ANNUAL REPORT
FOR THE YEAR ENDED
31 DECEMBER 2019

GREENCOAT
RENEWABLES
PLC
1

Contents
Page
At a Glance 2
Chairman’s Statement 4
Investment Manager’s Report 7
Board of Directors 20
Directors’ Report 22
Directors’ Remuneration Report 30
Statement of Directors’ Responsibilities 31
Corporate Governance Report 32
Audit Committee Report 38
Independent Auditor’s Report 42
Financial Statements 45
Notes to the Consolidated Financial Statements 51
Company Information 76
Supplementary Information (unaudited) 77
Defined Terms 78
Forward Looking Statements and Other Important
Information
81
All capitalised terms are defined in the list of defined terms
on pages 78 to 80 unless separately defined.
At a Glance
2
Summary
 is a sector-focused listed renewable infrastructure company, investing in renewable electricity
generation assets, with an initial focus on wind assets in Ireland. The Company’s aim is to provide investors with an annual
dividend that increases progressively whilst growing the capital value of its investment portfolio in the long term through
reinvestment of excess cash flow and the prudent use of portfolio leverage.
Highlights
1,154 GWh
The Group’s investments generated 1,154GWh of electricity, 4 per cent below budget owing
to higher than expected curtailment.
€48.8m
Net cash generation (Group and wind farm SPVs) was €48.8 million (gross of SPV level debt
prepayment).
462 MW
Further investment in Cloosh Valley and acquisition of 3 new wind farms increased the portfolio
to 15 wind farm investments, net generating capacity to 462MW and GAV to €1,016.9 million
as at 31 December 2019.
€273m Issuance of 251 million new shares raising €273 million in the year.
6.03c
The Company has declared total dividends of 6.03 cent per share with respect to the year and
is targeting a dividend of 6.06 cent per share for 2020.
36% €366.9 million Aggregate Group Debt at 31 December 2019, equivalent to 36 per cent of GAV.
Key Metrics
As at
31 December 2019
As at
31 December 2018
Market capitalisation €747.3 million €391.4 million
Share price 118.5 cent 103.0 cent
Dividends with respect to the year €33.0 million €19.5 million
Dividends with respect to the year per share 6.03 cent 6.00 cent
GAV €1,017 million €883.5 million
NAV €650.0 million €392.8 million
NAV per share 103.1 cent 103.4 cent
TSR 23.5 per cent 3.2 per cent
3

At a Glance
continued
At a Glance
Defining Characteristics
 was designed for investors from first principles to be simple, transparent and low risk.
1. The Group is initially focused on investing solely in operating Irish wind assets.
2.	
Wind is the most mature and largest scale renewable technology.
3.	Ireland has a long established regulatory regime, high wind resource and in excess of €8 billion of wind farms expected
to be in operation in the short to medium term.
4.	
The Group is wholly independent and thus avoids conflicts of interests in its investment decisions.
5.	
The independent Board governs the Group, actively monitors the efficient operation of the assets and works in
conjunction with an experienced investment management team.
6.	
The Group generally invests in wind farms that have an appropriate operational track record (or price adjustment
mechanism).
7.	
Low leverage is important to ensure a high level of cash flow stability and higher tolerance to downside sensitivities.
8.	
The Group invests only in Euro assets and thus does not incur material currency risk.
Chairman’s Statement
4
I am pleased to present our Company’s third
annual report since listing in 2017. This has
been another successful year with continued
strong growth, and further improvement to
operational performance. We have continued
to consolidate our market-leading position in
Ireland where we are now the second largest
owner of operating wind farms.
Whilst we are exploring the considerable potential in Europe’s secondary market,
the Irish market remains our focus for growth, and across two successful equity
placings we raised €273m in 2019, allowing us to increase GAV to over €1bn in value.
I would like to thank our shareholders for their continued confidence, as we work to
deliver the stable premium returns that our assets provide.
Performance
Our portfolio of 15 wind farms generated 1,154GWh in the year, 4 per cent below
budget, primarily due to higher than expected curtailment. There were no material
unplanned outages or issues affecting any of the assets in the period. Since listing,
our portfolio has grown by 2.5 times and this increased scale has provided the
opportunity for both portfolio enhancements and efficiencies, and operational
availability was on budget. The portfolio generated net operating cash flow of
€48.8 million(1)
, providing dividend cover of 1.7x, ahead of our 1.4x target.
Dividends and Returns
The Company declared dividends for the year of 6.03 cent per share, with the final
quarterly dividend of 1.5075 cent per share paid on 28 February 2020. Since listing,
the Company has consistently delivered on its dividend policy, and has achieved TSR
of 33.7 per cent at 31 December 2019.
NAV per share decreased in the year from 101.9 cent per share (ex dividend) on the
31st December 2018 to 101.6 cent per share (ex dividend) on 31 December 2019,
representing a decrease of 0.3 per cent, primarily as a result of lower long-term
power price projections.
Our unchanged dividend policy aims to increase our dividend between 0 and CPI
each year. Given our continued strong cashflow and robust dividend cover, we are
pleased to increase the dividend target for 2020 to 6.06 cent per share. This increase
of 0.5 per cent represents approximately half of Irish CPI in 2019, which stood at
1.1 per cent.
1	
Net cash generation and dividend cover are gross of SPV level debt repayment and were €40.6m and 1.4x
net of SPV level debt repayment.
Rónán Murphy
5

Chairman’s Statement
continued
Chairman’s
Statement
Acquisitions
We are very pleased with the market-leading position we have developed in the Irish market since IPO with aggregate
generating capacity now at 462MW. Our portfolio now comprises more than 10% of the country’s existing fleet of
operating wind assets, generating enough power to supply half of Dublin’s homes.
In 2019, the Group acquired 3 new wind farms, Beam Hill, Gortahile, and Killala, and also increased its existing stake in
Cloosh Valley wind farm from 50 per cent to 75 per cent.
Notably, Beam Hill represents our first merchant wind farm, and will allow the Group to explore different contracted
power price structures, including the emerging corporate PPA market in Ireland, which is projected to see considerable
growth over the next few years.
In February 2020, we also acquired Letteragh, a newly commissioned wind farm, which continues our strategy of
consolidating the small/medium REFIT market in Ireland. The weighted average remaining REFIT life stands at 10.4 years
across REFIT 1 and 2 assets.
We continue to see many value accretive opportunities for growth in the Irish secondary market, benefitting from our
execution track record, relationships with developers and potential sellers, and ability to transact at any scale.
Equity Issuance
Our equity issuance strategy allows us to maintain acquisitional agility, whilst also maintaining gearing targets, and
removing cash yield drag. In March 2019, we issued 140 million new shares at an issue price of 105.5 cent per share raising
gross proceeds of €148 million, closing out our 250 million share issuance programme that launched in July 2018.
Given our pipeline strength, we launched a 350 million share issuance programme in November 2019, and issued 111
million new shares at an issue price of 113.0 cent per share in December 2019 raising gross proceeds of €125 million.
Aggregate equity raising proceeds during the year were €273 million.
Both equity raisings were oversubscribed and NAV accretive. The Group has significant headroom to pursue opportunities
in the secondary market as they arise.
Gearing
As at 31 December 2019, the Group had €367 million of debt outstanding, equating to 36 per cent of GAV with weighted
average gearing during 2019 at 46 per cent, within our target range of 40 to 50 per cent.
Environmental, Social and Governance
Whilst the nature of our business ensures that we are working towards the benefit of society by reducing carbon emissions
from renewable electricity generation, we also want our Group to be a good partner in all its interactions and day-to-day
operations. 2019 saw us take a more sophisticated approach to ESG reporting, which will continue to develop over the
coming years.
In particular, I am proud that we are able to benefit the local communities around our wind farms indirectly, by supporting
employment and the economy, as well as directly via our community benefit schemes through which we committed over
€675,000 in 2019.
Outlook
The Irish wind market remains an attractive jurisdiction with both a stable and supportive regulatory regime and broad
public support. The country has over 4.0GW of installed capacity either in operation or construction under REFIT 1 and
REFIT 2, and the Board continue to view Ireland as an attractive market for further investment.
In June 2019, the Irish Government announced its Climate Action Policy committing the country to generating 70 per cent
of electricity from renewables by 2030 and is projected to create more than €12 billion of further investment opportunities.
It is expected that the majority of this new capacity will be delivered under the new RESS, a competitive auction structure
for CFD support, with such auctions expected to commence in 2020 and run until 2026. Given the expected CFD structure
of RESS, as well as regular auctions planned until 2026, this should ensure Ireland remains a very attractive jurisdiction for
further investment. In addition, Ireland is experiencing substantial growth in the demand for electricity, particularly from
the development of a substantial number of data centres. We expect to see a growing number of large corporate entities
seeking to enter into long term electricity contracts.
Chairman’s Statement
continued
6
The Group is now able to make acquisitions in Belgium, Finland, France, Germany and the Netherlands, in line with
our existing investment policy. Continental Europe can provide further diversification of intra-year generation volumes
and gives the Group access to a considerably larger pool of assets from which to seek best value. In addition to the
above jurisdictions, the Group is assessing opportunities in the Nordic regions, currently outside of the investment policy.
Special resolution 9 will be proposed at the forthcoming AGM to amend the investment policy to enable the Group to
invest in Nordic countries in addition to the other relevant countries noted on page 18.
Many of the operational assets across the continent are owned by parties with whom the Investment Manager has strong
existing relationships. The Group’s position is further improved by the absence of currency risk when acquiring assets in
Europe.
Board and Governance
During 2019, we initiated an external search process with the assistance of search firm, Korn Ferry, and I am very pleased
to welcome Marco Graziano to the Board. He has considerable expertise in the energy and renewables industry, and
significant experience of developing and operating European renewable assets in an executive capacity. My fellow board
members and I know he will make valuable contribution to our governance and growth.
Annual General Meeting
Our AGM will take place on 29 April 2020 at 2:00 pm at the offices of J&E Davy, Davy House, 49 Dawson Street, Dublin 2,
Ireland. Details of the formal business of the meeting are set out in the Notice of AGM, which is sent to shareholders with
the Annual Report. We look forward to meeting shareholders on that occasion.
Conclusion
I would like to thank my fellow directors who served during 2019, Emer Gilvarry and Kevin McNamara, for their stewardship
and advice during the period. Finally, I would like to acknowledge the substantial efforts of the Investment Manager,
which contributed significantly to our continued staged growth.
Rónán Murphy
Chairman
1 March 2020
Outlook (continued)
Lisdowney
7

Investment Manager’s Report
Investment
Manager’s
Report
The Investment Manager
The Investment Manager’s experience covers wind farm
investment, ownership, finance and operation. All the
skills and experience required to manage the Group’s
investments lie within a single investment manager. The
Investment Manager is authorised and regulated by the
FCA and is a full scope UK AIFM.
The team is led by Bertrand Gautier and Paul O’Donnell.
Bertrand has over 27 years of operational, financial and
investment experience, of which the last 10 years focussed
solely on renewables. He has been a Partner of Greencoat
Capital since joining in 2010 and specialises in investments
across the renewable energy space.
Bertrand joined from Terra Firma Capital Partners where
he managed a variety of LBO and re-financing transactions
and oversaw the management of portfolio businesses,
focusing on asset-backed companies. Before joining Terra
Firma in 2007, Bertrand spent five years at Merrill Lynch
as part of the M&A Advisory Group in the Infrastructure
and Industrials team. Prior to that, he gained extensive
operational experience over eight years at Procter &
Gamble in supply chain and purchasing management, as
well as in several French engineering SMEs.
Bertrand holds an MSc in General Engineering from ICAM
(France) and an MBA from Harvard Business School (USA).
Paul has over 17 years of renewables and investment
experience, of which the last 13 have been focussed solely
on renewables. He joined Greencoat Capital in 2009 and
has specialised in managing investments in the wind and
solar generation sectors, working across development,
operations, technology, and financing. In that time, Paul
oversaw Airvolution Energy, a UK based wind developer
which has developed and constructed over 60MW of wind
assets as well as Lumicity, a UK solar developer which
developed over 60MW of solar assets.
Paul has been a Partner of Greencoat Capital since 2016
and has been based in Dublin since 2013.
Paul holds a BBS (Hons) in Finance from Trinity College
Dublin.
Investment Manager’s Report
continued
8
Overview
The Investment Manager is very pleased with the Group’s achievements in 2019, which have continued to demonstrate
strong growth and operational efficiency across the business. In the past twelve months, Greencoat Renewables has
developed a market leading position in Ireland through acquiring value accretive assets in the secondary market, ensuring
the portfolio has exceeded target availability, and raising further equity in two oversubscribed issuances.
The value accretive additions during the year have diversified the portfolio further and brought economies of scale to the
business. Throughout the year we have continued to deliver strong cashflows from our existing portfolio, demonstrating
the resilience of the dividend cover, despite below budget generation.
Investment Portfolio
The Group’s investment portfolio as at 31 December 2019 consisted of interests in SPVs which held the following
underlying operating wind farms:
Wind Farm Turbines Operator PPA Total MW
Numbers do not cast due to rounding
The failure of a 200kV to 400kV grid transformer at Moneypoint impeded electricity flows in the south west of Ireland and
caused significant levels of curtailment across the portfolio. This failure was remedied in Q4 and the transformer returned
to operations at the end of November 2019.
The Investment Manager is actively participating in a dispatch down working group within the Irish Wind Energy
Association, which now represents over 90 per cent of wind generators in Ireland. The group are looking to collaboratively
address the system-wide issue of curtailment across the industry in Ireland.
Health and Safety
There were no major incidents in the year to 31 December 2019 and health and safety audits were conducted across 11
sites by an independent consultant. No material areas of concern were identified.
2019 has seen significant improvements in health and safety reporting from operators and there have been numerous
hazard observations during the year across the portfolio that have resulted in remedial action and improvements. No lost
time incidents were reported in the year.
Environmental, Social and Governance
There has been a focus within the Group to recognise the fundamental importance of adequate management of
ESG matters for all stakeholders and for the long-term sustainable success of the business. During the year the Group
achieved the following:
• Environmental - significantly increased generation capacity, supporting Ireland’s transition towards renewable energy
and a carbon net zero economy;
• Social - expansion of best practice community benefit schemes and rigorous health and safety approaches that
ensure the Group’s wind farms are a valued part of the community. Winner of the Best Community Programme at the
2019 Chambers Ireland CSR Awards for The Galway Wind Park project (Cloosh Valley);
Investment Manager’s Report
continued
12
• Governance - adoption of an ESG Policy which sets out the Group’s ESG objectives and a plan to systematise the
Investment Manager’s approach to ESG management.
Further details of the Group’s ESG initiatives can be found in the latest ESG report, available on the Company’s website
www.greencoat-renewables.com.
Acquisitions
2019 was another busy year in the Irish secondary wind sector and the opportunity for aggregation was clearly evidenced.
We continued to see many opportunities for value-accretive acquisitions, and during the year priced and assessed 43
wind farms totalling 529MW in Ireland. Of the wind farms priced, 5 investments were made by the Group (pre and
post year end), 11 were acquired by other buyers, 23 are no longer being pursued by the Group and 4 are subject to
continuing discussions.
We were delighted to have successfully acquired 3 new wind farms in 2019 year from separate sellers in separate
transactions, as well as the additional 25% investment in Cloosh Valley.
The following table lists investments in the year (including additional share of SPV-level debt and acquisition costs,
excluding acquired cash):
On 17 February 2020, the Group announced the acquisition of the 14.1MW Letteragh wind farm in County Clare for
€35.4 million, bringing net generating capacity of the portfolio to 476MW.
Equity Issuance
In March 2019, the Company issued 140 million new shares at an issue price of 105.5 cent per share, raising gross proceeds
of €148 million in an oversubscribed and NAV-accretive share placing. This issuance closed the Company’s programme
to issue 250 million new shares announced in July 2018.
In December 2019, the Company issued 111 million new shares at an issue price of 113.0 cent per share raising gross
proceeds of €125 million in another oversubscribed and NAV-accretive share placing. This was the first tranche of the
Company’s programme to issue 350 million new shares announced in November 2019.
Both share placings during the year demonstrate the Company’s continuing growth strategy.
Gearing
As at 31 December 2019, the Group and wind farm SPVs had €366.9 million outstanding debt, equating to 36 per cent of
GAV (limit 60 per cent).
Debt outstanding as at 31 December 2019 comprised €206 million drawn under the Group’s revolving credit facility and
€160.9 million of the Group’s proportionate share of long-term project finance debt (including the fair value of interest
rate swaps) in Cloosh Valley, Raheenleagh and Sliabh Bawn.
On 17 February 2020, the Group drew down a further €34 million under its revolving credit facility to fund the €35.4 million
acquisition of Letteragh wind farm, leaving amounts drawn under the facility at €240 million.
Financial Performance
Dividend cover for the year was 1.4x net of SPV level debt repayment or 1.7x gross of SPV level debt repayment.
Cash balances (Group and wind farm SPVs) decreased by €6.7 million from €41.2 million to €34.5 million over the year,
demonstrating effective recycling of excess portfolio cashflow into wind farm acquisitions and debt repayment.
Environmental, Social and Governance (continued)
13

Investment Performance
(1) Numbers do not cast due to rounding of €0.1 million
NAV at 31 December 2019 was €650 million (103.1 cent per share):
• NAV at 31 December 2018 was €392.8 million (103.4 cent per share);
• €151.6 million of investments were made in the year (including the Group’s increased share of SPV level debt at
Cloosh Valley following further investment in March 2019) offset by the €2.9 million receipt upon settlement of the
Glanaruddery wind energy true-up;
• cash balances decreased by €6.7 million;
• other relevant assets/liabilities at Group level increased by €5.5 million from a €5.6 million net liability position at
31 December 2018 to a €0.1m net liability position at 31 December 2019; and
• Aggregate Group Debt decreased by €123.8 million, which includes the movement of Group’s proportionate share
of SPV level debt positions (including associated interest rate swap fair values of €9.1 million) at Cloosh Valley,
Raheenleagh and Sliabh Bawn.
Total dividends of €29.2 million were paid in 2019. Total dividends of €33.0 million have been paid or declared with
respect to 2019 (6.03 cent per share). The target dividend with respect to 2020 is 6.06 cent per share. The increase of 0.03
cent (0.5 per cent) is in line with the Company’s stated dividend policy to increase the dividend on a progressive basis.
Given that Irish CPI for 2019 was 1.1 per cent, we have decided to increase the dividend by approximately half of CPI.
17

Investment Manager’s Report
NAV Sensitivities
NAV is equal to GAV less Aggregate Group Debt.
GAV is the sum of:
• DCF valuations of the Group’s investments;
• cash (at Group and wind farm SPV level); and
• other relevant assets/liabilities of the Group and wind farm SPVs.
The DCF valuation of the Group’s investments represents the largest component of GAV and the key sensitivities are
considered to be the discount rate used in the DCF valuation and long-term assumptions in relation to energy yield,
power prices, inflation, and asset life.
The base case discount rate is a blend of a lower discount rate for fixed cash flows and a higher discount rate for merchant
cash flows. The blended discount rate reduced by 0.3 per cent from 31 December 2018 reflecting market valuations
observed throughout 2019. The blended discount rate as at 31 December 2019 does remain within 6 per cent and
7 per cent, which is considered to be an appropriate base case for sensitivity analysis. A variance of +/- 0.25 per cent is
considered to be a reasonable range of alternative assumptions for discount rate.
The base case long term CPI assumption is 2.0 per cent.
Base case energy yield assumptions are P50 (50 per cent probability of exceedance) forecasts produced by expert
consultants based on long term wind data and operational history. The P90 (90 per cent probability of exceedance over
a 10 year period) and P10 (10 per cent probability of exceedance over a 10 year period) sensitivities reflect the future
variability of wind and the uncertainty associated with the long term data source being representative of the long term
mean. Given their basis on long-term operating data, it is not anticipated that base case energy yield assumptions will be
adjusted (other than any wind energy true-up arrangements with compensating purchase price adjustments).
Long term power price forecasts are provided by a leading market consultant, updated quarterly and adjusted by the
Investment Manager where more conservative assumptions are considered appropriate. The independent forecasts are
never adjusted upwards. Base case real power prices increase from approximately €54/MWh (2030) to approximately
€61/MWh (2040). The sensitivity below assumes a 10 per cent increase or decrease in power prices relative to the base
case for every year of the asset life.
The base case asset life is 30 years. The sensitivity below assumes that asset life may be 5 years shorter or longer than the
base case, which is impacted by commercial aspects of each investment, including the renewals of site leases, planning
permission and grid connection agreements.
The following chart shows the impact of the key sensitivities on NAV:
cent per share
Impact on NAV
Investment Manager’s Report
continued
18
Outlook
The Group has successfully executed against all facets of its business plan to date and is well positioned for future growth.
The outlook for the Group remains positive with a growing secondary wind market in Ireland, a stable policy backdrop for
Irish wind assets underpinned by the REFIT contracts, and an opportunity for further growth into attractive jurisdictions
in Europe.
Irish Wind Market
The Irish wind market remains an attractive jurisdiction with both a stable and supportive regulatory regime and broad
public support. The country has over 4.0GW of installed capacity either in operation or construction under REFIT 1 and
REFIT 2, representing a c.€8 billion market size.
RESS, a successor scheme to REFIT, has reinforced this further growth opportunity in the Irish renewables market from
2020 onwards. It is expected that over 13,500GWh per year of additional renewable generation will be contracted between
2020 and 2026, which would represent c.4GW of onshore wind capacity if all 13,500GWh was converted to onshore wind.
It is expected that RESS will support a broader range of technology solutions, including offshore wind and solar.
In June 2019, the Irish Government announced its Climate Action Policy committing the country to generating 70 per cent
of electricity from renewables by 2030 and is projected to create more than €12 billion of further investment opportunities.
It is expected that the majority of this new capacity will be delivered under RESS.
Ireland is seeing a substantial growth in the demand for electricity, particularly from the development of a substantial
number of data centres. The Company anticipates a growing number of large corporate entities seeking to enter into
long term PPA arrangements to meet their energy obligations.
Market Entry into Continental Europe
In line with the Company’s Investment Policy, the Group has the ability to make acquisitions in Belgium, Finland, France,
Germany and the Netherlands. Many of the operational assets across the continent are owned by parties with whom
the Investment Manager has strong existing relationships. The Group’s position is further improved by the absence of
currency risk when acquiring assets in Europe.
During the year, we have been exploring opportunities in Nordic countries, in particular Denmark, Norway and Sweden
(in addition to Finland which the Group could already invest in from July 2019 under the Company’s current Investment
Policy). These additional jurisdictions provide the Group with the benefit of a larger pool of potential acquisition targets
and facilitates the Group’s diversification opportunities. The Nordics represented a euro denominated market with power
sales into Nord Pool, one of the world’s most liquid power markets. The fundamentals of the market are positive due to
substantial plans for decarbonisation in each of the countries, increasing demand via electrification of key industries and
new interconnectors to higher priced markets. Given that electricity in these markets are traded in euros, it is unlikely that
there will be a material impact on currency risk should the Group invest in these jurisdictions.
The outlook for the Group continues to remain very positive, with robust operational and financial performance from the
existing portfolio with a healthy pipeline of further attractive investment opportunities.
Glanaruddery
19

Investment Manager’s Report
continued
Investment
Manager’s
Report
Portfolio generation snapshot


Board of Directors

20
The Directors are of the opinion that the Board, as a whole, comprises an appropriate balance of skills, experience and
diversity. The Board is comprised of individuals from relevant and complementary backgrounds offering experience
in investment, financial, and business skills, as well as in the energy sector, from both an investment and a commercial
perspective.
Rónán Murphy, Chairman
Rónán Murphy, aged 62, was previously Senior Partner of PwC Ireland, a position he was
elected to in 2007 and was re-elected to for a further 4 year term in July 2011. Rónán
joined PwC in 1980, qualifying in 1982, and was admitted to the partnership in 1992.
Rónán was a member of the PwC EMEA Leadership Board from 2010 to 2015. Rónán is
also a non-executive director of Icon Plc and Davy.
Rónán holds a Bachelor of Commerce degree and Masters in Business Studies from
University College Dublin and is a Fellow of the Institute of Chartered Accountants.
Kevin McNamara, Chairman of the Audit Committee
Kevin McNamara, aged 65, has more than 25 years’ experience in the energy sector.
Kevin enjoyed a long career with ESB International, including leading the investment
division of ESB International Investments. More recently Kevin was CFO of Amarenco
Solar, a solar business focused on the Irish and French markets and prior to this CEO of
Airvolution Energy, a UK wind development business.
Kevin holds a Bachelor of Commerce degree from University College Dublin and is a
Fellow of the Institute of Chartered Accountants.
Emer Gilvarry, Senior Independent Director
Emer Gilvarry, aged 62, is a consultant with Mason Hayes & Curran. Prior to taking up this
position, Emer was the Managing Partner for two consecutive terms from 2008 to 2014.
From 2014 until 2018, Emer took over the role of Chair of the firm. She is also a former
Head of the firm’s Litigation Group (2001 to 2008). Emer is a former Board member of Aer
Lingus. She is currently a board member of The Economic and Social Research Institute
and the Ireland Funds.
Emer holds a Bachelor of Law degree from University College Dublin (BCL).
Marco Graziano
Marco Graziano, aged 62, has more than 35 years of worldwide experience in the energy
sector, with a demonstrated track record of driving growth and profitability managing
large organisations. He served as both executive and non-executive director in a number
of companies in Europe, Africa, Middle East and Latin America. After many years with
the French multinationals Alstom and Areva, more recently he was President of South
Europe, MENA and LATAM for Vestas Wind Systems.
Marco holds a doctorate degree in mechanical engineering from Genoa University.
Marco was appointed to the Board after year end on 30 January 2020.
21


Board of Directors
continued
Board
of
Directors
Other Irish Public Company Directorships
In addition to their directorships of the Company, the below Directors currently hold the following Irish public company
directorships:
Rónán Murphy Icon plc
The Directors have all offered themselves for re-election and resolutions concerning this will be proposed at the AGM.
Conflicts of Interest
The Directors have declared any conflicts or potential conflicts of interest to the Board of Directors which has the authority
to approve such situations. The Company Secretary maintains the Register of Directors’ Conflicts of Interests which is
reviewed quarterly by the Board and when changes are notified. The Directors advise the Company Secretary and the
Board as soon as they become aware of any conflicts of interest. Directors who have conflicts of interest do not take part
in discussions which relate to any of their conflicts.

Directors’ Report
22
The Directors present their Annual Report, together
with the consolidated financial statements of Greencoat
Renewables PLC for the year ended 31 December 2019.
Principal Activity and Business Review
A detailed discussion of the individual project performance
and a review of the business in the period are covered in
the Investment Manager’s Report on pages 7 to 19.
Results for the Year
The consolidated financial statements for the financial year
ended 31 December 2019 are set out in detail on pages 45
to 50 including the results for the year which are set out in
the Consolidated Statement of Comprehensive Income on
page 45.
Future Developments
The Group’s outlook is discussed in the Investment
Manager’s Report on page 18.
Investment Objective
The Company’s aim is to provide attractive risk-adjusted
returns to shareholders through an annual dividend (6.03
cent per share for 2019) that increases progressively whilst
growing the capital value of its investment portfolio.
The Company is targeting an IRR of 7 to 8 per cent (net
of expenses and fees) on the issue price of the ordinary
shares to be achieved over the longer term via active
management of the investment portfolio, reinvestment of
excess cash flows and the prudent use of leverage. The
Company intends to hold assets in its investment portfolio
for the long term.
Investment Policy
The Group intends to increase its portfolio of renewable
energy generation assets within the Eurozone with a focus
on Ireland. Key investment criteria include:
• During the first 24 months from listing, the Group was
invested in operational wind energy assets in Ireland.
• Thereafter, Ireland will remain a key country of focus for
the Group as no less than 60 per cent of GAV will be
invested in Ireland.
• The Group can also invest, in aggregate, up to 40 per
cent of GAV in operational wind energy or solar assets
in other relevant countries (being Belgium, Finland,
France, Germany and the Netherlands).
The Group has used debt facilities to make additional
investments in the year. This has enhanced the Group’s
attractiveness to sellers since execution risk is greatly
diminished, with the Group effectively being a cash buyer.
The Group will continue to use debt facilities to make
further investments.
The Group will look to repay its drawn debt facilities by
refinancing them in the equity markets at appropriate
times in order to refresh its debt capacity. While debt
facilities are drawn, the Group benefits from an increase
in investor returns because borrowing costs are below the
underlying return on investments.
Group Structure and Share Capital
The Company is incorporated in the Republic of Ireland.
The Group is wholly independent and is not tied to any
particular utility or developer. All of the ordinary shares
in the Company are quoted on the Euronext Growth
Market of Euronext Dublin and on AIM of the London
Stock Exchange. The Group comprises of the Company
and Holdco. Holdco invests in the underlying portfolio
companies. During the year, Holdco 2 was dissolved with a
view to rationalising the Group.
The Company has one class of ordinary shares which carry
no rights to fixed income. Shareholders are entitled to all
dividends paid by the Company and, on a winding up,
provided the Company has satisfied all of its liabilities, the
Shareholders are entitled to all of the surplus assets of the
Company.
All shareholders have the same voting rights in respect of
the share capital of the Company. Shareholders are entitled
to attend and vote at general meetings of the Company
and, on a poll, to one vote for each ordinary share held.
The rights and obligations to the ordinary shares are set
out in the Company’s articles of association which are
available on the Company’s website: www.greencoat-
renewables.com.
Authority to Purchase Own Shares
The current authority of the Company to make market
purchases of up to 14.99 per cent of its issued share
capital expires at the conclusion of every AGM. A special
resolution will be proposed at the forthcoming AGM
seeking renewal of such authority until the next AGM (or
30 June 2021, whichever is earlier). The purchases will only
be made for cash at prices below the estimated prevailing
NAV per share and where the Board believes such
purchases will result in an increase of the NAV per share.
Any shares repurchased under this authority will either be
cancelled or held in treasury at the discretion of the Board
for future resale in appropriate market conditions.
The Directors believe that the renewal of the Company’s
authority to purchase shares, as detailed above, is in the
best interests of shareholders as a whole and therefore
recommend shareholders to vote in favour of the special
resolution.
Discount Control
As part of the Company’s discount control policies,
the Board intends to propose a continuation vote by
shareholders if the share price trades at a significant
discount to NAV. If in any financial year, the shares have
traded on average, at a discount in excess of 10 per cent
or more to the NAV per share in any financial year, the
23


Directors’ Report
continued
Directors’
Report
Discount Control (continued)
Board will propose a special resolution at the Company’s
next annual general meeting that the Company cease to
continue in its present form. Notwithstanding this, the
Board could consider buying back its own shares in the
market if the share price is trading at a material discount
to NAV, providing it is in the interests of the shareholders
to do so.
Major Interests in Shares
Significant shareholdings as at 31 December 2019 are
detailed below.
Shareholder
Ordinary shares
held %
31 December
2019
Irish Strategic Investment Fund 12.05
Newton Investment Management 8.64
FIL Investment International 5.78
M&G Investment Management 4.69
Investec Wealth & Investment 4.56
Cantor Fitzgerald 4.13
Foresight Group 3.83
Schroder Investment Management 3.76
Brewin Dolphin Ireland 3.73
Irish Life Investment Managers 3.56
Baillie Gifford & Co. 3.15
Companies Act 2014 Disclosures
The Directors disclose the following information:
• the Company’s capital structure is detailed in note
15 of the consolidated financial statements and all
shareholders have the same voting rights in respect
of the share capital of the Company. There are no
restrictions on voting rights that the Company is aware
of, nor any agreement between holders of securities
that result in restrictions on the transfer of securities or
on voting rights;
• there exist no securities carrying special rights with
regard to the control of the Company;
• the Company does not have an employees’ share
scheme;
• the rules concerning the appointment and replacement
of Directors are contained in the Company’s Articles of
Association and the Companies Act 2014;
• there exist no agreements to which the Company is
party that may affect its control following a takeover
bid; and
• there exist no agreements between the Company and
its Directors providing for compensation for loss of
office that may occur because of a takeover bid.
Key Performance Indicators
The Board believes that the key metrics detailed within
the summary on page 2, which are typical for renewables
infrastructure investment funds, will provide shareholders
with sufficient information to assess how effectively the
Group is meeting its objectives.
Ongoing Charges
31 December
2019
31 December
2018
€000 % € 000 %
Management fee 5,221 1.00% 3,035 1.00%
Directors’ fees 200 0.04% 200 0.07%
Ongoing expenses(1)
1,176 0.21% 1,054 0.34%
Total 6,597 1.25% 4,289 1.41%
Weighted Average
NAV 524,558 309,667
(1) 
Ongoing expenses do not include €31k (2018: €244k) of broken deal
costs.
Based on the 31 December 2019 NAV of €650 million, the
ongoing total management fee is 1.00 per cent. of NAV.
Assuming no change in NAV, the 2020 ongoing charges
ratio is expected to be 1.24 per cent.
The Investment Manager is not paid any performance or
acquisition fees.
Directors’ Indemnity
Directors’ and Officers’ liability insurance cover is in place
in respect of the Directors. The Company’s Articles of
Association provide, subject to the provisions of Ireland
and UK legislation, an indemnity for Directors in respect
of costs which they may incur relating to the defence of
any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or
judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company’s
Articles of Association and in the Directors’ letters of
appointment, there are no qualifying third party indemnity
provisions in force.
Corporate and Social Responsibility
Environmental, Social and Governance Matters
The Group currently invests in wind farms and the
environmental benefits of renewable energy are widely
known.
Althoughthenon-executiveBoardhasoverallresponsibility
for the activities of the Company and its investments, the
day-to-day management of the business is delegated to
the Investment Manager. This includes responsibility for

Directors’ Report
continued
24
Corporate and Social Responsibility (continued)
Environmental, Social and Governance Matters (continued)
ESG matters. The Investment Manager assesses how ESG
should be managed and the Company has developed its
ESG policy in accordance with the Investment Manager’s
ESG Framework, and the approach has two streams: pre-
investment and ongoing management. The full ESG policy
of the Company and its ESG report are available on the
Company’s website: www.greencoat-renewables.com.
The Group relies on the Investment Manager to apply
appropriate policies to the investments the Group makes.
The policies in place at the Investment Manager outline
the Group’s approach to responsible investing, as well
as the environmental standards which it aims to meet.
Responsible investing principles have been applied to
each of the investments made.
These policies require the Group to make reasonable
endeavours to procure the ongoing compliance of its
portfolio companies with its policies on responsible
investment.
The Investment Manager monitors compliance at the
investment phase and reports on an ongoing basis to the
Board.
Global Greenhouse Gas Emissions
As the Group has outsourced operations to third parties,
there are no significant greenhouse gas emissions to
report from the operations of the Group.
In relation to the Group’s investee companies, the level of
greenhouse gas emissions arising from the low volume of
electricity imports and from operation and maintenance
activity is not considered material for disclosure purposes.
Further, as the assets are renewable energy generators,
they reduce carbon dioxide emissions on a net basis (at a
rate of approximately 0.4tn CO2 per MWh).
Employees and Officers of the Company
The Company does not have any employees but instead
engages experienced third parties to operate the assets
that it owns, therefore employee policies are not required.
The Directors of the Company are listed on page 20.
Diversity
The Group’s policy on diversity is detailed in the Corporate
Governance Report on pages 32 to 37.
Principal Risks and Risk Management
In the normal course of business, each investee company
has a rigorous risk management framework with a
comprehensive risk register that is reviewed and updated
regularly and approved by its board. The key risks to the
performance of the Group, identified by the Board, are
detailed below.
The Board maintains a risk matrix considering the risks
affecting both the Group and the investee companies. This
risk matrix is reviewed and updated annually to ensure that
procedures are in place to identify, mitigate and minimise
the impact of risks should they crystallise and to identify
emerging risks and to determine whether any actions are
required. This enables the Board to carry out a robust
assessment of the risks facing the Group, including those
principal risks that would threaten its business model,
future performance, solvency or liquidity.
The risk appetite of the Group is considered in the light of
the principal risks and their alignment with the Company’s
Investment Objective. The Board considers the risk
appetite of the Group and the Company’s adherence
to the Investment Policy in the context of the regulatory
environment taking into account, inter alia, gearing and
financing risk, wind resource risk, the level of exposure
to power prices as well as environmental and health and
safety risks.
As it is not possible to eliminate risks completely, the
purpose of the Group’s risk management policies and
procedures is not to eliminate risks, but to reduce them
to ensure that the Group is adequately prepared to
respond to such risks and to minimise any impact if the
risk develops.
Killhills
25


Directors’ Report
continued
Directors’
Report
Principal Risks and Risk Management (continued)
The spread of assets within the portfolio ensures that the
portfolio benefits from a diversified wind resource and
spreads the exposure to a number of potential technical
risks associated with grid connections and with local
distributionandnationaltransmissionnetworks.Inaddition,
the portfolio includes 4 different turbine manufacturers,
which diversifies technology and maintenance risks.
Finally, each site contains a number of individual turbines,
the performance of which is largely independent of other
turbines.
Risks Affecting the Group
Investment Manager
The ability of the Group to achieve its investment objective
depends heavily on the experience of the management
team within the Investment Manager and more generally
on the Investment Manager’s ability to attract and retain
suitable staff. The sustained growth of the Group depends
upon the ability of the Investment Manager to identify,
select and execute further investments which offer the
potential for satisfactory returns.
The Investment Management Agreement includes key man
provisions which would require the Investment Manager
to employ alternative staff with similar experience relating
to investment, ownership, financing and management of
renewable energy projects should, for any reason, any key
man cease to be employed by the Investment Manager.
The Investment Management Agreement ensures that no
investments are made following the loss of key men until
suitable replacements are found and there are provisions
for a reduction in the investment management fee during
the loss period. It also outlines the process for their
replacement with the Board’s approval. The key men are
also shareholders in the Company.
Regulatory and Brexit Risk
The Investment Manager is the UK authorised AIFM of
the Company, an Irish AIF. The Company has put in place
contingency planning to cover different Brexit scenarios.
Following recent guidance from the CBI and legal advice,
the Company believes the AIFM will be able to continue to
manage the AIF as a non-EU AIFM, although the AIFM will
no longer be able to avail of the marketing passport under
AIFMD and will need to rely on national private placement
regimes.
The Board regularly discusses regulatory risks and the
Investment Manager reports to it on AIFMD compliance
matters. The Investment Manager also consults with
its own, and the Company’s legal adviser as well as the
Company’s NOMAD in relation to its plans to ensure that
the Company can continue to be AIFMD compliant after
Brexit.
If at any point the international community, or the EU,
were to withdraw, reduce or change its support for the
increased use of energy from renewable sources, including
generation of electricity from wind, for whatever reason,
this may have a material adverse effect on the legislative
basis for the supports for the promotion of the use of
energy from renewable sources. If this reduces the value
of the green benefits that wind energy generators are
entitled to, it would have a material adverse effect on the
Group.
Financing Risk
The Group will finance further investments either by
borrowing or by issuing further shares. The ability of the
Group to deliver enhanced returns and consequently to
realise expected NAV growth is dependent on access to
debt facilities and equity capital markets. There can be no
assurance that the Group will be able to borrow additional
amounts or refinance on reasonable terms or that there will
be a market for further shares.
Investment Returns Become Unattractive
A significantly strengthening economy may lead to
higher future interest rates which could make the listed
infrastructure asset class relatively less attractive to
investors. A rise in real interest rates could have a material
impact on the share price. As most of the revenues and
costs of the investee companies are either indexed or
correlated to CPI inflation, the Investment Manager
believes this provides a degree of mitigation against a rise
in interest rates due to inflation.
Risks Affecting Investee Companies
Regulation
As the renewable energy market has matured and costs of
new capacity have reduced, member states have generally
revised their supports for the sector to reduce the benefits
available to new renewable power generation projects.
However, in order to maintain investor confidence, Ireland
(and other relevant countries) have to date largely ensured
that benefits already granted to operating renewable
energy generation projects (which the Group is invested
in) are exempt from future regulatory change adversely
affecting those benefits.
If these policies were to change, such that subsidy supports
presently available to the renewable energy sector were
to be reduced or discontinued, it could have a material
adverse effect on the business, financial position, results of
operations and future growth prospects of the Group, as
well as returns to investors.
Electricity Prices
A number of factors could cause a decline in the market
price of electricity which could adversely affect the
portfolio companies’ revenue and financial condition.
Similarly, a decline in the costs of other sources of
electricity generation, such as fossil fuels or nuclear power,
could reduce the wholesale price of electricity and thus the
price achieved for electricity generated by wind farms. At
present, the Group does not hedge its sales of electricity
generated.

Directors’ Report
continued
26
Risks Affecting Investee Companies (continued)
Electricity Prices (continued)
Since 1995, Ireland has provided operating wind farms
with a supportive regulatory framework (REFIT 1 and REFIT
2) offering an inflation-linked floor price up to 15 years,
while allowing wind farms to capture prices above the
floor. Under REFIT, wind farms are provided with pricing
certainty and no downside exposure to electricity price
as the REFIT price is c.€80/MWh whereas the 2019 Irish
wholesale electricity price was c.€50/MWh.
When operating outside of REFIT (at the latest December
2027 for REFIT 1 or December 2030 for REFIT 2 contracted
wind farms), the Group may trade in the relevant electricity
market on a merchant basis and its financial performance
would be therefore subject to the wholesale power price
prevalent at the time. In general, independent forecasters
expect Irish wholesale power prices to rise in real terms
from current levels, driven by higher gas and carbon
prices. A difference in the achieved wholesale price of
electricity to that which is expected could have a material
adverse effect on the business, financial position, results
of operation and future growth prospects of the Group, as
well as returns to investors.
Wind Resource
The investee companies’ revenues are dependent upon
wind conditions, which will vary across seasons and years
within statistical parameters. The standard deviation of
energy production is 10 per cent over a 12 month period
(2 per cent over 25 years). Since long term variability is low,
there is no significant diversification benefit to be gained
from geographical diversification across weather systems.
TheGroupdoesnothaveanycontroloverthewindresource
and has designed its dividend policy such that it can
withstand significant short-term variability in production
relating to wind. Before investment, the Group carries out
extensive due diligence and relevant historical wind data
is available over a period of time. The other component of
wind energy generation, a wind farm’s ability to turn wind
into energy, is mitigated by generally purchasing wind
farms with a proven operating track record.
When acquiring wind farms that have only recently entered
into operation, only limited operational data is available.
In these instances, the acquisition agreements with the
vendors of these wind farms may include a ‘‘wind energy
true-up’’ which would apply once at least one year’s
operational data has become available or the acquisition
price would be adjusted to reflect wind uncertainty. Under
this true-up, the net load factor will be reforecast based on
all available data and the purchase price will be adjusted,
subject to de minimis thresholds and caps.
Asset Life
In the event that the wind turbines do not operate for the
period of time assumed by the Group in its business model
or require higher than expected maintenance expenditure
to do so, it could have a material adverse effect on
investment returns.
The Group performs regular reviews and ensures that
maintenance is performed on all turbines across the wind
farm portfolio. Regular maintenance ensures the wind
turbines are in good working order, consistent with their
expected life-spans.
Market Structure Change (I-SEM)
The island of Ireland previously had a wholesale electricity
market, the SEM, which was a gross mandatory pool market,
centrally dispatched, where the licensed transmission
system operators were responsible for forecasting wind
and demand. As a consequence, wind generators were
not “balance responsible”. The regulatory authorities
in Ireland and Northern Ireland have developed a new
integrated single electricity market, I-SEM, which aligns
SEM with electricity markets across Europe. This market
went live in October 2018 with one of the material changes
that it introduces “balance responsibility” for wind
generators. The implication of being balanced responsible
is that it introduces a potential cost to the wind operators.
The Group has contracted a third party service provider
with relevant experience to manage this risk.
It is not known what effect, if any, Brexit will have on the
operation of I-SEM. An adverse effect on I-SEM or the way
in which it might be developed as a result of Brexit could
have a material adverse effect on the business, financial
position, results of operations and future growth prospects
of the Company, as well as returns to investors
Health and Safety and the Environment
The physical location, operation and maintenance of wind
farms may, if inappropriately assessed and managed,
pose health and safety risks to those involved. Wind farm
operation and maintenance may result in physical injury
or industrial accidents, particularly if an individual were to
fall from height or be electrocuted. If an accident were to
occur in relation to one or more of the Group’s investments
and if the Group were deemed to be at fault, the Group
could be liable for damages or compensation to the extent
such loss is not covered by insurance policies. In addition,
adverse publicity or reputational damage could ensue.
The Board reviews health and safety at each of its
scheduled Board meetings and Kevin McNamara serves
as the appointed Health and Safety Director. The Group
engages an independent health and safety consultant
to ensure the ongoing appropriateness of its health and
safety policies.
Wind farms have the potential to cause environmental
hazards or nuisances to their local human populations,
flora and fauna and the surrounding natural environment.
Wind farms can receive complaints relating to specific
environmentalissues,orcompliancewithplanningconsents
and other relevant permits. Separately, the planning
27


Directors’ Report
continued
Directors’
Report
regulations in Ireland historically included a planning
exemption for underground grid connections. There have
been challenges to the basis on which this exemption has
been determined and there is currently uncertainty around
how the industry will resolve this challenge. The Group
continues to monitor any development, taking legal advice
wherenecessary,andaddressestheseasandwhenrequired.
Going Concern and Financial Risk
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position, are set out in the Investment Manager’s Report.
The Group faces a number of risks and uncertainties, as set
out above. Details of the financial instruments used, along
with the financial risk management objectives and policies
of the Group, including exposure to price risk, interest rate
risk, credit risk and liquidity risk are discussed in note 18 to
the consolidated financial statements.
The Group continues to meet day-to-day liquidity needs
through its cash resources.
As at 31 December 2019, the Group had net current
liabilities of €200.1 million (2018: €1.4 million) and had cash
balances of €6.0 million (2018: €3.0 million). This excludes
cash balances within investee companies of €28.5 million
(2018: €38.2. million), which are sufficient to meet current
obligations as they fall due. The significant net current
liabilities position of the Group at 31 December 2019 is
due to the Group’s revolving credit facility coming due for
renewal in December 2020 (within 12 months of the year
end) and therefore being classified as a current liability.
The Group expects to refinance the revolving credit facility
during 2020. The major cash outflows of the Group are
payment of dividends and costs relating to the acquisition
of new assets, both of which are discretionary.
The Group had €206.0 million (2018: €362.0 million) of
amounts drawn under its revolving credit facility as at
31 December 2019. The Group has and is expected to
continue to comply with the covenants of its banking
facilities going forward.
The Directors have reviewed Group forecasts and
projections which cover a period of not less than 12 months
from the date of this report, taking into account foreseeable
changes in investment and trading performance, which
show that the Group has sufficient financial resources.
On the basis of this review, and after making due enquiries,
the Directors have a reasonable expectation that the
Company and the Group have adequate resources to
continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going
concern basis in preparing the consolidated financial
statements.
Disclosure of Information to Independent Auditor
The Directors believe that they have taken all steps
necessary to make themselves aware of any relevant
audit information and have established that the Group’s
statutory Auditors are aware of that information. In so far
as they are aware at the time that this report was approved,
there is no relevant audit information of which the Group’s
statutory Auditors are unaware.
Independent Auditor
BDO, Statutory Audit Firm, have expressed their willingness
to continue in office in accordance with Section 383 (2) of
the Companies Act, 2014.
The Directors will propose the reappointment of BDO as
the Company’s Auditor and resolutions concerning this
and the remuneration of the Company’s Auditor will be
proposed at the AGM.
Audit Committee
Pursuant to the Company’s Articles of Association the
Board had established an Audit Committee that in all
material respects meets the requirements of Section
167 of the Companies Act 2014. The Audit Committee
was fully constituted and active during the year ended
31 December 2019. For more information, see the Audit
Committee Report on pages 38 to 41.
Annual Accounts
The Board is of the opinion that the Annual Report, taken
as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the performance, strategy and business model of
the Company.
The Directors recommend that the Annual Report, the
Directors’ Report and the Independent Auditor’s Report
for the year ended 31 December 2019 are received and
adopted by the shareholders and a resolution concerning
this will be proposed at the AGM.
Accounting Records
The Directors believe they have complied with the
requirements of Section 281 to Section 285 of the
Companies Act, 2014 with regard to accounting records
by employing accounting personnel with the appropriate
expertise and by providing adequate resources to the
financial function. The accounting records of the Company
are maintained by Northern Trust International Fund
Administration Services (Ireland) Limited at Georges
Court, 54-62 Townsend Street, Dublin 2, Ireland.
Subsequent Events
Significant subsequent events have been disclosed in note
21 to the consolidated financial statements.
Corporate Governance
The Corporate Governance Report on pages 32 to 37 form
part of this report.
Risks Affecting Investee Companies (continued)
Health and Safety and the Environment (continued)

Directors’ Report
continued
28
Directors and Company Secretary
The following Directors held office as at 31 December
2019:
Directors
Rónán Murphy (non-executive Chairman)
Emer Gilvarry (non-executive Director)
Kevin McNamara (non-executive Director)
Company Secretary
Estera Administration (UK) Limited
The biographical details of the Directors are set out on
page 20 of this Annual Report.
Changes in Directors during the year
There were no changes to directors during the year.
Directors’ Interests in Shares in the Company
Directors’ interests in Company shares as at 31 December
2019 are detailed below.
Shareholder
Ordinary shares
of €0.01 each
held as at
31 December
2019
Ordinary shares
of €0.01 each
held as at
31 December
2018
Rónán Murphy 170,571 124,752
Kevin McNamara 68,327 50,000
Emer Gilvarry 67,832 49,505
The Company does not have any share option schemes
in place.
Dividend
The Board has recommended a total aggregate dividend
of €9,506,589, equivalent to 1.5075 cent per share with
respect to the 3 month period ended 31 December 2019.
Political Donations
No political donations were made during the year ended
31 December 2019.
Longer Term Viability
As further disclosed on page 32, the Company is a member
of the AIC and complies with the AIC Code. In accordance
with the AIC Code, the Directors are required to assess
the prospects of the Group over a period longer than the
12 months associated with going concern. The Directors
conducted this review for a period of 10 years, which it
deemed appropriate, given the long-term nature of the
Group’s investments, which are modelled over 30 years,
coupled with its long-term strategic planning horizon.
In considering the prospects of the Group, the Directors
looked at the key risks facing both the Group and the
investee companies as detailed on pages 24 to 27,
focusing on the likelihood and impact of each risk as well
as any key contracts, future events or timescales that may
be assigned to each key risk.
As a sector-focused infrastructure fund, the Group aims
to produce stable and progressive dividends while
preserving the capital value of its investment portfolio on
a real basis. The Directors believe that the Group is well
placed to manage its business risks successfully over both
the short and long term and accordingly, the Board has
a reasonable expectation that the Group will be able to
continue in operation and to meet its liabilities as they fall
due for a period of at least 10 years.
While the Directors have no reason to believe that the
Group will not be viable over a longer period, they are
conscious that it would be difficult to foresee the economic
viability of any company with any degree of certainty for a
period of time greater than 10 years.
Directors’ Compliance Statement
The Directors, in accordance with Section 225(2)(a) of
the Companies Act 2014, acknowledge that they are
responsible for securing the Company’s compliance with
its “relevant obligations”. “Relevant obligations” in the
context for the Company, are the Company’s obligations
under:
• The Companies Act 2014, where a breach of the
obligations would be a category 1 or category 2
offence.
• The Companies Act 2014, where a breach of the
obligations would be a serious Market Abuse or
Prospectus offence.
• tax law.
Pursuant to Section 225(2)(b) of the Companies Act 2014,
the Directors confirm that:
• a compliance policy statement has been drawn up by
the Company in accordance with Section 225(3)(a) of
the Companies Act 2014 setting out the Company’s
policies (that, in the directors’ opinion, are appropriate
to the Company) regarding compliance by the
Company with its relevant obligations.
• appropriate arrangements and structures that in their
opinion, are designed to secure material compliance
with the Company’s relevant obligations, have been
put in place; and
• a review has been conducted, during the financial year,
of the arrangements and structures referred to above.
29


Directors’ Report
continued
Directors’
Report
By order of the Board
•
•

Rónán Murphy Kevin McNamara
Director Director
1 March 2020 1 March 2020
Directors’ Compliance Statement (continued)
Knockacummer

Directors’ Remuneration Report
30
This report has been prepared by the Directors in
accordance with the requirements of the Companies Act
2014. A resolution to consider the Directors’ Remuneration
Report will be proposed at the AGM.
The Company’s Auditor is required to give their opinion
on the information provided on Directors’ remuneration
and this is explained further in its report to shareholders
on pages 42 to 44. The remainder of this report is outside
the scope of the external audit.
Annual Statement from the Chairman of the Board
The Board, which is profiled on page 20, consists solely of
non-executive Directors and is considered to be entirely
independent. The Board considers at least annually the
level of the Board’s fees, in accordance with the AIC Code.
Remuneration Policy
As at the date of this report, the Board comprised 4
Directors, all of whom are non-executive. The Company has
established a Remuneration Committee which comprises
all of the Directors and the Chair is Emer Gilvarry.
Each of the Directors was appointed to the Remuneration
Committee with effect to the date of their appointment.
The Committee shall meet at such times as the Committee
Chairman shall require.
Each Director receives a fixed fee per annum based on their
roles and responsibility within the Company and the time
commitment required. It is not considered appropriate
that Directors’ remuneration should be performance
related and none of the Directors are eligible for pension
benefits, share options, long-term incentive schemes or
other benefits in respect of their services as non-executive
Directors of the Company. The total remuneration of non-
executive Directors has not exceeded the limit set out in
the Articles of Association of the Company.
The Company’s Articles of Association empower the Board
to award a discretionary bonus where any Director has
been engaged in exceptional work on a time spent basis
to compensate for the additional time spent over their
expected time commitment.
The Articles of Association provide that Directors retire
and offer themselves for re-election at the first AGM after
their appointment and at least every 3 years thereafter. In
accordance with corporate governance best practice, all
of the Directors have opted to offer themselves for re-
election on an annual basis.
All of the Directors have been provided with letters of
appointment which stipulate that their initial term shall be
for 3 years, subject to re-election.
A Director’s appointment may at any time be terminated
by and at the discretion of either party upon 6 months’
written notice. A Director’s appointment will automatically
end without any right to compensation whatsoever if
they are not re-elected by the Shareholders. A Director’s
appointment may also be terminated with immediate effect
and without compensation in certain other circumstances.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company’s
registered office.
The Directors do not envisage any changes to the
remuneration policy in the next accounting period.
Annual Report on Remuneration
The table below (audited information) shows all
remuneration earned by each individual Director during
the year:
Date of
Appointment
Directors’
fees per
annum
Paid in
year ended
31 December
2019
Paid in
year ended
31 December
2018
Rónán Murphy
(chairman) 16 June 2017 €100,000 €100,000 €100,000
Kevin McNamara 16 June 2017 €50,000 €50,000 €50,000
Emer Gilvarry 16 June 2017 €50,000 €50,000 €50,000
Total €200,000 €200,000
None of the Directors received any other remuneration or
additional discretionary payments during the year from the
Company.
On behalf of the Board,
Emer Gilvarry
Chair of the Remuneration Committee
1 March 2020
31


Statement of Directors’ Responsibilities
Statement
of
Directors’
Responsibilities
The Directors are responsible for preparing the Annual
Report and the consolidated financial statements in
accordance with applicable law and regulations.
Irish company law requires the Directors to prepare
financial statements for each financial year. Under that law
the Directors are required to prepare the Group financial
statements and have elected to prepare the Company
financial statements in accordance with IFRS as adopted
by the EU. Under company law the Directors must not
approve the consolidated financial statements unless they
are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or
loss of the Group for that period.
In preparing these consolidated financial statements, the
Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance
with IFRS as adopted by the EU, subject to any material
departures disclosed and explained in the consolidated
financial statements;
• prepare the consolidated financial statements on
the going concern basis unless it is inappropriate
to presume that the Company and the Group will
continue in business;
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the consolidated financial
statements comply with the Companies Act 2014 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities. The Directors are responsible for ensuring
that the Annual Report, taken as a whole, is fair, balanced,
and understandable and provides the information
necessary for shareholders to assess the Group’s
performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual
Report and the consolidated financial statements are
made available on a website. Financial statements are
published on the Company’s website in accordance with
legislation in Ireland and the UK governing the preparation
and dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility
of the Directors. The Directors’ responsibilities also extend
to the ongoing integrity of the consolidated financial
statements contained therein.
On behalf of the Board,

Rónán Murphy Kevin McNamara
Director Director
1 March 2020 1 March 2020

Corporate Governance Report
32
This Corporate Governance Report forms part of the
Report of the Directors as further disclosed on pages 22
to 29.
Corporate Governance Framework
The Company is committed to high standards of corporate
governance and the Board is responsible for ensuring
those high standards are achieved. Companies admitted to
trading on AIM or Euronext Growth Market are not required
to comply with the UK Code or Irish Annex, however they
are required to disclose the corporate governance code
which they have decided to apply. For the year ended
31 December 2019, the Company was a member of the
AIC and adopted the AIC Code. The AIC Code provides
boards with a framework of best practice in respect of the
governance of investment companies. While the Company
is not an ‘‘investment company’’ under the Companies
Act, the Company shares key important characteristics
with such companies e.g. it has no employees and the
tasks of portfolio management and risk management
are delegated to the Investment Manager. The FRC has
confirmed that investment companies who report against
the AIC Code and follow its requirements will also be
meeting their obligations under the UK Code and the
Irish Annex. The Board considers that reporting against
the principles and recommendations of the AIC Code, by
reference to the AIC Guide, provides better information
to Shareholders. A summary of the Company’s compliance
with the AIC code is provided on the Company’s website.
The text of the AIC Code and the AIC Guide are available
on the AIC’s website, www.theaic.co.uk. The UK Code is
available on the FRC’s website, www.frc.org.uk.
Statement of Compliance
The Board confirms that the Company has complied with
the AIC Code during the year ended 31 December 2019.
Purpose, Culture and Values
The Company’s purpose remains clear; to provide
shareholders with an annual dividend that increases
progressively whilst growing the capital value of its
investment portfolio in the long term on a real basis
through reinvestment of excess cash flow and the prudent
use of leverage.
During the year, the Board discussed the Company’s culture
and values. As an investment trust with no employees, it
was agreed that the culture and values of the Board should
be aligned with those of the Investment Manager and
centred on long term relationships with the Company’s key
stakeholders and sustainable investment as follows.
• integrity is at the heart of every activity, with the
importance of being transparent, trustworthy and
dependable being well understood.
• the trust of stakeholders is key to maintaining the
Company’s high reputation, in particular with regard
to execution certainty for asset sellers and delivery of
investment promises to investors.
• respect for differing opinions is to be shown across all
conversation and communication.
• individual empowerment is sought with growth
in responsibility and autonomy being actively
encouraged.
• collaboration and effectively utilising the collective
skills of all participants is important to ensure ideas and
information are best shared.
The Board
As at the date of this report, the Board comprises of 4
non-executive Directors, all of whom, are considered to
be independent of the Investment Manager and free from
any business or other relationship that could materially
interfere with the exercise of their independent judgement.
The Board appointed Marco Graziano as Director of the
Company with effect from 30 January 2020. Mr Graziano
was introduced to the Company by the independent
search firm, Korn Ferry. The Board felt it was beneficial to
the growth and development of the Company to enhance
the Board’s breadth of experience and skillset, particularly
in advance of the Group looking to invest in European
jurisdictions, as well as enhance the diversity of the Board.
Directors’ details are detailed on page 20, which sets out
the range of investment, financial and business skills and
experience represented.
Director Re-election and Appointment
The Articles of Association provide that Directors shall
retire and offer themselves for re-election at the first AGM
after their appointment and at least every 3 years thereafter.
Any Director, who has held office with the Company for
three consecutive 3 year terms shall retire from office. This
will allow for phased Board appointments and retirements
and enable the Board to consider whether there is any risk
that such Director might reasonably be deemed to have
lost independence through such long service.
However, all of the Directors, in accordance with best
practice, have opted to offer themselves for re-election
on an annual basis. Having considered their effectiveness,
demonstration of commitment to the role, attendance at
meetings and contribution to the Board’s deliberations,
the Board approves the nomination for re-election of all
Directors.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company’s
registered office.
33


Corporate Governance Report
continued
Corporate
Governance
Report
The Chairman
The Chairman’s primary responsibility is to lead the Board
and to ensure its effectiveness both collectively and
individually. The Chairman of the Board is Rónán Murphy.
In considering the independence of the Chairman, the
Board took note of the provisions of the AIC Code relating
to independence and has determined that Mr. Murphy is
an Independent Director. The Company has no employees
and therefore there is no requirement for a chief executive.
Senior Independent Director
During the year, Emer Gilvarry was appointed as Senior
Independent Director, which involves working closely
with the Chairman and providing support where required,
holding annual meetings with the other non-executive
directors to appraise the performance of the Chairman
and be available to shareholders if they have any reason
for concern.
Diversity Policy and Independence
The Board has a policy to base appointments on merit and
against objective criteria, with due regard for the benefits
of diversity, including gender diversity. Its objective is to
attract and maintain a Board that, as a whole, comprises an
appropriate balance of skills and experience.
The Board consists of individuals from relevant and
complementary backgrounds offering experience on
boards of listed companies, in financial and legal services
as well as in the energy sector. As at the date of this
report, the Board comprised 3 men and 1 woman, all non-
executive Directors who are considered to be independent
of the Investment Manager and free from any business or
other relationship that could materially interfere with the
exercise of their independent judgement.
During the year, the Nominations Committee engaged
search firm Korn Ferry to assist the Board in the
appointment of a new non-executive Director. This process
resulted in the appointment of Marco Graziano with effect
from 30 January 2020.
The Investment Manager operates an equal opportunities
policy and its partners and employees comprised 36 men
and 14 women.
Board Responsibilities
The Board will meet, on average, 4 times in each calendar
year for scheduled quarterly Board meetings and on
an ad hoc basis where necessary. At each meeting, the
Board follows a formal agenda that will cover the business
to be discussed including, but not limited to, strategy,
performance and the framework of internal controls, as
well as review of its own performance and composition.
Between meetings there is regular contact with the
Investment Manager. The Board requires to be supplied,
in a timely manner, with information by the Investment
Manager, the Administrator, the Depositary and other
advisers in a form and of a quality appropriate to enable it
to discharge its duties.
The Board is responsible for the determination of the
Company’s Investment Objective and Policy and has
overall responsibility for the Company’s activities. The
Company has entered into the Investment Management
Agreement with the Investment Manager pursuant to
which the Investment Manager is responsible for the day-
to-day management of the Company.
The Board also has responsibility for ensuring that the
Company keeps proper accounting records which disclose
with reasonable accuracy at any time the financial position
of the Company and which enable it to ensure that the
financial statements comply with applicable regulation.
It is the Board’s responsibility to present a fair, balanced
and understandable Annual Report, which provides
the information necessary for shareholders to assess
the performance, strategy and business model of the
Company. This responsibility extends to the interim and
other price-sensitive public reports.
The Board has established procedures which provide
a reasonable basis for the Directors to make proper
judgement on an ongoing basis as to the financial position
and prospects of the Company.
The Investment Manager will at all times act within
the parameters set out in the Investment Policy. The
Investment Manager reports to the Board and keeps the
Board appraised of material developments on an ongoing
basis.
The Investment Manager is responsible for, among other
things:
• management of the Portfolio and further investments;
• identifying, evaluating and executing possible further
investments;
• risk management;
• reporting to the Board;
• calculating and publishing NAV, with the assistance of
the Administrator;
• assisting the Company in complying with its ongoing
obligations as a company whose shares are admitted
to trading on AIM and Euronext Growth Market; and
• directing, managing, supervising and co-ordinating
the Company’s third-party service providers, including
the Depositary and the Administrator, in accordance
with industry best practice.
TheBoardhastheabilitytospecifyfromtimetotimespecific
matters that require prior Board approval (‘‘Reserved
Matters’’) or specific matters that it believes ought to be

Corporate Governance Report
continued
34
Board Responsibilities (continued)
brought to the Board’s attention as part of the general
reporting process between the Investment Manager and
the Board. The initial list of Reserved Matters specified by
the Board includes entry into markets other than those
located in the Republic of Ireland, entry into transactions
other than those involving operational onshore wind
assets, entry into any acquisitions increasing GAV by more
than 50% and entry into material new financing facilities.
The Investment Manager shall, once every calendar quarter,
submit to the Board a report of activities, investments and
performance of the Company, including progress of all
investments, details of the pipeline of acquisitions and
any disposals and, in addition, shall promptly report to the
Board any other information which could reasonably be
considered to be material.
Committees of the Board
The Company’s Audit Committee is chaired by Kevin
McNamara and consists of a minimum of 2 members.
Emer Gilvarry and Marco Graziano are the other members
of the Audit Committee as the date of this report. In
accordance with best practice, the Company’s Chairman is
not a member of the Audit Committee, however he does
attend Audit Committee meetings as and when deemed
appropriate. The Audit Committee Report which is on
pages 38 to 41 of this report describes the work of the
Audit Committee.
TheCompanyhasestablishedaManagementEngagement
Committee, which comprises all the Directors and the
Chair is Rónán Murphy. The Management Engagement
Committee’s main function is to keep under review the
performance of the Investment Manager and review and
make recommendations on any proposed amendment
to the Investment Management Agreement. The
Management Engagement Committee will also perform a
review of the performance of other key service providers to
the Group. The Management Engagement Committee will
meet at least once a year.
In accordance with the AIC Code, the Company has also
set up Remuneration and Nomination Committees. The
Remuneration Committee comprises of all the Directors
and the Chair is Emer Gilvarry. The Remuneration
Committee’s main functions are to determine and agree
the Board policy for the remuneration of the Directors
and review and consider any additional ad hoc payments
in relation to duties undertaken over and above normal
business. The Remuneration Committee will meet at least
once a year.
The Nomination Committee comprises all of the
Directors and the Chair is Rónán Murphy. The Nomination
Committee’s main function is to review the structure, size
and composition of the Board regularly and to consider
succession planning for Directors. The Nomination
Committee will meet at least once a year. The committee
worked closely with the search firm Korn Ferry to
identify candidates who displayed the relevant skills and
experience, while also seeking to increase diversity on the
Board. This process resulted in the appointment of Marco
Graziano to the Board.
Terms of reference for the Management Engagement,
Nominations and Remuneration Committees have been
approved by the Board and are available on the Company’s
website.
Board Meetings, Committee Meetings and Directors’
Attendance
A schedule of Board and Audit Committee meetings is
circulated to the Board one year ahead including the
key agenda items for each meeting. Other Committees
meetings are arranged as and when required. The number
of meetings of the full Board of the Company attended in
the year to 31 December 2019 by each Director is set out
below:
2019
Scheduled
Board Meetings
(Total of 6)
Additional
Board Meetings
(Total of 10)
Rónán Murphy 6 9
Emer Gilvarry 6 10
Kevin McNamara 6 10
Marco Graziano(1)
n/a n/a
(1)
Appointed with effect from 30 January 2020.
During the year, there were also 10 meetings of sub-
committees of the Board. The number of meetings of
the Committees attended in the year by each Committee
member is set out below.
2019
Audit
Committee
Meetings
(Total of 4)
Management
Engagement
Committee
Meetings
(Total of 2)
Nomination
Committee
Meetings
(Total of 3)
Remuneration
Committee
Meetings
(Total of 1)
Rónán
Murphy 4 2 3 1
Emer Gilvarry 4 2 3 1
Kevin
McNamara 4 2 3 1
Marco
Graziano(1)
n/a n/a n/a n/a
(1)
Appointed with effect from 30 January 2020.
35


Corporate Governance Report
continued
Corporate
Governance
Report
Board Performance and Evaluation
Regarding performance and evaluation pursuant to
Provision 26 of the AIC Code, the Board undertakes a
formal and rigorous evaluation of its performance each
financial year.
Each individual Directors’ training and development
needs are reviewed annually. All new Directors receive an
induction, including being provided with information about
the Company and their responsibilities and meetings with
the Investment Manager. In addition, each Director will
visit operational sites and specific Board training days are
arranged involving presentations on relevant topics.
Directors’ Indemnity
Directors’ and Officers’ liability insurance cover is in place
in respect of the Directors. The Company’s articles of
association provide, subject to the provisions of Ireland
and UK legislation, an indemnity for Directors in respect
of costs which they may incur relating to the defence of
any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or
judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company’s
articles of association and in the Directors’ letters of
appointment, there are no qualifying third party indemnity
provisions in force.
The Investment Manager
The Board has entered into the Investment Management
Agreement with the Investment Manager under which
the Investment Manager is responsible for developing
strategy and the day-to-day management of the Group’s
investment portfolio, in accordance with the Group’s
investment objective and policy, subject to the overall
supervision of the Board. A summary of the fees paid to
the Investment Manager are given in note 3 to the financial
statements.
The Investment Manager’s appointment is for an initial
term of 5 years from the admission date (25 July 2017). The
Investment Management Agreement may be terminated
by either party on the conclusion of the initial term
provided the party purporting to terminate provides not
less than 12 months prior written notice of its intention to
terminate the agreement. The Investment Management
Agreement may be terminated with immediate effect and
without compensation, by either the Investment Manager
or the Company if the other party has gone into liquidation,
administration or receivership or has committed a material
breach of the Investment Management Agreement.
Risk Management and Internal Control
The Board is responsible for the Company’s system
of internal control and for reviewing its effectiveness.
The Board confirms that it has an ongoing process for
identifying, evaluating and managing the significant risks
faced by the Company. This process has been in place
throughout the year and has continued since the year end.
TheCompany’sprincipalrisksanduncertaintiesaredetailed
on pages 24 to 27 of this report. As further explained in
the Audit Committee Report, the risks of the Company are
outlined in a risk matrix which was reviewed and updated
during the year. The Board continually reviews its policy
setting and updates the risk matrix annually to ensure that
procedures are in place with the intention of identifying,
mitigating and minimising the impact of risks should
they crystallise. The Board relies on reports periodically
provided by the Investment Manager, the Depositary
and the Administrator regarding risks that the Company
faces. When required, experts are employed to gather
information, including tax and legal advisers. The Board
also regularly monitors the investment environment and
the management of the Company’s portfolio, and applies
the principles detailed in the internal control guidance
issued by the FRC. The principal features of the internal
control systems which the Investment Manager and the
Administrator have in place in respect of the Group’s
financial reporting include:
• internal reviews of all financial reports;
• review by the Board of financial information prior to its
publication; and
• authorisation limits over expenditure incurred by the
Group;
Information and Support
The Board can seek independent professional advice on
a matter, at the Company’s expense, where they judge it
necessary to discharge their responsibilities as Directors.
The Committees of the Board are provided with sufficient
resources to undertake their duties. The Directors have
access to the services of the Company Secretary who
is responsible for ensuring that Board procedures are
followed.
Whistleblowing
The Board has considered the arrangements by which
staff of the Investment Manager or Administrator may,
in confidence, raise concerns within their respective
organisations about possible improprieties in matters of
financial reporting or other matters. It has concluded that
adequate arrangements are in place for the proportionate
and independent investigation of such matters and, where
necessary, for appropriate follow-up action to be taken
within their organisation.
Amendment of Articles of Association
The Company’s Articles of Association may be amended
by the members of the Company by special resolution
(requiring a majority of at least 75 per cent of the persons
voting on the relevant resolution).

Corporate Governance Report
continued
36
General Meetings
The Company shall hold in each year a general meeting as
its annual general meeting in addition to any other meeting
in that year and shall specify the meeting as such in the
notice calling it. All general meetings other than annual
general meetings shall be called extraordinary general
meetings. The Directors may convene general meetings.
Extraordinary general meetings may also be convened on
such requisition, or in default, may be convened by such
requisitionists as provided by the Companies Act 2014.
All business shall be deemed special that is transacted
at an extraordinary general meeting. All business that
is transacted at an annual general meeting shall also be
deemed special, with the exception of the consideration of
the Company’s statutory financial statements and reports of
the Directors and Auditors, the review by the members of
the Company’s affairs, the appointment of Directors in the
place of those retiring (whether by rotation or otherwise),
the appointment and re-appointment of the Auditors and
the fixing of the remuneration of the Auditors.
Every member entitled to attend and vote at a general
meeting may appoint a proxy to attend, speak and vote on
his or her behalf provided, however, that a member may
appoint more than one proxy provided that each proxy is
appointed to exercise the rights attached to shares held
in different securities accounts. The holders of ordinary
shares have the right to receive notice of and attend and
vote at all general meetings of the Company and they are
entitled, on a poll or a show of hands, to one vote for every
ordinary share they hold.
Votes may be given either personally or by proxy. Subject
to any rights or restrictions for the time being attached to
any class or classes of shares and subject to any suspension
or abrogation of rights pursuant to the Articles, on a show
of hands every member present in person and every proxy
shall have one vote, so, however, that no individual shall
have more than one vote, and on a poll every member
shall have one vote for every share carrying rights of which
he is the holder. On a poll a member entitled to more than
one vote need not cast all his votes or cast all the votes he
uses in the same way.
Engagement with Stakeholders
The Directors are responsible for acting in a way that they
consider, in good faith, is the most likely to promote the
success of the Company for the benefit of its members.
In doing so, they should have regard for the needs of
stakeholders and the wider society. The Company’s
objective is to provide investors with an annual dividend
that increases progressively while preserving the capital
value of its investment portfolio in the long term through
reinvestment of excess cashflow and the prudent use of
portfolio leverage.
Key decisions are those that are either material to the
Company or are significant to any of the Company’s key
stakeholders. The below key decisions were made during
the year, with the overall aim of promoting the success of
the Company while considering the impact on its members
and wider stakeholders.
Dividends
The Board has approved total dividends of 6.03 cent per
share with the respect to the year. The Board are confident
that with the Company’s continuing strong cashflow and
robust dividend cover, the Company can target a dividend
of 6.06 cent per share for 2020, which the Board expect to
contribute to the Company’s target return to investors of
an IRR in excess of 7 per cent, net of fees and expenses.
Acquisitions
During the year, the Company acquired 3 new wind farms,
and invested in an increased interest in an existing wind
farm in the Portfolio. The Board and the Investment
Manager considered each investment in the context of the
Company’s Investment Policy, availability of financing and
the potential returns to investors.
Share Issues
During the year, the Company issued 251 million further
shares, raising €273 million, through 2 oversubscribed
share placings. The Investment Manager engaged with
analysts and investors throughout each share issuance
process.
The Company is committed to maintaining good
communications and building positive relationships with
all stakeholders, including shareholders, debt providers,
analysts, potential investors, suppliers and the wider
communitiesinwhichtheGroupanditsinvesteecompanies
operate. This includes regular engagement with the
Company’s shareholders and other stakeholders by the
Board, the Investment Manager and the Administrator.
Regular feedback is provided to the Board to ensure they
understand the views of stakeholders.
Relations with Shareholders
The Company welcomes the views of shareholders and
places great importance on communication with its
shareholders. The Investment Manager is available at all
reasonable times to meet with principal shareholders and
key sector analysts. The Chairman, the Senior Independent
Director and other Directors are also available to meet with
shareholders if required.
All shareholders have the opportunity to put questions to
the Company at the registered address. The AGM of the
Company will provide a forum for shareholders to meet
and discuss issues with the Directors and Investment
Manager.
37


Corporate Governance Report
continued
Corporate
Governance
Report
Relations with Shareholders (continued)
The Board receives comprehensive shareholder reports
at all quarterly Board meetings and regularly monitors
the views of shareholders and the shareholder profile of
the Company. The Board is also kept fully informed of
all relevant market commentary on the Company by the
Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt
providers. The Investment Manager ensures the Company
continues to meet its debt covenants and reporting
requirements.
The Investment Manager conducts presentations with
analysts and investors to coincide with the announcement
of the Company’s annual and interim results, providing an
opportunity for discussions and queries on the Company’s
activities, performance and key metrics. In addition to
these semi-annual presentations, the Investment Manager
meets regularly with analysts and investors to provide
further updates with how the Company and the investment
portfolio are performing.
The Directors and Investment Manager receive informal
feedback from analysts and investors, which is presented
to the Board by the Company’s Euronext Growth Advisor,
NOMAD and Broker. The Company Secretary also receives
informal feedback via queries submitted through the
Company’s website and these are addressed by the Board,
the Investment Manager or the Company Secretary, where
applicable.
The Company recognises that relationships with suppliers
are enhanced by prompt payment and the Company’s
Administrator ensures all payments are processed within
the contractual terms agreed with the individual suppliers.
The Company, via its Investment Manager, has long-term
important relationships with its operational site managers
and turbine operations and maintenance managers and
reviews performance, including health and safety, on a
monthly basis. Representatives of the site manager and
SPV Board directors, from the Investment Manager, visit
all operational sites on a regular basis and carry out safety
walks at least once a year on each site.
Similarly, environmental protection issues are reported
on every month by the site managers and annual habitat
management plans are agreed by each SPV board for all
sites to ensure that the environment in and surrounding
each wind farm is carefully protected.
The Directors recognise that the long-term success of the
Company is linked to the success of the communities in
which the Group, and its investee companies, operate.
During the year, a number of community projects were
supported by the Company’s investment portfolio
companies, further details of which can be found in the
latest ESG report, available on the Company’s website:
www.greencoat-renewables.com.
Shareholders may also find Company information or
contact the Company through its website.
On behalf of the Board,
Rónán Murphy
Director
1 March 2020
Lisdowney

Audit Committee Report
38
At the date of this report, the Audit Committee comprised
of Kevin McNamara (Chairman), Emer Gilvarry, and Marco
Graziano (with effect from 30 January 2020). The AIC Code
has a requirement that at least one member of the Audit
Committee should have recent and relevant financial
experience and the Audit Committee as a whole shall have
competence relevant to the sector. The Board is satisfied
that the Audit Committee is properly constituted in these
respects. The qualifications and experience of all Audit
Committee members are disclosed on page 20 of this
report.
The Audit Committee operates within clearly defined terms
of reference which were reviewed during the financial year.
The revised terms have been approved by the Board, and
include all matters indicated by the AIC Code and are
available for inspection on the Company’s website: www.
greencoat-renewables.com.
Audit Committee meetings are scheduled at appropriate
times in the reporting and auditing cycle. The Chairman,
other Directors and third parties may be invited to attend
meetings as and when deemed appropriate.
Meetings
The Audit Committee met 4 times up to 31 December
2019. A breakdown of Director attendance is set out in the
Corporate Governance Report on page 34. BDO attended
2 of the 4 formal Audit Committee meetings held during
the year ended 31 December 2019.
Summary of the Role and Responsibilities of the Audit
Committee
The duties of the Audit Committee include reviewing the
Interim Report, Annual Report and financial statements
and any formal announcements relating to the Company’s
financial performance.
The Audit Committee is the forum through which the
external Auditor reports to the Board and is responsible
for reviewing the terms of appointment of the Auditor,
together with their remuneration. On an ongoing basis,
the Audit Committee is responsible for reviewing the
objectivity of the Auditor along with the effectiveness of the
audit and the terms under which the Auditor is engaged to
perform non-audit services (restricted to the limited scope
review of the Interim Report). The Audit Committee is
also responsible for reviewing the Company’s corporate
governance framework, system of internal controls and risk
management, ensuring they are suitable for an investment
company.
The Audit Committee reports its findings to the Board,
identifying any matters on which it considers that action or
improvement is needed, and make recommendations on
the steps to be taken.
Overview
During the year, the Audit Committee’s discussions
have been broad ranging. In addition to the 4 formally
convened Audit Committee meetings, during the year, the
Audit Committee has had regular contact and meetings
with the Investment Manager, and the Administrator.
These meetings and discussions focused on, but were not
limited to:
• reviewing the updated risk matrix of the Company;
• reviewing the Company’s corporate governance
framework;
• reviewing the internal controls framework for the
Company, the Administrator and the Investment
Manager, considering the need for a separate internal
audit function;
• considering potential incidents of fraud and the
Company’s response thereto;
• considering the ongoing assessment of the Company
as a going concern;
• considering the principal risks and period of assessment
for the longer term viability of the Company;
• monitoring the ongoing appropriateness of the
Company’s status as an investment entity under IFRS
10, in particular following an acquisition;
• monitoring compliance with AIFMD, the AIC code and
other regulatory and governance frameworks;
• reviewing and approving the audit plan in relation to
the audit of the Company’s Annual Report and financial
statements;
• monitoring compliance with the Company’s policy on
the provision of non-audit services by the Auditor; and
• reviewing the effectiveness, resources, qualifications
and independence of the Auditor.
Financial Reporting
The primary role of the Audit Committee in relation
to financial reporting is to review, with the Investment
Manager, the Administrator and the Auditor, the
appropriateness of the Interim Report and Annual Report
and financial statements, concentrating on, amongst other
matters:
• the quality and acceptability of accounting policies and
practices;
• the clarity of the disclosures and compliance with
financial reporting standards and relevant financial and
governance reporting requirements;
• amendments to legislation and corporate governance
reporting requirements and accounting treatment of
new transactions in the period;
39


Audit Committee Report
continued
Audit
Committee
Report
Financial Reporting (continued)
• the impact of new and amended accounting standards
on the Company’s financial statements;
• whether the Audit Committee believes that proper
and appropriate processes and procedures have been
followed in the preparation of the Interim and Annual
Report and financial statements;
• consideration and recommending to the Board
for approval of the contents of the annual financial
statements and reviewing the Auditors’ report thereon
including consideration of whether the consolidated
financial statements are overall fair, balanced and
understandable;
• material areas in which significant judgements have
been applied or there has been discussion with the
Auditor; and
• any correspondence from regulators in relation to the
Company’s financial reporting.
BDO attended 2 of the 4 formal Audit Committee
meetings held during the year and have presented
their audit findings to the Audit Committee. Matters
typically discussed include the Auditor’s assessment of
the transparency and openness of interactions with the
Investment Manager and the Administrator, confirmation
that there has been no restriction in scope placed on
them, the independence of their audit and how they have
exercised professional scepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the
Audit Committee meeting in advance of the year end, the
Audit Committee discussed and approved the Auditor’s
audit plan. The Audit Committee identified the fair value
of investments as a key area of risk of misstatement in the
Company’s financial statements.
Assessment of the Fair Value of Investments
The Group’s accounting policy is to designate investments
at fair value through profit or loss. Therefore, the most
significant risk in the Group’s accounts is whether its
investmentsarefairlyvaluedduetotheuncertaintyinvolved
in determining the investment valuations. There is also an
inherent risk of management override as the Investment
Manager’s fee is calculated based on NAV as disclosed
in note 3 to the consolidated financial statements. The
Investment Manager is responsible for calculating the NAV
with the assistance of the Administrator, in accordance
with its valuation policy and is subject to the approval of its
independent valuation committee.
On a quarterly basis, the Investment Manager provides a
detailed analysis of the NAV highlighting any movements
and assumption changes from the previous quarter’s NAV.
TheAuditCommitteeconsidersandchallengesthisanalysis
and the rationale of any changes made. The Committee
has satisfied itself that the key estimates and assumptions
used in the valuation model, which are disclosed in note 2
to the consolidated financial statements, are appropriate
and that the investments have been fairly valued.
The key estimates and assumptions include the useful
life of the assets, the discount factors, the level of wind
resource, the rate of inflation, the price at which the power
and associated benefits can be sold and the amount of
electricity the assets are expected to produce.
Internal Control
The Audit Committee has established a set of ongoing
processes designed to meet the particular needs of the
Company in managing the risks to which it is exposed.
The process is one whereby the Investment Manager
has identified the key risks to which the Company is
exposed, and recorded them on a risk matrix together
with the controls employed to mitigate these risks and
has a process in place to identify emerging risks and to
determine whether any actions are required. A residual
risk rating has been applied to each risk. The Audit
Committee is responsible for reviewing the risk matrix and
associated controls before recommending to the Board for
consideration and approval, challenging the Investment
Manager’s assumptions to ensure a robust internal risk
management process.
The Audit Committee considers risk and strategy regularly,
and formally reviewed the updated risk matrix in Q1
2020 and will continue to do so at least annually. By their
nature, these procedures provide a reasonable, but not
absolute, assurance against material misstatement or loss.
Regular reports will be provided to the Audit Committee
highlighting material changes to risk ratings.
The Audit Committee reviewed the Group’s principal
risks and uncertainties as at 30 June 2019, to determine
that these were unchanged from those disclosed in the
Company’s 2018 Annual Report and remained the most
likely to affect the Group in the second half of the year.
During the year, the Audit Committee also discussed
and reviewed the internal controls framework in place at
the Investment Manager and the Administrator in depth.
Discussions focused on 3 lines of defence: assurances at
operational level; internal oversight; and independent
objective assurance.
The Audit Committee concluded that these frameworks
were appropriate for the identification, assessment,
management and monitoring of financial and regulatory
risks, with particular regard to the protection of the
interests of the Company’s shareholders.

Audit Committee Report
continued
40
Internal Audit
The Audit Committee continues to review the need for an
internal audit function and has decided that the systems,
processes and procedures employed by the Company,
Investment Manager and Administrator, including their
own internal controls and procedures, provide sufficient
assurance that an appropriate level of risk management
and internal control is maintained. In addition to this, the
Company’s external Depositary provides cash monitoring,
asset verification and oversight services to the Company.
The Investment Manager is full scope AIFM, regulated by
the FCA in the UK and has a robust framework of internal
controls and an independent compliance function.
The Audit Committee has therefore concluded that
Shareholders’ investments and the Company’s assets are
adequately safeguarded and an internal audit function
specific to the Company is considered unnecessary.
The Audit Committee shall meet investors in relation to
the Company’s financial reporting and internal controls,
should it be deemed appropriate.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the
audit process by considering BDO‘s fulfilment of the
agreed audit plan through the reporting presented to
the Audit Committee by BDO and the discussions at
the Audit Committee meeting, which highlighted the
major issues that arose during the course of the audit. In
addition, the Audit Committee also sought feedback from
the Investment Manager and the Administrator on the
effectiveness of the audit process. For this financial year,
the Audit Committee was satisfied that there had been
appropriate focus and challenge on the primary areas of
audit risk and assessed the quality of the audit process to
be good.
Non-Audit Services
Details of fees paid to BDO during the year are disclosed in
note 5 to the consolidated financial statements. The Audit
Committee approved these fees after a review of the level
and nature of work to be performed and are satisfied that
they are appropriate for the scope of the work required.
The Audit Committee seeks to ensure that any non-audit
services provided by the external Auditor do not conflict
with their statutory and regulatory responsibilities, as well
as their independence, before giving written approval
prior to their engagement. The Audit Committee was
satisfied that BDO had adequate safeguards in place and
that provision of these non-audit services did not provide
threats to the Auditor’s independence.
The Audit Committee has a policy regarding the provision
of non-audit services by the external Auditor which
precludes the external Auditor from providing any of the
prohibited non-audit services as listed in Article 5 of the
EU Directive Regulation (EU) No 537/2014. The Audit
Committee monitors the Group’s expenditure on non-
audit services provided by the Company’s Auditor who
should only be engaged for non-audit services where they
are deemed to be the most commercially viable supplier
and prior approval of the Audit Committee has been
sought.
Independence
The Audit Committee is required to consider the
independence of the external Auditor. In fulfilling this
requirement, the Audit Committee has considered a
report from BDO describing its arrangements to identify,
report and manage any conflict of interest and the extent
of non-audit services provided by them.
The Audit Committee has concluded that it considers BDO
to be independent of the Company and that the provision
of the non-audit services described above is not a threat
to the objectivity and independence of the conduct of the
audit.
Re-appointment
BDO has been the Company’s Auditor from its
incorporation on 15 February 2017. The Auditor proposes
to rotate the audit partner responsible for the Group audit
every 5 years. Therefore, the lead partner may rotate after
the completion of the 2022 year end audit.
The external audit contract is intended to be put to tender
at least every 10 years. The Audit Committee shall give
advance notice of any retendering plans within the Annual
Report. The Audit Committee has considered the re-
appointment of the Auditor and decided not to put the
provision of the external audit out to tender at this time.
As described above, the Audit Committee reviewed the
effectiveness and independence of the Auditor and remain
satisfied that the Auditor provides effective independent
challenge to the Board, the Investment Manager and
the Administrator. The Audit Committee will continue
to monitor the performance of the Auditor on an annual
basis and will consider their independence and objectivity,
taking account of appropriate guidelines.
The Audit Committee has therefore recommended to the
Board that BDO be proposed for re-appointment as the
Company’s Auditor at the 2020 AGM of the Company.
41


Audit Committee Report
continued
Audit
Committee
Report
Annual General Meeting
The Chairman of the Audit Committee will be present at
the Company’s AGM to answer questions on the Audit
Committee’s activity and matters within the scope of the
Audit Committee’s responsibilities.
Kevin McNamara
Director
1 March 2020
Cloosh Valley

Independent Auditor’s Report
42
To the members of 
Opinion
We have audited the financial statements of Greencoat
Renewables PLC (“Company”) and its subsidiaries
(“Group”) for the financial year ended 31 December
2019, which comprise the Consolidated Statement of
Comprehensive Income, Consolidated and Company
Statement of Financial Position, Consolidated and
Company Statement of Changes in Equity, Consolidated
and Company Statement of Cash Flows, and the related
notes including the summary of significant accounting
policies set out in note 1. The financial reporting framework
that has been applied in their preparation is Irish Law
and International Financial Reporting Standards (“IFRS”)
as adopted by the European Union and, as regards the
Company financial statements, as applied in accordance
with the provisions of the Companies Act 2014.
In our opinion:
• the Group financial statements give a true and fair view
of the assets, liabilities and financial position of the
Group as at 31 December 2019 and of its profit for the
financial year then ended;
• the Company Statement of Financial Position gives a
true and fair view of the assets, liabilities and financial
position of the Company as at 31 December 2019;
• the Group financial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union;
• the Company financial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union as applied in accordance with the
provisions of the Companies Act 2014; and
• the Group financial statements and Company financial
statements have been properly prepared in accordance
with the requirements of the Companies Act 2014 and,
as regards the Group financial statements, Article 4 of
the IAS Regulation.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (“ISAs (Ireland)”) and
applicable law. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our
report. We are independent of the Group and Company
in accordance with ethical requirements that are relevant
to our audit of financial statements in Ireland, including
the Ethical Standard as applied to public interest entities
issued by the Irish Auditing and Accounting Supervisory
Authority (“IAASA”), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the financial statements of the current financial
year and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Related Disclosures
Refer to:
• Note 1 – Significant accounting policies;
• Note 2 – critical accounting judgments, estimates and
assumptions;
• Note 4 – return on investments; and
• Note 9 – investments at fair value through profit or loss;
of the accompanying financial statements.
Key Audit Matter
The valuation of investments is a subjective accounting
estimate where there is an inherent risk of management
override arising from the investment valuations being
prepared by the Investment Manager, who is remunerated
based on the Net Asset Value (“NAV”) of the Company.
The entire investment portfolio is represented by
unquoted equity and loan investments and all investments
are individually material to the financial statements.
Related Disclosures
Refer to:
• Note 1 – Significant accounting policies;
• Note 2 - critical accounting judgments, estimates and
assumptions;
• Note 4 – return on investments; and
• Note 9 – investments at fair value through profit or loss;
of the accompanying financial statements.
43


Independent Auditor’s Report
continued
Independent
Auditor’s
Report
Audit Response
For investments valued using a discounted cash flow
model we performed the following procedures:
• Challenged the appropriateness of the selection and
application of key assumptions in the discounted cash
flow model including discount rate, energy yield, power
price, inflation rate and asset life by benchmarking to
available industry data and consulting with our internal
valuation specialists;
• Agreed energy yield, power price, inflation rate and
asset life used in the model to independent reports;
• For new investments we obtained and reviewed all key
agreements and contracts and considered if they were
accurately reflected in the valuation model;
• For existing investments we analysed changes in
significant assumptions compared with assumptions
audited in previous periods and vouched these to
independent evidence including available industry
data;
• Used spreadsheet analysis tools to assess the integrity
of the valuation models and track changes to inputs or
structure;
• Agreed cash and other net assets to bank statements
and investee company management accounts;
• Considered the accuracy of forecasting by comparing
previous forecasts to actual results;
• We critically evaluated and challenged management’s
assessment as to the recoverability of the loan
investments;
• We vouched to loan agreements and verified the terms
of the loan; and
• We have reviewed the performance of the loan
investments during the financial year under review.
Our application of materiality
We define materiality as the magnitude of misstatement
in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person
would be changed or influenced. We use materiality both
in planning the scope of our audit work and in evaluating
the results of our work.
Based on our professional judgement, we determined
materiality for the financial statements as a whole as
follows:
• For the purpose of our audit we used overall materiality
of €13m, which represents approximately 2% of the
Group and Company’s NAV.
• We applied this threshold, together with qualitative
considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures
and to evaluate the effect of misstatements on the
Financial Statements as a whole.
• We chose NAV as the benchmark because of the Group
and Company’s asset based structure. We selected 2%
based on our professional judgment, noting that it is
also within the range of commonly accepted asset-
related benchmarks.
• In addition, we used a specific materiality for the
purpose of testing transactions and balances which
impact on the Group’s realised return. Specific
materiality of €1.7m represents approximately 10% of
the profit for the year.
We agreed with the Audit Committee that we would report
to the Audit Committee all audit differences in excess of
€0.65m, as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds.
Conclusions relating to going concern
We have nothing to report in respect of the following
matters in relation to which ISAs (Ireland) require us to
report to you where;
• the directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is not appropriate; or
• the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the Group and the
Company’s ability to continue to adopt the going
concern basis of accounting for a period of at least
twelve months from the date when the financial
statements are authorised for issue.
Other information
The directors are responsible for the other information.
The other information comprises the information included
in the annual report other than the financial statements
and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we
are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.

Independent Auditor’s Report
44
Opinions on Other Matters Prescribed by the
Companies Act 2014
Based solely on the work undertaken in the course of the
audit, we report that:
• in our opinion, the information given in the Directors’
report is consistent with the financial statements; and
• in our opinion, the Directors’ report has been prepared
in accordance with the Companies Act 2014.
We have obtained all the information and explanations
which we consider necessary for the purposes of our audit.
In our opinion, the accounting records of the Company
were sufficient to permit the financial statements to be
readily and properly audited and the Company Statement
of Financial Position is in agreement with the accounting
records.
Matters on which we are required to report by
exception
Based on the knowledge and understanding of the
Group and the Company and its environment obtained
in the course of the audit, we have not identified material
misstatements in the Directors’ report.
We are also required to review:
• the Directors’ statement in relation to going concern
and longer-term viability;
• the part of the Corporate Governance Statement
relating to the Company’s compliance with the
provisions of the AIC Code specified for our review;
and
• certain elements of disclosures in the report to
shareholders by the Board of Directors’ remuneration
committee.
In addition, the Companies Act 2014 requires us to report
to you if, in our opinion, the disclosures of directors’
remuneration and transactions required by sections 305 to
312 of the Act are not made.
We have nothing to report in this regard.
Respective Responsibilities
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as they determine is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group and Company’s ability
to continue as going concerns, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless management either
intends to liquidate the Group or the Company or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the IAASA’s
website at: http://www.iaasa.ie/getmedia/b2389013-
1cf6-458b-9b8f-a98202dc9c3a/Desc ription_of_auditors_
responsiblities_for_audit.pdf
This description forms part of our Auditor’s report.
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company’s members, as
a body, in accordance with section 391 of the Companies
Act 2014. Our audit work has been undertaken so that we
might state to the Company’s members those matters we
are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the Company and the Company’s members, as a
body, for our audit work, for this report, or for the opinions
we have formed.
Brian Hughes
For and on behalf of BDO,
Dublin,
Ireland
Statutory Audit Firm
AI223876
1 March 2020
45

­
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
Financial
Statements
Note
For the year ended
31 December 2019
€’000
For the year ended
31 December 2018
€’000
Return on investments 4 29,475 56,429
Other income 19 3,015 2,004
Total income and gains 32,490 58,433
Operating expenses 5 (6,734)‌‌ (4,533)‌‌
Investment acquisition costs (1,397)‌‌ (6,170)‌‌
Operating profit 24,359 47,730
Finance expense 13 (6,025)‌‌ (4,166)‌‌
Profit for the year before tax 18,334 43,564
Taxation 6 (1,237)‌‌ –
Profit for the year after tax 17,097 43,564
Profit and total comprehensive income attributable to:
Equity holders of the Company 17,097 43,564
Earnings per share
Basic and diluted earnings from continuing
operations in the year (cent) 7 3.46 13.81
The accompanying notes on pages 51 to 75 form an integral part of the consolidated financial statements.
­
Payables 12 (3,470)‌‌ (7,936)‌‌
Net current liabilities (200,107)‌‌ (1,414)‌‌
Non current liabilities
Loans and borrowings 13 – (362,031)‌‌
Net assets 650,000 393,954
Capital and reserves
Called up share capital 15 6,306 3,800
Share premium account 15 385,669 120,009
Other distributable reserves 199,936 229,153
Retained earnings 58,089 40,992
Total shareholders’ funds 650,000 393,954
Net assets per share (cent) 16 103.1 103.7
Authorised for issue by the Board on 1 March 2020 and signed on its behalf by:
Rónán Murphy
Chairman
Kevin McNamara
Director
The accompanying notes on pages 51 to 75 form an integral part of the consolidated financial statements.
47

­
Company Statement of Financial Position
As at 31 December 2019
Financial
Statements
Note
31 December 2019
€’000
31 December 2018
€’000
Non current assets
Investments at fair value through profit or loss 9 648,797 392,534
648,797 392,534
Current assets
Receivables 11 3,015 2,025
Cash and cash equivalents 188 759
3,203 2,784
Current liabilities
Payables 12 (2,000)
‌‌ (1,364)‌‌
Net current assets 1,203 1,420
Net assets 650,000 393,954
Capital and reserves
Called up share capital 15 6,306 3,800
Share premium account 15 385,669 120,009
Other distributable reserves 199,936 229,153
Retained earnings 58,089 40,992
Total shareholders’ funds 650,000 393,954
Net assets per share (cent) 16 103.1 103.7
The Company has taken advantage of the exemption under section 304 of the Companies Act 2014 and accordingly has
not presented a Statement of Comprehensive Income for the Company alone. The profit after tax of the Company for the
year was €17,097,394 (2018: €43,563,872).
Authorised for issue by the Board on 1 March 2020 and signed on its behalf by:
Rónán Murphy
Chairman
Kevin McNamara
Director
The accompanying notes on pages 51 to 75 form an integral part of the consolidated financial statements.
Net cash flows from operating activities 17 (3,886)‌‌ 1,460
Cash flows from investing activities
Loans advanced to Group companies 9 (268,447)‌‌ (109,384)‌‌
Repayment of loans advanced to Group companies 9 29,450 6,700
Repayment of shareholder loan investments 9 3,294 –
Investment acquisition costs – (324)‌‌
Net cash flows from investing activities (235,703)‌‌ (103,008)‌‌
Cash flows from financing activities
Issue of share capital 15 272,700 111,100
Payment of issue costs (4,390)‌‌ (2,051)‌‌
Dividends paid 8 (29,217)‌‌ (20,847)‌‌
Finance costs (75)‌‌ (409)‌‌
Net cash flows from financing activities 239,018 87,793
Net decrease in cash and cash equivalents during the year (571)‌‌ (13,755)‌‌
Cash and cash equivalents at the beginning of the year 759 14,514
Cash and cash equivalents at the end of the year 188 759
The accompanying notes on pages 51 to 75 form an integral part of the consolidated financial statements.

­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
Financial
Statements
1. Significant accounting policies
Basis of accounting
The consolidated financial statements have been prepared in accordance with IFRS to the extent that they have been
adopted by the EU and with those parts of the Companies Act 2014 applicable to companies reporting under IFRS.
These consolidated financial statements are presented in Euro (“€”)‌‌which is the currency of the primary economic
environment in which the Group operates and are rounded to the nearest thousand, unless otherwise stated.
The consolidated financial statements have been prepared on the historical cost basis, as modified for the measurement
of certain financial instruments at fair value through profit or loss. The financial statements have been prepared on the
going concern basis. The principal accounting policies are set out below.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2019
that had a significant effect on the Group or Company’s financial statements. Furthermore, none of the amendments to
standards that are effective from that date had a significant effect on the financial statements.
IFRS 16 “Leases” sets out the principles for the recognition, measurement, presentation and disclosure of leases on or
after 1 January 2019. As the Group’s investments are held at fair value through profit or loss and leases are held at SPV
level, the introduction of IFRS 16 has not had a material impact on the reported results and financial position of the Group.
As tax legislation can be difficult and judgemental to apply, uncertainties over tax are common. In the absence of specific
guidance, there has been diversity in how companies account for uncertainties over income tax treatments. A new
interpretation, IFRIC 23 “Uncertainty over Income Tax Treatments”, clarifies the requirements and is likely to result in
changes for some companies for periods beginning on or after 1 January 2019. The introduction of IFRIC 23 has had no
impact on the reported results and financial position of the Group.
New and amended standards and interpretations not applied
Other accounting standards and interpretations have been published and will be mandatory for the Company’s
accounting periods beginning on or after 1 January 2020 or later periods. The impact of these standards is not expected
to be material to the reported results and financial position of the Group.
Accounting for subsidiaries
The Directors have concluded that the Group has all the elements of control as prescribed by IFRS 10 ‘‘Consolidated
Financial Statements’’ in relation to all its subsidiaries and that the Company satisfies the criteria to be regarded as an
investment entity as defined in IFRS 10, IFRS 12 ‘‘Disclosure of Interests in Other Entities’’ and IAS 27 ‘‘Consolidated and
Separate Financial Statements’’. The three essential criteria are such that the entity must:
1.	
Obtain funds from one or more investors for the purpose of providing these investors with professional investment
management services;
2.	
Commit to its investors that its business purpose is to invest its funds solely for returns from capital appreciation,
investment income or both; and
3.	
Measure and evaluate the performance of substantially all of its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an investment time frame is critical. An investment entity should
not hold its investments indefinitely but should have an exit strategy for their realisation. Although the Company has
invested in equity interests in wind farms that have an indefinite life, the underlying wind farm assets that it invests in
have an expected life of 30 years. The Company intends to hold these wind farms for the remainder of their useful life to
preserve the capital value of the portfolio. However, as the wind farms are expected to have no residual value after their
30 year life, the Directors consider that this demonstrates a clear exit strategy from these investments.
Notwithstanding this, IFRS 10 requires subsidiaries that provide services that relate to the investment entity’s investment
activities but are not themselves investment entities to be consolidated. Accordingly, the annual financial statements
include the consolidated financial statements of the Company and Holdco. In respect of these entities, intra-Group
balances and any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated
financial statements. Unrealised losses are eliminated unless the costs cannot be recovered. The consolidated financial
statements of subsidiaries that are included in the consolidated financial statements are included from the date that
control commences until the dates that control ceases.
­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
52
Accounting for subsidiaries (continued)
Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 ‘‘Fair Value
Measurement’’ and IFRS 9 as permitted by IAS 27. The financial support provided by the Group to its unconsolidated
subsidiaries is disclosed in note 9.
Consolidation
Subsidiaries are all entities (including structured entities)‌‌over which the Company has control. The Company controls an
entity when the Company has power over the entity, is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Company. They are derecognised from the date that control ceases.
The Company applies the acquisition method to account for business combinations. The consideration transferred for
the acquisition of a subsidiary (for accounting purposes)‌‌is the fair value of the assets transferred, the liabilities incurred
to the former owners of the acquiree and the equity interests issued by the Company. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date.
The Company recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair
value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net
assets.
The following table outlines the consolidated entities.
Investment Date of Control
Registered
Office
Ownership
%
Country of
Incorporation
Place of
Business
GR Wind Farms
1 Limited 9 March 2017
Riverside One, Sir John
Rogerson’s Quay, Dublin 2 100% Ireland Ireland
Based on control, the results of Holdco are consolidated into the Consolidated Financial Statements. Holdco 2 was
dissolved in the year and is no longer consolidated into the Consolidated Financial Statements.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated
on consolidation. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been
adjusted to conform to the Company’s accounting policies. During the year, no such adjustments have been made, given
all subsidiaries have uniform accounting policies.
Acquisition method
The acquisition method is used for all business combinations.
Steps in applying the acquisition method are:
• Identification of the acquirer.
• Determination of the acquisition date.
• Recognition and measurement of the identifiable assets acquired, the liabilities assumed and any non-controlling
interest (NCI, formerly called minority interest)‌‌in the acquiree.
• Recognition and measurement of goodwill or a gain from a bargain purchase.
The guidance in IFRS 10 “Consolidated Financial Statements” is used to identify an acquirer in a business combination,
i.e. the entity that obtains control of the acquiree. An acquirer considers all pertinent facts and circumstances when
determining the acquisition date, i.e. the date on which it obtains control of the acquiree. The acquisition date may be a
date that is earlier or later than the closing date.
1. Significant accounting policies (continued)
53

­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset
and the net amount reported in the Consolidated Statement of Financial Position when there is a currently enforceable
legal right to offset the recognised amounts and the Group intends to settle on a net basis or realise the asset and liability
simultaneously.
At 31 December 2019 and 2018, the carrying amounts of cash and cash equivalents, receivables, payables and borrowings
reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments
or the relatively short period of time between the original instruments and their expected realisation. The fair value of
advances and other balances with related parties which are short-term or repayable on demand is equivalent to their
carrying amount.
Financial assets
The classification of financial assets at initial recognition depends on the purpose for which the financial asset was
acquired and its characteristics.
All financial assets are initially recognised at fair value. All purchases of financial assets are recorded at the date on which
the Group and the Company became party to the contractual requirements of the financial asset.
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They principally comprise cash and trade and other receivables and they are initially recognised at fair value
and subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Transaction costs are recognised in the Consolidated Statement of Comprehensive Income as incurred. The Group and
Company assesses whether there is any objective evidence that financial assets are impaired at the end of each reporting
period. If any such evidence exists, the amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The amount of any impairment is recognised in the Consolidated Statement of Comprehensive Income. Impairment
provisions for loans and receivables are recognised based on a forward looking expected credit loss model. All financial
assets assessed under this model are immaterial to the financial statements.
Investments at Fair Value Through Profit or Loss
Investments are designated upon initial recognition as held at fair value through profit or loss. Movements in fair value
are recognised in the Consolidated Statement of Comprehensive Income during the reporting period. As shareholder
loan investments form part of a managed portfolio of assets whose performance is evaluated on a fair value basis, loan
investments are designated at fair value in line with equity investments.
The Company’s loan and equity investments in Holdco are held at fair value through profit or loss. Gains or losses
resulting from the movement in fair value are recognised in the Company’s Statement of Comprehensive Income at each
valuation point.
Investments are initially recognised at cost, being the fair value of consideration given. Transaction costs are recognised
in the Consolidated Statement of Comprehensive Income as incurred.
Financial assets are recognised/derecognised at the date of the purchase/disposal.
Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an
arm’s length transaction. Fair value is calculated on an unlevered, discounted cash flow basis in accordance with IFRS 13
and IFRS 9. Gains or losses resulting from the revaluation of investments are recognised in the Consolidated Statement
of Comprehensive Income.
1. Significant accounting policies (continued)
­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
54
De-recognition of financial assets
A financial asset (in whole or in part)‌‌is derecognised either:
• When the Group has transferred substantially all the risks and rewards of ownership; or
• When it has neither transferred or retained substantially all the risks and rewards and when it no longer has control
over the assets or a portion of the asset; or
• When the contractual right to receive cash flow has expired.
Financial liabilities
Financial liabilities are classified according to the substance of the contractual agreements entered into.
All financial liabilities are initially recognised at fair value net of transaction costs incurred. All financial liabilities are
recorded on the date on which the Group becomes party to the contractual requirements of the financial liability.
All loans and borrowings are initially recognised at cost, being fair value of the consideration received, less issue costs
where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate method. Loan balances as at the year end have not been discounted to
reflect amortised cost, as the amounts are not materially different from the outstanding balances.
The Group’s other financial liabilities measured at amortised cost include trade and other payables and other short term
monetary liabilities which are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest rate method.
A financial liability (in whole or in part)‌‌is derecognised when the Group has extinguished its contractual obligations, it
expires or is cancelled. Any gain or loss on de-recognition is taken to the Consolidated Statement of Comprehensive
Income.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period to which they
relate on an accruals basis using the effective interest rate method.
Share capital
Financial instruments issued by the Company are treated as equity if the holder has only a residual interest in the assets
of the Company after the deduction of all liabilities. The Company’s ordinary shares are classified as equity instruments.
Share issue costs of the Company directly attributable to the issue and listing of shares are charged to the share premium
account. Share issue costs include those incurred in connection with the placing and admission which include fees
payable under a placing agreement, legal costs and any other applicable expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with banks and other short-term highly liquid
deposits with original maturities of 3 months or less, that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Foreign currencies
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated
Statement of Comprehensive Income.
Dividends
Dividends payable are recognised as distributions in the consolidated financial statements when the Company’s obligation
to make payment has been established.
Income recognition
Interest income on shareholder loan investments is recognised when the Group’s entitlement to receive payment is
established.
1. Significant accounting policies (continued)
55

­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
Income recognition (continued)
Other income is accounted for on an accruals basis.
Gains or losses resulting from the movement in fair value of the Group’s and Company’s investments held at fair value
through profit and loss are recognised in the Consolidated Statement of Comprehensive Income at each valuation point.
Expenses
Expenses are accounted for on an accruals basis.
Taxation
Under the current system of taxation in Ireland, the Company is liable to taxation on its operations in Ireland.
Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or
substantively enacted at the date of the Consolidated Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial
recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments, except where the
Company is able to control the timing of the reversal of the difference and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period
when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Statement of
Comprehensive Income except when it relates to items charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis. Deferred tax assets and liabilities are not discounted.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors, as a whole.
The key measure of performance used by the Board to assess the Group’s performance and to allocate resources is the
total return on the Group’s net assets, as calculated under IFRS, and therefore no reconciliation is required between the
measure of profit or loss used by the Board and that contained in the consolidated financial statements.
For management purposes, the Group is organised into one main operating segment, which invests in wind farm assets.
All of the Group’s income is generated within Ireland. All of the Group’s non-current assets are located in Ireland.
1. Significant accounting policies (continued)
­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
56
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires the application of estimates and assumptions which may affect the
results reported in the financial statements. Estimates, by their nature, are based on judgement and available information.
Classification of an investment entity
One area of judgement relates to the Company’s classification as an investment entity as defined in IFRS 10, IFRS 12 and
IAS 27. IFRS 10 requires that a Company has to fulfil 3 criteria to be an investment entity:
• Obtains funds from one or more investors for the purpose of providing those investor(s)‌‌with investment management
services;
• Commits to its investor(s)‌‌that its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and
• Measures and evaluates the performance of substantially all of its investments on a fair value basis.
IFRS 10 also determines that an investment entity would have the following typical characteristics:
• It has more than one investment;
• It has more than one investor;
• It has investors that are not related parties; and
• It has ownership interest in the form of equity or similar interests.
An entity that does not display all of the above characteristics could, nevertheless, meet the definition of an investment
entity.
The Directors have concluded that the Company meets the definition of an investment entity.
Fair value of investments
The key assumptions that have a significant impact on the carrying value of investments that are valued by reference to
the discounted value of future cash flows are the useful life of the assets, the discount factors, the level of wind resource,
the rate of inflation, the price at which the power and associated benefits can be sold and the amount of electricity the
assets are expected to produce. A sensitivity analysis of these assumptions is included in note 9.
Useful lives are based on the Investment Manager’s estimates of the period over which the assets will generate revenue
which are periodically reviewed for continued appropriateness. The standard assumption used for the useful life of a wind
farm is 30 years, which is commonly used by similar investment companies that invest in operating wind farms. Other
factors for consideration are the lengths of site leases and planning permission of the wind farms, which the Investment
Manager monitors closely. The weighted average lease length across the portfolio is 29 years with many leases having
options to extend and planning permission across the portfolio is between 20 and 25 years from commissioning. The
Investment Manager fully expects to be able to renew leases and planning.
The discount factors are subjective and therefore it is feasible that a reasonable alternative assumption may be used
resulting in a different value. The discount factors applied to the cash flows are reviewed annually by the Investment
Manager to ensure they are at the appropriate level. The Investment Manager will take into consideration market
transactions, where of similar nature, when considering changes to the discount factors used.
The revenues and expenditure of the investee companies are frequently, partly or wholly subject to indexation and an
assumption is made that inflation will increase at a long-term rate.
The price at which the output from the revenue generating assets is sold is a factor of both wholesale electricity prices
and the revenue received from the Government support regime. Future power prices are estimated using external third
party forecasts which take the form of specialist consultancy reports. The future power price assumptions are reviewed
as and when these forecasts are updated. There is an inherent uncertainty in future wholesale electricity price projection.
Specifically commissioned external reports are used to estimate the expected electrical output from the wind farm assets
taking into account the expected average wind speed at each location and generation data from historical operation.
The actual electrical output may differ considerably from that estimated in such a report mainly due to the variability of
actual wind to that modelled in any one period. Assumptions around electrical output will be reviewed only if there is
good reason to suggest there has been a material change in this expectation.
57

­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
Going concern
After making enquiries and noting the Group is in a net current liabilities position of €200.1 million as at 31 December
2019, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. The Directors expect the Group’s loan facilities to be renewed before
its final maturity date. Accordingly, they continue to adopt the going concern basis of accounting in preparing the
Consolidated Financial Statements.
3. Investment management fees
Under the terms of the Investment Management Agreement, the Investment Manager is entitled to a management fee
from the Company, which is calculated quarterly in arrears in accordance with the Investment Management Agreement.
The Fee shall be calculated in respect of each quarter and in each case based upon the NAV:
• on that part of the NAV up to and including €1 billion, an amount equal to 0.25 per cent of such part of the NAV; and
• on that part of the NAV in excess of €1 billion, an amount equal to 0.2 per cent of such part of the NAV.
Investment management fees paid or accrued in the years ended 31 December 2019 and 31 December 2018 were as
­
Notes to the Consolidated Financial Statements
59

Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of fair value hierarchy which the financial assets or
financial liabilities are recognised is on the basis of the lowest level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their entirety into only one of the following 3 levels:
• Level 1 – quoted prices (unadjusted)‌‌in active markets for identical assets or liabilities;
• Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices)‌‌or indirectly (i.e. derived from prices)‌‌; and
• Level 3 – inputs for assets or liabilities that are not based on observable market data (unobservable inputs)‌‌.
The determination of what constitutes ‘observable’ requires significant judgement by the Group. The Group considers
observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively involved in the relevant market.
The only financial instruments held at fair value are the investments held by the Group in the SPVs, which are fair valued
at each reporting date. The Group’s investments have been classified within level 3 as the investments are not traded
and contain unobservable inputs. The Company’s investments are all considered to be level 3 assets. As the fair value of
the Company’s equity and loan investments in Holdco is ultimately determined by the underlying fair values of the SPV
investments, the Company’s sensitivity analysis of reasonably possible alternative input assumptions is the same as for
the Group.
Due to the nature of the investments, they are always expected to be classified as level 3. There have been no transfers
between levels during the year ended 31 December 2019.
Any transfers between the levels would be accounted for on the last day of each financial period.
The Investment Manager carries out the asset valuations, which form part of the NAV calculation. These asset valuations
are based on discounted cash flow methodology in line with IPEV Valuation Guidelines and adjusted where appropriate,
given the special nature of wind farm investments.
9. Investments at fair value through profit or loss (continued)
­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
62
Fair value measurements (continued)
Valuations are derived using a discounted cashflow methodology in line with IPEV Valuation Guidelines and take into
account, inter alia, the following:
• due diligence findings where relevant;
• the terms of any material contracts including PPAs;
• asset performance;
• power price forecast from a leading market consultant; and
• the economic, taxation or regulatory environment.
The DCF valuation of the Group’s investments represents the largest component of GAV and the key sensitivities are
considered to be the discount rate used in the DCF valuation and long-term assumptions in relation to inflation, energy
yield, power prices, and asset life.
The DCF valuation is produced by discounting the individual wind farm cashflows on an unlevered basis. The equivalent
levered discount rate would be approximately 2 per cent higher than the blended portfolio discount rate.
The base case discount rate is a blend of a lower discount rate for fixed cash flows and a higher discount rate for merchant
cash flows. The blended discount rate reduced by 0.3 per cent from 31 December 2018 reflecting market valuations
observed throughout 2019. The blended discount rates as at 31 December 2019 does remain between 6 per cent and
7 per cent, which is considered to be an appropriate base case for sensitivity analysis.
A variance of +/- 0.25 per cent is considered to be a reasonable range of alternative assumptions for discount rate.
The base case long-term CPI assumption is 2.00 per cent.
Base case energy yield assumptions are P50 (50 per cent probability of exceedance over a 10 year period)‌‌forecasts
produced by expert consultants based on long-term wind data and operational history. The P90 (90 per cent probability
of exceedance over a 10 year period)‌‌and P10 (10 per cent probability of exceedance over a 10 year period)‌‌sensitivities
reflect the future variability of wind and the uncertainty associated with the long-term data source being representative
of the long-term mean. Given their basis on long-term operating data, it is not anticipated that base case energy yield
assumptions will be adjusted (other than any wind energy true-ups with compensating purchase price adjustments)‌‌.
Long-term power price forecasts are provided by a leading market consultant, updated quarterly and adjusted by the
Investment Manager where more conservative assumptions are considered appropriate. Base case real power prices
increase from approximately €54/MWh (2030)‌‌to approximately €61/MWh (2040)‌‌. The sensitivity analysis assumes a 10 per
cent increase or decrease in power prices relative to the base case for every year of the asset life’
The base case asset life is 30 years. The sensitivity below assumes the asset life may be 5 years shorter or longer than the
base case, which is impacted by commercial aspects of each investment, the renewals of site leases, planning permission
and grid connection agreements.
9. Investments at fair value through profit or loss (continued)
63

­Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
Sensitivity analysis
The fair value of the Group’s investments is €850,106,884 (2018: €757,398,839)‌‌
. The following analysis is provided to
illustrate the sensitivity of the fair value of investments to a change in an individual input, while all other variables remain
constant. The Board considers these changes in inputs to be within reasonable expected ranges. This is not intended to
imply the likelihood of change or that possible changes in value would be restricted to this range.
Input Base case Change in input
Change in fair
value of
investments
Facility arrangement fees 139 140
Professional fees 36 656
Finance expense 6,025 4,166
The loan balance as at 31 December 2019 and 31 December 2018 has not been adjusted to reflect amortised cost, as the
amount is not materially different from the outstanding balances.
In relation to loans and borrowings, the Directors are of the view that the current market interest rate is not significantly
different to the respective instrument’s contractual interest rates; therefore the fair value of the loans and borrowings at
the end of the reporting periods is not significantly different from their carrying amounts.
As at 31 December 2019, the Group had a revolving credit facility with AIB, BNP Paribas, Commerzbank, RBC and
Santander. The facility has a margin of 1.8 per cent plus EURIBOR (at zero per cent floor)‌‌per annum with a final maturity
date of 19 December 2020. The Directors expect the Group’s revolving credit facility to be refinanced before its final
maturity date.
67

­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
13. Loans and borrowings (continued)
‌‌
The Group is obliged to pay a quarterly commitment fee of 0.63 per cent per annum of the undrawn commitment
available under the facility. Lenders’ security consists of comprehensive debentures incorporating a fixed and floating
charge over the Group including a charge over the Group’s bank accounts and shares in the underlying investments.
As at 31 December 2019, the principal balance of the facility was €206,000,000 (2018: €362,030,526)‌‌, accrued interest was
€123,600 (2018: €536,179)‌‌and the outstanding commitment fee was €36,540 (2018: €28,135)‌‌.
14. Contingencies & Commitments
At the time of acquisition, wind farms which had less than 12 months’ operational data may have a wind energy true-up
applied, whereby the purchase price for these wind farms may be adjusted so that it is based on a 2 year operational
record, once operational data has become available.
As disclosed in note 9, the Group agreed an amount of €2.9 million to be received from Impax in settlement of the
Glanaruddery wind energy true-up. Also, during the year the Group agreed the wind energy true-up for Lisdowney, which
resulted in no net payment.
During the year, the Group acquired Killala wind farm for an initial consideration of €37.2 million for the 5 operating
turbines on the site. An additional turbine is currently under construction and the Group has agreed to pay further
consideration to the existing developer contingent on the final turbine becoming operational, which is expected to be
in the final quarter of 2020.
The following wind energy true-ups remain outstanding and the maximum adjustments are as follows: Killala: €2,000,000
and Knocknalour €489,000.
15. Share capital – ordinary shares
At 31 December 2019, the Company had authorised share capital of 2,000,000,000 ordinary shares of €0.01 each.
Date Issued and fully paid
18. Financial risk management
The Investment Manager and the Administrator report to the Board on a quarterly basis and provide information to the
Board which allows it to monitor and manage financial risks relating to its operations. The Group’s activities expose it
to a variety of financial risks: market risk (including price risk, interest rate risk and foreign currency risk)‌‌
, credit risk and
liquidity risk.
The Group’s market risk is managed by the Investment Manager in accordance with the policies and procedures in place.
The Group’s overall market positions are monitored on a quarterly basis by the Board of Directors.
Price risk
Price risk is defined as the risk that the fair value of a financial instrument held by the Group will fluctuate. Investments are
measured at fair value through profit or loss and are valued on an unlevered, discounted cash flow basis. Therefore, the
value of these investments will be (amongst other risk factors)‌‌a function of the discounted value of their expected cash
flows and, as such, will vary with movements in interest rates and competition for such assets. Note 9 details sensitivity
analysis on the impact of changes to the inputs used on the fair value of the investments.
69

­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
18. Financial risk management (continued)
Interest rate risk
The Group’s most significant exposure to interest rate risk is due to floating interest rates required to service external
borrowings through the revolving credit facility. An increase of 0.5 per cent represents the Investment Manager’s
assessment of a reasonably possible change in interest rates. Should the EURIBOR rate increase from 0 per cent to 0.5 per
cent, the annual interest due on the facility would increase by €1,030,000. The Investment Manager regularly monitors
interest rates to ensure the Group has adequate provisions in place in the event of significant fluctuations.
In accordance with the Company’s investment policy, it may enter into hedging transactions in relation to interest rates
for the purposes of efficient financial risk management. The Company will not enter into derivative transactions for
speculative purposes.
The Directors consider shareholder loan investments to be similar in nature to equity investments and, as these loans
bear interest at a fixed rate, they do not carry an interest rate risk.
The Group’s interest and non-interest bearing assets and liabilities as at 31 December 2019 are summarised below:
Liquidity risk
Liquidity risk is the risk that the Group and the Company may not be able to meet a demand for cash or fund an obligation
when due. The Investment Manager and the Board continuously monitor forecast and actual cash flows from operating,
financing and investing activities to consider payment of dividends, repayment of the Company’s outstanding debt or
further investing activities. As disclosed in Note 13, the Group’s revolving credit facility is due to mature in December
2020. The Directors expect this to be refinanced within 12 months after year end.
As disclosed in note 14, the purchase price of wind farms acquired with less than 12 months’ operational data may be
adjusted subject to a wind energy true-up based on a 2 years’ operational record once the operational data has become
available.
The following tables detail the Group’s expected maturity for its financial assets (excluding equity)‌‌and liabilities together
with the contractual undiscounted cash flow amounts as at 31 December 2019 and 31 December 2018:
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
Financial
Statements
18. Financial risk management (continued)
Liquidity risk (continued)
The following tables detail the Company’s expected maturity for its financial assets (excluding equity)‌‌and liabilities
together with the contractual undiscounted cash flow amounts as at 31 December 2019 and 31 December 2018:
The Group and Company will use cash flow generation, equity raisings, debt refinancing or disposal of assets to manage
liabilities as they fall due in the longer term.
Capital risk management
The Company considers its capital to comprise ordinary share capital, distributable reserves and retained earnings. The
Company is not subject to any externally imposed capital requirements.
The Group’s and the Company’s primary capital management objectives are to ensure the sustainability of its capital to
support continuing operations, meet its financial obligations and allow for growth opportunities. Generally, acquisitions
are anticipated to be funded by a combination of current cash, debt and equity.
­
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019 (continued)
74
19. Related party transactions
During the year, the Company advanced interest-free loans to Holdco of €268,446,764 (2018: €109,383,821)‌‌, and Holdco
made repayments of €29,450,000 (2018: €6,700,000)‌‌
. During the year, the Company also received shareholder loan
repayments from Knockacummer of €1,846,867 (2018: €nil)‌‌and Killhills of €1,447,246 (2018: €nil)‌‌.
During the year, the Company also paid remuneration to the Directors as disclosed in the Directors’ Remuneration Report
on page 30. The Directors’ interests in Company Shares as at 31 December 2019 are also disclosed on page 28 of the
Directors’ Report. The table below shows the number of Company shares acquired by the Directors:
21. Subsequent events
On 30 January 2020, the Company announced a dividend of €9.5 million, equivalent to 1.5075 cent per share with respect
to the quarter ended 31 December 2019, bringing total dividend declared with respect to the year to 31 December 2019
to 6.03 cent per share. The record date for the dividend was 7 February 2020 and the payment date was 28 February 2020.
On 30 January 2020, the Company announced the appointment of Marco Graziano as a non-executive director to the
board of the Company.
On 17 February 2020, the Group announced the acquisition of the 14.1MW Letteragh wind farm in County Clare for
€35.4 million.
76

Supplementary Information (unaudited)

Supplementary
Information
Disclosure required under the Alternative Investment Fund Managers Directive (“AIFMD”) for annual reports of
alternative investment funds (“AIFs”)
Alternative Investment Fund Manager’s Directive
Under the Alternative Investment Fund Manager Regulations 2013 (as amended) the Company is an Irish AIF and the
Investment Manager is a full scope UK AIFM.
Northern Trust International Fiduciary Services (Ireland) Limited provide depositary services under the AIFMD. Northern
Trust International Fund Administration Services (Ireland) Limited provide accounting and administration services to the
Company.
The AIFMD outlines the required information which has to be made available to investors prior to investing in an AIF and
directs that material changes to this information be disclosed in the Annual Report of the AIF. There were no material
changes in the year.
All information required to be disclosed under the AIFMD is either disclosed in this Annual Report or within a schedule
of disclosures on the Company’s website at www.greencoat-renewables.com.
The information in this paragraph relates to the Investment Manager, the AIFM, and its subsidiary company providing
services to the AIFM and it does not relate to the Company. The total amount of remuneration paid by the Investment
Manager, in its capacity as AIFM, to its 49 staff for the financial year ending 31 December 2019 was £8.9 million, consisting
of £6.6 million fixed and £2.3 million variable remuneration. The aggregate amount of remuneration for the 6 staff
members of the Investment Manager constituting senior management and those staff whose actions have a material
impact on the risk profile of the Company was £1.3 million.
The Investment Manager covers the potential professional liability risks resulting from its activities by holding professional
indemnity insurance in accordance with Article 9(7)(b) of AIFMD.
78

Defined Terms

Admission Document means the Admission Document of the Company published on 25 July 2017
Aggregate Group Debt means the Group’s proportionate share of outstanding third party debt.
AIB means Allied Irish Bank plc
AIC means the Association of Investment Companies
AIC Code of Corporate Governance sets out a framework of best practice in respect of the governance of investment
companies. It has been endorsed by the Financial Reporting Council as an alternative means for our members to meet
their obligations in relation to the UK Corporate Governance Code
AIC Guide means the AIC’s Corporate Governance Guide for Investment Companies
AIF means Alternative Investment Funds (as defined in AIFMD)
AIFM means Alternative Investment Fund Manager (as defined in AIFMD)
AIFMD means Alternative Investment Fund Managers Directive
AGM means Annual General Meeting of the Company
Ballybane means Ballybane Windfarms Limited
BDO means the Company’s Auditor as at the reporting date
Beam Hill means Beam Wind Limited
Brexit means the withdrawal of the United Kingdom from the European Union
BNP Paribas means BNP Paribas Fortis N.V / S.A
Board means the Directors of the Company
Cloosh Valley means Cloosh Valley Wind Farm Holdings DAC and Cloosh Valley Wind Farm DAC
Company means 
CBI means the Central Bank of Ireland
CFD means Contract For Difference
CPI means Consumer Price Index
DCF means Discounted Cash Flow
ESG means the Environmental, Social and Governance
EU means the European Union
Euronext means the Euronext Dublin, formerly the Irish Stock Exchange
EURIBOR means the Euro Interbank Offered Rate
Eurozone means the area comprising 19 of the 28 Member States which have adopted the euro as their common currency
and sole legal tender
FCA means Financial Conduct Authority
79

Defined Terms continued
Defined Terms
FRC means Financial Reporting Council
GAV means Gross Asset Value as defined in the Admission Document
Garranereagh means Sigatoka Limited
Glanaruddery means Glanaruddery Windfarms Limited and Glanaruddery Energy Supply Limited
Gortahile means Gortahile Windfarm Limited
Group means  and GR Wind Farms 1 Limited
Holdco means GR Wind Farms 1 Limited
Holdco 2 means GR Wind Farms 2 Limited
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
Investment Management Agreement means the agreement between the Company and the Investment Manager
Investment Manager means Greencoat Capital LLP
IPEV means the International Private Equity and Venture Capital Valuation Guidelines
IPO means Initial Public Offering
Irish Corporate Governance Annex is a corporate governance annex addressed to companies with a primary equity
listing on the Main Securities Market of Euronext
IRR means internal rate of return
I-SEM means the Integrated Single Electricity Market, which is the wholesale electricity market arrangement for Ireland
and Northern Ireland
Killala means Killala Community Wind Farm DAC
Killhills means Killhills Windfarm Limited
Knockacummer means Knockacummer Wind Farm Limited
Knockalour means Knockalour Wind Farm Holdings Limited and Knockalour Wind Farm Limited
Kostroma Holdings means Kostroma Holdings Limited
Lisdowney means Lisdowney Wind Farm Limited
Monaincha means Monaincha Wind Farm Limited
NAV means Net Asset Value as defined in the Admission Document
NAV per Share means the Net Asset Value per Ordinary Share
NOMAD means a company that has been approved as a nominated advisor for the Alternative Investment Market (AIM),
by Euronext Dublin and London Stock Exchange
PPA means Power Purchase Agreement entered into by the Group’s wind farms
80

Defined Terms
continued
PSO means Public Support Obligation
Raheenleagh means Raheenleagh Power DAC
RBC means Royal Bank of Canada
REFIT means Renewable Energy Feed-In Tariff
RESS means Renewable Energy Support Scheme
Review Section means the front end review section of this report (including but not limited to the Chairman’s Statement
and the Investment Manager’s Report)
Santander means Abbey National Treasury Services Plc (trading as Santander Global Corporate Banking)
SEM means the Single Electricity Market, which is the wholesale electricity market operating in the Republic of Ireland
and Northern Ireland
Sliabh Bawn means Sliabh Bawn Holding DAC, Sliabh Bawn Supply DAC and Sliabh Bawn Power DAC
Société Générale means Société Générale, London Branch
Solar PV means a solar photovoltaic system, which is a power system designed to supply usable solar power by means
of photovoltaics.
SPVs means the Special Purpose Vehicles, which hold the Group’s investment portfolio of underlying operating wind
farms
TSR means Total Shareholder Return
Tullynamoyle II means Tullynamoyle Wind Farm II Limited
UK means United Kingdom of Great Britain and Northern Ireland
UK Code means UK Corporate Governance Code issued by the FRC
81

Forward Looking Statements and other
Important Information
Important
Information
This document may include statements that are, or may be deemed to be, “forward-looking statements”. These
forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”,
“estimates”, “anticipates”, “expects”, “intends”, “may”, “plans”, “projects”, “will”, “explore” or “should” or, in each
case, their negative or other variations or comparable terminology or by discussions of strategy, plans, objectives, goals,
future events or intentions.
These forward-looking statements include all matters that are not historical facts. They may appear in a number of
places throughout this document and may include, but are not limited to, statements regarding the intentions, beliefs or
current expectations of the Company, the Directors and/or the Investment Manager concerning, amongst other things,
the investment objectives and investment policy, financing strategies, investment performance, results of operations,
financial condition, liquidity, prospects, and distribution policy of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties because they relate to future events and
depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of
future performance. The Company’s actual investment performance, results of operations, financial condition, liquidity,
distribution policy and the development of its financing strategies may differ materially from the impression created by,
or described in or suggested by, the forward-looking statements contained in this document.
In addition, even if actual investment performance, results of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies, are consistent with any forward looking statements contained in this
document, those results or developments may not be indicative of results or developments in subsequent periods. A
number of factors could cause results and developments of the Company to differ materially from those expressed or
implied by the forward looking statements including, without limitation, general economic and business conditions,
global renewable energy market conditions, industry trends, competition, changes in law or regulation, changes in
taxation regimes, the availability and cost of capital, currency fluctuations, changes in its business strategy, political and
economic uncertainty. Any forward-looking statements herein speak only at the date of this document.
As a result, you are cautioned not to place any reliance on any such forward-looking statements and neither the Company
nor any other person accepts responsibility for the accuracy of such statements.
Subject to their legal and regulatory obligations, the Company, the Directors and the Investment Manager expressly
disclaim any obligations to update or revise any forward- looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
In addition, this document may include target figures for future financial periods. Any such figures are targets only and are
not forecasts. Nothing in this document should be construed as a profit forecast or a profit estimate.

2019 ANNUAL REPORT +
FINANCIAL STATEMENTS
Since the company’s foundation in 1992 with
one site in Dublin, we have always aimed to
provide a superior customer experience and
value for money.
is the number one Motorway Service
Area (MSA) operator in the Republic of Ireland
and the number two Motorway Service Area
Operator in the United Kingdom. MSA sites are
strategic infrastructure assets that have high
barriers to entry due to long development lead
times and government legislation. There will be
increased focus on larger service area growth
in these regions.
OVERVIEW
 is a high growth roadside
convenience retail business operating in
Ireland, the United Kingdom and North America
4 
We have now established a large Petrol Filling
Station (PFS) footprint in the US and our aim
is to expand our presence as a recognised
operator of large Service Area sites on strategic
road networks in that market.
Highlights03
Overview04
Strategic Report
Our Story 10
Our Locations 16
Our Business Model 22
Chairman’s Statement 28
Chief Executive’s Review 30
Corporate Social Responsibility  46
Sustainability Review 52
Our People and Culture 60
Business Ethics Review 66
Financial Review 70
Corporate Governance
Board of Directors 84
Directors’ Report  86
Corporate Governance Statement 96
Audit Committee Report 102
Nomination Committee Report  106
Remuneration Committee Report 110
Statement of Directors’ Responsibilities 116
Financial Statements
Independent Auditors’ Report  120
Consolidated Income Statement 129
Consolidated Statement of Comprehensive Income 130
Consolidated Statement of Financial Position 131
Consolidated Statement of Changes in Equity 132
Consolidated Statement of Cash Flows 134
Notes to the Consolidated Financial Statements 135
Company Statement of Financial Position 208
Company Statement of Changes in Equity 209
Company Statement of Cash Flows 210
Notes to the Company Financial Statements  211
Information
Glossary of Financial Terms  220
Directors and Other Information 222
CONTENTS

STRATEGIC
REPORT
Our Story 10
Our Locations 16
Our Business Model 22
Chairman’s Statement 28
Chief Executive’s Review 30
Corporate Social Responsibility 46
Sustainability Review 52
Our People and Culture 60
Business Ethics Review 66
Financial Review 70


considers economic, environmental
and social responsibility as an integral part of
its corporate philosophy and understand the
contribution can make to a more
sustainable development

The Group was founded in 1992 by
Bob Etchingham (Chief Executive
Officer) following the acquisition
of its first site in Dublin and he was
joined in the business a year later by
Joe Barrett (Chief Operating Officer).
Together they have led the growth
and development of the business
in the intervening period. While the
initial years of the Group saw gradual
growth (with the number of sites
increasing to 24 by the end of 2005),
from the outset the focus was always
on the development of the retail
proposition and the establishment
of a quality food offering on its
forecourt sites.
OUR STORY
11
10 
The brand was successfully launched
in 2005 and the Group has subsequently
expanded at a rapid rate.
The acquisition of a controlling interest in Welcome
Break in 2018 provided a step change in the
growth and development of the Group, enlarging
its footprint in the United Kingdom, increasing its
food and beverage business and brand portfolio,
and further reducing the Group’s reliance on fuel
dependent revenue streams.
2005
– 
Petrogas launches
the brand
2009
– Distribution Centre opens
– 
The 
Charitable Fund launches
2014
– 
expands into
the US
– 
Fuel card &
Dealer offers
launch
2016
– 
extends brand
partnerships
– 
Award winning
Lisburn site opens
2018
– 
acquires
WELCOME BREAK including
37 sites and 29 hotels– 
opens
first site in Dublin,
Ireland
2008
– 
expands into
the UK
2010
– 
First 6 Motorway
Service Areas
open in Ireland
– 
partners with new
brands:
2013
– 
4 Motorway
Service Areas
open in Northern
Ireland
– 
launches own
brand food offer,
The Bakewell
2011
– 
Loyalty card
programme
launches in
Ireland
2015
– 
completes
successful IPO
& launches on the
Irish & London Stock
Exchanges
– 
partners
with new brands:
2017
– 
acquires:
• 
Joint Fuel Terminal,
Dublin Port
• 
Brandi Group,
South Carolina
• Carsley Group, UK
2019
– 
500th site opens
– 
Launch of
airline refuelling
business
in Ireland
– 
10th anniversary
of the Irish
Charitable Fund
which has raised
€3.3million
throughout the
years
Site numbers reached 75 by the end of 2010 and
556 by 31 December 2019.
• 
ROI & UK – There were 14 sites added to the ROI and
UK estate in 2019 (4 PFS, 2 MSA, 7 Dealer and 1 Hotel)
• 
US – The group also added 70 sites in the US
which comprised 46 sites in the US Mid-West in
September 2019; the acquisition of a 40% minority
stake in 23 Service Areas in Connecticut in October
and a further three new openings in the North-East.
We also exited from two stores in the US which we
had leased under flexible terms from CrossAmerica
Partners LP (“CAP”)
Growth Highlights
13
 STRATEGIC REPORT
12 
283
15
 STRATEGIC REPORT
14 
OUR LOCATIONS
16 
Service Area Sites (‘SA’)
The Group operates two types of Service Area
Sites – Motorway Service Areas and Trunk Road
Service Areas. Motorway Service Areas (‘MSA’) are
the Group’s largest sites situated on motorways
that, alongside a retail proposition, operate three
or more food and beverage offerings from a
combination of its own food brand, Bakewell,
and international brands including Burger King,
Starbucks, KFC, Subway, Waitrose, WH Smith,
Costa Coffee, Chopstix, Pizza Express, Harry
Ramsden and Greggs. In addition, the Group
operates Trunk Road Service Areas (‘TRSA’),
which are located on major roads. These are large
sites close to heavily trafficked or urban routes
that have a big plot size and ample parking and
toilets. The sites contain high end stores with an
attractive ambience. They have a relevant retail
offering with brand produce and
a limited chilled/ambient grocery offering
alongside a cafe environment with one to three
food and beverage offerings. As of 31 December
2019, the Group operated a total of 109 Service
Area sites (including 69 MSA sites), of which 23
were located in the United States, 36 were located
in the Republic of Ireland and 50 in the United
Kingdom. Six of our MSA sites in the Republic
of Ireland are operated under 25 year licences
from Transport Infrastructure Ireland (‘TII’).
The Group’s site categories can be described as follows:
Petrol Filling Stations (‘PFS’)
The Group operates both company-owned and
dealer PFS sites. As of 31 December 2019, the
Group operated 440 sites categorised as Petrol
Filling Stations of which 166 were located in the
Republic of Ireland (90 company owned PFS
sites and 76 dealer PFS sites), 106 in the United
Kingdom and 168 in the United States. Almost half
of the Group’s current company-owned PFS estate
is operated under the brand name.
branded sites have received significant
investment, in particular where there is a high
quality food proposition based around its own
food brand, Bakewell, and/or an international
brand such as Subway. The retail proposition
is built to reflect the local demographic.
Hotels
The Group operates 30 hotels, 29 of which
were acquired as part of the Welcome Break
transaction in 2018. One new hotel opened
in 2019 which was a contractual obligation
committed to prior to the Welcome Break
acquisition. 23 of the hotels are co-located
on Service Area sites while the remaining seven
are stand-alone. The hotels are operated under
the Ramada and Days Inn brands.
17
 STRATEGIC REPORT

Service Area Sites as at 31 December 2019

PFS sites as at 31 December 2019


In addition to the 23 Connecticut
Service Plaza sites, we added a group
of 46 PFS leasehold sites located in
Minnesota, Wisconsin and Michigan
Barrington, USA
21
 STRATEGIC REPORT
20 
OUR BUSINESS MODEL
The brand is based on competitive
fuel pricing that drives in-store footfall with
an innovative food and beverage offer focussed
on our customers’ needs. Improving the customer
journey to inspire loyalty is central to what we
do, ensuring we provide a smooth and enjoyable
experience.
We are committed to driving shareholder value
by deploying the best operational practices,
a cost optimisation focus, along with disciplined
capital allocation.
Combined with organic growth from existing sites,
our growth strategy is focused on establishing a
presence in new markets by developing traditional
fuel forecourts with a branded food offer and,
when significant scale has been achieved,
entering the larger service areas on strategic road
networks and enhancing the more attractive non-
fuel contribution. The final stage involves vertical
integration of the supply chain or fuel distribution.
is at different stages of this lifecycle
in its three markets.
is the number one Motorway Service
Area Operator (MSA) in the Republic of Ireland
and the number two Motorway Service Area
Operator in the United Kingdom. MSA sites are
strategic infrastructure assets that have high
barriers to entry due to long development lead
times and government legislation. There will be
increased focus on larger service area growth
in these regions.
We have now established a large Petrol Filling
Station (PFS) footprint in the US and our aim is
to expand our presence as a recognised operator
of large Service Area sites on strategic road
networks in that market.
The management team has a strong track record
of delivery and the talent pipeline will underpin
our expansion in the three markets.
As at December 2019, the business operated 556
forecourt sites and employed c.11,798 people.
 is a high growth roadside convenience retail business operating
in Ireland, the United Kingdom and North America. The growth pillars of the business
are based on growing food to become the dominant profit stream and therefore
reducing the dependency on fuel, partnering with premium food-to-go brands
and focusing on value accretive acquisitions.
Better Value Always
• Tailored retail offer
• Impulse/ultra-convenience
focus
Food & Beverage Focus
• 
Mix of own and
international brands
• 
Tailored offer to each location
Low Fuel Prices Always
• Local price promise
• Encouraging increased
footfall to our shops
We operate different site categories: We create value for all our stakeholders:
Motorway ‘MSA’
• 
MSAs are located on
motorways with large
facilities, extensive
parking and at least
three food offers
• 
MSAs have a range
of internationally
recognised food
brands
• 
Typically brown/green
field developments
Company Owned
• 
Traditional forecourt,
store offer and food-
to-go either own
brand or Subway/
Costa Coffee
• 
Relevant retail
proposition built
to reflect local
demographic
• 
Value offer in store
built on own brand
and promotion
• 
Ongoing rebrand/
facility development
opportunities
• Two types of brand offer:
- Ramada
- Day’s Inn
• 
Mix of hotels co-located at Motorway Service
Area sites and stand alone hotels

Trunk road ‘TRSA’
• 
TRSAs are mid-size
sites on trunk or ‘A’
roads with seating
areas and one to three
food and beverage
offerings
• 
High end stores with
attractive ambience
• 
Typically brown/green
field developments
Dealer
• 
PFS owned by
operator, 5 year fuel
supply agreement
• 
Brand Partners
25
 STRATEGIC REPORT
24 
Welcome Break Fleet, UK
26  27
 STRATEGIC REPORT
CHAIRMAN’S STATEMENT
Daniel Kitchen
It is my pleasure to introduce the annual report and financial statements
of  for the financial year ended 31 December 2019, a year
which saw substantial growth and development within the Group.
29
 STRATEGIC REPORT 29
29
Delivering Our Strategy
2019 was a significant year for the business
with the full integration of Welcome Break
transforming the shape of the Group as well
as significant expansion in the US where we added
70 sites during the year including 23 Service Area
sites located in Connecticut, USA through the
acquisition of 40% interest in Connecticut Service
Plazas in October 2019. This further establishes
our footprint in this region and is another step
forward in our aim to increase our presence
in the service area sector and thereby increasing
the proportion of earnings coming from catering
and retail operations.
In addition to the 23 Connecticut Service Plaza
sites, we added a group of 46 PFS leasehold sites
located in Minnesota, Wisconsin and Michigan
and 17 single site acquisitions across the Republic
of Ireland, the UK and the US bring the total site
additions to 84 for the year.
The core estate (excluding the
Welcome Break acquired assets) achieved strong
EBITDA growth of 21% year on year, benefiting from
a positive like-for-like performance and prior year
acquisitions. Welcome Break also demonstrated
good growth, particularly through its core catering
brands, driven by the roll-out of self-service kiosks
and new drive-thru services that improve the
customer journey. The results we’ve reported could
not have been achieved without the dedication
of our staff or the focus of the management team
on the execution of our growth strategy.
Board and Corporate
Governance
The Board of comprises of four
non-executive directors and three executive
directors. Board members meet formally at regular
Board meetings and in Board committees and
also less formally, to discuss issues affecting the
business of the Group.
During the year, the Board devoted considerable
time to our strategic objectives for the business
going forward, succession planning and the Group’s
acquisition activities. Full details of our approach
are set out in the Corporate Governance
Statement on pages 96 to 101.
I would like to thank each member of the Board
for their hard work and commitment during the
year and I look forward to continuing to work
with them for the benefit of the Group in the
coming year.
Management and Employees
Our people are key to our success. On behalf
of the Board, I would like to commend them for
their tireless efforts as they “go the extra mile”
every day for our customers and help us to deliver
another year of exceptional progress in the
business. The Group now employs almost 12,000
people. The future success of relies
strongly on the passion, energy and commitment
shown by all our employees and I look forward
to their ongoing contribution.
COVID-19, Current Trading
and Outlook
2019 was a busy year for as we
continued to grow our business and we entered
2020 with strong trading volumes. However,
from mid-March, we experienced the impact
of COVID-19 on footfall and volumes as
governments and customers started to take
measures to contain the spread of the virus.
The Group’s priorities in these unprecedented
times are the health and safety of our colleagues
and customers, maintaining essential services
and protecting our business. While the
performance outlook for 2020 is uncertain,
the Board remains confident in the strategy over
the longer term and believes the Group has
sufficient liquidity to maintain operations during
this challenging time and will be well positioned
to benefit from the normalisation in trade in the
longer term.
Daniel Kitchen
Chairman
17 July 2020
28 
CHIEF EXECUTIVE’S REVIEW
Robert Etchingham
2019 was a year of strong growth as we continued to deliver on our growth strategy
with the successful integration of Welcome Break, expansion of our footprint
in the US and the reduction of our reliance on fuel by continuing a shift in focus
to convenience retail and food on the go.
The performance was driven by strong organic
like for like growth and the full year impact
of prior year acquisitions as well as good growth
in the Welcome Break business. We have also
built an increased presence in strategic service
areas and successfully completed a large-scale
ERP transformation.
Our absolute focus at present is navigating the
various issues associated with COVID-19 and
to ensure we are looking after our people whilst
continuing to deliver the essential service we
provide to our customers. The ultimate impact
of the pandemic is unclear at this stage but we
are taking definitive steps to follow the relevant
guidance from the authorities whilst ensuring
we are also taking the right actions to ensure
the Group remains as resilient as possible to
the challenges, and is well positioned for when
normal conditions resume.
Financial Highlights
• Group Revenue of €3.1bn, 53% growth on 2018
• Group adjusted EBITDA (pre-IFRS 16) of €140.4m, 142% growth
on 2018, and adjusted EBITDA excluding the Welcome Break
acquired assets (pre-IFRS 16) of €57.7m, representing 21% growth
year on year
• Like-for-like (LFL) growth in fuel revenue of 10.8% and fuel gross
profit 7.4% (constant currency)
• LFL growth in non-fuel (food and store) revenue of 4.9% and
non-fuel gross profit of 5.7% (constant currency)
• Adjusted diluted EPS increased 26% to 33.8 cent
• Consolidated net external debt of €525.5m (€505.3m in
constant currency) representing leverage of 3.7x Group adjusted
EBITDA (pre-IFRS 16).  stand-alone leverage
is 1.9x adjusted EBITDA (pre-IFRS 16)
• Capital expenditure of €114.1m including maintenance capital
expenditure of €13.1m and ERP transformation costs of €11.3m
Operational Highlights
We continued to grow our operations during 2019 under the
leadership of Chief Operating Officer, Joe Barrett. We continued
to expand our estate with 556 sites trading at the end of December
2019. This included the addition in the US Mid-West of 46 sites
completed in September 2019 and the addition of a 40% interest
in Connecticut Service Plazas acquired in October 2019.
2019 also saw the delivery of significant additional synergies from
the Welcome Break acquisition. £2.5m synergies were delivered in
2019, primarily through a reorganisation of back office administration
and forecourt labour and we expect to deliver at least £13m p.a.
synergies by end 2021 (under normalised conditions), over twice
our original expectation. Key initiatives include:
• Further administration and site labour efficiencies
• Enhanced fuel margin from new fuel supply arrangement
• Hotels and procurement savings
We have also invested in the organisational structure of our
business to give us a platform for future growth:
• Enterprise Resource Planning transformation project went live
in July 2019
• Established a new national management structure in the US in
early 2020 with a centralised shared service centre due to the
scale of the US business growth
31
 STRATEGIC REPORT
30 
COVID-19 Overview, Current
Trading and Outlook
traded strongly and in line with
management expectations for the first 10 weeks
of 2020. However, footfall and volumes have been
impacted since mid-March as governments and
customers take increasing measures to contain
the spread of the COVID-19 virus.
has a resilient business model,
providing an essential service and our stores
remained opened throughout the period of the
lockdown, albeit some with significantly reduced
food franchise offerings. Our first priority since
the emergence of the virus has been the wellbeing
of our people and we are continuing to follow the
health and safety recommendations of the local
and national authorities in the regions in which
we operate.
As expected, we saw significant volume reductions
in all of our regions through April and May. At the
time of writing, we have experienced recovery in
those volumes in June as the travel restrictions
have gradually been lifted in our core markets,
though they remain some way off our normal
levels of activity.
At a very early stage in this crisis, the Group
took extensive action to reduce costs, protect
profitability and conserve cash. In particular, we put
in place a number of important initiatives to manage
our working capital as volumes decreased before
working capital gradually started to rebuild again
from the end of May as the recovery commenced.
Further to this, we have also engaged with our
lenders to obtain the necessary covenant flexibility
from both the  banking group and
the Welcome Break banking group.
Whilst we are confident that the Group has
adequate cash reserves to get through this cycle,
we have also negotiated with our finance providers
to convert existing accordion facilities and capital
expenditure facilities of €52.5m and €27.5m,
respectively, into revolving credit facilities to allow
us maximum flexibility to navigate through this
uncertain period.
We are highly conscious of the considerable
uncertainty created by the current COVID-19 crisis
but are confident in the defensiveness of our
business model and the strength of our balance
sheet and liquidity. Therefore, we are positive about
navigating the company through this crisis and
building our business for the long term.
33
 STRATEGIC REPORT
32 
ROI Sites ROI CAP EX
Republic of Ireland (‘ROI’)
ROI accounted for 25% of our gross profit in 2019
(2018: 48%). Revenue in ROI has increased by 8.4%
to €942m. This has been driven primarily by growth
in LFL revenue with growth in fuel of 17.8%, growth
in food of 4.5% and growth in store of 3.5%.
Gross profit has increased by 6.6% which is
also driven by growth in the LFL estate with
fuel gross profit increasing by 2.2%, food gross
profit increasing by 5.4% and store gross profit
increasing by 8.9%
’s premium fuel initiative, ‘Fuelgood’,
contributed to strong fuel LFL growth as the
take-up of this product continues to rise. Total
fuel volume pumped in 2019 increased by 1.1%,
slightly ahead of the overall market, and the pricing
environment was positive in the year.
A solid food performance was enhanced
by investment in the estate with self-service
kiosks installed, home delivery options provided
and continued product innovation, such as the
successful vegan range, which includes vegan
sausage rolls, ready-made meals, sandwiches
and croissants.
The ROI store performance was strong, driven
by improved buying, return on investment in car
wash upgrades and redevelopments of key sites.
We continue to improve our operating model
and cost efficiency with the deployment of a new
ERP project which went live on 1 July 2019.
We are actively monitoring the growth and
adoption of Electric Vehicles in the market and
in September 2019 started operating branded
Electric Vehicle charging bays.

Food gross profit has increased by 130.5%
and 8.6% ex Welcome Break reflecting the
growth in the estate and continued focus
on improving our food offering
PFS Company Owned SA Stand Alone Hotel
37
 STRATEGIC REPORT
36 
United Kingdom (‘UK’)
The UK business accounted for 61% of total gross
profit in 2019, increasing from 36% in 2018 due
to the full year impact of Welcome Break.
Revenue in the UK business has increased by
91%, principally driven by the Welcome Break
acquisition in Q4 2018. LFL growth (at constant
currency) in fuel of 4.9%, food of 1.7% and store
of 0.3% (all excluding the acquired Welcome Break
assets) has also contributed to this growth.
The related gross profit has increased by 242%,
reflecting a change in the mix following the
Welcome Break acquisition with more of a
weighting towards higher margin food sales. LFL
gross profit growth (at constant currency) has
increased by 18.9% in fuel and 3.2% in store, with
food LFL gross profit down 1.2% (all excluding
the acquired Welcome Break assets).
The results for 2019 incorporate the Welcome
Break acquisition which has driven significant
growth on 2018. Integration is proceeding as
planned, with in-year synergy delivery of £2.5m
in 2019, with synergies of at least £13m p.a.
to be delivered by the end of 2021 (assuming
normalised market conditions).
In the UK business, favourable fuel operating
contracts have been negotiated for the PFS
estate and Welcome Break which took effect
in February 2020. These will provide enhanced
margins as well as working capital benefits of
approx. £34m when we return to more normalised
trading conditions. The forecourts will be
rebranded from the fuel providers to ‘Welcome
Break’ as part of these new operating contracts.
The UK PFS estate like-for-like performance was
strong, driven by improved fuel margins.
The results for 2019 incorporate
the Welcome Break acquisition
which has driven significant
growth on 2018
39
 STRATEGIC REPORT
38 
A strong Food performance in Welcome Break
was driven by speed of service initiatives with
self-service Burger King and KFC ordering kiosks
introduced and the opening of two additional
Starbucks drive thru facilities. There was also
a positive year on year trading benefit in KFC
due to supply disruption issues in 2018.
Welcome Break delivered a robust performance
in the Store category and the UK PFS estate
increased the average transaction value in store
through upselling and increasing the average
basket size.
Parking and Gaming revenue, which are included
in the ‘Other’ category were ahead of expectations
with strong underlying growth.
The Hotel business, (which is also included in the
‘Other’ category) appointed a new management
team which is making good progress. A margin
optimisation programme has been established
to drive top line growth by increasing food and
beverage penetration, coupled with structured
room rate management.
There are currently 283 Electric Vehicle charging
bays in our UK estate with plans to provide a further
65 ‘open access’ charges within the existing network.
 STRATEGIC REPORT
40 
PFS Company Owned PFS Dealer Owned
USA Site Numbers USA CAP EX
USA
The US business accounted for 14% of total gross
profit in 2019 (2018:16%).
US revenue has increase by 70% which was driven
by acquisitions, alongside LFL revenue growth
(at constant currency) in fuel of 8.7% and store
of 26.7% with food revenue decreasing by 1.2%
US gross profit has increased by 76% which is also
primarily driven by acquisitions. LFL gross profit
has shown growth (at constant currency) in Fuel
of 2.3% and Store of 16.7% with food gross profit
declining by 0.6%.
As noted above, growth in the US business has
been driven by the addition of 46 PFS leasehold
sites in September 2019, as well the full year
impact of the acquisitions in Florida and South
Carolina during 2018.
The North American market has stronger fuel
margins compared to Europe, particularly in the
North East.
The scale of the US business has now grown
to a sufficient level such that has
established a new national management structure
with a centralised shared service centre.
The year also saw the continued expansion
of the relationship with 7-Eleven convenience
stores, through rebranding and new openings on
our sites. This has driven the non-fuel gross profit
increase of 83.9% on 2018.
is developing its first TRSA in Sturbridge
Massachusetts which will include food offers such
as Burger King and Dunkin. In December 2019
we opened a flagship store in Barrington with an
store and our first newly built Burger
King in the US estate.
The US business is performing well and is
benefitting from the strong local management
team as the business continues to scale.Hempstead, USA
Network Development
The Network Development division is led
by Eugene Moore with local teams based
in each region and comprises two main areas
of activity. Firstly there is a team involved
in identifying, appraising and acquiring new
outlets, whether existing stations or green
field opportunities. The other element of the
team is involved in the project management
of new builds on greenfield sites and the
redevelopment of existing sites.
Single Site Acquisitions
During 2019 we acquired 17 sites - nine sites
in Republic of Ireland, five sites in the UK
and three sites in the US. As we partner with
established brands in the US, we continue
to invest in the US estate and establish our
presence in the service area sector. As part
of our continuous review of the estate in the
US, we have elected to exit from two PFS sites.
Multiple Site Acquisitions
In September, we agreed to acquire 46 PFS
leasehold sites located in Minnesota, Wisconsin
and Michigan, centred in the large metropolitan
area of Minneapolis-St. Paul (US Mid-West).
The sites are operated under the BP, Holiday,
Freedom and Speedway fuel brands, with an
opportunity to bring our experience in food
and convenience retailing to complement the
existing fuel offer. The agreement is a lease with
CrossAmerica Partners LP (“CAP”), with an initial
lease term of 10 years and 4 five-year tenant-
only renewal options. The sites were taken over
and commenced trading in Q3. They have been
integrated into the US business unit structure.
We also acquired a 40% interest in
Connecticut Service Plazas, 23 service areas
located in Connecticut, USA, which is on
a strategic road network between New York
City and Boston. The concession agreement
with the Connecticut Department of Transport
has 25 years remaining with the potential for
a further 10-year extension. The concession
structure offers a stable and growing income
stream generated mainly from long-term
contracted, multinational branded anchor
tenants. This relationship offers an additional
91 branded food outlets including McDonalds
(10 outlets), Dunkin Donuts (23 outlets),
Subway (20 outlets) and Taco Bell (2 outlets).
There is an option to acquire a further 20%
interest after five years.
Redevelopments
In the Republic of Ireland, Midway on the M7
has been upgraded to a Motor Service Area
(MSA) with a forecourt convenience store
and four food offers, and Santry which is
strategically located beside Dublin airport has
been upgraded to a trunk road service area
(TRSA) with three food offers.
In the UK, one PFS site at Whitley has been
upgraded to a TRSA with two food offers.
Within the US estate we have converted six
convenience stores to the 7 Eleven brand with
four in South Carolina and two in the North
East, further strengthening our relationship and
bringing our total 7 Eleven stores to 15 at the
year end.
Our People
Our talented, passionate and experienced
people are key to our success along with
the strength of our management team. I am
very grateful for their commitment which has
contributed to another successful year of
growth in the business. I would like to take this
opportunity to thank all our employees for their
hard work and dedication to the Group.
Central to the delivery of our long-term
strategy is the Group’s culture, underpinned
by the values and behaviours expected of
our employees. The Board is cognisant of its
role in supporting employee welfare and in
seeking evidence that the right culture is being
fostered. In 2019 we completed a values and
culture project to refresh our core values as
our business grows and we will be relaunching
our core values across the group in 2020.
Summary
We are highly conscious of the considerable
uncertainty created by the current COVID-19
crisis and its impact on the business, and we
are closely monitoring the situation but are
confident in the defensiveness of our business
model and the strength of our balance sheet
and liquidity. We remain committed to our
strategy and we are confident in the robustness
of our business model. Therefore, we remain
positive on the long-term prospects for
the business.
Robert Etchingham
Chief Executive Officer
17 July 2020
43
 STRATEGIC REPORT
42 
Welcome Break delivered a robust
performance in the Store category and
the UK PFS estate increased the average
transaction value in store through upselling
and increasing the average basket size
Welcome Break Warwick, UK
45
 STRATEGIC REPORT
44 
CORPORATE AND SOCIAL
RESPONSIBILITY
We share success with the people
around us
We want our business to have
a positive impact on people’s, lives
our teams, customers, suppliers
and local communities.
We take pride in our commitment to making
a meaningful and long-term impact in our local
community by leveraging our position as one
of the biggest corporate philanthropists in
the country. We do this in close collaboration
with our charity partners and with the support
and involvement of our people through our
volunteering and fundraising efforts. We strive
to have our charitable fund programme align
our targets with the United Nations Sustainable
Development Goals, helping to influence
and drive change on the biggest challenges
facing society today.
2019 has been a significant milestone for
the charitable fund and we are delighted
to be celebrating 10 years supporting all our
charity partners along this incredible journey.
We are immensely proud of raising over €3million
during this time, which allows 
to make a real difference to many people’s lives
and support all the great work being achieved
by our charity partners. We are always so grateful
to our employees, suppliers and customers for
always getting behind the fund and going the
extra mile to support our charitable fund,
and we are excited to see how the fund will
grow into the future.
In 2018, acquired a controlling
interest in the UK motorway services business
Welcome Break, which like , has
a strong association with charitable activities,
also placing children as a core focus. Over the
past 10 years, the customers and staff of
Welcome Break have raised over £5million for
BBC Children in Need. We are pleased that this
association will continue in 2019 and is a welcome
addition to the Group’s charitable activities.
Overview
The Charitable Fund was set up in December 2009
with the aim to give back to the communities in
which operates throughout Ireland.
The Fund has supported a number of charity
partners, many with children at the centre, and
with the aim to deliver tangible and visible benefit
to the communities that both and
its charity partners serve. The Charitable Fund
Committee takes its CSR role very seriously
and because of this, have developed a balance
between supporting local and national community
requirements through fundraising, volunteering
and spreading awareness of our charity
partnerships and to engage with 
staff, suppliers and customers with a bespoke
fundraising and communications plan.
The charitable fund will reward customer loyalty by:
• 
Supporting very worthwhile charities and
engaging with our staff through team building
initiatives.
• 
Promoting awareness in growing less well-known
charities.
• 
Giving back to the local communities.
•
Sharing ’s success to those that need
it most.
Every two years the process to nominate new
charity partners is based on an employee survey
to help the committee understand the causes
that will motivate and inspire colleagues. Over
the past 10 years, over €3m has been raised for
our chosen causes as a result of the support and
engagement shown by our customers, suppliers
and employees.
Throughout the year employees from head office
and stores across Ireland arrange events to raise
awareness and stimulate engagement with our
charity partners. In the past year, volunteer days
and events have included Static Cycles, Bake
Sales, Marathons, Mountain Climbs, Skydives and
Pub Quizzes
’s ‘You Buy, We Give’ initiative continues
to grow every year and has contributed over €1.6m
to the Charitable Fund. Every time a customer
makes a shop and fuel or a shop only purchase
in an store in Ireland, the company
donates 1c/1p to the Charitable Fund
at no extra cost to the customer. Funds are also
donated through coin collection boxes placed
in all Service Stations, and Barcode
Campaigns whereby the customer is given the
option to donate €1/£1 in store once every quarter.

’s ‘You Buy, We Give’
initiative continues to grow every
year and has contributed over
€1.6m to the Charitable Fund
47
 STRATEGIC REPORT
46 
The Blossom Fund won Best CSR
Community Programme in the 2020 All Ireland
Community & Council Awards held in February
in Croke Park.
in partnership with the Irish Youth
Foundation provides funding to support
projects working with children in disadvantaged
circumstances. The focus is to support the health
and wellbeing of children. The Blossom Fund
is a unique community initiative and it allows
to make a difference at a local level.
Irish Youth Foundation
The Charitable Fund were delighted
to choose the Irish Youth Foundation as one
of our preferred charity partners for 2018/19 in
support of 62 community and voluntary youth
projects across Ireland which were chosen from
over 300 applicants to receive a total of €124,000
from the fund. The fund invited applications from
projects working with children and young people
aged between 4 and 12 living in disadvantaged
circumstances under the theme of health and
wellbeing. All of the projects receiving grants were
within 10km of an store, in line with
our approach of engaging with and supporting
the communities we serve.
Image credit
Awards 2019 DEBRA Ireland
Following the success achieved with DEBRA
Ireland, which resonated strongly with our staff,
decided to extend its support to
this partnership beyond the usual two year term.
DEBRA Ireland provides support services to
patients and families living with the debilitating
skin condition Epidermolysis Bullosa (EB). The EB
Community Care programme provides valuable
support for children and families in Ireland
impacted by EB. By delivering the highest level
of support in their homes and communities, the
programme helps improve the quality of life for
those affected. In addition, ’s support
of EB Awareness Week means families throughout
Ireland are no longer living with the staring and
stigma of this rare disease. The HSE has seen such
immediate benefit that they will now take over
the funding of an EB Nurse, freeing Debra Ireland
up to put the next phase into play; a further
expansion of EB Community Care which means
an additional family support worker, an additional
EB outreach nurse as well as increased respite
funding for families living with EB.
Focus Ireland
Focus Ireland is driven by the fundamental belief
that homelessness is wrong. No young person
should have to live in emergency accommodation
or worse. Focus Ireland provides innovative
programmes for young adults, many of whom
have no means of support after leaving children’s
homes or foster care. Programmes may involve
housing, work placements and other basic support
designed to make sure they stay off the streets.
is proud to support Focus Ireland as
one of its charity partners. This partnership will
enable Focus Ireland to work with more young
people to provide a safe environment, opportunity,
and help them reach their full potential.
Friends of the Cancer Centre
Friends of the Cancer Centre is dedicated to
making a real and meaningful difference to cancer
patients and their families across Northern Ireland.
Through our partnership with the charity and with
the support of staff and customers, we are able to
make a positive impact on the charity’s vital work
with young people and families affected by cancer.
No young person or family should ever have to
face cancer, but Friends of the Cancer Centre is
committed to ensuring that these young people
have access to the expert and age-appropriate
care they need, when they need it. Working
together, we are providing support to teenagers and
young adults with cancer, helping the charity fund
vital hours of specialist nursing care and much more.
FoodCloud
is delighted to be able to support
FoodCloud with the funding of three distribution
vans to help ensure food arrives fresh and safely.
is pleased to play its part in reducing
food waste in the interests of a more sustainable
environment, and at the same time help
FoodCloud reach those in need.
BBC Children in Need
BBC Children in Need has been the chosen charity
partner of the Welcome Break business in the UK
for 10 years and has been strongly supported by
Welcome Break customers via donations made
at its motorway service areas and staff hold
various fundraising events throughout the year.
We support BBC Children in Need as it exists to
change the lives of disadvantaged children and
young people in the UK. Their vision is that every
child in the UK has a safe, happy and secure
childhood and chance to reach their potential.
Children in Need is local to people in all corners
of the UK and provide grants to small and large
organisations which empower children and extend
their life choices. They support over 2,500 active
projects that are working with children facing
a range of challenges including: poverty and
deprivation, children who have been the victims of
abuse or neglect and disabled young people. Last
year the customers and staff of Welcome Break
raised a new record of over £750,000 for BBC
Children in Need.
Changing Places
The Group collaborates with the Changing Places
consortium in the UK, with Welcome Break recently
installing state of the art assisted changing and
toilet facilities for disabled people at nine of its
major motorway service areas, with further facilities
planned at other sites. The Changing Places
Consortium is a group of organisations working
to support the rights of people with profound and
multiple learning disabilities and/or other physical
disabilities. Established in 2005, the Consortium
campaigns for Changing Places to be installed
in all big public spaces so that disabled people
can have greater access to their communities.
FuelSevice App
joined forces with fuelService and
the Disabled Drivers Association of Ireland (DDAI)
to help disabled drivers receive assistance whilst
refuelling at stations across the country.
Refuelling a car is one of the biggest challenges
faced by disabled drivers, and is proud
to be the first Irish forecourt retailer to roll out this
app service and go some way towards making
refuelling easier and more accessible for disabled
drivers. The app offers a two-step process to take
the uncertainty and stress out of refuelling for
disabled drivers.
Partners for 2020
and beyond
The new charities that have been selected to
partner with the Charitable Fund over
the next two years are Pieta House, Enable Ireland,
Food cloud and Ireland Youth Centre, and Welcome
Break will continue to work with BBC Children
in Need and Changing Places. Together we will
make a difference and support the people and
community most in need.
49
 STRATEGIC REPORT
48 
51
 STRATEGIC REPORT
50 
INVESTING IN OUR CUSTOMERS& COMMUNITIES/
ENABLING A LOW CARBON FUTURE/
NURTURING OUR PEOPLE/
EMBRACINGCLEANER ENERGY
 SUSTAINABILITY REVIEW
We will leave a positive legacy
for future generations
considers economic,
environmental and social responsibility
as an integral part of its corporate
philosophy and understand the
contribution can make
to a more sustainable development.
Today, we are deeply committed to
leaving a positive and lasting legacy
for future generations, with a clear and
committed approach to sustainability
in every area of our business, and by
bringing our partners on this journey
with us.
We have made significant progress on several
initiatives across the business such as charity and
community, environment, healthy food alternatives,
and transition to cleaner energy, to name but a
few. We will announce a sustainability programme
where progress will be formally measured and
reported upon.
We have recently invested significantly in the
process of defining our sustainability goals and
creating a sustainability strategy. This strategy will
be the roadmap for our sustainability journey over
the next few years.
To help identify the material issues for 
and our stakeholders, we have engaged with
a wide range of stakeholders through a number
of channels, including in-depth interviews and
surveys. This process led to the identification and
prioritisation of material issues for .
These are illustrated in the figure opposite. We
will continue to keep these topics under review,
particularly with respect to emerging themes.
Materiality
Our approach to sustainability is centred on
addressing and reporting on the most material
issues for and its stakeholders.
In 2019, we undertook a comprehensive review
of material topics to reaffirm that our Sustainability
Programme will be adequately positioned to
address the most significant sustainability issues.
As part of the revised materiality assessment,
we engaged with a wide range of stakeholders
through a number of channels. In-depth interviews
with key internal and external stakeholders were
critical in confirming priority areas and for better
understanding our stakeholders’ expectations.
The outputs from these interviews were supported
by a survey of a broader stakeholder group. The
survey findings helped to validate the information
received through the interview process and
provided an opportunity for input from a larger
and more diverse stakeholder group.
Sustainability Materiality Matrix
The outcome of the assessment has confirmed
good alignment among internal and external
stakeholders across a range of sustainability topics
and confirmed that the Programme will be well
placed to address our most material issues.
The assessment also supported feedback received
through ongoing engagement with stakeholders,
particularly with regard to the evolution in some
topic areas, for example, fast charging for electric
vehicles, recycled rainwater in car washes and
ethically sourced coffee beans.
The topics to be covered in the sustainability report
are designed to reflect the outputs of this materiality
assessment. All of these topics are reviewed as part
of the broader risk assessment process, however,
at this point not all are considered to be principal
risks for the Group. We will continue to keep these
topics under review, particularly with respect
to organisational changes and emerging themes.
The assessment will also be central to the
development of our Sustainability Programme
as we seek to ensure continued alignment with
business and stakeholder needs.
This prioritisation of material issues were used
to develop the pillars and focus areas for our
sustainability strategy.
As a result of above, the strategy is structured
around four pillars:
• Enabling a Low Carbon Future
• Embracing Cleaner Energy
• Nurturing our People
• Investing in our Customers and Communities

We will continue to be successful,
while playing a positive role in the
broader sustainable development
agenda
Culture & Employee
Engagement
Attracting &
Retaining Talent
Inclusion & Diversity
Employee
Health &
Wellbeing
Changing Consumer
Preferences
Community
Development
Corporate Social
Responsibility
Customer
Accessibility
Labour Relations
Ethical Business &
Human Rights
Industry Innovation
& Change
Product Safety
& Quality
Regulation
Geopolitical Risk
Renewable
Energy
Carbon Reduction
& Climate Change
Water
Stewardship Waste & Circular Economy
Responsible Sourcing
& Traceability
Biodiversity
Market Growth
Brand & Reputation
Customer Experience
Influence
on
Stakeholders
Importance to 
Environment Community Marketplace Workplace
Low
High
High
Low
53
 STRATEGIC REPORT
52 
Sustainability and the UN
Sustainable Development Goals
The UN Sustainable Development Goals (SDGs)
provide a globally accepted roadmap for
addressing many of the most urgent global
economic, environmental and social challenges.
Although the seventeen goals were agreed at
international level, the challenges we face require
broad participation and there is a crucial need for
the private sector to play its part. As a leader in
the roadside retailing industry, our most significant
contribution to the SDGs will come through
enabling our customers reduce their fuel emissions
and improve the nutritional value of products
consumed and doing so in a way that does not
compromise the environment, the rights of others
or the long term effectiveness of our business.
We will continue to be successful, while playing
a positive role in the broader sustainable
development agenda. We highlight the SDGs
we impact on under each pillar. While we touch
on a number of the goals, we identify below the
SDGs that have greater strategic relevance for
our business and we see the greatest potential for
impact and opportunity in SDGs 7, 8, 11 and 13 –
Affordable & Clean Energy (SDG 7), Decent Work
& Economic Growth (SDG 8), Sustainable Cities &
Communities (SDG 11) and Climate Action (SDG 13).
Sustainability Strategy Pillars
and Alignment to UN SDGs
Our strategy aims to protect the natural
environment, enhance the lives of our employees
and the people who avail of our products and
services, and connect us with the communities
in which we operate.
Stakeholder Engagement
We are committed to ongoing and constructive
engagement with our key internal and external
stakeholders and through a process of two-way
engagement, we incorporate their views into our
business activities. We are engaged in partnerships
with key stakeholder groups and relevant third
parties to help achieve our goals. is
also a member of a number of trade organisations
and multi-stakeholder initiatives, through which we
seek to advance fuel and food initiatives. Before
undertaking the materiality assessment in 2019,
we revisited the process for stakeholder analysis
to ensure we continue to interact appropriately
with various stakeholder groups. Having clearly
identified those who we impact, and those groups
that can influence and impact , we
tailored our materiality assessment to ensure
input from diverse stakeholder groups. Among our
key stakeholders are employees, shareholders,
communities, customers, consumers, government
and suppliers including farmers. We understand
that among and within these groups, there can
be different and sometimes conflicting views.
As part of our engagement we seek to balance
these competing stakeholder interests and
respond in a way that maximises the value for
all those connected with the organisation.
Stakeholder Groups
We use a variety of channels to support the
engagement process, many of which are tailored
for specific stakeholder groups. Our ability
to demonstrate a robust engagement process
is a core part of the process and previously
we have mentioned how we engage and work
with the various stakeholders.
Governance
Accountability for implementing our sustainability
strategy and our sustainability performance
sits at the highest level of governance within
our organisation. Our Board of Directors
are committed to effective governance and
sustainable growth, and have made the further
evolution, development and execution of our
sustainability agenda a priority for the organisation.
To this end we have established a governance
structure to ensure our sustainability strategy
is fully embedded and implemented across the
wider business. Our governance structure is
shown below.
Board of Directors
Ultimate responsibility for sustainability
Executive Leadership Team
Executive responsibility
Head of Sustainability
Responsible for leading and implementing the sustainable strategy
Sustainability Working Group
Cross divisional/cross-regional representatives with responsibility to collaborate on
implementing programmes/initiatives within the business to deliver on strategic objectives
The pace of change and the scale of the challenges within our industry
require that we work collaboratively to develop shared understanding
and common solutions for many of the issues identified.
Mapping to UN SDGs
Enabling a low
carbon future
Embracing
cleaner energy
Investing in our
customers
& communities
Nurturing our
people
55
 STRATEGIC REPORT
54 
Proud of Our Achievements to Date
Sustainability is not new for us. We have already made significant
progress on several initiatives across the business and we are now
stepping up our efforts. Below are some of our key achievements
over the past period.
€3.9 million
donated to charity through
Charitable Fund
Accessibility
focus with FuelService App and
disability parking, toilets and facilities
Zero Waste
goes to landfill across
our Ireland operations
Water Harvesting
& recycling at car washes in Ireland
100% Green
Electricity in Ireland operations
Low Energy
lighting and LED used on canopy
and external forecourt displays
FoodCloud Partnership
to facilitate redistribution of
surplus food, reducing food waste
100% Certified
Rainforest Alliance Coffee
in Ireland
Sustainable
Commitment to 100% RSPO
certified Palm Oil
100% Recyclable
coffee cups and discount
for reusable cups
Largest Grid
of EV fast charging points on UK motorway
network across the Welcome Break estate
Graduates
and intern programmes launched
Over 30% Female
representation on senior
leadership team
Fuelgood Fuel
contains additives to make our petrol
and diesel better for your engine
and the environment
Inclusion & Diversity
strategy developed
Culture & Values
programme now underway
€3.9 million
donated to charity through
Charitable Fund
Accessibility
focus with FuelService App and
disability parking, toilets and facilities
Zero Waste
goes to landfill across
our Ireland operations
Water Harvesting
& recycling at car washes in Ireland
100% Green
Electricity in Ireland operations
Low Energy
lighting and LED used on canopy
and external forecourt displays
FoodCloud Partnership
to facilitate redistribution of
surplus food, reducing food waste
100% Certified
Rainforest Alliance Coffee
in Ireland
Sustainable
Commitment to 100% RSPO
certified Palm Oil
100% Recyclable
coffee cups and discount
for reusable cups
Largest Grid
of EV fast charging points on UK motorway
network across the Welcome Break estate
Graduates
and intern programmes launched
Over 30% Female
representation on senior
leadership team
Fuelgood Fuel
contains additives to make our petrol
and diesel better for your engine
and the environment
Inclusion & Diversity
strategy developed
Culture & Values
programme now underway
€3.9 million
donated to charity through
Charitable Fund
Accessibility
focus with FuelService App and
disability parking, toilets and facilities
Zero Waste
goes to landfill across
our Ireland operations
Water Harvesting
& recycling at car washes in Ireland
100% Green
Electricity in Ireland operations
Low Energy
lighting and LED used on canopy
and external forecourt displays
FoodCloud Partnership
to facilitate redistribution of
surplus food, reducing food waste
100% Certified
Rainforest Alliance Coffee
in Ireland
Sustainable
Commitment to 100% RSPO
certified Palm Oil
100% Recyclable
coffee cups and discount
for reusable cups
Largest Grid
of EV fast charging points on UK motorway
network across the Welcome Break estate
Graduates
and intern programmes launched
Over 30% Female
representation on senior
leadership team
Fuelgood Fuel
contains additives to make our petrol
and diesel better for your engine
and the environment
Inclusion & Diversity
strategy developed
Culture & Values
programme now underway
€3.9 million
donated to charity through
Charitable Fund
Accessibility
focus with FuelService App and
disability parking, toilets and facilities
Zero Waste
goes to landfill across
our Ireland operations
Water Harvesting
& recycling at car washes in Ireland
100% Green
Electricity in Ireland operations
Low Energy
lighting and LED used on canopy
and external forecourt displays
FoodCloud Partnership
to facilitate redistribution of
surplus food, reducing food waste
100% Certified
Rainforest Alliance Coffee
in Ireland
Sustainable
Commitment to 100% RSPO
certified Palm Oil
100% Recyclable
coffee cups and discount
for reusable cups
Largest Grid
of EV fast charging points on UK motorway
network across the Welcome Break estate
Graduates
and intern programmes launched
Over 30% Female
representation on senior
leadership team
Fuelgood Fuel
contains additives to make our petrol
and diesel better for your engine
and the environment
Inclusion & Diversity
strategy developed
Culture & Values
programme now underway
57
 STRATEGIC REPORT
56 
TOGETHER
WE CAN
BRING ABOUT
REAL CHANGE
AND LEAVE
A LASTING
LEGACY
FOR FUTURE
GENERATIONS
The Next Chapter in Our
Sustainability Journey
Whilst we can reflect on these achievements,
we recognise that much more needs to be
done. To us, it’s about evolving our business
whilst reducing our environmental impacts.
We will continue to be successful while playing
a positive and proactive role in the broader
sustainable development agenda.
The sustainability strategy continues to come
to life and is having a real impact across the
business, and this is evident in some of the
new initiatives being undertaken at present.
We will endeavour to communicate more
transparently to all our stakeholders as we
progress on our sustainability journey. This
will include sharing information on both our
achievements and the challenges we face
along the way.
is committed to creating sustained
long-term growth and stakeholder value whilst
managing the business to ensure an inclusive and
sustainable future for our stakeholders, including
employees, customers and local communities.
Together we can bring about real change and
leave a lasting legacy for future generations.
Fuel Initiatives
We utilise full-stage two vapour recovery pumps,
which collect the vapours from the nozzle and
vacuum them back into the tank, minimising vapour
release into the atmosphere. We also employ
a system on all sites which monitors fuel stock
at all times ensuring any risk of contamination
is minimised.
Water Initiatives
There are several initiatives we engage in while
developing our sites to help significantly reduce
our water consumption and energy usage
including the harvesting of rainwater from our
forecourt canopy which is used in car washes.
This used water is then cleaned via the water
recycling centre and reused. We continue
on the journey to roll out this initiative to further
sites across the estate.
Suppliers
aim to use environmentally friendly
suppliers. For example, only uses
Tierra Lavazza in all our coffee machines.
This is 100% Rainforest Alliance coffee, which
is both environmentally friendly and practices
non-exploitation of the workforce. In addition
to this, we aim to source much of our food
produce within the respective region to reduce
its carbon footprint.
58  59
 STRATEGIC REPORT
We collaborate as a growing
international business, while ensuring
locally-led high performing teams
in each of our regions. Each region
has distinct elements in its culture
while operating within a Group culture
that is built around a clear employee
proposition and being attentive to the
needs of our customers.
There is a strong entrepreneurial culture in the
business which is driven by the founders who
started the business more than 25 years ago
and are still closely involved with the business
today. We leverage the diverse talents and
expertise of our people to innovate and lead
to better value for our customers, our shareholders,
our people, our communities and our environment.
Our vision statement ‘To be the leading roadside
retailer serving the needs of consumers in transit
in each of our national markets’.
Our values are core to our culture and exist in all
of the regions we operate. In 2019 we completed
a values and culture project to refresh our core
values as our business grows. Our new core
values will launch in 2020 and will guide our
attitudes, behaviours and actions to our people,
our customers, our suppliers, and our broader
stakeholders. They are the qualities that we see
alive and at work in our business today, and which
will help us achieve our vision for the future.
Through these core values and our culture we
are committed to fostering a great place to work,
where our people can be at their best and are
able to contribute fully to our shared success.
Staff Development and
Engagement
Attracting and retaining great people is critical
to the growth and success of our business. We
recently set up a Group HR division in 
to actively lead more strategic organisational
development initiatives and to really accelerate our
people agenda. In 2019 we delivered a significant
number of new programmes for our people including:
• New culture and engagement projects including
the development of our core values across
the Group and launch of new engagement and
recognition programmes
• A new performance and rewards framework
to ensure a market competitive proposition
for our staff in each region, and a culture of
development and progression
• New leadership development and training
initiatives
• Enhancing our policies to create a more
progressive work environment for our people
• Internal progression and career path
development
• Talent and succession planning
Health and Wellbeing
We are committed to our employees and their
health and wellbeing is paramount to us in
. We encourage everyone to prioritise
their wellbeing, both inside and outside work.
We provide a number of initiatives including
Flexitime, Bike to Work Scheme, Tax Saver travel
tickets, Wellness Events and programmes and our
Employee Assistance Programme to support our
staff’s wellbeing and help them be at their best.
In 2019 we also set up a new Sports and Social
Committee in . The aim of this initiative
was to provide our employees with some exciting
new opportunities to engage and collaborate with
one another, away from their everyday interactions.
Exciting events have been arranged to suit all
needs such as bake offs, sporting activities like
running, golf events, yoga and pilates, cinema
and theatre outings and the first 
book club. We also celebrated our first 12 Days
of Christmas event in with a wonderful
daily campaign of internal events to celebrate the
end of a successful year.
OUR PEOPLE AND CULTURE
At , it’s our people that
make us a success
Training and Development
We invest in our employees through training
and development initiatives to ensure we provide
opportunities for personal growth and career
development. In 2019 we launched a number
of new training, development and mentoring
initiatives across all regions.
Our Retail Management Development Programme
is a 9-month site manager development programme
that enables participants to gain experience across
all areas of the business from customer service,
food & retail, site operations, people management
and leadership accreditation. In 2019 we conducted
a group wide refresh of this programme to add
new modules to the course and we rolled out this
programme in both our Irish and UK businesses with
plans to extend it into US for 2020.
In 2019 we also launched a number of new people
development training courses for our head office
staff across ROI, UK and USA as part of a new
approach to leadership development and the
competencies we wish to build for the future. These
programmes have received fantastic feedback form
our teams which we plan to build on for 2020
and beyond.
61
 STRATEGIC REPORT
60 

We invest in our employees
through training and development
initiatives to ensure we provide
opportunities for personal growth
and career development
63
 STRATEGIC REPORT
62 
Launch of 
Graduate Programme
2019 saw the launch of s first
Graduate programme. This is an exciting new
venture for , which will allow us to tap
into a new and critical pipeline of talent and skills
to continue our future growth and development.
The programme is a 3-year programme, that will
involve graduates experiencing all aspects of
, supporting both our retail sites and
our head office functions, including international
placement and transfers.
Inclusion and Diversity
At we believe in the transformative
potential of a truly diverse and inclusive workforce
and in 2019 we launched a large-scale inclusion
and diversity strategy across seven core pillars.
Each region has different initiatives underway
depending on the needs of the particular region
from an inclusion and diversity perspective.
Across the company we have also developed
new inclusion and diversity policies and training.
We expect everyone in our business - no matter
what our level, role or function is – to play an
active role in creating environments where people
of diverse backgrounds can bring their full selves
to work, and who can thrive in an open and
inclusive environment.
Our CSR programmes in each region also support
a number of these pillars through their events
and programmes.
Some highlights from 2019 include:
• Launch of a new partnership with the 30% Club and access
to female mentoring and development programmes through
a number of women in business programmes.
• Partnership with the DCU ability programme offering work
placements to individuals with intellectual disabilities. We have
also launched FuelService & JAM (Just a Minute) support services
for people with disabilities.
• South Dublin partnership supporting young adults with mental
health challenges and disabilities to reach their potential by
providing work experience placements.
• Enhancing our policies in each region related to working mums
and dads, and family needs.
• Cross cultural and broader inclusion and diversity awareness
built into our performance management and people management
training programmes.
Through actively engaging different perspectives, and ensuring
inclusion and diversity is embraced, we can challenge and
enrich our thinking, and empower our people and business
to achieve more.
65
 STRATEGIC REPORT
64 
BUSINESS ETHICS REVIEW
Our people will live the values of integrity,
inclusiveness and enterprising spirit
At , doing business with
integrity is fundamental to the way
we operate and the foundation of our
long term success. Business results
must always be achieved ethically
and legally, and the Group’s Code
of Conduct clearly defines the
standards and expectations set for
all colleagues. It sets out
how we respect each other, live our
Values, protect our assets and obey
the law. The policies behind the code
provide clear guidance for our daily
interactions and are reviewed annually.
The ongoing responsibility for their
implementation rests with Group
management, supported by relevant
functions including HR and Internal
Audit. The obligation to do the right
thing is underpinned by one of our
core values whereby colleagues are
supported to “…to do what is right
for our customer, our business and
the world”.
Anti-Bribery and Corruption
As part of the Group Code of Conduct,
’s Anti-Bribery Policy describes
our zero-tolerance approach and provides
guidelines to all employees regarding potential
situations involving bribery.
has implemented an Anti-Bribery
and Corruption policy which states that no
employees or representatives of the Group
is to offer or accept any bribe or engage in any
acts which constitute abuse of entrusted power
or position for private gain. The policy is designed
to ensure that each employee and representative
of the Group business within the Group understands
their responsibilities and the actions they need
to take to comply with the policy so that the
Group and our employees are protected from
any penalties, fines and/or reputational damage.
A copy of the policy is available on the Group’s
intranet page.
Whistleblowing
The Board has approved a Whistleblowing Policy
which is reviewed annually. The procedure allows
for concerns to be raised by employees and ensures
that they are addressed through a transparent
and confidential process. A copy of the policy
is available on the Group’s intranet page.
Human Rights
We are committed to acting ethically and with
integrity in all our business dealings. We aim
to have a workplace free of modern slavery
and will not knowingly engage with any
organisation involved in such activities. While
we recognise the risk associated with having
a large workforce in multiple countries and
a significant number of suppliers, our processes
and procedures are designed to be in compliance
with applicable human rights legislation in the
countries in which we operate.
Promoting Wellbeing
Given the time employees spend in the workplace,
we know that as an employer we can play an
important role in personal wellbeing beyond health
and safety. At , we want to support
our colleagues in leading healthier, more active
lives and have begun to expand a number of
locally relevant initiatives and promote a greater
awareness around the concept of wellbeing.
67
 STRATEGIC REPORT
66 
11,500+
EMPLOYEES
Rathcoole, Ireland
69
 STRATEGIC REPORT
68 
FINANCIAL REVIEW
Continued consistent delivery
with strong growth
Growth
Revenue
+52.7%
€3.1bn Revenue
Adjusted EBITDA
+141.7%
€140.4m EBITDA
Network
+84
556 sites
Return
ROCE
10.6%
Reflecting strategic
acquisitions and investments
Cash Conversion
107.2%
Cash €138.7m
Adjusted diluted EPS
+25.8%
33.8 cent per share
The Group is delighted to report
another very strong performance
for the 2019 financial year.
We expanded our portfolio of world
class brand partnerships, generated
very good levels of organic like-
for-like growth, built an increased
presence in strategic service areas
and successfully completed a large-
scale ERP transformation.
The Financial Review provides an overview
of the Group’s financial performance for the
year ended 31 December 2019 and the Group’s
financial position at that date.
The Key Financial Performance Indicators
outlined here are used to track business
and operational performance and help the
Group to drive value creation. The Group
has a disciplined financial approach to target
continued growth while meeting its return on
investment objectives. This combination of
growth and return help ensure the Group’s
financial objective of maximising shareholder
return is achieved.
70  71
 STRATEGIC REPORT 71

Revenue for the year of €3.1 billion was 52.7%
ahead of 2018 (50.9% on a constant currency
basis). The upside in performance was driven
by UK €804.7m, US €182.5m and ROI €72.8m
FY 2019
€m
FY 2018
€m
%
Growth
Revenue 3,072.60 2,012.60 52.7%
Gross Profit 572.1 282.3 102.7%
Selling & Distribution Costs (302.2) (156.8)
Administrative Expenses * (71.4) (39.9)
Other income 11.2 5.0
Adjusted EBITDAR * 209.5 90.6 131.2%
Rent (69.1) (32.5)
Adjusted EBITDA * 140.4 58.1 141.7%
Depreciation & Amortisation * (43.8) (22.1)
Finance Costs, net * (26.1) (6.4)
Adjusted PBT * 70.5 29.6 138.2%
Tax * (9.9) (3.3)
Adjusted PAT * 60.6 26.3 130.4%
Non-controlling interests * (19.4) 0.1
Adjusted PAT attributable to  * 41.2 26.4 56.1%
Adjusted Diluted EPS (cents) * 33.80 26.86 25.8%
* 
Adjusted for share based payments, non-recurring operating charges, interest on shareholder loans,
non-recurring interest charges, acquisition related intangible asset amortisation charges and the related
minority interest and tax impact on these items.
See note 8 in the financial statements for further detail on adjusting items.
Summary Profit and Loss
This is prepared on a pre-IFRS 16 basis
Revenue
Revenue for the year of €3.1 billion was 52.7%
ahead of 2018 (50.9% on a constant currency
basis). The upside in performance was driven
by UK €804.7m, US €182.5m and ROI €72.8m.
Excluding the Welcome Break acquisition,
’s revenue increased by 18.0% driven
by good underlying growth and the full year
impact of 2018 acquisition activity.
Gross Profit
Gross Profit increased by 102.7% over the prior
year to €572.1 million. (100.3% on a constant
currency basis). The strong performance was
driven by UK €247.0m, US €33.8m and ROI €8.9m.
The results for 2019 incorporate a full 12 months
of the Welcome Break acquisition which has
aided significant growth on 2018. US business
growth has been driven by the addition of 46 PFS
leasehold sites in September 2019 and the full
year impact of the 2018 acquisitions in Florida
and South Carolina.
Excluding the Welcome Break acquisition,
’s gross profit increased by 21.5%
driven by revenue growth and good underlying
like for like growth at a gross profit level.
FY 2019
€m
FY 2018
€m
%
Growth
Adjusted PAT attributable to Group 41.20 26.40 56.1%
Share based payments (1.0) (1.1)
Non-recurring charges (2.8) (8.5)
Acquisition related intangible assets amortisation (3.8) (1.1)
Interest on Eurobonds (shareholder loans) (7.5) (1.2)
Non-recurring finance cost (2.6) (1.0)
Acquisition related rental adjustments (2.4) 0.0
Impairment (2.3) (1.3)
IFRS 16 adjustment (11.0) 0.0
Tax 3.7 0.1
Minority interest 10.0 1.0
Reported PAT attributable to Group 21.50 13.30 61.7%
Selling, Distribution
and Administration Costs
Selling and Distribution Expenses
Selling and distribution costs (excluding rent,
depreciation and net impairments charges)
for the Group grew by 92.7%. When excluding
Welcome Break, these costs grew by 22.6%.
Group selling and distribution costs as a
percentage of gross profit decreased to 53.0%
in 2019 (2018: 55.5%).
Administration Expenses
Administration expenses (excluding share-based
payment expense, non-recurring costs and
depreciation) grew by 78.9%. When excluding
Welcome Break, the increase was 21.6%.
This increase is due to business expansion
and investment in management resources to
support the Group’s growth trajectory. Group
administration expenses as a percentage of gross
profit decreased to 12.5% in 2019 (2018: 14.1%).
Other Costs
Depreciation, amortisation and impairments
grew by €21.7 million which reflects the full year
impact of Welcome Break to the Group as well
as the increased level of capital expenditure
in recent years.
Interest costs have increased given the higher
debt levels utilised to finance the acquisition
of Welcome Break and as a result of the
Welcome Break debt consolidated in the Group.
Adjusted Diluted EPS
Adjusted diluted EPS is 33.8 cent per share which
is an increase on 2018 of 25.8%.
Adjusted Profit Attributable to the Group Reconciliation
Non-Recurring Charges
Non recurring charges primarily relate to the
restructuring of recent business acquisitions,
business combination acquisition costs and costs
incurred in the year in relation to the upgrade of
the ERP system.
Reported PAT attributable to the Group
Reported PAT attributable to the Group has
increased by 61.6% on 2018.
73
 STRATEGIC REPORT
72 
2019
€m
2018
€m
%
Growth
%
L4L Growth
Fuel Revenue 2,196.8 1,572.1 39.7% 10.8%
Food Revenue 344.2 162.0 112.4% 3.0%
Store Revenue 466.6 268.9 73.5% 6.0%
Other Revenue 64.9 9.5 581.9% 0.0%
Total Revenue 3,072.5 2,012.5 52.7% 9.6%
Fuel Gross Profit 141.5 96.0 47.3% 7.4%
Food Gross Profit 221.8 96.3 130.5% 3.2%
Store Gross Profit 158.4 82.5 92.0% 8.6%
Other Gross Profit 50.3 7.5 573.0% 0.0%
Total Gross Profit 572.0 282.3 102.7% 6.3%
Non-Fuel Total
Revenue 875.7 440.4 98.8% 4.9%
Gross Profit 430.5 186.2 131.2% 5.7%
* 
Like for Like (LFL) measures the performance of stores that were open at 1 January 2018 and excludes any stores that were closed
or divested since that date and constant currency eliminates the effects of exchange rate fluctuations that occur when calculating
financial performance numbers
Gross profit is an important financial metric for
the Group as fuel price fluctuations can have
a disproportionate impact on revenue movements.
Gross profit from fuel increased by 47.3% during
the year and 20.6% excluding Welcome Break.
This was primarily driven by the full year impact
of 2018 acquisitions as well as solid like for like
fuel margin growth.
Food gross profit has increased by 130.5% and
8.6% ex Welcome Break reflecting the growth
in the estate and continued focus on improving
our food offering. Store gross profit has increased
by 92.0% and 36.9% ex Welcome Break reflecting
estate growth and strong growth in impulse
categories during the summer months.
Analysis by Product and Geography Segment
Other gross profit which includes hotels, gaming
and parking has increased by 573.0% which results
from the full year impact of the Welcome Break
acquisition. The Hotel business appointed a new
management team which is making good progress.
A performance improvement programme has been
established to drive top line growth by increasing
food and beverage penetration, coupled with
structured room rate management.
Group – Gross Profit by Segment
The graphs above indicate the proportion of gross
profit that we derive from the different product
segments across each of our markets in the
Republic of Ireland, the UK and the USA.
The contribution to overall gross profit coming
from non-fuel continues to increase with 75%
of gross profit now coming from non-fuel revenue
streams which is up from 66% in the prior year.
A key strategic growth priority of the business
is to increase gross margin contribution from the
higher margin non-fuel sector.
The current year cash conversion has been
driven by increased fuel volume performance
in 2019, while 2018 cash conversion was enhanced
by improved credit terms from fuel suppliers.
€139.4m of cash was generated from operating
activities and was available to be utilised for debt
repayment and re-investment in the business.
Capital expenditure includes €36.6m ($40.0m)
in relation to the acquisition of a minority stake
in the Connecticut Service Plazas.
Equity proceeds in 2019 represents the funding
injected by AIP into Welcome Break in order to
complete the repayment in full of the junior loan
facility in that entity as originally planned as part
of the acquisition.
In November 2019, the Group completed
a refinance of loans in its Welcome Break business.
The Group obtained new long-term borrowings
comprising of a £165 million 7 year senior bank
loan and a £165 million 10 year institutional term
loan. The new senior facilities also include a £30
million capital facility and a £10 million revolving
credit facility, both of which were undrawn at
31 December 2019. The previous senior bank loan
of £300 million and £24 million capital facility were
repaid on the same date. These loans are non-
recourse to the parent company, .
Net Debt
Net external debt (excluding shareholder loans
and IFRS 16 lease liabilities) was €525.5m at
31 December 2019 (2018: €506.9m). On a constant
currency basis, net external debt was €505.3m.
Both Group leverage and  standalone
leverage were impacted by the significant
strengthening of Sterling in late 2019 as almost 80%
of Group external debt is denominated in Sterling.
The Group had total external debt of €664.2m
(pre-IFRS 16) and total cash of €138.7m at the
balance sheet date. Net external debt including IFRS
16 lease liabilities was €1.2bn at 31 December 2019.
The pro forma adjusted leverage for the Group
at 31 December 2019 was 3.7 times and the pro
forma adjusted basis for  on
a standalone basis and excluding Welcome Break
was 1.9 times.
77
 STRATEGIC REPORT
Non current assets have increased due to the
recognition of a right-of-use asset of €474.0m.
Net debt has increased due to the recognition
of lease liabilities of €685.0m.
When measuring lease liabilities, lease payments
were discounted using the incremental borrowing
rate at 1 January 2019. The weighted average rate
applied was 8%.
*
Adjusted for share based payments, non-recurring operating charges, interest on shareholder loans, non-recurring interest
charges, acquisition related intangible asset amortisation charges and the related minority interest and tax impact on these items.
This has increased due to a full year of trading results
of Welcome Break being included in the results.
79
 STRATEGIC REPORT
78 
COVID-19 Impact
COVID-19 has presented an unprecedented
challenge for our business and the wider
economies in which we operate. The scale
of the financial impact on in the 2020
financial year is difficult to quantify given the
uncertainty created by the virus. We have taken
strong measures to secure additional liquidity,
manage our working capital and reduce our
cost base.
We engaged with our finance providers in both
the  banking group and the
Welcome Break banking group at an early stage
of the crisis to seek additional flexibility. They
subsequently agreed to the removal or relaxation
of covenant conditions up to and including June
2021 and also to convert existing accordion
facilities and capital expenditure facilities of
€52.5m and GBP25m, respectively, into revolving
credit facilities which now gives us significant
additional flexibility to navigate through this period
of uncertainty. This represents a strong vote of
confidence in our business and in our retail model
by our lending partners.
Notwithstanding Welcome Break has been
the most heavily impacted by COVID-19, traffic
volumes on the UK motorway road network are
continuing to recover and the UK government’s
recent announcement which will see further
substantial lifting of restrictions from 4 July 2020
which we expect to drive further traffic increases
on the road network. The Welcome Break business
has substantial liquidity available and is well
positioned ahead of the important summer season.
We are very pleased with how the remainder of
the business traded through Q2 2020
aided by strong store sales in the local petrol filling
station sites, good fuel margins and extensive cost
saving measures.
Our absolute focus at present is navigating the
various challenges associated with COVID-19
and to ensure we are looking after our people
whilst continuing to deliver the essential service
we provide to our customers. The ultimate course
of the pandemic remains unclear at this stage,
but we are following the relevant guidance from
the authorities and taking definitive steps to ensure
the Group remains well positioned as market
conditions recover.
Niall Dolan
Chief Financial Officer

Navan, Ireland
81
 STRATEGIC REPORT
80 
CORPORATE
GOVERNANCE
Board of Directors 84
Directors’ Report  86
Corporate Governance Statement 96
Audit Committee Report 102
Nomination Committee Report  106
Remuneration Committee Report 110
Statement of Directors’ Responsibilities 116

82  83
85
84   CORPORATE GOVERNANCE
BOARD OF DIRECTORS
Independent Non-
Executive Chairman
Executive Directors NON-Executive Directors
Daniel Kitchen (68)
Non-Executive Director
Robert Etchingham (66)
Chief Executive Officer
Joseph Barrett (53)
Chief Operating Officer
Niall Dolan (46)
Chief Financial Officer
Howard Millar (58)
Independent
Non-Executive Director
Martin Southgate (65)
Independent
Non-Executive Director
Brian Geraghty (54)
Independent
Non-Executive Director
Nationality Irish Irish Irish Irish Irish Irish Irish
Date of Appointment 27 May 2015 19 November 2010 19 November 2010 6 March 2018 27 May 2015 11 February 2014 19 August 2014
Committee Membership Remuneration Committee
Nomination Committee
(Chairman)
Remuneration Committee
Nomination Committee
Audit Committee (Chairman)
Remuneration Committee
Nomination Committee
Audit Committee
Remuneration Committee
(Chairman)
Nomination Committee
Skills and Experience Previously, he was finance
director of Green Property plc
from 1994 to 2002, Deputy
CEO of Heron International from
2003 to 2008 and the Irish
Government-appointed chairman
of Irish Nationwide Building
Society from 2009 to 2011.
Founded the Group in 1992 after
working for Esso in the Republic
of Ireland and the UK for over
10 years. Mr. Etchingham has
over 30 years’ experience in the
retail fuel market and founded
the Group with a clear strategic
vision of the Group’s position in
the market. He has led the rapid
growth in the Group’s site numbers
in recent years, capitalising on the
opportunities presented during the
recession in Ireland and GB. He has
a Master’s Degree in Economics
from University College Dublin.
Joined the Group in its second
year of operation with a strong
background in retail and fast
moving consumer goods having
worked for Tesco and John West
Foods. Mr. Barrett has 30 years’
experience in the retail industry
and has a key responsibility for the
management and development
of the Group’s retail and food
offerings. Mr. Barrett has been
instrumental in developing the
Group’s partnerships with its
international food brand partners.
He has a B.Comm and MBA from
University College Dublin.
Appointed Chief Financial Officer
and Company Secretary of the
Group in July 2017. Mr. Dolan
joined the Company prior to the
IPO in 2015 as Head of Corporate
Finance and Treasury. Before
joining the Company, Mr. Dolan
was CFO of ISS Ireland Limited
for five years having previously
held a senior finance role with
One51 plc. Mr. Dolan qualified as a
chartered accountant with PwC in
1998 and also holds a Bachelor of
Commerce Degree and a Masters
of Accounting degree from
University College Dublin.
Served in several senior financial
roles in Ryanair over a 23 year
period between 1992 and 2014,
and was Deputy Chief Executive
and Chief Financial Officer from
1 January 2003 to 31 December
2014.
He graduated from Trinity College,
Dublin and was awarded a B.Sc
Mgmt (Hons) and is a Fellow of
the Institute of Chartered Certified
Accountants.
Graduate in Economics & Business
Studies and holds a post Graduate
Diploma in Marketing Studies. He
has spent over 35 years in the
consumer goods sector and has
a wealth of international business
experience having held numerous
General Management positions
worldwide. Prior to his retirement in
2013, Mr. Southgate was Managing
Director of JTI UK from 2011 to
2013. Currently mentors businesses
in strategy and commercial
development
Chartered accountant (fellow of
Chartered Accountants Ireland)
and senior partner in Crowe, a long
established global accounting firm.
Other Current
Directorships
Non-executive chairman of
Workspace Group plc (due to
retire in July 2020), Hibernia REIT
plc and Sirius Real Estate Limited.
Non-Executive Director of Ryanair
and serves as Chairman of the
Remuneration Committee.
Chief Executive Officer and
Executive Director of Sirius Aviation
Capital Holdings Ltd. Member of
the advisory Board of Irelandia
Aviation, and serves as a Director
on Viva Latinamerica S.A. and FAST
Colombia S.A.S.
Board Director and trustee of
Gallaher Pensions Limited and a
member of the Advisory Counsel
of the London Philharmonic
Orchestra.
Founding Director of The Little
Museum of Dublin.
Board Diversity by tenure (years): Less than 3 years (1) 3–8 years (4) 8 years or more (2)
 Board of Directors
Audit Committee
Senior
Management
Executive Risk
Committee
Group Risk Register
Operational
Management
Internal Audit
Internal Audit
Report
= Increase
= No change
= Decrease
87
86   CORPORATE GOVERNANCE
DIRECTORS’ REPORT Risk Impact Mitigation Trend
Culture and
Governance
The Group may face a challenge in achieving
the right balance in respect of culture
and governance structures arising from
accelerated growth. An inappropriate culture
at various levels of the organisation could
negatively impact current performance and
future growth of the business.
• The Group has adopted the Quoted Companies
Alliance Corporate Governance Code (the
‘Code’) in line with AIM rules. The Group
completes an annual review of the Code’s
requirements and has a ‘Statement
of Compliance’ disclosure on their website.
• The Group HR Department is focused on
strategic talent management and succession
planning initiatives to proactively manage and
mitigate this risk.
• The Group completed a cultural assessment
and has defined core values and practices
which will be communicated and embedded
across the Group.
Economic Uncertainties and challenging conditions
in the economies in which the Group
conducts business, may adversely affect
the Group’s business, results of operations
and financial position.
Specifically, the COVID-19 global pandemic
and resulting adverse economic conditions
have impacted the Group’s business and
could have a more adverse impact on the
Group’s business, results of operations
and financial position.
The pandemic has created significant
volatility, uncertainty and economic
disruption, which will adversely affect the
Group’s business operations, cash flows
and financial position.
The severity of the pandemic’s impact on
economies around the world and the potential
length of the economic recovery continues to
extend. The current outbreak and continued
spread of COVID-19 could cause a global
recession, which would have a further
adverse impact on the Group’s financial
condition and operations.
• The Group monitors these risks and actively
manages its business to ensure minimal
disruption to its operations.
• The Group is closely monitoring the impact
of the COVID-19 global pandemic on all aspects
of its business and geographies, including how
it may impact customers, employees, suppliers,
business partners and distribution channels.
• The Group has a resilient business model,
providing an essential service and its stores
remain open, albeit some with significantly
reduced food franchise offerings.
• The Group significantly curtailed expenditure
and has taken cost cutting measures within
a relatively short period of time.
• The Group secured access to additional
facilities to strengthen its liquidity position.
The directors present their annual report
together with the audited group financial
statements of  for the year
ended 31 December 2019.
Principal Activities and
Business Review
Established in 1992, is a roadside
convenience food and beverage retailer, operating
from motorway service areas and petrol forecourts
with a major presence in the Republic of Ireland,
the United Kingdom and the USA. The Group is
focused on acquiring and developing new Service
Area and Petrol Filling Station sites in each of
the three markets in which it operates. As at
31 December 2019, the business operated 556
forecourt sites and employed c11,798 people.
The directors are pleased with the performance
of the Group during the year and a comprehensive
review of the performance of the Group is included
in the Chief Executive’s Review and the Financial
Review presented by the Chief Financial Officer.
Subsidiary and Associated
Undertakings
A list of the Company’s principal subsidiaries
and associates is set out in note 31 of the financial
statements.
Principal Risks and Uncertainties
The Board has ultimate responsibility for
determining the nature and extent of the principal
risks it is willing to take in achieving its strategic
objectives.
Risk Management Framework
The Group’s risk management framework is
designed to be embedded within our organisational
structure. Operational management have
responsibility for identifying, managing and
mitigating risk within their operations on a day-to-
day basis. Senior management are responsible
for oversight and monitoring. Internal Audit acts
as an independent assurance provider.
Executive Risk Committee
The executive risk committee comprises the Group’s
executive directors and members of the senior
management team. It is responsible for assessing
the Group’s principal risks and uncertainties, the
controls in place to manage and mitigate those risks
and related monitoring and oversight procedures.
The executive risk committee reviews and maintains
the Group’s Risk Register and reports on changes
to the Audit Committee.
Group Risk Register Process
The Group’s Risk Register comprises a comprehensive
list of risks and is based upon a standardised
approach to risk identification, assessment and
review with a focus on mitigation and the assignment
of risk owners. Each risk identified is subject to an
assessment incorporating likelihood of occurrence
and potential impact criteria which ultimately leads
to the identification of the Group’s principal risks
and uncertainties. The Group has defined risk
categories as; strategic/commercial, operational,
economic, legal, technological and financial risks.
89
88   CORPORATE GOVERNANCE
Risk Impact Mitigation Trend
Brexit The UK’s decision to leave the EU is likely
to result in a short to medium term period
of economic and political uncertainty and
complexity. There is a risk that this uncertainty
could reduce demand in the Group’s UK
market, particularly in our motorway sites
in the UK and could adversely impact the
financial performance of the Group.
Macro-economic conditions, particularly higher
unemployment levels could lead to a reduction
in traffic volumes which would also impact the
performance of the Group’s UK based sites.
In addition, the Group generates a significant
portion of its earnings in the UK market, and
any significant decline in the value of sterling
will impact the Group’s translation of its sterling
earnings with consequential impacts on the
reported performance and results of the Group.
• The Group is closely monitoring this risk and
there is an on-going review of any new information
and policy indications from the UK Government
and the EU in relation to Brexit.
• The Group has a Brexit project team in place.
The cross-functional team assess Brexit-related
risks that face the Group, build mitigation
strategies and test alternative scenarios.
Technological
Changes
The Group may not keep at pace with
technological changes such as engine
enhancements, alternative fuels and new
delivery channels, which may result in
a negative impact on the Group’s operating
model, results of operations and financial
position.
• The Group is diversifying its business with a move
towards non-fuel dependent revenue streams.
• The Group installed electric vehicle charging
points on some of the motorway service area sites.
• The Group is completing a sustainability review
of its business and operations.
Business
Interruption
If the Group’s operations were interrupted as
a result of a significant event for a prolonged
period of time, which led to a delay or inability
to restore the organisation to its normal
operations, it could adversely affect the
Group’s financial position and results
of operations.
• The Group has operational contingency plans
in place which are reviewed and tested regularly.
• The Group has business continuity plans in place
and are continually assessing these plans to ensure
the processes are sufficient to meet the current
and future needs of the business.
• The Group ensures that an adequate insurance
programme in place.
Acquisitions
and
Integration
The Group may not select suitable targets
in line with the Group’s growth strategy and
at the appropriate rate of return and the
anticipated benefits of acquisitions (and/
or significant upgrades) may not be realised
if the Group is unable to conduct full due
diligence, raise the required funds, complete
the transaction or properly integrate the
operations of material acquisitions.
Or that risks embedded in a newly acquired
business are not fully understood and
managed. This may result in a failure or a
delay in the expected return on investment
and a subsequent impact on the strategic
development of the Group.
• All acquisitions must be approved by the
Investment Committee (‘IC’) and, for significant
acquisitions, by the Board.
• The IC has a clearly defined process to ensure
that an evaluation of potential acquisitions
is comprehensive and that the execution of
acquisitions is effective.
• Regular updates are presented to the Board
on potential significant acquisitions including
strategic and financial evaluations of any
proposed significant investments.
• The Group has put in place a formal integration
structure which is tailored to each specific project
including a project specific steering committee for
oversight and project management of integration.
Risk Impact Mitigation Trend
Acquisitions
and
Integration
(continued)
• Post-acquisition reviews are conducted
by senior management and the results are
presented to the IC and the Board.
• The Group appointed key personnel to manage
significant acquisitions and have set up an
integration project team with members from
key business streams to ensure the integration
is managed appropriately.
Legislation
and
Regulation
The Group is subject to an increasing
number of laws and regulations and the cost
of compliance or the failure to comply with
current and future regulatory obligations may
negatively affect the Group’s business.
Environmental laws may expose the Group
to the risk of substantial costs and liabilities,
in particular in relation to the Group’s storage
and dispensing of hydrocarbon fuels.
• The Group closely monitors all changes to
regulation and legislation.
• The Group’s operations ensure that appropriate
training programmes are in place for employees
with regards to any relevant laws/regulations
applicable to their business.
• The Group has operational controls in place
at a head office and site level. It also operates
a system on all sites which monitors fuel stock
at all times.
• The Group appointed a General Counsel
during 2019.
IT systems
and Change
Management
The anticipated benefits of new systems
once implemented may not be realised
or achieved.
• The Group has put in place a formal project
governance structure and project management
office for all IT projects.
• There is regular reporting to the Board regarding
major system roll outs and change management
projects.
Key people
and
Organisational
Structure
The Group may not be able to attract
and retain suitable personnel with the
requisite skills and experience, as necessary,
which may harm the Group’s ability to
implement its growth strategy and compete
within the industry.
• The Board is focused on succession planning
as the Group expands.
• The Nomination Committee regularly reviews
Board and senior management succession
planning to ensure that there is a robust
succession plan for senior management
positions and that the Group has the
appropriate level of skills and diversity across
the business.
• Development of our talent recruitment strategy
(intern, graduate programmes etc) to attract
talented people with the potential to be future
leaders of the Group.
• Continuous focus on leadership training for our
people managers.
• Employee survey undertaken to measure
engagement and set future priorities as well
as initiatives and programmes to increase
engagement.
Group Risk Register Process (continued)
Results for the year
The highlights of the Group’s financial statements include:
2019
€m
2018
€m
Revenue 3,072.6 2,012.6
Profit for the year attributable to the Group 21.5 13.3
Gross assets 1,969.2 1,332.5
Equity 286.0 361.3
The Consolidated Financial Statements for the financial year ended 31 December 2019 are set out in detail on pages 129 to 205
including the results for the year which are set out in the Consolidated Income Statement on page 129.
Dividends
The uncertainty posed by the COVID-19 outbreak
means that we are focused on minimising cash
outflows and strengthening our financial position
in the short term. As a result, the directors are
not proposing the payment of a final dividend
for 2019. An interim dividend of €0.66 cent
per share was paid in October 2019 (2018 total
dividend: 1.54 cent per share).
Events Since the Year End and
Future Developments
The impact of COVID-19 is discussed in further
detail in the Chief Executive’s Review, the
Chief Financial Officer’s Review and in note 35
to the Consolidated Financial Statements -
Post Balance Sheet Events. The Group remains
committed to driving shareholder value through
a combination of organic growth, acquisitions
and development opportunities.
Directors
The names of the current directors and brief
biographies are set out on pages 84 to 85.
Audit Committee
In accordance with Section 167 of the Companies
Act 2014,  has an Audit Committee,
which meets the requirements of the Companies Act.
Directors’ Remuneration
The remuneration paid to the directors in their
capacity as directors of  for the
year ended 31 December 2019 is set out in the
Remuneration Committee Report on page 110.
Interests of the Directors/
Secretary in the Group
The Group’s majority shareholder is B&J Holdings
Limited (incorporated in Malta), which owns
41.3% of the Company’s shares. Joseph Barrett
and Robert Etchingham are the ultimate controlling
parties of B&J Holdings Limited and own 100%
of the shares.
The directors and secretary who held office
at 31 December 2019 had the following interests
in the shares of the majority shareholder:
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial
Review on pages 70 to 81. In addition, note 23 in the Consolidated Financial Statements include the Group’s objectives,
policies and processes for managing its capital; its financial risk management objectives; details of its financial
instruments and hedging activities; and its exposures to credit, currency and liquidity risks.
91
90   CORPORATE GOVERNANCE
Risk Impact Mitigation Trend
Cyber and
Information
Security
The Group, similar to other companies,
is susceptible to cyber-attacks with the threat
to the confidentiality, integrity and availability
of data in its systems across the business.
• The Group continually monitors the
performance and robustness of its IT systems
and that of its IT vendors to ensure business
critical processes are safeguarded as far
as practicably possible.
• The Group have an arrangement in place with
a specialist third party provider to monitor
network activity and early warning reporting
to report unusual activity to central IT.
• Ongoing communication and training
programmes are in place to ensure appropriate
focus is maintained in respect of IT security
requirements including data protection.
• The Group has business continuity plans in
place and are continually assessing these plans
to ensure the processes are sufficient to meet
the current and future needs of the business.
• Dedicated IT personnel with appropriate
expertise are in place to oversee IT security.
• Formally documented information security
policies and procedures are in place and
third-party cyber security risk assessments
are in place.
B&J Holdings Limited
2019
Number of shares of
€1 each
2018
Number of shares of
€1 each
Ordinary Redeemable Ordinary Redeemable
Robert Etchingham 71,625 3,375 71,625 3,375
Joseph Barrett 23,875 1,125 23,875 1,125
95,500 4,500 95,500 4,500
The directors and secretary who held office at 31 December 2019 had the following
interests in shares of :

2019
Ordinary Shares of
€0.01 each
2018
Ordinary Shares of
€0.01 each
Non-Executive Directors
Daniel Kitchen 40,132 40,132
Brian Geraghty 16,447 16,447
Howard Millar 42,763 42,763
Martin Southgate 46,316 46,316
145,658 145,658
Group Risk Register Process (continued)
93
92   CORPORATE GOVERNANCE
Directors’ Interests in Share Options
Information on directors’ share options to subscribe for ordinary shares of the Company are set out below:
Options held at
31 December 2018
Granted during
2019
Exercised during
2019
Options held at
31 December 2019
Joe Barrett 100,000 300,000 0 400,000
Niall Dolan 550,000 300,000 0 850,000
Substantial Holdings
The table below shows all notified shareholdings in excess of 3% of the issued ordinary share capital
of the Company as at 31 December 2019 and 17 July 2020:
31 Dec 2019 17 July 2020 (date of signing)
Number of
shares
% of issued
ordinary
share capital
Number
of shares
% of issued
ordinary
share capital
B&J Holdings 49,781,579 41% 49,781,579 41%
Royal London Mutual Assurance Society 7,248,951 6% 7,408,738 6%
AXA SA 7,159,180 6% 5,419,306 4%
12 West Capital Management LP 6,317,677 5% 6,317,677 5%
Allianz SE 5,245,190 4% 5,357,119 4%
Canaccord Genuity Group Inc 4,627,450 4% 4,627,450 4%
UBS Group AG 4,576,725 4% 4,754,646 4%
Power Corporation of Canada 4,537,545 4% 4,282,456 4%
Octopus Investments Limited 4,407,771 4% 4,687,895 4%
Political Donations
No political donations were made during the
current or prior year.
Directors Compliance Statement
The directors acknowledge that they are
responsible for securing compliance by the
Company of its relevant obligations as set out
in the Companies Act (the ‘Relevant Obligations’).
The directors further confirm that there is
a Compliance Policy Statement in place setting
out the Company’s policies which, in the directors’
opinion, are appropriate to ensure compliance
with the Company’s Relevant Obligations.
The directors also confirm that appropriate
arrangements and structures are in place which,
in the directors’ opinion, are designed to secure
material compliance with the Company’s Relevant
Obligations. For the year ended 31 December
2019, the directors, with the assistance of the
Audit Committee, have conducted a review
of the arrangements and structures in place.
In discharging their responsibilities under Section
225 of the Companies Act, the directors relied
on the advice of persons who the directors believe
have the requisite knowledge and experience
to advise the Company on compliance with its
Relevant Obligations.
Disclosure of Information
to Auditors
The directors in office at the date of this report
have each confirmed that:
• as far as he is aware, there is no relevant audit
information of which the Company’s statutory
auditors are unaware; and
• he has taken all the steps that he ought to have
taken as a director in order to make himself
aware of any relevant audit information and to
establish that the Company’s statutory auditors
are aware of that information.
Accounting Records
The directors are responsible for ensuring that
adequate accounting records, as outlined in
Section 281-286 of the Companies Act 2014,
are kept by the Company. The directors are
also responsible for the preparation of the
Annual Report. The directors have appointed
professionally qualified accounting personnel
with appropriate expertise and have provided
adequate resources to the finance function in
order to ensure that those requirements are met.
The accounting records of the Company are
maintained at the Group’s principal executive
offices located at Block 17, Joyce Way, Parkwest,
Dublin 12, and at various subsidiary offices.
Non-Financial Reporting
Statement
The Group aims to comply with the European
Union (Disclosure of Non-Financial and Diversity
Information by Certain Large Undertakings
and Groups) Regulations 2017, S.I. No. 360
of 2017 as amended by the European Union
(Disclosure of Non-Financial and Diversity
Information by certain large undertakings and
groups) (Amendment) Regulations 2018, S.I. N.
410 of 2018. The Group has adopted the UN
Sustainability Goals, such that they now form
part of the policy of the Group. We have set
out the most relevant information and page
references on these topics below:
• Employee matters – see People
and Culture Review, page 60 and the
Succession Planning section of the Nomination
Committee Report, page 106;
• Respect for human rights – diversity and
equality remain key values of the Group – see
People and Culture section of the
Strategic Report, page 60;
• Environmental matters – see Sustainability
Review, page 52;
• Social matters – see Corporate Social
Responsibility section, pages 46;
• Anti-corruption and bribery – it is the policy
of the Company to comply with the provisions
of the Criminal Justice (Corruption Offences)
Act 2018 – see Business Ethics Review,
page 66;
• Diversity – the gender breakdown of the
workforce is 53% female and 47% male; and
• Supply chains – see Business Model section,
page 22, Director’s Report, page 86.
Going Concern
The Directors have performed an assessment
of going concern, including a review of the
Group’s current cash position, available banking
facilities and financial forecasts for 2020 and
2021, including the ability to adhere to banking
covenants. In doing so the Directors have
considered the uncertain nature of the current
COVID-19 pandemic, current trading trends
in our three markets and extensive actions
already undertaken to protect profitability and
conserve cash.
Further information in relation to the Group’s
business activities, together with the factors likely
to affect its future development, performance
and position is set out in the Chairman’s Letter, the
Chief Executive’s Review, the Finance Director’s
Review and the Principal Risks and Uncertainties
which are summarised on pages 86 to 90.
The Group has two separate banking
arrangements in its overall financing structure.
This comprises a facility provided to 
plc (“facilities”) which is utilised for the
purposes of financing the Group’s activities other
than its UK motorway service area operations
and a separate loan facility provided directly to
its Welcome Break subsidiary (“Welcome Break
facilities”) which is ring-fenced to that group of
companies and is non-recourse to the wider
group. Full details of those borrowings
and facilities are included in Note 20.
At 30 June 2020, the Group’s net debt position
was €550m approx. comprising €110m approx.
in cash and €660m approx. of external debt.
In addition, the Group had access to undrawn
committed facilities of €92m.
95
94   CORPORATE GOVERNANCE
Going Concern (continued)
Facilities
The Group announced on 18 May 2020 that
it had successfully completed a process with
the lenders to access an additional
€52.5m revolving credit facility and had also
agreed to substantially relax or remove covenant
conditions for the tests arising in each quarter
up to and including June 2021. This facility has
historically been subject to two covenants,
which are tested quarterly: net debt to pre-IFRS
16 EBITDA (leverage) and a fixed charge cover
test. In recognition of the current macroeconomic
uncertainty, the lenders have amended the
covenant test structure, replacing the existing
leverage test with a minimum rolling 12-month
pre-IFRS 16 EBITDA test and substantially relaxing
the fixed charge cover limits, both of which are
tested on a quarterly basis for the period to June
2021. After June 2021, the facility reverts to the
original covenant tests.
At 30 June 2020, the banking group’s
net debt position was €190m approx. comprising
€70m approx. of cash and €260m approx.
of external debt and had access to undrawn
committed facilities of €64m.
Welcome Break Facilities
The Group further announced on 1 July 2020 that
it had successfully repurposed a £25m dedicated
capital expenditure facility in the existing Welcome
Break banking facilities into a revolving credit
facility which is available to draw down for any
purpose. The lenders to Welcome Break also
agreed to relax or remove covenant conditions
for tests up to and including June 2021. This facility
has historically been subject to two covenants,
which are tested quarterly: net debt to EBITDA
(leverage) and EBITDA to net finance charges.
In both cases, EBITDA is calculated using FRS102
accounting principles. The lenders have amended
the covenant test structure, replacing the existing
tests with minimum rolling quarterly EBITDA and
minimum available liquidity tests which will be
tested on a monthly basis for the period to June
2021. After June 2021, the facility reverts to the
original covenant tests.
At 30 June 2020, the Welcome Break banking
group’s net debt position was €360m approx.
comprising €40m approx. of cash and €400m
approx. of external debt and had access to
undrawn committed facilities of €28m.
Financial Forecasts
Two scenarios were considered for the Group
in preparing our going concern assessment being
a management case and another scenario using
a set of severe but plausible downside assumptions
to that management case.
The management case which is built up from
detailed projections for each of the Group’s
businesses and markets includes the following
key assumptions:
• Fuel volumes were significantly impacted in
April and May with total volumes across the
group falling to less than half of normalised
levels. We projected a gradual recovery
commencing in June as restrictions were
eased which is expected to continue through
the second half of 2020 with December 2020
volumes estimated to be 10%-20% below
normalised monthly levels. This recovery is
forecast to continue in 2021 before normalising
to pre-COVID-19 levels by the end of 2021;
• Food volumes were also impacted with total
volumes less than a quarter of normalised levels
in April and May, driven primarily by the closure
of a number of food offers across the Group.
Similar to fuel, we have assumed a gradual
recovery of food volumes through the second
half of 2020 and into 2021 with December
2020 volumes estimated to be 15%-20% below
normalised monthly levels;
• Given their local nature, store volumes in the
PFS estate traded strongly during the lockdown
in April and May with sites trading at or slightly
above normalised levels. Following the lifting
of restrictions we anticipate that store volumes
would be somewhat subdued for the remainder
of 2020 and into 2021;
• Reduction in variable costs to align the costs
with the lower volumes including furloughing
staff as part of government support schemes
and reducing repairs and maintenance costs as
well as obtaining rent reductions from landlords;
• Reductions in support costs to reflect the
impact of the extensive cost reduction initiatives
implemented by the Group including the
implementation of a recruitment freeze, deferral
of executive bonuses and graduated salary
reductions for support staff across the business
The downside case included further reductions
in the range of 10-15% in fuel and food volumes
in the second half of 2020 and into 2021 to
reflect a scenario of a deeper economic impact,
region specific lockdowns in the UK and a slower
recovery over the course of next year. Those
projections showed that the Group will continue
to operate viably over that period.
Outcome of assessment
Overall the Group traded ahead of the
management case for the second quarter
of 2020 and has remained profitable at an EBITDA
level which further underlines the resilience and
adaptability of our business during this difficult
time. The Welcome Break business, which we
anticipated would be the most heavily impacted
part of the estate because of its dependence
on motorway volumes, traded in line with the
management case for the second quarter of 2020
and trading continues to improve. The remainder
of the estate traded ahead of the
management case expectations, aided
by strong store sales in the local PFS sites, good
fuel margins and extensive cost saving measures.
The Group’s cash position is more positive than
the management case due to the stronger than
expected performance. The management case
indicated that, as anticipated, there will be no
requirement for drawdown of the existing overdraft
facilities or the additional Revolving Credit
Facilities provided by lenders during
the period. Further, the management case projects
comfortable headroom over the new covenants in
both the and Welcome Break facilities.
With respect to the Welcome Break subsidiary
specifically, notwithstanding the business has
sufficient liquidity for the next 12 months, in
the event of a much more severe downside
circumstance where there is a further prolonged
national lockdown across the UK caused by
a second wave of COVID-19, this would likely
result in a breach of the revised EBITDA banking
covenant. One of the options available to lenders
following a covenant breach, would be to trigger
a repayment of outstanding debt. In such a
circumstance and without the Board taking further
mitigating actions or re-negotiating with lenders
then Welcome Break might be unable to realise
its assets and discharge its liabilities in the
normal course of business. This could result in
a substantial impairment or derecognition of the
investment in Welcome Break both in the Group
and Company. The Directors are satisfied that such
an occurrence would not impact on the group’s
ability to continue as a going concern given
the non-recourse nature of the Welcome Break
facilities to the wider group.
The Directors are confident that the Group
is now well positioned to manage its business
risks and have considered a number of factors
including current trading performance, the
outcomes of comprehensive forecasting,
a range of possible future trading impacts,
existing liquidity, amended covenant structures
and the non-recourse nature of the Welcome
Break facilities. The Directors are of the view
that there is a reasonable expectation that the
Group has adequate resources to continue
in operational existence for the next 12 months
following the date of approval of the financial
statements. For this reason, they continue
to adopt the going concern basis for preparing
the financial statements.
Statutory Auditor
The statutory auditors, PricewaterhouseCoopers
(“PwC”), have indicated their willingness to
continue in office, and a resolution that they
be re-appointed will be proposed at the Annual
General Meeting.
On behalf of the directors
Robert Etchingham Niall Dolan 		
17 July 2020 17 July 2020
Ludlow, UK
Board of Directors
The Board comprises a Non-Executive Chairman,
three Non-Executive Directors and three
Executive Directors (Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer).
Brief biographies of all the Directors are set out on
pages 84 to 85.
The Board considers that there is an appropriate
balance between Executive and Non-Executive
Directors for governing the business effectively
and promoting shareholder interests. The Board
considers that between them, the Directors have
the range of knowledge, skills and experience
necessary to address the various challenges
facing the Group. The composition of the Board
is reviewed annually by the Nomination Committee
to ensure that there is an effective balance of
skills, experience and knowledge. See Nomination
Committee Report on page 106 for details on
Board evaluation.
Division of Responsibilities
The roles of the Chairman and the Chief Executive
Officer are separately held and the division of their
responsibilities is clearly established.
Chairman
The Chairman’s primary responsibility is to lead
the Board and to ensure it is effective in carrying
out all aspects of its duties and responsibilities.
He sets the Board’s agenda, ensures that
adequate time is available for discussion and that
the Directors receive accurate, timely and clear
information. In particular, he ensures that the
Board reviews and approves management’s plans
for the Group.
The Chairman is the link between the Board
and the Group. He is specifically responsible
for establishing and maintaining an effective
working relationship with the Chief Executive
Officer, and promoting a culture of open dialogue
between the Executive and Non-Executive
Directors. He has the responsibility to ensure that
there is ongoing and effective communication with
shareholders and to ensure that members of the
Board develop and maintain an understanding
of the views of the shareholders.
Chief Executive Officer
The Chief Executive Officer (“CEO”) is responsible
for the day to day management of the Group’s
operations and for the implementation of Group
strategy and policies agreed by the Board. The
CEO also has a key role in the process of setting
and reviewing strategy. The CEO instils the Group’s
culture and standards which includes appropriate
corporate governance throughout the Group.
In executing his responsibilities, the CEO
is supported by the Chief Operating Officer
(“COO”) and the Chief Financial Officer (“CFO”),
who together with the CEO, are responsible
for ensuring that high quality information is
provided to the Board on the Group’s financial
and strategic performance.
Non-Executive Directors
The Non-Executive Directors’ main responsibilities
are to review the performance of management
and the Group’s financial information, assist
in strategy development, and ensure appropriate
and effective systems of internal control and risk
management are in place. The Non-Executive
Directors review the relationship with external
auditors through the Audit Committee, monitor
the remuneration structures and policy through
the Remuneration Committee and consider the
Board composition and succession planning
through the Nomination Committee.
The Non-Executive Directors provide a valuable
breadth of experience and independent judgement
to Board discussions.
Schedule of Matters
Reserved for the Board
Specific responsibilities reserved for the Board
include:
• setting the strategic direction of the Group
which is set out in the Business Model on pages
22 to 23;
• appointment or removal of the Chief Executive
Officer and recommendation for appointment
or removal of any member of the Board;
• Director and senior management succession
planning;
• approving an annual budget;
• reviewing operational and financial performance;
• approving major capital expenditure;
• reviewing the Group’s systems of financial
control and risk management;
• approval of borrowing facilities;
• setting dividend policy.
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96   CORPORATE GOVERNANCE
CORPORATE GOVERNANCE STATEMENT
Responsibility for good governance lies
with the Board. The Board is responsible
for leading the Company, for overseeing
the governance of the Group, and for
setting the tone for the Group’s culture,
values and standards.
 Board of Directors
Audit
Committee
Internal Audit
Chief Executive
Officer
Executive
Directors
Nomination
Committee
Remuneration
Committee
Corporate Governance
Framework
The Board recognises the importance
of maintaining high standards of corporate
governance and is firmly committed to business
integrity, high ethical values and professionalism
in all of its activities and operations.
The Board has adopted the principles of the
Quoted Companies Alliance (QCA) Corporate
Governance Code. Full details of our approach
to governance are set out below and,
as a Board, we continue to be committed
to good standards in governance practices
and will continue to review the governance
structures in place, to ensure that the current
practices are appropriate for our current
shareholder base and that, where necessary,
changes are made.
The key governance principles and practices
are described in the statement below, together
with the Audit, Nomination and Remuneration
Committees’ reports on pages 102 to 114.
Appointment of Directors
The Nomination Committee is responsible for
reviewing the structure, size and composition
(including the skills, knowledge, experience
and diversity) of the Board and making
recommendations to the Board with regard
to any new appointments of Directors.
Re-election of Directors
All Directors are required to retire by rotation
in accordance with the Group’s Constitution.
At every Annual General Meeting of the Group
as near as possible to one-third of the Directors
will retire by rotation in accordance with the
Company Constitution. The Nomination Committee
recommended a change to its re-election policy
during 2019, in that all Directors shall retire
annually and offer themselves for re-election
at the AGM. The Notice of AGM will provide
further details.
Independence
The Board has carried out its annual evaluation
of the independence of each of its Non-Executive
Directors. Non-Executive Directors should be
independent in character and judgement and
free from relationships or circumstances which
are likely to affect, or could appear to affect,
the Directors’ judgement.
Since their appointment, all current Non-Executive
Directors, including the Chairman, have been
considered by the Board to be independent
and free from any business or other relationship
which could materially affect their judgement.
The highest standards in governance require that
at least half of the Board should comprise Non-
Executive Directors and this standard has been
fully met since 27 May 2015.
Howard Millar has been appointed as senior
independent director of the Group.
Time Commitment
Meetings of directors are held regularly. Before
the beginning of each financial year, the Board
sets a schedule of Board and Committee meetings
to be held in the following year. A list of the
Directors’ attendance at scheduled meetings
throughout the year can be found on page 99.
Additional Board meetings are held on an ad hoc
basis as required throughout the year. During 2019,
there were nine scheduled meetings.
Prior to each meeting, the directors receive
a comprehensive board pack to facilitate
meaningful discussion and decision making
in relation to the Group’s business at each meeting.
If a Director is unable to attend a Board meeting,
either in person or by telephone, they will receive
meeting papers in advance and can communicate
their views on the issues to be discussed to the
other directors in advance of the meeting.
These views are then communicated at the Board
meeting on behalf of the absent Director. There
is regular contact between meetings in order
to progress the Group’s business.
Board Committees
The Board has established an Audit Committee,
a Remuneration Committee and a Nomination
Committee. Each committee has written terms
of reference which sets out how it should operate
including its role, membership, authority and
duties. Reports on the activities of the individual
committees are presented to the Board by the
respective Committee Chairman.
Audit Committee
Further details on the duties, operation and
activities of the Audit Committee can be found
in the Audit Committee Report on page 102.
Remuneration Committee
Further details on the duties, operation and
activities of the Remuneration Committee can
be found in the Remuneration Committee Report
on page 110.
Nomination Committee
Further details on the duties, operation and activities
of the Nomination Committee can be found in the
Nomination Committee Report on page 106.
Board and Committee Meetings
Details of the meetings held during the year,
both of the Board and of the Board Committees
are contained in the schedule below, which also
contains information on individual attendance.
Board of Directors Audit
Committee
Remuneration
Committee
Nomination
Committee
Date Activity
January 2019 Investor Conference in New York
March 2019 2018 Preliminary Results
March 2019 Roadshows in Dublin, London, Paris
April 2019 Investor Conference in London
September 2019 Interim Results for H1 2019
September 2019 Roadshows in Dublin, London
October 2019 Investor Conference in London
November 2019 Investor Conference in Dublin
Communication with Shareholders
The Board recognises the importance of engaging
with all shareholders on a regular basis to ensure
that our obligations to shareholders and other
stakeholders are met. There are regular meetings
between the representatives of the Group and
representatives of its principal investors and
presentations are made to both existing and
prospective institutional shareholders principally,
after the release of the interim and annual
results. Feedback is obtained from the meetings
which is communicated to the Board by the
Chief Executive Officer, Chief Operating Officer
and Chief Financial Officer.
The contents of the Annual Report including
the Chief Executive’s Review, the Financial
Review, the Directors’ Report and Financial
Statements (in addition to Regulatory
News Service Announcements, Preliminary
Results Announcements and Interim Results
Announcements) have been reviewed by the
Board in order to ensure a balanced and clear
presentation so that the Group’s position
and results may be properly appreciated
by shareholders.
The Executive Directors held 105 meetings and
conference calls with existing and prospective
shareholders during 2019 including:
Information is disseminated to shareholders and
the market generally, via Regulatory News Services
and is also published on the Group’s website
(www.stores.com). All current and
historical annual and interim reports and investor
presentations are also made available on the
Company’s website.
Notice of the AGM will be circulated to all
shareholders at least 21 days in advance
of that meeting. Shareholders are also invited
to participate in conference calls which present
the annual and interim financial statements of
the Group and this allows them the opportunity
to raise questions on the results.
99
98   CORPORATE GOVERNANCE
General Meetings
The Company operates under the Companies
Act 2014 (the ‘Act’). The Act provides for two
types of shareholder meetings: the AGM with
all other general meetings being called an EGM.
The Company must hold a general meeting each
year as its AGM, in addition to any other general
meetings held in that year. Not more than 15
months may elapse between the date of one
AGM and the next.
In accordance with the Company’s constitution,
an AGM and an EGM called for the passing of
a special resolution shall be called by at least
21 days’ notice and all other EGMs shall be called
by 14 days’ notice.
Shareholders have the right to attend, speak
and vote at the AGM and all other general
meetings. Votes may be given either personally
or by proxy or by a duly authorised representative
of a corporate member. Shareholders attending
the meeting will be informed of the number of
proxy votes lodged for each resolution.
The Company held its AGM on 5 June 2019.
The 2020 AGM will be held on 1 September 2020.
The Board acknowledges there is currently some
uncertainty as to whether it will be possible
for shareholders to attend the AGM in light of
COVID-19, the “Roadmap for reopening society
and business” most recently published by the
Irish Government in relation to COVID-19 physical
distancing measures and the most recent COVID-
19 regulations introduced by the Irish Government.
On the date of the AGM, current indications are
that travel within Ireland and indoor gatherings
of up to 100 people will be permitted. On this
basis, and while further guidance may issue in the
coming weeks, we anticipate that shareholders
may be permitted to attend the AGM, depending
on the COVID-19 physical distancing measures
in place at the time.
Shareholders are strongly encouraged to appoint
a proxy to attend and vote at the AGM on their
behalf, as the preferred means of fully and safely
exercising their rights, as personal attendance
at the AGM may present a risk to themselves and
others. Details of the resolutions to be proposed
and instructions on how to submit votes by proxy
are set out in the Notice of Meeting which will be
sent out to shareholders and is also available on
the Group’s website (www.stores.com).
Internal Control
The Directors are responsible for ensuring that
the Group maintains a system of internal control.
This system is designed to provide reasonable,
though not absolute, assurance against material
misstatement or loss. The Directors believe that
the Group, throughout the year and up to the
date of approval of the financial statements,
has an effective internal control environment
appropriate for the Group’s size.
The Directors have established a number of key
procedures designed to provide an effective
system of internal control. The key procedures
are as follows:
• Group Board Meetings with reports from
and discussions with senior Executives on
performance and key risk areas in the business;
• an organisation structure with defined lines
of responsibility and delegation of authority;
• a budgeting system with actual performance
being measured against budget on a regular
and timely basis, supported by information
systems developed for this purpose;
• regular review of the key business risks
relevant to the Group’s operations and control
procedures in place to address the key
business risks.
Annual Assessment of the
Principal Risks Facing the Group
The Board recognises the need for an effective
and well-defined risk management process and
it oversees and regularly reviews current risk
management and internal control mechanisms.
The Company’s principal risks, along with key
challenges in the execution of the Company’s
strategy and controls implemented to mitigate
them, can be found in the Directors Report on
pages 86 to 90.
Internal Audit
The Group has an internal audit function appropriate
to the Groups’ current size and complexity.
Culture
The Board understands the importance of
promoting a healthy corporate culture. Further
details on our culture are provided in the People
and Culture section on page 60.
Social Responsibility
The Board believes in conducting business in
a socially responsible manner and understanding
the position of as an important member
of the communities in which it operates. Further
details on our activities in this area are provided in the
Corporate Social Responsibility section on page 46.
101
100   CORPORATE GOVERNANCE
Spalding, UK Spalding, UK
103
102   CORPORATE GOVERNANCE
AUDIT COMMITTEE REPORT
I am pleased to present the Audit
Committee report for the 2019 financial
year. This report provides an overview
of how we have carried out our
responsibilities during the year.
Role of the Audit Committee
The role, responsibilities and authorities
of the Audit Committee (‘the Committee’) are
clearly communicated in our written Terms of
Reference. In order to achieve the Committee’s
stated responsibilities annually, the Committee
has documented a detailed meeting planner
outlining matters for consideration and timelines
for completion.
The Committee is responsible for providing
oversight and assurance to the Board regarding:
• monitoring the integrity of the Group’s financial
statements including reviewing significant
financial reporting judgements and changes
in accounting policies
• reviewing internal control and risk management
systems
• reviewing the effectiveness and operation
of the Internal Audit function
• considering and making a recommendation
to the Board in relation to the continued
appointment of the External Auditor
• reviewing the extent of non-audit services
undertaken by the External Auditor
• evaluating the performance of the External
Auditor, including their independence and
objectivity
Membership
Members are appointed to the Committee
by the Board, based on the recommendations
of the Nomination Committee. The Committee
is comprised of two independent non-executive
directors, Martin Southgate and myself, Howard
Millar (See pages 84 to 85 for our individual
biographies). The Board is satisfied that the
members of the Committee bring a wide range
of skills, expertise and experience in commercial,
financial and audit matters arising from the senior
positions they hold or held in other organisations.
The Board is satisfied that the mix of business and
financial experience enables the Committee to
effectively fulfil its responsibilities.
As with other Board Committees, the company
secretary or his deputy acts as secretary to
the Committee and the Committee may obtain,
at the Group’s expense, outside legal or other
professional advice needed to perform its duties.
Meetings
In line with the Committee’s Terms of Reference,
the Committee is expected to meet formally
four times a year and otherwise as required.
The Committee met five times in 2019 and
there was full attendance by all members
of the Committee (See details of meetings and
attendance on page 99). Meetings are generally
scheduled around the financial reporting cycle
to allow the Committee to discharge its duties
in relation to the financial statements. Reports
are circulated in advance of the meetings
to allow the Committee access to information
in a sufficiently timely manner.
The Group Chief Financial Officer, the Head
of Internal Audit and PwC as External Auditor,
have a standing invitation to attend the Committee
meetings. The Committee also regularly invites
other members of key management to attend the
Committee meetings. It is the Committee’s view
that the attendance of these individuals brings
additional insight when addressing significant
and/or complex financial matters, and this
approach will be continued in 2020. In general,
the Committee meets in advance of Board
meetings and reports to the Board on the key
outcomes from each meeting.
The Committee has unrestricted access to the
Group’s External and Internal Auditors, with whom
it meets at least four times a year. The Committee
meets with the External Auditor and the Head
of Internal Audit, without other executive
management being present on an annual basis
in order to discuss any issues which may have
arisen in the year under review.
The Chair of the Committee attends the Annual
General Meeting to answer questions on
the report on the Committee’s activities and
matters within the scope of the Committee’s
responsibilities.
Going Concern
The Committee considered the use of the going
concern basis of accounting and reviewed the
assessment prepared by management. The
Committee was comfortable with the assessment
and have a reasonable expectation that the
Group as a whole, have adequate resources to
continue in operation for the foreseeable future.
Financial Reporting and
Significant Financial Issues
The Committee considers significant accounting
policies, any changes to them and any significant
estimates and judgements. The Committee
also considers the methods used to account
for significant or unusual transactions where
the accounting treatment is open to different
approaches. Taking into account the External
Auditor’s view, the Committee considered
whether the Group in its financial statements
has adopted appropriate accounting policies
and, where necessary, made appropriate
estimates and judgements.
The Committee also reviewed the clarity and
integrity of disclosures in the financial statements.
The Committee reviewed in detail the below areas
of significant judgement in respect of the financial
statements for the year ended 31 December
2019. In this regard the Committee considered
a report from the External Auditor on its work
undertaken and conclusions reached. A summary
of this report is included in the Audit Report set
out on pages 120 to 127. The Committee also had
detailed discussions on these matters with senior
management and the External Auditor.
Goodwill Impairment Assessment
The Committee considered the goodwill
impairment assessment carried out by
management, in accordance with the requirements
of IAS 36 ‘Impairment of assets’ as set out in
note 14 of the financial statements.
In performing their impairment assessment,
management determined the recoverable
amount of each cash generating unit (‘CGU’)
and compared this to the carrying value at the
date of testing. The recoverable amount of
the CGU is determined based on value-in-use
calculations. The Committee considered and
discussed with management and PwC, the key
assumptions to understand their impact on the
CGU’s recoverable amount.
The Committee was satisfied that the methodology
used by management and the results of the
assessment, together with the disclosures were
appropriate.
Retail Sites Impairment Assessment
Retail sites are disclosed as land and buildings
in the property, plant and equipment note (note 13)
of the financial statements which represents
a material balance on the Group balance sheet.
The Committee considered the process and
methodology used to complete the impairment
review of the Group’s property assets. In this
regard, the Committee specifically assessed
the methodology used to identify properties
required to be assessed for impairment and the
key assumptions used to estimate the recoverable
amount of retail sites including future cash flows
and discount rates and where necessary the basis
for management’s estimate of fair value less cost
to sell. The Committee also assessed the process
and methodology for identifying and recording
impairment reversals.
The Committee was satisfied that the methodology
used by management and the results of the
assessment, together with the disclosures
were appropriate.
105
104   CORPORATE GOVERNANCE
Financial Reporting and
Significant Financial Issues
(continued)
IFRS 16 ‘Leases’
The Group’s adoption of IFRS 16 was a significant
project that has been regularly reviewed by the
Committee over the past few years. In completing
the adoption of the new standard, management
made certain significant judgements and estimates
which would materially impact the accounts.
This includes:
• Lease terms: Many of the Group’s leases have
options to renew or terminate. Management
considered all relevant factors and, in particular,
if an economic incentive exists to renew or
terminate. From this assessment, the Group
applied judgement in evaluating the length
of the lease.
• Calculation of incremental borrowing rate:
Discount rates are used to determine the
present value of the lease payments to value
the lease liability and applicable right-of-use
asset. Changes in this rate directly impacts
the carrying value of the lease liability and right-
of-use asset. To determine this rate, the Group
engaged external valuers to assess this on a
lease by lease basis. Management then reviewed
the work and assessed the appropriateness
of the results.
Management have directly reported to the
Committee in relation to the determination
of the above. The Committee have discussed
the approach with management and the External
Auditor and are satisfied that the assumptions
used are reasonable.
Accordingly, the Committee is satisfied that IFRS
16 has been correctly adopted in the Group’s
consolidated financial statements. Details of the
effect of the transition can be found in note 4
of the financial statements.
Accounting for Acquisitions
During the year, the Group acquired a 40% holding
in JLIF Holdings (Project Service) US, Inc and
it’s 100% subsidiary Project Services LLC. The
Group entered into a consortium shareholder
agreement with IST3 Investment Foundation and
TD Greystone Asset Management. Project Services
LLC operate 23 highway service plazas in the
State of Connecticut granted under a long-term
concession agreement with the Connecticut
Department of Transportation. Following
assessment by management, this was accounted
for as an investment in associate as disclosed
in note 16 to the financial statements.
The Group also acquired a leasehold interest
in 46 sites located in Michigan, Minnesota and
Wisconsin and following assessment, management
concluded that this did not meet the definition of
a business combination. Instead it was accounted
for as an asset acquisition and a right-of-use asset
was capitalised in line with the requirements of
IFRS 16.
Following discussions with management and PwC,
the Committee was satisfied that the accounting
treatment applied during 2019 was appropriate.
Risk Management and Internal
Control
The Board is responsible for maintaining a sound
system of risk management and internal control.
On behalf of the Board, the Committee has a role
in the continued development of a risk awareness
culture driving the integration of risk and strategy
and behaviours and beliefs at all levels of the
organisation.
The Committee received and reviewed the Group’s
risk register and executive risk committee minutes
at regular intervals throughout the year. As the
Group continues to grow, there is particular
focus on ensuring that any changes to the
Group’s risk profile are matched by appropriate
mitigating factors. The Group’s principal risks
and uncertainties are outlined on pages 86 to
90. The Committee also engages regularly with
both Internal and External Audit to ensure that
appropriate measures are taken to address risks as
they are identified or as their risk profile changes.
The Committee continues to encourage the
development of policies, procedures, management
systems and internal controls that are designed to
enhance the existing risk management framework.
Internal Audit
In my view having an Internal Audit function has
a positive impact on the control environment of
the Group and plays a significant role in supporting
the Committee. This is achieved by providing
assurance as to whether the controls implemented
by management are fit for purpose and operating
effectively.
As set out in the Internal Audit charter, the
Committee is responsible for overseeing the
Internal Audit function, approving the annual
Internal Audit plan and ensuring it is adequately
resourced and has appropriate standing within the
Group. The Internal Audit charter is reviewed and
approved by the Committee annually.
The plan, which is risk-based and reflective
of the developing business and control
environment, is assessed to ensure it provides
adequate coverage across the Group. When
changes are made to the plan, these are approved
by the Committee. Progress against the plan
is reported to the Committee by the Head of
Internal Audit at regular intervals throughout the
year, including the results of Internal Audit reports
and management’s actions to remediate issues
identified. The Committee also receives updates
on the nature and extent of non-audit activity
performed by the Internal Audit function.
During 2019, the Committee gave particular
attention to the newly acquired Welcome Break
(‘WB’) business and prioritised an assessment
of WB’s key processes and controls. Furthermore,
the Committee tracked the completion of follow
up actions arising from the assessment and
confirmed that the Group’s Internal Audit function
is responsible for auditing the WB business.
The Committee also met with the Chief Executive
of WB on the integration process on a number
of occasions and the Finance Director of WB
attends the regular Committee meetings.
The Head of Internal Audit has direct access
to the Chair of the Committee and the Committee
met privately with the Head of Internal Audit during
the year.
The Committee reviewed the effectiveness
of the Internal Audit function and confirmed its
satisfaction and concluded that it performed well
during 2019.
Whistleblowing Arrangements
The Group has an independent and confidential
whistleblowing procedure which allows employees
through an anonymous submission to raise
concerns regarding accounting or auditing
matters or questionable business practice.
The Committee ensures that arrangements are in
place for a proportionate, independent investigation
and appropriate follow up of such matters.
The Committee reviewed the Group’s whistleblowing
procedures during the year to ensure that they
meet the needs of the Group, in particular as it
continues to grow and expand its business.
External Audit
The Committee has an important role in supporting
the Board discharge its duties by providing
independent oversight over External Audit.
Independence and Provision
of Non-Audit Services
The Committee is responsible for ensuring that
the External Auditor is objective and independent.
PwC has been the Group’s auditor since 2013.
PwC as External Auditor is precluded from engaging
in certain non-audit services that would
compromise its independence, violate any laws
and regulations and affect its appointment as
External Auditor. In December 2016, the Committee
formalised the policy relating to non-audit fees
which established prior approval requirements
by the Committee for certain non-audit services.
An analysis of the non-audit fees provided by the
Group’s External Auditor is set out on page 158.
The Committee performed a review of the audit and
non-audit services provided by the External Auditor
and the fees charged for those services in respect
of the year ending 31 December 2019. Following
this review and the confirmation in writing received
from the Group’s External Auditor reaffirming its
independence and objectivity, the Committee is
satisfied as to PwC’s independence and objectivity.
Effectiveness
The Committee assessed the External Auditor’s
performance at our December 2019 meeting
when the External Audit plan for the year ended
31 December 2019 was presented. The Committee
discussed the significant audit risks and key audit
matters, audit scope and materiality amongst other
matters. The Committee reviewed and appropriately
challenged the External Auditor before agreeing the
proposed audit scope and approach.
PwC presented an interim finding report in March
2020 and presented a final detailed report of their
audit findings to the Committee at our meeting
in May 2020. These findings were reviewed and
appropriately challenged by the Committee.
In determining the appropriateness of the External
Auditor, the Committee had full regard to the
auditor’s competence, the quality and efficiency
of the audit, and whether the audit fee is appropriate
in relation to size, complexity, and risk and control
profile of the Group. After taking into account
all of the above factors, the Committee continues
to be satisfied with the performance of PwC and
has informed the Board accordingly.
On behalf of the Audit Committee
Howard Millar
Chair of the Audit Committee
17 July 2020
107
106   CORPORATE GOVERNANCE
NOMINATION COMMITTEE REPORT
I am pleased to present, the report
of the Nomination Committee for the
year ended 31 December 2019, which
provides a summary of the Nomination
Committee’s role and responsibilities,
and how the Committee discharged
these during 2019.
Role of the Nomination Committee
The duties, reporting responsibilities and authority
of the Nomination Committee are clearly set out in
our written Terms of Reference. These include, but
are not limited to, the following:
• reviewing the structure, size and composition
of the Board compared to its current position and
make recommendations to the Board with regard
to any changes
• giving full consideration to succession planning
for directors and other senior executives in
the course of its work, taking into account the
challenges and opportunities facing the Company,
and the skills and expertise needed on the Board
in the future
• identifying and nominating candidates for approval
by the Board to fill Board vacancies, considering
candidates on merit and against objective criteria
and with due regard for the benefits of diversity
on the Board, including gender, taking care that
appointees have enough time available to devote
to the position
• evaluating the balance of skills, knowledge,
experience and diversity on the Board; and
• reviewing annually the time required from non-
executive directors and assessing whether the
non-executive directors are spending sufficient
time on fulfilling their duties
Membership
Under the Terms of Reference, the Nomination
Committee must comprise at least two directors,
of whom a majority shall be independent non-
executive directors. Members are appointed to the
Committee by the Board for a three year term.
The Committee is comprised of four independent
non-executive directors:
• Daniel Kitchen (Chairman)
• Howard Millar
• Martin Southgate
• Brian Geraghty
See pages 84 to 85 for individual biographies.
Board and Committee
Composition
Elections and Re-elections at AGM
All of the Directors offered themselves
for re-election by the shareholders at the
Company’s AGM on 5 June 2019 and were
duly re-elected.
Boardroom Diversity
The Board is keen to ensure the Group benefits
from the existence of a high-quality Board
comprising of individuals with an appropriate
balance of skills and experience. Every year
we review our evolving business needs and
the core competencies and construct of our
Board. The Committee acknowledges that there
is a gender imbalance on the Board and its
committees. As we identify new Board positions
we are fully committed to a more diverse Board
and are actively engaging with the Board
Diversity Initiative in Ireland to address this gap
at the appropriate time for our business. This
will align with our overall Inclusion and Diversity
strategy for our business. The Board does not
have prescriptive or quantitative targets and the
Nomination Committee agreed that, in relation
to Board appointments, that diversity and
equality remain key values.
The Board is comprised of three Executive
Directors and four Independent Non-Executive
Directors including the Chairman. The three main
Board Committees (Remuneration Committee,
Nomination Committee and Audit Committee)
are solely comprised of Independent Non-
Executive Directors.
Board Performance Evaluation
On an annual basis, the Board evaluates its own
performance and that of its Committees and
of each individual Director. The Board considers
that the experience and objectivity of the
Non-Executive Directors combined with the
knowledge of the Executive Directors is key
to ensuring that the evaluation is robust.
In assessing the performance of the Board
in 2019, the Group HR director facilitated a review
of each of the Boards committees in addition
to the overall Group PLC board. This comprehensive
evaluation included considering a number of
categories including:
• Board remit and responsibilities
• Skills and experience of the Board
• Effectiveness and rhythm of board meetings
• Strategy, risk and performance
• Decision making processes
• Success planning and board development
• Communications and support
Performance of the chairman and Senior
Independent Director was also evaluated as was
relationships amongst the board. Broader culture
and behaviours were also considered. To conclude
the process, results were collated, summarised
and presented to the Board for discussion.
The appraisal process concluded that the Directors
and the overall Board are performing well,
and there is strong commitment in terms of Board
members dedication of time and attendance
to Board activities.
The next Board evaluation will take place before
the end of 2020.
Succession Planning
During the year the Nomination Committee
reviewed Board and Senior Management
succession planning to ensure that the Company
has the appropriate level of skills and diversity.
The Committee continues to ensure that there is
a robust succession plan for senior management
positions, and, in this regard, a Group HR function
was set up in 2019 to ensure further focus is given
to strategic talent management and succession
planning initiatives. A detailed cross Group talent
review was completed for all critical roles and talent
during 2019 and will be maintained on an ongoing
basis. This allows us to proactively plan and react
to any senior management changes, help retain
critical talent in the organisation, protect and
sustain our financial targets and ensure the optimal
foundation for future business growth.
Board of
Directors
Audit
Committee
Remuneration
Committee
Nomination
Committee
Tenure Years Years Years Years
Daniel Kitchen 4.6 4.6 4.6
Robert Etchingham 9.1
Joseph Barrett 9.1
Martin Southgate 5.9 4.6 4.6 4.6
Brian Geraghty 5.4 4.6 4.6
Howard Millar 4.6 4.6 4.6 4.6
Niall Dolan 1.8
Average tenure 5.8 4.6 4.6 4.6
Meetings
The Committee met twice during 2019. The other
matters dealt with by the Committee included
the following:
• The Committee reviewed the results of the
annual performance evaluation of the Board,
its committees and individual directors, including
a review of the time required from non-executive
directors to fulfil their duties
• The Committee reviewed the Terms of
Reference for the Nomination Committee
to ensure the contents remained relevant
and appropriate and best reflect the role
and responsibilities of the Committee; and
• The Nomination Committee considered good
practice and recommended to the Board that
all directors, subject to and seeking re-election,
be put forward for re-appointment at the
Company’s 2020 AGM
On behalf of the Nomination Committee
Daniel Kitchen
17 July 2020
Length of Tenure
The length of tenure of the Directors on the Board and on the
three main Board Committee as at 31 December 2019 is set
out below.
109
108   CORPORATE GOVERNANCE
Welcome Break Oxford, UK
Welcome Break Warwick, UK
Executive Remuneration Framework
Element Purpose and operation Maximum opportunity Performance Metrics
Base Salary An appropriate level of fixed
remuneration to reflect the skills and
experience of the individual.
Salaries are reviewed annually by the
committee taking into account all
relevant factors.
There is no prescribed maximum.
Salary increases are normally in line
with those of the wider workforce or
where contractually obliged. Larger
increases may be awarded to reflect
circumstances such as an increase
in the size of the Group or in the
responsibilities of the role.
N/A
Benefits To provide a market competitive benefits
package. Benefits currently provided
include, for the CFO, an allowance of
5% of salary to provide for motor and
other expenses.
The level of benefits is set at an
appropriate market rate.
N/A
Pension Contribution to executive pension
scheme for the COO. The CFO
participates in the Company defined
contribution pension scheme.
€32,700 for the COO, The CFO
participates in the Company defined
contribution pension scheme and
receives a contribution of 10% of salary.
Annual Bonus To drive and reward the delivery of the
business objectives over the financial
year.
The maximum bonus for each of the
Executive Directors is 50% of salary.
Targets are set and assessed by
the Committee each year. For both
2019 and 2020, 80% of the bonus
will be based on the achievement of
challenging adjusted EBITDA targets with
the balance based on the delivery of
specific non-financial objectives.
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110   CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT
I am pleased to present the report of
the Remuneration Committee for the
year ended 31 December 2019 which
has been prepared by the Remuneration
Committee and approved by the Board.
The objective of the report is to provide
shareholders with information to enable them to
understand the remuneration structures and how
they relate to the Group’s financial performance.
The responsibilities of the Remuneration
Committee are summarised herein and are set
out in full in the Terms of Reference for the
Remuneration Committee.
We have been mindful to ensure disclosures
in relation to the remuneration structures are in line
with good practice and we recognise the importance
of having remuneration policies, practices and
reporting that reflect best corporate governance
practices, having regard to the Company’s size
and the markets on which its shares are traded.
The Committee is dedicated to structuring
a remuneration policy which fosters an ongoing
commitment to the business from the Executive
Directors and a continued alignment of shareholders’
and executives’ interests. The significant
shareholdings of both the Chief Executive Officer
and the Chief Operating Officer also demonstrate
their ongoing commitment to the long term
success of the Group.
There have been three Committee meetings during
the year and details on the key matters considered
are set out on in more detail below.
Membership and Responsibilities
The Remuneration Committee is chaired by Brian
Geraghty and its other members are Daniel Kitchen,
Howard Millar and Martin Southgate, all of whom
are considered by the Board to be independent.
The Remuneration Committee was set up during
2015 and meets formally three times a year and
otherwise as required. The Remuneration Committee
recommends policy for the Group to adopt on
executive remuneration, determines the levels
of remuneration for each of the Executive Directors
and recommends and monitors the remuneration
of members of senior management.
2015 Long-Term Incentive Plan
The  Board considers share awards
to be a critical tool to incentivise and retain key
members of staff and align the long-term interests
of key executives with those of shareholders by
rewarding business performance. As such, the
 2015 Long-Term Incentive Plan (2015
LTIP) was established in 2015 and awards in the form
of share options were granted to employees in 2017
and 2018.
In early 2019, Deloitte were engaged by the
Remuneration Committee to perform a review on
the adequacy and appropriateness of the 2015 LTIP.
Following this review, the Remuneration Committee
implemented a number of changes to the Total
Shareholder Return (TSR) vesting criteria element
of the 2015 LTIP to bring it in line with best market
practice for listed companies of similar scale to
.
The key changes were as follows:
• To change the Total Shareholder Return (TSR)
comparator group from a peer grouping of 10
companies to the FTSE 250 market index. The
existing peer grouping was seen as too small
therefore it could result in arbitrary results and
it was difficult to establish an appropriate peer
group that was a sufficiently robust reference
point against which to measure the performance
of . The FTSE 250 index was seen
as a better measure of market benchmark returns.
• To change the TSR vesting schedule to the
standard market practice in the Republic of Ireland
and UK (25% of awards vesting for achieving
the 50th percentile and 100% of awards vesting
on achieving the 75th percentile. Awards will
not vest for performance less than the 50%
percentile which is unchanged). The previous
vesting schedule was 25% of awards vesting for
achieving the 75th percentile and 100% of awards
vesting on achieving the 100th percentile with
straight-line vesting between these points. The
vesting criteria was viewed to be overly onerous
and an ineffective alignment of interest tool when
compared to best market practice.
All other elements of the 2015 Plan remain
the same and the changes are not applied
retrospectively to the 2017 and 2018 grants.
At the time these changes were recommended
by the Remuneration Committee, a communication
was sent to the top five external shareholders
advising them of the changes and allowing them
an opportunity to provide their views on the matter.
Remuneration Policy for Directors
The Group’s policy on Executive Directors’
remuneration is designed to ensure that
employment and remuneration conditions reward,
retain and motivate them to perform in the best
interests of shareholders. Under this policy,
the Remuneration Committee may make minor
changes to this policy for regulatory, exchange
control, tax or administrative purposes or to take
account of a change in legislation. The elements
of the remuneration package which may apply
to Executive Directors are base salary, pension and
benefits, annual bonus and the long term incentive
plan. The table below summarises the framework
which was applied during 2019 and will apply
during 2020.
Consideration of Shareholder
Views
The Remuneration Committee considers
shareholder feedback received at each
year’s AGM. This feedback, in addition to any
feedback received during any meetings held
from time to time, is considered as part of the
Remuneration Committee’s annual review of the
Remuneration Policy.
In addition, the Remuneration Committee will
seek to engage directly with major shareholders
and their representative bodies, should any
material changes be proposed to the prevailing
Remuneration Policy.
Executive Remuneration Framework
Element Purpose and operation Maximum opportunity Performance Metrics
Long term
incentive
plans
To reward Executive Directors and
senior management for the delivery
of long term performance and align their
interests with those of shareholders and
other stakeholders.
Prior to admission an LTIP was
established (‘the 2014 Option Scheme’)
which involved the award of options over
c. 6.8m shares to members of the senior
management of the Company. Certain
of these options vested at the IPO date
while the remainder vested on the third
anniversary of the award grant date.
The options are granted with a fixed
exercise price which is determined firstly
based on the implied market value per
share of the Company at the grant date
of the options and secondly based on
the tenure of the employee. Employees
are required to remain in employment
with the Group until the options become
exercisable unless the board agrees
otherwise.
The options expire seven years after the
date of grant. The Group has no legal or
constructive obligation to repurchase or
settle the options in cash.
A second LTIP scheme (‘the 2015 LTIP
scheme’) was established on admission
in 2015. Awards from this scheme may
be made in the form of options or
conditional shares and will vest no earlier
than the third anniversary of the award
grant date.
No further awards will be made from
the 2014 Option Scheme.
Under the 2015 LTIP scheme the
maximum annual award is 150% of
salary. In addition, no more than 5% of
the issued ordinary share capital of the
Company may be issued or reserved
under the 2015 LTIP Scheme.
No performance metrics applied to the
2014 Option Scheme.
Vesting criteria for 2017 and 2018 awards
The vesting criteria for the awards granted
under the 2015 LTIP Scheme in 2017 and
2018 are 50% based on relative total
shareholder return (“TSR”) measured against
a group of listed peers and 50% based on
the achievement of targeted earnings per
share (“EPS”) growth.
In respect of the TSR objective, 25% vests
on median performance rising on a linear
basis to 100% vesting for upper quartile
performance. In respect of EPS growth, 25%
vests based on the achievement of growth of
the Consumer Price Index (“CPI”) + 3% rising
to 100% where EPS growth is in excess
of CPI +9%.
Vesting criteria for 2019 awards
The vesting criteria for the awards granted
under the 2015 LTIP Scheme in 2019 are 50%
based on relative total shareholder return
(“TSR”) measured against the FTSE 250 market
index and 50% based on the achievement of
targeted earnings per share (“EPS”) growth.
In respect of the TSR objective, 25% of awards
vest for achieving the 50th percentile and
100% of awards vest on achieving the 75th
percentile. In respect of EPS growth, the
vesting remains the same as the 2017 and
2018 grants.
Outcomes for 2019
(to be read as part of the consolidated financial statements)
The following table summarises the remuneration received by the Directors for the 2019 financial year:
2019 2018
Salary/fees Bonus Allowance Pension Total Total
€000 €000 €000 €000 €000 €000
Executive Directors
Joseph Barrett ¹ 364 140 - 32 536 588
Niall Dolan² 307 144 15 29 495 379
Robert Etchingham¹ 380 146 - - 526 568
Non-executive Directors
Brian Geraghty 20 20 20
Daniel Kitchen 80 80 80
Howard Millar 50 50 50
Martin Southgate 23 23 23
1,224 430 15 61 1,730 1,708
1
The bonus paid in 2018 related to both 2016 and 2017 performance
2
Niall Dolan was appointed as director on 6 March 2018. Details for 2018 are from date of appointment to 31 December 2018.
Basic Salary for Executive Directors
The following table shows the base salaries for the executive directors as at 31 December 2019 with
comparative information as at 31 December 2018:
2019
€000
2018
€000
Increase
%
Joseph Barrett 370 349 6%
Niall Dolan 317 288 10%
Robert Etchingham 387 365 6%
Salaries for the Executive Directors are set at
a market competitive level for the scope of the
roles and the size and complexity of the business.
A 6% increase was awarded to Joe Barrett and
Robert Etchingham in May 2019 which is below the
increase awarded to the senior management team.
A 10% increase was awarded to Niall Dolan to align
his salary with market levels.
In recommending the 2019 salary increase, the
Committee took account of performance both
of the Group as a whole and for the individual
director, individual responsibilities within the Group
and the review of wages and salaries across the
Group which took place alongside the executive
directors review.
Annual Bonus
The CEO, COO and CFO are eligible for a maximum
bonus of 50% of base salary. The bonus will be
based 80% on a profitability measure and 20%
based on the delivery of specific non-financial
objectives. The bonus paid in 2019 related to 2018
performance.
The profitability measure is based on performance
relative to an adjusted EBITDA target. Adjusted
EBITDA is defined in the glossary of financial terms
on page 220. The Committee has determined that
the specific targets for the year, both financial and
non-financial are commercially sensitive and cannot
be disclosed.
113
112   CORPORATE GOVERNANCE
LTIP awards
The following table shows the LTIP awards granted to the executive directors during 2019
with comparative information for 2018:
2019
Number of Options Granted
2018
Number of Options Granted
Joseph Barrett 300,000 100,000
Niall Dolan 300,000 100,000
The awards were granted on 9 May 2019 under the terms of the 2015 LTIP scheme as outlined above.
Outcomes for 2020
Due to the unprecedented uncertainty caused
by the COVID-19 pandemic, it has been decided to
postpone payment in 2020 of the bonus in relation
to 2019 performance. In addition, the executive
directors have volunteered to take temporary pay
cuts of approximately 20% for three months as
part of the wider measures to protect profitability
and conserve cash. These measures will be kept
under review.
Service Contracts/Letters of
Appointment
The Remuneration Committee reviews the
contractual terms for any new Directors to ensure
these reflect best market practice.
Executive Directors
All Executive Directors have service contracts
with the Group with a notice period of six months.
The service contracts for Robert Etchingham and
Joseph Barret are dated 29 April 2015, while the
service contract with Niall Dolan is dated 6 March
2018. The service contracts allow for termination
by way of payment for the entire notice period
or part thereof in lieu of notice. Standard ‘cause’
provisions are included in the service agreement
which allow the Group to terminate without notice
or the obligation to make payment in lieu of notice.
The Remuneration Committee may agree
remuneration proposals on the recruitment
or retention of Executive Directors which are
outside the standard policy to facilitate the hiring
or retention of someone of the calibre required
to deliver the Group’s strategy. When determining
appropriate remuneration arrangements the
Remuneration Committee will take into account
all relevant factors including (among others)
the level of opportunity, the type of remuneration
opportunity being forfeited and the jurisdiction
from which the candidate was recruited.
When determining leaving arrangements for an
Executive Director, the Remuneration Committee
takes into account applicable provisions of Irish
employment law, any contractual agreements and
the performance and conduct of the individual.
Non-Executive Directors
Each of the Non-Executive Directors are
appointed under a letter of appointment, detailing
arrangements that may generally be terminated
at will, by either party, without compensation.
The remuneration of Non-Executive Directors is
determined by the Board of Directors as a whole
subject to the limits in the Company’s Constitution.
On behalf of the Remuneration Committee
Brian Geraghty
17 July 2020
115
114   CORPORATE GOVERNANCE
STATEMENT OF DIRECTOR’S
RESPONSIBILITIES
117
116   CORPORATE GOVERNANCE
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
applicable Irish law.
Irish law requires the directors to prepare the Group
and Company financial statements for each financial
year giving a true and fair view of the Group’s and
Company’s assets, liabilities and financial position
at the end of the financial year and the profit or
loss of the Group for the financial year. Under that
law and in accordance with the Rules of the AIM
and ESM exchanges issued by the London and Irish
Stock Exchanges, the directors have prepared the
financial statements of the Group and Company
in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union
(EU IFRS) and with those parts of the Companies
Act 2014 applicable to companies reporting under
EU IFRS.
Under Irish law the directors shall not approve the
Group and Company financial statements unless
they are satisfied that they give a true and fair view
of the Group and Company’s assets, liabilities and
financial position as at the end of the financial
year and of the profit and loss of the Group for the
financial year.
In preparing these financial statements, the directors
are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• comply with applicable International Financial
Reporting Standards as adopted by the EU,
subject to any material departures disclosed
and explained in the Financial Statements;
• include any additional information required by
the Companies Act 2014; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Group and the Company will
continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to:
• correctly record and explain the transactions
of the Group and Company;
• enable, at any time, the assets, liabilities and
financial position of the Group and Company and
profit or loss of the Group to be determined with
reasonable accuracy; and
• enable the directors to ensure that the financial
statements comply with the Companies Act 2014
and enable those financial statements to be
audited.
The directors are also responsible for safeguarding
the assets of the Company and the Group and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Under applicable law and the requirements of the AIM
and ESM Rules, the directors are also responsible for
preparing a directors’ report that complies with that
law and those rules.
The directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Group’s website.
Legislation in the Republic of Ireland governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
On behalf of the directors
Robert Etchingham Niall Dolan
17 July 2020		 17 July 2020
FINANCIAL
STATEMENTS
Independent Auditors’ Report  120
Consolidated Income Statement 129
Consolidated Statement of Comprehensive Income 130
Consolidated Statement of Financial Position 131
Consolidated Statement of Changes in Equity 132
Consolidated Statement of Cash Flows 134
Notes to the Consolidated Financial Statements 135
118  119
 FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF 
Report on the Audit of the Financial Statements
Opinion
In our opinion, ’s Consolidated financial Statements and Company financial Statements (the “financial statements”):
• give a true and fair view of the Group’s and the Company’s assets, liabilities and financial position as at 31 December 2019 and
of the Group’s profit and the Group’s and the Company’s cash flows for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the
European Union and, as regards the Company’s financial statements, as applied in accordance with the provisions of the
Companies Act 2014; and
• have been properly prepared in accordance with the requirements of the Companies Act 2014.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”),
which comprise:
• the Consolidated and Company Statements of Financial Position as at 31 December 2019;
• the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year then ended;
• the Consolidated and Company Statements of Cash Flows for the year then ended;
• the Consolidated and Company Statements of Changes in Equity for the year then ended; and
• the notes to the financial statements, which include a description of the significant accounting policies.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial
statements. These are cross-referenced from the financial statements and are identified as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable law.
Our responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Our audit approach
Overview
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was
evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make
on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks
identified by our audit.
Materiality
Audit
scope
Key audit
matters
Materiality
• Overall Group materiality: €3.36 million (2018: €1.25 million) based on circa 2.5% of
pre-IFRS 16 Earnings before Interest, Tax, Depreciation and Amortisation (‘pre-IFRS 16
EBITDA’). 2018 materiality was based on circa 2.5% of Earnings before Interest, Tax,
Depreciation and Amortisation ('EBITDA’). As the Group adopted IFRS 16 on 1 January
2019, the bases for calculating materiality are consistent as between 2018 and 2019.
• Overall Company materiality: €3.8 million (2018: €3.7 million) which represents circa
1% of net assets. Financial statement line items that do not eliminate on consolidation
have been audited to lower materiality than overall materiality for the Consolidated
Financial Statements.
Audit scope
• Our audit work addressed each of the Group’s three operating segments: Retail Ireland,
Retail UK and Retail USA. The Consolidated financial statements are a consolidation
of 28 reporting components across the 3 operating segments.
• We performed full scope audits of the complete financial information of three financially
significant reporting components, one within Retail Ireland and two within Retail UK.
• In addition, audits of or specified audit procedures on selected account balances
were performed across 22 of the remaining 25 reporting components. The nature
and extent of audit procedures were determined by our risk assessment.
• Taken together, the reporting components where an audit on the full financial
information was performed accounted for in excess of 78% of Group revenues and
Group gross profit and in excess of 88% of Group total assets.
Key audit matters
• Carrying value of goodwill arising on the 2018 acquisition of Welcome Break
• Forecourt site impairment assessment.
• Going concern and related disclosures
121
 FINANCIAL STATEMENTS
120 
Key audit matter
Carrying value of goodwill arising on the
2018 acquisition of Welcome Break
Refer to page 103 (Audit Committee Report),
page 140 (Significant accounting policies), page 149
(Significant accounting estimates and judgements),
pages 168 to 169 (Notes to the Consolidated
financial statements).
The Consolidated Statement of Financial Position
includes goodwill of €459m of which €456m arose
from the acquisition during 2018 of the Group’s
50.01% shareholding in Appia Group Limited (the
parent company of the Welcome Break business).
Goodwill arising on business combinations is
not amortised but is reviewed for impairment on
an annual basis, or more frequently if there are
indications that goodwill may be impaired.
Management determined that the Welcome Break
business as a whole is the lowest level at which
goodwill should be allocated.
Management has developed a model to estimate
the value in use of the Welcome Break business,
being the present value of future cash flows
expected to be generated by it.
As set out in Note 14, cash flows used in the
value in use assessment are calculated based on
management’s best estimate of pre-tax cash flow
for the CGU for 2020 and thereafter over the
remaining useful life of the assets in the site using
a long term growth rate of 2%. COVID-19 is a non-
adjusting post balance sheet event; the board
approved 2020 budget was completed before
its emergence in the UK. Applying this model,
management determined that no impairment existed
at year end.
We regard this as a key audit matter because of the
materiality of the carrying value of goodwill and the
judgements required in estimating the value in use
of the Welcome Break business.
We focused in particular on the reasonableness
of the assumptions underlying the 2020 board
approved budget, the long term growth rates used
thereafter, the assumed level of maintenance capital
expenditure over the useful economic lives of the
sites and the estimation of an appropriate discount
rate.
We also focused on the adequacy of the
disclosures including the disclosures made in note
35 relating to COVID-19.
How our audit addressed the key audit matter
We considered management’s determination that the Welcome
Break CGU is the lowest level at which goodwill arising from the
acquisition should be allocated, by evaluating the basis on which Group
management reviews the performance of the Welcome Break business.
We evaluated and tested management’s estimation of value in use by:
• Assessing management’s budgeting process for 2020 cash flows and
challenging assumptions by reference to past performance and economic
conditions in the UK. The board approved 2020 budget was completed
before the emergence of COVID-19 in the UK.
• Assessing the reasonableness, by reference to published economic
forecasts as at 31 December 2019, of assumed long term growth rates
for the UK economy for cash flows beyond 2020.
• Testing assumed levels of maintenance capital expenditure over the useful
economic lives of Welcome Break sites by reference to historical capital
expenditure trends and projected depreciation amounts.
• Considering with the assistance of PwC experts, management’s
calculations of the weighted average cost of capital for the Welcome
Break business.
• Performing sensitivity analysis using alternative reasonably possible
assumptions for projecting the future performance of the Welcome Break
business. Our sensitivities did not include the potential impact of COVID-19,
which is a non adjusting post balance sheet event.
We concluded that the assumptions and methodologies adopted by
management to determine the value in use of the Welcome Break
business were reasonable and that the related disclosures in the financial
statements, including in relation to COVID-19, were appropriate.
How our audit addressed the key audit matter
We compared management’s benchmark for assessing indicators of
impairment at individual site level, which is based on projected 2020
financial performance as determined by the Group’s annual budgeting
process (which had been completed before the emergence of COVID-
19 in its major markets), to that used in the prior year. We assessed the
completeness of the population of sites identified by management for
impairment testing by comparing it to those sites tested by management
for impairment at 30 June 2019 and at 31 December 2018.
We evaluated and tested management’s estimation and the value in use
of each site for which impairment indicators had been found by:
• Assessing management’s budgeting process for 2020 site performance
and cash flows and challenging assumptions for sites by reference to past
performance and expected economic conditions in the Group’s major
markets.
• Assessing the reasonableness, by reference to published economic
forecasts as at 31 December 2019, of assumed long term growth rates
for the Irish and UK economies used by management to project site cash
flows beyond 2020.
• Evaluating the competence and objectivity of the experts engaged by
management to calculate the weighted average cost of capital for each
of the Group’s major markets
• Considering, with the assistance of PwC experts, management’s expert’s
report summarising its calculation of discount rates and assessing
whether appropriate assumptions and methodologies had been applied.
Separately, our experts assessed management’s calculations of the
weighted average cost of capital of the Welcome Break business.
• Performing sensitivity analysis using alternative reasonably possible
assumptions for determining future site performance.
We evaluated the competence and objectivity of the experts engaged
by management to determine the fair value less cost to sell of sites
for which value in use is less than carrying value. We considered their
reports and assessed whether appropriate valuation methodologies had
been applied.
We considered management’s separate assessment of whether
there has been sustained improvement in the performance of sites
where impairment charges were taken in previous years. We tested
management’s assessment against records of site profitability in 2019
and preceding years and challenged its completeness. For those sites
where management determined that sustained profitability improvement
had occurred, we evaluated and tested management’s process for the
estimation of the value in use of each site and their conclusions as to
whether a reversal of a previous impairment, in whole or in part, was
warranted.
We concluded that:
• management’s process for identifying impairment indicators and
conducting impairment testing, where required, was reasonable;
• the assumptions and methodologies adopted by management to assess if
impairment charges and/or reversals were required were reasonable; and
• the impairment charges and reversals recognised in the financial
statements are reasonable and that the related disclosures included in the
financial statements were appropriate.
Key audit matter
Forecourt site impairment assessment
Refer to page 103 (Audit Committee Report), page 142
(Significant accounting policies), page 150 (Significant
accounting estimates and judgements), pages 169 to
170 (Notes to the Consolidated financial statements).
At 31 December 2019, there were 556 sites in the
Group’s estate. Their carrying amounts are reviewed
at each reporting date to determine if there is any
indication of impairment. If management determines
that there are indicators that the carrying value of
individual sites may not be recoverable, a value in
use impairment test is performed for the affected
sites. Management updated the Group’s value in use
methodology during 2019 to reflect the adoption of
IFRS 16, Leases, which has increased the carrying
value of all leased sites.
In circumstances where the value in use of a site as
calculated by management is less than its carrying
value, management generally instructs external
valuation experts to develop an estimate of the site’s
fair value less costs to sell. In these circumstances
the recoverable amount is determined based on the
higher of the value in use and fair value less cost to sell.
Impairment charges recorded by the Group in
previous periods are separately assessed at each
reporting date to determine if the conditions which
gave rise to them continue to exist. If they do not,
impairment charges may be wholly or partly reversed.
Management has recognised an impairment charge of
€7.0 million in 2019 across the Group’s forecourt sites.
Of this, €6.1 million is based on value in use models
and €0.9 million is based on fair value less cost to sell.
Management recognised impairment reversals of €5.3
million in 2019, based on value in use models.
We regard this as a key audit matter because of the
materiality of the carrying value of forecourt sites
and the judgements required in determining whether
there are indicators of impairment and in estimating
the value in use and/or fair value less costs to sell of
individual sites.
We focused in particular on the suitability of
management’s benchmark for assessing indicators
of impairment, the reasonableness of management’s
projections of future growth rates used in estimating
cash flows at sites subject to impairment testing
and the determination of appropriate discount rates.
Management instructs external corporate finance
experts to calculate discount rates for its major
markets for businesses other than Welcome Break.
We also focused on the adequacy of the disclosures
including the disclosures made in note 35 relating to
COVID-19.
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122 
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry
in which the Group operates.
The Group is structured along three operating segments being Retail Ireland, Retail UK and Retail USA. Each operating segment
comprises a number of reporting components. The Consolidated financial statements are a consolidation of 28 reporting
components across the 3 operating segments. In establishing the overall approach to the Group audit, we identified 2 reporting
components, which in our view required an audit of their complete financial information due to their size and financial significance
to the Group.
In order to achieve the desired level of audit evidence on each account balance in the Consolidated financial statements,
we selected an additional reporting component and performed an audit of its complete financial information.
In addition, audits of or specified audit procedures on selected account balances were performed across 22 of the remaining
25 reporting components. The nature and extent of audit procedures were determined by our risk assessment.
Taken together, the reporting components where an audit on the full financial information was performed accounted for in excess
of 78% of Group revenues and Group gross profit and in excess of 88% of Group total assets.
PwC UK was engaged to perform an audit of the complete financial information on one of the financially significant reporting
components within the Retail UK operating segment. No other PwC network firm was engaged for the Group audit. In relation to
audit procedures that were performed by PwC UK, we issued detailed audit instructions, arranged regular physical and telephone
meetings throughout the audit and we reviewed extracts from PwC UK’s audit file to understand their risk assessment, and to
evaluate the results of their testing and the conclusions drawn in respect of significant risk areas. In addition, the PwC UK audit
engagement leader attended two  Audit Committee meetings during the audit process.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Key audit matter
Going concern and related disclosures
Refer to page 81 (Financial Review), page 103
(Audit Committee Report), pages 135 to 137 (Basis
of preparation), page 149 (Significant accounting
estimates and judgements) and page 205 (Post
balance sheet events).
The emergence of COVID-19 during 2020 and in
particular, the actions taken by national and State
governments to contain the transmission of the
virus in the Group’s major markets have significantly
impacted the Group’s businesses in the period since
mid-March 2020.
At 31 December 2019, the Group had total external
debt (excluding IFRS 16 lease obligations and
shareholder loans) of €664 million advanced under
two separate financing arrangements, one for the
legacy businesses and one for Welcome
Break. Both arrangements feature customary financial
covenants, measured quarterly.
During May 2020, the Group announced that it had
secured additional facilities and covenant relaxation
or removal up to June 2021 in respect of the
 financing arrangements. Earlier this
month, an equivalent announcement was made in
relation to Welcome Break’s financing arrangements.
Management has prepared trading, liquidity and
covenant compliance projections to the end of
2021 for each of the and Welcome
Break banking groups. These include a management
case and a severe but plausible scenario. The
directors have concluded that there is a reasonable
expectation that the Group will have adequate
resources to continue in operational existence for
the foreseeable future.
We considered this to be a key audit matter because
of the importance to users of the financial statements
of understanding the basis upon which the directors
have prepared the financial statements on a going
concern basis given the emergence and impact of
COVID-19 since the year end.
How our audit addressed the key audit matter
We read the amendments to the Group’s financing agreements executed
in recent months and obtained an understanding of the financial covenant
amendments which the Group had negotiated.
We considered the Group’s financial performance since the beginning
of 2020 by reading management accounts and through enquiries of
management. We developed an understanding of the impact of COVID-19
on the Group since mid-March.
We assessed the Group’s projections and obtained an understanding of
each of the modelled scenarios and the key assumptions which support
them. We challenged management on selected assumptions by reference
to past performance and expected economic conditions in the Group’s
major markets. We performed sensitivity analysis using alternative
reasonably possible assumptions including renewed lockdowns.
We compared outputs from the Group’s projections and from our
sensitivity analysis to management’s proforma covenant compliance
calculations.
We considered the disclosures made in the Basis of Preparation note
on pages 135 to 137 by reference to the understanding we had obtained
of the Group’s financial performance during 2020, our assessment
of management’s projections and our reading of the Group’s Facility
Agreements.
We concluded that the disclosures made by the directors are appropriate
in the circumstances.
Consolidated financial statements Company financial statements
Overall materiality €3.36 million (2018: €1.25 million). €3.8 million (2018: €3.7 million).
How we
determined it
Circa 2.5% of pre-IFRS 16 earnings before interest,
tax, depreciation and amortisation (‘pre-IFRS 16
EBITDA’). 2018 materiality was based on circa 2.5%
of EBITDA.
Circa 1% of net assets.
Rationale for
benchmark
applied
The Group is profit oriented and EBITDA is one of
the key metrics used by shareholders to determine
its performance.
We used EBITDA as our materiality benchmark
for the 2018 audit. Given the significant impact of
IFRS 16, Leases, on the Group’s 2019 result and
apparent continuing shareholder focus on pre-
IFRS 16 benchmarks, we believe that pre-IFRS 16
EBITDA is the most appropriate measure of trading
performance in 2019. As the Group adopted IFRS
16 on 1 January 2019, the bases for calculating
materiality are consistent as between 2018 and 2019.
We believe that net assets is the primary
measure used by the shareholders in
assessing the performance of the entity,
and is a generally accepted auditing
benchmark for a holding company.
Financial statement line items that do not
eliminate on consolidation have been audited
to lower materiality than overall materiality for
the Consolidated Financial Statements.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €0.17 million
(Group audit) (2018: €0.06 million) and €0.19 million (Company audit) (2018: €0.185 million) as well as misstatements below that
amount that, in our view, warranted reporting for qualitative reasons.
125
 FINANCIAL STATEMENTS
124 
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report to you where:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt
about the Group’s or the Company’s ability to continue to adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s or the
Company’s ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report and Financial Statements other than the financial
statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, to
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we
are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Directors’ Report, we also considered whether the disclosures required by the Companies Act 2014 (excluding
the information included in the ‘Non-Financial Statement’ as defined by that Act on which we are not required to report) have been
included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland) and the Companies
Act 2014 require us to also report certain opinions and matters as described below:
• In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’ Report
(excluding the information included in the ‘Non-Financial Statement’ on which we are not required to report) for the year ended
31 December 2019 is consistent with the financial statements and has been prepared in accordance with the applicable legal
requirements.
• Based on our knowledge and understanding of the Group and Company and their environment obtained in the course of the
audit, we have not identified any material misstatements in the Directors’ Report (excluding the information included in the ‘Non-
Financial Statement’ on which we are not required to report).
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities set out on page 116, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true
and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but
to do so.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but
to do so.
Responsibilities for the financial statements and the audit (continued)
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
Consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the IAASA website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2014 opinions on other matters
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the Company were sufficient to permit the Company financial statements to be readily
and properly audited.
• The Company Statement of Financial Position is in agreement with the accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’ remuneration and
transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to report arising from this
responsibility.
Prior financial year non financial statement
We are required to report if the company has not provided the information required by Regulation 5(2) to 5(7) of the European
Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 in respect
of the prior financial year. We have nothing to report arising from this responsibility.
Kevin Egan
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
17 July 2020
127
 FINANCIAL STATEMENTS
126 

1. GENERAL INFORMATION
 (‘the Company’) and its subsidiaries’ (‘the Group’) principal business is the operation of motorway service areas
and petrol filling stations. The Company is a holding company whose shares are publicly traded. The Company’s registration number
is 491702 and it is incorporated and domiciled in the Republic of Ireland. The address of its registered office is Block 17, Joyce Way,
Parkwest, Dublin 12.
2. STATEMENT OF COMPLIANCE
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards
(IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) as adopted by the European Union (EU) and those
parts of the Companies Act 2014 applicable to companies reporting under IFRS. The Company financial statements have been prepared
in accordance with IFRS as adopted by the EU and the Companies Act 2014. IFRS adopted by the EU differs in certain respects from
IFRS issued by the IASB. References to IFRS hereafter should be construed as references to IFRS as adopted by the EU.
2.1 Basis of preparation
The consolidated financial statements have been prepared under the historical cost convention, except for the following which are
recognised at fair value: certain financial assets and liabilities including derivate financial instruments, share based payments at grant
date and pension plan assets. The consolidated and Company financial statements are presented in Euro (€) and all values are rounded
to the nearest thousand (€000), except where otherwise stated.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s and Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements, are disclosed in note 3.
The Consolidated Statement of Financial Position at 31 December 2018 has been restated in accordance with IFRS 3, Business
Combinations, for final adjustments to the provisional fair value of the Welcome Break acquisition on 31 October 2018. See note 28
for details.
In presenting the parent Company financial statements together with the consolidated financial statements, the Company has availed
of the exemption in Section 304 of the Companies Act 2014 not to present its individual Income Statement and related notes that form
part of the approved Company financial statements and not to file its individual Income Statement with the Registrar of Companies.
The Company’s result for the financial year, determined in accordance with IFRS, is a profit for the year of €11 million (2018: loss
of €9.8 million). Details of the Company accounts can be found on pages 208 to 219. The Company uses the same accounting
policies as the Group which are listed in section 2.3.
The Group has applied the following standards, interpretations and amendments with effect from 01 January 2019:
• IFRS 16, Leases;
• Amendments to IFRS 9, Prepayment Features with Negative Compensation;
• Amendments to IAS 28, Long-term Interests in Associates and Joint Ventures;
• Annual Improvements to IFRS Standards 2015 – 2017 Cycle;
• Amendments to IAS 19, Plan Amendment, Curtailment or Settlement;
• IFRIC 23, Uncertainty over Income Tax Treatments.
The Group also elected to adopt the following amendments early:
• Amendments to IFRS 9 and IFRS 7 - Interest rate benchmark reform.
The effects of applying IFRS 16 and amendments to IFRS 9 and IFRS 7 are disclosed in note 4, Changes in Significant Accounting
Policies. The other amendments listed above did not have any impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
Going concern
The Directors have performed an assessment of going concern, including a review of the Group’s current cash position, available
banking facilities and financial forecasts for 2020 and 2021, including the ability to adhere to banking covenants. In doing so the
Directors have considered the uncertain nature of the current COVID-19 pandemic, current trading trends in our three markets and
extensive actions already undertaken to protect profitability and conserve cash.
The Group has two separate banking arrangements in its overall financing structure. This comprises a facility provided to
 (“facilities”) which is utilised for the purposes of financing the Group’s activities other than its UK
motorway service area operations and a separate loan facility provided directly to its Welcome Break subsidiary (“Welcome Break
facilities”) which is ring-fenced to that group of companies and is non-recourse to the wider group. Full details of those
borrowings and facilities are included in Note 20.
135
 FINANCIAL STATEMENTS
134 
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.1 Basis of preparation (continued)
Going concern (continued)
At 30 June 2020, the Group’s net debt position was €550m approx. comprising €110m approx. in cash and €660m approx.
of external debt. In addition, the Group had access to undrawn committed facilities of €92m.
Facilities
The Group announced on 18 May 2020 that it had successfully completed a process with the lenders to access an
additional €52.5m revolving credit facility and had also agreed to substantially relax or remove covenant conditions for the tests
arising in each quarter up to and including June 2021. This facility has historically been subject to two covenants, which are tested
quarterly: net debt to pre-IFRS 16 EBITDA (leverage) and a fixed charge cover test. In recognition of the current macroeconomic
uncertainty, the lenders have amended the covenant test structure, replacing the existing leverage test with a minimum rolling
12-month pre-IFRS 16 EBITDA test and substantially relaxing the fixed charge cover limits, both of which are tested on a quarterly
basis for the period to June 2021. After June 2021, the facility reverts to the original covenant tests.
At 30 June 2020, the banking group’s net debt position was €190m approx. comprising €70m approx. of cash and
€260m approx. of external debt and had access to undrawn committed facilities of €64m.
Welcome Break Facilities
The Group further announced on 1 July 2020 that it had successfully repurposed a £25m dedicated capital expenditure facility in
the existing Welcome Break banking facilities into a revolving credit facility which is available to draw down for any purpose. The
lenders to Welcome Break also agreed to relax or remove covenant conditions for tests up to and including June 2021. This facility
has historically been subject to two covenants, which are tested quarterly: net debt to EBITDA (leverage) and EBITDA to net finance
charges.
In both cases, EBITDA is calculated using FRS102 accounting principles. The lenders have amended the covenant test structure,
replacing the existing tests with minimum rolling quarterly EBITDA and minimum available liquidity tests which will be tested on
a monthly basis for the period to June 2021. After June 2021, the facility reverts to the original covenant tests.
At 30 June 2020, the Welcome Break banking group’s net debt position was €360m approx. comprising €40m approx. of cash
and €400m approx. of external debt and had access to undrawn committed facilities of €28m.
Financial Forecasts
Two scenarios were considered for the Group in preparing our going concern assessment being a management case and another
scenario using a set of severe but plausible downside assumptions to that management case.
The management case which is built up from detailed projections for each of the Group’s businesses and markets includes the
following key assumptions:
• Fuel volumes were significantly impacted in April and May with total volumes across the group falling to less than half of
normalised levels. We projected a gradual recovery commencing in June as restrictions were eased which is expected to
continue through the second half of 2020 with December 2020 volumes estimated to be 10%-20% below normalised monthly
levels. This recovery is forecast to continue in 2021 before normalising to pre-COVID-19 levels by the end of 2021;
• Food volumes were also impacted with total volumes less than a quarter of normalised levels in April and May, driven primarily by
the closure of a number of food offers across the Group. Similar to fuel, we have assumed a gradual recovery of food volumes
through the second half of 2020 and into 2021 with December 2020 volumes estimated to be 15%-20% below normalised
monthly levels;
• Given their local nature, store volumes in the PFS estate traded strongly during the lockdown in April and May with sites trading
at or slightly above normalised levels. Following the lifting of restrictions we anticipate that store volumes would be somewhat
subdued for the remainder of 2020 and into 2021;
• Reduction in variable costs to align the costs with the lower volumes including furloughing staff as part of government support
scheme and reducing repairs and maintenance costs as well as obtaining rent reductions from landlords;
• Reductions in support costs to reflect the impact of the extensive cost reduction initiatives implemented by the Group including
the implementation of a recruitment freeze, deferral of executive bonuses and graduated salary reductions for support staff
across the business
The downside case included further reductions in the range of 10-15% in fuel and food volumes in the second half of 2020 and into
2021 to reflect a scenario of a deeper economic impact, region specific lockdowns in the UK and a slower recovery over the course
of next year. Those projections showed that the Group will continue to operate viably over that period.
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.1 Basis of preparation (continued)
Going concern (continued)
Outcome of assessment
Overall the Group traded ahead of the management case for the second quarter of 2020 and has remained profitable at an EBITDA
level which further underlines the resilience and adaptability of our business during this difficult time. The Welcome Break business,
which we anticipated would be the most heavily impacted part of the estate because of its dependence on motorway volumes, traded
in line with the management case for the second quarter of 2020 and trading continues to improve. The remainder of the 
estate traded ahead of the management case expectations, aided by strong store sales in the local PFS sites, good fuel margins
and extensive cost saving measures. The Group’s cash position is more positive than the management case due to the stronger
than expected performance. The management case indicated that, as anticipated, there will be no requirement for drawdown of the
existing overdraft facilities or the additional Revolving Credit Facilities provided by lenders during the period. Further, the
management case projects comfortable headroom over the new covenants in both the and Welcome Break facilities.
With respect to the Welcome Break subsidiary specifically, notwithstanding the business has sufficient liquidity for the next 12 months,
in the event of a more severe downside circumstance where there is a further prolonged national lockdown across the UK caused by
a second wave of COVID-19, this would likely result in a breach of the revised EBITDA banking covenant. One of the options available
to lenders following a covenant breach, would be to trigger a repayment of outstanding debt. In such a circumstance and without the
Board taking further mitigating actions or re-negotiating with lenders then Welcome Break might be unable to realise its assets and
discharge its liabilities in the normal course of business. This could result in a substantial impairment or derecognition of the investment
in Welcome Break both in the Group and Company. The Directors are satisfied that such an occurrence would not impact on the group’s
ability to continue as a going concern given the non-recourse nature of the Welcome Break facilities to the wider group.
The Directors are confident that the Group is now well positioned to manage its business risks and have considered a number of factors
including current trading performance, the outcomes of comprehensive forecasting, a range of possible future trading impacts, existing
liquidity, amended covenant structures and the non-recourse nature of the Welcome Break facilities. The Directors are of the view that
there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 12 months
following the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis for preparing
the financial statements.
2.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company, all its subsidiaries, associate and joint
venture as at 31 December 2019.
Subsidiaries are entities controlled by the Group. They are consolidated from the date on which the Group obtains control and
continue to be consolidated until the date when such control ceases. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity, and has the ability to affect those returns through its power
over the entity. Subsidiaries are accounted for using the acquisition method as at the acquisition date i.e. when control
is transferred to the Group. The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company using consistent accounting policies.
The acquisition method of accounting is used to account for business combinations by the Group. See section 2.3 for details of the
Group’s accounting policies.
All intra-group balances, transactions and unrealised gains resulting from intra-group transactions and dividends are eliminated in
full. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement
of Financial Position respectively.
Associates are all entities over which the group has significant influence but not control or joint control. This is generally the case
where the group holds between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial
and operating policy decisions of an entity, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the joint venture. Joint control is the contractually agreed sharing of control of the arrangement, which exists only when
decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group’s investments in its associates and joint ventures are accounted for using the equity method from the date significant
influence/joint control is deemed to arise until the date on which significant influence/joint control ceases to exist or when the
interest becomes classified as an asset held for sale.
137
 FINANCIAL STATEMENTS
136 
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.2 Basis of consolidation (continued)
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the
Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other
comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint
ventures are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the other entity.
The Group determines at each reporting date whether there is any objective evidence that the equity accounted investment is
impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of
the equity accounted investment and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of associates/
joint ventures’ in the Consolidated Income Statement.
Unrealised gains on transactions between the Group and its associate and joint venture are eliminated to the extent of the Group’s
interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency
with the policies adopted by the Group. Investments in associates and joint ventures are shown separately on the Consolidated
Statement of Financial Position.
Joint operations are arrangements where the parties that have joint control of the arrangement, have rights to the assets and
obligations for the liabilities relating to the arrangement. The activities are undertaken by the Group in conjunction with other joint
operators that involve the use of the assets and resources of those joint operators. The Group’s investments in its joint operation
is accounted for by recognising its assets and its liabilities, including its share of any assets or liabilities held jointly; its share of the
revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. The
Group has a joint arrangement with Valero Energy (Ireland) Limited in the operation of a fuel terminal at Dublin port which is the
principal place of business. Both parties have an equal interest in the Dublin port asset.
2.3 Significant accounting policies
The following are significant accounting policies applied by the Group in preparing its consolidated financial statements:
Revenue
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of consideration received or
receivable, excluding value added tax and net of returns, trade discounts and including duty on goods to external customers. If it is
probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of
revenue as the sales are recognised. The transaction price is the contracted price with the customer.
Revenue is recognised when an identified performance obligation has been met. Sales of goods are recognised when the Group
sells a product to the customer. This is when control is deemed to have transferred to the customer and the customer can direct
the use of and obtain substantially all the remaining benefits from a good or service. The Group uses the five-step model as
prescribed by IFRS 15, Revenue Recognition, to determine when recognition is appropriate. Contracts with customers include
a single performance obligation.
Retail sales
The Group’s principle revenue is earned from fuel, food and store sales throughout its network of service stations in Ireland, the
UK and the USA. Sales of goods are recognised when the Group sells a product to the customer. Retail sales are usually in cash,
by credit card or by fuelcard. Due to the nature of the products sold, the Group does not experience material levels of returns.
Principal versus agent consideration
When deciding the most appropriate basis for presenting revenue or costs of revenue, the Group assesses whether it controls
the specified good before delivery to the customer to determine each party’s respective role in the transaction. Where the
Group’s role in a transaction is that of principal, revenue is recognised on a gross basis. This requires revenue to comprise
the gross value of the transaction billed to the customer, after trade discounts, with any related expenditure charged as an
operating cost. Where the Group’s role in a transaction is that of an agent, revenue is recognised on a net basis with revenue
representing the commission earned.
Customer loyalty programmes
The Group operates a loyalty programme where retail customers accumulate points for purchases made which entitle them
to discount on future purchases. A contract liability for the award of points is recognised at the time of the sale. Revenue is
recognised when the points are redeemed or no longer expected to be redeemed.
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
The points provide a material right to customers that they would not receive without entering into a contract. Therefore, the
promise to provide points to the customer is a separate performance obligation. The transaction price is allocated to the
product and the points on a relative stand-alone selling price basis. Management estimates the stand-alone selling price per
point on the basis of the discount granted when the points are redeemed and on the basis of the likelihood of redemption,
based on past experience. The stand-alone selling price of the product sold is estimated on the basis of the retail price.
A contract liability is recognised until the points are redeemed or no longer expected to be redeemed.
Hotel sales
Revenue is derived from hotel operations and includes the rental of rooms and food and beverage sales. Revenue is recognised
when the rooms are occupied and food and beverages are sold.
Gaming income
The Group recognises takings due from playing gaming machines less any payouts as revenue at the point the machine is
played.
Interest income
Interest income is recognised using the effective interest rate method when it is probable that income will flow to the Group. When
a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash
flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.
Interest income on impaired loans and receivables is recognised using the original effective interest rate.
Cost of sales
Cost of sales comprises the net costs of inventories recognised as an expense and other charges attributable to the acquisition of
inventory.
Supplier income
Supplier rebate income is recognised in cost of goods sold concurrent with the sale of the inventories to which it relates and is
calculated by reference to the expected consideration receivable from each rebate arrangement. Supplier rebate income is not
recognised if there is significant uncertainty regarding recovery of the amount due. Supplier rebate income accrued but not yet
received is included in accrued income.
Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Euro (€),
which is the Company’s functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such
trading transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the Consolidated Income Statement.
Intercompany foreign currency transactions are also translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. The Group has designated a number of intercompany loans as an extension of ’s
net investment in foreign operations. As there is no intention for these loans to be repaid in the foreseeable future, these loans are
considered quasi equity. Foreign exchange gains and losses arising on the retranslation of ‘quasi equity’ loans are recorded in the
Consolidated Statement of Comprehensive Income. All other foreign exchange gains and losses on intercompany balances are
recognised in the Consolidated Income Statement.
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign
operation are recognised in Other Comprehensive Income to the extent that the hedge is effective and are presented within equity
in the foreign exchange translation reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or
loss. When the hedged part of a net investment is disposed of, the associated cumulative amount in equity is transferred to profit or
loss as an adjustment to the profit or loss on disposal.
All other foreign exchange gains and losses are presented in the Consolidated Income Statement within administrative expenses.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
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138 
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
The results and financial position of all the Group entities that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
(a) assets and liabilities for each Statement of Financial Position are translated at the closing rate at the date of that Statement of
Financial Position;
(b) income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions); and
(c) all resulting exchange differences are recognised in the Consolidated Statement of Comprehensive Income.
Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is the excess of the consideration paid over the
fair value of the identifiable assets, liabilities and contingent liabilities in a business combination and relates to assets which are not
capable of being individually identified and separately recognised.
Goodwill acquired is allocated, at acquisition date, to the groups of cash generating units (CGUs) expected to benefit from
synergies related to the acquisition. Where management reassesses its groups of CGUs, goodwill is reallocated on a relative value
basis.
Goodwill is measured at cost less accumulated impairment losses. The CGUs represent the lowest level within the Group at which
goodwill is monitored for internal management purposes. These units are no larger than the operating segments determined in
accordance with IFRS 8: Operating Segments (note 5).
Goodwill is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment exists.
Where the recoverable amount of a cash generating unit is less than the carrying amount, an impairment loss is recognised.
Impairment losses arising in respect of goodwill are not reversed once recognised.
Where a subsidiary is sold, any goodwill arising on acquisition, net of any impairments, is included in determining the profit or loss
arising on disposal.
Intangible assets (other than goodwill)
Intangible assets (other than goodwill) include i) brands acquired on purchase of subsidiaries, ii) the costs associated with the
implementation of the Group’s ERP system, iii) operating agreements for the exclusive sale of fuel from dealer sites, iv) franchise
licences for the operation of franchised operations throughout the Group's retail network and wine and off licence fees in respect
of those retail stores that sell alcohol, and v) favourable contracts acquired on purchase of subsidiaries.
Intangible assets acquired are initially capitalised at cost and amortised using the straight-line basis over their contractual lives as
follows:
Branding 5-10 years
Software 12 years
Operating agreements 5 years
Franchises and licences 5-25 years
Favourable contracts Over the term of the contract
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by
the Group are recognised as intangible assets when the following criteria are met:
• it is technically feasible to complete the software so that it will be available for use;
• management intends to complete the software and use or sell it;
• there is an ability to use or sell the software;
• it can be demonstrated how the software will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software are available; and
• the expenditure attributable to the software during its development can be reliably measured.
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Directly attributable costs that are capitalised as part of the software include employee costs and relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use.
Research expenditure and development expenditure that do not meet the criteria above are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost
of an asset comprises its purchase price or construction cost plus any costs directly attributable to bringing the asset into the
location and condition necessary for it to be capable of operating in a manner intended by management.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the
Consolidated Income Statement during the financial year in which they are incurred.
Property, plant and equipment is depreciated on a straight-line basis over its expected useful life. The typical useful lives of the
Group’s property, plant and equipment are:
Freehold property Over 50 years
Leasehold improvements Over the term of the lease or useful life, whichever is lower
Plant and equipment 20 years
Fixtures & fittings 10 years
Motor vehicles 5 years
Computer hardware and software 5 years
Freehold land is not depreciated.
The expected useful lives of property, plant and equipment are reviewed and adjusted, if appropriate, at each financial year end.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from its use. Any gain or loss arising on de-recognition of the asset is recorded in the Consolidated Income Statement in the period
the asset is derecognised.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Assets under construction
Capitalisation of costs in respect of constructing property, plant and equipment commences when it is probable that future
economic benefits associated with the asset will flow to the Group, the costs are directly attributable to the related asset and
required to bring the asset into working condition.
Capitalisation of costs in respect of software intangible assets that are under construction and that arise from internal development
commence when all the following conditions are met:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale has been established;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits has been established including whether the entity can
demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset;
• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible
asset; and
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
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140 
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
The cost of self-constructed assets includes:
• the cost of materials, labour and services;
• any other costs directly attributable to bringing the assets to a working condition for their intended use; and
• in the case of Property, Plant and Equipment, an estimate of the costs associated with the removal of the asset or restoration of
the site when the Group has an obligation to remediate, if any.
Assets under construction are not depreciated and are assessed for impairment when there is an indicator of impairment. When
these assets are ready and available for use, the assets are transferred out of assets under construction to the applicable heading
under property, plant and equipment or intangible assets. At this point, depreciation begins.
Impairment of non-financial assets
The carrying amounts of the Group’s property, plant and equipment (including assets under construction), and intangible assets are
reviewed at each reporting date to determine whether there is any indication of impairment. If events or changes in circumstances
indicate that the carrying value of property, plant and equipment, or intangible assets may not be recoverable, the Group carries
out an impairment test.
When testing for impairment, assets are grouped together into the smallest group of assets that is largely independent of the
Group’s other cash generating streams. The recoverable amount in respect of each cash generating unit (CGU) is the higher of its
fair value less cost of disposal and the value in use.
Value in use is determined by discounting to present value the estimated future cash flows expected to be derived from the CGU.
The discount rate used is the Group’s weighted average cost of capital reflecting current market assessments of the time value of
money and the risks specific to the CGU.
Fair value is determined as the price that would be received to sell the CGU in an orderly transaction between market participants
at the measurement date. Further details of the application of this policy to the Group’s CGUs is set out in note 14. To the extent
that the carrying amount exceeds the recoverable amount, the asset is impaired and is written down. Any impairment loss arising is
recognised in the Consolidated Income Statement.
Prior impairments of non-financial assets are reviewed for possible reversal at each reporting date. A previously recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount
since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversals are recognised in the Consolidated Income Statement.
Investments in subsidiaries
This accounting policy is applicable only for the Company financial statements. Interests in subsidiary undertakings are measured
at cost less provisions for impairment in value on the Company Statement of Financial Position. The Company carries out an
impairment test if events or changes in circumstances indicate that the carrying value of the investment in a subsidiary may not be
recoverable. The recoverable amount is determined by comparing the carrying value of the investment in the subsidiary against the
higher of its fair value less costs to dispose and its value in use. The value in use is determined by discounting estimated future cash
flows expected to be derived from the financial asset, to net present value.
Financial assets
Classification
The Group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through Consolidated Statement of Comprehensive Income (OCI) or
through Consolidated Income Statement), and
• those to be measured at amortised cost. The classification depends on the entity’s business model for managing the financial
assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in the Consolidated Income Statement or Consolidated
Statement of Comprehensive Income.
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at FVPL are expensed in the Consolidated Income Statement.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely
payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income
using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in the Consolidated
Income Statement and presented in finance costs and income together with foreign exchange gains and losses. Impairment
losses are also presented in finance costs in the Consolidated Income Statement.
• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’
cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and
losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to the Consolidated Income Statement and recognised in finance costs and income.
Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign
exchange gains and losses and impairment expenses are presented in finance costs and income.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognised in the Consolidated Income Statement and presented net within
finance income/(costs) in the period in which it arises.
Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For
trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables, see note 18 for further details.
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost basis. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
Cash and cash equivalents
In the Consolidated Statement of Cash Flows, cash and cash equivalents includes cash in hand, cash in transit, deposits held at
call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the
Consolidated Statement of Financial Position, bank overdrafts are shown within borrowings in current liabilities.
Trade and other payables
These amounts represent liabilities for goods or services provided to the Group prior to the end of the financial year which are
unpaid. Trade and other payables are presented as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities. They are initially recorded at fair value
and subsequently measured at amortised cost using the effective interest rate method.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
143
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142 
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the obligation; and the amount can be estimated reliably. Provisions are not
recognised for future operating losses.
The amount recognised as provisions is the best estimate of the expenditure required to settle the present obligation at the balance
sheet date. The effect of the time value of money is not material and therefore the provisions are not discounted.
Post-employment obligations
The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans.
Defined benefit pension plans
The liability or asset recognised in the Consolidated Statement of Financial Position in respect of defined benefit pension plans is
the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-
quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating
to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair
value of plan assets. This cost is included in employee benefit expense in the Consolidated Income Statement.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in
the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of
Changes in Equity and in the Consolidated Statement of Financial Position.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised
immediately in the Consolidated Income Statement as past service costs.
Defined contribution plans
The Group operates a number of defined contribution plans. A defined contribution plan is a post-employment benefit plan under
which an entity pays fixed contributions into a separate entity. The Group has no further payment obligations once the contributions
have been paid. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the
Consolidated Income Statement in the periods during which the related services are received. Prepaid expenses are recognised as
an asset to the extent that a cash refund or a reduction in the future payments is available.
Other employee benefits
The Group recognises a liability and an expense for bonuses. The Group recognises a provision where contractually obliged or
where there is a past practice that has created a constructive obligation.
Liabilities for wages and salaries, including accumulating annual and sick leave that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service are recognised in respect of employees’
services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The liabilities are presented as trade payables and accruals in the Statement of Financial Position.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the Consolidated Income Statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs.
Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred
to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in the
Consolidated Income Statement as other income or finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting period.
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Borrowings costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in finance costs in the period in which they are incurred.
Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to
their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group has determined that its
derivatives should be treated as cash flow hedges, being hedges of a particular risk associated with the cash flows of recognised
assets and liabilities and highly probable forecast transactions.
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged
items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of
hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions. The fair
values of derivative financial instruments designated in hedge relationships are disclosed in note 23.
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities)
is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the
group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is
the case for unlisted equity securities.
Movements in the hedging reserve in shareholders’ equity are shown in note 23. The full fair value of a hedging derivative is
classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified
as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised
in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement, within finance income/(costs).
When option contracts are used to hedge forecast transactions, the group designates only the intrinsic value of the options as the
hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognised in
the cash flow hedge reserve within equity. The changes in the time value of the options that relate to the hedged item (‘aligned time
value’) are recognised within OCI in the costs of hedging reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows:
• The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in profit or
loss within finance cost at the same time as the interest expense on the hedged borrowings.
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast
transaction occurs, resulting in the recognition of a non-financial asset. When the forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit
or loss.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
145
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144 
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Share based payments
The Group operates a number of equity-settled, share-based compensation plans under which the entity receives services from
employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in
exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference
to the fair value of the options granted:
– including any market performance conditions;
– excluding the impact of any service and non-market performance vesting conditions; and
– including the impact of any non-vesting conditions.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on
non-market vesting conditions and service conditions. It recognises the impact of the revision of the original estimates, if any, in
the Consolidated Income Statement, with a corresponding adjustment to equity.
The fair value of options granted by the Company over its equity instruments to the employees of subsidiary undertakings in the
Group is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit
to equity in the parent entity accounts.
The social security contributions payable in connection with the grant of the share options are considered an integral part of the
grant itself, and the charge will be treated as a cash-settled transaction.
Where the Group receives a tax deduction for share-based payments, deferred tax is provided on the basis of the difference
between the market price of the underlying equity at the date of the financial statements and the exercise price of the option.
The 2016 Employee Share Option Plan is administered by the Employee Share Option Trust. When the options are
exercised, the trust transfers the appropriate amount of shares to the employee. The proceeds received net of any directly
attributable transaction costs are credited directly to equity.
Leases
Accounting policy applied after 01 January 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease, if the
contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. The Group
recognises a right-of-use asset and a lease liability at the lease commencement date, which is the date at which the asset is made
available for use by the Group.
The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment
losses and adjusted for certain remeasurements of the lease liability. The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, restoration costs and lease payments made at or before the commencement date
less any lease incentives received. The right-of-use asset is depreciated on a straight-line basis over the shorter of its estimated
useful life and the lease term. Where the lease contains a purchase option the asset is written off over the useful life of the asset
when it is reasonably certain that the purchase option will be exercised. Right-of-use assets are subject to impairment testing.
The lease liability is initially measured at the present value of the lease payments to be made over the lease term. The lease
payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate
known at the commencement date, payments for a purchase option, payments for an optional renewal period and termination
option payments if the Group is reasonably certain to exercise those options. The lease term is the non-cancellable period of the
lease adjusted for any renewal options which are reasonably certain to be exercised. Management applies judgement in determining
whether it is reasonably certain that a renewal option will be exercised. The variable lease payments that do not depend on an index
or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. The Group
has elected to avail of the practical expedient not to separate lease components from any associated non-lease components.
The lease payments are discounted using the lessee’s incremental borrowing rate as the interest rate implicit in the lease is generally
not readily determinable. Incremental borrowing rates are determined using a build-up approach that uses externally benchmarked
information adjusted to take consideration of the lessee’s risk profile and the specific lease characteristics. These characteristics
include the type of leased assets, the term of the lease and the currency of the lease.
The Group has elected to apply the recognition exemptions for short-term and low-value leases and recognises the lease payments
associated with these leases as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases
with a lease term of 12 months or less.
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Accounting policy applied before 01 January 2019
Assets held by the Group under leases which transfer to the Group substantially all of the risks and rewards of ownership are
classified as finance leases. On initial recognition, assets held under finance leases are included in property, plant and equipment,
at the lower of fair value and the present value of the minimum lease payments. Subsequent to initial recognition, each asset is
depreciated over the shorter of the lease term or its useful life and otherwise accounted for in accordance with the accounting
policy applicable to that asset.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance
charges, are included in current or non-current liabilities as appropriate. The interest element of the finance cost is charged to
the Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Consolidated
Income Statement on a straight-line basis over the period of the lease
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
• fair values of the assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Group;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill. If
those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised
directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values
allocated to the identifiable assets and liabilities are made within twelve months of the acquisition date.
Non-controlling interests are measured at their proportionate share of the acquiree’s identified net assets.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
147
 FINANCIAL STATEMENTS
146 
2. STATEMENT OF COMPLIANCE (CONTINUED)
2.3 Significant accounting policies (continued)
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the Statement of
Financial Position date in the countries where the Company’s subsidiaries, associate and joint venture operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to
the tax authorities.
Deferred income tax is recognised using the liability method on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. No deferred tax is recognised if the temporary
difference arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred income tax is recognised in respect of taxable temporary differences arising from investment in subsidiaries, associate
and joint venture, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each
Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all, or part of, the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates that
have been enacted or substantively enacted at the Statement of Financial Position date.
Provision for a corporation tax surcharge assessable on undistributed investment income (in accordance with Section 440, Taxes
Consolidation Act 1997) is provided after the time limit of eighteen months has elapsed within which a dividend can be paid to avoid
such surcharge.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net
basis.
Share capital
Ordinary shares and redeemable ordinary shares that rank pari passu with ordinary shares carry no preferential dividend right.
Proceeds from the issue of ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are recorded in retained earnings within equity.
Dividends
Dividends are recognised in the period in which they are approved by the Company’s shareholders, or in the case of an interim
dividend, when it has been approved by the Board of Directors and paid.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual
results. Management also needs to exercise judgement in applying the Group’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more
likely to be materially adjusted due to estimates and assumptions turning out to be different from eventual outcomes.
Significant judgements
Going concern
The Directors have assessed the Group’s ability to continue in operational existence for the foreseeable future by preparing detailed
financial forecasts and carrying out stress testing on projections, with consideration of the macro-economic backdrop.
The Group are highly conscious of the considerable uncertainty created by the current COVID-19 crisis, its impact on the business,
and are closely monitoring the situation. In note 2.1, the Directors have outlined details of the Group’s current financial position, the
key assumptions within their cash flow forecasts, and details of their current banking facilities and projected covenant compliance.
Based on this, the Directors are confident that the Group has adequate resources to continue in operational existence for the
foreseeable future. The Group therefore continues to adopt the going concern basis of accounting in preparing its consolidated
financial statements.
Lease terms
The Group adopted IFRS 16 from 01 January 2019. IFRS 16 eliminates the IAS 17 classification of leases as either operating leases or
finance leases and introduces a single lessee accounting model with some exceptions. See note 4 for further details.
Many of the Group’s leases have options to renew or terminate. The Group applies judgement in evaluating the length of the lease.
Management consider all relevant factors and, in particular, if an economic incentive exists to renew or terminate. The assessment
of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount
of lease liabilities and right-of-use assets recognised. The Group periodically assesses this, or more frequently if circumstances
change.
Assessment of control in the acquisition of associate
During the year, the Group acquired a 40% holding in JLIF Holdings (Project Service) US, Inc. The Group entered into a consortium
shareholder agreement with IST3 Investment Foundation and TD Greystone Asset Management.
An assessment of control was undertaken. IFRS 10 explains that an investor controls an investee when it is exposed, or has rights to
variable returns from its involvement with the investee and has ability to direct those returns through its power over the investee.
The investee is overseen by its Board who are elected by members holding shares with voting rights. The Board appoint key
management personnel who make the daily decision making regarding relevant activities that most significantly affect the investees
return. Provisions set out within the Shareholders Agreement that define the manner in which Directors are appointed to the Board
representing members holding equity instruments and the manner in which voting procedures are applied.
The Group also holds a call option over 20% of the shares of another shareholder, which is exercisable after a period of 5 years.
However, the call option does not impact the control assessment until it is exercisable.
On the basis of the above, the Group has concluded that it does not have the power to control the investee. The Group participates
in the acquired investee by virtue of its 40% holding of equity instruments issued. Therefore, it has been treated as an associate in
the financial statements
Significant estimates
Impairment of goodwill
Judgement is required in determining whether goodwill is impaired or not. The Group tests annually whether goodwill has suffered
any impairment. The recoverable amount of groups of CGUs have been determined based on value in use calculations. The principal
assumptions used to determine value in use relate to future cash flows and the time value of money. Further information is provided
in note 14.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
149
 FINANCIAL STATEMENTS
148 
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONTINUED)
Significant estimates (continued)
Impairment of non-financial assets
The carrying amounts of the Group’s property, plant and equipment, and intangible assets are reviewed at each reporting date to
determine whether there is any indication of impairment in accordance with the accounting policy set out in section 2.3 of these
financial statements. The recoverable amounts of CGUs have been determined based on value-in-use calculations which require
the use of estimates including cash flow forecasts, the determination of an appropriate weighted average cost of capital (WACC)
and fair value determined by external valuers. Such estimates are subject to change as a result of changing economic conditions.
As forecasting future cash flows is dependent upon the Group’s ability to generate returns from the assets invested across its
portfolio of sites, estimates are required in relation to future cashflows which will support the asset value. These estimates may
depend upon the outcome of future events and may need to be revised as circumstances change. Note 14 details the assumptions
used together with an analysis of the sensitivity to changes in key assumptions.
Calculation of incremental borrowing rate
Under IFRS 16 ‘Leases’, discount rates are used to determine the present value of the lease payments to value the lease liability
and applicable right-of-use asset. This discount rate can be either the interest rate implicit in the lease or the lessee’s incremental
borrowing rate (IBR). As the interest rate implicit in the lease was not readily determined, the Group used the IBR approach.
The incremental borrowing rate is derived from country specific risk-free interest rates over the relevant lease term, adjusted for
the finance margin attainable by each lessee and asset specific adjustments designed to reflect the underlying asset’s location and
condition. To determine the IBR, the Group engaged external valuers to assess this on a lease by lease basis. Management then
reviewed the work and assessed the appropriateness of the results.
Taxes
The calculation of the Group’s total tax charge necessarily involves a degree of estimation and judgement in respect of certain
items, where the tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority. The
final resolution of some of these items may give rise to material Consolidated Income Statement and/or cash flow variances.
Assumptions are also made around the assets which qualify for capital allowances and the level of disallowable expenses and this
affects the income tax calculation. Provisions may be made for uncertain exposures or recoveries, which can have an impact on
both deferred and current tax. Assumptions are also made around the tax net book value of assets to which capital allowances
apply, the level of capital allowances, the extent of rollover gains, indexation thereon and the tax base into which they have been rolled.
Measurement of defined benefit obligations
The cost of the defined benefit pension plan and the present value of pension obligations are determined using actuarial valuations.
These valuations involve making various assumptions that may differ significantly from actual developments in the future. The critical
assumptions and estimates applied along with a sensitivity analysis are provided in note 32.
4. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
The Group adopted amendments to IFRS 9 ‘Financial Instruments’, IFRS 7 ‘Interest Rate Benchmark Reform’ and IFRS 16, Leases, with
effect from 01 January 2019.
Hedge accounting
The Group has elected to early adopt the ‘Amendments to IFRS 9 and IFRS 7 Interest Rate Benchmark Reform’ issued in September
2019. In accordance with the transition provisions, the amendments have been adopted retrospectively to hedging relationships
that existed at the start of the reporting period or were designated thereafter, and to the amount accumulated in the cash flow
hedge reserve at that date.
The amendments provide temporary relief from applying specific hedge accounting requirements to hedging relationships directly
affected by IBOR reform. The reliefs have the effect that IBOR reform should not generally cause hedge accounting to terminate.
However, any hedge ineffectiveness continues to be recorded in the income statement. Furthermore, the amendments set out
triggers for when the reliefs will end, which include the uncertainty arising from interest rate benchmark reform no longer being
present.
In summary, the reliefs provided by the amendments that apply to the Group are:
• When considering the ‘highly probable’ requirement, the Group has assumed that the GBP LIBOR interest rate on which hedged
debts are based does not change as a result of IBOR reform.
4. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Hedge accounting (continued)
• In assessing whether the hedge is expected to be highly effective on a forward-looking basis, the Group has assumed that the
GBP LIBOR interest rate on which the cash flows of the hedged debt and the interest rate swap that hedges it are based is not
altered by IBOR reform.
Note 23 provides the required disclosures of the uncertainty arising from IBOR reform for hedging relationships for which the Group
applied the reliefs.
Cash flow hedging
The Group principally utilises interest rate swaps to swap its variable rate debt into fixed rates. These swaps are designated as cash
flow hedges and are set to closely match the critical terms of the underlying debt being hedged. They have accordingly been
determined by the Group to be highly effective in achieving offsetting cash flows for its variable rate debt.
As a result of the refinancing in the Welcome Break borrowings in November 2019, the Group terminated the existing £300 million
notional value interest rate swap and executed a new £165 million notional value swap which matched the new senior facility. The
fair value of the existing swap at the time of refinance was a €2.3 million liability to the hedge counterparties. Instead of settling this
liability, the fixed rate on the new swap was increased to repay the liability over the life of the new swaps.
As a result of the reduction in the notional value of the swaps from £300 million to £165 million, finance cost of €1.1 million has been
recycled from the cash flow hedge reserve to the Consolidated Income Statement being that part of the reserve attributable to the
£135 million portion of the original swap for which hedge accounting had been used in the previous period.
The remaining balance of €1.3 million in the cash flow hedge reserve will be recycled to the Consolidated Income Statement over
the next two financial years, being the remaining life of the previous senior facility, prior to its refinancing.
Possible sources of future ineffectiveness are as follows:
(i) the difference between the change in the fair value of the swap and the change in the fair value of a perfect hypothetical swap; and
(ii) the effects of the forthcoming reforms to GBP LIBOR, because these might take effect at a different time and have a different
impact on the hedged item (the floating-rate debt) and the hedging instrument (the interest rate swap used to hedge the debt).
Further details of these reforms are set out below.
Effect of IBOR reform
Following the financial crisis, the reform and replacement of benchmark interest rates such as GBP LIBOR and other interbank
offered rates (‘IBORs’) has become a priority for global regulators. There is currently uncertainty around the timing and precise
nature of these changes. The Group’s risk exposure that is directly affected by the interest rate benchmark reform is its £165 million
7 year floating-rate debt. The Group has hedged this debt with an interest rate swap, and it has designated the swap as a hedge of
the variability in cash flows of the debt, due to changes in 3 month GBP LIBOR that is the current benchmark interest rate.
The Group currently anticipates that the areas of greatest change will be amendments to the contractual terms of GBP LIBOR-
referenced floating-rate debt and swaps, and updating hedge designations.
Effect of IBOR reform – significant assumptions
In calculating the change in fair value attributable to the hedged risk of floating-rate debt, the Group has assumed that any pre-
existing fallback provisions in the floating rate debt do not apply to IBOR reform.
IFRS 16 Leases
IFRS 16 ‘Leases’ issued in January 2016 by the IASB replaces IAS 17 ‘Leases’, and related interpretations. IFRS 16 sets out the
principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor. For lessees,
IFRS 16 eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting
model with some exemptions for short-term and low-value leases. The lessee recognises a right-of-use asset representing its right
to use the underlying asset and a lease liability representing its obligation to make lease payments.
The Group leases a range of assets including property and motor vehicles. As a lessee, the Group previously classified leases as
operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of
ownership. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on
a straight-line basis over the period of the lease. Under IFRS 16, the Group applies a single recognition and measurement approach
for all leases, except for short-term and low-value assets and recognises right-of use assets and lease liabilities.
The Group has adopted IFRS 16 using the modified retrospective approach, with the date of initial application of 01 January 2019.
Under this method, the impact of the standard is calculated retrospectively, however, the cumulative effect arising from the new
leasing rules is recognised in the Statement of Financial Position at the date of initial application. Accordingly, the comparative
information presented for 2018 has not been restated.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
151
 FINANCIAL STATEMENTS
150 
4. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Under IFRS 16, a contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period
of time in exchange for consideration. The Group recognises a right-of-use asset and a lease liability at the lease commencement
date.
The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment
losses and adjusted for certain remeasurements of the lease liability. The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, restoration costs and lease payments made at or before the commencement date
less any lease incentives received. The right-of-use asset is depreciated on a straight-line basis over the shorter of its estimated
useful life and the lease term. Where the lease contains a purchase option, the asset is written off over the useful life of the asset
when it is reasonably certain that the purchase option will be exercised. Right-of-use assets are subject to impairment testing.
The lease liability is initially measured at the present value of certain lease payments to be made over the lease term. The lease
payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not
depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment
occurs. The Group has elected to avail of the practical expedient not to separate lease components from any associated non-lease
components.
The lease payments are discounted using the lessee’s incremental borrowing rate as the interest rate implicit in the lease is generally
not readily determinable.
After the commencement date, the lease liability is subsequently increased by the interest cost on the lease liability and decreased
by the lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or
rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes
in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is
reasonably certain not to be exercised.
The Group has elected to apply the recognition exemptions for short-term and low-value leases and recognises the lease payments
associated with these leases as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases
with a lease term of 12 months or less. Low-value assets comprise certain items of IT equipment and small items of office furniture.
Transition
For leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease
payments, discounted at the lessee’s incremental borrowing rate as at 01 January 2019.
For leases previously classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at
01 January 2019 were determined as the carrying amount of lease asset and lease liability under IAS 17 immediately before that date.
Right-of-use assets were measured at either:
• their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s incremental
borrowing rate at the date of initial application – the Group applied this approach for certain property leases; or
• an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this
approach to all other leases.
The Group applied the following practical expedients when applying IFRS 16 to leases previously classified as operating leases
under IAS 17:
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
• Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
• Relied on its assessment of whether leases are onerous under IAS 37 immediately before the date of initial application to meet
the impairment requirement.
On transition to IFRS 16, the Group has elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not
identified as leases under IAS 17 and IFRIC 4 were not reassessed.
4. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impacts on transition
The impact on the Group’s Consolidated Statement of Financial Position as at 01 January 2019 is as follows:
01 January
2019
€000
Assets
Property, plant and equipment 451,400
Deferred income tax asset 31,844
Prepayments (11,474)
471,770
Equity
Retained earnings (96,785)
Non-controlling interest (63,695)
Liabilities
Interest-bearing loans and borrowings 639,835
Trade and other payables (7,585)
471,770
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments
using the lessee’s incremental borrowing rate at 01 January 2019. The weighted average rate applied was 8%.
The Group’s operating lease commitments as at 31 December 2018 can be reconciled to the opening lease liability
as at 01 January 2019 as follows:
2019
€000
Operating lease commitments disclosed as at 31 December 2018 1,165,458
Less:
Adjustments as a result of alignment of extension and termination options (2,406)
Commitments relating to short-term and low-value leases (3,091)
Total future lease payments 1,159,961
Discounted using the Group's incremental borrowing rate (520,126)
Lease liability recognised on transition 639,835
Finance lease liabilities already recognised at 31 December 2018 21,792
Lease liability recognised as at 01 January 2019 661,627
		
Impacts for the period
The impact on the Group’s Consolidated Income Statement for the period to 31 December 2019 is as follows:
Year to
31 December
2019
€000
Operating lease payments 71,466
Interest on lease liabilities (49,276)
Depreciation of property, plant and equipment (33,095)
Profit on disposal of assets 134
Net impact on share of loss in associate (106)
Decrease in profit before tax (10,877)
		
The impact of IFRS 16 on the consolidated financial statements is set out in the Leases note (note 30). The impact of
IFRS 16 on the Alternative Performance Measures (APMs) is set out in the Glossary on pages 220 to 221.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
153
 FINANCIAL STATEMENTS
152 
5. SEGMENTAL ANALYSIS AND REVENUE INFORMATION
 is a roadside convenience retailer, operating from motorway service areas and petrol filling stations headquartered
in Dublin, Ireland. Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating
Decision Maker (CODM). The CODM has been identified as the Board of Executive Directors.
The board considers the business from both a geographic and product perspective. Geographically, management considers the
performance in Ireland, the UK and the USA. From a product perspective, management separately considers retail activities in
respect of the sale of fuel, food, store and other within Ireland, the UK and the USA. Other primarily relates to income arising from
the operation of hotels and gaming machines in the UK sites.
The Group is organised into the following operating segments:
• Retail Ireland - Involves the sale of fuel, food and store within the Republic of Ireland.
• Retail UK - Involves the sale of fuel, food and store along with hotel related revenue, gaming machines and other retail revenues
within the United Kingdom.
• Retail USA - Involves the sale of fuel, food and store within the United States of America.
The CODM monitors revenue and gross profit of segments separately in order to allocate resources between segments and to
assess performance.
Information regarding the results of each reportable segment is included within this note. Segment performance measures are
revenue and gross profit as included in the internal management reports that are reviewed by the executive directors. These
measures are used to monitor performance as management believes that such information is the most relevant in evaluating
the results of certain segments relative to other entities that operate within these industries. The CODM also reviews adjusted
EBITDA on a consolidated basis. Assets and liabilities are reviewed by the CODM for the Group in its entirety and as such segment
information is not provided for these items.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
5. SEGMENTAL ANALYSIS AND REVENUE INFORMATION (CONTINUED)
The below Revenue, split by product type and region, has been recognised at a point in time.
Contract liabilities - customer loyalty programme 405 250
Total contract liabilities 405 250
The Group discontinued its loyalty programme during 2019. The increase in the above balances relates to additional vouchers
(in excess of normal vouchers) sent to customers to reward them in advance of the termination of the scheme.
The programme will be replaced in 2020.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
6. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year.
Basic earnings per share
Profit from continuing operations attributable to the owners of the Company (€’000) 21,539 13,272
Weighted average number of ordinary shares in issue for basic earnings per share (’000) 120,625 97,038
Earnings per share – Basic (cent) 17.86 13.68
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares which comprise share options issued under the share incentive plan. For the
share options, a calculation is performed to determine the number of shares that could have been acquired at fair value based on
the monetary value of the outstanding share options at the exercise price. Where the number of shares calculated above is less
than the number of outstanding options this difference represents dilutive share options and is added to the weighted average
number of ordinary shares used for calculating basic earnings per share in order to calculate the weighted average number of
ordinary shares for the purpose of the diluted earnings per share.
Diluted earnings per share

(3) Non recurring charges primarily relate to the restructuring of recent business acquisitions, business combination acquisition
costs and costs incurred in relation to the upgrade of the ERP system.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
9. EMPLOYEE BENEFITS
(1) Included in bank loans and overdrafts are non-recurring finance costs of €2.6 million (2018: €1 million). During the year, the Group
completed a refinance of loans in its UK business. See note 20 for further details.
The €2.6 million is made up of the write off of previously capitalised loan costs (€6.1 million), the associated swap on these loan
costs recycled to the Consolidated Income Statement (€1.1 million) and a write off due to the ineffectiveness of the hedge (€0.7
million) offset by the release of the effective interest of the extinguished loans (€5.3 million). In 2018, the non-recurring finance
costs relates to the repayment of borrowings arising from the gain on transition to IFRS 9.
The average capitalisation rate used to determine the amount of the applicable borrowing costs to be capitalised was 2.53% (2018:
2.35%).
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
11. TAXATION
Current tax
Current tax expense – Ireland 1,614 1,158
Current tax expense – overseas 6,581 1,450
Adjustments in respect of previous periods (1,194) (304)
Total current tax 7,001 2,304
Deferred tax
Origination and reversal of temporary differences (766) 905
Total deferred tax (766) 905
Total tax 6,235 3,209
The total tax expense can be reconciled to accounting profit as follows:
Profit before tax from continuing operations 37,196 15,359
Income tax at 12.5% 4,650 1,920
Non tax deductible expenses 2,366 2,882
Net effect of differing tax rates 197 (1,159)
Share of results of an associate 115 -
Tax losses carried forward 101 (130)
Adjustments in respect of previous periods (1,194) (304)
Total tax expense 6,235 3,209
Factors affecting the tax charge in future years
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2015 (on 26 October 2015) and Finance
Bill 2016 (on 07 September 2016). These include reductions to the main rate to reduce the rate to 19% from 01 April 2017 and to 17%
from 01 April 2020. Deferred taxes at the Statement of Financial Position date have been measured using these enacted tax rates
and are reflected in these financial statements.
At Budget 2020, the UK Government announced that the corporation tax main rate for the years starting 01 April 2020 and 2021
would remain at 19%. As this is a non-adjusting post balance sheet event, these revised tax rates were not factored into the deferred
tax calculations at the Statement of Financial Position date.
161
 FINANCIAL STATEMENTS
160 
11. TAXATION (CONTINUED)
Deferred income tax:
The following is an analysis of the movement in the major categories of deferred tax liabilities/(assets) recognised by the Group for
the year ended 31 December 2019:
Property,
plant and
equipment Intangibles
Tax losses
and credits
Share based payments
Short term temporary and other differences Total
The following is an analysis of the movement in the major categories of deferred tax liabilities/(assets) recognised by the Group for
the year ended 31 December 2018:
Property,
plant and
equipment Intangibles
Tax losses
and credits
Share based
payments
Short term
temporary
and other
Deferred income tax assets are recognised for tax losses carry-forward to the extent that the realisation of the related tax benefit
through future taxable profits is probable. At 31 December 2019, the Group has unused tax losses amounting to €1.6 million (2018:
€1.7 million) for which no deferred tax asset has been recognised.
The Group has recognised deferred tax assets in relation to impairments up to only the value that offsets the value of recognised
deferred tax liabilities on the revaluation of land. Within the Group there are impairments of land of €1.8 million (2018: €5.2 million)
which would result in deferred tax assets of €0.6 million (2018: €1.7 million) which have not been recognised.
12. INTANGIBLE ASSETS
Assets under construction
Assets under construction relates to the development of internally generated software assets. During the year, the new ERP system
was implemented to support legacy operations and head office functions. Costs relating to this phase that were
capitalised were transferred from assets under construction into software and amortised from the date the asset came into use. The
Group has now moved onto the second phase of this project.
Amortisation charge
The amortisation charge has been split between administration expenses of €2.3 million (2018: €7,000) and selling and distribution
costs of €3.7 million (2018: €1.6 million).
Capitalised Interest
Interest capitalised on qualifying assets during the year amounted to €0.3 million using an average rate of 2.53% (2018: €0.2 million
using an average rate of 2.35%).
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
13. PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
Right-of-use
assets
Plant and
equipment
Fixtures,
fittings
and motor
vehicles
Computer
hardware
and
software
Assets
under
construction TotalLand and
buildings
Right-of-use
assets
Plant and
equipment
Fixtures,
fittings
and motor
vehicles
Computer
hardware
and
software
Assets
under
construction Total
401,091 - 64,308 86,904 10,347 14,131 576,781
01 January 2018 185,794 - 29,304 60,773 6,602 17,101 299,574
Depreciation charge
The depreciation charge has been split between administration expenses of €1.9 million (2018: €1.6 million) and selling and
14. IMPAIRMENT
Impairment of goodwill
Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis, or more frequently
if there are indications that goodwill may be impaired. Goodwill acquired through business combination activity has been allocated
to cash generating units (CGUs) that are expected to benefit from the synergies in that combination. The CGUs represent the
lowest level at which the associated goodwill is monitored for internal management purposes, and are not larger than the operating
segments determined in accordance with IFRS 8, Operating Segments. A total of two groups (2018: 2) of CGUs have been identified
and these are analysed below.
2019
2018
(restated)
Goodwill €000 €000
Welcome Break 456,271 433,967
Carsley 3,064 2,914
459,335 436,881
Impairment testing methodology and results
The recoverable amount of each CGU is based on a value in use calculation. Cash flows used in the value in use assessment are
calculated based on management’s best estimate of pre-tax cash flow for the CGU for 2020 and forecasted thereafter over the
remaining useful life of the assets in the CGU using a long term growth rate of 2%. The growth rate used does not exceed the long-
term average growth rate in the United Kingdom, the country in which both CGUs operate. The value in use represents the present
value of the future cash flows, discounted at a pre-tax discount rate of 7.65% (2018: 7.61%). The 2019 annual goodwill impairment
testing process has not identified any impairments. No impairments were identified in 2018.
Key sources of estimation uncertainty
Cash flow forecasts are derived from a bottom up budgeting process which features a combination of internal and external
factors based on historic experience and competitor activity. However, expected future cash flows are inherently uncertain and
are therefore liable to material change over time. The key assumptions employed in arriving at the estimates of future cash flows
factored into impairment testing are subjective and include projected EBITDA, maintenance capital expenditure, duration of asset
lives, and the discount rate used.
Of the goodwill allocated to the two groups of CGUs, the Welcome Break CGU accounts for 99% of the total carrying amount of
€459 million. The additional disclosures required for Welcome Break CGU are as follows:
14. IMPAIRMENT (CONTINUED)

Pre-tax discount rate 
The calculations use value in use as the basis of the recoverable amount.
The key assumptions and methodology used in respect of the Welcome Break CGU are consistent with those described above.
The values applied to each of the key estimates and assumptions are specific to that CGU and were determined from a combination
of internal and external factors based on historical experience and took into account the cash flows specifically associated with this
business.
Sensitivity analysis
The table below identifies the amounts by which each of the key assumptions must change in order for the recoverable amount to
be equal to the carrying value of the Welcome Break CGU.
Percentage point (%)
Increase in pre-tax discount rate 0.52
Reduction in EBITDA 20
Increase in maintenance capital expenditure 63
Impairment of property, plant and equipment and intangibles (other than goodwill)
The Group operates a number of service station sites in Ireland, the UK and the USA. The Group considers each individual site as a
cash generating unit (CGU) for the purpose of impairment assessment in accordance with IAS 36 ‘Impairment of assets’. Impairment
assessments are conducted at this level when indicators of impairment are considered to exist. The recoverable amounts of sites
that are assessed for impairment have been determined based on the higher of value-in-use methodology or fair value less costs of
disposal.
An impairment charge of €7 million (2018: €5.1million) was recognised in the Consolidated Income Statement within selling and
distribution costs. The impairment charge relates to service stations in Ireland, UK and US. Impairment indicators were identified
when the service stations failed to meet profitability expectations and the impairment charge arose from lower forecasts for future
profitability in respect of these sites because of trading conditions. The recoverable amount of these sites was €29.8 million (2018:
€12.9 million) of which €28.1 million (2018: €1.6 million) represented sites determined on a value in use basis and €1.7 million (2018:
€11.3 million) represented sites determined on a fair value less costs of disposal basis.
Fair value less costs of disposal
 FINANCIAL STATEMENTS
168 
14. IMPAIRMENT (CONTINUED)
Significant assumptions used in the value in use assessments are summarised below:
31 December 2019 31 December 2018
Ireland UK US Ireland UK US
€000 €000 €000 €000 €000 €000
Discount rate 6.5% 6.1% 7.0% 7.66% 7.61% -
Long term growth rate 2% 2% 2% 2% 2% -
Cash flows used in the value in use assessment are calculated based on management’s best estimate of pre-tax cash flow for each
individual site for 2020 and forecasted thereafter over the remaining useful lives of the assets in the site using long term growth
rates. Cash flows used in the value in use assessment also include maintenance capital expenditure required to maintain the site
assets in their current condition.
The above assumptions are subject to sensitivity analysis and the impairment review performed is predominantly dependent upon
the judgements used in arriving at the future growth rates and the discount rates used in the cash flow projections. Cash flow
projections have been performed over the remaining life of each cash generating unit (maximum 50 years).
The impact on the impairment charge of applying a 10% reduction to the long-term growth rate would be to increase in the
impairment charge by €0.4 million (2018: €0.1 million). A 5% increase in the discount rate would result in an increase in the
impairment charge of €0.6 million (2018: €0.2 million). A 10% reduction in pre-tax cash flow would result in an increase in the
impairment charge of €1.6 million (2018: €1.9 million).
Fair value less cost of disposal
31 December 2019 31 December 2018
Ireland UK US Total Ireland UK US Total
Fair value less cost
of disposal
The recoverable amount of certain sites were assessed for impairment based on fair value less costs of disposal. Independent
valuations of these sites were performed by external valuers to determine the fair value as at 31 December 2019. An impairment
charge of €0.9 million (2018: €1.7 million) was recognised in respect of these sites.
The fair value measurement of each of these sites is categorised within level 3 of the fair value hierarchy of IFRS 13 ‘Fair Value
Measurement’ and is based on inputs, other than quoted prices, that are observable for the asset either directly (that is, as prices)
or indirectly (that is, derived from prices).
Level 3 fair values of sites are derived using a market based approach in accordance with level 3 of the fair value hierarchy. The
valuation model used for sites involves the use of sales prices or market multiples for comparable land and buildings in close
proximity to the Group’s sites adjusted for differences in key attributes such as property size. The most significant input into this
valuation approach is price per square foot based on market value and the sites forecasted EBITDA.
Impairment reversals
Management performs a review in respect of sites that had previously been impaired for indicators of potential impairment reversals
at each reporting period. An indicator exists if the payback period of the site is less than the remaining useful life of the assets and
there have been no impairments or reversals on the site in the previous three years. In 2019, impairment reversals of €5.3 million
(2018: €3.9 million) were identified due to improved performance and were calculated from value in use assessments. The reversal
arose following an improvement in trading conditions at the sites that is expected to be maintained. After adjusting for the impact
of depreciation of €0.6 million (2018 €0.1 million), an impairment reversal of €4.7 million (2018: €3.8 million) was recorded in selling
and distribution costs in the Consolidated Income Statement.
15. INVESTMENT IN JOINT VENTURE
Company Investment held by Principal activity Country of incorporation
equity held

SuperStop Limited SuperStop Holdings
Limited
Operation of Motorway
Service areas
Republic of Ireland 50 50
Superstop Limited was established as part of a joint consortium with Petrogas Group Limited, Tedcastles Oil Products Limited and
Pierse Contracting Limited. The consortium was awarded the public-private partnership contract to design, build, maintain and operate
six motorway service areas by Transport Infrastructure Ireland (TII). These six motorway service areas are operated by the Group with a
fee paid to the TII based on a percentage of revenue. All other revenue and costs are attributable to the Group and are reflected in the
Consolidated Income Statement.
This investment is treated as a joint venture in the Group financial statements using the existing equity method of accounting. The Company
is a private entity which is not listed on any public exchange and, therefore, there is no published quotation price for the fair value of this
investment.
The following table provides summarised information on the Group’s investment in the undertaking:

Investment in joint venture – unquoted
At 01 January and at 31 December 3,135 3,135
Share of losses retained by joint venture
At 01 January (2,135) (2,135)
Share of loss for the year - -
Provision for impairment (1,000) -
At 31 December (3,135) (2,135)
Net investment in joint venture - 1,000
The Group ceased to recognise its share of losses in Superstop Limited during 2012 as the Group’s share of losses reached the
carrying value of the Group’s interest in the joint venture (including long term interests of €2.1 million).
During the year, the Group assessed the recoverability of the net investment as prescribed by IFRS 9. It was determined that there
was evidence that it is impaired and accordingly a €1 million impairment was recorded.
The Group’s share of unrecognised losses amounts to €2.4 million (2018: €2.3 million).
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
171
 FINANCIAL STATEMENTS
Current trade and other receivables are non-interest bearing and are generally on less than 30 day credit terms. Non-current
debtors relates to loans advanced to our dealer network and are denominated in Euro. The fair values of non-current trade and
other receivables approximates to their carrying value. The fair value has been determined on the basis of discounted cash flows.
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
United States of America 40 -
On 01 October 2019, the Group acquired a 40% holding in JLIF Holdings (Project Service) US, Inc and entered into a consortium
shareholder agreement with IST3 Investment Foundation and TD Greystone Asset Management. The principal activity of the
associate is the operation of 23 service plazas along the I-95, I-395 and Route 15 highways in the State of Connecticut.
The Group participates in the acquired investee by virtue of its 40% holding of equity instruments issued and is capable of
exercising significant influence over the activities of the investee but does not have the power to control the activities of the
investee. Therefore, it has been treated as an associate in the financial statements.
The Group’s interest in JLIF Holdings (Project Services) US, Inc is accounted for using the equity method in the consolidated
financial statements.

Investment in associate – unquoted
At 01 January - -
Acquisition during the year 36,630 -
At 31 December 36,630 -
Share of losses
At 01 January - -
Share of loss for the year (920) -
At 31 December (920) -
Net investment in associate 35,710 -
The share of loss in associate includes non-recurring acquisition related costs of €614,000.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
173
 FINANCIAL STATEMENTS
172 
18. TRADE AND OTHER RECEIVABLES (CONTINUED)
The ageing analysis of gross trade receivables based on invoice date is as follows:
Amounts falling due within one year:

Less than 1 month 20,551 13,237
Greater than 1 month but less than 2 months 1,994 5,598
Greater than 2 months but less than 3 months 1,366 765
3 months or greater 1,647 691
25,558 20,291
As of 31 December 2019, trade receivables of €3.9 million (2018: €6 million) were past due which have not been impaired.
The ageing analysis of these trade receivables based on invoice date is as follows:
Duration overdue
Less than 1 month 1,845 5,455
Greater than 1 month but less than 2 months 1,091 474
Greater than 2 months but less than 6 months 930 114
6 months or greater - -
3,866 6,043
Impairment losses
As of 31 December 2019, trade receivables of €1.1 million (2018: €1 million) were determined to be impaired.
The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of
the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and the days past due.
The expected loss rates are based on the historical payment profiles of sales and the corresponding historical credit losses
experienced. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors if
there is evidence to suggest that these factors affect the ability of the customer to settle the receivables.

 FINANCIAL STATEMENTS
174 
20. BORROWINGS
Eurobonds
Eurobonds are unsecured loans issued by Welcome Break that are required to be held by the shareholders in Welcome Break in the
same proportion to their respective shareholdings in the Welcome Break Group as per the share purchase agreement executed on
the 31 October 2018. Eurobonds (unsecured 14% fixed rate notes) comprise an aggregate principal amount of £81 million issued on
28 March 2008 and further loan notes issued bi annually from 31 July 2008 to 31 July 2017 inclusive under the terms of the loan. The
increase in Eurobonds relates to the further issue of Eurobonds during the year. The loan notes mature on 31 March 2021.
Maturity profile of bank loans
The value of committed undrawn bank facilities at 31 December 2019 was €69.2 million (2018: €87.5 million). The carrying amounts
of the current and non-current borrowings equate to their fair value as the borrowings incur interest charges based on variable
rates reflected in the Consolidated Income Statement using the effective interest rate method. There has been limited change in
credit or other risk characteristics of the Group since the debt was originally drawn down by the Group. The fair value has been
determined on the basis of discounted cash flows.
The Group’s primary source of liquidity is cash flows from operations. The Group’s primary use of cash is for funding day to day
operations, capital expenditure, debt service, dividends and other investment activity including acquisitions.
Bank overdrafts
Bank overdrafts are short term financing and are repayable on demand. At 31 December 2019, the Group had access to overdraft
facilities totalling €10 million and £11.7 million.
Analysis of total borrowings (net of unamortised issue costs)
* These loans were acquired as part of the Welcome Break business combination. See note 27 for details of this transaction.
Within the Group, there are two banking groups; the  banking facility and the Welcome Break debt facilities. Both are
independent of each other and therefore, the Welcome Break debt facilities are non-recourse to  and vice versa.
(1)  banking facility
In August 2018, the Group entered into a new €300 million facilities agreement. The syndicated multicurrency lending arrangements
include a €150 million term facility and a €150 million revolving credit facility, each of which matures in August 2023. Commitments
made by senior lenders in respect of ancillary facilities (including bank overdrafts noted above) are offset against the revolving
credit facility.
In addition to the €300 million facilities noted, there is provision for a further increase to commitments of €74.8 million in future
upon the satisfaction of certain criteria.
All facilities are on floating rate terms based on Euribor plus 2.5% for loans denominated in Euro and Libor plus 3.23% for loans
denominated in Pound Sterling.
This loan is stated net of unamortised issue costs of €6.1 million (2018: €7.8 million). These issue costs were incurred in respect of
the senior debt facilities and any subsequent amendments thereto. These costs together with the interest expense are allocated to
the Consolidated Income Statement over the term of the facility using the effective interest rate method.
As security for loans advanced by the senior lenders, the following charges have been granted:
(i) Debenture or equivalent over all material subsidiaries; and
(ii) Fixed charge on shares in all material subsidiaries.
In addition, joint and several guarantees of the obligations of the borrower by  and several other 100% owned group
companies have been granted.
The  banking facilities contain financial covenants. The Group was in full compliance with the requirements of its
covenant agreements throughout each of the financial years presented.
(2) Welcome Break debt facilities
In October 2018, as part of the Welcome Break acquisition, the Group acquired a number of loans which included senior debt,
junior debt and other loans.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
177
 FINANCIAL STATEMENTS
176 
20. BORROWINGS (CONTINUED)
The senior debt facility was entered into on 30 January 2017 with a term of 5 years for £300 million, a £30 million capital facility, £10
million working capital facility and £50 million uncommitted incremental capital facility. A £100 million junior facility was entered into
on 30 January 2017 with a term of 6 years.
In March 2019, the junior bank loan was repaid. In November 2019, the Group completed a refinance of its banking facilities in the
Welcome Break banking group. The Group obtained new long-term borrowings comprising of a £165 million 7 year new senior bank
loan and a £165 million 10 year institutional term loan. In addition to this, the new senior bank loan includes a £30 million capital
facility and a £10 million revolving credit facility, both of which were undrawn at 31 December 2019.
In addition to the above, there is provision for a further increase to commitments of £50 million in future upon the satisfaction of
certain criteria.
The previous senior bank loan of £300 million and £24 million capital facility were repaid on the same date. This included the write
off of unamortised issue costs of €6.1 million to finance charges.
The interest rate on the new senior bank loan is at LIBOR plus 1.95% in year 1, 2.00% in years 2 and 3, 2.10% in year 4, 2.25% in year
5, 2.45% in year 6 and 2.55% in the final year. Interest is paid quarterly in arrears. In 2018, the interest rate on the previous senior
facility was at LIBOR plus 2.75% in years 1 and 2, 3.0% in year 3, 3.25% in year 4 and 3.5% in the final year. The LIBOR rate has been
hedged using interest rate swaps. See note 23 for details.
The interest rate on the institutional term loan is 3.47% annual. Interest is paid half yearly in arrears.
The new senior bank loan is stated net of unamortised issue costs of £3.9 million. The institutional term loan is stated net of
unamortised issue costs of £1.4 million. The issue costs were incurred in respect of the debt facilities and any subsequent
amendments thereto. The costs together with the interest expense are allocated to the Consolidated Income Statement over the
term of the facility using the effective interest rate method.
The bank loans are secured by way of fixed and floating charges over the assets of Welcome Break Holdings (1) Limited, Welcome
Break Group Limited, Welcome Break Limited and Motorway Services Limited.
The Welcome Break debt facilities contain financial covenants. The Group was in full compliance with the requirements of its
covenant agreements throughout each of the financial years presented.
Other loans relate to a £7.3 million loan taken out for the redevelopment of a UK motorway service area, Sarn Park. This loan
matures on 22 October 2065.
21. PROVISIONS

At 01 January 4,313 1,393
Acquisitions (note 27) - 1,086
Used during the year (407) (317)
Additional provisions 2,002 2,167
Translation adjustment 77 (16)
At 31 December 5,985 4,313
The provision relates to self-insurance costs for accidents and other claims which have been provided against. These have been
incurred but not reported or paid as at the Consolidated Statement of Financial Position date and are expected to be utilised within
12 months.
22. TRADE AND OTHER PAYABLES

Current
Trade payables and accruals 285,224 245,704
Other creditors 7,389 8,678
Deferred income 1,627 2,086
Value added tax payable 20,149 16,147
Other taxation and social security 8,308 9,811
Amounts due to related parties (note 31) 1,000 285
323,697 282,711
Non-current
Other creditors 6,564 7,733
Deferred income - 6,275
6,564 14,008
Following the adoption of IFRS 16 on 01 January 2019, the Group derecognised deferred income of €6 million relating to leasehold
sites. See note 4 for information on the adoption of IFRS 16.
Trade and other payables are non-interest bearing and are generally on 30 day credit terms. The fair values of current trade and
other payables are equivalent to their carrying value.
The carrying amounts of the Group’s trade and other payables are denominated in the following currencies:

179
 FINANCIAL STATEMENTS
178 
23. CAPITAL AND FINANCIAL RISK MANAGEMENT
The main risks affecting the consolidated financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk.
The board reviews and agrees policies for the prudent management of each of these risks as documented below.
Interest rate risk
The Group’s exposure to changes in interest rates arises in respect of its floating rate borrowings. The Group regularly reviews its
loan agreements with a view to fixing a portion of its interest rates if deemed appropriate. At the financial year end, approximately
30% (2018: none) of bank loans were held on fixed interest rates with the remaining amounts on floating rates. Management review
the need to engage in hedging activities with respect to interest rate risk on negotiating new financing facilities.
Based on the Group’s net debt position at the year-end, holding all other variables constant, a movement of 100 basis points in base
market interest rates would affect the Group’s profit before tax and shareholders’ funds by approximately €2.2 million (2018: €0.8
million).
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging
instrument and the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged
floating rate loans.
The Group has entered into an interest rate swap which establishes a fixed interest rate with respect to certain of its borrowings.
The fair value of the interest rate swap has been measured in accordance with Level 2 of the fair value hierarchy. The Group
has measured the fair value of its interest rate swaps based on the present value of the estimated future cash flows based on
observable yield curves.
Foreign currency risk
The Group currently purchases goods for resale in foreign currency on a tactical basis where the cost and risk of foreign currency
purchasing is materially less than local purchasing.
The Group’s activities in the UK and USA are conducted primarily in their local currencies. Variances arising from foreign currency
translations are reflected in operating costs or in cost of sales in the Consolidated Income Statement in the year in which they arise.
The principal foreign exchange risk arises from fluctuations in the Euro value of the Group’s investments in Pounds Sterling and US
Dollars. The Group manages its borrowings where practical and cost effective, to partially hedge these foreign currency assets.
Hedging is done using currency borrowings in the same currency as the assets held by the operations using the borrowings.
A portion of the Group’s borrowings is denominated in Pounds Sterling and carried in Euro in the Consolidated Statement of
Financial Position. A movement of 10% in exchange rates would change the carrying value of borrowings by €109 million (2018: €55
million).
Credit risk
Credit risk arising in the context of the Group’s operations is not significant with the total bad debt provision at the Consolidated
Statement of Financial Position date amounting to 4% of gross trade receivables (2018: 5%). Customer credit risk is managed
centrally according to established policies, procedures and controls. Customer credit quality is assessed in line with strict credit
rating criteria and credit limits established where appropriate. Outstanding customer balances are regularly monitored and a review
for indicators of impairment (evidence of financial difficulty of the customer, payment default, breach of contract etc.) is carried out
at each reporting date. Significant balances are reviewed individually while smaller balances are grouped and assessed collectively.
A significant proportion of the Group’s trade receivables are insured to mitigate against large losses.
Receivables balances are in general unsecured and non-interest-bearing.
Cash and cash equivalents give rise to credit risk on amounts due from counterparty financial institutions (stemming from
their insolvency or a downgrade in their credit ratings). Dealings are restricted to those banks with the relevant combination of
geographic presence and investment grade rating. The Group continually monitors the credit ratings of its counterparties and
the credit exposure to each counterparty. Of the Group’s total cash and cash equivalents at 31 December 2019, 100% of cash is
held with financial institutions in the A or higher category of Standard & Poor’s and Moody’s. For other financial assets there is no
material levels of concentrations of credit risk.
Liquidity risk
The Group’s policy in relation to liquidity and cash flow risk is to ensure sufficient resources are available from cash balances or
cash flows so that all obligations can be met when they fall due. To achieve this, the Group operates a demand deposit account for
excess cash, as it is continuously redeveloping and incurring capital expenditure on service stations, and managing working capital
peaks and troughs for trading seasonality and timing of payments.
Management monitors rolling forecasts of the Group’s liquidity reserves (comprising the undrawn borrowings facilities) and cash
and cash equivalents on the basis of expected cash flows. In addition, the Group’s liquidity management policy involves projecting
cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity
ratios against internal and external requirements and maintaining debt financing plans.
23. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONTINUED)
The tables below summarise the maturity profile of the Group’s financial liabilities at 31 December 2019 and 31 December 2018,
based on contractual undiscounted payments, including interest:

Commodity price risk management
The Group is exposed to commodity cost risk in its fuel retail businesses. Market dynamics are such that these commodity cost
price movements are reflected in oil commodity sales prices within a short period. However, the Group’s exposure is considered
minimal as a natural hedge is in place between the purchase price of the commodity from suppliers and the ultimate resale to
customers. The Group does not use hedging instruments to manage commodity price risk.
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or buy back existing shares, increase or reduce
debt or sell assets. The Group includes borrowings in its measure of capital. The Group’s borrowings are subject to covenants which
have been complied with throughout the year.
The policy for net debt is to ensure a structure of longer term debt funding and cash balances with deposit maturities up to three
months.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
181
 FINANCIAL STATEMENTS
180 
23. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONTINUED)
The capital structure of the Group, which includes equity and net debt, may be summarised as follows:

Fair value measurement
Derivative financial instruments
(Liability)/asset at fair value through other comprehensive income (3,028) 461
The fair value of the derivative instruments set out above has been measured in accordance with Level 2 of the fair value hierarchy.
All are plain derivative instruments, valued within reference to observable interest rates.
Cash flow hedging
The Group principally utilises interest rate swaps to swap its variable rate debt into fixed rates. These swaps are designated as cash
flow hedges and are set to closely match the critical terms of the underlying debt being hedged. They have accordingly been
determined by the Group to be highly effective in achieving offsetting cash flows for its variable rate debt.
Hedge ineffectiveness for interest rate swaps may occur due to:
• 
the effect of the counterparty’s and the Group’s own credit risk of the swaps which is not reflected in the change in the fair value
of the hedged cash flows attributable to the change in the hedged risk;
• changes in the contractual terms or timing of payments on the hedged item; or
• the fair value of the hedging instrument on the hedge relationship designation date (if not zero).
There were no material levels of ineffectiveness in relation to the interest rate swaps in 2019 or 2018. Amounts accounted for
in the cash flow hedging reserve in respect of these swaps during the current and preceding periods have been set out in the
Consolidated Statement of Comprehensive Income. These fair value gains and losses are expected to impact on the consolidated
income statement over the period from 2019 to 2026, in line with the underlying debt being hedged.
Derivatives are only used for economic hedging purposes and not as speculative investments.
The Group’s accounting policy for its cash flow hedges is set out in note 2.3
24. 
MOVEMENTS OF LIABILITIES WITHIN CASH FLOWS ARISING FROM FINANCING ACTIVITIES
AND NET DEBT RECONCILIATIONS
Bank loans Eurobonds
Lease liabilities
Liabilities arising from financing activities
Cash and cash
Bank loans Eurobonds
Lease liabilities
Liabilities arising from financing activities
Cash and cash
 FINANCIAL STATEMENTS
182 
25. SHARE CAPITAL
Ordinary
The holders of ordinary shares are entitled to participate in dividends, and to share in the proceeds of winding up the Company in
proportion to the number of and amounts paid on the shares held. Ordinary shareholders also have the right to receive notice of
and attend and vote at all general meetings of the Company and they are entitled, on a poll or a show of hands, to one vote for
every ordinary share they hold. Votes at general meetings may be given either personally or by proxy. Subject to the Companies
Acts and any special rights or restrictions as to voting attached to any shares, on a show of hands every member who (being an
individual) is present in person and every proxy and every member (being a corporation) who is present by a representative duly
authorised, shall have one vote, so, that no individual shall have more than one vote for every share carrying voting rights and on a
poll every member present in person or by proxy shall have one vote for every share of which they are the holder.
2019
55,000 share options were exercised during 2019. Share premium of €0.1 million was recorded on these shares.
2018
During 2018, the Company issued 28,782,895 ordinary shares of €0.01 at an issue price of €6.08/£5.43 per share, resulting in gross
proceeds of €176 million. Share premium of €175.4 million was recorded on these shares. Directly attributable issue costs of €6.2
million have been deducted from retained earnings.
275,000 share options were exercised during 2018. Share premium of €0.4 million was recorded on these shares.
 FINANCIAL STATEMENTS
184 
26. RESERVES (CONTINUED)
Capital contribution
The capital contribution relates to a payment made to the Group in respect of a bonus payment to employees made by the largest
shareholder in 2015. The award was treated as a short term employee benefit (once committed, the employee had no further
service to earn the award) of the Group resulting in a charge (current year employee expense) to the Consolidated
Income Statement in respect of the year ended 31 December 2015 and a corresponding credit to a capital contribution in equity.
Cash flow hedge reserve
This reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments (net
of tax) related to floating rate debt which has been swapped into fixed interest using interest rate swaps on certain of the Group’s
borrowings.
Merger Reserve
On 01 January 2011, as part of a reorganisation of the group structure, the shareholders’ interests in Petrogas Group Limited (PGL)
and Service Areas Limited (ASA) were combined in . Immediately following this arrangement, the former
shareholders of PGL and ASA held the same economic interest in  as they held in PGL and ASA immediately prior
to its implementation. The Group adopted predecessor accounting to reflect this transaction in the Group financial statements
under Irish GAAP in 2011. The effect of the arrangement was to increase share premium by €66.3m and create a merger reserve of
€(65.5)m.
This transaction resulted in the combining of businesses under common control. IFRS 3 ‘Business Combinations’ defines such an
arrangement as a business combination in which all of the combining businesses are ultimately controlled by the same party or
parties before and after the business combination. Common control transactions of this nature fall outside the scope of IFRS 3
and consequently the Directors have adopted the same accounting policy of predecessor accounting under IFRS as was adopted
under Irish GAAP and explained above. Consequently no adjustments arose in respect of this transaction on transition to IFRS at 01
January 2012.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency translation adjustments arising from the translation of the
Group’s net investment in foreign operations including quasi equity. It also includes foreign currency translation adjustments arising
from the translation of financial liabilities designated as a hedge of a net investment in a foreign operation.
Share‑based payment reserve
This reserve represents the amounts credited to equity in relation to the share-based payment expense and related deferred tax
recognised in the Consolidated Income Statement.
27. BUSINESS COMBINATIONS
On 31 October 2018, acquired a 55.02% majority stake in Welcome Break from NIBC Infrastructure Fund. As part of the
transaction, sold an 8.6% shareholding in Welcome Break to AIP, the sole other current shareholder of Welcome Break.
also transferred some of its UK MSA and TRSA assets, as well as development pipeline assets to Welcome Break.
The net impact of transactions resulted in ultimately holding a 50.01% shareholding in Welcome Break and management
control.
As part of the transaction, not only acquired the shares in Appia Group Limited (ultimate parent of Welcome Break)
but also unsecured subordinated Eurobonds fixed rate notes. Eurobonds are unsecured loans that are required to be held by the
shareholders in Welcome Break in the same proportion to their respective shareholdings in the Welcome Break Group as per the
share purchase agreement executed on 31 October 2018.
During 2018, the Group performed an initial assignment of fair values to identifiable net assets acquired on a provisional basis given
the proximity of the acquisition to year-end. The Group finalised these during 2019 within the twelve month timeframe from the date
of acquisition, as stipulated by IFRS 3.
The fair value of the identifiable asset and liabilities acquired, as previously reported and subsequently adjusted is summarised in the
table below:
As previously reported
Adjustments to
provisional Fair value
Non-current assets
Non-controlling interest was measured as 49.99% of total identifiable assets adjusted for fair value measurements at
31 October 2018.
The principal factors contributing to the recognition of goodwill on the Welcome Break acquisition are the realisation of synergies
and the creation of scale in the UK while deepening the Group’s exposure to non-fuel food and beverages earnings.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
187
 FINANCIAL STATEMENTS
186 
28. RESTATEMENT OF PRIOR PERIODS
IFRS 3, Business Combinations
As per note 27, on 31 October 2018, the Group acquired 50.01% of the Welcome Break group. The provisional fair values of the
identifiable assets and liabilities were reassessed in 2019, to reflect information which became available concerning conditions that
existed at the date of acquisition, in accordance with IFRS 3, Business Combinations. Adjustments made to fair values previously
reported have been retrospectively restated. The fair value of the identifiable asset and liabilities acquired, as previously reported
and subsequently adjusted is summarised in the table below:
As previously stated
IFRS 3 adjustments
2018
(restated)
In 2018, the Group acquired 50.01% of the ordinary share capital of Welcome Break, a UK company. As part of the acquisition, the
Group recognised the 49.99% non-controlling interest of €81 million. Further details are provided in note 27. The profit allocated to
the non-controlling interest of this subsidiary in the Group’s financial statement is €9.4 million (2018: loss of €1.1 million).
In 2019, the Group and the non-controlling interest increased their investment in the Welcome Break group. 6.8 million new shares
were issued at a share premium of €24.5 million along with Eurobonds of €6.5 million. Both before and after the above transaction,
the shareholding remained at 50.01% and 49.99% respectively.
The Group also paid non-controlling dividends of €11.5 million. The amount paid to the Group has been eliminated on consolidation.
Set out below is the summarised financial information of the subsidiary that has non-controlling interest and is material to the Group.
Summarised statement of financial position
Non-current assets 1,186,966 846,752
Non-current liabilities (972,623) (571,234)
Non-current net assets 214,343 275,518
Current assets 87,757 81,633
Current liabilities (115,022) (89,678)
Current net liabilities (27,265) (8,045)
Net assets 187,078 267,473
Accumulated non-controlling interest 132,582 82,458
Profit/(loss) before tax for the period 13,135 (4,073)
Dividends payable to non-controlling interest 11,503 631
Net decrease in cash and cash equivalents (24,108) (75,093)
Included in the summarised statement of financial position are:
• intercompany balances applicable to non-controlling interests which are eliminated in full on consolidation; and
• the gross amount of Eurobonds. On consolidation the investment in Eurobonds are netted against the financial liability.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
189
 FINANCIAL STATEMENTS
188 
30. LEASES
The Consolidated Statement of Financial Position includes the following amounts relating to leases:
Right-of-use assetsThe Group presents lease liabilities in the line item ‘Borrowings’ in the Consolidated Statement of Financial Position
* 
In 2018, the Group recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance leases’ under
IAS 17 only. For adjustments recognised on adoption of IFRS 16 on 01 January 2019, please refer to note 4.
Additions to the right-of-use assets during 2019 were €41.9 million.
30. LEASES (CONTINUED)
Amounts recognised in the Consolidated Income Statement
The Consolidated Statement of Financial Position includes the following amounts relating to leases:
Properties
Plant and equipment 
Fixtures, fittings and motor vehicles Computer hardware and software 
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s
useful life.
Leasing activities
The Group enters into leases for a range of assets, principally relating to property. These property leases, which consist of sites and
office buildings, have varying terms, renewal rights and escalation clauses, including periodic rent reviews. The Group also leases
vehicles which include motor vehicles for management and trucks for distribution.
Extension and termination options
Extension and termination options are included in a number of property leases throughout the Group. They are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. In determining the lease term, management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a
termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated).
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
191
 FINANCIAL STATEMENTS
190 
30. LEASES (CONTINUED)
In determining whether a renewal or termination option will be taken, the following factors are normally the most relevant:
• The future of the petrol filling stations and future developments;
• 
If there are significant penalties to terminate (or not to extend), the Group is typically reasonably certain to extend (or not
terminate);
• 
If leasehold improvements are expected to have a significant remaining value, when the option becomes exercisable, the Group is
typically reasonably certain to extend (or not to terminate);
• Strategic importance of the asset to the Group;
• Past practice; and
• Costs and business disruption to replace the asset.
The lease term is reassessed if an option is exercised (or not exercised) and this decision has not already been reflected in the
lease term as part of a previous determination. The assessment of reasonable certainty is revised only if a significant change in
circumstances occurs, which affects this assessment, and this is within the control of the lessee.
Comparative lease disclosures under IAS 17
Operating lease commitments
Future minimum lease payments under non-cancellable operating leases were as follows:
Land and buildings
For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having
authority and responsibility for planning, directing and controlling the activities of the Group) comprises the Board of Directors.
B – Transactions with directors
The Group’s largest shareholder is B&J Holdings Limited (incorporated in Malta), which owns 41.3% of the Company’s shares. This
company is owned by Joseph Barrett and Robert Etchingham who hold 100% of the shares in B&J Holdings Limited.
Directors’ interest in share options
Information on directors’ share options to subscribe for ordinary shares of the Company are set out below:
31. RELATED PARTY DISCLOSURES (CONTINUED)
C – Joint ventures
Superstop Limited is a consortium between Petrogas Group Limited and Tedcastles Oil Products Limited. The consortium was
awarded the public-private partnership contract to design, build, maintain and operate six motorway service areas in Ireland by
Transport Infrastructure Ireland (TII). This is treated as a joint venture in the Group financial statements. Petrogas Group Limited hold
unsecured loan notes in Superstop (Holdings) Limited of €3.1 million. For details of the Group’s investment in its joint venture, see
note 15.
Details of amounts owed to and by the Group at the year-end net of impairment provisions are as follows:
Trade and other receivables
Interest receivable on loan notes
Operating and maintenance advance 
Maintenance works 
Trade and other payables
Commission payable 
(1) Interest receivable on the unsecured loan note of €3.1 million (2018: €3.1 million). At the year end, an amount of €1 million
(2018: €1 million) is outstanding with a corresponding impairment provision against this.
(2) This is an advancement of €0.1 million to Superstop Limited as per the terms of the operating and maintenance agreement.
An impairment provision has been booked against this.
(3) Selling and distribution costs include a credit of €0.1 million (2018: €0.1 million) receivable from Superstop Limited for
maintenance work carried out by the Group at the motorway service areas. The Group also purchased assets on behalf of
Superstop Limited in accordance with the Lifecycle Costs agreement. These costs were recharged back to Superstop Limited.
(4) Included in cost of sales is an amount of €5 million (2018: €5.2 million) paid to Superstop Limited, a wholly owned subsidiary
of Superstop (Holdings) Limited, in respect of commission due from the Group for the operation of Motorway Service Areas. At 31
December 2019 there was a balance of €1 million (2018: €0.3 million) due to Superstop Limited.
D – Associates
On 01 October 2019, the Group acquired a 40% holding in JLIF Holdings (Project Service) US, Inc and entered into a consortium
shareholder agreement with IST3 Investment Foundation and TD Greystone Asset Management. The principal activity of the
associate is the operation of 23 service plazas along the I-95, I-395 and Route 15 highways in the State of Connecticut. See note 16
for further details.
During the year, the Group invoiced €0.7 million to its associate; €0.6 million in relation to acquisition costs and €0.1 million for
management fees. This amount remains outstanding at the year end.
31. RELATED PARTY DISCLOSURES (CONTINUED)
E – Subsidiaries
The Company’s subsidiary companies, which (except where indicated) are incorporated in Ireland and have their registered office
at Block 17, Joyce Way, Parkwest, Dublin 12, the principal activities and the changes, where applicable, during the financial period,
as required by the Companies Act 2014, are set out below:

The registered office of these companies is 2 Vantage Court, Tickford Street, Newport Pagnell, Buckinghamshire MK 16 9EZ,
United Kingdom.
(vi) The registered office of these companies is 3500 South Dupont Highway, Dover, Kent, DE 19901, USA.
(vii) The registered office of these companies is 251 Little Falls Drive, Wilmington, New Castle, Delaware 19808, USA.
Shares in Petrogas Holdings Limited are held directly by . Shares in Petrogas Facilities Limited are hold by both
 and Petrogas Holdings Limited. Shares in the other subsidiaries are held directly or indirectly by Petrogas Holdings
Limited. All of the above companies have been included in the Group consolidation.
32. EMPLOYEE BENEFIT OBLIGATIONS
The Group operates a number of defined contribution pension plans in Ireland and the UK and separately a defined benefit plan in
the UK. Under the defined contribution scheme, the Group has no further payment obligations once contributions have been paid.
Contributions are recognised as an employee benefit expense in the Consolidated Income Statement in the periods during which
the related services are received. The expense for the defined contribution pension plan for the year was €3.1 million (2018: €0.9
million).
Welcome Break Group Limited is the sponsoring employer of and has legal responsibility for the defined benefit plan.
The level of benefits provided from the defined benefit plan depends on members’ length of service and their compensation. The
defined benefit plan is administered by Trustees that are legally separate from the Group. Trustees of pension schemes are required
by law to act in the best interest of scheme members and are responsible for setting certain policies, such as investment and
contribution policies, and governance of the schemes. The Trustees include representatives of the sponsoring employer and plan
participants.
The valuation used has been based on the most recent actuarial valuation at 31 December 2019 by a qualified independent actuary
to take account of the requirements of IAS 19.
The plan closed to future accrual for defined benefits on 09 January 2011. As members are no longer accruing further defined
benefits, there is no current service cost.
Any surplus in the defined benefit plan at the Consolidated Statement of Financial Position date is recognised on the basis that
future economic benefits would be available to the Group in the form of an eventual cash refund were the pension scheme to be
wound up.
Scheme liabilities are estimated using the projected unit credit method. Under this method each participant's benefits under the
plan are attributed to years of service, taking into consideration future increases and the plan's benefit allocation formula. The
scheme liability is the present value of the individuals' attributed benefits for valuation purposes at the measurement date, and the
service cost is the total present value of the individuals' benefits attributable to service during the year.
Scheme assets are stated at their fair value at the Consolidated Statement of Financial Position dates as provided by the plan's
investment consultants.
The following is a summary of the Group’s employee benefit obligations and their related funding status:
 FINANCIAL STATEMENTS
196 
32. EMPLOYEE BENEFIT OBLIGATIONS (CONTINUED)
Movement in fair value of plan assets: Interest income on plan assets 952 -
Interest cost (1,218) (192)
Net interest cost on net pension liability (266) (192)
Analysis of actuarial (losses) recognised in the Consolidated Statement of
Comprehensive Income:
Return on plan assets (excluding amounts in interest income) 5,035 (601)
Actuarial (loss)/gain due to experience adjustments (876) 1,016
Actuarial loss due to changes in financial assumptions (4,043) (773)
Actuarial gain due to changes in demographic assumptions 323 18
Total profit/(loss) recognised in the Consolidated Statement of Comprehensive Income 439 (340)
32. EMPLOYEE BENEFIT OBLIGATIONS (CONTINUED)
Maturity analysis
The expected maturity analysis is set out in the table below:
The weighted average duration of the defined benefit obligation at 31 December 2019 is 15 years (31 December 2018: 15 years).
The Group is committed to pay a further €0.4 million payment into the defined benefit scheme during the year to 31 December
2020.
Principal actuarial assumptions at the balance sheet date are as follows:
Weighted-average assumptions to determine defined benefit obligation
Discount rate 2.10 2.75
Pensions in payment increase rate 2.25 2.25
Retail price inflation 2.80 3.20
Assumed life expectancies on retirement at age 65
R FINANCIAL STATEMENTS
198 
32. EMPLOYEE BENEFIT OBLIGATIONS (CONTINUED)
Sensitivity analysis
The following table illustrates the key sensitivities to the amounts included in the consolidated financial statements which would
arise from adjusting certain key actuarial assumptions. The sensitivity of the defined benefit obligation to changes in actuarial
assumptions has been calculated using the projected credit method, which is the same method used to calculate the pension
liability in the Consolidated Statement of Financial Position. The methods and assumptions used in preparing the sensitivity analysis
have not changed compared to the prior year. In each case all of the other assumptions remain unchanged:
Increase/(decrease) in pension liabilities
Change in assumption:

The sensitivity information shown above has been determined by performing calculations of the liabilities using different
assumptions on a stand alone-basis.
Analysis of plan assets and liabilities

Employee benefit plan risks
The employee benefit plan exposes the Group to a number of risks, the most significant of which are:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields.
If assets underperform this yield, this will create a deficit. The plans hold a significant proportion of
equities which, though expected to outperform corporate bonds in the long-term, create volatility and
risk in the short-term. The allocation to equities is monitored to ensure it remains appropriate given
the plans’ long-term objectives.
Changes in bond yields: A decrease in corporate bond yields will increase the value placed on the plans’ liabilities, although
this will be partially offset by an increase in the value of the plans’ bond holdings.
Inflation risk: The plans’ benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities
(although, in most cases, caps on the level of inflationary increases are in place to protect against
extreme inflation). The majority of the assets are either unaffected by or only loosely correlated with
inflation, meaning that an increase in inflation could create a deficit.
Life expectancy: The majority of the plans’ obligations are to provide benefits based on the life of the member, so
increases in life expectancy will result in an increase in the liabilities.
33. SHARE BASED PAYMENT PLANS
Long Term Incentive Plan (LTIP) - 2014 Share Option Scheme
The Group operates an equity-settled, share-based compensation plan, under which subsidiaries receive services from employees
as consideration for equity instruments (options) of the Group. The share options are granted to directors and selected employees.
The options are granted with a fixed exercise price which is determined firstly based on the implied market value per share of the
Company at the grant date of the options and secondly based on the tenure of the employee. Part of the share options vested
when the Company's shares became publicly traded. The remainder vested three years after the date of grant. Employees are
required to remain in employment with the Group until the options become exercisable. The options expire seven years after the
date of grant. The Group has no legal or constructive obligation to repurchase or settle the options in cash.
The expense recognised for this plan for the year is shown in the following table:
Expense arising from equity settled transactions - 2
Expense arising from cash settled transactions - -
Total expense arising for share based payments - 2
Movements in share option schemes during the year
No. of share
options
Weighted
average
exercise price €
The weighted average remaining contractual life for the share options outstanding as at 31 December 2019 is 2 years (2018 is 3 years).
Notes to the Consolidated Financial Statements (continued)
33. SHARE BASED PAYMENT PLANS (CONTINUED)
The Group has used the Black Scholes valuation model to determine the grant date fair value of share options. The weighted
average fair value of the options at the grant date was €0.72. The following table lists the inputs used in the model:
Expected volatility (%) 28.3 – 30.6
Risk free interest rate (%) 0.10 – 0.38
Expected life of share options (years) 7
Weighted average share price (€) 1.67
Valuation model for new grants Black Scholes
Expected volatility reflects historic volatility of similar companies over a period equal to the expected life of the share options.
The risk-free rate is the rate of interest obtainable from government securities over the expected life of the share options.
Employee Share Option Trust - 2016 share option scheme
During 2016, ’s majority shareholder B&J Holdings established the Employee Share Option Trust (‘the
trust’) for the purpose of holding shares to be awarded to employees. The trust granted 515,000 share options on 31 March 2016
to selected employees to reward them for their service to the Group. The options were granted with a fixed exercise price. The
Group considers this an equity-settled, share-based compensation plan, under which the entity receives services from employees
as consideration for equity instruments (options) of the Group. The Group has no legal or constructive obligation to repurchase or
settle the options in cash.
The award of the options will have no cash impact on the Group nor will it result in any reduction in shareholder’s equity. However,
the award falls fully within the scope of IFRS 2 as an equity settled share based payment and therefore the following has been
booked in the Consolidated Income Statement:

Expense arising from equity settled transactions - 241
Expense arising from cash settled transactions - -
Total expense arising for share based payments - 241
Movements in share option schemes during the year
No. of share
options
Weighted
average exercise price share option No. of share options
31 March 2016 31 March 2018 31 March 2023 €2.00 149,000
The weighted average remaining contractual life for the share options outstanding as at 31 December 2019 is 3 years
(2018 is 4 years).
33. SHARE BASED PAYMENT PLANS (CONTINUED)
The Group has used the Black Scholes valuation model to determine the grant date fair value of share options. The weighted
average fair value of the options at the grant date was €2.34. The following table lists the inputs used in the model:
Expected volatility (%) 29.61
Risk free interest rate (%) (0.01)
Expected life of share options (years) 7
Dividend yield (%) 2
Weighted average exercise price (€) 2.00
Weighted average share price at grant date (€) 4.75
Valuation model for new grants Black Scholes
Long Term Incentive Plan (LTIP) - 2015 Share Option Scheme
The Group established a further share based payment plan which was approved by the Board of Directors on 27 May 2015.
The conditions attached to the transfer of ownership of any equity entitlements and/or vesting of share options are as follows:
• The employee must remain in service throughout a three year performance period.
• There is an additional holding period of one year to facilitate any clawback.
• Awards will not be granted to a participant with a market value in excess of 150% of salary in respect of any financial year.
• 
The plan is subject to the overall limits where, in any ten year period, the number of shares which may be issued under the
LTIP together with the number of shares issued under any other employee share plan adopted by the Company (in a general
meeting) after 19 June 2015 may not exceed 5% of the issued share capital of the Company.
Transfer of ownership of any equity entitlements and/or vesting of any share options will be determined by reference to the
following conditions:
• Options granted in 2017 and 2018
o 50% will vest contingent on the Total Shareholder Return (“TSR”) of  relative to ten listed peers.
The portion of this award will vest as follows:
Award
TSR is below the median 0%
TSR is at the median level 25%
TSR is at or above the upper quartile. 25% up to 100% on a sliding scale
• Options granted in 2019
o 50% will vest contingent on the TSR of  relative to the TSR performance of FTSE 250 market index.
The portion of this award will vest as follows:
Award
50th percentile 25%
75th percentile 100%
• The other 50% portion will vest dependent on EPS growth as follows:
Award
Less than Consumer Price Index +3% 0%
At Consumer Price Index +3% 25%
Reaches Consumer Price Index +9% 25% up to 100% on a sliding scale
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
203
 FINANCIAL STATEMENTS
202 
Expense arising from equity settled transactions 1,011 834
Expense arising from cash settled transactions - -
Total expense arising for share based payments 1,011 834
Movements in share option schemes during the year
No. of share
options
Weighted
average
exercise price €
Expected volatility reflects historic volatility of similar companies over a period equal to the expected life of the share options. The
risk-free rate is the rate of interest obtainable from government securities over the expected life of the share options.
Final dividend 2017 - 708
Interim dividend 802 603
Final dividend 2018 1,096 -
1,898 1,311
On 28 June 2019, a final dividend for the year ended 31 December 2018 of 0.91 cent per share was paid. On 18 October 2019,
an interim dividend for 2019 of 0.66 cent per share was paid (2018: 0.63 cent per share).
The Directors are not proposing a final dividend in respect of the 2019 financial year due to the unprecedented environment
in light of COVID-19.
35. POST YEAR END EVENTS
The Group made a strong start to the year, particularly in its catering and retail brands. However, footfall and volumes were
impacted as governments and customers took measures to contain the spread of the COVID-19 virus. provides
an essential service and our stores remained open throughout the period of lockdown in our major markets, albeit some with
significantly reduced food franchise offerings.
Our first priority since the emergence of the virus has been the wellbeing of our people and we are continuing to follow the health
and safety recommendations of the local and national authorities in the regions in which we operate.
As expected, the Group saw significant volume reductions in all of its regions through April and May. Recovery in volumes was
experienced in June as travel restrictions were gradually eased in our core markets, though they remain some way off our normal
levels of activity. Welcome Break has been most heavily impacted by COVID-19; however, traffic volumes on the UK motorway road
network are continuing to recover. Trading at the remaining businesses during Q2 2020 was supported by strong store
sales in the local petrol filling station sites, good fuel margins and extensive cost saving measures.
COVID-19 has presented an unprecedented challenge for our business and the wider economies in which we operate. The scale
of the financial impact on the Group in the 2020 financial year is difficult to quantify given the uncertainty created by the virus. We
have taken measures to secure additional liquidity, manage our working capital and reduce our cost base.
Given the above, the Directors are not proposing a final dividend in respect of the 2019 financial year.
COVID-19 is a non-adjusting post balance sheet event. Its impact is not therefore reflected in the carrying values of assets and
liabilities at 31 December 2019.
At Budget 2020, the UK Government announced that the corporation tax main rate for the years starting 01 April 2020 and 2021
would remain at 19%. Items such as deferred tax have been calculated used the enacted rate of 17% and therefore, this change
could have a material effect on the accounts. As this is a non-adjusting post balance sheet event, these revised tax rates were not
factored into these financial statements at the Statement of Financial Position date.
36. APPROVAL OF FINANCIAL STATEMENTS
The Board of Directors approved and authorised for issue the financial statements in respect of the year ended 31 December 2019.
Notes to the Consolidated Financial Statements (continued)
Year ended 31 December 2019
205
 FINANCIAL STATEMENTS
204 
COMPANY
FINANCIAL
STATEMENTS
Company Statement of Financial Position 208
Company Statement of Changes in Equity 209
Company Statement of Cash Flows 210
Notes to the Company Financial Statements  211Issued
share
capital
Share
premium
Capital
contribution
Foreign
currency
translation
reserve
Share
based
payment
reserve
Retained
earnings Total
Amounts owed by group company undertakings are unsecured, non-interest bearing, and are repayable on demand. There are
no provisions against amounts receivable from group companies. The Company exercises judgement as to the classification of
amounts due from group companies based upon the substance of the instrument.
The carrying amounts of the Company’s receivables are denominated in Euro.
Notes to the Company Financial Statements
Year ended 31 December 2019
211
 FINANCIAL STATEMENTS
210 
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are included in the Company Statement of Financial Position and Company Statement of Cash Flows
and are analysed as follows:
Non-cash transactions
 operates a number of share based payment schemes. These schemes reward employees of subsidiary entities.
These transactions represent a capital contribution to the subsidiaries and therefore, are treated as an investment in the
subsidiaries.
There were no other significant non-cash transactions during 2019 or 2018.
6. BORROWINGS
The value of committed undrawn bank facilities at 31 December 2019 was €22.2 million (2018: €64.8 million). The carrying amounts
of the current and non-current borrowings equate to their fair value as the borrowings incur interest charges based on variable
rates reflected in the Income Statement using the effective interest rate method. There has been limited change in credit or other
risk characteristics of the Company since the debt was originally drawn down by the Company at the end of October 2018.
Bank overdrafts
Bank overdrafts are short term financing and are repayable on demand. At 31 December 2019, the Company had access to
overdraft facilities totalling €10 million.
Bank loans
In August 2018, the Group entered into a new €300 million facilities agreement. The syndicated multicurrency lending arrangements
include a €150 million term facility and a €150 million revolving credit facility, each of which mature in August 2023. Commitments
made by senior lenders in respect of ancillary facilities (including bank overdrafts noted above) are offset against the revolving
credit facility.
In addition to the €300 million facilities noted, there is provision for a further increase to commitments of €75 million in the future
upon the satisfaction of certain criteria.
All facilities are on floating rate of terms based on Euribor plus 2.5% for loans denominated in Euro and Libor plus 3.23% for loans
denominated in Pound Sterling.
Bank loans are stated net of unamortised issue costs of €6.1 million (2018: €7.8 million). These issue costs were incurred in respect
of the senior debt facilities and any subsequent amendments thereto. These costs together with the interest expense are allocated
to the Consolidated Income Statement over the term of the facility using the effective interest rate method.
Guarantees and security
As security for loans advanced by the senior lenders, the following charges have been granted:
(i) Debenture or equivalent over all material group subsidiaries; and
(ii) Fixed charge on shares in all material subsidiaries.
In addition, joint and several guarantees of the obligations of the borrower by  and several other 100% owned group
companies have been granted.
Notes to the Company Financial Statements (continued)
Year ended 31 December 2019
213
 FINANCIAL STATEMENTS
212 
7. TRADE AND OTHER PAYABLES
2019
€000
2018
€000
Current
Trade payables and accruals 23 1,526
Amounts owed to group undertakings (note 12) 20,030 18,824
20,053 20,350
The fair value of trade and other payables is equivalent to their carrying values. The carrying amounts of the Company’s payables
are denominated in Euro. Amounts owed to group company undertakings are unsecured, non-interest bearing and repayable on
demand.
8. CAPITAL AND FINANCIAL RISK MANAGEMENT
Interest rate and foreign currency risk
The Company has exposure to changes in interest rates arising in respect of its floating rate borrowings and to foreign currency risk
in respect of its borrowing denominated in Pound Sterling. See note 23 of the consolidated financial statements for further details.
Based on the Company’s net debt position at the year-end, a movement of 100 basis points in base market interest rates would
affect the Company’s profit before tax and shareholder funds by approximately €2.2 million (2018: €0.5 million).
A movement of 10% in Euro v Sterling exchange rates would change the carrying value of borrowings by €10.4 million (2018: €9.9
million).
9. 
MOVEMENTS OF LIABILITIES WITHIN CASH FLOWS ARISING FROM FINANCING ACTIVITIES
AND NET DEBT RECONCILIATIONS
The holders of ordinary shares are entitled to participate in dividends and to share in the proceeds of winding up the Company in
proportion to the number of and amounts paid on the shares held. Ordinary shareholders also have the right to receive notice of
and attend and vote at all general meetings of the Company and they are entitled, on a poll or a show of hands, to one vote for
every ordinary share they hold. Votes at general meetings may be given either personally or by proxy. Subject to the Companies
Acts and any special rights or restrictions as to voting attached to any shares, on a show of hands every member who (being an
individual) is present in person and every proxy and every member (being a corporation) who is present by a representative duly
authorised, shall have one vote, so, that no individual shall have more than one vote for every share carrying voting rights and on
a poll every member present in person or by proxy shall have one vote for every share of which they are the holder.
2019
55,000 share options were exercised during 2019. Share premium of €74,000 was recorded on these shares.
2018
During 2018, the Company issued 28,782,895 ordinary shares of €0.01 at an issue price of €6.08/£5.43 per share, resulting in gross
proceeds of €176 million. Share premium of €175.4 million was recorded on these shares. Directly attributable issue costs of €6.2
million have been deducted from retained earnings.
275,000 share options were exercised during 2018. Share premium of €0.4 million was recorded on these shares.
Notes to the Company Financial Statements (continued)
Year ended 31 December 2019
215
 FINANCIAL STATEMENTS
214 
11. RESERVES
Share
premium
Capital
Contribution
Foreign
currency
translation
reserve
Share based
payment
reserve
Retained earnings Total
This reserve represents the amounts credited to equity in relation to the share-based payment expense recognised in the applicable
subsidiary’s income statement in which the employees are employed.
Capital contribution
The capital contribution relates to a payment made to the Group in 2015 in respect of a bonus payment to employees made by
the largest shareholder. The award was treated as a short term employee benefit (once committed, the employee had no further
service to earn the award) of the Group resulting in a charge (employee expense) to the Income Statement in respect
of the year ended 31 December 2015 and a corresponding credit to a capital contribution in equity.
Foreign currency translation reserve
The foreign currency translation reserve relates to foreign currency translation adjustments arising from the translation of financial
liabilities designated as a hedge of a net investment in a foreign operation.
12. RELATED PARTY DISCLOSURES
A - Transactions with directors
The Group’s largest shareholder is B&J Holdings Limited (incorporated in Malta), which owns 41.3% of the Company’s shares.
This company is owned by Joseph Barrett and Robert Etchingham who hold 100% of the shares in B&J Holdings Limited.
Directors’ interest in share options
Information on directors’ share options to subscribe for ordinary shares of the Company are set out below:
Options held at 31
December 2018
Granted during
2019
Exercised during
2019
The Company conducted transactions and held balances with fellow Group companies and other related parties during the year.
Details of these related parties are disclosed below:
Nature of
Relationship
Balance
owing
(to)/from
01-Jan-18
Transfers
to/(from)
group
companies
Expenses
paid on
behalf of/
(by) group
companies
Intra-
group
interest
charge
Foreign
exchange
on Intra-
group loans
Balance
Owing
(to)/from
31-Dec-18
Trade and other
receivables
Service
 FINANCIAL STATEMENTS
216 
12. RELATED PARTY DISCLOSURES (CONTINUED)
Nature of
Relationship
Balance
owing
(to)/from
01-Jan-19
Transfers
to/(from)
group
companies
Expenses
paid on
behalf of/
(by) group
companies
Intra-
group
interest
charge
Foreign
exchange
on Intra-
group loans
Balance
Trade and other
receivables
Service Areas
Limited
During the year, Petrogas Holdings Limited paid a dividend of €14.5 million (2018: €nil) to .
There are no provisions against amounts receivable from group companies. The Company exercises judgement as to the
classification of amounts due from group companies based upon the substance of the instrument.
C – Subsidiaries
The Company’s subsidiary companies are incorporated in Ireland and have their registered office at Block 17, Joyce Way, Parkwest,
Dublin 12. The principal activities and the changes, where applicable, during the financial period, as required by the Companies Act
2014, are set out below:
Subsidiary Principal activity Country of incorporation 2019 2018
Petrogas Holdings Limited Holding company Republic of Ireland 100% 100%
Petrogas Facilities Limited Holding company Republic of Ireland 97% -
Shares in the other subsidiaries are held directly or indirectly by Petrogas Holdings Limited. See note 31 of consolidated financial
statements for details.
13. COMMITMENTS AND CONTINGENCIES
There were no commitments for capital expenditure or contingent liabilities as at 31 December 2019 (2018: €nil).
Guarantees
Pursuant to the provisions of Section 357 of the Companies Act 2014, the Company has irrevocably guaranteed the liabilities of its
directly and indirectly wholly owned subsidiary undertakings in the Republic of Ireland (as listed below), for the financial year ended
31 December 2019 and, as a result, such subsidiary undertakings have been exempted from the filing provisions of Section 347 of
the Companies Act 2014.
On 28 June 2019, a final dividend for the year ended 31 December 2018 of 0.91 cent per share was paid. On 18 October 2019, an
interim dividend for 2019 of 0.66 cent per share was paid (2018: 0.63 cent per share).
The Directors are not proposing a final dividend in respect of the 2019 financial year due to the unprecedented environment in light
of COVID-19.
15. POST YEAR END EVENTS
The Directors are not proposing a final dividend in respect of the 2019 financial year due to the unprecedented environment in light
of COVID-19.
16. APPROVAL OF FINANCIAL STATEMENTS
The Board of Directors approved and authorised for issue the financial statements in respect of the year ended 31 December 2019.
Notes to the Company Financial Statements (continued)
Year ended 31 December 2019
219
 FINANCIAL STATEMENTS
218 
The key financial terms used by the Group in this report are as follows:
MEASURE DESCRIPTION
Constant currency Constant currency measure eliminates the effects of exchange rate fluctuations that
occur when calculating financial performance numbers. They are calculated by taking the
current year figures and applying the prior year exchange rates.
EBITDA and adjusted EBITDA EBITDA is defined as earnings before interest, tax, depreciation, amortisation and
impairment charges.
Adjusted EBITDA refers to EBITDA adjusted for share based payments and non-recurring
items. The adjusted EBITDA calculation can be found in note 5.
Adjusted EBITDA (Pre-IFRS 16) Adjusted EBITDA (Pre-IFRS 16) refers to adjusted EBITDA (as above) adjusted further for
the impact of IFRS 16 and acquisition related rent adjustments arising from business
combinations.
Adjusted EBITDA (Pre-IFRS 16) is calculated as follows:
Adjusted PBT Adjusted PBT is calculated using the profit for the financial year adjusted for share
based payments, non-recurring operating charges, net impairment charge, interest on
shareholder loans, non-recurring finance costs, the impact of IFRS 16 and acquisition
related adjustments arising from business combinations.
Adjusted PBT is calculated as follows:		
GLOSSARY OF FINANCIAL TERMS MEASURE DESCRIPTION
Adjusted EPS Adjusted Diluted EPS is calculated using the profit for the financial year adjusted for share
based payments, non-recurring operating charges, net impairment charge, interest on
shareholder loans, non-recurring finance costs, the impact of IFRS 16, acquisition related
amortisation charges and the related non-controlling interest and tax impact on these
items divided by the weighted average number of ordinary shares in issue for diluted
earnings per share.
Adjusted EPS is calculated as follows:

Pro forma adjusted leverage Pro forma adjusted leverage is defined as net debt divided by adjusted EBITDA (Pre-IFRS
16). Net debt is adjusted for shareholder loans and adjusted EBITDA incorporates the last 12
months Welcome Break performance.  leverage refers to the 
plc banking group which excludes Welcome Break.Annual Report
and Accounts
2019
WELCOME TO AG
AG (‘ARYZTA’) is an international leader in frozen B2B bakery.
is based in Schlieren, Switzerland, with operations in
North America, Europe, Asia, Australia, New Zealand and South America.
has a primary listing on the SIX Swiss Exchange and a
secondary listing on the Euronext Dublin (ISE) (SIX: ARYN, ISE: YZA).
Overview
Table of Contents
Annual Report and
Accounts 2019
Company
Governance
Group
Page Overview
02 Financial Highlights
03 Letter to Shareholders
06 Business Overview
08 Financial and Business Review
Governance
23 Corporate Governance Report
54 Compensation Report
71 Group Risk Statement
73 Our Responsibility
Group
78 Group Consolidated Financial Statements
Company
168 Company Financial Statements
185 Investor Information
Overview
2

Annual Report and Accounts 2019
Financial Highlights
1 See glossary on page 21 for definitions of financial terms and references used in this document.
2 Comparatives have been restated to include the effect of the bonus issue of shares pursuant to the November 2018 rights issue and the January 2018 scrip dividend.
Group
continuing operations discontinued operations
Group
Overview
3

Dear Shareholder,
Period in Review
While the financial performance in the 2019 financial year (‘FY19’) is not yet where we
want or expect it to be, we have delivered overall organic revenue stability and improving
performance against a series of measures. Revenue of €3.383bn shows a year-on-year
decline of 1.5%, while organic revenue in the period was flat. Group Underlying EBITDA
increased by 1.9% and EBITDA margin improved by 30 bps. All measures of Group
profitability have improved within the period. Your Board believes that the steps we have
taken, and continue to take, have put the business on a better defined path towards
stability, performance and growth.
Focused on the Core
Consistent with our focus on our core frozen B2B bakery business, we continue to dispose
of non-core or non-strategic assets. Our objective is to generate €450 million from this
programme, with proceeds committed to continued net debt reduction. Last week, we
announced the receipt of a binding offer to sell the majority of our interest in Picard for
a total consideration of €156m. Including Picard, we would realise €380m net proceeds
from our non-core asset disposal programme.
Project Renew
Project Renew forms a central part of our three year turnaround plan and is intended
to improve  operating efficiency in order to enhance our competitive positioning.
We expect this programme to deliver €200 million in savings over three years and €90
million of annual run rate savings by FY21. Project Renew is 12 months into a 36 month
programme and we are now seeing its initial benefits.
Board Renewal
As part of our ongoing process of Board refreshment and renewal, we announced, subject
to shareholder approval, the appointment of Luisa Delgado and Alejandro Legarda Zaragüeta
to your Board. Luisa, a Swiss national, brings significant B2B experience across Continental
Europe to the Board. Alejandro, a Spanish national, is a highly skilled senior executive
with significant management and non-executive director experience within various sectors
including in food related industries. Andrew Morgan will not be seeking re-election to the
Board at this AGM after six years as a Board member. I would like to thank Andrew for his
significant contribution to the Company. Following the 2019 AGM, subject to the election
of all Directors, the Board will comprise 11 Directors (of which 10 are deemed
as independent under The Swiss Code of Best Practice for Corporate Governance) with an
average tenure of less than two years.
Culture & Behaviour
Your Board’s objective is to foster an inclusive, performance-oriented culture through
team-work, the pursuit of excellence and an ownership mindset. A broad-based,
unifying culture, that permeates every level of our organisation, will positively contribute
to and each of its stakeholders. Our values are consistent with and support
our culture. Those values are: Integrity, by aligning our actions with our words and
delivering on each of our commitments; Creativity, by continuously encouraging new
ideas and constructive challenge; Care, embracing  passion for our people
and our product; fostering a safe, diverse and inclusive work environment which allows
Annual Report and Accounts 2019
Letter to Shareholders
Overview
4

our people to realise their full potential; Ownership, which encourages and empowers
individual performance while prioritising collaboration through teamwork; Customer
Focus, including an unrelenting emphasis on operating excellence and the customer,
which is at the heart of everything we do and committing resources to meet and to
exceed their needs. Finally, we maintain an absolute priority on food safety & quality.
Capital Raise
In November 2018, we completed a necessary capital raise, with net proceeds of
€739.5m to strengthen our balance sheet, to fund our liquidity and working capital
requirements and to finance Project Renew. Our objective is to deploy the capital
that you have entrusted us with as effectively as we can. We recognise that this was
a difficult process and we very much appreciate the shareholders’ support.
Shareholder Engagement
We have set shareholder engagement and, more broadly, stakeholder engagement as an
important priority for ARYZTA. Our objective is to restore an open, trusted and transparent
dialogue between and its shareholders. Following our 2018 AGM, we committed
to consult with those shareholders who opposed or had reservations about the capital
increase resolution. We have engaged with those shareholders and their concerns have
been shared with your Board. We continue to build a constructive dialogue with all
shareholders.
Outlook
In FY19, we have delivered a gradual yet consistent improvement against earnings
measures. In a broader sense, FY19 is about establishing the foundations for
performance. This includes enhanced operating efficiency and competitive positioning
through Project Renew. It also includes the re-organisation of existing management
structures to accelerate the pace of change. Operationally, it involves the optimisation
of our existing bakery network, through capacity consolidation, and delivering on the
first phase of our automation projects.
The steps we have taken have established stronger foundations on our path towards
stability, performance and growth.
Gary McGann
Chair, Board of Directors
8 October 2019
Letter to Shareholders (continued)
Overview
6

See glossary in section 20 for definitions of financial terms and references used in the financial and
business review.
The 31 July 2019 weighted average number of ordinary shares used to calculate IFRS diluted loss per share
is 822,613,220 (2018: 415,040,772). Comparatives have been restated to include the effect of the bonus issue
of shares pursuant to the November 2018 rights issue.
Annual Report and Accounts 2019
Financial and
Business Review
Overview
Financial and Business Review (continued)
9
4 Our business
is the world’s leading global, frozen B2B baking solutions provider, operating
in the frozen bakery segment of the overall bakery market.  customer
channels consist of a mix of large retail, convenience and independent retail, Quick
Service Restaurants (‘QSR’) and other foodservice categories.
Total revenue decreased by (1.5)% to €3.4bn during the year ended 31 July 2019, due to
disposals reducing revenue by (2.9)% and currency positively impacting revenue by 1.4%.
Organic revenue was flat, with positive price/mix impact of 2.0% offsetting volume losses
of (2.0)%.
North America organic revenue declined by (3.8)%, driven primarily by volume
losses, while Europe experienced 1.9% organic revenue growth, driven by
increases in price/mix, and Rest of World organic revenue grew by 8.9%, driven
by both increases in price/mix and volume.
Group Underlying EBITDA for the year ended 31 July 2019 was €307.5m, which represents
an increase of 1.9% compared to the prior year ended 31 July 2018, while EBITDA margins
increased by 30 bps to 9.1%.
The results for the year ended 31 July 2019 were consistent with the Group's focus on
revenue and earnings stability and represent a step towards delivery of a multi-year
turnaround commitment. The business is developing a united cohesive group, with a
singular focus on core strengths within a growing frozen B2B bakery market, through both
Project Renew, intended to enhance operating efficiency and competitive positioning of
ARYZTA, and with the re-organisation of existing management structures and the disposal
of non-core assets.
5 Europe
Europe has leading market positions in the frozen B2B bakery markets in Germany,
Switzerland, France, Ireland, the UK, the Netherlands, Hungary, Poland, Denmark, Spain,
Sweden, Romania and other European countries.
Europe revenue increased by 0.2% to €1,713.3m during the year ended
31 July 2019. Organic revenue growth of 1.9% was a result of a 2.2% benefit from
ongoing price/mix improvement, reflecting recovery of cost inflation and a focus on margin
improvement, offset by (0.3)% decrease in volumes.
Overview
Financial and Business Review (continued)
11

There were positive revenue performances across Switzerland, France, Poland and
Hungary, while trading was flat in Germany, despite the impact of insourcing. Favourable
currency movements impacted revenue by 0.1%, while the disposal of businesses in
Ireland during January 2018 and two bakeries during FY19 resulted in a (1.8)% revenue
decline.
Europe Underlying EBITDA for the year ended 31 July 2019 was €167.7m,
which represents a decrease of (2.5)% compared to the prior year ended 31 July 2018,
while EBITDA margins decreased by (30) bps to 9.8%, primarily in connection with the
decreased margins on partial pass through of increased raw materials and logistics costs,
and lower operating leverage following customer insourcing. There was H2-19 EBITDA
margin progression of 40 bps versus H1-19, due primarily to the initial benefits seen from
Project Renew.
As detailed in Section 9 on page 14 and 15, during the year Europe recorded a
loss on disposal of businesses of €5.0m, and a loss of €1.8m on impairment and disposal
of fixed assets and investment properties. In addition, Europe incurred €10.2m
of other restructuring-related costs, primarily severance and staff-related costs and
advisory and other costs, incurred as a direct result of rationalisation and consolidation of
management functions across the region as part of Project Renew.
6 North America
North America is a leading player in the frozen B2B bakery markets in the
United States and Canada. It has a diversified customer base, including multiple
retail, restaurants, catering, hotels, leisure, hospitals, military, fundraising and QSRs.
North America is a leader in high-value artisan bakery via La Brea Bakery,
which focuses on the premium branded bakery segment.
North America revenue declined by (4.8)% to €1,397.9m during the year
ended 31 July 2019. Organic revenue declined by (3.8)%, with positive price/mix of 1.3%
partially offsetting volume declines of (5.1)%.
Trading during the year remained challenging across both the Retail and Other Foodservice
channels, while revenues from the QSR channel were stable over the year. Favourable
currency movements supported revenue by 3.8%, while the disposal of the Cloverhill
Chicago and Cicero bakeries negatively impacted revenue by (4.8)%.
North America Underlying EBITDA for the year ended 31 July 2019 was €98.0m,
which represents an increase of 9.0% compared to the prior year ended 31 July 2018, while
EBITDA margins increased 90 bps to 7.0%. These movements were driven by early benefits
from Project Renew, with a significant de-layering of management leading to significant
SG&A savings, together with bakery-level efficiency gains, and a sustained focus on cost
control. The business remains focused on stabilising performance through a clear focus on
customer relationships, customer pipeline and improved operating efficiency.
As detailed in Section 9 on page 14 and 15, during the year North America
recorded a loss on the finalisation of the disposal of the Cloverhill businesses of €2.0m,
as well as €3.0m of other fixed asset impairments. In addition, North America
incurred €6.9m of other restructuring-related costs, primarily related to severance
and staff-related costs, and advisory and other costs, incurred as a direct result of
Overview
Financial and Business Review (continued)
12

consolidation of bakeries and rationalisation of management functions during the year as
part of Project Renew.
7 Rest of World
 operations in the Rest of World primarily includes businesses in Brazil,
Australia, Japan, Malaysia, Singapore, New Zealand and Taiwan. While representing
only 8% of total Group revenue and 13.6% of total Group Underlying EBITDA, these
locations provide attractive future growth opportunities and have importance as suppliers
to our global QSR customers.
Rest of World revenue increased by 6.0% to €272.2m during the year ended
31 July 2019. Organic revenue increased by 8.9%, as a result of strong 4.4% volume growth
with global strategic customers, as well as others across the region, combined with positive
price/mix of 4.5%. Unfavourable currency movements reduced revenue by (2.9)%.
Rest of World Underlying EBITDA for the year ended 31 July 2019 was €41.8m,
which represents a 4.7% overall increase, while Underlying EBITDA margins decreased
by 20 bps to 15.4%.
Overview
Financial and Business Review (continued)
13

8 Joint ventures
owns a 47.8% interest in Picard, which operates an asset-light B2C platform focused
on premium speciality food. Picard is located primarily in France, is separately managed and
has separately funded debt structures, which are non-recourse to ARYZTA.
While Picard is not considered part of  long-term strategy, disposal of the Group’s
investment is currently only possible with agreement of both joint venture partners. Therefore,
for FY19 the Group’s investment continues to be accounted on a historical cost basis using the
equity method of accounting, rather than at recoverable value as an asset held-for-sale.
As announced on 4 October 2019, subsequent to the end of the financial year, the Group
received a binding offer from Invest Group Zouari (‘IGZ’) to purchase 43.3% of its 47.8%
holding in Picard for gross consideration of €156m. retains a 4.5% interest in Picard,
to be recorded as a financial investment at fair value. The transaction is subject to customary
regulatory approvals and a works council consultation process in France and is expected to
close in the last quarter of calendar year 2019.
Picard had revenue of €1,422.8m during the year ended 31 July 2019 and delivered an
underlying contribution to of €27.6m, after interest and tax. The retail environment
in France is challenging, however Picard remains well positioned as the leading frozen food
retailer in France.
During the prior year ended 31 July 2018, received dividends from Picard totalling
€91.0m.

Overview
Financial and Business Review (continued)
14

9 Impairment, disposal and restructuring
During May 2018, the Group announced Project Renew, a three year cumulative €200m
restructuring and cost reduction plan aimed at restoring financial flexibility and aligning
our asset and cost base with current and expected business conditions.
In order to deliver these cost savings, the Group expects an overall investment of €150m,
with approximately €100m of the investment dedicated to capital investment and the
remaining €50m for restructuring-related costs.
During the year ended 31 July 2019, Project Renew has delivered €26m of benefits, with
a run-rate of €40m of annualised savings, in-line with the level of savings expected during
these initial stages of the programme. These benefits relate primarily to improvements in
the operating model through European operating model headcount reductions, significant
management de-layering in North America, as well as manufacturing efficiency gains
within bakery operations, and procurement and supply chain optimisation across both
segments.
Impairment and disposal-related costs
Net loss on disposal of businesses and impairment of disposal groups held for sale
During the year ended 31 July 2019, the Group disposed of two non-core businesses in
Europe, which had been accounted for as part of disposal groups held-for sale at July 2018.
As the €3.1m proceeds received, net of associated transaction costs, was less than the
€7.1m carrying value of the assets disposed, combined with a €1.0m cumulative foreign
currency translation loss since the initial investment, a loss on disposal of €5.0m was
recognised.
During the year ended 31 July 2018, a €48.8m loss on impairment of disposal groups
held-for-sale had been recognised in relation to these two non-core businesses. In
addition, during January 2018, the Group disposed of a business in Europe, which
resulted in a €1.4m gain on disposal.
During the year ended 31 July 2018, the Group agreed to dispose of the Cloverhill Chicago
and Cicero facilities in North America. A loss on disposal of €135.9m was recognised
Overview
Financial and Business Review (continued)
15

during the year ended 31 July 2018 related to these facilities. During the year ended
31 July 2019, the Group recognised an additional €2.0m loss in North America,
on the finalisation of the Cloverhill Chicago and Cicero disposals.
Impairment of goodwill
There was no impairment of goodwill during the year ended 31 July 2019.
Following significant reductions in estimated profitability, the Group recorded
a €175.0m goodwill impairment charge in Germany during the year ended 31 July 2018.
Further detail on the prior year goodwill impairment is included in note 14 in the IFRS
financial statements on pages 126 to 129.
Impairment and disposal of fixed assets and investment property
During the year ended 31 July 2019, the Group incurred a net loss on the disposal and
impairment of various fixed assets and investment properties totalling €4.8m (2018:
€4.5m).
Restructuring-related costs
Prior year labour-related business interruption costs
The €16.3m of labour-related business interruption costs experienced in the North
America Cloverhill facilities during the last three months of the financial year ended
31 July 2017 continued into the financial year ended 31 July 2018, during which the
group incurred €41.4m of further losses. As these businesses have since been disposed
of, no such costs were incurred during the year ended 31 July 2019.
Severance and other staff-related costs
During the year ended 31 July 2019, the Group incurred €9.8m (2018: €15.2m) in
severance and other staff-related costs. These costs primarily related to employees
whose services were discontinued following certain rationalisation decisions across the
various business locations of the Group as part of the implementation of Project Renew.
Other costs including advisory
During the year ended 31 July 2019, the Group incurred €7.3m in costs related to
the design and implementation of Project Renew across Europe and North America.
During the year ended 31 July 2018, the Group incurred €13.2m in costs related
to the reorganisation of the North America business and a group-wide strategic
business review.
Overview
Financial and Business Review (continued)
Financial Year
Following the amendment of the Group's Syndicated Bank Facilities Agreement in
September 2018, and successful completion of the capital raise during November 2018,
the group's financial covenants are now as follows:
– Leverage covenant (Net Debt: EBITDA):
– maximum 3.5x
– Interest cover covenant (EBITDA: Net interest, including Hybrid dividend):
– minimum 2.0x until July 2019
– minimum 3.0x thereafter
The Group’s key financial ratios were as follows:
July 2019 July 2018
Net Debt: EBITDA1
2.43x 3.83x
EBITDA: Net interest, including Hybrid dividend1
3.45x 3.72x
1 Calculated as per Syndicated Bank Facilities Agreement terms.
Capital raise
During November 2018, the Group completed a capital raise, by way of a rights issue,
in order to strengthen the balance sheet, provide necessary liquidity and working capital
funding and to enable delivery of ARYZTA's three year turnaround plan, Project Renew.
Upon approval by the shareholders at the General Meeting on 1 November 2018, a total
of 900,184,940 registered shares with a nominal value of CHF 0.02 each were offered to
ARYZTA's existing shareholders on a 10 for 1 share basis, at a discounted offer price of
CHF 1.00 per share.
The gross proceeds received upon completion of the rights issue were €795.8m. This
resulted in €739.5m, net of transaction costs, which was recognised within equity during
the year ended 31 July 2019, of which €15.8m is recognised within share capital, and
€723.7m within share premium.
Overview
Financial and Business Review (continued)
18

12 Hybrid funding
As of 31 July 2019, the Group has €866.3m of Hybrid funding principal outstanding,
as reflected in the table below.
Perpetual Callable
Subordinated Instruments Coupon Coupon rate if not called in EUR ’000
Not called CHF 400m 5.3% 6.045% +3 Month Swiss Libor (362,355)
Not called EUR 250m 6.8% 6.77% +5 Year Euro Swap Rate (250,000)
First call April 2020 CHF 190m 3.5% 4.213% +3 Month Swiss Libor (172,119)
Hybrid funding principal outstanding at 31 July 2019 exchange rates (784,474)
Hybrid instrument deferred dividends (81,846)
Total hybrid funding outstanding at 31 July 2019 exchange rates (866,320)
As the instruments have no maturity date and repayment is at the option of ARYZTA,
these perpetual callable subordinated instruments are recognised within other equity
reserves at historical cost, net of attributable transaction costs, until such time that
management and the Board of Directors have approved settlement of the applicable
instrument. Any difference between the amount paid upon settlement of these
instruments and the historical cost is recognised directly within retained earnings.
Dividends on these Hybrid instruments accrue at the coupon rate applicable to each
respective instrument on an ongoing basis; however, a contractual obligation to pay these
dividends in cash only arises when a Compulsory Payment Event, such as payment
of a cash dividend to equity shareholders, has occurred within the last twelve months.
Because the Group has not paid a cash dividend to equity shareholders during the last
12 months, as of 31 July 2019 the Group is under no contractual obligation to pay the
Hybrid instrument dividends in cash. Therefore, these deferred dividends have not been
accrued as separate financial liabilities, but instead remain within equity, in accordance
with IAS 32 ‘Financial Instruments’. Should a Compulsory Payment Event occur in the
future, all Hybrid instrument deferred dividends will become due in cash.
Movements related to the Hybrid instrument deferred dividends over the last two years
were as follows:
in EUR `000 FY 2019 FY 2018
Balance at 1 August (41,071) (9,032)
Hybrid instrument deferred dividend (38,902) (32,057)
Translation adjustments (1,873) 18
Balance at 31 July (81,846) (41,071)
13 Foreign currency
The principal euro foreign exchange currency rates used by the Group for the preparation
of these Financial Statements are as follows:
16 Dividend
No dividend is planned to be proposed for the year ended 31 July 2019. No dividend was
proposed or paid for the year ended 31 July 2018.
The dividend for the year ended 31 July 2017 was approved at the Annual General Meeting
held on 7 December 2017, to be settled as a scrip dividend via newly issued share capital,
based on a ratio of one new share for every 80 shares held. Accordingly, a total of 1,110,253
new shares, with a par value of CHF 0.02 per share, were issued to shareholders holding
shares in AG on 29 January 2018, resulting in €33,962,000 being recognised
within equity, based on the market price of the shares at the date of approval.
Overview
Financial and Business Review (continued)
20

17 Post balance sheet events – after 31 July 2019
As announced on 4 October 2019, the Group received a binding offer from Invest Group
Zouari (‘IGZ’) to purchase 43.3% of its 47.8% holding in Picard for gross consideration
of €156m. would retain a 4.5% interest in Picard, to be recorded as a financial
investment at fair value. The transaction is subject to a works council consultation process
in France and to customary regulatory approvals. Subject to  acceptance of the
offer following completion of the works council consultation process, the transaction is
expected to close in the last quarter of calendar year 2019. Upon completion, the proposed
transaction is expected to generate a material one-off non-cash accounting loss, currently
estimated to be c. €280m based on year end 2019 carrying value. This loss could change
depending on the timing of when the proposed transaction closes, as the results for Picard
would continue to be consolidated under the equity method of accounting until then.
During October 2019, the Group completed the disposal of its UK Food Solutions business
within the Europe operating segment for gross consideration of €8m. The transaction is
expected to result in a loss relating to derecognition of goodwill and recycle of cumulative
foreign currency translation loss since the initial investment.
These disposals are consistent with  strategy to focus on its frozen B2B bakery
operations and exit non-core businesses.
In Switzerland, changes to the Swiss federal and the canton of Zurich tax laws, which
eliminated certain favourable tax regimes, were substantively enacted in May and
September 2019 respectively. As substantive enactment at the Zurich cantonal level had
not taken place until after the reporting date of 31 July 2019, no adjustments to 
deferred tax position have been reported in the balance sheet.
If reflected, this would have led to an estimated €11m additional deferred tax expense and
would have resulted in no change in current tax expense. Changes in the tax laws in other
Swiss cantons in which the Group operates are still under discussion.
18 Principal risks and uncertainties
The Board and senior management have invested significant time and resources in
identifying specific risks across the Group, and in developing a culture of balanced
risk minimisation. The Board considers the risks and uncertainties disclosed on page 71
to continue to reflect the principal risks and uncertainties of the Group.
19		Forward looking statement
This report contains forward looking statements, which reflect management’s current views
and estimates. The forward looking statements involve certain risks and uncertainties that
could cause actual results to differ materially from those contained in the forward looking
statements. Potential risks and uncertainties include such factors as general economic
conditions, foreign exchange fluctuations, competitive product and pricing pressures and
regulatory developments.
Overview
Financial and Business Review (continued)
21

20 Glossary of financial terms and references
‘Organic revenue’ – presents the revenue movement during the period, excluding impacts
from acquisitions/(disposals) and foreign exchange translation.
‘Underlying EBITDA’ – presented as earnings before interest, taxation, depreciation and
amortisation; before impairment, disposal and restructuring-related costs.
‘Underlying EBITA’ – presented as earnings before interest, taxation and non-ERP related
intangible amortisation; before impairment, disposal and restructuring-related costs.
‘ERP’ – Enterprise Resource Planning intangible assets include the Group SAP system.
‘Joint ventures underlying net profit’ – presented as profit from joint ventures, net of
interest and tax, before non-ERP amortisation and the impact of associated non-recurring
items.
‘Hybrid instrument’ – presented as Perpetual Callable Subordinated Instruments,
which have no contractual maturity date and for which the Group controls the timing
of settlement; therefore, these instruments are accounted for as equity instruments in
accordance with IAS 32 ‘Financial Instruments’.
‘Underlying net profit’ – presented as reported net profit, adjusted to include the
Hybrid instrument dividend as a finance cost; before non-ERP related intangible
amortisation; before RCF and private placement early redemption-related costs and
before impairment, disposal and restructuring-related costs, net of related income tax
impacts. The Group utilises the underlying net profit measure to enable comparability
of the results from period to period, without the impact of transactions that do not relate
to the underlying business.
‘Segmental Net Assets’ – Excludes joint ventures, all bank debt, cash and cash
equivalents and tax balances, with the exception of deferred tax liabilities associated
with acquired goodwill and intangible assets, as those deferred tax liabilities represent
a notional non-cash tax impact directly linked to segmental goodwill and intangible assets
recorded as part of a business combination, rather than an actual cash tax obligation.
‘ROIC’ – Return On Invested Capital is calculated using a pro-forma trailing twelve month
segmental Underlying EBITA (‘TTM EBITA’) reflecting the full twelve month contribution
from acquisitions and full twelve month deductions from disposals, divided by the
respective Segmental Net Assets, as of the end of each period.
Annual Report and Accounts 2019
Corporate Governance
Report
23

Governance
Performance and Strategy
While has made progress on a number of fronts, the financial performance
during the financial year ended 31 July 2019 (‘FY19’) is not yet where we want or expect
it to be. The Board of Directors (‘Board’) believes that the steps it has taken, and
continues to take, are putting the business on a better defined path towards stability,
performance and growth.
During November 2018, the Group completed a capital raise, by way of a rights issue,
in order to strengthen the balance sheet, provide necessary liquidity and working capital
funding and to enable delivery of  three year turnaround plan, Project Renew.
Following approval by the shareholders at the Annual General Meeting on 1 November
2018, a total of 900,184,940 registered shares with a nominal value of CHF 0.02 each
were offered to  existing shareholders on a 10 for 1 share basis, at a discounted
offer price of CHF 1.00 per share.
The net proceeds received upon completion of the rights issue resulted in an injection
of €739.5m into the business, net of related transaction costs, which was recognised
within equity during the period ended 31 January 2019. €15.8m of this is recognised
within share capital, and €723.7m within share premium.
 strategy is to focus on managing, improving and growing our strong
international base and our leading position in B2B Frozen Bakery and European bakery
driven food solutions. Through a clear and relentless focus on customers and enhanced
operating efficiency, the Board remains confident in the underlying strength of the
business.
Board and Executive Management
At the 2018 Annual General Meeting (‘AGM’), Chuck Adair retired without
seeking re-election and Mike Andres, Greg Flack and Tim Lodge were elected to the
Board. The Company owes a debt of gratitude to Chuck for his long service through
very challenging times.
In addition, as part of a continued programme of Board refreshment, announced
the nomination of two potential new independent non-executive directors to the Board.
Subject to shareholder approval at the AGM on 14 November 2019, Luisa Delgado and
Alejandro Legarda Zaragüeta will be elected to the Board. Full biographical details of Luisa
and Alejandro will be included in the 2019 AGM invitation.
Luisa is an accomplished leader and director with almost 30 years of international
experience across multiple industries including luxury optical, IT, retail and particularly
fast moving consumer goods (FMCG). Luisa is currently a member of the supervisory
board of INGKA Holding BV (the holding company of IKEA) and Zertus Group and is a
board member of AO World plc and Barclays Bank Suisse SA. She will undoubtedly be a
very valuable addition to the Board. We believe that increasingly has the requisite
expertise and skills in place at Board level to oversee and support senior management’s
implementation of our multi-year turnaround plan.
Alejandro is a highly skilled senior executive with significant management and non-
executive director experience within various sectors including transport, gas and food-
related industries. He was managing director of Construcciones y Auxiliar de Ferrocarriles
Corporate Governance Report (continued)
24

Governance
S.A. (CAF), a listed group which manufactures railway vehicles and signalling equipment
and stayed on as a director of the board until 2019. Alejandro was an independent
director of Viscofan S.A., a listed group and the world leader in the manufacturing and
commercialization of casings for meat products, with commercial presence in over
100 countries around the world. He was an independent director for Pescanova and non-
executive director of Nueva Pescanova, a multinational fishing, farming and processing
group. Amongst the boards he served on, Alejandro was executive chairman of the board
of Nortegas Energía y Distribución S.A., the second largest gas distributor in Spain and
a director of Duro Felguera S.A., a listed group specializing in executing turnkey projects
for the energy, industrial and oil & gas sectors.
Andrew Morgan will not seek re-election to the Board at the 2019 AGM. The Board
would like to extend its sincere appreciation to Andrew for his services to over
the past six years. He played a significant role on the Board and we are grateful for the
commitment he has shown to the company during his tenure. We wish him every success
for the future.
Since the commencement of Rhona O’Brien, General Counsel and Company Secretary,
on 11 September 2018, the Executive Management team comprised: Kevin Toland, CEO;
Frederic Pflanz, CFO; Gregory Sklikas, CEO Europe; Dave Johnson, CEO North America;
Claudio Gekker, COO Latin America; Robert O’Boyle, COO APMEA; John Heffernan, Chief
Strategy Officer; Tony Murphy, Chief People Officer; and Rhona O’Brien.
Governance Framework
Details of the corporate governance framework adopted by (namely the Articles
of Association, Organisational Regulations and Terms of Reference for the Committees
of the Board) are available on the website at www.aryzta.com/about-aryzta/
corporate-governance. A number of updates to the Articles of Association will be
proposed by the Board for shareholder approval at the upcoming AGM on 14 November
2019.
Leadership
The Board
The Board is responsible for stewardship, governance and oversight, and for setting the
strategic direction of ARYZTA, in order to deliver sustainable value. The Board is also
responsible for defining risk appetite and risk mitigation/management. The Board is
committed to the highest standards of corporate governance in its management of
and its accountability to shareholders and other stakeholders. Strong leadership
and strong corporate governance are integral parts of our corporate culture and the Board
lead by example. Biographical details of the Directors are provided on pages 35 to 38.
When assessing its composition, as well as the composition of its main Committees, the
Board continuously reviews international best-practice standards and global corporate
governance developments.
Board Independence
At 31 July 2019, the Board of consisted of the Chair, one executive director and
six non-executive directors. The Board’s policy is that a majority of its membership
consists of independent non-executive directors, as determined by the Swiss Code of
Best Practice for Corporate Governance (the ‘Swiss Code’). The Board confirms that it is,
and was throughout FY19, fully compliant with the Swiss Code.
Corporate Governance Report (continued)
25

Governance
In June 2018, after careful consideration, the Company entered into a six-month
consultancy arrangement with Jim Leighton pursuant to which Jim provided advisory
services on the implementation of  three year €200m cost reduction plan,
Project Renew. Over and above his normal Board fees, the compensation payable
to Jim under the arrangement amounted to a total of US$150,000 over the six month
period of the consultancy. The consultancy agreement expired on 30 November 2018,
and Jim has been considered fully independent since that date.
In determining the arrangement with Jim Leighton, the Board was fully appraised of
corporate governance best-practice and, as a result of this arrangement, Jim ceased to
be regarded as an independent director and stood down from the Audit Committee during
the period of the consultancy agreement. Notwithstanding this, the Board is firmly of the
belief that Jim’s established skills and experience, his knowledge of the business,
and the importance of Project Renew to the Group’s multi-year turnaround story meant
such an arrangement was, on balance, in the best interests of the Group and our
stakeholders.
All non-executive directors are considered by the Board to be independent in character
and judgement within the meaning of the Swiss Code and none of the non-executive
directors are party to relationships or circumstances with which, in the Board’s
opinion, are likely to affect their independence or judgement. Subject to the approval
of all directors at the 2019 AGM, 10 out of the 11 Board members will be independent
non-executive directors.
To ensure the effective oversight of financial reporting, risk management, remuneration
and the future leadership of the business, the Board delegates certain functions to three
main Board Committees. Further details on the role of these key committees are provided
on pages 40 to 42.
The Chair
The Chair is responsible for the effective leadership, operation and governance of the
Board and its Committees. He ensures that all Directors contribute effectively in the
development and implementation of the Group’s strategy whilst ensuring that the nature
and extent of the significant risks the Group is willing to embrace in the implementation
of its strategy are determined, challenged, justified and where appropriate, accepted.
Governance and Culture
As a Board, we are committed to ensuring we adhere to best-practice corporate
governance principles and apply them in a pragmatic way that adds value to ARYZTA.
Continually enhancing our corporate governance is central to our aim of ensuring the
stability of and returning the business to a satisfactory level of performance
and growth.
An inclusive culture and the fostering of a performance-based organisation are key focus
areas for us as part of our wider governance framework. The Board will continue to work
to ensure that  revised strategy, operating model and remuneration framework
are aligned with our cultural focus. The success of our strategy is dependent on
developing a culture across that supports the pursuit of teamwork and
excellence. We continue to focus on ensuring  core vision and values are
Corporate Governance Report (continued)
26

Governance
developed and clearly understood by all our stakeholders, particularly our colleagues in
all parts of the organisation. We recognise that the Board and senior executives must lead
by example to ensure these values are embedded not just in the boardroom, but are
shared and understood throughout the business and form an integral part of interaction
with all stakeholders.
A unifying culture embraced by the entire organisation leads to success for the business
and pride for our people. At we are proud of our rich baking heritage and seek
to passionately fulfil the needs and ambitions of our customers and our people and the
environment in which we operate in an increasingly sustainable fashion. We will continue
to foster a culture that: delivers on our commitments; is focused on our customers and
operational excellence; relentlessly prioritizes food safety and quality; and creates a safe,
accepting and inspired workplace.
Board Renewal
The past three years have seen a number of appointments to  Board, which
reflects an ongoing programme of refreshment and renewal and the Board’s desire to
broaden its skills and expertise. Board refreshment is a fundamental aspect of fostering
and sharing diverse perspectives in the boardroom and generating new ideas and
business strategies while maintaining an appropriate level of experience and corporate
memory.
Central to effectively setting and overseeing  refocused strategy and determining
our approach to risk is our Board’s thorough understanding of our business and industry.
Throughout FY19, led by the Governance & Nomination Committee, the Board continued
to review its composition to ensure it meets our objective of having the diversity of skills,
experience, gender and geographic background relevant to  strategy and
business profile. In the context of the challenges facing the business, the priority was to
recruit directors who would add to the existing skills and experience of the Board. With the
help of international recruitment firms, significant emphasis was placed on the diversity
of skills and expertise required for new appointments and the importance of a strong
cultural fit with ARYZTA, as it pursues its future strategy and objectives. A cornerstone
of the recruitment process was the identification of individuals with relevant industry
experience, but also focusing on candidates who had success in implementing business
transformations or turnaround plans.
As part of the process of renewal, the Board was delighted that the shareholders
voted in favour of the Board’s recommendation to elect Mike Andres, Greg Flack and
Tim Lodge as non-executive directors of the Company at the 2018 AGM. Andrew Morgan
will not seek re-election to the Board at the 2019 AGM. The Board would like to extend
its sincere appreciation to Andrew for his services to over the past six years.
As previously announced, the Board intends to nominate Luisa Delgado and Alejandro
Legarda Zaragüeta at the 2019 AGM as candidates to serve as independent non-
executive directors of the Board, subject to election by shareholders.
Corporate Governance Report (continued)
27

Governance
The Board is satisfied that, subject to the election of the new directors at the 2019 AGM,
its current composition includes an increasingly satisfactory balance of longer-serving and
newly appointed directors who collectively have many of the critical skills and experience
relevant to the challenges facing ARYZTA. The addition to the Board of persons of the
calibre of Luisa Delgado and Alejandro Legarda Zaragüeta, if elected by shareholders at
the 2019 AGM, will contribute positively to the effectiveness and balance of the Board.
The effectiveness of the Board is also impacted by the relationship between non-
executive directors and management. Together with the Group CEO and Group CFO,
the Chair has spent time ensuring the flow of information between senior management
and non-executive directors has been sufficient to further assist the Board to be effective
in overseeing strategy and performance.
Given the level of recent Board refreshment in 2019, a particular focus for the Chair and
the Board was the induction and development of non-executive directors to ensure the
Board and its main Committees continue to evolve in line with our strategy and business.
Shareholder Engagement
The Board is committed to ongoing dialogue with shareholders to enable clear
communication of  objectives and to foster mutual understanding of what
is important to the Board and the shareholders. In addition, the Board is continually
apprised of shareholder interaction by the Chair, the Group CEO, the Group CFO and
the Investor Relations team, consistent with the obligation to develop an understanding
of the views and concerns of major shareholders.
Risk Management
The Board is and will continue to be focused on ensuring that the Group’s risk
management and internal control systems are effective in identifying, managing and
mitigating potential risks, and thereby underpinning robust decision-making on all capital
allocation decisions. The Board has continued to debate and develop its understanding
of risk, including appetite, tolerance and testing of risks and how to maximise business
opportunities. Supported by the Audit Committee, the Board continues to strive for a
better understanding of the risks the Group faces and the actions taken to mitigate them.
Compensation Report
At the 2018 Annual General Meeting, shareholders ratified the 2018 Compensation
Report through a separate advisory vote. Further, in line with Swiss law shareholders
approved the maximum aggregate amount of remuneration of the Board for the period
ending at the 2019 AGM and for the Executive Management for the financial year ending
31 July 2020.
Corporate Governance Report (continued)
28

Governance
Corporate Governance Report format
The Corporate Governance Report follows the SIX Swiss Exchange Directive
on Information relating to Corporate Governance and takes into account the Swiss Code.
The Group consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (‘IFRS’) and the requirements of Swiss law.
The AG Company financial statements are prepared in accordance with the
requirements of Swiss Law and the Company’s Articles of Association. Where necessary,
the financial statement disclosures have been extended to comply with the requirements
of the SIX Swiss Exchange Directive on Information relating to Corporate Governance.
In this report, the terms ‘ARYZTA’ and the ‘Company’ refer to AG, whereas the
‘Group’ and the ‘Group’ refer to AG and its subsidiaries.
To avoid duplication in some sections, cross-references are made to the 2019 Financial
Statements (comprising the Group consolidated financial statements and Company
financial statements of AG), as well as to the Articles of Association of ARYZTA
AG (available on the website at www.aryzta.com/about-aryzta/
corporate-governance).
Corporate Governance Report (continued)
29

Governance
1 Group structure and shareholders
1.1 Group structure
The General Meeting is the ultimate governing body of the Group and the
Board is accountable and reports to the shareholders, by whom it is elected. The Board,
while entrusted with the ultimate direction of ARYZTA, as well as the supervision of
management, has delegated responsibility for the day-to-day management of the Group,
to the extent allowed under Swiss law, through the Group Chief Executive Officer (‘CEO’),
to Executive Management. The Group’s management and organisational structure
corresponds to its current segmental reporting lines: Europe, North
America and Rest of World. Please refer to the section ‘Segmental Reporting’
in the Group Statement of Accounting Policies and Note 1 to the Group
Consolidated Financial Statements on page 95 and pages 109 to 112, respectively, for
further details regarding the Group’s reporting segments.
Each segment’s management team is responsible for the day-to-day activities of their
segment and reports to Executive Management, which in turn reports through the CEO
to the Board.
1.1.1 Listed companies of the Group AG
Name and domicile: AG, 8952 Schlieren, Switzerland
Primary listing: SIX Swiss Exchange, Zurich, Switzerland
Swiss Security number: 4 323 836
ISIN: CH0043238366
Cedel/Euroclear
common code: 037252298
Secondary listing: Irish Stock Exchange Limited, trading as Euronext Dublin, Dublin, Ireland
SEDOL Code: B39VJ74
Swiss Stock
Exchange symbol: ARYN
Irish Stock
Exchange symbol: YZA
Stock market capitalisation as of 31 July 2019
CHF 821,395,007 based on 990,587,322 registered shares outstanding (i.e. disregarding
2,518,405 treasury shares) and closing price of CHF 0.8292 per share.
Stock market capitalisation as of 31 July 2018:
CHF 1,259,521,174 based on 89,933,679 registered shares outstanding (i.e. disregarding
2,987,108 treasury shares) and closing price of CHF 14.005 per share.
1.1.2 Non-listed companies of the Group
Details of the significant subsidiaries and associated companies of (being their
company names, domicile, share capital, and the Company’s participation therein)
as well as the basis for classifying such subsidiaries as significant are set out in note 32
of the 2019 Group consolidated financial statements on page 162.
Corporate Governance Report (continued)
30

Governance
1.2 Significant shareholders
As at 31 July 2019, the Company has been notified of the following shareholdings
or voting rights, which amount to 3% or more of the Company’s issued ordinary share
capital:
1 Shareholders with significant holdings before the November 2018 capital raise who have not notified the
Group of a change in their holdings above or below a disclosure threshold are assumed to have offset the
dilutive effect of the capital increase by participating with a number of shares which prevented them being
required to disclose a crossing of a disclosure threshold.
Any significant shareholder notifications during the year, and since 31 July 2019, are
available from the website at: www.aryzta.com/investor-centre/shareholder-
notifications and also on the SIX Exchange Regulation’s website at: www.six-exchange-
regulation.com/en/home/publications/significant-shareholders.html
1.3 Cross-shareholdings
The Group has no interest in any other company exceeding 5% of voting rights
of that other company, where that other company has an interest in the Group
exceeding 5% of the voting rights in ARYZTA.
2 Capital structure
2.1 Capital
The registered share capital of the Company, as at 31 July 2019, amounts to
CHF 19,862,115 and is divided into 993,105,727 registered shares with a par value
of CHF 0.02 per share. The share capital is fully paid-up.
2.2 Authorised and conditional capital
currently has no conditional share capital. At the AGM on 14 November 2019,
the Board intends to recommend to shareholders the amendment of the Articles
of Association of the Company, to introduce a new article 4 to create conditional share
capital for issuance of shares, options or subscription rights to employees.
Pursuant to Article 5 of the Articles of Association (governing Authorised Share Capital),
the Board is currently authorised to increase the share capital of the Company by an
amount not exceeding CHF 161,416.00 through the issue of up to 8,070,800 registered
shares to be paid up in full with a par value of CHF 0.02 per share. At the time that this
Corporate Governance Report (continued)
31

Governance
authorised share capital was approved by the shareholders at the AGM in December
2017, it represented 10% of the then issued share capital. Following the capital raise
resolved at the 2018 AGM, this authorised capital now corresponds to 0.81% of the
current issued share capital. Such authority of the Board expires on 9 December 2019.
At the AGM on 14 November 2019, the Board intends to recommend to ARYZTA
shareholders the renewal of the authority of the Board to issue new shares from the
authorised share capital, currently valid until 9 December 2019, by two years to 15
November 2021, and to increase the number of new shares authorised to be issued from
the authorised share capital from currently 8,070,800 to 99,310,572 amounting to 10%
of the current share capital.
The Board has the power to determine the issue price, the date of issue, the date of
entitlement to dividends, the allocation of non-exercised pre-emptive rights and the type
of contribution to be made. The Board may withdraw or limit the pre-emptive rights in
the event of the use of those shares: (1) for acquisitions, (2) to broaden the shareholder
constituency, or (3) for the purposes of employee participation. For further details,
refer to Article 5 of the Articles of Association, which is available on the website
at www.aryzta.com/about-aryzta/corporate-governance.
Corporate Governance Report (continued)
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Governance
2.3 Changes in capital
Changes in share capital, treasury shares and the allocation of treasury shares to awards
granted in connection with the Long-Term Incentive Plans (performance share
units, restricted stock units, options and option equivalents) over the last three financial
years are as follows:
Nominal value
CHF Shares in issue
Shares
outstanding Treasury shares
Performance
share unit and
restricted stock
unit award
allocation
Option and
option
equivalent
allocation
Unallocated
Treasury shares
.
2.5 Profit-sharing certificates
has not issued any profit-sharing certificates1
.
1 	
Participation and profit-sharing certificates are instruments which have similar features to shares, but may
differ with regard to their entitlement to dividend payments, voting rights, preferential rights to company
assets or other similar rights
Corporate Governance Report (continued)
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Governance
2.6 Restrictions on transferability and nominee registrations
Article 7 of the Articles of Association deals with the Shareholders’ Register
and Restrictions on Transferability, and is available on the website at
www.aryzta.com/about-aryzta/corporate-governance.
2.6.1 Limitations on transferability
Pursuant to Article 7 b) of the Articles of Association, persons acquiring registered shares
are, on application, entered in the share register without limitation as shareholders with
voting power, provided they comply with the disclosure requirement stipulated by the
Federal Act on Financial Market Infrastructures and Market Conduct in Securities and
Derivatives Trading (Financial Market Infrastructure Act) of 19 June 2015 (‘FMIA’) and
expressly declare that they have acquired the shares in their own name and for their own
account.
Pursuant to Article 7 f) of the Articles of Association, the Company may in special
cases approve exceptions to the regulations described in section 2.6 above. The decision
to grant exceptions is at the Board’s discretion.
2.6.2 Exceptions granted in the year under review
As part of the establishment of ARYZTA, former holders of IAWS Group plc shares
and options received registered shares, delivered initially in the form of Capita
Depository Interests and since replaced by CREST1
Depository Interests (‘CDIs’)2
.
A CDI represents an entitlement to an registered share. CDI holders are not the
legal owners of the shares represented by the CDIs. They are not in a position to directly
enforce or exercise rights like a shareholder. However, CDI holders do maintain an interest
in the shares represented by the CDIs.
To facilitate voting by CDI holders, the Company has entered into arrangements
with Euroclear UK and Ireland to enable, by way of exception, registration of CREST
International Nominees Limited (‘CREST’) in the share register as nominee with voting
rights for the number of registered shares corresponding to the number of CDIs on the
CDI register. There were no other exceptions to the provisions of section 2.6.1 above
granted in the year under review.
CDI holders who wish to be in a position to directly enforce or exercise their rights must
have their interests entered in the share register in accordance with Article 7 of the
Articles of Association and effectively hold their shares through a member of the Swiss
SIS Settlement System.
In November 2018, the Swiss Federal Council passed an ordinance designed to remedy
the expiry of the EU Commission’s decision recognizing the equivalence of the Swiss
legal and supervisory framework applicable to SIX Swiss Exchange. The implication of
this Ordinance is that since 1 July 2019, non-Swiss trading venues may no longer trade
1 The CREST system, operated by Euroclear UK and Ireland, is the system for the holding and settlement
of transactions in uncertificated (UK, Irish and Channel Island) securities.
2 shares are held in trust by Euroclear UK and Ireland for the benefit of CREST members who
have been issued with dematerialised interests representing entitlements to registered shares
in the form of CDIs.
Corporate Governance Report (continued)
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Governance
equity securities of Swiss companies without FINMA recognition. There is an exemption
from this requirement for equity securities which were listed or admitted to trading on
non-Swiss trading venues with the consent of the issuer prior to 30 November 2018. The
listing of shares on Euronext Dublin falls into this category and is “grandfathered”
accordingly. will continue to monitor the implications of the Ordinance and any
further developments between the Swiss and EU authorities.
2.6.3 Admissibility of nominee registrations
Pursuant to Article 7 c) of the Articles of Association, nominee shareholders are entered
in the share register with voting rights without further inquiry up to a maximum of 1.5%
of the outstanding share capital available at the time. Above this 1.5% limit, registered
shares held by nominees are entered in the share register with voting rights only if the
nominee in question (at the application for registration or thereafter upon request by the
Company) discloses the names, addresses and shareholdings of the persons for whose
account the nominee holds 0.3% or more of the outstanding share capital available at that
time, and provided that the disclosure requirement stipulated by the FMIA is complied
with. The Board has the right to conclude agreements with nominees concerning their
disclosure requirements.
Pursuant to Article 7 d) of the Articles of Association, the limit of registration in Article 7
c) of the Articles of Association described above also applies to the subscription for, or
acquisition of, registered shares by exercising option or convertible rights arising from
registered or bearer securities issued by the Company, as well as by means of purchasing
pre-emptive rights arising from either registered or bearer shares.
Pursuant to Article 7 e) of the Articles of Association, legal entities, or partnerships,
or other associations or joint ownership arrangements, which are linked through capital
ownership or voting rights, through common management or in like manner, as well
as individuals, legal entities or partnerships that act in concert with intent to evade the
entry restriction, are considered as one shareholder or nominee.
2.6.4 Procedure and conditions for cancelling transferability
privileges
After due consultation with the person concerned, the Company is authorised to delete
entries in the share register as a shareholder with voting rights, with retroactive effect, if they
were effected on the basis of false information, or if the respective person does not provide
the information pursuant to Article 7 c) described in section 2.6.3 above.
2.7 Convertible bonds, warrants and options
As of 31 July 2019, has not issued any convertible bonds or warrants.
As of 31 July 2019, a total of 20,168,970 Performance Share Unit and Restricted Stock
Unit awards and 36,836,740 option and Option Equivalent Plan awards were outstanding,
subject to fulfilment of predefined vesting conditions in connection with the Long
Term Incentive Plan.
Please refer to the Compensation Report on pages 54 to 68 of this Annual Report for
further information pertaining to any Long Term Incentive Plan awards granted as an
element of Executive Management compensation.
35

Governance
Corporate Governance Report (continued)
3 Board of Directors
3.1 Members of the Board of Directors
At 31 July 2019, the Board of consists of the Chair, an executive director and
eight non-executive directors. Board policy is that a majority of its membership consists
of independent non-executive Directors, as determined in accordance with the Swiss
Code. The Board confirms that it is fully compliant with the Swiss Code.
At the 2018 Annual General Meeting (‘AGM’), Chuck Adair retired without
seeking re-election and Michael Andres, Greg Flack and Tim Lodge were elected to
the Board. As noted on page 25 above, Jim Leighton ceased to be regarded as an
independent director within the meaning of the Swiss Code during part of FY18. Jim has
been considered as fully independent since 30 November 2018. Save as set out above
in respect of Jim, all eight non-executive directors (including the Chair) are considered
by the Board to be independent in character and judgement and none of these non-
executive directors are party to relationships or circumstances with which, in
the Board’s opinion, are likely to affect their judgement.
As at 31 July 2019, the Board of was comprised as follows:
Gary McGann (1950, Irish)
Chair (since December 2016), and non-executive member
BA from University College Dublin; MScMgmt from IMI/Trinity College Dublin
and a Fellow of the Association of Chartered Certified Accountants
Gary McGann is the Chair of Flutter Entertainment plc (formerly Paddy Power Betfair plc).
He is also a director of Green REIT plc. He is the former Group Chief Executive Officer
of the Smurfit Kappa Group plc, one of the leading providers of paper-based packaging
solutions in the world. He is also former CEO of Aer Lingus Group, Gilbeys of Ireland and
Grand Met Finance Ireland Ltd. Gary is also Chair of Sicon Ltd (Sisk Group) and Aon
Ireland, and a former President of IBEC (Irish Business and Employers’ Confederation)
and CEPI (Confederation of European Paper Industries). In the ‘not for profit sector’, he is
a director of Barnardos and The Ireland Funds. Gary became a member of the ARYZTA
Board in December 2016.
Mike Andres (1958, American)
Non-executive member
Bachelor of Science in Business Administration from University of Tennessee,
United States
Mike Andres spent the majority of his career with McDonald’s Corporation having most
recently served, up to 2017, as President of McDonald’s USA, the largest global segment
of McDonald’s Corporation. He previously served in a range of senior positions at
McDonald’s, which he joined in 1982, including leading the turnaround and sale of the
restaurant chain, Boston Market. Mike brings a deep understanding of consumer markets
globally, and in North America in particular, to the Group. Mike became a member of the
Board in November 2018.
36

Governance
Corporate Governance Report (continued)
Greg Flack (1964, American)
Non-executive member
Bachelor of Science in Business Administration from Minnesota State University
Moorhead, United States
Greg Flack is executive chair of Green Chile Foods company, a US frozen consumer
foods company, a position he has held since 2014. He spent most of his previous career
at Schwan Food Company, a frozen food company, where he served as CEO from 2008
until 2013. He led a team of 15,000 people at Schwan which he joined in 1987. During
his tenure as Schwan CEO, he successfully led a turnaround strategy and business
restructuring. Greg brings significant food industry expertise and a track record of
business transformation to the Group. Greg became a member of the Board
in November 2018.
Dan Flinter (1950, Irish)
Non-executive member
MA in Economics from University College Dublin, Ireland
Dan Flinter is a former CEO of Enterprise Ireland and a former Executive Director of IDA
Ireland. He is Chair of the Boards of PM Group Holdings Ltd and The Irish Times Ltd.
He is a board member of Dairygold Co-Operative and Chair of its Remuneration
Committee. He is a member of the Board of the Institute of Directors, Ireland and joined
the Board of the IEDR (Irish Exchange Domain Registry) in July 2017. He is Chair of
the Board of VCIM. He is also a former Chair of the Governing Authority of Maynooth
University and of the Centre For Effective Services. He became a member of the ARYZTA
Board in December 2015.
Annette Flynn (1966, Irish)
Non-executive member
Bachelor of Commerce from University College Cork, Ireland; Fellow of the Association
of Chartered Certified Accountants; and Chartered Director
Annette Flynn has held various senior roles in UDG Healthcare plc, including Managing
Director of the Packaging & Specialty division and Head of Group Strategy. Prior to
joining UDG Healthcare, Annette held senior positions with Kerry Group plc working in
their Irish, UK and US operations. She is also a non-executive director of Dairygold Co-
Operative Society Ltd where she chairs the Audit Committee. Until her recent resignation
in September 2019, Annette was a non-executive director of Canada Life International
Assurance Ireland DAC, where she chaired the Risk Committee and was also a member
of the Audit Committee. She was formerly an executive and subsequently a non-executive
Director of UDG Healthcare plc and a non-executive director of Grafton Group plc. She is
a Fellow of the Association of Chartered Certified Accountants and a Chartered Director
accredited by the Institute of Directors UK. She became a member of the Board
in December 2014.
37

Governance
Corporate Governance Report (continued)
Jim Leighton (1956, American)
Non-executive member
Masters Business Administration, Keller Graduate School of Management;
Bachelor of Arts, Business Administration & Industrial Relations, University of Iowa
Jim Leighton is Executive Director and CEO of Australia and New Zealand based poultry
company Ingham’s Group Ltd. since 2018. Jim served as President of 40 North Foods from
2016 to 2018, and is currently Chair of Getting FIT Enterprises, both entities that he founded.
Between 2013 and 2016, Jim served as Chief Operating Officer and, subsequently, as Interim
Chief Executive Officer of Boulder Brands Inc., one of the fastest growing Health and Wellness
food companies in North America. Jim previously served as President of Perdue Foods, a
large privately-held food and protein company from 2009 to 2013; and Senior Vice President
operations and supply chain from 2006 to 2009. From 2002 to 2006, he served as the Senior
Vice President of Operations ConAgra Foods, Inc., one of the largest publically traded food
companies in the United States. He has also served on the publicly traded boards of Boulder
Brands, Ingham’s Group Ltd., Privately Held 1908 Brands. He became a member of the
Board in December 2017.
Tim Lodge (1964, English)
Non-executive member
MA from the University of Cambridge and Fellow of the Chartered Institute
of Management Accountants
Tim Lodge is an experienced finance executive, who was CFO of COFCO International
until 2017, where he helped combine two businesses into a global agribusiness with
revenues of $34 billion. He spent most of his previous career at Tate & Lyle PLC, a UK-
listed international food ingredients company, where he served as CFO from 2008 until
2014. During his tenure at Tate & Lyle, he oversaw a significant balance sheet reduction
and business transformation programme. Tim is a non-executive director of Arco Ltd.
Tim brings significant financial expertise and a proven track record in the food and food
ingredients business to the Company. Tim became a member of the Board in
November 2018.
Andrew Morgan (1956, English)
Non-executive member
BA from the University of Manchester
Andrew Morgan had more than 25 years with Diageo Plc including most recently seven
years as President Diageo Europe. Diageo is the world’s leading premium drinks business
and a FTSE top 10 company. Andrew also spent eight years with the Gillette Company in
a number of sales and marketing roles. He held a succession of marketing, strategy and
general management positions with Diageo and has lived in London, Athens, Madrid and
Barcelona, as well as managing emerging markets in Latin America, Asia and Africa. He
is a member of Council at the University of Leicester and is investing Chair of two start-up
companies in the consumer goods sector. He is a former President of AIM, the European
Consumer Goods association and served two terms on the Global Advisory Board of
British Airways. He became a member of the Board in December 2013. Andrew
will not be seeking re-election to the Board at the upcoming AGM.
38

Governance
Corporate Governance Report (continued)
Kevin Toland (1965, Irish)
Executive member
Fellow of the Chartered Institute of Management Accountants; Diploma in Applied Finance
from the Irish Management Institute
Kevin Toland is the Chief Executive Officer (‘Group CEO’) of ARYZTA. From 2013 to
2017 he was CEO of daa plc, which operates Dublin and Cork airports, ARI (a global
retailer in travel retail) and daa International. He previously held the position of Chief
Executive and President of Glanbia USA & Global Nutritionals, a division of Glanbia plc,
based in Chicago, Illinois. He was a member of the Glanbia plc board of directors from
2003 to 2013; and, was based in the US from 2004 to 2012. Kevin is a director of Total
Produce plc and IBEC (the Irish Business and Employers Confederation). Kevin became
a member of the Board in December 2017.
Rolf Watter (1958, Swiss)
Non-executive member
Doctorate in law from the University of Zurich, Master of Law degree from Georgetown
University, Washington D.C., USA
Rolf Watter has been a partner at the Zurich law firm Bär & Karrer since 1994. He
specialises in M&A and is an expert in corporate governance. He is currently Chair of
PostFinance AG and vice-Chair of Ceva Logistics AG and serves as a director of A.W.
Faber Castell (Holding) AG and AP Alternative Portfolio AG. He is also a board member in
two charitable foundations, a member of the Regulatory Board of the SIX Swiss Exchange
and a professor of law at the University of Zurich. He is a former Chair of Nobel Biocare
Holding AG and Cablecom Holdings. In addition, he was a Board member of Zurich
Insurance Group AG, Syngenta AG, Forbo Holding AG, and Centerpulse AG. He became
a member of the Board in December 2016.
Corporate Governance Report (continued)
39

Governance
3.2 Other activities and functions
None of the non-executive members of the Board has fulfilled any operational
management functions for companies of the Group in the three years
immediately preceding the period. Related-party transactions with any members of the
Board or Executive Management did not exceed €100,000 in aggregate during the years
ended 31 July 2019 and 2018.
3.3 Number of activities permitted outside the Group
Pursuant to Article 25 of the Articles of Association, the members of the Board currently
may hold no more than the following number of additional mandates in the supreme
executive bodies of companies and organisations outside of the Company:
–
– up to three mandates in listed companies;
–
– up to three mandates in non-listed companies;
–
– up to four mandates in (i) charitable organisations, (ii) associations or foundations
and (iii) other non-profit institutions.
For further details, refer to Article 25 of the Articles of Association, which is available
on the website at www.aryzta.com/about-aryzta/corporate-governance.
At the AGM on 14 November, 2019 the Board intends to recommend to shareholders
the amendment of Article 25 lit. a) of the Articles of Association to allow members
of the Board to hold i) up to four mandates in listed companies; ii) up to five mandates
in non-listed companies. The Board believes that there is a benefit for the Group
if members of the Board could hold more mandates with other listed or non-listed
companies. Furthermore, the amendment would bring into line with Swiss
best-practice standards and corporate governance principles.
3.4 Elections and terms of office
The General Meeting has the competence to appoint and remove the members of the
Board. By virtue of the Ordinance against Excessive Compensation with respect to Listed
Stock Corporations enacted by the Swiss Federal Council (the “Ordinance”), as from the
2014 AGM, all directors are subject to individual annual election by the General
Meeting.
3.5 Internal organizational structure
3.5.1 Allocation of tasks within the Board of Directors
The Board has adopted Organizational Regulations that define the essential roles
and responsibilities of the Board, the Chair, the Committees of the Board and the
Executive Management. By virtue of Swiss law, the office of Chair and the members of
the Remuneration Committee are subject to annual election by the General Meeting.
The Chair of the Remuneration Committee and membership of the Audit Committee,
the Governance and Nomination Committee and the respective Chairs thereof, are
determined annually by the Board, following the Annual General Meeting, in accordance
with the Organizational Regulations, which are available on the website at
www.aryzta.com/about-aryzta/ corporate-governance.
Corporate Governance Report (continued)
40

Governance
3.5.2 Tasks and areas of responsibility for each Committee
of the Board of Directors
has an Audit Committee, a Governance and Nomination Committee and a
Remuneration Committee. The powers and responsibilities of each Committee are set out
in their respective Terms of Reference, as approved by the Board and which are available
on the website at www.aryzta.com/about-aryzta/corporate-governance.
As of 31 July 2019, these Committees were comprised as follows:
Governance and
Nomination
Committee
Audit
Committee
Remuneration
Committee
Audit Committee
From 1 August 2018 until the Annual General Meeting on 1 November 2018, the Audit
Committee was comprised of two non-executive directors, namely Annette Flynn (Chair)
and Andrew Morgan and the Terms of Reference of the Audit Committee was amended to
allow a quorum of two non-executive directors during that period. Owing to Jim Leighton’s
consultancy agreement with the Company, Jim stepped down from the Audit Committee
during that time and did not seek re-election to the Audit Committee following the 2018
AGM. From 1 November 2018 to 31 July 2019, the Audit Committee was comprised of
four non-executive Directors, namely Annette Flynn (Chair), Greg Flack, Andrew Morgan
and Tim Lodge. In the 2019 financial year, the Audit Committee met five times and the
average duration of the meetings was approximately three hours.
The Audit Committee’s role includes reviewing the Group consolidated financial
statements and Company financial statements, the interim and full-year results and the
significant financial reporting judgements contained therein. The Audit Committee also
reviews the Group’s internal controls, and the scope and effectiveness of the Group’s
Internal Audit function. The Head of Internal Audit has access to the Audit Committee
at all times and he, as well as the Group CFO, attend meetings of the Audit Committee
by invitation. The Head of Internal Audit meets regularly with the Chair of the Audit
Committee for interim updates. He participated in all Audit Committee meetings during
the 2019 financial year. The Head of Internal Audit has regular meetings with the Group
CEO (formally at least twice annually) and other members of the Executive Committee.
An evaluation of the performance of Internal Audit is performed annually.
In the financial year 2019 the Audit Committee, operating under its Terms of Reference,
discharged its responsibilities by reviewing:
Corporate Governance Report (continued)
41

Governance
–
– the draft financial statements and interim results statement prior to Board approval
and reviewing the external auditor’s reports thereon;
–
– the appropriateness of the Group’s accounting policies;
–
– the audit and non-audit fees payable to the external auditor;
–
– the external auditor’s plan for the audit of the Group’s accounts, which included key
areas of extended scope work, key risks to the accounts, confirmations of the
external auditor independence and the proposed audit fee, and approving the terms
of engagement for the audit;
–
– the tender process and appointment of the external auditor;
–
– the Group’s financial controls and risk systems;
–
– the Internal Audit function’s terms of reference, resources, its work programme and
reports on its work during the year;
–
– the arrangements and the effectiveness of how members of staff may, in confidence,
raise matters of concern, including potential fraud; and
–
– the quality of underlying earnings reported by ARYZTA.
Remuneration Committee
From 1 August 2018 to 1 November 2018, the Remuneration Committee was comprised of
three non-executive Directors, namely Chuck Adair (Chair), Gary McGann and Rolf Watter.
From 1 November 2018 to 31 July 2019, the Remuneration Committee was comprised
of four non-executive Directors, namely Rolf Watter (Chair), Mike Andres, Dan Flinter and
Gary McGann. Each of these directors is considered by the Board to be independent in
judgement and character. In the 2019 financial year, the Remuneration Committee met six
times and the average duration of the meetings was approximately two hours.
The Remuneration Committee is responsible for determining all elements of the
remuneration of the members of the Board and the Group CEO, and for approving the
remuneration of other members of the Executive Management, upon the recommendation
of the Group CEO. The Remuneration Committee also reviews and makes recommendations
to the Board on an annual basis regarding the proposed total remuneration of the Board and
the Executive Management for future financial periods for approval at the Annual General
Meeting of shareholders. The Group’s remuneration policy for executive and non-executive
directors and details of directors’ remuneration are contained in the Compensation Report
on pages 54 to 68 of this Annual Report, in accordance with the Swiss Code of Obligations
(“CO”) and the SIX Directive on Information relating to Corporate Governance.
Governance and Nomination Committee
From 1 August 2018 to 1 November 2018, the Governance and Nomination Committee
was comprised of three non-executive directors, namely Dan Flinter (Chair), Gary McGann
and Rolf Watter. From 1 November 2018, the Governance and Nomination Committee was
comprised of four non-executive directors, namely Dan Flinter (Chair), Jim Leighton, Gary
McGann and Rolf Watter. With the exception of Jim, each of these directors is considered
by the Board to be independent in judgement and character. Jim was considered by the
Board to be Independent in judgement and character once his consultancy agreement with
the Company concluded on 30 November 2018. In financial year 2019, the Governance
and Nomination Committee met five times and the average duration of the meetings was
approximately two hours.
The Governance and Nomination Committee is responsible for identifying and nominating,
for approval by the Board and ultimately the shareholders, candidates to fill Board vacancies
and for the continuous review of senior management succession plans.
Corporate Governance Report (continued)
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Governance
In addition, the Governance and Nomination Committee is responsible for regularly
reviewing the structure, size and composition of the Board and making appropriate
recommendations to the Board in order to ensure an adequate size and a well-balanced
composition of the Board. The Governance and Nomination Committee is also responsible
for making determinations regarding the independence of members of the Board. The
Governance and Nomination Committee (together with other directors) engaged in a
number of interviews over the course of financial year 2019 to identify and recommend
for approval to the full Board, Luisa Delgado for election by shareholders as part of the
Board renewal programme. This was announced by the Board on 4 June 2019. Following
interviews held by the Governance and Nomination Committee, the Board announced on
7 October 2019 (post financial year 2019), its intention to nominate of Alejandro Legarda
Zaragüeta for election as a director to the Board by shareholders at the next AGM.
The Governance and Nomination Committee is charged with monitoring the Company’s
compliance with corporate governance best practices and with applicable legal, regulatory
and listing requirements and recommending to the Board such changes or actions as it
deems necessary. The Chair of the Governance and Nomination Committee is responsible
for reviewing the performance and effectiveness of the Chair in consultation with each
member of the Board, and of the full Board. In the financial year 2019 the Governance and
Nomination Committee worked collaboratively with the Remuneration Committee on matters
which were of common interest and relevance.
3.5.3 Work methods of the Board and its Committees
A total of seventeen Board meetings and general update calls were held during the
financial year 2019. These included meetings held in person and by conference call. The
increased volume of Board meetings and update calls held during financial year 2019 was
directly related to the Capital Raise process. The average duration of the Board meetings
held in person was approximately six hours and each director attended those meetings. At
the Board meetings, the Chairs of the Committees reported to the Board on their activities
and recommendations to the Board. Details of the remit of the Committees are set out in
section 3.5.2.
Board of Directors
Eligible to attend Attended
Corporate Governance Report (continued)
43

Governance
3.6 Definition of areas of responsibility
The Board is the ultimate governing body of AG. It has the power and
competencies afforded by Swiss law (art. 716a of the CO) including in particular:
1) to approve the strategic objectives, annual budget and capital allocations;
2) to appoint and remove executive management; and
3) to act as the ultimate supervisory authority.
The following matters fall within the exclusive competency of the Board of Directors:
–	
To ultimately direct the Company and issue necessary directives;
–	
To determine the organisation of the Company;
–	
To organise the accounting, the internal control system, the financial control and
the financial planning system, as well as perform a risk assessment;
–	
To appoint and remove the persons entrusted with the management and the
representation of the Company and to grant signatory power;
–	
To ultimately supervise the persons entrusted with the management, in particular with
respect to compliance with the law and with the Articles of Association, regulations
and directives;
–	
To prepare the business report, as well as to convene the General Meeting and
to implement its resolutions;
– To inform the judge in the event of over-indebtedness;
–	
To pass resolutions regarding the subsequent payment of capital with respect
to non-fully paid-up shares;
–	
To pass resolutions confirming increases in share capital and the amendments
to the Articles of Association entailed thereby;
Corporate Governance Report (continued)
44

Governance
–	
To examine compliance with the legal requirements regarding the appointment,
election and the professional qualifications of the external auditors; and
– To execute the agreements pursuant to art. 12, 36 and 70 of Swiss merger law.
The Board has delegated responsibility for the day-to-day management of the Group,
through the Group CEO, to Executive Management, to the extent allowed by Swiss law.
3.7 Information and control instruments pertaining
to Group Executive Management
The Executive Committee reports in a structured manner to the Board through the Group
CEO and Group CFO. In particular, at each Board meeting, the Group CEO informs the
Board of the status of current business operations, significant developments and major
business transactions and the Group CFO reports on financial performance across the
Group and on key financial figures and parameters. In addition, other executives within
the Group deliver presentations directly to the Board as and when appropriate. The
Board approves the formal Risk Assessment, as well as the design, implementation and
maintenance of the Internal Control System on an annual basis. The Internal
Audit function reports directly to the Audit Committee and to the Group CFO. Internal
Audit may audit all Group activities and meets with the Group CEO and also with the
other members of the Executive Management team at least twice annually. Internal
Audit discusses audit plans with the Audit Committee on at least an annual basis, but
may discuss them more frequently should circumstances require. The external auditors,
PricewaterhouseCoopers AG Zurich (the Auditors of the Group consolidated
financial statements and the Company financial statements), conduct their audits in
compliance with the auditing standards referenced in their respective opinions.
4.1 Group Executive Management
Since the commencement of Rhona O’Brien as General Counsel and Company Secretary
on 11 September 2018, the Executive Committee, comprised as follows: Kevin Toland
(Group CEO); Frederic Pflanz (Group CFO); Gregory Sklikas (CEO Europe); Dave Johnson
(CEO North America); Claudio Gekker (COO Latin America); Robert O’Boyle (COO
APMEA); John Heffernan (Chief Strategy Officer); Tony Murphy (Chief People Officer);
and Rhona O’Brien.
Kevin Toland (1965, Irish)
Chief Executive Officer (‘Group CEO’)
Fellow of the Chartered Institute of Management Accountants; Diploma in Applied Finance
from the Irish Management Institute
Kevin Toland is the Chief Executive Officer of ARYZTA. From 2013 to
2017 he was CEO of daa plc, which operates Dublin and Cork airports, ARI (a global
retailer in travel retail) and daa International. He previously held the position of Chief
Executive and President of Glanbia USA & Global Nutritionals, a division of Glanbia plc,
based in Chicago, Illinois. He was a member of the Glanbia plc board of directors from
2003 to 2013; and, was based in the US from 2004 to 2012. Kevin is a director of Total
Produce plc and IBEC (the Irish Business and Employers Confederation). He became a
member of the Board in December 2017.
45

Governance
Corporate Governance Report (continued)
Claudio Gekker (1965, Brazilian)
COO Latin America
Industrial engineering, Federal University of Rio de Janerio, Brazil; MBA from the
COPPEAD Graduate School of Business with an extension in the ESSEC International
Business School in France
Claudio joined in May 2014 as head of the Group’s Latin American activities.
Before joining ARYZTA, Claudio had a long and distinguished career in Brazil and Latin
America working for multinational companies such as Nabisco, Coca-Cola Company,
McCann Erickson, Nestlé and Bimbo Group. In January 2018 he became Vice President
and member of the Board of the Brazilian Food Service Institute.
John Heffernan (1970, Irish)
Chief Strategy Officer
Master of Business Administration, INSEAD; MSc, International Accounting and Finance,
London School of Economics and Political Science; Bachelor of Commerce (B. Comm.),
Banking and Finance, University College Dublin, Ireland
John joined as Chief Strategy Officer in February 2018, having previously held
roles in daa plc; ARI and daa International. John served as Chief Development Officer
of daa plc from 2014 to 2018. From 2006 to 2014, John was the founder and CEO of a
number of businesses in clean energy including Clearpower and Aer Ltd. From 2003 to
2006, he was Acquisitions and Development Director with Boundary Capital, a boutique
Irish-based private equity investor and corporate finance advisory firm. Prior to this, he
worked with McKinsey and Company from 1993 to 2003. This included a period working
for Ranks Hovis McDougall in Trade Marketing and Category Management.
Dave Johnson (1956, American)
CEO North America
Bachelor of Business Administration with a concentration in Finance and an MBA from
the University of Wisconsin
Dave Johnson is a native of Wisconsin, USA and brings to an extensive
background in the food industry. Most recently he served for nine years at Barry Callebaut
as President and CEO Americas, retiring in August 2017. Prior to Barry Callebaut, Dave
spent over 20 years with Kraft Foods Global, Inc serving in a number of senior positions
and was a member of the Global Executive team. His positions included President of
Kraft North America from 2003-2006 and President of Operations, Technology and
Procurement from 2002-2003. Dave also served as Chief Operating Officer and then
Chief Executive Officer and member of the Board, at Michael Foods from 2007-2009.
Dave joined in 2018.
46

Governance
Corporate Governance Report (continued)
Tony Murphy (1963, English)
Chief People Officer
B.A., Industrial Economics, University of Nottingham
Tony joined as Chief People Officer in December 2017. Tony previously held
a number of senior HR roles, including with Mondelez as Vice President of Human
Resources for the North America Region from 2012 to 2017, with Kraft Foods as Vice
President of Human Resources for the Snacks & Confectionary Business in the United
States from 2010 to 2012 and with Cadbury as Executive VP for Human Resources in
North America from 2008 to 2010. He was also Vice President for Human Resources for
the United States and Canada from 2005 to 2008 and People Capability Director in the
UK from 2004 to 2005. Tony also served in a number of senior HR roles with Diageo plc
in the UK and North America from 1993 to 2004.
Frederic Pflanz (1968, French/German)
Chief Financial Officer (‘Group CFO’)
Diploma in European Business Administration, ESB Business School; Bachelor of
Business Administration (BBA), International Finance & European Studies, NEOMA
Business School
Frederic Pflanz joined in January 2018 having previously served as a member
of the Executive Board of Maxingvest AG from 2015 to 2017 and as a member of the
Supervisory Board of Beiersdorf AG from 2015 to 2018. In April, 2019 Frederic was
re-elected to the Supervisory Board of Beiersdorf AG. Prior to this, Frederic held a
number of roles in Remy-Cointreau Group from 2010 to 2014, including Group CFO, COO,
heading the Group’s Global Operations and Director of External Development. Between
1992 and 2010, Frederic held a number of senior positions at L’Oreal Group, the world’s
largest cosmetics company, where he worked extensively across Continental Europe and
Asia. Most recently he served as Chief Financial Officer of the Global Consumer Products
Division, the largest division in the L’Oreal Group. Frederic has been a member of the
Advisory Board (Beirat) of Stiftung Meridian since November 2017.
Gregory Sklikas (1964, Greek)
CEO Europe
MSc, Computing Science, Cardiff University; Bachelor Business Administration,
Economics, Athens School of Economics
Gregory is a seasoned international business leader, who has spent the whole of his
career in food. Prior to joining in May 2018, Gregory spent 11 years at Royal
Friesland Campina where he held a number of senior roles, including most recently, COO,
Consumer Products EMEA and serving as a member of the Executive Board. Gregory also
served as Regional Director South East Europe between 2011 and 2012 and Managing
Director Friesland Campina Hellas between 2006 and 2012. Between 1993 and 2006,
Gregory spent 14 years at Unilever where he was Managing Director Algida Ice Cream
Greece and Country Board Member based in Greece. He previously held roles in regional
marketing, trade and customer management.
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Governance
Robert O’Boyle (1975, Irish)
COO APMEA
Bachelor Degree of International Commerce (German) from University College Dublin,
Ireland. Fellow of the Institute of Chartered Accountants in Ireland
From 1999 to 2008, Robert worked in Andersen and subsequently KPMG. Since 2008,
Robert has fulfilled a number of senior management roles in ARYZTA. From 2013 to 2015
he held the role of European Trading Director, moving in 2016 to head of the Group’s
APMEA activities as regional COO.
Rhona O’Brien (1974, Irish)
General Counsel and Company Secretary
Solicitor, Law Society of Ireland; Law (LLB Hons), Trinity College Dublin;
Masters (LLM Hons) in Commercial Law from University College Dublin; Diploma in
Notarial Law & Practice (Dip. Not.) (F.N.P.I.), Faculty of Notaries Public in Ireland
Rhona has served as a senior legal and regulatory advisor with over 18 years of legal
and governance experience. Rhona joined on 11 September 2018 from DCC
Vital Ltd (part of the DCC plc business) where she held the role of Senior Counsel, Legal
& Compliance. Prior to joining DCC Vital, Rhona was Senior Director of Legal and Risk
Management at Parexel International (IRL) Limited. Rhona was General Counsel and a
member of the Executive Senior Management Team from 2013 to 2016 and Director of
Regulation, Public Policy, Compliance and Equivalence from 2014 to 2016 at eir (formerly
eircom). Rhona trained with Arthur Cox and is a qualified solicitor admitted in Ireland by
the Law Society of Ireland and in England and Wales by the Law Society of England and
Wales. Rhona is also a voluntary unpaid non-Executive Director on Dublin City Council
Culture Connects Company Ltd.
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Governance
4.2 Other activities and functions
Except for the above-mentioned assignments, members of Group Executive Management
are currently not involved in other management or supervisory bodies. They are not
active in managing or consulting functions with interest groups, nor do they hold public
or political office. No member of the Group Executive Management holds management
contracts for any company outside the Group.
4.3 Number of activities permitted outside the Group
Pursuant to Article 25 of the Articles of Association, the members of the Executive
Management, subject to the approval by the Chair of the Board, may currently hold
no more than the following number of additional mandates in the supreme executive
bodies of companies and organisations outside of the Company:
–
– one in listed companies;
–
– up to two mandates in non-listed companies;
–
– up to four mandates upon instruction of the Company in companies that are not
directly or indirectly controlled by the Company (such as in pension funds and joint-
ventures); and
–
– up to four mandates in (i) charitable organisations, (ii) associations or foundations
and (iii) other non-profit institutions.
For further details, refer to Article 25 of the Articles of Association, which is available on
the website at www.aryzta.com/about-aryzta/corporate-governance. The Board
will not be seeking any changes to the mandates of the Executive Management at the
2019 AGM.
4.4 Management contracts
There are no management contracts with third parties at Group.
5 Compensation, shareholdings and loans
Please refer to the Compensation Report on pages 54 to 68 for disclosures pertaining
to compensation, as well as the content and method of determining the compensation
and share-ownership programmes. Also, see Articles 20 and 21 of the Articles of
Association (available on the website http://www.aryzta.com/about-aryzta/
corporate-governance), which govern the responsibilities of the Remuneration Committee
and Group Remuneration principles.
Non-executive Directors’ and Executive Management’s share interests
As at 31 July 2019 and 31 July 2018, the Directors and Company Secretary had no
interests, other than those shown below, in the ordinary shares in, or loan stock of, the
Company or other Group undertakings.
Corporate Governance Report (continued)
49

Effective 1 November 2018, C. Adair retired from the Board and M. Andres, G. Flack and T. Lodge were
elected to the Board.
2	
The Beneficial holding of J. Leighton is held in the form of Restricted Stock Units.
No loans or advances were made by the Group to members of the Board or to
the Executive Management during the financial year, or were outstanding at 31 July 2019
(2018: none).
6 Shareholders’ participation
6.1 Voting rights
Each share registered as a share conferring a voting right entitles the holder
to one vote at a General Meeting. Only holders who are registered as shareholders with
voting rights are entitled to exercise voting rights or the rights associated with them. The
consent of the Company is required for registration in the share register as a shareholder
with voting rights and such consent may be declined in the circumstances specified
in Article 7 c), d) and e) of the Articles of Association (available on the website
www.aryzta.com/about-aryzta/corporate-governance) as described in more detail in
section 2.6.3 above.
Under Article 7 f) of the Articles of Association, the Company may approve exceptions
to these restrictions in exceptional cases. As indicated in section 2.6.2 above, ARYZTA
has entered into arrangements with Euroclear UK and Ireland to enable investors
Corporate Governance Report (continued)
50

Governance
whose interests in are represented by CDIs to exercise their voting rights. CDI
holders who wish to be in a position to directly enforce or exercise their rights must have
their interests entered in the share register in accordance with Article 7 of the Articles
of Association and effectively hold their shares through a member of the Swiss SIS
Settlement System.
Proxies are entitled to attend General Meetings and exercise all rights of the represented
shareholders at such meetings. Provisions regarding the appointment of proxies and the
issuing of instructions to the independent proxy are contained in Article 13 of the Articles
of Association.
6.2 Statutory quorums
Pursuant to Article 15 of the Articles of Association, resolutions at the General Meeting
calling for a quorum of at least two-thirds of the votes represented are required for:
–
– The cases listed in art. 704 para. 1 CO and in art. 18 and 64 Merger Act;
–
– The easement or abolition of the restriction of the transferability of registered shares;
–
– The conversion of bearer shares into registered shares; and
–
– Any change to the provisions of article 15 of the Articles of Association.
6.3 Convocation of General Meeting of the shareholders
General Meetings are convened by the Board and, if need be, by the Auditors. In addition,
the Board must convene a General Meeting within two months if shareholders who jointly
represent at least 10% of the share capital of the Company request in writing that a meeting
be called and give details of the items to be discussed and the motions. Notice of the General
Meeting is given by publication in the Swiss Official Gazette of Commerce and on the Group’s
homepage (www.aryzta.com) at least 20 days before the date of the meeting. The notice
must state, inter alia, the day, time and place of the Meeting and the agenda.
6.4 Agenda
The Board compiles the agenda for the Annual General Meeting. One or more registered
shareholders with voting rights who jointly represent at least 10% of the share capital
of the Company registered in the Commercial Register may request items to be included
in the agenda.
Such requests must be in writing, specifying the items and the proposals, and be
submitted to the Chair at least 45 days before the date of the General Meeting. At the
AGM on 14 November, 2019 the Board will recommend to shareholders an
amendment to the Articles of Association to reduce the level of registered
share capital of the Company required to request items for inclusion in the agenda from
10% to 3%. This will bring into line with best-practice standards and corporate
governance principles in Switzerland.
6.5 Entry in the share register
The relevant date to determine the shareholders’ right to participate in the General
Meeting, on the basis of the registrations appearing in the share register, is set by the
Board in the invitation to the General Meeting.
Corporate Governance Report (continued)
51

Governance
7 Change of control and defence measures
7.1 Obligation to make an offer
does not have a provision on opting out or opting up in its Articles of Association.
Thus, the provisions regarding the legally prescribed threshold of 33 1/3% of the voting
rights for making a public takeover offer set out in Article 135 of the FMIA are applicable.
7.2 Change of control clauses
Benefits under the LTIP vest upon a change of control unless the Board resolves
otherwise. If the time at which a change of control has occurred cannot be ascertained
precisely, the Board shall determine the time at which the change of control shall be
deemed to have occurred. Otherwise, the agreements and plans benefiting the members
of the Board or of the Executive Management team are unaffected by a change of
control. Further details regarding the benefits under the LTIP are set out in the
Compensation Report on pages 54 to 68 of this Annual Report.
8 Auditors
8.1 Duration of the mandate and term of office of the lead auditor
PricewaterhouseCoopers AG, was elected as statutory auditor and Group auditor
beginning in December 2009 and has been elected for a term of one year each year
thereafter. At the 2018 AGM, PricewaterhouseCoopers AG, was re-elected as statutory
auditor and Group auditor for the 2019 financial year. Sandra Boehm Uglow was the lead
auditor for the financial years 2019, 2018 and 2017. Patrick Balkanyi was lead auditor
from PricewaterhouseCoopers AG’s appointment in 2009 to 2016. The lead auditor
rotates every seven years in accordance with Swiss law.
In accordance with good corporate governance, conducted a formal competitive
tender process for the appointment of the external auditor for financial year 2020. This
tender process was overseen by the Audit Committee. As of 31 July 2019, the tender
process had concluded and the Board intends to recommend to the shareholders, the
appointment of Ernst & Young AG, Zurich, as new external auditor, at the AGM on 14
November 2019.
8.2 Audit fees
The total audit and audit-related fees charged by the Group auditors in financial year 2019
amounted to €3,467,000 (2018: €2,450,000).
8.3 Additional fees
The Group’s policy is to manage its relationship with the external auditor to ensure their
independence is maintained. In order to achieve this, the Board has determined limits on
the type and scale of non-audit work that can be provided by the external auditor.
Contracts with the external auditor for other non-audit work are deemed to be pre-
approved by the Audit Committee, up to an aggregate limit of 75% of the audit fee on
average over a three year period. This is subject to the requirement that all contracts
for specific pieces of non-audit work with fees exceeding €250,000 be awarded on the
basis of competitive tendering. Where the awarding of a contract for non-audit work to
the external auditor is to be made that is likely to increase total fees for non-audit work
above this aggregate limit, the Group CFO consults the Chair of the Audit Committee in
Corporate Governance Report (continued)
52

Governance
advance of such a contract being awarded. Fees for additional services rendered by the
external auditors to the Group in financial year 2019 totalled 8.4 Information pertaining to the external audit
PricewaterhouseCoopers AG has presented to the Audit Committee a detailed report
on the results of the 2019 Group consolidated and Company financial statement audits,
the findings on significant financial accounting and reporting issues, as well as the
findings on the Group’s internal control system (‘ICS’). In the financial year 2019, both
PricewaterhouseCoopers AG and the Group Head of Internal Audit participated in all
regularly scheduled Audit Committee meetings. The Group CFO attended and participated
in all Audit Committee meetings during their respective appointments. Other members of
the Group Executive Management attended the meetings as invited. During the year the
Audit Committee and the Chair of the Audit Committee met with PricewaterhouseCoopers
AG without management present and vice versa. On an annual basis, the Board reviews
the selection of the external auditors, in order to propose their appointment to the Annual
General Meeting of ARYZTA. The Audit Committee assesses the effectiveness of the
work of the auditors in accordance with Swiss law. The lead auditor rotates every seven
years in accordance with Swiss law. During meetings of the Audit Committee, audit and
non-audit-related fees to be charged by PricewaterhouseCoopers AG during the year, are
reviewed to mitigate the risk of any potential impairment to PricewaterhouseCoopers AG’
independence. PricewaterhouseCoopers AG monitors its independence throughout the
year and confirms its independence to the Audit Committee annually.
As of 31 July 2019, the tender process had concluded for the appointment of the external
auditor for financial year 2020 and the Board intends to recommend the appointment of
Ernst & Young AG, Zurich, as the new statutory auditor, to the shareholders at the AGM on
14 November 2019.
Corporate Governance Report (continued)
53

Governance
9 Investor Communications Policy
Guiding principles
is committed to pursuing an open and consistent communication policy with
shareholders, potential investors and other interested parties. gives equal treatment
to all its shareholders. Any price-sensitive information is published in a timely fashion and the
information is provided in a format that is as complete, simple, transparent and consistent as
possible.
All announcements, reports and webcasts are available on the website:
www.aryzta.com. An automatic alerting service is also provided through the website.
 Investor Relations programme for institutional investors is carried out in line with
the quarterly announcement cycle. These investor communications focus either on recently
announced financial results, recent corporate activity or the longer-term strategy of the
Group. They do not serve the purpose of disclosing new information that might encourage
an investment decision. During open periods, holds ad hoc dialogue with individual
shareholders and the Chair meets with major investors as requested.
Investor relations contact details
Gerard Van Buttingha Wichers
Head of Investor Relations
Annual Report and Accounts 2019
Compensation Report
54

Governance
Letter from the Chairman of the Remuneration Committee
Dear Shareholders,
On behalf of the Board of Directors (‘Board’) and the Remuneration Committee (‘RemCo’),
I am pleased to introduce AG’s (‘ARYZTA’) Compensation Report for the financial
year ended 31 July 2019 (‘FY19’).
Throughout 2019, the RemCo continued to assess and review the overall compensation
framework with the main objective to support the company’s business strategy, while
aligning compensation with overall expectations of our shareholders. aims
to continue to be an attractive employer offering transparent and performance-based
compensation that anchors the strategic cornerstones of the company while promoting an
inclusive, equitable, meritocratic culture. In this context and in line to the announcement
at our 2018 Annual General Meeting (‘AGM’), awarded two Long Term Incentive
Plan ('LTIP') grants during FY19 which are both subject to performance conditions to
clearly focus on the delivery of our multi-year turnaround and to further advance to
acceptable levels of performance.
During FY19, the Board also decided to further promote the long-term performance by
introducing shareholding ownership guidelines for the Executive Management, effective
from FY20. Additionally, the Board has adjusted its own fee structure by introducing an
equity element in the form of blocked shares over a three-year period. Further details of
the changes as well as information on the activities of the RemCo can be found in this
Compensation Report.
At the upcoming AGM, we will ask you to approve, as last year, prospectively in a binding
vote the maximum compensation of the Board for the period ending at our 2020 AGM,
and the maximum aggregate compensation for the Executive Management for FY21.
Furthermore, you will have the opportunity to register your opinion on this Compensation
Report in a consultative vote.
Looking ahead, we will continue refining our compensation strategy in order to ensure that
 compensation framework continues to fulfil its purpose in the evolving context
in which the company operates; for instance, we have already decided to add to the LTIP
FY20 a relative total shareholder return measure.
On behalf of and the RemCo, I would like to thank you for your support and
valuable feedback.
Chairman of the Remuneration Committee
Rolf Watter, 8 October 2019
Compensation Report (continued)
55

Governance
Introduction to Compensation in 2019
 Compensation Report for FY19 has been prepared in accordance with Swiss
laws and regulations, including the Ordinance against Excessive Compensation at Listed
Stock Companies and the Directive on Information relating to Corporate Governance,
issued by SIX Swiss Exchange. The report also takes into account the recommendations
set out in the Swiss Code of Best Practice for Corporate Governance of economiesuisse.
The Compensation Report contains the following information:
–
– Overview of the current compensation framework for the Board and the Executive
Management including their various elements, and an explanation of specific changes
implemented during FY19.
–
– Compensation of the members of the Board from the 2018 AGM until the 2019 AGM.
–
– Compensation of the Executive Management paid and/or granted during FY19.
–
– A brief overview on the future structure and design of  compensation
approach.
Compensation Governance
The compensation system at is mainly determined by two key bodies: The
RemCo which advises the Board and the shareholders of at the AGM. The
Organizational Regulations, the Terms of Reference of the RemCo and the Articles
of Association describe and define the roles and responsibilities of these two bodies.
These documents contain the principles for the compensation of the members of the
Board and the Executive Management. In addition, the Articles of Association provide
for a supplementary amount available for employees joining the Executive Management
or being promoted within the Executive Management after the AGM approval of the
maximum aggregate amount of compensation available for the Executive Management.
The Articles of Association can be found on our homepage: www.aryzta.com/
about-aryzta/corporate-governance.
Compensation Report (continued)
56

Governance
The general division of duties, responsibilities and powers between the Board, the RemCo
and the AGM is shown in the table below.
CEO Committee Board AGM
Compensation strategy and guidelines
Review and
proposal Approval
Compensation principles
Review and
proposal Approval
Key terms of compensation plans for the
Board and the Executive Management
Review and
proposal Approval
Total compensation for the Board
Review and
proposal Proposal Voting
Total compensation for the Executive
Management
Review and
proposal Proposal Voting
Individual total compensation of the CEO
Review and
proposal Approval
Individual total compensation for other
members of the Executive Management Proposal Review Approval
Employment and termination agreements
for the CEO
Review and
proposal Approval
Employment and termination agreements
for members of the Executive Management Proposal Review Approval
Compensation Report Proposal Approval Voting
Role of the Shareholders regarding the AGM – Shareholder Engagement
In compliance with  Articles of Association, shareholders will be asked at the
2019 AGM, to be held on 14 November 2019, to approve the maximum aggregate amount
of compensation of:
–
– the Board for the period until the next AGM (i.e. the period until the 2020 AGM);
and
–
– the Executive Management for the following financial year (i.e. the FY ending
31 July 2021).
In addition, as in prior years, the Board will submit this Compensation Report to a
separate advisory vote for the shareholders at the 2019 AGM in line with the Swiss Code
of Best Practice for Corporate Governance.
At the 2018 AGM, the Board submitted three separate compensation-related resolutions,
which were all approved by the shareholders:
–
– The maximum aggregate amount of compensation for the members of the Board for
the period from the 2018 AGM until the 2019 AGM (binding vote): CHF 1,500,000.
–
– The maximum aggregate amount of compensation for the Executive Management for
the FY20 (binding vote): CHF 18,000,000.
–
– The compensation report for FY18.
57

Governance
Compensation Report (continued)
Remuneration Committee Activities during 2019
The RemCo is comprised of a minimum of three and a maximum of four independent
non-executive Board members who are elected annually and individually by the AGM
for a one-year period until the next AGM. The RemCo chairperson is appointed by the
Board. At the 2018 AGM, Rolf Watter, Mike Andres, Dan Flinter, and Gary McGann were
confirmed as members of the RemCo, and Rolf Watter was subsequently approved by the
Board as Chair of RemCo. The purpose of the RemCo is to assist the Board in fulfilling
its responsibilities regarding the compensation of the members of the Board and the
Executive Management of ARYZTA. As in prior years, in FY19 the RemCo acted within the
limits of the relevant shareholder approvals, being responsible for:
–
– assessing the overall compensation principles and compensation strategy of ARYZTA;
–
– determining all elements of the compensation of the members of the Board and the
Executive Management;
–
– approving the compensation of other members of the Executive Management, upon
the recommendation of the CEO;
–
– reviewing and recommending to the Board on an annual basis a proposal regarding
the total compensation amount of the Board and the Executive Management for the
following year;
–
– preparing and recommending to the Board the Compensation Report for approval.
The RemCo reviews the level and structure of compensation on an annual basis to ensure
that executives are remunerated in line with the level of their authority and responsibility
within the Group and so as to ensure the Company’s capacity to recruit and retain a
high calibre of professional managers. The RemCo reports to the Board at the Board
meeting following each meeting of the RemCo, ensuring that the Board members are kept
informed in a timely and appropriate manner of all material matters within the RemCo’s
area of responsibility. In addition, all RemCo papers (e.g. agenda, minutes, presentations,
etc.) are available to all members of the Board. When the RemCo considers it appropriate
to do so, it may directly ask members of the Executive Management or members of
the HR department to attend meetings. The RemCo is authorised to obtain appropriate
external advice and to invite those persons to attend the meetings of the RemCo. The
RemCo regularly holds private sessions (i.e. without the presence of members of the
Executive Management, members of the HR department or third parties). During FY19,
the RemCo appointed HCM International Ltd. (HCM) as an external independent advisor
on all compensation matters.
The RemCo chairman convenes meetings of the RemCo as often as the business affairs
of require. During FY19, the RemCo held six meetings with an average duration
of two hours each.
Compensation Report (continued)
58

Governance
The topics covered by the RemCo during the six meetings of FY19 are described in the
table below.
Board compensation Share Proposal • •
General framework Shareholding Requirements • • •
Communication Compensation Report • • •
RemCo Terms of Reference •
RemCo Charter review •
Compensation Principles
 compensation framework and principles are designed to attract and retain top
talent, to underpin the implementation and support the company’s strategic plans and
to provide a balance between motivating and challenging the members of the Executive
Management to deliver  near-term business priorities together with achieving
sustainable, long-term success. Furthermore, the company’s compensation framework
aims to be aligned with shareholders’ interest, driving the creation of shareholder value,
as well as fostering entrepreneurial thinking.
The RemCo gives careful and detailed consideration to the Board and Executive
Management compensation. As one reference point, the RemCo regards market data on
compensation to assess its competitiveness in the market environment. The aim of the
RemCo in designing compensation arrangements is to be oriented towards best practice,
have clear alignment with shareholders, incorporate an emphasis on performance, and
promote the long-term success of the company.
While  primary listing is in Switzerland, given the global scale of our business,
the RemCo keeps apprised of key developments regarding corporate governance and
compensation across the globe.
Compensation objectives and principles
– 
Retain and incentivise top talent to support delivery of the strategic plan (multi-year
turnaround)
– 
Provide balance between motivating and challenging employees to deliver on near-term
business priorities together with driving sustainable, long-term success
– 
Align with shareholder interests in the context of rewarding management for creating
shareholder value
– 
Support short- and long-term alignment with market practices while maintaining shareholder
support
Compensation Report (continued)
59

Governance
Compensation Framework for the Board of Directors
Compensation Approach for the Board of Directors
In order to assure the independence of the members of the Board in executing their
supervisory duties of the company, the total compensation of the Board is fixed and does
not include any performance-related, variable compensation component.
For FY19, consistent with the shareholder approval, non-executive Board members
were paid a fixed annual base fee of CHF 88,000, reflecting the time commitment and
responsibilities of the role. Additional compensation for non-executive directors for
service on a Board Committee was CHF 8,000, CHF 25,000 for the Chair of the Audit
Committee and CHF 16,000 for the Chairs of the other Committees. In addition, in
recognition of the extra burden and time commitment associated with transatlantic travel,
an additional allowance of CHF 15,000 per annum was given to Board members based
in North America. The Chair of the Board’s fee amounts to CHF 323,000 reflecting the
requirements of the role. Non-executive Board members are not eligible for performance-
related payments and therefore did not participate in the LTIP. The CEO received no
additional compensation for his role as a Board member.
The following table provides an overview of membership in Board Committees for the
members of the Board as of the end of FY19.
Board of Directors Audit Committee
Governance and
Nomination
Committee
Remuneration
Committee
Gary McGann Chair • •
Chuck Adair1
Mike Andres1
• •
Greg Flack1
• •
Dan Flinter • Chair •
Annette Flynn • Chair
Jim Leighton • •
Tim Lodge1
• •
Andrew Morgan • •
Kevin Toland •
Rolf Watter • • Chair
1 Effective 1 November 2018, C. Adair retired from the Board and M. Andres, G. Flack and T. Lodge were elected to the Board.
Since the 2018 AGM, the individual sum of the fixed annual base fee and, where
applicable, the fixed annual committee fee per member are compensated 60% in cash
and 40% in the form of Restricted Shares or Restricted Share Units (‘RSUs’), entitling
the recipient to receive shares upon expiration of the holding period for the
Restricted Shares, or vesting of the RSUs. Non-executive Board members must elect to
receive either Restricted Shares or RSUs, which are subject to either a three-year holding
or vesting period respectively, ending on the third anniversary of each grant. This equity
component further strengthens the long-term focus of the Board in performing its duties
as well as the alignment of the Board’s interests with those of  shareholders.
Compensation Report (continued)
60

Governance
In June 2018, the Group entered into a six-month consultancy arrangement with Jim
Leighton pursuant to which Mr. Leighton provided advice in relation to the implementation
of  three-year €200m cost reduction, Project Renew. The compensation
payable to Mr. Leighton under the arrangement only includes a cash element and
amounts to $150,000 over the course of the consultancy and was fully paid out during
FY19. The consultancy arrangement with Mr. Leighton ended on 30 November 2018.
Compensation Awarded to the Board of Directors (audited)
The following table reflects the payments received by Board members during FY18 and
FY19. The total compensation for FY19 for the Board amounted to CHF 1,290,000 which
is within the maximum amount approved at the AGM 2018 of CHF 1,500,000.
in Total 788 469 1,257 990
Social security payments 33 20
Total payments including
social security 1,290 1,010
1 Equity is awarded once a year at 40% of the total annual compensation. The balance of the compensation
for the financial year is settled in cash.
2 Effective 1 November 2018, C. Adair retired from the Board and M. Andres, G. Flack and T. Lodge were
elected to the Board.
3 The fee for J. Leighton includes a consultancy payment of CHF 116,000 for advice in relation to the
implementation of ARYZTA's three-year €200m cost reduction, Project Renew.
4 The terms of office as Member of the Board of Directors of W. Werlé expired on 7 December 2017 and on
that date J. Leighton was elected to the Board.
The compensation of the Board is subject to regular social security contributions and
is not pensionable. On the cash component, pays the employer contribution
of social security, and on the share component, pays both contributions. No
additional compensation components such as pension entitlements, lump-sum expenses
or attendance fees are awarded to the members of the Board.
Compensation Report (continued)
61

Governance
Non-executive Directors’ share interests
As at 31 July 2019 and 31 July 2018, the Directors and Company Secretary had no
interests, other than those shown below, in the ordinary shares in, or loan stock of, the
Company or other Group undertakings.
1	
Effective 1 November 2018, C. Adair retired from the Board and M. Andres, G. Flack and T. Lodge were
elected to the Board.
2	
The Beneficial holding of J. Leighton is held in the form of Restricted Stock Units.
Compensation Framework for the Executive Management
Compensation Approach for the Executive Management
The compensation package for the Executive Management is comprised of three different
elements:
–
– Fixed compensation in the form of an annual base salary and additional benefits
(including benefits-in-kind and pension contributions);
–
– Variable short-term incentive plan (‘STIP’);
–
– Variable long-term incentive plan ('LTIP').
Fixed Compensation
Annual base salary
The annual base salary is the main fixed compensation component paid to Executive
Management members. Typically, it is paid in cash in twelve equal monthly instalments.
The level of base salary is determined considering the scope and complexity of the function,
level of responsibility, and other factors deemed appropriate. In addition, the compensation
for the role in the location where the company competes for talent is considered. Fixed
base salaries of the Executive Management members are reviewed every year based on the
abovementioned factors and adjustments are made according to market developments.
Compensation Report (continued)
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Governance
Pension and benefits
Members of the Executive Management participate in the company's pension plans,
which consist primarily of retirement, insurance and health care plans designed to
provide an adequate level of protection for employees and their dependents in the event
of retirement, sickness, disability or death. The plans vary according to legal conditions,
but at least meet the legal requirements of the countries concerned. The members of
the Executive Management are also granted certain benefits and benefits in kind in
accordance with competitive market practice (e.g. a car allowance).
Short-term incentive plan ('STIP')
The short-term incentive plan ('STIP') is a variable incentive designed to reward eligible
participants for delivering strong short-term performance and contribution to 
annual business objectives, whilst limiting the company’s exposure to downside risk
in the case of financial underperformance, over a time horizon of one year. In order to
drive alignment across the Group, the STIP design consists of group-focused (financial)
measures to drive global thinking amongst key executives and regional performance
measures to account for regional responsibilities.
STIP targets are based on a mix of targets set at a Group level as well as on a regional level,
taking into consideration the scope of influence of each role (e.g. global, regional, business
unit). Regional targets are assigned to members with regional responsibilities, while other
members’ performance, including the performance of the CEO and CFO, is assessed at
Group level only. The STIP FY19 is based on the following primary financial measures:
–
– Underlying EBITDA
–
– Net Debt:EBITDA ratio
–
– Operating Free Cash Generation
The individual STIP target amounts to 100% of the base salary for all members of the
Executive Management. Depending on achieved performance, the STIP target value may
amount up to a pre-determined multiplier of the target value, but never exceeds 150% of
base salary in the case of outperforming targets.
The STIP targets for the Executive Management are set by the Board in accordance with
the overall business plan. To calibrate the target achievement curve for the following year,
a target achievement level is identified based on a robust budget for the respective year.
Minimum and maximum performance achievement levels are defined considering, amongst
other metrics, the previous year’s performance level. For both primary financial performance
measures, the Board sets a minimum threshold level under which there is no payout.
The maximum payout is capped at 150% of the target amount. Various country-specific
forfeiture rules apply in case of termination of employment during the performance year.
Compensation Report (continued)
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Governance
During FY19, STIP was paid to the members of Executive Management where the approved
performance thresholds were exceeded according to the level of achievement of the defined
short-term targets (Underlying EBITDA, Net Debt:EBITDA ratio, and Operating Free Cash
Flow). For the assessment of the Net Debt:EBITDA ratio, the target was recalibrated in order to
mitigate the effect of the capital raise, and the exceptional efforts to deliver the recapitalization
of the company were considered. Performance targets were achieved at different levels and
resulted in an overall payout range of 35% and 131% for the Executive Committee; for the
CEO the overall achievement was 98%.
Renew Special Bonus Plan ('RSBP')
The Renew Special Bonus Plan ('RSBP') is an exceptional element of the compensation
package of members of the Executive Management in the regions which are affected by
the cumulative three-year €200 million cost reduction and efficiency plan, Project Renew.
The purpose of the plan is to reward eligible participants for delivering on this plan. The
RSBP was launched for FY19 and FY20 and aims to incentivize the implementation of
Project Renew in the different regions.
This is a two-year bonus plan with two separate one-year performance targets per region.
For the regional members of the Executive Management eligible under this plan, the target
of the individual Renew Special Bonus amounts up to 35% of the base salary. It can
range up to 45% of the base salary, depending on the level of over achievement of the
performance targets. Payout in cash is accrued, based on the regional delivery per year,
and deferred to the end of FY20. In addition, country-specific forfeiture rules apply in case
of termination of employment during the two-year period.
Long-term incentive plan ('LTIP')
 long-term incentive plan ('LTIP') rewards eligible participants for delivering
significant long-term performance. The purpose of the LTIP is to provide performance-
driven equity-based future rewards to the participants for the accomplishment of the
Group's long-term financial and strategic goals. The LTIP is intended to retain and motivate
highly talented eligible participants and to promote behaviour towards enhancing the value
of the company for the benefit of its shareholders. The structure of this incentive framework
plays a central role in incentivising the delivery of  turnaround plan and the return
of the company to acceptable levels of performance starting from a very difficult position.
In principle, for each financial year, an LTIP is granted for eligible participants which will be
in the form of a certain number of options and Performance Share Units (‘PSUs’). The option
offers the LTIP participant the right to purchase a certain amount of shares subject
to the achievement of certain performance targets at the end of the 3-year performance
period. Options have a strike price equivalent to the market price of shares at the
grant date and can be exercised no earlier than three years after the vesting date and no later
than the ten-year expiration period. PSUs represent an unsecured contingent right to receive
shares subject to the achievement of certain performance targets at the end of the
performance period.
In light of the initial progress in stabilising the business, last year the RemCo granted two LTIP
awards during FY19:
–
– FY18 Award – 2-year performance period (i.e. FY19 and FY20)
–
– FY19 Award – 3-year performance period (i.e. FY19, FY20 and FY21)
Compensation Report (continued)
64

Governance
When deciding on the FY18 award, the RemCo was aware of the norm that LTIP awards are
generally subject to a three-year performance period. However, in light of the exceptional
circumstances that the business faced during FY18 with going through a period of
stabilization and change with the successful capital increase giving the go-ahead for Project
Renew, the RemCo delayed the grant of the FY18 award to FY19, with a shortened two-year
performance period and based on FY19 and FY20 performance. The RemCo believes that
the shift of the FY18 award to a grant date in FY19 ensures that there is alignment of the
LTIP with shareholder expectations of the future financial performance of the Group and
supports the business by incentivizing the Executive Management to deliver our strategic
goals, while also fulfilling the company’s previous contractual commitments to members
of the Executive Management. When taking its decision, the RemCo also considered the
retention element that is built into the LTIP. The two awards granted in FY19, together with
all other management compensation do not exceed the approved maximum amount of
compensation for the Executive Management of CHF 21,000,000.
The payout under the LTIP is based on the achievement of pre-defined operating
performance measures. Both LTIP awards, FY18 and FY19, vest subject to the achievement
of the following conditions and subject to continuing service:
–
– Operating Free Cash Generation (50%)
–
– Return on Invested Capital (50%)
–
– Requirement to remain in service throughout the performance period
Both operating key performance measures have an overall vesting range of 0% to 200% of
base salary for the CEO and 0% to 175% of base salary for other members of the Executive
Management. Below threshold, the vesting multiple is 0%. At threshold, the vesting multiple
is 50% base salary for the CEO and 43.75% base salary for other members of the Executive
Management. The respective vesting multiple runs linear to the respective target vesting
multiple of 125% of base salary for the CEO and 109% of base salary for other members
of the Executive Management, up to a maximum vesting multiple of 200% and 175%
respectively depending on the level of achievement of the operating performance measures.
After the three-year performance period, PSUs will be settled in shares and options and
can be exercised until the end of the exercise period, subject to forfeiture rules in the case
of termination of employment before the end of the plan cycle. The FY18 LTIP vests 50%
in shares and 50% in options, the FY19 vests in 75% in shares and 25% in options. It is
intended that by FY20 LTIP will only comprise of shares (PSUs). The vested options can be
exercised no later than ten years after the grant date and the exercise price is defined as the
share price at grant date.
The number of granted options and PSUs depends on the individual LTIP grant, which is
determined by the Board each year and whose value is expressed as a percentage of the
annual base salary and the fair value of shares at grant. Depending on the achieved
performance, the LTIP target value may amount to a pre-determined multiplier of the
target value but can never exceed 160% of granted PSU for any member of the Executive
Management, including the CEO.
Compensation Report (continued)
65

Governance
Compensation awarded to the Executive Management (audited)
The following table summarises the total compensation for the current and former
members of the Executive Management during FY18 and FY19. The total compensation
for the Executive Management amounted to CHF 19,113,000 which is within the
maximum amount approved at the AGM 2017 of CHF 21,000,000.
1 Executive Management compensation in FY19 includes remuneration for former Executive Management
members Pat Morrissey and Dermot Murphy who resigned in FY18.
2	
Executive Management compensation in FY18 includes remuneration for former Executive Management
members.
3	
The highest total compensation in FY18 was earned by Owen Killian who resigned from the Executive
Management on 31 March 2017.
4	
Represents the target value of the FY18 and FY19 LTIP awarded. The value may change depending on the
achievement of operating performance measures at vesting. All awards are unvested as at 31 July 2019.
Compensation Report (continued)
66

Governance
Executive Management’s interests in equity under the FY18 and FY19 LTIP awards
The following table shows the Executive Management’s interests in equity instruments
under the LTIP awards granted during FY19.	
PSUs and options are presented at target award. The number of PSUs and options vested may change
depending on the achievement of operating performance measures at vesting.
2 All awards are unvested as at 31 July 2019.
3 By REMCO decision on 25 September 2019, G Sklikas will be granted an LTIP award equivalent to the value
of two thirds of the FY18 LTIP. This will be granted at the next open period.
Employment conditions for the Executive Management
The employment contracts of the CEO and the other members of the Executive
Management provide for notice periods of a maximum of 12 months and non-compete
clauses of up to a further 12 months thereafter, in compliance with the Swiss Ordinance
Against Excessive Compensation in Listed Stock Companies and other applicable laws
and regulations. None of these contracts foresee severance or termination payments.
Previous and Discontinued Compensation Plans
Option equivalent plan
Vesting of the awards under the Option Equivalent Plan issued during FY16 was
conditional on compound annual growth in underlying diluted EPS (including the
associated cost of any awards expected to vest) in three consecutive accounting periods
exceeding the compound growth in the Euro-zone Core Consumer Price Index, plus 5%,
on an annualised basis. The awards were also subject to additional conditions, including:
(a) the requirement to remain in service throughout the performance period;
(b)	
the requirement that  reported ROIC over the expected performance period
is not less than 120% of its weighted average cost of capital; and
(c)	
the requirement that annual dividends to shareholders are at least 15% of underlying
EPS during the performance period.
Compensation Report (continued)
67

Governance
As the above performance conditions were not met during FY19, the Option Equivalent
Plan awards granted during FY16, for which no expense had been recognised, were
forfeited during the current year. The vested Option Equivalent Plan awards still
outstanding as of 31 July 2019 can be exercised no longer than ten years after grant date.
No Option Equivalent Awards under the Option Equivalent Plan were granted to the
Executive Management during FY19.
The following table details awards outstanding under the Option Equivalent Plan in favour
of Executive Management:
Options
carried forward
1	
During the financial year ended 31 July 2019, in order to maintain the dilutive impact of the November
2018 capital increase at a consistent level for outstanding LTIP awards with the dilution experienced by
shareholders who did not participate in the rights issue and instead sold their rights received, the Group
adjusted all outstanding LTIP awards by dividing the previous exercise price of each outstanding LTIP
award by the 4.64x Theoretical Ex-Rights Price (‘TERP’) and likewise by multiplying the previous number
of outstanding LTIP awards by TERP. Additionally, in order to eliminate the impact of the Scrip Dividend
issued in January 2018, the Group also adjusted all outstanding LTIP awards by dividing the exercise price
by 81 and multiplying by 80 and likewise multiplying the number of LTIP awards outstanding by 81 and
dividing by 80.
2	
The weighted average exercise price of all Option Equivalent Plan awards that remain outstanding and for
which the vesting conditions have been met is CHF 8.31.
Loans Granted to the Board of Directors or the Executive Management
No loans or advances were made by the Group to members of the Board of
Directors or to the Executive Management during FY19 or were outstanding at 31 July
2019 (2018: none).
Compensation Report (continued)
68

Governance
Future Considerations
As of FY20, Shareholding Guidelines for members of the Executive Management will
be introduced to further strengthen the long-term focus and to additionally increase the
alignment of the Executive Management’s interests with those of  shareholders.
The Shareholding Guidelines will apply to the Executive Management starting from FY20.
Each member of Executive Management is expected to build up an ownership of shares
of worth the equivalent of 150% of their annual base salary or 300% in the case
of the CEO.
Furthermore, another grant of the LTIP is planned after the approval of the aggregate
amount of compensation for the Executive Management at the AGM in November 2019.
In line with the long-term focus, an unchanged three-year performance period is foreseen.
For the upcoming LTIP FY20 grant, we will include a market-related performance measure
expressed as relative Total Shareholder Return. We will keep a strong focus on operating
measures that capture both profitability and capital efficiency. Furthermore, the new plan
will only involve PSUs which will convert into shares; options will be abolished. In addition,
will take an appropriate approach to target setting. Targets for the LTIP will be set
by the Board following a thorough outside-in approach conducted by  external
independent advisor on compensation matters, HCM.
Report of the statutory auditor
to the General Meeting of AG
on the compensation report 2019
69

Governance
We have audited the remuneration report of AG for the year ended 31 July 2019.
The audit was limited to the information according to articles 14–16 of the Ordinance
against Excessive Compensation in Stock Exchange Listed Companies (Ordinance)
contained in the tables labeled 'audited' on pages 60 and 65 of the remuneration report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the
remuneration report in accordance with Swiss law and the Ordinance against Excessive
Compensation in Stock Exchange Listed Companies (Ordinance). The Board of Directors is
also responsible for designing the remuneration system and defining individual
remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report.
We conducted our audit in accordance with Swiss Auditing Standards. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the remuneration report complies with Swiss law and
articles 14–16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made
in the remuneration report with regard to compensation, loans and credits in accordance
with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatements in the
remuneration report, whether due to fraud or error. This audit also includes evaluating the
reasonableness of the methods applied to value components of remuneration, as well as
assessing the overall presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Opinion
In our opinion, the remuneration report of AG for the year ended 31 July 2019
complies with Swiss law and articles 14–16 of the Ordinance.
PricewaterhouseCoopers AG
Sandra Böhm Uglow Carrie Rohner
Audit expert
71

Governance
Group Risk Statement
Principal Risks and Uncertainties
The Board and senior management continue to invest significant time and resources in
identifying specific risks across the Group, and in developing a culture of balanced risk
minimisation. The Group has formal risk assessment processes in place through which
risks are identified and associated mitigating controls are evaluated. These processes
are driven by local management, who are best placed to identify the significant ongoing
and emerging risks facing the business. The outputs of these risk assessment processes
are subject to various levels of review by Group management and Internal Audit, and a
consolidated Risk Map denoting the potential frequency and severity of identified risks
is reviewed and challenged by the Board of Directors on at least an annual basis. Risks
identified, and associated mitigating controls, are also subject to audit as part of various
operational, financial, health and safety audit programmes.
The key risks facing the Group include the following:1
–
– Risk of adverse movements in foreign currency exchange rates.
–
– Business risks associated with cash, receivables and other financial instruments.
–
– Operational risks facing the Group include product contamination and general
food scares, which could impact relevant products or production and distribution
processes.
–
– Changing dietary trends and the increased emphasis on health and wellness among
consumers present both opportunities and risks for the Group.
–
– Increasing regulation and compliance requirements including in areas such
as employment, health and safety, emissions and effluent control.
–
– The loss of a significant manufacturing / operational site through natural catastrophe
or act of vandalism could have a material impact on the Group.
–
– A significant failure in the accounting, planning or internal financial controls
and related systems could result in a material error or fraud.
–
– Risks to ongoing operations arising from a significant IT or security system failure,
including a cyber-attack.
–
– Risks to profitability arising from fluctuations in the availability, supply or price
of energy, commodities, labour and other production inputs.
–
– Risk of a decrease in consumer spending.
–
– Risk of impairment of its goodwill, brands and intangibles.
–
– Risks and challenges associated with change management, reorganisation and
business risks associated with the operation and execution of the Group’s three
year cost reduction plan and risks and challenges in implementing Project Renew
in full or on time.
–
– Risks in failing to develop successful and innovative products or in keeping up with
consumer preferences.
–
– Risks in protecting the Group’s brands and reputation.
–
– Risks associated with the potential loss of key management personnel.
–
– Were the Group to breach a financing covenant, it may be required to renegotiate
its financing facilities at less favourable terms resulting in higher financing costs,
and/or be unable to finance operations.
–
– Risks arising from the loss of a significant supplier or material disruption to the Group’s
supply chain.
–
– Risks to the profitability and revenue arising from the loss of a major customer
or contract.
–
– General economic risk such as a fall in economic growth rates, reduced demand,
effects of climate change on commodity prices, increased tariffs between countries
and uncertainty caused by the proposed departure of the United Kingdom from the
European Union.
1 These risks are not listed in order of importance.
73

Governance
Annual Report and Accounts 2019
Our Responsibility
Our Commitment
is committed to operating as a financially successful and socially responsible
business for the long-term. Our strategies are developed with careful attention of
Environmental, Social and Governance (ESG) considerations. The Group has established
the Cares initiative, aimed at promoting active employee, customer and supplier
engagement in pursuit of our corporate responsibility goals. Our approach is based on our
Corporate Values of Integrity, Ownership, Customer Focus, Creativity, and Care.
The key elements of this programme, as summarised below, include:
– People and Workplace
– Food and Marketplace
– Sustainable Sourcing
– Environmental Practices
– Community Engagement
Additional information on each of these areas is also available on our website at:
http://www.aryzta.com/our-responsibilities
People and Workplace
We believe that each employee contributes directly to our growth and success. We are
committed to creating a workplace and a value structure to attract and to retain a talented
diverse workforce to support not only our business success, but also the health and well-
being of our employees and their families.
We recognise that our continued success is dependent on the quality, commitment and
responsible behaviour of our people. values diversity and treats all individuals
with respect without regard to race, colour, gender, religion, age, natural origin, family
status, military veteran status, sexual orientation, disability, or any other criterion
prohibited by applicable federal, state, local, or international laws.
The health and safety of our people is of paramount importance to ARYZTA. We pursue
comprehensive safety management procedures, including policy manuals, verification
of regulatory compliance, risk assessments, individual site action plans, safety audits,
training programmes, formal accident investigations and the provision of occupational
health services.
In order to attract and retain the most talented workforce possible, provides
equal opportunities in recruitment, selection, promotion, employee development,
succession planning, training and compensation, solely on the basis of merit and business
needs and does not discriminate on any grounds.
has implemented a Global Employee Code of Conduct, which establishes policies
and expectations regarding employee behaviour, ethics, anti-bribery and corruption,
political involvement and freedom of association. fully complies with applicable
national and local laws and industry standards on working hours and the workplace
environment.
Our Responsibility (continued)
74

Governance
In relation to matters of concern, we have established a 24 / 7 hotline with Expo-
link (0800 563823) where employees, customers and suppliers can confidentially
communicate any concerns through an independent service.
Additionally, we have implemented ‘My Connection’, a human resources
information system used for confidentially retaining and updating employee information,
in order to streamline administration and enhance utilisation of employee data on a secure
and confidential basis.
Our objective is to operate to best practice standards in terms of confidentiality of
information (for example GDPR compliance or cyber security considerations).
Food and Marketplace
Today’s consumers are increasingly focused on the ingredients and sourcing of the food
they eat. At ARYZTA, our commitment is to provide choices to our customers, based
on expanding our food platforms to meet current and emerging trends. Our approach to
supply chain excellence includes strict vendor standards, comprehensive facility
expectations and detailed adherence to customer specifications. Customer requirements
are a central component of all of our baking operations. Each customer’s specifications,
expectations and requirements are documented to ensure compliance.
All of our bakeries will be Global Food Safety Initiative (GSFI) certified by the end of
calendar year 2019.  internal policies require compliance with all food safety
laws and regulations, including clean labelling requirements.
 food processing facilities operate under comprehensive Hazard Analysis
and Critical Control Point (HACCP) systems based on Codex Alimentarius Principles,
Good Manufacturing Practice (GMP) and in compliance with applicable food laws and
regulations. All relevant internal food safety and quality systems are also certified by
independent third-parties.
is committed to our Food Safety, Quality Assurance and Responsible Marketing
programmes and has partnered with iCiX to establish effective and efficient ways to
manage these programmes. contributes to various voluntary initiatives on food
and product safety by actively engaging with industry associations including the British
Retail Consortium, International Featured Standards (IFS-Food and IFS-Logistics),
American Institute of Baking (AIB) and the US Food and Drug Administration.
Our products are produced to the exacting specifications of our major international food
customers, as well as for the unique expectations of our independent local customers.
Excellence within this wide array of supply chain expectations is achieved through
partnering with our customers, suppliers and partners and through detailed internal
training programmes, to ensure quality control standards are adhered to throughout the
entire supply chain process.
To ensure our food is produced with the highest level of food safety,  raw
material vendors generally must:
– have a recognised GFSI accreditation;
– ensure raw materials are fully traceable back to suppliers;
Our Responsibility (continued)
75

Governance
– subject their operations to a risk assessment process in accordance with the ARYZTA
Vendor Code of Conduct and Manufacturing Code of Practice; and
– submit their operations to annual ethical data exchange audits
Sustainable Sourcing
Our procurement teams partner with our key vendors to establish long-term goals for
sustainable sources of raw materials that address the social, ethical, economic, safety,
quality, and environmental aspects of product sourcing.
As a key target area of our global strategy, is also addressing important human
rights issues with our vendors around the world. Our recently updated Global Vendor
Code of Conduct will be signed by our major suppliers as well as on-site staffing agencies
or other service providers. Our goal is to have all vendors sign the Code of Conduct by
the end of FY20. will then begin a process of third-party auditing of our vendor
network to assess the important areas of Supplier Workplace Accountability and to ensure
vendor partners are compliant with workplace standards, business practices and all local
laws and regulations.
Animal Welfare is another key component of our sustainability effort. has
completed a Global Animal Welfare Policy that addresses any uses of proteins in our
supply chain. Our initial targets address the important issue of cage-free eggs: we have
established a goal of 100% cage-free for all customers by 2025.
In Europe, our procurement team partners with wheat farmers to encourage sustainable
agricultural practices, including minimizing the amount of fertiliser and pesticides. We also
strive to source Fairtrade ingredients and increase diversity-owned vendors in sourcing
our products.
Conserving forests is a key focus of our 2025 goals. This target addresses two areas:
palm oil sustainability and increasing the use of recycled content in our packaging. In
order to support the long-term development of sustainable palm oil solutions, ARYZTA
is a global member of the Roundtable on Sustainable Palm Oil (RSPO) and participates
in three of the available certifications: Book and Claim, Mass Balance, and Segregated
Supply. A number of ARYTA’s customers have asked us to help them meet commitments
on certified sustainable palm oil. Our goals is to ensure that all customer and internal
requirements for sustainability of palm oil are continuously met.
Relative to recycled content in packaging, our goal for one key customer is to achieve
70% or higher post-industrial and post-consumer content by 2025, working with our key
packaging vendors.
Environmental Practices
At ARYZTA, we are committed to protecting our environment. In addition to ensuring
compliance with all regulatory and industry environmental standards, we are constantly
working towards reducing our energy and water use, minimizing our carbon footprint,
and diverting as much waste as possible from landfill. is aware that the earth’s
ecosystems are fragile and that environmental conservation is critical to the continued
well-being of the planet, its natural resources and its citizens.
Our Responsibility (continued)
76

Governance
In FY20 we will conduct a full assessment of our Scope 1, 2 and 3 carbon emissions and
establish a long-term target for carbon footprint reduction (which we intend to be science
based), along with a set of actions and investments needed to achieve the targets.
The goals will include individual metrics to measure our progress related to electricity and
gas consumption and intensity, incoming and waste water intensities, and overall carbon
emissions. These metrics will not only be used to assess the efficiency of our individual
bakeries and to identify potential cost savings opportunities, but are also included as the
primary inputs in determining the Group’s CO2 emissions per metric tonne of food sold,
which is the key environmental performance indicator used for measuring the success of
our Cares initiatives.
This CO2 metric is calculated based on various bakery and distribution activity inputs and
utilizing the Greenhouse Gas Protocol (‘GHG’) to assess the estimated emissions directly
related to  business. For the past two years, has submitted its Scope
1 and 2 global GHG emissions to the Carbon Disclosure Project, as a means of public
reporting and continuous improvement.
Protecting water resources is a key target area. Our goal with one customer is to reduce
our non-recipe water usage in bakeries relevant to them by 10% by 2025, from 2018
usage of 1.32 cubic meters of water per metric tonne of production. Since most of the
water usage in our bakeries is for sanitation and food safety purposes we will be mindful
of maintaining our strict standards as we explore ways to reduce water usage.
is also keenly focused on our waste stream and recycling as a method to
reduce waste sent to landfills. For one customer, we are targeting achieving a 97% waste
diversion from landfill by 2025, in conjunction with increasing our recycling rate to 64%
for non-organics.
Additionally, has recently partnered with another major European customer to
develop methods to reduce waste all along the food lifecycle, in support of UN Sustainable
Development Goal 12.3 which calls on all nations to halve food waste and reduce food
loss by 2030.
Community Engagement
We are committed to being a responsible member of the communities in which we
operate and encourage our business units to play an active role within them. In addition
to providing employment opportunities, aims to make positive contributions
to its community by building relationships and earning a positive reputation as a good
employer, neighbour and corporate citizen. For example, in North America ARYZTA
regularly donates food to Feeding America, a non-profit organisation working to reduce
hunger through a network of local food banks. We encourage our bakery teams to engage
with their local communities through volunteer activities and food donations. In addition,
routinely supports philanthropic activities of our key customers.
78
AG Accounts 2019
Group
Group Consolidated Financial Statements,
presented in euro and prepared in accordance
Page with IFRS and the requirements of Swiss law
79 Statement of Directors’ Responsibilities
80 Group Consolidated Income Statement
81 Group Consolidated Statement of Comprehensive Income
82 Group Consolidated Balance Sheet
84 Group Consolidated Statement of Changes in Equity
86 Group Consolidated Cash Flow Statement
88 Group Statement of Accounting Policies
109 Notes to the Group Consolidated Financial Statements
Company Financial Statements,
presented in Swiss francs and prepared in accordance
with the requirements of Swiss law
168 Company Income Statement
169 Company Balance Sheet
171 Notes to the Company Financial Statements
Annual Report and Accounts 2019
Group Consolidated and
Company Financial
Statements 2019
Group Consolidated Financial Statements
79
AG Accounts 2019
Group
Swiss company law requires the directors to prepare Group consolidated and Company
financial statements for each financial year. The directors are required to prepare
the Group consolidated financial statements in accordance with International Financial
Reporting Standards (‘IFRS’) and the requirements of Swiss law and to prepare the
Company financial statements in accordance with Swiss law and the Company’s Articles
of Association.
This responsibility includes designing, implementing and maintaining an internal control
system relevant to the preparation and fair presentation of the Group consolidated and
Company financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing each of the Group consolidated and Company financial statements,
the directors are required to:
–
– select suitable accounting policies and then apply them consistently;
–
– make judgements and estimates that are reasonable and prudent; and
–
– prepare the financial statements on a going concern basis, unless it is inappropriate
to presume that the Group and the Company will continue in business.
The directors are responsible for keeping proper books of account that present, with
reasonable accuracy at any time, the financial position of the Group and Company
and enable them to ensure that its financial statements comply with IFRS, the requirements
of Swiss law and the Company’s Articles of Association.
They are also responsible for taking such steps as are reasonably available to them to
safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and
financial information included on the Group’s website.
On behalf of the Board
Gary McGann Kevin Toland
Chair, Board of Directors CEO, Member of the Board of Directors
8 October 2019
Statement of Directors’ Responsibilities
for the year ended 31 July 2019
Group Consolidated Financial Statements
80
AG Accounts 2019
Group
Group Consolidated Financial Statements
81
AG Accounts 2019
Group
in EUR `000 Notes 2019 2018
Loss for the year (29,150) (469,976)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation effects
– Foreign exchange translation effects on net investments 52,308 (67,593)
– Taxation effect of foreign exchange translation movements 9 (73) (1,301)
Cash flow hedges
– Effective portion of changes in fair value of cash flow hedges (1,894) (1,299)
– Fair value of cash flow hedges transferred to income statement 1,160 (442)
– Deferred tax effect of cash flow hedges 9 18 310
Share of joint ventures' other comprehensive income 15 33 105
Total of items that may be reclassified subsequently to profit or loss 51,552 (70,220)
Items that will not be reclassified to profit or loss:
Defined benefit plans
– Actuarial (loss)/gain on Group defined benefit pension plans 24 (1,315) 1,124
– Deferred tax effect of actuarial loss/(gain) 9 201 (156)
Total of items that will not be reclassified to profit or loss (1,114) 968
Total other comprehensive income/(loss) 50,438 (69,252)
Total comprehensive income/(loss) for the year 21,288 (539,228)
The notes on pages 88 to 162 are an integral part of these Group consolidated financial statements.
Group Consolidated Statement
of Comprehensive Income
for the year ended 31 July 2019
GGroup Consolidated Financial Statements
88
AG Accounts 2019
Group
Group Statement of Accounting Policies
for the year ended 31 July 2019
Organisation
AG (the ‘Company’) is domiciled and incorporated in Schlieren, Switzerland.
The consolidated financial statements for the year ended 31 July 2019 consolidate the
individual financial statements of the Company and its subsidiaries (together referred
to as the ‘Group’), and show the Group’s interest in joint ventures using the equity method
of accounting.
The Group consolidated financial statements and the AG Company financial
statements were authorised for issue by the directors on 8 October 2019, subject
to approval by the shareholders at the General Meeting on 14 November 2019.
Statement of compliance
The Group consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (‘IFRS’) as issued by the International
Accounting Standards Board (‘IASB’) and the requirements of Swiss law. These policies
have been consistently applied to all years presented, unless otherwise stated.
The IFRS applied by the Group in preparation of these financial statements are those
that were effective for accounting periods beginning on or before 1 August 2018.
The following standards and interpretations, issued by the International Accounting
Standards Board (‘IASB’) and the IFRS Interpretations Committee, are effective
for the first time in the current financial year and have been adopted by the Group:
– IFRS 9 – Financial Instruments
– IFRS 15 – Revenue from Contracts with Customers
– Amendments to IFRS 2 – Classification and Measurement of Share-based Payment
Transactions
– Amendments to IAS 40 – Transfers of Investment Property
– Improvements to IFRS Standards (2014–2016)
– IFRIC 22 – Foreign Currency Transactions and Advance Consideration
While the above standards and interpretations modified certain presentation and
disclosure requirements, these new requirements are not significantly different than
information presented as part of the 31 July 2018 year-end financial statements and
had no material impact on the consolidated results or financial position of the Group.
The most significant impact from these new standards related to the adoption of IFRS 9.
IFRS 9 ‘Financial Instruments’ fully replaced IAS 39 ‘Financial instruments: Recognition
and measurements’ and was implemented by the Group effective 1 August 2018 using
the modified retrospective method, which would have required any cumulative effect of
initially applying IFRS 9 to be recognised within Retained Earnings, rather than restating
prior years.
While impairments for bad debt as well as currency revaluations continue to be
recognised in profit or loss, in accordance with IFRS 9, the Group now recognises
impairment of financial assets based on the simplified Expected Credit Losses (ECL)
model. Therefore, an allowance for expected losses is recognised as from the date
receivables are initially recognised; however, as the Group does not have a history of
significant bad debts, or anticipate significant changes to forward looking information,
no material change to the allowance for doubtful accounts arose as a result of this change.
Group Consolidated Financial Statements
Group Consolidated Financial Statements
90
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
IFRS 15 ‘Revenue from contracts with customers’ fully replaced IAS 11 ‘Construction
Contracts’, IAS 18 ‘Revenue’ and was implemented by the Group effective 1 August 2018.
The new standard defines a five-step model, which has to be used to assess the timing
and amount of revenue recognised from customer contracts. The Group undertook a
review of the main types of commercial arrangements with customers and determined that
as Group revenues are transactional in nature, generally related to the shipment or
delivery of goods to customers, net sales continue to be recognised at a point of time and
not over a period. Therefore, there was no significant impact on the Group’s financial
position or performance from the adoption of this new standard.
In accordance with the requirements of IFRS 15, new disclosures outlining the
disaggregation of revenue by significant geographic market, product category and
customer channel are included in note 1 to the Consolidated Financial Statements.
New standards, interpretations and framework
The following new standards, interpretations and amendments to framework, issued by
the IASB or the IFRS Interpretations Committee, have not yet become effective. The
Group has not applied early adoption in relation to any of them.
Standard/Interpretation/Framework Effective date
Planned
implementation by
(reporting
year to 31 July)
Amendments to IFRS 9 – Prepayment features with
negative compensation
1 January 2019 2020
Amendments to IAS 28 – Long-term interests in associates
and joint ventures
1 January 2019 2020
Amendments to IAS 19 – Plan amendment, curtailment or
settlement
1 January 2019 2020
Improvements to IFRS Standards (2015–2017) 1 January 2019 2020
IFRIC 23 – Uncertainty over income tax 1 January 2019 2020
IFRS 16 – Leases 1 January 2019 2020
Amendments to IFRS 3 – Definition of a business 1 January 2020 2021
Amendments to IAS 1 and IAS 8 – Definition of material 1 January 2020 2021
Amendments to the Conceptual framework 1 January 2020 2021
IFRS 17 – Insurance Contracts 1 January 2021 2022
The Group has undertaken an initial assessment of the potential impacts of the new
standards, amendments and improvements listed above that are effective for the Group
for the year ending 31 July 2020. Based on this initial assessment, the Group does not
currently believe the adoption of these standards, amendments and interpretations will
have a significant impact on the consolidated results or financial position of the Group,
except as noted below:
IFRS 16, published in January 2016, replaces the existing guidance in IAS 17 ‘Leases’.
IFRS 16 eliminates the classification of leases as either operating leases or finance leases.
It introduces a single lessee accounting model, which requires a lessee to recognise
assets and liabilities for all leases with a term of more than 12 months and to recognise
depreciation of lease assets separately from finance costs on lease liabilities in the income
statement. Recognising a right of use asset represents the lessee’s contractual right to use
the leased asset for the lease term and recognising a lease liability reflects the lessee’s
obligation to make payments under the terms of the lease.
Group Consolidated Financial Statements
91
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
The Group’s effective date is financial year beginning 1 August 2019. At that date, the
Group will calculate the lease commitments outstanding and apply appropriate discount
rates to calculate the present value of the lease commitment which will be recognised as a
liability and a right of use asset on the Group’s Balance Sheet.
As detailed in note 26, the Group’s future minimum rentals payable under non-
cancellable operating leases at 31 July 2019 amounted to €327.5 million and the charge
recognised in the Income Statement for the year ended 31 July 2019 amounted to €69.5
million. These amounts provide an indication of the scale of leases held at 31 July 2019
but exclude the impact of discounting, exemptions for short-term leases and low-value
leased assets.
The Group will apply IFRS 16 from 1 August 2019 using the modified retrospective
approach, whereby comparatives do not need to be restated. The Group will apply the
recognition exemption for both short-term leases and low-value leased assets. The Group
assessed each lease and will apply judgement for the determination of lease term where
there are extension or termination options.
The Group’s assessment of the impact of adopting IFRS 16 is at an advanced stage. The
Group is implementing a dedicated software solution which will host a centralised set of
lease data. Based on the work performed to date, the Group expects to recognise right of
use assets of approximately €295 million, net investment in subleased assets of €22
million, lease liabilities of €319 million, an increase in opening retained earnings of €5m
along with the derecognition of onerous lease provisions of approximately €2 million. The
expected impact of IFRS 16 on finance costs is an increase of €12 million. The Group
expects a positive impact on Underlying EBITDA in the range of €60 to €65 million. In
addition, the Group expects a positive impact on ROIC in the range of 30 to 50bps. The
actual adjustment on transition could differ to the estimated impact provided, due to
changes in underlying assumptions, assessment of the expected term of leases (including
renewal options) and foreign exchange.
Basis of preparation
The Group consolidated financial statements are prepared on a historical cost basis,
except that investment properties, derivative financial ­
instruments and certain financial
liabilities are stated at fair value through profit or loss or other comprehensive income.
The Group consolidated financial statements and the Company financial statements have
been prepared on a going concern basis.
The Group consolidated financial statements are presented in euro, rounded to the
nearest thousand, unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires management
to make judgements, estimates and assumptions in the application of the Group’s
accounting policies. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the
Group Consolidated Financial Statements
92
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
circumstances, the results of which form the basis for the judgements about carrying
values of assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised,
if the revision affects only that period, or in the period of the revision and future periods
if the revision affects both current and future periods. Further information on areas
involving a higher degree of judgement and accounting estimates is set out in note 31.
Income statement presentation
In accordance with IAS 1, ‘Presentation of Financial Statements’, the Group Consolidated
Income Statement is presented by function of expense, with the exception of net loss on
disposal of businesses and impairment of disposal groups held-for-sale and impairment of
goodwill. In accordance with IAS 1.85, net loss on disposal of businesses and impairment
of disposal groups held-for-sale and impairment of goodwill have been presented
separately on the basis of materiality and to distinguish them from other elements of
financial performance.
Management has also identified certain impairment, disposal and restructuring-related
costs within each functional area that do not relate to the underlying business of the
Group. Due to the relative size or nature of these items, in order to enable comparability
of the Group’s underlying results from period to period, these items have been presented
as separate components of underlying EBITDA, as defined in note 1, and have been
excluded from the calculation of underlying net profit in note 11.
Additionally, to enable a more comprehensive understanding of the Group’s financial
performance, the Group Consolidated Income Statement by nature of cost, through
operating profit, is set out in note 5.
Group Consolidated Financial Statements
93
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Basis of consolidation
The Group consolidated financial statements reflect the consolidation of the results,
the assets and the liabilities of the parent undertaking, and all of its subsidiaries, together
with the Group’s share of the profits/losses of joint ventures.
Subsidiary undertakings
Subsidiary undertakings are those entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that control ceases.
Where necessary, the accounting policies of subsidiaries have been changed to ensure
consistency with the policies adopted by the Group.
Disposal of subsidiaries
When the group ceases to have control, any retained interest in the entity is re-measured
to its fair value at the date when control is lost, with the change in carrying amount,
plus proceeds received, recognised in profit or loss. The fair value of the retained interest
is then utilised as the initial carrying amount for purposes of subsequently accounting
for the retained interest as an associate, joint venture or financial asset. Any amounts
previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in other comprehensive income
are reclassified to profit or loss.
Joint arrangements
Under IFRS 11, ‘Joint Arrangements’, investments in joint arrangements are classified
as either joint operations or joint ventures, depending on the contractual rights and
obligations of each investor. The Group has assessed the nature of its joint arrangements
and determined them to be joint ventures. Joint ventures are accounted for using
the equity method of accounting, with the Group’s investment including goodwill identified
on acquisition.
Equity method
Under the equity method, investments are initially recognised at cost, with the carrying
amount increased or decreased thereafter to recognise the Group’s share of the profits or
losses and movements in other comprehensive income after the date of the acquisition.
When the Group’s share of losses equals or exceeds its interest in the associate or joint
venture, which includes any interests that, in substance, form part of the Group’s net
investment, the Group does not recognise further losses, unless it has incurred a legal
or constructive obligation to do so.
Profits and losses resulting from upstream and downstream transactions between
the Group and its associates and joint ventures are recognised in the Group’s financial
statements, only to the extent of the unrelated investor’s interests. Unrealised losses
are eliminated, unless the transaction provides evidence of an impairment of the asset
transferred.
Group Consolidated Financial Statements
94
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
If the ownership interest is reduced, but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income
is reclassified to profit or loss, where appropriate. Dilution gains and losses arising
on investments in associates or joint ventures are recognised in the income statement.
The Group determines at each reporting date whether there is any objective evidence that
the investment in the associate or joint venture is impaired. If this is the case, the Group
calculates the amount of impairment as the difference between the recoverable amount
of the associate or joint venture, based on the higher of value in use or fair value less
costs to sell, and its carrying value, and recognises any impairment adjacent to share of
profit after interest and tax of associates or joint ventures in the income statement.
Where necessary, accounting policies of associates and joint ventures have been changed
to ensure consistency with the policies adopted by the Group.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising
from intra-group transactions, are eliminated in preparing the Group consolidated financial
statements. Unrealised gains and income and expenses arising from transactions with
associates and joint ventures are eliminated to the extent of the Group’s interest in the
entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to
the extent that they do not provide evidence of impairment.
Revenue recognition
Revenue represents the fair value of the sale of goods and services supplied to third
parties, after deducting trade discounts, allowances, and promotional and volume
rebates, and is exclusive of sales tax/VAT. Revenue is recognised when control of the
goods has passed to the buyer, which is usually upon shipment or delivery, depending
on the specific terms agreed with individual customer.
Revenue is recorded when there is no unfulfilled obligation that could affect the
customer’s acceptance of the goods. An estimate is made on the basis of historical
sales returns and is recorded to allocate these returns to the same period as the
original revenue is recorded. Rebates, allowances and discounts are provided for based
on agreements or contracts with customers, agreed promotional arrangements and
accumulated experience, using the expected value method. Any unutilised accrual is
released after assessment that the likelihood of such a claim being made is no longer
highly probable.
Financing income is recognised on an accrual basis, taking into consideration the sums
lent and the actual interest rate applied.
Revenue policy applicable before 1 August 2018
Revenue represents the fair value of the sale of goods and services supplied to third
parties, after deducting trade discounts, allowances, and promotional and volume
rebates, and is exclusive of sales tax/VAT. Revenue is recognised when the significant
risks and rewards of ownership of the goods have passed to the buyer, which is usually
upon shipment or delivery, depending on the specific terms agreed with individual
customers, when it is probable that the economic benefits will flow to the Group and
Group Consolidated Financial Statements
95
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
the amount of revenue can be measured reliably. Financing income is recognised on an
accrual basis, taking into consideration the sums lent and the actual interest rate applied.
Revenue is recorded when the collection of the amount due is reasonably assured. An
estimate is made on the basis of historical sales returns and is recorded to allocate these
returns to the same period as the original revenue is recorded. Rebates, allowances and
discounts are provided for based on agreements or contracts with customers, agreed
promotional arrangements and accumulated experience. Any unutilised accrual is
released after assessment that the likelihood of such a claim being made is no longer
probable.
Segmental reporting
Management has determined the operating segments based on the reports regularly
reviewed by the Group’s Chief Operating Decision Maker (‘CODM’) in making strategic
decisions, allocating resources and assessing performance.
Following the resignation of Owen Killian as Group CEO effective 31 March 2017, the
CODM in the intervening period up until the appointment of Kevin Toland as Group CEO
on 12 September 2017 was comprised of the Board of Directors. Effective 12 September
2017, the CODM has been identified as the Group CEO.
As reflected in those reports, the operations of the Group are primarily organised into
three operating segments, Europe, North America and Rest of
World. The Group’s principal geographies are Europe, North America and Rest of World.
Europe has leading market positions in the European frozen B2B bakery market.
In Europe, has a diversified customer base within the foodservice, large retail
and convenience or independent retail channels.
North America has leading positions in the frozen B2B bakery market in the
United States and Canada. It has a diversified customer base within the QSR, large retail
and other foodservice channels.
Rest of World consists of businesses in Australia, Asia, New Zealand and South
America, primarily partnering with international QSR and other foodservice customers.
Segment assets and liabilities consist of property, plant and equipment, goodwill and
intangible assets and other assets and liabilities that can be reasonably allocated to the
reported segment. Unallocated assets and liabilities principally include joint ventures,
current and deferred income tax assets and liabilities, together with financial assets and
liabilities. Share of results of joint ventures, net finance costs and income tax are
managed on a centralised basis. Therefore, these items are not allocated between
operating segments for the purpose of presenting information to the CODM.
Group Consolidated Financial Statements
96
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Employee benefits
Pension obligations
Obligations for contributions to defined contribution pension plans are recognised
as an expense in the income statement, as the related employee service is received.
The Group’s net obligation in respect of defined benefit pension plans is calculated
separately for each plan, by estimating the amount of future benefit employees have
earned in return for their service in the current and prior periods. The future benefit
is discounted to determine the present value of the obligation and the fair value of any
plan assets is deducted. The discount rate is the yield at the balance sheet date on
high-quality corporate bonds that have maturity dates approximating the terms of the
Group’s obligations.
The defined benefit calculations are performed by a qualified actuary using the
projected unit credit method on an annual basis. Re-measurement gains and losses
arising from experience adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in the Group Consolidated Statement
of Comprehensive Income, net of related taxes. Current and past service costs are
recognised as employment costs in the income statement. The net interest cost is
calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets, and is recognised in financing costs/income
in the income statement.
Share-based compensation
As defined in IFRS 2, ‘Share-based Payment’, the cost of equity instruments is recognised
at grant date fair value, with a corresponding increase in equity. The fair value is
measured at the grant date and recognised over the period during which the employees
become unconditionally entitled to the equity instrument. The fair value of the equity
instruments granted is measured using the Black-Scholes valuation model, taking into
account the terms and conditions under which the equity instruments were granted.
The Group’s equity-settled share-based compensation plans are subject to a non-market
vesting condition; therefore, the amount recognised is adjusted annually to reflect the
current estimate of achieving these conditions and the number of equity instruments
expected to eventually vest.
Termination benefits
The Group recognises termination benefits when it has a formal plan to terminate the
employment of current employees, which has been approved at the appropriate levels of
the organisation and when the entity is demonstrably committed to a termination through
announcement of the plan to those affected. In the case of an offer made to encourage
voluntary redundancy, the termination benefits are measured based on the number of
employees expected to accept the offer.
Group Consolidated Financial Statements
97
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Income taxes
Income tax expense on the profit or loss for the period comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that it relates
to items recognised directly in equity or in other comprehensive income, in which case
the related tax is also recognised directly in equity or in other comprehensive income,
respectively. Current income tax is the expected tax payable on the taxable income for
the period, using tax rates and laws that have been enacted or substantially enacted at
the balance sheet date, in the respective countries where the Group and its subsidiaries
operate and generate taxable income.
Deferred income tax is recognised using the balance sheet method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The amount of deferred income
tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantially enacted at the
balance sheet date. If the deferred income tax arises from initial recognition of an asset
or liability in a transaction other than a business combination that, at the time of the
transaction, does not affect accounting or taxable profit or loss, it is not recognised.
Deferred income tax is provided on temporary differences arising on investments in
subsidiaries, associates and joint ventures, except where the timing of the reversal of
the temporary difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
A deferred income tax asset is recognised only to the extent that it is probable that future
taxable profits will be available against which the asset can be recovered. Deferred
income tax assets are reduced to the extent it is no longer probable the related tax benefit
will be realised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and when the deferred
income tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there
is an intention to settle the balances on a net basis.
Group Consolidated Financial Statements
98
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Foreign currency
Items included in the financial statements of the Group’s entities are measured using
the currency of the primary economic environment in which each entity operates (the
‘functional currency’). The consolidated financial statements are presented in euro, the
Group’s presentation currency, rounded to the nearest thousand, unless otherwise stated.
Transactions in currencies other than the functional currency of each respective entity
are converted to the relevant functional currency using the foreign exchange rate
at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are converted to the relevant functional currency using the foreign exchange
rate at the balance sheet date. Foreign exchange differences arising on conversion
into the local functional currency are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and qualifying
net investment hedges.
The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on consolidation, are translated to euro at the foreign exchange rates
at the balance sheet date. Income and expenses of foreign operations are translated
to euro at the average exchange rates for the year, unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at the rate on the dates of the
transactions. Foreign exchange differences arising on translation of the net assets
of a foreign operation are recognised in other comprehensive income, as a change in
the foreign currency translation reserve.
Exchange gains or losses on long-term intra-group loans and on foreign currency
borrowings used to finance or provide a hedge against Group equity investments in non-
euro denominated operations are included in other comprehensive income, as a change
in the foreign currency translation reserve, to the extent they are neither planned nor
expected to be repaid in the foreseeable future, or are expected to provide an effective
hedge of the net investment. Any differences that have arisen since transition to IFRS are
recognised in the foreign currency translation reserve and are recycled through the Group
Consolidated Income Statement on the repayment of the intra-group loan, or on disposal
of the related business.
The principal euro foreign exchange currency rates used by the Group for the preparation
of these consolidated financial statements are as follows:
Currency
Dividends are recognised in the period in which they are approved by the Company’s
shareholders.
Property, plant and equipment
Property, plant and equipment is stated at historical cost, less accumulated depreciation
and impairment losses. Other subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the item of property, plant and equipment.
All other expenditures, including repairs and maintenance costs, are recognised in the
income statement as an expense as incurred.
Interest on specific and general borrowings used to finance construction costs of
property, plant and equipment is capitalised during the period of time that is required
to complete and prepare the asset for its intended use. All other borrowing costs are
expensed.
Depreciation is calculated to write-off the cost, less estimated residual value, of
property, plant and equipment, other than freehold land and assets under construction,
on a straight-line basis, by reference to the following estimated useful lives:
Buildings 25 to 50 years
Plant and machinery 3 to 20 years
Motor vehicles 3 to 7.5 years
The residual value of assets, if significant, and the useful life of assets is reassessed
annually. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals of property, plant and equipment are recognised on the
completion of sale. Gains and losses on disposals are determined by comparing the
proceeds received, net of related selling costs, with the carrying amount of the asset
and are included in operating profit.
Investment properties
Investment property, principally comprised of land and buildings, is held for capital
appreciation and is stated at fair value. The fair value is based on market value, being
the estimated amount for which a property could be exchanged in an arm’s length
transaction. Any gain or loss arising from a change in fair value is recognised in the
Group Consolidated Income Statement. When property is transferred to investment
property following a change in use, any difference arising at the date of transfer between
the carrying amount of the property immediately prior to transfer and its fair value is
recognised in equity if it is a gain. Upon disposal of the property, the gain would be
transferred to retained earnings. Any loss arising in this manner, unless it represents the
reversal of a previously recognised gain, would be recognised immediately in the Group
Consolidated Income Statement.
Group Consolidated Financial Statements
100
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Leased assets
Leases of property, plant and equipment, where the Group has substantially all the risks
and rewards of ownership, are classified as finance leases. Finance leases are capitalised
at the inception of the lease at the lower of the fair value of the leased asset or the
present value of the minimum lease payments. Assets acquired under finance leases
are depreciated over the shorter of the useful life of the asset or the lease term.
The corresponding rental obligations, net of finance charges, are included in interest-
bearing loans and borrowings. The interest element of the payments is charged to the
­
income statement over the lease period, so as to produce a constant periodic rate of
­
interest on the remaining balance of the liability for each period. For disclosure ­
purposes,
the fair value of finance leases is based on the present value of future cash flows,
­
discounted at appropriate current market rates.
Leases where a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. Payments made under operating leases are
charged to the income statement on a straight-line basis over the lease term.
Business combinations and goodwill
Business combinations are accounted for by applying the acquisition method. The cost
of each acquisition is measured as the aggregate of the fair value of the consideration
transferred, as at the acquisition date, and the fair value of any non-controlling interest
in the acquiree.
The consideration transferred includes the fair value of any assets or liabilities resulting
from a contingent consideration arrangement. Identifiable assets acquired and liabilities
assumed in a business combination are measured initially at their fair values at the
acquisition date. Where any part of the consideration for a business combination is
contingent, the fair value of that component is determined by discounting the estimated
amounts payable to their present value at the acquisition date. The discount is unwound
as a finance charge in the Group Consolidated Income Statement over the life of the
obligation. Subsequent changes to the estimated amounts payable for contingent
consideration are recognised as a gain or loss in the Group Consolidated Income
Statement.
Where a business combination is achieved in stages, the Group’s previously held interest
in the acquiree is re-measured to fair value at the acquisition date and included within
the consideration, with any gain or loss recognised in the Group Consolidated Income
Statement.
Goodwill is initially recognised at cost, being the difference between the cost of the
acquisition over the fair value of the net identifiable assets and liabilities assumed.
Following initial recognition, goodwill is stated at cost, less any accumulated impairment
losses.
When the initial accounting for a business combination is only provisionally determined
at the end of the financial year in which the combination occurs, any adjustments
to the provisional values allocated to the identifiable assets and liabilities are made within
a period of no more than one year from the acquisition date.
Group Consolidated Financial Statements
101
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Acquisition costs arising in connection with a business combination are expensed
as incurred.
Intangible assets
Intangible assets acquired as part of a business combination are initially recognised at
fair value, being their deemed cost as at the date of acquisition. These generally include
brand and customer-related intangible assets.
Computer software that is not an integral part of an item of computer hardware is also
classified as an intangible asset. Where intangible assets are separately acquired, they
are capitalised at cost. Cost comprises purchase price and other applicable directly
attributable costs. Directly attributable costs that are capitalised as part of the ERP and
computer-related intangibles include the employee costs and an appropriate portion of
relevant overheads. Other development expenditures that do not meet these criteria are
recognised as an expense as incurred.
Expenditure on research activities, undertaken with the prospect of gaining new scientific
or technical knowledge and understanding, is recognised in the income statement
as an expense as incurred. Expenditure on development activities, whereby research
findings are applied to a plan or design for the production of new or substantially
improved products or ­
processes, is ­
capitalised, if the product or process is technically
and commercially feasible, the ­
attributable expenditure can be reliably measured, and
the Group has sufficient ­
resources to complete development. The expenditure capitalised
includes the cost of materials, ­
direct labour or an appropriate proportion of overheads.
Capitalised development expenditure is stated at cost, less accumulated amortisation and
impairment losses. Other development expenditure is recognised in the income statement
as an expense as incurred.
Intangible assets with finite lives are amortised over the period of their expected useful
lives in equal annual instalments, generally as follows:
Customer relationships 10 to 22 years
Brands 10 to 25 years
Computer-related intangibles 3 to 5 years
ERP-related intangibles 6 to 12 years
Patents and other 8 to 12 years
Subsequent to initial recognition, the expected useful lives and related amortisation
of finite life intangible assets are reviewed at least at each financial year-end and, if
the expected economic benefits of the asset are different from previous estimates,
amortisation is adjusted accordingly. Intangible assets are stated at cost, less accumulated
amortisation and any impairment losses incurred.
There are no intangible assets with an indefinite useful life.
Group Consolidated Financial Statements
102
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Impairment of non-financial assets
The carrying amounts of the Group’s assets, other than inventories (which are carried
at the lower of cost and net realisable value), deferred tax assets (which are recognised
based on recoverability) and those financial instruments carried at fair value, are reviewed
to determine whether there is an indication of impairment when an event or transaction
indicates that there may be, and at least at each reporting date. If any such indication
exists, an impairment test is carried out and, if necessary, the asset is written down
to its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less costs to sell and an asset’s value-in-use. The Group tests goodwill for impairment
annually, during the last quarter of the financial year, or more frequently if events or
changes in circumstances indicate a potential impairment.
An impairment loss is recognised whenever the carrying amount of an asset, or its
cash-generating unit, exceeds its estimated recoverable amount. Impairment losses
are recognised in the income statement as an expense. Goodwill is allocated to the
various cash-generating units for the purposes of impairment testing. Impairment losses
recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the cash-generating unit, and then to reduce the
carrying amount of the other assets in the unit on a pro-rata basis. An impairment loss
for goodwill is not subsequently reversed. An impairment loss for other assets may be
reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
Inventory
Inventory is stated at the lower of cost, on a first-in, first-out basis, and net realisable
value. Cost includes all expenditure incurred in the normal course of business in bringing
the products to their present location and condition. Net realisable value is the estimated
selling price of inventory on hand, less all further costs to completion and all costs expected
to be incurred in marketing, distribution and selling.
Cash and cash equivalents
Cash equivalents are defined as short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. Cash and cash equivalents in the balance sheet comprise cash at bank
and on hand, call deposits and other short-term highly liquid investments with original
maturities of three months or less.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s
cash management are included as a component of net cash and cash equivalents for the
purpose of the Group Consolidated Cash Flow Statement.
Group Consolidated Financial Statements
103
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Disposal groups held-for-sale
Disposal groups are classified as held-for-sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower of their carrying amount
and fair value less costs to sell.
The assets of a disposal group classified as held-for-sale are presented separately from
the other assets in the balance sheet. The liabilities of a disposal group classified as
held-for-sale are presented separately from other liabilities in the balance sheet.
An impairment loss is recognised for any initial or subsequent write-down of the
disposal group to fair value less costs to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell, but not in excess of any cumulative impairment
loss previously recognised. A gain or loss not previously recognised by the date of
the sale of the disposal group is recognised at the date of derecognition. Non-current
assets that are part of a disposal group are not depreciated or amortised while they are
classified as held-for-sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale continue to be recognised.
Share capital
Shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity, net of tax, as a deduction from the proceeds.
If any Group company purchases AG’s equity share capital, those shares are
accounted for as treasury shares in the consolidated financial statements of the Group.
Consideration paid for treasury shares, including any directly attributable incremental
cost, net of tax, is deducted from equity attributable to the shareholders of the Company,
until the shares are cancelled or reissued. Where such shares are subsequently reissued,
any consideration received, net of any directly attributable incremental transaction costs
and the related income tax effects, is included in equity attributable to the Company’s
shareholders.
Group Consolidated Financial Statements
104
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Financial assets and liabilities
Financial assets and financial liabilities are recognised in or derecognised from the Group
Consolidated Balance Sheet on trade-date basis, being the date on which the Group
contractually commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have
been transferred and the group has transferred substantially all the risks and rewards of
ownership. Financial liabilities are derecognised only when the Group’s obligations are
discharged, cancelled or expired.
At initial recognition, the group measures a financial asset or liability at its fair value plus
directly attributable transaction costs, except in the case of a financial instrument through
profit or loss (FVPL) or through OCI (FVOCI), which are initially recognised at fair value.
Financial Assets classifications applicable after 1 August 2018
Financial assets are classified into one of the following categories depending on the
Group’s business model for managing the financial assets and the contractual terms
of the cash flows:
Amortised cost
Trade and other receivables (excluding prepayments) and cash and cash equivalents are
initially measured at fair value and are thereafter measured at amortised cost, using the
effective interest method, less loss allowance.
Fair value through income statement (FVPL) or OCI (FVOCI)
Derivative financial instruments are initially recorded at fair value on the date the contract
is entered into and are subsequently re-measured to fair value, as of each reporting date,
using quoted market values. The gain or loss arising on re-measurement is recognised
in the income statement, except where the instrument is a designated cash flow hedging
instrument through OCI.
Debt instruments
Subsequent measurement of debt instruments depend on the Group’s business model
for managing the asset and the cash flow characteristics of the asset. There are three
measurement categories into which the Group classifies its debt instruments:
–
– Amortised cost: Assets that are held for collection of contractual cash flows, where
those cash flows represent solely payments of principal and interest, are measured at
amortised cost. Any gain or loss arising on derecognition is recognised directly in the
Consolidated Income Statement. Impairment losses are presented in the Consolidated
Income Statement.
–
– FVOCI: Assets that are held for collection of contractual cash flows and for selling the
financial assets, where the assets’ cash flows represent solely payments of principal
and interest, are measured at FVOCI. The Group has no debt instruments measured
at FVOCI.
–
– FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured
at FVPL. In addition, assets that are irrevocably designated as FVPL at origination
to eliminate or significantly reduce an accounting mismatch are also measured at
FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL
is recognised in the Consolidated Income Statement.
Group Consolidated Financial Statements
105
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Equity investments
The Group subsequently measures all equity instrument investments at fair value.
Where the Group’s management has elected to present fair value gains and losses on
equity investments in OCI, there is no subsequent reclassification of fair value gains and
losses to the Group Consolidated Income Statement following the derecognition of the
investment. Dividends from such investments continue to be recognised in Consolidated
Income Statement when the Group’s right to receive payments is established.
Financial Assets classifications applicable before 1 August 2018
Financial assets were classified into one of the following categories:
Loans and receivables
Trade and other receivables (excluding prepayments) and cash and cash equivalents were
initially measured at fair value and are thereafter measured at amortised cost, using the
effective interest method, less any provision for impairment.
Hedge instruments
Derivative financial instruments are initially recorded at fair value on the date the contract
is entered into and are subsequently re-measured to fair value, as of each reporting date,
using quoted market values. The gain or loss arising on re-measurement is recognised
in the income statement, except where the instrument is a designated cash flow hedging
instrument.
Impairment of financial assets policy applicable after 1 August 2018
From 1 August 2018, the Group assesses on a forward looking basis the expected
credit losses associated with its debt instruments carried at amortised cost and FVOCI.
The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9
‘Financial Instruments’, which requires expected lifetime losses to be recognised from
initial recognition of the receivables.
Impairment of financial assets policy applicable before 1 August 2018
Before 1 August 2018, a provision for impairment of loans and receivables was
recognised when there was objective evidence that the Group would not be able to collect
all amounts due, according to the original terms of the financial asset.
Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed
in the ordinary course of business. If collection is expected in one year or less they are
classified as current assets. If not, they are presented as non-current assets. Credit losses
associated with trade and other receivables are recognised in administration expenses.
Where risks associated with trade receivables are transferred out of the Group under
receivables purchase arrangements, such receivables are derecognised from the balance
sheet, except to the extent of the Group’s continued involvement or exposure.
Group Consolidated Financial Statements
106
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Trade and other payables
Trade and other payables are recognised initially at fair value and are subsequently
measured at amortised cost, using the effective interest method. Trade and other
payables are classified as current liabilities, if payment is due within one year or less,
otherwise, they are presented as non-current liabilities.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or
constructive obligation as a result of a past event and it is probable that an outflow of
economic benefits will be required to settle the obligation and the outflow can be reliably
measured. If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability.
Derivatives
Derivative financial instruments, including forward currency contracts, interest rate swaps
and commodity futures contracts are used to manage the Group’s exposure to foreign
currency risk, interest rate risk and commodity price risk. These derivatives are generally
designated as cash flow hedges. The Group does not use derivatives for speculative
purposes.
Derivative financial instruments are initially recorded at fair value on the date the contract
is entered into and are subsequently re-measured to fair value, as of each reporting date,
using quoted market values. The gain or loss arising on re-measurement is recognised in
the income statement, except where the instrument is a designated hedging instrument.
The fair value of derivative instruments is calculated using quoted prices. Where such
prices are not available a discounted cash flow analysis is used based on the applicable
yield curve adjusted for counterparty risk for the duration and currency of the instrument,
which are observable:
–
– Foreign exchange forward contracts are measured using quoted forward exchange
rates to match the maturities of these contracts; and
–
– Interest rate swaps are measured at the present value of future cash flows estimated
and discounted based on the applicable yield curves adjusted for counterparty credit
risk.
Cash flow hedges
Subject to the satisfaction of certain criteria relating to the documentation of the risk,
objectives and strategy for the hedging transaction and the ongoing measurement
of its effectiveness, cash flow hedges are accounted for under hedge accounting rules.
At inception of a hedge relationship, the Group documents the economic relationship
between hedging instruments and hedged items including whether changes in the cash
flows of the hedging instruments are expected to offset changes in the cash flows of
hedged items. The Group documents its risk management objective and strategy for
undertaking its hedge transactions. In order to achieve and maintain cash flow hedge
accounting, it is necessary for management to determine, at inception and on an ongoing
basis, whether a forecast transaction is highly probable.
Group Consolidated Financial Statements
107
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
In such cases, any unrealised gain or loss arising on the effective portion of the derivative
instrument is recognised in other comprehensive income, as part of the cash flow hedge
reserve. Unrealised gains or losses on any ineffective portion are recognised in the income
statement. When the hedged transaction occurs, the related gains or losses in the cash
flow hedge reserve are transferred to the income statement. When the forecast transaction
is no longer expected to occur, the cumulative gain or loss and deferred cost of hedging
that were reported in equity are immediately reclassified to profit or loss.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow
hedges. Any gain or loss on the hedging instrument relating to the effective portion of
the hedge is recognised in other comprehensive income. The gain or loss relating to the
ineffective portion is recognised in the income statement. Gains and losses accumulated
in equity are included in the income statement when the foreign operation is disposed of
or sold.
Interest-bearing loans and borrowings
Interest-bearing borrowings are recognised initially at fair value, net of attributable
transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated
at amortised cost, using the effective interest rate method.
Fees paid on the establishment of loan facilities are capitalised as transaction costs
of the loan, to the extent that it is probable that some or all of the facility will be drawn
down, and are amortised over the period of the facility to which the fees relate.
For interest-bearing loans and borrowings with a contractual re-pricing date of less than
six months, the nominal amount is considered to approximate fair value for disclosure
purposes. For loans with a re-pricing date of greater than six months, the fair value is
calculated based on the expected future principal and interest cash flows, discounted
at appropriate current market interest rates.
Other equity reserve
As the perpetual callable subordinated instruments (‘Hybrid instruments’) have no
maturity date and repayment is at the option of ARYZTA, they are recognised within other
equity reserves at historical cost, net of attributable transaction costs, until such time
that management and the Board of Directors have approved settlement of the applicable
instrument. Any difference between the amount paid upon settlement of these instruments
and the historical cost is recognised directly within retained earnings.
Dividends on these Hybrid instruments accrue at the coupon rate applicable to each
respective instrument on an ongoing basis; however, a contractual obligation to settle these
dividends in cash only arises when a Compulsory Payment Event, such as payment of a cash
dividend to equity shareholders, has occurred within the last twelve months.
Government grants
Grants that compensate the Group for the cost of an asset are shown as deferred income
in the balance sheet and are recognised in the income statement in instalments on
a basis consistent with the depreciation policy of the relevant assets. Other grants are
credited to the income statement to offset the associated expenditure.
Group Consolidated Financial Statements
108
AG Accounts 2019
Group
Group Statement of Accounting Policies
(continued)
for the year ended 31 July 2019
Transactions with non-controlling interests
The Group treats transactions with non-controlling interests, which do not result in a loss
of control, as transactions with equity owners of the Group. For purchases from non-
controlling interests, the difference between any consideration paid and the relevant share
acquired in the carrying value of the net assets of the subsidiary is recorded in equity.
Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in
the entity is re-measured to its fair value, with the change in carrying amount recognised
in profit or loss. The fair value is then the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other comprehensive income
in respect of that entity are accounted for as if the Group had directly disposed of the
related assets or liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
Loss before income tax as reported in Group Consolidated Income Statement (17,960) (492,673)
1	
'Underlying EBITDA' – presented as earnings before interest, taxation, depreciation and amortisation; before impairment, disposal and restructuring-related
costs and related tax credits.
2	
Certain central executive and support costs have been allocated against the operating results of each business segment.
3	
Joint ventures, finance income/(costs) and income tax are managed on a centralised basis. Therefore, these items are not allocated between business segments
for the purposes of presenting information to the Chief Operating Decision Maker.
G1	
Other includes foreign countries in the Europe segment which individually did not represent greater than 5% of Group revenue in the
current or prior financial year.
2	
No country in the Rest of World segment represented greater than 5% of the Group revenue in the current or prior financial year on an
individual country basis.
3	
For the purposes of this analysis, customer revenues are allocated based on geographic location of vendor.
4	
One single external customer represented greater than 10% of the Group revenue in the current and prior financial year. These revenues
were earned across all of the Group's operating segments in the current and prior financial years. There is no significant credit risk associated with
receivables from this customer.
2.1 Net loss on disposal of businesses and impairment of disposal
groups held for sale
During the year ended 31 July 2019, the Group disposed of non-core businesses in
Europe, which had been accounted for as part of disposal groups held-for-sale at July
2018. As the €7,106,000 carrying value of the assets disposed exceeded the €3,129,000
proceeds received, net of associated transaction costs, combined with a €1,019,000
cumulative foreign currency translation loss since the initial investment, a net loss on
disposal of €4,996,000 was recognised, as detailed in note 3.
During the year ended 31 July 2018 a €48,762,000 loss on impairment of disposal
groups held-for-sale had been recognised in relation to these two non-core businesses, as
detailed in note 3. In addition, during January 2018, the Group disposed of a business in
Europe, which resulted in a €1,349,000 gain on disposal.
During the year ended 31 July 2018, the Group disposed of the Cloverhill Chicago
and Cicero facilities in North America. As the €54,818,000 proceeds received, net of
associated transaction costs, were less than the €209,108,000 carrying value of the net
assets prior to the disposal agreement, a loss of €135,903,000 was recognised during the
year ended 31 July 2018, net of a €18,387,000 cumulative foreign currency translation
gain since the initial investment. During the year ended 31 July 2019, the Group
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
114
AG Accounts 2019
Group
recognised an additional €1,992,000 loss in North America, on the finalisation of the
Cloverhill Chicago and Cicero disposals.
2.2 Impairment of goodwill
There was no impairment of goodwill during the year ended 31 July 2019.
Following significant reductions in estimated profitability, the Group recorded a
€175,000,000 goodwill impairment charge in Germany during the year ended 31 July
2018. Further detail on the prior year goodwill impairment is included in note 14.
2.3 Impairment and disposal of fixed assets and investment
property
During the year ended 31 July 2019, the Group incurred a net loss on the disposal and
impairment of various fixed assets and investment properties totalling €4,787,000 (2018:
€4,467,000)
2.4 Restructuring-related costs
During the year ended 31 July 2019, the Group has recognised costs, including providing
for amounts as required by IAS 37, ‘Provisions, Contingent Liabilities and Contingent
Assets’, in the Group Consolidated Income Statement as follows:
Labour related business interruption costs
The €16,349,000 of labour-related business interruption costs experienced in the North
America Cloverhill facilities during the last three months of the financial year ended 31
July 2017 continued into the financial year ended 31 July 2018, during which the group
incurred €41,443,000 of further losses. As these businesses have since been disposed,
no such costs were incurred during the year ended 31 July 2019.
Severance and other staff-related costs
During the year ended 31 July 2019, the Group incurred a total of €9,836,000 (2018:
€15,151,000) in severance and other staff-related costs arising from a number of
production, distribution and administrative rationalisations across the Group as part of the
implementation of Project Renew.
Other costs including advisory
During the year ended 31 July 2019, the Group incurred €7,307,000 in costs related to
the design and implementation of Project Renew across Europe and North America.
During the year ended 31 July 2018, the Group incurred €13,231,000 in costs related
to the reorganisation of the North America and a group-wide strategic business review.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
115
AG Accounts 2019
Group
3 Disposal groups held-for-sale
During July 2018, the Group identified for disposal two non-core businesses in the
Europe segment, which historically generated approximately €30,000,000 in
annual revenues. As plans for these disposals were approved by the Board of Directors
and are sufficiently progressed that they were considered highly probable to be completed
within the next 12 months, the assets of these businesses were accounted for as disposal
groups held-for-sale as of 31 July 2018.
As the fair value less costs to sell of these facilities of €7,000,000 was less than the
€55,762,000 carrying value of the net assets, a loss on impairment of disposal groups
held-for-sale of €48,762,000 was recognised in the income statement as of 31 July 2018.
In accordance with IFRS 5, ‘Non-current Assets Held for Sale and Discontinued
Operations’, the assets of the disposal groups classified as held-for-sale were presented
separately from other assets in the Group Consolidated Balance Sheet as at 31 July 2018.
The assets of the disposal groups held-for-sale at 31 July 2018 were as follows:
in EUR ’000 2019 2018
Property, plant and equipment – 4,208
Inventory – 2,792
Disposal groups held-for-sale at fair value less costs to sell – 7,000
The fair value was measured using inputs not observable within the market, and was
therefore within level 3 of the fair value hierarchy.
During the year ended 31 July 2019, the Group disposed of both businesses which
had been accounted for as part of disposal groups held-for sale at July 2018. As the
€7,106,000 carrying value of the assets disposed exceeded the €3,129,000 proceeds
received, net of associated transaction costs, combined with a €1,019,000 cumulative
foreign currency translation loss since the initial investment, a net loss on disposal of
€4,996,000 was recognised.
Group
8 Share-based payments
The Group has equity-based incentive awards outstanding under various Long-
Term Incentive Plans ('LTIPs'). In addition, as detailed in the Compensation Report, since
the November 2018 AGM, non-executive members of the Board of Directors have been
compensated in the form of restricted shares or Restricted Stock Units ('RSUs') in respect
of 40% of their fixed annual fees.
As the Group has no legal or constructive obligation to repurchase or settle the awards in
cash, the equity instruments granted under these LTIPs are equity-settled share-based
payments, as defined in IFRS 2 ‘Share-based Payment’.
As included in the tables for the respective plans below, during the year ended 31 July
2019, in order to maintain the dilutive impact of the November 2018 capital increase at a
consistent level for outstanding LTIP awards with the dilution experienced by shareholders
who did not participate in the rights issue and instead sold their rights received, the Group
adjusted all outstanding LTIP awards by dividing the previous exercise price of each
outstanding LTIP award by the 4.64x Theoretical Ex-Rights Price ('TERP') and likewise by
multiplying the previous number of outstanding LTIP awards by the TERP. Additionally, in
order to eliminate the impact of the Scrip Dividend issued in January 2018, the Group also
adjusted all outstanding LTIP awards by dividing the exercise price by 81 and multiplying
by 80 and likewise multiplying the number of LTIP awards outstanding by 81 and dividing
by 80. No incremental value arose as a result of this modification, primarily because the
weighted average exercise price of the awards following modification remains significantly
above the CHF 1.57 share price on the date of modification.
During the period ended 31 July 2019, the Group granted additional options and
Performance Share Units ('PSUs') to Group Executives and other members of senior
management. Vesting of these awards is conditional on achievement of segmental
operating free cash generation and ROIC targets during the associated performance
periods ending 31 July 2020 and 31 July 2021, as well as continued employment
throughout the respective performance periods. Further details are set out on pages 63
to 64 in the Compensation Report.
The number of awards granted during the period, as included in the respective tables
below, represents the maximum number of awards that could potentially vest. The actual
vesting level will be determined based on the level of performance achieved during
the applicable vesting period and applying the corresponding vesting multiple, ranging
between 0 and 1.6, to the number of awards received by each participant.
The total cost reported in the Group Consolidated Income Statement in relation to
equity-settled share-based payments is €2,494,000 (2018: €2,005,000). The analysis
of movements within the LTIP plans is as follows:
The weighted average fair value associated with option and option equivalent awards
issued during the year ended 31 July 2019 was CHF 0.40, which was determined using
the Black-Scholes valuation model. The significant inputs into the model were the CHF
1.08 share price as at the grant date and the equivalent exercise price, an expected
option life of 4.2 years, an expected volatility of 49.6%, an expected dividend yield of
0.0% and a risk-free rate of (0.6)%.
As the performance conditions associated with the option awards granted during financial
year 2016 were not met, these awards were forfeited during the year ended 31 July 2018.
The vested option awards still outstanding as of 31 July 2019 can be exercised no later
than ten years after grant date.
During the year ended 31 July 2019, the performance conditions associated with
84,815 RSUs were fulfilled. Therefore, these awards were approved as vested by the
Remuneration Committee and were subsequently exercised by employees, in exchange
for the same number of shares. The weighted average share price at the time of these
exercises was CHF 10.33.
During the year ended 31 July 2018, the performance conditions associated with
64,899 RSUs were fulfilled. Therefore, these awards were approved as vested by the
Remuneration Committee and were subsequently exercised by employees, in exchange
for the same number of shares. The weighted average share price at the time of these
exercises was CHF 28.69.
The performance conditions associated with the remaining 5,466 RSUs that were
outstanding as of 31 July 2018, which were subsequently modified to be 25,707 RSUs,
have not yet been fulfilled as of 31 July 2019.
The weighted average fair value assigned to PSUs issued during the period ended
31 July 2019 was CHF 1.08, which represents the full value of an ordinary share
on the grant date, as the exercise price associated with these awards is Nil and the
expected dividend yield was 0.0%.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
121
21.2% is the standard rate of income tax applicable to trading profits in Zurich, Switzerland.
10 Proposed dividend
No dividend is planned to be proposed for the year ended 31 July 2019. No dividend was
proposed or paid for the year ended 31 July 2018.
The dividend for the year ended 31 July 2017 was approved at the Annual General Meeting
held on 7 December 2017, to be settled as a scrip dividend via newly issued share capital,
based on a ratio of one new share for every 80 shares held. Accordingly, a total of 1,110,253
new shares, with a par value of CHF 0.02 per share, were issued to shareholders holding
shares in AG on 29 January 2018, resulting in €33,962,000 being recognised
within equity, based on the market price of the shares at the date of approval.
GEffect of equity-based incentives with a dilutive impact3
– –
Weighted average ordinary shares used to determine diluted EPS 822,613 415,041
Diluted loss per share (8.3) cent (121.0) cent
1	
Issued share capital excludes treasury shares as detailed in note 25.
2	
2018 comparatives and current year movements before the rights issue in November 2018 restated
to include the effect of the bonus issue of shares incorporated in the rights issue.
3	
In accordance with IAS 33, potential ordinary shares are treated as dilutive only when their conversion
would decrease profit per share or increase loss per share from continuing operations. As the impacts
related to the conversion of equity-based incentives and shares issued as scrip dividend would decrease
the loss per share for the years ended 31 July 2019 and 2018, no dilutive effect was taken during these years.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
123
AG Accounts 2019
Group
In addition to the basic and diluted earnings per share measures required by IAS 33,
‘Earnings Per Share’, as calculated above, the Group also presents an underlying diluted
earnings per share measure, in accordance with IAS 33 paragraph 73. This additional
measure enables comparability of the Group’s underlying results from period to period,
without the impact of transactions that do not relate to the underlying business.
As shown below, for purposes of calculating this measure, the Group adjusts the loss
used to determine basic EPS by the following items and their related tax impacts:
– excludes intangible amortisation, except ERP intangible amortisation;
– excludes RCF termination costs; and
– excludes impairment, disposal and restructuring-related costs.
2019 2018
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
124
Investment property is principally comprised of properties previously used in operations,
which were transferred to investment property upon the determination that they would
no longer be used in operations, but instead would be held as an investment for capital
appreciation.
During the year ended 31 July 2019, there were no land and building assets transferred
to investment property. During the year ended 31 July 2018, land and building assets
that were no longer in operational use were transferred to investment property. The
property was located in the Europe segment, and had an estimated fair value
of €1,168,000 at the date of transfer, which approximated its carrying value.
During the year, land in the Europe segment was disposed for net cash
consideration of €3,522,000. As the proceeds received exceeded the €2,909,000
carrying value of the assets, this transaction resulted in a gain on disposal of €613,000.
During the prior year, a number of properties in the Europe and Rest
of World segments were disposed for net cash consideration of €7,597,000. As the
proceeds received exceeded the €7,375,000 carrying value of the assets, these
transactions resulted in a gain on disposal of €222,000.
No fair value adjustments were recorded to investment properties during the year
31 July 2019. Rental income and operating expenses recognised related to these
properties is not significant. During the year ended 31 July 2018, a net gain of €447,000
of fair value adjustments related to the carrying value of investment properties was
recorded in the Europe and Rest of World segments, based on the
results of independent valuations. The valuations were arrived at by reference to location,
market conditions and status of planned disposals. The fair values of investment
properties are considered a Level 3 fair value measurement.
During the prior year ended 31 July 2018, €45,432,000 of net assets were de-recognised
in relation to the disposal of a business in Europe, and €209,108,000 of net assets were
de-recognised in relation to the disposal of the Cloverhill Chicago and Cicero
facilities in North America. These included €180,728,000 of intangible assets, of which
€142,924,000 related to goodwill, and €37,804,000 related to customer relationships,
brands and trademarks, software and other intangibles.
As set out in note 3, during the year ended 31 July 2018, €55,762,000 of assets related to
two non-core businesses in Europe were transferred to disposal groups held-for-sale. These
included €27,422,000 of intangible assets, of which €15,881,000 related to goodwill and
€11,541,000 related to customer relationships and software.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
127
AG Accounts 2019
Group
Goodwill Impairment testing
Goodwill acquired through business combinations is allocated at acquisition to the
cash-generating units (‘CGUs’), or groups of CGUs, that are expected to benefit from
the synergies of the business combination.
During the year ended 31 July 2019, management determined it appropriate to combine
the previous Germany CGU with the Other Europe CGU for purposes of goodwill impairment
testing, as these businesses increasingly operate as one within the overall Europe operating
segment. At the time of this determination a goodwill impairment test was performed on the
respective standalone CGUs, which did not indicate any impairment.
In making this determination it was considered that significant inter-group revenues exist,
both from Germany into Other Europe and from Other Europe into Germany. Increasing this
cross-selling continues to be a primary management focus in order to leverage the unique
individual capabilities of each bakery and balance the overall European capacity and capital
investment, while continuing to provide a larger product offering to customers. In addition,
major customer relationships are managed across the Germany and Other Europe network,
and it was noted that Germany and Poland, the largest country in terms of revenue and
Underlying EBITDA within the Other Europe CGU, are directed under a single management
team, with capital investment decisions and the matching of bakery capability to customer
needs determined on a combined basis.
in EUR ’000 Goodwill
128
AG Accounts 2019
Group
The Group tests goodwill for impairment annually, during the last quarter of the financial year,
or more frequently if changes in circumstances indicate a potential impairment.
The recoverable amounts of CGUs are based on value-in-use calculations. These
calculations use pre-tax cash flow projections based on expected future operating results
and related cash flows at the time the impairment test is performed. These projections
are based on current operating results of the individual CGU and an assumption regarding
future organic growth. For the purposes of the calculation of value-in-use, the cash flows
are projected based on current financial budgets, with additional cash flows in subsequent
years calculated using a terminal value methodology and discounted using the relevant
rate, as disclosed in the table above.
Impairment during the year ended 31 July 2018
Following reductions in estimated future profitability of the existing business, the Group
recorded a €175,000,000 goodwill impairment charge in Germany during the year
ended 31 July 2018. The recoverable amount of Germany goodwill after this charge was
€29,906,000, as outlined in the table above.
Profitability in this business had been significantly impacted by the consolidation of
bakery capacity into the Eisleben facility during prior years, which had been further
compounded by customer volume insourcing and commodity prices during the year
ended 31 July 2018, while the relatively new capacity at this bakery was also still being
optimised.
Goodwill sensitivity analysis
A significant adverse change in the expected future operational results and cash flows
may result in the value-in-use being less than the carrying amount of a CGU, which
would result in an impairment. Key assumptions include management’s estimates of the
terminal growth rate, the discount rate, future revenue and profitability.
The terminal growth rates used approximate relevant long-term inflation rates and industry
growth trends within each CGU. The discount rates used are based on the relevant risk-
free rates, adjusted to reflect the risk associated with the respective future cash flows of
that CGU.
Based on the results of the impairment testing undertaken, with the exception of the
North West Europe and North America CGUs, sufficient headroom exists for
the other CGUs, such that any reasonably possible movement in any of the underlying
assumptions, including a reduction in the terminal growth rate by 1.0%, or increasing the
discount rate by 1.0%, would not give rise to an impairment charge.
The headroom of the recoverable amounts of the North West Europe and North
America CGUs over the respective carrying amounts at 31 July 2019 is summarized in
the table below, as well as the amounts by which the key assumptions would need to
change, in isolation, such that the recoverable amounts would equal the carrying values
of the CGUs.
in EUR million
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
129
AG Accounts 2019
Group
An illustration of the sensitivities to reasonably possible changes in key assumptions
at 31 July 2019, in isolation, are as follows:
North West Europe North America
in EUR million Increase by 1% Decrease by 1% Increase by 1% Decrease by 1%
Pre-tax discount rate (55) 77 (200) 276
Terminal growth rate 86 (57) 330 (218)
Revenue is projected to grow over the plan period in line with industry growth projections,
consistent with external market data, with further assumed improvements in annual
underlying EBITDA across the plan period. A decrease of 110 bps in the revenue
compound annual growth rate across the plan period within the North America
CGU would reduce the headroom over carrying value to zero. EBITDA improvement hinges
on delivery of Project Renew savings, in particular within the North America and
North West Europe CGUs, which are sensitive to these savings being realised over the
expected timeframe. A 7% shortfall in Project Renew savings relating to initiatives which
are in progress in the North America CGU and a 31% shortfall in Project Renew
savings relating to initiatives which are in progress in the North West Europe CGU would
reduce the headroom in those CGUs to zero.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
130
AG Accounts 2019
Group
15 Investments in joint ventures
The Group share of joint ventures’ net assets is as follows:
in EUR ’000 2019 2018
At 1 August 420,016 528,188
Share of joint ventures' underlying net profit 27,555 22,755
Group share of intangible amortisation (3,215) (2,669)
Group share of tax on intangible amortisation and associated
rate adjustments 6,376 12,686
Group share of refinancing-related costs – (14,536)
Group share of restructuring-related costs (203) (3,080)
Loss on dilution of investment in joint venture (2,884) –
Disposal of investment in joint venture – (32,825)
Gains through other comprehensive income 33 105
Dividends – (91,018)
Translation adjustments – 410
At 31 July 447,678 420,016
owns a 48% (2018: 49%) interest in Picard, which operates an asset-light B2C
platform focused on premium speciality food. Picard is located primarily in France, is
separately managed and has separately funded debt structures, which are non-recourse
to ARYZTA. The Group also retains the right to exercise a call option to acquire the
remaining outstanding interest in Picard between 15 September and 15 October 2018,
between 15 September and 15 October 2019, or between 15 September and 15 October
2020. While holds only a minority shareholding and voting rights in Picard, the
Group is entitled to jointly approve key business decisions, including approval of proposed
members of Picard management and the annual operating budget, which determine the
presentation of the Group’s interest in Picard as a joint venture.
received no dividends from Picard during the year and the Group’s investment
carrying value in Picard is €447,678,000 as of 31 July 2019. During the year ended 31
July 2018, received cash dividends from Picard totalling €91,018,000, after
which the Group’s investment carrying value in Picard totalled €420,016,000 as of 31
July 2018. While Picard is not considered part of  long-term strategy, disposal
of the Group’s investment is currently only possible with agreement of both joint venture
partners. Therefore, the Group’s investment continues to be accounted on a historical cost
basis using the equity method of accounting.
The Group share of restructuring-related costs included in the table above primarily
relates to early redemption costs associated with the refinancing of Picard debt structures
during FY 2018.
The Group also owned a 50% interest in Signature Flatbreads, a pioneering flatbread
producer, producing an innovative range of authentic Indian breads, as well as
high-quality international flatbreads, tortillas, pizza bases and pitas. During March 2018,
consistent with  strategy to focus on its frozen B2B bakery operations and exit
non-core businesses, the Group sold its 50% interest in Signature Flatbreads to its joint
venture partners for net proceeds of €34,948,000. This resulted in a net gain on disposal
of €1,468,000 compared to the Group’s carrying value of €32,825,000, and associated
cumulative foreign currency translation reserve losses of €655,000 since the initial
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
131
AG Accounts 2019
Group
investment. Signature Flatbreads is not included within the results from joint ventures
for the year ended 31 July 2019.
The amounts included in these Group consolidated financial statements in respect
of the current year profits or losses of joint ventures are taken from their latest financial
statements, prepared up to their respective year-ends, together with management
accounts for the intervening periods to the Group’s year-end or to the date of disposal.
Picard has a year-end of 31 March. The assets, liabilities and overall investments in joint
ventures are as follows:
in EUR ’000
134
AG Accounts 2019
Group
19 Cash and cash equivalents
In accordance with IAS 7, ‘Statement of Cash Flows’, cash and cash equivalents comprise
cash balances held for the purposes of meeting short-term cash commitments and
investments, which are readily convertible to a known amount of cash and are subject
to an insignificant risk of changes in value. Bank overdrafts are included within current
interest-bearing loans and borrowings in the Group Consolidated Balance Sheet.
The cash and cash equivalents included in the Group Consolidated Cash Flow Statement
are analysed as follows:
in EUR ’000 2019 2018
Cash at bank and on hand 533,782 517,854
Bank overdrafts (155,902) (175,868)
Included in the Group Consolidated Cash Flow Statement 377,880 341,986
Cash at bank earns interest at floating rates based on daily deposit bank rates. Short-term
deposits are made for varying periods of between one day and three months, depending
on the immediate cash requirements of the Group, and earn interest at the respective short-
term deposit rates.
20 Interest-bearing loans and borrowings
Details of the Group’s interest bearing loans and borrowings are outlined below.
Group
Estimation of fair values
Set out below are the major methods and assumptions used in estimating the fair values
of the financial assets and liabilities disclosed in the preceding tables.
Fair value hierarchy
The tables at the beginning of this note summarise the financial instruments carried at
fair value, by valuation method. Fair value classification levels have been assigned to
the Group’s financial instruments carried at fair value. The different levels assigned are
defined as follows:
Level 1: Prices quoted in active markets
Level 2: Valuation techniques based on observable market data
Level 3: Valuation techniques based on unobservable inputs
Trade and other receivables/payables
Trade and other receivables are carried at amortised cost, less loss allowance. Trade
and other payables are carried at amortised cost. For any trade and other receivables or
payables with a remaining life of less than six months or demand balances, the carrying
value, less impairment provision where appropriate, is deemed to approximate fair value.
Cash and cash equivalents, including short-term bank deposits
For short-term bank deposits and cash and cash equivalents, all of which have an
original and remaining maturity of less than three months, the nominal amount is deemed
to approximate fair value.
Derivatives (forward currency contracts and interest rate swaps)
Forward currency contracts are marked to market using quoted forward exchange rates
at the balance sheet date. The fair value of interest rate swaps is calculated as the present
value of the estimated future cash flows based on observable yield curves.
Investment property
Investment property, principally comprised of land and buildings, is held for capital
appreciation. Investment property is stated at fair value through the income statement.
The fair value is based on market value, being the estimated amount for which a property
could be exchanged in an arm’s length transaction, determined based on the results
of independent valuations. The valuations were arrived at by reference to location,
market conditions including the prices of transactions of similar properties, adjusted as
appropriate, and status of planned disposals. As the fair value is based on inputs not
observable within the market, it has been classified as a Level 3 asset.
Disposal groups held-for-sale
The assets of disposal groups held-for-sale at 31 July 2018 were held at fair value less
costs to sell. The fair value was the estimated recoverable value determined based on the
status of the business sale processes and valuations of the underlying land and building
assets within the disposal groups. As the fair value was based on inputs not observable
within the market, it was classified as a Level 3 asset.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
139
AG Accounts 2019
Group
Interest-bearing loans and borrowings
For interest-bearing loans and borrowings with a contractual re-pricing date of less
than six months, the nominal amount including accrued interest is considered to
approximate fair value for disclosure purposes. For loans with a re-pricing date of greater
than six months, the fair value is calculated based on the expected future principal and
interest cash flows, discounted at appropriate current market interest rates.
Finance lease liabilities
Fair value is based on the present value of future cash flows discounted at market
interest rates.
Risk exposures
Group risk management
Risk management is a fundamental element of the Group’s business practice at all levels
and encompasses different types of risks. This overall Group risk management process
includes the performance of a risk assessment that is described in more detail in note 30.
Financial risk management specifically is described in further detail below.
Financial risk management
The Group’s international operations expose it to different financial risks that include:
–
– credit risks;
–
– liquidity risks;
–
– foreign exchange rate risks;
–
– interest rate risks; and
–
– commodity price risks.
The Group has a risk management programme in place, which seeks to limit the impact
of these risks on the financial performance of the Group. The Board has determined the
policies for managing these risks. It is the policy of the Board to manage these risks in
a non-speculative manner.
Credit risk
Exposure to credit risk
Credit risk arises from credit issued to customers on outstanding receivables and
outstanding transactions, as well as cash and cash equivalents, favourable derivative
financial instruments and deposits with banks and financial institutions.
The Group has not pledged any financial assets as collateral for liabilities or contingent
liabilities.
Cash and short-term bank deposits
Cash and short-term bank deposits are invested with institutions with the highest short-
term credit rating, with limits on amounts held with individual banks or institutions
at any one time. Management does not expect any losses from non-performance by
these counterparties.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
140
AG Accounts 2019
Group
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics
of each customer. There is no significant concentration of credit risk by dependence on
individual customers or geographies. The Group has detailed procedures for monitoring
and managing the credit risk related to its trade receivables based on experience,
customer’s track record and historic default rates. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial re-organisation and
default in payments are considered to be indicators that the trade receivables is impaired.
Individual risk limits are generally set by customer, and risk is only accepted above such
limits in defined circumstances. The utilisation of credit limits is regularly monitored.
Management does not expect any significant counterparty to fail to meet its obligations.
The maximum exposure to credit risk is represented by the carrying amount of each
asset.
The Group applies the simplified approach to providing for expected credit losses (‘ECL’)
permitted by IFRS 9 Financial Instruments, which requires expected lifetime losses to be
recognised from initial recognition of the trade receivables.
To measure the expected credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the days past due. The expected loss rates
are based on the payment profiles of sales and the corresponding historical credit
loss experience. The historical loss rates are adjusted to reflect current and forward-
looking information on macroeconomic factors affecting the ability of customers to settle
receivables.
The impact of adopting IFRS 9 on the consolidated financial statements was not
material for the Group and there was no adjustment to retained earnings on application
at 1 August 2018.
The Group also manages credit risk through the use of a receivables purchase arrangement
with a financial institution. Under the terms of this non-recourse agreement, the Group has
transferred substantially all credit risk and control of certain trade receivables, amounting to
€208,296,000 (2018: €224,658,000). The Group has continued to also recognise an asset
within Trade and other receivables, of €18,414,000 (2018: €25,518,000), representing the
fair value and maximum extent of its continuing involvement or exposure. This maximum
exposure was determined based on a Reserve Calculation Ratio (approximately 10%), as
per the terms of the receivables purchase arrangement. Total expenses associated with
this receivables purchase agreement during the year ended 31 July 2019 were €4,275,000
(2018: €3,033,000).
The undiscounted cash outflows required to repurchase these derecognised financial
assets would be equal to the receivables transferred, net of the Group’s remaining
continuing involvement asset. The estimated maturity of any such cash outflows would
be expected to be less than 6 months, as the Group’s trade and other receivables are
also generally settled in less than 6 months. As the carrying value of the receivables
transferred and the continuing involvement retained both equal fair value, no gain or loss
has arisen, either at the date of transfer or in connection with the Group’s continuing
involvement in these assets.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
Loss allowances
Liquidity risk is the risk that the Group will not be able to meet its financial obligations
as they fall due.
The Group’s objective is to maintain a balance between flexibility and continuity of
funding, so that not more than 40% of total bank borrowing facilities should mature
in the next twelve-month period. At 31 July 2019, 25% of the Group’s total bank
borrowings will mature within the next 12 months.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
142
AG Accounts 2019
Group
The following are the contractual maturities of financial liabilities, including estimated
interest payments:
Cash flow hedges
Cash flow hedges are hedges of highly probable forecasted future income or expenses.
In order to qualify for hedge accounting, the Group is required to document the ­
relationship
between the item being hedged and the hedging instrument and demonstrate, at
­inception, that the hedge relationship will be highly effective on an ongoing basis. The
hedge relationship must be tested for effectiveness on subsequent reporting dates. The
impact on the statement of consolidated income is on page 81.
There is no significant difference between the timing of the cash flows and the income
statement effect of cash flow hedges. The fair value included in the hedging reserve will
primarily be released to the Consolidated Income Statement within 6 months (2018: 6
months) of the balance sheet date.
Market risk
Market risk is the risk that changes in market prices and indices, such as foreign
exchange rates and interest rates, will affect the Group’s income or the value of its
holdings of financial instruments.
Foreign exchange risk
In addition to the Group’s operations carried out in eurozone economies, it has significant
operations in the UK, Switzerland and North America. As a result, the Group Consolidated
Balance Sheet is exposed to currency fluctuations including, in particular, Sterling, US
dollar, Canadian dollar and Swiss franc movements. The Group manages its balance sheet
having regard to the currency exposures arising from its assets being denominated
in a wide range of currencies.
Net investment hedges
As part of its approach towards mitigating its exposure to foreign currency risk, the
Group will, when required, fund foreign currency investments in the currency of the
related assets.
These relationships are typically designated by the Group as net investment hedges of
foreign currency exposures on net investments in foreign operations using the borrowings
as the hedging instrument. These hedge designations allow the Group to mitigate the risk
of foreign currency exposures on the carrying amount of net assets in foreign operations
in its Group consolidated financial statements.
The borrowings designated in net investment hedge relationships are measured at
amortised cost, with the effective portion of the change in value of the borrowings
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
144
AG Accounts 2019
Group
being recognised directly through other comprehensive income in the foreign currency
translation reserve. Any ineffectiveness arising on such hedging relationships is
recognised immediately in the income statement.
Foreign currency contracts
The Group also hedges a portion of its transactional currency exposure through the
use of currency swaps. Transactional exposures arise from sales or purchases by an
operating unit in currencies other than the unit’s functional currency. The Group uses
forward currency contracts to eliminate the currency exposures on certain foreign
currency purchases. The forward currency contracts must be in the same currency
and match the settlement terms of the hedged item.
The following table details the Group’s exposure to transactional foreign currency risk
at 31 July 2019:

Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
145
AG Accounts 2019
Group
Currency sensitivity analysis
A 10% strengthening or weakening of the euro against the foreign currencies below at
31 July would have increased/(decreased) equity and profit or loss by the amounts
shown below. This analysis assumes that all other variables, in particular interest rates,
remain constant. The analysis is performed on the same basis as in the prior year.
2Commodity price risk
The Group purchases and sells certain commodities for the purposes of receipt or
delivery and uses derivative contracts to protect itself from movements in prices other
than exchange differences. These contracts are classified as ‘own use’ contracts, as they
were entered into and continue to be held for the purpose of the receipt or delivery
of the non-financial item, in accordance with the business unit’s expected purchase, sale
or usage requirements. ‘Own use’ contracts are outside the scope of IFRS 9, ‘Financial
Instruments’, and are accounted for on an accrual basis. Where a commodity contract is
not entered into, or does not continue to be held, to meet the Group’s own purchase, sale
or usage requirements, it is treated as a derivative financial instrument, and the recognition
and measurement requirements of IFRS 9 are applied.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
On 22 December 2017, the US Tax Cuts and Jobs Act (‘the Act’) was enacted into law. As
a result of the Act, the statutory rate of US federal corporate income tax was reduced from
35% to 21% with effect from 1 January 2018. The reduction in the US corporate income
tax rate to 21% under the Act required revaluation of  US deferred tax assets
and liabilities during the financial year ended 31 July 2018.
The disposal of Cloverhill during FY18 also resulted in a reduction in deferred tax
attributes associated with these assets.
The Act also introduced a one-time mandatory deemed repatriation tax on historical
earnings & profits of certain US owned foreign corporations and exempted from tax future
dividends paid to the US. As a result, the FY17 unremitted earnings’ deferred tax liability,
which solely related to the US, was removed during FY18.
Swiss Tax Reform
In Switzerland, changes to the Swiss federal and the canton of Zurich tax laws, which
eliminated certain favourable tax regimes, were substantively enacted in May and
September 2019 respectively. As substantive enactment at the Zurich cantonal level had
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
149
AG Accounts 2019
Group
not taken place until after the reporting date of 31 July 2019, no adjustments to 
deferred tax position have been reported in the balance sheet.
If reflected, this would have led to an estimated €11m additional deferred tax expense and
would have resulted in no change in current tax expense. Changes in the tax laws in other
Swiss cantons in which the Group operates are still under discussion.
24 Employee benefits
The Group operates a number of defined benefit and defined contribution pension
plans in various jurisdictions. The Group operates four of the defined benefit plans in
Switzerland, two in France, one in Germany and one in Japan. The majority of plans are
externally funded with plan assets held in corresponding separate trustee-administered
funds, governed by local regulations and practice in each country.
The trustees of the various pension funds are required by law to act in the best interests
of the plan participants and are responsible for investment strategy and plan administration.
The level of benefits available to members depends on length of service and either their
average salary over their period of employment, their salary in the final years leading up to
retirement or in some cases historical salaries, depending on the rules of the individual plan.
Long-term employee benefits included in the Group Consolidated Balance Sheet
comprises the following:
in EUR `000 2019 2018
Other includes provisions to meet unfunded pension fund deficiencies in a variety of insignificant
subsidiaries.
The valuations of the defined benefit schemes used for the purposes of the following
disclosures are those of the most recent actuarial reviews carried out at 31 July 2019
by an independent, qualified actuary. The valuations have been performed using the
projected unit method.
Employee benefit plan risks
The employee benefit plans expose the Group to a number of risks, the most significant
of which are:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate
bond yields. If assets underperform this yield, this will create a deficit. The plans hold
a significant proportion of equities which, though expected to outperform corporate
bonds in the long-term, create volatility and risk. The allocation to equities is monitored
to ensure it remains appropriate given the long-term objectives of the plans.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
150
AG Accounts 2019
Group
Changes in bond yields
An increase in corporate bond yields will decrease the value placed on liabilities of the
plans, although this will be partially offset by a decrease in the value of the bond holdings
within the plans.
Life expectancy
In the event that members live longer than assumed, a further deficit will emerge.
The Group ensures that the investment positions are managed with an asset-liability
matching (‘ALM’) framework that has been developed to achieve long-term investments
that are in line with the obligations under the pension plans. Within this framework,
the Group’s ALM objective is to match assets to the pension obligations by investing
in long-term fixed interest securities with maturities that match the benefit payments
as they fall due and in the appropriate currency.
Financial assumptions
The main assumptions used were determined based on management experience and
expectations in each country, as well as actuarial advice based on published statistics.
An average of these assumptions across all plans were as follows:
2019 2018
Rate of increase in salaries 2.02% 1.83%
Discount rate on plan liabilities 0.43% 0.98%
The mortality assumptions imply the following life expectancies, in years, of an active
member on retiring at age 65, 20 years from now:
2019 2018
Male 24.4 24.3
Female 26.4 26.4
The mortality assumptions imply the following life expectancies, in years, of an active
member, aged 65, retiring now:
2019 2018
Male 22.6 22.5
Female 24.7 24.5
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
151
AG Accounts 2019
Group
The sensitivity of the defined benefit obligation to changes in the principal financial
actuarial assumptions is set out below. The present value of the defined benefit obligation
has been calculated using the projected unit credit method, which is the same as that
applied in calculating the defined benefit obligation recognised in the Group Consolidated
Balance Sheet. The impact on the defined benefit obligation as at 31 July 2019 is on
the basis that only one principal financial actuarial assumption is changed, with all other
assumptions remaining unchanged.
The impact of a change in the assumption of life expectancy has been measured as at
31 July 2019 in the sensitivity analysis. The method in preparing the sensitivity analysis
did not change compared to the previous period.
Assumption Change in Assumption Impact on plan liabilities
Net charge to Group Consolidated Income Statement 3,378 4,009
Additionally, a charge of €13,450,000 (2018: €13,767,000) was recorded in the Group
Consolidated Income Statement in respect of the Group’s defined contribution plans.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
153
AG Accounts 2019
Group
Defined benefit pension expense recognised
in Group Consolidated Statement of Comprehensive Income
in EUR `000 2019 2018
Return on plan assets (excluding interest income) 2,780 2,087
Experience losses on plan liabilities (483) (2,890)
Changes in demographic and financial assumptions (3,612) 1,927
Actuarial (loss)/gain (1,315) 1,124
Deferred tax effect of actuarial loss/(gain) (note 9) 201 (156)
Actuarial loss/(gain) recognised in Group Consolidated
Statement of Comprehensive Income (1,114) 968
History of experience gains
and losses: 2019 2018
Difference between expected and
actual return on plan assets:
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
154
AG Accounts 2019
Group
25 Shareholders equity
Registered shares of CHF 0.02 each –
authorised, issued and fully paid

At 1 August 92,921 1,191 91,811 1,172
Issue of registered shares (CHF 0.02) 900,185 15,782 – –
Scrip dividend – – 1,110 19
At 31 July 993,106 16,973 92,921 1,191
During November 2018, the Group completed a capital raise, by way of a rights issue,
in order to strengthen the balance sheet, provide necessary liquidity and working
capital funding, and to enable delivery of  three year turnaround plan, Project
Renew. At the Annual General Meeting on 1 November 2018, a total of 900,184,940
registered shares with a nominal value of CHF 0.02 each were offered to  existing
shareholders on a 10 for 1 share basis, at a discounted offer price of CHF 1.00 per share.
The gross proceeds received upon completion of the rights issue were €795,833,000.
This resulted in €739,505,000, net of related transaction costs, which was recognised
within equity during the year ended 31 July 2019, of which €15,782,000 is recognised
within share capital, and €723,723,000 within share premium. At 31 July 2019,
€739,505,000 has been recognised relating to proceeds from the rights issue within
financing activities in the Group Cash Flow Statement.
The dividend for the year ended 31 July 2017 was proposed to be settled as a scrip
dividend via newly issued share capital, based on a ratio of one new share for every 80
shares held, and was approved at the Annual General Meeting held on 7 December 2017.
Accordingly, a total of 1,110,253 new shares were issued, with a par value of CHF 0.02
per share during the year ended 31 July 2018.
In accordance with Article 5 of the Articles of Association (Authorised capital for
general purposes), the Board of Directors is authorised to increase the share capital
of the Company at any time until 9 December 2019 by a maximum amount of
CHF 161,416 by issuing of up to 8,070,800 fully paid up registered shares with
a par value of CHF 0.02 each. A partial increase is permitted.
The Board of Directors is authorised to withdraw or limit the pre-emptive rights of the
existing shareholders if the newly issued shares are used for the following purposes:
(1) mergers, acquisitions (including take-overs) of companies, parts of companies or
holdings, equity stakes (participation) or new investments planned by the Company,
or the financing or re-financing of such transactions, (2) broadening the shareholder
constituency, or (3) employee participations.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
155
AG Accounts 2019
Group
Treasury shares of CHF 0.02 each -
authorised, called up and fully paid
Release of treasury shares upon vesting
and exercise of equity entitlements (85) (1) (65) (1)
Release of treasury shares as restricted
shares (384) (5) – –
At 31 July 2,518 40 2,987 46
During the year ended 31 July 2019, the performance conditions associated with 84,815
Restricted Stock Unit awards were fulfilled (2018: 64,899). Therefore, these awards were
approved as vested by the Remuneration Committee and were subsequently exercised
by employees, in exchange for the same number of shares. The weighted average share
price at the time of these exercises was CHF 10.33 (2018: CHF 28.69).
In addition, during the year ended 31 July 2019, 383,888 shares were issued out of
treasury shares, in respect of restricted shares for non-executive directors, as detailed
on pages 54 to 68 of the Compensation Report.
These shares were issued out of shares previously held in treasury by Grange
Company UC, a wholly-owned subsidiary within the AG Group.
Other equity reserve
in EUR `000 2019 2018
At 1 August and 31 July 720,456 720,456
In April 2013, the Group raised CHF 400,000,000 through the issuance of a Perpetual
Callable Subordinated Instrument (‘Hybrid Instrument’), which was recognised at a carrying
value of €319,442,000 within equity. This Hybrid Instrument has no maturity date, and
as the first call option was not exercised by in April 2018, the coupon is now
6.045%, plus the 3-month CHF LIBOR.
In October 2014, the Group raised CHF 190,000,000 through the issuance of a Hybrid
Instrument. This Hybrid Instrument offers a coupon of 3.5% and has no maturity date,
with an initial call option date by in April 2020. In the event that the call option is
not exercised, the coupon would be 4.213%, plus the 3-month CHF LIBOR.
In November 2014, the Group raised €250,000,000 through the issuance of an additional
Hybrid Instrument. This Hybrid Instrument offers a coupon of 4.5% and has no maturity
date, and as the first call option was not exercised by in March 2019, the
coupon is now 6.77%, plus the 5 year euro swap rate.
The two Hybrid instruments issued during the year ended 31 July 2015 were recognised
at a combined value of €401,014,000 within equity.
As the Hybrid instruments have no maturity date and repayment is at the option
of ARYZTA, they are recognised within other equity reserves at historical cost, net
of attributable transaction costs, until such time that management and the Board
of Directors have approved settlement of the applicable instrument. Any difference
between the amount paid upon settlement of these instruments and the historical cost
is recognised directly within retained earnings.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
156
AG Accounts 2019
Group
Dividends on these Hybrid instruments accrue at the coupon rate applicable to each
respective instrument on an ongoing basis; however, a contractual obligation to settle
these dividends in cash only arises when a Compulsory Payment Event, such as payment
of a cash dividend to equity shareholders, has occurred within the last twelve months.
Because the Group has not paid a cash dividend to equity shareholders during the last
12 months, as of 31 July 2019 the Group is under no contractual obligation to settle the
Hybrid instrument dividends in cash. Therefore, these deferred dividends have not been
accrued as separate financial liabilities, but instead remain within equity, in accordance
with IAS 32 ‘Financial Instruments’. Should a Compulsory Payment Event occur in the
future, all Hybrid instrument deferred dividends will become due in cash.
Movements related to the Hybrid instrument dividends over the last two years were as
follows:
in EUR `000 2019 2018
Balance at 1 August (41,071) (9,032)
Hybrid instrument deferred dividend (38,902) (32,057)
Translation adjustments (1,873) 18
Balance at 31 July (81,846) (41,071)
Cash flow hedge reserve
The cash flow hedge reserve comprises of the effective portion of the cumulative
net change in the fair value of cash flow hedging instruments.
Share-based payment reserve
This reserve comprises amounts credited to reserves in connection with equity awards,
less the amount related to any such awards that become vested.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences, since
the date of the Group’s transition to IFRS, arising from translation of the net assets of
the Group’s non-euro-denominated functional currency operations into euro, the Group’s
presentation currency.
Capital and net debt management
The capital managed by the Group as at 31 July 2019 consists of total equity of
€2,436,147,000 (2018: €1,672,860,000) and net debt of €733,276,000 at 31 July 2019
(2018: €1,510,264,000). The Group has set the following goals for the management of its
capital and net debt:
–
– To maintain prudent Net Debt: EBITDA1
and interest cover (EBITDA: Net interest,
including Hybrid dividend1
) ratios to support a prudent capital base and ensure a
long-term sustainable business.
–
– To achieve a return for investors in excess of the Group’s weighted average cost of capital.
–
– To apply a dividend policy that takes into account the Group’s financial performance
and position, the Group’s future outlook and other relevant factors including tax and
other legal considerations.
The Group employs two ratio targets to monitor its financing covenants:
1 Calculated as per Syndicated Bank Facilities Agreement terms.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
157
AG Accounts 2019
Group
–
– The Group’s Net Debt: EBITDA ratio is below 3.5x – the ratio was 2.43x
at 31 July 2019 (2018 3.83x).
–
– The Group’s interest cover (EBITDA: Net interest, including Hybrid dividend) is above
2.0x – the ratio was 3.45x at 31 July 2019 (2018: 3.72x).
These ratios were complied with throughout the year ended 31 July 2019, and are
reported to the Board of Directors at regular intervals through internal financial reporting.
Following the amendment of the Group’s Syndicated Bank Facilities Agreement in
September 2018, and successful completion of the capital raise during November 2018,
the Group’s financial covenants are as follows:
– Leverage covenant (Net Debt: EBITDA):
– 
maximum 3.5x thereafter
– 
Interest cover covenant (EBITDA: Net interest, including Hybrid dividend):
– 
minimum 2.0x until July 2019
– 
minimum 3.0x thereafter
No dividend is planned to be proposed for the year ended 31 July 2019.
26 Commitments
26.1 Commitments under operating leases
Non-cancellable operating lease rentals are payable as set out below. These amounts
represent minimum future lease payments, in aggregate, that the Group is required to
make under existing lease agreements.
in EUR `000 2019 2018
Within one year 60,645 57,121
In two to five years 161,503 163,960
After more than five years 105,316 107,625
Total 327,464 328,706
26.2 Capital commitments
Capital expenditure contracted for at the end of the year, but not yet incurred, is as
follows:
in EUR `000 2019 2018
Property, plant and equipment 20,354 13,765
Intangible assets 36 –
Total 20,390 13,765
26.3 Other commitments
The Company is party to cross guarantees on Group borrowings. The Company
has also guaranteed the liabilities of subsidiaries within the Group. The Company
treats these guarantees as a contingent liability, until such time as it becomes probable
that the Company will be required to make a payment under the guarantee.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
158
AG Accounts 2019
Group
27 Contingent liabilities
Letters of credit and guarantees
Letters of credit and guarantees amounting to €14.5 million are outstanding at 31 July
2019 (2018: €12.2 million). The Group does not expect any material loss to arise from
these letters of credit or guarantees.
Litigation
The Group is subject to litigation risks and legal claims that arise in the ordinary course
of business, for which the outcomes are not yet known. These claims are not currently
expected to give rise to any material significant future cost or contingencies.
28 Related party transactions
In the normal course of business, the Group undertakes transactions with its joint
ventures and other related parties. A summary of transactions with these related ­
parties
is as follows:
in EUR `000 2019 2018
Purchase of goods – (141)
Provision of services 1,310 1,832
Purchase of goods and provision of services relate primarily to transactions with joint
ventures during the year.
The trading balances owing to the Group from related parties were €21,000 (2018:
€135,000) and the trading balances owing from the Group to these related parties were
€225,000 (2018: €228,000).
Compensation of key management
For the purposes of the disclosure requirements of IAS 24, ‘Related Party Disclosures’,
the term ‘key management personnel’ (i.e. those persons having authority and responsibility
for planning, directing and controlling the activities of the Group) comprises the Board of
Directors and the Group Executive Management, which manage the business and affairs
of the Group. A summary of the compensation to key management is as follows:
in EUR `000 2019 2018
Short-term employee benefits 8,395 5,515
Other long-term benefits 570 456
Long-term incentives (LTIP) 737 –
Total key management compensation 9,702 5,971
Jim Leighton was elected to the Board of Directors at the 2017 AGM. In
June 2018, entered into a consultancy arrangement with him under which he
would provide advisory services on the implementation of  three-year €200m
cost reduction plan, Project Renew. The compensation payable to Mr. Leighton under
the arrangement amounted to €133,000, over the period of the consultancy, of which
€103,000 accrued during FY19 and is included in the amounts above.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
159
AG Accounts 2019
Group
None of the non-executive members of the Board of Directors has fulfilled any
operational management functions for companies of the Group in the three
years immediately preceding the period. Related-party transactions with any members of
the Board of Directors or Executive Management did not exceed €100,000 in aggregate
during the year ended 31 July 2019, other than the aforementioned consultancy fee paid
to Jim Leighton.
Further detailed disclosure in relation to the compensation entitlements of the Board
of Directors and Executive Management is provided in the Compensation Report on pages
54 to 68.
29 Post balance sheet events – after 31 July 2019
As announced on 4 October 2019, the Group received a binding offer from Invest Group
Zouari (‘IGZ’) to purchase 43.3% of its 47.8% holding in Picard for gross consideration
of €156m. would retain a 4.5% interest in Picard, to be recorded as a financial
investment at fair value. The transaction is subject to a works council consultation process
in France and to customary regulatory approvals. Subject to  acceptance of
the offer following completion of the works council consultation process, the transaction
is expected to close in the last quarter of calendar year 2019. Upon completion, the
proposed transaction is expected to generate a material one-off non-cash accounting
loss, currently estimated to be c. €280m based on year end 2019 carrying value. This
loss could change depending on the timing of when the proposed transaction closes,
as the results for Picard would continue to be consolidated under the equity method of
accounting until then.
During October 2019, the Group completed the disposal of its UK Food Solutions
business within the Europe operating segment for gross consideration of €8m. The
transaction is expected to result in a loss relating to derecognition of goodwill and recycle
of cumulative foreign currency translation loss since the initial investment.
These disposals are consistent with  strategy to focus on its frozen B2B bakery
operations and exit non-core businesses.
In Switzerland, changes to the Swiss federal and the canton of Zurich tax laws, which
eliminated certain favourable tax regimes, were substantively enacted in May and
September 2019 respectively. As substantive enactment at the Zurich cantonal level had
not taken place until after the reporting date of 31 July 2019, no adjustments to 
deferred tax position have been reported in the balance sheet.
If reflected, this would have led to an estimated €11m additional deferred tax expense and
would have resulted in no change in current tax expense. Changes in the tax laws in other
Swiss cantons in which the Group operates are still under discussion.
30 Risk assessment
The Board and senior management continue to invest significant time and resources in
identifying specific risks across the Group, and in developing a culture of balanced risk
minimisation. The Group has formal risk assessment processes in place through which
risks are identified and associated mitigating controls are evaluated. These processes
are driven by local management, who are best placed to identify the significant ongoing
and emerging risks facing the business. The outputs of these risk assessment processes
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
160
AG Accounts 2019
Group
are subject to various levels of review by Group management and Internal Audit, and a
consolidated Risk Map denoting the potential frequency, severity and velocity of identified
risks is reviewed by the Board of Directors on at least an annual basis. Risks identified,
and associated mitigating controls, are also subject to audit as part of various operational,
financial, health and safety audit programmes.
31 Accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires management
to make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and expenses.
Information about significant areas of estimation, uncertainty, and critical judgements
in applying accounting policies that have the most significant effect on the amounts
recognised in the Group consolidated financial statements are described below:
Note Name
Note 14 Goodwill and intangible assets
Note 15 Joint ventures
Note 24 Employee benefits
Notes 9&23 Income taxes and deferred income tax
The Group tests annually whether goodwill and intangible assets have suffered any
impairment, in accordance with the accounting policy. The recoverable amounts of
cash-generating units (CGUs) have been determined based on value in use calculations.
The value in use calculation is based on an estimate of future cash flows expected to
arise from the CGUs and these are discounted to net present value using an appropriate
discount rate. The tests are dependent on management’s estimates and judgements, in
particular in relation to the forecasting of future cash flows, the discount rates applied to
those cash flows, the expected long term growth rate of the applicable businesses and
terminal values. Such estimates and judgements are subject to change as a result of
changing economic conditions. Additional information in relation to impairment reviews,
including headroom and sensitivity analysis is disclosed in note 14.
As set out in note 15, joint ventures, while Picard is not considered part of  long-
term strategy, and is therefore non-core to the group, disposal of the Group’s investment
as of 31 July 2019 was only possible with agreement of both joint venture partners.
Therefore, the Group’s investment continues to be accounted on a historical cost basis
using the equity method of accounting. As at 31 July 2019 it was not likely that the Group
would be in a position to sell its investment in Picard and it was management’s judgement
that it would recover its value through a continued interest in the joint venture. On that
basis, the appropriate method to validate the carrying value was a value in use model.
The estimation of and accounting for employee benefits involves judgements made on a
country by country basis, in conjunction with independent actuaries in relation to various
assumptions. Estimates are required in respect of uncertain future events including
mortality rates of members and increase in pension payments linked to certain obligations
and discount rates used in estimating the present value of the schemes assets and
liabilities. Details of the financial position of the employee benefit schemes are set out in
note 24.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
161
AG Accounts 2019
Group
Income taxes, as set out in note 9, and deferred taxes, as set out in note 23, are subject
to management estimate. The Group Consolidated Balance Sheet includes deferred
taxes relating to temporary differences, which are based on forecasts of the corresponding
entity’s taxable income and reversal of these temporary differences, forecasted over
a period of several years. As actual results may differ from these forecasts, these deferred
taxes may need to be adjusted accordingly.
Judgement and estimation is required in determining the income tax charge as the Group
operates in multiple jurisdictions and the tax treatment of many items is uncertain with
tax legislation being open to different interpretation. In addition, the Group is subject
to uncertainties involving tax audits which can involve complex issues that can require
extended periods to conclude. The Group considers these uncertain tax positions in the
recognition of its income tax/deferred tax assets or liabilities. The Group uses in-house tax
experts, professional firms and previous experience when assessing tax risks and the tax
uncertainties have been measured using a probability weighted expected value approach.
Group Consolidated Financial Statements
Notes to the Group Consolidated
Financial Statements (continued)
for the year ended 31 July 2019
162
AG Accounts 2019
Group
32 Significant subsidiaries and joint ventures
A list of all of the Group’s significant subsidiary and joint venture undertakings, as at
31 July 2019 and 2018, are provided in the table below. For the purposes of this note,
a significant subsidiary is one that has third-party revenues equal to, or in excess of,
2% of total Group revenue and/or consolidated Group assets equal to, or in excess of,
2% of total Group assets. A significant joint venture is one in which the Group’s share
of profits after tax is equal to, or in excess of, 2% of total Group operating profit and/or
the carrying value of the investment is equal to, or in excess of, 2% of total Group assets.
Name Nature of business Currency
Share
Group
Opinion
We have audited the group consolidated financial statements of AG and its
subsidiaries (the Group or Company), which comprise the group consolidated income
statement and group consolidated statement of comprehensive income for the year
ended 31 July 2019, the group consolidated balance sheet as at 31 July 2019 and the
group consolidated statement of changes in equity and the group consolidated cash
flow statement for the year then ended, and notes to the group consolidated financial
statements, including the group statement of accounting policies.
In our opinion, the group consolidated financial statements (on pages 80 to 162) give a
true and fair view of the consolidated financial position of the Group as at 31 July 2019
and its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with the International Financial Reporting Standards (IFRS) and
comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on
Auditing (ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions
and standards are further described in the ‘Auditor’s responsibilities for the audit of the
consolidated financial statements’ section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and
the requirements of the Swiss audit profession, as well as the IESBA Code of Ethics
for Professional Accountants, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall Group materiality: EUR 6,750,000
We concluded full scope audit work at six reporting entities in five
countries. Our audit scope addressed 66% of the Group’s revenue.
In addition, specified procedures were performed on a further five
reporting entities in five countries representing a further 16% of
the Group’s revenue.
As key audit matter the following area of focus has been identified:
– Recoverability of Goodwill
Materiality
Audit scope
Key audit
matters
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion
aims to provide reasonable assurance that the consolidated financial statements are free
from material misstatement. Misstatements may arise due to fraud or error. They are
considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the consolidated financial
statements.
Group Consolidated Financial Statements
Report of the statutory auditor
to the General Meeting of AG
on the consolidated financial statements 2019
(continued)
164
AG Accounts 2019
Group
Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall Group materiality for the consolidated financial statements
as a whole as set out in the table below. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate,
on the consolidated financial statements as a whole.
Overall Group materiality EUR 6,750,000
How we determined it 2.25% of Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA), as defined by the bank covenant,
rounded
Rationale for the materiality
benchmark applied
We chose EBITDA as the benchmark because, in our view, it is
the benchmark against which the performance of the Group is
most commonly measured by the relevant users of the financial
statements and because Loss before income tax is significantly
impacted by depreciation and amortization.
We agreed with the Audit Committee that we would report to them misstatements above
EUR 675,000 identified during our audit as well as any misstatements below that amount
which, in our view, warranted reporting for qualitative reasons. Misstatements that only
result in balance sheet reclassifications are reported to the Audit Committee if they are above
EUR 4,800,000.
Audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide
an opinion on the consolidated financial statements as a whole, taking into account the
structure of the Group, the accounting processes and controls, and the industry in which
the Group operates.
The Group financial statements are a consolidation of over 110 reporting entities, comprising
the Group’s operating businesses and centralised functions. We identified six reporting
entities that, in our view, required a full scope audit, due to their size or risk profile. These six
reporting entities are based in the United States of America, Germany, France, Switzerland
and Ireland. Specific audit procedures on certain balances and transactions were performed
at a further five reporting entities.
In order to fulfil our responsibilities for the direction, supervision and performance of the
Group audit, we were involved in the work performed by reporting entity audit teams by
performing selected site visits, participating in selected clearance meetings with management
and having detailed discussions with the audit teams around audit approach and matters
reported to us.
Audit procedures over the consolidation, significant Group functions such as treasury and
tax and goodwill impairment were performed centrally. Overall, our audit scope, including
specified audit procedures, accounted for 82% of Group revenues.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Group Consolidated Financial Statements
Report of the statutory auditor
to the General Meeting of AG
on the consolidated financial statements 2019
(continued)
165
AG Accounts 2019
Group
Recoverability of Goodwill
Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other
information comprises all information included in the annual report, but does not include the
consolidated financial statements, the standalone financial statements and the remuneration
report of AG and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in
the annual report and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility
is to read the other information in the annual report and, in doing so, consider whether
the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
As of 31 July 2019, the carrying
value of goodwill was EUR 1.458
billion, which represents
approximately 31% of total assets
and approximately 60% of total
equity. Goodwill is allocated to six
groups of cash-generating units
(CGUs).
Goodwill is tested for impairment
annually or more frequently if
events or changes in circumstances
indicate a potential impairment.
No impairment charge was
recognised during the year in
respect of goodwill.
We focused on this area given the
scale of the assets and because
the Company’s assessment of the
carrying value of goodwill involves
complex and subjective judgements
in respect of the assumptions
underpinning the value in use cash
flow models used to determine
the recoverable amount of each of
the Company’s CGUs. These relate
to the projection of future business
performance and profitability
for a period of three years,
estimation of terminal growth rates
and determination of a discount
rate for each CGU.
Refer to page 100 (Group
Statement of Accounting Policies,
Business combinations and
goodwill) and pages 126–129
(Note 14, Goodwill and intangible
assets).
–	
We assessed the Company’s allocation of goodwill to the
CGUs, and the change in allocation during the year,
by assessing the reasonableness of the CGUs taking into
consideration internal management reporting and how
the business is managed within and across geographies.
–	
We obtained the Company’s impairment analysis for each
CGU and performed the following procedures, among
others:
		 – 
Tested the mathematical accuracy of the model
and traced amounts to underlying financial
statement and other information, as applicable.
		 – 
Reconciled the three year projections to the budget
that was subject to scrutiny and approval by the
Board of Directors and gained an understanding
of the process undertaken to develop the projections.
In addition, discussed the projections with the
Company in order to obtain an understanding of
various factors that were built into the assumptions.
		 – 
Compared short term and terminal growth rate
assumptions to relevant market and economic
forecasts.
–	
With the support of internal valuation specialists, we
assessed the discount rates applied by the Company, by
performing an independent calculation of the weighted
average cost of capital for each CGU (adjusted to reflect
the risks associated with each CGU).
–	
We obtained the Company’s sensitivity analyses around key
assumptions to ascertain the effect of changes to those
assumptions on the value in use estimates and recalculated
these sensitivities. In addition, we performed our own
sensitivity analyses by changing various key assumptions
to assess whether the headroom of the recoverable amounts
over the respective carrying amounts might be sensitive
to a reasonably possible movement in any of the underlying
assumptions. North America and North West
Europe were the CGUs requiring particular attention based
on the level of headroom under our sensitivity analyses.
–	
We reviewed and validated disclosures regarding key
assumptions, headroom and sensitivity as presented in
the Group Consolidated Financial Statements in Note 14.
Based on the work performed, we found the judgement that
the carrying amount of the goodwill of each CGU is recoverable,
to be reasonable.
Key audit matter How our audit addressed the key audit matter
Group Consolidated Financial Statements
Report of the statutory auditor
to the General Meeting of AG
on the consolidated financial statements 2019
(continued)
166
AG Accounts 2019
Group
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial
statements that give a true and fair view in accordance with IFRS and the provisions of
Swiss law, and for such internal control as the Board of Directors determines is necessary
to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible
for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the Board of Directors either intends to liquidate the Group or to cease operations, or has
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we
exercise professional judgment and maintain professional scepticism throughout the audit.
We also:
–
– Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
–
– Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control.
–
– Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made.
–
– Conclude on the appropriateness of the Board of Directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence
Group Consolidated Financial Statements
Report of the statutory auditor
to the General Meeting of AG
on the consolidated financial statements 2019
(continued)
167
AG Accounts 2019
Group
obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
–
– Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
–
– Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance
of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors or its relevant committee regarding, among
other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that
we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee,
we determine those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890,
we confirm that an internal control system exists which has been designed for the
preparation of consolidated financial statements according to the instructions of the Board
of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Sandra Böhm Uglow Carrie Rohner
Audit expert
Auditor in charge
Zurich, 8 October 2019

AG Accounts 2019 Company Financial Statements
Company
Notes to the Company Financial Statements
1 Basis of presentation
The financial statements of AG, with a registered address of Ifangstrasse 9,
8952 Schlieren, have been prepared in accordance with the requirements of Swiss law.
The Company’s accounting period for the year is from 1 August 2018 to 31 July 2019.
2 Accounting policies
Financial Assets
Financial assets are valued at acquisition cost, less adjustments for foreign currency
movements and any other impairment of value.
Investments
Investments are initially recognised at cost. These investments are assessed annually
and adjusted to their recoverable amount, where necessary.
Foreign currency translation
Assets and liabilities in currencies other than Swiss francs are translated to Swiss
francs using year-end rates of exchange. Income and expenses denominated in
foreign currencies are recognised in Swiss francs at the applicable rate of exchange
on the date of the transactions.
Dividends
Dividend income resulting from financial investments is recorded upon approval
of the dividend distribution.
Revenue from licences and management fees
Revenues from licences and management fees from Group companies are recognised in
the period in which they are earned.
Treasury shares
Treasury shares are recognised at acquisition cost and include shares held directly
or by any AG Group company.
3 Full-time equivalents
The number of full-time equivalents in AG is not greater than 50. Please refer
to page 117 of the Group Consolidated Financial Statements to view the Group’s full-time
equivalents.
4 Loans, guarantees and pledges in favour of third parties
The Company has the following outstanding bonds and bank loans, which are included
within interest bearing loans and borrowings.
Bonds outstanding
1 The schedule of mandatory repayments by financial year on the amortising Syndicated Bank Term Loan
is as follows: FY 2020 – €80m; FY 2021 – €80m; FY 2022 – €80m and FY 2023 – €113m.
The average interest rate on the combined RCF and Term Loan facilities is 1.74%.
During July 2017, the Group agreed to the terms of a new five-year unsecured €1,800m
refinancing of its Syndicated Bank RCF and term loan facility, comprising a €1,000m
amortising term loan and a €800m revolving credit facility. On 22 September 2017, this
financing was used to repay the existing revolving credit and term loan facilities outstanding
at that time in full.
In September 2018, the Group received the unanimous consent of its lenders to amend
its existing Facilities Agreement to provide additional flexibility to pursue its new business
strategy and implement a share capital increase as part of its deleveraging plan. Details of
the capital increase are included in note 6 on page 173. Details of the Group's financing
covenants are included in note 25 to the Group Financial Statements on pages 156 and 157.
The short-term portion of the Company’s interest-bearing loans and borrowings relates
primarily to amounts drawn by the Company against positive cash balances of other entities
within the Group’s overall cash pooling arrangement. These cash pooling overdrafts are
repayable on demand and form an integral part of the Group’s cash and debt management
structure.
The Company is party to cross guarantees on Group borrowings. The Company has
also guaranteed the liabilities of subsidiaries within the Group. The Company treats
these guarantees as a contingent liability, until such time as it becomes probable that the
Company will be required to make a payment under the guarantee.
5 Details of investments
The Company holds direct investments in the following entities, all of which are intermediate
holding companies or intercompany financing entities within the Group.
Share capital
millions Percentage
The amount disclosed represents limited liability capital.
As a result of reductions in profitability within Hiestand Beteiligungsholding AG (CH) & Co.
KG and its subsidiaries during previous years and reductions in estimated future profitability
during the prior year, the Company recorded a CHF 110,000,000 impairment of its
investment in this wholly-owned subsidiary during the year ended 31 July 2018.
Notes to the Company Financial Statements
Conditional capital – – – –
Authorised capital 8,071 161 8,071 161
During November 2018, the Group completed a capital raise, by way of a rights issue,
in order to strengthen the balance sheet, provide necessary liquidity and working
capital funding, and to enable delivery of  three year turnaround plan, Project
Renew. At the Annual General Meeting on 1 November 2018, a total of 900,184,940
registered shares with a nominal value of CHF 0.02 each were offered to  existing
shareholders on a 10 for 1 share basis.
The proceeds of the capital raise upon completion of the rights issue, net of related
transaction costs, resulted in an increase in share capital of CHF 18,003,699, and an
increase in legal reserves from capital contribution of CHF 827,160,265 during the year
ended 31 July 2019.
The dividend for the year ended 31 July 2017 was proposed to be settled as a scrip
dividend via newly issued share capital, based on a ratio of one new share for every 80
shares held, and was approved at the Annual General Meeting held on 7 December 2017.
Accordingly, a total of 1,110,253 new shares were issued, with a par value of CHF 0.02
per share during the year ended 31 July 2018.
In accordance with Article 5 of the Articles of Association (Authorised capital for
general purposes), the Board of Directors is authorised to increase the share capital of the
Company at any time until 9 December 2019 by a maximum amount of CHF 161,416 by
issuing of up to 8,070,800 fully paid up registered shares with a par value of CHF 0.02
each. A partial increase is permitted.
The Board of Directors is authorised to withdraw or limit the pre-emptive rights of the
existing shareholders if the newly issued shares are used for the following purposes:
(1) mergers, acquisitions (including take-overs) of companies, parts of companies or
holdings, equity stakes (participation) or new investments planned by the Company,
or the financing or re-financing of such transactions, (2) broadening the shareholder
constituency, or (3) employee participations.
Notes to the Company Financial Statements
(continued)
174
AG Accounts 2019 Company Financial Statements
Company
The registered share capital of the Company as at 31 July 2019, amounts to
CHF 19,862,114.54, and is divided into 993,105,727 registered shares with
a par value of CHF 0.02 per share, of which 990,587,322 are outstanding and 2,518,405
are classified as treasury shares.
The registered share capital of the Company as at 31 July 2018, amounted to
CHF 1,858,415.74, and was divided into 92,920,787 registered shares with
a par value of CHF 0.02 per share, of which 89,933,679 were outstanding and 2,987,108
were classified as treasury shares.
Shareholders are entitled to dividends as declared and approved. The shares
rank pari passu in all respects with each other.
7 Treasury shares owned by the Company
or one of its subsidiaries
As at 1 August 2,987 115,689 3,052 117,871
Release of treasury shares
upon exercise of LTIP shares (85) (2,853) (65) (2,182)
Release of treasury shares as
restricted shares (384) (12,910) – –
As at 31 July 2,518 99,926 2,987 115,689
During the year ended 31 July 2019, the performance conditions associated with 84,815
Restricted Stock Unit awards were fulfilled (2018: 64,899). Therefore, these awards were
approved as vested by the Remuneration Committee and were subsequently exercised
by employees, in exchange for the same number of shares. The weighted average share
price at the time of these exercises was CHF 10.33 (2018: CHF 28.69).
In addition, during the year ended 31 July 2019, 383,888 shares were issued out of
treasury shares, is respect of restricted shares for non-executive directors, as detailed on
pages 54 to 68 of the Compensation Report.
These shares were issued out of shares previously held in treasury by Grange
Company UC, a wholly-owned subsidiary within the AG Group.
Notes to the Company Financial Statements
(continued)
175
AG Accounts 2019 Company Financial Statements
1 Shareholders with significant holdings before the November 2018 capital raise who have not notified the
Group of a change in their holdings above or below a disclosure threshold are assumed to have offset the
dilutive effect of the capital increase by participating with a number of shares which prevented them being
required to disclose a crossing of a disclosure threshold.
Any significant shareholder notifications during the year, and since 31 July 2019, are
available from the Group’s website at:
www.aryzta.com/investor-centre/shareholder-notifications.
9 Pension fund liability
The pension fund liability was CHF 53,744 at 31 July 2019 (2018: CHF 20,913).
Notes to the Company Financial Statements
(continued)
176
AG Accounts 2019 Company Financial Statements
Company
10 Non-executive Directors and Executive Management share
interests
Please refer to the AG Compensation Report on pages 54 to 68 for details
on the compensation process and compensation for the year of Non-executive Directors
and Group Executive Management.
Non-executive Directors’ and Executive Management’s share interests
The Directors and Company Secretary had no interests, other than those shown below,
in the ordinary shares in, or loan stock of, the Company or other Group undertakings.
Beneficial interests at 31 July were as follows:
Effective 1 November 2018, C. Adair retired from the Board and M. Andres, G. Flack and T. Lodge were elected
to the Board.
2	
The Beneficial holding of J. Leighton is held in the form of Restricted Stock Units.
No loans or advances were made to members of the Board of Directors or to Executive
Management during the financial year, or were outstanding at 31 July 2019 (2018: none).
Notes to the Company Financial Statements
(continued)
177
AG Accounts 2019 Company Financial Statements
Company
Executive Management’s interests in equity instruments under the LTIP
Opening
position
31 July 2018
No. of PSUs
granted during
the year1
No. of PSUs
Closing position
31 July 20192
No. of options
granted during
the year1
No. of options
Closing position
31 July 20192
Executive Management
1	
PSU's and options are presented at target award. The number of PSU's and options vested may change
depending on the achievement of operating performance measures at vesting.
2	
All awards are unvested as at 31 July 2019.
Previous and discontinued compensation plans
The following table details awards outstanding under the Option Equivalent Plan in favour of
Executive Management:
Options
carried forward
1 August 2018
Modified
during
the year1
Closing
position
31 July 2019
Of which
Vesting criteria
have been
fulfilled2
Executive Management

1	
During the financial year ended 31 July 2019, in order to maintain the dilutive impact of the November
2018 capital increase at a consistent level for outstanding LTIP awards with the dilution experienced by
shareholders who did not participate in the rights issue and instead sold their rights received, the Group
adjusted all outstanding LTIP awards by dividing the previous exercise price of each outstanding LTIP
award by the 4.64x Theoretical Ex-Rights Price (‘TERP’) and likewise by multiplying the previous number
of outstanding LTIP awards by TERP. Additionally, in order to eliminate the impact of the Scrip Dividend
issued in January 2018, the Group also adjusted all outstanding LTIP awards by dividing the exercise price
by 81 and multiplying by 80 and likewise multiplying the number of LTIP awards outstanding by 81 and
dividing by 80.
2	
The weighted average exercise price of all Option Equivalent Plan awards that remain outstanding and for
which the vesting conditions have been met is CHF 8.31.
Notes to the Company Financial Statements
(continued)
178
AG Accounts 2019 Company Financial Statements
Company
11 Post balance sheet events – after 31 July 2019
As announced on 4 October 2019, the Group received a binding offer from Invest Group
Zouari (‘IGZ’) to purchase 43.3% of its 47.8% holding in Picard for gross consideration
of €156m. would retain a 4.5% interest in Picard, to be recorded as a financial
investment at fair value. The transaction is subject to a works council consultation process
in France and to customary regulatory approvals. Subject to  acceptance of
the offer following completion of the works council consultation process, the transaction
is expected to close in the last quarter of calendar year 2019. Upon completion, the
proposed transaction is expected to generate a material one-off non-cash accounting
loss, currently estimated to be c. €280m based on year end 2019 carrying value. This
loss could change depending on the timing of when the proposed transaction closes,
as the results for Picard would continue to be consolidated under the equity method of
accounting until then.
During October 2019, the Group completed the disposal of its UK Food Solutions
business within the Europe operating segment for gross consideration of €8m. The
transaction is expected to result in a loss relating to derecognition of goodwill and recycle
of cumulative foreign currency translation loss since the initial investment.
These disposals are consistent with  strategy to focus on its frozen B2B bakery
operations and exit non-core businesses.
In Switzerland, changes to the Swiss federal and the canton of Zurich tax laws, which
eliminated certain favourable tax regimes, were substantively enacted in May and
September 2019 respectively. As substantive enactment at the Zurich cantonal level had
not taken place until after the reporting date of 31 July 2019, no adjustments to ARYZTA
AG’s tax position have been reported in the Company balance sheet. If reflected, there
is currently no impact on the current tax expense of the Company expected. Changes in
the tax laws in other Swiss cantons in which the Group operates are still under
discussion.
Company Appropriation of Available Earnings
179
AG Accounts 2019 Company Financial Statements
Company
Appropriation of available earnings
The Board of Directors will propose to the Annual General Meeting of Shareholders
the following appropriation of earnings:
in CHF `000 2019 2018
Balance of retained earnings carried forward 514,107 477,153
Net profit for the year 50,419 36,954
Closing balance of retained earnings 564,526 514,107
Dividend payment from retained earnings – –
Balance of retained earnings to be carried forward 564,526 514,107
Report of the statutory auditor
to the General Meeting of AG
on the financial statements 2019
180
AG Accounts 2019 Company Financial Statements
Company
Opinion
We have audited the financial statements of AG, which comprise the income
statement for the year ended 31 July 2019, the balance sheet as at 31 July 2019 and
notes for the year then ended, including a summary of significant accounting policies.
In our opinion, the financial statements (on pages 168 to 178) as at 31 July 2019 comply
with Swiss law and the company’s articles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards.
Our responsibilities under those provisions and standards are further described in the
‘Auditor’s responsibilities for the audit of the financial statements’ section of our report.
We are independent of the entity in accordance with the provisions of Swiss law and
the requirements of the Swiss audit profession and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall materiality: CHF 27,750,000
We tailored the scope of our audit in order to perform sufficient
work to enable us to provide an opinion on the financial state-
ments as a whole, taking into account the structure of the entity,
the accounting processes and controls, and the industry in which
the entity operates.
As key audit matter the following area of focus has been identified:
– Valuation of investments in subsidiaries
Materiality
Audit scope
Key audit
matters
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion
aims to provide reasonable assurance that the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered
material if, individually or in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds
for materiality, including the overall materiality for the financial statements as a whole
as set out in the table below. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in
aggregate, on the financial statements as a whole.
Overall materiality CHF 27,750,000
How we determined it 0.5 % of total assets, rounded
Rationale for the materiality
benchmark applied
We chose total assets as the benchmark because, in our view,
it is the benchmark that is most relevant for a holding company
that mainly holds investments and is not profit oriented, and
it is a generally accepted benchmark.
Report of the statutory auditor
to the General Meeting of AG
on the financial statements 2019 (continued)
181
AG Accounts 2019 Company Financial Statements
Company
We agreed with the Board of Directors that we would report to them misstatements
above CHF 2,750,000 identified during our audit as well as any misstatements below
that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We designed our audit by determining materiality and assessing the risks of material
misstatement in the financial statements. In particular, we considered where subjective
judgements were made; for example, in respect of significant accounting estimates that
involved making assumptions and considering future events that are inherently uncertain.
As in all of our audits, we also addressed the risk of management override of internal
controls, including among other matters consideration of whether there was evidence
of bias that represented a risk of material misstatement due to fraud.
Report on key audit matters based on the circular 1/2015 of the Federal Audit
Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of investments in subsidiaries
Investments in subsidiaries total
CHF 2.2 billion (39.4% of total assets)
as of 31 July 2019. Investments
are carried at initial cost value and
are subject to an annual impairment
assessment.
To identify indicators of impairment
of investments, management compared
the carrying value of the investments
with the investee’s net assets.
For investments with indicators of
impairment, management prepared
an estimate of the recoverable amount
using cash flow projections subject to
scrutiny and approval by the Board of
Directors of AG.
In general discrete valuation is made
for each single investment. Certain
investments are subject to a group
valuation approach due to their
homogeneous nature.
As a result of the current year
assessment, no impairment was
recorded.
We consider the valuation of
investments as a particularly significant
area due to the size of the carrying value
and judgement involved in assessing
the recoverability of these assets.
The valuation methods used involve
considerable judgment with respect
to assumptions about the future
performance of the business.
Refer to Note 2 Accounting policies
and Note 5 Details of investments.
We evaluated and tested management’s process to identify
impairment indicators by reperforming the comparison for
an appropriate sample of investments.
We evaluated and challenged the reasonableness of the key
assumptions applied by management in its determination
of the recoverable amount, such as:
–	
Cash flow projections in the forecast, by comparing
them to the budgets rolled up into the strategic plan
approved by the Board of Directors of AG.
–	
Discount rate used, by assessing the reasonableness
of the model employed.
Based on the work performed, we found that the
assessments were based on reasonable assumptions.
Key audit matter How our audit addressed the key audit matter
Report of the statutory auditor
to the General Meeting of AG
on the financial statements 2019 (continued)
182
AG Accounts 2019 Company Financial Statements
Company
Responsibilities of the Board of Directors for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in
accordance with the provisions of Swiss law and the company’s articles of incorporation,
and for such internal control as the Board of Directors determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing
the entity’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
Board of Directors either intends to liquidate the entity or to cease operations, or has
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law
and Swiss Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we
exercise professional judgment and maintain professional scepticism throughout the audit.
We also:
–
– Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
–
– Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control.
–
– Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made.
–
– Conclude on the appropriateness of the Board of Directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the entity’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the
entity to cease to continue as a going concern.
Report of the statutory auditor
to the General Meeting of AG
on the financial statements 2019 (continued)
183
AG Accounts 2019 Company Financial Statements
Company
We communicate with the Board of Directors or its relevant committee regarding, among
other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that
we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee,
we determine those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890,
we confirm that an internal control system exists which has been designed for the
preparation of financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss
law and the company’s articles of incorporation. We recommend that the financial statements
submitted to you be approved.Bank of Ireland Group plc
Annual Report
20
19
Strategic Report 3
2019 key performance highlights 3
Chairman’s review 4
Chief Executive’s review 6
Our purpose and values 10
Our strategy 11
Divisional review 18
Responsible and sustainable business 24
Our governance structure 35
Risk review 38
Financial Review 41
Governance 58
Risk Management Report 110
Financial Statements 161
Other Information 303X
Our Ambition is to be the
National Champion Bank
in Ireland, with UK and selective
international diversification.
Our Purpose is to enable our
customers, colleagues and
communities to thrive.
2
View this report online
This Annual Report and other information relating to Bank of Ireland is available at:
www.bankofireland.com

The Group’s forward looking statement
can be found on page 330.
  2
Financial
Performance
• Stable net interest
income; net interest
margin of 2.14% (2018: 2.20%)
• Costs reduced by €67m (4%)
• NPE ratio reduced by 190bps to 4.4% (2018: 6.3%)
Underlying1
profit
before tax
€758m
(2018: €935m)
Profit before tax
€645m
(2018: €835m)
Growth
• New lending up 3% to
€16.5bn (2018: €15.9bn)
• Irish mortgage market share
of 24%; increased SME
market share
• 11% income growth in Wealth
and Insurance
Net new
lending growth
€2.0bn
(2018: €1.3bn)
Transformation
• Cost reduction delivered
in each of the last four
reporting periods
• UK strategy making progress on ‘invest in,
improve and reposition’ strategy
• New digital platforms launched
Reduction in
underlying
operating expenses2
(before levies & regulatory charges)
4%/€67m
(2018: <3%/€48m)
Capital
• Organic capital generation of 170bps
• Unlocked additional 40bps through
capital initiatives
• Dividend increased by 9% to 17.5c per
share (€189m) from 16c per share
(€173m) in 2018
60%
employee
engagement score
(increase of 5% since 2018)
56:44
male / female
appointment
to management and
leadership positions
40%
reduction in carbon
emissions intensity (on
2011 baseline)
c.€11m
invested in learning
and development for
colleagues
>100k
children participated in
Financial Wellbeing
programme
€1bn
Sustainable Finance
Fund launched
2019 key performance highlights
Strategic Report
3

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
CET1 ratio
13.8%
(2018: 13.4%)
Further information on measures referred to
in our 2019 key performance highlights is
found in Alternative performance measures
on page 331.
1
The Group’s financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying
performance trends in the business.
2
Underlying operating expenses exclude levies and regulatory charges and non-core items. Including these items total costs were €13 million or 1% higher than 2018.
  3
Chairman’s review
The Group has continued to deliver on its growth and efficiency
strategy. With attractive market positions and the ongoing
commitment of colleagues across the Group, the Board is confident
that Bank of Ireland remains well placed to address ongoing
challenges and deliver value for our shareholders.
I am pleased to report that over the past
year the Group has continued to deliver on
the growth and efficiency strategy laid out
at our Investor Day in 2018. Our loan
books and Wealth and Insurance business
have grown, our cost1
base has reduced,
and our transformation programme has
made further progress. However, we also
face headwinds in our primary markets,
most notably a lower-for-longer interest
rate environment. In addition, heightened
competition in the United Kingdom (UK)
mortgage market, increases in regulatory
capital requirements, and political change,
including the ongoing uncertainties related
to the UK’s decision to leave the European
Union (EU), all present business
challenges. These headwinds are
impacting the timeframe for delivery of
some of our Investor Day targets; however,
I remain confident we have the right
strategy to deliver sustainable value for our
shareholders.
Strategy
Our ambition is to be the National
Champion Bank in Ireland, with UK and
selective international diversification. To
deliver on this ambition, we have outlined a
clear strategy to transform the Bank, serve
customers brilliantly and grow sustainable
profits.
Last year, I wrote of the imperative for the
financial services sector to adapt and
develop to meet rapidly changing
customer expectations. This remains as
critical now as it was then. To this end, we
have continued to make significant
investments to transform Bank of Ireland,
including our culture, our systems and our
business model, and to enhance services
to our customers.
The Group’s culture continues to
strengthen, with colleague engagement
improving again during 2019. We have
made progress in modernising our
systems, putting strong foundations in
place across all our technology layers while
improving efficiency and customer
experience. We have also continued to
transform the business model to create a
leaner, simplified and more agile
organisation. These investments and
enhancements leverage our strong
customer relationships to offer the right
products and services at the right time.
The rollout of the Group’s new Mobile App
and Wealth and Insurance digital platforms
are important milestones.
We are also investing in our UK and
international businesses. In the UK, we
extended our long-term financial services
partnership with the Post Office and exited
credit cards, unprofitable Automated Teller
Machines (ATMs) and current accounts.
These actions are consistent with the
imperative to improve returns in our UK
business.
The Group’s operating and financial
performance, combined with continued
organic capital generation, has contributed
to a robust capital position in 2019. I am
pleased to announce a proposed dividend
to shareholders in respect of 2019 of 17.5
cent per share, an increase of 9% on last
year’s level. This demonstrates continued
progress in line with our policy to increase
dividends on a prudent and progressive
basis, and over time, build towards a
payout ratio of around 50% of sustainable
earnings.
Purpose
Our purpose is to enable our customers,
colleagues and communities to thrive. To
achieve this purpose, we must ensure that
an appropriate corporate culture is
embedded across the organisation, and
that we conduct our business responsibly
and ethically at all times.
We are demonstrating our commitment
and heightened focus on all aspects of the
Responsible and Sustainable Business
(RSB) agenda. In 2019 the Group became
a signatory to the United Nations (UN)
Principles for Responsible Banking, which
is aligned with the Paris Climate
Agreement 2015. We are also a supporter
of the Task Force on Climate-related
Financial Disclosure (TCFD).
We launched Ireland’s first Financial
Wellbeing Programme, which underscores
our commitment to do more to support the
households and businesses that bank with
us. The Group also advanced a number of
green initiatives including our €1 billion
Sustainable Finance Fund and continued
progress on our Low Carbon Pledge.
We have realigned our governance
structure to ensure that RSB is a key focus
across all activities within the Group. The
role of the Group Nomination and
Governance Committee (GN&GC) has
been expanded to oversee our RSB
strategy.
Board
We are committed to ensuring that we
have the right balance of skills and
experience within the Board, including
diversity across all its dimensions.
During 2019 Andrew Keating stepped
down as Group Chief Financial Officer
(CFO) and Executive Director of the Group
after seven years during which he
demonstrated a successful track record of
financial leadership. He established a
strong finance function and was a key
member of the Board and Group Executive
team that saw Bank of Ireland repay fully
all State aid, return the Group to
sustainable profitability and resume
dividend payments to our shareholders.
We wish him well.
Myles O’Grady was announced as
incoming Group CFO and Executive
Director in October. Myles joined the Group
earlier in the year as Director of
Commercial Partnering and is a leading
finance professional with 30 years’
experience. He previously held senior roles
across retail, business and investment
banking, both in Ireland and internationally.
Eileen Fitzpatrick joined the Board in May.
She brings extensive capital markets and
public sector experience to the Group,
having held a number of senior roles in
both the asset management and
stockbroking industries, and more recently
was Head of New ERA at the National
Treasury Management Agency (NTMA).
In December, Michele Greene was
appointed to the Board, having been
nominated by the Minister for Finance. Her
experience as managing director of Digital
Banking and director of Strategic
Development at Virgin Money will further
enhance the Board’s experience in the
areas of change and digital and technology
innovation.
Remuneration
Staff turnover across the Group remains at
reasonable levels. However, competition
for talent in key prudential areas, such as
risk, finance and compliance, has
intensified as a consequence of the
substantial increase in the presence of
international financial services
organisations in Ireland. This challenge is
accentuated by the impact of the
remuneration restrictions under which the
Group and some of its competitors
operate. We are concerned about potential
risks that could open up in the Irish
banking sector as a result. This
disadvantage is most keenly felt by
investors in Bank of Ireland, as the only
institution to have repaid fully the
investment of the Irish taxpayer at the time
of the financial crisis.
The Group’s goal is to operate a
remuneration policy, including variable
remuneration, consistent with European
Banking Authority (EBA) guidelines. These
guidelines have been significantly
extended to be much stricter than what
operated in the past and enable much
better alignment of the interests of all
stakeholders (including in the delivery of
regulatory and customer service
objectives), with a much clearer emphasis
on risk management and long-term
sustainability.
Outlook
While the operating backdrop remains
subject to political and economic
developments, the progress delivered in
2019 in terms of lending, business income
and efficiency is a testament to our
strategic plan. The actions we are taking in
response to this macro-financial backdrop
demonstrate the flexible and responsive
leadership by Francesca and her Executive
team. With attractive market positions and
the ongoing commitment of colleagues
across the Group, the Board is confident
that Bank of Ireland remains well placed to
address ongoing challenges and deliver
value for our shareholders.
Patrick Kennedy
Chairman
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Chief Executive’s review
We continued to deliver on our strategic
priorities throughout 2019.
I am pleased to report that we have made
good progress in delivering on our
strategic priorities. For the second
successive year, we have grown our loan
book, expanded our Wealth and Insurance
business, reduced our cost1
base and
lowered our non-performing exposures
(NPEs). We grew our capital base during
2019 and are reporting an underlying profit
before tax of €758 million for the period.
While Brexit related uncertainties persisted
throughout 2019, the Irish economy has
continued to expand. The economic
fundamentals in our core home market
remain supportive. Irish Gross Domestic
Product (GDP) growth is expected to be
5.8% in 2019 while unemployment is at a
low level. The UK economy remained
resilient with moderate GDP growth and
unemployment at a multi-decade low.
Strategic ambition
Our ambition is to be the National
Champion bank in Ireland, with UK and
selective international diversification. Our
strategic priorities are to transform the
Bank, serve customers brilliantly and grow
sustainable profits.
18 months on from our Investor Day in
June 2018, we have continued to make
good progress in delivering on our
strategy. In particular we are:
• supporting home building and home
buying in Ireland;
• growing our loan book while
maintaining commercial discipline on
risk and pricing;
• growing our Wealth and Insurance
business;
• improving efficiency and reducing our
costs;
• benefitting from the investment in
transformation of our culture, systems
and business model;
• making demonstrable progress on the
execution of our strategy in the UK to
increase returns; and
• strongly generating organic capital with
an increasing dividend.
How changing environment impacts
our targets
Since Investor Day, the environment in
which we operate has changed materially
and is more challenging. Most notably from
a financial returns perspective, there has
been a change in interest rate expectations
with interest rates now expected to remain
at the current historically low levels for a
number of years. Other factors include the
prolonged period of uncertainty with
respect to Brexit, which continues to
influence the pace of credit formation in
Ireland in both the mortgage and Small and
Medium Enterprise (SME) markets, the
heightened competitive environment in the
UK mortgage market, and increased
regulatory capital requirements. These
external headwinds are impacting the
timeframe for delivery of some of our
Investor Day targets.
While we are implementing actions which
will partly mitigate these challenges, we
recognise that returns are also influenced
by market conditions. We are therefore
revising our targeted return on tangible
equity (RoTE) for 2021 to c.8% (from in
excess of 10%). We continue to target a
return on tangible equity of in excess of
10% over the longer term.
We are creating a leaner, simplified and
more agile organisation. The Group’s
relentless focus on cost management has
seen costs reduce during each of the past
four reporting periods. Reflecting this
strong momentum we are lowering our
cost target by €50 million to €1.65 billion in
6

Francesca McDonagh Group Chief Executive
1
The Group’s financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying
performance trends in the business.
  6
2021. We will do this while continuing to
invest in our people and infrastructure.
Systems transformation
Our systems transformation is supporting
growth, improving customer experience
and driving efficiencies. We are already
seeing the benefits of these investments. In
2019, we migrated debit cards to a new,
more resilient platform, and we have
modernised our payments infrastructure.
We have also launched new Wealth and
Insurance digital platforms, and the rollout
to customers of our new Mobile App
commences in Q1 2020.
Systems transformation, which requires the
integration of our core systems with
payments infrastructure and real-time
digital customer interactions, is a complex
process and must be managed carefully.
The external landscape is evolving with
technologies such as cloud and
Application Programming Interfaces (APIs)
positively impacting the way retail banks
manage IT change. The business and
regulatory landscapes have also evolved
significantly while the pace of customer
digital adoption and changing expectations
has accelerated.
Our programme has responded
appropriately and dynamically to these
developments. We have invested in
upgrading our legacy technology to meet
new regulations. To support the rapid
acceleration in digital transactions by our
customers, we have invested in our
payments infrastructure and card
technology, and the resilience and security
of our technology estate. We have also
adopted a more modular approach for
specific solutions, taking advantage of
latest technologies to increase the pace of
deployment for new digital services to our
customers.
While the transformation of our systems
will continue beyond 2021, we are
committed to remaining within the guided
transformation investment spend of €1.4
billion equating to an average of 50 to 60
basis points of Common equity tier 1
(CET1) capital annually until 2021. We
expect that investment in transformation
beyond 2021 will be at a lower level.
UK strategy
While it remains a challenging market, we
remain committed to the UK and continue
to make progress on our strategy to
increase returns by investing in, improving
and repositioning all parts of our portfolios.
We have increased our market share and
grown lending in our consumer and
Northridge businesses and launched our
new ‘Bespoke’ mortgage proposition while
maintaining commercial discipline on risk
and pricing. We are reducing our UK cost
base by simplifying our business model,
including the sale of our UK credit card
portfolio and exit from current accounts
and unprofitable ATMs. We have also
extended the Group’s partnership with the
Post Office, further enhancing the
alignment of both parties to drive benefits.
As we expect the competitive market
backdrop to persist, the achievement of
our target returns of high single digits will
now be beyond 2021. It is a strategic
imperative to improve returns in our UK
business.
Capital
Our capital position remains robust with
strong organic generation of capital. The
regulatory capital framework continues to
evolve. In December 2019 the Bank of
England (BoE) announced an increase in
the UK countercyclical capital buffer
(CCyB) resulting in a 30 basis points
increase in the Group’s regulatory
requirements from December 2020.
Reflecting this change we are increasing
the Group’s target CET1 ratio to in excess
of 13.5% (from in excess of 13.0%) on a
regulatory basis and on a fully loaded basis
at the end of the Other Systematically
Important Institutions (O-SII) phase-in
period in 2021.

Our dividend policy remains unchanged; to
increase on a prudent and progressive
basis and, over time, build towards a
payout ratio of around 50% of sustainable
earnings.
Financial performance
The Group generated an underlying profit
before tax of €758 million in 2019.
Underlying operating profit before net
impairment losses increased by 10%.
The Group’s loan book increased by €2.5
billion during 2019 (€0.8 billion on a
constant currency basis). Net lending
growth of €2.0 billion and the acquisition of
a portfolio of loans, was partially offset by
NPE securitisation and sale transactions
and the disposal of the Group’s UK credit
card portfolio. Total new lending volumes
in 2019 were €16.5 billion, 3% higher than
2018 on a constant currency basis.
Our market share in new mortgage lending
in Ireland was 24% in 2019. Strong
positive momentum in market share of
mortgage applications during the second
half of 2019 provides a good pipeline for
new mortgage lending in 2020. We remain
the leading corporate and business bank in
Ireland, with growing SME market share.
We have €1 billion of facilities approved to
support the delivery of c.9,000 new homes
and 2,000 student accommodation units
across Ireland.
Net interest income (NII) of €2.15 billion
was in line with 2018. Net interest margin
(NIM) was 2.14%, in line with our
expectations. The Group’s NIM reflects the
positive impact from new lending margins
and our strong commercial pricing
discipline, offset by the sale of our UK
credit card portfolio, competitive pressure
in the UK mortgage market and growth in
liquid assets. We expect full year 2020 NIM
to be c.2.05%, primarily driven by the
impact of the low rate environment on our
structural hedge portfolio and further
growth in liquid assets. 2020 NII is
expected to be broadly in line with 2019.
Fees and other income arise from
diversified business activities including
wealth, bancassurance, foreign exchange
(FX) and transactional banking fees. This
includes business income of €666 million
which, after excluding the impact of non-
core income relating to UK credit cards
and ATMs, is 6% higher than for the same
period in 2018. Our Wealth and Insurance
business was a key driver of this growth
where operating income increased by
11%, annual premium equivalent (APE)
new business sales were up 11%, Life
market share grew 2% to 22%, and
penetration of the bank customer base
increased from 26% in 2018 to 32% in
2019.
We are transforming our culture, systems
and business model, delivering efficiencies
across the Group. Operating expenses
(excluding levies and regulatory charges)
reduced to €1,785 million in 2019, a
decrease of 4% compared to 2018. A 6%
gross reduction in costs, driven by
simplifying our organisation, sourcing
strategically and improved ways of
working, created capacity to absorb higher
depreciation and targeted investment in
our people and infrastructure. Non-core
charges of €113 million include amounts
relating to our customer redress
programme (the Tracker Mortgage
Examination) together with restructuring
charges related to our cost reduction
programmes.
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Asset quality has remained strong in 2019
with improvements in particular across
loan portfolios with elevated levels of
NPEs. Our NPEs reduced by €1.5 billion to
€3.5 billion, equating to an NPE ratio of
4.4% of gross customer loans. This
reduction reflects working closely with
customers to agree sustainable solutions
(€0.9 billion), and NPE securitisation and
sale transactions (€0.6 billion).
A net impairment charge of €215 million in
2019 compared to a net impairment gain of
€42 million in 2018. This primarily reflects a
more normalised level of impairments and
also losses on a small number of large
exposures during 2019. Absent a
deterioration in the economic environment
or outlook, we expect the impairment
charge to be at the upper end of a range of
20 to 30 basis points per annum during
2020 to 2021.
Our fully loaded CET1 capital ratio at
December 2019 was 13.8%. The Group
generated 170 basis points of organic
capital in 2019. In addition, the Group
unlocked 40 basis points of capital from
the securitisation of non-performing Irish
mortgages and the sale of the UK credit
card portfolio. We continue to strategically
optimise, invest and allocate capital to
support investments in loan book growth,
transformation, regulatory capital demands
and distributions to our shareholders.
Our dividend policy remains unchanged. A
dividend of 17.5 cent per share or €189
million, a 9% increase on 2018, is
proposed in respect of full year 2019.
Customers, Colleagues and
Communities
Our customers are at the heart of
everything we do. We have been listening
and responding to their preferences by
meeting their financial requirements
through easy, simple and accessible
processes aligned to their digital
expectations. We continued to invest in our
digital channels, branch network and
contact centres in 2019. We launched our
new brand strategy and supported and
partnered with our customers in
preparation for Brexit with the launch of a
€2 billion Brexit fund and dedicated FX
facilities.
During 2019, we introduced Ireland’s first
Financial Wellbeing programme, designed
to help customers to better understand,
plan and improve their finances and inspire
financial wellbeing in Ireland. The
programme includes an online Financial
Wellbeing Centre, a Financial Wellbeing
Lab, and Financial Health Checks for
Personal and Business customers. Other
Financial Wellbeing initiatives include:
• a Youth programme focused on the
delivery of financial literacy to schools,
as well as third level campuses
nationwide;
• a Seniors programme, with a series of
seminars and supports delivered by
the newly appointed Financial
Wellbeing Coaches;
• roll out of a LifeGoals advisory service
and a new Digital Investment self-
service tool; and
• launch of a Vulnerable Customer Unit
(VCU) to provide banking support to
customers facing challenging
circumstances.
We launched our new People Strategy
which is aligned to our purpose, values
and strategic priorities. A positive shift in
culture is evident across the organisation,
and engagement by colleagues has
increased by 10% to 60% in the past two
years. We are focused on attracting and
retaining talent, ensuring the Group retains
a bench strength of skills and expertise,
enabling senior management development.
A key inclusion and diversity target is to
achieve a 50:50 gender balance for
management and leadership appointments
by end 2021. For 2019, females
represented 44% of all senior
appointments.
Conducting our business in a responsible
and sustainable way is fundamental to
achieving our purpose of enabling our
customers, colleagues and communities to
thrive. In October 2019, on behalf of the
Group, I signed the UN Principles for
Responsible Banking. While we recognise
there is more to do in the banking sector,
these pledges are key steps in our RSB
agenda and signify our commitment as
Ireland’s leading bank, to support the
global drive to address climate risks and
be a responsible business partner for our
customers, communities and colleagues.
We have also enhanced our governance
structure to provide more Board and senior
management ownership and oversight for
our RSB agenda. During 2019 we launched
our €1 billion Sustainable Finance Fund
and in doing so became the first bank in
Ireland to offer a ‘Green’ mortgage. The
aim of our Sustainable Finance Fund is to
support homeowners and businesses
across Ireland on their low carbon journey
through encouraging and rewarding
energy-efficient homes, retrofitting of older
properties, and SME and agriculture
investment in energy efficiency.
Sustainable returns
2019 has been a year of further growth in
lending, increased business income and
improved efficiency. We have made good
progress in the transformation of our
culture, systems and business model and
in delivering on our UK strategy. We have
strongly generated organic capital and
improved the asset quality of our loan
portfolios.
We are mindful of the risks, challenges and
uncertainties relating to the global
economy, interest rates and Brexit. We are
targeting growing RoTE from 6.8% in 2019
to c.8% by 2021, driven by business
growth and further cost reductions partially
offset by the impact of the lower interest
rate environment. Longer term we will
continue to target a RoTE of in excess of
10%. We will continue to responsibly
develop our profitable, long term
franchises and to serve our customers
brilliantly in a way that delivers attractive,
sustainable returns to our shareholders.
8

Francesca McDonagh
Group Chief Executive
Kai Restaurant owner David Murphy
with Bank of Ireland Eyre Square
business advisor Angela Maguire.

Our purpose and values
Bank of Ireland has a clearly articulated
purpose underpinned by four key values,
supporting our ambition to be the National
Champion Bank in Ireland.
Enabling our customers,
colleagues and communities
to thrive
Bank of Ireland’s purpose is to enable
our customers, colleagues and
communities to thrive.
Customers are at the heart of our
business and always come first.
Colleagues keep our organisation
working, by innovating and adapting
to meet our customers’ needs.
Communities are where we live and
work - and include groups such as
our shareholders, regulators,
governments and partners - at both a
local and a global level.
10
Our purpose is supported by four key
values which guide us in everything we
say and do.
Customer focused
We understand our customers well. We
listen to them to ensure they feel valued,
and use our insights to consider how
best to serve their needs. We take
appropriate actions to deliver solutions
to meet customers' changing
requirements.
One Group, One Team
We know we work smarter when we
come together behind our common
purpose. We learn from each other and
share ideas to expand our thinking. We
build an open, trusting and supportive
environment, and foster diversity of
thought, ideas and experiences to spark
creativity and innovation.
Agile
We embrace change with an open mind
and a can-do attitude. We respond
quickly and proactively seek different
perspectives. We challenge ourselves to
look for new and simplified ways to
efficiently deliver the best solutions for
our customers.
Accountable
We are empowered to take ownership
and trusted to do the right thing to
support our customers, colleagues and
communities. We lead by example and
challenge ourselves and each other to
do our best work at all times. We learn
from our mistakes and celebrate our
successes together.
Our purpose Our values
To be the National Champion Bank in Ireland with
UK and selective international diversification
National Champions are recognised as consumer champions, drivers
of economic growth with strong market shares, employers of choice,
and have strong brand positions. As we work to deliver this ambition,
we continue to transform the Bank of Ireland experience for our
customers, colleagues and communities.
Throughout 2019, we have introduced a range of measures designed
to make it easier for our customers to bank with us. We have invested
in our colleagues. And we have started to transform our brand,
unveiling significant initiatives that - in line with our purpose - will
enable our customers, colleagues and communities to thrive.
To achieve our ambition we have set three strategic priorities - to
transform the bank, serve customers brilliantly, and grow sustainable
profits. Our strategy to 2021 is anchored in these goals and is
underpinned by clear financial targets.
Our ambition
Attributes
of a National
Champion Bank
Aspirational
brand
Customer
champion
Strong market
share
Generate
capital & positive
potential returns
Focused and
transparent
business
Driver of
economic
growth
Employer
of choice
At our Investor Day in June
2018, we set out our strategic
plan to 2021. Our three strategic
priorities are transforming the
Bank, serving customers
brilliantly and growing
sustainable profits.
We are now midway through delivery of our
strategy and over the past 18 months, we have
made good progress. The key highlights for 2019
are set out on the following pages.
However, we recognise that our operating
environment has changed since we set out our
strategic plan. We are experiencing increasing
challenges from external factors including
lower for longer interest rates, ongoing Brexit
uncertainty, intense competition and the
evolving regulatory and political
environment.
Notwithstanding these headwinds, the
economic fundamentals underpinning
our strategic plan remain supportive
and we have clear plans in place to
deliver further progress against
each of our three strategic
priorities.
Our strategy
To transform the Bank, to serve
customers brilliantly and to grow
sustainable profits.
Our ambition
Our purpose
Our values
Strategic
priorities
Transform
the Bank
Serve customers
brilliantly
Grow sustainable
profits
Customer
focused
One
Group,
One Team
Agile Accountable
Enabling our customers,
colleagues and
communities to thrive
National
Champion
Bank in
Ireland; UK &
selective
international
diversification
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Our strategy
Transform the Bank
We are transforming our culture, systems and
business model to enable our customers,
colleagues and communities to thrive.
12

Culture
We are on a multi-year
culture transformation
journey. Strengthening our
culture will contribute to
positive customer outcomes,
long-term customer
relationships, growth in
sustainable revenue and
improved staff engagement
and talent acquisition.
Target outcomes
• Improved customer centricity.
• Best-in-class employee engagement.
• All management and leadership appointments to represent a 50:50 gender ratio
by end 2021.
2019 highlights
• We continued to embed a customer focused culture throughout the Group with
the establishment of an executive Culture Steering Committee and ongoing
participation in the Irish Banking Culture Board.
• Our colleague engagement score at 60% continues to improve, up 10% since we
started measuring two years ago.
• The Group’s Culture Embedding Index, which measures the awareness,
understanding, belief and demonstration of our purpose and values was 66% in
October 2019, up 11% from the previous survey in 2018.
• In 2019, the Group’s gender ratio of management and leadership appointments
was 56:44 male / female. We are further investing in dedicated programmes to
build gender balanced talent and accelerate future female leaders.
• We held our inaugural Group Recognition Awards in March 2019 acknowledging
exemplary colleague behaviour aligned to our purpose and values.
• The Group won the inaugural Diversity and Inclusion Award at the 2019 Business
& Finance Awards.
  12
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Systems
We are making a significant
investment to transform our
technology. This investment is
critical to support our
business growth, as well as
improving efficiency and
enhancing service to our
customers.
Target outcomes
• Improved customer experience.
• Simplification of products and processes.
• Excellence in digitisation and robotics.
• Transforming our technology.
2019 highlights
• Our new Mobile App went live with a colleague pilot underway.
• Completed the largest customer migration in the Group’s history with over two
million customers transferred to a new more resilient IT platform for debit card
and ATM transactions.
• We launched our Digital Investment Platform and Insurance Wallet.
• Harnessing robotics, we increased the degree of automation of over 100
business processes, improving customer experience and reducing operational
risk and costs.
• Continued investment in the development of key customer data and security
platforms, enhancing data management, meeting regulatory requirements and
reducing operational risk.
Business
model
We are committed to
optimising our business model
and ensuring our organisation
is efficient and effective. We
are simplifying our structures,
making our teams more
effective and improving our
management of third-party
providers. This will help us to
become leaner, more agile
and ever closer to our
customers.
Target outcomes
• A more simplified and customer centric organisation.
• Effective and sustainable sourcing arrangements.
2019 highlights
• Significant progress made in simplifying our organisational structure to create a
leaner more agile business that is closer to our customers, with our end state
structure now 97% complete.
• We achieved a €11 million1
or 2% reduction in staff costs from 2018, while
continuing to invest in our customer facing businesses and building internal
capability in key areas such as IT change delivery and analytics.
• We have successfully rolled out flexible ways of working across the Group, with
3,500 colleagues now working in agile workspaces, facilitating a 27% reduction
in the office space occupied over the last two years, including the exit of two
Dublin city centre properties in 2019.
• We have simplified the process for first time buyer mortgages improving
customer experience by accepting over 70% of documents in digital form (up
from 40% previously).
1
The Group’s financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying
performance trends in the business.
  13
Our strategy
Serve customers brilliantly
We are committed to building a customer focused organisation that
invests in improving service and digital capabilities, while also getting
the basics right. We listen to customers and respond to their feedback.
We are investing in our brand to help our customers know what we
stand for and how we bring value into their lives.
14

Embedding
voice of
customer
in our
businesses
Customers are the heart of our
business. The way customers
bank and the products and
services which they expect are
changing and evolving faster
than ever. We are committed to
supporting our customers’
needs and financial wellbeing
by offering customer centric
propositions and services to
enable our customers to thrive.
Target outcomes
• Significant improvement in customer satisfaction and advocacy.
• Serving customers during their key life moments.
• Customer centricity at the heart of our culture.
2019 highlights
• Our customer effort score, which measures ease of service experience, continues
to improve at +49, up from +36 at the start of 2019.
• We introduced Ireland’s first Financial Wellbeing programme to help customers
improve their financial literacy, capability and confidence, offering youth, seniors,
vulnerable customers and business customers financial wellbeing supports.
• We are supporting and partnering with customers in preparation for Brexit which
includes a €2 billion Brexit fund, enhanced FX facilities and hosting Brexit briefings
across Ireland with c.1,400 customers attending.
• We launched a Treasury Academy in partnership with Trinity Business School
which was attended by more than 120 businesses in 2019.
• Our Brilliant Basics initiative is putting customers’ needs at the heart of planning
and decision making, with over 5,000 suggestions received since its launch in
2018 and c.50% which have the broadest customer impact actioned to date.
• In the Republic of Ireland (RoI) customer complaints fell by 29% from 2018,
reflecting ongoing investment in improved customer service.
John Finn and Bank of Ireland
Oranmore branch manager
Helen Keane at John’s dairy
farm in Oranmore, Co Galway.
  14
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Investing in
digital and
physical
channels
We are investing in all
channels to improve customer
experience and service. We
are re-designing and digitising
high-priority journeys,
upgrading service in our
branches and contact centres,
reallocating colleagues to
customer facing roles and
upgrading advisory service
through colleague training and
development.
Target outcomes
• Great customer experience and increased digitally enabled customer journeys.
• Build the API foundation for Open Banking.
2019 highlights
• Our transactional customer experience score combined across all channels has
increased by 40% in 2019.
• We continued to improve our customer experience with an investment of €20
million in our branch network in 2019, optimised resourcing in our contact centres
and enabled customer improvements in our digital channels with over six million
digital form users, up 40% from 2018.
• Over 60% of personal loan applications are now made via mobile phone.
• Over one million customer logins have been recorded to our new digital
application tracker which facilitates real-time order tracking, initially for personal
loans customers.
• Our new digital personal current account page speed is now three times faster for
mobile users.
• We launched our new Life Advice digital investment tool enabling customers to
improve their Financial Wellbeing and plan for the future with 900 customers
registered since its launch in December 2019.
• We have expanded our Open Banking APIs enabling us to innovate and serve our
customers in new ways.
New brand
strategy
We have identified our brand
purpose and drivers, putting
the customer at the heart of
everything we do. We are
repositioning our brand to bring
our purpose to life in a way that
differentiates us and offers real
value to our customers,
colleagues and communities.
This new positioning will bring
all constituent parts of the
business together and will be
reflected in new advertising and
sponsorship assets. Our
creative brand position will
sustain us over the next three
to five years.
Target outcomes
• Number one Bank brand in Ireland.
2019 highlights
• We launched our new brand strategy ‘Begin’ in early 2019 and awareness of
Bank of Ireland communications grew significantly over the year.
• In November 2019, we re-certified to the Business Working Responsibly Mark; an
independently audited standard for sustainability in Ireland.
• We launched a Sustainable Finance Fund, which offers €1 billion in Green Loans
at reduced rates for energy-efficient properties.
• The Group signed the UN Principles for Responsible Banking in October 2019.
• We continued to support all of our communities, through sponsoring all four
provincial rugby teams and the Emerald Warriors, Ireland’s leading LGBT+ rugby
club.
• During Bank of Ireland’s 2019 National Enterprise Week, the Group hosted a
national programme of 26 events attended by over 1,600 small business and
agriculture customers.
• Bank of Ireland sponsored the National Enterprise Town Awards (NETA) for the
fourth year running, with 117 entries and 80 towns competing.
  15
Our strategy
Grow sustainable profits
We are focused on delivering sustainable returns for our shareholders. This is
based on business growth in our key markets to expand lending, grow fee
income and increase revenue sustainability. At the same time, we are reducing
our costs each year as we drive efficiency and streamline our business. Our
UK business is being reshaped to increase returns and reduce costs.
16

Business
growth
Creating growth in our Irish
business will increase lending
volumes, interest income and
fee income. We are allocating
capital and resources to
become the leading supporter
of home building and home
buying in Ireland, and to grow
our wealth management and
insurance business. As Ireland’s
leading retail and commercial
bank and the only bancassurer
in the market, we are building
on our strengths, supported by
strong fundamentals - in
particular the demand for
housing and supportive
demographic changes as called
out in Ireland 2040, the National
Planning Framework.
Target outcomes
• To become the National Champion Bank in Ireland with UK and selective
international diversification.
• To be the leading supporter of home building and home buying in Ireland.
• Building our Wealth and Insurance business.
• Measured and commercially disciplined loan book growth.
2019 highlights
• Underlying1
profit before tax of €758 million.
• Net lending growth of €2 billion with gross new lending volumes of €16.5 billion, 3%
higher than 2018.
• Market share in new mortgage lending in Ireland of 24%.
• We have €1 billion of facilities approved to support the delivery of c.9,000 new
homes and 2,000 student accomodation units across Ireland.
• We grew our market share of lending to SMEs with strong performances in
Manufacturing, Agriculture, Retail Convenience and Healthcare.
• Ireland’s number one Corporate Bank with net lending growth of €1 billion.
• We have leveraged our position as Ireland’s only bancassurer increasing the
penetration of Wealth and Insurance products to our banking customer base to 32%
and growth in operating income of 11% in 2019.
• Organic capital generation of 170 basis points, enabling investment in loan book
growth, transformation and dividends.
• Continued reduction in NPEs to 4.4% of gross loans - the first Irish bank to get
below 5%.
1
The Group’s financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying
performance trends in the business.
  16
17

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Continued
cost
reduction
We expect our costs to
reduce every year between
now and 2021, delivering a
total cost base of €1.65
billion.
Target outcomes
• Reduction of costs from €1.9 billion in 2017 to €1.65 billion in 2021.
• Reduction in costs every year to 2021.
• Underlying cost income ratio of c.50% over longer timeframe.
2019 highlights
• Sustained momentum on journey to become a more efficient organisation, with year
on year cost reduction of 4% or €67 million (before levies and regulatory charges).
• Total costs of €1,785 million in 2019, down from €1,900 million in 2017. Gross cost
savings of c.€215 million achieved by simplifying the organisation, strategic
sourcing and improved ways of working have created capacity for c.€100 million to
absorb higher depreciation and targeted investment, over the same period, in
transformation and our people.
• Underlying cost income ratio reduced by 2% versus prior year.
• Announced a more ambitious cost target for 2021 cost base of €1.65 billion, down
from prior target of c.€1.7 billion.
Reshaping
the UK
business
We are committed to the UK
market where our focus is on
increasing returns. We are
investing in businesses that
are generating profitable
returns, improving returns in
businesses with potential and
repositioning other businesses
including exit from the credit
card business and wind down
of legacy branch assets.
Target outcomes
• Improving returns.
• Lower cost of funding, acquisition and servicing.
• New propositions targeting under-served customer segments.
• Reviewing those portfolios and products where returns are below expectations.
2019 highlights
• We extended our longer-term financial services partnership with the UK Post
Office.
• Reduced UK costs by £64 million from 2018, improving UK cost income ratio from
65% to 60%.
• Disposed of UK credit card portfolio in July 2019 and optimised the ATM estate.
• Launched new higher margin bespoke mortgage products, with drawdowns of
£225 million during the year.
• Northridge new business lending exceeded £1.3 billion (+26% on 2018), primarily
reflecting increased sales across its established intermediary distribution
combined with new relationships during the year.
• The Group’s inaugural UK wholesale funding transaction raised £350 million in
long-term secured term funding.
  17
Bank of Ireland Group is one of the largest financial services groups in Ireland, with
total assets of €132 billion at 31 December 2019. We provide a broad range of
banking and other financial services. We are organised into four trading segments
and one support division to effectively serve our customers.
18

Retail Ireland
Serving consumer and SME customers across a
broad range of segments and sectors. Delivering
financial products, services and propositions
tailored to meet their needs through branch, phone
and digital banking channels. Operating as one of
Ireland’s largest lenders with €5.8 billion lent to the
Irish economy in 2019.
Wealth and Insurance
A leading provider of life, pensions, general
insurance, investment and savings products in the
Irish market. The Group is the only bancassurer in
Ireland operating through New Ireland with its
history of over 100 years and encompasses Private
Banking and Bank of Ireland Insurance Services.
Retail UK
Distributes consumer products via own brand and
partnerships with trusted brands (Post Office and
the Automobile Association (AA)) and operates a
universal bank in Northern Ireland (NI) as well as
strong niche businesses in attractive segments,
which include asset finance under the Northridge
Finance and Marshall Leasing Limited (MLL) brands
and FX via First Rate Exchange Services Limited
(FRES).
Corporate & Treasury
Ireland’s number one Corporate Bank1
and leading
treasury service provider incorporates the Group’s
corporate banking, wholesale financial markets,
specialised acquisition finance and large-
transaction property lending business across the
RoI, UK and internationally with offices in the United
States (US), Germany, France and Spain. Holds
market leading positions in chosen sectors,
including corporate banking, commercial real
estate, foreign direct investment and treasury.
Group Centre
Group Centre comprises the Group’s central control
functions, which establish governance and oversee
policies, and provide and manage processes and
delivery platforms for the trading divisions.
Divisional review
Our business model
Further information in relation to our divisional
results which are prepared on an underlying basis
is found in the Financial Review on pages 41 to 57.
1
Based on corporate lending information sourced from publicly available annual reports for 2018 for all Irish banks, Bank of Ireland analysis of its banking relationships with companies
from the 2019 Irish Times Top 500 companies list and Bank of Ireland analysis of its banking relationships with companies on the published listing of international companies setting
up operations in RoI 2019.
  18
19

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Transform the Bank
• Digital personal current account
application via mobile launched.
Average time to submit is six minutes
with account details received same day.
• Launch of digital car loan applications
integrated within car sales websites.
• Digital applications for loans and credit
cards grew by 20% in 2019. Customers
can digitally track the progress of their
application in real time.
• Improved customer experience,
reduced risk and increased efficiency
through robotics automation of
approximately eight million common
customer tasks - (up 40% on 2018).
• Mobile devices continue to be the
digital channel of preference, with
>75% of all visits now happening this
way.
• A further 58 branches refurbished as
part of our Branch Investment
programme in 2019.
• On-boarding of mortgage brokers
accelerated during 2019. Further
expansion of the channel is planned for
2020.
Serve customers brilliantly
• Improved customer service experience,
through our Brilliant Basics
programme, where frontline colleagues
identify continuous improvement
initiatives.
• As a result, our Customer Effort Score
(measuring service experience across
channels) is up from +36 to +49 and
we have seen a 29% decrease in
complaints in 2019.
• Launched Ireland’s first Financial
Wellbeing programme. Over 100,000
visits to the online Financial Wellbeing
Centre to date.
• Expanded our Youth Financial Literacy
Programme, making it available to over
500 secondary and 3,000 primary
schools.
• Market leading, customer-centric Life
Goals financial planning tool launched.
• Established a Vulnerable Customer Unit,
supporting advocacy groups and
frontline colleagues to meet the needs
of vulnerable customers.
• Enhanced Bereavement Support
journey, with a ‘tell us once’ approach
and online access to advice, forms and
a document upload facility.
Grow sustainable profits
• Underlying profit before tax of €468
million in 2019 is 28% lower than 2018,
primarily due to a higher impairment
charge in 2019.
• Both net interest income of €990
million and net other income of €268
million are broadly in line with 2018.
• Operating expenses of €745 million are
4% lower than 2018 due to continued
emphasis on cost reductions.
• Net impairment losses of €50 million
are €207 million higher than 2018
which reflects the combination of
updated impairment model parameters
(including updated forward looking
information and refreshed cure rates)
and the impact of the disposal /
securitisation of non-performing
portfolios in the year.
• Loans and advances to customers
(after impairment loss allowances) at
31 December 2019 of €33.8 billion
were €0.9 billion lower than 2018. This
decrease includes the derecognition of
€0.6 billion following the securitisation
and sale of a portfolio of non-
performing Irish mortgages, offset by
an acquisition of a €0.2 billion portfolio
of commercial loans in 2019. The pace
of redemptions exceeded that of
lending growth in 2019 resulting in a
net lending decrease of €0.3 billion.
• Customer deposits of €51.9 billion at 31
December 2019 were €4.2 billion higher
than 2018 primarily due to increases in
current account credit balances on the
back of a strong economy.
Divisional review
Retail Ireland
Retail Ireland serves consumer and business
customers across a broad range of segments
and sectors with financial products, services
and propositions tailored to meet their needs.
€468m
Underlying profit
before tax
€5.8bn
Gross new lending
€31m
Reduction in
operating costs Mary Carrick at Mary’s Fish
Shop in Ballybrit, Co Galway.
Further information in relation to our divisional
results which are prepared on an underlying
basis is found in the Financial Review on
page 52.
Further information on measures referred to in
our business segments is found in Alternative
performance measures on page 331.
(€263m)
Net new lending
  19
Transform the Bank
• Ongoing investment to digitise Wealth
and Insurance platforms, delivering a
modern and successful business which
is accessible through multiple media.
• Continued roll out of Ireland’s first life
assurance digital advice platform.
• Development of the digital insurance
wallet allowing customers to manage
their general insurance needs in one
place.
• First phase of broker online
connectivity rolled out enabling digital
connection with brokers for key
products.
Serve customers brilliantly
• Improved customer offerings across a
range of products including critical
illness and savings options.
• Enhanced customer journeys with the
digital advice platform allowing
customers to receive regulated
financial advice and providing
customer self-service capabilities.
• The online broker connectivity solution
allows brokers to pre-populate New
Ireland online application forms for new
and existing business using the
brokers own client data.
Grow sustainable profits
• Underlying profit before tax was €169
million in 2019 (2018: €67 million). The
increase year on year reflects strong
overall business performance allied
with the positive performance of
investment markets in 2019.
• APE new business sales in the Life
business was €345 million in 2019, an
increase of €44 million, 14% up on
2018. All sales channels recorded year
on year sales growth with bank
channel sales 29% higher than 2018
driven by strong life investment sales
and an increased customer penetration
rate of 32%.
• APE new business sales consisted of
€158 million of new single premium
business and €187 million of new
regular premium business with strong
growth in particular across pension
business.
• Operating profit of €134 million for the
year-ended 31 December 2019 was
€20 million or 18% higher than 2018.
• Operating income of €269 million in
2019 was €28 million higher than 2018
mainly reflecting strong overall
business performance and the benefit
of assumption changes.
• Operating expenses of €135 million in
2019 were €8 million higher than 2018.
• Unit-linked fund prices increased by
12.6% in aggregate during 2019,
heavily driven by growth in global
equity markets. The positive variance
relative to assumed growth led to a
positive investment return of €30
million (2018: adverse investment
variance of €27 million).
• Interest rates at 31 December 2019
were lower than those at the end of
2018 while the spread on corporate
bonds also narrowed. The overall
impact of the change in yields resulted
in a €5 million gain in 2019 (2018: €20
million loss).
Wealth and Insurance is a long established,
market leading, life and pension and general
insurance provider in Ireland. The Group is the
only bancassurer in the Irish market.
Divisional review
Wealth and Insurance
€169m
Underlying profit
before tax
22%
Market share
20

Further information on measures referred to in
our business segments is found in Alternative
performance measures on page 331.
Further information in relation to our divisional
results which are prepared on an underlying
basis is found in the Financial Review on
page 53.
€345m / +14%
Life & pensions new business APE
  20
21

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Divisional review
Retail UK
Transform the Bank
In transforming the Bank, Retail UK is
focused on increasing returns by investing,
improving and repositioning its efforts.
Investing in:
• Enhanced digital offering across
product lines including improved
payment functionality.
• Strategic IT capability to deliver
enhanced customer propositions such
as online mortgage product switching.
• Enhanced distribution of personal
lending in NI.
Improving:
• The Post Office partnership contract
has now been extended.
• Cost of funds effectively managed by
optimising funding mix and
management of deposit pricing.
• Focus on cost reduction, whilst
investing in strategic initiatives,
technology and regulatory compliance.
Repositioning:
• Sale of UK credit card portfolio
completed and migration is underway.
• Optimising the ATM estate.
• Continued deleverage of legacy
portfolios.
Serve customers brilliantly
• Progressing enhanced mortgage
strategy and new bespoke products
developed for the professional
segment.
• Increased NI branch staff and opening
hours to meet customer demand.
• Increased focus on complaint
management and resolution with
complaints per 1,000 reducing from
1.73 to 1.10 over the course of 2019.
• Also established a dedicated
bereavement team.
Grow sustainable profits
• Underlying profit before tax of £152
million in 2019 (2018: £161 million)
which excludes the performance of the
consumer credit card and ATM
portfolios which are treated as non-
core activities in 2019.
• Net interest income of £494 million has
decreased by £33 million. Excluding
the impact of credit cards in 2018 (£25
million), which is classified as non-core
in 2019, net interest income decreased
by £8 million. This was primarily due to
competitive pressures in the mortgage
market, partially offset by growth in the
asset finance and personal lending
volumes.
• Operating expenses of £288 million are
£64 million lower, primarily as a result
of repositioning the credit card and
ATM portfolios as non-core in 2019
and the remainder is due to continued
focus on cost management.
• Impairment losses of £71 million have
increased by £5 million compared to
2018, primarily due to new lending
growth in consumer lending.
• Loans and advances to customers
(after impairment loss allowances) of
£24.8 billion were £0.4 billion higher
than 31 December 2018. This reflects
an overall increase in net consumer
lending of £1.3 billion, which includes
Northridge, personal lending and
mortgages offset by the disposal of the
credit card portfolio (£0.6 billion) and
net repayments in commercial lending
(£0.3 billion).
• Customer deposits of £19.1 billion at
31 December 2019 were £0.7 billion
lower than 31 December 2018.
• In June 2019, £350 million of term
funding was raised through a
successful securitisation of prime UK
residential mortgage loans.
Retail UK provides consumer banking in Great Britain (GB) and
universal banking in Northern Ireland. Retail UK incorporates
Northridge Finance, the financial services partnerships with the
UK Post Office, the AA and our FX joint venture (FRES).
£152m
Underlying profit
before tax
£64m
Reduction in
operating costs
£5.9bn
Gross new lending
Further information on measures referred to in
our business segments is found in Alternative
performance measures on page 331.
Further information in relation to our divisional
results which are prepared on an underlying
basis is found in the Financial Review on
page 54.
£442m
Net new lending
  21
22

Divisional review
Corporate and Treasury
Corporate and Treasury is Ireland’s
number one Corporate Bank and
leading treasury service provider.
Transform the Bank
• Increased adoption of dedicated FX
digital platform with number of
customers using FXPay up 32% and
number of transactions up 33% across
all customer segments in 2019.
• Successfully concluded two Credit
Risk Transfer (CRT) transactions
reducing credit risk exposure through a
risk sharing structure whereby the
investors assume the credit risk for
potential credit losses on certain loans.
• Supported the Group in reducing its
NPE ratio below 5%, by concluding
two transactions involving loans
predominantly secured on buy to let
(BTL) investment properties.
Serve customers brilliantly
• Retained its position as Ireland’s #1
Corporate Bank.
• Maintained its position as a leading
domestic lender to Irish real estate
market and is supporting the Group’s
position as a National Champion in
house building.
• Allocated €1.5 billion for development
lending - commercial and residential.
This includes €800 million that will
deliver 7,100 new homes and 2,000
student accommodation units in RoI.
• Completed the first Irish Public Private
Partnership for Social Housing which
facilitated the building of 534 housing
units in the Greater Dublin region.
• Continued to selectively expand our
customer offering e.g. subscription
finance in the UK, selective re-entry
into the US property market and a new
mezzanine finance offering.
• Acquisition Finance opened an office in
Madrid to support its private equity
relationships who transact in the
Spanish market.
• Continued to support customers
against the backdrop of uncertain
market conditions which included
extensive Brexit communications.
• Unsecured FX facility for customers
impacted by Brexit and to support
businesses trading internationally
increased to €50 million (2018: €20
million).
• Continued investment in customer
proposition and experience
improvements, including simplifying
account opening and documentation,
as well as enhancing the ability for
customers to ‘self-serve’.
• Launch of Bank of Ireland’s Financial
Wellbeing programme for businesses
with initiatives such as the Bank of
Ireland Treasury Academy in
partnership with Trinity Business
School.
Grow sustainable profits
• Underlying profit before tax of €455
million in 2019, a decrease of €31
million compared to 2018.
• Business net interest and other income
of €758 million is €52 million higher
than 2018, predominantly driven by
increased lending activity.
• Financial instruments valuation
adjustments are a charge of €27 million
in 2019, a decrease of €34 million. The
2019 result is due to less favourable
market moves on derivative valuations
when compared to 2018.
• Net impairment losses on financial
instruments of €82 million is €41 million
higher than 2018 and reflects losses on
a small number of large exposures.
• Loans and advances to customers at
31 December 2019 of €16.4 billion are
€1.4 billion higher than 31 December
2018, of which net lending was €1
billion, with €0.2 billion of acquisitions
and intra group transfers and €0.2
billion FX related.
• The euro liquid asset bond portfolio of
€14 billion at 31 December 2019 has
decreased by €0.6 billion compared to
31 December 2018.
€455m
Underlying profit
before tax
€4.0bn
Gross new lending
€16.4bn
Loans & advances
to customers
Further information on measures referred to in
our business segments is found in Alternative
performance measures on page 331.
Further information in relation to our divisional
results which are prepared on an underlying
basis is found in the Financial Review on
page 55.
€1.0bn
Net new lending
  22
23

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Divisional review
Group Centre
Grow sustainable profits
• Group Centre’s income and costs
comprise income from capital and
other management activities,
unallocated Group support costs and
the costs associated with the Irish
Bank Levy along with contributions to
the Single Resolution Fund (SRF) and
the Deposit Guarantee Scheme (DGS)
and other industry levies.
• Negative operating income of €5
million in 2019, represents a decrease
of €29 million from 2018. This variance
was primarily due to a gain on disposal
of National Asset Management Agency
(NAMA) subordinated debt in 2018,
which did not reoccur in 2019 and
interest expense on leases arising from
the adoption of International Financial
Reporting Standards (IFRS) 16 in
2019.
• Operating expenses (before
Transformation Investment and levies
and regulatory charges) of €281 million
in 2019 were €27 million higher than
2018. The increase is reflective of
increased investment costs in strategic
initiatives, including higher
amortisation charges arising from
technology and infrastructure,
restructuring and further consolidation
of business activities, along with costs
associated with compliance and
meeting regulatory expectations.
• Our transformation programme
continues to make good progress and
a further €263 million was invested in
this programme during 2019, of which
€100 million is capitalised on the
balance sheet (31 December 2018:
€100 million), with an income
statement charge of €108 million
(2018: €113 million) and €55 million
recognised through non-core items
(2018: €93 million).
• Total Transformation Investment costs
recognised through non-core items
were €55 million for the Group, of
which €54 million was recognised
through Group Centre. €30 million
reflects a reduction in employee
numbers, €21 million relates to
programme management costs and
other costs were €3 million.
• Group Centre levies and regulatory
charges were €111 million in 2019,
€14 million higher than 2018.
Group Centre comprises Group Technology and Customer Solutions,
Group Finance, Group Risk, Group Marketing, People Services and
Group Internal Audit (GIA). These central functions establish
governance and oversee policies, and provide and manage processes
and delivery platforms for the trading divisions.
Further information in relation to our divisional
results which are prepared on an underlying
basis is found in the Financial Review on
page 55.
  23
Responsible and sustainable business
At Bank of Ireland, behaving in a responsible and sustainable way is
fundamental to achieving our purpose of enabling our customers,
colleagues and communities to thrive. We are committed to addressing the
key challenges facing society today and became a signatory to the UN
Principles for Responsible Banking in 2019. These principles help align the
banking sector with the objectives of the UN Sustainable Development
Goals and the 2015 Paris Climate Agreement.
Board with oversight for the Group’s
Corporate Responsibility Programme as
well as nomination and corporate
governance matters, now oversees the
Group’s RSB framework and strategy on
behalf of the Board. The Committee, which
has been renamed the Group Nomination,
Governance and Responsible Business
Committee (NGRB) to reflect its enhanced
role, is chaired by our Chairman Patrick
Kennedy. At Senior Executive level, the
Group Executive Committee (GEC) has
overarching responsibility for the Group’s
RSB strategy. Specific RSB responsibility
has been delegated to the Chief Strategy
Officer and our approach to RSB will be
fully integrated into our overall strategy.
In support of this, we have created a
Responsible and Sustainable Business
Forum (RSBF), chaired by the Chief
Strategy Officer. The RSBF, which consists
of senior business and functional
Executives from across the Group, enables
us to have a coordinated approach to
oversight, delivery and reporting of the
Group’s RSB strategy to GEC. The RSBF
is supported by the Group’s dedicated
RSB team.
During 2020, we will focus on integrating
RSB throughout the Group in a way that
supports our customers’ low carbon
journeys, builds our resilience as a pillar
bank and contributes to the overall
sustainability of the financial services
sector and the markets in which we
operate. We will proactively engage with
our stakeholders, through our materiality
and impact assessments, to understand
their perspectives and our impacts (both
positive and negative) on society, the
environment and the economy. We will use
this insight to further develop our approach
in this area, including setting goals and
targets.
Governance
We have enhanced our governance
structure to provide more Board focused
oversight and responsibility for our RSB
agenda. The GN&GC, a committee of the
Signing the UN Principles for Responsible
Banking is a key step in our Responsible
and Sustainable Business (RSB) journey.
This, along with becoming a supporter of
the TCFD signifies our commitment to be
part of the global drive to address climate
risks and be a responsible business
partner for our customers, communities
and colleagues. Over the course of 2019,
we have made considerable progress
against our RSB agenda including
launching our new customer strategy to
enhance the Financial Wellbeing of people
in Ireland, launching our new People
Strategy for our colleagues, and refocusing
our community activities into the newly
launched Bank of Ireland Begin Together
programme. We also became the first bank
in Ireland to introduce a Green Mortgage
through our €1 billion Sustainable Finance
Fund and from 1 January 2020, 100% of
our Irish electricity is now supplied from
renewable sources.
Business Working
Responsibly Mark
Bank of Ireland was re-certified to the
Business Working Responsibly Mark in
November 2019. The Bank was first
certified to the Mark, an independently
audited standard for corporate social
responsibility and sustainability, in 2016 for
its RoI operations. The scope of the
accreditation was extended across all
Group operations in 2019.

24
Francesca McDonagh, Group Chief Executive with
Geraldine Byrne Nason, Ireland’s Ambassador to the United Nations
  24
25

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Responsible and sustainable business
Business ethics
Living our values enables us to provide the best
possible service and holds us accountable, while
delivering new solutions to benefit our customers,
colleagues and communities. We are committed
to conducting ourselves to the highest standards,
managing our risks appropriately and sourcing in
a responsible way.
How we conduct ourselves
Our Code of Conduct (the ‘Code’) outlines
the high standards we set ourselves for
what we say and do in our relationships
with customers, colleagues and the
communities in which we do business. All
colleagues must adhere to the Code when
dealing with others and in personal
financial dealings.
The Code also includes details of what
action colleagues can take if they have
concerns about behaviours and practices
that are in conflict with our culture and
values. The Group is focused on ensuring
an environment exists, which embraces
constructive challenge and where
colleagues are empowered to speak up
without fear of any adverse impact. The
Group Speak-Up policy sets out the
standards and obligations in support of
colleagues who are highlighting concerns
of potential wrongdoing. All colleagues
complete annual mandatory training on
both the Code and Speak Up policy.
Financial crime compliance
Protecting the financial system from
financial crime risks including money
laundering, terrorist financing, and bribery
and corruption is of intrinsic importance to
the Group. Colleagues complete annual
mandatory training and assessment in
relation to key areas.
Anti-Bribery and Corruption
The Group’s Anti-Bribery and Corruption
policy sets out the minimum standards
regarding actions to be taken to identify
and manage bribery and corruption risks,
and roles and responsibilities are
structured under a three lines of defence
model.
Anti-Money Laundering,
Countering the Financing of
Terrorism, and Financial
Sanctions
Our policies in these areas set out the
standards needed to ensure the Group
meets its legislative and regulatory
requirements relating to these key risks.
Human trafficking
The monitoring and investigations team
within our Financial Crime Compliance
(FCC) unit have developed a suite of
typologies aimed at identifying possible
activity linked to human trafficking. FCC
also provided enhanced training to our
Anti-Money Laundering (AML) investigators
on this subject, as well as to frontline
teams.
FCC has also engaged with the anti-
human trafficking non-governmental
organisation (NGO) ‘Stop the Traffik’ to
provide Board and senior management
training on the scale and proximity of the
issue.
In accordance with relevant UK legislation,
we published our statement on Modern
Slavery and Human Trafficking for 2018
and will publish our 2019 statement in due
course. This applies to the Group and sets
out the steps and measures we have taken
to seek to ensure that modern slavery and
human trafficking does not occur within
our supply chain or in our business
operations.
Sourcing responsibly
We recognise the opportunity to influence
the integration of responsible business into
our supply chain. In 2019, we published a
Code of Supplier Responsibility that sets
out what we expect from our suppliers.
It sets out the key social, ethical and
environmental standards that we want our
suppliers to achieve and is supported by
our procurement processes and ongoing
due diligence. These assess supplier
behaviours and capabilities across a range
of sustainable business measures. Our
sourcing processes prioritise minimising
the lifecycle cost for the majority of
purchases.
  25
Responsible and sustainable business
Supporting the low-carbon economy
We are committed to supporting a successful
transition to a low carbon, climate resilient economy.
We will do this by enabling customers to take action,
managing climate-related risks and reducing the
Group’s own environmental footprint.
Sustainable Finance Fund
To support our customers’ transition to the
low-carbon economy, we launched the
Sustainable Finance Fund (the ‘Fund’) in
July 2019 and in doing so became the first
bank in Ireland to introduce a green
mortgage interest rate. The €1 billion Fund
supports our customers on their low
carbon journey by encouraging and
rewarding investment in energy-efficient
homes, older properties, and SME and agri
investment in energy efficiency.
Initiatives associated with the Fund include
a green interest rate discount for borrowers
buying or building energy efficient homes,
and a green home improvement loan for
energy-efficiency retrofits for older
properties. We have also introduced
reduced interest rates for investment in
energy-saving improvements for
businesses.
This Fund supports the Government’s
Climate Action Plan and Ireland’s
commitment to the UN Sustainable
Development Goals. To date there has
been strong customer demand for our
Sustainable Finance Fund products and
propositions.
Funding Renewable Energy
The Group continues to be a leading
financier of the renewable energy sector. To
date we have provided finance for
c.720MW of on-shore Irish wind farms
providing the equivalent of 468,000 homes
with renewable generated electricity.
We are also monitoring other forms of
renewable technology, e.g. solar and off-
shore wind, and await the introduction of a
new government support scheme to
enable lending into these sub sectors.
Climate Risk
We recognise that climate change presents
both risks and opportunities to our
business model and strategy. We see these
emerging through two key channels:
physical (e.g. increased severity /
frequency of extreme weather events), and
transitional (e.g. changes in how cars are
powered and the retrofitting requirement
for housing stock). We are integrating
climate risk into our risk frameworks and
26

policies, not as a separate risk category,
but as a transverse risk that impacts
through existing risk channels such as
credit and operational risk. As such it is
being integrated to leverage existing risk
management governance frameworks,
policies and processes.
In line with the recommendations of the
TCFD, during 2020 the Group will identify
activities and assets exposed to climate-
related risks and measure possible
financial risk impacts. As part of a UN
sponsored initiative, we are also
contributing to the development of a
methodology, which will enable financial
institutions to better understand the
climate change risks of their activities. This
impact assessment and associated
materiality exercise together with forward-
looking scenario analysis will inform our
business planning and associated risk
management strategies. The Group also
plans to:
• assess its exposure to carbon-
intensive assets or assets susceptible
to physical risks;
• continue to strengthen its operational
resilience and that of material
suppliers, and reduce its own climate
change impacts; and
• update our risk management
frameworks and policies to incorporate
processes for the identification,
assessment and mitigation of climate
risks.
An initial set of metrics for climate-related
risks are in development to support the
setting of relevant targets and limits to
track progress against our strategy and to
allow for related disclosure.
Our own environmental impact
In May 2018, we signed up to the Low
Carbon Pledge to reduce our carbon
emissions intensity (scope 1 and 2) by
50% by 2030. This pledge is part of The
Leaders’ Group on Sustainability, a
business coalition, convened by Business
in the Community Ireland (BITCI).
To date we have achieved a 40% reduction
in carbon emissions intensity (on a 2011
baseline), using m2
as intensity metric (in
absolute terms we have achieved a 50%
carbon emissions reduction).
In support of our commitment to reduce
carbon emissions and the impact that we
have on the environment, we have
continued to implement energy efficient
and other environmental initiatives
throughout 2019, which include:
• re-certification and transition to the
ISO 14001 and ISO 50001 2018
standard;
• installation of a highly-efficient air
conditioning system in a number of our
large administration buildings;
• power down of redundant IT
equipment in our data centres;
• upgrade of traditional lighting with LED
lighting across a number of retail and
administration sites;
• installation of 16 electric vehicle
charging points at six of our
administration sites; and
• introduction of Keep Cups towards the
end of 2018, which has resulted in a
59% reduction in disposable cups.
To further support the transition to a low-
carbon economy, 100% of our RoI and NI
electricity is supplied from renewable
sources as of 1 January 2020.
Reducing travel and enabling colleague wellbeing
Heather Kane is the Divisional Optimisation Lead for Retail UK. Based primarily in Belfast, her role
requires regular interaction with colleagues in London, Bristol and Dublin. Traditionally this involved
frequent travel, including visits to the London office. The roll-out of Agile Ways of Working (AWOW) along
with a strong focus on reducing costs associated with travel has transformed the way Heather works.
‘The enhancement of video conferencing technology in Belfast has facilitated much greater flexibility’ says
Heather. ‘There has also been a change in mindset and culture. People now challenge both themselves
and others about whether their travel is necessary. There is greater accountability on cost and a focus on
colleague wellbeing.’
Heather now works one to two days at home in County Armagh and travels to the London office
approximately once a month. ‘You have to be much more organised’ Heather explains. ‘I make sure to
optimise office time and schedule as many meetings as possible that are better face-to-face’. This has
resulted in a 20-25% reduction in business travel as well as a 20-30% reduction in personal commuting
which obviously brings about environmental benefits.
On a personal level Heather is now able to make a commitment to helping out fortnightly with a local
community group for young people and has more opportunities to support her mother, recently diagnosed
with dementia, to be as independent as possible at home.
27

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Financial Wellbeing
A key part of the Group’s long-term
ambition is to improve the Financial
Wellbeing of consumers in Ireland. In
March 2019, we launched a Financial
Wellbeing strategy with an initial €5 million
investment, to help consumers improve
their financial literacy, capability and
confidence. The approach is grounded in
nationally representative research which
sheds light on consumer levels of Financial
Wellbeing and shows that one-third of
people in Ireland are worried about
personal finances, more than half have no
pension, and one quarter would need to
borrow in less than a month if they lost
their main source of income. To support
this, a Financial Wellbeing Team was
established including Financial Wellbeing
coaches.
National Financial Wellbeing Index
We have developed a Financial Wellbeing
Index which indicates that Ireland has a
national average Financial Wellbeing score
of 61, which as a nation places us in the
‘Managing’ category. It also showed that
40% of those surveyed were in the
‘Struggling’ or ‘Stretched’ categories. We
will conduct this research on an ongoing
basis to track the Financial Wellbeing of
the nation.
Online Financial Wellbeing Centre
The Online Financial Wellbeing Centre
provides access to a range of tools,
information and support to help
consumers begin their Financial Wellbeing
journey. These include a Financial
Wellbeing Healthcheck for consumers and
businesses to assess their own financial
wellbeing. By the end of 2019, over 50,000
healthchecks had been completed.
Financial Wellbeing Lab
In April 2019, the Financial Wellbeing Lab
was opened in Bank of Ireland premises
and was used extensively to design and
test new propositions with customers,
colleagues and other stakeholders.
Youth Financial Wellbeing
Our Youth Financial Wellbeing Programme
is available to primary and secondary
schools for delivery in the classroom and
at home so that parents can introduce the
concept of financial literacy to their
children. We believe that Youth financial
literacy is a life skill that benefits children
helping them make informed decisions
about money and take charge of their own
future. In 2019, over 100,000 children
participated in the programme.
Primary school programme
Our new primary school initiative is
available to children from the age of seven
in over 3,000 schools nationally. The
initiative includes a range of resources for
children, parents and teachers, and is
fronted by ‘Ollie the Owl’, a character who
brings together stories, learning activities
and interactive games to teach children the
basics of money management. We aim to
have over 100,000 children participate in
the programme during the 2019/20 school
year. By year end, c.42,000 children from
400 schools had registered to participate.
Our partnership with BizWorld also
continued, promoting entrepreneurship
skills for young people.
Secondary school programme
The Money Smarts Challenge, our new
secondary school competition, sees
students learn essential Financial
Wellbeing skills while competing for a top
prize of €25,000 for their school. Designed
in conjunction with business studies
teachers and Financial Wellbeing experts,
students learn about the core elements of
financial wellbeing such as spending,
saving, earning, credit and debt. To date
3,200 students representing 300 schools
have registered for the competition.
Financial literacy week is also an important
part of our overall Money Smarts
Programme. In 2019, our Youth
Coordinators delivered these in 342
Schools across Ireland, helping students to
develop key financial life skills.

Financial Wellbeing for Business
In May 2019, we launched a Financial
Wellbeing offering for SMEs in conjunction
with a series of events across the country
exploring the theme of ‘Growing your
Business’. This offering included a new
online Financial Wellbeing Centre for
SMEs, a business-specific financial health
check and a library of content relevant to business Financial Wellbeing. We also
launched a new Treasury Academy for
business customers in conjunction with
Trinity Business School. This covers a
range of topics including FX, interest-rate
hedging, debt financing and managing
treasury risk.


Responsible and sustainable business
Enabling customers to thrive

Supporting customers’ Financial Wellbeing is
just one of the many important ways we show
our responsibility to our customers. We go
further by making sure we are inclusive of our
most vulnerable customers too.


Supporting our customers through Brexit
When it comes to Brexit our main focus is
on how we can assist customers navigate
the uncertainty and plan for the future. We
launched a Brexit Portal, which includes a
Brexit Checklist, Currency Risk Guide and
an Import / Export Guide to help
businesses prepare. We put supports in
place to assist customers with specific
requirements, from protecting their
business from risk to investing for growth
and expansion. This includes a €2 billion
Brexit Fund designed to support
businesses on the island of Ireland to flex
and adapt to Brexit change, and a €50
million FX facility designed to support
customers in managing their foreign
currency exchange risk. During 2019, we
ran a series of ‘Get to Grips with Brexit’
events. Over 1,400 business customers
attended in eleven different locations, with
over 20 speakers including local and
national representatives as well as local
customers who shared their own
experiences.
Information Security
The Group takes information security very
seriously and continues to invest in the
skills, technology and processes required
to protect information. The Group
Information Security function, led by the
Chief Information Security Officer,
constantly monitors cyber security threats;
implementing protective measures while
researching future threats and how to
defend against them.
All colleagues play a vital role in managing
information security risk and keeping
information safe and are required to
complete mandatory web-based training.
Role based training has also been
introduced, and monthly bulletins and
dedicated internal webpages are provided
for further guidance. All colleagues are
regularly tested on their ability to identify
and report suspected phishing incidents.
The Group operates a ‘three lines of
defence’ model aligned to the Group’s
operational risk management framework.
First line business unit risk owners are
responsible for identifying, risk assessing
and reporting cyber risks and managing
the risks via operational controls (First Line
of Defence).
Operational controls are aligned with
Group Information Security Policies
produced by the Group Operational Risk
function (Second Line of Defence) as well
as standards, technical specifications and
guidance produced by the Group
Information Security function. Information
Security Policies and controls are audited
by GIA (Third Line of Defence).
The Group collaborates with industry
bodies and intelligence-sharing working
groups to combat the growing threat from
cyber criminals, including the UK Cyber
Defence Alliance and the Banking
Payments Federation Ireland. Cyber risk
and control was reviewed by the Board Risk
Committee (BRC) on a number of
occasions in 2019. Information Security
guidance for customers is available on the
‘Security Zone’ page on our website
(boi.com/security), including fraud alerts
and information on how to report suspicious
online activity, emails or phone calls.
29

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
A listening ear
Noel Kenny is a member of our VCU team. He
brings a wide range of experience to the role and
his move to the team was a natural one, as his
experience is founded in roles within branch and
business banking, as well as supporting people in
mortgage arrears. As a parent of a child with
special needs, Noel brings a particular empathy to
customers who need a compassionate approach.
‘What’s unique about the unit is that it was built
from the ground up’ Noel explains. ‘The people
(Anne, Dan & Karen) who along with me, make up
the frontline team, all have many years of both
bank and life experience and this really helps
when to speaking to people. For difficult cases we
come together and try to work out the best
solution for the customer’.
Noel and the team provide support to colleagues
who deal with customers that may be vulnerable.
‘Age-related dementia and special needs are two
typical examples of the types of vulnerability we
come across. We provide colleagues with advice,
detailed guidance and relevant forms they might
need’ says Noel. ‘Language is so important when
dealing with sensitive situations. We have no right
to define anybody. If we try to prescribe
something, that probably won’t work but if we
give people options and work with them in a
sensitive manner, we can usually find a workable
solution’.
Vulnerable Customers
In 2019, the Group established a new VCU in Ireland to provide enhanced support
to customers in vulnerable circumstances. The VCU provides expert support and
guidance to frontline customer service colleagues so that they can support
customers facing vulnerable circumstances or situations. It aims to better assist
customers improve their financial wellbeing irrespective of the circumstances
facing them. Based in Carlow, the VCU is staffed by specialists with extensive
experience in retail and community banking, fraud and financial crime. The team
has completed bespoke training with advocacy and support organisations in the
areas of autism, sight loss, intellectual disability, addiction and vulnerable adults.
The VCU also exists as a support line for advocacy and support groups to flag
and escalate issues which they encounter. There have been over 4,000 vulnerable
customer interactions since the VCU was established. Outcomes for customers
are varied but can include the issuing of carers support cards, providing
information in other languages or intervening to prevent financial abuse.
 21:54 Page 29
Responsible and sustainable business
Enabling colleagues to thrive
We are committed to enabling our colleagues to
thrive and our new People Strategy empowers this.
We strive to ensure that all our colleagues are
engaged and have the skills and capabilities to
serve customers brilliantly. We are also working hard
to adopt a more flexible and inclusive workplace to
help colleagues perform to their full potential.
30

In April 2019, we launched our new People
Strategy with six pillars which are aligned
to our purpose, values and strategic
priorities. Our activities and progress under
each of these pillars is set out below.
Culture & Engagement
The multiyear transformation of our culture
continued throughout 2019. The focus was
on enhancing engagement and
encouraging a strong colleague voice.
Building on the work in 2018 to establish
our purpose and values, we continued to
embed our values throughout 2019. This
included leadership events attended by
over 1,600 senior leaders, and 66 ‘Values
in Action’ workshops for 1,800 managers
across RoI, NI & UK. Measurement of
colleague engagement continued through
our Open View surveys. 76% of colleagues
participated with results demonstrating
solid progress:
• engagement levels have increased.
Colleague Engagement Index is 60%
(+10% since 2017, +5% since Q1
2018) and 4% from the Global
Financial Services (GFS) benchmark;
and
• the Culture Programme continues to
make an impact with the Culture
Embedding Index at 66% (+11% from
the first measurement in 2018).
Enhancing colleague recognition formed a
key part of our culture and engagement
approach for 2019, with Group
Recognition Awards taking place in March.
Over 300 colleagues attended the event
with awards presented to teams and
individuals who role model living the Group
Values and Purpose.
The stories of the winners were shared
throughout the year. Ongoing recognition
continued through the introduction of e-
thank you cards, with over 3,000 being
sent since June 2019. The Recognition
Awards process is being repeated with the
annual winners to be celebrated in Q2
2020.
In October 2019, we launched a refreshed
colleague wellbeing programme focusing
on mental, financial and physical
wellbeing. The offering includes a new
Employee Assistance Programme, a
mental health strategy (including mental
health pledges) and enhanced financial
and physical wellbeing supports. In 2020,
the focus will be on developing wellbeing
supports, including; the launch of a
colleague wellbeing app / portal, rollout of
a mental health first aiders programme,
and mental health training for people
managers.
Ways of Working
Enabling Agile Ways of Working (AWOW),
enhancing our policies and developing
supporting technology are the key aspects
of our Ways of Working pillar. Significant
progress has been made on the rollout of
this throughout 2019:
• AWOW was rolled out across the
Group, following a successful
comprehensive pilot in 2018.
• AWOW can involve working from an
alternative Group location, from home
or other locations, agreeing flexible
working hours, and / or agreeing
alternative working patterns.
• Remote hubs were piloted to provide
colleagues further choice in terms of
work locations in 2020.
• Over 3,500 colleagues now work in
agile Group workspaces enabling more
openness and better collaboration.
• Technology has been, and continues to
be, enhanced to better enable remote
access and connection.
• Agile training has been delivered to
270 leaders.
60%
Employee engagement
56:44
Male / female appointment
to management and
leadership positions
>€11m
Invested in learning
8.8%
Staff turnover
 21:54 Page 30
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Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Inclusion & Diversity
Our focus in this area is to increase our diversity and
foster greater inclusivity. Our key goal remains a 50:50
gender balance target for management and leadership
appointments by end of 2021. Appointments include
new entrants and promotions. In 2019, females
represented 44% of Management and Leadership
appointments. Throughout 2019, we enhanced our
commitment to Inclusion & Diversity (I&D) through a
number of initiatives including:
• amending our recruitment policy by removing the
minimum education requirement as a standard
application requirement to ensure we become a
more inclusive employer opening up opportunities
to talented people from all backgrounds;
• introducing a hiring manager checklist to ensure
managers consciously consider diversity at every
step of the hiring process;
• unconscious bias training is included in the ‘You as
a Manager’ programme - demonstrating a
significant commitment to I&D, and embedding
awareness in people managers across the Group;
• maternity pay and adoption leave provision was
enhanced to 26 weeks’ full pay, effective from 1
January 2020;
• a partnership agreed with Family Carers Ireland
and Carers UK to help support a growing number
of colleagues with caring responsibilities. These
organisations provide a range of support services
including information on rights and entitlements,
guidance in relation to interactions with hospitals,
training on patient care and home support
services; and
• launching the Gold Sovereign Awards to
acknowledge the inspiring work of advocates for
I&D in the area of gender balance and equality.
In 2019 Bank of Ireland won a number of awards including:
• Business and Finance Diversity and Inclusion Award; and
• Women in Finance Diversity Ambassador of the Year award.
Gender Ratio
(total population)
Junior Level
(Band 1 to 2)
62% 38%
Middle level
(Band 3)
49% 51%
Management &
Leadership Level
(Band 4 to 7)
38% 62%
Overall Group
49% 51%
Organisation Capability
By focusing on organisation capability, the
Group is committed to organisation design
that is fit for purpose across all levels and
building a talent pipeline. Throughout 2019
a number of key initiatives progressed:
• we launched RISE, an early career
talent programme for women, further
progressing the building of gender
balanced talent across the Group. This
aligns to our gender diversity target;
• the Accelerate Programme focusing on
the development of female talent
identified as potential successors for
GEC, is now in its second year; and
• our Coaching Community of Practice
members are now using their
capabilities to support the
development of colleagues. The initial
focus has been on supporting
colleagues participating in the RISE
programme.
People Development
We want to ensure there are learning
opportunities for all, enable fulfilling
careers and build People Manager and
Leader capability. In 2019, over €11 million
was invested in the development of our
people, with over 185,000 hours of formal
training provided at an average of 17 hours
per colleague. A number of new
programmes were introduced in 2019, and
will continue into 2020:
• You as a Manager Programme was
launched to more than 2,000 People
Managers. This nine month programme
has been designed to support the
capabilities and behaviours identified
as being central to delivering on the
Group’s business transformation;
• You as a Leader Programme is being
developed in partnership with an
international business school. The
programme will focus on delivery of the
Group’s strategy and transformation by
developing leaders in strategic
capability and selected competency
areas;
• we launched a new Learning Service,
developed to support our colleagues in
building the skills and expertise to play
a key role in our transformation
journey;
• we introduced a Groupwide
mentoring programme and a
communication campaign that
introduces a network of career
connectors across the Group; and
• in 2020, we will launch our Aspiring
Managers programme to support
those who want to progress into
people management positions to be
ready for the additional
responsibilities that brings.
Rewards & Pensions
The Group aims to ensure that its reward
and pension framework is sustainable and
fit for purpose. In 2019, we initiated a
review of our current benefit offering, to
assess whether it reflects the needs of
colleagues. In response to colleague
feedback we will explore opportunities to
improve flexibility and choice.
 21:54 Page 31
32

Responsible and sustainable business
Enabling communities to thrive
As a bank that is at the heart of communities in Ireland, we
want to make a tangible and visible commitment that brings
our purpose to life. This means supporting the people,
businesses and organisations that are working hard to make
things better for everyone in their communities.
>€2.6m
Donated to charitable causes
750
Volunteer days
Our new community strategy
In 2019, we undertook a comprehensive
review of our community activities to
understand what was working well, where
we were having an impact, and how we
could increase and deepen this impact. We
consulted with stakeholders internally and
externally, engaged with charities and
community groups and conducted
research.
This review told us that Bank of Ireland has
a strong heritage of giving and supporting
community investment. Over the years, our
colleagues have shown their support for a
wide range of causes and this is a source
of great pride. However, while we invest
significantly in our communities, the
impact is often fragmented across a wide
range of different causes. We want to be
more purposeful in our approach,
supporting communities where we believe
we can have the greatest impact.
In 2020, we are rolling out a new approach
to community investment, Bank of Ireland
Begin Together - a €3 million investment
programme over three years that supports
community wellbeing and enterprise. Begin
Together comprises three distinct, yet
complementary elements:
• The Begin Together Fund will provide
valuable investment for community
initiatives across Ireland. It will support
financial, physical and mental
wellbeing projects and will be
supported by our volunteers and
guided by our expert partners.
• The Begin Together Awards will
recognise and honour the great work
done by those striving to lead their
communities forward and empower
local economies. This will bring the
existing National Enterprise Town
Awards under the Begin Together
umbrella and will expand to the island
of Ireland. The annual competition will
be run in partnership with local
authorities and councils.
• Begin Together Colleagues will enable
our colleagues across the Group to
deliver practical, hands-on support
through a fund to support local
financial, physical and mental
wellbeing initiatives suggested by
them. It will also support and
encourage volunteering activities, while
the long-established payroll giving
schemes (Staff Third World Fund and
Florin Fund) will continue.
Our impact in 2019
In 2019, our community investment
programme saw us provide matched
funding to our colleagues for causes close
to their heart, provide one volunteer day
per colleague and partner with three
flagship charities. In total over €2.6 million
was donated to charities through colleague
fundraising and bank donations and 750
days were volunteered. We also offered
training courses to community groups and
charities in partnership with BITCI and
made our facilities available for charity
meetings and events.
 21:54 Page 32
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Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Flagship charities
With the advent of our new community
strategy, 2019 saw the successful
conclusion of our partnerships with our
three flagship charities - Age Action and the
Irish Heart Foundation in the RoI and
Alzheimer’s Society in the UK. The various
partnerships saw tangible outcomes for the
work of these charities in our communities
with:
• over 300,000 young people trained by
Irish Heart Foundation to provide life-
saving CPR training in 430 secondary
schools across Ireland;
• €200,000 raised and over 700
colleagues volunteered to support older
people to remain active in their
communities and stay connected; and
• £310,734 raised for Alzheimer’s Society
in the UK - the equivalent of c.1500
‘side by side’ days - a service for
people living with dementia.
Kilkenny - Ireland’s most enterprising town
The story of partnership and innovation were the key themes to
emerge from Kilkenny’s winning entry. Modern and vibrant, yet with
extensive heritage assets, Kilkenny has a wide range of enterprises
with community at its heart. New enterprises, particularly the
internationally award-winning animation businesses, have become
embedded. The city clearly recognises its extensive heritage assets
and has very high quality accommodation for visitors. The ‘medieval
mile’ concept which links the heritage attractions in such a way that
visitors are attracted to move from one attraction to another, is
bringing benefits to the entire town. In addition to enterprise,
initiatives to deal with homelessness and social exclusion, and the
participation of many members of international communities based in
the city were commended.
National Enterprise Town Awards
The Bank of Ireland National Enterprise Town Awards
recognise and reward towns and urban villages, where
businesses and the community have come together, to
showcase a thriving local economy. 2019 was the fourth year
of the awards and saw 117 entries from 80 towns and urban
villages from almost every county in the RoI. There was
particularly strong growth in city entries in 2019 with nine
entries across four cities. The awards once again provided the
opportunity for business and community leaders to come
together and realise the inherent qualities of their town. In
total €193,000 of prize money was awarded to 42 towns for
investment in the further development of enterprise activity in
their towns. The overall 2019 winner was Kilkenny.
Showcasing our commitment to the Arts
Our Colleague Recognition Awards allowed us to showcase
our commitment to the Arts. Through Business to Arts, we
collaborated with Alva Gallagher, an established artist who
has won numerous awards for her work. Alva was inspired
by the Group’s purpose when she designed the unique
trophies, which were presented to winners on the night.
When Alva designed the Bank of Ireland Recognition
Awards Trophy, her objective was to inspire and support
our colleagues to reach beyond their goals and their
aspirations.
Supporting the Arts
Bank of Ireland continued to support the arts through the Bank of Ireland Cultural
and Heritage Centre in College Green - a partnership with the National Library of
Ireland and the Department of Culture, Heritage and the Gaeltacht. The current
exhibition Listen Now Again celebrating the life and works of Seamus Heaney is
free to the public and welcomed its 150,000th
visitor in November 2019.
 21:54 Page 33
The purpose of this table is to assist stakeholders in understanding our policies and management of key non-financial matters.
1
These policies are available on the Group’s website. All other policies listed are not published externally.
Responsible and sustainable business
Non-financial information statement
34

Environmental matters
Policies
• Group Environment policy (ISO 14001)1
• Group Energy policy (ISO 50001)1
Risks & Management
• Environment and Energy (page 26)
Social and employee matters
Policies
• Inclusion and Diversity policy
• Group Code of Conduct1
• Equal opportunities policy
• Group Health and Safety policy
• Employee Data Privacy
• Group Vulnerable Customers policy
• Group Learning policy
Risks & Management
• Vulnerable customers (page 29)
• Inclusion and diversity (page 31)
• Learning (page 31)
• Wellbeing (page 30)
• Communities (page 32)
• People risk (page 112)
Diversity report
Policies
• Board Diversity policy1
Risks & Management
• Corporate Governance statement
(page 59)
Bribery and corruption
Policies
• Group Code of Conduct1
• Speak Up policy
• Group Anti-Money Laundering policy
• Group Anti-bribery and Corruption policy
Risks & Management
• Code of conduct (page 25)
• Anti-bribery and corruption (page 25)
• Group Anti-Money Laundering (page 25)
• Conduct risk (page 150)
Business model
Risks & Management
• Divisional Review
Policies followed, due
diligence and outcome
Risks & Management
• Risk management framework
Description of principal risks
and impact of business
activity
Risks & Management
• Key risk types (page 39)
• Principal risks and uncertainties
(page 111)
Non-financial key
performance indicators
Policies
• Key highlights (page 3)
We comply with the new European Union
(disclosure of non-financial and diversity
information by certain large undertakings and
groups) Regulations 2017.
Respect for human rights
Policies
• Modern slavery and human trafficking
statement1
• Group procurement policy
• Group data protection and privacy policy
Risks & Management
• Information security (page 29)
• Operational risk (page 39)
• Human trafficking (page 25)
 21:54 Page 34
35

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Our governance structure
The Board is supported by a
number of Committees:
Group Nomination and
Governance Committee
Patrick Kennedy
Chair
Responsible for leading the process for
Board, Executive and key subsidiary board
appointments, renewals and succession
planning. It is also responsible for
corporate governance policies and
practice. Its remit has widened in 2020 to
include RSB.
Group Remuneration Committee
Steve Pateman (since January 2020)
Chair
Responsible for setting policy on the
remuneration of the Chairman and senior
management (including Executive
Directors) and approving specific
remuneration packages for the Chairman,
each of the Executive Directors, the Group
Secretary, and those Senior Executives
who report directly to the Group Chief
Executive Officer (CEO).
Group Audit Committee
Patrick Mulvihill
Chair
Responsible for monitoring the integrity of
the financial reporting arrangements and
overseeing all relevant matters pertaining
to the external auditor and the
effectiveness of the internal audit function.
Board Risk Committee
Richard Goulding
Chair
Responsible for monitoring risk
governance and assisting the Board in
discharging its responsibilities by ensuring
that risks are properly identified, reported,
assessed, and properly controlled; and
that strategy is informed by and aligned
with the Group’s risk appetite.
The Board is collectively responsible for the long-term
sustainable success of the Group and ensuring there
is a strong corporate governance structure in place.
The Board provides leadership of the Group, setting
strategic aims, within the boundaries of the risk
appetite and a framework of prudent and effective
controls. The Board has mechanisms in place to seek
and understand the views of stakeholders and
recognises the importance of considering stakeholder
perspectives when taking decisions.
The Group’s corporate governance
standards are implemented by way of a
comprehensive and coherent suite of
frameworks, policies, procedures and
standards covering corporate governance
as well as business and financial reporting,
and risk management activities. These are
supported by a strong tone from the top on
expected culture and behaviours. Such
standards are overseen by the GN&GC,
which reports regularly to the Board. Page
59 details the varied corporate governance
requirements that apply to the Group. An
outline of some of the ways in which the
Group approaches stakeholder
engagement can be found on page 72.
One of the main requirements applicable to
Bank of Ireland Group plc (‘BOIG plc’), as a
listed company, is the UK Corporate
Governance Code 2018 (the ‘UK Code’).
The Board welcomed the introduction of
the new UK Code in 2018, which it
believes brings a sharper focus to key
issues including the importance of a having
a clear purpose, culture and the value of
stakeholder engagement. Under the UK
Listing Rules and the Irish Corporate
Governance Annex to the Euronext Dublin
Stock Exchange Rules, companies are
required to apply the main principles of the
UK Code and report to shareholders on
how they have done so. The table below
outlines where you can find our disclosures
on how the Group has applied the main
principles of the UK Code.
36
Board Leadership and Company Purpose
A successful company is led by an effective and entrepreneurial board, whose role is to
promote the long-term sustainable success of the company, generating value for
shareholders and contributing to wider society.
• Board composition and succession (page 66)
• Strategic Report (page 3)
UK Code Principles Section
The Board should establish the company’s purpose, values and strategy, and satisfy
itself that these and its culture are aligned. All directors must act with integrity, lead by
example and promote the desired culture.
• Chairman’s introduction (page 59)
• Strategic Report – Chairman’s overview (page 4)
• Our governance structure (page 35)
• Assessing the effectiveness of the Board (page 69)
The Board should ensure that the necessary resources are in place for the company to
meet its objectives and measure performance against them. The board should also
establish a framework of prudent and effective controls, which enable risk to be
assessed and managed.
• Board’s oversight of risk management and internal
control systems (page 74)
• Report of the Group Audit Committee (page 82)
• Report of the Board Risk Committee (page 87)
In order for the company to meet its responsibilities to shareholders and stakeholders,
the board should ensure effective engagement with, and encourage participation from,
these parties.
• Stakeholder engagement (page 72)
• Strategic Report (enabling customers, colleagues
and communities to thrive) (page 10)
The Board should ensure that workforce policies and practices are consistent with the
company’s values and support its long-term sustainable success. The workforce should
be able to raise any matters of concern.
• Stakeholder engagement – colleagues (page 73)
• Strategic Report (business ethics, enabling
customers, colleagues to thrive) (page 10)
• Report of the Group Nomination and Governance
Committee (page 77)
Division of Responsibilities
The Chair leads the board and is responsible for its overall effectiveness in directing the
company. They should demonstrate objective judgement throughout their tenure and
promote a culture of openness and debate. In addition, the chair facilitates constructive
board relations and the effective contribution of all Non-Executive Directors (NEDs), and
ensures that directors receive accurate, timely and clear information.
• Roles and responsibilities (page 70)
• Chairman’s tenure (page 66)
• Board committees (pages 65 and 66)
• Chairman (page 61)
• Individual Directors (page 69)
UK Code Principles Section
The Board should include an appropriate combination of Executive and Non-Executive
(and, in particular, Independent Non-Executive) Directors, such that no one individual or
small group of individuals dominates the Board’s decision-making. There should be a
clear division of responsibilities between the leadership of the Board and the executive
leadership of the company’s business.
• Board composition and succession (page 66)
• Roles and responsibilities (page 70)
NEDs should have sufficient time to meet their board responsibilities. They should
provide constructive challenge, strategic guidance, offer specialist advice and hold
management to account.
• Assessing the effectiveness of the Board (page 69)
• Roles and responsibilities (page 70)
• Time commitment (page 75)
 21:54 Page 36
37

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Division of Responsibilities (continued)
The Board, supported by the company secretary, should ensure that it has the policies,
processes, information, time and resources it needs in order to function effectively and
efficiently.
• Roles and Responsibilities (pages 70 and 71)
• Role of the Board (page 69)
• Report of the Group Nomination and Governance
Committee (page 77)
UK Code Principles Section
Composition, Succession and Evaluation
Appointments to the Board should be subject to a formal, rigorous and transparent
procedure, and an effective succession plan should be maintained for Board and senior
management. Both appointments and succession plans should be based on merit and
objective criteria and, within this context, should promote diversity of gender, social and
ethnic backgrounds, cognitive and personal strengths.
• 2019 Board changes (page 67)
• External support (page 67)
• Diversity (page 68)
• Board composition and succession (page 66)
• Report of the Group Nomination and Governance
Committee (page 77)
UK Code Principles Section
The Board and its committees should have a combination of skills, experience and
knowledge. Consideration should be given to the length of service of the Board as a
whole and membership regularly refreshed.
• Your Board (Directors’ Bios) (page 61)
• Chairman’s introduction (page 59)
• Chairman’s tenure (page 66)
• Board composition and succession (page 66)
• Report of the Group Nomination and Governance
Committee (page 77)
• Diversity (page 68)
Annual evaluation of the Board should consider its composition, diversity and how
effectively members work together to achieve objectives. Individual evaluation should
demonstrate whether each director continues to contribute effectively.
• Assessing the effectiveness of the Board (page 69)
Audit, Risk & Internal Control
The Board should establish formal and transparent policies and procedures to ensure
the independence and effectiveness of internal and external audit functions and satisfy
itself on the integrity of financial and narrative statements.
• Board oversight of risk management and internal
control systems (page 74)
• Report of the Group Audit Committee (page 82)
UK Code Principles Section
The Board should present a fair, balanced and understandable assessment of the
company’s position and prospects.
• Chairman’s review, Strategic Report (page 4)
• Role of the Board (page 70)
• Board oversight of risk management and internal
control systems (page 74)
The Board should establish procedures to manage risk, oversee the internal control
framework, and determine the nature and extent of the principal risks the company is
willing to take in order to achieve its long-term strategic objectives.
• Board oversight of risk management and internal
control systems (page 74)
• Report of the Board Risk Committee (page 87)
Remuneration
Remuneration policies and practices should be designed to support strategy and
promote long-term sustainable success. Executive remuneration should be aligned to
company purpose and values and be clearly linked to the successful delivery of the
company’s long-term strategy.
• Report of the Group Remuneration Committee
(page 80)
• Remuneration Report (page 98)
UK Code Principles Section
A formal and transparent procedure for developing policy on Executive remuneration
and determining director and senior management remuneration should be established.
No Director should be involved in deciding their own remuneration outcome.
• Report of the Group Remuneration Committee
(page 80)
• Remuneration Report (page 98)
Directors should exercise independent judgement and discretion when authorising
remuneration outcomes, taking account of company and individual performance, and
wider circumstances.
• Report of the Group Remuneration Committee
(page 80)
• Remuneration Report (page 98)
 21:54 Page 37
38

Risk review
A strong risk culture is promoted
throughout the Group which encompasses
the general awareness, attitude and
behaviour of everyone in the Group.
Risk appetite defines the amount and type
of risk we are prepared to accept in pursuit
of our financial objectives. It forms a
boundary condition to strategy by
clarifying what is and is not acceptable.
Based on the risk appetite approved by the
Board, we set out an approach to risk in
order to:
(i) protect the long-term Group franchise;
(ii) ensure financial stability; and
(iii) maintain capital levels.
Our risk principles mean that risks may be
accepted at transaction, portfolio and
Group level if:
• they are aligned with our defined risk
appetite and risk identity;
• the risks represent an attractive
investment from a risk-return
perspective;
• we have the resources and skills to
analyse and manage the risks;
• appropriate risk assessment,
governance and procedures have been
observed; and
• stress and scenario tests around the
risks exist, where appropriate, and are
satisfactory.
Group risk management framework
- key components
The Risk Management Framework is aimed
at all key decision makers who are involved
in risk taking, capital management, finance
or strategy, including business units and
Group functions. It ensures that risks are
managed and reported in a consistent
manner throughout the Group. It outlines
our formal governance process for risk, our
framework for setting risk appetite and our
approach to risk identification,
assessment, measurement, management
and reporting and is underpinned by strong
risk governance and a robust risk culture.
The Board of Directors is responsible for
ensuring that an appropriate system of
internal control is maintained. This is
achieved through a risk governance
structure designed to facilitate the
reporting and escalation of risk concerns
from business units and risk functions
upwards to the Board and its appointed
committees and sub-committees, and
conveying approved risk management
policies and decisions to business units.
Individual responsibility is a key tenet of
risk management in the Group and we are
all accountable for our actions.
Principal risks and uncertainties
Principal risks and uncertainties could
impact on our ability to deliver our
strategic plans and ambitions. We consider
risks that arise from the impact of external
market shocks, geopolitical event risks or
other emerging risks as well as key risk
types which could have a material impact
on earnings, capital adequacy and / or on
our ability to trade in the future.
We believe great risk management leads to great
customer outcomes. We follow an integrated
approach to risk management. This means that all
material classes of risk are considered. Most
importantly our overall business strategy and
remuneration practices are aligned to our risk and
capital management strategies.
Further information in relation to these risks is
found in the Risk management report, on
pages 111 to 120.
 21:54 Page 38
39

Strategic Report Risk Management Report Financial Statements Other Information
Financial Review Governance
Business
and
strategic
Conduct Credit
Funding
and
liquidity
Life
insurance
Market Operational Pension Regulatory Reputation
Risk Management Process
Risk strategy and appetite
Key risks
Risk governance Risk culture
Risk identification and materiality assessment
Risk analysis and measurement
Risk monitoring and reporting
Business and strategic risk
This risk includes all risks that might impact
our current business model and
sustainability of our future strategy. It
includes; the threat from fintechs, digital /
technological changes, Brexit,
macroeconomic and regional geopolitical
uncertainty, transformation, climate and
people risks.
Conduct risk
The risk that we behave in a negligent or
inappropriate manner that leads to adverse
outcomes for customers, for example
selling a customer a product that does not
meet their needs, or failing to respond to a
customer complaint promptly or effectively.
Credit risk
The risk of loss resulting from a
counterparty failing to meet their
contractual obligations to us arising in
respect of loans or other financial
transactions. The risk arises from loans and
advances to customers, in addition to our
transactions with other financial
institutions, sovereigns, and state
institutions.
Funding and liquidity risk
The risk that we have insufficient financial
resources to meet commitments when they
fall due.
Life insurance risk
The risk of unexpected variations in the
amount and timing of insurance claims due
to, for example, changing customer
mortality, life expectancy, health, and
behaviour characteristics.
Market risk
The risk of loss in the value of our assets
and liabilities due to adverse movements in
interest rates, FX rates or other market
prices.
Operational risk
The risk of loss resulting from inadequate or
failed internal processes, people and
systems or from external events which can
lead to disruption of services to customers,
financial loss, and damage to our reputation.
Included are risks associated with business
continuity, data quality, fraud, information
security, cybercrime, IT, payments, sourcing
and unauthorised trading.
Pension risk
The risk that assets in principal defined
benefit pension schemes are inadequate or
fail to generate returns sufficient to meet
the schemes’ liabilities.
Regulatory risk
The risk that we fail to meet new /
existing regulatory / legislative
requirements and deadlines or if we fail
to embed regulatory requirements into
our processes.
Reputation risk
The risk to earnings or the value of our
franchise value arising from adverse
perception of our image on the part of
customers, suppliers, counterparties,
shareholders, investors, staff, legislators,
regulators or partners.
Capital adequacy
Capital adequacy is having a sufficient level or composition of capital to support normal business activities and to meet regulatory capital
requirements both under normal operating environments or stressed conditions. Capital adequacy is not a risk type in itself but owing to the
nature of capital as a critical risk mitigant is a key determinant of the overall Group risk appetite.
Key risk types
Further information in relation to our risk
management process is found in the Risk
management report, on pages 111 to 160.
 21:54 Page 39
A specialist at Bank of Ireland
customer APOS working
on a bespoke prosthetic
solution for a client
 21:54 Page 40
2019 financial results
Financial Review
Profit before tax of €645 million was
generated by the Group for 2019 (2018:
€835 million).
Operating profit before net impairment
(losses) / gains for 2019 is €82 million
higher than 2018 predominantly reflecting
lower operating expenses (before levies
and regulatory charges) of €67 million and
a growth in operating income (net of
insurance claims) of €31 million.
Net impairment losses for the year are
€215 million whereas in 2018 the Group
benefitted from a net impairment gain of
€42 million. This movement is the key
driver in the decrease of €177 million in
underlying profit before tax, representing a
return to more normalised impairment
levels.
Operating income has increased by €31
million compared to 2018. Net interest
income has remained stable year on year.
A strong performance in our Wealth and
Insurance business together with higher
valuation items are the key drivers of
operating income growth.
Operating expenses (before levies and
regulatory charges) of €1,785 million are
€67 million or 4% lower than 2018. The
Group continues to focus on reducing its
operational costs through simplifying the
organisation and strategic sourcing, driving
a decrease in third party spend. The
reduction has been achieved while
absorbing increased costs from wage
inflation and higher depreciation.
Our transformation programme continues
to make progress and a further €263
million was invested in this programme in
2019, of which €100 million is capitalised
on the balance sheet (2018: €100 million),
with an income statement charge of €108
million (2018: €113 million) and €55 million
(2018: €93 million) recognised through
non-core items.
Net impairment losses on financial
instruments of €215 million in 2019 was
higher than 2018 and primarily reflects a
more normalised level of impairments and
also losses on a small number of large
exposures.
Non-core charges increased by €13
million for the year. The increased charge is
principally due to customer redress
charges of €74 million, increased losses of
€30 million on disposal / liquidation of
business activities partially offset by a €52
million reduction in the cost of
restructuring programme, and an increase
of €42 million in the gain on the gross-up
policyholder tax in the Wealth and
Insurance business.
The taxation charge for the Group was
€197 million in 2019 with an effective
taxation rate on a statutory basis of 31%
(2018: €160 million and 19%, respectively).
The increased rate is primarily due to the
re-assessment of the tax value of the UK
tax losses carried forward and the tax
impact of the gross-up for policyholder tax
in the Wealth and Insurance business. On
an underlying basis and excluding the
impact of the re-assessment of the tax
value of the tax losses carried forward, the
effective taxation rate in 2019 was 17%
(2018: 19%). The effective tax rate is
influenced by changes in the geographic
mix of profits and losses.
2019 2018
Table 
Net interest income 1 2,150 2,146
Net other income 2 686 659
Operating income (net of insurance claims) 2,836 2,805
Operating expenses (before levies and
regulatory charges) 3 (1,785) (1,852)
Levies and regulatory charges 3 (117) (101)
Operating profit before net impairment (losses)
/ gains on financial instruments 934 852
Net impairment (losses) / gains on financial instruments 4 (215) 42
Share of results of associates and joint ventures (after tax) 39 41
Underlying profit before tax 758 935
Non-core items 5 (113) (100)
Profit before tax 645 835
Tax charge (197) (160)
Profit for the year 448 675
The Group generated an underlying profit before tax of €758 million in
2019 (2018: €935 million). All trading divisions are profitable and have
contributed positively to our financial performance during the year.
Summary consolidated income statement on an underlying basis
These financial results are presented on an Underlying basis. Underlying excludes non-core items which are
those items that the Group believes obscure the Underlying performance trends in the business (page 46).
41

Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
 21:54 Page 41
Net interest income after IFRS income
classifications of €2,167 million for 2019
is €13 million lower compared to 2018.
Excluding the impact of income relating to
the UK credit card portfolio in 2018 (€28
million) which have been reclassified as
non-core in 2019, net interest income has
increased by €15 million.
The gross customer yield has increased
marginally in 2019, primarily due to
favourable lending mix development and
the full year effect of the BoE base rate rise
in the second half of 2018.
The gross customer yield has increased
marginally in 2019, primarily due to
favourable lending mix development
partially, offset by competitive pressure in
UK mortgage market.
The Group’s average NIM has decreased
from 2.20% to 2.14%. This reflects the
repositioning of the UK credit cards
portfolio, higher liquid asset volumes and
an increase in the Group’s average cost of
funds by three basis points due to the
impact of new senior debt issuances to
meet Minimum Requirement for Own
Funds and Eligible Liabilities (MREL)
requirements.
Average interest earning assets in 2019
have increased by €2 billion compared
to 2018 arising from positive net new
lending growth partially offset by portfolio
disposals. For further information on loans
and advances to customers see page 48.
1
The year on year changes in net interest income and net other income are affected by certain IFRS income classifications. Under IFRS, certain assets and liabilities can be designated
at, or mandatorily included at fair value through profit or loss. Where the Group hold assets and liabilities at fair value through profit or loss, the total fair value movements on these
assets and liabilities, including interest income and expense, are reported in net other income. However, the interest income on any assets which are funded by these liabilities and
interest expense on any liabilities which fund these assets is reported internally in the net interest income. In addition, assets are purchased and debt is raised in a variety of
currencies and the resulting foreign exchange and interest rate risk is economically managed using derivative instruments - the cost of which is reported in net other income. To
enable a better understanding of underlying business trends, the impact of these IFRS income classifications is shown in the table above.
2
In 2019, there was €13 million (2018: €15 million) of interest income on Life loan mortgage products which is classified as fair value through profit or loss, with all income on such
loans reported in net other income. This IFRS income classification moves the income back to net interest income in line with how it was reported prior to the adoption of IFRS 9.
3
Average interest earning assets includes €411 million (2018: €431 million) of interest bearing assets carried at fair value through profit or loss.
4
The net interest margin is stated after adjusting for IFRS income classifications.
5
Gross yield and average cost of funds represents the interest income or expense recognised on interest bearing items net of interest on derivatives which are in a hedge relationship
with the relevant asset or liability. See page 331 for further information.
Summary consolidated income statement on an underlying basis (continued)
Net interest income
42

 21:54 Page 42
43
1
The year on year changes in net interest income and net other income are affected by certain IFRS income classifications. Under IFRS, certain assets and liabilities can be designated
at, or mandatorily included at fair value through profit or loss. Where the Group hold assets and liabilities at fair value through profit or loss, the total fair value movements on these
assets and liabilities, including interest income and expense, are reported in net other income. However, the interest income on any assets which are funded by these liabilities and
interest expense on any liabilities which fund these assets is reported internally in the net interest income. In addition, assets are purchased and debt is raised in a variety of
currencies and the resulting foreign exchange and interest rate risk is economically managed using derivative instruments - the cost of which is reported in net other income. To
enable a better understanding of underlying business trends, the impact of these IFRS income classifications is shown in the table above.
2
In 2019, there was €13 million (2018: €15 million) of interest income on Life loan mortgage products are classified as fair value through profit or loss, with all income on such loans
reported in net other income. This IFRS income classification moves the income back to net interest income in line with how it was reported prior to the adoption of IFRS 9.
3
Business income is net other income after IFRS income classifications before other gains and other valuation items. This is a measure monitored by management as part of the
review of divisional performance.
Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
 Summary consolidated income statement on an underlying basis (continued)
Operating expenses
Operating expenses (before levies and
regulatory charges) are €67 million or 4%
lower than 2018 as the Group continued to
focus on reducing its operational costs
absorbing wage inflation, maintaining its
investment in technology, business growth
and regulatory compliance. Expenses
related to the UK credit card portfolio and
ATMs businesses are treated as non-core
in 2019.
Staff costs (excluding pension costs) of
€710 million are €11 million lower
compared to 2018 due to lower average
staff numbers. The Group paid a salary
increase averaging 2.6% effective 1
January 2019 which partially offset the
impact of lower staff numbers.
Depreciation and amortisation has
increased by €77 million primarily reflecting
the impact of transition to IFRS 16 on 1
January 2019 and the recognition of new
Right of Use (RoU) assets. See note 62 for
further information.
Other costs including technology,
property, outsourced services and other
non-staff costs are €115 million lower than
2018 (€45 million lower net of IFRS 16
reclassification) due to the Group's
continuing progress in generating cost
savings through strategic sourcing and
efficiencies across its businesses whilst
investing in strategic initiatives, technology
and regulatory compliance. The impact of
transition to IFRS 16 on 1 January 2019
resulted in a reduction of lease charges in
other costs of €70 million (see note 62 for
further information).
Transformation Investment charge
Our transformation programme continues
to make good progress and a further
€263 million was invested in this
programme in 2019 of which €100 million
is capitalised on the balance sheet (2018:
€100 million), which an income statement
charge of €108 million (2018: €113 million)
and €55 million (2018: €93 million)
recognised through non-core items.
Levies and regulatory charges
The Group has incurred levies and
regulatory charges of €117 million in 2019
(2018: €101 million). The higher charge is
driven by increases in certain levies
including Irish Bank levy and the European
Central Bank (ECB) Supervisory fee.
At 31 December 2019 net impairment (losses) / gains on other financial instruments (excluding loans and advances to customers at amortised cost) included €5 million (2018: €6
million) on loan commitments and €nil (2018: €0.6 million) on guarantees and irrevocable letters of credit.
Summary consolidated income statement on an underlying basis (continued)
Net impairment (losses) / gains on financial instruments
The Group recognised a net impairment
loss of €215 million, including a net
impairment loss of €210 million on loans
and advances to customers at amortised
cost, compared to a net impairment gain of
€42 million in 2018.
Net impairment losses on financial
instruments in 2019 primarily reflects a
more normalised level of impairments and
also losses on a small number of large
exposures
A net impairment loss on the Retail Ireland
mortgage portfolio of €60 million in 2019 is
€120 million adverse to the gain of
€60 million in 2018. The loss during the
year is due to the combination of updated
impairment model parameters (including
updated forward looking information (FLI)
and refreshed cure rates) and the impact of
the disposal / securitisation of non-
performing portfolios in the year. Retail
Ireland credit-impaired and non-performing
mortgages reduced by 36% and 35%
respectively in 2019 with reductions
achieved in both the owner occupied and
BTL market segments, albeit weighted to
BTL reflecting the disposal / securitisation
of non-performing portfolios in this
segment.
There was a net impairment gain of €8
million on the Retail UK mortgage portfolio
which was €21 million favourable to the
loss of €13 million in 2018. The gain
reflects strong performance in the portfolio
with low levels of NPEs.
A net impairment loss of €76 million on the
non-property SME and corporate loan
portfolio in 2019 is €90 million adverse to
the gain of €14 million in 2018, reflecting
losses on a small number of large
exposures.
A net impairment loss of €24 million on the
Property and construction loan portfolio in
2019 is €36 million adverse to the gain of
€12 million in 2018. This loss is principally
related to a small number of large
exposures in the UK incurred in the second
half of the year.
A net impairment loss of €58 million on the
Consumer loans portfolio in 2019 is €21
million higher than the loss of €37 million in
2018. This loss was primarily driven by
strong volume growth in UK personal
lending with an associated increase in
impairment loss allowances.

Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
 
Underlying performance excludes non-
core items which are those items that the
Group believes obscure the underlying
performance trends in the business. The
Group has treated the following items as
non-core:
Customer redress charges
The Group has set aside a further €67
million provision in respect of the Tracker
Mortgage Examination to cover the
additional redress and compensation costs
for a number of customers, operational
costs associated with the length and
nature of the review and costs of closing
out the review. In addition, a further €7
million has been provided in respect of
other customer redress.
Cost of restructuring programme
During 2019, the Group recognised a
charge of €59 million. Transformation
Investment costs of €55 million relate to a
reduction in employee numbers (€34
million), programme management costs
(€17 million) and costs related to the
implementation of the Group’s property
strategy (€4 million). Other restructuring
charges of €4 million relate to impairment
of property, plant and equipment. A
restructuring charge of €93 million was
incurred in 2018, predominantly related to
changes in employee numbers.
Gross-up for policyholder tax in the
Wealth and Insurance business
Accounting standards require that the
income statement be grossed up in
respect of the total tax payable by Wealth
and Insurance, comprising both
policyholder and shareholder tax. The tax
gross-up relating to policyholder tax is
included within non-core items.
During 2019, the Group recognised a credit
of €35 million (2018: €7 million charge). The
year on year movement is mainly due to
favourable investment market performance
in 2019.
UK portfolio divestments
Where the Group has made a strategic
decision to exit an area of a business, the
related income and expenses of that
business are treated as non-core. During
the year, the Group disposed of the UK
credit card portfolio and exited unprofitable
ATMs. As a result, in 2019, €51 million of
operating income, €40 million of operating
expenses and €1 million of impairment
gains arising from these businesses have
been treated as non-core (2018: €nil).
Gain / loss on disposal / liquidation of
business activities
The loss on disposal of business activities
reflects the loss on sale of the UK credit
card portfolio. The assets were classified
as assets held for sale up to the date of
disposal in July 2019. The portfolio was
sold for total consideration of €580 million
resulting in a net loss on disposal of €21
million after making a provision related to
the cost of migration and other costs
associated with the disposal (note 26).
In addition, a loss of €4 million (2018: €5
million gain) was recognised relating to the
recycling of cumulative unrealised FX gains
and losses through the income statement
following the liquidation of foreign
denominated subsidiaries. These losses
were previously held in the FX reserve.
Investment return on treasury shares
held for policyholders
Under accounting standards, the Group
income statement excludes the impact of
the change in value of BOIG plc shares
held by Wealth and Insurance for
policyholders. In 2019, there was a €2
million loss (2018: €6 million gain). At 31
December 2019, there were 5.0 million
shares (2018: 3.3 million shares) held by
Wealth and Insurance for policyholders.
Summary consolidated income statement on an underlying basis (continued)
Non-core items
46
1
Includes staff costs of €11 million (2018: €nil).

 21:54 Page 46
47
The Group’s loans and advances to
customers (after impairment loss
allowances) of €79.5 billion are €2.5 billion
higher than 31 December 2018, primarily
due to net new lending of €2.0 billion and
the impact of FX rates. During 2019, the
Group disposed of its UK credit card
portfolio (€0.6 billion) and also
derecognised via securitisation and sale
transactions, non-performing Retail Ireland
loans of €0.5 billion.
During the year, the Group's loans and
advances to customers (after
impairment loss allowances) and
including loans and advances to
customers classified as held for sale
increased to €79.5 billion from €77.0 billion
in 2018. Gross new lending increased by
3% to €16.5 billion compared to €15.9
billion in 2018.
The Group’s asset quality continues to
improve. NPEs reduced by €1.5 billion to
€3.5 billion during 2019, and represented
4.4% of gross loans at 31 December 2019.
At December 2019, overall Group
customer deposit volumes are €5.1 billion
higher than 2018. The main drivers of this
movement were growth of €4.3 billion in
Retail Ireland primarily due to growth in
current account credit balances (€3.6
billion), reflecting strong economic activity
and a €0.5 billion increase in Corporate
and Treasury. Retail UK decreased by
Stg£0.6 billion, primarily driven by lower
UK Post Office balances due to pricing
optimisation. However due to sterling
strengthening against the Euro, Retail UK
balances increased on a headline basis by
€0.3 billion. The Loan to Deposit Ratio
(LDR) at 31 December 2019 is 95% (2018:
97%).
Wholesale funding balances are €0.4
billion lower than 2018 primarily due to
term maturities, full repayment of Targeted
longer-term refinancing operations (TLTRO)
borrowings, partially offset by two MREL
issuances (c.€1.3 billion). Total Monetary
Authority borrowings at 31 December 2019
are €1.7 billion compared to €2.7 billion at
31 December 2018.
The net defined benefit pension deficit has
decreased by c.€0.1 billion since 2018. The
primary drivers of the movement in the
pension deficit were positive asset returns,
experience gains and employer
contributions offset by the negative impact
of assumption changes in 2019. The
interest rate and inflation rate hedging
strategies in the investment portfolios have
offset the impact of the significant
reductions in discount rates in 2019.
The balance sheet remains strong with the
Group generating robust organic capital
growth. Our fully loaded CET1 ratio
increased by c.40 basis points during 2019
to 13.8% and our regulatory CET1 ratio
increased by c.10 basis points to 15.1%.
The increase of c.40 basis points is
predominantly due to organic capital
generation (c.+170 basis points) and the
sale of NPEs and the UK credit card
portfolio (c.+40 basis points) offset by risk
weighted assets (RWA) growth (c.-50 basis
points), investment in the Group’s
transformation programmes (c.-50 basis
points), an accrual for a proposed dividend
(c.-40 basis points), the impact of IFRS 16
implementation (c.-20 basis points) and net
movements, including movements in the
Group’s defined benefit pension schemes
(c.10 basis points). For further information
on capital see Capital Management on
pages 156 to 160 of the Risk Management
Report.

Summary consolidated balance sheet
1
Includes €0.3 billion of loans and advances to customers at 31 December 2019 (2018: €0.3 billion) that are measured at fair value through profit or loss and are therefore not subject
to impairment under IFRS 9.
2
Includes €nil of loans and advances to customers classified as held for sale at 31 December 2019 (2018: €0.6 billion) .
3
The Group’s Liquidity Coverage Ratio is calculated based on the Commission Delegated Regulation (EU) 2015/61 which came into force on 1 October 2015.
4
The Group’s Net Stable Funding Ratio is calculated based on the Group’s interpretation of the Basel Committee on Banking Supervision October 2014 document.
5
For basis of calculation of Return on Tangible Equity, see page 334.

Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
Further information on measures referred to in
the 2019 financial results, including gross new
lending, NPEs, wholesale funding and organic
capital is found in Alternative performance
measures on page 331.
 21:54 Page 47
Includes €0.3 billion of loans and advances to customers at 31 December 2019 (2018: €0.3 billion) that are measured at fair value through profit or loss and are therefore not subject to
impairment under IFRS 9.
2
Includes €0.6 billion of loans and advances to customers classified as held for sale at 31 December 2018.
Summary consolidated balance sheet (continued)
Loans and advances to customers
The Group's loans and advances to
customers (after impairment loss
allowances) of €79.5 billion are €2.5 billion
higher than 31 December 2018, primarily
due to net new lending of €2.0 billion and
the impact of FX rates. During 2019, the
Group completed the sale of its UK credit
card portfolio (Stg£0.5 billion) and also
derecognised via securitisation and sale
transactions, non-performing Retail Ireland
loans of €0.5 billion net carrying value.
Gross new lending of €16.5 billion across
Retail Ireland (€5.8 billion), Retail UK (€6.7
billion) and Corporate and Treasury (€4.0
billion) is 3% higher than 2018.
Redemptions and repayments of €14.5
billion are largely in line with 2018.
Against the backdrop of an overall positive
economic environment, the Group’s loan
portfolios continued to perform well and
NPEs (including credit-impaired) have
continued to reduce reflecting ongoing
resolution activities. While Brexit
uncertainty resulted in muted demand for
credit, it had no material impact on credit
quality. Group NPEs reduced by €1.5
billion or 29% to €3.5 billion at 31
December 2019 and represent 4.4% of
gross loans to customers, bringing the
Group’s NPE ratio below the key 5%
milestone. The reduction reflects agreed
customer work-outs of €0.9 billion and
NPE securitisation and sale transactions of
€0.6 billion.
During 2019, the stock of impairment loss
allowances decreased by €0.4 billion to
€1.3 billion due to the utilisation of
impairment loss allowances against credit-
impaired assets for which there was
considered to be no reasonable
expectation of recovery.
48

27 25
The Group’s portfolio of liquid assets at 31 December 2019 of €27.2 billion has increased by c.€2.5 billion since 2018 primarily due to an
increase in cash balances of €2.3 billion arising from higher deposit volumes, partially offset by higher lending volumes and lower
wholesale funding and subordinated debt. The Group has optimised cash balances with central banks to take advantage of the new ECB
deposit rate tiering structure.
Other assets and other liabilities
- Other liabilities - 1.3
The movement in the value of derivative assets and derivative liabilities is due to changes in fair values caused by the impact of the
movements in equity markets, interest rates and FX rates during 2019.
The net defined benefit pension deficit has decreased by c.€0.1 billion since 2018. The primary drivers of the movement in the pension
deficit were positive asset returns, experience gains and employer contributions offset by the negative impact of assumption changes in
2019. The interest rate and inflation rate hedging strategies in the investment portfolios have offset the impact of the significant reductions
in discount rates in 2019.
The increase in other assets and lease liabilities of €0.6 billion (2018: €nil) arise from the transition to IFRS 16 on 1 January 2019. See note
62 for further information.

Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
The tables below and on the following pages, provide further
information on the financial performance of the Group’s divisions
during 2019 as well as some key performance metrics. A
business review for each division can be found on pages 18 to 23
of the divisional review. Information on the financial performance
of the Group as a whole can be found on page 41 of the Strategic
report.
Basis of presentation
Percentages presented throughout the Strategic Report are
calculated on the absolute underlying figures and so may differ
from the percentage variances calculated on the rounded
numbers presented, where the percentages are not measured
this is indicated by n/m.
Principal rates of exchange used in the preparation of the
Financial Statements are set out on page 178.
References to ‘the State’ throughout this document should be
taken to refer to the Republic of Ireland, its Government and,
where and if relevant, Government departments, agencies and
local Government bodies.
1
These financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying performance
trends in the business. See page 46 for further information.
2
Other reconciling items represent inter segment transactions which are eliminated upon consolidation and the application of hedge accounting at Group level.
3
For basis of calculation of basic earnings per share see note 20 on page 212. Underlying earnings per share excludes non-core items.
4
For basis of calculation of the statutory cost income ratio is set out on page 334. Underlying cost income ratio is calculated on an underlying basis (page 334).
Divisional financial results
2019 2018

Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
Further information in relation to our divisional
results is found in the Financial Review on
pages 52 to 57.
Further information on measures referred to in
our business segments is found in Alternative
performance measures on page 331.
 21:54 Page 51
Net interest income and net other income are impacted by IFRS income classifications as set out on pages 42 and 43. The impact on Retail Ireland is to increase net interest income
in 2019 by €15 million to €1,005 million (post IFRS income classification) (2018: €1,012 million) with fully offsetting changes to net other income in both years. In 2019, the IFRS
income classification includes €13 million (2018: €15 million) of interest income on Life loan mortgage products which on transition to IFRS 9 were mandatorily classified as fair value
through profit or loss, with all income on such loans reported in net other income. This IFRS income classification moves the income back to net interest income in line with how it
was reported in prior years.
2
Net impairment losses on other financial instruments (excluding loans and advances to customers at amortised cost) were €nil for 2019 (31 December 2018: €3 million gain) on loan
commitments.
52

Divisional financial results (continued)
Retail Ireland
Further information in relation to the financial
performance of Retail Ireland can be found on
page 19.
 21:54 Page 52
Embedded value
The table above outlines the Market Consistent Embedded Value
(MCEV) performance using market consistent assumptions. The
MCEV principles are closely aligned to the Solvency II principles
and are consistent with the approach used for insurance
contracts in the IFRS basis.
Operating profit has increased to €139 million (2018: €115 million)
mainly reflecting the benefit of assumption changes compared to
2018.
As outlined in the IFRS results the impact of the unit linked fund
performance (€52 million positive) and interest rate movements
(€1 million loss) were positive overall in the year resulting in a total
profit of €190 million (2018: €53 million).
The table below summarises the overall balance sheet of Wealth
and Insurance on an MCEV basis at 31 December 2019
compared to the value at 31 December 2018. The Value of in
Force (ViF) asset represents the after tax value of future income
from the existing book.
The value of net assets reflects a dividend payment of €77 million
by Wealth and Insurance companies to Group Centre in 2019
(2018: €73 million).
Wealth and Insurance: 2019 2018
Summary balance sheet (MCEV) 
Net assets 481 471
ViF 710 640
Less Tier 2 subordinated capital / debt (162) (162)
Less pension scheme deficit (126) (107)
Total embedded value 903 842
53
Divisional financial results (continued)
Wealth and Insurance

Financial Review Risk Management Report Financial Statements Other Information
Strategic Report Governance
Further information in relation to the financial
performance of Wealth and Insurance can be
found on page 20.
 21:54 Page 53
Net impairment losses on other financial instruments (excluding loans and advances to customers at amortised cost) were £nil for 2019 (31 December 2018: £2 million gain) on loan
commitments.
2
Includes £nil (31 December 2018: £0.5 billion) of loans and advances to customers classified as held for sale.
54

Divisional financial results (continued)
Retail UK
Further information in relation to the financial
performance of Retail UK can be found on
page 21.

‘Net interest income’ and ‘net other income’ are impacted by IFRS income classifications as set out on pages 42 and 43. The impact on Corporate and Treasury 2019 ‘net interest
income’ was €6 million (2018: €nil) with fully offsetting changes to ‘net other income’ in both years.
- Business - net interest and other income 758 706 7%
- Financial Instruments valuation adjustments (27) 7 n/m
- Other debt instruments at FVOCI gains 1 8 (88%)
Operating expenses (195) (194) (1%)
Operating profit before impairment losses on financial instruments 537 527 2%
Net impairment losses on financial instruments (82) (41) n/m
Underlying profit before tax 455 486 (6%)
Net impairment (losses) / gains on financial instruments
Loans and advances to customers at amortised cost (77) (41) (88%)
- Non-property SME and corporate (67) (41) (62%)
- Property and construction (10) - -
Other financial instruments (excluding loans and advances to customers at amortised cost)2
(5) - n/m
Governance
Contents
Corporate Governance Statement
Chairman’s introduction 59
Your Board 61
Report of the Group Nomination and Governance Committee 77
Report of the Group Remuneration Committee 80
Report of the Group Audit Committee 82
Report of the Board Risk Committee 87
Attendance table 91
Report of the Directors 92
Schedule to the Report of the Directors 95
Remuneration report 98
Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Dear Shareholders,
I am pleased to present our Corporate Governance
Report for 2019. This report provides an overview of
our governance in practice, including how the Board
of Directors (the ‘Board’) operates, how it spent its
time during the year and how it has evaluated its
performance. It includes reports from the four
mandatory Board committees and explains how the
principles of good governance are embedded.
We believe that the role of the Board is to promote
the long-term success of the Group, whilst
contributing to wider society. In order to do this, the
Group must have a robust corporate governance
framework, providing systems of checks and
controls to drive accountability and better decision-
making, with appropriate policies and practices in
place to ensure that the Board and its committees
operate effectively.
The Board is accountable to shareholders for the
overall direction and control of the Group. It is
committed to high standards of governance
designed to protect the long-term interests of
shareholders and all other stakeholders, while
promoting the highest standards of integrity,
transparency and accountability.
A key objective of the Group’s governance
framework is to ensure compliance with applicable
corporate governance requirements. During 2019
these requirements comprised of:
• Central Bank of Ireland Corporate Governance
Requirements for Credit Institutions 2015 (‘Irish
Code’)1
.
• UK Corporate Governance Code 2018 (‘UK
Code’).
• Irish Corporate Governance Annex2
.
• S.I. No. 158/2014 - European Union (Capital
Requirements) Regulations 2014.
• European Banking Authority Guidelines on
internal governance under Directive
2013/36/EU.
• Joint European Securities and Markets Authority
(ESMA) and EBA Guidelines on the assessment
of the suitability of members of the management
body.
The Group complied with all applicable corporate
governance requirements throughout 2019.
Corporate governance developments are kept under
continuous review in order to ensure that the
Group’s governance structures evolve and remain
appropriate for a significant credit institution. The
Board welcomed the introduction in 2018 of the new
UK Code and its emphasis on relationships between
companies, shareholders and stakeholders, the
strength of which is crucial to ensuring informed
decisions are taken to support the longer-term
sustainability of the Group.
People and culture
Our people remain at the very core of what we do,
and I continue to be impressed by the commitment
and enthusiasm shown by all of our colleagues
during the Board’s visits to various locations and
other engagements with colleagues during the year.
Our culture and values are key to help us achieve
our strategic objectives and create value for all
stakeholders, and I was delighted to see an
improvement in our engagement and cultural
embedding scores during 2019. I know we still have
a way to go but I am encouraged by the
commitment and progress I am seeing, with more
colleagues taking accountability for making the
Group a better place to work.
The Board has worked with the Executive team to
ensure a continued focus on the Group’s culture,
where high standards and customer values are at
the core of all decisions. The Board is satisfied that
the Group’s purpose of enabling our customers,
colleagues and communities to thrive is fully aligned
with the Group’s culture, values and strategic
priorities.
As detailed on page 78, we took the positive step to
designate Eileen Fitzpatrick as our Workforce
Engagement Director, with a view to enhancing the
Group’s existing engagement mechanisms between
the Board and the workforce and to strengthen the
‘employee voice’ at the Board table and when
making decisions. This mechanism, along with other
ways in which we seek out the views of the Group’s
stakeholders, notably our customers, shareholders
and regulators, will continue to enhance the Board’s
discussions and decisions.
Strategic priorities
Delivery of the Group’s strategic priorities, to
Transform the Bank, Serve Customers Brilliantly and
Grow Sustainable Profits, remains a priority for the
Board and Executive team. These priorities were
originally set out at the Group Investor Day on 13
June 2018 and further details on progress to date
can be found in 'Our Strategy' on page 11.
Progress against key performance indicators (KPIs)
linked to the Group’s strategic priorities is overseen
by the Board. Given the scale of the transformation
that the Group is embarking upon, across our
culture systems and business model the Board
established a Group Transformation Oversight
Corporate Governance Statement
Chairman’s Introduction
Patrick Kennedy
Chairman
1
The Company’s primary banking subsidiary, The Governor and Company of the Bank of Ireland (the ‘Bank’), was subject to the Irish Code, (which
is available on www.centralbank.ie) throughout 2019. The Bank is also subject to the additional requirements of Appendix 1 and Appendix 2 of the
Irish Code for High Impact Designated Institutions, and Credit Institutions which are deemed ‘Significant’ Institutions (for the purposes of the
Capital Requirements Directive IV), respectively.
2
The Irish Corporate Governance Annex to the Listing Rules of the Irish Stock Exchange, t/a Euronext Dublin which is available on www.ise.ie.
 21:54 Page 59
60

Committee (GTOC) to facilitate more detailed and timely oversight
of the Group’s transformation programme, which reports to each
Board meeting. I am joined on that Committee by my Board
colleagues, Ian Buchanan, Patrick Mulvihill, Richard Goulding and
Michele Greene. The Group’s CEO, Chief Operating Officer, CEO
Retail Ireland and Chief Risk Officer (CRO) attend Committee
meetings along with other members of senior management as
required.
Responsible and sustainable business
As noted on page 24, we have enhanced our governance
structure to provide more board focused oversight and
responsibility for our RSB agenda. The GN&GC, a committee of
the Board with oversight of the Group’s Corporate Responsibility
Programme as well as nomination and corporate governance
matters, will now oversee the Group’s RSB framework and
strategy on behalf of the Board. To reflect its expanded remit, the
Committee is being renamed the NGRB. The Board recognises
and appreciates the key role it has in ensuring that RSB is
increasingly integral to the Group’s operations and long term
sustainability.
Board changes in 2019
The Nomination and Governance Committee is responsible for
reviewing the composition of the Board and its Committees and
assessing whether the balance of skills, experience, knowledge
and independence is appropriate to enable them to operate
effectively.
Eileen Fitzpatrick joined the Board in May 2019 as an
independent NED, bringing extensive capital markets and public
sector and capital markets experience to the Board. Michele
Greene was nominated by the Minister for Finance and was
appointed to the Board in December 2019. Michele is an
experienced retail banker with a strong understanding of evolving
customer requirements and has significant experience in the
digitalisation of banking processes and systems. Having been
identified by the Board during October 2019 to succeed Andrew
Keating as Group CFO and Executive Director, Myles O’Grady
received regulatory approval and was appointed to the Board in
January 2020. I am delighted they have joined the Board and look
forward to working with them in the years ahead. I would like to
thank each of the Directors for their commitment and support
during 2019. I would also like to express the Board’s appreciation
to Kent Atkinson and Andrew Keating, both of whom stepped
down during 2019, for their significant contributions to the Group
during their respective tenures.
The composition of the Board remains under continuous review
and the GN&GC maintains a constant focus on succession
planning to ensure the continuation of a strong and diverse
Board, which is appropriate to the Group’s purpose and the
industry within which it operates.
Board and individual effectiveness evaluation
During 2019, Praesta Ireland conducted the annual effectiveness
evaluation of the Board. Detail on the outcome of this evaluation,
which, in summary, concluded that the Board is effective can be
found on page 69. I also conducted a review of the performance
of individual directors, following which I concluded that individual
directors continue to demonstrate commitment to their roles. All
Directors are considered to be experienced and knowledgeable,
and I am confident that they each bring valuable skills to the
Board and provide an objective perspective. The Board considers
that the effective contribution of each of the individual directors
and the Board as a whole is, and continues to be, important to
the long-term sustainable success of the Group. As part of the
evaluation process, we have identified some areas for
enhancement which are welcomed, and I look forward to
reporting on progress in those areas in the next report.
Looking ahead
The Board will continue to work effectively with the Executive
team into 2020 to ensure continued focus on and delivery of the
Group’s strategy in order to create sustainable long-term value for
our shareholders. The Group’s governance framework will remain
under continuous review to ensure it remains robust and
facilitates effective decision making and appropriate Board
oversight.
Chairman’s Introduction (continued)
Patrick Kennedy
Chairman
21 February 2020
 21:54 Page 60

Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
61
Your Board
Patrick Kennedy
Independent (on appointment)
Role
Non-Executive Director (July 2010).
Chairman (August 2018, Deputy Chairman
April 2015). Chair, Group Nomination and
Governance Committee (August 2018,
Member from September 2014).
Member, Risk Committee from January
2011 and Chair July 2016 to July 2018.
Member, Remuneration Committee from
January 2011 to July 2016. Member of the
Audit Committee from July 2016 to July
2018.
Member of GTOC (August 2018).
Particular Skills
Strong leadership qualities. Deep
knowledge of the Bank with exceptional
commercial acumen. In-depth knowledge
of international business, management,
finance, corporate transactions, strategic
development and risk management gained
from a highly successful career in national
and international business.
External Appointments
Chairman and chair of the audit, risk,
remuneration and nomination committees
of Cartrawler.
Experience
Patrick was chief executive of Paddy
Power plc from 2006 to 2014, prior to
which he served as an executive director
from 2005 and non-executive director from
2004. Prior to joining Paddy Power plc,
Patrick worked at Greencore Group plc for
seven years where he was chief financial
officer and also held a number of senior
strategic and corporate development roles.
He previously worked with KPMG
corporate finance in Ireland and the
Netherlands, with McKinsey & Co. in
London, Dublin and Amsterdam and as a
non-executive director of Elan Corporation
plc.
Qualifications
Fellow of Chartered Accountants Ireland.
Patrick Haren
Independent
Role
Non-Executive Director (January 2012).
Deputy Chairman (August 2018). Senior
Independent Director (SID) (April 2015).
Member, Nomination and Governance
Committee (November 2015). Member,
Audit Committee from January 2012 to
July 2018. Remuneration committee Chair
from May 2015 and Member from January
2012 to January 2020.
Trustee of the Bank of Ireland Staff
Pensions Fund (BSPF).
Particular Skills
Experienced chief executive officer who
has gained extensive strategic, corporate
development and transactional experience.
External Appointments
None.
Experience
Patrick acts as an Advisor to Green Sword
Environmental Ltd. He is a former chief
executive officer of the Viridian Group,
having joined Northern Ireland Electricity in
1992 as chief executive. He previously
worked with the ESB, including as director
- New Business Investment and also
served as a board member of Invest
Northern Ireland for a number of years.
Patrick led the privatisation of Northern
Ireland Electricity by Initial Public Offering
(IPO) and grew the business under the new
holding company Viridian through to 2007,
positioning the company as the market
leader in independent electricity generation
and supply in competitive markets in
Ireland, North and South. He is a past
director of Bank of Ireland (UK) plc where
he also served as Chair of the
Remuneration Committee and a member
of the Nomination Committee.
Qualifications
Fellow of the Institute of Directors (UK).
Awarded a knighthood in 2008 for services
to the electricity industry in NI. Member of
the Institute of Banking (Ireland).
Francesca McDonagh
Non-Independent
Role
Group Chief Executive Officer and
Executive Director (October 2017).
Particular Skills
A skilled global banker, renowned for
strategic thinking and a proven track
record in successfully executing strategy.
A history of delivering strong financial
performance coupled with leadership of
transformation to drive future results.
Experience in a range of senior banking
roles, and in a range of countries and
operating structures. She brings to the
Board a leadership style characterised by
strong commercial results orientation, a
clear strategic vision and significant
customer focus.
External Appointments
Director of IBEC Company Limited by
Guarantee. Member of the Prudential
Regulation Authority (PRA) Practitioner
Panel.
Experience
Francesca joined the Group from HSBC
Group, where she held a number of senior
management roles over a twenty year
period including Group General Manager
and Regional Head of Retail Banking and
Wealth Management, UK and Europe,
Regional Head of Retail Banking and
Wealth Management, Middle East and
North Africa, and Head of Personal
Financial Services, Hong Kong. She has
previously served on the board of the
British Bankers’ Association, where she
was Deputy Chair, and on the board of the
National Centre for Universities and
Business in the UK.
Qualifications
Bachelor of Arts Degree in Politics,
Philosophy and Economics from Oxford
University. Awarded an Order of the British
Empire in 2017 for services to banking.
Fellow of the Institute of Banking (Ireland).
 21:54 Page 61
Your Board (continued)
Ian Buchanan
Independent
Role
Non-Executive Director (May 2018).
Member, Risk Committee (May 2018).
Director, Bank of Ireland (UK) plc
(September 2018) and a member of its
Risk Committee (October 2019).
Chair of GTOC (August 2018).
Particular Skills
Extensive technology, digital, business
transformation and customer operations
experience gained through his work in a
number of international retail, commercial
and investment banks.
External Appointments
Non-executive director of Openwork
Holdings Limited.
Experience
Ian was group chief information officer for
Barclays plc and chief operating officer for
Barclaycard until 2016. Before joining
Barclays in 2011, Ian was chief information
officer for Société Générale Corporate &
Investment Banking (2009 to 2011), a
member of the public board and group
manufacturing director of Alliance &
Leicester plc (2005 to 2008) and a member
of the executive committee and chief
operations and technology officer of
Nomura International (1994 to 2005). Ian’s
earlier career was spent at Credit Suisse,
Guinness, and BP.
Qualifications
Bachelor of Science degree in Physics
from the University of Durham.
Evelyn Bourke
Independent
Role
Non-Executive Director (May 2018).
Member, Audit and Nomination and
Governance Committees (May 2018).
Particular Skills
Strong track record in global executive
management and extensive experience in
financial services, risk and capital
management, and mergers and
acquisitions.
External Appointments
Group chief executive officer of BUPA.
Experience
Evelyn was appointed group chief
executive officer of BUPA in July 2016,
having been Acting CEO from April 2016.
She is also a member of the BUPA board.
She joined BUPA as chief financial officer
of BUPA. in September 2012, from Friends
Life Group, where she was chief executive
officer of its Heritage division. Previously at
Friends Provident, she was the executive
director responsible for strategy, capital
and risk and, prior to that, chief financial
officer. She was previously a non-
executive director of the IFG plc, Dublin,
where she was chair of the board risk
committee. Evelyn’s earlier career was
spent at Standard Life Assurance plc,
Chase De Vere Financial Solutions, St.
James’s Place, Nascent Group, Tillinghast
Towers Perrin, in the UK, and Lifetime
Assurance and New Ireland Assurance in
Dublin.
Qualifications
Fellow of Institute and Faculty of Actuaries.
MBA from London Business School.
62
Eileen Fitzpatrick
Independent
Role
Non-Executive Director (May 2019),
Member, Audit and Remuneration
Committees (May 2019). Workforce
Engagement Director (January 2020).
Particular Skills
Eileen has extensive capital markets and
public sector experience, and has held a
number of senior roles in both the asset
management and stockbroking industries.
External Appointments
Chairman of the Outside Appointments
Board, Department of Public Expenditure
and Reform.
Experience
Eileen joined the NTMA in 2006 as a
director, where she oversaw the Alternative
Assets Investment Programme, for the
National Pensions Reserve Fund. Eileen
was subsequently appointed as head of
NewERA at the NTMA, a position she held
from November 2011 to January 2019.
Prior to her appointment at the NTMA
Eileen was chief executive officer at AIB
Investment Managers from 2000 to 2006.
From 1987 to 2000 Eileen held a number
of senior investment and stockbroking
positions, including with AIB Investment
Managers, Goodbody Stockbrokers,
National City Brokers and Montgomery
Govett.
Eileen has served in a number of non-
executive positions including as chairman
of the Irish Association of Investment
Managers, as a board member of the
Chartered Accountants Regulatory Board,
as a member of the Government’s Top
Level Appointments Committee, and as a
member of the Governing Body of
University College Dublin.
Qualifications
PhD in Science from University College
Dublin.

 21:54 Page 62
Your Board (continued)
Richard Goulding
Independent
Role
Non-Executive Director (July 2017). Chair,
Risk Committee (Aug 2018, Member, July
2017). Member, Remuneration Committee
(July 2017). Member, Audit Committee
(August 2018).
Member of GTOC (August 2018).
Particular Skills
Extensive risk management and executive
experience in a number of banks with an
international profile, and brings a strong
understanding of banking and banking
risks, with a deep knowledge of
operational risk.
External Appointments
Non-executive director of Citigroup Global
Markets Limited, where he is chair of the
risk committee and a member of the audit
and remuneration and nomination
committees. Non-executive director of
Zopa Bank Limited, where he is chair of
the risk committee and a member of the
audit, nomination and remuneration
committees.
Experience
Richard held the role of group chief risk
officer (2006 to 2015) and director (2013 to
2015) at Standard Chartered Bank, where
he was a member of the group executive
committee, prior to which he held the role
of chief operating officer, Wholesale
Banking Division. Before joining Standard
Chartered in 2002, he held senior
executive positions with Old Mutual
Financial Services in the U.S., UBS
Warburg / SBC Warburg, London and
Switzerland, Astra Holding plc, Bankers
Trust Company and the Midland Bank
Group, London.
Qualifications
Qualified Chartered Accountant (South
Africa), Bachelor of Commerce degree and
a postgraduate degree in finance from the
University of Natal, South Africa.
63
Fiona Muldoon
Independent
Role
Non-Executive Director (June 2015).
Member, Risk Committee (November
2015). Member, Nomination and
Governance Committee (January 2019).
Particular Skills
Significant experience in governance,
regulatory compliance and financial
oversight and is an experienced financial
services professional. Significant previous
experience within a financial institution
with an international focus.
External Appointments
Group Chief Executive of FBD Holdings
plc and Chief Executive of FBD Insurance
plc. Director of Insurance Ireland (Member
Association) CLG.
Experience
Fiona is group chief executive of FBD
Holdings plc and FBD Insurance plc, one
of Ireland's largest property and casualty
insurers. She served from 2011 to 2014
with the Central Bank of Ireland (CBI)
including as director, Credit Institutions
and Insurance Supervision. Fiona spent 17
years of her career with XL Group in
Dublin, London and Bermuda, where she
worked in various management positions
including general insurance
responsibilities, corporate treasury and
strategic activities including capital
management, rating agency engagement
and corporate development.
Qualifications
Bachelor of Arts Degree from University
College Dublin, Fellow Chartered
Accountants Ireland.

Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Michele Greene
Non-Independent
Role
Non-Executive Director (December 2019).
Member, Risk Committee and GTOC
(December 2019).
Particular Skills
Extensive experience of financial services
and retail banking, particularly in the areas
of payments and digital innovation.
External Appointments
Director of Mololo Limited.
Experience
Michele held the role of managing director
of Virgin Money’s Digital Bank until July
2018, prior to which she was director of
strategic development, responsible for the
bank’s future development. Michele joined
Virgin Money initially as director of
banking, with responsibility for building the
bank’s new credit card business. Before
joining Virgin Money, she was chief
financial officer of MBNA Europe where
she held executive positions on the boards
of MBNA Europe Ltd and Premium Credit
Finance Limited.
Michele’s earlier career was spent at
Goldman Sachs, Credit Lyonnais and
KPMG.
Qualifications
Masters Degree from Trinity College Dublin
and Fellow of Chartered Accountants
Ireland.
 21:54 Page 63
Your Board (continued)
Steve Pateman
Independent
Role
Non-Executive Director (September 2018).
Chair, Remuneration Committee (January
2020, Member September 2018). Member,
Audit and Risk Committees (September
2018).
Particular Skills
Brings to the Board the strategic insights
of a chief executive officer of a UK Bank
and a strong lending and credit
background with deep commercial
experience including the operational
challenges facing lending institutions.
External Appointments
Director and CEO of Hodge Group
(stepping down in 2020) and due to join
Arora Group later in 2020 as CEO.
Experience
Steve joined Julian Hodge Bank Limited as
CEO in January 2019, and was appointed
to its board in February 2019. Prior to this,
Steve was CEO of Shawbrook Bank
Limited from October 2015 to December
2018. He joined Shawbrook from
Santander UK, where he was executive
director and head of UK banking and was
responsible for the bank’s corporate,
commercial, business and retail banking
operations as well as wealth management.
He also held a number of senior positions
at Santander UK, Royal Bank of Scotland
and NatWest. Steve was appointed vice
president of the Chartered Bankers
Institute in June 2017. He was director of
The Mortgage Lender Limited from May
2018 to January 2019.
Qualifications
Fellow of the Chartered Banker Institute.
Awarded an Honorary Doctorate from the
University of Kent for services to banking.
64
Myles O’Grady
Non-Independent
Role
Group Chief Financial Officer, Executive
Director (January 2020).
Particular Skills
Significant expertise working with
international and domestic regulators,
government and state authorities,
investors, market analysts and
international investment banks.
Experienced across strategy development,
business restructuring and recovery,
Finance function transformation, investor
relations and IPOs.
External Appointments
None.
Experience
Myles has 30 years’ experience as a
finance professional with over 25 years in
financial services. Prior to joining the
Group he was chief financial officer at
D|Res Properties, an Irish homebuilding
and property development company.
Previously, he was group director of
finance and investor relations at Allied Irish
Bank Group plc and Subsidiaries (AIB), an
Irish financial services group operating
predominantly in the RoI and the UK.
Myles’ earlier career was spent at Citibank,
Dresdner Kleinwort Benson and AIB Bank.
Qualifications
Fellow of the Chartered Association of
Certified Accounts, an INSEAD certified
board director and member of the Institute
of Directors Ireland.

Patrick Mulvihill
Independent
Role
Non-Executive Director (December 2011).
Chair, Audit Committee (April 2018,
Member December 2011). Member, Risk
Committee (December 2011 to May 2017,
January 2018 to date).
Member of GTOC (April 2016). Trustee of
the BSPF (December 2017).
Particular Skills
In-depth knowledge of financial and
management reporting, regulatory
compliance, operational, risk and credit
matters within a global financial institution.
External Appointments
Non-executive director of International
Fund Services (Ireland) Limited. Director of
Beachvista Limited.
Experience
Patrick spent much of his career at
Goldman Sachs, retiring in 2006 as global
head of operations covering all aspects of
capital markets operations, asset
management operations and payment
operations. He previously held the roles of
co-controller, co-head of global controller’s
department, covering financial /
management reporting, regulatory
reporting, product accounting and
payment services. He was also a member
of the firm’s risk, finance and credit policy
committees. Patrick has over twenty years’
experience of international financial
services and has held a number of senior
management roles based in London and
New York with Goldman Sachs.
Qualifications
Fellow of Chartered Accountants Ireland
and Associate of the Institute of Directors.
 21:54 Page 64
Your Board (continued)
65

Governance Risk Management Report Financial Statements Other Information
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Group Executive
Francesca McDonagh Group Chief Executive Officer
Sean Crowe Chief Executive, Markets and Treasury
Ian McLaughlin Chief Executive, Retail (UK)
Henry Dummer Chief Marketing Officer
Matt Elliott Chief People Officer
Tom Hayes Chief Executive, Corporate Banking
Gavin Kelly Chief Executive, Retail (Ireland)
Myles O’Grady Group Chief Financial Officer
Vincent Mulvey Group Chief Risk Officer
Jackie Noakes Chief Operating Officer
Mark Spain Chief Strategy Officer
Oliver Wall Chief of Staff & Head of Corporate Affairs
Sarah McLaughlin Group Secretary & Head of Corporate
Governance
Group Risk Policy Committee
Vincent Mulvey Group Chief Risk Officer (Chair)
Sean Crowe Chief Executive, Markets and Treasury
Tom Fee Head of Enterprise Risk Management
Tom Hayes Chief Executive, Corporate Banking
Myles O’Grady Group Chief Financial Officer
Gavin Kelly Chief Executive, Retail (Ireland)
Francesca McDonagh Group Chief Executive Officer
Declan Murray Chief Credit Officer
Gabrielle Ryan Group General Counsel
Jackie Noakes Group Chief Operating Officer
Patrick Mulvihill (Chair)
Evelyn Bourke
Eileen Fitzpatrick
Richard Goulding
Steve Pateman
Richard Goulding (Chair)
Ian Buchanan
Michele Greene
Fiona Muldoon
Patrick Mulvihill
Steve Pateman
Steve Pateman (Chair)
Eileen Fitzpatrick
Richard Goulding
Patrick Kennedy (Chair)
Evelyn Bourke
Patrick Haren
Fiona Muldoon
Group Audit
Committee
Group Risk
Committee
Group
Remuneration
Committee
Group Nomination
& Governance
Committee
Board1
1
The Board established a Group Transformation Oversight Committee to facilitate more detailed and timely oversight of the Group’s transformation programme. It is chaired by Ian
Buchanan and its members are Richard Goulding, Michele Greene, Patrick Kennedy and Patrick Mulvihill.
 21:54 Page 65
Chairman’s tenure
The new UK Code and the supporting Guidance on Board
Effectiveness nominate service on the Board for more than nine
years from the date of first appointment as a specific
consideration in the evaluation of the independence of NEDs. The
Chair is not subject to the UK Code’s independence test other
than on appointment. However, the UK Code recommends that
the Chair is subject to similar length of service considerations and
should not remain in post longer than nine years. The UK Code
provides for extension of the Chair’s tenure to facilitate
succession planning and the development of a diverse Board,
particularly in those cases where the Chair was an existing NED
on appointment. The principles and provisions of the UK Code in
this area are in support of the maintenance of the right
combination of skills, experience and knowledge on the board,
supported by formal processes of appointment and annual
evaluation of performance.
Patrick Kennedy was appointed Chairman in August 2018. He
was independent under the UK Code at the time of his
appointment.
Mr Kennedy’s appointment followed a rigorous process, led by
the SID, with external benchmarking by Egon Zehnder which
rated him as an exceptional candidate for the role. Mr Kennedy
was an existing NED, appointed to the Board of the Governor and
Company of Bank of Ireland (the ‘Bank’), in July 2010. During his
tenure, Mr Kennedy served on every major committee of the
Board, including Chair of the Risk Committee and Deputy Board
Chairman until July and August 2018 respectively. The years prior
to his appointment as Chairman, which are calculated in the
assessment of tenure, provided Mr Kennedy with a detailed
understanding of the business and enabled him to forge effective
relationships not only with the Executive but also with the wider
management team, factors which the Board regard as critical to
his current success as Chairman.
As set out in some detail in the BOIG plc Annual Report 2018, in
arriving at its decision at the time of his appointment as
Chairman, the Board took into account a number of exceptional
factors, including: the anticipated very significant level of turnover
on the Board due to retirements over the medium term; the recent
appointment of an external candidate, previously UK-based, to
the Group CEO role; and the Board’s preference that the
incoming Chairman should have a complementary knowledge of
the Irish environment, embracing customers, regulators and
Government, and knowledge and understanding of the Bank of
Ireland Group. In the view of the Board, these factors continue to
be relevant as the company goes through a period of continuing
significant change, including transformation of culture and a
multi-year programme of investment in systems. In addition,
having regard for the relatively recent appointments of the two
externally recruited Executive Directors (the CEO in October 2017
and CFO in January 2020), the Board is satisfied that there is no
issue of significant concurrent service arising as a governance
concern.
Mr Kennedy brings very strong leadership to the Board. He
demonstrates independent and objective judgement and
promotes constructive challenge amongst Board members. In his
short time in the role, he has demonstrated an innovative
approach to bringing new formats and structures to Board
meetings to improve the effectiveness of the Board. He has
focused strongly on Board succession and diversity and has
reinforced relationships with customers, regulators and
shareholders. He is rated very highly by all Board members in the
2019 Chairman effectiveness evaluation led by the SID,
supported by Praesta Ireland who led the external effectiveness
review of the Board as a whole in 2019.
Mr Kennedy combines a deep knowledge of the Group with
exceptional commercial acumen gained from a highly successful
career in national and international business. As an Irish-based
Chairman, the Board believes he provides valuable knowledge
and experience of the customer, regulatory and political
environment and necessary continuity during a period of
significant change. As such, the Board considers it appropriate
for Mr Kennedy to remain in role for a further period and will be
recommending his re-election in 2020. The company will consult
with shareholders on the matter of tenure during the second half
of the year, setting out its views on the wider issues of
succession planning at Board level and its assessment of the
best interests of shareholders.
Board committees
The Board is assisted in the discharge of its duties by a number
of Board Committees, whose purpose it is to consider, in greater
depth than would be practicable at Board meetings, matters for
which the Board retains responsibility. Each Committee operates
under terms of reference approved by the Board. Appropriate
cross-membership of key Board Committees, including between
the Audit and Risk Committees and Remuneration and Risk
Committees, is ensured. The GN&GC formally reviews the
composition and purpose of the Board Committees annually on
behalf of the Board.
The minutes of all meetings of Board Committees are circulated
to all Directors for information and are formally noted by the
Board. Papers for all Board Committee meetings are also made
available to all Directors, irrespective of membership. Such
circulation of minutes and papers are restricted should there be a
conflict of interest or issues of personal confidentiality.
The terms of reference of the Board Audit Committees, the BRC,
the GN&GC and the Group Remuneration Committee (GRC) are
available on the Group’s website at www.bankofireland.com/
about-bank-of-ireland/corporate-governance. In addition to the
aforementioned Committees, the Board has established a GTOC
which has a mandate to oversee the transformation of the culture,
systems and business model, as well as the safe delivery of some
regulatory mandated change programmes.
In carrying out their duties, Board Committees are entitled to take
independent professional advice, at the Group’s expense, where
deemed necessary or desirable by the Committee Members.
Reports from the Group Audit Committee (GAC), the BRC, the
GN&GC and the GRC are presented on pages 77 to 90.
Board composition and succession
The Board comprises twelve Directors: two Executive Directors,
the Chairman, who was independent on appointment, eight
independent NEDs and a Director nominated by the Minister for
Finance, who is deemed to be a non-independent NED. The
biographical details of each of the directors, along with each of
their individual dates of appointment, are set out on pages 61 to
64.
Your Board (continued)

66
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Your Board (continued)
The Board considers that a board size of 10 to 12 Directors
allows for a good balance between having the full range of skills
necessary on the Board and to populate its committees and
retaining a sense of accountability by each Director for Board
decisions.
Both on an individual and a collective basis, the Directors are
considered to have the range of skills, understanding, experience
and expertise necessary to ensure the effective leadership of the
Group and that high corporate governance standards are
maintained. The Group Nomination and Governance Committee
leads the process for appointments to the Board and ensures
plans are in place for orderly succession to both the Board and
Executive positions.
The Committee ensures a formal, rigorous and transparent
procedure when considering candidates for appointment to the
Board and maintains continuous oversight of the Board’s
composition to ensure it remains appropriate and has regard for
its purpose, culture, major business lines, geographies, risk
profile and governance requirements.
As part of the Committee’s succession planning process, it has
regard for the impact of expected retirements of directors and the
Group’s desired culture and strategic direction. As part of the
process, the Committee prepares a detailed role profile, based on
its analysis of the skills and experiences needed and selects,
where appropriate, an external search firm to facilitate the
process. The Committee follows the requirements of the Directors
Assessment Policy, which is fully aligned with the Joint ESMA
and EBA Guidelines on the assessment of the suitability of
members of the management body, and ensures a robust
assessment of potential candidates which includes interview by
the GN&GC members and recommendation to the Board prior to
the submission of fitness and probity applications to the regulator
for consideration.
All potential candidates are assessed to ensure they have the
ability to act with integrity, lead by example and promote the
desired culture, which evidences a commitment to high standards
and values where customers are at the heart of decision-making.
2019 Board changes
During 2019, Kent Atkinson, an experienced banker, retired from
the Board. In preparation for his retirement, the Committee had
identified deep experience in corporate and retail banking as a
key requisite skills and experience profile for the Board. Steve
Pateman, who joined the Board in September 2018, replenished
the Board’s core banking skills.
Also during 2018, the Committee commenced a search for a
director with a number of skills, experiences and characteristics,
with a focus on further diversity and knowledge of the Irish
market and environment. Eileen Fitzpatrick was identified from
that search and was appointed in May 2019. Eileen brings
strategic insights of a chief executive officer of an Irish asset
management company and a strong financial services
background, with extensive capital markets, public sector and
deep commercial experience.
Having regard for the Group’s transformation programme, the
Committee identified transformation, change and technology as
potential areas of focus for further NED recruitment. Against that
backdrop, Michele Greene was nominated by the Minister for
Finance and was appointed to the Board in December 2019.
Michele brings significant and recent experience of digital
banking and a focus on evolving customer expectations.
The selection of Myles O’Grady as the preferred candidate to
succeed Andrew Keating as Group CFO and Executive Director
was led by the CEO and supported by the Committee. Myles
joined the Group in June 2019 and brings a wealth of relevant
external experience to the role.
An active search is underway to identify a NED with further
technology transformation experience and the Group looks
forward to reporting positively on that search during 2020.
External support
The search process leading to the appointment of Eileen
Fitzpatrick was facilitated externally by Leaders Mores, a
consulting company specialising in board level appointments.
Leaders Mores is used for Board searches but has no other
connection with the Group or individual directors. While the
nomination of Michele Greene was a matter for the Minister for
Finance, the Group requested Leaders Mores to provide the
Board with an independent assessment of Michele Greene’s
suitability as part of the wider due diligence assessment, prior to
her being recommended by the Board for appointment.
Regulatory assessment and formal approval is required and
received for all Board appointments.
Induction and continuous development
On appointment, each director receives an induction plan tailored
to his or her specific requirements. It consists of meetings with
senior management on Group and Divisional strategy, deep dives
on businesses and an overview of the Group’s risk appetite and
Group Risk Framework, supplemented by sessions on the
management of key risks and a comprehensive range of meetings
covering the Group’s regulatory environment, people strategies,
technology and payments. Deep dives on capital and liquidity
management and an overview of the Group’s financial position
are also included, along with sessions relevant to membership of
specific committees.
The continuous development requirements of the Board and
individual directors, as required, is informed by the outcome of
annual effectiveness reviews, emerging external developments
and areas individual directors have identified as requiring focus.
These requirements are met through the provision of Group
Board training, presentations, site visits and individual bespoke
training sessions as required.
 21:54 Page 67

68
Your Board (continued)
International
Experience1
Diversity
The Board is fully committed to diversity in all
forms and truly believes that diversity is an
essential ingredient of sound decision-making.
The Board has an approved Board Diversity
Policy in place and, following review in 2019, it
has retained its target of a minimum of 33%
female representation on the Board by the end of
2020, with a medium term aspiration of achieving
equal gender representation on the Board. Below
is an overview of the current Board profile.
Board
Executive Director
2
Non-Executive Director
10
In addition to collective education and development programmes in 2019, individual Directors actively engaged in one to one focus sessions with
Management on topics such as vulnerable customers, wealth and insurance, SMEs, the Irish Mortgage Market, technology transformation and the Irish
Economy.
Eileen Fitzpatrick: As NED and member of Group Audit and Group Remuneration Committees.
Michele Greene: As NED. Further induction on the Group Transformation Programme and Group Risk is scheduled to take place in 2020, in recognition
of her committee roles.
Myles O’Grady: As Group CFO and Executive Director.
Tailored Induction Programmes
• Brexit preparedness.
• Market risk training: Regulatory and market developments from
Group Market and Liquidity Risk (GM&LR).
• Education / deep dive session on the net interest income reporting
process.
• Code of Conduct.
• Risk appetite: Definitions of non-financial risks and articulation of
appetite.
• IFRS17 and accounting standards.
• Business module - Site visit to Banking 365 Kilkenny including
management presentation / listening in sessions.
• Business module - Site visit to Northridge and Donegal Square
including management presentation / listening in sessions.
• Business module - Site visit to BOI IT Centre and Operations Centre;
Robotics and Automated Operations.
• Business module - Site Visit to Limerick branch, BOI Workbench and
Bereavement Support Unit.
Board and Committee Education and Development
1
International experience shows Directors with experience in more than one geographical location.
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69
Your Board (continued)
Assessing the effectiveness of the Board
Board
The Board seeks to continually enhance its operations and, each year, conducts a formal effectiveness evaluation of the Board, Board
Committees and individual Directors. The Board is required to have an external evaluation conducted once every three years. During
2019, an external evaluation was carried out by Praesta Ireland, an executive coaching and leadership consultancy company. Praesta
Ireland has no other connection to the Group.
The Praesta Ireland evaluation comprised:
• One to one interviews with all Directors, the Group Secretary
and a number of Group Executives.
• A review of Board papers, including Board packs, Board
minutes and Board committee papers.
• An online survey of Directors which sought their views on a
range of topics.
• Attendance as an observer at the December 2019 Board
meetings.
The scope of the Praesta Ireland evaluation included:
• The role of the Board.
• Board culture and dynamics.
• Board papers and reporting.
• Risk management and internal control.
• Performance evaluation.
• Chairing of the Board.
• Board composition, structure and processes.
• Stakeholder management and communications.
• Strategic focus, mission and vision.
• Effectiveness of the committees of the Board.
Chairman
The performance of the Chairman was assessed during the
Praesta Ireland evaluation and, led by the SID, the Board met to
discuss the Chairman’s performance, in his absence. The SID
subsequently provided an update on the positive outcome of the
review to the Chairman. Patrick Kennedy is considered to be a
highly effective Chairman and provides very strong leadership to
the Board. The Board confirmed its continued support for Patrick
Kennedy and his proposal for re-election at the 2020 Annual
General Meeting (AGM). The Board also actively considered the
Chairman’s tenure during this assessment, details of which are
reported on page 66.
Individual Directors
In addition to the Praesta Ireland evaluation process, the
Chairman met with Directors on a one to one basis to discuss
their individual performance, taking account of their input, which
was submitted in advance of the meetings. The Chairman
assessed each Director as being fully effective, with all Directors
demonstrating commitment to their role, and their contributions
continue to be important to the company’s long-term sustainable
success.
The independence of each Director is considered by the GN&GC
prior to appointment and reviewed annually thereafter using the
independence criteria set out in the UK Code, the Irish Code and
relevant EBA / ESMA Guidelines. Michele Greene has been
designated as non-independent by virtue of her nomination by
the Minister for Finance. It has been determined that all other
NEDs in office during 2019 are independent in character and
judgement and free from any business or other relationship with
the Group that could affect their judgement.
While Michele Greene has been designated as non-independent,
the Board believes, based on her performance to date, that she
too brings independent challenge and judgement to the
deliberations of the Board.
Patrick Kennedy was determined as independent on
appointment. Whilst acknowledging that his independence may
be perceived to be impacted during his tenure due to nature of
the role of a Chairman, as reported on page 66, Patrick Kennedy
is regarded as continuing to operate in a manner that is
independent in character and judgement and remains objective in
his opinions.
A rigorous assessment was undertaken of the independence of
Patrick Haren and Patrick Mulvihill who have served more than
six years on the Board. In both cases, the Chairman concluded
that they continue to demonstrate independence of mind and
remain independent.
2019 Conclusion
A consolidated report on the findings of the full evaluation
process was presented to the Board. The outcome of the
evaluation was positive, concluding that the Board and its
Committees continued to be effective, with all
Directors demonstrating commitment to their roles.
Progress had been made on areas for enhancement identified
during the 2018 internal effectiveness evaluation process, relating
to a continued focus on Group Strategy, Board training and
engagement with management on talent and succession
planning.
Recommendations from the 2019 Praesta Ireland evaluation,
actions in respect of each of which are actively underway,
included:
• while recognising progress made in recent years on the
quality of Board reporting, room for greater brevity and
sharper focus in Board papers;
• the need for the 2020 Board plan to allocate sufficient time to
agreed key areas of focus;
• evolution of the continuous development programme for
individual Directors and the Board as a whole; and
• enhanced focus on non-financial risk management.
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70
Your Board (continued)
How the Board spent its time at Board meetings in 2019
The Board considers and addresses opportunities and threats to its future success. It assesses the sustainability of its business model
and ensures that there is a strong corporate governance structure in place in order to deliver its strategy.
While not intended to be exhaustive, below is a high-level overview of a number of matters considered by the Board during 2019.
Business Context
• Chairman’s update.
• CEO perspective and priorities.
• Organisational Balanced Scorecard: Reporting on
performance relative to strategic, financial and non-financial
KPIs.
• Tracker Mortgage Examination Programme.
Business Performance and Risk Management Reports
• Financial and Business Performance.
• Risk Reports.
• Regulatory Interactions.
• Funding and Liquidity Policy.
• Internal Capital Adequacy Assessment.
• Internal Liquidity Adequacy Assessment.
Strategic Priorities and Business Deep Dives
• Group’s risk appetite Framework and risk appetite Statement.
• Brexit Readiness.
• Progress implementing the Group’s 2018–2021 strategy
• Key strategic priorities, including, but not limited to, reports
on;
- the Transformation Programme, including systems and
Customer journey transformation;
- the Group Culture Programme, including Inclusion and
Diversity and Employee Engagement;
- Customer Experience, including Financial Wellbeing,
Customer Insights and Customer Experience reports; and
- the Group’s ‘Fit for the Future’ cost management
programme.
• Marketing and Brand Framework.
• Business Deep Dives, including on RoI Mortgages, Wealth
and Insurance, GB and NI, Loan Book Growth, Home Building
and Buying.
Reports from Board Committees
• Recommendations from committees on key policies and
matters reviewed in depth by committees for Board decision.
• Reports on committee proceedings.
Governance and Oversight
• Key governance policies and documents.
• Board, Committee and Individual Director’s Effectiveness
Evaluation.
• Endorsement of Material Risk Takers (MRTs).
• Subsidiary oversight.
• Tracking of agreed actions.
Environment
• Investor Relations.
• Economic Environment.
• Stakeholder Engagements.
Attendance at meetings in 2019
The Board held eight meetings during the year ended 31
December 2019. Further details on the number of Board and
Committee meetings and attendance by individual Directors are
set out on page 91.
Role of the Board
The Group is led by an effective and committed Board of
Directors, who are collectively responsible for the long-term
success of the Group. The Board’s role is to provide leadership of
the Group within the boundaries of risk appetite and a framework
of prudent and effective controls which enable risk to be identified,
assessed, measured and controlled.
The Board sets the Group’s strategic aims and risk appetite to
support the strategy, ensuring that the necessary financial and
human resources are in place for the Group to meet its objectives.
The Board ensures that the Group’s purpose, values, strategy and
culture are all aligned and reviews management performance in
that regard.
The Board is responsible for endorsing the appointment of
individuals who may have a material impact on the risk profile of
the Group and monitoring on an ongoing basis their
appropriateness for the role. The removal from office of the head
of a ‘control function’, as defined in the Irish Code, is also subject
to Board approval.
The respective roles of the Chairman and the Group CEO, which
are separate, are set out in writing and have been agreed by the
Board. The Board has a schedule of matters specifically reserved
for its decision which is reviewed and updated regularly.
The Board approves the Group Risk Framework on an annual
basis and receives regular updates on the Group’s risk
environment and exposure to the Group’s material risk types.
Further information on risk management and the Board’s role in
the risk governance of the Group is set out in the Risk
Management Report on pages 110 to 160.
The work of the Board follows an agreed schedule of topics which
evolves based on business needs and is formally reviewed
annually by the Board.
Roles and Responsibilities
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Role of the Chairman
The Chairman oversees the operation and effectiveness of the
Board, including ensuring that agendas cover the key strategic
items confronting the Group and encouraging all Directors to
participate fully in the discussions and activities of the Board. He
also ensures that there is effective communication with
shareholders and promotes compliance with corporate
governance standards. The Chairman commits a substantial
amount of time to the Group and his role has priority over any
other business commitment. During the year, the Chairman and
NEDs met without the Executive Directors present, to discuss a
range of business matters.
Role of the Deputy Chairman and Senior Independent Director
The Deputy Chairman adopts the role of SID and deputises for the
Chairman as required and is a Trustee of the Bank Staff Pensions
Scheme. The SID provides a sounding board for the Chairman and
serves as an intermediary for the other directors and shareholders
if they have concerns that contact through the normal channels of
Chairman, Chief Executive or other Executive Directors has failed
to resolve or for which such contact is inappropriate. As
appropriate and when required, the SID meets a range of major
shareholders in order to develop a balanced understanding of their
views. The SID leads the evaluation of the Chairman in conjunction
with the other Directors and would normally take responsibility for
an orderly succession process for the Chairman, working closely
with the Nomination and Governance Committee.
Role of the Independent Non-Executive Director
The NEDs (including the Chairman and the Deputy Chairman)
bring independent challenge and judgement to the deliberations of
the Board through their character, objectivity and integrity. As
reported, while Michele Greene has been designated as non-
independent by virtue of her nomination by the Minister for
Finance, the Board believes, based on her performance to date,
that she too brings independent challenge and judgement to the
deliberations of the Board.
Role of the Group Chief Executive Officer
The Group Chief Executive Officer is responsible for execution of
approved strategy, holds delegated authority from the Board for
the day to day management of the business and has ultimate
executive responsibility for the Group’s operations, compliance
and performance. Procedures are in place to review the Group
Chief Executive’s contract at least every five years.
Your Board (continued)
The Directors have access to the advice and services of the
Group Secretary, who is responsible for advising the Board on all
governance issues and for ensuring that the Directors are
provided with relevant information on a timely basis to enable
them to consider issues for decision and to discharge their
oversight responsibilities.
The Directors also have access to the advice of the Group Legal
Adviser and to independent professional advice, at the Group’s
expense, if and when required. Committees of the Board have
similar access and are provided with sufficient resources to
undertake their duties.
The Group Secretary provides dedicated support for Directors on
any matter relevant to the business on which they require advice
separately from or additional to that available in the normal board
process. The Group has in place Directors’ and Officers’ liability
insurance in respect of legal actions against its Directors.
Matters reserved for the Board for approval include:
1. Strategy and risk appetite
• Determination of risk appetite and approval of the
Group’s risk appetite Statement.
• Determination of the Group’s strategy.
2. Corporate and Capital Structure
• Approval of CET1 capital investments of greater than €20
million in a regulated subsidiary and €40 million in any
other subsidiary.
• Approval of share issuances by any Group member to an
entity outside of the Group.
• Approval of equity underwriting of sums greater than €20
million.
3. Management
• Approval of the Group’s business plans and budgets.
• Overseeing management of the business.
• Overseeing organisational structure.
4. Financial and Regulatory Reporting, Internal Controls, Risk
and Capital Management
• Approval of Half Year Report, Annual Report and
Accounts.
• Approval of the Group Risk Framework.
• Approval of the Group Internal Capital Adequacy
Assessment Process (ICAAP), Internal Liquidity Adequacy
Assessment Process (ILAAP) and Recovery Plan.
• Overseeing the internal control, compliance and risk
management systems of the Group.
5. Transactions
• Approval of acquisitions or divestments of the business
or assets of any Group member involving a third party
except for credit management purposes.
• Approval of guarantees, including those in respect of
subsidiary companies, entered into by a member of the
Group, other than in the normal course of business.
• Approval of capital expenditure in excess of €40 million;
• Approval of Class 1 or Class 2 transactions (each as
defined by the Listing Rules).
• Approval of related party transactions (as defined by the
Listing Rules) giving rise to an obligation to issue a
shareholder circular.
6. Corporate governance, Board and other appointments
• Promoting the appropriate culture, corporate values,
behaviours and ethics of the Group.
• Overseeing corporate governance and succession
planning.
• Approving appointment of directors and specified senior
management appointments.
7. Pension Scheme and Remuneration
• Approval of all changes to the funding of pension
schemes in the Group and / or benefits of same.
• Overseeing the Group’s Remuneration framework.
Roles and Responsibilities (continued)
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Your Board (continued)
The Group’s approach to Strategy Development and
Monitoring
Development of Transformation Strategy
From mid-2017 the Board commenced work on a new strategy in
the context of a fundamental shift in customer demands for
service, increasing and changing competition and the need for
business and core systems transformation.
In June 2018, the Group’s three strategic priorities were identified
and announced to the Market:
• Transform the Bank.
• Serve customers brilliantly.
• Grow sustainable profits.
These strategic priorities remain relevant today and significant
time has been spent during 2019 reviewing progress against the
strategy, framing the agenda for further strategic considerations
to take place during 2020. Dedicated focus has been applied by
the GTOC on the transformation of the Bank, with notable
attention and consideration applied to the systems
transformation aspect of the strategy.
Monitoring of Transformation Strategy
In order to facilitate the Board in monitoring the execution of the
strategic plan, the Board:
• regularly discussed progress against execution priorities and
targets with the Group Chief Executive;
• received insights on stakeholder, employee and cultural
matters;
• assessed the progress of execution of strategy through deep-
dive sessions across the key business divisions;
• received regular updates on the systems transformation,
culture transformation and cost reduction programmes;
• received regular briefings from GTOC which has a mandate to
oversee the transformation of the culture, systems and
business model, as well as the safe delivery of some
regulatory mandated change programmes; and
• reviewed the potential implications of the UK’s preparations
to leave the EU and oversight of management monitoring and
risk mitigation activities.
Stakeholder Engagement
Shareholders
Board understanding of views of major shareholders
To facilitate the Board’s understanding of the views of major
shareholders, Directors receive an investor relations update from
management at all scheduled Board meetings. The content of this
update is varied, based on recent investor activities, but typically
includes market updates, details of recent equity and debt
investor interactions, share price and valuation analysis, analyst
updates, and share register analysis. All Directors are facilitated to
ensure that they are informed of the views of investors and
analysts. The Chairman met with a number of major shareholders
to discuss governance matters and delivery of strategic priorities
and progress in delivering transformation. The Board was updated
on the outcome of these discussions. The Chairman and / or the
SID are available to all shareholders if they have concerns that
cannot be resolved through the normal channels.
Institutional equity investors and analysts
Communication with shareholders is given high priority. One of the
responsibilities of the Chairman is to ensure effective
communication with shareholders and to ensure that Directors
develop an understanding of the views of major investors. Group
Investor Relations has primary responsibility for managing and
developing the Group’s external relationships with existing and
potential institutional equity investors and analysts. The Group has
an active and well-developed Investor Relations programme,
which involves regular meetings by Executive Directors, selected
Senior Executives and the Director of Group Investor Relations
and other authorised officers with the Group’s principal
institutional shareholders, other investors, financial analysts and
brokers. Approximately 400 such meetings and presentations
were held in 2019. All meetings with shareholders are conducted
in such a way as to ensure that price sensitive information is not
divulged. A dedicated Debt Investor section of the Group website
provides access to relevant information, including presentations,
publications and bond tables.
Retail shareholders
The Group Secretary’s team, supported by the Group’s Registrar,
Computershare Investor Services (Ireland) Limited
(‘Computershare’), maintains the Group’s share register, engages
with retail shareholders and delivers the Group’s AGM. With the
assistance of Computershare, the Group addresses shareholder
queries and, through its online facilities, enables shareholders to
view their portfolio and amend their information securely.
Annual General Meeting
The AGM provides an opportunity for shareholders to hear directly
from the Board on the Group’s performance and strategic
direction. The aim of the Board is to make constructive use of the
AGM and all shareholders are encouraged to participate in the
proceedings.
Questions are invited from shareholders in advance of the AGM,
and a substantial part of the agenda of the AGM is dedicated to
responding to shareholder questions. A ‘Help Desk’ facility is
provided by the Group’s registrar to assist shareholders to resolve
any specific queries that they may have in relation to their
shareholding. The 2019 AGM was held on 14 May 2019 in the
Concert Hall, RDS, Ballsbridge, Dublin 4 (2019 AGM).
At the 2019 AGM, separate resolutions were proposed on each
substantially separate issue and voting was conducted by way of
poll. The results of every general meeting, including details of
votes cast for, against and withheld on each resolution, are posted
on the Group’s website and released to the Irish and London
Stock Exchanges. As soon as the results of the 2019 AGM were
calculated and verified, they were released to applicable
exchanges, as set out above, and were made available on the
Group’s website.
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Your Board (continued)
In line with the Group’s policy to issue notice of the AGM 20
working days before the meeting, notice of the 2019 AGM was
circulated to shareholders on 9 April 2019. The Chairman (who is
also Chair of the GN&GC) and the Chairs of the GAC, BRC and
GRC were in attendance to hear the views of shareholders and
answer questions. It is usual for all Directors at the time of the
AGM to attend. All members of the Board attended the 2019
AGM.
The AGM of the Group in 2020 is scheduled to be held on 19 May
2020. Shareholders who will be unable to attend on this date are
encouraged to submit queries and vote in advance to ensure
continued participation.
Customers
The Group’s aim is to serve customers brilliantly by being the
number one bank for service and having the best brand in our
target markets including the best bank for partnerships in the UK.
The Board consistently reviews the strategy, receives updates on
implementation and reviews progress as part of the governance
process. The Group Customer Board, established in 2018, ensures
customer focus by management, along with a Customer Advisory
Council which ensures external challenge to our approach to
customer engagement. The Board receives regular updates on
progress against customer metrics and reports from the Group
CEO, the Chief Marketing Officer and the respective business
CEOs. In addition, its understanding of customers’ perspectives is
informed by deep dives on customer themes and customer
complaints, and visits by Directors to customer call centres to
hear customer voices at first hand. Directors also met on several
occasions with customers directly in 2019 reflecting the
importance of ‘serving customers brilliantly’ in our strategy.
Colleagues
The Board receives regular updates on the progress of the Group
Culture Programme and reviews the outputs from the Group’s
Open View staff survey and receives updates on progress in
implementing actions in response to staff feedback. The Board
pays particular attention to the Group Code of Conduct and Speak
Up Policy, and theGN&GC reviews its effectiveness annually. The
Board strives to create an environment in which staff are
encouraged to speak up where they have any concerns. Fiona
Muldoon, on behalf of the Board, actively sponsors the Group
Code of Conduct and Speak Up Policy.
During 2019, the Board met on several occasions with small
groups of managers from across the Group in sessions called
‘Visibility Sessions’, which form part of the annual Board
programme of work which is considered and approved each year.
Directors conduct site visits from time to time, and during 2019
the Board visited sites and met with staff in Belfast, Limerick and
Kilkenny. The 2020 Board programme of work is designed to
further enhance engagement with colleagues and includes a wider
range of site visits across the Group.
Another positive step was taken in response to the UK Code, with
the Board designating Eileen Fitzpatrick as the Workforce
Engagement NED, the objective of which is to enhance the
Group’s existing engagement mechanisms between the Board and
the workforce and to strengthen the ‘employee voice’ at the Board
table and when making decisions. A set of objectives for the
designated role has been established which will evolve during
2020 as the role and its effectiveness, both for the Board and our
colleagues, are considered. The role supplements what the Board
is already hearing about culture and behaviour and will report to
the Board regularly. Among other things, as part of the role, in
2020, the Workforce Engagement NED will:
• Engage with Management in deep dives on results of
OpenView staff surveys and planned actions.
• Host Open Door sessions with self-nominating employees on
a bi-annual basis.
• Attend the Group’s Colleague Recognition Event.
Regulators and Government
The Chairman and members of the Board regularly meet with
representatives from the regulators and government bodies,
including the Joint Supervisory Team, the CBI, BoE, Financial
Conduct Authority (FCA), PRA, ECB and the Department of
Finance. Core themes discussed at these meetings include
regulation and supervision, risk governance and oversight,
challenges facing the banking industry, strategic challenges and
rebuilding trust and culture. The Chairman and Group CEO update
the Board on their meetings with regulators and government
representatives at each Board meeting. Management provide
regular briefings to the Board on regulatory engagement and
correspondence which ensures that the Board remains aware of
regulatory expectations and areas of focus.
Communities
The Group’s communities are those where it has a physical
presence, where its employees live and work, as well as other
local and global groups and partners. The Group supports the
wider community through its community investment programme,
its support of local enterprise and through its financial wellbeing
programmes as well as playing an active role in society. We have
donated over €2 million to charitable causes in 2019.
Stakeholder Engagement (continued)
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Your Board (continued)
Board’s oversight of risk management and internal
control systems
Accountability and audit
The Report of the Directors, including a going concern statement
and a viability statement, is set out on pages 92 to 97. This
Corporate Governance Statement forms part of the Report of the
Directors.
Board Responsibility
The Board is responsible for overseeing the Group’s risk
management and internal control systems, which are designed to
facilitate effective and efficient operations and to ensure the
quality of internal and external reporting and compliance with
applicable laws and regulations, and to review the effectiveness
of same.
In establishing and reviewing the risk management and internal
control systems, the Directors carried out a robust assessment of
the principal risks facing the Group including those that would
threaten its business model, future performance, solvency or
liquidity, the likelihood of a risk event occurring and the costs of
control. The process for identification, evaluation and
management of the principal risks faced by the Group is
integrated into the Group’s overall framework for risk governance.
The Group is forward-looking in its risk identification processes to
ensure emerging risks are identified. The risk identification,
evaluation and management process also identifies whether the
controls in place result in an acceptable level of risk. At Group
level, a consolidated risk report and risk appetite dashboard is
reviewed and regularly debated by the BRC and the Board to
ensure satisfaction with the overall risk profile, risk
accountabilities and mitigating actions.
The report and dashboard provide a monthly view of the Group’s
overall risk profile, key risks and management actions, together
with performance against risk appetite and an assessment of
emerging risks which could affect the Group’s performance over
the life of the operating plan.
Information regarding the main features of the internal control and
risk management systems is provided within the risk
management report on pages 110 to 160. The Board concluded
that the Group’s risk management arrangements are adequate to
provide assurance that the risk management systems put in place
are suitable with regard to the Group’s profile and strategy.
Control systems
The Group’s overall control systems include:
• a clearly defined organisation structure with defined authority
limits and reporting mechanisms;
• three lines of defence approach to the management of risk
across the Group: line management in individual businesses
and relevant Group functions, central risk management
functions, and GIA;
• Board and Management Committees with responsibility for
core policy areas;
• a set of policies and processes relating to key risks;
• reconciliation of data consolidated into the Group’s financial
statements to the underlying financial systems. A review of
the consolidated data is undertaken by management to
ensure that the financial position and results of the Group are
appropriately reflected, through compliance with approved
accounting policies and the appropriate accounting for non-
routine transactions;
• Codes of Conduct setting out the standards expected of all
Directors, officers and employees in driving an appropriate,
transparent risk culture;
• a Risk Control Self-Assessment framework, where risks are
logged, managed and mitigated across the first-line, with
clear reporting, escalation and second-line oversight. Action
plans are developed and implemented to address any control
deficiencies;
• a comprehensive set of accounting policies; and
• a compliance framework incorporating the design and testing
of specific controls over key financial processes.
The Group operates a comprehensive internal control framework
over financial reporting with documented procedures and
guidelines to support the preparation of the consolidated financial
statements.
The main features are as follows:
• a comprehensive set of accounting policies relating to the
preparation of the annual and interim financial statements in
line with IFRS as adopted by the EU
• an independent internal audit function with responsibility for
providing independent, reasonable assurance to key internal
(Board, Group and Subsidiary Audit and Risk committees and
Senior Management) and external (Regulators and external
auditor) stakeholders on the effectiveness of the Group’s risk
management and internal control framework;
• a compliance framework incorporating the design and testing
of specific controls over key financial processes to confirm
that the Group’s key controls are appropriate to mitigate the
financial reporting risks;
• a robust control process is followed as part of interim and
annual financial statements preparation, involving the
appropriate level of management review and attestation of
the significant account line items, and where judgements and
estimates are made, they are independently reviewed to
ensure that they are reasonable and appropriate. This ensures
that the consolidated financial information required for the
interim and annual financial statements is presented fairly and
disclosed appropriately;
• the Annual Report and Interim Report are also subject to
detailed review and approval through a structured
governance process involving Senior and Executive finance
personnel;
• summary and detailed papers are prepared for review and
approval by the GAC covering all significant judgemental and
technical accounting issues, together with any significant
presentation and disclosure matters; and
• user access to the financial reporting system is restricted to
those individuals that require it for their assigned roles and
responsibilities.
Reviews by the Board
The effectiveness of the risk management and internal control
systems is reviewed regularly by the Board, the GAC and the
BRC, which also receive reports of reviews undertaken by Group
Risk and GIA. The GAC receives reports from the Group’s
external auditor (which include details of significant internal
control matters that they have identified), and has separate
discussions with the external and internal auditors at least once a
year without Executives present, to ensure that there are no
unresolved issues of concern.
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Your Board (continued)
The Group’s risk management and internal control systems are
regularly reviewed by the Board and are consistent with the
Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting issued by the Financial
Reporting Council and compliant with the requirements of Capital
Requirements Directive (CRD) IV. They have been in place for the
year under review and up to the date of the approval of the
annual report. The Group has determined a pathway to
compliance with the Basel Committee on Basel Committee on
Banking Supervision (BCBS) 239 risk data aggregation and risk
reporting requirements and continues to actively manage
enhancements.
Continuous improvement
The Group’s controls frameworks are continuously improved and
enhanced, addressing known issues and keeping pace with the
dynamic environment. Progress continues to be made in
operational (including IT and Information Security), regulatory and
conduct risks. The 2019 internal control assessment provides
reasonable assurance that the Group’s controls are effective, or
that, where control weaknesses are identified, they are subject to
management oversight and action plans. The GAC, in conjunction
with the BRC, following an assessment of whether the significant
challenges facing the Group are understood and are being
addressed, concluded that the assessment process was effective
and made a positive recommendation to the board in that regard.
Board Governance
Conflicts of Interest
The Board has an approved Conflicts of Interest Policy which
sets out how actual, potential or perceived conflicts of interest
are to be identified, reported and managed to ensure that
Directors act at all times in the best interests of the Group. This
policy is reviewed on an annual basis.
The Group Code of Conduct, which applies to all employees and
Directors of the Group, clarifies the duty on all employees to
avoid conflicts of interests. The Code of Conduct is reviewed on
an annual basis and communicated throughout the Group.
Time Commitment
The Group ensures that individual Board Directors have sufficient
time to dedicate to their duties, having regard to applicable
regulatory limits on the number of directorships which may be
held by any individual Director. The Company and the Bank have
each been classified as ‘significant institutions’ under CRD IV.
During the year ended 31 December 2019, all Directors were
within the directorship limits set out for significant institutions
under CRD IV.
All newly-appointed Directors are provided with a comprehensive
letter of appointment detailing their responsibilities as Directors,
the terms of their appointment and the expected time
commitment for the role. A copy of the standard terms and
conditions of appointment of NEDs can be inspected during
normal business hours by contacting the Group Secretary.
Directors are required to devote adequate time to the business of
the Group, which includes attendance at regular meetings and
briefings, preparation time for meetings and visits to business
units. In addition, NEDs are normally required to sit on at least
one Board Committee, which involves the commitment of
additional time. Certain NEDs, such as the Deputy Chairman, SID
and Committee Chairs, are required to allocate additional time in
fulfilling those roles.
Before being appointed, Directors disclose details of their other
significant commitments along with a broad indication of the time
absorbed by such commitments. Before accepting any additional
external commitments, including other directorships that might
impact on the time available to devote to their role, the agreement
of the Chairman and the Group Company Secretary, or,
depending on the nature of the proposed commitment, the full
Board, must be sought. In certain cases, advanced CBI approval
must also be sought.
Term of Appointment and Re-election of Directors
NEDs are normally appointed for an initial three-year term, with
an expectation of a further term of three years, assuming
satisfactory performance and subject to the needs of the
business, shareholder re-election and continuing fitness and
probity.
A NED’s term of office will generally not extend beyond nine years
in total unless the Board, on the recommendation of the GN&GC,
concludes that such extension is necessary due to exceptional
circumstances. In such a situation the Board will document its
rationale for any continuance and so advise the CBI in writing as
required under the Irish Code.
In respect of Executive Directors, no service contract exists
between the Company and any Director which provides for a
notice period from the Group of greater than one year. None of
the NEDs have a contract of service with the Group.
It is Group practice that, following evaluation, all Board Directors
are subject to annual re-election by shareholders. All Directors
retired at the AGM held on 14 May 2019. The following Directors,
being eligible, offered themselves for election and were elected at
the AGM in 2019:
• Ian Buchanan.
• Evelyn Bourke.
• Richard Goulding.
• Patrick Haren.
• Andrew Keating.
• Patrick Kennedy.
• Francesca McDonagh.
• Fiona Muldoon.
• Patrick Mulvihill.
• Steve Pateman.
The names of Directors submitted for election or re-election are
accompanied by sufficient biographical details and any other
relevant information in the AGM documentation to enable
shareholders to take an informed decision on their election. The
2020 AGM is scheduled for 19 May 2020 and, in line with
previous AGMs, all directors will retire from office at the date of
the AGM and may choose to offer themselves for election.
Organisational Structure
The Group believes it has robust governance arrangements,
which include a clear organisational structure with well defined,
transparent and consistent lines of responsibility, effective
processes to identify, manage, monitor and report the risks to
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76
Your Board (continued)
which it is or might be exposed, and appropriate internal control
mechanisms, including sound administrative and accounting
procedures, IT systems and controls. The system of governance
is subject to regular internal review. These governance
arrangements provide systems of checks and controls to ensure
accountability and drive better decision-making, and also include
policies and practices which ensure that the Board and its
Committees operate effectively.
The Group’s overall control systems include a clearly defined
organisation structure with defined authority limits and reporting
mechanisms to higher levels of management and to the Board,
which support the maintenance of a strong control environment.
Corporate and capital structure is a matter requiring Board
approval. In accordance with section 225(2) of the Companies
Act 2014, the Directors acknowledge that appropriate structures
that are, in the Directors' opinion, designed to secure material
compliance with the relevant obligations (as defined in section
225(1)) have been put in place. The Board reviews annually the
corporate legal structure of the Group and any changes to the
structure of the Group effected since the Board’s previous review.
Subsidiary Governance
The interaction between the Group Board and the boards of our
strategically significant subsidiaries are closely monitored. The
Chairman meets regularly with the Chairmen of these subsidiaries
in order to ensure good communication and alignment and
attends a number of subsidiary board meetings during the year.
The Group Board receives reports conducted on the
effectiveness of these significant subsidiaries. Ian Buchanan is
also a NED of Bank of Ireland (UK) plc and a member of its Risk
Committee.
The Chairs of Group Board Committees attend the equivalent
committees of the strategically significant subsidiaries once a
year. Similarly, the respective subsidiary Board Committee chairs
attend and present at the Group Board Committees annually to
provide an account of the subsidiary Board Committees
activities.
In 2019, the Board reviewed the Group Subsidiary Governance
Policy including the New Subsidiary / Entity process document,
which sets out the required procedure should any party in the
Group wish to set up a new Group subsidiary or entity in which
the Group will have a controlling interest. This is reviewed
annually.
The Group’s corporate simplification programme, designed to
remove a number of subsidiaries from the Group, made
considerable progress in 2019 with the dissolution of 11
companies. The purpose of this programme is to simplify
corporate structure of the Group with a view to generating
efficiencies and cost savings and reducing risk.
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Report of the Group Nomination and Governance Committee
Patrick Kennedy
Chair
Dear Shareholders,
Membership and meetings
At close of business on 31 December 2019, the
Group Nomination and Governance Committee (the
‘Committee’) comprised Patrick Kennedy, Patrick
Haren, Evelyn Bourke and Fiona Muldoon.
Biographical details, including each member’s
background and experience, are set out on pages
61 to 64.
The Committee met six times during 2019, five of
which were scheduled meetings. The Chair and
Members of the Committee, together with their
attendance at meetings, are shown below. The
Group CEO, Chief People Officer and other
members of management are invited to attend
meetings where the agenda item is relevant to them
and their attendance is requested by the
Committee. The Committee meets annually with no
management present.
Role and responsibilities
The key responsibilities of the Committee are set out
in its terms of reference (which are available on
www.bankofireland.com) and include:
• leading the process for appointments and
renewals for Board and Board Committees as
appropriate, and making recommendations in
this regard to the Board for its approval;
• ensuring plans are in place for orderly
succession to both the board and senior
management positions, and oversee the
development of a diverse pipeline for
succession;
• keeping Board governance arrangements under
review and making appropriate
recommendations to the Board to ensure
corporate governance practices are consistent
with good practice corporate governance
standards;
• overseeing subsidiary governance to ensure that
appropriate and proportionate governance
arrangements are in place for Group
subsidiaries; and
• agreeing the Group’s RSB policy and overseeing
its implementation.
Matters considered by the Committee
The principal matters considered, and actions taken
by the Committee during the year are described on
page 78.
Group Nomination
and Governance Eligible
Committee Meetings to attend Attended
Patrick Kennedy 6 6
Patrick Haren 6 6
Evelyn Bourke 6 5
Fiona Muldoon1
5 5
Board Composition, Succession and Diversity
The Committee continued to keep under review the
structure, size and composition of the Board and its
Committees. During 2019 the Committee devoted
considerable time to succession planning and
recruitment, having regard to the tenures of a
number of its directors to ensure readiness and
appropriate and timely succession activities. Further
details are set out on page 78.
The Committee engaged Leaders Mores, a
consulting company specialising in board level
appointments, to support Director searches
conducted during the year and considered a
number of potential candidates, leading to the
successful appointment of Eileen Fitzpatrick.
In addition, the Committee considered the nominee
of the Minister for Finance, Michele Greene, who
was subject to the same level of consideration and
suitability review by the Committee as applied to all
other NEDs. Leaders Mores supported the Board
with an independent assessment of Michele
Greene’s suitability as part of the wider due
diligence assessment, prior to her being
recommended by the Board for appointment.
An active search is underway to identify a NED with
technology transformation experience, with
additional ideal traits including financial services
experience and Irish residency. Leaders Mores and
MWM Consulting are facilitating this search. Other
than in connection with the Board searches,
Leaders Mores and MWM Consulting have no
connection with the Group.
The selection of Myles O’Grady as the preferred
candidate to succeed Andrew Keating as Group
CFO and Executive Director was led by the CEO
and supported by the Committee.
As part of the process of succession planning and
determining the appropriate range and mix of skills
required to maintain an effective Board, each
member of the Board is requested to self-assess
against the skills template set out in the Joint ESMA
and EBA Guidelines on the assessment of the
suitability of members of the management body and
key function holders. This assessment provided the
Committee with valuable analysis of the skills and
experience of Board members, relative to required
and desirable Board competencies, and contributes
to ensuring that the Board continues to have an
appropriate range and depth of skills and
experience.
While potential candidates were assessed against
developed candidate specifications for particular
identified roles and skill sets, potential candidates
were also required to be of sufficient calibre and
suitable for appointment to the Board as NED and
enhance the Board’s overall effectiveness,
facilitating the Board by acting with integrity, leading
by example and promoting the desired customer-
focused culture.
1
Appointed 20 January 2019
 21:54 Page 77
Report of the Group Nomination and Governance Committee (continued)
Matters considered and action taken by the Committee in 2019
Key issue Committee considerations Committee conclusion
Board
Composition,
renewal,
succession and
effectiveness
• Board skills assessment, composition, diversity, size,
tenure, succession planning.
• Committee composition and succession planning.
• NED recruitment and appointments, including Fitness
and Probity assessments.
• Effectiveness Reviews of Board, Chairman and
individual Directors.
Board appointments during the year were made to enhance the
composition, diversity and skills profile of the Board, replacing skills
of retiring Directors and introducing additional skills, experience
and perspectives that equip the Board to address the strategic
challenges facing the Group.
Having regard to the requisite skillsets of each Board Committee
and Members’ Tenures, the Committee recommended the
appointment of:
• Michele Greene to the Risk and Group Transformation Oversight
Committees;
• Eileen Fitzpatrick to the Audit and Remuneration Committees;
• Steve Pateman as Chair of the Remuneration Committee.
The 2018 internal effectiveness review concluded in January 2019
and the 2019 external effectiveness review concluded in January
2020; both reviews were positive of the Board and its Committees.
78

The Group recognises the benefits of having a diverse Board and
workforce, creating a work environment where everyone has an
opportunity to fully participate in creating business success, and
where each person is valued for his or her distinctive skills,
experiences and perspectives. In reviewing Board composition
and identifying suitable candidates, the Committee considers the
benefits of all aspects of diversity including the skills identified as
relevant to the business of the Group, regional and industry
experience, social and ethnic backgrounds, gender, age and
other relevant cognitive and personal qualities in order to
maintain an appropriate range and balance of skills, experience
and background on the Board. All Board appointments are made
on merit, in the context of the skills, experience, independence
and knowledge which the Board as a whole requires to be
effective.
Executive • Senior Executive succession planning and
appointments, including Fitness and Probity
assessments.
• GEC appointments and Group Structure Changes.
• Assessment of Suitability of Key Function Holders
and MRTs.
• Individual Accountability Regime Developments.
• Gender diversity of leaders and senior managers.
The Committee supported the Group CEO’s proposed
appointments in 2019 to the key roles of Chief People Officer, Chief
Strategy Officer, Group CFO, Group Secretary and CEO Retail (UK).
A deep dive of executive succession planning for key roles was
undertaken with the Board, which evidenced positive focus and
development by the Group CEO, supported by the Chief People
Officer, on succession planning and development of key talent
during 2019.
Governance and
corporate
responsibility
• Annual Corporate Governance Statement.
• Matters Reserved to Board and delegations.
• Code of Conduct.
• Group Speak Up Policy.
• Group Conflicts of Interests Policy.
• Updates to key corporate governance codes and
regulations, including 2018 UK Code, EBA Guidelines
on Internal Governance and Joint ESMA and EBA
Guidelines on the assessment of the suitability of
members of the management body and key function
holders.
• Consideration of actions to enhance workforce
engagement.
• Key Board Governance Policies.
• Approval of Governance Disclosures.
• Modern Slavery Statement for 2018.
The Committee approved changes to internal Polices to ensure
continued compliance with all applicable corporate governance
requirements. The Group’s Code of Conduct and Speak Up policies
were considered and changes agreed to ensure they remained
appropriate. The external communication of the Group’s corporate
governance standards through disclosures and the annual report
was approved.
The Committee considered and recognised the strength of the
mechanisms in place to engage with and hear from colleagues but
agreed that a further positive action to appoint a workforce
engagement director should be taken. A recommendation was
made to the Board and Eileen Fitzpatrick was designated as the
Workforce engagement NED in January 2020.
 21:54 Page 78
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Report of the Group Nomination and Governance Committee (continued)
During 2019 the Committee reviewed the Board Diversity Policy
(the latest version of which is available on the Group’s website)
and the measurable objectives set out thereunder. The Board has
set a target of achieving a minimum of 33% female representation
on the Board for the year ending 31 December 2020, with a
medium-term aspiration to have broadly equal gender
representation. As at 31 December 2019 there was 45% female
representation on the Board. With the appointment of Myles
O’Grady as Group CFO in January 2020, this became 42%.
In 2019, the Group made further progress in addressing diversity
in the Group’s workforce through its I&D programme, which
recognises that developing and utilising the skills and
perspectives of all our employees is critical to the Group’s
ongoing business success. While considering Senior Executive
succession planning, the Committee and the Board ensured that
diversity in its widest sense was at the forefront of related
considerations. For further details please see page 31 of the
Strategic Report.
Governance Matters
The Committee keeps under review updates to corporate
governance regulations and requirements and briefs the Board on
their effective implementation. In 2019, the Committee oversaw
the final implementation of the 2018 UK Code, many provisions of
which were in place in advance of the required date of 1 January
2019. As reported earlier, the Committee is being renamed as the
NGRB and its terms of reference are being updated to reflect its
wider remit in relation to RSB.
Effectiveness Reviews
The Committee oversaw the 2018 internal review of the
effectiveness of the Board and its Committees, including the
GN&GC, which concluded in January 2019, and the 2019
external review conducted externally by Praesta Ireland, which
concluded in January 2020. For further details, see page 69.
The Chair reports to the Board after each meeting to ensure all
members are fully informed of its committee’s activities and
decisions.
Policies • Board Terms of Reference.
• Board Conflicts of Interest Policy.
• Director Assessment Policy
• Board Diversity Policy.
• Board Training and Induction Policy.
• Group Fitness and Probity and Suitability
Assessment Policy
The Committee approved proposed amendments to the policies to
ensure that the key board policies remained appropriate and
effective.
Subsidiary
Governance
• Appointments to boards of substantial regulated
subsidiaries.
• Subsidiary Governance Policy and Guidelines.
• Review of composition and succession plans of key
subsidiary Boards.
• Review of effectiveness of key subsidiary Boards.
• Pension Scheme trustee appointments.
The Committee ensured that the boards of subsidiaries are properly
composed with suitable directors and have sound governance
structures, and that Group oversight of subsidiaries remained
appropriate.
Committee
Governance
• Committee Effectiveness Review.
• Committee Terms of Reference.
The Committee recommended amendments to its terms of
reference to ensure continued compliance with evolving corporate
governance requirements. The Committee considered the outcome
of the external review of the Board’s effectiveness as it related
specifically to the Committee. A positive outcome with regard to
the Committee’s continued effectiveness was reported.
Matters considered and action taken by the Committee in 2019 (continued)
Key issue Committee considerations Committee conclusion
Patrick Kennedy
Chair of the Group Nomination and Governance Committee
21 February 2020
 21:54 Page 79
Report of the Group Remuneration Committee
Patrick Haren
Chair
(stood down January 2020)
Dear Shareholders,
Membership and meetings
At close of business on 31 December 2019, the
Group Remuneration Committee (the ‘Committee’ or
the ‘GRC’) comprised four independent NEDs from
diverse backgrounds to provide a balanced and
independent view on remuneration matters. Its
composition is compliant with the requirements of
the Irish Code and CRD IV, and with the
recommendations of the 2018 UK Code.
I stood down from the Committee in January 2020,
having been Chair since May 2015. My colleague,
Steve Pateman, who joined the Committee in
September 2018, was appointed Chair in January
2020. I would like to take this opportunity to wish
Steve well as he takes on this role.
In order to ensure that remuneration policies and
procedures are consistent with effective risk
management, there is common membership
between the GRC and the BRC. Kent Atkinson,
Richard Goulding and Steve Pateman were
members of both Committees in 2019. Kent
Atkinson stood down from the Committee, following
his resignation from the Group and Eileen Fitzpatrick
joined the Committee during 2019. Biographical
details, including each member’s background and
experience, are set out on pages 61 to 64.
The GRC met seven times in 2019. The Members of
the GRC, together with their attendance at
meetings, are shown below. The Chairman, the
Group Chief Executive, Chief People Officer, CRO,
and the Head of Reward are invited to attend
meetings as appropriate.
Role and responsibilities
The GRC holds delegated responsibility from the
Board of Directors for the oversight of Group-wide
remuneration policy with specific reference to the
Chairman, Directors and senior management, heads
of and senior officers in independent control
functions, and those employees whose activities
have a material impact on the Group's risk profile.
The GRC is responsible for overseeing the annual
review of the Group Remuneration Policy with input
from the BRC and relevant risk management
functions.
The remuneration of NEDs is determined by a Board
Committee of the Chairman and the Executive
Directors, within the boundaries of the Company’s
constitution. No Director is involved in decisions
regarding their own remuneration. The remuneration
of the Chairman is a matter for the Committee.
The Group is currently operating under a number of
remuneration restrictions which cover all Directors,
senior management, employees and certain service
providers across the Group. For further information,
please see page 98 of the Remuneration Report.
Mercer Kepler, advisors to the Committee, Willis
Towers Watson and Deloitte provided remuneration
advice during 2019. The Committee is of the view
that they provided independent remuneration advice
to the Committee and they do not have any
connections with the Group that may impair their
independence.
Matters considered by the Group Remuneration
Committee
The matters considered and action taken by the
GRC during the year are set out on the following
page. The Committee reviews and challenges
information provided by management and takes
advice from external advisors, as appropriate. The
Committee ensures at all times to exercise
independent judgment and makes informed
decisions.
The Chair of the GRC reported to the Board after
each meeting to ensure all Directors were fully
informed of the GRC’s activities.
Group Remuneration Eligible
Committee Meetings to attend Attended
Patrick Haren 7 7
Kent Atkinson1
3 3
Eileen Fitzpatrick2
4 4
Richard Goulding 7 7
Steve Pateman 7 7
80

1
Kent Atkinson stood down 14 May 2019.
2
Eileen Fitzpatrick joined 15 May 2019.
 21:54 Page 80
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Report of the Group Remuneration Committee (continued)
Matters considered and action taken by the Committee in 2019
Remuneration
Policy, including
impact of risk
profile.
• Approval of Group Remuneration Policy and of
governance and monitoring of that policy.
• Review of Group risk profile and implications of
remuneration policies for risk and risk management.
• Design of a potential incentive scheme, including
scope, reflection of risk, and application at various
levels, including Executive Directors.
• Governance of potential incentive scheme.
• Design of Organisational Balanced Scorecard.
• Investor perspectives on potential incentive scheme.
• Current Remuneration Policy is properly governed and
implemented and does not lead to inappropriate risk taking.
• Any potential incentive scheme design will be subject to removal
of relevant restrictions and shareholder approval.
Remuneration
Disclosure
• Pillar 3 disclosures and the Remuneration Report
(review and approval).
• Design of Remuneration Report and disclosures if an
incentive scheme is introduced.
• Current disclosures are appropriate.
• Future disclosures should reflect good practice and shareholder
expectations.
Performance and
Remuneration of
Senior
Management
• Objective setting and performance appraisal of
Senior Executives to inform the setting of
remuneration, including for heads of independent
control functions.
• Review of approach to remuneration of Senior
Officers in independent control functions.
• Benchmarking and approval of changes to
remuneration of Senior Executives.
• Review of Executive Director Remuneration Policy and
practice, with a view to clarity, simplicity, risk
predictability, proportionality, and alignment to culture.
• There is an appropriate process in place to assess the
performance of Senior Executives.
• Changes to Senior Executive remuneration are properly
assessed and approved.
Governance and
review of
remuneration
practice.
• Approval of the Group Remuneration Policy
• Approval of Group Material Risk Taker Policy.
• Approval of Group Material Risk Taker list.
• Approval of remuneration of Heads of and Senior
Officers in Independent Control Functions.
• Review of workforce remuneration, top earners, staff
with specific Minister for Finance approvals and
compliance with remuneration restrictions.
• Review of regulatory developments.
• Review of internal audits relevant to remuneration
policy or practice.
• There is good governance around remuneration, particularly of
Executive Directors, Senior Management and those who could
materially impact the Group’s risk profile.
NED fees • Review and benchmarking of fees paid to the Group
Chairman and NEDs of subsidiary boards.
• Group Chairman fees are subject to the remuneration restrictions
and remain unchanged.
• Subsidiary NED fees are appropriate.
Committee
Governance
• Review of Committee Terms of Reference and
effectiveness.
• The Committee considered the outcome of the external review of
the Board’s effectiveness as it related specifically to the
Committee. A positive outcome with regard to the Committee’s
continued effectiveness was reported.
Patrick Haren
Chair of the Group Remuneration Committee
(stood down January 2020)
21 February 2020
Key issue Committee considerations Committee conclusion
 21:55 Page 81
Report of the Group Audit Committee
Patrick Mulvihill
Chair
Dear Shareholders,
On behalf of the Board Audit Committee (the
‘Committee’ or ‘GAC’), I am pleased to introduce
the report on the Committee’s activities during the
financial year ended 31 December 2019.
At a high level, the Committee operates in
conjunction with the BRC to ensure the Group
operates a strong internal control environment, with
the Committee specifically focused on protecting
the interests of the shareholders in relation to
internal controls as they relate to financial reporting.
The Committee also evaluates the independence
and performance of GIA and the external auditor,
KPMG, and considers and recommends the interim
and annual financial statements to the Board for
approval.
During 2019, we had a number of changes to the
composition of the Committee, with Kent Atkinson
standing down on his retirement from the Board at
the 2019 AGM and Eileen Fitzpatrick joining us in
May 2019. Common membership between the
Committee and the BRC is maintained through the
membership of Patrick Mulvihill, Richard Goulding
and Steve Pateman, which facilitates appropriate
co-ordination and effective governance across key
areas of internal control.
A number of key management changes took place
during 2019, and the Committee welcomed Steve
Sanders as Interim Group Chief Internal Auditor,
pending appointment of a permanent successor to
Steve O’Regan who left the Group in July 2019, and
Myles O’Grady as the Group CFO, succeeding
Andrew Keating who left the Group in October 2019.
Further details on Committee Members, Committee
meetings and attendance at meetings during 2019
are outlined on page 91.
While not intending to be an exhaustive list of the
Committee’s considerations and activities in 2019, a
number of areas that were subject to Committee
focus during the year are outlined below.
Group Internal Audit
In monitoring the activities and effectiveness of GIA,
the Committee approved the annual audit plan and
budget, including resources, and reviewed progress
against the plan throughout the year.
The Committee received regular reports from GIA on
internal audit activities across the Group which
outline details of the audit approach, Management
engagement and areas identified during audits for
further strengthening across the Group’s risk
management and internal control framework. These
reports cover matters of relevance to the Committee
in assessing the effectiveness of the internal
controls over the financial reporting processes.
Reports are rated based on the strength of the
control environment in operation, Management’s
awareness of the risks facing their business areas,
and the controls in place to mitigate those risks. In
conjunction with GIA reports, the Committee
considers Management’s responses to, and the
timeliness of the remediation of, identified issues.
Having regard for GIA activities and the Committee’s
review of the extent of the work undertaken by the
Finance and Risk teams across the Group, the
Committee is satisfied that internal controls over
financial reporting were appropriately designed and
operating effectively. Full details of the internal
control and risk management systems in relation to
the financial reporting process are detailed within
the risk management section on pages 110 to 160.
External audit
The Committee oversees the relationship with
KPMG and, Niamh Marshall, KPMG’s lead audit
partner, attends all Committee meetings.
During the year, the Committee considered KPMG’s
terms of engagement (including remuneration), its
independence, audit quality / performance,
objectivity and considered the plans for the interim
review and year end audit. The Committee also
assessed KPMG’s findings, conclusions and
recommendations arising from the interim review
and year-end audit.
Appropriate safeguards are in place to protect the
independence and objectivity of KPMG. The
Committee operates a policy to regulate the use of
KPMG for non-audit services, to ensure compliance
with the revised Ethical Standards for Auditors
(Ireland) 2017 from the Irish Auditing Accounting
Supervisory Authority (IAASA).
In order to ensure the objectivity and independence
of the KPMG, the policy formalises certain
restrictions on the provision of non-audit services by
KPMG requires all non-audit services provided by
KPMG must be approved in advance by the
Committee. Additional provision is made for the
approval by certain members of senior management
of non-material services which are below the
threshold. Annually, details of expected non-audit
services for the coming year are presented to the
Committee for approval. Any proposed additional
services exceeding these levels require additional
specific pre-approval.
82

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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
IFRS 9 and
impairment of
financial
instruments
The Committee reviewed management papers and discussed and challenged
management judgements used in determining the following based on IFRS 9
requirements:
• correct classification and measurement of financial instruments;
• stage allocations and stock of impairment loss allowance (including any necessary
Group management adjustments to reflect model limitations and / or late breaking
events);
• model parameter updates incorporating FLI;
• net impairment gain for the year; and
• quantum of NPEs.
The Group’s approach to the measurement of impairment is set out in the Group
Impairment Policy. The policy includes the Group’s criteria for allocating financial
instruments to stages, the method used to measure impairment for each material
portfolio, core impairment model methodologies, and the criteria for classifying financial
assets as NPEs. The policy has been approved by the Board on the recommendation of
the Committee, following recommendation by the Impairment Committee and the Group
Risk Policy Committee (GRPC).
The impairment models are approved for use by the Risk Measurement Committee
(RMC) and are maintained and executed by a specialist central unit within Group Risk.
The Committee reviewed the impact of key model changes made during the reporting
period.
The Committee was satisfied that the
classification and measurement of
financial assets, stage allocations,
model parameter updates (including
FLI), impairment loss allowances, and
the net impairment loss for the
reporting year, had been appropriately
determined in accordance
with the Group’s methodologies and
IFRS 9 accounting standard. The
Committee was also satisfied that the
associated disclosures were
appropriate based on the relevant
accounting standards including
International Accounting Standard (IAS)
1 and IFRS 7.
Matters considered and action taken by the Committee in 2019
Key issue Committee considerations Committee conclusion
Retirement
benefit
obligations
The Committee considered management’s key assumptions and judgements used in
determining the actuarial values of the liabilities of each of the Group’s sponsored
defined benefit pension schemes under IAS 19 ‘Employee Benefits’. Management
considered advice from independent actuaries, Willis Towers Watson, for the
determination of significant actuarial assumptions. The key assumptions proposed by
management and considered by the Committee were assumptions relating to inflation
rates, demographic and discount rates in Ireland and the UK which are used in
determining liabilities at the reporting date.
The Committee was satisfied that the
inflation rates, discount rates and other
significant assumptions were
appropriate and that the accounting for
the Group’s sponsored defined benefit
pension schemes and related
disclosures was in accordance with IAS
19.
The fees paid to KPMG for the year ended 31 December 2019
amounted to €4.6 million (2018: €3.9 million), of which €1.1
million (2018: €0.6 million) was payable in respect of non-audit
services. Non-audit services represented 24% of the statutory
audit fee (2018: 15%). Further information on fees paid in respect
of audit and non-audit services, along with details of non-audit
services provided during the year are set out in note 15 to the
consolidated financial statements ‘auditor’s remuneration’.
The Committee concluded that it was satisfied with the
independence, quality and performance of KPMG in respect of
the year ended 31 December 2019 and recommended that the
Board propose KPMG for reappointment for approval at the 2020
AGM.
Financial reporting
A key activity for the Committee is the consideration of significant
matters relating to the annual financial report, with key
accounting judgements and disclosures subject to in depth
discussion with Management and KPMG. The Committee
provides robust challenge to key judgements in advance of
making a recommendation to the Board that all financial reports
are considered to be a fair, balanced and understandable
assessment of the Group’s financial position.
Further information on some of these significant items is set out
in the Critical Accounting Estimates and Judgements on pages
194 to 197. Overall the Committee was satisfied that the 2019
annual report, including the financial statements, is fair, balanced
and understandable.
Report of the Group Audit Committee (continued)
 21:55 Page 83
Report of the Group Audit Committee (continued)
Deferred taxation The Committee considered the extent of deferred tax assets (DTAs) to be recognised in
respect of unutilised tax losses, and in particular the projections for future taxable profits
against which those losses may be utilised. In order for the Group to recognise these
assets, it must be probable that sufficient future taxable profits will be available against
which the losses can be utilised.
The Group has prepared financial projections which are being used to support the
Group’s ICAAP. The financial projections are prepared for the purpose of the Group’s
assessment of its capital adequacy. They are subjected to considerable internal
governance at a divisional and Group level and are reviewed and approved by Executive
management and the Board. Management’s assessment of the projections determined
that it was probable that there would be sufficient taxable profits in the future to recover
the DTA recognised arising from unused tax losses.
In relation to DTAs arising from Irish tax losses carried forward by The Governor and
Company of the Bank of Ireland (the ‘Bank’) management’s assessment of the
projections determined that it was probable that there would be sufficient taxable profits
in the future to recover the DTA of €1,088 million arising from those tax losses.
In relation to Bank of Ireland (UK) plc, notwithstanding its continued profitability and the
Group’s commitment to the UK, updated profit projections indicate an increase in the
projected DTA recovery period. In consideration of this, management proposed to
restrict the recovery period of the DTA in Bank of Ireland (UK) plc to ten years.
As a consequence, the carrying value of the DTA relating to trading losses of Bank of
Ireland (UK) plc was reduced by €45 million to €35 million, in the year ended 31
December 2019.
The Committee discussed with
management its assessment of the
recoverability of the DTA and the
related disclosures. The Committee and
the Board concluded that it was
probable that there would be sufficient
taxable profits in the future to recover
the DTAs recognised arising from
unused tax losses, and that the related
disclosures were as required under IAS
12 ‘Income Taxes’.
84

Life assurance
accounting
The Committee considered management’s key assumptions and judgements used in
determining the valuations of the Value of in Force (ViF) and insurance contract liabilities.
The key assumptions in projecting future surpluses and other net cash flows attributable
to the shareholder arising from business written were the interest rate and unit growth
rates, lapse rates, mortality, morbidity and expenses. Interest rates and unit-growth rates
are based on a range of duration specific rates determined by a risk-free yield curve.
This yield curve is provided by the European Insurance and Occupational Pensions
Authority.
Whilst not relevant to the 2019 financial reporting period, the Committee also considered
the future potential impact of IFRS 17.
The Committee was satisfied that the
significant assumptions are
appropriately applied and that the
accounting for the Group’s ViF and
insurance contract liabilities is
appropriate.
Intangible assets
- Capitalisation
of the
Transformation
Investment asset
The Committee considered the appropriateness of Management’s internal controls and
governance surrounding the capitalisation of costs related to internally generated
intangible assets associated with the Transformation Investment asset.
The Committee was satisfied, based on
the effective operation of governance
and controls, that the capitalisation of
costs relating to the Transformation
Investment asset, and the carrying
value of the related intangible assets,
was reasonable and in line with the
requirements of IFRS.
Matters considered and action taken by the Committee in 2019 (continued)
Key issue Committee considerations Committee conclusion
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Report of the Group Audit Committee (continued)
Matters considered and action taken by the Committee in 2019 (continued)
Key issue Committee considerations Committee conclusion
Viability
statement
In accordance with the requirements of the UK Code, the GAC considered whether it had
a reasonable expectation that the Group will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment and made a
recommendation to the Board in that regard. This required a robust assessment of the
principal risks facing the Group, including those that would threaten its business model
and future performance, solvency and liquidity.
GAC concluded that a robust
assessment of the principal risks facing
the Group, including those that would
threaten its business model, future
performance, solvency or liquidity, and
that there was a reasonable
expectation that the Group would be
able to continue in operation and meet
its liabilities as they fall due over the
period of their assessment. The Group
adopted a three-year period, having
regard to existing relevant process and
frameworks which are performed over
time periods ranging from six months to
three years.
Going concern The Committee considered management’s assessment of the appropriateness of
preparing the financial statements of the Group for the year ended 31 December 2019 on
a going concern basis. In making this assessment, matters considered included the
performance of the Group’s business, profitability projections, funding and capital plans,
under both base and plausible stress scenarios. The considerations assessed by the
GAC are set out on page 178 in the Going Concern disclosure within the Accounting
Policies in note 1 to the consolidated financial statements.
On the basis of the review performed
and the discussions with management,
the Committee was satisfied that there
were no material uncertainties related
to events or conditions that may cast
significant doubt on the Group’s ability
to continue as a going concern over the
period of assessment. This assessment
together with the Going Concern
disclosure (as set out on page 178) was
subsequently approved by the Board.
IFRS 16 The Committee considered the impact of IFRS 16 ‘Leases’ which came into effect on 1
January 2019 replaced IAS 17 ‘Leases’ and related interpretations. It addresses the
definition of a lease, recognition and measurement of leases and establishes principles
for reporting useful information to users of financial statements about the leasing
activities of both lessees and lessors. A key change arising from IFRS 16 is that all
operating leases are accounted for on balance sheet for lessees. The accounting for
lessors has not materially changed.
The Committee’s objective was to ensure the impact of IFRS 16 was appropriately
reflected in the financial statements, including an update to relevant accounting policies
and new disclosures. Key judgements included the choice of implementation option, the
use of practical expedients and judgements in relation to lease terms and incremental
borrowing rates.
The Committee was satisfied that the
approach / impact of transition to IFRS
16 had been appropriately determined
and that the associated judgements /
disclosures were appropriate based on
the relevant accounting and disclosure
requirements, contained in IFRS 16.
IT risk The Committee considered and discussed management’s assessment of IT risks and the
ongoing risk management programme to identify, rate, mitigate and report on IT risks,
including GIA and the external auditor’s review of the internal control environment and
findings arising from KPMG’s reviews.
On the basis of the review performed,
discussions with management, and the
continued operation of the
comprehensive internal control
framework over financial reporting, the
Committee was satisfied that these
risks did not impact financial reporting
processes.
 21:55 Page 85
Report of the Group Audit Committee (continued)
Other matters
The Committee also:
• received reports from the Group’s Money Laundering
Reporting Officer on the operation and effectiveness of the
systems and controls established by the Group to manage
FCC risk. FCC incorporates money laundering, terrorist
financing, sanctions and bribery and corruption and is a key
area of Committee focus;
• received reports from Group Compliance on matters relating
to Regulatory Risk and Conduct Risk profiles;
• dedicated time to review and oversee a number of key
programmes with potential financial reporting impacts such
as the EU General Data Protection Regulation (GDPR) and the
BCBS Principles for Effective Risk Data Aggregation and Risk
Reporting (BCBS 239); and
• reviewed talent development in and succession planning for
the finance function.
A full list of responsibilities are detailed in the Committee’s terms
of reference, which can be found at
https://www.bankofireland.com/about-bank-of-ireland/corporate-
governance/.
Committee Membership and Meetings
The Committee acts independently of the Executive. All members
of the Committee are independent NEDs with relevant
competence in the financial sector, and their biographies can be
found on pages 61 to 64. The members of the Committee have
extensive knowledge of financial markets, treasury, risk
management and IAS, and the Committee’s composition is
considered to meet all of the applicable requirements, including
the need for recent and relevant financial experience and
competence in accounting or auditing.
The members of the Committee maintain their knowledge base
on relevant Committee matters, through Board deep dives and
dedicated Committee training. During 2019, the Committee
received training on the net interest income reporting process,
forthcoming changes regarding the implementation of IFRS 17,
which will introduce an updated reporting standard for insurance
contracts, and the impact of new accounting standards which
came into effect during 2019, including IFRS 16 ‘Leases’ (for
further details see note 62 on page 292).
Details of the Committee members’ meeting attendance are
shown below.
Eligible
GAC meetings to attend Attended
Kent Atkinson1
2 1
Evelyn Bourke 7 6
Eileen Fitzpatrick2
5 5
Richard Goulding 7 7
Patrick Mulvihill 7 7
Steve Pateman 7 6
The Group CFO, the Head of Group Finance, the Group Chief
Internal Auditor, the Group’s lead audit partner, the Group CEO,
and the Group CRO attend meetings of the Committee as
appropriate.
The Committee also holds individual private sessions with each
of the Internal and External Audit teams (without other members
of the Executive management being present) and the Group’s
CFO during the year.
An external effectiveness evaluation of the Board was conducted
during 2019, and, as part of that process, a positive outcome with
regard to the Committee’s continued effectiveness was reported.
The Committee reports to the Board on how it discharges its
responsibilities and makes recommendations to the Board on key
matters.
86

Patrick Mulvihill
Chair of the Group Audit Committee
21 February 2020
1
Kent Atkinson stood down in May 2019.
2
Eileen Fitzpatrick joined in May 2019.
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Report of the Board Risk Committee
Richard Goulding
Chair
Dear Shareholders,
The Board Risk Committee (the ‘Committee’ or the
‘BRC’) gives detailed consideration to existing and
emerging risks, through a balanced agenda which
ensures sufficient focus on standing areas of risk
management through the Group Risk Framework,
together with specific attention being given to those
emerging risks which are considered to be of ongoing
importance to the Group and its customers.
On existing risks, there was significant focus on the
non-financial risk areas of operational risk, conduct
risk and regulatory risk. The BRC has overseen the
establishment of a non-financial risk improvement
programme to uplift the Group’s operational risk
framework and capability, proactively identify and
resolve conduct issues and enhance management of
regulatory risk. There has been a particular focus on
operational risk arising from change programmes.
Further progress across each of these areas will be a
key ongoing focus for the Committee during 2020.
Emerging risks included areas such as transformation
risk, data management, IT resilience and cyber
security, where the dynamic nature and significance
of related risks and challenges continue to evolve.
The environment within which the Group operates
continues to be subject to considerable change.
Uncertainties, including the consequences of the UK
exit from the EU and wider geo-political risks
continue to provide challenges, and the BRC will
continue to monitor developments and any
associated impact on the Group’s risk profile.
The BRC concluded that the Group continues to
have strong discipline in the management of both
emerging and existing financial risks and is satisfied
with the level of focus being applied to ensure
continuing strengthening of non-financial risk
management. The Committee’s work continues to
help support the Group in safely achieving its
purpose and strategy.
Risk Management - discussions and decisions
Key matters covered included:
• recommending the Group’s risk appetite
framework and Risk Appetite Statement.
Considering breaches of risk appetite,
remediation plans and required communications;
• recommending policies for Credit, Market and
Liquidity risks and approving other key risk
policies;
• regularly assessing the Group’s overall risk profile
and emerging risk themes, hearing directly from
the Group CRO and regularly reviewing the
consolidated risk report and risk appetite
dashboard;
• receiving reports on the Group’s operational and
technology capability, including specific updates
on cyber risk capability, IT resilience IT Service
Continuity Management (ITSCM), and Data
Management;
• recommending the Group’s plan for managing
NPEs, a key driver of managing legacy credit risk,
and reviewing the risk aspects of NPE sales;
• recommending the Group’s 2019 ICAAP, ILAAP
and Recovery Plan; and
• hearing from representatives of the ECB and CBI
regulators about regulatory expectations and
their specific views on the Group.
Committee purpose and responsibilities
The Committee is responsible for the risk culture of
the Group and setting the tone from the top in
respect of risk management. It is also responsible for
ensuring the risk culture is fully embedded and
supports at all times the Group’s agreed risk appetite,
covering the extent and categories of risk which the
Board considers acceptable for the Group.
In seeking to achieve this, the Committee assumes
responsibility for monitoring the Group’s Risk
Management Framework, which embraces risk
principles, policies, methodologies, systems,
processes, procedures and people. It also includes
the review of new, or material amendments to, risk
principles and policies, and overseeing any action
resulting from material breaches of such policy.
More details on the Group’s wider approach to risk
management can be found in the risk management
report on page 110. Full details of the Committee’s
responsibilities are set out in its terms of reference,
which can be found at
https://www.bankofireland.com/about- bank-of-
ireland/corporate-governance/.
Committee composition, skills and experience
The Committee is composed of NEDs who provide
core banking skills and competence in the financial
sector. Their biographies can be found on page 61 to
64. The members have extensive knowledge of
financial markets, consumer banking and risk
management, with technology, digital and operation
experience together with a clear awareness of putting
the customer at the centre of all the Group does.
Common membership with the GAC is provided by
Richard Goulding, Patrick Mulvihill, and Steve
Pateman.
The Group CRO has full access to the Committee
and normally attends meetings. The Group Chief
Internal Auditor and members of the Executive also
attend meetings, as appropriate.
During the year the Committee met its key objectives
and carried out its responsibilities effectively. Details
of Committee membership and meeting attendance
are shown below.
Board Risk Eligible
Committee Meetings to attend Attended
Kent Atkinson1
3 3
Ian Buchanan 8 8
Richard Goulding 8 8
Michele Greene2
- -
Fiona Muldoon 8 8
Patrick Mulvihill 8 8
Steve Pateman 8 8
1
Kent Atkinson stood down in May 2019.
2
Michele Greene joined in December 2019.
 21:55 Page 87
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Report of the Board Risk Committee (continued)
Credit Risk Credit quality continues to improve as the Group’s key
economies perform strongly.
The Committee considered overall credit quality during
the year and the Group’s strategy and operating plan for
NPEs. The Committee also reviewed the risk aspects of
NPE sales, residual risk in the motor finance portfolio,
sectors most exposed to Brexit and concentrations in
the mortgage portfolio.
Credit portfolios continue to perform well. NPEs continue to
decrease in line with the approved NPE strategy, albeit they remain
higher than long-term appetite.
Capital Adequacy Regular reviews are undertaken to ensure that
Regulatory and Fully Loaded capital ratios have
appropriate buffers above the Group’s own minimum
targets and regulatory requirements. The Committee
considered the impacts of future capital requirement
and capital availability and reviewed in detail the ICAAP,
including under stress scenarios.
The Group holds sufficient capital to deliver its planning horizon.
Funding and
Liquidity Risk
Regular reviews are undertaken to ensure that the
Group is compliant with all risk appetite measures and
regulatory liquidity requirements. The Committee
reviewed the results of regular stress testing and of the
ILAAP.
The Group continues to be fully compliant and has no issues with
market access or pricing.
Market Risk Regular reviews are undertaken to ensure that the
Group is compliant with all risk appetite measures
across credit spread risk, discretionary risk, Value at
Risk (VaR) and scenario-based stress testing.
The Committee reviewed the results of regular market
risk reporting and considered the impacts of emerging
market developments including Brexit.
The Group continues to operate within risk appetite in this area.
Pension Risk The Group is exposed to Pension Risk as a
consequence of its sponsorship of the Group’s defined
benefit pension schemes. The key sensitivities
associated with Pension Risk are outside the control of
the Group.
The Group continues to take asset and liability management
actions in order to reduce volatility and consequent capital impact.
The Group has made and continues to make progress.
Matters considered and action taken by the Committee in 2019
Key issue Committee considerations Committee conclusion
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Report of the Board Risk Committee (continued)
Operational Risk Managing operational risk continues to be a key focus
within the Group due to the complexity and volume of
change, the Group’s IT infrastructure, cyber risk and
reliance on third party suppliers.
The Committee continues to focus on ensuring the
Group has an effective framework for managing
operational risk, including enhancing the use of key risk
and control indicators and residual risk reporting. The
Committee has considered a number of reports in
relation to operational risk framework across cyber, IT,
sourcing, information security, data, and business
continuity.
The Group has made progress in its management of operational
risk. The Group will continue to focus on enhancing the maturity of
the framework during 2020.
Regulatory Risk Managing regulatory risk continues to be a key focus
for the Group due to the complexity and volume of
change and interdependent regulatory reform to be
managed.
The Committee continues to focus on ensuring there
are sufficient controls in place and oversight of
compliance programmes.
The Group has placed significant focus on overseeing compliance
with regulatory requirements. Regulatory risk will remain a key area
of focus for the Committee in 2020 given the importance of
continued compliance.
Conduct Risk The Committee focused on the Group’s management of
conduct risk.
Throughout 2019, the Committee has considered
reports on the resolution of customer conduct issues,
with a particular focus on tracker mortgages. The pace
and quality of remediation remained a focus, including
root cause analysis to establish lessons learned and
help prevent similar issues in the future. The Committee
continues to consider developments in the Group’s
conduct culture as well as reports on rectification
programmes, complaints, and conduct risk appetite
metric performance.
While good progress has been made in 2019, ongoing
improvement in risk profile and embedding of conduct initiatives
will remain a priority for the Group in 2020, and a subject of focus
for the Committee.
Business and
Strategic Risk
The Committee recognises the risks in delivering the
agreed strategy, associated with the transformation
agenda, customer expectations, and regulatory change.
The Group is engaged in a significant programme to transform the
bank, serve customers brilliantly and grow sustainable profits. It
acknowledges the challenges faced with delivering this strategy
whilst additionally enhancing systems and controls, and meeting
regulatory change.
New performance measures have been introduced to enable
performance monitoring, risk management, and the assessment of
delivery. These will be further developed and embedded during
2020.
Matters considered and action taken by the Committee in 2019 (continued)
Key issue Committee considerations Committee conclusion
 21:55 Page 89
90

Report of the Board Risk Committee (continued)
IT and
Information
Security
A resilient IT environment is critical to providing reliable
services to customers, and meeting current and future
demands. The risk of cybersecurity attacks, which
target financial institutions and corporates as well as
governments and other institutions, remains material as
their frequency, sophistication and severity continue to
develop in an increasingly digital world.
In conjunction with the GTOC (the committee
overseeing the Group’s transformation programme), the
BRC gave consideration to a wide range of issues,
including cyber and IT controls, technology resilience
and cybersecurity programme updates. The Committee
also worked closely with GTOC, overseeing
transformation to ensure appropriate prioritisation to
risk management.
Whilst there has been significant improvement in cyber capability,
IT resilience and transformation risk will remain areas of key focus
during 2020 as the Group continues to invest in its infrastructure
and replace core systems.
Richard Goulding
Chair of the Board Risk Committee
21 February 2020
Brexit Whilst progress has been made, Brexit carries
considerable uncertainty for our RoI and UK markets
with the shape of any final trade deal not yet clear.
The Brexit risks impacting the Group are credit risk, business and
strategic risk, and operating model risk. The Committee continues
to oversee the Group’s preparation and risk mitigations plans,
which have been executed effectively.
People With a substantial transformation programme underway,
a strongly performing economy in Ireland and
remuneration restrictions in place, the BRC regularly
reviewed the arrangements to manage people risk.
In 2019 the risks were mitigated and managed. This will be a key
area of focus during 2020.
Matters considered and action taken by the Committee in 2019 (continued)
Key issue Committee considerations Committee conclusion
 21:55 Page 90
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Attendance table
Attendance at scheduled meetings of the Board and its Committees during the year ended 31 December 2019.
Nomination and
Audit Governance Remuneration Risk
Board Committee Committee Committee Committee

Report of the Directors
Results
In 2019, the Group made a profit before tax of €645 million and
an after tax profit of €448 million. €386 million of profit is
attributable to ordinary shareholders and €62 million is
attributable to non-controlling interests.
Dividends
A proposed dividend of 17.5 cents per share on ordinary shares
will be paid on 9 June 2020 to those ordinary shareholders who
appear on the Company’s register on 11 May 2020, the record
date for the dividend, subject to ordinary shareholder approval.
Group activities
The Group provides a range of banking and other financial
services. The Strategic Report on pages 3 to 39 and Financial
Review on pages 41 to 57 contains a review of the results and
operations of the Group, of most recent events, and of likely
future developments.
In relation to the Group’s business, no contracts of significance to
the Group within the meaning of LR 6.1.77(10) of the Euronext
Dublin Listing Rules existed at any time during the year ended 31
December 2019.
Principal Risks and Uncertainties
Information concerning the Principal Risks and Uncertainties
facing the Group is set out on pages 111 to 120 in the Risk
Management Report.
Financial risk management objectives and policies
Information regarding the financial risk management objectives
and policies of the Group, in relation to the use of financial
instruments, is set out in the Risk Management Report on pages
110 to 160.
Share capital
As at 31 December 2019, the Group had 1,078,822,872 ordinary
shares of €1.00 each in issue, of which 4,951,358 were treasury
shares. Further detail on the structure of the Group’s capital is set
out in note 48 on page 265.
Takeover Bids Regulations
The disclosures required by the European Communities (Takeover
Bids (Directive 2004/25/EC)) Regulations 2006 are set
out in the Schedule to the Report of the Directors on pages 95 to
97.
Directors
The names of the members of the Board of Directors of the
Company as at 31 December 2019, together with a short
biographical note on each Director appear on pages 61 to 64.
At the AGM held on 14 May 2019, Evelyn Bourke and Ian
Buchanan were elected having both been appointed to the Board
in May 2018. Steve Pateman was also elected having been
appointed to the Board in September 2018. Richard Goulding,
Patrick Haren, Andrew Keating, Patrick Kennedy, Francesca
McDonagh, Fiona Muldoon and Patrick Mulvihill were re-elected.
Eileen Fitzpatrick was appointed to the Board as an Independent
NED on 15 May 2019. Michele Greene was also appointed to the
Board as an Independent NED on 5 December 2019.
Kent Atkinson and Andrew Keating retired from the Board on the
14 May 2019 and 18 October 2019 respectively. On the 15
October 2019, the Group announced that Myles O’Grady had
been identified as a successor to Andrew Keating as Group CFO
and Executive Director of the Group, subject to regulatory
approval. Mr O’Grady received regulatory approval to act as
Group CFO and Executive Director on 15 January 2020.
Remuneration
See Remuneration Report on pages 98 to 109.
Directors’ and Secretary’s interests
The interests of the Directors and Secretary in office as at 31
December 2019 in the shares issued by the Company as
disclosed to the Company are shown in the Remuneration Report
on page 109.
Listing rules disclosures
Information required under UK Listing Rule LR 9.8.4C can be
found on page 107 for Directors’ Emoluments and above under
‘Group activities’ for Contracts of Significance.
Substantial shareholdings
There were 97,189 registered holders of ordinary shares of the
Company at 31 December 2019. An analysis of these holdings is
shown on page 329. In accordance with LR 6.1.82 (2) of the
Euronext Dublin Listing Rules, details of notifications received by
the Company in respect of substantial interests in its ordinary
shares are provided in Table 1 below as at 31 December 2019
and 21 February 2020. Other than the Directors’ interests set out
on page 109 there were no other interests disclosed to the
Company in accordance with the Market Abuse Regulation and
Part 5 of the Transparency Regulations and the related
transparency rules during the period from 31 December 2019 to
21 February 2020.
For information on acquisition or disposal of own shares, refer to
note 48 on page 265.
31 December 21 February
2019 2020
Table: 1 % %
Ireland Strategic Investment Fund
/ Minister for Finance 13.95 13.95
Blackrock, Inc. 4.11 4.11
Baillie Gifford & Co. 4.53 4.53
M&G Plc 4.88 4.88
The Capital Group Companies, Inc. 2.72 3.09
Authority to purchase own ordinary shares
At the AGM held on 14 May 2019, the members gave the
Company, and any of its subsidiaries, the authority to make
market purchases up to approximately 10% of its own ordinary
shares. This authority will expire on close of business on the date
of the AGM of the Company in 2020 or on 14 August 2020,
whichever is earlier.
 21:55 Page 92
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
The Directors do not have any current intention to exercise the
power to purchase the Company’s own ordinary shares. This
authority was sought at the Company’s AGM to allow for greater
flexibility in the management of the Company’s capital resources.
Any ordinary shares so purchased would be cancelled.
Any such purchases would be made only at a price level that the
Directors considered to be in the best interest of shareholders
generally, after taking into account the Company’s overall
financial position and regulatory capital obligations and
requirements. In addition, the authority provides that the
minimum price which may be paid for such Shares shall not be
less than the nominal value of the Shares and the maximum price
shall be the higher of 105% of the average market price of such
ordinary shares and the amount stipulated by Article 3(2) of
Commission Delegated Regulation (EU) 2016/1052.
Corporate governance
The Company is subject to the 2018 UK Corporate Governance
Code published by the Financial Reporting Council in the UK (the
‘UK Code’) and the Irish Corporate Governance Annex to the
Listing Rules of the Irish Stock Exchange, t/a Euronext Dublin.
The Corporate Governance Statement forms part of the Report of
the Directors. Statements by the Directors in relation to the
Bank’s compliance with the CBI’s Corporate Governance
Requirements for Credit Institutions 2015, (the ‘Irish Code’) and
additional requirements of Appendix 1 and Appendix 2 of the Irish
Code for High Impact Designated Institutions, and Credit
Institutions which are deemed ‘Significant’ Institutions (for the
purposes of the CRD IV), respectively, are set out on pages 59 to
91.
Directors’ Compliance Statement
As required by Section 225 of the Companies Act 2014, as
amended, of Ireland, the Directors acknowledge that they are
responsible for securing the Company's compliance with its
‘relevant obligations’ (as defined in that legislation). The Directors
further confirm that a compliance policy statement has been
drawn up, and that appropriate arrangements and structures
have been put in place that are, in the directors' opinion,
designed to secure material compliance with the relevant
obligations. A review of those arrangements and structures has
been conducted in the financial year to which this report relates.
Environment
The Group’s environmental policy is accessible at
www.bankofireland.com and details of its environmental activities
are outlined in the ‘Responsible and Sustainable Business’
section of the Group’s Strategic Report, which is available on the
Group’s website.
Political donations
Political donations are required to be disclosed under the
Electoral Acts 1992 to 2014. The Directors, on enquiry, have
satisfied themselves that there were no political donations made
during 2019.
Branches outside the State
The Company has no branches established outside the State.
The Bank has branches in the UK, France, Germany the US and
Spain.
Going concern
The Directors have considered the appropriateness of the going
concern basis in preparing the financial statements for 2019 on
page 178 which forms part of the Report of the Directors and on
page 85 in the Corporate Governance Statement.
Viability statement
In accordance with the requirements of the UK Code, the
Directors have assessed the viability of the Group, taking account
of the Group’s current position and the potential impact of the
principal risks facing the Group.
The Directors have selected a three-year period for this
assessment, reflecting the time horizon that they consider fits
with the various risk and planning frameworks taken into account
in arriving at the viability statement.
The Directors have assessed the prospects of the Group through
a number of frameworks, including the ICAAP, the ILAAP, each of
which include an assessment of the impact of Brexit, the
monitoring of key risks identified under the Group’s risk
identification process by the GRPC, the BRC and the Board (see
page 125 of the Risk Management Report), and the assessment
of Principal Risks and Uncertainties (pages 111 to 120) together
with the Group’s strategic direction as set out in the Strategic
report (pages 3 to 39). Within the Principal Risks and
Uncertainties, the Directors consider Credit risk, Funding and
Liquidity risk and Capital adequacy to be the most relevant to the
viability assessment.
The ICAAP process facilitates the Board and senior management
in adequately identifying, measuring and monitoring the Group’s
risks and ensures that the Group holds adequate capital to
support its risk profile. ICAAP is subject to review by the Group’s
prudential regulator, the ECB Single Supervisory Mechanisim
(SSM). Underpinning the ICAAP process, the Group prepares
detailed financial projections under both a base case and a stress
case. Base case projections are prepared using consensus
macroeconomic forecasts together with Group-specific
assumptions, and the stress case is prepared based on a severe
but plausible stress economic scenario, (Risk Management
Report sections 2.5, 3.2 and 4). The ICAAP process
demonstrates that the Group has sufficient capital under both the
base and stress case scenarios to support its business and
achieve its objectives having regard to Board approved risk
appetite and strategy, and to meet its CRD IV regulatory capital,
leverage and liquidity requirements.
The Group’s ILAAP analysis demonstrates that the volume and
capacity of liquidity resources available to the Group are
adequate to support its business model, to achieve its strategic
objectives under both business as usual and severe but plausible
stress scenarios and to meet regulatory requirements including
the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio
(NSFR).
The Directors confirm that their assessment of the principal risks
facing the Group, through the processes set out above, was
robust. Based upon this assessment, and their assessment of the
Group’s prospects, the Directors have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period to 31 December 2022.
Report of the Directors (continued)
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Accounting records
The Directors ensure that adequate accounting records are kept
at the Company’s registered office, through the appointment of
suitably qualified competent personnel, the implementation of
appropriate computerised systems and the use of financial and
other controls over the systems and the data.
Auditor
KPMG, Chartered Accountants, were appointed statutory auditor
on 20 February 2018. They have been re-appointed annually
since that date and will continue in office in accordance with
section 383(2) of the Companies Act 2014.
Relevant audit information
The Directors in office at the date of this report have each
confirmed that as far as they are aware, there is no relevant audit
information of which the Group’s Auditor is unaware; and they
have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit
information and to establish that the Group’s Auditor is aware of
that information.
Non-financial information
Information required in accordance with the European Union
(Disclosure of Non-Financial and Diversity Information by certain
large undertakings and Groups) Regulations 2017 can be found in
in the Strategic Report on page 34.
Post balance sheet events
These are described in note 63 to the financial statements.
Patrick Kennedy Patrick Haren
Chairman Deputy Chairman

Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Schedule to the Report of the Directors
Information required under the European Communities
(Takeover Bids (Directive 2004/ 25/EC)) Regulations 2006.
As required by these Regulations, the information contained
below represents the position as at 31 December 2019.
1. Structure of the Company’s capital
The capital of the Company is divided into ordinary shares and
preference shares.
As at 31 December 2019, there were 1,078,822,872 ordinary
shares in issue. As at 31 December 2019, there were no
preference shares in issue.
Further detail on the structure of the Company’s capital is set out
in note h to the consolidated financial statements.
(i) Rights and Obligations attaching to the classes of shares
Ordinary shares
Dividend rights
Under Irish law, dividends are payable on the ordinary shares
of the Company only out of profits available for distribution.
Subject to the provisions of the Companies Act 2014 (the
‘Companies Act’), holders of the ordinary shares of the
Company are entitled to receive such dividends as may be
declared by the Company by ordinary resolution, provided
that the dividend cannot exceed the amount recommended
by the Directors. The Company may pay shareholders interim
dividends if it appears to the Directors that they are justified
by the profits of the Company available for distribution. Any
dividend which has remained unclaimed for twelve years from
the date of its declaration may be forfeited and cease to
remain owing by the Company.
Voting rights
Voting at any general meeting is by a show of hands or by
poll. On a show of hands, every shareholder who is present in
person or by proxy has one vote regardless of the number of
ordinary shares held by him or her. On a poll, every
shareholder who is present in person or by proxy has one
vote for every ordinary share of €1.00 each.
A poll may be demanded by:
(i) the Chairman of the meeting;
(ii) at least three members of the Company present in person
or by proxy having the right to vote at the meeting;
(iii) any member or members present in person or by proxy
representing not less than one-tenth of the total voting
rights of all the members having the right to vote at the
meeting; or
(iv) a member or members present in person or by proxy
holding shares in the Company conferring the right to
vote at the meeting being shares on which an aggregate
sum has been paid up equal to not less than one-tenth of
the total sum paid up on all the shares conferring that
right.
The necessary quorum for a general meeting is ten persons
present in person or by proxy and entitled to vote. All
business is considered to be special business if it is
transacted at an Extraordinary General Meeting (EGM) as is
all business transacted at an AGM other than the declaration
of a dividend, the consideration of the Company’s statutory
financial statements and reports of the Directors and Auditors
on those statements, the review by the members of the
Company’s affairs, the election of Directors in the place of
those retiring, the reappointment of the retiring Auditors
(subject to Sections 380 and 382 to 385 of the Companies
Act), the fixing of the remuneration of the Auditors and the
consideration of a special resolution for the purpose of
Section 1102(2)(b) of the Companies Act. Any business that is
required to be dealt with by way of special resolution must be
passed by not less than 75 per cent of the votes cast by such
members as, being entitled so to do, vote in person or by
proxy at a general meeting at which not less than twenty one
clear days’ notice specifying the text or substance of the
proposed resolution has been duly given.
Any business that is required to be dealt with by way of
ordinary resolution must be passed by a simple majority of
the votes cast by the members as, being entitled to do so,
vote in person or by proxy at a general meeting. Where an
equal number of votes have been cast on any resolution the
Chairman of the meeting is not entitled to a second or casting
vote.
An EGM (other than an EGM called for the passing of a
special resolution) may be called on at least 14 days’ notice
where:
(i) the Company offers the facility for members to vote by
electronic means accessible to all members who hold
shares that carry rights to vote at general meetings; and
(ii) a special resolution reducing the period of notice to
fourteen days has been passed at the immediately
preceding AGM or at an EGM held since the immediately
preceding AGM.
Liquidation rights
In the event of any surplus arising on the occasion of the
liquidation of the Company, the ordinary shareholders would
be entitled to a share in that surplus in proportion to the
capital at the commencement of the liquidation paid up or
credited as paid up on the ordinary shares held by them
respectively.
Preference shares
As at 31 December 2019, there were no preference shares in
issue. Where authorised to issue authorised but unissued
shares in the capital of the Company (including where
relevant, by shareholder approval under Section 1021 of the
Companies Act), and subject to the scope of any such
authority, in accordance with the Company’s articles of
association (the ‘Articles’), the Directors are authorised to
issue all or any of the authorised but unissued preference
shares from time to time in one or more classes or series, and
to fix for each such class or series such voting power, full or
limited or no voting power, and such designations,
preferences or special rights and qualifications, limitations or
restrictions thereof in any resolution adopted by the Directors
providing for the issuance of such class or series of
preference shares.
(ii) Variation of class rights
Whenever the share capital of the Company is divided into
different classes of shares, the rights attached to any class
may be varied or abrogated with the consent in writing of
three-fourths in nominal value of the issued shares of that
class, or with the sanction of a special resolution passed at a
separate general meeting of the holders of the shares of that
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class, either while the Company is a going concern or during
or in contemplation of a winding-up.
(iii) Percentage of the Company’s capital represented by class
of share
The ordinary shares represent 99.9% of the authorised share
capital and 100% of the issued share capital. The preference
shares represent 0.1% of the authorised share capital and
0% of the issued share capital.
2. Restrictions on the transfer of shares in the Company
There are no restrictions imposed by the Company on the
transfer of shares, nor are there any requirements to obtain
the approval of the Company or other shareholders for a
transfer of shares, save in certain limited circumstances set
out in the Articles. A copy of the Articles may be found on
www.bankofireland.com or may be obtained on request from
the Group Secretary.
3. Persons with a significant direct or indirect holding of
stock in the Company.
Details of significant shareholdings may be found on page 92.
4. Special rights with regard to the control of the Company
There are no special rights with regard to control of the
Company.
5. Shares relating to an employee share scheme that carry
rights with regards to the control of the Company that are
not exercisable directly by employees.
The Bank of Ireland Inland Revenue Approved UK Stock
Incentive Plan (SIP) provides that in respect of resolutions
proposed at general meetings of the Company, voting rights
in respect of shares held in trust for employees who are
participants in the SIP are to be exercised in accordance with
the employees’ written instructions to the trustees of the SIP.
In the case of ‘any other business’ at an AGM of the
Company, the SIP trustees are entitled to vote (or refrain from
voting) as they think fit.
6. Restrictions on voting rights
There are no unusual restrictions on voting rights.
7. Agreements between shareholders that are known to the
Company and may result in restrictions on the transfer of
securities or voting rights.
There are no arrangements between shareholders, known to
the Company, which may result in restrictions on the transfer
of securities or voting rights.
8. Rules of the Company concerning the:
(a) appointment and replacement of Directors
With the exception of any Director(s) nominated by the
Minister for Finance under the terms of the Credit
Institutions (Financial Support) Act 2008, all Directors
nominated between AGMs are submitted to shareholders
for election at the first AGM following their co-option. In
accordance with the UK Code, all Directors other than
any nominated by the Minister for Finance, retire by
rotation every year and, if eligible, may offer themselves
for re-election, subject to satisfactory performance
evaluation. Any Director(s) nominated by the Minister for
Finance are not subject to retirement by rotation but may
not serve as a Director of the Company for a period
longer than nine years after the date of their appointment.
In proposing the election or re-election of any individual
Director to the AGM, the reasons why the Board believes
that the individual should be elected or re-elected are
provided in the Chairman’s Letter to shareholders.
(b) amendment of the Company’s Constitution
The Company’s Constitution may be amended by special
resolution passed at an AGM or EGM. An AGM and a
Meeting called for the passing of a special resolution shall
be called by at least twenty one clear days’ notice.
Special resolutions must be approved by not less than 75
per cent of the votes cast by such members as, being
entitled so to do, vote in person or by proxy. No business
may be transacted at any General Meeting unless a
quorum of members is present at the time when the
Meeting proceeds to business. Ten persons present in
person or by proxy and entitled to vote shall constitute a
quorum.
9. Powers of the Company’s Directors, including powers in
relation to issuing or buying back by the Company of its
shares
Under its Articles, the business of the Company is managed
by the Directors, who exercise all powers of the Company as
are not, by the Articles, required to be exercised by the
Company in General Meeting. The Directors may exercise all
the borrowing powers of the Company and may give security
in connection therewith. These borrowing powers may be
amended or restricted only by the shareholders in General
Meeting. The members of the Company in General Meeting
may at any time and from time to time by resolution increase
the share capital of the Company by such amount as they
think proper. Whenever the share capital of the Company is
so increased, the Directors may, subject to various provisions
of the Articles, issue shares to such amount not exceeding
the amount of such enlargement as they think proper. All
ordinary shares so issued shall rank in equal priority with
existing ordinary shares.
Subject to provisions of the Companies Act, to any rights
conferred on any class of shares in the Company and to the
Articles, the Company may purchase any of its shares of any
class and may cancel any shares so purchased or hold such
shares as treasury shares (the ‘treasury shares’) with liberty to
re-issue any such treasury shares in accordance with Section
109 of the Companies Act 2014. The Company shall not
make market purchases of its own shares unless such
purchases shall have been authorised by a special resolution
of the Company and by a special resolution passed at a
separate general meeting of the holders of each class of
shares.
Schedule to the Report of the Directors (continued)
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10. Significant agreements to which the Company is a party
that take effect, alter or terminate upon a change of
control of the Company following a bid and the effects of
any such agreements.
There are no significant agreements to which the Company is
party that take effect, alter or terminate upon a change of
control of the Company following a bid, however, certain
Group agreements may be altered or terminated upon a
change of control of the Bank or Bank of Ireland (UK) plc
following a takeover. Those that may be deemed to be
significant in terms of their potential impact on the business
of the Group as a whole are the joint ventures between Bank
of Ireland (UK) plc and Post Office Limited in the UK (in
respect of FX and Post Office branded retail financial service
products) and the agreement between Bank of Ireland (UK)
plc, AA plc and AA Financial Services Limited in the UK (in
respect of AA branded financial services products).
11. Agreements between the Company and its Directors or
employees providing for compensation for loss of office
or employment that occurs because of a bid.
There are no agreements between the Company and its
Executive Directors or employees providing for compensation
for loss of office or employment (whether through
resignation, purported redundancy or otherwise) that occur
because of a bid.
The service contracts for NEDs do not make provision for
benefits on termination in the event of a bid.
Schedule to the Report of the Directors (continued)
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Remuneration Report
Remuneration Restrictions
The Group is currently operating under significant Remuneration
Restrictions which cover all Directors, senior management,
employees and certain service providers across the Group. The
Remuneration Restrictions place the Group at a competitive
disadvantage in seeking to retain and attract key staff.
The Remuneration Restrictions were contained within the
Covered Institutions Financial Support Scheme 2008 and the
‘Minister’s Letter’ (July 2011), under which the Group gave a
number of commitments and undertakings to the Minister for
Finance in respect of remuneration practices. The Minister’s
Letter was a further condition of the Transaction and Underwriting
Agreement entered into with the Irish Government (July 2011)
during the 2011 Recapitalisation of the Group. The Group
maintains a dialogue with the Department of Finance in relation to
Executive Director remuneration and other remuneration related
topics, and will respond appropriately to any revisions to the
Remuneration Restrictions.
As a result of the Remuneration Restrictions, the Group is
currently unable to provide a fixed / variable remuneration mix
throughout the Group. This results in risks relating to colleague
attraction and retention, a lack of remuneration alignment with
business goals, as well as some restrictions on the application of
discretion, and cost base inflexibility. If the Group fails to recruit
and retain skilled and qualified people, its businesses may be
negatively impacted. The Group considers itself to be in
compliance with these Remuneration Restrictions.
In addition, in the absence of the Remuneration Restrictions, the
Excess Bank Remuneration Charge on RoI tax residents in
Covered Institutions1
, where variable pay equals or exceeds
€20,000, would impact the application of the Group
Remuneration Policy.
The Remuneration Restrictions are currently applicable and are
assumed as such for purposes of this Remuneration Report.
Remuneration Governance Structures
The Bank of Ireland Group’s objective of attracting, retaining and
motivating high calibre people is deemed fundamental to the
successful delivery of the Group’s business strategy. The Group
wants to ensure the right people are in the right roles and
recognises the importance that the Group’s shareholders place
on the operation and management of the Group’s remuneration
strategy, frameworks, policies and practices. To reflect this, the
Group operates strong governance across the organisation on
the management of remuneration frameworks, policies and
practices that support the Group’s strategy.
Governance structures
The GRC has responsibility to consider, agree and approve a
remuneration strategy that supports the Group’s objectives of
long-term sustainability and success, sound and effective risk
management and good corporate governance.
With delegated authority from the Board, the GRC annually
reviews and approves the Group Remuneration Policy and the
Director’s Remuneration Policy (DRP). The GRC also reviews and
approves the remuneration of the Chairman of the Board, the
Executive Directors, members of the GEC and Senior Officers in
Independent Control Functions, as well as overseeing the
remuneration of all staff whose professional activities have a
material impact on the Group’s risk profile.
During 2019, independent advice was received by the Group from
external advisers Mercer Kepler, Willis Towers Watson, and
Deloitte LLP on a range of issues relating to remuneration
including:
• remuneration benchmarking for the GEC and senior
management;
• variable pay structures, including annual and long term
incentive schemes;
• evolving pay regulations and market pay practices; and
• other remuneration structures.
Engagement with Mercer Kepler, Deloitte and Willis Towers
Watson is ongoing.
Shareholders were advised in the Chairman’s Letter and Notice of
AGM 2019 that the Group’s goal is to operate a remuneration
policy, including variable remuneration, consistent with EBA
Guidelines. To this end, the GRC continued its engagement with
major shareholders during 2019 in regard to proposals for an
appropriate executive incentive scheme. In the event of the
Remuneration Restrictions being removed or amended,
proposals for the implementation of any such scheme(s) would be
subject to shareholder approval.
The GRC held seven meetings in 2019. Details of membership
and attendance can be found in the ‘Report of the Group
Remuneration Committee’ section of the Annual Report.
To avoid potential conflicts of interest, directors are not involved
in decisions regarding their own remuneration and advisors to the
remuneration committee are appointed by the Committee rather
than by management.
The terms of reference of the Committee are reviewed annually
and available on https://www.bankofireland.com/about-bank-of-
ireland/corporate-governance/court-committees/
A summary of the principal activities undertaken by the GRC in
2019 is available in the ‘Report of the Group Remuneration
Committee’ section of the Annual Report.
Statement on Shareholder Voting
The table below sets out the voting by shareholders on the
advisory resolution to approve the 2018 Group Remuneration
Committee Report at the 2019 AGM:
Group Remuneration Committee Report 2018
Vote No of shares Percentage
For 789,273,290 99.70
Against 2,384,721 0.30
Withheld 126,603 n/a
1
Covered Institutions are defined as institutions that have executed a guarantee acceptance deed and have been designated in an order by the Minister for Finance under the Credit
Institutions (Financial Support) Scheme 2008. The Group’s Covered Institutions are The Governor and Company of the Bank of Ireland and Bank of Ireland Mortgage Bank.
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Governance Risk Management Report Financial Statements Other Information
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European Banking Authority Remuneration
Guidelines (the ‘EBA Guidelines’)
The objective of these guidelines is to ensure that an institution’s
remuneration policies and practices are consistent with and
promote sound and effective risk management. They apply to the
Group.
Whereas the Group seeks to ensure it operates remuneration
policies which are compliant with regulatory guidelines, the Group
is currently operating under significant governmental and legal
constraints in relation to remuneration. The Group’s
Remuneration Policy, therefore, can only be implemented to the
extent possible given these Remuneration Restrictions.
Material Risk Takers
The EBA has issued criteria for identifying MRT roles, those staff
whose professional activities have a material impact on the
Group’s risk profile. The criteria are both qualitative (based on the
nature of the role) and quantitative (based on remuneration). The
Group maintains a list of these material risk takers.
The qualitative criteria can be summarised as: the management
body; senior management; other staff with key functional,
managerial or risk responsibilities; and staff who individually, or as
part of a committee, have authority to approve new business
products or to commit to credit risk exposures and market risk
transactions above certain levels.
The quantitative criteria are:
• individuals earning €500,000 or more in the previous year;
• individuals in the top 0.3% of earners in the previous year;
and
• individuals who earned more than the lowest paid MRTs per
certain qualitative criteria.
In addition to the qualitative and quantitative criteria, the Group
has applied its own minimum standards to identify roles that are
considered to have a material influence over its risk profile.
Disclosures
During 2019, the Group continued to comply with its annual
requirements to provide disclosures relating to:
• Remuneration at Bank of Ireland;
• Decision-making processes related to the remuneration
policy;
• Material Risk Taker assessment and reporting;
• Remuneration Restrictions;
• Link between pay and performance;
• Group Remuneration Strategy;
• Remuneration Expenditure; and
• All Staff Reporting.
These disclosures were made as part of the Group’s 2018 Pillar 3
disclosure in February 2019. The Group’s 2019 Pillar 3
disclosures were made in February 2020 and are available on the
Group’s website.
As a significant institution in an Irish banking context, the Group
is required to submit additional disclosures under EBA
Remuneration data collection exercises. The Group continued to
comply with its annual reporting requirements in 2019, submitting
the following reports via the CBI to the SSM:
• 2018 European Benchmarking exercise; and
• 2018 High Earners report.
Alignment of performance and reward with risk
The Group’s Risk Appetite Statement as set out on page 124
forms an integral element of remuneration structures, practices
and frameworks. The Group’s Risk Appetite Statement has been
cascaded, as appropriate, throughout the Group.
Involvement of the risk function
The Chair of the Board Risk Committee and the Court Risk
Committee and the Group Chief Risk Officer attended the GRC
meeting in October 2019. At this meeting, the Group Chief Risk
Officer reported on the Group’s risk profile and its relationship to
remuneration.
During 2019, a management committee was established,
responsible for carrying out risk oversight by management of
variable remuneration schemes in the Group (once these are
reintroduced) and other relevant remuneration related risk items,
as appropriate. Copies of minutes of these meetings are
submitted to the GRC for review and consideration.
2020 Directors’ Remuneration Policy
The DRP supports the Group’s objective of achieving, maintaining
and safeguarding a sound capital base, and is aligned with the
Group’s Remuneration Policy and principles for all staff. The DRP
reflects the approach to Director’s pay in 2018, which was voted
on by Shareholders at the 2019 AGM, and the intention to
implement variable pay and associated shareholding guidelines
upon removal of the Remuneration Restrictions.
The DRP will be submitted to shareholders for non-binding
advisory vote at the 2020 AGM. Subject to approval, the DRP will
apply for three years until the 2023 AGM, unless material changes
are required which mandate a revised DRP to be submitted to
shareholders for approval.
Remuneration approach
Where local laws or regulations set more rigorous requirements
for any aspect of remuneration governance, the higher standards
are applied. In the event that any aspect of the DRP contravenes
local laws or regulations, the local laws or regulations prevail.
To avoid potential conflicts of interest, directors are not involved
in decisions regarding their own remuneration.
Whilst the Bank recognises the requirement to propose the
reintroduction of variable pay for Executive Directors, this is not
possible due to the ongoing impact of Remuneration Restrictions.
If the Remuneration Restrictions were to be amended or lifted,
the Bank would seek Shareholder approval to re-introduce
variable pay for Executive Directors.
Key elements of Remuneration for Executive Directors
When determining Executive Director Remuneration policy and
practices, the GRC addressed the following, through its work on
the design of potential variable pay structures for Executive
Directors:
• Clarity - remuneration arrangements should be transparent
and promote effective engagement with shareholders and the
workforce.
Remuneration Report (continued)
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• Simplicity - remuneration structures should avoid complexity
and their rationale and operation should be easy to
understand.
• Risk - remuneration arrangements should ensure reputational
and other risks from excessive rewards, and behavioural risks
that can arise from target-based incentive plans, are identified
and mitigated.
• Predictability - the range of possible values of reward to
individual directors and any other limits or discretions should
be identified and explained at the time of approving the
policy.
• Proportionality - the link between individual awards, the
delivery of strategy and the long-term performance of the
company should be clear. Outcomes should not reward poor
performance.
• Alignment to culture - incentive schemes should drive
behaviours consistent with company purpose, values and
strategy.
Due to the Remuneration Restrictions, the structure of Executive
Directors’ remuneration is materially different to market practice.
The Group maintains a dialogue with the Department of Finance
in this regard, and will respond to any amended restrictions. In
such circumstances, shareholder engagement would be carried
out as appropriate.
Fixed pay elements for Executive Directors
Given Remuneration Restrictions, Executive Director changes to
base salary and fixed pay elements require engagement with the
Department of Finance. In the event of the fixed pay element of
the Remuneration Restrictions being lifted, or amended, fixed pay
for Executive Directors will be reviewed in 2020, with shareholder
engagement as appropriate.
Remuneration Report (continued)
Elements of
Remuneration
and purpose Operation Maximum potential value
Base Salary - purpose
is to provide a
competitive level of
fixed cash remuneration
reflecting the skills and
experience required
supporting recruitment
and retention in the
market environment.
Paid monthly as cash and
reviewed annually:
• CEO - €950,000
• CFO - €471,500
Base salaries are reviewed annually with any increase taking effect
from 1 January. In determining any base salary increases for Executive
Directors, the Remuneration Committee takes into consideration any
increases paid to the wider Bank population.
The Remuneration Committee, when considering what may represent an
appropriate base salary increase makes an objective assessment of:
• the individual’s responsibilities and the size and scope of their role;
and
• pay for comparable roles in comparable publicly listed companies of
a similar size.
The GRC recognises that a greater base salary increase may be
appropriate in certain circumstances, for example, if the Remuneration
Restrictions are lifted, an Executive Director’s remuneration is
uncompetitive, or where there has been a material increase in
responsibilities.
Non-salary benefits -
purpose is to provide a
range of market
competitive benefits
which are valued and
assist the individuals to
carry out their duties.
These are agreed on a case by case basis,
within a framework, and may include, but are
not limited to:
• life insurance;
• permanent health insurance;
• mobile phone;
• cash allowance - health;
• cash allowance - car; and
• relocation costs.
The level of benefit provision can vary depending on cost and
individual circumstances.
The value of the total benefits will continue to be reported annually in
the Remuneration Report.
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Remuneration Report (continued)
Elements of
Remuneration
and purpose Operation Maximum potential value
Pension - to encourage
planning for retirement
and long-term savings.
The Group’s objective
for pensions is aligned
with the long-term
interests of the Group,
with pensions schemes
designed to assist the
Group in attracting and
retaining high calibre
employees.
The Group Chief Executive Officer does not
currently participate in a Bank of Ireland
Employee Pension Scheme.
The Group Chief Financial Officer is a member of
the Bank of Ireland Defined Contribution (DC)
Scheme (RetireWell), participating on the same
basis as all members of this scheme, in line with
the scheme rules.
New internally appointed Directors will retain
their current pension arrangements.
New externally appointed Directors may be
offered participation in a Defined Contribution
scheme (currently RetireWell) in line with the
Rules of the scheme.
This level of benefit provision can vary depending on cost and
individual circumstances.
The value of the total benefits will continue to be reported annually in
the Directors’ Pension Benefits section of the annual remuneration
report on page 108.
Variable pay elements for Executive Directors (currently not allowed under the Remuneration Restrictions)
Variable pay is intended to incentivise the delivery of sustainable long-term performance, with rewards aligned to shareholders’ interests,
and adjusted for risk.
At this time the Group is not able to offer variable pay due to Remuneration Restrictions, creating challenges in relation to the attraction
and retention of key people, and the alignment of remuneration to shareholder objectives.
Other Policy elements for Executive Directors
Elements of
Remuneration
and purpose Operation Maximum potential value
Shareholding
requirements (subject to
the removal of the
remuneration
restrictions).
Upon the reintroduction of variable pay, all
Executive Directors of the Bank of Ireland Group
would be required to retain 50% of the after tax
value of any Bank of Ireland Group shares which
have vested and have been released to the
Executive Director from a variable pay plan such
as deferred shares from an Annual Incentive
Plan or vested shares from a Long Term
Incentive Plan.
Executive Directors will be required to build a shareholding of up to
100% of base salary.
In addition, Executive Directors will be required to hold shares post-
employment with the Group, equal to at least the lower of a) shares
held by the Executive Director at date of leaving or b) 100% of base
salary in shares for a period of 1 year post their employment with the
Group.
Shareholdings in this regard relate to Bank of Ireland Group shares
which have vested and have been released to the Executive Director
from a variable pay plan such as deferred shares from an Annual
Incentive Plan or vested shares from a Long Term Incentive Plan.
Personal shareholdings, for example, shares purchased by the
Executive Director, are not included under this shareholding guideline.
All employee share
plans - to promote
share ownership by all
employees.
In the event that the Group operates all
employee share plans, Executive Directors will
also be entitled to participate on the same basis
as other employees.
Such schemes will comply with Revenue limits.
 21:55 Page 101

102
Remuneration Report (continued)
Other Policy elements for Executive Directors (continued)
Elements of
Remuneration
and purpose Operation Maximum potential value
Notice and Termination
provisions
Standard termination provisions, which apply to
all senior roles of the Group, apply to Executive
Director Roles.
When determining leaving arrangements for an
Executive Director, the GRC takes into account
applicable provisions of Irish law, any contractual
arrangements and the performance and conduct
of the individual.
Notice Period
• CEO - 12 Months’ notice provided by the
Group, 6 Months’ notice provided by the CEO.
• CFO - 6 Months’ notice provided by the
Group, 6 Months’ notice provided by the CFO.
Upon their reintroduction, variable pay plans and all employee share
scheme awards for Executive Directors who leave the Group will be
treated in accordance with the remuneration policy, the share plan
rules as approved by the shareholders, and the relevant employment
policy operated by the Group.
Legacy arrangements There are no current legacy entitlements in
place.
From the introduction of the DRP, the Group will continue to honour
commitments or arrangements entered into prior to their appointment
as an Executive Director.
Executive Director
recruitment
The policy on recruitment of Executive Directors
aims to be market competitive and to structure
remuneration in line with the elements outlined
in this Policy, subject to the remuneration
restrictions.
The GRC may agree remuneration proposals on
hiring a new Executive Director which are
outside the standard policy to facilitate the hiring
of someone of the calibre required to deliver the
Group’s strategy. When determining appropriate
remuneration arrangements the Committee will
take into account all relevant factors including
(among other things) the level and type of
remuneration being forfeited and the jurisdiction
the candidate was recruited from. Remuneration
packages in excess of €500,000 currently
require approval from the Minister for Finance.
A buy-out may be offered to a new Director if the individual holds any
outstanding unvested awards or payments that are forfeited on
resignation from a previous employer in line with regulatory
requirements.
The GRC will seek to minimise buy-outs and ensure they are no more
generous than, and on substantially similar terms to, the original
awards or payments they are replacing, as far as possible.
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103
Remuneration Report (continued)
Remuneration for the Chairman and Non-Executive Directors
The remuneration of Non-Executive Directors is determined by a Board Committee of the Chairman and the Executive Directors, within
the boundaries of the Company’s Constitution with no Director being involved in decisions regarding their own remuneration.
The remuneration of the Chairman is a matter for the GRC.
There are currently no proposed changes to Non-Executive Directors’ remuneration. In the event of the amendment or removal of the
Remuneration Restrictions, the remuneration paid to Non-Executive Directors may be reviewed.
Remuneration for Non-Executive Directors does not include any performance-related elements or share options.
Elements of
Remuneration
and purpose Operation Maximum potential value
Fees
To reflect individual
responsibilities and
membership of Board
Committees.
Fees are paid monthly in cash.
No variable pay is provided so that the Chairman
and NEDs can maintain appropriate
independence which supports their capacity to
provide the constructive challenge required of
their role.
The Board reviews the amount of each component of fees periodically
to assess whether individually and in aggregate they are appropriate in
light of changes in roles, responsibilities and/or the time commitment of
the NEDs and ensure that individuals of the appropriate calibre are
able to be retained or appointed. In the case of the Chairman, this
review is undertaken by the Group Remuneration Committee.
Expenses Reimbursement of reasonable out-of-pocket
expenses incurred in connection with the
performance of duties. The full amount of
expenses incurred is reimbursed, with a gross-
up where tax is due on such expenses, to
ensure no loss to the individual.
n/a
Discretion
The GRC retains the discretion to make reasonable and
proportionate changes to the Directors’ Remuneration Policy in
order to respond to changing legal or regulatory requirements or
guidelines (including but not limited to any ECB, CBI, PRA or FCA
revisions to their remuneration rules and the EBA remuneration
guidelines). Where proposed changes are considered to be
material, the GRC will bring the Policy for shareholder approval.
Other remuneration disclosures
Group Remuneration Policy
The Group’s Remuneration Policy, which aims to support the
Group’s objectives of long term sustainability and success, sound
and effective risk management, good corporate governance and
responsible business conduct, was reviewed in 2019, with a small
number of changes made to reflect the implementation of the
Shareholder Rights Directive II. This Policy applies to all
employees and Directors of the Group.
The Policy sets out how the remuneration components used by
the Group operate and the approach to remuneration policies and
practices to ensure colleagues are paid in alignment with
business strategy, risk strategy, culture and values, and long-term
interests, whilst not encouraging excessive risk taking. The Group
Remuneration Policy supports the Group’s objective of achieving,
maintaining and safeguarding a sound capital base.
Subject to the Remuneration Restrictions, the Group
Remuneration Policy is designed to reflect the provisions of EU
and national regulations, notably the Capital Requirements
Directive (CRD IV), the PRA Rulebook, the FCA SYSC19D, and
EBA guidelines on sound remuneration policies. The Group
undertakes an annual review of the Group Remuneration Policy,
including the process for the identification of material risk takers,
to ensure that remuneration policies and practices are operating
as intended, are aligned to the Group’s strategy, purpose and
values, and are compliant with regulatory obligations. The annual
review is informed by appropriate input from the Group’s risk
management, compliance and internal audit functions.
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104

The Group recognises the importance the Group shareholders
place on the effective governance of the Group’s remuneration
policies and practices to ensure colleagues are paid in alignment
with business strategy, risk strategy, culture and values, and long-
term interests, whilst not encouraging excessive risk taking. The
Group Remuneration Policy supports the Group’s objective of
achieving, maintaining and safeguarding a sound capital base.
The application of the Group Remuneration Policy is consistent
with the Group’s Risk Appetite Statement and regulations that
govern remuneration in the jurisdictions where the Group
operates. A policy summary is accessible to all staff through the
company intranet.
The Group Remuneration Policy, supported by management
policies and operational procedures, collectively known as the
‘remuneration structures’ (e.g. Reward Framework, Performance
Achievement process, Material Risk Taker Policy and Governance
of Career & Reward Framework), is designed to ensure that the
Group’s approach to remuneration meets the principles below.
The Group’s ability to meet these principles is impacted in their
entirety by the Remuneration Restrictions.
Alignment with Group Objectives
• The remuneration structures are aligned with, and contribute
to the long-term strategy, sustainability, value creation and
success of the Group.
• Remuneration is determined on the basis of firm wide,
business unit and individual performance against business
and risk objectives.
• Divisional and individual performance measures and targets
are aligned with business and risk objectives at either a
Group or local business level, through a performance
achievement process based on a balanced scorecard,
ensuring alignment with business strategy, risk strategy,
culture and values and long-term interests.
• The remuneration structures support the Group’s purpose
and values
Fair Treatment of Customers
The Group’s remuneration structures are designed to:
• Place customers at the heart of the Group’s businesses by
delivering products and services that meet customers’
evolving financial requirements and are sold based on the
suitability to each individual customer’s needs.
• Support and encourage the fair treatment of customers.
• Support and encourage responsible business conduct.
Mitigate the potential for conflict between commercial,
customer and public interests.
• Avoid any conflict with an employee’s duty to act in the best
interests of customers or clients.
Employee-Focused
• The Group’s remuneration structures are designed to attract,
retain and engage high calibre employees, enabling the
Group to provide a competitive remuneration package across
all businesses and jurisdictions, in a cost effective manner.
• Remuneration policies and practices are simple, transparent,
easy to understand and implement.
Aligned with risk appetite
• The Group’s remuneration structures are designed to ensure
alignment of remuneration and risk performance of the Group
and its staff, promoting good risk management and positive
risk behaviours. Employee performance is assessed against a
balanced scorecard of financial and non-financial metrics,
including risk outcomes and behaviours.
• Remuneration structures are applied in consideration of and
in alignment with the Group’s Risk Appetite Statement and
overall risk governance structures.
• Risk adjusted financial performance is an important measure
when evaluating performance.
• Remuneration policies are subject to appropriate governance.
• The Group is compliant with all applicable remuneration
regulations as they relate to the Group.
The Group will continue to seek to ensure that its remuneration
policy enables it to be competitive and comprehensively adheres
to regulatory principles and guidelines set out by relevant
regulatory authorities, including the EBA. These design features
support all remuneration frameworks, policies and processes
across the Group, being applied proportionately depending on
the nature, scale and complexity of the particular business area.
During 2019, Executive Directors and the GEC members engaged
with employees on employee related topics in workplace ‘Town
Hall’ sessions, as well as through Open View and Pulse Surveys.
Engagement with the workforce on transformation and culture
took place throughout the year. The Chief People Officer, through
the Industrial Relations team, engaged with unions and partners’
council on remuneration and many other workplace-related
matters.
Attraction, Motivation and Retention
The Group’s success depends in part on the availability of high
calibre people and the continued services of members of its
management team, both at its head office and at each of its
business units.
Restrictions, including the Remuneration Restrictions, imposed
on remuneration by Government, tax or regulatory authorities or
other factors outside the Group’s control in relation to the
retention and recruitment of employees may adversely impact on
the Group’s ability to attract and retain key staff.
Workforce remuneration
The following table summarises the main remuneration structures
in place in the Group, under the Group’s Remuneration Policy.
Remuneration Report (continued)
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Remuneration Report (continued)
Element Objective Operation
Base salary To provide a competitive level of fixed cash
remuneration reflecting the skills and
experience required whilst supporting
recruitment and retention.
Base salaries are reviewed on an annual basis versus the external market and
internal relativities, taking into account the Group’s strategic objectives and individual
performance and potential.
Benefits To provide a range of market competitive
benefits which are valued and assist the
individuals carry out their duties.
Access to benefits and benefit levels can vary based on seniority. Benefit provision is
kept under regular review to ensure the benefits provided are cost effective, valued by
employees and competitive versus the market.
Pension To support the financial wellbeing of
employees
Since September 2014, the Group has operated a defined contribution scheme
(RetireWell) for all new hires. Employees hired prior to September 2014 are members
of the Group’s legacy defined benefit and hybrid pension schemes.
UK based role holders, who are affected by the Annual and Lifetime Allowances for
pension saving, can elect to receive a pension cash allowance in lieu of pension
scheme membership.
Incentive
Schemes -
Limited number of
small incentive
schemes in place
which have
received approval
under the
Remuneration
Restrictions.
To support, drive and reward performance
for the delivery of annual financial, non-
financial and personal objectives which are
consistent with:
• the Group’s purpose, values and culture;
• the business and customer strategy; and
• the long-term interests of the bank, to
create sustainable shareholder value.
The Group currently operates an approved small incentive scheme for Marshall
Leasing Ltd and two approved commission schemes in N.I.I.B. Group Limited and
NIAC. These arrangements are not subject to the Remuneration Restrictions.
Discretion
The GRC has certain discretionary powers under the Company’s
existing all employee share plan rules. This discretion relates to
the operation of the plans, for example, eligibility, quantum,
timing and application of good leaver status. The GRC will only
exercise this discretion if it believes it is in the best interests of
the Company to do so and where it is not possible, practicable or
proportionate to seek or await shareholder approval in General
Meeting. The exercise of the Committee’s discretion will be
disclosed in accordance with regulatory requirements.
Subsidiary remuneration policies
While both New Ireland Assurance Company plc (NIAC) and Bank
of Ireland (UK) plc have their own remuneration policies, these
policies are aligned with the Group policy with no material
deviations.
Performance achievement
The Group is committed to a simple and transparent reward
structure which drives performance, encourages employees to
live the purpose and values, and supports the Group’s ongoing
growth and sustainability. The Group’s performance achievement
process plays a critical role in aligning individual objectives with
the Group’s overall customer ambition, strategy, purpose and
values, and financial and non-financial goals.
A robust performance achievement process, incorporating
performance planning and review, remains critical and is a key
pillar of the Group’s compliance with remuneration guidelines.
The performance achievement process enables the Group to
align individual, business unit and divisional performance to the
Group’s strategic objectives through an ongoing dialogue
between managers and their direct team members ensuring a
strong alignment to risk.
The Group’s Purpose and Values shape everything colleagues do.
The Group’s values are the behavioural compass to how the
Group does business and are a key part of the Performance
Achievement process. Through this process, individual
performance is evaluated on what is achieved and how it is
achieved. The Performance Achievement process is linked to the
Group Competency Model, which outlines the core competencies
for staff, people managers and leaders. The Performance
Achievement process enables employees to:
• know what is expected of them every day and what it takes
to achieve success;
• understand how they personally contribute to their team and
the bank’s strategy; and
• own their own performance and personal growth to achieve
their individual career ambitions.
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Remuneration Report (continued)
Managers have mandatory risk goals which reflect the nature of
their role and their seniority within the Group and have an
appropriate weighting attached to them.
Key result areas
Goals and objectives are set and evaluated under each of the
Group’s strategic objectives of:
• Transform the Bank.
• Serve Customers Brilliantly.
• Grow Sustainable Profits.
This approach is consistent with the EBA Guidelines and ensures
that:
• organisational performance is continually enhanced by
measuring staff against the Group’s strategic objectives;
• all key deliverables and accountabilities of a role are taken
into account when performance is assessed. For example,
financial results, risk management, impact on customers,
leadership and development of people, regulatory and
compliance requirements; and
• a comprehensive view of an individual’s performance is taken,
rather than focusing on one or two key areas to the detriment
of others.
Each of the strategic objectives, which apply to all employees in
the Group, has a minimum weighting of 10%. In addition, there is
a minimum requirement of 20% of the overall weighting for risk-
related goals set across all three Strategic Priorities.
Goals set under these strategic objectives are linked to overall
Divisional and Group Strategy, support the achievement of
business unit objectives and are aligned to the Group’s Risk
Appetite Statement.
Key deliverables are agreed for each employee with their line
manager at the beginning of the performance cycle. Regular
informal reviews take place at times during the performance
cycle. A formal interim review occurs at a mid-point in the
performance cycle and a formal end of year review occurs at the
end of the performance cycle.
The Remuneration Restrictions impact the effectiveness of the
Group’s performance achievement system as it prevents a strong
link between performance and reward. In addition, the lack of
variable remuneration also impacts the Group’s ability to
incentivise and re-enforce cultural change and the Group’s
values.
 1
The Chairman and Deputy Chairman, as Non-executive Officers of the Company, are remunerated by way of non-pensionable salary. P Kennedy receives a non-pensionable salary of
€394,000 (2018: €164,167) for his role as Chairman. From 1 January 2018 to his date of resignation as Chairman, A Kane received a non-pensionable salary of €229,823 for his role
as Chairman. A Kane also received an accommodation, utilities and car allowance of €21,583 in 2018.
2
The Group Chief Financial Officer, A Keating, received an annual salary of €468,000 (2018: €468,000). His annual salary for pension purposes was €240,000 (2018: €240,000) and the
balance of his salary €228,000 (2018: 228,000) was excluded for pension purposes.
3
Fees are paid to NEDs and a basic fee of €63,000 per annum applies for both years. Additional fees are paid for separate SID responsibilities, Committee Chairmen and for
Committee membership. On 1 February 2009, all NEDs agreed to reduce their fees by 25%. These reductions applied throughout 2019 and 2018. The basic fee of €63,000 is the
reduced fee. In addition to the above, I Buchanan received separate fees for NED and committee membership roles in Bank of Ireland (UK) plc. In these roles he received
Stg£55,000, equivalent €62,721 in 2019 and Stg£18,104, equivalent €20,376 in 2018.
4
No bonuses were awarded in respect of 2019 or 2018.
5
The figures include car allowances and, where applicable, benefits in kind.
6
The amounts shown for A Keating relate to the Group’s pension funding contribution in respect of the pension benefit he accrued in line with his contractual entitlement during 2019
and 2018. There were no changes to Executive Directors’ contractual pension benefit entitlements in the year. The pension funding cost to the Group, in relation to the Group’s
sponsored defined benefit schemes, is updated following triennial pension scheme valuations to reflect changing market conditions and actuarial assumptions. The pension funding
cost also reflects the increased actuarial cost of each year’s accrual as each Executive Director’s term to normal retirement age reduces. All pension amounts have been determined
by Willis Towers Watson, the Group’s actuarial advisors, and are approved by the GRC.
7
In addition to the amounts shown, the Group bears the total costs of Directors’ travel and subsistence to and from Board and Committee meetings or while on the business of the Group.
Directors’ remuneration
The information below forms an integral part of the audited financial statements as described in the Basis of preparation on page 178.
Directors’ remuneration for the years ended 31 December 2019 and 31 December 2018
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Executive share options held by Directors and Secretary
No share options were granted or exercised during 2019 and there were no options to subscribe for ordinary shares outstanding in favour
of the Executive Directors or Secretary as at 31 December 2019.
External appointments held by Executive Directors
During 2019, no Executive Director held an external appointment in a FTSE 100 company.
Directors’ pension benefits
Set out below are details of the change in accrued pension benefits for the Directors during 2019.
(a) Additional (c) Accrued
inflation-adjusted defined
accrued defined (b) Increase in benefit pension
benefit pension DB transfer benefits at (d) Group
in the year value 31 December 2019 DC contributions

Executive Directors
A Keating (resigned 18 October 2019) 2,906 29,826 50,770 8,000
Column (a) represents the inflation-adjusted increase in the
individual's accrued defined benefit pension during the year.
Increases are shown after the opening position has been adjusted
for known statutory revaluation, and comprise allowance for
additional pensionable service, any increases in pensionable
earnings and any agreed adjustment in the individual's pension
accrual. This is in line with the requirements of the Listing Rules
and the related actuarial professional guidance.
Column (b) is the additional capital value, less the Director's
contributions, of Column (a) which could arise if the defined
benefit pension were to be transferred to another pension plan on
the Director leaving the Group and is calculated using factors
supplied by the actuary in accordance with actuarial guidance
notes ASP PEN-2, and is based on leaving service pension
benefits becoming payable at normal retirement date, age 60.
Column (c) is the aggregate defined benefit pension benefit
payable at normal retirement age based on the Director's
pensionable service with the Group at 31 December 2019.
Column (d) is the Group's contributions to the supplementary
section of its RetireWell DC arrangement.
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Governance Risk Management Report Financial Statements Other Information
Strategic Report Financial Review
Directors’ and Secretary’s interests in shares
The information below forms an integral part of the audited financial statements as described in the Basis of preparation on page 178.
The beneficial interests of the Directors and Secretary in shares issued by the Group as disclosed to the Group are detailed below in
accordance with Irish Listing Rule LR 6.1.82(1).
Number of €1.00
ordinary shares
Number of €1.00 in BOIG plc at
ordinary shares 1 January 2019
in BOIG plc at or at date of
Table: 3 31 December 2019 appointment
Directors

Secretary
S McLaughlin (appointed 18 September 2019) - -
Apart from the interests set out above, the Directors and
Secretary had no other interests in the shares / securities of the
Company or its Group undertakings at 31 December 2019. There
has been no change in the interests of each Director disclosed to
the Company under the provisions of article 19 of the Market
Abuse Regulation occurring between the end of the period under
review and 21 February 2020.
 21:55 Page 109
Risk Management Report
Contents
1 Principal Risks and Uncertainties 111
2 Risk management framework 121
2.1 Risk governance 121
2.2 Risk culture 123
2.3 Risk strategy and appetite 123
2.4 Risk identification and materiality assessment 124
2.5 Risk analysis and measurement 125
2.6 Risk monitoring and reporting 126
3 Management of key Group risks 127
3.1 Credit risk 127
3.2 Funding and liquidity risk 140
3.3 Market risk 145
3.4 Life insurance risk 149
3.5 Conduct risk 150
3.6 Regulatory risk 151
3.7 Operational risk 152
3.8 Business and strategic risk 153
3.9 Pension risk 154
3.10 Reputation risk 155
4 Capital management 156
The information below in sections or paragraphs denoted as
audited in sections 3.1, 3.2, 3.3, 3.4 and 4 and all the tables
(except those denoted unaudited) in the Risk Management
Report form an integral part of the audited financial statements
as described in the Basis of preparation on page 178.
All other information, including charts and graphs, in the Risk
Management Report is additional disclosure and does not form
an integral part of the audited financial statements.
110

 21:55 Page 110
1 Principal Risks and Uncertainties
Key risks identified by the annual risk identification process,
together with other significant and emerging risks facing the
Group and key mitigating considerations are set out below. For
many of the risks, the allocation of capital against potential loss is
a key mitigant; other mitigating considerations include those
outlined below.
This summary should not be regarded as a complete and
comprehensive statement of all potential risks, uncertainties or
mitigants; nor can it confirm that the mitigants would apply to
fully eliminate or reduce the corresponding key risks. Additionally,
other factors not yet identified, or not currently material, may
adversely affect the Group.
111

Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
Principal risks and uncertainties
Business and strategic risk arises from changes in the external
environment including economic trends and competitive
environment; failure to develop and / or execute an appropriate
business model or strategy; and ability to anticipate or mitigate
a related risk.
Business and strategic risk encompasses the Group’s current
business model on the basis of its ability to generate acceptable
returns, given its quantitative performance, key success drivers
and dependencies, and business environment and the
sustainability of the Group’s strategy on the basis of its ability to
generate acceptable returns, based on its strategic plans and
financial forecasts, and an assessment of the business
environment.
Key mitigating considerations
• Business divisional strategy is developed within the
boundaries of the Group’s strategy as well as the Board
approved risk appetite limit. These strategies are developed
within the divisions and challenged, endorsed, supported and
monitored by Group functions.
• The Board receives regular deep dive presentations on key
aspects of the Group’s strategy, and regular updates on
performance against strategic objectives by way of the Group
organisational scorecard.
• The Board receives comprehensive reports setting out
business and financial performance relative to plan, financial
projections, capital and liquidity plans, along with reports on
the Group’s key risks, risk appetite and risks outlook. The
Board’s business, financial and risk considerations are further
informed by regular economic updates, together with
updates on developments relevant to the Group’s franchises,
operations, customers, colleagues, and other business
activities.
• An independent Court Risk Report is produced quarterly and
reviewed by the Executive and Non-executive Risk
Committees. The content of the report includes an analysis
of, and commentary on, the key existing and emerging risk
types and also addresses governance, control issues and
compliance with risk appetite.
Business and strategic risk (page 153)
Principal risks and uncertainties
The Group is undergoing significant Transformation across
Culture, Business Model and Systems, which presents
challenges and risks, and significant customer considerations.
Failure to transform successfully could prevent the Group from
realising its strategic priorities.
Key mitigating considerations
• The Board has responsibility for developing the Group’s
strategic priorities. These priorities were set out at the Group
Investor Day on 13 June 2018.
• The Group has mobilised a number of significant change
programmes under each of the key Transformational change
areas to deliver against this strategy. These operate within
both existing governance fora and newly established fora to
closely monitor and manage the change, and the specific
risks and challenges associated with same.
• The GTOC oversees the business and strategy aspects of the
programme for its duration including review of transformation
risk updates.
Transformation risk
 21:55 Page 111
1 Principal Risks and Uncertainties (continued)
112

Business and strategic risk (continued) (page 153)
Principal risks and uncertainties
Following the UK exit from the EU, ongoing uncertainty relating
to the nature of the future trading relationship between the UK
and EU could impact the markets in which the Group operates
including pricing, partner appetite, customer confidence and
credit demand, collateral values and customers’ ability to meet
their financial obligations and consequently the Group’s financial
performance, balance sheet, capital and dividend capacity.
Other effects may include changes in official interest rate policy
in both the UK and Eurozone, which can impact the Group’s
revenues and also the Group’s IAS 19 defined benefit pension
deficit, and FX rate volatility, which can impact the translation of
the Group’s non-euro denominated net assets and profits.
Key mitigating considerations
• The Group has established a comprehensive Brexit
programme to identify, monitor and mitigate risks associated
with various outcomes of Brexit. The Board and Senior
Management receive updates on the Group’s Brexit
preparations ensuring close monitoring and management of
the specific risks and challenges associated with same.
• The Group’s ongoing operations in the UK are managed
within a ring-fenced, PRA regulated subsidiary, Bank of
Ireland (UK) plc. and primarily conducted through key
partnerships, which reduces the Group’s investment in
infrastructure and other items of a fixed cost nature.
• Bank of Ireland (UK) plc is primarily funded from deposits
gathered through partnerships with two iconic UK-focused
brands, the Post Office and the AA, and predominately from
deposits below the £85,000 Financial Services Compensation
Scheme (FSCS) limit.
• The Group manages its exposure to interest rate risk,
including GBP / EUR, through the hedging of its fixed-rate
customer and wholesale portfolios, the investment of its non-
interest bearing liabilities (free funds) and the setting of
conservative limits on the assumption of discretionary interest
rate risk.
• To minimise the sensitivity of the Group’s capital ratios to
changes in FX rates, the Group maintains reserves in sterling,
ensuring that the currency composition of capital is broadly
similar to the currency composition of RWAs.
Brexit
People risk
Principal risks and uncertainties
The continuing impact of remuneration restrictions on the
Group, where the improvement in the macro economic
environment and a close to full capacity labour market, have
significantly increased competition for talent in Ireland. This may
be further exacerbated post Brexit with increasing competition
for skilled resources and / or restricted mobility between
jurisdictions. It also includes people management, recruitment
and retention risks in relation to the Group’s transformation and
digitalisation of banking products and services, as the Group
adapts to the changing needs and preferences of our customer
base. Variable remuneration is an important tool in the
management of people risk, hence remuneration restrictions
also limit the ability to encourage and incentivise the behavioural
change required for culture transformation.
Key mitigating considerations
• The Group has a Board approved people strategy providing it
with a range of programmes and initiatives to enable the
Group to retain appropriate numbers and / or calibre of staff
having regard to remuneration restrictions imposed by
government, tax or regulatory authorities. These include
Board Talent Reviews including succession planning,
investment in Leadership and Management Development, the
Group’s Performance Management Framework, and the
Career and Reward Framework as aligned to our purpose and
values.
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1 Principal Risks and Uncertainties (continued)
113

Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
Business and strategic risk (continued) (page 153)
Principal risks and uncertainties
Banking models are rapidly evolving, for both consumers and
businesses in Ireland and globally. Rapidly shifting consumer
behaviours and available technologies are changing how
customers consume products and services.
These developments affect the manner in which customers
manage their day to day financial affairs. Money transmission
and data driven integrated services are also forecast to rapidly
evolve in the coming years, underpinned by regulatory
developments including the revised Payment Services Directive
and the GDPR. How the Group adapts to these developments
could impact the realisation of market strategies and financial
plans, dilute customer propositions and cause reputational
damage.
Key mitigating considerations
• In the context of the overall business strategy, the Group
assesses and develops its complementary technology
strategy to support and mitigate these risks.
• Given the significant developments in digital demands on
technology as well as increased regulatory requirements the
Group rigorously manages these demands within risk,
capacity and financial constraints.
• The Group’s policies, standards, governance and control
models undergo ongoing review to reference the Group’s
digital strategy and solutions.
• To support the Group’s digital strategy, as necessary, the
Group engages with appropriate external experts.
• The GTOC provides oversight on the Group’s digital strategy.
Digital
Macroeconomic conditions and geopolitical uncertainty
Principal risks and uncertainties
The Group’s businesses may be affected by adverse economic
conditions in countries where we have exposures, particularly in
Ireland and the UK, unfavourable exchange rate movements and
changes in interest rates, with a potential increase in global
protectionism and changes in the international tax environment
posing additional risks.
Geopolitical uncertainties could impact economic conditions in
countries where the Group has exposures, market risk pricing
and asset price valuations thereby potentially reducing returns.
The Group businesses may be affected by political, economic,
financial and regulatory uncertainty arising from the inconclusive
outcome of the recent general election (8 February 2020) in
Ireland.
Key mitigating considerations
• The Group monitors the risks and impact of changing current
and forecast macroeconomic conditions on the likely
achievement of the Group’s strategy and objectives.
• The Group manages its exposures in accordance with key
risk policies including maximum single counterparty limits
and defined country limits.
• The Group has in place a comprehensive stress and scenario
testing process.
• The Group is diversified in terms of asset class, industry and
funding source.
 21:55 Page 113
1 Principal Risks and Uncertainties (continued)
114

Business and strategic risk (continued) (page 153)
Principal risks and uncertainties
Following the financial crisis, the reform and replacement of
benchmark interest rates to alternative or nearly risk-free rates
has become a priority for global regulators. The Group’s
exposures to benchmark interest rates will be replaced or
reformed as part of this market-wide initiative.
Transition efforts in connection with these reforms are complex,
with significant risks and challenges.
Key mitigating considerations
• A formal Group-wide Benchmark Reform Programme has
been mobilised since early 2018 to manage the orderly
transition to new regulatory compliant benchmarks.
• The Group Asset and Liability Committee (ALCO) provides
oversight to the programme, and updates are provided to the
BRC ensuring close monitoring and management of the
specific risks and challenges associated with same.
• The Group has begun to transition to new Risk Free Rates
where market liquidity allows.
Key benchmark interest rate reform
Principal risks and uncertainties
Climate related considerations are a developing and growing
agenda item for financial institutions globally and an increasing
focus for key stakeholders including investors and customers.
The Group’s businesses, operations and assets could be
affected by climate change and climate-related risks. Two key
risks identified are physical risks from climate change, i.e.
extreme weather events such as flooding; and transition risks
which are risks associated with transitioning to a low carbon
economy, where the Group and its customer base could be
impacted by a range of impacts such as changes to consumer
behaviour and environmental legislation i.e. changes in how cars
are powered. Accelerating climate change could lead to sooner
than anticipated physical risk impacts to the Group and the
wider economy and there is uncertainty in the scale and timing
of technology, commercial and regulatory changes associated
with the transition to a low carbon economy.
Key mitigating considerations
• Conducting our business in a responsible and sustainable
way is fundamental to achieving our purpose of enabling our
customers, colleagues and communities to thrive.
• The Group continues to develop its RSB agenda which
considers climate related impacts across its own footprint
and that of its key stakeholders.
• The Group has strengthened its governance in relation to
RSB. It has also signed up to the UN Principles of
Responsible Banking and has become a supporter of the
TCFD.
• As part of our enterprise approach to manage climate risks
the Group is embedding the assessment of risks and
opportunities into key business planning and risk
management governance frameworks, policies and
processes.
• During 2020 the Group will identify activities and assets
exposed to climate related risks and measure possible
financial risk impacts. This impact assessment and
associated materiality exercise together with forward-looking
scenario analysis will inform our business planning and
associated risk management strategies.
Climate risk
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Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
1 Principal Risks and Uncertainties (continued)
Credit risk (page 127)
Principal risks and uncertainties
Credit risk is the risk of loss resulting from a counterparty being
unable to meet its contractual obligations to the Group in
respect of loans or other financial transactions. This risk
includes, but is not limited to, default risk, concentration risk,
country risk, migration risk and collateral risk.
Credit risk arises from loans and advances to customers and
from certain other financial transactions such as those entered
into by the Group with financial institutions, sovereigns and
state institutions.
Key mitigating considerations
• Board approved Group Credit Policy and risk appetite limits,
including credit category limits, together with a framework for
cascade to businesses and portfolios.
• Exposure limits for credit concentration risk.
• Defined credit processes and controls, including credit
policies, independent credit risk assessment and defined
authority levels for sanctioning lending.
• Processes to monitor compliance with policies and limits.
• Dedicated workout structures focused on the management
and reduction of NPEs.
Principal risks and uncertainties
Funding and liquidity risk is the risk that the Group will
experience difficulty in financing its assets and / or meeting its
contractual payment obligations as they fall due, or will only be
able to do so at substantially above the prevailing market cost of
funds.
Liquidity risk arises from differences in timing between cash
inflows and outflows. Cash inflows are driven by, amongst other
things, the maturity structure of loans and investments held by
the Group, while cash outflows are driven by items such as the
term maturity of debt issued by the Group and outflows from
customer deposit accounts.
Funding Risk can occur where there is an over-reliance on a
particular type of funding, a funding gap or a concentration of
wholesale funding maturities.
The Group funds an element of its sterling balance sheet in part
from euro (via cross currency derivatives), which creates an
exposure to the cost of this hedging.
Key mitigating considerations
• Board approved risk appetite limits.
• Group funding and liquidity policies, systems and controls.
• Comprehensive liquidity monitoring framework.
• Annual Board approved forward looking ILAAP.
• Strategic plan articulating and quantifying deposit
projections, wholesale funding and lending projections for all
divisions.
• Contingency Funding Plan and Recovery Plan in place with
annual update.
• Maintenance of liquid assets and contingent liquidity
available for use with market counterparties and / or in
liquidity operations offered by Monetary Authorities.
• The maturity profile of the Group’s cross currency hedging is
broadly spread over 24 months.
Funding and liquidity risk (page 140)
Principal risks and uncertainties
Market risk is the risk of loss arising from movements in interest
rates, FX rates, credit spreads or other market prices.
Market risk arises from the structure of the balance sheet, the
Group’s business mix and discretionary risk-taking. Additionally,
market risk arises through the conduct of customer business,
particularly in respect to fixed-rate lending and the execution of
derivatives and FX business.
Within limits and policy, the Group seeks to generate income
from Market Risk leaving some customer-originated or intra-
Group originated risk unhedged or through assuming risk
proactively in the market.
Structural market risk arises from the presence of non-interest
bearing liabilities (equity and some current accounts) on the
balance sheet, the multi-currency nature of the Group’s balance
sheet and changes in the floating interest rates to which the
Group’s assets and liabilities are linked (basis risk).
Key mitigating considerations
• Board approved risk appetite limits.
• Group Market Risk Policy.
• Comprehensive framework for monitoring compliance with
the Board’s market risk appetite limits, more granular market
risk limits and other controls.
• The Group substantially reduces its market risk through
hedging in external markets.
• VaR and extensive stress testing of market risks.
Market risk (page 145)
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1 Principal Risks and Uncertainties (continued)
116

Life insurance risk (page 149)
Principal risks and uncertainties
Life insurance risk is the risk of unexpected variation in the
amount and timing of claims associated with insurance benefits.
This variation, arising from changing customer mortality, life
expectancy, health or behavioural characteristics, may be short
or long term in nature.
Life insurance risk arises from the Group’s life insurance
subsidiary (NIAC) selling life insurance products in the Irish
market.
Key mitigating considerations
• Board approved risk appetite limits.
• Underwriting standards and limits are in place and apply
throughout the policy lifecycle from risk acceptance to claim
settlement.
• Reinsurance is used to manage the volatility from both
individual claims and aggregate risk exposures. Coverage is
placed with a diversified list of approved counterparties.
• The sensitivity of the Group’s exposure to life insurance risk is
assessed regularly and appropriate levels of capital are held
to meet ongoing capital adequacy requirements.
• A range of sensitivities and scenario tests are performed as
part of the annual Own Risk and Solvency Assessment
(ORSA) process.
• Management undertakes a rigorous analysis of claims and
persistency experience on a regular basis and monitors these
against the assumptions in its valuation and pricing bases so
that these can be adjusted to reflect experience.
Management undertakes pro-active operational initiatives in
order to manage persistency risk.
Conduct risk (page 150)
Principal risks and uncertainties
Conduct risk is the risk that the Group and / or its staff conduct
business in an inappropriate or negligent manner that leads to
adverse customer outcomes.
Examples of conduct risk include:
• risk of not delivering fair outcomes to customers;
• risk of the design and development of products and services
that do not continue to be suitable over the lifetime of the
product or respond to changing customer needs; and
• risk of staff not meeting set standards of behaviour with a
consequential material negative outcome for customers,
colleagues and communities.
Conduct risk arises from day-to-day execution of business
processes, provision of sales and services, management of key
stakeholder expectations and the various activities performed
by staff, contractors and third party suppliers.
Key mitigating considerations
• Board approved risk appetite limits.
• A robust, structured and methodical approach for the
management of conduct risk is in place across the Group
including the Group Conduct Risk Policy, the Conduct Risk
Management Framework (CRMF), a suite of policy standards
which clearly define expected standards of behaviour
supported by additional guidance, Group-wide and bespoke
training to assist the implementation and understanding of
the CRMF.
• Supporting customer-focused oversight measures.
• The Group have developed a strategy to develop culture
based on the outcomes we wish to deliver guided by the
Group’s values.
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1 Principal Risks and Uncertainties (continued)
Regulatory risk (page 151)
Principal risks and uncertainties
Regulatory risk is the risk of failure by the Group to meet new or
existing regulatory and / or legislative requirements and
deadlines or to embed regulatory requirements into processes.
The Group is exposed to regulatory risk as a direct and indirect
consequence of its normal business activities. These risks may
materialise from failures to comply with regulatory requirements
or expectations in the day-to-day conduct of its business, as an
outcome of risk events in other key risk categories and / or from
changes in external market expectations or conditions.
Key mitigating considerations
• Board approved risk appetite limits.
• Policies, statements, policy standards in place for compliance
risk, conduct risk, prudential risk, regulatory change risk and
financial crime risk.
• Specific Group-wide processes in place to identify, assess,
plan, develop and implement key compliance requirements.
• Regular status updates and monitoring at senior levels in the
Group including reporting to the BRC and Board.
• Processes in place to identify, assess, manage, monitor and
report financial crime risks as well as controls to mitigate
those risks.
• Processes in place to support the reporting, investigation,
resolution and remediation of incidents of non-compliance.
• Group-wide education and training in place.
Operational risk (page 152)
Principal risks and uncertainties
Operational risk is loss resulting from inadequate or failed
internal processes, people and systems or from external events.
This risk includes Business Continuity Risk, Data Quality &
Reliability, Fraud, Information Security and Cyber Risk,
Information Technology, Insurable, Legal & Contractual, Model,
Payments, Sourcing, Unauthorised Trading and Business
Processes.
Operational risk arises as a direct or indirect consequence of the
Group’s normal business activities through the day-to-day
execution of business processes, the functioning of its
technologies and in the various activities performed by its staff,
contractors and third party suppliers. This also includes the risks
associated with major change and the failure to deliver on the
Group’s multi-year investment programme to replace the core
banking platforms.
It also arises from the risk of cybersecurity attacks which target
financial institutions and corporates as well as governments and
other institutions. The risk of these attacks remains material as
their frequency, sophistication and severity continue to develop
in an increasingly digital world.
Key mitigating considerations
• Board approved risk appetite limits.
• The Group utilises a number of strategies in controlling its
exposure to operational risk, with the primary strategy being
the maintenance of an effective control environment, coupled
with appropriate management actions.
• The Operational Risk Management Framework consisting of
processes and policy standards, aims to embed adequate
and effective risk management practices within business
units throughout the Group.
• Processes to identify, assess, manage, monitor and report
operational risks as well as controls to mitigate those risks in
place.
• Processes to support the reporting, investigation, resolution
and remediation of incidents in place.
• Given the significant developments in digital demands on
technology as well as increased regulatory requirements, an
overarching Technology Investment Prioritisation Plan, which
includes the Core Banking Transformation Programme, is in
place to ensure these demands are managed within risk,
capacity and financial constraints.
• Clear contracts and accountability in place for third party
partners for the Transformation Programme.
• Regular internal audits and testing carried out to ensure
adequacy of controls.
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1 Principal Risks and Uncertainties (continued)
118

Principal risks and uncertainties
Uncertainty surrounding the outcome of disputes, legal
proceedings and regulatory investigations and administrative
sanctions proceedings, as well as potential adverse judgements
in litigation or regulatory proceedings remains a risk.
Key mitigating considerations
The Group has processes in place to seek to ensure the Group’s
compliance with legal and regulatory obligations, together with
clear controls in respect of the management and mitigation of
such disputes, proceedings and investigations as may be
instigated against the Group from time to time.
Litigation and regulatory proceedings
Operational risk (continued) (page 152)
Principal risks and uncertainties
The Group sponsored defined benefit pension schemes are
currently in deficit under the IAS 19 accounting definition,
requiring the Group to set aside capital to mitigate these risks.
The defined benefit pension schemes are subject to market
fluctuations and these movements impact on the Group’s capital
position, particularly the Group’s CET1 capital ratio, which
amongst other things, could impact on the Group’s dividend
capacity. See note 46 Retirement benefit obligations on page
258.
Key mitigating considerations
• Board approved risk appetite limits.
• To help manage pension risk, defined benefit schemes were
closed to new entrants in 2007 and a new hybrid scheme
(which included elements of defined benefit and defined
contribution) was introduced for new entrants to the Group.
The hybrid scheme was subsequently closed to new entrants
in 2014 and a new defined contribution scheme was
introduced for new entrants to the Group from that date.
• In addition, the Group implemented two Pension Review
programmes in 2010 and 2013 resulting in significant
restructuring of defined benefit scheme benefits which were
accepted by unions and by staff through individual staff
member consent.
• In return for the deficit reduction achieved through these
programmes, the Group also agreed to increase its support
for the schemes, above existing arrangements, so as to
broadly match the IAS 19 deficit reduction arising from the
benefit changes, and to facilitate a number of de-risking
initiatives.
• The Group monitors on an ongoing basis the opportunities at
an appropriate cost to increase the correlation between the
assets and liabilities of the scheme.
Pension risk (page 154)
Principal risks and uncertainties
Reputation risk is the risk to earnings or franchise value arising
from an adverse perception of the Group’s image on the part of
customers, suppliers, counterparties, shareholders, investors,
staff, legislators, regulators or partners.
Reputation risk arises as a direct or indirect consequence of the
Group’s operations and business activities. Reputation is not a
standalone risk but overlaps with other risk areas and may often
arise as a consequence of external events or operational risk
related issues.
Key mitigating considerations
• Group ambition, purpose, values and strategic priorities
communicated to all stakeholders.
• Potential impact on reputation is considered in the decision
making process.
• Media, government, political, regulatory and administrative
stakeholder engagement is actively managed.
• Print, broadcast, online and social media reportage and
commentary is monitored.
• Process of ‘Early Warning Reports’ - to alert senior
management on emerging issues that have the potential to
expose the Group to reputational risk - is embedded across
the Group.
• Active Group RSB programme in place.
• Strong focus on internal communications to ensure that
colleagues are kept informed on all important Group
announcements, issues and developments.
• Colleagues are required to comply with the Group Code of
Conduct.
Reputation risk (page 155)
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1 Principal Risks and Uncertainties (continued)
Capital adequacy (page 156)
Principal risks and uncertainties
Capital adequacy risk is the risk that the Group breaches or may
breach regulatory capital ratios and internal targets. The Group’s
business and financial condition would be negatively affected if
the Group was, or was considered to be, insufficiently
capitalised.
While all material risks impact on the Group’s capital adequacy
to some extent, capital adequacy is primarily impacted by
significant increases in credit risk or RWAs, materially worse
than expected financial performance and changes to minimum
regulatory requirements as part of the annual Supervisory
Review and Evaluation Process (SREP) review conducted by the
SSM.
Key mitigating considerations
• The Group closely monitors capital and leverage ratios to
ensure all regulatory requirements and internal targets are
met. In addition, these metrics are monitored against the
Board approved Risk Appetite Statement and suite of
Recovery Indicators.
• Comprehensive stress tests / forward-looking ICAAP financial
projections are prepared, reviewed and challenged by the
Board to assess the adequacy of the Group's capital, liquidity
and leverage positions.
• The Group has a contingency capital plan which sets out the
framework and reporting process for identifying the
emergence of capital concerns and potential options to
remediate same.
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Risk in relation to Irish Government shareholding
Principal risks and uncertainties
The risk that the Irish Government, which has a c.14%
discretionary shareholding in the Group via the Ireland Strategic
Investment Fund (ISIF), uses its voting rights in a way that might
not be in the best interests of the Group’s private sector
shareholders.
Key mitigating considerations
• The Minister for Finance and the Bank entered into a
Relationship Framework Agreement dated 30 March 2012,
the terms of which were prepared in the context of EU and
Irish competition law and to accommodate considerations
and commitments made in connection with the EU /
International Monetary Fund (IMF) Programme for Financial
Support for Ireland.
• The Framework Agreement provides inter-alia that the
Minister will ensure that the investment in the Group is
managed on a commercial basis and will engage with the
Group in accordance with best institutional shareholder
practice in a manner proportionate to the shareholding
interest of the State in the Group. In March 2017, as part of
the corporate reorganisation, the Company agreed to be
bound by and comply with certain provisions of the
relationship framework in relation to the Ministerial consent,
consultation process and the Group’s business plan.
Resolution risk
Principal risks and uncertainties
Arising from the implementation of the EU Bank Recovery and
Resolution Directive (BRRD) and Single Resolution Mechanism
(SRM) Regulation in Ireland and the UK, the relevant authorities
have wide powers to impose resolution measures on the Group
which could materially adversely affect the Group, as well as the
shareholders and unsecured creditors of the Group. The Single
Resolution Board (SRB) has the authority to exercise specific
resolution powers pursuant to the SRM Regulation similar to
those of the competent authorities under the BRRD, including in
relation to resolution planning and the assessment of
resolvability.
Key mitigating considerations
• Following notification that the SRB’s preferred resolution
strategy consisted of a single point of entry bail-in strategy,
the Group implemented a holding company, BOIG plc, during
2017.
• The Group continues to engage constructively with its
resolution authorities, including the SRB, in order to meet
regulatory expectations in respect of resolvability.
• Scenario planning and strategic planning tools are used to
identify impacts.
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1 Principal Risks and Uncertainties (continued)
120

Principal risks and uncertainties
The Group’s financial position and outlook are exposed to the
risks associated with a change in tax laws, tax rates, regulations
or practice and the risks associated with non-compliance with
existing requirements. The Group is also exposed to the risk that
tax authorities may take a different view to the Group on the
treatment of certain items. Furthermore, failure to demonstrate
that it is probable that future taxable profits will be available, or
changes in government policy or tax legislation may reduce the
recoverable amount of the DTAs currently recognised in the
financial statements.
Key mitigating considerations
• The Group has clearly defined tax compliance procedures to
identify, assess, manage, monitor and report tax risks and to
ensure controls mitigating those risks are in place and
operate effectively.
• The Group monitors the expected recovery period for DTAs.
• The Group monitors potential changes to tax legislation or
government policy and considers any appropriate remedial
actions.
Tax rates, legislation and practice
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2 Risk Management Framework
Risk statement
Guided by the conditions of the Board approved Risk Identity and
risk appetite, the Group follows an integrated approach to risk
management to ensure that all material classes of risk are taken
into consideration and that the Group’s overall business strategy
and remuneration practices are aligned with its risk and capital
management strategies.
The Group Risk Framework is the overarching high level
document which articulates the Group’s integrated approach to
risk. It is reviewed and approved annually by the Group CRO and
by the Board at least every three years following consideration
and recommendation by the BRC. It specifies the Group’s formal
governance process around risk, its framework for setting risk
appetite and its approach to risk identification, assessment,
measurement, management, and reporting.
The Group Risk Framework provides the foundations and
organisational arrangements for designing, implementing,
monitoring, reviewing and continually improving risk management
practices and activities across the Group. It provides the context
within which business and risk strategies are considered and
developed (including risk policies, guidelines and limits / targets).
The Group Risk Framework reflects the Group’s analysis and
responses to the impact and experience gained from economic
and financial stress. This includes the implementation of specific
recommendations from internal and external risk governance
reviews endorsed by the Board.
2.1 Risk governance
The identification, assessment and reporting of risk in the Group
is controlled within the risk governance framework which
incorporates the Board, Risk Committees (appointed by the
Board (e.g. BRC and GAC), the GRPC and its appointed
committees (e.g. Group Regulatory and Conduct Risk Committee
(GRCRC), Group Credit Committee (GCC), ALCO and Group
Operational Risk Committee (GORC)).
The Board is responsible for ensuring that an appropriate system
of internal control is maintained, and for reviewing its
effectiveness. Each of the Risk Committees (including the BRC
and GAC) has detailed terms of reference, approved by the Board
or their parent committee, setting out their respective roles and
responsibilities. Further detail outlining the key responsibilities of
the Group’s Board-level risk committees can be found on pages
77 to 90 within the Governance section.
2 Risk Management Framework (continued)
2.1 Risk governance (continued)
The Group Risk Policy Committee is the most senior
management risk committee and reports to the BRC. It is chaired
by the Group CRO and its membership comprises members of
the Group Executive team and Group-wide divisional and control
function executives. It met 28 times during 2019.
The GRPC is responsible for managing all risk types across the
Group, including monitoring and reviewing the Group’s risk profile
and compliance with risk appetite and other approved policy
limits, approving risk policies and actions within discretion
delegated to it by the BRC. The GRPC reviews and makes
recommendations on all risk matters where the Board and the
BRC has reserved authority. The BRC oversees the decisions of
the GRPC through a review of the GRPC minutes and reports
from the Committee Chair. The GRPC delegates specific
responsibility for oversight of the major classes of risk to specific
committees and individuals that are accountable to it.
The relevant committees are set out in the following table.
Committee Delegated responsibility
Group Credit Committee Approval of all large credit transactions
Impairment Committee Oversight of the impairment of financial instruments
Group Regulatory and Conduct Risk Committee Governance of regulatory risk and conduct risk
Group Operational Risk Committee Governance of operational risk
Portfolio Review Committee Assessment of the composition of the Group’s loan portfolio, including concentration risk,
consideration of credit portfolio limits and risk-adjusted returns
Risk Measurement Committee Approval and oversight of all aspects of credit risk measurement systems and may also
oversee other risk model classes used for management purposes within the Group
Asset and Liability Committee Oversight of interest rate, market and liquidity risks, capital and funding
Group Tax Committee Approval of tax-based transactions and oversight of tax policy
Private Equity Governance Committee Approval of equity underwriting transactions and private equity investments
Group Liquidity / Capital Committee Management of the liquidity and funding positions of the Group. This committee is only
invoked during periods of market disruption
US Advisory Risk Committee Oversight of risk and compliance for the US operations (established in compliance with the
Dodd-Frank Act)
Three lines of defence approach
The Risk Governance Framework is supported by the Group’s
management body and outlines how risk responsibilities extend
throughout the organisation based on a three lines of defence
approach.
First line of defence: Primary responsibility and accountability for
risk management lies with line management in individual
businesses and relevant Group functions. They are responsible
for the identification and management of risk at business unit /
Group function level including the implementation of appropriate
controls and reporting to the Group in respect of all major risk
events.
Second line of defence: Group Risk and a number of central
functions are responsible for maintaining independent risk
oversight and ensuring that a risk control framework is in place.
Nominated ‘Risk Owners’ are responsible for ensuring:
• formulation of risk strategy;
• that a policy or a process is in place for the risks assigned to
them;
• exposure to the risk is correctly identified, assessed
according to the Group’s materiality criteria, and reported;
• identified risk events are appropriately managed or escalated;
and
• independent oversight and analysis along with centralised
risk reporting are provided.
In 2019, the Group appointed a new Chief Compliance Officer,
with responsibilities for operational, regulatory, financial crime,
compliance and conduct risk activities.
Third line of defence: GIA provides independent, reasonable
assurance to key stakeholders on the effectiveness of the
Group’s risk management and internal control framework. GIA
carries out risk based assignments covering Group businesses
and functions (including outsourcing providers - subject to the
right to audit), with ratings assigned as appropriate. Findings are
122

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2 Risk Management Framework (continued)
2.1 Risk governance (continued)
communicated to senior management and other key
stakeholders, with remediation plans monitored for progress
against agreed completion dates. Group Credit Review (GCR), an
independent function within GIA, is responsible for reviewing the
quality and management of credit risk assets across the Group. In
2019, the Group Chief Internal Auditor departed the Group. An
Interim Group Chief Auditor was appointed pending completion
of recruitment process.
Management oversight of risk
The Board, GRPC and their appointed committees are subject to
annual effectiveness reviews which may result in further
enhancement as endorsed by the Board. Areas of specific focus
for review include organisational design, governance structures
and risk appetite design, articulation and implementation.
Group Risk is responsible for the Group’s overall risk strategy and
integrated risk reporting to the Board, the BRC and Group
Executive team, in addition to oversight of all risks. The function
is led by the Group CRO who is a member of the Group
Executive team and reports directly to the Group CEO, and may
directly influence business decisions by:
• emphasising a portfolio approach to risk management in
addition to a transactional approach;
• leading the discussion on the setting of risk appetite; and
• providing appropriate risk measurements to influence the
assessment of business performance.
The Group CRO provides independent advice and constructive
challenge to the Group Executive in the support of effective risk-
informed business decisions. This involves acting as an enabler
as well as a challenger of well-structured business growth
opportunities that can be shown to fit within the Group’s risk
appetite.
In addition, a number of other Group functions have responsibility
for the Group’s other key risk types, namely Group
Communications (reputation risk) and Group Finance (pension
risk). Business and strategic risk is managed by the relevant
Divisional CEOs, with risk ownership assigned to Group Strategy
Development and Group Finance. Life insurance risk is managed
within NIAC, an independent regulated subsidiary with its own
independent board, with risk ownership assigned to the CFO,
NIAC.
2.2 Risk culture
The Group risk appetite articulates the level of risk the Group is
prepared to take to achieve its strategic priorities. The culture of
the Group reflects the balance between:
• risk management and financial return; and
• risk taking and incentives.
The Group’s risk culture encompasses the general awareness,
attitude and behaviour of employees to the taking of appropriate
risk and the management of risk within the Group. The Group’s
risk culture is a key element of the Group’s effective risk
management framework, which enables decisions to be taken in
a sound and informed manner.
Transforming the Group is a strategic priority and ongoing
oversight and measurement of cultural transformation is required
to deliver this efficiently and effectively. The Group has developed
a Strategic Culture Transformation Plan to support the delivery of
a culture consistent with our Purpose, Values and Strategic
Priorities by 2021. It aims to embed a consistent and robust
culture across the Group and build on existing infrastructure and
focus on:
• enhancing existing processes - making good better and
better best e.g. enhanced performance management drawing
direct links to recognition and ultimately reward;
• reinforcing the Purpose and Values - knowing is not
enough, we must apply e.g. by restructuring the Code of
Conduct in line with the Group Values and using the Code of
Conduct check in meetings; and
• formalising existing practices - being willing is not enough,
we must show and do e.g. by formalising accountabilities so
that they drive decision making.
Actions have been identified to reflect the core enablers that will
allow for meaningful and measureable cultural change across the
Group.
2.3 Risk strategy and appetite
Risk identity
The Group’s risk identity is to be the National Champion bank in
Ireland focused on having long-term relationships with our retail,
commercial and corporate customers. The Group’s core franchise
is in Ireland with income and risk diversification through a
meaningful presence in the UK and selected international
activities where the Group has proven competencies. The Group
pursues an appropriate return for the risks taken and on capital
deployed while operating within prudent Board approved risk
appetite parameters to have and maintain a robust, standalone
financial position.
The Group’s risk strategy and risk appetite to pursue this risk
identity are set by the Board.
Risk strategy
The Group’s risk strategy is to ensure that the Group clearly
defines its risk appetite as reflected in Group strategy and that it
has appropriate risk governance, processes and controls in place
as articulated in the Group Risk Framework to:
• address its target markets with confidence;
• protect its balance sheet; and
• deliver sustainable profitability.
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2 Risk Management Framework (continued)
2.3 Risk strategy and appetite (continued)
124

Risks facing the Group are identified and assessed annually
through the Group’s risk identification process. Arising out of this
process, the identified risks are aggregated and key risk types are
identified which could have a material impact on the Group’s
earnings, capital adequacy and / or on its ability to trade in the
future. These key risk types form the basis on which risk is
managed and reported in the Group.
A risk owner is assigned to each key risk category and
appropriate policies and / or processes are put in place and a
formalised measurement and management process defined and
implemented. Risk appetite measures for each risk type are set
by the Board.
In addition to, and separate from, the Group’s risk identification
process, a review of the top five risks facing the Group is carried
out on a semi-annual basis. This process involves Senior
Executive management identifying and ranking what they
perceive to be the top risks facing the Group. This review
facilitates the identification and discussion of new risks whose
existence or importance may have been highlighted or elevated
by unusual or out of course developments such as external
market shocks or geopolitical event risks. It also facilitates
discussion and assessment of how such risks or events may
have a knock-on impact for the Group’s identified key risk types.
The ten key risk types are outlined below:
Pension
Operational Market
The Group seeks to accomplish its risk strategy by:
• defining risk identity and risk appetite as the boundary
condition for the Group’s strategic plan and annual operating
plan / budget;
• defining the risk principles upon which risks may be
accepted;
• ensuring that all material risks are correctly identified,
assessed, measured, managed and reported;
• ensuring that capital and funding considerations shape the
approach to risk selection / management in the Group;
• allocating clear roles and responsibilities / accountability for
the control of risk within the Group;
• avoiding undue risk concentrations;
• engendering a prudent and balanced risk management
culture;
• ensuring that the basis of remuneration for key decision
makers is consistent with EBA guidelines, as appropriate; and
• ensuring that the Group’s risk management structures remain
appropriate to its risk profile and take account of lessons
learnt and emerging internal and external factors.
Risk appetite
Risk appetite defines the amount and type of risk the Group is
prepared to accept in pursuit of its financial objectives. It informs
Group strategy and, as part of the overall framework for risk
governance, forms a boundary condition to strategy and guides
the Group in its risk-taking and related business activities.
Risk appetite is defined in qualitative terms as well as
quantitatively through a series of high level limits and thresholds
covering areas such as credit risk, market risk, funding and
liquidity risk, operational risk and capital measures. These high
level limits and thresholds are cascaded where appropriate into
more granular limits and thresholds across portfolios and
business units. Risk appetite guides the Group in its risk-taking
and related business activities, having regard to managing
financial volatility, ensuring solvency and protecting the Group’s
core franchises and growth platforms.
Measures, approved by the Group, are employed to track its
profile against the most significant risks that it assumes. Each of
these measures has a defined threshold level or limit, as
appropriate, and actual performance is tracked against these
threshold levels or limits.
The Risk Appetite Statement includes specific limits on credit
category and single name exposures among other qualitative and
quantitative risk parameters and it also provides for the
implementation of a hierarchy of credit category limits. The Risk
Appetite Statement is reviewed at least annually or in light of
changing business and economic conditions. It is set and
approved by the Board following consideration and
recommendation by the BRC.
2.4 Risk identification and materiality assessment
Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
2 Risk Management Framework (continued)
2.5 Risk analysis and measurement
The identified key risk types are actively analysed and measured
in line with the formalised policies and management processes in
place for each risk type.
For credit, funding and liquidity, life insurance, market,
operational and pension risks, risk models are used to measure,
manage and report on these respective risk types. Risk limits and
diversification, together with regular review processes, are in
place to manage potential credit risk and funding and liquidity risk
concentrations which in turn could lead to increased volatility in
the Group’s expected financial outcomes. Additionally, the
Group’s calculation of economic capital takes into consideration
the extent to which credit concentration risk exists in respect of
single name, sector and geography.
At Group level, common measures and approaches for risk
aggregation and measurement have also been adopted, in order
to inform operational and strategic plans and to steer the
business within the boundaries of its risk appetite. These include
one-year or multi-year forecasting / stress testing and a capital
allocation framework which incorporates economic capital
modelling and risk adjusted return analysis. The Group uses a
suite of risk measurement models and systems to support
decision making processes at transaction and portfolio levels,
e.g. approving a loan facility to a borrower.
Return on Capital
The common measure of return on risk used by the Group is Risk
Adjusted Return on Capital (RAROC). RAROC is used to
objectively assess the return of individual loans, portfolios and
businesses, and is a key performance metric for the Group in the
context of allocation of capital.
Loan loss forecasting and solvency stress testing
Forecasting and stress testing are risk management tools used by
the Group to alert management to potential adverse outcomes
related to a variety of risks and inform risk appetite and
contingent mitigating action.
The Group conducts:
• loan loss forecasting which informs senior management
about potential outcomes related to loan loss evolution under
chosen macroeconomic scenarios. This information is
regularly used as an input into the Group’s budget, strategic
plan and ICAAP. Additionally, it can be used to forecast future
provisioning needs and / or to understand, and therefore
anticipate, earnings volatility and future capital utilisation,
such as at portfolio / transaction level. Results of forecasting
are used by the Group to enhance the understanding of
potential vulnerabilities and to make decisions around risk
appetite and capital adequacy or to help prepare mitigating
actions;
• solvency stress tests evaluate the Group’s financial position
under ‘severe but plausible’ scenarios or sensitivities and
provide an indication of how much capital might be needed
to absorb losses should such a shock occur. Scenarios for
solvency stress testing are approved by GRPC but regulators
can also request that a mandated stress scenario be run to
assess capital needs across banks in a particular jurisdiction.
The approved scenarios are applied to the Group’s credit
portfolios and financials as appropriate, in order to generate
stressed loan loss forecasts and other impacts over the
scenario period. The outputs of the solvency stress testing
are reviewed and approved by the Board, and used by the
Group to inform risk appetite, strategy and capital planning
and are an integral component of the Group’s ICAAP process.
They are also used by regulators to assess the Group’s ability
to continue to meet its capital requirements under severe
adverse conditions; and
• reverse stress testing evaluates the Group’s ability to survive
an unforeseen severe event or combination of events that
would cause the Group’s business model to become
unviable. Reverse stress testing complements and builds on
solvency stress testing by exploring more extreme scenarios /
events beyond the likelihood thresholds looked at in solvency
stress testing. This is achieved as reverse stress testing is
developed in reverse, working back from an outcome of
business failure to causal analysis, while the more typical
solvency stress testing works towards defining a range of
outcomes or probabilities given defined inputs.
The Group also runs more frequent and / or ad hoc stress tests
for general risk management purposes. These cover:
Market risk
The following market risks are subject to stress testing as part of
its normal risk measurement and management process:
• discretionary market risk, consisting of Trading Book
positions and discretionary Interest Rate Risk in the Banking
Book (IRRBB) risk;
• structural IRRBB consisting of balance sheet basis risk; and
• structural FX, the sensitivity of Group capital ratios to
exchange rate movement.
Discretionary risk and basis risk are stressed using empirically-
based scenario analyses. In the case of discretionary risk, the
stress test results are potential changes in the economic value of
positions; in the case of basis risk, the results are potential
changes in one year-ahead net interest income.
Operational risk
Operational risk stresses are modelled based on a scenario-
based approach. Severe, yet plausible operational risk loss
scenarios are applied on a Group-basis and are used to inform
the assessment of the Group’s economic capital requirement.
Life insurance risk
Life insurance regulations require each life company to complete
an annual ORSA. The ORSA process is intended to consider
severe but plausible risks to the business, and the capital or
mitigating actions required to withstand those risks within the
context of its business plans. This assessment considers a range
of sensitivities and scenario tests, including deterioration in the
insurance risk experience.
Funding and liquidity risk
The Group stresses its exposure to liquidity risk through liquidity
stress testing which provides senior management with the ability
to assess the degree to which the Group is vulnerable to extreme
but plausible adverse liquidity conditions. It is used to identify the
potential impact of a range of adverse shocks, including the
impacts of rating downgrades and the reduction / withdrawal of
certain funding markets such as customer deposits or wholesale
markets on the Group’s ability to fund its outflows (asset
financing and / or contractual obligations) at the required time
and at a reasonable cost.
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2 Risk Management Framework (continued)
2.5 Risk analysis and measurement (continued)
2.6 Risk monitoring and reporting
Recovery planning
In line with the BRRD for EU banks, the Group maintains a
Recovery Plan which sets out options to restore financial stability
and viability of the Group in the event of the relevant
circumstances arising. The Group’s Recovery Plan is approved by
the Board on the recommendation of BRC and GRPC. Under a
separate but complementary process, the SRB in conjunction
with other relevant resolution authorities, conducts resolution
planning for all financial institutions that fall under the resolution
regime, including the Group. This involves the resolution authority
developing the set of actions that would be taken in the event
that a firm within scope of the regime fails.
The Group CRO reports on risk to the GRPC, the BRC and the
Board on a regular basis. This allows Group management to be
clear and consistent in communication with internal and external
stakeholders, including markets, rating agencies and regulators.
Additionally, it is a process which assists in discharging the
regulatory responsibilities of the Group, which stipulates that
management understand the major risks facing the Group and
the process in place for managing those risks.
The key risk types identified under the Group’s risk identification
process are assessed and their status is reported quarterly by the
Group CRO in the Court Risk Report which is reviewed by the
GRPC, the BRC and the Board. The content of the report
includes an analysis of and commentary on all key risk types as
set out on pages 127 to 155. Updates on risk dashboards and
risk appetite compliance are provided on a monthly basis.
As part of the Group’s risk monitoring and review processes and
in support of the Group’s ICAAP, a suite of risk and capital reports
are regularly reviewed by ALCO, the Portfolio Review Committee
(PRC) and GRPC. In addition, the Group performs regular
ongoing operational reporting and monitoring of credit quality,
grade migration and other risk trends as well as the tracking of
market risk and operational risk within the Group Risk functions.
Furthermore, the measurement and reporting process is subject
to ongoing review and is enhanced where appropriate.
Breaches of the Group Risk Framework or breaches / exceptions
to Board / Board appointed committee approved policies are
advised to the GRPC by the relevant risk owner and reported, as
necessary by the Chair of GRPC, to the BRC and Board.
Material breaches to other GRPC approved policies are advised
to the GRPC by the relevant risk owner at the earliest possible
opportunity.
The BRC also receives risk information through its review of the
GRPC minutes and through investigations carried out into
specific risk matters. The GAC separately receives Internal Audit
reports on a range of matters following completion of its
independent, risk based assignments or ad hoc reviews.
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Governance Financial Statements Other Information
Strategic Report Financial Review
3 Management of key Group risks
3.1 Credit risk
Key points:
• The macroeconomic environment in Ireland and the UK, which are the Group’s key markets, continued to be favourable in 2019.
While uncertainty in relation to Brexit resulted in muted overall demand for credit, it did not have a material impact on credit
quality.
• Total loans and advances to customers (before impairment loss allowance) at amortised cost1
increased to €80.5 billion at 31
December 2019 from €78.4 billion at 31 December 2018 reflecting the combined impacts of net new lending, FX rates, disposal /
securitisation of portfolios and utilisation of impairment loss allowance.
• Overall asset quality trends have continued to improve. NPEs reduced by €1.5 billion to €3.5 billion during 2019, with reductions
across all loan portfolios with elevated levels of NPEs, including reductions associated with the disposal / securitisation of NPE
portfolios in 2019 (primarily comprised of BTL residential mortgages in Retail Ireland).
• Total net impairment losses on loans and advances to customers of €210 million compared to a prior year gain of €36 million. The
loss primarily reflects a more normalised level of impairments and also losses on a small number of large exposures. Total
impairment loss allowance as a percentage of NPEs was 37% at 31 December 2019 (31 December 2018: 35%).
Definition of credit risk (audited)
Credit risk is the risk of loss resulting from a counterparty being
unable to meet its contractual obligations to the Group in respect
of loans or other financial transactions. This risk includes but is
not limited to default risk, concentration risk, country risk,
migration risk and collateral risk. At portfolio level, credit risk is
assessed in relation to the degree of name, sector and
geographic concentration to inform the setting of appropriate risk
mitigation and transfer mechanisms, and to assess risk capital
requirements. Risk appetite measures for credit risk are set by the
Board.
Credit risk arises from loans and advances to customers and
from certain other financial transactions such as those entered
into by the Group with financial institutions, sovereigns and state
institutions.
Credit facilities can be largely grouped into the following
categories:
• cash advances (e.g. loans, overdrafts, revolving credit
facilities (RCFs) and bonds), and associated commitments
and letters of offer;
• credit related contingent facilities (issuing of guarantees /
performance bonds / letters of credit);
• derivative instruments; and
• settlement lines.
The manner in which the Group’s exposure to credit risk arises,
its policies and processes for managing it and the methods used
to measure and monitor it are set out below.
Default risk
Default risk is the risk that financial institutions, sovereigns, state
institutions, companies or individuals will be unable to meet the
required payments on their debt obligations. Default may be as a
result of one or a number of factors including, but not limited to:
• deterioration in macroeconomic or general market conditions;
• deterioration in a borrower’s capacity to service its credit
obligation;
• a credit event (e.g. a corporate transaction);
• a natural or manmade disaster;
• regulatory change, or technological development that causes
an abrupt deterioration in credit quality;
• a mismatch between the currency of a borrower’s income and
their borrowing / repayments; and
• environmental factors that impact on the credit quality of the
counterparty.
Credit concentration risk
Credit concentration risk is the risk of loss due to exposures to a
single entity or group of entities engaged in similar activities and
having similar economic characteristics that would cause their
ability to meet contractual obligations to be similarly affected by
changes in economic or other conditions. Undue concentrations
could lead to increased volatility in the Group’s expected financial
outcomes.
Country risk
Country risk is the risk that sovereign or other counterparties
within a country may be unable, unwilling or precluded from
fulfilling their cross-border obligations due to changing political,
financial or economic circumstances such that a loss to the
Group may arise.
Migration risk
Migration risk is the potential for loss due to an internal / external
ratings downgrade which signals a change in the credit quality of
the loan exposure.
Collateral risk
Collateral risk is the risk of loss arising from a change in the value
or enforceability of security held due to errors in the nature,
quantity, pricing, or characteristics of collateral security held in
respect of a transaction with credit risk.
1
Excludes €0.3 billion of loans and advances to customers at 31 December 2019 that are measured at fair value through profit or loss and are therefore not subject to impairment
under IFRS 9 (31 December 2018: €0.3 billion) and includes €nil of loans and advances to customers classified as held for sale at 31 December 2019 (31 December 2018: €0.6
billion).
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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
Credit risk management (audited)
Credit risk statement
The Group actively seeks opportunities to provide appropriately
remunerated credit facilities to borrowers who are assessed as
having the capacity to service and discharge their obligations and
to allow growth in the volume of loan assets in line with the
Group’s risk appetite and to provide a solid foundation for
sustained growth in earnings and shareholder value.
The Group’s credit strategy is to underwrite credit risk within a
clearly defined Board-approved risk appetite and risk governance
framework through the extension of credit to customers and
financial counterparties in a manner that results in an appropriate
return for the risks taken and on the capital deployed while
operating within prudent Board-approved risk parameters, and to
maximise recoveries on loans that become distressed.
Credit risk management
The Group’s approach to the management of credit risk is
focused on a detailed credit analysis at origination followed by
early intervention and active management of accounts where
creditworthiness has deteriorated.
Through its ongoing credit review processes, the Group seeks
early identification of deteriorating loans with a view to taking
corrective action to prevent a loan becoming credit-impaired.
Typically, loans that are at risk of becoming credit-impaired are
managed by dedicated specialist units / debt collection teams
focused on working-out loans. For loans that become credit-
impaired, the focus is to minimise the loss that the Group will
incur. This may involve implementing forbearance solutions,
entering into restructuring arrangements, action to enforce
security, asset / portfolio disposals or securitisations.
The Group credit risk function has responsibility for the
independent oversight of credit risk, and for overall risk reporting
to the GRPC, the BRC and the Board on developments in credit
risk and compliance with specific risk limits. It is led by the Chief
Credit Officer who reports directly to the Group CRO. The
function provides independent oversight and management of the
Group’s credit risk strategy, credit risk management information
and credit risk underwriting. A separate Customer Loans
Solutions function also reports to the Group CRO and provides
experienced and dedicated management of challenged assets.
Credit policy
The core values and principles governing the provision of credit
are contained in Group Credit Policy which is approved by the
Board. Individual business unit credit policies (which include
specific sectoral / product credit policies) define in greater detail
the credit approach appropriate to the units concerned. These
policies are aligned with, and have regard to, the Group’s Risk
Appetite Statement and applicable credit limits, the lessons
learned from the Group’s loss history, the markets in which the
business units operate and the products which they provide.
Lending authorisation
The Group’s credit risk management systems operate through a
hierarchy of lending authorities which are related to internal loan
ratings. All exposures above certain levels require approval by the
GCC. Other exposures are approved according to a system of
tiered individual authorities which reflect credit competence,
proven judgement and experience. Material lending proposals are
referred to credit units for independent assessment / approval or
formulation of a recommendation for subsequent adjudication by
the applicable approval authority. Certain retail loan applications
may be approved automatically where they meet both approved
policy rules and minimum thresholds for the score produced by
internal credit scoring tools.
Controls and limits
The Group imposes credit risk control limits and guide points to
mitigate significant concentration risk. These limits and guide
points are informed by the Group’s Risk Appetite Statement
which is approved annually by the Board.
It includes specific long term limits for each category and
maximum exposure limits to a customer or a group of connected
customers.
The Board approves a framework of country maximum exposure
guide points which are used as benchmarks for the setting of
country limits. A maximum exposure limit framework for
exposures to banks is also approved by the GRPC for each rating
category. Limits are set and monitored for countries, sovereign
obligors and banks in accordance with these frameworks.
Credit risk measurement (audited)
All credit transactions are assessed at origination for credit quality
and the borrower is assigned a credit grade based on a
predefined credit rating scale. The risk, and consequently the
credit grade, is reassessed periodically. The use of internal credit
rating models and scoring tools, which measure the degree of
risk inherent in lending to specific counterparties, is central to the
credit risk assessment and ongoing management processes
within the Group.
Loan impairment
Under IFRS 9, essentially all credit risk exposures not measured
at fair value through profit or loss (FVTPL) are subject to
recognition of an impairment loss allowance for expected credit
losses (ECL). The Group’s impairment modelling methodologies
are approved by RMC and the quantum of the Group’s
impairment gain or loss, NPEs and impairment loss allowances
are reviewed by the Impairment Committee and by the GRPC in
advance of providing a recommendation to the GAC.
The Group’s credit risk rating systems and impairment models
and methodologies play a key role in quantifying the appropriate
level of impairment loss allowance. Further details are provided in
the section on credit risk methodologies on page 134.
An analysis of the Group’s impairment loss allowances at 31
December 2019 is set out in note 27 on page 222.
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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
Credit risk mitigation (audited)
An assessment of the borrower’s ability to service and repay the
proposed level of debt (principal repayment source) is undertaken
for credit requests and is a key element in the Group’s approach
to mitigating risk. In addition, the Group mitigates credit risk
through the adoption of both proactive preventative measures
(e.g. controls and limits) and the development and
implementation of strategies to assess and reduce the impact of
particular risks should these materialise, including hedging,
securitisation, the taking of collateral (which acts as a secondary
repayment source) and selective asset / portfolio disposals and
securitisations.
Risk transfer
The objective of risk mitigation / transfer is to limit the risk impact
to acceptable levels. At portfolio level, credit risk is assessed in
relation to the degree of name, sector and geographic
concentration. Where possible emergence of undue risk
concentrations are identified, the risk capital implications are
assessed and, where appropriate, risk transfer and mitigation
options (e.g. disposals, securitisations, hedging strategies) are
explored and recommended to the PRC.
Collateral
Credit risk mitigation includes the requirement to obtain collateral,
depending on the nature of the product and local market
practice, as set out in the Group’s policies and procedures. The
Group takes collateral as a secondary repayment source, which
can be called upon if the borrower is unable or unwilling to
service and repay debt as originally envisaged. Various types of
collateral are accepted, including property, securities, cash,
guarantees and insurance.
The nature and level of collateral required depends on a number
of factors including, but not limited to, the amount of the
exposure, the type of facility made available, the term of the
facility, the amount of the borrower’s own cash input and an
evaluation of the level of risk or Probability of Default (PD).
The Group’s requirements around completion, valuation and
management of collateral are set out in appropriate Group or
business unit policies and procedures. The extent to which
collateral and other credit enhancements mitigate credit risk in
respect of the Group’s Residential mortgage portfolio is set out in
the tables on pages 311 and 319.
Counterparty credit risk arising from derivatives
Trading in over-the-counter (OTC) derivatives is governed by the
European Market Infrastructure Regulation. The Group has
executed standard internationally recognised documents such as
International Swaps and Derivatives Association (ISDA)
agreements and Credit Support Annexes (CSAs) with all of its
derivative financial counterparties. In addition, the Group has
Cleared Derivatives Execution Agreements (CDEAs) with its
principal interbank derivative counterparties enabling the Group
to clear eligible derivatives through an EU approved and
regulated central counterparty. If a derivative contract cannot be
cleared through a central counterparty, a CSA serves to limit the
potential cost of replacing that contract at market price in the
event of a default by the financial counterparty. All of the Group’s
interbank derivatives are covered by CDEAs or CSAs and are
hence collateralised.
Credit risk reporting / monitoring (audited)
Credit risk at a Group, divisional and significant operating unit /
product type level is reported on a monthly basis to senior
management. This monthly reporting includes information and
detailed commentary on loan book growth, quality of the loan
book (credit grade and PD profiles and RWAs), impairment loss
allowances, and individual large credit-impaired exposures.
Credit risk, including compliance with key credit risk limits, is
monitored and reported monthly in the Court Risk Report. This
report is presented to and discussed by the GRPC and the
Board. The quarterly Court Risk Report is also presented to and
discussed by the BRC. A report on exceptions to credit policy is
presented to and reviewed by the GRPC, the BRC and the Board
on a quarterly basis.
The PRC considers and recommends to the GRPC, on a quarterly
basis, credit concentration reports which track changes in
sectoral and single name concentrations measured under agreed
parameters.
In addition other reports are submitted to senior management
and the Board as required.
GCR, an independent function within GIA, reviews the quality and
management of credit risk assets across the Group. Using a risk
based approach, GCR carries out periodic reviews of Group
lending portfolios, lending units and credit units.
Management of challenged assets (audited)
The Group has in place a range of initiatives to manage
challenged and vulnerable credit. These include:
• enhanced collections and recoveries processes;
• specialist work-out teams to ensure early intervention in
vulnerable cases;
• intensive review cycles for ‘at risk’ exposures and the
management of excess positions; and
• support from central teams in managing ‘at risk’ portfolios at
a business unit level.
Group forbearance strategies
Forbearance occurs when a borrower is granted a concession or
agreed change to a loan (‘forbearance measure’) for reasons
relating to the actual or apparent financial stress or distress of
that borrower. If the concession or agreed change to a loan
granted to a borrower is not related to the actual or apparent
financial stress or distress of that borrower, forbearance has not
occurred.
The forbearance strategies adopted by the Group seek to
maximise recoveries and minimise losses arising from non-
repayment of debt, while providing suitable and sustainable
restructure options that are supportive of customers in
challenged circumstances. Such strategies may include, where
appropriate, one or a combination of measures such as a
temporary reduction in contractual payments, a term extension,
capitalisation of arrears, adjustment or non-enforcement of
covenants and / or more permanent restructuring measures.
Forbearance requests are assessed on a case by case basis,
taking due consideration of the individual circumstances and risk
profile of the borrower.
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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
A request for forbearance will always be a trigger event for the
Group to undertake an assessment of the customer’s financial
circumstances and ability to repay prior to any decision to grant a
forbearance treatment. This assessment may result in a
deterioration in the credit grade assigned to the loan, potentially
impacting how frequently the loan must be formally reviewed.
This assessment may also result in a loan being considered to
have experienced a ‘significant increase in credit risk’ or
becoming classified as credit-impaired.
The Group Credit Policy and Group Credit Framework outlines
the core principles and parameters underpinning the Group’s
approach to forbearance with individual business unit policies
and procedures defining in greater detail the forbearance
strategies appropriate to each unit.
Borrower compliance with revised terms and conditions may not
be achieved in all cases. Non-compliance could for example arise
because the individual circumstances and risk profile of the
borrower continue to deteriorate, or fail to show an expected
improvement, to the extent that an agreed reduced level of
repayment can no longer be met. In the event of non-compliance,
a request for further forbearance may be considered. It is
possible that the Group, by virtue of having granted forbearance
to a borrower, could suffer a loss that might otherwise have been
avoided had enforcement action instead been taken - this could
for example arise where the value of security held in respect of a
loan diminishes over the period of a forbearance arrangement
which ultimately proves unsustainable.
It is the Group’s policy to measure the effectiveness of
forbearance arrangements over the lifetime of those
arrangements. A forbearance arrangement is considered to be
effective where the risk profile of the affected borrower stabilises
or improves over the measured time period, resulting in an
improved outcome for the Group and the borrower. The
measurement of effectiveness takes account of the nature and
intended outcome of the forbearance arrangement and the period
over which it applies.
Asset quality - Loans and advances to customers
(audited except where denoted unaudited)
Asset quality methodology
The Group has allocated financial instruments into one of the
following categories at the reporting date:
• Stage 1 - 12 month expected credit losses (not credit-
impaired)
Financial instruments which have not experienced a
significant increase in credit risk since initial recognition and
are not credit-impaired. An impairment loss allowance equal
to 12-month ECL is recognised, which is the portion of
lifetime ECL resulting from default events that are possible
within the next 12 months.
• Stage 2 - Lifetime expected credit losses (not credit-
impaired)
Financial instruments which have experienced a ‘significant
increase in credit risk since initial recognition’ and are not
credit-impaired. An impairment loss allowance equal to
lifetime ECL is recognised, being the ECL resulting from all
possible default events over the expected life of the financial
instrument. ‘Credit risk’ in this context refers to the change in
the risk of a default occurring over the expected life of the
financial instrument.
• Stage 3 - Lifetime expected credit losses (credit-impaired)
Credit-impaired financial instruments, other than Purchased
or Originated Credit-impaired (POCI) financial assets. An
impairment loss allowance equal to lifetime ECL is
recognised. The manner in which the Group identifies
financial assets as credit-impaired results in the Group’s
population of credit-impaired financial assets being
consistent with its population of defaulted financial assets (in
accordance with Article 178 of the Capital Requirements
Regulation (CRR) in scope for the impairment requirements of
IFRS 9. This encompasses loans where: (i) the borrower is
considered unlikely to pay in full without recourse by the
Group to actions such as realising security (including
‘forborne collateral realisation’ (FCR) loans); and / or (ii) the
borrower is greater than 90 days past due and the arrears
amount is material.
• Purchased or originated credit-impaired financial assets
Financial assets that were credit-impaired at initial
recognition. A POCI is not subject to any initial impairment
loss allowance but an impairment loss allowance is
subsequently recognised for the cumulative changes in
lifetime ECL since initial recognition. A POCI remains
classified as such until it is derecognised, even if assessed as
no longer credit-impaired at a subsequent reporting date.
Further information on the approach to identifying a ‘significant
increase in credit risk since initial recognition’ and in identifying
credit-impaired assets is outlined in the Credit risk methodologies
section on pages 134 to 136.
The Group continued to apply the following classifications at the
reporting date.
Forborne loans
Loans where a forbearance measure has been granted and where
the criteria to exit a forborne classification, in line with EBA
guidance, are not yet met. Loans that have never been forborne
or loans that are no longer required to be reported as ‘forborne’
are classified as ‘non-forborne’.
Forborne collateral realisation loans
Loans (primarily Residential mortgages) which meet both of the
following criteria: (i) not greater than 90 days past due; and (ii) for-
bearance is in place and future reliance on the realisation of
collateral is expected for the repayment in full of the loan when
such reliance was not originally envisaged. Such loans are
considered credit-impaired and include Split Mortgages and
certain ‘Interest Only’ / ‘Interest Only plus’ arrangements.
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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
Non-performing exposures
These are:
(i) credit-impaired loans which includes loans where the
borrower is considered unlikely to pay in full without recourse
by the Group to actions such as realising security, including
FCR cases, and loans where the borrower is greater than 90
days past due and the arrears amount is material; and
(ii) other / probationary loans that have yet to satisfy exit criteria
in line with EBA guidance to return to performing.
Quantitative information about credit risk can be found in the
credit risk exposure note on page 235 in the consolidated
financial statements.
Non-performing exposures
The tables below provide an analysis of loans and advances to
customers that are non-performing by asset classification as at
31 December 2019 (including loans classified as held for sale at
31 December 2018).
1
Includes Stage 3 and Purchased or Originated Credit-impaired assets which remain credit-impaired at the reporting date.
2
Other / probationary loans, including forborne loans that have yet to satisfy exit criteria in line with European Banking Authority guidance to return to performing.
Unaudited:
In addition to the NPEs on loans and advances to customers shown above, the Group has total non-performing off-balance sheet
exposures amounting to €0.1 billion (2018: €0.1 billion).
NPEs decreased to €3.5 billion at 31 December 2019 from €5.0 billion at 31 December 2018, with reductions evident across all
portfolios with elevated levels of NPEs including the impact of the disposal / securitisation of non-performing portfolios (primarily
comprised of BTL residential mortgages in Retail Ireland). NPEs at 31 December 2019 comprise credit-impaired loans of €3.1 billion
and other NPEs2
of €0.4 billion.
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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
Composition and impairment
The table below summarises the composition, credit-impaired volumes and related impairment loss allowance of the Group’s loans and
advances to customers at amortised cost (including loans classified as held for sale at 31 December 2018) as at 31 December 2019.
2019 Impairment
loss

1
Excludes €252 million of loans and advances to customers at 31 December 2019 (2018: €261 million) that are measured at fair value through profit or loss and are therefore not
subject to impairment under IFRS 9.
2
Includes Stage 3 and Purchased or Originated Credit-impaired assets which remain credit-impaired at the reporting date.
3
Impairment loss allowance on credit impaired loans and Purchased or Originated Credit-impaired assets.
4
Includes €630 million of loans and advances to customers classified as held for sale at 31 December 2018.
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Strategic Report Financial Review
3 Management of key Group risks (continued)
3.1 Credit risk (continued)
At 31 December 2019, loans and advances to customers (pre-
impairment loss allowance) of €80.5 billion were €2.1 billion
higher than 31 December 2018, reflecting the combined impacts
of net new lending, utilisation of impairment loss allowance and
currency translation (note 27).
Credit-impaired loans decreased to €3.1 billion or 3.9% of
customer loans at 31 December 2019 from €4.5 billion or 5.7% at
31 December 2018. This reduction reflects the Group’s continued
implementation of resolution strategies that include appropriate
and sustainable support to viable customers who are in financial
difficulty; and a continued positive economic environment and
outlook in key markets. Resolution strategies include the
realisation of cash proceeds from property sales activity, as well
as the disposal / securitisation of non-performing portfolios
(primarily comprised of BTL Retail Ireland residential mortgages)
and, where appropriate, have given rise to utilisation of
impairment loss allowance against loan amounts for which there
is no reasonable expectation of recovery.
The stock of impairment loss allowance on credit-impaired loans
decreased to €1.0 billion at 31 December 2019 from €1.4 billion
at 31 December 2018. This reduction incorporates the impact of
impairment loss allowance utilisation totalling c.€0.7 billion, which
was the primary driver of a decrease in impairment loss
allowance as a percentage of credit-impaired loans across the
Group’s loan portfolios. The decrease in the impairment loss
allowance for credit-impaired loans in the Property and
construction portfolio reflected resolution activity in Ireland and
the UK.
The table below summarises the composition, NPEs and related
impairment loss allowance of the Group’s loans and advances to
customers at 31 December 2019 (including loans classified as
held for sale at 31 December 2018) .
Unaudited:
The movements in NPEs in the year are broadly consistent with the movements in credit-impaired loans as set out on page 132. At 31
December 2019, the Group’s NPE impairment loss allowance cover ratio was 37% (2018: 35%).
1
Excludes €252 million (31 December 2018: €261 million) of loans and advances to customers at 31 December 2018 that are measured at fair value through profit or loss and are
therefore not subject to impairment under IFRS 9.
2
Includes €630 million of loans and advances to customers classified as held for sale at 31 December 2018.
134

Credit risk methodologies (audited)
The Group’s credit risk methodologies encompass internal credit
rating models and scoring tools and impairment models and are
set out below.
Internal credit rating models
The use of internal credit rating models and scoring tools, which
measure the degree of risk inherent in lending to specific
counterparties, is central to the credit risk assessment and
ongoing management processes within the Group.
The primary model measures used are:
• PD: the probability of a given counterparty defaulting on any
of its borrowings from the Group within the next twelve
months;
• Exposure at Default (EAD): the exposure the Group has to a
defaulting borrower at the time of default; and
• Loss Given Default (LGD): the loss incurred (after the
realisation of any collateral) on a specific transaction should
the borrower default, expressed as a percentage of EAD.
These measures are used to calculate regulatory expected loss
and are fully embedded in, and form an essential component of,
the Group’s operational and strategic credit risk management and
credit pricing practices.
The structure of internal rating systems
The Group divides its internal rating systems into non-retail and
retail approaches.
For the Group’s retail consumer and smaller business portfolios,
the credit risk assessment is grounded on application and
behavioural scoring tools. For larger commercial and corporate
customers, the risk assessment is underpinned by statistical risk
rating models which incorporate quantitative information from the
customer (e.g. financial statements) together with a qualitative
assessment of non-financial risk factors such as management
quality and market / trading outlook. Lending to financial
institutions is assigned an internal rating supported by external
ratings of the major rating agencies.
PD calculation
For the purposes of internal credit rating models, the Group
produces estimates of PD on either or both of the following
bases:
• Through-the-Cycle (TtC) estimates are estimates of default
over an entire economic cycle, averaged to a twelve month
basis. These are in effect averaged expectations of PD for a
borrower over the economic cycle; and
• Cyclical estimates are estimates of default applicable to the
next immediate twelve months. These cyclical estimates
partially capture the economic cycle in that they typically rise
in an economic downturn and decline in an economic upturn
but not necessarily to the same degree as default rates
change in the economy.
Non-retail internal rating systems
The Group has adopted the Foundation Internal Rating Based
(FIRB) approach for most of its non-retail portfolios. Under this
approach, the Group calculates its own estimates for PD and
uses supervisory estimates of LGD and credit conversion factors.
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To calculate PD under the FIRB approach, the Group assesses
the credit quality of borrowers based on transaction and borrower
specific characteristics. Scorecards are developed for each
significant portfolio or type of lending, with outputs used to
assign a PD grade to each borrower.
In the case of financial institutions, external credit agency ratings
are used to provide a significant challenge within the Group’s
ratings approach. For exposures other than financial institutions,
external ratings, when available for borrowers, play a role in the
independent validation of internal estimates.
For non-retail exposures, the Group calculates its own estimates
of PD on a TtC basis and on a cyclical basis. The TtC PD
estimates are based on internal default experience, or where
default data is limited, statistical model estimates combined with
available data to reflect the average default rate over the course
of an economic cycle. The TtC PDs do not vary with the
economic cycle and are used to calculate risk weighted exposure
amounts and to determine minimum regulatory capital
requirements. The cyclical PD estimates which capture a change
in borrower risk over the economic cycle are used for internal
credit management purposes. Both measures are estimated from
the same borrower risk factors.
Retail internal rating systems
The Group has adopted the Retail Internal Rating Based (IRB)
approach for the majority of its retail exposures. Under this
approach, the Group calculates its own estimates for PD, LGD
and credit conversion factors.
External ratings do not play a role within the Group’s retail internal
rating systems, however, external credit bureau data can play a
role in assessing certain borrowers.
Under the Retail IRB approach, scorecards based on internal
behavioural data and, where relevant, transaction specific
characteristics are developed for specific portfolios or product
types, the output from the scorecard is used to determine the PD
estimate.
The Group calculates retail PDs on a TtC or cyclical basis
depending on the portfolio. The TtC estimates are calibrated
based on long run average default rates over the course of an
economic cycle (based on internal default experience) within
identified discrete risk pools. The cyclical estimates are calibrated
based on a weighted average of the expected long-run default
rate over the course of an economic cycle and the most recently
observed annual default rate. These retail PDs are used for both
the calculation of risk weighted exposure amounts and for
internal credit management purposes.
LGD estimates are based on historic loss experience and
associated costs for all observed defaults for a defined time
period. The time period is set for each model to ensure LGD
estimates are representative of economic downturn conditions.
Estimates of credit conversion factors (which determine the
extent to which a currently undrawn amount is assumed to be
drawn and outstanding at point of default) are similarly derived
based on historic experience from observed defaults, and are
calibrated to produce estimates of behaviour characteristic of an
economic downturn.
The assumption that the time periods and data used for the
estimation of LGD and credit conversion factors remain
representative of economic downturn conditions is subject to
review and challenge on an ongoing basis.
Other uses of internal estimates
Internal estimates play an essential role in risk management and
decision making processes as well as the credit approval
functions, the internal capital allocation function and the
corporate governance functions of the Group. The specific uses
of internal estimates differ from portfolio to portfolio, and for retail
and non-retail approaches, but typically include:
• credit decisioning / automated credit decisioning and
borrower credit approval;
• credit management;
• calculation of RAROC;
• internal reporting; and
• internal capital allocation between businesses of the Group.
For other purposes, the cyclical PD estimates typically are used.
Both estimates feature within internal management reporting.
Impairment models are described further on page 136.
Control mechanisms for credit rating and impairment models
The Group Model Risk Policy and Group Model Risk Standards,
as approved by the BRC and GRPC respectively, set out the
Group’s overall approach to model risk management. The Group
also sets out more detailed requirements with respect to
development, monitoring and validation of credit rating and
impairment models. These standards are approved by the RMC.
Model development and redevelopment for credit rating and
impairment models are approved by the RMC and the results of
model performance monitoring are reported to the RMC on a
regular basis.
The Group mitigates model risk for credit rating and impairment
models as follows:
• model development standards: the Group adopts
centralised standards and methodologies over the operation
and development of models. This ensures a common
approach in key areas such as documentation, data quality
and management and model testing;
• model governance: the Group adopts a uniform approach to
the governance of all risk rating model related activities and
impairment model related activities, ensuring the appropriate
involvement of relevant stakeholders;
• model performance monitoring: credit risk rating and
impairment models are subject to testing on a quarterly basis
which is reported to the RMC. This includes assessment of
model performance against observed outcomes, including:
- rank order of borrowers;
- accuracy of parameter estimates;
- the stability of the rating;
- the quality of data; and
- the appropriateness of model use.
3 Management of key Group risks (continued)
3.1 Credit risk (continued)
 21:55 Page 135
3 Management of key Group risks (continued)
3.1 Credit risk (continued)
• independent validation: models are subject to in-depth
analysis on a periodic basis, which includes an assessment of
model performance against observed outcomes, including:
rank order of borrowers; accuracy of parameter estimates;
the stability of the rating population; the quality of data; and
the appropriateness of model use. This analysis is carried out
by a dedicated unit (the Independent Validation Unit) which is
independent of credit origination and management functions.
When issues are raised on risk rating or impairment models,
plans are developed to remediate or replace such models within
an agreed timeframe.
In addition, GIA regularly reviews the risk control framework,
including policies and standards, to ensure that these are being
adhered to, meet industry good practices and are compliant with
regulatory requirements.
Methodology for loan loss provisioning under IFRS 9
Approach to measurement of impairment loss allowances
Impairment is measured in a way that reflects: (a) an unbiased
and probability-weighted amount that is determined by evaluating
a range of possible outcomes; (b) the time value of money; and
(c) reasonable and supportable information that is available
without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic
conditions. Impairment is measured through the use of
impairment models, individual discounted cash flow (DCF)
analysis and modelled loss rates; supplemented where necessary
by Group management adjustments.
In general, a loss allowance is recognised for all financial
instruments in scope for the impairment requirements of IFRS 9.
However this may not be the case for very highly collateralised
loans, such as residential mortgages at low loan to value (LTV)
ratios. There have been no significant changes in the quality of
collateral or credit enhancements as a result of changes in the
Group’s collateral policies during the year. The Group’s
methodologies for valuation of property collateral are set out on
page 138, noting further that FLI (page 138) is applied as
appropriate to RoI and UK property collateral values in measuring
impairment loss allowances under IFRS 9. The Group’s critical
accounting estimates and judgements, including those with
respect to impairment of financial instruments, are set out in note
2 to the consolidated financial statements.
An analysis of the Group’s net impairment gains / (losses) on
financial instruments and impairment loss allowances is set out in
notes 16, 27 and 28 of the consolidated financial statements.
Impairment models
The Group has in place a suite of IFRS 9 compliant impairment
models which are executed on a monthly basis and which
allocate financial instruments to Stage 1, 2 or 3 and measure the
appropriate 12 month or lifetime ECL. The characteristics of an
exposure determine which impairment model is used, with
influencing factors including product type (e.g. Residential
Mortgage, unsecured personal loan, business loan) and market
segment (e.g. owner occupier, BTL, general corporate lending,
general business lending).
ECLs are calculated as the sum of the marginal losses for each
time period from the reporting date. The key components of the
ECL calculation are PD, EAD and LGD (which is expressed as a
percentage of EAD) and are described below. Other components
include discount rate and maturity. The current contractual rate is
generally used as the discount rate as it is considered a suitable
approximation of the effective interest rate determined at initial
recognition. For term lending including committed RCFs,
contractual maturity is used in the ECL calculation. For other
revolving facilities, behavioural life is generally used.
IFRS 9 Probability of Default
Where available, the ratings or underlying scores from internal
credit rating models are used as a starting point for IFRS 9 PD
calibration. While calibration techniques are similar to those used
for regulatory purposes, the IFRS 9 PD differs from through-the-
cycle or cyclical estimate PDs as it is an unbiased point-in-time
PD based on current conditions and adjusted to reflect FLI.
A current point-in-time IFRS 9 PD is calculated as the expected
default rate over the next 12 months. This PD is used in the
calculation of 12-month ECL and as a starting point in the
calculation of lifetime PD. Future point-in-time IFRS 9 PDs are
also calculated, being the expected default rates for each year
from the start of year two to maturity of the financial instrument.
Transition matrices are used to determine how an exposure
moves between different PD bands over time.
Together, the current point-in-time IFRS 9 PD and future point-in-
time IFRS 9 PDs are used to generate an IFRS 9 lifetime PD
expectation for each FLI scenario. The scenario weighted
averages are used to generate an overall IFRS 9 lifetime PD
expectation. At origination of a new financial instrument, these
expectations are stored, together with prepayment estimates
where relevant, and allow for comparison at future reporting
dates as one of the key determinants as to whether a ‘significant
increase in credit risk’ has occurred. As lifetime PD was not
calculated historically, the Group used reasonable and
supportable information available without undue cost or effort to
approximate the residual IFRS 9 lifetime PD expectations at initial
recognition for most financial instruments originated prior to the
adoption of IFRS 9 on 1 January 2018.
IFRS 9 Exposure at Default
Current point-in-time EAD is the expected EAD were the borrower
to default within the next 12 months. Future point-in-time EAD
also incorporates expected contractual cash flows. IFRS 9 EAD
differs from regulatory EAD in that it incorporates expected
contractual cash flows and caps the exposure at the contractual
limit.
IFRS 9 Loss Given Default
Current point-in-time LGD is the loss that would be incurred
should default occur in the next 12 months. To facilitate the
calculation of lifetime ECL, future point-in-time LGDs are
calculated for each year from the start of year 2 to maturity of the
exposure. The starting point for individual components of the
calculation is historical data. Cure rate is incorporated as
appropriate into the calculation and represents the expected
propensity of borrowers to return to the non-defaulted book
without a loss having been realised. FLI is also incorporated into
136

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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
LGD as appropriate where RoI or UK property collateral is held.
IFRS 9 LGD may differ from regulatory LGD as conservatism and
downward assumptions are generally removed.
Individual Discounted Cash Flow analysis
For credit-impaired financial instruments in Business Banking,
Corporate Banking and certain other relationship-managed
portfolios, the impairment loss allowance is primarily determined
by an individual DCF analysis completed by lenders in business
units and subject to review, challenge and, potentially, revision by
independent credit professionals in underwriting units within
Group Risk. The expected future cash flows are based on an
assessment of future recoveries and include forecasted principal
and interest payments (not necessarily contractual amounts due)
and expected cash flows, if any, from the realisation of collateral /
security held, less realisation costs.
Modelled loss rates
For some smaller and / or lower risk portfolios, impairment loss
allowances are measured by applying modelled loss rates to
exposure amounts. Modelled loss rates are generally determined
on a component basis taking into account factors such as the
nature and credit quality of the exposures and past default and
recovery experience on the portfolio or on portfolios with similar
risk characteristics. Generally a number of different loss rates will
be set for a portfolio to allow differentiation of individual financial
instruments within the portfolio based on their credit quality.
Identifying a significant increase in credit risk
The Group’s standard criteria to identify financial instruments
which have had a ‘significant increase in credit risk since initial
recognition’ are applied to the vast majority of loans and
advances to customers. ‘Credit risk’ in this context refers to the
change in the risk of a default occurring over the expected life of
the financial instrument. Unless credit-impaired or a POCI, a
financial instrument is generally allocated to Stage 2 if any of the
following criteria are met at the reporting date:
• remaining lifetime PD is more than double and more than 50
basis points higher than the remaining lifetime PD at the
reporting date as estimated based on facts and
circumstances as at initial recognition (adjusted where
relevant for changes in prepayment expectations);
• a contractual payment is greater than 30 days past due; and /
or
• the exposure is a forborne loan or a NPE.
The above criteria are automatically applied as part of the
monthly execution of the Group’s impairment models. In addition,
management considers whether there is reasonable and
supportable information that would not otherwise be taken into
account that would indicate that a significant increase in credit
risk had occurred.
Where a financial asset has been modified but not derecognised,
the quantitative assessment of ‘significant increase in credit risk’
continues to be based on the remaining lifetime PD at the
reporting date as estimated based on facts and circumstances as
at initial recognition (adjusted where relevant for changes in
prepayment expectations).
The Group assesses the effectiveness of its staging criteria semi-
annually, taking into account considerations such as the extent to
which: (i) exposures have moved directly from Stage 1 to Stage 3;
(ii) exposures have moved to Stage 3, having spent only a short
period in Stage 2; (iii) exposures have moved frequently between
Stages 1 and 2; and (iv) there is potential over-reliance on
backstop or qualitative criteria in identifying Stage 2 exposures.
The Group applies the low credit risk expedient to most debt
securities in scope for the impairment requirements of IFRS 9 and
similarly to loans and advances to banks, central banks and
investment firms. ‘Low credit risk’ encompasses PD grades 1 to 5
on the Group’s internal PD rating system, which broadly aligns
with ratings of AAA to BBB- for the external major rating
agencies. Such financial instruments are allocated to Stage 1.
For some smaller and / or low risk portfolios, the Group identifies
a ‘significant increase in credit risk since initial recognition’ solely
by reference to whether a contractual payment is greater than 30
days past due.
Identifying defaulted assets and credit-impaired assets
The Group’s definition of default for impairment purposes (i.e. for
the purposes of allocating financial instruments to ‘stages’ and
for measuring impairment loss allowances under IFRS 9) is
consistent with its application of the definition of default in Article
178 of the CRR noting that IFRS 9 requires the Group to use a
definition which is consistent with that used for internal credit risk
management purposes. The manner in which the Group identifies
financial assets as credit-impaired results in the Group’s
population of credit-impaired financial assets being consistent
with its population of defaulted financial assets in scope for the
impairment requirements of IFRS 9.
In the next financial year the Group will, subject to regulatory
approval, implement a new definition of default to comply with
EBA guidelines that are effective from no later than 1 January
2021.
The Group considers certain events as resulting in mandatory
default and credit-impaired classification without further
assessment. These include:
• greater than 90 days past due and the past due amount is
material;
• a forbearance arrangement is put in place where future
reliance on realisation of collateral is expected for repayment
in full when this was not originally envisaged;
• legal action is underway by the Group to enforce repayment
or realise security;
• the Group or a receiver takes security into possession; and
• the Group has formally sought an insolvency arrangement in
respect of the borrower.
Certain other events necessitate a lender assessment and, if the
outcome of the lender assessment is that the contractual amount
of principal and interest will not be fully repaid in what is
assessed to be the most likely cash flow scenario, default and
credit-impaired classification is mandatory. For larger value
commercial lending cases (typically greater than €1 million or
£850,000), the lender assessment involves production of an
individual DCF analysis. The events differ by portfolio and include
those set out below.
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3 Management of key Group risks (continued)
3.1 Credit risk (continued)
All portfolios:
• a forbearance measure has been requested by a borrower
and formally assessed;
• the non-payment of interest (e.g. via interest roll-up, arrears
capitalisation etc.) as a result of the terms of modification of
loans, including refinancing and renegotiation of facilities
where during the renegotiation process, the lender becomes
aware that the borrower is under actual or apparent financial
distress;
• evidence of fraudulent activity by the borrower or another
party connected with the loan;
• the contractual maturity date has passed without repayment
in full; or
• it becomes known that the borrower has formally sought an
insolvency arrangement.
Residential mortgage portfolios:
• offer of voluntary surrender of security or sale of security at a
possible shortfall; or
• it becomes known that the borrower has become
unemployed with no comparable new employment secured.
Larger Small and Medium Enterprise / corporate and property
loans:
• internal credit risk rating, or external credit rating, has been
downgraded below a certain level;
• financial statements or financial assessment indicates
inability of the borrower to meet debt service obligations and
/ or a negative net assets position;
• the borrower has ceased trading;
• a fall in the assessed current value of security such that the
LTV ratio is greater than or equal to 120% (Property and
construction only);
• a fall in net rent such that it is inadequate to cover interest
with little / no other income to support debt service capacity
(investment property exposures only); or
• a fall in the assessed gross development value such that sale
proceeds are no longer expected to fully repay debt
(development exposures only).
Review of credit-impaired loans
It is Group policy to review credit-impaired loans above agreed
thresholds semi-annually or on receipt of material new
information, with the review including a reassessment of the
recovery strategy and the continued appropriateness of a credit-
impaired classification. The minimum requirements for a
credit-impaired loan to return to non credit-impaired status are
that the borrower must not be greater than 90 days past due on a
material amount, the borrower must be considered likely to pay in
full without recourse by the Group to actions such as realising
security and there must be no forbearance arrangement in place
where future reliance on realisation of collateral is expected for
repayment in full when this was not originally envisaged. Typically,
an updated assessment of the borrower’s current financial
condition and prospects for repayment is required with the
borrower to have satisfactorily met repayments required under
the original or modified agreement regularly for a reasonable
period of time.
Methodologies for valuation of property collateral
The Group’s approach to the determination of the market value of
property collateral is set out in a Board-approved Group Property
Collateral Valuation Policy, supported by GRPC-approved Group
Property Collateral Valuation Guidelines, and is summarised
below. The Group’s approach to applying FLI to those values for
the purposes of measuring impairment loss allowance for the
year ended 31 December 2019 is set out in the Board-approved
Group Impairment Policy and is described below.
Retail Ireland mortgage loan book property values are determined
by reference to the original or latest property valuations held
indexed to the Central Statistics Office (CSO) Residential
Property Price Index (RPPI). Retail UK mortgage loan book
property values are determined by reference to the original or
latest property valuations held indexed to the Nationwide UK
house price index.
Commercial property valuations may include formal written
valuations from external or internal professionals, or ‘internally
assessed valuations’ completed by business units. Internally
assessed valuations are informed by the most appropriate
sources available for the assets in question. This may include
property specific information / characteristics, local market
knowledge, comparable transactions, professional advice (e.g.
asset management reports) or a combination thereof, in line with
more detailed guidance approved at least annually by the GRPC.
This guidance is informed by both internal and externally sourced
market data / valuation information, including input from the
Group’s Real Estate Advisory Unit.
Internally assessed valuations are subject to review, challenge
and, potentially, revision by independent credit professionals in
underwriting units within the Group Risk function and are
approved as part of the normal credit process.
Typically, more frequent valuations are required for properties
held as security for NPEs with an annual valuation required for
NPEs in excess of €300,000.
Forward looking information
FLI refers to probability-weighted future macroeconomic
scenarios approved semi-annually by the GRPC and used in the
assessment of ‘significant increase in credit risk’ and in the
measurement of impairment loss allowances under IFRS 9. The
Group generally uses three RoI FLI scenarios and three UK FLI
scenarios, being a central scenario, an upside scenario and a
downside scenario, all extending over a five year forecast period.
In each case the central scenario is based on internal and
external information and management judgement. The Group
keeps under review the need for FLI for other economies.
The Group’s FLI model uses the central scenario, recent actual
observed values and historical data to generate many scenarios
distributed around the central scenario. The central scenario is at
the 50th percentile of the distribution of scenarios (meaning that
there is a 50% likelihood of the expected ECL outcome being
better and a 50% likelihood of it being worse) and the upside and
downside scenarios are those scenarios at chosen lower and
higher percentiles respectively. The probability weightings
attached to the scenarios are a function of the chosen
percentiles, with lower probability weightings attached to
scenarios which are at percentiles more distant from the central
scenario.
Typically, one or two macroeconomic variables are incorporated
into each impairment model, being those determined through
138

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Republic of Ireland United Kingdom
2019 Downside Central Upside Downside Central Upside
Percentile 85th
50th
15th
85th
50th
15th
Scenario probability weighting 30% 39% 31% 29% 40% 31%
GDP growth 1.0% 2.7% 5.0% 0.9% 1.5% 2.1%
GNP growth 0.4% 2.2% 4.6% n/a n/a n/a
Unemployment rate 6.7% 5.3% 4.5% 5.1% 4.2% 4.0%
Residential property price growth (4.3%) 1.3% 6.8% (2.0%) 0.7% 3.4%
Commercial property price growth (7.3%) 0.6% 8.1% (3.7%) (0.1%) 2.6%
Republic of Ireland United Kingdom
2018 Downside Central Upside Downside Central Upside
Percentile 85th
50th
15th
85th
50th
15th
Scenario probability weighting 30% 39% 31% 29% 40% 31%
GDP growth 1.6% 3.1% 5.6% 0.5% 1.5% 1.8%
GNP growth 1.1% 2.8% 5.2% n/a n/a n/a
Unemployment rate 6.4% 5.0% 4.3% 5.5% 4.5% 4.5%
Residential property price growth (3.0%) 2.1% 8.1% (0.4%) 0.4% 5.0%
Commercial property price growth (7.6%) 1.4% 7.8% (5.5%) 0.2% 0.8%
3 Management of key Group risks (continued)
3.1 Credit risk (continued)
FLI is generally not applied to exposures to which the low credit
risk expedient has been applied given factors such as a lack of
internal default history to inform macro regression and that
applying FLI would be unlikely to have a material impact given
low PDs and that exposures are subject to 12-month rather than
lifetime ECL.
Group management adjustment
To ensure that the measurement of impairment reflects
reasonable and supportable information that is available without
undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions,
the need for a ‘Group management adjustment’ to the outputs of
the Group’s staging and impairment measurement methodologies
is considered at each reporting date in arriving at the final
impairment loss allowance. Such a need may arise, for example,
due to a model limitation or late-breaking event. A Group
management adjustment of €56 million was applied at 31
December 2019 (2018: €92 million) and is detailed in note 2 on
page 194 to the consolidated financial statements.
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macro regression techniques to be most relevant to forecasting
default of the credit risk exposures flowing through that model.
The lifetime PD expectation for an exposure generated under
each of the scenarios, weighted by the probability of each
scenario occurring, is used to generate the lifetime PD
expectations used for the assessment of ‘significant increase in
credit risk’.
Forecasts of residential and commercial property price growth are
incorporated as appropriate into the LGD component of the ECL
calculation.
The overall ECL for an exposure is determined as a probability-
weighted average of the ECL calculated for each scenario,
weighted by the probability of each scenario occurring.
Beyond the forecast period, default rates are assumed to revert
over time to an observed long run average and the value of
property collateral for LGD purposes is assumed to grow at an
observed long-run rate.
The following table shows the mean average forecast values for
some of the key macroeconomic variables under each scenario
for the five year forecast period 2020 to 2024 together with the
associated percentiles and probability weightings.
 21:55 Page 139
3 Management of key Group risks (continued)
3.2 Funding and liquidity risk
Definition of funding and liquidity risk (audited)
Funding and liquidity risk is the risk that the Group will experience
difficulty in financing its assets and / or meeting its contractual
payment obligations as they fall due, or will only be able to do so
at substantially above the prevailing market cost of funds.
Liquidity risk arises from differences in timing between cash
inflows and outflows. Liquidity risk can increase due to the
unexpected lengthening of maturities or non-repayment of
assets, a sudden withdrawal of deposits or the inability to
refinance maturing debt. These factors are often associated with
times of distress or adverse events such as a credit rating
downgrade(s) or economic or financial turmoil.
Funding risk can occur where there is an over-reliance on a
particular type of funding, a funding gap or a concentration of
wholesale funding maturities. The Group’s ability to access
funding markets at a sustainable cost and in a sufficient volume
can be negatively impacted by a credit rating downgrade(s) or
deterioration in market sentiment which in turn could impact the
financial position of the Group.
Liquidity risk statement (audited)
Funding and liquidity risk arises from a fundamental part of the
Group’s business model; the maturity transformation of primarily
short term deposits into longer term loans. The Group’s funding
and liquidity strategy is to maintain a stable funding base with
loan portfolios substantially funded by retail originated customer
deposit portfolios.
Liquidity risk framework (audited)
The Group has established a liquidity risk management
framework which encompasses the liquidity policies, systems
and controls in place to ensure that the Group is positioned to
address its daily liquidity obligations and to withstand a period of
liquidity stress. Principal components of this framework are the
Group’s Risk Appetite Statement and associated limits and the
Group’s Funding and Liquidity Policy, both of which are approved
by the Board on the recommendation of ALCO.
The Group Funding and Liquidity Policy outlines the Group’s
governance process with respect to funding and liquidity risk,
and sets out the core principles that govern the manner in which
the risk is mitigated, monitored and managed. The operation of
this policy is delegated to the Group’s ALCO.
These principal components are supported by further liquidity
policies, systems and controls which the Group has to manage
funding and liquidity risk.
Liquidity risk management (audited)
Liquidity risk management within the Group focuses on the
control, within prudent limits, of risk arising from the mismatch in
contracted maturities of assets and liabilities and the risks arising
from undrawn commitments and other contingent liabilities. The
Group manages its liquidity by jurisdiction with liquid assets
predominantly held in the currency of each jurisdiction.
The Group’s treasury function within Markets and Treasury
provides top down centralised management of the Group’s
funding and liquidity position including overall responsibility for
the management of the Group’s liquidity position and funding
strategy. This ensures a coordinated approach to balance sheet
management and is accomplished through the incorporation of
funding and liquidity risk appetite metrics into risk appetite at a
consolidated level, monitoring liquidity metrics for each
jurisdiction and compliance by the business units with the
Group’s funds transfer pricing policy.
The GM&LR function provides independent oversight of funding
and liquidity risk and is responsible for proposing and maintaining
the Group’s funding and liquidity risk management framework
and associated risk appetite metrics.
Liquidity risk management consists of two main activities:
• structural liquidity management focuses on the balance sheet
structure, the funding mix, the expected maturity profile of
assets and liabilities and the Group’s debt issuance strategy;
and
• tactical liquidity management focuses on monitoring current
and expected daily cash flows to ensure that the Group’s
liquidity needs can be met.
The Group is required to comply with the regulatory liquidity
requirements of the SSM and the requirements of local regulators
in those jurisdictions where such requirements apply to the
Group. SSM requirements include compliance with CRR / CRD IV
and associated Delegated Acts. The Group has remained in full
compliance with the regulatory liquidity requirements throughout
2019, and as at 31 December 2019 maintained a buffer
significantly in excess of regulatory liquidity requirements.
Bank of Ireland (UK) plc is authorised by the PRA and is subject
to the regulatory liquidity regime of the PRA. Bank of Ireland (UK)
plc has remained in full compliance with the regulatory liquidity
regime in the UK throughout 2019, and as at 31 December 2019
maintained a buffer significantly in excess of regulatory liquidity
requirements.
Key points:
• Group customer deposits of €84 billion have increased by €5 billion since 31 December 2018. The Group’s LDR reduced by 2% to
95% at 31 December 2019. The main driver of this movement was €4 billion growth in Retail Ireland’s current account credit
balances, reflecting strong economic activity and a €1 billion increase in Corporate and Treasury balances. On a constant currency
basis, Group customer deposits increased by €3.9 billion (see page 331 for further information on alternative performance
measures).
• The Group’s LCR at 31 December 2019 was 138%. The Group’s NSFR at 31 December 2019 was 131%.
140

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Governance Financial Statements Other Information
Strategic Report Financial Review
3 Management of key Group risks (continued)
3.2 Funding and liquidity risk (continued)
The annual ILAAP enables the Board to assess the adequacy of
the Group’s funding and liquidity risk management framework, to
assess the key liquidity and funding risks to which it is exposed;
and details the Group’s approach to determining the level of
liquid assets and contingent liquidity that is required to be
maintained under both business as usual and severe stress
scenarios.
A key part of this assessment is cash flow forecasting that
includes assumptions on the likely behavioural cash flows of
certain customer products. Estimating these behavioural cash
flows allows the Group assess the stability of its funding sources
and potential liquidity requirements in both business as usual and
stressed scenarios. The stressed scenarios incorporate Group
specific and systemic risks and are run at different levels of
possible, even if unlikely, severity. Actions and strategies available
to mitigate the impacts of the stress scenarios are evaluated as to
their appropriateness. Stress test results are reported to ALCO,
the BRC and the Board.
The Group also monitors a suite of Recovery Indicators and Early
Warning Signals in order to identify the potential emergence of a
liquidity stress. As part of its contingency and recovery planning
the Group has identified a suite of potential funding and liquidity
options which could be exercised to help the Group to restore its
liquidity position on the occurrence of a major stress event.
Liquidity risk reporting (audited)
The Group’s liquidity risk appetite is defined by the Board to
ensure that funding and liquidity are managed in a prudent
manner. The Board monitors adherence to the liquidity risk
appetite through the monthly Court Risk Report.
Management informs the Board in the monthly Court Risk Report
of any significant changes in the Group’s funding or liquidity
position. The Court Risk Report includes the results of the
Group’s liquidity stress testing. This estimates the potential
impact of a range of stress scenarios on the Group’s liquidity
position including its available liquid assets and contingent
liquidity.
Management reviews funding and liquidity reports and stress
testing results on a daily, weekly and monthly basis against the
Group’s Risk Appetite Statement. It is the responsibility of ALCO
to ensure that the measuring, monitoring and reporting of funding
and liquidity is adequately performed and complies with the
governance framework.
Liquidity risk measurement (audited)
The Group’s cash flow and liquidity reporting processes provide
management with daily liquidity risk information by designated
cash flow categories. These processes capture the cash flows
from both on-balance sheet and off-balance sheet transactions.
The tables below and on the following page summarise the
maturity profile of the Group’s financial assets and liabilities,
excluding those arising from insurance and participating
investment contracts at 31 December 2019 and 31 December
2018. These maturity profiles are based on the remaining
contractual maturity period at the reporting date (discounted).
The Group measures liquidity risk by adjusting the contractual
cash flows on deposit books to reflect their behavioural stability.
Unit linked investment liabilities and unit linked insurance
liabilities with a carrying value of €5,890 million and €12,694
million respectively (2018: €5,239 million and €11,003 million
respectively) are excluded from this analysis as their repayment is
linked directly to the financial assets backing these contracts.
Customer accounts include a number of term accounts that
contain access features. These allow the customer to access a
portion or all of their deposits notwithstanding that this
withdrawal could result in a financial penalty being paid by the
customer. For such accounts, the portion subject to the potential
early access has been classified in the ‘demand’ category in the
following table.
 21:55 Page 141
2019 Up to 3 3-12 1-5 Over 5
Demand months months years years Total
Maturities of financial assets and liabilities 
Assets
Cash and balances at central banks 8,325 - - - - 8,325
Trading securities - - - - 32 32
Derivative financial instruments 184 102 122 654 937 1,999
Other financial assets at FVTPL1
1,483 103 115 262 3,559 5,522
Loans and advances to banks 426 2,744 158 - - 3,328
Debt securities at amortised cost - 47 49 1,590 2,825 4,511
Financial assets at FVOCI - 86 1,665 4,893 4,153 10,797
Loans and advances to customers (before impairment provisions) 1,503 4,568 7,072 31,719 35,933 80,795
Total 11,921 7,650 9,181 39,118 47,439 115,309
Liabilities
Deposits from banks 94 349 - - - 443
Monetary Authorities secured funding - - 1,117 619 - 1,736
Customer accounts 70,457 6,610 4,586 2,224 91 83,968
Derivative financial instruments 194 147 253 760 1,124 2,478
Debt securities in issue - 971 870 5,069 1,899 8,809
Lease liabilities - 17 47 168 333 565
Subordinated liabilities - 209 - 263 1,218 1,690
Short positions in trading securities - - - - - -
Total 70,745 8,303 6,873 9,103 4,665 99,689
1
Excluding equity shares which have no contractual maturity.
3 Management of key Group risks (continued)
3.2 Funding and liquidity risk (continued)
2018 Up to 3 3-12 1-5 Over 5
Demand months months years years Total
Maturities of financial assets and liabilities 
Assets
Cash and balances at central banks 6,033 - - - - 6,033
Trading securities - - - 6 23 29
Derivative financial instruments 195 19 176 664 670 1,724
Other financial assets at FVTPL1
1,204 23 30 1,623 1,913 4,793
Loans and advances to banks 237 2,250 138 - - 2,625
Debt securities at amortised cost - 61 274 1,386 2,207 3,928
Financial assets at FVOCI - 469 913 5,748 4,918 12,048
Loans and advances to customers (before impairment provisions) 2,217 4,179 7,048 28,949 36,298 78,691
Total 9,886 7,001 8,579 38,376 46,029 109,871
Liabilities
Deposits from banks 78 367 - - - 445
Monetary Authorities secured funding - 251 224 2,179 - 2,654
Customer accounts 65,517 6,117 4,137 2,923 205 78,899
Derivative financial instruments 205 31 102 617 864 1,819
Debt securities in issue - 1,176 230 4,799 2,082 8,287
Subordinated liabilities - - - 464 1,640 2,104
Short positions in trading securities 16 - - - - 16
Total 65,816 7,942 4,693 10,982 4,791 94,224
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Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
3 Management of key Group risks (continued)
3.2 Funding and liquidity risk (continued)
Funding strategy (unaudited)
The Group seeks to maintain a stable funding base with loan
portfolios funded substantially by granular retail originated
deposits with any residual funding requirements principally met
through term wholesale funding and equity.
Customer deposits (unaudited)
The Group’s customer deposit strategy is to:
• maintain and optimise its stable retail customer deposit base
in line with balance sheet requirements;
• prudently manage deposit pricing and margins; and
• optimise stable funding levels in line with regulatory liquidity
requirements.
Group customer deposits of €84.0 billion were €5.1 billion higher
than 2018. The main driver of this movement was €4.3 billion
growth in Retail Ireland’s current account credit balances,
reflecting strong economic activity and a €0.5 billion increase in
Corporate and Treasury balances. As Sterling strengthened
against the Euro, Retail UK balances remained unchanged,
however post office balances decreased by Stg£0.6 billion due to
pricing optimisation. On a constant currency basis, Group
customer deposits increased by €3.9 billion.
At 31 December 2019, customer deposits of €84.0 billion (2018:
€78.9 billion) do not include €0.6 billion (2018: €0.6 billion) of
savings and investment products sold by Wealth and Insurance.
These products have fixed terms (typically five to seven years)
and consequently are an additional source of stable funding for
the Group.
Wholesale funding (unaudited)
The Group in the normal course aims to maintain funding
diversification, minimise concentrations across funding sources
and minimise refinancing maturity concentrations.
Following the establishment of the Group’s holding company,
BOIG plc, issuance of €1,250 million MREL eligible senior debt
has been completed by BOIG plc and down-streamed to the
Bank in 2019 (2018: €1,188 million).
Foreign exchange funding mismatch (unaudited)
The Group's operations in the UK are conducted primarily
through Bank of Ireland (UK) plc. The Group’s strategy is to
originate all new retail lending in the UK through Bank of Ireland
(UK) plc which is funded primarily via sterling deposits. During
2019, the Group provided £1.6 billion of term funding to Bank of
Ireland (UK) plc as part of the Group’s overall funding and liquidity
optimisation.
The Group also provides banking services in the UK through its
UK branch. This comprises corporate and business banking
activities and the management of residential mortgage contacts
which have not been transferred to Bank of Ireland (UK) plc and
which are funded primarily via cross currency derivatives.
At 31 December 2019, the stock of sterling denominated assets
funded by cross currency derivatives was c.£8.5 billion 144

3 Management of key Group risks (continued)
3.2 Funding and liquidity risk (continued)
2019 2018
Secured Secured Secured Secured
funding from funding Total funding from funding Total
Unsecured Monetary private wholesale Unsecured Monetary private wholesale
Wholesale funding maturity analysis1
funding Authorities sources funding funding Authorities sources funding
The maturity analysis has been prepared using the expected maturity of the liabilities.
Funding and liquidity position (unaudited)
The BOIG plc senior debt credit ratings from Standard
& Poor's (S&P) and Fitch have remained unchanged during 2019
at BBB- and BBB respectively. In December 2019, Moodys
upgraded BOIG plc from Baa3 to Baa2 and revised the outlook
on the BOIG plc senior debt credit rating from Positive to Stable.
During 2019, the Bank’s senior debt credit rating was upgraded
by Moody’s to A2 (from A3) and by S&P to A- (from BBB+). In
addition, both Moodys and S&P also revised the outlook on the
Bank’s senior debt credit rating to Stable from Positive during
2019. The credit rating from Fitch remained unchanged during
2019 at BBB and they continue to assign a Positive outlook to the
Bank senior debt credit ratings.
Balance sheet encumbrance (unaudited)
It is Group policy to ensure that the level of encumbrance of the
balance sheet is consistent and supportive of the Group’s
unsecured funding issuance plans.
At 31 December 2019, the Group’s overall encumbrance level
was 13% (2018: 14%) with €14 billion of the Group’s assets
encumbered (2018: €16 billion). The decrease in encumbered
assets is due to a reduction in the volume of assets in the
Group’s collateral programmes and repayment of borrowings
under the TLTRO.
As part of managing its funding requirements, the Group from
time to time encumbers assets as collateral to support wholesale
funding initiatives. This would include covered bonds, asset
backed securities, securities repurchase agreements and other
structures that are secured over customer loans. Covered bonds,
a key element of the Group’s long term funding strategy are
issued through its subsidiary Bank of Ireland Mortgage Bank
(BoIMB). BoIMB is registered as a designated mortgage credit
institution to issue Irish Asset Covered Securities in accordance
with relevant legislative requirements. BoIMB is required to
maintain minimum contractual overcollateralisation of 5% and
minimum legislative overcollateralisation of 3% (both on a
prudent market value basis). This is monitored by the Covered
Asset Monitor on behalf of the CBI.

Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
3 Management of key Group risks (continued)
3.3 Market risk
Definition and background (audited)
Market risk is the risk of loss arising from movements in interest
rates, FX rates or other market prices. Market risk arises from the
structure of the balance sheet, the Group’s business mix and
discretionary risk-taking. The Group recognises that the effective
management of market risk is essential to the maintenance of
stable earnings, the preservation of shareholder value and the
achievement of the Group's strategic objectives.
Risk management, measurement and reporting (audited)
The management of market risk in the Group is governed by the
Group’s Risk Appetite Statement and by the Group Policy on
Market Risk, both of which are approved by the Board. These are
supplemented by a range of ALCO approved limits and controls.
The Group has an established governance structure for market
risk that involves the Board, the BRC, the GRPC and the ALCO,
which has primary responsibility for the oversight of market risk in
the Group.
The Board monitors adherence to market risk appetite through
the monthly Court Risk Report.
GM&LR provides second line oversight of the Group’s exposure
to market risk, ensuring that the Group correctly identifies and
assesses the market risks to which it is exposed. GM&LR is a
part of the Group Risk Function reporting to the Group CRO.
It is Group policy to minimise exposure to market risk, subject to
defined limits for discretionary risk. Nonetheless, certain
structural market risks remain and, in some cases, are difficult to
eliminate fully. In addition, the Group bears economic exposure to
adverse movements in the credit spreads of bonds held as liquid
assets, or held as matching assets in NIAC. This is the
predominant economic exposure arising on the NIAC fixed
interest portfolio.
Market risks that arise are transferred to and managed by Bank of
Ireland Global Markets (BoIGM), the treasury execution arm of the
Group. These market risks are hedged by BoIGM as a matter of
course with the external market or, in the case of a small quantum
of the risks concerned, are run as short-term discretionary risk
positions subject to policy and limits. Discretionary risk-taking is
confined to interest rate risk (including inflation exposure), FX risk
and traded credit risk.
Similarly, market risks in the Group’s life assurance business,
NIAC, are managed within defined tolerances. However, certain
residual risks are inherent in this business, notably exposure to
credit spreads on assets held to match policyholder liabilities,
and indirect exposure to equity markets through changes in the
discounted value of fees applied to equity assets held by
policyholders in insurance contracts. This is outlined in greater
detail below.
Classification of market risk (unaudited)
In accordance with Group policy and aligned with regulatory
requirements and guidance the Group classifies market risk as
follows:
• Interest Rate Risk in the Banking Book: This is risk that
arises naturally through the conduct of retail and wholesale
banking business. This is broken down into re-pricing risk,
yield curve risk, basis risk and optionality risk. It also includes
earnings risk arising from non-interest bearing, floored or
perpetually fixed assets and liabilities.
• Trading Book Risk: This consists of risk positions that are
pro-actively assumed and which are booked in the Trading
Book in compliance with the CRR.
• Other market-related risks to earnings and / or capital:
Risks to earnings and / or capital that do not fall naturally
within the regulatory-defined categories of Trading Book and
IRRBB fall under this heading. For the most part, these risks
reflect the application of mark-to-market accounting to
particular portfolios or the impact of FX rate movements on
what is de facto a dual-currency balance sheet. The most
material risks arise from the fair valuation of credit risk in
securities portfolios and derivative books.
Balance sheet linkage (audited)
The accompanying table (page 146) classifies the balance sheet
in terms of Banking Book, Trading Book (as defined above) and
Insurance assets and liabilities. The principal risk factors which
drive changes in earnings or value in relation to each line item are
also outlined. Trading Book assets and liabilities were a small
proportion of the balance sheet at 31 December 2019 and this is
representative of the position throughout the year. Interest rates
are the most significant risk factor.
Discretionary market risk (audited)
Discretionary risk is a risk that is carried in the expectation of gain
from near-term movements in liquid financial markets. BoIGM is
the sole Group business unit permitted to run discretionary
market risk.
Discretionary risk can be taken by leaving naturally arising retail
or wholesale generated risks unhedged for a period (discretionary
IRRBB) or by taking proprietary positions in the market (Trading
Book risk). In conformity with the CRR, customer derivatives are
booked in the Trading Book and can be a source of trading risk if
not fully closed out.
Key points:
• The VaR arising from discretionary risk-taking remained at relatively low levels during 2019, this partly reflected the low levels of
market volatility. The Group continues to take moderate interest rate positions in both Trading and Banking books in addition to
positions in FX and traded credit markets.
• With the exception of basis risks, the Group manages its structural interest rate and FX positions according to passive Asset
Liability Management conventions.
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3 Management of key Group risks (continued)
3.3 Market risk (continued)
Discretionary market risk is subject to strict controls which set
out the markets and instruments in which risk can be assumed,
the types of positions which can be taken and the limits which
must be complied with. BoIGM’s discretionary market risk is
confined to interest rate risk (including inflation exposure), FX risk
and credit spread exposure to sovereigns, banks and credit
default swap (CDS) indices. A limit on discretionary risk and a
high-level stop loss are set in the Risk Appetite Statement
approved by the Board. These are supplemented by an ALCO
approved framework of limits and controls, based on VaR (see
below), scenario stress tests and sensitivities. The Group does
not seek to generate a material proportion of its earnings through
discretionary risk-taking and it has a low tolerance for earnings
volatility arising from this activity which is reflected in policy, limits
and other controls applied.
The Group employs a VaR approach to measure, and set limits
on, discretionary market risk whether taken in the Banking Book
(discretionary IRRBB risk) or pro-actively assumed in the Trading
Book. The Group measures VaR for a one-day horizon at a
confidence level of 99% (two-tailed). The volatilities and
correlations which are used to generate VaR numbers are
estimated using the exponentially weighted moving average
approach which gives more weight to recent data and responds
quickly to changes in market volatility. VaR is backtested and
reported on a daily basis with all exceptions subject to review and
explanation.
For the nature of risks assumed by the Group, VaR remains a
reliable basis of risk measurement, supplemented by stress
testing.
The Group uses VaR to allocate capital to discretionary risk in its
ICAAP but uses the standardised approach (TSA) for Pillar 1
Trading Book capital.
The Group recognises that VaR is subject to certain inherent
limitations and therefore VaR limits are supplemented by
scenario-based stress tests. These are particularly important in
periods of low market volatility when VaR numbers can
understate the risks of loss from large adverse market moves.
Position limits and ‘stop losses’ are also a central element of the
control environment.
The table below shows total VaR at 31 December 2019 was €0.5
million (2018: €1.1 million). Total VaR is the sum of overall interest
rate, FX and traded credit VaR. Overall Interest Rate VaR is a
correlated measure of trading book interest rate and discretionary
IRRBB.
Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
3 Management of key Group risks (continued)
3.3 Market risk (continued)

Structural and other risks (audited)
Notwithstanding the overriding objective of running minimal levels
of market risk, certain structural market risks remain and are
managed centrally as part of the Group’s asset and liability
management process.
Structural interest rate risk (unaudited)
Structural interest rate risk is predominantly the exposure of
Group earnings to interest rate changes arising from the presence
of non-interest bearing or behaviourally fixed-rate assets and
liabilities on the balance sheet. The principal non- interest bearing
liabilities are equity and non-interest bearing current accounts. It
is Group policy to invest its net non-interest bearing liabilities (or
free funds) in a portfolio of swaps with an average life of 3.5 years
and a maximum life of seven years. This has the effect of helping
to mitigate the impact of the interest rate changes on interest
income. The table below outlines the Group’s average volumes of
structural hedges and contribution to interest income.
Structural hedge (unaudited) 2019 2018
Average structural hedge volume (€bn) 33.3 26.4
Interest income from structural hedge (€m) 165 176
Other structural risks arise from credit-impaired loans and floored
(or negative-rate) loans and deposits.
Net interest income sensitivity analysis (unaudited)
The Group uses net interest income sensitivity analysis to
measure the responsiveness of earnings to scenarios for short
and long-term rates.
The following table shows the estimated sensitivity of the Group’s
income (before tax) to an instantaneous and sustained 1%
parallel movement in interest rates. The estimates are based on
management assumptions primarily related to the repricing of
customer transactions; the relationship between key official
interest rates set by Monetary Authorities and market determined
interest rates; and the assumption of a constant balance sheet by
size and composition. In addition, changes in market interest
rates could impact a range of other items including the valuation
of the Group’s IAS 19 defined benefit pension schemes.
Estimated sensitivity of Group 2019 2018
income (1 year horizon) (unaudited) 
100bps higher c.210 c.180
100bps lower (c.250) (c.210)
Basis risk (unaudited)
Basis risk is the exposure of the Group’s earnings to sustained
changes in the differentials between the floating market related
benchmark rates to which the Group’s assets, liabilities and
derivative hedges are linked. In the Group’s case, the principal
rates used for product and derivative repricing are one, three and
six month Euro Inter Bank Offered Rate (EURIBOR) and sterling
London Inter Bank Offered Rate (LIBOR), Sterling Overnight Index
Average, the ECB refinancing rate and the BoE base rate. In
addition, the Group funds an element of its sterling balance sheet
in part from euro which creates a structural exposure to the cost of
this hedging. In the context of potential market volatility around
Brexit, the Group has taken the pre-emptive action of pre-hedging
this structural exposure beyond the end of March 2020.
The Group applies notional limits and stress scenario analysis to
its basis positions.
Credit spread risk (unaudited)
Credit spread risk arises from the potential impact of changes to
the spread between the bond yield and swap rates. Bonds
purchased primarily as liquid assets and classified as fair value
through other comprehensive income (FVOCI) are held at fair
value on the balance sheet and as such, movements in the credit
spreads can result in adverse impacts on the fair value of these
holdings. At 31 December 2019, the Group held €10.8 billion in
securities classified as FVOCI (2018: €12.0 billion). A 1 %
increase in the average credit spread of the book in 2019 would
have reduced its value by €446 million (2018: €488 million).
An analogous economic risk exists in relation to securities held by
NIAC to match policyholder liabilities and to invest its capital. At
31 December 2019, NIAC’s bond portfolio had a market value of
€1.5 billion (2018: €1.4 billion). At 31 December 2019, a 1%
widening of all credit spreads (measured as bond yields minus
the corresponding swap rate) would have had an impact on
earnings of €120 million negative, while a 1% tightening would
have had a positive impact of €138 million (2018: €94 million
negative and €109 million positive respectively).
The Group also models the spread risk for both the FVOCI and
NIAC portfolios over a one-year horizon using a delta-normal VaR
model. It approximates a potential one-year loss in portfolio value
due to changes in credit spreads.
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3 Management of key Group risks (continued)
3.3 Market risk (continued)
Interest rate risk in New Ireland Assurance Company plc
(unaudited)
In managing the interest rate risk in its business, NIAC has regard
to the sensitivity of its capital position, as well as its IFRS
earnings, to market movements. NIAC follows a policy of asset /
liability matching to ensure that the exposure of its capital
position to interest rate movements remains within tolerances,
while also managing the impact on IFRS profits. At 31 December
2019, a 1% fall in swap and yield rates would have reduced its
excess own funds (own funds less solvency capital requirement
(SCR)) by €48 million and increased its IFRS profit by €3 million
(2018: €64 million and €18 million respectively).
Equity risk (unaudited)
NIAC’s earnings are also indirectly exposed to changes in equity
markets. This arises because a management fee is charged on
the value of €5 billion of equities held for policyholders in
insurance contracts in its unit linked book. As equity markets
move up and down, this gives rise to a change in current and
discounted future streams of equity-related fees which is
reflected in NIAC’s earnings. Every 1% fall in equity markets
applied to positions at 31 December 2019 would have reduced
NIAC’s earnings by €2 million (2018: €2 million reduction). Every
1% increase in equity markets would have had a broadly equal
and opposite impact.
Structural FX (unaudited)
The Group defines structural FX risk as the exposure of its key
capital ratios to changes in exchange rates. Changes in exchange
rates can increase or decrease the overall euro-equivalent level of
RWAs. It is Group policy to manage structural FX risk by ensuring
that the currency composition of its RWAs and its structural net
asset position by currency are broadly similar. This is designed to
minimise the impact of exchange rate movements on the
principal capital ratios.
At 31 December 2019, the estimated sensitivity of the Group’s
fully loaded CET1 ratio to a 10% depreciation of sterling and
dollar combined against the euro was two basis points.
The structural FX positions at 31 December 2019 and the preceding year
end were as follows:
2019 2018
Structural FX position (audited) 
Sterling - net asset position 2,394 2,365
US dollar - net asset position 426 577
Total structural FX position 2,820 2,942
Use of derivatives in the management of market risk (audited)
The activities set out above involve, in many instances,
transactions in a range of derivative instruments. The Group
makes extensive use of derivatives to hedge its balance sheet,
service its customer needs and, to a lesser extent, assume
discretionary risk. The Group’s participation in derivatives
markets is subject to policy approved by the BRC. The Group
makes a clear distinction between derivatives which must be
transacted on a perfectly hedged basis and those whose risks
can be managed within broader interest rate or FX books.
Discretionary market risk can only be assumed in clearly defined
categories of derivatives which are traded in well-established
liquid markets, supported by industry standard conventions and
documentation and valued in accordance with generally accepted
methods.
The approach to hedging and managing market risk is governed
by policies explicitly designed to ensure that all hedging activities
are risk reducing. Interest rate risk arising on customer lending
and term deposit-taking is centralised by way of internal hedging
transactions with BoIGM. This exposure is, in turn, substantially
eliminated by BoIGM through external hedges.
Structural risk is managed by way of selective and strategic
hedging initiatives which are executed under hedging authority
delegated by ALCO to the CEO Markets and Treasury.
Policy requires that, where behavioural optionality hedging relies
on assumptions about uncertain customer behaviour and where
material, it is subject to limits or other controls.
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Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
Definition (audited)
Life insurance risk is the risk of unexpected variation in the
amount and timing of claims associated with insurance benefits.
This variation, arising from changing customer mortality, life
expectancy, health or behaviour characteristics, may be short or
long term in nature. The sub-categories of life insurance risk such
as mortality, longevity and persistency risk each relate to different
sources of loss which arise as a result of writing life insurance
business.
Risk management (audited)
Life insurance risk is underwritten and managed by NIAC, a
wholly owned subsidiary of the Group. The management of
insurance risk is the responsibility of the board of NIAC which is
delegated through internal governance structures. Aggregate life
insurance risk exposure and exposure to the sub-categories of
life insurance risk are monitored through a suite of management
reporting metrics.
The risks that arise as a result of writing life insurance business
are also managed by a number of governance fora as well as
senior management. The minimum standards required when
managing these risks are set out in a suite of NIAC board
approved policies.
The Group transfers some life insurance risk to reinsurance
companies who then meet an agreed share of the claims that
arise on a book of business in return for a premium. This creates
a credit exposure to these reinsurance companies which is
managed within the NIAC risk management framework with
responsibilities delegated through the Reinsurance Risk Policy. A
review of the panel of reinsurers that may be used and the
structure of reinsurance arrangements is carried out at least
annually. Senior members of the management team with actuarial
and underwriting expertise contribute to the effective oversight of
this risk.
Risk measurement (audited)
Risk experience is monitored regularly with actual claims
experience being compared to the underlying risk assumptions.
The results of this analysis are used to inform management of the
appropriateness of those assumptions for use in pricing, capital
management and new product design.
Exposure to life insurance risk is measured by means of
sensitivity and scenario testing. Risk capital is calculated for each
individual risk type by stressing the best estimate assumptions of
future experience by extreme, but plausible, factors. The stress
factors are pre-defined by regulation and are set at a level with an
expected frequency of occurrence of one year in every 200. NIAC
also carries out an ORSA annually which is overseen by the NIAC
board. Within the ORSA, NIAC’s risk profile is considered, both
quantitatively and qualitatively, in a holistic manner with potential
areas of risk identified along with conclusions in respect of how
those risks will be mitigated. Further details can be found in note
37 on page 251.
Risk mitigation (audited)
The Group mitigates the potential impact of insurance risk
through a number of measures. Capital is held against exposure
to life insurance risk. Exposure to risk is also managed and
controlled by the use of medical and financial underwriting, risk
mitigating contract design features and reinsurance, as detailed
in risk management policies.
Risk reporting (audited)
An update on the status of life insurance risk is included in the
Court Risk Report on a quarterly basis. NIAC’s ORSA report in
respect of the NIAC annual assessment is also presented to the
GRPC on an annual basis.
Key points:
• NIAC remains focused on the Irish insurance market, selling a core suite of products across a range of distribution channels,
including the Bank of Ireland customer base. The risk profile in respect of life insurance risk is largely stable. The processes of
appropriate underwriting at both the new business and claims stages, as well as reinsuring a proportion of the life insurance risk
written, all remain key risk management tools.
• The 2019 ORSA has been completed and reported to the NIAC board. The process confirmed the robustness of NIAC’s financial
position in the face of extreme but plausible adverse scenarios.
• NIAC maintains sufficient capital and liquid resources to enable it to meet cash flows associated with establishing and maintaining
a portfolio of life insurance business. Available resources have been tested for adequacy under a wide range of adverse
sensitivities and scenarios with no significant weaknesses identified. The Company’s capital structure is consistent with its risk
profile.
3 Management of key Group risks (continued)
3.4 Life insurance risk
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150

3 Management of key Group risks (continued)
3.5 Conduct risk
Definition
Conduct risk is defined as the risk that the Group, and / or its
staff, conduct business in an inappropriate or negligent manner
that leads to adverse customer outcomes. It includes the risk the
Group’s wholesale market activities do not meet the necessary
standards of integrity and the level of professionalism required or
expected. The Group acknowledges that a level of residual risk
arises from the provision of a full range of financial services
across a range of systems and processes it is committed to
continually reducing same. The Group has no appetite for the
Group, and / or its staff, conducting business in an inappropriate
or negligent manner that leads to adverse outcomes for
customers, colleagues and communities.
The key conduct risk exposure areas managed by the Group
include the following:
Customer-focused strategy: The risk of not delivering fair
outcomes to customers. The delivery of fair outcomes for
customers forms the principal consideration of the Group’s
customer focused value and strategic priority of serving
customers brilliantly.
Product and Service Lifecycle Management: The Group is
committed to creating and maintaining suitable and appropriate
products and services for customers as they are working towards
their financial goals. This helps to ensure that the customer has a
positive experience throughout the product and service lifecycle.
Behavioural Standards and Culture: The Group is committed to
mitigating any risk arising out of business unit or employee
behaviours which result in poor outcomes for customers.
Risk management and measurement
The Group manages conduct risk under the Group CRMF which
is consistent with the overarching Group Risk Framework. It sets
out the risk management activities and underlying enablers (tools,
structures and roles) established by the Group to ensure an
effective, prudent and proportionate response to its principal
Conduct risks. The risk management activities and enablers
together form a framework for identifying, measuring, mitigating,
controlling and reporting on the performance and status of
conduct risk within the Group. A key priority of the CRMF is the
avoidance of systemic unfair customer outcomes.
The CRMF comprises the following risk management activities,
namely:
• conduct risk management approach;
• conduct risk governance;
• key metrics and risk indicators;
• conduct risk policy development and policy compliance; and
• guidance and training.
In particular, the Group seeks to ensure that its conduct risk
management practices comply with any specific conduct risk
related obligations arising within the jurisdictions in which it
operates. On an annual basis, the Board approves the Group Risk
Appetite Statement, which incorporates statements for all
material risks, including conduct risk.
Risk mitigation
The primary risk mitigants for conduct risk are the suite of policies
and policy standards. The Group Conduct Risk Policy sets out
the minimum requirements for the effective management of
conduct risk within the Group to ensure that the Group’s overall
exposure remains within the boundary conditions of the Board’s
approved conduct risk appetite. The standards of behaviour are
detailed in the Group Code of Conduct to which all management
and staff must adhere and affirm annually. The Speak-Up Policy
sets out the steps staff can take to raise any concerns they might
have of wrongdoing, risk or malpractice in the Group. The Group
has a training schedule across the Group to support staff and
management in this regard.
Risk reporting
The current status of conduct risk is reported to the GRPC
(Senior Executives) and Board members through the Court Risk
Report on a monthly basis. The GRCRC oversees the status of
conduct risk in the Group, including the progress of associated
risk mitigation initiatives, issues and breaches, and significant
regulatory interactions on a quarterly basis.
Key points:
• Significant activity has taken place to ensure adequate oversight over customer impacting issues. Metrics in the Board approved
Risk Appetite Statement and a suite of management reporting metrics facilitate the monitoring of our principal conduct risks.
• To deliver the strategic objective of serving customers brilliantly, strong risk management of customer protection risks continued
to be a focus throughout 2019. The pace and quality of remediation, including root cause analysis to establish lessons learned
and help prevent similar issues in the future, continued.
• In 2019, the Group established an executive Culture Steering Committee to enhance oversight of risk culture across core values.
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Risk Management Report
Governance Financial Statements Other Information
Strategic Report Financial Review
Definition
Regulatory risk is the risk of failure to meet new or existing
regulatory and / or legislative requirements and deadlines or to
embed requirements into processes. Underpinned by strong
engagement with regulatory stakeholders, regulatory risk
comprises regulatory compliance risk, corporate governance risk,
regulatory change risk and financial crime risk.
Regulatory change risk is the risk that changes to existing or
new laws / regulations / codes / guidance applicable to the Group
are not effectively addressed and the risk that the Group fails to
take timely and remedial actions.
Regulatory compliance risk is the current or prospective risk to
earnings and capital arising from violations or non-compliance
with laws, rules, regulations, agreements, prescribed practices or
ethical standards which can lead to fines, damages and / or the
violating of contracts and can diminish an institution’s reputation.
Corporate governance risk is the risk of loss arising from
inappropriate corporate governance structures, authorities or
activities leading to incorrect or improper business decisions, or
regulatory / legal sanctions.
Financial crime risk is the risk of the firm being used in
connection with money laundering or terrorist financing and that
the measures adopted by the Group to prevent and detect money
laundering, terrorist financing or sanctions evasion are not
effective and / or do not meet regulatory expectations.
Risk management and measurement
The Group manages regulatory risk under the Group Risk
Framework. The framework identifies the Group’s formal
governance process around risk, including its framework for
setting risk appetite and its approach to risk identification,
assessment, measurement, management and reporting. This is
implemented by accountable executives and monitored by the
GRCRC, the GRPC, the BRC and Board in line with the overall
Group risk governance structure outlined on pages 121 to 123.
The effective management of regulatory risk is primarily the
responsibility of business management and is supported by the
Group Compliance and Operational Risk function.
As detailed in the Group’s Risk Appetite Statement, the Group
has no appetite to knowingly breach any of its regulatory
obligations. However, it acknowledges that instances may occur
as a consequence of being in business. The Group has therefore
established an approach to ensure the identification, assessment,
monitoring, management and reporting of these instances. The
Group also undertakes risk based regulatory and compliance
monitoring.
Risk mitigation
Risk mitigants include the early identification, appropriate
assessment and measurement and reporting of risks. The primary
risk mitigants for regulatory risk are the existence of appropriate
controls in place throughout the business.
Risk reporting
The current status of regulatory risk is reported to Senior
Executives and Board members through the Court Risk Report on
a monthly basis. The Group Chief Compliance Officer reports to
the GRCRC on the status of regulatory risk in the Group,
including the status of the top regulatory risks, the progress of
risk mitigation plans, issues and breaches, and significant
regulatory interactions, on a quarterly basis.
Key points:
• During 2019, supervisory bodies focused on the key areas of business model and profitability risk, credit risk, impairment
provisioning (IFRS 9), credit risk modelling, capital adequacy, business continuity management, operational risk, Brexit, stress
testing and behaviour and culture.
• Engagement with the Group’s regulators in 2019 included matters such as credit risk modelling, Targeted Review of Internal
Models, Tracker Mortgage Examination and AML.
• Existing programmes continued and new programmes were established in the Group during the year to continue preparations for
the significant regulatory change agenda over the coming years.
• The heavy regulatory and compliance agenda is expected to continue in 2020. The Group will maintain its focus on continuing
compliance with the existing regulatory requirements of the jurisdictions in which it operates.
• Regulators conduct investigations and examinations on an industry wide basis from time to time.
3 Management of key Group risks (continued)
3.6 Regulatory risk
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3 Management of key Group risks (continued)
3.7 Operational risk
Definition
Operational risk is defined as the risk of loss resulting from
inadequate or failed internal processes, people and systems, or
from external events. This risk includes Business Continuity Risk,
Data Quality & Reliability, Fraud, Information Security and Cyber
Risk, Information Technology, Insurable, Legal & Contractual,
Model, Payments, Sourcing, Unauthorised Trading and Business
Processes.
Risk management
The Group faces operational risks in the normal pursuit of its
business objectives. The primary goals of operational risk
management are ensuring the sustainability and integrity of the
Group’s operations and the protection of its reputation by
controlling, mitigating or transferring the impact of operational
risk. Operational risk cannot be fully eliminated. The Group has
established a formal approach to the management of operational
risk in the form of an ‘Operational Risk Management Framework’
which defines the Group’s approach to identifying, assessing,
managing, monitoring and reporting the operational risks which
may impact the achievement of the Group’s business objectives.
This framework outlines, inter alia the following:
• formulation and dissemination of a Group Operational Risk
Policy specifying the risk management obligations of
management and staff within the Group;
• maintaining organisational structures for the oversight,
monitoring and management of operational risk throughout
the Group;
• setting aside capital and maintaining a suite of insurance
policies;
• setting out the boundary conditions in which operational risks
are to be managed, by way of Board approved Risk Appetite
Statement; and
• embedding formal operational risk management processes
and standards throughout the Group.
Operational risk policy and governance
The Group continues to maintain its ongoing oversight and
control of its exposure to operational risk. A critical component of
the operational risk management framework is a BRC approved
Operational Risk Policy which sets out the Group’s objectives and
the obligations of management in respect of operational risk.
Governance and oversight of operational risk forms part of the
Group’s Risk Framework which aims to ensure that risk
management activities are adequate and commensurate with the
Board approved risk appetite. The GORC is appointed by the
GRPC and is responsible for the oversight and monitoring of
operational risk within the Group and material subsidiaries.
Business units hold primary responsibility for the management of
operational risk and compliance with internal control
requirements.
Group Operational Risk is accountable for the development and
maintenance of an Operational Risk Management Framework to
ensure a robust, consistent and systematic approach is applied
to managing operational risk exposures across the Group.
Operational risk appetite
The Board has set out its appetite for operational risk in terms of
both qualitative factors and quantitative measures reflecting the
nature of non-financial risks. As such, the monitoring of
operational risk indicators is supplemented with qualitative review
and discussion at senior management executive committees to
ensure appropriate actions are taken to enhance controls.
Risk assessment
A systematic identification and assessment of the operational
risks faced by the Group is a core component of the Group’s
overall operational risk framework. This is known as the Risk and
Control Self Assessment (RCSA) and is a framework for
capturing, measuring and managing operational risk as well as
providing a mechanism for consistent identification, monitoring,
reviewing, updating and reporting of risks throughout the Group.
A key element of this process is the categorisation of risks by
taxonomy.
Risk mitigation and transfer
In addition to business unit risk mitigation initiatives, the Group
implements specific policies and risk mitigation measures for key
operational risks including, but not limited to, fraud, sourcing,
technology and business disruption risks. This strategy is further
supported by risk transfer mechanisms such as the Group’s
insurance programme, whereby selected risks are reinsured
externally. The Group Insurance programme is reviewed annually
to ensure coverage remains appropriate to the Group’s risk
management objectives. The Group’s total capital requirement
arising from operational risk is covered by Pillar 1 regulatory
capital, calculated using the TSA, and the Pillar 2 capital add-on,
calculated using an internal model based on outputs of the
scenario analysis programme as part of the ICAAP process.
Risk reporting
Regular reporting of operational risk is a key component of the
Group’s Operational Risk Framework.
The Board receives monthly update on the operational risk profile
via the Court Risk Report which provides a timely assessment of
material operational risks against risk appetite.
At least four times a year, the Head of Group Operational Risk
reports to GORC on the status of operational risk in the Group,
including the status of the top operational risks, the progress of
risk mitigation initiatives and programmes, significant loss events,
and the nature, scale and frequency of overall losses.
In addition, specified operational risk information is collated for
the purposes of reporting to regulatory supervisors in the
jurisdictions in which the Group operates.
Key points:
• The business control framework has continued to mature across the Group resulting in enhanced risk identification and
assessment, leading to improved risk based decisions and prioritisation of mitigating activities.
• During 2019, a number of enhancements to the business control environment were developed. Continuing progress on the
enhancement of control certification and testing, business process mapping, and forward looking risk management processes.
• The Group continues its multi-year programme to make substantial investment in its IT systems and given the risk attendant to
any large transformation, there is continued focus to ensure the sustainability and integrity of the Group’s operations.
152

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3 Management of key Group risks (continued)
3.8 Business and strategic risk
Definition
Business and strategic risk encompasses:
(i) the Group’s current business model on the basis of its ability
to generate acceptable returns, given its quantitative
performance, key success drivers and dependencies, and
business environment; and
(ii) the sustainability of the Group’s strategy on the basis of its
ability to generate acceptable returns based on its strategic
plans and financial forecasts, and an assessment of the
business environment.
It includes the risk that the Group fails to develop or to execute
successful strategies to deliver acceptable returns in the context
of the economic, competitive, regulatory / legal and interest rate
environments that arise. It also includes non-financial risks such
as people risks and risks relating to climate change.
Risk management, measurement and reporting
Divisions and business units are responsible for delivery of their
business plans and management of such factors as pricing, sales
and loan volumes, operating expenses and other factors that may
introduce earnings volatility. Business, divisional and portfolio
strategy is developed within the boundaries of the Group’s
strategy as well as the Group’s Risk Appetite Statement. These
strategies are approved by business divisional CEOs and
presented to the Board on an annual basis.
Monitoring of business and strategic risk is performed on a
divisional basis, and measured quarterly, with a scorecard
addressing movements in key indicators around income
diversification, margin trends, customer advocacy, costs, and
employee engagement. In addition to this, business and strategic
risk is evaluated through quarterly updates in the Court Risk
Report which is reviewed by the GRPC, the BRC and the Board.
The key dimensions evaluated within business and strategic risk
are:
• the strength of the Group's returns;
• appropriate strategic plan and financial projections;
• strength of the Group’s competitive position; and
• management capability, technology capability and resource
availability.
The Group also reviews business and strategic risk as part of the
annual risk identification process. In addition there is an annual
review of business and strategic risk to ensure that the BRC is
comfortable with the processes in place to manage business and
strategic risk and that residual risk is within the Group’s risk
appetite.
Risk mitigation
The Group mitigates business risk through business planning
methods, such as the diversification of revenue streams, cost
base management and oversight of business plans, which are
informed by expectations of the external environment and the
Group’s strategic priorities.
At an operational level, the Group’s annual budget process sets
expectation at a business unit level for lending volumes, margins
and costs. The tracking of actual and regularly forecasted
volumes, margins and costs against budgeted levels is a key
financial management process in the mitigation of business risk.
In the case of strategic risk, this risk is mitigated through regular
updates to the Board on industry developments, the
macroeconomic environment and associated trends which may
impact the Group’s activities, review of the competitive
environment and strategies at a divisional and business unit level.
Key points:
• On an annual basis, the Board reviews the Group’s strategic objectives and key underlying assumptions to confirm that the
strategic shape and focus of the Group remains appropriate.
• In terms of Brexit, the Group continues to monitor the ongoing EU and UK negotiations identifying, monitoring and mitigating risks
associated with various outcomes. Notwithstanding ongoing uncertainties related to Brexit, economic growth in core markets of
Ireland and UK remain positive.
• In a close to full capacity labour market within increasing competition for skilled resources, the Group has launched a People
Strategy focused on a range of initiatives to ensure recruitment and retention of resources.
• The Group is undergoing significant transformation across Culture, Business Model and Systems with a number of programmes
underway delivering against this strategy.
• The Group continues to effectively manage a range of technology programmes including supporting the Group’s digital strategy,
complying with the evolving regulatory environment whilst continuing to invest in improving resilience, efficiencies and customer
experience across channels.
• Continued low levels of bond yields, official interest rates and discount rates, competitive intensity in the UK, and a slower
conversion of Irish economic activity into credit formation, causes challenges and risk.
• The Group’s Benchmark Interest Rate Reform programme is managing transition to the new regulatory compliant benchmarks.
• The Group continues to develop its RSB agenda and has enhanced Board and executive oversight. RSB is a key theme for the
Group during 2020 and acting in a responsible and sustainable way involves consideration of, inter alia, climate related impacts
both across our own footprint and that of our customers and stakeholders. As part of our enterprise approach to manage climate
risks, the Group is embedding the assessment of risks and opportunities into key business planning and risk management
processes (page 114).

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3 Management of key Group risks (continued)
3.9 Pension risk
Definition
Pension risk is the risk in the Group defined benefit pension
schemes that the assets are inadequate or fail to generate returns
that are sufficient to meet the schemes’ liabilities. This risk
crystallises for the sponsor when a deficit emerges of a size
which implies a material probability that the liabilities will not be
met.
Risk management, measurement and reporting
The Group sponsors a number of defined benefit pension
schemes for past and current employees. At 31 December 2019,
the Group’s net IAS 19 pension deficit was €0.1 billion (2018: €0.2
billion) (note 46). The investment policy pursued to meet the
schemes’ estimated future liabilities is a matter for the Trustees
and the schemes’ Investment Committees. The Group, as
sponsor, has an opportunity to communicate its views on
investment strategy to the Trustees and receives regular updates
including scenario analysis of pension risk.
The Board receives monthly updates on movements in assets,
liabilities and the size of the deficit and also more detailed
quarterly updates through the Court Risk Report. In addition,
there is an annual review of pension risk to ensure that the Board
is satisfied with the processes in place to manage the risk and
that residual risk is within the Group’s risk appetite.
Risk mitigation
In order to mitigate pension risk, a new hybrid scheme was
introduced in 2007 for all new entrants (note 46) and the defined
benefit schemes were closed to new entrants. A defined
contribution scheme was introduced during 2014 for all new
employees and the hybrid scheme was closed to new entrants.
In 2010, the Group carried out an extensive pensions review in
order to address the pension deficit by a combination of benefit
restructuring and additional employer contributions over a period
of time to 2017.
In 2013, a further review, which also incorporated benefit
restructuring, was carried out which reduced the pension deficit
and is expected to further reduce the deficit through additional
employer financial support in the period from 2016 to 2020. This
additional financial support will broadly match the deficit
reduction as a result of the benefit restructuring.
Liability and risk management exercises continued in 2019 and
are considered on an ongoing basis. Nevertheless, a deficit still
exists and as the pension funds are subject to market
fluctuations, interest rate and inflation risks, a level of volatility
associated with IAS 19 pension deficits (note 46) and their impact
on the Group’s capital ratios remains.
Key points:
• Defined benefit pension funds are subject to market fluctuations, and interest rate and inflation risks, thus a level of volatility is
associated with defined benefit pension funding.
• In order to further address this volatility, a review of the Group sponsored defined benefit pension schemes was initiated and
completed in 2013. The resulting proposals arising from the review were accepted by employee members of the main defined
benefit scheme, the BSPF.
• These proposals have now been implemented for the BSPF. Similar proposals were implemented for two other Group defined
benefit schemes during 2014 and a third scheme in 2015.
• The Group has continued to support Trustees in taking action to improve the correlation between assets and liabilities and reduce
volatility.
• The Group has reduced deficit sensitivity to both euro and sterling interest rate and inflation rate movements through increased
hedging.
• The Group has also supported Trustees in diversifying asset portfolios away from listed equity into other return-seeking but
potentially less volatile asset classes.
• Further liability and risk management exercises will be considered on an ongoing basis in 2020.
154

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3 Management of key Group risks (continued)
3.10 Reputation risk
Definition
Reputation risk is defined as the risk to earnings or franchise
value arising from adverse perception of the Group’s image on
the part of customers, suppliers, counterparties, shareholders,
investors, staff, legislators, regulators or partners.
This risk typically materialises through a loss of business in the
areas affected. Reputation is not a standalone risk but overlaps
with other risk areas and may often arise as a consequence of
external events or operational risk related issues.
Risk management, measurement and reporting
Group Corporate Affairs is the primary function responsible for
managing reputation risk in the Group. With the exception of
certain specific communications to, for example, investors,
regulators and customers, Group Corporate Affairs manages all
external communications, stakeholder and government relations
The division works closely with Group Investor Relations, Group
Culture, Internal Communications and Group Marketing including
the RSB team, to ensure communication with external and
internal stakeholders is consistent, thereby helping to protect and
enhance the Group’s reputation. Reputation risk indicators are
tracked on an ongoing basis.
These indicators include:
• monitoring of print, broadcast, online and social media;
• trust and reputation tracking;
• market trends and events;
• stakeholder engagement; and
• monitoring risk events which may have the potential to
impact Group reputation.
The Group reviews reputation risk as part of the annual risk
identification process and has a Group Reputation Risk Policy in
place.
Quarterly updates are reported to the GRPC, the BRC and the
Board as part of the Court Risk Report. In addition, there is an
annual review of reputation risk to ensure that the BRC is
comfortable with the processes in place to manage reputation
risk and that residual risk is within the Group’s risk appetite.
Risk mitigation
A wide range of processes and structures are used to identify,
assess and mitigate potential risk to the Group’s reputation. This
ensures that potential impacts on the Group’s reputation are
taken into account as part of the decision making process.
Key points:
• The Group’s reputation continues to be influenced and shaped by a range of factors; the macroeconomic and political
environment, media and public commentary and general sector developments. More specifically, the Group’s decisions and
actions in pursuit of its strategic and tactical business objectives, and their interaction with the external environment, will influence
the Group’s reputation and how it is perceived by stakeholders.
• Within this context, actions and achievements of the Group over the past 12 months that have impacted positively on the Group’s
reputation include:
- ongoing communication of the Group Strategic Plan to 2021;
- launch of the Group’s new brand positioning, Financial Wellbeing Programme, and new VCU;
- ongoing participation in and support for the work of the Irish Banking Culture Board;
- introduction of a Sustainable Finance Fund and becoming signatory to UN Environment Programme - Finance
Initiative Principles for Responsible Banking; and
- external communications and stakeholder engagement activities associated with the Bank of Ireland NETA 2019.
• Some events in 2019 had a negative impact on the Group’s reputation including the ongoing CBI Tracker Mortgage Examination
and a systems outage in Q4 2019.
• All reputational issues were carefully and intensively managed through the identification of potential risks and the deployment of
communication strategies to mitigate these risks, as appropriate.

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4 Capital management
Key points:
• CET1 ratio is 15.0% under regulatory rules and 13.8% on a fully loaded basis at 31 December 2019.
• The Group is required to maintain a minimum CET1 ratio of 10.65% on a regulatory basis from 1 January 2020, increasing to
11.15% from July 2020, and to 11.45% from December 2020.
- This includes a Pillar 1 requirement of 4.50%, a Pillar 2 requirement (P2R) of 2.25%, a capital conservation buffer (CCB) of
2.50%, a CCyB of 0.90% (increasing to 1.2% from 16 December 2020), and an O-SII buffer of 0.50% (increasing to 1.0% from
1 July 2020).
- Pillar 2 guidance (P2G) is not disclosed in accordance with regulatory preference.
• The Group expects to maintain a CET1 ratio in excess of 13.5% on a regulatory basis and on a fully loaded basis at the end of the
O-SII phase-in period. This includes meeting applicable regulatory capital requirements plus an appropriate management buffer.
• Total capital ratio is 18.6% under regulatory rules at 31 December 2019.
• Leverage ratio is 7.1% on a regulatory basis and 6.5% on a fully loaded basis as at 31 December 2019.
• MREL ratio of 23.8% at 31 December 2019.
Capital management objectives and policies (audited)
The objectives of the Group’s capital management policy are to
ensure that the Group has sufficient capital to cover the risks of
its business and support its strategy and at all times to comply
with regulatory capital requirements. It seeks to minimise
refinancing risk by managing the maturity profile of non-equity
capital while the currency mix of capital is managed to ensure
that the sensitivity of capital ratios to currency movements is
minimised. The capital adequacy requirements set by the
regulatory authorities and economic capital based on internal
models are used by the Group as the basis for its capital
management. The Group seeks to maintain sufficient capital to
ensure that these requirements are met.
The current status of capital adequacy, including risk dashboards
and risk appetite compliance, is reported to Senior Executives
and the Board through the Court Risk Report on a monthly basis.
ICAAP (unaudited)
The ICAAP process facilitates the Board and senior management
in adequately identifying, measuring and monitoring the Group’s
risk profile. Underpinning the ICAAP process, the Group prepares
detailed financial projections. Base case projections are prepared
using consensus macroeconomic forecasts together with Group-
specific assumptions, and the stress case is prepared based on a
severe but plausible stress economic scenario.
The ICAAP process demonstrates that the Group has sufficient
capital under both the base and stress case scenarios to support
its business and achieve its objectives having regard to Board
approved Risk Appetite and Strategy, and to meet its regulatory
capital, leverage and liquidity requirements.
The Board approved ICAAP Report and supporting
documentation is submitted to the ECB and CBI on an annual
basis, and is subject to regulatory review as part of the SREP.
156

Capital ratios have been presented including the benefit of the retained profit in the year. Under Article 26 (2) of the Capital Requirements Regulation, financial institutions may include
independently verified interim profits in their regulatory capital only with the prior permission of the competent authority, namely the European Central Bank, and such permission has
been obtained.
2
A foreseeable dividend of €189 million (31 December 2018: €173 million) has been deducted as required under Article 2 of European Union Regulation No. 241/2014.
3
Deduction relates to deferred tax assets on losses carried forward, net of certain deferred tax liabilities. The deduction is phased at 50% in 2019, increasing annually at a rate of 10%
thereafter.
4
Includes technical items such as non-qualifying Common equity tier 1 items, Pension Volatility Adjustment and pension asset deductions.
5
The parent entity refers to BOIG plc.
6
The calculation of the Group’s Tier 1, Total Capital and related ratios (including Leverage ratio) at 31 December 2019 are stated after a prudent application of the requirements of
Articles 85 and 87 of Capital Requirements Regulation (further details are provided on page 159). As a result of the establishment of BOIG plc, and due to the requirements of Articles
85 and 87 of the Capital Requirements Regulation, regulatory capital instruments issued by subsidiaries (i.e. The Governor and Company of the Bank of Ireland) cannot be recognised
in full in the prudential consolidation.

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4 Capital management (continued)
CRD IV - 20181
(unaudited) CRD IV - 20191
(unaudited)
Regulatory Fully loaded Regulatory Fully loaded
Capital Requirements Directive IV (unaudited)
Implementation of the CRD IV legislation commenced on a
phased basis from 1 January 2014. The CRD IV transition rules
resulted in a number of deductions from CET1 capital being
introduced on a phased basis, all of which are now fully
implemented, with the exception of the DTAs (dependent on
future profitability) deduction which in the case of the Group is
phased to 2024. The ratios outlined in this section reflect the
Group’s interpretation of the CRD IV rules as published on 27
June 2013 and subsequent clarifications, including ECB
regulation 2016/445 on the exercise of options and discretions.
Regulatory Capital Developments (unaudited)
CRD IV continues to evolve through amendments to current
regulations and the adoption of new technical standards. On 7
June 2019, the amendments to the existing CRD and the CRR, as
well as the related EU BRRD and the SRM Regulation, were
published in the Official Journal of the EU and entered into force
on 27 June 2019. The majority of the changes impacting capital
contained in the amended CRR (e.g. binding leverage
requirement and amended SME supporting factor) will become
applicable from 28 June 2021. The amendments to CRD IV and
the BRRD require transposition into Irish law by 28 December
2020.
In December 2017, the Basel Committee announced revisions to
the Basel Framework. The revisions focus on the standardised
and IRB approaches to measuring credit risk and include the
introduction of an aggregate output floor to ensure banks’ RWAs
calculated via internal models are no lower than 72.5% of RWAs
calculated under TSA.
The revised standards will take effect from 1 January 2022, with a
phase-in period of five years for the aggregate output floor. The
Group is currently assessing the impact of these revisions
although any impact will depend on the implementation at EU
level.
In addition to the new Basel rules, there are a number of changes
to ECB / EBA regulatory requirements planned for the coming
years that will impact the Bank’s regulatory capital and RWA
calculations. These include new ECB and EBA NPL Guidelines;
EBA standards and guidelines on Definition of Default and PD /
LGD Estimates. The net impact of the evolving regulatory
framework including EBA and ECB guidelines is expected to
consume up to 80 basis points of CET1 by the end of 2021, with
the majority expected by 30 June 2020.
The Group actively monitors these developments and seeks to
comply with the new requirements when finalised.
IFRS 16 capital impact (unaudited)
IFRS 16, Leases, is effective from 1 January 2019 and requires
lessees to recognise assets and liabilities for all leases where
previously lessees could recognise a lease as either an operating
or finance lease. The impact of the adoption of IFRS 16 increased
the Group’s RWAs by c.€600 million, which reduced the fully
loaded CET1 ratio by c.20 basis points.
Credit Risk Transfer transactions
In November 2019, the Group executed a transaction to share a
further c.$70 million of credit risk on the Group’s existing
Acquisition Finance CRT transaction. During December 2019, the
Group executed a CRT transaction to refinance the Grattan
Securities CRT transaction. This transaction references a portfolio
of €2 billion of Irish and UK loan assets originated by Bank of
Ireland’s Corporate Banking business and involves the execution
of a credit protection deed backed by €265 million of unfunded
and funded credit protection.
These innovative transactions reduce the Group’s credit risk
exposure through a risk sharing structure whereby the investors
assume the credit risk for potential credit losses on the reference
portfolios of loan assets. No assets were derecognised from the
Group balance sheet and the reference portfolio of loan assets
and related customer relationships will continue to be maintained
by the Group.
Non-performing exposure transactions
During April 2019, the Group completed a securitisation on a
portfolio of c.€0.4 billion of RoI BTL Irish mortgages. In August
2019, the Group also executed a sale of predominantly BTL Irish
mortgages. In aggregate these transactions contributed c.30
basis points to the Group’s fully loaded CET1 ratio. In both
transactions the underlying loan assets were derecognised from
the Group balance sheet. Following completion of the
securitisation transaction the related customer relationships
continue to be maintained by the Group.
1
Capital ratios have been presented including the benefit of the retained profit in the year. Under Article 26 (2) of the Capital Requirements Regulation, financial institutions may include
independently verified interim profits in their regulatory capital only with the prior permission of the competent authority, namely the European Central Bank, and such permission has
been obtained.
2
Risk weighted assets reflect the application of certain Central Bank of Ireland required Balance Sheet Assessment adjustments and the updated treatments of expected loss.
3
Further details on risk weighted assets as at 31 December 2019 can be found in the Group’s Pillar 3 disclosures for the year ended 31 December 2019 available on the Group’s
website.
158

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159
4 Capital management (continued)
Capital requirements / buffers (unaudited)
The table above sets out the Group’s CET1 capital requirements
for 2020 and the authorities responsible for setting those
requirements.
The Group is required to maintain a CET1 ratio of 10.65% on a
regulatory basis from 1 January 2020, increasing to 11.15% from
5 July 2020 and to 11.45% from 16 December 2020. This
includes a Pillar 1 requirement of 4.5%, a P2R of 2.25%, a CCB
of 2.50%, a CCyB of 0.9% (0.6% in respect of RoI and 0.3% in
respect of UK (increasing to 0.6% from 16 December 2020)) and
an O-SII Buffer of 0.5% (increasing to 1.0% from 1 July 2020).
P2G is not disclosed in accordance with regulatory preference.
The CCyBs are independently set in each country by the relevant
designated authority. CCyBs are applied in proportion to an
institution’s RWA exposures in the particular country. The CBI has
set a CCyB of 1.0% in RoI (since July 2019). In the UK, the
Financial Policy Committee UK has set a CCyB of 1.0% (since
November 2018) increasing to 2.0% from 16 December 2020.
CCyB rates are subject to quarterly review by the relevant
designated authority.
The CBI has advised that the Group is required to maintain an O-
SII buffer of 0.5% from July 2019, increasing to 1.0% from July
2020 and 1.5% from July 2021. The O-SII buffer is subject to
annual review by the CBI.
The Group expects to maintain a CET1 ratio in excess of 13.5%
on a regulatory basis, and on a fully loaded basis at the end of
the O-SII phase-in period. This includes meeting applicable
regulatory capital requirements plus an appropriate management
buffer.
The CBI has requested power to introduce a Systemic Risk Buffer
in Ireland, which could increase capital demand. The timing, size
and application of any potential Systemic Risk Buffer are
unknown.
Minimum Requirement for Own Funds and Eligible Liabilities
(unaudited)
In November 2019, the SRB advised that the binding MREL for
the Group had been set at 11.93% of total liabilities and own
funds as at December 2017 (equivalent to 27.09% of RWAs) to be
met by 1 January 2021. The Group’s MREL ratio is 23.8% at 31
December 2019 (based on December 2019 RWA). Modest MREL
eligible senior debt issuance of c.€1 billion to €2 billion per
annum is anticipated.
Risk weighted assets (unaudited)
RWA on a regulatory basis, were €50.1 billion at 31 December
2019 (2018: €47.8 billion). The increase of €2.3 billion in RWA is
primarily due to net loan book growth and changes in asset
quality and book mix, FX impact on RWA and the implementation
of IFRS 16 offset by the impact of the disposal of NPEs and the
sale of the UK Cards business.
Regulatory ratio (unaudited)
The CET1 ratio was 15.0% at 31 December 2019 (2018: 15.0%).
The movement is primarily due to organic capital generation
(c.+160 basis points) and the disposal of NPEs and the UK credit
card portfolio (c.+40 basis points) offset by RWA growth (c.-50
basis points), the impact of CRD phasing for 2019 and IFRS 16
impacts (c.-45 basis points), investment in the Group’s
transformation programmes (c.-50 basis points), an accrual for a
proposed dividend (c.-40 basis points) and other net movements,
including movements in the Group’s defined benefit pension
schemes (c.-15 basis points).
Fully loaded ratio (unaudited)
The Group’s fully loaded CET1 ratio is 13.8% at 31 December
2019 (2018: 13.4%). The increase of c.40 basis points is primarily
due to organic capital generation (c.+170 basis points) and the
sale of NPEs and UK Cards (c.+40 basis points) offset by RWA
growth (c.-50 basis points), investment in the Group’s
transformation programmes (c.-50 basis points), an accrual for a
proposed dividend (c.-40 basis points), the impact of IFRS 16
implementation (c.-20 basis points) and other net movements,
including movements in the Group’s defined benefit pension
schemes (c.10 basis points).
Expected range.

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4 Capital management (continued)
Leverage ratio (unaudited)
The leverage ratio at 31 December 2019 is 7.1% on a CRD IV
regulatory basis (2018: 7.0%), 6.5% on a pro forma fully loaded
basis (2018: 6.3%).
The European Commission (EC) has introduced a binding
leverage requirement of 3% which will be applicable from 28
June 2021. The Group expects to remain well in excess of this
requirement.
Distribution policy (unaudited)
The Group paid a dividend of €173 million, equivalent to 16 cents
per share, in respect of the 2018 financial year on 10 June 2019.
The dividend represented a payout of 30% of sustainable
earnings (see page 331 for further information on alternative
performance measures).
In respect of 2019, the Board has proposed a dividend of €189
million, equivalent to 17.5 cents per share, representing a payout
of 34% of sustainable earnings and an increase of 9% on the 16
cents per share paid in respect of 2018.
The Group expects that dividends will increase on a prudent and
progressive basis and, over time, will build towards a payout ratio
of around 50% of sustainable earnings.
The dividend level and the rate of progression will reflect,
amongst other things, the strength of the Group’s capital and
capital generation, the Board’s assessment of the growth and
investment opportunities available, any capital the Group retains
to cover uncertainties and any impact from the evolving
regulatory and accounting environments. Other means of capital
distribution will be considered to the extent the Group has excess
capital.
Distributable items (unaudited)
As at 31 December 2019, the Company had reserves available for
distribution of €6.2 billion. Further information on the Company’s
equity is provided on page 297.
Individual consolidation (unaudited)
The regulatory CET1 ratio of the Bank calculated on an individual
consolidated basis as referred to in Article 9 of the CRR is 15.2%
at 31 December 2019 (2018: 15.2%).
Impediments to the transfer of funds (unaudited)
There is a requirement to disclose any impediment to the prompt
transfer of funds within the Group. In respect of the Group’s
licensed subsidiaries, the Group is obliged to meet certain license
conditions in respect of capital and / or liquidity. These
requirements may include meeting or exceeding appropriate
capital and liquidity ratios and obtaining appropriate regulatory
approvals for the transfer of capital or, in certain circumstances,
liquidity. The Group’s licensed subsidiaries would be unable to
remit funds to the parent when to do so would result in such
ratios or other regulatory permissions being breached. Apart from
this requirement, there is no restriction on the prompt transfer of
own funds or the repayment of liabilities between the subsidiary
companies and the parent.
At 31 December 2019, own funds were in excess of the required
minimum requirement.
160Financial Statements
Contents
Statement of Directors’ responsibilities 162
Independent Auditor’s Report 163
Consolidated financial statements 170
Notes to the consolidated financial statements 177
161

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Statement of Directors’ responsibilities
Signed on behalf of the Board by
21 February 2020
Patrick Kennedy
Chairman
Patrick Haren
Deputy Chairman
Francesca McDonagh
Group Chief Executive
The following statement, which should be read in conjunction
with the Independent Auditor’s Report set out on pages 163 to
169, is made with a view to distinguishing for shareholders the
respective responsibilities of the Directors and of the Auditor in
relation to the financial statements.
The Directors are responsible for preparing the Annual Report
and the consolidated financial statements in accordance with
IFRS adopted by the EU and with those parts of the Companies
Act 2014 applicable to companies reporting under IFRS, the EU
(Credit Institutions: Financial Statements) Regulations, 2015 and,
in respect of the consolidated financial statements, Article 4 of
the IAS Regulation. Company law requires the Directors to
prepare Group and Company financial statements for each
financial year.
The Directors are responsible for preparing the Company financial
statements in accordance with Generally Accepted Accounting
Practice in Ireland (accounting standards issued by the Financial
Reporting Council of the UK, including Financial Reporting
Standard 101 ‘Reduced disclosure framework’, and promulgated
by the Institute of Chartered Accountants in Ireland and Irish law).
Under Irish law the Directors shall not approve the Group's and
Company's financial statements unless they are satisfied that
they give a true and fair view of the Group's and the Company's
assets, liabilities and financial position as at the end of the
financial year and of the profit or loss of the Group for the
financial year.
In preparing these financial statements, the Directors are required
to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether the consolidated financial statements have
been prepared in accordance with IFRS adopted by the EU,
and the Company financial statements have been prepared in
accordance with Financial Reporting Standards (FRS) 101,
and ensure that they contain the additional information
required by the Companies Act 2014; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to:
• correctly record and explain the transactions of the Company;
and
• enable, at any time, the assets, liabilities, financial position
and profit or loss of the Company to be determined with
reasonable accuracy.
The Directors are also responsible under section 282 of the
Companies Act 2014 for taking all reasonable steps to ensure
such records are kept by its subsidiaries which enable them to
ensure that the financial statements of the Group comply with the
provisions of the Companies Act 2014 including Article 4 of the
IAS Regulation and enable the financial statements to be audited.
The Directors are responsible for monitoring the effectiveness of
the Company’s systems of internal control in relation to the
financial reporting process, and have a general responsibility for
safeguarding the assets of the Group and the Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Under applicable law and the requirements of the Listing Rules
issued by the Irish and London Stock Exchanges, the Directors
are also responsible for preparing a Directors’ Report and reports
relating to Directors’ remuneration and corporate governance.
The Directors are also required by the Transparency (Directive
2004/109/EC) Regulations 2007 and the Transparency Rules to
include a management report containing a fair review of the
business and a description of the Principal Risks and
Uncertainties facing the Group.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the
Company’s website.
Legislation in Ireland governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
The Directors confirm that, to the best of each Director’s
knowledge and belief:
• they have complied with the above requirements in preparing
the financial statements;
• the consolidated financial statements, prepared in
accordance with IFRS as adopted by the EU, give a true and
fair view of the assets, liabilities and financial position of the
Group and of the profit of the Group;
• the Company financial statements, prepared in accordance
with FRS 101, give a true and fair view of the assets, liabilities
and financial position of the Company;
• the management report contained in the Strategic Report
includes a fair review of the development and performance of
the business and the position of the Group and the Company,
together with a description of the Principal Risks and
Uncertainties that they face; and
• the Annual Report and the financial statements, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
162

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Independent Auditor’s Report
to the members of Bank of Ireland Group plc
163

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
Report on the audit of the financial statements
Opinion
We have audited the Group and Company financial statements of
Bank of Ireland Group plc (the ‘Company’) for the year ended 31
December 2019 set out on pages 170 to 302, which comprise the
consolidated income statement, consolidated statement of
comprehensive income, consolidated balance sheet,
consolidated statement of changes in equity, consolidated cash
flow statement, company balance sheet, company statement of
changes in equity and related notes, including the Group
accounting policies set out in note 1 and the Company
accounting policies set out on page 298. The financial reporting
framework that has been applied in their preparation is Irish Law
and International Financial Reporting Standards (IFRS) as
adopted by the European Union and, as regards the Company
financial statements, Irish Law and FRS 101 Reduced Disclosure
Framework.
In our opinion:
• the financial statements give a true and fair view of the
assets, liabilities and financial position of the Group and
Company as at 31 December 2019 and of the Group’s profit
for the year then ended;
• the Group financial statements have been properly prepared
in accordance with IFRS as adopted by the European Union;
• the Company financial statements have been properly
prepared in accordance with FRS 101 Reduced Disclosure
Framework issued by the UK’s Financial Reporting Council;
and
• the Group and Company financial statements have been
properly prepared in accordance with the requirements of the
Companies Act 2014 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are further described
in the Auditor’s Responsibilities section of our report. We believe
that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is consistent
with our reporting to the Group Audit Committee (GAC).
We were appointed as Auditor by the Board of Directors on 19
April 2018. The period of total uninterrupted engagement is
therefore two years for the year ended 31 December 2019. We
have fulfilled our ethical responsibilities under, and we remained
independent of the Group in accordance with, ethical
requirements applicable in Ireland, including the Ethical Standard
issued by the Irish Auditing and Accounting Supervisory Authority
(IAASA) as applied to public interest entities. No non-audit
services prohibited by that standard were provided.
Key audit matters: our assessment of risks of material
misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in
decreasing order of audit significance, were as follows:
Impairment loss allowance under IFRS 9
Refer to pages 181 to 184 (accounting policy) and note 27
(financial disclosures)
The key audit matter
The calculation of credit provisions requires a high degree of
judgement to reflect recent developments in credit quality, arrears
experience, and / or emerging macroeconomic risks.
The key areas where we identified greater levels of management
judgement and therefore increased levels of audit focus in the
Group's compliance with IFRS 9 include but are not limited to:
• Accuracy of Expected Credit Loss (ECL) models: The
calculation of ECL uses complex and inherently judgemental
modelling techniques. The models used in the various loan
portfolios are the key drivers of the Group's ECL results and
are therefore the most significant judgemental aspect of the
Group's ECL modelling approach.
• Significant Increase in Credit Risk (SICR): The criteria
selected to identify a significant increase in credit risk is a key
area of judgement within the Group's ECL calculation. The
application of the criteria relies on a significant number of
data elements, which form the basis of modelling of ECL. The
application of the appropriate criteria and accuracy of the key
data elements used in the loan processes are significant in
determining the ECL allowances.
• Forward looking macroeconomic scenarios: IFRS 9 requires
the Group to measure ECL on a forward-looking basis
reflecting future economic conditions. Significant
management judgement is applied to determining the
economic scenarios used and the probability weightings
applied to them, particularly given these assessments are
subject to material uncertainty from Brexit. The impact of
Brexit is subject to unprecedented levels of uncertainty of
consequences, with the full range of possible effects
unknown.
• Management adjustments: Adjustments to the model-driven
ECL results are applied by management to address known
impairment model limitations or emerging trends. Such
adjustments are inherently uncertain and significant
management judgement is involved.164

• Individual provisions for Stage 3 assets: Provisions for loans
identified as credit-impaired in the secured lending portfolios
are determined by means of discounted cash flows (DCF) and
require significant judgement in many cases.
How the matter was addressed in our audit
• We performed end-to-end process walkthroughs to identify
the key systems, applications and controls used in the ECL
processes. We tested the design and operating effectiveness
of the key controls over the completeness and accuracy of
the key data inputs into the impairment models.
• We tested SICR criteria relating to the authorisation of the
criteria, the validation metrics, and the application of the
criteria in the models.
• In conjunction with our modelling specialists, we tested the
design and implementation of controls over the modelling
process and methodologies, including model monitoring,
validation and approval, as well as testing the design and
implementation of controls over model outputs and
recognition and approval of post model adjustments.
• We tested the design and implementation of key controls
relating to the estimation of macroeconomic forecasts used in
measuring ECL including the economic scenarios and
probability weightings applied to them.
• We re-performed key aspects of the Group's SICR
calculations and selected samples of financial instruments to
determine whether a SICR was appropriately identified.
• We assessed the appropriateness of the key judgements in
the ECL models and the loss rate ECL calculations.
• We performed independent reperformance testing over key
aspects of the models underlying the calculation of expected
credit losses.
• We compared the Forward Looking Information (FLI) against
industry forecasts and the inputs used by management in
order to determine the base case and upside and downside
scenarios.
• We assessed the adequacy of post model adjustments for
certain portfolios, having regard for the risk profile of loan
books, recent loss history and performance of the relevant
portfolios and key uncertainties such as Brexit. We
challenged whether the modelled collective impairment
provision already appropriately reflected the assumptions
underpinning the adjustments or if a management adjustment
was required.
• For a risk-based selection of loans, we critically assessed, by
reference to the underlying documentation and through
inquiry of management, whether the indicators for a credit-
impairment had been identified. We challenged the
reasonableness of management's judgement in this regard.
• For a selection of credit-impaired loans, where relevant, we
examined the forecasts of future cash flows prepared by
management to support the calculation of the impairment
provision and challenged the assumptions through comparing
estimates to external support where available. Where
appropriate, this work involved considering third party
valuations of collateral, internal valuation guidelines derived
from benchmark data and / or externally prepared reports to
determine whether appropriate valuation methodologies were
employed.
• We found the judgments used by management in determining
the ECL charge and provision recognised to be reasonable.
Valuation of defined benefit pension net liability €139 million
(2018: €228 million)
Refer to pages 190 to 191 (accounting policy) and to note 46
(financial disclosures)
The key audit matter
The Group operates a number of defined benefit pension
schemes which in total are significant in the context of both the
overall balance sheet and the results of the Group. The schemes
have an aggregate IAS 19 defined benefit pension deficit of
€139 million at 31 December 2019.
The valuations of the pension obligations are calculated with
reference to a number of actuarial assumptions and inputs
including discount rate, rate of inflation and mortality rates. The
treatment of curtailments, settlements, past service costs and
other amendments can significantly impact the balance sheet and
results of the Group.
We regard the determination of the Group's defined benefit
pension liability as a key audit matter because its valuation is
complex and requires judgement in choosing appropriate
actuarial assumptions. Small changes in these assumptions can
have a material impact on the liability.
How the matter was addressed in our audit
• We obtained an understanding of the process around the
defined benefit pension schemes and tested the design and
implementation and operating effectiveness of the key
controls relating to the defined benefit pension schemes.
• We tested key data to source documentation establishing the
obligation to members, and vice versa.
• We obtained independent confirmations relating to the
valuation of the schemes' assets.
• In conjunction with our actuarial specialists we met with
management and the scheme actuary to understand any
changes in methodology and challenged the reasonableness
of the key assumptions used in the calculation of the liability,
comparing them to industry benchmarks.
• We also assessed the adequacy of the Group's disclosures in
respect to the sensitivity of the pension liability to these
assumptions.
• Overall, we found that the key assumptions and
methodologies used by management in the valuation of the
retirement benefit obligations to be appropriate.
Conduct Risk - specifically, the Tracker Mortgage
Examination (TME) provision of €75 million (2018: €42 million)
Refer to page 190 (accounting policy) and note 43 (financial
disclosure)
The key audit matter
At 31 December 2019, the Company’s provision in respect of the
tracker mortgage examination (TME) was approximately €75
million, primarily relating to remaining unpaid customer
remediation and appeals costs, enforcement action costs and
other remaining programme costs.
The primary development during the year relates to the increase
in the amount provided to cover the estimated costs of closing
out the Tracker Mortgage Examination review, including any
potential CBI sanction.
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As a result of the level of uncertainty associated with the ultimate
CBI sanction remaining high, we consider this to be a key audit
matter.
How the matter was addressed in our audit
• We read relevant correspondence between the CBI and the
Company in relation to the TME and discussed the key
matters with senior management and with those charged with
governance. We considered the Group Internal Audit findings
in respect of the matter.
• We obtained an understanding of the methodology used by
management in the determination of the provision and
assessed the design and implementation of controls relating
to the provision calculation at year end.
• For key assumptions inherent in the provision at year end, we
challenged the judgements made by management to
determine whether they were reasonable.
• We reviewed the adequacy of disclosures in respect of the
TME provision to determine whether they were consistent
with our understanding and in line with the requirements of
IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
Based on the evidence obtained, we found that the provision and
disclosures provided in respect of the TME are appropriate in
accordance with IAS 37.
Valuation of the insurance contract liabilities €12,694 (2018:
€11,003 million) and the Value of in Force (ViF) asset €631
million (2018: €571 million)
Refer to pages 192 to 193 (accounting policy) and notes 37 and
41 (financial disclosures)
The key audit matter
We consider the valuation of insurance contract liabilities and the
related ViF asset to be a key audit matter owing to the complex
calculations and the use of detailed methodologies and
significant judgements. This includes judgement over uncertain
future outcomes which for insurance contract liabilities mainly
relate to the ultimate settlement value of long term policyholder
liabilities; and for the ViF asset, includes future margins on
insurance contracts.
The valuation of the insurance contract liabilities and the related
ViF asset is based on a number of key assumptions such as
mortality, morbidity, persistency, expenses, unit growth rates and
interest rates.
How the matter was addressed in our audit
In testing the valuation of the insurance contract liabilities and ViF
asset:
• We tested the design, implementation and operating
effectiveness of the key controls relevant to the valuation of
the insurance contract liabilities and the ViF asset.
• We tested, on a sample basis, the completeness and
accuracy of the key data used in the valuation calculation.
• In conjunction with our actuarial specialists, we evaluated the
methodologies applied and the key assumptions, including
consideration of alternatives used in the valuation.
• We assessed and challenged the methodology and basis
used to set the underlying assumptions with reference to
guidance issued by the European Insurance and
Occupational Pensions Authority (EIOPA), the Group's
actuarial experience investigations and our experience of
similar companies in the marketplace as applicable.
• We assessed the calculation of insurance contract liabilities
and the ViF asset through:
- agreeing the assumptions and key data inputs into the
actuarial models to those we had evaluated;
- testing the design, implementation and operating
effectiveness of management’s controls over the output
of the calculations; and
- evaluating the external actuary’s report on the actuarial
methodologies, assumptions and calculations.
• We found that the insurance contract liabilities and the ViF
asset were appropriately calculated.
IT Operational Risk
The key audit matter
As with many banks, the Group is highly dependent on IT
systems for the processing and recording of significant volumes
of transactions. Our audit approach relies extensively on
automated controls and therefore on the effectiveness of controls
over IT systems.
In particular, we consider privileged user access management
controls to be critical in ensuring that only appropriately
authorised changes are made to relevant IT systems. Moreover,
appropriate access controls contribute to mitigating the risk of
potential fraud or error as a result of changes to applications and
data.
The Group has a complex IT environment and operates a large
number of applications, many of which are legacy systems which
we understand will be replaced as the Group executes its multi-
year investment programme to replace its core banking IT
platforms. This programme operates in tandem with existing
initiatives to maintain the operating effectiveness of the Group's
existing IT systems. Each of these elements has been brought
together in an Integrated IT Plan. Management has an ongoing
risk management programme in place to identify, rate, mitigate
and report on risk including IT and Operational risk matters.
We regard this area as a key audit matter owing to the high level
of IT dependency within the Group as well as the associated
complexity and the risk that automated controls are not designed
and operating effectively.
How the matter was addressed in our audit
• We evaluated the design and operating effectiveness of the
controls over the continued integrity of the IT systems that
are relevant to financial reporting.
• In conjunction with our IT audit specialists, we updated our
understanding of the Group’s IT environment having particular
regard for developments with respect to the Integrated IT
plans. We used this understanding to identify those IT
systems which support financial reporting processes.
• We examined the design of the governance framework
associated with the Group's IT architecture. We tested
relevant General IT Controls for IT applications we considered
relevant to the financial reporting process, including access
management, program development and change
management.
• We also tested the design, implementation and operating
effectiveness of key IT application controls, including the
configuration, security and accuracy of end user computing
controls. Where IT controls could not be relied upon we
 21:57 Page 165
166

conducted additional substantive procedures and where
relevant, we determined whether compensating controls were
effective mitigants for any design or operating deficiencies.
• While we continue to identify certain design and operating
effectiveness deficiencies with user access controls, the
existence of compensating controls provided us with
sufficient evidence to rely on the operation of the Group's IT
systems for the purposes of our audit.
Recognition and impairment of internally generated
intangible assets €760 (2018: €708 million)
Refer to page 190 (accounting policy) and notes 14 and 32
(financial disclosures)
The key audit matter
The Group balance sheet includes capitalised intangible assets of
€760 million.
Owing to the significance of the costs capitalised and the fact
that there is judgement involved in assessing whether the criteria
in IAS 38 required for capitalisation of such costs, have been met
- including the likelihood of the project delivering sufficient future
economic benefits - we considered this a key audit matter.
Where the costs incurred are internally generated (for example
employee costs) there is further judgement required, such as the
accuracy of amount of time spent on the projects.
How the matter was addressed in our audit
• We obtained an understanding of the various projects, and
their stage of completion. We tested the design,
implementation and operating effectiveness of key controls
relating to the capitalisation of expenditure and challenged
the impairment analysis performed by management in 2019.
• We inquired of management responsible for certain costs to
obtain an understanding of their associated projects so as to
enable us to determine whether the costs met the criteria for
capitalisation and tested a sample of costs capitalised in the
period to assess whether these had been appropriately
treated in line with the Group's accounting policy and IAS 38,
vouching to supporting documentation.
• Where external third-party contractors were used, we agreed
on a sample basis that the amounts invoiced were
appropriately capitalised. To determine whether internal
employee costs were directly attributable to projects, we
obtained listings of hours worked on individual projects for
the employment costs capitalised. We selected a sample of
the individual hours recorded and checked that the hours
charged were appropriately capitalised.
• We considered whether the development of new software
provided any evidence of obsolescence for existing internally
generated intangible assets on the balance sheet.
• We challenged management’s assessment of the appropriate
useful economic lives (UELs) for material assets capitalised in
2019.
• We found that the costs were capitalised in line with Group
policy and on a basis which is consistent with the
requirements of IAS 38. We found that management’s
assessment that there were no objective indicators of
impairment at year end to be reasonable.
Recoverability of deferred tax assets (DTAs) €1,088 (2018:
€1,165 million)
Refer to pages 191 to 192 (accounting policy) and note 35
(financial disclosures)
The key audit matter
The Group has DTAs of €1,088 million which are projected to be
recovered by 2037. The total DTAs before netting by jurisdiction is
€1,183 million. This includes unutilised tax losses of €1,089
million, of which €1,032 million relates to Ireland and €50 million
relates to the UK, with recovery periods of 18 and 10 years
respectively.
Detailed projections of future taxable profits for a five year period
are prepared by the Group. The projections for the final year are
then extrapolated, at estimated annual long term growth rates for
the Irish and UK economies for the purposes of projecting future
taxable profits beyond five years.
The recognition of a DTA relies on management's judgements
relating to the probability, timing and sufficiency of future taxable
profits, which in turn is based on assumptions concerning future
economic conditions and business performance and current
legislation governing the use of historical trading losses carried
forward. These are inherently subjective and subject to a high
degree of estimation uncertainty, particularly given the Brexit
uncertainty at year end and the differing jurisdictions in which the
DTA arises.
Under UK and Irish tax legislation, there is no time limit on the
utilisation of the Group's tax losses.
However, in the UK the amount of a bank's annual profits that can
be sheltered with trading losses carried forward is restricted to
25%.
We regard this area as a key audit matter because of the
judgements required by management as the estimation of future
taxable profits is inherently judgemental.
How the matter was addressed in our audit
• We tested the design and implementation of key controls over
the determination and approval of the forecast taxable profits
used to support the recognition of the deferred tax assets.
• With the assistance of our tax specialists we tested the
accuracy of the DTA calculations and the appropriateness of
any tax utilisation strategies applied.
• We assessed whether the forecasted profits were reasonable
by comparing to recent actual performance and challenging
the assumptions particular to the Group's future performance
using our knowledge of the business, Group strategy and
wider initiatives within the Group. We focused on those
assumptions directly impacting the forecasted profits. We
assessed the reasonableness of the external economic
assumptions – particularly interest rate forecasts – applied in
the assessment with reference to observable market data.
• We assessed how management considered alternative
outcomes and potential estimation uncertainty in arriving at
their base case projections.
• We considered whether key assumptions within the DTA
calculations were internally consistent and assessed the
reasonableness of the period over which the asset is
projected to be recovered.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
• We assessed the adequacy of disclosures provided in the
financial statements, including disclosures of the
assumptions and found them to be appropriate.
• On the basis of the work performed, we found management's
judgements relating to the probability, timing and sufficiency
of future taxable profits to be reasonable.
Recoverability of the carrying value of the investment by
BOIG plc in The Governor and Company of the Bank of
Ireland (Company only risk and key audit matter) €7,035
million (2018 - €7,035 million)
Refer to page 298 (accounting policy) and note c of the Company
Financial statements (financial disclosures)
The key audit matter
The Group completed a corporate reorganisation during 2017
which included the creation of a new Group holding company,
Bank of Ireland Group plc (the 'Company').
The Company balance sheet includes a €7 billion investment in
The Governor and Company of the Bank of Ireland (GovCo).
The accounting policy followed by the Company is to carry the
investment at cost less impairment. Impairment testing includes
the comparison of the carrying value with its recoverable amount.
The recoverable amount is the higher of the investment’s fair
value less costs of disposal or its value in use.
We consider this a key audit matter because of the significance of
the investment to the Company and the judgement associated
with its recovery which is predicated on the achievement of future
projections.
The key audit matter
• We tested the design and implementation of key controls over
the production and approval of the projections of future
profits. The Group prepares detailed projections covering a
five year period and then extrapolates the final year using
estimated long term growth rates for Ireland and the UK .
• We evaluated management's fair value assessment, which
was based on the market capitalisation both before and after
the year end and on external broker reports, and challenged
the key assumptions underlying the value in use calculations.
• We assessed the key assumptions underlying the projections
in the value in use calculations and considered other potential
plausible scenarios.
• We assessed the adequacy of disclosures in the Company's
financial statements.
• Based on evidence obtained, we found that management's
assertion that the investment by the Company in GovCo is
not impaired, is reasonable.
Our application of materiality and an overview of the scope of
our audit
The materiality for the Group financial statements as a whole was
set at €38 million. This has been calculated as c.5% of the
benchmark of Group underlying profit before taxation of €758
million, which we consider to be one of the principal
considerations for members of the Company in assessing the
financial performance of the Group. We reported to the Group
Audit Committee all corrected and uncorrected misstatements we
identified through our audit with a value in excess of €1.9 million
in addition to other audit misstatements below that threshold that
we believe warranted reporting on qualitative grounds.
The materiality for the Company financial statements is €77
million which represents 1% of net assets. The Company is the
ultimate holding company of the Group and its activities to date
have been limited to its investment in GovCo and the issue of
subordinated liabilities and debt securities. Hence a benchmark
based on net assets reflects the focus of the users of the financial
statements.
Our audit work addressed each of the Group’s five operating
segments which are headquartered in Ireland and the UK: Retail
Ireland, Wealth and Insurance, Retail UK, Corporate and Treasury
(C&T) and Group Centre. We performed full scope audits of the
complete financial information of the Retail Ireland, Wealth and
Insurance and Retail UK operating segments. Audits of account
balances were performed on Corporate and Treasury and Group
Centre operating segments.
The Group audit team instructed component auditors as to the
significant areas to be covered, including the relevant risks
detailed above and the information to be reported back. The
Group audit team approved the materiality for components which
ranged from €10 million to €25 million, having regard to the mix of
size and risk profile of the Group across the components.
The Group team visited all component locations in Dublin and
London and undertook an assessment of the audit risk and
strategy. Regular meetings were held both in person and through
telephone conference meetings with these component auditors.
At these visits and meetings, the findings reported to the Group
team were discussed in more detail, and any further work
required by the Group team was then performed by the
component auditor.
Audit coverage for individual line items within the consolidated
income statement and consolidated balance sheet falls in the
range 60% to 100%; most line items have audit coverage above
90%.
The work on five of the six components was performed by KPMG
Ireland, including the audit of the parent company. The remaining
work was covered by overseas component auditors.
We have nothing to report on going concern
We are required to report to you if:
• we have anything material to add or draw attention to in
relation to the Directors’ statement in note 1 to the financial
statements on the use of the going concern basis of
accounting with no material uncertainties that may cast
significant doubt over the Group and Company’s use of that
basis for a period of at least twelve months from the date of
approval of the financial statements; or
• if the related statement under the Listing Rules issued by the
Irish and London Stock Exchanges, set out on page 92 is
materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
Other information
The Directors are responsible for the other information presented
in the Annual Report together with the financial statements. The
other information comprises the information included in the
Strategic Report on pages 3 to 40, the unaudited sections of the
Risk Management Report on pages 110 to 160, the financial
review on pages 41 to 57, the Governance section on pages 58
to 109 (except for the Remuneration Report on page 107), the
unaudited parts of Other Information on pages 303 to 338. The
 21:57 Page 167
168

financial statements and our auditor's report thereon do not
comprise part of the other information. Our opinion on the
financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing
so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
Based solely on our work on the other information in those parts
of the directors’ report specified for our consideration:
• we have not identified material misstatements in the
Directors’ report;
• in our opinion, the information given in the Directors’ report is
consistent with the financial statements; and
• in our opinion, the Directors’ report has been prepared in
accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
• the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated;
• the Directors’ confirmation within The Report of the Directors
on page 93 that they have carried out a robust assessment of
the principal risks facing the Group, including those that
would threaten its business model, future performance,
solvency and liquidity; and
• the Directors’ explanation in The Report of the Directors of
how they have assessed the prospects of the Group, over
what period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items and report to you
in the following circumstances:
• Fair, balanced and understandable: if we have identified
material inconsistencies between the knowledge we acquired
during our financial statements audit and the Directors’
statement that they consider that the Annual Report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy;
• Report of the Audit Committee: if the section of the Annual
Report describing the work of the GAC does not
appropriately address matters communicated by us to the
GAC; or
• Statement of compliance with UK Corporate Governance
Code: if the Directors’ statement does not properly disclose a
departure from provisions of the UK Corporate Governance
Code specified by the Listing Rules for our review.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we report, in
relation to information given in the Governance section on pages
58 to 109, that:
• based on the work undertaken for our audit, in our opinion,
the description of the main features of internal control and
risk management systems in relation to the financial reporting
process, and information relating to voting rights and other
matters required by the European Communities (Takeover
Bids (Directive 2004/EC) Regulations 2006 and specified for
our consideration, is consistent with the financial statements
and has been prepared in accordance with the Act;
• based on our knowledge and understanding of the Company
and its environment obtained in the course of our audit, we
have not identified any material misstatements in that
information; and
• the Governance Section contains the information required by
the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and
groups) Regulations 2017.
We also report that, based on work undertaken for our audit,
other information required by the Act is contained in the
Corporate Governance Statement.
Our opinions on other matters prescribed by the Companies
Act 2014 are unmodified
We have obtained all the information and explanations which we
consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were
sufficient to permit the Company financial statements to be
readily and properly audited and the Company’s financial
statements are agreement with the accounting records.
We have nothing to report on other matters on which we are
required to report by exception
The Companies Act 2014 requires us to report to you if, in our
opinion, the disclosures of Directors’ remuneration and
transactions required by Sections 305 to 312 of the Act are not
made.
The Companies Act 2014 also requires us to report to you if, in
our opinion, the Company has not provided the information
required by section 5(2) to (7) of the European Union (Disclosure
of non-financial and diversity Information by certain large
undertakings and groups) Regulations 2017 for the year ended 31
December 2019 as required by the European Union (Disclosure of
non-financial and diversity Information by certain large institutions
and groups) (amendment) Regulations 2018.
The Listing Rules of Euronext Dublin and the UK Listing Authority
require us to review:
• the Directors’ Statement, set out on page 93, in relation to
going concern and longer-term viability;
• the part of the Governance section on pages 59 relating to
the Company’s compliance with the provisions of the UK
Corporate Governance Code and the Irish Corporate
Governance Annex specified for our review; and
• certain elements of disclosures in the report to shareholders
by the Board of Directors’ remuneration committee.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 162,
the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless
 21:57 Page 168
N Marshall
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place
IFSC
Dublin 1
Ireland
21 February 2020
169

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud, other irregularities or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of the financial statements. The risk of not detecting a
material misstatement resulting from fraud or other irregularities is
higher than for one resulting from error, as they may involve
collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control and may involve any area of law
and regulation and not just those directly affecting the financial
statements.
A fuller description of our responsibilities is provided on IAASA’s
website at https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-
9b8f-a98202dc9c3a/Description_of_auditors_responsiblities_for_
audit.pdf
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company’s members, as a body,
in accordance with Section 391 of the Companies Act 2014. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an Auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for our
report, or for the opinions we have formed.
 21:57 Page 169
Consolidated financial statements
Consolidated income statement (for the year ended 31 December 2019)
2019 2018
Note 
Interest income calculated using the effective interest method 4 2,350 2,354
Interest income on finance leases and hire purchase receivables 4 175 159
Interest income 2,525 2,513
Interest expense 5 (370) (379)
Net interest income 2,155 2,134
Net insurance premium income 6 1,518 1,496
Fee and commission income 7 510 521
Fee and commission expense 7 (205) (224)
Net trading income 8 138 55
Life assurance investment income, gains and losses 9 1,311 (331)
Other leasing income 10 62 52
Other leasing expense 10 (52) (41)
Other operating income 11 120 85
Total operating income 5,557 3,747
Insurance contract liabilities and claims paid 12 (2,647) (955)
Total operating income, net of insurance claims 2,910 2,792
Other operating expenses 13 (2,006) (1,941)
Cost of restructuring programme 14 (59) (111)
Operating profit before impairment (losses) / gains on financial instruments 845 740
Net impairment (losses) / gains on financial instruments 16 (214) 42
Operating profit 631 782
Share of results of associates and joint ventures (after tax) 17 39 41
Gain on disposal of asset held for sale 26 - 7
(Loss) / gain on disposal / liquidation of business activities 18 (25) 5
Profit before tax 645 835
Taxation charge 19 (197) (160)
Profit for the year 448 675
Attributable to shareholders 386 620
Attributable to non-controlling interests 49 62 55
Profit for the year 448 675
Earnings per ordinary share 20 35.9c 57.7c
Diluted earnings per ordinary share 20 35.9c 57.7c
170

 -1
As outlined in the Group accounting policies on page 179, comparative figures have been revised to reflect a restatement of revaluation of property net of tax for 2018.

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
 175
Consolidated cash flow statement (for the year ended 31 December 2019)
2019 2018
Note 
Cash flows from operating activities
Profit before tax 645 835
Share of results of associates and joint ventures 17 (39) (41)
(Loss) / gain on disposal / liquidation of business activities 18 25 (5)
Gain on disposal of asset held for resale 26 - (7)
Depreciation and amortisation 10,13 317 235
Net impairment loss on financial instruments, excluding cash recoveries 16 262 7
Impairment of property, plant and equipment 14 4 9
Impairment of intangible assets 14 - 6
Reversal of impairment on property 13 - (4)
Revaluation of investment property 33 3 (33)
Interest expense on subordinated liabilities 5 106 119
Interest expense on lease liabilities 5 15 -
Charge for pension and similar obligations 46 101 118
Net change in accruals and interest payable (17) 12
Net change in prepayments and interest receivable (16) 17
Charge for provisions 111 94
Non-cash and other items (1) 7
Cash flows from operating activities before changes
in operating assets and liabilities 1,516 1,369

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
 21:57 Page 175
Consolidated cash flow statement (for the year ended 31 December 2019) (continued)
Index Page
1 Group accounting policies 178
2 Critical accounting estimates
and judgements 194
3 Operating segments 198
4 Interest income 203
5 Interest expense 203
6 Net insurance premium income 204
7 Fee and commission income
and expense 204
8 Net trading income 205
9 Life assurance investment income,
gains and losses 205
10 Other leasing income and expense 205
11 Other operating income 206
12 Insurance contract liabilities and
claims paid 206
13 Other operating expenses 207
14 Cost of restructuring programme 208
15 Auditor’s remuneration (excluding
Value Added Tax) 208
16 Net impairment (losses) / gains
on financial instruments 209
17 Share of results of associates and
joint ventures (after tax) 209
18 (Loss) / gain on disposal / liquidation
of business activities 210
19 Taxation 210
20 Earnings per share 212
21 Derivative financial instruments 212
22 Other financial assets at fair value
through profit or loss 218
23 Loans and advances to banks 219
24 Debt securities at amortised cost 219
25 Financial assets at fair value through
other comprehensive income 220
26 Assets classified as held for sale 220
27 Loans and advances to customers 221
28 Credit risk exposures 235
29 Modified financial assets 243
30 Interest in associates 243
Index Page
31 Interest in joint ventures 243
32 Intangible assets and goodwill 244
33 Investment properties 245
34 Property, plant and equipment 246
35 Deferred tax 249
36 Other assets 250
37 Life assurance business 251
38 Deposits from banks 251
39 Customer accounts 252
40 Debt securities in issue 253
41 Liabilities to customers under
investment and insurance contracts 254
42 Other liabilities 255
43 Provisions 255
44 Contingent liabilities and commitments 256
45 Loss allowance provision on loan
commitments and financial guarantees 257
46 Retirement benefit obligations 258
47 Subordinated liabilities 264
48 Share capital 265
49 Non-controlling interests 266
50 Cash and cash equivalents 267
51 Changes in liabilities arising
from financing activities 268
52 Related party transactions 268
53 Summary of relations with the State 273
54 Principal undertakings 274
55 Interests in other entities 275
56 Liquidity risk and profile 277
57 Measurement basis of financial
assets and financial liabilities 279
58 Fair values of assets and liabilities 281
59 Transferred financial assets 290
60 Offsetting financial assets and
liabilities 291
61 Dividend per ordinary share 292
62 Impact of adopting new accounting
standard IFRS 16 ‘Leases’ 292
63 Post balance sheet events 294
64 Approval of financial statements 294
Notes to the consolidated financial statements
177

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
1 Group accounting policies
Basis of preparation
These consolidated financial statements are financial statements
of the Bank of Ireland Group plc (‘BOIG plc’ or the ‘Company’)
and its subsidiaries (collectively the ‘BOIG plc Group’ or the
‘Group’).
The financial statements comprise the Consolidated income
statement, the Consolidated statement of comprehensive
income, the Consolidated and Company balance sheets, the
Consolidated and Company statements of changes in equity, the
Consolidated cash flow statement, the notes to the consolidated
financial statements on pages 177 to 294 and the notes to the
Company financial statements on pages 295 to 302.
The financial statements include the information that is described
as being an integral part of the audited financial statements
contained in:
(i) Sections 3.1, 3.2, 3.3, 3.4 and 4 of the Risk Management
Report as described further on the bottom of page 110;
(ii) the Remuneration Report as described further on page 107;
and
(iii) Other Information - Group exposures to selected countries as
described further on the top of page 304.
The financial statements also include the tables in Other
Information - Supplementary asset quality disclosures that are
described as being an integral part of the audited financial
statements as described further on the top of page 307.
The amounts presented in the financial statements are rounded to
millions.
The consolidated financial statements of the Group are prepared
in accordance with IFRS as adopted by the EU and with those
parts of the Companies Act 2014 applicable to companies
reporting under IFRS and with the EU (Credit Institutions:
Financial Statements) regulations 2015 and the Asset Covered
Securities Acts 2001 and 2007.
The financial statements have been prepared under the historical
cost convention as modified to include the fair valuation of certain
financial instruments and land and buildings.
The preparation of the financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Although these estimates are based on
management’s best knowledge of the amount, event or actions,
actual results ultimately may differ from those estimates. A
description of the critical estimates and judgements applied in the
consolidated financial statements is set out in note 2.
The accounting policies and critical accounting estimates applied
by the Company are included in note 1 to the Company financial
statements on page 298.
FX rates used during year are as follows:
References to the ‘State’ throughout this document should be
taken to refer to the Republic of Ireland (RoI), its Government
and, where and if relevant, Government departments, agencies
and local Government bodies.
Going concern
The time period that the Directors have considered in evaluating
the appropriateness of the going concern basis in preparing the
financial statements for 2019 is a period of twelve months from
the date of approval of these financial statements (the ‘period of
assessment’).
In making this assessment, the Directors considered the Group’s
business, profitability projections, funding and capital plans,
together with a range of other factors such as the outlook for the
Irish economy, the impact of Brexit, along with ongoing
developments in EU economies.
The matters of primary consideration by the Directors are set out
below:
Capital
The Group has developed capital plans under base and stress
scenarios and the Directors believe that the Group has sufficient
capital to meet its regulatory capital requirements throughout the
period of assessment.
Funding and liquidity
The Directors have considered the Group’s funding and liquidity
position and are satisfied that the Group has sufficient funding
and liquidity throughout the period of assessment.
Conclusion
On the basis of the above, the Directors consider it appropriate to
prepare the financial statements on a going concern basis having
concluded that there are no material uncertainties related to
events or conditions that may cast significant doubt on the
Group’s ability to continue as a going concern over the period of

  178
1 Group accounting policies (continued)
Comparatives
Comparative figures have been restated where necessary, to
conform with changes in presentation or where additional
analysis has been provided in the current period. Any
adjustments to comparatives are disclosed in the relevant note or
supplementary asset disclosure as appropriate.
In the consolidated statement of comprehensive income the
revaluation of property, net of tax for the year ended 31
December 2018 has been increased by €10 million from a charge
of €5 million to a gain of €5 million arising as the pre-tax change
in the revaluation reserve was misstated. Consequently other
comprehensive income has increased by €10 million from €19
million (expense) to €9 million (expense) and total comprehensive
income has been increased by €10 million from €656 million to
€666 million. The restatement is attributable in full to equity
shareholders. The impact of this restatement affects the
Consolidated statement of comprehensive income as set out on
page 171 and the Taxation note on page 210. The restatement
has no impact on the Consolidated statement of changes in
equity.
Adoption of new and amended accounting standards
The following new standards and amendments to standards have
been adopted by the Group during the year ended 31 December
2019:
• IFRS 16 ‘Leases’
• International Financial Reporting Interpretation Committee
(IFRIC) 23 ‘Uncertainty over Income Tax Treatments’
• Amendment to IAS 19 ‘Plan Amendment, Curtailment or
Settlement’
• Amendments to IAS 28 ‘Investments in Associates’
• Interest Rate Benchmark Reform (Amendments to IFRS 9
‘Financial instruments’, IFRS 7 ‘Financial Instruments:
Disclosures’ and IAS 39 ‘Financial Instruments: Recognition
and Measurement)’
• Annual improvements 2015 to 2017 - These amendments
include minor changes to the following standards:
- IAS 12 ‘Income Taxes’
- IFRS 3 ‘Business Combinations’
- IFRS 11 ‘Joint Arrangements’
- IAS 23 ‘Borrowing Costs’
The Group’s accounting policies have been updated for the
application of the above new and amended accounting standards
from 1 January 2019. The updates together with the accounting
policies for the comparative year up to 31 December 2018 are
detailed below.
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ and related
interpretations. It addresses the definition of a lease, recognition
and measurement of leases and establishes principles for
reporting useful information to users of financial statements about
the leasing activities of both lessees and lessors. A key change
arising from IFRS 16 is that all operating leases are accounted for
on balance sheet for lessees. The accounting for lessors has not
materially changed.
As permitted under IFRS 16, the Group has elected to apply the
standard under the modified retrospective application rather than
full retrospective application. Under the modified retrospective
application, the Group as a lessee has not restated comparative
information, instead recognising the cumulative effect of initially
applying the standard as an adjustment to retained earnings (€nil
effect).
As permitted, the Group has availed of the following exemptions:
• short-term leases (lease term of 12 months or less);
• leases where the lease term ends within 12 months of the
date of initial application; and
• leases for which the underlying asset is of low value, except
for leases of computer equipment which were previously
classified as finance leases under IAS 17.
The Group recognises the lease payments associated with those
lease payments as an expense on a straight line basis over the
lease term.
As permitted the Group has applied the practical expedient to
leases of computer equipment previously classified as operating
leases under IAS 17. For certain computer equipment where the
Group is the lessee, it has elected not to separate the non-lease
components and accounts for lease and non-lease components
as a single lease.
The Group recognises the lease payments associated with those
leases as an expense on a straight line basis over the lease term.
The principal impact on the Group is in relation to property leases
that the Group, as the lessee, previously classified as operating
leases under IAS 17. These include primarily branches and office
premises, The commercial leases typically run for an original
period of 25 to 35 years (from inception) with five-yearly rent
reviews. The majority of the rent reviews are on an upwards only
basis. Some leases also include break options. The Group now
recognises a lease liability for the leases measured at the present
value of the remaining lease payments discounted using the
Group’s incremental borrowing rate (IBR). The Group has
recognised a RoU asset equal to the lease liability, adjusted by
the amounts of any prepaid or accrued lease payments relating to
that lease recognised in the balance sheet immediately prior to
date of initial application.
In addition the Group relied on its assessment of whether leases
were onerous immediately before the date of initial application.
Consequently the Group adjusted the RoU asset by the amount
of any such provision for onerous leases recognised in the
balance sheet immediately prior to date of initial application.
The Group leases a number of items of computer equipment
which were previously classified as finance leases under IAS 17.
For these leases, excluding those items for which the Group
availed of the low value exemption, the initial carrying amounts of
RoU asset and lease liability at 1 January 2019 were determined
to be the carrying amount of the lease asset and lease liability
under IAS 17 immediately before that date.
The Group reassessed contracts that were not identified as
leases under IAS 17. As a result of this assessment service
contracts for computer equipment were deemed to meet the
definition of a lease under IFRS 16 resulting in the recognition of
lease liabilities and RoU assets.
The effect of adoption of IFRS 16 is explained further in note 62.
International Financial Reporting Interpretation Committee
23 ‘Uncertainty over Income Tax Treatments’
IFRIC 23 clarifies how the recognition and measurement
requirements of IAS 12 ‘Income Taxes’, are applied where there is
uncertainty over income tax treatments.
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1 Group accounting policies (continued)
An uncertain tax treatment is any tax treatment applied by an
entity where there is uncertainty over whether that treatment will
be accepted by the tax authority. IFRIC 23 applies to all aspects
of income tax accounting where there is an uncertainty regarding
the treatment of an item, including taxable profit or loss, the tax
bases of assets and liabilities, tax losses and credits and tax
rates.
The introduction of IFRIC 23 has no impact on the Group’s
financial statements. The Group’s approach to accounting for
uncertain tax positions heretofore has embodied the clarifications
outlined in IFRIC 23. In particular, the Group considers uncertain
tax positions together or separately depending on which
approach better predicts how the uncertainties will be resolved.
Where the Group concludes it is not probable that a tax authority
will accept its assessment of an uncertain tax position, it reflects
the effect of the uncertainty using either the ‘most likely amount’
method or the ‘expected value’ method, as appropriate for the
particular uncertainty.
Amendment to IAS 19 ‘Plan Amendment, Curtailment or
Settlement’
This amendment requires an entity to use updated assumptions
to determine current service cost and net interest for the
remainder of the period after a plan amendment, curtailment or
settlement and recognise in profit or loss as part of past service
cost, or a gain or loss on settlement, any reduction in a surplus,
even if that surplus was not previously recognised because of the
impact of the asset ceiling. The amendment does not have a
significant impact on the Group at 31 December 2019.
Amendments to IAS 28 ‘Investments in Associates’
This narrow scope amendment clarifies that a long term interest
in an associate or joint venture to which the equity method is not
applied should be accounted for in the first instance under IFRS
9.
‘Interest Rate Benchmark Reform (Amendments to IFRS 9,
IFRS 7 and IAS 39)’
The International Accounting Standards Board (IASB) has issued
amendments to IFRS 9, IAS 39 and IFRS 7 that provide certain
temporary reliefs from applying specific hedge accounting
requirements in connection with the ongoing reform of the
interbank offered rate (IBOR). The temporary reliefs relate to
issues affecting financial reporting in the period before the
replacement of an existing IBOR with an alternative interest rate
(pre-replacement issues) and have the effect that IBOR reform
should not generally cause hedge accounting relationships to
terminate. However, any hedge ineffectiveness should continue to
be recorded in the income statement under both IAS 39 and IFRS
9.
The main exceptions relate to:
• The highly probable requirement and reclassifying the
cumulative gain or loss recognised in other comprehensive
income
Under IFRS 9 and IAS 39, a forecast transaction designated
as the hedged item in a cash flow hedge must meet the
‘highly probable requirement’. IFRS 9 and IAS 39 also require
amounts accumulated in the cash flow hedge reserve to be
reclassified to profit or loss when the hedged future cash
flows affect profit or loss. The relief provided by the
amendments requires an entity to assume that the existing
interest rate benchmark on which the hedged cash flows are
based do not change as a result of the IBOR reform.
• Prospective assessments
A hedging relationship qualifies for hedge accounting only if it
is expected to be highly effective (IAS 39) or there is an
economic relationship between the hedged item and the
hedging instrument (IFRS 9). Under the amendments, an
entity assumes that the interest rate benchmark on which the
cash flows of the hedged item, hedging instrument or hedged
risk are based is not altered by the IBOR reform.
• Separately identifiable risk components
IFRS 9 and IAS 39 allow entities to designate only changes in
the cash flows or fair value of an item attributable to a
specific risk (i.e. a risk component) if that risk component is
separately identifiable and reliably measurable. Under the
amendments, entities shall apply the separately identifiable
requirement only at the inception of a hedging relationship
and are not required to continue this assessment over the life
of the hedge.
The exceptions related to the highly probable requirement,
reclassifying the cumulative gain or loss recognised in other
comprehensive income (OCI) and prospective assessment will
apply for a limited period ending on the earlier of the date when:
• the uncertainty arising from IBOR reform is no longer present;
and
• the hedging relationships to which the exceptions apply are
discontinued or, in the case of reclassifying the cumulative
gain or loss recognised in OCI, when the entire cumulative
gain or loss recognised in OCI with respect to discontinued
hedging relationship has been reclassified to profit or loss.
The amendments apply for annual reporting periods beginning on
or after 1 January 2020 and earlier application is permitted. The
amendments were endorsed by the EU in January 2020. Having
made the accounting policy choice allowed under IFRS 9 to
continue to apply the hedge accounting requirements of IAS 39,
the Group has elected to early adopt the interest rate benchmark
reform amendments to IFRS 7 and IAS 39. The adoption of these
amendments did not result in any adjustment to the amounts
presented in the financial statements.
Annual improvements 2015-2017
These amendments include minor changes to the following
standards:
• Amendment to IAS 12 ‘Income Taxes’ - this amendment
clarifies that the income tax consequences of dividends on a
financial instrument classified as equity should be recognised
according to where the previous transactions or events that
generated distributable profits were recognised. As a result at
31 December 2019, the Group has recognised the income tax
effect of the Additional tier 1 (AT1) dividend within the income
statement. Comparatives have not been restated, as the
impact was not material.
• IFRS 3 ‘Business Combinations’ - a company remeasures its
previously held interest in a joint operation when it obtains
control of the business.
• IFRS 11 ‘Joint Arrangements’ - a company does not
remeasure its previously held interest in a joint operation
when it obtains joint control of the business.
• IAS 23 ‘Borrowing Costs’ - a company treats as part of
general borrowings, any borrowing originally made to develop
an asset when the asset is ready for its intended use or sale.
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1 Group accounting policies (continued)
Interest income and expense
Interest income and expense are recognised in the income
statement using the effective interest method for financial
instruments measured at amortised cost and financial assets
which are debt instruments measured at FVOCI, in accordance
with IFRS 9. Interest income and expense from derivative
financial instruments designated as hedging instrument are
accounted for in net interest income, in line with the underlying
hedged asset or liability. Interest in relation to derivatives not
designated as a hedging instrument is included in trading income.
The effective interest method is the method that is used in the
calculation of the amortised cost of a financial asset or liability
and in the allocation and recognition of interest revenue or
interest expense in profit or loss over the relevant period.
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial asset or financial liability to the gross carrying
amount of a financial asset or to the amortised cost of a financial
liability. When calculating the effective interest rate, the Group
estimates the expected cash flows by considering all the
contractual terms of the financial instrument (for example,
prepayment, extension, call and similar options) but does not
consider the ECL (except, in accordance with IFRS 9 in the case
of POCI financial assets where ECL are included in the
calculation of a ‘credit-adjusted effective interest rate’). The
calculation includes all fees and points paid or received between
parties to the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums or
discounts.
In the case of a financial asset that is neither credit-impaired nor
a POCI financial asset, interest revenue is calculated by applying
the effective interest rate to the gross carrying amount.
In the case of a financial asset that is not a POCI financial asset
but is credit-impaired at the reporting date, interest revenue is
calculated by applying the effective interest rate to the amortised
cost, which is the gross carrying amount adjusted for any
impairment loss allowance.
In the case of a POCI financial asset, interest revenue is
recognised by applying the credit-adjusted effective interest rate
to the amortised cost.
Where the Group revises its estimates of payments or receipts on
a financial instrument (excluding modifications of a financial asset
and changes in ECL), it recalculates the gross carrying amount of
the financial asset or amortised cost of the financial liability as the
present value of the estimated future contractual cash flows that
are discounted at the financial instrument’s original effective
interest rate (or credit-adjusted effective interest rate for POCI
financial assets). The adjustment is recognised as interest income
or expense.
Modifications
Where the contractual cash flows of a financial asset are modified
and the modification does not result in derecognition of the
financial asset, the Group recalculates the gross carrying amount
of the financial asset as the present value of the modified
contractual cash flows that are discounted at the financial asset’s
original effective interest rate and recognises a modification gain
or loss in the income statement. Where a modification is a
forbearance measure which does not result in derecognition, the
modification gain or loss is included in the income statement
within net impairment gains or losses. Otherwise, the modification
gain or loss is included within interest income.
Interest income and expense excludes interest on financial
instruments at FVTPL which is instead included within the fair
value movements recognised within net trading income.
Fee and commission income
The Group accounts for fee and commission income when the
contract with the customer is agreed and each party’s rights
under the contract, together with the payment terms, are
identified. In addition it must be probable that the Group will
collect the consideration to which it is entitled. Fee and
commission income is measured based on the consideration
specified in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group recognises
revenue when it transfers control of a product or service to a
customer. Fee income on the provision of current accounts to
customers is recognised as the service is provided. Portfolio and
other management advisory and service fees are recognised
based on the applicable service contracts usually on a time
apportioned basis. Asset management fees related to investment
funds are recognised rateably over the period the service is
provided. The same principle is applied for wealth management,
financial planning and custody services that are continuously
provided over an extended period of time. Loan syndication and
arrangement fees are recognised at a point in time when the
performance obligation is completed. Other fees including
interchange income, ATM fees and FX fees are recognised on
completion of the transaction and once the Group has completed
its performance obligations under the contract.
Financial assets
1. Recognition, classification and measurement
A financial asset is recognised in the balance sheet when,
and only when, the Group becomes a party to its contractual
provisions. At initial recognition, a financial asset is measured
at fair value (plus, in the case of a financial asset not at
FVTPL, directly attributable transaction costs) and is assigned
one of the following classifications for the purposes of
subsequent measurement:
• financial assets at amortised cost;
• financial assets at FVOCI; or
• financial assets at FVTPL.
The Group determines the appropriate classification based on
the contractual cash flow characteristics of the financial asset
and the objective of the business model within which the
financial asset is held.
In determining the business model for a group of financial
assets, the Group considers factors such as how
performance is evaluated and reported to key management
personnel (KMP); the risks that affect performance and how
they are managed; how managers are compensated; and the
expected frequency, value and timing of sales of financial
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1 Group accounting policies (continued)
In considering the contractual cash flow characteristics of a
financial asset, the Group determines whether the contractual
terms give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal
amount outstanding. In this context, ‘principal’ is the fair
value of the financial asset on initial recognition and ‘interest’
is consideration for the time value of money and for the credit
risk associated with the principal amount outstanding during
a particular period of time and for other basic lending risks
and costs (e.g. liquidity risk and administrative costs), as well
as profit margin. In making the determination, the Group
assesses whether the financial asset contains a contractual
term that could change the timing or amount of contractual
cash flows such that it would not meet this condition. In
making this assessment, the Group considers contingent
events, leverage features, prepayment and term extensions,
terms which limit the Group’s recourse to specific assets and
features that modify consideration of the time value of money.
(a) Financial assets at amortised cost.
Debt instruments
A debt instrument is measured, subsequent to initial
recognition, at amortised cost where it meets both of the
following conditions and has not been designated as
measured at FVTPL:
• the financial asset has contractual terms that give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding; and
• the financial asset is held within a business model
whose objective is achieved by holding financial
assets to collect contractual cash flows.
Purchases and sales of debt securities at amortised cost
are recognised on trade date: the date on which the
Group commits to purchase or sell the asset. Loans
measured at amortised cost are recognised when cash is
advanced to the borrowers.
Interest revenue using the effective interest method is
recognised in the income statement. An impairment loss
allowance is recognised for ECL with corresponding
impairment gains or losses recognised in the income
statement.
(b) Financial assets at fair value through other
comprehensive income
Debt instruments
A debt instrument is measured, subsequent to initial
recognition, at FVOCI where it meets both of the following
conditions and has not been designated as measured at
FVTPL:
• the financial asset has contractual terms that give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding; and
• the financial asset is held within a business model
whose objective is achieved by both collecting
contractual cash flows and selling financial assets.
Purchases and sales of debt instruments at fair value
through OCI are recognised on trade date. Gains and
losses arising from changes in fair value are included in
OCI. Interest revenue using the effective interest method
and FX gains and losses on the amortised cost of the
financial asset are recognised in the income statement.
The impairment loss allowance for ECL does not reduce
the carrying amount but an amount equal to the
allowance is recognised in OCI as an accumulated
impairment amount, with corresponding impairment gains
or losses recognised in the income statement. On
derecognition, the cumulative gain or loss previously
recognised in OCI is reclassified to the income statement.
Equity instruments
Where an irrevocable election has been made by the
Group at initial recognition, an investment in an equity
instrument that is neither ‘held for trading’ nor contingent
consideration recognised by the Group in a business
combination to which IFRS 3 ‘Business Combinations’
applies, is measured at FVOCI. Amounts presented in OCI
are not subsequently transferred to profit or loss.
Dividends on such investments are recognised in profit or
loss unless the dividend clearly represents a recovery of
part of the cost of the investment.
Regular way purchases and sales of financial assets
measured at FVOCI are recognised on trade date.
(c) Financial assets at fair value through profit or loss
All other financial assets are measured, subsequent to
initial recognition, at FVTPL. Financial assets at FVTPL
comprise:
Financial assets mandatorily measured at fair value
through profit or loss
Financial assets meeting either of the conditions below
are mandatorily measured at FVTPL (other than in respect
of an equity investment designated as at FVOCI):
• financial assets with contractual terms that do not
give rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding; and
• financial assets held within a business model whose
objective is achieved neither by collecting contractual
cash flows nor both collecting contractual cash flows
and selling financial assets. This includes financial
assets held within a portfolio that is managed and
whose performance is evaluated on a fair value basis,
such as investments held by the Group’s life
assurance business. It further includes portfolios of
financial assets which are ‘held for trading’, which
includes financial assets acquired principally for the
purpose of selling in the near term and financial
assets that on initial recognition are part of an
identified portfolio where there is evidence of a recent
pattern of short-term profit-taking.
Financial assets designated as measured at fair value
through profit or loss
A financial asset may be designated at FVTPL only if
doing so eliminates or significantly reduces measurement
or recognition inconsistencies (an ‘accounting mismatch’)
that would otherwise arise from measuring financial
assets or liabilities or recognising gains and losses on
them on different bases.
Regular way purchases and sales of financial assets at
FVTPL are recognised on trade date. They are carried on
the balance sheet at fair value, with all changes in fair
value included in the income statement.
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1 Group accounting policies (continued)
2. Reclassification
When, and only when, the Group changes its business model
for managing financial assets, it reclassifies all affected
financial assets. Reclassification is applied prospectively from
the reclassification date, which is the first day of the first
reporting period, interim or annual, following the change in
business model that results in the reclassification. Any
previously recognised gains, losses or interest are not
restated.
3. Derecognition
A financial asset is derecognised when the contractual rights
to the cash flows from the financial asset expire or the Group
has transferred substantially all the risks and rewards of
ownership. Where the Group retains the obligation to service
the transferred financial asset, the transferred asset is
derecognised if it meets the derecognition criteria and an
asset or liability is recognised for the servicing contract if the
servicing fee is more than adequate (an asset) or is less than
adequate (a liability) for performing the servicing.
Where a modification results in a substantial change to the
contractual cash flows of a financial asset, it may be
considered to represent expiry of the contractual cash flows,
resulting in derecognition of the original financial asset and
recognition of a new financial asset at fair value. The Group
reduces the gross carrying amount of a financial asset and
the associated impairment loss allowance when it has no
reasonable expectations of recovering a financial asset in its
entirety or a portion thereof.
Impairment of financial instruments
Scope
The Group recognises impairment loss allowances for ECL on the
following categories of financial instruments unless measured at
FVTPL:
• financial assets that are debt instruments;
• loan commitments;
• lease receivables recognised under IFRS 16 ‘Leases’ (IAS 17
‘Leases’ until 31 December 2018);
• financial guarantee contracts issued and not accounted for
under IFRS 4 ‘Insurance Contracts’; and
• receivables and contract assets recognised under IFRS 15
‘Revenue from Contracts with Customers’.
Basis for measuring impairment
The Group allocates financial instruments into the following
categories at each reporting date to determine the appropriate
accounting treatment.
Stage 1: 12-month expected credit losses (not credit-impaired)
These are financial instruments where there has not been a
significant increase in credit risk since initial recognition. An
impairment loss allowance equal to 12- month ECL is recognised.
This is the portion of lifetime ECL resulting from default events
that are possible within the next 12 months.
Stage 2: Lifetime expected credit losses (not credit-impaired)
These are financial instruments where there has been a significant
increase in credit risk since initial recognition but which are not
credit-impaired. An impairment loss allowance equal to lifetime
ECL is recognised. Lifetime ECL are the ECL resulting from all
possible default events over the expected life of the financial
instrument.
Stage 3: Lifetime expected credit losses (credit-impaired)
These are financial instruments which are credit-impaired at the
reporting date but were not credit-impaired at initial recognition.
An impairment loss allowance equal to lifetime ECL is recognised.
Purchased or Originated Credit-impaired financial assets
These are financial assets that were credit-impaired at initial
recognition. They are not subject to any initial impairment loss
allowance but an impairment loss allowance is subsequently
recognised for the cumulative changes in lifetime ECL since initial
recognition. A POCI financial asset remains classified as such
until it is derecognised, even if assessed as no longer credit-
impaired at a subsequent reporting date.
With the exception of POCI financial assets, a financial instrument
may migrate between stages from one reporting date to the next.
Significant increase in credit risk
In determining if a financial instrument has experienced a
significant increase in credit risk since initial recognition, the
Group assesses whether the risk of default over the remaining
expected life of the financial instrument is significantly higher than
had been anticipated at initial recognition, taking into account
changes in prepayment expectations where relevant. The Group
uses reasonable and supportable information available without
undue cost or effort at the reporting date, including forward-
looking information. A combination of quantitative, qualitative and
backstop indicators are generally applied in making the
determination. For certain portfolios, the Group assumes that no
significant increase in credit risk has occurred if credit risk is ‘low’
at the reporting date.
Credit-impaired
A financial asset is credit-impaired when one or more events that
have a detrimental impact on the estimated future cash flows
have occurred. Evidence that a financial asset is credit-impaired
includes observable data about the following events:
(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s)
would not otherwise consider;
(d) it is becoming probable that the borrower will enter
bankruptcy or other financial reorganisation;
(e) the disappearance of an active market for that financial asset
because of financial difficulties; or
(f) the purchase or origination of a financial asset at a deep
discount that reflects the incurred credit losses.
It may not be possible to identify a single discrete event - instead,
the combined effect of several events may have caused financial
assets to become credit-impaired.
Measurement of expected credit losses and presentation of
impairment loss allowances
ECL are measured in a way that reflects:
(a) an unbiased and probability-weighted amount that is
determined by evaluating a range of possible outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available
without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic
conditions.

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1 Group accounting policies (continued)
ECL are measured as follows:
• Financial assets that are not credit-impaired at the reporting
date: the present value of the difference between all
contractual cash flows due to the Group in accordance with
the contract and all the cash flows the Group expects to
receive.
• Financial assets that are credit-impaired at the reporting date:
the difference between the gross carrying amount and the
present value of estimated future cash flows.
• Undrawn loan commitments: the present value difference
between the contractual cash flows that are due to the Group
if the commitment is drawn and the cash flows that the Group
expects to receive.
• Financial guarantee contracts: the expected payments to
reimburse the holder less any amounts that the Group
expects to recover, discounted at an appropriate risk-free
rate.
Expected cash flows arising from the sale on default of a loan are
included in the measurement of expected credit losses under
IFRS 9 where the following conditions are met:
• selling the loan is one of the recovery methods that the Group
expects to pursue in a default scenario;
• the Group is neither legally nor practically prevented from
realising the loan using that recovery method; and
• the Group has reasonable and supportable information upon
which to base its expectations and assumptions.
For financial assets, the discount rate used in measuring ECL is
the effective interest rate (or ‘credit-adjusted effective interest
rate’ for a POCI financial asset) or an approximation thereof. For
undrawn loan commitments, it is the effective interest rate, or an
approximation thereof, that will be applied when recognising the
financial asset resulting from the loan commitment.
Impairment loss allowances for ECL are presented in the financial
statements as follows:
• Financial assets at amortised cost: as a deduction from the
gross carrying amount in the balance sheet.
• Loan commitments and financial guarantee contracts:
generally, as a provision in the balance sheet.
• Debt instruments at fair value through other comprehensive
income: an amount equal to the allowance is recognised in
OCI as an accumulated impairment amount.
Utilisation of impairment loss allowances
The Group reduces the gross carrying amount of a financial asset
and the associated impairment loss allowance when it has no
reasonable expectations of recovering a financial asset in its
entirety or a portion thereof. Indicators that there is no reasonable
expectation of recovery include the collection process having
been exhausted or it becoming clear during the collection
process that recovery will fall short of the amount due to the
Group. The Group considers, on a case-by-case basis, whether
enforcement action in respect of an amount that has been written
off from an accounting perspective is or remains appropriate. Any
subsequent recoveries are included in the income statement as
an impairment gain.
Forbearance
Forbearance occurs when a borrower is granted a concession or
agreed change to a loan (‘forbearance measure’) for reasons
relating to the actual or apparent financial stress or distress of
that borrower. Forbearance has not occurred if the concession or
agreed change to a loan granted to a borrower is not related to
the actual or apparent financial stress or distress of that borrower.
Prior to any decision to grant forbearance, the Group performs an
assessment of a customer’s financial circumstances and ability to
repay and assesses whether the loan is credit-impaired. Where
the loan is credit-impaired, it is allocated to Stage 3 (unless a
POCI financial asset). If a forborne loan has a variable interest
rate, the discount rate for measuring ECL is the current effective
interest rate determined under the contract before the
modification of terms.
Financial assets to which forbearance has been applied continue
to be reported as forborne until such time as they satisfy
conditions to exit forbearance in line with EBA guidance on non-
performing and forborne classifications. Forborne financial assets
which are not credit-impaired are generally allocated to Stage 2.
Where the cash flows from a forborne loan are considered to
have expired, the original financial asset is derecognised and a
new financial asset is recognised, initially measured at fair value.
Any difference between the carrying value of the original financial
asset and the fair value of the new financial asset on initial
recognition are recognised in the income statement. The new
financial asset may be initially allocated to Stage 1 or, if credit-
impaired, be categorised as a POCI financial asset.
Where a forbearance measure represents a modification of the
contractual cash flows of a financial asset and does not result in
its derecognition, the Group recalculates the gross carrying
amount of the financial asset as the present value of the modified
contractual cash flows that are discounted at the financial asset’s
original effective interest rate (before any modification of terms)
and a modification gain or loss is included in the income
statement within net impairment gains or losses.
Financial liabilities
The Group classifies its financial liabilities as being measured at
amortised cost unless it has designated liabilities at FVTPL or is
required to measure liabilities mandatorily at FVTPL, such as
derivative liabilities. Financial liabilities are initially recognised at
fair value, (normally the issue proceeds i.e. the fair value of
consideration received) less, in the case of financial liabilities
subsequently carried at amortised cost, transaction costs. For
financial liabilities carried at amortised cost, any difference
between the proceeds, net of transaction costs, and the
redemption value is recognised in the income statement using the
effective interest method.
When a financial liability that is measured at amortised cost is
modified without resulting in derecognition, a gain or loss is
recognised in profit or loss. The gain or loss is calculated as the
difference between the original contractual cash flows and the
modified contractual cash flows discounted at the original
effective interest rate.
Preference shares which carry a mandatory coupon are classified
as financial liabilities. The dividends on these preference shares
are recognised in the income statement as interest expense using
the effective interest method.
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A financial liability may be designated as at FVTPL only when:
(i) it eliminates or significantly reduces a measurement or
recognition inconsistency (an ‘accounting mismatch’) that
would otherwise arise from measuring assets or liabilities or
recognising the gains and losses on them on different bases;
or
(ii) a group of financial assets, financial liabilities or both is
managed and its performance is evaluated on a fair value
basis in accordance with documented risk management or
investment strategy; or
(iii) a contract contains one or more embedded derivatives that
significantly changes the cash flows of the contract and the
separation of the embedded derivative(s) is not prohibited.
The Group designates certain financial liabilities at FVTPL as set
out in note 57 to the financial statements.
The movement in own credit risk related to financial liabilities
designated at FVTPL is recorded in OCI unless this would create
or enlarge an accounting mismatch in profit or loss for the Group
(in which case all gains or losses are recognised in profit or loss).
Financial liabilities are derecognised when they are extinguished,
that is when the obligation is discharged, cancelled or expires.
Embedded derivatives
An embedded derivative is a component of a hybrid contract that
also includes a non-derivative host, with the effect that some of
the cash flows of the combined instrument vary in a way similar
to a stand-alone derivative.
If a hybrid contract contains a host that is not a financial asset
within the scope of IFRS 9, an embedded derivative is separated
from the host and accounted for as a derivative if, and only if, its
economic characteristics and risks are not closely related to
those of the host, a separate instrument with the same terms as
the embedded derivative would meet the definition of a
derivative, and the hybrid contract is not measured at FVTPL.
Financial guarantees
Financial guarantees are contracts that require the issuer to make
specified payments to reimburse the holder for a loss that it
incurs because a specified debtor fails to make payment when it
is due in accordance with the original or modified terms of a debt
instrument.
Financial guarantees held by the Group
A financial guarantee contract requires the issuer to make
specified payments to reimburse the holder for a loss it incurs
because a specified debtor fails to make payment when due.
Where the Group is the holder of such a guarantee and it is
considered integral to the contractual terms of the guaranteed
debt instrument(s), the guarantee is not accounted for separately
but is considered in the determination of the impairment loss
allowance for ECL of the guaranteed instrument(s).
Financial guarantees issued by the Group
The Group issues financial guarantees to banks, financial
institutions and other bodies on behalf of customers to secure
loans, overdrafts and other banking facilities and in connection
with the performance of customers under payment obligations
related to contracts and the payment of import duties. The
Group’s liability under an issued financial guarantee contract is
initially measured at fair value. The liability is subsequently
measured at the higher of the amount of the impairment loss
allowance for ECL determined in accordance with the
requirements of IFRS 9, and the initial measurement less the
cumulative amount of income recognised in accordance with the
principles of IFRS 15.
Any change in the liability is taken to the income statement and
recognised on the balance sheet within provisions. Where the
Group issues a financial liability which contains a financial
guarantee, the liability is measured at amortised cost using the
effective interest method.
Offsetting
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is currently a legally
enforceable right of set off and there is an intention to settle on a
net basis, or realise the asset and settle the liability
simultaneously. No impairment loss allowance for ECL is
recognised on a financial asset, or portion thereof, which has
been offset.
Valuation of financial instruments
The Group recognises trading securities, other financial assets
and liabilities designated at FVTPL, derivatives and financial
assets at FVOCI at fair value in the balance sheet. Fair value is
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date in the principal, or in its
absence, the most advantageous market to which the Group has
access at that date.
The fair values of financial assets and liabilities traded in active
markets are based on unadjusted bid and offer prices
respectively. If an active market does not exist, the Group
establishes fair value using valuation techniques. These include
the use of recent arm’s length transactions, DCF analysis, option
pricing models and other valuation techniques commonly used
by market participants. To the extent possible, these valuation
techniques use observable market data. Where observable data
does not exist, the Group uses estimates based on the best
information available.
The best evidence of the fair value of a financial instrument at
initial recognition is the transaction price in an arm’s length
transaction, unless the fair value of that instrument is evidenced
by comparison with other observable current market transactions
in the same instrument (i.e. without modification or repackaging)
or based on a valuation technique which uses only observable
market inputs. When such evidence exists, the initial valuation of
the instrument may result in the Group recognising a profit on
initial recognition. In the absence of such evidence, the
instrument is initially valued at the transaction price. Any day one
profit is deferred and recognised in the income statement to the
extent that it arises from a change in a factor that market
participants would consider in setting a price. Straight line
amortisation is used where it approximates to that amount.
Subsequent changes in fair value are recognised immediately in
the income statement without the reversal of deferred day one
profits or losses.

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Where a transaction price in an arm’s length transaction is not
available, the fair value of the instrument at initial recognition is
measured using a valuation technique.
For liabilities designated at FVTPL, the fair values reflect changes
in the Group’s own credit spread.
Transfers between levels of the fair value hierarchy
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change occurred.
Group accounts
1. Subsidiaries
Subsidiary undertakings are investees controlled by the
Group. The Group controls an investee when it has power
over the investee, is exposed, or has rights, to variable
returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee. The Group reassesses whether it controls an
investee when facts and circumstances indicate that there are
changes to one or more elements of control. The existence
and effect of potential voting rights are considered when
assessing whether the Group controls an investee only if the
rights are substantive.
A structured entity is an entity designed so that its activities
are not governed by way of voting rights. The Group
assesses whether it has control over such entities by
considering factors such as: the purpose and design of the
entity; the nature of its relationship with the entity; and the
size of its exposure to the variability of returns from the
entity.
Assets, liabilities and results of all Group undertakings have
been included in the Group financial statements on the basis
of financial statements made up to the end of the financial
year.
Business combinations
Except for where predecessor accounting applies,
subsidiaries are consolidated from the date on which control
is transferred to the Group and are no longer consolidated
from the date that control ceases. The Group uses the
acquisition method of accounting to account for business
combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes
the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. On an acquisition-by-acquisition basis, the
Group recognises any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. The excess
of the sum of the consideration transferred, the amount of
any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in
the acquiree, over the fair value of the Group’s share of the
identifiable net assets acquired, is recorded as goodwill.
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of impairment of the asset transferred. In
addition, FX gains and losses which arise on the retranslation
to functional currency of intercompany monetary assets and
liabilities are not eliminated.
Accounting policies of subsidiaries have been changed,
where necessary, to ensure consistency with the policies
adopted by the Group.
2. Associates and Joint Ventures
Associates are all entities over which the Group has
significant influence, but not control, over the entity’s financial
and operating decisions, generally accompanying a
shareholding of between 20% and 50% of the voting rights.
A joint arrangement is an arrangement of which two or more
parties have joint control. A joint venture is a joint
arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.
Those parties are called joint venturers.
Investments in associates and joint ventures are accounted
for by the equity method of accounting and are initially
recognised at cost.
The Group utilises the venture capital exemption for
investments where significant influence is present and the
business operates as a venture capital business. These
investments are designated at initial recognition at FVTPL.
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Those parties are called joint operators.
The Group accounts for the assets, liabilities, revenues and
expenses relating to its interest in joint operations in
accordance with the IFRSs applicable to the particular
assets, liabilities, revenues and expenses.
Accounting policies of associates and joint ventures have
been changed, where necessary, to ensure consistency with
the policies adopted by the Group.
3. Non-controlling interests
Transactions with non-controlling interests where the Group
has control over the entity are accounted for using the
Economic entity model. This accounting model requires that
any surplus or deficit that arises on any transaction(s) with
non-controlling interests to dispose of or to acquire additional
interests in the entity that does not result in loss of control is
recognised in equity.
4. Securitisations
Certain Group undertakings have entered into securitisation
transactions in order to finance specific loans and advances
to customers.
All financial assets continue to be held on the Group balance
sheet, and a liability recognised for the proceeds of the
funding transaction, unless:
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• the rights to the cash flows have expired or been
transferred;
• substantially all the risks and rewards associated with the
financial instruments have been transferred outside the
Group, in which case the assets are derecognised in full;
or
• a significant portion, but not all, of the risks and rewards
have been transferred outside the Group. In this case the
asset is derecognised entirely if the transferee has the
ability to sell the financial asset. Otherwise the asset
continues to be recognised only to the extent of the
Group’s continuing involvement.
Where the above conditions apply to a fully proportionate
share of all or specifically identified cash flows, the relevant
accounting treatment is applied to that proportion of the
asset.
Foreign currency translation
Items included in the financial statements of each entity of the
Group are measured using the currency of the primary economic
environment in which the entity operates (the ‘functional
currency’). The consolidated financial statements of the Group
and the financial statements of the Company are presented in
euro.
Foreign currency transactions are translated into functional
currency at the exchange rates prevailing at the dates of the
transactions. FX gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement. Translation
differences on non-monetary items, such as equities held at
FVTPL, are reported as part of the fair value gain or loss.
Translation differences on non- monetary items such as equities
classified at FVOCI are recognised in OCI. Exchange differences
arising on translation to presentation currency and on
consolidation of overseas net investments, are recognised in OCI.
Assets, liabilities and equity of all the Group entities that have a
functional currency different from the presentation currency
(‘foreign operations’) are translated at the closing rate at the
reporting date and items of income and expense are translated at
average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions). All resulting exchange
differences are recognised in OCI and accumulated in a separate
component of equity. On disposal of a foreign operation the
amount accumulated in the separate component of equity is
reclassified from equity to profit or loss. The Group may dispose
of its interest in a foreign operation through sale, liquidation,
repayment of share capital, abandonment or through loss of
control or significant influence.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
Operating profit / loss
Operating profit / loss includes the Group’s earnings from
ongoing activities after net impairment gains / (losses) on financial
instruments, and before share of profit or loss on associates and
joint ventures (after tax), profit / loss on disposal of property and
profit / loss on disposal / liquidation of business activities.
Leases
Identifying a lease
Under IFRS 16, a contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.
A Group company is the lessee
From 1 January 2019, the Group recognises a RoU asset and
lease liability at the lease commencement date. RoU assets are
initially measured at cost, and subsequently measured at cost
less any accumulated depreciation and impairment losses, and
adjusted for certain remeasurement of lease liabilities. The
recognised RoU assets are depreciated on a straight-line basis
over the shorter of their estimated useful lives and the lease term.
RoU assets are subject to impairment under IAS 36 ‘Impairment
of Assets’.
The Group has elected not to recognise RoU assets and lease
liabilities for leases of low-value assets and short-term leases.
The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
RoU assets, comprised of leases of buildings which do not meet
the definition of investment properties, and computer equipment,
are presented in property, plant and equipment. RoU assets
which meet the definition of investment properties are presented
within investment properties.
Lease liabilities are initially measured at the present value of lease
payments that are not paid at the commencement date,
discounted using the IBR if the interest rate implicit in the lease is
not readily determinable. Lease payments include fixed rental
payments. Generally, the Group uses its IBR as the discount rate.
The lease liability is subsequently increased by the interest cost
on the lease liability and decreased by lease payments made. It is
remeasured if there is a change in future lease payments, a
change in the lease term, or as appropriate, a change in the
assessment of whether an extension option is reasonably certain
to be exercised or a termination option is reasonable certain not
to be exercised.
When the lease liability is remeasured a corresponding
adjustment is made to the RoU asset and / or profit or loss, as
appropriate.
The Group has applied judgement in determining the lease term
as the non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered by an
option to terminate the lease, if it is reasonably certain not to be
exercised. The assessment of whether the Group is reasonably
certain to exercise such options impacts the lease term, which
significantly affects the amount of lease liabilities and RoU assets
recognised.
The Group has a number of leases which contain break options
and applies judgement in evaluating whether it is reasonably
certain not to exercise the option. That is, on commencement of
a lease the Group considers all relevant factors that create an
incentive for it to exercise the option. After the commencement
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1 Group accounting policies (continued)
event or change in circumstances that is within its control and
affects its ability to exercise (or not to exercise) the option.
Under IFRS 16, where the Group is an intermediate lessor the
subleases are classified with reference to the RoU asset arising
from the head lease, not with reference to the underlying asset.
Where the Group continues to retain the risks and rewards of
ownership as the intermediate lessor, it retains the lease liability
and the RoU asset relating to the head lease in its balance sheet.
If the Group does not retain the risks and rewards of ownership
as the intermediate lessor, these subleases are deemed finance
leases. During the term of the sublease, the group recognises
both finance lease income on the sublease and interest expense
on the head lease.
Until 31 December 2018, the Group applied the following
accounting policy in respect of leases in accordance with IAS
17.
1. A Group company is the lessee
The total payments made under operating leases are charged
to the income statement on a straight line basis over the
period of the lease.
When an operating lease is terminated before the lease
period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the
period in which termination takes place.
Leases of property, plant and equipment where the Group
has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at
the lease’s inception at the lower of the fair value of the
leased property and the present value of the minimum lease
payments.
The corresponding rental obligations, net of finance charges,
are included in long-term payables. The interest element of
the finance costs is charged to the income statement over the
lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each
period.
2. A Group company was the lessor
When assets are held under a finance lease, the present value
of the lease payments is recognised as a receivable. The
difference between the gross receivable and the present
value of the receivable is recognised as unearned finance
income. Lease income is included within net interest income
and is recognised over the term of the lease reflecting a
constant periodic rate of return on the net investment in the
lease.
Sale and repurchase agreements and lending of
assets
Assets sold subject to repurchase agreements (‘repos’) are
retained on the balance sheet and reclassified as pledged assets
when the transferee has the right by contract or custom to sell or
repledge the collateral; the counterparty liability is included in
deposits by banks or customer accounts, as appropriate.
Securities purchased under agreements to resell (‘reverse repos’)
are treated as collateralised loans and recorded as loans and
advances to banks or customers, as appropriate.
The difference between sale and repurchase price is treated as
interest and recognised in the income statement over the life of
the agreement using the effective interest method.
Securities lent to counterparties are also retained on the balance
sheet. Securities borrowed are not recognised in the financial
statements, unless these are sold to third parties, in which case
the purchase and sale are recorded with the gain or loss included
in trading income. The obligation to return the securities is
recorded at fair value as a trading liability.
Issued debt and equity securities
The classification of instruments as a financial liability or an equity
instrument is dependent upon the substance of the contractual
arrangement. Instruments which carry a contractual obligation to
deliver cash or another financial asset to another entity are
classified as financial liabilities. The coupons on these
instruments are recognised in the income statement as interest
expense using the effective interest method. Where the Group
has absolute discretion in relation to the payment of coupons and
repayment of principal, the instrument is classified as equity and
any coupon payments are classified as distributions in the period
in which they are made.
If the Group purchases its own debt, it is removed from the
balance sheet and the difference between the carrying amount of
the liability and the consideration paid is included in other
operating income, net of any costs or fees incurred.
Derivative financial instruments and hedge accounting
The Group has made the accounting policy choice allowed under
IFRS 9 to continue to apply the hedge accounting requirements
of IAS 39.
Derivatives are initially recognised at fair value on the date on
which the contract is entered into and are subsequently
remeasured at their fair value at each reporting date. All
derivatives are carried as assets when their fair value is
positive and as liabilities when their fair value is negative.
Certain derivatives embedded in other financial instruments that
are not financial assets are separated from the host contract and
accounted for as derivatives, when their economic characteristics
and risks are not closely related to those of the host contract and
the entire host contract is not carried at FVTPL.
Fair value gains or losses on derivatives are normally recognised
in the income statement. However where they are designated as
hedging instruments, the treatment of the fair value gains and
losses depends on the nature of the hedging relationship.
The Group designates certain derivatives as either:
(i) hedges of the exposure to changes in the fair value of
recognised assets or liabilities that is attributable to a
particular risk (fair value hedge); or
(ii) hedges of highly probable future cash flows attributable to a
recognised asset or liability, or a forecast transaction (cash
flow hedge).
Hedge accounting is applied to these derivatives provided certain
criteria are met. The Group documents, at the inception of the
transaction, the relationship between hedging instruments and
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hedged items, as well as its risk management objective and
strategy for undertaking various hedge transactions. The Group
also documents its assessment, both at hedge inception and on
an ongoing basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in
fair values or cash flows of hedged items. Hedge relationships are
concluded to be effective if the hedging instruments that are used
in hedging transactions offset the changes in fair value or cash
flow of the hedged items within a range of 80% to 125%.
Where a hedging instrument is novated to a clearing
counterparty, the Group does not discontinue hedge accounting
where the following criteria are met:
• the novation arises due to laws or regulations, or the
introduction of laws and regulations;
• the parties to the hedging instrument agree that one or more
clearing counterparties replace their original counterparty to
become the new counterparty to each of the parties; and
• the novation does not result in changes to the terms of the
original instrument except for those changes necessary to
effect the change in counterparty.
(a) Fair value hedge
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the
hedged asset or liability that are attributable to the hedged
risk.
The hedged item in a micro fair value hedge is a single
specified item e.g. a fixed rate commercial loan or a FVOCI
bond. If the criteria for hedge accounting cease to be met, no
further adjustments are made to the hedged item for fair
value changes attributable to the hedged risk. The cumulative
adjustment to the carrying amount of a hedged item is
amortised to profit or loss over the period to maturity using
the effective interest method.
The hedged item in a macro fair value hedge is a pool of
assets or liabilities with similar risk characteristics and
profiles, such as a pool of fixed rate mortgages. Unlike micro
fair value hedge accounting, macro fair value hedge
accounting is not discontinued if an individual asset or liability
within the pool of hedged items is sold, so long as the overall
pool of hedged items retains its characteristics as
documented at inception of the hedge. In addition, hedge
effectiveness testing is performed on a portfolio basis rather
than on an individual hedge relationship by hedge relationship
basis.
The Group also avails of the relaxed hedge accounting
provisions permitted by IAS 39 'Financial Instruments:
recognition and measurement' as adopted by the EU. Under
these provisions the Group applies portfolio fair value hedge
accounting of interest rate risk to its demand deposit book.
The Group resets portfolio fair value hedges of its demand
deposit book on a weekly basis and other macro fair value
hedges are reset on a monthly basis.
If the criteria for hedge accounting cease to be met, no
further adjustments are made to the hedged item for fair
value changes attributable to the hedged risk. The cumulative
adjustment to the carrying amount of a hedged item is
amortised to profit or loss over the period to maturity using
the effective interest method.
(b) Cash flow hedge
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is
recognised in OCI. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement.
Amounts accumulated in OCI are reclassified to the income
statement in the periods in which the hedged item affects
profit or loss.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in OCI at that time remains in
OCI and is recognised in the income statement when the
forecast transaction occurs. When a forecast transaction is
no longer expected to occur, the cumulative gain or loss that
was reported in OCI is immediately reclassified to the income
statement.
Property, plant and equipment
Freehold land and buildings are initially recognised at cost, and
subsequently are revalued annually to fair value by independent
external valuers. Revaluations are made with sufficient regularity
to ensure that the carrying amount does not differ materially from
the open market value at the reporting date.
RoU assets recognised as property, plant and equipment are
measured at cost less any accumulated depreciation and
impairment losses, and adjusted for certain remeasurement of
lease liabilities.
All other property, plant and equipment, including freehold and
leasehold adaptations, are stated at historical cost less
accumulated depreciation.
Increases in the carrying amount arising on the revaluation of land
and buildings, are recognised in OCI. Decreases that offset
previous increases on the same asset are recognised in OCI: all
other decreases are charged to the income statement.
The Directors consider that residual values of freehold and long
leasehold property based on prices prevailing at the time of
acquisition or subsequent valuation are such that depreciation is
not material.
Depreciation is calculated on the straight line method to write
down the carrying value of other items of property, plant and
equipment to their residual values over their estimated useful
lives as follows:
• adaptation works on freehold and leasehold property - 15
years, or the remaining period of the lease; and
• computer and other equipment - maximum of ten years.
• the recognised RoU assets are depreciated on a straight-line
basis over the earlier of the end of the useful life of the RoU
asset or the end of the lease term.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each reporting date. Property, plant
and equipment are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may
not be recoverable. An asset’s carrying amount is written down
immediately to its recoverable amount if its carrying amount is
greater than its estimated recoverable amount. The estimated
recoverable amount is the higher of the asset’s fair value less
costs to sell or its Value in Use (VIU).

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1 Group accounting policies (continued)
Gains and losses on the disposal of property, plant and
equipment are determined by reference to their carrying amount
and are taken into account in determining profit before tax. If the
asset being disposed of had previously been revalued then any
amount in OCI relating to that asset is reclassified directly to
retained earnings on disposal rather than the income statement.
Investment property
Property held for long-term rental yields and capital
appreciation is classified as investment property, except where
the property is used by the Group for administrative purposes or
the supply of services, in which case it is classified as owner
occupied property. Investment property comprises freehold and
long leasehold land and buildings. It is carried at fair value in the
balance sheet based on annual revaluations at open market
value as determined by external qualified property surveyors
and is not depreciated. Changes in fair values are recorded in
the income statement. Rental income from investment
properties is recognised as it becomes receivable over the term
of the lease.
Intangible assets
(a) Computer software
Acquired computer software licences are capitalised on the
basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised on the basis of
the expected useful lives, which is normally five years.
Costs associated with research activities or maintaining
computer software programmes are recognised as an
expense as incurred. Costs that are directly associated with
the production of identifiable and unique software products
controlled by the Group and which will probably generate
economic benefits exceeding costs beyond one year, are
recognised as intangible assets. Direct costs include software
development, employee costs and an appropriate portion of
relevant overheads. Computer software development costs
recognised as assets are amortised using the straight line
method over their useful lives, which is normally between five
and ten years.
(b) Other intangible assets
Other intangible assets are carried at cost less amortisation
and impairment, if any, and are amortised on a straight line
basis over their useful lives, which range from five years to
twenty years.
Computer software and other intangible assets are assessed
for impairment indicators annually or whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. If such indicators exist, the asset’s
recoverable amount is estimated. An asset’s carrying amount
is written down immediately to its recoverable amount if its
carrying amount is greater than its estimated recoverable
amount. The estimated recoverable amount is the higher of
the asset’s fair value less costs to sell and its VIU.
(c) Goodwill
Goodwill represents the excess of consideration transferred,
the amount of any non-controlling interest in the acquiree and
the acquisition date fair value of any previous equity interest
in the acquiree, over the fair value of the Group’s share of
identifiable net assets acquired. Goodwill on acquisition of
subsidiaries is included in intangible assets.
Goodwill is tested annually for impairment or more frequently
if there is any indication that it may be impaired, and carried
at cost less accumulated impairment losses. Goodwill is
allocated to cash generating units (CGU) for the purpose of
impairment testing. An impairment loss arises if the carrying
value of the CGU exceeds the recoverable amount. The
recoverable amount of a CGU is the higher of its fair value
less costs to sell and its VIU, where the VIU is the present
value of the future cash flows expected to be derived from
the CGU.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate of the
amount of the obligation can be made.
Provision is made for the anticipated costs of restructuring,
including related redundancy costs, when an obligation exists. An
obligation exists when the Group has a detailed formal plan for
restructuring a business and has raised valid expectations in
those affected by the restructuring by starting to implement the
plan or announcing its main features. A levy payable to a
Government is provided for on the occurrence of the event
identified by the legislation that triggers the obligation to pay the
levy.
Contingent liabilities are not recognised but are disclosed unless
the probability of their occurrence is remote.
Employee benefits
(a) Pension obligations
The Group operates both defined contribution and defined
benefit plans. A defined benefit plan is a pension plan that
defines an amount of pension benefit to be provided, usually
as a function of one or more factors such as age, years of
service or compensation. A defined contribution plan is a
pension plan under which the Group pays fixed contributions
into a separate entity (a fund) and will have no legal or
constructive obligations to pay further contributions if the
fund does not hold sufficient assets to pay all employees’
benefits relating to employee service in the current and prior
periods.
The asset or liability recognised in the balance sheet in
respect of defined benefit pension plans is the present value
of the defined benefit obligation at the reporting date minus
the fair value of plan assets. The defined benefit obligation is
calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated
future cash outflows using interest rates on high quality
corporate bonds that are denominated in the currency in
which the benefits will be paid, and that have terms to
maturity approximating the terms of the related pension
liability.
190

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191
1 Group accounting policies (continued)
Where a plan amendment, curtailment or settlement occurs
and the net defined benefit liability is remeasured to
determine past service cost or the gain or loss on settlement,
the current service cost and net interest for the remainder of
the period are remeasured using the same assumptions.
Service cost and net interest on the net defined benefit
liability / (asset) are recognised in profit or loss, within
operating expenses.
Remeasurements of the net defined benefit liability / (asset)
that are recognised in OCI include:
• actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions; and
• the return on plan assets, excluding amounts included in
net interest on the net defined benefit liability / (asset).
A settlement is a transaction that eliminates all further legal
and constructive obligations for part or all of the benefits
provided under a defined benefit plan, other than a payment
of benefits to, or on behalf of, employees that is set out in the
terms of the plan and included in the actuarial assumptions.
For defined contribution plans, contributions are recognised
as employee benefit expense when they are due.
(b) Short-term employee benefits
Short-term employee benefits, such as salaries and other
benefits, are accounted for on an accruals basis over the
period in which the employees’ service is rendered.
(c) Termination payments
Termination payments are recognised as an expense at the
earlier of:
• when the Group can no longer withdraw the offer of those
benefits; and
• when the Group recognises costs for a restructuring that
is within the scope of IAS 37 and involves the payment of
termination benefits.
For this purpose, in relation to termination benefits for
voluntary redundancies, the Group is considered to be no
longer able to withdraw the offer on the earlier of the
following dates:
• when the employee accepts the offer; and
• when a restriction (e.g. a legal, regulatory or contractual
requirement) on the Group’s ability to withdraw the offer
takes effect.
Income taxes
(a) Current income tax
Income tax payable on profits, based on the applicable tax
law in each jurisdiction, is recognised as an expense in the
period in which profits arise.
Tax provisions are provided on a transaction by transaction
basis using either the ‘most likely amount’ method or the
‘expected value’ method as appropriate for the particular
uncertainty and by management assessing the relative merits
and risks of tax treatments assumed, taking into account
statutory, judicial and regulatory guidance and, where
appropriate, external advice.
A current tax provision is recognised when the Group has a
present obligation as a result of a past event and it is
probable that there will be a future outflow of funds to a fiscal
authority to settle the obligation.
(b) Deferred income tax
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements. Deferred income tax is determined
using tax rates (and tax laws) that have been enacted or
substantively enacted by the reporting date and are expected
to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or
loss.
The tax effects of income tax losses available for carry
forward are recognised as DTAs to the extent that it is
probable that future taxable profit will be available against
which the temporary differences can be utilised and by
reference to the expiry dates (if any) of the relevant unused
tax losses or tax credits. DTAs and deferred tax liabilities are
not discounted.
Deferred income tax is provided on temporary differences
arising from investments in subsidiaries, associates and joint
ventures, except where the timing of the reversal of the
temporary difference is controlled by the Group and it is
probable that the difference will not reverse in the foreseeable
future.
Deferred tax on items taken to OCI is also recognised in OCI
and is subsequently reclassified to the income statement
together with the deferred gain or loss. Income tax on items
recognised directly in equity is recognised directly in equity,
except for the income tax consequences of dividends on a
financial instrument classified as equity, which are recognised
according to where the previous transactions or events that
generated distributable profits were recognised.
(c) Uncertain tax positions
IFRIC 23, which applies to all aspects of income tax
accounting, clarifies how the recognition and measurement
requirements of IAS 12 ‘Income Taxes’ are applied where
there is uncertainty over income tax positions.
The Group considers uncertain tax positions together or
separately depending on which approach better predicts how
the uncertainties will be resolved. Where the Group
concludes it is not probable that a tax authority will accept its
assessment of an uncertain tax position, it reflects the effect
of the uncertainty using either the ‘most likely amount’
method or the ‘expected value’ method, as appropriate for
the particular uncertainty.

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1 Group accounting policies (continued)
Share capital and reserves
1. Equity transaction costs
Incremental external costs directly attributable to equity
transactions, including the issue of new equity shares or
options, are shown as a deduction from the component of
equity in which the equity transaction is recognised, net of
tax.
2. Dividends on ordinary shares
Final dividends on ordinary shares are recognised in equity in
the period in which they are approved by the Company’s
shareholders on the recommendation of the Board of
Directors, or approved by the Board of Directors, as
appropriate. Interim dividends are recognised in equity in the
period in which they are paid.
3. Treasury shares
Where the Company or its subsidiaries purchase the
Company’s equity share capital, the consideration paid is
deducted from total shareholders’ equity as treasury shares
until they are cancelled. Where such shares are subsequently
sold or reissued, any consideration received is included in
shareholders’ equity. Any changes in the value of treasury
shares held are recognised in equity at the time of the
disposal and dividends are not recognised as income or
distributions.
4. Capital reserve
The capital reserve represents transfers from share capital,
retained earnings and other reserves in accordance with
relevant legislation. The capital reserve is not distributable.
5. Foreign exchange reserve
The FX reserve represents the cumulative gains and losses on
the translation of the Group's net investment in its foreign
operations since 1 April 2004. Gains and losses accumulated
in this reserve are reclassified to the income statement when
the Group loses control, joint control or significant influence
over the foreign operation or on disposal or partial disposal of
the operation.
6. Revaluation reserve
The revaluation reserve represents the cumulative gains and
losses on the revaluation of property occupied by Group
businesses, included within property, plant and equipment
and non-financial assets classified as held for sale. The
revaluation reserve is not distributable.
7. Share premium account
Where the company issues shares at a premium, a sum
equal to the aggregate amount or value of the premiums
on those shares is transferred to the share premium
account. Where, pursuant to Section 84 of the Companies
Act 2014, there has been a reduction of the Company’s
share capital by the cancellation of share premium, the
resulting profits available for distribution, as defined by
Section 117 of the Companies Act 2014, are reclassified
from the share premium account to retained earnings.
8. Cash flow hedge reserve
The cash flow hedge reserve represents the cumulative
changes in fair value, excluding any ineffectiveness, of
cash flow hedging derivatives. These are transferred to the
income statement when hedged transactions impact the
Group’s profit or loss.
9. Merger reserve
In the Company balance sheet, the merger reserve
represents the difference between the carrying value of the
Company’s initial investment in the Bank arising from the
corporate reorganisation in 2017 and the nominal value of
the shares issued as part of that reorganisation, less
amounts capitalised as share premium. In the
Consolidated balance sheet, the merger reserve also
includes an adjustment to eliminate the capital stock,
share premium, capital reserve and retained earnings of
the Bank at the date of corporate reorganisation, which do
not carry forward to the balance sheet of the Group.
10. Debt instruments at fair value through other
comprehensive income reserve
The debt instruments at FVOCI reserve comprises the
cumulative net change in the fair value of debt securities
measured at FVOCI together with the impact of fair value
hedge accounting, less the ECL allowance recognised in
profit or loss.
11. Liability credit reserve
The liability credit reserve represents the cumulative
changes in the fair value of financial liabilities designated
as at FVTPL that are attributable to changes in the credit
risk of those liabilities, other than those recognised in
profit or loss.
Life assurance operations
In accordance with IFRS 4, the Group classifies all life
assurance products as either insurance or investment
contracts for accounting purposes.
Insurance contracts are those contracts that transfer
significant insurance risk. These contracts are accounted for
using an embedded value basis.
Investment contracts are accounted for in accordance with IFRS
9. All of the Group’s investment contracts are unit linked in
nature. These contracts are accounted for as financial liabilities
whose value is contractually linked to the fair value of the
financial assets within the policyholders’ unit linked funds. The
value of the unit linked financial liabilities is determined using
current unit prices multiplied by the number of units attributed to
the contract holders at the reporting date. Their value is never
less than the amount payable on surrender, discounted for the
required notice period where applicable.
The Group recognises an asset for deferred acquisition costs
relating to investment contracts. Upfront fees received for
investment management services are deferred. These amounts
are amortised over the period of the contract.
Non-unit linked insurance liabilities are calculated using a gross
premium method of valuation. The computation is made on the
basis of recognised actuarial methods annually by an actuary,
with due regard to the applicable actuarial principles recognised
in the European framework for the prudential and financial
monitoring of direct life assurance business.
192

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Pronouncement
IFRS 17 ‘Insurance Contracts’
Nature of change
IFRS 17 replaces IFRS 4 ‘Insurance Contracts’, which was introduced as
an interim standard in 2004. IFRS 17 addresses the comparison problems
created by IFRS 4 by requiring all insurance contracts to be accounted for
in a consistent manner. IFRS 17 establishes the principles for the
recognition, measurement, presentation and disclosures of insurance
contract liabilities, ensuring an entity provides relevant information that
faithfully represents those contracts.
The standard is still subject to EU endorsement.
Effective date
Currently the effective date is for financial periods beginning on or after 1
January 2021, however the IASB have proposed delaying the mandatory
implementation date by 1 year to 2022. Earlier application of the standard
is permissible.
Impact
The Group began a business and financial assessment of the impacts of
IFRS 17 during 2018. The Group expects that IFRS 17 is likely to have a
significant adverse impact on the recognition, measurement and
presentation of the insurance business in the financial statements.
1 Group accounting policies (continued)

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193
The Group recognises the ViF life assurance business asset as
the present value of future profits expected to arise from
contracts classified as insurance contracts under IFRS 4. This
represents the present value of expected future cash flows, using
appropriate assumptions in assessing factors such as future
mortality, lapse rates and levels of expenses, and discounting
using the risk free interest rate curve. Thus, the use of best
estimate assumptions in the valuation of the ViF asset ensures
that the net carrying amount of insurance liabilities less the ViF
asset is adequate.
The ViF asset in the consolidated balance sheet and movements
in the asset in the income statement are presented on a gross of
tax basis. The tax charge comprises both current and deferred
tax expense and includes tax attributable to both shareholders
and policyholders for the period.
Premiums and claims
Premiums receivable in respect of non-unit linked insurance
contracts are recognised as revenue when due from
policyholders.
Premiums received in respect of unit linked insurance contracts
are recognised in the same period in which the related
policyholder liabilities are created. Claims are recorded as an
expense when they are incurred.
Reinsurance
Contracts entered into by the Group with reinsurers under which
the Group is compensated for losses on one or more contracts
issued by the Group are dealt with as insurance contracts,
subject to meeting the significant insurance risk test in IFRS 4.
The impairment requirements of IFRS 4 are applied to these
assets. Outward reinsurance premiums are accounted for in
accordance with the contract terms when due for payment.
Collateral
The Group enters into master agreements with counterparties, to
ensure that if an event of default occurs, all amounts outstanding
with those counterparties will be settled on a net basis. The
Group obtains collateral in respect of customer liabilities where
this is considered appropriate. The collateral normally takes the
form of a lien over the customers’ assets and gives the Group a
claim on these assets for both existing and future liabilities. The
collateral is, in general, not recorded on the Group balance sheet.
The Group also receives collateral in the form of cash or
securities in respect of other credit instruments, such as stock
borrowing contracts and derivative contracts, in order to reduce
credit risk. Collateral received in the form of securities is not
recorded on the balance sheet. Collateral received in the form of
cash is recorded on the balance sheet, with a corresponding
liability recognised within deposits from banks or deposits from
customers. Any interest payable arising is recorded as interest
expense.
In certain circumstances, the Group pledges collateral in respect
of liabilities or borrowings. Collateral pledged in the form of
securities or loans and advances continues to be recorded on the
balance sheet. Collateral placed in the form of cash is recorded in
loans and advances to banks or customers. Any interest
receivable arising is recorded as interest income.
Operating segments
The Group’s reportable operating segments have been identified
on the basis that the chief operating decision maker uses
information based on these segments to make decisions about
assessing performance and allocating resources. The analysis of
results by operating segment is based on management accounts
information.
Impact of new accounting standards
The following standard will be relevant to the Group but was not
effective at 31 December 2019 and has not been applied in
preparing these financial statements. There are no other standards
that are not yet effective and that would be expected to have a
material impact on the Group in future reporting periods. The
Group’s current view of the impact of this standard is outlined as
follows:
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2 Critical accounting estimates and judgements
In preparing the financial statements, the Group makes estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. Estimates and judgements are
continually evaluated and are based on historical experience and
other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Due to the
inherent uncertainty involved in estimating the likelihood of future
events, actual results could differ from those estimates, which
could affect the future reported amounts of assets and liabilities.
The estimates and judgements that have had the most significant
effect on the amounts recognised in the Group’s financial
statements are set out below.
(a) Impairment loss allowance on financial assets
The measurement of impairment loss allowance requires
significant judgement and estimation and is dependent in
large part on complex impairment models.
In arriving at impairment loss allowances, accounting
estimates which could change and have a material influence
on the quantum of impairment loss allowance and net
impairment charge within the next financial year include:
• generation of forward looking macroeconomic scenarios
and their probability weightings which are used in both
the assessment of ‘significant increase in credit risk’ and
in the measurement of impairment loss allowances; and
• valuing property collateral (including residential property
prices).
Accounting judgements which could change and have a
material influence on the quantum of impairment loss
allowance and net impairment charge within the next financial
year include determining if Group management adjustments
may be necessary to impairment model outputs to address
impairment model limitations or late breaking events.
In the next financial year the Group will, subject to regulatory
approval, implement a new definition of default to comply
with EBA guidelines that are effective from no later than 1
January 2021. The introduction of a new definition of default
policy may result in a change in the Group’s classification of
Stage 3 assets and / or the amount of impairment loss
allowances.
Other key accounting estimates which are not expected to
change and materially influence the quantum of impairment
loss allowance and net impairment charge within the next
financial year, include:
• determining the period over which to measure ECL for
uncommitted RCFs; and
• determining timeframes to realisation and likely net sale
proceeds.
Other key accounting judgements which are not expected to
change and materially influence the quantum of impairment
loss allowance and net impairment charge within the next
financial year, include:
• the Group’s criteria for assessing if there has been a
significant increase in credit risk since initial recognition
such that a loss allowance for lifetime rather than 12
month ECL is required;
• the selection of appropriate methodologies and model
factors for internal risk rating and impairment models;
• the approximation made at transition to IFRS 9 of the
residual lifetime PD expectations for most exposures
originated prior to adoption of IFRS 9; and
• selection of the most relevant macroeconomic variables
for particular portfolios and determining associations
between those variables and model components such as
PD and LGD.
The Group’s approach to measurement of impairment loss
allowances and associated methodologies, including the key
macroeconomic variables applied at 31 December 2019, is
set out in the credit risk methodologies section on pages 136
to 139.
The quantum of impairment loss allowance is impacted by
the application of three probability weighted future
macroeconomic scenarios. The following table indicates the
approximate extent to which the impairment loss allowance
at 31 December 2019, excluding Group management
adjustments, was increased by virtue of applying multiple
scenarios rather than only a central scenario.

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195
The following table indicates the approximate extent to which impairment loss allowance, excluding Group management adjustments,
would be higher or lower than reported were a 100% weighting applied to the upside and downside future macroeconomic scenarios
respectively:
2019
Impact of applying a Impact of applying a 100%
Impact of applying only an upside 100% weighting to the weighting to the downside
or downside scenario rather than upside scenario scenario
applying multiple probability-
The following table indicates the approximate extent to which impairment loss allowances for the residential mortgage portfolios,
excluding Group management adjustments, would be higher or lower than the application of a central scenario if there was an immediate
change in residential property prices:
2019 Impairment Residential Residential Residential Residential
loss property price property price property price property price
Impact of an immediate change allowance reduction of 10% reduction of 5% increase of 5% increase of 10%
in residential property prices - Central
compared to central scenario Scenario Impact Impact Impact Impact Impact Impact Impact Impact
impairment loss allowances 
Residential mortgages 362 76 21% 36 10% (32) (9%) (60) (17%)
- Retail Ireland 307 55 18% 26 9% (24) (8%) (45) (15%)
- Retail UK 55 21 37% 10 17% (8) (15%) (15) (27%)
2 Critical accounting estimates and judgements (continued)
The sensitivity of impairment loss allowances to stage allocation
is such that a transfer of 1% of Stage 1 balances at 31 December
2019 to Stage 2 would increase the Group’s impairment loss
allowance by approximately €24 million.
At 31 December 2019, the impairment loss allowance for
residential mortgages of €432 million includes a management
adjustment of €56 million (2018: €92 million), €50 million (2018:
€75 million) of which relates to Retail Ireland and €6 million (2018:
€17 million) to Retail UK.
The management adjustment for the Retail Ireland mortgage
portfolio primarily reflects the concentration of Stage 3 assets
which are longer in default, where utilisation of alternative
recovery strategies to achieve realisation may require higher
impairment coverage on disposal that currently cannot be
reasonably be reflected in IFRS 9 impairment model
methodology. The €50 million (2018: €75 million) management
adjustment reflects the size and profile of Stage 3 population at
31 December 2019 and has been calculated and applied through
increases to the LGD component of modelled impairment loss
allowances for Stage 3 residential mortgages that have been in
default for more than five years.
A €6 million (2018: €17 million) management adjustment for the
Retail UK mortgage portfolio has been applied across all stages
in the Retail UK mortgage portfolio pending further evolution of
IFRS 9 impairment model methodology.
The requirement for the application of a management adjustment
is reviewed at each financial reporting date to assess if the
situation requiring an adjustment in the previous reporting date
pertains and whether additional conditions have been identified
that may require the application of a new management
adjustment. At each financial reporting date, the adequacy of the
Group’s quantum of impairment loss allowance (including, if
required, any Group management adjustment) is reviewed and
considered by the GAC.
(b) Taxation
The taxation charge accounts for amounts due to fiscal
authorities in the various territories in which the Group
operates and includes estimates, based on a judgement of
the application of law and practice in certain cases, to
determine the quantification of any liabilities arising. At 31
December 2019, the net DTA was €1,017 million (2018:
€1,123 million), of which €1,089 million (2018: €1,162 million)
related to trading losses. The closing DTA includes €1,032
million of Irish trading losses, €50 million of UK trading
losses, and €7 million of US trading losses.
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2 Critical accounting estimates and judgements (continued)

196
A significant judgement relates to the Group’s assessment of
the recoverability of the portion of the DTA relating to trading
losses.
The recognition of a DTA relies on management’s estimate of
the probability and sufficiency of future taxable profits, and
the future reversals of existing taxable temporary differences
against which the losses can be utilised. Under current UK
and Irish legislation, there is no time limit on the utilisation of
these losses.
RoI deferred tax asset
Judgement
The Group’s judgement takes into consideration the impact of
both positive and negative evidence, including historical
financial performance, projections of future taxable income,
the impact of tax legislation and future reversals of existing
taxable temporary differences. Irish tax legislation does not
currently contain any restriction on the use of carried forward
tax losses.
Based on the Group’s projections, the DTA in respect of tax
losses is estimated to be recovered in full by the end of 2037
(2018: 2030). The increase in the recovery period is due to
more challenging economic headwinds, including a lower for
longer interest rate environment which was not previously
anticipated.
Based on the Group’s proven earnings history, its strong
position within the Irish financial services market and its
strategic priorities to deliver sustained future Irish profits, the
Group continues to recognise the Irish DTA in full.
UK deferred tax assets
UK legislation restricts the proportion of a bank’s annual
taxable profit that can be offset by carried forward losses to
25%. This restriction significantly lengthens the period over
which the Group could use its UK trading losses and has
been considered in the context of the measurement and
recognition of the DTA at 31 December 2019.
UK Branch
Judgement
Notwithstanding the absence of any expiry date for trading
losses in the UK, the Group continues to conclude that, for
the purpose of valuing its DTA, its brought forward trading
losses within the Bank’s UK branch (the ‘UK branch’) will be
limited by reference to a ten year period of projected UK
branch profits at the prevailing UK tax rates. Any remaining
unutilised UK branch carried forward trading losses have
been recognised for DTA purposes at the Irish tax rate, on the
basis that it is expected that these will be utilised against
future Bank profits in Ireland as permitted by current tax
legislation. This ten year timescale is the period over which
the Group believes it can conclude that it is probable that
future taxable profits will be available in the UK branch.
The carrying value of the DTA relating to trading losses of the
UK Branch has reduced by €2 million in the year ended 31
December 2019 (2018: €nil).
Bank of Ireland (UK) plc
Judgement
The Directors believe that Bank of Ireland (UK) plc will
continue to be profitable for the foreseeable future but
acknowledge the external challenges facing the banking
industry. In particular, during 2019 the economic environment
has become more challenging with residual Brexit uncertainty,
forecast continuation of a lower for longer interest rate
environment and accelerated transformation of banking
business models. The risk and implications of these issues
have heightened significantly in 2019.
Therefore, notwithstanding the absence of any expiry date for
trading losses in the UK, but acknowledging the economic
headwinds that have worsened during 2019 and that profit
forecasts become increasingly uncertain as the forecast
period extends into the future, the Directors have determined
that for the purpose of valuing its DTA, the brought forward
trading losses of Bank of Ireland (UK) plc will be limited by
reference to a ten year period of projected profits.
This 10 year timescale is supported by forecast taxable
profits and takes into account the Group’s long-term financial
and strategic plans and reflects the period over which the
Group believes it can conclude that it is probable that future
taxable profits will be available in Bank of Ireland (UK) plc.
As a consequence, the carrying value of the DTA relating to
trading losses of Bank of Ireland (UK) plc has been reduced
by €45 million in the year ended 31 December 2019 (31
December 2018: €nil).
There is a risk that the final taxation outcome could be
different to the amounts currently recorded. If future profits or
subsequent forecasts differ from current forecasts, a further
adjustment may be required to the DTA.
Sources of estimation uncertainty
To the extent that the recognition of a DTA is dependent on
sufficient future profitability, a degree of estimation and the
use of assumptions are required to support the conclusion
that it is probable that future taxable profit will be available
against which the unused tax losses can be utilised.
The Group’s assessment of deferred tax recoverability is
based on forecasts covering its five year initial planning
period. The forecast for year five onwards is based on the
projections within that fifth year of the initial planning period
and the deferred tax recoverability is most sensitive to the
forecast in the initial planning period. The Group’s profitability
projections are based on its strategic priorities where the
focus will be to increase overall returns, improve cost
efficiencies and grow sustainable profits. The projections also
reflect the external challenges facing the banking industry
including the lower for longer interest rate environment and
the uncertainty around the impact of Brexit on the UK
economy (note 19).
Liability management exercise
Judgement
Another significant judgement relates to a series of liability
management exercises that the Group conducted between
2009 and 2011 in order to enhance its equity capital which
involved the repurchase or exchange of certain of its external
liabilities in the UK at less than par, thus generating gains. The
Group determined, with the benefit of opinions from external
tax advisors and legal counsel that these gains were not
subject to taxation. The Group has proactively engaged with
the UK tax authority, HM Revenue & Customs (HMRC), over
the last number of years as it considers these transactions.
HMRC has concurred with the Group’s tax assessment in
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2 Critical accounting estimates and judgements (continued)
respect of certain of the gains that arose and its review
continues in respect of others. HMRC has challenged the tax
treatment of gains in the amount of £168 million (€189 million)
arising in respect of one transaction. The Group continues to
believe that all of the gains arising from these transactions are
not subject to tax and hence that it is not probable that a
liability will arise. No provisions have therefore been made
(note 19).
(c) Retirement benefit obligations
The Group sponsors a number of defined benefit pension
schemes. In determining the actual pension cost, the
actuarial values of the liabilities of the schemes are calculated
by external actuaries. This involves modelling their future
development and requires management to make
assumptions as to discount rates, price inflation, salary and
pensions increases, member mortality and other
demographic assumptions.
Sources of estimation uncertainty
There are acceptable ranges in which these estimates can
validly fall. The impact on the results for the period and
financial position could be materially different if alternative
assumptions were used. A quantitative analysis of the
sensitivity of the defined benefit pension liability to changes
in the key assumptions is set out in note 46.
(d) Life assurance operations
The Group accounts for the value of the shareholders’
interest in its long-term assurance business using MCEV
Principles and Guidelines. Embedded value is comprised of
the net tangible assets of Bank of Ireland Wealth and
Insurance and the ViF asset. The ViF asset represents the
expected future profits on insurance contracts and this is
calculated using an embedded value approach with market
consistent assumptions. The ViF asset is measured by
projecting expected future surpluses using best estimate and
market consistent assumptions and a risk free interest rate
curve.
Sources of estimation uncertainty
The estimation of future surpluses will depend on experience
in a number of areas such as investment returns, lapse rates,
mortality and investment expenses. Surpluses are projected
by making assumptions about future experience, having
regard to both actual experience and projected long-term
economic trends.
Changes to these assumptions may cause the present value
of future surpluses to differ from those assumed at the
reporting date and could significantly affect the value
attributed to the in force business. The ViF asset could also
be affected by changes in the amounts and timing of other
net cash flows (principally annual management charges and
other fees levied upon the policyholders) or the rate at which
the future surpluses and cash flows are discounted. In
addition, the extent to which actual experience is different
from that assumed will be recognised in the income
statement for the period. A quantitative analysis of the
sensitivity of profit to changes in the key life assurance
assumptions is set out in note 37.
(e) IFRS 16 ‘Leases’
Judgement in determining the lease term
The Group determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate
the lease (break option), if it is reasonably certain not to be
exercised.
The Group has a number of leases which contain break
options and applies judgement in evaluating whether it is
reasonably certain not to exercise the option. That is, on
commencement of a lease the Group considers all relevant
factors that create an incentive for it to exercise the option.
After the commencement date, the Group reassesses the
lease term if there is a significant event or change in
circumstances that is within its control and affects its ability
to exercise (or not to exercise) the option.
Judgement in determining the incremental borrowing rate
The Group uses the IBR (note 62) at the lease
commencement to calculate the present value of lease
payments. The Group derives the IBR from its internal Funds
Transfer Pricing mechanism, as adjusted to reflect the cost of
wholesale funding for a similar term, with a similar security
and in a similar economic environment to the RoU asset. The
weighted average IBR applied to lease liabilities recognised
on the balance sheet at the date of initial recognition was
2.7%.
(f) Tracker Mortgage Examination Review
At 31 December 2019 the Group holds a provision of €75
million (2018: €42 million) in respect of the industry wide
Tracker Mortgage Examination. While the supervisory phase
of the examination was concluded by the CBI in July 2019,
the provision covers the estimated costs of remediation of
any remaining impacted customers, addressing customer
appeals and closing out all other outstanding costs of the
exercise, in particular, any sanction that may be incurred as a
result of Central Bank of Ireland enforcement actions.
Judgement
The Group has exercised judgement in particular in
determining the level of potential appeals and the impact of
any potential administrative sanction. With respect to the
latter, the Group considers that there is a range of potential
sanction outcomes based on general and specific
circumstances and the amount of any sanction imposed may
differ from the amount provided at 31 December 2019.
Sources of estimation uncertainty:
• the level of costs to be incurred by the Group in
concluding the examination, in particular, any potential
fine;
• estimates of the level of appeals; and
• appeal success rates.
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3 Operating segments
The Group has five reportable operating segments which reflect
the internal financial and management reporting structure and are
organised as follows:
Retail Ireland
Retail Ireland is one of the largest providers of financial services
in Ireland with a network of 264 branches, phone contact centre,
c.1,550 self-serve devices, and online, smartphone and tablet
banking applications. Retail Ireland offers a broad range of
financial products and services including current accounts,
savings, mortgages, credit cards, motor finance and loans to
personal and business banking customers and is managed
through a number of business units, namely Distribution
Channels, Customer Segments and Propositions, Products
(including BoIMB) and Business Banking (including Bank of
Ireland Finance).
Wealth and Insurance
Wealth and Insurance includes the Group’s life assurance
subsidiary NIAC which distributes protection, investment and
pension products to the Irish market, across three core channels
made up of the Group’s distribution channels, independent
financial brokers and its own financial advisor network and
corporate partners. It also includes Investment markets and the
Group’s general insurance brokerage Bank of Ireland Insurance
Services, which offers home, car and travel insurance cover
through its agency with insurance providers.
Retail UK
The Retail UK division incorporates the financial services
partnership and FX joint venture with the UK Post Office, the
financial services partnership with the AA, the UK residential
mortgage business, the Group’s branch network in NI, the Group’s
business banking business in NI and the Northridge Finance
motor and asset finance, vehicle leasing and fleet management
business. The Group also has a business banking business in GB
which is being run down. The Retail UK division includes the
activities of Bank of Ireland (UK) plc, the Group’s wholly owned UK
licenced banking subsidiary.
Corporate and Treasury
Corporate and Treasury incorporates the Group's corporate
banking, wholesale financial markets, specialised acquisition
finance and large transaction property lending business, across
the RoI, UK and internationally, with offices in Ireland, the UK, the
US, Germany, France and Spain.
Group Centre
Group Centre comprises Group Technology and Customer
Solutions (formerly Group Manufacturing), Group Finance, Group
Risk, Group Internal Audit, Group Marketing and Group People
Services. These Group central functions establish and oversee
policies and provide and manage certain processes and delivery
platforms for the divisions.
Other reconciling items
Other reconciling items represent inter segment transactions
which are eliminated upon consolidation and the application of
hedge accounting at Group level.
Basis of preparation of segmental information
The analysis of results by operating segment is based on the
information used by the chief operating decision maker to
allocate resources and assess performance. The CEO and CFO
are considered to be the chief operating decision maker for the
Group. The Group’s operating segments reflect its organisational
and management structures. The CEO and CFO review the
Group’s internal reporting based around these segments to
assess performance and allocate resources. Transactions
between the business segments are on normal commercial terms
and conditions. Internal charges and transfer pricing adjustments
have been reflected in the performance of each business.
Revenue sharing agreements are used to allocate external
customer revenues to a business segment on a reasonable basis.
The measures of segmental assets and liabilities provided to the
chief operating decision maker are not adjusted for transfer
pricing adjustments or revenue sharing agreements as the impact
on the measures of segmental assets and liabilities is not
significant.
Capital expenditure comprises additions to property, plant and
equipment and intangible assets.
On an ongoing basis, the Group reviews the methodology for
allocating funding and liquidity costs in order to ensure that the
allocations continue to reflect each division’s current funding
requirement.
External revenue comprises interest income including that arising
on finance leases and hire purchase receivables, net insurance
premium income, fee and commission income, net trading
income, life assurance investment income gains and losses, other
operating income, other leasing income and share of results of
associates and joint ventures.
There were no revenues deriving from transactions with a single
external customer that amounted to 10% or more of the Group’s
revenues.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred to
as ‘Underlying profit’ in its internal management reporting
systems. Underlying profit excludes:
• customer redress charges;
• cost of restructuring programme;
• gross-up for policyholder tax in the Wealth and Insurance
business;
• UK portfolio divestments;
• loss on disposal / liquidation of business activities;
• investment return on treasury shares held for policyholders; and
• gain on disposal of property.
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3 Operating segments (continued)
1
Other reconciling items represent inter segment transactions which are eliminated upon consolidation and the application of hedge accounting at Group level.
Other
Retail Wealth and Corporate Group reconciling
Ireland Insurance Retail UK and Treasury Centre items1
Other
Retail Wealth and Corporate Group reconciling
Ireland Insurance Retail UK and Treasury Centre items1
Group

Other reconciling items represent inter segment transactions which are eliminated upon consolidation and the application of hedge accounting at Group level.
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4 Interest income
5 Interest expense
The Group presents interest resulting from negative effective
interest rates on financial assets as interest expense rather than
as an offset against interest income.
Interest expense recognised on subordinated liabilities
Interest expense on subordinated liabilities is recognised on an
Effective Interest Rate basis, net of interest income of €16 million
(2018: €19 million) on derivatives which are in a hedge
relationship with the relevant liability.
Interest expense recognised on debt securities in issue
Interest expense on debt securities in issue is recognised on an
Effective Interest Rate basis net of interest income of €51 million
(2018: €58 million) on derivatives which are in a hedge
relationship with the relevant liability.
From 1 January 2019 the Group adopted IFRS 16 ‘Leases’ and
has recognised interest expense on lease liabilities of €15 million.
The effect of the adoption of IFRS 16 is further explained in note
Customer accounts 135 164
Debt securities in issue 103 89
Subordinated liabilities 90 100
Deposits from banks 20 14
Lease liabilities 15 -
Interest expense on financial liabilities 363 367
Negative interest on financial assets 7 12
Interest expense 370 379
The Group presents interest resulting from negative effective
interest rates on financial liabilities as interest income rather than
as an offset against interest expense.
Interest income on loans and advances to customers is shown
net of charge of €10 million arising from the Tracker Mortgage
Examination Review. In 2018 the charge was €nil, however €12
million Tracker Mortgage Examination charge recognised in
operating expenses was reallocated to interest income.
Interest income recognised on loans and advances to
customers
In 2019, €68 million of interest was recognised on credit-impaired
loans and advances to customers (2018: €86 million).
In 2019, €73 million of interest income was received on
credit-impaired loans and advances to customers (2018: €93
million).
In 2019, interest income received on total forborne loans and
advances to customers was €134 million (2018: €158 million).
In 2019, interest recognised on total forborne loans and advances
to customers was €140 million (2018: €162 million).
Transferred from cash flow hedge reserve
Interest income includes a charge of €98 million (2018:
€61 million charge) transferred from the cash flow hedge reserve
(page 211).
Interest income recognised on debt securities at fair value
through other comprehensive income
Interest income on FVOCI financial assets is recognised net of
negative interest on derivatives which are in a hedge relationship
with the relevant financial asset of €28 million (2018: €27 million)
2019 2018

Financial assets measured
at amortised cost
Loans and advances to customers 2,261 2,249
Loans and advances to banks 31 28
Debt securities at amortised cost 9 12
Interest income on financial assets
measured at amortised cost 2,301 2,289
Financial assets at fair value through
other comprehensive income
Debt securities at FVOCI 30 46
2,331 2,335
Negative interest on financial liabilities 19 19
Interest income calculated using the
effective interest method 2,350 2,354
Interest income on finance leases and
hire purchase receivables 175 159
Interest income 2,525 2,513
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Strategic Report Financial Review
8 Net trading income
1
Net income from other financial assets mandatorily measured at fair value through profit or loss includes interest income from debt instruments and dividend income from equities. It
also includes realised and unrealised gains and losses.
2
Non-trading equities and debt securities mandatorily measured at fair value through profit or loss are reported in the balance sheet under the caption other financial assets at fair
value through profit or loss. The income from life assurance investments which also comprise other financial assets at fair value through profit or loss is reported in note 9 Life
assurance investment income, gains and losses.
9 Life assurance investment income, gains and losses
Life assurance investment income, gains and losses comprise the
investment return, realised gains and losses and unrealised gains
and losses which accrue to the Group on all investment assets
held by the Wealth and Insurance division, other than those held
for the benefit of policyholders whose contracts are considered to
be investment contracts. These instruments are mandatorily
measured at FVTPL.
Life assurance investment income, gains and losses of €1,311
million for the year ended 31 December 2019 (2018: losses of
€331 million) is consistent with favourable investment market
performance. Movement in insurance contract liabilities (note 12)
is consistent with the higher investment returns in the year.
2019 2018

Gains / (losses) on other financial assets
held on behalf of Wealth and
Insurance policyholders 1,284 (342)
Gains on investment property held on behalf
of Wealth and Insurance policyholders 27 11
Life assurance investment income,
gains and losses 1,311 (331)
Net trading income includes the gains and losses on financial
instruments held for trading and those designated at FVTPL
(other than unit linked life assurance assets and investment
contract liabilities). It includes the gains and losses arising on the
purchase and sale, the interest income receivable and expense
payable and the fair value movement on these instruments,
together with the funding cost of the trading instruments. It also
includes €18 million in relation to a net gain arising from FX (2018:
net gain €13 million).
Net fair value hedge ineffectiveness reflects a net charge from
hedging instruments of €78 million (2018: net charge of €63
million) offsetting a net gain from hedged items of €76 million
(2018: net gain of €63 million).
The total hedging ineffectiveness on cash flow hedges reflected
in the income statement in 2019 amounted to €nil (2018: €nil).
2019 2018

Financial liabilities designated at fair value (159) 62
Related derivatives held for trading 156 (77)
(3) (15)
Net income from financial instruments
mandatorily measured at fair value
through profit or loss1
Other financial instruments held for trading 88 28
Equities2
36 10
Loans and advances 11 14
Non-trading debt securities2
8 18
140 55
Net fair value hedge ineffectiveness (2) -
Cash flow hedge ineffectiveness - -
Net trading income 138 55
10 Other leasing income and expense
Other leasing income and expense relate to the business
activities of MLL, a wholly owned subsidiary of the Group. MLL is
a car and commercial leasing and fleet management company
based in the UK. Other leasing income includes; €35 million
(2018: €31 million) of operating lease payments received (note
34), €20 million arising from the sale of leased assets (2018: €14
million), and €7 million relating to other income (2018: €6 million).
Other leasing expense includes; depreciation of €28 million
related to rental vehicles (2018: €23 million) and other selling and
disposal costs of €24 million (2018: €18 million).
2019 2018

Other leasing income 62 52
Other leasing expense (52) (41)
Net other leasing income 10 11
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Strategic Report Financial Review
13 Other operating expenses
The Group has incurred levies and regulatory charges of €117
million (2018: €101 million). The other levies and regulatory
charges for 2019 primarily reflect the Group’s contribution to the
SRF and the DGS fund, along with the charges for the FSCS levy.
Transformation Investment income statement charge of €108
million (2018: €113 million) includes associated application and
infrastructure costs which will be included as part of the
Transformation Investment charge until it is customer supporting.
From 1 January 2019, the Group adopted IFRS 16 ‘Leases’. In
2019, there was €69 million depreciation of RoU assets under
IFRS 16 included within depreciation of property, plant and
equipment, a charge of €8 million relating to variable lease
payments, and a charge of €3 million under the short-term lease
exemption.
In 2018, other administrative expenses included an amount of
€60 million relating to operating lease expenses under IAS 17 and
€33 million relating to expenses on service contracts classified as
leases under IFRS 16 from 1 January 2019. The effect of adoption
of IFRS 16 is further explained in note 62.
During 2019, the Group incurred a charge of €57 million in other
administrative expenses relating to the Tracker Mortgage
Examination Review. In 2018, the charge was €nil, however €12
million Tracker Mortgage Examination charge recognised in
operating expenses was reallocated to interest income (note 4).
Staff numbers
At 31 December 2019, the number of staff (full time equivalents)
was 10,440 (2018: 10,367).
In addition to the reduction in the average number of staff
employed by the Group, the table also reflects the ongoing
restructuring of support functions. A number of customer delivery
operations moved from Group Centre primarily to Retail Ireland to
ensure a streamlined approach to customer service and maximise
operating efficiencies.
2019 2018
Administrative expenses and staff costs 
Staff costs excluding restructuring and Transformation Investment staff costs 855 867
Amortisation of intangible assets (note 32) 193 178
Levies and regulatory charges 117 101
- Irish bank levy 34 29
- Other 83 72
Transformation Investment charge 108 113
Depreciation of property, plant and equipment (note 34) 96 34
Lease expenses 11 -
- Variable lease payments (note 62) 8 -
- Short-term leases (note 62) 3 -
Reversal of impairment on property (note 34) - (4)
Other administrative expenses excluding cost of restructuring programme 626 652
Total 2,006 1,941
Total staff costs are analysed as follows:
Wages and salaries 659 650
Retirement benefit costs (defined benefit plans) (note 46) 103 120
Social security costs 74 74
Retirement benefit costs (defined contribution plans) 31 27
Other staff expenses 8 9
875 880
Staff costs capitalised (20) (13)
Staff costs excluding restructuring and Transformation Investment staff costs 855 867
Additional restructuring and Transformation Investment staff costs:
Included in cost of restructuring programme (note 14) 34 74
Included in Transformation Investment charge 17 15
Total staff costs recognised in the income statement 906 956
Average number of staff
(full time equivalents) 2019 2018
Retail Ireland 4,139 2,875
Retail UK 1,490 1,607
Wealth and Insurance 902 899
Corporate and Treasury 691 610
Group Centre 3,202 4,604
Total 10,424 10,595

During 2019, the Group recognised a charge of €59 million (2018: €111 million) of which €55 million relates to Transformation Investment
costs (2018: €93 million) as set out in the table above.
15 Auditor’s remuneration (excluding Value Added Tax)
RoI (i) Overseas (ii) 2019 2018
Total Auditor’s remuneration 3.8 0.8 4.6 3.9
Disclosure of Auditor's fees is made in accordance with Section
322 of the Companies Act which mandates the disclosure of fees
in particular categories and that fees paid to the Group Auditor
(KPMG) for services provided to the Group be disclosed in this
format. All years presented are on that basis.
The GAC has reviewed the level of fees and is satisfied that it has
not affected the independence of the auditors.
(i) Fees paid to the Statutory Auditor, KPMG.
(ii) Fees paid to overseas auditors consist of fees paid to KPMG
UK in the UK; and
(iii) Assurance services consist primarily of review of the interim
financial statements, fees in connection with reporting to
regulators including the CBI, IT governance review with
regards to Payment Services Directive 2, letters of comfort
and review of compliance with the Government Guarantee
Schemes.
14 Cost of restructuring programme
2019 2018

Transformation Investment costs 55 93
- Staff costs (note 13) 34 74
- Property related costs 4 11
- Programme management costs 17 8
Other restructuring charges 4 18
- Impairment of property, plant and equipment (note 34) 4 9
- Impairment of intangible assets (note 32) - 6
- Other related costs - 3
Total 59 111
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Strategic Report Financial Review
16 Net impairment (losses) / gains on financial instruments
2019 2018

Loans and advances to customers (209) 36
- Cash recoveries 48 49
- Movement in impairment loss allowances (note 27) (257) (13)
Loan commitments (5) 6
Net impairment (losses) / gains on financial instruments (214) 42
Loans and advances to customers at amortised cost
Net impairment (losses) / gains
The Group’s net impairment (losses) / gains on loans and
advances to customers at amortised cost are set out in this table.
As outlined in note 27, in 2019, the Group completed three
transactions whereby it derecognised or disposed of €479 million
of loans and advances to customers (after impairment loss
allowance). As outlined in the Group Accounting Policies on page
184, expected cash flows arising from the sale on default of a
loan are included in the measurement of expected credit losses
under IFRS 9, where certain conditions are met. As each
transaction satisfied these conditions, the cash flows have been
included in the impairment calculation. As a result, net
impairment (losses) / gains on financial instruments includes a net
impairment loss of €23 million arising on these transactions.

The loss on disposal of business activities reflects the sale of the
Retail UK credit card portfolio. The assets were classified as
assets held for sale up to the date of disposal (note 26). In July
2019, the portfolio was sold for total consideration of €580 million
resulting in a net loss on disposal of €21 million. On the date of
disposal, the assets had a gross carrying value of €587 million
(gross of ECL allowance) and a net book value of €562 million
(net of ECL allowance). The net loss on disposal also includes a
provision of €39 million related to the costs of migration and other
costs associated with the disposal.
In addition, as part of the Group’s focus on simplifying its
corporate structure, the Group has an ongoing programme of
winding up a number of wholly owned, dormant and non-trading
companies, a number of which are foreign operations. During
2019, the Group voluntarily appointed a liquidator to manage the
winding up of a number of foreign operations. Upon appointment
of the liquidator, the Group is considered to have lost control of
the foreign operations and has accounted for this loss of control
as a disposal. In accordance with IAS 21, the Group has
reclassified net cumulative FX losses of €4 million relating to
these foreign operations from the FX reserve to the income
statement during 2019 (2018: gains of €4 million).
18 (Loss) / gain on disposal / liquidation of business activities
2019 2018

Disposal of Retail UK card portfolio (21) -
Transfer of foreign exchange reserve
to income statement on liquidation of
non-trading entities (4) 4
Other - 1
(Loss) / gain on disposal / liquidation of
business activities (25) 5
19 Taxation
The effective taxation rate on a statutory profit basis for 2019 is
31% (2018: 19%).
The increased rate is primarily due to the re-assessment of the
tax value of the UK tax losses carried forward and the tax impact
of the gross-up for policyholder tax in the Wealth and Insurance
business. Excluding both of these items, the effective taxation
rate in 2019 was 17% (2018: 19%).
Between 2009 and 2011, the Group conducted a series of liability
management exercises in order to enhance its equity capital
which involved the repurchase or exchange of certain of its
external liabilities in the UK at less than par, thus generating
gains. The Group determined, with the benefit of opinions from
external tax advisors and legal counsel that these gains were not
subject to taxation. The Group has proactively engaged with the
UK tax authority, HMRC, over the last number of years as it
considers these transactions. HMRC has concurred with the
Group’s tax assessment in respect of certain gains that arose and
its review continues in respect of others. HMRC has challenged
the tax treatment of gains in the amount of £168 million (€189
million) arising in respect of one transaction. The Group continues
to believe that all of the gains arising from these transactions are
not subject to tax and hence that it is not probable that a liability
will arise. No provisions have therefore been made.
2019 2018
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
As outlined in the Group accounting policies on page 179, comparative figures have been restated to reflect a restatement of the pre-tax net change in the revaluation reserve for
2018.
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20 Earnings per share
The calculation of basic earnings per ordinary share is based on
the profit attributable to ordinary shareholders divided by the
weighted average number of ordinary shares in issue excluding
treasury shares (own shares held for the benefit of life assurance
policyholders).
Diluted earnings per share is based on the profit attributable to
ordinary shareholders divided by the weighted average number of
ordinary shares in issue excluding treasury shares adjusted for
the effect of all dilutive potential ordinary shares.
For 2019 and 2018, there was no difference in the weighted
average number of units of share used for basic and diluted
earnings per share as the effect of all potentially dilutive ordinary
shares outstanding was anti-dilutive.
2019 2018

Basic and diluted earnings per share
Profit attributable to shareholders 386 620
Profit attributable to ordinary shareholders 386 620
Shares Shares
(millions) (millions)
Weighted average number of shares in
issue excluding treasury shares 1,075 1,075
Basic and diluted earnings per share (cent) 35.9c 57.7c
21 Derivative financial instruments
The Group's objectives and policies on managing the risks that
arise in connection with derivatives, including the policies for
hedging, are included in the Risk Management Report on pages
110 to 160. The notional amounts of certain types of derivatives
do not necessarily indicate the amounts of future cash flows
involved or the current fair value of the instruments and,
therefore, do not indicate the Group's exposure to credit risk. The
derivative instruments give rise to assets or liabilities as a result
of fluctuations in market rates or prices relative to their terms.
The notional amounts and fair values of derivative instruments
held by the Group are set out in the table on the next page.
Derivatives held for trading comprise derivatives entered into with
trading intent as well as derivatives entered into with economic
hedging intent to which the Group does not apply hedge
accounting. Derivatives classified as held for hedging comprise
only those derivatives to which the Group applies hedge
accounting.
The Group uses netting arrangements and collateral agreements
to reduce its exposure to credit losses. Of the derivative assets of
€2.0 billion at 31 December 2019 (2018: €1.7 billion):
• €1.7 billion (2018: €1.3 billion) are available for offset against
derivative liabilities under master netting arrangements.
These transactions do not meet the criteria under IAS 32 to
enable the assets to be presented net of the liabilities. At 31
December 2019, cash collateral of €0.2 billion (2018: €0.2
billion) was held against these assets and is reported within
deposits from banks (note 38); and
• €0.3 billion (2018: €0.4 billion) are not covered by master
netting arrangements or relate to counterparties covered by
master netting arrangements with whom a net asset position
was held at the reporting date.
At 31 December 2019, placements with other banks include cash
collateral of €0.8 billion (2018: €0.4 billion) and loans and
advances to customers include cash collateral of €0.1 billion
placed with derivative counterparties in respect of a net derivative
liability position of €0.9 billion (2018: €0.4 billion) and is reported
within loans and advances to banks (note 23) and loans and
advances to customers (note 27).
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Financial Statements
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Strategic Report Financial Review
21 Derivative financial instruments (continued)
2019 2018
Contract Fair values Contract Fair values
notional notional
amounts Assets Liabilities amounts Assets Liabilities
represented the most significant interest rate benchmark reform
(IBOR) interest rate benchmarks to which the Group’s fair value
and cash flow hedge relationships of interest rate risk are
exposed.
As EURIBOR has been reformed and complies with the EU
Benchmarks Regulation under a new hybrid methodology, the
Group expects EURIBOR to continue as a benchmark interest
rate for the foreseeable future and, therefore, does not consider
interest rate hedge relationships of EURIBOR to be directly
affected by IBOR reform as at 31 December 2019. It is currently
expected that Sterling Overnight Index Average will replace GBP
LIBOR and Secured Overnight Financing Rate will replace USD
LIBOR.
The process being used by the Group to manage the transition to
alternative benchmark rates is included in the Risk Management
report on page 114.
The Group has applied judgement in relation to market
expectations when determining the fair value of the hedging
instrument and the present value of the estimated cash flows of
the hedged item. The key judgement is that the cash flows for
contracts currently indexing IBOR are currently expected to be
broadly equivalent to the cash flows when those contracts
transition to IBOR replacement rates. However, as the date of the
transition gets closer, this may no longer be the case. Hedge
accounting relationships impacted by IBOR reform may
experience increased ineffectiveness due to the following
reasons:
• Market participants’ expectations for when the transition from
the existing IBOR benchmark rate to an alternative
benchmark interest rate may occur. This could give rise to
hedge ineffectiveness in the prospective assessment, in
particular where the replacement of the benchmark rate is
expected to occur at different times in the hedged item and
the hedging instrument.
  213
Fair value hedges
Certain interest rate and cross currency interest rate derivatives
are designated as hedging instruments. These are primarily used
to reduce the interest rate and FX exposure on the Group's fixed
rate debt held, fixed rate mortgages, customer accounts and
debt issued portfolios. The amounts relating to items designated
as hedging instruments and hedge ineffectiveness for the year
were as follows.
Carrying amount Nominal amount
Items designated as hedging instruments Nominal of the hedging Changes in of the hedging
and hedge ineffectiveness amount of instrument value used to Ineffectiveness instruments
the hedging calculate hedge recognised in affected by
2019 instrument Assets Liabilities ineffectiveness2,3
profit or loss2,3
IBOR reform
Risk category Hedging instrument1
Items designated as hedging instruments Nominal Carrying amount of the Changes in
and hedge ineffectiveness amount of hedging instrument value used to Ineffectiveness
the hedging calculate hedge recognised in
2018 instrument Assets Liabilities ineffectiveness2,4
profit or loss2,4
Risk category Hedging instrument1
All hedging instruments are included within derivative financial instruments on the balance sheet.
2
Ineffectiveness is included within net trading income on the income statement.
3
The main cause of ineffectiveness in the Group’s fair value hedge relationships are differences in interest indicies or maturities between certain interest rate swaps and their related
hedged items.
4
There are no material causes of ineffectiveness in the Group’s fair value hedges.
214
• Modification to the terms of the existing IBOR contracts that
results in the derecognition of a hedged item or the hedging
instrument. If a modification is deemed to substantial, the
hedging instrument and/or hedged item will be required to be
derecognised, which would imply discontinuation of the
corresponding hedge accounting relationship. Any
subsequent re-designation of such hedge relationships may
increase hedge ineffectiveness.
The Group designates certain derivatives as hedging instruments
in either fair value or cash flow hedge relationships. The timing of
the nominal amounts of hedging instruments (excluding those
subject to a dynamic macro-hedging process) and the applicable
average rates were as follows.
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Strategic Report Financial Review
21 Derivative financial instruments (continued)
2019 Accumulated
amount of fair value
adjustments on the
hedged item included
Carrying amount in the carrying amount Changes in Remaining
of the hedged item of the hedged item value used for adjustments for
calculating hedge discontinued
Line item on the balance sheet in Assets Liabilities Assets Liabilities ineffectiveness hedges
wIn the table above the carrying amount of debt instruments measured at fair value through other comprehensive income that are designated as hedged items in fair value hedges
have been restated as the fair value hedge adjustment was not separately disclosed as required by IFRS 7 in 2018. The carrying amount of the hedged item has reduced from
All hedging instruments are included within derivative financial instruments on the balance sheet.
2
Ineffectiveness is included within net trading income on the income statement.
3
There are no material causes of ineffectiveness in the Group’s cash flow hedges.
4
Balances include €nil (2018: €nil) amounts transferred to profit or loss for which hedge accounting was previously applied but for which hedged future cash flows are not expected to
occur. The line items affected in profit or loss because of the reclassification are net interest income and net trading income / (expense).
Cash flow hedges
The Group designates certain interest rate and currency
derivatives in cash flow hedge relationships in order to hedge the
exposure to variability in future cash flows arising from floating
rate assets and liabilities and from foreign currency assets.
The amounts relating to items designated as hedging instruments
and hedge ineffectiveness for the year were as follows.
2019 Changes
in the value
of the hedging Amount Nominal
Carrying instrument reclassified amount of
Nominal amount of the Changes in recognised from the cash the hedging
amount of hedging instrument value used for in other Ineffectiveness flow hedge instruments
the hedging calculating hedge comprehensive recognised in reserve to affected by
Risk category and instrument Assets Liabilities ineffectiveness income profit or loss2,3
profit or loss3,4
IBOR reform
hedging instrument1

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
2019 Changes in the Remaining
hedged risk used for adjustments for
calculating hedge Cash flow discontinued
ineffectiveness hedge reserve hedges
Risk category  €m
Interest rate risk 19 (16) 31
Foreign exchange risk (4) 3 -
Total 15 (13) 31
2018 Changes in the Remaining
hedged risk used for adjustments for
calculating hedge Cash flow discontinued
ineffectiveness hedge reserve hedges
Risk category  €m
Interest rate risk (30) 2 19
Foreign exchange risk 3 (1) -
Total (27) 1 19
In 2019 and 2018, there were no forecast transactions to which
the Group had applied hedge accounting which were no longer
expected to occur.
Movements in the cash flow hedge reserve are shown in note 19
(page 211).
Movement in cash flow 2019 2018
hedge reserve 
Changes in fair value
- Interest rate risk 45 8
- Foreign exchange risk (485) (9)
Transfer to income statement
Interest income
- Interest rate risk (7) (25)
- Foreign exchange risk 105 86
Net trading income / (expense)
- Interest rate risk (32) (43)
- Foreign exchange risk 376 (74)
Deferred tax on reserve movements (6) 6
Net decrease in cash flow hedge reserve (4) (51)
21 Derivative financial instruments (continued)
  

22 Other financial assets at fair value through profit or loss
Other financial assets at FVTPL include assets managed on a fair
value basis by the life assurance business and those assets
which do not meet the requirements in order to be measured at
FVOCI or amortised cost.
A portion of the Group’s life assurance business takes the legal
form of investment contracts, under which legal title to the
underlying investment is held by the Group, but the inherent risks
and rewards in the investments are borne by the policyholders.
Due to the nature of these contracts, the carrying value of the
assets is always the same as the value of the liabilities due to
policyholders and any change in the value of the assets results in
an equal change in the value of the amounts due to
policyholders. The associated liabilities are included in liabilities
to customers under investment contracts and insurance contract
liabilities on the balance sheet. At 31 December 2019, such
assets were €14,425 million (2018: €12,314 million). Included in
these assets are investments in unconsolidated structured
entities which comprise investments in collective investment
vehicles of €10,029 million (2018: €8,283 million) (note 55).
Other financial assets of €2,028 million (2018: €1,821 million) of
which €1,809 million (2018: €1,626 million) relates to assets held
by the Group’s life assurance business for solvency margin
purposes or as backing for non-linked policyholder liabilities.
Further details on financial assets mandatorily measured at
FVTPL is set out in note 57. Included in these assets are
investments in unconsolidated structured entities which comprise
investments in collective investment vehicles of €147 million
(2018: €116 million) (note 55).
Included within other financial assets are subordinated bonds
issued by NAMA with a nominal value of €70 million (2018: €70
million) and a fair value of €73 million (2018: €76 million). These
bonds represented 5% of the nominal consideration received for
assets sold to NAMA in 2010, with the remaining 95% received in
the form of NAMA senior bonds. The subordinated bonds are not
guaranteed by the State and the payment of interest and
repayment of capital is dependent on the performance of NAMA.
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
23 Loans and advances to banks
Loans and advances to banks are classified as financial assets at
amortised cost or financial assets mandatorily at FVTPL. The
associated impairment loss allowance on loans and advances to
banks is measured on a 12-month or lifetime ECL approach.
Loans and advances to banks at FVTPL include assets managed
on a fair value basis by the life assurance business and those
assets which do not meet the requirements in order to be
measured at FVOCI or amortised cost. At 31 December 2019, the
Group’s loans and advances to banks includes €198 million
(2018: €213 million) of assets held on behalf of Wealth and
Insurance life policyholders.
Mandatory deposits with central banks includes €1.4 billion
relating to collateral in respect of the Group’s issued bank notes
in NI (2018: €1.4 billion).
Placements with other banks includes cash collateral of €0.8
billion (2018: €0.4 billion) placed with derivative counterparties in
relation to net derivative liability positions (note 21).
The Group has entered into transactions to purchase securities
with agreement to resell and has accepted collateral that it is
permitted to sell or repledge in the absence of default by the
owner of the collateral. At 31 December 2019, the fair value of
this collateral was €nil (2018: €16 million) and is included in the
loans and advances to banks at FVTPL.

Less impairment loss allowance on loans
and advances to banks (1) (1)
Loans and advances to banks at
amortised cost 3,022 2,307
Loans and advances to banks at FVTPL 306 318
Loans and advances to banks 3,328 2,625
There has been no significant change in the impairment loss
allowance on loans and advances to banks held at amortised
cost during the year. The composition of loans and advances to
banks at amortised cost by stage is set out on page 235 and the
asset quality of loans and advances to banks at amortised cost is
set out on page 242.
Loans and advances to banks at FVTPL are not subject to
impairment under IFRS 9.
24 Debt securities at amortised cost
The following table details the significant categories of debt
securities at amortised cost.
At 31 December 2019, debt securities at amortised cost with a
fair value of €18 million (2018: €nil) had been pledged to third
parties in sale and repurchase agreements. The Group has not
derecognised any securities delivered in such sale and
repurchase agreements on the balance sheet.
There are no significant changes in the impairment loss allowance
on debt securities at amortised cost, assets are Stage 1. The
composition of debt securities at amortised cost by stage is set
out on page 235 and the asset quality of debt securities at
amortised cost is set out on page 242.

25 Financial assets at fair value through other comprehensive income
At 31 December 2019, debt instruments at FVOCI with a fair
value of €17 million (2018: €67 million) had been pledged to third
parties in sale and repurchase agreements. The Group has not
derecognised any securities delivered in such sale and
repurchase agreements on the balance sheet.
The impairment loss allowance for ECL on debt instruments at
FVOCI does not reduce the carrying amount but an amount equal
to the allowance is recognised in OCI as an accumulated
impairment amount, with corresponding impairment gains or
losses recognised in the income statement.
The impairment loss allowance on debt instruments at FVOCI
was €3 million at 31 December 2019 (2018: €3 million). The
composition of debt instruments at FVOCI by stage is set out on
page 235 and the asset quality of debt instruments at FVOCI is
set out on page 241.
In 2019, the Group disposed of debt instruments at FVOCI of
€1,178 million (2018: €85 million) which resulted in a transfer of
€3 million (2018: €2 million) from the debt instruments at FVOCI
reserve to the income statement.
At 31 December 2019, financial assets at FVOCI included €664
million (2018: €543 million) placed with Monetary Authorities as
contingency, to access intraday and other funding facilities.
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
27 Loans and advances to customers
Loans and advances to customers includes cash collateral of
€0.1 billion (2018: €0.1 billion) placed with derivative
counterparties in relation to net derivative liability positions.
Of loans and advances to customers at FVTPL, €246 million
(2018: €261 million) represent the Life Loan mortgage product,
which was offered by the Group until November 2010. The cash
flows of the Life Loans are not considered to consist solely of
payments of principal and interest, and as such are classified as
FVTPL.
During the year, the Group completed three transactions whereby
it derecognised or disposed of €479 million of loans and
advances to customers (after impairment loss allowance) as
follows:
• In April 2019, the Group entered into a securitisation
arrangement for a portfolio of residential mortgage NPEs
through an unconsolidated special purpose vehicle named
Mulcair Securities Designated Activity Company (DAC)
(‘Mulcair Securities’), see note 55. The portfolio had a gross
carrying value of €370 million (before impairment loss
allowance) and a net carrying value of €326 million (after
impairment loss allowance).
The Group transferred the beneficial interest in the loans to
Mulcair Securities. In accordance with IFRS 9, the residential
mortgage assets have been derecognised from the balance
sheet.
• In August 2019, the Group sold a portfolio of residential and
commercial property NPEs to Promontoria 2019 DAC, a party
unconnected to the Group. The portfolio had a gross carrying
value of €239 million (before impairment loss allowance) and
a net carrying value of €151 million (after impairment loss
allowance). The Group has not retained any interest in the
assets sold.
• In December 2019, the Group sold a portfolio of UK personal
loan NPEs to Intrum Finance Limited, a party unconnected to
the Group. The portfolio had a gross carrying value of €13
million (before impairment loss allowance) and a net carrying
value of €2 million (after impairment loss allowance). The
Group has not retained any interest in the assets sold.
The Group has recognised a net impairment loss of €23 million on
these transactions which has been reported through net
impairment (losses) / gains on financial instruments, as required
by IFRS 9 (note 16).
In June 2019, the Group purchased a €265 million portfolio of
commercial loans predominantly in the RoI from KBC Ireland.
2019 2018

Loans and advances to customers
at amortised cost 76,543 74,428
Finance leases and hire purchase receivables 4,000 3,372
80,543 77,800
Less allowance for impairment charges on
loans and advances to customers (1,308) (1,698)
Loans and advances to customers at
amortised cost 79,235 76,102
Loans and advances to customers at fair
value through profit or loss1
252 261
Total loans and advances to customers 79,487 76,363
Amounts include
Due from joint ventures and associates 142 119
1
Loans and advances to customers at fair value through profit or loss are not subject to impairment under IFRS 9.
The Group’s portfolios of loans and advances to customers at amortised cost are set out below. The 2018 comparative table includes
loans and advances to customers held for sale at 31 December 2018.
2019 2018
Gross carrying Total loans and Gross carrying Total loans and
amount Impairment advances to amount Impairment advances to
at amortised loss customers at at amortised loss customers at
cost allowance amortised cost cost allowance amortised cost
Loans and advances to customers

27 Loans and advances to customers (continued)
The following tables show the gross carrying amount and impairment loss allowances subject to 12 month and lifetime ECL on loans and
advances to customers at amortised cost.
2019 Non-property
Residential SME and Property and
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
27 Loans and advances to customers (continued)
1
At 31 December 2019, Purchased or Originated Credit-impaired assets included €67 million of assets with an impairment loss allowance of €2 million which, while credit-impaired
upon purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated
Credit-impaired until derecognition.
The following tables show the changes in gross carrying amount
and impairment loss allowances of loans and advances to
customers at amortised cost for the year ended 31 December
2019. The tables are prepared based on a combination of
aggregation of monthly movements for material term loan
portfolios (i.e. incorporating all movements a loan in these
portfolios has made during the year) and full year movements for
revolving-type facilities and less material (primarily Consumer)
portfolios.
Transfers between stages represent the migration of loans from
Stage 1 to Stage 2 following a ‘significant increase in credit risk’
or to Stage 3 as loans enter defaulted status. Conversely,
improvement in credit quality and loans exiting default result in
loans migrating in the opposite direction. The approach taken to
identify a ‘significant increase in credit risk’ and identifying
defaulted and credit-impaired assets is outlined in the credit risk
section of the Risk Management Report on page 137 and the
Group accounting policies note on page 183.
Transfers between each stage reflect the balances and
impairment loss allowances prior to transfer. The impact of
re-measurement of impairment loss allowance on stage transfer
is reported within ‘re-measurement’ in the new stage that a loan
has transferred into. For those tables based on an aggregation of
the months transfers between stages, transfers may include loans
which have subsequently transferred back to their original stage
or migrated further to another stage.
‘Net changes in exposure’ comprise the movements in the gross
carrying amount and impairment loss allowance as a result of
new loans originated and repayments of outstanding balances
throughout the reporting period.
‘Net impairment (losses) / gains in income statement’ does not
include the impact of cash recoveries which are recognised
directly in the income statement (note 16).
‘Re-measurements’ includes the impact of re-measurement on
stage transfers noted above, changes in management
adjustments and re-measurement due to changes in asset quality
that did not result in a transfer to another stage.
‘ECL model parameter changes’ represents the impact on
impairment loss allowances of semi-annual updates to the FLI,
and other model and parameter updates used in the
measurement of impairment loss allowances.
‘Impairment loss allowances utilised’ represents the reduction in
the gross carrying amount and associated impairment loss
allowance on loans where the Group has no reasonable
expectations of recovering a financial asset in its entirety or a
portion thereof. The utilisation of an allowance does not, of itself,
alter a customer’s obligations nor does it impact on the Group’s
rights to take relevant enforcement action.
Measurement reclassification and other movements (427) (58) (16) - (501)
Gross carrying amount at 31 December 2019 71,778 5,571 3,099 95 80,543
Impairment loss allowances utilised on loans and advances to customers at amortised cost during 2019 includes €297 million of
contractual amounts outstanding that are still subject to enforcement activity.
 27 Loans and advances to customers (continued)
Total gross loans and advances to customers increased during
the period by €2.1 billion from €78.4 billion as at 31 December
2018 to €80.5 billion as at 31 December 2019.
Stage 1 loans have increased by €3.0 billion reflecting the impact
of net new lending and FX movements with a corresponding
increase in impairment loss allowances. Coverage on Stage 1
loans has remained consistent at 0.2% with the impact of
transfers from Stage 2 at a higher coverage rate offset by re-
measurement to 12-month ECL in Stage 1.
Stage 2 loans have increased by €0.5 billion with net repayments
of €0.7 billion offset by net transfers from other Stages of €1.2
billion. Stage 2 increases mainly reflect migration in the corporate
and property and construction portfolios due to a combination of
case specific credit events and the evolution of FLI / impairment
model parameter updates. Coverage on Stage 2 loans has
remained consistent at 3.4% with an increase in impairment loss
allowances due to the impact of parameter changes offset by net
repayments.
Stage 3 loans have decreased by €1.4 billion with the key drivers
being a net reduction in exposures of €1.1 billion and the
utilisation of impairment loss allowances of €0.7 billion, offset by
net transfers from other stages of €0.4 billion. The reduction
reflects ongoing resolution activity including the securitisation
and disposal of non-performing portfolios (primarily BTL
residential mortgages) during the year which contributed €0.6
billion of a decrease in gross carrying amount.
Stage 3 impairment losses have reduced by €0.5 billion primarily
due to the utilisation of impairment loss allowances of €0.7 billion
offset by the impact of updated FLI / impairment model
parameters (including refreshed cure rates) and re-measurement
primarily reflecting losses on a small number of large exposures.
€0.1 billion of the reduction relates to the securitisation and
disposal of non-performing portfolios (primarily BTL residential
mortgages) during the year. Cover on Stage 3 loans has
decreased slightly from 32% to 31%.
The impact of the disposal of the UK credit card portfolio during
the year which was classified as held for sale is included within
‘Measurement reclassification and other movements’ and
resulted in reductions in gross carrying amount of €587 million
and impairment loss allowance of €25 million.
1
At 31 December 2019, Purchased or Originated Credit-impaired assets included €67 million of assets with an impairment loss allowance of €2 million which, while credit-impaired
upon purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated
Credit-impaired until derecognition.
2
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2019 is €2 million.
  224

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
225
27 Loans and advances to customers (continued)
The movement in both the gross carrying amount and impairment loss allowances subject to 12 month and lifetime ECL on loans and
advances to customers at amortised cost by portfolio asset class is set out in the following tables. These tables are prepared on the same
basis as the total Group tables as set out above.
Residential Mortgages
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Residential mortgages - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impaired) impaired) impaired) impaired1
allowance
impairment loss allowance) 
1
At 31 December 2019, Purchased or Originated Credit-impaired assets included €2 million of assets with an impairment loss allowance of €nil which, while credit-impaired upon
purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated Credit-
impaired until derecognition.
2
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2019 is €nil.
  226
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
27 Loans and advances to customers (continued)
2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Residential mortgages - (not credit- (not credit- (credit- credit- loss
Impairment loss allowances utilised on Residential mortgages at amortised cost during 2018 includes €69 million of contractual amounts
outstanding that are still subject to enforcement activity.
At 31 December 2018, Purchased or Originated Credit-impaired assets included €2 million of assets with an impairment loss allowance of €nil which, while credit-impaired upon
purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated Credit-
impaired until derecognition.
2
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2018 is €nil.
  227
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27 Loans and advances to customers (continued)
Non-property SME and corporate
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Non-property SME and corporate - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impaired) impaired) impaired) impaired allowance
impairment loss allowance) 
Opening balance 1 January 2019 16,547 1,850 1,067 1 19,465
Total net transfers (771) 640 131 - -
- to 12-month ECL not credit-impaired 872 (870) (2) - -
- to lifetime ECL not credit-impaired (1,602) 1,780 (178) - -
- to lifetime ECL credit-impaired (41) (270) 311 - -
Net changes in exposure 1,354 (339) (189) 26 852
Impairment loss allowances utilised - - (260) - (260)
Exchange adjustments 256 24 9 - 289
Measurement reclassification and other movements 88 - (1) - 87
Gross carrying amount at 31 December 2019 17,474 2,175 757 27 20,433
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
(not credit- (not credit- (credit- credit- loss
Non-property SME and corporate - impaired) impaired) impaired) impaired1
allowance
Impairment loss allowance 
Opening balance 1 January 2019 50 74 501 - 625
Total net transfers 18 11 (29) - -
- to 12-month ECL not credit-impaired 26 (25) (1) - -
- to lifetime ECL not credit-impaired (8) 61 (53) - -
- to lifetime ECL credit-impaired - (25) 25 - -
Net impairment (losses) / gains in income statement (12) (7) 122 - 103
- Re-measurement (7) (5) 174 - 162
- Net changes in exposure (6) (8) (62) - (76)
- ECL model parameter changes 1 6 10 - 17
Impairment loss allowances utilised - - (260) - (260)
Exchange adjustments - - 2 - 2
Measurement reclassification and other movements - - 17 - 17
Impairment loss allowance at 31 December 2019 56 78 353 - 487
Impairment loss allowances utilised on non-property SME and corporate during 2019 includes €182 million of contractual amounts
outstanding that are still subject to enforcement activity.
1
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2019 is €2 million.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
27 Loans and advances to customers (continued)
2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Non-property SME and corporate - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impaired) impaired) impaired) impaired allowance
impairment loss allowance) 
Opening balance 1 January 2018 15,209 1,909 1,457 48 18,623
Total net transfers (485) 325 160 - -
- to 12-month ECL not credit-impaired 368 (350) (18) - -
- to lifetime ECL not credit-impaired (736) 806 (70) - -
- to lifetime ECL credit-impaired (117) (131) 248 - -
Net changes in exposure 1,792 (387) (250) (7) 1,148
Impairment loss allowances utilised - - (287) (42) (329)
Exchange adjustments 4 (1) (1) - 2
Measurement reclassification and other movements 27 4 (12) 2 21
Gross carrying amount at 31 December 2018 16,547 1,850 1,067 1 19,465
2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
(not credit- (not credit- (credit- credit- loss
Non-property SME and corporate - impaired) impaired) impaired) impaired1
allowance
Impairment loss allowance 
Opening balance 1 January 2018 60 84 754 37 935
Total net transfers 8 1 (9) - -
- to 12-month ECL not credit-impaired 17 (10) (7) - -
- to lifetime ECL not credit-impaired (6) 22 (16) - -
- to lifetime ECL credit-impaired (3) (11) 14 - -
Net impairment (losses) / gains in income statement (11) (9) 22 5 7
- Re-measurement (13) (3) 94 4 82
- Net changes in exposure 4 (10) (73) 1 (78)
- ECL model parameter changes (2) 4 1 - 3
Impairment loss allowances utilised - - (287) (42) (329)
Exchange adjustments - - - - -
Measurement reclassification and other movements (7) (2) 21 - 12
Impairment loss allowance at 31 December 2018 50 74 501 - 625
Impairment loss allowances utilised on non-property SME and corporate during 2018 includes €149 million of contractual amounts
outstanding that are still subject to enforcement activity.
1
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2018 is €nil.
  229
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27 Loans and advances to customers (continued)
Property and construction
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Property and construction - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impaired) impaired) impaired) impaired1
allowance
impairment loss allowance) 
Opening balance 1 January 2019 6,343 1,102 843 66 8,354
Total net transfers (651) 504 147 - -
- to 12-month ECL not credit-impaired 409 (408) (1) - -
- to lifetime ECL not credit-impaired (1,041) 1,108 (67) - -
- to lifetime ECL credit-impaired (19) (196) 215 - -
Net changes in exposure 222 (124) (236) (4) (142)
Impairment loss allowances utilised - - (219) - (219)
Exchange adjustments 71 33 14 3 121
Measurement reclassification and other movements - (2) - - (2)
Gross carrying amount at 31 December 2019 5,985 1,513 549 65 8,112
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
(not credit- (not credit- (credit- credit- loss
Property and construction - impaired) impaired) impaired) impaired1,2
allowance
Impairment loss allowance 
Opening balance 1 January 2019 4 38 369 - 411
Total net transfers 5 1 (6) - -
- to 12-month ECL not credit-impaired 8 (8) - - -
- to lifetime ECL not credit-impaired (3) 18 (15) - -
- to lifetime ECL credit-impaired - (9) 9 - -
Net impairment (losses) / gains in income statement (3) 1 28 2 28
- Re-measurement (5) (6) 69 2 60
- Net changes in exposure 1 (4) (41) - (44)
- ECL model parameter changes 1 11 - - 12
Impairment loss allowances utilised - - (219) - (219)
Exchange adjustments - 1 4 - 5
Measurement reclassification and other movements - 1 4 - 5
Impairment loss allowance at 31 December 2019 6 42 180 2 230
Impairment loss allowances utilised on Property and construction during 2019 includes €64 million of contractual amounts outstanding
that are still subject to enforcement activity.
1
At 31 December 2019, Purchased or Originated Credit-impaired assets included €65 million of assets with an impairment loss allowance of €2 million which, while credit-impaired
upon purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated
Credit-impaired until derecognition.
2
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2019 is €nil.
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Financial Statements
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Strategic Report Financial Review
2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Property and construction - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impaired) impaired) impaired) impaired1
allowance
impairment loss allowance) 
Opening balance 1 January 2018 5,850 1,313 1,494 67 8,724
Total net transfers (68) 29 39 - -
- to 12-month ECL not credit-impaired 313 (309) (4) - -
- to lifetime ECL not credit-impaired (340) 448 (108) - -
- to lifetime ECL credit-impaired (41) (110) 151 - -
Net changes in exposure 567 (234) (361) - (28)
Impairment loss allowances utilised - - (350) - (350)
Exchange adjustments (1) (6) (1) (1) (9)
Measurement reclassification and other movements (5) - 22 - 17
Gross carrying amount at 31 December 2018 6,343 1,102 843 66 8,354
2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
(not credit- (not credit- (credit- credit- loss
Property and construction - impaired) impaired) impaired) impaired1,2
allowance
Impairment loss allowance 
Opening balance 1 January 2018 7 42 685 1 735
Total net transfers 2 18 (20) - -
- to 12-month ECL not credit-impaired 5 (4) (1) - -
- to lifetime ECL not credit-impaired (2) 26 (24) - -
- to lifetime ECL credit-impaired (1) (4) 5 - -
Net impairment (losses) / gains in income statement (3) (21) 21 (1) (4)
- Re-measurement (3) (15) 67 - 49
- Net changes in exposure - (9) (47) (1) (57)
- ECL model parameter changes - 3 1 - 4
Impairment loss allowances utilised - - (350) - (350)
Exchange adjustments - - (1) - (1)
Measurement reclassification and other movements (2) (1) 34 - 31
Impairment loss allowance at 31 December 2018 4 38 369 - 411
Impairment loss allowances utilised on Property and construction during 2018 includes €111 million of contractual amounts outstanding
that are still subject to enforcement activity.
27 Loans and advances to customers (continued)
1
At 31 December 2018, Purchased or Originated Credit-impaired assets included €66 million of assets with an impairment loss allowance of €nil which, while credit-impaired upon
purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated Credit-
impaired until derecognition.
2
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2018 is €nil.
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27 Loans and advances to customers (continued)
Consumer
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Consumer - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impairment impaired) impaired) impaired) impaired allowance
loss allowance) including held for sale 
Opening balance 1 January 2019 4,816 250 108 - 5,174
Total net transfers (111) 42 69 - -
- to 12-month ECL not credit-impaired 152 (145) (7) - -
- to lifetime ECL not credit-impaired (216) 219 (3) - -
- to lifetime ECL credit-impaired (47) (32) 79 - -
Net changes in exposure 1,095 (37) (23) - 1,035
Impairment loss allowances utilised - - (41) - (41)
Exchange adjustments 157 6 3 - 166
Measurement reclassification and other movements (536) (55) (16) - (607)
Gross carrying amount at 31 December 2019 5,421 206 100 - 5,727
2019 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
(not credit- (not credit- (credit- credit- loss
Consumer - Impairment loss allowance impaired) impaired) impaired) impaired1
allowance
including held for sale 
Opening balance 1 January 2019 52 33 70 - 155
Total net transfers 4 (14) 10 - -
- to 12-month ECL not credit-impaired 16 (14) (2) - -
- to lifetime ECL not credit-impaired (4) 6 (2) - -
- to lifetime ECL credit-impaired (8) (6) 14 - -
Net impairment (losses) / gains in income statement 10 21 37 - 68
- Re-measurement (20) 25 54 - 59
- Net changes in exposure 31 (2) (16) - 13
- ECL model parameter changes (1) (2) (1) - (4)
Impairment loss allowances utilised - - (41) - (41)
Exchange adjustments 2 1 2 - 5
Measurement reclassification and other movements (4) (9) (15) - (28)
Impairment loss allowance at 31 December 2019 64 32 63 - 159
Impairment loss allowances utilised on consumer during 2019 includes €24 million of contractual amounts outstanding that are still
subject to enforcement activity.
1
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2019 is €nil.
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2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
Consumer - (not credit- (not credit- (credit- credit- loss
Gross carrying amount (before impaired) impaired) impaired) impaired allowance
impairment loss allowance) including held for sale 
Opening balance 1 January 2018 3,948 273 97 - 4,318
Total net transfers (35) (19) 54 - -
- to 12-month ECL not credit-impaired 50 (46) (4) - -
- to lifetime ECL not credit-impaired (57) 59 (2) - -
- to lifetime ECL credit-impaired (28) (32) 60 - -
Net changes in exposure 922 (3) (9) - 910
Impairment loss allowances utilised - - (35) - (35)
Exchange adjustments (25) (1) - - (26)
Measurement reclassification and other movements 6 - 1 - 7
Gross carrying amount at 31 December 2018 4,816 250 108 - 5,174
2018 Stage 1 - Stage 2 - Stage 3 - Purchased / Total
12 month ECL Lifetime ECL Lifetime ECL originated impairment
(not credit- (not credit- (credit- credit- loss
Consumer - Impairment loss allowance impaired) impaired) impaired) impaired1
allowance
including held for sale 
Opening balance 1 January 2018 41 33 64 - 138
Total net transfers 4 (7) 3 - -
- to 12-month ECL not credit-impaired 6 (4) (2) - -
- to lifetime ECL not credit-impaired (1) 2 (1) - -
- to lifetime ECL credit-impaired (1) (5) 6 - -
Net impairment (losses) / gains in income statement 7 8 35 - 50
- Re-measurement (5) 9 41 - 45
- Net changes in exposure 23 1 (4) - 20
- ECL model parameter changes (11) (2) (2) - (15)
Impairment loss allowances utilised - - (35) - (35)
Exchange adjustments - - - - -
Measurement reclassification and other movements - (1) 3 - 2
Impairment loss allowance at 31 December 2018 52 33 70 - 155
Impairment loss allowances utilised on consumer during 2018 includes €23 million of contractual amounts outstanding that are still
subject to enforcement activity.
27 Loans and advances to customers (continued)
1
The total amount of undiscounted expected credit losses at initial recognition on financial assets that were initially Purchased or Originated Credit-impaired during 2018 is €nil.
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27 Loans and advances to customers (continued)
Finance leases and hire purchase receivables
The Group’s material leasing arrangements include the provision of instalment credit and leasing finance for both consumer and business
customers. As outlined in the Group accounting polices note on page 179, from 1 January 2019, the Group adopted IFRS 16 ‘Leases’.
Loans and advances to customers include finance leases and hire purchase receivables, which are analysed in the table below. The net
investment in finance leases at 31 December 2019 was €4 billion, an increase of €0.6 billion since 31 December 2018. This was primarily
driven by volume increases in the Northridge business in Retail UK.

Gross investment in finance leases
NComparative figures for the prior year have not been restated and are set out on an IAS 17 classification and measurement basis.
2018
€m
Gross investment in finance leases
Not later than 1 year 1,114
Later than 1 year and not later than 5 years 2,526
Later than 5 years 12
3,652
Unearned future finance income on
finance leases (280)
Net investment in finance leases 3,372
The net investment in finance leases is analysed as follows:
Not later than 1 year 1,029
Later than 1 year and not later than 5 years 2,332
Later than 5 years 11
3,372
Securitisations
Loans and advances to customers include balances that have been securitised but not derecognised, comprising both residential
mortgages and commercial loans. In general, the assets, or interests in the assets, are transferred to structured entities, which then issue
securities to third party investors or to other entities within the Group. With the exception of Mulcair Securities, all of the Group’s
securitisation structured entities are consolidated. See note 55 for further details.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
28 Credit risk exposures
Internal credit risk ratings
The following disclosures provide quantitative information about
credit risk within financial instruments held by the Group. Details
of the credit risk methodologies are set out on pages 134 to 139.
In addition to credit risk, the primary risks affecting the Group
through its use of financial instruments are: funding and liquidity
risk, market risk and life insurance risk. The Group’s approach to
the management of these risks, together with its approach to
Capital management, are set out in sections 3.1 (credit risk), 3.2
(funding and liquidity risk), 3.3 (market risk), 3.4 (life insurance
risk) and 4 (capital management) of the Risk Management Report.
The table below illustrates the relationship between the Group’s
internal credit risk rating grades as used for credit risk
management purposes and PD percentages, and further
illustrates the indicative relationship with credit risk ratings used
by external rating agencies.
2019 Stage 1 - Stage 2 - Stage 3 - Purchased /
12 month ECL Lifetime ECL Lifetime ECL originated
(not credit- (not credit- (credit- credit-
Financial assets exposure by stage impaired) impaired) impaired) impaired1
Total
Financial assets
Composition and risk profile
The tables below summarise the composition and risk profile of the Group’s financial assets subject to impairment and the impairment
loss allowances on these financial assets.
1
At 31 December 2019, Purchased or Originated Credit-impaired assets included €67 million of assets with an impairment loss allowance of €2 million which, while credit-impaired
upon purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated
Credit-impaired until derecognition.
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28 Credit risk exposures (continued)
2018 Stage 1 - Stage 2 - Stage 3 - Purchased /
12 month ECL Lifetime ECL Lifetime ECL originated
Financial assets exposure by stage (not credit- (not credit- (credit- credit-
(before impairment loss allowance) impaired) impaired) impaired) impaired1
Loans and advances to customers excludes €252 million (2018:
€261 million) of loans mandatorily at FVTPL at 31 December 2019
which are not subject to impairment under IFRS 9 and are
therefore excluded from impairment related tables (note 27).
At 31 December 2019, other financial assets includes: cash and
balances at central banks of €8,327 million (2018: €6,035 million)
and items in the course of collection from other banks of €223
million (2018: €259 million). The above tables exclude loan
commitments, guarantees and letters of credit of €14,671 million
at 31 December 2019 (2018: €15,505 million) that are subject to
impairment (note 45).
1
At 31 December 2018, Purchased or Originated Credit-impaired assets included €68 million of assets with an impairment loss allowance of €nil which, while credit-impaired upon
purchase or origination were no longer credit-impaired at the reporting date due to improvements in credit risk. These assets will remain classified as Purchased or Originated Credit-
impaired until derecognition.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
Loans and advances to customers at amortised cost
Composition and risk profile
The table below summarises the composition and risk profile of the Group’s loans and advances to customers at amortised cost.
2019 20182
Loans and advances to customers Not credit- Credit- Total Not credit- Credit- Total
Composition and risk profile impaired impaired impaired impaired

Excluded from the table above are Purchased or Originated Credit-impaired assets of €95 million (2018: €70 million), €67 million (2018: €68 million) of which were no longer credit-
impaired at the reporting date due to improvement in credit risk since purchase or origination. These assets will remain classified as Purchased or Originated Credit-impaired until
derecognition.
2
Including held for sale.
Asset quality - not credit-impaired
The table below summarises the composition and impairment loss allowance of the Group’s loans and advances to customers at
amortised cost that are not credit-impaired.
2019 Stage 1 Stage 2
Impairment Impairment
loss loss
Not credit-impaired loans Loans as Impairment allowance Loans as Impairment allowance
and advances to customers % of total loss as % of % of total loss as % of
Composition and impairment Loans advances allowance loans Loans advances allowance loans
loss allowance 

28 Credit risk exposures (continued)
2018 Stage 1 Stage 2
Impairment Impairment
Not credit-impaired loans loss loss
and advances to customers Loans as Impairment allowance Loans as Impairment allowance
including held for sale % of total loss as % of % of total loss as % of
Composition and impairment Loans advances allowance loans Loans advances allowance loans
loss allowance Excluded from the table above are Purchased or Originated Credit-impaired assets of €95 million, €67 million of which were no longer credit-impaired at the reporting date due to
improvement in credit risk since purchase or origination. These assets will remain classified as Purchased or Originated Credit-impaired until derecognition.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
1
Excluded from the table above are Purchased or Originated Credit-impaired assets of €95 million (2018: €70 million), €67 million (2018: €68 million) of which were no longer credit-
impaired at the reporting date due to improvement in credit risk since purchase or origination. These loans will remain classified as Purchased or Originated Credit-impaired loans
until derecognition.
2
Including held for sale.
28 Credit risk exposures (continued)
Asset quality - credit-impaired
Credit-impaired loans include loans where the borrower is considered unlikely to pay in full without recourse by the Group to actions such
as realising security, and loans where the borrower is greater than 90 days past due and the arrears amount is material. All credit-impaired
loans and advances to customers are risk rated PD grade 12.
The table below summarises the composition and impairment loss allowance of the Group’s loans and advances to customers at
amortised cost that are credit-impaired (i.e. Stage 3).
Credit-impaired loans include Stage 3 and Purchased or Originated Credit-impaired assets which remain credit-impaired at the reporting date.
2
Other / probationary loans, including forborne loans that have yet to satisfy exit criteria in line with Eurpoean Banking Authority guidance to return to performing.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
28 Credit risk exposures (continued)
Geographical and industry analysis of loans and advances to customers
The following table provides a geographical and industry breakdown of total loans including loans held for sale (before impairment loss
allowances).
Other financial instruments as set out in the table below include instruments that are not within the scope of IFRS 9 or are not subject to
impairment under IFRS 9. These include trading securities, derivative financial instruments, loans and advances to banks at fair value,
other financial instruments at FVTPL (excluding equity instruments) and any reinsurance assets. The table summarises the asset quality of
these financial instruments by equivalent external risk ratings.

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
29 Modified financial assets
The following table provides analysis of financial assets for which the contractual cash flows have been modified while they had an
impairment loss allowance measured at an amount equal to lifetime ECL, and where the modification did not result in derecognition.
2019 2018

Financial assets modified during the year
Amortised cost before modification 387 923
Net modification gains (i.e. net of impairment gains impact) - 6
Financial assets modified since initial recognition
Gross carrying amount of financial assets for which impairment loss allowance has
changed from lifetime to 12 month expected credit losses during the year 608 894
30 Interest in associates
The Group has availed of the venture capital exemption in
accounting for its interests in associates. In line with the
accounting policy set out on page 186, these interests have been
designated at initial recognition at FVTPL. Changes in the fair
value of these interests are included in the share of results of
associates (after tax) line on the income statement.
In presenting details of the associates of the Group, the
exemption permitted by Section 316 of the Companies Act 2014
has been availed of and the Group will annex a full listing of
associates to its annual return to the Companies Registration
Office.

At beginning of year 53 59
Decrease in investments (10) (15)
Increase in investments 8 5
Share of results after tax (note 17) 5 4
At end of year 56 53
31 Interest in joint ventures
For further information on joint ventures refer to note 55 Interests
in other entities. 2019 2018

At beginning of year 69 69
Share of results after tax (note 17) 34 37
- First Rate Exchange Services 34 37
Dividends received (31) (36)
Exchange adjustments 4 (1)
At end of year 76 69
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32 Intangible assets and goodwill
2019 2018
Other Other
Computer Computer externally Computer Computer externally
software software purchased software software purchased
externally internally intangible externally internally intangible
Goodwill purchased generated assets Total Goodwill purchased generated assets Total

The category ‘computer software internally generated’ includes
the Transformation Investment asset with a carrying value of €331
million (2018: €253 million). This asset reflects investment in
technical infrastructure, applications and software licences. €173
million (2018: €183 million) of this is an amortising asset with
amortisation periods normally ranging from five to ten years with
the majority being amortised over ten years. At 31 December
2019, the remaining amortisation period for these assets ranges
between 1 and 9.5 years. The remaining €158 million (2018: €70
million) represents assets under construction on which
amortisation will commence once the assets are put into use.
The useful lives of intangible assets were reviewed by
management at 31 December 2019 following which the useful
lives of a number of intangible were revised from five to ten years.
In accordance with IAS 8, the change in the useful lives of the
intangible assets is treated as a change in accounting estimate
and recognised prospectively from the date of change. There was
no impact on the amortisation charge for the year.
Goodwill
Goodwill was recognised on the acquisition of MLL; a car
commercial leasing and fleet management company in the UK.
Impairment Review - Goodwill
Goodwill is reviewed annually for impairment or more frequently if
events or circumstances indicate that impairment may have
occurred, by comparing the carrying value of goodwill to its
recoverable amount. An impairment charge arises if the carrying
value exceeds the recoverable amount.
The recoverable amount of an asset is the higher of its fair value
less costs to sell and its VIU, where the VIU is the present value
of the future cash flows expected to be derived from the asset.
Impairment testing of goodwill
Goodwill is allocated to cash generating units (CGU) at a level
which represents the smallest identifiable group of assets that
generate largely independent cash flows.
The calculation of the recoverable amount of goodwill for each of
these CGU is based upon a VIU calculation that discounts
expected pre-tax cash flows at an interest rate appropriate to the
CGU. The determination of both requires the exercise of
judgement. The estimation of pre-tax cash flows is sensitive to
the periods for which forecasted cash flows are available and to
assumptions underpinning the sustainability of those cash flows.
While forecasts are compared with actual performance and
external economic data, expected cash flows reflect
management’s view of future performance.
The values assigned to key assumptions reflect past experience,
performance of the business to date and management
judgement. The recoverable amount calculations performed for
the significant amounts of goodwill are sensitive to changes in the
following key assumptions:
Cash flow forecasts
Cash flow forecasts are based on internal management
information for a period of up to five years, after which a growth
factor appropriate for the business is applied. Initial cash flows
are based on performance in the twelve month period ended 31
December 2019 and the next four years’ cash flows are
consistent with approved plans for each business.
Growth rates
Growth rates beyond five years are determined by reference to
local economic growth, inflation projections or long term bond
yields. The assumed long term growth rate for MLL is 0%.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
Discount rate
The discount rate applied to MLL is the pre-tax weighted average
cost of capital for the Group increased to include a risk premium
to reflect the specific risk profile of the CGU to the extent that
such risk is not already reflected in the forecast cash flows. A rate
of 12% has been used in the model.
Certain elements within these cash flow forecasts are critical to
the performance of the business. The impact of changes in these
cash flows, growth rate and discount rate assumptions has been
assessed by the Directors in the review. The Directors consider
that reasonably possible changes in key assumptions used to
determine the recoverable amount of MLL would not result in any
impairment of goodwill. No impairment has been identified as at
31 December 2019 (2018: €nil).
Impairment review - intangible assets
Intangible assets have been reviewed for any indication that
impairment may have occurred. Where any such indication exists
impairment has been measured by comparing the carrying value
of the intangible asset to its recoverable amount.
There was €nil impairment identified in the year ended 31
December 2019 (2018: €6 million).
32 Intangible assets and goodwill (continued)
33 Investment properties
In 2019, rental income from investment property amounted to €52
million (2018: €48 million). Expenses directly attributable to
investment property generating rental income was €6 million
(2018: €5 million). There were no expenses directly attributable to
investment properties which are not generating rental income for
2019 or 2018.
In 2019, the Group reclassified €21 million from investment
properties to property, plant and equipment (note 34). In 2018, a
number of real estate funds totalling €15 million were reclassified
from investment properties to other financial assets at FVTPL.
At 31 December 2019, the Group held investment property of
€999 million (2018: €1,037 million) on behalf of Wealth and
Insurance policyholders.

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
247
34 Property, plant and equipment (continued)
Freehold land Payments
and buildings on accounts
and long Computer Finance and assets in
leaseholds and other lease the course of
Future capital expenditure
This table shows future capital expenditure in relation to both
property, plant and equipment and intangible assets.
Group as lessor
Computer and other equipment of which subject to an operating
lease, relates to the business activities of MLL. MLL enters into
non-cancellable operating leases, as lessor, through its car and
commercial leasing activities. The terms of the leases vary but the
majority of the leases typically run for a non-cancellable period of
two to four years through which MLL is exposed to residual value
risk on the vehicles leased.
MLL ensures that residual value risk is effectively managed to
minimise exposure. The residual values used mirror those utilised
in the creation of the original client contract. Residual values for
MLL’s fleet of vehicles are benchmarked against industry
standards using third party valuation tools. The residual values for
the entire portfolio are reassessed using an independent valuation
tool on a monthly basis throughout the life of the underlying
contracts to determine if impairment is required. The process of
realising asset values at the end of lease contracts is effectively
managed to maximise net sale proceeds. MLL received operating
lease income of €35 million in 2019 (note 10).
The Group has also entered into a small number of operating
leases and operating sub-leases as lessor which represent
properties and components of properties surplus to the Group’s
own requirements. The Group received operating lease income
on these leases of €1 million in 2019.
The table sets out the future undiscounted operating lease
payments receivable.
Minimum future rentals under non-cancellable operating leases
Included in receivable, for 2018, is an amount of €8 million in relation to sub-lease rental.
Also included in receivable for 2018 is €49 million for future income receivable from existing car rental contracts relating to MLL.
Payable Receivable
2018 
Not later than 1 year 63 28
Later than 1 year (not later than 5 years) 223 32
Later than 5 years 394 1
Finance leases
The Group leases computer equipment under finance lease agreements. The leases range from one to five years, contain no material
contingent rents or restrictions imposed by lease agreements and contain standard terms of renewal. At 31 December 2018, the net
carrying amount of the assets held under finance leases was €5 million (2017: €7 million).
Total Present value
minimum Future of finance
future finance lease
payments charges commitments
2018  €m
Not later than 1 year 4 - 4
Later than 1 year not later than 5 years 1 - 1
Until 31 December 2018 the Group’s leases under IAS 17 were
as follows:
Operating leases
The Group leases a number of branch and office premises to
carry out its business. The commercial leases typically are 25 to
35 year operating leases with five-yearly rent reviews. The
majority of the rent reviews are on an upwards only basis. Some
leases also include break options. The Group also holds a
number of short-term leases for less than ten years and a number
of long-term leases at market rent with less than 135 years
unexpired.
Minimum future rentals are the rentals payable under operating
leases up to the next available break option where this exists or
to expiry date of the lease. Both the required break option notice
period and the amount of any penalty rent have been included in
the amounts payable below.
The Group has entered into a small number of sub-leases as
lessor which represent properties and components of properties
surplus to the Group’s own requirements.
34 Property, plant and equipment (continued)
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
The movement on the deferred tax account is as follows
At beginning of year 1,123 1,184
In accordance with IAS 12, when presenting the deferred tax
balances, the Group offsets DTAs and deferred tax liabilities where:
• an entity has a legally enforceable right to set off current tax
assets against current tax liabilities; and
• the DTAs and the deferred tax liabilities relate to income taxes
levied by the same taxation authority on the same taxable
entity.
The DTAs of €1,088 million (2018: €1,165 million) shown on the
balance sheet is after netting by jurisdiction. The total DTAs before
netting by jurisdiction is €1,183 million (2018: €1,267 million). This
includes an amount of €1,089 million (2018: €1,162 million) in
respect of operating losses which are available to shelter future
profits from tax, of which €1,032 million relates to Irish tax losses
carried forward by the Bank, €50 million relates to UK tax losses
carried forward by Bank of Ireland (UK) plc and the UK branch of
the Bank, and €7 million relates to US tax losses carried forward
by the US branch of the Bank.
The recognition of a DTA in respect of tax losses carried forward
requires the Directors to be satisfied that it is probable that the
Group will have sufficient future taxable profits against which the
losses can be utilised. In that regard, the Group estimates the
period over which it will utilise its tax losses carried forward.
These estimates are based on the Group’s profitability projections
which cover a five year planning period. These profitability
projections are based on its strategic priorities where the focus
will be to increase overall returns, improve cost efficiencies and
grow sustainable profits and incorporates estimates and
assumptions on economic factors such as employment levels and
interest rates as well as other measures such as loan volumes,
margins, costs and impairment losses. For the purposes of
estimating when its tax losses will be utilised, the Group does not
assume any annual growth in profits after the Group’s five year
planning period.
Based on the Group’s projections, the DTA in respect of Irish tax
losses, is estimated to be recovered in full by the end of 2037
(2018: 2030). The increase in the recovery period is due to more
challenging economic headwinds, including a lower for longer
interest rate environment.

35 Deferred tax (continued)
Based on the Group’s proven earnings history, its strong position
within the Irish financial services market and its strategic priorities
to deliver sustained future Irish profits, the Group continues to
recognise the Irish DTA in full. The use of alternative assumptions
representing reasonably possible alternative outcomes could
increase or decrease the estimated recovery period.
The Group believe that Bank of Ireland (UK) plc will continue to be
profitable for the foreseeable future but acknowledge the external
challenges facing the banking industry including the lower for
longer interest rate environment and residual Brexit uncertainty.
Therefore, notwithstanding the absence of any expiry date for
trading losses in the UK, but acknowledging the economic
headwinds that have worsened during 2019 and that profit
forecasts become increasingly uncertain as the forecast period
extends into the future, the Group have determined that, at 31
December 2019, the recognition of DTAs in respect of tax losses
of Bank of Ireland (UK) plc will be limited by reference to the
amount of losses that are expected to be utilised within a ten year
period of projected profits. This ten year timescale is supported by
forecast taxable profits and takes into account the Group’s long-
term financial and strategic plans and reflects the period over
which the Group believes it can conclude that it is probable that
future taxable profits will be available in Bank of Ireland (UK) plc.
As a consequence, the carrying value of the DTA relating to
trading losses of Bank of Ireland (UK) plc and the UK branch of
the Bank have reduced by €45 million and €2 million respectively
in the year ended 31 December 2019 (2018: €nil).
The Group has not recognised a DTA of €136 million (2018: €96
million) in respect of temporary differences, unused tax losses and
tax credits of which €47 million (2018: €46 million) relates to US
losses which are subject to a 20 year life and are scheduled to
expire unused in the period 2026 to 2029 due to an annual
limitation of use. The balance relates to UK losses which have no
expiry date but are currently not projected to be recovered within
ten years.
Net DTAs at 31 December 2019 of €1.0 billion (2018: €1.1 billion)
are expected to be recovered after more than one year.
Deferred tax liabilities have not been recognised for tax that may
be payable if distributable reserves of certain overseas
subsidiaries and joint ventures were remitted to Ireland as the
timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not
reverse in the foreseeable future. Distributable reserves for
overseas subsidiaries and joint ventures totalled €1.5 billion at 31
December 2019 (2018: €0.5 billion).
36 Other assets
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
37 Life assurance business
The Group recognises the ViF life assurance business asset as
the present value of future profits expected to arise from
contracts classified as insurance contracts under IFRS 4. The
ViF asset, which is presented gross of attributable tax,
represents the present value of future profits, less an allowance
for the cost of required capital, expected to arise from
insurance contracts written by the reporting date. It is
determined by projecting the future surpluses and other cash
flows attributable to the shareholder arising from these
contracts and discounting using risk free interest rates as
specified under the Solvency II directive.
The process used in determining the key economic and
experience assumptions is as follows:
Interest rates and unit growth rate
Interest rates and unit-growth rates are based on a range of
duration specific rates determined by a risk free yield curve. This
yield curve is provided by the EIOPA.
Shareholder tax rate
The current rate of corporation tax is assumed to be maintained
over the term of the business. Deferred tax has been allowed for
on future surpluses attributable to shareholders estimated to arise
from insurance contracts.
Mortality and morbidity
The mortality and morbidity assumptions, which include an
allowance for improvements in longevity for annuitants, are set
with regard to the Group’s actual experience and / or relevant
market data.
Persistency rate
Persistency rates refer to the rate of policy termination for
insurance policies. Best estimate policy lapse rate assumptions
are set with regard to the Group’s actual experience and other
relevant market data.
Maintenance expenses
Allowance is made for future policy costs and expense inflation
explicitly.
Sensitivities
This table indicates the standalone impact of changes in the key
assumptions on profit.
While this table shows the impact of an individual assumption
change, a change in one assumption could impact on other
assumptions due to the relationship between assumptions.
Volatility Adjustment
The Volatility Adjustment (VA) is an addition to the risk-free curve
under the Solvency II regulations which is designed to protect
insurers with long-term liabilities from the impact of volatility on
the insurers’ solvency position. The VA is based on a risk-
corrected spread on the assets in a reference portfolio.
2019 2018
Value of in Force asset 
At beginning of year 571 565
Income statement movement in Value
of in Force asset (gross of tax) 60 6
At end of year 631 571
Sensitivities: Impact on 2019 2018
annual profit before tax 
1% increase in interest rates and
unit growth rates (19) (26)
1% decrease in interest rates and
unit growth rates 3 18
10% improvement in mortality 22 25
10% improvement in longevity1
(37) (31)
10% improvement in morbidity 12 10
10% deterioration in persistency (16) (21)
10% increase in equity and
property markets 35 35
5% improvement in maintenance
expenses 19 19
0.5% widening in bond spreads2
(61) (51)
38 Deposits from banks
Deposits from banks include cash collateral of €0.2 billion (2018:
€0.2 billion) received from derivative counterparties in relation to
net derivative asset positions (note 21).
2019 2018

Monetary Authority secured funding 1,736 2,037
Deposits from banks 443 445
Deposits from banks 2,179 2,482
1
Impact on Annuity book of business.
2
Includes impact of Volatility Adjustment.
 21:59 Page 251
252

On 25 September 2019, the Group repaid its TLTRO borrowings
secured funding in line with the conditions of the TLTRO facility.
As at 31 December 2019, the Group had no secured funding from
the ECB.
Drawings under the Term Funding Scheme (TFS) from the BoE
will be repaid between October 2020 and February 2022. Index
Long Term Repo (ILTR) funding from the BoE has a maturity of
less than one year.
The Group’s Monetary Authority funding is secured by loans and
advances to customers.
38 Deposits from banks (continued)
39 Customer accounts
The movement in own credit risk related to the Group’s
customer accounts designated at FVTPL for the year is shown
below.
There were no (2018: €nil) amounts presented in OCI relating to
liabilities that the Group designated at FVTPL which were
derecognised during the year.
The carrying amount of the customer accounts designated at
FVTPL as at 31 December 2019 is equivalent to the contractual
amount due at maturity (2018: €31 million lower). This is set out in
note 57.
At 31 December 2019, the Group’s largest 20 customer deposits
amounted to 4% (2018: 3%) of customer accounts. Deposit
accounts where a period of notice is required to make a
withdrawal are classified within term deposits and other products.
Information on the contractual maturities of customer accounts is
144 in the Risk Management Report.
Term deposits and other products include a number of term
accounts that contain easy access features. These allow the
customer to access a portion or all of their deposit
notwithstanding that this repayment could result in financial
penalty being paid by the customer. For such accounts, the
portion subject to the potential early access has been classified
in the ‘demand’ category in the liquidity risk and profile note
(page 278).
Term deposits and other products include €35 million (2018: €67
million) relating to sale and repurchase agreements with financial
institutions who do not hold a banking licence.
Under the European Communities (Deposit Guarantee Scheme)
Regulations 2015, eligible deposits of up to €100,000 per
depositor per credit institution are covered. Eligible deposits
includes credit balances in current accounts, demand deposit
accounts and term deposit accounts. The scheme is
administered by the CBI and is funded by the credit institutions
covered by the scheme.
On 24 November 2015, the EC released a proposal, European
Deposit Insurance Scheme (EDIS), designed to achieve a
common European deposit protection scheme by 2024.
The EU (Bank Recovery and Resolution) Regulations 2015, which
transposed the BRRD into Irish Law, provides that covered
deposits (i.e. eligible deposits up to €100,000) are excluded from
the scope of the bail-in tool. The bail-in tool enables a resolution
authority to write down the value of certain liabilities or convert
them into equity, to the extent necessary to absorb losses and
recapitalise an institution. It also introduces ‘depositor
preference’, where shareholders’ equity and other unsecured

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
written down before losses are imposed on preferred depositors.
The bail-in rules allow in exceptional circumstances for the
exclusion or partial exclusion of certain liabilities (with a key focus
being eligible deposits) from the application of the write down or
conversion powers.
In addition to the deposits covered by these Regulations, certain
other Group deposits are covered by the deposit protection
schemes in other jurisdictions, chiefly the UK FSCS (in respect of
eligible deposits with Bank of Ireland (UK) plc).
39 Customer accounts (continued)
40 Debt securities in issue
As set out in note 38, the Group has repaid all of its TLTRO
borrowings in line with the terms and conditions of the TLTRO
facility and there were no such debt securities outstanding at the
end of 2019 (2018: €615 million).
During the year the Group repurchased and derecognised debt
securities in issue held at fair value through profit and loss in the
amount of €122 million (2018: €nil). This resulted in €9 million
(2018: €nil) being transferred from the liability credit reserve to
retained earnings, being the cumulative gain recognised through
OCI relating to these liabilities.
The carrying amount of the debt securities in issue designated as
at FVTPL at 31 December 2019 was €35 million higher than the
contractual amount due at maturity (2018: €19 million higher).
This is set out in note 57 on page 280.
2019 2018

Bonds and medium term notes 6,886 6,792
Monetary Authorities secured funding (note 38) - 617
Other debt securities in issue 1,559 973
Debt securities in issue at amortised cost 8,445 8,382
Debt securities in issue at fair value
through profit or loss 364 522
Total debt securities in issue 8,809 8,904

41 Liabilities to customers under investment and insurance contracts
The Wealth and Insurance division writes the following life
assurance contracts that contain insurance risk:
Non-unit linked life assurance contracts
These contracts provide the policyholder with insurance in the
event of death, critical illness or permanent disability (principally
mortality and morbidity risk).
Non-unit linked annuity contracts
These contracts provide the policyholder with an income until
death (principally longevity and market risk).
Unit linked insurance contracts
These contracts include both policies primarily providing life
assurance protection and policies providing investment but with a
level of insurance risk deemed to be significant (principally
mortality and market risk).
Insurance contract liabilities, which consist of both unit linked and
non-unit linked liabilities, are calculated based on recognised
actuarial methods with due regard to the applicable actuarial
principles recognised in the European framework for the
prudential and financial monitoring of direct life assurance
business.
Unit linked liabilities reflect the value of the underlying funds in
which the policyholder is invested. Non-unit linked liabilities are
calculated using a gross premium method of valuation.
The key assumptions used in the valuation of insurance contract
liabilities are:
Interest rate:
The interest rates used are based on risk free rates published by
EIOPA in line with the Solvency II Directive.
Mortality and morbidity:
The mortality and morbidity assumptions, which include an
allowance for improvements in longevity for annuitants, are set
with regard to the Group’s actual experience and / or relevant
industry data.
Maintenance expenses:
Allowance is made for future policy costs and expense inflation
explicitly.
Options and guarantees
The Group has a very limited range of options and guarantees in
its business portfolio as the bulk of the business is unit linked
without investment guarantees. Where investment guarantees do
exist they are either hedged with an outside party or matched
through appropriate investment assets.
Uncertainties associated with insurance contract cash flows
and risk management activities
For life assurance contracts where death is the insured risk, the
most significant factors that could adversely affect the frequency
and severity of claims are the incidence of disease and general
changes in lifestyle. Where the insured risk is longevity, advances
in medical care is the key factor that increases longevity. The
Group manages its exposures to insurance risks through a
combination of applying strict underwriting criteria, asset and
liability matching, transferring risk to reinsurers and the
establishment of insurance contract liabilities.
Credit risk
Reinsurance programmes are in place to restrict the amount of
exposure on any single life. The Group uses a panel of highly
rated reinsurance companies to diversify credit risk.
Capital management and available resources
The Solvency II framework came into full effect from 1 January
2016 and introduced new capital, risk management, governance
and reporting requirements for all European insurance entities.
Under Solvency II, insurance entities are required to hold
technical provisions to meet liabilities to policyholders using best
estimate assumptions plus a risk margin. In addition, entities are
required to hold a risk based SCR which is calculated by
considering the capital required to withstand a number of shock
scenarios.
As part of the disclosure requirements, the Group’s life assurance
entity, NIAC, annually publishes a public document called the
Solvency and Financial Condition Report setting out more detail
on its solvency and capital management.
2019 2018
Investment contract liabilities 
Liabilities to customers under investment
contracts, at fair value 5,890 5,239
The movement in gross life insurance contact liabilities can be analysed
as follows:

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
43 Provisions
The Group has recognised provisions in relation to restructuring
costs, onerous contracts, legal and other. Such provisions are
sensitive to a variety of factors, which vary depending on their
nature. The estimation of the amounts of such provisions is
judgemental because the relevant payments are due in the future
and the quantity and probability of such payments is uncertain.
The methodology and the assumptions used in the calculation of
provisions are reviewed regularly and, at a minimum, at each
reporting date.
 21:59 Page 255
256

In July 2019, the Group disposed of its UK credit card portfolio
and recognised a net loss on disposal of €21 million (note 18).
The net loss on disposal included a charge for a provision of €39
million related to the costs of migration and other costs
associated with the disposal, of which €34 million is remaining as
at 31 December 2019 and is included in the restructuring
provision.
At 31 December 2018 the Group held a provision of €42 million in
respect of the industry wide Tracker Mortgage Examination.
The Group has determined in 2019 that a further €67 million
provision is required to cover the additional redress and
compensation costs, operational costs and estimated costs of
closing out the Tracker Mortgage Examination review. €55 million
was provided at 30 June 2019 with the remaining €12 million
charged to the income statement at 31 December 2019.
Considerable progress has been made in 2019 in contacting and
remediating remaining impacted customers. Since 31 December
2018 €34 million of the provision has been utilised covering
redress, compensation and related costs leaving a residual
provision of €75 million at 31 December 2019.
While the redress and compensation element of the provision is
largely known, there are still a number of uncertainties as to the
eventual total cost of the examination and in particular, the
administrative sanctions proceedings. Management has therefore
exercised judgement to determine the appropriate provision in
respect of certain key items in addition to the core elements of
the redress and compensation to be paid to customers. These
key judgemental items principally comprise the following:
• appeals: customers can pursue certain other options in
respect of the determination as to whether they are impacted
and the quantum of redress and compensation offered by the
Group including lodging appeals to an independent appeals
panel in the 12 months after receiving their letter offering
redress and compensation. In arriving at the provision,
management has made estimates of the level of appeals and
the associated costs of processing and settling such appeals;
• programme costs: in determining the provision in respect of
the examination, management has had to consider a range of
costs associated with bringing the examination to an ultimate
conclusion. This includes costs associated with various
oversight and governance processes, in particular any
potential fine relating to the conclusion of the ongoing CBI
administrative sanctions proceedings and the running of the
appeals panel, tax liabilities that the Bank will settle on behalf
of customers, data system costs and tracing agents.
43 Provisions (continued)
44 Contingent liabilities and commitments
The table gives the contract amounts of contingent liabilities and
commitments. The maximum exposure to credit loss under
contingent liabilities and commitments is the contractual amount
of the instrument in the event of non-performance by the other
party where all counter claims, collateral or security prove
worthless.
Loss allowance provisions of €30 million (2018: €29 million)
recognised on loan commitments and guarantees and irrevocable
letters of credit are shown in note 45. Provisions on all other
contingent liabilities are shown in note 43.
In common with other banks, the Group conducts business
involving acceptances, performance bonds and indemnities. The
majority of these facilities are offset by corresponding obligations
of third parties.
Guarantees and letters of credit are given as security to
support the performance of a customer to third parties. As the
Group will only be required to meet these obligations in the event
of the customer’s default, the cash requirements of these
instruments are expected to be considerably below their nominal
amounts.
An acceptance is an undertaking by a bank to pay a bill of
exchange drawn on a customer. The Group expects most
acceptances to be presented, but reimbursement by the
customer is normally immediate. Endorsements are residual
liabilities of the Group in respect of bills of exchange, which have
been paid and subsequently rediscounted.
Other contingent liabilities primarily include performance bonds
and are generally short-term commitments to third parties which
are not directly dependent on the customers’ credit worthiness.
The Group is also party to legal, regulatory, taxation and other
actions arising out of its normal business operations.
In February 2019, the Group received a letter before claim from
investors in Eclipse film finance schemes asserting various claims
in connection with the design, promotion and operation of such
schemes. The Group’s involvement in these schemes was limited
to the provision of commercial finance. The Group was not the
designer, promoter or operator in respect of any of the schemes.
Documentary credits commit the Group to make payments to
third parties, on production of documents, which are usually
reimbursed immediately by customers.
Commitments to lend are agreements to lend to a customer in
the future, subject to certain conditions. Included within total
commitments is an amount of €22 million of undrawn loan
commitments to the Group’s joint ventures (2018: €57 million).
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
44 Contingent liabilities and commitments (continued)
2019 20181

Contingent liabilities
Guarantees and irrevocable letters of credit 428 354
Acceptances and endorsements 5 6
Other contingent liabilities 267 247
700 607
Loan commitments
Documentary credits and short-term trade related transactions 46 59
Undrawn formal standby facilities, credit lines and other commitments to lend 14,197 15,392
- Revocable or irrevocable with original maturity of 1 year or less 9,315 11,569
- Irrevocable with original maturity of over 1 year 4,882 3,523
14,243 15,151
2019 2018
Loss Loss
Amount allowance Amount allowance
 
Loan commitments (note 44) 14,243 29 15,151 28
Guarantees and irrevocable letters of credit (note 44) 428 1 354 1
14,671 30 15,505 29
45 Loss allowance provision on loan commitments and financial guarantees
The loss allowance on loan commitments are presented as a
provision in the balance sheet (i.e. as a liability under IFRS 9) and
separate from the impairment loss allowance. To the extent a
facility includes both a loan and an undrawn commitment; it is
only the impairment attributable to the undrawn commitment that
is presented in this table. The impairment loss allowance
attributable to the loan is shown as part of the financial asset to
which the loan commitment relates.
At 31 December 2019, the Group held a loss allowance provision
of €30 million (2018: €29 million) on loan commitments and
financial guarantees, of which €18 million (2018: €18 million) are
classified as Stage 1, €10 million (2018: €9 million) as Stage 2
and €2 million (2018: €2 million) as Stage 3.
The following tables summarise the asset quality of loan
commitments and financial guarantees by IFRS 9 twelve month
PD grade which are not credit-impaired. At 31 December 2019,
credit-impaired loan commitments are €50 million (2018: €61
million) while credit-impaired guarantees and irrevocable letters of
credit are €8 million (2018: €8 million) .
2019 Loan commitments Guarantees and irrevocable letters of credit
Loan commitments and Stage 1 Stage 2 Total Stage 1 Stage 2 Total
financial guarantees

2018 Loan commitments Guarantees and irrevocable letters of credit
Loan commitments and Stage 1 Stage 2 Total Stage 1 Stage 2 Total
financial guarantees
- Contract amount PD Grade
45 Loss allowance provision on loan commitments and financial guarantees (continued)
46 Retirement benefit obligations
The Group sponsors a number of defined benefit and defined
contribution schemes in Ireland and overseas. The defined
benefit schemes are funded and the assets of the schemes are
held in separate trustee administered funds. In determining the
level of contributions required to be made to each scheme and
the relevant charge to the income statement, the Group has been
advised by independent actuaries, which in the case of the
majority of the Group’s schemes is Willis Towers Watson.
The most significant defined benefit scheme in the Group is the
BSPF which accounts for approximately 74% of the total
liabilities across all Group sponsored defined benefit schemes at
31 December 2019. The BSPF and all of the Group’s other RoI
and UK defined benefit schemes were closed to new members
during 2007, and a new hybrid scheme (which included elements
of defined benefit and defined contribution) was introduced for
new entrants to the Group. The hybrid scheme was subsequently
closed to new entrants in late 2014 and a new defined
contribution scheme, RetireWell, was introduced for new entrants
to the Group from that date.
Retirement benefits under the BSPF and a majority of the other
defined benefit plans are calculated by reference to pensionable
service and pensionable salary at normal retirement date.
Regulatory Framework
The Group operates the defined benefit plans under broadly
similar regulatory frameworks. Benefits under the BSPF are paid
to members from a fund administered by Trustees, who are
responsible for ensuring compliance with the Pensions Act 1990
and other relevant legislation. These responsibilities include
ensuring that contributions are received, investing the scheme
assets and making arrangements to pay the benefits. Plan assets
are held in trusts and are governed by local regulations and
practice in each country.
In order to assess the level of contributions required, triennial
valuations are carried out with plan obligations generally
measured using prudent assumptions and discounted based on
the return expected from assets held in accordance with the
actual scheme investment policy.
The BSPF is also subject to an annual valuation under the Irish
Pensions Authority Minimum Funding Standard (MFS). The MFS
valuation is designed to assess whether the scheme has
sufficient funds to provide a minimum level of benefits in a wind-
up scenario. If the MFS valuation indicates a funding level of
below 100%, action would be required. This generally takes the
form of agreeing a ‘Funding Proposal’ with the Trustees with the
aim of meeting the MFS by a specified future point in time.
BSPF plan details at
last valuation date Number Proportion of
(31 December 2018) of members funding liability
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
46 Retirement benefit obligations (continued)
The responsibilities of the Trustees, and the regulatory
framework, are broadly similar for the Group’s other defined
benefit schemes and take account of pension regulations in each
specific jurisdiction. The Group works closely with the Trustees of
each scheme to manage the plans.
The nature of the relationship between the Group and the
Trustees is governed by local regulations and practice in each
country and by the respective legal documents underpinning
each plan.
Actuarial Valuation of the BSPF
The last formal valuation of BSPF was carried out as at 31
December 2018.
The triennial valuation disclosed the fair value of the scheme
assets represented 97% of the benefits that had accrued to
members, after allowing for expected future increases in earnings
and pensions.
As a result of the valuation discussions with the Trustees, the
Group agreed to pay €19.4 million per annum in contributions
over the 3 years to the next triennial valuation date, plus a
contribution to the annual scheme expenses. The total of these
payments will equate to the remaining committed contributions
arising from the 2013 Group Pensions Review.
In respect of future service, the actuary recommended an
employer contribution of €59.5 million per annum over the period
to the next valuation (decreased from €63.6 million at the last
valuation).
The next formal triennial valuation of the BSPF will be carried out
during 2022 based on the position at 31 December 2021.
The actuarial valuations are available for inspection by members
but are not available for public inspection.
Plan details
The table on page 258 sets out details of the membership of the
BSPF.
Guaranteed Minimum Pensions
Included in past service cost is an amount of €nil (2018: €4
million) related to Guaranteed Minimum Pensions equalisation
which impacts certain of the Group’s UK pension schemes.
Financial and Demographic assumptions
The assumptions used in calculating the accounting costs and
obligations of the Group’s defined benefit pension plans, as
detailed below, are set by the Directors after consultation with
independent actuaries.
Discount rates are determined in consultation with the Group’s
independent actuary, with reference to market yields at the
reporting date on high quality corporate bonds (AA rated or
equivalent) with a term corresponding to the term of the benefit
payments.
The assumption for RoI price inflation is set by reference to the
long-term expectation for eurozone inflation as implied by the
difference between eurozone fixed interest and index-linked
bonds. The assumptions for UK price inflation are determined
with reference to the Group’s independent actuary’s standard
cash flow matching inflation assumption methodology, except for
UK Consumer Price Index (CPI) inflation, which is set by
reference to retail price index (RPI) inflation, with an adjustment
applied, as there are insufficient CPI-linked bonds from which to
derive an assumption.
The salary assumption takes into account inflation, promotion
and current employment markets relevant to the Group. Other
financial assumptions are reviewed in line with changing market
conditions to determine best estimate assumptions.
Demographic assumptions are reviewed periodically in line with
the actual experience of the Group’s schemes.
Mortality assumptions
The mortality assumptions adopted for Irish pension
arrangements reflect both a base table and projected table
developed from various Society of Actuaries in Ireland mortality
investigations that are considered a best fit for the Group’s
expected future mortality experience.
Amounts recognised in financial statements
The table below outlines where the Group’s defined benefit plans are recognised in the financial statements:
1
The UK Pension Plans include a portion of the Bank of Ireland Staff Pension Fund which relates to UK members.

261

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
46 Retirement benefit obligations (continued)
The movement in the net defined benefit obligation over the year in respect of the Group’s defined benefit plans is as follows:
2019 2018
Deficit-reducing contributions consist principally of additional contributions related to the Group’s Pensions Reviews.
 21:59 Page 261
262

46 Retirement benefit obligations (continued)
The retirement benefit schemes’ assets include BOIG plc shares
amounting to €5 million (2018: €5 million) and one property
occupied by Group companies to the value of €40 million (2018:
€41 million).
Sensitivity of defined benefit obligation to key assumptions
This table sets out how the defined benefit obligation would have
been affected by changes in the significant actuarial assumptions
that were reasonably possible.
While the defined benefit obligation sensitivity table shows the
estimated impact of an individual assumption change, a change
in one assumption could impact on other assumptions due to the
relationship between assumptions.
Some of the reasonably possible changes in defined benefit
obligation assumptions may have an impact on the value of the
schemes’ investment holdings. For example, the plans hold a
proportion of their assets in corporate bonds. A fall in the
discount rate as a result of lower corporate bond yields would be
expected to lead to an increase in the value of these assets, thus
partly offsetting the increase in the defined benefit obligation. The
extent to which these sensitivities are managed is discussed
further below.
The table on the following page sets out the estimated sensitivity
of plan assets to changes in equity markets, interest rates and
inflation rates.
The sensitivity analysis is prepared by the independent actuaries
calculating the defined benefit obligation under the alternative
assumptions and the fair value of plan assets using alternative
asset prices.
Future cash flows
The plans’ liabilities represent a long-term obligation and most of
the payments due under the plans will occur several decades into
the future.
The duration or average term to payment for the benefits due,
weighted by liability, is c.21 years for the Irish plans and c.21
years for the UK plans.
Expected employer contributions for 2020 are €127 million in
respect of future service. This excludes any additional
contributions arising from the 2013 Group Pensions Review. The
remaining committed contributions from this Review are
estimated to be €38.8 million for the BSPF and are payable
before the end of 2020 in the form of cash or other suitable
assets.
Expected employee contributions for 2020 are €9 million.
Risks and risk management
The Group’s defined benefit pension plans have a number of
areas of risk.
The risks are considered from both a funding perspective, which
drives the cash commitments of the Group, and from an
accounting perspective, i.e. the extent to which such risks affect
the amounts recorded in the Group’s financial statements.
Changes in bond yields, interest rate and inflation risks, along
with equity risk, are the defined benefit schemes’ largest risks.
From an accounting liability perspective, the schemes are also
exposed to movements in corporate bond spreads. As part of its
risk management, the largest Group sponsored pension scheme,
the BSPF has invested 47% of its assets in a Liability Driven
Investment (LDI) approach to help manage its interest rate and
inflation risk.21:59 Page 262
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
The key areas of risk, and the ways in which the Group has
sought to manage them, are set out below:
Asset volatility
The defined benefit pension plans hold a proportion of their
assets in equities and other return-seeking assets. The returns on
such assets tend to be volatile. For the purposes of the triennial
valuation, the defined benefit liabilities are calculated using a
discount rate set with reference to government bond yields, with
allowance for additional return to be generated from the
investment portfolio.
For measurement of the obligation in the financial statements
under IAS 19, however, the defined benefit obligation is
calculated using a discount rate set with reference to high-quality
corporate bond yields.
The movement in the asset portfolio is not fully correlated with
the movement in the two liability measures and this means that
the funding level is likely to be volatile in the short-term,
potentially resulting in short-term cash requirements and an
increase in the net defined benefit deficit recorded on the balance
sheet.
In order to limit the volatility in asset returns, the schemes’ assets
are well-diversified by investing in a range of asset classes,
including listed equity, private equity, hedge funds, infrastructure,
reinsurance, property, government bonds and corporate bonds.
The investment in bonds is discussed further below.
Changes in bond yields
The LDI approach invests in cash, government bonds, interest
rate and inflation swaps, and other financial derivatives to create
a portfolio which is both inflation-linked and of significantly longer
duration than possible in the physical bond market. It also
provides a closer match to the expected timing of cash flow /
pension payments. The portfolio broadly hedges against
movements in long-term interest rates although it only hedges a
portion of the BSPF’s interest rate risks. Furthermore, the
portfolio does not hedge against changes in the credit spread on
corporate bonds used to derive the accounting liabilities.
However, the investment in corporate and government bonds
offers a further degree of matching, i.e. the movement in assets
arising from changes in bond yields partially matches the
movement in the funding or accounting liabilities. In this way, the
exposure to movements in bond yields is further reduced.
Inflation risk
The majority of the plans’ benefit obligations are linked to inflation
and higher inflation will lead to higher liabilities, although, in most
cases, caps on the level of inflationary increases are in place to
protect the plans against high inflation and the 2013 Group
Pensions Review changes have further limited this exposure. The
LDI portfolio broadly hedges against movements in inflation
expectations although it only hedges a portion of the BSPF’s
inflation risks.
Furthermore, the portfolio does not protect against differences
between expectations for eurozone average inflation and the
fund’s Irish inflation exposure.
Life expectancy
The majority of the plans’ obligations are to provide a pension for
the life of the member, which means that increases in life
expectancy will result in an increase in the plans’ liabilities.
Investment decisions are the responsibility of the Trustees and
the Group supports the efficient management of risk including
through the appointment of a Group Pensions Chief Investment
Officer. The role of Group Pensions Chief Investment Officer is to
advise and support the Trustees of the Group sponsored pension
schemes in the design, implementation and management of
investment strategy to meet the various scheme liabilities. The
duties include, but are not limited to, the identification and
management of risks such as the risk of insufficient asset returns,
changing interest rates, inflation, FX risk, counterparty exposures,
geographical risk, asset concentration risk, liquidity risk,
regulatory risk, manager risk and longevity risk.
46 Retirement benefit obligations (continued)
Increase / (decrease) Increase / (decrease)
2019 2018
Impact on plan assets 
All schemes
Sensitivity of plan assets to a movement in global equity markets with
allowance for other correlated diversified asset classes
- Increase of 5.00% 102 90
- Decrease of 5.00% (102) (90)
Sensitivity of liability-matching assets to a 25bps movement in interest rates
- Increase of 0.25% (325) (264)
- Decrease of 0.25% 344 280
Sensitivity of liability-matching assets to a 10bps movement in inflation rates
- Increase of 0.10% 82 71
- Decrease of 0.10% (80) (70)
 21:59 Page 263
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47 Subordinated liabilities
2019 2018

Undated loan capital
The Governor and Company of the Bank of Ireland
Stg£75 million 13⅜% Perpetual Subordinated Bonds (a) 89 85
Bristol & West plc
Stg£32.6 million 8⅛% Non-Cumulative Preference Shares (b) 38 36
127 121
Dated loan capital
The Governor and Company of the Bank of Ireland
€1,002 million 10% Fixed Rate Subordinated Notes 2020 (c) 207 214
Stg£197 million 10% Fixed Rate Subordinated Notes 2020 (c) 2 2
€250 million 10% Fixed Rate Subordinated Notes 2022 (d) 263 264
€750 million 4.25% Fixed Rate Reset Callable Subordinated Notes 2024 (e) - 753
Bank of Ireland Group plc
Stg£300 million 3.125% Fixed Rate Reset Callable Subordinated Notes 2027 (f) 351 328
US$500 million 4.125% Fixed Rate Reset Callable Subordinated Notes 2027 (f) 445 422
€300 million 2.375% Fixed Rate Reset Callable Subordinated Notes 2029 (f) 295 -
1,563 1,983
Total subordinated liabilities 1,690 2,104
Subordinated liabilities in issue at 31 December 2019
Undated loan capital
The principal terms and conditions of the subordinated liabilities
which were in issue by the Group at 31 December 2019 are set
out below.
(a) The 13³/8% Perpetual Subordinated Bonds were revalued as
part of the fair value adjustments on the acquisition by Bristol
& West plc of the business of Bristol & West Building Society
in July 1997. The Bank became the issuer of these bonds in
2007 in connection with the transfer of the business of Bristol
& West plc to the Bank.
(b) These preference shares, which are non-redeemable, non-
equity shares, rank equally amongst themselves as regards
participation in profits and in priority to the ordinary shares of
Bristol & West plc.
Holders of the preference shares are entitled to receive, in
priority to the holders of any other class of shares in Bristol &
West plc, a non-cumulative preference dividend at a fixed
rate per annum payable in equal half yearly instalments in
arrears on 15 May and 15 November each year. This
preference dividend will only be payable to the extent that
payment can be made out of profits available for distribution
as at each dividend payment date in accordance with the
provisions of the UK Companies Acts.
On 1 October 2007 in connection with the transfer of the
business of Bristol & West plc to the Bank, the Bank entered
into a Guarantee and Capital Maintenance Commitment (the
Guarantee) with respect to the preference shares. Under the
terms of the Guarantee, the liability of Bristol & West plc in
relation to the ongoing payment of dividends and any
repayment of capital in relation to the preference shares that
remained following the transfer of business would be
protected. Under the Guarantee, the Bank agreed, subject to
certain conditions, to (i) contribute capital to Bristol & West
plc to the extent required to ensure that Bristol & West plc
has sufficient distributable reserves to pay the dividends on
the preference shares and to the extent required, repay the
preference share capital and (ii) guarantee Bristol & West plc’s
obligations to make repayment of the dividends and
preference share capital.
The Guarantee contains provisions to the effect that the rights
of the Bank’s creditors under the Guarantee are subordinated
to (i) unsubordinated creditors and debtors of the Bank and
(ii) subordinated creditors of the Bank other than those whose
claims rank, or are expressed to rank, pari passu or junior to
the payments under the Guarantee.
Dated loan capital
Dated loan capital instruments, which includes bonds and notes,
constitute unsecured obligations of the Bank subordinated in
right of payments to the claims of depositors and other
unsubordinated creditors of the Bank and rank pari passu without
any preference among themselves.
The table above provides a description of the dated loan capital,
including:
• the currency of the issue;
• if the issue is fixed, floating or a combination of both; and
• maturity.
All of the dated notes in issue in 2019 were issued under the
Group’s Euro Note Programme.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
47 Subordinated liabilities (continued)
(c) €1,002 million 10% Fixed Rate Subordinated Notes 2020
and Stg£197 million 10% Fixed Rate Subordinated Notes
2020
On 12 February 2010, the Bank issued Euro and Sterling 10
year fixed rate subordinated notes with a coupon rate of
10%. The notes matured on 12 February 2020.
(d) €250 million 10% Subordinated Notes 2022
On 18 December 2012, the Bank issued 10 year fixed rate
notes with a coupon rate of 10% and a maturity date of
December 2022. The notes rank pari passu with all other
dated Bank subordinated debt.
(e) Fixed Rate Reset Callable Subordinated Notes 2024
On 11 June 2014, the Bank issued a €750 million 10 year
(callable at the end of year five) Tier 2 capital instrument. The
bond carried a coupon of 4.25%.
The debt was redeemed at par on the call date of 11 June
2019.
(f) Bank of Ireland Group plc subordinated notes
On 19 September 2017, the Company completed a dual
tranche issuance of Stg£300 million and US$500 million 10
year (callable at the end of year five) Tier 2 capital
instruments. The sterling bond has a coupon of 3.125% and
the US dollar bond has a coupon of 4.125%.
On 14 October 2019, the Company issued a €300 million 10
year (callable at the end of year five) Tier 2 capital instrument.
The bond carries a coupon of 2.375%.
Following the implementation in Ireland of the EU (Bank
Recovery and Resolution) Regulations 2015, these
instruments are loss absorbing at the point of non-viability
and Noteholders acknowledge that the notes may be subject
to the exercise of Irish statutory loss absorption powers by
the relevant resolution authority. Redemption in whole but not
in part is at the option of the Company upon (i) regulatory
reasons (capital event), or (ii) tax reasons (additional amounts
payable on the notes). Any redemption before the maturity
date is subject to such approval by the Competent Authority,
namely ECB or SRB as may be required by the CRR and / or
such other laws and regulations which are applicable to the
Company.
Movement in ordinary and treasury shares Ordinary shares Treasury shares Ordinary shares Treasury shares
At the beginning of the year 1,075,515,613 3,307,259 1,074,619,291 4,203,581
Change in shares held for the benefit of life assurance policyholders (1,644,099) 1,644,099 896,322 (896,322)
At end of year 1,073,871,514 4,951,358 1,075,515,613 3,307,259
265
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266

49 Non-controlling interests
Additional tier 1 securities
The AT1 securities issued by the Bank in June 2015 with a par
value of €750 million at an issue price of 99.874%, are not
attributable to the owners of the Parent BOIG and are classified as
non-controlling interests.
From 1 January 2019, any coupons paid on the Bank’s AT1
securities are recognised directly in equity with the income tax
credit effect recognised in the income statement. In 2018, the
coupon paid was recognised directly in equity together with the
related income tax credit, see page 173 for further information.
The principal terms of the AT1 securities are as follows:
• the securities constitute direct, unsecured and subordinated
obligations of the Bank, rank behind Tier 2 instruments, pari
passu with preference shareholders and in priority to ordinary
shareholders;
• the securities bear a fixed rate of interest of 7.375% until the
first call date (on 18 June 2020). After the initial call date, in the
event that they are not redeemed, the AT1 securities will bear
interest at rates fixed periodically in advance for five-year
periods based on market rates at that time;
• the Bank may elect at its sole and full discretion to cancel (in
whole or in part) the interest otherwise scheduled to be paid on
any interest payment date;
• the securities have no fixed redemption date, and the security
holders will have no right to require the Bank to redeem or
purchase the securities at any time;
• the Bank may, in its sole and full discretion but subject to the
satisfaction of certain conditions elect to redeem all (but not
some only) of the securities on the initial call date or semi-
annually on any interest payment date thereafter. In addition,
the AT1 securities are repayable, at the option of the Bank, due
to certain regulatory or tax reasons. Any repayments require
the prior consent of the regulatory authorities;
• the securities will be written down together with any accrued
but unpaid interest if the Group’s CET1 ratio or the Bank’s
CET1 ratio (calculated on an individual consolidated basis) falls
below 5.125%; and
• subsequent to any write-down event the Bank may, at its sole
discretion, write-up some or all of the written-down principal
amount of the AT1 instrument provided regulatory capital
requirements and certain conditions are met.
Preference stock
The preference stock and related stock premium of the Bank are
classified as non-controlling interests, as they are not attributable to
the owners of the parent BOIG plc.
As at 31 December 2019 and 2018, 1,876,090 units of sterling
preference stock and 3,026,598 units of euro preference stock were
in issue.
The preference stock is non-redeemable. The holders of preference
stock are entitled to receive at the discretion of the Bank a non-
cumulative preferential dividend, which in the case of the sterling
preference stock is payable in sterling, in a gross amount of
Stg£1.2625 per unit per annum and in the case of euro preference
stock is payable in euro in a gross amount of €1.523686 per unit
per annum, in equal semi-annual instalments, in arrears, on 20
February and 20 August in each year.
On a winding up of, or other return of capital, by the Bank (other
than on a redemption of stock of any class in the capital of the
Bank) the holders of preference stock will be entitled to receive an
amount equal to the amount paid up or credited as paid up on
each unit of the preference stock held (including the premium) out
of the surplus assets available for distribution to the Bank’s
members. Subject to the Bank’s Bye-Laws, the preference
stockholders may also be entitled to receive a sum in respect of
dividends payable.
The preference stockholders are not entitled to vote at any General
Court except in certain exceptional circumstances. Such
circumstances did not arise during 2019 and consequently the
preference stockholders were not entitled to vote at the Annual
General Court (AGC) held on 14 May 2019.
2019 2018

Balance at the beginning of the year 808 808
Profit attributable to non-controlling interest 62 55
Distribution to non-controlling interests - AT1 (55) (48)
Dividends paid to non-controlling interests
- preference stock (7) (7)
Balance at the end of the year 808 808
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
50 Cash and cash equivalents
Cash and cash equivalents are classified as amortised cost
financial assets, and measuring the impairment loss allowance on
cash and cash equivalents at amortised cost on a 12 month or
lifetime ECL approach as appropriate.
Cash and cash equivalents comprise cash in hand and balances
with central banks and banks which can be withdrawn on
demand. It also comprises balances with an original maturity of
less than three months.
The Group is required to hold an average balance with the Central
Bank over the published ECB reserve maintenance (six weeks)
periods in order to meet its minimum reserve requirement, which
at December 2019 was €681 million (2018: €621 million).
Cash and cash equivalents for the Group in 2019 increased by
€2,977 million during the year including an increase of €250
million due to the effect of foreign currency exchange translation
(2018: reduced by €1,850 million including a decrease of €27
million due to the effect of foreign currency translation).
There has been no significant change in the impairment loss
allowance on cash and balances at central banks during the year.
The composition of cash and balances at central banks by stage
is included in other financial assets set out in note 28 on page
235.
For the purposes of the cash flow statement, cash and cash equivalents
comprise the following balances:
2019 2018

Cash and balances at central banks 8,327 6,035
Less impairment loss allowance on cash
and balances at central banks (2) (2)
Cash and balances at central banks
net of impairment loss allowance 8,325 6,033
Loans and advances to banks (with an
original maturity of less than 3 months) 3,001 2,316
Cash and cash equivalents at
amortised cost 11,326 8,349
Cash and balances at central banks (net of impairment loss allowance)
is made up as follows:
2019 2018

Republic of Ireland (Central Bank of Ireland) 5,096 2,582
United Kingdom (Bank of England) 2,526 2,872
United States (Federal Reserve) 264 143
Other (cash holdings) 439 436
Total 8,325 6,033
 21:59 Page 267
This table sets out the changes in liabilities arising from financing activities between cash and non-cash items. For more information on
subordinated liabilities, see note 47. For more information on lease liabilities, see note 62. Interest accrued on subordinated liabilities is
included within other liabilities.
51 Changes in liabilities arising from financing activities
268

52 Related party transactions
Related parties in the Group include the parent company, BOIG
plc, subsidiary undertakings, associated undertakings, joint
arrangements, post-employment benefits, the State, KMP and
connected parties. A number of banking transactions are entered
into between the Company and its subsidiaries in the normal
course of business. These include extending secured and
unsecured loans, investing in debt securities issued by
subsidiaries, taking of deposits and undertaking foreign currency
transactions.
(a) Associates, joint ventures and joint operations
The Group provides to and receives from its associates, joint
ventures and joint operations certain banking and financial
services, which are not material to the Group, on similar
terms to third party transactions. These include loans,
deposits and foreign currency transactions. The amounts
outstanding during 2019 are set out in notes 30 and 31.
(b) Pension funds
The Group provides a range of normal banking and financial
services, which are not material to the Group, to various
pension funds operated by the Group for the benefit of its
employees (principally to the BSPF), which are conducted on
similar terms to third party transactions. Details on the
Group’s contributions to the pension funds are set out in
note 46.
The Group occupies one property owned by the BSPF. At 31
December 2019, the total value of this property was €40
million (2018: €41 million). In 2019, the rental income paid to
BSPF was €2 million (2018: €2 million).
At 31 December 2019, the BSPF assets included BOIG plc
shares amounting to €5 million (2018: €5 million).
(c) Transactions with the State
The Group considers that the State is a related party under
IAS 24 as it is in a position to exercise significant influence
over the Group.
Details of individually or collectively significant transactions
with the State and entities under its control or joint control are
set out in note 53.
(d) Transactions with Directors and Key Management
Personnel
(i) Loans to Directors
The following information is presented in accordance with
the Companies Act 2014. For the purposes of the
Companies Acts disclosures, Directors means the Board
of Directors and any past Directors who were Directors
during the relevant period.
Directors’ emoluments are set out in the Remuneration
Report on page 107.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
269
52 Related party transactions (continued)
Where no amount is shown in the tables below, this
indicates either a credit balance, a balance of €nil, or a
balance of less than €500. The value of arrangements at
the beginning and end of the financial year as stated
below in accordance with Section 307 of the Companies
Act 2014, expressed as a percentage of the net assets of
the Group at the beginning and end of the financial year,
is less than 1%.
Aggregate
maximum amount
outstanding during Repayments during
1
Balances include principal and interest.
2
These figures include credit card exposures at the maximum statement balance. While the closing balance includes interest accrued and interest paid, the maximum balance includes
interest paid only.
3
Repayments include principal and interest; revolving credit facilities are not included.
4
On terms, including interest rates and collateral, similar to those available to staff generally.
P Haren, K Atkinson (resigned 14 May 2019), R Goulding, I
Buchanan and S Pateman had no loans from the Group in 2019.
No advances were made during the year. No amounts were
waived during 2019.
None of the loans were credit-impaired as at 31 December 2019
or at 31 December 2018. There is no interest which having fallen
due on the above loans has not been paid in 2019 (2018: €nil).
 21:59 Page 269
270

Balances include principal and interest.
2
These figures include credit card exposures at the maximum statement balance. While the closing balance includes interest accrued and interest paid, the maximum balance includes
interest paid only.
3
Repayments include principal and interest; revolving credit facilities are not included.
4
On terms, including interest rates and collateral, similar to those available to staff generally.
All Directors have other transactions with the Bank. The nature of
these transactions includes investments, pension funds, deposits,
general insurance, life assurance and current accounts with credit
balances. The relevant balances on these accounts are included in
the aggregate figure for deposits on page 272.
Other than as indicated, all loans to Directors are made in the
ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for similar transactions with other persons unconnected with
the Group and of similar financial standing and do not involve more
than normal risk of collectability.
 21:59 Page 270
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
52 Related party transactions (continued)
(iii) Loans to connected persons - Central Bank licence condition
disclosures
Under its banking licence, the Bank is required to disclose in
its annual audited financial statements details of:
• the aggregate amount of lending to all connected
persons, as defined in Section 220 of the Companies Act
2014; and
• the aggregate maximum amount outstanding during the
year for which those financial statements are being
prepared.
Disclosure is subject to certain de minimis exemptions and to
exemptions for loans relating to principal private residences
where the total of such loans to an individual connected person
does not exceed €1 million.
The following information is presented in accordance with this
licence condition.
Maximum Number of
amounts persons Maximum
Balance as at outstanding as at number
2019 31 December 20193
during 20194
31 December of persons
Connected persons1
of the following Directors €’000 €’000 2019 during 2019
Persons connected to P Kennedy 2,256 3,531 1 1
Persons connected to E Bourke5
- 355 2 2
Maximum Number of
amounts persons Maximum
Balance as at outstanding as at number
2018 31 December 20183
during 20184
31 December of persons
Connected persons1
of the following Directors €’000 €’000 2018 during 2018
Persons connected to P Kennedy 1,574 1,656 1 1
Persons connected to F Muldoon - - - -
Persons connected to E Bourke5
508 594 2 2
(ii) Loans to connected persons on favourable terms
Maximum Number of
amounts persons Maximum
Balance as at outstanding as at number
2019 31 December 20193
during 20194
31 December of persons
Loans to connected persons1
on favourable terms2
€’000 €’000 2019 during 2019
E Bourke 2 6 2 2
Maximum Number of
amounts persons Maximum
Balance as at outstanding as at number
2018 31 December 20183
during 20184
31 December of persons
Loans to connected persons1
on favourable terms2
€’000 €’000 2018 during 2018
E Bourke 1 4 2 2
1
Connected persons of Directors are defined by Section 220 of the Companies Act 2014.
2
On terms, including interest rates and collateral, similar to those available to staff generally.
3
Balances include principal and interest.
4
These figures include credit card exposures at the maximum statement balance. While the closing balance includes interest accrued and interest paid, the maximum balance includes
interest paid only.
5
All loans to person connected to E Bourke were below disclosure thresholds.
 21:59 Page 271
272

52 Related party transactions (continued)
IAS 24 Disclosures Maximum
Balance as at Balance as at amounts Total number Total number
1 January 31 December outstanding of relevant of relevant
2019 20191,2
20191
during 2019 3
KMP as at KMP as at
Key management personnel €’000 €’000 €’000 1 January 2019 31 December 2019
Loans 4,635 3,381 3,963 21 21
Deposits 11,479 6,736 11,027 28 27
Maximum
Balance as at Balance as at amounts Total number Total number
1 January 31 December outstanding of relevant of relevant
2018 20181,2
20181
during 2018 3
KMP as at KMP as at
Key management personnel €’000 €’000 €’000 1 January 2018 31 December 2018
Loans 6,031 4,635 8,076 16 21
Deposits 6,421 11,479 19,956 23 28
KMP have other protection products with the Bank. The nature of
these products includes mortgage protection, life assurance and
critical illness cover. It also includes general insurance products
which are underwritten by a number of external insurance
companies and for which the Bank acts as an intermediary only.
None of these products has any encashment value at 31
December 2019 or 31 December 2018.
Included in the above IAS 24 loan disclosure figures are loans to
KMP and close family members of KMP on preferential staff
rates, amounting to €24,938 (2018: €47,785).
None of the loans were credit-impaired as at 31 December 2019
or at 31 December 2018. There is no interest which having fallen
due on the above loans has not been paid in 2019 (2018: €nil).
There are no guarantees entered into by the Bank in favour of
KMP of the Bank and no guarantees in favour of the Bank have
been entered into by the KMP of the Bank.
(v) Compensation of KMP
Details of compensation paid to KMP are provided below:
2
The opening balance includes balances and transactions with key management personnel who retired during 2018 and are not related parties during 2019. Therefore these key
management personnel are not included in the maximum amounts outstanding.
3
These figures include credit card exposures at the maximum statement balance. In all cases key management personnel have not exceeded their approved limits. The maximum
approved credit limit on any credit card held by key management personnel is €25,400 (2018: €30,000). The maximum amount outstanding was calculated using the maximum
balance on each account. The highest maximum outstanding liability for any member of key management personnel, close family and entities influenced by them did not exceed €3.5
million during 2019 (2018: €2.9 million). In some cases with investment type products (i.e. funds based products, life assurance and other policies) the maximum balance amounts
were not available, in which case the greater of the balance at the start of the year and the balance at the end of the year has been included as the maximum balance amount. While
the closing balance includes interest accrued and interest paid, the maximum balance includes interest paid.
4
Comprises gross salary, Employer Pay Related Social Insurance contributions, fees, cash in lieu of pension, car allowance and other short-term benefits paid in the year.
5
This comprises Employer contributions paid to pension funds.
6
These include, inter alia, contractual payments due in lieu of notice periods.
(iv) Key management personnel - loans and deposits (IAS 24)
For the purposes of IAS 24 ‘Related party disclosures’, the
Group has 30 KMP (2018: 28) which comprise the Directors,
the members of the GEC, the Group Secretary and any past
KMP who was a KMP during the relevant period. In addition
to Executive Directors, the GEC comprises Chief Executive
Markets and Treasury, Chief Executive - Retail (UK), Chief
Marketing Officer, Chief People Officer, Chief Executive -
Corporate Banking, Chief Executive - Retail Ireland, Group
CFO, Group CRO, Chief Operating Officer, Chief Strategy
Officer. KMP, including Directors, hold products with Group
companies in the ordinary course of business.
Other than as indicated, all loans to NEDs are made in the
ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at
the time for similar transactions with other persons, and do
not involve more than the normal risk of collectability. Loans
to KMP other than NEDs are made on terms similar to those
available to staff generally and / or in the ordinary course of
business on normal commercial terms.
The aggregate amounts outstanding, in respect of all loans,
quasi-loans and credit transactions between the Bank and its
KMP, as defined above, together with members of their close
families and entities influenced by them are shown in the
following table.
 21:59 Page 272
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
53 Summary of relations with the State
The Group considers that the State is a related party under IAS
24 as it is in a position to exercise significant influence over the
Group.
A relationship framework between the Minister for Finance and
the Bank has been in place since 30 March 2012. The purpose of
this framework is to provide the basis on which the relationship
shall be governed. This framework is available on the Department
of Finance website.
(a) Ordinary shares
At 31 December 2019, the State held through the ISIF
13.95% of the ordinary shares of the Company (31 December
2018: 13.95%).
(b) Guarantee schemes
Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009
Although the Group no longer has any guaranteed liabilities
under the Eligible Liabilities Guarantee (ELG) Scheme, the
ELG Scheme shall continue to exist until terminated by the
Minister for Finance. Pending that termination, the Bank,
BoIMB and Bank of Ireland (UK) plc continue to be bound by
the terms of the ELG Scheme including the provision of
certain covenants and an indemnity for the costs of the ELG
Scheme in favour of the Minister pursuant to the Scheme
documents of the ELG Scheme. No fees were payable in
respect of the year ended 2019 (2018: €nil).
European Communities (Deposit Guarantee Scheme)
Regulations 2015
Details of the deposits protected by these schemes are set
out in note 39.
(c) National Asset Management Agency Investment DAC
The Group, through its wholly-owned subsidiary NIAC, holds
17 million B shares in National Asset Management Agency
Investment DAC (NAMAID), corresponding to one-third of the
51 million B shares issued by NAMAID, acquired at a cost of
€17 million. NAMAID also issued 49 million A shares to
NAMA. As a result the Group holds 17% of the total ordinary
share capital of NAMAID.
NAMAID is a holding company and its subsidiaries include
the entities to which NAMA Participating Institutions
transferred eligible bank assets and which issued the NAMA
senior bonds and NAMA subordinated debt as consideration
for those assets. The A shares and B shares generally rank
equally, except as otherwise provided in the Articles of
Association of NAMAID. As holder of the A shares, NAMA has
veto rights in relation to: the declaration of dividends; the
appointment or removal of Directors; the exercise of voting
rights in respect of any subsidiary of NAMAID and the
appointment of a Chairman. A holder of the B shares may not
sell the shares without the consent of NAMA.
On a winding-up, the return on B shares is capped at 110%
of the capital invested, (€19 million in the case of the Group),
and the maximum loss that may be suffered is limited to the
original amount invested (€17 million in the case of the
Group). A discretionary non-cumulative dividend on the
capital invested may be paid on an annual basis and is
limited to the yield on ten year State bonds. A dividend of
€90,780 was received by the Group on 31 March 2019 (31
March 2018: €151,470).
(d) Other transactions with the State and entities under its
control or joint control
In addition to the matters set out above, the Group enters
into other transactions in the normal course of business with
the State, its agencies and entities under its control or joint
control. This includes transactions with AIB, Permanent TSB
Group Holdings plc, Government departments, local
authorities, county councils, embassies, NAMA, NAMAID and
the NTMA which are all considered to be ‘controlled’ by the
Government. These transactions include the provision of
banking services, including money market transactions,
dealing in government securities and trading in financial
instruments issued by certain banks. The amounts
outstanding at 31 December 2019 and 2018 in respect of
these transactions, which are considered individually
significant, are set out below.
The Group did not dispose of any NAMA subordinated bonds
during the year (2018: €211 million).
2019 2018

Assets
Unguaranteed senior bonds
issued by AIB 196 232
Unguaranteed subordinated
bonds issued by AIB 11 15
NAMA subordinated bonds (note 22) 73 76
Bonds issued by the State 5,790 5,472
Other financial assets at fair
value through the profit and loss
Bonds issued by the State 263 245
Loans and advances to banks
AIB 3 17
Liabilities
Customer Accounts
State (including agencies & entities
under its control or joint control) 932 1,070
Debt securities in issue
State (including agencies & entities under
its control or joint control) 25 134
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53 Summary of relations with the State (continued)
(e) Irish bank levy
The Finance Act (No 2) 2013 introduced a bank levy on
certain financial institutions, including the Group. An income
statement charge is recognised annually on the date on
which all of the criteria set out in the legislation are met. The
Finance Act 2019, enacted in December 2019, revised the
basis on which the levy would be calculated for the years
2019 to 2021. The revised levy currently equals 170% of each
financial institution’s Deposit Interest Retention Tax (DIRT)
payments in a particular year with the revised levy for 2019
and 2020 to be based on the DIRT payments made in 2017
and the revised levy for 2021 to be based on the DIRT
payments made in 2019. The annual levy paid by the Group
in October 2019 was €35 million (October 2018: €29 million).
54 Principal undertakings
The Parent company of the Group is Bank of Ireland Group plc.
The principal Group undertakings for 2019 were:
All the Group undertakings are included in the consolidated
financial statements. Unless stated otherwise, the Group owns
100% of the equity of the principal Group undertakings and
100% of the voting shares of all these undertakings.
In presenting details of the principal subsidiary undertakings, the
exemption permitted by Section 316 of the Companies Act 2014
has been availed of and the Company will annex a full listing of
Group undertakings to its annual return to the Companies
Registration Office.
Bank of Ireland Mortgage Bank
BoIMB's principal activities are the issuance of Irish Residential
mortgages and mortgage covered securities in accordance with
the Asset Covered Securities Act 2001 and the Asset Covered
Securities (Amendment) Act 2007. BoIMB asset covered
securities may be purchased by the Bank and other members of
the Group or third parties.
In 2019, the total amount outstanding in respect of mortgage
covered securities issued was €7.4 billion (2018: €8.3 billion).
In 2019, the total amount of principal outstanding in the mortgage
covered pool including mortgage assets and cash was €11.5
billion (2018: €12.8 billion).
BoIMB issues other debt securities under BoIMB’s obligation to
the CBI within the terms of the Special Mortgage Backed
Promissory Note programme. At 31 December 2019, BoIMB had
no such debt securities in issue (2018: €nil).
1
Direct subsidiary of BOIG plc.
2
Direct subsidiary of The Governor and Company of the Bank of Ireland.
3
This entity is a subsidiary of First Rate Exchange Services Holdings Limited, a joint venture with the UK Post Office, in which the Group holds 50% of the equity of the business.
Group
Country of Statutory
Name Principal activity Registered office incorporation year end
The Governor and Company of the Banking and financial services 40 Mespil Road, Ireland 31 December
Bank of Ireland1
Dublin 4
Bank of Ireland (UK) plc2
Retail financial services Bow Bells House, England and Wales 31 December
1 Bread Street,
London, EC4M 9BE
New Ireland Assurance Company plc Life assurance business 5-9 Frederick Street South, Ireland 31 December
Dublin 2
Bank of Ireland Mortgage Bank2
Mortgage lending and 40 Mespil Road, Ireland 31 December
mortgage covered securities Dublin 4
First Rate Exchange Services Limited3
Foreign exchange Great West House, England and Wales 31 March
Great West road,
Brentford,
London, TW8 9DF
N.I.I.B. Group Limited Personal finance and leasing 1 Donegall Square South, Northern Ireland 31 December
Belfast, BT1 5LR
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
55 Interests in other entities
(a) General
The Group holds ordinary shares and voting rights in a
significant number of entities. Management has assessed its
involvement in all such entities in accordance with the
definitions and guidance in:
• IFRS 10 ‘Consolidated financial statements’;
• IFRS 11‘Joint arrangements’;
• IAS 28 ‘Investments in associates and joint ventures’; and
• IFRS 12 ‘Disclosure of interests in other entities’.
See Group accounting policies on page 186.
(b) Significant restrictions on the Group’s ability to access or
use the assets and settle the liabilities of the Group
Regulated banking and insurance subsidiaries are required to
maintain minimum regulatory liquidity and solvency ratios and
are subject to other regulatory restrictions that may impact on
transactions between these subsidiaries and the Company,
including on the subsidiaries’ ability to make distributions.
Certain transactions between Bank of Ireland (UK) plc and the
Bank are subject to regulatory limits and approvals agreed
with the PRA. Total assets of Bank of Ireland (UK) plc at 31
December 2019 were €31.7 billion (2018: €29.9 billion) and
liabilities were €29.3 billion (2018: €27.6 billion).
The activities of BoIMB are subject to the Asset Covered
Securities Act 2001 to 2007 which imposes certain
restrictions over the assets of BoIMB. Total assets of BoIMB
at 31 December 2019 were €19.8 billion (2018: €19.6 billion)
and liabilities were €18.3 billion (2018: €18.0 billion).
The Group’s life assurance entity, NIAC, is required to hold
shareholder equity that exceeds a solvency capital
requirement, see note 41 for details. In addition, the Group’s
Isle of Man insurance entity is required to hold shareholder
equity that exceeds the solvency requirements specified by
the Isle of Man Financial Services Authority.
Under Section 357 (1)(b) of the Companies Act 2014, the
Bank has given an irrevocable guarantee to meet the
liabilities, commitments and contingent liabilities entered into
by certain Group undertakings. At 31 December 2019, the
commitments of these undertakings amounted to €62 million
(2018: €132 million).
(c) Consolidated structured entities
In the case of structured entities, in considering whether it
controls the investee, the Group applies judgement around
whether it has the ability to direct the relevant activities, has
exposure or rights to variable returns from its involvement
with the investee and has the ability to use its power to affect
the amount of its returns. The Group considers it has control
over the investee in the following situations:
• securitisation vehicles whose purpose is to finance
specific loans and advances to customers; or
• defeasance companies set up to facilitate big-ticket
leasing transactions.
In the case of some venture capital investments, in
considering whether it controls the investee the Group
applies judgement around whether it has the ability to direct
the relevant activities, has exposure or rights to variable
returns from its involvement with the investee and has the
ability to use its power to affect the amount of its returns. The
Group may hold 50% or more of the voting power of an
entity, but has been considered to have significant influence,
rather than control of the entity because the Group is not
involved in directing the relevant activities of the entity and
does not have the right to remove the manager of the entity.
In each case the Group considers that it has power over the
entity, is exposed or has rights to variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity, even though the
Group normally owns less than half of the voting rights of
those entities.
The Group does not consider it controls an investee when:
• the Group’s only involvement in the arrangement is to
administer transactions, for which the Group receives a
fixed fee, on the basis that the Group is acting as an
agent for the investors; or
• an entity is in the process of being liquidated, on the
basis that the entity is controlled by the liquidator.
The Group holds interests in a number of structured entities
(Brunel Residential Mortgage Securitisation No. 1 plc,
Bowbell No. 1 plc and Bowbell No 2 plc) whose purpose is to
acquire mortgage loans and other financial assets and issue
mortgage backed securities. Bowbell No 1 plc redeemed its
outstanding debt securities in November 2018. Bowbell No 2
plc issued new debt securities in June 2019. All of the assets
and liabilities of these entities are restricted. Total assets
amounted to €3.5 billion (2018: €1.1 billion) and liabilities
amounted to €3.5 billion (2018: €1.0 billion).
In 2016, the Group entered into a CDS transaction
transferring a portion of the credit risk on a reference portfolio
of performing Irish SME and corporate exposures to Grattan
Securities DAC (Grattan). The Group delivered notice of its
intention to call the transaction during December 2019 and
the transaction was terminated during January 2020.
During 2017, the Group entered into a further CDS
transaction transferring a portion of the credit risk on a
reference portfolio of performing leveraged acquisition
finance exposures to Mespil Securities DAC (Mespil). During
2019, the Group transferred an additional portion of the credit
risk on the portfolio to Mespil.
In 2019, the Group entered into a credit protection deed
(CPD) transaction transferring a portion of the credit risk on a
reference portfolio of performing loans originated by the
Group’s Corporate Banking team to Vale Securities Finance
DAC (Vale).
No assets or liabilities were transferred to Grattan, Mespil or
Vale as part of the transactions. Grattan, Mespil and Vale
each cash collateralised their exposure under the respective
transactions through the issue of credit linked notes to third
party investors. The protection provided by Grattan matured
in 2020, while that provided by Mespil matures in 2025 and
Vale matures in 2029.
In relation to these entities, there are no contractual
arrangements that require the Group to provide financial
support. In 2019 and 2018 the Group did not provide financial
or other support, nor does it expect or intend to do so.
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55 Interests in other entities (continued)
All of these entities are consolidated in the Group’s financial
statements.
(d) Treatment of changes in control of a subsidiary during the
reporting period
From time to time, the Group may wind up a wholly owned
company. During this process, the Group voluntarily appoints
a liquidator to manage the winding up of relevant entities.
Upon appointment of the liquidator, the Group is considered
to have lost control of the companies and accounts for this
loss of control as a disposal. In accordance with IAS 21, the
Group must reclassify net cumulative FX gains / losses
relating to these companies from the FX reserve to the
income statement. In 2019, €4 million loss was transferred
(2018: €4 million gain) (note 18).
(e) Joint arrangements
A joint arrangement is an arrangement of which two or more
parties have joint control i.e. contractually agreed sharing of
control of an arrangement where decisions about the relevant
activities require the unanimous consent of the parties
sharing control. These arrangements are identified by
reference to the power sharing agreements, ensuring that
unanimous consent of all parties is a requirement. Where the
arrangement has been structured through a separate vehicle,
the Group has accounted for it as a joint venture.
The table below shows the Group’s principal joint
arrangements for the year ended 31 December 2019.
All joint ventures investments are unquoted and are measured
using the equity method of accounting. All income from these
investments has been included in profit or loss from
continuing operations. There are no significant restrictions on
the ability of these entities to transfer funds to the Group in
the form of cash dividends, or to repay loans or advances
made by the Group. Nor is there any unrecognised share of
losses either for 2019 or cumulatively in respect of these
entities. Other than disclosed in note 44, the Group does not
have any further commitments or contingent liabilities in
respect of these entities other than its investment to date.
(f) Associates
An associated undertaking is an entity over which the Group
has significant influence, but not control, over the entity’s
operating and financial policy decisions. If the Group holds
20% or more of the voting power of an entity, it is presumed
that the Group has significant influence, unless it could be
clearly demonstrated that this was not the case. There are no
such cases where the Group holds 20% or more of the voting
power of an entity, and is not considered to have significant
influence over that entity.
The Group holds a number of investments in associates,
none of which is individually material. All income from these
investments has been included in profit or loss from
continuing operations. There are no significant restrictions on
the ability of these entities to transfer funds to the Group in
the form of cash dividends, or to repay loans or advances
made by the Group. Nor is there any unrecognised share of
losses either for 2019 or cumulatively in respect of these
entities. The Group does not have any contingent liabilities in
respect of these entities other than its investment to date.
(g) Unconsolidated structured entities
Unconsolidated collective investment vehicles
The company holds investments in unconsolidated structured
entities arising from investments in collective investment
undertakings, carried at fair value of €10,176 million (2018:
€8,399 million). The value included in assets held to cover
unit linked policyholder liabilities is €10,029 million (2018:
€8,283 million) and €147 million (2018: €116 million) is held
for non-unit linked liabilities (note 22).
At 31 December 2019, the total asset value of these
unconsolidated structured entities, including the portion in
which the Group has no interest, was €56.7 billion (2018:
€64.7 billion).
The Group’s maximum exposure to loss is equal to the
carrying value of the investment. However, the Group’s
investments in these entities are primarily held to match
policyholder liabilities in the Group’s life assurance business
and the majority of the risk from a change in the value of the
Group’s investment is matched by a change in policyholder
liabilities. The collective investment vehicles are primarily
financed by investments from investors in the vehicles.
During the year the Group has not provided any non-
contractual financial or other support to these entities and
has no current intention of providing any financial or other
support. The Group does not sponsor any of these
unconsolidated structured entities.
Mulcair Securities DAC
In April 2019, the Group entered into a securitisation
arrangement for a portfolio of residential mortgage NPEs,
through an unconsolidated special purpose vehicle, Mulcair
Securities. The portfolio transferred had a gross carrying
value of €370 million (before ECL allowance) and a net
carrying value of €326 million (after ECL allowance). The
Group transferred the beneficial interest in the loans to
Mulcair Securities which in turn issued notes backed by these
loans. The Group considers that it sponsors this company as
it continues to be involved with it as Servicer of the
Country of
Joint arrangement Holding Classification operation Nature of activities
First Rate Exchange
Services Holdings Limited 50% Joint venture UK Sale of financial products through the UK Post Office
relationship
Enterprise 2000 Fund 50% Joint venture Ireland Investment in venture capital companies
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
55 Interests in other entities (continued)
transferred assets and as it is in receipt of income from the
provision of these services. The total asset value of Mulcair
Securities at 31 December 2019 was €339 million.
The Group holds 5% of each class of notes issued by
Mulcair securities as a retained issuance, these notes are
held as debt securities at amortised cost with the exception
of notes with a nominal value of €2 million which are held as
at FVTPL.
Mulcair Securities is not consolidated but the associated
income in relation to the services provided to the company is
recognised in the Group’s financial statements as follows:
2019
€m
Interest income -
Trading income 1
Fee and commission income 1
Total income related to Mulcair Securities 2
The carrying amount of assets and liabilities in relation to this
entity are listed as:
2019
€m
Debt securities at amortised cost 15
Other financial assets held at fair value
through profit or loss 2
Total carrying value of assets held
related to Mulcair Securities 17
The Group’s maximum exposure to loss in respect of Mulcair
Securities is equal to the carrying value of the retained
issuance which is €17 million at 31 December 2019. There
are no contractual arrangements that require the Group to
provide financial support to Mulcair Securities.
Investment companies
The Group has incorporated certain entities to provide
investment opportunities to clients in international
commercial properties. The Group considers that it sponsors
these entities where it continues to be involved in the entity
or if it is in receipt of income from the entity during the year.
At 31 December 2019, there were three entities (2018: one).
At 31 December 2019, the total gross asset value of these
entities was €16 million (2018: €32 million).
With regard to the above unconsolidated structured entities,
they are infrastructure fund managers whose principal
activity is managing property investments. In 2019 and 2018,
the Group did not receive asset management fees from
these entities.
The structured entities are not consolidated, the associated
fee and commission income in relation to these entities was
€nil for 2019 (2018: €nil). The carrying amount of assets and
liabilities in relation to these entities in the Group’s financial
statements is €nil (2018: €nil).
The Group’s maximum exposure to loss in respect of these
unconsolidated entities is €nil (2018: €nil).
In relation to these entities, there are no contractual
arrangements that require the Group to provide financial
support.
(h) Coterminous year end dates
The Group consolidates certain entities where the entity
does not have the same year end reporting date as the
Group. This is to ensure the reporting dates of these Group
entities are kept consistent with the principal legal
agreements used to engage in its core business.
Assets, liabilities and results of all Group undertakings have
been included in the Group financial statements on the basis
of financial statements made up to the end of the financial
year.
56 Liquidity risk and profile
The tables below summarise the maturity profile of the Group’s
financial liabilities (excluding those arising from insurance and
investment contracts in the Wealth and Insurance division) at 31
December 2019 and 2018 based on contractual undiscounted
repayment obligations. The Group does not manage liquidity risk
on the basis of contractual maturity. Instead the Group manages
liquidity risk based on expected cash flows.
Unit linked investment liabilities and unit linked insurance
liabilities with a carrying value of €5,890 million and €12,694
million respectively (2018: €5,239 million and €11,003 million
respectively) are excluded from this analysis as their repayment is
linked to the financial assets backing these contracts.
Customer accounts include a number of term accounts that
contain easy access features. These allow the customer to
access a portion or all of their deposit notwithstanding that this
repayment could result in financial penalty being paid by the
customer. For such accounts, the portion subject to the potential
early access has been classified in the ‘demand’ category in the
table below.
The balances will not agree directly to the consolidated balance
sheet as the table incorporates all cash flows, on an
undiscounted basis, related to both principal and interest
payments.
 
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
58 Fair values of assets and liabilities
Fair value of assets and liabilities
Fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
Where possible, the Group calculates fair value using observable
market prices. Where market prices are not available, fair values
are determined using valuation techniques which may include
DCF models or comparisons to instruments with characteristics
either identical or similar to those of the instruments held by the
Group or of recent arm’s length market transactions. These fair
values are classified within a three-level fair value hierarchy,
based on the inputs used to value the instrument. Where the
inputs might be categorised within different levels of the fair value
hierarchy, the fair value measurement in its entirety is categorised
in the same level of the hierarchy as the lowest level input that is
significant to the entire measurement. The levels are defined as:
Level 1
Inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date.
Level 2
Inputs are inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or
indirectly.
Level 3
Inputs are unobservable inputs for the asset or liability.
Transfers between different levels are assessed at the end of all
reporting periods.
(a) Financial assets and financial liabilities recognised and
subsequently measured at fair value
All financial instruments are initially recognised at fair value.
The Group subsequently measures the following instruments
at FVTPL or at FVOCI: trading securities, other financial
assets and financial liabilities designated at FVTPL,
derivatives, loans and advances to customers held at fair
value, loans and advances to banks held at fair value,
financial assets held at FVOCI, customer accounts held at fair
value and debt securities in issue held at fair value.
A description of the methods and assumptions used to
calculate fair values of these assets and liabilities is set out
below. For fair value measurements categorised within level 3
of the fair value hierarchy, the valuation policies and
procedures are developed by the management of the relevant
business unit. The valuation process is documented before
being reviewed and approved by senior management to
ensure that the valuation method is consistent with market
practice, that the output is reasonable and that the
methodology is consistent both across the Group and
compared to prior reporting periods.
Loans and advances to customers held at fair value
These consist of assets mandatorily measured at FVTPL,
which predominantly relate to ‘Life loan mortgage products’.
Unlike a standard mortgage product, borrowers do not make
any periodic repayments and the outstanding loan balance
increases through the life of the loan as interest due is
capitalised. The mortgage is typically repaid out of the
proceeds of the sale of the property. These assets are valued
using DCF models which incorporate unobservable inputs
(level 3 inputs). Using reasonably possible alternative
assumptions would not have a material impact on the value
of these assets.
Loans and advances to banks held at fair value
These consist of assets mandatorily measured at FVTPL, and
include assets managed on a fair value basis by the life
assurance business and those assets that do not meet the
requirements in order to be measured at FVOCI or amortised
cost.
The estimated fair value of floating rate placements and
overnight placings is their carrying amount. The estimated fair
value of fixed interest bearing placements is based on DCFs
using prevailing money market interest rates for assets with
similar credit risk and remaining maturity (level 2 inputs).
Financial assets at fair value through other comprehensive
income
Financial assets at FVOCI predominantly consist of
government bonds and listed debt securities. For these
assets where an active market exists, fair value has been
determined directly from observable market prices (level 1
inputs) or yields through a recognised pricing source or an
independent broker, price-provider or investment bank (level
2 inputs).
Financial assets and financial liabilities held for trading
These instruments are valued using observable market prices
(level 1 inputs), directly from a recognised pricing source or
an independent broker or investment bank.
Derivative financial instruments
The Group’s derivative financial instruments are valued using
valuation techniques commonly used by market participants.
These consist of DCF and options pricing models, which
typically incorporate observable market data, principally
interest rates, basis spreads, FX rates, equity prices and
counterparty credit (level 2 inputs).
The fair values of the Group's derivative financial liabilities
reflect the impact of changes in own credit spreads derived
from observable market data (debit valuation adjustment
(DVA)). The impact of the cost of funding derivative positions
is also taken into account in determining the fair value of
derivative financial instruments (funding valuation adjustment
(FVA)). The funding cost is derived from observable market
data; however the model may perform numerical procedures
in the pricing such as interpolation when market data input
values do not directly correspond to the exact parameters of
the trade. Both methodologies are considered to use level 2
inputs.
Certain derivatives are valued using unobservable inputs
relating to counterparty credit such as credit grade, which are
significant to their valuation. The effect of using reasonably
possible alternative assumptions in the valuation of these
derivatives as at 31 December 2019 is immaterial. At 31
December 2018 effect was to increase their fair value by up
to €4 million with a corresponding impact on the income
statement. Where the impact of unobservable inputs is
material to the valuation of the asset or liability, it is
categorised as level 3 on the fair value hierarchy.
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58 Fair values of assets and liabilities (continued)
In addition a small number of derivative financial instruments
are valued using significant unobservable inputs other than
counterparty credit (level 3 inputs). However, changing one or
more assumptions used in the valuation of these derivatives
would not have a significant impact as they are entered into
to hedge the exposure arising on certain customer accounts
(see below), leaving the Group with no net valuation risk due
to the unobservable inputs.
Other financial assets at fair value through profit or loss
These consist of assets mandatorily at FVTPL, which are
predominantly held for the benefit of unit linked policyholders,
with any changes in valuation accruing to the policyholders.
These assets consist principally of bonds, equities and unit
trusts, which are traded on listed exchanges, are actively
traded and have readily available prices. Substantially all of
these assets are valued using valuation techniques which use
observable market data i.e. level 1 or level 2 inputs. A small
number of assets have been valued using DCF models, which
incorporate unobservable inputs (level 3). Using reasonably
possible alternative assumptions would not have a material
impact on the value of these assets.
Interest in associates
Investments in associates, which are venture capital
investments, are accounted for at FVTPL and are valued in
accordance with the ‘International Private Equity and Venture
Capital Valuation Guidelines’. This requires the use of various
inputs such as DCF analysis and comparison with the
earnings multiples of listed comparative companies amongst
others. Although the valuation of unquoted equity instruments
is subjective by nature, the relevant methodologies are
commonly applied by other market participants and have
been consistently applied over time. Using reasonably
possible alternative assumptions would not have a material
impact on the value of these assets. As the inputs are
unobservable, the valuation is deemed to be based on level 3
inputs.
Customer accounts
Customer accounts designated at FVTPL consist of deposits
which contain an embedded derivative (typically an equity
option). These instruments are typically valued using
valuation techniques which use observable market data. The
Group incorporates the effect of changes in its own credit
spreads when valuing these instruments. Previously, the
Group estimated this spread by reference to recent
transactions in the same instrument or in similar instruments
issued by the Group or other comparable financial institutions
(level 2 inputs). During the year, the Group moved to source
own credit spreads from independent brokers (level 3 inputs)
as observable own credit spreads were not available. Where
the impact of unobservable inputs is material to the valuation
of a customer account, that account is categorised as level 3
on the fair value hierarchy.
A small number of customer accounts are valued using
additional unobservable inputs (level 3 inputs). However,
changing one or more assumptions used in the valuation of
these customer accounts would not have a significant impact
as these customer accounts are hedged with offsetting
derivatives (see above), leaving the Group with no net
valuation risk due to those unobservable inputs.
Liabilities to customers under insurance and investment
contracts
In line with the accounting policy set out on page 192, the fair
value of liabilities to customers under both insurance and
investment unit linked contracts is contractually linked to the
fair value of the financial assets within the policyholders’ unit
linked funds. The value of the unit linked financial liabilities is
determined using current unit prices multiplied by the number
of units attributed to the contract holders at the reporting
date. Their value is never less than the amount payable on
surrender, discounted for the required notice period where
applicable.
Debt securities in issue
Debt securities in issue with a fair value of €364 million (2018:
€522 million) are measured at FVTPL, in order to reduce an
accounting mismatch which would otherwise arise from
hedging derivatives. Their fair value is typically based on
valuation techniques incorporating observable market data.
The Group incorporates the effect of changes in its own
credit spread when valuing these instruments. Previously, the
Group estimated this spread by reference to market
observable credit spreads of similar instruments issued by
the Group or other comparable financial institutions (level 2
inputs). During the year, the Group moved to source own
credit spreads from independent brokers (level 3 inputs) as
observable own credit spreads were not available. Where the
impact of unobservable inputs is material to the valuation of a
debt security in issue, that issuance is categorised as level 3
on the fair value hierarchy.
A small number of the debt securities in issue are valued
using additional unobservable inputs (level 3 inputs).
However, changing one or more assumptions used in the
valuation of these debt securities in issue would not have a
significant impact.
(b) Financial assets and liabilities held at amortised cost
For financial assets and financial liabilities which are not
subsequently measured at fair value on the balance sheet,
the Group discloses their fair value in a way that permits them
to be compared to their carrying amounts. The methods and
assumptions used to calculate the fair values of these assets
and liabilities are set out below.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
58 Fair values of assets and liabilities (continued)
Loans and advances to banks
The estimated fair value of floating rate placements and
overnight placings which are held at amortised cost is their
carrying amount. The estimated fair value of fixed interest
bearing placements which are held at amortised cost is
based on DCFs using prevailing money market interest rates
for assets with similar credit risk and remaining maturity (level
2 inputs).
Loans and advances to customers held at amortised cost
The fair value of both fixed and variable rate loans and
advances to customers held at amortised cost is estimated
using valuation techniques which include the discounting of
estimated future cash flows at current market rates,
incorporating the impact of current credit spreads and
margins. The fair value reflects both loan impairments at the
reporting date and estimates of market participants’
expectations of credit losses over the life of the loans (level 3
inputs).
Debt securities at amortised cost
For debt securities at amortised cost for which an active
market exists, fair value has been determined directly from
observable market prices (level 1 inputs). Debt securities at
amortised cost consist mainly of government bonds, asset
backed securities and other debt securities.
Deposits from banks and customer accounts
The estimated fair value of deposits with no stated maturity,
which includes non-interest bearing deposits, is the amount
repayable on demand. The estimated fair value of fixed
interest bearing deposits and other borrowings without
quoted market prices is based on DCFs using interest rates
for new deposits with similar remaining maturity (level 2
inputs).
Debt securities in issue and subordinated liabilities
The fair values of these instruments are calculated based on
quoted market prices where available (level 1 inputs). For
those notes where quoted market prices are not available, a
DCF model is used based on a current yield curve
appropriate to the Group for the remaining term to maturity.
The yield curve used incorporates the effect of changes in the
Group’s own credit spread (level 2 and level 3 inputs).
(c) Fair value on offsetting positions
Where the Group manages certain financial assets and
financial liabilities on the basis of its net exposure to either
market risks or credit risk, the Group applies the exception
allowed under paragraph 48 of IFRS 13. That exception
permits the Group to measure the fair value of a group of
financial assets and financial liabilities on the basis of the
price that would be received to sell a net long position (i.e. an
asset) for a particular risk exposure or paid to transfer a net
short position (i.e. a liability) for a particular risk exposure in
an orderly transaction between market participants at the
measurement date under current market conditions.
Accordingly, the Group measures the fair value of the group
of financial assets and financial liabilities consistently with
how market participants would price the net risk exposure at
the measurement date.
(d) Fair value of non-financial assets
Investment properties
Investment properties are carried at fair value as determined
by external qualified property surveyors appropriate to the
properties held. Fair values have been calculated using
current trends in the market of property sales and rental
yields in the retail, office and industrial property markets (level
2 inputs). Other inputs taken into consideration include
occupancy rate forecasts, sales price expectations and
letting prospects (level 3 inputs). All properties are valued
based on highest and best use.
Property
A revaluation of Group property was carried out as at 31
December 2019. All freehold and long leasehold commercial
properties were valued by Lisney (or its partner, Sanderson
Weatherall) as external valuers, with the exception of some
select properties which were valued internally by the Group’s
qualified surveyors. External valuations were made on the
basis of observable inputs such as comparable lettings and
sales (level 2 inputs).
Unobservable inputs such as profile, lot size, layout and
presentation of accommodation are also used (level 3 inputs).
All properties are valued based on highest and best use.
 
Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
58 Fair values of assets and liabilities (continued)
Movements in level 3 assets Other
Loans financial Derivative Property
advances assets at financial Interest in Investment held at
customers FVTPL instruments associates property fair value Total

The transfer from level 3 to level 2 arose as a result of the availability of observable inputs at 31 December 2018 which were unavailable at
31 December 2017.
The transfer from level 2 to level 3 arose as a result of the unobservable inputs becoming significant to the fair value measurement of
these assets.
There were no transfers between level 1 and 2.
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
58 Fair values of assets and liabilities (continued)
Movements in level 3 liabilities 2019 2018
Derivative Debt Derivative Debt
Customer financial securities Customer financial securities
accounts instruments in issue Total accounts instruments in issue Total
Quantitative information about fair value measurements using significant unobservable inputs (Level 3)
Fair value Range
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Strategic Report Financial Review
Quantitative information about fair value measurements using significant unobservable inputs (Level 3) (continued)
Fair value Range
amount of amount of Fair value of Fair value of Net
transferred associated transferred associated fair value
assets liabilities1
assets liabilities1
position
Securitisation
Loans and receivables
Residential mortgages book (Brunel SPE) - Including buybacks2
486 547 448 535 (87)
Residential mortgages book2
(Bowbell II SPE) 402 361 411 363 48
Sale and repurchase / similar products3
Debt securities at amortised cost 18 18 - - -
Financial assets at FVOCI 17 17 - - -
2018
Securitisation
Loans and receivables
Residential mortgages book (Brunel SPE) - Including buybacks2
531 610 497 595 (98)
Residential mortgages book2
(Bowbell II SPE) - - - - -
Sale and repurchase / similar products3
Debt securities at amortised cost 28 28 - - -
Financial assets at FVOCI 38 39 - - -
59 Transferred financial assets
The Group has transferred certain financial assets that are not
derecognised from the Group’s balance sheet. Such
arrangements are securitisations and sale or repurchase
agreements. The Group is exposed to substantially all risks and
rewards including credit and market risk associated with the
transferred assets.
The Group has not entered into any agreements on the sale of
assets that entail the Group’s continuing involvement in
derecognised financial assets other than assets transferred to
Mulcair Securities (note 55).
1
For the purposes of this disclosure, associated liabilities include liabilities issued by securitisation special purpose entity, held by other Group entities.
2
For each securitisation the relevant loan book / pool is ring-fenced whereby the cash flows associated with these assets can only be used to repay the related notes holders plus
associated issuance fees / costs.
3
Assets sold or transferred subject to repurchase agreements or similar products are retained on the balance sheet and reclassified as pledged assets when the transferee has the
right by contract to sell or repledge the collateral; the counterparty liability is included in deposits by banks or customer accounts, as appropriate. The difference between the original
sale price of the bonds and the repurchase price is the repo rate.
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60 Offsetting financial assets and liabilities
The following tables set out the effect or potential effect of netting
arrangements on the Group’s financial position. This includes the
effect or potential effect of rights of set-off associated with the
Group’s recognised financial assets and recognised financial
liabilities that are subject to an enforceable master netting
arrangement, irrespective of whether they are set off in
accordance with paragraph 42 of IAS 32.
Gross amounts Related amounts not set
of recognised Net off in the balance sheet
financial amounts of
Gross amounts liabilities financial assets Cash2
of recognised set off in the presented in the Financial1
collateral Net
financial assets balance sheet balance sheet instruments received amount
Amounts of €1,550 million represent recognised derivatives assets at fair value that do not meet the offsetting criteria (2018: €1,307 million).
2
Cash collateral amounts disclosed reflect the maximum collateral available for offset. Cash collateral received is reported within deposits from banks (note 38).
3
Amounts of €1,550 million represent recognised derivatives liabilities at fair value that do not meet the offsetting criteria (2018: €1,307 million).
4
Cash collateral amounts disclosed reflect the maximum collateral available for offset.
The following financial liabilities are subject to offsetting, enforceable master netting arrangements.
Gross amounts Related amounts not set
of recognised Net amounts off in the balance sheet
financial of financial
Gross amounts assets liabilities Cash4
of recognised set off in the presented in the Financial3
collateral Net
financial liabilities balance sheet balance sheet instruments pledged amount
The ‘Financial Instruments’ column identifies financial assets and
liabilities that are subject to set off under netting agreements
such as an International Swaps and Derivatives Association
(ISDA) Master agreement. The agreement between the Group and
the counterparty allows for net settlement of the relevant financial
assets and liabilities when both elect to settle on a net basis. In
the absence of such an election, financial assets and liabilities are
settled on a gross basis: however each party to the master
netting agreement has the option to settle all such amounts on a
net basis in the event of default of the other party.
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292

61 Dividend per ordinary share
62 Impact of adopting new accounting standard IFRS 16 ‘Leases’
As outlined in the Group accounting policies note on page 179, from 1 January 2019, the Group adopted IFRS 16 ‘Leases’. On transition to
IFRS 16, the Group recognised RoU assets within Property, plant and equipment (note 34) and lease liabilities by adjusting the opening
balances of the relevant assets and liabilities on the balance sheet, with no adjustment required to opening retained earnings. The impact
on transition is summarised below:
€m
Operating lease commitments under IAS 17 as at 31 December 2018 680
Less
Value added tax included in operating lease commitments as at 31 December 2018 (42)
Operating lease commitments as at 31 December 2018 excluding value added tax 638
Weighted average incremental borrowing rate as at 1 January 2019 (note 2) 2.7%
Discounted operating lease commitments as at 1 January 2019 excluding value added tax under IFRS 16 528
Less
Commitments relating to contracts outside the scope of IFRS 16 (15)
Add
Commitments relating to leases previously classified as finance leases 4
Service contracts not previously classified as leases under IAS 17 62
Commitments in optional extension periods not recognised as at 31 December 2018 58
Lease liabilities as at 1 January 2019 637
Carrying Impact Carrying
amount under of new amount under
IAS 17 as at accounting IFRS 16 as at
31 December 20181
standard 1 January 2019
 €m
Assets
Property, plant and equipment 438 616 1,054
Other assets 2,280 (16) 2,264
Liabilities
Lease liabilities - 637 637
Other liabilities 2,460 (31) 2,429
Provisions 84 (6) 78
1
Includes €5 million of finance lease assets as at 31 December 2018 reclassified as Right of Use assets under IFRS 16 on 1 January 2019.
On 22 February 2019, the Board recommended a dividend of 16.0 cent per ordinary share, €173 million in total, which was approved at
the Annual General Meeting (AGM) on 14 May 2019 and paid on 10 June 2019. This dividend has been accounted for in shareholders’
equity as an appropriation of retained earnings for 2019.
2019 2018
Cent Cent
per share per share €m
Final dividend paid in respect of the years ended 31 December 2019 and 2018 16.0 173 11.5 124
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
62 Impact of adopting new accounting standard IFRS 16 ‘Leases’ (continued)
RoU assets
Computer
and other Lease
Buildings equipment1
Total liabilities
Balance sheet under IFRS 16  
As at 1 January 2019 (net book value) 555 66 621 637
Payments - - - (84)
Interest expense (note 5) - - - 15
Reclassifications (5) - (5) -
Remeasurement of lease liabilities (4) (1) (5) (5)
Additions 1 2 3 3
Impairment (2) - (2) -
Depreciation expense (40) (29) (69) -
Exchange adjustments (1) - (1) (1)
As at 31 December 2019 504 38 542 565
1
Includes €5 million of finance lease assets as at 31 December 2018 reclassified as Right of Use assets under IFRS 16 on 1 January 2019.
Group as lessee
The principal contracts where the Group is a lessee under IFRS 16
are in relation to property leases that the Group previously
classified as operating leases under IAS 17 and a number of items
of computer equipment which were previously classified as
finance leases under IAS 17. The Group also reassessed contracts
that were not identified as leases under IAS 17. As a result of this
assessment service contracts for computer equipment were
deemed to meet the definition of a lease under IFRS 16 resulting
in the recognition of lease liabilities and RoU assets. Further
qualitative information on the nature of the leases is set out in the
Group accounting policies (note 1) and the undiscounted
contractual maturity of total lease liabilities is set out on page 278.
The Group recognised variable lease expenses of €8 million and
rent expense from short-term leases of €3 million for the year
ended 31 December 2019. Variable lease payments on RoU
assets relates to computer equipment that has a varying cost
dependant on usage with the contracts on which the payments
arise maturing within two years.
Total cash outflows on leases amounted to €95 million in 2019.
Group as lessor
As outlined in the Group accounting policies (note 1), the
accounting for lessors has not materially changed under IFRS 16.
The Group is engaged in finance lease and operating lease
activities.
Finance leasing activity and a maturity analysis of the Group’s net
investment in finance leases are included within Loans and
advances to customers (note 27) along with a gross to net
reconciliation of the investment in finance leases. Associated
income on finance leases is included in Interest income (note 4).
Operating leases where the Group is a lessor primarily relate to
the business activities of MLL. Further detail on the nature of the
company’s leasing activities, risks and risk management is
outlined in note 34.
In addition, the Group has also entered into a small number of
operating leases and operating sub-leases as lessor which
represent properties and components of properties surplus to the
Group’s own requirements.
A maturity analysis of undiscounted operating lease receivables
set out on an annual basis is included in note 34. Income and
expense associated with the Group’s operating lease activities is
included in note 10.
Amounts recognised in the balance sheet and income
statement
Set out below are the carrying amounts of the Group’s RoU assets
and lease liabilities and the movements during the period:
 22:00 Page 293
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63 Post balance sheet events
On 21 February 2020, the Board recommended a dividend of 17.5 cent per ordinary share, €189 million in total, to be paid on 9 June 2020
to those ordinary shareholders who appear on the Company’s register on 11 May 2020, the record date for the dividend, subject to
ordinary shareholder approval.
64 Approval of financial statements
The Board of Directors approved the consolidated and Company financial statements on 21 February 2020.
Summary of amounts recognised in the income statement 2019 2018
under IFRS 16 compared to equivalent amounts under IAS 17 
Amounts recognised in interest expense
Interest expense on lease liabilities 15 -
Amounts recognised in other operating expenses
Depreciation of RoU assets in property, plant and equipment 69 -
Depreciation of Finance lease assets in property, plant and equipment - 4
Operating lease payments - 60
Variable lease expenses 8 -
Short-term lease expenses 3 -
Expenses on service contracts classified as leases under IFRS 16 - 33
80 97
Amounts recognised in cost of restructuring
Impairment 2 -
Total 97 97
62 Impact of adopting new accounting standard IFRS 16 ‘Leases’ (continued)
 22:00 Page 294
Index Page
Company balance sheet 296
Company statement of changes in equity 297
Notes:
a Accounting policies and critical accounting estimates and judgements 298
b Loans and advances to banks 299
c Shares in Group undertakings 299
d Other assets 300
e Subordinated liabilities 300
f Debt securities in issue 300
g Other liabilities 301
h Share capital 301
i Dividend per ordinary share 301
j Other 302
k Directors and secretary 302

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
295
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Company Financial Statements
Company balance sheet (as at 31 December 2019)
2019 2018
Note 
Assets
Loans and advances to banks b 3,612 2,022
Shares in Group undertakings c 7,035 7,035
Other assets d 641 820
Total assets 11,288 9,877
Equity and liabilities
Debt securities in issue f 2,435 1,182
Subordinated liabilities e 1,092 766
Other liabilities g 19 18
Total liabilities 3,546 1,966
Equity
Share capital h 1,079 1,079
Share premium account 456 456
Retained earnings 6,207 6,376
Total equity 7,742 7,911
Total equity and liabilities 11,288 9,877
The Company recorded a profit after tax of €4 million for the year ended 31 December 2019 (2018: €1 million).
Patrick Kennedy
Chairman
Patrick Haren
Deputy Chairman
Francesca McDonagh
Group Chief Executive
Sarah McLaughlin
Group Secretary
Accounting policies and critical accounting estimates and judgements
The Company financial statements have been prepared in
accordance with FRS 101 ‘Reduced disclosure framework’ and in
accordance with Section 290 (1) of the Companies Act 2014.
These financial statements are financial statements of the Company
only and do not consolidate the results of any subsidiaries.
In preparing these financial statements the Company applies the
recognition, measurement and disclosure requirements of IFRS as
adopted by the EU (but makes amendments where necessary in
order to comply with the Companies Act 2014). The Company has
applied the exemptions available under FRS 101 in respect of the
following disclosures:
• statement of Cash Flows;
• disclosures in respect of transactions with wholly-owned
subsidiaries;
• certain requirements of IAS 1 ‘Presentation of financial
statements’;
• disclosures required by IFRS 7 ‘Financial Instruments:
disclosures’;
• disclosures required by IFRS 13 ‘Fair value measurement’; and
• the effects of new but not yet effective IFRSs.
The financial statements are presented in euro millions except
where otherwise indicated. They have been prepared under the
historical cost convention. The accounting policies of the
Company are the same as those of the Group which are set out in
the Group accounting policies section of the Annual Report on
pages 178 to193, where applicable. The Company’s investment
in its subsidiary is stated at cost less any impairment.
The preparation of financial statements in conformity with FRS
101 requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount,
event or actions, actual results ultimately may differ from those
estimates. A description of the critical estimates and judgements
is set out below.
Shares in Group undertakings
Cost
The cost of the Company’s investment in the ordinary stock of its
subsidiary undertaking, the Bank, was measured at the
Company’s share of the carrying value of the equity items
reflected in the separate financial statements of the Bank at 7
July 2017, the date on which the Company became the Parent
entity of the Bank. The Company’s share of these equity items, as
holder of 100% of the ordinary stock of the Bank, was assessed
in accordance with the rights attaching to other equity
instruments, comprising preference stock and an AT1 instrument,
and measured on a relative fair value basis.
Impairment review
The Company carries its investment in its subsidiary undertaking
at cost and reviews for impairment at each reporting date.
Impairment testing involves the comparison of the carrying value
of the investment with its recoverable amount. The recoverable
amount is the higher of the investment’s fair value or it’s VIU.
VIU is the present value of expected future cash flows from the
investment. Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
Judgement
Impairment testing inherently involves a number of judgemental
areas: the preparation of cash flow forecasts for periods that are
beyond the normal requirements of management reporting; the
assessment of the discount rate appropriate to the business;
estimation of the fair value of the investment; and the valuation of
the separable assets comprising the overall investment in the
Group undertaking.
Sources of estimation uncertainty
Cash flow forecasts
Cash flow forecasts are based on internal management
information for a period of up to five years, after which a long-
term growth rate appropriate for the business is applied. The next
five years’ cash flows are consistent with approved plans for each
business.
Growth rates
Growth rates beyond five years are determined by reference to
local economic growth rates. The assumed long term growth rate
for the purpose of the impairment assessment is 3%.
Discount rate
The discount rate applied is the pre-tax weighted average cost of
capital for the Group which is 12% at 31 December 2019 (31
December 2018: 12%).
The impact of changes in these cash flows, growth rate and
discount rate assumptions has been assessed by the Directors in
the review. No impairment has been identified at 31 December
2019 (31 December 2018: €nil).
Applying a long-term growth rate of 0% in the model would not
result in impairment of the investment. The Directors consider
that the use of reasonably possible alternative assumptions
would not materially impact the carrying value of the investment.
See note c for further information.
 22:00 Page 298

Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
299
The Company’s investment in the Bank is reviewed for
impairment if events or circumstances indicate that impairment
may have occurred, by comparing the carrying value of the
investment to its recoverable amount. An impairment charge
arises if the carrying value exceeds the recoverable amount. No
impairment charge was recognised in 2019.
The recoverable amount of the investment is the higher of its fair
value less costs to sell and its VIU, where the VIU is the present
value of the future cash flows expected to be derived from the
investment, based upon a VIU calculation that discounts
expected pre-tax cash flows at a discount rate appropriate to the
investment. The determination of both requires the exercise of
judgement. The estimation of pre-tax cash flows is sensitive to
the periods for which forecasted cash flows are available and to
assumptions underpinning the sustainability of those cash flows.
While forecasts are compared with actual performance and
external economic data, expected cash flows reflect
management’s view of future performance. The values assigned
to key assumptions reflect past experience, performance of the
business to date and management judgement.
The recoverable amount calculation performed is sensitive to
changes in the following key assumptions:
Cash flow forecasts
Cash flow forecasts are based on internal management
information for a period of up to five years, after which a long-
term growth rate appropriate for the business is applied (see
below). The next five years’ cash flows are consistent with
approved plans for each business.
Growth rates
Growth rates beyond five years are determined by reference to
long-term economic growth rates.
Discount rate
The discount rate applied is the pre-tax weighted average cost of
capital for the Company increased to include a risk premium to
reflect the specific risk profile of the investment to the extent that
such risk is not already reflected in the forecast cash flows.
The forecast cash flows reflect management’s view of future
business prospects. The impact of changes in these cash flows,
growth rate and discount rate assumptions has been assessed in
the review.
In 2017, the Bank declared and approved a €1 billion dividend
payment to BOIG plc. The Bank paid €173 million of this dividend
in 2019 (2018: €200 million). A total of €373 million has been paid
to date, the balance remains outstanding and payable on demand
by the company. As the declaration and approval of the dividend
is an irrevocable commitment by the Bank, the full amount of the
dividend has been accounted for by the Company.
2019 2018

Dividend receivable from the Bank1
627 800
Other assets 14 20
Total 641 820
Amounts include:
Due from Group undertakings 641 820
Other assets are analysed as follows:
Within 1 year 641 820
d Other assets
Dated loan capital
Stg£300 million 3.125% Fixed Rate Reset Callable Subordinated Notes 2027 350 333
US$500 million 4.125% Fixed Rate Reset Callable Subordinated Notes 2027 443 433
€300 million 2.375% Fixed Rate Reset Callable Subordinated Notes 2029 299 -
Total subordinated liabilities 1,092 766
Further details on subordinated liabilities are contained in note 47 to the consolidated financial statements.
f Debt securities in issue
2019 2018

Bonds and medium term notes 2,435 1,182
Debt securities in issue at amortised cost 2,435 1,182
Debt securities are analysed as follows:
After 1 year 2,435 1,182
2,435 1,182
The movement on debt securities in issue is analysed as follows:
2019 2018

Opening balance 1,182 -
Issued during the year 1,250 1,177
Other movements 3 5
Closing balance 2,435 1,182
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Financial Statements
Governance Risk Management Report Other Information
Strategic Report Financial Review
2019 2018
Authorised 
10 billion ordinary shares of €1.00 each 10,000 10,000
100 million preference shares of €0.10 each 10 10
Total 10,010 10,010
2019 2018
Allotted and fully paid 
1.079 billion ordinary shares of €1.00 each 1,079 1,079
h Share capital
Ordinary shares
All ordinary shares carry the same voting rights.
There were no outstanding options on ordinary shares under
employee schemes as at 31 December 2019 or 2018.
i Dividend per ordinary share
On 22 February 2019, the Board recommended a dividend of 16.0 cent per ordinary share, €173 million in total, which was approved at
the AGM on 14 May 2019 and paid on 10 June 2019. This dividend has been accounted for in shareholders’ equity as an appropriation of
retained earnings for 2019.
2019 2018
Cent Cent
per share per share €m
Final dividend paid in respect of the years ended 31 December 2019 and 2018 16.0 173 11.5 124
g Other liabilities
2019 2018

Accrued interest payable 19 18
Other liabilities 19 18
Other liabilities are analysed as follows:
Within 1 year 19 18
19 18
 22:00 Page 301
302

j Other
(i) BOIG plc is incorporated in Ireland as a public limited
company with registration number 593672. Its registered
office is situated at 40 Mespil Road, Dublin 4.
(ii) The Company is domiciled in Ireland.
(iii) Company income statement:
In accordance with Section 304 of the Companies Act, the
Company is availing of the exemption to not present its
individual income statement to the AGM and from filing it with
the Registrar of Companies. The Company's profit after tax
for the year ended 31 December 2019 determined in
accordance with FRS 101 is €4 million (2018: €1 million).
(iv) Information in relation to the Company’s principal subsidiaries
is contained in note 54 to the consolidated financial
statements.
(v) Auditor’s Remuneration:
In accordance with Section 322 of the Companies Act, the
fees paid in the year to the statutory Auditor for work
engaged by the Company comprised audit fees of €nil (2018:
€nil) and other assurance services of €nil (2018: €nil).
(vi) BOIG plc had no employees at any time during the year
(2018: no employees).
(vii) Post balance sheet events are shown in note 63 to the
consolidated financial statements.
k Directors and secretary
Directors
Kent Atkinson (resigned 14 May 2019)
Patrick Haren
Andrew Keating (resigned 18 October 2019)
Patrick Kennedy
Francesca McDonagh
Fiona Muldoon
Patrick Mulvihill
Michele Greene (appointed 5 December 2019)
Richard Goulding
Steve Pateman
Evelyn Bourke
Eileen Fitzpatrick (appointed 15 May 2019)
Ian Buchanan
Myles O’Grady (appointed 15 January 2020)
Company Secretary
Helen Nolan (resigned 31 July 2019)
Sarah McLaughlin (appointed 18 September 2019)
Peter Gray (Interim) (appointed 31 July 2019, resigned 18 September 2019)
The names of the persons who were Directors or Company
Secretary of the Company at any time during the year ended 31
December 2019 and up to the date of the approval of the financial
statements are set out in this note.
 22:00 Page 302
Other Information
Contents
Group exposures to selected countries 304
Supplementary asset quality and forbearance disclosures 306
Consolidated average balance sheet and interest rates 328
Shareholder information 329
Forward looking statement 330
Other disclosures 330
Alternative performance measures 331
Abbreviations 337
303

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
 22:00 Page 303
Group exposures to selected countries
The information in Group exposures to selected countries forms an integral part of the audited financial statements as described in the
Basis of preparation on page 178.
2019 United United
Ireland Kingdom States Spain France Belgium Other1
Total
AIn 2019, other is primarily made up of exposures to the following countries: Sweden: €0.9 billion, Netherlands: €0.5 billion, Portugal: €0.5 billion, Germany: €0.4 billion, Italy €0.4
billion, Norway: €0.3 billion, Austria: €0.3 billion, Denmark: €0.3 billion, Canada: €0.2 billion, Finland: €0.1 billion, Rest of world: €0.9 billion and Supranational institutions: €1.1 billion.
Also included in other is the Group’s euro cash holding in branches.
2
Net Derivative exposure is calculated after the application of master netting arrangements and associated cash collateral received.
3
This excludes €14.4 billion of assets held by the Group’s life assurance business which are linked to policyholder liabilities (2018: €12.3 billion) and includes loans and advances to
customers held at fair value through profit or loss of €0.3 billion (2018: €0.3 billion).
4
This excludes €198 million of assets held by the Group’s life assurance business which are linked to policyholder liabilities (2018: €213 million) .
5
In 2019, Other financial assets at fair value through other comprehensive income is primarily made up of exposures to the following countries: Sweden: €0.8 billion, Netherlands: €0.4
billion, Portugal: €0.4 billion, Italy: €0.4 billion, Norway: €0.3 billion, Rest of world: €1.8 billion.
6
In 2019, Debt securities at amortised cost Other category is made up of exposures to Germany: €0.1 billion and the Rest of world: €0.3 billion.
7
In 2018, other is primarily made up of exposures to the following countries: Sweden: €0.8 billion, Netherlands: €0.5 billion, Germany: €0.4 billion, Portugal: €0.4 billion, Canada: €0.3
billion, Norway: €0.3 billion, Austria: €0.3 billion, Denmark: €0.2 billion, Finland: €0.1 billion, Turkey €nil, Italy €0.5 billion, Rest of world: €1.0 billion and Supranational institutions: €1.7
billion. Also included in other is the Group’s euro cash holding in branches.
8
In 2018, Other financial assets at fair value through other comprehensive income` is primarily made up of exposures to the following countries: Sweden: €0.8 billion, Netherlands: €0.4
billion, Canada: €0.3 billion, Portugal: €0.4 billion, Italy: €0.4 billion and Rest of world: €2.7 billion.
9
In 2018, other is primarily made up of exposures to the Rest of world: €0.3 billion.
Set out in the tables below is a summary of the Group’s exposure
to sovereign debt and other country exposures for selected
balance sheet line items at 31 December 2019. These include
exposures to Ireland, the UK, the US and those other countries
that have a S&Ps credit rating of AA or below where the Group
has an exposure of over €470 million.
304

Supplementary asset quality and
forbearance disclosures
Index Page
Retail Ireland mortgages
Book composition
Loan volumes 307
Origination profile 309
Arrears profile 310
Loan to value profiles - total loans 311
Risk profile 313
Asset quality
Composition and impairment 314
Retail UK mortgages
Book composition
Loan volumes 316
Origination profile 318
Arrears profile 319
Loan to value profiles - total loans 319
Risk profile 321
Asset quality
Composition and impairment 323
Group forbearance disclosures
Risk profile of forborne loans and advances to customers 325
Risk profile of non-performing exposures 326

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
The tables below (except where denoted unaudited) in the Supplementary asset quality and forbearance disclosures form an integral part
of the audited financial statements as described in the basis of preparation on page 178. All other information in the Supplementary asset
quality and forbearance disclosures is additional information and does not form part of the audited financial statements.
Retail Ireland mortgages
The following disclosures relate to the Retail Ireland mortgage loan
book and provide additional detail and analysis on the composition
and quality of this loan book.
The Group has an established infrastructure for the origination,
underwriting and management of its mortgage portfolio. The
processes of underwriting through to account management are
centralised and no delegated discretions are in operation outside
the centralised units. The mortgage process is a comprehensively
documented process including evidence of key borrower
information such as independent valuations of relevant security
property.
Retail Ireland mortgage origination lending policy and guidelines are
subject to annual governance. Each applicant is primarily assessed
based on their ability and capacity to repay the loan while the
creditworthiness of the applicant, value of the property and the
individual circumstances of the applicant are key factors in the
underwriting decision.
Lending criteria for the Retail Ireland mortgage portfolio include:
• repayment capacity of the borrower;
• LTV limits;
• loan to income (LTI) limits;
• mortgage term duration; and
• loan specific terms and conditions.
Unless otherwise indicated, excluded from the following tables are
€0.2 billion of loans and advances to customers mandatorily held at
FVTPL at 31 December 2019 (2018: €0.3 billion) which are not
subject to impairment under IFRS 9 (note 27).
Book composition
Loan volumes
The tables below summarise the composition and risk profile of the Retail Ireland mortgage loan book. The following tables reflect the Retail
Ireland mortgages at amortised cost at 31 December 2019.
1
The above tables exclude undrawn loan commitments relating to Retail Ireland mortgages of €895 million at 31 December 2019 (31 December 2018: €774 million) that are subject to
impairment under IFRS 9.
2
At 31 December 2019, Purchased or Originated Credit-impaired loans included €2 million (31 December 2018: €2 million) of loans which, while credit-impaired upon purchase or
origination, were no longer credit-impaired at the reporting date due to improvements in credit risk. These loans will remain classified as Purchased or Originated Credit-impaired
until derecognition.
3
Excluded from the above tables at 31 December 2019 are €0.2 billion (31 December 2018: €0.3 billion) of loans mandatorily held at fair value through profit or loss which are not
subject to impairment under IFRS 9.
4 ‘
Full principal and interest’ repayment basis mortgages consist of mortgages that are contracted to be repaid over the agreed term on an amortising basis. The typical term at
origination for these mortgages was between 20 to 30 years.
5
‘Interest only’ mortgages typically consist of mortgages where the repayment consists of the full interest element (or greater) for an agreed period at the end of which the mortgage
repayment basis becomes ‘full principal and interest’ contracted to be repaid over the agreed term. Interest only periods on Retail Ireland mortgages typically range between three
and five years.
Book composition (continued)
Loan volumes (continued)
Table: 1b

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
1
The lending originated in each year is net of related redemptions. For phased drawdowns, the year of the initial drawdown is classified as the year of origination.
2
Excluded from the above tables at 31 December 2019 are €0.2 billion (31 December 2018: €0.3 billion) of loans mandatorily held at fair value through profit or loss which are not
subject to impairment under IFRS 9.
3
The number of accounts does not equate to either the number of customers or the number of properties.
Book composition (continued)
Origination profile
Table: 2 2019 2018
Total Retail Ireland Non-performing Total Retail Ireland Non-performing
Origination1
of mortgage loan book exposures mortgage loan book exposures
Retail Ireland
mortgage loan book2
(before Balance Number of Balance Number of Balance Number of Balance Number of
impairment loss allowance) accounts3
The table above illustrates that at 31 December 2019, €3.7 billion or
16% of the Retail Ireland mortgage loan book originated before
2006, €6.7 billion or 29% between 2006 and 2008 and €12.6 billion
or 55% in the years since 2008. At 31 December 2019, total non-
performing exposures were €1.5 billion (2018: €2.2 billion) or 6% of
the Retail Ireland mortgage loan book, of which €0.9 billion
originated between 2006 and 2008. There has been a decrease in
total NPEs in 2019 reflecting the securitisation of €0.4 billion of
NPEs, disposal of €0.2 billion of NPEs (note 27) and effectiveness of
the Group’s operating infrastructure, restructure of customer
mortgages on a sustainable basis and mortgage resolution activity,
supported by improving economic conditions.
 22:00 Page 309
This information indicates that the proportion (by number of
accounts) of the Retail Ireland mortgage book in arrears (greater
than 90 days past due) consistently remains significantly below
the industry average for both Owner occupied (28% of industry
average) and BTL (22% of industry average) mortgages. At 30
September 2019, 1.9% and 3.6% of Bank of Ireland’s Retail
Ireland Owner occupied and BTL mortgages respectively (by
number of accounts) were greater than ‘90 days past due’
compared to 6.9%2
and 16.5%2
respectively for the industry.
This information also indicates that the proportion (by number of
accounts) of the Retail Ireland mortgage book in arrears greater
than 720 days past due consistently remains significantly below the
industry average for both Owner occupied (22% of industry
average) and BTL (15% of industry average) mortgages. At 30
September 2019, 1.0% and 1.9% of Bank of Ireland’s Retail Ireland
Owner occupied and BTL mortgages respectively (by number of
accounts) were greater than 720 days past due compared to 4.5%2
and 12.3%2
respectively for the industry.
1
The table above includes €0.2 billion (2018: €0.3 billion) of loans mandatorily held at fair value through the profit or loss at 31 December 2019 which are not subject to impairment
under IFRS 9.
2
Industry source: CBI Mortgage Arrears Statistics Report, September 2019 - adjusted to exclude Bank of Ireland.
 22:00 Page 310
311
Excluded from the above table are Purchased or Originated Credit-impaired loans of €3 million (2018: €3 million), €2 million (2018: €2 million) of which were no longer credit-impaired
at the reporting date due to improvement in credit risk since purchase of origination. These loans will remain classified as Purchased or Originated Credit-impaired until derecognition.
2
Excluded from the above tables at 31 December 2019 are €0.2 billion (31 December 2018: €0.3 billion) of loans mandatorily held at fair value through profit or loss which are not
subject to impairment under IFRS 9.
3
Weighted average loan to value ratios are calculated at a property level and reflect the average property value in proportion to the outstanding mortgage.
 22:00 Page 311

312
The tables on the previous page set out the weighted average
indexed LTV for the total Retail Ireland mortgage loan book which
showed positive movements during 2019 and was, on average,
59% at 31 December 2019, 58% for Owner occupied mortgages
and 66% for BTL mortgages. The weighted average indexed LTV
for new Residential mortgages written during 2019 was 74%, being
74% for Owner occupied mortgages and 54% for BTL mortgages.
Property values are determined by reference to the property
valuations held, indexed to the CSO RPPI. The indexed LTV profile
of the Retail Ireland mortgage loan book contained in table 3b is
based on the CSO RPPI at October 2019.
The RPPI for October 2019 reported that average national
residential property prices were 16.9% below peak (2018: 17.6%
below peak), with Dublin residential prices and outside of Dublin
residential prices 21.3% and 20.1% below peak respectively (2018:
20.1% and 22.7% below peak respectively). In the 10 months to
October 2019, residential property prices at a national level
increased by 1.6%.
At 31 December 2019, €22.3 billion or 97% of Retail Ireland
mortgages were classified as being in positive equity, 98% for
Owner occupied mortgages and 88% for BTL mortgages.
Book composition (continued)
Loan to value profiles - total loans (continued)
 Asset quality
Composition and impairment
The table below summarises the composition of NPEs and impairment loss allowance for the Retail Ireland mortgage portfolio.
Table: 4 Impairment
Non- loss Impairment
Advances performing allowance loss
(before Non- exposures Impairment as % of non- allowance
2019 impairment performing as % of loss performing as % of
loss allowance) exposures advances allowance exposures advances
Retail Ireland mortgages1,2
Excluded from the above table are Purchased or Originated Credit-impaired loans of €3 million (2018: €3 million), €2 million (2018: €2 million) of which were no longer credit-impaired
at the reporting date due to improvement in credit risk since purchase of origination. These loans will remain classified as Purchased or Originated Credit-impaired until
derecognition.
2
Excluded from the above tables at 31 December 2019 are €0.2 billion (31 December 2018: €0.3 billion) of loans mandatorily held at fair value through profit or loss which are not
subject to impairment under IFRS 9.
 22:00 Page 314
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Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Total NPEs of €1.5 billion were €0.8 billion lower than at 31
December 2018.
Owner occupied NPEs of €1.0 billion were €0.2 billion lower than at
31 December 2018 with BTL mortgages decreasing to €0.5 billion
at 31 December 2019 from €1.1 billion at 31 December 2018. The
reduction in NPEs reflects the securitisation of €0.4 billion of
NPEs and disposal of €0.2 billion of NPEs (note 27), in addition to
the effectiveness of the Group's operating infrastructure,
restructure of customer mortgages on a sustainable basis,
mortgage resolution activity and improving economic conditions.
Asset quality (continued)
Composition and impairment (continued)
 22:00 Page 315
316

Retail UK mortgages
The following disclosures relate to the Retail UK mortgage loan
book. These provide additional detail and analysis on the
composition and quality of this loan book.
The Group has an established infrastructure for the origination,
underwriting and management of its mortgage portfolio. The
processes of underwriting through to account management are
centralised and no delegated discretions are in operation outside
the centralised units. The mortgage process is a comprehensively
documented process with documentary evidence of key borrower
information including independent valuations of relevant security
property.
Retail UK mortgage origination lending policy and guidelines are
subject to annual governance. Each applicant is primarily assessed
based on their ability and capacity to repay the loan. In addition to
the above, the credit worthiness of the applicant, value of the
property and the individual circumstances of the applicant are key
factors in the underwriting decision.
Lending criteria for the Retail UK mortgage portfolio include:
• repayment capacity of the borrower;
• LTV limits;
• LTI limits;
• mortgage term duration; and
• loan specific terms and conditions.
Book composition
Loan volumes
The tables below summarise the composition and risk profile of the Retail UK mortgage loan book.
Table: 1a
2019 2018
Retail UK mortgages - Volumes (before impairment
loss allowance) by interest rate type1
£m % £m %
Tracker 5,607 28% 6,271 32%
Variable rates 2,245 12% 2,711 14%
Fixed rates 11,917 60% 10,452 54%
Total Retail UK mortgages 19,769 100% 19,434 100%
At 31 December 2019, Retail UK mortgages were £19.8 billion
(2018: £19.4 billion). The increase of £0.4 billion or 2% reflects new
business generation partially offset by redemptions in the book.
New mortgage business continues to be sourced through the
Group’s relationship with the UK Post Office, through distribution
arrangements with other selected strategic partners and the
Group’s branch network in NI.
Tracker mortgages were £5.6 billion or 28% of the Retail UK
mortgages compared to £6.3 billion or 32% at 31 December 2018,
a decrease of £0.7 billion. Variable rate mortgages were £2.2 billion
or 12% of the Retail UK mortgages compared to £2.7 billion or 14%
at 31 December 2018, a decrease of £0.5 billion.
Fixed rate mortgages were £11.9 billion or 60% of the Retail UK
mortgages compared to £10.5 billion or 54% at 31 December 2018,
an increase of £1.5 billion.
1
The above tables exclude undrawn loan commitments relating to Retail UK mortgages of £951million at 31 December 2019 (2018: £763 million) that are subject to impairment.
 22:00 Page 316
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Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Book composition
Loan volumes (continued)
The tables below summarise the composition and risk profile of the Retail UK mortgage loan book.
The above tables exclude undrawn loan commitments relating to Retail UK mortgages of £951 million at 31 December 2019 (2018: £763 million) that are subject to impairment.
 22:00 Page 317
318

1
The lending originated in each year is net of related redemptions. For phased drawdowns, the year of the initial drawdown is classified as the year of origination.
2
The number of accounts does not equate to the number of customers or the number of properties.
Book composition (continued)
Origination profile
Table: 2 2019 2018
Total Retail UK Non-performing Total Retail UK Non-performing
Origination1
of mortgage loan book exposures mortgage loan book exposures
Retail UK
mortgage loan book (before Balance Number of Balance Number of Balance Number of Balance Number of
impairment loss allowance) £m accounts2
Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
1
Weighted average loan to value ratios are calculated at a property level and reflect the average of property values in proportion to the outstanding mortgage.
Book composition (continued)
Arrears profile
The table above sets out the weighted average indexed LTV for
the total Retail UK mortgage loan book, which was 63% at 31
December 2019. The weighted average LTV for new Residential
mortgages written during 2019 was 73%, 76% for Standard
mortgages and 61% for BTL mortgages.
Property values are determined by reference to the original or latest
property valuations held, indexed to the published ‘Nationwide UK
House Price Index’.
At 31 December 2019, £19.7 billion or 99.6% of the Retail UK
mortgage book was in positive equity (2018: £19.3 billion or
99%), comprising £10.8 billion or 99.5% of Standard mortgages
(2018: £10.2 billion or 99%), £7.4 billion or 99.8% of BTL
mortgages (2018: £7.5 billion or 99%) and £1.5 billion or 98.8%
of Self certified mortgages (2018: £1.7 billion or 99%).
This improvement reflects the upward movement in house prices
in the year with house prices increasing by 0.8% on average
across the UK, with significant regional variances, together with
capital reductions and principal repayments.
Book composition (continued)
Loan to value profiles - total loans (continued)

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Book composition (continued)
Risk profile
The table below provides an analysis of the Retail UK mortgages at amortised cost by IFRS 9 twelve month PD grade.
Table: 3c
2019 Standard Buy to let Self certified Total
Risk profile of Retail UK
mortgage loan book (before Non- Non- Non- Non-
impairment loss allowance) Performing performing Performing performing Performing performing Performing performing

Not credit-impaired
Consolidated average balance sheet
and interest rates
The following tables show the average balances and interest
rates of interest earning assets and interest bearing liabilities for
2019 and 2018. The calculations of average balances can be
based on daily, weekly or monthly averages, depending on the
reporting unit. The average balances used are considered to be
representative of the operations of the Group. The Group’s
operating divisions are managed on a product margin basis, with
funding and interest exposure managed centrally. The explanation
of the underlying business trends in the Group’s NIM, after
adjusting for the impact of IFRS income classifications, is
outlined on page 42.
Loans and advances to banks includes cash and balances at central banks.
1
Average balances are presented on an underlying basis excluding non-core items such as UK portfolio divestments, see page 46 for further details.
2
Represents underlying interest income or underlying interest expense recognised on interest bearing items net of interest on derivatives which are in a hedge relationship with the
relevant asset or liability. Interest income of €20 million and interest expense of €5 million relating to UK portfolio divestments, and a charge of €10 million (2018: €12 million) to
interest income relating to customer redress charges are excluded as non-core items.
3
Interest expense of €7 million (2018: €12 million) arising from assets subject to negative interest rates has been reclassified to interest income, whereas in the consolidated income
statement it is presented as interest expense. Interest income of €19 million (2018: €19 million) arising from liabilities subject to negative interest rates has been reclassified to interest
expense, whereas in the consolidated income statement it is presented as interest income.
4
Average loans and advances to customers volumes are presented net of Stage 3 impairment loss allowances.
5
The Group has availed of the relaxed hedge accounting provisions permitted by IAS 39 'Financial Instruments: recognition and measurement' as adopted by the EU. In order that
yields on products are presented on a consistent basis year on year and are not impacted by the resulting change in hedge accounting designations, net interest flows of €97 million
on all derivatives designated as fair value hedges of current accounts continue to be presented together with gross interest income on ‘Loans and advances to customers’ and is not
included in ‘Customer accounts’.
6
Excludes deposits carried at fair value through profit or loss.
7
Includes liabilities carried at fair value through profit or loss.
 22:00 Page 328
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Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Listings
BOIG plc is a public limited company incorporated in Ireland in
2016. Its ordinary shares, of nominal value €1.00 per share, have
a primary listing on the Irish Stock Exchange t/a Euronext Dublin
and a premium listing on the London Stock Exchange.
Registrar
The Company’s Registrar is:
Computershare Investor Services (Ireland) Limited, 3100 Lake
Drive, Citywest Business Campus, Dublin 24, D24 AK82
Telephone: + 353 1 247 5414
Facsimile: + 353 1 447 5571
or
Contact via website: www.computershare.com/ie/contact-us
Shareholders may view their shareholding on Computershare’s
website at: www.investorcentre.com/ie by registering their details
with Computershare. Once registered, shareholders will be sent a
Computershare activation code and will then be able to view and
amend their account details using the above link.
Amalgamating your shareholdings
If you receive more than one copy of a shareholder mailing with
similar details on your accounts, it may be because the Company
has more than one record of shareholdings in your name. To
ensure that you do not receive duplicate mailings in future and to
reduce the cost and waste associated with this, please have all
your shareholdings amalgamated into one account by contacting
the Company’s Registrar (joint accounts cannot be merged with
sole accounts or vice versa).
Shareholder enquiries
All enquiries concerning shareholdings should be addressed to
the Company’s Registrar.
Communication
It is the policy of the Company to communicate with shareholders
by electronic means or through the www.bankofireland.com
website in the interest of protecting the environment. Those
shareholders who do not wish to receive documents or
information by electronic means may request to receive the
relevant information in paper form.
Bank of Ireland website
Further information about the Bank of Ireland Group can be
obtained from the internet at www.bankofireland.com
Shareholder information
Holders of ordinary shares

This document contains forward-looking statements with respect
to certain of the Bank of Ireland Group plc (the ‘Company’ or
‘BOIG plc’) and its subsidiaries’ (collectively the ‘Group’ or ‘BOIG
plc Group’) plans and its current goals and expectations relating
to its future financial condition and performance, the markets in
which it operates and its future capital requirements. These
forward-looking statements often can be identified by the fact
that they do not relate only to historical or current facts.
Generally, but not always, words such as ‘may,’ ‘could,’ ‘should,’
‘will,’ ‘expect,’ ‘intend,’ ‘estimate,’ ‘anticipate,’ ‘assume,’
‘believe,’ ‘plan,’ ‘seek,’ ‘continue,’ ‘target,’ ‘goal,’ ‘would,’ or their
negative variations or similar expressions identify forward-looking
statements, but their absence does not mean that a statement is
not forward-looking.
Examples of forward-looking statements include, among others:
statements regarding the Group’s near term and longer term
future capital requirements and ratios, level of ownership by the
Irish Government, LDRs, expected impairment charges, the level
of the Group’s assets, the Group’s financial position, future
income, business strategy, projected costs, margins, future
payment of dividends, the implementation of changes in respect
of certain of the Group’s pension schemes, estimates of capital
expenditures, discussions with Irish, UK, European and other
regulators and plans and objectives for future operations. Such
forward-looking statements are inherently subject to risks and
uncertainties, and hence actual results may differ materially from
those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, but are not limited to, those
as set out in the Risk Management Report. Investors should read
‘Principal Risks and Uncertainties’ in this document beginning on
page 111.
Nothing in this document should be considered to be a forecast
of future profitability or financial position of the Group and none
of the information in this document is or is intended to be a profit
forecast or profit estimate. Any forward-looking statement speaks
only as at the date it is made. The Group does not undertake to
release publicly any revision to these forward-looking statements
to reflect events, circumstances or unanticipated events
occurring after the date hereof.
For further information please contact:
Myles O’Grady, Group Chief Financial Officer
Tel: +353 76 624 3291
Darach O’Leary, Director of Group Investor Relations
Tel: +353 76 624 4711
Damien Garvey, Head of Group External Communications and
Public Affairs
Tel: +353 76 624 6716
Forward looking statement
Other disclosures
TARGET 2
1. On 15 February 2008 a first floating charge (the Floating
Charge) was placed in favour of the CBI over all The
Governor and Company of the Bank of Ireland’s right, title,
interest and benefit, present and future, in and to (i) the
balances now or at any time standing to the credit of The
Governor and Company of the Bank of Ireland's account held
as a TARGET 2 participant with the CBI; and (ii) certain
segregated securities listed in an Eligible Securities Schedule
kept by The Governor and Company of the Bank of Ireland
for purposes of participating in TARGET 2 ((i) and (ii) together
the Charged Property) where TARGET 2 is a real time gross
settlement system for payments in euro with settlement in
central bank money.
This Floating Charge contains a provision whereby during the
subsistence of the security, otherwise than with the prior
written consent of the CBI, The Governor and Company of
the Bank of Ireland shall:
(a) not create or attempt to create or permit to arise or
subsist any encumbrance on or over the Charged
Property or any part thereof; or
(b) not, otherwise than in the ordinary course of business,
sell, transfer, lend or otherwise dispose of the Charged
Property or any part thereof or attempt or agree to do so
whether by means of one or a number of transactions
related or not and whether at one time or over a period of
time.
On 14 September 2018, The Governor and Company of the
Bank of Ireland entered into an Agreement in respect of
Continued Participation in Target 2 Ireland with the CBI to
restate and modify the terms and conditions applicable to
The Governor and Company of the Bank of Ireland’s existing
participation in TARGET 2 with effect from 14 September
2018. This Agreement provided that The Governor and
Company of the Bank of Ireland would continue to participate
in TARGET 2 in accordance with the Agreement and the
TARGET 2 Ireland terms and conditions as published on the
CBI’s website and that the Floating Charge would continue in
full force and effect with respect to such continued and
amended participation in TARGET 2.
 22:00 Page 330

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
331
Alternative performance measures
This section contains further information related to certain measures referred to in the Strategic Report, Financial Review and
summary of Group results.
The Financial Review is prepared using IFRS and non-IFRS measures to analyse the Group’s performance, providing comparability year
on year. These performance measures are consistent with those presented to the Board and Group Executive Committee and include
alternative performance measures as set out below. These performance measures may not be uniformly defined by all companies and
accordingly they may not be directly comparable with similarly titled measures and disclosures by other companies. These measures
should be considered in conjunction with IFRS measures as set out in the consolidated financial statements from page 161.
Average cost of funds represents the underlying interest expense recognised on interest bearing liabilities, net of interest on derivatives
which are in a hedge relationship with the relevant liability. See pages 42 and 328 for further information.
2019 2018
Calculation Source 
Interest expense Income statement 370 379
Exclude negative interest on financial assets Note 5 (7) (12)
Include negative interest on financial liabilities Note 4 (19) (19)
Exclude impact of FV hedges of current accounts Average balance sheet 97 46
Exclude interest expense related to UK portfolio divestments Average balance sheet (5) -
Other - (3)
Underlying interest expense 436 391
Average interest bearing liabilities Average balance sheet 92,355 89,564
Average cost of funds % (0.47%) (0.44%)
Constant currency: To enable a better understanding of performance, certain variances are calculated on a constant currency basis by
adjusting for the impact of movements in exchange rates during the period as follows:
• for balance sheet items, by reference to the closing rate at the end of the current and prior period ends; and
• for items relating to the income statement, by reference to the current and prior period average rates.
Growth in new lending on a constant currency basis
The Group calculates growth in new lending on a constant currency basis. For this calculation the Group applies the current year average
in year interest rate to Retail UK lending flows in both years so that the impact of movements in foreign exchange rates is eliminated.
2019 2018
Calculation Source 
New lending in the period Loans and advances to customers (OFR) 16,501 15,927
Impact of foreign exchange movements (19) 128
New lending on a constant currency basis 16,482 16,055
Growth in new lending (%) 2.66%
Growth in customer deposits on a constant currency basis
The Group calculates growth in customer deposits on a constant currency basis. For this calculation the Group applies the prior year end
rate in both years so that the impact of movements in foreign exchange rates is eliminated.
2019 2018
Calculation Source 
Customer deposits Note 39 83,968 78,899
Impact of foreign exchange movements (1,168) -
Customer deposits on a constant currency basis 82,800 78,899
Growth in customer deposits 3,901
 22:00 Page 331
332

Gross yield represents the underlying interest income recognised on interest earning assets, net of interest on derivatives which are in a
hedge relationship with the relevant asset. See pages 42 and 328 for further information.
2019 2018
Calculation Source 
Interest income Income statement 2,525 2,513
Exclude negative interest on financial liabilities Note 4 (19) (19)
Include negative interest on financial assets Note 5 (7) (12)
Exclude customer redress charges Note 4 10 12
Include impact of FV hedges of current accounts Average balance sheet 97 46
Exclude interest income related to UK portfolio divestments Average balance sheet (20) -
Other - 3
Underlying interest income 2,586 2,537
Average interest earning assets Average balance sheet 101,083 98,568
Average gross yield % (annualised) 2.56% 2.57%
Gross yield - customer lending
2019 2018
Calculation Source 
Interest income on loans and advances to customers Note 4 2,261 2,249
Interest income on finance leases and hire purchase receivables Note 4 175 159
Exclude customer redress charges Note 4 10 12
Include impact of FV hedges of current accounts Average balance sheet 97 46
Exclude interest income related to UK portfolio divestments Non-core items (OFR) (20) -
Other - (2)
Underlying interest income on customer lending 2,523 2,464
Average customer lending assets Average balance sheet 77,652 76,184
Average gross yield on customer lending % (annualised) 3.25% 3.23%
Gross yield- liquid assets
2019 2018
Calculation Source 
Interest income on loans and advances to banks Note 4 31 28
Interest income on debt securities at amortised cost Note 4 9 12
Interest income on debt securities at FVOCI Note 4 30 46
Include negative interest on financial assets Note 5 (7) (12)
Other - (1)
Underlying interest income on liquid assets 63 73
Loans and advances to banks Average balance sheet 7,042 7,802
Debt securities at amortised cost and financial assets at FVOCI Average balance sheet 16,389 14,582
Average interest earning liquid assets 23,431 22,384
Average gross yield on liquid assets % (annualised) 0.27% 0.33%
Alternative performance measures (continued)
 22:01 Page 332
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Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Alternative performance measures (continued)
Net interest margin is stated on an underlying basis after adjusting for IFRS income classifications. See page 42 for further details.
Alternative performance measures (continued)
Statutory cost income ratio is calculated as other operating expenses and cost of restructuring divided by total operating income, net of
insurance claims.
2019 2018
Calculation Source 
Other operating expenses Income statement 2,006 1,941
Cost of restructuring programme Income statement 59 111
Costs 2,065 2,052
Operating income net of insurance claims Income statement 2,910 2,792
Total operating income 2,910 2,792
Statutory cost / income ratio % 71% 73%
Return on Tangible Equity is calculated as being profit attributable to ordinary shareholders less non-core items (net of tax) divided by
average shareholders’ equity less average intangible assets and goodwill.
Return on Tangible Equity (adjusted) is calculated by adjusting the RoTE to exclude other gains and other valuation items (net of tax)
and to adjust the impairment gain or loss on financial instruments (net of tax) to a more ‘normalised’ impairment level of impairment loss,
net of tax. The average shareholders tangible equity is adjusted to a maximum CET1 ratio of 13%, reflecting the Group target CET1
ratio.

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Alternative performance measures (continued)
Tangible Net Asset Value per share is calculated as shareholder equity less intangible assets and goodwill divided by the number of
ordinary shares in issue, adjusted for treasury shares held for the benefit of life assurance policyholders.
2019 2018
Calculation Source 
Shareholder equity Balance sheet 9,625 9,243
Less - Intangible assets Note 32 (802) (768)
Less - Goodwill Note 32 (36) (34)
Adjust for own shares held for the benefit of life assurance policyholders Balance sheet 30 25
Tangible net asset value 8,817 8,466
Number of ordinary shares in issue Note 48 1,079 1,079
Treasury shares held for the benefit of life assurance policyholders Note 48 (5) (3)
1,074 1,076
Tangible net asset value per share (cent) 821 787
Underlying cost income ratio is calculated on an underlying basis (excluding non-core items), as operating expenses excluding levies
and regulatory charges divided by operating income (net of insurance claims), excluding other gains and other valuation items.
2019 2018
Calculation Source 
Other operating expenses Income statement 2,006 1,941
Cost of restructuring programme Income statement 59 111
2,065 2,052
Exclude:
- cost of restructuring programme Non-core items (OFR) (59) (111)
- customer redress charges Non-core items (OFR) (64) 12
- UK portfolio divestments Non-core items (OFR) (40) -
- levies and regulatory charges Note 13 (117) (101)
Underlying costs 1,785 1,852
Operating income net of insurance claims Income statement 2,910 2,792
Exclude:
- customer redress charges Non-core items (OFR) 10 12
- UK portfolio divestments Non-core items (OFR) (51) -
- gross up of policyholder tax in the W&I business Non-core items (OFR) (35) 7
- investment return on treasury stock held for policyholders Non-core items (OFR) 2 (6)
- transfers from reserves on asset disposal Note 11 (3) (2)
- net gain on disposal and revaluation of investments Other income (OFR) (4) (6)
- gain on disposal and revaluation of investment properties Note 33 1 1
- financial instrument valuation adjustments (CVA, DVA, FVA) and other Other income (OFR) 37 9
- unit-linked investment variance - Wealth and Insurance Other income (OFR) (30) 27
- Interest rate movements - Wealth and Insurance Other income (OFR) (5) 20
Underlying income 2,832 2,854
Underlying cost / income ratio % 63% 65%
335
 22:01 Page 335
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Alternative performance measures (continued)
Underlying earnings per share is calculated as profit attributable to shareholders adjusted for non-core items, divided by the weighted
average number of ordinary shares in issue, adjusted for treasury shares held for the benefit of life assurance policyholders.
2019 2018
Calculation Source 
Profit attributable to shareholders Income statement 386 620
Non-core items, including tax 177 78
Underlying profit attributable to shareholders 563 698
Weighted average number of ordinary shares in issue Note 20 1,079 1,079
Treasury shares held for the benefit of life assurance policyholders Note 20 (4) (4)
1,075 1,075
Underlying earnings per share (cent) 52.4 64.8
‘Annual Premium Equivalent’ is a common metric used by
insurance companies. The approach taken by insurance
companies is to take 100% of regular premiums, being the annual
premiums received for a policy, and 10% of single premiums.
This assumes that an average life insurance policy lasts 10 years
and therefore taking 10% of single premiums annualises the
single lump sum payment received over the 10 year duration.
Business income is net other income after IFRS income
classifications before other gains and other valuation items. See
page 43 for further details.
‘Forborne collateral realisation’ loans Loans (primarily
residential mortgages) which meet both of the following criteria: (i)
not greater than 90 days past due; and (ii) forbearance is in place
and future reliance on the realisation of collateral is expected for
the repayment in full of the loan when such reliance was not
originally envisaged. Such loans are considered credit-impaired
and include Split Mortgages and certain ‘Interest Only’ / ‘Interest
Only plus’ arrangements.
Gross new lending volumes represent loans and advances to
customers drawn down during the period and portfolio
acquisitions.
Liquid assets are comprised of cash and balances at central
banks, loans and advances to banks, debt securities at amortised
cost, financial assets at FVOCI and certain financial assets at
FVTPL (excluding balances in Wealth and Insurance). See page
49 for further details.
Liquid asset spread is calculated as gross yield on interest
bearing liquid assets less the average cost of funds. See page
42 for further detail.
Loan asset spread is calculated as gross yield on loans and
advances to customers less the average cost of funds. See
page 42 for further detail.
‘Non-performing exposures’
These are:
(i) credit-impaired loans (which includes loans where the
borrower is considered unlikely to pay in full without recourse
by the Group to actions such as realising security, including
FCR cases, and loans where the borrower is greater than 90
days past due and the arrears amount is material; and); and
(ii) other / probationary loans that have yet to satisfy exit
criteria in line with EBA guidance to return to performing.
Organic capital generation consists of attributable profit and
movements in regulatory deductions, including the reduction in
DTAs deduction (DTAs that rely on future profitability) and
movements in the Expected Loss deduction.
PE ratio is calculated as NPEs on loans and advances to
customers as a percentage of the gross carrying value of loans
and advances to customers.
Return on assets is calculated as being statutory net profit
(being profit after tax) divided by total assets, in line with the
requirement in the EU (Capital Requirements) Regulations 2014.
Sustainable earnings is calculated as profit for the year
attributable to shareholders adjusted for non-core items, other
gains and other valuation items and impairment.
Underlying excludes non-core items which are those items that
the Group believes obscure the underlying performance trends in
the business. See page 46 for further information.
Wholesale funding is comprised of deposits by banks (including
collateral received) and debt securities in issue.
 22:01 Page 336

Other Information
Governance Risk Management Report Financial Statements
Strategic Report Financial Review
Abbreviations
AA Automobile Association
AGC Annual General Court
AGM Annual General Meeting
AIB Allied Irish Banks Group plc and subsidiaries
ALCO Group Asset and Liability Committee
AML Anti-Money Laundering
APE Annual Premium Equivalent
APIs Application Programming Interfaces
AT1 Additional tier 1
ATM Automated Teller Machine
AWOW Agile Ways of Working
Bank The Governor and Company of the Bank of Ireland
BCBS Basel Committee on Banking Supervision
BITCI Business In The Community Ireland
BoE Bank of England
BOIG plc Bank of Ireland Group plc
BoIGM Bank of Ireland Global Markets
BoIMB Bank of Ireland Mortgage Bank
bps Basis points
BRC Board Risk Committee
BRRD Bank Recovery and Resolution Directive
BSA Balance Sheet Assessment
BSPF Bank of Ireland Staff Pensions Fund
BTL Buy to let
CBI Central Bank of Ireland
CCB Capital Conservation Buffer
CCyB Countercyclical capital buffer
CDEAs Cleared Derivatives Execution Agreements
CDS Credit default swap
CEO Chief Executive Officer
CET1 Common equity tier 1
CFO Chief Financial Officer
CGU Cash generating units
CPI Consumer Price Index
CRD Capital Requirements Directive (EU)
CRMF Conduct Risk Management Framework
CRO Chief Risk Officer
CRR Capital Requirements Regulation
CRT Credit Risk Transfer
CSAs Credit Support Annexes
CSO Central Statistics Office
CVA Credit Valuation Adjustment
DAC Designated Activity Company
DCF Discounted Cash Flow
DGS Deposit Guarantee Scheme
DIRT Deposit Interest Retention Tax
DRP Director’s Remuneration Policy
DTA Deferred tax asset
DVA Debit Valuation Adjustment
EAD Exposure at Default
EBA European Banking Authority
EC European Commission
ECB European Central Bank
ECL Expected credit losses
EDIS European Deposit Insurance Scheme
EGM Extraordinary General Meeting
EIOPA European Insurance and Occupational Pensions
Authority
ELG Eligible Liabilities Guarantee
ESMA European Securities and Markets Authority
EU European Union
EURIBOR Euro Inter Bank Offered Rate
FCA Financial Conduct Authority
FCC Financial Crime Compliance
FCR Forborne collateral realisation
FIRB Foundation Internal Rating Based
FLI Forward looking information
FPC Financial Policy Committee
FRES First Rate Exchange Services Limited
FRS Financial Reporting Standards
FSCS Financial Services Compensation Scheme
FVA Funding Valuation Adjustment
FVOCI Fair Value through Other Comprehensive Income
FVTPL Fair Value Through Profit or Loss
FX Foreign exchange
GAC Group Audit Committee
GB Great Britain
GCC Group Credit Committee
GCR Group Credit Review
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GEC Group Executive Committee
GIA Group Internal Audit
GN&GC Group Nomination and Governance Committee
GM&LR Group Market and Liquidity Risk
GORC Group Operational Risk Committee
GRC Group Remuneration Committee
GRCRC Group Regulatory and Conduct Risk Committee
GRPC Group Risk Policy Committee
GTOC Group Transformation Oversight Committee
HMRC HM Revenue & Customs
I&D Inclusion and Diversity
IAASA Irish Auditing Accounting Supervisory Authority
IAS International Accounting Standard
IASB International Accounting Standards Board
IBOR Inter Bank Offered Rate
IBR Incremental borrowing rate
ICAAP Internal Capital Adequacy Assessment Process
IFRIC International Financial Reporting Interpretation
Committee
IFRS International Financial Reporting Standard
ILAAP Internal Liquidity Adequacy Assessment Process
ILTR Index Long Term Repo
IMF International Monetary Fund
IPO Initial Public Offering
IRB Internal Rating Based
337
 22:01 Page 337
338

IRRBB Interest Rate Risk in the Banking Book
ISDA International Swaps and Derivative Association
ISIF Ireland Strategic Investment Fund
KMP Key management personnel
KPIs Key performance indicators
LCR Liquidity Coverage Ratio
LDI Liability Driven Investment
LDR Loan to deposit ratio
LGD Loss Given Default
LIBOR London Inter Bank Offered Rate
LTI Loan to income
LTV Loan to Value
MCEV Market Consistent Embedded Value
MFS Minimum Funding Standard
MLL Marshall Leasing Limited
MREL Minimum Requirement for own Funds and Eligible
Liabilities
MRT Material Risk Taker
NAMA National Asset Management Agency
NAMAID National Asset Management Agency
Investment DAC
NED Non-Executive Director
NETA National Enterprise Town Awards
NGO Non-governmental organisation
NGRB Group Nomination, Governance and Responsible
Business Committee
NI Northern Ireland
NIAC New Ireland Assurance Company plc
NIM Net interest margin
NPEs Non-performing exposures
NSFR Net Stable Funding Ratio
NTMA National Treasury Management Agency
OCI Other Comprehensive Income
ORSA Own Risk and Solvency Assessment
O-SII Other Systemically Important Institutions
OTC Over the Counter
P2G Pillar 2 Guidance
P2R Pillar 2 Requirement
PD Probability of Default
POCI Purchased or Originated Credit-impaired
financial asset
PRA Prudential Regulation Authority
PRC Portfolio Review Committee
RAROC Risk Adjusted Return on Capital
RCF Revolving Credit Facility
RCSA Risk and Control Self Assessment
RMC Risk Measurement Committee
RoI Republic of Ireland
RoTE Return on Tangible Equity
RoU Right of Use
RoW Rest of World
RPI Retail Price Index
RPPI Residential Property Price Index
RSB Responsible and Sustainable Business
RSBF Responsible and Sustainable Business Forum
RWAs Risk weighted assets
SCR Solvency Capital Requirement
SEAI Sustainable Energy Authority of Ireland
SID Senior Independent Director
SIP Stock Incentive Plan
SME Small and Medium Enterprise
SPE Special purpose entity
SREP Supervisory Review & Evaluation Process
SRB Single Resolution Board
SRF Single Resolution Fund
SRM Single Resolution Mechanism
SSM Single Supervisory Mechanism
S&P Standard and Poor's
TCFD Task Force for Climate-related Financial Disclosure
TFS Term Funding Scheme
TLTRO Targeted Longer Term Refinancing Operation
TSA The Standardised Approach
TtC Through-the-Cycle
UK United Kingdom
UN United Nations
US United States
VA Volatility Adjustment
VaR Value at Risk
VCU Vulnerable Customers Unit
ViF Value of in Force
VIU Value in Use
Abbreviations (continued)
 Where people
love to live
Cairn Homes plc
Annual Report 2019
We create places
& homes where
people love to live.
OUR VISION
Be the most trusted and safest
homebuilder in Ireland.
Trust is hard to win and easy to lose, so we do
everything in our power to earn both by consistently
living our values and treating our customers, staff
and partners with respect.
We value everyone who collaborates with us to
achieve our mission and consider their well-being
to be of paramount importance. Health and safety
is our number one priority and this is reflected in
our culture and practices.
We are confident that our integrity and hard work
are building a business that we can all be proud to
be a part of now and in the future.
 Read more about our strategy on pages 22 and 23.
Read more about our strategy on pages 22 and 23.
OUR MISSION
Building in great locations
to create places and homes
where people love to live.
Our mission is what guides us throughout the
homebuilding process; from initial site acquisitions to
our after-sales commitment we keep our customers at
the forefront of our thoughts and work hard to create
places where they will enjoy a great quality of life.
It’s this drive which allows us to consistently build
great homes, attractive and functional environments
and vibrant communities that people are proud to be a
part of and raise their families in. As our business grows,
we take immense pride in seeing our vision and efforts
translate into homes, neighbourhoods and communities
where people love to live.
OUR VALUES
Agile &
Innovative
We are creative and open
to new ideas, ready to
implement change when
required. We are prepared
and able to adapt to
changing market conditions
and customer requirements.
Honest &
Straight Talking
Maintaining an open and
transparent dialogue. Saying
what needs to be said and
not just what people want to
hear. Laying down the truth,
warts and all, means that
we can get to a better
solution faster.
Collaborative
Collaboration is at the
core of our homebuilding.
Projects involve hundreds
of people from varied
disciplines and professions
working together to achieve
a clear common goal – to
build great homes.
Commercially
Minded
Being sector aware.
Knowing the customer.
Seeking value and making
savings. As well as building
great and competitively
priced new homes we
are building sustainable
long-term value for our
shareholders.
Committed
& Engaged
We are all in. We’ll be there
to deliver on stakeholder
needs throughout their
journey with us, sharing
our knowledge, our insights
and our expertise to guide,
support and reassure.
1

Strategic Report
02 - 47
02 2019 Highlights
04 Investment Case
06 Chairman’s Statement
09 Chief Executive Officer’s Statement
14 Our Portfolio at a Glance
16 Business Model
18 Market Overview
22 Our Strategy
24 Strategy in Action
34 Risk Report
40 Financial Review
42 Corporate Social Responsibility
Corporate Governance
48 - 91
48 Board of Directors
50 Management Team
52 Site Management Team
54 Corporate Governance Report
61 Audit & Risk Committee Report
65 Nomination Committee Report
69 Remuneration Committee Report
89 Directors’ Report
Financial Statements
92 - 143
93 
Statement of Directors’ Responsibilities
in respect of the Annual Report and the
Financial Statements
94 
Independent Auditor’s Report
100 
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
101 Consolidated Statement
of Financial Position
102 
Consolidated Statement of
Changes in Equity
104 
Consolidated Statement of Cash Flows
105 
Notes to the Consolidated
Financial Statements
135 
Company Statement of
Financial Position
136 
Company Statement of
Changes in Equity
138 
Company Statement of Cash Flows
139 
Notes to the Company
Financial Statements
Additional Information
144
144 Company Information
2
2019 Highlights
A strengthening business
OPERATIONAL HIGHLIGHTS
A scaled
business
• Currently active on 16 sites –
c. 6,750 new homes.
• Depth of our talented and
experienced homebuilding team.
• 3,250 customers have chosen a
Cairn home with over 2,500 of
these customers already living
in their new home.
Continuing
to enhance
land value
• 6,874 units granted planning
since IPO, including 2,409 units
since September 2019.
• Total planning gains –
c. 3,500 units.
• Industry-leading 13 grants of
planning through the Strategic
Housing Development process.
Exceptional
landbank
• 17,000 units across 35 sites.
• 545 units average site size
on multi-phase, multi-year
developments.
• 79% of units acquired within
1 year of IPO.
• Average site costs: €32,000
for housing and €63,000 for
apartments.
Sustainability
agenda
• CSR transitioning to a sustainability agenda.
• People and Innovation.
• Engagement with increased focus
on people.
Competitively
priced starter
homes
• Over 1,800 new homes closed
and forward sold in 2019.
• Net Promoter Score 53.
• Strong sales rates – 3.33 units per active
housing sales outlet per week in 2019.
• €356,000 – starter home average selling
price (“ASP” incl. VAT) on 907 closed and
forward sold starter homes in 2019.
• House price inflation c. 1.0%.
Driving
operational
efficiencies
• Procurement advantage through
scale (€700m procured since IPO).
• Established subcontractor base
with c. 2,500 working full-time across
Cairn sites as at 2 March 2020.
• Innovation through off-site
manufacturing and standardisation
of houses.
• 2.5% build cost inflation.
Multifamily
privaterental
sector (“PRS”)
• 4 forward sold PRS transactions
(€243m revenue, incl. VAT).
• 1 completed PRS transaction
(€101m revenue, incl. VAT).
• 830 completed and forward
sold PRS units.
• 24% – Cairn’s share of 2019
new build PRS market (rank: 1).
Award winning
• Design and placemaking at:
1. Oak Park (Naas) – 2019 Excellence in
Planning Award (Irish Property Awards).
2. Six Hanover Quay – winner of the
Housing Project of the Year 2019
(Building & Architects Awards).
3

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
4
Investment Case
Why invest in
Cairn Homes
We are an established business with
a clear strategy and defined business
model, offering a range of new homes
across the price spectrum which appeal
to a deep buyer pool in all segments of
the market.
TRACK
RECORD
Strong progress delivered every
year since our IPO in 2015.
€900m invested in a c. 17,000
unit landbank.
Planning expertise – 6,874 units
granted planning permission
since IPO.
Active on 16 sites (6,750 new
homes).
3,250 customers have chosen
a Cairn home.
1,850 first time buyers have
bought one of our starter homes.
Significant cash generation –
€99.2m in 2019.
CAIRN
DIFFERENTIATORS
Largest landbank in Ireland –
12,000 housing sites and 5,000
apartment sites.
Competitively priced starter
homes – 907 closed and forward
sold starter homes in 2019 at an
ASP of €356,000 (incl. VAT).
Most credible counterparty
positioned to leverage PRS
opportunity – 830 completed
and forward sold PRS units
(24% share of 2019 new build
PRS market, ranked 1st).
Unit mix across the price spectrum
– 56% of our landbank units have
an ASP below €350,000 (incl. VAT).
Award winning developments.
A brand synonymous with quality.
MARKET
OPPORTUNITY
Ideally positioned within the
housing and apartment market.
8,600 units in our landbank
(excluding social housing) priced
between €250,000 and €350,000.
Active on 5 apartment sites (1,100
units) with 11 apartments sites
(c. 4,000 units at an average site
cost of €31,000) suitable for PRS.
21,241 new homes built in Ireland
in 2019 – demand c. 34,000.
Government plans to increase the
supply of social and affordable
housing.
5

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
SCALE AND PROCUREMENT
ADVANTAGES
Market leading efficiency as
the industry’s largest procurer
of labour and materials.
Plc platform of scale across low
density housing and high density
apartments.
€700m procured since IPO.
€288m procurement in 2019 with
build cost inflation at c. 2.5%.
Committed and loyal
subcontractor base – top 20
subcontractors account for 66%
of total procurement, averaging
€23m each and working across
an average of 8 sites each.
Off-site manufacturing,
standardisation and technology
driving further efficiencies.
HIGHLY EXPERIENCED
MANAGEMENT TEAM
Talented team of homebuilders
with national and international
experience and technical
expertise.
Organisational effectiveness
agenda which has built increased
capacity and capability to drive
business results.
Expanded the depth of our senior
management team in 2019 with
key appointments complementing
existing skillset.
Experienced construction and site
management teams supported by
central functions delivering award
winning developments.
Oak Park, Naas, Co. Kildare
6
Chairman’s Statement
“2019 was another year of strong
progress for our business where we
demonstrated our operational agility
in meeting market demand. Cairn is
Ireland’s leading homebuilder and
a brand synonymous with quality,
competitively priced new homes and
exceptional customer experience.”
John Reynolds
Chairman
We delivered on that target in 2019 closing
1,080 new homes and exceeding our IPO
expectations as to the scale our Company
could achieve.
Our strong performance in 2019,
with significant growth in revenue and
profitability, demonstrate the scale which
our business has reached. In addition to
top-line growth, we also continue to drive
strong free cash generation which underpins
a commitment to progressive capital
returns. More importantly, the Company
continues to make a very positive impact
and contribution within the communities
where we are building our new homes.
Strategy
The Company’s objective is to be the
leading Irish homebuilder by building in
great locations and creating places and
homes where people love to live. The
Company is strategically positioned within
both the low density housing and high
density apartment markets with a deep
buyer pool across the price spectrum.
We believe significant progress was made
during the year by the management in
developing, refining and implementing the
Company’s long-term strategy as agreed
by the Board, with a number of key strategic
decisions taken, including:
• Delivering on opportunities which exist
within the multifamily private rented
sector (“PRS”) with €345 million revenue
(incl. VAT) from one completed and
four forward sold (completing between
December 2019 and early 2021 on a
phased basis) transactions in city centre,
suburban and commuter belt locations.
The Company continues to see significant
demand from institutional capital due to
both the excellent location of our sites
and our demonstrable delivery capability:
• Enhancing and expanding our capabilities
through our people (broadened our
executive, senior management team and
board membership) and partnerships; and
• Delivering capacity improvements through
the use of technology, better processes
and strengthening our supply chain
through strategic initiatives.
The Company’s agile operating model
and our increased capability and capacity
will facilitate us to continue to operate our
business in a proactive manner and anticipate
market conditions as demonstrated by our
performance in 2019.
Social and Environmental Responsibility
As a Board, we are aware of our ESG
responsibilities and commitments. In our
short time as a listed company, we have
incorporated and embedded our four CSR
pillars – community, environment, people
and industry – into our culture and everyday
work. We are very mindful of climate change
and the impact which it is having on our
environment. We are a member of Business
in the Community Ireland, the leading
advisers on sustainability and CSR who are
part of the broader CSR Europe Company
and a partner of the World Business Council.
Our Company has signed up to the Low
Carbon Pledge and we have committed to
reducing our carbon emissions on our active
sites by 50% by 2030. We are using 2019
as our benchmark year to record our scope
1, 2 and 3 carbon emissions and plan our
future emission reductions. We recognise
the important role which our industry must
play in reducing carbon emissions and we
are committed to being at the forefront of
our industry’s response and actions.
Our CSR Agenda is transitioning to a
broader Sustainability Agenda and as a
Board and Company, we remain steadfast
in our commitment to ensuring we operate
a sustainable, innovative and forward-
thinking business.
Our People
The Board recognises its role in supporting
and overseeing the evolution of our culture.
Our people are the critical component
in the success which the Company has
delivered to date and into the future. One
of the Company’s strategic objectives is to
drive business performance through our
people strategy, through both our clearly
defined operating structures and our
broader corporate strategy. The Company
is committed to the ongoing development
of a strong culture through our values
and by extension how we work with each
other on a daily basis. This extends to
how we collaborate with our established
subcontractor and supplier base and other
sector professionals in delivering our high
quality, competitively priced new homes.
The Company was presented to the markets at our initial public
offering (“IPO”) in June 2015 as a new Irish homebuilder who
would build and sell c. 1,000 new homes annually.
7

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Currently, there are on average over 2,500
people working full-time across our active
sites and our business continues to make a
significant contribution to the broader Irish
economy. We estimate that our business
has contributed in excess of €350 million
to the Irish exchequer since our IPO. Our
focus on developing and expanding this
ongoing collaboration with our supply
chain is essential as we clearly identify
further opportunities for them to grow
their businesses and ensure our respective
long-term successes.
Our people and engagement plan seeks
to increase business performance through
building a skilled, engaged and connected
workforce, centred on three key pillars –
recruitment and reward, work environment
and development and growth. The jobs
market in Ireland has been extremely
competitive and we continue to attract
and retain the best talent to ensure that we
have the best team and trusted partners in
place to effectively deliver on our long-term
strategy. We focus on the development and
growth of our talent through continuous
professional development, structured
development planning and our reward
strategy to ensure we support career
development and provide ongoing
opportunities and challenges to our people.
2019 was another year of exceptional
progress for our business where we
demonstrated the agility of our operating
model and generated just under €100
million in free cash flow. This could not have
been delivered without the effort, energy
and professionalism of our management
team, ably led by Michael, and all of our
employees in what is a dynamic, demanding
and fast changing environment. On behalf
of the Board, I would like to extend our
appreciation to each of them for their
dedication, contribution and commitment
to the progress made during 2019.
Health and Safety
The Company is fully committed to the
highest standards of health and safety on
our sites. The health and safety of employees,
subcontractors, customers and the general
public is our number one priority. The
Company is fully committed to playing its part
in the national effort in limiting the spread of
the COVID-19 virus in line with Government,
Department of Health and Health Service
Executive guidelines. Additional stringent
measures have been implemented in
response to COVID-19 at our central support
office and on all active development sites,
while any new homes sale viewings are all
being held by private appointment only.
Increased construction activity levels
increase the risk of accidents on active sites
and the Company continually promotes the
importance of a safe working environment
and ensures the highest industry health
and safety standards are set. Each active
site has a dedicated health and safety
officer who is a core member of the site
team, ensuring that our health and safety
policies are implemented. Health and safety
is a standing agenda item at all Board
and Audit & Risk Committee meetings
and the Company retains an independent
external auditor to undertake a monthly
audit of health and safety practices and
management across all active sites.
Dividends and Capital Returns
The Company implemented a progressive
capital returns policy during 2019 aligned to
a commitment given to shareholders at IPO
that shareholder returns would be pursued
at the earliest opportunity.
The Company paid our inaugural interim
dividend of 2.5 cent per ordinary share in
October 2019 and announced a €25 million
share buyback programme on 12 September
2019. A further extension of this by
€35 million, increasing the size of the
share buyback programme to €60 million,
was announced on 16 January 2020.
It remains our expectation the Company
will generate significant excess cash over
the coming years and the medium term
commitment to a progressive capital returns
policy remains in place. However, in light
of the unprecedented circumstances and
considerable uncertainty, the Board has
taken the decision to withdraw its intention
to propose a final 2019 dividend of 2.75c
per share. In addition, the Company is
also suspending its current share buyback
programme, of which approximately €47
million of the €60 million programme has
been completed to date.
The situation will remain constantly under
review by the Board as we get a better
understanding of the impact which the
current environment will have on our
business.
Governance & Oversight
In July 2018, the Financial Reporting Council
published a revised 2018 UK Corporate
Governance Code (the “2018 Code”), which
came into effect for Cairn from 1 January
2019. As we move into 2020, the Board
is continuing to refine its governance
framework to reflect the requirements of
the 2018 Code and the evolution of market
best practices. As a Board, we view the
Financial Reporting Council’s efforts to
broaden the idea of corporate governance as
a positive step, and one which should benefit
the governance of companies by shifting
practice and reporting towards a principled
approach to corporate governance, rather
than one that can be viewed as an exercise
in compliance.
Certain of the revisions to the 2018 Code
have simply codified best practices in areas
where we as a Board feel the Company has
made significant progress, particularly in
relation to interaction with our stakeholders.
Throughout the Annual Report, we detail
the steps we have taken to enhance channels
of communication with all key stakeholders.
In order to augment alignment between
strategy and remuneration, both the annual
bonus and long-term incentive scheme now
include stakeholder measures, designed to
draw a sharp focus on the importance of
building lasting relationships with each key
stakeholder constituency.
Perhaps the most substantive change to
the governance regime for Irish and UK
companies under the new Code relates
to workforce engagement. As detailed on
page 54, we have taken a number of steps
to put in place meaningful engagement
mechanisms between the workforce and
the Board over the past year. In addition to
direct interaction with Board members and
senior management, we continue to place
a relentless focus on employee training
and development. Through the range
of programmes detailed on page 54, we
demonstrate our conviction that the success
of our business is inextricably linked to the
successful development of our people.
As noted in the 2018 Annual Report,
we appointed three new non-executive
Directors during 2019, being Linda Hickey,
Jayne McGivern and David O’Beirne. Led
by the Nomination Committee, the three
new Directors received rigorous training and
induction, to ensure each has a fundamental
understanding of the business’s governance,
operations and strategy. I am glad to report
that all three of the Directors have made
vigorous and insightful contributions to both
Board and Committee meetings already,
which has been recognised and appreciated
by the Board and management.
Having conducted a successful external
Board evaluation in 2018, an internal
evaluation was carried out during 2019.
The outcome of the evaluation was positive
and the action points emanating from
the process are set out in the Nomination
Committee Report on pages 65 to 68.
The successful onboarding of the Directors
was one particular positive result of
the evaluation and is testament to the
collaborative nature of the Board.
8
As leader of the Board, I am pleased at the
range and diversity of experience the Board
now possesses, ideally positioning us to
oversee and contribute to the evolution
of strategy.
Outlook
Looking back on 2019, I am proud of the
performance delivered and that in just
four years, we have created a homebuilder
of scale and a brand synonymous with
quality, competitively priced new homes
and exceptional customer experience. The
Company expected to continue to build on
our 2019 performance in the current year,
however the onset of COVID-19 means
we do not have clear visibility, at this time,
on its impact on our business in 2020. The
Company has a proven and experienced
management team who have moved at
Chairman’s Statement continued
pace to implement the near-term measures
required to protect our business, our
people and our customers. The Company
has a strong balance sheet and we have
undertaken a number of actions to
strengthen our liquidity position to
meet the challenges ahead.
With the strong location of our sites, the
talented team which we have assembled
and the agility of our operating model,
I am confident that the management team,
in conjunction with the Board, will navigate
this uncertain period and remain confident
in our prospects over the longer-term.
John Reynolds
Chairman
Architectural model of Griffith Woods
9

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Chief Executive Officer’s Statement
“In just over four years, 3,250
customers have chosen a Cairn
home reflecting the strong demand
for high-quality, competitively priced
new homes. ”
Michael Stanley
Co-Founder and Chief Executive Officer
The sites we are currently building on
around the Greater Dublin Area (“GDA”)
are capable of delivering over 6,750 new
homes. By using our low-cost landbank
across our 35 housing and apartment
sites as the foundation for a long-term
homebuilding business, we are maximising
the opportunities to capitalise on the
underlying potential which exists in the Irish
new homes residential property market.
As a homebuilder of scale, Cairn continues
to maximise efficiencies through our
organisational effectiveness agenda which
seeks to build increased capacity and
capability to drive business results and
returns in line with our strategic objectives,
in addition to supporting our business
into the long-term under all economic
conditions. 2019 was another year of
significant operational progress as we
continued to grow our capabilities and
enhance our capacity.
We have a clearly defined operating model
which brings together our enabling and
delivery functions based on efficient,
mature and collaborative processes which
are aligned to our people, structures
and governance framework. Cairn is also
committed to developing our strong culture
as a source of competitive advantage and
providing a challenging and rewarding
working environment for our team. This
focus has enabled us to achieve considerable
growth in revenue, profitability and cash
generation.
The Company’s approach to capital
allocation, through a timely and well
executed acquisition strategy in 2015 and
2016, a period representing a low point
in land values in the last 20 years, across
suburban and commuter belt low-density
housing sites (c. 12,000 units at an average
historic site cost of €32,000 per unit,
including c. 9,300 starter home units at
an average historic site cost of €23,000
per unit) and city centre, suburban and
commuter belt high-density apartment sites
(c. 5,000 units at an average historic site
cost of €63,000 per unit), and the successful
growth of our business resulted in Cairn
delivering 1,080 sales completions in 2019.
With our approach to sustainability and the
ongoing adoption of innovative, off-site
manufactured, construction methodologies,
the foundations are laid for Cairn to be the
leading homebuilder in Ireland into the
long-term.
We deliver new homes across the price
spectrum to a broad buyer pool, from our
starter homes which are priced at levels
where first time buyers can get access to
mortgages (at sales prices from €250,000)
to premium homes for up-sizers and down-
sizers and apartments for owner occupiers
and multifamily private rental sector (“PRS”)
institutional investors.
Cairn is well positioned to capitalise
on demand from first time buyers for
competitively priced starter homes. First
time buyers are our core market with over
50% (8,600 units) of our landbank priced
between €250,000 and €350,000 (incl. VAT).
Only 16% of all new homes in Ireland are
owned by people under the age of 39,
while this same cohort accounts for 58%
of all homes rented.
Multifamily PRS is now an established
asset class with transactions dominating
the Irish property investment market in
2019, accounting for 44% of all property
investment transactions. The Company
completed the sale of Six Hanover Quay
(120 apartments and two commercial
units) in June 2019 and contracted the
forward sale of The Quarter at Citywest
In just over four years, 3,250 customers have chosen a Cairn home reflecting the strong
demand for high-quality, competitively priced new homes. Despite the unprecedented
challenges that we are all dealing with today, from a business perspective we remain
very confident in our long-term prospects as Ireland’s leading homebuilder.
10
(282 apartments: €94 million, incl. VAT),
Shackleton Park and Gandon Park (229
residential units: €78.8 million, incl. VAT)
and Mariavilla (150 residential units: €53.5
million, incl. VAT) during H2 2019. In
securing over €345 million (incl. VAT) in
multifamily PRS completed and forward
sales to date, we have demonstrated
our agility and operational capability in
responding to a broadening buyer pool.
At the end of 2019, it was estimated that
c. €5 billion in domestic and international
institutional capital is seeking to invest
in well located, well designed and quality
built new homes with strong counterparties.
Demand from institutional investors for
multifamily PRS has spread to well-located
suburban and commuter belt locations and
our strong performance in 2019 highlights
the potential opportunities available to
Cairn across all of our sites in this asset
class over the coming years.
Our vision is to be the most trusted and
safest homebuilder in Ireland and our
strategy is to capitalise on the underlying
potential in the Irish residential property
market by building in great locations
and creating places and high quality
competitively priced homes where people
love to live. 2019 was another year of
excellent progress in executing this strategy.
While the near-term outlook is uncertain, we
are taking significant action to protect our
business and manage all factors within our
control during the current COVID-19 crisis.
CSR Transitioning to Sustainability
Climate change is undoubtedly one of the
biggest challenges facing the world today
and everyone at Cairn is committed to
ensuring we adopt a sustainable approach
to our business. Our CSR pillars embrace
community, environment, people and
industry. We are committed to building
homes and creating places that contribute
positively to society and improve the quality
of life of our customers. Cairn is focused on
delivering new homes in areas where there
is established infrastructure and multi-modal
transport links and reducing the continuing
urban sprawl of our capital city. The strong
locations of our land is evidenced by the
success of our planning to date where
local authorities and An Bord Pléanala
have granted us planning permission
for over 7,000 new homes.
For us, high quality and imaginative
placemaking strengthens the social fabric
of communities. We undertake and embed
important initiatives under each of our CSR
pillars in our everyday work, activities and
culture from community events at our new
developments, to our biodiversity policy
which underpins the quality and breadth
of our landscaping, to ongoing employee
engagement and sustainable innovation
and product sourcing from our supply
chain. In common with other sectors, we are
committed to reducing our carbon footprint
and will reduce our carbon emissions across
all of our developments by 50% by 2030.
We continually embed innovation into our
business, from off-site manufacturing which
yields programme gains and consistent
quality through to green walls which are
an environmentally friendly engineering
solution. We continually seek more efficient
and environmentally friendly ways to build
our new homes and have incorporated other
efficient modern methods of construction
into our delivery platform.
We are currently in the process of transitioning
from a CSR to a Sustainability Agenda. As part
of this, we are aligning our business practices
with the UN Sustainability Goals and will
embed sustainability even further into our
activities in the future. We will continue to
update you as we progress in this area.
Our Customers
Cairn delivered 1,080 closed sales in 2019
across 12 developments at an ASP of
€372,000 comprising 911 houses at an ASP
of €321,000 and 169 apartments at an ASP
of €648,000. This compares to 804 closed
sales across nine developments in 2018 at
an ASP of €366,000 comprising 612 houses
at an ASP of €323,000 and 192 apartments
at an ASP of €505,000. The Company
delivered 133 Part V homes across our
various sites to local authorities in 2019 at
an ASP of €224,000. The ASP in 2019 across
our starter home sites was €314,000. In
broadening our product mix and managing
our entry level price points, Cairn closed
more than 100 duplex unit sales across five
of our starter homes sites during 2019 at
an ASP of €267,000 (2018: 17 duplex unit
closed sales at an ASP of €274,000 on one
starter home site).
Starter homes are our core product offering
and our strategy is to focus on lowering
starter home scheme entry price points by
introducing a more diverse range of smaller
unit types and to price our starter homes to
sell at volume and at price points where first
time buyers can access mortgages. House
price inflation has averaged c. 1.0% across
our active sites in the last 12 months.
The Company continues to lead the delivery
of multifamily PRS in Ireland with four
transactions announced to date:
1. Completed the sale of 120 apartments at
Six Hanover Quay (Dublin 2) to Carysfort
Capital/Angelo Gordon in June 2019;
2. Contracted to sell 282 apartments at
The Quarter in Citywest (Dublin 24)
to Urbeo/Starwood Capital for €94
million (incl. VAT) with a phased delivery
commencing in late 2020;
3. Contracted to sell 150 apartments,
duplexes and houses at Mariavilla
(Maynooth) to Urbeo/Starwood Capital
for €53.5 million (incl. VAT) with a phased
delivery which commenced in December
2019; and
4. Contracted to sell 229 apartments,
duplexes and houses at Shackleton Park
and Gandon Park (Lucan) to Carysfort
Capital/Angelo Gordon for €78.8 million
(incl. VAT) with a phased delivery which
commenced in December 2019.
Cairn estimates that there were 18 new
build multifamily PRS transactions each with
a sales price in excess of €30 million which
contracted or completed in Ireland in 2019,
comprising c. 3,250 new units. With the
exception of the Mariavilla (Maynooth) sale,
all of these transactions were in Dublin. The
Company’s four transactions listed above
accounted for c. 24% of these units and
c. 20% of this market by value. As an equity-
led homebuilder of scale with well located
sites and a proven track record, Cairn will
continue to be an attractive counterparty
for multifamily PRS institutional investors.
Our customers have had to deal with the
uncertainty of the COVID-19 outbreak over
the last number of weeks and we have moved
over to more online interaction with them,
including virtual tours of our show homes.
At this point in time our customers who are
due to move into their new homes are very
anxious to complete and move in, whereas
new enquiries are at a much lower level.
Cairn’s 2020 year to date closed sales and
forward sales pipeline, as at 2 March, was
strong with a sales value of €266.1 million
(853 units), of which 152 units will close
in 2021. Nearly 85% of our forward sales
pipeline is contracted and the Company is
still fully operational, albeit with significantly
increased health and safety procedures on
all of our sites. We are focusing our efforts
on completing new homes which are due
to close in the near term and continue to
complete all forward sold multifamily PRS
units as planned. While we were very pleased
with our start to 2020, there has been a very
significant impact on all businesses in Ireland,
including Cairn’s, following the COVID-19
outbreak. It is currently very difficult to
predict how the Irish economy will perform
in 2020. We are taking significant actions to
protect our business during this period of
uncertainty to ensure we are well positioned,
both operationally and financially, to perform
once COVID-19 has passed. Further details
are set out at the end of this statement.
Chief Executive Officer’s Statement continued
11

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Production and Innovation
Cairn is currently active on 16 sites which
will deliver c. 6,750 new homes. Over 2,500
people work full-time across our active sites,
including direct employees, subcontractors
and other sector professionals. Cairn
commenced construction on three new
sites in 2019: a starter home housing site at
Edenbrook (Dublin 24) and apartment sites
at The Quarter in Citywest (Dublin 24) and
Griffith Woods (Dublin 9). In addition, the
construction of new phases commenced
at our Marianella (Rathgar), Mariavilla
(Maynooth) and Shackleton Park (Lucan)
sites. Two new sites have commenced in
the year to date at Graydon (Newcastle)
and Farrankelly (Delgany). The Company
completed the construction of our premium
apartment development at Six Hanover
Quay (Dublin 2), in addition to Phase 1 at
Shackleton Park (Lucan), Phase 1 at Elsmore
(Naas), Phase 2 at Churchfields (Ashbourne)
and Phase 2 at Glenheron (Greystones)
during 2019.
Our top 20 subcontractors account for
66% of the Company’s total €700 million
procurement since IPO (an average
of €23 million each), working across an
average of eight developments each.
The Company has an established and loyal
pool of subcontractor partners with whom
we collaborate across our large scale,
multi-phase, multi-year developments and
who benefit from the many advantages of
partnering with Cairn. The Company has
fixed price contracts in place across all of
our active construction sites – 86% of our
2020 and 60% of our 2021 construction
costs on these active sites are fixed.
The Company is focused on innovation
in continually seeking more efficient
and sustainable ways to build our new
homes. Off-site manufactured (“OSM”)
methodologies continue to evolve and
we have adopted more OSM into our
construction activities: all of our new
homes are now built using timber-frame
construction, we have introduced bathroom
pods across our recently commenced
apartment developments in addition to
other efficient and modern methods of
construction such as steel frame structures
and pre-cast construction elements. Our
experience of build cost inflation in the last
12 months is c. 2.5%.
Cairn’s 35 sites have an average size of c.
545 units, all in great locations with proven
demand. Some 98% of these units have
the benefit of full planning permission, are
residentially zoned or are within a Strategic
Development Zone (“SDZ”). Our internal
planning expertise and the ongoing success
which we have demonstrated in bringing
sites through planning provides a constant
conversion of sites into active development
sites.
Cairn continues to materially enhance
the value of existing sites through the
planning process and has delivered
c. 3,500 incremental units on our existing
sites which will be margin enhancing over
the coming years.
The Company’s site acquisition strategy
has evolved following the acquisition of our
landbank. Our focus remains on strategic
opportunities, including acquiring land
adjoining existing sites and exploring
further joint development opportunities.
Expenditure on site acquisitions amounted
to €11.5 million in 2019 (2018: €33.7 million),
including our second investment venture
development with NAMA, announced in
January 2019, when we acquired a 14.5
acre site adjoining our successful Parkside
development where we will build in excess
of 550 new homes. Cairn completed the
acquisition of an additional 97 acres of
development land within Clonburris SDZ,
as announced on 28 November 2019, for
€21 million post year-end in January 2020.
Six Hanover Quay, Dublin 2
12
Residential Property Market
Consumer sentiment improved in 2019
as the threat of a hard-Brexit receded
and while the current outlook for 2020
is uncertain, Cairn remains confident in
the medium to long-term outlook which
predicts annual demand for new homes in
Ireland of c. 34,000 units until 2040 (source:
CBI – Population Change and Housing
Demand in Ireland, December 2019). The
industry response to the housing crisis
remains constrained by a number of factors
with 21,241 new homes built nationally
in 2019, of which only 16,173 new homes
were built in multi-unit developments. In
the GDA, 11,646 new homes were built,
including 2,910 apartments and 932 one
off homes (source all: CSO New Dwelling
Completions Q4 2019). Cairn estimates the
long-term demand for new homes in the
GDA at c. 20,000 per annum.
Mortgage Market
The Irish mortgage market continued to
moderately expand in 2019 and the value
of mortgage drawdowns grew by 9.2% to
€9.5 billion (2018: €8.7 billion) and mortgage
approval values increased by 9.9% to €11.1
billion in the same period (2018: €10.1
billion) (source: BPFI Mortgage Approvals
December 2019 and BPFI Mortgage
Drawdowns Q4 2019).
First time buyers accounted for 51% of all
loan drawdowns in 2019, although only
7,063 first time buyer mortgages were
in respect of new homes (with 14,423
in relation to second-hand homes).
Cairn welcomed the arrival of two new
entrants to the owner occupier mortgage
market during 2019 and believes that
more competition will benefit mortgage
holders. Competition amongst mortgage
providers remains intense and more
attractive headline mortgage interest rates,
particularly fixed rates, are available.
The Central Bank of Ireland’s
macroprudential mortgage lending rules
mean that homebuilders in Ireland must
bring product to the market at price points
where the largest cohort of purchasers,
first time buyers, can access mortgages.
The broadest market for new homes is those
priced between €250,000 and €350,000
(incl. VAT) where average salaries can
more readily access mortgage finance.
Government Initiatives
The Government has implemented some
initiatives in response to the housing
crisis and the Company welcomed the
recent extension of two of the most
impactful measures, namely the SHD
fast-track planning process for residential
developments in excess of 100 units and
the first time buyer Help to Buy income tax
rebate scheme which were both extended
until 31 December 2021.
With 13 grants of planning, where we are
currently active on 9 of these sites, Cairn
accounts for 13.5% of all units granted
planning permission and 23% of all site
commencements under the SHD process
since its introduction in late 2017. The SHD
process has enabled the Company to scale
at a faster pace and facilitated the increase
in its number of new home sales in 2019 to
1,080 completions. Without this process, our
business would have been unable to scale
beyond our initial IPO target of 1,000 annual
new home completions. The Company’s
success in bringing our landbank through
this efficient planning process underpins
our confidence in delivering a significantly
higher number of new homes to the market
over the coming years.
The Help to Buy scheme acts as an
important counterbalance to the CBI’s
macroprudential mortgage lending rules in
allowing first time buyers access mortgages.
In Dublin, over 66% of all new homes sold
in 2019 were sold above Cairn’s starter
home ASP of €314,000 excluding VAT
(source: Property Price Register). Increasing
the supply of affordable starter homes in
locations close to areas of high employment
and key public transport links needs to
be proactively encouraged. In particular,
investment in key infrastructure projects,
as outlined in Project Ireland 2040, needs
to be accelerated to unlock the potential
for more housing delivery.
The exceptional shortage of affordable
housing was a key election issue and it is
expected that proposed solutions towards
addressing this shortage will be central in
any new Programme for Government.
In terms of a long-term solution, I believe
that any new Government formed will need
to significantly increase the supply of social
and affordable new homes in Ireland. Less
than 20% of 2019 new home supply was
built by main contractors and any increase
in supply in the near term will have to come
from the private homebuilding sector which
will play a critical role in partnering with
Government to address the housing crisis.
As Ireland’s largest homebuilder with a
proven track record, an operating platform
of scale and a strong, equity-led, balance
sheet, Cairn is ideally positioned to play a
leading role in assisting this delivery.
People
As I discussed above, our organisational
effectiveness agenda seeks to build
increased capacity and capability with
quality people with the right combination
of expertise and homebuilding experience,
across low-density housing and high-density
apartments, central to this agenda. We
continued to invest in our people throughout
2019 and increased our headcount from
155 direct employees at the end of 2018 to
195 direct employees at the end of 2019.
I was delighted to expand the depth and
talent of my senior management team
further since the start of 2019 with a
number of strong appointments including
Maura Winston (Chief People Officer
with responsibility for our people and
organisational effectiveness agenda),
Sarah Murray (Director of Customer with
responsibility for driving excellence across
the customer journey), Mike Grice (Group
Development Advisor with a focus on our
construction capability and driving delivery
across our high density developments)
and Kevin Cleary (Technical Director
ensuring our consistent approach to quality
placemaking and building communities
within existing communities as we continue
to scale). Fergus McMahon was also
promoted to Commercial Director and
he leads our commercial function with
responsibility for ensuring a commercial
and profitable platform for turning great
land into great places.
I would also like to extend a warm welcome
to Shane Doherty, our new Chief Financial
Officer and Executive Director, who joins
us in April 2020 to oversee the finance
and investor relations functions. Shane has
in-depth experience in senior financial and
business leadership roles across a range of
sectors and I look forward to working closely
with him as we continue to develop and
grow the business in the years ahead.
We have a highly experienced and committed
team of people to deliver our mission of
building in great locations to create places
and homes where people love to live.
Chief Executive Officer’s Statement continued
13

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
I echo my Chairman’s sentiments in
thanking each of my colleagues for their
dedication, contribution and commitment
to our business in 2019, while I would
also like to thank our established and
loyal subcontractor base and the other
property sector professionals with whom
we collaborate in delivering our high quality,
competitively priced new homes.
Outlook & COVID-19
It is difficult for me at this stage to provide
a definitive outlook for the business in these
uncertain times. 2020 started positively for
our business as the strong momentum from
our exceptional sales performance in 2019
continued into the early months.
However, our initial outlook for 2020 has
been impacted by the evolving social and
economic repercussions of the COVID-19
outbreak. There are a range of issues
which we are actively working through and
have implemented a number of actions
to manage the near-term impact on the
business and the safety of our people
and customers, including:
• On-Site Construction – it is likely we may
experience delays in our construction
programmes and the completion of
our new homes could be affected
by the impact of COVID-19. We have
implemented a range of extensive health
and safety measures and resources across
all sites including increased sanitation of
welfare facilities, preventing unnecessary
site visits from non-essential personnel,
minimising shared areas of work and
cross-trade interactions, managing
deliveries with strict protocols along
with several other measures which
have been communicated to all staff,
subcontractors and suppliers. We are in
regular communication with our supply
chain to closely monitor resource and
material constraints arising from COVID-19
that could impact programmes of work in
place. These measures have been taken
to ensure the risk to subcontractors and
employees working on our sites from
COVID-19 is reduced.
• Sales Completions – during the period
in which the COVID-19 outbreak persists,
we expect engagement from prospective
customers to reduce. We will continue
our marketing activities to the extent that
we can and facilitate both new homes
sales and completions whilst respecting
Government and Health Service Executive
guidelines and policies. All new homes
viewings are being held by private
appointment only with all show courts
and show homes set up to reduce the risk
of infection with hand sanitisers, wash
facilities etc. All sales material is being
issued by email only.
• Operational Integrity – we have
implemented a business continuity plan
to ensure critical Company operations
continue during the period of the
outbreak. We are operating with reduced
staff presence across business functions
at our Central Support Office supported
by colleagues working remotely with full
IT access and capability.
While we are actively managing all of the
operating factors within our control, we have
also undertaken a detailed assessment of
the potential financial impact of COVID-19
on the Company’s financial performance.
The context of the assessment is that the
outbreak of COVID-19 is an event which is
both unprecedented and unpredictable
for our Company. The Company entered
this uncertain period with a strong, liquid
balance sheet and sustainable, lowly
leveraged debt facilities and we have
implemented a number of additional
measures to protect our business from any
downside risks which may arise, including:
• Fully drawing our €200 million revolving
credit facility;
• Prioritising construction programmes
on sites where forward sales will be
delivered;
• Implementing additional health and
safety measures as discussed above;
• Undertaking liquidity stress test scenario
exercises;
• Withdrawing our intention to propose
a final 2019 dividend and suspending
our share buyback programme; and
• Establishing a “COVID-19 Team”
comprising key senior management
to maintain business continuity.
At this time, it is unclear how long this
period of uncertainty will continue for or the
depth of the impact COVID-19 will have on
the Irish economy. We are implementing
all of the necessary short-term measures
to protect and bolster the medium and
long-term prospects of our business for
all stakeholders.
Michael Stanley
Co-Founder & Chief Executive Officer
High capacity public
transport routes
Coastal commuter train
Rapid city train red line
Rapid city train green line
Commuter rail
Active
Future
14
We develop more than houses, we collaborate
with all stakeholders to develop thriving
neighbourhoods and communities, in great
locations where people love to live.
Our Portfolio at a Glance

For a full list of our current
and future developments visit
Business Model
A high level representation of how we organise our business in
an efficient and agile manner to effectively deliver and execute
our strategy.
Inputs Creating value
OUR PEOPLE
Our building teams take pride in delivering
quality. Their training and experience, from
apprentices to engineers to site foremen,
surveyors and site managers, ensures that
best-in-class standards are maintained.
OUR LANDBANK
With c. 17,000 landbank units, a significant
number of new homes will be delivered to the
Irish new homes market into the long-term from
a defined and established operating model
supported by a strong and robust balance sheet.
OUR SUPPLY CHAIN
Maintaining and creating long term
relationships with subcontractors and
suppliers. Maximising supply chain
innovation to ensure best in class
standards are delivered.
OUR DESIGN
Our approach to innovation and
standardisation across our construction
activities, integrating off-site manufactured
methodologies and responding to market
needs.
OUR CUSTOMERS
We engage with our customers to ensure that
the new homes we design and build meet their
every need. We understand that buying a new
home is one of the biggest decisions each of our
customers will make in their life and this frames
our approach to customer experience.
LAND
c. 17,000 units
owned, 79%
acquired within one
year of IPO.
Agility of 35
core sites.
Unit mix across the
price spectrum.
Average site size
c. 545 units.
Amortise fixed
preliminary costs
over longer term
construction
programmes.
Acquisitions
targeted on land
adjoining existing
sites and joint
ventures.
PEOPLE
High calibre,
talented team
enabled to innovate
and produce market
leading homes.
Support functions
and site management
teams fully resourced.
Focus on developing
our diverse talent
pool and building
careers.
Clearly defined
operating model
which brings
together our
enabling and
delivery functions.
Ongoing
engagement.
Developing a strong
culture as a source
of competitive
advantage.
PLANNING
& DESIGN
Landbank has
no material
planning risk.
Placemaking and
design driven
by creating
communities.
Collaborative
process across our
entire business.
6,874 units granted
planning permission
since IPO, including
2,409 units since
September 2019.
c. 3,500 incremental
units granted
planning permission
or expected to be
gained on existing
sites through
increased densities.
Understanding
our market and
customer needs
and designing
homes accordingly.
17

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Outputs
THE HOMES
WE BUILD
Standardised
starter home and
apartment product
across multiple sites
using innovative
OSM methods.
Developer-
Contractor – site
management teams
supported by central
support functions.
Manage strong,
established
and growing
subcontractor
and supplier
relationships.
Strategic
procurement
and supply chain
initiatives with fixed
price framework
agreements with
major suppliers.
Large scale sites drive
construction cost
economies of scale.
Energy efficient
homes with high
energy ratings
moving to A2
ratings in 2020 with
adoption of NZEB.
CUSTOMER
EXPERIENCE
Connect with
customers when
they start the
journey of buying
a new home.
Mapped the
customer experience
to deliver a
supportive, engaged
and collaborative
home buying process.
Investment in
customer service
operations with
dedicated sales and
after-sales customer
care teams providing
full support during
and after buying our
new homes.
Fully integrated
Customer
Relationship
Management system
streamlined across
sales and customer
legal management
process.
Provide information,
advice and support
during every step
of the home-buying
journey.
Customers
1,080 new homes sold in 2019
Net Promoter Score 53.
Employees
We attract and retain the
best talent. We engage with
and motivate our employees.
We reward performance. We
provide meaningful and positive
working environments and
focus on individual employee
development and growth.
Supply chain
Our supply chain is our most
important asset. We engage in
ongoing collaboration with our
subcontractors and suppliers
to ensure everyone’s long-
term success
Shareholders
Committed to a policy of
progressive capital returns
and distributing the Company’s
surplus capital from free cash
generation to shareholders over
the long-term.
Communities
We create sustainable, vibrant
communities centred around
well designed and high quality
landscaped environments.
1,800
Closed and forward sales in 2019.
€435.3m
Revenue increased by 29%
from €337.0m in 2018.
€85.3m
Gross profit increased by
23% from €69.1m in 2018.
€68.0m
Operating profit grew by
28% from €53.2m in 2018.
6.5 cent
Earnings per share
(2018: 4.0 cent).
DELIVERING VALUE FOR STAKEHOLDERS
18
Market Overview
Market Opportunity
The supply of new homes in the Irish
market remains constrained with demand
still significantly above current supply.
This supply/demand imbalance is more
profound than at the time of our IPO.
The fundamentals of the Irish new homes
market, and in particular in the Greater
Dublin Area (“GDA”), will remain positive for
a scaled homebuilder like Cairn delivering
new homes across the price spectrum.
An Outperforming Economy
2019 was another year of expansion for the
Irish economy with GDP growth of 5.5% and
strengthening consumer spending growth
of 3.3%.
Strong Demographics
• Population Growth: +1.3% (+64,500) in
the year to April 2019 (3x EU average).
• Irish population will exceed 5m in 2021
(2006 population: 4.24m).
Strong demographics driven by:
• Highest birth rate in the EU (13.5 births
for every 1,000 of population in 2017);
• One of the highest household formation
sizes in the EU at 2.8x (average 2.3x); and
• Strong inward migration (+33,700 in year
to April 2019).
Irish Population by Age Category
Ireland has one of the youngest populations
in the EU with 33.3% of our population under
the age of 25 (6.8% above EU average)
and nearly 22% of our population are
aged between 25 and 39.
Youngest population
in the EU
This 25 to 39 year old cohort of the
population account for 58% of all houses
rented in Ireland, and only 16% of all houses
owned. It is this cohort of the population
which is stuck in a rental trap because the
supply of new, affordable and well located
homes remains constrained.
Continuing Housing Undersupply
The Central Bank of Ireland estimate
national demand at 34,000 new homes per
annum until 2040. Within this, we estimate
GDA demand at 20,000 units. There were
21,241 new homes built in Ireland in 2019
which equates to 62.5% of demand.
MARKET IN 2019
FASTEST GROWING
ECONOMY IN THE EU

Average annual GDP growth since 2012.
Ireland has been the fastest growing
economy in the EU for each of the
last 6 years.
DEMOGRAPHICS
Population growth since our IPO continues
to broaden our addressable market.
UNDERSUPPLY OF NEW HOMES
21,241
Supply in 2019 versus demand of 34,000
(CBI).
Total national under-supply since our
IPO is 93,876 based on annual demand
of 34,000 new homes.
With a long-term historically low-cost landbank containing the best housing and apartment
sites in the best locations, a talented and experienced team with increased capacity and
capability, a defined operating model and an established track record, Cairn is uniquely
positioned to meet Ireland’s continuing need for well designed, quality built and well
located new houses and apartments.
Maximising opportunities
and broadening demand
19

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT

Excluding one-off houses, the number of
apartment and multi-unit development
homes delivered in the GDA was 10,714,
half the level of demand.
Commencement statistics indicate that
the construction of 14,440 new homes
commenced in the year to September 2019
(+23.8% year-on-year) in the GDA, including
4,418 apartment units (+ 100% year-on-
year). The increase in the construction
of apartments is welcomed, however a
worrying trend is starting to emerge on
multi-development houses with Dublin
commencements down 8.7% year-on-year.
This supply of multi-development new
homes in Dublin is unlikely to improve with
planning granted in the same period for
only 1,321 new multi-development homes,
a fall of 65% year-on-year.
With a significant percentage of new
apartment commencements forward sold
to multifamily PRS institutional investors and
a reduction in the number of new homes
being granted planning and commencing
in multi-development units, we believe
that this will result in further urban sprawl
as more and more first time buyers will be
forced into the commuter belt to acquire
their first home.
Increasing supply in the Irish homebuilding
industry is being constrained by the inability
of Irish homebuilders to scale at pace, with
constraints including, but not limited to:
• Sourcing equity;
• High bank funding costs;
• High land costs;
• Building on smaller sites;
• Small subcontractor bases;
• Not operating at scale;
• Inability to price new homes
competitively; and
• Low margin returns.
The outbreak of COVID-19 is an
unprecedented event for the Irish economy.
It is unclear how long this period of
uncertainty will continue for or the depth
of its impact on the economy. Cairn has
implemented a number of short-term
measures to protect the medium and long-
term prospects of the business to ensure it
can continue to play a leading role in housing
delivery in Ireland.
Exceptional Growth in Multifamily PRS Investment in 2019
• 44% of all real estate investment (2018: 31%; 2017: 17%).
• PRS Investment increased by €1.436bn (+154%).
• Cairn analysis indicated 18 new build PRS transactions,
incorporating 3,272 units, completed or sale agreed valued
at €1.6bn.
• Market data suggests current residential yields of 3.75%
and rental inflation 4.1%.
5
Active apartment
sites (1,100 units).
€345m
PRS sales (incl. VAT) agreed.
Ongoing engagement on
other developments.
11
Apartment sites suitable
for PRS.
Investment Amount Dublin Prime Yield
24%
Cairn share of 2019 new
build PRS market – rank #1.
THE MULTIFAMILY PRS MARKET
c. 4,000
Units at an average site
cost of €31k.
€419k
Cairn PRS ASP
(rest of market – €510k).
20
BUYER PROFILE
First Time Buyer
(from €275,000): 51%
Trade Up/Mover
(up to €600,000): 20%
Premium
(from €600,000): 19%
Social: OUR LANDBANK AND ADDRESSABLE MARKET
BUYER PROFILE & DEEP BUYER POOL
Traditional
buyer pool...
is now
broader
€64,000 TO €77,000 €77,000 TO €90,000 €90,000 TO €103,000 €103,000 TO €116,000
SINGLE OR JOINT INCOME
REQUIRED FOR 90% LTV MORTGAGE
• First Time Buyers.
• Up-Sizers.
• Down-Sizers.
• Young Professionals.
• Individual Investors.
• Local Authorities.
• Long-term Institutional
Investors.
• The Government.
• Affordable Housing
Bodies.
56% 70% 79% 84% 100%
31%
Cumulative % of our landbank* addressing these price points
* Analysis excludes c. 1,700 social and Part V units.
90%
Of our First Time Buyers
are couples or families.
16%
Of all houses in Ireland owned
by people aged < 39.
Market Overview continued
21

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
CAIRN 3 BED STARTER HOME
PRIVATE SALES IN 2019
€360,000
Average selling price (including VAT) in 2019
on 216 three bed new home completions
across our four starter home developments
in Dublin:
• Shackleton Park (Lucan);
• Gandon Park (Lucan);
• Edenbrook (Dublin 24); and
• Parkside (Dublin 13).
FTB MONTHLY MORTGAGE COST
Purchase price €360,000
Mortgage –
90% LTV
€324,000
Mortgage
interest rate
2.30%
Monthly Mortgage
Repayment
(30 year C&I)
€1,279
MONTHLY RENTAL COST
Lucan €1,801
Lucan €1,801
Dublin 24 €1,834
Dublin 13 €2,000
Average €1,859
OWNING VERSUS RENTING
€580
Cheaper to own (€1,279) than
rent (€1,859) a Cairn starter
home in Dublin (per month).
45%
More expensive to rent than
own a Cairn starter home in
Dublin (per month).
58%
Of all houses rented in
Ireland are by people
aged under 39.
Churchfields, Ashbourne, Co. Meath
22
1 CUSTOMERS
Ensure we deliver an optimal
customer experience and
gain the trust of all Cairn
homeowners.
2 HOMES
Designing and building high
quality, well located, energy
efficient homes that people
will love living in now and
into the future.
3 PLACES
Creating places for
communities to prosper.
4 PEOPLE
We attract and retain
the best people and
trusted partners.
5 OPERATIONAL
EXCELLENCE
Create a commercial
and profitable operating
platform to turn land into
great places to live.
Our Strategy
The Group’s strategy is to establish itself over the long-term as a leading Irish homebuilder,
constructing high quality and competitively priced new homes. Read more about Our Strategy
in Action on pages 24 to 33.
WHAT WE DID IN 2019
OUR STRATEGIC PRIORITIES
In growing our output volume by 34% to
1,080 units, delivered new homes of the highest
quality to the market. Delivered a broader
product range with two-bedroom duplex units
sold across six housing sites. Continued to
enhance and adapt the Cairn design to evolving
trends including the installation of more EV
charging points in our new homes. More off-site
manufacturing (“OSM”) – standardisation of
starter homes improved through timber frame
construction across all starter homes sites and
introduced bathroom pods, SFS framing and
pre-cast construction elements to apartment
developments. Unlocked the potential of
a number of sites with the delivery of key
offsite infrastructure.
Moved an additional 1,080 new customers into
their new home. Over 3,250 customers have
now chosen a Cairn home with over 2,500 of
these customers already living in their new
homes. This has created an opportunity to
obtain increased levels of robust customer
feedback which we continue to use to inform
design and product decisions and to further
enhance the customer journey. We increased
our customer communications to include
practical homeowner guides and development
updates; and we arranged and facilitated an
array of inclusive events such as barbecues,
Christmas parties and children’s entertainment,
helping to strengthen relationships in these
growing new communities.
Delivered 1,080 new homes across 12
developments. Established 17.3 acres of
green spaces and public realm planted
6,248 trees, actively incorporating
biodiversity measures. Delivered 133
social houses and launched our community
development programme for c. 3,100 new
residents. Invested €20m across public
infrastructure projects – 18km of roads
and bridges and 6 serviced school sites
(c. 3,000 pupils). Incorporated communal
EV power supply vehicular/car charging
points connections across all sites.
Refined our operating model for increased
impact and efficiency. Recruitment
strategically focused on building strong
leadership capability. Baselined employee
engagement levels with an eNPS (starting
point to understanding employee loyalty)
score of 28. Designed a communications
plan to drive programs that are key to team
engagement. Introduced the “Cairn Culture
Committee” driven by frontline employee
representation. Progressed our CSR strategy
and Sustainability Agenda. Continued
to grow and scale the organisation and
supported on ecosystem of 2,500 working
full-time across our active sites.
Secured access to key resources and personnel
by expanding our direct team in addition
to growing our subcontractor base with 68
new subcontractor and supplier relationships
created. Leveraged €288m procurement and
buying power as a hedge against build cost
inflation. Secured planning consent for 1,830
new homes. Commenced delivery of 3 new
high density projects in which standardisation
of method of construction and finished product
was a key focus to add to our already highly
standardised low density product range.
Continued to deliver key infrastructure with
key distributor roads, services and a bridge
built and opened to the public to improve
and enhance local environments.
23

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
WHAT WE’LL DO IN 2020 KEY PERFORMANCE INDICATORS
Focus on exceptional customer service.
Quality improvements monitored by
continuous customer feedback, beyond
NPS. Increased systems reporting
capabilities. Quantify aftercare reporting
out to 2 years post home ownership.
Report on community building initiatives.
Review homeowners feedback and
incorporate into design of future
developments. Measure community
engagement programme impact, utilising
findings in concept design and planning.
Attrition below targets. Succession
planning in place for all key roles.
Deployment of Leadership Development
Program to full management team.
Management Information dashboards
across all functions. Improved eNPS
score. Deliver Communications Calendar.
Focus on supply chain innovation and
performance measurement to uphold
best in class standards to maximise
efficiency of delivery through close and
supportive relationships. Monitor and
mitigate against upward cost pressure.
Retain the agility to maximise project
margins and programme delivery.
Maintain our best in class quality
standards for new homes delivered.
Ongoing focus on innovation and
sustainability of new homes built.
Adoption of NZEB standards. Deliver
greater construction programme and
cost efficiencies.
We have expanded our Sales & Marketing
team to include a dedicated Customer team,
including experienced customer aftercare and
site maintenance operators, focused on results
delivered with exceptional customer service.
This new platform will help create a more
holistic approach to the customer experience
ensuring the pre-sale and marketing promise
meets the reality of life in a Cairn home. This
will facilitate further integration of our design
and product selections and greatly assist with
the evolution of future products. We are also
continuing to increase our customer focused
communications by investing in additional IT
infrastructure to allow greater customisation of
customer preferences, both pre and post-sale.
Continue to enhance the standard of new
homes that we build through our in-house
pre-construction design development
processes. Create further efficiencies
during our construction process by
ensuring fit for purpose designs which
meet the demands of our broadening
buyer pool and deployment of innovative
building systems and methodologies.
Improve energy efficiency in our new
homes by adopting NZEB standards.
Enhance the quality and timelines of
construction. Focus on cost effectiveness
and supply chain efficiencies.
Continue to deliver major infrastructure
and public realm for the benefit of new
and existing communities. Roll out our
biodiversity strategy and target planting
of 6 trees per new home built. Deliver
new serviced sites for schools. Expand
our community initiatives with regular
events for each community. Bring more
sites through the planning process with
applications focused on placemaking
and design.
Drive enhanced business performance
through our organisational effectiveness
agenda and best practice processes.
Cascade new organisation structure
alignment through all functions. Further
embed the new leadership capability.
Enhance and grow our learning and
development capability and embedding
innovation and continuous learning. Focus
on succession planning, ensuring linkage
through reward delivery, and our employee
engagement model. Implement new
remuneration policy and ensure effective
reward and retention of critical talent.
Improving delivery efficiency even further
is a key objective. Develop our project
execution planning from the design
outset to ensure that constraints and
opportunities are identified and actioned
as early as possible in the project plan.
Strategic procurement initiatives to
support project planning targeted at the
areas with most potential benefit including
improving the quality and breadth of our
supply chain and maintain below market
build cost inflation. Continued roll out
of new NZEB compliant homes with a
particular focus on the most efficient
space and water heating solutions.
 Read more on page 24.
 Read more on page 26.
 Read more on page 28.
 Read more on page 30.
 Read more on page 32.
24
Strategy in Action
Delivering an
exceptional
customer experience
Our work on the Cairn customer journey in
2018 revealed that our customer’s values
are closely aligned with ours. Our customer
is informed, design savvy and they value
honesty and straight talking. They put their
trust in us and in 2019 they told us that we
delivered on our promise. Our personal
approach to managing the sales process
was highly rated and we were conscious to
ensure this customer focus, which is at the
heart of Cairn, continued as we grew.
Our customers love attention to detail.
Aesthetics are important, but functionality
is key. They want homes that work for their
lifestyle and customer care that works for
their busy lives.
Our customer cares about, not just their
home, but their neighbours, neighbourhood
and their growing communities. Every time
we consider a new initiative – a collaboration
with Street Feast or a book clinic with
Children’s Books Ireland, our customers
embraced these events and participated
with enthusiasm. They proved that the
ownership of place matters and our work
to create attractive, well-designed shared
spaces is extremely well received.
Our customers increasingly refer their
friends and family to our new homes
showing trust in Cairn and making
us proud of what we do.
Making the home buying journey exceptionally positive
for all of our customers and ensuring that they love
where they live.
53
Net Promoter Score
1 CUSTOMERS
Our 2,000th Customers
25

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
The Cairn Difference
Our commitment to listening to our customers
and placing them and their needs at the heart
of our decisions is reflected in positive customer
feedback and an impressive Net Promoter Score
of 53, considered excellent in any sector.
Each customer is provided with a Cairn sales
consultant to make the buying process as
straightforward and seamless as possible. We
are attentive to our customers’ needs throughout
the customer journey which manifests in every
touchpoint, from children’s entertainment at new
development launches to providing clear and
timely information when a customer needs it.
It’s all about putting ourselves in our customers
shoes and pre-empting their needs.
Our focus is on building cohesive communities.
It all starts in the shared spaces between the
houses where neighbours can meet each other
and create a sense of place and community. Street
feasts, children’s book clinics, festive get-togethers
– just some of the ways we try to foster warm and
friendly community ties.
We are there beyond the closing of our new homes
with a dedicated Customer Care Team to manage
the Cairn customer guarantee which extends to
12 months post sale closure. We understand the
importance of the little things and are there when
the customer needs us.
26
Strategy in Action continued
The Cairn
Difference
Competitively priced starter homes
at prices where first time buyers can
access mortgage finance.
Broad product range from duplex
units for first time buyers to premium
penthouse apartments for private
purchasers.
Most credible counterparty positioned
to leverage PRS opportunity.
Innovation and sustainability of
our A3 rated new homes which will
transition to A2 ratings in 2020 with
the adoption of NZEB.
Mariavilla, Maynooth, Co. Kildare
27

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
2 HOMES
Good housing is at the core of
quality of life. Sustainable new
homes that are designed around
how we live today, and can adapt
to how we will live tomorrow.
We place our customers at the
heart of every design choice
we make, because when good
design informs the practicalities
of everyday living, everything
is better.
Our new homes need to be able to adapt to
the ever-changing needs of our customers
who live in them. For example, the way you
use storage today may not be how you use it
tomorrow – just ask any parent! Bearing this in
mind we place a strong emphasis on designing
spaces that are versatile and adaptable.
Each space has a role to play and a story to tell.
The kitchen has always been the heart of the
Irish home, the place where the family comes
together for meals and where guests are
entertained. Sitting rooms where you can relax
and unwind, bedrooms that are a personal
space, as pleasant to fall asleep in as they are
to awaken in.
Our homes also feature innovative technology
like demand control ventilation to maintain
healthy filtered air, photovoltaic panels to
provide you with a cheap and sustainable
source of hot water, “A” rated energy efficient
homes that can cost as little as €2 per day to
run and state of the art insulation and build
materials. From 2020, all of our new homes
will adopt the Nearly Zero Energy Building
standard (“NZEB”) where the low amount of
energy required for a new home should be
covered to a very significant extent by energy
from renewable sources. This standard will
be achieved by the installation of air to
heat water pumps in all of our new homes.
A Cairn development is a guarantee for
future generations, where your choice will
stand the test of time.
Designandbuildhigh
qualitynewhomes
“Energy efficient homes that
cost less than €2 per day for
heating, hot water, lighting
and ventilation.”
* 
€2 is based on standardised occupancy as per the Sustainable Energy
Association of Ireland (“SEAI”) guidelines.
A3
Energy rating of all
of our new homes
New homes built
1,400
across 12 sites in 2019.
New homes
1,800
completed and forward sold in 2019.
Broadening product range
5
starter home developments
where we sold duplex units.
Three bedroom starter homes
43%
of 2019 sales completions.
New site commencements
in 2019
4
Sustainability and innovation
See page 33 for further details of
innovation in our new homes.
28
Strategy in Action continued
Creating places
for communities
to prosper
In delivering 1,080 new homes across
12 developments in 2019, we focused on
ensuring vibrant, prosperous places for
communities to live.
Some of our highlights in 2019 include:
• Contributed over €20m towards public
realm and infrastructure projects;
• Built 17.3 acres of green spaces and
public realm;
• Opened an award winning 8 acre park
at Oak Park, Naas. Winner of the 2019
Excellence in Planning Award;
• Constructed 18km of public roads and
bridges including one major road bridge
in Mariavilla, Maynooth, and 4 new
pedestrian bridges;
• Planted over 6,248 trees equating to
5.8 per new home closed;
• Created 6 new playgrounds;
• Incorporated biodiversity planting and
measures across our communities;
• Certified Pollinator Friendly Business by
the National Biodiversity Data Centre;
• Commissioned and delivered public
artwork at Churchfields, Ashbourne
and Parkside, Malahide Road;
• Commended in the Business 2
Arts Awards 2019 for “Eyes for You”
in Parkside;
• Delivered public greenways at
Parkside and Oak Park;
• Incorporated EV car/vehicular charging
points into all developments;
• Launched car sharing facilities across
all apartment developments;
• Established 6 serviced sites for new
schools with a potential capacity for
c. 3,000 pupils across primary and
secondary level; and
• Partnered with major retail operators
and commenced the delivery of
neighbourhood shops and local services.
We have focused on developing new
typologies which respond to changing
housing need and tenures.
We have switched to timber frame housing
construction enabling greater consistency
of quality control, reducing the carbon
footprint of our developments and enabling
greater certainty of programme delivery.
5.8
Trees planted for every new home
Quality homes in great locations lay the foundations for
strong communities. Smart planning and design have
the power to transform sites into vibrant living places,
encouraging new places where people and communities
can prosper. Our focus is to integrate our communities
into the fabric of existing towns and villages.
3 PLACES
29

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
The Cairn
Difference
Our focus on placemaking sets us
apart. Considered shared spaces,
playgrounds and parks give our
developments a real sense of place
and enhance the quality of life for
everybody who lives there. This was
recognised by our industry peers
in 2019 with the awards won at our
Oak Park and Six Hanover Quay
developments.
€125m
Contributed and committed to public
realm and infrastructure to date.
34
Acres of green space, planting and
landscaping across our developments
to date.
13
Playgrounds and play areas provided
across all of our developments.
12,000
Trees planted to date across our
developments.
Oak Park, Naas, Co. Kildare
Winner 2019 Excellence in Planning Award
(Irish Property Awards)
30
Strategy in Action continued
People and
innovation
People and innovation are at the heart of
our culture and success. From planning
through design, construction and aftersales,
we prioritise joined up thinking across
great teams to deliver brilliant homes
to our customers.
People come first….
Our “secret sauce” is the capability of our
talent and our unique culture. Attracting,
developing and retaining excellent and
diverse talent is critical to our performance
as a business.
For us, people come first. To achieve
our vision of being the most trusted and
respected homebuilder in Ireland, we
need the best people that will help us
to earn that trust. We offer an engaging
and collaborative work environment that
encourages growth and supports career
development. This is reflected in our
impressive engagement scores and will
be further underpinned by our broader
“well-being” strategy and investment in
employee development.
We have a business where people are
satisfied and rewarded for their work and
are enabled and encouraged to perform
to their best.
The depth and capability of our leadership
team has continued to scale in line with
our business, driven by a continued focus
on developing best in class delivery and
support functions and hiring above our
weight.
We work closely with our subcontractor
partners, who are a source of competitive
advantage as a key part of our ecosystem
to deliver great homes. We leverage our
platform to grow their business in line with
ours. Our aim is to remain their “partner of
choice” and this will drive the engagement
strategies that we will implement in future
years ensuring our extended workforce of
subcontractors and third parties are aligned
with what we are about “building in great
locations to create places where people
love to live”.
Key to our growth and scaling is retaining top talent
and enabling them to innovate and to produce market
leading homes.
31

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
195
Direct employees.
2,500
Working full-time
across Cairn sites.
28%
Decrease in reportable
safety incidents in 2019.
28
eNPS score.
292
Individual subcontractors
on Cairn sites in 2019.
The Cairn Difference
Our teams are aligned around a fully
integrated operating model and a culture
of innovation underpins the work that we do.
This is our differentiator and is supported by
our best practice processes, structures and
our progressive systems to ensure reliable,
scalable and sustainable results.
Our values are clear and live in our day to
day decisions ensuring we remain focused
on driving value creation.
TECHNICAL COMMERCIAL CONSTRUCTION CUSTOMER AFTER SALES
Developing our landbank
into innovatively
designed places where
people want to live.
Leveraging strategic
partnerships and
innovative supply chain
solutions to drive value.
Building well crafted,
energy efficient new
homes and establishing
vibrant communities.
Ensuring the customer
is at the centre of every
decision we make.
Supporting the customer
through every stage of
the journey and beyond.
WAYS OF WORKING
Value Creation Systems & Processes Culture & Values Cross-Functional Alignment
Strategic Planning
Financial Forecasting
& Controls
Organisational
Effectiveness
People &
Management
Corporate
Reputation &
Investor Relations
Market Intelligence
Strategy & Steering Activities
Enabling Activities Delivery Activities
• Brilliant product design.
• Differentiated placemaking.
• Innovative procurement.
• Risk managed product.
• High quality homes.
• Captive supply chain.
• Strong financial returns.
• Reliable delivery vs plan.
• Great stakeholder relationships.
• Differentiated, trusted brand.
• Strong sales and revenue.
• Great customer experience.
• Excellent product positioning.
We have worked hard to embed an operating model and organisation effectiveness agenda that produces long-term differentiated performance.
32
Strategy in Action continued
5 OPERATIONAL EXCELLENCE
Maximising
operationalefficiency
The Cairn Difference
Our approach to sustainability and innovation
is integral to the delivery of our new houses
and apartments and we are constantly
introducing more efficient, environmentally
friendly and cost-effective methods of
construction:
• Precast super structural elements yield
programme gains and consistent quality.
• Timber frames are the most economical
and efficient method of construction.
• Bathroom pods are manufactured off-site
and delivered ready to fit into place.
• SFS inner leaf makes the building
watertight at the earliest possible
date, allowing internal finishes to be
progressed fast.
• Transitioning to Building Information
Modelling technologies for current and
future high density projects.
• Schoeck Isokorb connectors reduces the
number of trades needed to construct
a balcony.
• Designing toward Nearly Zero Energy
Buildings (“NZEB”) and A2 levels of
energy efficient sustainable new homes.
• Sustainable Urban Drainage Systems are
an approach to rainwater management
and antiflooding technologies.
• Green Walls are an environmentally
friendly engineering solution with high
aesthetic value and biodiversity gains.
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
33

Cairn continues to implement and deliver more efficiencies in the
planning and delivery of our new homes as the business expands.
There are a number of ways in which we achieve this, including
continually improving project planning from the earliest stage, ensuring
our supply chain is a key contributor to our closely integrated delivery
model and ensuring that our highest standards are maintained across
every single new home which we build. Continual and collaborative
monitoring of both our supply chain performance and broader project
delivery performance provides us with the platform to ensure we
optimise our scale, resources, people and operating model.
We have witnessed build cost inflation of
c. 2.5% in the last 12 months with labour
resources continuing to be the inflationary
driver. We work closely with our supply chain
in communicating our development pipeline
which enables our subcontractors and suppliers
to apply perspective to the importance of
business continuity in our supply chain. This
ensures our supply chain can be competitive,
but also profitable and encouraged to invest in
their own businesses. This approach enables us
to manage build cost inflation in a sensible and
disciplined manner.
Our programme of engaging in both direct and
indirect procurement continues with a strong
focus on collaborative efficiency – we work with
our supply chain and design teams to realise
real savings on input costs. We continue to
enter multi-project group procurement deals,
including fixed term and term arrangements.
These group arrangements are supported
by improving performance measurement
and category knowledge. We collaborate on
innovative ways in which to deliver our new
homes. Off-site manufacturing methods of
construction are evolving and we continue to
explore the potential for other forms of off-site
construction methods and review these in the
context of future project perspectives.
Given the scale of our procurement, the
renewal and renegotiation of supplier
agreements are undertaken reflective of the
size of our business and our buying power.
Enhanced standardisation in our high density
projects is facilitating cost savings across our
supply chain.
2.5%
Build cost inflation
in the last 12 months
Risk remediation planning
RISK MANAGEMENT PROCESS
The Group presents its risk
management process and
Viability Statement in line with
the UK Corporate Governance
Code provisions.
The Group maintains a comprehensive risk
register which records identified risks across
the areas of financial, regulatory compliance,
operations including IT and strategy. The
register also includes external risks which
the Board continue to monitor on an
ongoing basis.
The risk register is a key risk management
tool used to identify, assess, mitigate,
monitor and report the key risks facing
the Group. Cairn has adopted a 5 x 5 risk
scoring methodology focusing on both the
likelihood of each risk occurring and the
impact should the risk materialise. Each
risk is assessed initially from an inherent
risk perspective. The controls in place to
mitigate each risk are then considered
and captured on the risk register, which
informs the residual risk rating. Where
control gaps or weaknesses are identified,
the Group seeks to address these through
the development of remediation plans and
further appropriate controls.
The Board engages Deloitte to review the
Group’s risk register at least annually, which
includes a workshop with senior management
to review and challenge the existing risks and
to identify any potential new or emerging
risks to be added to the register. The risk
register helps inform the Group in identifying
the Principal Risks and Uncertainties for
inclusion in the annual report. The risk register
is considered, discussed and challenged at
regular meetings with senior management,
the Audit & Risk Committee and the Board.
The Principal Risks and Uncertainties consist
of the highest risks as documented on the risk
register while also considering those risks that
could have the greatest impact on achieving
the Group’s strategic objectives from a top-
down perspective.
The most significant emerging risk is the
ongoing outbreak of COVID-19. The Group is
monitoring the situation carefully as it evolves
to understand the potential impact on our
people and our business. The Company has
implemented a number of actions to manage
the near-term impact on our people and
business as outlined on page 35. Above all,
we will maintain our commitment to the health
and safety of our employees, subcontractors
and customers by putting people first.
Risk Report
Going Concern
The Group’s activities, strategy and
performance are explained in the Chief
Executive Officer’s Statement on pages 9
to 13 and the Financial Review on pages 40
and 41 of this report. Having assessed the
relevant business risks, the Directors have
a reasonable expectation that the Group
has adequate resources to continue in
operational existence for the foreseeable
future. The Directors have therefore
continued to adopt the going concern
basis in preparing the financial statements.
Viability Statement
In accordance with the UK Corporate
Governance Code Provision 31, the
Directors have assessed the prospects
of the business and its ability to meet its
liabilities as they fall due over the medium
term. The Directors have concluded that
three years is an appropriate period for
assessment as this constitutes the Group’s
rolling strategic planning horizon.
The Group has developed a financial
model as part of our three-year plan,
which is updated at least annually and is
regularly tested and assessed by the Board.
Progress against the three-year plan is
regularly reviewed by the Board through
presentations from senior management
on the performance of the business.
The Group’s Principal Risks and
Uncertainties aggregate the risks identified,
as well as the mitigation plans implemented
as part of this process, and they include the
risks that may have short-term impacts as
well as those which may threaten the long-
term viability of the Group. The Directors
have made a robust assessment of the
potential impact that these risks would
have on the Group’s business model,
future performance, solvency and liquidity.
The three-year plan has been tested for
a range of scenarios which assess the
potential impact of severe but plausible risks
to the long-term viability of the Group in the
COVID-19 context. These scenarios included
the stress testing of the Group’s business
model assuming that a combination of
events resulted in a substantial reduction
in sales, similar to a severe recession, with
a deterioration in employment levels and
consumer confidence, coupled with a
collapse in bank risk appetite, leading to a
material reduction in credit availability. In
undertaking the stress testing, the Directors
assumed a rapid change in circumstances
over a relatively short period of time. In
assessing these severe downside scenarios,
it was assumed that there was a sudden
decline in demand leading to materially
reduced sales volumes and sales prices,
increased cost for materials and labour
and increased finance costs, followed by a
gradual recovery. The Directors assumed
they would make the most appropriate
decisions regarding such matters as the
following to ensure that the overall financial
risk was minimised through this cycle:
- suspending capital returns to shareholders;
- disposing of non-core sites;
- 
deferring certain planned site
commencements;
- short term rental of unsold new units; and
- implementing cost cutting initiatives.
Having reviewed the three-year plan and
considered the above stress testing, the
Directors confirm that they have a reasonable
expectation that the Group will continue to
operate and meet its liabilities as they fall due
over the aforementioned three-year period.
In reaching the above assessments on
going concern and our viability statement,
the Board has considered the impact
of COVID-19 as outlined on page 35.
Inevitably, there will be an adverse impact
on the business although the extent is not
yet clear. In response to this unprecedented
scenario, the Company has implemented a
number of near-term measures to protect
the business from the potential downside
risk of COVID-19, as outlined on page 35.
The Board’s conclusion is that we have
implemented the necessary short term
measures which we believe will protect and
bolster our business and, as of the date of
the report, the Board does not expect any
reasonably anticipated COVID-19 outcomes
to impact the Group’s long-term viability or
ability to continue as a going concern.
35

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
The principal operating risks and our approach to mitigating those risks are set out in more detail below.
RISK AREA RISK DESCRIPTION MITIGATION RISK TREND
PANDEMIC RISK
– COVID-19
The Group is exposed
to the impact of the
recent outbreak of
COVID-19 and the risks
to the supply of raw
materials, the inability
to attract buyers and
the interruption to
operations due to an
absence of a significant
number of colleagues
and subcontractors
for a period due to
contracting the virus or
due to measures taken
to contain the outbreak.
The Group recognises
the wider risk of a
potential fall in revenue
and profitability due
to lower general
economic activity.
The Group has policies and procedures designed to ensure the health
and safety of our employees and to deal with major incidents, including an
emergency response plan. The Group is continuously reviewing its business
continuity planning in anticipation of wider outbreaks of the virus and
Government guidance on expected levels of absence.
The Group is actively working through a range of issues and have implemented
a number of actions to manage the near-term impact on the business and
safety of our people and customers, including:
On-Site Construction: it is likely we may experience delays in our construction
programmes and the completion of our new homes could be affected by the
impact of COVID-19. We have implemented a range of extensive health and
safety measures and resources across all sites including increased sanitation of
welfare facilities, preventing site visits from non-essential personnel, minimising
shared areas of work and cross-trade interactions, managing deliveries
with strict protocols along with several other measures which have been
communicated to all staff, subcontractors and suppliers. We are in regular
communication with our supply chain to closely monitor resource and material
constraints arising from COVID-19 that could impact programmes of work in
place. These measures have been taken to ensure the risk to subcontractors
and employees working on our sites from COVID-19 is reduced.
Sales Completions: during the period in which the COVID-19 outbreak
persists, we expect engagement from prospective customers to reduce.
We will continue our marketing activities to the extent that we can and facilitate
both new homes sales and completions whilst respecting Government and
Health Service Executive guidelines and policies. All new homes viewings are
being held by private appointment only with all show courts and show homes
set up to reduce the risk of infection with hand sanitisers, wash facilities etc.
All sales material is being issued by email only.
Operational Integrity: we have implemented a business continuity plan
to ensure critical Company operations continue during the period of the
outbreak. We are operating with reduced staff presence across business
functions at our Central Support Office supported by colleagues working
remotely with full IT access and capability. Additionally, we have established
a COVID-19 Response Team to ensure that colleagues are supported and
protected in this changing environment.
While we actively manage all the operating factors within our control, we have also
undertaken a detailed assessment of the potential financial impact of COVID-19
on the Company’s financial performance. The context of the assessment is
that the outbreak of COVID-19 is an event which is both unprecedented and
unpredictable for our Company. The Company entered this uncertain period with
a strong, liquid balance sheet and sustainable, lowly leveraged debt facilities and
we have implemented a number of additional measures to protect our business
from any downside risks which may arise, including:
• fully drawing our €200 million revolving credit facility;
• prioritising construction programmes on sites where forward sales
will be delivered;
• implementing additional health and safety measures as discussed above;
• undertaking liquidity stress test scenario exercises;
• withdrawing our intention to propose a final 2019 dividend and suspending
our share buyback programme; and
• establishing a COVID-19 Response Team comprising key senior
management to maintain business continuity.
At this time, it is unclear how long this period of uncertainty will continue for
or the depth of the impact COVID-19 will have. The Board will continue to
monitor these mitigation strategies and adjust as necessary in light of evolving
COVID-19 developments over the coming weeks.
New risk
Risk trend
Risk increased
Risk decreased
Risk unchanged
36
Risk Report continued
RISK AREA RISK DESCRIPTION MITIGATION RISK TREND
ECONOMIC
CONDITIONS
The Group is sensitive
to the performance
of the broader Irish
economy (an open
economy whose
performance is linked
to that of the global
economy), changes
in interest rates,
employment and
general consumer
confidence. Changes
in economic conditions
are likely to impact
on house prices and
sales rates.
Cairn’s Board and management team closely monitor economic data
for indications of weakness or change in the economy.
Internal systems are in place to track the margin impact of reductions
in sales prices and increased construction costs.
Regular site appraisal reviews are undertaken to address any risk
of impairment.
A dedicated COVID-19 response team has been established to assess
and manage impacts of near-term challenges on the business.
The economic
outlook for 2020
is uncertain and
this presents
increased risk
to the Group.
MORTGAGE
AVAILABILITY &
AFFORDABILITY
The availability of
mortgage finance,
particularly the
deposit and income
requirements set by the
Central Bank of Ireland
on mortgage lending, is
fundamental to support
customer demand.
The Group monitors mortgage availability, including any impact from
regulations on mortgage lending and interest rates on an ongoing basis
and it is a regular item for discussion at Board meetings.
The Group also monitors approval and drawdown volumes of first time buyers,
in order to quantify the impact of the Central Bank of Ireland Loan to Value and
Loan to Income ratios and the Government Help to Buy tax rebate scheme,
as this results in more immediately realisable mortgage demand.
Changes or potential changes to rules or regulations are considered by the
Group, in conjunction with industry experts.
A dedicated COVID-19 response team has been established to assess and
manage impacts of near-term challenges on the business.
Availability of
mortgage finance
is regularly
reviewed, both
internally and in
conjunction with
industry experts.
The current
COVID-19 crisis
means there
is potentially
increased risk
this year.
HEALTH &
SAFETY
Health and Safety
breaches can
result in injuries to
Cairn employees,
subcontractors,
customers and the
general public on Cairn
sites, and/or result in
delays in construction
or increased costs in
addition to reputational
damage and potential
litigation. The risk of
an escalation in the
spread of COVID-19
resulting in an increased
health and safety risk
to subcontractors and
employees working on
our sites.
The Health and Safety department operates independently of the construction
division and reports directly to senior management in order to maintain
independence. Health and Safety is also a standing item on the Audit & Risk
Committee and Board agendas.
Reportable and non-reportable incidents are measured across sites and
reported to management and the Board on a regular basis.
A strong health and safety culture exists across the organisation with the
Company participating annually in the CIF “Health & Safety Week” and all
active sites being subject to the Group’s “Safe-T Cert” scheme, a formal
certification scheme designed for certifying the Safety Management Systems
of contractors working in the construction industry.
With regard to COVID-19, communications have been sent to all colleagues
advising them on the steps they should take to maintain safe working
environments in the workplace and in the event that they show symptoms
of the virus. The Group will continue to monitor guidance from Government
and will communicate with colleagues on a regular basis as appropriate.
Specifically, the Group has implemented a range of additional health and
safety measures and resources across all sites including increased sanitation
of welfare facilities, the removal of non-essential personnel from site offices,
minimising shared areas of work and cross-trade interactions, providing
additional personal protective equipment along with several other measures
which have been communicated to all staff, subcontractors and suppliers.
Cairn continues
to achieve high
standards in the
area of Health
and Safety
and strives to
make ongoing
improvements.
The current
COVID-19 crisis
means there
is potentially
increased Health
and Safety risk
this year.
37

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
RISK AREA RISK DESCRIPTION MITIGATION RISK TREND
AVAILABILITY AND
STRENGTH OF
SUBCONTRACTORS
The risk, due to Cairn’s
outsourced business model, that
the Group is unable to engage
the appropriate quantity and
quality of subcontractors, which
are critical to the construction
and delivery of new homes
and the potential disruption
to subcontractor availability
caused by the potential impact
of COVID-19.
Supply and subcontractor agreements are fixed for a
significant portion of each active site, in order to ensure
that supply is guaranteed.
Given the size of the Group’s landbank and its position
in the marketplace, it is a very attractive customer for
subcontractors.
Management have many years of experience in the
industry and strong relationships with and knowledge
of key subcontractors.
The Group ensures payments are made on time to
subcontractors in order to maximise their liquidity
as they scale their operations.
A panel of approved subcontractors is in place and
circulated on all relevant tenders.
Weekly procurement meetings ensure greater visibility of
subcontractor dependencies and availability across trades.
Regular communications with the supply chain on the
measures in place to minimise disruption to normal
operations arising from COVID-19.
Subcontractor
relationships and
capacity are closely
monitored by the
business on an
ongoing basis.
Ongoing
communications with
the supply chain to
identify and address
resource constraints
arising from COVID-19.
BREXIT Brexit related risks which could
be detrimental to the Group
as it may impact consumer
confidence, procurement and
sourcing of materials, house
prices and sales rates.
The Group continues to monitor the potential impacts
of Brexit.
Close monitoring of economic data for indications of
weakness or change in the economy reviewed at Board
and management level.
Continuous evaluation of procurement approach, source
of construction materials and exposure to international
markets.
Strong Irish supplier base (> 90%) with limited exposure to
UK materials. Majority of labour and materials are sourced
domestically.
More political certainty
in the United Kingdom
providing greater
visibility over potential
outcomes.
SUCCESSION
PLANNING
A risk that the loss of key staff will
result in a loss of key corporate
knowledge and consequential
impact on operations.
“9 box” succession planning methodology in place,
in order to identify succession gaps and actions to
close any gaps identified.
Performance management process ensures annual
goal-setting and structured performance feedback
with mid-year and year-end staff ratings.
Ensuring that remuneration policy is robust enough to
meet market demands. Succession planning actions will
be directly linked to compensation outcomes to ensure
reward and retention of best talent.
The Group continues to
place a strong emphasis
on succession planning.
Risk trend
Risk increased
Risk decreased
Risk unchanged
38
RISK AREA RISK DESCRIPTION MITIGATION RISK TREND
RECRUITMENT AND
RETENTION OF KEY
PERSONNEL
The risk that Cairn does not have
a sufficiently robust HR strategy
in place in order to ensure the
Group’s recruitment policy/
plans are delivered and that
key employees are retained.
The Group’s ambitious growth plans and
plc status make it an attractive place of
employment for high calibre employees.
The Group ensures that it has a
remuneration policy in place that is
competitive in the market-place to
retain key employees.
Quarterly performance and personal
development reviews in place to ensure
that Group strategy and goals are
communicated to key employees and
to provide regular feedback to ensure
they remain motivated.
The Group employs talent acquisition
recruitment specialists to ensure ongoing
recruitment of high quality employees.
The Group continues to strengthen its
organisation structure and has low levels
of employee turnover.
FINANCIAL
CONTROLS
FRAMEWORK
The risk or failure to adhere to
agreed policies, procedures
and processes due to a lack
of financial controls, leading to
potential financial misstatement,
fraudulent behaviour or a
potential financial loss to
the Group.
Financial controls and policies in place in
order to manage risks across the key areas.
Regular commercial review meetings and
associated processes ensure robustness
of margin reporting.
Central support office personnel with direct
site operational knowledge in place in
order to monitor site activity and site costs.
An outsourced internal audit function
tests the internal control framework and
suggests improvements where required.
These improvements are presented to the
Audit & Risk Committee and are reviewed
periodically to assess implementation.
The design, implementation and
monitoring of the Group’s financial
controls continue to receive significant
investment and focus.
LIQUIDITY
MANAGEMENT
The risk that the Group does
not maintain sufficient liquidity
headroom to ensure that it can
always meet its working capital
requirements as they fall due.
Risk that slower than expected
sales impact on the Group’s
liquidity position.
The risk that failure to comply
with the Group’s banking
covenants results in the
withdrawal of funding lines.
The Group aims to ensure that it always has
sufficient liquidity in place to meet its cash
flow requirements for the next 3 years.
The Group prepares regular forecasts
which look at both its short-term and
longer-term requirements.
Regular monitoring, forecasting and
reporting of banking covenants.
Speed of construction delivery on sites
takes account of sales absorption rates
across each site.
An unforeseen stretch in liquidity can
be managed through a reduction in the
pace of construction on one or more sites
if necessary.
The Group has implemented a number
of measures to protect our business
in response to the recent outbreak
of COVID-19 including:
• fully drawing our €200 million
revolving credit facility;
• undertaking liquidity stress test
scenarios; and
• not committing further funds to
our share buyback programme and
not paying a final 2019 dividend.
The Group has taken significant steps to
protect the business against what is an
increased risk in the near-term.
Risk Report continued
Risk Report continued
39

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
RISK AREA RISK DESCRIPTION MITIGATION RISK TREND
GOVERNMENT
POLICY
Inability to respond to changes
in a complex and stringent
regulatory environment that
applies to the housing industry.
Risk that the Government,
housing agencies and local
authorities introduce new
legislation or make other
changes that impact the Group.
The Group monitors all policy changes
and its experienced team is well placed
to recognise and respond to any changes.
The Group also uses external advisors who
monitor and advise on any likely changes to
relevant legislation.
Participation in housing industry advocacy
groups.
The changes to the planning regime
and the establishment of the Strategic
Housing Development planning process
(involving a one step process with An Bord
Pleanála for all sites delivering greater than
100 residential units), have ensured the
timeframe to obtain planning permission
on large sites has reduced.
The Group continues to achieve a high
level of success with regard to planning
applications and remains able to comply
with planning regulations.
PROGRAMME
RISK/PROJECT
PLANNING
The risk that the Group incurs
costs which are higher than
expected or experiences delays
in construction due to project
planning, other operational
issues or the potential disruption
caused by the spread of
COVID-19.
Robust project plans and controls are
in place.
In-house design team actively engaged
in all pre-planning and pre-construction
activities.
Monthly reporting of all project costs,
with variances and explanations
highlighted in monthly reports and
discussed at monthly on-site meetings
attended by site management teams and
senior management. The construction
programme is linked clearly to the sales
programme, with regular analysis by site
comparing sales status with forecast
completion dates.
Regular communications with the
supply chain to closely monitor resource
constraints arising from COVID-19 that may
impact the programme of works in place.
Initial planning and ongoing monitoring
of programme execution is a key
business process for the Group.
Ongoing communications with the
supply chain to identify and address
programme risk arising from COVID-19.
QUALITY AND
AVAILABILITY
OF MATERIALS
The risk of the inability to contain
the spread of COVID-19 with
resulting unexpected supply
chain disruptions and the risk
that the Group is unable to
source the materials it requires
at the right time and at the best
price, due to availability and
volume constraints, or risk that
suppliers provide materials that
do not meet our high standards
and expectations.
The Group’s scale ensures it has access
to high quality materials at competitive
prices.
Framework agreements in place with
key suppliers providing certainty over
quality, standards, supply, and pricing.
Stringent quality specifications are
prescribed and monitored through
a dedicated quality manager and
on site engineers, supported by
on site testing and assessments.
Off site manufacturing – using resilient
materials and suppliers that have the
capacity to deliver in line with the Group’s
growth plans.
Regular communications with the supply
chain to closely monitor availability of
materials in order to minimise disruption
from COVID-19.
Access to adequate quantities of suitable
materials at competitive prices is a core
focus for the Group.
Ongoing communications with the
supply chain to identify and address
supply constraints arising from COVID-19.
Risk trend
Risk increased
Risk decreased
Risk unchanged
40
“We delivered another strong
financial performance in 2019
with substantial growth in
revenue and operating profit.”
Ian Cahill
Head of Finance
Profit after Tax and Earnings per Share
Finance costs for the year of €9.5 million
(2018: €15.6 million including exceptional
finance items, and €11.7 million excluding
exceptional finance items) include the
interest, amortised arrangement fees, issue
costs and commitment fees on our financing
facilities. Overall, the Group delivered a
profit after tax of €51.2 million for the year,
compared with €31.4 million in 2018. Basic
earnings per share for 2019 was 6.5 cent
(2018: 4.0 cent).
Financial Position
Total assets amounted to €970.2 million
at 31 December 2019 (2018: €1,005.8
million). Net assets totalled €763.7 million
(2018: €756.6 million). During the year, the
Company paid dividends of €19.7 million
and completed share buybacks of €22.2
million, a total return of €41.9 million to
shareholders.
Inventories at year end were €897.3 million
(2018: €933.4 million), and included land
held for development of €692.8 million
(2018: €750.7 million), and construction
work in progress of €204.5 million (2018:
€180.8 million).
The investment in work in progress reflects
the increase in development activity during
the year as the company is now active on
16 development sites.
The reduction in land held for development
is consistent with our commitment to
monetise a significant portion of our
landbank over the medium-term.
Before dividends and share buybacks,
net debt reduced by €85.1 million over the
course of 2019, or by €43.2 million after the
company made payments of €41.9 million
to shareholders. At 31 December 2019,
the Company had net debt of €91.2 million
(2018: €134.4 million), comprising drawn
debt of €148.0 million (net of unamortised
arrangement fees and issue costs) (2018:
€196.7 million) and available cash of €56.8
million (2018: €62.2 million).
During the year, the Company also
repaid the €50.0 million term loan facility
with Activate Capital from cash reserves.
The debt facilities we put in place in 2018
continue to provide the Company with
adequate flexibility and a comfortable
maturity profile. Our net debt to inventories
(at cost) was just 10.2% at year end (2018:
14.4%).
Financial Review
Revenue
Continued scaling of the business in
2019 delivered revenue of €435.3 million
(2018: €337.0 million) and included 1,080
unit sales and a small number of non-
core development site sales. Unit sales
increased by 34% and revenue by 29%
when compared to 2018. Revenue from
unit sales of €401.8 million came from
12 separate selling sites, demonstrating
further expansion of the business. Our
average selling price (“ASP”) was €372,000
(excluding VAT) and represents a broad
product mix, but reflects our continued
focus on the starter home market.
Gross Profit and Operating Profit
Gross profit of €85.3 million (2018: €69.1
million) was a 23% increase over 2018 and
equated to a gross margin of 19.6% (2018:
20.5%). The business continues to enjoy
the benefits of a low-cost landbank and
procurement and operational efficiencies
through its scale.
Administrative expenses for the year were
€17.4 million (2018: €15.9 million), equating
to just 4% of revenue, which is consistent
with our commitment to having a lean and
efficient cost structure. Operating profit of
€68.0 million (2018: €53.2 million) was 28%,
or €14.8 million higher when compared to a
year earlier, equating to an operating profit
margin of 15.6% (2018: 15.8%).
41

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Cash Flow
During 2019 the Group generated net cash
from operations of €99.2 million (2018: €40.1
million), demonstrating continued progress
on our cash generation journey.
Following the €550 million capital
reorganisation in May 2019, the Board
paid a first interim ordinary dividend of 2.5
cent per share in October 2019. We also
announced a €25 million share buyback
programme in September 2019. A further
extension of this by €35 million, increasing
the size of the share buyback programme
to €60 million, was announced in January
2020. Approximately €47 million has been
completed as at 24 March 2020.
Outlook
Our strong closed and forward sales
pipeline demonstrated a positive start
to 2020. However, our outlook has been
impacted by the COVID-19 outbreak.
We believe that our strong liquidity and
operational agility position us well to meet
the challenges presented by this crisis. In
order to maximise available liquidity, we
have recently drawn down the remainder
of our revolving credit facility. The Board
has also taken the decision not to pay
a final 2019 dividend and to suspend our
€60 million share buyback programme.
The implementation of these measures
further strengthens our confidence in
the medium and long-term prospects
of the business.
Ian Cahill
Head of Finance
Glenheron, Greystones, Co. Wicklow
42
We are committed to
building homes and
creating places that
contribute positively
to communities and
society and minimise
our impact on the
environment.
Corporate Social Responsibility
Throughout 2019 we focussed and
increased our activities across the four
pillars of our CSR strategy – Community,
Environment, People and Industry –
ensuring all of our activities aligned with
our values and strategic pillars. We have
made huge strides forward in areas such
as community cohesion and placemaking,
biodiversity, health safety and wellbeing
and as a business we are committed to
continuing to invest in these areas more.
As we move to a more long-term
Sustainability Agenda, we are transitioning
our CSR pillars to align with Environmental,
Social and Governance (“ESG”) criteria
as our central standards in measuring our
environmental and societal impact.
43

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
44
Community
Working with all stakeholders, especially
our customers, to create successful places
and spaces. Placemaking that strengthens
the social fabric.
Public Realm and Infrastructure
Providing considered, well-designed and
healthy spaces that improve quality of life.
• Established over 17 acres
of parks and public realm.
• Delivered community development
for c. 3,100 new residents.
• Delivered serviced sites for 6 schools
catering for up to 3,000 pupils.
• Continued to provide for community
buildings and créches across our developments.
• Created and delivered 6 playgrounds.
Environment
Reducing our carbon footprint. Making
a positive contribution to the environmental
quality of the communities in which we work
and the environment as a whole.
Climate Change
Assessing and acting to reduce our carbon emissions.
• Engagement in Low Carbon Pledge.
• Benchmark year for recording and reporting our
emissions across:
• Scope 1 – Gas, Petrol & Diesel Consumption;
• Scope 2 – Electricity; and
• Scope 3 – Business Travel, Waste Generated
& Water Consumption;
• Provided car sharing facilities (Go Car).
for each Cairn development community.
• Installation of EV infrastructure facilities
for every Cairn home delivered.
People
People come first. Valuing our teams,
customers and partners and providing
resources and opportunities to grow
and develop together.
Safety as a Priority
Our vision is to be the safest housebuilder in Ireland.
• A continued focus on site safety, education
and awareness.
• Production of dedicated Cairn Safety Hub with
events, instructional video and documentation
to promote and educate employees and
contractors on all aspects of site safety.
Industry
Leading from the front. Developing
strong industry relationships, a well-trained
workforce and a sustainable future for the sector.
Training and Employment
Stimulating employment and growth across
the sector.
• Provided for 2,500 full-time jobs across
16 active sites.
• Apprenticeship & Graduate Programme –
engagement with industry partners and third
level institutions to design a sustainable
programme.
CSR PILLARS 2019 ACTIVITIES
Corporate Social Responsibility continued
45

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Community Engagement Events
Initiating and facilitating events designed
to stimulate community growth and cohesion.
• Launched suite of pilot initiatives aimed
at community creation and cohesion and ran
events such as Street Feasts and Book Doctor
with Children’s Books Ireland.
Arts Programme
Adding positively to the social and cultural
fabric of our communities.
• 2 new artworks and design pieces.
• Highly Commended for Commissioning
at Allianz Business to Arts Awards.
• Engaged with Business to Arts
as commissioning partner.
• Continue to deliver
new schools, community
buildings and créches.
• Increasing rollout of
community engagement
events and initiatives.
• Increased engagement
with Business To Arts in
commissioning of public art.
Biodiversity
Promotion of native tree species. Pollinator
friendly planting throughout developments
with wildflower meadows and greenwalls.
• Planted 6,248 trees with 5.8 trees planted
for each new home sold.
• Engaged with the National Biodiversity Data
Centre as Business Supporter of All Ireland
Pollinator Plan 2015-2020.
• Creation of wildflower meadows and
reinstatement of native hedgerows and
groundcover.
Sustainable Innovation
Implementing innovative and sustainable
materials and processes.
• Transition to timber frame and
sustainable offsite construction methods.
• Precast superstructural elements.
• SUDs (sustainable urban drainage systems,
NZEB (Nearly Zero Energy Buildings) and
introduced bathroom pods in our high-density
apartment developments.
• Ongoing implementation
of the Low Carbon Pledge.
• Continued biodiversity
focus and increased native
tree planting.
• Continued focus on
innovative and sustainable
technologies, methodologies
and practices.
Employee Wellbeing and Engagement
Creating a workplace that is attractive
and fulfilling.
• Deep dive and pulse surveys identifying
key drivers for staff and Employee Net
Promoter Score (“eNPS”) measurement.
• Employee Health & Wellbeing Program.
• Cultural Committee formed to coordinate
social and charitable projects.
Enhanced Customer Care and Communication
Reaching for the highest possible levels
of customer service and responsiveness.
• Establishment of a dedicated customer
care team and more streamlined processes.
• Expansion of customer care team.
• Rolling surveys and NPS scoring (53).
• Rollout of Health &
Wellbeing Program
initiatives such as health
cover, gym membership,
paternity leave, employee
assistance programme
and bike to work schemes.
Sustainable Strategic Alliances
Fostering innovative strategic partnerships
and interrogating our supply chain for carbon
emission reduction.
• Rolled out collaborative Kingspan
framework agreement and standardised timber
frame construction across Cairn developments.
• Continued to refine new residential
typologies for new tenures.
• Working with offsite manufacturers
for programmatic gains and carbon
footprint reduction.
Increased Engagement
with Subcontractor Base
Working closely with our subcontractors to
ensure sustainable growth, leveraging our
platform to help grow their businesses.
• Increased pipeline visibility and
transparency with regular communications
and subcontractor/supplier townhalls.
• Strengthened partnerships and shared
learnings and insights across all
of our subcontractor base.
• Black Hat Supplier Safety Workshops.
• Full rollout of Apprenticeship
and Graduate Programme.
ONGOING SUSTAINABILITY
AGENDA – 2020 ONWARDS
46
Corporate Social Responsibility
Cairn are signed up to the Low Carbon Pledge
and are committed to reducing our Scope 1,
2 and 3 greenhouse gas emission intensity by
50% by 2030.
Cairn’s Low Carbon Pledge
PHASED APPROACH TO LOW CARBON PLEDGE IMPLEMENTATION:
Currently at the initial stages of the Pledge,
we are recording and reporting all of our
scope 1, 2 and 3 carbon emissions, using
2019 as our benchmark year. To ensure
consistency and comparability of efforts, the
internationally recognised Greenhouse Gas
Protocol Corporate Standard is being used
as the underlying measurement framework.
As part of the initiative, Cairn will also
contribute to a Knowledge Platform which
will provide guidance on best practice to
share our carbon management knowledge
within the signatory group and we will be
engaging with community energy schemes
developed by the Sustainable Energy
Authority of Ireland (“SEAI”).
A working/steering group has been formed
to oversee our Carbon Emissions Intensity
reduction plan and will report to the Board
on a quarterly basis and contribute data
to an Annual Business in the Community
Ireland Low Carbon Report audited by PWC.
1
MEASURE, REPORT AND
COMMUNICATE OUR
CARBON EMISSIONS
2
INTEGRATE CARBON
REDUCTION EFFORTS
INTO OUR BUSINESS
3
INVEST IN LOW-CARBON
INITIATIVES AND
TECHNOLOGIES
4
LEAD IN DIALOGUES
WITH POLICY MAKERS,
SUPPLIERS EMPLOYEES
AND LOCAL COMMUNITIES
5
COLLABORATE WITH
OTHER BUSINESSES TO
ACCELERATE CLIMATE
ACTION IN OUR COMPANY,
SECTOR AND COUNTRY
Corporate Social Responsibility continued
47

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Non-Financial Information Statement
The following non-financial information constitutes our Non-Financial Information Statement, covering the requirements in respect of the
environment, people, social and community issues, human rights and anti-bribery & anti-corruption.
Certain of the non-financial information required pursuant to the EU Directive 2014/95/EU is also provided by reference to the following
location:
Non-financial Information Section Pages
Business Model Business Model 16 and 17
Policies Non-Financial Information Statement N/A
Principal Risks Risk Report 34 to 39
Key Performance Indicators Our Strategy 22 and 23
Our Annual Report contains a range of non-financial information. We have a variety of policies and guidance that support our key outcomes for
all our stakeholders. Policies, guidance and statements of intent are in place to ensure consistent governance. For the purposes of non-financial
reporting requirements, these are inclusive of but not limited to:
Reporting
Requirement Policy Statement Description
Environmental
Matters
CSR Statement
of Intent
Our CSR Policy mission is to use our skills, scale and commitment to help build a better society for all.
The Policy outlines the important role Cairn will play in building communities and creating places that
contribute positively to society. More information is available in the Sustainability section of our report
on pages 42 to 46 relating to the sustainability agenda at Cairn and the journey it is embarking on.
Procurement &
Subcontractor
Use Policy
Our Procurement & Subcontractor Use Policy has been rolled out across the business over the prior
two years. Whilst it includes provisions for our relationships with our supply chain partners, it is intended
that this Policy will be reviewed and updated in 2020 to ensure it addresses additional areas of priority
in relation to environmental matters and responsible sourcing of materials with the aim to reduce our
impact on the natural environment.
Social &
Employee
Matters
Code of Conduct At Cairn, our Code of Conduct is the oracle of how we operate and work together as a business. It
is how we present ourselves to the outside world. We expect our employees and sub-contractors to
work with integrity and respect all stakeholders within our business model. The Code also contains
our mission, our vision and our values which are core to how we operate as a business. This Code also
governs our communications and relationships with advisors, customers, suppliers and the broader
community.
Diversity &
Inclusion Policy
Cairn recognises the benefit and value of diversity across our organisation. We are committed to the
creation of an inclusive culture where our people reflect the diverse communities and customers that
we serve and where each person is given the opportunity to contribute and use their talents and
abilities, experiences and skills to participate in delivering sustainable commercial opportunities.
Health & Safety
Policy & Safety
Statement
Health & safety is at the core of everything we do. It is our number one priority to provide a safe
working environment for our employees and subcontractors. Effective management of health and
safety will have a positive impact on the way we deliver value.
Human Rights,
Bribery &
Corruption
Code of Conduct At Cairn, we promote human rights through our employment policies and practices, and through
our supply chain as best we can manage it. We recognise that our supply chain is diverse and our
partnerships have direct and indirect environmental and social impacts. We aim to actively encourage
our supply chain partners to consider their social and environmental impact when making decisions on
behalf of Cairn.
Anti-Bribery &
Corruption Policy
Anti-Fraud Policy
Lobbying Policy
“Speak–Up” Policy
Cairn recognises that bribery, corruption and fraud can undermine the rule of law and as such our Policy
actively reflects our legal and social responsibilities in relation to how we conduct our business. We also
have a “Speak-up” policy and a Lobbying Policy which governs how we manage whistleblowing and
how we interact with government agencies
Data Protection
Policy & Privacy
Statement
The privacy of our employees, customers, sub-contractors and third party agencies we work with is very
important within Cairn. Our Data Protection Policy and Omnibus Procedures guidance governs how we
collect, handle, store, share, use and dispose of data.
48
MICHAEL STANLEY
Co-Founder &
Chief Executive Officer
Age: 54
Nationality: Irish
Appointed to the Board:
12 November 2014
Independent: No
Skills and experience:
Michael Stanley co-founded
Cairn Homes plc and was
appointed Chief Executive
Officer prior to the IPO
in June 2015. Michael
has a strong pedigree in
residential development
and the broader property
industry. He was previously
Chief Executive Officer of
Stanley Holdings following
its demerger from Shannon
Homes. The Stanley family
founded Shannon Homes
in 1970, and the company
was one of Ireland’s largest
homebuilders in the
1990s and 2000s. Michael
restarted his homebuilding
operation in 2014 following
the economic downturn
in Ireland, and with his
business partner Alan
McIntosh, this provided
the operational platform
for Cairn Homes plc.
Michael also has extensive
experience in the
packaging, energy, agritech
and healthcare sectors.
Other current
appointments:
Not applicable.
Audit & Risk Remuneration Nomination Chair
Committees
Board of Directors
JOHN REYNOLDS
Chairman
Age: 61
Nationality: Irish
Appointed to the Board:
28 April 2015
Independent: N/A
Skills and experience:
John Reynolds was
previously Chief Executive
Officer of KBC Bank
Ireland plc (2009 to 2013)
and President of the Irish
Banking Federation (2012
to 2013), during which
time he was also a board
member of the European
Banking Federation. John
is a Chartered Director,
an Economics graduate of
Trinity College Dublin, and
holds a Masters degree in
Banking and Finance from
UCD.
Other current
appointments:
Non-Executive Director of
Computershare Investor
Services (Ireland) Limited,
Business in the Community
Limited, Institute of
Directors Ireland and the
National Concert Hall.
ALAN MCINTOSH
Co-Founder &
Non-Executive Director
Age: 52
Nationality: British
Appointed to the Board:
12 November 2014
Independent: No
Skills and experience:
Alan McIntosh has been
a principal investor
and part of successful
investor groups for
over 18 years. During
this time, he has had
operational management
roles and been part of
management teams
that have successfully
grown a number of
different businesses,
including Topps Tiles
plc, PizzaExpress and
Centre Parcs. Alan was
a co-founder of each of
Pearl Group (now listed
as Phoenix Group plc),
Punch Taverns plc, Spirit
Group plc and Wellington
Pub Company Ltd. Alan’s
private investment vehicle,
Emerald Investment
Partners, has interests in
real estate, healthcare,
biotech and technology
in Europe and North
America. He qualified as a
chartered accountant with
Deloitte & Touche in 1992.
Other current
appointments:
Not applicable.
GARY BRITTON
Non-Executive
Director
Age: 65
Nationality: Irish
Appointed to the Board:
28 April 2015
Independent: Yes
Skills and experience:
Gary Britton was previously
a partner in KPMG where
he served in a number of
senior positions, including
the firm’s Board, the
Remuneration and Risk
Committees and as head
of its Audit Practice. Gary
was formerly a Non-
Executive Director of the
Irish Stock Exchange plc
and KBC Bank Ireland
plc. Gary is a Fellow of
Chartered Accountants
Ireland, the Institute of
Directors in Ireland and
the Institute of Banking.
He is also a Certified Bank
Director as designated by
the Institute of Banking.
Other current
appointments:
Non-Executive Director of
Origin Enterprises plc.
LINDA HICKEY
Non-Executive
Director
Age: 58
Nationality: Irish
Appointed to the Board:
12 April 2019
Independent: Yes
Skills and experience:
Linda Hickey was
previously Head of
Corporate Broking at
Goodbody Stockbrokers,
where she worked for
fifteen years, and where
she advised clients on a
range of capital markets
and corporate governance
matters. Prior to this,
Linda worked at both NCB
Stockbrokers in Dublin and
Merrill Lynch in New York.
Linda also has a degree
in Business Studies from
Trinity College Dublin.
Other current
appointments:
Non-Executive Director at
Kingspan Group plc; Chair
of the Board of The Irish
Blood Transfusion Service;
member of Quanta Capital
Advisory Board, and senior
adviser at Powerscourt.
49

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
75%
25%
Independence
Non-independent
Independent
78%
22%
Gender
Male
Female
89%
11%
Role
Non-Executive
Executive
67%
33%
Tenure
1-2 years
3-5 years
JAYNE MCGIVERN
Non-Executive
Director
Age: 59
Nationality: British
Appointed to the Board:
1 March 2019
Independent: Yes
Skills and experience:
Jayne McGivern
is currently Global
Executive Vice President
of Development and
Construction for Madison
Square Garden plc, where
she is responsible for
overseeing all new venue
development projects in
addition to management
of the company’s planned
MSG Sphere venues in
Las Vegas and London.
Her former roles include
Divisional Managing
Director at Redrow
plc, Chief Executive
Officer of the European
Division of Multiplex plc,
Managing Director of
Anschutz Entertainment
Group in London,
during its acquisition
and redevelopment
of the O2, and Chair
of the UK Ministry of
Defence Infrastructure
Organisation. She
most recently led her
own private property
investment vehicle, Red
Grouse. Jayne is also
a Fellow of the Royal
Institution of Chartered
Surveyors.
Other current
appointments:
Non-Executive Director
at Skanska AB.
GILES DAVIES
Non-Executive
Director
DAVID O’BEIRNE
Non-Executive
Director
Age: 51
Nationality: British
Appointed to the Board:
28 April 2015
Age: 62
Nationality: Irish
Appointed to the Board:
1 March 2019
Independent: Yes
Skills and experience:
Giles Davies qualified as a
chartered accountant with
PwC in London and spent
five years in management
consultancy in London
and New York. He went
on to found Conservation
Capital, a leading
international practice
in the emerging field of
conservation enterprise,
ESG and related
investment financing.
He previously served as
Non-Executive Chairman
of Wilderness Scotland,
Non-Executive Chairman
of Capital Management &
Investment plc, and as a
Non-Executive Director of
Algeco Scotsman Group.
Other current
appointments:
Not applicable.
Independent: Yes
Skills and experience:
David O’Beirne is a former
Managing Partner of the
international law firm
Eversheds Sutherland,
Dublin, is also a former
Head of the firm’s
Corporate and Commercial
Department and is
currently a Partner in its
Corporate & Commercial
Department. David’s
primary practice areas
are mergers, acquisitions,
disposals, private equity
investments, corporate
restructurings and
corporate reorganisations,
and he has advised
clients, both domestic
and international, for
almost 40 years.
Other current
appointments:
Not applicable.
ANDREW BERNHARDT
Non-Executive
Director
Age: 59
Nationality: British
Appointed to the Board:
28 April 2015
Independent: Yes
Skills and experience:
Andrew Bernhardt
had a 29-year career
in commercial banking
at Barclays Bank and
GE Capital. He was
heavily involved in
supporting the growth of
a number of well-known
property companies
(including Canary Wharf,
Hammerson, Slough
Estates and Howard de
Walden Estates) during his
time at Barclays. In 2007,
he moved into investment
banking with Straumur
Investment Bank (now
ALMC). On the successful
restructuring in 2010,
Andrew was appointed
as CEO and remained in
this role until 2013. He
subsequently served as a
Non-Executive Director of
ALMC from 2013 to 2017.
Other current
appointments:
Non-Executive Director of
AJ Walter Aviation Limited
Chairman of Fairey
Industrial Ceramics Ltd.
Board Diversity
50
MICHAEL STANLEY
Chief Executive Officer & Co-Founder
MIKE GRICE
Group Development Advisor
SHANE DOHERTY
Incoming Chief Finance Officer
MAURA WINSTON
Chief People Officer
LIAM O’BRIEN
Managing Director, Housing
KEVIN CLEARY
Technical Director
SARAH MURRAY
Director of Customer
FERGUS MCMAHON
Commercial Director
IAN CAHILL
Head of Finance
Management Team
51

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
GERALD HOARE
Senior Manager, Pre-Construction
SINEAD GEOGHEGAN
Group Financial Controller
DEREK ROCHE
Health & Safety Manager
EIMÉAR O’FLANAGAN
Human Resources Manager
DECLAN MURRAY
Head of Investor Relations
AIDAN MCLERNON
Planning & Development Manager
JOHN GRACE
Planning & Development Manager
TARA GRIMLEY
Company Secretary
52
Site Management Team
KEVIN SWEENEY GERRY BUTCHER
DAMIEN O’BRIEN SEOIRSE COMERFORD
CONTRACTS AND PROJECT MANAGERS
53

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
SEAN FITZGERALD
NOEL MCGANN
DONAL DOCKERY
BRIAN HEVERIN
54
Dear Shareholder,
I am pleased to introduce our latest corporate governance report,
which outlines our activity and progress in what was a busy year
for the Board. I am also pleased to report that for the year ended
31 December 2019, the Company remains compliant with the
provisions of the UK Corporate Governance Code and the Irish
Corporate Governance Annex, (together the “Code”). 2019 – our
fifth year as a listed company – was another year of solid progress
for the Company despite challenging macroeconomic conditions.
It was also a year of significant change, both in terms of the
Board’s composition but also the governance framework under
which we operate. Despite those changes, the role of the Board
remains unchanged – to provide responsible leadership, oversee
management and contribute to creating long-term sustainable
value for the benefit of our shareholders and all other stakeholders.
As a Board and senior management team, we remain firmly focused
on that task.
Board Changes
Periodic and orderly refreshment of a Board is a central aspect of
maintaining high standards of corporate governance, effective
oversight of a business and ensuring diversity of thought and
constructive challenge. During the past year, there were a number
of changes to the non-executive cohort of the Board, with Jayne
McGivern, David O’Beirne and Linda Hickey joining as independent
Directors. In engaging an external search firm to identify candidates
for the three positions, we communicated a clear objective of
broadening the diversity of the Board as well as placing a focus on
the construction sector and legal and public company experience.
In the appointment of Jayne, David and Linda, we are fortunate
to have enhanced the diversity of the Board while also appointing
Directors who meet our target of adding these three valuable
skillsets to the Board. Their contributions to the Board since their
appointment speak to how much the Board will benefit from their
appointments.
Culture and Workforce Engagement
The Board places a clear emphasis on setting the tone from the top
and leading by example, while ensuring our culture is shared and
understood by all our people and among our wider stakeholders.
At Cairn, we are fortunate that the distance between the Board and
senior management and the remainder of the workforce is small.
Since our listing, the Board has played an active role in monitoring
our corporate culture, recognising its importance in ensuring we
continue to generate value for stakeholders and a work environment
which values the contribution of all of our people.
During 2019, we conducted extensive engagement surveys with
our stakeholders, including employees and customers. While, as a
Board, we recognise that such surveys need to be supplemented
by steps to develop a fundamental understanding of the feedback
provided, we were happy with both the level and nature of
responses. The Board is committed to promoting a positive culture
that is aligned with our values and strategy, and aligns with our
vision, mission and values.
The Board’s insight into our culture is supplemented by consistent
information from the Remuneration Committee on the Company’s
ability to attract and retain talent; overviews of exit interviews; and,
performance evaluations for middle and senior management.
As you will see detailed in our Annual Report, the Board has
designated David O’Beirne as the Director responsible for
workforce engagement. Engagement will take place through a
range of formal and informal channels and will further bolster our
ability to monitor and assess the evolution of corporate culture.
While we have developed strong processes and feedback channels
to ensure the Board is appraised of, and understands, the views
of our workforce since the business was founded, we believe the
appointment of the Director to lead this role, as set out by the new
UK Code, is a further positive development which will strengthen
the mechanics we already have in place. In future Annual Reports,
we will provide detailed disclosure on how our governance
framework ensures employees views continue to be not just heard
at Board level but play a role in the Board’s decision-making.
Stakeholder Engagement
The Board is cognisant of Provision 5 of the new UK Corporate
Governance Code, which asks Boards to have regard for engagement
with stakeholders and the communities in which we operate. For
Cairn, it is impossible to operate any other way. As a Company,
“We continue to provide
responsible leadership,
oversee management and
contribute to creating
long-term sustainable
value for the benefit of all
stakeholders.”
John Reynolds
Chairman of the Board
Corporate Governance Report
55

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
our licence to operate is grounded in our ability to build more than houses, it is to put in place the foundations for communities to prosper.
To do so, we consistently engage with the consumers who may buy the home, the wider communities where we are building, the planning
authorities who are vital to our developments and our partners and suppliers who provide the platform for us to succeed. In the area of
stakeholder engagement and interaction, as a Board, we are confident we were operating in a fashion the new principles of the Code have
formalised. All decisions of the Board will continue to have regard for their impact on our key stakeholders, which remains central to our
long-term sustainability.
Shareholder Consultation
Outside of engaging with our employees and wider stakeholders, during 2019 and early 2020, with the Chair of the Remuneration
Committee I spoke with a number of our major shareholders to discuss our proposed remuneration policy. As always, I found these
discussions to be very helpful in understanding evolving expectations. Further details of those discussions, which primarily focused
on remuneration, are set out in the Remuneration Committee Report on pages 69 to 88.
Management Succession
During 2019, we recruited a new Chief Financial Officer (“CFO”), Mr Shane Doherty who will join the Company in April 2020, to replace
Mr Tim Kenny who informed the Board of his decision in July 2019 to leave his role. We are pleased to have found a CFO of Shane’s calibre
to succeed Tim and further details on his recruitment are set out in the Nomination Committee Report on pages 65 to 68. In terms of wider
succession, the Board, through the Nomination Committee continuously reviews and evaluates succession arrangements for all senior roles
and to minimise ‘keyman’ risk to the business.
Shareholder Alignment
During the course of 2019, the Remuneration Committee also reviewed and modified management incentive arrangements in line with our
growth and development as a business and to ensure close alignment with that of our shareholders and evolving market practice. These
changes, which are set out in detail in our Remuneration Committee Report on pages 69 to 88, include the adoption of post-employment
shareholding requirements and further alignment of executive pensions with that of the wider workforce.
Board Performance Evaluation
Following an external review of the Board completed in 2018, one outcome of which was the process to appoint additional non-executive
Directors during the year, we conducted an internal evaluation process during 2019. This process evaluated the effectiveness of the Board
as a whole together with the performance of individual Directors and each of our Committees. We are pleased with the outcome of this
evaluation and the Board is satisfied with its performance and oversight for the year in review.
Summary
The remainder of this report sets out the role, responsibility and work of the Board during the year together with each of the Board
Committees. Reports from the Chairs of our Audit & Risk Committee, Nomination Committee and Remuneration Committee are set out
between pages 61 and 88. The effective and efficient operation of each of these Committees, together with their interaction with the
Board, is central to ensuring that all of the oversight responsibilities of the Board receive due care and attention in a timely manner.
I am grateful to the members of our Committees for their commitment and work during the course of 2019.
The following table sets out where to find further details on how we have implemented the key principles of the 2018 UK Code. I hope it
aids you in reviewing our approach to leading Cairn over 2019.
Section Area
Board leadership and company purpose Details on how the Board promotes the long-term success of the Company are set out in
our Strategic Report on pages 02 to 47 and throughout this Corporate Governance Report
on pages 54 to 60. Our purpose and values are set out on the inside front cover. Relations
with shareholders are described on page 59. Our whistleblowing programme is described
on page 63.
Division of responsibilities Pages 48 to 53 gives details of the Board and Management Team. The Board governance
structure is detailed on pages 56 and 57.
Composition, succession and evaluation The processes we followed to refresh the Board are set out within the Nomination
Committee Report on pages 65 to 68.
Audit, risk and internal control The Audit & Risk Committee Report can be found on pages 61 to 64, with further detail
on the principal risks to the business in the Risk Report on pages 34 to 39.
Remuneration The Company’s Remuneration Policy and the Remuneration Committee Report can be
found on pages 69 to 88.
I hope you find the remainder of the report useful and informative. I look forward to seeing as many of you as possible at our AGM. Even if
you cannot attend, I would encourage you to vote as many of your shares as possible, so that we gain a better understanding of the views
of our shareholders as a whole.
John Reynolds
Chairman
56
Role of the Board
The Company has a strong Board comprising members who have held senior positions in a number of public and private companies,
bringing a wealth of property, construction, legal, capital markets and public company experience, with a majority of independent
Directors (including, upon appointment, the Chairman) in compliance with the Code. Further details of the independence assessment
is contained within the Nomination Committee Report on pages 65 to 68. The Board is responsible for the leadership, control and
overall strategy of the Company, including establishing goals for management and monitoring the achievement of those goals.
The Board has a formal schedule of matters specifically reserved for its review including the approval of:
• Significant acquisitions or disposals;
• Significant capital expenditure;
• Financial statements and budgets;
• Risk management processes and the Principal Risks and Uncertainties; and
• Terms of Reference and membership of Board Committees.
The Board’s responsibilities also include ensuring that appropriate management, development and succession plans are in place; reviewing
the health and safety performance of the Company; and approving the appointment of Directors and the Company Secretary.
The roles of Chairman and Chief Executive Officer are separately held with a clear division of responsibility between them. The Board has
delegated some of its responsibilities to standing Board Committees as detailed below.
Board Committees
The Board has established three Committees to assist in the execution of its responsibilities, the Audit & Risk Committee, the Nomination
Committee and the Remuneration Committee. An overview of these Committees is provided within each Committee report. The current
Committee membership, meeting attendance and tenure of each member is set out in each individual Committee report.
Each Board Committee has specific Terms of Reference under which authority is delegated to it by the Board. These Terms of Reference
are reviewed annually and are available on the Company’s website. The Chair of each Committee reports to the Board regularly on its
activities, attends the Annual General Meeting and is available to answer questions from shareholders.
Chairman
John Reynolds was appointed Chairman of the Board on 29 April 2015 and was considered independent as at the date of his appointment.
The Chairman leads the Board, ensuring its effectiveness by:
• Providing a sounding board to the Chief Executive Officer;
• Providing leadership and spearheading the governance of the Board;
• Setting the agenda, style and tone of Board meetings;
• Ensuring the Board is provided with accurate, relevant, timely information to ensure its effective operation;
• Promoting a culture of openness and debate to ensure each Board member contributes to effective decision-making; and
• Ensuring effective communications with shareholders and shareholder engagement.
The Chairman holds other non-executive directorships and the Board considers that these do not interfere with the discharge of his duties
to the Company.
Chief Executive Officer
Michael Stanley was appointed Chief Executive Officer in November 2014. The Chief Executive Officer is responsible for:
• The effective management of the Company;
• Development and implementation of the Board strategy through the Senior Management Team;
• Resourcing of the organisation to achieve its strategic goals, including creating the desired organisational structure for
a growing business;
• Promoting of the mission, vision, values and culture of the Company; and
• Maintaining a close working relationship with investors, potential investors and other relevant external bodies.
Senior Independent Director
Giles Davies is the Senior Independent Director. The role of the Senior Independent Director is to:
• Provide a sounding board for the Chairman and to serve as an intermediary for the other Directors when necessary;
• Facilitate shareholders if they have concerns which contact through the normal channels of Chairman or Executive Directors
has failed to resolve or for which such contact is inappropriate;
• To hold a meeting with Non-Executive Directors at least annually (and on such other occasions as are deemed appropriate)
to appraise the Chairman’s performance, taking into account the views of Executive Directors; and
• To attend sufficient meetings with a range of major shareholders to listen to their views in order to help develop a balanced
understanding of the issues and concerns of major shareholders.
Corporate Governance Report continued
57

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Non-Executive Directors
The role of the Non-Executive Director is to:
• Constructively challenge and debate management proposals;
• Examine and review management performance in meeting agreed objectives and targets, including ensuring levels of remuneration
are appropriate for Executive Directors and succession plans are in place;
• Assess risk and the integrity of financial controls and information; and
• Input their knowledge and experience in respect of any challenges facing the Company and in particular, to the development of the
Company’s strategy.
Company Secretary
Tara Grimley was appointed Company Secretary in March 2018. The Company Secretary assists the Chairman in ensuring the effective
operation of the Board. The Directors have access to the advice and services of the Company Secretary who advises the Board on all
governance matters and developments in best practice. The Company Secretary is also responsible for ensuring a good information flow
between the Board and its Committees and the Senior Management Team.
D&O Insurance
The Company maintains appropriate Directors’ and Officers’ liability insurance cover in respect of legal action against Directors, the level
of which is reviewed annually.
Subject to the provisions of, and so far as may be permitted by the Companies Act 2014 and the Company’s Constitution, every Director,
Secretary or other officer of the Company is entitled to be indemnified by the Company against all costs, charges, losses, expenses and
liabilities incurred by them in the execution and discharge of their duties.
Board Meetings
The Board met nine times during the year and in addition, also held four sub-Committees meetings each constituted for varying purposes.
Details of Directors’ attendance at Board meetings as well as their tenure is set out below. In the event a Director is unable to attend a
meeting, he or she can communicate their views on any items to be raised at the meeting through the Chairman.
Director
Meeting
Attendance
Board
Tenure
John Reynolds (Chairman) 9/9 5 years
Andrew Bernhardt 9/9 5 years
Gary Britton 9/9 5 years
Giles Davies 9/9 5 years
Linda Hickey 4/4 1 year
Tim Kenny 8/9 2 years
Jayne McGivern 5/5 1 year
Alan McIntosh 9/9 5 years
David O’Beirne 5/5 1 year
Michael Stanley 8/9 5 years
Information and Support
All Directors are furnished with information necessary to assist them in the performance of their duties. Prior to all meetings taking place,
an agenda and Board papers are circulated to the Directors so that they are adequately prepared for the meetings. Directors also receive
monthly management accounts. The Company Secretary is responsible for the procedural aspects of the Board meetings and all Directors
have access to the Company Secretary for advice and assistance as necessary. Directors are, where appropriate, entitled to have access to
independent professional advice at the expense of the Company. Members of the Senior Management Team are invited to attend Board
and Committee meetings, on occasion, in order to help Directors gain a deeper understanding of the Company’s operations.
Conflicts of Interest
The Board reviews potential conflicts of interest as a standing agenda item at each Board meeting. Directors have continuing obligations
to update the Board on any changes to these conflicts.
Induction and Training
An induction procedure for new Board members was established in early 2019. Board members engage with senior management on a
regular basis to assist and enhance their understanding of the business. The Board considers on an ongoing basis the need for additional
training in respect of any matters relevant to the development and operation of the Board or any of its Committees.
58
Directors’ Terms of Appointment
The Executive Directors have service agreements with the Company which have notice periods of 12 months or less. The Non-Executive
Directors have Letters of Appointment which set out their terms of appointment. The initial period of appointment is three years and any
term renewal is subject to the approval of the Board and appointments are terminable on one month’s notice.
Under the Company’s Constitution, one third of all Directors must retire by rotation at each Annual General Meeting and may seek re-
election. However, in keeping with best corporate governance practice, the Board has decided that all Directors will seek re-election.
Accordingly, all Directors will retire at the Annual General Meeting currently scheduled for 20 May 2020 and, being eligible, will offer
themselves for re-election. The Board is satisfied that the Company benefits greatly from the services of all Directors and accordingly,
the Board recommends the re-election of all the Directors.
Board Policy on Diversity
During 2019, the Board adopted a formal Diversity and Equality Policy applicable to the Company as a whole. The Board and management
continues to be cognisant of the benefits of diversity and the recommendations of the Hampton-Alexander review, recognise the clear
benefits of increasing diversity at all levels of the organisation. Cairn made significant progress in this area during 2019 and the first quarter
of 2020 throughout the Company.
As at 31 December 2019, our female employees made up 25% of our total workforce, while 33% of the Chief Executive Officer’s direct
reports were female. Many of the Company’s employee base are also from varying backgrounds of nationality, ethnicity, and religion.
In each of these areas, the Company has made progress and diversity will continue to be key focus area for the Board and management
in 2020 and beyond. Details on diversity within the Company can be found on page 30.
Internal Control
The Board has overall responsibility for the Company’s system of internal control, for reviewing its effectiveness and for confirming that
there is an ongoing process in place for identifying, evaluating and managing the significant risks facing the Company. The process was
in place throughout the year under review and up to the date of approval of the Annual Report and Financial Statements. The Board
has reviewed the effectiveness of the Company’s risk management and internal control systems, with the assistance of the Audit & Risk
Committee. Effective risk management is critical to the achievement of the Company’s strategic objectives. Risk management controls
are in place across the business. The Company’s risk framework continues to evolve, with some risk mitigants only in existence for a short
period of time. The Company will continue to monitor and improve its risk management framework. Further details are available in the Risk
Report on pages 34 to 39.
The Company has documented its financial policies, processes and controls which will be reviewed and updated on an ongoing basis.
The key elements of the system of internal control include the following:
• Clearly defined organisation structure and lines of authority;
• Company policies for financial reporting, treasury management, information technology and security and project appraisal;
• Annual budgets and business plans; and
• Monitoring performance against budget.
The preparation and issuance of financial reports is managed by the finance function. The financial reporting process is controlled using
the Company’s accounting policies and reporting system. The financial information is reviewed by the Chief Financial Officer and the Chief
Executive Officer. The interim and preliminary results and the Annual Report and Financial Statements are reviewed by the Audit & Risk
Committee who recommend their approval to the Board.
Risk Management
The Company considers risk management to be of paramount importance. The Board, together with senior management, deals with risk
management on behalf of the Company as part of its regular monitoring of the business. The Board and the Audit & Risk Committee have
put in place procedures designed to ensure that all applicable risks pertaining to the Company can be identified, monitored and managed
at all times. Further information on the principal risks applicable to the Company is given on pages 34 to 39.
Financial Risk Management
The financial risk management objectives and policies of the Company are set out in note 29 to the consolidated financial statements.
Health and Safety Policy
It is the policy of the Company and its subsidiaries to comply with the following legislation as a minimum standard for all work activities:
• Safety, Health and Welfare at Work Act, 2005;
• the Safety, Health and Welfare at Work (General Application) Regulations, 2007;
• the Safety Health and Welfare at Work (Construction) Regulations, 2013 and all amendments to date; and
• All codes of practice applicable to the work undertaken by the Company or its subsidiaries.
Corporate Governance Report continued
59

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
In complying with the statutory requirements and implementing our safety management system the Company ensures, so far as reasonably
practicable, the safety, health and welfare of all employees whilst at work and provides such information, training and supervision as is
required for this purpose.
It is the policy of the Company to protect, so far as is reasonably practicable, persons not employed by the Group who may be affected by
our activities.
It is the policy of the Company to ensure that adequate consultation takes place between management, employees, contractors and others
on all health and safety related matters and employees are encouraged to notify management of identified hazards in the workplace.
All employees have the responsibility to co-operate with supervisors and management to achieve a healthy and safe work place and
to take reasonable care of themselves and others.
The Health and Safety Policy is available at all work locations for consultation and review by all employees. The Policy is kept up-to-date
and amended as necessary to meet changes in the nature and size of the business. The Policy is communicated to employees at the
commencement of their employment and on an annual basis thereafter as the safety statement review is carried out.
The Company will strive to work for the ongoing integration of health and safety into all of its activities, with the objective of attaining
high standards of health and safety performance. The Company seeks the full co-operation of all concerned in the carrying through
of its commitment.
Communication with Shareholders
The Company attaches considerable importance to shareholder communication. There is regular dialogue with institutional shareholders,
including detailed presentations and roadshows after the announcement of interim and preliminary results. The Executive Directors meet
with institutional investors during the year and participate in broker/investor conferences.
While the Chairman has overall responsibility for ensuring that the views of our shareholders are communicated to the Board as a whole,
contact with major shareholders is principally maintained by the Chief Executive Officer and the Chief Financial Officer. The Chairman
is available to meet with shareholders if they have concerns which have not been resolved through the normal channels or where such
contacts are not appropriate. The Executive Directors report regularly to the Board on their contact with shareholders. The Board also
regularly receives analysts’ reports on the Company.
Any significant or noteworthy acquisitions are announced to the market. The Company’s website www.cairnhomes.com provides the full
text of all announcements including the interim and preliminary results and investor presentations.
General Meetings
The Company holds a general meeting each year as its Annual General Meeting in addition to any other meeting in that year. Not more
than 15 months shall elapse between the date of one Annual General Meeting and that of the next. The Board is responsible for the
convening of general meetings.
The 2020 Annual General Meeting of the Company is scheduled to be held at the Company’s registered office, 7 Grand Canal, Grand
Canal Street Lower, Dublin 2, D02 KW81 at 11.00am on 20 May 2020. The 2019 Annual Report and 2020 Notice of the Annual General
Meeting will be circulated at least 20 working days prior to the meeting and will be available to download from the Company’s website.
The Notice contains a description of the business to be transacted at the Annual General Meeting.
Every shareholder has the right to attend and vote at the Annual General Meeting and to ask questions related to the items on the agenda
of the Annual General Meeting. However, in light of current public health guidelines in place as a result of the COVID-19 outbreak, and the
importance of the health and safety of shareholders, staff and others, shareholders are asked where possible not to attend this year’s AGM
in person but instead to vote using the proxy voting service, and submit any questions for the Directors electronically in advance of the
AGM in accordance with the instructions for doing so in the Notice.
Voting Rights
(a) Votes of Members: Votes may be given either personally or by proxy. Subject to any rights or restrictions for the time being attached
to any class or classes of shares, on a show of hands every member present in person and every proxy shall have one vote, so, however,
that no individual shall have more than one vote, and on a poll every member shall have one vote for every share carrying voting rights
of which he/she/it is the holder. The Chairman shall be entitled to a casting vote where there is an equality of votes.
(b) Resolutions: Resolutions are categorised as either ordinary or special resolutions. The essential difference between an ordinary resolution
and a special resolution is that a bare majority of more than 50% of the votes cast by members voting on the relevant resolution is
required for the passing of an ordinary resolution, whereas a qualified majority of 75% or more of the votes cast by members voting on
the relevant resolution is required in order to pass a special resolution. Matters requiring a special resolution include for example:
• altering the Objects of the Company;
• altering the Constitution of the Company; and
• approving a change of the Company’s name.
60
Other
The Company discloses information to the market as required by the Listing Rules of Euronext Dublin and the Listing Rules of the London
Stock Exchange and Financial Conduct Authority, including inter alia:
• Periodic financial information such as interim and preliminary results;
• Price-sensitive information, which for example, might be a significant change in the Company’s financial position or outlook, unless there
is a reason not to disclose such information (e.g. prejudicing commercial negotiations);
• Information regarding major developments in the Company’s activities;
• Information regarding dividend decisions;
• Any changes to the Board once a decision has been made, and
• Information in relation to any significant changes notified to the Company of shares held by a substantial shareholder.
The Company will make an announcement if it has reason to believe that a leak may have occurred about any ongoing negotiations of a
price-sensitive nature. Any decisions by the Board which might influence the share price must be announced as soon as possible and in
any event before the start of trading the next day. Information relayed at a shareholders’ meeting, which could be price-sensitive, must be
announced no later than the time the information is delivered at the meeting.
In relation to any uncertainty regarding the communication of a particular matter, advice will be sought from the Company’s sponsors and/
or legal advisor(s).
Corporate Governance Report continued
61

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Dear Shareholder,
This report describes how the Audit & Risk Committee (the
“Committee”) has fulfilled its responsibilities during the year under
its Terms of Reference and under the relevant requirements of the
UK Corporate Governance Code and Irish Corporate Governance
Annex (together “the Code”).
The Committee is satisfied that its role and authority include
those matters envisaged by the UK Corporate Governance Code
that should fall within its remit and that the Board has delegated
authority to the Committee to address those tasks for which it has
responsibility.
Committee Membership
The Committee currently comprises five Non-Executive Directors.
During the year, two additional Committee members Ms Linda
Hickey and Ms Jayne McGivern were appointed to the Committee
on 8 July 2019.
All members of the Committee are determined by the Board to be
independent Non-Executive Directors in accordance with provision
24 of the UK Corporate Governance Code. In accordance with the
requirements of provision 24 of the UK Corporate Governance
Code, I am designated as the Committee member with recent and
relevant financial experience. The biographical details on pages
48 and 49 demonstrate that members of the Committee have a
wide range of financial, capital markets, commercial and business
experience relevant to the sector in which the Group operates.
The Committee met five times during the year and all members
of the Committee in post at the date of the meeting attended
each meeting.
Meetings are attended by the members of the Committee and
others being principally the Chairman, the Company Secretary, the
Group Finance Director, the Head of Finance, the Group Financial
Controller, the Health & Safety Manager and representatives of the
outsourced Internal Audit function who attend by invitation. Other
members of executive management may be invited to attend to
provide insight or expertise in relation to specific matters.
Representatives of the External Auditor are also invited to attend
certain Committee meetings. The Committee also met privately
with the External Auditor and representatives of the outsourced
Internal Audit function without management present.
The Chair of the Committee reports to the Board on the work of the
Committee and on its findings and recommendations.
Attendance & Tenure
Committee Member
Meeting
Attendance
Committee
Tenure
Gary Britton (Chair) 5/5 5 years
Andrew Bernhardt 5/5 5 years
Giles Davies 5/5 5 years
Linda Hickey* 2/2 <1 year
Jayne McGivern* 2/2 <1 year
* Ms Hickey and Ms McGivern were appointed to the Committee on 8 July 2019.
“The Committee confirms
that, in our view, the Annual
Report, taken as a whole, is fair,
balanced and understandable,
and provides the information
necessary to assess the Group’s
position and performance,
business model and strategy.”
Gary Britton
Chair of the Audit & Risk Committee
Audit & Risk Committee Report
62
Audit & Risk Committee Report continued
Key Duties
• Monitoring the integrity of the Group’s financial statements and announcements relating to the Group’s performance;
• Advising the Board on whether the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable,
and whether it provides the information necessary for shareholders to assess the Group’s performance, business model and strategy;
• Monitoring the effectiveness of the external audit process and making recommendations to the Board in relation to the appointment,
re-appointment and remuneration of the External Auditor;
• Overseeing the relationship between the Group and the External Auditor including the terms of engagement and scope of audit;
• Reviewing the effectiveness of the Group’s internal controls;
• Reviewing the scope, resourcing, findings and effectiveness of the Internal Audit function;
• Overseeing the effectiveness of the risk management procedures in place and the steps taken to mitigate the Group’s risks;
• Reviewing the activities of the Health & Safety function and the effectiveness of the Group’s management of the General Data Protection
Regulation; and
• Reporting to the Board on how the Committee has discharged its responsibilities.
KEY AREAS OF ACTIVITY DURING 2019
A summary of the key activities of the Committee during the year is set out below:
Financial Reporting
The Committee reviewed the draft preliminary results, draft annual report and draft interim results before recommending their approval
to the Board. As part of their review, the Committee considered changes to accounting standards during the year and discussed with
management the impact of their implementation on the Group’s accounting policies. The Committee considered the appropriateness
of the relevant accounting policies and significant judgements and key estimates adopted in the preparation of the financial statements.
The Committee also considered the views of the External Auditors in making these assessments. The significant issues in relation to the
financial statements considered by the Committee and how these were addressed are set out on page 64. The Committee also reviewed
the observations on internal control prepared by the External Auditor as part of the audit process.
In accordance with the reporting requirements of the Code, the Committee confirms to the Board that, in our view, the Annual Report,
taken as a whole is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Risk Management and Internal Control
The Board has delegated responsibility to the Committee for monitoring the effectiveness of the Group’s system of risk management
and internal control. The Committee continued to monitor and review the risk management process and the procedures established for
identifying, evaluating and managing key risks, which included a review of performance against the objectives set in the prior year. Further
information on the Group’s risk management process is outlined in the Risk Report, on pages 34 to 39.
The Committee also met with the Group’s Health & Safety Manager on at least two occasions during the year. These meetings included
presentations of the results of both internal and externally facilitated audits of individual sites, reviewing key health and safety statistics,
monitoring resourcing requirements for the function and overseeing the achievement of key objectives during 2019 which were set at the
beginning of the year.
The Committee also met with the Data Protection Officer for the Group, who along with the Company Secretary, has responsibility for the
Group’s compliance with the General Data Protection Regulation (“GDPR”). Oversight and approval of the GDPR programme and ongoing
monitoring of its objectives were the main areas of focus during 2019.
Going Concern, Viability and Directors’ Compliance Statements
The Committee reviewed the draft Going Concern Statement, Viability Statement and Directors’ Compliance Statement prior to recommending
them to the Board for its review and approval. These statements are included in the Directors’ Report on pages 89 to 91 and the Risk Report
on pages 34 to 39. The reviews included assessing the effectiveness of the process undertaken by management to evaluate going concern,
including the analysis supporting the Going Concern Statement and disclosures in the financial statements. The Committee and the Board
consider it appropriate to adopt the going concern basis of accounting with no material uncertainties as to the Group’s ability to continue to do
so. The Committee also reviewed the Viability Statement scenario workings assessing the ability of the Group to continue trading for at least
three years. In making this assessment, the Committee and Board have also considered the impact of COVID-19 as outlined on pages 34 and
35. Inevitably, there will be a negative impact on the business although the extent is not yet clear. The Committee and Board do not expect any
reasonably anticipated COVID-19 outcomes to impact the Group’s ability to continue as a going concern. The Committee also reviewed the
table of obligations relating to the Directors’ Compliance Statement and the arrangements and structures which provide reasonable assurance
of compliance.
63

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Internal Audit
The Group’s Internal Audit function is outsourced, however the Committee continues to maintain oversight of and responsibility for the
function’s effectiveness on an annual basis. The Internal Audit function completed five Internal Audit reviews during the year; (1) Project
Management; (2) Internal Financial Controls and Funding and Liquidity; (3) Sales, Pricing and CRM; (4) Review of Payment Process; and (5)
Procurement and Subcontractor Management. The Committee considered reports and updates from the Internal Audit function for each
of these reviews which summarised the work undertaken, findings, recommendations and management responses to audits conducted
during the year. A register is maintained internally which monitors progress against any recommended process and control enhancements
to ensure that they are implemented appropriately and in a timely and controlled manner.
The Committee considered and approved the programme of work to be undertaken by the Internal Audit function in 2019 and the planned
programme of work for 2020. The Committee also met representatives of the outsourced Internal Audit function during the year where
they presented Internal Audit report findings and recommendations and updated the Committee on the actions taken to implement
recommendations. The Committee also met with the members of the Internal Audit function privately without management present.
External Auditor
Our External Auditor, KPMG, was appointed in 2015. The Group currently has no plans to tender for audit services, although is cognisant
of the EU Audit Regulation requirements on auditor rotation.
The Committee reviewed the External Auditor’s overall audit plan for the 2019 audit and approved the remuneration and terms of
engagement of the External Auditor. The Committee also considered the quality and effectiveness of the external audit process and the
independence and objectivity of the External Auditor.
In order to ensure the independence of the External Auditor, the Committee received confirmation from the External Auditors that they
are independent of the Group under the requirements of the Irish Auditing & Accounting Supervisory Authority (“IAASA”) Ethical Standard
for Auditors (Ireland). The External Auditors also confirmed that they were not aware of any relationships between the firm and the Group
or between the firm and persons in financial reporting oversight roles in the Group that may affect its independence. The Committee
considered and was satisfied that the relationships between the External Auditor and the Group including those relating to the provision
of non-audit services did not impair the External Auditor’s judgement or independence.
Non-Audit Services 		
The Committee review the engagement of the External Auditor to provide non-audit services on an ongoing basis. In considering any
proposal for the provision of non-audit services by the External Auditor, the Committee considered several matters including:
• Threats to independence and objectivity resulting from the provision of such services and any safeguards in place to eliminate
or reduce these threats to a level where they would not compromise the External Auditor’s integrity and objectivity;
• The nature of the non-audit services;
• Whether the skills and experience of the external audit firm make it the most suitable supplier of the non-audit services;
• The fees incurred, or to be incurred, for non-audit services both for individual services and in aggregate, relative to the audit fee; and
• Any relevant legislation.
Under this Policy, the External Auditor will not be engaged for any non-audit services without the approval of the Committee. The External
Auditor is precluded from providing certain services under Regulation (EU) No 537/2014 or from providing any non-audit services that have
the potential to compromise its independence or judgement.
Details of the audit and non-audit services provided by the External Auditor for 2019 and their related fees are disclosed in note 9 to the
consolidated financial statements. The Committee has undertaken a rigorous review of non-audit services provided during 2019 and is
satisfied that these services were efficiently provided by the External Auditor with the benefit of their knowledge of the business and did
not prejudice their independence or objectivity. The fees related mainly advice on legacy matters from the 2015 Project Clear transaction,
tax advisory services, the review of the interim accounts and iXBRL accounts conversion services.
In line with EU audit regulations, the Group’s non-audit fees will be less than 70% of the average of the audit fees over the previous three-
year period by the year ended 31 December 2020. During the year the Committee appointed PwC as an independent advisory firm to
conduct tax and other non-audit advisory work, to ensure the independence of the Group’s auditor and reduce the level of non-audit work
conducted by the External Auditor. This appointment resulted in a significant decrease in the ratio of audit fees to non-audit fees by the
External Auditor. For the year ended 31 December 2019 non-audit fees totalled 40% of audit fees in 2019 and 55% of the average audit
fee over the previous three-year period, well within the limits of the policy.
Whistleblowing, Fraud & Anti Bribery		
The Group’s Anti-Fraud, ‘Speak Up’ and Anti-Bribery Policies were approved in 2017 and circulated throughout the Group. The policies are
published on the Group’s intranet and employees are required to confirm they have read them. The Committee continue to monitor and
review any breaches to these Policies.
64
Estimates and Judgements
The Committee reviewed in detail the areas of significant judgement, complexity and estimation in connection with the financial
statements for 2019. The Committee considered a report from the External Auditors on the audit work undertaken and conclusions
reached as set out in their audit report on pages 94 to 99. The Committee also had an in-depth discussion on these matters with the
External Auditors. These significant areas were the carrying value of inventories and profit recognition.
Carrying Value of Inventories and Profit Recognition
The Group continued to invest capital in developing its landbank during 2019 and the construction work in progress carrying values have
increased as the business continues to scale its construction activities. Consequently, the carrying value of inventories is a critical area in
terms of judgement from a management and audit perspective. The Group engaged in a detailed annual impairment test during 2019
to ensure that the investment in such development land and the related construction work in progress is not impaired. The impairment
exercise was conducted with input from the relevant stakeholders across the business and external input, where appropriate. The annual
impairment test looks at all aspects of site performance on an individual site by site basis, in order to determine the net realisable value of
the individual site. This involves assessing the number of units that can be achieved on each individual site, together with a full assessment
of the likely sales prices of those individual units, which are then compared to a third-party sales agents’ assessment of the sales value of
those units or actual sales prices achieved to date.
All costs associated with the individual sites are assessed and updated on a regular basis as new information becomes available, based
on actual experience. In the event that the net realisable value is lower than the cost of any particular site, the individual site would be
considered impaired and it would be written down to its net realisable value. This process is reviewed by management and is also tested
extensively as part of the annual audit process.
The annual impairment test did not show any evidence of impairment on a site by site basis.
The Group recognises its gross profit on each sale, based on the particular unit sold and the total cost attaching to that unit. As the build
cost on a site can take place over a number of reporting periods the determination of the cost of sale to release on each individual unit
sale is dependent on up-to-date cost forecasting and expected profit margins across the scheme. There is a risk that one or all of the
assumptions could be inaccurate, with a resulting impact on the carrying value of inventory or the amount of profit recognised. This risk is
managed through ongoing site profitability reforecasting, with any necessary adjustments being accounted for in the relevant reporting
period.
The Committee considered the evidence from impairment reviews and profit forecasting models across the various sites and discussed the
results with management and is satisfied with the carrying values of inventories (development land and construction work in progress) and
with the methodology for the release of costs on the sale of individual units.
As Chair of the Committee, I engaged with the Company Secretary, the Group Finance Director, the Head of Finance, the Internal Audit
function and the External Auditor in preparation for Committee meetings. I also attend the Annual General Meeting and am available to
respond to any questions that shareholders may have concerning the activities of the Committee.
Gary Britton
Chair of the Audit & Risk Committee
Audit & Risk Committee Report continued
65

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Dear Shareholder,
I am pleased to present the Nomination Committee (“the
Committee”) report covering the work of the Committee during the
2019 financial year. This has been a busy year for the Committee with
a keen focus on Board and Committee composition. From 1 January
2019, the new UK Corporate Governance Code (“the Code”) also
came into effect for Cairn, which has several material implications
for Nomination Committees in Ireland and the UK. The review and
adoption of principles of the new Code also formed part of the
Committee’s activity during the year.
The primary role of the Committee is to monitor and maintain
an appropriate balance of skills, experience, independence and
diversity on the Board while regularly reviewing its structure, size
and composition. It is also responsible for ensuring there is a formal,
rigorous and transparent process for the appointment of new
Directors to the Board. Succession planning is a fundamental aspect
of the Committee’s work and encompasses a number of factors:
• contingency planning – for sudden and unforeseen departures;
• medium-term planning – the orderly replacement of current
Board members and senior executives; and
• long-term planning – the relationship between the delivery of
the Company strategy and objectives to the skills needed on the
Board now and in the future.
During the year, the Committee oversaw the recruitment process
resulting in the appointment of David O’Beirne, Jayne McGivern
and Linda Hickey in the first half of 2019, and the recruitment of
Chief Financial Officer, Shane Doherty who, following the departure
of Tim Kenny, will join the Company in April 2020. More widely,
the Board and Committee continue to receive presentations from
management on the development of the talent pipeline throughout
the organisation, as well as insights into recruitment processes
at all levels of the organisation. As a Committee, we also lead
oversight of the annual Board evaluation process to assess the
performance of individual Directors and the effectiveness of the
Board and its Committees.
During the past year, there were a number of changes to the
Committee. I took on the role of Chair of the Committee and
both Alan McIntosh and David O’Beirne joined the Committee.
Giles Davies
Chair of the Nomination Committee
“2019 was a particularly busy
year for the Committee with
a keen focus on Board and
Committee composition and
adopting the principles of the
new Code.”
Giles Davies
Chair of the Nomination Committee
Nomination Committee Report
66
Nomination Committee Report continued
Role of the Committee
The Committee is responsible for Board recruitment and will conduct a continuous and proactive process of planning and assessment,
taking into account the Board’s composition against the Company’s strategic priorities and the main trends and factors affecting the
long-term success and future viability of the Company. The Committee’s key objective is to ensure that the Board comprises individuals
with the necessary skills, knowledge, experience and diversity to ensure that the Board is effective in discharging its responsibilities.
The Committee meets at least 2 times per year and, during 2019, met 6 times. Member attendance at meetings is detailed below.
Committee Member
Meeting
Attendance
Committee
Tenure
Giles Davies* (Chair) 6/6 5 years
Gary Britton 6/6 5 years
Alan McIntosh* 3/3 <1 year
David O’Beirne* 3/3 <1 year
John Reynolds* 3/3 4 years
* 
Alan McIntosh and David O’Beirne joined the Committee on 8 July 2019. John Reynolds stepped down and was succeeded as Chair of the Committee by Giles Davies
on the same date.
In line with the provisions of the Code, a majority (75%) of members of the Committee are independent. In addition to the above, the
Chairman of the Board and the Chief Executive Officer are also often invited to attend meetings.
KEY AREAS OF ACTIVITY DURING 2019
GOVERNANCE BOARD COMPOSITION SUCCESSION PLANNING
• Reviewed and approved the
Committee’s annual agenda
and Terms of Reference.
• Reviewed any actual or potential
conflict of interests which may
arise for any Board member.
• Conducted an internally facilitated
Committee evaluation.
• Reviewed and approved a new
Diversity & Inclusion Policy for
the Group.
• Reviewed the provisions of the Code
and in particular, guidelines with
respect to workforce engagement.
• Reviewed the structure, size and
composition of the Board.
• Reviewed the skills, experience and
capability of each Board member and
of the Board as a whole against the
needs of the Board.
• Ensured that the time commitment
required from the Chairman and Non-
Executive Directors were appropriate
to fulfil their roles.
• Completed a skills assessment of the
current Board to identify gaps in skills,
diversity and capabilities required to
support the Company’s growth.
• Recruited three additional
independent Non-Executive Directors
to address diversity and skills gaps
identified.
• Recruited a new Chief Financial Officer.
• Reviewed the composition of each of
the Board Committees recommending
to the Board several changes to the
composition of each Committee.
• Ensured that succession requirements
were considered in the hiring of
key senior management (Director
of Customer, Technical Director,
Commercial Director and Chief
People Officer).
• Assessed the tenure and effectiveness
of current Board members.
• Supported top talent assessment with
the Chief Executive Officer to identify
employees in the succession pipeline.
Board Refreshment and Skills
The Committee considers Board and Committee composition at each meeting. This includes the consideration of new appointments,
both in respect of planned succession and as a result of the ongoing review of skills. The selection and appointment procedure commences
with the agreement of a role profile and selection of a recruitment firm to help identify potential candidates for the role. Three new Non-
Executive Directors were appointed in 2019 and details on their recruitment process are set out below. Each Non-Executive Director
appointed was as a result of a rigorous search process led by Korn Ferry. Korn Ferry is a leading independent recruitment firm and
has no other relationship with the Company other than in its role to provide recruitment services.
During the year, there were a number of changes to Board and Committee composition. David O’Beirne, Jayne McGivern and Linda Hickey
joined the Board in March and April, respectively. Each appointment has added significant diversity of expertise and knowledge to the
Board. Our Board continues to include an appropriate balance of longer serving and more recently appointed Directors, with diverse
backgrounds and experience. This serves to bring fresh thinking to the Board yet preserves the knowledge, experience and understanding
of the evolution of the Cairn business within the Board as a whole, all of which provides the platform for fruitful discussion at Board level.
67

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Skills Matrix of Non-Executive Directors
Name
Industry
PLC
NED
Experience
Governance
Experience
Commercial
Executive
Experience
Sector
Direct
Experience
Entrepreneurial
Background/
Experience
Policy/Government
Interaction
Experience
Large
Project
Delivery
Background
Sales/Marketing
Experience
Independent
Capital
Markets
Finance
Legal
Not
for
Profit

* John Reynolds was independent upon appointment as Chairman of the Board in April 2015.
The Committee will continue to monitor the composition and balance of the Board to ensure that broad expertise is available from the
existing members and will recommend further appointments as and when appropriate to assure the long-term success of the Company.
Board Balance, Effectiveness and Independence
The Committee reviewed the size and performance of the Board during the year and this process occurs annually. A key element of ensuring
the Board continues to operate at a high standard is independent oversight, which allows Non-Executive Directors to scrutinise and, when
necessary, challenge management proposals and strategy. Throughout the year, over half of the Board, excluding the Chairman, comprised
independent Non-Executive Directors. Giles Davies is the Senior Independent Director of the Company. The Senior Independent Director
provides a sounding board for the Chairman and serves as an intermediary for the other Directors and shareholders when necessary.
When evaluating the independence of Directors and the Board overall, the Committee has had due regard to any matters which might
affect, or appear to affect, the independence of certain of the Directors. Following a rigorous review as part of the Board’s annual
evaluation, each of the Non-Executive Directors, except for Alan McIntosh as a founder and former Executive Director and excluding
the Chairman who was independent upon appointment, is independent. In determining the independence of the Non-Executives,
the Committee scrutinised any issues relating to actual or perceived conflicts of interest.
In assessing the independence of Linda Hickey, the Committee had due regard for her former position as a senior executive at Goodbody
Stockbrokers (“Goodbody”), one of the Company’s corporate brokers, as well as on the Board of Kingspan Group plc (“Kingspan”), one
of the Company’s suppliers. The Committee concluded that Ms Hickey was fully independent, taking into account the following material
factors:
• Ms Hickey retired from her role at Goodbody in April 2019 prior to her joining the Board;
• The annual level of fees and expenses paid to Goodbody for 2019 were c. €50k (2018: c. €50k) for corporate broking, with one-off 		
fees of c. €45k incurred in relation to share repurchases during 2019. These total purchases are significantly below 1% of revenue for 		
Goodbody and are not considered material;
• In relation to her position as a non-executive on the Board of Kingspan, Kingspan is the largest supplier of timber frame housing 		
in Ireland. The availability of alternative suppliers at such scale simply does not exist in the Irish market and procurement of these 		
products was subject to the Company’s strict procurement procedures. Non-executive directors are not involved in the procurement
process; and
• The total purchases from Kingspan in 2019 were €15.5 million, which is not material for a business of Kingspan’s size, with €4.7 billion
of revenues in 2019.
Ms Hickey adds valuable experience having worked for two of the largest Irish stockbroking firms. In an Irish and international context,
she has deep experience in capital markets and particularly with Irish public companies, which is very valuable to the Company and our
shareholders. In addition, we consider experience gained through her role as a non-executive director of a global building materials
company to be an asset to the Company. At the 2019 AGM, Ms Hickey was elected to the Board with 100% shareholder support.
68
Separately, in considering the independence of David O’Beirne, both at the time of his appointment and subsequently as part of the
annual review of the Board’s composition, the Committee had particular regard for his position as a partner of Eversheds Sutherland
(“Eversheds”), one of the Company’s legal advisors. The Committee concluded that Mr O’Beirne was fully independent, taking into
account the following material factors:
• A&L Goodbody solicitors are the Company’s corporate lawyers advising on all matters pertaining to governance and corporate affairs;
• All fees paid to Eversheds relate to specific property transactions including property conveyancing. All work undertaken by Eversheds
for the Company is managed by other employees within the firm, and there are material protections in place – both at Eversheds and
Cairn – to ensure that no information about the Company’s legal affairs is available which is not available to all other Directors generally;
• He does not, nor has not, had any involvement in advising the Company on any legal matters;
• Mr O’Beirne has on no occasion acted as an advisor in any capacity to the Company;
• The total fees paid to Eversheds during the year were €1.78m (2018: €1.30m) and account for less than 4% of Eversheds annual revenues; and
• He has no role in the selection or retention of legal advisors to the Company.
Mr O’Beirne is an experienced and accomplished corporate lawyer and, as evidenced by his contributions since his appointment,
adds important legal and regulatory experience to the Board. Based on the foregoing, the Committee concluded that there was no
material relationship, financial or otherwise, which might directly or indirectly influence his judgement. Despite this, the Board and the
Committee are cognisant of the increase in fees paid to Eversheds from 2018 to 2019, which was reflective of the expansion in our need
for conveyancing services due to the increase in the number of new homes delivered annually. We will continue to closely monitor the level
of fees paid to Eversheds in the coming year, and the Committee will ensure that the Board continues to operate within the Company’s
Conflicts of Interest policy. At the 2019 AGM, Mr O’Beirne was elected to the Board with over 99% shareholder support.
Non-Executive directors are not, and will not be, involved in any discussion regarding their own independence, either at Committee or Board level.
Appointment of Chief Financial Officer
In July 2019, Tim Kenny advised the Board of his intention to leave his role as Group Finance Director in January 2020, remaining employed
until then with the Company to ensure the successful delivery of a number of important projects while promoting an orderly transition
to his successor. The process to recruit his replacement started immediately. Following an international search conducted by Odgers
Bernstein throughout 2019, the appointment of Shane Doherty was announced in January 2020. Mr Doherty joins from Morgan McKinley,
an international professional staffing and resourcing solutions business, where he has been Group Chief Financial Officer since March 2018.
Led by the Committee, the process around his appointment was rigorous and comprehensive, and included the review of in excess
of twenty internal and external candidates, as well as conducting several interviews. Following discussions and review of the depth of
candidates, the Committee proposed the appointment of Mr Doherty, which was unanimously approved by the Board. In determining
Mr Doherty’s appointment, his knowledge, skills and experience, specifically his significant financial, accounting and operational
experience as a chief financial officer was an important factor.
Following the recruitment of Mr Doherty, the Committee, working with the whole Board, reviewed the efficacy of its succession planning
and recruitment process. The Board is satisfied its succession planning and approach to recruitment is operating to a high standard and
continues to align with its overall approach to governance and strategy.
Diversity & Inclusion
A diverse workforce brings a broader range of perspectives and drives innovation, which supports us in better understanding the
expectations of those for whom we build houses. The Board and the executive play a key role in setting the tone on diversity and inclusion,
and the Committee applies the principles of Diversity and Inclusion when considering appointments. We use selection criteria that do not
discriminate in any direct or indirect way for all of our roles.
During 2019, the Board adopted a formal Diversity and Equality Policy applicable to the Company as a whole. As at 31 December 2019, our
female employees made up 25% of our total workforce, while 33% of the Chief Executive Officer’s direct reports were female. Many of the
Company’s employee base are also from varying backgrounds of nationality, ethnicity, and religion. In each of these areas, the Company
has made progress and diversity will continue to be key focus area for the Board and management in 2020 and beyond. Additional details
on diversity within the Company can be found on page 30.
The Board and the Committee remain mindful of the targets set by the Hampton Alexander Review and the Parker Review respectively for
companies to have 33% female representation on their boards by 2021. At the time of publishing this report, female representation on the
Board is 22%. Further information on gender diversity, including in our broader executive team, may be found on pages 30 and 50 to 53.
Committee Evaluation
The Committee conducted an internally facilitated evaluation assessing its effectiveness during 2019 using an individual, confidential
questionnaire and the Company Secretary analysed the responses and presented a summary of the findings to the Committee in
early 2020. Overall the Committee is considered to be operating effectively and each of the members continue to perform their role
independently and effectively. Several actions were noted for prioritisation in 2020 including succession planning for key senior roles,
finalising Cairn’s sustainability agenda and where responsibility for sustainability rests within the Board structure, and reviewing the remit
of the Committee overall to consider more formal terms of reference with respect to our broader governance agenda. The workforce
engagement strategy with the designated non-executive director responsible for this element of the principles within the Code, David
O’Beirne, will also be prioritised in 2020 by this Committee.
Nomination Committee Report continued
69

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Dear Shareholder,
As Chair of the Remuneration Committee (the “Committee”),
I am pleased to present our Remuneration Report for the year
ended 31 December 2019. In the period since our initial public
offering, the Company has grown considerably, delivering on
our promise set out at admission that we would develop and
optimise our landbank in order to create an Irish housebuilder of
scale, capable of delivering sustainable profits over the long-term.
Driven by talented employees throughout the organisation, Cairn’s
revenue, gross profit and EPS have grown significantly since listing
to over €435 million, €85 million and 6.5 cent per ordinary share,
respectively, in 2019. Our headcount has also increased significantly
from IPO to 195 at the end of 2019, placing an even greater
importance on the reward and incentive arrangements that
are required to attract and retain the best people.
During 2019, the Committee undertook a review of the
Remuneration Policy to ensure it remains fit for purpose and
engaged directly with shareholders to seek their feedback on
the proposed revisions. In determining the changes required,
the Committee was guided by the principles that (i) variable pay
would only be awarded for stretching performance, (ii) a significant
majority of the total package should be at risk for performance,
and (iii) an owner-based mindset is best achieved through the
delivery of shares to employees for performance.
In line with the development of the business, a key focus for the
Committee has been, and will continue to be, that we ensure our
approach to remuneration is transparent and, of equal importance,
our communication with shareholders through the Annual Report
and direct engagement remains a priority. Throughout this
report we have sought to provide enhanced disclosure on our
remuneration framework and how Committee decisions reflect
the strategic goals and performance of the business.
Approach to Remuneration
The Committee’s overall philosophy on remuneration remains to
ensure that Executive Directors and employees are incentivised to
successfully implement strategy and that remuneration promotes
alignment with the long-term interests of shareholders.
In implementing the Remuneration Policy approved at the 2017
Annual General Meeting and in developing the proposed 2020
Remuneration Policy, the Committee seeks to ensure that the
following are achieved in a way which enables our business to scale
up through attracting and retaining the best talent and delivering
shareholder value:
• Executives are rewarded in a fair and balanced way which
promotes the long-term success of the Company;
• Executives receive a level of remuneration that is appropriate
to their scale of responsibility and individual performance;
• The need to attract, retain and motivate employees of a high
calibre is taken into account; and
• Risk is properly considered in setting the Remuneration Policy
and in determining remuneration packages.
Performance and Remuneration Outcomes
2019 was another year of strong growth for the Group, with
management driving continued progress as evidenced across a
number of key areas:
• Continued Scaling: Delivered over 1,800 closed and forward sold
units in the period, including 1,080 new home sales completions.
Active on 16 developments, up from 12 at the end of 2018, which
will deliver c. 6,750 new homes. Closed and forward sales pipeline
of 853 units (€266.1 million, excl. VAT) as at 2 March 2020;
• Significant Growth: Revenues increased by 29% to €435.3
million (2018: €337.0 million);
• Multifamily Private Rental Sector (“PRS”) Sales and Forward
Sales: €345 million revenue (incl. VAT) on 830 units from one
completed and four forward sold multifamily PRS transactions in
city centre, suburban and commuter belt locations (equating to
a 24% share of the 2019 new build multifamily PRS market);
• Financial Performance: Gross profit increased by 23% to €85.3
million (2018: €69.1 million), operating profit grew by 28% to €68.0
million (2018: €53.2 million) and Group profit after tax increased
by 63% to €51.2 million (2017: €31.4 million). This resulted in an
Earnings Per Share (“EPS”) of 6.5 cent (2018: 4.0 cent); and
• Cash Generation and Capital Returns: Operating cash flow
grew by 147% to €99.2 million (2018: €40.1 million). 2.50 cent
per share interim dividend paid in October 2019 and €23 million
returned to shareholders through a share buyback programme.
“2019 was another year of
excellent growth and clear
delivery against key strategic
objectives for Cairn.”
Linda Hickey
Chair of the Remuneration Committee
Remuneration Committee Report
70
In addition to the key financial highlights detailed above, the Committee considered carefully the impact of the performance of Executive
Directors on operational scaling and quality metrics, all of which we believe justify payment of above-target bonuses for 2019 to both the
Chief Executive Officer (“CEO”) and the former Group Finance Director for his time in role for the full year of 2019. While the ‘hurdle’ for
high performance continually rises, the team have performed exceptionally well in 2019 and have performed very well in terms of financial
and operational performance despite, at times, challenging macro and market conditions. Further details of the bonus framework and
performance are provided on pages 79 and 80. From 2020 onwards, bonuses will be paid out against a formulaic framework.
Change in Chief Financial Officer (“CFO”)
As announced in July 2019, Tim Kenny stepped down as Group Finance Director and left the business in January 2020. Upon departure,
Mr Kenny’s remuneration was determined in line with our existing remuneration policy. Mr Kenny was treated as a good leaver on the basis
of his contribution to the business to date, meaning he was entitled to fixed pay for the duration of his notice period as well as a bonus pro-
rated for time served. Details of his 2019 remuneration are set out on page 78, and reflects the fact that Mr Kenny served for the entire of
the 2019 financial year.
In January 2020, we announced that Shane Doherty would succeed Tim Kenny as CFO with effect from April 2020. Mr Doherty joins from
Morgan McKinley where he has served as Group Chief Financial Officer for over two years. Mr Doherty’s salary has been set at €375,000
and pension contributions will be 15% of salary. His variable pay will be aligned with the Policy proposed at the 2020 AGM.
On joining the Company, the CFO will receive an LTIP award at the exceptional limit of 200% of salary permitted under the Policy. The first
half of the award (i.e. of 100% of salary) represents a regular grant for 2020 under the LTIP. The remainder (an additional 100% of salary)
reflects awards foregone from his previous employer. When calculating the value of the awards, the Committee linked the grant directly
to the value of remuneration the new CFO had forfeited. The Committee is satisfied that this level of award was necessary to ensure the
appointment of a candidate of Shane’s calibre to the Company whilst appropriately recognising awards at their fair market value that he
left in his prior role.
2018 UK Corporate Governance Code
As set out in last year’s Annual Report, since the Financial Reporting Council published the new UK Corporate Governance Code (the Code)
in July 2018, the Committee has been taken steps to refine our approach to remuneration to reflect the updated principles and provisions of
the Code. In terms of our revised remuneration policy, the principal new provisions relate to pensions and post-employment shareholding
requirements, which apply from 1 January 2020. Outside of the structural amendments to the fixed and variable remuneration framework,
the Committee continues to actively oversee remuneration arrangements for the remainder of the employee base. As part of that oversight, a
restricted share plan will be proposed at our 2020 AGM. The restricted share plan is part of the reward arrangements for the wider employee
base and will not form part of the Remuneration Policy for Executive Directors.
As an Irish incorporated company, the Company is not subject to the UK executive remuneration requirements as set out in the Large
and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. Nonetheless, in order to ensure
transparency to all of our stakeholders, we have sought to comply with these requirements on a voluntary basis, to the extent possible
under Irish law.
Shareholder Engagement
During the course of 2019 and early 2020, we engaged directly with shareholders to seek their feedback on the proposed 2020
Remuneration Policy. The Committee is committed to open dialogue with shareholders and institutional investor bodies on remuneration
matters and welcomes feedback as it helps to inform its decisions. As part of our re-design of the Remuneration Policy, the Chairman of
the Board and I contacted shareholders who hold approximately 70% of our issued share capital as well as the proxy advisors ISS and Glass
Lewis to outline our proposed changes to the Remuneration Policy and requested a meeting to obtain their feedback and input on a range
of governance areas. The Committee found the feedback to be valuable, particularly on aligning the reward framework with the delivery of
strategy and how best for us to communicate key decisions through the Annual Report.
Together with our shareholders, we discussed our evolving growth and scaling requirements, best practice in the market and delivering
sustainable results. The following were key themes which we reflected on in the decisions at Committee level:
1) Align pensions with the broader employee population whilst retaining a competitive positioning within our local market;
2) Detail the case and underlying rationale for increased variable pay opportunities;
3) Acknowledge that every business and market is different and that there is no ‘one size fits all’ approach to remuneration;
4) Ensure long term shareholder interests are aligned with management through share ownership;
5) Consider the introduction of a ROCE (Return on Capital Employed) metric as the business evolves and matures in the years ahead;
6) Ensure strong risk management by introducing bonus deferral alongside the current clawback provisions;
7) Align any exiting Executive Directors with shareholders through post-employment shareholdings; and
8) Introduce sensible, business-relevant stakeholder metrics into LTIP and/or bonus.
Our engagement with shareholders is an ongoing process which we have carried out on multiple occasions during the past 12 months.
I would like to take this opportunity to thank shareholders for their time in engaging with us which allowed us to reflect their views in our
final decisions.
Remuneration Committee Report continued
71

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Key Changes to 2020 Remuneration Policy
Following our engagement with shareholders and consideration of evolving best-practice, we made a number of changes which are
reflected in our 2020 Remuneration Policy which will be put to shareholders for an advisory vote in our 2020 AGM. These changes can
be summarised as follows and are described in further detail in the policy table:
1) Introduced a structured bonus plan with transparent metrics for Executive Directors, effective immediately;
2) Increased the maximum bonus opportunity from 75% for the CFO and 105% for the CEO to 150% of salary for both executives;
3) Introduced two-year bonus deferral into shares on all bonus received by Executive Directors above 125% of salary;
4) Increased the potential award levels in normal circumstances under the LTIP from 100% to 150% of salary;
5) Reduced the Executive Director pension contribution ceiling from 25% to 15% of salary, bringing it further in line with the broader
employee population whilst retaining a reasonable competitive positioning within our local market; this reduction will apply to the
current CEO equally over the next two years. This ceiling of 15% of salary will apply to any future hires;
6) Introduced a post-employment shareholding requirement, with Executive Directors required to hold at least 100% of salary for
a year after departure reducing to 50% of salary for two years after exit; and
7) Introduced stakeholder metrics alongside cash returns as part of a broader set of LTIP metrics to underpin the sustainability and
returns mindset in the business.
In determining the changes to the Policy, the Committee was guided by a number of principles including: (i) variable pay should only
be awarded for stretching performance, (ii) a significant majority of total remuneration should be at risk for performance, and (iii) an
owner-based mindset is best achieved through the delivery of shares to employees for performance. While there has been an increase in
potential pay under the bonus plan for the Executive Directors, maximum payouts will only be awarded for truly stretching performance
against challenging and formulaic performance targets. Deferral will apply to the final sixth of the bonus opportunity. While we recognise
that a greater level of deferral is standard among a number of our Irish and UK peers, the Committee is aware of the relatively unique
circumstances of the Company, with the CEO not participating in the LTIP, continuing to be paid a salary below that of peers, accepting
a reduction in his pension contributions, and being already firmly aligned with the interests of other shareholders through the size of his
holdings in the Company (see page 83 for further details). Despite these factors, the Committee introduced deferral for the first time and,
when introducing a revised policy in 2023, will likely increase the level of deferral again.
In electing to alter the maximum payouts under the bonus plan, the Committee was cognisant of the principle of opting for an emphasis
on variable or at-risk pay, as opposed to increasing fixed pay. In fact, the CEO’s salary has not increased in any of the last four years and
his total cash compensation reduced in 2017. This approach, coupled with a significant reduction in pension contributions, has resulted in
restrained overall remuneration levels under the proposed policy. In finalising the proposals before engaging shareholders, the Committee
reviewed the proposed remuneration levels against an extensive and robust peer group, which confirmed that bonus levels of up to 150%
of salary under the 2020 policy remained reasonable and at market levels, particularly when coupled with a conservative market salary. The
peer group employed was vigorously tested to ensure appropriateness in terms of size and relevance.
The maximum grant in normal circumstances under the LTIP has been increased to 150% of salary, however, the Committee does not
necessarily intend to make awards at this level and will exercise discretion in making future awards.
As outlined in other areas of this report, the Board is carefully monitoring the development of the COVID-19 outbreak and its potential
impact on the business. The Committee, like the Board, will continue to monitor these developments and their potential impact on the
incentive framework which will be evaluated on a regular basis.
On behalf of the Committee and the entire Board, I thank all shareholders and their representatives for the constructive engagement
in 2019 and 2020, and their valuable feedback and suggestions. We are grateful for your continued support and welcome any future
guidance.
Linda Hickey
Chair, Remuneration Committee
72
REMUNERATION STRATEGY
The Company’s proposed 2020 Remuneration Policy is set out below, reflecting evolving market practice, strategy and shareholder
feedback.
Through the implementation of the Policy, the Board seeks to align the interests of Executive Directors and other senior management
with those of shareholders, within the framework set out in the UK Corporate Governance Code. Central to this Policy is the Company’s
commitment to long-term, performance-based incentivisation and the encouragement of share ownership, both of which are aligned to
embedding an ‘ownership mindset’ within the Company’s culture.
The primary objective of the Policy is to promote the long-term success of the business by ensuring remuneration reflects business
performance and personal contribution to the delivery of the Company’s strategy in a way which creates long-term shareholder value.
Through the operation of the Policy, the Committee seeks to ensure that:
• The Company will attract, motivate and retain individuals of the highest calibre;
• Executive Directors and senior management are rewarded in a fair and balanced way which promotes the long-term success of the
Company;
• Executive Directors and senior management receive a level of remuneration that is appropriate to their scale of responsibility and
individual performance;
• The overall approach to remuneration has regard to the sector and geography within which the Company operates and the markets
from which it draws its Executive Directors and senior management; and
• Risk is properly considered in setting the Policy and in determining remuneration packages.
The elements of the remuneration package for the Executive Directors and other senior management are annual salary, retirement
benefits and allowances, annual performance-related incentives and participation in an LTIP, which promotes the creation of sustainable
shareholder value. Recognising the growth-oriented, long-term mindset required in senior management, the following pay mix underpins
our Remuneration Strategy.
Pay Mix at Maximum
CHIEF FINANCIAL OFFICER
Fixed
Bonus
LTIP
CHIEF EXECUTIVE OFFICER
Bonus
Fixed
Pay at
Note: The Chief Executive Officer does not receive LTIP awards.
Remuneration Committee Report continued
73

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
2020 REMUNERATION POLICY
The key elements of the remuneration for Executive Directors and other senior management under the Policy are set out in the table below
reflecting market practice and shareholder feedback.
When setting the Remuneration Policy for Executive Directors, the Committee has regard to the pay and employment conditions of
employees within the Company.
Element and Link to
Remuneration Policy Approach Maximum Opportunity
SALARY
To attract and retain high
performing talent required
to deliver the business
strategy, providing core
reward for the role.
Salaries are reviewed annually. The factors taken into
account in the review include:
• Role and experience;
• Company performance;
• Personal performance;
• Competitive market practice; and
• Benchmarking against an appropriate comparator group.
When setting executive director salaries, account is taken
of movements in salaries generally across the Company.
The target position for salaries will
generally be market median. Any annual
salary increases will be considered in that
context and reflect wider considerations of
performance and increases in pay for the
wider workforce.
ANNUAL INCENTIVES
To incentivise and reward
the delivery of near-term
business targets and
objectives.
Annual Incentive payments to Executive Directors and other
senior management are based on:
Metric Measure
Financial (50%) • Revenue vs. target
• Margin vs. target
Stakeholder (20%) • Customer metric vs. target
• Health & Safety underpin
Personal Objectives
(30%)
1. Strategy
2. Landbank and Portfolio Balancing
3. Risk
4. Brand
5. Talent Development
The measures, their weighting and the objectives are
reviewed on an annual basis. They will be disclosed when
they are no longer commercially sensitive.
The Committee can apply appropriate discretion in specific
circumstances in respect of determining the incentive
payment to be awarded.
A formal clawback policy is in place for the Executive
Directors (and other senior management), under which
Annual Incentive payments are subject to clawback for a
period of three years in the event of a material restatement
of financial statements or other specified events. Further
details on the clawback policy are set out on page 75.
Any bonus awarded to Executive Directors above 125%
of salary is deferred into shares for a period of two years.
The target and maximum awards, as
a percentage of annual salary, for the
Executive Directors are as follows:
Target Max.
Chief Executive Officer 75% 150%
Other Executive
Directors 75% 150%*
* 
The incoming CFO’s maximum contractual bonus
entitlement is 100% for 2020. The actual award
will be dependent upon individual performance
and potential.
74
Element and Link to
Remuneration Policy Approach Maximum Opportunity
CAIRN HOMES PLC LONG TERM INCENTIVE PLAN (“LTIP”)
To reward and retain
Executive Directors and
senior management over
the longer term and align
the interests of management
and shareholders through
incentivising the delivery
of strategy.
The LTIP provides for annual awards of Performance Shares.
It is the Committee’s intention that the primary long-term
incentive vehicle will be made through regular awards of
Performance Shares. Holders of Founder Shares will be
excluded from participation in the LTIP for the duration of
the performance period relating to their Founder Shares.
Performance Share awards vest based on three-year
financial performance, with measures including cumulative
EPS, TSR (Total Shareholder Return), cash generation and
stakeholder metrics. The Committee will consider the
appropriate measures and targets for each subsequent
cycle depending on strategic priorities.
Performance Shares will vest after three years, with
awards made to the Executive Directors and other senior
management subject also to an additional two-year holding
period after vesting.
A formal clawback policy is in place for the Executive
Directors (and other senior management), under which LTIP
awards are subject to clawback for a period of three years
from the vesting date in the event of a material restatement
of financial statements or other specified events. Further
details on the clawback policy are set out on page 75. Any
unvested awards will also be subject to malus provisions.
Under normal circumstances, the maximum
annual award of Performance Shares is up to
150% of salary. In exceptional circumstances,
such as recruitment, awards of up to 200% of
salary can be made. The actual grant size will
be dependent on individual performance
and potential.
No more than 5% of the issued ordinary
share capital may be issued or reserved for
issuance under the LTIP over any ten-year
period. This limitation will also apply to
the Restricted Share Plan (which, for the
avoidance of doubt, excludes Executive
Directors).
RETIREMENT BENEFITS
To attract and retain talent
by enabling long term
pension saving.
Executive Directors and senior management participate in
a defined contribution pension scheme or receive cash in
lieu of a pension. The pension scheme gives the Company
full discretion to pay appropriate contribution levels. The
Committee takes account of market and benchmarking
data for pension contributions for each employee group.
For the Executive Directors the pension
contribution is set at a maximum of 15%
of salary.
ALLOWANCES
To provide market
competitive benefits
consistent with role.
The main benefit is a car allowance. However, benefits
can include medical insurance, life assurance, health
screening and participation in “Save as You Earn” plans.
Maximum levels have not been set as
payments depend on the individual’s
circumstances and may be subject to
change periodically.
Notes to the Policy Table
The Committee may make minor amendments to the Policy set out above (for regulatory, exchange control, tax or administrative purposes
or to take account of a change in legislation) without obtaining shareholder approval for that amendment.
The rules of the incentive plans permit the substitution or variance of performance conditions to produce a fairer measure of performance
as a result of unforeseen circumstances or transactions and include discretions for upwards adjustment to the number of shares to be
realised in the event of a takeover, scheme of arrangement or voluntary winding up. Non-significant changes to the performance metrics
may be made by use of discretion under the LTIP rules.
The Committee reserves the right to make remuneration payments and payments for loss of office (including exercising any discretions
available to it in connection with such payments) that are not in line with the policy table set out above where the terms of the payment
were agreed: (i) before the Policy came into effect; or (ii) at a time when the relevant individual was not a Director of the Company and,
in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the Company.
Performance measures for the annual bonus scheme and the LTIP are selected to focus the Executive Directors on strategic financial and
operational priorities, both short-term and those related to long-term sustainable performance, providing alignment with shareholder
interests. Targets for each performance measure are then set by the Committee in light of strategic objectives over the short-term for the
annual bonus scheme and over at least a three-year performance period for the LTIP. In setting targets, the Committee takes into account
a number of reference points including our three-year plan and the external market.
Remuneration Committee Report continued
75

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Clawback Policy
Incentive payments made to the Executive Directors and other senior management may be subject to clawback for a period of three years
from date of payment in certain circumstances including:
• a material restatement of the Company’s audited financial statements;
• business or reputational damage to the Company or a subsidiary arising from a criminal offence, serious misconduct or gross negligence
by the individual; or
• a material breach of applicable health and safety regulations by the individual.
The rules of the LTIP provide for discretion to the Committee to reduce or impose further conditions on awards prior, or subsequent, to
vesting in the circumstances outlined above. Malus conditions will also apply to any unvested LTIP awards and will be applicable for the
same circumstances.
Policy for Non-Executive Directors
Fees Operation Maximum Opportunity
The fees paid to Non-Executive Directors
reflect their experience and ability and the
time demands of their Board and Board
Committee duties.
A basic fee is paid for Board membership.
Additional fees are payable to the Chairman,
Chair of the Remuneration Committee,
Chair of the Audit & Risk Committee and
the Senior Independent Director.
Additional fees may be paid for membership
of a Board Committee.
The remuneration of the Chairman
is determined by the Remuneration
Committee for approval by the Board.
The remuneration of the other Non-
Executive Directors is determined by the
Chairman and the Chief Executive Officer
for approval by the Board.
The fees are reviewed from time to
time, taking account of any changes
in responsibilities and market practice.
No prescribed maximum annual increase
but benchmarking and market practice will
determine any change in fees.
Non-Executive Directors do not participate
in the Company’s Annual Incentive and LTIP
and do not receive any retirement benefits
from the Company.
Non-Executive Directors Letters of Appointment
Non-Executive Directors have Letters of Appointment which set out their duties and responsibilities. The appointments are for three year
terms but are terminable on one month’s notice by the Board.
Policy on External Board Appointments
Executive Directors may accept external Non-Executive Directorships with the prior approval of the Board. The fees received for such roles
may be retained by the Executive Directors. The Board recognises the benefits that such appointments can bring both to the Company and
to the Executive Director in terms of broadening their knowledge and experience.
Share Ownership Guidelines
To encourage general share ownership and ensure alignment of Executive Directors interests with those of shareholders, the Committee
has adopted guidelines for Executive Directors to retain substantial long-term share ownership. The Chief Executive Officer is required to
hold shares equivalent to 300% of base salary while his direct reports are required to hold 100% of base salary, calculated by reference
to the value of their shares on the acquisition date. Executive Directors and other senior management will be required to hold 50% of any
vested LTIP shares until the applicable ownership level is achieved. The guidelines also specify that Executive Directors should, over a
period of five years from the date of appointment, build up and retain a shareholding in the Company. On termination of employment,
a departing Executive Director will be required to hold at least 100% of salary for a year after departure reducing to 50% of salary for
two years after exit. This post-termination shareholding requirement will not apply to Mr Kenny as it is being introduced from 2020.
Differences in Pay Policy for Employees and Executive Directors
The principles applied to the remuneration of Executive Directors are essentially the same as those throughout the Company. The
difference between pay for Executive Directors and other employees is that for Executive Directors the variable pay element forms
a greater proportion of the overall package and the total remuneration opportunity is higher to reflect the increased responsibility
of the role.
While the Committee’s specific oversight of individual remuneration packages extends only to the Executive Directors and a number of
senior management, it aims to create a broad policy framework to be applied by management to employees throughout the Company,
through its oversight of remuneration structures for senior management and of any major changes in employee benefits structures
throughout the Company. Alignment is delivered by ensuring that senior management and Executive Directors participate in the same
bonus and incentive schemes as far as possible, with similar performance measures and targets. For the avoidance of doubt, Executive
directors will not participate in the Restricted Stock Unit (“RSU”) scheme.
76
Remuneration Policy for Recruitment of New Executive Directors
In determining the remuneration package for new Executive Directors, the Committee will be guided by the principle of offering such
remuneration as is required to attract, retain and motivate a candidate with the particular skills and experience required for a role. The
Remuneration Committee will generally set a remuneration package which is in accordance with the terms of the approved Remuneration
Policy in force at the time of the appointment, though the Committee may make payments outside of the Policy if required in the particular
circumstances and if in the best interests of the Company and its shareholders.
Where an individual forfeits outstanding incentive awards with a previous employer, the Committee may offer compensatory awards to
facilitate recruitment. These awards would be in such form as the Committee considers appropriate, taking into account all relevant factors
including the form, expected value, anticipated vesting and timing of the forfeited awards. The value of any compensatory awards would
be no higher, in the opinion of the Committee, than the value forfeited.
For an internal appointment, any variable pay element awarded in respect of the prior role and any other ongoing remuneration obligations
existing prior to the appointment will be honoured.
Service Contracts
The service agreements of the Executive Directors are rolling contracts which were entered into on the dates shown in the table below:
Name Contract Effective Date Notice Period (Director) Notice Period (Company)
Michael Stanley 9 June 2015 12 months 12 months
Shane Doherty* 14 April 2020 6 months 6 months
* Shane Doherty will join the Company on 14 April 2020.
Policy for “Leavers”
On termination of an Executive Director’s contract, the Committee’s objective is to agree an outcome which is in the best interests of the
Company and its shareholders, taking into account the specific circumstances and performance of the individual, as well as any relevant
contractual obligations and incentive plan rules.
The provisions for “leavers” in respect of each of the elements of remuneration are as follows:
Salary and Benefits
Payments are made in respect of annual salary and benefits for the relevant notice period. The notice period for the Chief Executive Officer
is 12 months and for other Executive Directors the notice period is a maximum of 12 months. In all cases, the notice period applies to both
the Company and the individual.
Annual Incentive
The Committee can apply appropriate discretion in respect of determining the annual incentives, if any, to be awarded based on actual
achieved performance and the period of employment during the financial year. The Committee’s consideration will include the individual’s
performance and contribution in the year in which they leave as well as the basis on which they are leaving the Company.
LTIP
The Committee would normally exercise its discretion when dealing with a participant who ceases to be an employee by reason of
certain exceptional circumstances e.g. death, injury or disability, redundancy, retirement or any other exceptional circumstances. In such
circumstances, any shares that have not already vested on the participant’s cessation date would be eligible for vesting on the normal
vesting date or other date determined by the Committee. The number of shares vesting would be determined by the Committee, although
the default position would be to pro-rate for the proportion of the vesting period elapsed at cessation and to continue to apply the
performance conditions.
In line with the new Remuneration Policy detailed on pages 73 to 77, a post-employment shareholding requirement will apply to Executive
Directors who will be required to hold at least 100% of salary for a year after departure reducing to 50% of salary for two years after exit.
In the event that a participant ceases to be an employee by reason of a termination for serious misconduct, share awards held by the
participant, whether or not vested, would lapse immediately on the service of notice of such termination, unless the Committee in its
sole discretion determines otherwise.
In the event that a participant resigns voluntarily, the Committee will consider their contribution to the business in determining if good
leaver status would be awarded for unvested awards. Each circumstance will be determined on a case by case basis and the Committee
will exercise its discretion in the best interests of the Company and shareholders.
Remuneration Committee Report continued
77

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Remuneration Outcomes in Different Performance Scenarios
The total remuneration opportunity for Executive Directors is strongly performance based and weighted to the long term. The charts
below illustrate the total potential remuneration of Executive Directors under four assumed performance scenarios:
Michael Stanley (Chief Executive Officer) Shane Doherty (Chief Financial Officer)
Minimum On Target Maximum Max+50%
Minimum: Includes fixed pay only (salary, pension and benefits). There is no annual bonus payment and no vesting under the LTIP.
On Target: Fixed pay plus target bonus payout of 75% of base salary and 25% payout under the LTIP.
Max: Fixed pay plus full bonus payout of 150% of base salary for Mr Stanley. For Mr Doherty, fixed pay plus full bonus of 150% of base
salary and full LTIP payout of 150% of base salary.
Max+50%: Same as Max but also includes the impact of a 50% share price appreciation on the LTIP payout.
In the above scenarios, as Mr Stanley does not participate in the LTIP, these have not been included in his remuneration outcomes.
78
ANNUAL REPORT ON REMUNERATION
This section of the Remuneration Report sets out the basis of how the Company’s Remuneration Policy was operated for the year ended
31 December 2019 and how it will be operated in 2020.
At a Glance Summary
Component Michael Stanley – Chief Executive Officer Tim Kenny – Former Group Finance Director
Single figure totals 2019 €966,000 €808,000
Annual bonus 2019 100% of salary payout = €425,000 75% of salary payout = €299,000
LTIP vesting in 2019 N/A N/A
LTIP awards granted in 2019 N/A 100% of salary*
Salaries for 2020 €425,000 N/A
Shareholding at year end as % of salary 6,242.9% 19.8%
* Mr Kenny was considered a good leaver and as such, his awards will vest in line with his period of service to 31 December 2019 and plan performance conditions.
Remuneration Outcomes for Executive Directors for the Year Ended 31 December 2019
The table below sets out the details of the remuneration payable to the Executive Directors for the year ended 31 December 2019, with
comparatives for the prior year ended 31 December 2018.
Executive Director
Salary Annual Incentive Retirement Benefit Car Allowance Total
Michael Stanley 425 425 425 383 106 102 10 10 966 920
Tim Kenny 399 380 299 285 100 95 10 10 808 770
Alan McIntosh* – 190 – – – 16 – 6 – 212
* 
Mr McIntosh stepped down as an Executive director in August 2018 to become a Non-Executive director. The figures shown above reflect time spent as an Executive
director.
Non-Executive Directors’ Remuneration Details
The Committee reviewed independent benchmarking for Non-Executive Director fees from Mercer. No changes were proposed or made
to Non-Executive Director fees during 2019. The fees paid to Non-Executive Directors in respect of the years ended 31 December 2019
with comparatives for the prior year ended 31 December 2018 are set out below:
Non-Executive Director
Base Fee Chair Fee SID Fee Total

* Ms Hickey, Ms McGivern and Mr O’Beirne’s fees above are reflective of their time spent in the role.
** 
Mr McIntosh stepped down as an Executive Director in August 2018 to become a Non-Executive Director. The remuneration shown above is reflective of the time
spent in the Non-Executive Director role in 2018.
Remuneration Committee Report continued
79

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
2019 Annual Bonus
The maximum bonus opportunity for 2019 was 105% of salary for the Chief Executive Officer and 75% of salary for the Group Finance
Director. Annual incentives were based 70% on financial performance and 30% on the achievement of individual performance objectives
linked to leadership and operational targets. Given the stage of growth of the Company, the goals were set within a three-year context
and assessed annually for progress versus expected performance. As part of the review of the Remuneration Policy in advance of the 2020
Annual General Meeting, the Committee have placed a particular focus on how the bonus framework should be altered to reflect that the
business is in a more mature stage of development as detailed and outlined in the Remuneration Policy. The breakdown and resulting
bonus outcomes for 2019 for the Chief Executive Officer and Group Finance Director were:
Target Incentive
(% of salary)
Maximum Incentive
(% of salary)
Actual 2019 Bonus
(% of salary)
Michael Stanley 70% 105% 100%
Tim Kenny 50% 75% 75%
BONUS FRAMEWORK DISCLOSURE
Both the Chief Executive Officer and the Group Finance Director achieved above target performance in each of the key areas of performance.
In assessing performance, the Committee took into account a range of financial and non-financial criteria linked to the delivery of strategy and
the generation of shareholder value. A detailed breakdown of the bonus framework and performance of both the Chief Executive Officer and
the Group Finance Director for 2019 is set out below:
Michael Stanley, Chief Executive Officer:
Area Goal Weighting Performance
Financial Achievement of key financial
objectives and targets
relating to revenue, profit
and cash generation. These
were set against the 3-year
budget to achieve progress
as set by the Board at the
start of the year.
70% Above target
• Significant growth and scaling delivered.
• Revenues increased to €435.3 million (2018: €337.0 million).
• Over 1,800 units closed and forward sold in 2019, including 1,080 sales
completions (+34% year on year). Closed and forward sales pipeline of
853 units (€266.1 million, excl. VAT) as at 2 March 2020.
• Gross profit increased by 23% to €85.3 million (2018: €69.1 million), operating
profit grew by 28% to €68.0 million (2018: €53.2 million) and Group profit after
tax increased by 63% to €51.2 million (2017: €31.4 million). This resulted in an
Earnings Per Share (“EPS”) of 6.5 cent (2018: 4.0 cent).
• Cash Generation and Capital Returns were very strong: operating cash flow
grew by 147% to €99.2 million (2018: €40.1 million). An interim dividend of
2.50 cent was paid in October 2019 and €23 million returned to shareholders
through a share buyback programme.
Strategic
Value
Evaluate and execute land
acquisitions to ensure
strategic value captured and
portfolio is risk balanced
and value led.
10% Above target
• €345 million (incl. VAT) of earned and forward sales revenue for 830 units
from one completed and four forward sold multifamily PRS transactions in city
centre, suburban and commuter belt locations (equating to a 24% share of the
2019 new build multifamily PRS market) demonstrating meaningful capture of
addressable opportunity in institutional capital.
• Led and delivered revenue from non-core site sales to release underlying value
of €32.2m.
• c. 3,500 incremental units from planning gains which enhanced landbank value.
Succession
Planning
Attract, retain and motivate
best in market leadership.
10% Above target
• Succession planning methodology in place which is linked to LTIP and active
talent development.
• In conjunction with the Nomination Committee, played a role in key talent
hiring to strengthen future succession options with the recruitment of senior
management and the development of a diverse pipeline.
• Performance management fully established and supporting our mission,
values and culture.
• Established new operating model to support efficient scaling and delivery.
80
Area Goal Weighting Performance
Brand,
Values and
Stakeholders
Define strategy and values
for the Group that aligns
with shareholder value
and long term sustainable
growth. Represent Cairn
group effectively to create
leverage for the company
with stakeholders and
enhancement of Cairn
brand identity and group
reputation in the market.
5% Above target
• Strategy and Values in place for the business and fully cascaded across all
team into team and personal goals.
• Consistent focus on communicating the brand effectively across all channels.
Strong corporate presence and reputation within local market.
• Industry Awards as a recognition of progress in these areas – 2019 Excellence
in Planning Award – Private Sector (Oak Park, Naas) and Building and Architect
of the Year Awards 2019: Housing Project of the Year (Six Hanover Quay).
Risk
Management
Provide leadership to
ensure that there is an
appropriate governance
framework for the
business, underpinned
by the appropriate risk
appetite for the Group.
5% Above target
• Excellent Health and Safety support and record.
• Governance and risk framework as disclosed in annual report is fully effective
and supported by the CEO.
Tim Kenny, Former Group Finance Director
Area Goal Weighting Performance
Financial In combination with the
CEO, continue to drive
the delivery of revenue,
profitability and cash
generation targets for this
year as set against 3 year
budget to achieve progress
as set by the Board at the
start of the year.
70% Above target
• Supporting the CEO in order to drive outstanding financial and operational
performance.
• Excellent financial results for the business with strong growth in revenue
(+29%) and operating profit (+28%) in 2019.
• Significant increase in EPS to 6.5 cent (+ 63%).
• Capital returns to shareholders.
• Supported target unit sales delivery.
• Completion of the sale of Six Hanover Quay in June 2019 which delivered net
revenue of €90 million and a profit of €14.1 million. Leadership and oversight
of all the related final commercial and legal negotiations.
Supporting
/Completing
Transactions
Evaluate options for
maximising financial
performance and
shareholder returns.
20% Above target
• Played a leading role in Multifamily Private Rental Sector (“PRS”) transactions.
• Forward Sales.
• €345 million (incl. VAT) of earned and forward sales revenue for 830 units from
both completed and supported forward sale of multifamily PRS transactions in
city centre, suburban and commuter belt locations which represented a 24%
share of the 2019 new build multifamily PRS market).
• Leadership of the forward sale of The Quarter at Citywest.
• Leadership of the sale and forward sales of multifamily PRS units at Mariavilla
(Maynooth), Shackleton Park (Lucan) and Gandon Park (Lucan).
Strategy
& Reporting
Enhance financial reporting
and forecasting capability
to support decision making
internally and externally.
5% Above target
• Leadership of a budget and forecast process resulting in high quality
information being provided to the Board and management with supporting
sensitivities and risk analysis to support decision-making.
• Negotiation and enablement of the dividend payout and share buy-back to
deliver shareholder value.
• Leadership of the implementation of a €550 million capital reorganisation.
Risk
Management
Provide direct leadership
to ensure that there is
an appropriate finance
and safety governance
framework for the business,
underpinned by the
appropriate risk appetite
for the Group.
5% Above target
• Excellent Health and Safety support and record.
• Strong performance across finance team to further develop a commercial
capability to enable us to make data led decisions and to scale.
• Excellent governance framework and supporting processes in place with
strong risk management focus and decision making.
Remuneration Committee Report continued
81

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
LONG TERM INCENTIVES
The purpose of the LTIP is to align the Executive Directors and other eligible senior managers with shareholder interests, and to reinforce
outstanding performance. LTIP awards are subject to performance targets set over a three-year period, with an additional two year holding
period for Executive Directors and other senior managers as identified by the Committee. The Chief Executive Officer, who holds Founder
Shares, will not receive an award under the LTIP for the duration of the performance period relating to his Founder Shares.
Therefore, the only Executive Director who will participate in the LTIP is the Chief Financial Officer.
LTIP Target Setting – 2017 to 2022 Overview
The Committee is very pleased with the operational scaling of the Company, evidenced through the fulfilment of its unit and margin
targets, each of which have been achieved. The Company must remain dynamic and agile in its ability to not only deliver its original
commitments, but also to exploit market opportunities as they arise. For the benefit of value creation and shareholder returns over the
long term, management took advantage of the high density development opportunity for enhanced margin progression which emerged
alongside housing delivery. The natural implication of this evolution of strategy towards stronger high density development produces
enhanced, but delayed earnings which is evidenced in the increased EPS target outlined below for the 2019 and 2020 LTIP.
2017 LTIP
In 2017, we made the first award under our LTIP, the performance period for which ended on 31 December 2019. The only Executive
Director eligible to receive an award under the LTIP in 2017 was the Group Finance Director Mr Kenny, which was granted at 200% of
salary, to recognise Mr Kenny’s appointment to the Board, taking into account he had no vesting under any long term incentive award
for at least three years, and also to represent the value of his long term incentive forfeited in his previous role.
The performance criteria for the 2017 LTIP were as follows:
A total of 80% of the shares under the award were subject to the following target thresholds:
Cumulative EPS Vesting of EPS-based Award
Less than 16.7c 0%
16.7c 25%
Between 16.7c and 26.0c Straight-line vesting between 25% and 100%
26.0c or above 100%
A total of 20% of the shares under the award were subject to the following target thresholds:
Total Shareholder Return Vesting of TSR-based Award
Less than 8% p.a. 0%
8% p.a. 25%
Between 8% p.a. and 12.5% p.a. Straight-line basis between 25% and 100%
12.5% p.a. or above 100%
The outcomes of the EPS and TSR elements of the 2017 LTIP are below.
EPS performance outcomes
2017 0.6c
2018 4.0c
2019 6.5c
Total 11.1c
As 16.7c was the threshold vesting hurdle, the EPS element of the award did not vest. TSR for the performance period was 1.9% p.a. which
was lower than the 8% p.a. threshold, therefore, the TSR element of the award also did not vest. As such, the 2017 LTIP award was deemed
to have lapsed in full.
82
2018 LTIP
On 5 April 2018, Tim Kenny received an award under the LTIP as set out in the table below:
Executive Director
Date of
Grant
Number
of Shares
Granted
Share Price
at Date of
Grant
Face Value
on Date of
Grant
Award
as %
of Salary
Vesting
Date
Holding
Period after
Vesting
Tim Kenny 05.04.18 214,689 €1.77 €380,000 100% 05.04.21 2 years
Vesting of these awards will be subject to EPS and TSR performance targets measured over the period 2018 to 2020.
A total of 80% of the shares under the 2018 LTIP award will vest subject to the following target thresholds:
Cumulative EPS Vesting of EPS-based Award
Less than 16.7c 0%
16.7c 25%
Between 16.7 and 24.0c Straight-line basis between 25% and 100%
24.0c or above 100%
A total of 20% of the shares under the 2018 LTIP award will vest subject to the following target thresholds:
Total Shareholder Return Vesting of TSR-based Award
Less than 8% p.a. 0%
8% p.a. 25%
Between 8% p.a. and 12.5% p.a. Straight-line basis between 25% and 100%
12.5% p.a. or above 100%
Mr Kenny was considered a good leaver and so his 2018 LTIP award would vest pro-rata based on his period of service to 31 December
2019 and subject to plan performance conditions.
2019 LTIP
On 15 April 2019, Tim Kenny received an award under the LTIP as set out in the table below:
Executive Director
Date of
Grant
Number
of Shares
Granted
Share Price
at Date of
Grant
Face Value
on Date of
Grant
Award
as %
of Salary
Vesting
Date
Holding
Period after
Vesting
Tim Kenny 15.04.19 300,905 €1.326 €399,000 100% 15.04.22 2 years
Vesting of these awards will be subject to EPS and TSR performance targets measured over the period 2019 to 2021.
A total of 80% of the shares under the 2019 LTIP award will vest subject to the following target thresholds:
Cumulative EPS Vesting of EPS-based Award
Less than 19.9c 0%
19.9c 25%
Between 19.9c and 31.0c Straight line vesting between 25% and 100%
31.0c or above 100%
A total of 20% of the shares under the 2019 LTIP award will vest subject to the following target thresholds:
Total Shareholder Return Vesting of TSR-based Award
Less than 8% p.a. 0%
8% p.a. 25%
Between 8% p.a. and 12.5% p.a. Straight-line basis between 25% and 100%
12.5% p.a. or above 100%
Mr Kenny was considered a good leaver and so his 2019 LTIP award would vest pro-rata based on his period of service to 31 December
2019 and subject to plan performance conditions.
Remuneration Committee Report continued
83

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
2020 LTIP
Whilst it is always the Company’s intention to provide shareholders with the forward-looking LTIP targets, in light of the exceptional
circumstances surrounding COVID-19 facing all companies, the Committee has determined it is prudent to delay the setting of the 2020
LTIP targets until it has a clearer line of sight as to what constitutes strong performance in the period ahead. The metrics and targets will be
communicated to shareholders through an RNS, immediately after they are confirmed.
The Committee will continue to monitor these developments and their potential impact on the incentive framework which will be evaluated
on a regular basis.
Retirement Benefits
In 2019, the Executive Directors received a cash supplement in lieu of pension, consistent with the Remuneration Policy. In 2020, it is
proposed that the Chief Executive Officer’s pension contribution of 25% of salary will reduce to 15% (5% p.a. reduction phased equally
over two years commencing in 2020), to bring his pension contribution further in line with the general workforce.
Payments for Loss of Office
No payments for loss of office were made during the year under review.
Payments to Past Directors
There were no payments to former Directors during the year.
Change in Remuneration of Chief Executive Officer
The table below sets out the percentage change in the remuneration awarded to Michael Stanley between 2018 and 2019.
Percentage Change
2019
Percentage Change
2018
Michael Stanley (Chief Executive Officer) 5.0% 15.4%
Mr Stanley received no salary increase in 2017, 2018 or 2019. The 15.4% increase in 2018 and the 5% increase in 2019 relates to his variable
bonus and pension entitlements. Given the early stage development of the Company and the significant increase in new employees hired in
2018 and 2019, it is not appropriate to disclose the comparable average employee remuneration. The Company will provide a comparative
analysis from 2020 onwards as the tenure of employees stabilises.
Relative Importance of Spend on Pay
The table below shows total employee remuneration (excluding LTIP awards) and distributions to shareholders, in respect of 2019 and 2018.
2019 2018
Total Employee Remuneration €20.9m €15.5m
Distributions to Shareholders* €42.3m –
* Dividends and purchase of own shares in 2019.
Directors’ Shareholding as Percentage of Salary
The table below sets out the percentage of base salary held in shares in the Company by the current Executive Director, CEO Michael
Stanley as at 31 December 2019.
Shareholdings as at 31 December 2019 (% of base salary)
Michael Stanley 6,242.9%
84
REMUNERATION POLICY IMPLEMENTATION IN 2020
A summary of how the Remuneration Policy will be applied for 2020 is set out below.
Salary
The salary of the Chief Executive Officer and incoming Chief Financial Officer are detailed below. The Chief Executive Officer’s salary
remains unchanged from 2018.
1 January 2020 1 January 2019
Michael Stanley €425,000 €425,000
Shane Doherty* €375,000 N/A
* Mr Doherty will join the Company in April 2020. The amount stated above is annual base salary.
The Committee believes that the proposed Remuneration Policy for 2020 represents the right reward strategy for the Company’s stage
of growth whilst reflecting evolving market practice and shareholder views.
The Committee is satisfied that for 2020 onwards, the following LTIP and Annual Bonus metrics, balanced across financial, stakeholder
and returns metrics reflect the growing scale of the Company.
LTIP Metrics
As advised, whilst it is always the Company’s intention to provide shareholders with the forward-looking LTIP targets, in light of the
exceptional circumstances surrounding COVID-19 facing all companies, the Committee has determined it is prudent to delay the setting
of the 2020 LTIP targets until it has a clearer line of sight as to what constitutes strong performance in the period ahead. The metrics and
targets will be communicated to shareholders through an RNS, immediately after they are confirmed.
The Committee will continue to monitor these developments and their potential impact on the incentive framework which will be evaluated
on a regular basis.
Annual Bonus Metrics
The performance framework and bonus opportunity for 2020 will change pending approval of the Remuneration Policy from 2020. The
maximum opportunity will be 150% of salary for Executive Directors. This ensures that a significant portion of Executive remuneration
remains at risk and subject to the achievement of more formulaic targets outlined below. Specific disclosure of the performance framework
for 2020 will be detailed in the 2020 Annual Report. In line with the new Policy, any bonus awarded to Executive Directors above 125% of
salary will be deferred into shares for a two-year period.
Weighting Measures
Financials (50%) • Revenue vs. target.
• Margin delivery vs. target.
Personal Objectives (30%) • A mix of personal and strategic measures, to draw a sharp focus on areas of significance beyond
financial performance.
Stakeholder (20%) • Customer Satisfaction vs. target.
• Health & Safety underpin.
Pension
Pension contributions for the Chief Executive Officer will reduce over two years from 25% of base salary to 15% (5% p.a. reduction
phased equally over two years commencing in 2020), to bring his pension contribution further in line with the general workforce. Pension
contributions for the Chief Financial Officer will be 15% of base salary.
Remuneration Committee Report continued
85

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Directors’ & Secretary’s Interests in the Long Term Incentive Plan (“LTIP”)
Details of outstanding share awards, with performance conditions, granted to the Directors and the Company Secretary under the LTIP are
set out below:
Number of Shares Under Award
Directors’ & Secretary’s Interests in Ordinary Share Capital
The interests of the Directors and Company Secretary who held office at 31 December 2019 in the issued ordinary share capital of the
Company are set out in the table below. The interests disclosed below include both direct and indirect interests in shares.
No. of Ordinary
Shares at
–

All of the above interests were beneficially owned. Aside from the interests disclosed above and the Founder Shares and Deferred Shares
held by the Founder Directors disclosed below, the Directors and the Company Secretary had no interests in the share capital of the
Company or any other group undertaking at 31 December 2019.
There were no changes in the above Directors and Secretary’s interests between 31 December 2019 and 25 March 2020.
The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and other interests.
The Company has a policy on dealing in shares that applies to all Directors. Under this policy, Directors are required to obtain clearance
from the Company before dealing in Company shares. Directors are restricted from dealing during designated close periods and at any
other time when they are in possession of Inside Information (as defined by the Market Abuse Regulation).
86
Additional Interests of Founder Shareholders who are Founder Directors
In addition to the shareholdings noted above, the Founder Directors have the following additional interests:
No. of Deferred
Shares at
31 December 2019
No. of Founder
Shares at
31 December 2019
No. of Deferred
Shares at
31 December 2018
No. of Founder
Shares at
31 December 2018
Founder Directors
Michael Stanley 9,990,000 6,713,752 9,990,000 6,713,752
Alan McIntosh 9,990,000 9,591,075 9,990,000 9,591,075
Total 19,980,000 16,304,827 19,980,000 16,304,827
The total number of Founder Shares in issue at 31 December 2019 is 19,182,149 (19,182,149 at 31 December 2018).
The Founder Shares are convertible into Ordinary Shares subject to the performance condition, which is the achievement of a compound
annual rate of return of 12.5% in the Company’s share price.
The Founder Shares do not carry a right to a dividend or voting rights. The performance condition was tested initially over the first test
period in 2016 (the first test period was 1 March 2016 to 30 June 2016), and is tested again over the six subsequent test periods (from
1 March to 30 June).
The Performance Condition is that for a period of 15 or more consecutive business days during the relevant test period, the closing price
exceeds such price as is derived by increasing the adjusted issue price by 12.5% for each test period, starting with the first in 2016 and
ending with the last in 2022, such increase to be on a compound basis.
In calculating whether the performance condition is satisfied during any test period, any dividends, returns of capital or distributions
declared in the 12 months ending at the end of the relevant test period are added to the closing price.
If the performance condition is satisfied, the Company may elect within 20 business days of the date on which the satisfaction of the
performance condition was notified to the holders of Founder Shares, to convert Founder Shares into such number of Ordinary Shares
which, at the highest average closing price of an Ordinary Share during the test period, have an aggregate value equal to the Founder
Share Value. The “Founder Share Value” shall be calculated as 20% of the TSR in the periods described below.
TSR is calculated as the sum of the increase in market capitalisation, plus dividends, returns of capital or other distributions in each case in
the relevant period, being:
(i) the first time the performance condition is satisfied, the period from initial public offering to the test period in which the performance
condition is first satisfied; and
(ii) for subsequent test periods, the period from the end of the previous test period in respect of which Founder Shares were last converted
or redeemed to the test period in which the performance condition is next satisfied. In each test period, the increase in market
capitalisation is calculated by reference to the highest average closing price.
The effect of this is that the calculation of TSR rebases to a “high watermark” equal to the market capitalisation used to calculate the most
recent conversion or redemption of Founder Shares, so that the holders of Founders Shares only receive 20% of the incremental increase in
TSR since the previous conversion or redemption.
The calculation of Founder Share Value is made without reference to the 12.5% per annum hurdle so that once the performance condition
is satisfied, the holders of Founder Shares are entitled to share in 20% of the TSR, not just that element of TSR above the hurdle contained
in the performance condition.
Subject to satisfying the performance condition there is no limitation on the amount to be converted into ordinary shares (or otherwise
issued as ordinary shares at nominal value to fulfil the Founder Share Value) or paid out in cash, other than the seven year limit.
Rather than convert the Founder Shares into Ordinary Shares, the Board may elect (subject to compliance with the Companies Act 2014
and provided the Company has sufficient distributable reserves) to redeem such Founder Shares for payment of a cash equivalent to that
holder of Founder Shares.
All New Ordinary Shares issued in respect of the conversion of Founder Shares are subject to a one year lock-up period, with 50% of the
New Ordinary Shares remaining subject to a further one year lock-up period thereafter.
The holders of Deferred Shares do not have any voting rights and are not entitled to receive dividends other than the right to receive
€1 in aggregate for every €100,000,000,000 paid to the holders of ordinary shares.
Remuneration Committee Report continued
87

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
ROLE AND RESPONSIBILITIES OF THE COMMITTEE
Our Role
The Committee’s role is to determine and agree the Remuneration Policy for Executive Directors and senior management and to monitor
and report on it. The Committee’s responsibilities, delegated by the Board as set out in its Terms of Reference, are to:
• Determine the remuneration packages of the Chairman, Chief Executive Officer, Chief Financial Officer and oversee the remuneration
practices for certain other senior managers, including salary, annual incentive, pension contributions and compensation payments;
• Oversee remuneration structures for senior management and to oversee any major changes in employee benefits structures throughout
the Company;
• Nominate Executive Directors and management for inclusion in the LTIP, to grant awards under the LTIP, to determine whether the
criteria for the vesting of awards have been met and to make any necessary amendments to the rules of the LTIP;
• Ensure that contractual terms on termination or redundancy, and any payments made, are fair to the individual and the Company;
• Be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the Terms of Reference for any
consultants who advise the Committee;
• Obtain up to date information about remuneration in other companies of comparable scale and complexity; and
• Agree the policy for authorising claims for expenses from the Directors.
Key Responsibilities
The Committee follows an annual programme of work to execute these responsibilities which for 2019 were:
EXECUTIVE REMUNERATION GOVERNANCE
SHAREHOLDER
CONSULTATION LONG TERM INCENTIVES
• Reviewed annual
performance of the
Executive Directors.
• Determined fixed and
variable remuneration for
Executive Directors and
senior management.
• Reviewed and made progress against
the remuneration strategy agreed to
execute the Remuneration Policy.
• Worked with the Committee’s
consultants during 2019 to ensure
rigour of Committee analysis and
decisions.
• Considered and approved the
Remuneration Report and remuneration
disclosure requirements.
• Reviewed and approved its annual
agenda and Terms of Reference.
• Revised Remuneration
Policy in line with
normal governance
calendar and revised
LTIP and Bonus plan
following consultation
with shareholders.
• Engaged with
shareholders to discuss
Remuneration approach
for 2019 and 2020
Remuneration Policy.
• Set 2019 and 2020
LTIP targets following
consultation with
shareholders.
• Ensured LTIP awards
were linked to
succession planning.
• Assessed efficacy
and stretch of LTIP
targets through all
cycles.
Q1 Q2 Q3 Q4
• Evaluation of business
strategy and priorities
relative to remuneration.
• Executive Director goal
setting.
• Terms of Reference review.
• 2019 and 2020 LTIP target
setting.
• Succession planning and “Nine-Box”
assessment of top talent.
• 2020 LTIP target approval.
• Remuneration Report
development.
• New hire review and
reward relative to
succession gaps.
• Year-end
performance and
compensation
assessment for
Executive Directors.
• Assessment of
remuneration
outcomes for general
employee base.
The Committee met eleven times during the year ended 31 December 2019. The main agenda items included:
• Determining the annual incentives payable for 2019;
• Overseeing the Remuneration Policy implementation;
• Approving the grant of LTIP share awards;
• Setting LTIP performance targets;
• Reviewing remuneration trends and market practice;
• Approving the remuneration packages of Executive Directors and senior management;
• Reviewing pension matters; and
• Approving the 2018 Remuneration Report.
The Company Chairman, Chief Executive Officer and Chief Financial Officer may be invited to attend meetings of the Committee, except
when their own remuneration is being discussed. No Director is involved in consideration of his or her own remuneration. The Company
Secretary acts as secretary to the Committee.
88
Consultation with Shareholders
When determining remuneration, the Committee takes into account the views of representative investor bodies and shareholder
views. In advance of the 2020 AGM, the Remuneration Committee Chair wrote to shareholders representing approximately 70%
of the Company’s issued share capital and the major proxy advisors and directly engaged with a number of major shareholders.
The Board is committed to engaging with major shareholders on any material changes to the Remuneration Policy which will be
recommended for an advisory shareholder vote at the 2020 Annual General Meeting.
Attendance & Tenure
Committee Member
Meeting
Attendance
Committee

* 
Ms Hickey succeeded Mr Davies as Chair of the Committee on 8 July 2019. Mr O’Beirne was appointed to the Committee on the same date. Mr Bernhardt
missed one meeting during the year, which had been called at short notice, due to a pre-existing conflict. His views were sought in advance of the meeting.
The Chairman of the Board, the Chief Executive Officer and Chief People Officer are also invited to attend meetings except in
circumstances when their remuneration is tabled for discussion.
External Advice
The Committee seeks independent advice when necessary from external consultants. Mercer acted as independent
remuneration advisors to the Committee for 2019. During 2019, the Committee also sought advice from FTI Consulting (“FTI”),
engaged by the Company to provide independent advisory corporate governance support to the Board, as well as both the
Nomination and Remuneration Committees. The Committee is satisfied that the advice from both Mercer and FTI was objective
and independent.
Statement of Shareholder Voting
The Company is committed to ongoing shareholder dialogue and takes shareholder views into consideration when formulating
remuneration policy and practice. To the extent there are substantial votes against resolutions in relation to remuneration, the
Company will seek to understand the reasons for such votes and will provide details of any actions in response to such a vote.
The following table sets out the actual votes at the 2019 Annual General Meeting in respect of the Remuneration Committee
Report.
Directors’ Remuneration Report For Against Withheld*
Number of Votes (millions) 535,628,007 17,247,618 3,357,802
Percentage % 96.88 3.12 –
* A vote withheld is not a vote in law and is therefore excluded from the calculation of votes for and against the resolution.
Remuneration Committee Report continued
89

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
The Directors present their report to the shareholders together with the audited financial statements for the year ended 31 December 2019.
Principal Activities, Business Review and Future Developments
Cairn Homes plc is one of Ireland’s leading homebuilders, constructing high quality new homes with an emphasis on design, innovation
and customer service. At 31 December 2019, the Group consisted of the Company, Cairn Homes plc, and a number of subsidiaries, which
are detailed in note 26 to the consolidated financial statements. Shareholders are referred to the Chairman’s Statement, Chief Executive
Officer’s Statement and the Financial Review which contain a review of operations and the financial performance of the Group for 2019, the
outlook for 2020 and the key performance indicators used to assess the performance of the Group. These are deemed to be incorporated
in the Directors’ Report.
Results for the Year
The Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2019 and the Consolidated
Statement of Financial Position at that date are set out on pages 100 and 101 respectively. The Group’s profit for the year ended 31 December
2019 was €51.2 million (2018: €31.4 million).
Dividends
The Company paid a first interim dividend of 2.5 cent per ordinary share on 18 October 2019 to shareholders on the register on the record date
of 20 September 2019.
Directors and Company Secretary
The names of the Directors and a biographical note on each appear on pages 48 and 49. Ms Jayne McGivern and Mr David O’Beirne joined
the Board on 1 March 2019 and Ms Linda Hickey joined the Board on 12 April 2019. Mr Tim Kenny resigned from the Board on 7 January 2020.
The Company Secretary’s details are set out in the Management Team on page 51.
In accordance with the provisions contained in the UK Corporate Governance Code (the “Code”), all Directors retired at the Annual General Meeting
of the Company on 22 May 2019 and, being eligible, offered themselves for re-election, and all were re-elected to the Board on the same day.
Any Director appointed to the Board by the Directors will be subject to election by the shareholders at the first Annual General Meeting held
following his/her appointment. Furthermore, under the Company’s Constitution, one third of all Directors must retire by rotation at each Annual
General Meeting and may seek re-election. However, in accordance with the provisions of the Code, the Board has decided that all Directors
should retire at the 2020 Annual General Meeting and offer themselves for re-election.
Directors’ and Company Secretary’s Interests
Details of the Directors’ and Company Secretary’s share interests and interests in unvested share awards of the Company are set out in the
Remuneration Committee Report on pages 85 and 86.
Share Dealing
The Company has in place a share dealing code which gives guidance to the Directors and certain employees of the Company to be followed
when dealing in the shares of the Company or any other type of securities issued by or related to the Company. It is designed to ensure that
these individuals neither abuse, nor set themselves under suspicion of abusing, information about the Company which is not in the public
domain. It is also designed to ensure compliance with the EU Market Abuse Regulation (596/2014) which came into effect on 3 July 2016.
Share Capital
The Company has four authorised classes of shares: Ordinary Shares; A Ordinary Shares; Founder Shares and Deferred Shares. As at
31 December 2019 and 24 March 2020 (being the latest practicable date before approval of this Annual Report), the Company had 770,655,088
Ordinary Shares and 750,715,547 Ordinary Shares in issue respectively, each with a nominal value of €0.001, all of which are of the same class
and carry the same rights and obligations. The Company also had 19,182,149 Founder Shares and 19,980,000 Deferred Shares in issue at the
same dates.
The percentage of the total issued share capital represented by each class of shares on the above dates was:
% of Total Issued Share
Capital
Share Class
Ordinary Shares 95.16 95.04
Founder Shares 2.37 2.43
Deferred Shares 2.47 2.53
Further information on the Company’s share capital, including the rights attached to different classes of shares, is set out in note 17 to the
consolidated financial statements.
The Company has a Long Term Incentive Plan in place, the details of which are set out in the Remuneration Committee Report and in note 18 to
the consolidated financial statements.
Directors’ Report
90
Directors’ Report continued
Substantial Shareholdings
As at 31 December 2019 and 24 March 2020 (being the latest practicable date before approval of this Annual Report), the Company had been
notified of the following details of interests of over 3% in the ordinary share capital of the Company.
Except as disclosed below, the Company has not been notified as at 24 March 2020 of any interest of 3% or more in its ordinary share capital,
nor is it aware of any person who directly or indirectly, jointly or severally, exercises or could exercise control over the Company.
Shareholder
* 
Emerald Everleigh Limited Partnership (the “LP”) and Prime Developments Ltd (“PDL”) are the registered holders of the interests described above. The LP is ultimately owned
by PDL. The shares in PDL are held in trust for a discretionary trust (constituted under English and Welsh law) and Alan McIntosh (Non-Executive Director of the Company)
and his spouse are the beneficiaries of that trust.
Principal Risks and Uncertainties
Under Irish company law, the Group is required to give a description of the Principal Risks and Uncertainties which it faces. These Principal Risks
and Uncertainties are set out on pages 35 to 39 and are deemed to be incorporated in the Directors’ Report.
Accounting Records
The Directors are responsible for ensuring that adequate accounting records are maintained by the Group as required by Sections 281-285 of
the Companies Act, 2014. The Directors believe that they have complied with this requirement through the employment of suitably qualified
accounting personnel and the maintenance of appropriate accounting systems. The accounting records of the Company are maintained at the
registered office: 7 Grand Canal, Grand Canal Street Lower, Dublin 2, D02 KW81.
Takeover Regulations 2006
For the purposes of Regulation 21 of Statutory Instrument 255/2006 “European Communities (Takeover Bids (Directive 2004/25/EC))
Regulations 2006”, the details provided on share capital on pages 118 to 120, substantial shareholdings above, and the disclosures on Directors’
remuneration and interests in the Remuneration Committee Report on pages 69 to 88 are deemed to be incorporated in this section of the
Directors’ Report.
Transparency Regulations 2007
For the purposes of information required by Statutory Instrument 277/2007 “Transparency (Directive 2004/109/EC) Regulations 2007”
concerning the development and performance of the Group, the following sections of this Annual Report shall be treated as forming part
of this Directors’ Report:
1. 
The Chairman’s Statement on pages 6 to 8, the Chief Executive Officer’s Statement on pages 9 to 13 and the Financial Review on pages 40
and 41.
2. The Corporate Governance Report on pages 54 to 60.
3. The Principal Risks and Uncertainties on pages 35 to 39.
4. Details of Earnings Per Share on page 126.
5. Details of the Capital Structure of the Company on pages 118 to 120.
Corporate Governance Regulations
As required by company law, the Directors have prepared a Corporate Governance Report which is set out on pages 54 to 60 and which, for the
purposes of Section 1373 of the Companies Act 2014, is deemed to be incorporated in this part of the Directors’ Report. Details of the capital
structure and employee share schemes are included in notes 17 and 18 to the consolidated financial statements respectively.
91

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Directors’ Compliance Statement
The Directors, in accordance with Section 225(2) of the Companies Act 2014, acknowledge that they are responsible for securing the Company’s
compliance with certain obligations specified in that section arising from the Companies Act 2014, the Market Abuse (Directive 2003/6/ EC)
Regulations 2005, the Prospectus (Directive 2003/71/EC) Regulations 2005, the Transparency (Directive 2004/109/EC) Regulations 2007, and
Tax laws (“relevant obligations”).
The Directors confirm that:
• A compliance policy statement has been drawn up setting out the Group’s policies that in their opinion are appropriate with regard to such
compliance;
• Appropriate arrangements and structures have been put in place that, in their opinion, are designed to provide reasonable assurance of
compliance in all material respects with those relevant obligations; and
• A review has been conducted, during the financial year, of those arrangements and structures.
Going Concern and Longer Term Viability
The Directors’ statements on going concern and longer term viability are included in the Risk Report on page 34.
Subsidiaries
Information on the Company’s subsidiaries is set out in note 26 to the consolidated financial statements.
Political Contributions
No political contributions were made by the Group during the year that require disclosure in accordance with the Electoral Acts 1997 to 2002
and the Electoral Political Funding Act 2012.
Post Balance Sheet Events
Information in respect of events since the year end is contained in note 33 to the consolidated financial statements.
Audit & Risk Committee
The Group has an established Audit & Risk Committee comprising of five independent Non-Executive Directors. Details of the Committee and
its activities are set out on pages 61 to 64.
External Auditor
KPMG were appointed statutory auditor in 2015. In accordance with Section 383(2) of the Companies Act 2014, the External Auditor, KPMG,
will continue in office and a resolution authorising the Directors to fix their remuneration will be proposed at the forthcoming 2020 Annual
General Meeting.
Disclosure of Information to the External Auditor
Each of the Directors who held office at the date of approval of the Directors’ Report confirms that:
• So far as they are aware, there is no relevant audit information of which the External Auditor is unaware; and
• That they have taken all steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and
to establish that the External Auditor is aware of such information.
Approval of Financial Statements
The Financial Statements were approved by the Board on 25 March 2020.
Signed on behalf of the Board
John Reynolds			 Michael Stanley
Chairman			Director
92
Consolidated Financial Statements
For the year ended 31 December 2019
Financial Statements
Statement of Directors’ Responsibilities 93
Independent Auditor’s Report 94
Consolidated Statement of Profit or Loss and Other Comprehensive Income 100
Consolidated Statement of Financial Position 101
Consolidated Statement of Changes in Equity 102
Consolidated Statement of Cash Flows 104
Notes to the Consolidated Financial Statements 105
93

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
The Directors are responsible for preparing the Annual Report and the consolidated and company financial statements, in accordance
with applicable law and regulations.
Company law requires the Directors to prepare consolidated and company financial statements for each financial year. Under that law,
the Directors are required to prepare the consolidated financial statements in accordance with IFRS as adopted by the European Union
and applicable law including Article 4 of the IAS Regulation. The Directors have elected to prepare the company financial statements in
accordance with IFRS as adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the assets, liabilities and financial position of the Group and Company and of the profit or loss of the Group for that year. In preparing
each of the consolidated and company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements;
• assess the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;
and
• use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to cease operations, or have
no realistic alternative but to do so.
The Directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central
Bank of Ireland to include a management report containing a fair review of the business and a description of the principal risks and
uncertainties facing the Group.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets,
liabilities, financial position and profit or loss of the Company, and which enable them to ensure that the financial statements of the
Company comply with the provisions of the Companies Acts 2014. The Directors are also responsible for taking all reasonable steps to
ensure such records are kept by the Company’s subsidiaries which enable them to ensure that the financial statements of the Group comply
with the provisions of the Companies Act 2014 and Article 4 of the IAS Regulation. They are also responsible for such internal control as
they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for safeguarding the assets of the Company and the Group, and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report
that complies with the requirements of the Companies Act 2014.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s and
Company’s website www.cairnhomes.com. Legislation in the Republic of Ireland concerning the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility Statement as required by the Transparency Directive and UK Corporate Governance Code
Each of the Directors, whose names and functions are listed on pages 48 and 49 of this Annual Report, confirm that, to the best of each
person’s knowledge and belief:
• the consolidated financial statements, prepared in accordance with IFRS as adopted by the European Union, and the company financial
statements, prepared in accordance with IFRS as adopted by the European Union as applied in accordance with the provisions of the
Companies Act 2014, give a true and fair view of the assets, liabilities and financial position of the Group and Company at 31 December
2019 and of the profit of the Group for the year then ended;
• the Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and
the position of the Group and Company, together with a description of the principal risks and uncertainties that they face; and
• the Annual Report and Financial Statements, taken as a whole, provides the information necessary to assess the Group’s position
and performance, business model and strategy and is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance, business model and strategy.
On behalf of the Board
John Reynolds			 Michael Stanley
Chairman			Director
Statement of Directors’ Responsibilities
in respect of the Annual Report and the Financial Statements
94
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Cairn Homes plc (‘the Company’ and, together with its subsidiaries, ‘the Group’) for the year
ended 31 December 2019, which comprise the consolidated statement of profit or loss and other comprehensive income, the consolidated
and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company
statements of cash flows and related notes, including the summary of significant accounting policies set out in note 3 for the Group and note 1
for the Company. The financial reporting framework that has been applied in their preparation is Irish Law and International Financial Reporting
Standards (IFRS) as adopted by the European Union and, as regards the company financial statements, as applied in accordance with the
provisions of the Companies Act 2014.
In our opinion:
• the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at
31 December 2019 and of the Group’s profit for the year then ended;
• the consolidated financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union, as applied
in accordance with the provisions of the Companies Act 2014; and
• the consolidated financial statements and company financial statements have been properly prepared in accordance with the
requirements of the Companies Act 2014 and, as regards the consolidated financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities section of our report. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee.
We were appointed as auditor by the Directors on 10 June 2015. The period of total uninterrupted engagement is the five years ended
31 December 2019. We have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with,
ethical requirements applicable in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority
(IAASA) as applied to public interest entities. No non-audit services prohibited by that standard were provided.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Carrying values of inventories €897.3m (2018: €933.4m) and profit recognition
Refer to page 64 (Audit and Risk Committee Report), page 109 (accounting policy for inventories) and note 14 to the consolidated financial
statements (financial disclosures – inventories).
The key audit matter
Inventories consist of the costs of land, materials, design and related production and site development costs to date, less amounts
recognised as cost of sales on properties which have been sold. The carrying value of development land and work in progress depends
on key assumptions relating to forecast selling prices for houses or apartments, site planning (including planning consent), build costs and
other direct cost recoveries, all of which contain an element of uncertainty.
The Group recognises profit on each sale, based on the particular unit sold, by reference to the overall expected site margin. As site
development and the resulting sale of residential units can take place over a number of reporting periods the determination of profit is
dependent on the accuracy of the forecasts about future selling prices, build costs and other direct costs. There is a risk that one or all
of the assumptions may be inaccurate with a resulting impact on the carrying value of inventories or the amount of profit recognised.
Independent Auditor’s Report
to the members of Cairn Homes plc
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
How the matter was addressed in our audit
Our audit procedures included, among others:
a) We documented our understanding of the processes, and tested the design and implementation of relevant controls, over the accuracy
and completeness of the input data and assumptions made in the Group’s financial models which support the carrying value of
development land and work in progress, and the allocation of costs to individual residential units. This involved testing approvals
over the review and updating of selling prices and cost forecasts and the authorisation and recording of costs by management.
b) We inspected management’s detailed year-end assessments of the net realisable value of development sites. These calculations were
primarily based on residual value calculations whereby the estimated total costs of the development were deducted from total forecast
sales proceeds. We challenged the key inputs and assumptions in the following ways, among others:
• We inspected forecast residential unit sales prices for consistency with sales prices achieved for similar properties or estimates
supplied by external property consultants.
• We agreed a sample of forecast costs to supplier agreements or other relevant documentation from third parties and, for sites
not yet in development, considered the consistency of estimates for the major cost categories with the estimates for sites in
development.
• We evaluated the assumptions in relation to forecast numbers of units to be constructed based on appropriate documentary
support.
• We enquired of management as to whether there were any site-specific factors which may indicate that an individual site could be
impaired.
• We considered wider market evidence relating to land prices in Ireland and the demand for housing.
c) For sites in development, we compared actual revenues and costs to estimates to assess whether net realisable values were updated
and that the overall expected sales margins were adjusted accordingly. We evaluated the sensitivity of margins on these sites to
changes in sales prices and costs and considered whether this indicated a risk of impairment of the inventory balance. We agreed any
changes in planning permission to documentary support and evaluated the impact of such changes on the overall profitability of the
individual development site.
d) For completed sales in the year, we tested the accuracy of the release from inventory to cost of sales recorded in the general ledger
for consistency with the financial cost models for the relevant sites.
e) For new development land acquisitions in the year, we inspected purchase contracts and other supporting documentation to agree
the costs of acquisition, including related direct purchase costs. We agreed amounts paid to corroborating documentary evidence.
f) We agreed a sample of additions to construction work in progress during the period to invoices/payment certificates and examined
whether these additions were construction related and had been appropriately recorded as part of the costs of the relevant site.
g) We considered the adequacy of the Group’s disclosures regarding the carrying value of development land and work in progress.
Our findings
We found that the Group had appropriate processes in place to regularly update forecasts of development site profitability to take account
of costs incurred, updated forecast costs to complete and estimated sales prices. We found that the profit margins recognised on sales
during the year appropriately reflected the costs attributable to units sold based on the Group’s financial models.
Our audit procedures on the key assumptions underpinning the year-end assessments of the net realisable value of development sites,
and the related sensitivity analysis, did not identify any misstatements in relation to the Group’s conclusion that inventories are stated at
the lower of cost and net realisable value and therefore are not impaired.
We found that the costs of new development site acquisitions during the year, and of the sample of additions to construction work in
progress inspected, were appropriately recorded.
The disclosures in the financial statements relating to inventories are adequate to provide an understanding of the accounting policy and
key assumptions relating to the Group’s inventories and profit recognition.
96
Revenue recognition €435.3m (2018: €337.0m)
Refer to page 109 (accounting policy for revenue) and note 6 to the consolidated financial statements (financial disclosures – revenue)
The key audit matter
There was a substantial increase in reported revenue compared to prior year. A relatively high proportion of total revenue was recorded in
the latter part of the year, which required particular emphasis on the recognition of revenue in the correct accounting period. Also, as well as
traditional sales of residential units to private individuals, the Group entered into other types of agreements with certain customers during the
year for the sale of multiple units, which required particular consideration in relation to the application of the relevant accounting standard.
How the matter was addressed in our audit
Our audit procedures included, among others:
a) We documented our understanding of the processes, and tested the design and implementation of relevant controls, over the
completeness, existence and accuracy of revenue.
b) We agreed a sample of sales of residential units and residential sites to signed contracts and cash proceeds and examined whether
there was appropriate evidence that control over those properties had transferred to customers prior to the year-end, and hence that
revenue had been recognised in the correct accounting period.
c) We evaluated the approach adopted by management for the timing and amount of revenue to be recognised in accordance with the
relevant accounting standard from material contracts entered into with customers for the sale of multiple units. In this regard, we
independently inspected the related contract documentation and considered the appropriate application of the revenue recognition
model in the relevant accounting standard, including whether revenue should be recognised (i) at a point in time or (ii) over time.
Our findings
We found that the Group had appropriate processes in place in relation to the recording of revenue.
Appropriate documentary evidence was available for all of the sample of sales of residential units and residential sites that we tested and
as a result we found that revenue had been accurately recorded for those sales in the year.
We found that the approach taken in the financial statements by the Group for the recognition of revenue from contracts for the sale of
multiple units was materially consistent with the requirements of the relevant accounting standard.
Our application of materiality and an overview of the scope of our audit
The materiality for the consolidated financial statements as a whole was set at €2.8m (2018: €2.6m). This has been calculated with reference to a
benchmark of profit before taxation. Materiality represents approximately 4.8% (2018: 6.9%) of this benchmark, which we consider to be one of
the principal considerations for members of the Company in assessing the financial performance of the Group. We used a profit before taxation
benchmark because profitability increased significantly in 2019, and this benchmark is typically applied for listed groups which have reached a
mature stage. In assessing materiality in absolute terms for 2019 we also had regard to the level of revenue and total assets.
In the prior year, our materiality was calculated with reference to a benchmark of total revenue, of which it represented 0.77%. In assessing
materiality in absolute terms for 2018 we also had regard to the level of profit and total assets.
We report to the Audit and Risk Committee all corrected and uncorrected misstatements we identified through our audit with a value
in excess of €0.14m (2018: €0.13m), in addition to other audit misstatements below that threshold that we believe warrant reporting on
qualitative grounds.
We subjected all of the Group’s reporting components to audits for group reporting purposes. The work on all components was performed
by the Group audit team.
Materiality for the company financial statements as a whole was set at €1.8m (2018: €1.8m), determined with reference to a benchmark of
total assets, of which it represents 0.26% (2018: 0.25%).
Independent Auditor’s Report continued
to the members of Cairn Homes plc
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
We have nothing to report on going concern
We are required to report to you:
• if we have anything material to add or draw attention to in relation to the directors’ statement in note 1 to the financial statements
on the use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group’s
and Company’s use of that basis for a period of at least twelve months from the date of approval of the financial statements; or
• if the related statement under the Listing Rules set out on page 34 is materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
Other information
The directors are responsible for the other information presented in the Annual Report together with the financial statements. The other
information comprises the information included in the Directors’ Report, 2019 Highlights, Investment Case section, Chairman’s Statement,
Chief Executive Officer’s Statement, Our Portfolio at a Glance section, Business Model, Market Overview, Our Strategy section, Strategy
in Action section, Risk Report, Financial Review, Corporate Social Responsibility section, Board of Directors section, Management Team
section, Site Management Team section, Corporate Governance Report, Audit and Risk Committee Report, Nomination Committee
Report, Remuneration Committee Report and Additional Information section. The financial statements and our auditor’s report thereon do
not comprise part of the other information. Our opinion on the financial statements does not cover the other information and, accordingly,
we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Based solely on our work on the other information we report that, in those parts of the Directors’ Report specified for our consideration:
• we have not identified material misstatements in the Directors’ Report;
• in our opinion, the information given in the Directors’ Report is consistent with the financial statements; and
• in our opinion, the Directors’ Report has been prepared in accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to:
• the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated;
• the directors’ confirmation within the Viability Statement on page 34 that they have carried out a robust assessment of the principal risks
facing the Group, including those that would threaten its business model, future performance, solvency and liquidity; and
• the directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what period they have
done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including
any related disclosures drawing attention to any necessary qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items and report to you in the following circumstances:
• Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge we acquired during our
financial statements audit and the directors’ statement that they consider that the Annual Report and Financial Statements taken as a
whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and
performance, business model and strategy;
• Audit and Risk Committee Report: if the section of the Annual Report describing the work of the Audit and Risk Committee does not
appropriately address matters communicated by us to the Audit and Risk Committee; and
• Statement of compliance with UK Corporate Governance Code: if the directors’ statement does not properly disclose a departure from
provisions of the UK Corporate Governance Code specified by the Listing Rules of Euronext Dublin and/or the UK Listing Authority for
our review.
We have nothing to report in these respects.
98
In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Report on
pages 54 to 60 and the Directors’ Report, that:
• based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and risk management
systems in relation to the financial reporting process, and information relating to voting rights and other matters required by the
European Communities (Takeover Bids (Directive 2004/EC)) Regulations 2016 and specified for our consideration, is consistent with the
financial statements and has been prepared in accordance with the Act;
• based on our knowledge and understanding of the Company and its environment obtained in the course of our audit, we have not
identified any material misstatements in that information; and
• the Directors’ Report contains the information required by the European Union (Disclosure of Non-Financial and Diversity Information by
certain large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance
Report.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Group and Company were sufficient to permit the financial statements to be readily and
properly audited and the financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required
by Sections 305 to 312 of the Act are not made.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by
section 5(2) to (7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017 for the year ended 31 December 2019 as required by the European Union (Disclosure of Non-Financial and Diversity
Information by certain large undertakings and groups (Amendment)) Regulations 2018.
The Listing Rules of Euronext Dublin and the UK Listing Authority require us to review:
• the directors’ statements, set out on page 34 in relation to going concern and longer-term viability;
• the part of the Corporate Governance Report on pages 54 to 60 relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code and the Irish Corporate Governance Annex specified for our review; and
• certain elements of disclosures in the report to shareholders by the Board of Directors’ Remuneration Committee.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 93, the directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group’s and Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements
can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a material misstatement
resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation and not just those directly
affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-
a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf
Independent Auditor’s Report continued
to the members of Cairn Homes plc
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work, for our report, or for the opinions we have formed.
Sean O’Keefe
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1. Basis of Preparation
(a) Reporting entity
Cairn Homes plc (“the Company”) is a company domiciled in Ireland. The Company’s registered office is 7 Grand Canal, Grand Canal Street
Lower, Dublin 2, D02 KW81. These consolidated financial statements cover the year ended 31 December 2019 for the Company and its
subsidiaries (together referred to as “the Group”). The Group is predominantly involved in the development of residential property for sale.
(b) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and
their interpretations approved by the International Accounting Standards Board (IASB), as adopted by the European Union (EU), and those
parts of the Companies Act 2014 applicable to companies reporting under IFRS and Article 4 of the IAS Regulation.
(c) New standards and interpretations
The following standards and interpretations were effective for the Group for the first time from 1 January 2019. They did not have a material
effect on the consolidated results of the Group:
• IFRS 16 Leases;
• Amendments to IFRS 9 Prepayment Features with Negative Compensation;
• IFRIC 23 Uncertainty over Income Tax Treatments;
• Amendments to IAS 28 Long-term Interest in Associates and Joint Ventures; and
• Annual Improvements to IFRS Standards 2015-2017 Cycle.
Details of the impact of IFRS 16 are set out in notes 3 (c), 12 and 20.
The following standards and interpretations are not yet endorsed by the EU. The potential impact of these standards on the Group is
under review:
• IFRS 17, Insurance Contracts;
• Amendments to IFRS 3, Definition of a Business; and
• Amendments to IFRS 10 and IAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.
The following standards have been endorsed by the EU, are available for early adoption and are effective from 1 January 2020. The
Group has not adopted these standards early, and instead intends to apply them from their effective date. The potential impact of these
standards on the Group is under review.
• Amendments to References to Conceptual Framework in IFRS Standards;
• Amendments to IAS 1 and IAS 8, Definition of Material; and
• Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).
(d) Functional and presentation currency
These consolidated financial statements are presented in Euro, which is the functional currency of the Company and presentation currency
of the Group, rounded to the nearest thousand.
(e) Going concern basis of accounting
Having considered the principal risks to the business, cash flow forecasts and available loan facilities, the Directors consider that it is
appropriate that the financial statements have been prepared on the going concern basis, which assumes that the Group will continue to
be able to meet its liabilities as they fall due for the foreseeable future. In terms of reaching this assessment, the Board has also considered
the impact of the COVID-19 outbreak. Inevitably, there will be some negative impact on the business although the extent is not yet clear.
The Board does not expect any reasonably anticipated COVID-19 outcomes to impact the Group’s ability to continue as a going concern.
The significant accounting policies applied in the preparation of these financial statements are set out in note 3.
2. Key Judgements and Estimates
The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets, liabilities, income and expenses. Actual results could differ materially from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The significant accounting judgement impacting these financial statements is:
• scale and mix of each development and the achievement of associated planning permissions
This may involve assumptions on new or amended planning permission applications. This judgement then feeds into the process of
forecasting expected profitability by development which is used to determine the profit that the Group is able to recognise on its
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
2. Key Judgements and Estimates continued
developments in each reporting period.
The key sources of estimation uncertainty impacting these financial statements are:
• forecast selling prices; and
• carrying value of inventories and allocations from inventories to cost of sales (See notes 3 (f) and 14).
Due to the nature of the Group’s activities and, in particular the scale of its development costs and the length of the development cycle,
the Group has to allocate site-wide development costs between units completed in the current year and those in future years. It also has
to forecast the costs to complete on such developments and make estimates relating to future sales prices. Forecast selling prices are
inherently uncertain due to changes in market conditions. These estimates impact management’s assessment of the net realisable value
of the Group’s inventories and also determine the extent of profit or loss that should be recognised in respect of each development in
each reporting period.
In making such assessments and allocations, there is a degree of inherent estimation uncertainty. The Group has developed internal
controls designed to effectively assess and review carrying values and the appropriateness of estimates made.
3. Significant Accounting Policies
The accounting policies set out below have been applied in these financial statements.
(a) Basis of consolidation
The consolidated financial statements include the results of Cairn Homes plc and all its subsidiary undertakings for the year ended
31 December 2019.
Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration
transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Goodwill arising on consolidation
represents the excess of the fair value of the consideration over the fair value of the separately identifiable net assets and liabilities acquired.
Any goodwill that arises is capitalised and tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss
immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration is
classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, subsequent changes in the
fair value of contingent consideration that meets the definition of a financial instrument are recognised in profit or loss.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which
control ceases.
Non-controlling interests, as stated in the statement of financial position, represents the portion of the equity of subsidiaries which is not
attributable to the owners of the Company.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated.
(b) Property, plant and equipment
Property, plant and equipment are initially recognised at cost. Depreciation is provided using the straight-line method to write off the cost
less any residual value over the estimated useful life of the asset on the following basis:
• Leasehold improvements 7 years
• Motor vehicles 4 years
• Computers & equipment 3-7 years
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3. Significant Accounting Policies continued
(b) Property, plant and equipment continued
The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at each financial reporting date.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
(c) Leases
Leases
IFRS 16, Leases, is effective for the first time in the financial year ended 31 December 2019. IFRS 16 has replaced IAS 17 Leases. The Group
has initially adopted IFRS 16 Leases from 1 January 2019. IFRS 16 introduced a single, on-balance sheet accounting model for lessees
under which the distinction between operating leases and finance leases is removed for lessees.
The policy applicable up to 31 December 2018 under IAS 17 was that payments made under operating leases were recognised in profit
or loss on a straight-line basis over the term of the lease. The Group had no finance leases under IAS 17.
Under IFRS 16, all assets held by the Group under lease agreements which are greater than twelve months in duration are recognised
as right-of-use assets within the statement of financial position representing its rights to use the underlying asset. The present value of
future payments to be made under those lease agreements is recognised as a liability representing its obligation to make lease payments.
Rental expenses are replaced in profit or loss with finance costs on the lease liability and depreciation of the right-of-use assets.
The Group has applied IFRS 16 using the modified retrospective approach, under which the right-of-use asset and related lease liability
have been determined by discounting the lease payments over the expected term of the lease at a discount rate of 2.6% reflecting
the Group’s incremental borrowing rate. Accordingly, the comparative information presented for 2018 has not been restated and it is
presented, as previously reported, under IAS 17 and related interpretations.
The Group recognises a right-of-use asset and a lease liability at inception, being the later of the date of initial application of IFRS 16 or
the lease commencement date. The lease liability is initially measured at the present value of the lease payments that are not paid at the
inception date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. The lease liability is subsequently increased by the interest costs on the lease liability and decreased by the lease payments
made. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability plus any initial direct costs,
and subsequently at cost less any accumulated depreciation. Depreciation is charged on a straight-line basis over the lease term from the
inception date.
The right-of-use asset and lease liability recognised under IFRS 16 represents the Group’s lease on the central support office, which is the
only lease impacted by IFRS 16.
Impacts on transition
On transition to IFRS 16, the Group recognised right-of-use assets and lease liabilities. The impact on transition is summarised below.
1 January 2019
€’000
Right-of-use assets 1,443
Lease liabilities 1,443
When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate of 2.6% at 1 January 2019.
1 January 2019
€’000
Operating lease commitments at 31 December 2018 as disclosed in the Group’s consolidated financial statements 1,510
Discounted using the incremental borrowing rate at 1 January 2019 1,443
Lease liabilities recognised at 1 January 2019 1,443
Lease liabilities recognised at 31 December 2019 1,138
Impact for the year ended 31 December 2019
As a result of initially applying IFRS 16, the Group has recognised €1.1 million of right-of-use assets and €1.1 million of lease liabilities as at
31 December 2019. In addition, the Group has recognised depreciation and interest costs, instead of an operating lease expense. During
the year ended 31 December 2019, the Group recognised €0.360 million of depreciation charge on right of use assets and €0.038 million
of interest costs on lease liabilities.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
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FINANCIAL STATEMENTS
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STRATEGIC REPORT
3. Significant Accounting Policies continued
(d) Intangible assets
Computer software
Acquired computer software is capitalised as intangible assets on the basis of the costs incurred to acquire and bring to use the
specific software.
Costs that are directly attributable to the production of identifiable and unique software products controlled by the Group, and that will
probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets.
Computer software costs are amortised over their estimated useful lives from seven to ten years for specialised software which is expected
to provide benefits over those periods. Other costs in respect of computer software are recognised as an expense as incurred.
The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at each financial reporting date. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
(e) Revenue
Revenue represents the fair value of consideration received or receivable, net of value-added tax. Revenue is recognised at the point in
time when control over the property has been transferred to the customer, which occurs at legal completion. Revenue is measured at the
transaction price agreed under the contract.
Booking and contract deposits on units sold by the Group are held by the Group’s legal advisors, externally to the Group, until legal
completion of the sale, at which point all such deposits are paid to the Group and recognised as revenue. Where a contract, on which a
contract deposit has been paid, is not completed, the Group will recognise the forfeited deposit (arising in accordance with the contract’s
terms) as revenue.
Rental income is recognised on a straight-line basis over the life of the operating lease. This income principally arises from existing rental
properties on acquired development sites which will be demolished or vacated (see policy (f)).
(f) Inventories
Units in the course of development and completed units are valued at the lower of cost and net realisable value. Cost includes the cost of
land, raw materials, stamp duty, direct labour and development costs, but excludes indirect overheads. Land purchased for development,
including land in the course of development, is initially recorded at cost. For development property acquired through business combinations,
cost is the sum of the fair value at acquisition plus subsequent direct costs. The Group’s developments can take place over several reporting
periods and the Group has to allocate site-wide development costs between units built in the current year and in future years. It also has to
estimate the costs to completion of such developments. In making these assessments, which impact on estimating the appropriate amounts
from inventory to be recognised as cost of sales on units sold, there is a degree of inherent uncertainty.
The Group is predominantly involved in the development of residential property units for sale. Because the nature of such individual units
is that they are produced in large quantities on a repetitive basis over a relatively short period of time, the Group’s inventories are not
considered to be qualifying assets for the purposes of capitalisation of borrowing costs.
Inventories are carried at the lower of cost and net realisable value, such that provision is made, where appropriate, to reduce the value
of inventories and work in progress to their net realisable value.
Where a site has commenced selling units, the Group compares the margin recognised on a site in the year to the forecast margin on a
site over the life of the development, taking account of updated sales prices and cost estimates. Where a site has not yet commenced
selling, the Group compares the most recent forecast to prior forecasts for that site. The Group assesses whether any such updated margin
forecasts indicate that the inventory balance needs to be adjusted to reflect the net realisable value.
Where a site purchased for redevelopment includes existing rental properties which will be demolished or vacated as part of the planned
redevelopment of the site, the full cost of the site is classified within inventories.
Contract deposits for purchases of development property are recognised as deposits when paid and are transferred to inventory on legal
completion of the contract when the remainder of the contract price is paid.
(g) Share-based payments
The Group has issued equity-settled share-based payments to certain employees (long-term incentive awards and share options) and
founders (Founder Shares).
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3. Significant Accounting Policies continued
(g) Share-based payments continued
The grant-date fair value of equity-settled share-based payment awards granted to employees is generally recognised as an expense, with
a corresponding increase in equity over the vesting period of the awards. The amounts recognised as an expense are adjusted to reflect
the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions, where
applicable at the vesting date.
The amount recognised as an expense is not adjusted for market conditions not being met. For share-based payment awards with
non‑vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no
true-up for differences between expected and actual outcomes.
(h) Taxation
Tax expense comprises current tax and deferred tax. Tax expense is recognised in profit or loss except to the extent that it relates to
a business combination or items recognised in other comprehensive income or equity.
Current tax is the expected tax payable on taxable profit or loss for the period and any adjustment to tax payable in respect of previous
years. It is measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss;
• temporary differences relating to investments in subsidiaries to the extent that the Group is able to control the timing of the reversal of
the temporary differences and it is probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is
probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed
when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that
future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow
from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amounts of its assets and liabilities.
The measurement of uncertain tax positions within tax assets and liabilities requires judgement in interpreting tax legislation and
current case law in order to estimate the amount to be recognised. In line with accounting standards, the Group reflects the effect of an
uncertainty using either the “most likely amount” method or the “expected value” method, as appropriate for the particular uncertainty.
(i) Pensions
The Group operates defined contribution schemes for employees. The Group’s contributions to the schemes are charged to profit or loss
in the year in which the contributions fall due.
(j) Cash and cash equivalents
Cash and cash equivalents include cash and bank balances in bank accounts with no notice or on short-term deposits which are subject
to insignificant risk of changes in value.
Any cash and bank balances that are not available for use by the Group are presented as restricted cash. Amounts of restricted cash which
are restricted from being exchanged or used to settle a liability for at least 12 months after the end of the reporting year are classified as
non‑current assets.
(k) Provisions
Provisions are recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result
of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount can be
reliably estimated.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
3. Significant Accounting Policies continued
(l) Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity
through retained earnings.
(m) Exceptional items
Items that are material in size and unusual or infrequent are presented as exceptional items in the statement of profit or loss and other
comprehensive income. The Directors are of the opinion that the separate presentation of exceptional items provides helpful information
about the Group’s underlying business performance.
(n) Segmental reporting
Operating segments are reported in a manner consistent with the internal organisational and management structure and the internal
reporting information provided to the Chief Operating Decision Maker (“CODM”) (designated as the Board of Directors), which is
responsible for allocating resources and assessing performance of operating segments.
(o) Finance income and costs
Interest income and expense is recognised using the effective interest method. The effective interest method is a method of calculating
the amortised cost of a financial asset or financial liability (or group of financial assets or financial liabilities) and of allocating the interest
income, interest expense and fees paid and received over the relevant period.
Commitment fees in relation to undrawn loan facilities are accounted for on the accruals basis, within finance costs.
The Group is required to capitalise borrowing costs directly attributable to the acquisition, construction and production of a qualifying
asset, as part of the costs of that asset. Inventories which are produced in large quantities on a repetitive basis over a short period of time
are not qualifying assets. The Group does not generally produce qualifying assets.
(p) Financial instruments
(i) Financial assets and financial liabilities
Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently measured based on their
classification as described below. Their classification depends on the purpose for which the financial instruments were acquired or issued,
their characteristics and the Group’s designation of such instruments. IFRS 9 requires that all financial assets and financial liabilities be
classified as fair value through profit or loss (“FVTPL”), amortised cost or fair value through other comprehensive income (“FVOCI”).
(ii) Classification of financial instruments
The following summarises the classification and measurement the Group has elected to apply to each of its significant categories of
financial instruments:
Type
IFRS 9
classification
Financial assets
Cash and cash equivalents Amortised cost
Trade and other receivables Amortised cost
Financial liabilities
Loans and borrowings Amortised cost
Trade payables and accruals Amortised cost
(iii) Trade and other receivables
Trade and other receivables are initially recognised when they are originated and are accounted for at amortised cost using the effective
interest method. The amortised cost is reduced by impairment losses, which are measured using an expected credit loss model. Any
interest income and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
(iv) Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
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3. Significant Accounting Policies continued
(p) Financial instruments continued
(v) Derecognition and modification of financial liabilities
The Group derecognises a financial liability when it is extinguished (when its contractual obligations are discharged or cancelled, or expire).
(v) Derecognition and modification of financial liabilities continued
The Group also derecognises a financial liability when there is a substantial modification of the liability. A substantial modification is
deemed to have occurred when the present value of the cash flows under the modified terms, discounted using the original effective
interest rate, is at least 10% different from the discounted present value of the remaining cash flows under the original terms. If the financial
liability is deemed to have been substantially modified, a new financial liability is recognised at fair value. The difference between this fair
value and the previous carrying amount of the financial liability prior to its derecognition is recognised in profit or loss.
A non-substantial modification of a financial liability is deemed to have occurred when the present value of the cash flows under the
modified terms, discounted using the original effective interest rate, is less than 10% different from the discounted present value of the
remaining cash flows under the original terms, and there are no other qualitative factors which indicate that a substantial modification
has occurred. For non-substantial modifications, the amortised cost of the liability is recalculated by discounting the modified cash flows
at the original effective interest rate and any resulting gain or loss is recognised in profit or loss. For non-substantial modifications where
the impact is that the interest on floating rate liabilities has been repriced at current market terms, the original effective interest rate is
adjusted to reflect the current market terms at the time of the modification. Any costs and fees directly attributable to the modification
of the financial liability are recognised as an adjustment to the carrying amount of the modified financial liability and amortised over its
remaining term under the effective interest method. Any unamortised costs attributable to the original financial liability, with the exception
of unamortised arrangement fees, are recognised as an adjustment to the carrying amount of the modified financial liability and amortised
over the remaining term of the modified liability under the effective interest method. Unamortised arrangement fees relating to the original
financial liability are recognised in profit or loss on modification.
(vi) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when,
the Group currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the
asset and settle the liability simultaneously.
4. Measurement of Fair Values
Certain of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial
assets and liabilities. Fair value is defined in IFRS 13, Fair Value Measurement, as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring the fair value of an
asset or a liability, the Group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques, as follows:
• Level 1: quoted prices, (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the
entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting year during which the change
has occurred.
Further disclosures about the assumptions made in measuring fair values are included in note 29 Financial Instruments and
Risk Management.
5. Segmental Information
Segmental information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported
in a manner consistent with the internal reporting provided to the CODM. The CODM has been identified as the Board of Directors of
the Company.
Having considered the criteria in IFRS 8 Operating Segments and considering how the Group manages its business and allocates resources,
the Group has determined that it has one reportable segment. In particular, the Group is managed as a single business unit, building and
property development. As the Group operates in a single geographic market, Ireland, no geographical segmentation is provided.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
Land held for development 692,756 750,653
Construction work in progress 204,503 180,833
Development land collateral – 1,869
897,259 933,355
The Directors consider that all inventories are essentially current in nature although the Group’s operational cycle is such that a
considerable proportion of inventories will not be realised within 12 months. It is not possible to determine with accuracy when specific
inventories will be realised as this will be subject to a number of factors such as consumer demand and the timing of planning permissions.
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14. Inventories continued
As the build costs on each site can take place over a number of reporting periods the determination of the cost of sales to release on each
sale is dependent on up to date cost forecasting and expected profit margins across the various developments. There is a risk that one or all
of the assumptions may require revision as more information becomes available, with a resulting impact on the carrying value of inventories or
the amount of profit recognised. The risk is managed through ongoing site profitability reforecasting with any necessary adjustments being
accounted for in the relevant reporting year. The Directors considered the evidence from impairment reviews and profit forecasting models
across the various sites and are satisfied with the carrying value of inventories (development land and construction work in progress), which
are stated at the lower of cost and net realisable value, and with the methodology for the release of costs on the sale of inventories.
Development land collateral consists of the collateral property attached to loans acquired by the Group as part of the December
2015 Project Clear loan portfolio acquisition. The Group has now completed the foreclosure process of transferring development land
collateral into its direct ownership and the carrying value of this collateral property at 31 December 2019 was nil (2018: €1.9 million).
The total amount charged to cost of sales from inventories during the year was €348.2 million (2018: €266.6 million).
15. Trade and Other Receivables
Construction bonds 5,884 3,963
Other receivables 5,817 4,070
11,701 8,033
The carrying value of all trade and other receivables is approximate to their fair value.
16. Cash and Cash Equivalents
2019
Cash and cash equivalents 
Cash deposits are made for varying short-term periods depending on the immediate cash requirements of the Group. All deposits can be
withdrawn without significant changes in value and accordingly the fair value of cash and cash equivalents is identical to the carrying value.
17. Share Capital and Share Premium
Authorised Number
O
The Company has four authorised classes of shares: Ordinary Shares; A Ordinary Shares; Founder Shares; and Deferred Shares.
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per Ordinary
Share at meetings of the Company.
The holders of Founder Shares are not entitled to receive dividends and do not have voting rights at meetings of the Company save in
relation to a resolution to wind up the Company or to authorise the Directors to issue further Founder Shares. Founder Shares entitle Prime
Developments Ltd (“PDL”) (the ultimate beneficiaries of PDL are Alan McIntosh, a Director, and his spouse), Michael Stanley and Kevin
Stanley (the Founders) to receive 20% of the Total Shareholder Return (which is the increase in the market capitalisation of the Company,
plus dividends, returns of capital or distributions in the relevant periods) (the Founder Share Value), over the seven years following the
Initial Public Offering in 2015, subject to the satisfaction of the Performance Condition, being the achievement of a compound rate of
return of 12.5% per annum in the Company’s share price, as adjusted for any dividends, returns of capital or distributions paid in the period.
The Founder Shares will be converted into Ordinary Shares or paid out in cash, at the option of the Company, in an amount equal to the
Founder Share Value. Subject to satisfying the Performance Condition there is no limitation on the amount to be converted into Ordinary
Shares (or otherwise issued as Ordinary Shares at nominal value to fulfil the value of 20% of Total Shareholder Return achieved) or paid out
in cash, other than the seven year limit referred to above.
The following restrictions apply to the transfer of Founder Shares before they are converted to Ordinary Shares: any Founder Shareholder
may at any time transfer some or all of the Founder Shares held by him to a family member or (one or more) trustees to be held under
a Family Trust and/or any other Founder Shareholder. None of the Founder Shares transferred to the above mentioned parties may
subsequently be transferred save to a person or a party to which the shares in question could have been transferred as defined above.
The following restrictions apply to the Ordinary Shares which are issued as a result of the Founder Shares conversions:
• during the period of 365 days from the date of conversion, none of the Founders will, without the prior written consent of the Board,
offer, sell or contract to sell, or otherwise dispose of such Ordinary Shares (or any interest therein or in respect thereof) or enter into any
transaction with the same economic effect as any of the foregoing; and
• for a second period of 365 days commencing one year following conversion of Founder Shares into Ordinary Shares, the Founders shall
be entitled to offer, sell, or contract to sell, or otherwise dispose of 50% of such Ordinary Shares (or any interest therein or in respect
thereof) or enter into any transaction with the same economic effect as any of the foregoing but the lock-up restriction described above
will continue to apply to the remaining 50% of such Ordinary Shares during that second period of 365 days.
The total number of Ordinary Shares impacted by these restrictions amounted to 13,555,311 at 31 December 2019.
The holders of Deferred Shares do not have voting rights at meetings and are not entitled to receive dividends except for the right to
receive €1 in aggregate for every €100,000,000,000 paid to the holders of Ordinary Shares.
The holders of A Ordinary Shares are not entitled to receive dividends and do not have voting rights at meetings of the Company.
Share Issues
No shares were issued during the year ended 31 December 2019.
Year ended 31 December 2018
On 16 August 2018, the Company issued 27,110,622 Ordinary Shares (through the conversion of 27,110,622 Founder Shares) to the Founder
Group of Michael Stanley, Alan McIntosh and Kevin Stanley.
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17. Share Capital and Share Premium continued
Share Issues continued
Capital reorganisation
On 29 April 2019, the High Court approved a capital reorganisation to reduce the Company’s share premium account by €550 million and
the resulting reserves from this cancellation have been treated as realised profits. The capital reorganisation took effect on 1 May 2019.
Share buyback
Further to the authority granted at the Annual General Meeting on 22 May 2019, the Company commenced a €25 million share buyback
programme on 13 September 2019. As at 31 December 2019, the total cost of shares repurchased under the buyback programme
was €22,646,683. In accordance with the share buyback programme, all repurchased shares are subsequently cancelled. 18,128,083
repurchased shares were cancelled in the year ended 31 December 2019. This programme completed on 13 January 2020.
On 16 January 2020, the Company announced an extension of its €25 million share buyback programme to include up to a further €35
million, thereby increasing the size of the overall share buyback programme to €60 million (note 33). Despite the Group’s robust financial
position and strong cashflow generation capability, the Board has carefully considered its capital return policy in the face of the COVID-19
crisis and, with the long term interests of the Group in mind, has determined to suspend the share buyback programme, as of 24 March 2020.
Other Undenominated Capital
Nominal value of own shares purchased 18 –
At 31 December 18 –
18. Share-Based Payments
Founder Shares
A valuation exercise was undertaken in 2015 to fair value the Founder Shares (the terms of which are outlined in note 17), which resulted in
a non-cash charge in the period to 31 December 2015 of €29.1 million, with a corresponding increase in the share-based payment reserve
in equity such that there was no overall impact on total equity. This non-cash charge to profit or loss for the period ended 31 December
2015 was for the full fair value of the award relating to the Founder Shares, all of which was required to be recognised up front under the
terms and conditions of the Founder Share agreement. No charge has been or will be recognised in subsequent years.
The valuation exercise was completed using the “Monte Carlo” simulation methodology and the following key assumptions:
• Share price volatility of 25% per annum, based on a basket of comparative UK listed entities;
• Risk free rate of 0.1% per annum;
• Dividend yield of 3% per annum, effective from 2018; and
• 15% discount based on restrictions on sale once Founder Shares convert to Ordinary Shares.
As detailed in note 17, during the year ended 31 December 2018, 27,110,622 Founder Shares were converted to Ordinary Shares and a
proportionate amount of the €29.1 million amount referred to above, totalling €7.9 million, was transferred from the share-based payment
reserve to retained earnings.
Long Term Incentive Plan
The Group operates an equity settled Long Term Incentive Plan (“LTIP”), which was approved at its May 2017 Annual General Meeting,
under which conditional awards of 3,889,750 shares made to employees remain outstanding as at 31 December 2019 (2018: 3,121,413).
The shares will vest on satisfaction of service and performance conditions attaching to the LTIP. Vesting of 80% of the awards will be based
on Earnings per Share (“EPS”) performance and 20% will be based on Total Shareholder Return (“TSR”) over a three year vesting period.
Awards to Executive Directors and senior management are also subject to an additional two year holding period after vesting.
The EPS-related performance condition is a non-market performance condition and does not impact the fair value of the EPS-based awards
at the grant date, which is equivalent to the share price at grant date.
A valuation exercise was undertaken in 2017, 2018 and 2019 to fair value the TSR-based LTIP awards. The fair value (per unit) at the date
of grant of these awards ranged from €1.11 to €1.326 (2019 awards); €1.088 to €1.862 (2018 awards) and €1.52 to €1.76 (2017 awards).
The valuation exercise was completed using the “Monte Carlo” simulation methodology and the following key assumptions:
• Share price volatility of 25% per annum;
• Risk free rate of 0% per annum;
• Dividend yield of 3% per annum, effective from 2019;
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
18. Share-Based Payments continued
Long Term Incentive Plan continued
• Share price at date of grant ranging between €1.088 and €1.862, depending on grant date; and
• Share price at beginning of performance period €1.35 (2017), €1.89 (2018) and €1.058 (2019).
The Group recognised costs related to the LTIP during the year ended 31 December 2019 of €0.220 million (2018: €1.449 million), of which
€0.070 million (2018: €1.184 million) was charged to profit or loss and €0.150 million (2018: €0.265 million) was included in construction work
in progress within inventories. There was a corresponding increase of €0.220 million in the share-based payment reserve in equity.
The number of outstanding conditional share awards under the LTIP are as follows:
Outstanding at beginning of year 3,121,413 1,465,909
Forfeited during the year (247,359) –
Lapsed during the year (1,350,777) –
Granted during the year 2,366,473 1,655,504
Outstanding at end of year 3,889,750 3,121,413
Share Options
500,000 ordinary share options were issued in the year ended 31 December 2015, to a Director at that time and none have been exercised
as at 31 December 2019. 250,000 of these options vested during 2018 and the remaining 250,000 vested during 2019. The exercise price of
each ordinary share option is €1.00. At grant date, the fair value of the options that vested during 2018 was calculated at €0.219 per share
while the fair value of options that vested during 2019 was calculated at €0.220 per share. The related charge to profit or loss during the
year ended 31 December 2019 was nil (2018: nil).
19. Loans and Borrowings
2019
Current liabilities
Bank and other loans
Repayable within one year – 49,333
Non-current liabilities
Bank and other loans
Repayable as follows:
Between one and two years – –
Between two and five years 90,704 75,058
Greater than five years 57,337 72,280
148,041 147,338
Total borrowings 148,041 196,671
In the prior year, the Group completed a debt refinancing of its existing €200 million term loan and revolving credit facility with Allied Irish
Banks plc and Ulster Bank Ireland DAC, which was repayable by 11 December 2019, into a new €277.5 million term loan and revolving credit
facility with Allied Irish Banks plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc, repayable by 31 December 2022. Additionally, the
Group completed a €72.5 million private placement of loan notes with Pricoa Capital Group, repayable on 31 July 2024 (€15 million), 31 July
2025 (€15 million) and 31 July 2026 (€42.5 million). These debt facilities are secured by a debenture incorporating fixed and floating charges
and assignments over certain assets of the Group.
The €50 million term loan with Activate Capital, which the Group entered into on 5 July 2017, was repaid on 12 July 2019.
The Group had undrawn revolving credit facilities of €194 million at 31 December 2019.
The amount presented in the financial statements is net of related unamortised arrangement fees and transaction costs.
122
Total lease liabilities 1,138 –
Following the adoption of IFRS 16, the Group has recognised a lease liability in respect of the lease of its central support office property.
On initial application of IFRS 16 the lease liability and related right-of-use asset were determined by discounting the lease payments over
the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate.
The undiscounted remaining contractual cash flows at 31 December 2019 are as follows:
As at 31 December 2019
Contractual cash flows
Total
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
24. Dividends
Dividends of €19.7 million (2.5 cent per ordinary share) were paid by the Company during the year (2018: nil).
Dividends and a capital distribution totalling €1.9 million (2018: dividend of €0.527 million) were paid during the year by the Company’s
subsidiary, Balgriffin Cells P13-P15 DAC (note 28), to National Asset Management Agency (“NAMA”) in respect of its 35% shareholding.
25. Related Party Transactions
For the year ended 31 December 2019, the following related party transactions have taken place requiring disclosure.
The remuneration of key management personnel (which comprise the Board of Directors of the Company) was as follows:
2019
€’000
2018
€’000
Short-term employee benefits 2,244 2,192
Post-employment benefits (pension contributions – defined
contribution schemes) 106 102
Share-based payment expense – LTIP – 380
Total remuneration of key management personnel 2,350 2,674
26. Group Entities
The Company’s subsidiaries are set out below. All of the Company’s subsidiaries are resident in Ireland, with their registered address at
7 Grand Canal, Grand Canal Street Lower, Dublin 2. All Group companies operate in Ireland only.
Group company Principal activity
126
27. Earnings Per Share
The basic earnings per share for the year ended 31 December 2019 is based on the earnings attributable to ordinary shareholders of
€51.224 million and the weighted average number of ordinary shares outstanding for the period.
Profit for the year attributable to the owners of the Company 51,224 30,764
Numerator for basic and diluted earnings per share 51,224 30,764
Number of
Shares
Number of
Shares
Weighted average number of ordinary shares for year (basic) 785,864,442 771,848,317
Dilutive effect of options 89,471 197,625
Denominator for diluted earnings per share 785,953,913 772,045,942
Earnings per share (cent)
– Basic 6.5 4.0
– Diluted 6.5 4.0
There is no dilution in respect of Founder Shares. It is assumed, as is required under IAS 33, that the test period for the Founder Share
conversion calculation is from 1 September 2019 to 31 December 2019, however the actual test period for determining the Founder Share
conversion in 2020 will be from 1 March 2020 to 30 June 2020. Based on the assumed test period, no ordinary shares would be issued
through conversion of Founder Shares as the relevant performance condition was not met.
Additional ordinary shares may be issued under the Founder Share scheme in future periods up to and including 2022 if the performance
condition under the rules of the scheme is reached (note 17).
The diluted earnings per share calculation also reflects the dilutive impact of share options (note 18). There is no dilution in respect of the
LTIP as the performance conditions are not met as at 31 December 2019.
Adjusted earnings per share

Profit attributable to owners of the Company 51,224 30,764
Exceptional items (note 31) – 3,930
Tax effect of exceptional items – (491)
Adjusted profit for purposes of calculating adjusted earnings per share 51,224 34,203
Weighted average number of ordinary shares for period (basic) 785,864,442 771,848,317
Adjusted earnings per share – basic 6.5 cent 4.4 cent
Adjusted earnings per share is 6.5 cent (2018: 4.4 cent). The only adjustment to basic earnings per share was to exclude the exceptional
items (net of their tax effect) in 2018 (note 31).
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
28. Non-Controlling Interests
The non-controlling interest at 31 December 2019 of €2.5 million relates to the 25% share of the net assets of a subsidiary entity, Balgriffin
Investment No. 2 HoldCo DAC, which is held by National Asset Management Agency (“NAMA”). Cairn Homes plc holds 75% of the equity
share capital in this subsidiary which is involved in the development of residential property.
The non-controlling interest at 31 December 2018 of €4.4 million relates to the 25% share of Balgriffin Investment No. 2 HoldCo DAC
referred to above and the 35% share of the net assets of a subsidiary entity, Balgriffin Cells P13-P15 DAC, which was also held by NAMA.
Balgriffin Cells P13-P15 DAC was formerly involved in the development of residential property. It completed its development activities in
2018 and was since wound up in an orderly manner and dissolved in January 2020.
Name Principal activities
Country of
incorporation
Ownership interest held by
non-controlling interest %
2019 2018
Balgriffin Cells P13-P15 DAC Development of property Ireland 35% 35%
Balgriffin Investment No. 2 HoldCo DAC Holding company Ireland 25% 25%
29. Financial Instruments and Risk Management
The Group has exposure to the following risks arising from financial instruments:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for
measuring and managing risk, and the Group’s management of capital.
(a) Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes
in market conditions and the Group’s activities.
The Group Audit & Risk Committee keeps under review the adequacy and effectiveness of the Group’s internal financial controls and the
internal control and risk management systems.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s trade and other receivables and cash and cash equivalents. The carrying amount of
financial assets represents the maximum credit exposure.
Exposure to credit risk
The Group’s principal financial assets are cash and cash equivalents.
Group management, in conjunction with the Board, manages the risk associated with cash and cash equivalents by depositing funds with
a number of Irish financial institutions and AAA rated international institutions.
The maximum amount of credit exposure is therefore:

Construction bonds and other receivables 11,701 8,033
Cash and cash equivalents – current 56,810 62,232
68,511 70,265
Construction bonds and other receivables of €11.7 million at 31 December 2019 were all not past due. The construction bonds and other
receivables have been reviewed and considering the nature of the counterparties no credit losses are expected. As a result, no credit loss
provision has been recognised.
128
29. Financial Instruments and Risk Management continued
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or other financial assets. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation.
The Group monitors the level of expected cash inflows on receivables together with expected cash outflows on trade and other payables
and commitments. All trade and other payables at 31 December 2019 are considered current with the expected cash outflow equivalent to
their carrying value.
Management monitors the adequacy of the Group’s liquidity reserves (comprising undrawn borrowing facilities as detailed in note 19 and
cash and cash equivalents as detailed in note 16) against rolling cash flow forecasts. In addition, the Group’s liquidity risk management
policy involves monitoring short term and long term cash flow forecasts.
Financial liabilities due in less than one year
Trade payables and accruals 32,196 31,726
Lease liabilities 334 –
Borrowings – 49,333
32,530 81,059
Financial liabilities due after more than one year
Lease liabilities 804
Borrowings 148,041 147,338
148,845 147,338
Funds available:
Cash and cash equivalents 56,810 62,232
Revolving credit facilities undrawn 194,000 198,927
250,810 261,159
The Board has reviewed the Group financial forecasts and associated risks for the period beyond one year from the date of approval of the
financial statements. The forecasts reflect key assumptions, based on information available to the Directors at the time of the preparation
of the financial forecasts.
These forecasts are based on:
• detailed forecasting by site for the period 2020-2022, reflecting trends experienced up to the date of preparation of the financial
forecasts; and
• future revenues for 2020-2022 based on management’s assessment of trends across principal development sites.
Notwithstanding the evolving COVID-19 situation (note 33), the Directors expect that the Group will meet all of its obligations as they fall due
on the basis that there is sufficient liquidity available to the Group for the period beyond one year from the date of approval of these financial
statements.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
(d) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
(i) Currency risk
The Group is not exposed to significant currency risk. The Group operates only in the Republic of Ireland.
(ii) Interest rate risk
At 31 December 2019, the Group had the following facilities:
(a) term loan and revolving credit facilities with Allied Irish Bank plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc that had a principal
drawn balance of €77.5 million at a variable interest rate of Euribor (with a 0% floor), plus a margin of 2.6%. The Group has an exposure
to cash flow interest rate risk where there are changes in Euribor rates; and
(b) a €72.5 million private placement of loan notes with Pricoa Capital which have a fixed coupon of 3.36%.
130
29. Financial Instruments and Risk Management continued
(d) Market risk continued
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 100 basis points in Euribor benchmark interest rates at the reporting date would have increased (decreased)
profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant and the rate change is only applied
to the loans that are exposed to movements in Euribor.
Profit or loss Equity

Variable-rate instruments – borrowings (1,071) – (1,071) –
Cash flow sensitivity (net) (1,071) – (1,071) –
The Group is also exposed to interest rate risk on its cash and cash equivalents. These balances attract low interest rates and therefore a
relative increase or decrease in their interest rates would not have a material effect on profit or loss.
(e) Capital management
The Board’s policy is to maintain a strong capital base (defined as shareholders’ equity) so as to maintain investor, creditor and market
confidence and to sustain the future development of the business. The Group takes a conservative approach to bank financing and the net
debt to total asset value ratio was 9.4% at 31 December 2019 (2018: 13.4%). Net debt is defined as loans and borrowings (note 19) less cash
and cash equivalents (note 16).
On 29 April 2019, the High Court approved a capital reorganisation to reduce the Company’s share premium account by €550 million and the
resulting reserves from this cancellation have been treated as realised profits. The capital reorganisation took effect on 1 May 2019 (note 17).
Further to the authority granted at the Annual General Meeting on 22 May 2019, the Company commenced a €25 million share buyback
programme on 13 September 2019. As at 31 December 2019, the total cost of shares repurchased under the buyback programme
was €22,646,683. In accordance with the share buyback programme, all repurchased shares are subsequently cancelled. 18,128,083
repurchased shares were cancelled in the year ended 31 December 2019. This programme completed on 13 January 2020.
On 16 January 2020, the Company announced an extension of its €25 million share buyback programme to include up to a further €35
million, thereby increasing the size of the overall share buyback programme to €60 million (note 33). Despite the Group’s robust financial
position and strong cashflow generation capability, the Board has carefully considered its capital return policy in the face of the COVID-19
crisis and, with the long term interests of the Group in mind, has determined to suspend the share buyback programme, as of 24 March 2020.
The Company paid a first interim ordinary dividend of 2.5 cent per share (€19.7 million) in October 2019.
(f) Fair value of financial assets and financial liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the
fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described
as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are
observable, either directly or indirectly; and
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
131

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
29. Financial Instruments and Risk Management continued
(f) Fair value of financial assets and financial liabilities continued
• Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based
on observable market data.
The following table shows the Group’s financial assets and liabilities and the methods used to calculate fair value.
Asset/ Liability Carrying value Level Method Assumptions
Borrowings Amortised cost 2 Discounted Cash Flow Valuation based on future repayment and
interest cashflows discounted at a year-end
market interest rate.
The following table shows the carrying values of financial assets and liabilities including their values in the fair value hierarchy. The table
does not include fair value information for other financial assets and liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value.
132
30. Other Commitments and Contingent Liabilities
Pursuant to the provisions of Section 357, Companies Act 2014, the Company has guaranteed the liabilities and commitments of its subsidiary
undertakings (excluding Balgriffin Cells P13-P15 DAC, Balgriffin Investment No.2 HoldCo DAC and Balgriffin Investment No.2 DAC) for their
financial years ending 31 December 2019 and as a result such subsidiary undertakings have been exempted from the filing provisions of
Companies Act 2014. Details of the Group’s subsidiaries are included in note 26 and all subsidiaries listed there, except Balgriffin Cells P13-P15
DAC, Balgriffin Investment No.2 HoldCo DAC and Balgriffin Investment No.2 DAC are covered by the Section 357 exemption.
At 31 December 2019, the Group had contracted as follows:
• to sell 282 apartments at The Quarter in Citywest, Dublin 24 to Urbeo for €94 million (incl. VAT). These apartments are currently under
construction with a phased delivery commencing in late 2020.
• to sell 150 Multifamily PRS residential units in Mariavilla, Maynooth to Urbeo for €53.5 million (incl. VAT). 64 of these units were
completed and sold pre year end for €24.2 million (incl. VAT) with the remaining 86 apartments currently under construction with
a phased delivery until the end of 2020.
• to sell 229 Multifamily PRS units in Lucan to Carysfort Capital for €78.75 million (incl. VAT). 15 of these units were completed and sold
pre year end for €5.2 million (incl. VAT) with the remaining 214 apartments currently under construction with a phased delivery until the
end of 2020.
• to acquire two sites, comprising 97 acres of development land within Clonburris SDZ, at a cost of €21 million (incl. VAT). Subsequent to
the year end, the Group completed the purchase of these sites (note 33).
At 31 December 2019, the Group had a contingent liability in respect of construction bonds in the amount of €1.5 million.
There are no other commitments or contingent liabilities that should be disclosed in these financial statements.
31. Exceptional Items
Year ended 31 December 2019
There were no exceptional items during 2019.
Year ended 31 December 2018
The terms of the agreements for the Argentum acquisition in 2016 included contingent consideration which could be payable in certain
circumstances in relation to the Swords site. The exceptional finance cost of €3.25 million (note 8) in 2018 related to the settlement of this
contingent consideration which was agreed with the Argentum vendors during 2018. This was required to be charged to profit or loss in the
consolidated financial statements in accordance with IFRS 3 Business Combinations.
Residual unamortised arrangement fees at the date of the refinancing (note 8, note 19) of €0.68 million relating to the previous term loan
and revolving credit facility were charged to profit or loss in 2018.
These charges arose from non-routine transactions and were therefore classified as exceptional items.
32. Profit or Loss of the Parent Company
The parent company of the Group is Cairn Homes plc. In accordance with Section 304 of the Companies Act 2014, the Company is availing
of the exemption from presenting its individual statement of profit or loss and other comprehensive income to the Annual General Meeting
and from filing it with the Registrar of Companies. The Company’s loss after tax for the year ended 31 December 2019, determined in
accordance with IFRS as adopted by the EU, is €5.6 million (2018: loss of €4.7 million).
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
133

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
33. Events After the Reporting Period
On 15 January and 16 January 2020, Cairn Homes Properties Limited completed the acquisition of two sites, comprising 97 acres of
development land within Clonburris SDZ, at a cost of €21 million (incl. VAT).
On 16 January 2020, the Company announced an extension of its €25 million share buyback programme to include up to a further
€35 million, thereby increasing the size of the overall share buyback programme to €60 million (note 17). In the period from 1 January 2020
to 24 March 2020, the Company repurchased 21,321,025 shares at a total cost of €24.5 million, of which 19,939,541 shares had been
cancelled as at 24 March 2020. Despite the Group’s robust financial position and strong cashflow generation capability, the Board has
carefully considered its capital return policy in the face of the COVID-19 crisis and, with the long term interests of the Group in mind, has
determined to suspend the share buyback programme, as of 24 March 2020.
The recent outbreak of COVID-19 is clearly concerning and the Company is monitoring developments very closely. The safety and
wellbeing of its people has been the Company’s overriding priority. The Company has established a COVID-19 response group to assess
the range of possible risks, impacts and mitigation strategies and this group will continue to respond to the situation as it evolves. Since
the year-end, the Company has seen significant macro-economic uncertainty as a result of the outbreak and inevitably, there will be some
negative impact on the business although the extent is not yet clear as the scale and duration remain uncertain. As at the date of approval
of the financial statements, the Group is well positioned given its current financial position and strong liquidity position and has mitigation
plans in place, which it continues to adapt as the situation evolves.
34. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 25 March 2020.
134
Company Financial Statements
For the year ended 31 December 2019
Company Statement of Financial Position 135
Company Statement of Changes in Equity 136
Company Statement of Cash Flows 138
Notes to the Company Financial Statements 139
Financial Statements continued
135

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
Assets
Non-current assets
Property, plant and equipment 2 438 507
Right of use assets 3 1,083 –
Intangible assets 4 673 855
Investments in subsidiaries 5 34,313 36,640
36,507 38,002
Current assets
Amounts due from subsidiary undertakings 6 652,262 687,270
Trade and other receivables 7 389 336
Cash and cash equivalents 6,123 5,146
658,774 692,752
Total assets 695,281 730,754
Equity
Share capital 8 810 828
Share premium 8 199,616 749,616
Other undenominated capital 18 –
Share-based payment reserve 9 8,002 7,782
Retained earnings 463,109 (38,988)
Total equity 671,555 719,238
Liabilities
Non-current liabilities
Lease liabilities 10 804 –
804 –
Current liabilities
Trade and other payables 11 22,588 11,516
Lease liabilities 10 334 –
22,922 11,516
Total liabilities 23,726 11,516
Total equity and liabilities 695,281 730,754
On behalf of the Board
John Reynolds				Michael Stanley
Chairman				Director
Company Statement of Financial Position
At 31 December 2019
136
Company Statement of Changes in Equity
For the year ended 31 December 2019
Share Capital
Share
premium
137

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
As at 1 January 2018 762 20 46 749,616 14,222 (42,218) 722,448
Total comprehensive loss for the year
Loss for the year – – – – – (4,659) (4,659)
(4,659) (4,659)
Transactions with owners of the Company
Conversion of Founder Shares to ordinary shares 27 – (27) – (7,889) 7,889 –
Equity-settled share-based payments – – – – 1,449 – 1,449
27 – (27) – (6,440) 7,889 1,449
As at 31 December 2018 789 20 19 749,616 7,782 (38,988) 719,238
Company Statement of Changes in Equity
For the year ended 31 December 2018
138
Company Statement of Cash Flows
For the year ended 31 December 2019

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
1. Significant Accounting Policies 140
2. Property, Plant and Equipment 140
3. Right of Use Assets 141
4. Intangible Assets 141
5. Investments in Subsidiaries 141
6. Amounts due from Subsidiary Undertakings 141
7. Trade and Other Receivables 142
8. Share Capital and Share Premium 142
9. Share-Based Payments 142
10. Lease Liabilities 142
11. Trade and Other Payables 143
12. Financial Instruments 143
13. Related Party Transactions 143
14. Events after the Reporting Period 143
15. Approval of Financial Statements 143
Notes to the Company Financial Statements
For the year ended 31 December 2019
140
1. Significant Accounting Policies
The individual financial statements of the Company have been prepared in accordance with IFRS as adopted by the EU and as applied in
accordance with the Companies Act 2014. As described in note 32 of the consolidated financial statements, the Company has availed of
the exemption from presenting its individual statement of profit or loss and other comprehensive income. The Company’s loss after tax
for the year ended 31 December 2019 is €5.6 million (2018: loss of €4.7 million).
The significant accounting policies applicable to these individual company financial statements which are not reflected within the
accounting policies for the consolidated financial statements are detailed below.
(a) Investments in subsidiaries
Investments in subsidiaries are accounted for in these individual financial statements on the basis of the direct equity interest, rather than
on the basis of the reported results and net assets of investees. Investments in subsidiaries are carried at cost less impairment.
(b) Intra-group guarantees
The Company has given guarantees in respect of borrowings and other liabilities arising in the ordinary course of business of the Company
and subsidiaries. The Company considers these guarantees to be insurance contracts and accounts for them as such. These guarantees are
treated as contingent liabilities until such time as it becomes probable that a payment will be required under such guarantees.
2. Property, Plant and Equipment
Leasehold
improvements

Notes to the Company Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
141

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
3. Right of Use Assets
2019
€’000
2018
€’000
Cost
At 1 January 2019 on initial application of IFRS 16 1,443 –
Additions – –
At 31 December 2019 1,443 –
Accumulated depreciation
At 1 January 2019 – –
Depreciation (360) –
At 31 December 2019 (360) –
Net book value
At 31 December 2019 1,083 –
Following the adoption of IFRS 16, the Company has recognised a right-of-use asset in respect of the lease of its central support office
property. On initial application of IFRS 16, (see note 3(c) of the consolidated financial statements) the asset and related lease liability were
determined by discounting the lease payments over the expected remaining term of the lease at a discount rate of 2.6% reflecting the
Group’s incremental borrowing rate at 1 January 2019.
4. Intangible Assets
For further information on Intangible Assets refer to note 13 of the consolidated financial statements.
5. Investments in Subsidiaries
2019
€’000
2018
€’000
At the beginning of the year 36,640 29,151
Additions during the year 27 7,489
Impairment during the year (2,354) –
At the end of the year 34,313 36,640
Details of subsidiary undertakings are given in note 26 of the consolidated financial statements.
Additions during 2019 relate to direct transaction costs in respect of the investment in Balgriffin Investment No.2 HoldCo DAC which was
acquired for €7.5 million in 2018.
Impairment during 2019 relates to the capital distribution from a subsidiary, Balgriffin Cells P13-P15 DAC, which completed its
development activities in 2018 and was since wound up in an orderly manner and dissolved in January 2020. The capital distribution of
€2.354 million has been separately accounted for as distribution income. There is a corresponding impairment charge of €2.354 million
resulting in a nil impact on profit or loss overall.
6. Amounts due from Subsidiary Undertakings
Amounts due from subsidiary undertakings are repayable on demand.
The amounts owed by subsidiaries have been reviewed and no credit losses are expected based on the financial position of subsidiaries.
As a result, no expected credit loss provision has been recognised.
142
7. Trade and Other Receivables
Other receivables 389 336
389 336
8. Share Capital and Share Premium
For further information on Share Capital and Share Premium refer to note 17 of the consolidated financial statements. For further
information on dividends refer to note 24 of the consolidated financial statements.
9. Share-Based Payments
For further information on Share-Based Payments refer to note 18 of the consolidated financial statements.
10. Lease liabilities
Current liabilities
Lease liabilities
Repayable within one year 334 –
334 –
Non-current liabilities
Lease liabilities
Repayable as follows:
Between one and two years 334 –
Between two and five years 470 –
804 –
Total lease liabilities 1,138 –
Following the adoption of IFRS 16, the Company has recognised a lease liability in respect of the lease of its central support office
property. On initial application of IFRS 16 (see note 3(c) of the consolidated financial statements) the lease liability and related right-of-
use asset were determined by discounting the lease payments over the expected remaining term of the lease at a discount rate of 2.6%
reflecting the Group’s incremental borrowing rate at 1 January 2019.
The undiscounted remaining contractual cash flows at 31 December 2019 are as follows:
As at 31 December 2019
Contractual cash flows
Total
Lease liability 
Notes to the Company Financial Statements continued
For the year ended 31 December 2019
Financial Statements continued
143

FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
STRATEGIC REPORT
11. Trade and Other Payables
2019
€’000
2018
€’000
Trade payables 500 244
Accruals 3,038 2,611
VAT liability 17,768 7,989
Payroll taxes 1,282 672
22,588 11,516
12. Financial Instruments
The carrying value of the Company’s financial assets and liabilities, comprising amounts due from subsidiary undertakings, other
receivables, cash and cash equivalents, trade payables and accruals are a reasonable approximation of their fair value. Relevant disclosures
on Group financial instruments and risk management are given in note 29 of the consolidated financial statements.
13. Related Party Transactions
Under IAS 24, Related Party Disclosures, the Company has related party relationships with key management and with its subsidiary
undertakings (see note 26 of the consolidated financial statements).
Key management compensation is set out in note 25 of the consolidated financial statements.
14. Events after the Reporting Period
On 16 January 2020, the Company announced an extension of its €25 million share buyback programme to include up to a further
€35 million, thereby increasing the size of the overall share buyback programme to €60 million. In the period from 1 January 2020 to 24 March
2020, the Company repurchased 21,321,025 shares at a total cost of €24.5 million, of which 19,939,541 shares had been cancelled as at
24 March 2020. Despite the Group’s robust financial position and strong cashflow generation capability, the Board has carefully considered
its capital return policy in the face of the COVID-19 crisis and, with the long term interests of the Group in mind, has determined to suspend
the share buyback programme, as of 24 March 2020.
The recent outbreak of COVID-19 is clearly concerning and the Company is monitoring developments very closely. The safety and
wellbeing of its people has been the Company’s overriding priority. The Company has established a COVID-19 response group to assess
the range of possible risks, impacts and mitigation strategies and this group will continue to respond to the situation as it evolves. Since
the year-end, the Company has seen significant macro-economic uncertainty as a result of the outbreak and inevitably, there will be some
negative impact on the business although the extent is not yet clear as the scale and duration remain uncertain. As at the date of approval
of the financial statements, the Group is well positioned given its current financial position and strong liquidity position and has mitigation
plans in place, which it continues to adapt as the situation evolves.
15. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 25 March 2020.
144
Company Information
Additional Information
Directors
John Reynolds (Non-Executive Chairman)
Michael Stanley (Chief Executive Officer)
Alan McIntosh (Non-Executive)
Andrew Bernhardt (Non-Executive)
Gary Britton (Non-Executive)
Giles Davies (Non-Executive)
Linda Hickey (Non-Executive)
Jayne McGivern (Non-Executive)
David O’Beirne (Non-Executive)
Secretary and Registered Office
Tara Grimley2019
Annual Report & Accounts



Contents
Overview

1	2019 Performance Highlights
2
Our Business at a Glance
4	Chair’s Statement

Strategic Report

8
Chief Executive Officer’s Review
12 Business Model
14 Market Review
16 Our Strategy
18 Our Brands
20	Corporate Social Responsibility
24 People and Culture
28 Engaging with Stakeholders
34 Operating and Financial Review
45	Understanding and Managing
our Principal Risks

Governance

50	Chair’s Governance Statement
52	Board of Directors
55 Corporate Governance Framework
Roles and Responsibilities
57	2019 Board Activities
59 Effectiveness
60	Nomination Committee Report
63	Audit Committee Report
68	Risk Committee Report
70	Directors’ Remuneration Report
91 Directors’ Report

The Strategic Report on pages 7 to 29
was approved by the Board of Directors
on 26 February 2020
Peter Jackson Chief Executive Officer
Jonathan Hill Chief Financial Officer

Financial Statements

97	Statement of Directors’ Responsibilities
98	Independent Auditor’s Report
103	Consolidated Income Statement
104	Consolidated Statement of Other
Comprehensive Income
105	Consolidated Statement of
Financial Position
106 Consolidated Statement of Cash Flows
107	Consolidated Statement of
Changes in Equity
109	Notes to the Consolidated
Financial Statements
163	Company Statement of Financial
Position
164	Company Statement of Changes
in Equity
166	Notes to the Company Financial
Statements

Other information

184	Five-Year Financial Summary
184 Shareholder Information

Overview

is a global sports betting
and gaming operator, with a portfolio of leading
brands. Continuous innovation across product,
marketing, technology and responsible gambling
practices, coupled with a world-class creative
team combine to create a leading proposition for
our customers to enjoy.
Around the world we provide our customers with
intuitive products that offer market-leading value,
promotions and choice. These are powered by our
in-house technology, trading, development and
responsible gambling teams.
We employ over 9,000 people who share a common
set of traits: competitiveness, agility, integrity and a
relentless focus on delivering the highest standards
of entertainment to our customers in a safe and
responsible way.
Last year the Group changed its name to Flutter
Entertainment plc to reflect our growing inventory
of distinct brands from around the world including

Proposed full-year dividend
per ordinary share**

Average number of
responsible gambling
interactions per month

*	The “underlying” measures exclude separately disclosed items that are not part of the usual business
activity and are also excluded when internally evaluating performance, and have been therefore
reported as “separately disclosed items” (Note 4 and page 123 to the Consolidated Financial
Statements).
† EBITDA is profit before interest, tax, depreciation, amortisation and impairment expenses excludes
the impact of IFRS 16 and is a non-GAAP measure (page 40).
** 2019 final dividend is subject to shareholder approval.

1



Our Business at a Glance

A portfolio of leading
international brands

Our team of exceptional people deliver a leading sports betting and gaming
experience to over 7 million customers around the world, through our diverse
and distinctive portfolio of brands.

Paddy Power

Betfair

Sportsbet

Adjarabet

TVG

FanDuel

Operates online and retail
across the UK and Ireland,
where we are one
of the most popular sports
betting brands. Paddy
Power is recognised for
its slick and easy-to-use
betting app, one of the
most vibrant sportsfocused retail estates in
the sector, and a marketing
operation that is globally
renowned for a distinct
brand of mischief.
The newest brand under
the Flutter umbrella is the
leader in the Georgian
online gaming market.
A strong product set,
combined with unique
marketing assets including
a long-term partnership
with the Adjaranet media
platform, delivers an
unparalleled offering to
our customers.

2

Operates globally and
gives online sports betting
customers an unparalleled
offer with its marketleading Exchange and
Sportsbook providing
consistent value, choice
and innovation. We are well
known for our insight-led
approach to marketing
and communicating with
our customers around
the world.

Broadcasts horse racing
across the US as well
as operating an online
betting network that is
active in over 30 states.
We are driving the
industry forward through
innovative, high-quality
broadcasting and marketleading promotional offers
around US horse racing.

One of the market-leading
brands in the fast-growing
Australian sports betting
market. Our customer
friendly proposition is
underpinned by innovative
products, disruptive
marketing and consistent
promotional generosity
around key sports events.

The driving force behind the
rise in daily fantasy sports
in the US over the past
10 years, with over 8 million
customers. Since the
US Supreme Court gave
individual states the right
to regulate sports betting
in May 2018, FanDuel has
launched sportsbooks in
six US states, offering a
market-leading online
and retail proposition.

Strategic report
Overview

Operating as
four divisions
PPB Online

Comprises the Paddy Power, Betfair and Adjarabet brands
offering our products in over 100 countries globally. It also
includes our B2B operations where we offer risk and trading
services to a number of international partners.

Australia

Sportsbet is the leading online sports betting brand in
the Australian market combining innovative products
with dynamic marketing campaigns around national
sports events.

Find out more on page 35

Find out more on page 36

US

PPB Retail

The US division operates the FanDuel sports betting
brand in six states currently; four multichannel in New
Jersey, Indiana, West Virginia and Pennsylvania; and
two retail-only in New York and Iowa. In addition to the
sportsbooks, we also offer daily fantasy sports across
40 states, horse racing wagering via our TVG business
and online casino in both New Jersey and Pennsylvania.

Find out more on page 38

Find out more on page 37


Consists of 623 Paddy Power betting shops across the
UK and Ireland. The estate is sports betting led, driven
by a market-leading range of TV content and strong pricing
and promotions. We also offer dynamic multichannel
products, such as our PP onside app, which bridges the
gap between retail and online.

Australia
PPB Online

47%

US
PPB Retail
* Pre IFRS 16.


Chair’s Statement

Landmark year for the Group
Dear shareholder

Responsible gambling
underpins every element
of the Group’s strategy.
We work hard to keep
our customers safe while
they enjoy our products,
thereby helping us to build
a sustainable business.

*	The “underlying” measures exclude separately
disclosed items, that are not part of the usual
business activity and are also excluded when
internally evaluating performance, and have
been therefore reported as “separately disclosed
items” (Note 4 and page 123 to the Consolidated
Financial Statements).
†	EBITDA is profit before interest, tax, depreciation,
amortisation and impairment expenses, excludes
the iimpact of IFRS 16 and is a non-GAAP measure
(page 40).

4

I am pleased to update you on another
busy year for the Group as it continues
to extend its global presence. 2019 saw
the Group further expand its operations
in the US market while also building more
sustainable, recreational customerfocused businesses in all our regions.
This was Peter Jackson’s second year
as Chief Executive Officer and, with
the support of the Board, the Group
completed the acquisition of Adjarabet
in February and subsequently agreed the
terms of a transformational combination
with The Stars Group in October. At the
same time, the Group remained focused
on executing upon its four-pillar strategy,
with good progress made across each of
its core objectives.
We remain determined to do all that we
can to become the leader in the industry
in the area of responsible gambling and,
while progress has been made in this area
in 2019, this work is far from complete.
As a matter of priority, we will continue
to refine our approach and to enhance
the safeguards that we have in place for
our customers.
PPB Online rolled out country-specific
pricing which enhanced the capabilities
of our international sportsbooks. The
recent introduction of My Betfair Rewards
provides Exchange customers with a more
tailored pricing package, giving them the
freedom to choose their own commission
rates. The evolution of PPB Online is
ongoing as we continue to reduce reliance
on higher-value customers and move
to an increased focus on a more casual,
recreational customer base. Elsewhere,
the integration of Adjarabet has gone very
well, with the business benefiting from the
expertise and technology that the broader
Group has to offer.

Our Australian business also performed
very well in 2019 against the backdrop
of significantly higher gaming taxes and
product fees. The business remains as
focused as ever on the consistent drivers
of its historical success, namely ongoing
enhancement to product, value and
marketing. In particular, the Sportsbet
team are making good progress in the
personalisation of the product experience.
In the US, the pace of regulatory change
has been very encouraging with 14 states
legislating in favour of sports betting.
The Group now offers online services
in four states and retail operations in six
states, with ambitious plans to roll out in
further states during 2020. FanDuel has
continued to win strong market share
in the states in which it operates and,
while we anticipate that the competitive
landscape will continue to intensify, we
also believe that the unique set of assets
that FanDuel possesses positions it very
well for future growth.
Financially, the Group saw continued good
growth with Revenue up 14% to £2,140m
and underlying* EBITDA† of £385m.

Responsible gambling

Responsible gambling underpins every
element of the Group’s strategy. We
work hard to keep our customers safe
while they enjoy our products, thereby
helping us to build a sustainable business.
In 2019, we continued to evolve our
responsible gambling capabilities and
have recently launched an enhanced
Customer Activity Awareness Programme
(CAAP) proprietary model which enables
us to identify and interact with at risk
customers. On our brand websites,
we have further enhanced our tools
and customer journeys which support
customers in managing spend and play.

Overview

Gary McGann
Chair

We know that we cannot solve the
complex challenges that the gambling
industry faces alone and we work
proactively with other leaders and relevant
organisations in the industry to develop a
progressive responsible gambling mindset
focused on solutions which provide the
safest possible environment in which
to gamble. Last year saw us work with
others in the sector to launch the Safer
Gambling Commitments and to commit
to significantly enhanced funding to
treat those suffering from gamblingrelated harm.

Culture and values

Central to the long-term delivery of
our strategy is the Group’s culture,
underpinned by the values and behaviours
expected of our employees. Our values
have been communicated Group-wide
and will continue to be promoted by the
Group’s management teams to guide
our employees in the way we do business.
In addition to receiving updates from
Executives throughout the year, in July
2019, the Board visited FanDuel, in New
York. As well as providing commercial
insights, site visits allow the Board to gain
an understanding of the Group’s culture.
This visit also allowed employees to meet
with the Non-Executive Directors, ask
questions and gain an understanding of
the operation of
the Board.

Andrew Higginson was appointed as a
Non-Executive Director on 2 October
2019. Andrew brings an extensive wealth
of Board, commercial, retail and leadership
experience to the Board.
We continue to focus on Board renewal
and composition, and keep under review
diversity of the Board and the appropriate
mix and balance of Board capabilities
and experience.

Investor engagement
and remuneration

During 2019, I continued to engage
with our investors and both Peter Rigby,
Chair of the Remuneration Committee,
and I met with shareholders to discuss
proposed remuneration changes in the
context of internal and external strategic
developments, business and regulatory
changes, as well as discussing general
governance matters. The objective
of these discussions is to present
a remuneration structure that can
withstand the uncertainties within our
industry and our dynamic business
strategy, while creating strong alignment
with shareholders’ interests. The proposed
changes to our Remuneration Policy are
presented in this report for shareholder
approval at our 2020 AGM.

Below PPB Marketing offsite and raceday
where staff shared ideas on how to keep our
customers at the heart of everything we do.

Board update

On 15 May, Nancy Cruickshank was
appointed as Non-Executive Director.
Nancy brings a wealth of digital and
Non-Executive Director expertise,
combined with a proven entrepreneurial
spirit and track record.

Chair’s Statement continued
Our people

Our industry is competitive and fast-moving
and it is vital that we continue to attract,
develop and retain highly talented people
and reward success. The Group has in
place a range of initiatives designed to
ensure a successful and inclusive working
environment. We continue to focus on
promoting diversity for all employees.
During 2019, the Board appointed two
Non-Executive Directors dedicated
to workforce engagement. This is an
important initiative for the Board to gain
a wider understanding of views from our
employees and will continue to be a focus
for the Board during 2020.
In addition to the dedicated workforce
engagement programme, I spent time
throughout 2019 visiting offices across
the Group. I had the pleasure of visiting
our Malta and Hammersmith offices and
FanDuel operations, using the opportunity
to meet employees across the business.
I continue to be impressed by the quality,
dedication and commitment shown by
our colleagues throughout the Group led
by the Executive team, and I would like
to thank them all for their contribution
throughout 2019.

6

Dividend policy/proposed
combination with The Stars
Group

We have proposed a Final Dividend for
2019 of 133p per ordinary share (subject
to shareholder approval), which would
maintain the full-year dividend at 200p
per ordinary share.
On 2 October 2019, the Group announced
that it had agreed terms with The Stars
Group to bring the two businesses
together in what both Boards believe
will be a transformational combination.
The transaction is subject to the approval
of both sets of shareholders as well
as a number of national competition
authorities that will review the proposed
deal. Assuming such approvals are
forthcoming, the transaction is expected
to complete in either Q2 or Q3 2020.
The Board of Flutter believes that the
transaction will allow the Group to
accelerate its progress against all four
pillars of its strategy and position it very
well to accelerate its international growth.
The combined Group will also be better
diversified from both a geographic and
product standpoint.

As a result of the transaction, the Group’s
financial leverage will change materially,
with an expectation that the Group will
have a pro-forma net debt/EBITDA ratio of
approximately 3.5 times upon completion.
This is above the Group’s stated mediumterm net debt/EBITDA target of 1–2 times.
As such, the Board is proposing that a
distribution of an ordinary dividend of
200p per share annually is targeted until
such time as the Group’s net debt position
returns to below 2 times.
We look forward to completing The Stars
Group transaction and approaching the
future thereafter with confidence.
Gary McGann
Chair
26 February 2020

Strategic Report

Strategy
Section Contents
8
Chief Executive Officer’s Review
12 Business Model
14 Market Review
16 Our Strategy
18 Our Brands
20 Corporate Social Responsibility
24 People and Culture
28 Engaging with Stakeholders
34 Operating and Financial Review
45	Understanding and Managing
our Principal Risks

7



Chief Executive Officer’s Review

Flutter grew revenues
by 14% during 2019 to
over £2.1 billion.
We took a leadership position in the
US online sports betting and gaming
market, executed strongly in Australia and
expanded our European presence through
the acquisition of Georgian market leader,
Adjarabet. Group underlying EBITDA1,2
for the year was £385m, down 15% on
the prior year, reflecting incremental tax/
regulatory changes of £107m and our
investment in the nascent US market.
Excluding the impact of the tax and
regulatory changes, underlying EBITDA1,2
increased 12%.
The Group’s four pillar strategy that we
laid out last year remains in place and good
progress has been made against each
pillar during 2019. In our core markets we
remain strongly positioned. Internationally
we have made progress in improving the
Betfair proposition and have added to our
podium positions with the acquisition of
Adjarabet. In the US, our business goes
from strength to strength.

Peter Jackson
Chief Executive Officer

8

The external regulatory
and tax backdrop

While executing on our strategy remains
a key focus, it is important that we reflect
on the future direction of our business
and the sector more broadly. Our Group
operates in a fast-paced, highly
competitive industry, that is governed
by a multitude of national regulatory and
tax frameworks which are continuously
evolving. Regulatory change presents
the Group with great opportunities but
also poses real potential challenges and
risks. To be well positioned to deal with
such change, we believe that global
scale and diversification are key.
In 2019 we saw examples of both.
The expansion of the regulated sports
betting market in the US continues
apace, an opportunity that we believe
is transformational for the Group.
In our core markets of the UK, Ireland
and Australia we also incurred significant
tax increases while our international
operations experienced several
unexpected market closures in the
first half of the year. In addition, the
introduction of a £2 staking limit on
UK gaming machines changed the
unit economics for UK shop operators,
equating to an annualised profitability
impact of £30m for our retail estate.
As we look to the future, we believe
that we have reached a pivotal time
when it comes to responsible gambling.
To better protect potentially vulnerable
customers and to put our business on
a more sustainable footing, it is clear
that we must do more in this area both
as an operator and as an industry.

As an operator…

During 2019 we improved two key aspects
of our responsible gambling program:
How we identify customers who need to
be protected: we improved our in-house
technology by significantly increasing the
number of behaviours that we monitor
to determine whether customers
are using our products responsibly.
How we interact with our customers:
we more than trebled the size of our
responsible gambling team over the
last 18 months, investing in specialist
training to ensure that our people are
interacting with our customers at an
early stage. This positively influences
behaviours and aims to ensure that
customers do not spend more than
they can afford on our products.
The results of these initiatives have been
encouraging to date with an 84% increase
in customers choosing to set deposit
limits while delivering a 56% increase
in real time contact with customers.
Notwithstanding the progress made, we
have more to do and we must continuously
seek to raise our standards when it comes
to responsible gambling and compliance
procedures. For example, as part of our
ongoing review of business relationships,
we have taken the decision to stop taking
business from a number of Exchange B2B
partners where we felt their compliance
policies were no longer sufficiently aligned
with those of the Group. This decision
is likely to lead to a reduction in our
Exchange revenues during 2020.

Responsible gambling is
a critical component of
our strategy. This is why
we continue to raise our
standards as a socially
progressive operator and
to help lead the industry
in a race to the top when
it comes to responsible
gambling practices.

Strategic Report

The entrepreneurial culture of our business and
the quality of our people are continuing to drive our
global expansion while providing our teams with the
opportunities they seek to develop their careers
and gain new experiences.

As an industry…

Collaboration between industry leaders
is essential to put the sector on a
more sustainable footing. We must
promote a mindset that encourages
a race to the top when it comes to
responsible gambling best practice.
During 2019, we worked with several
leading operators in the UK to introduce
safer gambling commitments. To ensure
that these commitments are delivered
with the transparency and authenticity
intended, the newly established Betting
and Gaming Council will regularly report
publicly on the progress we are making
against them. Arising from these
commitments, the industry is now working
alongside the Gambling Commission on
three specific areas of focus. These are:
VIP code: development of a
code to ensure loyalty schemes
do not incentivise behaviour
which puts customers at risk
Advertising technology: review
of online advertising to enhance
protection of vulnerable people
Responsible game design:
setting a framework to ensure
products and game design does
not drive high risk behaviours

Above The Paddy’s Rewards Club and Rhodri
Giggs combination was one of 2019’s most
talked about adverts.

12%

Paddy Power customer growth

Future regulation

On January 14th, the UK Gambling
Commission announced that it would
introduce a ban on gambling by credit card
from 14th April this year. In our submission
to the UK Gambling Commission on credit
cards, we had acknowledged that there was
a need for some change in this area and
we will be in a position to implement the
required changes on schedule. In addition,
the UK Government has announced that it
will review the 2005 Gambling Act in the
months ahead and we are hopeful that the
emphasis of future UK regulation will be on
player protection with a clear focus on
affordability. In Ireland, we remain supportive
of the Government’s work on the Gambling
Control Bill which seeks, among other
things, to establish a dedicated regulator
for the gambling sector in Ireland.

PPB Online and Retail

Paddy Power enjoyed good momentum
across all products during 2019. Leveraging
our iconic brand we rolled out several
attention grabbing campaigns such as
the Rhodri Giggs “Loyalty is dead” and our
“Don’t think you’re special” campaigns.
Both drove good customer acquisition
and engagement with customer growth
of 12% during the year excluding the
World Cup. In addition, we improved the
Paddy Power product offering with ‘ACCA
insurance’, leading the market with this
offering. This has contributed to Paddy
Power ranking best-in-class in the market
when it comes to promotions. We have
also been pleased with how our PPB Retail
business has responded to the £2 staking

Above Paddy Power enlisted
one of Europe’s greatest
exports, Eric Cantona,
as Brexit ambassador.

limit on Fixed Odd Betting Terminals,
with signs that we are winning market
share as competitors reduce the size
of their retail estates.
During 2019, Betfair was the business
most impacted by regulatory change and
the initiatives we introduced to re-shape
our business. Positively we continue to
invest in the brand and deliver product
enhancements. We launched our new
Clive Owen Betfair brand campaign
which uses simple analogies to explain
the concept of the Betfair Exchange
to new customers. The campaign has
a greater focus on digital channels to
achieve greater marketing efficiency.
Our international business benefitted
from a multitude of product improvements
including rolling out country specific
pricing (CSP) in Q1 and the addition of
four new payment options and five new
currencies during the year. We have
been pleased with the underlying
momentum within our international
business, with underlying Exchange
customer growth of 23% during 2019 and
an uplift in contribution from both CSP
and marketing efficiencies achieved.
In line with our international strategy to
secure podium positions in new markets,
we acquired a 51% stake in Adjarabet in
February, giving us a leadership position
in another regulated market. Integration
has gone well with the business now able
to access the Group’s sports betting
expertise. Very strong organic growth
since acquisition has reinforced our
view that local scale and focus is vital
to winning in international markets.

23%

Betfair International Exchange
customer growth

9



Chief Executive Officer’s Review continued
Australia

The Sportsbet team delivered a strong
performance during 2019. While substantial
increases in taxes and product fees
reduced gross profit margins, most of this
was recovered through strong top line
growth as a result of continued investment
in product, value and marketing. The
business maintained operating cost
discipline, extending its strong track
record of delivering operating leverage.
We continued to pursue our 2018 strategy
of prioritising customer generosity with
positive results. Sportsbet has been
recognised as having some of the best and
most generous promotions in the market.
This drove customer growth of 9%
during the year (excluding the World Cup),
while the number of online bettors using
Sportsbet as their main mobile account
of choice remains almost twice that of
our nearest competitor.

9%

Sportsbet customer growth

The US

The growth opportunity in the US has
continued to unfold quickly during 2019.
We have been encouraged by the pace
of regulation to date, with 14 individual
states having now passed sports betting
legislation. These 14 states account for
c. 24% of the US population and with more
states expected to follow, we are now
increasingly confident that the total US
addressable market for our products
could exceed $10bn.
To take advantage of this opportunity,
we continue to believe that certainty of
market access in each state is key, ideally
via “first skin” access agreements. First
skin refers to having the right to use the
first online/mobile license that a landbased partner is granted in a particular
state. Some states have only granted one
skin per operator, for example Michigan,
which is why securing first skin access is
a priority. We recently secured additional
first skin market access deals with
The Cordish Company in Maryland and
Twin River in Colorado. We now have
first skin market access deals in 15 US
states. Looking ahead, we believe that the
strength of our market share performance
to date will make us an attractive potential
partner in further states.

FanDuel investor day

In March 2019 we invited analysts and
investors to our Meadowlands sportsbook
to learn further detail on the FanDuel
Group and to understand the opportunity
in the US market.
Discover more at flutter.com/investors/
results-centre/year/2019

10

350,000
Customers in the US since launch

44%

Online share in the US

$130m

Marketing investment in FanDuel
brand in 2019

During 2019, we successfully leveraged
our key US assets to acquire 285,000
additional sports betting customers,
bringing our total US sports-betting
customer base to over 350,000.
Those key assets are:
A strong starting position with
established businesses in the
US performing strongly, growing
contribution and absorbing a portion
of the cost base.
A US database of 8.5 million
customers, a rich source of customer
cross-sell; 42% of our sports betting
customers have come from the Daily
Fantasy Sports (DFS) database to date
and cross-sell into the New Jersey casino
has accelerated significantly since we
embedded gaming content into our
sports app. We rolled out our online
casino product in Pennsylvania
in January 2020 and the early trends
to date have been very encouraging.
The FanDuel brand which resonates
strongly, benefitting from a marketing
investment of $130m during 2019
alone and over $600m to date. In
the sportsbook markets in which we
currently operate, FanDuel has the
highest unaided brand awareness and
leadership in Google search trends,
highlighting how the brand has mass
appeal beyond its traditional DFS base.
This has ultimately resulted in a very
attractive average customer acquisition
cost3 of less than $250 since the
sportsbook was launched.

Strategic Report

Proposed combination
with The Stars Group

On 2 October 2019 we announced our plans
to combine with The Stars Group to create
a global betting and gaming company.
 iscover more at flutter.com /
D
investors/proposed-combination-with
-the-stars-group

A high quality and broad product
range which we continue to innovate.
We were the first operator to offer same
game parlay betting and continue to
be the only operator to offer it on NFL
games. In addition, the integration
of our risk and trading functions with
our global business allows us to offer
significantly more betting markets than
our competitors.
A team that has true scale; our US team
now numbers over 1,000. This scale
is unrivalled in the US online market.
Over 70 experienced employees from
Flutter’s global team have joined our
US business over the last 18 months.
The combination of favourable customer
acquisition economics and our leading
product offering means that we have
experienced average customer payback
of less than 12 months in New Jersey,
benefitting from cross-sell to casino.
Furthermore, we believe that the
standalone New Jersey sportsbook
will be structurally contribution positive
in 2020.

200p

Ordinary dividend per share in 2019

£243m
Returns to shareholders

1x-2x

Medium-term Group leverage ratio

In 2020, we expect to go live online in at
least three additional states (Colorado,
Tennessee and Iowa) and we also plan
to progress our work on our proprietary
technology stack, utilising Group assets
to ensure we have sufficient scale and
flexibility to deal with individual state
requirements.

Balance sheet strength

The ongoing strength of the Group’s
balance sheet has meant that we
have been very well positioned to take
advantage of market opportunities as
they arise. Following the acquisition of
a 58% stake in FanDuel during 2018,
we announced the acquisition of a 51%
stake in Adjarabet in early 2019 and
then the proposed transformational
combination with The Stars Group in
October. Our strong balance sheet has
been a key enabler and an asset during
the negotiation of each deal.
With this in mind, the Group continues to
target a medium-term leverage range of
between 1x and 2x net debt to EBITDA2.
Over the last 12 months the Group has
progressed towards this leverage target
via (i) continued investment in growing
our US business, (ii) enhanced returns
to shareholders and (iii) the acquisition
of the Adjarabet stake. As a result, at
31 December 2019 the Group had net
debt of £265m representing 0.7 times
underlying EBITDA1,2.

1.	The “underlying” measures exclude separately
disclosed items, that are not part of the usual
business activity of the Group and have therefore
been reported as “separately disclosed items”.
2.	EBITDA is profit before interest, tax, depreciation
and amortisation expenses and is a non-GAAP
measure. EBITDA throughout this Operating and
Financial Review excludes the impact of IFRS 16.
See Appendix 5 of Operating and Financial Review
for a reconciliation to IFRS 16 compliant numbers.

The proposed combination with
The Stars Group will see the Group’s
leverage ratio increase to c. 3.5 times
proforma4 underlying EBITDA1,2 post
completion, above our target range.
As such, we are proposing maintaining our
annual ordinary dividend at 200p per share
until the Group’s net debt to EBITDA2
returns below 2x.

Stars Group combination
update

We have commenced our integration
planning work ahead of our proposed
merger with The Stars Group and remain
excited about the opportunities that the
deal will create for the Group. In Australia,
the Australian Competition and Consumer
Commission has confirmed that it has
granted its informal approval. The proposed
transaction remains subject to approval by
the Australian Foreign Investment Review
Board as well as further international
regulatory bodies in Australia.
We are continuing to work with the various
competition authorities elsewhere globally
to obtain the necessary approvals ahead
of completion of the transaction. We still
expect that the completion date will be in
either Q2 or Q3 2020.
Peter Jackson
Chief Executive Officer
26 February 2020

3.	Average customer acquisition cost is the total
sportsbook media and digital marketing spend
divided by the total number of customers acquired.
4.	The Adjarabet and FanDuel transactions
completed on 1 February 2019 and 10 July 2018
respectively. The ‘Proforma’ results include the
Adjarabet and FanDuel fantasy sports businesses
as if they had always been part of the Group,
incorporating in addition to the reported results,
results from pre-acquisition periods in 2018
and 2019.

11

Annual
AnnualReport
Report&&Accounts
Accounts2019
2019

Business Model

Building long-term value

The unique advantages we possess allow us to deliver an exciting sports betting
and gaming experience to our customers around the world, while building long-term
value for our stakeholders in a sustainable and responsible way.
Competitive advantage

Our process

Significant global scope with local focus
 ur strong position in the largest regulated online
O
betting markets across the world gives us the
confidence to continue to invest in our portfolio
of diverse but complementary brands.

7m+

Active customers across…

In-house technology

 ur proprietary technology platforms and in-house
O
product development allow us to support an array
of international operations. We run specialist sports
and gaming development centres in Porto, Cluj,
Sofia, Edinburgh, London and Glasgow which develop
unique and innovative content for all our brands.
This positions us well to potentially incorporate
further brands, platforms and products into
our business.

Online

Market-leading sports pricing
and risk management

Our advanced in-house sportsbook pricing
technology and proprietary Exchange platform
allow us to offer strong pricing and a wider range of
markets across our own sites as well as unparalleled
white-label services to our third parties.

The world’s largest betting Exchange

 he Betfair Exchange is a unique tool that facilitates
T
the betting between customers (rather than fixed
odds set by the bookmaker), typically resulting
in better odds and enhanced trading capability.
The product gives our customers more choice,
more control over their betting and helps power
a range of trading optionality across the Group.

US

Rest of the
world

Strong global expertise and talent

Our ever-growing global talent pool, comprising
industry and market specialists in technology,
marketing, trading and commercial fields, enables
us to operate strategically and efficiently across
different time zones. We continue to invest a
significant amount in developing, retaining and
rewarding our team and finding ways to benefit
from collaboration across territories.

12

Retail

UK
Ireland

Australia

report
Strategic Report

Generation of margin
and commission
Sports betting

Sports betting involves customers betting on the
outcome of sporting events. We have three separate
operating models for sports betting:
– Sportsbooks
(Paddy Power, Betfair, Sportsbet, FanDuel) are
traditional bookmaking products, where we act as
the bookmaker, offering odds on outcomes and
taking bets from customers. The odds we offer
apply an expected margin, designed to enable us
to retain a net return after settlement of all bets.

– Betfair Exchange
is a platform which enables customers to bet
against each other. Unlike a traditional sportsbook,
we do not take any risk on the outcome of an event
and instead earn a commission for facilitating the
matching of customer bets.

– T VG business
operates an advanced deposit wagering (ADW)
service in the US. Our platform accepts wagers from
customers and places them into tack-based pools.
We take no risk on the outcome of the event but
earn commission from the pool operators on the
wagers we forward.

Daily Fantasy Sports (DFS)

Our FanDuel business operates a DFS service
where customers select virtual teams of athletes
to play against each other for a pre-determined
prize pool.
The athletes earn points based on their
real-life performances and the customer team
with the highest number of points wins the
contest. We take a commission from the prize
pool when the contest ends.

Gaming

Gaming involves customers betting on a range
of skill-based games, games of chance and
peer-to-peer games.
These include online casino, poker, bingo and
games, along with machine gaming terminals in
our UK retail betting shops. Some of these games
involve customers betting “against the house”,
with a fixed-odds margin applied, and for others,
like poker, we facilitate the game between
customers and take a commission.

Creating value for our stakeholders


Memoranda of
understanding with
governing bodies

During 2019, over 7 million active customers played our
products online and enjoyed visiting our betting shops.
They benefit from market-leading value, promotions,
product choice and innovation in their betting with the
customer experience and responsible gambling mindset
at the heart of every decision-making process.
As a publicly listed company we have a long-standing
track record of delivering strong returns to shareholders
and during 2019, we returned £243m through ordinary
dividends and share buybacks.
See Dividends on page 93

Employees

At 31 December 2019, we employed 9,153 people across
18 global offices and in 623 Paddy Power betting shops
and 7 FanDuel betting shops. This creates significant
economic benefit in the regions in which we operate.
See People and culture on page 24 to 27

Economic contribution

We make a significant financial contribution to the
territories in which we operate, paying £523m in gaming,
corporation and other taxes in 2019.

Sports

We support sports via commercial partnerships, product
fees (racing), sponsorship, betting integrity services and
charitable support for grassroots sports activities.

Communities

Delivering our products in the safest possible way, and
creating a “race to the top” mindset around responsible
gambling practices in all markets in which we operate
is the single most important part of our community
relationships. However, we are also committed to making
a positive contribution to the communities in which we
operate through our social responsibility and charity
programmes. In 2019 the focus for our Corporate Social
Responsibility (CSR) activity was around mental health
which involved working with relevant charities across
European markets to both provide training for front line
staff on how to recognise and support vulnerable people,
resilience training for employees and charity fundraising.
See Responsible gambling and Corporate
Social Responsibility on page 20 to 23

13



Market Review

The recent trend
by governments, both
national and local,
to introduce “regulate
and tax” regimes is
leading to an opening
up of additional regulated
online markets.

c.£345bn
Estimated total market value

10%

CAGR* in the five years to 2019

c.12%
Of the total market is online

Global market with a
long runway of growth
The global betting and gaming market
incorporates a wide array of products and
services including sports betting, lotteries,
casino games, poker and bingo. These
products are offered in both land-based
venues (such as casinos, betting shops
and race tracks) and across online/mobile/
telephone channels. The total market is
estimated to be worth c. £345bn.
Since the late 1990s, online channels have
grown strongly (estimated CAGR* of 10%
in the five years to 2019) with online now
representing c. 12% of the total market.
The growth in the online market has been
driven by several key drivers, namely:
the expansion of the overall market due
to ongoing product development and
innovation;
the ongoing growth in global smartphone
penetration, which has led to better
availability of mobile products;
the structural migration of customers
from retail to online in many markets; and
a continuous improvement in the
quality of products available, with betting
apps providing greater convenience
and a better overall user experience
for customers.
We believe that the online sector still has
a long runway of growth ahead of it, with
each one percentage point migration
from offline to online contributing c. £3bn
(or 8%) to overall online market growth.
How the sector is regulated varies
significantly across the world, with a
spectrum from markets where gambling
is explicitly prohibited, to governmentowned monopolies, to licensed industries
that are fully open to commercial
operators. There also remain many
markets where governments are yet to
legislate for online products and as such
the regulatory picture in these markets
remains grey.
Left Paddy Power took the
Japan Rugby World Cup by
storm with an eclectic line up
of ambassadors featuring Ruby
Walsh, Donncha O’Callaghan
and WWE Champion Sheamus.

14

Encouragingly, the recent trend by
governments, both national and local,
to introduce “regulate and tax” regimes
is leading to an opening up of additional
regulated online markets. The repeal of
the federal ban on sports betting in the US
and the Brazilian government announcing
its intention to regulate sports betting are
two examples of this trend. In the last two
years alone, markets with a total potential
online customer base of over 400m adults
have either introduced regulation,or been
given the authority to do so.

UK & Ireland

Combined the UK and Ireland represent
our largest market in terms of revenue,
representing 51% of total Group revenue.
These revenues are derived from our two
online brands; Paddy Power and Betfair
as well as the Paddy Power retail estate
of 623 betting shops, known as licensed
betting offices (“LBOs”).
The UK is a relatively mature gambling
market but remains highly competitive
across both sports and gaming verticals.
It is fully regulated and is estimated to
be worth approximately £14bn annually
(including lottery). The UK online sports
and gaming market is worth c. £5bn
with the UK retail market worth c. £3bn.
We estimate the UK online market is
growing at 4-5% per annum. Following
the introduction of a new £2 staking limit
on fixed odds betting terminals (“FOBTs”)
in April 2019, the retail UK market has
experienced a significant number of shop
closures. As of now, we estimate that c.
900 shops have been closed across the
industry, representing c. 10% of the total
number of shops in the UK. We believe it
is likely that more shops will be closed by
competitors in due course.
The Irish market consists of both landbased and online channels. Unlike the UK,
however, retail operations in Ireland do
not offer gaming products such as FOBTs.
The Irish online sports and gaming market
is worth c. €350m, slightly larger than
the Irish retail market which is worth an
estimated €340m.

Strategic Report

The Group is the largest online betting
operator across the UK and Ireland with an
estimated 14% share of the online market,
and an estimated 21% share of the online
sports market. We operate approximately
7% of the LBOs across the UK and Ireland,
being the largest retail betting operator in
Ireland and the fifth-largest in the UK by
shop numbers.

Australia

Australia is the Group’s second-largest
market by revenue, representing 21%
of total Group revenue via our marketleading Sportsbet brand. The Group
holds an estimated 27% share of the highly
competitive Australian online market.
The Australian sports betting market is
fully regulated and is worth an estimated
A$5bn, with online and mobile accounting
for almost 69% of the total market.
Online market growth has averaged
c. 15% per annum in recent years but
has moderated in 2019 to c. 10%. This
growth is driven by migration from retail
to online, ongoing product development,
increased smartphone penetration and
growth in the popularity of sports betting.
Online gaming is not currently permitted
in Australia.

US
The US market represents 18% of total
Group revenue. Traditionally the market
has been predominantly land-based,
with online sports betting (horse racing)
and gaming only available on a very
limited basis at state level. In May 2018
the US Supreme Court overturned the
Professional and Amateur Sports Act
(“PASPA”), which effectively imposed a
federal ban on sports betting across 46
US states. By December 2019, legislation
has been passed in 19 states while further
states have indicated their intention to
legislate for sports betting in the future.
The American Gaming Association
estimates that the US sports betting
market is worth US$150bn in stakes each
year, with only a small fraction of that
accruing to licensed operators currently.

The FanDuel sportbook has a retail
presence in 6 states and is live online in 4.
During 2019 c. US$900m of sports betting
revenue was generated, with 57% from

online and mobile channels. New Jersey,
Pennsylvania and Nevada are the largest
markets and on a combined basis account
for 82% of total revenue (94% of online).
FanDuel is live online in New Jersey,
Pennsylvania, West Virginia and Indiana.
In the first full calendar year of regulated
online sports betting in New Jersey, the
market generated US$244m of revenue
(2018: US$54m), of which the Group had
a 45% market share. The comparable
numbers for the first 7 months of
regulated sports betting in Pennsylvania
were US$71m in online market revenues
and a 49% market share.
Online casino is also regulated in New
Jersey and following the regulation of
sports betting, growth of this market has
accelerated rapidly due to cross-sell from
sports customers. The market grew 67%
in 2019 to US$462m revenues with the
Group holding a 17% market share.
Fantasy sports are also popular in the
market with the daily fantasy sports
(“DFS”) market estimated to be worth
approximately US$300m. The Advanced
Deposit Wagering (“ADW”) horse racing
market is online and phone only and is
estimated to be worth c. US$5bn in stakes.
The Group has held a strong position in
these traditional markets, participating
in the DFS market via its FanDuel brand
(estimated c. 40% market share) and
the ADW market via its TVG brand
(estimated 33% market share).
Below The FanDuel sportsbook has a retail
presence in 6 states and is live online in 4.

Europe & International

The Group currently has licenses to
operate in several regulated European
markets through the Betfair brand,
including Denmark, Italy, Malta, Romania,
Spain and Sweden; and in Georgia through
the Adjarabet brand. In totality, Betfair
accepts bets from over 100 countries and
sees good scope to grow our presence
in these markets over time. Some of the
bigger online markets are as follows:
The Spanish online betting market
was regulated in 2012 and is worth an
estimated €700m. The Group has a mid
single digit market share of the market.
Italy is the largest fully-regulated
continental European online betting
market, worth an estimated €1.7bn.
The Group currently has a single digit
market share of the Italian market.
The Swedish online market regulated in
2018 and is worth an estimated £700m,
with the Group having an estimated
single digit market share.
The Georgian online market is regulated
and worth an estimated £180m. The
Group currently has an estimated 40%
market share via the Adjarabet brand.
We estimate that we have a single digit
share of the nascent online betting
and gaming markets in Denmark
and Romania.
The Group also operates in several grey
international markets through the Betfair
brand; the most significant being Brazil
where we estimate we have a single digit
market share currently.

All market share figures are as at 31 December
2019. US market revenues are given in gross gaming
revenues, which varies from the traditional net
gaming revenue figures given elsewhere
Sources: UK Gambling Commission, H2GC, Aigmeg,
Internal Group analysis, Regulus Partners.
* CAGR: Compound annual growth rate.

15



Our Strategy

Growing
a more
diversified
sustainable
business

Our vision

To be a global leader in online sports betting and gaming,
combining a diversified portfolio of strong national brands
with the world’s leading betting Exchange.
We have a clear four pillar strategy to capitalise on the
sector’s opportunities underpinned by responsible
gambling. Our strategic pillars are supported by:
(i) Maximise profitable growth in our core markets

(ii) Grow our business in the rest of the world
(iii) Attain podium positions in additional
regulated markets

(iv) Pursue the US opportunity rigorously

Our purpose

To deliver a vibrant and safe sports betting and gaming
experience to our customers around the world,
while building long-term value for our shareholders
in a sustainable and responsible way.

These pillars are supported by investment in our key
enablers, namely our people, products and technology.

Our approach is underpinned by our core values; to
operate responsibly and with a customer-centric focus.

16

Strategic Report
report

Maximise profitable growth in core markets
In our core markets (UK, Ireland and
Australia) we have leading positions
that enable us to generate and grow our
profit and cash-flows. We are focused
on maximising both by ensuring we:
Invest in our leading customer
propositions (product, value and
promotions)

Leverage our distinct assets (iconic
brands and the world’s leading
betting Exchange)
Collaborate with our peers on
regulatory developments
Strive to be best in class from a
responsible gambling perspective
Focus on operating efficiently to
increase returns

We are confident that successful
execution against these targets
will deliver growth for our core
businesses, generate positive
returns on marketing investment and
achieve good operating leverage.

Grow our business in the rest of the world
Betfair currently operates in a large
number of international markets,
predominantly appealing to customers
through the brand’s unique customer
value proposition. We continue to invest
in our technology and product offering
to serve our international customers.
We believe that there is still a considerable
runway of growth for the Group from
international markets through:

Building an efficient global product
that offers tailored regional
customer propositions
Investing further in regional
promotional and marketing spend
on a returns-based approach
Leveraging our global scale and
technology platform to minimise
the cost to serve customers

Successful execution of this
strategy should increase the Group’s
international diversification, while
ensuring that the Group’s overall
profitability is not exposed to any
material concentration of revenues
within particular markets. The nature
of the Exchange liquidity ecosystem
also means that growing international
revenues can also improve the Betfair
proposition within its core markets.

Attain podium positions in additional regulated markets
We believe that having a local focus
and strong brand presence are
advantageous in effectively competing
in local online regulated markets.
Attaining a podium position in any
market provides us with the customer
franchise to invest in a more tailored
product proposition for that market
and generate greater returns.

Through successful execution of
this strategy, the Group will be well
positioned to take advantage of the
global trend towards online regulation,
increasing its diversification and
ultimately expanding the number
of core markets that generate
sustainable cash flows.

Pursue the US opportunity rigorously
The US Supreme Court’s decision to
allow individual state by state sports
betting in May 2018 has opened up a
very significant growth opportunity
that will be transformative for the sector.
The pace of legislation and regulation
since has been very encouraging with
over a quarter of the population of the
US now living in states where sports
betting has been legislated for in some

form. We believe that we have attained
each of the key assets required to be
successful in the US sports betting
market including the FanDuel brand and
customer database, high quality product
and the Group’s operation capabilities.
We are confident we can maintain our
market leadership in key regulated states
by leveraging these assets:

Maximise the cross-sell opportunity
across all our product verticals
Invest in the FanDuel brand to maintain
our market leading awareness and
attractive customer acquisition costs
Create a flexible technology stack to
deal with the complexity of US state by
state regulation.

17



Our Brands
Our distinctive brands
are one of our greatest
strengths, enabling us
to acquire, retain and
engage with customers
in a unique manner
in all of our key markets.

Below Paddy Power brought in
“The Special One” to promote
their Daily Jackpots on Paddy
Power Games.

18

Our Paddy Power mischief-makers
continued to stir things up in 2019, kicking
off the year with a TV advert for Paddy’s
Rewards Club with a man whose story
isn’t usually associated with loyalty, Rhodri
Giggs. The campaign went far and wide,
as the general public reacted with shock
and awe. Hot on the heels of that headlinegrabbing advert, Paddy Power put some
more adverts up in Dublin ahead of the
Ireland vs England Six Nations clash in
February. Using press and out-of-home
ads – as well as turning one of our shops
into a “passport office” – the campaign
poked fun at visiting English fans.
The biggest brand campaign of the year
came in July, when Paddy Power were
“revealed” as Huddersfield Town’s new
shirt sponsor – with a truly obnoxious logo
appearing as a sash across the kit. Twitter
went into meltdown in outrage with most
assuming it was a prank until Huddersfield
ran out onto the pitch for a pre-season
friendly wearing the kit. After 48 hours of
antagonising silence, Paddy Power came
clean, announcing that they were actually
“unsponsoring” the shirt by removing
our logo completely, would be doing the
same for a further four teams, and would
be calling on other brands to follow suit in
order to “give the shirt back to the fans”.
An important example of how we use
mischief to make a more serious point.
To top off the year we enlisted the help
of José Mourinho who starred in a Paddy
Power Games advert for Daily Jackpots,
with a killer script and convincing delivery
to remind customers that he was the only
“Special One”.

Our iconic Aussie brand Sportsbet is still
serving up betting with a healthy side of
banter. Through a mix of tailored customer
generosity offers, headline generating
early pay-outs and product advertising
around Same Race Multis, Sportsbet
remains the number one brand in
the market.
The brands latest dalliance into film parody
saw cricketing legend Merv Hughes
reprise the role of Mark “Chopper” Read
to play out one of the most iconic scenes
from Australian cinema. The “Grubs Subs
Collector” ad went down a storm, receiving
over 2m views and being awarded the best
ad on YouTube in Australia for 2019.
An early pay-out on the Labor Party to win,
two days before the election, to the tune
of a cool A$1.3m, delivered Sportsbet
some serious global news coverage but
not quite for the reasons they’d hoped.
With seven out of every 10 bets coming in
for Labor, traders were confident enough
to give punters their winnings early, but
it wasn’t to be as the incumbent Liberal/
National coalition defied the odds to
win a third three-year term. But at least
everyone was talking about Sportsbet.
Finally, Sportsbet took sledging to the
next level with a cheeky dig at England
for voting Brexit, in the form of a 50,000
square foot crop circle just outside of
Edgbaston, to remind England that the
Ashes would ‘Remain’ in Australia.
Below A topical Brexit dig from Sportsbet with a
crop circle letting England know that
the Ashes would “Remain” in Australia.

Strategic report

Right FanDuel celebrated
their “Sports Equinox”
with an advert in the iconic
Times Square, New York.

Our brands in the US (TVG, Betfair and
FanDuel) had another strong year with
TVG becoming a major sponsor of the
Breeders Cup for the first time and
delivering a record number of activations
for the brand.
FanDuel is now the number one brand in
terms of awareness across both fantasy
and sports betting. Marketing was taken
up a gear around several high-profile
sports events to ensure that continues.
The launch of the NFL season saw a
new advertising campaign that focused
on key product features for fantasy and
sportsbook customers.
In 2019, FanDuel created a celebration
known as the “Sports Equinox”, a unique
day in the American sporting calendar
where all four major US professional
leagues – NFL, NHL, NBA and MLB – play
on the same day – a sports fan’s dream.
Where better to showcase the brand and
associate themselves with the day than
with an enormous advert in Times Square
and a $500,000 free to play competition
for fantasy and sportsbook customers.
The bespoke campaign and free to
play game were played by over 150,000
customers, helping the day itself set a
new record high Sportsbook handle.
In December the brand also launched the
“Spread The Love” campaign to support
the launch of sports betting in Indiana.
The campaign was based on a simple
mechanic that for every 250 customers
who bet on the spread, the line would
move by one point in customers’ favour.
With the campaign going viral, over 10,000
customers benefited as the spread moved
from +8.5 to +51, delivering great value
and an entertaining campaign that further
enhanced FanDuel’s brand presence in a
new market.

Betfair and its diverse product offering
aims to be the world’s leading destination
for core bettors in over 100 countries.
With the Betfair Exchange remaining
at the heart of the brand, it brought on
board Hollywood actor Clive Owen to
spearhead the advertising campaign
to create a series of slick films that use
everyday situations as analogies of how
the platform works.
The 40 online films ran across TV, social
and digital platforms explaining features
such as “setting your own odds” or “back
and lay” betting.
This insight-led approach to communicating
with customers led to the creation of
a network of weekly betting podcasts
focused on football, racing, cricket, NFL and
more: “Betfair…Only Bettor”.

Below Clive Owen spearheaded the Betfair
Exchange campaign.

Since becoming part of the Flutter
Entertainment Group in February 2019,
Adjarabet has increased investment in the
brand and continued to develop innovative
content and exciting promotions that
delight our customers. Adjarabet
continues to be a leader in Georgia and
is taking market share in Armenia.
Highlights include the launch of Aviator,
a unique social game that customers
love plus many other new games from a
variety of suppliers including content from
Cayetano, our in-house studio. We held
the biggest draws in Georgia with a “40 car
giveaway” during the summer and ended
the year with “25 new years” featuring daily
cash prizes.
We developed and launched a unique
game called “arena”, an interactive movie
where customers choose how the story
proceeds and win prizes. Featuring Rivaldo
and many famous Georgian actors and
sports stars, it has been a huge hit with
over 100,000 customers watching the
full one-hour movie.

100,000

Customers watched Adjarabet’s interactive
game movie “arena”

19



Corporate Social Responsibility

Responsible gambling is at the
heart of our business
THE FOUR PRINCIPLES OF OUR
RESPONSIBLE GAMBLING STRATEGY ARE:

Behaving responsibly

Responsible gambling (RG) for Flutter
is fundamental to every element of
the Group’s strategy. Under our global
strategy sits our RG strategy that is
underpinned by four principles as outlined
here. Across our global business, we
provide an entertaining betting experience
to over 7 million customers and our
priority is ensuring that, during their visits
to our sites and shops, they can stay in
control and only bet what they can afford.
However, we recognise that for a small
minority of customers, gambling stops
being fun, and they are at risk of harm.
All markets have their own regulation
and societal context, and we apply our
principles in that context with the ultimate
objective of building a sustainable and
responsible business in each market.

Below PPB Raceday
brought staff together
for an afternoon of
racing, ideas and
learning about
our customers.

1

We build our business
on customers having
fun, and harmful play
has no place

To ensure that all our customers
gamble responsibly, we have robust
and wide-ranging policies on RG and
routinely engage with customers we think
might be at risk. The tools we have in place
range from deposit and loss limits to full
self-exclusion protocols and we endeavour
to make these processes as seamless and
easy to use as possible. We continually
assess and evolve these processes to
ensure we are doing everything possible
to protect our customers.
Every customer is different, and we
know that not all customers will choose
to proactively use our tools, so we
also actively monitor our customer
base using our Customer Activity and
Awareness Programme (CAAP). CAAP
is our proprietary machine learning
model which uses an algorithm to
identify potentially ‘at-risk’ customers
based on their behaviour. This year we
enhanced the model to analyse over 100
customer behaviours daily and assign
risk scores to each active customer.
Proactive interventions regularly take
place off the back of these scores which
greatly increases our ability to identify at
risk customers early in the lifecycle and
intervene before gambling becomes a
problem for them.

2

We educate our
customers and staff
about responsible play

This isn’t a dry, faceless process. We have
real people trained to call and email
customers every day to intervene when
we see they may be at risk of gamblingrelated harm. Our specialist RG team
make around 130,000 monthly RG
awareness interactions across our
Paddy Power and Betfair brands, and
nearly 1,200 customer interaction calls
per month. We have recently rolled out
CAAP 2.0 to our Sportsbet customers in
Australia and are developing a model for
our US business. Where we are concerned
about customers, we will not market to
them. We have invested significantly to
ensure protecting our customers is a key
priority by refreshing and targeting our
staff training around RG.

130,000
Monthly responsible gambling
awareness interactions across our
Paddy Power and Betfair brands

1,200

Customer interaction calls per month

20

Strategic Report

3

 e have to talk, share
W
and work with others
to keep innovating in
responsible gambling

An important part of our ongoing RG
strategy is aimed at establishing the Group
as one of the progressive voices in the
industry and striving to raise the standards
for our customers and stakeholders.
We work with trade associations in all of
our regulated markets, all of which have
played an important role in establishing
progressive, constructive self-regulation
that enhances customer protection.
We made further significant steps
towards driving the industry forward
in 2019 by working with several leading
operators in the UK to introduce
industry Safer Gambling Commitments,
a comprehensive set of measures
devised to support the UK Gambling
Commission’s National Strategy to
Reduce Gambling Harm.
The five core Safer Gambling
Commitments are targeted to:
prevent underage gambling
and protect young people;
increase support for treatment
of gambling harm;
strengthen and expand codes
of practice for advertising
and marketing;
protect and empower our
customers; and
promote a culture of safer gambling.
To ensure that these commitments
are delivered with the transparency and
authenticity they are intended, we form
part of an industry working group with
other operators under the Betting and
Gaming Council (‘BGC’) and will regularly
report publicly on progress against
these commitments.

4

We invest in always
getting better at
tackling the problem

In the UK we continue to drive collaboration
across the industry through our membership
of the newly formed Betting and Gaming
Council (‘BGC’). We made further progress
in our RG intentions in the following areas:

Research, treatment
and education

Our UK business continued to invest in
RG. During 2019 we donated 0.1% of our
UK gross gambling yield (GGY) to the
research, education and treatment of
problem gambling as encouraged by the
Gambling Commission, and we would
welcome the introduction of a levy to
ensure all UK licensed operators do the
same. In June 2019 we announced, along
with the other big five operators, that we
would raise our current 0.1% voluntary
contribution of GGY over the next four
years to 1% in 2023. This tenfold increase
will reach a contribution of approximately
£60m, a level which we intend to maintain
in the future and we hope that the wider
industry will follow suit.

Whistle-to-whistle
advertising ban

In September 2019 the gambling industry
followed through with its agreement to ban
all pre-watershed gambling advertising
during televised live sport in the UK. It is
vital that we market responsibly and hope
these restrictions have gone some way to
address understandable concerns about
the proliferation of advertising.

Responsible gambling week

We participated in the now annual joint UK
and Ireland Responsible Gambling Week,
collating activities across all online and
retail gambling outlets across both countries.
The week sees all retail and marketing
changed to RG messaging as well as being
displayed on site and all social media
platforms. This year our Paddy Power
brand used their marketing assets to
create videos with ambassadors Ruby
Walsh, Matt Chapman, Lizzie Kelly and
Mick Fitzgerald in order to land the RG
message in a way that would resonate
with our audience. Events are set up
internally for staff in our corporate offices,

to learn from problem gambling charities
we support, to make employees aware
of how to spot possible signs of problem
gambling but also to encourage everyone
to consider how else we can improve our
processes so that we can further protect
our customers.

Responsible gambling charities
During 2019, we further supported the
UK Government’s nominated charity
GambleAware, as well as committing to a
four-year funding plan through our Safer
Gambling Commitments for the Young
Gamblers Education Trust which aims
to inform, educate and safeguard young
people against problem gambling.
In Ireland we are proud to have been
a strong and leading advocate for the
establishment of the Gambling Awareness
Trust – an independent charity set up to
fund research, education and treatment
services to help minimise gambling-related
harm in Ireland. This initiative represents
a significant increase in the amount of
funding available to support organisations
in Ireland.

Alpha Hub

Alpha Hub is a technology start-up
incubator programme led by the Emerging
Technology team from our office in
Cluj, Romania. The program sought to
find technologies and products that
complemented the internal innovation
efforts around RG and help increase our
capabilities across the Group. In January
2019, Mindway AI and Pamble were
selected out of 210 applications from
54 countries.
Mindway uses artificial intelligence and
expert insight from clinical experts on
pathological gambling, medical and
psychology experts as well as researchers
in addiction and addictive behaviour,
to build a “digital expert” that assess
customers for problem gambling
behaviour. We have been able to build
this into our own proprietary CAAP model
to ensure our risk profiling of customers
is as comprehensive as possible.
Pamble is a companion app that
uses cognitive behavioural therapy
(‘CBT’) to help people overcome
gambling addiction.

21



Corporate Social Responsibility continued
IN ADDITION TO OUR COMMITMENT TO RG,
WE FOCUS ON OTHER SOCIAL RESPONSIBILITIES:

Sustainability and
environment

Business Improvement
District schemes

In 2019, we participated in and funded 52
Business Improvement District schemes
across the UK in partnership with local
councils to combat anti-social behaviour
and keep crime away from gambling.

Climate

Climate change is increasingly important
for all businesses and we are in the process
of developing new measures to try to
reduce our footprint wherever we can.
This includes refurbishing the head office
sites in Dublin and London with even more
efficient materials to dramatically reduce
consumption levels. As you can see in the
table, most of our emissions come from
electricity consumption and air travel.
We are also taking on recommendations
from the Energy Savings Opportunity
Scheme (ESOS) survey conducted
this year and developing these into our
medium-term property strategies.

Electricity consumption

We have been working for a number of
years to ensure that, wherever possible,
our shops, offices and data centres
operate on renewable energy tariffs,
which only use power gained from wind,
water or solar. As of 2019 all UK retail
stores are on renewable tariffs.

Air travel

We now voluntarily report on Scope 3
emissions by recognising our carbon flight
emissions generated by business travel.
We offset our 2018 flight emissions by
funding an anti-deforestation project in
the Peruvian Amazon called Madre de
Dios which preserves 100,000 hectares
of rainforest from deforestation.

>£250,000
Raised through employee volunteering
activities and corporate donations to our
European Charity of the Year partners

22

Promoting sport

UK greyhounds

In 2019, Flutter paid £1.6m to greyhound
racing, following the introduction of an
agreement we supported with the help
of the Greyhound Board of Great Britain
(GBGB) that online operators would make
voluntary contributions to the British
Greyhound Racing Fund. This funding
helps to ensure high standards of welfare
and integrity within the sport.

Horseracing

We are mindful of our responsibility to
make a positive contribution to the sports
we take bets on. In 2019, we contributed
£14m to the UK Horseracing Betting Levy
and spent over £4m on sponsorship deals
with racecourses across the Group, in
addition to making charitable donations to
organisations such as the Injured Jockeys
Fund and Racing Welfare.

sports, from korfball to canoeing, hockey
to American football. As of 2018, we
also ringfenced 50% of these grants for
clubs that include women’s teams, to
help further encourage the development
of women’s sports.

Betfair x El Deporte

Similar to our UK Cash4Clubs, we launched
the Betfair x El Deporte programme in
Spain in 2018, with the endorsement of
the Spanish Sport Association. In 2019,
we provided €20,000 of vital funding
to grassroots sports across Spain.
Below Flutter contributes to the sustainability
of racing through levies, voluntary
commitments and commercial partnerships.

UK Cash 4 Clubs

We continue to offer community sports
clubs the chance to apply for grants of up
to £1,000 to make improvements to their
club that can take them to the next level
and continue their future sustainability.
This year we issued £35,000 of grants
to 38 clubs, supporting a vast range of
TYPE OF EMISSIONS
Direct (Scope 1)

Indirect Energy (Scope 2)
Indirect Other (Scope 3)
Total gross emissions (tCO2e)

Activity
Strategic Report

Empowering our people

Volunteering

Our staff participate in a range of
volunteering, sporting and charity events
which the business fully supports and helps
organise where possible. These range
from supporting homeless projects,
helping at community gardening
programmes to organising fundraising
events for our Charity of the Year partners.
Our staff are encouraged to take time
out of their busy work schedules to give
back to their communities.

Walking Month

Walking Month is a competition that
originated in our Cluj office in 2010 and
has since expanded and gone on to win
awards including ‘Best Tech CSR initiative’
and ‘Romania CSR Award for Community
Involvement’. The competition is for
everyone, be that individually or as part
of a team, with the goal of taking as many
steps as possible across the month.
With money raised from registrations
and throughout the month, we support
local NGOs and charities in Romania that
help people with issues ranging from
mobility to special needs. What started as
a small scheme to motivate employees to
support the community has grown into a
multi-office initiative which spans outside
of just our employees. In 2019, there were
3,100 participants across five countries
making 976 million steps which raised
€100,000 for a local Romanian NGO and
our European Charity of the Year partners.

New Entrepreneurs
Foundation

We are a supporter and hirer of the New
Entrepreneurs Foundation, a graduate
scheme to create the entrepreneurs
of the future. Each new entrepreneur
receives advice, support, and guidance
for making their bright idea into a highgrowth, sustainable business.

Charity of the Year

The European Charity of the Year
programme was set up in 2019 to enhance
PPB’s overall CSR commitments.
Across our European offices, we asked
our employees what cause they’d like us
to support, and mental health was the
choice in each of our office locations.
Local mental health charities were then
selected in each office location which
were: Samaritans (UK&I), Richmond
Foundation (Malta), Encontrar+se (Portugal),
ACPOR (Romania).

The programme had three
main intentions:

Further support for our customers

Our staff who interact with customers
are rigorously trained in how to deal with
anyone potentially at risk of gambling-related harm. Samaritans enhanced our
training by sharing their own wealth of
expertise with over 50 people from our
Key Accounts, RG and Customer Service
teams on how to recognise vulnerable
behaviour in a person, and armed them
with tools and techniques to use in order
to effectively intervene and where to
signpost people for support if needed.
Samaritans are now included as a support
organisation on both the Paddy Power
and Betfair online RG microsites and in
our new RG leaflet distributed to retail
stores. Samaritans leaflets have also
been distributed to PP retail stores to
further increase the reach of the charity.

Employee wellbeing

On World Mental Health Day, we launched
“Wellbeing in the Workplace”, an online
mental health training programme
developed by the Samaritans, to all
our European employees.
We openly spoke about mental health
at key dates throughout the year
(Mental Health Awareness Week, World
Mental Health Day and National Stress
Awareness Day) and held workshops
in each of our offices to increase
awareness and understanding of
common mental health issues.

Right Paddy Power’s
“Fearless Jockey” statue
was unveiled ahead of the
Cheltenham Festival.

Promoting diversity
and equality

Pride sponsorship

This year Paddy Power won its first Cannes
Lion award for the brand’s sponsorship
of Brighton and Hove Pride in 2018 where
they ran an “empty bus” to highlight that
there isn’t a single openly gay player in the
Premier League despite one in 50 people
identifying in the UK as LGBTQ+. To up
our game in 2019, we got current Celtic
captain Scott Brown and Liverpool legend
Graeme Souness to unite for a common
goal against homophobia in football.

Fearless Jockey statue

To celebrate and encourage gender
equality in racing, Paddy Power enlisted
the help of Rachael Blackmore to unveil
our Fearless Jockey statue at the
Cheltenham Festival in March. Based
on the “Fearless Girl”, who stared down
Wall Street’s bull after it was unveiled in
New York City, the 7.5-metre statue had an
inscription etched into the plinth reading
“Some jockeys have big balls. Others are
just great jockeys.”
Below Paddy Power continued our support
of the LGBTQ+ community with the annual
sponsorship of Pride festivals in Malta &
Brighton and Hove.

Fundraising

Over the course of the year, our total
charitable giving was over £255,000 from
a combination of employee fundraising
activities and corporate donations.

23



People and Culture

Our diverse, high-performing
teams are central to our success
Diversity

Diversity is a key strategic priority to
help drive business growth, and focus
on diversity (D&I) and inclusion initiatives
has had a positive impact throughout the
business. We are proud to partner with the
All-in Diversity Project, an industry-driven
D&I initiative, as well as communities who
promote females in technology such as
Girls in Tech and Girls Who Code. We have
sponsored Pride events in a number of
our locations. Our Sportsbet CEO, Barni
Evans, has been accepted into the Male
Champions of Change, a collective group
of senior male leaders across Australia,
tasked with driving gender equality within
their organisations and the communities
in which they operate.

We led a very successful employer brand
campaign highlighting the diversity of
our employees. The ‘I am PPB’ campaign
extended to ‘I am Sportsbet’ this year,
using real employees to demonstrate
the breadth of talent in our organisation.
We had a positive response, resulting in
an increased number of female applicants
(up to 33% in Sportsbet and 41% in PPB).
In 2019, 23% of the applicants for roles
in FanDuel were female, a significant
increase from prior years. We credit
the increase to the multi-focused
employer brand campaign which
included personal testimonials from
female employees and the establishment
of strong partnerships with community
programmes, educational institutions
and government agencies.
We actively promote our flexible working
options, ensure our job adverts are gender
neutral and set targets for balanced
shortlists with our search partners.
We have high engagement with
unconscious bias training from all
senior managers across each of our
businesses. 2019 saw the successful
launch of “Lean In Circles” and we continue
to promote diversity and inclusion through
our regular D&I events.

Left A successful employee
campaign for Sportsbet.

All employees*


A: Male: 5,454 (60%)
B: Female: 3,699 (40%)
Board of Directors*
B
A: Male: 8 (73%)
B: Female: 3 (27%)
Senior management*
A: Male: 192 (65%)
B: Female: 105 (35%)

Senior managers are defined in legislation as
including both persons responsible for planning
directly or controlling the activities of the Company
(or strategically part of the Company); and any
other directors of undertakings including in the
consolidated accounts. For reporting purposes,
as at 31 December 2019, there were 54 Group
subsidiary entity board directors, comprising
5 women and 49 men.
* As at 31 December 2019.

24

Strategic Report

Diversity is a key strategic
priority to help drive our
business growth, and our
focus on diversity and
inclusion initiatives has
had a positive impact.
We are pleased to report that:
We have significantly increased the
number of female applicants in all our
businesses, resulting in an increase in the
number of women employed in each –
29% in Sportsbet, 32% in PPB and 23%
in FanDuel.
In the US, 35% of our Director and
above roles were filled by women and
25% of our promotional and transfer
opportunities were filled by women.
In Sportsbet, there was 83% positive
engagement with the statement
“Sportsbet values diversity”, and 78%
positive engagement with the statement
“I feel like I belong at Sportsbet”.
In PPB, diversity was one of our highest
scoring drivers of engagement. With
employees scoring us 8.8 out of a
possible 10 in relation to the statement
“People from all backgrounds are treated
fairly at PPB”.
In FanDuel, there was 86% positive
engagement with the statement,
“people from all backgrounds are
treated fairly at FanDuel”.
In 2020, we will continue our focus on
attracting diverse talent; however, we will
enhance our plan to reinforce an inclusive
environment. We are building an inclusive
environment to support diversity through
leadership and team member training
and development.

Benefits and reward

Our European employees have the power
to choose the benefits that work best for
them. Not everyone has the same needs
and we’re definitely not a one-size-fitsall company, so our Freestyle benefits
programme offers extensive choices for
employees to build a benefits package
that meets their needs. Employees also
have the option to participate in the
Group’s Save As You Earn share scheme.

Right Chair Gary McGann
meeting one of our many
talented employees during
his visit to the Malta office.

Our employees’ health and wellbeing really
matters to us, which is why we provide a
wide range of activities, including regular
external speakers on health, nutrition,
and a large number of sporting activities
and widely attended social events from
trivia nights to philanthropic activities.
Across the business, our employees
enjoy regular social events hosted by
social committees, and employee-led
groups that provide light-hearted activities
tailored for each location.
In FanDuel ,we offer one of the most
comprehensive benefit packages seen in
the US Employer Circle. Every aspect of
our plan from the most traditional (health
and welfare) to the alternative (flexible
working) is state of the art and clearly
establishes us as an employer of choice.
We have a fully company-funded health
and welfare programme. Our maternity,
paternity and family leave policies are
above the US standard and retirement
plans exceed the market norm.
In 2019, Sportsbet moved towards a more
holistic approach to benefits, with the
launch of our BeWell offering. Employees
receive market-leading paid parental
leave, health insurance and an employee
assistance programme. Additional
benefits range from annual flu vaccination
to external career coaching. We also host
a speaker series on health and wellbeing,
and hold regular “Are you OK?” days.

Communication and clarity

Workplace by Facebook is key to our
employees staying in touch and building
internal networks. It is also our core
platform to deliver messages across
the organisation. Our people like to
stay connected and understand what is
happening in the overall business and our
industry. Employees in all our businesses
log onto Workplace for updates on what’s
happening. For Retail, we keep in touch by

sending all employees a weekly newsletter
called “iPaddy”, with all the need-to-know
information for the week ahead.
Building relationships is key to our success,
so we also host regular interactive town
halls, listening sessions, Q&A sessions,
customer briefings and strategy
roadshows. Through these channels,
we encourage two-way engagement with
senior leaders on a wide range of topics.
These also provide opportunities for
recognising and rewarding team members
that live our values and bring our culture
to life.
We are serious about employee feedback
– understanding what’s working and
what’s not is essential to shaping our
employee experience. In the spirit of
promoting open and continuous dialogue,
our employees participate in engagement
surveys twice a year and in 2019 our
already high engagement improved in
PPB and Sportsbet. FanDuel launched
their first engagement survey in 2019 with
scores showing engagement at or above
industry benchmarks. Survey results
highlight employees’ connection to their
managers, company goals and employee
initiatives is particularly notable.

Learning and development

Development remains a key element
in our employee proposition. Providing
learning opportunities that are meaningful
and impactful to all colleagues is a driving
force of our success.
Our culture encourages employees to be
curious and own their careers. A number
of company-wide initiatives such as
Job Swing and Access All Areas provide
opportunities to work with and find out
more about other areas of our business.
We promote customer obsession by

25



People and Culture continued

We have a bespoke, interactive, online
learning plan for our corporate and retail
employees to ensure that they have the
knowledge and skills on topics such as
integrity, responsible gambling and
anti-money laundering.
offering all employees the opportunity
to be closer to the customer and learn
more about our products. Regular
Hackathon, Ideas Days and inspirational
talks from external speakers provide more
opportunities for employees to grow.
In Sportsbet we host an annual customer
summit where all team members attend
to learn more about customers and make
better decisions for them.
2019 saw significant investment in our
leadership capability across PPB and
Sportsbet to ensure they are equipped
to create the right climate and bring our
culture to life. In Sportsbet this led to
the implementation of the leadership
deal which articulates the minimum
expectations of our leaders.
We have a strong commitment to
global mobility and our global mobility
programme provides incredible learning
and career opportunities across
our locations.
We maintain a suite of programmes to
accelerate our talent and provide technical
expertise to our specialists. Additionally,
digital learning continues to be a critical
component of how our employees
develop their careers. We have developed
partnerships with digital learning vendors
such as Linked In Learning, Udemy and
Litmos to offer online platforms with
thousands of bite-size learning packages
that our employees can download and
watch on their desktop or smartphone.
Mandatory training is central to our
commitment to being a responsible
operator with the highest level of integrity.

26

Flexible/agile working

Flexibility is important to our employees
and we promote a variety of flexible
working options so they can work flexibly
around their hobbies, studies or commute.
Our uncapped annual leave in Europe is
highly valued and a sign of the trust and
respect between colleagues.
In FanDuel, flexible working arrangements
have been solidly embedded into our
culture and business practices. Colleagues
appreciate the breadth of roles that
can afford a high degree of flexibility, in
numerous permutations, that allow them
to effectively balance demands of career
and personal commitments. Offering
unlimited annual leave has allowed us
to stand out in the US market and it
represents a significant employment
attraction from entry to senior levels.
In November 2018, we asked our
employees in Europe if they felt their work
schedule is flexible enough to manage
their personal life and we scored 8.9,
which is 0.5 above the technology
industry benchmark. In Australia, 79% of
team members reported that Sportsbet
enables them to balance work and personal
life. 89% agreed that they are “genuinely
supported” if they choose to make use of
flexible working arrangements.

Shop Manager of the Year

A first for Paddy Power as Sandra Gilmartin
won Betting Shop Manager of the Year for
2019. She won the judges over with her
passion for not only providing customers
with the highest level of service, but also
taking responsibilty for looking after them
and offering support where appropriate.

Group Code of Ethics

Building a culture where we operate
responsibly, sustainably and with integrity
is essential to our business. Our Code of
Ethics encompasses policies on areas
such as business conduct, anti-bribery
and corruption, whistleblowing and
equal opportunities.

Mandatory training

To ensure this Code is embedded in
everything we do, all corporate employees
are required to undertake regular, detailed
mandatory e-learning training covering
a range of areas, including responsible
gambling, anti-money laundering
and betting integrity, anti-bribery and
corruption and information security.
Retail employees also have additional
specific training, for example on security
and customer service.
All of our staff who interact with
customers are also rigorously trained in
how to monitor and recognise behaviour
that could indicate someone potentially
at risk of gambling-related harm, and
intervene where appropriate.

Below “Get to Know the NED” – In June 2019,
FanDuel’s New York staff met with the
Board and gained insight into the role of
Non-Executive Directors.

Strategic Report

Anti-bribery and corruption

The Group is committed to maintaining
the highest standards of ethics and
compliance with all relevant laws wherever
it does business. We do not tolerate any
form of bribery or corruption and require
all individuals working for us – whether
employees, permanent or temporary,
contractors or third parties, including
associated persons that perform
services on behalf of the Group, agents,
intermediaries – introducers, joint
ventures and partnerships to comply
with anti-bribery and corruption laws
and ethical standards.
We have in place policies, procedures,
training, management systems and
internal controls to prevent bribery and
corruption occurring, including requiring
due diligence to be carried out on
individuals or companies who will perform
services for, or on behalf of, and risk
assessments of new business ventures,
including in the context of bribery and
corruption risk. These obligations are
set out in our Code of Ethics, which all
employees are required to adhere to
under their contract of employment/
service contracts. This also includes
guidance on receiving and offering gifts
and hospitality, internal gifts, political
donations and contributions and
charitable donations. Employees must
consider the appropriateness of the giving
and receiving of gifts and hospitality, which
is reinforced by having different approval
levels. Consideration is also given as to
when, and how, charitable donations
may be given going some way to address
issues of conflict of interest.
A compulsory e-learning training module
is also required to be completed by
employees. We regularly monitor this
area, including its suitability, adequacy
and effectiveness, and implement
improvements as appropriate.

Equal opportunities

We’re committed to equal opportunities
and diversity in our workplace and will
not tolerate harassment, discrimination,
victimisation or bullying. We recruit,
employ and promote employees based
on their qualifications and abilities.
Our Equal Opportunities Policy states
our commitment to a policy of equality
of opportunity and treatment in our
employment practices. We don’t
discriminate on any grounds, including
gender, sexual orientation, marital or

civil partner status, gender reassignment,
race, religion or belief, colour ,nationality,
ethnic or national origin, disability or age,
pregnancy, trade union membership, or
part-time or fixed-term status and take
appropriate steps to accommodate the
requirements of an individual’s religion,
culture and domestic responsibilities.

Modern Slavery Statement

We understand that modern slavery is a
global threat that imposes an intolerable
burden on those affected by it. As a
global operator, Flutter is committed to
preventing slavery and human trafficking
in all areas of our business and we
expect the same commitment from
our employees, contractors, suppliers
and business partners.
In 2019, we focused efforts on further
developing our policies on modern slavery,
and on developing the tools to more
effectively screen our suppliers for any
instances of forced labour and human
trafficking. We remain determined to
expand and deepen the screening to
account for the global nature of our supply
chain and will continue to be proactive in
monitoring our business for breaches.
Our Modern Slavery Statement can be
found in full at: www.flutter.com

Health and safety

The Group recognises the importance
of health and safety. We are committed
to ensuring the wellbeing and safety of
our employees and customers in all our
corporate offices and retail betting shops,
and continue to ensure that our policies
and procedures comply with relevant
local safety, health and welfare at work
legislation, as appropriate.
We have created a Global Health and
Safety Framework that will ensure a
consistent and ‘One’ Approach to health
and safety management within the
worldwide organisation. Key to this is
the creation and delivery of a Three Year
Strategic Roadmap, which has resulted
in the development of Global Policies,
Standards and Procedures which will drive
compliance within the brands, regions and
countries where we operate and ultimately
an improved safety culture across
our operations.
Utilising our iLearn online training platform
and through focused campaigns, we
are providing our teams with the tools,
understanding and capability to carry
out their activities and roles safely and
in compliance with both legislative and
industry standards.

Human rights

We are committed to upholding the
United Nations’ Universal Declaration of
Human Rights. We are proud to support
human rights through our policies which
require employees to behave ethically
and to respect the human rights of our
employees and other stakeholders in
the business.

Right PPB Raceday in
November brought together
staff in all European offices
with an afternoon of racing,
ideas and learning about
our customers.

27



Engaging with Stakeholders

Engaging with a broad
range of stakeholders
The Board recognises that we have
a number of stakeholders including
shareholders, customers, employees,
governments and regulators, and the
communities in which we operate. The
Board is cognisant of its responsibility
to understand each of their views and
does this through a variety of methods,
which are continually reviewed to
remain effective. Updates are provided
and discussed at Board and relevant
Committee meetings. Throughout
this Annual Report, we have provided
information on some of the initiatives
and approaches undertaken in relation
to stakeholder engagement by the
Group during 2019.
The 2018 UK Corporate Governance
Code (the ‘2018 UK Code’) reinforced the
importance of the Board understanding
the views of the Company’s key
stakeholders and this section is
intended to provide information on
how stakeholders’ interests have been
considered in board discussions and
decision-making processes in accordance
with the 2018 UK Code.
While the 2018 UK Code makes specific
reference to section 172 of the United
Kingdom’s Companies Act 2006, Flutter
is incorporated in Ireland and subject to
the requirements of the Companies Act
2014 of Ireland rather than the 2006 UK
legislation. Nonetheless, Flutter’s Board
has had regard to the matters set out in
its decision-making as described in this
section of the Annual Report.

Shareholders
The Board is committed to maintaining
constructive dialogue with shareholders
and ensuring that it has a deep
understanding of their views. It also
recognises that shareholders consider
a range of environmental, social and
governance matters. The Chair, on behalf
of the Board, meets shareholders without
management present and reports to the
Board on these discussions. All Directors
are also available to meet institutional
investors on request. The Board receives
updates on the shareholder engagement
and analyst commentary and in 2019 also
received presentations from corporate
brokers on investor perceptions and
generally in relation to capital markets.

Some of the activities undertaken during
2019 are summarised below:
A full programme of engagement with
shareholders, potential shareholders
and analysts, across the UK, Ireland,
US and overseas, was undertaken by
a combination of the Chief Executive
Officer, the Chief Financial Officer, other
key management and the Investor
Relations team (including attendance
at investor conferences, facilitating site
and shop visits and ad-hoc meetings).
The Executive Directors presented to,
and met with, our largest shareholders,
as well as sell-side analysts following
the full and half-year results and trading
updates and also attended a number of
investor conferences and roadshows.
The Chair engaged with key shareholders
and proxy advisory agencies on
corporate governance matters.

KEY INVESTOR EVENTS IN 2019

March

2018 Preliminary Results
Analyst and investor presentation
followed by an investor roadshow
Attendance at investor conferences
Corporate governance calls with proxy
advisory agencies
US investor day on FanDuel division

April

Attendance at investor conferences

May

Q1 2019 trading update
AGM 2019

June

Attendance at investor conferences

August

2019 half-year results
Analyst and investor presentation
followed by an investor roadshow

October

Announcement of Flutter
Entertainment plc and The Stars
Group combination
Analyst and investor presentation
followed by an investor roadshow
Corporate governance meetings
with shareholders and proxy advisory
agencies

November

Q3 2019 trading update
US investor roadshow
Governance meetings with investors

December

Attendance at investor conferences

28

Strategic Report

The Chair and Remuneration Committee
Chair held a number of follow up meetings
with our larger investors on remuneration
related matters (see page 73), as well
as on corporate governance topics in
general, including talent retention and
succession planning at both Board and
Executive Committee level, our risks
and responsible gambling.
Private individual shareholders were
communicated with via the Company
Secretary’s office.
Current substantial shareholders are set
out on page 92

AGM

All of our Directors attended the 2019
AGM and an average of 61.95% of the total
issued share capital was voted across all
resolutions. A presentation was given to
attending shareholders at the 2019 AGM
on the new Flutter branding and rationale
behind the name change.
Our 2020 AGM will be held on Thursday
14 May 2020. A letter from the Chair and
the Notice convening the AGM will be sent
to shareholders and will be available at:
www.flutter.com/investors/shareholdercentre/agm

All Directors attend the AGM with the
Chair and each Committee Chair making
themselves available to take questions
from shareholders. Separate resolutions
are proposed on each item of business.

Website and shareholder
communications

Further details on the Group, our business
and key financial dates can be found on
our corporate website:
www.flutter.com/investors
Below Celtic captain Scott Brown took part
in Paddy Power’s campaign to unite against
homophobia in football.

Customers

Employees

We take a proactive approach to
communication with customers on
the topic of responsible gambling. An
example of how we have improved our
communication in 2019 is given on
pages 32 to 33. To ensure the Board is
adequately briefed on the matter, updates
are provided to the Board and Board
Committees by the Chief Executive
Officer as well as presentations from
other members of senior management.
The Responsible Gambling team has
developed risk reporting against key
responsible gambling metrics. Breaches of
the metrics identified must be escalated
up to the Board with an immediate
remediation plan. This demonstrates to
front-line staff the priority which the Board
ascribes to preventing gambling harm.
We also engage with our customers in
a number of other ways and use this as
part of research and insight into building
a comprehensive understanding of our
customer needs, and this is used to make
decisions in relation to our products and
services. Examples include social media,
brand websites, focus groups, our retail
shops and Paddy Power TV, customer
feedback, complaints and customer
service centres, as well as marketing and
advertising. Again, updates are provided
to the Board by the Chief Executive
Officer as well as presentations from other
members of senior management.

The Board gains an understanding
of the views of our employees and the
culture of the organisation through visits
to our offices, one-to-one meetings,
Board presentations and via the Executive
Directors. In addition, further to the
requirements under the 2018 UK Code,
in 2019:
(i)	two Non-Executive Directors, Peter Rigby
and Emer Timmons, were designated
to workforce engagement; and
(ii)	an employee representative was
appointed on a 12-month assignment
as a participant of the Company’s
Risk Committee as part of our Board
Apprentice Programme.
Further details of (i) and (ii) are given on the
following two pages.

Our Strategy: pages 16 to 17
Responsible Gambling: pages 20 to 21

Sports and
communities
Our corporate social responsibility
strategy is focused on adding value to the
communities in which we live and work.
Detailed updates are provided to, and
discussed by, the Risk Committee and
the Board as necessary.
Corporate Social Responsibility:
pages 20 to 23

People and Culture: pages 24 to 27
Responsible Gambling: pages 20 to 21

Suppliers
Our Procurement Policy includes a
commitment to sustainable procurement
and mitigation against the risk of modern
slavery, anti-bribery and corruption, and
data protection/privacy breaches across
our supply chain. We aim to operate to the
highest professional standards, treating
our suppliers in a fair and reasonable manner
and settling invoices promptly.

Governments
and Regulators

As set out in the Risk Committee Report,
substantive communications with
regulators are reported to Directors via
that Committee. Any relevant significant
communications from financial regulators
and tax authorities are discussed by
the Audit Committee in line with its
responsibilities. The Chief Executive
Officer and the Chief Financial Officer
also update the Board on other key
matters as relevant.
Audit Committee and Risk Committee
Reports: pages 63 to 69

29



Engaging with Stakeholders continued

empow
How we are engaging with employees
Our Board Apprentice
Programme offers
employees insights
into the operation of
the Board and supports
the development
of future leaders.
Gary McGann
Chair

30

Workforce engagement
forums

In 2019 the Board set up an Employee
Voice programme, which acts as a forum
for the Board to monitor workforce
engagement. Flutter has over 9,000
employees globally in various locations
across four main divisions: PPB Online,
PPB Retail, Sportsbet and FanDuel.
The Board has appointed Emer
Timmons and Peter Rigby as designated
Non-Executive Directors for workforce
engagement and they meet with
representatives from each division
throughout the year to understand
workforce engagement and
views. Further, the designated
Non-Executive Directors also
receive quarterly updates on workforce
engagement from all divisions and
have the opportunity to meet
employees during Board visits at
our various locations.

This programme aims to enhance
the Board’s awareness, through the
designated Non-Executive Directors,
of Flutter employee engagement
and views, improving its ability to
have regard to these interests when
making decisions.
Three meetings have been held in 2019,
in June, July and December. The June
meeting focused on our PPB Online
region, in July PPB Retail and Australia
and in December the US. In advance
of the meetings, the designated
Non-Executive Directors were provided
with the most recent employee
engagement survey data, attrition and
turnover data, and the current employee
topics as reflected in the questions asked
in recent townhalls, which supported
discussions between the employee
representative of each division and the
designated Non-Executive Directors.

Strategic Report

wer

Board Apprentice
Programme

In July 2019, the Board approved our
Board Apprentice Programme, which
appointed an employee representative
to the Risk Committee for a 12-month
period. This was a newly created
development opportunity intended
to recognise high performers in a
key leadership position in the Group,
and with a strong performance track
record and potential. The employee
representative receives all the Risk
Committee materials and participates
in all meetings of the Committee except
where, at the discretion of the Chair of
the Committee/Company Secretary,
an exception should be made.
The employee representative had
onboarding meetings with the Company
Secretary and the Chief Risk Officer who
attend all Risk Committee meetings
and shared insights and context on
the priorities and practical workings of
the Committee. In addition, a one-toone meeting with the Chair of the Risk
Committee was facilitated to provide
the employee representative further
insight into the operation of the
Risk Committee.

Throughout this assignment, the
employee representative has the
opportunity to speak with members
of the Committee to ask questions
and take feedback that will maximise
their learning opportunity. At the end
of the Board Apprentice Programme,
the Risk Committee Chair or Company
Secretary will have a final meeting
with the employee representative to
reflect on the experience. It will provide
an insight into the governance and
strategic workings of a FTSE 100 Board
Committee, a chance to get to know
and work with other senior leaders
and Non-Executive Directors, and
perhaps most importantly, provide
detailed insights into our Group risk and
reputation strategic agenda, which are
key priorities for our Board. Given the
appointed employee representative’s
senior leadership role in the Group and
accountability for driving a culture that
manages risk, RG and reputation to the
highest levels, this Board Apprentice
Programme is highly relevant and
rewarding to both Flutter and the
employee representative.

31



Engaging with Stakeholders continued

enabl
Personalised communications
send a combination of awareness
messages to individual customers
highlighting specific tools relevant
to their behaviour.

32

Strategic Report

le

How we are engaging with customers
As outlined earlier in this Annual Report,
we are focussed on improving two key
areas to enhance RG measures we have
in place:
i) 	how we identify customers where
intervention is needed; and
ii) 	how we interact with these
customers.

As part of the workstream to improve
customer RG interactions, we
recognised the importance of adopting
a personalised approach. Historically,
RG communications were using email
only, had set specific templates for
all customers and therefore proved
less impactful in changing customer
behaviours.
In 2019, a new web-based messaging
contact method was introduced as
another layer of communication for
RG awareness communications.
If a customer does not open the RG
awareness email communication within
48 hours of it being sent, they will receive
an additional web message pop-up upon

their next login. In conjunction with this,
RG awareness communications are now
personalised by risk levels determined
by ingesting data from our CAAP model.
These personalised communications
send a combination of awareness
messages for low to medium-risk
customers, highlighting specific tools
relevant to the customer behaviour.
For example, should an increase
in deposits be the driver behind
identification in CAAP, a tailored RG
deposit limit tool communication will be
sent. If the behaviour were to change
the following week into a pattern
of higher staking, a tailored RG loss
limit tool awareness email will follow.
These personalised communications
have proven effective to drive use of
relevant RG tools and a reduction in at
risk customers in the CAAP model due
to regulation of customer spend levels.

33



Operating and Financial Review
Group Income Statement

During 2019 Flutter
expanded its presence in
both the US and Europe,
with the roll-out of
online sports betting in
3 additional US states
and the acquisition of
Adjarabet, the market
leader in online gaming
in Georgia.

£385m
Underlying EBITDA1, 2

200p

per ordinary share proposed
full year dividend

Sports revenue
Gaming revenue
Total revenue
Cost of sales
Cost of sales as a % of net revenue
Gross profit
Sales and marketing
Contribution
Product and technology
Operations
Central costs
Other operating costs
Underlying1 EBITDA2
Underlying EBITDA1,2 margin
Depreciation and amortisation
Underlying1 operating profit
Underlying1 net interest expense
Separately disclosed items
Profit before tax
Underlying1 earnings per share
Dividends per share

2019
£m
2019
(pre
£m IFRS 16)

1,667
473
2,140
(650)
30.4%
1,490
(465)
1,025
(166)
(378)
(55)
(599)
425
19.9%
(145)
281
(14)
(131)
136
303p
200p

These developments, coupled with good
organic growth in our core operations, drove
Group revenue growth of 14% to £2.1 billion.
On a proforma4, constant currency3 basis,
Group revenue growth was 9%.
Cost of sales were adversely affected
by the increased gaming taxes in Ireland,
the UK and Australia. The year-on-year
impact of these was £73m, and this was
the primary driver of cost of sales as a
percentage of revenues increasing by
530bps to 30.4%.
Other operating costs increased by 17%,
or 10% on a proforma4 constant currency3
basis. The majority of this increase
reflected additional investment in the US
with the equivalent organic growth for the
Group (excluding US) up 3% year-on-year.

Jonathan Hill
Chief Finance Officer

34

1,667
473
2,140
(650)
30.4%
1,490
(465)
1,025
(171)
(409)
(60)
(639)
385
18.0%
(108)
277

2018
£m

Change %
(pre
IFRS 16)

Adjusted
Proforma4 for tax and
3
CC regulatory
change
changes7
YoY
%

1,474
+13%
+10%
399
+19%
+6%
1,873
+14%
+9%
(470) +38%
+32%
25.1% +530bps +540bps
1,403
+6%
+1%
(406) +15%
+7%
997
+3%
-2%
(144) +19%
+9%
(343) +19%
+12%
(59)
+1%
+2%
(546) +17%
+10%
451
-15%
-17%
24.1% -610bps -560bps
(90) +19%
+16%
360
-23%
-25%
(4) +294%
(138)
-5%
219
-38%
379p
-20%
200p

+16%

+12%

Underlying EBITDA1,2 declined 15% to
£385m, partly reflecting the ongoing
investment in the US (an incremental
EBITDA2 loss of £26m) as well as additional
tax and regulatory changes which cost
the Group approximately £107m
year-on-year. Excluding these items,
Group EBITDA2 (excluding US) would
have been 19% higher.
Depreciation and amortisation increased
by 19% reflecting our ongoing investment
in product and technology, with a major
proportion of this in the US. As a result
of the factors above operating profit
of £277m was 23% lower. Increased
interest expense during 2019 reflects
in equal measure the increased average
gross debt during the year and the
implementation of IFRS 16. Separately
disclosed items include the amortisation
of acquisition related intangible assets
relating to the Paddy Power Betfair merger
and costs associated with the proposed
combination with The Stars Group.
The Group delivered a profit before tax
of £136m (2018: £219m) after separately
disclosed items, which do not relate to
the usual business activity of the Group.
Underlying1 earnings per share reduced
by 20% to 303 pence.

Strategic Report

PPB Online

6% revenue growth
impacted by our enhanced
responsible gambling
initiatives

£1bn
Revenue +6%
(2018: £948m)

£307m
Underlying EBITDA1, 2
(2018: £316m)

£263m

Underlying1 operating profit
(2018: £275m)

PPB Online revenues grew by 6% to just
over £1bn during 2019, benefitting in
part from the acquisition of Adjarabet.
Revenues were flat on a proforma4 basis.
There were a number of significant factors
that drove this outcome, including:
Good underlying growth in daily active
customers across our three brands of 8%
An improvement in expected net
revenue margin across sportsbook
following the roll-out of country
specific pricing
The impact of enhanced responsible
gambling measures which saw the
Group materially reduce its revenues
from high-value customers
The impact of a series of unanticipated
international market switch offs
At a brand level, good performance across
Paddy Power and Adjarabet was offset
by the changes we are making at Betfair.
Looking at growth by product, sports
revenues declined by 2% while gaming

revenues grew 26%. On a proforma4,
constant currency3 basis, gaming revenues
were up 7%.
Sportsbook revenue was flat and 6%
higher excluding the impact of the
World Cup in 2018. Net revenue margin of
8.1% was 20bps above expected margin.
The combination of the introduction of
country specific pricing in Q1 (which had a
material impact on low value international
staking), the ongoing refinement of our
risk management capabilities and changes
in our customer bet mix led to expected
margin improving by 90 bps during the
year. It should be noted that the prior year
had benefitted from favourable sports
results with actual margin 70bps higher
than expected margin.
Exchange and B2B revenues were down
5% with market switch offs having a
material impact. Adjusting for switch
offs and World Cup, Exchange and B2B
revenues were up 1%.
Gaming revenues grew 26%, reflecting
the strong performance of Adjarabet.
Gaming momentum in Paddy Power also
continued to be strong with increased
customer acquisition following the launch
of our “Don’t think you’re special” campaign.
Combined gaming actives across Paddy
Power and Betfair were up 14% during the
year. Our increased focus on responsible
gambling is building a more sustainable
revenue base, though this clearly reduces
Pre IFRS 16

Sportsbook stakes

Sportsbook net revenue margin

Sports revenue
Gaming revenue
Total revenue
Cost of sales

Cost of sales as a % of net revenue

Gross profit
Sales and marketing
Contribution
Product and technology
Operations
Other operating costs
Underlying EBITDA1,2

Underlying EBITDA1,2 margin

Depreciation and amortisation
Underlying1 operating profit

revenues in the short term as higher
value customers are replaced with lower
spending recreational customers.
Cost of sales were primarily adversely
affected by the year-on-year increase in
Irish betting duty and UK remote gaming
duty, which cost an incremental £23m.
Sales and marketing costs reduced during
2019 due to World Cup spend in the prior
year. Other operating costs increased by
11%, reflecting increased investment in
product and technology during the year
and the addition of Adjarabet within the
Online division.
Underlying EBITDA1,2 reduced by just
3% to £307m despite the material tax
and regulatory changes, equating to an
EBITDA2 margin of 30.5% compared to
33.4% in the prior year.
2019
£m

5,184
8.1%
666
340
1,006
(283)
28.1%
723
(240)
483
(99)
(76)
(176)
307
30.5%
(45)
263

2018
£m

5,453
7.7%
678
270
948
(231)
24.4%
717
(242)
475
(95)
(64)
(158)
316
33.4%
(42)
275

Change
%

-5%
+40bps
-2%
+26%
+6%
+23%
+380bps
+1%
-1%
+2%
+5%
+20%
+11%
-3%
-280bps
+8%
-4%

35



Operating and Financial Review continued
Australia6

14% revenue growth
offsetting much of the
material tax increases

£446m
Revenue +14%
(2018: £403m)

£125m
Underlying EBITDA1, 2
(2018: £137m)

£103m

Underlying operating profit
(2018: £119m)
1

Sportsbet performed very well during
2019 against the backdrop of a step
change in gaming taxes that saw cost
of sales as a percentage of revenue rise
from 30.1% to 40.7%. In advance of this
change, the Group increased investment
in customer generosity during 2018 and
this strategic decision, coupled with
further personalisation of the Sportsbet
product offering, delivered excellent
customer and revenue growth during
2019. Sportsbet grew its active customers
by 9% (excluding World Cup) which in turn
helped to drive revenue growth of 14%.
Stakes increased by 3% year-on-year
with less customer recycling due to more
bookmaker friendly results. Excluding the
benefit of the World Cup, stakes were
up 5%. Expected margin increased by
90 bps year-on-year, reflecting further
refinement of our risk and trading
capabilities as well as ongoing changes
in product mix, with customers favouring
higher margin products such as same
game multis. Favourable sports results

Pre IFRS 16

Sportsbook stakes
Sportsbook net revenue margin
Total revenue
Cost of sales
Cost of sales as a % of net revenue
Gross profit
Sales and marketing
Contribution
Product and technology
Operations
Other operating costs
Underlying EBITDA1,2
Underlying EBITDA1,2 margin
Depreciation and amortisation
Underlying1 operating profit

during 2019 resulted in a further boost of
80bps in margin though we responded
to these results by giving more back to
customers via increased generosity,
meaning that the net increase in margin
was 100 bps year-on-year.
While personalisation work led to other
operating costs being 9% higher during
2019, this was more than offset by savings
at the sales and marketing line where we
shifted spend from traditional channels to
personalised digital channels. Examples of
this type of promotional spend during the
year include our popular “Justice Refund”
campaign where we returned money to
our customers through free bets. Sales
and marketing costs therefore reduced
9% compared with 2018.
Underlying EBITDA1,2 reduced by £12m to
£125m, offsetting much of the additional
£50m in incremental taxes and product
fees. Adjusting for these additional costs,
underlying EBITDA1,2 was 49% higher in
constant currency3 terms.

2019
£m

4,298
10.4%
446
(182)
40.7%
264
(73)
191
(21)
(45)
(67)
125
28.0%
(21)
103

2018
£m

Change
%
£

Change
%
A$

4,308
Flat
+3%
9.4% +100bps +100bps
403
+11%
+14%
(121)
+50%
+54%
30.1% +1060bps +1070bps
282
-6%
-3%
(82)
-11%
-9%
199
-4%
-1%
(20)
+5%
+7%
(42)
+7%
+10%
(62)
+7%
+9%
137
-9%
-6%
34.0% -600bps -590bps
(18)
+22%
+25%
119
-13%
-11%

Above Continued personalisation of Sportsbet
product offering and customer promotions.

36

Strategic Report

US6

#1 online sportsbook and
#1 online casino; 44% online
share in states where
FanDuel was live during 2019

£376m
Proforma4 revenue +54%
(2018: £236m)

£40m

Proforma4 underlying EBITDA1, 2 loss
(2018: £15m loss)

£60m

Proforma underlying1 operating loss
(2018: £27m loss)

Pre IFRS 16

Sportsbook stakes
Sportsbook net
revenue margin
Sports revenue
Gaming revenue
Total revenue
Cost of sales
Cost of sales as a %
of net revenue
Gross profit
Sales and marketing
Contribution
Product and
technology
Operations
Other operating costs
Underlying EBITDA1,2
Underlying EBITDA1,2
margin
Depreciation and
amortisation
Underlying1
operating loss

Reported
2019
£m

423

2019
£m

2,326

Proforma4 basis
2018 Change %
£m
£

Change %
US$

4.4%
325
51
376
(116)

2.6%
172
20
191
(45)

4.4%
325
51
376
(116)

2.6% +180bps
216
+51%
20
+160%
236
+60%
(50) +132%

+180bps
+45%
+149%
+54%
+124%

30.8%
261
(145)
115

23.3%
147
(75)
72

30.8%
261
(145)
115

(44)
(112)
(156)
(40)

(23)
(63)
(86)
(14)

(44)
(112)
(156)
(40)

(32)
(73)
(106)
(15)

+36%
+52%
+47%
n/a

+30%
+47%
+42%
n/a

-10.7%

-7.6%

-10.7%

-6.3%

-450bps

-450bps

(20)

(11)

(20)

(13)

+61%

+55%

(60)

(25)

(60)

(27)

n/a

n/a

2,326

2018
£m

Our merger with FanDuel and the regulation
of sports betting has transformed the US
division. 2019 saw us expand our online
sportsbook offering into 3 new states.
The DFS database provided 42% of our
sportsbook customers, while cross-sell to
casino drove a 149% increase in gaming
revenue. Ongoing investment in customer
growth (350,000 sportsbook customers
by year-end) resulted in an underlying
EBITDA1,2 loss of £40m.
Sportsbook: The FanDuel sportsbook
generated more than £100m in sportsbook
revenues during 2019 compared with
£11m generated in 2018. This equated to
a combined online market share of 44%
in the 4 states in which FanDuel is live.
By December 2019, FanDuel had become
the largest national sportsbook in the
US. Net revenue margin increased by
180 bps reflecting the benefits of a more
geographically diverse customer base and
improvements in risk and trading operations.
Casino: Our online casino materially
benefited from sports betting cross-sell.
Growth accelerated once we embedded
casino content in the sports betting app
in July and by December 54% of casino
revenues were coming from sportsbook
customers. This resulted in Q4 gaming
revenues trebling year-on-year, equating

423

+450%

+446%

21.2% +960bps +960bps
186
+40%
+35%
(95)
+53%
+47%
91
+27%
+22%

to a 19% share of the New Jersey casino
market in Q4. This was 7% higher than
the comparable period in 2018.
TVG/DFS: Our established sports
businesses of daily fantasy sports and
TVG grew proforma4 revenue by 4%.
On a combined basis, these businesses
delivered double digit contribution
growth, providing significant resources
for investment in sportsbook customer
acquisition.
The proforma4 constant currency3 sales
and marketing cost increase of 47%
represents our investment in sportsbook
customer acquisition, supplementing our
existing spend on established products
including daily fantasy sports. In tandem
with driving daily fantasy sports revenues,
this spend allows us to acquire potential
future sports betting customers prior to
a state regulating sports betting. On a
proforma4 basis, contribution increased
from £91m in 2018 to £115m in 2019.
Excluding sales and marketing, other
operating costs increased by 42% in
proforma4, constant currency3 terms as
we expanded our operating capabilities,
invested in product and technology,
and brought our US headcount to
circa 1,000 employees.

37



Operating and Financial Review continued
PPB Retail

The introduction of a £2
staking limit on gaming
machines and an increase
in taxes resulted in a 26%
reduction in EBITDA

£312m
Revenue
(2018: £331m)

£53m
Underlying EBITDA1, 2
(2018: £72m)

£32m

Underlying operating profit
(2018: £51m)
1

38

Pre IFRS 16

Sportsbook stakes
Sportsbook net revenue margin
Sports revenue
Machine gaming revenue
Total revenue
Cost of sales
Cost of sales as a % of net revenue
Gross profit
Sales and marketing
Contribution
Product and technology
Operations
Other operating costs
Underlying EBITDA1,2
Underlying EBITDA1,2 margin
Depreciation and amortisation
Underlying1 operating profit
Shops at year end
In 2019 the introduction of a £2 staking
limit on fixed odds betting terminals led
to a 34% decline in gaming revenues from
the 1st of April 2019 (when the change
came into effect). This revenue trend has
improved during the year as competitors
have reduced the size of their retail estates
with gaming revenues 21% lower in Q4.
Sportsbook revenue across the estate
increased by 4%, with stakes growth
of 1% and a 30bps improvement in net
revenue margin. In UK retail, sportsbook
staking was particularly strong in Q4 as
our shops benefitted from competitor
closures. We have continued to expand
our offering in retail with the roll-out of our
next generation screens across the Irish
estate, providing customers with a more
immersive betting experience.
The change in FOBT regulation, coupled
with an increase in Irish betting duty, cost
the Group £34m in EBITDA2, resulting in
a 26% reduction in underlying EBITDA1,2.

2019
£m

1,793
12.8%
230
82
312
(70)
22.4%
242
(7)
235
(6)
(175)
(182)
53
17.1%
(22)
32
623

2018
£m

1,779
12.5%
222
110
331
(73)
22.1%
258
(7)
252
(6)
(174)
(180)
72
21.6%
(21)
51
626

Change
%

+1%
+30bps
+4%
-25%
-6%
-5%
+30bps
-6%
+4%
-7%
+5%
+1%
+1%
-26%
-450bps
+4%
-38%
n/a

Our Retail division operates
623 Paddy Power betting
shops with 357 shops in the
UK and 266 shops in Ireland
at the end of 2019.
Below Paddy Power provides customers
a vibrant, sports-led retail offering.

Strategic Report

Taxation

Corporate income tax

The total effective tax rate for the Group
after separately disclosed items was
17.5% (2018: 17.4%). This was driven by
an increase in the Group’s underlying1
effective tax rate to 15.9% (2018: 14.9%).
The underlying1 effective tax rate is
materially impacted by the geographic
mix of profits within the Group and the
incremental US loss incurred during 2019
which is not recognised for deferred tax
purposes. Excluding the US, the effective
tax rate was 12.8% (2018: 13.7%).

Indirect tax updates – key markets

The following tax changes which impact
the profitability of the Group were
implemented or announced during 2019:

1) UK

Following publication by the UK
Government of its Review of Gaming
Machines and Social Responsibility
Measures in May 2018 the rate of remote
gaming duty increased from 15% to 21%
on 1 April 2019 (payable on gross online
gaming revenues from UK customers).

2) Ireland

From 1 January 2019, the betting duty
payable by Irish customers on sports
betting stakes increased from 1% to
2% while the duty on betting exchange
revenues increased from 15% to 25%.

3) Australia

Throughout 2018, various state
governments announced the introduction
of point of consumption taxes (‘POC’)
and from 1 January 2019 these came
into effect in New South Wales, Victoria,

Separately disclosed items
Amortisation of acquisition related intangible assets
Transaction fees
Impairment of goodwill & intangible assets
Gain on contingent consideration
Restructuring and strategic initiatives
Profit on sale of investment
Total separately disclosed items

Western Australia and Australian Capital
Territory. The overall impact of additional
taxes in 2019 for the Group was an almost
11% percentage point increase in cost of
sales as a % of net revenue in Australia.
During 2019 Tasmania also announced
a new POC which came into effect on
1 January 2020.

4) Other regulated markets

The following tax increases were
effective 1 January 2019 in less material
Flutter markets:
Online tax on sports betting in Italy
increased from 22% to 24% and from
20% to 25% on online gaming
An online gambling tax of 18% was
introduced in Sweden
Romania introduced a new 2% tax on
deposits along with the 16% online
revenue tax already payable

2019
£m

(113)
(18)
–
–
–
–
(131)

2018
£m

(101)
–
(27)
11
(28)
7
(138)

Separately disclosed items do not relate to the usual business activity of the Group and therefore are excluded from underlying1 profits.
During 2019, these included £113m of amortisation of acquired intangible assets recognised on accounting for the 2016 merger of
Paddy Power and Betfair, the 2018 combination of the Group’s US assets with FanDuel and the 2019 acquisition of Adjarabet.
Transaction fees during 2019 relate to costs associated with the proposed combination with The Stars Group.

39



Operating and Financial Review continued
Cash flow and financial position

Dividend

As at 31 December 2019, the Group had net debt of £265m,
excluding customer balances.
Pre IFRS 16 adjustments

Underlying EBITDA1,2
Capex
Working capital
Corporation tax
Underlying1 free cash flow
Cash flow from separately
disclosed items
Free cash flow
Dividends paid
Share buyback
Acquisitions (2019 Adjarabet; 2018
FanDuel)
Legacy Greek and German tax
Interest and other borrowing costs
Net proceeds from issue of shares
Other
Net decrease in cash
Net (debt)/cash at start of year
Foreign currency exchange
translation
Net debt at year end5

2019
£m

2018
£m

385
(136)
86
(41)
295

451
(107)
(38)
(60)
247

(13)
282
(156)
(87)

(1)
246
(169)
(415)

(102)
(40)
(7)
4
3
(104)
(162)

(71)
–
(4)
10
–
(403)
244

1
(265)

(2)
(162)

Net debt increased by £103m during 2019, with strong positive
cash flows from operations, primarily offset by enhanced
shareholder returns and the acquisition of Adjarabet.
The Group had £136m of capital expenditure during 2019
(2018: £107m). The year-on-year increase reflects on-going
product development work in our online businesses and
investment in additional market access in the US.
Working capital during 2019 was positively affected by material
prepayments in relation to European marketing assets and US
sports betting assets (c. £30m) in 2018, the expansion of our
US business and the effect of incremental taxes that were
introduced or increased in 2019.
Corporation tax payments reduced during 2019 to £41m,
reflecting the timing of tax payments and the lower taxable
profits of the Group.
Cash flow from separately disclosed items relates to costs
associated with the proposed combination with The Stars Group.
During the year, £243m was returned to shareholders via
dividends and share buybacks.
Payment was made to the German and Greek tax authorities
relating to two contested legacy tax issues. The Group remains
confident of our grounds to appeal both of these cases.
At 27 February 2019 the Group had net debt of £265m,
equivalent to a leverage ratio of 0.7 times.

40

The Board has proposed a final divided of 133p per share,
equating to a full year dividend for 2019 of 200p (2018: 200p).
The ex-dividend date will be 9 April 2020, the record date will
be 14 April 2020 and payment date will be on 22 May 2020.

Outlook

2020 has begun strongly, with good customer and revenue
momentum across all of our divisions.
Euro 2020 presents an excellent opportunity to engage with and
acquire customers across multiple markets and we therefore
anticipate that sales and marketing for PPB Online will be c. 25%
of net revenue in 2020 (2019: 23.9%). Offsetting the cost of this
marketing investment is our performance in retail gaming which
is running ahead of our initial expectations.
PPB Online will see a number of regulatory changes this year.
The annualised revenue impact of the recently announced
restriction on UK credit card deposits will be c.£20‐25m.
We estimate that the decision to switch off a small number
of B2B partners will result in a reduction in Exchange revenues,
equivalent to less than 1% of Group revenues in 2020.
In the US, FanDuel continues to enjoy very strong momentum.
With plans to launch and invest in our online sportsbook in at least
3 additional states in 2020 we currently expect the US EBITDA2
outcome for 2020 to be similar to 2019.

Footnotes to the Operating and Financial Review
1. 	The “underlying” measures exclude separately disclosed items, that are not part
of the usual business activity of the Group and are also excluded when internally
evaluating performance and have been therefore reported as “separately
disclosed items” (see note 4 and page 123 to the Consolidated Financial
Statements).
2.	EBITDA is profit before interest, tax, depreciation and amortisation expenses
and is a non-GAAP measure. EBITDA throughout this Operating and Financial
Review excludes the impact of IFRS 16. See Appendix 5 for a reconciliation to
IFRS 16 compliant numbers. It is defined as profit for the year before depreciation
and amortisation, financial income, financial expense and tax expense/credit.
The Group uses EBITDA, Underlying EBITDA and Underlying operating profit
to comment on its financial performance. These measures are used internally
to evaluate performance, to establish strategic goals and to allocate resources.
The Directors also consider that these are commonly reported and widely used
by investors as an indicator of operating performance and ability to incur and
service debt, and as a valuation metric. These are non-GAAP financial measures
and are not prepared in accordance with IFRS and, as not uniformly defined
terms, these may not be comparable with measures used by other companies
to the extent they do not follow the same methodology used by the Group.
Non-GAAP measures should not be viewed in isolation, nor considered as a
substitute for measures reported in accordance with IFRS. All of the adjustments
shown have been taken from the financial statements.
3.	Constant currency (“cc”) growth throughout this Operating and Financial Review
is calculated by retranslating non-sterling denominated component of 2018 at
2019 exchange rates (see Appendix 4).
4.	The Adjarabet and FanDuel transactions completed on 1 February 2019 and
10 July 2018 respectively. The ‘Proforma’ results include the Adjarabet and
FanDuel fantasy sports businesses as if they had always been part of the Group,
incorporating in addition to the reported results, results from pre-acquisition
periods in 2018 and 2019.
5.	Net debt at 31 December 2019 is comprised of gross cash excluding customer
balances of £108.1m and gross borrowings of £367.3m. The comparative
balance shown as at 31 December 2018 is comprised of gross cash excluding
customer balances of £123.7m and borrowings of £285.4m (see Appendix 3).
6. Growth rates in the commentary are in local currency.
7.	The impact of tax and regulatory change is calculated by adjusting the prior year
comparative to reflect the same regulatory and tax rules that exist in the current
period. This includes the impact of changes to Australian point of consumption
taxes and product fees, UK machine staking limits, UK online remote gaming
duty and Irish betting duty.

Strategic Report

Appendix 1: Divisional Key Performance Indicators
PPB Online
£m

Sportsbook
stakes

Sportsbook
net rev margin

Sports
revenue

Gaming
revenue

2019
5,184
8.1%
666
340

Total revenue

1,006

Cost of sales
as a % of net
revenue

28.1%

Cost of sales

Gross Profit

(283)

723

Sales &
marketing

(240)

Product &
technology

(99)

Contribution

Operations

Unallocated
central costs

Other
operating
costs

Underlying
EBITDA

483

(76)

Underlying
operating
profit

5,453

-5%

2019
4,298

4,308

7.7% +40bps 10.4%
678

-2%

270

+26%

948

+6%

(231) +23%
24.4%
717

(242)

446
–

446

(182)

+380
bps 40.7%
+1%
-1%

475

+2%

(95)

+5%

(64) +20%

264

(73)

Flat

+3%

1,793

9.4%

+100
bps

+100
bps 12.8%

403

+11%

+14%

–

–

–

+14%

30.1%

+1060
bps

+1070
bps 22.4%

282

-6%

191

199

(82)

-11%

(21)

(20)

+5%

(45)

(42)

+54%

-3%
-9%

-4%

+7%

-1%

+7%

+10%

2,326

12.5% +30bps

4.4%
325

82

+11%

312

222

+4%

110

-25%

(73)

-5%

331

51

2.6%

+180
bps

+180
bps

8.8%

172

+89%

+83%

1,667

20 +160% +149%

22.1% +30bps 30.8%

23.3%

(7)

(6)

+97% +90%

(176)
307

(158) +11%
316
33.4%

-3%

(67)

(62)

125

137

-280
bps 28.0% 34.0%

(45)

(42)

+8%

263

275

-4%

(21)
103

+7%
-9%

-600
bps

+9%

(182)

(44)

(23) +90%

+83%

-6%

53

-590
bps 17.1%

72

-26%

(40)

-450
bps -10.7%

21.6%

(86) +81%

+72%
+86%

(650)

1,490

(465)

1,025

+73%

+76%

(14) +178% +168%
-7.6%

-310
bps

(171)

(409)

(639)
385

+25%

(22)

(21)

+4%

(20)

(11) +92%

+84%

119

-11%

32

51

-38%

(60)

(25) +142% +133%

(470) +38%

1,403

997

+6%

+3%

(343) +19%
(59)

+39%

+6%

+3%

+19%

+1%

+2%

(546) +17%

+17%

-15%

-14%

(108)

(90) +19%

+20%

277

360

-22%

-310
bps 18.0%

(18) +22%
-13%

+18%

+19%

+5%

(156)

+19%

(144) +19%

(6)

+1%

399

+14%

+57%

(180)

+14%

(406) +15%

+61%

(63) +78%

+13%

+530
bps

(75) +93%

(112)

1,474

+530
bps

(145)

+1%

Flat

25.1%

+4%

(174)

Flat

+740
bps 30.4%

(7)

72

+77%

8.8%

+15%

261

115

147

+15%

+14%

(45) +159% +151%
+750
bps

473

+14%

1,873

-6%

-7%

% CC1%
2018 Change Change

2,140

258

252

(175)

(116)

2019

423 +450% +446% 13,601 11,962

191

235

-6%

Group

% US$ %
2018 Change Change

376

(70)

242

2019

+1%

230

403

(121) +50%

1,779

US

(60)

Underlying
EBITDA margin 30.5%
Depreciation
& amortisation

%
2018 Change

Pre IFRS 16 adjustments
PPB Retail
% A$ %
%
2018 Change Change 2019 2018 Change
Australia

451
24.1%

-610
bps

-23%

-600
bps

Pre IFRS 16 adjustments
Proforma Basis

US
£m

Sports net revenue
Gaming net revenue
Total revenue
Cost of sales
Cost of sales as a % of net revenue
Gross Profit
Sales & marketing
Contribution
Product & technology
Operations
Unallocated central costs
Other operating costs
Underlying EBITDA
Underlying EBITDA margin
Depreciation & amortisation
Underlying operating profit

2019

2018

% Change

US$ %
change

325
51
376
(116)
30.8%
261
(145)
115
(44)
(112)

216
20
236
(50)
21.2%
186
(95)
91
(32)
(73)

+51%
+160%
+60%
+132%
+960bps
+40%
+53%
+27%
+36%
+52%

+45%
+149%
+54%
+124%
+960bps
+35%
+47%
+22%
+30%
+47%

(156)
(40)
-10.7%
(20)
(60)

(106)
(15)
-6.3%
(13)
(27)

+47%
n/a
-450bps
+61%
n/a

+42%
n/a
-450bps
+55%
n/a

Group
2019

1,667
478
2,145
(652)
30.4%
1,493
(466)
1,027
(171)
(410)
(60)
(641)
386
18.0%
(108)
278

2018

1,525
455
1,980
(497)
25.1%
1,483
(433)
1,050
(156)
(365)
(59)
(581)
470
23.7%
(93)
377

%
change

+9%
+5%
+8%
+31%
+530bps
+1%
+8%
-2%
+9%
+12%
+1%
+10%
-18%
-570bps
+16%
-26%

CC1%
change

+10%
+6%
+9%
+32%
+540bps
+1%
+7%
-2%
+9%
+12%
+2%
+10%
-17%
-560bps
+16%
-25%

1.	Constant currency (“cc”) growth is calculated by retranslating non-sterling denominated component of 2018 at 2019 exchange rates (see Appendix 4). Half-yearly and
quarterly divisional key performance indicators are available on our corporate website: https://www.flutter.com/investors

41



Operating and Financial Review continued
Appendix 2: Reconciliation of reported revenue and underlying EBITDA to proforma adjusted EBITDA
Revenue
£m

Reported
Inclusion of pre-acquisition
Adjarabet and FanDuel results
Proforma

2019

2018

YoY
%

CC YoY
%

2,140

1,873

+14%

+15%

5
2,145

107
1,980

+8%

+9%

Underlying EBITDA (pre IFRS 16 adjustments)
YoY
CC YoY
2019
2018
%
%

385

451

-15%

-14%

1
386

19
470

-18%

-17%

Appendix 3: Reconciliation of Presented cash flow to Reported statutory cash flow

In the Operating and Financial Review the cash flow has been presented on a net cash basis. The difference between this and the
reported statutory cash flow is the inclusion of borrowings to determine a net cash position and the use of the underlying EBITDA
on a pre-IFRS 16 basis, as reconciled in the table below.
£m

Presented cash flow
(pre IFRS 16 adjustments)
2019

2018

Underlying EBITDA1
Capex2
Working capital3
Corporation tax
Underlying free cash flow
Cash flow from separately disclosed items4
Free cash flow
Dividends paid
Share buyback
Acquisitions (2019 Adjarabet; 2018 FanDuel)
Legacy Greek and German tax
Interest and other borrowing costs5
Net proceeds from issue of new shares6
Other
Lease liabilities paid
Net amounts drawn down/(repaid) on borrowings
Net (decrease)/increase in cash

385
(136)
86
(41)
295
(13)
282
(156)
(87)
(102)
(40)
(7)
4
3
–
–
(104)

451
(107)
(38)
(60)
247
(1)
246
(169)
(415)
(71)
–
(4)
10
–
–
–
(403)

Net cash at start of the year
Foreign currency exchange translation
Net (debt)/cash at year end

(162)
1
(265)

244
(2)
(162)

Adjustment to include
borrowings and IFRS 16

Reported cash flow

2019

2018

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
223
223

425
(136)
87
(41)
336
(13)
323
(156)
(87)
(102)
(40)
(7)
4
3
(41)
88
(16)

451
(107)
(38)
(60)
247
(1)
246
(169)
(415)
(71)
–
(4)
10
–
–
223
(180)

285
(1)
373

62
(1)
285

124
–
108

307
(3)
124

40
–
1
–
41
–
41
–
–
–
–
–
–
–
(41)
88
88

2019

2018

1.	Underlying EBITDA (pre IFRS 16) includes the following line items in the statutory cash flow: Profit for the period, separately disclosed items, tax expense before
separately disclosed items, financial income before separately disclosed items, financial expense before separately disclosed items and depreciation and amortisation
before separately disclosed items. EBITDA throughout this Operating and Financial Review excludes the impact of IFRS 16. See Appendix 5 for a reconciliation to IFRS 16
compliant numbers.
2.	Capex includes purchase of property, plant and equipment, purchase of intangible assets, purchase of businesses net of cash acquired (excluding Adjarabet and FanDuel
acquisitions shown separately in presented cash flow), capitalised internal development expenditure, payment of contingent deferred consideration and loss on disposal
of property, plant and equipment and intangible assets.
3.	Working capital includes (increase)/decrease in trade and other receivables, (decrease)/increase in trade, other payables and provisions, employee equity-settled share
based payments expense before separately disclosed items, and foreign currency exchange (gain)/loss.
4.	Cash flow from separately disclosed items includes restructuring, transaction fees and strategic initiative costs paid.
5.	Interest and other borrowing costs includes interest paid, interest received and fees in respect of borrowings facility.
6.	Net proceeds from issue of new shares includes proceeds from issue of new shares.

42

Strategic Report

Appendix 4: Reconciliation of growth rates to constant currency growth rates

Constant currency (“cc”) growth is calculated by retranslating non-sterling denominated component of 2018 at 2019 exchange rates as
per the table below.
Pre IFRS 16 adjustments
£m

2019

2018

% Change

Cost of sales
Gross Profit

(650)
1,490

(470)
1,403

+38%
+6%

2
(4)

(467)
1,399

+39%
+6%

Sales and marketing
Product & technology
Operations
Unallocated central costs
Operating costs

(465)
(171)
(409)
(60)
(1,105)

(406)
(144)
(343)
(59)
(953)

+15%
+19%
+19%
+1%
+16%

–
–
1
–
1

(407)
(143)
(343)
(59)
(951)

+14%
+19%
+19%
+2%
+16%

385
(108)
277

451
(90)
360

-15%
+19%
-23%

(3)
–
(3)

448
(90)
357

-14%
+20%
-22%

1,006
446
312
376

948
403
331
191

+6%
+11%
-6%
+97%

(1)
(11)
(1)
6

947
392
330
198

+6%
+14%
-6%
+90%

307
125
53
(40)
(60)

316
137
72
(14)
(59)

-3%
-9%
-26%
+178%
+1%

2
(4)
–
(1)
–

318
133
71
(15)
(59)

-3%
-6%
-25%
+168%
+2%

Underlying EBITDA by division
PPB Online
Australia
PPB Retail
US
Unallocated central costs

1,467
400
1,867

cc% change

1,474
399
1,873

Revenue by division
PPB Online
Australia
PPB Retail
US

(7)
1
(7)

2018 cc

1,667
473
2,140

Underlying EBITDA
Depreciation and amortisation
Underlying operating profit

+13%
+19%
+14%

2018 FX impact

Sports net revenue
Gaming net revenue
Total net revenue

+14%
+18%
+15%

43



Operating and Financial Review continued
Appendix 5: Reconciliation of underlying EBITDA and EBIT to reported statutory EBIT by division

From 1 January 2019, IFRS 16 – Leases replaced IAS 17 – Leases. This means for leases previously classified as operating leases, a right
of use asset and associated lease liability will be recognised going forward. The nature of the operating lease expense also changes as
IFRS 16 replaces the previous operating lease expense with a depreciation charge on the asset and an interest expense on the liability.
As a Group we have adopted the modified retrospective approach by not restating the comparative period. Therefore, in the Operating
and Financial Review, in order to maintain comparability with the prior period, we have shown underlying EBITDA on a consistent basis
with the prior period, i.e. on a pre-IFRS 16 basis with the relevant operating lease expense included within EBITDA. The impact of IFRS 16
on Group profit before tax was immaterial in the period.

£m

Total revenue
Cost of sales
Gross Profit

Operating
costs

Underlying
EBITDA

Depreciation &
amortisation
Underlying
operating
profit
Underlying
net interest
expense

Separately
disclosed items
Profit before
tax

44

PPB Online
Pre IFRS 16
IFRS 16 adjust- Reported
2019
ment
2019
1,006

–

1,006

723

–

723

(416)
307

(283)

(45)
263

–

Pre
IFRS 16
2019
446

(283)

(182)

5

Australia
IFRS 16
adjust- Reported
ment
2019
–

446

312

242

(137)
127

264

–

(182)
264

(410)

(140)

3

5

313

125

3

(5)

(50)

–

263

103

(2)
–

(24)
104

312

PPB Retail
IFRS 16
adjust- Reported
ment
2019
–

–

(21)

Pre
IFRS 16
2019

(70)

–

Pre
IFRS 16
2019
376

–

(70)

242

(116)

(189)

23

53

US
IFRS 16
adjust- Reported
ment
2019
–

376

Pre
IFRS 16
2019
2,140

(650)

Group
IFRS 16
adjust- Reported
ment
2019
–

2,140

–

1,490

261

–

–

(116)

–

261

1,490

(166)

(301)

4

(297)

(1,105)

23

76

(40)

4

(36)

385

40

425

(22)

(21)

(43)

(20)

(4)

(24)

(108)

(37)

(145)

32

2

33

(60)

1

(60)

277

3

281

40

(650)

(1,064)

(9)

(5)

(14)

(131)

–

(131)

137

(1)

136

Strategic Report

UNDERSTANDING AND MANAGING OUR PRINCIPAL RISKS

Risk Governance and Responsibilities
The Board’s responsibility is:

overall responsibility for overseeing
the Group’s internal control and risk
management processes ensuring
appropriate and robust systems of
internal control and risk management
are in place to identify, manage and
mitigate the risks to the overall viability
of the Group.

The Audit Committee’s
responsibilities are:

ensuring the integrity of the Group’s
financial reporting and internal control
and risk management systems and
whistleblowing; and
reviewing the work of the Internal Audit
function and consider the reports
presented by the external auditor.

The Risk Committee’s
responsibilities are:

ensuring management and the second
line risk functions are performing their
roles in managing risk;
ensuring the Group Risk Registers are
properly maintained and managed;
ensuring the material risks for the Group
are being managed appropriately;
ensuring the Group’s divisions are
operating within the risk appetite; and
ensuring emerging risks are identified,
measured and monitored.

The Executive Committee’s
responsibilities are:

identifying, assessing, monitoring,
managing and mitigating risks and
taking advantage of opportunities;
embedding risk management in
business as usual;
ensuring appropriate internal
controls are in place;
identifying all key risks and
ensuring actions to mitigate
risks are implemented; and
implementing policies to ensure
we operate within our risk appetite.

Three Lines of Defence

First line

Executive Committee

Business operations:
Management and Chief
Executive Officer
Establish and develop the risk
and control environment
Primary responsibility for
day-to-day risk management
Proactive management of
continuous business process
improvement

Second line

Risk Committee

Oversight functions:
Risk Management, Finance,
HR, Legal, Compliance,
and Information Security
Establish Group policies and
control standards within
risk appetite
Provide guidance, advice and
direction for their implementation
Monitor the appropriate
execution and application of
policies and procedures

RISK MANAGEMENT PROCESS

1. Identify risks

	A robust methodology is used
to identify principal risks across
the Group.

2. 	Assess and quantify risks
	Analyse risks and controls
and evaluate the commercial,
strategic, regulatory and other
impacts and the likelihood
of occurrence.

3. 	Develop action plans to
manage and mitigate risk
	Assess effectiveness and
adequacy of controls. If additional
controls are required, these are
identified and responsibilities
assigned.

4.	Monitor and reassess
risk post mitigation
and report

	Management is responsible for
monitoring controls and progress
of actions to manage principal
risks and is supported through the
Group’s Internal Audit programme
which evaluates the design
and effectiveness of controls.
The risk management process
is continuous; principal risks are
reported to both the Risk and
Audit Committees.

Third line

Audit Committee

Independent assurance:
Internal Audit
Provide independent challenge
and assurance that risk is
appropriately managed
Systematic evaluation and
monitoring of controls
Identify efficiencies and process
improvement opportunities

45



Identifying, Managing and Mitigating our Principal Risks
Identifying our principal risks

The principal risks and uncertainties which are considered to
have the potential to materially impact on the Group’s long-term
performance and achievement of its strategic objectives are set
out on the following pages. External and internal risk factors are
considered.
This is not intended to be an exhaustive and extensive analysis
of all risks which may affect the Group. Additional risks and
uncertainties not presently known to management, or currently
deemed to be less material, may also have an adverse effect on
the business.
Principal risk/uncertainty

Responsible
gambling and
safer play
Risk category:
 Reputational
 Financial
 Strategic

Change in risk: New
Impact: High
Likelihood: High

Why we need to manage this

Responsible gambling (GR) underpins
every element of the Group’s strategy
from the products it designs and offers,
through to how to communicate and
market these with our customers.
We want to protect players who are at
risk of the potential negative effects of
gambling and build a business around
sustainable players and customers.

RISK ASSESSMENT KEY
How the inherent risk (before taking into account controls in place
to mitigate it by the business) has changed over the past year:
Increased risk

No change in risk

Decreased risk

Impact: Impact on the business if the risk materialises.
Likelihood: Likelihood of occurrence of the risk in the next
three years before taking into account mitigation activities
by the business.
How we manage and mitigate the risk

 We have a clearly defined Group RG strategy that is embedded into our
business from how we identify at-risk customers through to how we
interact, communicate and encourage RG tool usage.

 We continue to refine our RG capabilities and have recently launched
an enhanced CAAP proprietary model that enables us to identify and
interact with at-risk customers. The model now monitors 114 customer
behaviours daily and assigns risk scores to each active customer.
 Our sites carry a leading range of tools to support customers in
managing their spend and play, and we are continually working to
improve and enhance our tools and site content. For example in the UK,
in H2 2019 a project commenced to focus on enhancing the RG online
offering to customers, making it easier for them to understand their
gambling behaviour and to use RG tools. This included a refresh of the
RG microsites for key brands, delivered in December 2019.
 We continue to be proactive both with our own initiatives and through
collaboration with our industry peers as we focus on the long-term
sustainability of our operations and our industry. For example, in the
UK, the CEO Safer Gambling Commitments were recently launched in
November 2019 as part of the ongoing drive to ensure RG standards
are raised across the industry. These commitments will deliver
long term and continually enhance how our industry empowers,
protects, and supports customers in safer gambling.

 In July 2019, we also agreed to increase our financial support for safer
gambling in the UK, raising the current 0.1% voluntary contribution
of our gross gambling yield over the next four years to 1% in 2023.
This additional funding will be used by various third parties to support
existing treatment commitments, to educate on gambling responsibly
and to continue independent research programmes.

Data protection
Risk category:

 Legal and regulatory
 Reputational
 Financial

Change in risk:
Impact: High

Likelihood: Medium

46

The inability to adequately protect
sensitive customer data and other
key data and information assets that
could be leaked, exposed, hacked or
transmitted resulting in customer
detriment, formal investigations
and/or possible litigation leading to
prosecution, fines and damage to
our brands.

 In December 2019, the Remuneration Committee approved an RG
measure based on PPB reducing revenue from at-risk customers
identified by the CAAP model as medium or high-risk customers.
Delivery of this measure is tied into staff bonuses, reflecting the
importance we place on protecting at risk customers.

 We have in place a number of data protection policies in order to protect
the privacy rights of individuals in accordance with the relevant local data
protection and privacy legislation and with GDPR.
 These policies are monitored by the Legal and Data Protection teams
to ensure that the business is aware of, and adheres to, industry best
practice standards and relevant laws.

 Technology and IT security controls are in place to restrict access to
sensitive data and ensure individuals only have access to the data they
need to do their job.
 Annual data protection training is mandatory for all staff, as well as
conducting regular training and awareness sessions for key parts of
the business who handle customer and staff personal information.

Strategic Report

Principal risk/uncertainty

Regulation,
licensing and
regulatory
compliance
Risk category:

 Commercial
 Financial
 Legal and regulatory
 Reputational

Change in risk:
Impact: High

Likelihood: High

Cyber Security
Risk category:

 Legal and regulatory
 Reputational
 Technology

Change in risk:
Impact: High

Why we need to manage this

The regulatory, taxation
or legislative environment,
including interpretations or
practices applicable to the
Group’s activities in the various
markets in which it operates,
can make it commercially
challenging for us to operate
or restrict our ability to
grow the business in such
markets. This includes
those markets where no
regulatory framework exists.
This industry is continually
subjected to adverse
regulatory headwinds.
Breaches of regulations
damage our reputation as
well as leading to fines and
investigations and can impact
future growth.
The inability to adequately
protect customer data and
other sensitive assets, as well
as maintain critical services
during a cyber attack could
result in customer detriment,
regulatory fines and revenue
losses.

Likelihood: High

Reliance on
third parties
and key supplier
relationships
Risk category:
 Commercial
 Strategic

Change in risk:
Impact: High

Likelihood: Medium

Business
continuity
planning

Risk category:
 Commercial
 Technology

Change in risk:
Impact: High

Likelihood: Low

We rely on third parties across
our business. Managing
relationships with, and
performance by, key suppliers,
particularly those supplying
software platforms, payment
processing and data to
support the Group’s products
is key to the Group’s strategic
objectives. This includes
ensuring third parties comply
with our policies.
The ability of the Group to
recover from severe disruption
to business operations,
premises and/or resources
is paramount. A significant
disruption to one of our
offices can cause potential
reduction in revenue and loss
of customers.

How we manage and mitigate the risk

 We have dedicated internal and external Legal, Compliance and Tax teams
for all regions with responsibility for advising business units on these matters and
working with the business to set appropriate policies, processes and controls.
For the jurisdictions in which we hold a licence, the relevant Compliance teams
monitor compliance with the regulatory framework and licence requirements.
 Our dedicated Regulatory Affairs and Compliance teams work with regulators
and governments in relation to proportionate and reasonable regulation.

 As the first line, management has ultimate accountability for compliance.
Training and communication strategies have focused on ensuring appropriate
awareness of requirements. A risk-based approach is taken to key areas and there
are appropriate second and third line functions in the business which test the
systems and processes for compliance.
 Management report periodically to the Audit Committee and Risk Committee
(as applicable) on the application of various laws and regulations by the relevant
jurisdiction to ensure that they are appropriately understood and managed.
 The Group’s internal and external auditors report the findings of their audit
procedures to the Audit Committee on relevant compliance matters.

 The Group invests significantly in cyber security resources and controls, and
works with a variety of external security specialists to ensure that security
arrangements and systems are up-to-date with emerging threats.

 The Group’s Global Cyber Security Policy aims to align control standards
across the Group in managing cyber risks, and the Global Cyber Security team
continuously assesses the risks and controls around security and IT operations.

 The Group has appropriate business continuity, IT disaster recovery and crisis
management plans in place. The Group also maintains a level of cyber insurance
cover at a Group level.

 Regular training and awareness campaigns are carried out by Cyber Security and
Divisional Information Security teams and annual Information security training is
mandated for all staff.
 Where possible, we limit reliance on a single supplier to reduce potential single
points of failure.

 The Group has strong commercial relationships with its key suppliers. Contracts
and service level agreements are in place with third parties and are subject to
regular review. Proposed new contracts are passed through a procurement
process to ensure adequate protection for the Group.
 The Group monitors the performance of third-party suppliers in order to ensure
the efficiency and quality of contract performance.

 We have business continuity plans in place for all critical areas of the business.

 We regularly review and test these business continuity plans (BCP) and continue
to enhance our business continuity capability.

 A BCP Steering Committee has oversight of the management and improvement
of the BCPs.
 A BCP risk register is maintained and tracks progress in our business continuity
planning.
 The increase in adverse weather events across the Group’s locations have
increased the need to better manage this risk but we have in place continuity
plans to manage such events and these have been successfully tested.

47



Identifying, Managing and Mitigating our Principal Risks continued
Principal risk/uncertainty

Technology
systems stability
and availability,
and disaster
recovery
Risk category:
 Commercial
 Reputational
 Technology

Change in risk:
Impact: High

Likelihood: Medium

Key employees
recruitment and
retention
Risk category:
 Commercial
 Strategic

Change in risk:
Impact: High

Likelihood: High

Integration
and project/
change risk
Risk category:
 Strategic
 Commercial
 Financial

Change in risk: New
Impact: High

Likelihood: Medium

Market
restrictions
Risk category:

 Commercial
 Financial
 Legal and Regulatory
 Strategic

Change in risk:

Impact: Medium

Likelihood: Medium

Why we need to manage this

Our operations are dependent on
technology and advanced IT systems
and any damage or failure to these
could reduce revenue and harm our
business reputation.

Reduced availability of our products
arising from software, infrastructure
and system issues could result in a poor
customer experience and may have an
impact on customer loyalty affecting
our ability to grow the business.
Delays in restoring services following a
major disruption could result in loss of
customers and reputational damage.

Continued success and growth is
dependent on the performance
of Executive Directors, senior
management and other key employees.
Retention and recruitment of these
individuals is a key component in
securing the ability to grow and
develop the business.
The Group’s ability to continue to attract,
retain and motivate committed and
highly skilled employees in an intensely
competitive environment is key.

A key component of our Group strategy
is to grow and attain market leading
positions in new and existing markets
in which we operate.
The failure to identify, execute or
effectively integrate acquisitions or
mergers, or to successfully manage
change programmes associated with
integrations could impact on revenue
targets and impede the strategic
development of the Group.

Restrictions on new or existing markets
such as advertising bans, protectionist
regulations or material taxation
changes can impact growth plans.

How we manage and mitigate the risk

 We continuously invest in a cost-effective technology platform to
ensure stability and availability, to eliminate single points of failure and
improve performance.

 In PPB, our single technology platform means customers are interfaced
onto a single platform, which has increased resilience.
 Key metrics are in place to monitor key systems and platforms globally
and identify potential emerging issues for all divisions.
 There is a formal incident management process for identifying,
escalating and resolving issues and a post-incident process to ensure
that similar issues cannot happen again.

 Robust development and change management processes help reduce
the risk of unplanned outages.

 We continue to invest in and test our disaster recovery capability
for our key products across the Group. Where possible, we have failover
solutions available and seek to limit single points of failure.

 Through the Nomination and Remuneration Committee, the Board
reviews key positions (namely the Executive Directors and senior
management), succession and the remuneration and incentives in place.
The overall remuneration structure in place for all employees is also
reviewed by the Remuneration Committee.
 Our HR function actively manages succession planning, talent
management and the processes that are in place throughout the
business to identify key roles and conduct regular appraisals, succession
and talent reviews, and engagement surveys as well as career
development opportunities.
 All employees are subject to regular salary reviews, a comprehensive
benefit package and are able to join our all-employee Save As You Earn
share scheme (Sharesave) (subject to local jurisdictional requirements),
which provides an opportunity for them to participate in the Group’s
performance.
 We have dedicated business development, corporate finance and
divisional management teams who continually and proactively review
potential acquisitions.

 All acquisition targets undergo a robust assessment to ensure their
strategic fit with the business, but also to assess their long-term viability
to generate positive returns.
 Our dedicated corporate finance team performs a thorough internal
review and evaluation process, including external due diligence, prior to
completing any potential acquisitions or mergers.

 Dedicated and experienced internal resources, complemented with
external expertise, are put in place to manage projects and programmes
associated with integrations, with direct reporting lines to the Group’s
Executive Committee and Board.
 Potential changes in regulatory and taxation environments are
monitored on an ongoing basis with a view to managing any changes
appropriately and cost-efficiently.

 The Group continues to promote transparent and effective regulations
in all markets that create a level playing field.
 A product prioritisation process ensures that any new regulations are
complied with in a timely manner.
 We continue to invest in the flexibility of our technology, which is key
to us entering or remaining in markets and allowing for adaptability as
market conditions change.

The Board continues to monitor the Brexit-related transition activity, and currently does not consider this to be a material risk to the business. We
are a global business, geographically and product diversified, and licensed country-by-country. Specific areas considered in terms of impact include
regulation, people, legal and tax impacts, and activities related to these areas are being progressed through a dedicated Brexit working group.

48

Strategic Report
Governance

Governance
Section Contents
50	Chair’s Governance Statement
52	Board of Directors
55	Corporate Governance Framework
Roles and Responsibilities
57	2019 Board Activities
59	Effectiveness
60	Nomination Committee Report
63	Audit Committee Report
68	Risk Committee Report
70	Directors’ Remuneration Report
91 Directors’ Report

49



GOVERNANCE OVERVIEW

Chair’s Governance Statement
Dear shareholder

In setting the tone for
the culture, values and
behaviours, the Board keep
the Group’s stakeholders at
the heart of our decisionmaking process, and
we remain focussed on
delivery of the long-term
sustainable success of the
Group.

Gary McGann
Chair

I am pleased to present the Corporate
Governance Report for 2019, which
summarises our approach to ensuring
effective governance and oversight of
the business and the work undertaken
during 2019.
Strong corporate culture and shared
values are designed to drive the right
behaviours throughout the Group and
play an important part in delivering a
sustainable, successful business in the
long term.
Our corporate reputation is an important
element of delivering on our vision of being
a global leader in online sports betting,
combining a diversified portfolio of strong
national brands with the world’s leading
betting exchange. We also appreciate the
constant need to consider the impact we
can have on a wider group of stakeholders
beyond investors, such as employees,
customers and society, and the need
to strive to achieve positive outcomes
in all respects.

Our approach to governance

Flutter implemented the 2018 UK
Corporate Governance Code (the
2018 UK Code) and the Irish Corporate
Governance Annex for the year ended
31 December 2019.
Flutter is committed to the highest
standards of corporate governance
and we regularly review our governance
structures and arrangements to ensure
that they meet best practice requirements.
The Board has responsibility for the
leadership, strategic direction and longterm success of the Group. The Board is
also responsible for the stewardship of the
Group, establishing the Group’s purpose,
values and strategy and satisfying itself
that these are aligned to the culture of
the organisation. As part of our decisionmaking process, due regard is given to the
interests of all of the Group’s stakeholders
with the goal of achieving long-term

50

Gary McGann
Chair

sustainable success for the business.
This in turn should deliver strong
shareholder value. The Board, its
Committees and management, working
together, and using our governance
principles, provide a clear and robust
framework within which decisions
are made.

Board composition, diversity
and succession planning

Nancy Cruickshank was appointed as
Non-Executive Director on 15 May
2019 and Andrew Higginson was
appointed as Non-Executive Director
on 2 October 2019.
As part of the Board renewal process,
a key focus for the Board over the next
12 months continues to be Board
succession planning to ensure we have
the right balance of skills, knowledge
and experience necessary on the Board,
taking account of our business model,
the sector within which we operate,
the growth in scale of the Group, our
geographic expansion and the proposed
combination with The Stars Group. The
ongoing process of Board succession is
managed by the Nomination Committee,
all appointments are based on merit, with
appropriate consideration to diversity.
The Board has a formal Board Diversity
Policy in place, and considers diversity in
the widest sense to include age, gender,
experience, ethnicity, professional
background, skills and international
experience. Details on progress of
Board diversity during 2019 are set
out on page 54.

Board effectiveness

In accordance with requirements of
the 2018 UK Code to have the Board’s
performance evaluation externally
facilitated at least every three years, the
2019 evaluation of the performance of
the Board, its Committees and individual
Directors was externally facilitated.
I am pleased to report that the results of
the 2019 evaluation process were positive
and that a number of actions were agreed
which will be implemented during the
current year. Further details on the 2019
Board evaluation are set out on page 62.

Governance

Remuneration changes

Further to significant changes in our
operating environment and in order
to align our remuneration arrangements
with our strategy, we will submit a
non-binding Remuneration Policy for
shareholder approval at the 2020 AGM.
In drafting the proposed Remuneration
Policy, the Remuneration Committee and
the Board gave extensive consideration
to guidelines, evolving market trends
and best practice in relation to the
remuneration framework. Recognising the
importance of shareholder engagement,
the Chair of the Remuneration Committee
led a comprehensive consultation process
with major shareholders and proxy
advisers on the proposals contained
within the proposed Remuneration
Policy, which aims to promote alignment
to our strategy and strike a balance
between compensation being aligned
with shareholders’ interests and our
ability to recruit, retain and motivate
high-performing employees in a very
competitive and regulated market place.
These are further detailed in the Directors’
Remuneration Report on pages 70 to 90.

Reputation and risk

Our reputation continues to be of vital
importance to the Group and its various
constituents. The Risk Committee
focuses on the reputational impact of
the Group’s activities and how these are
being managed, particularly in relation
to responsible gambling. Both it and the
Audit Committee strive to ensure that the
Group’s risk management processes and
risk appetite are aligned to the culture of
the organisation.

Stakeholder engagement

The Board has always had regard to wider
stakeholders beyond shareholders and in
particular to our employees. During 2019,
I spent time engaging with employees
through visiting our operations worldwide,
while also encouraging all the Board
members to do the same. In 2019, the
Board undertook a visit to our FanDuel
offices in New York.
Committee Chairs also spend time
outside of formal meetings conducting
more widespread discussions with a
broad range of our stakeholders.

Both Peter Rigby (as Chair of the
Remuneration Committee) and I held
meetings with investors on general
governance and remuneration matters
during the year and details of these are
discussed within this report.
Further to the requirements under the
2018 UK Code, the Board has appointed
two Non-Executive Directors, Peter
Rigby and Emer Timmons, to be the
formal representatives for the Board in
relation to appropriate engagement with
our global employees, building on the
current positive processes we already
have in place. Progress on our workforce
engagement and wider stakeholder
engagement throughout 2019 is set
out on pages 28 to 33.

Board priorities for 2020

The Board’s objectives for 2020 are to
continue to focus on our responsible
gambling initiatives, including the roll-out
of the CAAP 2.0 model and wider industry
improvements in responsible gambling,
and to consider wider environmental,
social and governance matters relevant
to the Group. The Board will continue to
support the Executive Directors with the
execution of our strategy, to focus on
the attraction and retention of talented
staff, succession planning increasing
the diversity of the organisation and on
enhancing our governance practices.
The Board will support integration with
The Stars Group, if approved, and remain
aware and informed of cyber risks and
mitigation and ensure that we continue
to have regard to the interests of all of
our stakeholders.
We look forward to meeting our
shareholders at our AGM, which will be
held on 14 May 2020 at 11.00 am in Dublin.
Gary McGann
Chair
26 February 2020

Statement of compliance

The primary (premium) listing of
is on the
LSE, with the listing on Euronext
Dublin characterised as secondary.
For this reason, Flutter Entertainment
plc is not subject to the same ongoing
listing requirements as would apply
to an Irish company with a primary
listing on Euronext Dublin. For further
information, shareholders should
consult their financial adviser.
On behalf of the Board, I am pleased
to confirm that we have fully complied
with both the 2018 UK Corporate
Governance Code (the 2018 UK
Code) and the Irish Corporate
Governance Annex (the Irish Annex)
for the year ended 31 December 2019.
The UK Code is available from
the Financial Reporting Council’s
website: www.frc.org.uk
The Irish Annex is available from
Euronext Dublin’s website:
www.euronext.com

Fair, balanced and
understandable

The Board believes that this Annual
Report, taken as a whole, is fair,
balanced and understandable and
provides the information necessary
for shareholders to assess the
Group’s position and performance,
business model and strategy.
The Audit Committee assisted
the Board with this assessment as
explained on page 64. The Statement
of Directors’ Responsibilities appears
on page 97.

Alignment with the 2018
UK Code:

Board Leadership and Company
Purpose pages 1, 2, 12, 13 & 52 to 56
Division of Responsibilities
pages 55 to 56
Composition, Succession and
Evaluation pages 52 to 62
Audit, Risk and Internal Control
pages 63 to 69
Remuneration pages 70 to 90

Board of Directors
1. Gary McGann
Chair – Independent on
appointment (age 69)

2. Peter Jackson
Chief Executive Officer (age 44)

Appointed to this position
1 July 2015*

Key strengths and experience
 Extensive experience in leading consumer
businesses with international reach within a
highly regulated industry
 Technology and digital consumer sector
expertise
Prior to becoming Chief Executive Officer,
Peter was Chief Executive Officer of Worldpay
UK, an operating division of Worldpay Group
plc. He was formerly Chief Executive Officer
of Travelex Group. He then joined Banco
Santander as Head of Global Innovation and
a Director of Santander UK Group Holdings
plc. Peter’s previous experience includes
senior positions at Lloyds and Halifax Bank
of Scotland, as well as time at McKinsey &
Company. He holds an MEng degree.

Key strengths and experience
 Extensive board experience in both the
private and public sector
 Significant number of years’ experience
in senior finance, operations, market-facing
and general management roles.
Gary was previously a Non-Executive
Director of Smurfit Kappa Group, having
been Group Chief Executive prior to this and
having previously held a number of senior
roles including President and Group Chief
Operations Officer. Prior to this, he was Chief
Executive of Gilbeys of Ireland and Aer Lingus
Group. Gary holds BA and MSc Management
degrees and is a qualified accountant (FCCA).
Other current appointments
Chair of Aryzta AG

* Became a Non-Executive Director: November 2014.

Appointed to this position
8 January 2018*

Other current appointments
None

*	Non-Executive Director of Betfair Group plc:
April 2013 and Paddy Power Betfair plc:
February 2016.

3. Jonathan Hill
Chief Financial Officer (age 51)
Appointed to this position
22 October 2018

Key
Committee membership Nationality
A: Audit
UK
N: Nomination
Canada
Re: Remuneration
Ri: Risk
Ireland
B: Committee Chair
Germany

52

Key strengths and experience
 Significant financial and operational
experience across various industry sectors
and at listed companies
 Strong knowledge in strategic planning and
development of large corporate projects
Jonathan was previously the Group Chief
Financial Officer at Saga plc. Prior to that, he
held various senior roles within TUI Travel plc
and Centrica plc and was the Group Finance
Director at Bovis Homes Group plc. He is a
qualified chartered accountant and spent his
early career at Price Waterhouse in London.
Other current appointments
None

6

4. Jan Bolz
Independent Non-Executive
Director (age 59)
A / Re

Appointed to this position
6 September 2017

Key strengths and experience
 Extensive senior management experience
across marketing, sales and finance functions
 A wealth of global experience across the
gambling and gaming industry
Jan was most recently the Chief Executive
Officer of Tipico, a German sports betting
business. Prior to this, Jan held several senior
executive roles with Electronic Arts, including
that of Vice President of Marketing and Sales
for International, and Bertelsmann Music Group
as Managing Director of BMG Ariloa Munich.
Other current appointments
None

5. Zillah Byng-Thorne
Independent Non-Executive
Director (age 45)
A / Ri

Appointed to this position
2 February 2016*

Key strengths and experience
 A number of years’ financial and operational
experience
 Strong insight into retail trends, consumer
behaviour, brands and the digital and
technology sector having led a consumerfacing digital business
Zillah joined Future plc in November 2013
as Chief Financial Officer and Company
Secretary and was appointed as the Chief
Executive in April 2014. Prior to this, she
was Chief Financial Officer of Trader Media
Group, Fitness First Group Ltd and Thresher
Group. She is a chartered management
accountant and a qualified treasurer, and holds
an MA in Management Studies and an MSc in
Behavioural Change.

Other current appointments
Chief Executive of Future plc and Non-Executive
Director and Chair of Audit and Risk Committee
of Gocompare.com Group plc
*	Non-Executive Director of Betfair Group plc:
September 2013.

Governance

6. Michael Cawley
Independent Non-Executive
Director (age 65)

8. Peter Rigby
Independent Non-Executive
Director (age 64)

10. Nancy Cruickshank
Independent Non-Executive
Director (age 49)

Appointed to this position
17 July 2013

Appointed to this position
2 February 2016*

Appointed to this position
15 May 2019

Key strengths and experience
 Significant experience in senior finance,
leadership and operational roles
 Extensive regulated industry experience
Michael previously held a number of senior
positions at Ryanair, including Deputy Chief
Executive Officer, Chief Operating Officer,
Chief Financial Officer and Commercial
Director. Prior to that, Michael was Group
Finance Director of Gowan Group Limited,
Flybondi Limited, Linked P2P Limited and
Meadowbrook Heights Unlimited. He is a
qualified chartered accountant and holds
a Bachelor of Commerce degree.

Other current appointments
Chair of Hostelworld Group plc and Fáilte
Ireland and Non-Executive Director of Kingspan
Group plc and Ryanair Holdings plc

7. Ian Dyson
Senior Independent Director
(age 57)

Appointed to this position
2 February 2016*

Key strengths and experience
 Has held various senior financial and
operational roles and extensive listed board
experience
 Vast knowledge of regulated businesses
and the gambling and gaming sector
Ian was formerly a Non-Executive Director of
Punch Taverns plc, having previously been Chief
Executive. Other previous positions held by him
include Finance & Operations Director at Marks
and Spencer Group plc, Finance Director at
The Rank Group plc, Group Financial Controller
of Hilton Group plc and Finance Director at Le
Meridien. His early career was spent with Arthur
Andersen, where he was also Partner. Ian is a
qualified chartered accountant.
Other current appointments
Non-Executive Director and Chair of the
Audit Committee of InterContinental Hotels
Group plc and SSP Group plc and Senior
Independent Director and Chair of the Audit
Committee of ASOS plc
*	Non-Executive Director of Betfair Group plc:
February 2010.

Key strengths and experience
 Significant experience in operations
management, brands, and mergers and
acquisitions
 A number of years’ experience in senior
finance roles and leading a highly digitalised
business
Peter was previously Chief Executive and, prior
to that, Finance Director, of Informa plc from
1983 to 2013. Prior to this, he held the role of
Finance Director for Stonehart Publications.
He holds a BA in Economics and is a qualified
accountant.
Other current appointments
None

*	Non-Executive Director of Betfair
Group plc: April 2014.

9. Emer Timmons
Independent Non-Executive
Director (age 51)

Appointed to this position
17 May 2017

Key strengths and experience
 A wealth of global experience in sales, retail,
distribution and operations
 International experience in marketing and
commercial strategy
Emer is Founder and CEO of ET Solutions
GmbH which provides strategic engagement
professional services and programmes.
Previously, Emer was the Chief Marketing
Officer and President of Enterprise & Strategic
Sales, and prior to this, she was the President of
British Telecom UK , a role she held for 10 years.
She holds a degree in Maths and Economics.

Other current appointments
Co-Chair of Leaders as Change Agents (LACA),
a new UK government-backed board, aimed at
intensifying the campaign for greater diversity
at senior levels in business, and provides advice
to the UK Government promoting equality,
diversity and inclusion.

Key strengths and experience
 Extensive digital and entrepreneurial
expertise
 A wealth of Non-Executive Director
experience
Nancy is a serial entrepreneur, digital leader
and Non-Executive Director. She presently
leads the Business Transformation programme
at Carlsberg group. Her last start-up, My
Showcase, was named by the Sunday Times
as one of the 15 fastest-growing start-ups in
the UK in 2016. The business was acquired by
Miroma Group in February 2018.
Nancy worked in the digital industry for over
20 years, including launching Condé Nast online
in 1996, overseeing Telegraph Media Group’s
Digital business and developing the Fashion
& Beauty market leader, Handbag.com
between 2001-2006, leading to a successful
sale to Hearst Corporation in 2006.
Other current appointments
Senior Vice President at Carlsberg A/S and
a member of the Carlsberg Group executive
team. Non-Executive Director at Bango and
OnMobile.

11. Andrew Higginson
Independent Non-Executive
Director (age 62)

Appointed to this position
2 October 2019

Key strengths and experience
 A wealth of Executive and Non-Executive
Board-level experience
 Commercial, retail and leadership expertise
Andrew served as an Executive Director at
Tesco plc, having spent 15 years on the Main
Board, first as Finance and Strategy Director,
and latterly as Chief Executive of their Retailing
Services business. His early career was with
Unilever, Guinness, Laura Ashley and the
Burton group. He was previously the Chair of
Poundland Group plc and N Brown plc, Senior
Independent Director of Sky plc and a NonExecutive Director of the Rugby Football Union.
Other current appointments
Chair of Wm Morrison Supermarkets plc and
Evergreen Garden Care Limited and NonExecutive Director of Woolworths Holdings
Limited (South African retailer)

53

Board Diversity
Board Diversity Policy

The Board recognises the benefits of
diversity to the long-term success of the
Group. We are committed to ensuring
the Board is sufficiently diverse and
appropriately balanced. We are mindful
of the reviews in this area including the
Davies Review, the Parker Review and the
Hampton-Alexander Review.

Objectives of the Board
Diversity Policy

The Nomination Committee reviews
all measurable objectives for achieving
diversity on the Board and recommends
them for Board adoption. At any given
time, the Board may pursue one or more
aspects of its diversity and measure
progress accordingly.
The Board has set a target to achieve
33% female representation on the
Board by the end of 2020.
Recognising the benefits of wider
experience, consideration of NonExecutive Director candidates from
various backgrounds has been taken
into account when considering NonExecutive Director appointments.
The recruitment and selection process
for Non-Executive Directors ensures
that longlists of potential candidates
comprise at least 50% female candidates.
The Nomination Committee only
engages with search firms which are
accredited under the Enhanced Code
of Conduct for Executive Search Firms
in Board appointments.
The Board is committed to having a
diverse Board and to ensuring an open
and fair recruitment and selection process
for all Board appointments.

Implementation of Board
Diversity Policy

All appointments to the Board are based
on merit, in the context of the balance and
mix of appropriate skills and experience
the Board as a whole requires in order to
be effective.
Diversity is a key criteria for consideration
as part of the Board renewal process,
and the Nomination Committee takes
into account the following criteria when
considering Non-Executive Director roles:
skills, knowledge and experience in areas
relevant to the operation of the Board,
including professional background and

54

international experience and having
regard to Board skills gaps;
diversity in all aspects, including age,
nationality, gender, social and ethnic
backgrounds, cognitive and personal
strengths; and
the need for an appropriately sized
Board.
During the process of ongoing Board
renewal, each or a combination of these
criteria can take priority.
As part of the annual performance
evaluation of the effectiveness of the
Board, its Committees and individual
Directors, the Nomination Committee
will also consider the current and future
diversity needs of the Board.

2019 Board diversity progress

As at 31 December 2019, 27.27% of
our Directors are female. While short
of achieving our target of 33%, this has
increased from 22.2% in 2018.
The external search agency used
during the recruitment process for the
appointments of Nancy Cruickshank
and Andrew Higginson was accredited
under the Enhanced Voluntary Code of
Conduct for Executive Search Firms.
During 2019, the recruitment process
for Non-Executive Directors considered
candidates from a wide pool of
experience and longlists of potential
candidates comprised at least 50%
female candidates.

2020 Board diversity priorities

The Board acknowledges it will not
achieve our objective of 33% female
representation on the Board in 2020
following the combination with The
Stars Group. We remain committed
to achieving this objective despite the
contemporaneous nature of right sizing
the Board.
During 2020, the Board will review our
Board Diversity Policy, and consider the
2018 UK Code and the recommendations
of the Hampton-Alexander Review
regarding gender diversity and the
Parker Review on ethnicity. Our policy
will continue to promote an inclusive and
diverse Board.

Non-Executive Directors’ skills

A: Regulation and regulatory
environment – 3
B: Finance – 6
C: Consumer services/retail – 9
D: Gambling/gaming – 1
E: Digital/cyber security/technology – 4
F: Marketing/branding – 2
G: FTSE 100 Board experience – 5
H: Business transformation – 9
I: M&A and integration – 7
J:	International experience

*	Includes tenure as a Non-Executive Director
of Betfair Group plc or Paddy Power plc (premerger) where applicable.

Gender
(Executive and Non-Executive Directors)
A: Male
B: Female
A

73% – 8

B

27% – 3

Balance of independence

Non-Executive Chair*
A:	Independent Non-Executive
Directors**
B: Executive Directors
A

78% – 7

* Independent on appointment.
** Excluding Chairman.

B

22% – 2

Governance

Corporate Governance Framework, Roles and Responsibilities
Nomination Committee
Board

Ian Dyson
(Chair)

Michael Cawley
Gary McGann

Emer Timmons

Considers the structure, size and composition
of the Board and its Committees and advises
on succession planning for the Board and the
Executive Committee and ensuring that the Board
retains an appropriate mix of skills, experience,
knowledge and diversity.

Nancy Cruickshank

Nomination Committee Report:
pages 60 to 62

Andrew Higginson

Audit Committee
Chief
Executive
Officer

Michael Cawley
(Chair)

Jan Bolz

Zillah Byng-Thorne
Ian Dyson

Emer Timmons

Provides governance and oversight over the
integrity of the Group’s financial reporting and the
Group’s internal controls and risk management
systems, and also monitors the performance of
internal and external audit.
 udit Committee Report:
A
pages 63 to 67

Risk Committee
Executive
Committee
Day-to-day
management
of the business
and operations.

Execution of
the strategy is
delegated to the
Chief Executive
Officer and
the Executive
Committee.

Zillah Byng-Thorne
(Chair)

Michael Cawley
Gary McGann
Peter Rigby

Nancy Cruickshank

Reviews the reputational impact of the Group’s
activities and how these are being managed, the
Group’s responsible gambling strategy objectives
and performance, the Group’s corporate social
responsibility strategy and objectives, and our risk
management activities for assurance that these
are appropriate and in line with the risk appetite
of the Group.
R
 isk Committee Report:
pages 68 to 69

Remuneration Committee
Peter Rigby
(Chair)

Jan Bolz

Ian Dyson

Gary McGann

Emer Timmons

Andrew Higginson

Each Committee
Chair formally
reports to the Board
following their meetings
and makes any
recommendations
to the Board in line
with their Terms of
Reference.
Papers and minutes
for all meetings are
circulated to all Board
members other than
Directors who may be
deemed to have
a potential
conflict of interest.

Reviews all aspects of Executive remuneration,
reviewing trends across the industry and setting
the Directors’ Remuneration Policy, which is
designed to incentivise and retain talent to support
the delivery of the Group’s long-term strategy.
It also sets the remuneration of the Chair, the
Executive Committee and the Company Secretary
and reviews the structure in place for wider
workforce remuneration.
R
 emuneration Committee Report:
pages 70 to 90

Disclosure Committee
Responsible for overseeing the disclosure of information by the
Company to meet its obligations under the EU Market Abuse
Regulation and the Central Bank of Ireland’s laws and regulations
and the Financial Conduct Authority’s Listing Rules and Disclosure
Guidance and Transparency Rules.
Terms of Reference: www.flutter.com/
investors/corporate-governance

55



Corporate Governance Framework, Roles and Responsibilities continued
Board of Directors

Responsible for the stewardship of
the Group, overseeing its conduct and
affairs to create long-term sustainable
success in order to generate greater
cumulative value for shareholders and
other stakeholders, such as employees
and wider society, and to understand
their views.
Responsible for establishing the Group’s
purpose and values and satisfying itself
that these are aligned to the culture.
Responsible for the Group’s strategic
direction, long-term objectives and
development.
Discharges some of its responsibilities
directly and others through its
Committees and management.
Approves strategic plans and annual
budgets and ensures that the necessary
financial and human resources are
in place for the Group to meet
its objectives.
Maintains an oversight of the Group’s
operations, financial performance and
governance and ensures compliance
with statutory and regulatory obligations.
Determines the Group’s risk appetite
and ensures that we have in place a
robust system of internal control and
risk management, including ensuring
that material risks are being properly
addressed and emerging risks are
identified, measured and monitored.
Responsible for ensuring that the Group
has the necessary leadership team in
place to efficiently execute its strategy.

Non-Executive Directors
(all independent)

Bring a strong external perspective,
advice and judgement to the Board,
acting independently and constructively
challenging decisions.
Bring varied industry and professional
backgrounds, experience, skills and
expertise aligned to the needs of
the Group’s business and long-term
strategic objectives.

56

Chair

Chief Executive Officer

Responsible for the leadership and
effectiveness of the Board, including
overseeing corporate governance
matters and undertaking the evaluation
of the Board, its Committees and
the Directors.
With the Board, ensures that the Group’s
culture is aligned with the Group’s
purpose, values and strategy.
Sets and manages the Board’s agenda,
ensuring that Directors receive timely,
accurate and clear information on the
Group’s business and that they are fully
informed of relevant matters, thereby
promoting effective and constructive
debate and supporting a sound
decision-making process.
Oversees the Board’s consideration
of the Group’s strategy and the major
issues facing the Group.
Ensures that adequate time is available
for discussion and consideration
of the Group’s principal risks and
their mitigation.
Ensures that there is effective
stakeholder engagement and the
Board is kept aware of their views, in
particular those of shareholders.

Overall responsibility for the Group’s
performance and the delivery of the
Group’s strategy in consultation with
the Board.
Builds and leads an effective Executive
Committee and oversees the Group’s
business operations and management
of its risks.
Ensures that appropriate consideration
is given to the Group’s responsibilities
to all stakeholders, including its
shareholders, customers and
employees.

Gary McGann

Senior Independent Director
Ian Dyson

Available to liaise with shareholders
in exceptional circumstances when
they have concerns that have not
been addressed by the Chair, the
Chief Executive Officer or the Chief
Financial Officer.
Leads the annual performance review
of the Chair and assists the Chair with
the annual Board evaluation.
Provides advice and support to the Chair,
and serves as an intermediary for other
Directors if necessary.

Peter Jackson

Chief Financial Officer
Jonathan Hill

Manages the Group’s financial affairs,
including the Finance, Tax, Treasury,
Investor Relations, and Property and
Procurement functions, as well as
communication with capital markets.
Supports the Chief Executive Officer
in the implementation and achievement
of the Group’s strategic objectives.

Company Secretary
Edward Traynor

Ensures a good flow of timely
information within the Board and its
Committees and between
senior management and the
Non-Executive Directors.
Advises the Board on legal and
governance matters and ensures
compliance with Board procedures.
Arranges new Director inductions,
Board ongoing training and assists
with professional development
as required.
With the Chair and the Senior
Independent Director, reviews the
governance processes, including the
Board and Committee evaluation, in
terms of being fit for purpose and the
consideration of any improvements
to be made.
Supports the Remuneration
Committee with implementation of
Reward outcomes.
The Company Secretary is also General
Counsel and oversees the Legal and
Regulatory Affairs teams.

Governance

2019 Board Activities
2019 BOARD MEETINGS
ATTENDANCE

GOVERNANCE IN ACTION

Meetings
attended/
eligible to
attend

1

Board Directors

Responsible gambling

The Board oversees responsible gambling (RG) policies and governance and ensures
consistent direction and guidance is provided against our Group RG strategic
objectives. RG updates to the Board occur on a regular basis, including updates
from the Chief Executive Officer and Chief Risk Officer. The Risk Committee
reports to the Board on progress of the RG strategy as well as management of
risks impacting our reputation. In 2019, the Risk Management function has built
out the Group’s risk appetite for the management of its key risks, including RG.
Dedicated RG steering committees are also in place to focus on RG objectives and
strategy implementation, and these steering groups report into the local senior
management, and the Board Risk Committee. Further details on our RG strategy
are set out on pages 20 to 21.

1.	Comprises scheduled and unscheduled meetings.
2. 	Nancy Cruickshank was appointed to the Board
on 15 May 2019.
3.	Andrew Higginson was appointed to the Board
on 2 October 2019.
4.	Peter Rigby was unable to attend two Board
meetings called at short notice at a time when
Mr. Rigby had previously notified the Chair that
he was uncontactable due to a prior commitment.

Board meetings

10 Board meetings were held in 2019.
At each meeting, standing agenda items
included updates by the Chair, the Chief
Executive Officer, the Chief Financial
Officer and the Company Secretary. Each
Committee Chair also provided an update
on their respective Committee meetings
and copies of each Committee’s minutes
(to the extent that they contained no
items which would be a potential conflict
for other Directors) were circulated to
the Board. In addition, during the year
the Non-Executive Directors met on
a number of occasions without the
presence of Executive Directors .
Board and Committee members are
provided with papers in a timely manner
in advance of each meeting on a secure
electronic portal. Each Director ensures
that they have reviewed papers in advance
of the meeting. Exceptionally, if a Director
is unable to attend, comments are
provided to the Chair or the relevant
Committee Chair beforehand. If any
Director has unresolved concerns about
the Group or a proposed action, these are
recorded in the minutes of the meeting.
There were no such occasions in 2019.

Board visit: FanDuel

In June 2019, the Board visited FanDuel’s head office in New York. During the
visit, the Board received presentations on the launch of Sportsbook in FanDuel,
retail strategy, product and technology, as well as brand and marketing of the
FanDuel brands. The Board also participated in an employee engagement initiative,
‘Get to know the NED’, which provided employees with an opportunity to spend
time with the Non-Executive Directors to gain insight into the role of Non-Executive
Directors on the Board.

2019 Board Activities continued
Key activities of the Board in 2019
Strategic and
operational
matters

Through the Chief Executive Officer, updated on operational, business and strategic matters, including responsible
gambling as well as competitor analysis
Dedicated strategy sessions were held to consider the Group’s strategic opportunities and, challenges and as a result,
the updated strategy for the Group, as set out on pages 16 and 17, was approved by the Board
Various presentations on regional and functional updates and developments were received from Executive Committee
members and other members of senior management including actions, progress and risks in relation to the strategic
priorities
Approved the combination with The Stars Group and were provided with updates on progress in relation to
anti-trust clearances. Continued to monitor other opportunities for mergers and acquisitions as part of strategic
growth opportunities
Consideration of the various changes in regulation and regulatory headwinds across our markets and the impact on
our business
Updated on material communications with regulators and other regulatory and legislative bodies

Finance and
investor
relations

Through the Chief Financial Officer, updated on financial performance on a regular basis
Consideration of the 2020 budget in the context of the three-year plan
Reviewed and approved the results announcements and trading updates
Updated on investor views and shareholder relations, analysts’ reports and media updates, share register movements
and share price performance, as well as engagement with investors
Reviewed and approved the going concern and viability statements
Reviewed the Group’s financing and capital structure, and approved the Dividend Policy. The interim and final proposed
dividends for 2019 were specifically reviewed in the context of the Company’s distributable reserves (see Note 17 to the
Company Financial Statements on page 139)
Annual review of the Group’s tax strategy was undertaken and its publication on our website was approved

Governance,
risk and
governance
obligations

Reviewed developments in corporate governance, legal and regulatory updates, and considered enhancements to current
practices to meet the obligations therein
Undertook a fair, balanced and understandable review of the Annual Report and Accounts
Received updates on our internal control and risk management systems through reports from the Audit Committee and
Risk Committee Chairs
Agreed the process and actions from the Board and Committee effectiveness evaluation
Chair and Remuneration Committee Chair engaged with investors on governance and remuneration matters and
feedback on voting in relation to AGM 2019 matters
Reviewed and approved the Matters Reserved for the Board and each Committee’s Terms of Reference
Discussed the composition of the Board and its Committees, including succession planning and approved the
appointment of the two new Non-Executive Directors
Approved the Group’s updated Modern Slavery Statement for publication on our website

People
and culture

Updated on employee strategy, engagement, succession planning, talent management and diversity, particularly at senior
management level
Two designated Non-Executive Directors appointed for workforce engagement received quarterly updates from
workforce representatives on relevant workforce matters in their region, as well as under employee engagement during
Board site visits
Updated on employee remuneration structure and proposed changes to Remuneration Policy

58

Governance

Effectiveness
Director induction
and development

On joining the Board, all new Directors
undertake an induction programme. For
Non-Executive Directors this is managed
by the Chair and Company Secretary and
for Executive Directors, this is managed
by the Chief Executive Officer and the
HR function. The primary purpose of the
induction programme is to familiarise new
Directors with the Group’s operations and
business, the regulatory environment,
our stakeholders, as well as Directors’
duties and our governance practices.
Non-Executive Directors are encouraged
to visit our international offices to gain a
first-hand understanding of the culture.
While there is an overall induction
programme in place, this is tailored to
take into account a Director’s previous
experience, their responsibilities and,
for Non-Executive Directors, specific
Committee responsibilities. This is then
discussed with the Director themselves.

Ongoing training and
development and advice

The Chair and Company Secretary keep
under review the knowledge of each
Director and their understanding of the
Group to fulfil their roles on the Board
and its Committees. All Directors are
encouraged to request further information
and support they consider necessary
to fulfil their role. As part of ongoing
development, legal and regulatory updates
are provided as necessary for the Board
and each Committee by internal and
external advisers. We recognise that
our Directors have a diverse range of
experience, and we accordingly encourage
them to attend external seminars and
briefings that will assist them individually,
particularly in the case of Committee
Chairs. Additional knowledge is also
gained through updates and briefings
covering relevant areas for the business
and the Group.
Each Director may obtain independent
professional advice at the Company’s
expense in the furtherance of their duties
as a Director. Each Committee is supported
by the Company Secretary and his Deputy.
In addition, each Committee seeks
independent professional advice as required.

Time commitment

On appointment, Directors are advised
of, and required to make, the necessary
time commitment to discharge their
responsibilities effectively. No precise
timings are given as this will vary from
year to year depending on activities.
The Chair keeps under continual review
the time each Non-Executive Director
has dedicated to the Group and his
own time commitment is kept under
review by himself in conjunction with
the Nomination Committee. This is also
considered as part of the Board evaluation
process. The majority of Directors are
experienced board directors of public
companies and all have an understanding
of the time and intellectual commitment
that is necessary to fulfil their commitments
to the Group. Although Zillah Byng-Thorne
has both an executive and a non-executive
director position in addition to her being a
Non-Executive Director with the Group,
the Chair and the Board consider that
she is able to provide sufficient time to
her responsibilities. Like all our Chairs,
she spends the appropriate amount of
time outside of meetings preparing and
meeting with key internal stakeholders.
For any Director who hasn’t previously
been a director of a public company,
time expectations are highlighted on
appointment. The Board recognises the
2018 UK Code’s guidance and investors’
expectations that Directors give sufficient
time to discharge their responsibilities.
Attendance at Board and Committee
meetings is a priority. In addition to the
formal scheduled meetings, there is
significant other engagement by Directors.
This includes private individual meetings
with the Chair, the Chief Executive Officer
and other Directors, as necessary.
As part of enhancing business knowledge
and insight, Non-Executive Directors,
in particular Committee Chairs, had
meetings with other members of senior
management throughout 2019. Site visits
are actively encouraged and, in 2019, the
whole Board visited the FanDuel offices in
New York, which not only helped facilitate
knowledge of the operations in their office,
but also provided the Board with visibility
of talent at different levels and insight into
the culture within the broader business.
The Chair also spent time visiting our
operations in Hammersmith and Malta.

In respect of all Directors, the Chair
is satisfied that their other duties and
time commitments do not conflict with
those as Directors of the Group and
their involvement and commitment
is more than sufficient to meet their
Board obligations and responsibilities.
Executive Directors may hold one external
non-executive directorship (but not a
chairmanship) of a large public listed
company (or its equivalent) but must
obtain prior consent before accepting
such a position. Executive Directors may
retain the fees from any such directorship
where practical. This is considered
helpful to broaden and deepen their
skills, knowledge and experience.

Conflicts of interest

The Board has formal procedures in
place for managing conflicts of interest,
which include an annual confirmation to
this effect by all Directors. Directors are
required to give advance notice of any
actual or potential conflicts of interest to
the Company Secretary and the Board
should it arise. In the case of a conflict,
the relevant Director would be excluded
from the quorum and vote in respect of
any matters in which they have an interest.
These are formally considered on an
annual basis by the Board alongside any
other appointments held by Directors.

Election/re-election
of Directors

As part of the recommendation to
shareholders for the election/annual
re-election of individual Directors,
the skills and experience each Director
brings as well as their time commitment,
tenure and independence are considered
by the Nomination Committee. The
performance review and evaluation also
feed into this process.
The Board recommends the election
of Nancy Cruickshank and Andrew
Higginson and, for all other current
Directors, recommends their re-election
to shareholders at our upcoming AGM.

59



Nomination Committee Report
Role and responsibilities

The Committee considers the structure,
size and composition of the Board and
its Committees, advising on succession
planning and making appropriate
recommendations to ensure that the
Board retains an appropriate mix of skills,
experience, knowledge and diversity,
in line with the current and future needs
of the Board.

During 2019, the
Nomination Committee
focused on Board renewal,
the appointment of
Non-Executive Directors,
and Board diversity.
Ian Dyson
Nomination Committee Chair

2019 MEETING ATTENDANCE
Committee members1

Ian Dyson (Chair)
Michael Cawley
Gary McGann
Emer Timmons
Nancy Cruickshank2
Andrew Higginson3

Date
appointed

1.	All members are independent Non-Executive
Directors and the Chair of the Board was
independent on appointment to that role.
2.	Nancy Cruickshank was appointed on
15 May 2019.
3.	Andrew Higginson was appointed a member of
the Committee on 26 February 2020.

OTHER ATTENDEES
Other Directors, including the Chief
Executive Officer and Committee
Chairs, are invited to attend meetings
as appropriate in order to provide
relevant input.
The Company Secretary or his Deputy
acts as secretary to the Committee
and provides support as necessary.

60

 ommittee’s Terms of Reference:
C
www.flutter.com/investors/corporategovernance
 irectors’ biographies:
D
pages 52 and 53

Key activities undertaken
in 2019

Board composition and balance

We aim to have a Board that is well
balanced and has the appropriate skills,
knowledge, experience and diversity
for the current and future needs of the
business. Whilst the tenure of individual
Directors is taken into account, we
are keen to strike a balance between
continuity and succession for the Board
as a whole. Longer-serving Directors
bring valuable experience and working in
conjunction with newer appointees, it is
believed that the Board has an appropriate
balance, a reasonable level of diversity
and continues to operate effectively.

Skills and experience

For balanced and effective decisionmaking, it is important that the Board has
a broad range of skills and experience.
The Committee maintains a skills
matrix of the Board to identify areas for
enhancement and allows the mapping
of the Board’s skills as a whole against
the evolving needs of the business,
and ensures that any future search for
Non-Executive Directors is focussed.
This assists in defining the attributes
required as part of the search for new
Non-Executive Directors.

Board renewal

During the year, the Committee
recommended to the Board that
Nancy Cruickshank be appointed as a
Non-Executive Director (May 2019) and
that Andrew Higginson be appointed as a
Non-Executive Director (October 2019).
In order to identify shortlists for these
roles, the areas of focus were digital
experience, commercial, retail experience,
FTSE 100 experience and improving
Board diversity. The biographies of the
Directors are set out on pages 52 to
53. Executive search agents, Russell
Reynolds Associates, were used to identify
candidates during the course of 2019.
Russell Reynolds Associates were also
engaged to facilitate the 2019 external
evaluation of the Board, its Committees
and Directors. Russell Reynolds Associates
have no other connection with the
Company or any of its individual Directors.

Diversity

The Board’s progress against our Board
Diversity Policy is set out in the Board
Diversity Report on page 54.
I nformation on diversity initiatives across
the Group and our gender statistics are set
out on pages 23 to 27

Tenure and independence

The Board is committed to ensuring that
it continues to comprise a majority of
independent Non-Executive Directors
who objectively challenge management.
The Committee has carried out its annual
assessment of independence of each of
the Non-Executive Directors, taking into
account the circumstances set out in
the 2018 UK Code, namely whether the
Directors are independent in character
and judgement and free from relationships
or circumstances which are likely to affect,
or could appear to affect, the Directors’
judgement. The Committee is satisfied
that each of the Non-Executive Directors
remains independent.

Governance

Effectiveness of the
Committee

This is monitored by me and was also
specifically reviewed as part of the Board
and Committee evaluation process.
It was considered that the Committee
was operating effectively and focusing
on the key areas within its remit.

Focus for 2020

During 2020, the Committee will continue
to focus on Board diversity, succession
planning for the Executive Committee,
and the Board in general, and oversee
diversity initiatives and progress
throughout the organisation.
Ian Dyson
Nomination Committee Chair
26 February 2020

Board and Committee
evaluation

Given the last externally facilitated
evaluation was held in 2016, in line with
the requirements of the 2018 UK Code,
the 2019 Board evaluation was externally
facilitated. Russell Reynolds Associates
were engaged to carry out the external
evaluation of the effectiveness of the
Board, its Committees and Directors.
The external evaluation considered:
the composition, performance
and cohesion of the Board and its
Committees, reflecting the current
and future business model and strategy
of the Group and risk oversight;
an assessment of the individual
competence of each member
of the Board of Directors;

an assessment of the roles and
responsibilities and evidence of
the strengths of the Board and its
Committees;
an evaluation of the Board’s approach to
leading the development of the culture
and values across the Group;
identification of any areas inhibiting the
Board and its Committees from being
fully effective; and
the quality of materials presented
and operation of Board meetings.
During a Board meeting held on
24 February 2020, the Chairman,
supported by Russell Reynolds Associates’
representatives, presented a report on
the 2019 Board performance evaluation
for consideration by the Board. During
2020, the Nomination Committee will
keep under review progress made against
the actions arising from the 2019 external
Board evaluation.

2018 Board and Committee internal evaluation:
actions and progress

The actions from the 2018 evaluation and progress against these are summarised below:
2018 evaluation actions

Continue to review the relevance and
conciseness of Board and Committee
papers while ensuring sufficient depth
of information

Progress

The format of reporting information to
the Board and its Committees continued
to improve during 2019, with a focus on
sufficient and relevant information.
The Board will continue to keep under
review the quality of information presented
to support its decision-making

To maximise the amount of time at Board
meetings allocated to discussing key
business/market developments, risks
and challenges

This was achieved through focused
agenda planning and inputs from the
Risk Committee

As part of the ongoing education and
training programme for Directors,
have more internal and externally
facilitated presentations giving particular
consideration to external industry and
regulatory changes and disruptive
technology risks

There has been a broad spectrum of
Board presentations both from within
the business and by external advisers and
experts, focusing on ongoing business
awareness of our industry and the broader
environment, for example capital markets
and investor perceptions of the business, a
detailed cyber security session and broader
commercial presentations

To continue to focus on Board composition
and succession planning with an emphasis
on diversity of gender, ethnicity, skills
and experience, to enable a continuingly
effective Board capable of supporting the
business in the near and long term

Nomination Committee meetings have
focussed on succession planning for the
Executive and Non-Executive Directors,
with a particular focus on the objectives of
the Board Diversity Policy

61



Nomination Committee Report continued
2019 Board and Committee external evaluation
Questionnaire

Environment, Social
and Governance
(‘ESG’), including RG,
culture and talent
management

Director
performance

Strategic alignment and risk oversight
Meeting processes and materials

Recruitment, selection and succession planning

Environment, social and governance, culture and talent management
Leadership, Board culture and effectiveness
Individual Committee effectiveness

One-to-one interviews were held with the external evaluator and each Director and the Company Secretary.
These sessions focussed on the outcome of the questionnaires and enabled further feedback on individual contribution
and collective performance of the Board
In addition to the external evaluator interviews, throughout 2019, the Chair kept under review the performance
of all Non-Executive Directors, having individual meetings and providing feedback as appropriate

The Chair provided feedback to the Chief Executive Officer on his performance having discussed with the other Directors

Results

The Chief Executive Officer provided feedback to the Chief Financial Officer on his performance having also discussed
with the other Directors

The external evaluators presented their report to the Board which summarised the feedback and highlighted key themes.
This was discussed with the Chair of the Board and Chair of the Nomination Committee prior to being presented to
the Board
Actions were discussed and agreed with the Board and progress against these will be monitored by the Nomination
Committee and the Company Secretary during 2020

Conclusion

Each Committee Chair also received feedback on their respective Committee in order to continue to improve
their effectiveness
Overall, it was concluded that the Board functions well and each of its Committees were effective with strong
engagement, allowing adequate time to discuss areas within their remit

There is a strong cohesive relationship between Directors and debate is appropriate. Board members are considered to
be making an effective contribution to their roles, bringing relevant knowledge, diversity of perspective, and an ability and
willingness to challenge

Focus Areas
for 2020

There is a positive and supportive culture of openness which is facilitated by the Chair. The Chair continues to perform
very effectively, both in respect of Board matters and in relation to other aspects of his role as Chair, taking into account
the benefit for all stakeholders, including shareholders

Board composition and succession planning: Taking into account the appropriate Board composition and size, to focus
on sufficient succession plans being in place to ensure the smooth transition for regular Board refreshment, also ensuring
an appropriate balance of skills and experience based on strategy-led definition of required competencies, diversity and
board leadership roles
Executive succession planning: To review succession plans to ensure they are appropriate to support development
of a diverse pipeline of Executives across the Group

Risk management, especially RG and other ESG matters: To continue to focus on oversight of RG strategy across the
Group, including its broader industry engagement, its risk to the reputation and business model, and also to focus on
other areas of ESG

Maintaining/rebuilding strong culture after the new Board has been appointed: To continue to foster a highly effective
Board culture while taking account of changes to Board composition
Oversight of merger integration and talent management: To utilise insights and learnings from previous mergers
to ensure successful integration of the proposed merging companies

62

Governance

Audit Committee Report
2019 MEETING ATTENDANCE
Committee members1

Michael Cawley
(Chair)

Jan Bolz
Zillah Byng-Thorne3
Ian Dyson
Emer Timmons

A key focus for the
Committee during 2019
was to ensure appropriate
governance and oversight
over the integrity of the
Group’s financial reporting
and the internal control
and risk management
frameworks.
Michael Cawley
Audit Committee Chair

Attended/
Date eligible to
appointed
attend2

1.	All members are independent Non-Executive
Directors.
2. 	In addition, the Committee also met with the Risk
Committee members for an annual joint Audit
and Risk Committee meeting.
3.	Zillah Byng-Thorne was unable to attend one
meeting due to a prior commitment which was
notified in advance.

OTHER ATTENDEES
Only members of the Committee have
a right to attend Committee meetings.
Regular attendees who attend all
meetings by invitation include the
Chief Executive Officer, Chief Financial
Officer, the Group Director of Internal
Audit and the Group Director of Finance
and Corporate Controller. The external
auditors, KPMG, also attend Committee
meetings and have direct access to the
Chair of the Committee.
The Company Secretary, or his Deputy,
acts as secretary to the Committee and
provides support as required.
In addition to the Group Director of
Internal Audit, who presents at every
meeting, and the Chief Financial Officer,
who updates the Committee on key
financial matters, in 2019 other
presenters included:
Director of Group Accounting and
Reporting
Director of Tax
Group Head of Treasury and Client Funds
Property and Procurement Director
Director of Group Finance Operations
Chief Executive Officer, Sportsbet
Chief Information Officer, Sportsbet

Role and responsibilities

The primary role of the Committee is
to provide governance and oversight
over the integrity of the Group’s financial
reporting and internal control and
risk management frameworks. It also
monitors the performance of internal
and external audit.
 ommittee’s Terms of Reference:
C
www.flutter.com/board-committees

To discharge its responsibilities effectively,
the Committee has unrestricted access
to the Group’s external auditor, KPMG,
and the Internal Audit function, with whom
it meets throughout the year with, and
without, management, as appropriate.
These meetings ensure that there are no
restrictions on the scope of their audits,
and allow discussion of any matters
that the internal or external auditor
might not wish to raise in the presence
of management.
The Committee may obtain, at the
Group’s expense, outside legal or other
professional advice needed to perform
its duties.
As Chair of the Committee, I report to the
Board on the key outcomes from each
meeting and on how the Committee has
discharged its duties. The minutes of all
Committee meetings are circulated to
the Board for information.
Zillah Byng-Thorne, Ian Dyson and I
all have “recent and relevant financial
experience” as required under the 2018
UK Code. All members of the Committee
are independent Non-Executive Directors
with financial and commercial experience
relevant to either the digital and/or
consumer industry and the broader
commercial environment within which we
operate. Therefore, the Committee, the
Nomination Committee and the Board are
satisfied that the Committee, as a whole,
has competence relevant to the sector in
which the Group operates.
 irectors’ biographies:
D
pages 52 and 53

63



Audit Committee Report continued
Fair, balanced and
understandable

The Board is responsible for ensuring
that the Annual Report and Accounts,
as a whole, is fair, balanced and
understandable and provides
the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy. At the Board’s
request, the Committee assisted
it with this review. In its opinion,
it considered this to be the case.
As part of this review, the Committee:
reviewed a draft of the whole
Annual Report and Accounts at a
meeting in advance of giving its final
opinion and ahead of final approval
by the Board. The Committee
was provided with all relevant
information, received briefings
from management on how specific
issues are managed and challenged
management as required;
received confirmation that each
Committee had signed off on each
of their respective Committee
reports and reviewed other sections
for which they have responsibility
under their Terms of Reference;
was provided with a confirmation
by management that they
were not aware of any material
misstatements in the Financial
Statements made intentionally to
achieve a particular presentation;
and
was provided with findings from
KPMG that it had found no material
audit misstatements that would
impact the unqualified audit
opinion during the course of its
work. The Committee confirms
that it is satisfied that KPMG, as
the external auditor, has fulfilled
its responsibilities with diligence
and professional scepticism. After
reviewing the presentations and
reporting from management and
consulting where necessary with
KPMG, the Committee is satisfied
that the Financial Statements
appropriately address the critical
judgements and key estimates
(both in respect of the amounts
reported and the disclosures).

64

Key activities undertaken
in 2019

The Committee met six times in 2019.
In addition, the members of both the Audit
Committee and the Risk Committee met
together for the annual joint Audit and
Risk Committee meeting. Meetings are
generally scheduled around the financial
reporting cycle to allow the Committee
to discharge its duties in relation to the
Financial Statements. The Committee’s
activities in 2019 included:

Financial reporting

Monitoring the integrity of the
Financial Statements and the formal
announcements relating to the Group’s
financial performance.
Reviewing significant financial
reporting judgements.
Assessing and reporting on the Group’s
viability in line with the 2018 UK Code
requirements and the appropriateness
of the going concern basis.
Considering the report of the external
auditor on the Financial Statements
and the year-end audit.
Ensuring compliance with relevant
regulations for financial reporting and
the 2018 UK Code.

Reporting and governance

Advising the Board as to whether,
taken as a whole, the Annual Report
and Accounts is fair, balanced and
understandable and provides the
necessary information to shareholders
to assess the Group’s position
and performance, business model
and strategy.
Reviewing the Committee’s Terms
of Reference.
Reviewing the Committee’s schedule of
proposed matters for its 2020 meetings.

Internal Audit

Monitoring and reviewing the
effectiveness of the Group’s Internal
Audit function.
Considering the results of internal
audits undertaken and management’s
responses to the findings, including
updates on actions identified.
Approving any changes to the Internal
Audit Plan for 2019 and approval of the
Internal Audit Plan for 2020.
Reviewing and approving amendments
to the Internal Audit Charter.

Risk management and internal
control

Assessing the appropriateness of the
Group’s overall risk management and
internal control framework.
Ensuring that there is a robust process
in place to monitor and evaluate the
principal risks to which the Group is
exposed, including those that would
threaten its business model, future
performance, solvency or liquidity.
Reviewing the Group’s whistleblowing
arrangements by which employees
may, in confidence, and if they wish,
anonymously, raise concerns about
possible improprieties in matters of
financial reporting or other matters
and any outputs therefrom.
Reviewing processes for detecting fraud,
misconduct and control weaknesses
and considering responses to any
such occurrence.

External Auditor

Reviewing and making a recommendation
to the Board in relation to the continued
appointment of KPMG as the external
auditor and, as a Committee, approving
KPMG’s remuneration and terms of
engagement for the 2019 financial year.
Reviewing and approving the External
Audit Plan for 2019 presented by KPMG,
including consideration of its key areas
of risk and the audit approach applied by
KPMG, the proposed areas of coverage
of KPMG’s audit and any changes thereto
during the year.
Considering KPMG’s updates during
2019 in relation to the External Audit
Plan and related actions.
Evaluating the performance of KPMG,
including its independence and
objectivity and monitoring any
non-audit services provided by KPMG.
Reviewing and approving the Group’s
Non-Audit Services Policy (the NonAudit Policy) and, in advance, approving
any non-audit services and related fees
to be provided by KPMG during 2019.

Governance

Financial reporting and significant financial issues

The role of the Committee in relation to financial reporting is to monitor the integrity of the Financial Statements at half year and at year
end as well as formal announcements relating to the Group’s financial performance. The Committee has considered whether accounting
standards are consistently applied across the Group and whether disclosures in the Financial Statements are appropriate and sufficient.
Following discussions with management and KPMG, the Committee has determined that the key risks of misstatement of the Group’s
Financial Statements are in relation to the following:
Matter considered

Revenue recognition

The Group has a number of income streams across its
online and retail operations with a high prevalence of cash
and card payment transactions. Effective operational and
fraud-related controls from both an IT systems and financial
control perspective assist in ensuring the accuracy and
completeness of these income streams.

Action

The Committee gained comfort over this area through discussion with the Chief
Financial Officer and the Group Director of Finance and Corporate Controller
in relation to the operation of key financial controls such as cash and revenue
reconciliations.

The Group Head of Treasury and Client Funds presented to the Committee on
treasury and banking controls in operation, which ensure the accuracy and integrity
of funds held in the Group’s bank accounts and client funds accounts.

The Committee also gained an understanding of, and challenged, the work performed
by KPMG, including its assessment of the key IT controls in operation in relation to the
Group’s IT systems.
As a result of the above procedures, the Committee is satisfied that there are
appropriate controls and processes in place across the Group to ensure the
completeness and accuracy of reported income.

Tax provisioning and legacy tax assessment
in Germany and Greece

The Group operates in a heavily regulated industry across
a number of geographical jurisdictions. Regulation and
compliance continue to evolve in all of our markets.
Compliance with the laws and regulations in each jurisdiction
could have a direct effect on material amounts reported
and disclosed in the Group’s Financial Statements and is
therefore a key risk area considered by the Committee.
This includes matters such as tax, where judgement and
estimation are required to interpret international tax laws
relating to gaming, transfer pricing as well as point of
consumption taxes, and the way these taxes interact within
other legislation in each jurisdiction, in order to identify
and value provisions in relation to gaming and other taxes
as applicable.
The Group has two legacy tax assessments in Germany
and Greece which it strongly disputes and is in the process
of appealing. These amounts are not considered liabilities
for the Group and no provision has been made for amounts
assessed or potential further assessments. Pending the
outcome of these appeals, the Group paid the Greek tax
assessment (including the penalties and interest) of €15m
and the €30.6m German tax assessment in 2019, with
the late payment interest to be paid in due course. These
amounts have been recorded as non-current receivables on
the balance sheet.

The Directors keep abreast of all known or potential regulatory, tax or legal claims
against the Group that may arise from the Group’s operations. The Chief Risk Officer
reports to the Risk Committee on the processes in place to ensure compliance with
laws and regulations in relation to gambling and gaming licences. The Committee Chair
is a member of the Risk Committee and the Risk Committee Chair is a member of this
Committee and she also provides an update to the entire Board on the discussions at the
previous Risk Committee meeting with minutes circulated to all Directors. Accordingly,
this Committee is kept fully apprised of any engagements with regulatory authorities.
Internal Audit reports covering compliance with laws and regulations are reviewed
by this Committee. There is an annual update to the Committee from the Group’s
Director of Tax in relation to the Group’s tax compliance, with further updates on specific
matters by him or the Chief Financial Officer as necessary. The Group also engages
PricewaterhouseCoopers (PwC) as our main external tax adviser. In relation to the
treatment of the legacy tax assessments in Germany and Greece, the Group received
regular updates from the Chief Financial Officer and the Group’s Director of Tax. In
addition the Group received legal advice which supports the position in the Financial
Statements. The combination of independent advice, our in-house expertise and the
procedures and reporting provided by KPMG assisted in providing assurance to the
Committee that the processes, assumptions and methodologies used by the Group in
relation to taxation amounts reported and disclosed in the Group’s Financial Statements
are appropriate.
In addition, KPMG reported to the Committee on the results of its procedures which are
designed to obtain sufficient appropriate audit evidence regarding compliance with the
provisions of those laws and regulations generally recognised to have a direct effect on
the determination of material amounts and disclosures in the Financial Statements.

The above procedures provided the Committee with assurance that sufficiently robust
policies and procedures are in place to prevent and detect instances of non-compliance
with laws and regulations that could have a material impact on the amounts reported in
the Group’s Financial Statements.

Internal Audit

Internal Audit is an independent assurance function for the Group whose remit is to provide independent and objective assurance that
the key risks to the Group are appropriately identified and managed and that key controls are operating as expected. It reports directly
into the Committee. The Committee also annually approves the Internal Audit Charter.
The Group Director of Internal Audit attends and reports at every Committee meeting, has direct access to all Committee members,
and the Committee Chair also met with the Group Director of Internal Audit outside of Committee meetings throughout 2019.
The Committee approved the 2019 Internal Audit Plan in December 2018 and this was assessed by the Committee to ensure it provided
adequate coverage across the Group and was risk-based in its approach. Changes are made to this plan based on emerging risks or
changes in the business during the year; any changes are reviewed and agreed by the Committee.

65



Audit Committee Report continued
Progress against the Internal Audit
Plan was reported to the Committee
throughout 2019 and is considered in
detail at the half year and after the year
end. The Committee also reviewed the
specifics of audit findings and the progress
of the business in addressing audit
recommendations. Internal Audit regularly
reported to the Committee on key risk
themes, methodology enhancements
and on the overall risk management
frameworks in the business.
A strategic review of the Internal Audit
function was also performed in 2019
by a third party and the Committee
made independent enquiries of KPMG
and of senior management as to the
performance of Internal Audit.
Taking into consideration all of these,
the Committee is satisfied as to the
Internal Audit function’s performance.

Risk management

In accordance with the 2018 UK Code,
the Board is required to describe the
principal risks to which the business is
exposed and the activities undertaken
to mitigate against them. The Board
must also confirm that it has carried out
a robust assessment of the principal risks
facing the Group, including those that
would threaten the business model, future
performance, solvency or liquidity of the
business.
It is required to explain how it has assessed
the prospects of the Group, over what
period it has done so, why this period
is considered appropriate and whether
the Board has a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities if they fall
due over the period of their assessment,
drawing attention to any qualifications or
assumptions as necessary. The Board
has reported on these requirements
on page 94.
This Committee and the Risk Committee
together support the Board in relation
to monitoring the adequacy and
effectiveness of the risk management
systems. During 2019, this Committee
oversaw the third line function and
reviewed the output of the Internal Audit
function as well as the management of
financial risks. The Committee also reviews
the reports presented by the external
auditor, KPMG. The Risk Committee,
reviewed the work of the second line
functions and ongoing operational risk
management. To ensure that there is

66

a full review of the risk management
process as a whole, I am a member of
the Risk Committee and the Chair of the
Risk Committee is also a member of this
Committee. We also have an annual joint
meeting of the Audit and Risk Committee
at which a review of the risk management
process, as a whole, is undertaken, for
its appropriateness and effectiveness in
identifying the principal risks and reviewing
how those risks are being managed and
mitigated. The Committees also rely on
the work of internal and external audit
to ensure that appropriate measures
are taken to address risks as they are
identified or as their risk profile changes.
As part of the overall risk management
framework, management maintains
divisional risk registers. This Committee
and the Risk Committee, together,
at their annual joint meeting, formally
consider these and the appropriateness
of management’s risk appetite.
Understanding and managing
the Group’s principal risks:
pages 45 to 48
Risk Committee Report:
pages 68 and 69

Code of Ethics, Anti-bribery
and Whistleblowing

Our Code of Ethics sets out the standard
of conduct and behaviour expected of our
employees throughout the organisation.
We have in place policies, procedures,
management systems and internal controls
to prevent bribery and corruption occurring,
including policies on whistleblowing, gifts
and hospitality, and anti-bribery and
corruption. The formalised Whistleblowing
Policy and procedure encourages
employees to raise issues regarding
possible improprieties in matters of
financial reporting or other matters on
a confidential basis. This Committee
monitors its effectiveness and is advised
of notifications made. The Committee is
satisfied that the whistleblowing process
is working appropriately.
Group Code of Ethics: page 26

External Auditor: KPMG

There are a number of areas which the
Committee considers in relation to KPMG
as the External Auditor – its performance,
reappointment, independence and
objectivity and, remuneration.

Performance

In April 2019, KPMG presented its 2019
audit plan and strategy to the Committee.
This Plan provided detail on the proposed
audit approach and methodology, the
materiality level intended to be used
during the audit and highlighted the areas
considered as having a higher risk due to
the level of judgement involved and the
potential impact of a misstatement
on the Group Financial Statements.
The areas of highest risk were considered
to be revenue recognition and the
German and Greek legacy gaming tax
assessment. In addition, KPMG highlighted
that, as required by Auditing Standards,
management override of controls
was also included as a significant audit
risk. The Committee reviewed and
appropriately challenged the conclusions
reached by KPMG before agreeing its
proposed Audit Plan’s scope and approach.
In relation to the 2019 financial year,
KPMG presented at each meeting and
presented specific detailed reports to
the Committee on:
its 2019 half-year review in July 2019;
its update to its 2019 Audit Strategy in
October 2019;
its 2019 IT audit in December 2019; and
its 2019 financial year audit in
February 2020.
The Committee provided appropriate
challenge to the work performed,
assumptions made and conclusions
drawn, particularly in relation to the
higher-risk areas identified above.
The Committee meets privately with
KPMG at least annually without any
members of management or the
Executive Directors being present.
The Committee took into account
the following factors in assessing the
performance of KPMG and further to
this was satisfied with its performance:
the quality and content of the deliverables
presented to the Committee;
the ability of KPMG to respond appropriately
to challenges raised by the Committee;
the progress achieved against
the agreed Audit Plan, and the
communication of any changes to
the plan in respect of matters such
as emerging risks;
the competence with which it
handled key accounting and audit
judgements and the manner in which
it communicated the same;

Governance

the outcome from an internal
management review of its performance;
its compliance with relevant ethical and
professional guidance on the rotation
of audit partners; and
its qualifications, expertise and
resources.

Reappointment and length
of service

The Committee is responsible for making
recommendations on the appointment,
reappointment and removal of the
external auditor to the Board. It also
keeps under review whether the external
auditor is, and remains, objective and
independent. KPMG Ireland was appointed
as the Group’s auditor in 2002. The audit
was last tendered in 2011 for the year
ended 31 December 2011. Post the
merger with Betfair, KPMG LLP (UK)
was the Group’s auditors for the years
ended 31 December 2016 and 2017.
The Committee reviewed the performance
and effectiveness of KPMG and concluded
that it continues to provide an effective
audit service and that there are no compelling
reasons for change. The Committee is
mindful of the requirements of the EU
Directive on audit reform. Under the
Directive’s transitional arrangements,
KPMG can continue to act as the Group’s
external auditor for the period up to
31 December 2023 at which point the
Committee will need to recommend the
appointment of a different audit firm.
Having reviewed the effectiveness of
KPMG, the Committee concluded that it
was not in the best interests of the Group
to undertake an external audit tender at
this time, but we will continue to monitor
the performance of KPMG and a tender
will be undertaken when appropriate
and, in any event, as required under the
current legislation.
Accordingly, the Committee
recommended the reappointment of
KPMG to the Board (which was accepted)
for the 2020 financial year. Cliona Mullen
is the current lead audit partner and 2018
was her first year in this role.

Independence and the provision of
non-audit services

The Committee is responsible for
implementing appropriate safeguards
where the external auditor also provides
non-audit services to the Group.
In recognition of the fact that the
perceived independence and objectivity of
the external auditor may be compromised

where it receives fees for non-audit
services, the Non-Audit Policy operated
during 2019, formalising the process to
be followed when considering whether
to engage the external auditor for
non-audit services. Any engagement
of the external auditor for non-audit
work must satisfy applicable rules and
legislation, including Statutory Instrument
SI 312 and the IAASA Ethical Standard
for Auditors (Ireland).
KPMG is accordingly precluded from
engaging in non-audit services that would
compromise its independence, would
violate any laws or regulations affecting
its appointment as the external auditor,
or would lead a reasonable third party to
regard the objectives of the proposed
non-audit service as being inconsistent
with the external audit. The Non-Audit
Policy specifically calls out services that
the external auditor cannot provide to
the Group. No approval is given by the
Committee for the provision of prohibited
services. Beyond this all engagements
of KPMG are formally approved by the
Committee in advance.
The Group’s policy is that the total fees
for non-audit services to the Group
shall be limited to no more than 70%
of the average of the fees paid for the
last three consecutive years for auditrelated fees paid to KPMG Ireland and
overseas offices. During 2019, KPMG
Ireland were engaged to perform certain
agreed upon procedures in relation to
stock market filing requirements for
the proposed combination with The
Stars Group. The Audit Committee
specifically considered the impact of this
on KPMG’s independence as auditors and
were satisfied that it was appropriate to
engage KPMG, having taken into account
the potential impact to the auditors’
independence and the procedures put
in place to reduce them to an acceptable
level. During 2019, the Committee
monitored the extent to which KPMG
was engaged to provide non-audit
services and considered and approved the
engagement as required under the NonAudit Policy. An analysis of the non-audit
fees provided by KPMG during 2019 is set
out in Note 7 to the Consolidated Financial
Statements out on page 125. For 2019,
non-audit fees paid to KPMG amounted
to 38% (2018: 37%) of audit-related
fees paid to the Irish firm and overseas
offices. The Committee is satisfied that
the non-audit services provided and fees
paid in relation to these do not impair

KPMG’s independence and objectivity and
there are sufficient safeguards in place in
respect of this.

Hiring of former employees of the
external auditor

In order to ensure the independence
and objectivity of the external auditor,
KPMG, any offer of employment to a
former employee of the audit firm, within
two years of the employee leaving the
audit firm, must be pre-approved by the
Committee where the offer is made in
respect of a senior executive position.
Key audit partners will not be offered
employment by the Group within two
years of undertaking any role on the
audit. Other key team members will not
be offered employment by the Group
within six months of undertaking any role
on the audit. Other employees of KPMG,
who accept employment by the Group
must cease any activity on the Group’s
audit immediately when they tender
their resignation to KPMG. In order to
ensure objectivity, any partner previously
involved in the audit of the Group’s parent
Company or its subsidiaries shall not be
recruited in the Group Finance function.
The Committee is satisfied with,
the independence, objectivity and
effectiveness of KPMG as the external
auditor, and with the external audit
process as a whole.

Effectiveness of the
Committee

The operation, performance and
effectiveness of the Committee is
monitored by me throughout the year,
and was also specifically reviewed as
part of the external evaluation process
(see page 62), and I am pleased to confirm
that the Committee continues to
operate effectively.

Focus for 2020

The Committee will continue to monitor
governance and ensure adequate oversight
over the integrity of the Group’s financial
reporting and the Group’s internal control
and risk management frameworks as well
as the Internal Audit function and KPMG
as the external auditor.
Michael Cawley
Audit Committee Chair
26 February 2020

67



Risk Committee Report
2019 MEETING ATTENDANCE
Committee members1

Zillah ByngThorne (Chair)
Michael Cawley
Gary McGann
Peter Rigby
Nancy
Cruickshank3

A key focus for the
Committee is to oversee
our responsible gambling
strategy and its progress,
as well as the management
of risks impacting our
reputation.
Zillah Byng-Thorne
Risk Committee Chair

Role and responsibilities

The Committee is responsible for
reviewing the reputational impact of the
Group’s activities and how these are
being managed; the Group’s responsible
gambling (RG) strategy and objectives; the
Group’s corporate social responsibility
(CSR) strategy and objectives; the Group’s
risk management activities for assurance
that these are appropriate and in line with
the risk appetite of the Group; and the
Group risk register (together with the
Audit Committee).
Committee’s Terms of Reference:
www.flutter.com/board-committees

The Committee’s focus in 2019

Attended/
Date eligible to


1.	All members are independent Non-Executive
Directors and the Chair of the Board was
independent on appointment to that role.
2.	In addition, the Committee also met with the
Audit Committee members for an annual joint
Audit and Risk Committee meeting.
3.	Nancy Cruickshank was appointed on 15 May 2019.

OTHER ATTENDEES
Only members of the Committee have
a right to attend Committee meetings.
Regular attendees who attend all
meetings by invitation include the Chief
Executive Officer, the Chief Financial
Officer and the Chief Risk Officer.
The Company Secretary, or his Deputy,
acts as secretary to the Committee and
provides support as required.
In 2019, presenters included:
Chief Technology Officer
Group Director of Global Cyber Security
General Counsel and Company
Secretary
Chief Executive Officer, PPB
Group Director of Risk Management
Group Director of Compliance
Managing Director of Customer
Operations, PPB
Director of Responsible Gambling
Programme, PPB

The key areas of focus included monitoring and reviewing the Group’s:
RG strategy and the progress in its execution;
risk management activities, including review of Group’s regional risk registers
and monitoring of Group risk appetite;
compliance activities;
bookmaking risks limit and policy;
risk and trading activities;
CRS strategy and progress; and
Annual Assurance Statement for the Gambling Commission, ahead of
recommendation to the Board.

68

Key activities undertaken
in 2019
Compliance

The Committee regularly received
updates in relation to the Group’s ongoing
compliance with its regulatory licences
and legal obligations and considered the
processes in place to manage and mitigate
the risks related to relevant operational
matters. These included anti-money
laundering, anti-bribery, betting integrity,
marketing compliance and data protection
and privacy. The Committee also reviewed
formal reports every six months from the
Data Protection Officer and the Money
Laundering Reporting Officer.
The Committee is kept informed of
substantive communications with regulators
and management of such relationships.
Together with the Audit Committee,
the Committee was updated on the
Group’s Code of Ethics and related
standards and policies, including those
in relation to whistleblowing, gifts and
hospitality, anti-bribery and corruption,
and business conduct, and how these are
communicated to all employees, including
mandatory training.
Group Code of Ethics: page 26

Responsible gambling

The Board considers preventing
gambling-related harm to be an essential
part of behaving responsibly as a business
and we have in place, and continue to
enhance, wide-ranging policies and
tools and support mechanisms to help
our customers manage their gambling.
Therefore, it continues to be a key focus
area of the Board. In addition to RG
being a standing agenda item as part of
the Chief Executive Officer’s update at
Board meetings, this Committee spends
considerable time reviewing the strategic
objectives and priorities for the Group
and the progress being made in relation
to agreed actions and workstreams, as
well as the monitoring of risks. Related
presentations provide the opportunity
to receive updates on the progress being
made, for example on RG operating
controls and the continual improvements
being made in relation to interactions
with customers.
Responsible gambling and corporate social
responsibility: pages 20 to 23

Governance

Risk management

This Committee, alongside the Audit
Committee, supports the Board in
monitoring the Group’s risk management
processes for their appropriateness
and effectiveness in identifying the
principal risks. As part of the overall risk
management framework, management
maintains individual divisional risk registers
for each of PPB, Sportsbet and FanDuel.
These detail the significant risks facing
the business and consider the potential
likelihood and impact of these risks
materialising once the existence of controls
and mitigating factors are considered.
Understanding and managing our
principal risks: pages 45 to 48

The Committee reviews how our risks are
being managed and mitigated and has
oversight of key second line functions
such as Risk Management, Compliance
and Information Security. During 2019,
the Committee met with, and received,
detailed presentations from various key
functions to assess the management
of the main operational risks, including
specific updates in relation to the FanDuel
and Sportsbet operations, as well as
updates on IT-related risks, commercial
risks and operating risks among others.
The Audit Committee has oversight
of the third line function (see the Audit
Committee Report). The Executive

Committee manages the specific risks
associated with its areas of responsibility
and is supported by the second and third
line functions.
To ensure that there is a full review of the
risk management process as a whole,
I am a member of the Audit Committee
and Michael Cawley (Audit Committee
Chair) is a member of this Committee
and updates are provided by each
Committee Chair at the Board meeting.
We also hold at least one joint meeting of
the Audit and Risk Committees annually
at which we specifically review the risk
management process, as a whole, for
its appropriateness and effectiveness
in identifying the principal risks and how
those risks are being managed and
mitigated, the Group’s risk registers, and
the appropriateness of management’s
risk appetite. This is then reported to the
Board in order to assist with the Board’s
assessment and approval.
Audit Committee Report:
pages 63 to 67

Corporate social responsibility

The Committee was also updated on
the objectives and strategy in respect
of CSR and progress in the delivery of
agreed actions. As detailed in the Strategic
Report, our CSR addresses the following
topics: behaving responsibly; reducing

our environmental impact; promoting
sport; empowering our people; supporting
charities; and promoting diversity
and equality.

Effectiveness of the
Committee

This is monitored by me and was also
specifically reviewed as part of the external
evaluation process (see page 62). All
feedback received is used to improve the
Committee’s effectiveness particularly
as the scope and remit of the Committee
evolves in a very dynamic market. I am
pleased to confirm that the Committee
continues to operate effectively.

Focus for 2020

During 2020, the Committee will continue
to focus on the Group’s management
of key strategic risks. This includes, for
example, progress against its RG strategy,
cyber and other technology risks and
the regulatory environment and related
risks. The Committee will also undertake
a detailed review of the robustness of our
risk management processes for current
and emerging risks.
Zillah Byng-Thorne
Risk Committee Chair
26 February 2020

GOVERNANCE IN ACTION

Consideration and management of cyber risks
Cyber threats continue to be a feature
of operating digital businesses
and the Board is acutely aware of
these risks. Therefore, time continued
to be spent in 2019 discussing and
monitoring cyber risks and security, and
the progress in mitigating these risks
and preventing any possible attacks
or related material adverse incidents.
Business presentations from the Group
Chief Technology Officer and the Group
Director of Global Cyber Security were
provided. Management of cyber
risks includes:
a highly skilled and diverse team of
over 70 individuals allocated across
the Group to protect from cyber
security threats;
regular review of access controls;

a newly created Group cyber security
capability and team to oversee and
guide on the approach to cyber security
across all Flutter divisions;
a Global Cyber Security Policy, approved
by the Risk Committee on behalf of the
Board, which sets out the minimum set
of cyber security requirements;
a dedicated cyber threat capability set
up to identify the immediate and future
cyber threats facing the Group;
an approach to testing products
and services in the same way that
hackers would;
defensive measures, procedures
and teams to protect from malicious
distributed denial of service (DDOS)
attacks;

processes in place to ensure security
is built in to product development;
tools and processes in place to ensure
the Group is protected against insider
threat including data leakage;
sharing of proactive threat intelligence
as part of industry reviews and
discussions;
integration of Group-wide cyber
security metrics into the Group risk
management capability;
significant annual investment in people,
process and technology to stay ahead
of threats;
security standards such as ISO27001:
2013, PCI and NIST are held across the
Group; and
an emphasis on employee awareness,
education and testing.

69



DIREC TORS’ REMUNER ATION REPORT

Remuneration Committee Chair’s Statement
Overview

Peter Rigby
Chair of the Remuneration Committee

2019 MEETING AT TENDANCE
Committee members1

Peter Rigby
(Chair)
1.	All members are independent Non-Executive
Directors and the Chair of the Board was
independent on appointment to that role.
2.	Andrew Higginson was appointed a member of
the Committee on 26 February 2020.

The Committee’s Terms of Reference
are reviewed annually and are
available at:
www.flutter.com/investor-relations

OTHER AT TENDEES
The Chief Executive Officer, Chief
Financial Officer, Chief People
Officer, Reward Director, Head
of Executive Compensation and
PricewaterhouseCoopers (PwC), our
remuneration advisers, attended some
or all of the meetings by invitation but are
not members. Individuals are not present
when their own remuneration is discussed.
As with other Board Committees, the
Company Secretary, or his Deputy, acts as
secretary to the Committee and provides
support to it.

70

As Chair of the
Remuneration Committee
(“the Committee”), I am
pleased to present the
Directors’ Remuneration
Report for the year ended
31 December 2019.
As an Irish-incorporated company,
is not
subject to the UK’s remuneration
reporting requirements;
however, our preference is for our
remuneration policies, practices
and reporting to reflect best practice
corporate governance for a FTSE
100 company. Accordingly, since
2015 the Committee has complied
with the reporting regulations
on a voluntary basis.

Directors’ Remuneration
Report structure
Remuneration Committee Chair’s
Statement: pages 70 to 74
Remuneration Policy:
pages 76 to 83

The proposed Remuneration
Policy will be put to a vote
at the 2020 AGM.
Annual Report on Remuneration:
pages 84 to 90

The Annual Report on Remuneration
focuses on the remuneration
arrangements and outcomes for
the year under review, and how the
Committee intends to implement
the proposed Remuneration Policy
in 2020.
For clarity, remuneration is reported in
pound sterling, in line with the Group’s
reporting currency. Remuneration
is converted to pound sterling from
euros, to simplify reporting.

2019 was another busy year for Flutter,
and one in which we achieved a great deal.
In a challenging operating environment,
we delivered strong financial performance
for our investors. We continued to deliver
on our four pillar strategy and to promote
the appropriate and meaningful industry
responses in the area of responsible
gambling. Management executed on
their commitment to make significant
inroads into the US market and the
expected merger with The Stars Group
will significantly strengthen our market
position globally.
2019 also proved to be a busy year for
the Committee. Below, I describe the
changes that the Committee is proposing
to the Remuneration Policy (“the Policy”),
which we spent much time considering
and discussing with shareholders. These
changes will be put to a shareholder vote
at the 2020 AGM.

New Remuneration Policy

Over recent years the alignment
between our current Executive Directors’
remuneration structure and our business
strategy has gradually been eroded.
In particular, it has become extremely
difficult to set medium to long-term
financial targets that appropriately
reflect management’s success due to:
factors outside of management’s
control, such as market switch-offs
and regulatory and tax changes across
multiple locations. We have little warning
of these and therefore little chance to
prepare for them;
the very different growth prospects and
regulatory dynamics of our three divisions
– PPB, Sportsbet and FanDuel; and
success in the US requiring significant
upfront investment, which will impact
short-term profits. In addition, our
forecasts cannot accurately predict the
timing of the opening of new US states.
The potential combination with The Stars
Group will also make it more challenging
to set targets in the near term.
Last year, the Committee made a
number of changes to our remuneration
framework in the context of some
of these challenges. After extensive
engagement and dialogue with our key
shareholders, we made some progress
in tackling these issues. We were pleased
that the Directors’ Remuneration Report

Governance

received a vote in favour at the 2019
AGM of 99.52%. However, as we indicated
in last year’s report, the Committee
has since carried out a review of the
Remuneration Policy with a view to
further addressing these issues. Following
extensive consultation with shareholders
and UK proxy advisory agencies, we are
proposing a new Remuneration Policy
which aligns to both the Group’s strategy
and shareholders’ interests. The proposed
changes are described below.

What changes are proposed?

We are proposing to introduce a model
that is heavily weighted towards longterm share deferral, which we consider
to be the best way to align reward with the
successful delivery of our strategy, and to
be the most appropriate for our business
going forward. Share awards will continue
to be fully performance-based, but we are
increasing the proportion of the incentive
package that is linked to annual bonus, and
correspondingly reducing the value of the
Long Term Incentive Plan (LTIP). As such
we are proposing the following:
Reweighting the annual bonus and LTIP
opportunities and reducing the overall
quantum. The Chief Executive Officer’s
bonus opportunity will change from
180% to 285% of salary (with a significant
increase in the bonus deferral requirement
– see below), while the LTIP opportunity
will reduce from 300% to 180% of salary.
These changes keep the target value of
incentives unchanged. Based on both
5- and 10-year average bonus and LTIP
outcomes, the new approach would have
delivered a lower total incentive value than
the current policy. Corresponding changes
will be made to the Chief Financial Officer’s
bonus and LTIP opportunities.
A significant increase to both the level
and timing of the annual bonus deferral.
Currently a third of the bonus is deferred
into Flutter shares under the Deferred
Share Incentive Plan (DSIP), with half for
one year and half for two. This will increase
to 50% deferral into Flutter shares, with
half for three years and half for four. This
change ensures that focus on Flutter’s
long-term value creation is maintained.
The introduction of a Group revenue
underpin to the deferred bonus. An
underpin will be included for the deferred
element of the bonus, whereby Group
revenue growth will need to exceed a
pre-set underpin. If the underpin is not
met, the Remuneration Committee will

reduce the vesting of the deferred bonus
award using the method detailed on the
next page.
The introduction of a responsible
gambling (RG) measure for 10% of the
bonus. RG is a critical element of our
strategy and of the sustainability of our
industry. Introducing an RG measure will
incentivise management to achieve clear
objectives on the RG agenda. This will be
completely measurable and quantifiable,
as detailed on the next page.
Other bonus measures. Group EBIT
(excluding the US) will continue to be our
primary annual measure, accounting for
65% of the bonus. The remaining 25% will
relate to the US business. Success in the
US market will have a significant impact
on our industry’s future, and it is therefore
important that Executive Directors are
incentivised on delivering on our US strategy.
The US opportunity continues to represent
a significant element of the bonus, with
the weighting unchanged from 2019.
As well as being measured in the bonus,
our success in the US is likely to have a
significant impact on shareholder returns,
which will be captured through the LTIP.
Simplification of the LTIP measures
to be 100% based on relative total
shareholder return (TSR). This change
will address the issues around targetsetting that I have highlighted above,
and will also create alignment between
the long-term interests of shareholders
and management. The focus on TSR
performance provides management
with greater ability to make business
decisions in a dynamic environment while
ensuring that they will only be rewarded
for these inputs if they flow through to
comparative total returns to investors
over the long term. This is part of our
holistic approach to incentivisation with
the bonus solely focusing on measures
within management’s control to provide
a counter-balance.
Post-cessation holding periods will
be introduced. Executive Directors
will be required to hold the lower of the
respective shareholding guideline and
the actual shareholding immediately
prior to departure for a period of two
years following departure. This further
emphasises the focus on the long
term, and complements the approach
to providing more longer-term equity
under the proposed incentive plans.

Pension contribution levels have also
been considered in the context of the
2018 UK Corporate Governance Code
(“2018 UK Code”) and Investment
Association guidance. The Committee
has determined that all relatively newly
appointed Executive Directors will receive
a pension in line with the level available
to our workforce in the UK and Ireland.
Both current Executive Directors have
been recently recruited with a contractual
entitlement to a 15% pension contribution
level. However, the Committee has agreed
that this will be reduced to the UK and
Ireland workforce level from 1 January 2023.

Incentive quantum

We recognise the general expectation for a
reduction in total incentive quantum as part
of a rebalancing towards the short term.
As such, we have proposed a decrease
to the overall incentive opportunity from
480% to 465% of salary for the CEO and
430% to 415% of salary for the CFO. This
ensures that the expected value of the
current packages is maintained, while the
maximum level of total pay is reduced to
reflect the shift from LTIP to annual bonus.
At the same time, we have significantly
increased the deferral requirement in
terms of both quantum and timing, and
introduced the revenue underpin on the
deferred bonus, broadly maintaining the
overall time horizons and the proportion
of pay at risk.
The Committee’s approach has always
been to set challenging bonus targets.
Over the last five years the average
pay-out has been 64% of maximum.
This compares with a typical FTSE 100
pay-out over that period of around 75% of
maximum. At the same time, our average
level of LTIP vesting has historically been
higher than our bonus pay-out, at 89%
of maximum. This picture is borne out
in the Change in CEO single total figure
of remuneration table on page 90.
This demonstrates the Committee’s
track record in setting stretching annual
goals, and the challenging nature of the
Group budget, both of which will remain
unchanged in the future. The Committee
is extremely conscious of the need to
ensure that all incentive plan targets are
appropriately robust and stretching, and
invites shareholders to view the annual
bonus targets on a retrospective basis.
Further details on our approach to
target-setting are set out on page 78.

71



DIREC TORS’ REMUNER ATION REPORT

Remuneration Committee Chair’s Statement continued
Finally, following the potential combination with The Stars Group, the market capitalisation of the Group could double, which would
propel Flutter into the FTSE 40. In the context of this significant increase in size, we believe that the proposed incentive opportunities
remain appropriate, market competitive and aligned to shareholder interests.

2020 annual bonus and LTIP performance measures

The Committee has carefully considered the performance measures for both the annual bonus and LTIP. We have chosen to set these
measures after taking into account our business strategy, the key strategic priorities for Flutter over the upcoming policy period and
the discussions we have had with our major shareholders over the past 12 months.
The table below sets out the proposed measures and their link to the Group’s strategy. The Committee is confident that these
measures drive the right balance between financial performance and strategic execution, and provide direct alignment between
the interests of participants and the generation of long-term shareholder value. Details of the targets for the long-term element
are included in the table below. The annual bonus targets and achievement against them will be disclosed retrospectively, and not in
advance, due to commercial sensitivity. Annual targets have been set excluding the impact of the combination with The Stars Group
and so the targets may need to be adjusted following the completion of the deal.
Measure

Annual bonus

Weighting

Link to strategy

Group EBIT
(excluding
the US)
The Group EBIT measure ensures that we maintain a strong focus on the key financial driver for our business.

US-specific measures


While we have excluded the US from the Group EBIT measure, given that the US opportunity is so significant
and potentially transformative for Flutter, it is important that Executive Directors are incentivised to deliver
on our US strategy. Although the US business currently provides a small percentage of our revenues, it
represents the single largest growth opportunity for Flutter. A quarter of our annual bonus is therefore
based on US measures.

We have excluded the impact of the US business from Group EBIT as we believe that significant up front
investment is required to grow the US business over the medium term, and Executive Directors should not be
disincentivised from making this investment.

The US measures will be aligned to the strategic priorities for the relevant year, reflecting the specific
objectives required to capitalise on the opportunity within a rapidly developing and evolving market.
For 2020, we will measure both net revenue and EBITDA from all verticals in states that have been licensed
by the end of 2019.

Responsible gambling

RG is a critical element of our business strategy and for the sustainability of our industry, and including an
RG measure will ensure that management are incentivised to achieve clear objectives on the RG agenda.

This has been something that we have considered including in the annual bonus plan in the past but we
have, until now, struggled to find a measure which we considered to be sufficiently robust, measurable and
quantifiable. We have now determined a measure which meets all of these criteria.
For 2020, we will measure the percentage reduction in revenue (as a proportion of total revenues) from
customers that are defined as “at risk” by our CAAP model. We have set clear reduction targets around
this which we will disclose in next year’s report.

Group
revenue

Deferred
bonus
underpin

Group revenue retains a long-term focus on top-line growth and ensures that the increased deferral under
the annual bonus is subject to an explicit long-term financial underpin.


Relative TSR ensures that management pay is linked to the outperformance of the market and helps manage
the impact of wider economic volatility. This measure provides a focus for management on ensuring the
strategy and its implementation leads to long-term comparative returns to shareholders. In combination
with the bonus, relative TSR provides management with flexibility and agility – critical in a fast-changing
market – but does not allow management to forget that one of the key objectives of the strategy is generating
comparatively strong returns to shareholders.

If the underpin is breached then the Committee will have full discretion as to the extent of any adjustment.
However, as a guide, if Group revenue falls below the level of the underpin then the Committee would reduce
the relevant deferred portion of the bonus by at least 25% and if Group revenue declines then the relevant
deferred portion of the bonus would be reduced by at least half. Where weak revenue performance in a particular
year has caused the underpin to be breached, the Committee would determine that only the next tranche
of deferred bonus due to vest is reduced.


Relative TSR

Performance in line with the median of the FTSE 100 (excluding housebuilders, real estate investment trusts
and natural resources companies) will result in a threshold level of vesting of this element, while performance in
line with upper quartile relative to the peer group will result in maximum vesting.

72

Governance

Risk of approach

The Committee was very conscious
when designing the new Policy that the
re‑weighting of the incentives to the
annual bonus could result in a risk of the
business being run for the short-term
rather than long-term sustainable value.
To mitigate this risk, the new Policy
includes a number of safeguards:
a significant increase in both the
quantum and length of the bonus
deferral requirements;
the introduction of post-cessation
shareholding requirements;
an underpin based on long-term
Revenue performance for the
deferred bonus;
the retention of a meaningful
LTIP opportunity;
the reduction in quantum against
the current levels; and
in setting annual targets we will be
considering annual progress against
our longer-term strategic goals and
objectives. Therefore, annual targets
do not equate to shorter-term thinking.

Shareholder feedback
on the new Policy

During the year, we engaged extensively
with our key shareholders on remuneration.
We have always listened closely to our
shareholders and aim to secure their full
support in all that we do. We engaged with
them during two consultation windows:
in November 2019 and again in January
2020. We found these meetings to be
both insightful and informative, and that
most of
our shareholders were generally
supportive of the proposals. While we
received broad support, we made some
changes to the original proposals as
a result of the feedback we received:
The initial proposals discussed with
shareholders did not include any
reduction to the overall incentive
opportunity. While the majority of
our shareholders did not have any
concerns with this, a small number of
shareholders and UK proxy advisory
agencies told us that they expected
to see some discount. We therefore
decided to make a small reduction to the

overall opportunity, while maintaining
the expected value of the current
arrangements.
Our initial proposal was for 50% of the
LTIP to be based on absolute TSR. Many
of our key shareholders told us that
they had concerns with this measure
and, following discussions, we decided
to use relative TSR as the sole LTIP
performance measure.
We were also asked about the lack of a
formulaic adjustment for the revenue
underpin. Following the consultation,
we decided to include some specific
guidance around how this would work in
practice in order to address this issue,
as has been set out on the previous page.
Finally, we did not initially intend to
reduce pension opportunities for
incumbent Executive Directors. After
further consideration, the Committee
decided to make a commitment to
reduce the current Executive Directors’
opportunities to the general UK and
Ireland workforce level by the end of
the term of this Remuneration Policy,
i.e. from the start of 2023.

Impact of the proposed
combination with The Stars
Group

During the year, Flutter announced its
intention to merge with The Stars Group.
Should the merger proceed, it will be
transformative for Flutter, creating the
world’s largest online betting and gaming
operator, and potentially doubling the
market capitalisation of our business.
We believe the remuneration structure
proposed here is well aligned to the
requirements of the merged Group.
However, the merger will impact in-flight
bonus and LTIP awards, as it will have a
significant effect on the Group’s underlying
financial metrics on which the awards are
based. The Committee will consider if any
adjustments are required. The exact
changes will, in part, depend on the
timing of the close of the deal. Once the
Committee has had the opportunity to
fully review the impact of the merger on the
existing targets, we will engage further with
shareholders on our proposed approach.
Given the significant increase in the size
of the Group and its geographic scope,

and on the Director’s responsibilities
upon completion of the merger, we will
review the salaries of the leadership team
to ensure that they remain appropriate
in relation to the market. We will, of
course, communicate any changes to
shareholders at the appropriate time.

Workforce pay and the
employee voice

At Flutter, we firmly believe that our
strongest asset is our people; our
thousands of colleagues across many
countries work hard every day to ensure
that our products are market-leading and
that our customers continue to receive
exceptional service. We therefore believe
that our people should be rewarded
appropriately, and we work hard to
continually improve our reward offering,
as part of ensuring that Flutter is a great
place to work. For example, last year
we extended our Sharesave plan to our
colleagues in Bulgaria, and we intend
to expand our coverage again for 2020.
We also introduced a paid birthday holiday
off for all UK Retail colleagues and a new
Company Sick Pay Policy for Ireland Retail
colleagues in 2019, which greatly enhanced
our current Retail wellbeing offering.
Both the Committee and the Board have
always considered wider employee pay as
context for the decisions they make, and
we feel that we have a good understanding
of this. For example, all bonus outturns
and Executive Director salary increases
are reviewed and approved in the context
of wider employee pay budgets and
outcomes. In addition, I am one of two
Non-Executive Directors who have been
designated specifically to understand our
workforce policies and practices, and to
relay our understanding back to the Board.
Our activities in the year are detailed on
page 30. Finally, every year the Board
reviews and acts upon the outcome of
our global people survey and regularly
visits local offices to meet with our
employees directly. We believe that all
these activities taken together equip the
Committee with an enormous amount
of context in which to make informed
and educated decisions about Executive
Director pay.

73



DIRECTORS’ REMUNER ATION REPORT

Remuneration Committee Chair’s Statement continued
Consideration of UK Corporate Governance Code principles

In designing the new Policy, the Committee has specifically considered and addressed the following principles of the UK Corporate
Governance Code:

Clarity

Remuneration arrangements should be
transparent and promote effective engagement
with shareholders and the workforce.

Simplicity

Remuneration structures should avoid complexity
and their rationale and operation should be easy
to understand.

Risk
Predictability

Proportionality
Alignment to
culture

Remuneration arrangements should ensure
reputational and other risks from excessive rewards,
and behavioural risks that can arise from target-based incentive plans, are identified and mitigated.

The removal of multiple complex long-term measures assists
with simplicity.
We believe that the new structure can be easily understood
and articulated.

The Committee was very conscious of this area in designing the new
Policy, and has taken steps to mitigate potential risks, as set out on
the Risk of approach section on the previous page.

The range of possible values of rewards to individual
Directors and any other limits or discretions should
be identified and explained at the time of approving
the Policy.

The LTIP is performance-based, and the value delivered under both
the LTIP and DSIP is influenced by share price performance. However,
the Pay for performance: scenario analysis section on page 82 provides
an indicative value of the total package based on various performance
scenarios.

The link between individual awards, the delivery
of strategy and the long-term performance of the
Company should be clear. Outcomes should not
reward poor performance.

The new Policy enables meaningful and appropriate targets to be
set with a significant proportion of remuneration linked to long-term
shareholder value. We believe that incentive plan outcomes will reflect
the successful execution of our strategy.

Incentive schemes should drive behaviours
consistent with Company purpose, values
and strategy.

2019 performance and
outcomes (2019 annual bonus
and 2017 LTIP)

Financially, the Group saw continued
strong top-line momentum, with revenue
growth in double digits. Performance
in the US and Australia was particularly
pleasing; however, tax and regulatory
headwinds continued to put pressure on a
number of areas of the business. This was
reflected in our incentive plan results.
The 2019 annual bonus was based on
Group EBIT (37.5%), Group revenue
(37.5%) and US measures (25%), with
stretching growth targets set for all three
measures. While the US measures were
achieved in full, the Group EBIT and Group
revenue measures were partially achieved,
leading to an overall outcome of 73.0% of
the maximum opportunity (2018: 48.9%).
The Committee considered this level of
pay-out to be appropriate in the context of
the Group’s wider business performance.
Full details of the targets and adjustments
made are given on page 84.

74

We have removed the complexity of setting long-term targets, and
are instead using TSR to measure performance under the LTIP.
This requires no adjustments and is clear and easy to understand.
Overall, the deferred bonus structure is clear and transparent.

The measures used in our incentive structure are aligned with our
business strategy and values. For example, the inclusion of an RG
measure demonstrates our commitment to the RG agenda, which
is a core part of Flutter’s values.

While neither the CEO or CFO are
participants, the LTIP 2017 is due to vest in
March 2020, based on three-year earnings
per share (EPS) and revenue targets to
31 December 2019. However, due to the
high level of stretch in our targets, as well
as the unprecedented levels of regulatory
changes over the period, this award will not
vest for the former Executive Directors.
No discretion was exercised in respect
of any of the awards.

Looking ahead

The Committee is conscious that 2020
is likely to be a year of significant change
and transformation for the Group,
with the potential completion of The
Stars Group merger. We operate in a
complex and dynamic economic and
regulatory environment, and it is critical
in this context that management are
incentivised to deliver the merger and to
take advantage of the opportunities that
become available. We will continue to
review the operation of our remuneration
arrangements within the parameters of
the Remuneration Policy presented here.

In developing the changes that are
summarised above, both I and the
Chair of the Board undertook significant
consultation with major investors during
the year, and the Committee carefully
discussed all the suggestions put forward.
We will continue to maintain a close
dialogue with investors as we seek to
deliver a competitive, motivating pay
framework that is tightly aligned to the
experience of our shareholders. We are
very grateful to those investors for the
time they took with us and for the
feedback they provided. We look forward
to receiving our shareholders’ support for
the Remuneration Policy as put forward
at the 2020 AGM.
Peter Rigby
Remuneration Committee Chair
26 February 2020

Governance
Governance

DIREC TORS’ REMUNER ATION REPORT

Remuneration at a glance
2019 Annual Bonus Outcome
In line with our Remuneration Policy, one-third of the
bonus will be deferred into Flutter shares under the DSIP,
half for one year and half for two years.

2019 SINGLE TOTAL REMUNERATION FIGURES

2017 LTIP

Peter Jackson Chief Executive Officer

The extremely stretching LTIP
targets set in 2017 were not
met and consequentially
there was no vesting under
the 2017 LTIP.
Neither of the current
Executive Directors hold an
award under this plan.

NEW REMUNERATION STRUCTURE FOR 2020
Current structure
LTIP
– Opportunity: 300% of salary for CEO; 250% of
salary for CFO
– Measures: 2019 grant based on EPS (excluding US),
Revenue (excluding US), US value measure and
relative TSR
Bonus
– Opportunity: 180% of salary
– Deferral: One-third deferred with 50% vesting after
year 1 and 50% after year 2
– Measures: Group EBIT (excluding US), Group revenue
(excluding US) and US measures
Pension
– 15% of salary
Base salary

Proposed structure
Reduced
weighting

Increased
weighting and
significantly
increased
deferral
requirement
Reduced to
UK&I workforce
level

LTIP
– Opportunity: 180% of salary for CEO; 150% of
salary for CFO
– Measures: 2020 grant based on relative TSR

Bonus
– Opportunity: 285% of salary for CEO; 265% for CFO
– Deferral: Half deferred with 50% vesting after year 3
and 50% after year 4
– Measures: Group EBIT (excluding US), US measures,
responsible gambling. Group revenue underpin
applies to bonus deferred under the DSIP
Pension
– 15% of salary (reduced to UK&I workforce level in
2023, and on appointment for new incumbents)
Base salary

75

DIREC TORS’ REMUNER ATION REPORT

Remuneration Policy

Shareholders approved the current Remuneration Policy at the 2018 AGM and it took effect from that date. The Remuneration Policy set
out below will take effect from the date of the 2020 AGM, when it is subject to an advisory, non-binding vote, and will apply until the 2023
AGM at the latest.
Changes to the previous Policy are detailed in the Introduction from the Chair and summarised at the bottom of the previous page.

Remuneration Policy table

This section of the Report sets out our Remuneration Policy for Executive Directors. It will apply to all payments made from the date
of the 2020 AGM. The current policy will continue to apply until this date.
Element

Salary

Purpose and link
to strategy

To attract and retain
high-calibre talent in
the labour market in
which the Executive
Director is employed.

Operation and performance measures

Generally reviewed annually but may be reviewed
at other times of the year in exceptional
circumstances.
Salaries (inclusive of any Director fees) are set
with reference to individual skills, experience,
responsibilities, Company performance and
performance in role.

Independent benchmarking is conducted on a
periodic basis against companies of a similar size
and complexity, and those operating in the same
or similar sectors, although this information is
used only as part of a broader review.

Maximum opportunity

Increases (as a percentage of salary) will generally
be in line with salary inflation and consistent with
those offered to the wider workforce.
Higher increases may be appropriate in certain
circumstances including, but not limited to:

 where an individual changes role;

 where there is a material change in the
responsibilities or scope of the role;

 where an individual is appointed on a below-market salary with the expectation that
this salary will increase with experience
and performance;
 where there is a need for retention;

 where salaries, in the opinion of the
Committee, have fallen materially below
the relevant market rates; and
 where the size of the Group increases
in a material way.

The Committee will review salaries if the
proposed combination with The Stars Group
completes. This may lead to increases awarded
at rates higher than the wider workforce level,
given that it would represent a significant change
in the scale and complexity of the business and
therefore the roles of the Executive Directors.

Benefits

To provide market-competitive, cost-effective benefits.

Employment-related benefits may include (but
are not limited to) private medical insurance,
life assurance, income protection, relocation,
travel and accommodation assistance related
to fulfilment of duties, tax equalisation and/
or other related expenses as required. Where
expenses are necessary for the ordinary conduct
of business, the Company may meet the cost of
tax on benefits.

The value of benefits may vary from year-to-year
in line with variances in third-party supplier costs
which are outside of the Company’s control,
business requirements and other changes made
to wider workforce benefits.

Pension

To provide retirement
benefits that are
appropriately
competitive within the
relevant labour market.

Paid as a defined contribution and/or cash
supplement.

Contribution of up to 15% of salary (or an
equivalent cash payment in lieu) for current
Executive Directors. These will reduce to the UK
and Ireland wider workforce level from the start of
2023. For any new Executive Directors appointed
during the term of this Policy, contributions
will be set in line with the wider workforce level
upon recruitment.

76

Governance

Element

Annual
bonus and
DSIP

Purpose and link
to strategy

To incentivise and
reward the successful
delivery of annual
performance targets.
The DSIP also provides
a link to long-term
value creation.

Operation and performance measures

The Committee reviews the annual bonus prior to the start of
each financial year to ensure that the opportunity, performance
measures, targets and weightings are appropriate and in line with
the business strategy at the time.

Performance is determined by the Committee on an annual basis
by reference to Group financial or strategic measures, or personal
objectives, although the financial element will always account for
at least 50% of the bonus in any year. The DSIP will be subject to
a financial underpin; for 2020 this will be a revenue underpin but
a different measure may be used in future years.
Half of any annual bonus is paid in cash, with the remaining half
deferred into shares under the DSIP. Any deferred element is
released 50% after three years and 50% after four years from
the date of grant.

Maximum opportunity

Threshold performance will
result in an annual bonus
pay-out of 25% of
the maximum opportunity.
For target performance,
the annual bonus earned is
two-thirds of the maximum
opportunity.

Maximum annual opportunity
of 285% of total salary for the
CEO and 265% of salary for
other Executive Directors.

Malus and clawback provisions apply to the annual bonus and DSIP
both prior to vesting and for a period of two years post-vesting, in
the circumstances detailed on page 83. Dividends (or equivalent)
accrue and are paid on DSIP awards that vest.

LTIP

To attract, retain and incentivise Executive
Directors to deliver the Group’s longterm strategy while
providing strong alignment with shareholder interests.

Annual grant of shares or nil-cost options, vesting after a
minimum of three years, subject to the achievement of
performance conditions.

The Committee reviews the performance measures, targets and
weightings prior to the start of each cycle to ensure that they are
appropriate. The measures and respective weightings may vary
year-on-year to reflect strategic priorities, but at least 75% will
always be based on financial measures (which can include TSR).

The normal maximum
opportunity is 180% of salary
for the CEO and 150% of salary
for other Executive Directors.
Threshold performance will
result in no more than
25% vesting.

Following vesting, awards are subject to a holding period of up to
two years, such that the overall timeframe of the LTIP will be no
less than five years. Directors may sell sufficient shares to satisfy
the tax liability on exercise but must retain the net number of
shares until the end of this two-year period.

Malus and clawback provisions apply to the LTIP, which allow the
Company to reduce or claw back awards during the holding period,
in the circumstances detailed on page 83.
Dividends (or equivalent) accrue and are paid on LTIP awards
that vest.

Save As
You Earn
(SAYE)

Shareholding
guidelines

To facilitate share
ownership and provide
further alignment with
shareholders.

To create alignment
between the interests
of Executive Directors
and shareholders.

The Company operates Save As You Earn share plans for all
employees (in the UK this is an HMRC-approved and in Ireland this
is an Irish Revenue-approved plan); the Executive Directors may
participate in the plan on the same basis as other employees.

Maximum opportunity is in line
with HMRC and Irish Revenue
limits (currently £500 and
€500 per month for UK and
Irish employees respectively).
Maximum opportunity for
employees in other countries
is the equivalent of €500 per
month.

Executive Directors must build up and maintain a holding of shares
in the Company equivalent to a minimum of 300% of salary for the
CEO and 200% of salary for other Executive Directors. Executive
Directors must retain half of post-tax vested awards until the
guidelines are met. Shareholding guidelines may be met through
both beneficially owned shares and vested but unexercised
options on a notional net of tax basis. Executives are required to
hold the lower of their respective shareholding guideline and the
actual shareholding immediately prior to departure for two years
post departure.

n/a

Participants are invited to save up to the monthly limit over a
three-year period and use these savings to buy shares in the
Company at up to the maximum discount allowable in the
relevant jurisdiction.

The Committee is satisfied that the above Remuneration Policy is in the best interests of shareholders and does not promote excessive
risk-taking. Contractual provisions may require the Committee to make payments to a Director that falls outside of the Policy set out
above. This would be limited to situations where the terms of the payment were agreed at a time when the individual concerned was not
a Director of the Company and, in the opinion of the Committee, the payment was not in consideration of the individual becoming
a Director of the Company. LTIP and DSIP awards granted under the previous Remuneration Policy will continue to vest in line with
those terms.

77



DIREC TORS’ REMUNER ATION REPORT

Remuneration Policy continued

Notes to the Remuneration Policy table
Discretions for adjustments

In relation to incentive plans, the Committee retains the right
to exercise discretion, to ensure that the level of award payable
is appropriate and fair in the context of the Director’s individual
performance and the Group’s underlying performance. Such
discretion is important to ensure that outcomes are fair to both
shareholders and participants. Where used, the rationale for this
discretion will be fully disclosed to shareholders in the relevant
Directors’ Remuneration Report.
This includes the discretion to amend a performance condition
that the Committee no longer deems appropriate, which will only
be exercised if reasonable in the circumstances, and the revised
condition is neither materially more nor less difficult to satisfy
than was originally intended. In particular, the Committee has
discretion to adjust the performance conditions to take account
of significant changes to the regulatory environment in which
the Group operates, e.g. material new and increased taxes and
product fees specific to the gambling and/or gaming industry.
The Committee has discretion to make adjustments in other
special circumstances, including but not limited to rights issues,
corporate restructuring and special dividends.

How we select performance measures and set targets

The performance measures used in both the annual bonus and
LTIP are selected annually, and reflect the Group’s strategic
objectives, future business strategy and key performance
indicators. Where financial targets are used, these are set taking
into account a range of reference points including internal
budgets, external broker forecasts for both the Company
and its peers as well as the Group’s strategic priorities and the
wider economic environment in which the Group operates.
In general, our measures are chosen to provide management
with flexibility and agility in a fast-changing market, while ensuring
strong alignment to shareholder returns.

Annual bonus

The 2020 annual bonus plan is based on a mix of financial and
strategic measures: Group EBIT (excluding US) (65%), US-specific
measures (25%) and responsible gambling (10%). The element
of bonus deferred under the DSIP is also subject to a Group
revenue underpin.
We would not be able to achieve our strategic objectives without
strong and sustained revenue and Group EBIT growth. The use of
profit as a primary measure alongside a Group revenue underpin
ensures that there is a balance between growth and profitability
within the overall structure.

78

Given that the US opportunity is so vast and potentially
transformative for Flutter, it is important that we include USspecific measures in the bonus, and 25% of the bonus is therefore
based on key financial and strategic priorities in the US. For 2020,
the measures we will use are net revenue from all verticals in
existing 2019 states, and EBITDA from all verticals in existing
2019 states.
A responsible gambling measure has also been included for this
year. This is a critical element of our business strategy and for the
sustainability of our industry and including a responsible gambling
measure will ensure that management are incentivised to achieve
clear objectives on the responsible gambling agenda. We will
measure the percentage reduction in revenue from customers
that are defined as “at risk” by our CAAP model as a proportion
of total revenues.

LTIP

The intention is that the LTIP will be based solely on relative TSR,
which we believe to be the best all-encompassing indicator of how
management are executing against strategy. It provides a focus
for management on ensuring the strategy and its implementation
lead to long-term comparative returns to shareholders.
Performance targets are considered to be stretching yet
achievable, and maximum outcomes are only paid for truly
outstanding performance.

Legacy awards

In-flight awards made before the adoption of this Policy will
continue in line with the approved policy under which they were
granted. Further details of these awards can be found within the
Remuneration Policy approved at the 2018 AGM and included
within the 2017 Annual Report and Accounts.

How we consider the views of our shareholders

The Committee has always been, and remains, committed
to ongoing dialogue with our key shareholders. We have had
extensive discussions with our shareholders and investor
representative bodies during the year. As detailed in the
Remuneration Committee Chair’s Statement, in developing
the proposed Remuneration Policy, we engaged with our
shareholders and leading UK institutional investor bodies to
understand their views during two consultation windows: in
November 2019 and then again in January 2020. In finalising the
Remuneration Policy, the Committee gave regard to the feedback
received and made a number of changes to address specific
concerns raised.
The Committee maintains an open and transparent dialogue
with shareholders and takes an active interest in voting outcomes.
We will continue to speak to our key investors every year and take
on board their views on our executive remuneration practices
and structures.

Governance

How we consider pay and conditions
of employees in the Group

The 2018 UK Code explicitly states that the Committee must be
informed of the wider workforce remuneration and associated
policies. The Committee considers the pay and employment
conditions elsewhere in the Group when determining
remuneration for Executive Directors, and the Company seeks
to promote good relationships with employee representative
bodies as part of its employee engagement strategy. However,
the Committee does not consult specifically with employees
on the Directors’ Remuneration Policy.
The Committee receives updates from the Group’s HR function
on pay and conditions across the Group, and considers these as
part of its discussions and decision-making, including considering
global pay budgets before reviewing Executive Director salary

levels. The Board reviews and acts upon the outcome of our
global people survey and regularly visits local offices to meet
with our employees directly.
As outlined in the Remuneration Committee Chair’s statement,
over the past year two members of the Remuneration
Committee have been appointed to meet specifically with a
variety of employees from different parts of the Group on an
ongoing basis to gain first-hand insight into the views of our
workforce. In speaking to employees, we also offer them the
opportunity to talk about executive pay, and about how it aligns
to the pay policy of the wider workforce.
The Committee also considers the CEO to wider workforce pay
ratio and relevant internal pay gaps and metrics when assessing
the appropriateness of Executive Directors’ fixed remuneration.
The Committee considers the level of fixed remuneration to be
appropriate in this context.

Our remuneration policy for the wider workforce

Below Board level, employees receive a remuneration package that is reflective of their role and responsibilities, set by reference to
internal relativities and external market data where applicable. Employees at the Executive level will typically have a greater emphasis
on performance-related and long-term pay compared with those below this level. Details are given in the table below:
Element

Salary

Approach

Our approach to salary reviews is consistent across the Group, with consideration given to the level of responsibility,
experience, individual performance and salary levels in comparable companies. Remuneration surveys are referenced, where
appropriate, to establish market rates.
Although increases may vary, Executive Director increases are aligned with the typical increases awarded across the Group
under normal circumstances.

Pension and
benefits

Benefits and pension arrangements are tailored to local market conditions for all of our employees across the Group.

Annual
bonus

The majority of our employees are eligible to participate in an annual bonus plan, though award sizes vary by level. Performance
measures are tailored to be suitable to the nature and responsibility of the role, and the geographic location, though the
structure remains broadly consistent across the Group.

Share plans

Executive Directors are eligible to participate in the LTIP.

Employees at Executive Committee and senior management level are also eligible to participate in share plans, which vest
based on continued employment and, in some cases, are also subject to performance conditions. The timing of the vesting is
dependent on geographic location.
The majority of our workforce is also eligible to participate in the employee SAYE plan; the basis of participation varies
depending on geographic location.

Shareholding
guideline

Shareholding guidelines are in place for Executive Directors and Executive Committee members.

Under its Terms of Reference, the Committee holds responsibility for the remuneration of the Group’s Executive Committee and the
Group General Counsel and Company Secretary. The Committee’s Terms of Reference are annually reviewed by the Committee and
the Board and the Committee will keep under review its role in relation to employees below the Board in the context of any legislative
changes or revisions to the 2018 UK Code.

79



DIREC TORS’ REMUNER ATION REPORT

Remuneration Policy continued
Recruitment remuneration

The Committee’s policy is to set pay for new Executive Directors within the existing Remuneration Policy in order to provide internal
consistency. The Committee aims to ensure that the Company pays no more than is appropriate to appoint individuals in the context
of the market.
Element

Salary

Approach

The salary (inclusive of any Director fees) will be set taking into account the skills and experience
of the individual, internal relativities and the market rate for the role as identified by any relevant
benchmarking of companies of a comparable size and complexity. If it is considered appropriate
to set the salary for a new Executive Director at a level which is below market (for example, to
reflect their experience in the role), their salary may be increased to achieve the desired market
positioning by way of a series of phased above-inflation increases in subsequent years.

Maximum opportunity

n/a

Benefits

New appointees will be eligible to receive benefits on the same terms as other Executive
Directors. Additionally in the case of any Executive Director being recruited from overseas, or
being recruited by the Company to relocate overseas to perform their duties, the Committee
may offer expatriate benefits on an ongoing basis. Alternatively, the Committee may approve
the payment of one-off relocation-related expenses and legal fees incurred by the individual in
connection with the appointment.

n/a

Pension

New appointees will be eligible to receive pension benefits (or an equivalent cash payment in
lieu) at the same level as the majority of our employees in the UK and Ireland.

In line with the wider
workforce.

Annual
bonus and
DSIP

The plan, as described in the Remuneration Policy table, will apply to new appointees with
the relevant maximum being pro-rated to reflect the proportion of the year employed. The
Committee retains flexibility to use different performance measures and targets in the first
year, depending on the timing and nature of the appointment.

285% of salary for a CEO
and 265% of salary for
other Executive Directors.

LTIP

New appointees will be granted awards under the LTIP on the same terms as the current
Executive Directors.

Typically 180% of salary
for a CEO or 150% of
salary for other Executive
Directors. Awards of up
to 280% of salary may be
granted in exceptional
circumstances.

SAYE

New appointees will be eligible to participate in the SAYE on the same terms as other employees.

n/a

Shareholding guidelines will apply on the same basis as for current Executive Directors.

n/a

Shareholding
guidelines

The Committee may also make an award in respect of a new appointment to buy out remuneration forfeited on leaving a previous
employer and may exercise the discretion available under the relevant Listing Rules to facilitate this, i.e. in the event that a different
structure to those included above would be required. In doing so, the Committee will ensure that buyout awards have a fair value no
higher than that of the awards or remuneration forfeited and would consider relevant factors including any performance conditions
attached to these awards, the likelihood of those conditions being met, the delivery mechanism, and the remaining vesting period of
these awards. For clarity, the maximum opportunity levels set out above do not apply to buyout wards.
In the case of an internal appointment, any variable pay element awarded in respect of the prior role will be allowed to pay out according
to its original terms stipulated on grant or adjusted as considered desirable to reflect the new role, even if it is not consistent with the
Remuneration Policy for Executive Directors. Incentive opportunities for below-Board employees are typically no higher than for
Executive Directors, but incentive measures will vary to more closely reflect the position and responsibilities of the individual.
In the case of the appointment of a new Non-Executive Director, fees would be paid in line with the Non-Executive Director fee policy
outlined on page 83.

80

Governance

Policy on payments for loss of office

When considering termination payments under incentive plans, the Committee reviews all potential incentive outcomes to ensure
they are fair to both shareholders and participants. The table below summarises how the awards under the annual bonus, the DSIP
and the LTIP are typically treated in specific circumstances, with the final treatment remaining subject to the Committee’s discretion.
The bonus payment will be pro-rated for time (based on the proportion of bonus period elapsed) and performance up to the point
of the change of control. The Committee retains discretion to dis-apply pro-rating (in whole or in part) in exceptional circumstances.
Alternatively the Committee may determine that the bonus does not pay out on change in control and continues under the terms
of the acquiring entity.
Plan

Annual
bonus

DSIP

LTIP

Scenario

Ill health or disability,
redundancy, retirement
(with agreement from the
Company), or any other
reason the Committee
may determine

Timing of payment/vesting

Normal payment date, although
the Committee has discretion to
accelerate payment on a case-by-case basis in its discretion.

The bonus will normally be deferred
into the DSIP.

Calculation of payment/vesting

The Committee will determine the annual bonus
outcome based on circumstances and the date of
leaving. Performance against targets is typically
assessed immediately (in case of death) or at the end of
the year in the normal way and any resulting bonus will
be pro-rated for time served during the year.

Death

Immediately

Change of control

Immediately

The bonus payment will be pro-rated for time (based
on the proportion of bonus period elapsed) and
performance up to the point of the change-of-control.
The Committee retains discretion to dis-apply
pro-rating (in whole or in part) in exceptional circumstances.
Alternatively the Committee may determine that
the bonus does not pay out on change of control and
continues under the terms of the acquiring entity.

All other reasons

No bonus is paid

n/a

Ill health or disability,
redundancy, retirement
(with agreement from the
Company), or any other
reason the Committee
may determine

The later of the and the expiry of
any post-restrictive covenants,
although the Committee has
discretion to accelerate on a case-by-case basis.

Any underpins continue to apply.

Death

Immediately

n/a

Change of control

Immediately

Awards may alternatively be exchanged for new
equivalent awards in the acquirer where appropriate.

All other reasons

Awards lapse

n/a

Ill health or disability,
redundancy, retirement
(with agreement from the
Company), or any other
reason the Committee
may determine

The later of the normal vest
date and the expiry of any post-restrictive covenants, although
the Committee has discretion to
accelerate on a case-by-case basis.

Any outstanding awards will normally be pro-rated
for time (based on the proportion of vesting period
elapsed); performance will be measured at the end
of the performance period. The Committee retains
discretion to dis-apply pro-rating or accelerate
testing of performance conditions in exceptional
circumstances.

Death

Immediately

As above, but with performance being measured
(and awards released) at the appropriate date.

Change of control

Immediately

Any outstanding awards will be pro-rated for time
(based on the proportion of vesting period elapsed) and
performance up to the point of the change of control.
The Committee retains discretion to dis-apply pro-rating
(in whole or in part) in exceptional circumstances.
Alternatively the Committee may decide to exchange
award for new equivalent awards in the acquirer
where appropriate.

All other reasons

Awards lapse

n/a

81



DIREC TORS’ REMUNER ATION REPORT

Remuneration Policy continued

We reserve the right to make additional exit payments if we need
to discharge an existing legal obligation (or pay damages for
breaching an obligation). We also reserve the right to make an exit
payment by way of settlement or compromise of any claim arising
in connection with terminating a Director’s office or employment.

Service agreements, change-of-control
provisions and loss of office policy

Our policy is for service agreements to contain the following terms:
Agreements are terminable on 12 months’ notice given
by either party.
Agreements contain a provision entitling the employer to
terminate their employment by payment of a cash sum in lieu
of notice equal to the total base salary, contractual benefits and
pension contributions that would have been payable during the
notice period.
The payment in lieu of notice can be paid, at the employer’s
discretion, as a lump sum or in monthly instalments over the
notice period. There is a mechanism to reduce the payment in
lieu of notice if they commence alternative employment while
any instalments remain payable from which they receive an
annual salary of at least £50,000.

Executive Directors may also be entitled to a pro-rata bonus
for the year in which termination occurs at the discretion of the
Committee. All of the share option and incentive plans which
are operated by the Company contain provisions relating to
termination of employment, and any share awards held by an
Executive Director on termination will be governed by the rules
of the relevant plan.
Executive Directors are subject to a confidentiality undertaking
without limitation in time and to non-competition, non-solicitation and non-hiring restrictive covenants for a period
of 12 months after the termination of their employment.
Peter Jackson and Jonathan Hill’s individual service agreements
are in line with the above policy.
The service contract of any new appointment would be based
on similar terms. In certain circumstances, the Committee may
approve new contractual arrangements with departing Executive
Directors including (but not limited to) settlement, confidentiality,
outplacement services, restrictive covenants and/or consultancy
arrangements. These will be used sparingly and entered into only
where the Committee believes that it is in the best interests of the
Company and its shareholders to do so.

Pay for performance: scenario analysis

The following charts provide an estimate of the potential future reward opportunities for the Executive Directors, and the potential split
between the different elements of pay under four different performance scenarios: Minimum, Target, Maximum and 50% share price
increase. Potential reward opportunities are based on the new Remuneration Policy, applied to 2020 salaries.

The scenarios in the graph above are based on the following
assumptions:
The minimum scenario comprises: (i) base salary as at 1 March
2020 (CEO: £766,066 and CFO: €573,619), (ii) current pension
opportunity (15% of salary); and (iii) value; benefits as disclosed
in the 2019 Single Figure of Total Remuneration for Executive
Directors table excluding any benefits that are one-off in nature,
such as relocation allowances.

The Target scenario comprises: minimum plus (i) 67% pay-out
of maximum bonus opportunity, and (ii) 60% vesting of LTIP.
No share price growth is assumed.
The Maximum scenario comprises: minimum plus (i) maximum
bonus pay-out, and (ii) full LTIP vesting. No share price growth
is assumed.
The Share price growth scenario is as per Maximum, except
that 50% share price growth is assumed on all LTIP awards.

Governance

Chair and Non-Executive Directors

The services of the Non-Executive Directors, including the Chair,
are provided for under the terms of a letter of appointment with
the Company. Continuation of the Non-Executive Directors’
appointments is contingent on satisfactory performance and
annual re-election at the AGM of the Company, unless terminated
earlier upon written notice by either the Non-Executive Director
or the Company. The Non-Executive Directors’ appointments
will terminate automatically if they are removed from office
by a resolution of the shareholders of the Company or are not
re-elected. The appointment letters for the Non-Executive
Directors provide that on termination, only fees accrued and
expenses incurred up to the date of termination are payable.
Details of the policy on Non-Executive Directors’ fees are set
out in the table below. Any future recruitment for a Chair or a
Non‑Executive Director would be on the basis of the below.
Purpose and link to strategy

To attract and retain
Non-Executive Directors of the
highest calibre with experience
relevant to the Company.

Non-Executive Director

Start of current term

1. 	Dates of original appointment to Paddy Power plc or Betfair Group plc,
as applicable, as shown on pages 52 and 53.

Operation and performance measures

Remuneration for Non-Executive Directors, other than the
Chair, is determined by the Board, on the recommendation
of the Executive Directors in consultation with the Chair.
The Chair’s fee is determined and recommended to the
Board by the Remuneration Committee.
Fees are reviewed from time to time.

Remuneration for Non-Executive Directors, other than the
Chair, comprises a base annual fee for acting as a NonExecutive Director of the Company and additional fees
for the Senior Independent Director, and the Chairs of the
Audit, Nomination, Remuneration and Risk Committees.

Any reasonable expenses, including all travel (including to
and from Company offices), hotels and other expenses
the Non-Executive Directors reasonably incur in the
furtherance of their duties may be reimbursed by the Group
and grossed up for any tax payable by the individual. NonExecutive Directors do not receive any other benefits from
the Company and they are not eligible to join the Group’s
pension scheme or participate in any bonus or share
incentive plan.

Maximum opportunity

The current aggregate annual fee for all
Non-Executive Directors, including the
Chair, is €1,228,672.

The maximum aggregate annual fee for
all Non-Executive Directors, including the
Chair, allowed by the Company’s Articles
of Association is €2,000,000.1

Fee increases may be greater than
those offered to the wider workforce (in
percentage terms), reflecting the fact that
they may only be offered on a periodic
basis or reflect additional responsibilities
and/or time commitments.
Current fee levels are disclosed in the
Annual Report on Remuneration.

1. 	The aggregate limit on Non-Executive Directors’ remuneration provided for is an absolute upper limit. Anticipated increases in Non-Executive Directors’ fees would be in
line with independent market benchmarking.

Copies of Directors’ service contracts or letters of appointment
(as applicable) are available for inspection at the Company’s
registered office during normal business hours and at the AGM
at least 15 minutes prior to its commencement until its conclusion.

Executive Directors’ external directorships

The Board acknowledges that Executive Directors may be invited
to become Non-Executive Directors of other companies which
have no business relationship with the Group and that these
duties can broaden their experience and knowledge to the benefit
of the Group. Executive Directors are permitted to accept a
maximum of one other external Non-Executive Directorship
(but not a Chairmanship) of a large publicly listed company (or its
equivalent), with the prior approval of the Chair of the Board.
Fees paid for external appointments may be retained by the
individual concerned.

Our malus and clawback provisions

Malus and clawback provisions apply to the Company’s incentive
plans. Under these provisions, the Committee may apply
malus and/or clawback provisions within two years of the vest
or payment date of an award (or exercisable date in the case
of options) where:
the Committee discovers that the Company misstated
its financial results or that an error was made when assessing
the performance conditions; or
an individual is found guilty of gross misconduct or a crime
which causes loss or reputational damage to the Company.
Should a trigger event be identified, the Remuneration
Committee may require some or all of an employee’s outstanding
awards to be forfeited or for clawback to be applied.

83



DIREC TORS’ REMUNER ATION REPORT

Annual Report on Remuneration
The Committee believes that the Remuneration Policy
operated as intended during 2019. This section provides
details of remuneration outcomes for the financial year ended
31 December 2019 for Executive Directors who served during
2019, and how the approved Remuneration Policy will be
implemented for all Directors in 2020.

The Remuneration Committee’s
responsibilities

Set out below is a summary of the Committee’s key
responsibilities:
setting the Remuneration Policy for the Executive Directors;
reviewing the wider workforce remuneration and related
policies and the alignment of incentives and rewards with
culture and taking these into account when setting the policy
for Executive Director remuneration;
supporting the Board in determining whether reward-related
employee policies and practices are in line with the Group’s
culture, strategy and values;
engaging with shareholders in respect of the Remuneration
Policy for Executive Directors and its implementation
as appropriate;
engaging with the workforce to explain how executive
remuneration aligns with wider Group pay policy;
ensuring that the Remuneration Policy and reward decisions
incentivise and retain talent, and support the delivery of
our long-term strategy;
considering the appropriateness of the Remuneration
Policy when reviewed against the rest of the organisation;
determining the terms of employment for Executive Directors,
members of the Executive Committee and the Group General
Counsel and Company Secretary, including remuneration,
recruitment and termination arrangements;
approving the measures and targets for incentive plans
for Executive Directors, the Executive Committee and
the Group General Counsel and Company Secretary; and
assessing the appropriateness of and achievement against
performance targets relating to incentive plans.
The names of the current members of the Committee are
given on page 70.

The Remuneration Committee’s focus in 2019
Overall
remuneration

 Holistic review of the Remuneration Policy,
with various iterations to incorporate
shareholder feedback

Annual bonus

 Determining and approving bonus
outcomes in respect of 2018 performance
 Reviewing and approving performance
measures and targets for 2019 bonus
 Reviewing forecasted 2019 bonus
outcome

 Reviewing, considering and approving
the 2020 annual bonus structure and
performance measures

Long-term
incentives

 Reviewing performance measures and
targets for the 2019 LTIP awards
 Approving 2019 incentive grants for
Executive Directors and the Executive
Committee and Company Secretary

 Approving overall quantum of awards for
2019 share incentives for all employees

 Reviewing, considering and approving new
performance measure for the 2020 LTIP

Governance

 Reviewing and approving the 2018
Directors’ Remuneration Report

 Preparing the 2019 Directors’
Remuneration Report, including the
updated Remuneration Policy

 Reviewing the annual Remuneration
Committee calendar

 Reviewing and updating the Committee’s
Terms of Reference
 Assessing dilution from share plans
against recommended limits and use
of Employee Benefit Trust
 Considering the implications of the
proposed merger on remuneration
arrangements

Shareholder
consultation

84

 Reviewing and approving total
remuneration of Executive Directors and
members of the Executive Committee

 Extensive engagement with shareholders
on proposed changes to the
Remuneration Policy

Governance

External advisers

PwC are the Committee’s remuneration advisers. They were appointed by the Committee in 2017, following a competitive tender
process. They provide independent commentary and advice, together with updates on legislative requirements, best practice and
market practice to assist it with its decision-making.
PwC report directly to the Committee, and are signatory to, and abide by the Code of Conduct for Remuneration Consultants (which
can be found at www.remunerationconsultantsgroup.com). The Committee undertakes due diligence periodically to ensure that the
remuneration advisors remain independent of the Group and that the advice provided is impartial and objective. The Committee is
satisfied that any conflicts are appropriately managed.
The fees paid to PwC in respect of work carried out for the Committee in 2019 totalled £169,875 and are based on an agreed fee for
business-as-usual support (with additional work charged on a time and materials basis). PwC also advised and supported the Group’s
management in relation to remuneration during the year, and provided tax advice to the Group during 2019. PwC have no other
connection with the Company or any of its individual Directors.
The Committee also seeks internal advice and support from the Group General Counsel and Company Secretary, Deputy Company
Secretary, Chief People Officer and Reward Director as appropriate.

Shareholder voting at shareholder meetings

The following shows the results of the advisory votes on the Annual Statement and Annual Report on Remuneration and the
Remuneration Policy at the 2019 AGM:
Annual Report on
Remuneration (AGM 2019)
Remuneration Policy
(AGM 2018)

Details of our engagement with shareholders over the relevant year are provided in each years’ Annual Report and Accounts.

Single figure of total remuneration for Executive Directors (audited)

The table below sets out the single figures of total remuneration received by each Executive Director of the Company during the year
ended 31 December 2019 and the prior year. Remuneration relates to the period during which each Executive Director was a member of
the Board in this capacity. Please refer to notes below the table for full details of how the figures are calculated and additional disclosure
of the full-year equivalents.


1.	Peter Jackson was appointed as Chief Executive Officer on 8 January 2018. On appointment to this role his salary was £720,000, and this was increased to £740,160 with
effect from 1 March 2019. This table does not reflect any fees received by him as a Non-Executive Director until he became Chief Executive Officer in 2018.
2. 	Jonathan Hill was appointed as Chief Financial Officer on 22 October 2018. On appointment, his salary was €539,125, and this was increased to €554,221 with effect
from 1 March 2019. Values are converted from euros to pound sterling using the 12-month average exchange rate over the relevant financial year (2019: £1= €1.1392;
2018: £1 = €1.1303).
3. Salary: represents the total amount earned for the relevant financial year.
4. 	Benefits comprise private medical insurance, life assurance and income protection. For Jonathan Hill, this also includes relocation costs of £39,000 in 2018 and
£63,000 in 2019.
5. 	Pension: the pension for both Executive Directors is the value of the cash paid to them in lieu of contributions. Neither of the Executive Directors has a prospective
entitlement to a defined benefit pension.
6. 	Neither of the Executive Directors participated in the 2017 LTIP. As no LTIP shares vested in the year, share price movement had no impact on the outcome and no
discretion was exercised in this regard.
7. 	Other includes the value of the buyout options of £272,000 for Peter Jackson and £77,000 for Jonathan Hill. This is the second tranche of Peter Jackson’s awards
which vested on 3 December 2019, and the first tranche of Jonathan Hill’s awards which vested on 22 October 2019. It also include the intrinsic value of SAYE grants
for Jonathan Hill.

85



DIREC TORS’ REMUNER ATION REPORT

Annual Report on Remuneration continued
2019 annual bonus (audited)

The maximum annual bonus opportunity for Executive Directors in 2019 was 180% of salary. Target bonus was 120% of salary. The 2019
annual bonus was based on Group EBIT (excluding US business performance), Group revenue (excluding US business performance) and
US-specific measures. The table below shows the outcome for each element relative to the target set:
Performance targets1

Group revenue
(excluding US)
Group EBIT3
(excluding US)
US measures:
Sportsbook online
market share
Sportsbook gross
revenue
Non-sportsbook net
revenue
EBITDA3
Total

1. Awards pay out on a straight-line basis between the points shown.
2. Converted from euros to pound sterling at he 12-month average exchange rate over the financial year of £1 = €1.1392.
3. Targets and actual performance are on a pre IFRS 16 basis.

Bonus targets have been adjusted for exchange rate movements over the period, as is normal practice. In addition, an adjustment has
been made for the unprecedented impact of market switch offs above budgeted levels, of £6m for Group EBIT (excluding US) and £9m
for revenue (excluding US). The US targets have been adjusted for the timing of state openings based on the schedule agreed by the
Committee at the time of target-setting.
Prior to approving the annual bonus outcomes, the Committee discussed whether or not the proposed outturn was considered to
be fair. Following the discussion, the Committee was satisfied that the outcomes were appropriate and fair in the context of both the
Directors’ individual performance and the Group’s underlying performance.
In line with the Remuneration Policy that applied during the year, one-third of bonus earned is deferred into shares under the DSIP,
vesting 50% after one year from grant and 50% after two years from grant.
Malus and clawback provisions apply to the annual bonus and DSIP both prior to vesting and for a period of two years post-vesting.

2017 LTIP (audited)

While neither the CEO nor CFO are participants, the LTIP 2017 is due to vest in March 2020. However, due to the high levels of stretch
in our targets and the unprecedented levels of regulatory change, this award will not vest for the former Executive Directors.

Incentive plan interests awarded in the year (audited)

On 11 March 2019, awards were granted to the Executive Directors under the LTIP and DSIP. Details of these awards are set out in the
following table:
Type of interest in shares

Face value (%)

1. Three-day average share price prior to the date of grant of £58.46.
2. 	The US element of the 2019 LTIP award vests in July 2023, and the associated holding period reduces accordingly.
3. 	The value of the award was calculated using the three-day average exchange rate prior to the date of grant of £1 = €1.1640.


Vesting date

Governance

The LTIP awards will vest subject to the achievement of the following performance conditions:
EPS (excluding US business performance)
Annualised growth in EPS over the three-year period 2019–2021
Revenue (excluding US business performance)
Annualised growth in revenue over the three-year period 2019–2021
US value measure2
Growth and development of the US business
Relative TSR
TSR compared with the FTSE 31–130 (excluding housebuilders,
real estate investment trusts and natural resources companies)

Weighting

1.	Awards vest on a straight-line basis between the points shown.
2. 	Performance under the US value measure will be based on the external valuations in July 2023 that form part of the FanDuel deal. As such the 2019 LTIP is to
be assessed against the 2023 valuation. The baseline value of the US business used to calibrate this performance measure is currently considered commercially sensitive
and so will only be disclosed retrospectively in the Remuneration Report that shows the final vesting against this measure. To ensure robust governance, the baseline
valuation has been lodged with KPMG, our external auditor, who will verify this against the disclosure made at the point of vesting. Given the later vesting date for this
measure, the related post-vesting holding period for any awards earned under this portion will be reduced accordingly. This will result in there being no change to the
required overall five-year period from the grant date to release.

Single figure of total remuneration for
Non-Executive Directors (audited)

Payments to former Directors (audited)

The table below sets out the single figures of total remuneration
received by each Non-Executive Director who served during the
year ended 31 December 2019:

Non-Executive Director

Jan Bolz

Zillah Byng-Thorne
Michael Cawley
Nancy Cruickshank

A Audit Re Remuneration N Nomination

Ri Risk

Chair CB Chair of the Board

Fees for Non-Executive Directors are pro-rated according to
their appointment date or date of role change where appropriate.
1. 	Fees are converted from euros to pounds sterling as appropriate, using the
12-month average exchange rate over the financial year (2018: £1 = €1.1278;
2019: £1 = €1.1392).
2. 	Nancy Cruickshank was appointed as a Non-Executive Director on 15 May 2019.
3. 	Andrew Higginson was appointed a Non-Executive Director on 2 October
2019, and was appointed a member of the Nomination Committee and the
Remuneration Committee on 26 February 2020.

Last year, we calculated the value of the LTIP 2016 for Breon
Corcoran and Alex Gersh using an average share price from
1 October 2018 to 31 December 2018 of £66.37, in line with the
prescribed methodology. This has now been revised to reflect
the actual share price on vesting, as follows:

Executive Director

Breon Corcoran
Alex Gersh

1. 	Awards vested on 20 May 2019.
2. 	Includes the value of 348 dividends paid to Breon Corcoran, which were not
included in the estimated value.

Both Alex Gersh and Breon Corcoran were also granted awards
under the LTIP 2017. As explained in the Introduction from Chair,
the performance conditions of this award were not met, and their
awards therefore will lapse in full.

Implementation of Remuneration Policy
for 2020
Salary

The Committee approved the following total salaries for the
Executive Directors, effective from 1 March 2020.
Peter Jackson
Jonathan Hill

1. 	Fees are converted from euros to pounds sterling using the 12-month average
exchange rate over the financial year (2019: £1 = €1.1392).

Salary levels will be reviewed upon completion of the potential
merger with The Stars Group to ensure that they remain
appropriate.

87



DIREC TORS’ REMUNER ATION REPORT

Annual Report on Remuneration continued
Pension and benefits

Save As You Earn (SAYE)

Annual bonus

Chair and Non-Executive Director fees

The Executive Directors will receive a cash supplement in lieu of
pension contribution of 15% of total salary in 2020. They will also
receive benefits in line with the Remuneration Policy.
As noted in the Remuneration Committee Chair’s Statement,
we have changed the annual bonus levels for 2020. As such, the
annual bonus opportunity for the CEO and CFO in 2020 will be
285% of salary and 265% of salary respectively.
The Committee has determined that performance targets will
not be disclosed on a prospective basis for reasons of commercial
sensitivity but will be disclosed on a retrospective basis in next
year’s Annual Report on Remuneration. The performance
measures for the 2020 bonus are as follows:
Group EBIT (excluding US)
US-specific measures:
Net revenue from all verticals in existing
2019 states
EBITDA from all verticals in existing 2019 states
Responsible gambling: reduction of revenue
from “at risk” customers

Weighting

Half of any bonus earned will be paid in cash, with the remaining
half deferred into shares under the DSIP, vesting 50% after three
years and 50% after four years from grant, subject to continued
employment and a revenue underpin. Awards are eligible to
receive dividend equivalents. Malus and clawback provisions apply
to the annual bonus and DSIP both prior to vesting and for a period
of two years post-vesting.

LTIP

The 2020 LTIP award grant levels will be in line with the new
Remuneration Policy, at 180% of salary for the CEO and
150% of salary for the CFO. The awards will be granted after
the 2020 AGM.
Face value at
date of award
(£)

Peter Jackson
Jonathan Hill

As noted earlier in the Report, from 2020 LTIP awards will vest
based on Relative TSR. The proposed targets are set out in the
table below:
Performance measure

Relative TSR2

Weighting

100%

Threshold1
Maximum1
(25% vesting) (100% vesting)

Median

Upper
quartile

1. Awards vest on a straight-line basis between the points shown.
2. 	TSR compared with the FTSE 100 (excluding housebuilders, real estate
investment trusts and natural resources companies).

88

Executive Directors are eligible to participate in the plan with the
same terms as all other UK and Ireland employees if an invitation
to enter a savings contract is offered during the year.
The fees payable to the Chair of the Board and other
Non-Executive Directors for 2020 are as follows:
Fee p.a.

Base fee
Chair

Base Non-Executive Director fee
Additional fees
Senior Independent Director
Audit Committee Chair
Nomination, Remuneration or
Risk Committee Chair

£10,000
€25,000
£15,000 or €20,000

These fees were reviewed in December 2018 by the Board and
are considered to continue to remain appropriate. They will be
reviewed again in the coming year.

Percentage change in Chief Executive Officer
remuneration compared with other employees
The table below shows the percentage change in the Chief
Executive Officer’s remuneration from the prior year compared
with the average percentage change in remuneration for all
other employees. To provide a relevant comparison, the analysis
includes only salaried corporate office UK and Ireland employees
and is based on a consistent set of employees. The Committee
considers this to be the most appropriate comparator group.

CEO1
Corporate office UK&I
employees

Percentage change in 2019 compared with 2018
Base
Taxable
Annual
salary
benefits
bonus


1.	Based on full-year equivalent for CEO for 2018.
2.	Bonuses for the workforce for 2019 have not been concluded at the time
of signing this report and therefore this is an indicative figure.

Relative importance of spend on pay

The table below shows the percentage change in total employee
pay expenditure and shareholder distributions (i.e. dividends and
return of capital) from the financial year ended 31 December 2018
to the financial year ended 31 December 2019.
Dividends
Share buybacks
Total shareholder
distributions
Employee remuneration

Governance

CEO pay ratio disclosure

In 2019, we once again undertook an exercise to identify the CEO pay ratio, which we did for the first time in 2018. Alongside the ratio for our
UK employees (in accordance with the regulations), we have also published the ratio for our UK and Ireland employees combined, which in our
view better reflects our corporate structure and the significant proportion of Group employees based in Ireland. The ratios are as follows:
Group

UK employees only
UK and Ireland employees


The total pay and benefits of each employee who is the best equivalent of the 25th, 50th and 75th ranked employee is as follows:
Group

UK employees only
UK and Ireland
employees

Total pay and benefits
Salary only
Total pay and benefits
Salary only

25th percentile
pay ratio

Methodology

The pay and benefits of employees were calculated in line with the single total figure of remuneration methodology. We have used
calculation method A. As such, we have used actual pay and benefits from 1 January to 31 December 2019. Joiners, leavers and
part-time employees’ earnings have been annualised on a full-time equivalent (FTE) basis, excluding any payments of a one-off nature,
with FTE calculations based on 40 hours per week. Those on unpaid leave for more than 30 days have been excluded from the analysis.
Where bonus payments are made on a weekly, monthly or quarterly basis, payments made in the 2019 compensation year were
included. For annual bonus payments, bonuses calculated for the 2019 year and to be paid in 2020 were used. As all workforce bonuses
have not been concluded at the time of signing this report, indicative figures have been used. Benefits included in the calculation are
employer pension/or cash in lieu received and the benefit in kind/P11D value of any taxable benefits.

Directors’ shareholdings

We believe it is important that Executive Directors build up a significant holding in shares, in order to align their
interests with those of our shareholders. As such, the CEO and CFO are required to build and maintain holdings of 300% and 200% of
salary respectively. Shareholding requirements may be met through both beneficially owned shares and vested but unexercised options
net of notional tax. Those subject to continued employment or performance assessment are not included. Given that both Executive
Directors were appointed recently and are yet to have an incentive plan vest, they are still building up their holdings.
As set out in the Remuneration Committee Chair’s statement, post-employment holding periods have been introduced for the
Executive Directors, and will take effect immediately. As such, they will apply to the 2020 LTIP and the 2021 DSIP (which is based on
the 2020 annual bonus). Executive Directors will be required to hold the higher of their actual shareholding at the time of departure
and the applicable shareholding requirement for two years post-departure.
The table below shows the shareholding of each Director against their respective shareholding requirement (where relevant)
as at 31 December 2019 and there have been no changes to this from then until the date of this report.

Share options
subject to
performance


1. 	Includes shares held by the individual and those held by persons closely associated with them.
2. 	Based on beneficially owned shares and vested but unexercised options net of notional tax, a share price of £92.24 and salaries as at 31 December 2019.
3. 	Neither of the Executive Directors exercised any share option awards during the year.

89



DIREC TORS’ REMUNER ATION REPORT

Annual Report on Remuneration continued
Pay for performance

The graph below shows the TSR performance (share price plus dividends paid) of Flutter Entertainment plc1 compared with the
performance of the FTSE 100 Index over the ten-year period to 31 December 2019, assuming a nominal £100 investment in Paddy
Power plc1 and the FTSE 100 Index at the start of the timeframe. This index has been selected because the Company believes that the
FTSE 100 provides a relevant and appropriate broad market comparator index for the combined entity and includes companies of a
similar size.
Pay for performance
A: Flutter Entertainment plc¹
B: FTSE 100 Index
Value of £100 invested at

1. 	Paddy Power plc changed its name to Paddy Power Betfair plc on completion of the merger of Paddy Power plc and Betfair Group plc on 2 February 2016. During 2019,
Paddy Power Betfair plc was renamed Flutter Entertainment plc.

Change in Chief Executive Officer’s single total figure of remuneration
CEO single figure
of remuneration

1. 	Remuneration is converted from euros to pounds sterling as appropriate, using the 12-month average exchange rate over the financial year. Patrick Kennedy
and Andy McCue were paid in Euros. Breon Corcoran was paid in pounds sterling, as is Peter Jackson.
2. 	Before retesting – note, there is no provision for retesting in respect of LTIP awards made from 2013 onwards.
3. 	Retesting was applied to the unvested portion of the 2011 LTIP based on performance to 31 December 2014, and as a result an additional 4.9% of the award vested
in March 2015.
4. 	Retesting was applied to the unvested portion of the 2012 LTIP based on performance to 31 December 2015, and as a result an additional 4.0% of the award vested
in March 2016.
5. 	Andy McCue was not eligible for a bonus in 2016 in line with his payment for loss of office.
6. 	Breon Corcoran was not eligible for a bonus in 2018 in line with his payment for loss of office.
7. 	Peter Jackson has no LTIP vestings in these years.

Governance

Director’s Report
The Directors’ Report for the year ended 31 December 2019
should be read in conjunction with the other sections of this
Annual Report and Accounts, all of which are incorporated into
this Directors Report by reference for the purposes of sections
325 and 1373 of the Companies Act 2014 and Regulation 21 of
SI 255/2006 European Communities (Takeover Bids Directive
(2004/25/EC)) Regulations 2006 and SI 277/2007 Transparency
(Directive 2004/109/EC) Regulations 2007 and SI 360/2017
European Union (Disclosure of Non-Financial and Diversity
Information by Certain Large Undertakings and Groups)
Regulation 2017 as applicable:
the Strategic Report, which includes a review of the
development and performance of the Group, the external
environment, key strategic aims, business model and financial
disclosure requirements arising from EU and Irish legislation:
pages 7 to 48;
the non-financial information statement: page 95;
information on employees: pages 24 to 27;
the Corporate Governance Report: pages 49 to 95;
information on the Company’s diversity initiatives and Board
Diversity Policy: pages 24 to 27 and 54;
the Directors’ Remuneration Report, which includes information
on the annual performance bonus, the LTIP, share schemes,
share options, Directors’ service contracts, Directors’
remuneration and payments for loss of office: pages 70 to 90 ;
details of the Audit Committee: pages 63 to 67;
details of share capital and reserves: Note 16 to the
Consolidated Financial Statements on pages 138 to 139;
details of earnings per share: Note 9 to the Consolidated
Financial Statements on page 127; and
details of derivative financial instruments: Note 29 to the
Consolidated Financial Statements on page 155.

Principal activities

The Group is a global sports betting and gaming operator, whose
headquarters are in Dublin, Ireland. It currently operates across
the following divisions:
PPB – (i) Online, which consists of the Paddy Power, Betfair
and Adjarabet online sites which offer sportsbook, exchange
and gaming services across the UK and Ireland, Europe and
International territories. The division also includes a range of
global business-to-business (B2B) partnerships, and (ii) Retail,
which operates 623 Paddy Power betting shops across the UK
and Ireland;
Australia – consisting of Sportsbet, the market-leading brand in
the fast-growing Australian online betting market; and
US – comprising the FanDuel brand, which is the nation’s leading
online sports betting brand as well as offering daily fantasy
sports, TVG, America’s leading horse racing TV and betting
network, and the Betfair online casino and horse racing
betting exchange.

2020 outlook

The 2020 outlook set out in the Operating and Financial Review
on pages 34 to 44 is deemed to be incorporated in this part of
the Directors’ Report.

Research and development

The Group performs research and development activities to
ensure that it continues to be a recognised innovator in the
betting and gaming industry. These activities support the
introduction of new products, the creation of new betting
markets, improved online customer experience and the
development of better processes and systems. Continued
research and development contributes to the Group’s future
growth and profitability. Further details of our research and
development activities are set out in the Strategic Report on
pages 7 and 48.

Results

The Group’s profit for 2019 before separately disclosed items
of £224m reflects a decrease of 26% on the 2018 profit before
separately disclosed items of £303.8m. Overall Group profit
for 2019 amounted to £111.9m after separately disclosed
items amounting to £112.1m, further information is set out
in Note 4 to the Consolidated Financial Statements on page
123. Adjusted diluted earnings per share amounted to £3.017
compared with £3.772 in the previous year, a decrease of 20%.
The financial results for 2019 are set out in the Consolidated
Income Statement on page 103. Total equity attributable to the
Company’s equity holders at 31 December 2019 amounted to
£3,984.7m (2018: £3,998.0m).

Business review, key performance indicators,
and principal risks and uncertainties

The Strategic Report on pages 7 to 48, which includes the Chair’s
Statement and the Chief Executive Officer’s Review, contains a
review of the performance and developments of the Group during
the year, including the analysis of the key performance indicators.
The principal risks and uncertainties facing the Group are on
pages 45 to 48.

Annual General Meeting (AGM) 2020

The Notice of AGM, convening the AGM to be held on 14 May
2020, is sent out to shareholders together with this Annual Report
and Accounts. This contains full details of the resolutions that
will be put to shareholders. It is also available on our corporate
website: www.flutter.com/investors/shareholder-centre/agm

Changes to the Board of Directors

Nancy Cruickshank was appointed as a Non-Executive Director
of the Company on 15 May 2019.
Andrew Higginson was appointed as a Non-Executive Director
of the Company on 2 October 2019.
In accordance with the provisions of the 2018 UK Code, all
Directors eligible for re-election should retire at each AGM and
offer themselves for re-election. Accordingly at our AGM 2020,
Andrew Higginson and Nancy Cruickshank will retire and seek
re-election, and all other Directors, will retire and seek re-election
at the next AGM. The Board believes that all Directors offering
themselves for election or re-election continue to be effective
and demonstrate commitment to the role. The Biographies of
our current Directors can be found on pages 52 to 53.

91



Director’s Report continued
Directors’ and officers’ liability insurance

Throughout 2019, the Group had in place directors’ and officers’
liability insurance, which covered all Directors and officers.

Directors’ and Company Secretary’s shareholdings

The Company has established share ownership guidelines for
Executive Directors to ensure that their interests are aligned
with those of shareholders.
For detailed information, see the Directors’ Remuneration
Report: pages 70 to 90.
As at 26 February 2020 (being the latest practicable date before
publication of this Annual Report and Accounts), the current
Directors and the Company Secretary held the same number
of beneficial interests in shares as at 31 December 2019 as set
out in the table below. These shareholdings include all beneficial
interests and those held by persons closely associated with them.
This does not include their share awards under the Company’s
share schemes. The interests of the Executive Directors in the
Company’s share schemes as at 31 December 2019 are set
out on page 89. The Company Secretary has no interest in the
Company’s share schemes that require disclosure.


*	Nancy Cruickshank was appointed as a Non-Executive Director of the Company
on 15 May 2019.
†	Andrew Higginson was appointed as a Non-Executive Director of the Company
on 2 October 2019.

None of the Directors nor the Company Secretary had an interest
in the shares of any subsidiary undertaking of the Company or in
any significant contracts of the Group.

92

Shares

Substantial shareholdings

As at 31 December 2019 and 26 February 2020 (being the latest
practicable date before publication of this Annual Report and
Accounts), the Company had been notified of the following details
of interests of over 3% in the Company’s ordinary share capital
(excluding treasury shares):

T1. 	As notified by The Capital Group Companies, Inc, EuroPacific Growth Fund
(‘EUPAC’) and Capital World Growth and Income Fund (‘WGI’) are mutual funds
registered in the United States that are interested in 7.9746% and 3.0270%
respectively of the then Company’s ordinary share capital carrying voting
rights, and that their voting rights have been delegated to Capital Research
and Management Company (‘CRMC’). CRMC’s holdings under management
are reported in aggregate by The Capital Group Companies, Inc. Accordingly,
EUPAC’s and WGI’s interests are included in the 13.05% interest which was
notified by The Capital Group Companies, Inc.
2.	Parvus Asset Management Europe Limited holds a derivative position via
equity swap.

Share capital, rights and obligations

As at 26 February 2020 (being the latest practicable date before
publication of this Annual Report and Accounts), the Company’s
total issued share capital was 80,322,073 shares, comprising:
78,356,473 ordinary shares in issue each with a nominal value
of €0.09, all of which are of the same class and carry the same
rights and obligations. Ordinary shares carry the right to the
profits of the Company available for distribution and to the
return of capital on the winding up of the Company. Ordinary
shares carry the right to attend and speak at extraordinary
general meetings of the Company and each share has the right
to one vote. With regard to the Company’s shares: (i) there are no
restrictions on their transfer; (ii) no person holds shares carrying
special rights with regard to the control of the Company; (iii)
there are no shares to which a Company share scheme relates
carrying rights with regard to the control of the Company; (iv)
there are no restrictions on the voting rights attaching to the
Company’s shares; and (v) there are no agreements between
shareholders that are known to the Company that may result

Governance

in restrictions on the transfer of securities or on voting rights;
and 1,965,600 treasury shares, which have no voting rights
and no entitlement to dividends. This represents 2.45% of the
Company’s total issued share capital (including treasury shares).
As far as known to the Directors, the Company is not directly
or indirectly owned or controlled by another company or any
government. Further information on the Company’s share capital
is set out in Note 16 to the Consolidated Financial Statements on
page 138.
At the Company’s AGM in 2019, shareholders authorised the
Directors, by way of passing a special resolution, to be able to
allot shares for cash up to 5% of the Company’s total issued share
capital (excluding treasury shares) without first being required to
offer them to existing shareholders of the Company. At the 2020
AGM, shareholders will be requested to renew this authority. Save
for the allotment of shares in respect of the Group’s employee
share schemes, the Directors have no current intention to
exercise this authority.

Purchase of own shares

At the Company’s AGM in 2019, the shareholders authorised the
Company and/or any of its subsidiaries, by way of passing a special
resolution, to be able to make market purchases of a maximum
of 7,810,478 of the Company’s ordinary shares (10% of the
Company’s total issued share capital (excluding treasury shares).

Own shares held

During 2019, the Paddy Power Betfair plc Employee Benefit
Trust (EBT) transferred 29,344 (2018: 101,232) ordinary
shares to employees under the Company’s share schemes.
At 31 December 2019, the EBT held 70,397 (2018: 99,741) ordinary
shares in the Company, representing 0.089% (2018: 0.12%) of
the total issued share capital of the Company (excluding treasury
shares) as at that date. No shares were purchased into the EBT
during the year ended 31 December 2019 (2018:0). Further
information is set out in Note 16 to the Consolidated Financial
Statements on page 139.

Outstanding options

566,469 (2018: 509,140) awards or grants over shares were
made during 2019 that would be dilutive of the Company’s issued
share capital. We settle outstanding awards or grants under
the Company’s share schemes with shares purchased in the
market and through issuing new shares. The Board continues to
review this as appropriate. As at 31 December 2019, there were
1,593,947 (2018: 1,568,986) options outstanding.

Dividends

Details of the Company’s dividends for the financial years ended
31 December 2019 and 2018:
2019 final
dividend*
2019 interim
dividend
2018 final
dividend
2018 interim
dividend

* Subject to shareholders’ approval at the AGM 2020.

Employees

The Group employed 9,153 people as at 31 December 2019.
The responsibility for formulating, implementing and ensuring
adherence to employment policies and relevant legislation falls
under the remit of our HR function. The Group fully supports the
principle of equal opportunity for all employees and opposes all
forms of discrimination and has policies to ensure that it meets
its legal obligations. It is also the Group’s policy to give full and
fair consideration to the recruitment of disabled persons, and to
provide such persons with the same training, career development
and promotion opportunities as other employees. In the event
of employees becoming disabled, every effort is made to ensure
that their employment within the Group continues and that
appropriate training is provided.
The Group believes in open and continuous communications as
an important part of the employee engagement process. The
Group has various internal communication channels for informing
employees about financial results, business development and
other news concerning the Group and its people. Our Code
of Ethics applies to all employees across the Group. As part of
enabling our employees to participate in the Group’s performance
and align with shareholder value, employees are also able to
join our all employee Save As You Earn scheme (subject to local
jurisdictional requirements) (see Note 18 of the Consolidated
Financial Statements on pages 139 to 144).
For detailed information on our people and culture: pages 24 to 27

Events after the reporting date

Details of events after the reporting period are set out in Note 33
on page 161 to 162 of the Financial Statements.

Other

Greenhouse gas emissions
See pages 22

93



Director’s Report continued
Political donations

No political donations were made by the Company during 2019
that require disclosure in accordance with the Electoral Acts 1997
to 2002 and the Electoral Political Funding Act 2012.

Articles of Association

The Company’s Articles of Association may only be amended
by way of a special resolution approved by the shareholders.
They were last amended, effective as of 27 May 2019, by way of
a special resolution passed at the AGM held on 15 May 2019 to
change the name of the Company from Paddy Power Betfair plc
to Flutter Entertainment plc.
A circular to shareholders, which will contain the Notice of
Meeting for the 2020 AGM, will be posted to shareholders on
27 March 2020.

Significant agreements – change-of-control provisions

There are no significant agreements which contain provisions
entitling other parties to exercise termination or other rights in the
event of a change in control of the Company. The rules of certain
Company share schemes include provisions which apply in the
event of a takeover or reconstruction.

Contractual arrangements

The Group has contractual arrangements with numerous third
parties in support of its business activities. In that context,
disclosure in this Annual Report and Accounts of information
about any of those third parties is not considered necessary
for an understanding of the development, performance or
position of the Group’s businesses.

Related party transactions

Internal controls are in place to ensure that any related party
transactions involving Directors or their connected persons
are carried out on an arm’s length basis and are disclosed in
the Financial Statements. Transactions with Directors and
parties related to them have been disclosed in Note 31 to the
Consolidated Financial Statements on pages 159 and 160.

Funding and liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group also spreads its cash reserves across several highly
rated banks and investments to mitigate counterparty risks.
The Group performs regular cash flow projections to ensure that
it has sufficient cash on demand to meet expected operational
expenses for a period of at least 90 days. The Group has a
committed revolving credit facility of £450m which expires in
April 2023 and a committed term loan facility of £250m which
expires in November 2020, with options to extend by a further
12 months. Both facilities are provided by a syndicate of banks.
At 31 December 2019, £250m of the term loan facility was drawn
down and £117.3m of the revolving credit facility was drawn
down. Further details are set out in Note 23 on page 149 to 150.

94

Viability statement

In accordance with the UK Code, the Directors confirm that they
have a reasonable expectation that the Group will continue to
operate and meet its liabilities, as they fall due, for the next three
years to December 2022. This three-year timeframe was selected
as it corresponds with the Board’s strategic planning horizon. Also
the possible impact of future regulatory change and the pace of
technological change limits the Directors’ ability to reliably predict
the longer term. This is based on long-term plans prepared in
2019 with sensitivity analysis performed on key financial metrics
such as sportsbook net revenue percentage and amounts staked.
The Directors’ assessment has been made with reference to the
strong cash-generation capabilities of the Group, its committed
debt facilities and in particular its £450m committed revolving
credit facility, which expires in April 2023, the Board’s risk appetite,
and the principal risks and uncertainties and how they are
managed, as detailed in pages 45 to 48 of this Annual Report.
The Directors also assessed the potential financial and
operational impacts, in severe but plausible scenarios, of
the principal risks and uncertainties and the likely degree of
effectiveness of current and available mitigating actions.

Going concern, responsibilities and disclosure

The current activities of the Group and those factors likely to
affect its future development, together with a description of its
financial position, are described in the Strategic Report. Principal
risks and uncertainties affecting the Group, and the steps taken
to mitigate these risks are described in the Understanding and
Managing our Principal Risks section of the Strategic Report
on pages 45 to 48. Critical accounting estimates affecting the
carrying values of assets and liabilities of the Group are discussed
in Note 2 to the Consolidated Financial Statements.
After making appropriate enquiries, the Directors have a
reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for
three years (in line with the viability statement). In making this
assessment, the Directors considered the going concern
status for a period of at least 12 months from the date of
signing this Annual Report and Accounts. For this reason,
they continue to adopt the going concern basis in preparing
the Financial Statements.

Compliance policy statement

It is the policy of the Directors of the Company, in line with
section 225 of the Companies Act 2014, to:
(i) comply with its relevant obligations;
(ii)	put in place appropriate arrangements and structures that
are designed to secure material compliance with its relevant
obligations;
(iii) conduct a review during each fiscal year of those
arrangements and structures; and
(iv) seek and rely on the advice of persons employed by the Group
or retained by it under contract for services, being persons
who appear to the Board to have the requisite knowledge
and experience to advise the Directors of the Company on
compliance with its relevant obligations.

Governance

Non-financial information statement

As per the requirements of the non-financial reporting
regulations, which were set out in the Companies Act 2014 and
Regulation 21 of SI 255/2006 European Communities (Takeover
Bids Directive (2004/25/EC) Regulations 2006 and SI 277/2007
Transparency (Directive 2004/109/EC) Regulations 2017 and
SI 360/2017 European Union (Disclosure of Non-Financial and
Diversity Information by Certain Large Undertakings and Groups)
Regulation 2017, the table below sets out certain non-financial
information to provide investors and other stakeholders with
an understanding of the Group’s development, performance,
position and impact of its activity and where this information
has been provided in this Annual Report :
Reporting
requirement

Environmental
Matters
Social and
employee matters

Relevant policies and Location of
additional information information*

Sustainability and
environment
Code of Ethics;
Global Health
and Safety
Framework
Human rights
Code of Ethics;
Modern Slavery
Statement
Anti-bribery and
Code of Ethics;
corruption
Anti-Bribery
and Corruption
Policy
Business model
–
Non-financial KPIs –
Principal risks
–

Page

Corporate Social
22
Responsibility
Corporate Social 20-23
Responsibility;
People and
24–27
culture
People and
24–27
culture
People and
culture

24–27

Business model 12–13
Strategic Report 12–13
Understanding 45– 48
and managing
our principal risks

*	The referenced sections are deemed to be incorporated within this
Directors’ Report.

Auditors

KPMG, chartered accountants, were appointed statutory auditor
on 18 May 2018 and have been reappointed annually since that
date, and pursuant to section 383(2) of the Companies Act 2014
will continue in office. Prior to 18 May 2018, KPMG LLP, the UK
member firm of KPMG, were the auditor to Flutter Entertainment
plc, having served as auditor for the two financial years ended
31 December 2017. KPMG in Ireland previously served as
auditor to Paddy Power plc (subsequently renamed to Flutter
Entertainment plc) for 14 uninterrupted financial years.
In accordance with section 381(1)(b) of the Companies Act 2014,
a resolution authorising the Directors to fix the remuneration of
the auditors will be proposed at the 2020 AGM.

Disclosure of information to the external auditor

Each of the Directors who held office at the date of approval of
the Directors’ Report confirms that:
so far as they are aware, there is no relevant audit information
of which the external auditor is unaware; and
they have taken all steps that they ought to have taken as a
Director to make them aware of any relevant audit information
and to establish that the external auditor is aware of that
information.

Books of account

The measures which the Directors have taken to ensure that
adequate accounting records are kept with the requirements
of sections 281 to 285 of the Companies Act 2014 are: the
appointment of suitably qualified personnel; the adoption of
suitable policies for recording transactions, assets and liabilities;
and the appropriate use of computers and documentary systems.
The Group and Company accounting records are kept at the
Company’s headquarters at Belfield Office Park, Beech Hill Road,
Clonskeagh, Dublin 4, Ireland.

Listing Rule 9.8.4R

For the purposes of compliance with LR 9.8.4R (4) details of
any long-term incentive schemes are included in the Directors’
Remuneration Report on pages 75 to 90 and included by
reference within this Directors’ Report. For the purposes of
compliance with LR 9.8.4(12) and (13) – Waivers of Dividend
Disclosure – the Trustee of the Employee Benefit Trust has
elected to waive dividends in respect of certain holdings of Flutter
shares, details of which are set out on page 139 of the Financial
Statements and are in included by reference within the Directors’
Report. The remaining LR9.8.4R sections are not applicable.
On behalf of the Board of Directors
Peter Jackson		
Jonathan Hill
Chief Executive Officer
Chief Financial Officer
26 February 2020
Flutter Entertainment plc, Registered in Ireland
Company number 16956

95

Financial
Statements
Section Contents
97	Statement of Directors’ Responsibilities
98	Independent Auditor’s Report
103	Consolidated Income Statement
104	Consolidated Statement of Other
Comprehensive Income
105	Consolidated Statement of
Financial Position
106	Consolidated Statement of Cash Flows
107	Consolidated Statement of
Changes in Equity
109	Notes to the Consolidated
Financial Statements
163	Company Statement of Financial Position
164	Company Statement of Changes
in Equity
166	Notes to the Company Financial Statements

96

Financial Statements

Statement of Directors’ Responsibilities

IN RESPEC T OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements
(the “Annual Report and Accounts”) in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under that
law, the Directors are required to prepare the Group financial
statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU)
and applicable law including Article 4 of the IAS Regulation.
The Directors have elected to prepare the parent Company
financial statements in accordance with FRS 101 Reduced
Disclosure Framework as applied in accordance with the
provisions of the Companies Act 2014.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the assets, liabilities and financial position of the Group
and parent Company and the Group’s profit or loss for that year.
In preparing each of the Group and parent Company financial
statements, the Directors are required to:
select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable
and prudent;
state whether applicable Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
assess the Group and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern; and
use the going concern basis of accounting unless they either
intend to liquidate the Group or Parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are also required by the Transparency (Directive
2004/109/EC0 Regulations 2007) and the Interim Transparency
Rules of the Irish Financial Services Regulatory Authority to
include a management report containing a fair review of the
business and a description of the principal risks and uncertainties
facing the Group.
The directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time
the assets, liabilities, financial position and profit or loss of the
Company and which enable them to ensure that the financial
statements comply with the provision of the Companies Act
2014. The directors are also responsible for taking all reasonable
steps to ensure such records are kept by its subsidiaries which
enable them to ensure that the financial statements of the
Group comply with the provisions of the Companies Act 2014
including Article 4 of the IAS Regulation. They are responsible
for such internal controls as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have
general responsibility for safeguarding the assets of the Group,
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. The directors are also
responsible for preparing a directors’ report that complies with
the requirements of the Companies Act 2014.

The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group
and parent Company website (www.flutter.com). Legislation in the
Republic of Ireland concerning the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.

Responsibility statement of the Directors in
respect of the Annual Report

Each of the Directors confirms that, to the best of their
knowledge:
the Group Financial Statements, prepared in accordance
with IFRS as adopted by the European Union, and the Parent
Company Financial Statements, prepared in accordance with
FRS 101 Reduced Disclosure Framework give a true and fair
view of the assets, liabilities and financial position of the Group
and Parent Company at 31 December 2019 and of the profit
or loss of the Group for the year then ended;
the Directors’ Report includes a fair review of the development
and performance of the business and the position of the Group
and Company, together with a description of the principal risks
and uncertainties that they face; and
the Annual Report and Accounts, taken as a whole, provides
the information necessary to assess the Group’s position and
performance, business model and strategy, is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy.
On behalf of the Board of Directors
Peter Jackson
Chief Executive Officer
26 February 2020

97

Jonathan Hill
Chief Financial Officer

97



Independent Auditor’s Report

TO THE MEMBERS OF FLUT TER ENTERTAINMENT PLC

Report on the audit of the financial statements
Opinion

We have audited the Group and Company financial statements
of (‘the Company’) for the year ended
31 December 2019 set out on pages 103 to 182, which comprise
the consolidated income statement, the consolidated statement
of other comprehensive income, the consolidated statement
of financial position, the consolidated statement of cash flows,
the consolidated statement of changes in equity, the company
statement of financial position, the company statement of
changes in equity, and related notes, including the summary of
significant accounting policies set out in note 2. The financial
reporting framework that has been applied in their preparation is
Irish Law and International Financial Reporting Standards (IFRS)
as adopted by the European Union and, as regards the Parent
Company financial statements, Irish Law and FRS 101 Reduced
Disclosure Framework.
In our opinion:
the financial statements give a true and fair view of the assets,
liabilities and financial position of the Group and Company as at
31 December 2019 and of the Group’s profit for the year then
ended;
the Group financial statements have been properly prepared in
accordance with IFRS as adopted by the European Union;
the Company financial statements have been properly prepared
in accordance with FRS 101 Reduced Disclosure Framework
issued by the UK’s Financial Reporting Council; and
the Group and Company financial statements have been
properly prepared in accordance with the requirements of
the Companies Act 2014 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.

Basis for opinion

We conducted our audit in accordance with International
Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are further described
in the Auditor’s Responsibilities section of our report. We believe
that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is consistent
with our report to the audit committee.

98

We were re-appointed as auditor to by
the Directors on 18 May 2018. The period of total uninterrupted
engagement is the two financial years ended 31 December 2019.
Prior to 18 May 2018, KPMG LLP, the UK member firm of KPMG,
was the auditor to having served as
auditor for the two financial years ended 31 December 2017.
KPMG in Ireland previously served as auditor to Paddy Power
plc (subsequently renamed to Flutter Entertainment plc) for
14 uninterrupted financial years. We have fulfilled our ethical
responsibilities under, and we remain independent of the Group
in accordance with ethical requirements in Ireland including the
Ethical Standard issued by the Irish Auditing and Accounting
Supervisory Authority (“IAASA’’) as applied to public interest
entities. No non-audit services prohibited by that standard
were provided.

Key audit matters: our assessment of risks of
material misstatement

Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified
by us, including those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters,
in decreasing order of audit significance, were as follows
(unchanged from 2018):

Financial Statements

Revenue recognition (Group and Parent Company) £2,140m (2018 – £1,873m)
The Audit Committee Report: page 63
Accounting policy: page 111 to 113
Note 3 to the Group financial statements: page 120
The key audit matter

The Group has a number of income streams
across its online and retail operations
which are predominantly driven by cash
and payment card transactions. The
accuracy and completeness of the amounts
recognised from these income streams is
largely dependent on the effectiveness of
the operational and fraud-related controls
in place in the Group’s IT systems that aim
to correctly calculate appropriate wins
and losses, and commission revenues, as
applicable, alongside customer funds. It is
also dependent on core finance processes
and controls accurately reporting on
and reconciling these transactions.
Revenue streams for the vast majority of
the Group’s products are computed on
highly-complex IT systems, which process
a high volume of low value transactions
across a high volume of different sporting
events. There are in excess of 1 billion
transactions each year, all requiring a
correct IT outcome. There is a risk that a
system may not be configured correctly
from the outset such that winning
and losing bets or commissions are
calculated incorrectly, that the systems
do not interface correctly from the
customer facing systems through to the
financial information systems and that
unauthorised changes may be made to any
of these systems, which may result in the
misstatement of revenue.

The calculation of revenue from the IT
systems links directly to the reconciliation
of funds between customer and corporate
accounts for the majority of online activity
and, as such, customer funds must be
appropriately managed and safeguarded.
There is a risk that winning and losing bets
or commissions are not calculated correctly
and consequently, a risk that the revenue
to be transferred from the customer
accounts in the ring-fenced trust to Flutter
Entertainment corporate accounts could
be misstated.

How the matter was addressed in our audit

 Our procedures when relevant to the Group or Parent Company included, among others:

 With the assistance of our IT audit specialists we obtained and documented our understanding
of key revenue processes and specifically how transactions from each revenue stream were
initiated, processed and recorded from transaction initiation through to recording in the Financial
Statements.
 We tested the design and implementation of key controls, both automated and manual,
in these processes. We also identified the key IT environments supporting these processes.

 With the assistance of our IT audit specialists we tested key controls relevant to supporting
our audit approach to revenue. These included logical access controls, including user access
management; user access recertification; appropriateness of privileged users from the
perspective of user access management, change management and job scheduling; and user
authentication.
 As part of our IT change management procedures we tested controls over authorisation and
testing of changes and developments to the systems; and controls over job processing and
scheduling (automated IT processing for interfaces and batch processing).

 We tested the operating effectiveness of controls over customer account set-up, cash deposits
and withdrawals from customer accounts.

 We tested the operating effectiveness of controls over the capturing of initial bets, their allocation
between different products and their processing through the system to recognition as revenue or
in the appropriate customer account.
 We used data analytics to test key interfaces between transaction recording systems and the
General Ledger.
 We tested the effectiveness of the controls at a sample of retail betting shops in the Republic
of Ireland and United Kingdom. This involved undertaking site visits.

 We traced a selection of bets placed on live-betting environments from the customer-facing
systems to the source databases and then from the databases to the financial information
systems to assess whether that information is passed appropriately from one system to another.

 We obtained external confirmation and/or third party statements of the clients funds held in the
client trust and reconciled the bank balance confirmation/third party statement to the customers’
betting accounts.
 We assessed the appropriateness of cash transferred from the client trust accounts to corporate
cash by reconciling the total revenue amounts reported by key IT systems to the amounts
transferred from the client funds to corporate cash. We tested a sample of these transfers by
agreeing the amounts to the relevant bank information.
 Using data analytics, we recalculated a selection of commissions for the year for a customer’s
account based on country, event and level of activity and ensured charges were applied as
described in the terms and conditions for Exchange transactions.

 We recalculated premium charges for a sample of customers during the year, confirming such
charges were applied as described in the terms and conditions for Exchange transactions.

 To identify unusual trends or activities in revenues, we considered reports issued by the Group’s
Internal Audit function during the year on revenue related processes. We also considered the
Group’s reports which are designed to identify unusual trading activity.

 We performed substantive analytical procedures over the significant revenue streams and tested
the inclusion of income in the appropriate period.

 We tested a sample of bets placed around year end for events which had occurred ensuring the
revenue was appropriately recorded in the correct period. We also tested a sample of open bets at
year end ensuring the event had not yet occurred and ensured the bet was correctly recorded as an
open bet at year end.
 We also considered the adequacy of disclosures in respect of revenue recognition.
 Based on evidence obtained we found that revenue recognition is appropriate.

The key audit matter above was also applicable to the Parent Company.

99



Independent Auditor’s Report continued

TO THE MEMBERS OF FLUT TER ENTERTAINMENT PLC

Tax provisioning – legacy gaming tax assessments in Germany and Greece
The Audit Committee Report: page 63
Accounting policy: page 111 to 112
Note 14 to the Group financial statements: page 137
The key audit matter

For some markets in which the Group now operates or operated in
the past, the tax regulations dealing specifically with online gaming
might not yet be formed, is unclear or continues to evolve, requiring the
Directors to exercise a level of judgement surrounding the interpretation
and application of local and international tax laws which may differ from
the relevant tax authorities. This may result in significant judgements in
the quantification of provisions or contingent liabilities for gaming and
other indirect taxes in countries where the tax regulations do not exist
or are unclear, the volatility of which could have a significant impact on
the financial statements, particularly if there is a retrospective element
applied to taxes.

During prior periods, the Group received significant tax assessments
from tax authorities in Germany and Greece in respect of legacy periods.
The Group settled these assessments during the current period but is
appealing the matters. Management is treating the assessments paid
as fully recoverable on the basis that the Group will successfully appeal
the assessments in both Germany and Greece and receive a refund of
the amounts paid. This is a significant judgement.

How the matter was addressed in our audit

Our procedures included, among others:

 We obtained and documented our understanding of the process
around the calculation of income tax provisions and the review
of the assumptions used in the estimation of such liabilities.
We evaluated the design and implementation and tested the
operating effectiveness of the relevant controls therein.
 For all significant gaming tax assessments, we challenged
management on their treatment of the tax assessments.

 We reviewed correspondence with the Group’s external legal counsel
and we obtained external legal confirmations from the German
and Greek lawyers.
 We held discussions with the Group’s external legal counsel on the
tax assessments and the probability of success in the ongoing
appeals process.
 We assessed the adequacy of the Group’s disclosures in respect
of the gaming tax assessments in Germany and Greece.

 Based on evidence obtained, we found that the treatment of the tax
provisions and associated disclosures were appropriate.

The Greek tax assessment was settled by the Parent Company and therefore this key audit matter was relevant to the audit and the
Parent Company.

Our application of materiality and an overview
of the scope of our audit

Materiality for the Group financial statements as a whole was set
at £12.5 million (2018: £10.4 million), determined with reference
to a benchmark of Group revenues, of which it represents 0.6%
(2018: 5% of Group profit before tax).
The Group benchmark has changed from the prior year, in order
to reflect the change in the nature of the Group’s operations
as they continue to invest in the US and enter new markets
there. The US segment is currently loss making and is therefore
resulting in volatility in the group’s profit before tax. As a result
of our assessment, we consider Group revenues the appropriate
representative benchmark for the financial performance of the
Group in 2019. Of the Group’s four reporting components,
we subjected three (FY2018: two) to full scope audits for
Group purposes.
Materiality for the parent company financial statements as a
whole was set at £9.4 million (2018: £7.8 million), determined with
reference to a benchmark of total assets and chosen to be lower
than materiality for the group financial statements as a whole.
It represents 0.1% of total assets (2018: 0.1%).
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £625,000
(2018: £520,000), in addition to other identified misstatements
that warranted reporting on qualitative grounds.

10 0

The components within the scope of our work accounted 96%
of Group revenues (2018: 90%), 99% of Group net assets (2018:
98%) and 95% of Group profit before taxation (2018: 92%).
The remaining 4% of total Group revenues and 5% of Group profit
before tax is represented primarily by one component. For this
residual component, we performed analysis at an aggregated
Group level and re-confirmed our assessment that there were no
significant risks of material misstatement within this component.
The Group team instructed component auditors as to the
significant areas to be covered, including the relevant risks
detailed above and the information to be reported back.
The Group team approved the component materialities, which
ranged from £3.8 million to £9.4 million, having regard to the
mix of size and risk profile of the Group across the components.
The work on two of the three in-scope components was
performed by component auditors in Australia and the US
and the rest, including the audit of the parent company,
was performed by the Group team.
The Group team held teleconference meetings with the
Australian and US components to assess the audit risk and
strategy. The Group audit team visited the US component to
discuss work undertaken in more detail. The Group team also
held teleconference meetings with our Australian and US
components at the conclusion of their fieldwork to discuss
the findings reported to the Group team. The Group team also
carried out a detailed review of the Australian and US component
audit workpapers.

Financial Statements

We have nothing to report on going concern

We are required to report to you if:
we have anything material to add or draw attention to in relation
to the directors’ statement in note 2 to the financial statements
on the use of the going concern basis of accounting with no
material uncertainties that may cast significant doubt over
the Group and Company’s use of that basis for a period of at
least twelve months from the date of approval of the financial
statements; or
if the related statement under the Listing Rules of Euronext
Dublin and the UK Listing Authority is materially inconsistent
with our audit knowledge.
We have nothing to report in these respects.

Other information

The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
The other information comprises the information included in the
directors’ report and Strategic report. The financial statements
and our auditor’s report thereon do not comprise part of the other
information. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent
with the financial statements or our audit knowledge. Based solely
on that work we have not identified material misstatements in the
other information.
Based solely on our work on the other information we report
that, in those parts of the Directors’ Report specified for our
consideration:
we have not identified material misstatements in the
directors’ report;
in our opinion, the information given in the directors’ report
is consistent with the financial statements;
in our opinion, the directors’ report has been prepared in
accordance with the Companies Act 2014.

Disclosures of principal risks and longer-term viability

Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
the Understanding and Managing our Principal Risks disclosures
describing these risks and explaining how they are being
managed and mitigated;
the directors’ confirmation within the Directors’ Report that they
have carried out a robust assessment of the principal risks facing
the Group, including those that would threaten its business
model, future performance, solvency and liquidity; and
the directors’ explanation in the Directors’ Report of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.

Other corporate governance disclosures

We are required to address the following items and report to
you in the following circumstances:
Fair, balanced and understandable: if we have identified
material inconsistencies between the knowledge we acquired
during our financial statements audit and the directors’
statement that they consider that the Annual Report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
Report of the Audit Committee: if the section of the Annual
Report describing the work of the Audit Committee does not
appropriately address matters communicated by us to the
Audit Committee;
Statement of compliance with UK Corporate Governance
Code: if the directors’ statement does not properly disclose a
departure from provisions of the UK Corporate Governance
Code specified by the Listing Rules for our review.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we report,
in relation to information given in the Corporate Governance
Statement on pages 50 to 51, that:
based on the work undertaken for our audit, in our opinion,
the description of the main features of internal control and
risk management systems in relation to the financial reporting
process is consistent with the financial statements and has been
prepared in accordance with the Act;
based on our knowledge and understanding of the Company
and its environment obtained in the course of our audit, we have
not identified any material misstatements in that information;
and
the Corporate Governance Statement contains the information
required by the European Union (Disclosure of Non-Financial
and Diversity Information by certain large undertakings and
groups) Regulations 2017.
We also report that, based on work undertaken for our audit, other
information required by the Act is contained in the Corporate
Governance Statement.

Directors’ Remuneration Report

In addition to our audit of the Financial Statements, the Directors
have engaged us to audit the information in the Directors’
Remuneration Report that is described as having been audited,
which the Directors have voluntarily decided to prepare as if
the Company were required to comply with the requirements
of Schedule 8 to The Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 (SI 2008
No. 410) made under the UK Companies Act 2006.
In our opinion the part of the Directors’ Remuneration Report
which we were engaged to audit has been properly prepared in
accordance with Schedule 8 to The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2008 made under the UK Companies Act 2006, as if those
requirements were to apply to the Company.

101



Independent Auditor’s Report continued

TO THE MEMBERS OF FLUT TER ENTERTAINMENT PLC

Our opinions on other matters prescribed by
the Companies Act 2014 are unmodified

We have obtained all the information and explanations which we
consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Group and Company
were sufficient to permit the Group financial statements and
the Company statement of financial position to be readily and
properly audited and the Group and Company’s statement of
financial position and the Group’s profit and loss account is in
agreement with the accounting records.

We have nothing to report on other matters on which
we are required to report by exception

The Companies Act 2014 requires us to report to you if, in
our opinion, the disclosures of directors’ remuneration and
transactions required by Sections 305 to 312 of the Act are not
made.
The Companies Act 2014 also requires us to report to you if, in our
opinion, the Company has not provided the information required
by section 5(2) to (7) of the European Union (Disclosure of NonFinancial and Diversity Information by certain large undertakings
and groups) Regulations 2017 for the year ended 31 December
2019 as required by the European Union (Disclosure of NonFinancial and Diversity Information by certain large undertakings
and groups) (amendment) Regulations 2018.
The Listing Rules of Euronext Dublin and the UK Listing Authority
require us to review:
the Directors’ Statement, in relation to going concern and
longer-term viability;
the part of the Corporate Governance Statement relating to the
Company’s compliance with the provisions of the UK Corporate
Governance Code and the Irish Corporate Governance Annex
specified for our review; and
certain elements of disclosures in the report to shareholders
by the Board of Directors’ remuneration committee.

Respective responsibilities and restrictions
on use
Directors’ responsibilities

As explained more fully in their statement set out on page 97,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and
fair view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do so.

102

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance but does not guarantee that an audit conducted
in accordance with ISAs (Ireland) will always detect a material
misstatement when it exists. Misstatements can arise from
fraud, other irregularities or error and are considered material if,
individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis
of the financial statements. The risk of not detecting a material
misstatement resulting from fraud or other irregularities is higher
than for one resulting from error, as they may involve collusion,
forgery, intentional omissions, misrepresentations, or the override
of internal control and may involve any area of law and regulation
and not just those directly affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s
website at https://www.iaasa.ie/getmedia/b2389013-1cf6-458b9b8f-a98202dc9c3a/Description_of_auditors_responsiblities_
for_audit.pdf

The purpose of our audit work and to whom we owe
our responsibilities

Our report is made solely to the Company’s members, as a body,
in accordance with Section 391 of the Companies Act 2014.
Our audit work has been undertaken so that we might state to
the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members, as a body, for our audit work, for our
report, or for the opinions we have formed.
C. Mullen
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
26 February 2020

Financial Statements

Consolidated Income Statement
YEAR ENDED 31 DECEMBER 2019

Continuing operations
Revenue
Cost of sales
Gross profit


Profit/(loss) for the year
Attributable to:
Equity holders of the Company
Non-controlling interest
Earnings per share
Basic
Diluted

1. E
 BITDA is defined as profit for the year before depreciation, amortisation and impairment, financial income, financial expense and tax expense/credit. It is considered
by the Directors to be a key measure of the Group’s financial performance. Note as a result of the adoption of IFRS 16 Leases from 1 January 2019, under the modified
retrospective approach, the rent expense which in 2018 was reflected in operating costs excluding depreciation, amortisation and impairment, is no longer recorded as
an expense in 2019 but is replaced by a depreciation charge and finance expense which are recorded after EBITDA. There is no restatement of comparative information.
See Note 2 for further detail on the impact of IFRS 16.

Notes 1 to 33 on pages 109 to 162 form an integral part of these consolidated financial statements.

103



Consolidated Statement of Other Comprehensive Income
YEAR ENDED 31 DECEMBER 2019

Profit for the year
Other comprehensive income/(loss)
Items that are or may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
Fair value of foreign exchange cash flow hedges transferred to income statement
Foreign exchange (loss)/gain on translation of the net assets of foreign currency
denominated entities
Other comprehensive income/(loss)
Total comprehensive income for the year
Attributable to:
Equity holders of the Company
Non-controlling interest
Notes 1 to 33 on pages 109 to 162 form an integral part of these consolidated financial statements.

Financial Statements

Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2019

Note

Assets
Property, plant and equipment
Intangible assets
Goodwill
Deferred tax assets
Investments
Other receivables
Total non-current assets

Equity
Issued share capital and share premium
Treasury shares
Shares held by employee benefit trust
Other reserves
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Total equity

Trade and other receivables
Financial assets – restricted cash
Cash and cash equivalents
Total current assets

Liabilities
Trade and other payables
Derivative financial liabilities
Provisions
Current tax payable
Lease liabilities
Borrowings
Total current liabilities

Trade and other payables
Derivative financial liabilities
Provisions
Deferred tax liabilities
Lease liabilities
Borrowings
Total non-current liabilities

1 T
 he Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach, comparative information is not restated.
See Note 2 for further details.

Notes 1 to 33 on pages 109 to 162 form an integral part of these consolidated financial statements.

On behalf of the Board
Peter Jackson			
Chief Executive Officer		
26 February 2020

Jonathan Hill
Chief Financial Officer

105



Consolidated Statement of Cash Flows
YEAR ENDED 31 DECEMBER 2019

Cash flows from operating activities
Profit for the year
Separately disclosed items
Tax expense before separately disclosed items
Financial income
Financial expense
Depreciation and amortisation before separately disclosed items
Employee equity-settled share-based payments expense before separately disclosed items
Foreign currency exchange loss/(gain)
Loss/(profit) on disposal of property, plant and equipment and intangible assets
Cash from operations before changes in working capital
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade, other payables and provisions
Cash generated from operations
Tax paid
Net cash from operating activities before transactions fees, restructuring and strategic
initiatives costs paid
Transaction fees paid
Restructuring and strategic initiative costs paid
Amounts paid in respect of legacy Greek and German tax assessments
Net cash from operating activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of investment
Cash in acquired businesses
Purchase of businesses
Capitalised internal development expenditure
Payment of contingent deferred consideration
Proceeds from disposal of property, plant and equipment and intangible assets
Interest received
Net cash used in investing activities
Proceeds from the issue of new shares
Proceeds from the issue of shares to Non-controlling interest
Dividends paid
Payment of lease liabilities
Net amounts drawn down on borrowing facilities
Repayment of FanDuel debt and debt like items
Interest paid
Fees in respect of borrowing facility
Purchase of own shares including direct purchase costs
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at start of year
Foreign currency exchange gain/(loss) on cash and cash equivalents
Net Cash and cash equivalents at end of year
Bank overdraft
Cash and cash equivalents at end of year
Notes 1 to 33 on pages 109 to 162 form an integral part of these consolidated financial statements.


Financial Statements

Consolidated Statement of Changes in Equity
YEAR ENDED 31 DECEMBER 2019

Balance at
1 January 2019
Total comprehensive
income for the year
Profit for the year
Foreign exchange
translation (Note 6)
Net change in fair value
of cash flow hedge
reserve
Total comprehensive
income/(loss) for the
year
Transactions with
owners of the
Company, recognised
directly in equity
Shares issued (Note 16)
Business combinations
(Note 13)
Own shares acquired by
the Group (Note 16)
Equity-settled
transactions – expense
recorded in income
statement
Equity-settled
transactions – vestings
Tax on share-based
payments
Transfer to retained
earnings on exercise of
share options (Note 16)
Dividends to
shareholders (Note 17)
Total contributions
by and distributions
to owners of the
Company
Balance at
31 December 2019

Consolidated Statement of Changes in Equity
YEAR ENDED 31 DECEMBER 2018

Balance at
1 January 2018
Adoption of IFRS 9
Opening balance
as restated
Total comprehensive
income for the year
Profit for the year
Foreign exchange
translation (Note 6)
Total comprehensive
income/(loss) for
the year
Transactions with
owners of the
Company, recognised
directly in equity
Shares issued (Note 16)
Shares issued in
Non-controlling interest
Business combinations
– FanDuel (Note 13)
Own shares acquired
by the Group (Note 16)
Equity-settled
transactions – expense
recorded in income
statement
Equity-settled
transactions
– vestings
Tax on share-based
payments
Transfer to retained
earnings on exercise of
share options (Note 16)
Dividends to
shareholders (Note 17)
Total contributions by
and distributions to
owners of the Company
Balance at
31 December 2018

Number of
ordinary
shares in
issue
millions

Notes 1 to 33 on pages 109 to 162 form an integral part of these consolidated financial statements.

108

NonTotal controlling
Financial Statements

Notes to the Consolidated Financial Statements
1. General information

(the “Company”) and its subsidiaries
(together referred to as the “Group”) is a global sports betting
and gaming group, whose headquarters are in Dublin, Ireland.
The Group currently operates across four divisions; (i) PPB Online
which includes the online brands of Paddy Power, Betfair and
Adjarabet, the Paddy Power telephone sportsbook, as well as
a number of business-to-business partnerships; (ii) Australia,
consisting of Sportsbet, the market leader in the fast-growing
Australian online betting market; (iii) PPB Retail, which operates
over 620 Paddy Power betting shops across the UK and Ireland;
and (iv) US, which comprises FanDuel, a market leading operator
in daily fantasy sports and online and retail sportsbetting, TVG,
America’s leading horseracing TV and betting network, the Betfair
New Jersey online casino and the Betfair New Jersey horseracing
betting exchange.
The Company is a public limited company incorporated and
domiciled in the Republic of Ireland and has its primary listing on
the London Stock Exchange and a secondary listing on the Irish
Stock Exchange. The address of its registered office is set out on
page 185 of this Annual Report.
The consolidated financial statements of the Group for the year
ended 31 December 2019 comprise the financial statements of
the Company and its subsidiary undertakings and were approved
for issue by the Board of Directors on 26 February 2020.

2. Basis of preparation and summary of
significant accounting policies

The consolidated financial statements are prepared on the
historical cost basis except for betting transactions (which are
recorded as derivative financial instruments), investments,
contingent deferred consideration and certain share-based
payments, all of which are stated at fair value (grant date fair
value in the case of share-based payments). The consolidated
financial statements are presented in pounds sterling and are
rounded to the nearest million.
Further to IAS Regulation (EC1606/2002, ‘Accounting standards
adopted for use in the EU’), EU law requires that the annual
consolidated financial statements of the Group be prepared in
accordance with International Financial Reporting Standards
(“IFRS”) adopted by the European Union (“EU”). The consolidated
financial statements have been prepared on the basis of IFRS
adopted by the EU and effective for accounting periods ending
on or after 1 January 2019.
The accounting policies applied in the preparation of these
consolidated financial statements have been applied consistently
during the year and prior year, except as highlighted below in
‘Recent accounting pronouncements’.

Recent accounting pronouncements

The IASB have issued the following standards, policies,
interpretations and amendments which were effective for the
Group for the first time in the year ended 31 December 2019:
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
Amendments to IFRS 9 Prepayment Features with
Negative Compensation
Amendments to IAS 28: Long-term interests in Associates
and Joint Ventures

Annual improvements to IFRS Standards 2015-2018 Cycle
Amendments to IAS 19: Plan amendment, Curtailment
or Settlement
The adoption of the above new standards and interpretations
with the exception of IFRS 16 did not have a significant impact
on the Group’s consolidated financial statements.
The Group has adopted IFRS 16 Leases from 1 January 2019.
IFRS 16 introduced a single on-balance sheet accounting model
for lessees. As a result, the Group as a lessee has recognised
right-of-use assets representing its rights to use the underlying
assets and lease liabilities representing its obligations to make
lease payments.
The Group has applied IFRS 16 using the modified retrospective
approach, under which the cumulative effect of initial recognition
is recognised in retained earnings at 1 January 2019. Accordingly,
the comparative information presented for 2018 has not been
restated – i.e. it is presented as reported under IAS 17 and related
interpretations. The details of the changes in accounting policies
are discussed below.

As a lessee

As a lessee, the Group previously classified leases as operating
or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of ownership
of the underlying asset. Under IFRS 16, the Group recognises right
of use assets and lease liabilities for most leases – i.e. these leases
are recorded on the statement of financial position.
However the Group has elected not to recognise the right-of-use
assets and lease liabilities for a small amount of leases of low
value assets (e.g office equipment). The Group recognises the
lease payments associated with these leases as an expense on
a straight-line basis over the lease term.
The Group recognises a right of use asset and a lease liability at
the lease commencement date. The right of use asset is initially
measured at cost and subsequently at cost less any accumulated
depreciation and impairment losses and adjusted for certain
remeasurements of the lease liability. The right of use asset is
initially measured at deemed cost comprising the amount of the
initial measurement of lease liability, any lease payments made
at or before the commencement date less any lease incentives
received, any initial direct costs, and restoration costs. It is
subsequently measured at cost less accumulated depreciation
and impairment in accordance with the Group’s accounting
policies. It is depreciated over the shorter of the lease term and
the useful life of the right-of-use asset, unless there is a transfer
of ownership or purchase option which is reasonably certain to
be exercised at the end of the lease term. If there is a transfer of
ownership or purchase option which is reasonably certain to be
exercised at the end of the lease term, the Group depreciates the
right-of-use asset over the useful life of the underlying asset.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate. To determine the incremental borrowing
rate, the Group, where possible, used recent third-party borrowings
as a benchmark to determine the borrowing rate that would
be attached to a secured borrowing having similar amount,
economic environment and duration as the individual lease.

109



Notes to the Consolidated Financial Statements continued
2. Basis of preparation and summary of
significant accounting policies (continued)
As a lessee (continued)

Lease liabilities include the net present value of the following
lease payments:
fixed payments (including in-substance fixed payments),
less any lease incentives receivable
variable lease payment that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable by the group under residual
value guarantees
the exercise price of a purchase option if the group is reasonably
certain to exercise that option, and
payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease liability is subsequently increased by the interest cost
on the lease liability and decreased by the lease payment made.
It is remeasured when there is a change in future lease payments
arising from a change in an index or a rate, a change in the
estimate of the amount expected to be payable under a residual
value guarantee, or as appropriate, changes in the assessment of
whether a purchase or extension option is reasonably certain to
be exercised or a termination option is reasonably certain not to
be exercised.
The Group has applied judgement to determine the lease term for
some lease contracts in which it is a lease that includes renewal
options. The assessment of whether the Group is reasonably
certain to exercise such options impacts the lease term, which
significantly affects the amount of lease liabilities and right of use
assets recognised.

Transition

Until 31 December 2018, leases of property, plant and equipment
where the Group, as lessee, had substantially all the risks and
rewards of ownership were classified as finance leases. Finance
leases were capitalised at the lease’s inception at the fair value of
the leased property or, if lower, the present value of the minimum
lease payments. The corresponding rental obligations, net of
finance charges, were included in other short-term and long-term
payables. Each lease payment was allocated between the liability
and finance cost. The finance cost was charged to profit or loss
over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance leases
was depreciated over the asset’s useful life, or over the shorter of
the asset’s useful life and the lease term if there is no reasonable
certainty that the group will obtain ownership at the end of the
lease term.
Leases in which a significant portion of the risks and rewards
of ownership were not transferred to the group as lessee were
classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) were
charged to profit or loss on a straight-line basis over the period of
the lease, unless another systematic basis was more appropriate.

110

The Group leases various licenced betting and other offices
under operating lease agreements. The leases have varying
terms, escalation clauses and renewal rights. The leases have,
on average, approximately five years left to run (if the Group was
to exercise available break options), with a right of renewal after
that date. Lease rentals are typically reviewed every five years to
reflect market rental rates or changes in general inflation rates.
At transition, for leases classified as operating leases under IAS
17, lease liabilities were measured at the present value of the
remaining lease payments discounted at the Group’s incremental
borrowing rate at 1 January 2019. Right of use assets are
measured at either:
their carrying amounts as if IFRS 16 had been applied since the
commencement date, discounted using the leases incremental
borrowing rate at the date of initial application.
an amount equal to the lease liability, adjusted by the amount
of any prepaid or accrued lease payments.
The Group used the following practical expedients when
applying IFRS 16 to leases previously classified as operating
leases under IAS 17:
Applied the exemption not to recognise right of use assets and
liabilities for leases with less than 12 months of lease term and
leases for which the underlying asset is of low value
Relied on previous assessments on whether leases are onerous
as an alternative to performing an impairment review
Applied portfolio level accounting for leases with similar
characteristics
Excluded initial direct costs from measuring the right of use
asset at the date of initial application
Used hindsight when determining the lease term if the contract
contains options to extend or terminate the lease

As a lessor

The Group has a small number of properties that are sublet.
The accounting policies applicable to the Group as a lessor are
not different from those under IAS 17.
At inception, the Group determines whether each lease is a
finance lease or an operating lease, by reference to the transfer
of all risks and rewards in connection to ownership of the
underlying asset. In this case, the Group applies the derecognition
and impairment requirements in IFRS 9 to the net investment
in the lease.
When the Group is an intermediate lessor the sub leases are
classified with reference to the right-of -use-asset arising from
the head lease, not with reference to the underlying asset.
Under operating leases, the Group recognises the income
generated by the lease on an accruals basis over the life of
the contract.

Impact on financial statements
Impact on transition

On transition to IFRS 16, the Group recognised additional right-ofuse-assets and additional lease liabilities. The impact on transition
is summarised below:

Financial Statements

Right of use assets
Provisions
Payables
Lease liabilities
Trade and other receivables including prepayments


As the Group measured the right-of-use-assets at an amount
equal to the lease liabilities, no adjustment to retained earnings
was required.
The provisions derecognised referred to previously identified
onerous leases that under IAS 17 had required, in previous
accounting periods, the recognition of a provision which,
under IFRS 16, is incorporated in the overall lease liability.
When measuring lease liabilities for leases that were classified as
operating leases, the Group discounted lease payments using
its incremental borrowing rate at 1 January 2019. The weighted
average rate applied is 3%.

Operating lease commitments at 31 December
2018 as disclosed in the Group’s consolidated
financial statements
Less payments not to be included within
lease liability
Discounted using the incremental borrowing
rate at 1 January 2019
Lease liabilities recognised at 1 January 201

Impacts for the period

As a result of initially applying IFRS 16 in relation to the leases
that were previously classified as operating leases, the Group
recognised £166.0m of right-of-use-assets and £170.5m of lease
liabilities as at 31 December 2019. See Note 10, 22 and 30 (d) for
further details.
Also in relation to those leases under IFRS 16, the Group has
recognised depreciation and interest costs instead of operating
lease expense. During the year ended 31 December 2019, the
Group recognised £36.7m of depreciation charges (See Note 10)
and £5.0m of interest costs from these leases, as highlighted in
Note 6.

Adopted IFRS not yet applied

The following IFRSs have been issued but have not been applied
in these financial statements. Their adoption is not expected to
have a material effect on the financial statements:
Amendments to references to the Conceptual Framework in
IFRS Standards (effective date 1 January 2020)
Definition of a business (Amendments to IFRS 3) (effective
date 1 January 2020)
Definition of material (Amendments to IAS 1 and IAS 8)
(effective date 1 January 2020)

IFRS 17 Insurance Contracts (effective date 1 January 2021)
Amendments to IFRS 10 and IAS 28: Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture
(effective date to be confirmed)

Basis of consolidation

The Group’s financial statements consolidate the financial
statements of the Company and its subsidiary undertakings
based on accounts made up to the end of the financial year.
A subsidiary is an entity controlled by the Company. The Group
controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Intra-group
balances and any unrealised gains and losses or income and
expenses arising from intra-group transactions are eliminated on
consolidation except to the extent that unrealised losses provide
evidence of impairment.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future
periods affected.
In the course of preparing the financial statements, no judgements
have been made in the process of applying the Group’s accounting
policies, other than those involving estimation (as described
below), that have a significant effect on the amounts recognised
in the financial statements.
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in material adjustment to the
carrying amount of assets and liabilities within the next financial
year is set out below.

Valuation of legacy gaming tax assessments

Taxation within the Group includes both Income Taxes and
Gaming Taxes. Judgement and estimation is required to interpret
international tax laws and the way these taxes interact within each
jurisdiction, to identify and value any provisions arising in relation
to gaming and income taxes as applicable.
As outlined in Note 14, on 13 February 2019, the Group provided
an update on two separate disputed legacy tax assessments.
The first relates to the Betfair Exchange in Germany, which
operated there until November 2012, and the second relates to
the paddypower.com business in Greece.
The Hessen Fiscal Court provided the Group with its decision
relating to the Group’s appeal of a 2012 German tax assessment
relating to the Betfair Exchange, which operated in Germany
until November 2012. The Fiscal Court found against the Group
and deemed that a tax liability of approximately €40m (£36m) is
payable (including accrued interest). This represents a multiple
of the revenues generated by the Exchange during the
assessment period.

111



Notes to the Consolidated Financial Statements continued
2. Basis of preparation and summary of
significant accounting policies (continued)

Valuation of legacy gaming tax assessments (continued)

Separately, the Group was issued with a Greek tax assessment
for financial years 2012, 2013 and 2014, relating to paddypower.
com’s Greek interim licence. This assessment concluded that
the Group is liable to pay €15.0m in taxes including penalties and
interest. This is substantially higher (by multiples) than the total
cumulative revenues ever generated by paddypower.com in
Greece. There is potential that the periods after 2014 could also
be subject to further challenge by the Greek tax authorities.
The Group strongly disputes the basis of these assessments, and
in line with the legal and tax advice we have received, is confident
in our grounds to successfully appeal them. The appeals process
has commenced in both cases. Accordingly, we do not consider
that these amounts represent liabilities for the Group and no
provision has been made for amounts assessed or potential
further assessments. This involves a series of judgements about
future events and ultimately the court judgements and therefore
the Directors may need to re-assess the accounting treatment as
matters develop further. Pending the outcome of these appeals,
we paid the total Greek tax assessment (including the penalties
and interest) and the €30.6m German tax assessment during
2019, with the late payment interest to be paid in due course.
The amounts paid have been recorded as a non-current
receivable on the balance sheet.

Note 10 – Lease term and determination of whether the
Group is reasonably certain to exercise extension options

Some property leases particularly in our retail business contain
extension and break options to provide operational flexibility.
These options are held by the Group and not by the lessors.
The Group assesses whether it is reasonably certain to exercise
these options at lease commencement date. When assessing
these options at the date of transition, the Group was mindful
of the regulatory changes in 2019 particularly in the UK and the
impact it would have on future shop profitability and whether it
could state with reasonable certainty that these options would be
exercised. The Group is of the view that other than the underlying
trading of the shop, there is no economic incentive to extend a
particular lease. For example, the rents are at market rates, there
are no significant leasehold improvements and there are no
significant costs relating to exiting or relocating.
During 2019, as these regulatory changes have been
implemented and the Group has obtained greater knowledge
of the potential impact on profitability, it has reassessed the
likelihood of options being exercised which resulted in an increase
in the right-of-use-asset and lease liability being recognised.
The Group has estimated that the potential future lease
payments should it exercise all options would result in an
increase in the lease asset and liability of £19m.

Note 12 – Measurement of the recoverable amounts of
cash generating units containing goodwill and indefinite
life licences and brands intangible assets

An impairment review has been performed of all goodwill and
intangible assets held by the Group. The impairment review is
performed on a “value-in-use” basis, which requires estimation
of future net operating cash flows, the time period over which

112

they will occur, an appropriate discount rate and an appropriate
growth rate. Certain of these estimates and assumptions
are subjective in nature. However, there are no estimates or
assumptions used in assessing the recoverable amount of cash
generating units which are considered to have a significant risk of
causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year.

Measurement of fair values

A number of the Group’s accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
The Group has an established control framework with respect to
the measurement of fair values. Significant unobservable inputs
and valuation adjustments are monitored on an on-going basis.
When measuring the fair value of an asset or liability, the Group
uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on
the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability
might be categorised in the different levels of the fair value
hierarchy, then the fair value measurement is categorised in its
entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change has occurred.

Revenue

The services provided by the Group comprise sports betting
(sportsbook, the exchange sports betting product, daily fantasy
sports products and pari-mutuel betting products), fixed odds
games betting, online games and casino, peer-to-peer games
including online bingo and online poker and business-to-business
services. Revenue is stated exclusive of value-added tax.
The Group’s betting and gaming activities are classified as
derivative financial instruments, with the exception of the
exchange sports betting product and pari-mutuel betting
products on which commission income is earned, peer-to-peer
games on which commission income and tournament fees are
earned (including daily fantasy sports), and business-to-business
services on which fees are earned.
Revenue from sportsbook betting activities represents the net
gain or loss from betting activities in the period plus the gain
or loss on the revaluation of open positions at period end and
is stated net of the cost of customer promotions and bonuses
incurred in the period. These derivatives are recognised initially
at fair value and subsequently at fair value through profit or loss,
within the revenue line as this represents the Group’s principal
activity. Customer promotions (including free bets) and bonuses
are deducted from sportsbook betting revenue.

Financial Statements

Revenue from the exchange sports betting product represents
commission earned on betting activity and is recognised on the
date the outcome for an event is settled.
Revenue from Daily Fantasy Sports products represents
entry fees less prizes paid and player acquisition and retention
incentives. Prizes are generally paid in cash or an entry fee into
specific contests or tournaments.
The Group earns service fees from offering fantasy sports
contests (“Contests”) and fantasy sports tournaments
(“Tournaments”) to users. Contests are generally completed
in a single day or up to one week. Tournaments are generally
completed in one week or up to several months over two to three
rounds. For Contests, revenue is recognised when the contest is
settled. For Tournaments, revenue is recognised over the period
of the tournament as each round is completed and there is
no longer a service obligation to each user that participated
in the tournament.
The Group offers various incentives to build loyalty, encourage
and engage users on the platform, the costs of incentives are
recorded as a reduction to the amount recognised as revenue
for service fees.
Revenue from sponsorships represents advertising campaigns
for customers who become a presenting sponsor at events.
Customers are generally billed prior to the campaign launch
and revenue is earned over the period of the event.
Revenue from pari-mutuel betting products represents a
percentage of stake and is recognised on settlement of the
event, and is stated net of customer promotions and bonuses
in the period.
Revenue from fixed odds games and the online casinos
represents net winnings (“customer drop”), being amounts
staked net of customer winnings, and is stated net of customer
promotions and bonuses incurred in the period.
Revenue from peer-to-peer games represents commission
income (“rake”) and tournament fees earned from games
completed by the period end, and is stated net of the cost of
customer promotions and bonuses incurred in the period.
Revenue from business-to-business services represents
fees charged for the services provided in the period.

in the period in which it is incurred. Capitalised development
expenditure assets are amortised on a straight-line basis from
the date they are available for use over their useful economic life.

Cost of sales principally comprises betting and gaming taxes,
software supplier costs, customer payment transaction fees,
sporting levies and other data rights charges.

Pounds sterling represents the primary currency for transactions
and as such the Group has chosen to present its financial
statements in pounds sterling. Items included in the financial
statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which
the entity operates, which are primarily pounds sterling, euro,
Australian dollar, US dollar and Georgian lari .

Cost of sales

Research and development

Expenditure on research activities is recognised in the income
statement as an expense in the period in which it is incurred.
Expenditure on development activities is recognised as an internally
generated intangible asset only when the necessary criteria are
met; including demonstrating the technical feasibility of the product
and having sufficient certainty over future revenue or cost
savings that will be generated from the product. The qualifying
expenditure capitalised represents costs directly attributable to
the development of the asset. This expenditure is capitalised from
the date when they first meet the recognition criteria and until the
date at which the asset is available for use. If the criteria are not
met the expenditure is recognised in profit or loss as an expense

Financial income

Interest income is recognised on an accruals basis by reference
to the principal outstanding and the effective rate of interest.
Financial income includes positive changes in the fair value of
financial assets at fair value through profit or loss and positive
changes in the fair value of deferred contingent consideration.

Financial expense

Financial expense comprises interest expense on borrowings
(except in respect of borrowing costs relating to qualifying assets),
lease interest, interest on guarantee contracts entered into with
third parties, the unwinding of the discount on provisions and
other non-current liabilities, negative changes in the fair value of
financial assets at fair value through profit or loss and negative
changes in the fair value of deferred contingent consideration.

Bank and credit card charges

Bank and credit card charges and fees that are considered
integral to the operations of the Group’s business are recognised
in ‘cost of sales’ in the consolidated income statement. Bank
charges and fees that are related to the Group’s financing
activities are recognised in ‘financial expense’ in the consolidated
income statement.

Operating segment reporting

Operating segments are distinguishable components of the
Group that have been established based on the internal reports
regularly reviewed by the Group’s Chief Operating Decision
Maker (the Board of Directors, “CODM”) in order to assess each
segment’s performance and to allocate resources to them.
Geographical segments provide services within a particular
economic environment that are subject to risks and rewards that
are different from those components operating in alternative
economic environments. The Group has determined that its
operating segments of PPB Online, Australia, US and PPB Retail
are its reportable segments. See Note 3 for further information
on operating segments.

Functional and presentation currency

Foreign currency transactions

Transactions in foreign currencies are translated at the relevant
foreign exchange rate ruling at the date of the transaction.
Non-monetary assets that are carried at historical cost are
not subsequently retranslated. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are
translated to functional currencies at the foreign exchange
rates ruling at that date. Foreign exchange differences arising
on translation are recognised in the income statement.

113

Notes to the Consolidated Financial Statements continued
2. Basis of preparation and summary of
significant accounting policies (continued)
Foreign currency transactions (continued)

Gains and losses arising on the retranslation of cash and cash
equivalent balances are included within ‘operating costs excluding
depreciation and amortisation’ in the income statement rather
than as financial income or expense, as the Directors consider
that the gains or losses arising relate to operations, as the Group
broadly matches its foreign currency denominated assets and
liabilities to ensure that foreign exchange gains and losses are
minimised. Gains and losses on retranslation of non-cash assets
and liabilities are also dealt with as operating items. Gains and
losses on foreign currency retranslation are separately analysed
into their components in the statement of cash flows.
For a review of the Hedge Accounting policies adopted by the
Group, see Hedging Activities below.

Foreign currency translation of foreign operations

To the extent that the Group’s foreign operations are considered
to have functional currencies which are different from the
Group’s presentation currency, the assets and liabilities of foreign
operations, including goodwill and fair value adjustments arising
on consolidation and long term intra-group loans that are part
of the net investment because repayment is not planned or
foreseen, are translated to GBP at the foreign exchange rates
ruling at the reporting date. The revenues and expenses of these
foreign operations are translated to GBP at rates approximating
the foreign exchange rates ruling at the dates of the transactions.
Foreign exchange differences arising on translation are
recognised directly in the consolidated statement of other
comprehensive income and presented in the foreign currency
translation reserve within equity.

Business combinations

Acquisitions of subsidiaries are accounted for using the
acquisition method. The value of acquisition is measured at the
date of purchase and represents the aggregate of the fair values
of assets given, liabilities incurred or assumed and any equity
instruments issued by the Group in exchange for control of
the acquiree and fair value of previously held equity interests.
The identifiable assets and liabilities of the acquiree are
recognised at their fair values at the date of acquisition.
Goodwill recognised subsequent to 1 January 2004, representing
the excess of purchase consideration over the fair value of
net identifiable assets acquired defined in accordance with
IFRS 3 Business Combinations, is capitalised. Goodwill is initially
recognised as an asset at cost and is thereafter measured at
cost less any accumulated impairment losses. Goodwill is not
amortised but is tested for impairment annually. Any impairment
in the value of goodwill is dealt with in the income statement in the
period in which it arises. Goodwill is recognised only when control
of the acquiree is initially achieved. Following the acquisition of
control, no goodwill is recognised on subsequent purchases
of equity interests in the acquiree and instead the difference
between the cost of such acquisitions and the carrying values of
the relevant net assets in non-controlling interest is dealt with
through retained earnings. Costs relating to the acquisition of
businesses that occurred since 1 January 2010 are expensed
to the income statement when incurred. Costs related to the

114

acquisition of non-controlling interests are recognised directly in
retained earnings.
The interest of non-controlling shareholders in the acquiree is
initially measured at the non-controlling shareholders percentage
interest in the net fair value of the assets, liabilities and contingent
liabilities recognised. Subsequently the non-controlling interests
are allocated their share of results recognised in the income
statement and the Statement of Comprehensive Income.
Amounts payable in respect of deferred contingent consideration
are recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration are
recognised in the income statement.

Property, plant and equipment

Property, plant and equipment is stated at historical cost less
accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the
asset. The cost of self-constructed assets includes the cost of
materials and direct labour, any other costs directly attributable
to bringing the assets to a working condition for their intended
use, and the costs of dismantling and removing items and
restoring the sites on which they are located. Cost also may
include transfers from equity of any gain or loss on qualifying
cash flow hedges of foreign currency purchases of property,
plant and equipment. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of
that equipment.
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset are capitalised
as part of the cost of that asset.
Gains and losses on disposal of an item of property, plant
and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and
equipment and are recognised net in the income statement.
Depreciation is calculated to write off the cost less estimated
residual value of property, plant and equipment on a straight-line
basis over their useful lives, as follows:
Land
Buildings: Freehold
Buildings: Leasehold
improvements

Fixtures and fittings
Computer equipment
Motor vehicles
Right-of-use asset

Not depreciated
50 years
Unexpired term of the lease, except
for leases with an initial term of ten or
less years, which are depreciated over
the unexpired term of the lease plus
the renewal length of the lease if there
is an unconditional right of renewal
3 – 7 years
3 – 5 years
3 – 5 years
Over the lease term as defined
under IFRS 16

Assets in the process of construction are stated at cost less
impairment losses. Depreciation of these assets begins when the
assets are ready for their intended use.
The residual value of property, plant and equipment, if not
insignificant, is reassessed annually.

Financial Statements

Intangible assets

Intangible assets, principally comprising brands, customer
relations, computer software and technology, development
expenditure, licences and broadcasting and wagering rights are
capitalised and amortised over their estimated useful economic
lives on a straight-line basis, with the exception of customer
relations which is amortised on a reducing balance basis.
Brands represent the fair value of brands and trade-mark assets
acquired in business combinations.
Customer relations represent the fair value of customer relations
acquired in business combinations.
Computer software and technology includes the costs incurred
in acquiring and bringing specific software programs into use and
the fair value of software and technology acquired in business
combinations. Maintenance costs relating to computer software
programs are expensed to the income statement when incurred.
Development expenditure represents internally generated
costs incurred on development activities. These costs have
been capitalised in accordance with the requirements of IAS 38
Intangible Assets.
Licences comprise the costs of acquiring retail bookmaking
licences, the rents incurred in respect of the period prior to each
shop opening for business (as the existence of a premises is a
pre-requisite for obtaining such licences), licences for electronic
point-of-sale (“EPOS”) system software, and gambling licences
including US market access payments across a number of
jurisdictions globally.
Broadcasting and wagering rights represent assets acquired
as part of the all-share merger with Betfair Group plc in 2016
(the ‘Merger’) and in particular relate to the US segment.
The estimated useful economic lives of intangible assets,
according to which amortisation is calculated, are as follows:
Brands
Customer relations

Computer software and technology
Development expenditure
Licences
Broadcasting and wagering rights

The licences intangible assets recognised on the acquisition of
the D McGranaghan Limited business in 2008, the acquisition
of an additional betting shop in Northern Ireland in 2011 and
the brands intangible assets recognised on the acquisition of
Sportsbet Pty Limited and International All Sports Limited in 2009
are not amortised for the reasons set out in Note 11.

Non-derivative financial instruments

Non-derivative financial instruments are recognised initially at fair
value plus, for instruments not at fair value through profit or loss,
any directly attributable transaction costs. Subsequent to initial
recognition, non-derivative financial instruments are measured
as described below.
Cash and cash equivalents for the purpose of the statement
of cash flows comprise cash and call deposits with an original
maturity of three months or less and bank overdrafts, repayable
on demand, that are integral to the Group cash management.
Restricted cash represents cash held by the Group but which
is ring fenced, or used as security for specific arrangements
(such as cash held on the balance sheet in designated client
fund accounts where certain jurisdictions require the Group to
do so, or as collateral for a bank guarantee), and to which the
Group has restricted access for a period of time. It includes funds
held to cover monies owed to customers, as per the terms of
the Australian corporate sports book making licences issued
to Sportsbet and also funds held to cover monies owed to
customers in our US businesses. Restricted cash is now classified
as amortised cost. Restricted cash balances are further classified
as current or non-current depending on when the restriction
first ends.
Neither cash and cash equivalents or restricted cash include
certain customer funds deposited in a stakeholder account held
by The Sporting Exchange (Clients) Limited, a wholly-owned
subsidiary of the Group, on the basis that they are held on trust
for customers and do not belong to and are not at the disposal
of the Group.
Subsequent to initial recognition, cash and cash equivalents and
trade and other payables are measured at
amortised cost.
Trade and other receivables are stated at their nominal value as
reduced by appropriate allowances for expected credit losses.
Investments in equity are measured at fair value and changes
therein, are recognised in the consolidated income statement
unless the irrevocable option at initial recognition to present
changes in fair value in Other Comprehensive Income (‘OCI’) is
chosen. This designation is made on an instrument by instrument
basis. Fair value is determined using a discounted cash flow which
requires estimation of future net operating cash flows, the time
period over which they will occur, an appropriate discount rate and
discounts for lack of marketability and lack of control that pertains
to the minority stake.
Financial assets are derecognised if the Group’s contractual right
to the cash flows from the financial assets expire or if the Group
transfers the financial asset to another party without retaining
control or substantially all the risks and rewards of the asset.
Regular way purchases and sales of financial assets are accounted
for at trade date, i.e. the date that the Group commits itself to
purchase or sell the asset. Financial liabilities are derecognised
if the Group’s obligations specified in the contract expire or are
discharged or cancelled.

Other non-derivative financial instruments comprise cash and
cash equivalents, restricted cash, investments, trade and other
receivables and trade and other payables.
A financial instrument is recognised if the Group becomes a party
to the contractual provisions of the instrument.

115



Notes to the Consolidated Financial Statements continued
2. Basis of preparation and summary of
significant accounting policies (continued)
Impairment
Financial assets (including receivables)

The Group recognises loss allowances for expected credit losses
(ECLs) on financial assets measured at amortised cost. The Group
measures loss allowances at an amount equal to lifetime ECLs,
except for bank balances for which credit risk (i.e. the risk of default
occurring over the expected life of the financial instrument)
has not increased significantly since initial recognition which
are measured at 12 month ECLs.
Loss allowances for trade receivables and contract assets are
always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial
asset has increased significantly since initial recognition and
when estimating ECLs, the Group considers reasonable and
supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment and
including forward looking information. The Group considers a
financial asset to be in default when the borrower is unlikely to
pay its credit obligations to the Group in full or the financial asset
is significantly past due.
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Group is exposed
to credit risk.

Measurement of ECLs

ECLs are a probability weighted estimate of credit losses. Credit
losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity in
accordance with the contract and the cash flows that the Group
expects to receive). ECLs are discounted at the effective interest
rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is ‘credit impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Evidence that a financial asset is credit impaired includes the
following observable data:
significant financial difficulty of the third party;
a breach of contract such as a default;
the restructuring of a balance by the Group on terms that the
Group would not consider otherwise; or
it is probable that the third party will enter bankruptcy or other
financial reorganisation

Presentation of allowance for ECL in the statement of
financial position

Loss allowances for financial assets measured at amortised
cost are deducted from the gross carrying amount of the assets.
See Note 24 for further detail.

116

Write-off

The gross carrying amount of a financial asset is written off
when the Group has no reasonable expectations of recovering
a financial asset in its entirety or a portion thereof. The Group
individually makes an assessment with respect to the timing
and amount of write off based on whether there is a reasonable
expectation of recovery. The Group expects no significant
recovery from the amount written off. However, financial assets
that are written off could still be subject to enforcement activities
in order to comply with the Group’s procedures for recovery of
amounts due.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset’s recoverable amount is
estimated. For goodwill, and intangible assets that have indefinite
useful lives (such as certain licences and brands) or that are not
yet available for use, the recoverable amount is estimated each
year at the same time. The recoverable amount of an asset or
cash generating unit is its value in use. In assessing value in use,
the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific
to the asset. For the purpose of impairment testing, assets
that cannot be tested individually are grouped together into
the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows
of other assets or groups of assets (the “cash generating unit”,
or “CGU”). Subject to an operating segment ceiling test, for the
purposes of goodwill impairment testing, CGUs to which goodwill
has been allocated are aggregated so that the level at which
impairment is tested reflects the lowest level at which goodwill is
monitored for internal reporting purposes. Goodwill acquired in
a business combination is allocated to groups of CGUs that are
expected to benefit from the synergies of the combination.
The Group’s corporate assets do not generate separate cash
inflows. If there is an indication that a corporate asset may be
impaired, then the recoverable amount is determined for the
CGU to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the
unit (group of units) on a pro rata basis. An impairment loss in
respect of goodwill is not reversed. In respect of other assets,
impairment losses recognised in prior periods are assessed
at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only
to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had
been recognised.

Financial Statements

Borrowings

Borrowings are recorded at the fair value of the proceeds
received, net of any directly attributable transaction costs.
Subsequent to initial recognition, borrowings are stated at
amortised cost using the effective interest method.
Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in profit or loss over
the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the group
has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting period.

Derivative financial instruments

The Group holds certain derivative financial instruments which
are initially recognised at fair value.

Sports betting open positions

Amounts received from customers on sportsbook events
that have not occurred by the year end are derivative financial
instruments and have been designated by the Group on initial
recognition as financial liabilities at fair value through profit or loss.

Hedging activities

The Group has designated its Euro lease liabilities as a hedging
instrument for the prospective currency exposure which
originates from the regular stream of revenues denominated
in Euro (the highly probable forecast transactions).
The risk being hedged is the exposure to variability in the spot
foreign exchange rate of a highly probable forecast transaction
(the future Euro revenue), that could affect P&L. Future cash flows
can relate to highly probable forecast revenues or purchases
in a foreign currency. Volatility in future cash flows might result,
in particular, from changes in exchange rates.
In accordance with IAS 39 Financial Instruments: Recognition and
measurement, at the inception of the hedge relationship, the
Group documents the economic relationship between hedging
instruments and hedged items, including whether changes
in the cash flows of the hedging instruments are expected to
offset changes in the cash flows of hedged items. The Group
documents its risk management objective and strategy for
undertaking its hedge transactions.
Provided the hedge is effective, changes in the fair value of the
hedging instrument are initially recognised in OCI and taken to
a separate component of equity. Any ineffective portion of the
change in the fair value of the hedging instrument is recognised
directly in P&L.
The amount recognised in the separate component of equity
should be the lower of:

the cumulative gain or loss on the hedging instrument from the
inception of the hedge; and
the cumulative change in the fair value (present value) of the
expected cash flows on the hedged item from the inception
of the hedge.
Whilst the foreign currency risk component of a non-derivative,
such as the lease liability that is used as a hedging instrument, is
the amount determined in accordance with IAS 21, the fair value
change of the hedged item (the forecast revenue) is calculated by
discounting changes in the spot exchange rate from the date of
revenue recognition so as to take into account the time value
of money.
If the cumulative change in the hedging instrument exceeds
the change in the hedged item (sometimes referred to as an
‘over-hedge’), ineffectiveness will be recognised in P&L for the
excess. If the cumulative change in the hedging instrument is less
than the change in the hedged item (sometimes referred to as an
‘under-hedge’), no ineffectiveness will be recognised. The regular
volume of Euro revenue transactions consistently generated by
the entities exceed the book value of the hedging instrument,
ensuring that the Group will not incur any ineffectiveness within
its designated hedging relationship.
The accumulated gains and losses recorded in equity are
reclassified to P&L as a reclassification adjustment, as defined
in IAS 1, in the same period or periods during which the hedged
expected future cash flows affect P&L. This coincides with when
the forecast revenue occurs.
Where there is a cumulative loss on the hedging instrument
and it is no longer expected that the loss will be recovered, it is
immediately recognised in P&L.
When a hedging instrument expires, or is sold or terminated, or
when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred costs of
hedging in equity at that time remains in equity until the forecast
transaction occurs, resulting in the recognition of a non-financial
asset such as inventory. When the forecast transaction is no
longer expected to occur, the cumulative gain or loss and deferred
costs of hedging that were reported in equity are immediately
reclassified to profit or loss.

Provisions

A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can be
estimated reliably, and it is considered probable that an outflow
of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific
to the liability.

Long service leave

The provision for long service leave (that arises under the
provisions of Australian state legislation) is measured per the
requirements of IAS 19. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Expected future payments
are discounted using market yields at the reporting date on
Australian government bonds with terms to maturity that
match, as closely as possible, the estimated future cash outflows.

117



Notes to the Consolidated Financial Statements continued
2. Basis of preparation and summary of
significant accounting policies (continued)
Lease reinstatement

Where there exists a legal obligation for properties held under
leases to be reinstated to their original condition on expiry of the
lease, a provision is established to recognise the estimated cost
of such reinstatement work on a straight-line basis over the term
of the lease.

Onerous contracts

A provision for onerous contracts is recognised when the
expected benefits to be derived from a contract by the Group
are less than the unavoidable costs of meeting its obligations
under the terms of the contract. The provision is measured at the
present value of the lower of the expected cost of terminating
the contract and the expected net cost of continuing with the
contract. Before a provision is established, the Group recognises
any impairment loss on the assets associated with that contract.

Gaming tax

Gaming tax provisions relate to amounts provided for taxes in
certain jurisdictions where the interpretation of tax legislation
is uncertain. When the group disagrees with the application
of unclear tax legislation, for example when it is applied
retrospectively and/or results in a one-off disproportionate tax
equivalent to many times the profit derived by the Group from
its historic activities in that jurisdiction, the Group continues to
challenge these interpretations.
Whilst the maximum potential obligation for all ongoing cases
could be greater than the recognised provision, and the outcomes
may not be known for some time, a liability has been recorded
for the Directors’ best estimate of the cash outflows that will
ultimately be required in respect of each claim. Management have
not provided a sensitivity for this provision as the range is not
considered to be material.

Income Tax

Income tax in the income statement comprises current and
deferred tax. Income tax expense is recognised in profit or loss
except to the extent that it relates to items recognised in Other
Comprehensive Income or directly in equity, in which case it is
recognised in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of
the previous year.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred
tax is measured at the tax rates that are expected to apply to
temporary differences when they reverse, based on laws that
have been enacted or substantively enacted at the reporting
date. A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reviewed at each
reporting period and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised. Deferred tax
assets and liabilities are offset to the extent that they relate to
income taxes levied by the same taxation authority.

118

Employee benefits
Pensions

The Group operates a number of defined contribution schemes
under which the Group pays fixed contributions to a separate
entity and has no legal or constructive obligation to pay further
amounts. Obligations for contributions are recognised as an
expense in the income statement as the service is received.
Prepaid contributions are recognised as an asset to the extent
that a cash refund or reduction in future payments is available.

Long-term incentive bonus plans

The Group accounts for obligations relating to long term incentive
bonus plans for employees at the present value of the benefit
obligation at the reporting date. The service cost relating to such
plans is allocated to the financial years over which service under
the plan is rendered by the employee. The income statement
expense represents the increase in the present value of the
benefit obligation resulting from employee service in the current
period, in addition to any associated finance costs where material.

Share-based payments

The Group operates equity-settled long term and medium
term incentive plans for selected senior executives and other
key management under which they are conditionally awarded
shares or options over company shares which vest upon the
achievement of predetermined targets and/or future service
periods. The fair value is measured at the award or option grant
date and is spread over the period during which the employees
become unconditionally entitled to the shares or options with
a corresponding increase in the share-based payment reserve
in equity. The fair value of the shares conditionally granted is
measured using the market price of the shares at the time of grant
or in the case of shares with a non-market condition measured
using either a binomial or Monte Carlo valuation model.
The Group also currently operates a deferred share incentive
plan (“DSIP”) whereby one-third of any annual incentive payment
(determined under the Annual Cash Incentive Plan) may be paid
in deferred shares. Any such deferred element granted under the
DSIP will vest 50% after 1 year and 50% after 2 years from the
date of grant and will be fair valued using the same methodology
as other long and medium term incentive plans. The two-thirds
cash portion is measured on an undiscounted basis and expensed
as the related service is provided. A liability is recognised for the
amount expected to be paid under this cash portion if the Group
has a present legal or constructive obligation to pay this amount
as a result of past service provided by the employee and the
obligation can be estimated reliably.
The Group operates an equity-settled share save scheme
(“SAYE”) for employees under which employees acquire
options over Company shares at a discounted price subject to
the completion of a savings contract. The fair value of share
options granted is recognised as an employee benefit cost with
a corresponding increase in the share-based payment reserve in
equity. The fair value is measured at grant date and spread over
the period during which the employees become unconditionally
entitled to the options. The fair value of the options granted
is measured using a Black-Scholes model, taking into account
the terms and conditions, other than non-market performance
conditions, upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of share options that vest.

Financial Statements

Share capital
Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects.

Shares held by employee benefit trust

The costs of purchases of the Company’s shares by the
Employee Benefit Trust, which have been conditionally awarded
to executives under the terms of the share award schemes, are
shown separately as deductions from equity in the Consolidated
Statement of Financial Position.

Repurchase of share capital (treasury shares)

When share capital recognised as equity is repurchased, the
amount of the consideration paid, which includes directly
attributable costs, is recognised as a deduction from equity.
The repurchased shares are classified as treasury shares and
are presented as a deduction from total equity. Transaction
costs relating to the purchase by the Company of its own shares
are recognised directly in retained earnings. When treasury
shares are sold or reissued subsequently, the amount received is
recognised as an increase in equity, and any resulting surplus on
the transaction is recognised in share premium.
Where the Company purchases its own shares and subsequently
cancels those shares, the cost of the shares cancelled is
written off directly to retained earnings. The nominal value
of the shares cancelled is transferred from share capital to
undenominated capital.

Dividends

Dividends on ordinary shares are recognised in equity in the
period in which they are approved by the Company’s shareholders,
or, in the case of the interim dividend, when it has been approved
by the Board of Directors and paid. Dividends declared after the
reporting date are disclosed in Note 33.

Earnings per share

The Group presents basic and diluted earnings per share (“EPS”)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares, which
include awards under share award schemes and share options
granted to employees.

Separately disclosed items

Separately disclosed items are those that in management’s
judgement need to be disclosed by virtue of their size, incidence
or if not part of the Group’s normal trading activities. The separate
reporting of these items helps provide a better understanding of
the Group’s underlying performance.
Such items may include the amortisation of acquisition
related intangibles, significant restructuring and strategic
initiative costs, material fees in respect of acquisitions, significant
impairment of property, plant and equipment and intangible
assets and also significant movement in the fair value of
contingent consideration.

In the majority of cases, it is the material impact that these items
have on the financial statements that determines whether
they should be separately disclosed. Materiality is determined
by assessing whether disclosing such items separately would
present a reader with a better understanding of the performance
of the Group. If such items were deemed to be less than material,
they would not be separately disclosed.
These items, usually due to their size and nature tend to be nonrecurring items and would not arise on an annual basis. However,
in other cases, items such as for example, the amortisation of
acquisition related intangibles may occur over several years but
are disclosed separately due to their finite life and the significantly
changing amortisation profile of the assets in question in the
related years. The separate disclosure of such items helps the
reader better understand underlying business performance.
The tax related impact of such items is also disclosed separately.

Going concern

The Group has considerable financial resources. As a consequence,
the Directors believe that the Group is well placed to manage
its business risks successfully. The Directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future, and
therefore they continue to adopt the going concern basis in the
Consolidated Financial Statements. Further detail is contained in
the Directors’ Report on page 94.

3. Operating segments
Revenue

Income for the years ended 31 December 2019 and 2018 is
analysed as follows:
Revenue in respect of sportsbook
and gaming activities
Other commission and fee revenue
(included in PPB Online, Australia
and US revenue)
Revenue

2019
£m

2018
£m

1,666.4

1,425.2

473.6

448.2
1,873.4

2,140.0

As more fully described in the basis of preparation and summary
of significant accounting policies, betting activities are considered
to be derivative financial instruments as set out in IFRS 9 Financial
Instruments. Other commission and fee revenue is earned from
the exchange sports betting product and pari-mutuel betting
products, daily fantasy sports, peer-to-peer gaming, and
business-to-business services and, as these activities do not
involve customers taking a direct position against the Group,
such revenue is not classified as income from derivative financial
instruments and represents revenue from contracts with
customers under IFRS 15.
The Group’s reportable segments are businesses that are
managed separately, due to a combination of factors including
method of service delivery, geographical location and the
different services provided.

119



Notes to the Consolidated Financial Statements continued
3. Operating segments

Reportable business segment information

The Group has determined that its operating segments are its
reportable segments. The Group’s reportable segments are as
follows:
PPB Online
Australia
PPB Retail
US
The reportable segments reflect the way financial information is
reviewed by the Group’s Chief Operating Decision Maker (“CODM”).
The PPB Online segment derives its revenues primarily from
sports betting (sportsbook and the exchange sports betting
product) and/or gaming (games, casino, bingo and poker)
services in all business-to-customer (“B2C”) geographies
that the Group operates in except the US and Australia, and
business-to-business (“B2B”) services globally. Online services
are delivered primarily through the internet with a small proportion
delivered through the public telephony system.
The Australia segment earns its revenues from sports
betting services provided to Australian customers using
primarily the internet with a small proportion using the public
telephony system.

The PPB Retail segment derives its revenues from sports betting
and/or gaming machine services delivered through licenced
bookmaking shop estates in the UK and Ireland.
The US segment earns its revenues from sports betting, daily
fantasy sports and gaming services provided to US customers
using primarily the internet with a proportion of US sports betting
services also provided through a small number of retail outlets.
Corporate administrative costs (Board, Finance, Legal, Internal
Audit, HR, Property and other central functions) cannot be
readily allocated to individual operating segments and are not
used by the CODM for making operating and resource allocation
decisions. These are shown in the reconciliation of reportable
segments to Group totals.
The accounting policies in respect of operating segments
reporting are the same as those described in the basis of
preparation and summary of significant accounting policies set
out in Note 2.
The Group does not allocate income tax expense or interest to
reportable segments. Treasury management is centralised for
the PPB Online, Australia, PPB Retail and US segments.
Assets and liabilities information is reported internally in
total and not by reportable segment and, accordingly,
no information is provided in this note on assets and liabilities
split by reportable segment.

Reportable business segment information for the year ended 31 December 2019
Revenue from external customers
Cost of sales
Gross profit
Operating costs excluding depreciation, amortisation
and impairment
Underlying EBITDA1
Depreciation and amortisation
Reportable segment profit/(loss) before separately disclosed items
Amortisation of acquisition related intangible assets (Note 4)
Reportable segment profit/(loss) after amortisation of
acquisition related intangible assets
Transaction fees2 (Note 4)
Operating profit

Financial Statements

Reportable business segment information for the year ended 31 December 2018
Revenue from external customers
Cost of sales
Gross profit
Operating costs excluding depreciation, amortisation and
impairment
Underlying EBITDA 1
Depreciation and amortisation
Reportable segment profit/(loss) before separately disclosed items
Amortisation of acquisition related intangible assets (Note 4)
Impairment of goodwill and intangible assets (Note 4)
Reportable segment profit/(loss) after amortisation of acquisition
related intangible assets and impairment of goodwill and
intangible assets
Restructuring and strategic initiatives2 (Note 4)
Operating profit

1.	Underlying EBITDA in the above segment note is defined as profit for the period before separately disclosed items, depreciation, amortisation and impairment, financial
income, financial expense and tax expense/credit. It is considered by the Directors to be a key measure of the Group’s financial performance. Note as a result of the
adoption of IFRS 16 Leases from 1 January 2019, under the modified retrospective approach, the rent expense which in 2018 was reflected in operating costs excluding
depreciation, amortisation and impairment, is no longer recorded as an expense in 2019 but is replaced by a depreciation charge and finance expense which are recorded
after EBITDA. There is no restatement of comparative information. See Note 2 for further detail on the impact of IFRS 16.
2. The Group does not allocate transaction fees and restructuring and strategic initiatives to reportable segments.

Reconciliation of reportable segments to Group totals
Revenue
Total revenue from reportable segments, being total Group revenue
Profit and loss
Operating profit
Unallocated amounts:
Financial income
Financial expense
Profit before tax
Disaggregation of revenue under IFRS 15

Group revenue disaggregated by product line for the year ended 31 December 2019:
Sports revenue1
Gaming revenue
Total Group revenue

Prevenue disaggregated by product line for the year ended 31 December 2018:
Sports revenue1
Gaming revenue
Total Group revenue
1. Sports revenue comprises sportsbook, exchange sports betting, daily fantasy sports and pari-mutuel betting.
Notes to the Consolidated Financial Statements continued
3. Operating segments (continued)
Geographical segment information

The Group considers that its primary geographic segments are ‘UK’, ‘Ireland’, ‘Australia’, ‘US’ and ‘Rest of World’. The UK geographic
segment consists of the UK Retail bookmaking business, online and telephone sports betting from customers in the UK, and online
gaming from customers in the UK. The Ireland geographic segment consists of the Irish Retail bookmaking business, online and
telephone sports betting from customers in Ireland, and online gaming from customers in Ireland. The Australia geographic segment
consists of online and telephone sports betting from Australian customers. The US geographic segment is comprised of online and
retail sports betting and online gaming from US customers. The Rest of World geographic segment is comprised of online sports
betting, online gaming and B2B services provided to customers in geographies other than the UK, Ireland, Australia and the US.
Revenues from customers outside the UK, Ireland, Australia and the US are not considered sufficiently significant to warrant
separate reporting.
Group revenues disaggregated by geographical segment for the year ended 31 December 2019:
UK

Group revenues disaggregated by geographical segment for the year ended 31 December 2018:

Revenues are attributed to geographical location on the basis of the customer’s location.

Non-current assets (excluding deferred tax asset balances) by geographical segment are as follows:

Financial Statements

4. Separately disclosed items
Amortisation of acquisition related intangible assets
Transaction fees
Impairment of goodwill and intangible assets
Gain on contingent consideration
Restructuring and strategic initiatives
Profit on disposal of investment
Operating profit impact of separately disclosed items
Tax credit on separately disclosed items
Total separately disclosed items

Amortisation of acquisition related intangible assets

Non-cash amortisation of £113.1m has been incurred in the period (2018: £100.7m) as a result of intangible assets separately identified
under IFRS 3 as a result of the Merger with Betfair in 2016 and the acquisitions of FanDuel Limited in 2018 and Adjarabet in 2019.

Transaction fees

In the year ended 31 December 2019, this relates to incremental one-off transaction costs resulting from the proposed all-share
combination with The Stars Group Inc. See Note 33 for further detail on this combination.

Impairment of goodwill and intangible assets

During the year ended 31 December 2018, non-cash impairments amounting to £27.2m, primarily in relation to goodwill and intangible
assets associated with our US DRAFT business were incurred (see Note 12). There were no such impairments in 2019.

Gain on contingent consideration

The movement in the value of contingent consideration during the year ended 31 December 2018 relates to the contingent
consideration that the Group has deemed is no longer payable arising in respect of the DRAFT acquisition. No such item was incurred
in 2019.

Restructuring and strategic initiatives

The costs incurred during the year ended 31 December 2018 arose from the combination of Betfair US with FanDuel Limited and
significant restructuring and strategic changes made following the appointment of a new CEO.

Profit on disposal of investment

In February 2018, the Group disposed of its remaining 31.4% non-controlling interest in LMAX Limited for cash consideration amounting
to £21.9m to the existing majority LMAX shareholders generating a profit of £7.0m.
Transaction fees and Restructuring and strategic initiatives are included in the Consolidated Income Statement within operating
costs excluding depreciation, amortisation and impairment. Amortisation of acquisition related intangible assets is included within
depreciation and amortisation and impairment of goodwill and intangible assets is included within impairment. The profit on disposal
of investment and gain on contingent consideration are included within financial income.

5. Employee expenses and numbers

Employee expenses excluding separately disclosed items (see Note 4) are:
Wages and salaries
Social security costs
Defined contribution pension and life assurance costs
Share-based payment costs
Other staff costs
The average number of persons employed by the Group (including Executive Directors), all of whom were
involved in the provision of sports betting and gaming services, during the year was:

Notes to the Consolidated Financial Statements continued
5. Employee expenses and numbers (continued)

Details on the remuneration of Directors as per the requirement of the Companies Act 2014 are set out below.
Emoluments
Pension costs


The gain on the exercise of share options in 2019 by individuals who were Directors at any time during 2019 was £nil (2018: £15.3m).
Further detail in respect of Directors’ remuneration is set out in the Directors’ Remuneration Report on pages 70 to 90.

6. Financial income and expense
Recognised in profit or loss:
Financial income:
Change in fair value of contingent consideration
Profit on disposal of investment
Movement in fair value of investments
On financial assets at amortised cost
Interest income on short term bank deposits
Sub-lease interest
Total
Financial expense:
Change in fair value of contingent consideration
Unwinding of the discount on provisions and other non-current liabilities
On financial liabilities at amortised cost
Interest on borrowings, bank guarantees and bank facilities, and other interest payable
Lease interest
Total

Recognised in other comprehensive income/(loss):
Effective portion of changes in fair value of cash flow hedges
Fair value of foreign exchange cash flow hedges transferred to income statement
Net change in fair value of cash flow hedge reserve
Foreign exchange (loss)/gain on translation of the net assets of foreign currency denominated entities
Total


No amounts were recorded in the income statement in respect of ineffective cash flow hedges in the year ended 31 December 2019
Financial Statements

7. Statutory and other information
Auditor’s remuneration for audit and other assurance services
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment of goodwill and intangible assets
Amortisation of capitalised development costs
Loss/(gain) on disposal of property, plant and equipment and intangible assets
Foreign currency exchange loss/(gain) – monetary items
Operating lease rentals, principally premises
Research and development
Operating lease income (representing sub-lease income

Remuneration to Group external auditor (KPMG Ireland)

In accordance with the requirements of Regulation 120 of Statutory Instrument 220/2010, ‘European Communities (Statutory Audits)
(Directive 2006/43/EC) Regulations 2010’, the auditor’s remuneration figures presented below represent fees paid to KPMG Ireland only
and are exclusive of value-added tax.
Audit
Other assurance services – audit of subsidiaries
Other assurance services – miscellaneous
Other non-audit services
Total

Further analysis of the total fees paid to the Group external auditor, KPMG Ireland, worldwide for audit and non-audit services is
presented below:

Analysis of total auditor’s remuneration for audit and other assurance services
Audit of Group (KPMG Ireland)
Audit of subsidiaries (KPMG Ireland)
Audit of subsidiaries (other KPMG offices)
Other assurance services – miscellaneous (KPMG Ireland and other KPMG offices)

Analysis of amounts paid to the auditor in respect of non-audit services
Tax advisory services (other KPMG offices)
Other non-audit services
Total
Notes to the Consolidated Financial Statements continued
8. Tax expense
Recognised in profit or loss:
Current tax charge
Prior year over provision
Total current tax
Deferred tax credit
Prior year (under)/over provision
Decrease in net deferred tax liability (Note 19)
Total tax expense in income statement
0

The difference between the total tax expense shown above and the amount calculated by applying the standard rate of corporation tax
to the profit before tax is as follows:
Profit before tax
Tax on Group profit before tax at the standard Irish corporation tax rate of 12.5%
Depreciation on non-qualifying property, plant and equipment
Effect of different statutory tax rates in overseas jurisdictions
Non-deductible expenses
Effect of changes in statutory tax rates
Movement on deferred tax balances not recognised
Over provision in prior year
Total tax expense
Total tax expense for 2019 includes a credit for separately disclosed items amounting to £18.6m (2018: £15.1m) (see Note 4).

Tax rates

The Group’s consolidated effective tax rate on profits including separately disclosed items for 2019 is 17.5% (2018: 17.4%). The separately
disclosed items impacting the consolidated tax rate include the unwind of deferred tax liabilities recognised in respect of merger related
intangibles and the acquisition of a majority stake in Adjarabet as well as other deal related costs. The tax effect of separately disclosed
items in the current year amounted to a tax credit of £18.6m (2018: £15.1m).
The Group’s underlying effective tax rate of 15.9% (2018: 14.9%) is materially impacted by the geographic mix of profits and reflects a
combination of higher and lower headline rates of tax in the various jurisdictions in which the Group operates when compared with the
Irish standard rate of corporation tax of 12.5%.
The Group’s underlying effective tax rate is also materially impacted by the movement on deferred tax balances which remain
unrecognised due to the doubt over the future recoverability of those assets, as well as the effect of expenses which are not deductible
for tax purposes.
No significant changes are expected to statutory tax rates other than those announced and enacted at 31 December 2019; principally
the reduction in the headline rate of UK corporation tax to 17% in April 2020.
The effect of the reduction in the UK headline rate of corporation tax on recognised deferred tax balances in the UK is reflected in the
above tax reconciliation.
The future effective tax rate of the Group is principally affected by the ongoing geographic mix of profits in accordance with the OECD
guidelines in relation to Base Erosion and Profit Shifting.

126

Financial Statements

9. Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit
or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the
year. The weighted average number of shares has been adjusted for amounts held as Treasury Shares and amounts held by the Group’s
Employee Benefit Trust (“EBT”).
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
The calculation of basic and diluted EPS is as follows:
Numerator in respect of basic and diluted earnings per share (£m):
Profit attributable to equity holders of the Company
Numerator in respect of adjusted earnings per share (£m):
Profit attributable to equity holders of the Company
Separately disclosed items
Profit for adjusted earnings per share calculation

Adjustments to derive denominator in respect of diluted earnings per share (in 000’s):
Weighted average number of ordinary shares in issue during the year
Dilutive effect of share options and awards on issue
Adjusted weighted average number of ordinary shares in issue during the year
Diluted earnings per share
Adjusted diluted earnings per share

4The average market value of the Company’s shares of £68.25 (2018: £74.63) was used to calculate the dilutive effect of share options
based on the market value for the period that the options were outstanding.
The number of options excluded from the diluted weighted average number of ordinary shares calculation due to their effect being
anti-dilutive is 464,380 (2018: 447,540).

127



Notes to the Consolidated Financial Statements continued
10. Property, plant and equipment

The net book value of land, buildings and leasehold improvements at 31 December 2019 includes £39.5m (2018: £43.3m) in respect of
leasehold improvements.
The Directors do not consider the remaining useful lives of property, plant and equipment to be materially different from the period over
which the assets are being depreciated.
For more information about the opening adjustments in relation to the introduction of IFRS 16, see Note 2.

128

Financial Statements

11. Intangible assets

The movements during the prior year and current year in respect of intangible assets, which comprise computer software and
technology, licences, development expenditure, brands, customer relations, and broadcasting and wagering rights, were as follows:

Cost
Balance at 1 January 2018
Additions
Additions – internally developed
Additions – business combinations
Foreign currency translation adjustment
Balance at 31 December 2018
Additions
Additions – internally developed
Additions – business combinations
Foreign currency translation adjustment
Balance at 31 December 2019
Amortisation and impairment
Balance at 1 January 2018
Amortisation and impairment charges
Foreign currency translation adjustment
Balance at 31 December 2018
Amortisation and impairment charges
Foreign currency translation adjustment
Balance at 31 December 2019
Net book value
The value of betting shop licences of £18.1m (2018: £18.1m) acquired as a result of the purchase of D McGranaghan Limited in 2008
and an additional betting shop in Northern Ireland in 2011 are not being amortised as the Directors consider these licences to have an
indefinite life because:
existing law in Northern Ireland restricts entry of new competitors;
there exists a proven and future expected demand for bookmaking services and products; and
the Group has a track record of renewing its betting permits and licences at minimal cost.
The value of brand intangible assets recognised on application of fair value accounting to the purchase of Sportsbet and IAS in 2009
(amounting to £12.6m at 31 December 2019 (2018: £13.1m)) are not being amortised as the Directors consider that the relevant brands
have indefinite lives because:
the Directors intend to utilise the brands in the businesses for the foreseeable future (with the exception of the IAS brand – see below);
and
substantial sums are invested annually in the form of marketing expenditure expensed through profit or loss to maintain and to
enhance the value of these brands.
The Group reviews the carrying value of licences and brands for impairment annually (or more frequently if there are indications that
the value of the licences and brands may be impaired) by comparing the carrying values of these assets with their recoverable amounts
(being the higher of value in use and fair value less costs to sell).
In 2011, the Directors reviewed the carrying value of the International All Sports Limited (“IAS”) brand of AUD6.9m and determined, on
the basis of future plans, that an impairment provision was required against the value of that brand at 31 December 2011. A similar review
was performed at 31 December 2018 and at 31 December 2019 (when the GBP equivalent value of the brand was £3.8m and £3.7m
respectively) which indicated that there had been no changes in the circumstances that gave rise to the impairment provision and that
continued provision was appropriate.


Notes to the Consolidated Financial Statements continued
12. Goodwill

The following cash generating units (‘CGU’), being the lowest level of asset for which there are separately identifiable cash flows, have the
following carrying amounts of goodwill:
Balance at 1 January 2018
Impairment
Arising on acquisitions during the year (Note 13)
Foreign currency translation adjustment
Balance at 31 December 2018
Arising on acquisitions during the year (Note 13)
Foreign currency translation adjustment
Balance at 31 December 2019


The PPB Online segment goodwill amount arose from the acquisition of CT Networks Limited (“Cayetano”), a games developer based in
the Isle of Man and Bulgaria, in 2011, the acquisition of the Betfair online business (excluding operations in the US) acquired as part of the
all-share merger with Betfair Group plc in 2016 and on 1 February 2019, the acquisition of an initial 51% controlling stake in Adjarabet,
the market leader in online betting and gaming in the regulated Georgian market (see Note 13).
The Australia segment goodwill amount arose from the acquisition of an initial 51% interest in Sportsbet Pty Limited (“Sportsbet”) and
the subsequent acquisition of International All Sports Limited (“IAS”) by Sportsbet, both in 2009.
The US segment goodwill amount arose from the acquisition of the US business acquired as part of the all-share merger with Betfair
Group plc in 2016 and the acquisition of FanDuel Limited a market leading operator in the daily fantasy sports market in the United
States, in 2018 (see Note 13). Due to the decision to combine the Group’s US assets with FanDuel (see Note 13) and the impact of
this decision on the Group’s existing US daily fantasy sports business, the Group reviewed the carrying value of this business and
determined, that an impairment charge of £26.5m was required in 2018.
Goodwill in UK Retail arose from the acquisition of two London bookmaking businesses in 2004, the acquisition of a retail bookmaking
company in Northern Ireland in 2008 and the acquisition of a number of retail bookmaking shop properties since 2010 (see Note 13).
Goodwill in Irish Retail arose from the amalgamation of three bookmaking businesses to form Paddy Power plc in 1988 and the
acquisition of a number of retail bookmaking shop properties since 2007 (see Note 13).

Impairment tests for cash generating units containing goodwill and indefinite life intangible assets

In accordance with accounting requirements, the Group performs an annual test for impairment of its cash generating units. The most
recent test was performed at 31 December 2019.
For the purpose of impairment testing, the Group’s cash generating units include amounts in respect of goodwill and indefinite life
intangible assets (comprising licences acquired as part of the purchase of the D McGranaghan Limited business in 2008 and a shop
acquisition in 2011, and brands acquired as part of the purchase of Sportsbet and IAS in 2009 – see Note 11).
The details of the impairment reviews in respect of the cash generating units as of 31 December 2019 are presented below:


The recoverable amount of the PPB Online operating segment underlying cash generating unit was estimated based on value in use
calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts
approved by management covering a three year period. Projections for a further two years are based on the assumptions underlying
the management approved projections and include an average projected growth rate of 5%. The terminal growth rate for the
extrapolated period (following the initial five year period) is projected to be approximately 2.6% (2018: 2.6%) per annum and is based
on a weighted average income growth rate of 2.6% (2018: 2.6%), which is based on experience and is consistent with management’s
expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic
by management in light of the recent performance of the segment and the Group’s targeted performance over the next three years.
A pre-tax discount rate of 8.5% (2018: 8.5%), which reflects the specific risks and currency of the cash flows relating to the underlying
business segments, has been used in discounting the projected cash flows. Management believe that any reasonably possible change
in the key assumptions on which the PPB Online segment goodwill recoverable amount is based would not cause its carrying amount
to exceed its recoverable amount.

The recoverable amount of the Australia operating segment underlying cash generating unit was estimated based on value in use
calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts
approved by management covering a three year period. The terminal growth rate for the extrapolated period (following the initial
three-year period) is projected to be approximately 2.7% (2018: 2.7%) per annum and is based on a weighted average income growth
rate of 2.7% (2018: 2.7%), which is based on experience and is consistent with management’s expectations for market development
and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent
performance of the Group and the Group’s targeted performance over the next three years. A pre-tax discount rate of 14.4% (2018:
14.4%), which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in
discounting the projected cash flows. Management believe that any reasonably possible change in the key assumptions on which the
Australia operating segment goodwill and brands recoverable amounts are based would not cause their carrying amounts to exceed
their recoverable amounts (with the exception of the IAS brand amounting to £3.7m at 31 December 2019 (2018: £3.8m) – see Note 11).


The recoverable amount of the US operating segment underlying cash generating unit was estimated based on value in use calculations.
These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by
management covering a five year period. Projections for a further four years are based on the assumptions underlying the management
approved projections and include an average projected growth rate of 6.5%. The terminal growth rate for the extrapolated period
(following the initial nine year period) is projected to be approximately 3.0% (2018: 2.5%) per annum which is based on experience and
is consistent with management’s expectations for market development and growth in market share where applicable. The growth
rate assumptions are considered realistic by management in light of the recent performance of the segment and the Group’s targeted
performance over the next five years. A pre-tax discount rate of 17% (2018: 9%) which reflects the specific risks and currency of the
cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. The increase in the
discount rate compared to the prior year is largely driven by the new US sportsbook cashflows which were not reflected in the prior year
impairment review. After recording the impairment on the 2017 DRAFT acquisition, management believe that any reasonably possible
change in the key assumptions on the remaining US goodwill would not cause its carrying amount to exceed its recoverable amount.0

The recoverable amount of the UK Retail underlying cash generating unit was estimated based on value in use calculations. These
calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by management
covering a three year period. The terminal growth rate for the extrapolated period (following the initial three year period) is projected to
be approximately 0% (2018: 2%) per annum and is based on a weighted average income growth rate of 0% (2018: 2%), which is based on
experience and is consistent with management’s expectations for market development and growth in market share where applicable.
The growth rate assumption is considered realistic by management in light of the recent performance of the cash generating unit and
the Group’s targeted performance over the next three years. A pre-tax discount rate of 10.1% (2018: 10.1%), which reflects the specific
risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash
flows. Management believe that any reasonably possible change in the key assumptions on which the UK Retail cash generating unit
goodwill and licences recoverable amounts are based would not cause their carrying amounts to exceed their recoverable amounts.


The recoverable amount of the Irish Retail underlying cash generating unit was estimated based on value in use calculations.
These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by
management covering a three year period. The terminal growth rate for the extrapolated period (following the initial three year period) is
projected to be approximately 0% (2018: 2%) per annum and is based on a weighted average income growth rate of 0% (2018: 2%), which
is based on experience and is consistent with management’s expectations for market development and growth in market share where
applicable. The growth rate assumption is considered realistic by management in light of the recent performance of the cash generating
unit and the Group’s targeted performance over the next three years. A pre-tax discount rate of 10.0% (2018: 10.0%), which reflects the
specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected
cash flows. Management believe that any reasonably possible change in the key assumptions on which the Irish Retail cash generating
unit goodwill recoverable amount is based would not cause its carrying amount to exceed its recoverable amount.
The discount rates applied to each cash generating unit’s cash flows represents a post-tax rate that reflects the Group’s weighted
average cost of capital (‘WACC’) adjusted for any risks specific to that cash generating unit. A 50bps change in the pre-tax discount rate
and in the terminal growth rate which are considered to be the most sensitive inputs would not cause the carrying amount to exceed
the recoverable amount for any of the above cash generating units.
Based on the reviews as described above, with the exception of the impairment of USD35.3m (£26.5m) in 2018 of the US DFS business
acquired in 2017 and the IAS brand impairment of AUD6.9m initially provided for in 2011 (see Note 11), no impairment has arisen.

13. Business combinations
Year ended 31 December 2019
Acquisition of Adjarabet

On 1 February 2019, the Group completed the acquisition of an initial 51% controlling stake in Adjarabet, the market leader in online
betting and gaming in the regulated Georgian market. The Group, through agreed option agreements, expects to acquire the remaining
49% after three years.
In 2018, Adjarabet generated revenues (unaudited) of 215m Georgian Lari (GEL) (£64m) and EBITDA (unaudited) of GEL68m (£20m).
The initial cash consideration being paid by the Group for the 51% stake is £102m. A mechanism has also been agreed, consisting of
call and put options, which enables the Group to acquire the remaining 49% after three years at a valuation equivalent to 7 times 2021
EBITDA. The call/put option consideration can be settled, at the Group’s election, in cash or shares. As a consequence of both the put
and call options being only exercisable at fair value being the future EBITDA and earnings multiple which are considered to be two key
inputs into valuing the option, it was determined that the fair value was not material and was close to nominal value.
Since the date of acquisition to 31 December 2019, the Adjarabet business has contributed £74.7m of revenue and £21.0m of operating
profit. If the Adjarabet acquisition had occurred on 1 January 2019, their contribution to revenue and operating profit would have been
£79.6m and £21.7m respectively for the year ended 31 December 2019.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Included within the intangible assets were £74.4m of separately identifiable intangibles comprising brand and customer relations
acquired as part of the acquisition, with the additional effect of a deferred tax liability of £11.1m thereon. These intangible assets are
being amortised over their useful economic lives of up to ten years. Receivables acquired amounted to £1.2m. The book value equated
to the fair value as all amounts are expected to be received.
The main factors leading to the recognition of goodwill (none of which is deductible for tax purposes) is growth by combining business
activities, a strong workforce, leveraging existing products and synergy savings. The goodwill has been allocated to the existing PPB
Online CGU and it has been deemed that a separate CGU is not appropriate.

132

Financial Statements

Assets
Property, plant and equipment
Intangible assets
Total non-current assets
Trade and other receivables
Financial assets – restricted cash
Cash and cash equivalents acquired
Total current assets
Total assets
Liabilities
Trade and other payables
Customer balances
Total current liabilities

Notes to the Consolidated Financial Statements continued
13. Business combinations (continued)
Year ended 31 December 2018
Acquisition of FanDuel Limited

On 10 July 2018, the Group completed the combination of its US business with FanDuel Limited, to create a new company called
FanDuel Group Inc.. Under the terms of the combination, the Group contributed its existing US business and assets along with $145m
(£109.3m) of cash to FanDuel Group Inc. and also paid $15.5m (£11.7m) to a small number of FanDuel Limited shareholders for their
shareholding, while FanDuel Limited contributed its entire business to FanDuel Group Inc.. The cash contribution was used in part
to pay down existing FanDuel Limited debt and will also be used to fund the working capital of FanDuel Group Inc.. The combination
resulted in the holders of shares owning 61% of FanDuel Group Inc., and the holders of FanDuel Limited shares
owning 39% of FanDuel Group Inc. call and put options exist to acquire the shares of FanDuel Limited shareholders at prevailing market
valuations after three and five years. The Group has the discretion as to whether these options are settled by the issuance of Flutter
Entertainment plc shares or via cash. As a consequence of both the put and call options being only exercisable at fair value based on the
market value of FanDuel at the date of exercise of the options, it was determined that the fair value was not material and was close to
nominal value.
In 2018, subsequent to the above transaction, Boyd Gaming acquired 5% in FanDuel such that now has a
58% interest in FanDuel.
The consideration was £211.9m based on the value of the Group’s existing US business contributed to FanDuel Group Inc., cash
consideration paid and the fair value of the cash contribution payable by the Group to FanDuel.
FanDuel has over 40% market share of the US daily fantasy sports market, with 7m registered customers across 40 states. In 2017,
it had revenue of $124m and 1.3m active customers. Headquartered in New York, the business has built-up a leading US sports brand
with approximately $400m cumulative marketing spend to date supported by innovative proprietary technology. The transaction
strengthens the Group’s opportunity to target the prospective US sports betting market through the addition of a strong brand, large
existing customer base and talented team.
Since the date of acquisition to 31 December 2018, the FanDuel DFS business has contributed £57.3m of revenue.
If the FanDuel acquisition had occurred on 1 January 2018, then their contribution to revenue would have been £101.5m for the year
ended 31 December 2018.
FanDuel’s profit cannot be readily defined due to the integration of the businesses post the acquisition. The proforma profit for the
combined US Group is disclosed on page 37 of the Annual Report. Acquisition related costs of £7.9m were incurred in respect of this
transaction and are disclosed within restructuring costs and strategic initiatives in Note 4 of the Consolidated Financial Statements.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Included within the intangible assets were £171.2m of separately identifiable intangibles comprising brands, customer relations and
technology acquired as part of the acquisition, with the additional effect of a deferred tax liability of £35.9m thereon. These intangible
assets are being amortised over their useful economic lives of up to ten years. Receivables acquired amounted to £3.6m. The book
value equated to the fair value as all amounts are expected to be received.
The main factors leading to the recognition of goodwill (none of which is deductible for tax purposes) is growth by combining business
activities, a strong workforce, leveraging existing products and synergy savings of the merged operations. The goodwill has been
allocated to the existing US CGU and it has been deemed that a separate CGU is not appropriate.
Financial Statements

Assets
Property, plant and equipment
Intangible assets
Total non-current assets
Trade and other receivables
Financial assets – restricted cash
Cash and cash equivalents acquired
Total current assets


Liabilities
Trade and other payables
Debt and debt like items acquired
Customer balances
Total current liabilities
Trade and other payables
Deferred tax liabilities
Total non-current liabilities
Total liabilities


Net assets acquired
Goodwill
Non-controlling interest measured at the fair value of net assets identified
Consideration
The consideration is analysed as:
Betfair US shares transferred to Non-controlling interest
Consideration paid in cash
Fair value of cash contribution allocated to Non-controlling interest
Consideration

Notes to the Consolidated Financial Statements continued
13. Business combinations (continued)
Shop property business acquisitions

In 2018, the Group, in the absence of available comparable sites for organic shop openings, acquired a number of licenced bookmaking
businesses in the UK and Ireland.
Details of the net assets acquired and the goodwill arising on these acquisitions under IFRS are as follows:
Fair values
31 December


Identifiable net assets acquired:
Property, plant and equipment
Goodwill arising on acquisition – UK Retail and Irish Retail
Consideration

e consideration is analysed as:
Cash consideration
Contingent deferred consideration
Consideration

The principal factors contributing to the UK Retail and Irish Retail goodwill balances are the well-established nature of the acquired
businesses within the locations in which they operate and the potential synergies, rebranding opportunities and operational efficiencies
achievable for the acquired businesses within the Group.
Information in respect of revenue, operating profit and cash flows for the acquired businesses in the period from acquisition and for the
year ended 31 December 2018 has not been presented on the basis of immateriality.
Contingent deferred consideration is payable to the vendors by reference to the acquired businesses’ performance against agreed
financial targets for the 12 months following the date of acquisition.

Net cash outflow/(inflow) from purchase of businesses

Cash consideration – acquisitions in the year
Cash acquired – acquisitions in the year
Repayment of FanDuel debt and debt like items
Cash consideration – acquisitions in previous years
Total
Analysed for the purposes of the statement of cash flows as:
Purchase of businesses
Cash acquired from acquisitions
Repayment of FanDuel debt and debt like items
Payment of contingent deferred consideration

At 31 December 2018, the Group had a non-controlling interest in Featurespace of 2.38% with a fair value of £2.3m. In 2019, the Group
disposed of its remaining 2.38% non-controlling interest in Featurespace for cash consideration amounting to £2.3m.

Other receivables
Prepayments
Finance lease receivable (see Note 30)
Amounts paid in respect of legacy German and Greek tax assessments (Note A)


Current assets

Trade and other receivables
Trade receivables – credit betting customers
Trade receivables – other sports betting counterparties
Trade receivables
Finance lease receivable (see Note 30)
Other receivables
Value-added tax and goods and services tax
Prepayments
Trade and other receivables are non-interest bearing.

Note A

On 13 February 2019, the Group provided an update on two separate disputed legacy tax assessments. The first relates to the Betfair
Exchange in Germany, which operated there until November 2012, and the second relates to the paddypower.com business in Greece.
The Hessen Fiscal Court provided the Group with its decision relating to the Group’s appeal of a 2012 German tax assessment relating
to the Betfair Exchange, which operated in Germany until November 2012. The Fiscal Court found against the Group and deemed that a
tax liability of approximately €40m (£36m) is payable (including accrued interest). This represents a multiple of the revenues generated by
the Exchange during the assessment period.
Separately, the Group was issued with a Greek tax assessment for financial years 2012, 2013 and 2014, relating to paddypower.com’s
Greek interim licence. This assessment concluded that the Group is liable to pay €15.0m in taxes including penalties and interest. This is
substantially higher (by multiples) than the total cumulative revenues ever generated by paddypower.com in Greece. There is potential
that the periods after 2014 could also be subject to further challenge by the Greek tax authorities.
The Group strongly disputes the basis of these assessments, and in line with the legal and tax advice we have received, is confident
in our grounds to successfully appeal them. The appeals process has commenced in both cases. Accordingly, we do not consider
that these amounts represent liabilities for the Group and no provision has been made for amounts assessed or potential further
assessments. This involves a series of judgements about future events and ultimately the court judgements and therefore the directors
may need to re-assess the accounting treatment as matters develop further. Pending the outcome of these appeals, we paid the total
Greek tax assessment (including the penalties and interest) and the €30.6m German tax assessment during 2019, with the late payment
interest to be paid in due course.

137
Notes to the Consolidated Financial Statements continued
15. Financial assets and cash and cash equivalents
Current
Financial assets – restricted cash
Cash and cash equivalents
Financial assets

Included in financial assets – restricted cash at 31 December 2019 were either (1) restricted at that date, as they represented customer
funds balances securing player funds held by the Group or (2) required to be held to guarantee third party letter of credit facilities.
These customer funds that are not held in trust are matched by liabilities of equal value. The effective interest rate on bank deposits
at 31 December 2019 was 0.6% (2018: 2.28%); these deposits have an average original maturity date of 1 day (2018: 1 day). The bank
deposits also have an average maturity date of 1 day from 31 December 2019 (2018: 1 day). The Directors believe that all short term
bank deposits can be withdrawn without significant penalty.
Financial assets – restricted cash and cash and cash equivalents are analysed by currency as follows:

As at 31 December 2019, £318.2m (31 December 2018: £368.4m) was held in trust in The Sporting Exchange (Clients) Limited on
behalf of the Group’s customers and is equal to the amounts deposited into customer accounts. Neither cash and cash equivalents
or restricted cash include these balances on the basis that they are held on trust for customers and do not belong to and are not at the
disposal of the Group.

16. Share capital and reserves

The total authorised share capital of the Company comprises 150,000,000 ordinary shares of €0.09 each (2018: 150,000,000 ordinary
shares of €0.09 each). All issued share capital is fully paid. The holders of ordinary shares are entitled to vote at general meetings of the
Company on a one vote per share held basis. Ordinary shareholders are also entitled to receive dividends as may be declared by the
Company from time to time.
The movement in the number of issued ordinary shares during the year was as follows:
During the year ended 31 December 2019, 279,096 ordinary shares (2018: 474,236) were issued as a result of the exercise of share
options under employee share schemes, giving rise to a share premium of £3.6m (2018: £2.3m).
The £500m share buyback programme, which commenced on 29 May 2018 completed in February 2019. Under this programme, the
Company repurchased for cancellation 6,993,308 ordinary shares for a total consideration of approximately £500m. This consisted of
a £200m share buyback programme announced on 29 May 2018 which was completed in August 2018 and in August 2018, the Group
commenced a second buyback programme of £300m which was ongoing at 31 December 2018. Overall in 2018 cash payments of
£413.7m had been made in respect of the repurchases and a further £1.3m for other transaction related costs were made. Between
31 December 2018 and 6 February 2019 further payments of £86.4m in respect of share purchases and £0.4m for other transaction
related costs were made. The nominal value of the shares cancelled during the year ending 31 December 2019 was £0.1m.

138

Financial Statements

A total of 1,965,600 ordinary shares were held in treasury as of 31 December 2019 (2018: 1,965,600). All rights (including voting rights
and the right to receive dividends) in the shares held in treasury are suspended until such time as the shares are reissued. The Group’s
distributable reserves are restricted by the value of the treasury shares, which amounted to £40.7m as of 31 December 2019 (2018:
£40.7m). The cost of treasury shares held by the Company at 31 December 2019 was £4.2m (2018: £4.2m), with a further £36.5m of
shares being held by the Company’s subsidiaries (2018: £36.5m).
At 31 December 2019, the Paddy Power Betfair plc Employee Benefit Trust (“EBT”) held 70,397 (2018: 99,741) of the Company’s own
shares, which were acquired at a total cost of £6.1m (2018: £8.6m), in respect of potential future awards relating to the Group’s employee
share plans (see Note 18). The Company’s distributable reserves at 31 December 2019 are restricted by this cost amount. In 2019,
29,344 shares with an original cost of £2.5m (2018: 101,232 shares with an original cost of £7.0m) were transferred from the EBT to the
beneficiaries of the EBT.
The foreign exchange translation reserve at 31 December 2019 had a debit balance of £21.5m (2018: credit balance of £4.1m) and arose
from the retranslation of the Group’s net investment in Euro, AUD, USD and GEL functional currency entities. The movement in the
foreign exchange translation reserve for the year ending 31 December 2019 reflects mainly the weakening of USD and GEL against
GBP in the year.
The cash flow hedge reserve represents the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that had not yet occurred at that date. Following the introduction of IFRS 16, the Group has
designated the Euro lease liability in its GBP functional currency companies as a hedging instrument in a hedge of its highly probable
future Euro revenues. The fair value gain of £2.3m at 31 December 2019 (31 December 2018:nil) arises as the applicable EUR – GBP
forward exchange rates were favourable relative to the position at the start of the year.
Other reserves comprise undenominated capital. Undenominated capital at 31 December 2019 of £2.3m (2018: £2.2m) relates to the
nominal value of shares in the Company acquired by the Company of £2.1m (2018: £2.0m) and subsequently cancelled and an amount
of £0.2m (2018: £0.2m) which arose on the redenomination of the ordinary share capital of the Company at the time of conversion from
Irish pounds to Euro.
In 2019, an amount of £20.3m (2018: £40.5m) in respect of share options exercised during the year was transferred from the sharebased payment reserve to retained earnings. An amount of £1.1m of deferred tax relating primarily to the Group’s share-based
payments was credited to retained earnings in 2019 (2018: charge of £3.6m) – see also Note 19. An amount of £0.4m of current tax
relating to the Group’s share-based payments was credited to retained earnings in 2019 (2018: £2.9m).
As permitted by section 304 of the Companies Act 2014, no separate profit and loss account is presented in respect of the Company.
The Company recorded a profit for the year of £74.7m (2018: £34.2m). This includes £75.0m (2018: Nil) of dividends receivable from
subsidiary companies.

17. Dividends paid on ordinary shares
Ordinary shares:
– final dividend of £1.33 per share for the year ended 31 December 2018 (31 December 2017: £1.35)
– interim dividend of £0.67 per share for the year ended 31 December 2019 (31 December 2018: £0.67)
Amounts recognised as distributions to equity holders in the year
The Directors have proposed a final dividend of 133 pence per share which will be paid on 22 May 2020 to shareholders on the Company’s
register of members at the close of business on the record date of 14 April 2020. This dividend, which amounts to approximately £104m,
has not been included as a liability at 31 December 2019.

18. Share-based payments

Summary of equity-settled share-based payments

The Group had the following share-based payment schemes brought forward from before the all-share combination between Paddy
Power and Betfair in February 2016 (the ‘Merger’):
The Paddy Power plc Sharesave Scheme; and
The Paddy Power Long Term Incentive Plan.
In addition, a number of schemes were acquired at the Merger date:
The Betfair Sharesave Scheme;
The Betfair Restricted Share Scheme; and
The Betfair Long Term Incentive Plan and Deferred Share Incentive Plan.

139

Notes to the Consolidated Financial Statements continued
18. Share-based payments (continued)

Summary of equity-settled share-based payments (continued)

Subsequent to the Merger, the Group has issued new awards under the following schemes:
The Sharesave Scheme
The Long Term Incentive Plan, Medium Term Incentive Plan and Deferred Share Incentive Plan;
The Restricted Share Plan; and
FanDuel Value Creation Plan (VCP).
The above schemes are settled via a mixture of the allotment of shares from the Employee Benefit Trust (‘EBT’) and the issue of new
shares or in the case of the FanDuel VCP in either equity shares or cash at the Group’s option. As a result, all schemes are accounted for
as equity-settled in the financial statements. Going forward, no new awards will be granted under any pre-Merger schemes.
The equity-settled share-based payments expense recognised in the income statement in respect of all schemes is as follows:
Underlying
The Paddy Power Long Term Incentive Plan
The Betfair Restricted Share Scheme
The Betfair Long Term Incentive Plan and Deferred Share Incentive Plan
Sharesave Scheme
The Long Term, Medium Term and Deferred Share Incentive Plans (“LTIP”, “MTIP” & “DSIP”)
The Restricted Share Plan
FanDuel Value Creation Plan (VCP)
Separately disclosed items (see Note 4)

The aggregate number of shares which may be utilised under the employee share schemes in any ten year period may not exceed ten
per cent of the Company’s issued ordinary share capital. The percentage of share capital which can be utilised under these schemes
comply with guidelines issued by the Investment Association in relation to such schemes.

Summary of options outstanding

At 31 December 2019, 1,593,947 awards and options (31 December 2018: 1,574,487) in the capital of the Group remain outstanding and
are exercisable up to 2029 as follows:
The Paddy Power plc Sharesave Scheme
Paddy Power Long Term Incentive Plan
The Betfair Long Term Incentive Plan and Deferred Share Incentive Plan
The Sharesave Scheme
The Long Term, Medium Term and Deferred Share Incentive Plans
(“LTIP”, “MTIP” & “DSIP”)
The Restricted Share Plan

The Paddy Power plc Sharesave Scheme

The Paddy Power plc Sharesave Scheme was adopted by shareholders on 21 November 2000 and was subsequently approved by the
Revenue Commissioners.
All employees (including Executive Directors) who had not less than six months continuous service with the Company or any subsidiary
nominated to join the Sharesave Scheme could be invited to apply for options to acquire shares. The purchase price for each ordinary
share in respect of which an option is granted could not be less than 75 per cent of the closing price of the shares on the Irish Stock
Exchange on the dealing day last preceding the date of grant of the option or its nominal value. The aggregate maximum monthly
contribution payable by an employee in connection with the scheme is €500/£500.

Financial Statements

Movements in the share options under this scheme during the year were as follows:
Outstanding at January 2019

Granted during year

* Share options lapse 3.5 and 5.5 years after date of grant.

The weighted average exercise price for share options exercised during the year is £34.51 (31 December 2018: £37.53) at a weighted
average share price at the date of exercise of £80.76 (2018: £77.84). The total number of shares exercisable at 31 December 2019 is
3,695 (2018: 3,975).
The fair value of options granted under the Sharesave Scheme was determined using a Black-Scholes model and is expensed over the
vesting period. The following assumptions were used in the Black-Scholes pricing model for the above options:
2011 – 2014

Share price at date of grant
Exercise price (€)
Exercise price (£)
Expected volatility
Expected term until exercised
Risk-free interest rate

The Paddy Power Long Term Incentive Plan
Summary of share awards outstanding

The total number of share awards outstanding under the Paddy Power Long Term Incentive Plan at 31 December 2019 was nil (2018:
5,501). These shares vested fully in 2019. The movements in share awards during the year ended 31 December 2019 (excluding related
dividends awarded as shares) were as follows:
Outstanding at
1 January 2019

The Betfair Long Term Incentive Plan and Deferred Share Incentive Plan

The following share plans were acquired on the Merger completion date (“Completion”) and were originally introduced in the Betfair
Group to incentivise and reward for the successful delivery of the short-term and long-term business strategy:
The Betfair Long Term Incentive Plan (“LTIP”) which consists of restricted share awards; and
The Betfair Deferred Share Incentive Plan (“DSIP”) which consists of cash and restricted share awards.
The schemes have awards in the form of cash and restricted shares. The level of award granted in each of the schemes were based on
a mixture of the individual performance of the employee and Group-wide performance over the term of the award which was between
one and three years.
Prior to the Merger, Paddy Power and Betfair agreed that outstanding unvested awards granted under the Betfair Long Term Incentive
Plan (‘‘Betfair LTIP Awards’’) in 2013/14, 2014/15 and 2015/16 would not vest on Completion but would be replaced by awards over an
equivalent number of the Company’s Shares (calculated by reference to the Exchange Ratio) which would have the same normal vesting
dates as the original awards but be subject to certain absolute vesting levels.
Outstanding at
The outstanding shares on these schemes are exercisable up to 2025.
The weighted average exercise price for share options exercised during the year was a nominal price (31 December 2018: a nominal
price) at a weighted average share price at the date of exercise of £73.12 (31 December 2018: £77.66). The total number of shares
exercisable at 31 December 2019 is 314,059.

Notes to the Consolidated Financial Statements continued
18. Share-based payments (continued)

The Betfair Long Term Incentive Plan and Deferred Share Incentive Plan (continued)

The options granted in the year represent dividend roll-ups, in line with documented scheme rules.
The fair value of the share options in the LTIP scheme is expensed over the three year period that the options vest.

The Sharesave Scheme

During the year, 162,477 options were granted under the Sharesave Scheme. These SAYE options must
ordinarily be exercised within six months of completing the relevant savings period. In line with market practice, the exercise of these
options is not subject to any performance conditions.
All employees (including Executive Directors) who have not less than six months continuous service with the Company or any subsidiary
nominated to join the Sharesave Scheme may be invited to apply for options to acquire shares. The purchase price for each ordinary
share in respect of which an option is granted shall not be less than 75 per cent of the closing price of the shares on the Irish and London
Stock Exchanges on the dealing day last preceding the date of grant of the option or its nominal value. The aggregate maximum monthly
contribution payable by an employee in connection with all Sharesave related schemes is €500/£500.
The weighted average share price at the date of exercise was £87.56 (31 December 2018: £75.96). 34,861 shares were exercisable
at 31 December 2019 (2018: nil).
The fair value of the options is expensed over the period that the options vest. The following assumptions were used in the
Black-Scholes pricing model for the 2016, 2017 and 2018 options:
Share price at date of grant
Exercise price
Expected volatility
Expected term until exercised
Expected dividend yield
Risk-free interest rate

The following assumptions were used in the Black-Scholes pricing model for the 2019 options:
Share price at date of grant
Exercise price
Expected volatility
Expected term until exercised
Expected dividend yield
Risk-free interest rate
Financial Statements

The Long Term Incentive Plan, Medium Term Incentive Plan and Deferred Share Incentive Plan
The following share plans were introduced post-Merger to incentivise and reward for the successful delivery of the short, medium and
long-term business strategy:
Long Term Incentive Plan (“LTIP”) which consists of restricted share awards;
Medium Term Incentive Plan (“MTIP”) which consists of restricted share awards; and
Deferred Share Incentive Plan (“DSIP”) which consists of cash and restricted share awards.
The level of award granted in each of the schemes is based on a mixture of the individual performance of the employee and the Group
wide performance over the term of the award which is between one and three years.
The DSIP has cash elements which are fixed in value and are paid and expensed in the first year that the awards are issued. The cash
award represents two-thirds of the total award. There is no option given to elect to have these issued in shares. The cash element
issued is classified as a cash bonus in the income statement and not a ‘cash-settled share-based payment’ on the basis that the
employee does not have the option to choose whether they receive cash or shares, and the award value is fixed and not based on
share price movements.
The restricted share portion of the DSIP award will vest over the second and third year of the scheme.
The weighted average exercise price for share options exercised during the year was a nominal price and at a weighted average share
price at the date of exercise of £65.19 (31 December 2018: £72.56). The value of each award was calculated at the grant date and
expensed over a period of up to three years in which the awards vest. The total number of shares exercisable at 31 December 2019 is
54,881 (2018: 20,337). The awards granted in the 2016, 2017 and 2018 schemes during the year represent dividend roll-ups, in line with
documented scheme rules. The share price at the date of the awards granted during the year was between £58.46 – £75.50 (2018:
£66.87 – £79.23). For the 2019 LTIP awards where an element of the award has non-market conditions such as the 25% related to the
value of the US business and 25% based on Relative Total Shareholder Return, the Group has engaged third party valuation specialists
to provide a fair value for the awards using a Monte Carlo simulation model. The fair value of the US value and Relative Total Shareholder
Return ie the non-market element of these awards was £4.75 and £4.77 respectively.

The Restricted Share Plan

During the year, 158,192 (2018: 41,138) options were granted under the Restricted Share plan.
The movements in this plan during the year ended 31 December 2019 were as follows:

The level of award granted on this plan is based on a mixture of individual performance of the employee and Group-wide performance
over the term of the award which is between one and three years. Restricted shares are valued with reference to the market value of the
shares on the date of grant. The value of each award was calculated at the grant date and expensed over a period of up to three years
in which the awards vest. The weighted average exercise price for share options exercised during the year was a nominal price and at
a weighted average share price at the date of exercise of £68.35 (31 December 2018: £72.39). The fair value at the date of the awards
granted during the year was between £58.46 – £79.23 (2018: £62.43 – £79.23). The awards granted in the 2017 and 2018 schemes during
the year represent dividend roll-ups, in line with documented scheme rules.

143

Notes to the Consolidated Financial Statements continued
18. Share-based payments (continued)
FanDuel Value Creation Plan (VCP)

In 2019, the Group introduced a plan for FanDuel employees that allows them share in the future value created within FanDuel. As there
were communications to staff in 2018 in respect of this plan, an expense of £2.4m was recognised in 2018. The expense recognised in
respect of this plan in 2019 is £7.4m. Employees will be awarded an allocation of units which represent a share in value created. The value
of these units will be determined by the value of the business at July 2021 and July 2023 compared to benchmark. Employees have the
option to exercise 50% of these units at July 2021 at the prevailing value or roll some or all of them to July 2023 at the prevailing value at
that date. The Group will have the option of settling this plan via the issuance of shares or cash.

The Paddy Power Betfair plc Employee Benefit Trust

Prior to the Merger, awards under the Paddy Power plc Long Term Incentive Plan were satisfied from the Paddy Power Betfair plc
Employee Benefit Trust (the “EBT”). Post-Merger, certain other awards may also be satisfied from the EBT. Purchases of Flutter
Entertainment plc ordinary shares from 1 January 2018 to 31 December 2019 and shares vested from the EBT during that period,
are shown below:
Number of Flutter
Entertainment plc
ordinary shares

Shares held by the EBT at 1 January 2018
Vested from the EBT in 2018
Shares held by the EBT at 31 December 2018
Vested from the EBT in 2019
Shares held by the EBT at 31 December 2019

The results of the EBT are included in the Company financial statements. The shares held by the EBT at the
reporting date are shown as a deduction from equity in the consolidated statement of financial position in accordance with the Group’s
accounting policy (see Note 16).

19. Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Property, plant and equipment
Intangible assets
Employee benefits
Other
Net assets/(liabilities)

Deferred tax assets and liabilities have been offset at 31 December 2019 and 2018 where there is a legally enforceable right to such
set-off in each jurisdiction. Included in the statement of financial position is a deferred tax asset of £11.9m (2018: £10.7m) and a deferred
tax liability of £65.0m (2018: £77.4m).
The deferred tax liability in relation to intangible assets disclosed above primarily relates to the deferred tax liability arising in respect of
acquisition accounting related intangibles. This deferred tax liability continues to unwind as the intangible assets are amortised over their
useful economic life.
The deferred tax asset arising on employee benefits relates to future tax deductions the Group expects to receive in relation to share
based payments operated by the Group to reward its employees. The asset is recognised at the tax rate at which it is expected to unwind.
Financial Statements

Movement in temporary differences during the year

Balance at 1 January 2018
Recognised in income
Arising on acquisition
Recognised directly in equity
Foreign currency translation adjustment
Balance at 31 December 2018
Arising on acquisition
Recognised in income
Recognised directly in equity
Foreign currency translation adjustment
Balance at 31 December 2019

Unrecognised deferred tax assets

The Group has unrecognised deferred tax assets in respect of losses of £29.3m (2018: £20.4m). These have not been recognised on the
basis that there is insufficient certainty of there being future taxable profits in the relevant jurisdictions, and therefore the assets will not
be realisable.

20. Trade and other payables and derivative financial liabilities
Current liabilities

Trade and other payables
Trade payables
Customer balances
PAYE and social security
Value-added tax and goods and services tax
Betting duty, data rights, and product and racefield fees
Employee benefits
Liability to purchase own shares
Contingent deferred consideration – business combinations (Note 29)
Accruals and other liabilities
Total
Derivative financial liabilities
Sports betting open positions (Note 29)

Notes to the Consolidated Financial Statements continued
20. Trade and other payables and derivative financial liabilities (continued)
Non-current liabilities

Trade and other payables
Employee benefits
Contingent deferred consideration – business combinations (Note 29)
Accruals and other liabilities
Total
Derivative financial liabilities
Sports betting open positions (Note 29)


11.0
–

The liability to purchase own shares at 31 December 2018 relates to an obligation arising under a buyback agreement for the purchase of
the Company’s own shares (see Note 16). The share buyback was completed in full in 2019.

Sports betting open positions

Amounts received from customers on sportsbook events that have not occurred by the year end are derivative financial instruments
and have been designated by the Group on initial recognition as financial liabilities at fair value through profit or loss.
The carrying amount of the liabilities is not significantly different from the amount that the Group is expected to pay out at maturity of
the financial instruments. Sports bets are non-interest bearing. There is no interest rate or credit risk associated with open sports bets.

Contingent deferred consideration – business combinations

Included within non-current liabilities is contingent and deferred consideration of £11.0m due to Betfair’s historical acquisition of HRTV,
a horseracing television network based in the United States. The amount payable at 31 December 2019 in respect of the HRTV
acquisition amounted to £18.3m, with £11.0m due after one year from the reporting date.

21. Provisions
Current

Employee benefits (long service leave)
Betting duty, data rights, and product and racefield fees (gaming tax)
Accruals and other liabilities (onerous contracts)
Total

Non-current

Employee benefits (long service leave)
Accruals and other liabilities (lease reinstatement and onerous contracts)
Financial Statements

The movements in provisions during 2018 and 2019 were as follows:

Current

Balance at 1 January 2018
Amounts used during the year
Additional provisions recognised
Transfers from current liabilities
Balance at 31 December 2018
Transfer to IFRS 16 lease liability
Amounts used during the year
Additional provisions recognised
Transfers from non-current liabilities
Balance at 31 December 2019

Onerous
contracts
£m
Long service
Lease
leave reinstatement

Onerous contracts

Non-current

Balance at 1 January 2018
Transfers to current liabilities
Charged to the income statement:
– Additional provisions recognised
Balance at 31 December 2018
Transfer to IFRS 16 lease liability
Transfers to current liabilities
Charged to the income statement:
– Additional provisions recognised
Balance at 31 December 2019

Long service leave

The timing and amount of long service leave cash outflows are primarily dependent on when staff employed at the reporting date avail
of their entitlement to leave and their expected salaries at that time. As of 31 December 2019, it was expected that cash outflows would
occur primarily within the following five years (2018: within the following five years).

Lease reinstatement

Included in this category are amounts provided by the Group for the reinstatement of properties held under leases to their original
condition when the leases were taken out. These costs are generally provided for over the expected term of the relevant leases.
The timing and amount of lease reinstatement cash outflows is dependent on the expected dates on which leased premises will be
exited and the existence of provisions in the lease contracts requiring reinstatement. The cash outflows are expected to occur at
various stages over the next 21 years as longer term leases are not renewed (2018: the next 22 years).

Onerous contracts

The onerous contracts provision at 31 December 2018 primarily related to operating leases where the Group were not occupying
properties for which it still has a present and future obligation to make lease payments. The provision represented the future expected
net cash outflows under these leases discounted at an interest rate appropriate to the timing of these net cash outflows. Following the
introduction of IFRS 16 at 1 January 2019, these provisions have been included within the IFRS 16 lease liability.

Notes to the Consolidated Financial Statements continued
21. Provisions (continued)
Gaming tax

Separate to the amounts highlighted in Note 14, there are other gaming tax provisions relating to amounts provided for taxes in certain
jurisdictions where the interpretation of tax legislation is uncertain. When the group disagrees with the application of unclear tax
legislation, for example when it is applied retrospectively and/or results in a one-off disproportionate tax equivalent to many times the
profit derived by the Group from its historic activities in that jurisdiction, the Group continues to challenge these interpretations.
Whilst the maximum potential obligation for all ongoing cases could be greater than the recognised provision, and the outcomes may
not be known for some time, a liability has been recorded for the Directors’ best estimate of the cash outflows that will ultimately be
required in respect of each claim. Management have not provided a sensitivity for this provision as the range is not considered to be
material. Management note this is a key estimate, however it is not a key judgement that will have a material impact in the coming year.

22. Borrowings and lease liabilities
Current liabilities

Term Loan Facility
Overdraft facility
Accrued interest on borrowings
Less: expenses relating to term loan facility
Lease liabilities
Non-current liabilities

Revolving credit facility
Less: expenses relating to revolving credit facility
Lease liabilities


In 2015, the Group secured a committed revolving credit bank loan facility (“RCF”) of €300m provided by a syndicate of banks which was
scheduled to expire in May 2020. In 2018, the RCF was amended to an amount of £450m and was extended to expire in April 2023. In May
2019, the RCF was amended to update the financial covenants and margin grid, as per those outlined below. In May 2019, the Group also
secured a term loan facility of £250m provided by a syndicate of banks. The term loan facility is for an initial period of 18 months with an
option to extend further by up to 12 months.
At 31 December 2019, £79m and €45m of the RCF was drawn down and £250m of the term loan facility was drawn down totalling to
£367.3m (31 December 2018: £285m).
Borrowings under the RCF and the term loan facility are unsecured but are guaranteed by the Company and certain of its operating
subsidiaries. Borrowings under the RCF incur interest at LIBOR (for borrowings denominated in pounds sterling) and EURIBOR (for
borrowings denominated in euro) plus a margin of between 1.10% and 2.50%. A commitment fee, equivalent to 35% of the margin, is
payable in respect of available but undrawn borrowings. Borrowings under the term loan facility incur interest at LIBOR plus a margin of
between 0.60% and 2.40%.
It is the Directors’ opinion that due to the Group’s bank borrowings being subject to floating interest rates and the proven cash
generation capability of the Group, there is no significant difference between the book value and fair value of the Group’s borrowings.
Under the terms of both the RCF and term loan facility, the Group is required to comply with the following financial covenants on a
semi-annual basis.
Net Leverage Ratio: Consolidated net borrowings shall not be more than 3.5 times underlying consolidated EBITDA (with acquisition
spikes in the event of material acquisitions, to 4.0 times for a period of six months, stepping back to 3.75 times for the subsequent
six months, before returning to 3.5 times).
Interest Cover Ratio: Underlying consolidated EBITDA shall not be less than 4.0 times net finance charges.
During the year ended 31 December 2019, all covenants have been complied with.

148

Financial Statements

In addition, at 31 December 2019 £5.0m of the Group’s bank overdraft facilities were utilised (31 December 2018: £Nil). See Note 25 for
further detail.

Reconciliation of movements of liabilities to cash flows arising from financing activities:
Balance at 1 January 2019
IFRS 16 Lease liability at 1 January 2019
Adjusted Balance at 1 January 2019
Changes from financing cash flows
Amounts drawn on Revolving Credit Facility
Amounts drawn on Term Loan Facility
Amounts repaid on borrowing facility
Fees in respect of borrowing facility

Amounts drawn on overdraft facility
Lease liabilities paid
Interest paid
Total
Other changes
Lease liability change – Business Combinations
Lease liability change – remeasurement of lease term
Lease liability change – Additions & Disposals
Interest on borrowings
Interest on leases
Unwinding of capitalised expenses relating to revolving credit facility
Foreign exchange movements
Total other changes
Balance at 31 December 2019


23. Financial risk management

The Group has the following risk exposures in relation to its use of financial instruments:
Market risk;
Credit risk;
Liquidity risk;
Foreign currency risk; and
Interest rate risk.
Set out below is information on the Group’s exposure to each of the above risks, and what its objectives, policies and processes are for
measuring and managing those risks. Information is also provided on how the Group manages its capital. Quantitative disclosures in
respect of these risks are included throughout these consolidated financial statements and, in particular, in Notes 24 to 27.

General

The Board of Directors has overall responsibility for the management of the Group’s risks. This responsibility is delegated to a number
of committees over which the Board has oversight. The primary Board committees set up to manage risks are the Risk Committee and
the Audit Committee. Both these Committees report regularly to the Board on their activities. The oversight of the Group’s treasury
operations is performed by an Investment Committee, chaired by the Chief Financial Officer, which reports annually to the Audit
Committee on its activities.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument
and the hedged item. This will effectively result in the exposure arising from fluctuations of currency exchange rates being mitigated by
the retranslation effect of designated financial instruments.

149



Notes to the Consolidated Financial Statements continued
23. Financial risk management (continued)
Market risk

Market risk relates to the risk that changes in prices, including sports betting prices/odds, foreign currency exchange rates and interest
rates (see also ‘Interest rate risk’ section below), will impact the Group’s income or the value of its financial instruments. Market risk
management has the function of managing and controlling the Group’s exposures to market risk to within acceptable limits, while at
the same time ensuring that returns are optimised.
The management of market risk is performed by the Group under the supervision of the Risk Committee and the Investment
Committee and according to the guidelines approved by them. The Group will utilise hedges where there is an identified requirement
to manage profit or loss volatility.

Sports betting prices/odds

Managing the risks associated with sportsbook bets is a fundamental part of the Group’s business. The Group has a separate Risk
Department which has responsibility for the compilation of bookmaking odds and for sportsbook risk management. The Risk
Department is responsible for the creation and pricing of all betting markets and the trading of those markets through their lives. A mix
of traditional bookmaking approaches married with risk management techniques from other industries is applied, and extensive use is
made of mathematical models and information technology. The Group has set predefined limits for the acceptance of sportsbook bet
risks. Stake and loss limits are set by reference to individual sports, events and bet types. These limits are subject to formal approval by
the Risk Committee. Risk management policies also require sportsbook bets to be hedged with third parties in certain circumstances
to minimise potential losses. The profits and losses recorded on sportsbook hedging activities are recorded in ‘revenue’ in the income
statement.

24. Credit risk
Credit risk

The Group’s credit risk represents the risk that a financial loss may result in the event that a counterparty to a financial instrument,
a trading partner or customers fail to meet their contractual obligations.

Trade and other receivables

The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all trade receivables.
The Group’s sports betting and gaming businesses are predominantly cash and credit card/debit card businesses where there is a
requirement that the customer pays in advance when a transaction is entered into. Credit lines are provided to customers on a case by
case basis for higher value customers or based on credit ratings for smaller value customers. Individual credit limits are decided upon
by the credit control function in the first instance after taking into account credit and background reference checks. The collectability
of outstanding trade receivable balances is closely monitored by reference to aged receivables and other reports and any receivable
balances considered to be uncollectible are provided against when identified.
To measure the expected credit losses, trade receivables are monitored based on credit risk characteristics and the days past due.
The absence of recurring patterns for specific categories of receivables and the relative immateriality of the amounts in the context
of the broader balance sheet resulted in a portfolio approach not being adopted for the purpose of impairment recognition.
Trade and other receivables impairment allowances are established against individual receivable balances when there is objective
evidence that such balances are likely to be uncollectible, either in full or in part. The impairment allowance also includes a collective
loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. There is
no material concentration of sales with individual customers.

Cash investments and foreign exchange forward contracts

It is Group treasury policy to limit investments in cash deposits and foreign exchange forward contracts to counterparties that have
a Moody’s (or equivalent) long term credit rating of A3 or higher and a Moody’s (or equivalent) short term credit rating of P1, unless
otherwise specifically approved by the Investment Committee.
A list of approved counterparties is maintained by the Group. There are also limits on the percentage of total cash on deposit that can
be invested with any individual counterparty. Management does not expect any counterparty to fail to meet its obligations as of the
reporting date and the date of this report. There are also restrictions on the type of cash products that can be invested in.
The Group continues to carefully measure counterparty risk by monitoring credit agency ratings, Credit Default Swap spread prices and
other public information, and to take action to mitigate such risks as are identified. The Group has accordingly restricted its cash deposit
investments to counterparties that had higher credit ratings and has, when required, shortened the maturities of deposits placed.

150

Financial Statements

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at
31 December was:

Restricted cash
Trade receivables
Finance lease receivables
Other receivables
Cash and cash equivalents
Total

The maximum exposure to credit risk for trade and other receivables by geographic region at 31 December was:

United Kingdom
Ireland
Australia
US
Other
Total

The maximum exposure to credit risk for trade and other receivables by type of counterparty at 31 December was:

Trade receivables – credit betting customers
Trade receivables – other sports betting counterparties
Finance lease receivable
Other receivables
Total

Significant customers

There were no individual customers at 31 December 2019 or 31 December 2018 that represented over ten per cent of trade receivables.

Expected credit loss

The ageing of trade receivables at 31 December 2019 and 2018 was as follows:

Not past due
Past due 0 days to 30 days
Past due 31 days to 120 days
Past due 121 days to 365 days
More than one year
Total

Impairment
Gross allowance

The gross trade receivable balance is £10.4m (2018: £9.6m) with an allowance for impairment in respect of these receivables of £1.9m
(2018: £4.5m). There were no material impairment losses during the year.

Notes to the Consolidated Financial Statements continued
25. Liquidity risk

This represents the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s policy for liquidity
management is to ensure that there is sufficient liquidity in place to meet its liabilities as they fall due, both under normal or potential
adverse conditions, and without resulting in undue loss or damage to the Group.
The Group performs regular cash projections to ensure that there is sufficient cash on hand to meet its expected obligations as they
fall due. The nature of the Group’s business and the potential volatility in sporting results can result in significant differences between
expected and actual short term cash flows. Consequently, a conservative approach is applied to cash forecasting and flexibility is built
into the forecast to cover potentially adverse sporting results. Cash deposit placement time periods are decided upon by reference
to cash inflows forecast and expected requirements in respect of the Group’s financial obligations. The Group’s treasury policy sets a
maximum maturity on deposits of up to 12 months. Information on the overall maturity of deposits at 31 December 2019 and 2018 is
set out in Note 15. It is the Directors’ belief that the Group’s cash deposit balances can be withdrawn without significant penalty.
The Group has the following lines of credit:
A committed revolving credit bank loan facility (“RCF”) of £450m obtained from a syndicate of banks which expires in April 2023.
At 31 December 2019, £117.3m of this facility was drawn down. Borrowings under the RCF are unsecured but are guaranteed by the
Company and certain of its operating subsidiaries. Borrowings under the RCF incur interest at LIBOR plus a margin of between 1.10%
and 1.95% and EURIBOR plus a margin of between 1.10% and 1.95%. A commitment fee, equivalent to 35% of the margin, is payable
in respect of available but undrawn borrowings.
A committed Term Loan facility of £250m obtained from a syndicate of banks which expires in November 2020. At 31 December
2019, £250m of this facility was drawn down. Borrowings under the Term Loan are unsecured but are guaranteed by the Company
and certain of its operating subsidiaries. Borrowings under the Term Loan incur interest at LIBOR plus a margin of between 0.60%
and 2.40%.
Unsecured uncommitted bank overdraft facilities for working capital purposes totalling £4.3m (€5.0m). Interest is payable thereon at
the bank’s prime overdraft rate plus 0.5%. Bank overdraft facilities for certain subsidiaries of the Company are guaranteed by way of
a Letter of Guarantee issued by in favour of Allied Irish Banks p.l.c.
Unsecured uncommitted bank overdraft facilities for working capital purposes totalling £15m. Interest is payable thereon at the bank’s
sterling base rate plus 3.5%. Bank overdraft facilities for certain subsidiaries of the Company are guaranteed by way of a Letter of
Guarantee issued by in favour of AIB Group (UK) p.l.c.
At 31 December 2019, £5.0m of the bank overdraft facilities were being utilised (31 December 2018 £nil). The following are the
undiscounted contractual maturities of the earliest date repayable of financial liabilities as at 31 December:

Non-derivative financial liabilities
Trade and other payables
Contingent deferred consideration
Borrowings
Lease Liabilities
Derivative financial liabilities
Sports betting open positions
Total

Non-derivative financial liabilities
Trade and other payables
Contingent deferred consideration
Borrowings – Revolving Credit Facility
Derivative financial liabilities
Sports betting open positions
Total
Financial Statements

The contingent deferred consideration payable represents management’s best estimate of the fair value of the amounts that will be
payable, and may vary depending on the future performance of the acquired businesses.

26. Currency risk

The Group is exposed to currency risk in respect of revenue, expenses, receivables, cash and cash equivalents, and other financial
assets and financial liabilities (primarily trade payables, accruals and customer balances) that are denominated in currencies that are not
the functional currency of the entities in the Group. The currencies in which transactions are primarily denominated are pound sterling
(“GBP”), euro (“EUR”), Australian dollar (“AUD”), US dollar (“USD”) and Georgian lari (“GEL”).
It is Group policy to ensure that foreign currency denominated liabilities are broadly matched by foreign currency denominated assets,
primarily cash deposits. This is generally achieved by monthly sales of net foreign currency inflows into the subsidiaries’ functional
currency at spot rates. Foreign exchange impacts therefore arise on the retranslation of their income and expense into their functional
currency for Group reporting purposes. Subject to Investment Committee approval, the Group may make use of forward contracts,
intentional imbalances between foreign currency denominated liabilities and assets, and other derivatives to manage foreign currency
exposures on expected future cash flows.
While the Group generally maintained a naturally hedged balance sheet, as described in the preceding paragraph, it remains exposed
to exchange rate risk in respect of its expected future foreign currency denominated income and expenses in its foreign operations.
The exposure arising from the currency risk in connection to its Euro revenue is mitigated by the remeasurement effect of the
Euro-denominated lease liabilities, recognised in the current accounting year as a result of the introduction of IFRS 16 Leases effective
1 January 2019. As a result, the Group has designated the foreign currency element of the leases as a hedging instrument in relation to
the exposure identified above. The effect of the revaluation of the lease liabilities designated as hedging instruments are deferred to the
hedging reserve and subsequently released to the profit and loss in the month in which the revenue occurs.

Exposure

As of 31 December 2019 and 2018, the Group’s foreign currency risk exposure, based on the functional currencies of its operations, was
as follows:

Financial assets
Non-derivative financial liabilities1
Derivative financial liabilities
Gross statement of financial position
exposure

Effects of hedge accounting on the financial position and performance

Following the introduction of IFRS 16, the Group has designated the Euro lease liability in its GBP functional currency companies as
a hedging instrument in a hedge of its highly probable future Euro revenues. The effects of the foreign currency-related hedging
instruments on the Group’s financial position and performance are as follows:
Carrying amount (current liability)
Notional amount
Maturity date
Hedge ratio
Change in intrinsic value of the outstanding hedging instruments since inception of the hedge

Notes to the Consolidated Financial Statements continued
26. Currency risk (continued)
Sensitivity analysis

A ten per cent increase and decrease in the value of pound sterling against the following currencies at 31 December 2019 and 2018
would have increased/(decreased) profit and equity by the amounts below as a consequence of the retranslation of the above foreign
currency denominated assets and liabilities at those dates. It is assumed that all other variables, especially interest rates, remain
constant in the analysis.

27. Interest rate risk

Interest rate risk arises primarily from the Group’s borrowings which are at a floating rate. The Group may manage this risk through
the use of interest rate derivatives as appropriate. At 31 December 2019, the Group was not party to any such derivative. Excess cash
funds are invested in interest-bearing bank deposits on which the interest rate is fixed for the term of the deposit. Group treasury policy
imposes limits on the terms over which cash can be placed on deposit.

Profile
Variable rate instruments
Financial assets – restricted cash
Financial assets – cash
Borrowings


Cash flow sensitivity analysis for variable rate instruments

An increase and decrease of 50 basis points (“bps”) in interest rates at 31 December 2019 and at 31 December 2018 would have
(decreased)/increased profit for a full year and equity by the amounts set out in the table below. It is assumed that all other variables,
including foreign currency exchange rates, remain constant.

31 December 2019
Variable rate instruments
31 December 2018
Variable rate instruments

Due to the low interest rates already applying to a significant portion of the Group’s cash balances, a 50bps decrease in interest rates has
only a marginal impact on the interest income earned by the Group.

154

Financial Statements

28. Capital management

The capital structure of the Group consists of cash and cash equivalents, debt finance, issued capital, reserves and retained earnings.
The efficiency of the Group’s capital structure is kept under regular review by the Board.
The Group continues to target a medium term leverage range of between 1 times and 2 times net debt to EBITDA. This target reflects
the Group’s strong cash flow generation, general capital market conditions and the need to retain strategic flexibility for continuing
investment opportunities. The Group has significant capacity in respect of its ability to pay dividends with no material restrictions.
The Group has the authority to buy back up to ten per cent of the Company’s issued share capital between the dates of its Annual
General Meetings (“AGM”s), subject to the annual approval of its shareholders at the Company’s AGM. Shares bought back may either
be cancelled or held in treasury. In 2018 and 2019, 6,993,308 shares have been bought and subsequently cancelled as part of the share
buy back program. The Company’s ordinary shares are also acquired on the market periodically by the Paddy Power Betfair plc Employee
Benefit Trust (the “EBT”) to meet the EBT’s obligations under share award schemes. These shares are held by the EBT and ownership is
transferred to the EBT’s beneficiaries if and when the related share awards vest.
At 31 December 2019 and 31 December 2018, neither the Company nor any of its subsidiaries were subject to externally imposed
capital requirements.

29. Fair values

Fair values versus carrying amounts

The following are the fair values and carrying amounts of financial assets and liabilities carried at amortised cost in the statement of financial
position:

Assets
Trade receivables
Other receivables (including finance lease receivables)
Restricted cash
Cash and cash equivalents
Total
Liabilities
Trade and other payables
Lease liabilities
Borrowings
Total
Net

Fair value hierarchy

Financial instruments at 31 December which are carried at fair value are analysed by the valuation method below. The different levels
have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).


Notes to the Consolidated Financial Statements continued
29. Fair values (continued)

Fair value hierarchy (continued)

Investments
Derivative financial liabilities
Non-derivative financial liabilities
Total

Investments
Derivative financial liabilities
Non-derivative financial liabilities
Total



Basis for determining fair values

The following are the significant methods and assumptions used to estimate the fair values of the financial instruments above:

Financial instruments carried at amortised cost
Trade and other receivables (Level 2)

The fair value of trade and other receivables is estimated using the present value of future cash flows discounted at the market rate of
interest at the reporting date. Amounts due within three months are not discounted.

Financial assets and cash and cash equivalents (Level 2)

The fair values of restricted cash and cash and cash equivalents are based on the nominal value of the relevant cash and bank deposit
balances, as all are held at variable interest rates.

Trade and other payables (Level 2)

The fair value of trade and other payables is estimated using the present value of future cash flows discounted at the market rate of
interest at the reporting date. Amounts due within three months are not discounted.

Lease liabilities (Level 2)

The fair value of lease liabilities is estimated using the present value of future cash flows discounted at the incremental borrowing rate
at the lease commencement date.

Borrowings (Level 2)

The fair value of borrowings is estimated using the present value of future cash flows discounted at the market rate of interest at the
reporting date.

Financial instruments carried at fair value
Investments (Level 3)

The fair value of investments approximates the historic cost.

Derivative financial instruments (Level 3)

Derivative financial instruments comprise sports betting open positions. The fair value of open sports bets at the year-end has been
calculated using the latest available prices on relevant sporting events.

Non-derivative financial liabilities (Level 3)

Non-derivative financial liabilities includes contingent consideration. The contingent consideration payable is determined with reference
to forecast performance for the acquired businesses during the relevant time periods and the amounts to be paid in such scenarios.
The fair value was estimated by assigning probabilities to the potential payout scenarios. The significant unobservable inputs are
forecast performance for the acquired businesses.

156

Financial Statements

Sensitivity analysis in respect of Level 3 financial instruments carried at fair value

The following sensitivity analysis has been performed for the Level 3 financial liabilities carried at fair value at 31 December 2019 and 2018:

Sports betting open positions

The fair value of sports betting open positions is primarily based on expectations as to the results of sporting and other events on which
bets are placed. Changes in those expectations and ultimately the actual results when the events occur, will result in changes in fair value.
There are no reasonably probable changes to assumptions and inputs that would lead to material changes in the fair value methodology
although final value will be determined by future sporting results.

Contingent consideration

The fair value of contingent consideration is primarily dependent on forecast performance for the acquired businesses against
predetermined targets. An increase and decrease of 10% in the expected performance for the acquired businesses during the relevant
time periods would increase and decrease the value of contingent consideration at 31 December 2019 by £0.7m and £0.7m respectively
(2018: £0.9m and £0.9m).

Investments

There are no reasonably probable changes to assumptions and inputs that would lead to material changes in the fair value methodology.

Movements in the year in respect of Level 3 financial instruments carried at fair value

The movements in respect of the financial assets and liabilities carried at fair value in the year to 31 December are as follows:

Balance at 1 January 2018
Arising on acquisitions (Note 13)
Recognised in the income statement
Settlements
Foreign currency translation adjustment
Balance at 31 December 2018
Recognised in the income statement
Settlements
Foreign currency translation adjustment
Balance at 31 December 2019

Sports betting
open positions
£m


30. Commitments and contingencies
(a) Guarantees

The Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group. The Company
considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee contract as a
contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.
The Group has uncommitted working capital overdraft facilities of £19.3m (2018: £10.5m) with Allied Irish Banks p.l.c. These facilities are
secured by a Letter of Guarantee from Flutter Entertainment plc.
The Group has bank guarantees: (1) in favour of certain gaming regulatory authorities to guarantee the payment of player funds, player
prizes, and certain taxes and fees due by a number of Group companies; and (2) in respect of certain third party rental and other property
commitments, merchant facilities and third party letter of credit facilities. The maximum amount of the guarantees at 31 December
2019 was £12.5m (2018: £15.7m). No claims had been made against the guarantees as of 31 December 2019 (2018: £Nil). The guarantees
are secured by counter indemnities from and certain of its subsidiary companies. The value of cash deposits
over which the guaranteeing banks hold security was £2.6m at 31 December 2019 (2018: £0.9m).
The Australian corporate sports bookmaking licences issued to Sportsbet require those companies to hold sufficient cash funds to
cover monies owed to customers. At 31 December 2019, the total value of relevant customer balances attributable to the Australia
business segment was £40.4m (AUD76.1m) (2018: £45.5m (AUD82.5m)) and the combined cash and cash equivalent balances held by
Sportsbet at that date totalled £66.1m (AUD124.4m) (2018: £65.6m (AUD119m)). In addition, the Group holds cash amounts totalling
£148.7m (2018: £121.7m) primarily in respect of customer funds that are not held on trust in The Sporting Exchange (Clients) Limited in
accordance with local regulations. This includes the requirements of various states in the United States which requires fantasy contest
operators to either segregate customer funds or else maintain a reserve in the form of cash and cash equivalents. Customer funds that
are not held on trust are matched by liabilities of an equal value.
As mentioned in Note 22, borrowings under the RCF and Term loan are unsecured but are guaranteed by the Company and certain of its
operating subsidiaries.

157



Notes to the Consolidated Financial Statements continued
30. Commitments and contingencies (continued)
(b) Contingent liabilities

The Group operates in an uncertain marketplace where many governments are either introducing or contemplating new regulatory or
fiscal arrangements. The Board monitors legal and regulatory developments and their potential impact on the business, however given
the lack of a harmonised regulatory environment, the value and timing of any obligations in this regard are subject to a high degree
of uncertainty and cannot always be reliably predicted. See Note 14 for further detail in respect of legacy German and Greek
tax assessments.

(c) Capital commitments

Capital expenditure contracted for at the statement of financial position date but not yet incurred was as follows:

Property, plant and equipment
Intangible assets
Total

The Group leases various licenced betting and other offices under lease agreements. The leases have varying terms, escalation clauses
and renewal rights. The leases have, on average, approximately five years left to run (if the Group was to exercise available break options),
with a right of renewal after that date. Lease rentals are typically reviewed every five years to reflect market rental rates or changes in
general inflation rates. Leases for licenced betting and other offices are entered into as combined leases of land and buildings. Since the
title to the land does not pass, the rent paid to the landlord of the building is increased to market rent at regular intervals and the Group
does not participate in the residual value of the building, it was determined that substantially all the risks and rewards of the offices are
with the landlord. As such, the Group had determined that the leases were operating leases in accordance with IAS 17.
For the accounting treatment of such leases under IFRS 16 as opposed to IAS 17, and for the adjustments required at transition date,
refer to the applicable accounting policy.
The Group has a small number of properties that are sublet.

Right of use assets

Balance at 1 January 2019
Business combinations
Depreciation charge for the year
Additions – IFRS 16 right-of-use asset
Remeasurement of lease term
Derecognition of right-of-use assets
Foreign exchange translation
Balance at 31 December 2019


Derecognition of right of use assets is as a result of entering into a finance sub-lease and exiting early from an existing lease.

Leases as lessee

Amounts recognised in profit or loss:
2019 – Leases under IFRS 16
Depreciation
Interest on lease liabilities
Income from sub-leasing right of use assets
Expense relating to short-term lease
Financial Statements

2018 – Leases under IAS 17
Lease expense
Contingent rent expense
Sub-lease income

Lease options (See Note 2 and Note 10)

Some property leases particularly in our retail business contain extension and break options to provide operational flexibility. These
options are held by the Group and not by the lessors. The Group assesses whether it is reasonably certain to exercise these options at
lease commencement date. When assessing these options at the date of transition, the Group was mindful of the regulatory changes in
2019 particularly in the UK and the impact it would have on future shop profitability and whether it could state with reasonable certainty
that these options would be exercised. The Group is of the view that other than the underlying trading of the shop, there is no economic
incentive to extend a particular lease. For example, the rents are at market rates, there are no significant leasehold improvements and
there are no significant costs relating to exiting or relocating.
During 2019, as these regulatory changes have been implemented and the Group has obtained greater knowledge of the potential
impact on profitability, it has reassessed the likelihood of lease terms being extended and revised its lease term assumptions.
The Group has estimated that the potential future lease payments should it exercise all options or not exercise any break clauses would
result in an increase in the lease asset and liability of £19m.

Leases as lessor
Finance lease

The Group has a small number of properties that are sublet. The following table sets out a maturity analysis of lease receivables showing
the undiscounted lease payments to be received after the reporting date. Under IAS 17, the Group did not have any finance leases as a
lessor.

Less than one year
Between two and five years
Total undiscounted lease receivable
Unearned finance income
Net Investment in finance lease

Operating lease

The Group has a small number of properties that are sublet. Sublease payments of £1.2m (2018: £2.2m) are expected to be received
during the year ended 31 December 2020.

31. Related parties

The principal related party transactions requiring disclosure under IAS 24 Related Party Transactions relate to the existence of subsidiaries
and transactions with these entities entered into by the Group, transactions with Directors and the identification and compensation of
key management personnel.

Subsidiaries

The Consolidated Financial Statements include the financial statements of the Company and its subsidiaries. A listing of the material
subsidiaries is provided in Note 32. Transactions to and from subsidiaries have been eliminated in the preparation of the Consolidated
Financial Statements.

Transactions with Directors

There were no loans outstanding to any Director at any time during the year. Details of Directors’ remuneration, interests in share awards
and share options are set out on page 89. Other related party transactions between the Group and the Directors, all of which were
conducted on an arm’s length basis and on normal commercial terms, are set out below.
Pádraig Ó Ríordáin is a Partner in Arthur Cox and was a director of the Group until 2 March 2018. Up until 2 March 2018, the Group
incurred fees of €18,600 relating to legal advice received from Arthur Cox.

Notes to the Consolidated Financial Statements continued
31. Related parties (continued)

Transactions with key management personnel, comprising Executive Directors, Non-Executive Directors and other
members of the Group’s Executive Committee
Key management personnel compensation is as follows:

Short-term employee benefits
Non-Executive Directors fees
Post-employment benefits
Termination costs
Share-based payments costs
Total

32. Group entities

The Company had the following subsidiary undertakings carrying on businesses which materially affect the profits and assets of the
Group at 31 December 2019:
Name

Equity interest at 31 December 2019
1. These companies are held directly by Flutter Entertainment plc.
2. Non-controlling interest of 0.2% exists in relation to Tradefair Spreads Limited. The value of the non-controlling interest was less than £0.1m at 31 December 2019.

All subsidiary undertakings have been included in the Group consolidated financial statements.
In addition to the above subsidiary undertakings, the Group utilises an employee trust, The Paddy Power Betfair plc Employee Benefit
Trust, with a registered address at 12 Castle Street, St Helier, Jersey, JE2 3RT, and which holds shares under the share award schemes.

33. Events after the reporting date
Dividend

In respect of the current year, the Directors propose that a final dividend of 133.0 pence per share will be paid to shareholders on
22 May 2020. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability
in these financial statements. The proposed dividend is payable to all shareholders on the register of members on 14 April 2020.
The total estimated dividend to be paid amounts to £104m.

Proposed combination with The Stars Group Inc

As announced on 2 October 2019, the Group and The Stars Group Inc (“TSG”) reached agreement on the terms of a recommended
all-share combination to be implemented through an acquisition of TSG by Flutter pursuant to a plan of arrangement under the Business
Corporations Act (Ontario) (the “Combination”).

Notes to the Consolidated Financial Statements continued
33. Events after the reporting date (continued)

Proposed combination with The Stars Group Inc (continued)

Under the terms of the Combination, which is subject to the approval of Flutter and TSG shareholders and various regulatory approvals,
TSG shareholders will be entitled to receive: 0.2253 new Flutter ordinary shares in exchange for each TSG common share held by
them. Immediately following completion of the Combination, Flutter shareholders would own approximately 54.64 per cent and TSG
shareholders would own approximately 45.36 per cent of the share capital of Flutter (based on the fully diluted share capital of Flutter and
the fully diluted share capital of TSG excluding any out of the money options, in each case, as at the date of the announcement of the
Combination). Subject to receipt of the required regulatory and shareholder approvals, the Combination is expected to complete in Q2
or Q3 2020.
The Combination will bring together two complementary businesses (the “Combined Group”) to create a global leader in sports betting
and gaming. The Combined Group will have a diverse portfolio of leading brands and complementary best-in-class products with a broad
geographic reach. Flutter and TSG will each bring to the Combined Group a proven track record in using product and brand leadership
to create low-cost customer acquisition channels, while optimising value through product cross-sell. The Combined Group will benefit
from both an enhanced global platform and improved reach within local markets. On a pro forma basis, the Combined Group’s annual
revenue would have been £3.8bn in 2018, making it the largest online betting and gaming operator globally.
The arrangement agreement entered into between the Group and TSG in order to implement the Combination includes certain
circumstances in which the Group or TSG may terminate the arrangement agreement, including circumstances in which a termination
payment of approximately £60 million will be payable by either party.

Equity
Issued share capital and share premium
Treasury shares
Shares held by employee benefit trust
Other reserves
Retained earnings
Shareholders’ funds – all equity interests
Assets
Property, plant and equipment
Intangible assets
Goodwill
Financial assets
Other receivables
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets

Liabilities
Trade and other payables
Derivative financial liabilities
Lease liabilities
Borrowings
Total current liabilities
Derivative financial liabilities
Lease liabilities
Borrowings
Total non-current liabilities

1	The Company has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach, comparative information is not restated.
See Note 1 for further details.

Notes 1 to 21 on pages 166 to 182 form an integral part of these financial statements.
On behalf of the Board of Directors
Peter Jackson			
Chief Executive Officer		
26 February 2020


Chief Financial Officer

Company Statement of Changes in Equity
YEAR ENDED 31 DECEMBER 2019

Balance at
1 January 2019
Profit for the year
Shares issued (Note 12)
Own shares acquired by
the Group
Equity-settled transactions
– expense recorded in
income statement
Deferred tax
Equity-settled transactions
– vestings
Transfer to retained earnings
on exercise of share options
(Note 12)
Dividends to shareholders
(Note 13)
Total contributions by and
distributions to owners of
the Company
Balance at
31 December 2019

164

Attributable to equity holders of the Company (see Note 12)
Financial Statements

Company Statement of Changes in Equity
YEAR ENDED 31 DECEMBER 2018

Balance at
1 January 2018
Profit for the year
Shares issued (Note 12)
Own shares acquired by
the Group
Equity-settled transactions
– expense recorded in
income statement
Equity-settled transactions
– vestings
Transfer to retained earnings
on exercise of share options
(Note 12)
Dividends to shareholders
(Note 13)
Total contributions by and
distributions to owners of
the Company
Balance at
31 December 2018

Attributable to equity holders of the Company (see Note 12)

Number of
ordinary
shares in
issue
millions

Issued
share
capital
and share
premium
Undenominated
capital

Foreign
exchange
translation
reserve
£m
Shares
held by
Treasury
employee
shares benefit trust


Notes to the Company Financial Statements
1. Basis of preparation and summary of
significant accounting policies

The financial statements as reported have been rounded to
the nearest million. These financial statements were prepared
in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”). There have been no material
departures from the Standards. The functional and presentation
currency of these financial statements is GBP. All amounts in the
financial statements have been rounded to the nearest million.
In preparing these financial statements, the Company applies
the recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the
EU (“Adopted IFRSs”), but makes amendments where necessary
in order to comply with the Companies Act 2014 and has set out
below where advantage of the FRS 101 disclosure exemptions
has been taken. In these financial statements, the company has
adopted FRS 101 for the first time. In the transition to FRS 101
from Adopted IFRS, the Company has made no measurement
and recognition adjustments.
The Company is the ultimate parent company of the Flutter
Group which includes the Company in its consolidated financial
statements. In these financial statements, the company has
applied the exemptions available under FRS 101 in respect of
the following disclosures.
Cash Flow Statement and related notes;
Comparative period reconciliations for tangible fixed assets
and intangible assets;
Disclosures in respect of transactions with wholly owned
subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRSs;
Disclosures in respect of the compensation of Key Management
Personnel; and
Disclosures of transactions with a management entity that
provides Key Management Personnel services to the company.
Certain disclosures regarding revenue.
As the consolidated financial statements of the Flutter Group
include the equivalent disclosures, the Company has also taken
the exemptions under FRS 101 available in respect of the following
disclosures
IFRS 2 Share Based Payments in respect of group settled share
based payments;
Certain disclosures required by IAS 36 Impairment of assets
in respect of the impairment of goodwill and indefinite life
intangible assets;
Certain disclosures required by IFRS 3 Business Combinations in
respect of business combinations undertaken by the Company
Certain disclosures required by IFRS 13 Fair Value Measurement
and the disclosures required by IFRS 7 Financial Instrument
Disclosures.
As permitted by section 304 of the Companies Act 2014, no
separate profit and loss account is presented in respect of the
Company. The Company recorded a profit for the year of £74.7m

This includes £75.0m (2018: Nil) of dividends
receivable from subsidiary companies.

Recent accounting pronouncements

The IASB have issued the following standards, policies,
interpretations and amendments which were effective for the
Company for the first time in the year ended 31 December 2019:
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
Amendments to IFRS 9 Prepayment Features with Negative
Compensation
Amendments to IAS 28: Long-term interests in Associates
and Joint Ventures
Annual improvements to IFRS Standards 2015-2018 Cycle
Amendments to IAS 19: Plan amendment, Curtailment or
Settlement
The adoption of the above new standards and interpretations with
the exception of IFRS 16 did not have a significant impact on the
Company’s financial statements.
The Company has adopted IFRS 16 Leases from 1 January 2019.
IFRS 16 introduced a single on-balance sheet accounting model
for lessees. As a result, the Company as a lessee has recognised
right-of-use assets representing its rights to use the underlying
assets and lease liabilities representing its obligations to make
lease payments.
The Company has applied IFRS 16 using the modified
retrospective approach, under which the cumulative effect of
initial recognition is recognised in retained earnings at 1 January
2019. Accordingly, the comparative information presented for
2018 has not been restated – i.e. it is presented as reported under
IAS 17 and related interpretations. The details of the changes in
accounting policies are discussed below.

As a lessee

As a lessee, the Company previously classified leases as operating
or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of ownership
of the underlying asset. Under IFRS 16, the Company recognises
right of use assets and lease liabilities for most leases – i.e. these
leases are recorded on the statement of financial position.
However the Company has elected not to recognise the right-ofuse assets and lease liabilities for a small amount of leases of low
value assets (e.g office equipment). The Company recognises the
lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
The Company recognises a right of use asset and a lease liability
at the lease commencement date. The right of use asset is
initially measured at cost and subsequently at cost less any
accumulated depreciation and impairment losses and adjusted
for certain remeasurements of the lease liability. The right of use
asset is initially measured at cost comprising the amount of the
initial measurement of lease liability, any lease payments made
at or before the commencement date less any lease incentives
received, any initial direct costs, and restoration costs. It is
subsequently measured at cost less accumulated depreciation

Financial Statements

and impairment in accordance with the Company’s accounting
policies. It is depreciated over the shorter of the lease term and
the useful life of the right-of-use asset, unless there is a transfer
of ownership or purchase option which is reasonably certain to
be exercised at the end of the lease term. If there is a transfer of
ownership or purchase option which is reasonably certain to be
exercised at the end of the lease term, the lessee depreciates
the right-of-use asset over the useful life of the underlying asset.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Company’s incremental
borrowing rate. Generally, the Company uses its incremental
borrowing rate as the discount rate. To determine the incremental
borrowing rate, the Company, where possible, used recent thirdparty borrowings as a benchmark to determine the borrowing rate
that would be attached to a secured borrowing having similar amount,
economic environment and duration as the individual lease.
Lease liabilities include the net present value of the following
lease payments:
fixed payments (including in-substance fixed payments), less
any lease incentives receivable
variable lease payment that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable by the Company under
residual value guarantees
the exercise price of a purchase option if the Company is
reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease
term reflects the Company exercising that option
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease liability is subsequently increased by the interest cost
on the lease liability and decreased by the lease payment made.
It is remeasured when there is a change in future lease payments
arising from a change in an index or a rate, a change in the
estimate of the amount expected to be payable under a residual
value guarantee, or as appropriate, changes in the assessment of
whether a purchase or extension option is reasonably certain to
be exercised or a termination option is reasonably certain not to
be exercised.
The Company has applied judgement to determine the lease term
for some lease contracts in which it is a lease that includes renewal
options. The assessment of whether the Company is reasonably
certain to exercise such options impacts the lease term, which
significantly affects the amount of lease liabilities and right of use
assets recognised.

Transition

Until 31 December 2018, leases of property, plant and equipment
where the Company, as lessee, had substantially all the risks and
rewards of ownership were classified as finance leases. Finance
leases were capitalised at the lease’s inception at the fair value of
the leased property or, if lower, the present value of the minimum
lease payments. The corresponding rental obligations, net of
finance charges, were included in other short-term and long-term

payables. Each lease payment was allocated between the liability
and finance cost. The finance cost was charged to profit or loss
over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance leases
was depreciated over the asset’s useful life, or over the shorter of
the asset’s useful life and the lease term if there is no reasonable
certainty that the group will obtain ownership at the end of the
lease term.
Leases in which a significant portion of the risks and rewards
of ownership were not transferred to the group as lessee were
classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) were
charged to profit or loss on a straight-line basis over the period of
the lease, unless another systematic basis was more appropriate.
The Company leases various licenced betting and other offices
under operating lease agreements. The leases have varying
terms, escalation clauses and renewal rights. The leases have, on
average, approximately five years left to run (if the Company was
to exercise available break options), with a right of renewal after
that date. Lease rentals are typically reviewed every five years to
reflect market rental rates or changes in general inflation rates.
At transition, for leases classified as operating leases under
IAS 17, lease liabilities were measured at the present value of
the remaining lease payments discounted at the Company’s
incremental borrowing rate at 1 January 2019. Right of use assets
are measured at either:
their carrying amounts as if IFRS 16 had been applied since the
commencement date, discounted using the leases incremental
borrowing rate at the date of initial application.
an amount equal to the lease liability, adjusted by the amount of
any prepaid or accrued lease payments.
The Company used the following practical expedients when
applying IFRS 16 to leases previously classified as operating leases
under IAS 17.
Applied the exemption not to recognise right of use assets and
liabilities for leases with less than 12 months of lease term and
leases for which the underlying asset is of low value
Relied on previous assessments on whether leases are onerous
as an alternative to performing an impairment review
Applied portfolio level accounting for leases with similar
characteristics
Excluded initial direct costs from measuring the right of use
asset at the date of initial application
Used hindsight when determining the lease term if the contract
contains options to extend or terminate the lease

As a lessor

The Company has a small number of properties that are sublet.
The accounting policies applicable to the Company as a lessor are
not different from those under IAS 17.
At inception, the Company determines whether each lease is a
finance lease or an operating lease, by reference to the transfer of
all risks and rewards in connection to ownership of the underlying
asset. In this case, the Company applies the derecognition and
impairment requirements in IFRS 9 to the net investment in the lease.

Notes to the Company Financial Statements continued
1. Basis of preparation and summary of
significant accounting policies (continued)
As a lessor (continued)

When the Company is an intermediate lessor the sub leases are
classified with reference to the right of use asset arising from the
head lease, not with reference to the underlying asset.
Under operating leases, the Company recognises the income
generated by the lease on an accruals basis over the life of
the contract.

Impact on financial statements
Impact on transition

On transition to IFRS 16, the Company recognised additional
right of use assets and additional lease liabilities. The impact on
transition is summarised below.

Right of use assets
Provisions
Lease liabilities
Trade and other receivables including prepayments


As the Company measured the right of use assets at an amount
equal to the lease liabilities, no adjustment to retained earnings
was required.
When measuring leases liabilities for leases that were classified as
operating leases, the Company discounted lease payments using
its incremental borrowing rate at 1 January 2019. The weighted
average rate applied is 2%.

Operating lease commitments at 31 December
2018 as disclosed in the Company’s financial
statements
Discounted using the incremental borrowing
rate at 1 January 2019
Lease liabilities recognised at 1 January 2019

Impacts for the period

As a result of initially applying IFRS 16 in relation to the leases
that were previously classified as operating leases, the Company
recognised £39.7m of right of use assets and £37.7m of lease
liabilities as at 31 December 2019.
Also in relation to those leases under IFRS 16, the Company has
recognised depreciation and interest costs instead of operating
lease expense. During the year ended 31 December 2019, the
Company recognised £8.0m of depreciation charges and £1.1m
of interest costs from these leases.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.

168

Estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future
periods affected.
In the course of preparing the financial statements, no
judgements have been made in the process of applying the
Company’s accounting policies, other than those involving
estimation (as described below), that have a significant effect
on the amounts recognised in the financial statements.
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in material adjustment to the
carrying amount of assets and liabilities within the next financial
year is set out below.

Valuation of legacy gaming tax assessments

Taxation within the group includes both Income Taxes and
Gaming Taxes. Judgement and estimation is required to interpret
international tax laws and the way these taxes interact within each
jurisdiction, to identify and value any provisions arising in relation
to gaming and income taxes as applicable.
As outlined in Note 9, the Company was issued with a Greek tax
assessment for financial years 2012, 2013 and 2014, relating
to paddypower.com’s Greek interim licence. This assessment
concluded that the Company is liable to pay €15.0m in taxes
including penalties and interest. This is substantially higher (by
multiples) than the total cumulative revenues ever generated by
paddypower.com in Greece. There is potential that the periods
after 2014 could also be subject to further challenge by the Greek
tax authorities.
The Company strongly disputes the basis of this assessment, and
in line with the legal and tax advice we have received, is confident
in our grounds to successfully appeal them. The appeals process
has commenced. Accordingly, we do not consider that this
amount represents a liability for the Company and no provision
has been made for amounts assessed or potential further
assessments. This involves a series of judgements about future
events and ultimately the court judgements and therefore the
directors may need to re-assess the accounting treatment as
matters develop further. Pending the outcome of this appeal, we
paid the total Greek tax assessment (including the penalties and
interest). The amount paid has been recorded as a non-current
receivable on the balance sheet.

Revenue

The services provided by the Company comprise sports betting
and business-to-business services as well as services provided to
other group companies. Revenue is stated exclusive of value-added tax. The costs of customer promotions (including free
bets) and bonuses are deducted from revenue.
The Company’s activities, with the exception of business-to-business services and services to other group companies
on which fees are earned, are classified as derivative financial
instruments.
Revenue from betting activities represents the net gain or loss
from betting activities in the period plus the gain or loss on the
revaluation of open positions at period end, and is stated net
of the cost of customer promotions and bonuses incurred in
the period.

Financial Statements

These derivatives are recognised initially at fair value and
subsequently at fair value through profit or loss, within the
income line as this represents the Company’s principal activity.
Commission and other fee income earned is also recorded
within revenue.
Revenue from business-to-business services and services to
other group companies represents fees charged for the services
provided in the period.

Financial assets

Interests in subsidiary undertakings are stated in the Company
statement of financial position as financial assets, at cost less,
where necessary, provisions for impairment.
Included within financial assets are capital contributions
representing share-based payment awards made to employees
of certain of the Company’s subsidiaries.

Property, plant and equipment

Property, plant and equipment is stated at historical cost less
accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the
asset. The cost of self-constructed assets includes the cost of
materials and direct labour, any other costs directly attributable
to bringing the assets to a working condition for their intended
use, and the costs of dismantling and removing items and
restoring the sites on which they are located. Cost also may
include transfers from equity of any gain or loss on qualifying
cash flow hedges of foreign currency purchases of property,
plant and equipment. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of
that equipment.
Gains and losses on disposal of an item of property, plant
and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and
equipment and are recognised net within the income statement.
Depreciation is calculated to write off the cost less estimated
residual value of property, plant and equipment on a straight line
basis over their useful lives, as follows:
Land
Buildings: Freehold
Buildings: Leasehold
improvements

Fixtures and fittings
Computer equipment
Right-of-use Asset

Not depreciated
50 years
Unexpired term of the lease, except for
leases with an initial term of ten or less
years, which are depreciated over the
unexpired term of the lease plus the
renewal length of the lease if there is
an unconditional right of renewal
3 – 7 years
3 – 5 years
Over the lease term as defined
under IFRS 16

Assets in the process of construction are stated at cost less
impairment losses. Depreciation of these assets begins when the
assets are ready for their intended use.
The residual value of property, plant and equipment, if significant,
is reassessed annually.

Intangible assets

Intangible assets, principally comprising licences and computer
software, are capitalised at cost and amortised over their
estimated useful economic lives on a straight line basis.
Licences comprise the costs of acquiring retail bookmaking
licences, the rents incurred in respect of the period prior to each
shop opening for business (as the existence of a premises is
a pre-requisite for obtaining such licences) and licences for
electronic point of sale (“EPOS”) system software.
Computer software includes the costs incurred in acquiring and
bringing specific software programs into use. Maintenance costs
relating to computer software programs are expensed to the
income statement when incurred.
The estimated useful economic lives of intangible assets,
according to which amortisation is calculated, are as follows:
Licences
Computer software

2 – 20 years
2 – 5 years

Goodwill

Acquisitions of businesses are accounted for using the acquisition
method. The value of acquisition is measured at the date of
purchase and represents the aggregate of the fair values of assets
given, liabilities incurred or assumed and any equity instruments
issued by the Group in exchange for control of the acquiree and
fair value of previously held equity interests. The identifiable
assets and liabilities of the acquiree are recognised at their fair
values at the date of acquisition.
Goodwill recognised under Irish Generally Accepted Accounting
Practice (“GAAP”) prior to the date of transition to IFRS is stated
at net book value as at the transition date. Goodwill recognised
subsequent to 1 January 2014, representing the excess of
purchase consideration over the fair value of net identifiable
assets acquired defined in accordance with IFRS, is capitalised.
Goodwill is initially recognised as an asset at cost and is thereafter
measured at cost less any accumulated impairment losses.
Goodwill is not amortised but is tested for impairment annually.
Any impairment in the value of goodwill is dealt with in the income
statement in the period in which it arises. Goodwill is recognised
only when control of the acquiree is initially achieved. Following the
acquisition of control, no goodwill is recognised on subsequent
purchases of equity interests in the acquiree and instead the
difference between the cost of such acquisitions and the fair
values of the relevant net assets acquired is dealt with through
retained earnings.
Costs relating to the acquisition of businesses that occurred
since 1 January 2014 are expensed to the income statement
when incurred. Costs relating to the acquisition of non-controlling
interests are recognised directly in retained earnings.
Amounts payable in respect of deferred contingent consideration
are recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration are
recognised in the income statement.

169



Notes to the Company Financial Statements continued
1. Basis of preparation and summary of
significant accounting policies (continued)
Impairment
Financial assets (including receivables)

The Company recognises loss allowances for expected credit
losses (‘ECLs’) on financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal
to lifetime ECLs, except for bank balances for which credit risk
(i.e. the risk of default occurring over the expected life of the
financial instrument) has not increased significantly since initial
recognition which are measured at 12 month ECLs.
Loss allowances for trade receivables and contract assets are
always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Company considers reasonable and
supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Company’s
historical experience and informed credit assessment and
including forward looking information. The Company considers
a financial asset to be in default when the borrower is unlikely to
pay its credit obligations to the Company in full or the financial
asset is significantly past due.
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Company is exposed
to credit risk.

Measurement of ECLs

ECLs are a probability weighted estimate of credit losses. Credit
losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity
in accordance with the contract and the cash flows that the
Company expects to receive). ECLs are discounted at the
effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Company assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is ‘credit impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Evidence that a financial asset is credit impaired includes the
following observable data:
significant financial difficulty of the third party;
a breach of contract such as a default;
the restructuring of a balance by the Company on terms that
the Company would not consider otherwise;
it is probable that the third party will enter bankruptcy or other
financial reorganisation.

Presentation of allowance for ECL in the statement of
financial position

Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.

170

Write-off

The gross carrying amount of a financial asset is written off when
the Company has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof. The Company
individually makes an assessment with respect to the timing
and amount of write off based on whether there is a reasonable
expectation of recovery. The Company expects no significant
recovery from the amount written off. However, financial assets
that are written off could still be subject to enforcement activities
in order to comply with the Company’s procedures for recovery of
amounts due.

Non-financial assets

The carrying amounts of the Company’s non-financial assets,
other than deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If
any such indication exists, then the asset’s recoverable amount is
estimated. For goodwill, and intangible assets that have indefinite
useful lives (such as certain licences and brands) or that are not
yet available for use, the recoverable amount is estimated each
year at the same time. The recoverable amount of an asset or
cash generating unit is the greater of its value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the
risks specific to the asset. For the purpose of impairment testing,
assets that cannot be tested individually are grouped together
into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows
of other assets or groups of assets (the “cash generating unit”,
or “CGU”). Subject to an operating segment ceiling test, for the
purposes of goodwill impairment testing, CGUs to which goodwill
has been allocated are aggregated so that the level at which
impairment is tested reflects the lowest level at which goodwill
is monitored for internal reporting purposes. Goodwill acquired
in a business combination is allocated to groups of CGUs that
are expected to benefit from the synergies of the combination.
The Company’s corporate assets do not generate separate cash
inflows. If there is an indication that a corporate asset may be
impaired, then the recoverable amount is determined for the CGU
to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the
unit (group of units) on a pro-rata basis. An impairment loss in
respect of goodwill is not reversed. In respect of other assets,
impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or
no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.

Financial Statements

Other non-derivative financial instruments

Other non-derivative financial instruments comprise cash
and cash equivalents, trade and other receivables and trade and
other payables.
Non-derivative financial instruments are recognised initially at fair
value plus, for instruments not at fair value through profit or loss,
any directly attributable transaction costs. Subsequent to initial
recognition, non-derivative financial instruments are measured
as described below.
A financial instrument is recognised if the Company becomes a
party to the contractual provisions of the instrument. Financial
assets are derecognised if the Company’s contractual right to
the cash flows from the financial assets expire or if the Company
transfers the financial asset to another party without retaining
control or substantially all the risks and rewards of the asset.
Regular way purchases and sales of financial assets are accounted
for at trade date, i.e. the date that the Company commits itself to
purchase or sell the asset. Financial liabilities are derecognised if
the Company’s obligations specified in the contract expire or are
discharged or cancelled.
Cash and cash equivalents for the purpose of the statement
of cash flows comprise cash and call deposits with an original
maturity of three months or less.
Subsequent to initial recognition, cash and cash equivalents,
deposits and trade and other payables are measured at
amortised cost.
Trade and other receivables are stated at their nominal value as
reduced by appropriate allowances for expected credit losses.

Derivative financial instruments

The Company holds certain derivative financial instruments
which are initially recognised at fair value.

Sports betting open positions

Amounts received from customers on sportsbook events
that have not occurred by the year end are derivative financial
instruments and have been designated by the Company on initial
recognition as financial liabilities at fair value through profit or loss.

Borrowings

Borrowings are recorded at the fair value of the proceeds
received, net of any directly attributable transaction costs.
Subsequent to initial recognition, borrowings are stated at
amortised cost using the effective interest method.

Employee benefits
Pensions

The Company operates a number of defined contribution
schemes under which the Company pays fixed contributions to a
separate entity and has no legal or constructive obligation to pay
further amounts. Obligations for contributions are recognised as
an expense in the income statement as the service is received.
Prepaid contributions are recognised as an asset to the extent
that a cash refund or reduction in future payments is available.

Share-based payments

The Company operates equity-settled long term and medium
term incentive plans for selected senior executives and other
key management under which they are conditionally awarded
shares or options over company shares which vest upon the
achievement of predetermined targets and/or future service
periods. The fair value is measured at the award or option grant
date and is spread over the period during which the employees
become unconditionally entitled to the shares or options with
a corresponding increase in the share-based payment reserve
in equity. The fair value of the shares conditionally granted is
measured using the market price of the shares at the time of grant
or in the case of shares with a non-market condition measured
using either a binomial or Monte Carlo valuation model.
The Company operates an equity-settled share save scheme
(“SAYE”) for employees under which employees acquire
options over Company shares at a discounted price subject to
the completion of a savings contract. The fair value of share
options granted is recognised as an employee benefit cost with
a corresponding increase in the share-based payment reserve in
equity. The fair value is measured at grant date and spread over
the period during which the employees become unconditionally
entitled to the options. The fair value of the options granted is
measured using a Black-Scholes model, taking into account the
terms and conditions upon which the options were granted.
The amount recognised as an expense is adjusted to reflect the
actual number of share options that vest.
The Company also operates equity-settled schemes for
employees under which employees may acquire options over
Company shares. The fair value is recognised as an employee
benefit cost with a corresponding increase in the share-based
payment reserve in equity. The fair value is measured at grant date
and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the
options granted is measured using a Black-Scholes model, taking
into account the terms and conditions, other than non-market
performance conditions upon which the options were granted.
The amount recognised as an expense is adjusted to reflect the
actual number of awards that vest.

Income Tax

Income Tax in the income statement comprises current and
deferred tax. Income Tax expense is recognised in profit or loss
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity, in which case it is
recognised in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of
the previous year.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred
tax is measured at the tax rates that are expected to apply to
temporary differences when they reverse, based on laws that
have been enacted or substantively enacted at the reporting date.

171



Notes to the Company Financial Statements continued
1. Basis of preparation and summary of
significant accounting policies (continued)
Income Tax (continued)

A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reviewed at each
reporting period and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset to the extent that they
relate to income taxes levied by the same taxation authority.

Foreign currency transactions

Transactions in foreign currencies are translated at the relevant
foreign exchange rate ruling at the date of the transaction.
Non-monetary assets that are carried at historical cost are
not subsequently retranslated. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are
translated into GBP at the foreign exchange rates ruling at that
date. Foreign exchange differences arising on translation are
recognised in the income statement.

Repurchase of share capital (treasury shares)

When share capital recognised as equity is repurchased, the
amount of the consideration paid, which includes directly
attributable costs, is recognised as a deduction from equity.
The repurchased shares are classified as treasury shares and
are presented as a deduction from total equity. Transaction
costs relating to the purchase by the Company of its own shares
are recognised directly in retained earnings. When treasury
shares are sold or reissued subsequently, the amount received is
recognised as an increase in equity, and any resulting surplus on
the transaction is recognised in share premium.
Where the Company purchases its own shares and subsequently
cancels those shares, the cost of the shares cancelled is written
off directly to retained earnings. The nominal value of the
shares cancelled is transferred from share capital to the
undenominated capital.

Dividends

Dividends on ordinary shares are recognised in equity in the period
in which they are approved by the Company’s shareholders, or,
in the case of the interim dividend, when it has been approved
by the Board of Directors and paid. Dividends declared after
the reporting date are disclosed in Note 33 to the consolidated
financial statements.

2. Employee expenses and numbers
Wages and salaries
Social security costs
Defined contribution pension and life assurance costs
Share-based payments expense (see below)
Other staff costs
The average number of persons employed by the Company (including Executive Directors), all of whom
were involved in the provision of betting services, during the year was

Details of the remuneration of Directors are set out in the Directors’ Remuneration Report on pages 70 to 90.

Summary of share-based payments expense

The share-based payments expense in the profit and loss account in respect of the Company’s share schemes is comprised as follows:
The Paddy Power plc Sharesave Scheme
The Long Term Incentive Plan (“LTIP”) and Restricted Share Plan
The Sharesave Scheme

Financial Statements

3. Financial income and expense
Recognised in profit or loss:
Financial expense:
On financial liabilities at amortised cost
Lease interest
Interest on borrowings, bank guarantees and bank facilities, and other interest payable
Total

4. Statutory information
Auditor’s remuneration
Depreciation of property, plant and equipment
Amortisation of intangible assets
Foreign currency exchange loss – monetary items
Operating lease rentals, principally premises
Operating lease income (representing sub lease income)


The Auditor’s remuneration of £0.8m (2018: £0.5m) relates to the audit of Group and subsidiary financial statements and other non-audit
services. It comprises £0.1m (2018: £0.1m) for the audit of the Company. Further details on Auditor’s remuneration is disclosed in Note 7 to
the consolidated financial statements.

Auditor remuneration to Company External Auditor (KPMG Ireland)

In accordance with the requirements of Regulation 120 of Statutory Instrument 220/2010, ‘European Communities (Statutory Audits)
(Directive 2006/43/EC) Regulations 2010’, the Auditor’s remuneration figures presented below represent fees paid to KPMG Ireland
only and are exclusive of value-added tax. Audit relates to the audit of the Company financial statements only. Audit fees borne by the
Company in relation to the audit by KPMG Ireland of the Group and subsidiary companies are classified as other assurance services.
Audit
Other assurance services
Other non-audit services
Other assurance services includes £0.4m (2018: £0.4m) in respect of fees incurred by the Company for the audit of the Group financial
statements, £0.1m (2018: £0.1m) in respect of fees relating to the audit of subsidiary companies which have been borne by the Company,
and £0.3m (2018: £nil) in respect of other non-audit services.

173



Notes to the Company Financial Statements continued
5. Property, plant and equipment
Land,
buildings and
leasehold
improvements

Depreciation
Balance at 31 December 2018
Depreciation charges
Balance at 31 December 2019

Cost
Adjusted balance at 1 January 2019
Recognition of right-of-use asset on initial application of IFRS 16
Adjusted balance at 1 January 2019
Additions
Remeasurement of lease term
Balance at 31 December 2019

The net book value of land, buildings and leasehold improvements at 31 December 2019 includes £9.2m (2018: £10.8m) in respect of
leasehold improvements.
The Directors do not consider the remaining useful lives of property, plant and equipment to be materially different from the period over
which the assets are being depreciated.

6. Intangible assets

The movements during the prior year and current year in respect of intangible assets, which comprise licences and computer software,
were as follows:

Cost
Balance at 1 January 2019
Additions
Balance at 31 December 2019
Amortisation
Balance at 1 January 2019
Amortisation charges
Balance at 31 December 2019
Net book value
At 31 December 2018
At 31 December 2019
Financial Statements

7. Goodwill
Balance at 31 December 2018 and 31 December 2019

The goodwill balance as at 31 December 2019 arose from the assets acquired as part of the amalgamation of three bookmaking
businesses to form Paddy Power plc in 1988 and subsequent acquisitions of licenced book making shops in Ireland. The goodwill
balance as at 31 December 2019 is attributable to the Irish Retail cash generating unit, being the lowest level of asset for which there are
separately identifiable cash flows (see Note 12 to the consolidated financial statements).
The accumulated amortisation balance at 31 December 2019 is £4.1m (2018: £4.1m). Under IFRS, goodwill is not amortised but is instead
tested for impairment annually. The most recent test for impairment was performed at 31 December 2019 and is detailed in Note 12 to
the consolidated financial statements.

8. Financial assets

Balance at 1 January 2018
Share-based payments
Balance at 31 December 2018
Share-based payments
Balance at 31 December 2019

Unlisted
investments in
subsidiary
companies

In the opinion of the Directors, the value to the Company of the unlisted investments in and capital contributions to subsidiary
companies at 31 December 2019 is not less than the carrying amount of £5,029.6m (2018: £5,023.8m). The Company’s principal
subsidiaries are listed in Note 32 to the consolidated financial statements.
Capital contributions represent amounts included in the Company’s share-based payment reserve relating to share-based payment
awards made to employees of certain of the Company’s subsidiary undertakings.

9. Trade and other receivables
Non-current assets

Trade and other receivables
Amounts owed by fellow Group companies
Amounts paid in respect of legacy Greek tax assessments (Note A)
Current assets

Trade and other receivables
Prepayments
Amounts owed by fellow Group companies
Corporation tax receivable
Total
Amounts owed by fellow Group companies are unsecured, interest free and repayable on demand.

175



Notes to the Company Financial Statements continued
9. Trade and other receivables (continued)
Note A

The Company was issued with a Greek tax assessment for financial years 2012, 2013 and 2014, relating to paddypower.com’s Greek
interim licence. This assessment concluded that the Company is liable to pay €15.0m in taxes including penalties and interest. This is
substantially higher (by multiples) than the total cumulative revenues ever generated by paddypower.com in Greece.
The Company strongly disputes the basis of this assessment, and in line with the legal and tax advice we have received, is confident in
our grounds to successfully appeal them. Accordingly, we do not consider that these amounts represent liabilities for the Company and
no provision has been made for amounts assessed or potential further assessments. Pending the outcome of this appeal, we paid the
total Greek assessment (including penalties and interest) in 2019.

10. Cash and cash equivalents

There was no cash on deposit at 31 December 2019 and 31 December 2018.
Cash and cash equivalents are analysed by currency as follows:
11. Deferred tax assets

Deferred tax is attributable to the following:

Property, plant and equipment
Net asset

Movement in temporary differences during the year
Balance at 1 January
Recognised in income
Recognised in OCI
Balance at 31 December

All the above deferred tax balances are in respect of Irish corporation tax.

12. Share capital and reserves

The total authorised share capital of the Company comprises 150,000,000 ordinary shares of €0.09 each (2018: 150,000,000 ordinary
shares of €0.09 each). All issued share capital is fully paid. The holders of ordinary shares are entitled to vote at general meetings of the
Company on a one vote per share held basis. Ordinary shareholders are also entitled to receive dividends as may be declared by the
Company from time to time.
The movement in the number of issued ordinary shares during the year was as follows:
During the year ended 31 December 2019, 279,096 ordinary shares (2018: 474,236) were issued as a result of the exercise of share
options under employee share schemes, giving rise to a share premium of £3.6m (2018: £2.3m).

Financial Statements

The £500m share buyback programme, which commenced on 29 May 2018 completed in February 2019. Under this programme,
the Company repurchased for cancellation 6,993,308 ordinary shares for a total consideration of approximately £500m. This consisted
of a £200m share buyback programme announced on 29 May 2018 which was completed in August 2018 and in August 2018, the Group
commenced a second buyback programme of £300m which was ongoing at 31 December 2018. Overall in 2018 cash payments of
£413.7m had been made in respect of the repurchases and a further £1.3m for other transaction related costs were made. Between
31 December 2018 and 6 February 2019 further payments of £86.4m in respect of share purchases and £0.4m for other transaction
related costs were made. The nominal value of the shares cancelled during the year ending 31 December 2019 was £0.1m.
A total of 225,000 ordinary shares were held in treasury as of 31 December 2019 (31 December 2018: 225,000). All rights (including
voting rights and the right to receive dividends) in the shares held in treasury are suspended until such time as the shares are reissued.
The Company’s distributable reserves are restricted by the value of the treasury shares, which amounted to £4.2m as of 31 December
2019 (31 December 2018: £4.2m).
At 31 December 2019, the Paddy Power Betfair plc Employee Benefit Trust (“EBT”) held 70,397 (2018: 99,741) of the Company’s own
shares, which were acquired at a total cost of £6.1m (2018: £8.6m), in respect of potential future awards relating to the Group’s employee
share plans (see Note 18 of the Consolidated Financial Statements). The Company’s distributable reserves at 31 December 2019 are
restricted by this cost amount. In 2019, 29,344 shares with an original cost of £2.5m (2018: 101,232 shares with an original cost of £7.0m)
were transferred from the EBT to the beneficiaries of the EBT.
Other reserves comprise undenominated capital of £2.2m (2018: £2.1m) which relates to the nominal value of shares in the Company
acquired by the Company and subsequently cancelled, and the nominal value of shares in the Company cancelled as part of the return
of capital to shareholders, and an amount of £0.2m (2018: £0.2m) which arose on the redenomination of the ordinary share capital of the
Company at the time of conversion from Irish pounds to Euro.
The foreign exchange translation reserve of £130.0m arose as a result of the Company changing its functional currency and presentation
currency from Euro to pound sterling with effect from 1 January 2018.
In 2019, an amount of £16.4m (2018: £5.6m) in respect of share options exercised during the year was transferred from the share-based
payment reserve to retained earnings.

13. Dividends paid on ordinary shares
Ordinary shares:
final dividend of £1.33 per share for the year ended 31 December 2018 (31 December 2017: £1.35)
interim dividend of £0.67 per share for the year ended 31 December 2019 (31 December 2018: £0.67)
Amounts recognised as distributions to equity holders in the year



The Directors have proposed a final dividend of 133 pence per share which will be paid on 22 May 2020 to shareholders on the Company’s
register of members at the close of business on the record date of 14 April 2020. This dividend, which amounts to approximately £104m,
has not been included as a liability at 31 December 2019.

14. Trade and other payables and derivative financial liabilities
Current liabilities

Trade and other payables
Trade payables
PAYE and social welfare
Value-added tax
Betting duty
Amounts owed to fellow Group companies
Contingent deferred consideration – business combinations (Note 18)
Liability to purchase own shares
Accruals and other liabilities
Total
Derivative financial liabilities
Sports betting open positions (Note 18)


Notes to the Company Financial Statements continued
14. Trade and other payables and derivative financial liabilities (continued)
Non-current liabilities

Derivative financial liabilities
Sports betting open positions (Note 18)
Non-current liabilities

Revolving credit facility
Less: expenses relating to revolving credit facility
Total
Lease liabilities

See Note 22 to the consolidated financial statements for further information on the terms of the borrowings.

16. Financial risk management

The Company’s risk exposures, and what its objectives, policies and processes are for managing those risks, are set out in Note 17 and
Note 23 to the consolidated financial statements.

17. Credit risk

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 31
December was:

Cash and cash equivalents

Financial Statements

18. Fair values

Fair values versus carrying amounts

The following are the fair values and carrying amounts of financial assets and liabilities carried at amortised cost in the statement of
financial position:

Assets
Amounts owed by fellow Group companies
Cash and cash equivalents
Total
Liabilities
Trade and other payables
Lease liabilities
Borrowings
Total
Net

Fair value hierarchy

Financial instruments at 31 December which are carried at fair value are analysed by valuation method below. The different levels have
been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Derivative financial liabilities
Total

Derivative financial liabilities
Non-derivative financial liabilities

Basis for determining fair values

The following are the significant methods and assumptions used to estimate the fair values of the financial instruments above:

Financial instruments carried at amortised cost
Cash and cash equivalents (Level 2)

The fair value of cash and cash equivalents is based on the nominal value of the relevant cash and bank deposit balances, as all are held at
variable interest rates.

Trade and other payables (Level 2)

The fair value of trade and other payables is estimated using the present value of future cash flows discounted at the market rate of
interest at the reporting date. Amounts due within three months are not discounted.

Lease liabilities (Level 2)

The fair value of lease liabilities is estimated using the present value of future cash flows discounted at the incremental borrowing rate at
the lease commencement date.

179



Notes to the Company Financial Statements continued
18. Fair values (continued)
Borrowings (Level 2)

The fair value of borrowings is estimated using the present value of future cash flows discounted at the market rate of interest at the
reporting date.

Financial instruments carried at fair value
Derivative financial instruments (Level 3)

Derivative financial instruments comprise sports betting open positions. The fair value of open sports bets at the year-end has been
calculated using the latest available prices on relevant sporting events.

Sensitivity analysis in respect of Level 3 financial instruments carried at fair value

The following sensitivity analysis has been performed for the Level 3 financial liabilities carried at fair value at 31 December 2019 and
2018:

Sports betting open positions

The fair value of sports betting open positions is primarily based on expectations as to the results of sporting and other events on which
bets are placed. Changes in those expectations and ultimately the actual results when the events occur will result in changes in fair value.
There are no reasonably probable changes to assumptions and inputs that would lead to material changes in the fair value methodology
although final value will be determined by future sporting results.

Movements in the year in respect of Level 3 financial instruments carried at fair value

The movements in respect of the financial assets and liabilities carried at fair value in the year to 31 December are as follows:

Balance at 31 December 2018
Recognised in the income statement
Settlements
Balance at 31 December 2018
Recognised in the income statement
Settlements
Balance at 31 December 2019

Sports betting

19. Pension arrangements

The Company operates defined contribution pension schemes for certain employees. The assets of the schemes are held separately
from those of the Company in independently administered funds.
Pension costs for the year were £0.3m (2018: £0.3m) and the amount due to the schemes at 31 December 2019 amounted to £0.1m
(2018: £0.1m).

20. Commitments and contingencies
(a) Guarantees

The Company has uncommitted working capital overdraft facilities of £4.3m (2018: £4.5m) with Allied Irish Banks p.l.c. These facilities
are secured by cross-guarantees within the Group.
The Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group.
The Company considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee
contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under
the guarantee.
As mentioned in Note 22 to the consolidated financial statements, borrowings under the RCF and Term Loan are unsecured but are
guaranteed by the Company and certain of its operating subsidiaries.

180

Financial Statements

(b) Capital commitments

Capital expenditure contracted for at the statement of financial position date but not yet incurred was as follows:

Property, plant and equipment
Total
(c) Leases

The Company leases various licenced betting and other offices under lease agreements. The leases have varying terms, escalation
clauses and renewal rights. The leases have, on average, approximately five years left to run (if the Company was to exercise available
break options), with a right of renewal after that date. Lease rentals are typically reviewed every five years to reflect market rental rates or
changes in general inflation rates. Leases for licenced betting and other offices are entered into as combined leases of land and buildings.
Since the title to the land does not pass, the rent paid to the landlord of the building is increased to market rent at regular intervals and
the Company does not participate in the residual value of the building, it was determined that substantially all the risks and rewards of the
offices are with the landlord. As such, the Company had determined that the leases were operating leases in accordance with IAS 17.
The Company has a small number of properties that are sublet.

Right of use assets
Balance at 1 January 2019
Remeasurement of lease term
Depreciation charge for the year
Balance at 31 December 2019
Leases as lessee

Amounts recognised in profit or loss:
2019 – Leases under IFRS 16
Depreciation charge for the year
Interest on lease liabilities

2018 – Leases under IAS 17
Lease expense
Sub-lease income

Lease exercises

Some property leases particularly in our retail business contain extension and break options to provide operational flexibility. These options
are held by the Company and not by the lessors. The Company assesses whether it is reasonably certain to exercise these options
at lease commencement date. When assessing these options at the date of transition, the Company was mindful of the regulatory
changes in 2019, the impact it would have on future shop profitability and whether it could state with reasonable certainty that these
options would be extended. The Company is of the view that other than the underlying trading of the shop, there is no economic
incentive to extend a particular lease. For example, the rents are at market rates, there are no significant leasehold improvements and
there are no significant costs relating to exiting or relocating.
During 2019, as these regulatory changes have been implemented and the Company has obtained greater knowledge of the potential
impact on profitability, it has reassessed the likelihood of lease options being exercised.
The Company has estimated that the potential future lease payments should it exercise all options or not exercise any break clauses
would result in an increase in the lease asset and liability of £2m.

181



Notes to the Company Financial Statements continued
20. Commitments and contingencies (continued)
Leases as lessor
Finance lease

The Company has a small number of properties that are sublet. The following table sets out a maturity analysis of lease receivables
showing the undiscounted lease payments to be received after the reporting date. Under IAS 17, the Company did not have any finance
leases as a lessor.

Less than one year
Between two and five years
Total undiscounted lease receivable
Unearned finance income
Net Investment in finance lease

Operating lease

The Company has a small number of properties that are sublet. Sublease payments of £0.1m (2018: £0.2m) are expected to be received
during the year ended 31 December 2020.

(d) Section 357 guarantees

Pursuant to the provisions of Section 357 of the Companies Act 2014, the Company has guaranteed the liabilities and commitments
of its wholly owned subsidiary undertakings in the Republic of Ireland for the financial year ended 31 December 2019 and, as a result,
such subsidiary undertakings have been exempted from the filing provisions of the Companies Act 2014.

21. Approval of Financial Statements

The Financial Statements of the Company for the year ended 31 December 2019 were approved by the Board of Directors on
26 February 2020.

182

Other Information

Other
Information
Section Contents
184	Five-Year Financial Summary
1Five Year Financial Summary (unaudited)
Financial information for the Group for the five years ended 31 December 2019 is set out below.

Revenue
EBITDA (before separately disclosed items)
EBITDA: Separately disclosed items
EBITDA (after separately disclosed items)
Operating profit (before separately disclosed items)
Operating profit: Separately disclosed items
Operating profit (after separately disclosed items)
Profit before tax
Profit/(loss) for the year


1. Statutory numbers reported.
2.	Proforma numbers represent the results of the Group as if the Merger with Betfair Group plc had occurred on 1 January 2015. A reconciliation between the proforma
numbers and statutory numbers for 2015 is provided on page 52 of the 2016 Annual Report.

Shareholder Information
is a public limited company
incorporated and domiciled in the Republic of Ireland.
It has a primary listing on the London Stock Exchange
and a secondary listing on Euronext Dublin.

Corporate website

The Company’s corporate website provides shareholders with
a broad range of information including investor information such
as the Annual Report and Accounts, current and historic share
prices, AGM materials, events and governance information:
www.flutter.com

Dividends

Dividend payments

Details of the Company’s dividends for the financial years ended
31 December 2019 and 31 December 2018 can be found on
page 93 and at:
www.flutter.com/investor-relations

Dividend withholding tax (“DWT”)

As an Irish resident company, all dividends paid by the Company
are subject to DWT, currently at the rate of 25% unless a
shareholder is entitled to an exemption. Shareholders entitled
to the exemption must have submitted a properly completed
exemption form to the Company’s Registrar by the relevant
record date for the dividend. Non-Irish resident shareholders and
certain Irish companies, trusts, pension schemes, investment
undertakings, companies resident in any member state of the
European Union and charities may be entitled to claim exemption
from DWT. If you require any further assistance or information on
the relevant form to be completed, please contact the Registrar.

184

Forms are available on the Irish Tax & Customs Revenue website:
www.revenue.ie

Shareholders should note that DWT will be deducted from
dividends where a properly completed form has not been received
by the relevant record date for a dividend.

Dividend mandates

We encourage shareholders to have their dividends paid directly
into their bank account to ensure efficiency of payment on the
payment date and reduce the instances of lost or out-of-date
unclaimed cheques. Please contact the Registrar to avail of this.

Out-of-date/unclaimed dividends

If you have out-of-date dividend cheques or unclaimed dividends,
please contact the Registrar.

FINANCIAL CALENDAR
Preliminary Results
Final Dividend: Ex-dividend date
Final Dividend: Record date
2020 Annual General Meeting
2019 Final Dividend: Payment date
Financial year end

2020


Further updates to the calendar can be found at www.flutter.com

Other Information

Electronic shareholder
communications

We encourage you to be notified
by email or letter when shareholder
communications such as the Annual
Report or Notice of Annual General
Meeting are available to be viewed
online on our website at:
www.flutter.com

This allows the Company to have a positive
effect on the environment by significantly
reducing the volume of paper used in the
production of shareholder mailings, save
substantial printing and postal costs in
addition to speeding up the provision
of information to you as a shareholder.
You can elect to receive email notifications
by contacting the Registrar.

Amalgamation of accounts

Shareholders who receive duplicate sets
of Company mailings owing to multiple
accounts in their name should contact
the Registrar to request their accounts
be amalgamated.

Shareportal

Shareholders may access their accounts
online at:
www.signalshares.com

This facility allows shareholders to
check their shareholdings and dividend
payments, change address, change
dividend instructions, register email
addresses, appoint proxies electronically
and also download standard forms and
documents to initiate other changes in
details held by the Registrar.

Shareholder security

Please be aware that organisations,
typically from overseas, sometimes make
unsolicited contact with shareholders
offering to buy their shares or to sell
shares on their behalf at prices which can
be significantly higher than the market
price of the shares.

Designed and produced by Friend

If you are in receipt of an unsolicited
call from someone offering to buy your
shares, you should remain vigilant; take
a note of the name of the person and
organisation that has contacted you;
not respond to high pressure tactics to
provide bank details or arrange to transfer
money if you are unsure of the bona fide
nature of the caller; check if the company
or individual is appropriately authorised to
operate as an investment firm with your
local regulatory authority (Central Bank of
Ireland for shareholders resident in Ireland
and the Financial Conduct Authority for
shareholders resident in the UK); and
obtain independent advice from
a qualified advisor or stockbroker.

Share dealing

If you wish to buy or sell shares in the
Company you can do this by using the
services of a stockbroker or high
street bank.
You can also use Link Share Dealing
Services:

Please note the price of shares can
go down as well as up, and you are not
guaranteed to get back the amount you
originally invested. If you are in any doubt
you should contact an independent
financial adviser.

Contacts

Registered office
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Annual Report &
Accounts 2019
Home of the new.
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
 Homes 
Contents
Contents
Building high
quality homes for
where and how
our customers
want to live.”
Chairman’s Letter 4
CEO's Review 8
CFO’s Review 12
Our KPIs 16
Business Model & Strategy
Strategic Update 20
Business Units 30
Risk Management Report 36
ESG Report 44
Governance
Corporate Governance Report 54
Audit and Risk Committee Report 62
Remuneration and Nomination Committee Report 68
Board of Directors 86
Directors’ Report 89
Financial Statements 95
Company Information 156
Knightsgate
Rush, Co. Dublin
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
2 
* At Annual Report approval date
** Suburban portfolio at year end
Our vision is to
create the leading
sustainable
homebuilding
platform in Ireland.
3
 at a Glance
 at a Glance
2019 2018
Financials
Revenue €284.6m €84.2m
Gross margin % 18.1% 18.2%
Net cash at 31 December €53m €131m
Operating profit/(loss) €29.4m (€2.6m)
Inventory at 31 December €840.5m €718.9m
Sales Activity
Selling sites 14 7
Unit completions 844 275
Units sold, signed or reserved* 475 451
ASP €332k €287k
Pricing <€350k** 84% 74%
Construction
Active construction sites 17 14
Site openings 6 7
Next year's deliveries from existing sites 100% 100%
Units under construction in the period >1,600 >1,100
Acquisitions
Strategic acquisitions 8 16
Acquisitions cost €109m €351m
Total units acquired 2,600 7,408
Landbank size 14,500+ 12,600+
Proby Place
Blackrock, Co. Dublin
€
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
4  5
Chairman’s Letter
We have reviewed our key markets ahead of 2020 and
realigned the segments of our business internally to
ensure we are best equipped operationally to respond
to current market dynamics. Our business segments are
now Suburban, Urban and Partnerships and each are
discussed in more detail in the strategy and business
model section from page 18.
Our people
The Board recognises the significant role the people
within our Company have played in delivering our
success to date. Our role is to continue to support and
develop our people through refining our culture and
communicating what we value as a Company. The
implementation of our culture and values extend beyond
employees and include our wider subcontractor and
supplier base.  now employs over 330 staff
and has a subcontractor network of more than 1,600.
Our people continue to be the key element in delivering
our increased output targets and the Board reaffirms its
commitment to invest in our people. On behalf of the
Board, I want to thank our employees, subcontractors
and suppliers for their efforts and dedication throughout
2019 and we look forward to supporting and working with
you throughout 2020 and beyond.
Governance
The New Code
Strong corporate governance is a pillar of the Group
and the Board is firmly committed to maintaining the
highest standards of corporate governance. Following
the publication of the new 2018 UK Corporate
Governance Code (the “Code”), the Board has invested
significant time ensuring that we have met the changes
introduced by the Code from 1 January 2019. Details of
our approach and the governance structure changes
introduced are set out in the Corporate Governance
Report on pages 54 to 61.
Board Composition
During 2019 there were a number of changes to the
membership of the Board. Early in 2019, we announced
that Caleb Kramer had informed the Board of his
intention to retire as a Non-Executive Director and
confirmed that he would not seek re-election at the
AGM. Justin Bickle stepped down from his role as Chief
Executive Officer of the Group and resigned from the
Board in August 2019. I’d like to take this opportunity to
thank Justin and Caleb for the significant and valuable
contribution they have made to the success achieved to
date at .
John Mulcahy
Chairman
 Properties PLC was established just 28
months ago with the clear target of becoming the
leading sustainable house builder in Ireland and we
are well on our way to achieving that goal.
The Company’s successful performance in 2019
demonstrates that we continue to implement the right
strategy and provide attractive, affordable and high-
quality product to owner occupiers, local authorities
and the rental sector.
Successful scaling of operations
In 2019, the Group's second full year of trading,
we delivered another strong performance both
operationally and financially with a 207% increase on
2018 in the number of unit completions.
The 844 (2018: 275) unit completions in 2019 were
delivered from 14 (2018: 7) sales outlets while we have
now opened 20 sites since IPO which clearly illustrates
the successful escalation of our operations.
Looking ahead, we expect the market environment to
remain favourable with significant owner occupier and
institutional demand for housing, particularly starter
homes. The extent of the institutional demand for high
quality residential product is such that the Group now
expects to forward fund a series of Urban apartment
developments in the future. Reflecting confidence
in where the delivery capability has evolved since
IPO, we have increased the Group's medium-term
output targets by 2,650 units from 2022 to 2024. The
increased output targets and our approach to funding
our development expenditure reflects the Group's
continued commitment to invest in operational scale
and efficiencies which maximise return on capital.
Chairman’s
Letter
Dear Shareholder,
I am pleased to present
our Annual Report
for the year ended
31 December 2019.
Innovative
Our Culture
Customer-
Centred
Safety Led Collaborative Can-Do
 have
increased the Group's
medium-term output
targets by 2,650 units
from 2022 to 2024

Note 1: Since IPO
Increasing output target to 3,000 units by 2023 (+50% vs IPO)
12,000
units delivered
by 20241
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
6  7
Chairman’s Letter
Following on from the Remuneration and Nomination
Committee’s 2018 assessment of the composition of the
Board and its Committees, a process was undertaken
to identify and appoint suitable independent Non-
Executive Directors with complimentary skills and
experience to the existing Board members. On
completion of this process I was pleased to welcome
two new Non-Executive Board members in September
2019; Pat McCann and Cara Ryan. In addition, I
was pleased to welcome our Chief Financial Officer,
Michael Rice, to the Board as an Executive Director in
November 2019.
Each new Board member has a diverse background
and unique skillset that will bring a fresh perspective
to our existing Board composition. I look forward to
the valued contribution each new Board member will
make as we execute on our business plan and continue
to work towards meeting our targets in 2020 and
beyond. Further details of the above are set out in the
Remuneration and Nomination Committee Report on
page 68.
Capital re-organisation
At the Extraordinary General Meeting held on
17 December 2019, shareholders approved a capital
reorganisation resolution to reduce the Group’s
share premium account by an amount up to €700
million. Subject to High Court approval of the capital
reorganisation, the undistributable reserves (namely
the share premium account) will be transferred to
distributable reserves. We expect this process to
complete in 2020 which will provide the Company with
flexibility to establish and implement a capital returns
policy in due course.
As communicated at our Investor Day on 29 January
2020 our priorities for maximising shareholder returns
in the short term include a reduction in our net
land investment, increased unit output, a targeted
investment in suburban working capital and the
forward funding of certain urban projects while
maintaining prudent leverage levels in the interim.
In the context of these near-term strategic priorities,
we re-affirm our commitment to commencing a capital
returns program once excess cash is available and will
continue to keep our investor community informed as
we execute our business plan.
Outlook
We are on plan and have made good progress in 2019
and are confident that the investments we are making
will further enhance our level of output and position in
the market. The  management team remains
focussed on delivering profitable growth and cash
conversion in the medium term while building scale
and continuing to develop out the platform.
In particular the Board believes that the Company is
well positioned to deliver across three segments, but
as a single business capitalising on scale advantages
to address Ireland’s fundamental demand / supply
imbalance. In the market there continues to be a long-
term demand for 35,000 units per annum. We intend
to be the volume operator supplying these units to
the market. We are clear on where we are, where we
are going and we have the right strategy for how we
are going to get there. The Group’s increased output
targets are ambitious but achievable in the context of
the short to medium term fundamentals of the Irish
housing market. The Board remains very confident
about the future for your Company and the further
progress 2020 and beyond will bring.
John Mulcahy
Executive Chairman
Our vision is to
create the leading
sustainable
homebuilding
platform in Ireland.
In the market there continues to be a
long-term demand for 35,000 units per
annum.  intend to be the
volume operator supplying these units
to the market
35,000
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
8  9
CEO's Review
profits have consistently exceeded expectations in each
of the years since IPO. Our approach to operations
and construction consistently delivers and exceeds
expectations. Our key objective is to continue solidifying
this platform and programme to deliver units and
returns for shareholders.
Market Environment
A key driver of this unit delivery is a market opportunity
which remains highly compelling. Population growth
is driving a housing need and well-capitalised scale
homebuilders, such as , are best placed to
address this. The landbank we’ve assembled can deliver
housing which is both in demand and affordable and
for which we have the operations and capital structure
to execute on.
Fourteen selling sites delivered the Group’s units for
2019 with both existing and new selling sites performing
well with reservations and pricing remaining strong
throughout the period. New selling sites in 2019 included
Blackrock Villas, Ledwill Park, Mountwoods, Semple
Woods, and Knightsgate. These sites will each be
delivering sales again in 2020 with new developments at
Barnhall Meadows, Oldbridge Manor, Bellingsmore, and
Silver Banks also coming onstream.
Our End Markets
We will continue to pursue our three core markets –
suburban housing, urban apartments and partnerships
with local authorities and state agencies. To better
reflect how we are delivering these segments to the
market and to streamline communication to investors,
Suburban, Urban and Partnerships will replace the
old Home and Living banners. While the target
markets remain the same our new approach will allow
the attractive characteristics of each segment to be
assessed and valued independently.
Given our single delivery platform, one of the welcome
challenges the Group will begin to face is where to
deploy our construction resource to deliver the best
return on capital for shareholders. In the near-term that’s
across Suburban and Urban where we’re balancing the
returns on offer against the requirement to both manage
risk and build a sustainable business. Over the life of
the plan, when Partnerships materialise, we will take the
opportunity to reduce our overall land investment and
deliver our output targets in as capital light a manner as
possible. This will be upside to our base case plan which
just deals with our current operational programme –
Suburban and Urban.
Scaling Our Construction Operations
2019 was another strong year on the construction front
where the Group opened seven construction sites
assisted by the formation of dedicated site opening
teams. Allowing for completed developments at Herbert
Hill, Proby Place and Holsteiner, the Group is now
actively constructing on 16 sites with a further two sites
scheduled to open in Q1 2020.
Since IPO a commitment of the business has been
to clearly outline where we believe we can take the
business from a unit delivery standpoint. We’re now two
years into our journey and have proven we can move
quickly to monetise the Group's attractive landbank.
Reflecting our confidence in where the delivery
capability has got to, and the extent of the team's
ambitions, we have significantly increased the Group’s
output targets for the medium-term to 3,000 units per
annum from 2023. This is 50% greater than the IPO
target of 2,000 units. This plan sees the Group delivering
a further 10,800 units in the period to 2024 having
already delivered on over 1,100 since IPO.
The Group’s Urban projects, once successfully forward
funded, will result in revenue, profits and cash for the
Group in advance of the full delivery of the unit output
targets outlined. The increased output targets and
approach to funding our development expenditure
reflects the Group’s continued commitment to invest in
operational scale and efficiencies which maximises the
return on the capital of the Group.
Working Closely With
Our Supply Chain
The Group continues to invest in more efficient and cost-
effective construction techniques. Early initiatives have
included the optimisation of our processes and finished
product, in addition to adopting modern building
practices, including utilising off site timber-frame and
modular manufacturing systems.
In order to further enhance the Group's timber-frame
construction solutions and guarantee long-term supply,
 has entered into an exclusive multi-year
open book supply agreement with one of its existing
timber-frame suppliers based in Ireland, Keenan Timber
Frame Limited (“KTF”).
In conjunction with the agreement the Group has
purchased a production facility in a strategic location
close to its active construction sites for approximately €5
million. This manufacturing facility will be leased to KTF
and once operational will allow KTF to supply timber
frame product exclusively for .
Stephen Garvey
Chief Executive Officer
In our second full year of trading it has been another
strong performance for the Group both operationally
and financially as we continue to exceed our targets,
delivering three times the number of unit completions
from one year ago. We have completed our net
investment in land, grown our operations consistent with
our business plan and remain focused on optimising
capital returns as the business continues to scale.
Our Vision
The vision for the business is simple; it’s that everyone
should have access to high quality, energy efficient
homes in flourishing communities across Ireland. Our
key ingredient for delivering on this vision is people.
We’re very proud of what the business has become in
a short space of time since its inception. If you were
to spend a day at our offices or indeed visit us on
our sites I believe you’d see a business that is; safety
led, customer centred, collaborative, innovative and
importantly for the scale of the opportunity ahead of
us, a talented group of people with a ‘can-do’ attitude.
Phase I Of IPO
Objectives Delivered
It’s our ‘can-do’ attitude that has helped ensure that the
Group has delivered on Phase I of our IPO objectives.
We’ve not only succeeded in successfully deploying
our capital; we’ve also assembled a landbank which
is targeted at the most resilient segment of the market
– starter homes – in very strong urban centres. The
sustained and profitable manner in which we’ve
deployed the capital is best demonstrated by the pace
of our operational ramp-up. We’ve opened 20 sites to
date, thus far delivered more than 1,100 units (844 in
2019) with in excess of this number under construction
again in 2020. Our delivery of units, revenues and
CEO’s
Review
I am pleased to update
you, our shareholders,
on our continued
strong progress at
.
For more information
on our Business
Model see page 18
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
10  11
CEO's Review
The open book supply agreement and the factory
investment by  will facilitate the expansion
of KTF’s own operations and help de-risk ’s
medium and long-term housing delivery targets while
also allowing the Group to benefit from any savings
delivered as a result of the partnership. The factory is
due to be operational by Q2 2020 and will initially have
the capability to deliver approximately 800 timber frame
units per annum with the option to expand this capacity
in the future with limited investment.
Our Sustainability Agenda
In delivering on our objectives we recognised early the
importance of creating a sustainable business. Our
environmental and social agenda has been to the fore
since our establishment as a PLC and we committed
to strengthening and progressing this as part of our
operational and construction programmes.
Our work in planning and contributing to sustainable
communities, meeting and exceeding our environmental
obligations and sustainably integrating with our supply
chain are features of our operations and are covered in
more detail in this report.
Customer Service
We are very proud to lead the industry in Ireland in
both build quality and customer service. Quality and
customer service have been long-term commitments for
us, and we strive to meet and exceed our customers’
expectations. We believe that high quality homes and
excellent customer service are fundamental to our
ongoing success. We are building homes the country
needs, creating jobs and supporting economic growth
whilst also delivering both operationally and financially
for our shareholders.
Conclusion
The fundamentals of our sector remain strong. There
is a continuing chronic under-supply of housing in
Ireland (both private and public) and well-capitalised
scale homebuilders are best placed to address this.
With a strong landbank primed for operation and
capital ready to deploy should we see an opportunity,
together with a skilled team with a proven track record,
 has already earned a leading role within
the Irish residential landscape.
We will continue to deliver in 2020 where the Group
has substantially de-risked its construction targets
with costs largely fixed and strong forward sales in
place. The market backdrop remains favourable with
significant institutional and private demand for housing,
particularly starter homes, evident across the Group’s
selling sites.
In closing, I wish to echo the words of our Executive
Chairman and thank all the  staff, their
families and our industry partners for joining us on this
exciting journey.
Stephen Garvey
Chief Executive Officer
Barnhall Meadows
Leixlip, Co. Kildare
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
12  13
CFO's Review
our Revolving Credit Facility, commitment fees on the
undrawn element of the facility and arrangement fees,
which are being amortised over the life of the facility.
Overall, the Group delivered a profit after tax of €22.8m,
which shows significant progression from the loss of
€3.9m incurred in 2018, and current year earnings per
share of 2.6 cent (2018: Loss per share of 0.5 cent).
Balance Sheet
The Group’s net asset value has increased to €867m at
31 December 2019 (2018: €843m).
The Group has increased its land portfolio to €668m
(2018: €618m) at 31 December with the Group’s net
investment in land now starting to decrease with focus
on smaller incremental land acquisitions.
The Group has made a significant investment in work
in progress in line with the continued ramp-up of the
business with a year-end balance of €173m (2018:
€101m). The investment in the land portfolio and work
in progress has been financed through the Group’s
cash balances, which have decreased to €93m at 31
December 2019 (2018: €131m).
Cash flow
The Group had a net cash outflow in the year of
€37.5m, a significant reduction from €221m in the
prior year. This reduction comes from a combination
of improved cash generation from the business and a
reduced spend on land.
With the business now getting towards scale, the
business generated operating cash inflows before
changes in working capital of €31m versus a cash
outflow of €2m in 2018. Given the strong landbank
now in place, our net inventory spend for the year was
€119m, with the vast majority of that related to work
in progress, compared to a net inventory spend of
€432m in 2018.
The Group is in a net cash position of €53m (2018:
€131m) at year-end, with €93m of cash and €40m of
debt from our Revolving Credit Facility.
As expected, we utilised this debt facility to a greater
extent in 2019 to fund our investment in work in progress.
We drew down €120m (2018: €26m) and repaid €80m
(2018: €26m) from the facility at various points during the
year. The increased utilisation of the facility will continue
in 2020 as we open more construction sites in line with
our strategy.
Investor Relations
 is committed to interacting with the
international financial community to ensure a full
understanding of the Group’s strategic plans and
targets and its performance against these plans and
targets. During the year, the executive management
and investor team presented at 9 capital market
conferences, and conducted 258 institutional one-on-
one and group meetings.
On 29 January 2020, the Group also hosted a Capital
Markets Day in the London Stock Exchange with a
strong attendance amongst shareholders, analysts and
financial institutions. The Group’s updated 5-year plan
was unveiled at this event, with increased delivery targets
and new forward funding mechanisms outlined.
Share Price and Market Capitalisation
The Group’s shares traded between €0.62 and €0.91
during the year (2018: €0.67 to €1.26). The share price
at 31 December 2019 was €0.87 (31 December 2018:
€0.71m) giving a market capitalisation of €758m
(2018: €619m).
Group performance
 had another strong year in 2019 both from
an operational and financial perspective. This was the
first year of profitability for the Group and we have now
established ourselves as a scale housebuilder within the
Irish market after only two full years of operation.
The total unit completions for the year was 844 units
(2018: 275), a 207% increase on the prior year but also
16% higher than our market guidance of 725 units.
Group revenue was €284.6m (2018: €84.2m) for the year
with €280m (2018: €79m) related to the 844 units. The
continued strong demand for our first-time buyer product
is evident from our Average Selling Price (‘ASP’) for the
year of €332k (2018: €287k).
Revenue included consideration of €4.3m (2018: €5m)
from a number of non-core site disposals.
The Group’s gross profit for the year amounted to €51.5m
(2018: €15.3m) with an overall gross margin of 18.1% (2018:
18.2%). The strong margin performance demonstrates
continued margin progression in our underlying housing
margin which was 17% in 2018.
Our operating profit (pre-exceptional items) was €30.5m
(2018: loss of €2.2m), which is a 10.7% operating margin
and is in line with expectations. The Group’s central costs
for the year were €19.6m (2018: €17.2m), which along with
€1.4m (2018: €0.2m) of depreciation and amortisation
gives total administrative expenses (pre-exceptional items)
of €21.0m (2018: €17.4m).
The exceptional costs of €1.1m (2018: €0.4m) incurred in
the year relate to redundancy and restructuring costs and
costs associated with the cessation of the Hollystown Golf
and Leisure Limited business in December 2019.
Net finance costs for the year were €2.7m (2018: €1.4m),
primarily reflecting interest on the drawn portion of
 had
another strong year
in 2019 both from an
operational and
financial perspective.
The total unit completions
for the year was 844 units
(2018: 275), a 207% increase
on the prior year but also
16% higher than our market
guidance of 725 units.
844
Michael Rice
Chief Financial Officer
CFO's Review
Overall, the Group
delivered a profit after tax
of €22.8m, which shows
significant progression
from the loss of €3.9m
incurred in 2018.
€22.8m
€
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
14  15
CFO's Review
Financial Risk Management
The Group’s financial risk management is governed by
policies and procedures which have been approved
by the Board of Directors and are reviewed on an
annual basis. These policies primarily cover credit
risk, liquidity risk and interest rate risk. The principal
objective of these policies is the minimisation of
financial risk at reasonable cost.
Credit risk
The Group transacts with a variety of high credit-rated
financial institutions for both placing deposits and
managing our day-to-day cash flow requirements. The
Group actively monitors its credit exposure to each
counterparty to ensure compliance with internal limits
approved by the Board.
Liquidity and interest rate risk
The Group has a strong balance sheet with its cash
balance and debt facility allowing the business to
finance its current growth strategy. The Group’s debt
facility is drawn on a floating interest rate, with no
related derivatives or financial instruments in place.
The Group will continue to review this approach based
on the level of drawn funds and the wider interest
rate environment.
Outlook
The Group had forward sales of 240 units (2018: 202
units) at 31 December 2019 which has risen to 475 at the
date of this report giving a strong view on our 1,000 unit
completion target for 2020.
All sites required to deliver the 1,000 units in 2020
are now active and this gives us good visibility of the
projected 2020 gross margin.
The Group has maintained a strong Balance Sheet
throughout the year with €53m (2018: €131m) of net
cash at year end and an undrawn debt facility of
€210m (2018: €250m). The next phase of the Group’s
growth will require significant investment in working
capital and I am confident that this growth will
be prudently funded through a combination of
cash generated from the business and our current
debt facility.
The Group looks forward to further underlying financial
and operational growth in the year ahead.
Michael Rice
CFO
All sites required to
deliver the 1,000 units
in 2020 are now active.
1,000
The Group has a strong balance sheet
with its cash balance and undrawn
debt facility allowing the business to
finance its current growth strategy.
Herbert Hill
Dundrum, Dublin
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements

KPIs
16 
Our KPIs
Non-financial KPIs
Health &
Safety
Customer
Satisfaction
For more information on how
our KPIs impact Executive
Director's remuneration
See pages 82 and 83
Financial KPIs
Revenue predominantly includes
housing revenue, which reflects the
number of units sold by the Average
Selling Price of those units, and
non-core land disposals. As the
business continues to grow, Revenue
is seen as a key measure of top-line
business improvement.
€284.6m
Revenue
€284.6m
2019
2018 €84.2m
Group management consider EBITDA
pre-exceptional items and the related
margin percentage of revenue,
to be an important measure for
assessing the profitability of the
Group. It demonstrates profitable
and sustainable growth during our
initial ramp-up phase and shows
improvements in the operating
efficiencies of the business.
€31.9m
EBITDA
€31.9m
2019
2018 (€1.9m)
11.2%
EBITDA Margin
11.2%
2019
2018 -2.3%
The Group considers Health & Safety
audit scoring an important indicator
of performance for the Group. The
metric is the average Site Safety Audit
score percenage from both internally
and externally completed audits.
2019
Performance
achieved 75%
Exceeding customer expectations is
central to the Group's strategy and
a key indicator of performance
linked to variable remuneration.
 engages an independent
external firm to survey our customers
on topics linked to their experience
with .
2019
Performance
achieved 84%
Semple Woods
Donabate, Co. Dublin
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
 Homes 19
18 
Business Model
& Strategy
Innovation
For more on our
use of technology
see pages 23 and 24
We achieve quality and
greater accessibility
to new homes by
relentlessly innovating
the way we plan, design
and build. We bring
new ideas home.”
“
Taylor Hill
Balbriggan, Co. Dublin
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
21
20  Strategic Update
Business Model & Strategy
Strategic Update
Business Model and Organisational Structure
 is focussed on strategically located developments in the Greater Dublin Area, Cork, Limerick and Galway.
The Group delivers across three distinct business segments – Suburban, Urban and Partnerships - as a single business,
capitalising on scale advantages and investing to optimise return on capital. Each business segment benefit from
the Group’s attractive landbank, proven delivery platform and industry leading central resources covering the entire
process outside of construction delivery. Our single underwriting teams is complimented by centralised, planning &
design, manufacturing, procurement, construction management and PLC functions.
The four strategic priorities of the Group which
are underpinned by our sustainability objectives are
as follows:
A. Disciplined investment across our target segments;
B. Putting our private and institutional customers
at the heart of what we do;
C. Scaling our construction capability across Suburban
and Urban; and
D. Optimisation of capital employed to drive returns
for shareholders.
During 2019 the Group made significant progress
towards the achievement of these strategic objectives.
Disciplined investment across
three business segments
Post IPO the Group moved quickly to de-risk our long-
term sales objectives by assembling a starter-home
focussed landbank with affordability and value-for-money
at its core. Our landbank was assembled at attractive
rates in the context of both cost per site and site cost as a
percentage of NDV.
 is now positioned to deliver housing to the
deepest segments of the market with 84% of Suburban
units on forthcoming developments priced at €350k or
less. With an average site size of 280 units coupled with
a focus on starter-homes, the portfolio is monetisable in
Our implementation strategy
Suburban Urban Partnerships
Three business segments addressing
Ireland’s fundamental demand / supply imbalance
Key Attractions
Fundamentals remain
highly favourable and
sustainable
 focused
on three attractive
segments
Opportunity to create the
leading homebuilding
platform in Ireland
Structures now in
place to triple
construction output
Scalable and sustainable business focused on driving ROCE
Strategic priorities for maximising shareholder returns
Suburban
Urban
Partnerships
Disciplined
Investment Across
Target Segments
Customer service
Retail offering
Institutional offering
Customer
Centric
Focus
Minimise upfront
land cost
Control WIP investment
Innovation to control the
cost of delivery
Target
Enhanced
ROCE
Low and high-rise
Standardisation
Offsite contruction
Use of technology
Scale
Contruction
Capability
Delivering strong performance outcome for all
Operating responsibly
People Health & Community Customers Environment Supply
Safety Chain
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
22  23
Business Model & Strategy Strategic Update
the current regulatory and market environment within
a short time-frame. We also estimate that our primarily
low-density Homes portfolio has the optionality to deliver
over 2,000 units into the Suburban PRS sector.
Our valuable Urban sites also allow the Group to
capitalise on the large quantum of capital currently
seeking to access the Urban PRS opportunity in Ireland.
The Group’s Urban portfolio includes high density
apartment sites focused on sustainable rental locations
primarily in Dublin City and Cork City.
Further opportunities continue to exist to make accretive
land acquisitions which target the starter-home and PRS
markets in the strongest locations. Once acquired these
acquisitions will contribute to the achievement of delivery
targets in the near-term and drive returns above Group
targets in future periods.
Despite our continued investment in land the Group are
committing to reducing our net landbank investment by
€100m by 2021.1
Customer centric focus
Retail Customer Focus
Our retail customer service offering is built around three
core customer promises:
• Access – building where our customers want to live
at a price that is affordable;
• Quality is a promise we do not compromise on.
Energy efficient homes designed for how people
want to live; and
• To achieve access and quality for our customers we
will continue to relentlessly innovate how we plan,
design and build - bringing new ideas home
This approach is driving our customer service reputation.
Institutional Customer Focus
Increasingly our customers are institutions which is a
feature of the market that we believe is here to stay.
These institutions choose  not only because we
are one of the few companies delivering product which
works in strong locations, but because:
• We have a track record of delivering and a strong
reputation;
• Institutional investors know that when we say we’ll
deliver, that’s what happens; and
• There is peace of mind for individuals within
organisations who are advocating for an investment
in one of our developments alongside a blue chip
supplier like .
Increasingly these features are establishing  as
the partner of choice within the industry.
Scaling our construction capabilities
We are now actively constructing from 16 sites which are
expected to deliver our 2020 unit guidance of 1,000 units.
This is consistent with our target absorption rate of 50-70
unit sales per site per annum.
In order to achieve ’s medium-term
construction objectives, the key priorities for the Group
have been to:
• Further develop the Groups low-rise and high-rise
construction capabilities;
• Standardise our processes and end product;
• Invest in offsite construction; and
• Utilise technology across our business.
Develop low-rise and high-rise capabilities
Our central Group resources have allowed the
construction operations to focus on opening sites and
controlling the build programme. The delivery of our
developments is aligned to our target markets and
reflects the different skill sets involved in delivering
Suburban and Urban product.
For Suburban construction we have dedicated teams
for site openings – the most challenging part of any
development. These delivery teams are organised into
clusters by region to maximise efficiencies but also to
help train, retain and promote our construction talent in a
structured and deliberate manner.
We recognised early that Urban apartment delivery is
a specialised skill-set. We’ve built on the track record of
the existing team with specialised hires from the London
market where high-rise apartment delivery has been
the norm for a significant period of time. Our highly
experienced Urban delivery team is well positioned to
deliver the forthcoming Urban developments in a timely
and cost-effective manner.
Standardisation of Processes and Production
Our construction methodologies are built around a
standardised process to deliver high quality sustainable
homes as efficiently as possible. This approach has
allowed  to build at volume across our active
sites and deliver on our multi-site strategy.
Supporting our standardised construction approach is our
centralised procurement team that has established strong
relationships with suppliers and subcontractors enabling
the Group to enter into comparatively attractive contracts
for key labour and materials thereby allowing the Group
to manage our exposure to construction cost inflation.
1. Vs June 2019
Offsite Construction
The Group continues to invest in more efficient and
cost-effective construction techniques. Early initiatives
have included the optimisation of our processes and
finished product, in addition to adopting modern building
practices, including utilising off site timber-frame and
modular manufacturing systems.
In order to further enhance the Group's timber-frame
construction solutions and guarantee long-term supply,
 has entered into an exclusive multi-year open
book supply agreement with one of its existing timber-
frame suppliers based in Ireland, Keenan Timber Frame
Limited (“KTF”).
In conjunction with the agreement, the Group has
purchased a production facility in a strategic location
close to its active construction sites for approximately €5
million. This manufacturing facility will be leased to KTF
and once operational will allow KTF to supply timber
frame product exclusively for .
The open book supply agreement and the factory
investment by  will facilitate the expansion
of KTF’s own operations and help de-risk ’s
medium and long-term housing delivery targets while
also allowing the Group to benefit from any savings
delivered as a result of the partnership. The factory which
is due to be operational in Q2 2020 and will initially have
the capability to deliver approximately 800 timber frame
units per annum with the option to expand this capacity
in the future with limited investment.
Separately, the Group’s quarry for the offsite disposal
of inert material is also due to be operational from
Q2 2020 further de-risking the costs associated with
groundworks on site.
Technology
Along with a stable and sustainable supply chain
another asset that the Group is utilising to facilitate
our continued growth is technology. The aim is to
utilise technology to connect construction across our
sites and the rest of the business.
Our ability and motivation to invest in technology early
has ensured we have a stable platform for growth that
helps deliver transparency and control throughout our
projects. Examples of this include drone scans, document
management and a mobile field app. This helps ensure
that collaboration, cost management, quality control and
health and safety are all managed effectively.
Optimise capital employed
to drive returns for shareholders
As we make increasing progress towards achieving these
objectives we will further optimise the capital employed
within the business to drive shareholder value and returns
over the long term. Practically this will mean a reduced
landbank investment without a reduction in output in the
outer years of our business plan.
We’ve assembled a highly attractive landbank and are
now at the peak of that investment trajectory with no
net land spend envisaged (€100m reduction targeted by
the end of 20211
).
Having already grown the delivery capability threefold,
we’re committing to doing the same again and more.
This will require continued investment in work-in-
progress which is a necessity to work the balance sheet
appropriately. Where possible we’ll mitigate any WIP
investment via the forward funding of our Urban projects.
Operating responsibly
Our environmental and social agenda has been to the
fore since our establishment as a PLC.
People
Key to scaling the business has been people. Growing
the business from 75 employees at IPO to over 330
today required the creation of a culture which not only
empowered talent but which also embraced equal
opportunities, diversity and inclusion. We have a
strong gender balance ratio compared to the industry
average ( 19% female, Industry average 5.5%).
 works closely with the Construction Industry
Federation (“CIF”) on initiatives to encourage female
participation in the industry and sponsored the CIF’s
“International Women's Day Conference" in 2019 and will
do so again in 2020.
At  we encourage an inclusive culture, where
employees have a voice and feel valued. 
held Diversity Day 2019 which provided diversity and
inclusion workshops for all managers. We will again be
carrying out Diversity and Inclusion training in 2020. We
The Group continues to
invest in more efficient
and cost-effective
construction techniques
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
24  25
Strategic Update
Business Model & Strategy
Technology in action
Technology allows us to have a collaborative
environment where the whole business is on the
same page.
One of the challenges within our business is how
best we can connect sites to our head office. To
facilitate coordination, we use an online platform
that is accessible to everyone in the business. We
use multiple modules across the platform such
as document control, health & safety, tendering,
supplier packages and workflows. Our field app
allows us to inspect, observe, identify and report
any positive or negative corrective actions.
Drone scans and videos are used to record
and communicate on this platform with all
parts of the business. This offers the ability to
predict constraints and reprogram the works
which de-risks the entire process and greatly
improves coordination.
Utilising our drone technology, 3D scans are the
used in our earthworks modelling software which
allows us to value engineer and manage our civil
engineering projects at an early stage before we
even go into a site.
“ Technology
allows us to have
a collaborative
environment
where the whole
business is on the
same page.”
Case Study
have also signed up to the CIF Diversity Charter with
a view to gaining bronze accreditation in 2020.
We are committed to having a great place to work for
our people. We carry out annual employee surveys to
ensure engagement with employees and encourage
frequent engagement through line management. We
work on the lowest scoring areas to improve in these
areas and also focus on our highest scoring areas to
ensure we maintain these results.
Health and Safety
Health and Safety is at the heart of our operations. In
2019 the Group achieved a Highly Commended Award
from NISO and a Grade A Safe T Cert. We believe there
is always more that can be done in this area and as
a market leader, it is incumbent on us to continue to
drive the health and safety agenda and the Group are
currently implementing ISO 45001:2018 Occupational
Health & Safety Management. Health and Safety
drives an element of all senior management's variable
remuneration with awards based on the results of
site audits.
Customer
Exceeding customer expectations is central to the
Group's strategy of creating the leading home building
platform in Ireland. Built around the objectives of access,
quality and innovation our customer service offering
has brought a new professionalism to the industry.
Customer satisfaction has been a KPI for the entire
business since inception and drives an element of senior
management's variable remuneration. Despite there
being no published benchmarks in Ireland we engage an
independent external firm to survey our customers. Full
variable remuneration is not paid to employees unless the
equivalent of 5 star status in the UK is achieved.
Sustainable Communities
Contributing to sustainable communities is a key feature
of our approach to planning and design. In 2020
the Group will commence works on our first urban
brownfield regeneration project in Dublin’s Docklands.
This is the first project of its type to be delivered by
the Group and forms part of a portfolio of over 2,000
urban brownfield units which will be delivered by the
Group between now and 2024.
 is pleased to confirm that the Group has been
shortlisted as a finalist in Residential Category for the
upcoming Irish Construction Excellence Awards.
Environmental and Quality
The environmental sustainability of our housing is at the
forefront of business decisions.
All houses and apartments delivered by the Group in
2019 had a BER rating of A3 or better and our efforts in
providing sustainable energy efficient homes are replicated
in reducing the environmental footprint of our operations.
Initiatives to date have included the introduction of
electric vehicles, the use of recycled materials on site and
a minimisation of waste across the business. 
has also commenced the implementation of ISO 14001:2015
Environmental Management System.
Quality control is integral to how we procure and run our
sites. High risk materials such as stone, concrete, block,
and mortar are certified at source with additional random
sampling and testing carried out in the field. All materials
are sent to design teams for approval prior to use and
must carry a DOP or CE mark. As part of our ongoing
training and development, we provide Building Control
(Amendment) Regulations (BCAR) training for all of our
employees involved in this process and quality assurance
training in relevant departments.
Our near-term strategic priorities
In achieving our corporate strategy, the near-term
strategic priorities for the Group are to:
• Actively manage our landbank by acquiring sites
at attractive rates through disciplined capital
deployment while reducing the Groups overall land
investment by over €100m in the period to 2021;
• Exceed our customers’ expectations with a continued
commitment to access, quality and innovation;
• Triple construction output to 3,000 units as
the Group continues to build a balanced and
sustainable business throughout the cycle by
focussing on Suburban, Urban and Partnerships
while maintaining the highest standards of health
and safety on our sites; and
• Deliver sector leading return on capital over the
long term by optimising the capital employed
within the business.
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
26 
Shay and Thelma Kearney
Cois Glaisin
Navan, Co. Meath
 celebrates one
year of happy homeowners
June 2018,  closed the first house in the
company’s history when Shay Kearney and his
wife Thelma received the keys to their home. After
selling their home in Dublin and browsing the
market, Shay and Thelma found exactly what they
were looking for at Cois Glaisin.
“We knew all about the community because
our kids live here,” he says. “The houses are well
structured and they’re well finished and even
now I’ve found that I can get help from Sean,
the finishing foreman on the site, if there’s
anything I need.”
“ We got the keys on
a Friday evening and
we slept there on
Sunday night. That's
how quickly the move
took place for us.”
Case Study
Cois Glaisin
Navan, Co. Meath
Strategic Update
Business Model & Strategy 27
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Site Schedule 29
Business Model & Strategy
Our Lanbank - Balanced GDA
Focused Portfolio
Key
Suburban
Urban
Suburban/Urban
Motorway Network
Rail network
Active Suburban Selling from
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
31
Business Model & Strategy
30  Business Units
Business Units
Product End-Market Locations Exit
Suburban Houses and Low-
rise Apartments
Private/
Institutions
Ireland Traditional/
Forward Sales
("FS")
Urban Apartments Institutions Dublin/Cork
city
FS/Forward Fund
("FF")
Partnerships Houses and
Apartments
Private/State/
Institutions
Ireland State/
Traditional/FF
or FS
Our business segments - key characteristics
Attractions of our complementary
business segments
Deepest demand
Most fragmented supply
Alignment of buyer
income and aspirations
Easier optimisation of
construction
Suburban
Structural occupier
shift to rental
Institutionalisation of
rental sector
Capital light
(forward funds)
Longer term earnings
visibility
Urban
Strong ROCE
Increased business
resilience/reduced risk
Fit with both suburban
and urban segments
Access to land/deliveries
Partnerships
All developments sourced and delivered via single delivery platform
Investing across three segments to optimise return on capital
Land
Availability
Land
Competition
Demand Supply
Suburban • Stable supply of
zoned land
• Primarily off-market
transactions
• Limited for sites
of scale
• More prevalent on
small sites
• Owner occupiers
• PRS rental product
• Social housing
• Primarily small
developers
Urban • On-market transactions
more prevalent
• Utilising PLC advantages
to compete for sites
• Strong competition
for high-profile
on-market
transactions
• PRS rental product
• Social housing
• Investment fund
/ end owners
utilising 3rd
party contractors
• Specialist
developers
Partnerships • Driven by Local
Authorities and Land
Development Agency
(“LDA”)
• Local developers
and contractors
• Developer /
contractor
consortiums
• Strong urban
centres suit owner
occupier product
• Social and
affordable
component
de-risk each site
• Local developers
and contractors
• Developer /
contractor
consortiums
Our business segments – competitive dynamics
Optimising mix across three segments to optimise return on capital
 delivers across three distinct business segments – Suburban, Urban and Partnerships - as a single business,
capitalising on scale advantages and investing to optimise return on capital. These business segments have differing
characteristics in terms of product, end-market, location and exit mechanism.
Targeting these verticals has allowed the Group to capitalise on the unique attractions of each market. Each business
segment benefits from the Group’s attractive landbank, proven delivery platform and industry leading central resources
covering the entire process outside of construction delivery. Our single underwriting team are complemented by
centralised planning & design, manufacturing, procurement and PLC functions.
The focus on three distinct verticals and exit optionality through increased sales velocity has allowed the Group
to increase its output targets significantly since IPO. Reflecting confidence in where the delivery capability has
evolved, the Group’s medium-term output targets were increased for 2022, 2023 and 2024 to 2,350, 3,050 and
3,000 units respectively.
The comptitive environment, from land availbility through to supply and demand differs across each target
segment. Over the medium term the diversification across these distinct markerts will allow the Group to prioritise
its construction resource in a manner which generates the best return for shareholders while reducing risk and
increasing business resiliance.
Our urban and suburban
delivery schedule
Both suburban and urban deliveries are core to the group’s output targets
Suburban
Urban
Urban Dublin Docklands

(Note: The Group communicated the change in its segments from Homes and Living to Suburban, Urban and
Partnerships to the shareholder community at its Investor Day on 29 January 2020 and has prepared this strategic
report on this basis to maintain consistency. It should be noted that this change in how we analyse our business is
effective from January 2020, while the previous segmentation of Homes and Living was used throughout 2019 and Note
9 of the consolidated financial statements has been prepared on this basis, in accordance with the requirements of
IFRS 8 Operating Segments)
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
32 
Herbert Hill
Dundrum, Dublin
33
Business Model & Strategy Business Units
Urban
Urban product is all apartments to be delivered to institutions primarily in Dublin and Cork but also on sites
adjacent to significant rail transportation hubs. Demand in this segment is being driven by the shift to rental by
millennials and lifestyles and the exodus of private landlords due to fiscal policy and regulation who are being
replaced by institutional investors.
Urban offers significant attractions from a risk and return on capital perspective given the opportunities that exist to
forward fund these developments. This provides longer term earnings visibility due to early commitment from a forward
sale or forward fund transaction.
Strong focus on
collaboration driving
repeat business
Why Institutions
choose 
Access to quality
product in
Suburban and
Urban locations
Building
track-record and
reputation
Certainty
of delivery
Blue chip
backing
Suburban
Suburban product is primarily housing with some low-rise apartments with demand coming from private buyers and
institutions. This means affordable, high quality homes in locations of choice at €325,000 or below. The Group has an
overwhelming Greater Dublin Area focus in our portfolio however the product is required nationally. Suburban sees
private and institutional demand for our product via traditional and forward sale structures.
Suburban Landbank Split by ASP
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Business Model & Strategy
34  Business Units
Example Unit Mix

Indicative Tender Criteria
60%
40%
PRS/Private
for sale
Affordable Social Financial Quality
Social and Affordable
units delivered in an
appropriate setting
Placemaking
Local Authority / State Agency Benefits
Leverage value in state
lands to provide social
and affordable units
Utilise site value
Sharing of
economics above
certain thresholds
Overage
On social and
affordable units
Delivery Margin
Developer Economics
On PRS and private
for sale units
Developer Margin
For development
management
Fees
On social and
affordable units
Returns
On PRS and private
for sale units
Units
Strong unit delivery
with high level of
pre-committed sales
even in downturn
Risk Management
Partnerships
Partnerships are accretive to the business over the long-term. A partnership typically involves the Government, local
authority or state agency contributing their land on a reduced cost or phased basis into a development agreement
with . It has a reduced risk from a sales perspective where approx. 50% of the product will be delivered
back to the government or local authority for social and affordable homes. Over time this will de-risk the 
market exposure and provide:
• access to both land and deliveries for our Suburban and Urban segments;
• strong ROCE profile; and
• increased business resilience with reduced risk
The Partnerships segment is going to take the most time to come to fruition but it’s one where we are investing
significant time and effort given our skillset and the attractions of the segment from a ROCE perspective.

Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
36  37
Risk Management Report
Business Model & Strategy
The Group has implemented a four line of defence model.
Line of defence Function Responsibilities
First line Department heads Risk owners within the business with responsibility for
ensuring risk management is embedded in day to
day activities and taking a proactive approach to risk
identification and mitigation.
Second line Executive committee Risk monitoring within the business with responsibility
for ensuring policies are implemented throughout
the Group.
Third line Internal audit Risk assurance within the business with
responsibility for providing additional assurance
on the effectiveness of risk management and internal
controls to the Executive Committee and the Audit
and Risk Committee.
Fourth line Audit & Risk Committee Risk oversight with responsibility for setting
Group strategy through determining risk policy
and procedures.
Our approach to risk management is embedded across
all levels and departments of our business, with a focus
on site level risk, to ensure that barriers to achieving
strategic objectives are identified and mitigated. The
Board and senior management set the tone for risk
management in the business through regular interaction,
review and ownership of key risks.
The Board is responsible for ensuring good corporate
governance and prudent risk management is
implemented by the Group. The Board has approved
the Group’s Risk Management Framework which
provides a common risk management process across
the Group to identify, assess, mitigate, monitor and
report risks which impact the Group. The Group’s
risk management process is a bottom up integrated
approach that aims to ensure that all risks to which
the Group are exposed are identified, understood and
appropriate mitigating controls are implemented to
manage the risks effectively and protect the Group. As
part of its oversight responsibilities, the Audit & Risk
Committee is responsible for reviewing the adequacy
and effectiveness of the Group’s internal controls and
risk management process (page 62). The Group’s risk
register and principal risks are a standing agenda
item for each Audit and Risk Committee meeting. The
risk register is used to support the risk management
process and document the Group’s risks, controls and
their approved ratings based on likelihood and impact
from both an inherent and residual perspective. The
risk register is not a static list, but a dynamic process to
ensure risk is managed and mitigated effectively. The
Board formally reviews and approves the risk register on
at least a bi-annual basis.
Risk
Management
Report
Identify
Assess
Report
Risk
Monitor
Risk management in action
Risk management is embedded in the day to day
activities of the business through aligning key strategic
KPIs and remuneration metrics of Executive and senior
management with risk management.
Certain risk management and compliance activities
across the Group are reported monthly to the Board
and Executive committee, with input received from
across the business to respond to risk in line with the
risk management framework.
The Health & Safety (H&S) department is a
dedicated resource whose activities are mainly
focused on risk management throughout
the Group. There are a number of Corporate office
departments whose activities support H&S and also
assist in maintaining a focus on risk management
including Information Technology, Human Resources
and Internal Audit. In addition, third parties are
engaged where necessary to assist and provide
additional assurance in relation to risk management.
A key component of financial risk management is the
Executive and senior management led development
of the annual budget and 5-year business plan, and
quarterly reforecast processes which are used to
monitor progress against plan and assess risk across
all existing and emerging risk categories.
The Group has also invested significantly in
technology, site infrastructure and people to
improve our control processes and systems in order
to respond to the everyday operational risks that are
faced by all companies in our industry.
Our Risk
Management
Framework
Mitigate
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
39
Risk Management Report
Business Model & Strategy
Principal risks and uncertainties
The Board has carried out a robust assessment of the principal risks facing the business. Arising from the risk
management process, principal risks and uncertainties have been identified which could have a material impact
on the Group in achieving our strategic objectives. The Board and Audit and Risk Committee have reviewed the
Group’s principal risks and have considered the new risks introduced for 2019. The main risk categories that the Board
considered are the following:
Risk Categories
Financial Risk
Investment risk is defined as the probability or likelihood of occurrence of losses relative to the expected return on
any particular investment.
Market risk is the risk of loss to the Group arising from market volatility or adverse movements in the level or
volatility of market prices of equities, currencies or property. Market Risk includes Interest Rate Risk which is the risk
to earnings and capital associated with changes in the level or volatility of interest rates and Foreign Exchange (FX)
Risk is the risk to earnings and capital associated with changes in the level of foreign exchange rates.
Non-Financial Risk
Compliance risk is the risk of legal sanctions, material financial loss, or loss to reputation that the Group may suffer as
a result of its failure to comply with legislation, regulations, code of conduct, and standards of best/good practice.
Operational and IT risk is the risk of loss resulting from inadequate or failed internal processes, people and systems,
or from external events.
Reputational risk is a risk of loss resulting from damage to the Group's reputation.
Strategic risk is the loss or unplanned/unfair gains resulting from adverse strategic initiatives.
External Risk
External Risk is the risk to the Group of potentially failing to meet its strategic objectives following significant
changes to the external environment in which it operates.
The principal risks and uncertainties together with key mitigating considerations that fall into each of these risk
categories are set out below.
Our risk
category
Risk or uncertainty and
potential impact
Risk rating
change
External risk 1. Adverse Macroeconomic Conditions
2. Adverse changes to government policy and regulations
3. Mortgage Availability and Affordability
Operational risk 4. Availability and increased cost of materials and labour
5. Inadequate Project Management
6. Insufficient health and safety procedures
7. Employee development and retention
Reputational risk 8. Data protection and cyber security
9. Decline in Product Quality
Table legend: No change to risk rating Increased risk rating New risk
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
40  41
Risk Management Report
Business Model & Strategy
Our risk
category
Risk or uncertainty and
potential impact
Key Mitigating Considerations Risk
rating
change
External risk Adverse Macroeconomic
Conditions
 operates in a
property market that is cyclical
by nature which can lead to
volatility of property values and
market conditions.
Geopolitical uncertainty
(including Brexit) could lead
to a potential adverse impact
on the Group’s asset valuation
and financial performance due
to factors such as slowdown
in economic growth, increased
interest rates and a decline in
consumer confidance.
The Group aims to maintain a reasonable but limited
stock of land (c.5 years).
The Group avoids any longer exposure through strict
land acquisition policies.
The Group has a robust acquisition policy and
approval process in place to ensure the best value is
achieved on assets and that they are aligned to the
strategic objectives of the Group.
The Urban and Partnerships segments will assist in
reducing the cyclical nature of the business through
the delivery of apartments and houses for the rental
market as well as schemes with local authorities or
other government bodies.
Management and the Board actively monitor the
geopolitical risks and seeks expert industry advice
where required.
External risk Adverse changes to
government policy
and regulations
A change in the domestic
political environment and/or
government policy (including
tax legislation, support of the
housebuilding sector, Part V
allowance and first-time buyer
assistance) could adversely
affect the Group’s financial
performance.
The Group’s management and Board monitor
government policy and the make-up of any new
governments on an ongoing basis.
Group management’s site by site forecasts are
conservative by nature and allow for expected
negative changes in government policy
and regulation.
The Group has the capability to redesign
developments as appropriate should it be required.
The Group will consider alternative sales strategies
where required to align to any changes in the
domestic political environment.
External risk Mortgage Availability
and Affordability
 understands that
affordable mortgage finance
is a crucial funding source for
buyers in the residential property
market in Ireland.
Constraints on the availability
and cost of mortgage financing
may have an adverse impact
on sales of the Group’s homes
due to a potential decline in
customer demand and ultimately
the profitability of the Group.
Management and the Board continuously
monitor Central Bank of Ireland policy around
mortgage availability.
The Group regularly engages with mortgage
advisors to gain valuable insights into the market
and the impact of regulatory changes impacting
mortgage lending.
The Group’s strategy can facilitate the adjustment
of delivery velocity if required.
Our risk
category
Risk or uncertainty and
potential impact
Key Mitigating Considerations Risk
rating
change
Operational
risk
Availability and increased cost
of materials and labour
Shortages or increased costs of
materials and labour could lead
to an increase in construction
costs and delays in the
completion of homes.
If the Group is unable to control
its costs or pass on any increase
in costs to the purchasers of
the Group’s homes, source
the requisite labour, and / or
renegotiate improved terms with
suppliers and contractors, the
Group’s margins may reduce
which could have an adverse
impact on the Group’s business
operations and financial
condition.
The Group has fixed cost contracts in place with sub-
contractors and suppliers where possible.
The Group has the potential to expand its purchasing
network should it be required and maintains flexibility
by not having an overreliance on any one supplier.
The Group engages in financial planning and
continuously monitors and reviews the budget versus
actual costings.
Operational
risk
Inadequate Project
Management
Inadequate oversight of the cost
and delivery of development
projects adversely affects
expected return on investment.
The Group has fixed cost contracts in place with sub-
contractors and suppliers where possible.
The Group employs highly experienced and qualified
commercial and finance teams who oversee a robust
financial planning process for each development and
continuously monitor and review the budget versus
actual costings. This includes regular updates to the
Executive Committee and Board of Directors.
The Group have implemented a new organisational
structure within the Commercial department to
correctly structure the department to ensure oversight
of all costs as the business matures in line with the
business plan.
The Group have implemented an integrated ERP
system which provides improved commercial
reporting, automated payment and sub-contractor
accrual functions. The system eliminates manual
processes and provides for real time reporting for
more accurate decision making at a project, sub
project, element and cost object level.
Table legend: No change to risk rating Increased risk rating New risk
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
42  43
Risk Management Report
Business Model & Strategy
Our risk
category
Risk or uncertainty and
potential impact
Key Mitigating Considerations Risk
rating
change
Operational
risk
Insufficient health and
safety procedures
 is focused on the
wellbeing of its employees,
contractors/sub-contractors and
the general public.
The Group understands that
failure to implement and adhere
to the highest standard of
Health & Safety practices can
lead to a significant risk to
health, safety and welfare of
staff and other parties resulting
in increased costs and negatively
impact the timely and safe
delivery of a project.
Additionally, any failure in
health or safety performance
or compliance, including delays
in responding to changes in
health & safety regulations
may result in financial and/or
other penalties.
A dedicated Health & Safety Officer is appointed and
in place for every site.
The Group has a wealth of experience, adopts
best practice and regulations and has developed
and implemented formal best practice policies and
procedures to support and promote a robust Health &
Safety environment.
The Group ensures all staff are appropriately and
adequately trained.
The Group has a Grad A Safe-T certificate which is
the industry Health & Safety auditing standard.
There is adequate insurance cover in place to
deal with any claims that may arise from claims due
to injury.
Operational
risk
Employee development
and retention
The success of the Group
is dependent on recruiting,
retaining and developing highly
skilled, competent people. The
Group is aware that loss of key
personnel and / or the inability
to attract / retain adequately
skilled and qualified people
could lead to:
• Poor operational and
financial performance
• Inadequate staff knowledge
and understanding of policies
& procedures;
• Reduced control environment;
• Insufficient transfer of
knowledge amongst staff to
allow for succession planning;
• Demotivated staff; and
• Failure to achieve/deliver
on the Group’s strategic
objectives.
The Group offers competitive and attractive
remuneration packages and where appropriate long-
term interest alignment.
The Group offers the opportunity for advancement
through creating a positive working environment.
The Group has implemented a performance
management and appraisal process which includes
open channels of communication and feedback and
development plans for employees.
The Group has introduced a Graduate Programme
across all departments to develop and ensure
progression within the business for all employees
The Group is developing a succession plan to ensure
continuity of quality service and knowledge retention.
The Group ensures that all staff have access to
relevant internal and external training.
Our risk
category
Risk or uncertainty and
potential impact
Key Mitigating Considerations Risk
rating
change
Operational &
reputational
risk
Data protection and
cyber security
The Group uses information
technology to perform
operational and marketing
activities and to maintain its
business records.
A cyber-attack could lead to
potential data breaches or
disruption to the Group’s systems
and operations which in turn
could lead to damage to the
Group’s reputation and potential
loss of customers and revenue.
Any security or privacy
breach of the information
technology systems may also
expose the Group to liability
and regulatory scrutiny.
The Group's Head of IT leads the Group's initiatives
in mitigating the risk of cyber and data security
breaches.
The Group uses internal and external back-up systems
under the supervision of a third-party service provider
pursuant to agreements that specify certain security
and service level standards.
The Group has implemented sensitive data password
protection and all such information is stored in
secure locations.
Reputational
risk
Decline in Product Quality
Delivery of the highest quality
homes is central to the success
of .
The Group continues to focus
on ensuring our products meet
the desired standards and is
aware that significant negative
incidents including construction
defects, material environmental
liabilities (including hazardous
or toxic substances), quality
deficiencies or perceptions
thereof could adversely impact
the Group’s sales and possibly
result in litigation cases against
the Group with a potentially
negative impact on the Group’s
brand and customer satisfaction
which are crucial to the Group’s
performance.
The Group has implemented robust quality control
procedures and strictly adheres to Building Control
(Amendment) Regulations requiring (among other
stipulations) the appointment of suitably qualified
engineers and architects
The Group has an experienced and professional
support team in place.
The Group has a dedicated customer service after-
sales team.
Table legend: No change to risk rating Increased risk rating New risk
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
44  45
ESG Report
Business Model & Strategy
In a market of full employment and skill shortages in
the construction industry  are acutely focused
on attracting and retaining talent. We have developed
a competency framework to support the hiring and
development of staff and have put in place formalised
career paths to attract and retain key talent. 
has formalised training and CPD programmes to enable
employees to achieve their highest potential and
contribute to the Group's future success including:
• the  Graduate Programme with 18
graduate attendees from across the business
in 2020;
• the introduction of a Leadership Development
Programme for senior and middle management;
and
• internally designed Technical Construction Training
Programmes for our site teams.
We reward people fairly and have very competitive
benefit and reward packages ensuring the commitment
and retention of employees. These include health
insurance, life assurance, a defined contribution pension
scheme and a Save As You Earn share purchase
programme allowing employees to share in the success
of the Group. We continuously strive towards enhancing
our employee value proposition.
 have a strong gender balance ratio
compared to the industry average (
19% female, Industry average 5.5% (CIF Women in
Construction Industry Report 2018)).  works
closely with the Construction Industry Federation (CIF)
on initiatives to encourage female participation in
the industry.  was a sponsor at the CIF’s
“International Women's Day Conference" in 2019 and will
be again in 2020.
At  we encourage an inclusive culture, where
employees have a voice and feel valued. 
held Diversity Day in 2019 and provided Diversity and
Inclusion Workshops for all managers. We will again be
carrying out Diversity and Inclusion training in 2020 and
have signed up to the CIF Diversity Charter in 2020.
To ensure our employees’ health and wellness in the
workplace, each year we put together a wellness
calendar which includes a range of health initiatives
and programmes that are rolled out throughout the
year. This includes mental wellbeing initiatives, health
checks and awareness programmes, training to support
wellbeing and guest speakers on relevant issues.
 also provide a 24-hour Employee Assistance
Programme service to all employees.
ESG Report
In  creating homes safely is at the core
of what we do. Our main objective every day is that
our employees, sub-contractors, suppliers and all
those visiting sites come into work and go home
from work safely. Senior management involvement is
the cornerstone of health and safety in .
Here at  we ‘Walk the talk’ and it is senior
management being visible on site that sets the standard
and lead on safety.
At , health and safety training is a continuous
process and investing in the competency levels of
all staff, particularly site staff, is a key commitment
 makes to its people. In-house training for
staff is provided in:
• Manual handling
• Abrasive wheels
• Working at height
• Fire training
• Toolbox talks
In addition, external training consultants are brought
in to provide further training in manual handling and
Safe Pass and Plant safety (CSCS). When we identify
an area of competency that we need to increase or
supplement, staff are provided with the appropriate
level of training.
Planning is the key to the success of health and safety
in  and this is best demonstrated through
our daily site white board meetings at which a safe
plan of action for the day’s activities is agreed.
 are also investing in technology
to assist with our health and safety initiatives.
TAG is a biometric time and attendance software that
ensures only pre-qualified and competent people are
allowed access to sites. The person gaining access to
the site has to have their certification and induction
up to date and reflected in TAG before the software
will allow them access. Additionally, this software
allows  to de-risk health and safety onsite
by controlling who is onsite at any point in time and
provides data to be able to assess resources to ensure
only people that need to be onsite are provided access.
The progress  has made and the efforts
we have gone to from a health and safety perspective
have been recognised in 2019. In our second full year
of operations  were awarded a “Highly
Commended" certificate by the National Irish Safety
Organisation at the 28th Annual Occupational Safety
Awards 2019. In addition, we were also awarded Safe
T-cert grade A in 2019 by the Construction Industry
Federation. Being recognised for our health and safety
policies and procedures indicates the strong progress
we have made in the context of the number of sites we
have open. However,  recognises the need to
constantly strive for the highest standards of health and
safety and are focussed on embedding an attitude of ‘we
can always do more’ from a health and safety perspective.
“Safety is just massive with
. It’s just something that
we all adhere to and we’re all tuned
into. It’s good onsite but we’re
always trying to find a better way
of doing things all the time with
’s help.”
(John Keenan - Director, Keenan Timber Frame)
 Diversity Information
Headcount
breakdown
Female 65
Male 277
Headcount site
and office
Female Office 54
Male Office 80
Female Site 11
Male Site 197
Average salary Female €48,666
Male €63,433
Average Age Female 36
Male 40
People Retaining talent
Equal opportunities
Diversity and inclusion
Health & Safety Led At the core of what we do
NISO - High Commended Award
IOSH - T Cert Grade A
“Health and safety is the first item on our Board’s agenda and drives
an element of all senior management’s remuneration. We have already
achieved various awards for health and safety initiatives. Health and
safety will always be to the forefront of the business.”
(Stephen Garvey, CEO)
As the business has gown since IPO, we have continued to develop our environmental, social and governance (ESG)
agenda. Our commitment to the highest standards of corporate governance is detailed in the Governance section
of this report and set out below is an update on other areas of priority which demonstrates our focus on building
the business in a sustainable and responsible way.
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
47
Business Model & Strategy ESG Report
Community Matters Public Infrastructure
Community Initiatives
Strong transport links/park and cycle
As part of our commitment to placemaking 
contributes to and provides public infrastructure as part of
our development process. This may include playgrounds,
access roads, public amenity areas, or financial
contributions towards infrastructure etc. We believe it is
both responsible and necessary that public infrastructure
is a component of our construction methodology during
our placemaking process.
Public infrastructure can be very broad in definition
allowing us to take a holistic approach to
understanding the needs and requirements specific
to each and every development with respect to
the surrounding environment, public infrastructure,
and amenity. As part of this process we engage
with public bodies, local communities and local
authority policy to ensure we consider all aspects
of infrastructure provision, current and future. As
part of the placemaking process when considering
our development we initiate a significant process of
understanding where existing public infrastructure is
located (public parks, transport links, retail business,
schools, play facilities, etc.). During this process we
build in links and permeability to infrastructure nodes
while also, if required, providing elements of the
infrastructure ourselves if a deficit exists.
As part of our sustainable approach and engaging with
the community we consider sustainable infrastructure
provision as part of our normal development process
on every scheme, ie EV charging points, cycle lanes,
connection to pubic cycle lanes, walking permeability, etc.
The customer is core to our business, be that retail
or institutional. At  we are committed to
constantly evolving to deliver best in class product. The
customer is central to our integrated planning and design
approach. As part of this approach we consider what our
customers' ask is and what their needs are in terms of:
• Public and private open space;
• Fit and finish;
• Layout;
• Natural surroundings; and
• Leveraging existing infrastructure
We deliver best in class after sales service, maintenance
plans and meaningful warranties for our clients
providing further piece of mind with the sale of
our product
Our design principles are based on affordability. We
are focused not only on designing a residential unit or
scheme that complies with regulatory rules but we also
consider affordability in the locality in the context of the
macroprudential rules.
At  we are committed to placemaking for
our customers. We consider the architecture and
bio-diversity of the surrounding environment to ensure
we are representing this appropriately in our schemes.
Our aim is to ensure our schemes fit in with the natural
surrounding environment whilst leveraging public open
space and the existing infrastructure.
Customer Focused Access to housing
Innovative and sustainable design
Customer service
White Board Meeting
White board meetings are completed on each
site at the beginning of every day to agree
a safe plan of action for the day's activities.
Every supervisor on site must attend these
meetings. The objective of the meetings is to
identify the hazards and risks associated with
each area of work on the site. Examples of the
topics discussed include:
• Interaction with sub-contractors
• Alterations to scaffolding
• Safeguarding of excavation and deliveries
• Crane setup
The white board sessions are also an
opportunity for any other challenges or
concerns to be brought forward by supervisors
and addressed.
“Every morning on site we would have
white board meetings where all trades
would come together and discuss what
was happening during the day in terms
of what each trade is doing. We would
all be co-ordinated together to make sure
safety is at the top of the list. Everybody
would be made aware of what is going
on around the site in terms of machinery
moving around and what is the highest
risk for that day. I think it is very
important because once employees are
safe and understand what they're doing
I think everything works better.”
(Alan Cribben - MD, Alan Cribben Electrical Ltd.)
Case Study
46 
Cluain Adain
Navan, Co. Meath
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48  49
Business Model & Strategy ESG Report
Supply Chain Sustainable offsite manufacturing
Material certification
Supply payment terms reflect
sub-contractor partnership mentality
Materials suppliers
 takes a partnership approach with our
supply chain through emphasising the ability to provide
suppliers with a clear roadmap of annual targets and
multi-phase projects. This gives suppliers the confidence
and line of sight to allow them to scale their business in
a stable and secured way.
To mitigate the effect of restricted credit within the
system we have taken the decision to centrally procure
a large majority of the high value items required for
the construction process such as heat pumps, sanitary
ware, insulation and plasterboard so as minimise the
administration for sub-contractors.
There are many advantages of maintaining a substantial
approved supplier base from ensuring healthy
competition during our procurement process with a
view to minimising cost price inflation to facilitating our
scale and having the ability of opening multiple sites
simultaneously. In addition to ensuring that the best
price is achieved  also focuses on ensuring
the suppliers we partner with are only suppliers that are
aligned with our values and our sustainability agenda.
Our substantial approved subcontractor base and
the utilisation of our MEAT (Most Economical
Advantageous Tender) analysis ensures that we
achieve this Utilising our MEAT analysis process we
ensure that we are assessing a range of competencies
of suppliers including:
• health and safety;
• resources and ability to meet program;
• product and materials sourcing; and
• quality standards
 are constantly innovating our design,
operations and materials principles to push further beyond
current building regulation to ensure our environmental
agenda is central to all developments in the business.
For example, we are now focused on “beyond-NZEB
(Nearly Zero Energy Building)” standards in the product
we are delivering. The key to us building to this standard
is attention to detail during the design and construction
process and the use of renewable technologies in our
homes, for example heat pumps.
We use heat pumps as standard as a renewable
source of energy production in our homes. This is an
environmentally sustainable form of energy generation
while also offering a convenient system of heating
the home for our consumers. The holistic approach
we take to our overall development process to include
our insulation measures, air tightness detailing and
quality of materials results in our homes deriving their
considerably reduced energy demand solely from a
renewable generator, the heat pump.
 understands that we are uniquely positioned
to be a leader in environmental sustainability for the
construction industry in Ireland. To achieve this we
embed in the business greater awareness and training,
accountability and responsibility in our actions and
measuring and reporting of our progress to ensure
sustainable environmental targets are achieved.
Environmental practices being implemented in 2020
including the implementation of ISO 14001 that
specifies requirements for an effective environmental
management system and ISO 45001 related to
Occupational Health and Safety. Carbon reduction
projects including a strategy to move towards electric
vehicle usage within the business, associated mileage
reduction and establishing a baseline for carbon
footprint. In addition,  work with accredited
waste recycling services to ensure that our targets for
reduction in landfill and increase in recycling targets
are achieved.
Environmental Priorities NZEB buildings
Energy demand supplied from
renewable energy
Construction waste recycled or reused
Our ability to bulk buy and enter into long term
agreements has multiple benefits:
• higher quality material at a very competitive price
ultimately providing a better product for our clients;
• ability to accurately control material costs for
the duration of projects by minimising material
inflation;
• assist in streamlining operations for our suppliers
by reducing the number of spares they may have to
carry and coordinating deliveries ultimately driving
better value; and
• ultimately we can maintain and manage a
sustainable supply chain as we grow.
By centralising our procurement, we get the benefit
of a portfolio focused procurement strategy and
avoid a silo approach from each site. We can ensure
consistency on-site by standardising the products
reducing coordination issues, and streamlining
training requirements. We can coordinate and manage
logistics ensuring just in time deliveries and minimise
our carbon footprint by mitigating against multiple
deliveries. With a view to growing our supplier network
and providing local employment where possible we
work with local suppliers.
“They are very competent at
what they do. They adopt a very
professional attitude and we enjoy a
close working partnership with, their
procurement team and site personnel.
When we have that knowledge of
the 20 sites and more to come it
allows us to also achieve economies
of scale so that we can deliver cost
savings. When you’re dealing with
one procurement team you build
close working relationships, and an
understanding of each others work
practices, requirements and style.”
(Rory O’Hanlon – MD, Davies Ltd, Grafton Group)
Bellingsmore
Kilmartin, Co. Dublin
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Business Model & Strategy
50  ESG Report
Case Study
Our Subcontractor Partners
Our multi phase approach to projects gives
sub-contractors the confidence to scale their business
as they have line of sight of our annual targets and
deliveries. Our centralised procurement approach
reduces the credit risk and provides security to
subcontractors to plan and grow their own businesses.
Knowing that  has the ability to pay, and
pay on time, gives our subcontractors the security to
plan and grow their own businesses. This mitigates
against subcontractors requiring expensive sources
of finance like invoice discounting and helps to ensure
that our partners not only meet but exceed our
requirements including Health, Safety, Environment,
Program, and Quality.
Our subcontractors now understand the 
Way. These are our standardised processes and
procedures that we utilise across our sites including:
• site set up;
• health safety and environmental requirements;
• procurement and valuations processes; and
• logistics planning and coordination meetings.
By ensuring consistency across our sites our
expectations and requirements are clearly set out and
our required standards achieved.
By utilising our value proposition we have and
continue to attract a significant number of competent
sub contractors. In the period from October 2018 to
December 2019 alone we have been able to add 191
partners to our tendering process.
Infrastructure
Sub-structure
Super-structure
Timber-frame
Mechanical
Electrical
Top Packages
on Site
Our Subcontractors want to work for 
Increasing number
of subcontractors
available for each
package offered
Track record now
established by high
performing cohort
No single contractor
reliance
Commentary
New Subcontractor
Additions
Flight of contractors to  makes new site openings easier and reduces CPI
230
180
130
80
30
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
191 newly approved
subcontractors
since October 2018
“When I first started in 2014 it was myself and another engineer so working
with  the last couple of years has allowed me to grow, has allowed
me to employee people. When I’m planning with , I’m planning not
just for this year, but next year and the following year and a lot of the projects
I would be working on would be three year programmes because there are
only so many houses you can deliver in a year on a particular site. So for me
there’s safety when I’m talking about employing somebody I say here’s the
project and this is a three year project so if you stay with me I know we’re ok
for the next couple of years from a financial point of view.”
(Paul McGrail – Director, Paul McGrail Consultant Engineers)
Taylor Hill
Balbriggan, Co. Dublin
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52 
Governance
Quality
For more on
customer testimonial
See page 27
We looked around at
quite a number of places,
different developments
and different sized houses
and we just kept coming
back to this because of
the quality of build.”
Shay and Thelma Kearney
(Customers at Cois Glaisin)
“
Marina Village
Greystones, Co. Wicklow
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Governance Corporate Governance Report
Governance
Early in 2019, we announced that Caleb Kramer had
informed the Board of his intention to retire as a
Non-Executive Director and confirmed that he would
not seek re-election at the AGM. Mr Kramer had
been appointed to the Board at IPO pursuant to
the relationship agreement then in place between
the Group and Oaktree Capital Management.
The Remuneration and Nomination Committee
commenced the process, assisted by the engagement
of independent executive search firm Korn Ferry, to
identify and select suitable candidates with the stated
intention of appointing at least one new independent
Non-Executive Director during the year. Following a
considered appointment process, we were delighted to
welcome Pat McCann and Cara Ryan to the Board in
September 2019.
We later announced the appointment of an additional
Executive Director to the Board, our Chief Financial
Officer Michael Rice. Michael has been engaged as
the Group’s Chief Financial Officer since IPO in October
2017 and has responsibility for the Group’s finance,
commercial, treasury and IT functions. He has proved
to be a valuable addition to the Board since his
appointment in November 2019.
One of my responsibilities as your Chairman is to ensure
that the Board is performing effectively. There are now
eight members of the Board, including myself, and we
are comprised of three executives and five independent
non-executives. Each member contributes a combination
of skills, experience and knowledge to the Board and
provides constructive challenge, strategic guidance and
specialist advice to management. The positive impact of
the addition of new members to the Board in 2019 and
the increased effectiveness of the updated structure and
composition of the Board were reflected in the results
of our second annual self-evaluation. Further detail in
relation to the review process and outcomes can be
found at page 60.
The Board is grateful for the support of our shareholders
and we will continue to engage regularly with you to
ensure that we understand your views on governance
and performance against strategy. We particularly
appreciate the feedback received from a number of
our large shareholders during the Remuneration and
Nomination Committee’s consultation on remuneration
policy and plans for 2020, which is set out in more detail
in the Committee's report on pages 68 to 85, and the
strong turnout from shareholders at our first Investor
Day held in January 2020.
Together with my colleagues on the Board, I am looking
forward to the continued growth of our business in 2020
and I would like to thank all of our colleagues across the
Group for their contribution to the significant progress
made in 2019.
John Mulcahy
Chairman
John Mulcahy
Chairman
The Board remains committed to ensuring that
 meets the highest standards of corporate
governance. We have closely monitored the
developments in corporate governance following the
publication of the new 2018 UK Corporate Governance
Code (the “Code”) and we have given detailed
consideration to the adjustments that were required
within our governance structures to meet the changes
introduced by the Code from 1 January 2019.
In this Corporate Governance Report we describe how
we have applied the principles and provisions of the
Code and the Irish Corporate Governance Annex (‘the
Annex”) which underpin the corporate governance
framework for listed companies and, in line with its
‘comply or explain’ model, we detail any departures
from its provisions.
The Board recognises that, in addition to its own
activities, the work of the Board committees is central
to ensuring the robustness of the Group’s corporate
governance framework. Our Board committees have
continued to work effectively during the year and
reports from the Audit and Risk Committee and the
Remuneration and Nomination Committee are set out
at pages 62-67 and 68-85 respectively, providing details
of each committee’s membership and activities during
the year.
As previously announced, there were a number of
changes to the executive leadership of the Group and
to the membership of the Board during the course of
2019. Justin Bickle stepped down from his role as Chief
Executive Officer of the Group and resigned from the
Board in August 2019. Justin was succeeded as Chief
Executive Officer by Stephen Garvey, previously the
Chief Operating Officer and a Co-Founder of the
Group. Justin and Stephen worked closely with the
Board and the Group’s senior management team in the
following months to ensure a smooth transition.
Introduction
from the
Chairman
Dear Shareholders,
I am pleased to
present the Corporate
Governance Report for
2019, our second full
year of operations at
.
The Board remains
committed to ensuring
that  meets
the highest standards
of corporate governance.
Proby Place
Blackrock, Dublin
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56 
Board Leadership
and Purpose
Purpose & Culture
The Group’s overarching purpose is the provision
of access to high quality, energy efficient homes in
flourishing communities across Ireland.
The Group has positioned itself as ‘Home of the New’
in Irish residential development, not only in how it builds
energy-efficient, high quality homes but in how it selects
land and partners, how it plans on land, how it fosters
and embeds relationships with communities and how it
utilises technology to innovate in delivery.
The Group has a clear vision to create the leading and
most sustainable homebuilding platform in Ireland and
it recognises and reinforces the pivotal role played by its
people in achieving its aims. To this end, the Group has
developed a culture that is safety-led, customer-centred,
collaborative and innovative.
The Board is committed to ensuring the continued
alignment of the Group’s strategic decisions with
its purpose and culture, through both the setting of
non-financial KPIs in Health and Safety and Customer
Satisfaction and through its regular assessment of policies
and practices across the business. The Board supports
and encourages two-way communication with the
workforce and has established formal channels for the
workforce to raise any matters of concern directly.
Role of the Board
The Board is responsible for setting and guiding the
strategic direction of the Group, understanding the key
risks faced by the Group, determining the risk appetite
of the Group and ensuring that a robust internal
control environment and risk management framework
is in place. The Board has overall responsibility
for the management of the Group’s activities and
is accountable to shareholders for creating and
sustaining shareholder value and for the long-term
success of the Group.
There is a clear division of responsibilities within the
Group between the Board and executive management.
Responsibility for day-to-day running of the Group’s
operations is delegated by the Board to the Executive
Committee, with the Board reserving to itself a formal
schedule of matters over which it retains control. To
assist in discharging its responsibilities, the Board
has established an Audit and Risk Committee and a
Remuneration and Nomination Committee. The terms
of reference for each of the Board Committees and
the schedule of matters reserved for the Board are
reviewed on an annual basis and made available on
the Group’s website.
Engagement with Shareholders
The Board recognises the importance of effective
engagement with, and active participation from,
its shareholders and is committed to building and
maintaining successful shareholder relationships through
regular and transparent communication.
This commitment is formalised through the Group’s
comprehensive investor relations program. In addition
to the detailed presentations and roadshows conducted
after the announcement of interim and full-year results,
the Chief Executive Officer, Chief Financial Officer
and the Director of IR & Strategy regularly meet with
institutional investors and analysts throughout the year
and participate in a number of industry conferences.
In addition, the Chairman and Senior Independent
Director are also available to meet with shareholders on
request, should they have any issues or concerns that
cannot be resolved through the usual IR channels.
The views of shareholders are communicated to the
Board through the Executive Directors and they receive
monthly updates on institutional shareholder meetings,
broker reporting and general market commentary from
the Director of IR & Strategy, all of which assists the
Board in understanding and taking account of the view
of shareholders.
Annual General Meeting
The Annual General Meeting gives shareholders an
opportunity to hear a presentation on the Group’s
activities and performance during the year, to ask
questions of the Chairman and, through him, the Board
Committee Chairmen and members, and to vote on
each resolution put to the meeting.
The AGM also provides the Board with a valuable
opportunity to communicate with private investors and
 encourages all shareholders to attend the
meeting each year and to put forward any questions
that they may have to the Directors at the conclusion of
the formal business of the meeting.
The AGM will be held on 19 May 2020 at Herbert Park
Hotel, Ballsbridge, Dublin 4.
Workforce Engagement
The Board is committed to meeting its responsibilities
to all stakeholders in the business and places
significant value on the maintenance of successful
relationships with the Group’s workforce, suppliers,
customers and the communities in which it operates.
Following the introduction of the new Code, the Board
gave detailed consideration to its existing stakeholder
engagement structures and identified key actions to
further develop meaningful, two-way dialogue with the
Group’s workforce.
During 2019, the Board assessed and reviewed the
engagement activities already taking place within the
business through the externally facilitated Great Place
to Work Trust Index Employee Survey and Culture Audit.
Following careful consideration, the Board elected to
designate a Non-Executive Director as responsible for
gathering the views of the workforce, noting that the
existing workforce-led Great Place to Work employee
committee would provide a complementary mechanism
through which the new Workforce Engagement Director
would effectively engage with the workforce.
Following her appointment as Workforce Engagement
Director, Cara Ryan worked with the Company
Secretary and the Head of HR to develop a method
for connecting the pre-existing Great Place to Work
Committee’s engagement activity with decision-
making in the boardroom. The employee-led Great
Place to Work Committee is composed of workforce
representatives from across the Group’s office locations
and sites and it meets on a regular basis throughout
each calendar year to review the results of the annual
Great Place to Work survey and develop proposals to
management to address key themes arising from the
survey. As Workforce Engagement Director, Cara Ryan
meets with the Great Place to Work Committee at key
intervals in the Group’s workforce engagement calendar
and delivers succinct and accurate feedback both up-to
and back-from the Board.

Properties plc
Board
Executive
Committee
Audit & Risk
Committee
Remuneration
& Nomination
Committee
Corporate
Governance
Report
The Corporate Governance Report, in conjunction with the Audit and Risk Committee Report and the Remuneration
and Nomination Committee Report, describes how the Group has applied the principles and followed the provisions of
the new 2018 UK Corporate Governance Code (the “Code”) and the Irish Corporate Governance Annex (“the Annex”)
and details any departures by the Group from the specific provisions of the Code and the Annex. The full text of the
Code and the Annex can be obtained from the following websites respectively:
www.frc.org.uk
www.euronext.com
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Governance Corporate Governance Report
The Board recognises the importance of communication
and ‘reporting back’ to the workforce, to demonstrate
that it has listened to and acted upon feedback, and
the Board is committed to continuing to build upon its
engagement activities and strengthen its relationship
with the workforce over the course of 2020.
Conflicts of Interest
The Board considers potential conflicts of interest as a
standing agenda item at each meeting and a Conflicts of
Interest Register is maintained by the Company Secretary,
setting out any conflicts of interest which a Director has
disclosed to the Board in line with their statutory duty.
The Group has established a comprehensive Conflict of
Interest Policy and, in line with that policy, each Director
reviews the Conflict of Interest Register and provides an
updated declaration of interests form to the Company
Secretary on an annual basis.
Division of
Responsibilities
Chairman and Chief Executive Officer
The roles of the Chairman and the Chief Executive
Officer are clearly segregated and the division of
responsibilities between them is set out in writing and
reviewed by the Board on an annual basis.
The Chairman, John Mulcahy, is responsible for
leadership of the Board, promoting its effectiveness in
all aspects of its role and ensuring its key duties are
discharged to an acceptable degree. The Chairman
ensures that the Board members receive accurate and
timely information, enabling them to play a full and
constructive role in the development and determination
of the Company’s strategy. He is responsible for creating
an environment which encourages open dialogue and
constructive challenge, and he ensures that there is
effective communication with the shareholders.
The Chief Executive Officer, Stephen Garvey, is
accountable to and reports to the Board and is
responsible for running the Group’s business. He is
charged with the execution of agreed strategy and
implementation of the decisions of the Board, with
a view to creating value for shareholders and the
wider stakeholder base. The Chief Executive Officer is
ultimately responsible for all day-to-day management
decisions, acting as a direct liaison between the Board
and management and communicating to the Board on
behalf of the Group’s external stakeholders.
Senior Independent Director
Lady Barbara Judge is the Senior Independent Director
of the Group. She is available to shareholders who
have concerns that cannot be addressed through the
Chairman or Chief Executive Officer and will attend
meetings with major shareholders as necessary. The
Senior Independent Director acts as a sounding board for
the Chairman and serves as an intermediary for the other
Directors as necessary. She is also responsible for leading
the annual performance review of the Chairman.
Non-Executive Directors
Of the eight Board members, five are independent Non-
Executive Directors. The Group’s Non-Executive Directors
have a key role in the appointment and removal
of Executive Directors, and the assessment of their
performance. The Non-Executive Directors constructively
challenge and debate management proposals and
hold to account the performance of management and
of individual Executive Directors against the agreed
performance objectives.
The Non-Executive Directors have direct access to the
senior management team within the Group and contact
with the business is encouraged by the Board and
assists the Non-Executive Directors in constructively
challenging management and offering advice and
guidance on strategic decisions.
Company Secretary
The Company Secretary, Chloe McCarthy, supports the
Chairman and the Chief Executive Officer in fulfilling
their duties and is available to all Directors for advice
and support. She is responsible for ensuring compliance
with Board procedures and for the Group’s commitment
to best practice in corporate governance. The Company
Secretary is also responsible for ensuring compliance
with the Group’s legal and regulatory requirements.
Independence
Provision 9 of the Code prescribes that the Chairman
should be independent on appointment. The Board is of
the collective belief that John Mulcahy’s ongoing role as
Executive Chairman enables him to bring his extensive
knowledge and experience of the Irish residential
housing market to his leadership of the Board. The
Board continues to believe that John’s commitment and
contribution as Executive Chairman is essential to the
effective leadership of the Board and the Group as
it implements its ambitious growth strategy following
admission to trading in October 2017.
Given the Board’s unanimous decision to appoint
an Executive Chairman, and its collective preference
for John Mulcahy to continue in his role, the Senior
Independent Director remains willing and available to
assume additional responsibilities, as required. There
also continues to be a clear division of responsibilities
between the Chairman and the CEO. As such, the
Board remains satisfied that no one individual or group
has dominated its decision making and that there has
been sufficient challenge of executive management in
meetings of the Board.
The independence of each of the Non-Executive
Directors is considered on appointment, and on an
annual basis by the Board. The Board has reviewed
the independence of all Non-Executive Directors and
determined that they continue to be independent within
the provisions of the Code.
The Board gave detailed consideration to the
independence of Robert Dix and Pat McCann, given
that Robert Dix is currently a Non-Executive Director
of Dalata Hotel Group plc where Pat McCann serves
as Chief Executive, and both currently act as Non-
Executive Directors at The Quinn Property Group. The
Board was aware of this relationship on appointing
Pat McCann to the Board in 2019 and concluded
that his experience, knowledge and skills in leading
and growing a company post-IPO would be of
immeasurable value to the Board and in the best
interests of the Group and its shareholders.
The Board is satisfied that Robert Dix and Pat McCann
have demonstrated objectivity and autonomy in both
character and judgement, irrespective of their pre-
existing relationship, and will continue to act objectively
and in the best interests of the Group.
Board Meeting Attendance
The Board convenes with sufficient frequency to ensure
the effective discharge of its duties during the year.
In 2019, the Board held seven formal Board meetings
with one additional full-day session covering strategy
and training.
The table below provides details of the attendance
record for all Board meetings held in 2019.
Meetings
held
while a
Director
Meetings
Attended
Attendance
Record
John Mulcahy 7 7 100%
Stephen Garvey 7 7 100%
Lady Barbara Judge 7 7 100%
Richard Cherry 7 7 100%
Robert Dix 7 7 100%
Cara Ryan 2 2 100%
Pat McCann 2 2 100%
Michael Rice 1 1 100%
Directors are expected to attend all meetings of the
Board and of the Committees on which they serve,
and the Annual General Meeting.
Time Commitment
The time commitment required of Directors is considered
on appointment, and on an annual basis by the Board.
All Directors are expected to allocate sufficient time to
discharge their duties effectively and confirm this as part
of the annual Board evaluation each year.
Each year, the schedule of regular meetings to be held
in the following calendar year is agreed with each of the
Directors. If a Director is unable to attend a scheduled
meeting, they are encouraged to communicate their
views on the relevant agenda items in advance to the
Chairman or the Company Secretary for noting at the
Board meeting.
Supplementary to its formal meetings, the Board
encourages its Non-Executive Directors to communicate
directly with both the Executive Directors and the senior
management team.
Composition, Succession
and Evaluation
Board Composition
There were a number of changes to the membership of
the Board in 2019, including the resignations of Justin
Bickle and Caleb Kramer and the appointments of Pat
McCann, Cara Ryan and Michael Rice.
The Board is now comprised of eight Directors: three
Executive Directors, including the Executive Chairman,
and five independent Non-Executive Directors. During the
annual Board evaluation process, the Board reviewed
the overall balance of skill, experience, knowledge and
independence of the Board and its Committees. The
Board is satisfied that it is of an appropriate size for
the requirements of the business and that the current
composition provides a suitable balance of skills and
experience across a number of industry sectors including
construction, property development, capital markets, legal
and financial services, which equip the Board members in
effectively discharging their duties to the Group and
its shareholders.
The Board is satisfied that the balance of Executive
and Non-Executive Directors is suitable to facilitate
constructive and effective challenge and debate.
Biographies of the Directors are set out on pages
86 to 88.
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Appointments to the Board
The Remuneration and Nomination Committee is
responsible for leading the process for new director
appointments and has established a formal, rigorous
and transparent procedure for the selection and
nomination of candidates to the Board.
All members of the Remuneration and Nomination
Committee are independent Non-Executive Directors
and the details of its nomination activities in 2019 are
set out in the Committee Chairman’s report at pages
68 to 85.
The Non-Executive Directors are appointed for a term
of three years, with no right to re-nomination by the
Board either annually or after the conclusion of the
three-year period. The terms of their engagement with
the Company as Directors are set out in formal letters
of appointment.
The Executive Directors have service agreements with
the Company, which provide for notice periods of six
months. Full details of the remuneration of the Directors
can be found at page 81.
All Directors will submit themselves for re-election at
the 2020 AGM.
Board Diversity
The Board has adopted a Board Diversity Policy,
intended to assist the Board, through the Remuneration
and Nomination Committee, in achieving optimum
Board and Committee composition.
The Board recognises the clear benefits of a diverse
Board including with regard to diversity of experience,
skills, background and gender and agrees that these
differences should be considered in determining the
optimum composition of the Board.
While all Board appointments are made on merit
and with regard to the skills and experience that the
Board requires to be effective, it is the Group's policy
to develop over time the diversity of its Board without
compromising the calibre of new directors.
The Remuneration and Nomination Committee review
the Board Diversity Policy annually, including assessing
its effectiveness and will discuss any revisions that may
be required, recommending any such revisions to the
Board for approval.
Following changes to Board composition in 2019,
female representation on the Board increased to 25%.
Female employees accounted for 25% of the senior
management, as defined by the Code, and 11% of senior
management direct reports. Further details on diversity
within the Group can be found on page 44 .
Directors’ Induction, Training
and Development
The Group has established a formal induction process
for new Non-Executive Directors, providing them with
a comprehensive understanding of their role and
responsibilities as Directors, the business of the Group and
the operations of the Board and allowing for the efficient
and effective integration of new Board members.
The induction of Non-Executive Directors is overseen
by the Chairman with the assistance of the Company
Secretary and includes meetings with respective
management teams in each of the Group’s business
lines and site tours of live construction projects. Newly
appointed Directors have access to the Company
Secretary’s assistance and guidance around the
workings of the Board, in addition to the experience
gained with attendance at regular meetings.
The Group is committed to the ongoing development of
the Board and all Directors receive regular updates on
the Group’s projects and activities and are encouraged
to attend site tours facilitated by the Executive Directors.
Directors also receive updates from the Company
Secretary on legal and regulatory changes.
In 2019 the Board held a full-day group strategy and
training session, designed to address topics of strategic
importance to the Group. Presenters on the day included
external advisors from the Group’s broker and corporate
law firm as well as the internal heads of department for
Construction, Sales and Land Acquisition.
Board Evaluation
The performance and effectiveness of the Board and
its Committees is reviewed on an ongoing basis and
is subject to a formal and rigorous evaluation on an
annual basis.
The annual review process for 2019 was conducted
internally and followed the approach and findings of
the previous year’s review. Led by the Chairman and the
Company Secretary, the annual review was conducted
by way of a comprehensive questionnaire developed
specifically for the Board and carefully structured and
designed to enable the Directors to identify any areas
for potential improvement in the processes of the Board
and its Committees.
The evaluation process began with the issue of
questionnaires to Directors for their consideration
and comment, with appropriate time provided for
completion. All Directors were also asked to complete a
self-evaluation questionnaire. Following the completion
of questionnaires, the Chairman met with Directors on a
one-on-one basis, inviting them to evaluate and comment
on the operation of the Board and its committees. The
Chairman and Company Secretary then met to discuss
the results of the evaluation process and a report was
submitted to the Board setting out the principal issues
raised and proposing appropriate actions for 2020.
As part of the annual Board evaluation process, the
independent Non-Executive Directors met with Lady
Barbara Judge as Senior Independent Director to review
the performance of the Chairman during the year. Lady
Judge later met with the Chairman to communicate
the feedback from that meeting and she formally
reported to the Board on the outcome of the Chairman’s
performance evaluation.
Having considered the results of the 2019 Board
evaluation in their totality, the Directors are satisfied
with the effectiveness of the Board and its Committees,
and with the performance and contribution of the
Chairman and the individual Directors.
The Board will conduct its first externally facilitated
annual review process for the year ending
31 December 2020.
Audit, Risk and
Internal Control
Audit and Risk Committee
The Board has established an Audit and Risk Committee
comprised entirely of independent Non-Executive
Directors.
The Audit and Risk Committee is responsible for
monitoring the integrity of the Group’s financial
reporting and the effective application of the Group’s
internal controls and risk management procedures.
The Board is satisfied that the combined qualification
and experience of the individual members provides the
Committee with the financial and risk management
expertise necessary to discharge its responsibilities.
A detailed overview of the key roles and responsibilities
of the Audit and Risk Committee and the work of the
Committee in discharging its responsibilities during
2019 is set out in the Committee Chairman’s report on
pages 62 to 67.
Internal Control and Risk Management
The Board recognises its ultimate responsibility for
establishing and maintaining Group procedures to
manage risk, oversee the internal control framework and
determine the nature and extent of the principal and
emerging risks that the Group is willing to take in order
to achieve its long-term objectives.
The Board confirms that a robust process for identifying,
evaluating and managing significant risks has been
in place for the financial year and up to the date of
approval of the Annual Report and financial statements.
Details of the annual assessment of the principal
risks facing the Group are set out in the Group's Risk
Management Report on pages 36 to 43.
The key elements of the Group’s system of internal
controls are as follows:
• A clearly defined organisation structure and lines
of authority;
• Group policies for financial reporting, treasury
management, tax, risk management, information
technology and security and site acquisition
and investment;
• Approval of annual budgets and strategic business
plans by the Board, with performance against
budgets and forecasts monitored and reported back
to the Board on a regular basis;
• An Audit & Risk Committee comprised of
independent Non-Executive Directors; and
• An independent internal audit function reporting
directly to the Audit and Risk Committee.
The preparation and issue of financial reports is
managed by the Group Finance Department in
accordance with Group accounting policies and
reporting systems, and under the direction of the Chief
Financial Officer. The interim and preliminary results
and the Annual Report and financial statements of the
Group are reviewed by the Audit and Risk Committee
and recommended for approval to the Board.
Remuneration
Remuneration and
Nomination Committee
The Board has established a Remuneration and
Nomination Committee comprised entirely of
independent Non-Executive Directors.
The Remuneration and Nomination Committee has
been delegated responsibility for determining Group
policy on executive remuneration and for setting
remuneration for the Chairman, Executive Directors and
senior management.
A detailed description of the work undertaken by
the Remuneration and Nomination Committee in
its assessment, development and application of the
Group’s executive remuneration policy is set out in the
Committee's Report on pages 68 to 85.
Non-Executive Director Remuneration
The remuneration of Non-Executive Directors is set on
appointment by the Board, on advice from independent
professional advisors, and is reflective of the time
commitment and responsibilities of their role.
The full details of fees paid to Non-Executive Directors is
set out on page 79.
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Governance Audit and Risk Committee Report
Robert Dix
Chairman
Audit and Risk Committee
On behalf of the
Committee, I am pleased
to present the Audit and
Risk Committee Report
for the financial year
ended 31 December 2019.
The Company has had a significant year of growth and
the Committee has continued to focus its efforts on
assisting the Board by proactively managing its core
areas of responsibility. This activity has been outlined
in detail on page 64 and is summarised below.
In March, the Committee reviewed the Director’s
statements on compliance, viability and going concern
from the 2018 Annual Report prior to recommending
approval of these to the Board. This review was revisited
as part of the approval of the condensed consolidated
interim financial statements in August.
In June, the Committee received a comprehensive
presentation from the Group insurance broker on the
Group insurance programme to satisfy the Committee
that the insurance policies in place remained appropriate
in the context of our current growth and future objectives.
As part of the June and December meetings the
Committee received presentations from and reviewed
the findings of internal audit in relation their reviews
of Project Management, IT security and change
management and Health and Safety.
In December, the Committee sought a presentation
from management on the successful ERP system
implementation during Q4 and a wider IT update to
satisfy the Committee that IT controls and security
remains effective within the Group.
With regard to the half year and year end financial
statements, the Committee is particularly focused on
the areas of the financial statements with which a high
degree of judgement and estimation uncertainty is
associated. The primary area of judgement reviewed
by the Committee is the carrying value of inventory and
profit recognition. The issue considered and activities
undertaken by the Committee are outlined on page
65. The underlying valuation models for inventory are
thoroughly scrutinised by the external auditors with
no disagreement in judgements used by the Company
being reported.
The risk register and the principal risks and uncertainties
faced by the Group outlined in the Risk Management
Report are a standing agenda point on all Committee
meetings. Discussions are focused on emerging risk
areas and existing risks where the risk rating has
increased or decreased significantly.
I am pleased to conclude that the Audit and Risk
Committee has met its obligations for 2019 and is
looking forward to further developing the Group's
risk management framework to respond to the
opportunities and challenges that 2020 will bring
as the Group continues to deliver on its strategic
objectives and 5 year plan.
Robert Dix
Chairman
Audit and Risk Committee
Audit and
Risk Committee
Report
Roles and
Responsibilities
The Audit and Risk Committee’s Terms of Reference, are
available on the Group’s website. The Terms of Reference
are reviewed annually and amended in line with any
future organisational changes to ensure they continue to
be fit for purpose.
At a high level, the duties carried out by the Audit and
Risk Committee relate to:
• Financial reporting;
• Risk management;
• Internal controls;
• Compliance; and
• Oversight of the Group’s relationship with the
external auditor.
These responsibilities are intended to be performed
in conjunction with the management team, Executive
Committee and internal/external auditors.
The key function of the Committee is oversight of the
Group’s internal control and risk management systems.
This involves the following responsibilities:
• Monitor the integrity of the financial statements of
the Company, including its interim management
statements, annual and half-yearly reports, and
any other formal announcement relating to its
financial performance reviewing and reporting to
the Board on significant financial reporting issues
and judgements which they contain having regard
to matters communicated to it by the auditor
• Review the content of the annual report and accounts
and advise the Board on whether, taken as a whole, it
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
company’s performance, business model and strategy
• Review the adequacy and effectiveness of the
Group’s internal controls including the systems
established to identify, assess, manage and monitor
risks and receive reports from management on the
effectiveness of these, including the conclusions
of any testing carried out by internal or external
auditors and other assurance providers
• Review the principal risks identified in the annual
report and the statements on the Group’s internal
controls and risk management framework
• Review and approve the risk management policy, the
Group’s risk register and appetite statement, prior to
submission to the Board for its approval
• Advise the Board on the Group’s current risk
exposures and future strategy for managing
such risks
• Review relevant risk reporting, including incident
breach reporting in order to assess the effectiveness
of the Group’s risk management process
• Other responsibilities of the Audit and Risk
Committee are set out in detail its Terms of
Reference which are available on the Group’s
website and are noted below.
(i) Integrity of the Financial Statements and
Announcements
(ii) Compliance, Bribery, Conflicts of interest,
Whistleblowing and Fraud
(iii) Internal Audit
(iv) External Audit
(v) Committee Effectiveness
Audit and Risk
Committee Composition
During 2019, the Audit and Risk Committee comprised
three independent non-executive Directors; Robert Dix
(Chairman), Richard Cherry and Lady Barbara Judge.
The biographies of these Directors can be found on
pages 86 to 88.
The Board believes that Committee members offer a
balanced suite of expertise, including financial expertise
and experience in the legal and property sectors.
Particularly, the Board considers that the Committee
Chairman has sufficient recent and relevant financial
experience for the role and that there is sufficient
financial and commercial experience within the Audit
and Risk Committee as a whole. This vast array of skills
enables the Audit and Risk Committee to carry out its
duties and responsibilities as detailed in the Committee’s
Terms of Reference.
Meetings
The Audit and Risk Committee have met on four
occasions during the financial year and there was full
attendance by all Committee members. The attendance
of Committee members is detailed in the table below.
On occasion, special attendees were invited to attend all
or part of Committee meetings as deemed appropriate
and necessary by the Committee Chairman.
The Committee meet with the internal and external
auditor without other executive management being
present, on an annual basis in order to discuss any
issues which may have arisen during the financial year.
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Governance Audit and Risk Committee Report
Committee
Member
In
Attendance
Committee
member as of
Robert Dix 4/4 2017
Richard Cherry 4/4 2017
Lady Barbara Judge 4/4 2017
Activities
2019 has been a year of significant growth and
development for the Group. The Group’s risk profile
continues to evolve as it works towards achieving its
strategic objectives and executing on its 5-year plan.
To respond and mitigate against risks as they emerge
or evolve, the Group implements a risk management
approach that is dynamic rather than static in nature.
Further detail in relation to the Group’s approach to
risk management is set out on pages 36 to 43. The
Group continues to embed risk management across
all levels and departments of the Group through a
top down approach with the tone being set by the
Committee, Board and senior management. Set out
below is a summary of the Committee’s activity during
the financial year.
Fair, Balanced and Understandable
The Board is responsible for the approval of the Annual
Report and financial statements. The Board is required
to confirm that:
• It considers the Annual Report and financial
statements, taken as a whole, to be fair balanced
and understandable; and
• It provides the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy.
At the request of the Board, the Committee considered
whether the Annual Report and financial statements for
the financial year met these requirements. To satisfy this
responsibility the Committee considered the following:
• the timetable, communications and co-ordinated
approach to the preparation of the Annual Report
and financial statements by senior management;
• the systematic and timely approach to review
and sign off with a focus on transparency and
understandability by senior management;
• the detailed presentation of the Annual Report
and financial statements to the Committee
by senior management outlining the process
undertaken to ensure the report is fair, balanced
and understandable;
• timely submission of the draft Annual Report and
financial statements to the Committee to facilitate
adequate review and discussion prior to approval
by the Committee; and
• the presentation by KPMG on their audit process
and conclusions reached on the Annual Report and
financial statements.
Having considered the above, the Committee confirmed
to the Board that the Annual Report and financial
statements taken as a whole, is fair, balanced and
understandable and provided the information necessary
for shareholders to assess the Group’s and the
Company’s financial position, performance, business
model and strategy.
Financial Reporting
The primary issue considered by the Audit and Risk
Committee in relation to the financial statements for the
financial year ended 31 December 2019 was the Group’s
assessment of the carrying value of inventory at the
reporting date and profit recognised on completed units
during the year.
Activity in 2019
Topic Description of activity
Financial Reporting The Committee assessed whether suitable accounting policies had been adopted in the
preparation of the results for the relevant period and whether management had made
appropriate estimates and judgements. In particular, the Committee focused on areas
that involved a significant level of judgement or complexity (as outlined in the financial
reporting section below). The Committee also considered the view expressed by the
external auditor, KPMG, in making these assessments.
During the financial year, the Committee reviewed and recommended the Group’s 2018
Annual Report and the financial statements for the half year ended 30 June 2019 to the
Board for approval.
The Committee considered the requirements of the Irish Companies Act 2014 in relation
to the Directors’ Compliance Statement and is satisfied that appropriate steps were
taken to ensure compliance by the Group with these requirements. The Committee also
considered the Group’s adoption of the going concern basis of preparation and its
viability statement prior to recommending both for approval by the Board.
Risk Management In respect of the 2019 annual report, the Committee considered the Group’s
risk management framework and the key business risks as disclosed in the Risk
Management Report as part of its review of the Group’s risk register.
The Committee received a presentation from the Group's insurance broker on the
Group insurance programme to satisfy the Committee that the insurance policies in
place remained appropriate in the context of our current growth and future objectives.
The Committee also sought a presentation from management on the successful ERP
system implementation during Q4 and a wider IT update to satisfy itself that IT controls
and security remain strong within the Group.
Internal Audit The Committee met representatives from the outsourced internal audit function
(Deloitte) throughout the financial year and reviewed reports, findings and
recommendations arising from the audits conducted.
The Committee also approved the planned programme of work for 2020.
External Audit The Committee met representatives from the external auditor throughout the financial
year both with and without management present.
During 2019, the Committee reviewed KPMG’s reports on the 2018 audit and their
interim review for the six months ended 30 June 2019. It also reviewed and approved
KPMG’s audit plan in respect of the audit for the year ended 31 December 2019.
Significant Issue Considered Committee Activity
Carrying value of inventory and profit recognition
The carrying value of the Group’s inventory was
€840.5m at 31 December 2019 which comprises the cost
of development land and development rights acquired,
and the costs of the work completed thereon to date.
Inventory is required to be carried at the lower of cost
and net realisable value.
At financial year end management undertook an
exercise to assess the net realisable value of the
inventory balance in order to assess the carrying value
at that date. There is a significant level of judgement
involved in this exercise which includes a review of
future cash flows associated with each individual site in
order to validate current profitability projections which
are also the key determinants of profit recognition as
sales complete. The exercise indicated no evidence of
impairment and therefore no adjustment to the carrying
value was required at 31 December 2019.
Management presented a summary of its review to the
Committee which included information in relation to the
cross functional approach taken to the net realisable
value calculations, its policy for profit recognition
on completed units as well as the review process
undertaken by senior management. Management’s
presentation included a summary of the results of the
review for each development site with key assumptions
highlighted for discussion.
The Committee considered the financial year end
approach to the inventory carrying value review and
discussed same with management. It also considered
the external auditor’s findings in respect of the carrying
value review which supported management’s assertion
that no impairment was required.
Based on the results of the process undertaken by
management, the Committee was satisfied with the
carrying value of inventory at year end and the profit
recognised in the consolidated statement of profit or
loss on units closed in 2019.
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Governance Audit and Risk Committee Report
Internal Audit
The Committee is responsible for the scope and
operation of the internal audit function. The Committee
approves and monitors the planned work of internal
audit considering any identified ineffective controls and
findings. The Committee places a particular focus on
control weaknesses and the remediation plans put in
place by management.
The Committee met representatives from the
outsourced internal audit function (Deloitte) on four
occasions during the financial year and considered
the reports from the internal audit function on their
reviews of project management, IT security and change
management and Health and Safety. The Committee
has also approved the planned programme of work
for 2020.
External Auditor
KPMG is the external auditor of the Group. The
Audit and Risk Committee considers and makes
recommendations to the Board, to be put to
shareholders for approval at the AGM, in relation
to the appointment, re-appointment or removal of
the external auditor. KPMG attended each of the
Committee meetings in 2019.
During the year, the Committee was informed of lead
audit partner Ruaidhri Gibbons’s intention to step down
following the completion of the 2019 half year review,
to be replaced by Michael Gibbons. This transition took
place in Q3 ahead of the year end audit.
Audit effectiveness
The effectiveness of the external audit process is
assessed by the Audit and Risk Committee, which
meets regularly throughout the financial year with the
audit partners. In conducting this review, the Audit and
Risk Committee concluded that the audit process as a
whole had been conducted robustly and that the team
selected to undertake the audit had done so thoroughly
and professionally.
In assessing the independence and objectivity of
the external auditor, the Audit and Risk Committee
considered the internal processes which the External
Auditor has in place to ensure their independence
and objectivity is monitored and reviewed sufficiently.
Further, the Audit and Risk Committee considered
senior management’s satisfaction with KPMG. The
Committee also meets regularly with KPMG without the
presence of management.
Auditor independence and non-audit services
KPMG have formally confirmed their independence to
the Audit and Risk Committee. In order to further ensure
independence, the Committee has a policy on the
provision of non-audit services by the external auditor
that seeks to ensure that the services provided by the
external auditor are not, or are not perceived to be, in
conflict with auditor independence. Analysis of fees paid
or payable at in respect of services provided by KPMG
in the financial year are analysed in the table below:
€ ‘000
Audit fees 120
Non-audit fees
Interim review fees 15
Tax services fees 50
Total 185
At the end of the financial year, non-audit fees paid to
KPMG represented 54% of total audit fees.
It is the Group’s practice to engage KPMG on
assignments in addition to their statutory audit duties
where their expertise and experience with the Group
are important. KPMG provided certain tax services in
the financial year which were considered and deemed
appropriate by the Committee.
The Committee has approved a policy on the use
of the external auditor for non-audit services and
continually monitors the ratio of audit to non-audit
fees, acknowledging the legislation which will apply
to the Group from 2020 onwards requiring fees for
non-audit services to be capped at 70% of the average
statutory audit fee over the previous 3 year period.
Further, in reviewing non-audit services provided by
the external auditor, the Committee considers whether
the non-audit service is a permissible service under the
relevant legislation and any real or perceived threat
to the external auditor’s independence and objectivity
to include, among other considerations, a review of:
the nature of the non-audit services; whether the
experience and knowledge of the external auditor
makes it the most suitable supplier of the non-audit
services; and the economic importance of the Group
to the external auditor. The policy on the supply of
non-audit services includes a case by case assessment
of the services to be provided and the costs of the
services by the external auditor considering any
relevant ethical guidance on the matter.
The effectiveness of the external
audit process is assessed by
the Audit and Risk Committee,
which meets regularly throughout
the financial year with the
audit partners.
Barnhall Meadows
Leixlip, Co. Kildare
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Governance Remuneration & Nomination Committee Report
2019 was a year of significant change at Board level
for . The Committee’s work during the year
included agreeing the appropriate remuneration
package for Stephen Garvey in his new role as Chief
Executive Officer and the resignation arrangements
for his predecessor, Justin Bickle. The Committee also
recommended the appointment of Michael Rice (Chief
Financial Officer), to the Board, and identified and
recommended to the Board the appointment of two new
Non-Executive Directors, Pat McCann and Cara Ryan.
To ensure ongoing alignment with ’s strategy,
regulatory developments and the views of leading
investors, during the year the Committee undertook
a detailed review of the Remuneration Policy for the
Executive Directors with the assistance of external
advisers. The outcome of this review is set out below.
The Committee is confident that the changes to
the Remuneration Policy and the way it will be
implemented in 2020 results in an approach to
executive remuneration which is appropriate from
an external perspective, taking into account practice
at other comparable companies and the views of
’s major shareholders. The Committee
also believes that pay for the Executive Directors is
appropriate in the context of remuneration practices
across the Company more broadly, both in terms of
pay levels and incentive structures.
Richard Cherry
Chairman,
Remuneration and Nomination Committee
Remuneration
& Nomination
Committee
Report
Dear Shareholder,
I am pleased to present
the Remuneration
and Nomination
Committee report for
the financial year ended
31 December 2019 which
provides a summary
of the activities of the
Committee during the
financial year.
2019 Performance
2019 has been another year where the Group has
outperformed our IPO targets and continued to focus
on increasing our operational scale.  is
now benefiting from efficiencies and has the platform
in place to maximise returns for our shareholders by
focusing on achieving our increased output guidance
and monetising our landbank.
Incentive Outcomes for 2019
In light of the above performance, the Committee has
agreed annual bonus payments between 72% and 75%
of the maximum available opportunity for the Executive
Directors for 2019. This reflects the Directors’ achievements
against challenging performance targets across a range
of financial and non-financial metrics.
Details of the bonus targets in place for the year and
the level of achievement against them are set out on
page 82 with the Committee providing greater levels of
information this year to reflect governance best practice).
Review of the Remuneration Policy
The Committee’s intention in reviewing the
Remuneration Policy was to ensure that 
has appropriate structures in place to incentivise and
reward management in the next phase of the Group’s
development, while also being cognisant of corporate
governance best practice and the views of investors.
After developing a series of proposals for the revised
Policy, the Committee conducted a consultation exercise
with major shareholders and leading proxy advisers and
was pleased with the broad support received from those
consulted on the direction of travel.
Full details of the new Remuneration Policy are included
in this Report on pages 75 to 79. The Policy continues
to include a mix of fixed and variable remuneration,
with incentives provided through short and long-term
schemes. The key changes to the previous approach are
explained below:
• The existing annual bonus scheme works well in
incentivising outperformance against various key
performance indicators, and so its basic structure
has been retained. However, the amount payable for
target performance has been reduced from 70% of
the maximum (67% for the Executive Chairman) to
50%, recognising general shareholders views on this
issue. We have also introduced appropriate recovery
provisions to give the Committee the ability to claw
back bonuses if required in specific circumstances.
Bonuses will continue to be paid in cash, although
the Committee will keep under review whether it
would be appropriate to require a portion of any
cash bonus to be invested in  shares.
• The Long-Term Incentive Plan (LTIP) is now explicitly
included within the Remuneration Policy, taking
into account the participation of the CFO in this
plan. The CFO received LTIP awards prior to his
appointment to the Board and he will continue to
receive regular annual awards going forward. The
performance metrics for the 2020 award (which differ
from the approach adopted in the past to ensure
continued alignment with ’s strategy) are
set out below. Due to the ongoing participation of
the other Executive Directors in the Founder Share
Scheme (which was established prior to ’s
IPO), they will not receive LTIP awards in 2020. As the
Founder Share Scheme moves towards the end of
its life, the Committee will give further consideration
to the best long-term incentive opportunities to
provide to the Executive Chairman and the CEO.
Any proposals will be the subject of consultation with
major shareholders at the relevant time.
• From 2020, Executive Directors granted LTIP awards
will be required to retain any shares that vest for
a minimum period of at least two years following
vesting (other than shares which are sold to pay
tax). This is in line with the provisions of the 2018
UK Corporate Governance Code and the views of
many leading shareholders.
• Consistent with standard practice for companies
of ’s size, the Committee has introduced
a requirement for Executive Directors to build a
shareholding equivalent in value to 200% of basic
salary. Taken together with the other changes
set out above, this significantly strengthens the
alignment between Executive Directors and
shareholders. As such, and recognising that the
new LTIP holding period continues to apply for
awards held by any leavers, the Committee has
decided not to go further at this stage and has
not introduced an additional requirement for
shares to be held for a set period of time following
termination of employment. However, this matter
will be kept under review as market practice and
investor expectations continue to develop.
• The Policy permits Executive Directors to receive an
annual Company pension contribution up to a level
of 15% of basic salary, with contributions above
5% depending on the extent of the individual’s
personal contributions. These arrangements are
consistent with those in place for senior executives
below Board level and are also in line with the
wider market. However, the Committee recognises
that investors are increasingly keen on pension
provision for Executive Directors to be aligned
with that of the wider workforce, and this issue will
therefore be kept under review as it relates to the
existing Directors. That said, for any new Executive
Director, the Policy specifies that their contribution
rate will be set in line with the rate attributable to
the majority of the wider workforce.
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Governance Remuneration & Nomination Committee Report
• The Founder Share Scheme is no longer
considered part of the formal Remuneration Policy.
The Scheme reflects the rights of the Founder
Shares as a specific class of shares in the share
capital of the Company, as set out in ’s
Memorandum and Articles of Association. The
Remuneration and Nomination Committee does
not have the ability to amend these rights. As
such, the Committee believes that the Founder
Share Scheme is not a long-term incentive scheme
in the conventional sense and should not be
treated as part of the Remuneration Policy. The
Scheme will continue to run its course and details
of its operation – including any shares converted
in accordance with the terms and conditions of the
Scheme – will be included in future Remuneration
and Nomination Committee Reports. Full details
of the current status of the Scheme are set out on
page 85 of this year’s report.
Other Committee Activity in 2019
In addition to the review of the Directors’ Remuneration
Policy, during 2019 the Committee considered in detail
the remuneration policies and incentive schemes in
place for colleagues across  more broadly.
Over the course of the year, the Committee placed
particular focus on Board development and
succession planning. As part of its nomination duties,
the Committee undertook a formal and rigorous
recruitment process to identify additional independent
Non-Executive Directors with the necessary skills and
experience to strengthen the Board’s composition as the
Group continues to scale its operations. The Committee
also supported the Board Chairman in ensuring that
succession requirements were carefully considered in
the appointment of a new Chief Executive Officer and a
new Executive Director during the year. Further details in
relation to the Committee’s nominations activity in 2019
are set out at page 72.
In carrying out its duties during the year, the Committee
met and consulted with specialist external advisers,
members of the Executive Committee and members of
the wider management team on a number of occasions.
Remuneration for 2020
Full details of the operation of the Remuneration Policy
for 2020 are set out later in this Report. In brief, there
are no changes to the basic salaries of the Executive
Directors or any other aspect of their fixed remuneration.
The annual bonus scheme will operate in a similar
fashion as in 2019, albeit with a reduction in the amount
payable for target performance (as noted above). The
performance metrics used in 2019 – which remain central
to the achievement of ’s strategic goals in
the short-term – will continue to apply. The Committee
acknowledges that some shareholders have expressed a
preference for a return on capital employed metric to be
included in the bonus scheme, and this will be kept under
review for future years.
For the LTIP, the Committee will grant an award to the
CFO at a level of 100% of his basic salary. For half of
this award, performance conditions based on absolute
total shareholder return (TSR) will apply. TSR directly
aligns rewards for management with the returns to
 shareholders and is a reflection of the
success or otherwise of 's chosen strategic
path. For the other half, targets based on growth in
’s earnings per share (EPS) will be introduced.
This is an important measure of profitability which
acts as a gauge of how well  has followed
through on its targeted growth strategy across the
different business segments. It also ensures that a
meaningful proportion of the LTIP relates to a parameter
over which the CFO (and other LTIP participants) has
direct line of sight. The specific targets for both the TSR
and the EPS metrics are set out on page 83 and 84. As
noted above, the Executive Chairman and the CEO will
not receive an LTIP grant in 2020.
Following the appointment of two new independent
Non-Executive Directors in late 2019, the Committee
will continue to oversee the induction of the newest
members of the Board during 2020. Throughout
the year, the Committee will ensure that effective
succession planning for the Board and senior
management is developed further, building on the
progress made during 2019. The Committee will also
have an active role in the first externally facilitated
annual Board evaluation in 2020.
2018 UK Corporate Governance Code
 is committed to complying with the UK
Corporate Governance Code wherever appropriate
or explaining its reasons for non-compliance. The
Committee believes that the Remuneration Policy for
Executive Directors is consistent with the key principles
set out in the 2018 Code. The arrangements are
simple and transparent, with a clear link between the
performance of the Group and the rewards available
to individual Directors. The Policy for Directors is
aligned with ’s culture of rewarding excellent
performance across the organisation and also provides
for a strong level of alignment with the interests of
shareholders in .
The Committee is satisfied that  complies
in all material respects with the remuneration
provisions of the 2018 Code, with the following minor
exceptions. First, the Committee has not developed
a formal policy on post-employment shareholding
requirements. Second, the pension contribution rate
for existing Executive Directors is not aligned with
the rate for the wider workforce. The Committee’s
position in respect of these matters is set out above.
In addition, the Code provision requiring the chair
of the remuneration committee to have served on a
remuneration committee for at least 12 months prior to
appointment as chair was published subsequent to my
appointment as Chair of ’s Remuneration
and Nomination Committee. Although I had not served
on a remuneration committee prior to becoming Chair
of the Committee, I had extensive experience in my
previous executive role of dealing with a range of
remuneration matters across a large housebuilding
company. I have now chaired the Remuneration
and Nomination Committee at  for over
two years.
AGM
The Committee is continuing to actively monitor the
transposition into Irish law of the EU Shareholder
Rights Directive, which will require  to
provide shareholders with a specific vote on the
Remuneration Policy. In advance of the introduction
of this requirement, and in line with the approach
already taken by some other listed Irish companies, we
have decided to voluntarily present the new Policy to
shareholders by way of an advisory vote at the AGM
to be held on 19 May 2020. In addition, we will also ask
shareholders to approve a separate advisory vote on
the Remuneration and Nomination Committee Report
at the AGM, continuing our previous practice.
I hope you will support both the Policy and the Report
resolutions, and I welcome any comments or feedback
you may have on our activities in 2019, the changes to
the Remuneration Policy, or any other relevant matters.
Richard Cherry
Chairman,
Remuneration and Nomination Committee
Cluain Adain
Clonmagadden, Navan
70 
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Governance
72 
Roles and
Responsibilities
The principal responsibilities and duties of the
Committee include:
• Assessing the effectiveness and performance of
the Board and each of its Committees including
consideration of the balance of skills, experience,
independence and knowledge of the Group on
the Board, its diversity, including gender, how the
Board works together as a unit, and other factors
relevant to its effectiveness;
• Where necessary, making recommendations to the
Board based on the above considerations;
• Considering succession planning for Directors and
members of senior management, including the
identification and assessment of potential Board
candidates, and making recommendations to the
Board for its approval;
• Preparing job specifications for the appointment
of a Chairman, Senior Independent Non-Executive
Director; and other Non-Executive Directors;
• Having responsibility for setting the Remuneration
Policy for all Executive Directors including pension
rights and any other compensation payments;
• Recommending and monitoring the level and
structure of remuneration for senior management;
• Reviewing the ongoing appropriateness and
relevance of the Remuneration Policy, taking into
account all factors which it deems necessary,
including the risk appetite of the Group and
alignment to the Group’s long term strategic goals
and culture;
• Reviewing the total individual remuneration
package of each Executive Director and other
designated senior executives including any
bonuses, incentive payments and share options or
other share awards; and
• Overseeing any major changes in employee
benefits structures throughout the Group.
Committee Composition
The Committee comprises three Independent Non-
Executive Directors; Richard Cherry (Chairman), Robert
Dix and Lady Barbara Judge. The biographies of these
Directors can be found on page 87.
The Board believes that the Committee members offer
a balanced suite of expertise, meeting the specific
requirements of this Committee. The breadth of skills
and experience of the members enables the Committee
to carry out its duties and responsibilities as detailed in
the Committee Terms of Reference.
Meetings
The Committee met on nine occasions during the
financial year ended 31 December 2019. On occasion,
additional attendees including the Board Chairman, the
CEO, the CFO, the Head of HR, the Group Company
Secretary and specialist external advisers were invited
to attend all or part of Committee meetings as deemed
appropriate and necessary by the Committee Chairman.
Committee
Member
In
Attendance
Committee
member as of
Richard Cherry 9/9 2017
Robert Dix 9/9 2017
Lady Barbara Judge 9/9 2017
Board Nomination Activities
Board Composition
Arising from the results of the first annual Board
evaluation, conducted at the end of 2018, the
Committee gave detailed consideration to the size
and structure of the Board in the first half of 2019. The
Committee reviewed the existing make up of skills and
experience on the Board and identified key attributes
and skills for the appointment of additional independent
Non-Executive Directors in 2019.
Following Justin Bickle’s decision to step down from his
role as Chief Executive Officer of the Group and resign
from the Board in August 2019, the Committee placed
particular focus in the latter half of 2019 on ensuring
the appropriate balance of Executive Directors and
senior management representation on the Board,
culminating in the appointment of the Group CFO,
Michael Rice, to the Board.
The Board is now comprised of eight Directors: three
Executive Directors, including the Executive Chairman,
and five independent Non-Executive Directors.
The Committee is satisfied that the Board is of an
appropriate size for the requirements of the business
and that the current composition provides a suitable
balance of skills and experience, although this will
continue to be reviewed on an ongoing basis.
Non-Executive Director Appointments
Having considered in detail the skills and capabilities
that would be required from new Non-Executive
Directors to strengthen the Board and assist the Group
in achieving its strategic objectives, the Committee
engaged independent executive search firm Korn Ferry
to support the process of identifying and shortlisting
suitable candidates. Reflecting on the skills and
expertise that each potential candidate would bring to
the Board, the Committee then selected candidates to
invite to interview.
The interview process comprised an initial interview with
the Committee, with two candidates then selected to
proceed to further interviews with the Board Chairman
and the Executive Directors. The interview process
culminated in the Committee formally recommending
the appointments of Pat McCann and Cara Ryan to the
Board. On the Board’s approval, Pat McCann and Cara
Ryan were appointed as Non-Executive Directors with
effect from 1 September 2019.
Robert Dix is a Non-Executive Director of Dalata
Hotel Group plc where Pat McCann serves as Chief
Executive, and both currently act as Non-Executive
Directors at The Quinn Property Group. Robert Dix
deferred the decision to recommend Pat McCann’s
appointment to his fellow Committee members, and
he abstained from voting on the appointment at the
Board. The Committee, and the Board, were aware
of this relationship on appointing Pat McCann and
concluded that his experience, knowledge and skills in
leading and growing a company post-IPO would be
of immeasurable value to the Board and in the best
interests of the Group and its shareholders. Further
details in relation to the Board’s consideration of Non-
Executive Director independence is set out at page 59
of the Corporate Governance Report.
Biographies for Pat McCann and Cara Ryan are set out
at page 88.
Succession Planning
The Committee is cognisant of the role of effective
succession planning in governance and in ensuring
that the Group mitigates ‘key people’ risk. During 2019
the Committee supported the Board Chairman in
reviewing and enacting succession plans for the role of
CEO and in recommending the promotion of the CFO
to Executive Director.
In addition to planning for the succession of Executive
Directors, the Committee engages with the Executive
Directors on succession planning for senior management
roles below Board level and encourages the alignment
of succession planning and remuneration arrangements
with Group strategy.
Re-Election of Directors
The contribution and commitment of all Directors is
reviewed on an annual basis as part of the wider
Board evaluation.
Remuneration & Nomination Committee Report
Taylor Hill
Balbriggan, Co. Dublin
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Governance
Other Activities
Set out below is a summary of the Committee’s key activities during the financial year.
Activity in 2019
Topic Description of activity
Annual Bonus The Committee formally assessed performance against the targets set for the 2018
annual bonus scheme, agreeing bonus payments as disclosed in last year’s report.
Later in 2019, the Committee also undertook an initial review of performance against
the targets for the 2019 annual bonus and considered the targets to apply for the 2020
scheme, taking into account ’s key financial and non-financial KPIs.
Long Term Incentive
Plan (LTIP)
The Committee approved the granting of LTIP awards to certain members of the
senior management team during 2019, having considered the appropriate employee
population and performance conditions for these awards.
Review of AGM voting The Committee considered the outcome of the 2019 AGM vote on the Remuneration &
Nomination Committee Report and the issues raised by certain shareholders.
Appointment of
independent advisers
Following a formal tender process, Korn Ferry were appointed as the Committee’s
independent advisers on executive remuneration matters.
Review of
Remuneration Policy
and Shareholder
Consultation
The Committee undertook a detailed review of the Executive Directors’ Remuneration
Policy, with the assistance of the new independent external advisers. Among other
things, this considered developments in market practice, the views of investors and
the appropriate incentives required for the next stage of ’s development.
The Committee consulted major shareholders and proxy advisers on the outcome of
the review.
Executive Committee The Committee met representatives from the Executive Committee throughout the
financial year to receive updates on the business and specific areas of interest to
the Committee.
Committee Evaluation The Committee reviewed its Terms of Reference to ensure they were fit for purpose. The
Terms of Reference are available on the Group’s website.
As part of the annual review process, all Directors
are asked to complete self-evaluation questionnaires,
assessing their own skills and expertise and this
analysis is reviewed in detail to determine whether
the collective skills and experience of the Directors
are appropriate to meet the needs of the Group.
The Committee will work closely with the Board
Chairman to consider the outcomes of the annual
Board evaluation for 2019 and ensure that any
necessary actions are taken during the course of 2020.
Full details of the annual Board evaluation process are
set out at page 60 of the Corporate Governance Report.
The Board will recommend the formal election to office
of those new Directors appointed in 2019 and the
re-election of all other Directors at the 2020 AGM.
Diversity
During 2019, the Group adopted a Board Diversity
Policy designed to assist the Board, through the
Committee, in achieving optimum Board and
Committee composition. It is the Group's policy to
develop over time the diversity of its Board without
compromising the calibre of new Directors. All Board
appointments are made on merit and with regard to
the skills and experience that the Board requires to
be effective.
The Committee will review the Board Diversity Policy
annually, including assessing its effectiveness and
will discuss any revisions that may be required,
recommending any such revisions to the Board
for approval.
Remuneration & Nomination Committee Report
The Committee recognises the value of diversity
in its ongoing review of Board composition and in
succession planning. All candidates are considered
on merit and against objective criteria, having due
regard to the benefits of diversity of experience, skills,
background and gender.
The Board Diversity Policy is published on the
Group website.
Details of the gender balance of those in senior
management within the Group, and their direct
reports, are provided at page 60 of the Corporate
Governance Report.
Reporting
The Chairman of the Committee reports to the Board
on the activities of the Committee. The Chairman
of the Committee will attend the Annual General
Meeting to answer questions on the report on the
Committee’s activities and matters within the scope of
the Committee’s responsibilities.
External Advisers
During the financial year, the Committee obtained
independent advice from external remuneration
consultants, Mercer, in relation to market trends,
comparator benchmarking, developments in remuneration
policies and practice and governance best practice.
Following a formal tender process, the Committee
appointed Korn Ferry as its new advisers during the year
to provide support in developing and implementing a
new Remuneration Policy. Both Mercer and Korn Ferry
are members of the Remuneration Consultants Group
and signatories to its Code of Conduct, and all advice is
provided in accordance with this Code.
As noted above, a separate practice within Korn Ferry
provided support to the Committee during the year in
identifying potential candidates for appointment to the
Board as new Non-Executive Directors. The Committee
is entirely comfortable that the advice it received from
Korn Ferry on executive remuneration matters was
independent and robust.
Remuneration Policy
The following table outlines the key details of the
Executive Directors’ Remuneration Policy, applicable
from the 2020 financial year onwards. In designing this
Remuneration Policy, the objective of the Committee
is to continue to attract, retain and motivate executive
management of the quality required to run the Group
successfully, having regard to the views of shareholders
and other stakeholders, as well as pay and conditions
across the Group as a whole. The Committee is satisfied
that the remuneration framework is in alignment with
the Group’s risk appetite, purpose and culture, while
also being supportive of its long-term strategic goals.
A summary of the key changes to the Remuneration
Policy are set out in the statement from the Committee
Chairman on pages 68 to 71.
At the AGM to be held on 19 May 2020, shareholders
will be asked to approve the new Remuneration Policy
by way of a separate advisory resolution.
Element/Purpose Operation Maximum Opportunity
Base Salary
To attract and
retain high calibre
individuals
Base salaries are reviewed by the Committee
annually in the last quarter of the year with any
adjustments to take effect from 1 January of the
following year.
Factors taken into account in the review include the
individual’s role and level of responsibility, personal
performance and developments in pay in the market
generally and across the Group.
Base salary for Executive Directors is inclusive of
fees receivable by the Executive as a Director of
the Group.
There are no prescribed maximum
salaries or maximum increases.
Increases will normally reflect
increases across the Group and in
the market generally.
However, increases may be
higher or lower to reflect certain
circumstances (whether temporary
or permanent) such as changes
in responsibility or in the case of
newly appointed individuals to
progressively align salary with
market norms. In line with good
practice, market movements will not
be considered in isolation but in
conjunction with other factors.
Benefits
To be competitive
with the market
In addition to their base salaries, Executive
Directors’ benefits currently include life and health
insurance and a car allowance in line with typical
market practice. Other benefits may be provided if
considered appropriate.
No maximum levels are prescribed
as benefits will be related to each
individual’s circumstances.
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Governance Remuneration & Nomination Committee Report
Element/Purpose Operation Maximum Opportunity
Annual Bonus
To reward the
achievement
of annual
performance
targets
Individuals will receive annual bonus awards based
on the achievement of financial and/or non-financial
targets. Threshold, target and maximum performance
levels will be set, with pro-rata payments between
the points based on relative achievement levels
against the agreed targets.
The financial KPIs will ensure that employees
are aligned with shareholders’ interests and the
parameters that the Group will be assessed on
by the market in the long-term. The financial KPI
targets will be set annually based on the budget
and strategic plan process carried out in Q3/Q4
every year. Appropriate details of the specific
targets will be included on a retrospective basis
in the Remuneration and Nomination Committee
Report each year.
The Committee retains discretion to adjust any
award to reflect the underlying financial position
of the Group.
The maximum award for Executive
Directors as a percentage of basic
salary is as follows:
Executive Chairman 75%
CEO 100%
CFO 100%
The amount payable for target
performance is limited to 50% of
the maximum award.
Bonuses are paid in cash although
the Committee will keep under
review whether it would be
appropriate to require a portion of
any cash bonus to be invested in
 shares.
Long Term Incentive Plan (LTIP)
To incentivise
long-term
performance and
ensure alignment
with the interests
of 
shareholders.
Senior executives are eligible to participate in the
LTIP. The CFO is the only Executive Director who
currently participates in the plan. The Executive
Chairman and the CEO do not currently participate
in the LTIP given their participation in the Founder
Share Scheme (see page 85).
The LTIP involves the grant of nil-cost options
over ordinary shares to participants based on a
percentage of their gross basic salary.
LTIP awards vest subject to the satisfaction
of performance conditions over a three-year
period. The Committee selects the performance
condition ahead of each grant taking into account
’s strategic priorities and business
circumstances. A majority of the metrics chosen will
be financial metrics.
Full details of the chosen metrics and specific targets
for recent awards and for awards to be granted in
2020 are set out on pages 83 and 84.
The vesting of any award is subject to Committee
discretion that it is satisfied the Group’s underlying
performance has shown a sustained improvement in
the period since date of grant.
With effect from 2020, LTIP awards granted to
Executive Directors are subject to a holding
period of at least two years following the date of
exercise of their options. Shares that are subject
to a holding period post-exercise may be placed
in a restricted share trust for the duration of the
restricted period.
The LTIP rules permit awards to
be granted up to 150% of basic
salary, or 200% in exceptional
circumstances.
Performance Conditions
For both the annual bonus scheme and the LTIP, the
Committee sets performance conditions based on
business circumstances and the key strategic priorities.
Specific targets are chosen based on the business plan
and budget, the Board’s expectations of performance
and external market estimates (where relevant). The
performance conditions to apply to the 2020 bonus
scheme and the LTIP award to be granted in 2020 are
set out on pages 83 to 84.
Malus and Clawback
For both the annual bonus scheme and the LTIP,
recovery provisions are in place which permit the
Committee to claw back awards if certain trigger events
occur within two years of the payment or vesting date:
• If the award was determined on the basis of
materially incorrect information, including as a
result of any material misstatement of the financial
results; and/or
• If the participant has engaged in any wilful
misconduct, recklessness, fraud and/or criminal
activity (including actions which have impacted the
reputation of the Company); and/or
• If the participant commits an act which constitutes
a material breach of his/her contract, restrictive
covenants and/or any confidentiality obligations.
Shareholding Guidelines
All Executive Directors are required to build a
shareholding equivalent in value to 200% of their basic
salary. Until this guideline is met, individuals will be
required to retain at least 50% of any shares which
vest following the end of the performance and holding
periods for the LTIP (excluding any shares which are
required to be sold to pay tax due at vesting).
As explained on page 69, the Committee has at this
stage decided not to introduce a requirement for
shares to be held for a set period of time following
termination of employment. However, this matter will
be kept under review.
Approach to Recruitment Remuneration
The package for any new Executive Director would be
based on the elements set out in the Remuneration
Policy table above. For certain elements of the
package, the following approach would apply.
Basic salary: The salary offered to a new Executive
Director would take into account a number of relevant
factors including the individual’s background and
experience, the responsibilities of the role and wider
market practice. The Committee has the discretion to
appoint a new Executive Director on a salary below
the prevailing market rate, with a view to increasing
the salary over time depending on performance and
development in the role. Such increases may be at a
level higher than would otherwise apply.
Benefits: The benefits package will be consistent
with that provided to existing Executive Directors.
The Committee may provide other benefits (e.g. a
relocation package in the event of a new Executive
Director being required to relocate in order to
join ).
Retirement benefits: As stated in the Remuneration
Policy table, any new Executive Director will have
their pension contribution rate set in line with the rate
attributable to the majority of the wider workforce.
Annual bonus: A new Executive Director will normally
be eligible to participate in the annual bonus scheme,
on the same basis as the other Executive Directors.
Participation will normally be pro-rated to reflect
the period of service during the financial year. The
maximum bonus opportunity for a new Executive
Director is 100% of basic salary.
LTIP: A new Executive Director will normally be
eligible to participate in the LTIP on the same basis
as the other Executive Directors. An LTIP award may
be granted as part of the arrangements agreed on
appointment. In line with the Remuneration Policy,
any LTIP award will be limited in size to 150% of basic
Element/Purpose Operation Maximum Opportunity
Retirement Benefits
To attract and
retain high calibre
individuals as part
of competitive
package.
The Group operates a defined contribution pension
scheme for Executive Directors. Pension contributions
are calculated on base salary only.
For current Executive Directors, 15%
of basic salary.
Any new Executive Director
appointed after the 2020 AGM will
have their contribution rate set in
line with the rate attributable to the
majority of the wider workforce
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Governance Remuneration & Nomination Committee Report
salary, or 200% in the event the Committee considers
the circumstances to be sufficiently exceptional to
justify an award at this level.
Buyout awards: In certain circumstances – for example
to attract an external candidate of exceptional calibre
– the Committee may consider providing a buyout
award as compensation for incentives provided by
the candidate’s previous employer which will lapse
as a result of the individual joining . The
value of any buyout award will take into account the
performance conditions attached to the forfeited
incentives, the likelihood of them being satisfied, the
proportion of the performance period completed as at
the date of cessation of employment, the mechanism
of delivery (e.g. in cash or equity) and any other
relevant factors. The Committee may grant a buyout
award under ’s existing incentive plans or, if
necessary, may use a bespoke arrangement.
The Committee reserves the right to appoint a
new Executive Director on a service agreement
with a 12-month notice period, in line with standard
market practice.
Service Agreements
The current Executive Directors all have service
agreements with  of no fixed term. The
agreements are terminable on six months’ notice from
both the Group and the Executive. The agreements
do not provide for any additional compensation to be
paid in the event of a change of control of .
Policy for Leavers
Salary and Benefits
For leavers, any termination payments are made only
in respect of annual salary excluding benefits for the
relevant notice period.
Annual Bonus
In order for annual bonus payments to be made,
Executive Directors must normally be employed by the
Group on the bonus payment date.
Long-Term Incentive Plan
Under the rules of the LTIP, the vesting of awards for
good leavers depends on the satisfaction of the relevant
performance conditions. Awards are reduced on a pro
rata basis to reflect the proportion of the vesting period
which has not elapsed at the date of cessation.
For other leavers, unvested awards lapse on cessation.
In the event of a change of control, the Committee
has discretion under the LTIP rules to determine the
extent of vesting of outstanding awards, having regard
to the extent that performance conditions have been
met and the length of the performance period which
has elapsed.
Wider Executive/Employee
Remuneration Considerations
The Remuneration and Nomination Committee has
oversight of the remuneration arrangements for other
senior executives in  and also considers
matters relating to pay across the Group as a whole,
including workforce remuneration policies and incentives
for the wider employee population. The Committee
has not engaged directly with employees on executive
remuneration matters but has considered in detail
the issue of alignment between Executive Director
remuneration and the pay for the employee population
more broadly.
Senior managers participate in a bonus scheme
which is reflective of the structure in place for the
Executive Directors. A number of senior managers
below the Board participate in the LTIP, with the same
performance conditions applying to all awards granted
under the plan. For 2020, a separate bonus scheme
applies for the main employee group, under which
the majority of bonus payments are subject to the
achievement of targets linked to personal performance.
Engaging with Shareholders
The Committee is committed to an open line of
communication with shareholders and will seek the
views of major investors when considering significant
changes to remuneration practices or policies (as
evidenced by the consultation exercise undertaken as
part of the recent policy review process).
Committee Discretions
The Committee retains discretion to make any
payments, notwithstanding that they are not in line
with the policy set out above, where the terms of the
payment were agreed (i) before the policy came into
effect, or (ii) at a time when the relevant individual was
not a director of the Company and, in the opinion of
the Committee, the payment was not in consideration
of the individual becoming a director of the Company.
For these purposes ‘payments’ includes the Committee
satisfying awards of variable remuneration and, in
relation to an award over shares, the terms of the
payment are determined at the time the award is
granted. Details of any such payments will be disclosed
in the Remuneration and Nomination Committee Report
for the relevant year.
The Committee also has the discretion to amend the
policy with regard to minor or administrative matters
where it would be, in the opinion of the Committee,
disproportionate to seek or await shareholder approval.
The Committee will operate the annual bonus and
long-term incentive arrangements according to their
respective rules. Consistent with market practice the
Committee retains certain discretions in respect of the
operation and administration of these arrangements.
External Appointments
The Board recognises the benefit which the Company
can obtain if Executive Directors serve as non-executive
directors of other companies. Subject to review in each
case, the Board’s general policy is that an Executive
Director can accept non-executive directorships of
other companies (provide this does not prejudice the
individual’s ability to undertake his duties at )
and can retain the fees in respect of such appointment.
Remuneration Policy for
Non-Executive Directors
Non-Executive Directors (NEDs) have letters
of appointment which set out their duties and
responsibilities. The appointments are initially for a three-
year term but are terminable on one month’s notice.
The NEDs each receive a fee which is set by the
Committee and approved by the Board on advice
from the independent professional advisers. The NEDs
are paid a basic fee of €60,000 per annum with
additional fees payable to the Senior Independent
Non-Executive Director of €30,000 per annum. NEDs
receive an additional €15,000 for chairing the Audit
and Risk Committee and the Remuneration and
Nomination Committee.
Accordingly, the NED letters of appointment detail the following annual fees:
Name Role €
Lady Barbara Judge Senior Independent Non- Executive Director 90,000
Robert Dix Chairman, Audit & Risk Committee 75,000
Richard Cherry Chairman, Remuneration & Nomination Committee 75,000
Pat McCann Non-Executive Director 60,000
Cara Ryan Non-Executive Director 60,000
There has been no change in the fees payable to NEDs since appointment and no change is proposed for 2020.
NEDs are not eligible to participate in any Group pension plan. The NEDs do not have service contracts and do not
participate in any bonus or share option schemes. NEDs may receive benefits if considered appropriate.
Marina Village
Greystones, Co. Wicklow
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Governance Remuneration & Nomination Committee Report
Annual Remuneration Report for 2019
The following table illustrates remuneration awarded to Directors for the financial year ended 31 December 2019:
Name Salary/Fees(1)
Annual Bonuses(2)
Benefits(3)
Employer
Pension
Contributions(4)
Total
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
€ € € € € € € € € €
Executive
Directors
John Mulcahy 300,000 300,000 162,096 100,500 18,500 18,500 - - 480,596 419,000
Stephen Garvey 383,333 350,000 286,881 175,000 22,725 21,901 57,500 17,500 750,439 564,401
Michael Rice (5)
52,500 - 39,375 - 168 - 7,875 - 99,918 -
Justin Bickle (6)
675,000* 450,000 336,773 225,000 22,000 22,000 22,500 22,500 1,056,273 719,500
Non-Executive
Directors
Robert Dix 75,000 75,000 - - - - - - 75,000 75,000
Richard Cherry 75,000 75,000 - - - - - - 75,000 75,000
Lady Barbara
Judge
90,000 90,000 - - - - - - 90,000 90,000
Pat McCann (7)
20,000 - - - - - - - 20,000 -
Cara Ryan (7)
20,000 - - - - - - - 20,000 -
Caleb Kramer (8)
26,209 60,000 - - - - - - 26,209 60,000
Total 1,717,042 1,400,000 825,125 500,500 63,393 62,401 87,875 40,000 2,693,435 2,002,901
* Includes €450,000 related to salary and €225,000 related to payment in lieu of notice
1. Amounts reflect salaries in respect of Executive Directors and Directors' fees in respect of Non-Executive Directors.
2. Annual Bonuses relate to bonuses paid to Executive Directors as explained on page 82.
3. Benefits largely relate to car allowances and health insurance provided to Executive Directors in accordance with
their employment contracts.
4. Only Executive Directors are eligible to receive pension contributions. Non-Executive Directors do not receive
pension contributions.
5. Michael Rice was appointed to the Board on 1 November 2019. Payments disclosed in the table above relate to period
served as a Director.
6. Justin Bickle resigned from the Board on 23 August 2019 but remained an employee of the Company until 16 January
2020. Payments disclosed include his salary as an employee for the entirety of 2019 in addition to a payment in lieu of his
contractual notice period. Further details in respect of the resignation arrangements for Justin Bickle are set out below.
7. Pat McCann and Cara Ryan were appointed to the Board on 1 September 2019.
8. Caleb Kramer resigned from the Board on 7 June 2019.
Resignation Arrangements for Justin Bickle
Justin Bickle stepped down from his role as Group CEO and resigned as a Director of the Board with effect from 23
August 2019. He was immediately succeeded as CEO by Stephen Garvey, though he continued to be employed by
the Group during a transition period on his existing terms and conditions.
In recognition of his continuation in service during the transition period, Justin Bickle remained eligible for his
full performance related bonus payment in respect of financial year 2019, in accordance with the terms of his
employment agreement.
Blackrock Villas
Blackrock, Cork
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Governance Remuneration & Nomination Committee Report
Justin Bickle’s employment with the Group ceased on
the expiry of the transition period, with effect from 16
January 2020. He was paid in lieu of his contractual
entitlement to six months’ notice. No ex gratia
termination payments were paid to Justin Bickle in
connection with his ceasing employment with the Group.
Justin Bickle is a holder of Founder Shares, awarded to
him as a Co-Founder of the Group prior to admission
to trading on the Irish and London Stock Exchanges
on 13 October 2017. As a Founder Shareholder, Justin
Bickle remains entitled to participate in the Founder
Share Scheme. Where the performance conditions are
met, a corresponding portion of his Founder Shares will
automatically convert into Ordinary Shares. No new or
additional Founder Shares have been or will be created
and any future conversion of Founder Shares will not
involve any new issuance of shares, rather an automatic
re-designation of existing shares that he has held as
a Founder Shareholder since 2017. Further details in
relation to the Founder Share Scheme are provided at
page 85 of this report.
Base Salary
The salaries paid to the Executive Directors for the
financial year ended 31 December 2019 are set out
in the table above. Stephen Garvey’s annual salary
was increased from €350,000 to €450,000 on his
appointment as CEO on 23 August 2019, to align his
salary with that paid to his predecessor, Justin Bickle.
The CFO, Michael Rice, was appointed to the Board on
1 November 2019 and his annual salary is €315,000.
The base salaries of Executive Directors will remain
unchanged for the 2020 financial year.
Annual Bonus
2019 Outcome
The Executive Directors participated in an annual bonus
scheme for 2019 with performance measured against a mix
of financial (60%) and non-financial (40%) performance
conditions. The specific financial target ranges and the
extent to which they were met are set out in the table below:
2020 Bonus Arrangements
For 2020, the annual bonus scheme will continue to operate in the same manner as in 2019, with
a 60%/40% split between financial and non-financial metrics. The performance metrics will remain
the same:
Financial metrics Weighting
Revenue 20%
EBITDA 20%
EBITDA margin 20%
Non-financial metrics Weighting
Safety 20%
Customer service 20%
The specific performance targets are currently considered commercially sensitive. Full details of
the targets – including information on the extent of achievement against them – will be included
in next year’s report.
The maximum annual bonus opportunity for 2020 will be 100% of basic salary for the CEO and CFO
and 75% of basic salary for the Executive Chairman. As set out in the Remuneration Policy table, the
amount payable for target performance will be set at 50% of the maximum opportunity.
Long-Term Incentive Plan (LTIP)
Michael Rice is the only Executive Director who participates in the LTIP. He received awards under
the plan in October 2017 and April 2019, prior to his appointment to the Board, as detailed in the
table below.
Award date Number of
options
Grant date
share price
Performance
period
Date of
vesting
13 Oct 2017 225,000 €1.00 13 Oct 2017 to 12 Oct 2020 12 Oct 2020
17 Apr 2019 200,893 €0.84 17 Apr 2019 to 16 Apr 2022 16 Apr 2022
Vesting of the awards set out in the table above is subject to a performance condition based on
the satisfaction of absolute total shareholder return (TSR) targets over the three-year vesting period,
as follows:
TSR performance - compound growth per annum Level of vesting
12.5% 100%
6.25% 25%
Less than 6.25% Nil
Awards vest on a straight-line basis for performance between 6.25% and 12.5%. In addition, any vesting
of awards is subject to Committee discretion that it is satisfied the Group’s underlying performance has
shown a sustained improvement in the period since the date of grant.
Metric Weight % Payable Targets Performance
Achieved
Bonus Award
Revenue 20% Threshold 40% €249.6m €284.6m 78%
Max 100% €305.0m
EBITDA 20% Threshold 40% €25.7m €31.9m 85%
Max 100% €33.6m
EBITDA margin 20% Threshold 40% 9.3% 11.2% 77%
Max 100% 12.1%
Health & Safety 20% Threshold 40% 70% Audit Score 75% 70%
Max 100% 80%+ Audit Score
Customer Satisfaction 20% Threshold 40% 80% Survey Score 84% 64%
Max 100% 90%+ Survey Score
Taking this into account, the total bonus award was determined by the Committee to be 75% of the maximum
opportunity for Justin Bickle, Stephen Garvey and Michael Rice and 72% for John Mulcahy. This resulted in the
following bonus payments to the Executive Directors which were paid in cash.
Name Role Bonus Payment
€’000
Bonus payment as % of
maximum opportunity
John Mulcahy Executive Chairman 162 72%
Stephen Garvey CEO 287 75%
Michael Rice* CFO 39 75%
Justin Bickle Former CEO 337 75%
* Relates to period served as an Executive Director
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Governance Remuneration & Nomination Committee Report
For 2020, the Committee intends to grant an LTIP award to the CFO at a level of 100% of basic salary.
The Committee has decided to apply two performance conditions to this award, as set out below.
TSR performance (applies to 50% of the award)
– compound growth per annum
Level of vesting
12.5% 100%
6.25% 25%
Less than 6.25% Nil
Awards vest on a straight-line basis for performance between 6.25% and 12.5%.
EPS performance (applies to 50% of the award)
– Adjusted EPS to be achieved in FY2022
Level of vesting
12.5c 100%
9.5c 25%
Less than 9.5c Nil
Awards vest on a straight-line basis for performance between 9.5c and 12.5c.
The performance period for this award will be aligned
with ’s financial years and will run for three
years from 1 January 2020 to 31 December 2022.
The TSR performance conditions for the award are
the same as those applying to earlier LTIP awards
and are considered appropriately challenging. The
EPS performance targets have been set taking into
account the internal budget and strategic plan as well
as external expectations of ’s performance
over the period up to the end of 2022. Achievement
of the maximum target would represent significant
outperformance of both internal and external forecasts.
In addition to the performance conditions as set out
above, any vesting of awards is subject to Committee
discretion that it is satisfied the Group’s underlying
performance has shown a sustained improvement in the
period since the date of grant.
In line with the new Remuneration Policy (as set out
in the table on pages 75 to 77), LTIP awards granted
to Executive Directors from 2020 onwards will include
a holding period of at least two years post-exercise.
Shares that are subject to a post-exercise holding period
may be placed in a restricted share trust.
Directors’ and Secretary’s
Interest in Shares
The biographical information for the Directors and the
Company Secretary at the time of this report can be
found on pages 86 to 88. The table below sets out the
interests of the Directors and Company Secretary in
Ordinary Shares of the Group at 31 December 2019.
Founder Share Scheme
This scheme was established in 2017 in advance of the
Company’s IPO to incentivise the three founders of
 (John Mulcahy, Stephen Garvey and Justin
Bickle) to grow the business over the initial
five-year period following listing.
Each of the founders holds a number of Founder
Shares, which are a specific class of shares in the share
capital of the Company, with their terms set out in the
Memorandum and Articles of Association. The Founder
Shares are converted into ordinary shares (or a cash
equivalent) subject to the achievement of a performance
condition linked to ’s share price.
The scheme runs over the five years from 2018 to 2022.
Performance is assessed separately over five separate
test periods, with Founder Shares converting into
ordinary shares based on performance in each test
period. The test period is from 1 March to 30 June
each year.
Under the performance condition, the closing
 share price must, for a period of 15 or more
consecutive business days during the test period, exceed
the adjusted issue price1
by 12.5%.
This percentage increase is measured on a
compound basis.
If the performance condition is satisfied, the founders
are entitled to convert Founder Shares into such number
of ordinary shares which, at the highest average closing
price of an ordinary share during the test period, have
an aggregate value equal to the “Founder Share Value.”
This is calculated as 20% of the TSR in the relevant
period, being (i) the first time the performance condition
is satisfied, the period from Admission to the test period
in which the performance condition is first satisfied; and
(ii) for subsequent test periods, the period from the end
of the previous test period in respect of which Founder
Shares were last converted or redeemed to the test period
in which the performance condition is next satisfied.
As previously disclosed, the performance condition was
satisfied during the first test period from 1 March 2018
to 30 June 2018, resulting in the conversion of Founder
Shares into 18,993,162 ordinary shares in 2018.
The performance condition was not satisfied during
the test period from 1 March 2019 to 30 June 2019. As a
result, there was no conversation of Founder Shares into
ordinary shares during 2019.
All new ordinary shares issued in respect of the
conversion of Founder Shares are subject to a one-year
lock-up period, with 50% of the new ordinary shares
subject to a further one-year lock-up period thereafter.
The table below sets out the ownership split between
the holders of Founder Shares:
Name 31 December 2018 31 December 2019
Justin Bickle* 81,453,077 81,453,077
Stephen Garvey 81,453,077 81,453,077
John Mulcahy 18,100,684 18,100,684
Total 181,006,838 181,006,838
* Beneficially held by Durrow Ventures.
Ordinary Shares Founder Shares Deferred Shares Ordinary Shares
under option
Name 2019 2018 2019 2018 2019 2018 2019 2018
John Mulcahy 2,682,766 2,482,766 18,100,684 18,100,684 - - -
Stephen Garvey 13,261,329 13,061,329 81,453,077 81,453,077 - - -
Michael Rice 23,333 23,333 - - - - 425,893* 225,000*
Lady Barbara Judge 109,880 109,880 - - - - - -
Richard Cherry 1,371,069 1,166,666 - - - - - -
Robert Dix 350,000 350,000 - - - - - -
Cara Ryan - - - - - - - -
Pat McCann 70,000 - - - - - - -
Chloe McCarthy - - - - - - 142,381* 65,000*
* The exercise price of the ordinary shares under options detailed above is nil. The expiry date for the options granted during
2019 and prior to 2019 are 7 years from 16 April 2022 and 12 October 2020 respectively.
1. The adjusted issue price is defined as the IPO offer price (€1) as adjusted to reflect any subsequent consolidation or
subdivision of ordinary shares or any allotment of ordinary shares pursuant to a capitalisation of profits or reserves.
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
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Governance Board of Directors
John Mulcahy (70)
Executive Chairman
Nationality: Irish
Date of Appointment:
11 August 2017
John Mulcahy is a chartered surveyor
with over 40 years’ experience in
the Irish real estate sector. He is
currently the chairman of IPUT plc
and a member of the board of TIO
ICAV. Previously, he was a member
of the board (from 2012 to 2014),
and Head of Asset Management
(from 2011 to 2014), at National
Asset Management Agency and,
prior to that, was chairman and
CEO of JLL’s operations in Ireland
from 2002 to 2010. John was also a
founding member of the RICS Asset
Valuations Standards Committee
and the Property Advisory
Committee of the National Pension
Reserve Fund.
Other Appointments:
• Chairman of IPUT plc
• Board member of TIO ICAV,
and Quinta do Lago S.A., a
Portuguese resort developer.
Stephen Garvey (40)
CEO
Nationality: Irish
Date of Appointment:
9 August 2017
Stephen Garvey has over 20 years’
experience in the construction and
property industry. His experience
includes working with many of the
large Irish property developers,
including Menolly Homes, Schelester
properties, Glenman Corporation
and McCabe Builders. In 2003,
Stephen founded Bridgedale Homes
Ltd, ’s predecessor
company, which focused on
constructing residential developments
in the Greater Dublin Area. In his role
as CEO of Bridgedale, he sourced
and negotiated the acquisitions of
development sites, secured external
finance, formulated and implemented
business plans for each project and
managed the overall delivery of
residential units. From 2014 to 2017,
Stephen advised and managed on
the acquisition of 2,101 units in the
Irish residential development market
on behalf of TIO RLF.
Michael Rice (37)
CFO
Nationality: Irish
Date of Appointment:
1 November 2019
Michael joined the Group in
September 2017, having previously
worked as Group Financial
Controller in Kingspan Group plc.
Michael has responsibility for the
Group’s finance, commercial and IT
functions and has been instrumental
in developing and implementing
the Group’s internal and external
reporting framework. Michael has
a Bachelor of Commerce degree
and a Masters in Accounting
from University College Dublin
and is a Fellow of Chartered
Accountants Ireland.
Lady Barbara Judge CBE (73)
Senior Independent Director
Nationality: Irish
Date of Appointment:
26 September 2017
Lady Barbara Judge CBE has 40
years’ experience in the financial,
legal and property industries.
Lady Judge has previously served
as chairman of the UK Pension
Protection Fund, as a Commissioner
of the U.S. Securities and Exchange
Commission, as a director of Samuel
Montagu & Co in Hong Kong and
as founder and chairman of Private
Equity Investor Plc. Lady Judge has
significant experience in the real
estate sector, including her previous
positions on the boards of Quintain
Estates and Development plc and
Richard Ellis International (now
CBRE). Lady Judge is a graduate of
the University of Pennsylvania and
received a Juris Doctor degree with
honours from New York University
Law School. She was appointed
Commander of the Order of the
British Empire in 2010.
Other Appointments:
• Chairman of Cifas.
• Chairman LoopUp.
• Chairman of the Astana
Financial Services Authority
Committee Memberships:
• Member of the Audit and Risk
Committee (2 years).
• Member of the Remuneration
and Nomination Committee
(2 years).
Robert Dix (67)
Independent Non-Executive Director
& Chairman of the Audit and
Risk Committee
Nationality: Irish
Date of Appointment:
26 September 2017
Robert Dix was formerly a partner
and head of Transaction Services
at KPMG Ireland, where he worked
for 20 years before his retirement
in 2008. He now operates his
own firm, Sopal Limited, which
advises organisations on capital
markets, corporate governance and
strategic planning issues. Robert
is a graduate of Trinity College
Dublin and a Fellow of Chartered
Accountants Ireland.
Other Appointments:
• CEO of Sopal Limited.
• Non-executive Director
and Chairman of Quinn
Property Group.
• Non-executive Director
and Chairman of the Audit
Committee of Allianz plc and
Dalata Hotel Group plc.
• Robert also holds non-executive
directorships at a number of
private companies.
Committee Memberships:
• Chairman of the Remuneration
and Nomination Committee
(2 years).
• Member of the Audit and Risk
Committee (2 years).
Richard Cherry (58)
Independent Non-Executive Director
& Chairman of the Remuneration
and Nomination Committee
Nationality: British
Date of Appointment:
2 October 2017
Richard Cherry was formerly a
director and Chief Executive of
the Partnerships business at UK
housebuilder Countryside, where
he worked for over 35 years until
his retirement in September 2017.
He served on the main board
for 30 years and previously held
the roles of Group New Business
Director and Deputy Chairman. He
has significant experience in the
real estate sector, including in the
execution of partnership projects
with public authorities and housing
associations. Richard is a graduate
of the University of Reading and is
a Fellow of the Royal Institution of
Chartered Surveyors.
Other Appointments:
• Richard holds directorships
at a small number of private
companies
Committee Memberships:
• Chairman of the Remuneration
and Nomination Committee
(2 years).
• Member of the Audit and
Risk Committee (2 years).
Board of Directors
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Governance Directors' Report
Pat McCann (68)
Independent Non-Executive Director
Nationality: Irish
Date of Appointment:
1 September 2019
Pat McCann has 50 years'
experience in the hotel industry,
having begun his career in 1969 with
Ryan Hotels plc. He joined Jurys
Hotel Group plc in 1989 and became
Chief Executive of Jurys Doyle Hotel
Group plc in 2000. In 2007, Pat
founded Dalata Hotel Group plc.
He is a non-executive director of a
number of private companies and
was appointed to the board of lbec
in 2017. Pat is currently President of
lbec. He is a former non-executive
director of EBS Building Society,
Greencore Group plc and Whitfield
Private Hospital. He has served as
National President of the Irish Hotels
Federation and as a member of the
National Tourism Council.
Other Appointments:
• CEO and Executive Director of
Dalata Hotel Group plc.
• Non-executive Director of Ibec
and Quinn Property Group.
Cara Ryan (47)
Independent Non-Executive Director
Nationality: Irish
Date of Appointment:
1 September 2019
Cara Ryan is an experienced non-
executive director, with 20 years'
experience at board level in publicly
listed and private companies in
both regulated and non-regulated
entities. Until recently, she was a non
executive director of IFG Group plc,
a listed financial services Group,
where she chaired the Nominations
Committee and was a member of
the Audit & Risk and Remuneration
Committees. In March 2019 she
was appointed as a non-executive
director of Mercer Ireland, where
she chairs the Risk Committee and
sits on the Audit Committee. Cara
was also a non-executive director
of the Children's Medical Research
Foundation, supporting Our Lady's
Children's Hospital in Crumlin and
the National Children's Research
Centre. She has held Board
positions at various investment
funds, was the MD of IFG Investment
Managers until 2006 and is the
former Director of Finance of Manor
Park Homebuilders , where she held
responsibility for financial and legal
matters of the Group until 2012.
Other Appointments:
• Non-executive Director and
Chair of the Risk Committee
and member of the Audit
Committee of Mercer Ireland
Limited.
• Non-executive Director of
Harmony Capital Partners
Limited
Company Secretary
Chloe McCarthy (35)
Chloe McCarthy is an ICSA qualified
Company Secretary and a Barrister-
at-Law in Ireland. Chloe was
called to the Bar in 2008 and was
a member of the Law Library for
a number of years before gaining
experience at international law firms
including Taylor Wessing in London,
Allens Linklaters in Sydney and A&L
Goodbody in Dublin. Prior to joining
 at IPO in 2017, Chloe was
the Assistant Company Secretary at
Aegon Ireland PLC.
Principal Activities and
Business Review
 is a leading Irish homebuilder listed on
Euronext Dublin and the London Stock Exchange. With
a focus on strategically located developments in the
Greater Dublin Area, Cork, Limerick and Galway, The
Group delivers across there distinct business segments
– Suburban, Urban and Partnerships – as a single
business capitalising on scale advantages and investing
to optimise return on capital.
Shareholders are referred to the Chairman’s Letter, the
CEO's Review and the CFO's Review on pages 4, 8 and
12 respectively, which set out management’s review of
the Group’s operations and financial performance in
2019 and the outlook for 2020. These are deemed to be
incorporated into the Directors' Report.
Results and Dividends
Group revenue for the year ended 31 December
2019 was €284.6 million (2018: €84.2 million), gross
profit was €51.5 million (2018: €15.3 million), profit after
tax was €22.8 million (2018: loss of €3.9 million) and
basic earnings per share of €0.03 (2018: loss per share
of €0.01).
 did not pay a dividend during the financial
year ended 31 December 2019 (2018: €Nil).
As communicated at our Investor Day on 29 January
2020, the Group’s strategy for maximising shareholder
returns will include a targeted investment in suburban
working capital. Accordingly no current proposal exists
to pay a dividend or otherwise deploy any distributable
reserves to shareholders but, in order to provide the
flexibility to establish and implement a capital returns
policy in due course, the Company has initiated the
process of generating the necessary distributable
reserves through the reduction of the share premium
account of the Company.
Directors’
Report
The Directors present
their report and
the consolidated
financial statements of
 Properties
plc (“” or the
“Company”) and its
subsidiaries (the “Group”)
for the year ended 31
December 2019.
Group revenue for the year
ended 31 December 2019
was €284.6 million
(2018: €84.2 million)
€284.6m
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
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Governance Directors' Report
Group Strategy
A review of the Group’s strategic priorities is set
out in the Strategic Report, which is deemed to be
incorporated into the Directors’ Report.
Principal Risks and Uncertainties
In accordance with Section 327(1)(b) of the Companies
Act 2014,  is required to give a description
of the principal risks and uncertainties faced by the
Group. These principal risks and uncertainties, and the
steps taken by the Group to mitigate them, are detailed
in the Risk Management Report and deemed to be
incorporated into the Directors’ Report.
Directors and Company Secretary
The names of the Directors and Company Secretary and
a biographical note on each appear on pages 86 to 88.
In accordance with the provisions contained in the
UK Corporate Governance Code (2018), all Directors
will voluntarily retire and be subject to election by
shareholders at the 2020 Annual General Meeting.
Directors’ and Company
Secretary’s Interests in Shares
Details of the Directors’ and Company Secretary’s
share interests and interests in unvested share awards
of the Company are set out in the Remuneration and
Nomination Committee Report on page 84.
Share Capital
The issued share capital of the Group as at 27 February
2020 consists of 871,333,550 ordinary shares and
181,006,838 Founder Shares. Each share class has a
nominal value of €0.001. Holders of ordinary shares
are entitled to one vote per ordinary share at general
meetings of the Group, while no voting rights are
conferred on holders of founder shares. Founder Shares
may be converted to ordinary shares (or an equivalent
value in cash) in the future subject to the achievement of
performance hurdles related to the Group’s share price.
Further information on the Group’s share capital and the
rights attaching to the different classes of shares is set
out in Note 26 to the consolidated financial statements.
The Group also has a Long-Term Incentive Plan in place,
the details of which are set out at pages 83 and 84 of
the Remuneration and Nomination Committee Report
and in Note 15 to the consolidated financial statements.
Accounting Records
The Directors are responsible for ensuring that
adequate accounting records are maintained by the
Group, as required under Sections 281 to 285 of the
Companies Act, 2014. The Directors believe that they
have complied with this requirement through the
implementation and maintenance of appropriate
accounting systems and resources, including the
employment of suitably qualified accounting personnel
and the provision of adequate resources to the Group
Finance Department. The accounting records of the
Group are maintained at Block B, Maynooth Business
Campus, Maynooth, Co. Kildare.
Takeover Regulations 2006
For the purposes of Regulation 21 of Statutory
Instrument 255/2006 “European Communities
(Takeover Bids (Directive 2004/25/EC)) Regulations
2006”, the details provided on share capital and
substantial shareholdings above, and the disclosures in
relation to Directors’ remuneration and interests in the
Remuneration and Nomination Committee Report on
pages 68 to 85 are deemed to be incorporated in this
section of the Directors’ Report.
Further required information in relation to the change of
control provisions contained in the Group’s Founder Share
Scheme and Long-Term Incentive Plan is set out below.
Founder Shares
In the event of a change of control of the Group at any
time prior to 30 June 2022 which results in an offer to
all holders of shares, if the performance condition has
been satisfied and such offer becomes unconditional in
all respects, the Founder Shares shall convert into such
number of ordinary shares which, at such offer price,
have an aggregate value equal to his relative proportion
of 20% of the Total Shareholder Return (calculated by
reference to the change of control price plus dividends
and distributions made) between admission and the
change of control (less the value of any ordinary shares
(at their original conversion or redemption price)) which
have previously been converted or redeemed.
Long-Term Incentive Plan
The Remuneration and Nomination Committee will
determine the extent to which unvested awards with
regard to the extent that the applicable performance
condition has been satisfied up to the date of the
change of control event.
Transparency Regulations 2007
For the purposes of information required by Statutory
Instrument 277/2007 ‘Transparency (Directive 2004/109/
EC) Regulations 2007’ concerning the development and
performance of the Group, and the principal risk and
uncertainties faced, ,the Chairman’s Letter on pages
4 to 6, the CEO’s Review on pages 8 to 11, the CFO’s
Review on pages 12 to 14 and the Principal Risks and
Uncertainties detailed at pages 40 to 43, are deemed to
be incorporated in this part of the Directors' Report.
Corporate Governance
The directors of  are committed to achieving
the highest standards of corporate governance. The
directors have prepared a Corporate Governance
Report, which is set out on pages 54 to 61 and, for the
purposes of s1373 of the Companies Act 2014, is deemed
to be incorporated into the Directors’ Report.
The Corporate Governance Report includes a detailed
description of the way in which  has applied
the principles of good governance set out in the UK
Corporate Governance Code (2018) and the Irish
Corporate Governance Annex.
Directors’ Compliance Statement
The directors acknowledge their responsibility for
securing the Group’s compliance with its relevant
obligations under Section 225(2)(a) of the Companies
Act 2014 (the “Act”) (the “Relevant Obligations”).
In accordance with Section 225 (2) (b) of the Act, the
directors confirm that they have:
1. drawn up a Compliance Policy Statement setting
out the Group’s policies (that are, in the opinion of
the directors, appropriate to the Group) in respect
of the compliance by the Company with its Relevant
Obligations;
2. put in place appropriate arrangements or structures
that, in the opinion of the directors, provide a
reasonable assurance of compliance in all material
respects with the Group’s Relevant Obligations; and
3. conducted a review of the arrangements or
structures that the directors have put in place to
ensure material compliance with the Company’s
Relevant Obligations during the financial year to
which this report relates.
Going Concern
The Directors have assessed the financial position of
the Group in light of the principal business risks facing
the construction industry as a whole and the Group’s
strategic plan. They believe that the Group is well
placed to manage and mitigate these risks. Thus, they
have a reasonable expectation that the Group has
adequate resources to continue in operational existence
for 12 months from the date of approval of the financial
statements. For this reason, the directors consider
it appropriate to adopt the going concern basis in
preparing the financial statements.
Significant Shareholdings
As at 31 December 2019 and 27 February 2020, the Group has been notified of the following interests of 3% or more
in its ordinary share capital:
As at 31 December 2019 As at 27 February 2020
Shareholder Ordinary
Shares held
% Ordinary
Shares held
%
1 FIL Investment International 87,027,910 9.99 86,834,926 9.97
2 Rye Bay Capital 78,698,321 9.03 73,698,321 9.03
3 GIC 77,492,088 8.89 77,492,088 8.89
4 Oaktree Capital Mgt 55,250,000 6.34 55,250,000 6.34
5 Paradice Investment Mgt 47,857,210 5.49 47,267,338 5.42
6 Pelham Capital Mgt 45,497,440 5.22 45,497,440 5.22
7 Man GLG 40,018,455 4.59 43,432,327 4.98
8 Lazard 36,045,437 4.14 37,472,424 4.30
9 SAS Rue la Boétie 29,647,572 3.40 29,552,390 3.39
10 Credit Suisse Group 29,525,118 3.39 27,083,342 3.11
11 Kinney Asset Mgt 27,200,000 3.12 25,600,000 2.94
12 Ranger Global Real Estate Advisors 26,127,436 3.00 24,914,985 2.86
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
92  93
Governance Directors' Report
Viability Statement
In accordance with the provisions of the UK Corporate
Governance Code (2018), the directors are required to
assess the prospects of the Group, explain the period
over which they have done so and state whether they
have a reasonable expectation that the Group will be
able to continue in operation and meet liabilities as they
fall due over this period of assessment.
The directors assessed the prospects of the Group over
the three-year period to February 2023. The directors
concluded that three years was an appropriate period
for the assessment, having regard to the following:
• The Group’s strategic plan is predominantly based
on a 3-year horizon with longer term strategic
forecasting and any statement with foresight
greater than three years having to be made with a
considerable level of estimation; and
• In general, the inherent short-cycle nature of the
residential market in Ireland, including the Group’s
forward sales and project pipeline, does not lend
itself to making long term projection statements
greater than three years.
It is recognised that such future assessments are subject
to a level of uncertainty that increases with time, and
therefore future outcomes cannot be guaranteed or
predicted with certainty.
The Group’s strategic plan was approved by the Board
at its meeting in December 2019 and is based on
forecasts undertaken by management of the relevant
business functions. The plan reflects construction
cost and house price inflationary assumptions which
were reviewed at Board and management level. The
underlying assumptions of the Group’s strategic plan are
subject to sensitivity analysis for scenarios that could
reasonably materialise. The risk factors outlined in the
Risk Management Report on pages 36 to 43 were also
considered in the strategic plan process.
Based on the above assessment the directors have a
reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall
due over the 3-year period.
Political Donations
No political donations were made by the Group
during the year that require disclosure under the
Electoral Act 1997.
Subsidiary Companies
Information in relation to the Group’s subsidiaries is set
out in note 25 to the financial statements. The Group
does not have any branches outside of Ireland.
Subsequent Events
Information in respect of events since the year end
is contained in note 31 to the consolidated financial
statements.
Audit and Risk Committee
The Group has an established Audit and Risk
Committee comprising of three independent Non-
Executive Directors. Details of the Committee and its
activities are set out on pages 62 to 66.
Auditor
KPMG, Chartered Accountants, were appointed
statutory auditor on 21 August 2017 and have been
re-appointed annually since that date. Pursuant
to section 383(2) KPMG will continue in office and
a resolution authorising the directors to fix the
auditor’s remuneration will be proposed at the Annual
General Meeting.
Relevant Audit Information
The Directors confirm that in so far as they are each
aware, there is no relevant audit information of which
the Group’s auditors are unaware and that each
Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any
relevant audit information and to establish that the
Group’s auditors are aware of that information.
Approval of Financial Statements
The financial statements were approved by the
Board on 27 February 2020.
On behalf of the Board
Micheal Rice
Director
Stephen Garvey
Director
Semple Woods
Donabate, Co. Dublin
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
95
94 
Financial
Statements
Access
Statement of directors’ responsibilities in respect of the annual report and the financial statements 96
Independent Auditor’s Report to the Members of  Properties plc 98
Consolidated statement of profit or loss and other comprehensive income 104
Consolidated balance sheet 105
Consolidated statement of changes in equity 106
Consolidated statement of cash flows 108
Notes to the consolidated financial statements 109
Company balance sheet 148
Company statement of changes in equity 149
Notes to the Company financial statements 151
Alternative Performance Measures (APMs) 154
We are giving more
people the opportunity
of owning a new
home - building where
they want to live and
at a price that is more
affordable.”
“
Cluain Adain
Navan, Co. Meath
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Statement of directors’ responsibilities in respect of the annual report
and the financial statements
Statement of directors’ responsibilities in respect of the annual report
and the financial statements (continued)
The directors are responsible for preparing the annual report and the Group and Company financial statements, in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and Company financial statements for each financial year.
Under that law, the directors are required to prepare the consolidated financial statements in accordance with IFRS
as adopted by the European Union and applicable law including Article 4 of the IAS Regulation. The directors have
elected to prepare the Company financial statements in accordance with FRS 101 Reduced Disclosure Framework as
applied in accordance with the provisions of Companies Act 2014.
Under company law the directors must not approve the Group and Company financial statements unless they
are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and
Company and of the Group’s profit or loss for the financial year ended 31 December 2019. In preparing each of
the Group and Company financial statements, the directors are required to:
» select suitable accounting policies and then apply them consistently;
» make judgements and estimates that are reasonable and prudent;
» state whether applicable Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements;
» assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
» use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to
cease operations, or have no realistic alternative but to do so.
The directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules of the Central Bank of Ireland to include a management report containing a fair review of the
business and a description of the principal risks and uncertainties facing the Group.
The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at
any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure
that the financial statements of the Company comply with the provision of the Companies Act 2014. The directors
are also responsible for taking all reasonable steps to ensure such records are kept by its subsidiaries which
enable them to ensure that the financial statements of the Group comply with the provisions of the Companies Act
2014 including Article 4 of the IAS Regulation. They are responsible for such internal controls as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error, and have general responsible for safeguarding the assets of the Company and the Group,
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The
directors are also responsible for preparing a directors’ report that complies with the requirements of the Companies
Act 2014.
The directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Group’s and Company’s website www..ie. Legislation in the Republic of Ireland concerning the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement as required by the Transparency Directive and UK Corporate Governance Code
Each of the directors, whose names and functions are listed on pages 86 to 88 of this annual report, confirm that, to
the best of each person’s knowledge and belief:
» The Group financial statements, prepared in accordance with IFRS as adopted by the European Union and the
Company financial statements prepared in accordance with FRS 101 Reduced Disclosure Framework, give a true
and fair view of the assets, liabilities, and financial position of the Group and Company at 31 December 2019
and of the profit or loss of the Group for the financial year then ended;
» The directors’ report contained in the annual report includes a fair review of the development and performance
of the business and the position of the Group and Company, together with a description of the principal risk and
uncertainties that they face; and
» The annual report and financial statements, taken as a whole, provides the information necessary to assess
the Group’s performance, business model and strategy and is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company’s position and performance, business model
and strategy.
On behalf of the Board
Michael Rice Stephen Garvey
Director Director 27 February 2020
Financial Statements 97
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Independent Auditor’s Report to the Members of  Properties PLC
(continued)
Independent Auditor’s Report to the Members of  Properties PLC
Report on the audit of the financial statements
Opinion
We have audited the Group and Company financial statements of  Properties PLC (‘the Group’) for the
year ended 31 December 2019 set out on pages 104 to 153, which comprise the Consolidated statement of profit
or loss and other comprehensive income, the Consolidated and Company Balance Sheets, the Consolidated and
Company Statements of Changes in Equity, the Consolidated and Company Cash Flow Statements and related
notes, including the summary of significant accounting policies set out in note 8. The financial reporting framework
that has been applied in the preparation of the Group financial statements is Irish Law and International Financial
Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements,
Irish Law and FRS 101 Reduced Disclosure Framework.
In our opinion:
» the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and
Company as at 31 December 2019 and of the Group’s profit for the year then ended;
» the Group financial statements have been properly prepared in accordance with IFRS as adopted by the
European Union;
» the Company financial statements have been properly prepared in accordance with FRS 101 Reduced Disclosure
Framework issued by the UK’s Financial Reporting Council; and
» the Group and Company financial statements have been properly prepared in accordance with the requirements
of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
section of our report. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee.
We were appointed as auditor by the directors on 21 August 2017. The period of total uninterrupted engagement is
the period 3 years ended 31 December 2019. We have fulfilled our ethical responsibilities under, and we remained
independent of the Group in accordance with, ethical requirements applicable in Ireland, including the Ethical
Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to public interest
entities. No non-audit services prohibited by that standard were provided.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit
of the financial statements and include the most significant assessed risks of material misstatement (whether or
not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matter was as follows:
The key audit matter How the matter was addressed in our audit
Inventories, relating to work-in-
progress on sites under development
and land yet to be developed,
represent a significant asset of
the Group.
Work-in-progress comprises of
the costs of the land being built
on, direct materials, direct labour
costs and those overheads that
have been incurred in bringing the
inventories to their present location
and condition.
Work-in-progress per site is stated
at the lower of cost and net
realisable value (“NRV”), NRV being
the estimated net selling price less
costs to sell and management’s
estimated total costs of completion.
The forecasting of selling prices
and costs to complete is inherently
judgemental and may be subject to
estimation error.
For each development project,
site-wide residential development
costs are allocated between units
built in the current period and units
to be built in future years, which
requires further judgement.
The Group recognises profit on each
unit sale by reference to the overall
expected margin to be achieved on
the site.
There is a risk that the assumptions
of such forecasts and estimations
may be inaccurate with a resulting
impact on the carrying value
of inventory or the amount of
profit recognised.
Our audit procedures included, amongst others:
» We obtained and documented our understanding of the process to
determine the NRV of the Group’s work-in-progress and tested the
design and implementation of the relevant controls therein.
» For all new land acquisitions, we inspected purchase contracts and
agreed the costs of acquisition including related purchase costs.
» We agreed a sample of costs incurred and included in inventory in
the year such as direct materials, direct labour costs and overheads
to supporting documentary evidence, which included checking that
they were allocated to the appropriate site.
» We inspected the Group’s NRV reports on a sample basis and
challenged the key inputs and assumptions in the following ways:
– We agreed a sample of forecast costs to purchase
contracts, supplier agreements or tenders and other
relevant documentation.
– We evaluated the assumption in relation to forecast unit numbers to
be constructed based on appropriate documentary support.
– We compared the forecast sales prices against recent prices
achieved for similar properties to support the validity of the
estimated sales price in the forecast.
– We enquired as to whether there were any site-specific factors
which may indicate that an individual site could be impaired.
– We evaluated the sensitivity of the development margin to a
change in sales prices and costs and considered whether this
indicated a risk of impairment of the inventory balance.
– For sites in development, we compared actual unit sales and
costs incurred to NRV estimates to ensure that NRV values
were updated and that the overall expected site margin was
adjusted accordingly.
» For completed sales, we tested the accuracy of the release from
inventory to cost of sales recorded in the general ledger for
consistency with the NRV reports for the relevant sites.
» We considered the adequacy of the Group’s disclosures regarding
the carrying value of inventory.
We found that the profit margins recognised on completed sales during
the year appropriately reflected the attributable costs of the units sold.
We found that the key assumptions used in the calculations of NRV
were reasonable and supported the carrying value of inventory as at
31 December 2019, and the related disclosures in respect of work-in-
progress to be appropriate.
Carrying value of Inventory €840.5 million (2018 - €719 million) and profit recognition.
Refer to page 62 (Audit and Risk Committee Report), page 115 (accounting policy for inventories) page 113
(accounting policy for expenditure) and pages 133 to 134 (financial disclosures - inventories)
Financial Statements 99
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Independent Auditor’s Report to the Members of  Properties PLC
(continued)
Independent Auditor’s Report to the Members of  Properties PLC
(continued)
Due to the nature of the Company’s activities, there are no key audit matters that we are required to communicate
in accordance with ISAs (Ireland).
Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at €4.8 million (2018: €4.4 million). This
has been calculated with reference to a benchmark of total assets which we consider to be one of the principal
considerations for members of the Group in assessing the financial performance of the Group as the principal focus
of the Group in the financial period has been the deployment of capital raised. Materiality represents approximately
0.5% of this benchmark. We report to the Audit and Risk Committee all corrected and uncorrected misstatements
we identified through our audit with a value in excess of €0.2 million (2018: €0.2 million). In addition, we applied
a lower specific materiality level of €1.1 million for testing profit and loss items, representing approximately 0.4%
of total revenues for the year. In our judgement, the application of this specific materiality is appropriate due to key
performance indicators of the Group.
Materiality for the parent company financial statements as a whole was set at €4.3 million (2018: €4.3 million). This
was determined with reference to a 0.5% benchmark of total assets. We reported to the Audit and Risk Committee
any corrected or uncorrected identified misstatements exceeding €0.2 million (2018: €0.2 million).
We subjected all of the Group’s reporting components to audits for group reporting purposes. The work on all
components was performed by the Group audit team.
We have nothing to report on going concern
We are required to report to you if:
» we have anything material to add or draw attention to in relation to the directors’ statement in Note 7 to the
financial statements on the use of the going concern basis of accounting with no material uncertainties that may
cast significant doubt over the Group and Company’s use of that basis for a period of at least twelve months
from the date of approval of the financial statements; or
» if the related statement under the Euronext Dublin and UK Listing Authority Listing Rules set out on page 92 is
materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
Other information
The directors are responsible for the other information presented in the Annual Report together with the financial
statements. The other information comprises the information included in the Directors’ Report, Chairman’s Letter,
CEO’s Review, CFO’s review, Strategic Update, Business Units, Risk Management Report, ESG Report, Corporate
Governance Report, Audit and Risk Committee Report and Remuneration and Nomination Committee Report. The
financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on
the financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
Based solely on our work on the other information we report that, in those parts of the Directors’ report specified for
our consideration:
» we have not identified material misstatements in the directors’ report;
» in our opinion, the information given in the directors’ report is consistent with the financial statements;
» in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or
draw attention to in relation to:
» the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated;
» the directors’ confirmation within the Viability Statement on page 92 that they have carried out a robust
assessment of the principal risks facing the Group, including those that would threaten its business model, future
performance, solvency and liquidity; and
» the directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over
what period they have done so and why they considered that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention
to any necessary qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items and report to you in the following circumstances:
» Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge
we acquired during our financial statements audit and the directors’ statement that they consider that the
Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s position and performance, business model
and strategy;
» Report of the Audit and Risk Committee: if the section of the Annual Report describing the work of the Audit and
Risk Committee does not appropriately address matters communicated by us to the Audit and Risk Committee;
» Statement of compliance with UK Corporate Governance Code: if the directors’ statement does not properly
disclose a departure from provisions of the UK Corporate Governance Code specified by the Listing Rules of
Euronext Dublin and the UK Listing Authority for our review.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate
Governance Statement on pages 54 to 61, that:
» based on the work undertaken for our audit, in our opinion, the description of the main features of internal
control and risk management systems in relation to the financial reporting process and information relating
to voting rights and other matters required by the European Communities (Takeover Bids (Directive 2004/EC)
Regulations 2006 and specified for our consideration, is consistent with the financial statements and has been
prepared in accordance with the Act;
» based on our knowledge and understanding of the Company and its environment obtained in the course of our
audit, we have not identified any material misstatements in that information; and
» the Corporate Governance Statement contains the information required by the European Union (Disclosure of
Non-Financial Diversity Information by certain large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our audit, other information required by the Act is contained in
the Corporate Governance Statement.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
Financial Statements 101
100 
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Independent Auditor’s Report to the Members of  Properties PLC
(continued)
Independent Auditor’s Report to the Members of  Properties PLC
(continued)
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be
readily and properly audited and the financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration
and transactions required by Sections 305 to 312 of the Act are not made.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided
the information required by section 5(2) to (7) of the European Union (Disclosure of Non-Financial and Diversity
Information by certain large undertakings and groups) Regulations 2017 for the year ended 31 December 2019 as
required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings
and groups) (amendment) Regulations 2018.
The Listing Rules of the Euronext Dublin and the UK Listing Authority require us to review:
» the Directors’ Statement, set out on pages 91 and 92, in relation to going concern and longer-term viability;
» the part of the Corporate Governance Statement on pages 54 to 61 relating to the Company’s compliance with
the provisions of the UK Corporate Governance Code and the Irish Corporate Governance Annex specified for
our review; and
» certain elements of disclosures in the report to shareholders by the Board of Directors’ remuneration committee.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on pages 96 and 97, the directors are responsible for: the
preparation of the financial statements including being satisfied that they give a true and fair view; such internal
control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs
(Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other
irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting
a material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may
involve any area of law and regulation and not just those directly affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at https://www.iaasa.ie/getmedia/
b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies
Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a
body, for our audit work, for our report, or for the opinions we have formed.
Michael Gibbons 27 February 2020
for and on behalf of KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
Financial Statements 103
102 
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Consolidated balance sheet
as at 31 December 2019
Consolidated statement of profit or loss and other comprehensive income
For the financial year ended 31 December 2019
104 
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Consolidated statement of changes in equity
for the financial year ended 31 December 2018
Consolidated statement of changes in equity
for the financial year ended 31 December 2019
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019
Consolidated statement of cash flows
For the financial year ended 31 December 2019
2019 2018
Note €’000 €’000
Cash flows from operating activities
Profit/(loss) for the financial year 22,840 (3,930)
Adjustments for:
Depreciation and amortisation 1,391 235
Finance costs 12 2,666 1,414
Equity-settled share-based payment expense 15 592 407
Tax charge/(credit) 17 3,851 (39)
(Profit)/loss on disposal of property, plant and equipment 18 (456) 18
30,884 (1,895)
Changes in:
Inventories (118,605) (432,031)
Trade and other receivables (1,036) 11,076
Trade and other payables 21,346 23,126
Cash used in operating activities (67,411) (399,724)
Interest paid (2,472) (1,218)
Tax refund/(paid) 276 (32)
Net cash used in operating activities (69,607) (400,974)
Cash flows from investing activities
Acquisition of property, plant and equipment 18 (7,747) (10,622)
Acquisition of intangible assets 19 (491) (564)
Cash acquired on acquisition - 15
Proceeds from the sale of property, plant and equipment 1,160 -
Acquisition of subsidiary (net of cash acquired) - (13,663)
Net cash used in investing activities (7,078) (24,834)
Cash flows from financing activities
Proceeds from issue of share capital - 213,085
Issue costs paid - (7,131)
Proceeds from loans and borrowings 120,000 26,000
Repayment of loans and borrowings (80,000) (26,000)
Transaction costs related to loans and borrowings - (1,025)
Payment of lease liabilities (792) (216)
Net cash from financing activities 39,208 204,713
Net decrease in cash and cash equivalents (37,477) (221,095)
Cash and cash equivalents at the beginning of the year 130,701 351,796
Cash and cash equivalents at the end of the year 93,224 130,701
1 Reporting entity
 Properties PLC (“the Company) is domiciled in the Republic of Ireland. The Company’s registered office
is 15 Merrion Square North, Dublin 2. These consolidated financial statements comprise the Company and its
subsidiaries (together referred to as “the Group”) and cover the financial year ended 31 December 2019. The
Group’s principal activities are the construction and sale of houses and apartments for the private buyer, local
authorities and the private rental sector.
2 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS’s) as adopted by the European Union which comprise standards and interpretations approved by
the International Accounting Standards Board (IASB), and those parts of the Companies Act 2014 applicable to
companies reporting under IFRS and Article 4 of the IAS regulation.
This is the Group’s first set of annual financial statements in which IFRS 16 Leases has been applied. The related
changes to significant accounting policies are described in Note 6. Other than the adoption of IFRS 16, there have
been no other significant changes to the Group’s accounting policies during the year.
3 Functional and presentation currency
These consolidated financial statements are presented in Euro which is the Company’s functional currency. All
amounts have been rounded to the nearest thousand unless otherwise indicated.
4 Use of judgements and estimates
Management applies the Group’s accounting policies as described in Note 8 when making critical accounting
judgements, of which no individual judgement is deemed to have a significant impact upon the financial
statements, apart from the estimation involved in assessing the carrying value of inventories as detailed below.
(a) Carrying value of work-in-progress, estimation of costs to complete and impact on
profit recognition
The Group holds inventories stated at the lower of cost and net realisable value. Such inventories include land and
development rights, work-in-progress and completed units. As residential development is largely speculative by
nature, not all inventories are covered by forward sales contracts. Furthermore, due to the nature of the Group’s
activity and, in particular the scale of its developments and the length of the development cycle, the Group has
to allocate site-wide development costs between units being built and/or completed in the current year and
those for future years. It also has to forecast the costs to complete on such developments. These estimates impact
management’s assessment of the net realisable value of the Group’s inventory balance and also determine the
extent of profit or loss that should be recognised in respect of each development in each reporting period.
In making such assessments and allocations, there is a degree of inherent estimation uncertainty. The Group
has established internal controls designed to effectively assess and centrally review inventory carrying values and
ensure the appropriateness of the estimates made. These assessments and allocations evolve over the life of the
development in line with the risk profile, and accordingly the margin recognised reflects these evolving assessments,
particularly in relation to the Group’s long-term developments.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
5 Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, both for
financial and non-financial assets and liabilities. Fair value is defined in IFRS 13, Fair Value Measurement, as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When measuring the fair value of an asset or liability, the Group uses market
observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on
the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Further information about the assumptions made in measuring fair values is included in the following notes:
» Note 15 Share-based payments; and
» Note 27 Financial instruments and financial risk management.
6 Changes in significant accounting policies
The Group has initially adopted IFRS 16 Leases from 1 January 2019. A number of other new standards (IFRIC 23
Uncertainty on Tax Treatments and Annual Improvements to IFRS 2015-2017) are effective from 1 January 2019
but they do not have a material effect on the Group’s financial statements.
The Group has applied IFRS 16 using the modified retrospective approach, under which the right-of-use asset has
been measured at an amount equal to the lease liability. Accordingly, the comparative information presented for
2018 has not been restated – i.e. it is presented, as previously reported, under IAS 17 and related interpretations.
The details of the changes in accounting policy are disclosed below. The Group’s new accounting policy is
included in Note 8.13. Additionally, the disclosure requirements in IFRS 16 have not generally been applied to
comparative information.
a) Definition of a lease
Previously, the Group determined at contract inception whether an arrangement was or contained a lease under
IFRIC 4 Determining Whether an Arrangement contains a Lease. The Group now assesses whether a contract is
or contains a lease based on the new definition of a lease. Under IFRS 16, a contract is, or contains, a lease if the
contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.
On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that
were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease under IFRS
16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or
after 1 January 2019.
b) As a lessee
As a lessee, the Group leases assets including a property and motor vehicles. The Group previously classified leases
as operating or finance leases based on its assessment of whether the lease transferred significantly all the risks
and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognises
right-of-use assets and leases liabilities for most of these leases – i.e. these leases are on-balance sheet.
6 Changes in significant accounting policies (continued)
b) As a lessee (continued)
For leases of properties in which it is a lessee, the Group has elected not to separate non-lease components and
will instead account for the lease and non-lease components as a single lease component.
i. Leases classified as operating leases under IAS 17
Previously, the Group classified property and certain motor vehicles as operating leases under IAS 17. On transition,
for these leases, lease liabilities were measured at the present value of the remaining lease payments, discounted at
the Group’s incremental borrowing rate as at 1 January 2019 (see Note 6(d)(i)). Right-of-use assets are measured at
an amount equal to the lease liability. The Group applied this approach to all leases.
The Group tested its right-of-use assets for impairment on the date of transition and has concluded that there is no
indication that the right-of-use assets are impaired.
The Group used a number of practical expedients when applying IFRS 16 to leases previously classified as
operating leases under IAS 17. In particular, the Group:
» did not recognise right-of-use assets and liabilities for lease for which the lease term ends within 12 months of
the date of initial application;
» did not recognise right-of-use assets and liabilities for leases of low value assets;
» excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application; and,
» used hindsight when determining the lease term.
ii. Leases classified as finance leases under IAS 17
Previously, the Group leased certain motor vehicles and these leases were classified as finance leases under IAS
17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 January 2019
were determined at the carrying amount of the lease asset and the lease liability under IAS 17 immediately before
that date.
c) As a lessor
In certain instances the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
d) Impact on financial statements
(i) Impact on transition*
On transition to IFRS 16, the Group recognised additional right-of-use assets and additional lease liabilities. The
impact on transition is summarised below and further detail is provided in Note 28.
1 January
Right-of-use assets presented in Property, Plant and Equipment 1,227
Lease liabilities 1,227
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
6 Changes in significant accounting policies (continued)
d) Impact on financial statements (continued)
(i) Impact on transition* (continued)
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments
using its incremental borrowing rate at 1 January 2019. The discount rate applied for all leases ranged between 2.5%-4%.

Operating lease commitment at 31 December 2018 disclosed in the Group’s
consolidated financial statements 1,305
Discounted using the incremental borrowing rate at 1 January 2019 1,248
Finance lease liabilities recognised as at 31 December 2018 38
Recognition exemption for leases with less than 12 month of lease term at transition (59)
Lease liabilities recognised at 1 January 2019 1,227
*For the impact of IFRS 16 on profit or loss for the year and consolidated statement of cash flows, see Note 28. For
the impact of IFRS 16 on segment information see Note 9.
7 Going concern
The Group has recorded a profit after tax of €22.8 million (2018: loss of €3.9 million). The Group has a cash
balance of €93.2 million (2018: €130.7 million) and has committed undrawn funds available of €85 million
(2018: €125 million). Having considered the Group’s cash flow forecasts, the Directors believe that the Group has
adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to
prepare the financial statements on a going concern basis.
8 Significant accounting policies
The Group has consistently applied the following accounting policies to all periods presented in these consolidated
financial statements, except if mentioned otherwise.
8.1 Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.
Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss
immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at
the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial
instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise,
other contingent consideration is remeasured at fair value each reporting date and subsequent changes in the fair
value of the contingent consideration are recognised in profit or loss.
8 Significant accounting policies (continued)
8.1 Basis of consolidation (continued)
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date on which control commences until the date on which control ceases.
(iii) Joint operations
Joint operations arise where the Group has joint control of an operation with other parties, in which the parties have
direct rights to the assets and obligations of the operation. The Group accounts for its share of the jointly controlled
assets and liabilities and income and expenditure on a line by line basis in the consolidated financial statements.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated.
8.2 Revenue
The Group develops and sells residential properties. Revenue is recognised at the point in time when control over
the property has been transferred to the customer, which occurs at legal completion. Revenue is measured at the
transaction price agreed under the contract.
8.3 Expenditure
Expenditure recorded in inventory is expensed through cost of sales at the time of the related property sale. The
amount of cost related to each property includes its share of the overall site costs. Administration expense is
recognised in respect of goods and services received when supplied in accordance with contractual terms.
8.4 Taxation
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it
relates to a business combination, or items recognised directly in equity or in OCI.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current
tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.4 Taxation (continued)
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
» temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
» temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that
the Group is able to control the timing of the reversal of the temporary differences and it is probable that they
will not reverse in the foreseeable future; and
» taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits will be available against which they can be used. Future
taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of
taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual
subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the
probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary difference when they
reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to
income taxes, if any.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through
sale, and the Group has not rebutted this presumption.
Deferred tax assets and liabilities are offset only if certain criteria are met.
8.5 Share-based payment arrangements
The grant date fair value of equity-settled share-based payment arrangements granted to employees is generally
recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and
non-market performance conditions are expected to be met, such that the amount ultimately recognised is based
on the number of awards that meet the related service and non-market performance conditions at the vesting
date. For share-based payment awards with non-vesting conditions or market conditions, the grant date fair value
of the share-based payment is measured to reflect such conditions and there is no true-up for differences between
expected and actual outcomes.
8 Significant accounting policies (continued)
8.6 Exceptional items
Exceptional items are those that are separately disclosed by virtue of their nature or amount in order to highlight
such items within the consolidated statement of profit or loss for the financial year. Group management exercises
judgement in assessing each particular item which, by virtue of its scale or nature, should be highlighted as an
exceptional item. Exceptional items are included within the profit or loss caption to which they relate.
In the current financial year, redundancy and restructuring costs and costs associated with the cessation of the
Hollystown Golf and Leisure Limited business are considered exceptional items (Note 11). The directors believe that
separate presentation of these exceptional expenses is useful to the reader as it allows clear presentation of the results
of the underlying business and is relevant for an understanding of the Group’s performance in the financial year.
8.7 Property, plant and equipment
Property, plant and equipment is carried at historic purchase cost less accumulated depreciation. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its
intended use. Depreciation is provided to write off the cost of the assets on a straight-line basis to their residual
value over their estimated useful lives at the following annual rates:
» Buildings 2.5%
» Plant and machinery 14-20%
» Fixtures and fittings 20%
» Computer Equipment 33%
The assets’ residual values, carrying values and useful lives are reviewed on an annual basis and adjusted if
appropriate at each reporting date.
Where an impairment is identified, the recoverable amount of the asset is identified and an impairment loss, where
appropriate, is recognised in the statement of profit or loss and other comprehensive income.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised within administration expenses in the statement of profit or loss and other comprehensive income.
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Group.
8.8 Intangible assets – computer software
Computer software is capitalised as intangible assets as acquired and amortised on a straight-line basis over its estimated
useful life of 3 years, in line with the period over which economic benefit from the software is expected to be derived.
The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at each
reporting date.
8.9 Inventory
Inventory comprises property in the course of development, completed units, land and land development rights.
Inventories are valued at the lower of cost and net realisable value. Direct cost comprises the cost of land, raw
materials and development costs but excludes indirect overheads. Land purchased for development, including land
in the course of development, is initially recorded at cost.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.9 Inventory (continued)
Where such land is purchased on deferred settlement terms, and the cost differs from the amount that will
subsequently be paid in settling the liability, this difference is charged as a finance cost in the statement of profit or
loss and other comprehensive income over the period to settlement.
A provision is made, where appropriate, to reduce the value of inventories and work-in-progress to their net
realisable value.
8.10 Financial instruments
Financial assets and financial liabilities
Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently
measured based on their classification as described below. Their classification depends on the purpose for
which the financial instruments were acquired or issued, their characteristics and the Group’s designation of such
instruments. The standards require that all financial assets and financial liabilities be classified as fair value through
profit or loss (“FVTPL”), amortised cost, or fair value through other comprehensive income (“FVOCI”).
Classification of financial instruments
The following summarises the classification and measurement the Group has elected to apply to each of its
significant categories of financial instruments:
Type IFRS 9
Classification
Financial assets
Cash and cash equivalents
Other receivables
Restricted cash
Construction bonds
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Financial liabilities
Bank indebtedness
Accounts payable and accrued liabilities
Amortised cost
Amortised cost
Cash and cash equivalents
Cash and cash equivalents include cash and short-term investments with an original maturity of three months or
less. Interest earned or accrued on these financial assets is included in other income.
8 Significant accounting policies (continued)
8.10 Financial instruments (continued)
Classification of financial instruments (continued)
Other receivables
Such receivables are included in current assets, except for those with maturities more than 12 months after the
reporting date, which are classified as non-current assets. Loans and other receivables are included in trade
and other receivables on the consolidated balance sheets and are accounted for at amortised cost. These assets
are subsequently measured at amortised cost. The amortised cost is reduced by impairment losses. The Group
recognises impairment losses on an ‘expected credit loss’ model (ECL model) basis in line with the requirements of
IFRS 9. Interest income and impairment losses are recognised in profit or loss. Any gain or loss on derecognition is
recognised in profit or loss.
Restricted cash
Restricted cash includes cash amounts which are classified as non-current assets and held in escrow until the
completion of certain criteria.
Construction bonds
Construction bonds includes amounts receivable in relation to the completion of construction activities on sites.
These assets are included in trade and other receivables on the consolidated balance sheets and are accounted for
at amortised cost.
Other liabilities
Such financial liabilities are recorded at amortised cost and include all liabilities.
8.11 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events
and it is probable that an outflow of resources will be required to settle that obligation, and the amount has been
reliably estimated.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability, where the effect of discounting
is considered significant. The unwinding of the discount is recognised as a finance cost.
8.12 Pensions
The Group operates a defined contribution scheme. The assets of the scheme are held separately from those of the
Group in a separate fund. Obligations for contributions to defined contribution plans are expensed as the related
service is provided.
8.13 Leases
The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative
information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of
accounting policies under IAS 17 and IFRIC 4 are disclosed separately.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.13 Leases (continued)
Policy applicable from 1 January 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
uses the definition of a lease in IFRS 16.
This policy is applied to contracts entered into, on or after 1 January 2019.
i. As a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component and non-lease component on the basis of its relative stand-
alone prices. However, for the leases of property the Group has elected not to separate non-lease components and
account for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that
case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on
the same basis as those of property and motor vehicles. In addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease, or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate with reference to its current financing sources and makes
certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
» fixed payments, including in-substance fixed payments;
» variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
» amounts expected to be payable under a residual value guarantee; and
» the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in the future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate
of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it
will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
8 Significant accounting policies (continued)
8.13 Leases (continued)
Policy applicable from 1 January 2019 (continued)
i. As a lessee (continued)
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and
equipment’ and lease liabilities in ‘lease liability’ in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and
short-term lease. The Group recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
ii) As a lessor
In certain instances the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
Policy applicable before 1 January 2019
For contracts entered into before 1 January 2019, the Group determined whether the arrangement was or
contained a lease based on the assessment of whether:
» fulfilment of the arrangement was dependent on the use of a specific asset or assets; and
» the arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset if
one of the following was met:
– the purchaser had the ability or right to operate the asset while obtaining or controlling more than an
insignificant amount of the output;
– the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more
than an insignificant amount of the output; or
– facts and circumstances indicated that it was remote that other parties would take more than an insignificant
amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current
market price per unit of output.
i. As a lessee
Leases of property, plant and equipment that transfer to the Group substantially all of the risks and rewards of
ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower
of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the
assets are accounted for in accordance with the accounting policy applicable to that asset.
Assets held under other leases were classified as operating leases and were not recognised in the Group’s statement
of financial position. Payments made under operating leases were recognised in profit or loss on a straight-line basis
over the term of the lease. Lease incentives received were recognised as an integral part of the total lease expense,
over the term of the lease.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.13 Leases (continued)
Policy applicable before 1 January 2019 (continued)
ii. As a lessor
In certain instances, the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
8.14 Share capital
(i) Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity
(retained earnings).
(ii) Founder Shares
Founder Shares were initially issued as ordinary shares and subsequently re-designated as Founder Shares.
Following re-designation, the instruments are accounted for as equity-settled share-based payments as set out at
Note 8.5 above.
8.15 Finance income and costs
The Group’s finance income and finance costs include:
» Interest income
» Interest expense
Interest income and expense is recognised using the effective interest method.
9 Segmental information
The Group has considered the requirements of IFRS 8 Operating Segments in the context of how the business is
managed and resources are allocated.
In 2019, the Group was organised into two key reportable operating segments being  Homes and
 Living. Internal reporting to the Chief Operating Decision Maker (“CODM”) is provided on this basis. The
CODM has been identified as the Executive Committee (as detailed in the Corporate Governance Report).
The Group currently operates solely in the Republic of Ireland and therefore no geographically segmented financial
information is provided.
 Homes
 Homes develops and builds starter, mid-size, executive and high-end homes (both houses and
apartments) for the residential market in Ireland, with a focus principally on the Greater Dublin Area, as well as the
Cork, Limerick and Galway regions.
9 Segmental information (continued)
 Living
 Living’s strategic focus is on designing, developing and delivering residential solutions for institutional
investors, social and affordable landlords, government entities and strategic landowners.  Living intends
to augment its operations with partnership arrangements to design, develop and deliver residential schemes for
purchase by institutional investors, approved housing authorities and governmental and local authorities in Ireland.
 Living is also the Group’s delivery platform for Private Rental Sector (“PRS”) projects, which are residential
projects that governmental authorities promote by offering a range of financial incentives, such as by granting
guarantees and other financial risk sharing incentives, in order to increase the supply of properties in the build-to-
rent market.  Living develops residential schemes for private sector investors in PRS projects.
As outlined in the Strategy Update on pages 20 to 27, the Group’s activities have been restructured from 2020
onwards into new operating segments being Suburban, Urban and Partnerships with internal reporting to the
CODM being modified to reflect this new structure. As such, segmental information will be presented in line with this
new structure and the requirements of IFRS 8 Operating Segments in future reporting periods.
Segmental financial results
2019 2018
€’000 €’000
Revenue
 Homes 284,596 84,115
 Living 41 64
Revenue for reportable segments 284,637 84,179
Operating profit/(loss)
 Homes 41,812 6,311
 Living (1,983) (1,306)
Operating profit for reportable segments 39,829 5,005
Reconciliation to results for the year
Segment results – operating profit 39,829 5,005
Finance expense (2,666) (1,414)
Directors’ remuneration (2,712) (2,003)
Corporate function payroll (3,631) (3,137)
Listing costs - (409)
Depreciation and amortisation (980) (34)
Professional fees (1,256) (845)
Share-based payment expense (592) (407)
Gain on sale of property, plant and equipment 456 -
Other corporate costs (1,757) (725)
Profit/(loss) before tax 26,691 (3,969)
Financial Statements 121
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
9 Segmental information (continued)
Segment assets and liabilities
2019 2018

Homes

Living
Total 
Homes

Living
Total
Segment assets 
Reconciliation to Consolidated Balance Sheet
Deferred tax asset 31 71
Trade and other receivables 338 1,117
Cash and cash equivalents 25,251 106,650
Property, plant and equipment 16,855 7,677
Intangible assets 869 -
966,666 878,342
Segment liabilities
Reconciliation to
Consolidated Balance Sheet
Trade and other payables 4,386 1,663
Interest accrual - 196
Loans and Borrowings 39,569 -
100,119 35,227
10 Revenue

Residential property sales 
Land sales Income from property rental and other income 
All revenue is earned in the Republic of Ireland.
11 Exceptional items
In the current financial year, redundancy and restructuring costs and costs associated with the cessation of the
Hollystown Golf and Leisure Limited (“HGL”) business of €1.1 million have been classified as exceptional items in
accordance with the Group’s accounting policy set out at Note 8.6.
In the prior financial year, listing costs of €0.4 million relating to the Group’s Firm Placing and Open Offer were
classified as exceptional items in the prior financial year.
2019 2018
€’000 €’000
Corporate and HGL redundancy costs 8Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
13 Statutory and other information
2019 2018
€’000 €’000
Amortisation of intangible assets (Note 19) 299 61
Depreciation of property, plant and equipment (Note 18)* 1,937 645
Employment costs (Note 14) 28,567 19,885
(Profit)/loss on disposal of property, plant and equipment (456) 18
Auditor’s remuneration
Audit of Group, Company and subsidiary financial statements** 120 120
Other assurance services 15 315
Tax advisory services 18 48
Tax compliance services 32 29
185 512
Directors’ remuneration
Salaries, fees and other emoluments 2,605 1,963
Pension contributions 88 40
2,693 2,003
* Includes €0.8 million (2018: €0.5 million) capitalised in inventory during the year ended 31 December 2019
** Included in the auditor’s remuneration for the Group is an amount of €0.015 million (2018: €0.015 million) that
relates to the Company’s financial statements.
14 Employment costs
The average number of persons employed by the Group (including Executive Directors) during the financial year was
313 (Executive Committee: 4; Non-Executive Directors:4, Construction: 198; and Other: 107). (2018: Executive
Committee: 4; Non-Executive Directors: 4, Construction: 126; and Other: 66)
14 Employment costs (continued)
The aggregate payroll costs of these employees for the financial year were:
2019 2018
Before
Exceptional
items
Wages and salaries 
Social welfare costs 
Pension costs - defined contribution 
€12.9 million (2018: €7.3 million) of employment costs were capitalised in inventory during the financial year.
15 Share-based payment arrangements
The Group operates three equity-settled share-based payment arrangements being the Founder Share scheme, the
Long-Term Incentive Plan (“LTIP”) and the Savings Related Share Option Scheme (known as the Save As You Earn or
“SAYE” scheme). As described below, options were granted under the terms of the LTIP and SAYE schemes during
the financial year.
(a) Founder Share Scheme
The Founders of the Company (John Mulcahy, Justin Bickle (beneficially held by Durrow Ventures), and Stephen
Garvey) subscribed for a total of 200,000,000 ordinary shares of €0.001 each for cash at par value during 2017,
which were subsequently converted to Founder Shares in advance of the Company’s initial public offering. These
shares entitle the Founders to share 20% of the Company’s Total Shareholder Return (“TSR”) (being the increase
in market capitalisation of the Company, plus dividends or distributions in the relevant period) in each of five
individual testing periods up to 30 June 2022, subject to achievement of a performance condition related to the
Company’s share price. Further details in respect of the Founder Shares are outlined in Note 26.
Following the completion of the second test period (which ran from 1 March 2019 until 30 June 2019), it was
confirmed that, the performance condition related to the Company’s share price was not satisfied and therefore the
Founder Share Value in respect of the test period was €nil and accordingly no Founder Shares were converted to
ordinary shares during the year.
(b) LTIP
On 17 April 2019, the Remuneration and Nomination Committee approved the grant of 2,750,293 options to
certain members of the management team in accordance with the terms of the Company’s LTIP. These options will
vest on completion of a three-year service period from grant date subject to the achievement of certain performance
condition hurdles based on the Company’s TSR across the vesting period. 25% of the award will vest once the
3-year annualised TSR reaches 6.25% per annum with the remaining options vesting on a pro rata basis up to
100% if TSR of 12.5% is achieved. The entire grant of options remain outstanding at 31 December 2019.
Financial Statements 125
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
15 Share-based payment arrangements (continued)
(b) LTIP (continued)

LTIP options in issue at 1 January 2,351,743 1,588,500
Granted during the year 2,750,293 839,065
Forfeited during the year (416,236) (75,822)
LTIP options in issue at 31 December 4,685,800 2,351,743
Exercisable at 31 December - -
The fair value of LTIP options granted in the period was measured using a Monte Carlo simulation. Service and
non-market conditions attached to the arrangements were not taken into account when measuring fair value. The
inputs used in measuring fair value at grant date were as follows:
2019 2018 2018
Tranche 1 Tranche 1 Tranche 2
Fair value at grant date €0.32 €0.48 €0.31
Share price at grant date €0.84 €1.16 €0.87
Valuation methodology Monte Carlo Monte Carlo Monte Carlo
Exercise price €0.001 €0.001 €0.001
Expected volatility 27.0% 34.3% 28.1%
Expected life 3 years 3 years 3 years
Expected dividend yield 0% 0% 0%
Risk free rate -0.55% -0.45% -0.42%
The exercise price of all options granted under the LTIP to date is €0.001 and all options have a 7- year
contractual life.
Given the Group did not have an extensive trading history at grant date, expected share price and TSR volatility
was based on the volatility of a comparator group of peer companies over the expected life of the equity
instruments granted together with consideration of the Group’s actual trading volatility to date.
The Group recognised an expense of €0.6 million (2017: €0.04 million) in the consolidated statement of profit or
loss in respect of options granted under the LTIP.
15 Share-based payment arrangements (continued)
(c) SAYE Scheme
On 1 October 2019, the Remuneration and Nomination Committee approved the grant of 966,420 options to
employees of the Group. Under the terms of the scheme, employees may save up to €500 per month from their
net salaries for a fixed term of three or five years and at the end of the savings period they have the option to buy
shares in the Company at a fixed exercise price.
Details of options outstanding and grant date fair value assumptions
-
SAYE options in issue at 1 January 341,640 150,000 - -
Granted during the financial year 771,420 195,000 356,040 150,000
Cancelled during the financial year (306,720) (35,000) (14,400) -
SAYE options in issue at 31 December 806,340 310,000 341,640 150,000
2019 2018
3 Year 5 Year 3 Year 5 Year
Fair value at grant date €0.21 €0.21 €0.20 €0.23
Share price at grant date €0.75 €0.75 €1.03 €1.03
Valuation Methodology Monte Carlo Monte Carlo Monte Carlo Monte Carlo
Exercise price €0.60 €0.60 €1.00 €1.00
Expected volatility 27.5% 29.6% 26.8% 29.6%
Expected life 3 years 5 years 3 years 5 years
Expected dividend yield 0% 1.4% 0% 1.4%
Risk free rate -0.82% -0.78% -0.14% -0.42%
The weighted average exercise price of all options granted under the SAYE to date is €0.77.
Given the Group did not have an extensive trading history at grant date, expected share price and TSR volatility
was based on the volatility of a comparator group of peer companies over the expected life of the equity
instruments granted together with consideration of the Group’s actual trading volatility to date.
The Group recognised an expense of €0.01 million consolidated statement of profit or loss in respect of options
granted under the SAYE scheme.
Financial Statements 127
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
16 Earnings per share
a) Basic Earnings per share
The calculation of basic earnings per share has been based on the profit attributable to ordinary shareholders
and the weighted average numbers of shares outstanding for the financial year. There were 871,333,550 ordinary
shares in issue at 31 December 2019 (2018: 871,333,550).
2019 2018
Profit/(loss) for the financial year attributable to ordinary shareholders (€’000) 22,840 (3,930)
Weighted average number of shares for the financial year 871,333,550 745,664,898
Basic earnings/(loss) per share (cents) 2.62 (0.53)
2019 2018
No. of shares No. of shares
Reconciliation of weighted average number of shares (basic)
Issued ordinary shares at beginning of financial year 871,333,550 667,049,000
Effect of Founder Shares Converted - 7,545,229
Effect of shares issued for cash - 71,070,669
871,333,550 745,664,898
b) Diluted Earnings per share
2019 2018
Profit/(loss) for the financial year attributable to ordinary shareholders (€’000) 22,840 (3,930)
Weighted average number of shares for the financial year 871,333,550 745,664,898
Diluted earnings/(loss) per share (cents) 2.62 (0.53)
2019 2018*
No. of shares No. of shares
Reconciliation of weighted average number of shares (diluted)
Weighted average number of ordinary shares (basic) 871,333,550 745,664,898
Effect of share options on issue** - -
871,333,550 745,664,898
*The number of potentially issuable shares in the Group held under option or Founder Share arrangements at 31
December 2019 is 185,692,638 (2018: 183,850,221).
16 Earnings per share (continued)
b) Diluted Earnings per share (continued)
** Under IAS 33, Founders Shares and LTIP arrangements have an assumed test period ending on 31 December
2019. Based on this assumed test period no ordinary shares would be issued through the conversion of Founder
Shares and LTIP as the performance conditions were not met.
At 31 December 2019, 1,116,340 options (2018: 2,843,383) were excluded from the diluted weighted average
number of ordinary shares because their effect would have been anti-dilutive. As a result, there was no difference
between basic and diluted earnings per share.
17 Income tax
2019 2018
Before
Exceptional
items
Exceptional
items 
Current tax charge for the financial year 3,864 (93) 3,771 18
Deferred tax charge/(credit) for the financial year 80 - 80 (57)
Total income tax charge/(credit) 3,944 (93) 3,851 (39)
The tax assessed for the financial year differs from the standard rate of tax in Ireland for the financial year. The
differences are explained below.

Profit/(loss) before tax for the financial year 26,691 (3,969)
Tax charge/(credit) at standard Irish income tax rate of 12.5% 3,336 (496)
Tax effect of:
Income taxed at the higher rate of corporation tax 222 324
Non-deductible expenses – other 230 109
Other adjustments 63 24
Total income tax charge/(credit) 3,851 (39)
Financial Statements 129
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
17 Income tax (continued)
Movement in deferred tax balances
Balance at
1 January
2019
Recognised
in profit
or loss
Balance at
31 December
2019
€’000 €’000 €’000
Tax losses carried forward 208 (80) 128
208 (80) 128
The deferred tax asset accrues in Ireland and therefore has no expiry date. Management has considered it probable
that future profits will be available against which the above losses can be recovered and, therefore, the related
deferred tax asset can be realised.
18 Property, plant and equipment
Land &
buildings
Fixtures &
fittings
Plant &
machinery
Computer equipment Total

Cost
At 1 January 2019 7,713 748 3,341 407 12,209
Recognition of right-of-use asset on
initial application of IFRS 16 876 - 351 - 1,227
Adjusted at 1 January 2019 8,589 748 3,692 407 13,436
Additions 5,281 21 2,616 146 8,064
Disposals (704) (7) - - (711)
At 31 December 2019 13,166 762 6,308 553 20,789
Accumulated depreciation
At 1 January 2019 (36) (89) (500) (87) (712)
Charge for the financial year (743) (141) (896) (157) (1,937)
Disposals - 2 - - 2
At 31 December 2019 (779) (228) (1,396) (244) (2,647)
Net book value
At 31 December 2019 12,387 534 4,912 309 18,142
18 Property, plant and equipment (continued)
Land &
buildings
Fixtures &
fittings
Plant &
machinery
Computer
equipment 
Total Cost
At 1 January 2018 - 331 1,161 57 1,549
Acquisitions through business
combinations - - 62 - 62
Additions 7,713 417 2,136 356 10,622
Disposals - - (18) (6) (24)
At 31 December 2018 7,713 748 3,341 407 12,209
Accumulated depreciation
At 1 January 2018 - (15) (50) (8) (73)
Charge for the financial year (36) (74) (452) (83) (645)
Disposals - - 2 4 6
At 31 December 2018 (36) (89) (500) (87) (712)
Net book value
At 31 December 2018 7,677 659 2,841 320 11,497
The depreciation charge for the year includes €0.8 million (2018: €0.5 million) which was capitalised in inventory at
31 December 2019.
Financial Statements 131
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
19 Intangible assets
Licence
Computer
Software Total
Licence
Computer
Software Total
€227.3 million (2018: €66.6 million) of inventory was recognised in ‘cost of sales’ during the year ended
31 December 2019.
(i) Significant development land acquisitions completed during the year
Maryborough Ridge, Cork
As at 31 December 2018, the Group had entered into an unconditional contract to acquire 24.34 acres of
zoned land for residential development at Maryborough Ridge a development site at Douglas, Co. Cork for total
consideration of €12.5 million (excluding fees and stamp duty). A deposit of €1.3 million was paid in 2018 and was
recognised within trade and other receivables as at 31 December 2018. The transaction subsequently completed in
February 2019 resulting in the transfer of the full amount to inventory.
Castleknock
As at 31 December 2018, the Group had contracted to acquire a development site at Carpenterstown Road,
Castleknock, Co. Dublin for total consideration of €9.3 million (excluding fees and stamp duty). A deposit of €0.9
million was paid in 2018 and was recognised within trade and other receivables at 31 December 2018. The
transaction subsequently completed in January 2019 resulting in the transfer of the full amount to inventory.
Project Arrow
In March 2019 the Group acquired two development sites located in Leixlip and Newbridge, Co. Kildare for total
consideration of approximately €50 million (excluding fees and stamp duty).
Kilruddery, Co. Wicklow / Howth, Co. Dublin
In June 2019 the Group acquired two development sites for an aggregate consideration of approximately €24m
(excluding fees and stamp duty) at Kilruddery, Bray Co. Wicklow and at Howth Co. Dublin.
Rathmullan Road, Drogheda, Co. Meath
In July 2019 the Group acquired a 30 acre site at Rathmullan Road, Drogheda, Co. Meath for total consideration of
€7.4m (excluding fees and stamp duty).
(ii) Employment cost capitalised
€12.9 million of employment costs incurred during the year have been capitalised in inventory (2018: €7.3 million).
Financial Statements 133
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
20 Inventory (continued)
(iii) Development rights
Tallaght, Dublin 24 / Gateway Retail Park, Co. Galway
In March 2018, the Group entered into an Acquisition and Profit Share Agreement (“APSA”) with Targeted
Investment Opportunities ICAV (“TIO”), a wholly owned subsidiary of OCM Luxembourg EPF III S.a.r.l. Under the
terms of the APSA, the Group acquired certain development rights in respect of sites at The Square Shopping
Centre, Tallaght, Dublin 24 and Gateway Retail Park, Knocknacarra, Co. Galway for aggregate consideration of
approximately €13.9 million (including stamp duty and acquisition costs). The development rights will (subject
to planning) entitle the Group to develop at least 750 residential units under two joint business plans to be
undertaken with Sigma Retail Partners (on behalf of TIO) which will also entitle TIO to control and benefit from any
retail development at both sites. The Directors have determined that joint control over both sites exists and the
arrangements have been accounted for as joint operations in accordance with IFRS 11 Joint Arrangements. For
further information regarding the APSA, see Note 29 of these financial statements.
Maryborough Ridge, Cork
In December 2018, the Group entered into a licence agreement to develop 18.65 acres at Maryborough Ridge,
Cork. At 31 December 2019 an amount of €6.4 million (2018: €6.9 million) is included within inventory in line with
the conditions of the licence agreement as outlined in Note 30.
21 Trade and other receivables
2019 2018
€’000 €’000
Trade receivables 3,412 249
Other receivables 2,482 70
Prepayments 393 1,065
Unamortised transaction costs on debt facility - 788
VAT recoverable - 6,461
Construction bonds 4,401 3,377
Deposits for sites 1,553 2,497
12,241 14,507
The carrying value of all financial assets and trade and other receivables is approximate to their fair value and are
repayable on demand.
22 Trade and other payables
2019 2018
€’000 €’000
Trade payables 7,455 7,821
Payroll and other taxes 2,755 2,787
Inventory accruals 22,017 21,289
Other accruals 5,709 3,096
VAT payable 18,282 -
Interest accrual - 196
56,218 35,189
Non-current - 1,803
Current 56,218 33,386
56,218 35,189
The carrying value of all financial liabilities and trade and other payables is approximate to their fair value and are
repayable on demand.
23 Loans and Borrowings
(a) Loans and borrowings
The Group is party to a Revolving Credit Facility for a total of €250 million (of which €125 million is committed) with
a syndicate of domestic and international banks for a term of 3 years at an interest rate of one-month EURIBOR
(subject to a floor of 0 per cent.) plus a margin of 2.5%. At 31 December 2019, €40.0 million (31 December 2018:
€nil) had been drawn on the facility. Pursuant to the RCF agreement, there is a fixed and floating charge in place
over certain assets of the Group as continuing security for the discharge of any amounts drawn down.
31 December
2019
31 December
2018
€’000 €’000
Revolving Credit Facility 40,000 -
Unamortised borrowing costs* (446) -
Interest accrued* 15 -
Total loans and borrowings 39,569 -
The Group’s RCF was entered into with AIB, Barclays and HSBC and is subject to primary financial covenants
calculated on a quarterly basis:
» A maximum net debt to net assets ratio;
» The Group is required to maintain a minimum cash balance of €25.0 million throughout the term of the facility; and
» A minimum EBITDA to net interest coverage ratio.
*The Group had €Nil loans and borrowings at 31 December 2018 and accordingly the unamortised transaction
costs asset was classified within trade and other receivables at that date. Interest accrued was classified within trade
and other payables at 31 December 2018.
Financial Statements 135
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
23 Loans and Borrowings (continued)
(c) Net (debt) / funds reconciliation
31 December
2019
31 December
2018
€’000 €’000
Cash and cash equivalents 93,224 130,701
Loans and borrowings (39,569) -
Lease liabilities (595) (38)
Total net funds 53,060 130,663
(d) Lease Liabilities
Lease liabilities are payable as follows:
31 December 2019
Present value of
minimum lease
payments Interest
Future value of
minimum lease
payments
€’000 €’000 €’000
Less than one year 423 49 472
Between one and two years 102 2 104
More than two years 18 1 19
543 52 595
24 Restricted cash
The restricted cash balance relates to €1.5 million held in escrow until the completion of certain infrastructural works
relating to the Group’s residential development at Balbriggan, Co. Dublin. The estimated fair value of restricted cash
as at 31 December 2019 is its carrying value.
Financial Statements 137
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
25 Subsidiaries
The subsidiary companies (all of which are resident in Ireland) and the percentage shareholdings held by 
Properties PLC, either directly or indirectly, at 31 December 2019 are as follows:
Company Principal activity % Reg.office
 Properties (Holdings) Limited Holding company 100% 1
 Treasury DAC Financing activities 100% 2
 Contracting Limited Property development 100% 2
 Homes Limited Property development 100% 2
Greystones Devco Limited Property development 100% 2
Marina Quarter Limited Property development 100% 2
GLV Bay Lane Limited Property development 100% 2
 Living Limited Property development 100% 1
GL Partnership Opportunities DAC Property development 100% 1
GL Partnership Opportunities II DAC Property development 100% 1
Hollystown Golf & Leisure Limited Golf Club operations 100% 2
GLL PRS HoldCo Limited Dormant company 100% 1
GLL Partnership HoldCo Limited Dormant company 100% 1
GLL HoldCo Limited Dormant company 100% 1
Into the Future (South) Limited Dormant company 100% 2
Feathermist Limited Dormant company 100% 2
Braddington Developments Limited Dormant company 100% 2
Bulwark Limited Dormant company 100% 1
1 15 Merrion Square North, Dublin 2, D02 YN15
2 Block B, Maynooth Business Campus, Maynooth, Co. Kildare, W23W5X7
26 Share capital and share premium
(a) Authorised share capital
2019 2018
(d) Rights of shares in issue
Ordinary Shares
The holders of Ordinary Shares are entitled to one vote per Ordinary Share at general meetings of the Company
and are entitled to receive dividends as declared by the Company.
Founder Shares
Founder Shares do not confer on any holder thereof the right to receive notice of, attend, speak or vote at general
meetings of the Company except in relation to resolutions regarding the voluntary winding up of the Company or
the granting of further Founder Shares. Founder Shares do not entitle their holder to receive dividends.
Founder Shares entitle the Founders of the Company namely, Justin Bickle (through Durrow Ventures), Stephen
Garvey and John Mulcahy to share 20% of the Company’s TSR (calculated by reference to the change of control
price plus dividends and distributions made) between admission and the change of control (less the value of
any ordinary shares (at their original conversion or redemption price)) which have previously been converted or
redeemed in the five years following the IPO of the Company.
This entitlement is subject to the achievement of a performance condition related to the Company’s share price,
specifically that a compound rate of return of 12.5% (adjusted for any dividends or other distributions and returns
of capital made but excluding the value of any Founder Shares which have been redeemed) is achieved across five
testing periods.
Following completion of the second test period (which ran from 1 March 2019 until 30 June 2019), it was confirmed
that, the performance hurdle condition was not satisfied and therefore the Founder Shares Value for the test period
was zero, and accordingly no Founder Shares were converted to ordinary shares in respect of this test period.
Capital re-organisation
At an Extraordinary General Meeting of the Company held on 17 December 2019, the shareholders approved
(subject to the approval of the High Court) an increase of the distributable reserves of the Company by the transfer
of an amount of up to €700 million from the Company’s share premium account to distributable reserves (namely
retained earnings). This transfer will be reflected in the Group and Company financial statements once approved by
the High Court.
27 Financial instruments and financial risk management
The consolidated financial assets and financial liabilities are set out below. While all financial assets and liabilities
are measured at amortised cost, the carrying amounts of the consolidated financial assets and financial liabilities
approximate to fair value. Trade and other receivables and trade and other payables approximate to their fair value
as the transactions which give rise to these balances arise in the normal course of trade and, where relevant, with
industry standard payment terms and have a short period to maturity (less than one year).
Financial instruments: financial assets
2019 2018
€’000 €’000
The consolidated financial assets can be summarised as follows:
Trade receivables 3,412 249
Other receivables 2,482 70
Construction bonds 4,401 3,377
Deposits for sites 1,553 2,497
Cash and cash equivalents 93,224 130,701
Restricted cash (non-current) 1,500 1,500
Total financial assets 106,572 138,394
Cash and cash equivalents are short-term deposits held at variable rates.
Financial instruments: financial liabilities
2019 2018
€’000 €’000
Trade payables 7,455 7,821
Lease liabilities (2018: finance lease obligations) 595 38
Inventory accruals 22,017 21,289
Other accruals 5,709 3,096
Total financial liabilities 35,776 32,244
Trade payables and other current liabilities are non-interest bearing.
Financial risk management objectives and policies
As all of the operations carried out by the Group are in Euro there is no direct currency risk, and therefore the
Group’s main financial risks are primarily:
» liquidity risk – the risk that suitable funding for the Group’s activities may not be available;
» credit risk – the risk that a counter-party will default on their contractual obligations resulting in a financial loss
to the Group; and
Financial Statements 141
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies (continued)
» market risk – the risk that changes in market prices, such as interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments.
This note presents information and quantitative disclosures about the Group’s exposure to each of the above risks,
its objectives, policies and processes for measuring and managing risk, and the Group’s management of capital.
Liquidity risk
Liquidity risk is the risk that the Group may not be able to generate sufficient cash reserves to settle its obligations
in full as they fall due or can only do so on terms that are materially disadvantageous. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring, unacceptable losses or risking damage to
the Group’s reputation. The Group’s liquidity forecasts consider all planned development expenditure.
Management monitors the adequacy of the Group’s liquidity reserves against rolling cash flow forecasts. In addition,
the Group’s liquidity risk management policy involves monitoring short-term and long-term cash flow forecasts. Set
out below are details of the Group’s contractual cash flows arising from its financial liabilities and funds available to
meet these liabilities.
31 December 2019
Carrying
amount
*Contracted cash flows on loans and borrowings in the prior year related to commitment fee payable on the RCF.
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies (continued)
Liquidity risk (continued)
2019 2018
€’000 €’000
Funds available
Revolving credit facility* (undrawn committed) 85,000 125,000
Cash and cash equivalents 93,224 130,701
178,224 255,701
*The Group’s RCF contains a mechanism through which the committed amount can be increased up to €250.0
million. Under the terms of the Group’s RCF, the Group is required to maintain a minimum cash balance of €25.0
million in cash and cash equivalents throughout the term of the facility.
The Group’s RCF is subject to primary financial covenants calculated on a quarterly basis:
» A maximum net debt to net assets ratio;
» A minimum cash reserves limit; and
» A minimum EBITDA to net interest coverage ratio.
Credit risk
The Group’s exposure to credit risk encompasses the financial assets being: trade and receivables and cash and
cash equivalents. Credit risk is managed by regularly monitoring the Group’s credit exposure to each counter-party
to ensure credit quality of customers and financial institutions in line with internal limits approved by the Board.
There has been no impairment of trade receivables in the year presented. The impairment loss allowance allocated
against trade receivables, cash and cash equivalents and restricted cash is not material. The credit risk on cash and
cash equivalents is limited because counter-parties are leading international banks with minimum long-term BBB-
credit-ratings assigned by international credit agencies. The maximum amount of credit exposure is the financial
assets in this note.
Market risk
The Group’s exposure to market risk relates to changes to interest rates and stems predominately from its debt
obligations. In the prior year, the Group entered in to a RCF for a total of €250.0 million (of which €125.0 million is
committed) with a syndicate of domestic and international banks for a term of 3 years at an interest rate of EURIBOR
(subject to a floor of 0 per cent.) plus 2.5%. €40 million (2018: €nil) had been drawn on the facility at 31 December
2019. The Group has an exposure to cash flow interest rate risk where there are changes in the EURIBOR rates.
A fundamental review and reform of major interest rate benchmarks is being undertaken globally. There is
uncertainty as to the timing and the methods of transition for replacing existing benchmark interbank offered rates
(IBORs) with alternative rates.
IBOR continues to be used as a reference rate in financial markets and is used in the valuation of instruments with
maturities that exceed the expected end date for IBOR. Therefore, the Group believes the current market structure
supports the valuation of our debt obligations as at 31 December 2019.
Financial Statements 143
142 
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies (continued)
Capital management
The Group finances its operations by a combination of shareholders’ funds and working capital. The Group’s
objective when managing capital is to maintain an appropriate capital structure in the business to allow
management to focus on creating sustainable long-term value for its shareholders, with flexibility to take advantage
of opportunities as they arise in the short and medium term. This allows the Group to take advantage of prevailing
market conditions by investing in land and work-in-progress at the right point in the cycle.
28 Leases
A. Leases as lessee (IFRS 16)
The Group leases a property and motor vehicles. The leases typically run for a period of 1-3 years, with an option
to renew the lease after that date. Lease payments are renegotiated every 1-3 years to reflect market rentals.
The Group leases certain motor vehicles with contract terms of one year. These leases are short term and leases of
low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties (that do not meet the definition of investment property) and motor
vehicles are presented as property, plant and equipment (see Note 18).
Property Motor
Vehicles
Total

Balance at 1 January 876 351 1,227
Depreciation charge for the year (596) (148) (744)
Additions to right-of-use assets - 90 90
Balance at 31 December 280 293 573
ii. Amounts recognised in profit or loss
2019
€’000
2019 – Leases under IFRS 16
Interest on lease liabilities 32
Expenses relating to short-term leases 80
2018 – Operating leases under IAS 17
Lease expense 771
28 Leases (continued)
A. Leases as lessee (IFRS 16) (continued)
iii. Amounts recognised in statement of cash flows
2019
€’000
Total cash outflow on leases 792
B. Leases as lessor
In certain instances, the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
29 Related party transactions
(i) Key Management Personnel remuneration
Key management personnel comprise the Non-Executive Directors and the Executive Committee. The aggregate
compensation paid or payable to key management personnel in respect of the financial year was the following:
2019 2018
€’000 €’000
Short-term employee benefits 2,912 2,357
Post-employment benefits 116 74
LTIP and SAYE share-based payment expense 66 50
3,094 2,481
(ii) Other related party transaction
Prior year transaction
The Group entered into the APSA with TIO, a wholly owned subsidiary of OCM Luxembourg EPF III S.a.r.l. (OCM)
(and an entity in which John Mulcahy and Justin Bickle are directors) on 12 March 2018.
Under the terms of the APSA, the Group acquired certain development rights in respect of sites at The Square
Shopping Centre, Tallaght, Dublin 24 and Gateway Retail Park, Knocknacarra, Co. Galway for aggregate
consideration of approximately €13.9 million (including stamp duty and transaction costs). The development rights
will (subject to planning) entitle the Group to develop at least 750 residential units under two joint business plans
to be undertaken with Sigma Retail Partners (on behalf of TIO) which will also entitle TIO to control and benefit from
any retail development at both sites.
The Directors have determined that joint control over both sites exists and the arrangements have been accounted
for as joint operations in accordance with IFRS 11 Joint Arrangements. This accounting treatment was re-assessed at
the end of the reporting period and the Director’s concluded that it remains appropriate.
Financial Statements 145
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
29 Related party transactions (continued)
(ii) Other related party transaction (continued)
Prior year transaction (continued)
The APSA also stipulates that TIO would be entitled to share, on a 50/50 basis, any residual profit remaining after
the Group’s purchase consideration plus interest and residential development cost plus 20% has been deducted
from sales revenue in relation to the residential development opportunity at The Square Shopping Centre, Tallaght,
Dublin 24, Gateway Retail Park, Knocknacarra, Co. Galway and a third site, Bray Retail Park, Bray, Co. Wicklow.
The agreement defines certain default events including TIO not possessing good and marketable title over
the development sites and TIO not transferring good and marketable title over the development sites. On the
occurrence of a default event, the Group shall be entitled to recover the aggregate purchase consideration in
respect of the development rights. OCM has agreed to guarantee this obligation of TIO.
30 Commitments and contingent liabilities
(a) Commitments arising from development land acquisitions
In addition to the contingent liabilities outlined in Note 29 above, the Group had the following commitments at 31
December 2019 relating to development land acquisitions:
Land acquisition subject to re-zoning
In the prior year, the Group contracted to acquire 66 acres of currently unzoned land in the Greater Dublin Area
subject to appropriate residential zoning being awarded in the next local authority development plan on at least 30
acres of the site. Once this minimum threshold is achieved, the Group has committed to acquiring the entire site at a
fixed price per acre on land zoned for residential development with the remaining land to be acquired at market value.
Hollystown Golf and Leisure Limited (“HGL”)
During 2018, the Group acquired 100 per cent of the share capital of HGL. Under the terms of an overage
covenant signed in connection with the acquisition, the Group has committed to paying the vendor an amount
equal to an agreed percentage of the uplift in market value of the property should any lands owned by HGL,
that are not currently zoned for residential development be awarded a residential zoning. This commitment has
been treated as contingent consideration and the fair value of the contingent consideration at the acquisition
date was initially recognised at €nil. At the reporting date, the fair value of this contingent consideration was
considered insignificant.
Maryborough Ridge, Cork
The Group entered into a licence agreement to develop a further 18.65 acres at the Maryborough Ridge site in
2018. At 31 December 2018 an amount of €6.9 million was recognised in inventory reflecting the initial licence
fee paid and related stamp duty and acquisition costs. The remaining €6.1 million of the licence fee is payable in
equal instalments in line with milestones outlined in the licence agreement which will bring the total consideration to
approximately €13.0 million. During the year ended 31 December 2019, the first milestones were achieved resulting
in the payment of €2.1m of the residual licence fee.
Under the terms of the licence agreement, the Group has committed to paying the vendor further variable amounts
dependent on the number of units developed and unit sale prices achieved in excess of those contemplated in the
licence agreement. As these commitments are based on uncertain future events, the Group has treated them as
contingent consideration. The Group will reassess these commitments at each reporting date.
31 Subsequent events
No events have occurred subsequent to the reporting date that require disclosure in these financial statements.
32 Loss of the Parent Company
The parent company of the Group is  Properties PLC. In accordance with section 304 of the Companies
Act 2014, the Company is availing of the exemption from presenting its individual statement of profit or loss and
other comprehensive income to the Annual General Meeting and from filing it at the Companies Registration Office.
The Company’s loss after tax for the financial year was €1.1 million (for the period ended 31 December 2018: loss
of €0.7 million).
33 Approved financial statements
The Board of directors approved the financial statements on 27 February 2020.
Financial Statements 147
146 

The financial statements have been prepared on a going concern basis under the historical cost convention in
accordance with the Companies Act 2014 and Generally Accepted Accounting Practice in the Republic of Ireland
(Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)). Note 2 describes the principal
accounting policies under FRS 101, which have been applied. The Company has applied the exemptions available
under FRS 101 in respect of the following disclosures:
» Statement of Cash Flows
» Disclosures in respect of transactions with wholly owned subsidiaries
» Certain requirements of IAS 1 Presentation of Financial Statements
» Disclosures required by IFRS 7 Financial Instrument Disclosures
» Disclosures required by IFRS 13 Fair Value Measurement; and
» The effects of new but not yet effective IFRSs
» Disclosures in respect capital management
As noted in Note 32 of the consolidated financial statements, the Company has also availed of the exemption from
presenting the individual statement of profit or loss and other comprehensive income. The Company’s loss for the
financial year was €1.1 million. (2018: €0.7 million).
2 Significant accounting policies
Significant accounting policies specifically applicable to these individual Company financial statements and which
are not included within the accounting policies for the consolidated financial statements are detailed below.
(a) Investments in subsidiaries
Investments in subsidiaries are accounted for in these individual Company financial statements on the basis of the
direct equity interest, rather than on the basis of the reported results and net assets of investees. Investments in
subsidiaries are carried at cost less impairment.
The capital contributions arising from share-based payment charges represents the Company’s granting rights
over its equity instruments to employees of the Company’s subsidiaries. This results in a corresponding increase in
investment in subsidiary.
(b) Intra-group guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of companies within
the Group, the Company considers these to be insurance arrangements and accounts for them as such. The
Company treats the guarantee contract as a contingent liability until such time as it becomes probable that it will be
required to make a payment under the guarantee.
Financial Statements 151
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Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Notes to the Company financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the Company financial statements
For the financial year ended 31 December 2019 (continued)
3 Investment in subsidiaries
Amounts due from subsidiaries 845,700 845,931
845,700 845,931
Amounts owed by subsidiaries are non-interest bearing and are repayable on demand. The expected credit loss
associated with the above balances is considered to be insignificant.
6 Trade and other payables
2019 2018
€’000 €’000
Trade payables 44 146
Accruals 1,476 1,022
Payroll and other taxes 72 62
1,592 1,230
7 Share capital and share premium
For further information on share capital and share premium, refer to Note 26 of the consolidated
financial statements
8 Financial instruments
The carrying value of the Company’s financial assets and liabilities are a reasonable approximation of their
fair value.
Relevant disclosures on consolidated financial instruments and risk management are given in Note 27 of the
consolidated financial statements.
9 Share-based payments
For information in relation to share-based payment arrangements impacting the Company, refer to Note 15 of the
consolidated financial statements.
10 Related party disclosures
See Note 29 of the consolidated financial statements for information in relation to related party transactions.
Remuneration of key management
Key management of the Company is defined as the directors of the Company. The compensation of key
management personnel is set out in Note 29 of the consolidated financial statements.
Financial Statements 153
152  Financial Statements 153
152 
Chairman’s Letter CEO’s Review CFO’s Review Business Model & Strategy Governance Financial Statements
Alternative Performance Measures (APMs)
The Group reports certain alternative performance measures (“APMs”) that are not required under IFRS, which is
the framework under which the consolidated financial statements are prepared. The Group believes that these
metrics assist investors in evaluating the performance of the underlying business and provides a more meaningful
understanding of how senior management review and monitor the business on an ongoing basis.
These performance measures are referred to throughout our strategy and business update and the discussion of
our reported financial position. These performance measures may not be uniformly defined by all companies and
accordingly they may not be directly comparable with similarly titled measures and disclosures by other companies.
The principal APMs used by the Group are defined as follows:
1 Gross margin percentage
2019 2018
Financial statements reference €’000 €’000
Gross profit Statement of profit or loss 51,487 15,292
Revenue Note 10 284,637 84,179
Gross margin percentage 18.1% 18.2%
2 Earnings before interest, tax, depreciation and amortisation
(EBITDA) pre-exceptional items and related margin
An APM representing earnings before interest, tax, depreciation, amortisation and exceptional items that Group
management considers to be the most appropriate measure for assessing the profitability of the Group in a given
financial period. It is calculated by adding back non-cash depreciation and amortisation charges to the Group’s
operating profit or loss for a period, and also adding back exceptional items. EBITDA margin pre-exceptional items
represents this metric as a percentage of the Group’s revenue.
2019 2018
Financial statements reference €’000 €’000
Depreciation - capitalised 845 524
Depreciation - expensed 1,092 121
Total depreciation Note 18 1,937 645
Operating profit/(loss) Statement of profit or loss 29,357 (2,555)
Exceptional items Note 11 1,125 409
Depreciation – expensed As above 1,092 121
Amortisation Note 19 299 61
EBITDA: pre-exceptional items 31,873 (1,964)
EBITDA margin pre-exceptional items 11.2% (2.3%)
3 Return on capital employed (ROCE)
An APM representing return on capital employed that Group management believes is the best measure of the
Group’s ability to generate profits from its asset base in a capital efficient manner and to create sustainable
shareholder value. ROCE is calculated as operating profit divided by average capital employed, where operating
profit is earnings before interest and tax and where capital employed is calculated as (i) net assets plus (ii) financial
indebtedness, less (iii) cash and intangible assets.
4 Net Development Value (NDV)
An APM representing a metric the Group uses to estimate the development value of land held in inventory. NDV is
calculated by multiplying the number of units the Group expects to sell on a given site by the estimated sales price
of each unit.
5 Adjusted EPS (AEPS)
This metric will be used as a performance condition for grants under the Group’s LTIP from 2020 onwards. It
is defined as Basic Earnings Per Share as calculated in accordance with IAS 33 Earnings Per Share subject to
adjustment by the Remuneration and Nomination Committee at its discretion, for items deemed not reflective of the
Group’s underlying performance for the period.

2019 ANNUAL REPORT & FINANCIAL STATEMENTS
1.5 million passengers
401,300 passenger cars
313,200 RoRo units
343,400 container shipments (teu)
320,800 port lifts
carried during 2019 on up to 17 daily sailings.
Dublin Ferryport Terminals and Belfast Container
Terminal were up 3.5%.
In Eucon overall container volumes shipped were up 4.8%.
Strategic short sea RoRo routes operated by Irish Ferries
connecting Ireland to the UK and Continental motorway network.
voted ‘Best Cruise or Ferry Experience’ by readers of the
Irish Independent Newspapers.
Business
Review
04 The Group
06 Financial Highlights
07 Our Investment Case
08 Five Year Summary
11 Chairman’s Statement
15 Chief Executive’s Review
18 Operating and Financial Review
40 Environmental and Sustainability
52 Risk Management
58 Our Fleet
61 Executive Management Team
Corporate
Governance
64 The Board
66 Report of the Directors
70 Corporate Governance Report
83 Report of the Audit Committee
88 Report of the Nomination Committee
90 Report of the Remuneration Committee
105 Directors’ Responsibilities Statement
Financial
Statements
108 Independent Auditor’s Report
118 Consolidated Income Statement
119 Consolidated Statement of Comprehensive Income
120 Consolidated Statement of Financial Position
121 Consolidated Statement of Changes in Equity
123 Consolidated Statement of Cashflows
124 Notes to the Consolidated Financial Statements
182 Company Statement of Financial Position
183 Company Statement of Changes in Equity
185 Company Statement of Cashflows
186 Notes to the Company Financial Statements
202 Investor Information
Contents
View this report online
icg.annualreport19.com
01
Business
Review
High standard on-board experience
enjoyed by our Irish Ferries customers
encompasses quality food, beverage,
entertainment and accommodation
services. Passengers are never out of
touch with free satellite wi-fi services.
Business
Review

02
The Group 04
Financial Highlights 06
Our Investment Case 07
Five Year Summary 08
Chairman’s Statement 11
Chief Executive’s Review 15
Operating and Financial Review 18
Environmental and Sustainability 40
Risk Management 52
Our Fleet 58
Executive Management Team 61
Ferries Container & Terminal
Irish Continental Group (ICG) is the leading
Irish-based maritime transport Group. We
carry passengers and cars, Roll on Roll off
(RoRo) freight and Container Lift on Lift off
(LoLo) freight, on routes between Ireland, the
United Kingdom and Continental Europe. We
also operate container terminals in the ports
of Dublin and Belfast. The Group also carries
out ship chartering activities.
The Group
Ferries
division
Modern fleet of multi-purpose ferries and LoLo container
vessels operating between Ireland and the United Kingdom and
Continental Europe, and on charter.
Over 1.5 million passengers carried during 2019 on up to 17 daily
sailings.
Key freight positions on short sea routes between the Republic
of Ireland and Britain.
Inclusive package holidays to the Republic of Ireland and
Britain.
For more information see page 26.
Container and
Terminal division
Container shipping services between Ireland and Continental
Europe, operating modern fleet and equipment, as well as
stevedoring and related services for container traffic at Dublin
and Belfast Ports.
For more information see page 32.

04
Superior Customer Service
Leading Positions in Chosen Markets
Our Investment Case
Our Purpose
To deliver continued success in our chosen markets through the provision
of a safe, reliable, timely, good value and high-quality experience for all our
customers in a way that minimises our impact on the environment.
We will achieve this by anticipating our customers’ needs and matching
their requirements with superior services through constant innovation and
the rapid application of technology.
We measure our success through the quality of our service, as seen by our
customers, and delivering sustained and profitable growth for the benefit
of all our stakeholders.
Positioning the
Group for growth

Further details on How We Create
Value are set on pages 20 and 21.
07
Business
Review
Summary extract of Income Statement 2019 3

Revenue 357.4 330.2 335.1 325.4 320.6
Operating expenses and employee
benefits expense (270.6) (261.8) (254.1) (241.9) (245.1)
Depreciation and amortisation (36.8) (22.1) (20.7) (20.9) (18.3)
50.0 46.3 60.3 62.6 57.2
Non-trading items 1
14.9 13.7 28.7 - -
Interest (net) (3.4) (0.8) (1.3) (2.2) (3.1)
Profit before taxation 61.5 59.2 87.7 60.4 54.1
Taxation (1.3) (1.4) (4.4) (1.6) (0.4)
Profit for the year 60.2 57.8 83.3 58.8 53.7
EBITDA (pre non-trading items) 86.8 68.4 81.0 83.5 75.5
Per share information: €cent €cent €cent €cent €cent
Earnings per share
-Basic 31.7 30.4 44.1 31.4 28.9
-Adjusted 2
23.8 23.1 31.0 31.4 29.1
Dividend per share 13.410 12.770 12.160 11.580 11.025
Shares in issue at year end: m m m m m
-At year end 187.4 190.3 189.9 188.3 186.4
-Average during the year 189.8 190.0 188.8 187.5 185.8
1. 
Non-trading items are material non-recurring items that derive from events or transactions that fall outside the ordinary activities of the Group and
which individually, or, if of a similar type, in aggregate, are separately disclosed by virtue of their size or incidence.
2. Adjusted earnings exclude pension interest and non-trading items.
3. 
The 2019 reported results include the effects of first time adoption of IFRS 16 Leases. Prior year figures have not been restated for the effects of
IFRS 16 which was adopted with effect 1 January 2019. The effect on the Consolidated Income Statement for financial year 2019 was to decrease
operating expenses by €9.4 million, increase depreciation charges by €8.6 million, increase interest expenses by €1.0 million, a net reduction in
profit after tax of €0.2 million. The effect on the Consolidated Statement of Financial Position was to increase assets by €35.3 million and liabilities
by €35.5 million and reduce retained earnings by €0.2 million.
Five Year Summary

08
Summary extract of Statement 2019 3
2018 2017 2016 2015
of Financial Position     
Property, plant and equipment,
intangible and right of use assets 353.5 308.1 250.0 205.1 170.9
Retirement benefit surplus 12.5 2.5 8.1 2.4 5.6
Other assets 225.8 203.7 135.2 84.1 67.9
Total assets 591.8 514.3 393.3 291.6 244.4
Equity capital and reserves 287.9 252.9 223.8 144.4 115.5
Retirement benefit obligation 3.7 4.2 3.4 15.9 10.7
Other non-current liabilities 229.3 205.7 51.5 5.3 60.0
Current liabilities 70.9 51.5 114.6 126.0 58.2
Total equity and liabilities 591.8 514.3 393.3 291.6 244.4
Summary extract of Consolidated Statement
of Cashflows
Net cash inflow from operating activities 84.8 61.5 71.8 82.1 68.2
Net cash (outflow)/ inflow from investing
activities (52.3) (158.8) 27.7 (55.6) (34.8)
Net cash (outflow)/ inflow from financing
activities (46.5) 131.4 (51.3) (7.8) (28.0)
Cash and cash equivalents at the
beginning of the year 124.7 90.3 42.2 25.0 19.4
Effect of foreign exchange rate changes 0.2 0.3 (0.1) (1.5) 0.2
Closing cash and cash equivalents 110.9 124.7 90.3 42.2 25.0
    
Net (debt)/ cash (129.0) (80.3) 39.6 (37.9) (44.3)
Times Times Times Times Times
Net debt/ EBITDA 1.5x 1.2x N/A 0.5x 0.6x
Gearing (Net debt as a percentage of
shareholders’ funds) 45% 32% N/A 26% 38%
09
Business
Review

10
Chairman’s Statement
Financial Outcome
The application of IFRS 16 effective since 1
January 2019 affects some of the financial
comparatives as the 2018 reported amounts have
not been restated in the financial statements. To
assist assessment of underlying performance pro-
forma pre IFRS 16 amounts are disclosed.
The overall financial outcome for the Group was
a Profit before tax and before non-trading items
of €46.6 million (€46.8 million pre-IFRS 16) (2018:
€45.5 million). EBITDA generated was €86.8
million (€77.4 million pre-IFRS 16) (2018: €68.4
million) from total revenues of €357.4 million
(2018: €330.2 million).
The Group performance reflected the outcome in
our Ferries division where EBIT before non-trading
items was €36.4 million (€36.2 million pre-IFRS
16) (2018: €34.2 million). The growth in EBIT was
driven by an improved operational performance
in the fleet alongside the successful introduction
of the W.B. Yeats, partially offset by the increased
depreciation charge in its first year of operation.
During the year, the Group purchased two
additional container ships for external charter.
The Thetis D was purchased in April for €12.4
million, and the CT Rotterdam was purchased in
November for €8.2 million. Of our six owned LoLo
container vessels, three are currently on year-
long charters to the Group’s container shipping
subsidiary Eucon on routes between Ireland
and the continent whilst two are chartered to
third parties. The remaining vessel, the recently
acquired CT Rotterdam is providing short term
drydock cover with Eucon and will afterwards
be offered for external charter. Overall external
charter revenues were €4.7 million in 2019 (2018:
€2.1 million).
In April 2019, the Group entered into a bareboat
hire purchase agreement for the sale of the
Oscar Wilde to MSC Mediterranean Shipping
Company SA. Gross proceeds of €28.9 million
are receivable over 6 years and a profit of €14.9
million is reported as a non-trading item.
Following the technical difficulties on the flagship
Ulysses in 2018, significant works were carried
out on the vessel in January 2019. I am pleased to
report, the schedule integrity of the conventional
ferry fleet has returned to the previous high levels
achieved prior to the 2018 disruptions, improving
from 90% in 2018 to 97% in 2019. As expected,
this has contributed to the Group’s improved
financial performance in the year.
The W.B. Yeats was introduced into service in
January 2019. The vessel was deployed on the
Dublin – Holyhead route in the winter months and
transferred to the Dublin – Cherbourg route in
the summer. The first year of operation has been
a success and the vessel’s performance so far has
exceeded our expectations.
Performance in our Container and Terminal
division was improved with an EBIT of €13.6
million (€13.0 million pre IFRS 16) (2018: €12.1
million) with throughput in our terminals at Dublin
and Belfast showing strong growth.
During the year the Group agreed an extension
to the port operating concession agreement at
Belfast. This agreement now extends to 2026
during which the port owner BHC will undertake
significant investment in new port assets.
2019 proved to be a successful year for the Group, with growth in all of
our divisions and a return to high levels of schedule integrity across the
ferry fleet following our investment during 2019. Of particular importance
to the long-term development of the Group, was the introduction of the
new cruise ferry W.B. Yeats into service in January 2019, and the continued
expansion of our owned container ship fleet.
11
Business
Review
Strategic Development
2019 has been a successful year for the strategic
development of the Group. The W.B. Yeats
entered service in January and we expanded our
owned container vessel fleet. The Group in 2018
entered into an agreement for the construction of
a second cruise ferry with a contracted delivery
of late 2020. It is intended that this vessel will
service the Dublin – Holyhead route alongside the
existing Ulysses with the Epsilon being returned to
its owners.
The Dublin Swift underwent additional works to
increase car deck capacity and re-entered service
in March on Dublin – Holyhead offering faster
crossing times compared to conventional ferries.
The Ulysses has undergone an extensive drydock
with sailing performance on the Dublin –
Holyhead route returning to the previous levels of
reliability. The Isle of Inishmore which operates
our Rosslare – Pembroke service has also
undergone additional drydock works based on
learning from the Ulysses issues. The works have
improved our schedule integrity in 2019. We have
retained the charter of the roro vessel Epsilon
which we operate on both Dublin – Holyhead
and Dublin – Cherbourg pending delivery of our
second new vessel scheduled for late 2020. With
the full operational fleet now in position we look
forward to a period of growth and additional
revenue generating opportunities.
With increasing awareness of the effects of
economic activity on the environment the Group
is furthering its existing efforts to minimise its
environmental footprint. The Group’s strategy
is one of minimising costs and achieving of
economies of scale which very much aligns with
reducing environmental impacts. The Group
has and is currently undertaking significant
investments all of which bring significant
environmental improvements to our operations.
Among the various initiatives discussed later in the
Annual Report at pages 40 to 51, is an estimated
€25 million investment in exhaust gas cleaning
systems to significantly improve the quality of the
unavoidable emissions from our vessels.
With a year end net debt of €129.0 million, 1.5
times EBITDA, available liquidity resources €201.3
million and strong cash generation the Group is
actively seeking out new investment opportunities
that meet the Group’s stringent investment
hurdles.
Exit of United Kingdom from the
European Union
The UK exited the EU on 31 January and entered
a transition period until latest the end of 2020
during which negotiations of new rules on trade,
travel and business between the UK and the EU
will take place. There is continuing uncertainty
over the nature of the relationship post 2020. The
Group’s ferry division is highly dependent on trade
flows between Ireland and the UK. Therefore any
slowdown in either economy as a result of the exit
of United Kingdom from the European Union will
likely have an effect on Irish Ferries carryings.
The Group is happy to note that that the long
standing Common Travel Area arrangements will
remain allowing free movement of passengers
between both jurisdictions. It is also noted that
the UK have confirmed their adherence to the
Convention on the Contract for the International
Carriage of Goods by Road which will facilitate
retention of the landbridge route through the
United Kingdom.
Irish Ferries has engaged with its port operators
and regulatory authorities to minimise the effect
of any port disruptions on its services following
the UK exit. Should port delays occur in the short-
term on Irish sea services while new cross border
procedures settle in, Irish Ferries deployment
of the W.B. Yeats on Dublin – Cherbourg has
already added significant capacity to the direct
continental services. In addition due to the revised
fleet configuration Irish Ferries has the ability to
offer additional frequency on its direct continental
services should demand justify it.
The exit of United Kingdom from the European
Union is expected to have a lesser effect on our
container shipping operations between Ireland
and the continent. There is a risk of delays or
congestion at European ports with some potential
for increased flows, dependent on Irish economic
growth.
Chairman’s Statement
Continued

12
Corporate Governance
The Board acknowledges the importance of
good corporate governance practices. We have
developed a corporate governance framework
based on the application of the principles and
provisions of the UK Corporate Governance
Code and the Irish Corporate Governance Annex.
A revised UK Corporate Governance Code
was issued in July 2018 was effective for all of
2019 and the Board has reviewed its corporate
governance framework in light of the revised
Code. I report on this framework in the Corporate
Governance Report on pages 70 to 82.
During the year, I led the annual evaluation of
Board performance of which further details are
set out in the Corporate Governance Report on
page 77. As Chairman, I am satisfied that the
Board operates effectively to ensure the long-
term success of the Group and that each Director
is contributing effectively and demonstrating
commitment to their role.
Dividend and share buyback
During the financial year a final dividend of 8.56
cent per ICG Unit was paid for the financial year
ended 31 December 2018 and also an interim
dividend of 4.42 cent per ICG Unit was paid for
the financial year ended 31 December 2019. The
Board is proposing a final dividend of 8.99 cent
per ICG Unit in respect of the financial year ended
31 December 2019.
During the year the Group also bought back 2.9
million shares which were cancelled. The total
consideration paid for these shares was €12.9
million. The total amount returned to shareholders
in the period between dividends and buybacks
was €37.6 million.
Outlook
Since our last update to the market, in the Interim
Management Statement of November 2019,
trading to the end of the year was strong. For the
full year 2019 the Ferries division recorded strong
volume growth of 2.6% for passengers, 2.2% for
cars and 10.4% for RoRo freight. In the Container
& Terminal division overall container volumes
shipped for the year were up 4.8%, while port lifts
were up 3.5%.
In the period from 1 January 2020 to 29 February
2020, trading has been impacted by prolonged
bad weather and the planned reduction in tourism
capacity to facilitate the installation of exhaust
gas cleaning systems on the Ulysses. In the Ferries
division, the Ulysses has been replaced during
the period by a freight only conventional ferry.
Irish Ferries carried 27,900 cars in the period,
down 8.5% on the prior year, while the number of
passengers carried decreased by 0.8% to 112,400.
RoRo freight carryings were not materially
impacted by capacity changes and increased by
11.2% in the period to 50,700 units.
The Container and Terminal division was heavily
impacted by the prolonged bad weather in the
period. In the period from 1 January 2020 to 29
February 2020, overall container volumes shipped
were down 9.8% and terminal volumes were down
11.6% reflecting the impact of exceptional adverse
weather conditions over the last three weeks of
February and stronger volumes in the prior year
due to the impending exit of the UK from the EU
at the time which resulted in some increased
demand. Over the same period due to storms
and reduced capacity, overall capacity was down
12.5% over the prior year.
Despite the uncertainty created by the exit of
the UK from the EU, with our modern and flexible
fleet we are well placed to target volume growth
in all our markets. We look forward to building on
the strategic success in 2019 with another year of
volume growth across all our divisions.
We note the current and evolving COVID-19
outbreak. We continue to monitor the situation in
our areas of operation and work closely with all
relevant authorities.
John B. McGuckian,
Chairman
4 March 2020
13
Business
Review

14
Chief Executive’s Review
The Chairman in his review noted the progress
we have made in the strategic development of
the Group over the past twelve months. These
include the introduction of the W.B. Yeats,
material improvements to our schedule integrity,
the expansion of our owned container fleet and
the extension of the Belfast Container Terminal
concession.
The performance in the Ferries division, generator
of 79% of Group EBITDA, saw an underlying
increase of 14.3% in EBITDA after adjusting
for the effects of IFRS 16. This was primarily
due to improved operational performance, the
introduction of new services and expansion of
the container vessel chartering activities. EBIT
increased by 5.8% to €36.2 million (2018: €34.2
million), again due to the introduction of new
services, improved operational performance but
partially offset by increased vessel depreciation
charges on the new W.B. Yeats over the 34 year
old Oscar Wilde and on the increased container
vessel fleet.
Performance in the Container and Terminal
division continued to grow at a steady rate.
EBITDA in this division increased to €16.1 million
pre IFRS 16 (2018: €14.8 million) with EBIT rising
7.4% to €13.0 million pre IFRS 16 (2018: €12.1
million). This reflected increased activity in both
container shipping operations in Eucon and
container handling activities at our terminals in
Dublin and Belfast.
Financial Position
The Group ended the year in a strong position
financially with equity attributable to shareholders
increasing by €35.0 million to €287.9 million. This
was achieved after returning €24.7 million (2018:
€23.5 million) to shareholders by way of dividend
with the underlying dividend per share increasing
by 5.0%. The Group also bought back 2.9 million
of its own shares, equivalent to 1.5% of the issued
equity at the beginning of the year, at a total
consideration of €12.9 million.
Net debt at year end was €129.0 million compared
to net debt of €80.3 million in the prior year. This
represents a Net Debt/ EBITDA leverage of 1.5
times. The increase in the net debt during the year
is mainly due to the accounting treatment under
IFRS16 of right of use assets. The recognition of
right of use asset lease obligations increased year
end net debt by €36.0 million at the end of the
year. These obligations are excluded for banking
covenant purposes. Year end net debt of €129.0
million comprised gross borrowings of €203.9
million, lease obligations of €36.0 million less
gross cash balances of €110.9 million.
2019 Performance
2019 was a positive year for the Group where the long-term operational
and financial position continued to strengthen. This was underpinned by
the introduction in January of the W.B. Yeats.
Key Financial highlights As Reported Pre IFRS 16
* 
These APMs which are non-IFRS measures to monitor Group performance are defined and reconciled to IFRS measures on pages 22
to 23. Pre IFRS 16 adjusts reported amounts for the effects of IFRS 16
15
Business
Review
Strategic Performance
As Chief Executive my key responsibility is to
drive future profitable and sustainable growth of
the Group. I’m happy to report that on a strategic
level significant progress was made during 2019 in
preparing the Group for future long-term growth
opportunities.
In December 2018, the Group took delivery of the
W.B. Yeats which entered into service in January
2019. This was a significant step for the Group’s
ability to accommodate and take advantage
of the long-term growth opportunities in our
markets. The W.B. Yeats commenced services
on the Dublin – Holyhead route in January 2019
and then transferred to the Dublin – Cherbourg
route in March. This vessel offers increased
levels of comfort and capacity over the 34 year
old Oscar Wilde which was sold. Investment in
the W.B. Yeats is key to the Group’s decision to
offer increased year round direct freight sailings
to the continent. I am pleased to report, that the
W.B. Yeats exceeded our expectations in her first
year of service and successfully operated on both
the Dublin – Holyhead and Dublin – Cherbourg
routes.
The Group in 2018 entered into an agreement for
the construction of a second cruise ferry with a
contracted delivery of late 2020. It is intended
that this vessel will service the Dublin – Holyhead
route alongside the existing Ulysses with the
Epsilon being returned to its owners. The cruise
ferry will accommodate 1,800 passengers and
crew, with capacity for 5,610 freight lane metres,
which provides the capability to carry up to 330
freight units per sailing. Overall, it will effectively
be a 50.0% increase in Irish Ferries peak freight
capacity compared to the Ulysses.
The Dublin Swift replaced the Jonathan Swift
on the Dublin – Holyhead fastcraft service
during April 2018. The Dublin Swift operated a
summer only service for the first time in 2019.
The performance of the vessel was slightly below
expectations, mostly due to congestion in Dublin
Port which resulted in a less than optimal sailing
schedule. We have amended the schedule for
2020 and will closely monitor performance.
Also in April the Group entered into a bareboat
hire purchase agreement for the sale of the
cruise ferry Oscar Wilde to MSC Mediterranean
Shipping Company SA. The total gross
consideration for the sale is €28.9 million, payable
in instalments over 6 years, up to 2025. This has
resulted in profit on disposal in the year of €14.9
million.
The Group’s management continually seeks
investment opportunities which meet the Group’s
stringent return hurdles both in terms of return
and risk appetite a policy which is promoted at all
levels within the organisation. These investments
are funded through a combination of debt and
cash generation from existing activities.
Strategy and the Environment
While conscious that shipping is the most
environmental friendly mode of transport in
terms of emissions per kilometric cargo tonne
it still does have an impact on the environment.
Aligned with its corporate responsibility towards
the environment and to ensure compliance with
new environmental regulations effective from
1 January 2020, the Board has approved an
investment in exhaust gas cleaning systems on
its two existing cruise ferries and four owned
container vessels. This technology is already
employed on the newly constructed W.B. Yeats
and specified on the second new cruise ferry. The
first of these systems is being installed on the
Ulysses and the second is planned to be installed
on Isle of Inishmore later in 2020. While offering
positive environmental effects this investment is
expected to lead to lower operational costs on an
ongoing basis.
In our terminal operations in Dublin we have
commissioned two remotely operated rubber
tyred gantries (RTG) on one of our container
stacks. They are successfully operating in
the Dublin terminal. The Group have ordered
two additional remotely operated gantries for
delivery in mid 2020. Whilst improving the
working conditions of the operators it also yields
operational efficiencies together with improving
safety aspects of terminal operations. It is
expected that such equipment will become the
model for future expansion of terminal operations.
Also in our terminal operations we plan to
Chief Executives Review
Continued

16
introduce a new collection management system
for our contracted hauliers reducing waiting times
and leading to more efficient traffic planning.
Exit of United Kingdom from the
European Union
While the United Kingdom exited the EU in
January 2020, we are still lacking clarity on what
the future trading relationship will be post the
current transition period which continues up to 31
December 2020. No matter what the immediate
short term consequences may be of proposed exit
of United Kingdom from the European Union, if
it proceeds, it is the Group’s position that Ireland
as an island will continue to trade outside of its
borders. Given the strong linkages between
Ireland and the United Kingdom both culturally
and commercially, it is the Group’s view that
trade between these two economies will remain
robust over the longer term. However the Group’s
investment in vessels is designed to provide route
planning flexibility to enable the Group to adapt
its schedules to customer demand both over
the short and long term. Should demand for the
Group’s existing services fall over the longer term,
the vessels are capable of being deployed to most
geographic areas given their design specification.
Stakeholders
The Group’s performance is dependent on
the support of our customers, suppliers and
employees. I would like to thank all our customers
for their support during the past year. We will
continue to work with our customers to meet their
expectations into the future.
Our suppliers are key to our ability to deliver
quality services to our customers. We continually
work with our suppliers whether they be port
operators, contracted service providers or
product suppliers to improve efficiencies and
quality. We appreciate the co-operation and
flexibility achieved in delivering our 24/ 7 services.
Finally, I express my gratitude to our employees.
It is their knowledge and dedication to customer
service that drives the future success of the
Group.
Outlook
I look forward to in 2020 a continuation of the
trends in 2019 that saw both operational and
financial progress across all the divisions in the
Group. As in prior years, we will continue to seek
out improvement and investment opportunities
for our longer-term success.
Eamonn Rothwell,
Chief Executive Officer
4 March 2020
17
Business
Review
This Operating and Financial Review provides information to shareholders
and the Review should not be relied upon by any other party or for any
other purpose.
The Review contains certain forward-looking statements and these
statements are made by the Directors in good faith, based on the
information available to them up to the time of their approval of this
report. These statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
This Operating and Financial Review has been prepared for the Group as
a whole and therefore gives greater emphasis to those matters which are
significant to Irish Continental Group plc and its subsidiaries when viewed
as a whole.
This Operating and Financial Review discusses the following:
How We Create Value 20
Key Performance Indicators and Summary of 2019 Results 22
Operating Review 26
- The Ferries division 26
- The Container and Terminal division 32
Financial Review 37
Operating and Financial Review

18
19
Business
Review
Irish Continental Group plc is a focused provider of maritime passenger
and freight services with its principal operations in North West Europe.
The Group operates through two divisions:
Ferries division
Principal activities include passenger and
RoRo freight shipping services under the Irish
Ferries brand together with ship chartering
activities.
Quality assets People and
culture
Financial
management
Safety Environment
Container and Terminal division
Principal activities include LoLo shipping activities under
the Eucon brand and the operation of two container
terminals, Dublin Ferryport Terminals (DFT) and Belfast
Container Terminal (BCT), within the two main ports on
the island of Ireland.
How We Create Value
Operating and Financial Review
Our Strategy
There are two principal
elements to the Group’s
strategy for delivering
value to shareholders:
This strategy is supported by our five strategic pillars:
Further details on our strategic pillars can be found on page 72 under Group Strategy and Corporate Culture.
For more, please see Strategy in Action on pages 42 and 48.
Our Key Resources as outlined opposite are central to delivering our principal business activities and
achieving our strategic objectives.
Investment in quality
assets in order to achieve
economies of scale
consistent with a superior
customer service.
Benchmarking costs to
industry best practice
to enable the Group to
compete vigorously in its
chosen markets.

Further details on these operations are set out in the Operating Review on page 26 to 35.

20
At the end of 2019 the Group
had 307 direct employees,
located in Ireland, the UK and
The Netherlands.
Voted best Ferry Company by
travel trade professionals for the
13th year in a row at the ‘Irish
Travel Trade News Awards’.
Our Key
Resources
Long-term leasehold
interests and operating
agreements in
our container
terminals
Access to
strategically located
ports and slot times
A modern ferry and
container vessel
fleet
Recognised brand
names
Experienced,
qualified staff
Access to financial
resources
Reliability underpinned by major
investment in tonnage and
maintenance of quality assets
ensuring the high levels of
schedule integrity demanded by
our customers.
Always on, always in touch our
shipping and terminal services
operate 24/7, assisted by
investment in modern booking
and tracking systems to ensure
our customers can keep in touch
over a variety of platforms.
Fastest crossing on the Irish
sea on board the Irish Ferries
Dublin Swift fastcraft service
with a sailing time of two hours
between Dublin and Holyhead
at speeds of up to 65 kph.
Strategic short sea RoRo
routes operated by Irish
Ferries providing a seamless
connection from Ireland to the
UK and Continental motorway
network for the 313,200 RoRo
units carried in 2019.
Strategically located container terminals
which handled 320,800 container units
during 2019 in Ireland’s main ports of
Dublin and Belfast for shipping operators
providing services to key continental
hub ports and onwards access to global
markets.
Connected container transport services
provided by Eucon, transporting 343,400
teu (twenty foot equivalent) in 2019
between Ireland and over 20 countries
throughout Europe by sea, road, rail and
barge.
Key contributor to regional tourism in
Ireland, Irish Ferries carried 1.5 million
passengers and 401,300 cars during
2019 with research indicating that car
tourists stay longer and travel outside
the main urban centres.
High standard on-board experience
enjoyed by our Irish Ferries customers
encompasses quality food, beverage,
entertainment and accommodation
services. Passengers are never out of
touch with free satellite wi-fi services.
The Group maintained
liquidity reserves of €201.3
million at 31 December 2019
comprising cash and undrawn
committed loan facilities.
Share listing on Euronext
Dublin and the London Stock
Exchange.
21
Business
Review
Key Performance Indicators and
Summary of 2019 Results
Operating and Financial Review
The Group uses a set of headline Key Performance Indicators (KPIs) to measure the performance of its operations
and of the Group as a whole which are set out and defined below.
Certain financial measures used are not defined under International Financial Reporting Standards (IFRS).
Presentation of these Alternative Performance Measures (APMs) provides useful supplementary information which,
when viewed in conjunction with the Group’s IFRS financial information, allows for a more meaningful understanding
of the underlying financial and operating performance of the Group. These non-IFRS measures should not be
considered as an alternative to financial measures as defined under IFRS. Descriptions of the APMs included in this
report are disclosed below.
APM Description Benefit of APM
EBITDA EBITDA represents earnings before interest,
tax, depreciation, amortisation and non-
trading items
Eliminates the effects of financing and
accounting decisions to allow assessment
of the profitability and performance of the
Group.
EBIT EBIT represents earnings before interest, tax
and non-trading items.
Measures the Group’s earnings from ongoing
operations.
Free cash flow
before strategic
capex
Free cash flow comprises operating
cash flow less capital expenditure
before strategic capex which comprises
expenditure on vessels excluding annual
overhaul and repairs, and other assets with
an expected economic life of over 10 years
which increases capacity or efficiency of
operations.
Assesses the availability to the Group of
funds for reinvestment or for return to
shareholders.
Net debt Net debt comprises total borrowings
plus lease liabilities less cash and cash
equivalents.
Measures the Group’s ability to repay its
debts if they were to fall due immediately.
Adjusted
Earnings Per
Share (EPS)
EPS is adjusted to exclude the non-trading
items and net interest cost on defined
benefit obligations.
Directors consider Adjusted EPS to be a key
indicator of long-term financial performance
and value creation of a public listed
company.
ROACE ROACE represents return on average capital
employed. Operating profit (before non-
trading items) expressed as a percentage
of average capital employed (consolidated
net assets, excluding net (debt) / cash,
retirement benefit surplus / (obligation)
and asset under construction net of related
liabilities.
Measures the Group’s profitability and the
efficiency with which its capital is employed.
Pre-IFRS 16 Use of the term Pre-IFRS 16 denotes that the
APM or IFRS measure presented for 2019 has
been adjusted to remove the effects of the
application of IFRS 16: Leases.
Assists the year on year comparison of
underlying performance.

22
Non-Financial KPIs Description Benefit of non-financial KPI
Schedule
integrity
Schedule integrity (the number of sailings
completed versus scheduled sailings).
Schedule integrity is an important measure
for Irish Ferries vessels as it reflects the
reliability and punctuality of our service. This
measure is meaningful to both our passenger
and freight customers alike in facilitating
them and their cargo to arrive on time at
their final destination.
The following table sets forth the reconciliation from the Group’s operating profit for the financial year to EBIT,
EBITDA, Free Cash Flow and Net (debt)/ cash. See note 12 to the Financial Statements for the calculation of Basic
and Adjusted EPS. The Group implemented IFRS 16: leases on a modified retrospective basis and has not restated the
prior year results for the change in accounting policy.
Cash Flow

Operating profit (EBIT) 64.9 60.0
Non-trading items (note 10) (14.9) (13.7)
Net depreciation and amortisation (note 9) 36.8 22.1
EBITDA 86.8 68.4
Working capital movements (note 35) 2.0 (3.8)
Pension payments in excess of service costs (note 35) (1.3) (1.6)
Share based payments expense (note 32) 1.9 2.4
Other 0.1 (0.7)
Cash generated from operations 89.5 64.7
Interest paid (note 35) (3.5) (1.0)
Tax paid (note 35) (1.2) (2.2)
Maintenance capex (11.6) (15.6)
Free cash flow before strategic capex 73.2 45.9
Strategic capex (42.5) (160.5)
Free cash flow after strategic capex 30.7 (114.6)
Proceeds on disposal of property, plant and equipment 1.8 17.4
Dividends paid to equity holders of the Company (24.7) (23.5)
Buyback of equity (12.9) -
Proceeds on issue of ordinary share capital 0.1 0.6
Net cash flows (5.0) (120.1)
Opening net (debt)/ cash (80.3) 39.6
Recognition of right of use asset lease obligations (43.5) -
Translation/ other (0.2) 0.2
Closing net debt (129.0) (80.3)
23
Business
Review
Key Performance Indicators and
Summary of 2019 Results
Operating and Financial Review
The following table sets forth the reconciliation from the Group’s ROACE calculation;
ROACE

Equity 287.9 252.9
Net debt 129.0 80.3
Asset under construction (including prepayment deposits) (43.9) (189.9)
Retirement benefit obligations 3.7 4.2
376.7 147.5
Retirement benefit surplus (12.5) (2.5)
Capital employed 364.2 145.0
Average capital employed 254.6 142.5
Operating profit (before non-trading items) 50.0 46.3
ROACE 19.6% 32.5%
The following table sets forth the reconciliation from the Group’s net debt calculation;
Net debt

Cash and cash equivalents (note 19) 110.9 124.7
Non-current borrowings (note 22) (200.3) (204.0)
Current borrowings (note 22) (3.6) -
Non-current lease obligations (27.6) (0.7)
Current lease obligations (8.4) (0.3)
Net debt (129.0) (80.3)
The calculation and performance of KPIs and a summary of the key financial results for the year is set out in the table
below. A detailed review of the divisional operations is set out in the Operating Review and Financial Review on
pages 26 to 39.
Ferries
Container &
Terminal Inter- Segment Group
   
Comment        
Revenue 212.4 196.2 154.4 143.3 (9.4) (9.3) 357.4 330.2
EBITDA 1 67.2 53.6 19.6 14.8 - - 86.8 68.4
Operating profit (EBIT) 2 36.4 34.2 13.6 12.1 - - 50.0 46.3
Non-trading item (note 10) 14.9 13.7 - - - - 14.9 13.7
Net pension interest income/
(expense) (note 6 and 7) - - - - - - - 0.1
Other finance charges (note 7) - - - - - - (3.5) (1.0)
Finance income (note 6) - - - - - - 0.1 0.1
Net interest - - - - - - (3.4) (0.8)
Profit before tax - - - - - - 61.5 59.2
ROACE 3 17.6% 31.1% 28.6% 37.1% - - 19.6% 32.5%
ROACE (Excl. IFRS 16 effects) 17.4% 31.1% 40.0% 37.1% - - 20.6% 32.5%
EPS: (note 12)
EPS Basic 4 - - - - - - 31.7c 30.4c
EPS Adjusted 4 - - - - - - 23.8c 23.1c
Free Cash Flow 5 - - - - - - 73.2 45.9

24
Comment:
Financial KPIs
1. EBITDA: Group EBITDA for the year increased by 26.9%, to €86.8 million (2018: €68.4 million). Adjusting for the
effects of IFRS 16 (Note 30 (iii)) the underlying comparable EBITDA was €77.4 million, an increase of 13.1%. The
increase in underlying EBITDA was primarily due to better schedule integrity following the disruption in the Ferries
division in 2018, and the introduction of the W.B. Yeats. Underlying EBITDA in the Ferries division increased by 14.3%,
to €61.3 million, while the Container and Terminal division increased by 8.1%, to €16.1 million.
2. EBIT: Group EBIT (pre non-trading items) for the year increased by 7.9% to €50.0 million (2018: €46.3 million).
Adjusting for the effects of IFRS 16 (Note 30 (iii)) the underlying comparable EBIT was €49.2 million, an increase of
6.2%. The Ferries division increase in underlying EBIT was 5.8%, while the Container and Terminal division was 7.4%
higher, as a result of volume growth. In April 2019, the Group entered into a bareboat hire purchase agreement for
the sale of the cruise ferry Oscar Wilde to MSC Mediterranean Shipping Company SA. The total gross consideration
for the sale was €28.9 million payable in instalments over 6 years, up to 2025. The sale generated a profit before tax
of €14.9 million (2018: sale of the vessel Jonathan Swift generating a profit before tax of €13.7 million). Group EBIT
including non-trading items increased by 8.1% to €64.9 million (2018: €60.0 million).
3. ROACE: The Group achieved a return on average capital employed of 19.6% (2018: 32.5%). This decreased return
is due to the increase in average capital employed to €364.2 million from €145.0 million. This increase was primarily
due to the introduction of the W.B. Yeats. The Ferries division achieved a return on average capital employed of 17.6%
(2018: 31.1%) while the Container and Terminal division achieved 28.6% (2018: 37.1%). The comparable underlying
returns after adjusting net assets and operating profit for the effects of IFRS 16 was a total Group return of 20.6%,
Ferries division 17.4% and Container and Terminal division 40.0%.
4. EPS: Adjusted EPS (before non-trading items and the net interest cost on defined benefit obligations) was 23.8
cent compared with 23.1 cent in 2018. Basic EPS was 31.7 cent compared with 30.4 cent in 2018. The comparable EPS
for 2019 increases by 0.1 cent after adjusting for the effect of IFRS 16.
5. Free Cash Flow before strategic capital expenditure: The Group’s Free Cash Flow before strategic capital
expenditure was €73.2 million (2018: €45.9 million). The increase in free cash flow is mainly due to the increase in
EBITDA, positive working capital movements and reduced maintenance capital expenditure. Free Cash Flow before
strategic capital expenditure is a meaningful measure of cash generated for investment or return to shareholders.
Adjusting for the effects of IFRS 16 the comparable free cash flow amount was €64.8 million.
Non-Financial KPIs
Schedule integrity: The Ferries division delivered 92% of scheduled sailings compared with 86% in the previous year
across all services. Our conventional ferry services (excluding the fast ferry) delivered schedule integrity of 97% in
comparison with 90% in 2018. These figures largely reflect the lost sailings arising from the technical issues affecting
the Ulysses in 2018 and non-operation of scheduled W.B. Yeats sailings due to the late delivery of that vessel by the
shipbuilder in the prior year.
25
Business
Review
The Ferries division operates multipurpose ferry services carrying both
passengers and RoRo freight on strategic short sea routes between Ireland
and the United Kingdom and direct ferry services between Ireland and
France. The division also engages in chartering activities.
The Ferries division
Operating and Financial Review
The ferry services trades under the Irish Ferries
brand. During 2019 Irish Ferries operated three
routes utilising a fleet of five vessels, four of which
are owned and one which is chartered-in.
The division took delivery in December 2018
of the new cruise ferry the W.B. Yeats. After
undergoing final commissioning and certifications
it commenced services on the Dublin – Holyhead
route in January 2019 transferring to the Dublin
– Cherbourg route in March. In April 2019, the
Group entered into a bareboat hire purchase
agreement for the sale of the surplus vessel Oscar
Wilde to MSC Mediterranean Shipping Company
SA. The Dublin Swift fastcraft re-entered
service in March 2019 following winter layup and
drydock during which the car carrying capacity
was increased through the addition of a new
mezzanine deck.
In addition to the modern fleet Irish Ferries retains
rights to access appropriate berthing times at
key ports allowing Irish Ferries to facilitate its
customer preferred sailing times.
The division also owns six container vessels which
are time chartered.
2019 Overall Ferries division Performance
As Reported Pre IFRS 16
 Change 2019 Change
Revenue €212.4m €196.2m +8.3% €212.4m +8.3%
EBITDA* €67.2m €53.6m +25.3% €61.3m +14.3%
EBIT* €36.4m €34.2m +6.4% €36.2m +5.8%
Non-trading item €14.9m €13.7m - €14.9m -
ROACE 17.6% 31.1% - 17.4% -
* Excluding non-trading items.
Revenue in the division was 8.3% higher than
the previous year at €212.4 million (2018:
€196.2 million). Revenue in the first half of the
year increased by 1.5% to €92.3 million (2018:
€90.9 million), while in the second half revenue
increased 14.1%, to €120.1 million (2018: €105.3
million). EBITDA increased to €67.2 million (2018:
€53.6 million) while EBIT was €36.4 million
compared with €34.2 million in 2018.
The prior year reported figures have not been
restated for the effects of IFRS 16 adopted on 1
January 2019. Adjusting the 2019 reported figures
for these effects, the underlying comparatives for
2019 are EBITDA of €61.3 million, a 14.3% increase
over 2018 and EBIT of €36.2 million, an increase of
5.8% over 2018.
Fuel costs were €34.7 million, an increase of €1.0
million on the prior year. The division achieved a
return on capital employed of 17.6% or 17.4% pre
IFRS 16 (2018: 31.1%).
In total Irish Ferries operated 4,934 sailings in
2019 (2018: 4,755), the increase mainly due to
technical issues on the vessel Ulysses in the prior
year which resulted in a cancellation of sailings.

26
Business
Review
The Ferries division
Continued
Operating and Financial Review
Car and Passenger Markets
It is estimated that the overall car market*, to and
from the Republic of Ireland, fell by approximately
2% in 2019 to 777,600 cars, while the all-island
market, i.e. including routes into Northern Ireland,
is estimated to have decreased by 1.0%. Irish
Ferries’ car carryings during the year were up
on the previous year by 2.2% to 401,300 cars,
(2018: 392,700 cars). In the first half of the year
Irish Ferries car volumes fell by 6.0%, reflecting
the planned withdrawal of fastcraft services in
the winter period. In the second half of the year,
volumes were up by 8.3%, largely attributable to
the disruption of services of the Ulysses in 2018
and additional conventional ferry services on the
Dublin – Holyhead route due to the introduction
of the W.B. Yeats.
The total sea passenger market (i.e. comprising
car, coach and foot passengers) to and from the
Republic of Ireland decreased by 3.5% on 2018
to a total of 2.92 million passengers, while the
all-island market decreased by 1.5%. Irish Ferries’
passenger numbers carried increased by 2.6%
at 1.54 million (2018: 1.50 million). In the first half
of the year, Irish Ferries passenger volumes fell
by 4.7% and in the second half of the year, which
is seasonally more significant, the increase in
passenger numbers was 8.5%.
The Ferries division delivered 92% of scheduled
sailings compared with 86% in the previous
year across all services. Our conventional ferry
services (excluding the fast ferry) delivered
schedule integrity of 97% in comparison with 90%
in 2018. These figures largely reflect lost sailings
arising from the technical issues affecting the
Ulysses in the prior year and non-operation of
scheduled W.B. Yeats sailings in 2018 due to the
late delivery of that vessel by the shipbuilder.
Initiatives by the tourist industry such as the Wild
Atlantic Way and Ireland’s Ancient East, have
been instrumental in promoting ‘own car’ tourism
around the Irish coasts, and have helped broaden
the distribution of tourists around the island and
across the seasons.
In 2019, Irish Ferries delivered a comprehensive
programme of marketing and promotional activity
across our key markets of Britain, Ireland and
France. We continued investing significantly in our
brand and delivered compelling and personalised
offers to our customers at times relevant for the
planning and booking of their holidays and other
travel.
This approach helped to improve our brand
awareness in these important markets, and to
drive increased levels of enquiries to our website,
www.irishferries.com, which generated over 6.4
million visits, and delivered over 85% of bookings
transacted in the year.

28
Our campaign strategy was to deliver awareness
of our services, using traditional and social media
channels and to create an interest in purchasing
our services online. We used the latest buying
techniques to leverage the best value in our media
spend and delivered an integrated campaign
across the relevant markets. Our messaging and
advertising used a wide range of channels and
was compatible with all transactional platforms,
browsers and devices, in support of our strategy
of being available to our customers whenever they
wish to book, and on whatever device they choose
to do so.
We appreciate that our own performance is
closely linked to the performance of tourism
source markets, and we continued to work closely
with state tourism agencies in Ireland (Tourism
Ireland and Fáilte Ireland), Wales (Visit Wales), and
France (Normandy Tourism and Cotentin Tourism),
to deliver co-operatively funded advertising and
publicity initiatives.
Given the commercial value of our e-commerce
site, considerable attention is paid to ensuring that
the associated systems are continuously available,
robust and secure. We continue to invest in
developing our e-commerce efficiency and are
continuously updating our systems and channels
as we determine changes in consumer research
and transaction behaviour.
While we work hard to engage with the consumer
marketplace, we also invest considerably in
partnerships with the travel trade. In 2019, we
were delighted to be voted ‘Best Ferry Company’
by travel trade professionals, for the 9th year in a
row at the Irish Travel Industry Awards, and for the
29
Business
Review
The Ferries division
Continued
Operating and Financial Review
13th year in a row at the Irish Travel Trade News
Awards. In addition, in the UK Group Leisure &
Travel awards, Irish Ferries was voted the winner
in the category ‘Best Ferry or Fixed Link Operator’.
Already this year, Irish Ferries has been awarded
‘Best Ferry Company’ for the 10th year in
succession by travel agents in the Irish Travel
Industry Awards 2020.
RoRo Freight
The RoRo freight market* between the Republic
of Ireland, and the U.K. and France, continued to
grow in 2019 on the back of the Irish economic
recovery, with the total number of trucks and
trailers up 1.0%, to approximately 1,042,800 units.
On an all-island basis, the market increased by
approximately 0.8% to 1.88 million units.
Irish Ferries’ carryings, at 313,200 freight units
(2018: 283,700 freight units), increased by 10.4%
in the year with volumes up 7.4% in the first half
and up 13.5% in the second half. The performance
against the market is principally related to the
schedule disruptions experienced on the Ulysses
in the prior year and additional sailings and
capacity following the introduction of the W.B.
Yeats.
Irish Ferries has also been proactive in the online
environment for freight customers. In recent years
high quality mobile options have been developed,
alongside the traditional desktop, whereby
customers can access our freight reservations
systems with ease. This has facilitated an increasing
proportion of our business being booked via our
website, www.irishferriesfreight.com.
*
(Market figures source: Passenger Shipping Association and
Cruise & Ferry)

30
Chartering
During the year, the Group purchased two
additional container ships for external charter.
The Thetis D was purchased in April for €12.4
million, and the CT Rotterdam was purchased in
November for €8.2 million. Of our six owned LoLo
container vessels, three are currently on year-
long charters to the Group’s container shipping
subsidiary Eucon on routes between Ireland
and the continent whilst two are chartered to
third parties. The remaining vessel, the recently
acquired CT Rotterdam, is providing short-term
drydock cover with Eucon and will afterwards be
offered to the market. Overall external charter
revenues were €4.7 million in 2019 (2018: €2.1
million).
In April 2019, the Group entered into a bareboat
hire purchase agreement for the sale of the Oscar
Wilde to MSC Mediterranean Shipping Company
SA.
Outlook
We look forward to 2020 and beyond with
renewed confidence in our service offering. With
the addition of the W.B. Yeats to the fleet we are
now able to offer a year round freight service
direct to Cherbourg with additional significant
capacity in both tourism and freight offerings.
With the extensive drydocking works carried
out on the Ulysses at the beginning of the year,
we have returned to previously high levels of
schedule integrity and we plan to build on this in
the coming year.
31
Business
Review
The Container and Terminal division provides direct container shipping
services between Ireland and continental Europe together with the
operation of container terminals at both Dublin and Belfast.
The Container and Terminal division
Operating and Financial Review
The division’s intermodal shipping line Eucon
is the market leader in the sector, operating a
core fleet of six chartered container vessels
ranging in size from 750 – 1,000 teu capacity,
connecting the Irish ports of Dublin, Cork and
Belfast with the continental ports of Rotterdam
and Antwerp. Eucon deploys 3,800 owned and
leased containers (equivalent to 7,400 teu) of
varying types thereby offering a full range of
services from palletised, project and temperature
controlled cargo to Irish and European importers
and exporters from all points on the island of
Ireland to destinations across 20 European
countries. Quay to door services are contracted to
third parties utilising a variety of transport modes
including road, rail and barge.
Dublin Ferryport Terminals operates its Dublin
Port container facility from a leasehold facility
covering over 34 acres. The facilities comprise
480 metres of berths for container ships, with
a depth of 9 to 11 metres and is equipped with
3 modern Liebherr gantry cranes (40 tonne
capacity) and 8 rubber tyred gantries (40 tonne
capacity) on a strategically located site within
three kilometres of Dublin city centre and within
one kilometre of the Dublin Port Tunnel, providing
direct access to Ireland’s motorway network. In
addition two electrically operated rubber tyred
gantries incorporating latest technologies to allow
for remote operation were commissioned during
the year.
2019 Overall Container and Terminal Performance
As Reported Pre IFRS 16
 Change 2019 Change
Revenue €154.4m €143.3m +7.7% €154.4m +7.7%
EBITDA €19.6m €14.8m +32.4% €16.1m +8.7%
EBIT €13.6m €12.1m +12.4% €13.0m +7.4%
ROACE 28.6% 37.1% - 40.0% -
Belfast Container Terminal operates the sole
container terminal at Belfast under a services
concession agreement with Belfast Harbour
Commissioners (BHC). This facility comprises
of a 27 acre site, equipped with 3 ship to shore
gantry cranes, 3 rail mounted gantry cranes
and 3 straddle carriers. During the year the
Group agreed an extension to the port operating
concession agreement at Belfast. This agreement
now extends to 2026 during which the port owner
BHC will undertake significant investment in new
port assets.

32
The Container and Terminal division
Continued
Operating and Financial Review
Revenue in the division increased to €154.4 million
(2018: €143.3 million). The revenue is derived
from container handling and related ancillary
revenues at our terminals and in Eucon from a
mix of domestic door-to-door, quay-to-quay and
feeder services with 70% (2018: 70%) of shipping
revenue generated from imports into Ireland.
With a flexible chartered fleet and slot charter
arrangements Eucon was able to adjust capacity
and thereby continue to meet the requirements of
customers in a cost effective and efficient manner.
EBITDA in the division increased to €19.6 million
(2018: €14.8 million) while EBIT rose 12.4% to
€13.6 million (2018: €12.1 million). The prior year
reported figures have not been restated for the
effects of IFRS 16 adopted on 1 January 2019.
Adjusting the 2019 reported figures for these
effects, the underlying comparatives for 2019 are
EBITDA of €16.1 million, an 8.7% increase over
2018 and EBIT of €13.0 million, an increase of 7.4%
over 2018.
In Eucon overall container volumes shipped were
up 4.8% compared with the previous year at
343,450 teu (2018: 327,600 teu). The resulting
revenue increase was partially offset by volume
related costs while fuel costs were at a similar
level to the prior year.
Containers handled at the Group’s terminals in
Dublin Ferryport Terminals (DFT) and Belfast
Container Terminal (BCT) were up 3.5% at
320,800 lifts (2018: 310,000 lifts). DFT’s volumes
were up 4.4%, while BCT’s lifts were up 2.1%.
Outlook
We look forward to continuing the growth trend
achieved in 2019 which is testament to our
investment in the business in driving efficiencies
and nurturing close customer relationships.
We are pleased with the commissioning of our
new remotely operated RTGs and expect two
additional units to be delivered in 2020. These will
further drive efficiencies and increase operating
capacity in our Dublin terminal. Following the
extension to the concession agreement for the
operation of Belfast Container Terminal, we are
also looking forward to working with Belfast
Harbour in planning for future investment at the
Belfast facility.

34
35
Business
Review

36
Results
Revenue for the year amounted to €357.4 million
(2018: €330.2 million) while operating profit
before non-trading items amounted to €50.0
million (€49.2 million pre IFRS 16) compared with
€46.3 million in 2018. Principal variations on
the prior year include the revenue effects of the
schedule disruptions in the Ferries division in the
prior year and the introduction of the W.B. Yeats
into service. In April 2019, the Group entered
into a bareboat hire purchase agreement for
the sale of the cruise ferry Oscar Wilde to MSC
Mediterranean Shipping Company SA. The total
gross consideration for the sale is €28.9 million,
payable in instalments over 6 years, up to 2025.
This has resulted in profit on disposal in the year
of €14.9 million.
In the prior year, the Group completed the sale
of the vessel Jonathan Swift generating a non-
trading item of €13.7 million.
Taxation
The tax charge is €1.3 million compared with a
charge of €1.4 million in 2018. The corporation
tax charge of €1.2 million (2018: €1.5 million)
comprises Irish and UK corporation tax. Certain
activities qualify to be taxed under tonnage tax
(which is an EU approved special tax regime
for qualifying shipping activities) in Ireland.
Reconciliation of the tax charge showing the
effect of the tonnage tax regime on the Group’s
tax charge is shown at note 8. The deferred tax
charge was €0.1 million in 2019 (2018: €0.1 million
credit).
Earnings per share
Basic EPS was 31.7 cent compared with 30.4 cent
in 2018. The reason for the increase in Basic EPS is
due to the increase in profit attributable to equity
holders of the parent to €60.2 million (2018:
€57.8 million) with no significant movement in the
average shares in issue.
Adjusted EPS (before the net interest cost on
defined benefit obligations and non-trading items)
was 23.8 cent compared with 23.1 cent in 2018.
Cash flow and investment
EBITDA for the year was €86.8 million (€77.4
million pre IFRS 16*) (2018: €68.4 million). There
was a net inflow of €2.0 million, due to positive
working capital movements, payments in excess
of service costs to the Group’s pension funds of
€1.3 million and other net cash inflows amounting
to €2.0 million yielding cash generated from
operations amounting of €89.5 million (2018:
€64.7 million).
Interest paid was €3.5 million (2018: €1.0 million)
while taxation paid was €1.2 million (2018: €2.2
million).
Capital expenditure outflows amounted to €54.1
million (2018: €176.1 million) which included €42.5
million of strategic capital expenditure related to
the purchase of the container vessels Thetis D and
CT Rotterdam, and other fleet improvements.
Dividend payments of €24.7 million (2018: €23.5
million) were made during the year and €12.9
million was expended in buying back the Group’s
equity.
The application of IFRS 16 increased year end
net debt by €36.0 million comprising the initial
application of IFRS 16 increasing lease obligations
at implementation date by €31.0 million together
with additions during the period of €12.5
million. These amounts were reduced by capital
repayments.
The above cash flows resulted in a year-end
net debt of €129.0 million (2018: €80.3 million
net debt), which comprised gross borrowing of
€203.9 million, lease obligations of €36.0 million
offset by cash balances of €110.9 million. The key
Net Debt/ EBITDA (pre non-trading items) ratio
was 1.5 times.
Dividend and share buybacks
During the financial year a final dividend of 8.56
cent per ICG Unit was paid for the financial year
ended 31 December 2018 and also an interim
dividend of 4.42 cent per ICG Unit was paid for
the financial year ended 31 December 2019. The
Board is proposing a final dividend of 8.99 cent
per ICG Unit in respect of the financial year ended
31 December 2019.
During the year the Group also bought back 2.9
million shares representing 1.5% of the issued
equity at 1 January 2019. These shares were
cancelled. The total consideration paid for these
shares was €12.9 million.
Financial Review
Operating and Financial Review
37
Business
Review
Pensions
The Group sponsors four separately funded
defined benefit pensions schemes covering
employees in Ireland, the UK and the Netherlands.
The Group also participates in the UK based
industry-wide scheme, the Merchant Navy
Officers Pension Fund (MNOPF) in which
participating employers share joint and several
liability. Aggregate pension assets in the four
Group-sponsored schemes at year end were
€298.4 million (2018: €264.3 million), while
combined pension liabilities were €289.6 million
(2018: €266.0 million).
The total net surplus of all defined benefit pension
schemes at 31 December 2019 was €8.8 million in
comparison to €1.7 million deficit at 31 December
2018.
Financial risk management
The principal objective of the Group’s treasury
policy is the minimisation of financial risk at
reasonable cost. To minimise risk the Group uses
interest rate swaps and forward foreign currency
contracts. The Group does not trade in financial
instruments.
Interest rate management
The interest rates on Group borrowings at 31
December 2019 comprising loan notes and
finance lease obligations has been fixed at a
contracted rate at the date of drawdown with the
relevant lender eliminating exposure to interest
rate risk on borrowings. The average effective
interest rate at 31 December 2019 was 1.60%. At
31 December 2019, all of Group borrowings were
at fixed rates at an average effective rate of 1.62%.
Debt interest cover, for the year was 65 times
(2018: 65 times).
Currency management
The Group has determined that the Euro is the
operating currency in which it reports its results.
The Group also has significant Sterling and US
Dollar cash flows. The Group’s principal policy
is to minimise currency risk by matching foreign
currency assets and liabilities and to match cash
flows of like currencies. Sterling revenues and
expenses are netted. Exposure to the US Dollar
relates mainly to fuel costs. The Group has in
place fuel surcharge arrangements with its
commercial customers which recovers a portion
of movements in euro fuel costs above a base level
which partially mitigates the exposure to US dollar
currency movements.
Commodity price management
Bunker oil costs constitute a separate and significant
operational risk, partly as a result of historically
significant price fluctuations. In the Container and
Terminal division bunker costs above a base level
are offset to a large extent by the application of
prearranged price adjustments with our customers.
Similar arrangements are in place with freight
customers in the Ferries division. In the passenger
sector, changes in bunker costs are included in the
ticket price to the extent that market conditions will
allow. Bunker consumption was 122,000 tonnes in
2019 (2018: 108,600 tonnes). The cost per tonne of
heavy fuel oil (HFO) fuel in 2019 was 3% higher than
in 2018 while marine gas oil (MGO) was 2% lower
than in 2018.
Credit risk
The Group’s credit risk arising on its financial assets
is principally attributable to its trade and other
receivables. The concentration of credit risk in
relation to trade is limited due to the exposure being
spread over a large number of counterparties and
customers. Other receivables include deposits paid
under a shipbuilding contract which are secured
through letters of credit issued by high quality
insurers. The Group also has a significant long-term
receivable relating to a bareboat hire purchase
arrangement which is secured by retention of title to
the vessel.
Liquidity
It is Group policy to maintain available facilities which
allow the Group to conduct its business in an orderly
manner. The target level is reviewed from time to
time in line with the Group’s future requirements over
the medium term and will comprise cash deposits
and committed banking facilities. Total available
facilities at 31 December 2019 amounted to €201.3
million comprising cash balances of €110.9 million
together with undrawn committed facilities of €90.4
million with average maturity of 4.1 years. Total drawn
facilities of €205.0 million had an average maturity of
6.2 years over remaining terms of up to 11 years.
David Ledwidge,
Chief Financial Officer
4 March 2020
Financial Review
Continued
Operating and Financial Review

38
39
Business
Review
Environmental and Sustainability
ICG Strategy and the Environment
A commitment to safeguarding the environment
and operating in a sustainable manner is a
key deliverable of ICG strategy. A continuous
focus on its cost base drives improvement in
operational efficiency resulting in lower inputs
and wastage levels, and maximises asset lives all
of which ultimately improves our environmental
performance.
In recognising that small changes can deliver
cumulatively large efficiencies over time ICG
has developed a groupwide environmental
framework the objective of which is to facilitate
the continuous improvement of the environmental
effects of the Group’s activities in a unified and
structured manner.
On a wider societal level ICG plays a pivotal
role in Ireland’s traded goods logistical chain
while Irish Ferries’ passenger services contribute
significantly to the tourism industries of Ireland,
the United Kingdom and France.
The Group’s principal activity is the operation
of ships and provision of related services. While
transport by sea is one of the most efficient
modes of transport, as measured by cargo
tonnes per kilometre, these activities still have
an unavoidable impact on the environment.
This report provides a summary of the principal
initiatives implemented by the Group to minimise
this impact over four key areas; vessel design,
fleet operation, on board hotel activities; and
terminal activities.
Vessel Design
The Group operates a total fleet of four ferries
(three owned, one chartered-in), one fast
craft and six container vessels (four owned,
2 chartered-in). The Group commissioned all
three owned ferries and the chartered-in ferry is
due to be replaced by a further commissioned
newly built ferry. The efficiency characteristics
of our fleet commence at the design phase with
incremental improvements made over the life of
a vessel. Projects completed or commissioned
during 2019 are described below.
Construction Design
When commissioning new vessels the Group is
committed to the application of innovative design
features intended to minimise environmental
impact. By law, all new ships from 2013 onwards
require an Energy Efficiency Design Index (EEDI)
whereby new ship designs must meet an efficiency
reference level. The W.B. Yeats has a required
EEDI of 18.5g of CO2 per tonne-mile. The new
cruise ferry under construction at a contract
price of €165.2 million will fall under phase two
of EEDI as construction takes place from 2020,
meaning its required efficiency will be a ten percent
improvement on that designated for the W.B. Yeats.
Ballast Water Management
The intake and discharge of ballast water (sea water)
is an integral part of vessel stability management,
though poor management of ballast water systems
can damage local biodiversity through transference
of non-native marine species.
The Group has implemented a Ballast Water and
Sediments Management Plan across all its fleet
for correct management of ballast water to help
prevent the spread of non-native marine species
by transference. Our newest vessel W.B. Yeats has
already been designed with ballast water treatment
systems, while in 2020, the Group will complete
feasibility studies and set out investment proposals
for ballast water treatment equipment across the
remaining fleet from 2021. Pending completion of
this upgrade project the operating protocol is that all
ballast water is loaded and discharged at the same
location so as to avoid species transfer.
In addition to reducing the risk of transference, this
project will also improve fuel efficiencies through
avoiding excess carrying of ballast waters.
Paint
A key factor that affects vessel performance apart
from the optimal engineered design of the hull is the
maintained condition of the hull itself. Central to this
is maintaining a smooth underwater hull surface to
reduce resistance when moving through the water.
Once in service a vessel’s hull is exposed to corrosion
and fouling, which studies indicate can adversely
affect fuel consumption by up to four percent. To
maintain maximum efficiency as part of ongoing
maintenance ICG vessels utilise modern silicon based
non-toxic paints which avoid the release of harmful
agents into the sea. These assist in preventing
corrosion thereby ensuring maximum hull life,
reducing fouling between drydockings and lowers
the risk of damage to local biodiversity.

40
Propeller Caps
The W.B. Yeats was delivered fitted with
the latest energy efficient propeller blades.
These incorporated rotating propeller
caps which decrease propeller resistance
and increase thrust. This increases overall
propulsion efficiency and reduces fuel
consumption. Having assessed this
technology, a full set of similar propeller
blades were retro-fitted to the Ulysses
during 2019.
41
Business
Review
Exhaust Gas Cleaning Systems
The International Maritime Organisation
(IMO), a UN sponsored body adopted by
the European Union, has issued new fuel
regulations (IMO 2020) which are effective for
all shipping operators effective from 1 January
2020. IMO 2020 requires all our vessels
operating outside of sulphur emission control
areas (SECA) to reduce sulphur emissions
equivalent to consuming 0.5% sulphur content
fuel oils compared to the previous permitted
1%. Over the last decade these permissible
levels have been decreased in stages from
3.5% to the current 0.5% and 0.1% when
operating in SECA.
The fastcraft Dublin Swift consumes marine
gas oil which has a delivered sulphur content
of 0.1% thus already in compliance and
bettering the new regulatory requirement in
its geographic area of operation.
On its owned and operated fleet, the Group
has taken the decision to install Exhaust Gas
Cleaning Systems (EGCS) to comply with
these latest requirements. The cruise ferry
W.B. Yeats which commenced sailing in the
fleet in 2019 was delivered an EGCS. This
ensured that this vessel complied with the
0.5% sulphur cap on marine fuels in advance
of the 1 January 2020 deadline. The cruise
ferries Isle of Inishmore and Ulysses and the
owned container vessels operated by the
Group will each have EGCS installed during
2020 and pending completion of those
installations will consume heavy fuel oils
with a delivered sulphur content of 0.5%.
In opting for EGCS the Group performed
a thorough assessment of alternatives,
including a conversion to LNG fuels and found
the EGCS option to be the safest and most
environmentally friendly solution. In addition
to managing sulphur emissions studies have
shown that EGCS can remove 60-90% of
particulate matter (PM or black carbon),
including a portion of small and ultrafine PM,
resulting in fewer particles released in the
atmosphere compared to consuming 0.5%
fuel oils or marine gas oil.
The experience to date with the W.B. Yeats
is that achieved sulphur emissions are below
permitted levels with on-board emission
alarm levels set lower than the maximum
permissible.
Total Group investment for supply and
installation of EGCS is estimated at
approximately €25 million. In addition to
improving ICG’s environmental performance
this investment allows the Group to consume
lower cost fuel oils and in the event that a
vessel may become surplus to operational
requirement allows for greater geographical
operational ability increasing the
marketability of the vessel to a third party.
Environmental and Sustainability
Continued
Strategy
in Action

42
43
Business
Review
Fleet Operations
Ship Energy Efficiency Management Plan
Under IMO requirements each vessel has
developed a Ship Energy Efficiency Management
Plan (SEEMP). The SEEMP contains a multitude
of measures intended to improve the energy and
environmental efficiency of a ship in a cost-
effective manner. While all plans are vessel-
specific, they each follow a Plan-Do-Check-Act
iterative cycle for improvement.
Key SEEMP measures, all of which improve the
fleet environmental performance include;
• Fuel efficiency maximisation
• Speed optimisation for sea conditions
• Minimisation of hull resistance through sailing
parameter optimisation
• Engine performance management
• Boiler performance management
• Bunker management
Efficiency in operation
ICG is developing a program to increase
operational efficiency awareness across its
fleet through recording the operational profile
for each voyage conducted in service. Due to
be introduced in 2020, each scheduled voyage
carried out with plant safely reduced below the
standard operational profile due to efficient
port operations, navigational routing, trim of
vessel, good weather, speed management or
a combination of the above while maintaining
schedule will be classed as a ‘clean voyage’. It is
proposed that clean voyages will be recorded
throughout the year and associated reduction
in CO2 emissions estimated and used to
benchmark against annually to ensure continuous
improvement.
Additionally, during 2019 the Group has
commenced reporting under the EU Monitoring,
Environmental and Sustainability
Continued
CHECK
On-board energy audits
by relevant ship manager
Voyage management,
including appropriate
measurement and
monitoring of
consumption
PLAN
Plan implementation of
identified energy saving
measures
Set goals to increase
commitment
ACT
Internal reporting and
follow-up
EU MRV / IMO reporting
Identify new areas for
improvement
DO
Energy efficiency
awareness training
for crew
Implement measures
identified

44
Reporting and Verification guidelines (MRV)
which requires ships to monitor and report CO2
emissions, fuel consumption, transport work
and average energy efficiency each year. In
time this data will provide a benchmark to track
improvement.
Refrigeration and Air Conditioning Emissions
All our vessels have refrigeration and
air conditioning systems which utilise
hydrofluorocarbons gasses (HFCs) which are
known to cause ozone damage if leaked into the
atmosphere. All owned vessels are fully compliant
with the EU ‘F-gas’ Regulation restricting the
usage of certain HFCs and imposing bans on
certain other HFCs with the highest global
warming potential. Leakages of all refrigerant gas
on board vessels are to be recorded in 2020 with
the intention of implementing an action plan to
work towards a zero-leak environment by 2022.
Waste
The disposal of waste at sea is strictly prohibited
by regulation and all vessels have a waste
disposal plan. All vessels use oil recovery
systems to recover spent oils which are then
sent for recycling to processors with regulatory
approvals. All other vessel waste is segregated
where possible and sent for recycling at approved
facilities.
Under the most recent biennial reporting to the
Irish Central Statistics Office, the Group has
recorded reductions in its wastage in 2018 over
2016 with an overall reduction of approximately
1,100 tonnes. This represents a 30% reduction in
waste sludge and oil water and a 68% reduction
achieved across other waste types, including
packaging, paper and electronic waste.
45
Business
Review
Hotel and Catering Activities
Welcoming over 1.5 million guests aboard
our cruise and passenger ferries annually
our on-board hospitality services contribute
significantly to our environmental performance.
We are continually seeking ways to improve our
performance in the following key areas;
Responsible sourcing
Where possible we seek to increase the use
of local suppliers and showcase local produce
supporting artisan producers. Typical examples
include our fish supplier, a large family-owned
fishmonger based in the fishing town of Howth in
North County Dublin who supply locally sourced
seafood utilising sustainable fishing methods.
We source all of our fruit and vegetables through
Irish distributors who guarantee to deliver the
freshest produce from farms all around the
Country. When in season Irish produce will always
be selected before imported goods. All our beef
is Irish produced and our Irish dairy, cheddar
cheese and eggs are origin green certified. Our
breakfast meats are sourced in Kilkenny and
Cork. We are a strong promoter of Irish beverages
not only the popular brands but also smaller
producers of craft beers and spirits. In line with
the demands of our guests we now offer a wide
variety of plant based food and drink options in all
our cafes and restaurants with plans to increase
this range of offering in 2020. Our coffees are
provided by a Dublin based roaster, using the
world’s first purpose-built carbon neutral roastery
in Dublin and coffees and teas served on board
are fair trade certified. Our supply chain seeks to
minimise the number of deliveries to our vessels
through the use of containerised provisioning.
Water conservation
All water used on board our vessels is of potable
standard. As this is both a scarce resource and an
increasing cost ICG seeks to reduce consumption
on-board vessels through water saving devices
such as flow controllers without interrupting our
guests’ comfort. Water conservation is covered
in environmental awareness information made
available to our crews.
Related to water conservation is waste water
treatment systems. All our vessels have foul water
treatment systems which meet strict regulatory
requirements at least equivalent to land based
systems before discharge into open seas away
from coastal areas.
Cleaning and hygiene
With up to two million laundry items per annum
ICG requires that its laundry service provider
should be as environmentally conscious as ICG.
Our laundry contract has been awarded to one of
Ireland’s leading laundries whom ICG is satisfied
is accredited as complying with the highest
environmental standard with a commitment
to minimum use of harmful detergents and a
recycling program.
In our cabin accommodation we use ozone
sanitary systems which has high oxidant power
to eliminate odours and harmful bacteria while
significantly reducing the use of chemical
products.
Other on-board initiatives
Equally important to the significant initiatives
above are the myriad of smaller changes that are
constantly being implemented an example being
a switch to coreless tissue dispensers removing
over 300,000 cardboard cores from our previous
waste output.
Environmental and Sustainability
Continued
Single use plastics
We committed during 2019 to remove single use plastics and
other non-compostable consumables from our restaurants.
We are well on the way to achieving this goal during 2020
where all food packaging and coffee cups will be produced
from compostable materials. We have also introduced an
awareness programme for our guests through the use of our
turtle logo.

46
47
Business
Review
Environmental and Sustainability
Continued
Terminal Operations
The Group’s container terminals at Dublin and Belfast utilise
energy in the form of direct consumption of fossil fuels
and electricity generating exhaust emissions. The nature
of operations is that terminals also generate road traffic
and certain levels of noise. ICG has a number of projects in
place to improve environmental performance at its container
facilities.
Strategy
in Action
Increased electrification of heavy plant
The two most recent commissioned mobile
gantries (RTGs) at our Dublin Ferry Port
Terminal represented a change to electrical
power from previous diesel combustion. The
advantages are greater efficiency due to
zero idling, lower emissions and noise levels.
Currently 20% of our RTG fleet is electrically
powered which is expected to increase to
33% following delivery of further units during
2020. The three ship to shore cranes are
already electrically powered.
At our Belfast terminal our landlord partner
Belfast Harbour Commissioners have
commenced an investment program whereby
they are also changing the plant which we
operate from diesel units to electrical units.
Increased Automation
In conjunction with our investment in new
RTGs at Dublin we commissioned our first
automated container stack during 2019. This
has improved container handling efficiency
significantly, while further increasing the level
of occupational safety in the port. We are
currently commissioning a second automated
stack in conjunction with the delivery of the
two additional RTGs scheduled for delivery in
2020.
The modernisation of the Belfast terminal
by our landlord will also incorporate this
technology.
Transport Management System
A new transport management system having
been trialled during 2019 is scheduled to be
operational during 2020. This will facilitate
reduced waiting times and idling time on the
part of our sub-contracted hauliers while also
improving aspects of operational safety within
our terminals.

48
49
Business
Review
Offices
While our office locations are the least
environmentally impactful aspect of ICG
operations we have adopted an environmental
plan to generate environmental awareness of the
impact of our administrative activities. ICG has
a waste management plan in place for its offices
and ports. With the help of staff, suppliers and
visitors we aim to prevent waste and discontinue
the use of environmentally damaging products as
a primary goal. Having moved to energy efficient
lighting during 2018, the 2019 initiative was to
optimise the uncontaminated segregation of
compostable, recyclable and general waste to
enable its waste partners to effectively process
waste and to replace all single use plastics with
compostable alternatives in office canteens and
recreation areas.
Social and Governance
Community and Wellness
The Group continues to take an active interest in
the communities within which it operates. Each
separate business unit assists in local initiatives
through sponsorship and organised events.
ICG recognises the important role played by
charities and community organisations within
its communities and we are happy to help these
organisations achieve their goals. Irish Ferries has
been a main sponsor of the Dublin St. Patrick’s
Day festival. The Group is also happy to support
its employees with charitable endeavours of their
own. Irish Ferries works with the Irish Whale
and Dolphin group by reporting information on
sightings and facilitating surveys to assist in the
conservation and understanding of cetaceans in
the Irish Sea.
Staff
The general health and wellbeing of employees
and customers is of utmost importance to the
Group. ICG participates in the ‘Cycle to Work’
scheme and provides an on-site gym facility at the
Group head office, available to all staff.
ICG is an equal opportunities employer and while
the industry is heavily male represented, the
Group believes diversity is necessary to drive
innovation, make better decisions and maintain a
talented workforce. As of 31 December 2019, 33%
of the Group’s employees were female. Whilst
this is not representative of the population at
large it is characteristic of the sector in which we
operate. Cognisant of the need to better reflect
societal composition, the Group has put in place
an initiative to seek out larger numbers of female
candidates when conducting recruitment.
Safeguard of vulnerable persons
ICG imposes strict obligations on the entity
responsible for the technical and crewing
management onboard its ships, the applicable
contractors it employs and its management teams
to comply with all applicable laws, including those
relating to labour and employment practices. ICG
requires a due diligence process to be conducted
prior to the appointment of a contractor together
with in-contract reviews.
Within its day to day operations ICG has in place a
range of measures to help ensure modern slavery
and human trafficking are not taking place in its
business or its supply chains. Measures adopted
include;
• Provision of guidance to employees to support
immigration and border agency initiatives to
reduce human trafficking, which augments
general observation for unusual behaviour in
our ports and onboard our vessels. Awareness
of this issue is promulgated across all Group
businesses.
• Working with other companies and
organisations to share knowledge, learning and
best practise and co-operating with a series of
law-enforcement projects that help to combat
human trafficking and modern slavery.
• Regular updates to management and
committees on modern slavery so that directors
and key individuals understand their role and
accountability for the prevention of modern
slavery occurring in our businesses and supply
chains.
• Actively monitoring its initiatives in preventing
modern slavery and human trafficking by
reference to reports and alerts from staff,
the public and communication with law-
enforcement agencies.
Safety
The promotion and maintenance of a strong safety
culture across all activities is a principle strategy
of ICG, to not only ensure the safety, security
and well-being of our people and passengers, but
also so that all stakeholders reap the competitive
rewards that come from giving safety top priority.
Environmental and Sustainability
Continued

50
The Group’s operations span a wide range of
activities, both ashore and afloat. It is a matter of
high priority that all our activities are conducted
in a manner that ensures the safety and security
of all our people, and all those who travel on
board our ships or visit our terminals. The bedrock
of ICG’s safety performance is our people. We
place strategic emphasis on ensuring all those
who work within the Group’s sphere of operations
are competent, provided with a high level of
safety and quality training and information, and
are encouraged to engage with the Group’s
continuous improvement philosophy.
Compliance with policy and procedures, both
ashore and afloat, is monitored by regular and
detailed audits. Audits are conducted by trained
and experienced auditors in an open yet focused
manner that drives compliance and improvement.
Senior management monitor safety and audit
performance across the Group, identifying and
addressing safety trends and opportunities for
improvement where they may arise.
In addition to the Group’s own internal verification
procedures, our activities are subject to regular
routine inspection by national and international
statutory bodies. They, like us, set high standards
to ensure the safety and well-being of all
personnel, passengers and cargoes; standards
that we as a Group are ready to meet and exceed.
Ashore: As a minimum, all the Group’s activities
are conducted in strict compliance with the
various statutory health and safety standards
and international maritime regulations that
apply. In accordance with the Safety, Health and
Welfare at Work Act 2005 and its equivalents in
other jurisdictions, the Group has in place safety
policies and safety statements that guide our
activities. We have in place a system of hazard
identification and risk assessment that ensures
all necessary steps are taken to minimise and
mitigate safety risks. Agreed procedures ensure
that activities and operations are conducted in a
consistent and safe manner. By fostering a culture
of employee competence and participation we
empower our employees to continuously improve
the efficiency and safety of our activities, so
contributing to a safe environment for all.
At Sea: ICG ensures that all its ships are designed,
operated and maintained in compliance with the
International Convention for the Safety of Life at
Sea (SOLAS). This Convention is administered by
the UN’s International Maritime Organisation and
is subject to continuous international review and
updating, ensuring ship safety standards keep
pace with societal expectations and technological
advances.
The safety and security of ship’s crews,
passengers and cargoes is critical to our business,
and is always the primary consideration. ICG ships
are certified in accordance with the International
Safety Management (ISM) Code, the international
standard for the safe management and operation
of ships and for pollution prevention.
ICG also operates in full compliance with the
International Ship and Port Facility Security
(ISPS) Code on board all ships and at all locations.
The on-board management of the Irish Ferries
operated vessels was performed by Matrix Ship
Management Limited, Cyprus, on behalf of ICG.
While the focus is on accident prevention where
incidents do occur, effective internal and external
reporting and investigation systems are employed
to identify the cause of such incidents and put
in place actions to prevent recurrence. Due to
the highly regulated environment in which we
operate, incidents may be subject to external
investigation by the appropriate regulatory
authority. The Group will always work with the
authorities toward a successful and worthwhile
investigation outcome.
Lost Time Injury Frequency (LTIF) is a metric used
to measure workplace safety. LTIF measures
the number of workplace incidents causing an
employee to miss the following day’s work per
million hours worked. The Group’s LTIF rate for
2019 was 1.6 (2018: 1.6).
51
Business
Review
Risk Management
Overview
Exposure to risk is an inherent element to carrying out the business
activities of the Group; the operation of ships and provision of related
services. Effective risk management and internal control systems are
therefore necessary to protect the Group from exposure to unnecessary
risks and ensure the sustainability of the Group’s business.
The Board has overall responsibility for establishing procedures to manage risk, oversight of the internal
control framework and determining the nature and extent of the principal risks the Group is willing to
take in order to achieve its long-term objectives. The Board has created a culture of risk awareness
throughout the organisation whereby risk consideration is built into decision making processes.
This Board has delegated the monitoring of the Group’s risk management and internal control systems
to the Audit Committee. This assessment is carried out through the review of reports and presentations
made by the Risk Management Committee (RMC) and Group Internal Audit. Further information on the
Audit Committee activities is set out in its report on pages 83 to 87.
Risk Management Framework
The Group has adopted a three lines of defence framework to provide assurance that appropriate
control and mitigation measures are in place for identified risks.
1st Line of Defence 2nd Line of Defence 3rd Line of Defence
Management Controls Financial Control Internal Audit
Internal Control Measures Risk Management
Monitoring
Compliance
The first line of defence rests
with management acting through
their staffs who are responsible
for the design, implementation
and monitoring of internal control
measures within their respective
business areas.
The second line of defence
comprises of oversight functions
such as Group Finance and
Group Marine and Safety. These
functions are involved in policy
setting and provide assurance
over first line activities.
The third line of defence
consists of the Group Internal
Audit function, which performs
independent oversight of the first
two lines and reports directly to
the Audit Committee on matters
of internal control, compliance
and governance.
Senior Management
Audit Committee / Board
External
Audit
Regulator

52
Role of the Risk Management
Committee
The RMC established by the Group comprises
members from across the three lines of defence,
as well as having Board representation. The
RMC is tasked with driving the Group’s risk
management process including the maintenance
of the Group Risk Register and coordination of risk
management activities. The RMC role is one of
facilitator rather than assessor. The RMC makes
presentations to the Audit Committee and Board
during the year outlining its work and reporting on
key risk areas.
Risk Management Process
The Group’s Risk Management Process is
underpinned by the Risk Management Framework
and is led by the RMC. The Group’s process is
based on the revised international standard ISO
31000 (2018), ‘Risk Management – Guidelines’,
and provides a systematic approach to managing
risks throughout the Group.
Risk identification and monitoring
The Board sets the Group’s risk appetite and
has identified four principal risk categories;
strategic, operational, financial and IT and cyber.
The Group’s appetite for various risk areas is
communicated through the adoption of Risk
Appetite Statements. These provide context to
how the Group’s strategy is pursued and to which
risks are assessed. The Board has a low tolerance
for risks that may impact reputation in terms of
safety of vessels and customers and compliance
with relevant laws and regulations. The ICG Risk
Code contains the Group’s risk policy and details
the Group’s framework and risk activities.
Each business owner is responsible for
ensuring comprehensive risk identification and
assessment is carried out covering their sphere of
responsibility. Risks are identified through various
means, including the use of an identification tool
guiding risk assessors through several internal
and external factors in identifying potential
barriers to respective objectives. Risks are
assigned to risk owners whom are those persons
with responsibility for the activity generating
the risk. Where a risk contains multiple causes
and consequences, risk owners are required
to collaborate in performing a cause and
consequence analysis.
Risk owners are ultimately responsible for the
completion and maintenance of risk assessments
across their respective risk areas. Risks are
measured in terms of the likelihood of occurrence
and estimated impact using a standardised
scoring model. All evaluations are made from a
Group perspective and are relative to Group risk
appetite. Guidance tools are in place to ensure
consistency is achieved across risk assessments
and the Group.
Existing control measures are documented and
assessed within the risk assessment forms in
determining net risk scores. All risk assessments
are reviewed by members of the RMC before they
are released to the Group Risk Register. The RMC
and risk owners can prescribe the implementation
of further control measures at the review stage.
Risk Management
Continued
The Group Risk Register is the central online
repository for documenting, assessing and
prioritising risks, and for documenting and
prescribing control measures. The Register
forms a significant portion of the Group’s risk
management process.
The Group Risk Register is reviewed on a regular
basis by the RMC. Any necessary changes to the
Group Risk Register are identified throughout
the year through the occurrence of a risk event,
via quarterly RMC meetings, from Internal
Audit reviews or through new risk assessments
completed. The RMC will in time develop metrics
to monitor changing exposure to key risks.
Risk information within the Group Risk Register
is analysed and used for reporting principal risks
to the Board and for Internal Audit planning.
A presentation of the Group’s principal and
emerging risks is made to the Board at least
annually or more frequently if warranted by
developments. At these presentations the Board
challenges the RMC is their processes and
evaluations of the principal and emerging risks
identified in the context of the Group’s own
risk policy, risk appetite and general market
developments both within and outside the
industry sector.
Emerging Risks
Risk monitoring is an ongoing process to reflect
the dynamic nature of the environment in which
the Group operates.
The Group acknowledges two types of emerging
risks that can arise. The first type are new risks
that emerge in the external environment in which
the Group operates. These are identified through
the ongoing Group risk identification process.
The second type are previously identified risks
recorded in the Group Risk Register whose impact
on Group activities has changed, prompting
a reassessment. Emerging risks are closely
monitored and assessed as their uncertain nature
can result in the risks becoming significant within
a short timeframe. Emerging risks currently under
review at the date of this report relate to greater
employer responsibility for employee welfare,
greater environmental and climate awareness
driving increased regulation and the potential
disruption to travel and trade from the developing
situation around Covid-19.
Viability assessment
The principal risks identified through the Group’s
risk processes have been considered by the
Directors when preparing the Viability Statement
on page 67, as part of their assessment of the
prospects for the Group.
Principal Risks
Strategic Risks
Description Potential Impact Examples of Mitigation
Commercial &
Market
Service disruption
The Group operates in
a highly competitive
environment where
service reliability is a key
attribute and where brand
damage can be caused
through mismanagement
of service disruption
however caused.
Loss of revenue and
reputational damage.
The Group has standard
processes in place for
managing various types
of disruptive events,
including clear and timely
communications with
customers. Vessels have access
to high resolution professional
weather forecasts and regular
contact is maintained with ship
managers.

54
Operational Risks
Description Potential Impact Examples of Mitigation
Health and Safety
Hazardous cargo
As a pivotal supplier
of maritime transport
services within Ireland’s
external logistics chain
there is potential for
incidents involving
hazardous cargoes during
handling or shipping.
Pollution, serious
personal injury and
reputational damage.
Hazardous cargoes are
stowed in accordance with
the International Maritime
Dangerous Goods Code.
The Group relies on quality
customers and partners to
ensure cargo is adequately
packed, secured and declared.
Crews are trained in the
response to any hazardous
incident.
All hazardous paperwork
requirements are strictly
enforced by trained personnel.
Health and Safety
Risk of injury
Given the nature of the
Group’s activities there is
risk of accidents causing
serious personal injury.
Loss of life and/or serious
personal injury and
reputational damage.
All companies within the
Group maintain up to date
Safety Policies. Safety audits
are carried out on all Group
locations. Information,
instruction, training and
supervision is provided to all
personnel as appropriate. The
Group has put in place major
incident response plans and
regularly conducts drills.
Operational
Compliance
People trafficking
As the Group operates
international maritime
services there is a risk
that our services are used
for people trafficking
within cargo transport
units.
Serious health risks to
refugees or stowaways
and reputational damage.
The Group complies with the
International Ship and Port
Facility Security (ISPS) Code.
There is CCTV and 24-hour
security at terminals. There is
close liaison in place with the
relevant port authorities on
security measures. Additional
private security is deployed
at shore locations where
warranted. Shore staff and
crews are also given training in
identifying suspicious traffic.
55
Business
Review
Risk Management
Continued
Financial Risks
Description Potential Impact Examples of Mitigation
Financial Loss
Major project failure
Where the Group
contracts the
construction of significant
assets including vessels
with long construction
leadtimes there is risk of
budget overrun arising
from underestimation
of costs, excess
spending, or by failure
in the performance of
contractors.
Business
interruption
resulting in
financial loss.
Reputational
damage.
Elements and objectives of major
projects are clearly defined.
External expertise is sought where
appropriate. Any divergences from
spending plans are investigated and
reported to Executives. Due diligence
is performed in advance on potential
contractors. Contract guarantees are
sought. Key milestone dates are set
and monitored.
Financial Loss
Inadequate
insurance
The Group activities are
capital intensive and
concentrated in a small
number of significant
high value complex assets
which increases the risk
of inadequate insurance
on new and existing
assets, or on emerging
risks.
Damage to
assets resulting
in irrecoverable
losses and service
disruption.
Management of insurance is
performed by experienced and
knowledgeable personnel. All
insurances including insured values
are reviewed timely prior to renewal.
The Group maintains close liaison
with its brokers regarding emerging
risks and insurance trends.
Fraud
Payment diversion
The Group incurs
significant liabilities to a
small number of suppliers
which generates the risk
that payments might be
diverted to incorrect bank
accounts.
Financial loss
and potential
reputational
damage.
All invoices are reviewed by the
relevant managers.
All vendor bank account details are
subject to a documented callback
verification. Dual management
authorisation is required for all
payments in banking systems. There
is a Group Social Engineering Policy
in place which is circulated to relevant
personnel, who are also required to
undertake online awareness modules.
Volatility
Fuel costs
The Group consumes
fuel oils (accounting for
20% of 2019 operating
costs) which are traded
commodities and
subject to significant
unpredictable price
fluctuation.
Increase in cost
base, reducing
profitability.
Group policy has been to purchase
these commodities in the spot
markets and to remain unhedged. The
Group operates a dynamic surcharge
mechanism with the Group’s
freight customers which allows
for prearranged price adjustments
in line with Euro fuel costs. In the
passenger sector, in addition to fixed
environmental surcharges changes
in bunker costs are included in the
ticket price to the extent that market
conditions will allow.

56
IT Systems and Cyber Risks
Description Potential Impact Examples of Mitigation
Information
Security
By nature of the services
offered the Group
requires to capture and
retain personal data
which creates the risk of
personal data breach by
whatever means.
Heavy fines imposed
under GDPR and
reputational damage.
The Group has documented
data protection impact
assessments on all activities.
Personal data is maintained
in accordance with retention
requirements. All mobile
devices are encrypted.
Compliance is assessed by the
Group’s Data Protection Officer
and Group Internal Audit.
Cyber Threats The Group relies on
information technology
systems to support its
business activities. These
systems are connected
to customers and the
internet generally
which makes the Group
susceptible to cyber-
attacks affecting the
availability of systems.
Business interruption
resulting from spread of
virus to critical systems
and reputational damage.
Group policy is to only use
licensed software providers.
Anti-virus software is in place
on all PCs. Security information
and event management (SIEM)
system is in place to detect
infections quickly. All staff are
required to undertake security
awareness training. The Group
has documented and rehearsed
incident response plans in
place.
57
Business
Review
Executive Management Team
Eamonn Rothwell
BComm, MBS, FCCA, CFA UK
Chief Executive Officer
Eamonn Rothwell, aged 64, has been a Director for 33 years having been appointed as
a non-executive Director in 1987 and subsequently to the position of Chief Executive
Officer in 1992. He is also a Director of Interferry European Office A.I.S.B.L. He is a former
Director of The United Kingdom Mutual War Risks Association Limited, Interferry Inc and
The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited. He is
a past executive Director of former stockbrokers NCB Group, now part of Investec Bank.
Prior to that, he worked with Allied Irish Banks plc and Fáilte Ireland (The Irish Tourist
Board).
David Ledwidge FCA, BSc (Mgmt)
Chief Financial Officer
David Ledwidge, aged 40, was appointed to the Board on 3 March 2016. David
joined the Group in 2006 from professional services firm Deloitte where he
qualified as a Chartered Accountant. He has held various financial positions within
the Group, including Group Risk Accountant, and most recently as Finance Director
of Irish Ferries. He was appointed to his current role as Group Chief Financial
Officer in May 2015.
Andrew Sheen MSc, BEng(Hons), CEng, FIMarEST, FRINA.
Managing Director – Ferries division
Andrew Sheen, aged 48, a Chartered Engineer, has been involved in shipping for
over 29 years and has worked with Irish Ferries in a variety of Operational Roles for
over 14 years. He re-joined ICG from the UK Maritime & Coastguard Agency and has
been a Director of Irish Ferries since 2013. He was appointed to his current role as
Managing Director of the Ferries division in March 2015. He is currently President of the
Irish Chamber of Shipping and is a Director of the European Community Ship Owners
Association and the International Chamber of Shipping.
Declan Freeman FCA
Managing Director – Container and Terminal division
Declan Freeman, aged 44, joined the Group in 1999 from professional services firm
Deloitte where he qualified as a Chartered Accountant. He has worked in a number of
financial and general management roles in the Group up to his appointment as Managing
Director of Eucon in 2011. He was appointed to his current role as Managing Director of
the Container and Terminal division in 2012.
61
Business
Review
Corporate
Governance
Strategically located container
terminals which handled 320,800
container units during 2019 in Ireland’s
main ports of Dublin and Belfast for
shipping operators providing services
to key continental hub ports and
onwards access to global markets.

62
The Board 64
Report of the Directors 66
Corporate Governance Report 70
Report of the Audit Committee 83
Report of the Nomination Committee 88
Report of the Remuneration Committee 90
Directors’ Responsibilities Statement 105
John B. McGuckian BSc (Econ)
Chairman
John B. McGuckian, aged 80, has been a Director for 32 years having been appointed as
a non-executive Director in 1988 and Chairman in 2004. He has a wide range of interests,
both in Ireland and internationally. He is also a Director of Cooneen Textiles Limited.
He is a former Director of a number of listed companies and he has previously acted as
the Chairman of; the International Fund for Ireland, the Industrial Development Board
for Northern Ireland, UTV Media plc (where he was also a member of the Remuneration
Committee) and as Senior Pro-Chancellor and Chairman of the Senate of the Queen’s
University of Belfast.
Catherine Duffy BA LegSc, DipLeg Stds
Independent Director
Catherine Duffy, aged 58, has been a Director for 8 years having been appointed to the
Board in 2012. Catherine is a Senior Partner and former Chair of law firm A&L Goodbody
specialising its Banking and Financial Services. Catherine is a member and a former Chair
of the International Legal Advisory Panel to the Aviation Working Group of Unidroit. She
was previously a non-executive Director of Beaumont Hospital and a member of the
first Advisory Group to the Irish Maritime Development Office, a government sponsored
organisation set up to promote and assist the development of Irish shipping and shipping
services.
Committee Membership: Audit Committee, Nomination Committee (Chairperson) and Remuneration Committee
Brian O’Kelly BBS, FCA
Senior Independent Director
Brian O’Kelly, aged 57, has been a Director for 7 years having been appointed to the
Board in 2013. Brian is Co-Head of Investment Banking in Goodbody having previously
been Managing Director of Goodbody Corporate Finance. He is an executive director
of Ganmac Holdings, the parent company of Goodbody. Brian qualified as a Chartered
Accountant with KPMG and was subsequently a Director of ABN AMRO Corporate
Finance. He is a member of the Listing Committee of Euronext Dublin.
Committee Membership: Audit Committee, Remuneration Committee (Chairperson), Nomination Committee
John Sheehan FCA
Independent Director
John Sheehan, aged 54, was appointed to the Board in October 2013. John holds a
senior position with Ardagh Group, a leading operator in the global glass and metal
packaging sector with operations principally in Europe and North America. John has over
20 years of experience at management level with exposure to international acquisition
and development projects. He was formerly Head of Equity Sales at NCB Stockbrokers,
now part of Investec Bank, where he spent thirteen years in a range of roles and directly
covered various industry sectors including transport and aviation. John qualified as a
Chartered Accountant with PwC.
Committee Membership: Audit Committee (Chairperson), Remuneration Committee, Nomination Committee
The Board
The Group’s non-executive Directors are:

64
Eamonn Rothwell BComm, MBS, FCCA, CFA UK
Chief Executive Officer
Eamonn Rothwell, aged 64, has been a Director for 33 years having been appointed as a
non-executive Director in 1987 and subsequently to the position of Chief Executive Officer
in 1992. He is also a Director of Interferry European Office A.I.S.B.L. He is a former Director
of The United Kingdom Mutual War Risks Association Limited, Interferry Inc and The
United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited. He is a past
executive Director of former stockbrokers NCB Group, now part of Investec Bank. Prior to
that, he worked with Allied Irish Banks plc and Fáilte Ireland (The Irish Tourist Board).
Committee Membership: Nomination Committee
Thomas Corcoran BComm, FCA
Company Secretary
Thomas Corcoran, aged 55, joined the Company in 1989 from the international
professional services firm PwC, where he qualified as a Chartered Accountant. He has
held a number of financial positions within the Group and is currently Group Financial
Controller and Company Secretary. He was appointed Company Secretary in 2001.
David Ledwidge FCA, BSc (Mgmt)
Chief Financial Officer
David Ledwidge, aged 40, was appointed to the Board on 3 March 2016. David joined the
Group in 2006 from professional services firm Deloitte where he qualified as a Chartered
Accountant. He has held various financial positions within the Group, including Group Risk
Accountant, and most recently as Finance Director of Irish Ferries. He was appointed to
his current role as Group Chief Financial Officer in May 2015.
The Company secretary is:
The Group’s Executive Directors are:
Corporate
Governance
65
The Directors present their Report together with the
audited financial statements of the Group for the
financial year ended 31 December 2019.
Results for the year and Business
Developments
Details of the results for the financial year are set out
in the Consolidated Income Statement on page 118
and in the related notes forming part of the financial
statements. The fair review of the development of the
business of the Company and its subsidiaries is set out
in the Operating and Financial Review on pages 18 to
38. This includes a description of the principal activities,
principal risks, uncertainties, alternative performance
measures and environmental and employee matters.
Research and Development
The Group actively monitors developments in ship
design and ship availability with an emphasis on product
improvement and achievement of economies of scale.
Dividend and Share Buyback
Dividends paid during the year ended 31 December 2019
are set out in the Consolidated Statement of Changes
in Equity on page 121 for the Group and the Company
Statement of Changes in Equity on page 183 for the
Company.
In June 2019, a final dividend of 8.56 cent per ICG
Unit was paid in respect of the financial year ended 31
December 2018. In October 2019, an interim dividend
of 4.42 cent per ICG Unit was paid in respect of the
financial year ended 31 December 2019.
The Board is proposing a final dividend of 8.99 cent per
ICG Unit to be paid in respect of the financial year ended
31 December 2019 in June 2020 which is estimated to be
€16.8 million.
The Company has adopted a progressive dividend
policy the aim of which is to gradually increase or
at least maintain the annual total dividend per share
over the medium term. Any dividend is declarable at
the discretion of the Directors following assessment
of the Company’s performance, its cash resources
and distributable reserves. At 31 December 2019 the
Company’s retained earnings amounted to €139.4 million
all of which were considered to be distributable.
The Company bought back 2,900,000 of its shares,
representing 1.5% of its issued share capital at 1 January
2019 during the year for a total consideration of €12.9
million. Further details are contained at note 20 to the
financial statements.
Board of Directors
The Board members are listed on pages 64 to 65 of this
report.
The Company’s Constitution, requires that one third of
the Directors are required to retire from office at each
Annual General Meeting of the Company. However,
in accordance with the provisions contained in the UK
Corporate Governance Code, the Board has decided
that all Directors should retire at the 2020 Annual
General Meeting and offer themselves for re-election.
Biographical details of the Directors are set out on pages
64 to 65 of this report and the result of the annual board
evaluation is set out on page 77.
Accounting Records
The Directors believe that they have complied with the
requirements of Section 281 to 285 of the Companies Act
2014 with regard to maintaining adequate accounting
records by employing accounting personnel with
appropriate expertise and by providing adequate
resources to the finance function. The accounting
records of the Company are maintained at the
Company’s registered office, Irish Continental Group
plc, Ferryport, Alexandra Road, Dublin 1, Ireland.
Going Concern
The financial statements have been prepared on the
going concern basis and, the Directors report that they
have satisfied themselves at the time of approving the
financial statements that the Group and Company are
going concerns, having adequate financial resources to
continue in operational existence for the foreseeable
future. In forming this view the Directors have
considered the future cash requirements of the Group’s
business in the context of the economic environment
of 2020, the principal risks and uncertainties facing the
Group on pages 54 to 57, the Group’s 2020 budget plan
and the medium-term strategy of the Group, including
capital investment plans. The future cash requirements
have been compared to bank facilities which are
available to the Group and Company.
Report of the Directors

66
Viability Statement
The Directors have assessed ICG’s viability over a
timeframe of five years which the Directors believe
reflects an appropriate timeframe for performing
realistic assessments of future performance given the
dynamic nature of our markets as regards the competitive
landscape, economic activity, long-life assets and the
significant capital investment commitments related to the
construction of a new cruise ferry.
In making their assessment, the Directors took account
of ICG’s current financial and operational positions
and contracted capital expenditure. These positions
were then rolled forward based on a set of assumptions
on expected outcomes to arrive at a base projection.
Sensitivity analysis was then performed on the base
projection against potential financial and operational
impacts, in severe but plausible scenarios, of the
principal risks and uncertainties and the likely degree of
effectiveness of current and available mitigating actions
as set out on pages 54 to 57. It was further assumed
that functioning financial markets exist throughout the
assessment period with bank lending available to the
Group on normal terms and covenants. The process
which was performed by management was subject to
examination and challenge by the Directors.
Based on this assessment, the Directors have a reasonable
expectation that the Company and the Group will be able
to continue in operation and meet all their liabilities as
they fall due over the five years assessment periods.
Directors’ Compliance Statement
The Directors acknowledge that they are responsible for
securing compliance by the Company with its Relevant
Obligations as defined by the Companies Act 2014 (the
Relevant Obligations).
The Directors confirm that they have drawn up and
adopted a compliance policy statement setting out the
Company’s policies that, in the Directors’ opinion, are
appropriate to the Company respecting compliance by
the Company with its Relevant Obligations.
The Directors further confirm the Company has put in
place appropriate arrangements or structures that are,
in the Directors’ opinion, designed to secure material
compliance with its Relevant Obligations. For the year
ended 31 December 2019, the Directors have reviewed
the effectiveness of these arrangements and structures
during the financial year to which this Report relates.
In discharging its obligations under the Companies Act
2014, as set out above, the Directors have relied on the
advice of persons employed by the Company or retained
by it under a contract for services, who the Directors
believe to have the requisite knowledge and experience
to advise the Company on compliance with its Relevant
Obligations.
Disclosure of Information to Statutory
Auditors
In accordance with the provisions of Section 330 of the
Companies Act 2014, each Director of the Company at
the date of approval of this report individually confirms
that:
• So far as they are aware, there is no relevant audit
information, as defined in the Companies Act 2014, of
which the Statutory Auditor is unaware; and
• They have taken all the steps that they ought to have
taken as a Director to make themselves aware of
any relevant audit information (as defined) and to
ensure that the Statutory Auditor is aware of such
information.
International Financial Reporting Standards
Irish Continental Group presents its Financial Statements
in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
The Group has adopted all of the new and revised
Standards and Interpretations issued by the International
Accounting Standards Board (IASB) and the International
Financial Reporting Interpretations Committee (IFRIC) of
the IASB that are relevant to its operations and effective
for accounting periods beginning on 1 January 2019 and
that have been adopted by the European Union.
Principal Risks and Uncertainties
The Group has a risk management structure in place
which is designed to identify, manage and mitigate the
threats to the business. The key risks facing the Group
include strategic, operational, financial and, information
technology and cyber risks arising in the ordinary course
of business. Further details of risks and uncertainties are
set out on pages 54 to 57.
Corporate
Governance
67
Substantial Shareholdings
The latest notifications of interests of 3% or more in the share capital of the Company received by the Company on or
before 4 March 2020 and as at 31 December 2019 were as follows:
Beneficial Holder as Notified 4 March 2020 31 December 2019
Number of Units % of Issued Units Number of Units % of Issued Units
Eamonn Rothwell 29,899,729 15.90% 29,899,729 15.90%
Wellington Management Company, LLP 17,276,545 9.20% 17,276,545 9.20%
Ameriprise Financial Inc. 15,260,710 8.10% 15,260,710 8.10%
Marathon Asset Management, LLP 11,647,052 6.20% 14,343,681 7.60%
Kinney Asset Management, LLC 7,737,838 4.10% 7,737,838 4.10%
FMR, LLC 6,229,035 3.30% 6,229,035 3.30%
BlackRock Inc. 6,162,207 3.20% 7,271,837 3.80%
Directors, Secretary and their Interests
The interests of the Directors and Secretary of the Company and their spouses and minor children in the share capital
of the Company at 31 December 2019 and 1 January 2019 all of which were beneficial, were as follows:
Director

Share Options
John B. McGuckian 296,140 296,140 - -
Eamonn Rothwell 29,899,729 29,553,479 1,408,000 1,182,000
Catherine Duffy - - - -
David Ledwidge 97,938 92,028 382,500 306,500
Brian O’Kelly 41,740 41,740 - -
John Sheehan 35,000 15,000 - -
Company Secretary
Thomas Corcoran 213,579 179,329 470,000 414,500
ICG Units are explained on page 202 of this report.
Auditors
In accordance with Section 383(2) of the Companies
Act 2014, the Auditor, Deloitte Ireland LLP, Chartered
Accountants and Statutory Audit firm, continue in office
and a resolution authorising the Directors to fix their
remuneration will be proposed at the forthcoming AGM.
Details of Deloitte’s appointment is set out on page 86.
Deloitte were first appointed Auditors to the Company
during 1988.
Corporate Governance
The Group applies the principles and provisions of The
UK Corporate Governance Code (2018) as adopted by
Euronext Dublin and the UK Financial Conduct Authority
and of the Irish Corporate Governance Annex (the
Irish Annex) issued by Euronext Dublin. A Corporate
Governance Report is set out on pages 70 to 82 and is
incorporated into this Report by cross reference.
The Group has established an Audit Committee whose
report is included at pages 83 to 87.
Key Performance Indicators
The Group uses a set of headline Key Performance
Indicators (KPIs) to measure the performance of its
operations. These KPIs are set out on pages 22 to 25 and
are incorporated into this Report by cross reference.
Report of the Directors
Continued

68
Future Developments
The Group has contracted for a second new cruise ferry
to be built at a contract price of €165.2 million by the
German company FSG who built the W.B. Yeats and is
scheduled for delivery in late 2020. It is planned that this
cruise ferry will replace the Ulysses on the peak sailings
between Dublin-Holyhead, with the Ulysses becoming
the second vessel on that route and the chartered vessel
Epsilon redelivered to owners. The ship will give ICG an
increase in effective capacity from 200 freight units up
to 300 freight units on peak sailings. This will allow ICG
to continue growing on the key Dublin-Holyhead route
into the future.
The Group is also fitting exhaust gas cleaning systems
on all its owned vessels which will lead to reduction
in exhaust sulphur emissions below the maximum
permitted under recent regulation effective from 1
January 2020. This program will take place over 2020
with the Ulysses cruise ferry due for completion in
the first quarter of 2020. The Group is also expanding
operations at the Dublin container terminal with the
addition of container stacks and new automated
electrical mobile gantries.
The Group is closely monitoring developments in
negotiations between the European Union and the
United Kingdom following the United Kingdom exit from
the European Union on 31 January 2020 and consequent
effects these may have on the Group’s activities. The
Group is also monitoring developments around Covid-19
(the corona virus) and the effect it may have on trade
and travel. In line with its strategy, the Group will
continue to pursue investments which meet its stringent
return criteria and which improve our environmental
performance.
Events after the Reporting Period
The Board is proposing a final dividend of 8.99 cent per
ICG Unit in respect of the results for the financial year
ended 31 December 2019.
Annual Report and Financial Statements
This Annual Report together with the Financial
Statements for the financial year ended 31 December
2019 was approved by the Directors on 4 March 2020.
The Directors consider that the Annual Report and
Financial Statements, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Annual General Meeting
Notice of the Annual General Meeting, which will be
held on Tuesday, 12 May 2020*, will be notified to
shareholders in April 2020.
On behalf of the Board
Eamonn Rothwell David Ledwidge
Director Director
4 March 2020
Registered Office: Ferryport, Alexandra Road, Dublin 1,
Ireland.
* 
Subsequent to the approval of this Annual Report, the Annual General
Meeting was postponed to a later date (see pg 203).
Corporate
Governance
69
Dear Shareholder,
Corporate Governance is concerned with how companies are directed and
controlled. Your Board acknowledges the importance of, and is committed
to maintaining high standards of corporate governance practices. We
strongly believe that good corporate governance supports the delivery of our
strategy and is essential to long-term sustainable growth and maintenance of
shareholder value. The Board sets the tone for governance practices across
the whole Group.
The Group applies the principles and provisions of The UK Corporate
Governance Code (the Code) issued by the Financial Reporting Council
and the Irish Corporate Governance Annex (the Irish Annex) issued by
Euronext Dublin. We are reporting against the July 2018 edition of the
Code which became effective for the Group commencing 1 January 2019.
The key changes over the previous version of the Code include reporting
on how corporate culture is integrated into governance processes, board
composition and tenure, engagement with stakeholders and an expanded
role of the Remuneration Committee. We have reviewed our governance
processes and where necessary made changes in order to achieve
substantial compliance with the Code.
The Corporate Governance Report explains how the Group has applied the
principles set out in the Code and the Irish Annex. While we acknowledge
that the Code sets overall current best practice expectations, your Board
reserves its discretion not to apply certain provisions where they may not
be compatible with its business model and/ or its legal obligations. In these
circumstances an explanation is provided.
Your Board currently comprises two executive and four non-executive
Directors. Further details on Board composition is set out on pages 76 and
77. During the year I led the annual Board evaluation and concluded that the
Board was as a whole operating effectively for the long-term success of the
Group.
The reports from the Committee chairmen are set out on pages 83 to 104.
The business conditions we face create opportunities and challenges going
forward and I look forward to continuing open and constructive debate and
ensuring that our corporate governance practices remain appropriate to
assist in the future sustainable growth of the Group.
John B. McGuckian
Corporate Governance Report

70
Corporate Governance Code
The Company is committed to the principles of
corporate governance contained in the UK Corporate
Governance Code (the Code) issued in July 2018
by the Financial Reporting Council, as adopted by
Euronext Dublin, for which the Board is accountable to
shareholders. The Irish Corporate Governance Annex
(the Irish Annex) issued by Euronext Dublin also applies
to the Group.
The Board considers that, having explained in this
Report, throughout the period under review the Group
has been in compliance with the provisions of the Code
and the requirements set out in the Irish Annex. This
Corporate Governance Report at page 73 explains
the Group’s approach to workforce engagement, and
at page 75 notes that the Chairman’s tenure exceeds
9 years. The Report of the Remuneration Committee
at page 100 explains why in relation to one Director a
notice period in excess of one year may apply in limited
circumstances.
The Code required the Board to describe in its Annual
Report how the interests of key stakeholders and
the matters set out in S172 of the United Kingdom
Companies Act of 2016 have been considered in Board
discussions and decision making. While Irish Continental
Group plc is incorporated in Ireland and not subject to
UK legislation, the Board is satisfied that these matters
have been addressed in discussions and disclosures
throughout this Annual Report including discussion
on strategy and business model, business review,
risk processes, environmental matters and employee
engagement.
The Code can be viewed on the Financial Reporting
Council’s (FRC) website (www.frc.org.uk) and the Irish
Annex on Euronext Dublin website (www.euronext.com).
Board Leadership and Company Purpose
The Board is collectively responsible for the long-term
sustainable success of the Group through provision of
leadership within a framework of prudent and effective
controls which enables risk to be assessed and managed.
Pursuant to the Constitution, the Directors of the
Company are empowered to exercise all such powers as
are necessary to manage and run the Company, subject
to the provisions of the Companies Act 2014.
In discharging this responsibility the Board has adopted
a formal schedule of matters specifically reserved to
it for decision, which covers key areas of the Group’s
business including approval of financial statements,
budgets (including capital expenditure), acquisitions
or disposals, dividends and share redemptions, Board
appointments and setting the risk appetite. Certain
additional matters are delegated to Board Committees.
Corporate
Governance
71
Group Strategy and Corporate Governance
On page 20 we describe the Group’s strategy. This strategy is supported by our five strategic pillars, consideration of
which is interwoven throughout the Board agenda for each meeting.
Strategic Pillar Board activities
Quality assets
Investment in quality assets is essential to ensure
reliable timely and high quality experience for our
customers which are essential to retaining the Group’s
pivotal position in Ireland’s international logistics chain.
• The oversight and monitoring of performance of the
fleet including the introduction of W.B. Yeats into
service during 2019.
• Investment evaluation and approval including:
-
- cruise ferry vessel upgrade works both customer
facing and background technical improvements.
-
- front end customer facing booking systems.
-
- container terminal automation and booking
systems.
People and culture
Our customers’ experience is directly affected through
their interaction with our employees and third party
contractors.
• Overview of service quality reports.
• Monitoring of feedback from staff briefing sessions.
• Site visits.
• Approval of whistleblowing procedures.
Financial management
Pursuit of investment opportunities within stringent
risk and reward hurdles and avoidance of speculative
financial positions.
• Monitoring of financial liquidity and headroom.
• Challenge of investment proposals presented by
the executive team in terms of resilience and risk
appetite.
• Ongoing consideration of commodity and currency
exposures.
Safety
The operational safety of our vessels and terminal
facilities is paramount to maintaining the reputation of
our brands which is vital to future success and a strong
safety culture is promoted across all activities.
• Oversight of operational safety reviews.
• Site visits and travel on Group vessels.
• Briefings by the Risk Management Committee.
Environment
The Group seeks to minimise the impact of its activities
on the environment through constant innovation,
efficiency and awareness.
• The Board has oversight of Group compliance with
existing regulations and potential effects of new
regulation.
• Approval of new investment is conditional on
the project meeting known future regulation and
improving the Group’s environmental performance.
• The Board has overseen the development of a culture
of environmental awareness throughout the Group
embodied within an environmental framework to
drive continuous improvement.
Corporate Governance Report
Continued

72
Communications with Shareholders
The Board promotes good communications with
shareholders and the Group commits resources to
shareholder communication commensurate with its
size. Other than during close periods and subject to the
requirements of the Takeover Code, when applicable,
the Chief Executive and the Chief Financial Officer
have a regular dialogue with its major shareholders
throughout the year and report on these meetings to the
Board. The Senior Independent Director is also available
on request to meet with major shareholders.
The Board encourages communications with
shareholders and welcomes their participation at all
general meetings of the Company. The Board notes that
at the 2019 AGM, held on 17 May 2019, the advisory
resolution to receive the Report of the Remuneration
Committee for the year ended 31 December 2018
received 78% support. There had been extensive
communication with major shareholders prior to the
meeting with further opportunity to raise any corporate
governance concerns at subsequent meetings since
then. Further information is contained in the Report of
the Remuneration Committee.
Regular formal updates are provided to shareholders
and are available on the Group’s website. During 2019
these included Trading Updates, the Half-Yearly Financial
Report, and the Annual Report and Financial Statements
together with investor presentations. Irish Continental
Group’s website, www.icg.ie, also provides access to
other corporate and financial information, including all
regulatory announcements and a link to the current ICG
Unit price.
The 2020 Annual General Meeting is scheduled for 12
May 2020*. Arrangements will be made for the 2019
Annual Report and 2020 Annual General Meeting Notice
to be available to shareholders 20 working days before
the meeting and for the level of proxy votes cast for and
against each resolution and the number of abstentions,
to be announced at the meeting. Further details on the
procedures applicable to general meetings are set out on
page 80.
Further investor relations information is available on
pages 202 to 204 of this Report.
Workforce Engagement
The Board notes the Code provision relating to
workforce engagement and the methods which might
be used to effect same. The Board has considered these
against the nature of the manner in which the Group’s
activities are performed. As is common practice in
the maritime sector, our vessels are crewed through
third party managers. The Group has no legal rights
to engage with the individual crew members who are
directed and controlled by the third party manager. The
Group ensures that the third party crews carryout their
functions to required standards through the monitoring
of service levels on board vessels. The contracts
between the Group and the crewing managers include
detailed service level arrangements and requirements
that the third party adhere to international IMO
regulations regarding employment terms for seafarers.
The Group monitors the crewing manager certification
on an ongoing basis. The Group has also entered into
third party labour contracts with respect to its terminal
operations.
At peak season the Group engages in excess of 1,000
persons, of which approximately 300 are direct
employees. The Board has considered that the most
appropriate manner in which it can ensure that the
interests of persons employed directly or indirectly
can be considered is through challenging the CEO and
divisional managing directors on their regular reports to
the Board.
Both formal and informal processes underlie engagement
with the direct workforce. Formal processes include
general briefing sessions to all employees twice annually
in conjunction with release of results. There are also
annual staff reviews which promote the exchange of
views. The Group has also formulated grievance and
whistleblowing procedures whereby employees can
report any concern in confidence. Informally given the
small direct workforce there is an open access policy
whereby any employee has access to any manager up
to the CEO. Senior management also regularly visit
all Group locations. Within these processes executive
management report on workforce matters to the Board.
* 
Subsequent to the approval of this Annual Report, the Annual General Meeting was postponed to a later date (see pg 203).
Corporate
Governance
73
Whistleblowing Procedures
The Group has a suite of policies covering employee
conduct which are available on the internal staff intranet.
Employees are reminded to refresh their knowledge of
these policies at least annually. These policies include
a whistleblowing policy to ensure procedures are in
place to enable employees to raise, in a confidential
manner, any genuine concerns about possible financial
impropriety or other wrongdoing. This is now reviewed
annually by the Board reflecting the broader scope
of the policy. The most recent review of the policy by
the Board to ensure that it remains appropriate to the
circumstances of the Group was in October 2019.
Division of Responsibilities
The Board comprises of two executive and four non-
executive Directors. The roles of Chairman and Chief
Executive are separate, set out in writing and approved
by the Board.
Details of the professional and educational backgrounds
of each Director encompassing the experience and
expertise that they bring to the Board are set out
on pages 64 to 65. The Board believes that it is of a
size and structure and that, the Directors bring an
appropriate balance of skills, experience, independence
and knowledge to enable the Board to discharge its
respective duties and responsibilities effectively, with no
individual or Group of individuals dominating the Board’s
decision making. Each of the non-executive Directors
has a broad range of business experience independent of
the Group both domestically and internationally.
The Board has adopted the corporate governance
structure set out above.
Chairman: The Board is led by the Chairman who is
responsible for its overall effectiveness in directing the
Group. John B. McGuckian has served as Chairman of
the Board since 2004 and is responsible for leading the
Board ensuring its effectiveness through;
• Setting the Board’s agenda and ensuring that adequate
time is available for discussion.
• Promoting a culture of openness and debate by
facilitating the effective contribution of Non-Executive
Directors in particular and ensuring constructive
relations between Executive and Non-Executive
Directors.
• Ensuring that the Directors receive accurate, timely
and clear information.
• Ensuring effective communication with shareholders.


74
Chief Executive: The Board has delegated the
management of the Group to the Executive
Management, through the direction of Eamonn Rothwell
who has served as Chief Executive since 1992. The Chief
Executive is responsible for implementing Board strategy
and policies and closely liaises with the Chairman and
manages the Group’s relationship with its shareholders.
Senior Independent Director: The Board, having
considered his experience, has appointed Brian
O’Kelly as the Senior Independent Director. The Senior
Independent Director acts as a sounding board for the
Chairman and serves as an intermediary for the other
Directors if necessary. Mr O’Kelly is also available
to shareholders if they have concerns which have
not been resolved through the normal channels of
Chairman, Chief Executive or for which such contact is
inappropriate.
Non-Executive Directors: Non-Executive Directors
through their knowledge and experience gained outside
the Group constructively challenge and contribute to
the development of Group strategy. Non-Executive
Directors scrutinise the performance of management in
meeting agreed goals and objectives and monitor the
reporting of performance. They satisfy themselves on
the integrity of financial information and that financial
controls and systems of risk management are robust and
defensible. Through their membership of Committees
they are responsible for determining appropriate levels
of remuneration of Executive Directors and have a prime
role in appointing and, where necessary, removing
executive directors, and in succession planning.
Company Secretary: The Company Secretary provides
a support role to the Chairman and the Board ensuring
good information flows within the Board and its
Committees and between senior management and non-
Executive Directors, as well as facilitating induction and
assisting with professional development as required and
advising the Board through the Chairman on governance
matters. Thomas Corcoran has served as Company
Secretary since 2001.
Committees: During the year ended 31 December
2019, there were three standing Board Committees
with formal terms of reference; the Audit Committee,
the Nomination Committee and the Remuneration
Committee. In addition the Board will establish ad-hoc
sub-committees to deal with other matters as necessary.
All Board Committees have written terms of reference
setting out their authorities and duties delegated by the
Board. The terms of reference are available, on request,
from the Company Secretary and on the Group’s
website. The reports of the Committees are set out at
pages 83 to 104.
Independence: All of the non-executive Directors
are considered by the Board to be independent of
management and free of any relationships which
could interfere with the exercise of their independent
judgement. In considering their independence, the Board
has taken into account a number of factors including
their length of service on the Board, other directorships
held and material business interests.
Mr. McGuckian has served on the Board for
more than nine years since his first appointment.
Notwithstanding this tenure the Board, as advised by
the Nomination Committee, considers Mr. McGuckian
to be independent. Mr. McGuckian has a wide
range of interests and experience both domestically
and internationally. The Board has considered the
knowledge, skills and experience that he contributes and
assesses him to be both independent in character and
judgement and to be of continued significant benefit
to the Board. Mr. McGuckian was also assessed to be
independent at the date of appointment as Chairman in
2004.
Catherine Duffy is a partner at law firm A&L Goodbody
from whom the Company has received legal services
in their capacity as legal advisors to the Company.
Details of the expenses incurred, which were on an arm’s
length basis at standard commercial terms, are set out
at note 34 to the Financial Statements. The expense
incurred in 2019 was significantly higher than in previous
years and relates principally to the Group’s referral of
the National Transport Authority determinations of
the Group’s non-compliance with the EU Regulation
covering sea passengers to the High Court of Ireland
for judicial review. The Group engaged A&L Goodbody
to advise on this matter given their expertise in the area
and knowledge of the Group. Catherine Duffy absented
herself from the decision on this appointment. In her
role at A&L Goodbody, Catherine has not been involved
in providing advice to the Company. The Board, as
advised by the Nomination Committee, has considered
the relationship and does not consider it to affect
Catherine’s independence as a non-Executive Director of
the Company.
Corporate
Governance
75
Division of Responsibilities – continued
Meetings: The Board agrees a schedule of regular
meetings each calendar year and also meets on other
occasions if necessitated with contact between
meetings as required in order to progress the Group’s
business. Where a Director is unable to attend a
meeting, they may communicate their views to
the Chairman. The Directors receive regular and
timely information in a form and quality appropriate to
enable the Board to discharge its duties. Non-Executive
Directors are expected to utilise their expertise and
experience to constructively challenge proposals tabled
at the meetings. The Board has direct access to the
executive management who regularly brief the Board in
relation to operational, financial and strategic matters
concerning the Group.
Director attendances at scheduled meetings are set
out below. The Chairman also holds meetings with the
non-executive Directors without the executive Directors
present and the non-executive Directors also meet once
a year, without the Chairman present.
Attendance at scheduled Board meetings during the year
ended 31 December 2019 was as follows:
Member A B Tenure
J. B. McGuckian (Chair) 7 7 32 years
E. Rothwell 7 7 33 years
C. Duffy 7 7 8 years
D. Ledwidge 7 7 4 years
B. O’Kelly 7 7 7 years
J. Sheehan 7 7 6 years
Column A: the number of scheduled meetings held during the year where
the Director was a member of the Board.
Column B: the number of scheduled meetings attended during the year
where the Director was a member of the Board.
Access to Advice: There is a procedure for Directors
in the furtherance of their duties to take independent
professional advice, at the expense of the Group, if they
consider this necessary. The Group carries Director
liability insurance which indemnifies Directors in respect
of legal actions that may be taken against them in the
course of discharging their duties as Directors.
All Directors have access to the advice and services of
the Company Secretary, who is responsible to the Board
for ensuring that Board procedures are followed and that
applicable rules and regulations are complied with.
Composition, Succession and Evaluation
The Board has established a Nomination Committee
to lead the appointments process and plan for orderly
succession at Board and senior management level. The
Nomination Committee report is set out on pages 88 to
89.
Appointments: All Directors are appointed by the
Board, following a recommendation by the Nomination
Committee, for an initial term not exceeding three years,
subject to annual re-election at the Annual General
Meeting. Prior to their nomination as a non-executive
Director, an assessment is carried out to determine
that they are independent. Non-executive Directors'
independence is thereafter reviewed annually, prior
to recommending the resolution for re-election at the
AGM. Under the Articles each Director is subject to
re-election at least every three years but in accordance
with the Code the Board has agreed that each Director
will be subject to annual re-election at the AGM.
The terms and conditions of appointment of non-
executive Directors appointed after 2002 are set out
in their letters of appointment, which are available for
inspection at the Company’s registered office during
normal office hours and at the Annual General Meeting
of the Company.
Development and Induction: On appointment, Directors
are given the opportunity to familiarise themselves with
the operations of the Group, to meet with executive
management, and to access any information they may
require. Each Director brings independent judgement
to bear on issues of strategy, risk and performance. The
Directors also have access to the executive management
in relation to any issues concerning the operation of the
Group.
The Board recognises the need for Directors to be aware
of their legal responsibilities as Directors and it ensures
that Directors are kept up to date on the latest corporate
governance guidance, company law developments and
best practice.
Corporate Governance Report
Continued

76
Performance Evaluation: The Board conducts an annual
self-evaluation of the Board as a whole, the Board
processes, its committees and individual Directors. The
purpose of the evaluation process includes identification
of improvements in Board procedures and to assess each
Director's suitability for re-election. The process which
is led by the Chairman, is forward looking in nature. On
a triennial cycle an independent external facilitator is
engaged to further assist the process, the most recent
such engagement relating to the 2017 evaluation.
For the 2019 evaluation, the Company Secretary made
a presentation to the Board outlining key focus areas
for consideration by the Directors against key events
addressed by the Board during the year together with
a review of the matters for action emanating from the
previous evaluation. The focus areas included Board
composition, Board agenda, Director interaction, quality
of information, time allocation and decision making
processes. Post the presentation the Chairman reviewed
with each Director their observations on the items raised
in the presentation together with a review of Director
performance. Following conclusion of the Director
engagement the Chairman reported to the Board on
the outcome of the evaluation process which indicated
that the Board as a whole was operating effectively
for the long-term success of the Group and that each
Director was contributing effectively and demonstrating
commitment to the role. The ongoing progress on the
Board process matters noted in the prior year was
acknowledged with no further matters added as a result
of the latest evaluation.
Within the process, the non-executive Directors, led
by the Senior Independent Director, met without the
Chairman being present to evaluate the Chairman’s
performance. The Senior Independent Director
subsequently reported to the Board that the Chairman
was providing effective leadership of the Board.
Audit Risk and Internal Control
The Board has described its business model on pages
20 to 21 setting out how the Company generates value
over the longer term and the strategy for delivering the
objectives of the Company.
The Board has overall responsibility for determining the
Group’s risk appetite but has delegated responsibility for
the review, design implementation and monitoring of the
Group’s internal control system to the Audit Committee.
These systems are designed to manage rather than
eliminate the risk of failure to achieve business
objectives, and can only provide reasonable, and not
absolute, assurance against material misstatement or
loss.
In accordance with Guidance on Risk Management,
Internal Control and Related Financial and Business
Reporting (September 2014) issued by the FRC, the
Board confirms that there is a continuous process for
identifying, evaluating and managing the significant
risks faced by the Group, that it has been in place for
the period under review and up to the date of approval
of the financial statements, and that this process is
regularly monitored by the Board. The report of the
Audit Committee is set out on pages 83 to 87. The risk
management framework and processes including the
principal risks and uncertainties identified are set out on
pages 52 to 57.
No material weaknesses in internal controls were
reported to the Board during the year.
Taking account of the Group’s current position and
principal risks the Directors have set out in the Viability
Statement on page 67 their assessment of the prospects
for the Group.
Reporting
The Board is committed to providing a fair, balanced
and understandable assessment of the Company’s
position and prospects to shareholders through the
Annual Report, the Interim Statement and any other
public statement issued by the Company. The Directors
have considered the Annual Report based on a review
performed by the Audit Committee and have concluded
that it represents a fair, balanced and understandable
assessment of the Company’s position and prospects.
Remuneration
The Board has delegated the approval of remuneration
structures and levels of the executive Directors and
senior management to the Remuneration Committee
whose report is set out at pages 90 to 104.
Corporate
Governance
77
Diversity
The Board has adopted a Board Diversity Policy in
compliance with the European Union (Disclosure of
non-financial and diversity information by certain
large undertakings and Groups) Regulation 2017. The
promotion of a diverse Board makes prudent business
sense and for stronger corporate governance.
The Company seeks to maintain a Board comprised of
talented and dedicated directors with a diverse mix of
expertise, experience, skills and backgrounds reflecting
the diverse nature of the business environment in
which the Company operates. For purposes of Board
composition, diversity includes, but is not limited to, age,
gender or educational and professional backgrounds.
When assessing Board composition or identifying
suitable candidates for appointment or re-election
to the Board, the Company, through the Nomination
Committee, considers candidates on merit against
objective criteria having due regard to the benefits of
diversity and the needs of the Board. The Company
does not focus on any single diversity characteristic and,
accordingly, has not adopted targets in respect of any
single diversity characteristic.
The Nomination Committee will give due regard to
diversity when reviewing Board composition and
considering Board candidates. The Committee will
report annually, in the corporate governance section of
the Annual Report, on the process it has used in relation
to any Board appointments.
Beyond the Board the senior management team and
direct reports comprise 20 individuals in total, of which
20% are female. While the Board acknowledges the
imbalance of this ratio compared to society at large it
is reflective of the industry sector in which the Group
operates. Against this background, the Board has not set
any gender ratio target but is committed to improving
this ratio over time. In that regard the Nomination
Committee and executive management, as appropriate,
will actively seek out a greater pool of female candidates
when undertaking any future recruitment process.
Matters Pertaining to Share Capital
The information set out below is required to be
contained in the Report of the Directors under
Regulation 21 of the European Communities (Takeover
Bids (Directive 2004/25/EC)) Regulations 2006 (S.I.
255/2006). The information represents the position at 31
December 2019.
For the purposes of Regulations 21(2)(c), (e), (j) and (k)
of the European Communities (Takeover Bids (Directive
2004/25/EC)) Regulations 2006 (S.I. 255/2006), the
information given under the following headings: (i)
Substantial Shareholdings page 68; (ii) Share Option
Plans page 98; (iii) Long Term Incentive Plan page 93;
(iv) Service Contracts page 100; and (v) Share-based
Payments page 169; (vi) Borrowings page 156, are
deemed to be incorporated into this statement.
Share capital
The authorised share capital of the Company is
€29,295,000 divided into 450,000,000 ordinary shares
of €0.065 each (Ordinary Shares) and 4,500,000,000
Redeemable Shares of €0.00001 each (Redeemable
Shares). The Ordinary Shares represent approximately
99.85% and the Redeemable Shares represent
approximately 0.15% of the authorised share capital. The
issued share capital of the Company as at the date of
this Report is 187,419,390 Ordinary Shares. There are no
Redeemable Shares currently in issue.
Ordinary Shares and Redeemable Shares (to the extent
Redeemable Shares are in issue) are inextricably linked
as an ICG Unit. An ICG Unit is defined in the Constitution
of the Company as “one Ordinary Share in the Company
and ten Redeemable Shares (or such lesser number
thereof, if any, resulting from the redemption of one or
more thereof) held by the same holder(s)”.
The rights and obligations attaching to the Ordinary
Shares and Redeemable Shares are contained in the
Constitution of the Company.
The Directors may exercise their power to redeem
Redeemable Shares from time to time pursuant to the
Company’s Articles of Association where there are
Redeemable Shares in issue.
The structure of the Group’s and Company’s capital and
movement during the year are set out in notes 20 and 21
to the financial statements.
Corporate Governance Report
Continued

78
Restrictions on the Transfer of Shares
Save as set out below there are no limitations in Irish law
on the holding of ICG Units and there is no requirement
to obtain the approval of the Company, or of other
holders of ICG Units, for a transfer of ICG Units. Certain
restrictions may from time to time be imposed by laws or
regulations such as those relating to insider dealing.
Transfers of Ordinary Shares and Redeemable Shares
can only be affected where the transfer involves a
simultaneous transfer of the other class of shares with
which such shares are linked as an ICG Unit. An ICG
Unit comprised one Ordinary Share and nil Redeemable
Shares at 31 December 2019 and 31 December 2018.
ICG Units are, in general, freely transferable but the
Directors may decline to register a transfer of ICG Units
upon notice to the transferee, within two months after
the lodgement of a transfer with the Company, in the
following cases:
(i)	
where the transfer of shares does not involve a
simultaneous transfer of the other class of shares
with which such shares are linked as an ICG Unit;
(ii) 	
a lien is held by the Company; or
(iii)	
in the case of a purported transfer to or by a minor
or a person lawfully adjudged not to possess an
adequate decision-making capacity;
(iv)	
unless the instrument of transfer is accompanied
by the certificate of the shares to which it relates
and such other evidence as the Directors may
reasonably require; or
(v)	
unless the instrument of transfer is in respect of one
class only.
ICG Units held in certificated form are transferable upon
production to the Company’s Registrars of the original
share certificate and the usual form of stock transfer or
instrument duly executed by the holder of the shares.
ICG Units held in uncertificated form are transferable
in accordance with the rules or conditions imposed
by the operator of the relevant system which enables
title to the ICG Units to be evidenced and transferred
without a written instrument and in accordance with
the Companies Act, 1990 (Uncertificated Securities)
Regulations 1996 (S.I. 68/1996) and Section 1085 of the
Companies Act 2014.
The rights attaching to Ordinary Shares and Redeemable
Shares comprised in each ICG Unit remain with the
transferor until the name of the transferee has been
entered on the Register of Members of the Company.
No person holds securities in the Company carrying
special rights with regard to control of the Company.
The Company is not aware of any agreements between
holders of securities that may result in restrictions in the
transfer of securities or voting rights.
The Powers of the Directors including in Relation to
the Issuing or Buying Back by the Company of its
Shares
Under the Constitution of the Company, the business
of the Company is to be managed by the Directors who
may exercise all the powers of the Company subject
to the provisions of the Companies Acts 2014, the
Constitution of the Company and to any directions given
by members at a General Meeting. The Constitution
further provides that the Directors may make such
arrangements as may be thought fit for the management
of the Company’s affairs including the appointment of
such attorneys or agents as they consider appropriate
and delegate to such persons such powers as the
Directors may deem requisite or expedient.
At the Company’s Annual General Meeting held on 17
May 2019, member resolutions were passed whereby
(i)	
the Company, or any of its subsidiaries, were
authorised to make market purchases of up to 15%
of the issued share capital of the Company.
(ii) 	
the Directors were authorised until the conclusion
of the next Annual General Meeting, to allot shares
up to an aggregate nominal value of 66.66% of the
then present issued Ordinary Share capital and the
present authorised but unissued Redeemable Share
capital of the Company subject to the provision
that any shares allotted in excess of 33.33% of the
then present issued Ordinary Share capital must be
allotted pursuant to a rights issue.
In line with market practice, members will be asked to
renew these authorities at the 2020 Annual General
Meeting.
Corporate
Governance
79
Matters Pertaining to Share Capital –
continued
General Meetings and Shareholders Voting and other
Rights
Under the Constitution, the power to manage the
business of the Company is generally delegated to the
Directors. However, the members retain the power to
pass resolutions at a General Meeting of the Company
which may give directions to the Directors as to the
management of the Company.
The Company must hold a General Meeting in each
year as its Annual General Meeting in addition to any
other meetings in that year and no more than fifteen
months may elapse between the date of one Annual
General Meeting and that of the next. The Annual
General Meeting will be held at such time and place as
the Directors determine. All General Meetings, other
than Annual General Meetings, are called Extraordinary
General Meetings.
Extraordinary General Meetings shall be convened by
the Directors or on the requisition of members holding,
at the date of the requisition, not less than five percent of
the paid up capital carrying the right to vote at General
Meetings and in default of the Directors acting within 21
days to convene such a meeting to be held within two
months, the requisitionists (or more than half of them)
may, but only within three months, themselves convene
a meeting.
No business may be transacted at any General Meeting
unless a quorum is present at the time when the meeting
proceeds to business. Three members present in
person or by proxy and entitled to vote at such meeting
constitutes a quorum.
The holders of ICG Units have the right to receive notice
of, attend, speak and vote at all General Meetings of the
Company.
In the case of an Annual General Meeting or of a
meeting for the passing of a Special Resolution or the
appointment of a Director, 21 clear days’ notice at the
least, and in any other case 14 clear days’ notice at
the least (assuming that the members have passed a
resolution to this effect at the previous year’s Annual
General Meeting), needs to be given in writing in the
manner provided for in the Constitution to all the
members, Directors, Secretary, the Auditor for the time
being of the Company and to any other person entitled
to receive notice under the Companies Act.
Voting at any General Meeting is by a show of hands
unless a poll is properly demanded. On a show of hands,
every member who is present in person or by proxy has
one vote regardless of the number of shares held by a
shareholder. On a poll, every member who is present in
person or by proxy has one vote for each share of which
he/she is the holder. A poll may be demanded by the
Chairman of the meeting or by at least three members
having the right to vote at the meeting or by a member
or members representing not less than one-tenth of the
total voting rights of all the members having the right to
vote at the meeting or by a member or members holding
shares in the Company conferring a right to vote at the
meeting, being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total
sum paid up on all the shares conferring that right.
Deadlines for Exercising Voting Rights
Voting rights at General Meetings of the Company are
exercised when the Chairman puts the resolution at
issue to the vote of the meeting. A vote decided on a
show of hands is taken forthwith. A vote taken on a poll
for the election of the Chairman or on a question of
adjournment is also taken forthwith and a poll on any
other question is taken either immediately, or at such
time (not being more than 30 days from the date of the
meeting at which the poll was demanded or directed) as
the Chairman of the meeting directs. Where a person is
appointed to vote for a member as proxy, the instrument
of appointment must be received by the Company
not less than 48 hours before the time appointed for
holding the meeting or adjourned meeting at which the
appointed proxy proposes to vote, or, in the case of a
poll, not less than 48 hours before the time appointed for
taking the poll.
Shareholder Rights (Directive 2007/36/EC)
The holders of ICG Units have the right to attend, speak,
ask questions and vote at General Meetings of the
Company. The Company, pursuant to Section 1105 of the
Companies Act 2014 and Regulation 14 of the Companies
Act 1990 (Uncertificated Securities) Regulations 1996
(S.I. 68/1996), specifies record dates for General
Meetings, by which date members must be registered in
the Register of Members of the Company to be entitled
to attend and vote at the meeting.
Corporate Governance Report
Continued

80
Pursuant to Section 1104 of the Companies Act 2014,
a member, or a Group of members who together hold
at least 3% of the issued share capital of the Company,
representing at least 3% of the total voting rights of all
the members who have a right to vote at the meeting to
which the request for inclusion of the item relates, have
the right to put an item on the agenda, or to modify an
agenda which has been already communicated, of a
General Meeting. In order to exercise this right, written
details of the item to be included in the General Meeting
agenda must be accompanied by stated grounds
justifying its inclusion or a draft resolution to be adopted
at the General Meeting together with evidence of the
member or Group of members shareholding must be
received, by the Company, 42 days in advance of the
meeting to which it relates.
The Company publishes the date of its Annual General
Meeting on its website www.icg.ie on or before 31
December of the previous financial year.
Rights to Dividends and Return of Capital
Subject to the provisions of the Company’s Constitution,
the holders of the Ordinary Shares in the capital of the
Company shall be entitled to such dividends as may be
declared from time to time on such shares. The holders
of the Redeemable Shares (if any) shall not be entitled to
any dividends.
On a return of capital on a winding up of the Company
or otherwise (other than on a conversion, redemption or
purchase of shares), the holders of the Ordinary Shares
shall be entitled, pari passu with the holders of the
Redeemable Shares (if any) to the repayment of a sum
equal to the nominal capital paid up or credited as paid
up on the shares held by them respectively. Thereafter,
the holders of the Ordinary Shares shall be entitled to the
balance of the surplus of assets of the Company to be
distributed rateably according to the number of Ordinary
Shares held by a member. The Redeemable Shares
shall not confer upon the holders thereof any rights to
participate further in the profits or assets of the Company.
Rules Concerning Amendment of the Company’s
Constitution
As provided in the Companies Act 2014, the Company
may, by special resolution, alter or add to its
Constitution. A resolution is a special resolution when it
has been passed by not less than 75% of the votes cast
by members entitled to vote and voting in person or
by proxy, at a General Meeting at which not less than
21 days’ notice specifying the intention to propose the
resolution as a special resolution, has been duly given.
Rules Concerning the Appointment and Replacement
of Directors of the Company
Other than in the case of a casual vacancy, Directors
of the Company are appointed on a resolution of the
members at a General Meeting, usually the Annual
General Meeting.
No person, other than a Director retiring at a General
Meeting is eligible for appointment as a Director without
a recommendation by the Directors for that person’s
appointment unless, not less than six or more than 40
clear days before the date of the General Meeting,
written notice by a member, duly qualified to be present
and vote at the meeting, of the intention to propose the
person for appointment and notice in writing signed by
the person to be proposed of willingness to act, if so
appointed, shall have been given to the Company.
The Directors have power to fill a casual vacancy or
to appoint an additional Director (within the maximum
number of Directors fixed by the Constitution of the
Company (as may be amended by the Company in a
General Meeting)) and any Director so appointed holds
office only until the conclusion of the next Annual
General Meeting following their appointment, when the
Director concerned shall retire, but shall be eligible for
reappointment at that meeting.
Each Director must retire from office no later than
the third Annual General Meeting following their last
appointment or reappointment. In addition, one third
of the Directors for the time being (or if their number
is not three or a multiple of three, then the number
nearest to one third), are obliged to retire from office
at each Annual General Meeting on the basis of the
Directors who have been longest in office since their last
appointment.
The Company has adopted the provisions of the UK
Corporate Governance Code in respect of the annual
election of all Directors. All Directors will retire at the
forthcoming Annual General Meeting and following
review are being recommended for re-election.
A person is disqualified from being a Director, and
their office as Director ipso facto vacated, in any of the
following circumstances:
Corporate
Governance
81
Matters Pertaining to Share Capital –
continued
Rules concerning the appointment and replacement
of Directors of the Company – continued
(i)	
if he is adjudicated bankrupt or being a bankrupt
has not obtained a certificate of discharge in the
relevant jurisdiction; or
(ii)	
if in the opinion of a majority of his co-Directors,
the health of the Director is such that he or she can
no longer be reasonably regarded as possessing an
adequate decision-making capacity so that he may
discharge his duties; or
(iii)	
if he ceases to be, or is removed as a Director by
virtue of any provision of the Acts or the Articles, or
he becomes prohibited by law from being a Director
or is restricted by law in acting as a Director; or
(iv)	
if he (not being a Director holding for a fixed term an
executive office in his capacity as a Director) resigns
his office by notice in writing to the Company; or
(v)	
if he is absent for six successive months without
permission of the Directors from meetings of the
Directors held during that period and the Directors
pass a resolution that by reason of such absence he
has vacated office; or
(vi)	
if he is removed from office by notice in writing
served upon him signed by all his co-Directors;
if he holds an appointment to an executive office
which thereby automatically determines, such
removal shall be deemed an act of the Company
and shall have effect without prejudice to any claim
for damages for breach of any contract of service
between him and the Company; or
(vii)	
if he is convicted of an indictable offence not being
an offence under the Road Traffic Act, 1961 or any
statutory provision in lieu or modification thereof.
Notwithstanding anything in the Constitution or in any
agreement between the Company and a Director, the
Company may, by Ordinary Resolution of which the
required notice has been given in accordance with
Section 146 of the Companies Act 2014, remove any
Director before the expiry of their period of office.
Replacement of CREST with Euroclear Bank for
Electronic Settlement of Trading in the Company’s
Shares
Similar to other Irish-incorporated companies listed in
Dublin and/ or London, the majority of the Company’s
shares have for many years been held, and trades in
those shares have been electronically settled, in the
relevant settlement system operated by Euroclear
UK & Ireland Limited (EUI) and constituting a relevant
system for the purposes of the Irish Companies Act
1990 (Uncertificated Securities) Regulations 1996 (as
amended) (the Uncertificated Securities Regulations) (the
CREST System). The CREST System is operated by EUI,
which is based in London.
Where a company’s securities are admitted to trading
or traded on a trading venue regulated by Directive
2014/65/EU, EU legislation requires electronic
settlement to occur through an authorised central
securities depository (a CSD) that is established in
a member state of the EU (an EU CSD) (or under an
approved third country arrangement). There is currently
no authorised CSD established in Ireland. As a result of
the withdrawal of the United Kingdom from the EU, EUI is
no longer an EU CSD. Following the expiry of an agreed
transitional period EUI has confirmed that it will no
longer be in a position to continue to provide settlement
via the CREST System in respect of securities of Irish
companies. Euroclear Bank SA/NV, an international
CSD based in Belgium and part of the Euroclear Group
(Euroclear Bank), has been identified as the EU CSD to
replace EUI.
To better facilitate a common migration procedure from
EUI to an EU CSD for all Irish listed companies whose
shares are currently held and settled through CREST, the
Irish parliament enacted the Migration of Participating
Securities Act 2019 (the Migration Act). To participate
in the migration procedure under the Migration Act,
eligible companies must, among other requirements,
pass certain shareholder resolutions at a general meeting
of its shareholders.
It is essential for the Company that electronic settlement
of trading of its shares can continue in a legally
compliant manner, and to ensure ongoing compliance
with the electronic share trading requirements for listing
on Euronext Dublin and on the London Stock Exchange.
As an Irish-incorporated company whose shares are
admitted to trading on Euronext Dublin and the London
Stock Exchange, the Company therefore intends to
effect migration or transfer of issuer CSD services
from the current system, CREST, operated by EUI, to
the replacement system, operated by Euroclear Bank
(Migration).
Accordingly, it is expected that the Company will convene
an extraordinary general meeting during 2020 in order
to consider, and if thought fit, approve a number of
resolutions which are proposed, pursuant to the Migration
Act, in connection with Migration.
Corporate Governance Report
Continued

82
Dear shareholder,
I am pleased to present the Report of the Audit
Committee (the Committee) for the year ended 31
December 2019.
The Committee plays an important role in
ensuring the Group’s financial integrity for
shareholders through oversight of the financial
reporting process, including the risks and controls
in that process. This report sets out how the
Committee fulfilled its duties under its Terms of
Reference, the UK Corporate Governance Code,
the Irish Annex and legislation.
The Committee has reviewed the critical
accounting judgements and key sources of
estimation applied in preparing these financial
statements and have reported to the Board on
these.
The Committee also performed a review of this
Annual Report including both the financial and
non-financial information to ensure that the
Annual Report and Financial Statements, taken
as a whole, is fair, balanced and understandable,
and provides the information necessary for
shareholders to assess the Group and Company’s
position and performance, business model and
strategy. Other work undertaken included the
on-going monitoring of the effectiveness of the
Group’s systems of risk management and internal
control and external auditor effectiveness.
Report of the Audit Committee
Composition
The Audit Committee membership is set out in the table
below which also details attendance and tenure.
Member A B Tenure
J. Sheehan (Chair) 3 3 6 years
C. Duffy 3 3 8 years
B. O’Kelly 3 3 7 years
Column A: the number of scheduled meetings held during the year where
the Director was a member of the Committee.
Column B: the number of scheduled meetings attended during the year
where the Director was a member of the Committee.
The members bring significant professional expertise
to their roles gained from a broad level of experience
gained outside of the Group. This together with their
experience as Directors of the Company the Committee
as a whole has competence relevant to the sector in
which the Group operates. The member’s biographies
are set out on page 64. The Board has determined
that all appointees are independent, that Brian O’Kelly
and John Sheehan have recent and relevant financial
experience and that all members have experience of
corporate financial matters. Overall the Committee is
independent and possesses the skills and knowledge to
effectively discharge its duties under the Committee’s
terms of reference. The Company Secretary acts as
secretary to the Committee.
The scheduled meetings take place on the same day
as Board meetings. The Chairman provides updates to
the Board on key matters discussed and minutes are
circulated to the Board.
Role and Responsibilities
The role, responsibilities and duties of the Audit
Committee are set out in written terms of reference
which are reviewed annually. The terms of reference are
available on the Group’s website www.icg.ie.
The principal responsibilities of the Committee cover the
following areas;
• Supporting the Board in fulfilling its responsibilities
in relation to the integrity of the financial reporting
process.
• Advise whether the Annual Report and Financial
Statements, taken as a whole, are fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group and
Company’s position and performance, business model
and strategy.
Corporate
Governance
83
Role and Responsibilities – continued
• Monitor the effectiveness of the Group’s internal
controls and financial risk management systems,
including the internal audit function.
• Managing the relationship with the external auditor,
including consideration of the appointment of the
external auditor, the level of audit fees, and any
questions of independence, provision of non-audit
services, resignation or dismissal. The Committee
discusses with the external auditor the nature and
scope of the audit and the findings and results.
During the year responsibility for oversight of the
operation of the Group’s whistleblowing procedures was
transferred to the Board reflecting the widening of the
scope of those procedures beyond financial impropriety.
Work Performed
The principal work undertaken by the Committee during
the period under review was focused on the following
areas;
Financial Reporting
The Committee reviewed the Group’s Half Yearly
Financial Report for the six months ended 30 June 2019,
the Preliminary Statement of Results and this Annual
Report and Financial Statements, for the financial
year ended 31 December 2019 and the two Trading
Statements issued during the year. These reviews
considered,
• The impact of the new accounting standard IFRS 16:
Leases;
• The accounting treatment and presentation of the
non-trading item related to the disposal of the vessel
Oscar Wilde;
• Other than for new standards the consistency,
appropriateness and application of the Group’s
accounting policies;
• The clarity and completeness of disclosures and
compliance with financial reporting standards,
legislative and regulatory requirements;
• Whether these reports, taken as a whole, were
fair, balanced and understandable and provide the
information necessary for shareholders to assess the
Group’s position and performance, business model
and strategy;
• A comparison of these results with management
accounts; and
• The critical accounting judgements and key sources of
estimation applied in the preparation of the financial
statements.
In assessing if the financial statements have dealt
appropriately with each area of judgement the
Committee challenged the key assumptions and
methodologies used by management in formulating
estimates. The key sources of estimation uncertainty
and critical accounting judgements applied in the
preparation of the financial statements for the financial
year ended 31 December 2019 are set out below and also
discussed in detail on pages 138 to 139.
Key Estimates
• Post-employment benefits
The Group operates a number of Group sponsored
pension schemes and is also a participating employer
in the Merchant Navy Officers Pension Fund, a multi-
employer scheme. Details of these schemes are set
out in note 33 to the financial statements. The size of
the pension obligations is material to the Group and
sensitive to actuarial assumptions. The Committee has
reviewed actuarial advice on the assumptions provided
by the Group actuary. The Committee was satisfied
that the assumptions used were reasonable and that
the obligations set out in the financial statements are
consistent with the assumptions.
• Useful lives for property, plant and equipment and
intangible assets
Long-lived assets comprising primarily of property,
plant and equipment and intangible assets represent
a significant portion of total assets. Changes in the
useful lives or residual values may have a significant
impact on the annual depreciation and amortisation
charge. The Committee reviewed the useful lives of
significant assets, along with the residual values used
for vessels, and were satisfied that the estimates used
were reasonable.
Report of the Audit Committee
Continued

84
Critical Accounting Judgements
• Impairment
The Group does not have assets which are required
to be tested annually for impairment. In relation to
other significant assets the Committee made inquiries
of management to determine whether there were
any indications of impairment. The Committee were
satisfied that no internal or external indications of
impairment were identified and consequently no
impairment review was required.
• Leases – non-cancellable lease term
The application of IFRS 16 requires judgement in
determining the non-cancellable term of the lease,
together with any periods covered by an option
to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not to be
exercised. The Group has leases with renewal options
the exercise of which significantly affects the amount
of lease liabilities and right of use assets recognised.
This requires the exercise of judgement to assess the
likelihood of these being exercised taking into account
likely developments in the Group.
• Leases – incremental borrowing rate applicable
to first time recognition of right of use lease
obligations
The first time application of IFRS 16: Leases required
estimation of the incremental borrowing rate
application to right of use lease obligations. The size
of the obligations is material to the Group particularly
those obligations relating to land leases where the
remaining term extended to between 77 and 103
years at date of application. This required exercise
of judgement in the circumstance where discount
rates over such terms for comparable assets, terms
and credit risk were generally not observable in the
market. Further details are provided at note 2.
• Going concern
The Committee reviewed the appropriateness of
using a going concern assumption for the preparation
of the Group Financial Statements. The Committee
considered future trading projections and available
committed borrowing facilities. The Committee were
satisfied that the Group will have adequate financial
resources to continue in operational existence for the
foreseeable future. The Going Concern Statement is
set out on page 66.
Viability Statement
The Committee reviewed and challenged management’s
assumptions and scenarios together with the calculations
supporting the Viability Statement set out on page 67.
The Committee also considered the appropriateness of
the five year assessment time frame. The Committee was
satisfied that a robust assessment had been completed
and reported this to the Board.
Recommendations to the Board
Based on the work undertaken, the Committee reported
to the Board that the Annual Report and Financial
Statements for the year ended 31 December 2019 taken
as a whole is fair, balanced and understandable, and
provides the information necessary for shareholders
to assess the Group and Company’s position and
performance, business model and strategy and
recommended that the Annual Report and Financial
Statements be approved by the Board.
The Committee had also recommended the approval of
the Half Yearly Financial Report for the six months ended
30 June 2019 and the Trading Statements issued during
2019.
Risk Management and Internal Control
The risk management framework is set out on page
52. The Committee, on behalf of the Board, reviews
the effectiveness of the Group’s control environment
including internal controls and financial risk management
systems.
The Committee oversees the work of the Risk
Management Committee (RMC) which coordinates a
unified system of ongoing identification, monitoring and
reporting of risks throughout the Group. The activities
of the RMC are undertaken alongside the activities of
internal audit.
Corporate
Governance
85
commencement of the audit of the financial statements
for the financial year ended 31 December 2019. The
Committee considered Deloitte’s internal policies
and procedures for maintaining independence and
objectivity and their approach to audit quality. The
Committee assessed the quality of the external audit
plan as presented by Deloitte and satisfied itself as to
the expertise and resources being made available. The
Committee also reviewed the terms of the Letter of
Engagement and approved the level of remuneration.
Deloitte reported their key audit findings to the
Committee in March 2020 prior to the finalisation of
the financial statements. This report, which included
a schedule of unadjusted errors and misstatements,
significant judgements and estimations and key areas
of risk, was considered by the Committee in forming
their recommendation to the Board. The Committee also
considered the representations sought by Deloitte from
the Directors.
Deloitte issued a letter on control weaknesses noted
during their audit, none of which were considered
of a serious nature so as to cause Deloitte to amend
the scope of their original audit plan. The Committee
has considered these and having discussed with
management have directed remedial action be taken
where considered appropriate.
The Committee evaluated Deloitte’s performance which
included an assessment of Deloitte’s communication
process with the Committee and senior management,
knowledge of the Group and industry sector and
resource commitment to the external audit and the
Committee is satisfied that Deloitte remain effective,
objective and independent. The Committee therefore
recommended to the Board that Deloitte be retained as
auditors to the Group for financial year 2020.
Deloitte was first appointed by the Company to audit
its financial statements for the financial year ended 31
October 1988 and subsequent financial periods. The lead
partner is rotated every five years to ensure continued
objectivity and independence. Mr. Ciarán O’Brien has
acted as lead partner for the audit of the 2019 Financial
Statements having been appointed to that role during
2016.
Risk Management and Internal Control –
continued
During the year the Committee met with members
of the RMC and presentations were made outlining
the work undertaken in managing risk monitoring
systems, procedures for ensuring the risk register is
being updated for new and emerging risks and the
management of exposure to principal risks. The work
of the RMC is also central in putting consideration of
risk to the fore in business decision making throughout
the Group. The Committee reviewed the updated
risk appetite statements prepared by the RMC which
were then presented to the Board for approval. The
Committee also received regular reports throughout the
year including internal audit reviews, operational and
safety risk reviews including information technology and
cyber security. In addition the Chairman meets regularly
with the Internal Auditor and the Committee approved
the 2019 internal audit plan.
The Committee undertook a review of the RMC and
Internal Audit activities in order to assess how effectively
it had performed. Following the review, the Committee
was satisfied that the RMC and Internal Audit were
achieving their objectives. Overall the Committee
continues to be satisfied that the Group control
environment remains appropriate and effective. This
assessment has been reported to the Board.
External Audit
The Committee is responsible for managing the
relationship with the Group’s external auditor and
monitoring their performance, objectivity and
independence. Deloitte is the current external auditor to
the Group.
Deloitte confirmed to the Company that they comply
with the Ethical Standards for Auditors (Ireland) 2016
as issued by IAASA and that, in their professional
judgement, they and, where applicable, all Deloitte
network firms are independent and their objectivity is
not compromised.
The Committee met with Deloitte prior to the
Report of the Audit Committee
Continued

86
The Committee notes that under Part 27 Statutory Audits
of Companies Act 2014, the Group will at the latest be
required to conduct a tender process for the external
audit in respect of the financial year 2021. As Deloitte
will have served in excess of 20 years at that time they
will not be eligible for re-appointment. The Committee
has taken the initial steps to conducting a tender process
in sufficient time to allow for an orderly transition to the
new external auditor. This process is expected to be
completed by 30 September 2020.
Non-Audit Services
The Committee permits the external auditor to provide
non-audit services where they are permitted under
Part 27 Statutory Audits of Companies Act 2014 and
are satisfied that they do not conflict with auditor
independence. The Committee’s policy on the provision
of non-audit services requires that each engagement
for the provision of non-audit services requires approval
of the Committee. The Committee approved the
engagement of the external auditor to provide certain tax
compliance services in respect of the 2019 financial year.
This approval was granted on the basis of procedural
efficiency and having considered that the level of fees
would be unlikely to affect the independence of the
external auditor.
The Audit Committee has considered all relationships
between the Company and the external audit firm,
Deloitte, including the provision of non-audit services as
disclosed in note 9 to the financial statements which are
within the thresholds set out in Part 27 of the Statutory
Audits of Companies Act 2014. The Committee does not
consider that those relationships or the level of non-audit
fees impair the auditor’s judgement or independence.
John Sheehan
Chair of the Audit Committee
Corporate
Governance
87
Report of the Nomination Committee
Dear shareholder,
I am pleased to present the report of the
Committee for the year ended 31 December 2019.
This report sets out how the Committee fulfilled
its duties under its Terms of Reference and the UK
Corporate Governance Code.
The Committee plays an important role in
ensuring that the Board has the appropriate
balance of skills, knowledge and experience to
ensure the Board operates effectively for the long-
term success of the Group.
Composition
The Nomination Committee membership is set out in the
table below which also details attendance and tenure. All
Directors bring significant professional expertise to their
roles on this Committee as set out in their professional
biographies on pages 64 to 65.
Member A B Tenure
C. Duffy (Chair)* 1 1 7 years
B. O’Kelly* 1 1 3 years
J. Sheehan* 1 1 3 years
E. Rothwell 1 1 10 years
*Independent director
Column A: the number of scheduled meetings held during the year where
the Director was a member of the Committee.
Column B: the number of scheduled meetings attended during the year
where the Director was a member of the Committee.
Role and Responsibilities
The role, responsibilities and duties of the Nomination
Committee are set out in written terms of reference
and are reviewed annually. The terms of reference are
available on the Group’s website www.icg.ie.
Its duties are to regularly evaluate the balance of
skills, knowledge, experience and diversity of the
Board and Committees and make recommendations
to the Board with regard to any changes. It is also
charged with searching out, identifying and proposing
to the Board new appointments of executive or non-
executive Directors. The Committee also considers the
re-appointment of any non-executive Director on the
expiry of their term of office. In discharging its duties the
Committee is cognisant of the requirement to allow for
orderly succession and refreshment of the Board.
The Chairman provides an update to the Board on key
matters discussed and minutes are circulated to the
Board.

88
Work Performed
The Committee considered the results of the evaluation
of the Board. The Committee were satisfied that the
Board continues to be of adequate size and composition
to suit the current scale of its operations and has an
appropriate balance of skills, knowledge, experience and
diversity to enable it to effectively discharge its duties.
The Committee noted the Code’s comments on non-
executive Director tenure and the tenure profile of the
existing non-executive Directors. It was agreed that
the Committee continue researching future potential
candidates to ensure orderly Board refreshment and
diversity.
The Committee, reviewed and recommended to
the Board the re-appointment of Mr. McGuckian as
non-executive Director, subject to re-election by
shareholders at the AGM. Mr. McGuckian has served
as Chairman of the Board since 2004 and as a non-
executive Director since 1988. This recommendation was
proposed following a robust review of the knowledge,
skills and experience that he contributes. The Committee
assessed him to be both independent in character and
judgement and to be of continued significant benefit to
the Board.
The Committee noted that Mr. McGuckian’s re-
appointment is a departure from the provisions of
the Code which states that the Chairman should not
stay in position beyond 9 years from the date of first
appointment to the Board. The Code recognises in
certain circumstances this period may be extended
including to allow for succession planning and the
development of a diverse Board. In recommending his
re-appointment the Committee considered it beneficial
to retain his considerable experience in the Group’s
business during the period of Board refreshment noted
earlier.
The Committee reviewed the performance of John
Sheehan as a Director of the Company during his second
three year term and recommended his re-appointment
as a Director of the Company for a further three year
term subject to annual re-election by shareholders at the
AGM.
The Committee also reconfirmed their previous
assessment of the independence of the two other non-
executive Directors, Catherine Duffy and Brian O’Kelly.
No Committee member voted on a matter concerning
their position as a Director.
The Company values diversity and the benefits this can
contribute to future success. The Board’s Diversity Policy
is set out on page 78. In considering any appointment
to the Board the Committee identifies the set of skills
and experience required. Individuals are selected based
on the required competencies of the role with due
regard for the benefits of diversity. Notwithstanding
the Committee notes the female composition of the
Board and senior management reports was 16% and
20% respectively. In relation to future Board and senior
manager appointments the Committee will actively
seek out a greater pool of female candidates for
consideration. The Committee has also requested the
executive management team to follow a similar process
in relation to recruitment generally. External search
agencies independent of the Company are engaged to
assist where appropriate.
No recruitment for senior management positions
requiring input of the Committee took place during the
period.
Catherine Duffy
Chair of the Nomination Committee
Corporate
Governance
89
Composition
The Committee membership is set out in the table
below which also details attendance and tenure. All
Directors bring significant professional expertise to their
roles on this Committee as set out in their professional
biographies on page 64.
Member A B Tenure
B. O’ Kelly (Chair) 2 2 7 years
J. Sheehan 2 2 6 years
C. Duffy 2 2 3 years
Column A: the number of scheduled meetings held during the year where
the Director was a member of the Committee.
Column B: the number of scheduled meetings attended during the year
where the Director was a member of the Committee.
Role and Responsibilities
The role, responsibilities and duties of the Committee
are set out in written terms of reference which are
reviewed annually. The terms of reference are available
on the Group’s website www.icg.ie.
The Committee’s duties are to establish a remuneration
framework that;
• Will attract, motivate and retain high calibre
individuals;
• Will reward individuals appropriately according to
their level of responsibility and performance;
• Motivate individuals to perform in the best interest of
the shareholders; and
• Will not encourage individuals to take risks in excess of
the Company’s risk appetite.
Against this framework the Committee approves
remuneration levels and awards based on an individual’s
contribution to the Company against the background
of underlying Company financial performance having
regard to comparable companies in both size and
complexity.
Meetings
The Committee met twice during the period. The
Chairman provided an update to the Board on key
matters discussed.
Dear shareholder,
I am pleased to present the Report of the
Remuneration Committee for the year ended 31
December 2019.
The Committee ensures that the remuneration
structures and levels are set to attract and retain
high calibre individuals necessary at executive
Director and senior manager level and to
motivate their performance in the best interests
of shareholders. This report sets out how the
Committee fulfilled its responsibilities under its
terms of reference and details the remuneration
outcomes for the executive Directors.
The current remuneration framework was
adopted during 2017 following the approval by
shareholders at the 2017 AGM of the Performance
Share Plan. The Committee reviewed the
framework during the year taking into account
feedback from shareholders following
engagement and remain satisfied that it continues
to be appropriate for the Group’s business needs
and strategy.
As the Company is subject to Company Law as
enacted in Ireland, the Company is not required
to seek shareholder approval for its Remuneration
Policy or this Report. However, the Company will
be submitting this report to shareholders as an
advisory resolution at the 2020 AGM.
Report of the Remuneration Committee

90
The work performed included consideration of
levels of executive Director and senior management
remuneration. The level of basic salaries were reviewed
by the Committee having regard to job specification,
level of responsibility, individual performance and
market practice. The Committee approved performance
awards, to certain employees, based on Group, business
unit and individual performance. The Committee
determined the vesting of second tier options under the
2009 Share Option Plan previously granted during 2014.
The Committee also undertook a review of the existing
remuneration framework adopted during 2017.
Remuneration framework
We are of the view that any remuneration framework
should seek to create strong linkages to longer-term
Company performance and alignment with shareholder
interests through growth in equity value. To achieve
this the Committee seeks to set base salaries at median
market levels and structure performance awards in a
manner that encourages individuals to acquire and retain
significant long-term shareholdings relative to base
salary that are above market norms.
The Committee during the year reviewed the
remuneration framework first adopted during 2017.
The Committee acknowledges that full implementation
may in certain instances be constrained by pre-existing
contractual arrangements. Notwithstanding the
Committee remained satisfied that it continues to be
appropriate to the business needs and strategy of the
Group. In particular the Committee notes the promotion
of strong alignment with shareholders through
requirements of minimum shareholdings, remuneration
of 50% of annual performance awards with shares with
a five year holding requirement and the overall eight
year alignment period for any awards granted under the
longer-term Performance Share Plan. These elements
are further supported by clawback provisions. This is
consistent with the Group’s ongoing investment in long
life assets. The Committee also reviewed the movements
in remuneration levels against longer-term performance
and total remuneration amounts against market levels
generally.
Corporate Governance Code
The Corporate Governance Code 2018 (the Code)
introduced a number of changes over the previous
version of the Code in the area of remuneration including
requirements for;
• Remuneration schemes to promote long-term
shareholdings by executive directors;
• Post-employment shareholding requirements;
• Ability to override formulaic outcomes; and
• Alignment of executive Director pension contributions
with those available to the workforce.
The Committee determined that the existing framework
has already addressed these matters as discussed later
in this report. However, it is noted that the Remuneration
Framework was silent in relation to alignment of
executive Director pension contributions with those
available to the workforce. The Committee confirms that
executive Director pension participation is substantially
on the same terms as those generally available to the
workforce. The Remuneration Framework has been
updated to include existing practice. The Committee
is also satisfied that the Remuneration Framework is
transparent, avoids complexity, encourages acceptable
risk taking and is aligned to long-term Company
performance and culture.
Corporate
Governance
91
Remuneration Framework (adopted with effect from 1 January 2017)
Element Operation Maximum Opportunity
Base Salary
To attract
and retain
high calibre
individuals .
Base salaries are reviewed by the Committee annually in the
last quarter of the year with any adjustments to take effect
from 1 January of the following year.
Factors taken into account in the review include the individual’s
role and level of responsibility, personal performance and
general developments in pay in the market generally and
across the Group.
There is no prescribed
maximum salaries or
maximum increases.
Increases will broadly
reflect increases across the
Group and in the market
generally.
Increases may be higher
to reflect changes in
responsibility or market
changes and in the case
of newly appointed
individuals to progressively
align salary with market
norms.
Retirement
Benefits
To attract
and retain
high calibre
individuals.
Certain individuals are members of a defined benefit pension
scheme where contributions are determined by the scheme
actuary pursuant to the benefits offered under the scheme rules.
Other individuals are members of a defined contribution pension
scheme where the Company has discretion to pay appropriate
contributions as a percentage of base salary as agreed by the
Company and individual under their contract of employment.
In certain circumstances the Company may provide an
equivalent cash payment in lieu of pension contributions.
There are no prescribed
maximum levels of
pension contribution
though Executive Director
participation is substantially
on the same terms as for the
workforce generally.
No element of
remuneration other than
base salary is pensionable.
Other Benefits
To be
competitive with
the market.
Benefits may include the use of a company car or an equivalent
cash amount, club subscriptions, life and health insurance.
No maximum levels are
prescribed as benefits
will be related to each
individual circumstance.
Report of the Remuneration Committee
Continued

92
Element Operation Maximum Opportunity
Annual Bonus
To reward
achievement
of annual
performance
targets.
Individuals will receive annual bonus awards based on the
achievement of financial targets and personal objectives
agreed prior to the start of each financial year. Threshold levels
will be set for minimum and maximum awards with pro-rata
payments between the two points.
Due to commercial sensitivity the targets will not be disclosed
in advance but may be disclosed retrospectively.
For executive Directors and members of the executive
committee a minimum of 50% of any bonus earned, after
allowing for payroll taxes, will be invested in ICG equity which
must be held for a period of 5 years.
A formal clawback policy whereby all or a portion of the share
award is subject to clawback for a period of two years in
certain circumstances. Further details of the clawback policy
are on page 101.
The Committee retains discretion to adjust any award to
reflect the underlying financial position of the Company and
to agree awards outside of the above framework in respect of
recent joiners and leavers.
The maximum award in
any period of 12 months
may not exceed 200% of
base salary in the case of
the CEO and 150% of base
salary in the case of any
other individual.
An existing contractual
annual bonus arrangement
will continue to apply
to the existing CEO Mr.
Eamonn Rothwell in lieu
of the arrangements
described here and is
explained in further detail
under the report on
2019 executive Director
remuneration outcomes.
Performance
Share Plan
(PSP)
To align the
interests of
individuals with
the long-term
interests of
the Company’s
shareholders.
The Committee will grant nominal cost options to individuals to
acquire equity in the Company.
The vesting period is normally 3 years with the extent of
vesting based on the performance conditions set out below.
Any vesting of awards is subject to the Committee discretion
that it is satisfied that the Company’s underlying performance
has shown a sustained improvement in the period since the
date of grant.
No re-testing of the vesting performance conditions is
permitted.
Options will normally be exercised upon vesting and any ICG
equity delivered to an individual will be held for a period of
5 years, except to the extent that the Committee allow such
number of the shares delivered to be sold to facilitate the
discharge of any tax liabilities.
The plan incorporates market standard good leaver / bad
leaver provisions.
The market value of any
PSP awards in any period
of 12 months may not
exceed 200% of base
salary in the case of the
CEO and 150% of base
salary in the case of any
other individual.
In exceptional situations,
including recruitment,
higher awards may be
granted but not exceeding
300% of base salary.
Remuneration Framework (adopted with effect from 1 January 2017) – continued
Corporate
Governance
93
Element Operation Maximum Opportunity
Performance
Share Plan (“PSP”)
continued
Options may vest early in the event of a takeover, merger, scheme
of arrangement or other similar event involving a change of
control of the Company, subject to the pro-rating of the share
awards, to reflect the shortened performance period since the
date of grant, though the Committee can exercise its discretion
not to apply pro-rating if it considers it to be inappropriate given
any particular circumstances.
The Committee in exercising its discretion under the rules of
the PSP may (i) re-calibrate the performance conditions and
change their relative weightings (ii) introduce new and retire old
performance measures; provided that any changes are no less
challenging, are aligned with the interests of the Company’s
shareholders and are disclosed in the Committee’s report to
shareholders.
A formal clawback policy whereby all or a portion of the share
award is subject to clawback for a period of two years post
vesting in certain circumstances. Further details of the clawback
policy are on page 101.
The performance conditions, which are measured over a three
year vesting period are currently based on;
• Adjusted Diluted Earnings per Share (EPSd)
• Return on Average Capital Employed (ROACE)
• Free Cash Flow Ratio (FCFR)
• Total Shareholder Return (TSR)
Each condition is equally weighted and in all cases 30% vests at
threshold performance and 100% vests at maximum with pro-rata
vesting between these two levels.
The performance levels are currently calibrated as follows;
Vesting Threshold
Minimum Maximum
EPSd 5% 12%
ROACE 13% 20%
FCFR 100% 130%
TSR Median Top Quartile
Remuneration Framework (adopted with effect from 1 January 2017) – continued
Report of the Remuneration Committee
Continued

94
Element Operation Maximum Opportunity
Shareholding
Requirement
To align the
interests of
individuals with
the long-term
interests of
the Company’s
shareholders.
All executive Directors and members of the Executive
Committee are expected to maintain a minimum shareholding of
300% of base salary. Individuals are allowed a five year period
from date of first appointment to achieve the required holding.
The market value of vested options and any shares held under
the Company’s restricted share arrangements will count
towards determining an individual’s holdings.
Not applicable.
Remuneration Outcomes for Executive Directors in 2019
Total Directors’ single figure for Director’s remuneration for the year was €4,075,000 compared with €2,880,000 in
2018 and details are set in the table below:
Base salary
Performance pay
Benefits Pension
Options /
PSP1/2
Fees
Total
2019
Restricted
shares Cash
100% of the second tier options granted on 4 March 2015 under the 2009 Share Option Plan and 44% of the options granted on 23 May 2017
under the PSP will vest during 2020 based on performance to 31 December 2019, subject to continued employment up to the vesting date.
2	
The value of any options vesting will be based on the actual share price at date of vesting. For the purposes of the above disclosure the value of an
option has been based on the difference between the option subscription price and the average closing price of an ICG unit between 1 October
and 31 December 2019.
Remuneration Framework (adopted with effect from 1 January 2017) – continued
Corporate
Governance
95
Details of Directors’ remuneration for the year ended 31 December 2018 are set out below:
Base salary
Performance Pay
Benefits Pension
Options /
PSP1
Fees
Total
2018
Restricted
shares Cash

Executive Directors
E. Rothwell 552 1,572 - 35 - - - 2,159
D. Ledwidge 221 108 62 22 33 - - 446
Total for executives 773 1,680 62 57 33 - - 2,605
Non-executive Directors
J. B. McGuckian - - - - - - 125 125
C. Duffy - - - - - - 50 50
B. O’Kelly - - - - - - 50 50
J. Sheehan - - - - - - 50 50
Total for non-executives - - - - - - 275 275
Total 773 1,680 62 57 33 - 275 2,880
1 None of the executive Directors held options which vested during 2019 based on performance to 31 December 2018.
In relation to Mr. Eamonn Rothwell €0.3 million (2018:
€0.2 million) of performance pay has been included as
a non-trading item (note 10) in relation to the disposal of
the Oscar Wilde (2018: in relation to the disposal of the
Jonathan Swift).
The information above forms an integral part of the
audited Consolidated Financial Statements as described
in the Basis of Preparation on page 124.
Base Salary
Eamonn Rothwell, CEO, was awarded an increase in
base salary of 2.5% in 2019 over his 2018 base salary.
This was in line with the base salary increase awarded to
all employees who are not accruing benefits under any of
the Group’s defined benefit pension schemes. In terms of
a wider comparator Group the Committee noted that the
CEO pay level was below median base salaries of FTSE
250 constituent companies.
Mr. David Ledwidge, CFO, was appointed to the Board
on 3 March 2016. His salary at that date was set at
a level commensurate with his experience with the
Group with the expectation that subject to individual
and Group performance that this level of salary will rise
progressively over a number of years to comparable
levels in the market for similar roles. Against these
considerations, in 2019, the Committee awarded Mr.
David Ledwidge a 15% increase in annualised base salary.
Report of the Remuneration Committee
Continued

96
Director’s Pension benefits
The aggregate pension benefits attributable to the executive Directors at 31 December 2019 are set out below:
E. Rothwell D. Ledwidge
Increase in accumulated accrued annual
benefits (excluding inflation) in the period - 1 1 1
Transfer value of the increase in
accumulated accrued benefits (excluding
inflation) at year end* - 4 4 3
Accumulated accrued annual benefits on
leaving service at year end - 16 16 15
* Note: Calculated in accordance with actuarial Guidance note GNII.
There were no pension benefits attributable to Mr.
Eamonn Rothwell as he has reached normal retirement
age and pension benefits have vested.
In relation to Mr. David Ledwidge costs in relation to
defined benefit pension arrangements was €20,000
(2018: €20,000) with a further €16,000 (2018:
€13,000) related to the defined contribution pension
arrangements.
The Company also provides lump sum death in service
benefits and the premiums paid during the year
amounted to €6,000 and €1,000 in relation to Eamonn
Rothwell and David Ledwidge respectively.
Performance Related Pay
Eamonn Rothwell
Eamonn Rothwell has been associated with ICG since its
inception as a public company and floatation in 1988. A
legacy contractual arrangement governs Mr. Rothwell’s
performance related pay.
The CEO annual bonus performance award is
predominantly driven by a formula based on basic EPS
growth which incorporates an adjustment for share
buybacks. The Committee also retain discretion to make
adjustments for any non-cash non-trading items. The
Company believes that EPS is consistent and transparent
and EPS growth drives long-term value creation in the
business, reflected in share price appreciation. EPS is the
key performance indicator by which the Board assesses
the overall performance of the Company.
As part of the remuneration framework review
the Committee reassessed the CEO performance
arrangements and in its view the arrangements remain
appropriate. In carrying out this assessment the
Committee has considered the arrangements over the
longer-term performance of the Company rather than
on a single year basis and noted that 100% of the annual
performance award was remunerated through the
allocation of ICG shares with a five year holding period.
David Ledwidge
David Ledwidge was appointed Executive Director on 6
March 2016. The Committee assessed Mr. Ledwidge’s
performance in his role over the period and in particular
his development within the sphere of his greater
responsibility. The assessment concluded that Mr.
Ledwidge was performing in line with expectations
which included his contribution to investment
appraisal, capital management, investor relations and
systems development all supporting the longer-term
development of the Group. On this basis, taking account
of market norms and the expectation that, subject to
performance at an individual and Company level, his
remuneration would rise progressively over a number of
years to comparable levels in the market for similar roles
the Committee concluded that an annual performance
award of €166,000, being 65% of annualised base salary
was appropriate. Of this annual performance award,
46% was allocated towards the acquisition of restricted
shares (before tax liabilities) with the balance received in
cash.
Restricted Shares
In relation to any element of the annual performance
award remunerated through the restricted share plan,
shares are held in trust for the beneficiaries and may not
be sold for a period of 5 years and one month from the
date of grant, aligning the value of the award with Group
performance over the restricted period.
Corporate
Governance
97
Long-Term Incentive
Grants during 2019
The long-term incentive scheme applicable for the 2019 financial year was the Performance Share Plan approved by
shareholders on 17 May 2017. The Committee has suspended future awards under the 2009 Share Option Plan which
remains in place to facilitate the administration of previously granted options.
On 8 March 2019 the Committee, granted an annual award of options to Mr. Rothwell and Mr. Ledwidge in line with
the annual limits set out in the PSP rules being 200% and 150% of salary respectively. The total number of options
granted to Mr. Rothwell and Mr. Ledwidge based on a share price of €5.00 were 226,000 and 76,500 respectively.
Options Vested during 2019
During the period the Committee considered the performance conditions attaching to the basic tier options granted
on 1 September 2014 under the legacy Share Option Plan at an exercise price of €2.97. Under the rules of the Share
Option Plan the Committee determined that these grants vested based on reported Group EPS for the year ended 31
December 2018, and accordingly 152,500 outstanding options were deemed vested in favour of participants during
the year. None of these options had been granted to the executive Directors. The share price at date of vesting was
€4.39.
Options expected to vest during 2020 based on performance to 31 December 2020
The Committee has considered the performance conditions attaching to the second tier options granted on 5
March 2015 under the legacy Share Option Plan at an exercise price of €3.58. Under the rules of the Share Option
Plan the Committee has determined that these grants will vest during 2020 based on reported Group EPS for the
year ended 31 December 2019. Vesting will be conditional on the continued employment of the option holders
at the vesting date. At 31 December 2019 there were 905,000 outstanding second tier options granted on 5
March 2015, including 350,000 and 75,000 options in favour of Mr. Eamonn Rothwell and Mr. David Ledwidge
respectively.
The Committee has also considered the performance conditions attaching to the options granted under the PSP on
23 May 2017 which are tested against Group performance up to 31 December 2019. The 2019 outcomes have been
adjusted for the effects of the application of IFRS 16 Leases so that the diluted earnings per share, return on average
capital employed and free cash flow ratio metrics are comparable over the performance period. The table below
shows the expected vesting on each metric.
Performance Condition Weighting Threshold Maximum Actual Outcome
Diluted adjusted earnings per share 25% 36.0 cent 43.7 cent 23.7 cent 0% out of 25%
Return on average capital employed 25% 13% 20% 29.3% 25% out of 25%
Free cash flow ratio 25% 100% 130% 120.3% 19% out of 25%
Total shareholder return 25% 26.8% 56.5% 23.3% 0% out of 25%
30% vesting occurs at threshold performance increasing pro-rata up to the maximum vesting threshold. Vesting will
be conditional on the continued employment of the option holders at the vesting date in 2020. At 31 December 2019
there were 1,036,145 outstanding options granted on 23 May 2017, including 293,000 and 100,000 options in favour
of Mr. Eamonn Rothwell and Mr. David Ledwidge respectively of which 128,920 and 44,000 are expected to vest
during 2020.
The gross value of those options expected to vest in favour of the executive Directors based on performance to 31
December 2019 has been included in the total director remuneration table for year ended based on an estimated
share price of €4.51 being the average closing price of an ICG Unit between 1 October 2019 and 31 December 2019.
Report of the Remuneration Committee
Continued

98
Long-Term Incentive – continued
Details of movements in share options granted to Directors under the Performance Share Plan and the legacy share
option plan are set out in the table below:
Option Type Date of Grant 31-Dec-18 Granted Vested Exercised 31-Dec-19
1	
These options are expected to vest during 2020 based on performance to 31 December 2019 and the gross value has been included in the
Director remuneration schedule.
2	
These options are expected to vest during 2020 at a vesting rate of 44% based on performance to 31 December 2019 and the gross value has been
included in the Director remuneration schedule. The delivered shares will be held in trust for a period of 5 years from exercise date.
3	
These options will vest and become exercisable three years from the third anniversary of grant in accordance with achievement of the
performance conditions set out in the Remuneration Framework table. These options will normally have to be exercised on or shortly after the
vesting date and the delivered shares held in trust for a period of 5 years from exercise date.
Corporate
Governance
99
Other matters
Minimum Shareholding Requirements
The Company encourages individuals to acquire and
retain significant shareholdings to align interests of
management with those of shareholders. The Company
has a minimum shareholding requirement for executive
Directors and members of the executive management
committee to hold shares to a market value of 300% of
base salary within 5 years of date of appointment. The
market value of vested options and any shares held
under the Company’s restricted share arrangements will
count towards determining an individual’s holdings.
The market value of the holdings of executive Directors
and Executive Committee at 31 December 2019 as a
multiple of salary at that date are shown in the following
table:
Salary multiple held
Eamonn Rothwell 255.5 times
David Ledwidge 2.2 times
Other Executive Management 7.0 times
Non–Executive Directors
Non-executive Directors receive a fee which is set by
the Committee and approved by the Board. They do
not participate in any of the Company’s performance
award plans or pension schemes. As part of the overall
review of remuneration structures the Committee
recommended the fee payable to the Board Chairman to
continue the same as prior year at €125,000 per annum
and other non-executive Directors at €50,000. The fee
levels are considered in line with market norm generally
and reflective of the levels of commitment expected
from persons holding non-executive directorship
positions.
Non-executive Directors do not have notice
periods and the Company has no obligation to pay
compensation when their appointment ceases. The
letters of appointment are available for inspection at
the Company’s registered office during normal business
hours and at the AGM.
Director’s Service contracts
Non-executive Directors have been appointed under
letters of appointment for periods of three years subject
to annual re-election at the AGM.
In respect of Mr. Eamonn Rothwell, CEO, there is an
agreement between the Company and Eamonn Rothwell
that, for management retention reasons, in the event of
a change in control of the Company (where over 50%
of the Company is acquired by a party or parties acting
in concert, excluding Eamonn Rothwell) he will have
the right to extend his notice period to two years or to
receive remuneration in lieu thereof.
This amendment to Mr. Eamonn Rothwell’s contract
of employment was agreed by the Remuneration
Committee a number of years ago to retain and motivate
the CEO during a series of attempted corporate takeover
actions.
The letters of appointment for other executive Directors
do not provide for any compensation for loss of office
other than for payments in lieu of notice and, except as
may be required under Irish law, the maximum amount
payable upon termination is limited to 12 months
equivalent.
On termination, outstanding options may at the
absolute discretion of the Committee be retained by the
departing individual in accordance with the good leaver
/ bad leaver provisions of the relevant plan. Any shares
delivered to an individual which are subject to a retention
period will remain unavailable to the individual until
the end of the retention period and where applicable
will be subject to clawback under the provisions of the
Clawback Policy.
Report of the Remuneration Committee
Continued

100
Share option schemes
There were no long-term incentive plans in place during
the year other than the Group’s 2009 share option plans
(suspended as regards new grants) and the Performance
Share Plan.
The purpose of the share option plans is to encourage
identification of option holders with shareholders’
longer-term interests. Under the plans, options have
been granted both to Directors and to employees of the
Group. The options were granted by the Committee on
a discretionary basis, based on the employees expected
contribution to the Group in the future. Non-executive
Directors are not eligible to participate in the plan.
In the ten year period ended 31 December 2019, the
total number of options granted, net of options lapsed
amounted to 3.8% of the issued share capital of the
Company at 31 December 2019.
A charge is recognised in the Consolidated Income
Statement in respect of share options issued to executive
Directors. The charge in respect of executive Directors
for the financial year ended 31 December 2019 is
€901,000 (2018: €845,000).
Clawback Policy
The Committee recognises that there could
potentially be circumstances in which performance
related pay (either annual bonuses, and/ or longer-
term incentive awards) is paid based on misstated
results or inappropriate conduct resulting in material
damage to the Company. Whilst the Company has
robust management and internal controls in place to
minimise any such risk, the Committee has in place
formal clawback arrangements for the protection
of the Company and its investors. The clawback of
performance related pay comprising the annual bonus
and PSP awards would apply in certain circumstances
including:
• a material misstatement of the Company’s financial
results;
• a material breach of an executive’s contract of
employment;
• any wilful misconduct, recklessness, and / or fraud
resulting in serious injury to the financial condition or
business reputation of the Company.
For executive Directors and members of the Executive
Committee 50% of the annual bonus will be invested
in ICG equity which must be held for a period of five
years and one month, which will be subject to clawback
for a period of two years per the circumstances noted
above. Any awards granted under the PSP will be subject
to clawback during the vesting period and any shares
delivered on vesting will be subject to clawback for
an initial two year period per the circumstances noted
above.
Post-employment holdings
The Committee in designing its performance pay
initiatives, as explained below, has ensured that
executive Directors and senior managers retain
appropriate levels of shareholding post-employment. To
avoid any conflict with how these schemes operate the
Committee does not consider it necessary to specify
actual levels of post-employment shareholdings. Under
the annual bonus scheme a minimum of 50% of an
annual award must be invested in shares held in trust
for a holding period of five years. Similarly any shares
delivered pursuant to the vesting of options under the
PSP must normally be held in trust for a holding period of
five years. Therefore, at termination executive Directors
and senior management participating in these schemes
will contractually retain an interest in shares for a period
of five years post employment, proportional to the
amount of variable pay awarded over the final five years
of employment.
External Appointments
No executive Director retained any remuneration
receivable in relation to external board appointments.
Payments to former Directors
There were no pension payments or other payments for
loss of office paid to any former Directors during the
year.
External Advisers
The Committee sought assistance from Mercer in
relation to assessment of the achievement of the
performance conditions applicable to the May 2017
awards under the PSP. Mercer are members of the
Remuneration Consultants Group and signatories to its
Code of Conduct. Other than the services above Mercer
did not provide any other services to the Group in the
period 1 January 2019 to the date of this report.
Corporate
Governance
101
Say on Pay
ICG is an Irish incorporated company and is not subject
to the UK disclosure requirements of the Large and
Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013. However, in
accordance with ICG’s commitment to best corporate
governance practices and shareholder engagement,
the Board, on the recommendation of the Remuneration
Committee, will put this Report of the Committee to
an advisory vote at the forthcoming 2020 AGM of the
Company.
At the AGM held on 17 May 2019, the advisory resolution
on the Report of the Remuneration Committee in
respect of the year ended 2018 received 78% support.
The Company had engaged extensively with its major
shareholders in advance of the meeting in respect
of their concerns. There is also the opportunity
for shareholders to raise any concerns regarding
remuneration practices at investor meetings or to
request direct communication with the Chair of the
Committee.
The Committee understands the following were the
concerns of shareholders;
CEO performance pay:
A number of shareholders raised the non-disclosure
of metrics around the CEO performance pay. The
Committee has considered this and for contractual
reasons does not disclose the exact calculation
methodology. The Committee is satisfied that the
outcomes reflect Group performance over the longer-
term. The Committee is of the view that remuneration
should be aligned with the business needs and strategy
of the Group. Notwithstanding the Committee has
also satisfied itself that the total overall remuneration
of the CEO is not out of alignment with market norms
through comparison with CEO remuneration of FTSE
250 companies and overall Group performance versus
the FTSE 250. The Group equity is premium listed on the
London Stock Exchange though it is not a constituent of
the FTSE 250. However, the Committee is of the view
that comparison against FTSE 250 metrics is appropriate
as the Group is of an equivalent market capitalisation and
provides a large verifiable population for comparative
purposes.

The table above sets out the single figure total
remuneration comparison versus FTSE 250 and is based
on most recent available information on published
accounts for years ended during 2018 sourced from the
Deloitte publication “Directors’ Remuneration in FTSE
250 Companies”. The single figure total remuneration
figure has been averaged over three years to reduce
any single year effect. Sterling figures were converted
to Euro at average rates. The Committee notes that
the 2018 CEO base salary was within the lower quartile
range whereas the single figure total remuneration
average over the three year period 2016 to 2018 was
ahead of the median but below the upper quartile. The
ICG CEO single figure total remuneration average over
2017 to 2019 was €2,925,000, for which there was no
publicised comparison available at the date of the report.
Report of the Remuneration Committee
Continued

102
Based on the above analysis the Committee is satisfied
the overall remuneration outcomes for the CEO are
consistent with the remuneration framework objectives.
CFO rate of salary increase
A number of shareholders raised a concern regarding
the 20% increase in the CFO salary in 2018 over 2017.
This was viewed as not being consistent with increases
awarded generally. Mr. Ledwidge was appointed to the
position of CFO in March 2015 and to the Board in March
2016. The Committee had noted in its 2016 report that
Mr. Ledwidge’s salary was set at a level commensurate
with his experience with the Group with the expectation
that subject to individual and Group performance that
this level of salary will rise progressively over a number
of years to comparable levels in the market for similar
roles. The Committee has assessed Mr. Ledwidge’s
performance since 2016 to have met its expectations
and has increased his salary progressively from an initial
Comparative TSR Performance
investment
The Committee also considered the longer-term total
shareholder return (TSR) performance of the Group
compared to both the FTSE 250 and ISEQ all share index
based on an initial €100 investment on 1 January 2010
depicted in the chart below.
salary on appointment to the Board of €160,000 to
€254,000 reported in this report. The Committee has
further determined that his salary be set at €318,000
for 2020. In setting this salary level the Board has again
looked at FTSE 250 salary levels for equivalent positions
as set out below;
The Committee notes that the prior year’s salary levels
and the 2020 level remain at the lower quartile levels as
does the single figure total remuneration. In line with the
objectives of the Remuneration Framework, and having
reviewed Mr. Ledwidge’s performance the Committee is
satisfied that the progressive increase in the salary level
remains appropriate.

104
Directors’ Responsibilities Statement
The Directors are responsible for preparing the
Annual Report and the Group and Company Financial
Statements, in accordance with applicable laws and
regulations. Company law requires the Directors to
prepare Group and Company Financial Statements
each year. Under that law, the Directors are required to
prepare the Group Financial Statements in accordance
with IFRS as adopted by the European Union and Article
4 of the IAS regulation. The Directors have elected
to prepare the Company Financial Statements in
accordance with IFRS as adopted by the European Union
and as applied in accordance with the provisions of the
Companies Act 2014.
Under company law, the Directors must not approve
the Group and Company Financial Statements unless
they are satisfied that they give a true and fair view of
the assets, liabilities and financial position of the Group
and Company as at the end of the financial year and
of the profit or loss of the Group for the financial year
and otherwise comply with the Companies Act 2014.
In preparing each of the Group and Company Financial
Statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
• state that the Financial Statements comply with
IFRS as adopted by the European Union as applied in
accordance with the Companies Act 2014; and
• prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the
Group and the Company will continue in business.
The Directors are responsible for keeping adequate
accounting records which disclose with reasonable
accuracy at any time the financial position of the
Company and the Group and to enable them to
ensure that the Financial Statements are prepared in
accordance with IFRS as adopted by the European Union
and comply with Irish statute comprising the Companies
Act 2014 and in regard to the Group Financial
Statements, Article 4 of IAS Regulation. They are also
responsible for safeguarding the assets of the Company
and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities. The Directors are responsible for the
maintenance and integrity of the corporate and financial
information included in the Group’s and Company’s
website (www.icg.ie). Legislation in Ireland governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors of Irish Continental Group plc
acknowledge these responsibilities and accordingly
have prepared this Consolidated Annual Report for the
financial year ended 31 December 2019 in compliance
with the provisions of Regulation (EC) No. 1606/2002,
regulations 4 and 5 of Statutory Instrument No. 277 of
2007 of Ireland, the Transparency Rules of the Central
Bank of Ireland, the applicable International Financial
Reporting Standards as adopted by the European Union,
the Companies Act 2014 and the Listing Rules issued by
Euronext Dublin.
Each of the Directors, whose names and functions are
listed on pages 64 and 65 of the Annual Report confirms
that to the best of each person’s knowledge and belief:
• the Consolidated Financial Statements for the financial
year ended 31 December 2019 have been prepared
in accordance with International Financial Reporting
Standards and give a true and fair view of the assets,
liabilities, financial position and profit or loss of
the Company and the undertakings included in the
consolidation taken as a whole;
• the Operating and Financial Review includes a fair
review of the development and performance of the
business for the financial year ended 31 December
2019 and the position of the Company and the
undertakings included in the consolidation taken as
a whole, together with a description of the principal
risks and uncertainties that they face; and
• the Annual Report and Financial Statements, taken as
a whole, are fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Group’s position and performance, business
model and strategy.
This responsibility statement was approved by the Board
of Directors on 4 March 2020 and signed on its behalf
by:
Eamonn Rothwell David Ledwidge
Director Director
Corporate
Governance
105
Reliability underpinned by major
investment in tonnage and maintenance
of quality assets ensuring the high
levels of schedule integrity demanded
by our customers.
Financial
Statements

106
Independent Auditor’s Report 108
Consolidated Income Statement 118

Consolidated Statement of Comprehensive Income 119

Consolidated Statement of Financial Position 120

Consolidated Statement of Changes in Equity 121

Consolidated Statement of Cashflows 123
Notes to the Consolidated Financial Statements 124
Company Statement of Financial Position 182
Company Statement of Changes in Equity 183
Consolidated Statement of Cashflows 185
Notes to the Company Financial Statements 186
Opinion on the financial statements of Irish Continental Group plc (the “Company”)
In our opinion, the Group and parent Company financial statements:
• give a true and fair view of the assets, liabilities and financial position of the Group and parent Company as at 31
December 2019 and of the profit of the Group for the financial year then ended; and
• have been properly prepared in accordance with the relevant financial reporting framework and in particular, with
the requirements of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS
Regulation.
The financial statements we have audited comprise the:
the Group financial statements:
• the Consolidated Income Statement;
• the Consolidated Statement of Comprehensive Income;
• the Consolidated Statement of Financial Position;
• the Consolidated Statement of Changes in Equity;
• the Consolidated Cash Flow Statement;
• the related notes 1 to 37, including a summary of significant accounting policies as set out in note 2 to the financial
statements.
the parent Company financial statements:
• the Company Statement of Financial Position;
• the Company Statement of Changes in Equity;
• the Company Cash Flow Statement;
• the related notes 38 to 56, including a summary of significant accounting policies as set out in note 38 to the
financial statements.
The relevant financial reporting framework that has been applied in the preparation of the Group financial statements
is the Companies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union
(“the relevant financial reporting framework”). The relevant financial reporting framework that has been applied
in the preparation of the parent Company financial statements is the Companies Act 2014 and FRS 101 “Reduced
Disclosure Framework” issued by the Financial Reporting Council.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable law. Our responsibilities under those standards are described below in the “Auditor’s responsibilities for the
audit of the financial statements” section of our report.
We are independent of the Group and parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and
Accounting Supervisory Authority (IAASA), as applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independent Auditor’s Report to the
Members of Irish Continental Group plc
Report on the audit of the financial statements

108
Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the current year are as follows:
• appropriateness of the useful lives and residual values of vessels used in the determination
of the depreciation charge;
• appropriateness of key assumptions used to determine retirement benefit liabilities; and
• cut-off of revenue recognised in the current year
There have been no significant changes to the key audit matters since the prior financial year
report.
Materiality The materiality that we used in the current year for the Group was €2.8m which was
determined on the basis of profit before tax and non- trading items.
The materiality that we used in the current year for the parent Company was €1.96m which
was determined on the basis of net assets.
Scoping We determined the scope of our Group audit by obtaining an understanding of the Group
and its environment, including Group-wide controls, and assessing the risks of material
misstatement at the Group level. Based on that assessment, we focused our Group audit
scope primarily on the audit work in fifteen components. Five of these were subject to a full
scope audit, a further five components were subject to audits of specified account balances
and the remaining five entities were subject to analytical procedures.
Significant
changes in our
approach
There were no significant changes in our audit approach in the current year, the activities of
the Group remained consistent year on year.
Conclusions relating to principle risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which ISA
(Ireland) or the Listing Rules require us to report to you whether we have anything material to report, add or draw
attention to:
• the directors’ confirmation in the annual report on page 67 that they have carried out a robust assessment of the
principal and emerging risks facing the Group and the parent Company, including those that would threaten its
business model, future performance, solvency or liquidity;
• the disclosures on pages 52 to 57 to the annual report that describe the principal risks, procedures to identify
emerging risks, and an explanation of how these are being managed or mitigated;
• the directors’ statement on page 66 in the financial statements about whether the directors consider it appropriate
to adopt the going concern basis of accounting in preparing the financial statements and the directors’
identification of any material uncertainties to the Group’s and the parent Company’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial statements;
• whether the directors’ statement relating to going concern required under the Listing Rules in accordance with
Listing Rule 6.1.82(3) is materially inconsistent with our knowledge obtained in the audit; or
• the directors’ explanation on page 67 in the annual report as to how they have assessed the prospects of the Group
and parent Company, over what period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the Group and parent Company will be
able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including
any related disclosures drawing attention to any necessary qualifications or assumptions.
Financial
Statements
109
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current financial year and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the useful lives and residual values of vessels used in the determination
of the depreciation charge.
Key audit matter
description
There is a risk that management’s estimate of useful lives and residual values of vessels is
inaccurate leading to an impact on the depreciation charge.
The Group holds €429.10m of vessels, as at 31 December 2019.
The annual depreciation charge depends primarily on the estimated lives of each type of
vessel and the estimated residual value, as determined by management. The determination
of appropriate estimates requires significant judgement by management and relies on inputs
that are variable such as the value of scrap metal and the estimated residual value of vessels.
A change in the estimate of useful lives or residual value of vessels can have a significant
impact on the amount of depreciation charged to the Income Statement.
Please also refer to page 83 (Audit Committee Report), page 133 (Accounting Policy – Property,
Plant & Equipment), and note 3 – Critical accounting judgements and key sources of estimation
uncertainty and note 13 Property, Plant & Equipment.
How the scope
of our audit
responded to
the key audit
matter
We examined management’s assessment of useful lives and estimated residual values of
these vessels.
We obtained an understanding of management’s processes and performed testing of
relevant controls, which included reviews by senior members of management and the Board
to ensure the current assumptions used are appropriate.
We challenged and evaluated management’s key assumptions including their assessment of
useful lives and their estimates of residual values. As part of this, we performed sensitivity
analysis on the key assumptions to assess the impact of various changes on the annual
depreciation charge for the year.
We benchmarked management’s assumptions against information available from external
independent market sources, such as:
• market data relating to the value of scrap metal;
• market data relating to the sale of similar ships;
• market data relating to the lives of ships that were scrapped during the financial year.
We evaluated and assessed the adequacy of the disclosures made in the financial statements,
including the disclosure of the key assumptions and the sensitivity of the depreciation charge
to changes in the underlying assumptions.
We determined that management’s assessment of the useful lives of the vessels and residual
values to be reasonable based on the work that we undertook.
Independent Auditor’s Report to the
Members of Irish Continental Group plc
Report on the audit of the financial statements – continued

110
Appropriateness of key assumptions used to determine retirement benefit liabilities
Key audit matter
description
There is a risk that the liabilities of pension schemes are determined using inappropriate
actuarial assumptions, leading to potential misstatement of the net pension asset/deficit.
The Group operates a number of defined benefit schemes. The net pension asset at the year
end amount to €8.8m consisting of pensions assets of €12.5m and deficits of €3.7m.
There is a high degree of estimation and judgement in the calculation of the pension
liabilities, particularly in the determination of appropriate actuarial assumptions in respect of
the discount, mortality and inflation rates.
We identified the discount rate as the being most volatile key assumption where a small
movement can have a significant impact on the calculation of the pension liabilities.
Please also refer to page 83 (Audit Committee Report), page 132 (Accounting Policy –
Retirement Benefit Schemes), and note 3 – Critical accounting judgements and estimates
How the scope
of our audit
responded to
the key audit
matter
The following audit procedures were performed in order to assess the Group’s valuation of its
retirement benefit liabilities, we;
• obtained an understanding of management’s processes and performed testing of relevant
controls, which included reviews by senior members of management and the Board to
ensure the current assumptions used are appropriate.
• utilised Deloitte Actuarial Specialists as part of our team to assist us in understanding,
evaluating and challenging the appropriateness of the discount rate and other key
assumptions;
• made inquiries with both management and the Group’s external pension advisors to
understand their processes in determining the discount rate and other key assumptions
used in calculating retirement benefit liabilities;
• benchmarked the discount rate and other key assumptions used against comparable
market and peer data, where available to ensure that they were within appropriate ranges
and reasonable given our knowledge of the schemes; and
• assessed whether the disclosures made in the financial statements in respect of retirement
benefit schemes were in accordance with the relevant accounting standards.
Based on the evidence obtained, we found that the discount rate and other assumptions
used by management in the actuarial valuations for pension liabilities are within a range we
consider reasonable.
Financial
Statements
111
Cut-off of revenue recognized in the current year
Key audit matter
description
There is a risk that revenues are manipulated through recording of future revenues prematurely
to achieve performance targets.
When making our assessment of the potential risk of fraud in relation to revenue recognition,
we considered the nature of the transactions across the Group. The Group recognises
revenue in respect of its various streams over the performance period of the underlying
contract obligations.
We have therefore pinpointed the significant risk across the Group to the proper cutoff of
revenue recorded at year end.
Please also refer to page 128 (Accounting Policy – Revenue Recognition), note 4 segmental
information.
How the scope
of our audit
responded to
the key audit
matter
We obtained an understanding of the significant revenue arrangements in place across the
Group, and of the internal controls and IT systems in place over those revenue streams.
We performed testing of relevant internal controls over the Group’s significant revenue
processes including operational controls in place around passenger numbers and freight
volumes to ensure that revenue was recognised where the date of travel or transportation
had occurred.
We tested on a sample basis, revenue recognised around year end for the various revenue
streams across the Group to assess if the performance obligations were met in line with the
underlying contractual arrangements with customers for the associated revenue recognised
to ensure that it was recognised appropriately.
No significant matters arose from our work.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements
as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on the financial
statements is not modified with respect to any of the risks described above, and we do not express an opinion on
these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a
reasonably knowledgeable person, relying on the financial statements, would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group to be €2.8m, which is approximately 6% of profit before tax and non-
trading items. We have considered the profit before tax and non trading items to be the appropriate benchmark for
determining materiality because it is the most important measure for users of the Group’s financial statements and
it excludes the effect of volatility (for example, separately disclosed non-trading items) from our determination. We
determined materiality for the parent Company to be €1.96m which is approximately 1.1% of net assets, as the most
significant driver of the parent Company financial statements is the capital and reserves balance.
We have considered quantitative and qualitative factors, such as understanding the entity and its environment,
history of misstatements, complexity of the Group and reliability of the control environment.
We agreed with the Audit Committee that we would report to them all audit differences in excess of €140,000 as
Independent Auditor’s Report to the
Members of Irish Continental Group plc
Report on the audit of the financial statements – continued

112
well as differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our audit
We determined the scope of our Group audit by
obtaining an understanding of the Group and its
environment, including Group-wide controls, and
assessing the risks of material misstatement at the
Group level. Based on that assessment, we focused
our Group audit scope primarily on the audit work
in fifteen components. Five of these were subject
to a full scope audit and five components were
subject to audits of specified account balances,
where the extent of our testing was based on our
assessment of the risks of material misstatement and
of the materiality of the Group’s operations in those
components. The remaining five entities were subject
to analytical procedures at the Group level.
These components were selected based on coverage achieved and to provide an appropriate basis for undertaking
audit work to address the risks of material misstatement identified above. Our audit work at the fifteen components
was executed at levels of materiality applicable to each individual unit which were lower than Group materiality and
ranged from €1.40m to €2.52m.
At the Group level, we also tested the consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of the aggregated financial information of the
remaining components not subject to audit or audit of specified account balances.
The Group audit team attended planning meetings for all components. In addition to our planning meetings, we
sent detailed instructions to our component audit teams, included them in our team briefings, discussed their risk
assessment, attended client planning and closing meetings, and reviewed their audit working papers.
The levels of coverage of key financial aspects of the Group by type of audit procedures are as set out below:
PBT pre non-trading items Group materiality
Audit Committee reporting threshold

Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report with regard to our responsibility to specifically address the following
items in the other information and to report as uncorrected material misstatements of the other information where
we conclude that those items meet the following conditions:
• Fair, balanced and understandable – the statement given by the directors that they consider the annual report
and financial statements taken as a whole is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s and the parent Company’s position and performance, business
model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting – the section describing the work of the audit committee does not appropriately
address matters communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code and the Irish Corporate
Governance Annex - the parts of the directors’ statement required under the Listing Rules relating to the
Company’s compliance with the UK Corporate Governance Code and the Irish Corporate Governance Annex
containing provisions specified for review by the auditor in accordance with Listing Rule 6.1.85 and Listing Rule
6.1.86 do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code or the
Irish Corporate Governance Annex.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view and otherwise comply with the
Companies Act 2014, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group and parent Company or to cease
operations, or have no realistic alternative but to do so.
Independent Auditor’s Report to the
Members of Irish Continental Group plc
Report on the audit of the financial statements – continued

114
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group and parent Company’s internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors;
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group and parent Company’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause
the entity (or where relevant, the Group) to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation;
• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the
Group to express an opinion on the (consolidated) financial statements. The Group auditor is responsible for the
direction, supervision and performance of the Group audit. The Group auditor remains solely responsible for the
audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that the
auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a
statement that the auditor has complied with relevant ethical requirements regarding independence, including the
Ethical Standard for Auditors (Ireland) 2016, and communicates with them all relationships and other matters that
may be reasonably be thought to bear on the auditor’s independence, and where applicable, related safeguards.
Financial
Statements
115
Where the auditor is required to report on key audit matters, from the matters communicated with those charged
with governance, the auditor determines those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. The auditor describes these matters in the
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, the auditor determines that a matter should not be communicated in the auditor’s report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies
Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit;
• In our opinion the accounting records of the parent Company were sufficient to permit the financial statements to
be readily and properly audited;
• The parent Company statement of financial position is in agreement with the accounting records;
• In our opinion the information given in the directors’ report is consistent with the financial statements and the
directors’ report has been prepared in accordance with the Companies Act 2014.
Corporate Governance Statement
We report, in relation to information given in the Corporate Governance Report on pages 70 to 82 that:
• In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate
Governance Statement pursuant to subsections 2(c) and (d) of section 1373 of the Companies Act 2014 is consistent
with the Company’s statutory financial statements in respect of the financial year concerned and such information
has been prepared in accordance with the Companies Act 2014.
Based on our knowledge and understanding of the Company and its environment obtained in the course of the audit,
we have not identified any material misstatements in this information.
• In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement
contains the information required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and Groups) Regulations 2017 (as amended); and
• In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to
section 1373(2)(a),(b),(e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement.
Independent Auditor’s Report to the
Members of Irish Continental Group plc
Report on the audit of the financial statements – continued

116
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the directors’ report.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if,
in our opinion, the disclosures of directors’ remuneration and transactions specified by law are not made.
The Listing Rules of the Euronext Dublin require us to review six specified elements of disclosures in the report to
shareholders by the Board of Directors’ remuneration committee. We have nothing to report in this regard.
Other matters which we are required to address
We were first appointed by Irish Continental Group plc to audit the financial statements for the financial year ended
31 October 1988 and subsequent financial periods. The period of total uninterrupted engagement including previous
renewals and reappointments of the firm is 31 years, covering the years ending 31 October 1988 and 31 December
2019.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of
the Company in conducting the audit.
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in
accordance with ISA (Ireland) 260.
Ciarán O’Brien
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2
6 March 2020
Financial
Statements
1. General information
Irish Continental Group plc (ICG) is a public limited company incorporated in Ireland (Company registration number:
41043). The addresses of its registered office and principal places of business are disclosed on the inside back cover
of the Annual Report.
The Group carries passengers and cars, RoRo freight and container LoLo freight, on routes between Ireland, the
United Kingdom and Continental Europe. The Group also operates container terminals in the ports of Dublin and
Belfast.
The Company charters vessels and is the holding Company of a number of subsidiary companies.
2. Summary of accounting policies
Statement of Compliance
The Group and Company financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and as applied in accordance with the Companies Act 2014 and as
regards the Consolidated Financial Statements Article 4 of the IAS Regulations.
Basis of preparation
The financial statements have been prepared on the going concern basis and the historical cost convention.
All figures presented in the financial statements are in Euro and are rounded to the nearest one hundred thousand
except where otherwise indicated.
Basis of consolidation
The Consolidated Financial Statements include the information in the Remuneration Report that is described as being
an integral part of the Consolidated Financial Statements.
The Consolidated Financial Statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company:
• has the power over the investee;
• is exposed, or has rights, to variable return from its involvement with the investee; and
• has the ability to use its power to affect its return.
In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the
year are included in the Consolidated Income Statement from the date the Company gains control until the date the
Company ceases to control the subsidiary.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019

124
2. Summary of accounting policies – continued
New standards and interpretations
The Group and Company adopted the new and amended International Financial Reporting Standards (“IFRS”) and
Interpretations in the year set out below.
• New Standards
-
- IFRS 16: Leases
• Amended Standards
-
- Amendment to IAS 19: Plan Amendment, Curtailment or Settlement
-
- Amendments to IAS 28: Long-term interests in Associates Ventures
-
- Annual Improvements to IFRS Standards 2015 – 2017 Cycle
⋅
⋅ IFRS 3: Business Combinations
⋅
⋅ IFRS 11: Joint Arrangements
⋅
⋅ IAS 12: Income Taxes
⋅
⋅ IAS 23: Borrowing Costs
-
- Amendments to IFRS 9: Prepayment Features with Negative Compensation
• Interpretations
-
- IFRIC 23: Uncertainty over Income Tax Treatments
The impact of these is set out below.
IFRS 16 – Leases
IFRS 16: Leases was applied for the first time with a date of initial application of 1 January 2019.
IFRS 16 replaces IAS 17: Leases and related interpretations setting out the principle for the recognition, measurement,
presentation and disclosure of leases for both lessee and lessor. A significant change arising from the application
of IFRS 16 for lessees is that leases previously defined as operating leases under IAS 17 and treated as “off-balance
sheet” are now required to be recognised in the Statement of Financial Position as a “right of use” asset and a related
lease liability. There have been no significant changes in accounting by lessors.
The Group has decided to apply IFRS 16 using the modified retrospective approach as permitted by the standard.
Under the modified retrospective approach the Group as lessee has not restated comparative information and has
instead recognised the cumulative effect in opening retained earnings.
The Group has availed of the following practical expedients as permitted by the standard;
• i) Short-term leases where the lease term is or the remaining lease term at date of adoption was 12 months or less,
• ii) Leases where the underlying asset is of low value,
• iii) Adoption of a portfolio approach to individual containers leased under a master agreement,
• iv) Non separation of the non-lease components from the lease component attaching to short term vessel leases.
The Group recognises the lease payments associated with those leases at (i) and (ii) above as an expense on a
straight line basis over the lease term.
Financial
Statements
125
2. Summary of accounting policies – continued
The majority of leases held by the Group in terms of contractual commitment relate to property and vessel charters
all of which were previously classified as operating leases. At 1 January 2019, the principal property leases related
to leases of property with outstanding terms of between 77 and 103 years with 7 year rent reviews. Vessel charters
included short term time charters and a bareboat charter of a ro-pax vessel. These leases, after allowing for the
practical expedients availed of, were recognised as a lease liability at the date of adoption measured at the present
value of the remaining lease payments discounted using the Group’s incremental borrowing rate. The Group also
recognised a right of use asset equal to the lease liability, adjusted for rentals prepaid or accrued which were not
material.
In relation to the bareboat charter of the ro-pax vessel, the Group assessed the contractual terms and determined
that the future lease rentals applying to an extension option should be added to the contractual commitments
previously disclosed under IAS 17 as the Group was reasonably certain to exercise that option based on the
conditions which existed as at 1 January 2019.
The Group does not classify that element of a contract as a lease where the right to control the use of an identified
asset for a period of time is based on variable consideration based on activity levels. In these circumstances any
variable consideration is expensed to Income Statement as the right is consumed. For lease terms up to ten years,
which includes all leases other than land leases at Dublin Port the incremental borrowing rate was estimated
based on the expected interest rates which would be charged under the Group’s revolving credit facility being
the contracted loan margin plus the market cost of fixed interest funds in the relevant currency for the applicable
lease term. The current revolving facility expires in September 2024, with a reasonable expectation that it will be
renewed on no worse terms for a further period of 5 years. The incremental borrowing rate for the land leases which
extend for between 77 and 103 years was estimated based on a consideration of longer-term property yields and
extrapolation of corporate bond yields for an equivalent duration of the underlying lease.
The effects from adopting the standard were;
• On the opening statement of Consolidated Financial Position at 1 January 2019; an increase in the carrying value of
right of use assets of €32.2 million, a transfer in the carrying value of property, plant and equipment of €1.2 million,
an increase in lease obligations of €31.0 million and a net nil adjustment to equity attributable to shareholders.
• In the financial year ended 31 December 2019: a reduction in operating expenses of €9.4 million, an increase in
depreciation of €8.6 million, an increase in finance costs of €1.0 million giving a net reduction in profit before tax
of €0.2 million.
• The effect on 2019 basic and diluted EPS from the reduction in profit before tax in 2019 of €0.2 million is 0.1 cent.
• Net Debt at 1 January 2019 redefined to including obligations relating to right of use assets was €111.3 million
compared to €80.3 million previously reported at 31 December 2019.
The adoption of IFRS 16 has not affected the Group’s lessor accounting in respect of charter revenues receivable. In
accordance with IFRS 16 the deferred consideration receivable in relation to bareboat hire purchase sale agreement
pertaining to the disposal of the Oscar Wilde in April 2019 has been treated as a finance lease receivable at an
amount equivalent to the net investment in the lease.
Other Standards and interpretations effective from 1 January 2019
The amendments to and interpretations of the previously issued standards effective from 1 January 2019 did not have
any material impact on these financial statements.
IFRS 17: Insurance Contracts will be affective from 1 January 2021. The Group is currently evaluating the impact IFRS
17 may have on the Group financial statements which is currently not expected to be material.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

126
2. Summary of accounting policies – continued
Standards effective from 1 January 2020 or later
There are a number of new standards and amendments to standards applicable to the Group which have been issued
and effective but which have not been applied in preparing the Group Consolidated Financial Statements for the year
ended 31 December 2019. A listing of these is set out below.
Title
Latest Adoption Date
(financial year commencing)
New Standards
IFRS 17: Insurance Contracts 1 January 2021
Amended Standards
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Deferred
Amendments to the Conceptual Framework for Financial Reporting, including
amendments to references to the Conceptual Framework in IFRS Standards
1 January 2020
Amendments to IFRS 3 - Definition of a Business 1 January 2020
Amendments to IAS 1 and IAS 8 - Definition of Material 1 January 2020
Amendments to IAS 1 - Classification of liabilities as current or non-current 1 January 2020
Amendments to IAS 39, IFRS 7 and IFRS 9: Interest Rate Benchmark Reform 1 January 2020
The impact of the amendments noted above with an adoption date of 1 January 2020 has been assessed as not
having a material impact on the Group and Company. The impact of IFRS 17 Insurance Contracts with an effective
date of 1 January 2021 is currently being reviewed but is not expected to have a material impact on adoption by the
Group and Company.
Financial
Statements
127
2. Summary of accounting policies – continued
Accounting policies applied in preparation of the financial statements for the financial year ended
31 December 2019
Revenue recognition
Revenue is measured based on the consideration specified in a contract concluded with a customer and excludes any
amounts collected on behalf of third parties including taxes.
The principal activities from which the Group generates its revenue are set out below.
Ferries division
Product or Service Nature and satisfaction of performance obligation
Passenger Transport Passenger revenue is recognised over time as services are provided. Contracts are
concluded during the booking process with a high degree of probability of collection of
the sales proceeds. Sales proceeds are recognised as deferred revenue until the single
performance obligations to transport the passenger from departure point to destination
point is satisfied. The price is fixed at the time of booking. Where a customer is eligible
to participate in loyalty programmes, the price is allocated based on the relative stand-
alone selling price or expected selling price based on company data.
Deferred revenue is reduced for any refund paid to a customer where the Company
is unable to complete the performance obligation. Ticket breakage, i.e. deferred
untravelled revenue for no shows, is recognised in full once the original booked travel
date has expired based on a no refund policy.
RoRo freight RoRo freight revenue is recognised over time as services are provided. Contracts are
concluded during the booking process with a high degree of probability of collection of
the sales proceeds. Sales proceeds are recognised as deferred revenue until the single
performance obligation to transport the freight unit from departure point to destination
point is satisfied. The price is fixed at the time of booking or is otherwise variable if the
customer has an active rebate arrangement. The contract price less the estimates of
the most probable rebate amount is allocated to the performance obligation with the
rebate amount retained in deferred revenue until paid.
On Board Sales Revenue from sales in bars and restaurants is recognised at the time of sale. The
Group recognises a single contract for all goods and services in a transaction basket
at the time of transaction with payment received at the same time. There is a single
identifiable obligation to transfer title with the price fixed at the time of transaction.
Retail Concessions Revenues earned from retail concessions is recognised over time based on declarations
received up to the reporting date. For each concession the Group recognises a single
contract involving the grant of a licence or creation of a right to provide services on
board vessels creating a single identifiable obligation. The price is treated as variable
based on a percentage of sales.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

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2. Summary of accounting policies – continued
Container and Terminal division
Product or Service Nature and satisfaction of performance obligation
Container Shipping LoLo container shipping revenue is recognised over time based on effort expended on
each activity (collection, shipping and delivery) undertaken in fulfilment of obligations.
Contracts are concluded during the booking process with a high degree of probability
of collection of the sales proceeds. Sales proceeds are recognised as deferred revenue
until the single performance obligation to transport the container from collection point
to delivery point is satisfied. The price is fixed at the time of booking.
Stevedoring Stevedoring revenue is recognised over time in line with the number of containers
loaded or discharged onto vessels in fulfilment of obligations. Contracts are concluded
with customers covering services to be provided over time with a high degree of
probability of collection of the sales proceeds. Sales proceeds are recognised once the
performance obligations are satisfied i.e. the loading or discharge of a vessel. The price
is fixed at the time of contract or is otherwise variable if the customer has an active
rebate arrangement. The contract price less the best estimate of the most probable
rebate amount is allocated to the performance obligation with the rebate amount
retained in deferred revenue. As rebates are paid to customers amounts included in
deferred revenue are released with experience adjustments included as revenue.
Leasing
The Group and Company has applied IFRS 16: Leases effective from 1 January 2019 and has applied the below
policy at (i) in respect of recognition and measurement of right of use assets and related lease liabilities in respect of
financial year 2019. The prior period has not been restated. In prior periods accounting for leases was performed as
set out in IAS 17: Leases as per the policy set out at (ii) below.
(i) Lease accounting policy effective from 1 January 2019
Identifying a lease
Where a contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration it is treated as a lease.
(a) As Lessee
Where the Group acts as a lessee the Group recognises a right of use asset and lease liability at the lease
commencement date, which is the date the underlying asset is available for our use.
Right of use assets are initially measured at cost, and subsequently measured at cost less any accumulated
depreciation and impairment losses (if any), and adjusted for certain remeasurement of lease liabilities. The
recognised right of use assets are depreciated on a straight-line basis over the shorter of their estimated useful lives
and the lease term. Right of use assets are subject to impairment under IAS 36 ‘Impairment of assets’. Right of use
assets are presented as a separate line item in the Statement of Financial Position.
Lease liabilities are initially measured at the present value of lease payments that are not paid at the commencement
date, discounted using the incremental borrowing rate if the interest rate implicit in the lease is not readily
determinable. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by
lease payments made. In the Consolidated Cash Flow Statement the payments made are separated into the principal
portion (presented within financing activities), and interest (presented in operating activities). It is remeasured if
there is a change in future lease payments, a change in the lease term, or as appropriate, a change in the assessment
of whether an extension option is reasonably certain to be exercised or a termination option is reasonable certain not
to be exercised.
Financial
Statements
129
2. Summary of accounting policies – continued
(b) As Lessor
The Group treats bareboat hire purchase sale agreements in relation to the disposal of vessels as finance leases
where it transfers substantially all the risks and rewards incidental to ownership of the underlying vessel to the
charterer. The sales proceeds recognised at the commencement of the lease term by the Group is that implied by
the fair value of the asset, which together with any initial direct costs equal the net investment in the lease and is
presented as a receivable in the Statement of Financial Position. Following initial measurement finance lease income
is recognised in Revenue and is allocated to accounting periods so as to reflect a constant periodic rate of return on
the outstanding net investment.
Lease payments receivable arising from the grant of a right to use vessel which does not meet the requirement of a
finance lease are recognised as revenue on a straight line basis over the term of the relevant charter. The provision of
operation and maintenance services is recognised on a daily basis at the applicable daily rate under the terms of the
charter.
(ii) Lease accounting policy effective prior to 1 January 2019
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. The capital element of future lease rentals is treated
as a liability and is included in the Consolidated Statement of Financial Position as a finance lease obligation.
The interest element of lease payments is charged to the Consolidated Income Statement over the period of the
lease in proportion to the balance outstanding.
Rentals payable under operating leases are charged to the Consolidated Income Statement on a straight-line basis
over the term of the lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line
basis over the lease term as a reduction of the rental expense.
Concession and Licence agreements
Payments made under concession arrangements, where the Group benefits from the use of an asset or right and the
obligation to make the payments has not been recognised in the Statement of Financial Position as a lease obligation,
are charged to the Consolidated Income Statement as the rights conferred under the terms of the arrangement are
consumed.
Benefits received and receivable as an incentive to enter into a concession agreement are also spread on a straight-
line basis over the agreement term as a reduction of the expense.
The Group does not classify that element of a contract as a lease where the right to control the use of an identified
asset for a period of time is based on variable consideration based on activity levels. In these circumstances any
variable consideration is expensed to the Income Statement as the right is consumed.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

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2. Summary of accounting policies – continued
Non-trading items
The Group treats material items either individually or, if of a similar type, in aggregate, that derive from events
or transactions that fall outside the ordinary activities of the Group as non-trading items. Non-trading items are
presented separately on the face on the Consolidated Income Statement, separately disclosing any tax effects.
Foreign currencies
The individual financial statements of each Group entity are prepared in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the Consolidated Financial
Statements, the results and financial position of each entity are expressed in Euro, which is the functional currency of
the Company, and the presentation currency for the Consolidated Financial Statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the
transactions. At each statement of financial position date, monetary assets and liabilities denominated in foreign
currencies are retranslated at the rates prevailing on the statement of financial position date. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising
on the settlements of monetary items and on the retranslation of monetary items, are included in the Consolidated
Income Statement for the financial year.
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign
operations are expressed in Euro using exchange rates prevailing on the statement of financial position date. Income
and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuate
significantly during the period, in which case the exchange rates at the date of transactions are used.
Exchange differences arising on the translation of foreign currency subsidiaries, if any, are recognised in the
Consolidated Statement of Comprehensive Income and accumulated in equity in the translation reserve. On
disposal of a foreign subsidiary the cumulative translation difference for that foreign subsidiary is transferred to the
Consolidated Income Statement as part of the gain or loss on disposal.
In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward contracts and options
(see below for details of the Group’s accounting policies in respect of such derivative financial instruments).
On consolidation, exchange differences arising from the translation of the net investment in foreign operations and
on borrowings and other currency instruments of such investments, are recognised in other comprehensive income
and accumulated in equity.
Finance costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, gains
and losses on hedging instruments that are recognised in the Consolidated Income Statement and the unwinding of
discounts on provisions.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment
income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the
Consolidated Income Statement in the financial year in which they are incurred.
Financial
Statements
131
2. Summary of accounting policies – continued
The interest expense component of lease payments relating to lease obligations as a lessee are recognised in the
Consolidated Income Statement using the effective interest rate method.
The net interest cost on defined benefit obligations is recognised in the Consolidated Income Statement under
finance costs in accordance with IAS 19 Employee Benefits.
Interest Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount on initial recognition.
Retirement benefit schemes
Defined benefit obligations
For defined benefit obligations, the cost of providing benefits and the liabilities of the schemes are determined
using the projected unit credit method with assets valued at bid price and actuarial valuations being carried out
by independent and professionally qualified actuaries at each statement of financial position date. Current service
costs, past service cost, or credit, and net interest expense or income are recognised in the Consolidated Income
Statement. Adjustments in respect of a settlement, a curtailment and past service cost, or credit, are recognised in
the Consolidated Income Statement in the period of a plan amendment. Remeasurement comprising, actuarial gains
and losses is reflected in the Statement of Financial Position with a charge or credit recognised in the Consolidated
Statement of Comprehensive Income in the period in which they occur.
The net interest cost on defined benefit obligations has been recorded in the Consolidated Income Statement
under finance costs. Net interest is calculated by applying the discount rate at the beginning of the period to the net
defined benefit liability or asset.
In addition to the pension schemes operated by the Group, certain employees are included in the Merchant Navy
Officers Pension Fund (MNOPF). As the Group has no control over the calls for contributions made from the MNOPF,
it has determined that the fund should be accounted for as a defined benefit obligation and its liability recognised
accordingly. The Group’s share of the MNOPF deficit as advised by the trustees is included with the other Group
schemes.
The retirement benefit obligation recognised in the Consolidated Statement of Financial Position represents the
deficit or surplus in the Group’s defined benefit obligations. Any surplus resulting from this calculation is limited to
past service cost, plus the present value of available refunds and reductions in future contributions to the scheme.
Defined contribution pension schemes
Payments to defined contribution pension schemes are recognised as an expense as they fall due. Any contributions
outstanding at the period end are included as an accrual in the Consolidated Statement of Financial Position.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable
is based on taxable profit for the year. Taxable profit differs from profit as reported in the Consolidated Income
Statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the statement of financial position date.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

132
2. Summary of accounting policies – continued
A proportion of the Group’s profits fall within the charge to tonnage tax, under which regime taxable profits are
relieved to an amount based on the tonnage of vessels employed during the year. In accordance with the IFRIC
guidance on IAS 12 Income Taxes, the tonnage tax charge is included within other operating expenses in the
Consolidated Income Statement.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except
where the Group is able to control the reversal of the temporary differences and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset realised based on tax laws and rates that have been enacted at the statement of financial position date.
Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged
or credited directly to the Consolidated Statement of Comprehensive Income or is dealt with in equity.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and liabilities on a net basis.
Property, plant and equipment
Vessels
Vessels are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation on vessels is charged so as to write off the cost or deemed cost less residual value over the estimated
economic useful life on a straight line basis. The amount initially recognised in respect of Ro-pax ships less estimated
residual value, is allocated between hull and machinery and hotel and catering elements for depreciation purposes.
In respect of LoLo vessels, all value is attributed to hull and machinery.
In considering residual values of ships, the Directors have taken into account the valuation of the scrap value of the
ships per light displacement tonne. Residual values are reviewed annually and updated if required. Estimations of
economic life and residual values of ships are a key accounting judgement and estimate in the financial statements.
Any change in estimates are accounted for prospectively.
Financial
Statements
133
2. Summary of accounting policies – continued
The estimated economic useful lives of vessels are as follows;
Hull and Machinery
• Conventional Ro-pax Ships 30 - 35 years
• Fast ferries 15 - 25 years
• LoLo 25 years
Hotel and Catering 10 years
For conventional ferries, hull and machinery components are depreciated over an initial estimated useful life of 30
years but this is reviewed on a periodic basis for vessels remaining in service 25 years after original construction.
Drydocking
Costs incurred in renewing the vessel certificate are capitalised as a separate component under vessels in tangible
fixed assets and depreciated over the period to the next expected dry-docking required for certificate renewal. Costs
and accumulated depreciation relating to expired certificates are treated as disposals.
Other assets
Property, plant and equipment, other than passenger ships and freehold land, are stated at cost less accumulated
depreciation and any accumulated impairment losses. Freehold land is stated at cost and is not depreciated. The
carrying values of other assets are reviewed for impairment when there is any indication that the carrying values may
not be recoverable in which case the assets are written down to their recoverable amount. Cost comprises purchase
price and directly attributable costs.
The amount initially recognised in respect of an item of other assets is allocated to its significant parts and each such
part is depreciated separately. In respect of stevedoring equipment related costs are allocated between structural
frame and machinery.
Depreciation on property, plant and equipment other than vessels and right of use assets where ownership is
transferred at the end of the lease term is charged so as to write off the cost, other than freehold land and assets
under construction, over the estimated economic useful lives, using the straight-line method, on the following bases:
Buildings 0.7% - 10%
Plant Equipment and vehicles 4% - 25%
Right of use assets held under leases where ownership is not transferred at the end of the lease term are depreciated
over the shorter of their expected useful lives or the lease term.
Assets under construction, the construction of which takes a substantial period of time are recorded at the
cost incurred to date less any impairment loss and no depreciation is charged on these amounts. Depreciation
commences when the assets are ready for their intended use. Cost includes borrowing costs capitalised in
accordance with the Group’s accounting policies. Borrowing costs directly attributable to the construction
of property, plant and equipment are capitalised as part of the cost of the assets up to the date of substantial
completion.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

134
2. Summary of accounting policies – continued
Gains or losses on the disposal of property, plant and equipment represent the difference between the net proceeds
and the carrying value at the date of sale. Income is accounted for when there is an unconditional exchange of
contracts, or when all necessary terms and conditions have been fulfilled.
Intangible assets
Costs incurred on the acquisition and commissioning of computer software are capitalised, as are costs directly
associated with developing computer software programmes, if it is probable that the expected future economic
benefits that are attributable to these assets will flow to the Group and the cost of these assets can be measured
reliably. Computer software costs recognised as assets are written off on a straight-line basis over their estimated
useful lives, which is normally 5 years.
Impairment of property, plant and equipment and intangible assets
At each statement of financial position date, the Group performs a review to ascertain whether there are any
indications of impairment which may affect carrying amounts of its property, plant and equipment and intangible
assets. If any such indications exist, the recoverable amount of the asset is estimated in order to determine whether
the affected assets have actually suffered an impairment loss. Where an asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash generating unit to which the
asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
current market assessments of the time value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the
carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the assets (cash
generating units) in prior years. A reversal of an impairment loss is recognised as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost represents suppliers’ invoiced cost net of any
related discounts etc. determined on a first in, first out basis. Net realisable value represents the estimated selling
price less all costs to be incurred in marketing, selling and distribution.
Treasury shares
Consideration paid to purchase the Company’s equity share capital is deducted from the total shareholders’ equity
and classified as treasury shares until such shares are cancelled. No gain or loss is recognised on the purchase, sale,
issue or cancellation of the treasury shares. Where such shares are subsequently sold or reissued, any consideration
received is included in total shareholders’ equity.
Where shares are cancelled an amount equivalent to the nominal value of the cancelled shares is transferred from
retained earnings to the capital redemption reserve.
Financial
Statements
135
2. Summary of accounting policies – continued
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at invoice value, which approximates to fair value. Appropriate
allowances for estimated irrecoverable amounts are recognised in the Consolidated Income Statement when there is
objective evidence that the carrying value of the asset exceeds the recoverable amount.
Trade receivables are classified as loans and receivables which are subsequently measured at amortised cost, using
the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in
the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial
liabilities and equity instruments are set out below.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at fair value, net of transaction costs incurred. Finance
charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for in the
profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise. Bank borrowings are classified as financial liabilities
and are measured subsequently at amortised cost using the effective interest rate method.
Trade payables
Trade payables are classified as other financial liabilities, are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rates.
The Group uses foreign exchange forward contracts and interest rate swaps to hedge these exposures.
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which
provide written principles on the use of financial derivatives consistent with the Group’s risk management strategy.
The Group does not use derivative financial instruments for speculative purposes.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

136
2. Summary of accounting policies – continued
Derivative financial instruments are held in the Consolidated Statement of Financial Position at their fair value.
Changes in the fair value of derivative financial instruments that are designated, and are effective, as hedges of
changes in future cash flows are recognised directly in other comprehensive income. Any ineffective portion of the
hedge is recognised in the Consolidated Income Statement. When the cash flow hedge of a firm commitment or
forecasted transaction subsequently results in the recognition of an asset or a liability, then, at the time the asset
or liability is recognised, the associated gains or losses on the derivative that was previously recognised in other
comprehensive income and accumulated in equity are included in the initial measurement of the asset or liability. For
hedges that do not result in the recognition of an asset or liability, amounts accumulated in equity are recognised in
the Consolidated Income Statement in the same period in which the hedged item affects profit or loss.
Changes in fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in
the Consolidated Income Statement as they arise.
Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated, or exercised, or
no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument
accumulated in equity is retained in equity until the forecasted transactions occur. If a hedged transaction is no
longer expected to occur, the net cumulative gain or loss accumulated in equity is transferred to the Consolidated
Income Statement in the period.
Contingent liability
A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits is
remote.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable
that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of
the expenditure required to settle the obligation at the statement of financial position date, and are discounted to
present value where the effect is material.
Financial guarantee contracts
Where the Group enters into financial guarantee contracts to guarantee the indebtedness of other parties, the
Group considers these to be insurance arrangements and accounts for them as such. The Group treats the guarantee
contract as a contingent liability until such time it becomes probable that the Group will be required to make a
payment under the guarantee.
Share based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments
are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of the shares expected to vest as a result of the effect of non-
market based vesting conditions.
For awards where vesting will be determined by market based vesting conditions, those granted prior to 1 January
2019 were fair value measured using a binomial pricing model. Monte-carlo modelling was used for awards granted
after 1 January 2019.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
Financial
Statements
137
2. Summary of accounting policies – continued
Employee benefits expense
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period
in which the associated services are rendered by the employees of the Group. A liability for a termination benefit is
recognised at the earlier of when an entity can no longer withdraw the offer of the termination benefit and the entity
recognises any related restructuring costs.
Distributions
Distributions are accounted for when they are paid, through retained earnings. Dividend income from investments
is recognised when the shareholders’ rights to receive payment have been established (provided that it is probable
that the economic benefits will flow to the Group and the amount of revenue can be measured reliably). Dividends
received from fellow subsidiaries are eliminated on consolidation.
Operating profit
Operating profit is stated after non-trading items arising from continuing operations.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s and Company’s accounting policies, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these amounts. The estimates and underlying assumptions are reviewed on an on-going basis.
Key sources of estimation uncertainty and critical accounting judgements are as follows:
Estimates
Post-employment benefits
The Group’s and Company’s total obligation in respect of defined benefit obligations is calculated by independent,
qualified actuaries, updated at least annually. The size of the obligation is sensitive to actuarial assumptions. These
include demographic assumptions covering mortality and longevity, and economic assumptions covering price
inflation, benefit and salary increases together with the discount rate used. The size of the scheme assets is also
sensitive to asset return levels and the level of contributions from the Group and Company. Further details are set out
in note 33.
The Group and Company is a participating employer in the Merchant Navy Officer Pension Fund (MNOPF), a multi-
employer defined benefit pension scheme. The MNOPF is in deficit. Under the rules of the fund all employers are
jointly and severally liable for the deficit. The deficit included in the Financial Statements for the Group and Company
represents an apportionment of the overall scheme deficit based on notification received from the trustees which is
currently 1.53% for the Group and 0.51% for the Company, less any deficit payments made. Should other participating
employers’ default on their obligations, the Group and Company will be required to absorb a larger share of the
scheme deficit calculated in the same manner as the current apportionment.
Useful lives for property, plant and equipment
Long-lived assets comprising primarily of property, plant and equipment represent a significant portion of total
assets. The annual depreciation and amortisation charge depends primarily on the estimated lives of each type of
asset and, in certain circumstances, estimates of residual values. Management regularly reviews these lives and
change them if necessary to reflect current conditions. In determining these useful lives management considers
technological change, patterns of consumption, physical condition and expected economic utilisation of the
asset. Changes in the useful lives or residual values may have a significant impact on the annual depreciation and
amortisation charge. Details of the useful lives are included in the accounting policy headed property, plant and
equipment. Further details are set out in note 13.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

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3. Critical accounting judgements and key sources of estimation uncertainty – continued
Critical accounting judgements
Impairment
The Group assessed its property, plant and equipment and intangible assets to determine if there were any
indications of impairment. Factors considered in identifying whether there were any indications of impairment
included the economic performance of assets, technological developments, new rules and regulations, shipbuilding
costs and carrying value versus market capitalisation of the Group. No internal or external indications of impairment
were identified for any material asset and consequently no impairment review was performed.
Leases – non-cancellable lease term and incremental borrowing rate
The Group has applied judgement in determining the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an
option to terminate the lease, if it is reasonably certain not to be exercised. The assessment of whether the Group
is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of
lease liabilities and right of use assets recognised. The Group also applies judgement in estimating the incremental
borrowing rate applicable to a lease.
Leases – incremental borrowing rate
The Group has applied judgement in estimating the incremental borrowing rate applicable to long-term land leases
with terms ranging from 77 to 103 years, periods significantly beyond normal borrowing periods available to the
Group and in the market generally. In these circumstances the incremental borrowing rate was estimated through
a combination of consideration of longer-term property yields and extrapolation of corporate bond yields for an
equivalent duration of the underlying lease.
Going Concern
The Directors have satisfied themselves that the Group and Company are going concerns having adequate financial
resources to continue in operational existence for the foreseeable future. In forming their view the Directors have
taken into consideration the future financial requirements of the Group and Company and available financial
resources comprising cash and available undrawn loan facilities.
Financial
Statements
139
4. Segmental information
Business segments
The Executive Board is deemed the chief operating decision maker within the Group. For management purposes, the
Group is currently organised into two operating segments; Ferries and Container & Terminal. These segments are the
basis on which the Group reports internally and are the only two revenue generating segments of the Group.
The Ferries segment derives its revenue from the operation of combined RoRo passenger ferries and the chartering
of vessels. The Container & Terminal segment derives its revenue from the provision of door-to-door and feeder LoLo
freight services, stevedoring and other related terminal services.
Segment information about the Group’s operations is presented below.
Inter-segment revenue is at prevailing market prices. The inter-segment revenue in the Ferries division in 2019 of €8.2
million (2018: €8.1 million) primarily relates to container vessels which are on time charter to the Group’s container
shipping subsidiary Eucon.
Revenue has been disaggregated into categories which reflect how the nature, amount, timing and uncertainty of
revenue and cash flows are affected by economic factors. As revenues are recognised over short time periods of
no more than days, a key determinant to categorising revenues is whether they principally arise from a business to
customer (passenger contracts) or a business to business relationship (freight and charter contracts) as this impacts
directly on the uncertainty of cash flows.
Ferries Container & Terminal Total
  
     
4. Segmental information – continued
For the year ended 31 December 2019 €338.8 million was recognised over time (2018: €312.0 million) and €18.6
million was recognised at a point in time (2018: €18.2 million). No single external customer in the current or prior
financial year amounted to 10 per cent or more of the Group’s revenues.
Ferries Container & Terminal Total
  
     
Result
Operating profit 36.4 34.2 13.6 12.1 50.0 46.3
Finance income 0.1 0.2 - - 0.1 0.2
Finance costs (2.0) (0.6) (1.5) (0.4) (3.5) (1.0)
Non-trading items 14.9 13.7 - - 14.9 13.7
Profit before tax 49.4 47.5 12.1 11.7 61.5 59.2
Income tax expense (0.4) (0.5) (0.9) (0.9) (1.3) (1.4)
Profit for the financial year 49.0 47.0 11.2 10.8 60.2 57.8
Statement of Financial Position
Assets
Segment assets 391.1 334.4 89.8 55.2 480.9 389.6
Cash and cash equivalents 79.8 94.5 31.1 30.2 110.9 124.7
Consolidated total assets 470.9 428.9 120.9 85.4 591.8 514.3
Liabilities
Segment liabilities 34.6 31.9 29.4 24.5 64.0 56.4
Borrowings 183.3 204.3 56.6 0.7 239.9 205.0
Consolidated total liabilities 217.9 236.2 86.0 25.2 303.9 261.4
Other segment information
Capital additions 43.8 79.1 2.0 3.5 45.8 82.6
Right of use asset additions - - 12.5 - 12.5 -
Depreciation and amortisation 30.8 19.4 6.0 2.7 36.8 22.1
Financial
Statements
141
4. Segmental information – continued
Ferries Container & Terminal Total
  
     
Operating expenses
Fuel 34.7 33.7 14.6 14.5 49.3 48.2
Labour costs 25.1 24.4 7.5 6.7 32.6 31.1
Port costs 41.9 39.7 30.9 29.4 72.8 69.1
Other costs 25.6 27.6 75.9 72.3 101.5 99.9
Intersegment costs (1.2) (1.2) (8.2) (8.1) (9.4) (9.3)
Total operating costs 126.1 124.2 120.7 114.8 246.8 239.0
Geographic analysis of revenue by origin of booking

 
Geographic analysis of location of property, plant and equipment

5. Employee benefits expense

The average number of employees during the financial year was as follows:
Ferries 218 218
Container & Terminal 91 92
309 310
The number of employees at the financial year-end was 307 311

 
Aggregate costs of employee benefits were as follows:
Wages and salaries 18.7 17.8
Social insurance costs 1.8 1.7
Defined benefit obligations – current service cost (note 33 vii) 1.5 1.7
Defined benefit obligations – curtailment gain (note 33 vii) (0.1) (0.5)
Defined contribution pension scheme – pension cost (note 33) 0.4 0.2
Share-based payment expense (note 32) 2.1 2.4
Total employee benefit costs incurred 24.4 23.3
Wages and salaries costs capitalised (0.1) (0.5)
Total employee benefit expensed in the Income Statement 24.3 22.8
Staff costs of €0.1 million were capitalised during the financial year (2018: €0.5 million) in relation to management
and supervision of the contracts for the construction of new vessels. Of the total employee expense of €24.3 million,
€0.5 million comprising €0.3 million wages and salaries and €0.2 million share based payment expense was included
within the non-trading item (note 10).
6. Finance income
 
Interest on bank overdrafts and loans 2.5 0.9
Interest on lease obligations 1.0 0.1
Net interest cost on defined benefit obligations (note 33 vii) - -
Total finance costs 3.5 1.0
8. Income tax expense

 
Current tax 1.2 1.5
Deferred tax (note 25) 0.1 (0.1)
Total income tax expense for the financial year 1.3 1.4
The Company and its Irish tax resident subsidiaries have elected to be taxed under the Irish tonnage tax scheme.
Under the tonnage tax scheme, taxable profit on eligible activities is calculated on a specified notional profit per day
related to the tonnage of the ships utilised. In accordance with the IFRIC clarification of tonnage taxes issued May
2009 the tonnage tax charge is not considered an income tax expense under IAS 12 Income Taxes, and has been
included in other operating expenses in the Consolidated Income Statement.
Domestic income tax is calculated at 12.5% of the estimated assessable profit for the year for all activities which do
not fall to be taxed under the tonnage tax scheme. Taxation for other jurisdictions is calculated at the rates prevailing
in the relevant jurisdictions. The income tax expense for the year includes a current tax charge of €1.2 million and a
deferred tax expense of €0.1 million.
The total tax expense for the financial year is reconciled to the accounting profit as follows:

 
10. Non-trading items
On 11 April 2019, the Company announced it entered into a hire purchase agreement for the sale of the vessel Oscar
Wilde, which had become surplus to operational requirements, to buyers MSC Mediterranean Shipping Company
SA for an agreed consideration of €28.9 million, payable in instalments over 6 years. The vessel was delivered to the
buyer on 25 April 2019.
The gross consideration of €28.9 million is receivable over 72 months. This amount less related commissions has
been discounted to estimated present value of €24.5 million at a discount rate of 4.0% and has been treated as a
finance lease receivable (note 16).
In the prior period the Group sold the fastcraft Jonathan Swift. As both vessels had been used in the Group’s Irish
tonnage tax trade, no tax arose on either disposal.
These gains on disposal of the vessels are included in the profit for the period and are disclosed as non-trading items
in the Consolidated Income Statement.

 
Consideration
Gross consideration 28.9 15.5
Gain on disposal of vessel
Consideration (net of commissions) 28.2 15.1
Effect of discounting (3.7) -
Present value of net consideration (note 16) 24.5 15.1
Disposal costs (0.5) (0.1)
Employee benefit costs associated with disposal (0.5) (0.2)
Net proceeds 23.5 14.8
NBV of vessel disposed of (8.6) (1.1)
Gain on disposal 14.9 13.7
The total amount included in the Consolidated Cashflow Statement in respect of the disposal of the Oscar Wilde in
the period ended 31 December 2019 is €1.6 million. This comprises instalments received net of leasing income of €2.4
million (note 16) less disposal costs of €0.5 million and the cash element of the employee benefit cost €0.3 million. In
the prior period the full net proceeds relating to the sale of the Jonathan Swift of €14.8 million were received in the
period.
11. Dividends

 
Final dividend of 8.56c per ICG Unit for financial year ended 31 December 2018 (2017: 8.15c) 16.3 15.5
Interim dividend of 4.42c per ICG Unit for the financial year ended 31 December 2019 (2018:4.21 c) 8.4 8.0
24.7 23.5
The Board is proposing a final dividend of 8.99 cent per ICG Unit amounting to €16.8 million in respect of the results
for the financial year ended 31 December 2019.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

146
12. Earnings per share

’000 ’000
Weighted average number of ordinary shares for the purposes of basic earnings per share 189,797 190,037
Effect of dilutive potential ordinary shares: Share options 1,143 1,405
Weighted average number of ordinary shares for the purpose of diluted earnings per share 190,940 191,442
The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to
reflect shares issued during the year (note 20).
The earnings used in both the adjusted basic and adjusted diluted earnings per share are adjusted to take into
account the net interest on defined benefit obligations (note 33) and the effect of non-trading items after tax.
The prior year reported adjusted basic earnings per share and adjusted diluted earnings per share has been
represented to include the tax effect on non-trading items.
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is
based on the following data:

 
Earnings
Earnings for the purposes of basic and diluted earnings per share -
Profit for the financial year attributable to equity holders of the parent 60.2 57.8
Non-trading item after tax (note 10) (14.9) (13.7)
Net interest cost on defined benefit obligations (note 33 vii) - (0.1)
Earnings for the purposes of adjusted basic and diluted earnings per share 45.3 44.0

Cent Cent
Basic earnings per share 31.7 30.4
Diluted earnings per share 31.5 30.2
Adjusted basic earnings per share 23.8 23.1
Adjusted diluted earnings per share 23.7 23.0
Diluted earnings per ordinary share
Diluted earnings per Ordinary Share is calculated by adjusting the weighted average number of Ordinary Shares
outstanding to assume the exercise of all vested share option awards at 31 December. Share option awards which
have not yet satisfied the required performance conditions for vesting are excluded from the calculation. The dilutive
effect of vested share options is calculated as the difference in the average market value during the period and the
option price. Share options outstanding at 31 December are set out in note 32. Of the 2,496,500 (2018: 2,399,000)
vested options at 31 December 2019, the dilutive effect is 1,143,000 ordinary shares (2018: 1,405,000 ordinary
shares).
Financial
Statements
147
13. Property, plant and equipment
Assets under
Construction Vessels
Plant
Equipment
and Vehicles
Land and
Buildings Total
    
Assets previously designated as held under finance leases under the previous leasing standard were reclassified as
right of use assets on the initial application of IFRS 16: Leases at 1 January 2019. Further information is provided at
note 30.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

148
13. Property, plant and equipment – continued
In accordance with IAS 16, the property, plant and equipment of the Group and Company has been reviewed in
relation to the residual values used for the purpose of depreciation calculations. In considering residual values of
passenger ships, the Directors have taken into consideration the valuation of the scrap value of the ships per light
displacement tonne. Residual values are reviewed annually and updated where the Directors consider the latest
estimates of residual value estimates would lead to a significant change in depreciation charges.
Estimations of economic life and residual values of ships are a key judgemental estimate in the financial statements.
A 10% increase/ decrease in residual values of ships would have a €0.2 million (2018: €0.2 million) decrease/ increase
on depreciation in the Consolidated Income Statement and a €0.2 million (2018: €0.2 million) increase/ decrease
on the carrying value of property, plant and equipment in the Statement of Financial Position. In relation to the
remaining estimated economic life of the ships, a one year increase/ decrease would have a €0.8 million (2018: €1.6
million) decrease/ €1.0 million (2018: €2.3 million) increase in depreciation in the Consolidated Income Statement,
and a €0.8 million (2018: €1.6 million) increase/ €1.0 million (2018: €2.3 million) decrease on the carrying value of
property, plant and equipment in the Statement of Financial Position.
Assets under construction at 31 December 2019 amounted to €6.9 million of which €6.4 million relates to a vessel
under construction and the balance relates to other works. Deposits paid for the construction or delivery of assets
in excess of work completed at the Statement of Financial Position date are treated as prepayments and included in
Trade and other receivables.
During the year the vessel W.B. Yeats, which had been delivered to the Group in December 2018, completed final
certifications entering service on 22 January 2019. Costs related to this vessel of €156.9 million were reclassified
from Assets under Construction to Vessels on final certification.
During the year ended 31 December 2019 additions to assets under construction included staff costs of €0.1 million
(2018: €0.5 million) and interest costs of €1.4 million (2018: €1.6 million).
14. Intangible assets

 
Cost
The Group’s applied IFRS: 16 Leases with effect from 1 January 2019 as set out at note 2 Accounting Policies. At
initial application, the Group recognised right of use assets and related lease liabilities by adjusting the opening
balances brought forward from the Statement of Financial Position reported at 31 December 2018. The impact of the
application of IFRS 16 is set at note 30.
Right of use assets are depreciated on a straight line basis over the lease term. Vessels include a lease contract
expiring in November 2020 over which the Group retains an option to renew for a further year which at 31 December
2019, it was not reasonably certain that this option would be exercised. Plant and equipment mainly relates to
containers used in the Group’s container fleet leased under various master agreements with an average remaining
term of 3.1 years. Land and buildings comprised (i) leased land at Dublin Port from which the Group operates a
container terminal where the average remaining lease term was 95 years and (ii) a concession agreement at Belfast
Harbour from which the Group operates a container terminal where the average remaining lease term was 6.7 years.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

150
16. Lease receivable

 
At 1 January 2019 - -
Sale of vessel (note 10) 24.5 -
Amounts received (2.9) -
Net benefit recognised in period 0.5 -
At 31 December 2019 22.1 -
During the period, the Group entered into a bareboat hire purchase sale agreement for the disposal of the vessel
Oscar Wilde (note 10). Legal title to the vessel transfers to the lessor only on payment of the final instalment. The
deferred consideration has been treated as a finance lease receivable at an amount equivalent to the net investment
in the lease.
Amounts received less the net benefit recognised in the period, a total of €2.4 million has been recognised in the
Consolidated Statement of Cashflows as proceeds on disposal of property, plant and equipment (see note 10).
The amounts receivable under the agreement at 31 December were as follows;

 
Within one year 3.6 -
Between 1 and 2 years 3.6 -
Between 2 and 3 years 3.6 -
Between 3 and 4 years 3.6 -
Between 4 and 5 years 3.6 -
Greater than 5 years 7.3 -
Undiscounted payments receivable 25.3 -
Unearned income (3.2) -
Present value of payments receivable / Net investment in the lease 22.1 -
Analysed as:
Current finance lease receivable 2.7 -
Non – current finance lease receivable 19.4 -
22.1 -
The Group is not exposed to foreign currency risk as a result of the lease arrangement, as it is denominated in Euro.
Residual value risk on the vessel under lease is not significant, because of the existence of a secondary market in
vessels.
The Directors of the Company estimate the loss allowance on the finance lease receivable at 31 December at an
amount equal to lifetime expected credit losses. None of the finance lease receivable at 31 December 2019 was past
due, and taking into account the historical payment experience together with the retention of legal title the Directors
of the Group consider that no provision for expected credit losses is required.
Financial
Statements
151
17. Inventories

Fuel and lubricating oil 2.8 2.9
Catering and other stocks 0.3 0.4
3.1 3.3
The Directors consider that the carrying amount of inventories approximates their replacement value.
Cost of inventories recognised as an expense in the Consolidated Income Statement amounted to €57.1 million during
the financial year (2018: €55.0 million).
18. Trade and other receivables

 
Trade receivables 44.8 40.3
Allowance for expected credit losses (1.5) (1.4)
43.3 38.9
Prepayments 43.4 35.3
Finance Lease receivable (note 16) 2.7 -
Other receivables 3.0 1.5
92.4 75.7
The Group and Company extend credit to certain trade customers after conducting a credit risk assessment. Year-
end trade receivables represent 46 days sales at 31 December 2019 (2018: 45 days). Prepayments includes €28.9
million relating to a €33.0 million deposit on a vessel under construction less amount recognised in property plant
and equipment and further amounts of €8.1 million relating to deposits on capital works due to be carried out post
year end.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

152
18. Trade and other receivables – continued
The Group’s trade receivables are analysed as follows:
Gross value
Expected
Credit
Losses Net value Gross value
Expected
Credit
Losses Net value
2019 2019  2018 2018
     
Not past due
Risk of expected credit losses
The Group has applied the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant financing component. The concentration of credit risk is limited
due to the exposure being spread over a large number of counterparties and customers. In measuring the expected
credit losses, the trade receivables have been grouped by shared credit risk characteristics and by days past due. The
expected loss rates are heavily influenced by the past rate of actual credit losses. Trade receivables are written off
when there is no reasonable expectation of recovery.
Movement in the allowance for doubtful debts

 
Balance at beginning of the financial year 1.4 1.5
Increase/(decrease) in allowance during the financial year 0.1 (0.1)
Balance at end of the financial year 1.5 1.4
The amount included in prepayments relating to a shipyard deposit is secured through letters of credit issued by
high quality insurers. In relation to the amounts paid as deposits on other capital works, significant progress on these
works had been completed by the financial statement approval date. No allowance has been made for expected
credit losses on prepayments and other receivables as they were assessed as not being impaired at 31 December
2019.
Financial
Statements
153
19. Cash and cash equivalents
For the purposes of the statement of cashflows, cash and cash equivalents include cash on hand and in banks net of
outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement
of cashflows:

 
Cash and cash equivalents 110.9 124.7
Cash and cash equivalents comprise cash held by the Group and Company and short-term bank deposits with an
original maturity of three months or less. The carrying amount of these assets approximates their fair value. 95% of
the cash and cash equivalents were on deposit in institutions rated A2 or above by Moodys. The Directors consider
the credit risk of these counterparties to be compatible with the Group’s credit policy and operational requirements.
The geographic spread by deposit institution for the Group was as follows:

20. Share capital – continued
There were no redeemable shares in issue at 31 December 2019 or 31 December 2018.
The Company has one class of share unit, an ICG Unit, which at 31 December 2019 comprised one ordinary share and nil
redeemable shares. The share unit, nor any share therein, does not carry any right to fixed income.
The number of ICG Units issued during the year was 55,000 (2018: 270,000) and total consideration received amounted
to €0.1 million (2018: €0.6 million). These ICG Units were issued under the Group’s and Company’s share option plans.
During the year the Company bought back 2,900,000 ICG Units on the market for prices ranging between €4.20 to
€4.50 per ICG Unit. Total consideration paid of €12.9 million which was charged against retained earnings. The nominal
value of the shares cancelled of €0.2 million was retained in a capital redemption reserve. The buybacks were conducted
in line with the Group’s capital management policy at prices which the directors considered were in the best interests of
the remaining shareholders.
Holders of ordinary shares are entitled to such dividends that may be declared from time to time on such shares and are
entitled to attend, speak and vote at the Annual General Meeting of the Company. On return of capital on a winding up,
the holder of ordinary shares is entitled to participate in a distribution of surplus assets of the Company.
Redeemable shares do not entitle holders to any dividend nor any right to participate in the profit or assets of the
Company other than to the repayment of a sum equal to the nominal value of 0.001 cent per share on a winding up of the
Company. Redeemable shares do not entitle the holder to attend, speak or vote at the Annual General Meeting.
21. Analysis of Equity
Group and Company
Share premium
The share premium account comprises the excess of monies received in respect of share capital over the nominal value of
shares issued.
Capital reserves
This consists of reserves arising on consolidation and the capital redemption reserve.
Reserves arising on consolidation relate to the acquisition of a subsidiary. At 31 December 2018 the reserve balance
stands at €0.1 million. The balance is unchanged from, 1 January 2018 and 1 January 2019.
The capital redemption reserve represents the nominal value of share capital repurchased. During the year €0.2 million
was transferred from retained earnings representing the nominal value of shares cancelled. At 31 December 2019 the
reserve balance stands at €7.4 million (2018: €7.2 million).
Share options reserve
The share options reserve represents the cumulative charge to the Consolidated Income Statement of share options
issued which are not yet exercised and issued as shares.
Hedging reserve
The hedging reserve represents the cumulative amount of gains and losses on hedging instruments arising from effective
cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in the Income Statement
only when the hedged transaction impacts the profit or loss, or is included as a basis adjustment to the non-financial
hedged item, consistent with the applicable accounting policy.
Translation reserve
Exchange differences relating to the translation of the net assets and results of the Group’s foreign currency denominated
subsidiaries, from their functional currency into the Group’s presentational currency, being Euro, are recognised directly
in the translation reserve.
Financial
Statements
155
22. Borrowings

 
22. Borrowings – continued
Amounts outstanding at 31 December 2018 were transferred to lease liabilities on the application of IFRS 16 Leases.
The average effective borrowing rate for the financial year ended 31 December 2018 was 5.5%. Interest rates had
been fixed at the contract date exposing the Group to fair value interest rate risk. All leases were on a fixed interest
repayment basis.
Borrowing facilities

 
Overdraft and trade guarantee facilities
Amounts utilised – trade guarantee (note 37) 0.6 0.6
Amounts undrawn 15.4 15.4
Total committed overdraft facilities 16.0 16.0
Committed loan facilities
Amounts drawn 205.0 205.0
Amounts undrawn 75.0 75.0
Total committed loan facilities 280.0 280.0
Uncommitted Facilities 244.8 240.2
At 31 December the Group had total committed loan and overdraft facilities of €296.0 million (2018: €296.0 million)
which comprised of amounts utilised of €205.6 million (2018: €205.6 million) and amounts undrawn of €90.4 million
(2018: €90.4 million). Uncommitted facilities relate to bank and private placement shelf agreements which are
available for drawing at the discretion of the relevant lender. All borrowings at 31 December 2019 were unsecured
and cross guaranteed by certain subsidiaries within the Group.
The Group’s borrowing facilities comprise of the following;
(i)	
A bank overdraft and trade guarantee facility with permitted drawing amounts of €16.0 million. At 31 December
2019, €0.6 million (2018: €0.6 million) was utilised on this facility by way of trade guarantees and €nil was utilised
as an overdraft. Interest rates are calculated by reference to the lender’s prime rate plus a fixed margin. This
facility, available for drawing by the Company and certain subsidiaries, is reviewed annually and is repayable on
demand.
(ii)	
A multicurrency revolving credit facility with permitted drawing amounts of €75.0 million, which may be
increased to €125.0 million in total at the discretion of the lenders on application. At 31 December 2019, €nil
(2018: €nil) was drawn under this facility. Interest rates are arranged at floating rates, calculated by reference to
EURIBOR or LIBOR settings depending on currency drawn plus an agreed margin which varies with the Group’s
net debt to EBITDA ratio, which creates a cash flow interest rate risk. This facility is available for drawing by
the Company and certain subsidiaries and matures on 30 September 2024, having been extended by one year
during 2019.
(iii)	
Amortising term loan facilities totalling €155.0 million made available by the European Investment Bank to fund
the construction of two new cruise ferries one of which was delivered in December 2018 and the second being
under construction. These facilities have been drawn in full and are repayable in equal instalments over a ten
year period commencing December 2020 and ending during 2030. Interest rates are fixed for the duration of the
term at rates ranging from 1.616% to 1.724%.
Financial
Statements
157
22. Borrowings – continued
(iv)	
Multicurrency private placement loan note shelf agreements agreed with a number of investors with a potential
drawing amount of €244.8 million. Loan notes for a total amount of €50.0 million with a maturity of 30
November 2024 at an interest rate of 1.40% have been issued under this facility. The remaining balance of €194.8
million total is available for drawing at the discretion of investors for an initial period up to 6 October 2020.
Interest rates are set at each drawing date and maturity may extend for up to 15 years.
The weighted average interest rates paid during the financial year were as follows:

Bank overdrafts 0.58% 0.63%
Bank loans 1.58% 1.55%
The average interest rates reflect the terms of the refinancing arrangements concluded in prior periods. No
additional bank loans were drawn during 2019. Interest rates on all bank loans drawn in prior periods were fixed at
date of drawdown. The Group’s financing facilities contain provisions that where there is a change in control of the
Company, lenders may cancel the facilities and declare all utilisations immediately due and payable. A change of
control is where any person or Group of persons acting in concert becomes the owner of more than fifty per cent of
the voting share capital of the Company.
In the opinion of the Directors, the Group and Company are in compliance with the covenants contained in its
borrowing agreements as of 31 December 2019.
23. Lease liabilities

 
At 31 December 2018 - -
Initial application of IFRS 16 32.0 -
Liabilities created 12.5 -
Payments (10.0) -
Lease interest expense recognised in period 1.0 -
Currency Adjustment 0.5 -
At 31 December 2019 36.0 -
Analysed as:
Current liabilities 8.4 -
Non-current liabilities 27.6 -
36.0 -
The Group applied IFRS 16 Leases with effect from 1 January 2019 as set out at note 2 Accounting Policies. At
initial application, the Group recognised right of use assets and related lease liabilities by adjusting the opening
balances brought forward from the Statement of Financial Position reported at 31 December 2018. The impact of the
application of IFRS 16 is set out at note 30.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

158
23. Lease liabilities – continued
The maturity profile of lease liabilities is set out below.

Committed lease obligations:
Within one year 8.4 0.3
Between 1 and 2 years 2.9 0.7
Between 2 and 3 years 2.5 -
Between 3 and 4 years 2.3 -
Between 4 and 5 years 2.2 -
Greater than 5 years 17.7 -
36.0 1.0
Outstanding lease terms vary from 1 to 7 years except in the case of leasehold land where the terms vary between
76 and 102 years. For the financial year ended 31 December 2019, the average incremental borrowing rate applying
to lease liabilities was 3.1%. The incremental borrowing rate in the case of lease liabilities recognised on application
of IFRS 16 was estimated at 1 January 2019 and in all other cases at the date of commencement of the lease. The
incremental borrowing rate is estimated as that rate of interest available to the Group for borrowings over a similar
term as the obligation to acquire a similar asset. The Group’s obligations are secured by lessors’ title to the leased
assets.
All lease contracts relating to land and property contain market review clauses.
Lease obligations do not include any variable payments based on throughput of leased facilities, short term leases of
less than 1 year or leases relating to low value assets. These are expensed as incurred and disclosed at note 9.
24. Financial instruments and risk management
The Group’s activities expose it to a variety of financial risks including market risk (such as interest rate risk, foreign
currency risk, commodity price risk), liquidity risk and credit risk. The Group’s funding, liquidity and exposure to
interest and foreign exchange rate risks are managed by the Group’s treasury and accounting departments. A
combination of derivative financial instruments and treasury management techniques are used to manage these
underlying risks.
(i) Categories of financial instruments
Financial assets and liabilities
2019 Loans and
receivables
at amortised
cost
Financial
liabilities at
amortised
cost
Carrying
value Fair value
   
   
Trade and other receivables 75.7 - 75.7 75.7
Cash and cash equivalents 124.7 - 124.7 124.7
Borrowings - 205.0 205.0 205.2
Trade and other payables - 49.7 49.7 49.7
Fair value hierarchy
The fair value of financial assets and financial liabilities that are carried in the Statement of Financial Position at fair
value, are classified within Level 2 (2018: Level 2) of the fair value hierarchy as market observable inputs (forward
rates and yield curves) which are used in arriving at fair values.
The Group has adopted the following fair value measurement hierarchy for financial instruments:
• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;
• Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are
observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
The following are the significant methods and assumptions used to estimate fair values of financial assets and
financial liabilities:
Trade and other receivables / payables
For trade receivables and trade payables, with average settlement periods of 46 days (2018: 45 days) and 65 days
(2018: 71 days) respectively, the carrying value less allowance for expected credit losses, where appropriate, is
estimated to reflect fair value.
Cash and cash equivalents
For cash and cash equivalents, all with a maturity of three months or less, the nominal amount is estimated to reflect
fair value.
Borrowings
The fair value of bank loans has been determined based on a discounted cash flow analysis with the most significant
input being the discount rate reflecting the Group’s own credit risk. For finance leases the Group considers that the
incremental borrowing cost used to calculate the carrying value includes a fair estimate of counterparty risk and the
carrying value approximates fair value.
Derivative financial instruments
There are no derivative financial instruments outstanding at 31 December 2019 and 31 December 2018.
(ii) Interest rate risk
At 31 December 2019, interest rates on short term bank deposits were contracted for terms of less than three months
at average effective rates of 0.1% (2018: 0.0%).
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

160
24. Financial instruments and risk management – continued
The interest rates on all Group borrowings at 31 December 2019 comprising loan notes and term loans has been fixed
at contracted rates at the date of drawdown with the relevant lender eliminating exposure to interest rate risk on
borrowings. The average interest rate at 31 December 2019 was 1.60% (2018: 1.62%) for remaining terms of between
4.9 and 11 years. At 31 December 2018 borrowings also included finance leases where interest rates had been fixed at
date of inception eliminating exposure to interest rate risk on finance leases.
The interest rates on all lease liabilities at 31 December 2019 were fixed at the incremental borrowing rate at the later
of the IFRS 16 effective application date of 1 January 2019 or lease commencement date eliminating exposure to
interest rate risk on lease liabilities. The average interest rate at 31 December 2019 on outstanding lease liabilities was
3.1% (2018: n/a) for remaining lease terms of between 11 months and 101 years.
Sensitivity to interest rates
As all of the Group’s borrowings are fixed for the full remaining borrowing terms the Group has not prepared
calculations to measure the estimated effect of changes in market interest rates on the Consolidated Income
Statement and Equity Review.
(iii) Foreign currency risk management
The Group publishes its consolidated financial statements in Euro and conducts business in different foreign
currencies. As a result, it is subject to foreign exchange risk due to exchange rate movements which will affect
the Group’s transaction costs and the translation of the results and underlying net assets of its foreign operations.
Exchange rate exposures are managed within approved policy parameters. The Group did not utilise forward foreign
exchange contracts during the year ended 31 December 2019 or 2018.
Sensitivity
The currency risk sensitivity analysis is set out below
Under the assumptions; (i) a 10% strengthening in Euro exchange rates against all currencies, profit before tax would
have increased by €2.9 million (2018: increase of €0.7 million) and equity (before tax effects) would have increased by
€0.7 million (2018: decrease of €1.3 million); (ii) a 10% weakening in Euro exchange rates against all currencies, profit
before tax would have decreased by €3.5 million (2018: decrease of €0.9 million) and equity (before tax effects)
would have decreased by €0.9 million (2018: increase of €1.6 million).
The currency profile of the carrying amounts of the Group’s monetary assets and monetary liabilities at the statement
of financial position date are as follows:
2019 Euro Sterling US Dollar Total
   
24. Financial instruments and risk management – continued
2018 Euro Sterling US Dollar Total
(iv) Commodity price risk
In terms of commodity price risk the Group’s vessels consume heavy fuel oil (HFO), marine diesel / gas oil (MDO/
MGO) and lubricating oils, all of which continue to be subject to price volatility. The Group must also manage the
risks inherent in changes to the specification of fuel oil which are introduced under international and EU law from
time to time.
The Group’s policy has been to purchase these commodities in the spot markets and to remain unhedged. In the
Container & Terminal division movements in fuel costs are offset to a large extent by the application of prearranged
price-adjustments with our customers. Similar arrangements are in place with freight customers in the Ferries
division. In the passenger sector, changes in fuel costs are included in the ticket price to the extent that market
conditions will allow.
(v) Liquidity risk
The Group and Company is exposed to liquidity risk which arises primarily from the maturing of short-term and
long-term debt obligations and derivative transactions. The Group and Company’s policy is to ensure that sufficient
resources are available either from cash balances, cash flows or undrawn committed bank facilities, to ensure all
obligations can be met as they fall due. To achieve this objective, the Group and Company:
• monitors credit ratings of institutions with which the Group and Company maintains cash balances;
• limits maturity of cash balances; and
• borrows the bulk of its debt needs under committed bank lines or other term financing and by policy maintains a
minimum level of undrawn committed facilities.
At each year end, the Group’s rolling liquidity reserve (which comprises cash and undrawn committed facilities and
which represents the amount of available cash headroom in the Group funding structure) was as follows:

 
Cash and cash equivalents 110.9 124.7
Committed undrawn facilities 90.4 90.4
Liquidity reserve 201.3 215.1
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

162
24. Financial instruments and risk management – continued
Management monitors rolling cash flow forecasts on an on-going basis to determine the adequacy of the liquidity
position of the Group. This process also incorporates a longer-term liquidity review to ensure refinancing risks are
adequately catered for as part of the Group’s strategic planning.
Liquidity analysis
The following table sets out the maturity and liquidity analysis of the Group’s financial liabilities into the relevant
maturity groupings based on the remaining period at the statement of financial position date to the contractual
maturity date:
Liquidity Table
(vi) Credit risk
The Group and Company monitors its credit exposure to its counterparties via their credit ratings (where applicable)
and where possible limits its exposure to any one party to ensure that there are no significant concentrations
of credit risk. Notwithstanding due to the nature of the underlying transaction there is a material exposure to a
single counterparty in relation to the lease receivable. Mitigation of this exposure is explained at note 16. Credit
risk in relation to trade and other receivables and cash and cash equivalents has been discussed in notes 18 and
19 respectively. The maximum exposure to credit risk is represented by the carrying amounts in the Statement of
Financial Position.
(vii) Capital management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the overall cost of capital.
No changes were made in the objectives, policies or processes for managing capital during the financial years ended
31 December 2019 and 31 December 2018.
Financial
Statements
163
24. Financial instruments and risk management – continued
The capital structure of the Group consists of net cash (borrowings as detailed in note 22 offset by cash and cash
equivalents) and equity of the Group (comprising issued capital, reserves and retained earnings as detailed in notes
20 and 21).
The Group is not subject to any externally imposed capital requirements.
In managing its capital structure, the primary focus of the Group is the ratio of consolidated net debt as a multiple of
EBITDA. Maximum levels for this ratio are set under Board approved policy so as to ensure compliance with banking
covenants under the Group’s borrowing agreements. These policy requirements were achieved at 31 December 2019
and 31 December 2018. At 31 December 2019, the net debt position of the Group was €129.0 million (2018: net cash of
€80.3 million). The ratio of consolidated net debt as a multiple of EBITDA (before non-trading items) in 2019 was 1.5
times (2018: 1.2 times).
(viii) Derivative financial instruments
The interest rate on Group borrowings outstanding at 31 December 2019 and throughout the period and the prior
period had been fixed at contracted rates with the lenders. Consequently the Group did not utilise any interest rate
swaps during 2019.
The Group and Company utilises currency derivatives to hedge short term future cash flows in the management of its
exchange rate exposures. At 31 December 2019 and 31 December 2018, there were no outstanding forward foreign
exchange contracts.
25. Deferred tax liabilities
The Company and its subsidiaries, where appropriate, have elected to be taxed under the Irish tonnage tax scheme
in respect of all eligible shipping activities. Certain activities will not fall within the tonnage tax scheme and will
continue therefore to be subject to standard rates of corporation tax. These activities give rise to deferred tax assets
and liabilities and the impact of these is shown below.
In both the Group and the Company, taxable losses in excess of expected future reversing taxable temporary
differences have been incurred that are available for offset against future taxable profits. Deferred tax assets are
recognised to the extent that it is probable that future taxable profit will be available against which the unused tax
losses and unused tax credits can be utilised. A deferred tax asset has not been recognised in respect of these losses
where suitable taxable profits are not expected to arise. The Group estimates the probable amount of future taxable
profits, using assumptions consistent with those employed in the Group’s financial planning process, and taking into
consideration applicable tax legislation in the relevant jurisdiction. These calculations require the use of estimates.
The Group has not provided deferred tax in relation to temporary differences applicable to investments in
subsidiaries on the basis that the Group can control the timing and realisation of these temporary differences and it is
probable that the temporary difference would be immaterial and will not reverse in the foreseeable future.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

25. Deferred tax liabilities – continued
The following are the deferred tax liabilities and assets recognised by the Group, and the movements thereon, during
the current and prior reporting periods.
2019 Accelerated
tax
depreciation
Retirement
benefit
obligation Total
  
Trade payables and accruals comprise amounts outstanding for trade purchases and on-going costs and are non-
interest bearing. They also include deferred revenue amounts of €5.0 million (2018: €3.8 million) relating to cash
received relating to performance obligations outstanding not yet complete by the Group.
The average trade credit period outstanding was 65 days at 31 December 2019 (2018: 71 days). Certain suppliers
reserve the right to charge interest on balances past their due date.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit
timeframe.
Financial
Statements
165
27. Provisions

 
CThe claims provision comprises (i) the insurance excess payable by the Group and Company in a number of potential
compensation claims, arising in the normal course of business. No provision has been recognised for instances
that may have been incurred prior to the financial year-end, but for which no claim has been received (ii) ex-gratia
discounts which can be claimed by customers against future travel the timing and presentation of which are
uncertain.
28. Commitments

 
Commitments for the acquisition of property, plant and equipment – approved and
contracted for not accrued
Approved and contracted 185.1 136.3
Less accrued at 31 December (note 13) (41.0) -
Approved and contracted for not accrued 144.1 136.3
29. Operating lease obligations

 
Commitments at 31 December 2019 relate to short term vessel charter and container hire obligations. An expense of
€6.7 million (2018: €15.5 million) was recognised in the period under operating leases where the related rights were
not recognised as a right to use asset. The 2019 operating lease expense is analysed as follows;
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

166
29. Operating lease obligations – continued

Short term leases of terms of less than one year 6.1
Variable lease payments not included in the measurement of lease liabilities 0.6
6.7
The Group applied IFRS 16 Leases, which replaced IAS 17, with effect from 1 January 2019 as set out at note 2
Accounting Policies. At initial application, the Group recognised right of use assets and related lease liabilities by
adjusting the opening balances brought forward from the Statement of Financial Position reported at 31 December
2018. A reconciliation of previously reported operating lease commitments at 31 December 2018 is set out at note 30.
30. Impact of first time application of IFRS16: Leases
The Group’s approach to the application of IFRS 16 Leases with effect from 1 January 2019 is set out at note 2
Accounting Policies. At initial application, the Group recognised right of use assets and related lease liabilities by
adjusting the opening balances brought forward from the Statement of Financial Position reported at 31 December
2018. The impact of the application of IFRS 16 is set out below.
(i) Reconciliation of opening lease obligations
A reconciliation of the previously reported operating lease commitments of €70.9 million at 31 December 2018 to the
opening lease obligations at Note 30 is set out below;

Operating lease contractual commitments at 31 December 2018 70.9
Commitments relating to extension options not contracted for at 31 December 2018 and assessed as
reasonably certain to be exercised as at 1 January 2019 5.7
Commitments related to leases previously classified as finance leases 1.1
Commitments relating to leases treated as short term leases (0.7)
Gross lease commitments at 1 January 2019 77.0
Effect of discounting (45.0)
Lease liability at 1 January 2019 32.0
Present value of lease commitments previously classified as finance leases (1.0)
Lease liabilities recognised on adoption of IFRS 16 31.0
Financial
Statements
167
Assets
Non-Current assets
Property, plant and equipment 307.7 (1.2) 306.5
Right of use assets - 32.2 32.2
Non-Current liabilities
Borrowings 204.7 22.6 227.3
Current liabilities
Borrowings 0.3 8.4 8.7
(iii) Effect on the Income Statement from the date of adoption of IFRS 16 compared to IAS 17 in the period
The effects of the reported result for the year ended 31 December 2019 from applying the new accounting policy
compared to the previous policy are set out below.

Reduction in operating lease expenses included in other operating costs (9.4)
Reduction in depreciation of property, plant and equipment (0.5)
Increase in depreciation and amortisation expense arising from depreciation of right of use assets 9.1
Increase in finance costs 1.0
Net decrease in profit before tax in the period 0.2
The effect of the net decrease in profit before tax was to decrease 2019 basic earnings per share and diluted earnings
per share by 0.1 cent.
(iv) Incremental borrowing rates at date of adoption
The incremental borrowing rates used to value lease liabilities relating to right to use assets recognised at the date of
adoption of IFRS 16 are set out below.
Lease terms of between 1 and 5 years Lease terms of between 77 and 103 years
Euro 1.50% 4.10% to 4.25%
Sterling 2.65% to 2.72% -
US Dollar 4.25% to 4.32% -
There were no leases at the date of adoption with terms ending between 6 and 76 years.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

168
31. Operating lease income
The aggregate future minimum lease payments receivable under non-cancellable operating leases are as follows:

 
Within 1 year 2.7 0.2
The lease payments receivable relate to the charter of container vessels.
32. Share-based payments
The Group operates two equity settled share option schemes under which certain employees have been issued with
share options as described below.
The Performance Share Plan (“PSP”) is the active plan under which option awards may be granted. Details of the
award and vesting conditions are set out in the Report of the Remuneration Committee. Vesting is contingent on
market conditions such as total shareholder return and non-market conditions such as earnings per share, free cash
flow and return on average capital employed. During the year 782,500 options were granted under the PSP with a
vesting period of 3 years.
The 2009 Share Option Plan remains in place with respect to outstanding grants made prior to 2016 but no new
grants will be made following the adoption of the PSP. During the year grants of second tier options over 152,500 ICG
Units at an exercise price of €2.97 granted on 1 September 2014 were determined to have vested.
The number of shares over which options may be granted may not exceed 10% of the shares of the Company in issue.
Options are forfeited where the grantee ceases employment with the Group or Company unless retention, is
permitted by the Remuneration Committee under good leaver rules. The Scheme Rules allow for the early exercise of
outstanding options upon a change in control of the Company.
The number and weighted average exercise price of share options granted under the above plans is as follows:
2019  2018
Number of share
options
Weighted average
exercise price
Number of share
options
Weighted average
exercise price
€ €
Outstanding at 1 January 5,144,285 1.86 4,852,500 2.11
Granted during the year 782,500 0.065 670,500 0.065
Exercised during the year (55,000) 2.97 (270,000) 1.97
Forfeited during the year - - (108,715) 1.68
Outstanding at 31 December 5,871,785 1.61 5,144,285 1.86
Exercisable at 31 December 2,496,500 2.40 2,399,000 2.41
Weighted average share price
at date of exercise of options 4.67 4.45
Weighted average remaining contractual
life of options outstanding at year-end 2.8 Years 3.9 Years
In settlement of the options exercised during the year the Company issued 55,000 (2018: 270,000) new ICG units
with none sourced through market purchase.
Financial
Statements
169
32. Share-based payments – continued
The exercise prices of options outstanding at 31 December are as follows:
 Price
Options Options €
Exercisable:
2009 Share Option Plan
Vested Options 1,361,500 1,361,500 1.570
Vested Options 230,000 132,500 2.970
Vested Options 905,000 905,000 3.580
Exercisable at 31 December 2,496,500 2,399,000
Not Yet Exercisable:
2009 Share Option Plan
Second Tier Options (1) - 152,500 2.970
Second Tier Options (1) 905,000 905,000 3.580
Performance Share Plan (2) 2,470,285 1,687,785 0.065
Outstanding at 31 December 5,871,785 5,144,285
Notes on vesting conditions
1. Second Tier Options under the 2009 Share Option Plan will vest and become exercisable from the fifth
anniversary of grant once (i) Earnings Per Share growth over any period of five consecutive financial years
commencing at the financial year immediately preceding the date of grant place the Company in the top quartile
of companies either (a) listed on Euronext Dublin or (b) included in the London Stock Exchange FTSE 250, by
reference to Earnings Per Share growth over the same period and (ii) over that period the Earnings Per Share
growth is at least 10% above the increase in the Consumer Price Index compounded per annum over such period.
2. Vesting of options under the Performance Share Plan are contingent on the achievement of certain market and
non-market performance hurdles set out in the Report of the Remuneration Committee.
Under Group equity-settled share based payment schemes the maximum life of a share option is ten years, these
are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. Fair
value was measured using the Binomial option pricing model for options granted prior to 31 December 2018. For
options granted after 1 January 2019, fair value has been estimated using Monte-Carlo simulation modelling. The
Directors consider the change in valuation technique better reflects the underlying features of the PSP. The effect
of the change on the cumulative share option expense in prior periods represented by the share option reserve at 1
January 2019 has been estimated as not material and previous estimates of fair value have not been modified. The
expected life used in the model has been adjusted, based on management’s best estimates, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
Outstanding options had been granted on 26 March 2012, 1 September 2014, 5 March 2015, 23 May 2017, 9 March
2018 and 8 March 2019. The estimated fair values of the options are as follows:
Year of Grant  2017 2015 2015 2014 2014 2012 2012
Share Plan PSP PSP PSP 2009 Plan 2009 Plan 2009 Plan 2009 Plan 2009 Plan 2009 Plan
- - - Basic Tier Second Tier Basic Tier Second Tier Basic Tier Second Tier
Fair value of
option €3.53 €4.06 €3.67 €0.4528 €0.5581 €0.2992 €0.4449 €0.3240 €0.3680
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

170
32. Share-based payments – continued
The inputs into the model in the respective years of grant were as follows:
Year of Grant  2017 2015 2015 2014 2014 2012 2012
Basic Tier Second Tier Basic Tier Second Tier Basic Tier Second Tier
At date of grant:
Weighted average
share price €4.945 €5.860 €5.400 €3.580 €3.580 €2.970 €2.970 €1.570 €1.570
Weighted average
exercise price €0.065 €0.065 €0.065 €3.580 €3.580 €2.970 €2.970 €1.570 €1.570
Expected volatility 27% 22% 22% 29% 31% 27% 30% 34% 33%
Expected life 3 years 8 years 8 years 7 years 9 years 7 years 9 years 7 years 9 years
Risk free rate (0.498%) 0.023% 0.023% 0.090% 0.299% 0.439% 0.765% 1.323% 1.799%
Expected dividend
yield 2.50% 4.39% 4.61% 5.16% 4.72% 5.83% 4.89% 4.97% 4.41%
Expected volatility was determined by calculating the historical volatility of the Company’s share price. The fair value
determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of the shares that will eventually vest, and adjusted for the effect of
non-market based vesting conditions.
In 2019, the share-based payment expense recognised in the Consolidated Income Statement was €2.1 million (2018:
€2.4 million) and in the Income Statement of the Company was €1.0 million (2018: €1.0 million).
The share-based payment expense has been classified in the Consolidated Income Statement as follows:

 
Employee benefits expense 2.1 2.4
Share-based payment expense of €901,000 (2018: €845,000) relates to the Directors of the Group. The balance
on the share option reserve in the Consolidated Statement of Financial Position at 31 December 2019 is €5.9 million
(2018: €3.8 million).
33. Retirement benefit schemes
The Group operates defined contribution pension schemes in all of its main operating locations. The Group also has
defined benefit obligations as set out below. Scheme assets are held in separate trustee administered funds.
Defined Contribution Scheme
The Group operates a defined contribution pension scheme, which provides retirement and death benefits for all
recently hired employees. The total cost charged in the Consolidated Income Statement of €0.4 million (2018: €0.2
million) represents employer contributions payable to the externally administered defined contribution pension
scheme at rates specified in the rules of the scheme. There was €nil in outstanding contributions included in trade
and other payables at 31 December 2019 (2018: €nil).
Financial
Statements
171
33. Retirement benefit schemes – continued
Defined Benefit Obligations
(i) Group sponsored schemes
The Group operates contributory defined benefit obligations, which provide retirement and death benefits for other
employees who are not members of the defined contribution pension scheme. The defined benefit obligations
provide benefits to members in the form of a guaranteed level of pension payable for life, the level of the benefits
depend on the member’s length of service and salary.
The assets of these schemes are held separately from those of the Group in schemes under the control of trustees.
The trustees are responsible for ensuring the schemes are run in accordance with the applicable trust deed and
the pension laws of the relevant jurisdiction. The trustees invest the funds in a range of assets with the objective
of maximising the fund return whilst minimising the cost of funding the scheme at an acceptable risk profile. In
assessing the risk profile the trustees take account of the nature and duration of the liabilities and review investment
strategy regularly.
The pension contributions paid in the year ended 31 December 2019 amounted to €2.7 million (2018: €2.8 million)
while the current service cost charged to the Consolidated Income Statement amounted to €1.5 million (2018:
€1.7 million) as well as a curtailment gain of €0.1 million (2018: €0.5 million). At 31 December 2019, there were 751
pensioners in receipt of pension payments from the Group’s schemes (2018: 766).
In 2014 the Group concluded a deficit funding agreement with the trustee of the Group’s main defined benefit
obligations, the Irish Ferries Limited Pension Scheme. Under the terms of the agreement the Company makes deficit
payments to the scheme of €1.5 million per annum, adjusted for inflation, for a projected period up to 2023, or until
the deficit is eliminated if earlier, with additional payments of €0.5 million per annum to an escrow account, the
balance of which will also be payable to the scheme in certain circumstances.
The pension charges and payments in respect of the schemes are in accordance with the advice of professionally
qualified actuaries. The latest actuarial valuation reports for these schemes, which are not available for public
inspection, are dated between 31 March 2018 and 31 October 2018. The valuations employed for disclosure purposes
have been based on the most recent funding valuations for each scheme adjusted by the independent actuaries to
allow for the accrual of liabilities up to 31 December 2019 and to take account of financial conditions at this date. The
present value of the defined benefit obligation, and the related current service cost and past service credit, were
measured using the projected unit credit method and assets have been valued at bid value.
(ii) Merchant Navy Officers Pension Fund (MNOPF)
In addition to the pension schemes operated by the Group, the Group has obligations in respect of past service of
certain employees who are members of the MNOPF, an industry wide multi-employer scheme and which is closed to
future accrual. The latest actuarial valuation of the scheme, which is available for public inspection, is dated 31 March
2018 and disclosed a net past service deficit of GBP 9.0 million. The Group’s share of the MNOPF obligations, as most
recently advised by the trustees, is 1.53% (2018: 1.53%). The valuation at 31 December 2019 is based on the actuarial
deficit contribution demands notified to the Group and which remains outstanding at the reporting date.
On this basis the share of the overall deficit in the MNOPF estimated by the Company attributable to the Group at 31
December 2019 is €nil (2018: €nil). During the year the Group made payments of €nil (2018: €nil) to the trustees.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

172
33. Retirement benefit schemes – continued
(iii) Principal risks and assumptions
The Group is exposed to a number of actuarial risks as set out below:
Investment risk
The pension schemes hold investments in asset classes such as equities which are expected to provide higher returns
than other asset classes over the long-term, but may create volatility and risk in the short-term. The present value
of the defined benefit obligations liability is calculated using a discount rate by reference to high quality corporate
bond yields; if the future achieved return on scheme assets is below this rate, it will create a deficit. IAS 19 Employee
Benefits provides that the discount rate used to value retirement benefits should be determined by reference to
market yields on high quality corporate bonds consistent with the duration of the liabilities. Due to a narrow bond
universe the Group defines high quality bonds in the Eurozone as those rated AA or higher by at least one rating
agency. In respect of Sterling schemes, corporate bonds must be rated AA, or higher, by at least two rating agencies.
Salary risk
The present value of the defined benefit liability is calculated by reference to the projected salaries of scheme
participants at retirement based on salary inflation assumptions. As such, any variation in salary versus assumption
will vary the schemes’ liabilities.
Life expectancy risk
The present value of the defined benefit obligations liability is calculated by reference to the best estimate of the
mortality of scheme participants both during and after their employment. An increase in the life expectancy of the
scheme participants will change the scheme liabilities.
Inflation risk
A significant proportion of the benefits under the plans are linked to inflation with higher inflation leading to higher
liabilities.
The Directors have taken independent actuarial advice on the key judgements used in the estimate of retirement
benefit scheme assets and liabilities.
The principal assumptions used for the purpose of the actuarial valuations were as follows:
Sterling Liabilities Euro Liabilities
 
Discount rate 1.85% 2.65% 1.00% 1.80%
Inflation rate 3.20% 3.45% 1.30% 1.50%
Rate of annual increase of pensions in payment 2.95% 3.15% 0.40% - 0.50% 0.60% - 0.70%
Rate of increase of pensionable salaries 0.90% 1.00% 0.00% - 0.90% 0.00% - 1.00%
The Euro and Sterling discount rates have been determined in consultation with the Group’s independent actuary,
who has devised proprietary models referencing market yields at the balance sheet date on high quality corporate
bonds consistent with the duration of the liabilities. For 31 December 2019 the high quality corporate bond population
include those rated AA or higher by at least two rating agencies.
Financial
Statements
173
33. Retirement benefit schemes – continued
The average life expectancy used in the principal Group schemes at age 60 is as follows:

Male Female Male Female
Irish Schemes
Current retirees 26.4 years 29.3 years 26.3 years 29.2 years
Future retirees 28.8 years 31.4 years 28.7 years 31.3 years
UK Schemes
Current retirees 27.7 years 29.2 years 27.0 years 29.2 years
Future retirees 29.2 years 30.7 years 28.8 years 31.2 years
Assumptions regarding life expectancies are set based on actuarial advice in accordance with published statistics
and experience in each jurisdiction.
Sensitivity of pension liability judgemental assumptions
The Group’s total obligation in respect of defined benefit obligations is calculated by independent, qualified
actuaries, updated at least annually and totals €289.6 million at 31 December 2019 (2018: €266.0 million). At 31
December 2019, the Group also has scheme assets totalling €298.4 million (2018: €264.3 million), giving a net
pension surplus of €8.8 million (2018: deficit of €1.7 million). The size of the obligation is sensitive to actuarial
assumptions. The sensitivity analysis below are based on a change in an assumption while holding all other
assumptions constant with the exception of the rate of inflation assumption which impacts other inflation linked
assumptions. The sensitivity analysis intends to provide assistance in understanding the sensitivity of the valuation
of pension liabilities to market movements on discount rates, inflation rates and mortality assumptions for scheme
beneficiaries. The analyses are for illustrative purposes only as in practice assumptions rarely change in isolation.
There has been no change from the prior year in the methods and assumptions used in preparing the sensitivity
analyses below.
A*The rate of inflation sensitivity includes its impact on the rate of annual increase of pensions in payment assumption and the rate of increase of
pensionable salaries assumption as they are both inflation linked assumptions.
The size of the scheme assets which are also sensitive to asset return levels and the level of contributions from the
Group are analysed by asset class in part (iv) of this note.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

174
33. Retirement benefit schemes – continued
iv) Retirement benefit assets and liabilities
The amount recognised in the Consolidated Statement of Financial Position in respect of the Group’s defined benefit
obligations, including an apportionment in respect of the MNOPF is as follows:
Schemes with liabilities in
Sterling
Schemes with liabilities
in Euro
 
   
Equities 11.6 9.2 105.8 91.2
Bonds 13.0 13.4 102.7 93.3
Diversified funds - - 41.7 35.3
Property 0.3 0.3 19.2 19.4
Other 2.9 1.2 1.2 1.0
Fair value of scheme assets 27.8 24.1 270.6 240.2
Present value of scheme liabilities (26.2) (22.4) (263.4) (243.6)
Surplus/ (deficit) in schemes 1.6 1.7 7.2 (3.4)
Three of the defined benefit obligations accounted for by the Group are in a net surplus position and are shown
in non-current assets in the Consolidated Statement of Financial Position. One of the defined benefit obligations
accounted for by the Group are in a net deficit position and are shown in non-current liabilities.
The overall weighted average duration of the Group’s defined benefit obligations is 16.2 years (2018: 16.1 years).
The weighted average duration of Euro scheme obligations was 16 years (2018: 16 years) and of Sterling scheme
obligations was 17 years (2018: 17 years).
The split between the amounts shown in each category is as follows:

 
Non-current assets – retirement benefit surplus 12.5 2.5
Non-current liabilities – retirement benefit obligation (3.7) (4.2)
Net surplus/ (deficit) in pension schemes 8.8 (1.7)
Financial
Statements
175
33. Retirement benefit schemes – continued
(v) Movements in retirement benefit assets
Movements in the fair value of scheme assets in the current year were as follows:
2019 Schemes in
Sterling
Schemes in
Euro Total
  

 
Charged to Finance costs
Interest income on scheme assets (4.8) (5.2)
Interest on scheme liabilities 4.8 5.1
Net interest income on defined benefit obligations (notes 6 and 7) - (0.1)
The estimated amounts of employer contributions expected to be paid to the schemes during 2020 is €2.7 million
based on current funding agreements.
Financial
Statements
177
33. Retirement benefit schemes – continued
(viii) Amounts recognised in the Consolidated Statement of Comprehensive Income
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the defined benefit
obligations are as follows:
Actuarial gains and losses

 
Actual total return on scheme assets 42.8 (9.5)
Interest income on scheme assets (4.8) (5.2)
Return on scheme assets (excluding amounts included in net interest cost) 38.0 (14.7)
Remeasurement adjustments on scheme liabilities:
Gains and (losses) arising from changes in demographic assumptions 0.1 (1.9)
(Losses) and gains arising from changes in financial assumptions (25.8) 3.9
(Losses) and gains arising from experience adjustments (3.3) 4.6
Actuarial gain/ (loss) recognised in the Consolidated Statement of Comprehensive Income 9.0 (8.1)
Exchange movement

 
Exchange gain/ (loss) on scheme assets 1.3 (0.2)
Exchange (loss)/ gain on scheme liabilities (1.1) 0.2
Net exchange gain recognised in the Consolidated Statement of Comprehensive Income 0.2 -
34. Related party transactions
During the financial year, Group entities incurred costs of €0.2 million (2018: €0.2 million) through provision of
administration and accounting services to Irish Ferries Limited Pension Scheme and Irish Ferries (UK) Limited Pension
Scheme, related parties that are not members of the Group. These related parties provide pension benefits to
employees of the Group.
As at the statement of financial position date, Catherine Duffy, non-executive Director of the Company, is a partner
at law firm A&L Goodbody (“ALG’’). During the year ended 31 December 2019, expenses of €0.8 million of which
€50,000 relates to Catherine’s remuneration for her role as non-executive Director (2018: €0.4 million of which
€50,000 relates to Catherine’s remuneration for her role as non-executive Director) were incurred for services
received from ALG in their capacity as legal advisors to the Group. All services have been provided on an arm’s
length basis at the standard commercial terms of ALG.
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

178
34. Related party transactions – continued
Compensation of key management personnel
The Group’s key management comprise the Board of Directors and senior management having authority and
responsibility for planning, directing and controlling the activities of the Group.
The remuneration of key management, including Directors, during the financial year was as follows:

 
Short-term benefits 5.1 4.4
Post-employment benefits 0.2 0.2
Share-based payment expense 1.6 1.5
6.9 6.1
Short-term benefits comprise salary, performance pay and other short-term employee benefits.
Post-employment benefits comprise the past and current service cost calculated in accordance with IAS 19 Employee
Benefits.
Share-based payment expense represents the cost charged in respect of equity-settled share-based payments.
The remuneration of Directors and key management is determined by the Remuneration Committee having regard to
the performance of individuals, market trends and the performance of the Group and Company.
Details of the Remuneration of the Group’s individual Directors, together with the number of ICG shares owned by
them and their outstanding share options are set out in the Report of the Remuneration Committee and the Report of
the Directors.
Dividends
Amounts received by key management, including Directors, arising from dividends are as follows:

 
Dividends 4.0 3.7
Share options
Share options exercised by the Company’s Directors are set out in the Report of the Remuneration Committee on
pages 90 to 103.
Financial
Statements
179
35. Net cash from operating activities

 
Operating activities
Profit for the year 60.2 57.8
Adjustments for:
Finance costs (net) 3.4 0.8
Income tax expense 1.3 1.4
Retirement benefit obligations – current service cost 1.5 1.7
Retirement benefit obligations – curtailment gain (0.1) (0.5)
Retirement benefit obligations – payments (2.7) (2.8)
Pension payments in excess of service costs (1.3) (1.6)
Depreciation of property, plant and equipment 27.5 21.9
Amortisation of intangible assets 0.2 0.2
Depreciation of right to use asset 9.1 -
Share-based payment expense 1.9 2.4
Gain on disposal of property, plant and equipment (15.1) (15.1)
Increase in provisions 0.3 0.7
Operating cash flows before movements in working capital 87.5 68.5
Decrease / (increase) in inventories 0.2 (0.6)
Increase in receivables (4.7) (4.6)
Increase in payables 6.5 1.4
Working capital movements 2.0 (3.8)
Cash generated from operations 89.5 64.7
Income taxes paid (1.2) (2.2)
Interest paid (3.5) (1.0)
Net cash inflow from operating activities 84.8 61.5
Notes Forming Part of the
Consolidated Financial Statements
For the year ended 31 December 2019 – continued

180
36. Change in financing liabilities
The changes in liabilities arising from financing activities during the year ended 31 December 2019 were as follows;
Bank Loans Loan Notes
Origination
Fees
Finance
Leases
Lease
Liabilities Total
     
At 31 December 2018 155.0 50.0 (1.0) 1.0 - 205.0
Initial application of IFRS 16 - - - (1.0) 32.0 31.0
At 1 January 2019 155.0 50.0 (1.0) - 32.0 236.0
Changes from cashflows - - (0.2) - (9.0) (9.2)
Non Cashflow changes
• Amortisation - - 0.1 - - 0.1
• Right of use assets recognised - - - - 12.5 12.5
• Currency - - - - 0.5 0.5
At 31 December 2019 155.0 50.0 (1.1) - 36.0 239.9
Capital repayments on the bank loans drawn during 2018 do not commence until 2020. The loan notes have bullet
payment terms with repayment due in 2024. The initial application of IFRS 16 increased liabilities from financing
activities by €31.0 million (note 30).
37. Contingent liabilities
The Group has issued counter indemnities to Allied Irish Banks plc in relation to bonds required by regulatory
authorities and suppliers, amounting to €0.6 million (2018: €0.6 million). The Group regards these financial guarantee
contracts as insurance contracts and accordingly the accounting treatment applied is that applicable to insurance
contracts. No claims have been notified to the Group in respect of these contracts, therefore no provision is
warranted.
The Group is a participating employer in the Merchant Navy Officer Pension Fund (MNOPF), a multi-employer
defined benefit pension scheme. The MNOPF is closed to future accrual. Under the rules of the fund all employers
are jointly and severally liable for any past service deficit of the fund. The last notification from the trustees
showed that the Group’s share of any deficit would be 1.53%. Should other participating employers’ default on their
obligations, the Group will be required to absorb a larger share of the scheme deficit. If the Group were to terminate
their obligations to the fund, voluntarily or otherwise, the Group may incur a statutory debt under Section 75 of the
United Kingdom Pensions Act 1995 amended by the Pensions Act 2004. The calculation of such statutory debt is
prescribed in legislation and is on a different basis from the current deficit calculations. This would likely be a greater
amount than the net position included in these financial statements and the Directors consider that this amount is not
quantifiable unless and until such an event occurs.
In the ordinary course of business the Group is exposed to legal proceedings from various sources including
employees, customers, suppliers and regulatory authorities. It is the opinion of the Directors that losses, if
any, arising in connection with these matters will not be materially in excess of provisions made in the financial
statements.
Financial
Statements
181

Notes  
Net cash inflow from operating activities 53 40.1 44.9
Cash flow from investing activities
Dividend received from subsidiaries - 51.0
Purchases of property, plant and equipment (6.1) (156.5)
Purchases of intangible assets (0.1) (0.1)
Net cash outflow from investing activities (6.2) (105.6)
Cash flow from financing activities
Dividends paid to equity holders of the Company (24.7) (23.5)
Market buyback of equity (12.9) -
Repayment of finance lease obligations - (0.3)
Repayments of lease liabilities (0.2) -
Financing receivables - 83.0
Proceeds on issue of ordinary share capital 0.1 0.6
Net cash (outflow) / inflow from financing activities (37.7) 59.8
Net increase in cash and cash equivalents (3.8) (0.9)
Cash and cash equivalents at beginning of year 26.4 27.3
Cash and cash equivalents at end of year 22.6 26.4
Company Statement of Cashflows
For the financial year ended 31 December 2019
Financial
Statements
185
38 Company Statement of Accounting Policies
Basis of Preparation
The Company Financial Statements of Irish Continental Group plc (“the Company”) were prepared under the
historical cost convention, in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”). In preparing these Financial Statements, the Company applies the recognition, measurement and
disclosure requirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but
makes amendments where necessary in order to comply with the Companies Act 2014 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs; and
• Disclosures in respect of the compensation of Key Management Personnel.
As the Consolidated Financial Statements of the Group are prepared in accordance with IFRS as adopted by the
EU and include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in
respect of the following disclosures:
• Certain disclosures required by IFRS 2 Share-based Payments;
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial
Instruments: disclosures.
The accounting policies used in the preparation of the Company Financial Statements are consistent with the
accounting policies used in the preparation of the Consolidated Financial Statements set out in the Summary of
Accounting Policies at note 2 on pages 124 to 138. Unless otherwise stated, these have been applied consistently to
all periods presented in these Company Financial Statements. The financial statements have been prepared in Euro
and are rounded to the nearest million.
IFRS 16: Leases
IFRS 16 Leases was applied for the first time with a date of initial application of 1 January 2019. Details of the changes
to lease accounting arising from implementation of IFRS 16 compared to the previous standard IAS 17 are set out
pages 125 to 126 of the Consolidated Financial Statements. The Company has followed the same approach as used in
preparing the Consolidated Financial Statements.
The effect on the Company from the first time application of IFRS 16 was as follows;
• A transfer of existing assets from property, plant and equipment which had been financed under finance leases in
accordance with IAS 17 to right of use assets. These assets with a net book value of €0.3 million comprised cost of
€2.6 million less accumulated depreciation of €2.3 million.
• There was no effect on net debt
• There was no effect on the income statement during the financial year.
Accounting policies applying only to the Company Financial Statements
Investments in subsidiaries
Investments in subsidiaries held by the Company are carried at cost less any accumulated impairment losses. Equity
settled share based payments granted by the Company to employees of subsidiary companies are accounted for
as an increase or decrease in the carrying value of the investment in subsidiary companies and the share options
reserve.
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019

186
39. Company profit for the period
The profit attributable to equity shareholders dealt with in the Financial Statements of the Company was €6.5 million
(2018: €47.8 million). In accordance with section 304 of the Companies Act 2014, the Company is availing of the
exemption from presenting its individual Income Statement to the Annual General Meeting and from filing it with the
Registrar of Companies.
Company Auditors’ remuneration: €’000 €’000
Audit of the entity financial statements 17.0 17.0
Other assurance services 252.0 224.5
Tax advisory services 17.0 17.0
286.0 258.5
Disclosure of Directors’ emoluments as required by Section 305 of the Companies Act 2014, is given in the Report of
the Remuneration Committee on pages 90 to 103 and is included within the financial statements by way of a cross
reference.
There were no employees in the Company during the financial year ended 31 December 2019 (2018: nil). Costs
of €4.3 million (2018: €4.4 million) were recharged to the Company from subsidiary companies in relation to
management services.
Financial
Statements
187
40. Property, plant and equipment
Company
Assets under
Construction Vessels
Plant
Equipment
and Vehicles
Land and
Buildings Total
    
Cost
The Company has entered into a contract for the construction of a vessel of which the amount of €6.4 million
represents the estimated value of work completed up to the period end. Contractual amounts paid in excess of this
are classified as prepayments.
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019 – continued

188
41. Intangible assets

 
Cost
The intangible assets included above, all computer software, have finite useful lives of 5 years, over which the assets
are amortised. Amortisation is on a straight-line basis.
Financial
Statements
189
42. Right of use assets
Plant and
Equipment

Cost

The Company applied IFRS 16 Leases with effect from 1 January 2019 as is set out at note 38 Accounting Policies. At
initial application, the Company recognised right of use assets and related lease liabilities by adjusting the opening
balances brought forward from the Statement of Financial Position reported at 31 December 2018.
The impact of the application of IFRS 16 at 1 January 2019 resulted in the transfer of fixed assets with a net book
value of €0.3 million to right of use assets. As these assets were held under finance leases there was no effect on
opening lease obligations. There was a negligible effect on the profit before tax recognised in the Company Income
Statement in the year ended 31 December 2019 arising from the change in accounting policy.
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019 – continued

190
43. Investment in subsidiaries

 
Investment in subsidiaries at beginning of the financial year 13.4 12.0
Movement related to share options allocated to employees in subsidiaries 1.2 1.4
Investment in subsidiaries at end of the financial year 14.6 13.4
The Company’s principal subsidiaries at 31 December 2019 is as follows:
Name of subsidiary Country of incorporation and operation Principal activity
Irish Ferries Limited* Ireland Ferry operator
Eucon Shipping & Transport Limited* Ireland Container shipping services
Irish Continental Line Limited* Ireland Ship leasing
Irish Ferries Services Limited* Ireland Administration services
Belfast Container Terminal (BCT) Limited Northern Ireland Container handling
Irish Ferries (U.K.) Limited United Kingdom Shipping & forwarding agents
Eurofeeders Limited United Kingdom Shipping & forwarding agents
Irish Ferries (U.K.) Services Limited United Kingdom Administration services
Zatarga Limited Isle of Man Ship leasing
Contarga Limited* Ireland Ship leasing
Irish Ferries Finance DAC Ireland Administration services
ICG Shipping (W. B. Yeats) Limited Ireland Maritime transport
ICG Shipping (Hull 777) Limited Ireland Maritime transport
* Companies availing of Companies Act 2014 exemption under S357
The Company in all instances owns 100% of the issued share capital and voting rights attaching thereto in respect of
all subsidiary companies.

 
Fuel and lubricating oil - 0.2
Catering and other stocks - 0.4
- 0.6
The Directors consider that the carrying amount of inventories approximated their replacement value.
45. Trade and other receivables

 
Amounts due from subsidiary companies (note 52) 83.7 151.8
Prepayments 28.9 29.2
Other receivables 0.3 0.4
112.9 181.4
Amounts due from subsidiary companies are interest free and repayable on demand. The reduction in amounts due
from subsidiary companies of €68.5 million was partly applied in reducing amounts due to subsidiary companies
(note 50). The Company has assessed credit losses as if the receivable had been demanded at the date of financial
position. As all amounts are due from subsidiaries which were in a net asset position and the Company concluded
that no provision for credit losses was required.
46. Share capital
Details of the Company’s equity share capital are set out at Note 20 to the Consolidated Financial Statements.
47. Borrowings
At 31 December 2018 borrowings comprised exclusively of finance leases as set out below.
Finance Leases
Minimum lease payments
Present value of minimum lease
payments
 
   
Amounts payable under finance leases:
Within one year - 0.2 - 0.2
In the second to fifth years inclusive - 0.1 - 0.1
- 0.3 - 0.3
Less future finance charges - - - -
Present value of lease obligations - 0.3 - 0.3
Less: amount due for settlement within 12 months - (0.2) - (0.2)
Amount due for settlement after 12 months - 0.1 - 0.1
Amounts outstanding at 31 December 2018 were transferred to lease liabilities on the application of IFRS 16 Leases.
The average effective borrowing during 2018 was 5.5%.
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019 – continued

192
48. Lease liabilities

 
At 31 December 2018 - -
Initial application of IFRS 16 0.3 -
Payments (0.2) -
Lease interest expense recognised in period - -
At 31 December 2019 0.1 -
Analysed as:
Current liabilities 0.1 -
The Company applied IFRS 16 Leases with effect from 1 January 2019 as set out at note 38 Accounting Policies. At
initial application, the Company recognised right of use assets and related lease liabilities by adjusting the opening
balances brought forward from the Statement of Financial Position reported at 31 December 2018. The impact of the
application of IFRS 16 is set out at note 38.
The Company’s obligations are secured by lessors’ title to the leased assets.
49. Deferred tax liabilities
There are no deferred tax liabilities and assets recognised by the Company during the current and prior reporting
periods. The Company’s taxable income was fully taxable within the Irish tonnage tax system.
The estimated value of deferred tax assets not recognised is €0.1 million (2018: €0.1 million). Deferred tax assets
are not recognised as it is not probable that taxable profits will be available against which deductible temporary
differences can be utilised.
50. Trade and other payables

Within 1 year  
Amounts due to subsidiary companies (note 52) 126.1 164.7
Other payables 1.8 5.6
127.9 170.3
The amounts owed by the Company to its subsidiaries is represented as follows;

 
Trading balances 19.1 57.7
Financing balances 107.0 107.0
126.1 164.7
Amounts owed to subsidiary companies are repayable on demand with no fixed payment schedule. The decrease in
trading balances of €38.6 million was funded through collection of receivables from other subsidiaries (note 45).
Interest is payable on financing balances at agreed fixed rates comprising funding cost and a margin. The average
interest rate paid on borrowings advanced during the year was 1.78% (2018: 1.71%) and the average interest rate
payable on financing balances outstanding at 31 December 2019 was 1.78% (2018: 1.80%).
Financial
Statements
193
51. Retirement benefit schemes
(i) Company sponsored / Group affiliated schemes
Certain former employees of the Company were members of a defined benefit scheme which is sponsored by
another Group Company, Irish Ferries Limited. The stated policy between the sponsoring entity and the Company
does not require the Company to recognise the net defined benefit in its individual financial statements. Detailed
information in respect of this scheme is given in note 33 to the Consolidated Financial Statements. Other former
employees were members of the Ex Merchant Navy Officers Pension Fund (Ex MNOPF), of which the Company is the
sponsoring employer.
The contributory defined benefit schemes sponsored by the Company and the Group companies provide retirement
and death benefits for former employees. The defined benefit schemes provide benefits to members in the form of a
guaranteed level of pension payable for life, the level of the benefits depend on the member’s length of service and
salary. The assets of these schemes are held separately from those of the Company and Group in schemes under the
control of trustees. The trustees are responsible for ensuring the schemes are run in accordance with the applicable
trust deeds and the pension laws of the relevant jurisdiction. The pensions charge and payments in respect of the
schemes are in accordance with the advice of professionally qualified actuaries.
The latest actuarial valuation report for the Ex MNOPF Scheme, which is not available for public inspection, is dated
29 June 2018. The valuation employed for disclosure purposes has been based on the most recent funding valuations
for the schemes adjusted by the independent actuaries to allow for the accrual of liabilities up to 31 December 2019
and to take account of financial conditions at this date.
The present value of the defined benefit obligation, and the related current service cost and past service credit, were
measured using the projected unit credit method and assets have been valued at bid value.
(ii) Merchant Navy Officers Pension Fund (MNOPF)
In addition to the pension schemes operated by the Company, certain former employees are members of the
MNOPF, an industry wide multi-employer scheme. The latest actuarial valuation of the scheme, which is available for
public inspection, is dated 31 March 2018. The Company’s share of the MNOPF obligations, as most recently advised
by the trustees, is 0.51% (2018: 0.51%).
The valuation at 31 December 2019 is based on the actuarial deficit contribution demands notified to the Company
and which remains outstanding at the reporting date.
The share of the overall deficit in the MNOPF apportioned to the Company is €nil at 31 December 2019 (2018: €nil).
During the year the Company made payments of €nil (2018: €nil) to the Trustees.
(iii) Principal risks and assumptions
The principal risks and assumptions used for the purpose of the actuarial valuations are set out in note 33 (iii) of the
Consolidated Financial Statements.
The Company’s total obligation in respect of the defined benefit schemes is calculated by independent, qualified
actuaries, updated at least annually and totals €0.9 million at 31 December 2019 (2018: €0.7 million). At 31 December
2019, the Company also has scheme assets totalling €1.7 million (2018: €1.4 million) giving a net pension surplus of
€0.8 million (2018: €0.7 million). The size of the obligation is sensitive to actuarial assumptions.
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019 – continued

194
51. Retirement benefit schemes – continued
(iv) Retirement benefit assets and liabilities
The amount recognised in the Statement of Financial Position in respect of the Company’s defined benefit schemes,
is as follows:

 
Equities 1.2 1.0
Bonds 0.3 0.3
Property 0.1 0.1
Other 0.1 -
Fair value of scheme assets 1.7 1.4
Present value of scheme liabilities (0.9) (0.7)
Surplus in schemes 0.8 0.7
The retirement benefit scheme sponsored by the Company is in a net surplus position. In addition, the Company’s
share of the deficit in the industry wide scheme, the MNOPF, based on the last actuarial valuation as at 31 March
2018 is €nil (2018: €nil). The total surplus of €0.8 million (2018: €0.7 million) is shown under non-current assets in the
Statement of Financial Position.
The Company is exposed to a number of actuarial risks, these include demographic assumptions covering mortality
and longevity, and economic assumptions covering price inflation, benefit and salary increases together with the
discount rate used. The size of the scheme assets is also sensitive to asset return levels and the level of contributions
from the Company.
(v) Movement in retirement benefit assets
Movements in the fair value of scheme assets in the financial year were as follows:

2019
At beginning of the financial year 1.4
Actuarial gains 0.3
At end of the financial year 1.7
2018
At beginning of the financial year 1.7
Actuarial losses (0.3)
At end of the financial year 1.4
Financial
Statements
195
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019 – continued
51. Retirement benefit schemes – continued
(vi) Movement in retirement benefit liabilities
Movements in the present value of defined benefit obligations in the financial year were as follows:

2019
At beginning of the financial year 0.7
Actuarial losses 0.2
At end of the financial year 0.9
2018
At beginning of the financial year 0.9
Actuarial gains (0.2)
At end of the financial year 0.7
The present value of scheme liabilities at the financial year ended 31 December 2019 and 31 December 2018 relate to
wholly funded plans.
(vii) Amounts recognised in the Company Income Statement
There were no amounts recognised in the Company Income Statement in respect of the defined benefit obligations
in the period (2018: €nil).
The estimated amounts of contributions expected to be paid by the Company to the schemes during 2020 is €nil
based on current funding agreements.
(viii) Amounts recognised in the Company Statement of Comprehensive Income
Amounts recognised in the Company Statement of Comprehensive Income in respect of the defined benefit
obligations are as follows:
Actuarial gains and losses

 
Actual return on scheme assets 0.3 (0.3)
Interest income on scheme assets - -
Return on scheme assets (excluding amounts included in net interest cost) 0.3 (0.3)
Remeasurement adjustments on scheme liabilities:
(Losses)/ gains arising from changes in financial assumptions (0.2) 0.2
Actuarial gain/ (loss) recognised in Statement of Comprehensive Income 0.1 (0.1)

196
52. Related party transactions
As at the statement of financial position date, Catherine Duffy, non-executive Director of the Company, is a partner
at law firm A&L Goodbody (“ALG’’). During the year ended 31 December 2019, expenses of €0.8 million of which
€50,000 relates to Catherine’s remuneration for her role as non-executive Director (2018: €0.4 million of which
€50,000 relates to Catherine’s remuneration for her role as non-executive Director) were incurred for services
received from ALG in their capacity as legal advisors to the Company. All services have been provided on an arm’s
length basis at the standard commercial terms of ALG.
The Company chartered a vessel to a subsidiary Company during the year. It also advanced and received funds to
and from certain subsidiaries. Net funds received from subsidiaries during the financial year amounted to €29.5
million (2018: €44.2 million advanced subsidiaries). The Company has provided Letters of Financial Support for
certain of its other subsidiaries.
During the financial year the Company received dividends of €nil million (2018: €51.0 million) from subsidiary
companies.
At 31 December the following amounts were due to or from the Company by its subsidiaries:

 
Amounts due from subsidiary companies (note 45) 83.7 151.8
Amounts due to subsidiary companies (note 50) (126.1) (164.7)
(42.4) (12.9)
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
There are no set terms and conditions attached to the amounts outstanding.
Financial
Statements
197
53. Net cash from operating activities

Company  
Operating activities
Profit for the financial year 6.5 74.4
Adjustments for:
Finance costs (net) 0.8 0.1
Dividend income - (75.0)
Depreciation of property, plant and equipment 5.6 2.4
Depreciation of right to use assets 0.2 -
Amortisation of intangible assets 0.2 0.3
Share-based payment expense - 0.4
Decrease in provisions - (0.2)
Operating cash flows before movements in working capital 13.3 2.4
Decrease/ (increase) in inventories 0.6 (0.1)
Decrease/ (increase) in receivables 67.1 (23.2)
Decrease in payables (40.1) (42.0)
Cash generated by operations 40.9 (62.9)
Interest paid (0.8) (0.1)
Net cash inflow/ (outflow) from operating activities 40.1 (63.0)
54. Contingent liabilities
The Company is a participating employer in the Merchant Navy Officer Pension Fund (MNOPF), a multi-employer
defined benefit pension scheme. The MNOPF is closed to future accrual. Under the rules of the fund all employers
are jointly and severally liable for any past service deficit of the fund. The last notification from the trustees showed
that the Company’s share of any deficit would be 0.51%. Should other participating employers’ default on their
obligations, the Company will be required to absorb a larger share of the scheme deficit. If the Company were
to terminate their obligations to the fund, voluntarily or otherwise, the Company may incur a statutory debt under
Section 75 of the United Kingdom Pensions Act 1995 amended by the Pensions Act 2004. The calculation of such
statutory debt is prescribed in legislation and is on a different basis from the current deficit calculations. This would
likely be a greater amount than the net position included in these financial statements and the Directors consider that
this amount is not quantifiable unless and until such an event occurs.
In the ordinary course of business the Company is exposed to legal proceedings from various sources including
employees, customers, suppliers and regulatory authorities. It is the opinion of the Directors that losses, if
any, arising in connection with these matters will not be materially in excess of provisions made in the financial
statements.
Notes Forming Part of the
Company Financial Statements
For the year ended 31 December 2019 – continued

198
54. Contingent liabilities – continued
The Company acts as guarantor to lending arrangements concluded by certain of its subsidiaries. The Company has
also guaranteed the liabilities and commitments of its Irish subsidiaries for the financial year ended 31 December 2019
pursuant to the provision of Section 357 of the Companies Act 2014. The Company has treated these guarantees as
insurance arrangements and each contract is treated as a contingent liability until as such time it becomes probable
that the Company will be required to make a payment under the guarantee. The Company has carried out review
based on the latest financial information available regarding these subsidiaries, all of which are in a net asset position,
and assessed that as at 31 December 2019 it was not probable that the Company would be required to make a
payment under any of these guarantees. Details of the Company’s principal subsidiaries have been included in
note 42.
55. Events after the Reporting Period
The Board is proposing a final dividend of 8.99 cent per ICG Unit in respect of the results for the financial year ended
31 December 2019.
There have been no other material events affecting the Company or Group since 31 December 2019.
56. Approval of financial statements
The financial statements were approved by the Board of Directors and authorised for issue on 4 March 2020.
Financial
Statements
199
Investor
Information

200
Strategic short sea RoRo routes
operated by Irish Ferries providing a
seamless connection from Ireland to
the UK and Continental motorway
network for the 313,200 RoRo units
carried in 2019.
201
Investor
Information
Investor Information
ICG Units
An ICG Unit consists of one Ordinary Share and nil Redeemable Shares at 31 December 2019 and 31 December 2018.
The shares comprising a unit are not separable for sale or transfer purposes.
The number of Redeemable Shares comprised in an ICG Unit at any particular time will be displayed on the Irish
Continental Group plc. website www.icg.ie. The redemption of redeemable shares is solely at the discretion of the
Directors.
At 4 March 2020, an ICG Unit consisted of one Ordinary share and nil Redeemable shares.
Payments to Shareholders
Shareholders are offered the option of having any distributions paid in Euro or Sterling and made by way of cheque
payment or electronic transfer. Shareholders should contact the Company’s Registrar for further information.
The Company is obliged to deduct Dividend Withholding Tax (DWT) at the standard rate of income tax in Ireland
(currently 20%) from dividends paid to its shareholders, unless a shareholder is entitled to an exemption from DWT
and has returned a declaration form to the Company’s Registrar claiming such entitlement.
ICG Unit price data (€)
High Low Year end
Year ended 31 December 2019 5.20 3.71 4.84
Year ended 31 December 2018 6.00 4.20 4.25
Share listings
ICG Units are quoted on the official lists of both Euronext Dublin and the UK Listing Authority.
ICG’s ISIN code is IE00BLP58571.
ICG is a member of the CREST share settlement system. Shareholders may choose to hold paper share certificates or
hold their shares in electronic form.
Investor Relations
Please address investor enquiries to:
Irish Continental Group plc
Ferryport
Alexandra Road
Dublin 1
Telephone: +353 1 607 5628
Fax: +353 1 855 2268
Email: investorrelations@icg.ie

202
Registrar
The Company’s Registrar deals with all administrative queries about the holding of ICG Units.
Shareholders should contact the Registrar in order to:
• Register to receive shareholder information electronically;
• Elect to receive any distributions from the Company by bank transfer; and
• Amalgamate accounts where shareholders have multiple accounts in their name, to avoid duplicate sets of
Company mailings being sent to one shareholder.
The registrar also offers a share dealing service to shareholders.
The Company’s registrar is:
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Telephone: +353 1 447 5483
Fax: +353 1 447 5571
Email: webqueries@computershare.ie
Financial calendar 2020
Announcement of Preliminary Statement of Results to 31 December 2019 5 March 2020
Annual General Meeting to be announced*
Proposed final dividend payment date to be announced*
Half year results announcement 30 August 2020
* on 25 March 2020 the Company announced that it would postpone its Annual General Meeting from its original scheduled date of 12 May 2020. All
business normally conducted at the Annual General Meeting, including approval of the final dividend, will be deferred to the later date which will be
advised to shareholders.
Travel discounts for Shareholders
Registered shareholders of 1,000 or more ICG shares can avail of a discount when travelling with Irish Ferries. The
availability of the discount, the conditions applicable and the level of discount are subject to review and are varied
from time to time. The principal features of the scheme at 4 March 2020 are:
• 20% discount on passenger and car ferry services between Ireland and Britain;
• 10% discount on passenger and car ferry services between Ireland and France (direct sailings only); and
• 5% discount on Irish Ferries inclusive package holidays (incorporating travel with Irish Ferries).
To qualify for the discount the person travelling must be the beneficial owner of the shares, book online at
www.irishferries.com, and apply for the discount at the time of booking. The discount is not available in conjunction
with any other discount scheme.
For further information and full details of the current terms and conditions please contact Irish Ferries by email at
shareholders@irishferries.com.
203
Investor
InformationIrish Residential Properties REIT plc
2019 Annual Report
Building Communities, Investing in Sustainable Supply
Corporate Profile
Irish Residential Properties REIT plc (the “Company”,“I-RES”,“we”,
“our”, together with IRES Residential Properties Limited, the “Group”)
is a growth oriented Real Estate Investment Trust that is focused on
acquiring, holding, managing and developing investments primarily
focused on private residential rental accommodations in Ireland. At
31 December 2019, the Group owns 3,666 apartments and houses for
private rental in Dublin and Cork. The Company’s shares are listed
on the Main Securities Market of Euronext Dublin.

Operating Performance
Revenue from Investment Properties (€ millions) 62.1 50.6
Net Rental Income (€ millions) 50.5 41.2
Profit Before Fair Value Changes in Investment Properties – EPRA Earnings (€ millions) 33.1 27.8
EPRA Basic Earnings per share (cents)(1)
6.9 6.5
Profit (€ millions) 86.3 119.8
Basic EPS (cents) 18.0 28.0
Portfolio Performance
Total Number of Residential Units at Year End 3,666 2,679
Overall Portfolio Occupancy Rate(1)
98.3% 99.8%
Overall Portfolio Average Monthly Rent (€)(1)
1,596 1,599
Gross Yield at Fair Value(1)(2)
5.6% 6.1%
As at 31 
Liquidity and Leverage
Total Property Value (€ millions) 1,359.2 921.3
Net Asset Value (€ millions) 810.2 618.7
EPRA Net Asset Value (€ millions) 811.0 619.6
Basic NAV per share (cents) 155.3 142.5
EPRA Basic NAV per share (cents)(1)
154.6 142.0
Group Total Gearing(3)
40.8% 33.6%
Other
Market Capitalisation (€ millions) 829.5 586.1
Weighted Average Number of Shares – Basic 478,563,272 427,164,632
(1)
For definitions, method of calculation and other details, refer to pages 25 to 26 of Business Performance Measures under the Business Review section of the
Investment Manager’s Review.
(2)
Excluding fair value of development land and investment properties under development.
(3)
For definitions, method of calculation and other details, refer to page 24 to 25 of Liquidity and Financial Condition under the Operational and Financial Review.
Financial Highlights
Coronavirus Disease 2019 (“CoViD19”)
The current CoViD19 pandemic has presented new challenges to the
world economy including Ireland.
Ireland has been impacted by the CoViD19 pandemic over the last
month, including an evolving range of measures being introduced by
the Irish Government to manage this emergency health crisis. We in
I-RES are continuing to assess and formulate a comprehensive action
and response plan to CoViD19. The safety of staff and residents is of the
utmost importance, and we are following all of the Irish Health Service
Executive (HSE) guidelines in that regard.
While there is considerable uncertainty as a result of the coronavirus
pandemic, the Board believes that the Company is well positioned in the
face of the crisis;
• Balance sheet is robust
• Gearing is low at circa 41% and there is considerable headroom on
committed bank facilities
• Scale and geographic spread of portfolio of apartments and houses
reduces risk
• Strong net rental income and variable cost base
We believe it is our responsibility to prioritise:
1. The safety and well-being of employees and other personnel
supporting the ongoing business; and
2. The safety and well-being of our residents and properties.
The Board and Investment Manager have experience of managing
crisis situations in the past and we are leveraging this knowledge and
experience to initiate appropriate practices to help control the spread
of CoViD19 to the best of our ability and minimize the impact on our
people and our business. We have already taken a number of preventative
measures to mitigate risk across our business.
The financial position and liquidity of the Company and IRES
Residential Properties Limited (collectively, the “Group”) is strong, and
we have the resources and flexibility to manage our way through this
issue. Additionally, the investments our Investment Manager has made in
its technology platform will be a benefit to the Group and together with
an experienced team, we can responsibly respond to this fluid situation.
The Irish Government has introduced emergency legislation, Emergency
Measures in the Public Interest (CoViD19) Act 2020, which includes
measures relating to suspension of termination notices to residents and
no increases in rents during the period of 3 months from 27 March 2020
(such period could be extended by the Irish Government). The Irish
government has also introduced a COVID-19 Income Support Scheme.
The COVID-19 Income Support Scheme, includes a Wage Subsidy
Scheme whereby employers will be refunded up to 70% of an employee’s
wages (capped at €410 per week). The scheme is expected to last for
12 weeks from 26 March 2020. In addition, under the Income Support
Scheme, workers who have lost their jobs due to the crisis will receive an
enhanced emergency COVID-19 Pandemic Unemployment Payment of
€350 per week, the COVID-19 illness payment will also be increased to
€350 per week; and the self-employed will be eligible for the COVID-19
Pandemic Unemployment Payment of €350 per week directly from the
Department of Employment Affairs and Social Protection. Currently, the
Irish Government has also instructed that everyone should stay at home
until 12 April 2020 except for certain situations including employment of
an essential service. This is an evolving and dynamic environment and we
expect that further Government measures may be introduced in dealing
with the CoViD19 crisis. The Group has deemed that it is providing an
essential accommodation service and will continue to operate during this
time. Construction of the Group’s development projects are not deemed
essential and will stop work during this time.
The impact of CoViD19 is still uncertain at this time and the Central
Bank of Ireland believes it would have an adverse impact on economic
forecasts for Irish and Global economic performance for the remainder
of 2020. The Central Bank of Ireland forecast that depending on the
length and severity of the crisis, Irish GDP could contract by up to
8.3% in 2020. We will continue to monitor the development of the
pandemic and assess how I-RES will respond to the changing economic
environment. The multi-family real estate sector is a highly defensive and
counter-cyclical asset class that can bear broader market swings, even in
comparison to other property sectors.
2 
A Year of Continued Strong Progress
I-RES continued to invest and increased its portfolio in 2019 by a further 37% to
3,666 high-quality, modern residential units with an average age of 11 years. These
residential units are located close to excellent public transport infrastructure with an
average commute time to the city centre of under 40 minutes. In line with our strategy
of making a positive contribution to the Irish housing market and sustainable living,
while delivering dividend growth to our shareholders, we provide homes that are
particularly attractive to people who are interested in putting down roots and staying
for the long term.
Revenue from
Investment Properties

Building Value for Shareholders
Building Value for Shareholders
Against a backdrop of an historically low interest rate environment, a strongly
growing economy in Ireland and rapid population growth, I-RES has built an
exceptional residential rental business based on a strong balance sheet and
a high-quality development pipeline. This in turn is generating strong returns
and growing dividends for our shareholders.

HIGHLIGHTS
01
New portfolio acquisition
On 1 August 2019, we acquired a portfolio of 815
residential units in 16 existing properties in 15 prime
locations in Dublin and one in Cork (the “Marathon
Portfolio”) with strong rental demand and proximity
to local amenities and transport links. The portfolio
generates annual rental income of €14.5 million.
02
Increased funding
We successfully completed a share placing to raise gross
proceeds of €134 million in June and July of 2019 while
our new credit facility of €450 million entered into in
April of 2019 was subsequently increased to €600 million
in June 2019.
03
Completed developments acquired
In February 2019, we acquired The Coast in Baldoyle,
Dublin 13. The mixed housing, apartment and duplex
development comprises 52 residential units in a popular
residential location close to high-quality amenities with
excellent connectivity to Dublin City Centre.
04
Forward purchases agreed
Three forward purchases comprising a total of 173
residential units were agreed during the year. Taylor Hill in
Balbriggan, Semple Woods in Donabate, and Waterside in
Malahide, all in north County Dublin, enjoy proximity to
excellent infrastructure including public transport, schools
and employment as well as access to Dublin Airport. On
a phased basis up to November 2019, we took delivery of
the 118 quality homes in Donabate and Balbriggan built
by Glenveagh to an excellent specification including high
environmental standards.
05
Multi-year development pipeline
We have a development pipeline of 219 residential units
under forward purchase contracts due in 2020/21 together
with 627 residential units with planning permission
granted. This includes 18 residential units at Tallaght
Cross West in west Dublin and 61 residential units at
Bakers Yard in Dublin City Centre currently under
construction. The 84 residential units at Beacon Square
South and 428 residential units at Rockbrook, both in
Sandyford south Dublin, have successfully come through
the planning approval process during 2019.
4 
Our Strategy for Growth and Development
I-RES is committed to making a positive contribution to a sustainable, long-term
solution to Ireland’s housing shortage. Our strategy is based on providing high-
quality homes for people who wish to live in them for the longer term. We are
delivering on this strategy by investing in the development of new supply as well
as through the acquisition of existing stock.
Camac Crescent, Turvey Avenue, Inchicore, Dublin 8
HOW WE GROW OUR PORTFOLIO
01
Real estate fundamentals
Ireland’s population continues to grow at a rapid pace
whilst demand for rental accommodation outstrips supply.
02
Development partnerships
A key contributory factor to Ireland’s severe housing
shortage has been the lack of credit and capital available to
builders and developers. I-RES is helping to alleviate that
situation by providing purchase commitments to developers
through forward purchase agreements for projects with
planning permission in place, which will help developers
secure financing. Current forward purchase agreements
will deliver 219 residential units within the next two years.
03
Acquisition of completed developments
Our growth strategy also includes the acquisition of
completed developments in the Greater Dublin Area and
other major urban centres around the country. These
acquisitions provide additional capital to the development
sector to enable further residential construction activity.
04
Investment in intensification
of existing portfolio
Our existing properties include a number of development
sites which have the capacity to deliver 627 new residential
units with planning permissions now in place for all of
these developments, providing the Group with additional
flexibility on its significant future growth potential.
Together with forward commitments, this has the potential
to increase the total number of homes in the portfolio by
23%, up to more than 4,500 residential units.
5

Market Outlook
Demand for rental housing
Housing completions in Ireland remain significantly
behind demand. Completions reached circa 21,000 in
2019 compared to the required level of more than 34,000
(Central Bank of Ireland).
Due to CoViD19 situation, Central Bank of Ireland reports
that house completions in Ireland could decrease to 16,000
from the original estimate of 26,000 in 2020.
02
Rapidly growing population and
foreign direct investment
Ireland’s population, which stood at 4.74 million in 2016,
is projected to increase to 5.7 million by 2040 (ESRI).
The population of Dublin is expected to increase by
31.9%, from 1.34 million in 2016 to 1.76 million by 2036,
representing 31.6% of the national total (CSO).
Ireland’s young population profile means that the working
age population (15-64) could increase by as much as
863,800 (27.8%) to 3,968,100 by 2051 (CSO).
Ireland is the number one destination in the world
for foreign direct investment by US tech companies
(Wolfgang Digital).
03
The housing market
In Q1 2019, there were 356,500 dwellings privately rented
in Ireland, an increase of 14,900 from Q1 2018 (CSO).
This brought the proportion of dwellings which are rented
privately in Ireland to 19.1% – more than double the 2004
level of 8%. In Dublin, 25.9% of dwellings were rented
privately in Q1 2019, up from 24% in Q1 2018 (CSO).
6 
Meeting Our Objectives
I-RES is committed to investing in communities by providing high-quality housing
in attractive, well serviced locations where people want to live, work and build their
lives. The focus of our acquisition and development strategy is therefore on family
friendly urban locations which feature high grade community facilities, good public
transportation links, well developed educational and social infrastructure, and
sustainable employment opportunities.
High-Quality Acquisitions
Marathon Portfolio
(815 residential units)
During 2019 we acquired the Marathon Portfolio
for €285 million (including VAT but excluding other
transaction costs). The portfolio comprises 815 residential
units in 16 existing properties – 15 in Dublin and one in
Cork – in well-located areas with high-quality amenities
and transport links.
Annual rental income of €14.5 million delivers a year one
gross yield of 5.2%.
The acquisition represented an excellent opportunity to
enter the Cork market for the first time.
The portfolio significantly expands our Dublin footprint
and offers the ability to leverage our existing operating
platform and infrastructure.
The Coast
(52 residential units)
We acquired The Coast in Baldoyle in February 2019. The
development comprises a mix of houses, apartments and
duplex units.
Acquisition cost was circa €14 million (including VAT but
excluding transaction costs).
Investment generates gross yields of circa 6.0%.
The Coast is located on the site of the former Baldoyle
Racecourse in a popular residential location providing
excellent amenities and connectivity to Dublin
City Centre.
7

Meeting Our Objectives
Forward Purchase Contracts
Balbriggan and Donabate
(118 residential units)
In March 2019 we entered into contracts with Glenveagh
Homes for the forward purchase of 40 residential units
at Semple Woods, Donabate and 78 residential units at
Taylor Hill, Balbriggan, Co Dublin.
The overall investment was circa €38.2 million (including
VAT but excluding transaction costs).
All 118 residential units were delivered turn-key on a
phased basis by November 2019.
Situated close to excellent infrastructure including
transport, schools and local employers.
Waterside
(55 residential units)
In May 2019 we entered into a contract for the forward
purchase of 55 apartments and duplexes at Waterside,
Malahide, Co Dublin.
The value of the transaction was circa €18.5 million
(including VAT but excluding transaction costs).
Ideally located between Malahide and Swords villages in
north County Dublin.
The scheme was handed over on a phased basis by the end
of March 2020.
Development Pipeline
Grande Central
(428 residential units)
Grande Central in Rockbrook, Sandyford, Dublin 18 will
be a modern new development comprising 428 new one-,
two- and three-bedroom apartments.
Planning permission has been granted for the development.
Excellent infrastructure including LUAS within walking
distance and close proximity to the M50 and N11.
High-quality local amenities including established schools,
shopping facilities and the UPMC Beacon Hospital close by.
Microsoft, American Airlines, Vodafone, AIB, the Central
Bank of Ireland mint facility and other major employers nearby.
Bakers Yard
(61 residential units)
Bakers Yard is located on the North Circular Road,
15 minutes walking distance to Dublin City Centre.
The site was granted planning permission in 2019 for
the development of 14 x 1 bed, 6 x 2 bed and 36 x 3 bed
apartments as well as 5 studio apartments.
The site has been cleared and the construction contract
was awarded in January 2020 and construction has
commenced.
This new block of apartments will be adjacent to the Mater
Hospital and leading financial services and professional
services companies located on the North Docks and
Dublin City Centre.
8 
Managing Properties for People
01
Bringing new standards to
the rental market
We are transforming the residential rental market for the
better by offering professional property management
services through IRES Fund Management Limited
(“IRES Fund Management” or “Investment Manager”).
Each building has dedicated staff to ensure residents
receive the highest possible standards of service.
02
Rapid response
We put our residents first at all times by offering a 24-hour
on-call service for emergencies such as loss of heat, water
or essential services. We also maintain high service and
safety standards such as twice-yearly fire drills that exceed
regulatory requirements.
03
Top-quality staff
Those high standards also apply to our Investment
Manager’s highly trained operations staff who participate
in regular external and internal professional development
programmes in areas such as health and safety, process
efficiencies and property management.
The I-RES Advantage
Advanced technology to
maximise efficiency
Team of tradespeople
and caretakers
Dedicated property manager
for every building
Intensive training and development
for all Investment Manager
team members
24-hour emergency
service line
Safety standards exceed
regulatory requirements
9

More than Just Buildings
I-RES invests in sustainable communities by
providing high-quality homes for people who
want to live and work there for the long term.
Our round-the-clock service, outstanding levels
of care and maintenance and building quality,
and commitment to our residents, add up to an
exceptional standard of living for residents.
10 
Contents
REVIEW
Chairman’s Statement 12
Chief Executive Officer’s Statement 14
Investment Manager’s Statement 18
Business Review 19
Market Update 27
Business Objectives and Strategy 28
Investment Policy 29
The Risk Report 31
GOVERNANCE
I-RES Board of Directors 42
Corporate Governance Statement 45
Report of the Audit Committee 52
Report of the Remuneration Committee 58
Report of the Nomination Committee 68
Report of the Directors 71
Statement of Directors’ Responsibilities 79
FINANCIAL STATEMENTS
Independent Auditor’s Report to the Members of
Irish Residential Properties REIT PLC 82
Consolidated Statement of Financial Position 87
Consolidated Statement of Profit or Loss and
Other Comprehensive Income 88
Consolidated Statement of Changes in Equity 89
Consolidated Statement of Cash Flows 90
Notes to Consolidated Financial Statements 91
Company Statement of Financial Position 118
Company Statement of Profit or Loss and
Other Comprehensive Income 119
Company Statement of Changes in Equity 120
Company Statement of Cash Flows 121
Notes to Company Financial Statements 122
SUPPLEMENTARY INFORMATION
Supplementary Information 130
CAPREIT and IRES Fund Management Senior Management 145
Glossary of Terms 146
Forward-Looking Statements 147
Shareholder Information 148
11

Review
12 
Review
Chairman’s Statement
The board of the company (“the Board”) is very
satisfied with the performance of the Group under the
management of our CEO, Margaret Sweeney, and the
investment manager, IRES Fund Management. They
remain focused on achieving the strategic priorities
established by the Board, delivering solid and growing
yields for investors through quality service delivery to
residents and accretive acquisitions and developments.
While the coronavirus pandemic has created significant
uncertainty in every walk of life, we believe that our
business is resilient. We have a robust balance sheet and
sufficient headroom in our bank facilities. Our residence
base is diversified and the underlying demand for good
quality rental housing is strong. Our priority is the welfare
of our colleagues, tenants and communities, and this
remains our focus as we continue to adapt to the changing
conditions created by the coronavirus.
As at 31 December 2019, the Group has invested in a
portfolio of 3,666 residential units across 41 properties in
the Dublin area and one property in Cork. The Board will
continue to evaluate growth opportunities supported by
strong population growth in Ireland, against a changing
policy and regulatory environment and disciplined capital
allocation delivering value for shareholders. We are very
appreciative of our shareholders (including CAPREIT)
and of our banking syndicate which strongly supported
the Company in its financing during this period;
particularly noteworthy are the increase in the Revolving
Credit Facility to €600 million at attractive rates, and the
circa 20% equity capital raise via a private placement of
shares, raising €131 million (net), to fund our continuing
growth strategy. The Board is delighted that the Group has
acquired the Marathon Portfolio, an established portfolio
of scale which is a highly strategic acquisition.
Financial Results
The Group has generated strong growth in revenues
and profits for the year ended 31 December 2019 due
to continued investment in new properties for rental,
rental growth and consistently high occupancy across
the portfolio.
Basic EPRA EPS is 6.9 cents for the year ended 31 December
2019, an increase of 6.2%, compared to last fiscal year
(: 6.5 cents).
EPRA NAV per share increased by 8.9%, 154.6 cents, for
the year ended 31 December 2019. This growth was driven
mainly by acquisitions completed during the year, and
increases in the valuation of the investment properties and
NRI, partially offset by dividends paid in 2019.
Investment Manager
The Board continues to be very satisfied with the
significant contributions made by IRES Fund Management,
the Company’s alternative investment fund manager,
together with senior management and staff of CAPREIT
Limited Partnership (“CAPREIT LP”). CAPREIT LP
and IRES Fund Management provide significant support
from senior staff and other personnel, together with an
advanced SAP platform and other important contributions
supporting the Group.
Declan Moylan, Chairman
13

Governance Highlights
This year was our first year operating under the new UK
Corporate Governance Code 2018 (the “UK Code”).
The Board has embraced the change and worked
hard to ensure it has effectively implemented its new
requirements.
In particular, the Board acknowledges the increased
focus on relationships between a company and its
various stakeholders and acknowledges the important
relationships the Company has with, for example, its
valued tenants, shareholders, suppliers and the wider
community. The new UK Code requires that outside of
shareholders, the Board should understand the views of
the Company's other key stakeholders and describe how
their interests, among other matters set out in section 172
of the UK Companies Act 2006, have been considered
in Board discussions and its decision making. While
section 172 is a provision of UK company law and there
is no direct comparator in the Irish Companies Act 2014,
the Board acknowledges that, as a premium listed issuer
on the main market of Euronext Dublin, it is important
to address the spirit intended by such provisions. We
have therefore reported on this on page 50 of the Annual
Report and throughout the ESG Report.
The results of our internal Board evaluation carried out
in 2019 were very positive. The review demonstrated the
strength of the Board, its enhanced capability, and its
unanimous view that good governance underpins strategic
delivery and long-term value creation. The evaluation
showed that our new Board member Mark Kenney (who
joined with effect from 1 January 2019) has enhanced the
composition of the Board.
Outlook
In the short term, the Board believes in the Group’s
ability to navigate the uncertainty caused by CoViD19.
The Group’s financial position and liquidity is strong
and we have the resources and flexibility to manage our
way through this issue. Additionally, the investments our
Investment Manager has made in its technology platforms
will be a benefit to the Group and our team members as
we responsibly respond to this fluid situation. However, a
prolonged crisis including increasing unemployment levels
may have an impact on the Group’s bad debts and level of
arrears of rents.
Recent economic forecasts suggest that the CoViD19
pandemic may have significant implications for Global
and Ireland’s economic growth forecasts for the remainder
of 2020. However, the multi-family real estate sector is
considered to be a highly defensive and counter-cyclical
asset class that can bear broader market swings, even
in comparison to other property sectors. The Board
and Investment Manager will continue to review as
appropriate our business strategy in light of these
recent developments.
Declan Moylan
Chairman
Review
14 
Review
Chief Executive Officer’s Statement
I am pleased to report that 2019 represented another
productive year for the Group as we continued to deliver
on our growth strategy through disciplined capital
allocation to add high-quality residential units to the asset
portfolio. This was underpinned by successful funding
through new debt financing and a successful equity
placing, in addition to the continuing strong underlying
performance of the business.
As we progress into 2020, the current CoViD19 pandemic
has presented new challenges to the world economy
including Ireland.
Ireland has been impacted by the CoViD19 pandemic over
the last month, including an evolving range of measures
being introduced by the Irish Government to manage
this emergency health crisis. While the coronavirus
pandemic has created significant uncertainty in every
aspect of life, we believe that our business is resilient. The
Group's financial position and liquidity is strong and
we have the resources and flexibility to manage our way
through this challenge. Our residence base is diversified
and the underlying demand for good quality rental
accommodation remains strong.
The safety of staff and residents is of the utmost
importance, and we are following all of the Irish Health
Service Executive (HSE) guidelines in that regard.
We believe it is our responsibility to prioritise:
1. The safety and well-being of employees and other
personnel supporting the ongoing business; and
2. The safety and well-being of our residents
and properties.
The Board and Investment Manager have experience
of managing crisis situations in the past and we are
leveraging this knowledge and experience to initiate
appropriate practices to help control the spread of
CoViD19 to the best of our ability and minimize the
impact on our people and our business. We have already
taken a number preventative measures to mitigate risk
across our business.
Additionally, the investments our Investment Manager
has made in its technology platform will be a benefit to
the Group and together with an experienced team, we
can responsibly adapt to this fluid situation. The Irish
Government has introduced emergency legislation to
deal with CoViD19 which includes measures relating
to suspension of termination notices to residents and
no increases in rents during the period of three months
from 27 March 2020 (such period could be extended
by the Irish Government), working from home, except
for essential services, together with substantial income
supports to employers and employees whose businesses
and jobs will be impacted by CoViD19.
CoViD19 will likely have a hit on the Global economy and
Irish economy in the remainder of 2020; however, there
is significant uncertainty on the extent of the impact at
this time. We will continue to monitor the development
of the pandemic and assess how I-RES will respond to the
changing economic environment. I also believe that the
multi-family real estate sector is a highly defensive and
counter-cyclical asset class that can bear broader market
swings, even in comparison to other property sectors.
In addition, I-RES has a strong balance sheet, with no
near term maturities, and sufficient headroom on its
Credit Facility.
Review of 2019
We continued our investment in the supply of apartments
and houses for rent in line with our strategy, through a
combination of acquisitions and new developments. We
grew the portfolio by circa 37%, through the addition of
987 residential units with an additional 219 residential
units contracted to be delivered in 2020 and 2021. We also
received planning permission for the development of an
additional 627 rental units which provides the Group with
further flexibility on its significant future growth potential.
As at 31 December 2019, the portfolio consisted of
3,666 high-quality, well-located residential units, with
an average age of approximately 11 years, along with
associated commercial space and owned development sites
(: 2,679 residential units), at a fair value
of €1,359.2 million. Our residential units, mainly located
in the Dublin area, are near important transportation links
and employment centres.
Margaret Sweeney, Chief Executive Officer
15

Including VAT, but excluding other transaction costs.
Planning Permissions Received
The Company has successfully achieved planning approval for the development of 627 residential units on sites owned by
the Group, which would increase the current portfolio size by circa 17%.
Location Units at Completion Status
Tallaght Cross West 18 Planning Permission Granted and Under Construction
Bakers Yard 61 Planning Permission Granted and Under Construction
Priorsgate (Bruce House) 31 Planning Permission Granted
Priorsgate (Conversion) 5 Planning Permission Granted
Beacon Square South (B4) 84 Planning Permission Granted
Rockbrook 428 Planning Permission Granted
Total 627
We entered into a new Revolving Credit Facility of
€450 million with a syndicate of five banks in April 2019
and subsequently exercised the accordion option to
increase this to €600 million in June 2019 in order to fund
our acquisitions and development contracts, including the
Marathon Portfolio acquisition. This facility is at a lower
interest cost than the previous facility and extends the
maturity to 2024, with an option to extend further to 2026
(subject to certain terms and conditions). In March 2020,
we successfully closed the issue of €130 million notes
and USD$75 million notes on a private placement basis
(collectively, the “Notes”). The proceeds from the Notes
will be used to partially repay the drawn amount under
the Revolving Credit Facility and their issue provides
access to a broader range of funding options in the future
to support the Group’s growth strategy.
The Company successfully raised gross proceeds
of approximately €134.2 million (net proceeds of
approximately €131 million) through the issuance of new
shares in a placing with shareholders, which was very
strongly supported. The net proceeds from the issuance of
shares was received in two tranches in June and July 2019.
Growth Strategy
We continue to deliver on the growth strategy which we
first outlined during 2018. Due to the limited supply of
completed rental accommodation in the Irish market and
continued growing demand, our strategy is to invest in
supply through a combination of:
• Continued acquisition of completed assets at
accretive yields
• Investing in future supply through development
partnerships with developers of Private Rented Sector
(“PRS”) assets
• Development and intensification of I-RES owned sites
During 2019, we made steady progress across all three
strands of this strategy.
Review
16 
Environmental, Social and Governance
(“ESG”) Strategy
We recognise that responsible investing and ESG-based
performance and disclosure is increasingly becoming
valued and expected by investors and other stakeholders
across the real estate industry. Our commitment is to
build a sustainable and responsible business which
is aligned with the long-term approach we take to
building, maintaining and investing in our properties
and supporting and servicing our residents, employees,
suppliers and the wider community in which we operate.
We seek to align our business strategy and objectives with
a developing ESG strategy for the Company supported by
our Investment Manager. We believe that sustainability
is an important element of delivering on our vision to be
Ireland’s leading landlord providing good quality homes
in which to live and belong to the local community. As
a leader in Ireland’s residential housing market, I-RES is
establishing the necessary building blocks to gain better
understanding of our exposure to ESG-related risks and
to explore opportunities for delivering on sustainability
objectives alongside longer-term value creation.
Results
Below is a table summarising the Group’s financial position as at 31 December 2019 and profit or loss results for the year
ended 31 December 2019:
Statement of Financial Position:
As at
31 December 2019
As at

Investment Property Value (€ millions) 1,359.2 921.3
Net Asset Value (€ millions) 810.2 618.7
EPRA Net Asset Value (€ millions) 811.0 619.6
Basic NAV per share (cents) 155.3 142.5
EPRA basic NAV per share (cents) 154.6 142.0
Bank Indebtedness (€ millions) 549.9 307.5
Group Total Gearing 40.8% 33.6%
Statement of Profit or Loss and Other Comprehensive Income:
For the year ended
31 December 2019
For the year ended

Revenue from Investment Properties (€ millions) 62.1 50.6
Net Rental Income (€ millions) 50.5 41.2
Profit including revaluation gain (€ millions) 86.3 119.8
Basic EPS (cents) 18.0 28.0
Diluted EPS (cents) 17.9 27.8
EPRA Basic EPS (cents) 6.9 6.5
The property assets at 31 December 2019 increased by
€381.6 million relating to acquisitions, development and
maintenance of the asset portfolio and a €56.2 million
fair value gain on the investment properties held as at
31 December 2019. The main drivers of the valuation
increase in the period were continued rental growth and
capitalisation rate compressions.
Basic NAV per share and EPRA NAV per share
were 155.3 cents and 154.6 cents, respectively, as at
31 December 2019, having increased by 9.0% and 8.9%
from 142.5 cents and 142.0 cents, respectively, as at
.
The Group increased its Group Total Gearing to 40.8% at
31 December 2019, up from 33.6% at ,
to support additional acquisitions and development. This
remains within the Group's gearing policy of 45.0% and
REIT limit of 50%.
Average Monthly Rent (“AMR”) for all properties was
€1,596 as at 31 December 2019 (December 2018: €1,599).
All of the Group’s assets are subject to rent regulation
which permits a maximum annual rent increase of 4%
per annum for properties located in “rent pressure zones”,
which includes Dublin and Cork. The Government of
Ireland has recently extended the rent regulation on the
same terms for a further two years to December 2021.
As a result of strong property management programmes
and strong market fundamentals in the Irish residential
rental sector, the residential occupancy level remained
high at 98.3% at 31 December 2019 (31 December
2018: 99.8%) with the slight decrease on the prior year
primarily arising as a result of Semple Woods and Taylor
Hill still being leased at the end of the year following
the final delivery of the remaining residential units in
November 2019.
Review
17

The efficient operating platform of IRES Fund
Management continues to deliver operating efficiencies
with the NRI margin increasing to 81.4% from 81.3%.
We are delighted to continue our strategy of earnings
growth with EPRA Basic EPS increasing by 6.2% to
6.9 cents for the period ended 31 December 2019
compared to 6.5 cents for the same period last year. This
was due to organic rental growth and active acquisitions
and developments.
Dividends
Under the Irish REIT Regime, subject to having sufficient
distributable reserves, the Company is required to distribute
to shareholders at least 85% of the Property Income of
its Property Rental Business for each financial year. The
Company paid an additional dividend of 3.0 cents per share
(€13.0 million) on 29 March 2019 in respect of the year
ended , representing a total dividend of
5.6 cents per share for the 2018 financial year. A dividend of
2.7 cents per share (€14.1 million) was paid in September
2019 for the six-month period ended 30 June 2019.
The Board announced an additional dividend of 3.1 cents
per share (€16.2 million) for the 12 months ended
31 December 2019 following the filing of the relevant
financial statements for the Company in Dublin,
Ireland on 20 February 2020. This dividend was paid on
23 March 2020.
Future Outlook
Despite continued improvement in housing output
in Ireland during 2019, a significant shortage of
accommodation still remains the most pressing issue
within the housing market. Supply remains limited due
to a lack of construction. According to Daft.ie, there were
only 3,542 listings for all of Ireland for rental properties
in November 2019, close to historic lows and equivalent
to approximately 0.3% of Ireland's housing stock as
measured in the 2016 census. This macro environment
of population growth combined with a significant
housing shortage, coupled with our continued investment
and professional property management, provides
opportunities for I-RES to continue to grow as a leading
provider of private rented residential homes in Ireland.
We continue to monitor the impact and potential risks
and opportunities for the Group from the recently
evolving CoViD19 crisis, market events such as Brexit
and US policy on Foreign Direct Investment in Ireland, as
well as taxation and increased regulation risks. CoViD19
could give rise to increases in bad debts and vacancy
levels, however it is too early to ascertain the extent of
this impact. Brexit could have an impact on housing
demand, which would provide opportunity for further
growth for the Group. However, depending on trade and
supply chain impacts, the withdrawal could drive up the
costs of construction and maintenance. The ongoing
housing shortage and increasing rents are a key focus of
Government as well as increasing regulation to protect
residents’ interests.
Following the recent general election in Ireland, there is
increased uncertainty in relation to future Government
policy on housing and regulation of the private rental
market, particularly in relation to rent regulation. This
uncertainty is likely to continue until a new Government is
formed and provides greater clarity of policy intentions.
There would be an adverse impact for Ireland and
potentially for the Irish residential real estate market of
these events; however, currently the extent is uncertain.
As noted above, I believe that our business is resilient.
The Group’s financial position and liquidity is strong
and we have the resources and flexibility to manage our
way through the various challenges. Our residence base is
diversified and the underlying demand for good quality
rental accommodation remains strong. Despite the
current macro uncertainty, we continue to view long-term
prospects with confidence as we meet the critical need for
quality homes in Ireland.
In closing, I would like to express how impressed I am
with the quality of all of the team that makes I-RES such
a success and their commitment to building a long-term
sustainable business in Ireland. From the operations
team on the ground who take such excellent care of our
residents, to the entire IRES Fund Management group here
in Dublin, our partners and colleagues in CAPREIT and
the Board of Directors of the Company, it is a remarkable
group. I believe that together we can successfully manage
the current temporary challenges facing the Group and its
stakeholders and continue to build a successful business in
the future.
Margaret Sweeney
Chief Executive Officer
Review
18 
Investment Manager’s Statement
The Investment Manager performed strongly in 2019,
solidifying our ability to deliver consistent yields for
investors. In particular, we enhanced our capacity to
deliver high-quality accommodations and services
for residents while continuing to pursue our strategy
for growth.
Our highly qualified and talented operations team, which
features a member dedicated to each building and offers
extensive supports such as a 24-hour emergency line,
leads the way in professional management of residential
rental accommodation nationally. The team builds
close relationships with residents and ensures that our
reputation for quality assets is sustained through proactive
and attentive maintenance. It is our objective to ensure
that people simply love to live in our buildings, which
leads to the consistently high occupancy rates we have
delivered year after year.
Our local capabilities are amplified by our access to the
Global expertise, systems and technology platforms of
CAPREIT, a Canadian leader in the professional property
management of rental accommodation. Building on
the CAPREIT model, which features open and regular
communication with residents, best practices in employee
development, and innovative strategies for attracting
and retaining residents, we continually improve our
offerings to residents to ensure that the service we provide
exceeds expectations.
I-RES has a well diversified, high-quality portfolio
distributed around Dublin with one asset in Cork acquired
as part of the Marathon Portfolio and located close to
transport hubs, schools and major employers. In these
areas, we have expanded our community engagement
activities and worked with local residents to deepen our
relationships with neighbours and residents.
These activities are all part of our effort to deliver
exceptional living experiences that encourage residents to
put down roots and stay.
Ireland remains one of the fastest growing economies in
the European Union, and the consistently high demand
for quality rental properties, combined with a growing
appreciation of the value of I-RES’ professional property
management approach, is perfectly aligned with the I-RES
model of long-term commitment to a residential market.
I look forward to another successful year of delivering
exceptional service to residents and consistent yields
for investors.
Scott Cryer
Director of IRES Fund Management
Review
Scott Cryer, Director of IRES Fund Management
19

Business Review
The Company continues to seek accretive acquisitions
and pre-purchase commitments within Dublin and its
commuter zones as well as other large urban centres in
Ireland, in order to grow its portfolio.
The Irish residential market continues to see low levels
of new apartment building against the backdrop of a
significant supply and demand imbalance. Accordingly,
the rental market remains robust with strong demand and
almost 100% occupancy across the Group’s portfolio.
The I-RES strategy for future growth is focused around:
• Acquisition of quality completed assets
• Development and intensification of existing sites
and buildings
• Development partnerships/pre-purchase contracts
Whilst the focus of the Group’s acquisition and
development activity is on the Dublin and Dublin
commuter belt markets, the Company continues to
explore opportunities in the regional markets. In 2019,
the Group has acquired its first property in Cork as part
of its acquisition of the Marathon Portfolio. Additionally,
the Group owns a number of well-located development
sites which have the capacity to deliver circa 627 new
residential units. The Company made significant progress
through 2019, in achieving planning grants for all
627 residential units.
High-Quality Acquisitions in 2019
We continued our successful acquisitions strategy
through 2019, adding further high-quality homes to the
asset portfolio.
The Coast, Baldoyle, Dublin 13
The Company acquired 52 residential units at the
Coast, Baldoyle, Dublin 13 in Q1 2019 for €14.0 million
(inclusive of VAT, but excluding other transaction costs).
The Coast is a quality residential development, laid out as
two developments, Red Arches and Myrtle. The residential
units acquired are dispersed throughout the scheme, with
39 units located in Myrtle and 13 in Red Arches.
The Coast is located approximately 12kms from the City
Centre and 11kms from Dublin Airport. Clongriffin
DART (light rail link) is within 500m of the residential
units, providing a direct link to the City Centre. The Coast
is situated in close proximity to a range of amenities and
employers including numerous golf clubs, Baldoyle Bay,
hotels, shops and restaurants. Local employers include An
Post, Niche Generics, Mylan & Busch and the Baldoyle
Industrial Estate.
Marathon Portfolio, Dublin
On 14 June 2019, I-RES announced it had signed and
exchanged contracts to acquire the Marathon Portfolio,
comprising 815 residential units, across 16 high-quality
developments, for a total purchase price of €285 million
(including VAT but excluding other transaction costs).
15 of the developments included in the portfolio are
located in Dublin, comprising 765 residential units in total
(representing 94% of the portfolio) and one scheme is
located in Cork, comprising 50 units (representing 6% of
the portfolio). The Marathon portfolio assets present an
excellent mix of locations which complement the existing
I-RES portfolio with a number of the Marathon portfolio
developments being located close to existing I-RES assets
and others located in excellent locations where I-RES will
now establish a market presence. This acquisition was
completed on 1st August 2019. The residential units are
situated in a mix of Prime South Dublin, City Centre,
Secondary North Dublin and Secondary West Dublin
locations and at an additional location in close proximity
to the city of Cork. These are established residential areas
close to quality infrastructure including schools, transport,
employment and amenities.
Forward Purchase Contracts 2019
In March 2019, the Company entered into contracts
for the forward purchase of 118 houses located in two
excellent suburbs in County Dublin (Balbriggan and
Donabate) from a subsidiary of Glenveagh Properties PLC
for a total purchase price of €38.2 million (including VAT,
but excluding other transaction costs).
78 Houses in Taylor Hill, Balbriggan, Co Dublin
Taylor Hill is situated close to excellent infrastructure
including transport, schools and employment, with an Irish
Rail Station in the town and Dublin Airport approximately
a 20-minute drive away. The local area provides a host of
amenities for prospective residents including local parks,
sport facilities, restaurants and shopping including the
Millfield Shopping Centre.
Construction of these houses was completed with the
residential units handed over turn-key to I-RES in phases
by the end of 2019. The houses are currently fully leased.
40 Houses in Semple Woods, Donabate, Co Dublin
Semple Woods is situated close to excellent infrastructure
including transport, schools and employment, with
an Irish Rail Station in the town and Dublin Airport
approximately a 15-minute drive away. The local area
provides a host of amenities for prospective residents
including Newbridge House, local parks, sport facilities,
beaches, golf courses, restaurants and shopping.
Review
20 
Construction of these houses was completed with the
residential units handed over turn-key to I-RES in phases
by the end of 2019. The houses are currently fully leased.
Waterside, Malahide, Co Dublin
I-RES entered into contract for the forward purchase
of 55 apartments and duplexes at Waterside, Malahide,
Co Dublin for a total purchase price of €18.5 million
(including VAT, but excluding other transaction costs).
Waterside is located close to excellent infrastructure,
including transport, schools and employment, with
Dublin Airport approximately a 10-minute drive away.
The local area provides a host of amenities for prospective
residents including transport, schools and employment.
55 residential units were received by the end of
March 2020 on a phased basis.
Contracts Entered in 2018 Which Are
Expected to Be Delivered in 2020/2021
Hansfield Wood, Dublin 15, Phase 2
During 2018, I-RES entered into contract to acquire a
1.3 acre development site in Hansfield Wood for a total
purchase price of €3.3 million. I-RES and its technical
team monitored the construction of a self-contained block
of 95 apartments at Hansfield Wood, Dublin 15. The
building work is now nearing completion with snagging
due to commence in early 2020 and handover of the
apartments to I-RES anticipated in Q2 2020. This date
may be impacted by restrictions on construction activity
during the CoViD19 crisis.
Merrion Road, Dublin 4
I-RES entered into contract for the forward purchase
of 69 residential units at Merrion Road in a transaction
valued at €47.6 million. Construction commenced in
2019 with I-RES and its technical team monitoring the
ongoing works. It is anticipated that the residential units
will be completed and handed over to I-RES during 2021
and made available for leasing. This date may be impacted
by restrictions on construction activity during the
CoViD19 crisis.
Development and Intensification of
Existing Assets
During the past two years, I-RES submitted planning
applications to build circa 627 residential units across
7 existing sites and has now successfully received planning
permissions for all of these developments.
Developments in 2019
Tallaght Cross West, Dublin 24
In March 2018, the Company received a grant of planning
permission for the conversion of unused commercial space
to 18 residential units. Construction began in 2019, with
completion expected in 2020.
Coldcut Park, Clondalkin, Dublin 22
In July 2018, the Company received a grant of planning
permission to convert an unused crèche (day-care facility)
into a three-bedroom duplex residential unit. Works are
completed and the residential unit is now occupied.
Planning Permission Granted for the Following
Future Development Sites
Bakers Yard, Great Portland Street, Dublin 1
The Company owns a 0.18 ha (0.45 acre) development
site at the Bakers Yard scheme. The site is very well located
within walking distance of the International Financial
Services Centre, Trinity College and the Mater Hospital.
In September 2018, a final grant of planning permission
for the proposed 61 residential unit development was
granted. Demolition and clearance of the site was
completed in Q2 2019. The Company entered into a
contract to commence construction of the 61 units in
Q1 2020 with completion estimated by end of 2021. This
date may be impacted by restrictions on construction
activity during the CoViD19 crisis.
Review
21

Bruce House, Priorsgate, Tallaght, Dublin 24
The Company has received planning permission for the
construction of 31 residential units above ground floor
commercial space from the local planning authority.
Priorsgate, Tallaght, Dublin 24
The Company has received planning permission for
the conversion of unused commercial space into five
residential units.
Rockbrook, Sandyford
The Company owns a development site of approximately
1.13 ha (2.8 acres) at the Rockbrook scheme in Sandyford.
On acquisition of the site the Company inherited
significant in-place infrastructure, in particular the three-
level basement car park that was partially completed by
the original developer.
The Company appointed a new local design team in early
2018 to prepare an entirely new design and planning
application for the site. The planning application follows
the new planning process known as the ‘Strategic Housing
Development’ application, whereby planning applications
for residential schemes of over 100 units are presented
direct to An Bord Pleanala. Following consultation with
the local planning authority, the Company’s planning
application for 428 residential units was submitted to
An Bord Pleanala and granted planning permission in
Q3 2019.
Site B4, Beacon South Quarter, Sandyford
Site B4 is strategically located at the entrance to the
Sandyford Business District between the Beacon Private
Hospital and The Maple apartments.
A planning application was submitted for 84 residential
units above ground floor commercial space which received
a Grant from the local authority and following appeal was
granted full and final planning permission in June 2019.
Site B3, Beacon South Quarter, Sandyford
Site B3, which previously has planning for commercial
office, fronts Blackthorn Drive and is within the Beacon
South Quarter mixed-use scheme. A pre-planning
submission has been issued to the local planning authority
for a scheme of 45 residential units.
Review
22 
Property Portfolio Overview
The following tables provide the Group’s property portfolio valuation as at 31 December 2019 compared to 31 December
2018. There were no disposals during the year.
Property Overview
Property Location Location
# of Apts.
Owned(1)
Commercial Space
Owned (sq. m.)(1)
Average Monthly Rent Per Apt.
as at 30 December 2019(1)(2)(3)
Occupancy(1)(2)
South Dublin
1 Beacon South Quarter Sandyford 225 2,395 € 1,905 99.1%
2 Grande Central Sandyford 65 – € 1,792 100.0%
3 Rockbrook Grande Central Sandyford 81 3,529 € 1,729 100.0%
4 Rockbrook South Central Sandyford 189 1,136 € 1,755 100.0%
5 Bessboro Terenure 40 – € 1,732 100.0%
6 The Forum Sandyford 8 – € 1,851 100.0%
7 Elmpark Green Merrion 201 – € 1,652 100.0%
8 The Maple Sandyford 68 – € 2,130 100.0%
9 Time Place Sandyford 67 – € 1,659 98.5%
10 Beechwood Court Stillorgan 101 – € 1,724 100.0%
11 Belville Court Cabinteely 29 – € 1,449 96.6%
Total South Dublin 1,074 7,060 € 1,774 99.5%
City Centre
12 Kings Court Smithfield 83 566 € 1,524 100.0%
13 The Marker Docklands 85 1,218 € 2,640 91.8%
14 Bakers Yard Portland Street North 86 700 € 1,528 98.8%
15 City Square Gloucester Street 24 57 € 1,719 100.0%
16 Xavier Court Drumcondra 41 – € 1,509 97.6%
17 Spencer House North Docks 12 – € 1,634 91.7%
18 Coopers Court Liberties 14 196 € 1,312 92.9%
19 Richmond Gardens Drumcondra 98 – € 1,517 100.0%
20 East Arran Street Smithfield 12 – € 1,608 100.0%
Total City Centre 455 2,737 € 1,739 97.0%
West City
21 Camac Crescent Inchicore 90 – € 1,462 100.0%
22 Lansdowne Gate Drimnagh 224 – € 1,654 99.1%
23 Tyrone Court Inchicore 95 – € 1,620 98.9%
Total West City 409 – € 1,604 99.4%
North Dublin
24 Charlestown Fingals 235 – € 1,449 100.0%
25 Hampton Woods Finglas 128 – € 1,723 99.2%
26 The Coast Baldoyle 52 – € 1,421 100.0%
27 Carrington Park Santry 142 – € 1,466 100.0%
28 Heywood Court Santry 39 – € 1,390 100.0%
29 Northern Cross Malahide 128 – € 1,349 100.0%
30 Russell Court Swords 29 – € 1,333 100.0%
31 Taylor Hill Balgriggan 78 – € 1,452 82.1%(5)
32 Semple Woods Donabate 40 – € 790 37.5%(5)
Total North Dublin 871 – € 1,439 91.0%
West Dublin
33 Priorsgate Tallaght 103 2,538 € 1,245 99.0%
34 The Laurels Tallaght 19 190 € 1,333 100.0%
35 Tallaght Cross West Tallaght 442 16,098 € 1,341 99.8%
36 Coldcut Park Clondalkin 91 – € 1,525 100.0%
37 Hansfield Wood Ongar 99 – € 2,191 100.0%
Hansfield Wood II(4)
Ongar – – N/A N/A
38 Belleville & The Mills Castleknock 21 – € 1,594 100.0%
39 The Oaks Clonsilla 14 – € 1,579 100.0%
40 St. Edmunds Palmerstown 18 – € 1,614 100.0%
Total West Dublin 807 18,826 € 1,470 99.9%
Cork
41 Harty’s Quay Cork 50 – € 1,186 92.0%
Total owned portfolio as at 31 December 2019 3,666 28,623 € 1,596 98.3%
(1)
As at 31 December 2019.
(2)
Based on residential units.
(3)
Average monthly rent (“AMR”) is defined as actual monthly residential rents, net of vacancies, as at the stated date, divided by the total number of apartments
owned in the property. Actual monthly residential rents, net of vacancies, as at 31 December 2019 was €5,851,557 divided by 3,666 units (which are the total
units owned as at 31 December 2019) resulting in AMR of €1,596.
(4)
As at 31 December 2019, Hansfield Wood Phase II was still under construction.
(5)
Taylor Hill and Semple Woods were forward purchases that I-RES entered into. The residential units were delivered to I-RES on a phased basis throughout the
2019 fiscal year.
Review
23

Operational and Financial Results
Net Rental Income and Profit for the Year Ended
31 December 2019
€’000

€’000
Operating Revenues
Revenue from investment properties 62,097 50,608
Operating Expenses
Property taxes (669) (536)
Property operating costs (10,891) (8,914)
(11,560) (9,450)
Net Rental Income (“NRI”) 50,537 41,158
NRI margin 81.4% 81.3%
General and administrative expenses (4,288) (3,258)
Asset management fee (4,024) (3,178)
Share-based compensation expense (236) (228)
Net movement in fair value of investment properties 56,234 92,664
Gain/(Loss) on derivative financial instruments 131 (659)
Lease interest (4) –
Depreciation of property, plant and equipment (32) (8)
Financing costs on credit facility (12,036) (6,706)
Profit for the Year 86,282 119,785
Operating Revenues
For the year ended 31 December 2019, total operating
revenues increased by 22.7% compared to the year ended
, due to the full year of contributions
from prior year acquisitions, acquisitions and completed
forward purchases during 2019, increased rents of existing
properties and consistently high occupancy levels.
Net Rental Income
The NRI margin has been presented as the Company
believes this measure is indicative of the Group’s operating
performance. For the period ended 31 December 2019, NRI
increased by 22.8% primarily due to acquisitions completed
in the prior year having a full-year impact, acquisitions and
completed forward purchases during 2019 and organic
rental growth. The NRI margin for the current year slightly
increased to 81.4% compared to 81.3% for last year.
General and Administrative (“G&A”) Expenses
G&A expenses include costs directly attributable to
head office, such as executives’ salaries, director fees,
professional fees for audit, legal and advisory services,
depository, property valuation fees and other general and
administrative expenses.
Asset Management Fee
Pursuant to the investment management agreement
between I-RES, IRES Residential Properties Limited and
IRES Fund Management effective on 1 November 2015, as
amended and restated from time to time (the “Investment
Management Agreement”), I-RES pays 3.0% per annum
of its gross rental income as property management fees
(included under property “Operating costs” above) and
0.5% per annum of its net asset value, together with
relevant reimbursements, as asset management fees to the
Investment Manager. The asset management fee for the
year ended 31 December 2019 was €4.0 million compared
to €3.2 million for the year ended . It
is higher due to fair value gains on investment properties,
higher profits and NAV increases in 2019. See note 19
to the financial statements for further details of the
Investment Management Agreement.
Share-based Compensation Expenses
Options are issuable pursuant to I-RES’ share-based
compensation plan, namely the long-term incentive plan
(“LTIP”). Options were granted on 26 March 2015 and
16 April 2014 by I-RES to certain trustees and employees
of CAPREIT and its affiliates and to the Company’s former
Chief Executive Officer. In 2017 and 2019, additional
options were granted to the Company’s Chief Executive
Officer. See note 11 of the financial statements.
Net Movement in Fair Value of Investment Properties
I-RES recognises its investment properties at fair value at
each reporting period, with any unrealised gain or loss on
remeasurement recognised in the consolidated statement
of profit or loss and other comprehensive income. The
fair value gain on investment properties is mainly due
to the continued rental growth from income properties
and capitalisation rate compression, which has led to an
increase in value of €56.2 million for the period ended
31 December 2019.
Review
24 
Gain (Loss) on Derivative Financial Instruments
On 28 February 2017 and 15 September 2017, I-RES
entered into interest rate swap agreements aggregating
to €204.8 million. The agreements effectively convert
borrowings on a EURIBOR-based floating rate credit
facility to a fixed rate facility, the fixed portion being
EURIBOR rate of circa minus 0.09% per annum and will
mature in January 2021. For the year ended 31 December
2019, there was a fair value gain of circa €0.1 million
recorded in the consolidated statement of profit or loss
and other comprehensive income compared to a fair value
loss of circa €0.7 million for 2018.
Financing Costs on Credit Facility
Financing costs, which include the amortisation of
certain financing expenses, interest and commitment
costs, increased for the year ended 31 December 2019
to €12.0 million from €6.7 million for the year ended
. The increase is mainly due to a higher
drawdown of the new Revolving Credit Facility from
€309 million to €555 million. The financing costs also
include circa €1.4 million of deferred loan costs written
off and a prepayment cost of circa €1.8 million incurred
relating to the termination of the previous facility of
€350 million. The new facility has a lower margin as
compared to the previous facility.
Property Portfolio Overview
Property Capital Investments
The Group capitalises all capital investments related to
the improvement of its properties. For the year ended
31 December 2019, the Group made property capital
investments of €8.0 million, an increase from €5.0 million
for the year ended . The increase in
capital investments includes €1.7 million relating to
intensification of units, €0.7 million relating to capital
improvements for new acquisitions and approximately
€0.5 million relating to improvements at Beacon
South Quarter.
At Beacon South Quarter, in addition to the capital
expenditure work that has already been completed, water
ingress and fire remediation works were identified in 2016,
and I-RES is working with the Beacon South Quarter
owners’ management company to resolve these matters. In
2017, in relation to these water ingress and fire remedial
works, levies were approved by the members of the Beacon
South Quarter owners’ management company. I-RES’
portion of these levies as at 31 December 2019 is circa
€0.6 million. There is also an active insurance claim with
respect to the water ingress and related damage.
Liquidity and Financial Condition
I-RES takes a proactive approach to its debt strategy to
ensure the Group has laddering of debt maturities, and
the Group’s leverage ratio and interest coverage ratio are
maintained at a sustainable level.
The Group is in compliance with its financial covenants
contained in its facility agreement with Barclays Bank
Ireland PLC, Ulster Bank Ireland DAC, The Governor and
Company of the Bank of Ireland, Allied Irish Banks, P.L.C
and HSBC Bank PLC.
Group Total Gearing
At 31 December 2019, capital consists of equity and debt, with Group Total Gearing of 40.8%, which is below the 50%
maximum allowed by the Irish REIT Regime. As a result, the Group has capacity of circa €80 million to acquire and/or
develop additional properties. I-RES seeks to use gearing to enhance shareholder returns over the long term.
I-RES’ new Revolving Credit Facility borrowing capacity is as follows:
As at
31 December 2019
€’000

€’000
Committed Facility 600,000 350,000
Less: Drawdowns 555,020 309,159
Available Borrowing Capacity 44,980 40,841
Weighted Average Interest Rate 1.86% 1.93%
Review
25

On 18 April 2019, I-RES entered into a new revolving
and accordion credit facility of up to €450 million with
a syndicate of five banks, which could be extended to
€600 million. On 12 June 2019, I-RES exercised its option
under the Company’s facility noted above to extend its
committed facilities from €450 million to €600 million
and has amended the credit facility to include a new
uncommitted accordion facility in the amount of
€50 million.
Equity Issuance in 2019
On 13 June 2019 and 10 July 2019, I-RES successfully
completed placings to institutional investors, in two
tranches of, in aggregate, 86,550,000 new Ordinary
Shares at a price of €1.55 per share raising gross proceeds
of approximately €134.2 million (before commissions,
fees and expenses). Fees relating to the issuance of the
new Ordinary Shares are circa €3.2 million, resulting in
net proceeds of circa €131 million. The purpose of the
placing was to support the funding of the Company’s
growth strategy including the acquisition of the Marathon
portfolio. The terms of the issue were fixed on 13 July 2019
at which date the market price of the Ordinary Shares
was €1.61.
Business Performance Measures
The Group, in addition to the Operational and Financial
results presented above, has defined business performance
indicators to measure the success of its operating and
financial strategies:
Average Monthly Rent (“AMR”)
AMR is calculated as actual monthly residential rents,
net of vacancies, as at the stated date, divided by the
total number of residential units owned in the property.
Through active property management strategies, the
lease administration system and proactive capital
investment programmes, I-RES increases rents as market
conditions permit and subject to applicable laws. It has
been presented as the Company believes this measure is
indicative of the Group’s performance of its operations.
Occupancy
Occupancy rate is calculated as the total number of
residential units occupied over the total number of
residential units owned as at the reporting date. I-RES
strives, through a focused, hands-on approach to the
business, to achieve occupancies that are in line with, or
higher than, market conditions in each of the locations in
which it operates. Occupancy rate is used in conjunction
with AMR to measure the Group’s performance of
its operations.
Gross Yield at Fair Value
Gross Yield is calculated as the Annualised Passing Rents
as at the stated date, divided by the fair market value of the
investment properties as at the reporting date, excluding
the fair value of development land and investment
properties under development. Through generating higher
revenues compared to the prior year and maintaining high
occupancies, I-RES’ objective is to increase the Annualised
Passing Rent for the total portfolio, which will positively
impact the Gross Yield. It has been presented as the
Company believes this measure is indicative of the rental
income generating capacity of the total portfolio.
European Public Real Estate Association (“EPRA”)
Earnings per Share
EPRA Earnings represents the earnings from the core
operational activities (recurring items) for the Group.
It is intended to provide an indicator of the underlying
performance of the property portfolio and therefore
excludes all components not relevant to the underlying
and recurring performance of the portfolio, including any
revaluation results and results from the sale of properties.
EPRA EPS is calculated by dividing EPRA Earnings for
the reporting period attributable to shareholders of the
Company by the weighted average number of ordinary
shares outstanding during the reporting period. It has
been presented as the Company believes this measure is
indicative of the Group’s performance of its operations.
EPRA NAV per Share
EPRA NAV measures the fair value of net assets on an
ongoing, long-term basis in accordance with guidelines
issued by EPRA. EPRA NAV excludes the net mark-to-
market value of financial instruments used for hedging
purposes, where a company has the intention to keep the
hedge position until the end of the contractual duration,
and deferred tax in respect of any difference between the
fair value and the book value of the investment properties.
EPRA NAV is then divided by the diluted number of
ordinary shares at the reporting date. To optimise this
measure, I-RES focuses on growing asset value and
maximising shareholder value through active and efficient
asset and property management. It has been presented
as the Company believes this measure is indicative of the
Group’s operating performance and value growth.
Review
26 
AMR and Occupancy
Total Portfolio
Properties Owned Prior to 
(Like-for-Like Properties)
Properties Acquired After

2019 2018 2019 2018
As at
31 December AMR Occ. % AMR Occ. %
AMR
change % AMR Occ. % AMR Occ. %
AMR
change % AMR Occ. %
Residential €1,596 98.3% €1,599 99.8% (0.2%) €1,649 99.4% €1,599 99.8% 3.1% €1,453 95.1%
The Group has generated strong rental growth and maintained a high level of residential occupancy across the portfolio
during the year, indicative of the strong market fundamentals in the Irish residential rental sector. For like-for-like
properties, AMR increased to €1,649 per residential unit as at 31 December 2019, up 3.1% from €1,599 at 31 December
2018, largely due to strong increases in monthly rental rates on circa 85% of combined renewals and turnovers during
the year and consistent occupancy rates compared to last year. For like-for-like properties, AMR is used as a measure for
sustainable year over year changes in revenues.
Gross Yield at Fair Value
As at
31 December 2019
€’000

€’000
Annualised Passing Rent 72,798 53,888
Aggregate fair market value as at reporting date 1,293,241 882,416
Gross Yield 5.6% 6.1%
The portfolio Gross Yield at fair value was 5.6% as at 31 December 2019 compared to 6.1% as at ,
excluding the fair value of development land and investment properties under development. The NRI margin was
approximately 81.4% for the year ended 31 December 2019 (81.3% for the year ended ).
EPRA Earnings per Share

Total comprehensive income for the year attributable to shareholders (€’000) 86,282 119,785
Adjustments to calculate EPRA Earnings exclude:
Costs associated with early redemption of debt instrument (€’000) 3,153 –
Changes in fair value on investment properties (€’000) (56,234) (92,664)
Changes in fair value of derivative financial instruments (€’000) (131) 659
EPRA Earnings (€’000) 33,070 27,780
Basic weighted average number of shares 478,563,272 427,164,632
Diluted weighted average number of shares 481,508,009 431,236,978
EPRA Earnings per share (cents) 6.9 6.5
EPRA Diluted Earnings per share (cents) 6.9 6.4
EPRA NAV per Share
As at 31 
Net assets (€’000) 810,169 618,724
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000) 788 913
EPRA net assets (€’000) 810,957 619,637
Number of shares outstanding 521,678,946 434,153,946
Diluted number of shares outstanding 524,529,943 436,272,927
Basic Net Asset Value per share (cents) 155.3 142.5
EPRA Net Asset Value per share (cents) 154.6 142.0
EPRA basic EPS for the period was 6.9 cents for the year ended 31 December 2019.
EPRA NAV per share increased by 8.9% for the year ended 31 December 2019 compared to , as a result
of property valuation increases and rental profit in the period, offset by dividends paid in March 2019 and September 2019.
Review
27

Market Update
The Irish economy has continued to perform well,
delivering GDP growth of 5.5% in 2019 according to the
Central Statistics Office (“CSO”), again close to the fastest
growing economies in Europe. The growth is broad based,
with consumer demand, public expenditure and net trade
making positive contributions to growth.
This buoyant growth backdrop is mirrored in the labour
market, where the most recent data from the CSO show
that employment grew by 3.5% year-on-year (yoy) in
2019. The unemployment rate has dropped to a new cycle
low of 4.8% in December.
As the country has trended towards full employment, the
lack of spare capacity has led to an inevitable increase in
income. Average weekly earnings grew by 3.5% in 2019
and hourly earnings by 3.6% (per the CSO).
Crucial to Ireland’s strong economic performance has
been the resilience of the export sector. Both goods and
services exports have shown double-digit growth in
2019 (per the CSO), showing little sign of any negative
impact from Brexit or the slowdown in Global trade.
This is because Ireland’s export sector is concentrated
in defensive sectors, or less exposed to tariffs and trade
tensions, namely: agri-food, business and financial
services, information and communications technology,
life sciences, and pharmaceuticals.
The consumer remains buoyant, with CSO data showing
consumer spending up 3.4% in 2019, or by 5.3% in
nominal terms. Core retail sales grew by 4.2% in the first
eleven months of 2019. This is exceptional growth by
European standards but has mainly been driven by higher
incomes from jobs growth, increasing wages and tax cuts.
Household savings remain at high levels.
The homebuilding sector continues to pick-up with
approximately 21,000 completions (per the CSO) and
approximately 26,000 starts (per the Department of
Housing) in 2019. However, residential property price
inflation has slowed to just 0.9% with prices falling
marginally in Dublin in 2019 according to the CSO. This
reflects an inevitable slowdown following the tightening
of Central Bank mortgage lending rules, but with added
downward pressure from Brexit uncertainty, particularly at
the top end of the market.
Rental inflation is robust across the economy, with
residential rents circa 8% higher in the year to September
according to the Residential Tenancies Board. The
availability of rental properties continues to be an acute
issue, with listings of only 3,542 rental properties in
November according to Daft.ie. This is still close to
historic lows, down marginally on last year, and equivalent
to approximately 0.3% of Ireland’s housing stock as
measured in the 2016 census.
Opposition political parties in December 2019 had
proposed new rent legislation, Rent Freeze (Fair Rent)
Bill 2019, which was rejected by the Irish Government.
However, the future policy and regulatory situation could
be subject to change as a new Government is being formed
following the recent general election. The experience of
other markets, including Germany, highlights that the
proposals would cause a significant reduction in much
needed supply of new rental stock and negatively impact
the maintenance and servicing of existing stock. Policies
aimed at stimulating new supply, especially in the area of
social and affordable housing for both owner-occupiers
and residents, could have beneficial outcomes for Ireland’s
housing market.
In the UK Brexit continues to be the main political risk.
Following its formal withdrawal from the European Union
on 31 January 2020, the UK entered the ‘transition period’
during which there will be no change to trade relations –
lasting until end-2020. Although the UK government
insists there can be no extension, it is unlikely a trade deal
can be concluded by the end of 2020.
The impact of CoViD19 is still uncertain and the Central
Bank of Ireland believes it would have an adverse impact
on economic forecasts for Irish and Global economic
performance for the remainder of 2020. The Central
Bank of Ireland forecast that depending on the length
and severity of the crisis, Irish GDP could contract by up
to 8.3% in 2020 and unemployment increase to 25% in
Q2 2020. We will continue to monitor the development
of the pandemic and assess how I-RES will respond to the
changing economic environment.
Review
28 
Business Objectives and Strategy
The I-RES business model is based on a long-term
commitment to the residential market and is aligned with
Ireland’s growing need for high-quality residential space.
To fulfil this commitment, I-RES will continue to pursue
investment in acquisitions and strategic pathways that add
long-term value.
Objectives
• Provide shareholders with long-term sustainable, stable
and predictable dividends
• Grow income and net asset value through active
management of properties, accretive acquisitions and
developments, and strong financial management
Business Strategy
The Irish residential rental market continues to exhibit
strong market fundamentals: increasing growth of the
Irish economy; an influx of multinational companies
to Dublin; substantial demand for high-quality rental
accommodation from highly trained international and
local workers; and a significant shortage of available
housing. These circumstances created ideal conditions for
the execution of I-RES' strategy in 2019, and despite the
current temporary challenges posed by CoViD19, these
strong market fundamentals we believe will underpin
I-RES' growth strategy going forward.
To meet its objectives, I-RES has established the following
strategies to deliver growth:
• Acquisitions
• Development of Existing I-RES Properties
• Local Development Partnerships
• Financial Management
Acquisitions
For developments and acquisitions, I-RES is focused
on opportunities for growth in Dublin City and its
environs as well as other main urban centres in Ireland.
Going forward, I-RES is refining its asset building to
include investing in developments and acquisitions
in commuter markets outside of Central Dublin that
meet three key criteria: 1) strong local employment;
2) good transportation connections; 3) family-friendly
neighbourhoods with nearby schools.
Development of Existing I-RES Properties
While continuing to pursue accretive acquisitions, I-RES is
responding to the increased competition for asset purchase
opportunities in the Irish residential market by increasing
its focus on development and intensification opportunities
within its existing portfolio, where potential has been
identified to add an estimated 627 apartments at currently
owned properties. These apartments can be built at a cost
that is lower than current market values for comparable
properties, partly because there is already significant
infrastructure in place, such as groundworks and
parking. Execution of this strategy is evident in the grant
of planning permission at Tallaght Cross West for the
conversion of unused commercial space to 18 residential
units as well as a conversion of an unused creche into a
three-bedroom duplex residential unit.
Local Development Partnerships
I-RES is pursuing mutually beneficial partnerships with
local builders and developers. Leveraging its strong
balance sheet, I-RES can deploy financing at attractive
rates and secure the option to acquire units in approved
developments, enabling I-RES to deliver new homes
at accretive yields. An example of this strategy is the
forward purchase of 118 houses located in two excellent
suburbs in County Dublin (Balbriggan and Donabate)
from a subsidiary of Glenveagh Properties PLC for a
total purchase price of €38.2 million (including VAT, but
excluding other transaction costs).
Financial Management
I-RES takes a conservative approach and strives to manage
its exposure to interest rate volatility by proactively
managing its credit facility to reduce interest rates.
In addition, I-RES strives to maintain a conservative
overall liquidity position and achieve a balance in its
overall capital resource requirements between debt
and equity. The Company’s strategy is founded on
maintaining prudent levels of interest cover and protecting
shareholders’ funds, particularly bearing in mind the
cyclical nature of the Irish property market. As at
31 December 2019, the Company’s Group Total Gearing
was 40.8% (33.6 % as at ), well below
the 50% maximum allowed by the Irish REIT guidelines.
We will continue to use our Credit Facility to fund our
development costs and further acquisition opportunities
that arise.
Review
29

Investment Policy
Focus Activity
The Group’s aim is to assemble a portfolio within its focus
activity of acquiring, holding, managing and developing
investments primarily focused on residential rental
accommodations and ancillary and/or strategically located
commercial property on the island of Ireland, principally
within the greater Dublin area and other major urban
centres on the island of Ireland (the “Focus Activity”).
The vast majority of such properties will form the Group’s
property investment portfolio for third party rental.
The Group may also acquire indebtedness secured by
properties (including in respect of buy-to-let properties)
within its Focus Activity where it intends to gain title to
and control over the underlying property. There is no limit
on the proportion of the Group’s portfolio that consists of
indebtedness secured by properties.
Consistent with the Focus Activity, the Group may
consider property development, redevelopment or
intensification opportunities, in particular, the completion
of building out the Group’s current development
sites, where the directors of the Company consider it
appropriate having regard to all relevant factors (including
building risk, lease up risk, expected returns and time
to complete).
The Group may also acquire properties and portfolios
which include other assets outside of the Focus Activity,
subject always to a maximum limit of 20% of the overall
gross value of the Group’s property assets, provided there
is a disposal plan in place in connection with such assets
which have been deemed non-strategic and do not meet
the Group’s investment objectives or which could otherwise
have an adverse effect on the Group’s status as an Irish real
estate investment trust.
Gearing
The Group will seek to use gearing to enhance shareholder
returns over the long term. The Group’s gearing,
represented by the Group’s aggregate borrowings as a
percentage of the market value of the Group’s total assets,
will not exceed the 50% maximum permitted under
the Irish REIT Regime. The board of the Company (the
“Board”) reviews the Group’s gearing policy (including
the level of gearing) from time to time in light of then-
current economic conditions, relative costs of debt and
equity capital, fair value of the Group’s assets, growth and
acquisition opportunities and other factors the Board may
deem appropriate, with the result that the Group’s level
of gearing may be lower than 50%. The Board may also
from time to time consider hedging or other strategies to
mitigate interest rate risk.
Investment Structures
The Group also has the ability to enter into a variety
of investment structures, including joint ventures,
acquisitions of controlling interests, acquisitions of
minority interests or other structures (whether by way of
equity or debt) including, but not limited to, for revenue
producing purposes in the ordinary course of business,
within the parameters stipulated in the Irish REIT
Regime. There is no limit imposed on the proportion
of the Group’s portfolio that may be held through
such structures.
Warehousing/Pipeline Agreements
If the Group is unable to participate in sales processes for
property investments because it has insufficient funds
and/or debt financing available to it, including where its
gearing is at or close to the maximum permitted level
under the Irish REIT Regime, the Group is permitted
to acquire property investments that meet the criteria
specified in its Investment Policy (including the
acquisition of shares in property holding companies) from
time to time in accordance with the terms of warehousing
or pipeline arrangements entered into or to be entered
into by it with third parties, in each case, without
shareholder approval and for a price calculated on a basis
that has been approved in advance by the directors of
the Company.
Restrictions
Pursuant to the Irish REIT Regime, the Group is required,
amongst other things, to conduct a Property Rental
Business consisting of at least three properties, with the
market value of any one property being no more than 40%
of the total market value of the properties in the Group’s
Property Rental Business. Further, at least 75% of the
Group’s annual Aggregate Income will need to be derived
from its Property Rental Business and at least 75% of the
market value of its assets, including uninvested cash, will
need to relate to its Property Rental Business.
In addition to the foregoing, the Group will not do
anything that would cause the Group to lose its status as a
real estate investment trust under the Irish REIT Regime.
Review
30 
Changes to the Investment Policy
Material changes to the Group’s Investment Policy set
out above may only be made by ordinary resolution of
the shareholders of the Company in accordance with
the Listing Rules of Euronext Dublin and notified to the
market through a Regulatory Information Service. If the
Company breaches its Investment Policy, the Company
is required to make a notification via a Regulatory
Information Service of details of the breach and of
actions it may or may not have taken. A material change
in the published Investment Policy would include the
consideration of investments outside of the Focus Activity,
other than as permitted under this Investment Policy.
For as long as the Company remains admitted to the
Official List maintained by Euronext Dublin, any changes
to the Company’s Investment Policy must be made in
accordance with the requirements of the Listing Rules of
Euronext Dublin.
With a view to implementing the Investment Policy, the
Company has adopted an Investment Strategy, a copy of
which is set out in each annual report of the Company,
and which is subject to such amendments as made by the
Board from time to time.
I-RES has invested in accordance with the investment
policy. Please refer to the property overview table on
page 22 for further details.
Review
31

The Risk Report
Risk Management and Internal Control Systems
The Group employs a three lines of defence approach to risk management.
This system of internal controls includes, but is not limited to, the following:
Entity Level Controls Policies and Procedures Process Controls
• Board oversight of the Investment Manager
and financial, operational and compliance
matters
• Experienced personnel and oversight
established by the Investment Manager
• Tone at the top
• Defined structure and clear lines of
authority
• Communication and disclosure controls
such as management meetings and
compliance certifications
• Corporate governance policies
• Code of Conduct and Employee Handbook
• Signing Authority and Delegation Policy
governing day-to-day transactions and
larger corporate initiatives
• Risk management processes, and regulatory
monitoring practices
• Investment decision policies, including
robust due diligence policies and
procedures
• Financial reporting and risk management
processes
• Asset valuation procedures
• Operations policies and practices
• Information technology and security
policies and procedures
• Preventive and detective financial,
compliance and operational transaction
level controls
• Information technology controls
surrounding key financial and operational
systems
• Establishing and monitoring budgets and
business plans, including consideration
of risk
• Monitoring of financial results and key
operational, financial and compliance
performance indicators (net asset value, net
operating income, capitalisation rates,
occupancy, average monthly rents, gearing
and debt covenant compliance, revenue
collectability and REIT status compliance)
Board
The Board has overall responsibility
for maintaining and monitoring the Group’s
system of risk management and internal control, and
assessing its effectiveness. Such a system is designed to identify,
manage and mitigate financial, operational and compliance risks inherent
to the Group and allow the Group to meet its strategic objectives.
Audit Committee
The Board relies on the Audit Committee to assist with certain responsibilities relating to internal
controls, risk management and reporting. Refer to the Report of the Audit Committee on page 52 for the
procedures established by the Audit Committee to discharge these responsibilities.
Investment Manager Board
The Investment Manager has a Board of Directors that is comprised of independent and non-independent
directors and has oversight of the Investment Manager’s activities.
1
Management and Employees
2
Risk Management Function
2
Internal Audit
Investment Manager
The Investment Manager’s employees and management team are responsible for designing, implementing
and carrying out a system of internal controls to mitigate key risks facing the Group and allow it to meet
its strategic objectives.
Review
In addition to the above, the Board and the Investment
Manager engage third-party expertise, where needed, to
assist in carrying out processes and to provide advisory
services. The Board has appointed third-party valuation
firms to provide valuations of the property-related
investments of the Group. The Investment Manager
reviews the assumptions and inputs used by the third
party valuation firm, as well as the results of their
valuation process. Additionally, the Group has a rotation
policy for its third party valuation firms, under which an
additional valuation firm was appointed in 2019.
32 
The Investment Manager has a risk management function
which is responsible for carrying out risk assessments with
process owners. The risk management function, upon
meeting with process owners, has established a risk register
consisting of key strategic, operational, financial and
compliance/regulatory risks impacting the Group along
with associated mitigating controls. Throughout the year,
the risk management function meets with process owners
to maintain the risk register and incorporate any changes
to the risks and mitigating controls. This risk register and
related assessments include content and discussion relating
both to principal risks as well as emerging risks. While
emerging risks may not become principal risks, they are
identified and monitored throughout the year by process
owners and the risk management function. In addition
to discussion with process owners, the risk management
function also seeks guidance from outside advisors in
relation to certain external risks including emerging
risks. The risk management function also carries out an
assessment of the likelihood of occurrence of the risk and
the impact associated with each risk in the risk register. The
results of this risk assessment process and a summary of the
key and emerging risks in the risk register are presented to
the Audit Committee and the Board on a quarterly basis.
The risk assessment process and risk register also assist
the Board in determining the Group’s principal risks and
uncertainties, which have been included on pages 34 to 40.
The Investment Manager’s risk management function is
also responsible for assessing the Group’s risks that require
insurance and ensuring that adequate insurance is procured
to protect the Group from significant exposures. From
time to time, the Investment Manager’s risk management
function engages third party expertise to assist it in carrying
out risk assessments and to provide risk advisory services,
as well as in procuring optimal insurance coverage for the
Group on the most cost-effective basis.
The Board is satisfied that the Investment Manager’s
risk management function has the necessary authority,
resources, expertise and access to relevant information to
fulfil its role and is operating effectively as at the date of
this Report.
The Group has not established an internal audit
function but instead relies on the Investment Manager’s
internal audit function in order to assist the Audit
Committee and Board to assess the effectiveness of the
Group’s risk management and internal control systems.
For further details regarding the Audit Committee’s
annual assessment of the need for an internal audit
function, refer to the Report of the Audit Committee
on page 57. The Investment Manager’s internal audit
function consults with the Investment Manager’s staff,
the Investment Manager’s risk management function
and the Group’s Board of Directors to determine its
mandate. In shaping its mandate, the Investment
Manager’s internal audit function also considers the work
performed by the Investment Manager’s risk management
function. This mandate includes auditing the design
and operating effectiveness of key operational, financial
and compliance related internal controls making up risk
mitigation activities. The Investment Manager’s internal
audit function has adequate authority and access to
the personnel, processes and records of the Investment
Manager and the Group in order to perform its work. The
Investment Manager’s internal audit function meets with
the Group’s external auditor regularly throughout the year
to discuss internal control and audit matters. Additionally,
the Group’s external auditor has access to the internal audit
function’s findings and reports. The Investment Manager’s
internal audit function presents quarterly to the Audit
Committee on its work related to the internal controls of
the Group. The Audit Committee has direct access to the
Investment Manager’s internal audit function through
quarterly Audit Committee meetings, including in-camera
sessions as required. Furthermore, the Audit Committee
plays a key role in assessing the annual internal audit plan
put forth by the Investment Manager’s internal audit
function and also in reviewing any significant findings
resulting from the audit work carried out under this plan.
Taking into account the information on principal risks
and uncertainties provided on pages 34 to 40, and the
ongoing work of the Audit Committee in monitoring the
risk management and internal control systems on behalf
of the Board, the Board:
• is satisfied that it has carried out a robust assessment of
the principal risks and emerging risks facing the Group,
including those that would threaten its business model,
future performance, solvency or liquidity; and
• has reviewed the effectiveness of the risk management
and internal control systems, including all material
financial, operational and compliance controls (including
those relating to the financial reporting process), and no
material failings or weaknesses were identified.
Going Concern Statement
The directors, after making enquiries, have a reasonable
expectation that the Company, and the Group as a whole,
have adequate resources to continue operating for at
least 12 months. For this reason, the going concern basis
of accounting continues to be adopted in preparing the
financial statements included in this Report.
Assumptions are built in for the statement of profit or
loss and other comprehensive income, statement of
financial position and statement of cash flows, and these
are rigorously tested by management and the directors.
Sensitivity analysis has been applied to reflect the potential
impact of some of the principal strategic and commercial
risks of the Group, as described on pages 34 to 40,
including the recently evolving CoViD19 pandemic.
Review
33

Review
After making enquiries and having considered the
uncertainties facing the Group and the options available
to it, the directors have a reasonable expectation that
the Group will have sufficient funds available to meet
liabilities as well as other planned expenditures as they
fall due in the foreseeable future. Based on the above, the
directors continue to adopt the going concern basis of
accounting for the preparation of the financial statements.
Viability Statement
Assessment of Prospects
The Group’s strategy has been outlined on page 28. Under
this strategy, the key factor underlining the Group’s
prospects is:
Growth: The Group is targeting organic net rental
income growth supplemented by increased income from
acquisitions and development of assets.
The Board has considered the changes in the risk profile
of the Group that this entails and has determined that
they are acceptable in the context of the risk profile of the
Group as a whole.
The Assessment Period
The Group’s viability assessment includes a budget for the
next financial year, together with a forecast for the following
two financial years. Achievement of the one-year budget
has a greater level of certainty and is used to set near-term
targets across the Group. Achievement of the three-year
plan is less certain than the budget but provides a longer-
term outlook against which strategic decisions can be made.
The directors concluded that three years was an
appropriate period for the assessment given that this is the
key period of focus within the Group’s strategic planning
process, and it fits well with the Group’s development
cycle. The objectives of the strategic planning process are
to consider the key strategic choices facing the Group
and to build a consolidated financial model with various
stress scenarios, taking into account the principal risks and
uncertainties facing the Group.
The Assessment Process and Key Assumptions
Detailed financial forecasts are prepared, with the first year
of the financial forecast forming the Group’s operating
budget, and subject to a rolling forecast process throughout
the year. Subsequent years of the forecasts are extrapolated
from the first year, based on the overall content of the
strategic plan. Progress against financial budgets and key
objectives is reviewed in detail on a monthly basis by the
Group and shared with the Board on a quarterly basis.
Mitigating actions are taken, whether identified through
actual trading performance or the rolling forecast process.
The key assumptions within the Group’s financial forecasts
include: organic revenue growth supplemented by investment
in acquisitions and development, supported by market trends.
Assessment of Viability
The viability assessment has considered the Group’s
profitability, capital values, gearing, cash flows and other key
financial metrics over the period. These metrics are subject
to alternate severe stress scenarios, in which a number of
the main underlying assumptions are changed based on
some of the principal risks of the Group, as described on
pages 34 to 40, to reflect a comprehensive range of possible
outcomes. These scenarios are intended to illustrate what
the directors believe are a range of plausible outcomes and
do not necessarily capture the worst cases. The actual results
may vary significantly from these scenarios.
Specifically, in this scenario the Group considers the
prolonged pandemic, regulation and legislation, political
and economic risks (included in the Principal Risks
and Uncertainties section), which would negatively
impact the cash flows and banking covenants. The key
assumptions for this severe stress but plausible scenario
include reduction in revenues due to no rental increases
applied on renewals and turnovers, significant increase in
vacancy and bad debt expenses from existing properties
and acquisitions, and yield expansion on assets. The
valuations are based on a long-term view of the economy.
Under a prolonged recession, the directors believe that
the Company has mitigants for liquidity and cash flows
by seeking a consensual agreement with the vendors
for deferment of our future commitments on forward
purchases, reduction in discretionary capital expenditure
and dispositions of non-core residential units, as well as
further equity raise to deleverage if required. Also, repair
and maintenance expenses and property management
expenses, which are two significant components of the
operating expenses, are variable expenses that can be
managed to reduce costs.
The directors have assessed the viability of the Group over
a three-year period to December 2022, taking account
of the Group’s current position and the potential impact
of the principal risks. While the severe stress tests are
hypothetical, the Group has control and mitigation
measures in place to withstand or avoid potential
unfavourable impacts under the scenarios, such as seeking
a consensual agreement with the vendors for deferment
of acquisitions and development and disposition of assets.
Based on this assessment, the directors have a reasonable
expectation that the Group will be able to continue to
sustain its operation and meet its liabilities as they fall due
over the period to December 2022. The Group has a strong
balance sheet, with no near term debt maturities, and
currently has sufficient headroom on its Credit Facility.
In making this statement, the directors have considered
the resilience of the Group, taking into account its current
position, the principal risks facing the business in severe
but reasonable scenarios, and the effectiveness of any
mitigating actions.
34 
Review
Principal Risks and Uncertainties
The directors of the Company set out below the principal risks and uncertainties that the Group is exposed to and that
may impact performance in the coming financial year. The Group proactively identifies, assesses, monitors and manages
these risks with the assistance of the Investment Manager and CAPREIT LP, as well as the combined expertise of its
Board. The principal risks and uncertainties, along with their strategic impact on the business and mitigating factors, have
been outlined. The Group has also provided its belief on how the risk has trended (remained stable, is increasing or is
decreasing) from the year ended .
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Prolonged
Pandemic
A widespread and
prolonged
pandemic will have
a negative effect on
Ireland's economy,
and in turn have an
adverse impact on
the performance of
the Group.
The global spread of the coronavirus
(CoViD19) has resulted in major disruptions
to both businesses and personal lives. The
Group, its Investment Manager, and its key
vendors will experience disruptions to
day-to-day operations if a significant portion
of their employees become ill or are required
to be quarantined for extended periods.
As the situation has evolved recently and very
rapidly, there is significant uncertainty as to
what the overall economic impact will be. It is
anticipated, however, that there will be a
negative impact to the Group's cash flows due
to increased unemployment, reduced business
activity, and government measures taken to
ease the economic impact of the CoViD19
virus to the general public.
High
The Group and its Investment Manager
continue to monitor the circumstances and
their effect on the operation and
macroeconomic environment.
The Group and its Investment Manager have
both convened Crisis Management Teams
consisting of senior leadership and subject
matter experts in order to provide direction to
various elements of the operation. The
Group's business continuity plan has been
activated, and the Group is taking steps to
continue providing support to tenants in the
evolving environment.
Given the difficult environment for tenants,
the Group will work with tenants and housing
authorities to minimize the impact of the
CoViD19 virus on tenants and their homes.
Increasing
The CoViD19 virus has
evolved recently, and rapidly.
While governments around
the world and health
authorities are taking
significant measures to slow
the spread of the CoViD19
virus, it will take an extended
period of time to understand
the full impact of the virus.
Furthermore, it will take a
prolonged period of time for
businesses to return to
normal operations.
Economy
A general
weakening of the
Irish economy.
Reduced economic activity could have a
negative impact on asset values and net rental
income, which could affect cash flows.
Medium
The Group’s focus is on Dublin, which has
been more resilient economically than other
areas of Ireland in the past.
On an ongoing basis, the Investment Manager
monitors business performance and related
economic factors and reports to the Board
quarterly on the aforementioned.
Increasing
The Irish economy has
experienced healthy growth
over the last few years in
terms of GDP increases and
declines in the jobless rate.
However, CoViD19 pandemic
is anticipated to impact
significantly on 2020 growth
forecasts. The recent OECD
reports suggests the impact
on the Irish economy could
be less than other countries
due to the diversity of its
industry base and
export sector.
35

Review
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Regulation and
Legislation
The government
may introduce
legislation,
including tax and
rent legislation, that
has an adverse
impact on the
performance of
the REIT.
In December 2016, the Government passed
legislation, which amongst other things, limits
annual rent increases to 4% in “rent pressure
zones”, which includes Dublin and Cork and
impacts all of the Group’s investment properties.
2019 saw further significant changes to the
Residential Tenancies Acts which govern
residential tenancies in Ireland. These changes
included:
1. 
Effective June 2019, the 4% cap on rent
increases applies to properties built after
December 2016;
2. 
Changes to termination rights and
notice periods;
3. 
The introduction of limitations on
short-term lettings;
4. 
An increasing of the Residential Tenancies
Board’s investigations and sanctioning
powers;
5. 
Changes to lease registration requirements;
6. 
An expansion of rent control areas and
changes to rent control exemptions;
7. 
A new definition of “substantial change” in
the nature of the rental property; and
8. 
An expansion of the residential tenancies
legislation to cover student specific
accommodation.
Following the election on 8 February 2020, a
new Government is being formed and is likely
to bring increased regulation. This may have a
negative impact on revenues and asset values
if some of the policy intentions being
discussed during the election campaign are
brought forward by the new Government.
Additionally, as legislation changes, the
Investment Manager may have to incur
incremental costs to comply, such as staff
training, modification of procedures and
technology systems, and consultations with
professional advisors.
High
The rent legislation, including the 4%
limitation on annual rent increases, had been
reflected in the Group’s expectations of
financial performance and growth in 2020
and future years. The Group and its
Investment Manager also employ an effective
expense management strategy, keeping in
mind the limitation on revenue growth
imposed by the legislation. Additionally,
occupancy throughout the portfolio remains
close to 100%.
The Investment Manager’s due diligence
process for acquisitions also factors in the
impact of the 4% limitation on annual rent
increases. As well, there is a continued focus
on development and intensification
opportunities (the legislation with respect to
the 4% limitation on annual rent increases
does not apply to the first rent set in any
new developments).
If any new legislation is enacted, relevant staff
will receive training and education in order to
continue compliance with the rent legislation.
The Group will continue to monitor for and
evaluate any further changes in the legislation,
and their impact on the growth strategy.
Increasing
On 5 December 2019,
an opposition (non-
government) political party,
Sinn Féin, was given leave to
introduce the Rent Freeze
(Fair Rent) Bill 2019 (“the
Bill”). The Bill proposed to
impose a rent freeze on
residential rents.
Residential rental markets
and regulation continue to be
a key topic of interest in
Ireland, given the current
lack of supply in the housing
market and the resulting
impact on rents. As such,
there is uncertainty as to
whether additional changes
to rental regulations will be
enacted and if so, the
magnitude of the impact of
these changes.
Political
Material changes to
the political
environment in
areas significantly
impacting the
Group’s operations.
In Ireland, a general election was held on
8 February 2020 and a new Government is
being formed. Housing continues to be a
significant topic of discussion amongst the
political parties and uncertainty around
future Government policy on housing and
regulation of the private rental market will
likely continue for some time until a new
Government is formed and provides greater
clarity of their policy intentions.
The Rent Freeze (Fair Rent) Bill 2019 in its
current form proposes to provide for a rent
freeze for all existing and new tenancies. This
bill if passed in its current form would
negatively impact revenues, asset values,
ability to raise funds via debt or equity, and
the Group’s overall growth.
On 23 June 2016, the UK voted to leave the
European Union (EU). This withdrawal took
place on 31 January 2020, and now the UK
and the EU have entered a transition period
where the future relationship between the two
parties will be negotiated. There continues to
be a significant amount of uncertainty around
potential effect of the withdrawal on the Irish
economy as the UK is one of Ireland’s largest
trading partners. The withdrawal will also
likely impact immigration, foreign
investment, economic and fiscal policy, and
regulatory practices.
High
The Investment Manager and the Board are
continuing to consider the impact of various
political risks on the Group’s business and will
monitor, evaluate and adapt to developments
as they arise.
Increasing
The recent general election in
Ireland could impact housing
policy and legislation.
Additionally, as the UK and
EU progress through the
transition period, there
continues to be uncertainty
around the withdrawal’s
impact on trade relations
between Ireland and the UK,
and on Ireland’s economy.
36 
Review
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Access to Capital
The ability to access
capital becomes
limited.
If the Group is unable to source debt
financing at attractive rates or raise equity, it
may not be able to meet its growth objectives
through acquisitions and development or
preserve its existing assets through
maintenance or capital expenditures.
Medium
The Investment Manager and the CEO have
developed relationships with lenders, both in
Ireland and abroad, which provide ongoing
financing possibilities.
The quality of the Group’s property portfolio
and the conservative gearing target of 45% on
total assets (particularly apartments) are
attractive credit characteristics for potential
lenders, which to date have facilitated the
raising of debt financing. The Group currently
has a revolving and accordion credit facility of
up to €600 million.
Since year end the Group has issued a Notes
Private Placement raising €200 million
equivalent which has been used to part repay
the Revolving Credit Facility.
The Group invests in properties that generate
a strong rate of return for its investors and, in
turn, increases the attractiveness of its shares
and dividends. As such, the Group believes
it can raise additional capital if required
but only after considering existing
shareholders’ interests.
The Group actively manages its liquidity
needs and monitors capital availability.
Stable
At 31 December 2019 the
Group had drawn on its
credit facility in the amount
of €555 million. The Group
continues to monitor
liquidity needs to ensure that
future capital requirements
are anticipated and met
within the limits of its
leverage targets.
Based on its financial
position and performance, as
well as its relationships with
lenders and current and
potential investors, the
Group does not believe that
its ability to obtain debt
financing or raise equity has
changed from last year.
Opportunity to
Acquire or Develop
Assets
Investment
opportunities may
become limited.
The Group may not grow in number of
apartments relative to the past if there is a
lack of development and acquisition
opportunities. Additionally, investment
opportunities could be limited if they become
overly costly or there is excess competition.
If growth opportunities are limited, it will
impact the Group’s ability to generate growing
returns for its shareholders.
Medium
The Group has become a sought-after investor
for new investment opportunities that arise in
the market.
The Investment Manager has deep market
knowledge and has established strong
industry relationships, which provide for new
growth opportunities. Additionally, the
Investment Manager has dedicated staff
focused on identifying and evaluating a
pipeline of acquisition and development
opportunities.
The Group focuses on a three-pronged
strategy for growth. This involves acquisitions,
development opportunities within existing
assets, and partnering with developers in
relation to new development opportunities.
Increasing
Completed assets are in
limited supply, and new
supply is coming online more
slowly than expected. The
CoViD19 restrictions will
exacerbate this further. Prior
to the recent CoViD19 crisis,
competition via new entrants
and funds, though moderated,
had continued to increase,
leading to continued cap-rate
compression and reduced
opportunity for accretive
acquisitions. It is too early to
establish the competitive
environment post CoViD19.
The Group has continued to
maintain an active pipeline of
acquisition and development
opportunities and continues
to pursue opportunities to
develop its existing assets
as appropriate.
37

Review
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Cost of Capital
and Loan to
Value Ratio
Interest rates
increase, and/or
property valuations
decrease, resulting
in higher debt
service costs and
restrictiveness of
future leveraging
opportunities.
Investors’ expected
rate of return
increases, resulting
in pressure to
increase dividend
yields.
The Group is exposed to risks associated with
movements in interest rates on its floating
rate bank debt, as well as movements in
property valuations.
Significant increases in interest rates, and the
cost of equity, could affect the Group’s cash
flow and its ability to meet growth objectives
or preserve the value of its existing assets.
Additionally, property valuations are
inherently subjective but also driven by
market forces. A contraction in property
values could make the Group too highly
geared, which would result in higher interest
costs and covenant breaches.
Medium
The Group has a target loan to value ratio of
45%, which is in line with the debt covenant
limits. The target loan to value ratio seeks to
ensure that the Group does not become too
highly geared, which would result in high
interest costs and covenant breaches, or in
being under geared, which would result in lost
opportunity for higher returns.
The Group has a proven track record of
strong and accretive results. Strong results,
combined with being in a residential industry
that is experiencing healthy demand, helps
manage shareholders’ expectations and thus,
the cost of equity.
Hedging instruments are used to limit the
Group’s interest rate exposure and the Group
has hedged 37% of its interest rate exposure
on its Revolving Credit Facility.
Regarding the floating rate on the bank
indebtedness, the Investment Manager
consults on a regular basis with the external
lenders regarding interest rate exposure and
whether hedging should be put in place,
which is subject to Board approval.
The Group closely monitors property values by
updating its property valuations twice annually
through the use of two property valuation firms.
Increasing
The European Central Bank is
not expected to significantly
increase interest rates over the
short to medium term given
the current and anticipated
levels of uncertain economic
indicators. As such, the Group
does not anticipate a material
increase in debt financing
costs.
The Group’s assets have
increased in value over the last
three years. CoViD19 may
impact the valuations of the
Group in the short term. It is
too early to determine the
magnitude of the short-term
adverse impact on the
valuation of the Group’s
investment property. The
Group’s reasonable expectation
is that the residential asset class
should continue to perform
well in the long term.
Investment
Manager
Performance
A material decline
in the Investment
Manager’s
performance, or if
it is unable to carry
out its duties under
the Investment
Management
Agreement, or
the Investment
Manager serves
notice to terminate
its services in
accordance with
the terms of
the Investment
Management
Agreement.
The Investment
Manager can serve
12 months’ notice
to terminate
their services.
The Investment Manager, through its asset
management and property management
functions, plays an integral part in the
day-to-day operations and management of
the Group’s assets. As a result, a significant
decline in its performance or an inability to
carry out its mandate or if it chooses to serve
notice to terminate its services could lead to a
decline in the Group’s financial and operating
performance, and significant disruption to the
Group’s operations.
The Investment Manager must comply with
certain regulations including the Property
Services (Regulation) Act and the Alternative
Investment Fund Management Directive
(“AIFMD”) of the European Union. Failure to
do so could result in it losing its ability to
provide property management and/or asset
management services under the Investment
Management Agreement to the Group.
If the Group had to select another investment
manager, there would be significant
interruptions to day-to-day operations given
the Group’s reliance on the Investment
Manager’s personnel, processes and
IT systems.
Medium
The Investment Manager is made up of a
well-regarded multi-disciplinary team of
qualified property and finance professionals
experienced in the selection, financing and
management of property investments.
The Board oversees and evaluates the work
of the Investment Manager including
monitoring key performance indicators such as
occupancy, rental revenues, net rental income,
collectability of rents and net asset values.
Additionally, the Board periodically reviews
actual revenues and expenditures against
budgets. The Board also has a close working
relationship with the Investment Manager.
Key personnel of the Investment Manager and
its parent company, CAPREIT LP and its
affiliates, are financially incentivised through
the Group’s long-term incentive plan.
The Investment Manager’s compliance and
financial professionals spend a considerable
amount of time ensuring compliance with the
AIFMD requirements, as well as monitoring
AIFMD regulations for any changes that
impact compliance processes. The Investment
Manager’s policies and procedures are
reviewed regularly to incorporate any changes
in legislation or procedure.
Additionally, the Investment Manager has
engaged third party advisors and firms to assist
it in complying with the AIFMD and carrying
out associated functions, as well as making
required filings to the Central Bank.
The Investment Manager regularly reports on
its compliance activities relating to AIFMD to
the Board of the Company, and the Board of
the Investment Manager oversees compliance
with the AIFMD to ensure that the Investment
Manager meets its regulatory obligations at
all times.
The Company continues to be satisfied with the
performance of the Investment Manager and will
engage proactively with IRES Fund Management
in relation to any proposed changes to the
Investment Management Agreement. The
Investment Management Agreement provides
that, after 1 November 2019, IRES Fund
Management may serve 12 months’ notice of its
intention to terminate the Agreement and, if
requested by the Company, the Investment
Manager will provide transition services for a
period of three (3) months at the Company’s cost.
Stable
The Investment Manager has
continued to have strong
performance as evidenced by
the returns being generated
on the Group’s assets and
ability to manage day-to-day
operational matters. The
Group does not anticipate any
material changes in the
Investment Manager’s ability
to continue this performance
or its ability to comply with
AIFMD regulations.
38 
Review
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Concentration
Risk
The Dublin market
experiences
material
circumstances that
result in lower
occupancy or
demand for rental
properties.
A lack of geographical or asset diversification
could lead to a material financial impact to
the Group in the event of a decrease in
occupancy or lower rents.
Medium
Dublin has continued to be an economically
resilient market. While the bulk of the existing
portfolio is diversified across various districts
within Dublin, the Company now owns
property in Cork and continues to explore
opportunities in other areas of Ireland with
strong economic fundamentals.
The Investment Manager monitors supply
and demand for rental apartments in
operating areas where the Group’s investment
properties are located.
Additionally, the Investment Manager
monitors and reports on certain key metrics
around investment performance and risk, as
well as compliance with the Group’s stated
investment policy, on a quarterly basis to
the Board.
Stable
Real estate fundamentals in
Dublin continue to be strong
as a result of the economy
and population growth.
The level of concentration
is within the Group’s risk
appetite given the accretive
opportunities still presented
by being focused on the
Dublin market.
Construction
Increasing
construction costs,
cost overruns
or delays in
completion of
development
projects or defects
in construction or
non-compliance
with building
standards.
The Group may not meet its performance
targets if there are material costs in excess of
estimates to build a property or if there are
unanticipated delays in securing planning
permissions or completion of construction,
pushing back occupancy of the property and
thus impacting the returns the Group can
generate for shareholders. Increasing costs
of construction could also impact returns
or the Group’s ability to take on construction
projects.
Furthermore, post construction, structural
deficiencies or non-compliance with building
code may be discovered which could also
impact returns.
Medium
In sourcing/reviewing potential development
opportunities, the Investment Manager
undertakes a detailed investment and viability
analysis and ensures that the development
opportunity meets the investment strategy,
while building in timing and cost
contingencies as needed. This analysis is
presented to the Board for review and the
Board must approve all development
opportunities prior to commencement.
The Investment Manager will typically
recommend a tender process is completed
for the main contractor and selection of a
potential main contractor will be based on
their proven ability and capacity to complete
construction projects of a similar nature. The
Investment Manager performs adequate due
diligence on its main contractors before
recommending their engagement to the
Board. Additionally, the Investment Manager
will make a recommendation in respect of the
proposed form of contract and obtains
performance bonds where possible. The
Investment Manager will retain a technical
team to closely monitor each project and the
work of the main contractor to ensure the
project is being completed in compliance with
required standards and is on schedule and
within budget. The Investment Manager also
engages an independent quantity surveyor to
ensure the contractor billings are in line with
the actual work completed. The Group uses
fixed rate contracts to remove cost inflation
risk during the construction phase.
To protect against structural defects and
non-compliances with building standards, the
Investment Manger receives completion
certificates and Opinions of Compliance (in
respect of planning permissions and building
regulations) from the main contractor and
where necessary, engages third party
professionals to inspect the building during
and upon completion of construction.
Furthermore, an Assigned Certifier has been
proactively engaged across major development
projects in order to minimise risk of
non-compliance with statutory requirements.
The Investment Manager will require a suite of
collateral warranties from the design team and
main contractor. Additionally, a structural
defects liability period (typically 12 months)
will be sought, during which time a holdback
will be retained pending resolution in respect
of any construction defects which have
become apparent in the 12 months
immediately post practical completion.
Stable
The main contracting firms
used by the Group have been
active in the office and hotels
sectors and continue to seek
projects in the residential
sector by way of
diversification. While many
contracting firms have been
expanding their teams to
accommodate increasing
activity in the sector there
remains pressure in the
availability of construction
labour and consultants.
Additionally, there continues
to be upward pressure on
construction costs.
39

Review
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Cybersecurity and
Data Protection
Failure to comply
with data
protection
legislation or
being subject to a
cybersecurity
attack.
Failing to comply with data protection
legislation and practices could lead to
unauthorised access and fraudulent activities
surrounding confidential/non-public business
information or personal data, particularly that
belonging to the Group’s residents. This could
result in direct losses to stakeholders, penalties
to the Group and/or the Investment Manager
for non-compliance, potential liability to third
parties and reputational damage to the Group.
Medium
The Investment Manager is responsible for
data privacy and protection on behalf of itself
and the Group and remains adaptable to
constant technological and legislative change.
Employees receive regular awareness training
on cybersecurity, privacy and data protection.
Access to personal data is controlled through
physical measures (e.g. locked offices and
storage locations, alarm monitoring,
cameras), administrative measures (e.g. data
minimisation, data retention policies, data
destruction practices, and audits) and IT
security measures (e.g. password protection,
firewalls, antivirus, intrusion detection and
encryption). The Investment Manager also
engages third party consultants/advisors,
where required, to assist with assessing the IT
environment and cyber risks.
The Investment Manager maintains
cybersecurity insurance coverage on behalf of
itself and the Group and continues to monitor
and assess risks surrounding collection,
processing, storage, disclosure, transfer,
protection, and retention/destruction
practices for personal data.
Increasing
As technological change has
occurred at a rapid pace, the
inherent risks surrounding
cybersecurity and data
protection have also evolved
and continue to evolve at an
equally rapid pace. European
Union Data Protection
legislation (e.g. General Data
Protection Regulation and
ePrivacy) is increasing in
prescriptiveness, obligation
and administration.
Additionally, issues such as
cross border data transfers
and vendor risk complexities
continue to pose challenges,
and phishing and social
engineering attempts
continue at an accelerating
pace due to criminal online
“business models” focusing
on high volume/quick hit
ransomware deployment and
basic financial fraud via
wire transfer.
Acquisition Risk
Investment
decisions may be
made without
consideration of
all risks and
conditions.
Investment assets may decrease in value or
result in material unanticipated expenditures
subsequent to acquisition as a result of
unknown risks and conditions at the time of
purchase, including structural deficiencies or
non-compliances with building code.
Medium
The Investment Manager carries out due
diligence on every investment opportunity
(both acquisitions and development projects)
to determine its fit with the Group’s stated
investment policy. This includes all standard
investigations, which are reasonable and
practical under the circumstances, to evaluate
the building structure and condition,
compliance with planning and building
regulations, and the likely magnitude of
capital expenditures over a three- to five-year
period. This involves the appointment of third
party experts to carry out technical and
engineering studies and investigations.
Post-acquisition, the Investment Manager,
through prudent operating practices,
monitors and manages any property related
issues, including building deficiencies, as
they arise.
Where structural defect insurance policies are
still in force, they transfer to the Group upon
change of title.
Whenever possible, the Group seeks to have
collateral warranties assigned at the time
of acquisition.
Stable
The Investment Manager’s
due diligence practices have
not changed substantially
since last year as they
continue to be consistent
with industry norms and
align with the Group’s
risk appetite.
40 
Review
Risk Strategic Impact Mitigation Strategy
Risk Trending Since
December 31, 2018
Tax Compliance
Risk
Failure to comply
with tax legislation
including REIT
rules, VAT and
stamp duty.
If the Group fails to comply with REIT rules
or there are changes to tax policies it could
result in the loss of REIT status and/or change
the tax treatment of the Group’s income
and thus decrease the attractiveness of the
Company as an investment to current or
potential shareholders.
Low
The Investment Manager proactively
monitors and tests the Group’s compliance
with the rules and regulations affecting REIT
status and regularly reviews and considers
how the Group’s planned operations may
impact compliance with these rules. The
results of these compliance reviews are
reported to the Board on a quarterly basis, at
a minimum.
The Investment Manager also engages
independent tax and legal advisors in relation
to compliance monitoring, where needed. Its
dedicated risk and compliance personnel are
alert and vigilant regarding these matters and
any impending or emerging changes in REIT
rules and regulations or tax policies.
Stable
The Group does not believe
the risk of non-compliance
has changed from last year
and the Investment Manager
has not changed their
monitoring and testing
processes in a way that could
result in a change in the risk.
Planning
Delays in obtaining
planning
permissions in
respect of the
Group’s
development sites
leading to delays in
commencement
and delivery of
residential units.
Planning permission is required from
the relevant planning authority prior to
the development of the Group’s
development sites.
Delay in achieving planning permission may
result in a slower level of portfolio growth
and income generation from the
development assets.
Low
The Investment Manager appoints competent
professional teams in respect of each
development opportunity (including
architectural and planning consultants) to
advise on the preparation of planning
applications. Additionally, the Investment
Manager has dedicated resources to actively
manage the development process on behalf
of the Group. The appointed project
management team continuously reviews
project specific risk matrices for each
project stage.
Decreasing
The Group received a
number of planning
permissions during the
course of 2019.
The Strategic Housing
Development planning
application process allows
for greater consultation
with authorities prior to
submission of planning
applications. This process
relates to residential
developments of over
100 units.
Governance
42 
Governance
I-RES Board of Directors
Declan Moylan
Independent
Non-Executive Chairman
Appointed: 31 March 2014
Nationality: Irish
Committee membership:
Audit Committee: Appointed 31 March 2014 to
18 April 2017
Remuneration Committee: Appointed 31 March 2014
Nomination Committee: Appointed 31 March 2014
Declan Moylan is former Managing Partner and Chairman
of Irish law firm Mason Hayes & Curran. During his
legal career his practice focused on advising international
corporates establishing businesses in Ireland.
Mr. Moylan has extensive board experience in commercial
and not-for-profit organisations. He is currently a director
of Nitro Software EMEA Limited, the Europe, Middle
East and Africa division of Nitro Software Limited, which
listed on the Australian Securities Exchange in 2019, and
Monster Energy Limited, subsidiary of Monster Beverage
Corporation of Corona, California listed on NASDAQ.
Mr. Moylan is Chairman of Butler Corum European
Hospitality Fund, an investment fund focused on hotel
properties across the Eurozone. He is a member of the
Audit Committee of the Office of Director of Public
Prosecutions which supervises Irish State prosecutions
of criminal matters and referendum petitions. He is
Chairman of WEEE Ireland Limited, the country’s largest
compliance scheme for the disposal of Waste Electric
and Electronic Equipment (WEEE) in compliance with
European Directive 2012/19/EU.
Mr. Moylan is a former member of Dublin City University
Governing Authority. He is a former director of the Irish
Museum of Modern Art in Dublin and of the Crawford
Art Gallery in Cork, both on appointment by the Minister
for Arts, Regional, Rural and Gaeltacht Affairs in Ireland.
Phillip Burns
Non-Independent
Non-Executive Director
Appointed: 23 March 2016
Nationality: American and
British
Committee membership:
Remuneration Committee: Appointed 23 March 2016 to
31 March 2017
Nomination Committee: Appointed 23 March 2016
Phillip Burns is the Chief Executive Officer and trustee
of European Residential Real Estate Investment Trust
(ERES) (TSXV:ERE.UN), an unincorporated, open-
ended real estate investment trust, a position Mr. Burns
holds as a senior employee of CAPREIT, which is the
majority unitholder of ERES. ERES is Canada’s only
European-focused residential REIT and currently owns a
portfolio of 131 multi-residential properties, comprised
of 5,632 residential units in the Netherlands. Mr. Burns is
also the Founder and a Principal of Maple Knoll Capital.
During his career, he has been involved as a principal or
advisor in transactions with an aggregate value of over
€20.0 billion, with more than 70% centred around real
estate across multiple geographies. Mr. Burns has also
been involved with raising in excess of €11.0 billion of
equity for principal investment, including over €2.5 billion
dedicated to real estate.
Previously, Mr. Burns was Chief Executive Officer of
Corestate Capital, an investment manager focused on
distressed real estate transactions in Europe. Prior to
this, he was a Managing Director at Terra Firma Capital
Partners, where he specialised in infrastructure, real estate
and credit. Mr. Burns also worked for Goldman Sachs,
where he focused on mortgage finance, real estate and
general corporate finance, and Skadden Arps, where he
worked as a corporate attorney.
Mr. Burns holds a Bachelor of Science in Aerospace
Engineering from the University of Michigan and a
Juris Doctor, summa cum laude, from Syracuse University.
43

Governance
Joan Garahy
Independent
Non-Executive Director
Appointed: 18 April 2017
Nationality: Irish
Committee membership:
Audit Committee: Appointed 18 April 2017
Remuneration Committee: Appointed 18 April 2017
Nomination Committee: Appointed 1 November 2017
Joan Garahy is Managing Director of ClearView
Investments & Pensions Limited, an independent
financial advisory company. Ms. Garahy has 30 years
of experience advising on and managing investment
funds. She was a founder and former Managing
Director of HBCL Investments & Pensions and former
Director of Investments at HC Financial Services. In
the past, Ms. Garahy worked with the National Treasury
Management Agency as Head of Research at the National
Pension Reserve Fund and was also Head of Research with
Hibernian Investment Managers (now Aviva Investors).
Prior to that, she spent 10 years as a stockbroker with both
Goodbody Stockbrokers and NCB in Dublin.
Ms. Garahy is a member of the board of directors of
Kerry Group plc (ISE:KRZ) since January 2012 and
has been Chair of its Remuneration Committee and a
member of its Audit Committee since February 2012.
In May 2018, Ms. Garahy was named as the Senior
Independent Director at Kerry Group plc. She has also
served as a member of the board of directors of ICON plc
(NASDAQ:ICLR) since November 2017 and is Chair of
the Compensation & Organisation Committee. She has
also served as a director of a number of private companies
and is a non-executive director of the Irish Chamber
Orchestra (charity).
Ms. Garahy is a Qualified Financial Advisor and a
registered stockbroker. She has an Honours Bachelor of
Science and is a Master of Science graduate. She holds a
C.Dip in Accounting & Finance (ACCA).
Tom Kavanagh
Independent
Non-Executive Director
Appointed: 1 June 2018
Nationality: Irish
Committee membership:
Audit Committee: Appointed 1 June 2018
Remuneration Committee: Appointed 1 June 2018
Tom Kavanagh is a former partner at Deloitte Ireland
and left the firm on . Mr. Kavanagh
has wide-ranging experience in professional practice as
a business adviser, corporate restructuring expert and
insolvency practitioner. This has included, over the last
10 years, advising on the restructuring of distressed Irish
property assets. Mr. Kavanagh has served as a director on
the boards of a number of private companies and was a
member of the board of the Credit Union Restructuring
Board, REBO, from 2012 to 2014.
Mr. Kavanagh holds a Bachelor of Commerce from
University College Dublin. He is a member of Chartered
Accountants Ireland (FCA) since 1982.
Mark Kenney
Non-Independent
Non-Executive Director
(Investment Manager
Nominee)
Appointed with effect from:
1 January 2019
Nationality: Canadian
Committee membership: None
On 1 January 2019, Mark Kenney was appointed as
a member of the Board as IRES Fund Management’s
nominee.
Mr. Kenney joined CAPREIT in 1998 and has over
25 years of experience in the multi-family real estate
sector. In his role as President and Chief Executive Officer
of CAPREIT, Mr. Kenney oversees the strategy and the
allocation of CAPREIT’s capital in Canada and Europe,
including in relation to the IRES Fund Management’s
operations in Ireland. Prior to 2019, Mr. Kenney was the
Chief Operating Officer at CAPREIT, a role in which he
44 
Governance
was charged with creating and implementing CAPREIT’s
operational policies, directing the asset and property
management team, and overseeing the marketing,
procurement, development and acquisitions departments.
Prior to joining CAPREIT, Mr. Kenney held a senior
position at Realstar Management Partnership, overseeing
portfolios in Western Canada and Northern Ontario.
He has also held various leadership roles at Greenwin
Property Management and Tridel, where he managed
portfolios in the Greater Toronto Area. Mr. Kenney is
a former board member of the Federation of Rental-
Housing Providers of Ontario and St. Hilda’s Towers and
was a founding board member of the Greater Toronto
Apartment Association (GTAA). He holds a Bachelor of
Economics degree from Carleton University.
Aidan O’Hogan
Independent
Non-Executive Director
and Senior Independent
Appointed: 31 March 2014
Nationality: Irish
Committee membership:
Audit Committee: Appointed 31 March 2014
Remuneration Committee: Appointed 31 March 2014
Nomination Committee: Appointed 31 March 2014 to
23 March 2016 and re-appointed 31 March 2017
Aidan O’Hogan is a Fellow of the Royal Institution of
Chartered Surveyors and of The Society of Chartered
Surveyors in Ireland and a past President of the Irish
Auctioneers and Valuers Institute. He is Managing
Director of Property Byte Limited, a property and asset
management consultancy business. In 2009 he retired
as Chairman of Savills Ireland (previously Hamilton
Osborne King) after 40 years as a real estate professional,
and was previously Managing Director and Chairman of
Hamilton Osborne King with almost 30 years’ experience
there prior to which he spent 9 years at Lisney. He is a
Council Member of Property Industry Ireland, having
been its Chair from 2012 to 2015. He is Chair of the
Investment Committee at Pearl Property Managers
Limited., a member of the Investment Committee of
Friends First, Property Advisory Committee and a non-
executive director of The Cluid Housing Association. He is
also a former non-executive director of Cairn Homes plc.
Margaret Sweeney
Executive Director and
Chief Executive Officer
Appointed: 23 March 2016
Nationality: Irish
Committee membership:
Audit Committee: Appointed 23 March 2016 to
1 November 2017
Remuneration Committee: Appointed 31 March 2017 to
1 November 2017
Nomination Committee: Appointed 23 March 2016 to
1 November 2017
Margaret Sweeney is the CEO of the Company since
1 November 2017.
Ms. Sweeney has held a number of senior positions
including Chief Executive Officer of DAA plc (Dublin
Airport Authority), Chief Executive Officer and board
director of Postbank Ireland Limited, and Director in
Audit and Advisory Services at KPMG, a firm she worked
with for 15 years.
Ms. Sweeney is currently a non-executive director on the
board of Dalata Hotel Group plc and Chair of the board of
Irish Institutional Property, real estate association. She has
in the past served as a non-executive director on a number
of boards in Ireland and internationally, including Aer
Rianta International plc, Flughafen Düsseldorf GmbH,
Birmingham International Airport and Hamburg Airport,
including managing significant investments in these
companies. She is a member of the Council of Chartered
Accountants Ireland, a Fellow of Chartered Accountants
Ireland and a Chartered Director of the Institute of
Directors. She also served as President of the Dublin
Chamber of Commerce from 2008 to 2009. Ms. Sweeney
is Chair of the Advisory Board for Dublin City University
(DCU) Business School and was previously a member of
the Governing Body of DCU.
45

Governance
Corporate Governance Statement
Governance Framework
The Company’s corporate governance practices for the
financial year ended 31 December 2019 were governed
by the relevant requirements and procedures prescribed
by the new UK Code which applies to financial years
beginning 1 January 2019 (found at https://www.frc.
org.uk/getattachment/88bd8c45-50ea-4841-95b0-
d2f4f48069a2/2018-UK-Corporate-Governance-Code-
FINAL.pdf) and the Irish Corporate Governance Annex
to the UK Corporate Governance Code (“Irish Annex”)
(found at https://www.ise.ie/Products-Services/Sponsors-
and-Advisors/Irish-Corporate-Governance-Annex),
together the “Codes”.
Effective and Experienced Leadership
As at the date of this Report, there are seven (7) directors
on the Board. The Chief Executive Officer, Margaret
Sweeney, is an executive director. Declan Moylan (the
Chairman), Phillip Burns, Joan Garahy, Tom Kavanagh,
Mark Kenney and Aidan O’Hogan (Senior Independent
Director) are non-executive directors. The biographies of
all the directors appear in this Report on pages 42 to 44.
Strategy
The Board is collectively responsible for the long-term
sustainable success of the Company and delivery of value
for shareholders. The Board leads the development of the
culture, purpose, value and strategy of the Company and
its subsidiary, IRES Residential Properties Limited, and
aims to ensure that these are aligned.
The key role of the Board is to provide leadership of
the Group, set the strategic objectives for the Company,
monitor the achievement of these and determine the
nature and extent of the principal risks it is willing to take
in achieving these strategic objectives.
Performance and Monitoring
The Board is also responsible for the Company’s dividend
policy, corporate governance, approval of financial
statements and shareholder documents and formulating,
and monitoring and reviewing the effectiveness of, the
Company’s risk management and internal control systems.
The Board also seeks to ensure that its obligations towards
its shareholders and other stakeholders are understood
and met.
The Board is responsible for ensuring the accuracy
of financial and business information provided to
shareholders and for ensuring that such information
presents a fair, balanced and understandable assessment
of the Company’s position and prospects.
Investment Manager and Board
Reserved Matters
The Company appointed IRES Fund Management as its
alternative investment fund manager as of 1 November
2015, pursuant to the terms of the Investment Management
Agreement, to provide the Company with portfolio
management, risk management, property management and
other services in relation to assets or properties which may
be acquired, held or disposed of by the Group, and to act
with day-to-day authority, power and responsibility for such
assets and properties. The Board oversees the performance
of the Investment Manager and the Company’s activities
and reviews the performance and contractual arrangements
with the Investment Manager.
The Investment Manager has discretionary authority to
enter into transactions for and on behalf of the Company,
except for certain matters that are reserved to, and require
the consent of the Board. Unless required to be performed
by the Investment Manager as a matter of law or in order
to respond to a bona fide emergency, the Company’s prior
written approval is required for certain matters, including:
a) any acquisition/disposal of a property investment
or entry into any agreement to acquire/dispose of a
property investment;
b) any new financing or refinancing, including associated
hedging arrangements, entered into in respect of a
property investment;
c) any capital expenditure on a property investment in
excess of an approved budget;
d) any proposed lease event where the rent referable to
the relevant lease is greater than 7.5% of the aggregate
rental income of the Company;
e) any acquisition or entry into any agreement to
acquire any property investment through a joint
venture or co-investment structure;
f) any hedging or use of derivatives, including those related
to debt facilities, interest or property investments, which
may only be used to the extent (if any) permitted by any
regulatory requirements applicable to the Company and/
or the Investment Manager;
g) the entry by the Company into any transactions for
the purchase of assets from, or provision of services
of a material nature by, any affiliate of the Investment
Manager, or for the sale of assets or provision of
services of a material nature to any affiliate of
the Investment Manager;
h) any disposal of any right, title or interest in any of
the Company’s properties at less than its acquisition
cost; and
i) in relation to the valuation of the Company’s
properties, any variation from the RICS Red Book.
46 
Governance
The Board is at all times free to offer ideas to the Investment
Manager relating to the structure of a transaction so as to
provide the Company the greatest value.
Skills and Experience
The Board collectively has strong experience of acquiring
and managing real estate assets providing the Company
with a good knowledge base. As highlighted in the
biographies of the directors on pages 42 to 44, each of the
directors brings a different set of skills and experience to
the Board. The directors’ diverse skill sets facilitate the
consideration of issues at meetings of the Board from a
range of perspectives and these diverse skills are relied
upon in addressing major challenges facing the Company.
The division of responsibilities between the Chairman,
the Chief Executive Officer and the Senior Independent
Director has been clearly established, set out in writing
and agreed to by the Board.
For information on the Company’s diversity policy, please
refer to Report of the Nomination Committee on page 70.
Key Activities of the Board in 2019
In addition to the key operational and financial reports
presented and considered by the Board at each of its
meetings, the following were considered by the Board
during the year:
Strategy
Successful completion of a placing of 86,550,000 new
Ordinary Shares in the Company, raising gross proceeds
of approximately €134.2 million enabling the Company to
push forward with its growth strategy.
Continued investment in additional real estate assets
for rent:
• Acquired the Marathon Portfolio consisting of
815 residential units;
• Entered into contracts for the pre-purchase of
118 residential units with a subsidiary of Glenveagh
Properties PLC. All residential units have been delivered
in a phased basis in 2019;
• Entered into contracts for the pre-purchase of
55 residential units at Waterside, Malahide; and
• Acquired 52 residential units at The Coast, Baldoyle in
Dublin 13.
Financing
Completed the refinancing of the Company's debt
facilities with a new syndicated revolving credit facility
of €450 million in April 2019 and increased this to
€600 million in June 2019, to part finance the acquisition
of the Marathon Portfolio, comprising 815 residential units
across 16 high-quality developments, as well as lengthening
the maturity of the debt and achieving a lower interest rate.
Prepared for the entry into secured private placement
notes of €200 million (equivalent) in March 2020.
Governance and Risk
Prepared for the introduction of the new UK Code.
Enhancement of the Group’s governance framework and
procedures through the review and update (as relevant)
of the Group’s policies and procedures including those
regarding EMIR, data protection, market abuse, share
dealing, media engagement, whistleblowing and diversity,
among others.
Reviewed the effectiveness of the Company’s risk
management systems and internal controls.
Leadership and People
Undertook a review of the remuneration arrangements for
Non-Executive Directors and Executive Directors.
Key Services
Reviewed the Company’s corporate broker and sponsor
arrangements.
Key Priorities for 2020
• Continued critical oversight of the Group’s strategy.
• Increase the Board’s information and education on issues
around sustainability and environmental awareness in
the context of the Group’s business and activities.
• Continued investment to build resilience of the business
and enable the Group to grow in a measured fashion.
• Enhanced reporting of risk and controls.
Committees of the Board
As recommended by the Codes, the Board has established
the following three (3) committees: the Audit Committee,
the Remuneration Committee and the Nomination
Committee. The duties and responsibilities of each of these
committees are set out clearly in written terms of reference
which are approved by the Board and published on the
Company’s website. These terms of reference for each
Committee were revised with effect from 1 January 2019 in
order to reflect relevant provisions of the new UK Code.
A report from each of these committees is set out below.
Other committees have been and may be established from
time to time in accordance with the Company’s Constitution,
including in connection with the negotiation and
administration of the Company’s credit facility, equity raises or
acquisition, development or commercial leasing transactions.
Board Meetings
Directors are expected to participate in all scheduled
board meetings as well as each annual general meeting. A
schedule of board meetings is circulated to the Board in
advance of the financial year end for the following year.
47

Governance
At each quarterly meeting of the Board, there are certain
standing agenda items (for example, strategy discussion,
update on investment and development plans, review
of risk, operations and financial reports, update on ESG
progress and update on investor relations). This seeks
to ensure that the Board has the opportunity to have
in-depth discussions on key issues across all aspects of
the Group’s activities. The Chairman and the Company
Secretary ensure that the directors receive clear, timely
information on all relevant matters necessary to assist
them in the performance of their duties.
Each committee also approves a committee work plan for
the following year.
The Board meets a minimum of four (4) times each
calendar year and otherwise as required. Prior to such
meetings taking place, an agenda and board papers are
circulated electronically via a secure Board portal to the
directors to ensure that there is adequate time for them to
be read and to facilitate robust and informed discussion.
The portal is also used to distribute reference documents
and other useful resources. The Company Secretary is
responsible for the administrative and procedural aspects
of the board meetings.
The Board held eleven (11) meetings during 2019.
In addition, the Board held a strategy review session
in November 2019. In accordance with Principle 12
of the UK Code and led by Aidan O’Hogan as Senior
Independent Director, the non-executive directors
met without the Chairman present during the year to
appraise the Chairman’s performance. In accordance with
Principle 13 of the UK Code, the Chairman met during
the year with the non-executive directors without the
presence of the Chief Executive Officer.
Meetings and Attendance
Directors’ attendance records at Board and committee meetings of the Company from 1 January 2019 until 31 December
2019 are set out in the table below. For Board and committee meetings, attendance is expressed as the number of meetings
attended out of the number that each director was eligible to attend.
Board(1)
Audit Committee Remuneration Committee Nomination Committee
Declan Moylan 11 of 11 N/A 9 of 9 4 of 4
Phillip Burns 11 of 11 N/A N/A 3 of 4(3)
Mark Kenney 10 of 11(2)
N/A N/A N/A
Joan Garahy 11 of 11 5 of 5 9 of 9 4 of 4
Tom Kavanagh 11 of 11 5 of 5 9 of 9 N/A
Aidan O’Hogan 11 of 11 5 of 5 9 of 9 4 of 4
Margaret Sweeney 11 of 11 N/A N/A N/A
(1)
No director was absent from any quarterly board or committee meeting (as applicable).
(2)
Mark Kenney was unable to attend a board meeting due to a prior business commitment.
(3)
Phillip Burns was unable to attend a Nomination Committee meeting due to an urgent business matter.
All directors attended the annual general meeting held on
28 May 2019.
Details of the directors’ and the Secretary’s interests in the
share capital of the Company are set out in the Interests of
Directors and Secretary in share capital on page 72.
The Chairman does not have any other significant
commitments.
Information, Support and
Independent Advice
Directors have direct access to the support of Elise Lenser,
the Company Secretary. The Board has also approved
a procedure for directors, where appropriate, to seek
independent professional advice at the expense of the
Company if necessary.
Remuneration
Details of the remuneration of directors are set out in the
Report of the Remuneration Committee on page 63.
Induction
The Chairman, with the support of the Company
Secretary, is responsible for preparing and co-ordinating a
comprehensive induction programme for newly appointed
directors. This is intended to give a broad introduction
to the Group’s business, its areas of significant risk and to
enable new directors to understand the Company’s core
purpose and values so that they can be effective directors
from the outset. As part of this induction programme, new
directors receive an information pack which includes a
Group structure overview, key policies, historical financial
reports, schedule of board meetings and information on
how to access the Company’s board portal. A number of
governance matters are also outlined, including directors’
duties, conflicts of interest and Market Abuse Regulation.
The Company Secretary is available to advise each board
member on queries or concerns.
Other key elements of the induction programme include
a tour of part of the Group’s property portfolio with
the Chief Executive Officer or a senior representative
48 
Governance
of IRES Fund Management in order to familiarise the
new director with the Group’s operations, property
management, a segment of the property portfolio and key
stakeholders. This meeting also provides new directors
with an opportunity to ask any questions they may have
on the nature and operations of the business, and on the
implementation of the Group’s business strategy. The new
director is also invited to meet with other key people at
IRES Fund Management and CAPREIT LP responsible
for risk, insurance, internal audit, acquisitions and
development, operations and financial reporting.
Development of Directors
The Nomination Committee, on behalf of the Board,
assesses the training needs of the directors on at least
an annual basis. A combination of tailored Board and
Committee agenda items and other Board activities,
including briefing sessions, further assist the directors in
continually updating their skills, and their knowledge of
and familiarity with the Company, as required to fulfil
their roles. The Board also arranges for presentations from
IRES Fund Management and the Group’s other advisors
on matters relevant to the Group’s business.
During 2019, the Board received presentations by external
experts on directors' duties, Euronext developments and
from the Chief Human Resources Officer of CAPREIT on
company culture. The Board also received presentations
from industry and capital market experts on the Irish Real
Estate Market, international developments in residential
real estate assets and related financing. The directors also
attended a property tour of some of the Group's newer
properties. In late 2018, the Board received training in
preparation for the new UK Code which was adopted by
the Company with effect from 1 January 2019.
Risk Management and Internal Control
The Board has overall responsibility for the effectiveness
of the Company’s system of risk management and internal
control. The Board has delegated responsibility for the
monitoring of the effectiveness of this system to the Audit
Committee. The work done by the Audit Committee in
this area is set out in the Report of the Audit Committee
on pages 55 to 57. The Board and the Audit Committee
have ensured that the Investment Manager has maintained
a robust system of risk management and internal control.
The Board and the Audit Committee periodically review
and consider if the risk management and internal control
systems are operating effectively. They are assisted in this
assessment by the risk management and internal audit
functions of the Investment Manager.
The Board and the Audit Committee receive periodic
reports from the Investment Manager’s internal audit
function and risk management function surrounding the
risk management and internal control systems and their
operating effectiveness. For further details on these systems,
please see the Risk Management and Internal Control
Systems section of the Risk Report on pages 55 to 57.
The Board confirms that there is an ongoing process for
identifying, measuring and managing the significant risks,
including any principal risks, such as new or emerging
risks, faced by the Group in achieving its strategic
objectives, that this process has been in place for the year
ended 31 December 2019 and up to the date of approval of
this Report, and that this process is regularly reviewed by
the Board. For further details on the principal risks being
faced by the Group, please see the Principal Risks and
Uncertainties section of the Risk Report on pages 34 to 40.
Board Evaluation and Effectiveness
The Board recognises the need to continually strengthen
Board processes, including:
• Reflecting on past performance and implementation of
previous recommendations or actions;
• Consideration of future training, skills and diversity
requirements;
• Identification and implementation of new
recommendations or actions to improve performance;
and
• Ensuring the Board understands the needs of
stakeholders, including considering any conflicts.
As the Company is a smaller company for the purposes of
the Irish Annex, the Company is not required to engage
an external facilitator to conduct the annual performance
evaluation process; however, it does so on a voluntary
basis periodically, most recently for the performance
evaluation process in 2017 which was facilitated by the
Institute of Directors in Ireland and reported on in the
2017 Annual Report.
In 2019 the Board, led by the Chairman with the support
of the Company Secretary, carried out an evaluation of its
performance and effectiveness. The evaluation reviewed
the balance of skills, experience, independence and
knowledge of the Board and the effectiveness of the Board
and its committees in their workings. Directors were also
evaluated individually to assess their contribution and
effectiveness, together with the role of the Chair.
The various phases of the 2019 performance evaluation
are set out below:
• The evaluation was facilitated using a questionnaire-
based approach. Evaluation questionnaires were
provided to each of the directors in November 2019 to
appraise: (a) the performance of the Board as a whole;
(b) the performance of each committee of which the
director was a member; (c) their individual performance;
and (d) the performance of each of the other directors.
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Governance
• The directors were also asked to complete a skills
matrix, the results of which are used by the Nomination
Committee to identify any skills gaps and are
considered in assessing candidates during the director
nomination process.
• The Chairman presented the results of the performance
evaluation process at a board meeting held on
19 February 2020.
• The senior independent non-executive director (the
“Senior Independent Director”) met with the non-
executive directors (other than the Chairman) to
appraise the Chairman’s performance and took into
consideration the views of the executive director. The
Senior Independent Director presented the results of
the evaluation of the Chairman’s performance at a
board meeting held on 19 February 2020.
The Board considers that the use of individual
questionnaires and follow-up meetings, if deemed
necessary, provides a robust and objective approach to
Board evaluation.
The results of our internal Board evaluation carried out
in late 2019 were very positive. The review confirmed that
the Board is a strong and cohesive team with multiple skill
sets. The review also highlighted the directors’ unanimous
view that good governance underpins strategic delivery
and long-term value creation.
In addition, the review confirmed that Mark Kenney, who
joined the Board with effect from 1 January 2019, has
settled in well and enhanced the composition of the Board.
The effectiveness of Declan Moylan as Chairman was
considered as part of this year’s Board evaluation. One-
to-one meetings were held by the Senior Independent
Director and each non-executive director (other than the
Chairman). The results of the review were unanimously
positive and confirmed that Declan is well respected and
promotes a culture of openness and debate.
The Board has reviewed the feedback from the 2019
evaluation and produced the following action plan and
2020 priorities:
• Reinvigoration of Board processes to ensure that the
members have the resources and information to function
effectively;
• Development of an enhanced awareness among
members of issues affecting sustainability and
environmental impact arising from the Group’s activities;
• Recalibration and enhancement of methods of risk
assessment to maximise identification and analysis of
relevant issues;
• Further development of methods of assessing and
reviewing performance of the Investment Manager
to ensure maximum benefit for the Company and its
shareholders;
• Enhancement of the number of preparatory and training
sessions to aid the development and understanding of
Board members; and
• Increase in the number of external guests and speakers to
supplement understanding and perspectives of members
regarding relevant market and business conditions.
Progress on these actions will be considered as part of
the next performance evaluation and reported on in next
year’s Annual Report.
Independence
Declan Moylan (Chairman), Aidan O’Hogan (Senior
Independent Director), Joan Garahy and Tom Kavanagh
are each considered independent for the purposes of the
Listing Rules.
Margaret Sweeney is not considered to be independent as
she is the Chief Executive Officer of the Company.
Mark Kenney is not considered to be independent due
to his connection with CAPREIT, which is a significant
shareholder of the Company. Also, CAPREIT is the parent
company of CAPREIT LP and the Investment Manager
is wholly owned and controlled by CAPREIT LP. Mark
Kenney is the President and Chief Executive Officer
of CAPREIT. Pursuant to the terms of the Investment
Management Agreement, IRES Fund Management is
entitled to nominate and require the Company to appoint
one person as a non-executive director. Mark Kenney acts
as IRES Fund Management’s nominee. Mark Kenney also
has a significant link to Phillip Burns, further details of
which are disclosed directly below.
At the time of his appointment as a director, Phillip Burns
was regarded as an independent non-executive director.
Following a decision of the Board on 29 March 2017,
Phillip Burns was no longer considered to be independent,
having regard to certain cross-directorships with another
director concerning the Company and European
Commercial Real Estate Investment Trust (“ERES”), a
Canadian company that has its shares listed for trading on
the TSX Venture Exchange and in respect of which Phillip
Burns is the Chief Executive Officer, a director and a
shareholder. While such cross-directorships no longer exist
following the retirement of David Ehrlich, Phillip Burns
is still considered to be non-independent having regard to
Euronext Dublin Listing Rule 2.10.11 and the provisions
of the UK Corporate Governance Code given that, (i) in
connection with a transaction entered into between ERES
and CAPREIT, pursuant to which CAPREIT indirectly
acquired control of ERES, Phillip Burns was appointed as
a senior employee of CAPREIT LP, which has a material
business relationship with the Company as it is the
parent company of the Investment Manager and (ii) this
appointment together with the transaction completed
between ERES and CAPREIT gives rise to a significant link
50 
Governance
with another director on the Board of the Company, Mark
Kenney, President and Chief Executive Officer of CAPREIT.
Senior Independent Director
The role of the Senior Independent Director is mainly to:
• Provide a sounding board for the Chairman and to serve
as an intermediary for the other directors when necessary;
• Be available and respond to shareholders where contact
through the normal channels of the Chairman or the
Investment Manager has failed to resolve any concerns,
or for which such contact is inappropriate;
• Hold a meeting with non-executive directors at least
annually (and on such other occasions as are deemed
appropriate) to appraise the Chairman’s performance,
taking into account the view of the executive directors
(if any); and
• Obtain updates from the Chief Executive Officer
and the Investment Manager on the views of major
shareholders and when called upon, seek to meet a
sufficient range of major shareholders personally, in
each case to help develop a balanced understanding of
the issues and concerns of major shareholders.
Share Dealing Code
With effect from 3 July 2016, EU Market Abuse Regulation
(596/2014) (“MAR”) repealed and replaced Market
Abuse Directive (2003/6/EC) (MAD). As part of the
changes introduced as a result of MAR, the Listing Rules
were amended by the deletion of the Model Code, which
regulated dealings in shares by persons discharging
managerial responsibilities (“PDMRs”). Instead, new rules
requiring listed companies to have effective systems and
controls regarding PDMRs’ securities dealing clearance
procedures were introduced.
In order to comply with the provisions of MAR, the
Company adopted a share dealing code for its PDMRs
and applicable employees of the Group for the purpose of
ensuring compliance by such persons with the provisions
of MAR relating to dealings in the Company’s securities
and, in particular, requiring PDMRs to obtain prior
clearance before dealing in the Company’s securities. The
share dealing code also sets out the periods in which share
dealings are prohibited.
The directors consider that this share dealing code is
appropriate for a company whose shares are admitted to
trading on Euronext Dublin. The Company continues
to take appropriate steps to ensure compliance by the
directors and applicable employees with the terms of the
share dealing code and the relevant provisions of MAR.
Details of each director’s interests in the Company’s shares
are set out in the Report of the Directors on page 72.
Communications with Shareholders
The Board believes that the Company acts fairly between
shareholders and recognises the importance of this
together with the need to clearly communicate with
shareholders and to engage in appropriate dialogue to
obtain the views of shareholders as a whole. Presentations
are made to both existing and prospective institutional
shareholders, principally after the release of the interim
and annual results but also as part of investor days
organised by brokerage firms. Major acquisitions are
also announced to the market and the Company’s
website (www.iresreit.ie) provides the full text of all
announcements. The website also contains annual and
interim reports and slide show investor presentations. The
Board is kept informed of the views of shareholders by the
Chief Executive Officer and the Investment Manager and
receives analysts’ reports on the Company. Furthermore,
relevant feedback from investor meetings is provided to
the Board on a regular basis. The Chairman and the other
directors also have the opportunity to meet shareholders
and analysts at the Company’s annual general meeting.
In 2019, Margaret Sweeney, the Chief Executive Officer
of the Company, attended approximately 196 separate
meetings and conference calls with existing and
prospective shareholders. The Company also hosted
several property tours for shareholders.
If shareholders wish to communicate directly with the
Board, they should contact Margaret Sweeney, CEO, or
Elise Lenser, Company Secretary, contact details for whom
are provided in the Shareholder Information section on
page 148 of this Report.
General Meetings of Shareholders
For a description of the operation of general meetings,
the key powers of such meetings, shareholders’ rights and
the exercise of such rights at general meetings, see General
Meetings in the Report of the Directors on page 78.
Section 172 of the U.K. Companies Act
2006 (“section 172”)
The new UK Code provides that outside of shareholders,
the Board should understand the views of the Company’s
other key stakeholders and describe how their interests and
the matters set out in section 172 have been considered in
Board discussions and decision making. While section 172
is a provision of UK company law, and there is no direct
comparator in the Irish Companies Act 2014, the Board
acknowledges that, as a premium listed issuer on the main
market of Euronext Dublin, it is important to address the
spirit intended by such provisions.
51

Governance
Each stakeholder group requires a tailored engagement
approach to foster effective and mutually beneficial
relationships. By understanding stakeholders, the Board
can factor the potential impact of its decisions on each
stakeholder group and consider their needs and concerns,
having regard to section 172.
The Board also recognises that by engaging further with
all stakeholders, the Company can continue to deliver on
its culture and purpose (see page 4 of the ESG Report).
Please also see directly above for a description of how the
Company engages with its shareholders and page 17 in
the ESG Report for details of the Company's other key
stakeholder engagement.
Investment Manager and Workforce
As the Company has only three employees (one of whom
sits on the Board and is the CEO and the other two being
her assistant and the Director of Investor Relations and
Funding), there is no workforce as such with whom
the Board can engage. Further, given that the Company
is externally managed, it has no responsibility for the
remuneration of the workforce of the Investment Manager
or of its remuneration policies. As a consequence, the
portions of provisions 2, 5, 33, 38, 40 and 41 of the UK
Code and s.172 that relate to workforce engagement are
not applicable to the Company.
Review of the Investment Manager
The Board has reviewed the performance of the
Investment Manager and is satisfied with the overall
performance of the Investment Manager for the year
ended 31 December 2019. For a detailed review of the
business performance indicators, see pages 25 to 26 in the
Business Performance Measures section.
In the opinion of the directors, the continuing
appointment of the Investment Manager on the terms
of the Investment Management Agreement is in the
interests of the shareholders as a whole and accordingly,
the Investment Manager will continue in the performance
of its duties. The directors have formed this view for the
reasons set out in the Review of the Investment Manager
section and based on the Business Performance Measures
section on pages 25 to 26.
Remuneration Policy of the
Investment Manager
The Investment Manager has established a remuneration
policy which it applies in accordance with AIFMD and
the guidelines on sound remuneration policies under
AIFMD as issued by the European Securities and Markets
Authority from time to time.
In the implementation of its remuneration policy, the
Investment Manager aims to ensure good corporate
governance and promote sound and effective risk
management. It will not encourage any risk taking which
would be considered inconsistent with the risk profile of
the Group. The Investment Manager will ensure that any
decisions are consistent with the overall business strategy,
objectives, values and interests of the Group and will try to
avoid any conflicts of interest which may arise.
The Investment Manager ensures that annually the
remuneration policy is reviewed internally.
The total remuneration paid in the period to the staff
of the Investment Manager, all of whom are engaged in
managing the Group’s activities, was €1.82 million, of
which €1.51 million comprised fixed remuneration and
€305,000 comprised variable remuneration. The number
of staff employed as at 31 December 2019 was 65 (46 as
at ), of which 41 site employees (27 site
employees as at ) were charged to
I-RES. There are no senior managers or members of staff
of the Investment Manager whose actions have a material
impact on the risk profile of the Company.
Compliance with Relevant Codes
The directors are committed to maintaining high
standards of corporate governance and this Corporate
Governance Statement describes how the Company has
applied the Codes in 2019. The Board considers that the
Company has complied with the provisions set out in the
Codes throughout the last financial year under review
except that, as in prior years, the remuneration of the
directors under the long-term incentive plan (“LTIP”)
does not comply in full with Schedule A to the UK Code.
During 2019, there is no minimum holding period for
shares granted under the LTIP and options vest over three
years from the date of grant on the basis of one third per
completed year the recipient of the option completes in
respect of the relevant service which has qualified him
or her for the option grant. However, pursuant to the
terms of Margaret Sweeney’s employment agreement, she
has agreed to hold in escrow one third of her last vested
options (or shares acquired upon exercise of such options)
for a period of 12 months following the end of her
employment with the Company. Although the Company
was not fully compliant in relation to the arrangements
we had in place during 2019, over the course of the year
the Remuneration Committee reviewed the Company's
remuneration policy and the new arrangements described
in the Report of the Remuneration Committee are in
line with the Codes’ provisions as new performance
share awards will vest over a five-year period (three-year
performance period and two-year holding period).
52 
Governance
Report of the Audit Committee
Introductory Statement from the Audit
Committee Chair
Dear Shareholder,
On behalf of the Audit Committee, it is my pleasure to
present the Report of the Audit Committee for the year
ended 31 December 2019.
The report demonstrates how the Audit Committee
fulfilled its responsibilities during the year under the
appropriate regulatory frameworks.
As in previous years, a key focus of the Audit Committee
was to ensure that the semi-annual investment property
valuation process was conducted appropriately. Given that
the Company has grown significantly in 2019, the Audit
Committee considered it prudent to appoint a second
independent valuer to value part of the portfolio. The
2019 year end investment property portfolio was split for
purposes of valuation and valued by two external valuers.
The Audit Committee objectively assessed the valuations
prepared by the independent valuers and was satisfied
that the assumptions and methodologies being used were
appropriate and reasonable.
The Audit Committee continues to monitor that KPMG
remains objective and independent. The Audit Committee
reviews with KPMG the findings of their work and noted
that no major issues arose during the audit. As part
of its assessment of KPMG’s independence, the Audit
Committee assessed the amount and value of non-audit
services provided and noted that it has not impaired
their independence.
The Audit Committee also meets with the Company’s tax
advisors to ensure that it keeps informed of anticipated
changes to tax laws and regulations that may impact
the Company. As well, it continues to meet with the
Company’s Investment Manager to ensure that the
internal controls are working effectively.
The Audit Committee assisted the Board in determining
that the Annual Report and Consolidated Financial
Statements, when taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company's position,
performance, business model and strategy.
Looking Ahead
Looking ahead to the 2020 financial year, the Audit
Committee will remain focused on the audit and
assurance processes within the business, and maintain its
oversight of financial, valuation, taxation and evolving
regulatory requirements. In terms of process and controls,
the Audit Committee continues to focus on the design and
the operational effectiveness of the internal controls.
I trust that you will find this report to be useful in
understanding the operations and activities of the Audit
Committee during the year.
Joan Garahy
Chair of the Audit Committee
Members: Joan Garahy (Chair), Tom Kavanagh and
Aidan O’Hogan.
The Audit Committee is chaired by Joan Garahy, an
independent non-executive director. All members of
the Audit Committee were independent non-executive
directors when appointed by the Board and continues
to be independent. Accordingly, the Audit Committee is
constituted in compliance with the Codes and Articles
of Association regarding the composition of the Audit
Committee. All members are appointed for an initial
term of up to three (3) years, which may be extended by
the Board. The term of appointment for Joan Garahy
expires on 17 April 2020 and the term of appointment for
Aidan O’Hogan expired on 30 March 2020. Accordingly,
the Board has agreed that the appointment of Joan
Garahy shall be extended for an additional term of
approximately three years commencing on 18 April 2020
and expiring at the end of the 2023 AGM (subject to her
continuing to meet the criteria for membership of the
Audit Committee). The Board has further agreed that the
appointment of Aidan O’Hogan shall be extended for an
additional term of approximately three years commencing
on 31 March 2020 and expiring at the end of the 2023
AGM (subject to him continuing to meet the criteria for
membership of the Audit Committee).
The Board is satisfied that the Audit Committee members
are appropriately qualified and experienced to fulfil
their roles and have a broad mix of skills and experience
arising from senior roles they hold or have held with
other organisations, and that the Audit Committee as a
whole has competence relevant to the sector in which
the Company operates. In accordance with the Codes,
Ms. Garahy, in particular, is considered by the Board to
have recent, significant and relevant financial experience.
Meetings of the Audit Committee
The Audit Committee meets at least four (4) times per
year and otherwise as required. The Audit Committee
met five (5) times during the period from 1 January
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Governance
2019 to 31 December 2019 and the external auditor was
in attendance at each meeting. The Audit Committee
members’ attendance at each meeting is set out on page 47.
The Chief Executive Officer and certain representatives
of the Investment Manager attend the Audit Committee
meetings, as required. The external valuer attends the
Audit Committee meetings when the year-end and
interim valuations of the Company’s properties are being
considered. The Company’s tax advisors also meet with
the Audit Committee at least bi-annually to address any
tax developments and as otherwise required.
Terms of Reference and Principal Duties
The terms of reference established for the Audit
Committee were approved and adopted by the Board on
31 March 2014 and are regularly reviewed and updated
for best practice and compliance with the Codes (most
recently on 1 January 2019 to reflect, amongst other things,
legislative changes and best practice). The roles and
responsibilities delegated to the Audit Committee under
the terms of reference can be accessed electronically at
http://investorrelations.iresreit.ie/corporate-governance.aspx.
The Audit Committee reviews its terms of reference on
an annual basis and, if necessary, proposes for formal
Board adoption amendments to the Audit Committee’s
terms of reference. The Audit Committee evaluates its own
performance relative to its terms of reference. Following
the 2019 annual review, it was concluded that the Audit
Committee was operating effectively.
The Audit Committee’s principal duties include:
Reporting and External Audit
• to monitor and keep under review the scope and
effectiveness of the Group’s financial reporting;
• to monitor the integrity of the financial statements
of the Group, including its annual and semi-annual
financial reports and any other formal announcement
relating to its financial performance;
• to review and report to the Board on summary
financial statements and any financial information
contained in certain other documents, such as
announcements of a price-sensitive nature;
• to keep under review the adequacy and effectiveness
of the Group’s internal financial controls and risk
management and internal control systems;
• to oversee the relations with the external auditor
and to consider and make recommendations on the
appointment, reappointment and removal of the
external auditor;
• to ensure the independence and objectivity of the
external auditor annually;
• to ensure that the provision of non-audit services
by the external auditor does not impair the external
auditor’s independence or objectivity; and
• to review with the external auditor the findings of
their work, including any major issues that arose
during the course of the audit and have subsequently
been resolved.
Valuations
• to monitor and review the valuation process;
• to review the valuation reports, assumptions and
methodology; and
• to assess independent valuers’ competence and
effectiveness.
Risk and Internal Control
• to monitor and keep under review the scope and
effectiveness of the Group’s risk management and
internal control systems; and
• to assess and review regular reports on such matters
from the Company’s Investment Manager, internal
auditors (if any) and management.
Other
• to review the Audit Committee’s terms of reference and
monitor its execution; and
• to consider compliance with legal and other regulatory
requirements, accounting standards and the
Listing Rules.
How the Audit Committee Discharged
Its Responsibilities in 2019
The Audit Committee’s agenda is set based on the Group’s
financial calendar and the Audit Committee’s work plan,
which allows the Audit Committee to fulfil its role in an
efficient manner. In the year under review, the principal
activities of the Audit Committee were as follows:
• reviewed the appropriateness of Group accounting
principles, practices and policies, and monitored
changes to and compliance with accounting standards
on an ongoing basis;
• reviewed the Group’s interim report and this Report,
including the financial statements contained therein,
and considered the key areas of judgement before
recommending them to the Board for approval;
• reviewed the Group’s preliminary announcement of
financial results;
• reviewed and approved the annual audit plan presented
by the external auditor and approved the audit fees;
• reviewed and discussed the reports received from the
external auditor following the audit process;
• reviewed and considered the Group’s key risks, internal
control policies and procedures and risk management
systems, with particular reference to the operations of
the Investment Manager;
• reviewed and considered the approach adopted by
the independent valuers, including assumptions,
procedures and methodologies applied in valuing the
Group’s property portfolio;
54 
Governance
• considered the necessity for an internal audit function
on an ongoing basis;
• reviewed the annual internal audit plan put forth by the
Investment Manager’s internal audit function;
• received reports throughout the year from the
Investment Manager’s risk management and internal
audit functions in regards to work performed
around the Group’s system of risk management and
internal controls;
• reviewed the Investment Manager’s and the external
auditor’s fraud detection procedures;
• reviewed and recommended amendments, as required,
to the Company’s dividend policy, non-audit services
policy, treasury policy, valuation policy, code of
ethics, directors’ compliance policy statement (and
arrangements and structures in place to ensure
compliance), signing authority and delegation policy,
whistleblower policy, safety statement, anti-corruption
policy, and statement on policies and procedures
relating to margin requirements for non-centrally
cleared derivatives;
• reviewed and amended the terms of reference for the
Audit Committee with effect from 1 January 2019;
• assessed the viability model for long-term
sustainability; and
• reviewed the dividends to be paid and the unaudited
company financials and recommended them to
the Board.
Financial Reporting and Significant
Financial Judgements
With respect to this Report and the financial statements
included therein, the Audit Committee assessed whether
suitable accounting policies had been adopted and
whether management had made appropriate judgements.
The Audit Committee paid particular attention to matters
which it considered could have a material impact on
the Group’s results and those matters which involve a
higher level of complexity, judgement or estimation by
management. The most significant matters considered by
the Audit Committee in relation to this Report and the
financial statements contained therein for the year were
as follows:
Investment Property Valuations
The Group had investment property with a fair value
of €1,359 million as at 31 December 2019, as set out
in note 5 to the Group financial statements. As the
portfolio of the Group’s asset has grown significantly, the
Group has appointed a second valuer, Savills. The Audit
Committee considered the investment property valuation
process which had been carried out by management
in order to satisfy itself that the balances were stated
appropriately. These reviews involved the understanding
of management’s analytical procedures, management’s
discussions with CBRE and Savills, the Group’s
independent valuers, and assessment of the market inputs
utilised on each property prior to recording the valuations
obtained. The Audit Committee assessed the performance
and independence of the two valuers and is satisfied with
their performance and that both valuers are independent.
The Investment Manager has confirmed to the Audit
Committee that it is satisfied that the valuers conducted
its work in accordance with the Royal Institution of
Chartered Surveyors’ Valuation Standards. In addition,
the Audit Committee met with the two independent
valuers and discussed year-end valuations, valuation
methodology and significant assumptions used. The Audit
Committee also discussed the market dynamics with both
valuers, focusing on the 2016 Rent Legislation and its
impact on the year-end valuations. As both valuers rely as
part of their assumptions on comparable evidence from
recent market transactions to benchmark and support
their valuations of the Group’s properties, the Audit
Committee assessed the relevance and appropriateness
of these transactions, in conjunction with management.
Following a review of the detailed valuation analysis
provided by management and detailed discussions with
management and the independent valuers, the Audit
Committee was satisfied that the significant inputs used
for valuation, any provisions recorded against valuation of
the investment properties, and valuation of the investment
properties were appropriate. The Audit Committee
discussed the valuation process with management and
each valuer, and confirmed from each of them that they
are satisfied with the quality and accuracy of the property
information provided to them. The external auditor
also reviews the two valuers’ reports, performs test work
on the information provided by the Company to both
valuers, meets with the two valuers as part of their audit
procedures, and communicates to the Audit Committee
any comments or observations they may have.
Transactions with CAPREIT
Due to the close nature of the relationship between
CAPREIT (or its affiliates) and I-RES, CAPREIT’s
shareholding in I-RES at 31 December 2019, and the
provision of services provided by IRES Fund Management,
a subsidiary of CAPREIT, to I-RES, the Audit Committee
and the external auditor discussed the risk of undisclosed
related party transactions for the 2019 consolidated
financial statements. The Audit Committee discussed the
level of fees incurred in respect of management services
received from CAPREIT and its affiliates and discussed
these with relevant management. The Audit Committee
also considered the disclosures in the notes to the financial
statements. The Audit Committee was satisfied as a
result of these discussions that appropriate disclosure
has been made in the annual report in relation to each of
these matters.
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Governance
Other Matters
Other matters considered by the Audit Committee
included the disclosure of non-IFRS measures
(“Alternative Performance Measures”), tax compliance,
and regulatory obligations and accounting disclosures.
Going Concern
The Audit Committee has reviewed and is satisfied with
a presentation from the Investment Manager in support
of the Board’s Statement of Going Concern as set out on
page 33.
Viability Statement
The Audit Committee has reviewed a report from the
Investment Manager and is satisfied that this assessment
adequately addresses the principal risks disclosed in the
Risk Report on pages 34 to 40 and that a three-year time
horizon for the viability model is appropriate to the
Company’s business. Furthermore, the Audit Committee
has reviewed the assessment of the Group’s viability by
management, as stated on page 33. The review included:
• key assumptions used;
• assessment of prospects; and
• assessment of viability.
REIT Status
The Audit Committee reviewed a report from the
Investment Manager setting out the Company’s compliance
with the REIT requirements as at 31 December 2019.
The Audit Committee has confirmed to the Board that the
Company is in compliance with the REIT rules.
Fair, Balanced and Understandable
The UK Code requires that the Board should present a fair,
balanced and understandable assessment of the Company’s
position and prospects, and specifically that they
consider that the annual report and financial statements
included therein, taken as a whole, are fair, balanced and
understandable, and provide the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.
At the request of the Board, the Audit Committee
considered whether this Report and financial statements
included therein met these requirements.
The Audit Committee considered the process put in
place by management for the preparation of the annual
report and financial statements included therein, and
in particular the timetable, co-ordination and review
activities. The Audit Committee discussed these
arrangements with management. Key considerations
of the Audit Committee when reflecting on these
requirements included:
• the information and reporting the Audit Committee
had received during the course of the financial year;
• the balance of information included in the annual
report against the Audit Committee’s understanding of
the operations and performance of the Group;
• the compliance of the financial statements with all
applicable financial reporting standards and any other
required regulations; and
• the language used in the annual report ensuring it was
understandable to a wide variety of shareholders.
Arising from the Audit Committee’s work in this regard,
the Audit Committee and the Board concluded that this
Report and financial statements included therein, taken as
a whole, are fair, balanced and understandable, and that
they provide the necessary information for shareholders to
assess the Company’s position and performance, business
model and strategy. The Board statement to this effect is
on page 80.
Risk Management and Internal Controls
The Board has delegated responsibility to the Audit
Committee to monitor the Group’s risk management
and internal control systems. In order to discharge this
responsibility for the period from 1 January 2019 to
31 December 2019, the Audit Committee:
a) conducted an annual review of the effectiveness of the
Group’s risk management and internal control systems
and reported to the Board on its findings;
b) received presentations from the Investment Manager’s
risk management function and internal audit function;
c) reviewed the Group’s principal risks and uncertainties
quarterly;
d) reviewed quarterly reports from the Investment
Manager relating to investment management, fund risk
management, regulatory compliance, operational risk
management, capital and financial management, and
distribution;
e) received quarterly updates on any internal control
compliance issues or material legal matters; and
f) reviewed quarterly reports relating to the internal
controls of the Investment Manager and CAPREIT LP.
In addition, the Board, as a whole, reviews quarterly
reports from the Investment Manager and operations
updates relating to key performance indicators.
The Chair of the Audit Committee reports to the Board
at each meeting on the Audit Committee’s activities in
regard to the Group’s risk management and internal
control systems.
External Audit
One of the key roles of the Audit Committee is to monitor
the performance, objectivity and independence of the
external auditor. Open, direct and honest communication
between the Audit Committee, the external auditor and
the senior management team of the Investment Manager
56 
Governance
is essential in ensuring both an effective audit and auditor
independence.
In November 2019, the Audit Committee met with the
external auditor to agree the FY 2019 audit plan. To ensure
a quality audit, the external auditor needs to be aware
of the business risks; therefore, the Audit Committee
discussed and agreed upon the key business, financial
statements and audit risks, and the materiality being used
for the audit, to ensure that the audit was appropriately
focused. In advance of the commencement of the annual
audit, the Audit Committee reviewed the external auditor’s
letter of engagement, together with a presentation from
the external auditor confirming their independence within
the meaning of the regulations and professional standards.
In February 2020, in advance of the finalisation of
the Group’s financial statements for the year ended
31 December 2019, the Audit Committee received a
report from the external auditor on their key audit
findings, including the key areas of risk and significant
judgements, and discussed the issues with them in order
for the Audit Committee to form a judgement on the
financial statements.
In order to assist the Audit Committee in evaluating
the external audit process and to ensure continuous
improvement, following the completion of the audit,
the Audit Committee members discussed with the
management team of the Investment Manager the
effectiveness of the external auditor and the external audit
process in general.
At least annually, the Audit Committee meets with the
external auditor without the presence of management
to discuss any matters the external auditor may wish to
raise. The Audit Committee continues to be satisfied with
the performance of the external auditor, who remains
effective, objective and independent.
Statutory Auditor
On completion of a tender process in 2017, and having
regard to the requirements of the Statutory Audit Directive
of 15 June 2016 (Statutory Instrument SI 312 of 2016),
the Board approved the appointment of KPMG as
statutory auditor with effect for the financial year ended
. This appointment was approved by
the shareholders at the 2019 annual general meeting.
KPMG remains the statutory auditor for the financial year
ended 31 December 2019. The audit partner in charge
within KPMG is Sean O’Keefe. The Audit Committee
will keep the tenure of the external auditor under review
in light of best practice and recent legislation. The Audit
Committee currently has no plans for retendering of the
statutory auditor.
Independence and Non-Audit Services
The Company has a policy on non-audit services. The level
of non-audit services provided by the external auditor is
reviewed at least on a quarterly basis and, in conjunction
with the external auditor, the impact on independence and
objectivity is assessed.
The independence and objectivity of the auditors was
addressed by the Audit Committee in conjunction with the
level of fees for non-audit services in the reporting period.
KPMG completes the audit of the financial statements and
PWC completes the tax related workings, ensuring that
both parties remain independent. Following discussion
with the external auditors, the Audit Committee
determined that the fees for non-audit services were lower
than the audit fees for the year ended 31 December 2019.
In addition, the only non-audit service performed by our
external auditor, KPMG, in 2019 was the 30 June 2019
interim financial statement review. Given the nature of the
assignment, the Audit Committee considered the external
auditor the most suitable candidate for this review.
The Audit Committee concluded that the independence
and objectivity of the external auditor have not
been compromised.
Details of the amounts paid to the external auditor during
the year for audit and non-audit services are set out in
note 24 to the Group financial statements.
Whistleblower Policy
The Company is committed to the highest standards of
openness, probity, and accountability, as well as the highest
possible ethical standards in all of its practices. To achieve
this, the Company encourages use of internal and external
mechanisms for reporting any malpractice or illegal
acts or omissions through the Group’s whistleblower
policy, which was reviewed and strengthened during the
2019 financial year. The policy applies to all employees
and contractors of the Group and all employees of the
Investment Manager, among others. The policy provides
information on the process to follow if any employee
feels it appropriate to raise a concern confidentially in
respect of a relevant wrongdoing which includes, for
example, non-compliance with a legal obligation, health
and safety threats, damage to the environment, theft,
misappropriation of assets or unacceptable behaviour
towards colleagues or the public. All concerns raised are
considered by the Chair of the Audit Committee or a
nominated third party.
The Audit Committee is satisfied that the process is
effective, confidential and ensures the protection of
employees from harassment or other detrimental
treatment as a result of raising a concern. No incidences of
concern were uncovered in 2019.
57

Governance
Internal Audit
In accordance with the UK Code, the Audit Committee
has considered the need for an internal audit function
given the Group’s scale, complexity and range of
operations, including its external management structure
in relation to operations. Based on the foregoing
considerations, the Audit Committee has recommended
to the Board that it does not believe it is necessary to
establish an internal audit function. Rather, the Audit
Committee has assessed the Investment Manager’s
internal audit function and believes it to be of sufficient
quality, experience and expertise appropriate for its
business, and that the Investment Manager’s internal audit
function has sufficient independence and access to the
resources and information of the Investment Manager
and the Group to be able to assist the Audit Committee
and the Board in discharging their responsibilities with
regards to assessing the effectiveness of the Group’s risk
management and internal control systems. Additionally,
the Audit Committee has direct access to the Investment
Manager’s internal audit function through quarterly Audit
Committee meetings, including in-camera sessions, as
required. Furthermore, the Audit Committee assesses the
annual internal audit plan put forth by the Investment
Manager’s internal audit function and receives periodic
reports of the work performed under the plan. The Board
concurs with the Audit Committee’s recommendation not
to establish an internal audit function for the Group.
The Audit Committee will continue to review this position
annually and make appropriate recommendations to
the Board.
Key Priorities of the Audit Committee
for 2020
Looking ahead to the 2020 financial year, the Audit
Committee will remain focused on the audit and
assurance processes within the business, and maintain
its oversight of financial and evolving regulatory
requirements. The action plan for the 2020 financial year
will include:
• reviewing and making recommendations in relation
to the statutory, preliminary final and interim
financial results;
• reviewing the adequacy of the Group’s internal audit
function and considering the necessity for an internal
audit function;
• reviewing the impact on financial results due to
regulatory and legislative changes;
• ensuring the independence and objectivity of the
external auditor; and
• monitoring and reviewing the valuation process.
58 
Governance
Report of the Remuneration Committee
Introductory Statement from the
Remuneration Committee Chair
Dear Shareholder,
On behalf of the Remuneration Committee, I am pleased
to present the Report of the Remuneration Committee for
the year ended 31 December 2019.
You will see that this year we have refreshed the format of
the report, with the introduction of the new UK Code and
the EU Shareholders’ Rights Directive in mind. We hope
you find this format a clear explanation of our approach
to remuneration and how we applied this during 2019.
2019 has been a year of exceptional activity for the
Company with a 36.8% increase in the number of
residential units we own and a 22.8% increase in Net
Rental Income, a very significant restructuring of our
borrowings and a market capitalisation in excess of
€800 million as at 31 December 2019. The Remuneration
Committee's decisions in relation to remuneration
arrangements for the CEO were made in this context.
CEO Remuneration in 2019
Margaret Sweeney, our CEO, was appointed in 2017 on
contract terms which broadly replicated those in the
contract with her predecessor David Ehrlich, who stepped
down as CEO on his appointment as CEO of CAPREIT.
Her basic salary under her initial contract was €330,000.
With effect from 1 January 2019, the Remuneration
Committee increased the salary level to €400,000. In
setting this level, the Remuneration Committee took into
account a comparison with salary levels in a comparable
group of Irish and UK REITs and the constituents of the
ISEQ 20, as well as the performance of the Company since
Ms. Sweeney’s appointment and significant increase in its
scale over this time.
For 2019, the CEO’s annual bonus maximum opportunity
level was increased from 100% to 150% of salary.
Alongside the increase in opportunity level, we introduced
a bonus deferral arrangement such that 20% of any bonus
paid will be paid as restricted company shares to promote
sustainable performance and provide additional alignment
of the CEO with shareholder interests. The performance
measures and targets which were applicable for 2019, as
well as performance achieved, are fully set out on page 64.
Based on this strong performance, circa 92% of the
maximum opportunity level was payable.
On 18 June and 10 July 2019 a total of 2,596,499 share
options were granted to Ms. Sweeney in connection with
the successful completion of a placing of 86,550,000 new
Ordinary Shares in the Company, raising gross proceeds
of approximately €134.2 million (before commissions, fees
and expenses). Further details of these awards are included
on page 65. As described below, it is intended that these
share option awards will be the last share option awards
granted to Ms. Sweeney under this arrangement, with a
new performance share arrangement replacing options in
our Remuneration Policy to apply from 2020.
Looking Ahead
During the course of 2019, the main activities of the
Remuneration Committee involved a review of our
remuneration arrangements, to ensure that they continue
to support the Company’s business strategy as well as
taking into account developments such as the updated
UK Code and market practice. In the next section, we have
set out our new Remuneration Policy, which we propose
to apply from 2020.
The key change in the Remuneration Policy compared to
previous arrangements is that we propose replacing the
share option arrangement under which awards were made
to the CEO with annual awards of performance shares,
which will vest subject to the achievement of stretching
three-year EPS (earnings per share) and TSR (relative
total shareholder return) performance conditions. Vested
shares will also be subject to an additional two-year
holding period.
We have introduced a shareholding requirement under
which the CEO will be required to build and maintain
a share-holding of 200% of salary. A post-employment
shareholding requirement will also apply, with the CEO
required to hold 200% of salary (or actual shareholding
on exit if lower) for a period of two years after
leaving employment.
The Remuneration Committee and the Board believe
that these revised arrangements represent a fair and
competitive remuneration package for the CEO and one
that both drives performance and aligns with shareholders’
interests. We also believe this to be a package which will
encourage retention of a CEO who has demonstrated a
very strong level of performance for the Company to date.
With increasing levels of competitors entering the PRS
market in Ireland, we believe it to be highly desirable that
our CEO is well motivated and rewarded in a form which
aligns with shareholders’ longer-term interests.
Aidan O’Hogan
Chair of the Remuneration Committee
59

Governance
Members: Aidan O’Hogan (Chair), Joan Garahy,
Tom Kavanagh and Declan Moylan.
The Remuneration Committee is chaired by Aidan
O'Hogan. All members of the Remuneration Committee
were independent non-executive directors when appointed
by the Board and continue to be independent. Accordingly,
the Remuneration Committee is constituted in compliance
with the Codes and the Articles of Association regarding
the composition of the Remuneration Committee. No
member of the Remuneration Committee has any conflicts
of interest, nor do they have any personal financial interest
other than as shareholders (where relevant).
All members of the Remuneration Committee are
appointed for an initial term of up to three years, which
may be extended by the Board.
The terms of appointment for Aidan O’Hogan and
Declan Moylan expired on 30 March 2020. The term of
appointment for Joan Garahy expires on 17 April 2020.
Accordingly, the Board has agreed that the appointment
of Aidan O’Hogan and Declan Moylan shall be extended
for an additional term of approximately three years
commencing on 31 March 2020, and expiring at the end
of the 2023 AGM (subject to each continuing to meet the
criteria for membership of the Remuneration Committee).
The Board has further agreed that the appointment of
Joan Garahy shall be extended for an additional term of
approximately three years commencing on 18 April 2020
and expiring at the end of the 2023 AGM (subject to her
continuing to meet the criteria for membership of the
Remuneration Committee).
As highlighted in the biographies of each member of the
Remuneration Committee on pages 42 to 44, the members
of the Remuneration Committee bring a range of different
experience and skills to the Remuneration Committee
relating to small, medium and large organisations and
public companies, including experience in the area of
senior executive remuneration, which the Board is satisfied
enables the Remuneration Committee to fulfil its role.
Meetings of the Remuneration
Committee
The Remuneration Committee meets at least once per year
and as otherwise required.
The Remuneration Committee met nine (9) times during
the period from 1 January 2019 to 31 December 2019. The
Remuneration Committee members’ attendance at each
meeting is set out on page 47.
Terms of Reference and Principal Duties
The terms of reference for the Remuneration Committee
were approved and adopted by the Board on 31 March
2014 and are regularly reviewed and updated for best
practice and compliance with the codes (most recently on
1 January 2019 to reflect, amongst other things, legislative
changes and best practice). The roles and responsibilities
delegated to the Remuneration Committee under the
terms of reference can be accessed electronically at http://
investorrelations.iresreit.ie/corporate-governance.aspx.
The Remuneration Committee reviews its terms of
reference on an annual basis and if necessary, proposes for
formal Board adoption amendments to the Remuneration
Committee’s terms of reference. The Remuneration
Committee evaluates its own performance relative to its
terms of reference. Following the 2019 annual review, it
was concluded that the Remuneration Committee was
operating effectively.
The Remuneration Committee’s principal duties include:
• to determine and agree to with the Board the
framework or broad policy for the remuneration of
all executive directors and the chairman, including
pension rights and any compensation payments, and
to recommend and monitor the level and structure of
remuneration for senior management (if any);
• to take into account all factors which it deems necessary
in determining any such remuneration policy;
• to liaise with the Nomination Committee to ensure
that the remuneration of newly appointed executives is
within the Company’s overall policy;
• to determine the policy for and scope of pension
arrangements, service agreements, termination
payments and compensation commitments for the
executive directors;
• to approve the design of, and determine targets for,
any performance-related pay schemes operated by
the Company, approving the total annual payments
made under such schemes and asking the Board, when
appropriate, to seek shareholder approval for any long-
term incentive arrangements; and
• to review the design of all share incentive plans for
approval by the Board and shareholders and, for any
such plans, to determine each year whether awards will
be made and, if so, the overall amounts of such awards,
the individual awards to eligible individuals as it so
determines and the performance targets to be set.
No Director may be involved in any decisions in respect of
his or her own remuneration.
60 
Governance
Remuneration Policy
The Company’s policy is to ensure that executive
compensation includes a mix of basic salary and short-
term and long-term incentive awards, aligned to the
Company's strategy and key performance indicators.
The mix of executive compensation should be designed
to reflect the relative impact of the executive’s role on the
Company’s performance and should consider how the
compensation mix aligns with long-term shareholder
value creation.
In determining the target mix of compensation, the
Remuneration Committee considers market compensation
data available for comparator real estate investment
trusts, which includes real estate investment trusts in
jurisdictions inside and outside of Ireland (including
countries where executives are employed and paid by
the real estate investment trust), to ensure that the
compensation mix is competitive with comparator real
estate investment trusts and appropriate in light of the
Company’s business strategy.
The following section sets out the Company’s
Remuneration Policy for Executive and Non-Executive
Directors, which will apply from 1 January 2020. The
Remuneration Policy will be put forth for shareholder
approval on an advisory basis at the Company's 2020
annual general meeting.
In developing the Remuneration Policy, the Committee
has been mindful of the factors set out in the UK Code
Provision 40:
Clarity and Simplicity: The Committee has aimed
to incorporate simplicity and transparency into the
design and delivery of our Remuneration Policy. The
remuneration structure is simple to understand for
both participants and shareholders and is aligned to the
strategic priorities of the business.
Risk: The Remuneration Policy includes a number of
points to mitigate potential risk:
• Defined limits on the maximum opportunity levels
under incentive plans
• Provisions to allow malus and clawback to be applied
where appropriate
• Performance targets calibrated at appropriately
stretching but sustainable levels
• Bonus deferral, LTIP holding periods, in-employment
and post-employment shareholding requirements
ensuring alignment of interests between Executive
Directors and shareholders and encouraging
sustainable performance
Predictability: We aim for our disclosure to be clear to
allow shareholders to understand the range of potential
values which may be earned under the remuneration
arrangements.
Proportionality: A significant part of an Executive’s
reward is linked to performance with a clear line of
sight between business performance and the delivery of
shareholder value.
Alignment to culture: The incentive arrangements and
the performance measures used are strongly aligned to
those that the Board considers when determining the
success of the implementation of the Company’s purpose,
values and strategy. Please see page 28 of this Report for
more information on the Company’s strategy and key
performance indicators.
The Company’s strategy of growth in both NOI and NAV,
with secure and favourable leverage, alongside quality
standards of accommodation and customer service, is well
aligned with the substantially deferred rewards available
to the CEO through both the bonus and the LTIP share
awards if and when certain benchmarks are achieved.
Moreover, the significant deferral combined with the
malus and clawback provisions minimises the risk of any
exceptional short-term focus.
Element Operation Opportunity Performance Metrics
Basic Salary
To provide a fixed
level of compensation
reflecting the
individual’s skills and
experience
The Remuneration Committee will consider the salary
level from time to time during the policy period, having
regard to any significant changes in the size and scope
of the role and the business, material changes in
comparative market data for similar roles and reward for
individual development.
No maximum level Not applicable
Benefits
To provide benefits
which are
competitive with
market practice
An annual taxable cash allowance towards car, health
cover and risk benefits such as death in service critical
illness and disability cover contributions.
No maximum level
Benefits allowance from 1 January
2019: €25,000 p.a.
Not applicable
Pension
To provide
competitive
post-retirement
benefits
Fixed contributions into an approved Company defined
contribution executive pension scheme or an equivalent
cash supplement is proposed.
15% of basic salary Not applicable
61

Element Operation Opportunity Performance Metrics
Annual Bonus
To support the
delivery of the
Company’s business
strategy and KPIs and
reward annually for
contribution to
financial and
non-financial
performance
Annual bonus based on stretching performance
conditions set by the Remuneration Committee at the
start of each year.
20% of any bonus paid will be paid as restricted
Company shares to promote sustainable performance
and provide additional alignment of the CEO with
shareholder interests. Dividends will be paid as they arise.
Any bonus payments will be subject to withholding
(malus) or requirement of repayment (clawback)
provisions in the event of the achievement of certain
financial results that were subsequently the subject of
or affected by a restatement of all or a portion of the
Company’s Consolidated financial statements;
engagement in gross negligence, intentional misconduct
or fraud that caused or partially caused the need for the
restatement, as finally determined (beyond any right of
appeal) by a court of competent jurisdiction, and the
bonus payment received would have been lower had the
financial results been properly reported.
The Remuneration Committee has the discretion to
override formulaic outcomes in circumstances where it
judges it would be appropriate to do so and, in such
circumstances, the basis for the exercise of any such
discretion will be disclosed in the Annual Report.
The cash portion of bonus may be payable (in whole or
in part) as an employer pension contribution if agreed
between the individual and Remuneration Committee.
Maximum opportunity of 150% of
basic salary
For the achievement of Target
performance, 50% of the
Maximum opportunity (75% of
basic salary) would be expected to
be payable.
The Remuneration
Committee will determine
the performance measures,
their weightings and the
calibration of targets each
year and will clearly
disclose these in the
Remuneration Report.
2019 performance measure
and targets are set out on
page 64.
Long-Term
Incentives
To align the interests
of the CEO with
those of shareholders
and reward the
delivery of long-term
strategic performance
objectives and
the creation of
shareholder value
On her appointment as CEO, a share option award was
granted to Margaret Sweeney and she was entitled to be
awarded options to acquire 3% of the number of shares
issued by the Company from time to time pursuant to
any equity raise (private or public) of the Company.
From 2020, this share option arrangement for the CEO
will be replaced with annual awards of shares, subject to
stretching three-year performance conditions.
Following the three-year performance period, there will
be a further two-year holding period to further promote
sustainable performance and shareholder alignment.
Dividend equivalents (as a cash amount or additional
shares) will be paid at the end of the vesting period.
All LTIP awards will be subject to malus and
clawback provisions.
The Remuneration Committee has the discretion to
override formulaic outcomes in circumstances where it
judges it would be appropriate to do so and in such
circumstances, the basis for the exercise of any such
discretion will be disclosed in the Annual Report.
In the event of an equity restructuring, the Remuneration
Committee may make an equitable adjustment to the
terms of share and share option awards by adjusting the
number and kind of shares which have been granted.
Outstanding LTIP awards would normally vest and
become exercisable on a change of control, subject to
plan rules, and taking account of the degree to which
performance conditions have been satisfied.
The Remuneration Committee may exercise its discretion
to vary the level of vesting having regard to the
circumstances and reasons for the events giving rise to
the change of control or determine that it would be
appropriate for the LTIP awards to be exchanged for
equivalent awards in the purchaser’s shares where such an
award would be substantially equivalent, in value and in
terms and conditions, to the award in the Company.
The LTIP limit cannot exceed 10% of the Company’s
issued ordinary share capital (adjusted for share issuance
and cancellation) during the 10-year period prior to
that date.
Awards of face value up to 135%
of salary
The vesting of these shares
will be determined by
performance against
earnings per share (“EPS”)
and relative total
shareholder return (“TSR”)
conditions set by the
Remuneration Committee
at the time of each grant.
The performance targets
for each award will be
clearly disclosed in
the relevant year’s
Remuneration Report.
Governance
62 
Governance
Element Operation Opportunity Performance Metrics
Shareholding
Requirement
To further align the
interests of the CEO
with those of
shareholders and
encourage sustainable
performance
From 2020, the CEO will be required to build and
maintain a shareholding interest in the Company
equivalent to at least 200% of her basic salary. There will
be a five-year period to build up this holding from the
introduction of the policy.
For the purposes of the requirement,“shareholding
interest” includes shares if vesting is not subject to any
further performance conditions. Vested but unexercised
share options, deferred bonus shares and LTIP shares
during the two-year holding period following the
achievement of the performance condition will be
included with a 50% discount applied where appropriate
to reflect the number of shares which would be owned
assuming sufficient shares were sold to pay tax due.
A post-employment shareholding requirement will also
apply: A shareholding interest in the Company equivalent
to at least 200% of basic salary (or the actual shareholding
interest on exit if lower) will be required to be held for a
period of two years after leaving employment.
Not applicable Not applicable
Derogation from
Remuneration Policy
Only in accordance with the terms of the Remuneration
Policy and/or the European Union (Shareholders’ Rights)
Regulations 2020, which provides for temporary
derogation in exceptional circumstances, where doing so
is to serve the long-term interests and sustainability of
the Company as a whole or to assure its viability.
Not applicable Not applicable
The Remuneration Committee considers that these revised
arrangements are in practice more closely aligned with
the Company’s long-term strategy than the previous
arrangements.
Service Contracts
Margaret Sweeney has a service contract with the
Company terminable upon six months’ prior written
notice at the discretion of Margaret Sweeney or
12 months’ prior written notice at the discretion of the
Company. Margaret Sweeney is entitled to be paid her
full remuneration (net of any social welfare benefits)
during any periods of inability to work due to illness
or accident, not exceeding in aggregate six weeks in any
consecutive 12-month period; and thereafter six weeks’
half remuneration (net of any social welfare benefits).
Ms. Sweeney’s notice period entitlements are limited
to salary and benefits over 12 months or less, subject
to mitigation.
Policy for Recruitment of
New Executive Directors
The Remuneration Committee will determine the
remuneration arrangements in respect of any newly
appointed Executive Directors that may be appointed in
the future, in line with and subject to the limits in the
Remuneration Policy as set out above, including use of
performance criteria, holding periods and application of
recovery or withholding periods.
Salary levels will be determined taking into account the
experience of the individual, the size and scope of the
role and the business, and comparative market data for
similar roles.
Relocation benefits may be provided if necessary.
If for an external appointment it is necessary to buy out
incentive arrangements which would be forfeited on
leaving the previous employer, this will be done taking
into account the form (e.g. cash or shares), vesting
period and any performance conditions applicable to the
remuneration being forfeited.
If an internal appointment is made, remuneration
arrangements awarded prior to promotion to Executive
Director level will continue to run in line with the
schedule and conditions determined at time of grant.
Non-Executive Director Fees
The remuneration of the non-executive directors is
determined by the Board as a whole. No director may
be involved in any decisions in respect of his or her
own remuneration.
Levels of remuneration for non-executive directors reflect
the time commitment and responsibilities of the role. The
fees paid to non-executive directors are therefore set at a
level which aims to attract individuals with the necessary
experience and ability to make a significant contribution
to the Company and to compensate them appropriately
for their role. Levels of fees may be reviewed from time
to time during the policy period, having regard to any
significant changes in the size and scope of the role and
the business, and material changes in comparative market
data for similar roles.
63

Explanatory notes:
1. The table includes all emoluments paid to or
receivable by directors in respect of qualifying services
during the review period.
2. Non-executive directors do not receive any benefits.
3. For more information on options granted to the
directors, please refer to the section below titled
“Long-term Incentives”.
4. No compensation for loss of office, payments for
breach of contract or other termination payments
were paid to any current or former director in the
period under review.
5. These proportions have been calculated based on
the figures in this table. Note that, as share options
awarded in 2019 were market priced, their intrinsic
value at the date of grant (and therefore the value
included in this table) was zero. Full details of the
awards made in 2019 and in previous years are
included in the tables below under “Long-term
Incentives”.
Basic Salary
With effect from 1 January 2019, the basic salary of
the CEO was increased from €330,000 to €400,000. In
determining this level, the Committee took into account
a comparison with levels in a comparable group of Irish
and UK REITs and the constituents of the ISEQ 20, as
well as the performance of the Company since Margaret
Sweeney’s appointment in 2017 and significant increase in
its scale over this time.
Benefits
The CEO receives an annual taxable cash allowance
towards car, health cover and risk benefits such as death in
service critical illness and disability cover contributions.
With effect from 1 January 2019, the allowance was
increased from €20,000 to €25,000 p.a.
Pension
The CEO participates in a defined contribution pension
arrangement and received contributions equivalent to
15% of basic salary during 2019.
Governance
Potential Derogation from the
Remuneration Policy
The Remuneration Committee intends that remuneration
arrangements will operate in accordance with the above
Remuneration Policy for a four-year period or until an
amended Remuneration Policy is put to shareholders for
approval. The European Union (Shareholders' Rights)
Regulations 2020 allow for the potential for a temporary
derogation from the Remuneration Policy where doing
so is necessary in exceptional circumstances, to serve the
long-term interests and sustainability of the traded PLC
as a whole or to assure its viability. By definition, it is not
possible to fully list all such exceptional circumstances, but
the Remuneration Committee would only use such ability to
apply a derogation after careful consideration and where the
Remuneration Committee considers the circumstances were
truly exceptional and the consequences for the Company
and shareholders of not doing so would be significantly
detrimental. Where time allowed, shareholders would be
consulted prior to applying such a change, or, at minimum
where this was not possible, the full details of the derogation
would be communicated as soon as practical (e.g., by market
announcement/on the Company's website) and disclosed in
detail in the next Remuneration Report. Under the potential
derogation, the Remuneration Committee would have the
ability to vary the elements of remuneration described in
the above table, including levels and performance conditions
applicable to incentive arrangements.
Total Remuneration of Directors
The table below sets forth the total remuneration received by each director in 2018 and 2019.
Fixed Remuneration Variable Remuneration Proportion of

64 
Governance
Annual Bonus
From 2019, the CEO’s annual bonus maximum opportunity level was increased from 100% to 150% of basic salary.
Alongside the increase in opportunity level, a bonus deferral arrangement was introduced such that 20% of any bonus
paid will be deferred into Company shares to promote sustainable performance and provide additional alignment of the
CEO with shareholder interests.
For 2019, 80% of annual bonus for the CEO was determined by financial performance measures and 20% was based on
strategic objectives. The weightings, targets and performance against each are summarised in the tables below:
2019 Quantitative Financial Measures (Note 1)
1. 
Putting in place and implementing a proactive investor
relations plan with existing and prospective investors
3%
Fully achieved as reflected by the exceptional level of support
from existing and new shareholders in the capital raise for the
Marathon Portfolio acquisition. Green
2. 
Managing strong relationship with existing and new
bank lenders including the execution of a new and
increased credit facilities 3%
2019 was a most successful year for the Company with very
strong support from its bankers enabling the addition of 987
additional residential units. Green
3. 
Advance growth in assets in line with approved Board
strategy in conjunction with the Investment Manager 4%
The growth in the number and value of assets during 2019 was
beyond that foreseen at the outset of 2019. Green
4. 
Progression of Investment Management Agreement
with Board and CAPREIT 4%
Discussions were commenced and a Board subcommittee
appointed during 2019 and the groundwork laid for the
necessary advice and negotiations scheduled review of the
Investment Management Agreement to take place during 2020. Green
5. 
Develop ESG strategy and benchmarking against
relevant standards in conjunction with the
Investment Manager 2%
Development of the Company’s ESG strategy was progressed
during the course of the year. For more details of this strategy,
please see the ESG report on page 149 of this Report. Green
6. 
Successfully overseeing the Risk Management Strategy
and execution to ensure that there is no material
avoidable and within our control risk events 4%
There were no material risk events encountered during 2019.
Green
Note 1: The Remuneration Committee assessed performance against each of the qualitative measures on a ‘traffic light’ basis: Green – Fully Achieved,
Orange – Partially Achieved, Red – Not Achieved.
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Governance
All the qualitative objectives for 2019 were fully achieved.
The total bonus payable to the CEO in respect of the financial year ended 2019 was therefore 137.9% of basic salary
(maximum opportunity: 150% of basic salary). In line with this, on 19 February 2020, the Remuneration Committee
awarded the CEO a performance-related bonus of €551,790 in respect of the Company's financial year ended on
31 December 2019 (the “2019 Bonus”). Of this, €441,432 (representing 80% of the 2019 Bonus) was paid to the CEO in
cash. The remainder of the 2019 Bonus, representing €110,358, was settled as a restricted entitlement, to the beneficial
interest in 92,393 ordinary shares in the capital of the Company (the “Restricted Bonus Shares”). The Restricted Bonus
Shares were acquired on-market and are being held on trust for the CEO for three years.
Long-Term Incentives
Share Options Awarded During 2019
Director Grant Date
Exercise
(1)
Options were first granted at I-RES’ initial offering on 16 April 2014.
(2)
At the time of his appointment as a non-executive director, Mark Kenney held 1,500,000 options of I-RES previously awarded to him in his capacity as an
employee of CAPREIT.
66 
Governance
Interests of Directors and the Secretary in the Share Capital
The interests of directors and the Secretary in the share capital of the Company set out in page 72 of the Report of the
Directors is incorporated by reference in this Remuneration Report.
As of 2 April 2020, the CEO maintained a ‘shareholding interest’ of approximately 251% of basic salary based on a market
price of €1.10 being the closing price of the Company’s shares on 2 April 2020.
Implementation of Remuneration Policy in 2020
Following the adjustment to the basic salary of the CEO in 2019, the Remuneration Committee does not anticipate
making a further adjustment in 2020.
The CEO’s opportunity under the annual bonus for 2020 will be 150% of basic salary, with 20% of any bonus
payment deferred into shares for three years. The table below sets out the measures and weightings that will apply for
2020. The full details of targets and performance against each will be set out on a retrospective basis on next year’s
Remuneration Report.
Weighting
Measure (% of Maximum Bonus)
EPRA earnings (Note 1) 50%
EPRA Basic EPS (Note 1) 10%
Dividend per share 10%
Net Asset Value 10%
Qualitative strategic objectives 20%
Note 1: EPRA earnings will be based on normalized EPRA EPS which is calculated by excluding from EPRA EPS the effects of certain non-recurring and
exceptional items.
On 27 March 2020, the Remuneration Committee awarded the CEO, subject to certain conditions, a conditional share
award of 437,601 ordinary shares (equivalent to 135% of basic salary) in the capital of the Company (the “2023 Restricted
Shares”) as Restricted Shares under the terms of the LTIP. In order for the CEO to receive the 2023 Restricted Shares,
she must continue to be employed by the Company up to the vesting date in 2023 and meet the applicable performance
conditions set out in the table below. The 2023 Restricted Shares are to be held on trust for the CEO for a further two-year
period from the vesting date in 2023.
Performance Level Vesting Level
EPS Portion
(50% weighting)
Percentage growth in EPS: 2022
compared to base year of 2019
(Note 1)
TSR Portion
(50% weighting)
TSR relative to the constituents of the FTSE
EPRA/NAREIT Europe Developed Index
Below Threshold 0% Below 3% p.a. Below Median
Threshold 25% 3% p.a. Median
Stretch (or above) 100% 6% p.a. Upper Quartile (or above)
Between Threshold and Stretch Pro-rata between 25% and 100% Between 3% and 6% p.a. Between Median and Upper Quartile
Note 1: EPRA earnings will be based on normalized EPRA EPS which is calculated by excluding from EPRA EPS the effects of certain non-recurring and
exceptional items.
67

Governance
Non-Executive Director Fees
The Company reviewed the level of fees for non-executive
directors. Following the review, the Remuneration
Committee (with Declan Moylan recused) recommended
to the Board that the fees of the Company Chairman
should be increased from €100,000 to €140,000 p.a. with
effect from 21 February 2019. The Board adopted that
recommendation. No other changes were made to Non-
Executive Director (“NED”) fees. In determining this
level, the Remuneration Committee took into account a
comparison with levels in a comparable group of Irish
and UK REITs and the constituents of the ISEQ 20 and
the significant increase in the Company’s scale since the
fees were last reviewed. The Remuneration Committee
noted and had regard to the fact that the Chairman had
materially more day-to-day engagement with the business
than would be commonly the case, by virtue of the
Company being externally managed and as a consequence
it was essential that there be an unusually high level of
engagement and support between the CEO and Chairman.
Executives’ External Appointments
The executive director (and any future executive
director(s) that might be appointed) are permitted to take
on external appointments with another publicly listed
company with the prior approval of the Board. The Board
recognises that there are benefits to both the Company
and the executive director, for the executive director
to serve as a non-executive board member of other
companies. The executive director is permitted to retain
any payments received in respect of such appointments.
On 27 February 2014, Margaret Sweeney was appointed
as a non-executive director of Dalata Hotel Group plc, for
which she received an annual fee in 2019 of €85,000.
Payment for Loss of Office/Exit Payments
No payments were made in the year in relation to loss
of office.
External Services
The Remuneration Committee has engaged remuneration
consultants, Willis Towers Watson, which have no other
relationship with the Group or any individual director,
to provide advice in relation to executive remuneration
and to advise in relation to the remuneration policy and
remuneration report. Willis Towers Watson’s fees for
advice during 2019 were €38,858.
Key Priorities of the Remuneration
Committee for 2020
1. 
To establish and finalise a revised long-term incentive
scheme for the CEO applicable for 2020.
2. 
To set suitable targets for the bonus scheme and for any
long-term incentive scheme for 2020.
3. 
To monitor comparator performance and their reward
schemes to ensure a high level of awareness at Board
level of the relative performance of our Remuneration
Policy.
4. 
To ensure alignment of our Remuneration Policy with
current governance recommendations.
68 
Governance
Report of the Nomination Committee
Introductory Statement from the
Nomination Committee Chair
Dear Shareholder,
On behalf of the Nomination Committee, I am pleased to
present the Report of the Nomination Committee for the
year ended 31 December 2019.
This year we welcomed Mark Kenney, President and Chief
Executive Officer of CAPREIT, to the Board effective
1 January 2019. Mr. Kenney is the Investment Manager’s
nominee on the Board and has over 28 years of experience
in the multi-family real estate sector.
The Board is comprised of directors who have been
involved with the Company since its inception and have
invaluable insight into the history and growth of the
Company and more recently appointed directors who
offer fresh perspectives and enhance Board diversity.
The Nomination Committee remains satisfied with the
structure, size, composition and balance (including the
skills, knowledge, experience, independence and diversity)
of the Board and its committees.
A report issued in June 2019 by the Balance for Better
Business Review Group, which is an independent business-
led review group established by the Government of Ireland
to improve gender balance at the senior leadership level in
Ireland, encouraged Irish companies that form part of the
ISEQ 20 Companies to target 25% female representation
on boards by 2020. We are pleased to report that currently,
28.6% of the directors on the Board are female, which
includes the Company’s Chief Executive Officer and the
Chair of the Audit Committee. These are significant roles
and demonstrate the Board’s commitment to ensuring
appropriate gender diversity on the Board.
Looking Ahead
With two directors, including myself, entering their third
three-year term as directors on the Board, the Nomination
Committee will continue to focus on Board succession
planning. In terms of director development, as noted in our
Risk Report a principal risk for the Company is the dynamic
regulatory and political environment in which the Company
operates. We will continue to focus on ensuring that our
directors receive timely information and presentations from
experts and advisors on regulatory developments, so that the
Board is well positioned to assess the impact of such changes
to the Company and respond appropriately.
Declan Moylan
Chair of the Nomination Committee
Members: Declan Moylan (Chair), Phillip Burns,
Joan Garahy and Aidan O’Hogan.
The Nomination Committee is chaired by Declan Moylan,
who is also the Chairman. The Company considers
the Chairman of the Company to be independent and
accordingly a majority of members of the Nomination
Committee are independent. Therefore, the Nomination
Committee is constituted in compliance with the Codes
and the Articles of Association regarding the composition
of the Nomination Committee.
All members are appointed for an initial term of up to
three (3) years, which may be extended by the Board.
The terms of appointment for Declan Moylan and
Aidan O’Hogan expired on 30 March 2020. The term of
appointment of Joan Garahy expires on 31 October 2020.
Accordingly, the Board has agreed that the appointment
of Declan Moylan and Aidan O’Hogan shall be extended
for an additional term of approximately three years
commencing on 31 March 2020 and expiring at the end
of the 2023 AGM (subject to each continuing to meet the
criteria for membership of the Nomination Committee).
The Board has further agreed that the appointment of
Joan Garahy shall be extended for an additional term
of approximately two and half years commencing on
1 November 2020 and expiring at the end of the 2023 AGM
aligning with the expiry of her Board and other Committee
appointments (subject to her continuing to meet the
criteria for membership of the Nomination Committee).
Meetings of the Nomination Committee
The Nomination Committee meets at least once per year
and as otherwise required. The Nomination Committee
met four (4) times during the period from 1 January
2019 to 31 December 2019. The Nomination Committee
members’ attendance is set out on page 47.
Terms of Reference and Principal Duties
The terms of reference for the Nomination Committee
were approved and adopted by the Board on 31 March
2014 and are regularly reviewed and updated for best
practice and compliance with the Codes (most recently on
1 January 2019 to reflect, amongst other things, legislative
changes and best practice). The roles and responsibilities
delegated to the Nomination Committee under the terms
of reference can be accessed electronically at http://
investorrelations.iresreit.ie/corporate-governance.aspx.
The Nomination Committee reviews its terms of reference
on an annual basis and, if necessary, proposes for
formal Board adoption amendments to the Nomination
Committee’s terms of reference. The Nomination
Committee evaluates its own performance relative to its
terms of reference. Following the 2019 annual review,
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Governance
it was concluded that the Nomination Committee was
operating effectively.
The Nomination Committee leads the process for
considering appointments to the Board and its Committees.
The Nomination Committee’s principal duties include:
(a) to regularly review the structure, size and composition
of the Board and the Board committees, evaluate
the balance of skills, knowledge and experience on
the Board and the Board committees, and make
recommendations to the Board with regard to any
adjustments that are deemed necessary;
(b) to be responsible for identifying and nominating, for
the approval of the Board, candidates to fill Board
vacancies as and when they arise, ensuring that
the procedures followed are formal, rigorous and
transparent; and
(c) to satisfy itself with regard to succession planning that
processes and plans are in place with regard to both
Board and senior appointments.
Key Activities During 2019
The Nomination Committee undertook the following key
activities during the 2019 financial year:
• developed a work plan for 2019;
• reviewed the Nomination Committee’s terms of
reference;
• considered and recommended to the Board that
the appointment of Phillip Burns as a director of
the Company be extended for an additional term of
approximately three years expiring at the end of the
2022 AGM;
• considered and recommended to the Board a new Division
of Responsibilities Statement and Diversity Policy;
• considered and recommended to the Board amendments
to the Company’s position descriptions for the Chief
Executive Officer, Chairman, Senior Independent
Director and Non-Executive Director, having regard to
the new UK Code requirements;
• reviewed the time commitments of the Chairman, Senior
Independent Director and Non-Executive Directors;
• considered the scale of other appointments the Chair of
the Board and other non-executive directors may take
on without compromising their effectiveness;
• reviewed ongoing succession planning;
• adopted an updated skills matrix for Board members in
line with the Company’s strategy to aid future succession
planning and talent management, as well as ensure that
an appropriate balance of skills and expertise exists;
• approved a more comprehensive induction plan for new
directors and discussed the director education programme;
• reviewed the findings of the Board evaluation with
respect to composition of the Board and its Committees;
• assessed the balance of skills, experience, independence,
diversity and knowledge of each director and across the
Board and subsequently recommended that each of them
be elected or re-elected at the Company’s AGM; and
• discussed and reviewed any new corporate governance
requirements and any new or forthcoming
amendments to relevant laws or regulations that will,
or are likely to, impact the roles and duties of the
Nomination Committee.
Succession Planning
The Nomination Committee assesses the aggregate skills
and experience of the directors in light of the current and
future needs of the Board and its committees, both on a
routine basis and in particular when considering renewal
of contracts and potential new appointments.
Each non-executive director, including the Chairman of
the Board, is expected to serve until the end of the annual
general meeting following the third anniversary of his
or her appointment unless his or her appointment is
otherwise terminated earlier in accordance with the terms
of his or her letter of appointment or he or she is invited
by the Board and agrees to serve for an additional period.
In its work in the area of Board renewal, the Nomination
Committee looks at a number of issues including:
• skills, knowledge and expertise in areas relevant to the
operation of the Board;
• diversity; and
• the need for an appropriately sized Board.
The Board has had a stable year with no directors leaving
or joining other than Mr. Kenney joining as a director
effective as of 1 January 2019. Mr. Moylan and Mr. O'Hogan
will complete their second three-year term contracts and
Ms. Garahy will complete her first three-year term contract
at the end of the Company's 2020 annual general meeting.
The Nomination Committee considered and approved
the renewal of their appointments to the Board for an
additional term of approximately three years. In addition,
the Nomination Committee considered and approved
the renewal of their appointments to the Remuneration
Committee and Audit Committee (as relevant), which
appointments expired on 30 March 2020 in the case of
Mr. Moylan and Mr. O'Hogan and are due to expire on
17 April 2020 in the case of Ms. Garahy, for an additional
term of approximately three years. None of Mr. Moylan,
Mr. O'Hogan or Ms. Garahy participated in the discussion
or vote with respect to his or her re-appointment to Board
and/or Committee positions with respect to him or herself.
The number of directors is currently considered by the
Nomination Committee to be sufficiently small to allow
efficient management of the Company while being large
enough to ensure an appropriate mix of skills and experience.
Board and Committee Evaluation
The Nomination Committee reviewed those elements of
the Board evaluation that related to the composition of
the Board and its committees, and the time commitment
required from Non-Executive Directors. These were rated
positively, and the Nomination Committee continues
70 
Governance
to monitor the skills and experience requirements
throughout the year.
The Nomination Committee believes that each
Non‑Executive Director brings a distinct range of skills
and experience that complements those brought by
the other Non-Executive Directors. The Nomination
Committee recommended to the Board, which in turn
confirmed, that all serving directors be put forward for
re‑election at the 2020 AGM.
Diversity
The Board and the Nomination Committee recognise the
importance of, and are committed to supporting, diversity
and inclusion in the boardroom where directors believe
that their views are heard, their concerns are addressed and
they serve in an environment where no bias, discrimination
or harassment is tolerated on any matter. The Board and
the Nomination Committee understand that a diverse
Board will offer different perspectives in order to provide
effective oversight of the Company’s business and guide the
Company towards its strategic aims. Diversity also improves
the quality of decision-making by the Board by reducing
the risk of group-think and supports the development of a
diverse pipeline of candidates to serve on the Board.
The Company’s Diversity Policy requires the Board to
consider a broad range of characteristics when considering
diversity including, but not limited to:
• age, gender, social and ethnic background;
• educational and professional background, possession
of technical skills in the Company’s field of operations,
including “soft” and cognitive skills necessary to be an
effective director;
• personal strengths such as strength of character,
experience, knowledge and understanding; and
• expertise in relevant environmental, social and
governance (“ESG”) matters.
The Nomination Committee in the context of its Board
evaluation processes, regularly reviews the structure, size
and composition of the Board, taking diversity and the
considerations noted above in particular into account,
in order to maintain an appropriate range and balance
of skills, experience and background on the Board. The
Nomination Committee also considers diversity in the
context of Board appointments and succession planning.
Each of these processes will take account of and address
the Board’s diversity at that time and consider needs for
enhancement of diversity on the Board. In implementing
the Diversity Policy during 2019, the Nomination
Committee considered diversity in evaluating the optimum
composition of the Board and in evaluating the effectiveness
of its Board. Based on the skills matrix that is completed by
each director as part of the Board evaluation, the directors
have diverse skills, including in relation to enterprise
leadership, management experience, board experience, legal,
tax, general real estate experience, development, human
resources, stakeholder engagement, corporate governance,
financial acumen, government relations and capital markets.
Where outside-of-Board appointments (which did not arise
in 2019 given there was no change in Board members during
the year) and having regard to the fact that the Company has
only three employees, the Board recognises the challenges
in fully implementing its Diversity Policy across a relatively
small pool of individuals in order to achieve true diversity
within each of the characteristics listed above. In addition,
where using recruitment consultants, the Nomination
Committee seeks, and will continue to seek, to work with
consultants who have made a commitment to promote
diversity. All Board appointments, with the exception of the
Investment Manager’s nominee who is nominated by the
Investment Manager, are based on a transparent selection
process using objective criteria, including consideration
of diversity (including gender), necessary experience,
characteristics, skillsets and other attributes necessary to
ensure effective oversight of the Company’s business and to
guide the Company towards its strategic objectives.
The Company meets board gender diversity best practice
in Ireland by having over 25% female Board representation
by 2020. Currently, 28.6% of the directors on the Board
are female, which includes the Company’s Chief Executive
Officer and the Chair of the Audit Committee. Both
roles demonstrate the Board’s commitment to ensuring
appropriate gender diversity on the Board.
Given the composition of the Board and the development
stage of the Company, the Board and the Nomination
Committee do not currently consider it appropriate at this
time to set any measurable objectives, including gender
quotas, in respect of Board or employee representation. The
Nomination Committee will consider annually whether
measurable objectives such as quantitative targets and
timeframes for achieving diversity are appropriate and, if
thought fit, will recommend such measurable objectives to
the Board for adoption. The Board is committed to having
an appropriate balance of skills and perspectives, including
gender balance on the Board.
Key Priorities of the Nomination
Committee for 2020
The Nomination Committee’s plan for the 2020 financial
year includes:
• implement actions from the 2019 Board Evaluation
(see page 48);
• continue to assess what enhancements should be made
to Board and Committee composition;
• continue to undertake our work in relation to
succession planning for the Board;
• review the Board’s overall contribution to strategy;
• review the time commitment and effectiveness of each
non-executive director’s contribution; and
• consider the skills, availability and performance of each
Board member.
71

Governance
Report of the Directors
The directors of the Company present their report and the
audited financial statements for the financial period from
1 January 2019 to 31 December 2019.
Principal Activity
The Company is an Irish real estate company, focused
on the private residential rental property market on the
Island of Ireland. The Company owns interests primarily
in residential rental accommodations and ancillary and/or
strategically located commercial properties located in and
near major urban centres in Ireland, in particular Dublin.
The Company purchased its first real estate assets on
10 September 2013 and is now one of the largest private
residential landlords in Ireland. The Company’s net assets
and operating results are derived from real estate located
in Ireland.
Review of Activities, Business
Performance Measures and Events
Since the Year End
The Chairman’s Statement on pages 12 to 13, the Chief
Executive Officer’s Statement on pages 13 to 17, the
Investment Manager’s Statement on page 18, and the
Business Review section of the Investment Manager’s
Review on pages 19 to 26 contain a review of the
development and performance of the business during the
year, the state of affairs of the business at 31 December 2019,
recent events and likely future developments. Information
in respect of events since the year end as required by the
Companies Act, 2014 is included in these sections and in
note 26 of the Group financial statements on page 117.
The Corporate Governance Statement on pages 45 to 51,
the Report of the Audit Committee on pages 52 to 57, the
Report of the Remuneration Committee on pages 58 to
67, the Report of the Nomination Committee on pages 68
to 70 and the Review on pages 12 to 40 are deemed to be
included in this Report of the Directors for the purposes
of the Companies Act, 2014.
This Report, the documents referred to therein,
which include a description of the principal risks and
uncertainties facing the Company, the Chairman’s
Statement on pages 12 to 13, the Chief Executive Officer’s
Statement on pages 13 to 17, the Investment Manager’s
Statement on page 18, the Business Review on pages
19 to 26 and the Risk Report on pages 31 to 40 are
deemed to be the management report as required by the
Transparency (Directive 2004/109/EC) Regulations 2007
(the “Transparency Regulations”).
Revenue for the financial period amounted to
€62.10 million (€50.61 million for the 2018 year). The
profit for the year attributable to shareholders amounted
to €86.28 million (€119.79 million for the 2018 year).
Basic Earnings per Share and Diluted Earnings per Share
amounted to 18.0 cents and 17.9 cents, respectively
(28.0 cents and 27.8 cents for the 2018 year). EPRA
Earnings per Share were 6.9 cents (6.5 cents for the 2018
year), and EPRA NAV per share was 155.3 cents (142.0 cents
as at ). Further details of the results for
the year are set out in the consolidated statement of profit
or loss and other comprehensive income on page 88.
REIT Status
The Company elected for REIT status on 31 March 2014
under section 705 E of the Taxes Consolidation Act, 1997.
As a result, the Company does not pay Irish corporation tax
on the profits and gains from qualifying rental business in
Ireland from that date, provided it meets certain conditions.
As an Irish REIT, the Company is required to distribute
to its shareholders (by way of dividend), on or before the
filing date for its tax return for the accounting period
in question, at least 85% of the Property Income of the
Property Rental Business arising in each accounting period
(provided it has sufficient distributable reserves). Failure
to meet this requirement will result in an Irish REIT
incurring a tax charge calculated by reference to the extent
of the shortfall in the dividends paid.
The directors confirm that the Group complied with
all the above REIT requirements for the period from
1 January 2019 to 31 December 2019.
Dividends
Under the Irish REIT Regime, subject to having sufficient
distributable reserves, the Company is required to
distribute to shareholders at least 85% of the Property
Income of its Property Rental Business for each accounting
period. Each year it is the Board’s intention to propose
semi-annual dividends payable in March and September.
Accordingly, in 2019, the Board paid dividends of
approximately €24.3 million for the 2018 accounting
period and approximately €14 million in respect of the
period from 1 January 2019 to 30 June 2019. On 20
February 2020, the directors announced an additional
dividend of €16.2 million (dividends per share of
3.1 cents) for the year ended 31 December 2019, to be
paid on 23 March 2020 to shareholders on record as
of 28 February 2020. This dividend was made up of a
Property Income Distribution (“PID”), as defined in the
Irish REIT Legislation.
72 
Governance
Share Capital
The authorised share capital of the Company is
1,000,000,000 ordinary shares of €0.10 each, of which
521,678,946 shares were in issue at 31 December 2019. All
of these shares are of the same class. They all carry equal
voting rights and rank equally for dividends. No shares in
the Company were acquired or redeemed by the Company
during the financial period ended 31 December 2019 or
made subject to charge or lien. There are no securities
holding special rights with regard to control of the
Company. Particulars of the authorised and issued share
capital of the Company as at 31 December 2019 are set out
in note 12 of the Group financial statements on page 105.
During the financial period ended 31 December 2019 and
as at 2 April 2020, the Company held no shares in treasury,
and no subsidiary undertaking of the Company held
shares in the Company.
There are no restrictions on the transfer of shares in the
Company and no requirements to obtain approval of the
Company, or of other holders of securities in the Company,
for a transfer of shares in the Company, save that the
directors may decline to register any transfer of a share:
• to or by a minor or a person with a mental disorder
(as defined by the Mental Health Act, 2001);
• in certain circumstances where the directors have
given notice to a shareholder under the Articles of
Association requiring such shareholder to notify the
Company of his or her interest in any shares in the
Company and is in default for a prescribed period in
supplying such information to the Company;
• if the transfer is in favour of any person, as determined
by the directors, to whom a sale or transfer of shares, or
whose direct, indirect or beneficial ownership of shares
would or might cause a specific regulatory burden to
be imposed on the Company, such as under the US
Securities Exchange Act of 1934;
• in certificated form where the following documents
have not been produced: the original share certificate
and the usual form of stock transfer, duly executed by
the holder of the shares and stamped with the requisite
stamp duty; and
• in uncertificated form only in such circumstances as may
be permitted or required by the CREST Regulations.
Interests of Directors and Secretary in Share Capital
The current directors, with the exception of Mark Kenney, and the Company Secretary had no interests in the share
capital at their date of appointment. As announced by the Company in December 2018, Mark Kenney was appointed as
a non-executive director of I-RES with effect from 1 January 2019. At the time of his appointment, Mark Kenney held
1,500,000 options of I-RES previously awarded to him in his capacity as an employee of CAPREIT.
The movement in directors’ and Secretary’s shares during the year is set out below:
Name

In accordance with the disclosure requirements prescribed by Euronext Listing Rule 6.1.82(1), the interests disclosed above
include both direct and indirect legal and beneficial interests in shares. Other than as noted below, there were no movements
in directors’ shareholdings or outstanding option awards between 31 December 2019 and the date of this Report.
CEO 2019 Bonus Award
On 19 February 2020, the Remuneration Committee awarded the CEO a performance-related bonus of €551,790 in
respect of the Company's financial year ended on 31 December 2019. Of this, €441,432 (representing 80% of the 2019
Bonus) was paid to the CEO in cash. The remainder of the 2019 Bonus, representing €110,358, was settled as a restricted
entitlement, subject to certain conditions, to the beneficial interest in 92,393 ordinary shares in the capital of the
Company. The Restricted Bonus Shares were acquired on-market and are being held on trust for the CEO for three years.
The Restricted Bonus Shares are reflected in the table above for the CEO under “Ordinary Shares as at 2 April 2020”.
73

Governance
CEO 2020 LTIP award
On 27 March 2020, the Remuneration Committee awarded
the CEO, subject to certain conditions, a conditional
share award of 437,601 ordinary shares in the capital of
the Company as Restricted Shares under the terms of the
LTIP. In order for the CEO to receive the 2023 Restricted
Shares, she must continue to be employed by the Company
up to the vesting date in 2023 and meet the applicable
performance conditions (as disclosed on page 66 of the
Report of the Remuneration Committee). The 2023
Restricted Shares are to be held on trust for the CEO for
a further two-year period from the vesting date in 2023.
The 2023 Restricted Shares are in addition to the interests
reflected in the table above for the CEO.
The directors and the Company Secretary have no
beneficial interests in any of the Group’s subsidiary or
associated undertakings.
The Company is not aware of any other arrangements
between its shareholders which may result in restrictions
on the transfer of securities or voting rights.
Employee Share Schemes
Options are issuable pursuant to I-RES’ share-based
compensation plan, namely, the LTIP. Eligible participants
include employees or executive directors of the Company
and certain trustees and employees of CAPREIT and
its affiliates. Further details on the LTIP are included in
note 11 of the Group financial statements.
Powers of the Board
The directors are responsible for the management of the
business of the Company and may exercise all the power
of the Company subject to applicable legislation and
regulation and the Company’s Constitution.
The directors’ powers to allot, issue, repurchase and
reissue ordinary shares are dependent on the terms of the
resolutions from time to time in force so empowering the
directors. At the Company’s 2019 annual general meeting,
the directors were given the power to:
• issue new shares up to a nominal amount of
€21,707,697.30, representing half (50%) of the
nominal value of the Company’s issued share capital
as at 9 April 2019;
• disapply statutory pre-emption rights in connection
with issues of ordinary shares for a nominal cash value
equivalent to up to 10% of the nominal value of the
issued share capital (5% of which, in line with the
Pre-emption Group’s Statement of Principles, is to be
exercised solely in connection with an acquisition or
specified capital investment);
• make market purchases of the Company’s ordinary
shares up to 15% of the issued ordinary shares in the
Company and to reissue those shares; and
• reissue repurchased shares and set a reissue price range.
The authorities described above are due to expire at the
conclusion of the 2020 annual general meeting of the
Company or 15 months from the passing of the resolution.
Details of the resolutions to be considered at the next
annual general meeting of the Company will be sent to
shareholders in advance of the 2020 annual general meeting.
Rules Concerning the Appointment and
Removal of Directors of the Company
Directors are appointed on a resolution of the shareholders
at a general meeting, usually the annual general meeting,
either to fill a vacancy or as an additional director. The
directors have the power to fill a casual vacancy or to appoint
an additional director (within the maximum number of
directors fixed by the Company in a general meeting),
and any director so appointed holds office only until the
conclusion of the next annual general meeting following
his or her appointment, when the director concerned shall
retire, but shall be eligible for reappointment at that meeting.
No person other than a director retiring at a general
meeting may be appointed a director at any general
meeting unless (i) he or she is recommended by the
directors or (ii) not less than seven (7) nor more than
thirty (30) clear days before the date appointed for the
meeting, notice executed by a shareholder qualified to
vote at the meeting has been given to the Company of the
intention to propose that person for appointment stating
the particulars which would be required, if he or she were
so appointed, to be included in the Company’s register of
directors together with notice executed by that person of
his or her willingness to be appointed.
Each director is obliged to retire at each annual general
meeting and, if wishing to continue in office, may
offer himself or herself for re-election at the annual
general meeting.
The office of a director shall be vacated ipso facto, in any
of the following circumstances, if the director:
• is restricted or disqualified from acting as a director
of any company under the provisions of Part 14 of the
Companies Act, 2014;
• becomes bankrupt or makes any arrangement or
composition with his or her creditors generally;
• in the opinion of a majority of his co-directors,
becomes incapable by reason of mental disorder of
discharging his or her duties as a director;
• (not being a director holding for a fixed term an
executive office in his or her capacity as a director) the
director resigns office by notice to the Company;
• holds any executive office or employment with the
Company or any subsidiary, and that office or employment
is terminated for any reason and his or her co-directors
resolve that office as a director be vacated;
• is convicted of an indictable offence, unless the
directors otherwise determine;
74 
Governance
• shall have been absent for more than six (6) consecutive
months without permission of the directors from
meetings of the directors held during that period and
his or her alternate director (if any) shall not have
attended any such meeting in his or her place during
such period, and the directors pass a resolution that by
reason of such absence he or she has vacated office; or
• is removed from office by notice in writing (whether
in electronic form or otherwise) by all his or her
co‑directors.
Notwithstanding anything in the Company’s Constitution
or in any agreement between the Company and a director,
the Company may, by ordinary resolution of which
extended notice has been given in accordance with the
Companies Act, 2014, remove any director before the
expiry of his or her period of office.
Directors
As at the date of this Report, there are seven (7) Directors
on the Board. The Chief Executive Officer, Margaret
Sweeney, is an executive director. Declan Moylan (the
Chairman), Phillip Burns, Joan Garahy, Tom Kavanagh,
Mark Kenney and Aidan O’Hogan (Senior Independent
Director) are non-executive directors. A short biographical
note on each director appears on pages 42 to 44.
In accordance with Provision 18 of the UK Code and the
Company’s Constitution, all directors of the Company
are subject to election by shareholders at the first annual
general meeting after their appointment, and to annual re-
election thereafter. In accordance with this, each of Phillip
Burns, Joan Garahy, Tom Kavanagh, Mark Kenney, Declan
Moylan, Aidan O’Hogan and Margaret Sweeney will retire
and, being eligible, will offer himself/herself for re-election
at the Company’s 2020 annual general meeting.
Non-Executive Directors Agreements for Service
Other than Margaret Sweeney, the directors do not have service contracts but do have letters of appointment which reflect
their responsibilities and commitments. Margaret Sweeney entered into an employment agreement with the Company
effective 1 November 2017 (as amended on 18 February 2020 and 27 March 2020). Each director has the same general
legal responsibilities to the Company as any other director and the Board as a whole is collectively responsible for the overall
success of the Company.
The details of the non-executive directors’ current terms and dates of current service contracts are set out below:
Name
Date of Appointment
to Board
Date of Most Recent Letter
of Appointment
Year Term Expires
(on conclusion of the AGM) Notice Period
Declan Moylan 31 March 2014 19 February 2020 On conclusion of 2023 AGM 3 months
Phillip Burns 23 March 2016 21 March 2019 On conclusion of 2022 AGM 3 months
Mark Kenney 1 January 2019 11 December 2018 as amended
21 March 2019
On conclusion of 2022 AGM 3 months
Joan Garahy 18 April 2017 19 February 2020 On conclusion of 2023 AGM 3 months
Tom Kavanagh 1 June 2018
18 April 2019 as amended
21 March 2019 and 3 April 2020 On conclusion of 2021 AGM 3 months
Aidan O’Hogan 31 March 2014 19 February 2020 On conclusion of 2023 AGM 3 months
Upon the expiry of an initial three-year term on 31 March
2017, the appointment of each of Declan Moylan and Aidan
O’Hogan as a non-executive director of the Company was
extended for a second three-year term expiring at the end
of the 2020 AGM. The Board has approved their respective
appointments for a third term of approximately three
years commencing at the conclusion of the 2020 annual
general meeting and expiring at the conclusion of the
annual general meeting in 2023, unless terminated earlier
in accordance with the terms of their letters of appointment
(and subject to re-election at each of the Company’s annual
general meetings in accordance with the UK Code and the
Company’s Articles of Association).
Phillip Burns was appointed as a non-executive director
effective 23 March 2016 for an initial three-year term
expiring at the end of the 2019 annual general meeting.
The appointment of Phillip Burns as a director of the
Company was extended for a second three-year term
expiring at the conclusion of the annual general meeting
in 2022, unless terminated earlier in accordance with the
terms of his letter of appointment (and subject to re-
election at each of the Company’s annual general meetings
in accordance with the UK Code and the Company’s
Articles of Association).
Joan Garahy was appointed as a non-executive director
effective 18 April 2017 for an initial three-year term
expiring at the end of the 2020 annual general meeting.
The Board has approved Ms. Garahy’s appointment for
a second term of approximately three years commencing
at the conclusion of the 2020 annual general meeting and
expiring at the conclusion of the annual general meeting
in 2023, unless terminated earlier in accordance with the
terms of her letter of appointment (and subject to re-
election at each of the Company’s annual general meetings
in accordance with the UK code and the Company’s
Articles of Association).
75

Governance
Tom Kavanagh was appointed as a non-executive director
effective 1 June 2018 for a term of approximately three
years commencing on 1 June 2018 and expiring at the
conclusion of the annual general meeting in 2021, unless
terminated earlier in accordance with the terms of his letter
of appointment (and subject to re-election at each of the
Company's annual general meetings in accordance with the
UK Code and the Company's Articles of Association).
Mark Kenney was appointed as a non-executive director
of the Company (and the Investment Manager’s nominee)
effective 1 January 2019 for a term of approximately three
years and expiring at the end of the 2022 annual general
meeting, unless terminated earlier in accordance with the
terms of his letter of appointment (and subject to re-
election at each of the Company’s annual general meetings
in accordance with the UK Code and the Company’s
Articles of Association). With over 28 years of experience in
the real estate sector and serving as chief executive officer
of CAPREIT, one of Canada’s largest real estate investment
trusts, the Board believes Mr. Kenney brings valuable
skills, experience and insight to the Board. Further details
on the skills and experience of Mr. Kenney are set out in
biographies of the Directors on pages 42 to 44.
The letter of appointment for each non-executive
director provides that the Company may terminate that
director’s appointment with immediate effect in certain
circumstances, including where a director commits a
material breach of his or her obligations under their letter
of appointment or otherwise at the discretion of the
director or the Company on three months’ prior written
notice. No compensation is payable to any director in the
event of any such termination. In addition to their general
legal responsibilities, the directors have responsibility for
the Company’s strategy, performance, financial and risk
control, and personnel.
With effect from 1 November 2017, Margaret Sweeney has
served on the Board of the Company as an executive director.
The terms of Ms. Sweeney’s contract of employment are
summarised on pages 63 to 65 of this Report.
Copies of the terms and conditions of appointment for
each Director are available for inspection by any person at
the offices of McCann FitzGerald, Riverside One, Sir John
Rogerson’s Quay, Dublin 2, D02 X576 Ireland during
normal business hours and at the Company’s annual
general meeting for 15 minutes prior to the meeting and
during the meeting.
There are no agreements between the Company and its
directors or employees providing for compensation for
loss of office or employment, whether through resignation,
purported redundancy or otherwise, that occurs as a result
of a takeover of the Company, except under the terms of
the LTIP.
Key Management Personnel
The Company is managed by the Chief Executive Officer
of the Company and through the external Investment
Manager under the supervision of the Board. The
Company has engaged the services of the Investment
Manager (which is authorised as an alternative
investment fund manager by the Central Bank of Ireland
under the AIFM Regulations) to act as the Company’s
alternative investment fund manager under the AIFM
Regulations and has delegated certain portfolio, risk
management, property management and other functions
to the Investment Manager pursuant to the Investment
Management Agreement.
In providing its services to the Company under the
Investment Management Agreement, the Investment
Manager also has access to the expertise and resources
provided by CAPREIT LP, pursuant to the services
agreement among the Company, CAPREIT LP and IRES
Fund Management (as amended or restated from time
to time) (the “Services Agreement”), which covers the
performance of property and asset management services
by CAPREIT LP.
Pursuant to these arrangements, CAPREIT LP has made
available (at its own cost) the services of Ms. Priyanka
Taneja to the Company as its Chief Financial
Officer (“CFO”) under a secondment arrangement.
Notwithstanding her role as CFO of the Company,
Ms. Taneja is not an employee of the Company pursuant
to this arrangement and remains at all times an employee
of, and is remunerated by, CAPREIT LP. The CFO
secondment arrangement may be terminated in a number
of circumstances, including on the termination of, or
material amendment to, the Services Agreement and/or
the Investment Management Agreement, on written notice
by the Company or in the event of the appointment of
Ms. Taneja to an alternative position within CAPREIT LP.
Conflicts of Interest – Directors
Section 231 of the Companies Act, 2014 requires each
director who is in any way, either directly or indirectly,
interested in a contract or proposed contract with the
Company to declare the nature of his or her interest at a
meeting of the directors. The Company keeps a register
of all such declarations, which may be inspected by any
director, secretary, auditor or member of the Company at
the offices of McCann FitzGerald, Riverside One, Sir John
Rogerson’s Quay, Dublin 2, D02 X576.
Subject to certain exceptions, the Articles of Association
generally prohibit directors from voting at board meetings
or meetings of committees of the Board on any resolution
concerning a matter in which they have a direct or indirect
interest which is material to, or a duty which conflicts
or may conflict with the interests of, the Company.
76 
Governance
Directors may not be counted in the quorum in relation to
resolutions on which they are not entitled to vote.
Pursuant to the Investment Management Agreement, the
Investment Manager is entitled to nominate and require
the Company to appoint one person as a non-executive
director. Mark Kenney is the President and Chief Executive
Officer of CAPREIT and is the Investment Manager’s
nominee non-executive director. CAPREIT is the parent
company of CAPREIT LP and the Investment Manager is
wholly owned and controlled by CAPREIT LP. The Articles
of Association prohibit any Director who is a nominee of
the Investment Manager and Directors who are officers
or trustees of CAPREIT or any CAPREIT affiliate from
participating in deliberations of the Board relating to the
appointment and engagement by the Company of IRES
Fund Management or in relation to the appointment and
engagement by the Company of any CAPREIT affiliate.
Mark Kenney and Phillip Burns, accordingly will not
be permitted to vote on any matter at the Board level
relating to the appointment and engagement of IRES Fund
Management or CAPREIT LP.
Conflicts of Interest – Investment
Management Agreement and Services
Agreement
Each of the Investment Management Agreement and the
Services Agreement include non-compete provisions in
favour of the Company, subject to certain exceptions.
Corporate Governance
The Company has complied, from 1 January 2019 to
31 December 2019, with the provisions set out in the
UK Code and in the Irish Annex, which applied to the
Company for the financial period ended 31 December
2019, except as disclosed on page 51 under Compliance
with Relevant Codes.
The Corporate Governance Statement on pages 45 to
51 sets out the Company’s application of the principles
and compliance with the provisions of the UK Code
and the Irish Annex and the Company’s system of risk
management and internal control.
Principal Risks and Uncertainties
A description of the principal risks and uncertainties
facing the Group is set out on pages 34 to 40.
Substantial Shareholdings
The Company has been notified of the following interests of 3% or more of the voting rights over the share capital of the
Company as at 31 December 2019 and 2 April 2020:
Holder 31 December 2019 2 April 2020
Number of Shares % Number of Shares %
CAPREIT Limited Partnership 95,510,000 18.13 95,510,000 18.13
Setanta Asset Management Limited 33,096,744 6.93 33,096,744 6.93
Aviva plc & its Subsidiaries 26,881,654 6.19 37,672,249 7.22
Timbercreek Asset Management Inc. 31,158,461 5.98 31,158,461 5.98
Lansdowne Partners International Limited 30,669,544 5.98 21,008,449 4.03
Irish Life Investment Managers Limited 20,838,363 4.99 20,838,363 4.99
FMR LLC 25,524,965 4.90 21,051,947 4.03
APG Asset Management N.V. 19,209,053 4.02 19,209,053 4.02
GLG Partners LP 13,207,986 3.17 13,207,986 3.17
Except as disclosed above, the Company has not been notified as at 2 April 2020 of any other interest of 3% or more of
the voting rights in its share capital nor is it aware of any person who directly or indirectly, jointly or severally, exercises
or could exercise control over the Company. The table above summarises the various notifications that the Company has
received for shareholders with 3% or more of the voting rights. The percentage ownership is based on the number of shares
outstanding at the time the Company was notified. As the total number of shares outstanding as at 31 December 2019 and
2 April 2020 was 521,678,946 and 521,678,946, respectively, the actual percentage ownership may differ from above.
77

Information Required to Be Disclosed by LR 6.1.77, ISE Listing Rules
For the purposes of LR 6.1.77, the information required to be disclosed by LR 6.1.77 can be found in the following locations:
Section Topic Location
(1) Interest capitalised Financial Statements, Note 5
(2) Publication of unaudited financial information in a circular or prospectus Not applicable
(3) Small related party transactions Not applicable
(4) Details of long-term incentive schemes 
Report of the Remuneration Committee
(5) Waiver of emoluments by a director Not applicable
(6) Waiver of future emoluments by a director Not applicable
(7) Non-pre-emptive issues of equity for cash Business Review
(8) Item (7) in relation to major subsidiary undertakings Not applicable
(9) Parent participation in a placing by a listed subsidiary Not applicable
(10) Contracts of significance Financial Statements, Note 19
(11) Provision of services by a controlling shareholder Not applicable
(12) Shareholder waivers of dividends Not applicable
(13) Shareholder waivers of future dividends Not applicable
(14) Agreement with controlling shareholders Not applicable
All of the information cross-referenced above is hereby incorporated by reference into this Report of the Directors.
Governance
Principal Subsidiaries and JointVentures
Details of the Company’s principal subsidiaries as at
31 December 2019, which include IRES Residential Properties
Limited (acquired on 31 March 2015 in connection with
the acquisition of the Rockbrook Portfolio and holds the
Rockbrook Portfolio), and certain owner management
companies in which the Company holds a majority of the
voting rights, are set out in note 19 of the Group financial
statements on pages 111 to 114. All of the Company’s
principal subsidiaries are incorporated in Ireland.
Financial Instruments
Financial instruments are set out in note 15 of the Group
financial statements on pages 106 to 109.
Financial Risk Management
The financial risks include market risk, liquidity risk,
credit risk and capital management risk. The financial
risk management objectives and policies of the Group are
set out in note 15 of the Group financial statements on
pages 106 to 109.
Subsequent Events
Information in respect of events since the year end is
contained in Note 26 to the Group financial statements
on page 117.
Political Contributions
There were no political contributions which are required
to be disclosed under the Electoral Act, 1997 or the Irish
Companies Act, 2014.
Accounting Records
The directors are responsible for ensuring accounting
records, as required by Sections 281 to 285 of the
Companies Act, 2014, are kept by the Company. The
directors believe that they have complied with this
requirement by providing adequate resources to maintain
adequate accounting records throughout the Company,
including the appointment of personnel with appropriate
qualifications, experience and expertise. The accounting
records of the Company are maintained at its registered
office located at South Dock House, Hanover Quay, Dublin.
Relevant Audit Information
The directors believe that they have taken all steps
necessary to make themselves aware of any relevant audit
information and have established that the Company’s
statutory auditors are aware of that information. Insofar
as they are aware, there is no relevant audit information of
which the Company’s statutory auditors are unaware.
Directors’ Compliance Statement
The directors, in accordance with Section 225(2) of the
Companies Act, 2014, acknowledge that they are responsible
for securing the Company’s “Relevant Obligations” within
the meaning of Section 225 of the Companies Act, 2014
(described below as “Relevant Obligations”).
The directors confirm that:
• A compliance policy statement has been drawn
up setting out the Company’s policy (that is in the
opinion of the directors appropriate to the Company)
with regard to compliance by the Company with its
Relevant Obligations;
• Appropriate arrangements and structures that, in the
directors’ opinion, are designed to ensure material
compliance with the Company’s Relevant Obligations,
have been put in place; and
• A review has been conducted during the financial year
of the arrangements and structures that have been put
in place to secure the Company’s compliance with its
Relevant Obligations.
78 
Governance
Regulation 21 of SI 255/2006 European
Communities (Takeover Bids (Directive
(2004/25/EC)) Regulations 2006
The Company has certain banking facilities and financial
indebtedness arising under a private placement of loan
notes which may require repayment and (in respect of
the banking facilities) cancellation of the commitments
thereunder in the event that a change of control occurs
with respect to the Company, which may have the effect
of also terminating (in whole or part) hedges transacted
by the Company’s International Swaps and Derivative
Association, Inc. (“ISDA”) documentation. In addition,
the LTIP contains change of control provisions which
allow for the acceleration of the exercisability of share
options or awards in the event that a change of control
occurs with respect to the Company.
There are no other significant agreements to which the
Company is a party that take effect, alter or terminate
upon a change of control of the Company following a bid.
For the purposes of Regulation 21 of the European
Communities (Takeover Bids (Directive 2004/25/EC))
Regulations 2006, the information on Directors
on pages 42 to 44 and the disclosures on Directors’
Remuneration on page 63 of this Report cover the
information required and are deemed to be incorporated
in the Report of the Directors.
Auditor
KPMG, Chartered Accountants, were appointed statutory
auditor on 17 July 2018 and have been re-appointed
annually since that date, and pursuant to section 383(2)
will continue in office. A resolution authorising the
directors to set their remuneration will be proposed at the
Company’s 2020 annual general meeting.
Audit Committee
The Board has established an Audit Committee in
compliance with the Codes to assist with certain
responsibilities relating to internal controls, risk
management and reporting. Refer to the Report of the Audit
Committee on page 53 for the procedures established by the
Audit Committee to discharge these responsibilities.
General Meetings
The Company holds a general meeting each year as its
annual general meeting in addition to any other meeting
in that year. Not more than 15 months shall elapse
between the date of one annual general meeting and
that of the next. The directors are responsible for the
convening of general meetings. Information is distributed
to shareholders at least 20 working days prior to the
annual general meeting.
No business other than the appointment of a chairman
shall be transacted at any general meeting unless a quorum
of members is present at the time when the meeting
proceeds to business. Except as provided in relation to
an adjourned meeting, three (3) persons entitled to vote
upon the business to be transacted, each being a member
or proxy for a member or a duly authorised representative
of a corporate member, shall be a quorum.
Votes may be given either personally or by proxy or a
duly authorised representative of a corporate member.
Subject to rights or restrictions for the time being attached
to any class or classes of shares, on a show of hands,
every member present in person and every proxy or duly
authorised representative of a corporate body shall have
one vote. No individual shall have more than one vote, and
on a poll, every member present in person or by proxy or
a duly authorised representative of a corporate body shall
have one vote for every share carrying voting rights of
which the individual is the holder.
Resolutions are categorised as either ordinary or special
resolutions. A bare majority of more than 50% of the
votes cast by members voting on the relevant resolution
is required for the passing of an ordinary resolution,
whereas a qualified majority of more than 75% of the
votes cast by members voting on the relevant resolution
is required in order to pass a special resolution. Matters
requiring a special resolution include, for example:
altering the objects of the Company; altering the Articles
of Association of the Company; and approving a change of
the Company’s name.
Constitution
The Company’s Constitution sets out the objects and
powers of the Company. The Articles of Association
detail the rights attaching to shares, the method by which
the Company’s shares can be purchased or re-issued,
the provisions which apply to the holding and voting
at general meetings and the rules relating to directors,
including their appointment, retirement, re-election,
duties and powers. The Articles of Association may be
amended by special resolution of the shareholders, being
a resolution proposed on not less than 21 days’ notice as a
special resolution and passed by more than 75% majority
of those voting on the resolution.
The Directors’ Report was approved by the Board of
Directors on 3 April 2020 and is signed on their behalf by:
Directors
3 April 2020
Declan Moylan Margaret Sweeney
Chairman Executive Director
79

Governance
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Report
and the financial statements in accordance with applicable
laws and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law
the directors are required to prepare the Group’s and
Company’s financial statements in accordance with
International Financial Reporting Standards as adopted
by the European Union (“IFRS”) and applicable law
including Article 4 of the IAS regulation.
The directors have elected to prepare the Company
financial statements in accordance with FRS 101 Reduced
Disclosure Framework as applied in accordance with the
provisions of Companies Act 2014.
Under company law, the directors must not approve the
Group and Company financial statements unless they
are satisfied that they give a true and fair view of the
assets, liabilities and financial position of the Group and
Company and of the Group's profit or loss for that year.
In preparing the financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether applicable Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the financial statements;
• assess the Group and Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless they
either intend to liquidate the Group or Company or
to cease operations, or have no realistic alternative but
to do so.
The directors are responsible for keeping adequate
accounting records which disclose with reasonable accuracy
at any time the assets, liabilities, financial position and profit
or loss of the Company and which enable them to ensure
that the financial statements comply with the provision of
the Companies Act 2014. The directors are also responsible
for taking all reasonable steps to ensure such records are
kept by its subsidiaries which enable them to ensure that
the financial statements of the Group comply with the
provisions of the Companies Act 2014 including Article
4 of the IAS Regulation. They are responsible for such
internal controls as they determine is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and
have general responsibility for safeguarding the assets of
the Group, and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are also responsible for preparing a directors'
report that complies with the requirements of the
Companies Act 2014.
In accordance with applicable law and the Euronext
Dublin Listing Rules, the directors are also required to
prepare a Report of the Directors and reports relating to
directors’ remuneration and corporate governance. The
directors are also required by the Transparency (Directive
2004/109/EC) Regulations 2007 (the “Transparency
Regulations”) to include a management report containing
a fair review of the business and a description of the
principal risks and uncertainties facing the Group. The
Report of the Directors, on pages 71 to 78, the Chairman’s
Statement on pages 12 to 13, the Chief Executive Officer’s
Statement on pages 14 to 17, the Investment Manager’s
Statement on page 18, the Business Review on pages 19 to
26 and the Risk Report on pages 31 to 40 are deemed to be
the management report as required by the Transparency
Regulations.
The directors confirm that they have complied with the
above requirements in preparing the financial statements.
The directors have contracted with the Investment
Manager to ensure that those requirements are met.
The books and accounting records of the Group and the
Company are maintained at the Company’s registered
office located at South Dock House, Hanover Quay,
Grand Canal Square, Dublin 2, Ireland. The directors have
delegated investment management and administration
functions, including risk management, to the Investment
Manager without abrogating their overall responsibility.
The directors have in place mechanisms for monitoring
the exercise of such delegated functions, which are always
subject to the supervision and direction of the Board.
These delegations of functions and the appointment of
regulated third party entities are set out in the Corporate
Governance Statement on pages 45 to 51.
80 
Governance
Each of the directors, whose names and functions are
listed on pages 42 to 44, confirms that, to the best of each
director’s knowledge and belief:
As required by the Transparency Regulations:
• the financial statements, prepared in accordance with
IFRS as adopted by the EU, give a true and fair view of
the assets, liabilities and financial position of the Group
and the Company as at 31 December 2019 and of the
results of the Group, taken as a whole, for the period
1 January 2019 to 31 December 2019;
• the management report, comprising the Report
of the Directors, the Chairman’s Statement, the
Chief Executive Officer’s Statement, the Investment
Manager’s Statement, the Business Review and the
Risk Report, include a fair review of the development
and performance of the business and the position of
the Company and the Group taken as a whole as at
31 December 2019, together with a description of the
principal risks and uncertainties that the Company and
the Group faces; and
• use the going concern basis of accounting unless they
either intend to liquidate the Group or Company or
to cease operations, or have no realistic alternative but
to do so.
As required by the UK Corporate Governance Code:
• the Report and financial statements contained therein,
taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders
to assess the Company’s position and performance,
business model and strategy.
Signed on behalf of the Board
3 April 2020
Declan Moylan Margaret Sweeney
Chairman Executive Director
Financial
Statements
82 
Independent Auditor’s Report
Independent Auditor’s Report to the Members
of Irish Residential Properties REIT PLC
Report on the Audit of the
Financial Statements
Opinion
We have audited the financial statements of Irish
Residential Properties REIT plc (“the Group”) for the
year ended 31 December 2019 set out on pages 87 to
128, which comprise the Consolidated and Company
Statement of Financial Position, the Consolidated
Statement of Profit or Loss and Other Comprehensive
Income, the Consolidated and Company Statements of
Changes in Equity, the Consolidated Cash Flow Statement
and related notes, including the summary of significant
accounting policies set out in notes 2 and 3. The financial
reporting framework that has been applied in the
preparation of the Group financial statements is Irish Law
and International Financial Reporting Standards (IFRS)
as adopted by the European Union and, as regards the
Company financial statements, Irish Law and FRS 101
Reduced Disclosure Framework.
In our opinion:
• the financial statements give a true and fair view of the
assets, liabilities and financial position of the Group
and Company as at 31 December 2019 and of the
Group’s profit for the year then ended;
• the Consolidated financial statements have been
properly prepared in accordance with IFRS as adopted
by the European Union;
• the Company financial statements have been properly
prepared in accordance with FRS 101 Reduced
Disclosure Framework issued by the UK’s Financial
Reporting Council; and
• the Group and Company financial statements have
been properly prepared in accordance with the
requirements of the Companies Act 2014 and, as
regards the Group financial statements, Article 4 of
the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable law. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities
section of our report. We believe that the audit evidence
we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our
report to the audit committee.
We were appointed as auditor by the directors on 17 July
2018. The period of total uninterrupted engagement
is 2 years ended 31 December 2019. We have fulfilled
our ethical responsibilities under, and we remained
independent of the Group in accordance with, ethical
requirements applicable in Ireland, including the Ethical
Standard issued by the Irish Auditing and Accounting
Supervisory Authority (IAASA) as applied to public
interest entities. No non-audit services prohibited by that
standard were provided.
Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our
professional judgement, were of most significance in
the audit of the financial statements and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, including
those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of
the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
83

Independent Auditor’s Report
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Valuation of Investment Property: Consolidated €1,359 million (2018 – €921 million),
Company €1,225 million (2018 – €799 million)
Refer to pages 52 to 57 (Audit and Risk Committee Report), pages 92 to 93 (accounting policy) and
pages 100 to 102 (financial disclosures)
The key audit matter How the matter was addressed in our audit
The Groups’ investment property portfolio
(including properties under development and
development land) comprises a portfolio of
mainly residential property assets located in
Dublin. The investment property portfolio is
valued at €1,359 million at 31 December 2019
and represents 98% of the Group’s total assets
and 91% of the Company's total assets.
The valuation of the Group’s investment
property portfolio is inherently subjective,
as it requires, amongst other factors,
consideration of the specific characteristics of
each property, the location and nature of each
property, consideration of prevailing property
market conditions and, in respect of income
generating properties, estimation of future
rentals beyond the current lease terms.
In respect of properties under development,
further factors include estimated costs to
completion and timing of practical completion
of each development.
The directors engage external valuers to value
the Group’s investment property portfolio
in accordance with the Royal Institution of
Chartered Surveyors (‘RICS’) Valuation –
Professional Standards. The valuation experts
used by the Group have considerable experience
of the markets in which the Group operates.
In determining the valuation of the Group’s
investment properties, the valuers take into
account the above considerations and rely
on the accuracy of the underlying lease and
related information provided to the valuers by
the Group.
We regard this area as a key audit matter due to
the significance of the estimates and judgements
involved in the valuation of the Group’s
investment property portfolio.
In this area our audit procedures included, among others,
the following:
• We evaluated the design and implementation of key controls
over the investment property valuation process.
• We performed testing over the accuracy and completeness
of lease information provided by the Group to the external
valuers for income generating properties.
• We inspected the valuation reports and confirmed that
the valuation approach was in accordance with RICS
standards and suitable for the purposes of the Group’s
financial statements.
• We assessed the external valuers’ qualifications and expertise
and read their terms of engagement with the Group to
determine whether there were any matters that might
have affected their objectivity or may have imposed scope
limitations upon their work. We found no evidence to suggest
that the objectivity of the valuers in their performance of the
valuations was compromised.
• We met with the external valuers to understand the valuation
of the portfolio. These discussions included gaining an
understanding of the external valuers process; the critical
assumptions employed in estimating future rental incomes
and future capital expenditure requirements for income
generating properties; costs for completion of development
properties; and the judgements in the selection of appropriate
capitalisation rates for each property.
• We considered the capitalisation rate assumptions used by the
valuers in performing their valuations and compared them
to relevant market evidence, benchmarking against specific
property sales, comparables and other external data.
• For properties under development, we agreed the construction
and other costs used in the external valuations to the Group's
records, including signed construction contracts. We also
obtained support for the actual construction and other costs
incurred to date.
• We agreed the value of all investment properties included in
the financial statements to the valuation reports prepared by
the external valuers.
• We assessed the adequacy of the disclosures in relation to
the valuation of investment properties and found them to
be appropriate.
On the basis of the work performed, we found the assumptions
used in the valuations to be appropriate.
84 
Independent Auditor’s Report
Transactions with related parties
Refer to pages 52 to 57 (Audit and Risk Committee Report), and
pages 111 to 114 (financial disclosures)
The key audit matter How the matter was addressed in our audit
A number of related party relationships exist
between the Group and CAPREIT LP and its
affiliates. The asset management fee and related
disclosures are considered significant transactions
and disclosures in the financial statements.
Due to the significance of related party
transactions and the risk of non-disclosure, this
warranted specific audit focus.
How the matter was addressed in our audit
• We obtained an understanding of the process, procedures
and controls governing the identification and management of
related party transactions.
• We read the Board Minutes to consider the completeness
of related party transactions and relevant agreements with
related parties.
• We recalculated the fees charged from IRES Fund Manager, a
wholly owned subsidiary of CAPREIT LP, to the Investment
Management Agreement.
• We considered the disclosures included in the financial
statements for consistency with agreements and other related
party transactions during the year.
On the basis of the work performed, we found the disclosures in
the financial statements to be appropriate.
Our application of materiality and an overview of
the scope of our audit
The materiality for the Group financial statements as a
whole was set at €7.9 million (2018: €6.2 million). This
has been calculated with reference to a benchmark of
net assets which we consider to be one of the principal
considerations for members of the Group in assessing the
financial performance of the Group. Materiality represents
approximately 1% of this benchmark, consistent with
the prior year. In addition, we applied a materiality of
€1.5 million (2018: €1.2 million) for testing profit or
loss items excluding the net movement in fair value of
investment properties (representing 3.7% of profit for the
year before the net movement in fair value of investment
properties). In our judgement, the application of this
specific materiality is appropriate due to key performance
indicators of the Group driven by profit or loss items.
We report to the Audit Committee all corrected and
uncorrected misstatements we identified through our
audit with a value in excess of €0.3 million.
Materiality for the company financial statements as a
whole was set at €7.7 million (2018: €5.9 million). This
was determined with reference to a benchmark of net
assets. We reported to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
€0.3 million.
The Group team performed the audit of the Group as if
it was a single aggregated set of financial information.
The audit was performed using the materiality levels set
out above.
We have nothing to report on going concern
We are required to report to you if:
• we have anything material to add or draw attention to
in relation to the directors’ statement in note 2 to the
financial statements on the use of the going concern
basis of accounting with no material uncertainties
that may cast significant doubt over the Group and
Company’s use of that basis for a period of at least
twelve months from the date of approval of the
financial statements; or
• if the related statement under the Euronext Dublin
Listing Rules set out on page 77 is materially
inconsistent with our audit knowledge.
We have nothing to report in these respects.
Other information
The directors are responsible for the preparation of the other
information presented in the Annual Report together with
the financial statements. The other information comprises
all the information included in the Chairman’s Statement,
Chief Executive Officer’s Statement, Investment Manager’s
Statement, Business Review, Market Update, Business
Objectives and Strategy, Investment Policy, Risk Report,
Corporate Governance Statement, Report of the Audit
Committee, Report of the Remuneration Committee, Report
of the Nomination Committee, Report of the Directors.
85

Independent Auditor’s Report
The financial statements and our auditor’s report thereon
do not comprise part of the other information. Our
opinion on the financial statements does not cover the
other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is
materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the
other information.
Based solely on our work on the other information we
report that:
• we have not identified material misstatements in the
directors’ report;
• in our opinion, the information given in the directors’
report is consistent with the financial statements; and
• in our opinion, the directors’ report has been prepared
in accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term
viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
• the Principal Risks disclosures describing these
risks and explaining how they are being managed
and mitigated;
• the director's confirmation within the viability
statement on page 33 that they have carried out a
robust assessment of the principal risks facing the
Group, including those that would threaten its business
model, future performance, solvency and liquidity; and
• the directors’ explanation in the viability statement of
how they have assessed the prospects of the Group, over
what period they have done so and why they considered
that period to be appropriate, and their statement as
to whether they have a reasonable expectation that
the Group will be able to continue in operation and
meet its liabilities as they fall due over the period of
their assessment, including any related disclosures
drawing attention to any necessary qualifications or
assumptions.
Other corporate governance disclosures
We are required to address the following items and report
to you in the following circumstances:
• Fair, balanced and understandable: if we have identified
material inconsistencies between the knowledge we
acquired during our financial statements audit and the
directors’ statement that they consider that the Annual
Report and financial statements taken as a whole is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Group’s position and performance, business model
and strategy;
• Report of the Audit Committee: if the section of
the Annual Report describing the work of the Audit
Committee does not appropriately address matters
communicated by us to the Audit Committee;
• Statement of compliance with UK Corporate
Governance Code: if the directors’ statement does
not properly disclose a departure from provisions of
the UK Corporate Governance Code specified by the
Listing Rules of Euronext Dublin for our review.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we
report, in relation to information given in the Corporate
Governance Statement on pages 45 to 51, that:
• based on the work undertaken for our audit, in
our opinion, the description of the main features
of internal control and risk management systems
in relation to the financial reporting process and
information relating to voting rights and other matters
required by the European Communities (Takeover Bids
(Directive 2004/EC)) Regulations 2006 and specified
for our consideration, is consistent with the financial
statements and has been prepared in accordance with
the Companies Act;
• based on our knowledge and understanding of the
Group and its environment obtained in the course
of our audit, we have not identified any material
misstatements in that information; and
• the Corporate Governance Statement contains
the information required by the European Union
(Disclosure of Non-Financial and Diversity
Information by certain large undertakings and groups)
Regulations 2017.
We also report that, based on work undertaken for our
audit, other information required by the Companies Act is
contained in the Corporate Governance Statement.
Our opinions on other matters prescribed by the
Companies Act 2014 are unmodified
We have obtained all the information and explanations
which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Group were
sufficient to permit the financial statements to be readily
and properly audited and the financial statements are in
agreement with the accounting records.
86 
Independent Auditor’s Report
We have nothing to report on other matters on which
we are required to report by exception
The Companies Act 2014 requires us to report to you if,
in our opinion, the disclosures of directors’ remuneration
and transactions required by Sections 305 to 312 of the
Companies Act are not made.
The Listing Rules of the Euronext Dublin require us
to review:
• the Directors’ Statement on page 33 in relation to going
concern and longer-term viability;
• the part of the Corporate Governance Statement on
pages 45 to 51 relating to the Company’s compliance
with the provisions of the UK Corporate Governance
Code and the Irish Corporate Governance Annex
specified for our review; and
• certain elements of disclosures in the report
to shareholders by the Board of Directors’
remuneration committee.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on
pages 79 to 80, the directors are responsible for: the
preparation of the financial statements including being
satisfied that they give a true and fair view; such internal
control as they determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error;
assessing the Group and Company’s ability to continue as
a going concern, disclosing, as applicable, matters related
to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the
Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement
when it exists. Misstatements can arise from fraud, other
irregularities or error and are considered material if,
individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users
taken on the basis of the financial statements. The risk of
not detecting a material misstatement resulting from fraud
or other irregularities is higher than for one resulting from
error, as they may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control and may involve any area of law and regulation
and not just those directly affecting the financial
statements.
A fuller description of our responsibilities is provided
on IAASA’s website at 
The purpose of our audit work and to whom we owe
our responsibilities
Our report is made solely to the Company’s members, as
a body, in accordance with Section 391 of the Companies
Act 2014. Our audit work has been undertaken so that we
might state to the Company’s members those matters we
are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members,
as a body, for our audit work, for our report, or for the
opinions we have formed.
3 April 2020
Sean O’Keefe


€’000
Cash Flows from Operating Activities:
Operating Activities
Profit before taxes 86,282 119,785
Adjustments for non-cash items:
   Fair value adjustment – investment properties 5 (56,234) (92,664)
   Depreciation of property, plant and equipment 32 8
   Amortisation of other financing costs 2,486 835
   Share-based compensation expense 11 236 228
   (Gain)/Loss on derivative financial instruments 14 (131) 659
   Straight-line rent adjustment 21 (22)
   Interest accrual relating to derivatives 6 5
32,698 28,834
Interest cost on credit facility 9,239 6,089
Changes in operating assets and liabilities 18 1,958 (6,321)
Net Cash Generated from Operating Activities 43,895 28,602
Cash Flows from Investing Activities
Deposits on acquisitions (2,284) –
Acquisition of investment properties (344,684) (41,361)
Development of investment properties (24,768) (31,129)
Investment property enhancement expenditure (7,633) (4,987)
Direct leasing cost (47) (218)
Net Cash Used in Investing Activities (379,416) (77,695)
Cash Flows from Financing Activities
Financing fees on credit facility (5,990) (20)
Interest paid on loan drawn down 18 (9,677) (6,089)
Credit Facility drawdown 18 637,451 78,309
Credit Facility repayment 18 (391,590) (17,000)
Lease payment 6 (247)
Proceeds on issuance of shares 18 135,142 17,264
Share issuance costs (3,129)
Dividends paid to shareholders 17 (27,086) (22,537)
Net Cash Generated from/(Used in) Financing Activities 334,874 49,927
Changes in Cash and Cash Equivalents during the Year (647) 834
Cash and Cash Equivalents, Beginning of the Year 7,626 6,792
Cash and Cash Equivalents, End of the Year 6,979 7,626
The accompanying notes form an integral part of these financial statements.
Financial Statements
91

Notes to Consolidated Financial Statements
1. General Information
Irish Residential Properties REIT plc (“I-RES” or the “Company”) was incorporated in Ireland on 2 July 2013 as
Shoreglade Limited (formerly known as CAPREIT Ireland Limited, Irish Residential Apartments REIT Limited and Irish
Residential Properties REIT Limited). On 16 April 2014, I-RES obtained admission of its ordinary shares to the primary
listing segment of the Official List of Euronext Dublin for trading on the regulated market for listed securities of Euronext
Dublin. Its registered office is South Dock House, Hanover Quay, Dublin, Ireland. Ordinary shares of I-RES are listed on
the Main Securities Market of Euronext Dublin under the symbol “IRES”.
I-RES was previously a wholly owned subsidiary of CAPREIT Limited Partnership (“CAPREIT LP”). As at 1 January
2019, CAPREIT LP’s interest in I-RES was 18.0%. In 2019, CAPREIT LP acquired an additional 17,500,000 shares, raising
CAPREIT LP’s interest in I-RES to 18.3%.
IRES Residential Properties Limited of South Dock House, Hanover Quay, Dublin 2 is a wholly owned consolidated
subsidiary of I-RES, acquired on 31 March 2015, and owns directly the beneficial interest of its properties. I-RES and
IRES Residential Properties Limited together are referred to as the “Group” in this financial information. The Group
owns interests in residential rental accommodations, as well as commercial and development sites, the majority of which
are located in and near major urban centres in Dublin, Ireland. Specifically, IRES Residential Properties Limited owns an
interest in the “Rockbrook Portfolio”, which consists of 81 apartments at Rockbrook Grande Central and 189 apartments
at Rockbrook South Central, mixed-use commercial space of approximately 4,665 sq. m., a development site of
approximately 1.13 hectares and associated basement car parking.
2. Significant Accounting Policies
a) Basis of preparation
These consolidated financial statements of the Group have been prepared in accordance with International Accounting
Standards (“IFRS”) as adopted by the European Union (“EU”), IFRS Interpretations Committee (“IFRIC”) interpretations
and those parts of the Companies Act, 2014, applicable to companies reporting under IFRS.
The consolidated financial statements of the Group are prepared on a going concern basis of accounting and under the
historical cost convention, as modified by the revaluation of investment properties, derivative financial instruments at
fair value and share options at grant date through profit or loss in the consolidated statement of profit or loss and other
comprehensive income. The consolidated financial statements of the Group have been presented in euros, which is the
Company’s functional currency.
The consolidated financial statements of the Group cover the 12-month period from 1 January 2019 to 31 December 2019.
The Group has not early adopted any forthcoming International Accounting Standards Board (“IASB”) standards.
Note 2(s) sets out details of such upcoming standards.
Going concern
The Group meets its day-to-day working capital requirements through its cash and deposit balances. The Group’s
plans indicate that it should have adequate resources to continue operating for the foreseeable future. Accordingly, the
directors consider it appropriate that the Group adopts the going concern basis of accounting in the preparation of the
consolidated financial statements.
b) Basis of consolidation
These consolidated financial statements incorporate the financial statements of I-RES and its subsidiary, IRES Residential
Properties Limited. I-RES controls IRES Residential Properties Limited by virtue of its 100% shareholding in that
company. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Subsidiaries
Subsidiaries are entities controlled by I-RES. I-RES controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect these returns through its power over the entity.
The financial information of subsidiaries (except owner management companies) is included in the consolidated financial
Financial Statements
92 
statements from the date on which control commences until the date on which control ceases. I-RES does not consolidate
owner management companies in which it holds majority voting rights. For further details, please refer to note 19.
c) Investment properties and investment properties under development
Investment properties
The Group considers its income properties to be investment properties under IAS 40, Investment Property (“IAS 40”),
and has chosen the fair value model to account for its investment properties in the consolidated financial statements.
Under IFRS 13, Fair Value Measurement (“IFRS 13”), this IFRS defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Investment properties are treated as acquired at the time when the Group assumes the significant risks and returns of
ownership, which normally occurs when the conveyancing contract has been performed by both buyer and seller and the
contract has been deemed to have become unconditional and completed. Investment properties are deemed to have been
acquired when the buyer has assumed control of ownership and the contract has been completed.
Investment properties comprise investment interests held in land and buildings (including integral equipment) held for
the purpose of producing rental income, capital appreciation or both, but not for sale in the ordinary course of business.
All investment properties are initially recorded at cost, which includes transaction and other acquisition costs, at their
respective acquisition dates, and are subsequently stated at fair value at each reporting date, with any gain or loss
arising from a change in fair value recognised in profit or loss in the consolidated statement of profit or loss and other
comprehensive income for the period. Gains and losses incurred on the disposal of investment properties are also
recognised in the profit or loss in the consolidated statement of profit or loss and other comprehensive income.
The fair value of investment properties is determined by a qualified independent valuer at each reporting date,
in accordance with the Royal Institution of Chartered Surveyors Valuation Standards (“RICS”) and IFRS 13. The
independent valuer holds a recognised relevant professional qualification and has recent experience in the locations and
segments of the investment properties valued. At each reporting date, management undertakes a review of its investment
property valuations to assess the continuing validity of the underlying assumptions, such as future income streams and
Capitalisation Rates used in the independent valuation report, as well as property valuation movements when compared
to the prior year valuation report and holds discussions with the independent valuer.
Investment properties under development
Investment properties under development include those properties, or components thereof, that will undergo activities
that will take a substantial period of time to prepare the properties for their intended use as income properties.
The cost of a development property that is an asset acquisition comprises the amount of cash, or the fair value of
other consideration, paid to acquire the property, including transaction costs. Subsequent to the acquisition, the cost
of a development property includes costs that are directly attributable to these assets, including development costs,
and borrowing costs. These costs are capitalised when the activities necessary to prepare an asset for development or
redevelopment begin and continue until the date that construction is substantially complete, and all necessary occupancy
and related permits have been received, whether or not the space is leased.
Interest capitalised is calculated using the Company’s weighted average cost of borrowing.
Properties under development are valued at fair value by a qualified independent valuer at each reporting date with fair
value adjustments recognised in profit or loss in the consolidated statement of profit or loss and other comprehensive
income. In the case of investment property under development, the valuation approach applied is the “residual method”,
with a deduction for the costs necessary to complete the development together with an allowance for the remaining risk.
Development land
Development land is also stated at fair value by a qualified independent valuer at each reporting date with fair value
adjustments recognised in profit or loss in the consolidated statement of profit or loss and other comprehensive income.
In the case of development land, the valuation approach applied is the comparable sales approach, which considers recent
sales activity for similar land parcels in the same or similar markets. Land values are estimated using either a per acre
or per buildable square foot basis based on highest and best use. Such values are applied to the Group’s properties after
adjusting for factors specific to the site, including its location, highest and best use, zoning, servicing and configuration.
Financial Statements
93

Key estimations of inherent uncertainty in investment property valuations
The fair values derived are based on anticipated market values for the properties, being the estimated amount that
would be received from a sale of the assets in an orderly transaction between market participants. The valuation of
the Group’s investment property portfolio is inherently subjective as it requires, among other factors, assumptions to
be made regarding the ability of existing tenants to meet their rental obligations over the entire life of their leases, the
estimation of the expected rental income in the future, an assessment of a property’s ability to remain an attractive
technical configuration to existing and prospective tenants in a changing market and a judgement to be reached on the
attractiveness of a building, its location and the surrounding environment. While these and other similar matters are
market-standard considerations in determining the fair value of a property in accordance with the RICS methodology,
they are all subjective assessments of future outturns and macroeconomic factors, which are outside of the Group’s
control or influence and therefore may prove to be inaccurate long-term forecasts. As a result of all these factors, the
ultimate valuation the Group places on its investment properties is subject to some uncertainty, and may not turn out to
be accurate, particularly in times of macroeconomic volatility. The RICS property valuation methodology is considered
by the Board to be the valuation technique most suited to the measurement of the fair value of property investments.
It is also the primary measurement of fair value that all major and reputable property market participants use when
valuing a property investment. See note 5 for a detailed discussion of the significant assumptions, estimates and valuation
methods used.
d) Property asset acquisition
At the time of acquisition of a property or a portfolio of investment properties, the Group evaluates whether the
acquisition is a business combination or asset acquisition. IFRS 3, Business Combinations is applicable only if it is
considered that a business has been acquired. A business, under IFRS 3, is defined as an integrated set of activities and
assets conducted and managed for the purpose of providing a return to investors, or to lower costs or provide other
economic benefits directly and proportionately to investors.
When determining whether the acquisition of an investment property or a portfolio of investment properties is a business
combination or an asset acquisition, the Group applies judgement when determining whether an integrated set of
activities is acquired in addition to the property or portfolio of properties. Activities can include whether employees were
assumed in the acquisition and whether an operating platform has been acquired.
When an acquisition does not represent a business as defined under IFRS 3, the Group classifies these properties, or
portfolio of properties, as an asset acquisition. Identifiable assets acquired, and liabilities assumed in an asset acquisition
are measured initially at their fair values at the acquisition date. Acquisition-related transaction costs are capitalised to
the property.
e) Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation, and mainly comprise head
office, head office fixtures and fittings, and information technology hardware. These items are depreciated on a straight-
line basis over their estimated useful lives: The building has a useful life of 20 years and the fixtures and fittings have a
useful life ranging from three to five years.
f) IFRS 9, Financial Instruments (“IFRS 9”)
Financial assets and financial liabilities
Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently accounted
for based on their classification as described below. Their classification depends on the purpose for which the financial
instruments were acquired or issued, their characteristics and I-RES’ designation of such instruments. The standards
require that all financial assets and financial liabilities be classified as fair value through profit or loss (“FVTPL”),
amortised cost or fair value through other comprehensive income (“FVOCI”).
Financial Statements
94 
Classification of financial instruments
The following summarises the classification and measurement I-RES has elected to apply to each of its significant
categories of financial instruments:
Type Classification Measurement
Financial assets
Cash and cash equivalents Held to Collect Amortised cost
Other receivables Held to Collect Amortised cost
Deposits on acquisition Held to Collect Amortised cost
Financial liabilities
Bank indebtedness Other financial liabilities Amortised cost
Accounts payable and accrued liabilities Other financial liabilities Amortised cost
Security deposits Other financial liabilities Amortised cost
Derivative financial instruments FVTPL Fair value through profit or loss
Cash and cash equivalents
Cash and cash equivalents include cash and short-term investments with an original maturity of three months or less.
Interest earned or accrued on these financial assets is included in other income.
Loans and other receivables
Such receivables arise when I-RES provides services to a third party, such as a tenant, and are included in current assets,
except for those with maturities more than 12 months after the consolidated balance sheet date, which are classified as
non-current assets. Loans and other receivables are included in other assets on the consolidated balance sheet and are
accounted for at amortised cost.
Other liabilities
Such financial liabilities are recorded at amortised cost and include all liabilities other than derivatives, which are
designated to be accounted for at fair value, through profit and loss.
FVTPL
Financial instruments in this category are recognised initially and subsequently at fair value. Gains and losses arising
from changes in fair value are presented within net income in the consolidated statement of income and comprehensive
income in the period in which they arise. Financial assets and liabilities at FVTPL are classified as current, except for the
portion expected to be realised or paid more than 12 months after the consolidated balance sheet date, which is classified
as non‑current. Derivatives are also categorised as FVTPL unless designated as hedges.
g) IFRS 16, Leases
The Group has applied IFRS 16 from 1 January 2019 using the modified retrospective approach and therefore the
comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of
accounting policies under IAS 17 and IFRIC 4 are disclosed separately.
I-RES was not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessee, as at
31 December 2019; I-RES did not have any arrangements where it is considered the lessee.
I-RES was not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor, except
for the evaluation of lease and non-lease components of its rental revenue, which required the reclassification of certain
incomes within what was previously treated as Rental Income as revenue to be accounted for under IFRS 15.
Policy applicable from 1 January 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a
lease in IFRS 16. This policy is applied to contracts entered into, on or after 1 January 2019.
Financial Statements
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As a lessee
When the Group acts as a lessee, at commencement or on modification of a contract that contains a lease component, the
Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease
term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-
use asset will be depreciated over the useful life of the underlying asset. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources
and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of
the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will
exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and
equipment’ and lease liabilities in ‘Lease liability’ in the statement of financial position.
As a lessor
When I-RES acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating
lease. To classify each lease, I-RES makes an overall assessment of whether the lease transfers to the lessee substantially all
of the risks and rewards incidental to ownership of the underlying assets. If this is the case, then the lease is a finance lease;
if not, then it is an operating lease. As part of the assessment, I-RES considers certain indicators such as whether the lease
is for the major part of the economic life of the asset, the present value of lease payments and any option included in the
lease. I-RES has determined that all its leases are operating leases.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It
assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described
above, then it classifies the sub-lease as an operating lease.
I-RES has applied the approach to contracts in place on 1 January 2019 or subsequently entered into.
On modification of a contract that contains a lease component and a non-lease component, I-RES allocates the
consideration in the contract to each of the components on the basis of their relative stand-alone prices.
Financial Statements
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Policy applicable before 1 January 2019
The Group recognises rental revenue using the straight-line method, whereby the total amount of rental revenue to be
received from all leases is accounted for on a straight-line basis over the term of the related leases. The difference between
the rental revenue recognised and the amounts contractually due under the lease agreements is accrued as other receivable.
Tenant inducements
Incentives such as cash, rent-free periods and move-in allowances may be provided to lessees who enter into a lease.
The incentives are written off on a straight-line basis over the term of the lease as a reduction of rental revenue.
Early termination of leases
When the Group receives rent loss payments from a tenant for the early termination of a lease, it is reflected in the
accounting period in which the rent loss payment occurred.
Bad debt
All residential accounts receivable balances exceeding 30 days are written off to bad debt expense and recognised in the
consolidated statement of profit or loss and other comprehensive income. Subsequent recoveries of amounts previously
written off are credited in the consolidated statement of profit or loss and other comprehensive income.
h) IFRS 15, Revenue from Contracts with Customers (“IFRS 15”)
I-RES retains substantially all of the risks and benefits of ownership of its investment properties and therefore accounts
for leases with its tenants as operating leases. Rent represents lease revenue earned from the conveyance of the right to
use the property, including access to common areas, to a lessee for an agreed period of time. The contract also contains
a performance obligation that requires I-RES to maintain the common areas to an agreed standard. This right of use
and performance obligation is governed by a single rental contract with the tenant. In accordance with the adoption of
IFRS 16, Leases, I-RES has evaluated the lease and non-lease components of its rental revenue and has determined that
common area maintenance services constitute a single non-lease element, which is accounted for as one performance
obligation under IFRS 15 and is recognised separately to Rental Income as Revenue under IFRS 15 Revenue from
Contracts with Customers.
Rental revenue includes amounts earned from tenants under the rental contract which are allocated to the lease and non-
lease components based on relative stand-alone selling prices. The stand-alone selling prices of the lease components are
determined using an adjusted market assessment approach and the stand-alone selling prices of the service components
are determined using the input method based on the expected costs plus an estimated market-based margin for
similar services.
Rental income from the operating lease component is recognised on a straight-line basis over the lease term in accordance
with IFRS 16, Leases. When I-RES provides incentives to its tenants, the cost of such incentives is recognised over the lease
term, on a straight-line basis, as a reduction of revenue.
Revenue from maintenance services represents the service component of the REIT’s rental contracts and is accounted for
in accordance with IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). These services consist primarily of the
recovery of utility, property and other common area maintenance and amenity costs where I-RES has determined it is
acting as a principal.
These services constitute a single non-lease component, which is accounted for as one performance obligation under
IFRS 15 as the individual activities that comprise these services are not distinct in the context of the contract. The
individual activities undertaken to meet the performance obligation may vary from time to time but cumulatively the
activities undertaken to meet the performance obligation are relatively consistent over time. The tenant simultaneously
receives and consumes the benefits provided under the performance obligation as I-RES performs and consequently
revenue is recognised over time, typically on a monthly basis, as the services are provided.
i) Bank indebtedness, borrowing costs and interest on credit facility
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified at FVTPL if it
is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Other financial liabilities
are subsequently measured at amortised cost using the effective interest method. Interest expense is recognised in profit
or loss.
Financial Statements
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The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The
Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are
substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration
paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
j) Operating segments
The Group operates and is managed as one business segment, namely property investment, with all investment properties
located in Ireland. The operating segment is reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker, which has been identified as the I-RES Board.
k) Statement of cash flows
Cash and cash equivalents consist of cash on hand and balances with banks. Investing and financing activities that do not
require the use of cash or cash equivalents are excluded from the consolidated statement of cash flows and are disclosed
separately in the notes to the consolidated financial statements. Interest expense is classified as financing activities.
l) Income taxes
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable
is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if
any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax
arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
I-RES elected for REIT status on 31 March 2014. As a result, from that date I-RES does not pay Irish corporation tax on
the profits and gains from its qualifying rental business in Ireland, provided it meets certain conditions.
Going forward, corporation tax is still payable in the normal way in respect of income and gains from any residual
business (generally including any property trading business) not included in the Property Rental Business. I-RES would
also be liable to pay other taxes such as VAT, stamp duty, land tax, local property tax and payroll taxes in the normal way.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects,
at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using
tax rates enacted or substantively enacted at the reporting date.
m) Equity and share issue costs
The equity of I-RES consists of ordinary shares issued. Shares issued are recorded at the date of issuance. Direct issue costs
in respect of the issue of shares are accounted for as a deduction from retained earnings.
n) Net asset value (“NAV”) and EPRA NAV
The NAV is calculated as the value of the Group’s assets less the value of its liabilities, measured in accordance with
IFRS as adopted in the EU, and in particular will include the Group’s property assets at their most recent independently
assessed market values.
EPRA NAV is calculated in accordance with the European Public Real Estate Association (“EPRA”) Best Practice
Recommendations, November 2016. EPRA NAV excludes the net marked-to-market movement in the value of financial
instruments used for hedging purposes and where a company has the intention to keep the hedge position until the end
of the contractual duration, and deferred tax in respect of any difference between the fair value and the book value of the
investment properties.
Financial Statements
98 
o) Share-based payments
I-RES has determined that the options issued to senior executives qualify as “equity-settled share-based payment
transactions” as per IFRS 2. In addition, any options issued to the directors have also been based on equity-settled share-
based payment transactions. The fair value of the options measured on the grant date will be expensed over the vesting term
with a corresponding increase in equity. The fair value for all options granted is measured using the Black-Scholes model.
p) Property taxes
Property taxes are paid annually and recognised as an expense evenly throughout the year.
q) Security deposits
Security deposits are amounts received from tenants at the beginning of a tenancy. When a tenant is no longer in
possession of the property, the Group will assess whether there were damages to the property above normal wear and
tear for which deductions may be made to their deposit. Once the inspections and repairs are calculated, the remaining
security deposit is returned to the tenant.
r) Pension
The Company operates a defined contribution plan for its employees (as at the date of this Report, the CEO and her
assistant). A defined contribution plan is a pension plan under which a company pays fixed contributions into a separate
entity. Once the contributions have been paid, the company has no further obligations. The contributions are recognised
as an expense when they are due. The amounts that are not paid are shown as accruals in the balance sheet. The assets of
the plan are held separately from those of the Company in an independently administered fund.
s) Impact expected from new or amended standards
The following standards and amendments are not expected to have a significant impact on reported results or disclosures
of the Group, and were not effective at the financial year end 31 December 2019 and have not been applied in preparing
these consolidated financial statements. The Group’s current view of the impact of these accounting changes is
outlined below:
IFRIC 23 Uncertainty over Income Tax Treatments
This IFRS addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax
rates, when there is uncertainty over income tax treatments under IAS 12. It is currently not expected to be applicable to
the Group’s financial statements. It is applicable to annual reporting periods beginning on or after 1 January 2019.
Annual Improvements to IFRS Standards 2015–2017 cycle:
IFRS 3, Business Combinations – A company remeasures its previously held interest in a joint operation when it obtains
control of the business.
IFRS 11, Joint Arrangements – A company does not remeasure its previously held interest in a joint operation when it
obtains joint control of the business.
IAS 12, Income Taxes – A company accounts for all income tax consequences of dividend payments in the same way.
IAS 23, Borrowing Costs – A company treats as part of general borrowings any borrowing originally made to develop an
asset when the asset is ready for its intended use or sale.
These amendments are not expected to have a significant impact on the Group.
IFRS 17, Insurance Contracts
This new IFRS interpretation clarifies the accounting treatment of insurance contracts and is effective for years beginning
on or after 1 January 2021 and is not yet EU endorsed. It requires insurance liabilities to be measured at a current
fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. The
Company does not currently envisage any impact from the introduction of this standard. IFRS 17 supersedes IFRS 4,
Insurance Contracts as of 1 January 2021.
Amendments to IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors
The amendments clarify the definition of “material” and are effective for annual reporting periods that commence on or
after 1 January 2020. These amendments are not expected to have a significant impact on the Group.
Financial Statements
99

Amendments to IFRS 9, IAS 39 and IFRS 7
The amendments provide new guidance to hedging relationship with LIBOR rates. It is applicable to annual reporting periods
beginning on or after 1 January 2020. The Group is currently in the process of assessing the effects of the amendments.
3. Critical Accounting Estimates, Assumptions and Judgements
The preparation of the consolidated financial statements in accordance with IFRS requires the use of estimates,
assumptions and judgements that in some cases relate to matters that are inherently uncertain, and which affect the
amounts reported in the consolidated financial statements and accompanying notes. Areas of such estimation include,
but are not limited to, valuation of investment properties. Changes to estimates and assumptions may affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates under different assumptions and conditions.
The valuation estimate of investment properties is deemed to be more significant. See notes 2(c) and 5 for a detailed
discussion of valuation methods and the significant assumptions and estimates used. Determination of the lease term for
the office lease is also deemed to be more significant. See notes 2(g) and 6 for the determination of the lease term.
4. Recent Investment Property Acquisitions and Developments
For the year 1 January 2019 to 31 December 2019
Investment property acquisitions
Property Acquisition Date
Apartment
Count Region
Total Acquisition
Costs
(1)
Expenditures during the period relate to development of 99 units at Hansfield Wood. As at , I-RES received all 99 completed apartments.
The total fixed price contract included €7.8 million related to land.
(2)
On 16 November 2018, I-RES acquired a 1.3 acre development site at Hansfield Wood Phase II Development for €30 million and entered into a development
agreement to develop 95 apartments.
Financial Statements
100 
5. Investment Properties
Valuation basis
Investment properties are carried at fair value, which is the amount at which the individual properties could be sold in
an orderly transaction between market participants at the measurement date, considering the highest and best use of the
asset, with any gain or loss arising from a change in fair value recognised in profit or loss in the condensed consolidated
interim statement of profit or loss and other comprehensive income for the period.
80.7% of the fair values of all of the Group’s investment properties as at 31 December 2019 are determined by Coldwell-
Banker Richard Ellis (CBRE) and remaining by Savills, the Company’s external independent valuers. The valuers employ
qualified valuation professionals who have recent experience in the location and category of the respective property.
Valuations are prepared on a bi-annual basis at the interim reporting date and the annual reporting date.
The information provided to the valuers, and the assumptions and valuation methodologies and models used by the
valuers, are reviewed by management. The valuers meet with the Audit Committee and discuss the valuation results as
at 31 December and 30 June directly. The Board determines the Group’s valuation policies and procedures for property
valuations. The Board decides which independent valuers to appoint for the external valuation of the Group’s properties.
Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.
Investment property producing income
For investment property, the income approach/yield methodology involves applying market-derived capitalisation rates
to current and projected future income streams. These capitalisation rates and future income streams are derived from
comparable property transactions and are considered to be the key inputs in the valuation. Other factors that are taken
into account include the tenure of the lease, tenancy details, and planning, building and environmental factors that might
affect the property.
Investment property under development
In the case of investment property under development, the approach applied is the “residual method” of valuation,
which is the valuation method as described above with a deduction for the costs necessary to complete the development,
together with an allowance for the remaining risk.
During 2019, the Company incurred development costs of €25.3 million (2018: €31.1 million) relating to the properties
under development, which includes allocation of development land related to residential development. At the reporting
date, the properties under development are Tallaght Cross West and Hansfield Phase II.
Borrowing costs of €660,102 (€218,000 as at ) are included in capitalised development expenditures.
The weighted average interest rate used to capitalise the borrowing costs was 1.86% (2018: 1.93%).
Development land
In the case of development land, the approach applied is the comparable sales approach, which considers recent sales
activity for similar land parcels in the same or similar markets. Land values are estimated using either a per acre or per
buildable square foot basis based on highest and best use. Such values are applied to the Group’s properties after adjusting
for factors specific to the site, including its location, zoning, servicing and configuration.
Information about fair value measurements using unobservable inputs (Level 3)
At 31 December 2019, the Group considers that all of its investment properties fall within Level 3 fair value as defined
by IFRS 13. As outlined in IFRS 13, a Level 3 fair value recognises that the significant inputs and considerations made
in determining the fair value of property investments cannot be derived from publicly available data, as the valuation
methodology in respect of a property also has to rely on a number of unobservable inputs including technical reports, legal
data, building costs, rental analysis, professional opinion on profile, lot size, layout and presentation of accommodation.
In addition, the valuers utilise proprietary databases maintained in respect of properties similar to the assets being valued.
The Group tests the reasonableness of all significant unobservable inputs, including Capitalisation Rates and stabilised
net rental income (“Stabilised NRI”) used in the valuation and reviews the results with the independent valuers for all
independent valuations. The Stabilised NRI represents property revenue less property operating expenses, adjusted for
market-based assumptions such as long-term vacancy rates, management fees, repairs and maintenance.
Financial Statements
101

Sensitivity analysis
Stabilised NRI and market-observed Capitalisation Rates are key inputs in the valuation model used. For example,
completed properties are valued mainly using a term and reversion model: i.e., the present values of future cash flows
from expected rental receipts are calculated. For the existing rental contract or term, this is the expected net rents from
tenants over the period to the next lease break option or expiry. After this period, the reversion, estimated Stabilised NRI
is used to calculate cash flows based on expectations from current market conditions. Thus, a decrease in the estimated
Stabilised NRI will decrease the fair value, and an increase in the estimated Stabilised NRI will increase the fair value.
The Capitalisation Rates magnify the effect of a change in Stabilised NRI, with a lower Capitalisation Rate resulting in a
greater effect on the fair value of investment properties than a higher Capitalisation Rate.
For investment properties producing income and investment properties under development, an increase of 1% in the
Equivalent Capitalisation Rate would have the impact of a €227.8 million reduction in fair value while a decrease of 1%
in the Equivalent Capitalisation Rate would result in a fair value increase of €349.2 million. An increase of 1% to 4% in
Stabilised NRI would have the impact ranging from €13.3 million to €53.2 million in fair value, while a decrease of 1% to
4% in Stabilised NRI would have the impact ranging from €-13.3 million to €-53.2 million. I-RES believes that this range
of change in Stabilised NRI is a reasonable estimate in the next 12 months based on expected changes in Stabilised NRI.
The direct operating expenses recognised in the consolidated statement of profit or loss and other comprehensive income
for the Group is €11.6 million for the year ended 31 December 2019 (2018: €9.5 million), arising from investment
property that generated rental income during the period. The direct operating expenses are comprised of the following
significant categories: property taxes, utilities, repairs and maintenance, wages, insurance, service charges and property
management fees.
The direct operating expenses recognised in the consolidated statement of profit or loss and other comprehensive income
arising from investment property that did not generate rental income for the period ended 31 December 2019 and
 was not material.
An investment property is comprised of various components, including undeveloped land and vacant residential and
commercial units; no direct operating costs were specifically allocated to the components noted above.
Quantitative information
A summary of the Equivalent Capitalisation Rates and ranges along with the fair value of the total portfolio of the Group
as at 31 December 2019 is presented below:
As at 31 December 2019
Type of Interest Fair Value WA NRI(1)
Rate Type(2)
Max. Min. Weighted Average102 
The following table summarises the changes in the investment properties portfolio during the periods:
Reconciliation of carrying amounts of investment properties
For the year ended 31 December 2019
Income
Properties
Properties Under
Development
Development
Land Total
(1)
Reclassified Tallaght Cross West from development site to properties under development and reclassified Coldcut park from properties under development to
income properties.
(2)
Straight-line rent adjustment.
(3)
Includes cash outlays for new tenants.
(4)
Reclassified Hansfield Wood Phase I from properties under development to income properties, and development site from income properties to
development land.
Most of the residential leases are for one year or less.
The carrying value of the Group investment properties of €1,359.2 million for the investment properties at 31 December
2019 (€921.3 million at ) was based on an external valuation carried out as at that date. The valuations
were prepared in accordance with the RICS Valuation – Global Standards, 2017 (Red Book) and IFRS 13.
6. Leases
Leases as lessee (IFRS 16)
On 9 December 2019, the Group entered into an agreement to lease office space at South Dock House. The lease is for
a period of 20 years, with options for the Group to terminate the lease on the 10th and 15th anniversaries of the lease.
Lease payments are renegotiated every five years to reflect market rentals.
A portion of the office space is sub-let to a tenant. The sub-lease expires in 2020, and is classified as an operating lease.
The Group has assessed at the lease commencement date whether it is reasonably certain to exercise the lease termination
option and has determined that the lease term is 20 years. As well, the Group has used an incremental borrowing rate of
2.48% to determine the lease liability.
Financial Statements
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Information about leases for which the Group is a lessee is presented below.
Right-of-use assets
2019
Land and buildings
(in €’000)
Balance at 1 January –
Additions to right-of-use assets 10,114
Depreciation charge for the year (31)
Balance at 31 December 10,083
Amounts recognised in profit or loss
During 2019, I-RES recognised interest on lease liabilities of circa €4,000.
Amounts recognised in statement of cash flows
During 2019, I-RES’ total cash outflow for leases was circa €247,000.
Lease as lessor
The Group leases out its investment property consisting of its owned residential and commercial properties as well as
a portion of the leased property. All leases are classified as operating leases from a lessor perspective. See note 13 for an
analysis of the Group’s rental income.
7. Property, Plant and Equipment
Land and Buildings Furniture and Fixture Total
(1)
The carrying value of all accounts payable and accrued liabilities approximates their fair value.
(2)
Includes property related accruals, development accruals, property management fees and asset management fees accruals.
Financial Statements
104 
10. Credit Facility
As at 31 
€’000 €’000
Bank Indebtedness
Loan drawn down 555,020 309,159
Deferred loan costs (5,169) (1,665)
Total 549,851 307,494
On 18 April 2019, I-RES entered into a new accordion credit facility of up to €450 million with a syndicate of five banks,
which can be extended to €600 million (subject to certain terms and conditions) (the “New Revolving Credit Facility”),
replacing the existing €350 million revolving and accordion credit facility which was due to mature January 2021 (the
“Previous Revolving Credit Facility”). There was a cancellation fee of €1.7 million associated with paydown of the
Previous Revolving Credit Facility and a write off of €1.4 million of unamortised deferred financing cost.
The New Revolving Credit Facility has a five-year term, which can be extended to seven years (subject to certain conditions)
and is secured by a floating charge over assets of the Company and IRES Residential Properties Limited, its subsidiary, and a
fixed charge over the shares held by the Company in IRES Residential Properties Limited. It has reduced margin compared
to the Previous Revolving Credit Facility. This facility is being provided by Barclays Bank Ireland PLC, Ulster Bank Ireland
DAC, The Governor and Company of the Bank of Ireland, Allied Irish Banks, P.L.C. and HSBC Bank PLC.
On 12 June 2019, the Company exercised its option under the New Revolving Credit Facility and restated on 12 June
2019 to extend its committed facilities from €450 million to €600 million and amended the New Revolving Credit Facility
to include a new uncommitted accordion facility in the amount of €50 million. The New Revolving Credit Facility (as
amended and restated on 12 June 2019) matures on 11 June 2024. The interest on the New Revolving Credit Facility (as
amended and restated on 12 June 2019) is set at the annual rate of 1.75%, plus the one-month or three-month EURIBOR
rate (at the option of I-RES).
On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to €160 million. The agreements have
an effective date of 23 March 2017 and a maturity date of January 2021. On 15 September 2017, I-RES entered into a new
interest rate swap agreement totalling €44.8 million. The new agreement has an effective date of 15 September 2017 and a
maturity date of January 2021.
The interest rate swap agreements effectively convert the hedged portion of the Credit Facility (€204.8 million) from a
variable rate to a fixed rate facility up to the maturity date (see note 14 for further details).
I-RES has complied with all externally imposed capital requirements to which it was subject during the year.
11. Share-Based Compensation
Options are issuable pursuant to I-RES’ share-based compensation plan, namely, the long-term incentive plan (“LTIP”).
Options were granted on 26 March 2015 and 16 April 2014 by I-RES to certain trustees and employees of Canadian
Apartment Properties Real Estate Investment Trust (“CAPREIT”) and its affiliates and to the former Chief Executive
Officer of I-RES.
On 16 November 2017, 2,000,000 options were granted to Margaret Sweeney, Chief Executive Officer of I-RES.
On 18 June 2019, 1,302,461 options were granted to the Chief Executive Officer. The Chief Executive Officer received
options, calculated as 3% of the new Ordinary Shares issued, at an exercise price of €1.71 per share, in accordance with her
employment agreement.
On 10 July 2019, an additional 1,294,038 options were granted to the Chief Executive Officer in connection with the
second tranche placing of the new ordinary shares.
Financial Statements
105

All options have a maximum life of seven years less a day and will vest over three years from the date of grant on the basis
of one third per completed year the recipient of the option completes in respect of the relevant service which has qualified
him or her for an option grant. The LTIP limit cannot exceed 10% of I-RES’ issued ordinary share capital (adjusted for
share issuance and cancellation) during the 10-year period prior to that date. As at 31 December 2019, the maximum
number of additional options issuable under the LTIP is 21,542,450 (: 38,696,396).
LTIP
For the year ended
WA exercise
price 31 
Share Options outstanding
as at 1 January 1.11 10,875,000 27,736,940
Issued, cancelled or granted during the period:
Issued or granted 1.70 2,596,499 –
Exercised or settled 1.02 (975,000) (16,861,940)
Share Options outstanding as at 31 December 2019(2)
1.24 12,496,499 10,875,000
(1)
Cancelled/forfeited – the unvested shares resulting from the departure of certain CAPREIT employees.
(2)
Of the Share Options outstanding above, 9,233,333 were exercisable at 31 December 2019 (: 9,541,667).
The fair value of options has been determined as at the grant date using the Black-Scholes model. The assumptions
utilised in the model to arrive at the estimated fair value for the outstanding grants at the respective periods are
listed below.
LTIP
The expected volatility is based on historic market volatility prior to the issuance. The volatility of the 18 June 2019 and
10 July 2019 issue is based over the prior seven years. 16 November 2017 issue’s volatility is based over the prior four years,
26 March 2015 issue’s volatility is based over the prior five years and 16 April 2014 issue’s volatility is based over the prior
four years. The risk-free rate is based on Irish Government bonds with a term consistent with the assumed option life.
The share-based compensation expense during the year ended 31 December 2019 was €236,000 (:
€228,000).
Following the financial period under review, on 27 March 2020 the Remuneration Committee awarded the CEO, subject
to certain conditions, a conditional share award of 437,601 ordinary shares (equivalent to 135% of basic salary) in the
capital of the Company (the “2023 Restricted Shares”) as Restricted Shares under the terms of the LTIP. In order for the
CEO to receive the 2023 Restricted Shares, she must continue to be employed by the Company up to the vesting date
in 2023 and meet certain performance conditions. The 2023 Restricted Shares are to be held on trust for the CEO for a
further two-year period from the vesting date in 2023.
12. Shareholders’ Equity
All equity shares outstanding are fully paid and are voting shares. Equity shares represent a shareholder’s proportionate
undivided beneficial interest in I-RES. No equity share has any preference or priority over another. No shareholder has
or is deemed to have any right of ownership in any of the assets of I-RES. Each share confers the right to cast one vote at
any meeting of shareholders and to participate pro rata in any distributions by I-RES and, in the event of termination of
I-RES, in the net assets of I-RES remaining after satisfaction of all liabilities. Shares will be issued in registered form and
are transferable.
Financial Statements
106 
The number of shares authorised is as follows:

Authorised Share Capital 1,000,000,000 1,000,000,000
Ordinary shares of €0.10 each
The number of issued and outstanding ordinary shares is as follows:

Ordinary shares outstanding, beginning of year 434,153,946 417,292,006
New shares issued(1)(2)
87,525,000 16,861,940
Ordinary shares outstanding, end of year 521,678,946 434,153,946
(1)
On 12 June 2019 and 9 July 2019, I-RES successfully completed a placing of 86,550,000 new Ordinary Shares at a price of €1.55 per share raising gross proceeds
of approximately €134.2 million (before commissions, fees and expenses). The additional 975,000 shares were new shares issued for options issued under
the LTIP.
(2)
For the year ended , all shares were issued pursuant to exercise of share options by the former CEO of I-RES and certain employees of
CAPREIT at weighted average exercise prices of €1.02 per share.
13. Revenue from Investment Properties
I-RES generates revenue primarily from the rental income from investment properties. Rental income represents lease
revenue earned from the conveyance of the right to use the property, including access to common areas, to a lessee for
an agreed period of time. The rental contract also contains an undertaking that common areas and amenities will be
maintained to a certain standard. This right of use of the property and maintenance performance obligation is governed
by a single rental contract with the tenant. In accordance with the adoption of IFRS 16, Leases, I-RES has evaluated
the lease and non-lease components of its rental revenue and has determined that common area maintenance services
constitute a single non-lease element, which is accounted for as one performance obligation under IFRS 15 and is
recognised separately to Rental Income.
31 December 2019

Rental Income 53,946 44,565
Revenue from services 7,055 5,464
Car park income 1,096 579
Revenue from contracts with customers 8,151 6,043
Total Revenue 62,097 50,608
14. Realised and Unrealised Gains and Losses on Derivative Financial Instruments
On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to €160 million. The agreements have
an effective date of 23 March 2017 and a maturity date of January 2021. On 15 September 2017, I-RES entered into a new
interest rate swap agreement totalling €44.8 million. The new agreement has an effective date of 15 September 2017 and
a maturity date of January 2021. The interest rate swap agreements effectively convert the hedged portion of the Credit
Facility (€204.8 million) from a variable rate to a fixed rate facility to maturity date (see note 10 for further details), the
fixed interest rate is at 1.66% (1.75% less 0.09%) on the total €204.8 million interest rate swap.
In 2019, a fair value gain of €131,000 (2018: loss of €659,000) has been recorded in the consolidated statement of
profit or loss and other comprehensive income and the fair value of the interest rate swaps was a liability of €788,000 at
31 December 2019 (: liability of €913,000).
15. Financial Instruments, Investment Properties and Risk Management
a) Fair value of financial instruments and investment properties
The Group classifies and discloses the fair value for each class of financial instrument based on the fair value hierarchy in
accordance with IFRS 13. The fair value hierarchy distinguishes between market value data obtained from independent
sources and the Group’s own assumptions about market value. The hierarchy levels are defined below:
Level 1 – Inputs based on quoted prices in active markets for identical assets or liabilities;
Financial Statements
107

Level 2 – Inputs based on factors other than quoted prices included in Level 1 and may include quoted prices for similar
assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted
prices), such as interest rates and yield curves that are observable at commonly quoted intervals; and
Level 3 – Inputs which are unobservable for the asset or liability and are typically based on the Group’s own assumptions
as there is little, if any, related market activity.
The Group’s assessment of the significance of a particular input to the fair value measurement in its entirety requires
judgement and considers factors specific to the asset or liability.
The following table presents the Group’s estimates of fair value on a recurring basis based on information available as at
31 December 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.
As at 31 December 2019
(1)
See note 5 for detailed information on the valuation methodologies and fair value reconciliation.
(2)
The valuation of the interest rate swap instrument is determined using widely accepted valuation techniques including discounted cash flow analysis on the
expected cash flows of the derivatives. The fair value is determined using the market-standard methodology of netting the discounted future fixed cash
payments and the discounted expected cash flow of the derivatives. The variable cash receipts are based on an expectation of future interest rates (forward
curves) derived from observable market interest rates. If the total mark-to-market value is positive, I-RES will consider a current value adjustment to reflect
the credit risk of the counterparty, and if the total mark-to-market value is negative, I-RES will consider a current value adjustment to reflect I-RES’ own credit
risk in the fair value measurement of the interest rate swap agreements.
b) Risk management
The main risks arising from the Group’s financial instruments are market risk, interest rate risk, liquidity risk and credit
risk. The Group’s approach to managing these risks is summarised as follows:
Market risk
Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market
prices. Market risk reflects interest rate risk, currency risk and other price risks.
The Group’s financial assets currently comprise short-term bank deposits and trade receivables.
Short-term bank deposits are held while awaiting suitable investment properties for investment. These are denominated
in euros. Therefore, exposure to market risk in relation to these is limited to interest rate risk.
Interest rate risk
With regard to the cost of borrowing, I-RES has used, and may continue to use hedging, where considered appropriate, to
mitigate interest rate risk.
As at 31 December 2019, I-RES’ Credit Facility was drawn for €555.0 million. On 28 February 2017 and 15 September
2017, I-RES entered into interest rate swap agreements aggregating to €204.8 million. The interest rate swap agreements
effectively convert the hedged portion of the Credit Facility from a variable rate to a fixed rate facility to maturity date. The
Financial Statements
108 
fixed interest rate is at 1.66% (1.75% less 0.09%). The agreements effectively convert borrowings on a EURIBOR-based
floating rate credit facility to a fixed rate facility. As of 15 September 2017, interest on the remaining portion of the Credit
Facility is paid at a rate of 1.75% per annum plus the higher of the one-month or three-month EURIBOR rate (at the
option of I-RES) or zero. For the year ended 31 December 2019, a 100-basis point change in interest rates would have the
following effect on the unhedged portion:
As at 31 December 2019
Change in interest rates Increase (decrease) in net income
Based on the fixed margin of 1.75% plus the one-month EURIBOR rate as at 31 December 2019 of -0.472% on the unswapped portion of the Credit Facility.
(2)
Based on the fixed margin of 1.75% plus the floor of zero on the unswapped portion of the Credit Facility.
As at 
Change in interest rates Increase (decrease) in net income
2018
Basis Points €’000
EURIBOR rate debt(1)
+100 (660)
EURIBOR rate debt(2)
-100 –
(1)
Based on the fixed margin of 2.0% plus the one-month EURIBOR rate as at 31 December 2019 of -0.368% on the unswapped portion of the Credit Facility.
(2)
Based on the fixed margin of 2.0% plus the floor of zero on the unswapped portion of the Credit Facility.
Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulties in accessing capital markets and refinancing its
financial obligations as they come due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation. The Group monitors the level of expected cash inflows on trade and other receivables,
together with expected cash outflows on trade and other payables and capital commitments.
As at 31 December 2019 6 months or less(1)
6 to 12 months(1)
1 to 2 years(1)
2 to 5 years(1)
More than
5 years(1)
Based on carrying value at maturity dates.
(2)
Based on current in-place interest rate for the remaining term to maturity.
Financial Statements
109

The carrying value of bank indebtedness and trade and other payables (other liabilities) approximates their fair value.
Credit risk
Credit risk is the risk that: (i) counterparties to contractual financial obligations will default; or (ii) the possibility that the
Group’s tenants may experience financial difficulty and be unable to meet their rental obligations.
The Group monitors its risk exposure regarding obligations with counterparties through the regular assessment of
counterparties’ credit positions.
The Group mitigates the risk of credit loss with respect to tenants by evaluating the creditworthiness of new tenants and
obtaining security deposits wherever permitted by legislation.
The Group monitors its collection experience on a monthly basis and ensures that a stringent policy is adopted to provide
for all past due amounts. All residential accounts receivable balances exceeding 30 days are written off to bad debt expense
and recognised in the consolidated statement of profit or loss and other comprehensive income. Subsequent recoveries
of amounts previously written off are credited in the consolidated statement of profit or loss and other comprehensive
income. The Group’s impairment loss allowance for trade receivables amounted to €581,000 for the year ended
31 December 2019 (2018: €217,000).
Cash and cash equivalents are held by major Irish and European institutions with credit ratings of AA and AAA,
respectively. The Company deposits cash with individual institutions to avoid concentration of risk with any one
counterparty. The Group has also engaged the services of a depository to ensure the security of the cash assets.
Risk of counterparty default arising on cash and cash equivalents and derivative financial instruments is controlled
by dealing with high-quality institutions and by a policy limiting the amount of credit exposure to any one bank
or institution.
Capital management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, I-RES may issue new shares or consider the sale of assets to reduce
debt. I-RES, through the Irish REIT Regime, is restricted in its use of capital to making investments in real estate property
in Ireland. I-RES intends to make distributions if its results of operations and cash flows permit in the future.
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. At 31 December 2019, capital consists of equity and debt, and Group Total
Gearing was 40.8%. I-RES seeks to use gearing to enhance shareholder returns over the long term. The level of gearing is
monitored carefully by the Board.
The Board monitors the return on capital as well as the level of dividends paid to ordinary shareholders. Subject to
distributable reserves, it is the policy of I-RES to distribute at least 85% of the Property Income of its Property Rental
Business for each accounting period.
16. Taxation
I-RES elected for REIT status on 31 March 2014. As a result, from this date the Group is exempt from paying Irish
corporation tax on the profits and gains from qualifying rental business in Ireland provided it meets certain conditions.
Instead, dividends paid to shareholders in respect of the Property Rental Business are treated for Irish tax purposes as
income in the hands of shareholders. Corporation tax is still payable in the normal way in respect of income and gains
from any residual business (generally including any property trading business) not included in the Property Rental
Business. I-RES is also liable to pay other taxes such as VAT, stamp duty, land tax, local property tax and payroll taxes in
the normal way.
Within the Irish REIT Regime, for corporation tax purposes the Property Rental Business is treated as a separate business
from the residual business. A loss incurred by the Property Rental Business cannot be offset against profits of the
residual business.
Financial Statements
110 
An Irish REIT is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of
dividend), on or before the filing date for its tax return for the accounting period in question, at least 85% of the Property
Income of the Property Rental Business arising in each accounting period. Failure to meet this requirement would result
in a tax charge calculated by reference to the extent of the shortfall in the dividend paid. A dividend paid by an Irish REIT
from its Property Rental Business is referred to as a property income distribution. Any normal dividend paid from the
residual business by the Irish REIT is referred to as a non-property income distribution dividend.
The directors confirm that the Group has remained in compliance with the Irish REIT Regime up to and including the
date of this Report and that there has been no profit arising from residual business activities.
17. Dividends
Under the Irish REIT Regime, subject to having sufficient distributable reserves, I-RES is required to distribute to
shareholders at least 85% of the Property Income of its Property Rental Business for each accounting period, provided it
has sufficient distributable reserves.
On 9 August 2019, the directors resolved to pay an interim dividend of €14.1 million for the period ended 30 June 2019.
The dividend of 2.7 cents per share was paid on 13 September 2019 to shareholders on record as at 23 August 2019.
On 22 February 2019, the directors resolved to pay an additional dividend of €13.0 million for the year ended 31 December
2018. The dividend of 3.0 cents per share was paid on 29 March 2019 to shareholders on record as of 8 March 2019.
On 3 August 2018, the directors declared an interim dividend of €11.3 million for the period ended 30 June 2018. The
dividend of 2.6 cents per share was paid on 7 September 2018 to shareholders on record as at 17 August 2018.
On 22 February 2018, the directors resolved to pay an additional dividend of €11.3 million for the year ended 31 December
2017. The dividend of 2.7 cents per share was paid on 23 March 2018 to shareholders on record as of 2 March 2018.
31 December 2019

Profit for the year 86,282 119,785
Less: Unrealised gain in net movement in fair value of investment properties (56,234) (92,664)
Property Income of the Property Rental Business 30,048 27,121
Add back:
Share-based compensation expense 236 228
Unrealised change in fair value of derivatives (131) 659
Distributable Reserves 30,153 28,008
18. Supplemental Cash Flow Information
For the year ended
31 December 2019

Financing costs on credit facility as per the consolidated statement of profit
or loss and other comprehensive income 12,036 6,706
Interest expense accrual (315) –
Capitalised interest 442 218
Less: Amortisation of financing fees (2,486) (835)
Interest paid on loan drawn down 9,677 6,089
Changes in operating assets and liabilities
For the year ended
31 December 2019
ilities
from financing activities 
19. Related Party Transactions
CAPREIT LP has an indirect 18.3% beneficial interest in I-RES and has determined that it has significant influence over
I-RES. The beneficial interest is held through a qualifying investor alternative investment fund, Irish Residential Properties
Fund, CAPREIT LP’s wholly owned subsidiary.
Effective 1 November 2015, CAPREIT LP’s wholly owned subsidiary, IRES Fund Management Limited (“Investment
Manager”) entered into the investment management agreement with I-RES (the “Investment Management Agreement”),
as amended or restated or as may be amended or restated from time to time, pursuant to which I-RES pays 3.0% per annum
of its gross rental income as property management fees and 0.5% per annum of its net asset value together with relevant
reimbursements as asset management fees to the Investment Manager. The Investment Management Agreement governs
the provision of portfolio management, risk management and other related services to the Company by the Investment
Manager on a day-to-day basis. It has an initial term of five years, unless it is duly terminated pursuant to a provision of the
Investment Management Agreement, and thereafter shall continue in force for consecutive five-year periods.
The Investment Manager has the ability to terminate the Investment Management Agreement by serving 12 months’
notice of termination at any time after 1 November 2019. The Investment Manager may also terminate the Investment
Management Agreement at any time if required to do so by any competent regulatory authority, if the Company commits a
material breach of the agreement which remains unremedied for 30 days, or if the Company enters an event of insolvency.
The Company may terminate the Investment Management Agreement if the Investment Manager commits a material
breach of the agreement which remains unremedied for 30 days, enters an event of insolvency, is no longer authorised to
carry out the services under the Investment Management Agreement or if CAPREIT LP (or one of its affiliate) ceases to
beneficially own 5% of the Company or ceases to control the Investment Manager. The Company may also terminate the
Investment Management Agreement on or after 1 November 2020 if it determines that internalisation of the management
of the Company, subject to relevant regulatory approval, is in the Company’s best interests. In such circumstances, the
Company is required to purchase the issued shares of the Investment Manager on a liability free/cash free basis for €1.
Certain transitional provisions apply under the Investment Management Agreement upon its termination in order to
effect an orderly transition of the services to the Company. Other than fees or other monies accrued up to the point of
termination, the Investment Manager is not entitled to compensation on termination of the agreement.
In providing its services to the Company under the Investment Management Agreement, the Investment Manager also
has access to the expertise and resources provided by CAPREIT LP, pursuant to the Services Agreement between the
Company, CAPREIT LP and the Investment Manager (as amended from time to time), which covers the performance
of property and asset management services by CAPREIT LP. Among other standard termination provisions, the Services
Agreement terminates on the termination of the Investment Management Agreement or where CAPREIT LP (or one of its
affiliates) ceases to control the Investment Manager.
Financial Statements
112 
For the year ended 31 December 2019, I-RES incurred €4.0 million in asset management fees. In addition, €1.9 million in
property management fees were incurred and recorded under operating expenses. For the year ended ,
€3.2 million in asset management fees and €1.5 million in property management fees were recorded. For the year ended
31 December 2019, CAPREIT charged back €1.36 million (2018: €1.21 million) relating to salaries.
The amount payable to CAPREIT LP (including IRES Fund Management) totalled €2.0 million as at 31 December 2019
(€0.9 million as at ) related to asset management fees, property management fees, payroll-related
costs and other miscellaneous expenses incurred by CAPREIT LP on behalf of the Group. All charges from CAPREIT LP
are benchmarked at normal commercial terms and on an arm’s length basis. The amount receivable from CAPREIT LP
(including IRES Fund Management) totalled €0.1 million as at 31 December 2019 (€0.1 million as at )
related to the leasing of office space and other miscellaneous expenses incurred by I-RES on behalf of CAPREIT LP.
IRES Fund Management Limited has multiple leases for office space with I-RES. The rental income for the office space for
the year ended 31 December 2019 was €116,000 (€116,000 for the year ended ). The leases expire on
1 March 2020, 1 December 2020 and 1 December 2021. Minimum annual rental payments from IRES Fund Management

Minimum annual rent payments from I-RES Fund Management 61 34
Directors
At the time of appointment as a director, Phillip Burns was regarded as an independent non-executive director. Following
a decision of the Board on 29 March 2019, Phillip Burns was no longer considered to be independent, having regard to
certain cross-directorships concerning the Company and European Residential Real Estate Investment Trust (“ERES”), a
Canadian company that is a subsidiary of CAPREIT and has its shares listed on the TSX Venture Exchange and in respect
of which Phillip Burns is Chief Executive Officer, a director and a shareholder. While such cross-directorships no longer
exist following the retirement of David Ehrlich, Phillip Burns is still considered to be non-independent having regard
to Euronext Dublin Listing Rule 2.10.11 and the provisions of the UK Corporate Governance Code given that, (i) in
connection with a transaction entered into between ERES and CAPREIT, pursuant to which CAPREIT indirectly acquired
control of ERES, Phillip Burns was appointed as a senior employee of CAPREIT LP, which has a material business
relationship with the Company as it is the parent company of the Investment Manager and (ii) this appointment together
with the transaction completed between ERES and CAPREIT gives rise to a significant link with another director on the
Board of the Company, Mark Kenney, President and Chief Executive Officer of CAPREIT.
As such, Phillip Burns has been appointed as a senior employee of CAPREIT (or its affiliate) and the Chief Executive
Officer of ERES, which in turn has a material business relationship with the Company, which is the parent company of
the Investment Manager and this appointment gives rise to a significant link with another director on the Board of the
Company, Mark Kenney, President and Chief Executive Officer of CAPREIT.
Executive members
The only executive member of the Board is Margaret Sweeney, who was appointed as the Chief Executive Officer of the
Company on 1 November 2017. All other members of the Board are non-executive directors. Ms. Sweeney’s basic salary
as at 31 December 2019 was €400,000 and she is entitled to a bonus of up to 150% of her annual basic salary, subject to
approval by the Board. Ms. Sweeney does not receive any additional fees for her role as executive director of the Company.
Ms. Sweeney is eligible to participate in the LTIP and, under her employment contract, in 2019 she was entitled to be
awarded options to acquire 3% of the number of shares issued by the Company from time to time pursuant to any equity
raise. On 18 June and 10 July 2019, a total of 2,596,499 share options were granted to Ms. Sweeney in connection with the
successful completion of a placing of 86,550,000 new Ordinary Shares in the Company.
In December 2018, the Company announced the appointment of Mark Kenney to the Board as a non-independent non-
executive director with effect from 1 January 2019. Mr. Kenney succeeds Mr. Ehrlich as IRES Fund Management Limited’s
nominee on the Board. Mark Kenney is the President and Chief Executive Officer of CAPREIT.
Purchase of I-RES shares
On 18 June 2019, CAPREIT LP indirectly purchased 8,778,387 shares of I-RES. On 10 July 2019, CAPREIT LP indirectly
purchased an additional 8,721,613 shares of I-RES. As at 31 December 2019, CAPREIT LP’s beneficial interest in I-RES
increased to 18.3% (2018: 18.0%) due to the share purchases.
Financial Statements
113

Expenses
Total remuneration is comprised of remuneration of the non-executive directors of €384,333 for the year ended 31 December
2019 and €329,167 for the year ended , excluding remuneration related to the Chief Executive Officer.
Owners’ management companies not consolidated
As a result of the acquisition by the Group of apartments or commercial space in certain residential rental properties,
the Group holds voting rights in the relevant owners’ management companies associated with those developments.
Where the Group holds the majority of those voting rights, this entitles it, inter alia, to control the composition of such
owners’ management companies’ boards of directors. However, as each of those owners’ management companies is
incorporated as a company limited by guarantee for the purpose of owning the common areas in residential or mixed-
use developments, they are not intended to be traded for gains. For these reasons, I-RES does not consider these owners’
management companies to be material for consolidation as the total asset of the owner’s management companies is less
than 0.3%, either individually or collectively. I-RES has considered the latest available financial statements of these owners’
management companies in making this assessment.
Details of the owners’ management companies in which the Group had an interest during the year ended 31 December
2019, along with the relevant service fees paid by the Group to them, are as follows:
Owners’ Management Entity Registered Official Address
115

20. Contingencies
At Beacon South Quarter, in addition to the capital expenditure work that has already been completed, water ingress
and fire remediation works were identified in 2016, and I-RES is working with the Beacon South Quarter owners’
management company to resolve these matters. In 2017, in relation to these water ingress and fire remedial works, levies
were approved by the members of the Beacon South Quarter owners’ management company. I-RES’ portion of these
levies as at 31 December 2019 is circa €0.6 million. There is also an active insurance claim with respect to the water ingress
and related damage. The amount of potential costs relating to these structural remediation works cannot be currently
measured with sufficient reliability.
21. Commitments
In March 2018, planning permission was granted for the conversion of 18 units at Tallaght Cross West. Total consideration
for the project is expected to amount to €4.69 million (including VAT, but excluding other transaction costs), which is
substantially completed in December 2019 and to be handed over to the Company in Q1 2020. The outstanding amount is
circa €0.3 million.
In October 2018, the Company entered into a development agreement for 95 apartments for a total consideration of
€26.7 million (including VAT but excluding other transaction costs). The project is currently still under construction as of
31 December 2019 and the amount outstanding is circa €0.9 million.
In November 2018, the Company entered into a share purchase agreement to acquire 69 residential units for a total
consideration of €47.16 million (including VAT but excluding other transaction costs). Practical completion of the units is
expected to be on or around Q4 2020 with a long-stop date of Q4 2021.
In May 2019, the Company entered into contract for the forward purchase of 55 apartments and duplexes for a total
purchase price of €18.5 million (including VAT, but excluding transaction costs). Practical completion of the units is
expected to be on or around Q2 2020 and the payment of €18.5 million will be made upon practical completion.
In September 2019, the Company entered into a design and build contract to intensify the commercial space at Tallaght
Cross West. The total consideration of the contract is circa €9.7 million and the amount outstanding as of 31 December
2019 is circa €8.5 million.
Total lease commitments are outlined in note 6.
22. Earnings per Share
Earnings per share amounts are calculated by dividing profit for the reporting period attributable to ordinary
shareholders of I-RES by the weighted average number of ordinary shares outstanding during the reporting period.

Profit attributable to shareholders of I-RES (€’000) 86,282 119,785
Basic weighted average number of shares 478,563,272 427,164,632
Diluted weighted average number of shares(1)(2)
481,508,009 431,236,978
Basic Earnings per share (cents) 18.0 28.0
Diluted Earnings per share (cents) 17.9 27.8
(1)
Diluted weighted average number of shares includes the additional shares resulting from dilution of the long-term incentive plan options as of the reporting
period date.
(2)
At 31 December 2019, 4,596,499 options (2018: 2,000,000) were excluded from the diluted weighted average number of ordinary shares because their effect
would have been anti-dilutive.
EPRA issued Best Practices Recommendations most recently in November 2016, which gives guidelines for
performance matters.
EPRA Earnings represents the earnings from the core operational activities (recurring items for I-RES). It is intended
to provide an indicator of the underlying performance of the property portfolio and therefore excludes all components
not relevant to the underlying and recurring performance of the portfolio, including any revaluation results and results
from the sale of properties. EPRA Earnings per share amounts are calculated by dividing EPRA Earnings for the reporting
period attributable to shareholders of I-RES by the weighted average number of ordinary shares outstanding during the
reporting period.
Financial Statements
116 
EPRA Earnings per Share

Total comprehensive income for the year attributable to shareholders (€’000) 86,282 119,785
Adjustments to calculate EPRA Earnings exclude:
Costs associated with early close out of debt instrument (€’000) 3,153 –
Changes in fair value on investment properties (€’000) (56,234) (92,664)
Changes in fair value of derivative financial instruments (€’000) (131) 659
EPRA Earnings (€’000) 33,070 27,780
Basic weighted average number of shares 478,563,272 427,164,632
Diluted weighted average number of shares 481,508,009 431,236,978
EPRA Earnings per share (cents) 6.9 6.5
EPRA Diluted Earnings per share (cents) 6.9 6.4
23. Net Asset Value per Share
EPRA issued Best Practices Recommendations most recently in November 2016, which gives guidelines for
performance matters.
EPRA NAV measures the fair value of net assets on an ongoing, long-term basis in accordance with guidelines issued
by EPRA. EPRA NAV excludes the net mark-to-market to the value of financial instruments used for hedging purposes
where a company has the intention to keep the hedge position until the end of the contractual duration, and deferred tax
in respect of any difference between the fair value and the book value of the investment properties.
EPRA NAV per Share
As at 31 
Net assets (€’000) 810,169 618,724
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000) 788 913
EPRA net assets (€’000) 810,957 619,637
Number of shares outstanding 521,678,946 434,153,946
Diluted number of shares outstanding 524,529,943 436,272,927
Basic Net Asset Value per share (cents) 155.3 142.5
EPRA Net Asset Value per share (cents) 154.6 142.0
24. Directors’ Remuneration, Employee Costs and Auditor Remuneration
For the year ended
31 December 2019

(1)
Included in the auditor remuneration for the Group is an amount of €125,000 (2018: €93,000) that relates to the audit of the Company’s financial statements.
(2)
Non-audit remuneration for 31 December 2019 and  relates to review of interim financial statements.
25. Holding Company Details
The name of the holding company of the Group is Irish Residential Properties REIT plc. The legal form of the Company is
a public limited company. The place of registration of the holding company is Dublin, Ireland and its registration number
is 529737. The address of the registered office is South Dock House, Hanover Quay, Dublin 2, Ireland.
26. Subsequent Events
On 10 January 2020, the Company entered into contract with a building contractor to construct 61 units on the
development land located next to Bakers Yard.
On 15 January 2020, the Company received 26 residential units at Waterside and made a payment of circa €8.2 million.
On 27 March 2020, the Company received the residual 29 residential units at Waterside and made an additional payment
of circa €8.7 million.
On 11 March 2020, IRES entered into €200 million equivalent of secured private placement notes (the “Notes”). The
proceeds from the Notes will be used to part pay down its credit facility. The notes have a tenor of 7 to 12 years with
average maturity of 9.7 years.
On 12 February 2020, IRES entered into USD Euro cross currency, interest rate swaps for the US tranche of the Notes of
$75 million USD. The Notes have a weighted average fixed interest rate of 1.92% inclusive of this swap.
On 19 February 2020, the Remuneration Committee awarded the CEO a performance-related bonus of €551,790 in
respect of the Company's financial year ended on 31 December 2019 (the “2019 Bonus”). Of this, €441,432 (representing
80% of the 2019 Bonus) was paid to the CEO in cash. The remainder of the 2019 Bonus, representing €110,358, was
settled as a restricted entitlement, subject to certain conditions, to the beneficial interest in 92,393 ordinary shares in the
capital of the Company (the “Restricted Bonus Shares”). The Restricted Bonus Shares were acquired on-market and are
being held on trust for the CEO for three years.
On 27 March 2020, the Remuneration Committee awarded the CEO, subject to certain conditions, a conditional share
award of 437,601 ordinary shares in the capital of the Company (the “2023 Restricted Shares”) as Restricted Shares under
the terms of the LTIP. In order for the CEO to receive the 2023 Restricted Shares, she must continue to be employed by
the Company up to the vesting date in 2023 and meet the applicable performance conditions (as disclosed on page 66 of
the Report of the Remuneration Committee). The 2023 Restricted Shares are to be held on trust for the CEO for a further
two-year period from the vesting date in 2023.
The long-term impact of CoViD19 is still uncertain at this time and may have a significant impact on economic forecasts
heretofore for Irish and Global economic performance for the remainder of 2020. We will continue to monitor the
development of the pandemic and assess how I-RES will respond to the changing economic environment. The directors
believe that I-RES has a strong balance sheet with no near term debt maturities and has sufficient headroom on its Credit
Facility, and that the multi-family real estate sector is a highly defensive and counter-cyclical asset class that can bear
broader market swings, even in comparison to other property sectors.
27. Approval of Consolidated Financial Statements
These audited consolidated annual financial statements were approved by the Board on 3 April 2020.
Financial Statements
118 
Company Financial Statements
Company Statement of Financial Position
As at 31 December 2019
Note 
Shareholders’ Equity at 1 January 2019 43,414 370,855 176,257 988 591,514
Total comprehensive income for the period
Profit for the period – – 76,526 – 76,526
Total comprehensive income for the period – – 76,526 – 76,526
Transactions with owners, recognised directly in equity
Long-term incentive plan X – – – 236 236
Share issuance X 8,753 126,389 (3,052) (77) 132,013
Dividends paid XV – – (27,086) – (27,086)
Transactions with owners, recognised directly in equity 8,753 126,389 (30,138) 159 105,163
Shareholders’ Equity at 31 December 2019 52,167 497,244 222,645 1,147 773,203
Share
Capital
Share
Premium
Retained
Earnings
Other
Reserve Total
Note 
Shareholders’ Equity at 1 January 2018 42,027 354,978 90,891 2,135 490,031
Total comprehensive income for the period
Profit for the period – – 106,528 – 106,528
Total comprehensive income for the period – – 106,528 – 106,528
Transactions with owners, recognised directly in equity
Long-term incentive plan X – – – 228 228
Share premium allocation (298) 298 – – –
Share issuance X 1,685 15,579 1,375 (1,375) 17,264
Dividends paid XV – – (22,537) – (22,537)
Transactions with owners, recognised directly in equity 1,387 15,877 (21,162) (1,147) (5,045)
Shareholders’ Equity at  43,414 370,855 176,257 988 591,514
The accompanying notes form an integral part of these financial statements.
Company Financial Statements
121

Company Statement of Cash Flows
For the year ended 31 December 2019
Note
31 December 2019
€’000

€’000
Cash Flows from Operating Activities
Operating Activities
Profit before taxes 76,526 106,528
Adjustments for non-cash items:
   Fair value adjustment – investment properties (46,704) (79,587)
   Depreciation of property, plant and equipment 32 8
   Amortisation of other financing costs 2,486 835
   Share-based compensation expense 236 228
   Loss on derivative financial instruments (131) 659
   Straight-line rent adjustment III 14 (28)
   Interest accrual relating to derivatives 6 5
32,465 28,648
Financing costs and interest received 4,589 1,489
Changes in operating assets and liabilities XVI 1,957 (6,374)
Net Cash Generated from Operating Activities 39,011 23,763
Cash Flows from Investing Activities
Deposit on acquisitions (2,284) –
Acquisition of investment properties (344,684) (41,361)
Development of investment properties (23,051) (31,129)
Investment property enhancement expenditure (6,631) (4,071)
Direct leasing cost III (52) (218)
Interest receivable from subsidiary V 4,650 4,600
Repayments from (advances to) subsidiary V (3,410) 1,468
Net Cash Used in Investing Activities (375,462) (70,711)
Cash Flows from Financing Activities
Financing fees on Credit Facility (5,990) (20)
Interest paid on loan drawn down XVI (9,677) (6,089)
Credit Facility drawdown XVI 637,451 78,309
Credit Facility repayment XVI (391,590) (17,000)
Lease payment (247) –
Proceeds on issuance of shares XVI 135,142 17,264
Net proceeds on issuance of shares XVI (3,129) –
Dividends paid to shareholders (27,086) (22,537)
Net Cash (Used in)/Generated from Financing Activities 334,874 49,927
Changes in Cash and Cash Equivalents during the Period (1,577) 2,979
Cash and Cash Equivalents, Beginning of the Period 7,395 4,416
Cash and Cash Equivalents, End of the Period 5,818 7,395
The accompanying notes form an integral part of these financial statements.
Company Financial Statements
122 
Notes to Company Financial Statements
(I) Significant Accounting Policies
These Company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of International Financial Reporting Standards as adopted by the EU (“EU IFRS”) but makes amendments where necessary
in order to comply with the Companies Act 2014 and has set out below where advantage of the FRS 101 disclosure
exemptions has been taken.
In these financial statements the Company has adopted FRS 101 for the first time.
In the transition to FRS 101, the Company has applied IFRS 1 whilst ensuring that its assets and liabilities are measured
in compliance with FRS 101. The accounting policies set out in this note have been applied in preparing the financial
statements for the year ended 31 December 2019, the comparative information presented in these financial statements
for the year ended  and in the preparation of an opening FRS 101 balance sheet at 1 January 2018
(the Company’s date of transition).
The Company noted no differences in its preparation of the comparative information presented in these financial
statements for the year ended 31 December 2019. In preparing its FRS 101 balance sheet as at 1 January 2018 and
, the Company made no adjustments to the amounts reported previously under IFRS. In preparing its
FRS 101 profit and loss account for the year ended , the Company made no adjustments to the amounts
reported previously under IFRS.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these financial statements.
The financial statements of the Company are prepared on a going concern basis and under the historical cost convention,
as modified by the revaluation of investment properties and derivatives at fair value through profit or loss and the
measurement of share options at fair value at the date of grant. The financial statements of the Company have been
presented in euros, which is the Company’s functional currency.
For Company details, refer to note 25 of the consolidated financial statements.
The significant accounting policies of the Company are the same as those of the Group, which are set out in note 2 of the
consolidated financial statements.
a) Investment in subsidiaries
Investment in subsidiaries is shown at cost less provision for any impairment or diminution in value.
b) Intercompany loan
An intercompany loan was recognised at amortised cost using the effective interest rate method. Under the effective
interest rate method, any transaction fees, costs and discounts directly related to the intercompany loan were recognised
within interest expense on intercompany loan in the statement of profit or loss and other comprehensive income over the
expected term of the intercompany loan.
(II) Critical Accounting Estimates, Assumptions and Judgements
For further information on critical accounting estimates, assumptions and judgements, refer to note 3 of the consolidated
financial statements.
Company Financial Statements
123

(III) Investment Properties
For further information on investment properties, refer to note 5 of the consolidated financial statements.
For the Company, an increase of 1% in the Equivalent Capitalisation Rate would have the impact of a €206.2 million
reduction in fair value whilst a decrease of 1% in the Equivalent Capitalisation Rate would result in a fair value increase
of €314.8 million. An increase of 1% to 4% in Stabilised NRI would have an impact ranging from €48.6 million to
€12.1 million increase while a decrease of 1% to 4% in Stabilised NRI would have an impact ranging from €-48.6 million
to €-12.1 million in fair value. I-RES believes that this range of change in Stabilised NRI is a reasonable estimate in the
next 12 months based on expected changes in Stabilised NRI.
A summary of the Equivalent Capitalisation Rates and ranges along with the fair value of the total portfolio of the
Company as at 31 December 2019 and 2018 is presented below:
As at 31 December 2019
Type of Interest Fair Value WA NRI(1)
Rate Type(2)
Max. Min. Weighted Average
Investment properties 1,178,087 2,747 Equivalent Capitalisation Rate 6.19% 4.16% 4.94%
Properties under
development 36,000 N/A Average Development Cost (per sq. ft.) € 379.0 € 319.2 € 370.2
1,259 Equivalent Capitalisation Rate 5.93% 4.75% 4.94%
Development land(3)
10,700 N/A Market Comparable (per sq. ft.) € 153.0 € 35.6 € 105.0
Total fair value 1,224,787
(1)
Calculated as the Stabilised NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”).
(2)
The Equivalent Capitalisation Rate disclosed above is based on the Stabilised NRI divided by the fair value of the investment property.
(3)
Development land is fair-valued based on the value of the undeveloped site per square foot.
As at 
Type of Interest Fair Value WA NRI(1)
Rate Type(2)
Max. Min. Weighted Average
€’000 €’000
Investment properties 779,039 3,009 Equivalent Capitalisation Rate 6.27% 4.14% 5.01%
Properties under
development 10,500 N/A Average Development Cost (per sq. ft.) € 383.1 € 383.1 € 383.1
1,577 Equivalent Capitalisation Rate 4.65% 4.65% 4.65%
Development land(3)
9,600 N/A Market Comparable (per sq. ft.) € 125.0 € 35.6 € 89.8
Total fair value 799,139
(1)
Calculated as the Stabilised NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”).
(2)
The Equivalent Capitalisation Rate disclosed above is based on the Stabilised NRI divided by the fair value of the investment property.
(3)
Development land is fair-valued based on the value of the undeveloped site per square foot.
The following table summarises the changes in the investment properties portfolio during the periods:
For the year ended 31 December 2019
Income
Properties
Properties Under
Development
Development
Land Total
€’000 €’000 €’000 €’000
Balance at the beginning of the year 779,039 10,500 9,600 799,139
Additions:
Acquisitions 344,684 – – 344,684
Development expenditures – 25,345 1,896 27,241
Reclassification(1)
184 266 (450) –
Property capital investments and intensification 6,981 – – 6,981
Capitalised leasing costs(2)
(14) – – (14)
Direct leasing costs(3)
52 – – 52
124 
For the year ended 
Income
Properties
Properties Under
Development
Development
Land Total
Balance at the beginning of the year 623,295 11,600 7,850 642,745
Additions:
Acquisitions 41,361 – – 41,361
Development expenditures – 31,129 – 31,129
Reclassification(4)
32,849 (33,449) 600 –
Property capital investments and intensification 4,071 – – 4,071
Capitalised leasing costs 28 – – 28
Direct leasing costs 218 – – 218
Unrealised fair value gain adjustments 77,217 1,220 1,150 79,587
Balance at the end of the year 779,039 10,500 9,600 799,139
(1)
Reclassified Tallaght Cross West from development site to properties under development and reclassified Coldcut park from properties under development to
income properties.
(2)
Straight-line rent adjustment.
(3)
Includes cash outlays for new tenants.
(4)
Reclassified Hansfield Wood Phase I from properties under development to income properties, and development site from income properties to
development land.
The carrying value for the Company of €1,224.8 million for the investment properties at 31 December 2019
(€799.1 million at ) was based on an external valuation carried out as at that date. The valuations were
prepared in accordance with the RICS Valuation – Global Standards, 2017 (Red Book) and IFRS 13.
(IV) Leases
For further information on the Leases, refer to note 6 of the consolidated financial statements.
(V) Property, Plant and Equipment
For further information on the Property, plant and equipment, refer to note 7 of the consolidated financial statements.
(VI) Loan Advances to the Subsidiary
As at 31 
€’000 €’000
Balance at the beginning of the period 93,602 95,070
Interest income 4,650 4,600
Interest received (4,650) (4,600)
Advances to (repayments from) subsidiary 3,410 (1,468)
Balance at the end of the period 97,012 93,602
On 31 March 2015, the Company acquired the entire issued share capital of IRES Residential Properties Limited
for €873,000 and provided financing to IRES Residential Properties Limited to repay the loan on the Rockbrook
Portfolio to CAPREIT LP. The total amount in aggregate receivable from its subsidiary amounted to €97.0 million as at
31 December 2019 (€93.6 million as at ), net of repayments. This receivable is interest bearing at 4.94%
per annum fixed and repayable on demand. As this receivable is repayable on demand, its carrying value is considered to
be materially in line with its fair value.
(VII) Other Assets
(1)
The carrying value of all accounts payable and accrued liabilities approximates the fair value.
(2)
Includes property related accruals, development accruals, property management fees and asset management fees accruals.
(IX) Credit Facility
For further information on the Credit Facility, refer to note 10 of the consolidated financial statements.
(X) Share-Based Compensation
For further information on share-based compensation, refer to note 11 of the consolidated financial statements.
(XI) Shareholders’ Equity
For further information on shareholders’ equity, refer to note 12 of the consolidated financial statements.
(XII) Revenue
The Company generates revenue primarily from the rental income from investment properties. Rental income represents
lease revenue earned from the conveyance of the right to use the property, including access to common areas, to a
lessee for an agreed period of time. The rental contract also contains an undertaking that common areas and amenities
will be maintained to a certain standard. This right of use of the property and maintenance performance obligation is
governed by a single rental contract with the tenant. In accordance with the adoption of IFRS 16, Leases, the Company has
evaluated the lease and non-lease components of its rental revenue and has determined that common area maintenance
services constitute a single non-lease element, which is accounted for as one performance obligation under IFRS 15 and is
recognised separately to Rental Income.
31 December 2019
Rental Income 48,872 39,376
Revenue from services 6,280 4,939
Car park income 962 579
Revenue from contracts with customers 7,242 5,518
Total Revenue 56,114 44,894
(XIII) Financial Instruments, Investment Properties and Risk Management
a) Fair value of financial instruments and investment properties
For further information on the fair value of financial instruments and investment properties, refer to note 14(a) of the
consolidated financial statements.
The following table presents the Company’s estimates of the fair value on a recurring basis based on information available
as at 31 December 2019, and aggregated by the level in the fair value hierarchy within which those measurements fall.
As at 31 December 2019
\(1)
See note 5 of the consolidated financial statements for detailed information on the valuation methodologies and fair value reconciliation.
(2)
The valuation of the interest rate swap instrument is determined using widely accepted valuation techniques including discounted cash flow analysis on the
expected cash flows of the derivatives. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable
market interest rates. If the total mark-to-market value is positive, I-RES will consider a current value adjustment to reflect the credit risk of the counterparty,
and if the total mark-to-market value is negative, I-RES will consider a current value adjustment to reflect I-RES’ own credit risk in the fair value measurement
of the interest rate swap agreements.
b) Risk management
For further information on risk management, refer to note 14(b) of the consolidated financial statements.
As at 31 December 2019 6 months or less(1)
6 to 12 months(1)
1 to 2 years(1)
2 to 5 years(1)
More than
5 years(1)

Loan drawn down – – – 555,020 –
Bank indebtedness interest(2)
4,757 4,809 9,540 23,340 –
Other liabilities 9,820 – – – –
Derivative financial instruments – – 788 – –
Security deposits 6,550 – – – –
21,127 4,809 10,328 578,360 –
(1)
Based on carrying value at maturity dates.
(2)
Based on current in-place interest rate for the remaining term to maturity.
As at  6 months or less(1)
6 to 12 months(1)
1 to 2 years(1)
2 to 5 years(1)
More than
5 years(1)

Bank indebtedness – – – 309,159 –
Bank indebtedness interest(2)
2,980 3,030 6,027 231 –
Other liabilities 8,739 – – – –
Derivative financial instruments – – – 913 –
Security deposits 4,767 – – – –
16,486 3,030 6,027 310,303 –
(1)
Based on carrying value at maturity dates.
(2)
Based on current in-place interest rate for the remaining term to maturity.
(XIV) Taxation
For further information on taxation, refer to note 16 of the consolidated financial statements.
(XV) Dividends
For further information on dividends, refer to note 17 of the consolidated financial statements.
Company Financial Statements
127

(XVI) Supplemental Cash Flow Information
Breakdown of operating income items related to financing and investing activities
For the year ended
31 December 2019
€’000

€’000
Financing costs on credit facility(1)
9,677 6,089
Capitalised interest 442 –
Lease interest 4 –
Interest from loan advance to subsidiary (4,650) (4,600)
4,589 1,489
(1)
For the year ended
31 December 2019
€’000

€’000
Financing costs on credit facility 12,036 6,706
Capitalised interest 442 218
Interest expense accrual (315) –
Less: Amortisation of arrangement fee (2,486) (835)
9,677 6,089
Changes in operating assets and liabilities
For the year ended
31 December 2019
€’000

€’000
Prepayments (1,373) (7,994)
Trade receivables 109 (769)
Other receivables 1,018 1,359
Accounts payable and other liabilities 420 (189)
Security deposits 1,783 1,219
Changes in operating assets and liabilities 1,957 (6,374)
Issuance of Shares
For the year ended
31 December 2019
€’000

€’000
Issuance of shares 135,142 17,624
Issuance costs (3,129) –
Net proceeds 132,013 17,624
Changes in liabilities due to financing cash flows
Changes from Financing Cash Flows Non-Cash Change
Derivatives 2019
Bank
indebtedness 309,159 637,451 (391,590) – – – – – – 555,020
Deferred loan
costs, net (1,665) – – – (5,990) 2,486 – – – (5,169)
Derivative
financial
instruments 913 – – – – – – (131) 6 788
Lease liability – – – (247) – – 10,118 – – 9,872
Total liabilities
from financing
activities 308,407 637,451 (391,590) (247) (5,990) 2,486 10,118 (131) 6 560,511
(XVII) Statement of Profit or Loss and Other Comprehensive Income
The Company has availed of the exemption to present an individual statement of profit or loss and other comprehensive
income provided in the Companies Act, 2014.
(XVIII) Related Party Transactions
During 2015 the Company financed the purchase of the Rockbrook Portfolio on behalf of its subsidiary, IRES Residential
Properties Limited. The total amount in aggregate receivable from its subsidiary amounted to €97.0 million as at
Company Financial Statements
128 
31 December 2019 (€93.6 million as at ), net of repayments. This receivable is interest bearing and
repayable on demand.
For further information on related party transactions, refer to note 19 of the consolidated financial statements.
(XIX) Contingencies
For further information on contingent liabilities of the Company, refer to note 20 of the consolidated financial statements.
(XX) Earnings per Share
For further information on earnings per share, refer to note 22 of the consolidated financial statements.

Profit attributable to shareholders of I-RES (€’000) 76,526 106,530
Basic weighted average number of shares 478,563,272 427,164,632
Diluted weighted average number of shares 481,508,009 431,236,978
Basic Earnings per share (cents) 16.0 24.9
Diluted Earnings per share (cents) 15.9 24.7
For further information on EPRA Earnings per share, refer to note 22 of the consolidated financial statements.

Earnings per IFRS statement of profit or loss and other comprehensive income (€’000) 76,526 106,530
Adjustments to calculate EPRA Earnings exclude:
Changes in fair value on investment properties (€’000) (46,704) (79,587)
Costs associated with early close out of debt instrument (€’000) 3,153 –
Changes in fair value of financial instruments (€’000) (131) 659
EPRA Earnings (€’000) 32,844 27,602
Basic weighted average number of shares 478,563,272 427,164,632
EPRA Earnings per share (cents) 6.9 6.5
(XXI) Net Asset Value per Share
For further information on net asset value per share, refer to note 23 of the consolidated financial statements.
As at 31 
Net assets (€’000) 773,203 591,515
Adjustments to calculate EPRA NAV exclude:
Fair value of financial instruments 788 913
EPRA net assets (€’000) 773,991 592,428
Number of shares outstanding 521,678,946 434,153,946
Diluted number of shares outstanding 524,529,943 436,272,927
Basic Net Asset Value per share (cents) 148.4 136.2
EPRA Net Asset Value per share (cents) 147.6 135.8
(XXII) Directors’ Remuneration, Employee Costs and Auditor Remuneration
For further information on directors’ remuneration and employee costs, refer to note 24 of the consolidated
financial statements.
(XXIII) Commitments
For further information on Commitments, refer to note 21 of the consolidated financial statements.
(XXIV) Subsequent Events
For further information on subsequent events, refer to note 26 of the consolidated financial statements.
Company Financial Statements
Supplementary
Information
130 
Supplementary Information
EPRA Performance Measures and
Disclosures (Unaudited)
The following EPRA performance measures are presented
to improve transparency, comparability and relevance
across the European listed real estate industry.
EPRA Earnings per Share (EPS)
EPRA Earnings represents the earnings from the core
operational activities (recurring items for the Company).
It is intended to provide an indicator of the underlying
performance of the property portfolio and therefore
excludes all components not relevant to the underlying
and recurring performance of the portfolio, including any
revaluation results and results from the sale of properties.
EPRA EPS is calculated by dividing EPRA Earnings for
the reporting period attributable to shareholders of the
Company by the weighted average number of ordinary
shares outstanding during the reporting period. It has
been presented as the Company believes this measure is
indicative of the performance of the Group’s operations.
EPRA Diluted Earnings per Share
EPRA Diluted EPS is calculated by dividing EPRA
Earnings for the reporting period attributable to
shareholders of the Company by the diluted weighted
average number of ordinary shares outstanding during the
reporting period. It has been presented as the Company
believes this measure is indicative of the performance of
the Group’s operations.
EPRA NAV per Share
EPRA NAV measures the fair value of net assets on an
ongoing, long-term basis in accordance with guidelines
issued by EPRA. The EPRA NAV excludes the net mark-
to-market to the value of financial instruments used
for hedging purposes and where a company has the
intention to keep the hedge position until the end of the
contractual duration, and deferred tax in respect of any
difference between the fair value and the book value of the
investment properties. The EPRA NAV is then divided by
the diluted number of ordinary shares outstanding as at
the end of the reporting period. To optimise this measure,
I-RES focuses on growing asset value and maximising
shareholder value through active and efficient asset
and property management. It has been presented as the
Company believes this measure is indicative of the Group’s
operating performance and value growth.
EPRA Triple Net Asset Value per Share
(EPRA NNNAV)
EPRA NNNAV’s purpose is to report net asset value
including fair value adjustments in respect of all material
balance sheet items which are not reported at their fair
value as part of the EPRA NAV. Generally, EPRA NAV is
adjusted for the fair value of financial instruments, fair
value of debt, and fair value of deferred tax to calculate
EPRA NNNAV.
EPRA Net Initial Yield (EPRA NIY)
EPRA NIY is calculated as the annualised rental income
based on the cash rents passing at the balance sheet date,
less non-recoverable property operating expenses, divided
by the gross market value of the property. It has been
presented by the Company to improve comparability of
yield measures across the European real estate market.
EPRA“topped-up”Net Initial Yield
(EPRA“topped-up”NIY)
EPRA “topped-up” NIY is calculated by making an
adjustment to the EPRA NIY in respect of the expiration
of rent-free periods or other unexpired lease incentives
such as discounted rent periods and step rents. It has been
presented by the Company to improve comparability of
yield measures across the European real estate market.
131

Supplementary Information
EPRA Vacancy Rate
EPRA Vacancy Rate is calculated as the percentage of estimated residential rental value of vacant space divided by the
estimated residential rental value of the whole portfolio as at the reporting date. The estimated rental value excludes
properties under development, commercial properties and development land. It has been presented by the Company to
improve comparability of the vacancy measure across the European real estate market.
EPRA Performance Measure

Total comprehensive income for the year attributable to shareholders (€’000) 86,282 119,785
Adjustments to calculate EPRA Earnings exclude:
Changes in fair value on investment properties (€’000) (56,234) (92,664)
Costs associated with early close out of debt instrument (€’000) 3,153 –
Changes in fair value of derivative financial instruments (€’000) (131) 659
EPRA Earnings (€’000) 33,070 27,780
Basic weighted average number of shares 478,563,272 427,164,632
Diluted weighted average number of shares 481,508,009 431,236,978
EPRA Earnings per share (cents) 6.9 6.5
EPRA Diluted Earnings per share (cents) 6.9 6.4
EPRA NAV per Share
As at 31 
Net assets (€’000) 810,169 618,724
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000) 788 913
EPRA net assets (€’000) 810,957 619,637
Number of shares outstanding 521,678,946 434,153,946
Diluted number of shares outstanding 524,529,943 436,272,927
Basic Net Asset Value per share (cents) 155.3 142.5
EPRA Net Asset Value per share (cents) 154.6 142.0
EPRA Triple Net Asset Value (“NNNAV”)
As at 31 
EPRA NAV 810,957 619,637
Adjustments to calculate EPRA net assets include:
Fair value of financial instruments (€’000) (788) (913)
Fair value of debt – –
Deferred tax – –
EPRA triple net assets (€’000) 810,169 618,724
Diluted number of shares outstanding 524,529,943 436,272,927
EPRA NNNAV per share (cents) 154.5 141.8

Supplementary Information
Property Portfolio
Kings Court (83 residential
apartments, Smithfield, Dublin 7)
The Company acquired Kings Court,
located in Smithfield, Dublin 7, in
September 2013. The development
was constructed in 2006 and is a
residential development consisting
of 83 residential apartments
dispersed over four blocks. The
entire development is constructed
over a common basement with
65 car park spaces. The Company’s
83 residential apartments consist of
25 one-bedroom, 54 two-bedroom
and 4 three-bedroom residential
apartments.
This development also has 566 sq. m.
(6,093 sq. ft.) of commercial space, all
of which is owned by the Company.
Grande Central (65 residential
apartments, Sandyford,
Dublin 18)
The Company acquired Grande
Central, located in Sandyford,
Dublin 18, in September 2013.
The development was constructed
in 2007 and is a residential
development located within the
suburb of Sandyford, Dublin 18,
approximately 8 km south of Dublin
City Centre. The development is on
a 0.5 ha (1.2 acre) site and consists
of a purpose-built apartment block
with 195 residential apartments,
65 of which are owned by the
Company. The entire development
is constructed over a common
basement with a single car park
space per residential apartment. The
Company’s 65 residential apartments
consist of 10 one-bedroom, 34 two-
bedroom and 21 three-bedroom
residential apartments.
Priorsgate (103 residential
apartments, Tallaght, Dublin 24)
The Company acquired Priorsgate,
located in Tallaght, Dublin 24, in
September 2013. The development
was constructed in 2007 and is a
residential development on a 1.1 ha
(2.6 acre) site located approximately
10 km southwest of Dublin City
Centre. The development consists
of 199 residential apartments
dispersed over three blocks, 103 of
which are owned by the Company.
The Company’s 103 residential
apartments, which are dispersed over
the three blocks, consist of 49 one-
bedroom, 48 two-bedroom, 5 three-
bedroom and one four-bedroom
residential apartments.
The Company also owns eight
adjacent commercial units with a
total of 2,538 sq. m. (27,316 sq. ft.)
of space. The entire development
is constructed over a common
basement with a single car park space
per residential apartment.
Included with the property is an
adjoining detached building on a
0.18 ha (0.44 acre) site known as
Bruce House Site.
134 
Supplementary Information
Camac Crescent (90 residential
apartments, Inchicore, Dublin 8)
The Company acquired Camac
Crescent, located in Inchicore,
Dublin 8, in September 2013. The
development was constructed in 2008
and is a residential development on
a 0.56 ha (1.4 acre) site located in
Inchicore, Dublin 8, approximately
3 km west of Dublin City Centre.
The development consists of
110 residential apartments dispersed
over six blocks, 90 of which are
owned by the Company. The entire
development is constructed over
a common basement with a single
car park space per residential
apartment. The Company’s 90
residential apartments consist of
21 one-bedroom, 49 two-bedroom
and 20 three-bedroom residential
apartments.
The Laurels (19 residential
apartments, Tallaght, Dublin 24)
The Company acquired The Laurels,
located in Tallaght, Dublin 24, in
June 2014. The development was
constructed in 2007 and consists
of 19 residential apartments,
all of which are owned by the
Company. The Laurels consists of
4 one-bedroom, 13 two-bedroom
and 2 three-bedroom residential
apartments.
The Company also owns 190 sq. m.
(2,045 sq. ft.) of commercial space
in the form of one large unit which
could be split into two units.
The Marker Residences
(85 residential apartments, Grand
Canal Dock, Dublin 2)
The Company acquired the Marker
Residences, located in the Grand
Canal Dock area of Dublin 2, in
July 2014. The development was
constructed in 2012 and consists of
105 luxury residential apartments,
85 of which were acquired by the
Company, and approximately
1,218 sq. m. (13,111 sq. ft.) of
commercial space, all of which was
acquired by the Company. The
Company’s 85 residential apartments
are all two-bedroom residential
apartments.
135

Supplementary Information
Beacon South Quarter
(225 residential apartments
Sandyford, Dublin 18)
The Company acquired Beacon
South Quarter, located in Sandyford,
Dublin 18, in October 2014. The
development was constructed in
2007/2008 and is a landmark mixed-
use development on 5.3 ha (13 acres).
A number of major employers
are located in the immediate
neighbourhood, including Vodafone,
Merrill Lynch and Microsoft, and the
development is adjacent to the LUAS
light rail line to the city centre. The
Beacon South Quarter development
includes many high-end occupiers,
including private medical care,
leisure and a selection of food and
lifestyle shops. The development
consists of 880 luxury residential
apartments, 225 of which are owned
by the Company. The Company’s
225 residential apartments consist of
26 one-bedroom, 173 two-bedroom
and 26 three-bedroom residential
apartments.
The Company also owns
approximately 2,395 sq. m.
(25,777 sq. ft.) of ancillary
commercial space within
the development.
In addition, the Company owns
two adjacent development sites
and one former site that has now
been developed into The Maple
and 6,847 sq. m. (73,701 sq. ft.) of
commercial space.
For the year ended 31 December
2017, the Company has made
property capital investments in
this property related primarily to
in-suite improvements. In addition
to the capital expenditure work
that has already been completed,
I-RES is working with Beacon South
Quarter’s owner management
company to resolve water ingress
and fire remediation works
previously identified.
Charlestown (235 residential
apartments, Finglas, Dublin 11)
The Company acquired Charlestown,
a mixed-use development set on
16.2 ha (40 acres) in Finglas, Dublin
11, in October 2014. The development
was constructed in 2007 and consists
of 285 residential apartments, 235 of
which are owned by the Company.
The Company’s 235 residential
apartments consist of 36 one-
bedroom, 164 two-bedroom and 35
three-bedroom residential apartments.
The overall development comprises
facilities for tenants including
a shopping centre, a medical
centre, and a variety of leisure and
restaurant facilities. The property is
located approximately 9.5 km from
Dublin City Centre and 8 km from
Dublin airport, and is adjacent to the
main M50 and M2 transportation
corridors.
Bakers Yard (86 residential
apartments, Portland Street
North, Dublin 1)
The Company acquired Bakers Yard,
an apartment development on 0.6 ha
(1.4 acres) adjacent to Dublin City
Centre in Dublin 1, in October 2014.
The development was constructed
in 2007/2008 and is within walking
distance of many large government
and private sector employers, as well
as local and national public transport
infrastructure. The development
consists of 132 residential
apartments, 86 of which are owned
by the Company. The Company’s
86 residential apartments consist of
13 one-bedroom, 61 two-bedroom
and 12 three-bedroom residential
apartments.
The Company also owns
approximately 700 sq. m. (7,534 sq. ft.)
of ancillary commercial space within
the development. In addition, the
Company owns an adjoining 0.18 ha
(0.45 acre) site with planning
consent for a further 55 residential
apartments and three ground-floor
commercial units.
136 
Supplementary Information
Lansdowne Gate (224 residential
apartments, Drimnagh,
Dublin 12)
The Company acquired Lansdowne
Gate, a superior quality development
on 2.2 ha (5.5 acres) in Drimnagh,
Dublin 12, in October 2014. The
development consists of 280
residential apartments, 224 of which
are owned by the Company, set
in 11 blocks over semi-basement
car parking, with the benefit of a
centralised district heating system,
landscaped gardens and a children’s
playground. The Company’s
224 residential apartments consist of
23 one-bedroom, 146 two-bedroom
and 55 three-bedroom residential
apartments.
The development was constructed
in 2005 and is located adjacent to
the LUAS light rail system, 5 km
from the City Centre and within
walking distance of numerous large
employers, as well as shopping and
leisure facilities.
Rockbrook Grande Central
and Rockbrook South Central
(“Rockbrook Portfolio”)
(270 residential apartments,
Sandyford, Dublin 18)
The Company acquired the
Rockbrook Portfolio, located in
Sandyford, Dublin 18, in March
2015 via the acquisition of IRES
Residential Properties Limited.
The development consists of
270 residential apartments and
approximately 4,665 sq. m.
(50,214 sq. ft.) of mixed-use
commercial space. The portfolio
also includes a development site of
approximately 1.13 ha (2.8 acres)
and associated basement car parking.
The property is located close to the
Stillorgan LUAS light rail system
stop, in an area serviced by numerous
bus routes. Located nearby are
the UPMC Beacon Hospital and
large employers such as Microsoft,
Vodafone, Volkswagen and the
Clayton Hotel. The Company’s
270 residential apartments consist of
46 one-bedroom, 203 two-bedroom
and 21 three-bedroom residential
apartments.
The portfolio also includes a
development site of approximately
1.13 ha (2.8 acres) and associated
basement car parking. The Company
submitted a planning application
in December 2018 to build
428 residential units on this site.
Tyrone Court (95 residential
apartments, Inchicore, Dublin 8)
The Company acquired Tyrone
Court, located in Inchicore, Dublin
8, in June 2015. The development
was constructed in 2014 and consists
of 131 apartments across four
residential apartment blocks, 95 of
which are owned by the Company.
The Company’s 95 residential
apartments consist of 4 three-
bedroom duplex units and 3 three-
bedroom, 64 two-bedroom and
24 one-bedroom apartments.
The property is located in an
established residential area close
to Drimnagh Station, which is a
15-minute commute to City Centre.
Located nearby are St. James’s
Hospital, Inchicore College, the
Central Criminal Court and Heuston
Station, all of which provide a strong
employment centre and tenant
market.
137

Supplementary Information
Bessboro (40 residential
apartments, Terenure, Dublin 6)
The Company acquired Bessboro,
located in Terenure, Dublin 6, in
December 2015. The development
was constructed in 2008 and consists
of 40 residential apartments, all of
which are owned by the Company.
The Company’s 40 residential
apartments consist of 6 one-
bedroom, 32 two-bedroom and
2 three-bedroom apartments.
Bessboro provides a strong suburban
location only 7 km from Dublin
City Centre and 4.6 km from the
M50 motorway. The location
provides a range of amenities
including shops, schools, bars and
restaurants, all within walking
distance of Bessboro and also in close
proximity to Bushy Park, golf and
rugby clubs.
Tallaght Cross West (442
residential apartments, Tallaght,
Dublin 24)
The Company acquired Tallaght
Cross West, located in Tallaght,
Dublin 24, in January 2016. The
development was constructed in
2008 and consists of 507 residential
apartments, 442 of which are owned
by the Company. The Company’s
442 residential apartments consist of
161 one-bedroom, 237 two-bedroom
and 44 three-bedroom residential
apartments.
The Company also owns 18,344 sq. m.
(197,460 sq. ft.) of commercial
space and associated underground
car parking.
The Company has received a grant
of planning permission for the
conversion of unused commercial
space to 18 residential apartments.
The Forum (8 residential
apartments, Sandyford,
Dublin 18)
The Company acquired The Forum,
located in Sandyford, Dublin 18, in
February 2016. The development
was constructed in 2007 and consists
of 127 residential apartments, eight
of which, along with 11 basement
car parking spaces, are owned by
the Company. The Company’s
8 residential apartments consist
of one one-bedroom and 7 two-
bedroom residential units.
The Forum is located on the LUAS
tram line and next to the Royal
College of Surgeons’ Sandyford
facility. The development is
also adjacent to the Company’s
Rockbrook and Beacon South
Quarter portfolios.
138 
Supplementary Information
City Square (23 residential
apartments, Gloucester Street,
Dublin 2)
The Company acquired City
Square, located on Gloucester
Street, Dublin 2, in April 2016. The
development was constructed in 2006
and consists of 27 apartments, 23 of
which are owned by the Company.
The Company’s 23 residential units
consist of 15 one-bedroom and
8 two-bedroom residential units.
The property is located near Trinity
College and the River Liffey, and
close to LUAS and DART lines.
Elmpark Green (201 residential
apartments, Merrion Road,
Dublin 4)
The Company acquired Elmpark
Green, located in Merrion Road,
Dublin 4, in May 2016. The
Company’s 201 residential apartments
consist of 101 one-bedroom, 96 two-
bedroom and 4 three-bedroom
residential apartments.
The development was constructed in
2006, and consists of 332 apartments,
201 of which are owned by the
Company. Elmpark Green is located
near Merrion, Blackrock and Frascati
Shopping Centres, and is also
adjacent to the Elm Park Golf and
Sports Club, as well as St. Vincent’s
University Hospital.
Coldcut Park (90 residential
apartments, Clondalkin,
Dublin 18)
The Company acquired Coldcut
Park, located on Coldcut Road in
Clondalkin, Dublin 18, in August
2016. The Company’s 90 residential
apartments consist of 18 one-
bedroom, 22 two-bedroom, 33 three-
bedroom and 17 four-bedroom
residential apartments.
The development was constructed in
2012 and consists of 93 apartments,
90 of which are owned by the
Company. The property is located
near Liffey Valley Shopping Centre,
LUAS Red Line and Cherry Orchard
Railway Station.
139

The Maple (68 residential
apartments, Sandyford,
Dublin 18)
The Company completed the
construction of The Maple, located
in Sandyford, Dublin 18, in July
2017. The development consists
of 68 residential apartments, all of
which are owned by the Company.
By apartment type, The Maple
comprises 4 one-bedroom, 55 two-
bedroom and 9 three-bedroom
apartments.
The development is conveniently
located near UPMC Beacon
Hospital, BSQ Shopping Centre
and transportation links such as the
Stillorgan LUAS stop.
2019 Completed
Developments and
Acquisitions
See Completed Developments and
High-Quality Acquisitions under
the Business Review section of the
Investment Manager’s Review on
page 19 for details on the following
properties.
The Coast (52 units, Baldoyle)
Taylor Hill + Semple Woods (118
units, Balbriggan and Donabate)
Marathon Acquisition (815 units,
Dublin and Cork)
The Company acquired the following
properties through the Marathon
acquisition on 1 August 2019:
Carrington Park (142 residential
apartments, Santry, Dublin 9)
Carrington Park is located in Santry
in suburban north Dublin. The asset
comprises 142 residential apartments
(25 one-bedroom, 93 two-bedroom,
23 three-bedroom) in a mid-
rise development which includes
basement car parking. It is situated
within the Northwood Campus,
a large mixed-use development
covering 220 acres. It benefits
from excellent road infrastructure
providing easy access to Dublin
Airport (4 km), the City Centre
(7 km) and a number of business
parks located around north Dublin.
It also benefits from good public
transport links being adjacent to a
main bus corridor. The locality is well
established with a good mix of local
employment and local amenities.
Supplementary Information
140 
Beechwood Court (101 residential
apartments, Stillorgan, Co
Dublin)
Beechwood Court is located
in Stillorgan, an affluent south
Dublin suburb. The asset
comprises 101 highly specified
residential apartments in a mid-rise
development which was designed by
Reddy Architects and developed by
Jackson Homes in 2006. There are
9 one-bedroom, 90 two-bedroom
and 2 three-bedroom apartments.
The development includes an
underground car park and attractive
landscaped gardens. The area is a
well-established residential location
with a good mix of local employment
and amenities. It is close to UCD
(4 km) Stillorgan Business Park
(2 km) and Stillorgan Shopping
Centre (1 km).
Northern Cross (128 residential
apartments, Malahide Road,
Dublin 13)
Northern Cross is located off
the Malahide Road in suburban
north Dublin. The asset comprises
128 residential apartments which
are split 69:59 in two medium rise
blocks. Northern Cross is comprised
of 36 one-bedroom, 87 two-bedroom
and 5 three-bedroom apartments.
The development includes secure
underground parking and landscaped
internal courtyards. The Malahide
Road connects the area to north
county Dublin and the M1 & M50
interchange is also easily accessed
being just 3 km to the west. The
area benefits from good amenities
with the commercial at ground
floor level within the development
serving as the local town centre.
Recently the area has seen extensive
new residential development
with Cairn Homes building out a
new housing development to the
east. This development includes
a new neighbourhood centre, a
new primary school and a new
public park.
Richmond Gardens (98 residential
apartments, Richmond Avenue,
Dublin 3)
Richmond Gardens is located in
Drumcondra in Dublin City. The
asset comprises 98 residential well
presented apartments which are
in a several low-rise blocks located
around an attractive internal
courtyard. There are 23 one-bedroom
and 53 two-bedroom apartments.
The development also includes
98 parking spaces in an underground
car park. The asset is situated off
Richmond Avenue just north of the
City Centre. The location benefits
from ‘the best of both’ being close to
the city centre but also having easy
access to more suburban amenities.
There are also a variety of local shops
and bars within a short walk. It is
close to both the Port Tunnel (2 km)
and Clontarf Road station (2 km),
which gives easy access to suburban
Dublin and beyond.
Supplementary Information
141

Time Place (67 residential
apartments, Sandyford,
Dublin 18)
Time Place is located in Sandyford
in suburban-south Dublin. The
asset comprises 67 residential
apartments which are in a mid-rise
block built over a secure basement
car park. There are 9 one-bedroom
and 57 two-bedroom apartments.
The total development comprises
90 units and is located off the Corrig
Road immediately adjacent to the
Beacon South Quarter. The area is
an excellent suburban rental location
being located close to the M50 and
having several major employers
(Microsoft, Vodafone, AIB) in the
immediate vicinity in the Sandyford
Business district. It benefits from
excellent road links and public
transport links with Sandyford Luas
stop being 5 minutes away.
Xavier Court (41 residential
apartments, Sherrard Street,
Dublin 1)
Xavier Court is in Drumcondra in
Dublin City Centre on Sherrard St
Upper. The asset comprises 41 self-
contained residential apartments
which are set in two mid-rise
blocks built around a landscaped
internal courtyard. There are
18 one-bedroom, 21 two-bedroom
and 2 three-bedroom apartments.
The development abuts several
period terraced buildings and is
built over a secure underground
car park. It is close to the city and
benefits from its location in a trendy
urban neighbourhood. Its location
facilitates easy access to the key
city centre locations. Dublin City
University, the North Docks office
district and Trinity college are all
within a 20-minute walk. The Mater
hospital is also close by being less
than 1 km to the west. Drumcondra
rail station is less than a five-minute
walk which provides easy access to
suburban Dublin.
Harty’s Quay (50 residential
apartments, Rochestown Road,
Cork)
Harty’s Quay is located in suburban
south-east Cork. The area is generally
considered one of the more attractive
and affluent parts of Cork and is
known for the many grand single
family homes which often trade at
prices in excess of €1m. The asset
comprises 50 residential apartments
set in two medium-rise blocks. There
are 5 one-bedroom, 43 two-bedroom
and 2 three-bedroom apartments.
The development comprises seven
blocks in total with parking at surface
level. The scheme is situated off the
Rochestown road on an old quay side
which affords the scheme spectacular
sea views. It benefits from good
access to the M40, which is 2 km
away, and is the main motorway
servicing Cork.
Supplementary Information
142 
Heywood Court (39 residential
apartments, Santry, Dublin 9)
Heywood Court is located in Santry
in suburban north Dublin. The asset
comprises 39 residential apartments
in a medium-rise development with
parking at both surface and basement
levels. There are 4 one-bedroom
and 35 two-bedroom apartments.
It benefits from excellent road
infrastructure providing easy access
to Dublin Airport (4 km), the City
Centre (7 km) and a number of
business parks located around north
Dublin. It also benefits from good
public transport links being adjacent
to a main bus corridor. The locality
is well established with a good mix
of local employment and local
amenities.
Belville Court (29 residential
apartments, Cabinteely,
Dublin 18)
Belville Court is located in Cabinteely
in suburban south Dublin. The asset
comprises 29 residential apartments
in a medium-rise development with
secure basement parking. There are
4 one-bedroom, 22 two-bedroom
and 3 three-bedroom apartments.
The development comprises two
separate blocks with all of the subject
units being situated in the same
block. The development benefits
from a good mix of local amenities
with a neighbourhood retail centre
just 1 km away.
Belleville, Ashtown and The Mills
(21 residential apartments,
Castleknock, Dublin 15)
Belleville and The Mills comprise
two separate developments. They
are considered together as they
were built by the same developer
and acquired together. The Mills is
located in Castleknock in suburban
west Dublin. Belleville comprises
18 residential apartments in two low-
rise blocks and associated surface car
parking. There are 16 two-bedroom
and 5 three-bedroom apartments.
The locality is a well-established
residential area. Belleville is located
just to the north of the Phoenix Park
in Ashtown. It benefits from the
amenity of the park while also having
good road access to the city centre
and the M50. It is a picturesque and
well-established location.
Supplementary Information
143

St Edmunds (18 residential
apartments, Palmerstown,
Dublin 20)
St Edmunds is located in
Palmerstown in suburban west
Dublin. The asset comprises
18 residential apartments which are
set in several mid-rise blocks. There
are 12 two-bedroom apartments
and 6 three-bedroom apartments.
The development presents well and
includes attractive open greenspace.
Parking is provided in a secure
private basement car park. There is
a good provision of local amenities.
The development is about 1 km from
the Liffey Valley Shopping Centre,
which is one of the largest shopping
centres in Ireland. Fonthill Retail
Park (<1 km), Clondalkin Industrial
Estate (4 km) and the cluster of
business parks around the Nass
Road (8 km) are nearby and provide
substantial employment.
Russell Court (29 residential
apartments, Swords,
Co Dublin)
Russell Court is in Swords in north
county Dublin. The asset comprises
29 residential apartments (all two-
bedroom) which are set in two low-
rise blocks over a secure basement car
park. It is located around 5 km to the
north of Dublin Airport and is also
close to a number of business parks
including Airside Retail Park (2 km)
and the Swords Business Park (2 km).
Spencer House (12 residential
apartments, IFSC, North Docks,
Dublin 1)
Spencer House is located off
Mayor Street Lower in Dublin’s
city centre. It is situated adjacent
to the IFSC in the heart of Dublin’s
central business district. The asset
comprises 12 residential apartments
(588 units in total) which are set
in mid-rise blocks over a secure
basement car park. There are
3 one-bedroom apartments and
9 two-bedroom apartments. The
location offers a variety of inner-
city amenities including shops, bars
and restaurants. Its location benefits
from its immediate proximity to
the IFSC and Dublin’s north docks
office cluster which accommodates
many major employers. The location
benefits from excellent public
transport links with a LUAS red line
stop located immediately outside
the development.
Supplementary Information
144 
East Arran Street (12 residential
apartments, Smithfield, Dublin 7)
East Arran Street is located off
Ormond Key Upper in Dublin’s
city centre. The asset comprises a
low-rise terrace of period houses
that were fully converted and
extended to accommodate 12 self
contained apartments (2 one-
bedroom and 10 two-bedroom).
The apartments can avail of on street
parking immediately outside the
development. The apartments are
well specified and spacious. It is a
short distance from Dublin’s main
retail and centre being only 500 m
from both Jervis Shopping Centre
and Temple Bar. It benefits from a
host of local city-centre amenities
including bars, restaurants and shops.
Local transport links are excellent
with frequent bus services and a
LUAS red line stop about 500 m away
at the Jervis Centre.
The Oaks (14 residential
apartments, Clonsilla, Dublin 15)
The Oaks is located in Clonsilla
off Porterstown Road. The asset
comprises a low-rise block of
14 apartments and associated surface
car parking. There are 8 two-
bedroom and 6 three-bedroom
units. The area is part of the wider
west Dublin/Blanchardstown urban
area. The development is located
2 km to the south of Blanchardstown
shopping centre and less than 1 km
from the Coolmine industrial estate.
Coopers Court (14 residential
apartments and 2 commercial
units, Bond Street, Dublin 8)
Coopers Court is located in the
Liberties area of Dublin 8. The
asset comprises a mid-rise block of
14 two-bedroom apartments built
over a secure basement car park. The
area has become a location of choice
for young working professionals in
Dublin. The asset is situated near
major employers such as St James’s
Hospital and Guinness.
Supplementary Information
145

Supplementary Information
CAPREIT and IRES Fund Management
Senior Management
Mark Kenney
President and
Chief Executive
Officer of
CAPREIT
See Board of Directors profiles for
further detail.
Scott Cryer
Chief Financial
Officer of
CAPREIT
Scott Cryer joined CAPREIT in
September 2009 and was appointed
as the Chief Financial Officer of
CAPREIT in 2011. Mr. Cryer is
also currently a director of IRES
Fund Management Limited and
supports I-RES in all financial and
reporting decisions.
Corinne
Pruzanski
General Counsel
and Corporate
Secretary of
CAPREIT
Corinne Pruzanski joined CAPREIT
as General Counsel and Corporate
Secretary in 2011 with responsibility
for all legal and governance matters
relating to CAPREIT, including
CAPREIT’s acquisitions, dispositions,
financing arrangements and
compliance with laws. Ms. Pruzanski
is also company secretary to IRES
Fund Management Limited.
Jodi
Lieberman
Chief Human
Resources Officer
of CAPREIT
Jodi Lieberman joined CAPREIT
in 2009 and has been instrumental
in developing the human resources
function at the company as well as
at I-RES.
Charles
Coyle
Vice President,
Acquisitions
With over 20 years of property
investment and development
experience, Charles Coyle
was appointed by IRES Fund
Management as Vice President,
Acquisitions in December 2014. He
supports I-RES with all acquisition
and development decisions.
Jonathan
Fleischer
Executive
Vice President –
Operations
Jonathan Fleischer joined CAPREIT
in October 2015. Jonathan oversees
the operation of I-RES.
Priyanka
Taneja
Chief Financial
Officer of
I-RES and Vice
President Finance
at CAPREIT
Priyanka Taneja joined CAPREIT
in May 2008 and is currently the
Vice President of Finance, and is
responsible for overseeing Financial
Reporting, Taxation, Valuations,
Treasury and Financings. She also
assists with Investor Relations and
provides support for the finance
and financial reporting functions
for I-RES.
146 
Supplementary Information
Glossary of Terms
The following explanations are not intended as technical definitions, but rather are intended to assist the reader in
understanding terms used in this Report.
“Annualised Passing Rent”
Defined as the actual monthly residential
and commercial rents under contract with
tenants as at the stated date, multiplied by
12, to annualise the monthly rent;
“Average Monthly Rent (AMR)”
Actual monthly residential rents, net of
vacancies, as at the stated date, divided by
the total number of apartments owned in
the property;
“Basic Earnings per share (Basic EPS)”
Calculated by dividing the profit for the
reporting period attributable to ordinary
shareholders of the Company in accordance
with IFRS by the weighted average number
of ordinary shares outstanding during the
reporting period;
“Capitalisation Rate”
The rate of return on a property investment
based on current and projected future
revenue streams that such property
investment will generate;
“Companies Act, 2014”
The Irish Companies Act, 2014;
“Diluted weighted average number
of shares”
Includes the additional shares resulting
from dilution of the long-term incentive
plan options as of the reporting period date;
“EPRA”
The European Public Real Estate
Association;
“EPRA Diluted EPS”
Calculated by dividing EPRA Earnings
for the reporting period attributable to
shareholders of the Company by the diluted
weighted average number of ordinary shares
outstanding during the reporting period.
EPRA Earnings measures the level of
income arising from operational activities.
It is intended to provide an indicator
of the underlying income performance
generated from leasing and management
of the property portfolio, while taking
into account dilutive effects, and therefore
excludes all components not relevant to
the underlying net income performance of
the portfolio, such as unrealised changes
in valuation and any gains or losses on
disposals of properties;
“EPRA EPS”
Calculated by dividing EPRA Earnings
for the reporting period attributable
to shareholders of the Company by the
weighted average number of ordinary shares
outstanding during the reporting period.
EPRA Earnings measures the level of
income arising from operational activities.
It is intended to provide an indicator of the
underlying income performance generated
from leasing and management of the
property portfolio and therefore excludes all
components not relevant to the underlying
net income performance of the portfolio,
such as unrealised changes in valuation
and any gains or losses on disposals
of properties;
“EPRA NAV”
Measures the fair value of net assets on an
ongoing, long-term basis in accordance
with guidelines issued by EPRA, while
taking into account dilutive effects of any
options, convertibles or other financial
instruments. The EPRA NAV excludes the
net mark-to-market to the value of financial
instruments used for hedging purposes
and where a company has the intention
to keep the hedge position until the end
of the contractual duration, and deferred
tax in respect of any difference between
the fair value and the book value of the
investment properties;
“EPRA NAV per share”
Calculated by dividing EPRA NAV by
the diluted number of ordinary shares
outstanding as at the end of the reporting
period;
“Equivalent Capitalisation Rate”
The Equivalent Capitalisation Rate is
calculated as the Stabilised NRI divided by
the fair value of the investment property;
“Gearing”
Calculated by dividing the Group’s
aggregate borrowings by the market value
of the Group’s total assets;
“Group Total Gearing”
Calculated by dividing the loan drawn
down by the market value of the Group’s
investment properties consistent with the
financial covenant of the Group’s Revolving
Credit Facility;
“Gross Yield”
Calculated as the Annualised Passing
Rent as at the stated date, divided by the
fair value of the investment properties,
excluding fair value of development
land and investment properties under
development as at the reporting date;
“Irish REIT Regime”
Means the provisions of the Irish laws and
regulations establishing and governing real
estate investment trusts, in particular, but
without limitation, section 705A of the
Taxes Consolidation Act, 1997 (as inserted
by section 41(c) of the Finance Act, 2013),
as amended from time to time;
“Market Capitalisation”
Calculated as the closing share price
multiplied by the number of shares
outstanding;
“Net Asset Value”or“NAV”
Calculated as the value of the Group’s
or Company’s assets less the value of
its liabilities measured in accordance
with IFRS;
“Net Asset Value per share”
Calculated by dividing NAV by the basic
number of ordinary shares outstanding as at
the end of the reporting period;
“Net Rental Income (NRI)”
Measured as property revenue less property
operating expenses;
“Net Rental Income Margin”
Calculated as the NRI over the revenue from
investment properties;
“Occupancy Rate”
Calculated as the total number of
apartments occupied over the total
number of apartments owned as at the
reporting date;
“Property Income”
As defined in section 705A of the Taxes
Consolidation Act, 1997. It means, in
relation to a company or group, the
Property Profits of the company or group,
as the case may be, calculated using
accounting principles, as: (a) reduced by
the Property Net Gains of the company or
group, as the case may be, where Property
Net Gains arise, or (b) increased by the
Property Net Losses of the company or
group, as the case may be, where Property
Net Losses arise;
“Property Profits”
As defined in section 705A of the Taxes
Consolidation Act, 1997;
“Property Net Gains”
As defined in section 705A of the Taxes
Consolidation Act, 1997;
“Property Net Losses”
As defined in section 705A of the Taxes
Consolidation Act, 1997;
“Property Rental Business”
As defined in section 705A of the Taxes
Consolidation Act, 1997;
“Sq. ft.”
Square feet;
“Sq. m.”
Square metres;
“Stabilised NRI”
Measured as property revenue less property
operating expenses adjusted for market-
based assumptions such as long-term
vacancy rates, management fees, repairs and
maintenance;
“Vacancy Costs”
Defined as the value of the rent on
unoccupied residential apartments and
commercial units for the specified period.
147

Supplementary Information
Forward-Looking Statements
I-RES Disclaimer
This Report includes statements that are, or may deemed
to be, forward-looking statements. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms “anticipates”,“believes”,
“estimates”,“expects”,“intends”,“plans”,“projects”,“may”
or “should”, or, in each case, their negative or other
comparable terminology, or by discussions of strategy,
plans, objectives, trends, goals, projections, future events
or intentions. These forward-looking statements include
all matters that are not historical facts. They appear in a
number of places throughout this Report and include, but
are not limited to, statements regarding the intentions,
beliefs or current expectations of I-RES concerning,
amongst other things, its results of operations, financial
position, liquidity, prospects, growth, strategies and
expectations for its industry. Such forward-looking
statements are not guarantees of future performance
and involve known and unknown risks, uncertainties
and other factors which may cause the actual results,
performance or achievements of I-RES and/or the
industry in which it operates to be materially different
from any future results, performance or achievements
expressed or implied by such forward-looking statements.
As a result, you are cautioned not to place any reliance
on such forward-looking statements and neither the
Company nor any other person accepts responsibility for
the accuracy of such statements.
Nothing in this Report should be construed as a profit
forecast or a profit estimate.
The forward-looking statements referred to in this Report
speak only as at the date hereof. I-RES expressly disclaims
any obligation or undertaking to release publicly any
revision or updates to these forward-looking statements to
reflect any change in (or any future) events, circumstances,
conditions, new information or any change in the
Company’s expectations or otherwise except as required by
law, regulation or by any appropriate regulatory authority.
2019 ESG Report
Building Communities. Investing in Sustainable Partnerships.
Reporting Boundaries
This environmental, social and governance report (“ESG Report”) forms part of I-RES’ 2019
Annual Report and presents the material issues and impacts of our activities during the fiscal year
ended 31 December 2019.
The ESG Report encompasses all the assets owned by the Group and managed by IRES Fund
Management Limited (“IRES Fund Management” or the “Investment Manager”). The ESG Report
provides an overview of our priorities and highlights from 2019 on ESG matters relevant to the
real estate investment industry in general and to I-RES in particular.
We follow the Euronext guidance on ESG reporting of January 2020.
For more information about I-RES and our activities, please read our other annual reports.
This ESG Report should be read in conjunction with our 2019 Annual Report.
Corporate Profile
Irish Residential Properties REIT plc (the “Company”,“I-RES”,“we”,
“our”, together with IRES Residential Properties Limited, the “Group”)
is a growth oriented Real Estate Investment Trust that is focused on
acquiring, holding, managing and developing investments primarily
focused on private residential rental accommodations in Ireland. At
31 December 2019, the Group owns 3,666 apartments and houses for
private rental in Dublin and Cork. The Company’s shares are listed
on the Main Securities Market of Euronext Dublin.
Table of Contents
In Conversation with Our Leadership 2
Integrating an ESG Strategy 4
Acquisitions and Development 5
Operational Footprint Performance 8
People, Partnerships and Communities 13
External Stakeholders 17
Corporate Governance and Integrity 19
The Maple, BSQ, Sandyford
2 I-RES | 2019 | ESG REPORT
Q
In Conversation with Our Leadership
Our current economic and social environment presents several challenges and opportunities
that drive our investor expectations. As part of the evolving investor expectation to deliver efforts
and initiatives that support a sustainable future, I-RES recognises that environmental, social
and governance (“ESG”) disclosure is increasingly being associated with better business value.
Margaret Sweeney, Chief Executive Officer (“CEO”), and Declan Moylan, Chair of the Board, sat
down to discuss what ESG competency means for our organisation and its implications for our
corporate strategy and expected performance.
How does I-RES define ESG strategy and
what does it mean to our organisation?
I-RES understands that the transition toward sustainable
finance requires effective capital allocation across all
facets of our business decision-making. The integration
of an ESG strategy can help proactively address associated
transitional risks and create new value-add opportunities,
thereby assuring investors not only that I-RES is effectively
managing our operations but that we have the necessary
governance structure in place to support a sustainable
future. Our investments extend beyond managing our
buildings to include the suppliers we partner with, the
residents we house and the communities in which we
operate. Through these strategic alignments, I-RES expects
to generate positive and well-managed returns for our
investors, while also making meaningful contributions to
the communities we impact and the environment in which
we operate.
How is ESG integrated into I-RES’
corporate strategy?
Understanding roles and responsibilities and embedding
accountability across all business partners are the
foundational building blocks to an effective ESG strategy.
I-RES’ operational strategy is externally managed by our
Investment Manager, a subsidiary of CAPREIT that is
tasked with delivering superior customer service, enhanced
resident experience and quality home living. Having that
clear understanding of roles, responsibility and shared
accountability on ESG-related deliverables ensures that
3
I-RES | 2019 | ESG REPORT
Q & A with Margaret Sweeney (CEO) and Declan Moylan (Chair of the Board)
A
I-RES is well positioned to integrate ESG into its corporate
strategy. For example, on page 9, you can read about how
we have improved the operating efficiency of our managed
buildings by delivering energy conservation efforts, such
as conducting LED lighting retrofits across our portfolio.
On page 15, you can read how our Investment Manager
consistently invested in the development of its talent
pool by delivering close to 77 hours of in-house training,
which contributed to CAPREIT, its parent company,
being recognised as an AON Best Employer for a seventh
consecutive year. Page 4 details some of our notable ESG
achievements in 2019, one of which includes building
the in-house ESG subject matter expertise by providing
support early in the year to CAPREIT’s Director of
ESG Strategy Integration, who is working closely with
I-RES’ CEO and the Investment Manager team to embed
ESG into our corporate culture and decision-making.
Leveraging CAPREIT’s hands-on experience and proven
operating philosophies, our Investment Manager applies
over 20 years of proven sustainable practices throughout
our operations. Seen as a natural evolution of how we
conduct our business, the development and integration of
an ESG strategy will help deliver better programmes and
services to our stakeholders, and ultimately results to our
residents and other stakeholders.
What can our stakeholders expect from
I-RES on delivering our ESG strategy
going forward?
As we continue to transform local resident expectations
of landlords through our model of professional property
management, high-quality assets and excellent service,
our stakeholders can remain confident in our delivery of a
strong ESG report in 2020 that supports our business growth
strategy. By mid-2020, we will be submitting our inaugural
application to Global Real Estate Sustainability Benchmark
(“GRESB”), an industry-leading global assessor of the
ESG performance of real estate assets and their managers.
In 2020, we will also look to evolve our understanding
and commitment to demonstrating alignment on matters
such as climate-related risks and opportunities, which are
increasingly important to residents, employees, investors
and the communities we serve. Our Investment Manager
remains committed to driving resident satisfaction to
maintain our high occupancies and resident comfort. As we
look ahead, we remain committed to advancing our ESG
initiatives and reporting our progress. We are excited to
showcase what I-RES’ growth strategy entails and how our
ESG strategy aligns with our corporate goals throughout
our 2019 ESG Report.
– 
MARGARET SWEENEY,
CHIEF EXECUTIVE OFFICER
– 
DECLAN MOYLAN,
CHAIR OF THE BOARD
4 I-RES | 2019 | ESG REPORT
Integrating an ESG Strategy
A measure of the wider impact of our operations
and long-term strategy.
In our inaugural year of formalising I-RES’ ESG strategy, understanding our corporate narrative was essential to assuring
an impactful performance disclosure. As Ireland’s leading residential landlord, we recognise the impact our business
operations will pose on attracting and retaining the best employees, assets and business partners, the value added to
the lives of our residents and of the communities we operate in, and the resulting implications for our shareholders.
The integration of our ESG strategy is our corporate commitment to make a positive contribution to the communities
we serve, achieving sustainable growth in close collaboration with our Investment Manager and business partners and
addressing the adverse environmental and social impacts related to our operations.
We are proud to have delivered some foundational building blocks in 2019 that will set the tone for an effective and
collaborative ESG strategy integration going forward. Some of those initial key deliverables in 2019 include:
Building a Corporate-Wide ESG Competency
• One of our early ESG-related deliverables was to build a corporate-wide ESG competency, starting from the Board
and I-RES’ CEO, trickling through to our Investment Manager’s various operational departments. In partnership with
our Investment Manager, we conducted in-person presentations and leveraged virtual conference tools to socialise our
ESG strategy for both I-RES and IRES Fund Management employees. Building our ESG competency ensures that ESG
factors are integrated into our corporate strategy, organisational culture, and the operational practices managed by our
Investment Manager.
Embedding a Culture of Collaboration and Partnership
• I-RES’ CEO leads the understanding and communication of our ESG strategy and objectives with our shareholders,
and with our Investment Manager through a multidisciplinary steering committee comprised of the CEO as Chair
with senior management of CAPREIT and IRES Fund Management, including CAPREIT’s Director of ESG Strategy
Integration; the VP Acquisitions and Development and the Senior Director of Operations of IRES Fund Management;
and the Company Secretary of I-RES. To ensure the effective integration of our ESG strategy into our day-to-day
operations and decision-making, our Investment Manager established a Green Ambassadors committee, which oversees
employee and partner engagement to facilitate stakeholder engagement and programme deployment. We believe our
ESG strategy supports our innate corporate culture of collaboration and partnership with our Investment Manager in
achieving long-term sustainable results.
Looking
Ahead
Our first year of ESG formalisation delivered several
achievements and provided added opportunities for
consideration. Although we are proud of our achievements,
we also understand that there is still a long journey ahead.
As we look to further socialise the formalisation of our ESG
strategy, additional key ESG-related deliverables for the
coming years will include:
• Completing an inaugural Global Real Estate
Sustainability Benchmark (“GRESB”) submission in
2020, which will assess our ESG-related performance
against industry peers and provide us with a blueprint
to expand on our ESG strategy integration.
• Conducting a materiality assessment analysis to help
identify and prioritise key measures to support our
strategic integration and planning process with
regard to ESG.
• Formalising ESG-related policies and standards to
ensure strategy alignment with regulatory requirements
and industry best practices.
• Developing a cross-departmental stakeholder
engagement programme that will align our goals with
supply chain partners, employees, residents and our
investor base.
The UN Sustainable Development Goals (“SDGs”)
are a call to action designed to focus on fundamental
environmental and social issues. Recognizing our
responsibility in supporting the SDGs and building a more
sustainable future, I-RES’ corporate policies and program
alignment with the SDGs are illustrated where applicable
at the end of each section of the report.
5
I-RES | 2019 | ESG REPORT
Acquisitions and Development
Assessing ESG-related factors to address risks
and capitalise on business opportunities.
As one of Ireland’s largest residential property owners, we recognise the importance of integrating environmental
and social considerations into our business strategy. With a combined pipeline of over 800 units, our acquisition and
development strategy continues to focus on delivering high-quality residential homes for the Irish market. As a part of our
growth strategy, we remain committed to evaluating the integration of ESG-related factors during both acquisitions
and development processes and initiatives.
Embedding ESG Considerations into
Our Investment Strategy
Our acquisition appraisal practices aim to review
investment opportunities both at the neighbourhood
selection level (macro) and at the property level (micro)
to inform Board-level decision-making (see Figure 1). At
the macro level, local amenities are evaluated taking into
consideration public transport links, recreation amenities
and a healthy walkable access to the surrounding
neighbourhood and community. Following our
neighbourhood assessment, micro-level factors are then
evaluated. As a standard, all our acquisitions undergo a
Phase I environmental audit, which includes a desktop
assessment, followed by site assessment due diligence.
Acquisitions Environmental Audit Scope
Desktop Assessment Site Assessment
• A review of historical area maps
• Site sensitivity research (geology, hydrology and hydrogeology)
• Pollution control and waste licence database review
• Aerial photography research
• Radon map review
• Flood risk assessment
• Pollution control and waste licence database review
• Visual inspection of the site setting and adjacent land use
• Discussion with the site representative
• Assessment of possible contamination sources
ESG-Related Considerations
In collaboration with our Investment Manager and
partners, I-RES reviews environmental and social related
factors for potential acquisitions and development sites
to identify risks and improvement opportunities for the
first five years of asset ownership. To further support the
growth of a resilient portfolio, our Investment Manager
incorporates life cycle considerations into capital
investment decisions as asset improvement measures.
Examples include the operational maintenance of existing
units and budgets required for:
Members of our Investment Manager’s Acquisitions and Development team
• HVAC systems
• Flooring
• Lift upgrades
• Lighting retrofits
• Waste management
processes
6 I-RES | 2019 | ESG REPORT
Delivering High-Quality Homes: A Focus on Design Performance
Aligning with the national and European Union (“EU”) energy efficiency and performance agenda, I-RES will continue
to target energy A-rated homes within our forward purchase strategy. We believe delivering high-quality homes is key to
ensuring the long-term performance potential of a property. Working closely with some of Ireland’s leading developers,
we will continue to seek investment opportunities among top tier energy rated homes and developments. Consideration is
given to best practice design standards and green building certifications at the different stages of our developments.
Local Amenities Due Diligence
• Local services, such as shops,
restaurants, etc.
• Access to local employment
opportunities
• Public transport links
• Schools
• Healthcare facilities
• Recreation
• Safe outdoor space
MICRO
Technical Review
Figure 1: I-RES’ Acquisition Due Diligence Process
• Phase One environmental audit
• Building energy rating review
• Structural review
• Mechanical & electrical review
• Compliance review, such as
building regulations
• Fire audit
• Identify options to improve
asset performance overtime
• Review life cycle cost of
asset maintenance and
identify improvement
opportunities
IRES Fund Management Board Reviews and Recommends
MACRO
I-RES Board Reviews and Approves
In the next two years, an additional
219 units with energy
ratings of A3 and above
will be delivered through forward purchase.
An active Irish Green Building Council
(“IGBC”) member, I-RES leverages
design applications from local and
international best practices in the
sustainable built environment.
CASE STUDY:
The School Yard Apartments, in
Dublin 2 – Set to Be Ireland’s First
Registered LEED Gold-Certified
Mid-rise Residential Development
Scheduled for construction breaking ground in Q1 2020,
The School Yard Apartments is designed to meet
LEED Gold standard requirements. Anticipated to be
Ireland’s first LEED Gold-certified mid-rise residential
development, its key design features will include:
• Access to well-serviced public transportation
• Detailed ASHRAE 90.1 LEED Energy Modelling
which will demonstrate ≥30% savings compared to
ASHRAE baseline
• Potable water use reduction – targeting ≥35% savings
compared to LEED baseline
ESG Considerations Applied by the Investment Manager’s Acquisitions Team
Acquisitions and Development
7
I-RES | 2019 | ESG REPORT
Understanding Our Communities through Active Engagement
Large scale I-RES development projects begin by placing community engagement at the forefront. To understand local
needs, we hold open community engagement meetings for all new developments above 30 units. Active community
engagement is an opportunity for the development team to gain valuable insight on what matters to our communities,
while ensuring residents have access to detailed information.
The Investment Manager’s Acquisitions and Development team ensures that all new developments are designed to meet the
requirements of our residents and maximize ongoing management efficiencies by working in close consultation with the
Operations, Leasing and Maintenance teams.
CASE STUDY:
Delivering Community Needs –
Rockbrook, Sandyford, Dublin 18
In response to community needs raised during our
stakeholder engagement process with the Dun Laoghaire
Rathdown County Council, the Rockbrook development
is designed to include a creche – a communal multi-use
space, including a green resident community space and
soft play areas for children – and various retail units to
support local amenities. Our Rockbrook development
project will deliver over 400 apartments to help support a
community feel.
Social & Affordable Housing
I-RES is committed to complying with the Social & Affordable housing obligations as part
of the Planning and Development Act. Ongoing discussions are taking place between the
local authorities and I-RES to deliver the 10% social and affordable housing required for
live developments.
Sustainable Development Goals Alignment
Looking
Ahead
I-RES will continue to review best practices within the industry for new developments. At each project stage, I-RES will
continue to challenge standard design practice in an effort to attain LEED Gold-level certification for residential properties. It
is the intention of I-RES to continue with the forward purchasing of energy A-rated units. Starting in 2020, I-RES will further
assess our inclusion of ESG-related measures as part of our due diligence process and decision-making on all new acquisitions
and development under the Board’s review, particularly assessing climate-related resilience and adaptation factors.
Acquisitions and Development
8 I-RES | 2019 | ESG REPORT
Operational Footprint Performance
Understanding the impacts directly associated with our operational footprint is key to effectively managing and
optimising the performance of our managed assets. Our Investment Manager is actively working to develop clear targeted
improvement objectives that will not only improve our operational performance but also maintain resident comfort
through smart operations management. In 2019, I-RES’ Investment Manager focused on solidifying the necessary ESG
building blocks, including scoping our data coverage and identifying opportunities for supplier engagement, resident
education and employee training to deliver on our operational footprint performance.
Energy Management
In collaboration with our Investment Manager and the Owners Management Companies (“OMCs”), I-RES is committed
to managing the energy consumption and resulting carbon emissions from our operations over which we have direct
control. Enhancing the coverage of our directly controlled energy performance data is key to understanding our current
energy performance and developing improvement strategies. We continue to gather energy consumption data where it is
available and actively engage with property management partners to expand our data coverage.
Due to our fractured ownership structure, I-RES has
limited oversight and direct control over the purchase and
management of utilities, which are fully resident controlled.
The fractured ownership also poses a limited ability to
introduce and implement operating policies to set and
drive operational performance and management within the
common shared spaces across our reported assets.
While I-RES holds limited oversight on the operational
performance of our reported real estate assets, we do
actively engage with our buildings’ OMCs to uncover
collaboration opportunities that will help expand
on our data coverage and help develop operating
policies and standards. Please refer to page 22 of our
2019 Annual Report for a detailed property portfolio
ownership breakdown.
In order to provide like-for-like comparison in our
annual common area electricity consumption, assets
held for the full 2018 and 2019 calendar years are
reported below. In total, 24 assets were held for the
two defined reporting periods ending December 31.
I-RES’ reported consumption below is reflective of
12 months of full common area electricity consumption
data collected for 25% of our assets for both 2018 and
2019. We will continue to engage with our buildings’
OMCs to attain added coverage of the full common area
electricity consumption. The table below demonstrates the
coverage breakdown of data reported:
In 2019, our Investment Manager initiated a consultation
to review energy supplier contracts to explore renewable
electricity options. This resulted in successfully
transferring our directly managed electricity contracts for
nine properties in Dublin to a 100% renewable energy
supply. Following the initial trial success, we will continue
to implement renewable contracts where possible.
Over the course of four years, our Investment Manager
completed LED lighting upgrades across our portfolio’s
common areas. In 2020, our Investment Manager intends
to extend the LED lighting upgrade initiative to applicable
existing properties where I-RES has full control. Our
Investment Manager also regularly reviews opportunities
to improve indirect energy consumption with our
residents. In 2019, our Investment Manager initiated a
third party survey to gather costs and potential savings
opportunities for an in-suite LED lighting upgrade.
Seventeen properties were surveyed, and options are
currently being reviewed for a 2020 delivery.
Within our managed portfolio, we are conducting a multi-
year phased boiler replacement programme of 660 gas-
fired boilers. In 2019, our boiler replacement programme
was assessed in response to the Irish Government’s
Climate Action Plan 2019. I-RES supports the ambitions
of the new plan and in 2020 our focus is to explore viable
replacement options in support of decarbonisation.
CASE STUDY:
Photovoltaic Energy Production
at Taylor Hill Ballbriggan
In 2019, I-RES delivered 78 new homes at Taylor Hill
Ballbriggan through a forward purchase agreement with
Glenveagh Homes. All houses within the development
complex are fitted with Photovoltaic (“PV”) panels for
renewable energy generation. Utilising locational solar
resource data, each PV panel installed has the capacity to
generate 247 kWh per annum.
House Size
Number of
PV Panels
Annual Electricity
Output (kWh)
2 bedrooms 3 740
3 bedrooms 3 740
4 bedrooms 4 987
According to the Commission for Regulation of Utilities
(“CRU”), the average annual electricity consumption for a
household in Ireland is 4,200 kWh.
In one calendar year, the development complex containing
242 PV panels has the installed capacity to generate an
estimated 59,725 kWh of renewable energy. Through
this onsite production of energy, Taylor Hill will offset
approximately 24,690 kg of carbon emissions*.
All homes at Taylor Hill are A rated for energy performance.
The following features are in place across the development:
• High level of insulation is incorporated
in all floors, walls and roofs
• All houses are constructed to provide
a high level of airtightness
• All windows and paned doors are double glazed
• A-rated condensing gas boiler central heating system
• Thermostatically controlled heating system
* 0.4134 per kWh conversion rate applied for offset calculations.
In line with our commitment
to delivering high-quality
homes, over 50% of
the I-RES portfolio
has BER A–B energy ratings.
Operational Footprint Performance
10 I-RES | 2019 | ESG REPORT
Waste Diversion – Engaging
Residents and Suppliers
In 2019, our Investment Manager
continued our work with residents
and waste suppliers to improve
waste performance through the delivery of education
programmes and improved data coverage. Since
2018, 100% of waste under our control was diverted
from landfill.
Water Conservation
Given that our portfolio’s water
consumption and management are
not under our direct operational
control, access to water-related
data is currently unavailable. I-RES will investigate
opportunities to engage with both residents and
our property management partners to advocate
for improved water conservation awareness and
performance disclosure in 2020.
In 2019, the mixed recycling segregation rate under I-RES contracts was 15%. Recognising that this could be improved, our
Investment Manager implemented measures to support residents and improve waste management. Resident information
booklets issued to all I-RES residents now include guidance on waste management and recycling. Our Investment Manager
also improved the waste storage facilities available at properties. Starting with the storage environment, all waste areas
were cleaned, painted and provisioned with hand sanitiser and automatic air fresheners. To support segregation, a new
colour coding system and upgraded signage was introduced to help residents identify the correct waste streams; tables
were also installed to facilitate sorting if required. Through our Investment Manager, I-RES will continue to monitor waste
segregation to understand the effectiveness of these measures.
2,172 tonnes
of waste
were collected
100%
was diverted
from landfill
423 tonnes were
recycled, re-used or
composted
1,749 tonnes were
diverted to energy from
waste incineration
Waste Streams Provided to Residents
• General Waste
• Glass
• Dry Mixed Recycling
• Food
• Waste Electrical
(“WEEE”)
CASE STUDY:
Keywaste – Enhancing Waste Tracking
Working collaboratively with Keywaste, IRES Fund
Management implemented improved waste data tracking in
2019. On a monthly basis, data is utilised to monitor waste
streams, waste volumes, segregation and bin contamination.
Visibility of this data on a monthly basis supports
performance monitoring and active response for targeted
improvements. Including data covering a range of metrics
such as bin contamination allows us to identify recurrences
and develop appropriate solutions.
In 2019, across I-RES’ portfolio:
Operational Footprint Performance
11
I-RES | 2019 | ESG REPORT
Team members of our Investment Manager’s Green Ambassadors
Green Ambassadors – A Collaborative Mission
Our Investment Manager established a Green Ambassadors initiative in 2019 to lead
the collective environmental efforts of our business. Green Ambassadors represent
a wide range of IRES Fund Management departments, drawing on a diversity of
experience and perspectives. Following an initial kick-off meeting, each team member
has committed four hours per quarter to support ESG-related initiatives. To date,
the team has focused on internal initiatives such as recycling education and tips for
energy efficiency in the workplace.
Departments Represented
• Regional
• Procurement
• Regional Administration
• Operations
• ESG Strategy Integration
• Acquisitions and
Development
Operational Risk Management and Environmental Health and Safety (“EHS”)
I-RES has a Safety Statement which is reviewed annually by the Audit Committee, and on which the Board received
training. On a quarterly basis, the Investment Manager, as part of its quarterly reporting on risk and internal controls,
highlights to the Audit Committee and the Board any risks related to environmental conditions and health safety,
including any related concerns identified as part of control testing. IRES Fund Management assumes overall responsibility
for all health and safety within I-RES and this is reflected in the safety communications structure detailed in the Safety
Statement effective July 2017.
Operational Footprint Performance
12 I-RES | 2019 | ESG REPORT
Looking
Ahead
I-RES will continue to investigate new technology opportunities at applicable building sites that will support our
commitment to optimise our operational footprint performance. Starting in 2020, we will seek to formalise policies,
standards and programmes to help drive our ESG performance across our directly managed portfolio, and assess the
opportunity to develop and apply building-level targets where we have direct control, while continuing to prioritise the
assessment and mitigation of environmental, health and safety risks to our key stakeholders.
70% of IRES Fund Management’s employees received incident report training in 2019.
Sustainable Development Goals Alignment
Policy
Incident & Injury Investigation and Reporting
Hazard Identification & Control
Confined Space
Contractor & Sub-Contractor
Fire Safety
First Aid
Health & Safety Committee
Hearing Loss Prevention
Hot Work
Lock-Out/Tag-Out
Corporate Occupational Health & Safety
WHMIS
Working Alone
Working at Heights
Workplace Inspections
Psychological Safety & Wellbeing
Environmental Risk Management Policy
Procedures
Incident & Injury Investigation
Incident & Injury Reporting
Hazard Identification & Control
Personal Protective Equipment
Workplace Inspections
Programmes
Emergency Response Plan
To be actioned in 2020:
Policies
Psychological Safety & Wellbeing
Environmental Risk Management Policy
Programmes
Emergency Response Plan
The Investment Manager’s policies and procedures are reviewed by an external third party consultant annually. Following
this exercise, we receive feedback on performance and update recommendations to remain compliant with all local-
level legislation and industry best practices. What is more, our Investment Manager’s employees have access to detailed
e-learning content dedicated to operational health and safety (“OHS”) management, including micro learning videos.
All policies, procedures and programmes listed below are reviewed and updated on a regular basis to meet applicable
regulations as needed:
Operational Footprint Performance
13
I-RES | 2019 | ESG REPORT
People, Partnerships and Communities
Our Investment Manager holds a commitment to help build a
transformative workplace that attracts and cultivates collaboration.
As I-RES’ Investment Manager, IRES Fund Management provides significant day-to-day management and strategy
support, which is delivered through a number of personnel functions. As our Investment Manager, IRES Fund
Management actively maintains a collaborative and engaging workplace for all employees by creating a supportive
working environment focused on balancing professional development and personal wellbeing. Our Investment Manager’s
corporate values guide its professional internal and external engagements and interactions with stakeholders.
Attracting and Nurturing the Best and Most Diverse Talent
IRES Fund Management continues to prioritise attracting the best and brightest talent within the real estate sector. Our
dedicated Human Resources (“HR”) team focuses on strategic talent consultation, attraction and leadership development.
To ensure it continues to attract top talent, IRES Fund Management offers a wide range of leadership development
opportunities to all new recruits and existing employees. In 2019, our Investment Manager’s team grew by 38%, adding
18 new team members in a number of departments and locations across Ireland in support of I-RES’ operational
footprint. IRES Fund Management undertakes several initiatives to foster a diverse and inclusive work environment,
including celebrating International Women’s Day and holding a diversity week where daily videos and education on
diversity are shared with employees.
Investment Manager’s Corporate Values
• Service
• Excellence
• Pride
• Innovation
• Respect
• Integrity
• Fun
• Leadership & Teamwork
• Accountability
Of the 18 new staff
members hired at IRES Fund
Management since 2019,
44% were female.
In 2019, IRES Fund
Management held a
52/48% gender split
between self-identified
women and men.
Business Person of the Month
Margaret Sweeney, CEO of I-RES, was named Business & Finance’s
Business Person of the Month in May 2019. Sweeney’s noteworthy
and ongoing business successes were recognized for contributing to
the wider community in Ireland.
14 I-RES | 2019 | ESG REPORT
Investing in Employees: IRES
Fund Management’s Benefits and
Compensation Approach
Our Investment Manager places its employees at the
centre of its business culture and continues to improve
available benefits to enhance the work-life balance of all
team members. In April 2019, IRES Fund Management
launched its first employee healthcare package in
partnership with Ireland’s most experienced health
insurance provider, Vhi Healthcare. The package offers
a wide range of coverage and support with healthcare,
including general practitioner procedures, parental care,
psychiatric coverage and much more.
Our Investment Manager’s Employee
Benefits Include:
• Vhi Healthcare
• Death in Service
• Income Continuance
• Pension
• Annual Leave Entitlement
• Compassionate Leave
• Paternity Leave
• Maternity Leave
• Force Majeure Leave
• Bike to Work Scheme
• Travel Ticket Tax Saver
Since its launch in April 2019,
34% of our Investment
Manager’s employees have
participated in the Vhi
Healthcare Benefit Programme.
Health and Wellness in the Workplace
IRES Fund Management continually looks to enhance employee lifestyle
and work-life balance through several initiatives:
Our Investment Manager’s Wellbeing Initiatives
• Wellbeing portal – access to information to
support mental health outside the workplace
• Wellbeing workshops
• Team social evenings
• Pension calculator
• Birthday (day off)
• Step challenge – a company-wide
competition to promote wellness and
encourage activity
• Employee anniversary gift
• Christmas and summer parties
CASE STUDY:
Wellbeing Workshop
In 2019, our Investment Manager held several wellbeing workshops
to engage employees and identify initiatives they felt would
contribute to improving their wellbeing in the workplace, including
the remote regional offices supporting I-RES’ portfolio. Rather
than prescribing wellbeing initiatives, they chose to listen to their
employees and create a meaningful feedback process to inform their
collective decision-making. As a result, our Investment Manager
implemented several office improvements, including:
• Weekly fresh fruit deliveries
• Access to smoothie blenders
• Gifting all employees with reusable water bottles and stress balls
People, Partnerships and Communities
15
I-RES | 2019 | ESG REPORT
Training and Development
Lifelong Learning at IRES Fund Management
Our Investment Manager encourages and facilitates continual learning for all employees. The objective is to support
lifelong learning while improving employee development, wellbeing and satisfaction. IRES Fund Management’s HR team
works diligently to provide a wide range of professional training and education opportunities. Their team understands the
importance of a diverse approach to training and therefore offers general and specialised training, in addition to internal
and external leadership and development programmes.
New Dublin Office – Nurturing a culture of collaboration and partnership, I-RES recently
underwent an office renovation to facilitate a shared workspace with our Investment
Manager team. Our new office amenities include shower facilities, towel service and secure
bike storage to encourage active travel; recycling pods to facilitate waste segregation; diverse
plants and floor-to-ceiling windows to enhance biophilic design and daylight provision.
Our Investment Manager’s
employees are entitled to
a €2,000 contribution
each year for external
education fees.
77 hours of training
delivered in 2019.
In 2019, IRES Fund
Management introduced the
Star Awards, a peer-based
recognition programme. Each
quarter, the effort of a team member is
identified and acknowledged by peers,
fostering a supportive working environment.
IRES Fund Management
supports all of its employees’
education goals and
therefore does not impose
any restrictions on programmes when
they are related to professional growth
and development.
People, Partnerships and Communities

CASE STUDY:
The Building Leaders Programme
The Building Leaders programme is designed to strengthen the
development of future leaders through experiential learning.
CAPREIT has designed different Building Leaders programmes
suited to different subsets of its workforce, including:
• BL Foundations for operations managers
• BL Core for senior managers within operations
• BL Partners for corporate managers
• BL Executive for executive staff
Through experiential learning opportunities and individually tailored coaching, the programme helps develop leadership
skills over the course of two years and ensure appropriate succession planning within the CAPREIT organisation.
The Building Leaders programme is an international programme run by CAPREIT and as a result, employees of IRES
Fund Management are eligible to participate and each participant has access to a wide range of international mentors.
Sustainable Development Goals Alignment
Looking
Ahead
Our Investment Manager remains committed to evolving its training and benefits programmes
and to ensuring support and alignment with industry best practices.
Professional Memberships and Accreditations
of IRES Fund Management Employees
• Property Services Regulatory Authority
(“PSRA”)
• Society of Chartered Surveyors (Ireland)
• Royal Institute of Chartered
Surveyors (UK)
• Irish Institute of Professional Auctioneers
• Institute of Directors Ireland
• Engineers Ireland
Members of our Investment Manager’s Operations team
People, Partnerships and Communities
17
I-RES | 2019 | ESG REPORT
External Stakeholders
Resident Engagement
Enhancing the Resident Experience by Delivering
Authentic Service That Builds Collaboration,
Partnership and Trusting Relationships
In 2019, we engaged a third party service provider to
perform a resident satisfaction survey. The objective of the
survey is to measure resident satisfaction and explore ways
to improve overall experience. To understand the resident
experience, we focused on five key areas:
• Resident profile
• Overall satisfaction and loyalty
• General property amenities
• Maintenance and service
• Staff evaluation
Detailed results analysis per site is scheduled for
completion in Q1 2020 and the results will be utilised
to target key feedback themes and develop resident
improvement programmes.
1. Satisfaction with
the common space
and landscaping.
2.The quality
of amenities,
maintenance
and repairs.
3. Respectful and
professional staff.
Procurement – Building and Maintaining Strong Partnerships
I-RES partners with a wide range of vendors across Ireland, delivering an extensive array of high-quality services
and products for our supply chain. I-RES believes employing an ESG lens to our procurement activities presents
opportunities to manage our impacts, find innovation, and save costs and resources. I-RES is committed to working
proactively with suppliers who share our ESG aspirations.
CASE STUDY:
An Electrifying Sustainable Procurement Process
With over €360,000 spent on electrical appliances in 2019, electrical
goods remain a key supply chain focus for our business. Collaborating
with our electrical appliance vendors, we focus on identifying the key
impacts of the product life cycle. To address product life performance,
our Investment Manager collaborated with our vendors to develop a
standard product purchase list for electrical appliances. As a result, 90%
of our standard purchase electrical appliances have an energy A-rated
performance. Moving beyond product performance, our Investment
Manager also engages with our vendors to manage the product’s end of
life. Partnering with DID Electrical, we responsibly recycled 44 tonnes
of electrical waste in 2019.

18 I-RES | 2019 | ESG REPORT
Leadership and Supporting
Our Communities
I-RES has taken a leading role in the formation of a real
estate association in Ireland, Irish Institutional Property
(“IIP”), whose mission is “to promote the development
of a sustainable world class real estate sector in Ireland
which benefits members, the economy, communities and
wider society”. I-RES CEO Margaret Sweeney is Chair
of the Board of IIP. I-RES is a member of European Real
Estate Association (“EPRA”) and Dublin Chamber of
Commerce. The CEO and senior management in IRES
Fund Management actively participate and contribute
their experience and knowledge to other professional
bodies including the Governing Council of Chartered
Accountants Ireland, Society of Chartered Surveyors
Ireland, and the Ireland Green Building Council.
I-RES, together with our Investment Manager, actively
supported a wide range of annual charitable causes across
Ireland. In 2019, we donated close to €70,000 through our
participation in many charitable fundraisers, community
improvement programmes, event support and sporting
and music sponsorships.
Sustainable Development Goals Alignment
Looking
Ahead
IRES Fund Management will continue to drive resident
service and satisfaction by identifying new and innovative
ways to engage I-RES’ residents and enhance their
experience at our properties. Future efforts will concentrate
on broadening the scope of our resident engagement
initiatives to address added social and environmental
causes, as well as the importance of health and wellbeing.
In collaboration with our partners, I-RES will continue
to manage third party risks that could result from our
procurement activities. Our Investment Manager will
continue to encourage our supply chain partners to remain
accountable for their environmental and social performance
by integrating adaptable ESG measures across the supply
chain and socialising the adoption of these measures in
coming years. Starting with the mapping of our supply
chain, our Investment Manager will strive to establish
and communicate our expectations through a formalised
supplier code of conduct, an important step in involving
our supply chain partners in integrating our ESG strategy.
I-RES is proud to sponsor the Naomh Ólaf
GAA club for three years running.A club
with core values of diversity and respect,
Naomh Ólaf GAA club is a cornerstone of
the local community.
An annual summer community festival,
Tallafest is a valued opportunity to meet our
residents and foster a sense of community.
Giving Back in 2019: Charitable Initiatives and
Community Engagements I-RES Supported
• Tallafest Sponsor
• Better Homes Conference Sponsor
• BSQ Family Funday
• Darkness Into Light Fundraiser
• Dragons at the Docks Fundraiser
• Santa Dash Fundraiser
• Dublin Neurological Institute Fundraiser
• Elmpark Outdoor Gym
• Naomh Ólaf Football Club Sponsor
Alongside our real estate peers and Investment Manager, I-RES participated in the Dragons
at the Docks Fundraiser in aid of the Dublin Simon Community. Collectively, the event raised
€350,000 in 2019.All proceeds from the event go toward acquiring homes for families and
individuals experiencing homelessness.
External Stakeholders
19
I-RES | 2019 | ESG REPORT
Corporate Governance and Integrity
A collaborative corporate culture supported
by strong corporate governance.
Responsible corporate governance and integrity underpin our business and are integral to our corporate strategy and
commitment to transforming local resident expectations of landlords through our high-quality assets and IRES Fund
Management’s model of professional property management and excellent service. Elected by our shareholders to oversee
the management of the Company, I-RES’ Board also ensures that the long-term interests of shareholders are advanced
responsibly, while balancing the interests of our other stakeholders, including residents and our communities. Pursuant
to the Codes, we aim to hold ourselves to high standards of ethical behaviour and transparency. Through our Code of
Business Ethics and Conduct, we aim to deliver on our commitment of accountability to our stakeholders. The Board
actively engages with I-RES and our Investment Manager to keep the protection and promotion of our stakeholders’ interests
top of mind. By advising on the right corporate strategy and applying effective governance measures and oversight, the
Board helps identify principal risks associated with I-RES’ business and ensures the implementation of appropriate systems
to manage these risks, while identifying suitable opportunities for growth and the creation of continued long-term value.
In developing a collaborative and partner-focused
organisation that clearly defines how it intends to lead,
the Board and CEO actively engage with the Investment
Manager in building its cultural fluency by supporting
I-RES’ promotion of integrity, openness, diversity and
active responsiveness to the views of shareholders and
wider stakeholders. To ensure that our Investment Manager
understands, supports and is aligned with our corporate
purpose, values and strategy, the Chair of the Board
along with I-RES’ Chief Executive Officer visited certain
of CAPREIT’s site offices in Canada in 2019. To further
affirm corporate culture alignment, the Investment
Manager and CAPREIT’s executive leadership team
delivered a Board-level presentation on how CAPREIT’s
leadership style is adopted and integrated into the
Investment Manager’s policies, practices and behaviours
through the following seven leadership competencies,
commonly referred to as the “7Cs”.
The “7Cs” developed by CAPREIT and adopted by the
Investment Manager are aligned with the Company’s
growth strategy and culture.
• Creative: We are willing to challenge the status
quo, value innovative ideas, listen to everyone, and
collaborate and share ideas across the organisation.
• Ambitious: Achieving high performance, pushing for
the best, remaining positive and overcoming challenges.
• Proactive: Taking the initiative, overlooking boundaries,
leading teams and acting on opportunities will cultivate
a positive,“can do” attitude.
• Results Focused: Achieving results, monitoring success,
adjusting actions and giving feedback will ensure we are
continuously improving.
• Executive Minded: Balancing the short- and long-term
views of our business, maintaining our composure
when faced with challenges, building strong teams and
communicating a clear vision are ways in which we can
be more executive minded.
• Investment Minded: When we make decisions to
spend or invest, we balance the impact on short- and
long-term growth. Improving financial returns is the
goal, which we can achieve through the use of good
judgement and the optimisation of capital.
• Thoughtful: By taking the time to value the common
good, respecting others, winning support and earning
trust, we can maximise team effectiveness.
Through our Code of Business Ethics and Conduct,
we aim to deliver on our commitment of accountability to our stakeholders.
20 I-RES | 2019 | ESG REPORT
The Board of Directors – Promoting Responsible Conduct
through Board-Level Oversight
I-RES remains committed to the highest standards of governance, consistent with regulatory expectations, evolving
industry best practices, our corporate strategy and our risk appetite. As at the date of this report, the Board consists of
seven directors. The Chief Executive Officer, Margaret Sweeney, is an executive director. Declan Moylan (the Chairman),
Phillip Burns, Joan Garahy, Tom Kavanagh, Mark Kenney and Aidan O’Hogan (Senior Independent Director) are
non‑executive directors. The biographies of all the Directors appear in the Annual Report on pages 42 to 44. For added
details on I-RES’ corporate governance strategy and approach, please refer to page 45 of the Annual Report.
Governance-Related Policies Description
Anti-Corruption Policy Stipulates the Board’s duties and responsibilities to avoid committing bribery and corruption and to
provide guidance for the purpose of addressing potential problems appropriately. Applies globally to all
persons acting for or on behalf of I-RES, including directors, officers and employees.
Code of Business Ethics and Conduct Addresses the Board’s commitment to maintaining high standards of integrity and accountability in
conducting the business of the Company and its subsidiaries by providing a framework of guidelines and
principles to govern and encourage ethical and professional behaviour in conducting our business.
Board Diversity Policy Sets out the approach to diversity in respect of the Board of the Company to achieve the most appropriate
blend and balance of diversity over time, ensure the inclusion of different perspectives to provide effective
oversight, improve the quality of decision-making by reducing group-think, and support the development
of a diverse pipeline of candidates in succession planning.
Dealing Code The purpose of this code is to ensure that I-RES’ directors, and certain employees of the Company and its
subsidiaries, do not abuse, and do not place themselves under suspicion of abusing, inside information, and
comply with their obligations under the Market Abuse Regulation.
Tenure Policy Designates each non-executive director of the Company, including the Chairman of the Board of the
Company, to serve until the end of the annual general meeting following the third anniversary of their
appointment, unless their appointment is terminated earlier.
Division of Responsibilities Statement States the Board’s collective responsibility for I-RES’ long-term sustainable success and the delivery of value
for shareholders. The Board leads the development of I-RES’ culture, purpose, value and strategy and aims
to ensure that these are aligned.
Whistle-Blower Policy Provides all of I-RES’ workers, including the Board, officers and employees, with a process to raise genuine
concerns safely and appropriately, and to disclose information which they believe shows malpractice or
impropriety without fear of victimisation.
Board Leadership: Assessing and Monitoring Our Corporate Culture
The Board has the opportunity to assess and monitor I-RES’ corporate culture through ongoing and organic
interactions between the Board, the Chief Executive Officer and the Investment Manager’s team to ensure policies,
practices and behaviours are aligned with the Company’s purpose, values and strategy.
Listed below are examples of engagement measures taken in 2019:
• Fifth year anniversary celebration attended by the Directors, I-RES and the Investment Manager team, including
senior and other personnel
• Ad-hoc department-level presentations delivered to the Board by the Investment Manager
• Property tour hosted by the IRES Fund Management Operations team for the Directors
• Joint dinners amongst the Directors and members of CAPREIT and the Investment Manager
• Annual community engagement initiatives and events
• I-RES’ CEO meets with CAPREIT senior management in Canada several times each year
Corporate Governance and Integrity

ANNUAL REPORT
2019
  1
ii
STRATEGIC REPORT
5 2019 Results Financial Highlights
6 Our Purpose
8  at a Glance
12 Chairman’s Statement
14 Chief Executive Officer’s Review
18 Our People
24 Our Business Model
26 Our Markets
28 Strategy & Financial Targets
31 Strategic Advantage
32 Financial Key
Performance Indicators
34 Financial Review
42 Business Review: Taste & Nutrition
47 Business Review: Consumer Foods
49 Sustainability Review
73 Risk Report
DIRECTORS’ REPORT
90 Board of Directors
92 Report of the Directors
Governance Report
98 Corporate Governance Report
107 Audit Committee Report
112 Nomination Committee Report
116 Remuneration Committee Report
FINANCIAL STATEMENTS
140 Independent Auditors’ Report
146 Financial Statements
154 Notes to the Financial Statements
SUPPLEMENTARY INFORMATION
216 Financial Definitions
CONTENTS
 1
 is the global leader in
taste and nutrition serving the food,
beverage and pharmaceutical industries,
and is a leader in its consumer foods
categories in the chilled cabinet.
 1
 is the global leader in
taste and nutrition serving the food,
beverage and pharmaceutical industries,
and is a leader in its consumer foods
categories in the chilled cabinet.
STRATEGIC
REPORT

4
STRATEGIC REPORT
2019 RESULTS
5

STRATEGIC REPORT
2019 RESULTS
FINANCIAL HIGHLIGHTS
1		 See Financial Key Performance Indicators section pages 32-33 and the Supplementary Information section
page 216 for definitions, calculations and reconciliations of Alternative Performance Measures.
Total Shareholder Return of 29.3%2018: (6.8%)
(74% cash
conversion)
> Strong overall revenue
growth resulting in
record Group revenue
> Good margin expansion
achieved in the year
> Taste & Nutrition made
significant progress
across its strategic
priorities
> Consumer Foods
division delivered
a solid underlying
performance in a
subdued marketplace
> The Board recommends
a final dividend of 55.1
cent per share
Continued delivery
and strategic
development
6 
As the world leader in
taste and nutrition, our
Purpose is to Inspire Food
and Nourish Life.
Our Purpose is central to The Kerry Way and
serves as our guiding light on our journey to make
it easier and more valuable for customers to do
business with us, as we seek to make a greater,
more lasting difference in the world by inspiring
innovative, natural and sustainable taste and
nutrition solutions for consumers, customers, the
industry and the world.
Inspire Food · Nourish Life puts food, drink and
wellbeing front and centre. Food matters. It brings
people together; across cultures, countries and
generations. Food is heritage, happiness and
health. Food is family and friends. Food is life.
Our
Purpose

6
STRATEGIC REPORT
OUR PURPOSE
7

Inspiring Food is about
Innovation
It is about co-creating better tasting,
better performing and better-for-you
consumer focused solutions for the
food and beverage industry with our
customers and partners. Solutions that
are enabled by world class science and
differentiated through our leading Taste
and Nutrition, Wellness and Functionality
foundational technologies. Innovative
solutions that inspire new growth for
customers and a sustainable food future
for all.
Nourishing Life is about
Sustainability
It is about adding value to aspects of life
including the safety of our people and
the safety and quality of our products
which nourish the lives of millions of
people around the world every day.
Nourishing life also means something
broader, encouraging the professional
growth of our people, supporting our
teams and their overall wellbeing and
contributing to our communities and the
environment. Through our Values, voice
and visibility we can strive to solve the
bigger sustainability challenges facing
the world.
Our Values
The Group’s Values of Courage, Ownership, Inclusiveness,
Open-mindedness and Enterprising Spirit are also a central
element of The Kerry Way and underpin our Purpose.
Further details of our Values are outlined in Our People on page 19.
7

8
90% Taste & Nutrition
10% Consumer Foods
STRATEGIC REPORT
 AT A GLANCE
Since our modest beginnings in 1972, in a greenfield site in
Listowel, Co. Kerry, Ireland we have grown from strength to
strength to become a leading player in the global food and
beverage industry, with current annual sales of €7.2 billion.
This journey has been one of dynamic growth and
strategic acquisition, guided by our in-depth understanding
of international market dynamics, insights into consumer
trends, shifting taste preferences and evolving nutritional
requirements.
As an organisation, we never stand still and are clear with
our colleagues, customers and stakeholders; who we are,
what we do, how we do it, where we are going and why we
matter – we call this The Kerry Way.
Kerry Taste & Nutrition is the global leader in the
development of taste and nutrition solutions for the food,
beverage and pharmaceutical markets. Its broad technology
foundation, customer-centric business model, and industry-
leading integrated solutions capability makes Kerry the
co-creation partner of choice.
Kerry Foods, the Group’s Consumer Foods division, has
grown its presence with retail partners primarily in the
Irish and UK markets. It is a leader in its categories in the
chilled cabinet.
82% Taste & Nutrition
18% Consumer Foods
€7.2bn
Revenue
€903m
Trading Profit
Group Revenue
by Division
Group Trading Profit
by Division
 will be:
> the world leader in Taste and Nutrition
serving the food, beverage and
pharmaceutical industries, and
> a leader in its categories in the
chilled cabinet primarily in the Irish
and UK markets.
Through the skills and wholehearted
commitment of our employees, we will
be leaders in our markets – excelling in
product quality, technical and marketing
creativity and service to our customers.
We are committed to the highest standards
of business and ethical behaviour, to fulfilling
our responsibilities to the communities
which we serve and to the creation of long
term value for all stakeholders on a socially
and environmentally sustainable basis.
About Us
Our Mission Statement
At Kerry Taste & Nutrition, we understand consumers
want to consume food and beverage products that
meet their individual taste preferences, nutrition and
wellness requirements, while enhancing their lives and
contributing to a more sustainable world. Customers
including global, regional and local manufacturers, retailers
and foodservice providers all continue to re-evaluate the
recipes, processes and the ingredients they use in the
development of their products.
In a highly fragmented market, Kerry has the broadest
range of taste, nutrition and functional ingredient
technologies and solutions capability available to
re-formulate existing products and create new products
across all food and beverage end use markets.
In Kerry, we Inspire Food and Nourish Life through the
passion, commitment and work of our global team of
expert food scientists, chefs, baristas, brewers, mixologists,
bakers and nutritionists. Our leading business model,
unique taste and nutrition positioning and leading
integrated solutions capabilities differentiate Kerry as the
co-creation partner of choice for the food, beverage and
pharma industry. We know success requires an ability
to stay ahead of ever-changing consumer demand. We
partner with our customers to deliver products that will
delight and nourish their consumers across the globe.
Where we
operate

Consumer Foods
Kerry’s Consumer Foods division is a leader in its
categories in the chilled cabinet primarily in the
Irish and UK markets.
Kerry Foods has many strong and well loved
brands including Dairygold, Richmond, Fridge
Raiders, Cheestrings and Denny. These brands
can be found in kitchens, supermarkets, service
stations, convenience stores and entertainment
venues the length and breadth of Ireland and
the UK. In addition to these brands, Kerry Foods
manufactures customer branded products, which
can be found in leading supermarkets in Ireland
and the UK.
Key to the success of Kerry Foods is its ability
to focus on best positioning its offering in the
changing marketplace to drive further growth.
+
Our Business Model
pages 24-25
Strategy & Financial Targets
pages 28-30
Global Headquarters
Global and Regional
Technology &
Innovation Centres
Manufacturing Plants
Sales Offices
Note
Ireland & UK: 34 manufacturing plants, 4 sales offices

12
Kerry’s strategic positioning
and leading business model
continue to be key drivers of growth
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
I am pleased to report another successful
year for the Group, characterised overall
by good business performance and
strategic development.
The Group expanded its strategic footprint in developing
markets, made good progress integrating a number of
strategic acquisitions and further enhanced its integrated
solutions portfolio.
The Group’s strategic expansion in China progressed well.
We upgraded the recently acquired SIAS facility to serve
our customers in the Greater Beijing region, and continued
the expansion programme at our Nantong facility.
Philip Toomey Chairman
In June, the Group opened a new facility in Tumkur,
India, which will serve our rapidly expanding South West
Asia market. Further to the acquisition of AATCO at the
end of 2018, the Group also invested in expanding our
capabilities in the Middle East region.
The recent acquisitions of Fleischmann’s (FVC) business,
Southeastern Mills (SEM) and Ariake U.S.A., all performed
well, and integration is progressing to plan. These
acquisitions were complemented by the acquisitions of
Isoage Technologies, Biosecur Lab, Diana Food (Georgia,
USA) and Pevesa Biotech, further enhancing Kerry’s leading
authentic taste and clean label technology portfolio which
the Group plans to leverage to meet increasing demand
across a broader range of applications.
During the year, we continued to evolve our industry-
leading integrated solutions portfolio, with the launch
of the Radicle™ portfolio of plant-based offerings as a
notable example.
Kerry delivered a robust performance in the context of a
subdued UK marketplace and excluding the impact of the
previously reported ready meals contract exit. A number of
new plant-based products were launched under the Naked
Glory and Richmond brands in the year.
Strategic Development
Kerry’s business model embraces the Group’s leadership in
Taste & Nutrition and Kerry Foods’ leadership positioning
in its selected consumer foods platforms. Strategic
development of our platforms for growth is underpinned
by continued organic growth and acquisitive activity. In
a year of significant acquisition investment, the Group
completed eleven acquisitions at a net cost of €561.7m.
We continue to pursue organic and acquisitive growth
opportunities which build on the Group’s business model
and can be structurally integrated.
13

Governance
The Board is firmly committed to
maintaining the highest standards
of corporate governance in line with
best practice. During 2019, the Board
reviewed the Company’s corporate
governance policy and implemented
appropriate changes in accordance
with the Provisions of the 2018 UK
Corporate Governance Code. This
included broadening the remit of
the Remuneration Committee and
strengthening our stakeholder
engagement structures with the
appointment of Mr. Tom Moran as
designated workforce engagement
Director. We also engaged with all
our other stakeholders during the
year, as we believe that listening to
their views and needs is fundamental
to building a sustainable business.
Further details of our stakeholder
engagement activities are outlined
on pages 100-103.
In 2019, the Board engaged
Independent Audit Limited to
facilitate a performance evaluation of
the Board and its Committees. The
Board concluded that the outcomes
of the evaluation process have been
positive and have confirmed to the
Chairman that the Board and its
Committees operate effectively. A
number of areas of improvement
were identified and action plans
were agreed which will be addressed
during 2020. Further details of the
performance evaluation are outlined
on page 105.
Purpose and Values
During 2019, the Group articulated
its Purpose, refreshed its Values, and
communicated and embedded both
across the organisation following
a collaborative process with input
from employees across the Group.
Our Purpose to Inspire Food and
Nourish Life, and our Values of
Courage, Ownership, Inclusiveness,
Open-mindedness and Enterprising
Spirit are core elements of The Kerry
Way organisational framework. The
Board will continue to ensure that
management throughout the Group
promote our Purpose and Values to
guide our employees in the way we
do business.
Sustainability
We understand the importance of
delivering long term sustainable
economic growth in an ethical
manner, aligned to our Purpose and
in line with societal expectations.
During 2019, the Group made
good progress on its sustainability
objectives with the successful
conclusion of the Towards 2020
Programme.
Building on the success of this
programme, taking into account the
feedback received from ongoing
engagement with our stakeholders,
we developed a new sustainability
programme with even greater
ambition, to be launched in the
second quarter of 2020. This strategy
will address the most material issues
for Kerry and our stakeholders and
our objective as an organisation, is to
continue to integrate sustainability
into all aspects of our business to
support our Purpose to Inspire Food
and Nourish Life.
Further details of our sustainability
programme are outlined in the
Sustainability Review on pages
49-72.
Operational Visits
As part of an ongoing programme,
the June 2019 Board meeting
was held in Krakow, Poland. The
visit focused on Kerry’s Taste &
Nutrition strategy for Europe and
Russia and featured presentations
on strategy, market updates and
trading performance from the
Polish, Russian, Eastern Europe and
Northern Europe senior management
teams. An economic update on the
Polish market was also presented
by an external industry expert.
Representatives from a major
customer in Eastern Europe were
invited to present and engage in
discussions with the Board on their
experience of working with Kerry.
While in Poland, the Board hosted
a dinner with key stakeholders
including employees and customers,
representatives of government,
trade and enterprise agencies. This
provided an informal opportunity
for the Board to engage with
stakeholders in the local market.
In 2019, I visited the North America
Savoury Taste Centre of Excellence
and manufacturing facility in Clark,
New Jersey, USA, the opening of our
new manufacturing facility in Tumkur,
India as well as sites in France
and Ireland.
Our People
Central to Kerry’s continued success
is the hard work and commitment of
all our employees and the strength
of our senior management teams.
During 2019, the Board reviewed
senior management development
and succession plans having regard
to agreed diversity targets, ensuring
the appropriate level of skills and
diversity exist in the Group to achieve
our future growth and development
objectives. As I visit sites throughout
the Group, I continue to be impressed
by the quality, commitment and
enthusiasm of our people.
Dividend
The Board recommends a final
dividend of 55.1 cent per share (an
increase of 12% on the 2018 final
dividend) payable on 15 May 2020 to
shareholders registered on the record
date 17 April 2020.
Together with the interim dividend
of 23.5 cent per share, this brings
the total dividend for the year to 78.6
cent, an increase of 12% on 2018.
Prospects
The Board remains confident that
the Group’s business model and
strategies will continue to deliver
shareholder value and benefit our
other stakeholders in the years to
come. We will continue to pursue
organic and acquisitive growth
opportunities and the Group’s
balance sheet is well placed to
support our objectives. The view of
management regarding the business
outlook for 2020 is presented in the
Chief Executive Officer’s Review.
Finally, on behalf of the Board, I would
like to thank Edmond and all our
employees for their contribution to
the ongoing success of the Group.
Philip Toomey
Chairman
17 February 2020
20% North
America
15% UK
19% Continental
Europe
4% Rest of World
2% Ireland
60%
Institutions
27%
Retail
13% Kerry Co-operative
Shareholder Analysis

14
Strong growth was achieved in the year,
driven by good volume growth in
Taste & Nutrition and the contribution
from strategic acquisitions
STRATEGIC REPORT
CHIEF EXECUTIVE OFFICER’S REVIEW
The food and beverage industry continues to
evolve at pace, with a heightened focus on
sustainability as consumers are demanding
more, which is challenging traditional business
models right along the end-to-end supply chain.
Consumers want great taste, including authentic, natural
and local taste experiences. They want enhanced nutrition
for better health and overall wellbeing, and they expect
more convenient and affordable options to match today’s
on-the-go and digital lifestyles. Consumers are demanding
that these experiences are produced and delivered
without compromise, in ways that are good for people
and the planet. Products are increasingly required to
reflect consumers’ values on sustainability and provide
additional fulfilment by creating positive outcomes beyond
the consumption occasion. Our Purpose to Inspire Food
and Nourish Life helps define the key role Kerry plays in
addressing these needs. As our customers continue to
meet these rapidly changing consumer demands and
increase speed to market, Kerry is best positioned as the
co-creation partner of choice with our unique business
model, broad taste and nutrition technology portfolio, and
industry-leading integrated solutions capability.
The Group delivered a solid volume growth performance
in the year. Taste & Nutrition achieved good volume
growth in the Americas, a solid performance in Europe
and continued strong growth in APMEA. Consumer Foods
delivered a robust underlying performance versus the
market, offset by the impact of the ready meals contract
exit previously announced.
Edmond Scanlon Chief Executive Officer
15

Results
Group revenue on a reported basis
increased by 9.6% to €7.2 billion
reflecting volume growth of 2.8%,
flat overall pricing, favourable
translation currency impact of 2.1%
and contribution from business
acquisitions of 4.7%.
Taste & Nutrition delivered 4.0%
volume growth and Consumer Foods’
business volumes reduced by 2.2%.
Group trading margin increased
by 30bps to 12.5%, resulting in an
overall increase in trading profit of
12.1% to €903m. This trading margin
increase reflects growth in both the
Taste & Nutrition and Consumer
Foods divisions.
Constant currency adjusted earnings
per share increased by 8.3% to
393.7 cent (2018 currency adjusted:
363.5 cent). Basic earnings per share
increased by 4.7% to 320.4 cent
(2018: 305.9 cent).
Kerry’s industry-leading research
and development expenditure
increased to €291m due to additional
investment in Taste & Nutrition (2018:
€275m). Net capital expenditure
amounted to €315m (2018: €286m)
as the Group continued to invest in
its strategic priorities for growth, in
particular authentic taste, clean label
technologies and developing market
facilities. The Group achieved free
cash flow of €515m, reflecting cash
conversion of 74% in the year (2018:
€447m / 72%).
+
Our Markets
pages 26-27
Taste & Nutrition
Business Review
pages 42-46
Consumer Foods
Business Review
pages 47-48
4.0%
Taste & Nutrition
Volume growth ahead of markets
across Food and Beverage EUMs
Reported revenue increased by
12.5%, reflecting good volume
growth, significant contribution
from business acquisitions and a
favourable translation currency
impact. Trading profit grew by
14.1% to €918.5m, reflecting a
20bps improvement in trading
margin to 15.3%.
2.7%
Americas
Volume growth in the Americas
driven by Food EUMs of Meat
and Snacks
Reported revenue in the region
increased by 16.5% to €3,198m,
reflecting 2.7% volume growth, 0.2%
increase in net pricing, a favourable
translation currency impact of 4.4%
and contribution from business
acquisitions of 9.2%.
North America delivered good volume
growth against a backdrop of softer
market volume growth rates. LATAM
performed well with good growth
in Brazil and Mexico, and a solid
performance in Central America.
Within the Food EUMs, Kerry’s
Meat sub-EUM delivered strong
growth, with plant-based offerings
in particular delivering an excellent
performance, as customers continue
to seek innovative solutions to meet
the consumer demand for cleaner
label and next generation offerings.
This performance was complemented
by the acquisition of the coatings and
seasonings business, Southeastern
Mills (SEM), which performed very well.
The Snacks sub-EUM delivered good
growth, as Kerry’s integrated solutions
capability was key to a number
of successful customer launches
addressing consumer demands
for new world taste and healthier
snacking experiences.
The Beverage EUMs had a number
of plant-based beverage launches
and innovations utilising Ganeden®
probiotics, contributing to a good
finish to the year.
The global Pharma EUMs had a good
performance, led by strong growth in
excipients in North America.
Good progress was made on the
integration of Fleischmann’s (FVC)
business and Ariake U.S.A., Inc. and
both performed well. These were
complemented by the acquisitions
of Isoage Technologies, Biosecur
Lab and Diana Food (Georgia, USA),
further enhancing Kerry’s leading
authentic taste and clean label
technology portfolio, which the
Group plans to leverage in meeting
increasing demand across a broader
range of applications.
Volume
Growth
Volume
Growth

16
10.3%
APMEA
Volume growth in APMEA driven by
strong growth across all Food and
Beverage EUMs
Reported revenue in the region increased
by 16.2% to €1,285m, reflecting 10.3%
volume growth, 0.1% increase in net
pricing, 0.1% favourable transaction
currency impact, 0.6% favourable
translation currency impact, and
contribution from business acquisitions
of 5.1%. Key to the strong growth in the
region was the further deployment of
Kerry’s business model with customers
across existing and new markets.
Within the Food EUMs, Kerry’s Meat
sub-EUM delivered excellent growth with
both global and regional customers,
particularly in China and South East Asia,
with a range of innovations meeting key
consumer preferences for premium local
authentic taste and a superior home
delivery experience.
The Snacks sub-EUM delivered strong
growth, particularly with savoury taste
innovations that meet local consumer
preferences.
Kerry’s Beverage EUMs delivered strong
growth underpinned by a number
of successful launches in refreshing
beverages with enhanced wellness and
functional benefits. The branded DaVinci
range enjoyed strong growth across
the year.
We continued to make good progress in
expanding our capacity and deploying
our technology capabilities in the
region. Our strategic expansion in China
progressed well, as we upgraded the
recently acquired SIAS facility to serve our
customers in the Greater Beijing region,
and continued the expansion programme
at our Nantong facility. In June, the Group
opened a new facility in Tumkur, India,
which will serve our rapidly expanding
South West Asia market. Further to the
acquisition of AATCO at the end of 2018,
the Group invested in expanding its
capabilities in the Middle East region.
2.0%
Europe
Volume growth in Europe driven
by Beverage and Food EUMs of
Meat and Snacks
Reported revenue in the region
increased by 2.4% to €1,456m,
reflecting 2.0% volume growth, 0.1%
increase in net pricing, a favourable
translation currency impact of
0.1% and contribution from business
acquisitions of 0.2%. Kerry’s
performance in the Foodservice
channel contributed strongly to
growth in the region.
Kerry’s Beverage EUMs achieved
strong broad-based growth across a
number of sub-categories from
low/non-alcoholic beverage, tea and
coffee to plant-based offerings.
Within the Food EUMs, Kerry’s Meat
sub-EUM performed very well, with its
industry-leading portfolio deployed to
create solutions which met a variety
of customer and consumer needs.
Strong growth and very good business
development was achieved in plant-
based meat alternatives, supported by
the launch of the Radicle™ portfolio.
The Snacks sub-EUM performed
well, with a number of new authentic
world taste launches and healthy
snack products incorporating Kerry’s
Ganeden®
probiotics.
The Group also completed the
acquisition of Pevesa Biotech – a
specialist plant protein isolates and
hydrolysates business based in Spain
and serving key nutrition applications.
Volume
Growth
Volume
Growth
17

Consumer Foods
Delivered a solid underlying
performance in the context of
a subdued market
Reported revenue decreased
by 2.4% to €1,307m, reflecting
a 2.2% reduction in volumes,
0.5% decrease in net pricing and
a favourable translation currency
impact of 0.3%. Excluding the
impact of the previously reported
ready meals contract exit, Kerry
delivered a robust performance in
the context of a subdued UK
marketplace, where lower consumer
confidence impacted overall market
volumes. The divisional trading
margin increased by 10bps to 7.6%.
Trading profit decreased by 1.2% to
€98.9m in the year. The Realignment
Programme was completed during
the year and delivered to plan.
The Richmond chilled sausage range
delivered a solid performance, led
by growth in chicken sausages
and the new plant-based sausage
which was launched at the end of
September, along with a range of
meat-free products under the Naked
Glory brand. The Denny brand in
Ireland performed well. A number of
business wins supported our overall
performance within spreads.
Chilled meals continued to be
impacted by reduced promotional
activity, while frozen meals had a
good performance across the range.
As previously announced, production
ceased in the ready meals facility in
Burton in September and the site
was sold prior to the year end.
The Cheestrings range had strong
growth supported by a number of
innovations. Fridge Raiders also
extended its snacking range to
reach a broader consumer market.
Future Prospects
Our markets and the end-to-end
supply chain are experiencing
unprecedented disruption, as
consumers are demanding more than
ever before, and traditional business
models are being challenged as a
result. What consumers want from
food and beverage offerings is
changing at pace. They want great
tasting products that nourish their
bodies, enhance their lives and are
sustainable for the planet. New
entrants and challenger brands have
added significant fragmentation to
the marketplace. Key for customers to
win in this fast-moving environment
is the ability to bring more products
to market and to do so quicker. This
changing marketplace is creating a
significant opportunity for enterprises
that can deliver on these new
requirements. Kerry’s unique business
model, broad taste and nutrition
technology portfolio, and industry-
leading integrated solutions capability
positions it as the co-creation partner
of choice for the food, beverage and
pharma industries.
Over the past number of weeks, we
have been working with our team
in China to manage the ongoing
developments relating to the
coronavirus. Our first priority remains
the safety of our people and their
families. Our team in China is taking
all appropriate protective measures
in our facilities and we are working
with the Chinese authorities, our
customers and other stakeholders
to manage through the situation.
We have included in our full year
guidance the estimated first quarter
impact on our China business.
Taste & Nutrition has strong growth
prospects, as we continue to further
deploy our industry-leading business
model in supporting our customers.
Consumer Foods continues
to selectively focus on growth
opportunities.
The Group will continue to invest
for growth aligned to the changing
market landscape and pursue M&A
opportunities aligned to our strategic
growth priorities.
The Group has a strong innovation
pipeline and remains confident in
its ability to continue to outperform
its markets.
Edmond Scanlon
Chief Executive Officer
17 February 2020

18
STRATEGIC REPORT
OUR PEOPLE
Our Culture
At Kerry, our people are the winning
ingredient in our business. We leverage
our diverse, entrepreneurial and results
focused culture, talents and expertise
to innovate and lead to better food, in
a better way for a better future for our
customers, our shareholders, our people,
our communities and our environment.
Every day, our 26,000+ people access our
global expertise and taste and nutrition
capabilities to develop innovative food and
beverage solutions that offer new growth
opportunities for our customers. We
represent more than 120 nationalities with
operations across more than 150 locations;
we are committed to fostering a great
place to work, where our people can be at
their best and are able to contribute fully to
our shared success.
We strive for excellence in the delivery
of our core business capabilities and
differentiate ourselves as an organisation
through our people. We think and act
with a Safety First, Quality Always mindset
and focus on enabling our people to
make it easier and more valuable for our
customers to do business with Kerry. We
set ourselves the highest standards of
business and ethical behaviour.
Our groupwide approach to people
leadership is about nurturing a positive
environment where all our people are
inspired to develop themselves, to learn
together and to grow our business;
winning for our customers and for Kerry.
Our Purpose to Inspire Food
and Nourish Life underpins
all our people practices
including our commitment
to delivering for our
communities, globally and
locally through charitable
initiatives. Our people
are actively encouraged,
recognised and rewarded
for bringing our Purpose
to life and for demonstrating
our core Values within Kerry.
Globally connected
and winning locally
19

Our Values
The Kerry Way is our organisation’s
framework for guiding our decisions
and actions, individually and collectively,
towards current business priorities, our
long term aspirations and our shared
goal: To make it easier and more valuable
for our customers to do business with us.
The Kerry Way framework was
developed through a collaborative
process with inputs from our people
and seeks to ensure our people feel
inspired and connected – to each other,
the organisation, and to the impact
we have on the world. The Kerry Way
framework clarifies who we are; what
we do, how we do it, why we matter
and where we are going and is
fully aligned with our strategic
growth priorities.
Our Values are embedded within
The Kerry Way framework and were
refreshed during 2019 to reflect both
the heritage we are proud of, and our
ambitions for the future.
Our refreshed Values were approved
by the Board in 2019 and the Executive
Team are taking a leading role in
ensuring our Values are firmly
embedded across the Group.
OUR KERRY
VALUES
underpinned by our
foundation
of Safety First,
Quality Always
COURAGE
We’re brave,
speak up, and
inspire others
to get the best
results.
ENTERPRISING
SPIRIT
We’re bold,
think big picture,
add value,
and grow together.
OWNERSHIP
We’re
accountable and
care about the
business as if it
were our own.
INCLUSIVENESS
We’re welcoming,
authentic, and see
strength in diversity.
OPEN-MINDEDNESS
We’re curious,
innovative, and
believe in possibility.

20
Externally, we continue to strengthen
core strategic partnerships both
within Ireland and globally. In North
America through our partnership
with Women Foodservices Forum,
40 colleagues participated in the
Annual Leadership Development
Conference in Dallas, focused on
advancing women leaders and driving
gender equity in business. Through
our membership of the Irish Chapter
of the 30% club and the Agri-Food
Diversity & Inclusion Forum led by
Bord Bia, Kerry hosted a Masterclass
for over 80 companies within the Irish
food and drink industry at our Global
Technology & Innovation Centre in
Naas, Ireland, with the aim of sharing
thought leadership and innovative
practices for attracting, developing
and retaining the diverse talent we
all need to continue to grow and
innovate to secure the future of
our industry.
We continue to sponsor volunteer
programmes, with the aim of
fostering a culture of inclusion both
within Kerry and in our communities.
We are particularly proud of our
partnership with Special Olympics,
launched during 2018 in the UK,
Ireland, The Netherlands and Poland,
which we have committed to extend
to 2020. This programme provides
opportunities to children and adults
with intellectual disabilities to
participate all year round in sporting
activities and in 2019, a number of
selected Kerry volunteers had the
unique opportunity to participate
in the World Games in Abu Dhabi,
supporting athletes and families from
all over the world.
Finally, continuing our journey to
increase gender and cultural diversity
in leadership roles, we have agreed a
set of measures with our Executives,
endorsed by our Board to ensure
our leadership teams and internal
talent pipelines better reflect the
broader mix of capabilities and
cultural diversity we have within our
organisation. This will be further
developed in 2020 and incorporated
in our Sustainability 2030 Plan.
80+
Kerry hosted a
Masterclass for over
80 companies within
the Irish food and drink
industry at our
Global Technology
& Innovation Centre,
in Naas, Ireland
40
In North America
through our
partnership with
Women Foodservices
Forum, 40 colleagues
participated in the Annual
Leadership Development
Conference in Dallas
10
Kerry Volunteers
attended the Special
Olympics World Games
in Abu Dhabi
Fostering Diversity, Inclusion and Belonging
As a global business, we appreciate
and value our dynamic mix of
people who bring new perspectives,
experiences and thought leadership
to enable our organisation to
continuously grow and innovate
for our customers. We are committed
to creating a positive and inclusive
work environment where everyone
can be at their best, contribute to
our success and excel personally
and professionally.
Whilst diversity continues to be a
focus, particularly increasing our
gender and cultural diversity in
leadership roles, creating a culture
of inclusion and belonging is equally
important for us. We want to ensure
all our people’s ideas are heard
and discussed to strengthen our
approach. Our refreshed diversity,
inclusion and belonging strategy,
informed by inputs from our people
as well as external best practice,
is fully aligned with business and
talent objectives. We focus on raising
awareness of this important priority
through continued education and
training, we promote greater diversity
in our leadership profile, we foster
a more inclusive workplace and we
build and strengthen partnerships
within our communities.
One of the highlights from 2019 has
been the establishment of employee-
led Diversity, Inclusion & Belonging
Committees in many locations. These
committees actively raise awareness
of this important agenda, educate
and inspire our people to work
together to promote global and local
events that foster a more positive and
inclusive work environment for all.
21

We have a highly engaged and passionate workforce
across  that wants to be part of making
Kerry a better and more successful business for the
future. In 2019, we reviewed our approach to employee
engagement, partnering with one of the world’s leading
experts on leadership, culture and employee engagement
to develop a more comprehensive engagement strategy.
Our overall aim is to develop our leaders’ capability to
actively champion feedback and engage with their teams,
assess and monitor the level of employee engagement and
our employees’ experience in Kerry as a leading indicator
of and contributor to business performance and ensure
that Kerry continues to be a great place to work, thrive
and succeed.
During 2019, 85% of our people participated in our
second groupwide engagement survey to identify areas
of strength and areas for continuous improvement within
our business. Customer focus, alignment of employee
and organisational goals and our Safety First, Quality
Always mindset continued to be clear areas of strength.
Through a series of follow-up conversations with our
people we identified three global engagement priorities
for improvement: leadership development, organisational
effectiveness, and creating an environment where
everyone can fulfil their career aspirations and be at their
best. Throughout 2019 we have been focusing on these
priorities through a few significant groupwide initiatives,
with other initiatives being developed for launch and
impact in 2020, as follows:
Growing together, Winning together: our Employee Experience
> Strengthening people leader capabilities to grow and lead our business for the future. Having
rearticulated the role of the people leader at Kerry towards the end of 2018, resulting in a new framework
and set of objectives for all people leaders, reinforced through our performance management process, we
launched a series of leadership summits and workshops across the Group in 2019. To date, over 50% of our
people leaders have participated in learning experiences to understand how to nurture talent as a catalyst
for growth, to help our people develop meaningful careers with Kerry and to build sustainable, effective and
diverse teams that deliver exceptional results.
In addition, we sought to further clarify expectations for all leaders within Kerry during 2019. Following
workshops held with over 70 senior leaders, covering 14 nationalities, across all parts of our business,
we agreed a core set of Leadership Competencies, which describe the skills and behaviours expected for
successful execution of our strategy now and in the future. These competencies will set common standards
for leadership at Kerry and will be actively reinforced through all our key people processes.
> Aligning to improve organisational effectiveness. To enable our employees to make it easier and more
valuable for our customers to do business with us, 2019 has seen us focus on further refining our operating
model – how we better service our customers and continue to be the world’s leading Taste & Nutrition
company. As a consumer-led customer-centric organisation, we have structured our business to be close to
the market and consumer with our applications and sales teams based in local markets. Internally we have
streamlined our processes, and connected our global capabilities, for faster and more innovative responses
for the customer. Over 100 commercial leaders from across the Group have been involved in enhancing our
approach and we will continue to progress this in 2020.
> Being at our best: The Kerry Way. Bringing to life what it means to work at Kerry, sharing our Purpose and
creating an environment where everyone is connected to our ambitions in order to fulfil their own potential
and deliver for our customers, we initiated a groupwide The Kerry Way employee engagement initiative to
reach our 26,000+ employees. Inspired by sharing personal stories and demonstrating leadership in action,
our people leaders have led structured workshops with their teams focused on understanding who we are,
what we do, how we do it, where we are going and why we matter as a business throughout 2019. A key part
of these workshops has been connecting our people to our Purpose and our Values and sharing our Vision
for building a future for Kerry within our industry and society in general. To date 90% of employees have
participated in workshops and we will reach all employees by early 2020.
During 2019, the Board appointed Mr. Tom Moran as
designated workforce engagement Director. The Board
approved a workforce engagement plan for the designated
workforce engagement Director which includes visits to
office and manufacturing locations in Ireland, UK, France,
North America, Latin America and Asia. These visits will
provide an insight into a range of workforce engagement
activities within Kerry and opportunities to directly engage
with the workforce. Typical activities will include leaders
and employees bringing to life The Kerry Way, embedding
our Purpose and our Values in daily activities, engaging
in two-way communication and providing feedback
through Town Halls and workshops, building community
partnerships through local volunteer programmes and
proudly celebrating Kerry’s inclusive and diverse culture
through sponsored global and local activities.
We will continue to monitor progress against all our global
improvement opportunities through ongoing dialogue
with our leadership teams, our people and targeted pulse
surveys within the business during 2020.

22
> Safety First, Quality Always. The safety of our people and food
safety are core priorities for Kerry, and our commitment to our
people and our customers is reinforced through our ‘Safety First,
Quality Always’ practices.
During 2019 we continued to invest in our people, our processes
and infrastructure, strengthening our functional capability
through technical learning and career development opportunities,
and enhancing our global capabilities to improve our own global
quality, safety, health and environmental standards and policies as
well as to meet industry and regulatory requirements.
#Safetyfirst was the theme for 2019’s Kerry Global Safety Day.
It was a call to action to prevent accidents in the workplace.
Workplace safety is very important to Kerry, and we all have a
desire to work in a safe and protected environment. Workshops
sponsored by our global executive team were held across key sites
to promote and encourage collective action to ensure we create
safer workplaces for all our people.
> Code of Conduct. Through our Kerry Code of Conduct we focus
critical attention on ethical business practices and provision of
a safe and healthy workplace. Our programme of employment
compliance modules, covering Information Security, Intellectual
Property, Anti-Fraud and Code of Conduct, is updated annually
to maintain regulatory, legislative and workplace relevance,
and governed by our Compliance Steering Committee with
representation from across the business. This programme has
been completed by over 80% of our people during the past two
years and continues to be a priority area of focus for our business.
Achieving results ethically and in compliance with all relevant
legislation will always be an absolute expectation at .
We operate a zero-tolerance approach to labour abuses and
support effective abolition of child and forced labour worldwide.
The Group’s ‘Express a Concern’ hotline provides a mechanism by
which employees can report concerns in confidence through an
externally facilitated channel.
> Health & Wellbeing. Personal health and wellbeing of all our
people is paramount. At Kerry we appreciate the importance
of having a supportive wellbeing programme in place. Our
wellbeing framework has four pillars – nutritional, physical,
emotional and financial. We continue to develop and embed
wellbeing practices through our leadership development and
employee wellbeing programmes.
Promoting safe and healthy workplaces and work practices for our people
23

At Kerry we pride ourselves in our ability to offer
opportunities for all our people to grow professionally
and personally. Through our ‘world of opportunity’
initiative, promoted throughout 2019, and our global
mobility programmes, we supported over 550 moves this
year, with our people relocating for assignments in all
corners of the world, contributing their expertise to drive
local growth for our customers and Kerry and to gain new
cultural and life experiences. With an explicit focus on
leveraging our global footprint to develop future leaders,
we continue to encourage our early career employees,
typically graduates and those with less than five years’
experience, to seek out global opportunities to broaden
their experiences to support their career progression.
Graduates and employees with less than five years’
experience represent over a quarter of all international
moves in Kerry.
Kerry’s renowned Graduate Development programme
continues to be a core component of our strategy
to strengthen our future talent pipeline, providing
opportunities for graduates to work and develop across
a wide range of core disciplines, enabling longer term
sustainable leadership for the organisation. In 2019 we
upgraded our graduate assessments to ensure Kerry
remains competitive in today’s graduate marketplace and
have plans to enhance our global graduate offering and
development solutions in 2020.
Our Global Recognition Framework promotes the
further growth and consistency of our regional and local
recognition programmes.
In line with our aim to be the first choice for the best
talent around the world, our reward programmes are
locally advantageous to support both the business
strategy and the diverse needs of our people as well as
focused on recognising their performance, potential and
business value creation.
We are committed to gender pay equality and will
continue to proactively monitor the pay of male and
female colleagues doing similar roles to ensure it is
comparable. We appoint and promote based on merit
and will continue to encourage the career development
of all our people, paying attention to our promotion and
recruitment practices with regards to gender, to support
greater female representation at all levels.
At Kerry, ‘Total Reward’ is about more than just pay
and financial rewards, it encompasses robust learning,
career development, personal growth and worldwide
opportunities in an inclusive culture where all our people
can flourish.
During 2019, we carried out a Total Reward review
across several countries which collectively represented
approximately 80% of our global workforce. The purpose
of this review was to ensure that our reward programmes
continue to be positioned as one of the key levers of
business performance, are appropriately aligned with
the external market, and are delivered in a way which
makes them more easily understood and appreciated by
our employees. As part of this review, we refreshed our
reward philosophy and this framework will guide us as we
implement the recommendations arising from this review
during 2020 and beyond.
The Remuneration Committee of the Board was kept
updated on matters arising from the Total Reward review.
This review allowed the Committee to consider the
alignment of Executive Directors' remuneration with that
of the wider workforce.
Strengthening our Talent Pipeline Rewards and Recognition
550+
Internal moves created
through our 'world
of opportunity' and
mobility programmes

24
PEOPLE + CULTURE + SUSTAINABILITY
STRATEGIC REPORT
OUR BUSINESS MODEL
Inputs
30,000 Shareholders
26,000+ Employees
Consumers
Community & Government
Sales in 150+countries
Manufacturing in 32countries
The industry reference and customer preference
– creating value for all stakeholders
+
Global
Regional
Local
Retail
Foodservice
Authentic
Taste
Nutrition,
Wellness &
Functionality
A. FOUNDATIONAL
TECHNOLOGIES
B. INTEGRATED VALUE
CREATION ENGINE
C. CUSTOMERS
& CHANNELS
Food
End Use Markets
Beverage
Pharma
Meat
Dairy
Meals
Snacks
Bakery & Confectionery
Cereal & Sweet
25

A. Kerry has the industry’s broadest portfolio of
foundational technologies, built up over 30 years
and used to deliver both enhanced taste attributes
and improved nutrition and functionality. Combining
these technologies is a key driver of today’s consumer
preferences and a significant customer challenge.
Kerry’s positioning at the intersection of taste and
nutrition and understanding of how these work
together provides a unique ability to deliver tailored
customer-specific solutions.
B. The integrated value creation engine is where Kerry
excels by utilising its global infrastructure across the
entire product development cycle from ideation right
through to product launch. The three cogs of this
engine comprise Culinary & Insights which encapsulates
the market discovery, ideation and concept creation
phase; the Development & Applications teams who
work together to create products with the relevant taste
and nutrition attributes, while using Kerry’s sensory,
analytical and regulatory experts to ensure the product
meets consumer preferences; and Product Process
Technologies, where Kerry’s extensive understanding of
the end-to-end supply chain, process engineering and
unique ability to develop finished consumer products
distinguishes it from others. Kerry is the leading
provider of integrated solutions, leveraging these
interconnected capabilities to drive value for customers.
Therefore if a customer wants to bring a new product
to market quickly or move into an adjacent category
across the food, beverage and pharma landscape,
Kerry is the co-creation partner of choice.
C. Kerry delivers customer solutions across a broad set
of routes to market in both the retail and foodservice
channels. Its diversified range of customers extends
from global to regional and local leaders.
These wide ranging capabilities continue to be deployed in local markets through our expansive infrastructure, allowing
Kerry to successfully meet local consumer needs, deliver on our strategy and drive sustainable business performance.
STRATEGIC REPORT
OUR BUSINESS MODEL
Outputs
200+
Articles published since 2016
by Kerry Health & Nutrition Institute
Customers 18,000+Products
7,000+People impacted by the RAIN Programme
+29% TSR in 2019
€1.3bnPayroll
Kerry’s customer-centric business model comprises three core elements
– a diverse portfolio of foundational technologies, a unique integrated
value creation engine and unparalleled customer and channel access.
+
Read more
about the RAIN
Programme in
our Sustainability
Review
page 69

26
The consumer is at the centre of everything we do
A.
Consumer Preferences
Kerry’s approach is
focused on fundamentally
understanding local
consumer preferences and
supporting customers as
they seek to innovate to win
in today’s food, beverage
and pharma marketplace.
B.
End Use Markets
Kerry’s sales are viewed
primarily through
the lens of its food,
beverage and pharma
end use markets,
through which it sells
18,000+ products.
C.
Customers & Channels
Kerry has a customer base
that is well diversified
between global companies,
regional leaders and
local/smaller players.
The Group works
effectively across this
wide range of customers
and tailors its approach to
best serve each individual
customer type.
Kerry serves the market
through a number of
different sub-channels
that are principally
grouped under
either the retail or
foodservice channels.
Kerry is a consumer-led
organisation. Our business
model, structures and
strategies continue to
evolve, centred around
a deep understanding
of diverse local consumer
preferences across the globe.
1.
Food
EUMs
Beverage
EUMs
Pharma
EUMs
STRATEGIC REPORT
OUR MARKETS
27

The changing marketplace is
reshaping our industry
Leading to significant
market opportunity
Kerry’s markets and the
end-to-end supply chain are
experiencing unprecedented
isruption, as consumers are
demanding more than ever before
and traditional business models are
being challenged as a result. What
consumers want from food and
beverage offerings is changing at pace,
they want great tasting products that
nourish their bodies, enhance their
lives and regenerate the planet. New
entrants and challenger brands have
added significant fragmentation to
the marketplace. This is leading to the
requirement for shortened product
development lifecycles as consumers
want to continuously try new things.
Customers are responding by delivering
authentic products that combine
great taste while meeting nutrition
and functionality demands. Trust is
absolutely paramount as consumers
seek socially responsible offerings
from companies that follow sustainable
practices. Key for customers to win in
this fast moving environment is the
ability to bring more products to market
and do so quicker. All of these changes
are reshaping our industry, challenging
long established business models and
redefining traditional ways of working.
This changing marketplace is
creating a significant opportunity
for enterprises that have the business
model and capabilities to deliver
on these new requirements.
Customers continue to look for
partners that provide an enhanced
innovation service and can perform
value-add activities that may have
previously been an internal step in a
new product launch. This is leading to
significant market opportunity and a
potential future market far in excess
of the current estimated market size
of c. €75 billion.
Sustainability is a key driver of change
along the supply chain
Food for life and wellbeing
New taste experiences
Trust is core
‘Made-for-me’
Managing accelerating
customer fragmentation
Elevating nutrition without
compromising on taste
Being trusted
Digital transformation
Manufacturing needs evolving
Integrating innovation
processes
Redefining supply chains
Organisational agility critical
DRIVING
CUSTOMER
TRANSFORMATION
CONSUMER
REVOLUTION
RESHAPING
OUR INDUSTRY
2. 3.
MARKET
TODAY
P
O
TENTIAL FUTURE MARK
E
T
STRATEGIC REPORT
OUR MARKETS

28
STRATEGIC
PRIORITIES
FOR GROWTH
TASTE & NUTRITION
AUTHENTIC
TASTE
NUTRITION, WELLNESS
& FUNCTIONALITY
OVERVIEW Our Authentic Taste
platform is founded on a
‘from-food-for-food’ heritage
and philosophy, with a broad
range of foundational
technology capabilities
in Dairy, Savoury, Smoke
& Grill, Citrus, Tea & Coffee,
Beverage and Sweet
amongst others.
Kerry has an extensive
portfolio of technologies
across both Taste and
Nutrition. It has developed
its unique ability to deploy
these technologies together
to enhance the taste and
improve the nutrition and
functionality of products,
which has been integral to
Kerry leading the industry
shift towards delivering
customer specific integrated
solutions.
Our Nutrition, Wellness
& Functionality platform
delivers benefits such as natural
preservation, immunity support,
digestive health, sustainable
efficiencies, fortification and
cleaner labels. These benefits
are achieved by leveraging this
broad foundational technology
platform which includes Proteins,
Fibres, Enzymes, Probiotics,
Texturants, Food Protection and
Natural Preservation Solutions
amongst others.
KEY
ACHIEVEMENTS
STRATEGY IN
ACTION
The Group has clear strategic priorities for organic
and acquisitive growth which are the main drivers
of our medium term organic growth targets and
focus areas for capital allocation.
Taste Nutrition
Unique
Proposition
Strategic
Priorities
for Growth
These are complemented by our
margin expansion objectives and
underpinned by a returns discipline,
with sustainability a key consideration
for all strategic decisions.
Winning in the Market
through Kerry's Leading Plant-Based Offering
The demand for plant-based products is
growing at pace across a range of categories,
as consumers recognise the health benefits of
a balanced diet and the ever increasing impact
of sustainability on purchasing decisions.
Customers continue to expand their ranges
and improve the product attributes of their
offerings, including improving flavour, texture,
nutritional value and delivering a cleaner label.
During the year Kerry launched its RadicleTM
brand to allow customers to access the full suite
of its plant-based offering. Examples of a number
of successful launches during the year across a
variety of applications are outlined below.
Meat-Free
Al Pastor Plenti
• Authentic Savoury™ Clean
Smoke, Al Pastor marinade
• Plenti™ Protein
• Freshness – Clean Label
Preservation
Dairy-Free
Cold Brew Soft Serve
• Cold Brew Extract &
Functional Oat Solution
• Natural Flavour &
TasteSense™ Solution
• Clean Label Texture
Solution including
Emugold™ Fibre
Coconut & Lemongrass
Protein Beverage
• TasteSense™ – Sugar
Reduction Technology
• Simply Nature™ –
Lemongrass Extract and
Coconut Crystals
• Prodiem™ Refresh
STRATEGIC REPORT
STRATEGY & FINANCIAL TARGETS
29

TASTE & NUTRITION CONSUMER FOODS
DEVELOPING
MARKETS
FOODSERVICE
Kerry’s local knowledge and focus,
combined with its global expertise
and capabilities have been key to
its excellent track record of growth
in developing markets.
Kerry’s target is to continue to
achieve average volume growth in
developing markets of 10%+ per
annum over the five year plan.
Kerry has an unrivalled position
as a partner to the Foodservice
channel. The breadth of our offering
and depth of capabilities means
Kerry is the leading partner for
foodservice operators, as it provides
menu innovation and new platforms,
themed & seasonal offerings and
nutrition-led innovation.
Kerry’s target is to achieve average
volume growth in Foodservice of 7%
per annum over the five year plan.
A leader in its categories in the
chilled cabinet primarily in Ireland
and the UK.
We will continue to drive growth
and outperform our markets in our
core business by responding to key
consumer trends in meat, meals
and dairy, while also leveraging this
core expertise in developing and
expanding adjacent categories.
The Taste & Nutrition division’s leading
strategic priorities for growth are Authentic
Taste combined with Nutrition, Wellness &
Functionality. These are intrinsically intertwined,
as Kerry’s philosophy and ways of working focus
on delivering great tasting products, whilst
enhancing their nutrition, wellness
and functionality.
The Group also continues to advance our
leading positions in Developing Markets
and the Foodservice channel.
The Consumer Foods division is a leader
in its categories in the chilled cabinet and
is focused on best positioning its offering
in the changing marketplace to drive
further growth.
Core
Adjacencies
New occasions
New channels
New customers
+
Taste & Nutrition
Business Review
pages 42-46
Consumer Foods
Business Review
pages 47-48
The official inauguration of Kerry Tumkur facility
in India. Pictured: Scott Scharinger, VP & General
Manager SWA; Ambassador Brian McElduff; Philip
Toomey, Chairman; John Savage, President & CEO
Kerry APMEA.
• Continued strong organic
performance, with volume
growth of 10.0%.
• Strategic expansion in China
through upgrading the recently
acquired SIAS facility to serve
customers in the Greater Beijing
region, and the continued
expansion of the Nantong facility.
• Commissioned new state-of-the-
art 40,000m² facility in Tumkur,
India, which is another example
of the Group’s ambition for
sustainable production.
• Achieved good volume growth
of 5.5% in the year.
• Excellent growth within
beverage in Europe, as the
nutritional partner to a number
of leading Foodservice players.
• Strong growth across the APMEA
region, with the DaVinci brand
performing particularly well.
• Achieved underlying volume
growth ahead of our markets,
which were challenged in the year
due to softer consumer demand.
• Achieved strong growth in
our adjacent categories,
particularly in snacking
through the Cheestrings and
Fridge Raiders ranges.
• Launched a number of
plant-based offerings
under the Richmond and
Naked Glory brands.
STRATEGIC REPORT
STRATEGY & FINANCIAL TARGETS

Medium Term Financial Targets
The medium term financial targets are based on a combination of growth and return.
Our overall target of 10%+ average constant currency adjusted EPS growth represents a balance of volume growth
and margin expansion, supported by the reinvestment of cash in our strategic priorities. The metrics of return on
average capital employed and cash conversion represent a balanced assessment of performance over time.
These metrics ensure that there is an appropriate balance between growth and return. We believe that the delivery
of these financial targets should underpin a Total Shareholder Return outperformance relative to our peers.
Note 1: Volume growth targets assume 2% above market growth rates.
Note 2: Adjusted EPS growth and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax).
Note 3: Cash conversion is free cash flow expressed as a percentage of adjusted earnings after tax.
Full definitions can be found on pages 216-219.
Strategic Medium Term Financial Targets
On average over life of plan
Outperformance
STRATEGIC REPORT
STRATEGY & FINANCIAL TARGETS
STRATEGIC REPORT
STRATEGIC ADVANTAGE
TECHNOLOGY
LEADER
Unique expertise in technology
integration for solution delivery
Industry-leading application
& culinary expertise
Leading technology portfolio
Deep science & research
expertise aligned to global
network of partners
Unparalleled breadth of
product process expertise
Best-in-industry infrastructure
of global and local technology
& application centres
GROWTH
POTENTIAL
Industry-leading business model
Unique Taste & Nutrition
positioning with long runway
of technology deployment
opportunities
Winning across all customer
segments and channels
Further strong growth potential
in developing markets
Extensive global footprint
platform to meet local needs
Proven consolidator
SUSTAINABILITY
Long term strategy fully anchored
in our Sustainability commitments
Natural community based
heritage
Investing for a sustainable future
Strong delivery against
2020 targets
Milestones linked to performance
management
Innovative health & wellbeing
programmes supporting
communities globally
PEOPLE
Proven leadership and
management capability
Ambitious, results driven
and collaborative culture
Investment in leadership,
professional and technical
capabilities for the future
Opportunities for personal
growth and career fulfilment
Global mobility programme
Diverse and inclusive teams
Reward & recognition focus
PROVEN
SUCCESS
33 years of consistent results
since 1986
10% CAGR for revenue
13% CAGR for trading profit
13% CAGR for adjusted
EPS growth
16% CAGR on share price
17% CAGR on dividend per share
MARKET
LEADER
Global leader in Taste & Nutrition
– Co-creation partner for the
food & beverage industry
Largest Taste & Nutrition
business in Developing Markets
Global Leader in Taste & Nutrition
solutions into Meat/Meat
Alternative Market
Global Leader in Clean Label
solutions (in particular natural
preservation & natural taste)
In 5 of the top 10 blockbuster
drugs
Leader in our chilled foods
categories in Ireland and the UK
We have a long history of
sustained profitable growth.
Group strategy will continue
to be achieved through
the commitment and
expertise of our people.
Key Financial
Performance
Metric
Definition1 Volume growth represents sales
growth year-on-year, excluding
pass-through pricing on raw
material costs, currency impacts,
acquisitions (net of disposals) and
rationalisation volumes.
Trading margin expansion
represents the change in trading
margin in the current year
compared to trading margin
achieved in the prior year.
Trading margin represents
trading profit expressed as a
percentage of revenue.
Constant currency adjusted
EPS growth represents
adjusted EPS in the current
year compared to adjusted
EPS achieved in the prior
year calculated on a constant
currency basis. Adjusted EPS is
considered more reflective of
the Group’s underlying trading
performance than basic EPS.
Performance
Commentary
The Group achieved volume
growth of 2.8% in the year which
outperformed the market. This
reflected strong growth in the
Taste & Nutrition division, partially
offset by the performance of the
Consumer Foods division which
was impacted by a contract exit.
The Group increased its trading
margin by 30bps to 12.5% in
the year.
The Group achieved constant
currency adjusted EPS growth
of 8.3% reflecting a consistent
solid performance in the year.
Historical
Performance
Strategic
Linkage
Volume growth is an important
metric as it is seen as a key driver
of top-line organic business
improvement. This is used as
the key revenue metric, as Kerry
operates a pass-through pricing
model with its customers to cater
for raw material price fluctuations.
Pricing therefore impacts
like-for-like revenue growth
positively or negatively depending
on whether raw material prices
moved up or down.
Trading margin expansion is
a key measure of profitability,
demonstrating improvement in
the product mix being sold and
in operational efficiency in the
business.
EPS growth is a key
performance metric
encompassing the components
of growth important to the
Group’s stakeholders. Volume
growth and margin expansion
are two key drivers of EPS
growth.
Link to
Remuneration
Volume growth is a metric in the
short term incentive plan and
is a key driver of adjusted EPS
growth, which is a metric for the
long term incentive plan.
Trading margin expansion is a
metric in the short term incentive
plan and is a key driver of adjusted
EPS growth, which is a metric for
the long term incentive plan.
Constant currency adjusted EPS
growth is a performance metric
for the long term incentive plan.
GROWTH
1		 These are non-IFRS measures or Alternative Performance Measures. Definitions, calculations and reconciliations for
these are set out above and within the Supplementary Information section – Financial Definitions on pages 216-219.
Volume Growth
2.8%
Trading Margin Expansion
The metrics outlined below are the important
measurement indicators of Group performance
in meeting its financial objectives. The Group’s
financial objective is to maximise shareholder return
by delivering on the targets of growth in business
profitability and meeting return on investment hurdles.
The Group also has a range of non-financial metrics
that are used to measure performance with customers,
suppliers, community, environmental targets and
employee engagement. The non-financial metrics are
shown in the Sustainability Review and complement
the financial metrics detailed below.
STRATEGIC REPORT
FINANCIAL KEY PERFORMANCE INDICATORS
33

This measure is defined as profit after
taxation before non-trading items
(net of related tax), brand related
intangible asset amortisation and
finance income and costs, expressed
as a percentage of average capital
employed.
Cash conversion is defined as free
cash flow, expressed as a percentage
of adjusted earnings after tax.
TSR represents the change in the
capital value of  shares plus
dividends in the financial year.
The Group achieved ROACE of 11.8%
reflecting strategic acquisitions and
investments made in the year.
The Group achieved cash conversion
of 74%, reflecting good cash
generation partially offset by capital
investment for growth and additional
working capital in the year.
The Group achieved a TSR of 29.3%,
which outperformed the mean and
median of Kerry’s peer set in the year.
The Group has achieved compound
growth of 100% in TSR over the course
of the last five years.
ROACE is a key measure of the
return achieved by the Group on its
investment in capital expenditure
projects, acquisitions and other
strategic investments, as a percentage
of what resources are available to
the Group.
Cash conversion is an important
metric as it measures how much of
the Group’s adjusted earnings after
tax is converted into cash.
TSR is an important indicator of how
successful the Group has been in terms
of shareholder value creation.
ROACE is a performance metric for the
long term incentive plan.
Cash conversion is a performance
metric for the short term incentive plan.
TSR is a performance metric for the
long term incentive plan.
EPS
Total Shareholder Return (TSR)
29.3%
RETURN
Return on Average Capital
Employed (ROACE)
11.8%
Cash Conversion
74%
ROACE Cash TSR
Cash Conversion %
Free Cash Flow
Annual TSR Growth
Compound TSR Growth
+
Non-Financial KPIs are
detailed in the Sustainability
Review pages 50-51
Business strategy is set by the Board of Directors and all
Kerry employees work towards achieving these goals.
Performance evaluation takes account of all key
performance indicators. Remuneration is directly linked
with performance versus targets.

34
Continued consistent delivery
with good growth
Marguerite Larkin
Chief Financial Officer
The Group continued to deliver good revenue and trading
profit growth in the year against the backdrop of softer
market volumes in certain developed markets. This was
achieved primarily through consistent volume growth in our
Taste & Nutrition business and the contribution from recently
acquired businesses, which resulted in good overall adjusted
EPS growth in the year.
The Financial Review provides an overview of the Group’s financial
performance for the year ended 31 December 2019 and the Group’s
financial position at that date.
The Key Financial Performance Indicators outlined below are used to track
business and operational performance and help the Group to drive value
creation. The Group has a disciplined financial approach of targeting continued
growth while meeting its return on investment objectives. This combination of
growth and return help ensure the Group’s financial objective of maximising
shareholder return is achieved.
Definitions, calculations and reconciliations for these are set out within the Key Performance
Indicators section on pages 32-33 and within the Supplementary Information section – Financial
Definitions on pages 216-219.
*		 Before brand related intangible asset amortisation and non-trading items (net of related tax).
1		 Expressed as a percentage of adjusted earnings after tax.
35

Revenue
Group reported revenue increased by 9.6% to €7.2 billion (2018: €6.6 billion), reflecting volume growth of 2.8%, flat
overall pricing impact, favourable translation currency impact of 2.1% and contribution from business acquisitions
of 4.7%.
2018: Group reported revenue +3.1%, volume growth +3.5%, pricing (0.5%), transaction currency (0.1%), translation
currency (3.4%) and contribution from business acquisitions of +3.6%.
Taste & Nutrition reported revenue increased by 12.5% to €6.0 billion (2018: €5.4 billion), reflecting volume growth
of 4.0%, pricing increase of 0.1% related to raw material movements, translation currency impact of 2.6% and
contribution from business acquisitions of 5.8%.
2018: Taste & Nutrition reported revenue +3.7%, volume growth +4.1%, pricing (0.5%), transaction currency (0.1%),
translation currency (4.0%), acquisitions +4.2%.
Consumer Foods reported revenue decreased by 2.4% to €1.31 billion (2018: €1.34 billion), reflecting volume
decline of 2.2%, pricing decrease of 0.5% related to raw material pricing pass-through and market pricing, and
positive translation currency impact of 0.3%. The volume decrease reflects the exit of a ready meals contract
during the year - excluding the impact of this contract exit, volume would have increased by 0.9%.
2018: Consumer Foods reported revenue +0.6%, volume growth +1.1%, pricing (0.4%), transaction currency (0.3%),
translation currency (0.6%), acquisitions of +0.8%.
Analysis of Results
%
change

Revenue 9.6% 7,241.3 6,607.6
Trading profit 12.1% 902.7 805.6
Trading margin 12.5% 12.2%
Computer software amortisation (26.5) (25.0)
Finance costs (net) (81.6) (67.0)
Adjusted earnings before taxation 794.6 713.6
Income taxes (excluding non-trading items) (98.6) (89.2)
Adjusted earnings after taxation 11.5% 696.0 624.4
Brand related intangible asset amortisation (37.8) (28.8)
Non-trading items (net of related tax) (91.7) (55.1)
Profit after taxation 566.5 540.5
EPS
Cent
EPS
Cent
Basic EPS 4.7% 320.4 305.9
Brand related intangible asset amortisation 21.4 16.3
Non-trading items (net of related tax) 51.9 31.2
Adjusted* EPS 11.4% 393.7 353.4
Impact of retranslating prior year adjusted earnings per
share at current year average exchange rates - 10.1
Adjusted* EPS in constant currency 8.3% 393.7 363.5
*		 Before brand related intangible asset amortisation and non-trading items (net of related tax).

36
Trading Profit & Margin
Group trading profit increased by 12.1% to €902.7m (2018: €805.6m). Group trading margin increased by 30bps
to 12.5% driven by portfolio enhancement, operating leverage, efficiencies and the impact of acquisitions, partially
offset by investments for growth, Brexit risk management costs and increased Kerryconnect investment due to the
commencement of the rollout across our sites in North America.
Trading margin in Taste & Nutrition increased by 20bps to 15.3% (2018: 15.1%), driven by portfolio enhancement,
operating leverage and efficiencies, partially offset by investments for growth, the impact of acquisitions and Brexit
risk management costs.
Trading margin in Consumer Foods increased by 10bps to 7.6% (2018: 7.5%), driven by efficiencies from the
Realignment Programme which delivered to plan, partially offset by a decrease in operating leverage as a result
of the contract exit, Brexit risk management costs and net price in a challenging market.
The trading profit reflects an EBITDA of €1.1 billion (2018: €0.9 billion) and an EBITDA margin of 15.1% (2018: 14.2%).
A comprehensive analysis of the revenue and trading performance of the Taste & Nutrition and Consumer Foods
divisions is included in the Business Reviews on pages 42-48.
Computer Software Amortisation
Computer software amortisation increased by €1.5m to €26.5m (2018: €25.0m) reflecting the ongoing progression
of the Kerryconnect Programme including costs associated with the rollout across our sites in North America. The
capitalised element of the cost of this project is being amortised over a seven year period.
Brand Related Intangible Asset Amortisation
Brand related intangible asset amortisation increased to €37.8m (2018: €28.8m) which is reflective of recent
acquisition activity.
Finance Costs (net)
Finance costs (net) for the year increased by €14.6m to €81.6m (2018: €67.0m) primarily due to acquisition activity
and the impact of IFRS 16 ‘Leases’. The Group’s average interest rate for the year was 3.7% (2018: 3.8%).
Impact of IFRS 16 ‘Leases’
In January 2019, the Group adopted the new accounting standard IFRS 16 ‘Leases’, which resulted in a €3.4m
reduction in operating expenses and an increase of €4.6m in finance costs on transition.
Taxation
The tax charge for the year before non-trading items was €98.6m (2018: €89.2m) representing an effective tax rate
of 13.0% (2018: 13.0%) and is reflective of the geographical mix of earnings.
Acquisitions
During the year, the Group completed eleven acquisitions at a total consideration of €561.7m. These investments
were aligned to the Group’s strategic priorities for growth, bringing additional taste and nutritional technologies,
expanding its presence in developing markets and adding to its foodservice offering.
Non-Trading Items
During the year, the Group incurred a non-trading item charge of €91.7m (2018: €55.1m) net of tax. The charge
in the year related to costs associated with the integration of recent acquisitions, a material transaction process in
our sector that we participated in, and the Consumer Foods Realignment Programme. The prior year non-trading
charge related primarily to costs associated with the integration of acquisitions and the completion of the Brexit
Currency Mitigation Programme.
Adjusted EPS in Constant Currency
Adjusted EPS in constant currency increased by 8.3% in the year (2018: +8.6%). This was achieved through
volume growth ahead of our markets, good margin progression, together with the contribution from the
acquired businesses.
Basic EPS
Basic EPS increased by 4.7% to 320.4 cent (2018: 305.9 cent). Basic EPS is calculated after accounting for brand
related intangible asset amortisation of 21.4 cent (2018: 16.3 cent) and a non-trading item charge of 51.9 cent net
of related tax (2018: 31.2 cent).
Return on Average Capital Employed
The Group achieved ROACE of 11.8% (2018: 12.0%) reflective of strategic acquisitions completed and investments
made in the year.
37

Exchange Rates
Group results are impacted by year-on-year fluctuations in exchange rates versus the euro. The average rates
below are the principal rates used for the translation of results. The closing rates below are used to translate assets
and liabilities at year end.
Average Rates Closing Rates
2019 2018 2019 2018
Australian Dollar 1.61 1.58 1.60 1.62
Brazilian Real 4.44 4.34 4.53 4.44
British Pound Sterling 0.88 0.89 0.85 0.90
Chinese Yuan Renminbi 7.73 7.82 7.82 7.85
Malaysian Ringgit 4.65 4.77 4.60 4.74
Mexican Peso 21.59 22.72 21.19 22.50
Russian Ruble 72.28 74.05 69.34 79.46
South African Rand 16.20 15.89 15.77 16.47
US Dollar 1.12 1.18 1.12 1.14
Dividends
The Board has proposed a final dividend of 55.1 cent per A ordinary share, payable on 15 May 2020 to
shareholders registered on the record date of 17 April 2020. When combined with the interim dividend of 23.5
cent per share, the total dividend for the year amounts to 78.6 cent per share (2018: 70.2 cent per share), which is
an increase of 12.0% over last year’s dividend. The Group’s aim is to have double digit dividend growth each year.
Over 33 years as a listed company, the Group has grown its dividend at a compound rate of 16.7%.
Balance Sheet
A summary balance sheet as at 31 December is provided below:

Property, plant & equipment 2,062.9 1,767.0
Intangible assets 4,589.7 4,095.6
Other non-current assets 179.5 189.7
Current assets 2,672.2 2,271.4
Total assets 9,504.3 8,323.7
Current liabilities 2,014.0 1,650.8
Non-current liabilities 2,928.1 2,638.5
Total liabilities 4,942.1 4,289.3
Net assets 4,562.2 4,034.4
Shareholders’ equity 4,562.2 4,034.4
Property, Plant & Equipment
Property, plant and equipment increased by €295.9m to €2,062.9m (2018: €1,767.0m) primarily due to capital
expenditure in the year and the impact of the change in the lease accounting policy, partially offset by the annual
depreciation charge. Net capital expenditure in the year amounted to €315.3m (2018: €285.5m). The level of capital
investment supports the Group’s growth initiatives and included upgrading the recently acquired SIAS facility in the
Greater Beijing region, continuing the expansion programme at the Nantong facility in China, opening a new facility
in Tumkur, India to serve the rapidly expanding South West Asia market and expanding the Group’s capabilities in the
Middle East region.

38
Intangible Assets & Acquisitions
Intangible assets increased by €494.1m to €4,589.7m (2018: €4,095.6m) due to the additions of €437.7m relating to the
eleven acquisitions completed during the year, the increased investment in Kerryconnect related software and positive
foreign exchange movements, partially offset by the annual amortisation charge.
Current Assets
Current assets increased by €400.8m to €2,672.2m (2018: €2,271.4m), primarily due to an increase in cash on
hand at 31 December 2019 and trade receivables, other receivables and inventories from the businesses acquired
during the year.
Retirement Benefits
At the balance sheet date, the total net deficit for all defined benefit schemes (after deferred tax) was €8.6m (2018:
€44.0m). The decrease in the net deficit is primarily driven by strong return on assets and a reduction in the deficit
from the liability management programme offsetting unfavourable movements in discount rates. The net deficit
expressed as a percentage of market capitalisation at 31 December 2019 was 0.04% (2018: 0.3%).
Shareholders’ Equity
Shareholders’ equity increased by €527.8m to €4,562.2m (2018: €4,034.4m), resulting from profits generated
during the year, offset in part by dividends.
A full reconciliation of shareholders’ equity is disclosed in the Consolidated Statement of Changes in Equity
on page 150.
Capital Structure
The Group finances its operations through a combination of equity and borrowing facilities, including bank
borrowings and senior notes from capital markets.
The financing structure of the Group is managed in order to optimise shareholder value while allowing the Group
to take advantage of opportunities that might arise to grow the business. The Group targets acquisition and
investment opportunities that are value enhancing and the Group’s policy is to fund these transactions from cash
flow or borrowings while maintaining its investment grade debt status.
This is managed by setting Net debt to EBITDA targets while allowing flexibility to accommodate significant acquisition
opportunities. Any expected variation from these targets should be reversible between 18 and 24 months; otherwise
consideration would be given to issuing additional equity in the Group.
Free Cash Flow
Free cash flow is an important indicator of the strength and quality of the business and of the availability of funds
to the Group for reinvestment or for return to the shareholder. In 2019, the Group achieved free cash flow of
€514.6m (2018: €446.5m).
Free Cash Flow

Trading profit 902.7 805.6
Depreciation (net) 191.4 134.1
Movement in average working capital (89.5) (57.1)
Pension contributions paid less pension expense (26.7) (40.0)
Cash flow from operations 977.9 842.6
Finance costs paid (net) (80.8) (64.5)
Income taxes paid (67.2) (46.1)
Purchase of non-current assets (315.3) (285.5)
Free cash flow 514.6 446.5
Cash conversion1 74% 72%
1		
Cash conversion is free cash flow expressed as a percentage of adjusted earnings after tax.
39

Net Debt
Net debt at the end of the year was €1,862.8m (2018: €1,623.5m). The increase during the year is analysed in the
table below:
Movement in Net Debt

Free cash flow 514.6 446.5
Acquisitions (net of disposals) including payments relating to previous acquisitions (568.0) (503.2)
Difference between average working capital and year end working capital 25.6 (21.7)
Non-trading items (89.1) (59.8)
Equity dividends paid (128.3) (114.4)
Shares issued during the financial year 0.1 -
Exchange translation adjustment (2.5) 0.5
Increase in net debt resulting from cash flows (247.6) (252.1)
Fair value movement on interest rate swaps 12.5 (2.6)
Exchange translation adjustment on net debt (4.2) (27.1)
Increase in net debt in the year (239.3) (281.8)
Net debt at beginning of year (1,623.5) (1,341.7)
Net debt at end of year (1,862.8) (1,623.5)
Exchange Impact on Net Debt
The exchange translation adjustment of €4.2m results primarily from borrowings denominated in US dollar
translated at a year end rate of $1.12 versus a rate of $1.14 in 2018.
Maturity Profile of Net Debt

Within 1 year 409.8 400.0
Between 1 and 2 years (1.2) (142.2)
Between 2 and 5 years (732.6) (1,082.8)
Over 5 years (1,538.8) (798.5)
Net debt at end of year (1,862.8) (1,623.5)
Weighted average maturity (years) 5.9 4.8
Credit Facilities
Undrawn committed facilities at the end of the year were €1.1 billion (2018: €750.0m) while undrawn standby
facilities were €330.0m (2018: €320.0m).
In June 2019, the Group renewed its €1.1 billion revolving credit facility, extending the maturity date to June 2024.
The facility contains two 1-year extension options, exercisable on the 1st and 2nd anniversaries of the facility and
which, if exercised, would extend the maturity date of the facility to June 2026. In line with the Group’s commitment
to environmental and social matters, the revolving credit facility carries a price adjustment mechanism, which is
linked to the Group meeting or exceeding certain carbon, water and waste efficiency metrics. This facility is not
subject to a financial covenant.
In September 2019, the Group issued 10 year €750m euro bond notes. The bonds are listed on Euronext Dublin
and are rated by S&P and Moody’s. Full details of the Group’s financial liabilities, cash at bank and in hand and
credit facilities are disclosed in notes 23 and 24 to the Consolidated Financial Statements.

40
Key Financial Covenants
The Group’s balance sheet is in a strong position with a Net debt to EBITDA* ratio of 1.8 times. At this ratio the
Group has significant liquidity headroom to support future growth plans. A small element of the Group’s finance
facilities is subject to financial covenants. Group Treasury monitors compliance with all financial convenants and at
31 December the key convenants are as follows:
Covenant
2019
Times
2018
Times
Net debt: EBITDA* Maximum 3.5 1.8 1.7
EBITDA: Net interest Minimum 4.75 13.2 14.7
* Calculated in accordance with lenders' facility agreements which take account of adjustments outlined on page 218.
Share Price and Market Capitalisation
The Company’s shares traded in the range €86.50 to €117.90 during the year. The share price at 31 December
2019 was €111.10 (2018: €86.50) giving a market capitalisation of €19.6 billion (2018: €15.2 billion). Total
Shareholder Return for 2019 was 29.3% (2018: (6.8%)).
Financial Risk Management
Within the Group risk management framework as described in the Risk Report on page 73, the Group has
a Financial Risk Management Programme, which is approved by the Board of Directors and is subject to
regular monitoring by the Finance Committee and Group Internal Audit. The Group does not engage in
speculative trading.
Further details relating to the Group’s financial and compliance risks and their associated mitigation processes are
discussed in the Risk Report on pages 73-88 and in note 24 to the Consolidated Financial Statements.
Summary and Financial Outlook
The Group delivered another strong performance in 2019, generating revenue of €7.2 billion, trading profit of
€903m and free cash flow of €515m in a dynamic consumer marketplace that is leading to a rapidly evolving
industry landscape. At year end the balance sheet is also in a good position and with a Net debt: EBITDA ratio
of 1.8 times, the Group has significant headroom to support the future growth plans of the organisation.
The Group will continue to invest for growth aligned to the changing market landscape and pursue M&A
opportunities aligned to our strategic growth priorities.
EBITDA: Net interest*
2015 2016 2017 2018 2019
19.0x
17.0x
15.0x
13.0x
11.0x
5.0x
7.0x
9.0x
3.0x
Net debt: EBITDA*
2015 2016 2017 2018 2019
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
41

A strong history of
positive results
STRATEGIC REPORT
10 YEAR EARNINGS HISTORY
2010
€’m
2011
€’m
**2012
€’m
2013
€’m
2014
€’m
2015
€’m
2016
€’m
2017
€’m
2018
€’m
2019
€’m
Revenue 4,960.0 5,302.2 5,848.3 5,836.7 5,756.6 6,104.9 6,130.6 6,407.9 6,607.6 7,241.3
Trading profit 470.2 500.5 559.0 611.4 636.4 700.1 749.6 781.3 805.6 902.7
Computer software amortisation (4.3) (5.4) (8.7) (11.5) (13.6) (18.7) (23.4) (24.3) (25.0) (26.5)
Finance costs (net) (60.5) (46.0) (62.1) (67.6) (52.9) (69.3) (70.4) (65.6) (67.0) (81.6)
Adjusted earnings before taxation* 405.4 449.1 488.2 532.3 569.9 612.1 655.8 691.4 713.6 794.6
Income taxes (excluding non-trading items) (68.7) (74.6) (77.3) (79.1) (79.6) (81.1) (86.7) (89.5) (89.2) (98.6)
Adjusted earnings after taxation* 336.7 374.5 410.9 453.2 490.3 531.0 569.1 601.9 624.4 696.0
Brand related intangible asset
amortisation
(11.8) (13.9) (14.7) (16.6) (14.4) (18.7) (23.0) (23.6) (28.8) (37.8)
Non-trading items (net of related tax) (0.7) 0.1 (135.5) (352.2) 4.0 13.1 (13.0) 10.2 (55.1) (91.7)
Profit after taxation attributable
to owners of the parent
324.2 360.7 260.7 84.4 479.9 525.4 533.1 588.5 540.5 566.5
Adjusted EPS (cent)* 192.1 213.4 234.0 257.9 278.9 301.9 323.4 341.2 353.4 393.7
*		 Adjusted EPS, adjusted earnings before taxation and adjusted earnings after taxation are calculated before brand related intangible asset
amortisation and non-trading items (net of related tax) and are considered more reflective of the Group’s underlying trading performance.
Growth in Adjusted EPS on a constant currency basis is disclosed on page 217.
** 2012 was restated in line with IAS 19 (2011) ‘Employee Benefits’ which was adopted as required by IFRS in 2013. All other years are presented
as reported.

42
Kerry is the global leader
in the development of taste
and nutrition solutions for
the food, beverage and
pharmaceutical markets.
Our broad technology
foundation, customer-centric
business model, and industry-
leading integrated solutions
capability make Kerry the
co-creation partner of choice.
STRATEGIC REPORT
BUSINESS REVIEW
Revenue
2019
€6,018m
Volume Growth
4.0%
Trading Margin
2019
15.3%
Margin Expansion
+20bps
Taste &
Nutrition
43

> Volume growth driven by
Beverage and Food End Use
Markets (EUMs) – led by
Meat and Snacks
> Pricing 0.1% – reflecting
broadly neutral raw material
costs in the period
> Trading margin +20bps –
key drivers were enhanced
product mix, operating
leverage and efficiencies,
partially offset by investments
for growth and Brexit risk
management costs
This performance included the recent
acquisitions of Fleischmann’s (FVC)
business, Southeastern Mills (SEM)
and Ariake U.S.A., Inc. Trading profit
grew by 14.1% to €918.5m, reflecting
a 20 basis point improvement in
trading margin to 15.3%.
Developing markets delivered strong
volume growth of 10.0%, with APMEA
developing markets being the main
driver. Key drivers of growth were
localisation, regulatory changes,
food safety, convenience and home
delivery, which drove increased new
product development. Foodservice
performed well, with volume growth
of 5.5% despite some softness in the
North American market.
Kerry’s nutrition and wellbeing
technology portfolio had a strong
performance, as Kerry further evolved
its position as the industry-leading
nutrition and wellness partner
across Beverage and Food EUMs,
particularly in Meat and Snacks.
Demand for great tasting products
with improved nutritional attributes
continued to accelerate across the
globe. Our unique taste and nutrition
positioning, food science expertise
and deep understanding of the
intersection of taste and nutrition
were key drivers of increased
innovation across a wide range of
applications. This led to good sales
growth in solutions incorporating
Kerry’s fermented ingredients,
broad speciality protein portfolio,
probiotics, TasteSense™, botanicals
and natural extracts.
Reported revenue increased by
12.5%, reflecting volume growth of
4.0%, pricing of 0.1%, favourable
translation currency impact of 2.6%
and contribution from business
acquisitions of 5.8%.

44
Americas Region
Reported revenue in the region
increased by 16.5% to €3,198m,
reflecting 2.7% volume growth, 0.2%
increase in net pricing, favourable
translation currency impact of 4.4%
and contribution from business
acquisitions of 9.2%. North America
delivered good volume growth
against a backdrop of softer market
volume growth rates.
Within the Food EUMs, Kerry’s
Meat sub-EUM delivered strong
growth, with plant-based offerings
in particular delivering an excellent
performance, as customers continue
to seek innovative solutions to
meet the consumer demand for
cleaner label and next generation
offerings. This performance was
complemented by the acquisition
of the coatings and seasonings
business of Southeastern Mills (SEM)
which performed very well.
The Snacks sub-EUM delivered
good growth, as Kerry’s integrated
solutions capability was key to a
number of successful customer
launches addressing consumer
demands for new world taste and
healthier snacking experiences.
The Cereal & Sweet sub-EUM
remained challenged and the Meals
sub-EUM was impacted by churn
within the category. The Dairy
sub-EUM benefitted from the
ongoing evolution of the ice cream
category towards healthy indulgence
and added wellness benefits.
While the Beverage EUMs were
impacted by subdued market volume
growth in Foodservice, there were
a number of plant-based beverage
launches and innovations utilising
Ganeden®
probiotics, contributing to
a good finish to the year.
LATAM performed well with good
growth in Brazil and Mexico, and
a solid performance in Central
America. The Beverage EUM
delivered strong growth across the
region, with particularly good growth
in the ice cream category in Brazil
and the Snacks sub-EUM in Mexico.
The global Pharma EUMs had a good
performance, led by strong growth in
excipients in North America.
Good progress was made on the
integration of Fleischmann’s (FVC)
business and Ariake U.S.A., Inc, and
both performed well. These were
complemented by the acquisitions
of Isoage Technologies, Biosecur
Lab and Diana Food (Georgia, USA),
further enhancing Kerry’s leading
authentic taste and clean label
technology portfolio, which the
Group plans to leverage in meeting
the increasing demand across a
broader range of applications.
AMERICAS
> 2.7% volume growth
> Solid performance in North
America led by Food EUMs
of Meat and Snacks
> LATAM performed well
45

Europe Region
Reported revenue in the region
increased by 2.4% to €1,456m,
reflecting 2.0% volume growth,
0.1% increase in net pricing,
favourable translation currency
impact of 0.1% and contribution
from business acquisitions of 0.2%.
This represented a good overall
performance versus the marketplace,
with Kerry’s performance in the
Foodservice channel contributing
strongly to growth in the region.
Kerry’s Beverage EUMs achieved
strong broad-based growth across
a number of sub-categories from
low/non-alcoholic beverage, tea and
coffee to plant-based offerings. There
was a strong performance within
Foodservice, as customers enhanced
their beverage offerings across their
menus, with a number of better-for-
you and seasonal product launches
incorporating Kerry’s botanicals,
natural extracts and sugar reduction
technologies.
Within the Food EUMs, Kerry’s Meat
sub-EUM performed very well,
with its industry-leading portfolio
deployed to create solutions which
met a variety of customer and
consumer needs.
Strong growth and very good
business development were achieved
in plant-based meat alternatives,
supported by the launch of the
Radicle™ portfolio.
The Snacks sub-EUM performed
well, with a number of new authentic
world taste launches and healthy
snack products incorporating
Kerry’s Ganeden® probiotics. The
Confectionery sub-EUM achieved
good growth through a number
of local novel taste LTOs across
the region.
The Dairy EUM was impacted by
softer demand in the ice cream
category during the period.
International dairy markets were
relatively stable in the period,
reflecting less volatility in global
supply/demand dynamics.
Russia and Eastern Europe delivered
good growth, as we continue to
develop our presence and offering
across the region. The Group also
completed the acquisition of Pevesa
Biotech – a specialist plant protein
isolates and hydrolysates business
based in Spain and serving key
nutrition applications.
EUROPE
> 2.0% volume growth
> Good performance in
Beverage and Foods EUMs
of Meat and Snacks
> Foodservice performed
well across the region

46
APMEA Region
Reported revenue in the region
increased by 16.2% to €1,285m,
reflecting 10.3% volume growth,
0.1% increase in net pricing, 0.1%
favourable transaction currency
impact, 0.6% favourable translation
currency impact and contribution
from business acquisitions of 5.1%.
Key to the strong growth in the region
was the further deployment of Kerry’s
business model with customers
across existing and new markets.
This approach was key in supporting
our customers as they meet evolving
local consumer demands.
Within the Food EUMs, Kerry’s Meat
sub-EUM delivered excellent growth
with both global and regional
customers, particularly in China
and South East Asia, with a range of
innovations meeting key consumer
preferences for premium local
authentic taste and a superior home
delivery experience.
The Snacks sub-EUM delivered
strong growth, particularly with
savoury taste innovations that meet
local consumer preferences.
Kerry’s Beverage EUMs delivered
strong growth underpinned by a
number of successful launches in
refreshing beverages with enhanced
wellness and functional benefits.
The branded DaVinci range enjoyed
strong growth across the year.
We continued to make good
progress in expanding our capacity
and deploying our technology
capabilities in the region. Our
strategic expansion in China
progressed well, as we upgraded
the recently acquired SIAS facility to
serve our customers in the Greater
Beijing region, and continued
the expansion programme at our
Nantong facility. In June, the Group
opened a new facility in Tumkur,
India, which will serve our rapidly
expanding South West Asia market.
Further to the acquisition of AATCO
at the end of 2018, the Group
invested in expanding its capabilities
in the Middle East region.
APMEA
> 10.3% volume growth
> Strong growth right
across all Food and
Beverage EUMs
> Good progress in strategic
expansion and business
development
47

1 volume growth excluding contract exit
Kerry Foods is an
industry-leading
manufacturer of
chilled food products
primarily to the Irish
and UK markets.
Revenue
2019
€1,307m
Volume Growth
-2.2% (+0.9)%¹
Trading Margin
2019
7.6%
Margin Expansion
+10bps
Consumer
Foods
STRATEGIC REPORT
BUSINESS REVIEW

48
Reported revenue decreased by
2.4% to €1,307m, reflecting a 2.2%
reduction in volumes, a 0.5% decrease
in net pricing, and a favourable
translation currency impact of 0.3%.
Excluding the impact of the previously
reported ready meals contract exit,
Kerry delivered a robust performance
in the context of a subdued UK
marketplace, where lower consumer
confidence impacted overall market
volumes. The divisional trading
margin increased by 10bps to 7.6%.
Trading profit decreased by 1.2% to
€98.9m in the year. The Realignment
Programme was completed during
the year and delivered to plan.
The Richmond brand chilled sausage
range delivered a solid performance
led by growth in chicken sausages
and the new plant-based sausage,
which was launched at the end of
September, along with a range of
meat-free products under the
Naked Glory brand.
The Denny brand in Ireland
performed well. A number of
business wins supported our
overall performance within spreads.
Chilled meals continued to be
impacted by reduced promotional
activity, while frozen meals had a
good performance across the range.
As previously announced, production
ceased in the ready meals facility in
Burton in September and the site was
sold prior to the year end.
The Cheestrings brand was supported
by a number of innovations. Fridge
Raiders also extended its snacking
range to reach a broader consumer
market.
> Overall volume
performance impacted by
ready meals contract exit
> Pricing of -0.5% reflective
of lower input costs and
market pricing
> Trading margin – strong
efficiencies partially offset
by pricing and Brexit risk
management costs
STRATEGIC REPORT
BUSINESS REVIEW
49

As a leader in the food and beverage industry,
we understand the challenges that confront the
industry and their impact on the current food
production systems, knowing that our shared
success is dependent on our ability to respond
to these challenges quickly and effectively.
STRATEGIC REPORT
SUSTAINABILITY REVIEW
We also continuously strive for better in our workplace,
improving safety, fostering diversity and inclusion and
ensuring our people continue to share in our success.
In external communities, we are making a positive impact
to the lives of those beyond our direct reach and through
partnerships with the World Food Programme and
Concern Worldwide, we are focusing on interventions
that will make a lasting impact on people who are most
in need.
As we enter a new decade, we understand the increased
responsibility to co-create with our customers, better,
more natural, healthier and nutritious food and beverage
solutions to meet the world’s food needs in a more
effective and environmentally sustainable way. In 2019,
we commenced a process to develop and integrate a
new, more ambitious sustainability programme to better
position us to meet this increased responsibility. The
programme, which will be launched in 2020, will outline
our new targets, as we look forward to partnering with
others in the co-creation of a better food future, one in
which we continue to fulfil our Purpose of inspiring food
and nourishing life.
In 2019, we witnessed a groundswell of support for climate
action and we continue to see this translate into consumer
sentiment which places clear demands on industry and on
companies such as ours. Given our Purpose of inspiring
food and nourishing life, our world class science and our
innovation capabilities, Kerry is ideally positioned and is
fully committed to playing a leading role in this new food
future. We co-create solutions with our customers, helping
them produce better food in a better way for a better
future, and our leading portfolio of taste and nutrition
solutions are consumed by millions of consumers
every day.
We continue to address our own impacts and at the
conclusion of our Towards 2020 Sustainability Programme,
I am proud of the progress we have made to date. Since
2015, we have consistently reduced the environmental
impact of our operations, exceeding our key targets on
emissions, water and waste. We continue to work with
suppliers to help them on their journey, whether they are
vanilla farmers in Madagascar or dairy farmers in South
West Ireland, understanding that collaborations and
partnerships are key to our sustainable future.
Securing
Sustainable
Growth Edmond Scanlon
Chief Executive Officer

STRATEGIC REPORT
SUSTAINABILITY REVIEW
Reduction in
carbon intensity
Versus 2013 base year
23%
Reduction in
waste to landfill
Versus 2013 base year
41%
Reduction in
waste intensity
Versus 2013 base year
31%
Environmental
sustainability
Marketplace
sustainability
Workplace
sustainability
Community
sustainability
TOWARDS 2020
SUSTAINABILITY
PILLARS
Sustainable
funding arranged
ESG linked revolving credit facility
€1.1bn
Research, Development
& Application
Industry-leading investment
€291.4m
Key
Highlights
Employee
participation in
The Kerry Way
workshops
90%
50
51

RAIN Programme
Farmers trained on
conservation agriculture
1,000+
Project Leche
Honduran teachers
trained on nutrition
190
Noon Foundation
People accessing improved healthcare
>38,000
Non-Financial Reporting Statement
We comply with regulations on non-financial reporting and provide information on required topics across this report.
Relevant information on each topic can be found below.
Reporting Requirements Our Policies Page Reference
Environmental Matters Environmental Policy Page 55
Social and Employee Matters
Health & Safety Policy; Group Code of Conduct;
Diversity, Inclusion & Belonging Policy;
Employee Concerns Disclosure Policy
Pages 20 and 65-66
Respect for Human Rights Human Rights Policy Page 66
Anti-bribery and Corruption Anti-Bribery Policy; Group Code of Conduct Page 65
Business Model Pages 24-25
Non-financial KPIs Pages 50-51 and 55-70
Health & Safety
Reduction in recordable incidents
17%
Food Safety
Sites with GFSI certification
100%
Workplace Audits
Across manufacturing sites
>90%
Note: Non-financial KPIs excludes the impact from recently completed acquisitions.
Photo: WFP/Boone Rodriguez
Photo: Farmers in the village of Sabon Kalgo with their first crop of short season millet.
Photographer: Darren Vaughan/ Concern Worldwide

52
Given the growing global awareness of environmental
challenges such as climate change, loss of biodiversity,
pollution and waste, the way in which we produce and
consume food is increasingly under scrutiny. With a
projected world population of almost 10 billion people
by 2050, producing enough food in a sustainable
manner to meet growing demand represents both
an opportunity and a significant challenge for our
industry.
The current food system has a substantial
environmental and social impact. Food production
accounts for nearly a quarter of all greenhouse gas
emissions while agriculture uses 70% of fresh water,
and is a leading cause of deforestation and biodiversity
loss. Current diet and lifestyle choices are also a
leading contributor to disease. According to the
World Health Organisation, what we eat, and drink
is now the second highest risk factor for early death,
making what we produce and how we produce it
critical considerations for the Group.
Our Approach
Kerry’s objective is to integrate sustainability into all
aspects of our business. Our efforts are focused on the
most material issues for Kerry and its stakeholders. We
examine the ways in which we can reduce our adverse
impacts and identify where our skills and expertise can
make a positive difference.
Since 2009, we have been formally measuring and
reporting on our impacts and in 2019, we concluded
the five year Towards 2020 Programme. Building on
the success of previous initiatives, this programme
involved a comprehensive set of actions spanning our
direct operations and broader value chain. Structured
around four pillars; Environment, Marketplace,
Workplace and Community, the Towards 2020
Programme set measurable targets for improvement
over time. Since 2015, delivery against these targets
has helped us to enhance the lives of the people who
create and consume our products, connect us with our
communities and protect the natural environment that
surrounds us.
As we move forward, our approach is evolving to
better enable our Purpose and reflect the systemic
nature of the sustainability challenges we face. While
our objective of creating healthier, more sustainable
diets will remain unchanged, a shift in emphasis to
key themes will help us to address challenges more
holistically and in a way that better equips us to
tackle the interdependencies between many of our
material aspects. Details of this new programme will be
launched in the second quarter of 2020.
Goal 2:
Zero Hunger
Our capabilities support the development of
cost effective, healthier and more nutritious
food. We also support sustainable agricultural
production and greater food security through
our responsible sourcing and community
development programmes.
Goal 3:
Good Health and Wellbeing
Diet is a leading factor in the proliferation of
non-communicable disease and at Kerry, our
technologies and expertise support customers
in the development of healthier products that
can make a positive impact on the wellbeing
of consumers.
Goal 12:
Responsible Consumption
& Production
With an increasing population and a tension
between food production and environmental
protection, we are committed to sustainable
sourcing and production across our operations.
Our solutions can also support our customers
in the development of more sustainable
consumer products.
Towards 2020 and the UN Sustainable
Development Goals
The UN Sustainable Development Goals (SDGs) provide
a globally accepted roadmap for addressing many
of the most urgent global economic, environmental
and social challenges. Agreed at international level in
September 2015, the achievement of these 17 goals by
2030 requires broad participation and creates a key role
for businesses in delivering solutions that can help meet
these challenges.
As a world leader in the food and beverage industry,
our most significant contribution to the SDGs will
come through enabling our customers to improve the
healthfulness and nutritional value of their products in
a way that does not compromise the environment, the
rights of others or the long term effectiveness of our
business.
We will continue to be successful, while playing a positive
role in the broader sustainable development agenda
through purposeful business action and throughout this
review, we highlight the SDGs we impact on under each
pillar. While we touch on many of the goals, SDGs 2, 3 and
12 have particular strategic relevance for our business
and we see the greatest potential for positive impact and
opportunity in helping meet these goals.
ENVIRONMENT
SUSTAINABILITY
COMMUNITY
SUSTAINABILITY
WORKPLACE
SUSTAINABILITY
MARKETPLACE
SUSTAINABILITY
SECURING SUSTAINABLE GROWTH
53

Materiality
Our approach to sustainability
is centered on addressing
and reporting on the most
material issues for Kerry and
its stakeholders. In 2018, we
undertook a comprehensive review
of material topics to ensure that
our Towards 2020 Programme
continued to focus on the right
aspects and also to inform the
development of our 2030 agenda.
The outputs of this assessment
which identified the most
material matters to Kerry and
our stakeholders are outlined
on this page.
Following on from the materiality
assessment in 2018, we continued
to engage with key stakeholders
to address the critical areas of
importance. Further feedback
received through ongoing
engagement has reinforced
the outcome of the materiality
assessment, albeit, we continue to
see an acceleration in areas such
as transparency, climate and waste.
The topics covered in this report are
designed to reflect material topics
of importance to Kerry and our
stakeholders. All of these topics are
reviewed as part of the broader risk
assessment process, and while risks
such as climate change continue
to emerge within the overall risk
register, they are currently not
considered to be principal risks
for the Group. Further details on
the Group’s principal risks are
outlined in the Risk Report on
pages 75-87. We will continue
to keep these topics under
review, particularly with respect
to organisational changes and
emerging themes.
Material Matters of Importance to Kerry and our Stakeholders
Our Value Chain
Consumer
KERRY
GROUP
Retail & Food
Service
Supplier
Customer
Primary
Producer
Processor
Trust &
Transparency
Ethics &
Human Rights
Responsible Sourcing
& Traceability Product Safety
& Quality
Taste, Nutrition
& Health
Climate Change
Waste & Circular
Economy
Diversity
& Inclusion
Talent
Management
Market Leading
Growth
Community
Development
Biodiversity
Geo-political
Risk & Brexit
Labour
Relations
Environment Marketplace Workplace Community
Animal
Welfare
Regulation
Water
Stewardship
Innovation & Product
Development
Changing Consumer
Preferences
Employee Health
& Wellbeing
Energy
VERY HIGH
HIGH
IMPORTANCE TO 
VERY
HIGH
HIGH
IMPORTANCE
TO
STAKEHOLDERS

54
Shareholders
Board of Directors
Executive Management
Stakeholder Engagement
We understand the importance of stakeholder
engagement. The pace of change and the nature of
the challenges facing our industry require shared
understanding and a common approach to the path
forward. Kerry is committed to ongoing and constructive
engagement with our stakeholders and through a
two-way engagement process, we incorporate their
views into our business activities.
Through a process of stakeholder analysis, we clearly
identify those groups we impact on, as well as those
groups that can influence and impact on Kerry, and we
engage our key stakeholder groups and relevant third
parties to help achieve our broader goals. In addition to
the ongoing direct engagement with key stakeholders in
2019, we also participated in a number of collaborative
projects, details of which are laid out in this report.
Additionally, Kerry is a member of numerous trade
organisations and multi-stakeholder platforms, through
which we regularly engage with stakeholders and
interested groups on key topics.
Among our key stakeholders are employees,
shareholders, communities, customers, consumers,
government and suppliers. We understand that among
and within these groups, there can be different and
sometimes conflicting views. As part of our engagement
we seek to balance these competing stakeholder
interests and respond in a way that maximises the value
for all those connected with the organisation.
Finance
Committee
Sustainability
Council
Audit Committee
Nomination Committee
Remuneration Committee
Stakeholder Groups
We use a variety of channels to support the engagement
process, many of which are tailored for specific
stakeholder groups. Our ability to demonstrate a robust
engagement process is a core part of our independent
AA1000 Assurance Standard accreditation and
throughout this report we provide examples of how we
engage and work with the stakeholders outlined above.
Details of how we create value for our stakeholders is
outlined in the Business Model on pages 24-25.
Governance
The Group’s Sustainability Council was established under
delegation from the Board of Directors. Its membership
includes functional leadership from across the Group
and its role includes the assessment of sustainability
risks and opportunities, determining how best these
can be addressed, and appraisal of ongoing Group
performance versus our stated targets.
In 2019, the membership of the Council was revised
to include Executive Directors and members of the
Executive Committee. This senior management team
was closely involved in guiding the development of a new
sustainability programme and has responsibility for its
integration within the broader business. Chaired by the
Group’s Head of Sustainability, the Council continues to
report at least annually to the Board.
Customers &
Consumers
Government
Suppliers
Community
Employees
Shareholders
Risk Oversight
Committee
55

At Kerry, we are mindful of our impact on the environment
and recognise the fundamental importance of a healthy
ecosystem for our shared future. In the creation of our
products, Kerry’s operations impact the environment and
our ability to successfully reduce this impact and address
these environmental challenges is an essential part of
retaining our licence to operate. As a business we think
long term, innovating to ensure we continue nourishing
consumers while lowering our impact on the planet and
communities in which we operate. We aim to minimise our
footprint in accordance with the Group’s Environmental
Policy. This policy commits us to carrying out our activities
in a responsible manner, complying with all applicable
legislation, implementing good environmental practice and
continuously improving performance.
Kerry has a comprehensive monitoring and reporting
framework in place across all sites and performance
is under ongoing review by relevant functions and the
Group’s Sustainability Council. We integrate environmental
considerations throughout our business and in June 2019,
the Group amended its €1.1 billion revolving credit facility
which incorporated a margin adjustment linked to the
achievement of certain environmental metrics.
Kerry is proud of the strong performance on
environmental stewardship in 2019 and the successful
completion of our Towards 2020 Programme. In many
cases we have exceeded key environmental targets. We
continue to pursue independent certification of best
practice, with 86% of eligible sites certified under ISO
14001 and key energy users accredited under ISO 50001.
We recognise that the conclusion of the Towards 2020
Programme is not an end point. Instead, it provides a
platform for a new approach that reflects the best available
science and responds to the urgent need for action.
Reducing Emissions
Industrial emissions are a key contributor to climate change,
and we are conscious that increasingly stark warnings
around the need for greater action cannot be ignored.
Climate change represents both risk and opportunity for
our business. Potential risks include an accelerating shift
in customer and consumer preferences, disruption to
operations and supply chains as well as regulatory and
policy responses to meet international commitments under
the Paris Accord. We believe that in tackling our emissions,
Kerry can support the transition to a greener economy
and capture further growth through the provision of lower
carbon solutions.
Environment
Following the 2018 UN IPCC
Special Report which emphasises
the need for urgent action, 2019
was a seminal year for climate
change, as global awareness
increased, and the conversation
shifted from the need for action to
the more difficult discussions on
what form that action should take.
Our Environmental activities contribute to the achievement
of the following UN Sustainable Development Goals.

56
As part of our ongoing efforts on climate, we track and
report our impact. In 2015, we set a target for a further
13% reduction in carbon intensity across Scope 1
emissions (direct from energy generation) and Scope 2
emissions (indirect from purchased electricity and heat)
by 2020. In 2018 we were delighted to surpass that target
and are pleased to report that in 2019, we continued to
reduce emissions so that over the course of our Towards
2020 Programme, total carbon intensity fell by 23% versus
our 2013 base year.
We measure and report performance for sites within our
operational control in accordance with the Greenhouse
Gas (GHG) Protocol and our data is independently assured
to AA1000 Assurance Standard (2008). We note the
recommendations of the Task Force on Climate Related
Financial Disclosures and continue to integrate these into
our broader reporting framework.
Notes:
1. Our measurement and target performance of Scope 1 and
2 emissions from our manufacturing facilities. This accounts
for 98% of Kerry’s Scope 1 and 2 emissions.
2. The GHG Protocol sets the global standard for how to
measure, manage and report greenhouse gas emissions.
3. Kerry’s actual performance has been adjusted to reflect
like-for-like performance compared to our baseline year. We
use the NOVEM Methodology for carbon reporting to adjust
our baseline target reduction number in order to account
for changes to product mix that have had a material effect
on carbon intensity.
Annual Carbon Intensity
2019
2018
2013
2019
2018
2013
Kg CO2
per Tonne of Finished Product Towards 2020 Target
Towards 2020 Target
m3
per Tonne of Finished Product
257.6
239.4
310.9
50
100
150
200
250
300
350
0
4.8
4.9
5.0
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.6
5.2
5.1
96.3
66.2
75.1
40
60
80
100
120
m
3
per
Tonne
of
Finished
Product
2019
2018
2013
4
2
0
Total Withdrawals m3
m3
per Tonne of Finished Product
400000
200000
0
m
3
Summary Assurance Statement
Environmental consultants, Jacobs, have assured Kerry’s
greenhouse gas performance data (Scope 1 and Scope 2
emissions and selected Scope 3 emissions) as well as water
withdrawal and discharge data from its manufacturing
facilities for 2019 in accordance with AA1000AS (2008).
Jacobs evaluated the systems and processes used to collate
and report the greenhouse gas, water withdrawal and water
discharge performance data. Jacobs has been able to obtain
a moderate level of assurance for the data reported in the
Group Annual Report 2019.
EUROPE
1
AMERICAS
2
APMEA
6
Location of Priority Water Sites
Against the backdrop of rising water demand, we
continue to view our water footprint within the
broader context of global water risk. Given the uneven
distribution of water resources, some of our locations
are potentially more vulnerable to physical water risk.
To help determine how increasing competition for
scarce water resources may impact Kerry, we use the
World Resources Institute’s Aqueduct Tool to help in
our assessment.
Using Water Efficiently
Water is essential to the ongoing operation of our
business and we rely on the availability of sufficient
quantities of clean, fresh water to produce our
products. From raw materials through to maintaining
product safety and quality, water is a critical ingredient
for our future success. Currently over two billion people
live in countries experiencing high water stress and this
is likely to increase as populations and their demands
for water grow, and the effects of climate change
intensify (UN World Water Development Report 2019).
With increasing pressure on this shared resource,
we are aware of the importance of protecting water
sources and using water as efficiently as possible.
We ensure that we protect natural water sources by
meeting all requirements relating to waste water from
our sites and aim to reduce the amount of water we
use by 7%, versus a 2013 baseline. We have a water
reduction target at each site across the Group and
continuously look for ways to conserve and reuse our
water volumes. In 2019, we exceeded our target with
a 9% reduction in water intensity, delivering on our
Towards 2020 goal.
Annual Water Intensity

Using this tool, we have identified nine locations
globally as priority water sites. We carefully monitor
water usage at these facilities and our efficiency across
these locations significantly exceeds that for the Group.
In 2019, total water withdrawals across the nine sites
was 15% lower than our 2013 base year as outlined
in the graph above, although we have seen some
increases in water withdrawals at a number of these
sites, driven primarily by changes to product mix.
Generating Less Waste
With population growth and rising levels of income
putting increasing pressure on natural resources, the
current linear system of production, consumption and
disposal is increasingly unsustainable. Growing demand
for raw materials coupled with the impacts from waste
provide a clear imperative for shifting to a more circular
economy.
Our priority is to generate less waste and our Towards
2020 Programme set a target of a 12% reduction
in waste intensity by 2020 versus a 2013 base year.
In 2017, we surpassed that target and in 2019 we
continued this momentum, achieving a 31% reduction
in waste intensity versus our 2013 base year.
In 2020, we will continue to focus on more efficient use
of resources and will seek alternative uses for our waste.
1 		 This is a relative measure of waste to landfill as a percentage of total waste. The decrease of 1% versus our performance in 2018 (90%),
is due to reductions in our total waste volumes. Actual volumes sent to landfill continued to decline in 2019.
2 		 Waste to landfill volumes include waste sent for incineration without energy recovery.
Water Use at Priority Sites
Towards 2020 Target
m3
per Tonne of Finished Product
Towards 2020 Target
Zero Waste to Landfill
Across our sites, we continue to focus on reducing,
reusing and recycling our waste streams. Under the
Towards 2020 Programme, we targeted the goal of zero
waste to landfill and while we still have some work to do
to reach this milestone, we have reduced landfill volumes
by 41% versus our 2013 baseline and 89%1 of our waste
volumes are currently diverted2.
Less than 1% of our total waste volumes are categorised
as hazardous waste, the majority of which is recycled.
For non-hazardous waste streams, we are finding ways
to reuse these resources.
Food Waste
A critical lever in the reduction of the environmental
impacts of food production and consumption is tackling
food waste. Estimates suggesting that a third of all food
is lost or wasted, while 821 million people go hungry,
are indicative of a clear failing within the current food
system. Target 12.3 of UN Sustainable Development
Goal 12, ‘Responsible Production and Consumption’,
requires a 50% reduction in world food waste by 2030.
As a supporter of the global Champions 12.3 initiative
through Kerry Foods, we have published food waste data
for this business for the second time in 2019, showing we
remain on track to meet this 50% target. In 2020, we will
extend this goal on food waste beyond our Consumer
Foods business and work towards a 50% reduction
across the wider Group.
Plastic Packaging
Our Consumer Foods business places plastic packaging
directly onto the consumer market. In 2018, Kerry Foods
joined the UK Plastics Pact, adopting a target for 100% of its
plastic packaging to be reusable, recyclable or compostable
by 2025. In 2019, work has continued to deliver on these
goals with numerous projects across the division. One
project involved the removal of non-recyclable black CPET
trays from 70 million ready-to-eat meals. This first-to-market
solution uses trays that are fully recyclable, detectable and
recoverable in the UK recycling system and contain 85%
post consumer recycled content.
2019 Waste by Disposal Method
74% Recycling & Recovery
11% Landfill
5% Incineration (with energy recovery)
10% Other

58
Increasingly, consumers want to know what is in their
food and a heightened demand for transparency
in ingredient production and the implications for
people and the planet are resulting in a new dynamic.
At Kerry we are ideally positioned to support our
customers in adapting to this industry shift.
Our farm-to-fork approach and understanding
of the nutritional impacts for the end consumer,
coupled with our unrivalled innovation capabilities,
enables us to co-create with our customers and
partners, solutions that are natural, nutritious and
more sustainable.
18,000+
Products
+
Taste & Nutrition
Business Review
pages 42-46
Consumer Foods
Business Review
pages 47-48
Marketplace
At Kerry, we understand that our products
have an impact beyond the factory gates.
As well as producing our own consumer
brands, our taste and nutrition technologies
are an integral part of some of the world’s
best known food and beverage products.
From farm-to-fork, we are working to
improve the sustainability of products and
partnering with those who share our Values.
150+
Sales in 150+ countries
Our Marketplace activities contribute to the achievement
of the following UN Sustainable Development Goals.
59

Health & Nutrition
Non-communicable diseases (NCDs), including heart
disease, cancer and diabetes, are leading causes of
mortality. What the World Health Organisation term
an ‘invisible epidemic’ is responsible for over 70% of
global deaths. Unhealthy diets have been identified as a
primary risk factor associated with NCDs and with over
two billion people overweight or obese, it is increasingly
clear that the current food system plays a significant role
in the proliferation of these chronic conditions.
As consumers become increasingly aware of the link
between diet and health, demand continues to rise for
products that are natural and which consumers can
trust to maintain and enhance their wellbeing. As the
world’s leading Taste & Nutrition company, we are ideally
placed to support our customers in the development of
healthier, clean label product offerings that meet these
changing consumer expectations, while continuing to
deliver great taste through new and exciting flavours.
We have the industry’s leading portfolio of taste and
nutrition technologies and our product development
and innovation work brings together Kerry’s unrivalled
global capabilities to develop market leading solutions
based on local needs and taste preferences. Uniquely,
almost 90% of our portfolio is naturally derived and
we continue to maintain our focus on developing
solutions that come ‘from-food-for-food’. We lead the
industry with our investment in Research, Development
and Application.
Creating Sustainable Solutions
Food Waste Plant Protein Resource Efficiency
Kerry improves the shelf life and safety
of natural foods that traditionally use
no preservatives, and replaces chemical
ingredients used for maintaining shelf
life which are being rejected by health
conscious consumers. We replace these
with more sustainable, plant-based
ingredients, naturally derived from
fermentation and that have a lower
environmental impact. In addition, the
technology can facilitate more centralised
manufacturing, allowing for broader
distribution channels so that food is not
damaged during extended transit times
and can safely handle fluctuating storage
conditions.
The global plant-based food market
value is estimated to reach approximately
USD$24.3 billion by 2026 as the flexitarian
movement continues to grow. To support
our customers in this exciting category,
we launched Radicle™ by Kerry, a new
global portfolio and solution platform.
This portfolio allows us to bring together
our complete technology offering and
application expertise specifically for
the plant-based market. It is clearly
aligned with our customers’ needs to
create winning products that are more
sustainable and nutritionally optimised
with cleaner labels, authentic tastes and
appealing texture.
The impact of climate change such as
the recent trend of hotter summers has
brought challenging growing conditions
for cereals and grains all over the world.
This has led to reduced crop yields, higher
barley and malt prices, as well as inferior
quality grains for brewing and distilling.
Kerry has the largest portfolio of brewing
ingredients and process aids as well as
the technical expertise, to help brewers
navigate these three key challenges. Our
solutions help our customers improve
overall brewhouse process performance
and maximise extract yield while reducing
the percentage of malt used. This results
in vastly improved sustainability measures
and cost savings for the brewhouse.
In 2019, we invested a further €291.4m in this area to
ensure we continue to shape the future of food. For more
see Our Markets pages 26-27.
We work collaboratively to support Kerry’s leadership
position and are engaged with external centres of
expertise, through which we share and acquire new
knowledge. The Kerry Health and Nutrition Institute (KHNI)
has established itself as a leading source of thought
leadership in the area of diet and health. In 2019, KHNI
published over 70 pieces of content and continued its
highly successful webinar series, engaging the industry on
topics including, clean label, sugar reduction, plant protein
and much more. See khni.kerry.com for more details.
Kerry Foods’ Better-for-You Programme
Within our Consumer Foods division, we continue to drive
positive change in the nutritional profiles of our brands
without compromising on taste. We are committed to drive
reductions in salt, sugar and calories in line with targets
from both UK and Irish governments. We introduced
our Richmond lower salt frozen sausages, Richmond
chicken sausages with lower salt and fat, and Richmond
meat-free sausages that are also lower in salt and fat
content. Additionally, we have continuous improvement
programmes across all our brands to drive further
reductions in 2020 and 2021.
Replace Reduce Re-position Reinvent
Remove
Clean Label
Investment in R&D

60
Responsible Sourcing
Much of the environmental impacts associated with our
products occur in the supply chain, often at farm level.
Although we do not own or operate any farms, Kerry is
committed to promoting good agricultural practices and
to upholding the rights of workers who help to produce
our raw materials.
With a raw material spend of almost €4 billion, Kerry
sources products from thousands of suppliers, providing
vital support to agricultural communities around the
world. However, some of the raw materials we use can
present social and environmental challenges. Addressing
these challenges can prove difficult within a complex
global supply chain and, where possible, we seek to work
with other stakeholders on a pre-competitive basis to find
common solutions.
We continue to work to improve the traceability and
sustainability of our raw materials and have a focus on six
strategically important raw material categories. Certification
standards play an important part in demonstrating good
practice, however, we also engage closely with suppliers
across these six categories and work collaboratively at farm
level in a number of priority areas.
We are members of important multi-stakeholder initiatives,
through which we seek to work with others to advance
responsible sourcing at category and industry level.
These initiatives include SAI Platform, Innovation Centre
for U.S. Dairy, Sustainable Spices Initiative, Origin Green,
Roundtable on Sustainable Palm Oil and the Sustainable
Vanilla Initiative.
Ensuring Quality & Food Safety
We strive to produce safe, high quality products and
have stringent food and product safety requirements in
place across the Group, as outlined in our Food Safety
and Quality Policy. We take a farm-to-fork view that
incorporates preventive controls through to horizon
scanning and embedding best practice. We have
implemented a global quality management system and
in 2019, 100% of our sites maintained Global Food Safety
Initiative (GFSI) certification. GFSI is an industry-driven
initiative that reduces food safety risks by delivering
equivalence between effective food safety management
systems. We leverage this platform to ensure food safety
and compliance with quality standards.
Kerry also requires that its suppliers of raw materials
comply with strict requirements as laid out in the
Group’s Supplier Requirements Manual. We partner with
suppliers operating in nearly 60 countries around the
world, performing a risk assessment on all our direct
suppliers and third party manufacturers annually. In
2019, we conducted 1,100 supplier food safety audits in
50 countries across 6 continents and in the past 5 years,
our Global Supply Quality team have conducted in excess
of 5,000 supplier audits.
Like many of the sustainability challenges we face, issues
around food safety and food fraud are not unique to
Kerry. As part of our governance and due diligence
programme, policies and ways of working are refined in
line with GFSI standards, peer reviews and benchmarking
programmes with customers and organisations such as
SSAFE (Safe Supply of Affordable Food Everywhere).
Palm Oil
Dairy
Meat
Vanilla
Herbs & Spices
Paper Packaging
61

Palm Oil
At Kerry, we believe that working with industry partners
to effect change is the best long term solution for the
palm industry. As a member of the Roundtable on
Sustainable Palm Oil (RSPO), we continue to pursue the
sourcing of more sustainable palm oil. We clearly set
out our requirements in Kerry’s Palm Oil Sourcing Policy
and maintain regular engagement with suppliers to
ensure compliance. All volumes across our Kerry Foods
branded products carry physical RSPO certification
and we continue to pursue greater traceability for all
volumes purchased. In September 2019, we published
an updated palm oil progress report outlining that
traceability for our volumes to the mill was 97% while
to plantation the number had increased to 51%.
For more information see our progress report on
www.kerrygroup.com.
Program Ilham
Program Ilham is a collaborative project that aims to
support smallholder farmers to improve their yields,
thereby increasing production without the need for
additional land and helping to improve the livelihoods
of farm families.
In 2019, we concluded the fourth workshop for
smallholders on Best Management Practice (BMP).
The workshop focused on practical interventions such
as ways to determine nutrient deficiency, handling
of chemicals and proper use of personal protective
equipment. The programme also provides subsidised
compost based fertiliser which is specially formulated
from the results of local soil and foliar sampling.
Dairy
Kerry’s liquid milk suppliers use a natural, grass-based
production system that is among the most carbon
efficient in the world. Still, dairy production has
a significant environmental footprint and Kerry
Agribusiness works closely with our farmers to support
them in implementing more sustainable practices in
areas such as grassland management, soil health, water
quality and animal welfare.
100% of Kerry’s Irish milk volumes are certified under
the Sustainable Dairy Assurance Scheme (SDAS),
through which each farm is independently audited
every 18 months. Each farmer is provided with a carbon
footprint for their farm, together with information
on what changes to farming practices will help to
reduce emissions.
In 2019, through our membership of the Sustainable
Agriculture Initiative (SAI) Platform, Kerry was an active
participant in the development of the Sustainable Dairy
Partnership (SDP). Through cooperation between dairy
buyers and processors on sustainability, the SDP builds
on the Dairy Sustainability Framework (DSF) and its
eleven criteria without creating any new standards.
Protecting Workers in our Supply Chain
Our Supplier Code of Conduct sets out our expectation
that all suppliers act ethically, honestly and in accordance
with all applicable laws. It is explicit in stating our respect
for internationally recognised human rights and Kerry
does not tolerate the use of forced or child labour, in any
operations connected with the Group.
Action on this issue is coordinated across a number
of functions including HR and procurement, with
overall governance undertaken through the Group’s
Sustainability Council (see page 54). We monitor
compliance based on risk and use independent input to
help determine our areas of focus. Kerry is a member
of SEDEX (Supplier Ethical Data Exchange), the world’s
leading collaborative platform for sharing responsible
sourcing data, and we use this platform to assess
our suppliers and help drive improvements in labour
standards. To further support us in these efforts, we are
also a member of the Food Network for Ethical Trade
(FNET), a collaborative industry initiative that aims to
improve human rights in global food supply chains.
For our global contracts, over 95% of vendors are
SEDEX registered. In addition, we also assess our total
supply chain based on risk and our goal for year end
2020 is for all direct suppliers classified as high risk to be
registered as members of SEDEX. We continue to make
progress towards that goal with 71% of these suppliers
registered in 2019. Under our Supplier Code of Conduct,
Kerry reserves the right to conduct independent audits
of suppliers to confirm compliance and in 2019, 18% of
our high risk suppliers had independent SMETA (SEDEX
Members Ethical Trade Audit) audits in place.
Across priority raw material categories (see below), we
continue to monitor human rights risk all the way to
farm level. As part of this work we have created risk
maps, calculating risk ratings for selected vendors and
developing vendor action plans. We also have dedicated
programmes in place to mitigate risks of infringement
and examples include producer programmes in our
vanilla and palm oil supply chains.
Promoting Sustainable Agriculture
The variation in our sourcing locations presents us
with a variety of sustainability challenges arising from
different agricultural systems and geographic contexts.
To overcome this, we have developed a risk analysis
tool which helps to identify and assess key areas for
action within our priority categories. The tool considers
a number of key impact areas within our supply chain,
including human rights, emissions, deforestation and
animal welfare. Through our procurement function,
we work to mitigate these impacts and some details of
actions taken across these six categories are outlined
on pages 61-63.

62
It provides a credible approach to foster and
demonstrate continuous improvement and delivers a
common approach to assess and improve sustainability
at farm level. The launch of the SDP represents an
important step on Kerry’s responsible sourcing journey
for those dairy ingredients where we do not have a
direct relationship with farmers.
Meat
Our assessment of suppliers to date has focused on
four key categories of pork, chicken, beef and fish
which represent the key meat sourcing categories for
the Group. We maintain 100% traceability to farm level
for all volumes assessed. In addition, all seafood which
we purchase is certified under Aquaculture or Marine
Stewardship Council (ASC, MSC) standards. For chicken
and pork, 77% and 44% of our respective volumes
carry third party certification. Our sourcing of beef is
predominantly from Ireland and the UK where extensive
production systems can help mitigate some of the key
risks in this category, for example animal welfare.
Vanilla
In Madagascar, Kerry’s Tsara Kalitao Programme
supports more sustainable vanilla production. With a
focus on improving livelihoods, empowering women
and educating children, the programme takes a holistic
and long term approach to sustainability in the regions
where we source.
All beans produced through the programme are certified
organic and agronomists work to improve agricultural
practices among farmers, helping them to enhance
production techniques, boosting yields and thereby
increasing incomes.
We also look at other ways of protecting farm incomes
and with the high price of vanilla, the incentive for
theft of beans prior to harvest remains, reinforcing
the importance of the community watch programme
initiated in participating villages. In 2019, theft of
green beans stabilised within participating villages at
approximately 3%, which is one of the lowest rates
across the region.
We are also focused on ensuring that children across
these villages can stay in school. We are pleased to
note the continuing increase in the level of educational
attainment at schools participating in the programme,
allowing children to progress beyond primary level. In
2019, pass rates for final exams rose to 60% for the
additional 15 schools incorporated in 2018. This is up
from a pass rate of 17% in 2017.
Herbs & Spices
Within this category we have established a programme
that aims to source only from primary processors.
These supply partners are chosen for their consistent
high quality and reliability, their proximity to farming
communities and their commitment to working in close
collaboration with these farmers. Kerry is also an active
member of the Sustainable Spice Initiative, which has
an objective of fully sustainable spice production and
trade. Sustainably certified spices are not widely available
and certification programmes are in their infancy
relative to other commodities. As we seek to build a
more sustainable sector, we have committed to working
towards 10% certified sustainable sourcing in our top
3 product categories by 2021 and to achieve or exceed
25% certified sustainable sourcing in our top 3 product
categories by 2025. In 2019, we made good progress
against these targets and expect to deliver on these
commitments within the agreed timeframe.
Madagascar
In 2019, pass rates for final
exams rose to 60% for
the additional 15 schools
incorporated in 2018. This is
up from a pass rate of 17%
in 2017.
63

Paper Packaging
Our Towards 2020 target was to procure 90% of our
fibre based packaging from sources that are certified,
verified or recycled. In 2019, we maintained performance
ahead of that target with 91% of our volumes meeting
these criteria. Accepted certification standards include
Forest Stewardship Council (FSC) and Programme for the
Endorsement of Forest Certification (PEFC).
No Deforestation
Forests play a critical role in supporting our ecosystem
and are a source of fuel and food for over a billion
people yet forests globally are under threat. Agriculture
is a leading cause of deforestation and Kerry has
committed to ensuring that the raw materials we use do
not contribute to further forest loss by 2025. We have
a no deforestation commitment across targeted supply
chains that represent a high risk of deforestation and
include Meat, Dairy, Soy Bean, Palm Oil, and Paper. We
are a member of several multi-stakeholder initiatives
focused on this area including RSPO, the UK Roundtable
on Responsible Soy, Tropical Forest Alliance (TFA) 2020
and others.
Marketing and Communications
At Kerry, we are committed to providing clear product
information, which supports consumers in making healthy
choices. All advertising and brand positioning conform to
national advertising codes of practice and we are conscious
of the potential impact of marketing to children and young
people. We provide on-pack nutritional labelling and
additional information services e.g. brand websites,
to help consumers make informed choices.
The Group has established best practice guidelines for
nutritional labelling across our portfolio, in line with
Food Information to Consumers legislation.
In addition to mandatory labelling requirements,
we support the voluntary addition of front-of-pack
‘Reference Intake’ information to aid consumer choice.
We also employ customer enquiry lines which are
manned by experienced teams who can help respond to
any additional customer requests.
National Commitment
Origin Green is Ireland’s national food and drink
sustainability programme led by Bord Bia (Irish Food
Board). The programme brings together farmers,
producers, retailers and foodservice operators with
the goal of making Ireland a world leader in more
sustainable food production.
Origin Green enables Ireland’s food
industry to set and achieve measurable
sustainability targets and Kerry is proud
to be a founder member. As part of
our Origin Green charter, we have
set commitments for improvement
across specified target areas including
responsible sourcing, manufacturing
operations and social impact.
These commitments are fully aligned with the Group’s
broader sustainability goals and we continue to lead
with the delivery of our programme. The independent
verification of our performance under Origin Green also
helps to provide further assurance around our progress
on these issues.
In 2019, Kerry engaged with Bord Bia and
industry partners in the development of a new
Grass Fed Dairy Standard in response to demands
from the marketplace for more natural and
sustainable products.

64
+
Our People
pages 18-23
Each day, our people live our Values of Courage,
Ownership, Inclusiveness, Open-mindedness and
Enterprising Spirit as we partner with our customers
and co-create better food, beverage and pharma
products for consumers around the world. We strive
to foster a culture that attracts the world’s leading
talent and create the environment where that talent
can grow and flourish. More details relating to
workplace sustainability can be found in Our People
section on pages 18-23, outlining our key activities
in some core areas and specifically relating to our
Purpose, Values, diversity and inclusion, the employee
experience, health, safety & wellness, talent pipeline
and total rewards.
Workplace
Our colleagues are the foundation of our
business. They enable Kerry’s innovative and
entrepreneurial culture to thrive, which is a
key source of our competitive advantage, and
central to our ongoing success. We cannot
deliver for our customers without the 26,000+
unique and talented employees around the
globe and we recognise that achieving our
ambition of sustainable business growth can
only be attained through their efforts.
R&D Scientists
Our Workplace activities contribute to the achievement
of the following UN Sustainable Development Goals.
65

At Kerry, doing business with integrity is fundamental
to the way we operate and the foundation of our long
term success. Business results must always be achieved
ethically and legally, and the Group’s comprehensive
Code of Conduct clearly defines the standards and
expectations set for all Kerry colleagues. It sets out
how we respect each other, live our Values, protect our
assets and obey the law. The policies behind the code
provide clear guidance for our daily interactions and
are reviewed annually. The ongoing responsibility for
their implementation rests with Group management,
supported by relevant functions including HR and
Internal Audit. The obligation to do the right thing is
underpinned by one of our core Values of Courage
whereby colleagues are supported to “…to do what is
right for our customer, our business and the world”.
The Code of Conduct is available in multiple languages
and is applied to all aspects of business across the
Group. All colleagues are required to familiarise
themselves with this code on joining Kerry and we
mandate ongoing training thereafter through our
learning academy, on at least a bi-annual basis. Since
2018, over 80% of all eligible colleagues have achieved
Code of Conduct certification.
Where employees have concerns about business
conduct, the Group provides clear guidance on
reporting. The Employee Concerns Disclosure Policy
details the appropriate means of reporting alleged
misconduct. It encourages employees to speak up if
they believe something is not right and is clear about
the protection afforded to whistleblowers. To facilitate
anyone who wishes to express a concern, the Group
operates an ethics hotline, through which employees
and third parties can report an issue anonymously at

Doing the Right Thing
In 2019, we continued to monitor and investigate all
reported issues via this ‘Express a Concern’ facility. In
the period there were approximately 0.4 cases reported
per 100 employees (which includes a small number
of reports from external parties) with over 85% of
concerns reported relating to internal HR matters. The
Board continue to review the effective operation of
this facility and the reports arising from its operation
on an ongoing basis. Further details are outlined
under Whistleblowing Arrangement in the Corporate
Governance Report on page 103. We also seek to
extend our Values on ethical business practice to those
with whom we do business and our requirements are
reflected in our Supplier Code of Conduct.
Fighting Bribery & Corruption
As part of the Group Code of Conduct, Kerry’s Anti-
Bribery Policy describes our zero-tolerance approach
and provides guidelines to all employees regarding
potential situations involving bribery. This policy,
together with policies on fraud, anti-money-laundering,
fair competition and engaging with government
officials, all support Kerry’s efforts to ensure that
corrupt practices do not form part of our business
relationships. Internally, we ask questions on bribery
and corruption of each business unit as part of the
ongoing assessments undertaken by the Group’s
Internal Audit Team. In 2019, no incidences of bribery or
corruption were uncovered across the Group.
As a business, we are also a member of SEDEX
(Supplier Ethical Data Exchange) and each of our sites
globally is registered with the platform. As part of this
membership, each site completes a self-assessment
on areas aligned with our Code of Conduct, including
ethical business practice. Furthermore, over 90% of
our sites are subject to an independent SMETA (SEDEX
Members Ethical Trade Audit) or equivalent audit.

66
Upholding Human Rights
We are fully committed to upholding Human Rights and
conduct our business in a manner that respects the
rights and dignity of all people. Kerry’s Global Human
Rights Policy reflects this commitment and is guided
by the Universal Declaration on Human Rights and the
International Labour Organisation’s Core Conventions.
The Group’s Human Rights policy applies to all Kerry
employees and sets out our expectations of business
and supply chain partners to conduct their business in
a way that upholds the principles set out in the policy.
The use of child or forced labour is strictly prohibited
across all our operations and facilities. We do not
tolerate any form of unacceptable treatment of workers
and we respect all laws establishing a minimum age for
employment.
We have processes in place to ensure compliance and
to support implementation and monitoring of the
Group’s Human Rights policy. These are supported by
monitoring through a number of external platforms.
All manufacturing sites are registered with SEDEX and
complete a self-assessment questionnaire, including
questions on young employees, forced labour and
human rights. Across our business over 90% of
manufacturing sites are covered by independent
SMETA, or equivalent, audits.
Our Supplier Code of Conduct is explicit in demanding
that those who seek to do business with the Group
uphold the rights of workers and expressly forbids the
use of child labour, or forced or involuntary labour of
any type. For more information on our engagement
with suppliers in this area see our Responsible Sourcing
Section on page 61.
We understand stakeholder requirements for more
information on the impact of these policies and the
associated due diligence processes. This is an area
where we continue to enhance and build on existing
programmes with further integration of approach
across key functions.
The Group publishes an annual Slavery and Human
Trafficking Statement which is available on the Group
website at www.kerrygroup.com.
Improving Health & Safety
Kerry’s Health and Safety Policy and management
system defines consistent ways of working and
establishes standard requirements across our business.
While calling out responsibilities and accountability
at all levels, it outlines a role for all colleagues in
working safely and challenging any unsafe behaviour.
Implementation is led by the Global Health, Safety
and Environmental (HSE) team and employees are
supported by dedicated HSE personnel across our sites,
who work with site managers to ensure we consistently
promote a culture of Safety First, Quality Always.
Since 2015, we have been targeting a 5% year-on-year
improvement in our health and safety metrics and
have made significant improvement over that period.
In 2019, we delivered an improvement of 17% on the
previous year and over the course of our Towards
2020 programme, we have achieved a cumulative 45%
improvement versus our 2013 baseline. While this
represents significant progress, there is no acceptable
level of accident or injury and we continue to strive for
the safest possible working environment. As part of our
forthcoming commitments in this area, we are setting
targets that align with best in class performance. For
more, on health and safety see Our People section on
page 22 and the Risk Report on pages 82-83.
Promoting Wellbeing
Given the time employees spend in the workplace, we
know that as an employer we can play an important
role in personal wellbeing beyond health and safety.
At Kerry, we want to support our colleagues in leading
healthier, more active lives and have begun to expand
a number of locally relevant initiatives and promote a
greater awareness around the concept of wellbeing.
For more, on our wellbeing activities, see Our People
on page 22.
67

Developing Talent
Kerry recognises that in order to achieve our business
goals, we must continuously invest in colleagues by
adopting a structured approach to talent management.
In the first instance we value Inclusiveness, and
through our Diversity, Inclusion and Belonging strategy,
we are proactive in building a dynamic employee
population which is representative of our global
footprint, connected for knowledge sharing and has the
potential to develop the future skills required to sustain
our growth as a business.
Our structured approach to talent management is
achieved via the ‘mySuccess’ platform that provides a
mechanism for our people and managers to discuss
performance and career progression with ongoing
feedback and coaching, as well as formal year end
reviews. Training or development needs identified
as a result of this two-way process are supported
through the Kerry Learning Academy, which facilitates
the provision of tailored and more general learning
solutions across the organisation. These solutions
include a blend of classroom, online and interactive
content that provides instruction, stimulates discussion
and encourages collaboration from structured
graduate training through to leadership development
programmes. Our people, based in our main centres
and working within our manufacturing locations, have
invested in their development through the completion
of over 206,000 courses during 2019.
Finally, to continue providing a stimulating employee
experience, and to sustain our growth, we encourage
our employees to build partnerships in the community
and use our formal Volunteer Programme to help
nourish these communities we rely on to support our
business growth and from which we continue to build
our talent pool.
For more on Talent and the employee experience,
see Our People on pages 18-23.

Our People
pages 18-23
At Kerry we know that our global scale can have
profound local impacts and we are focused on
supporting and engaging in ways that enhance local
communities. We know too that some of those most
in need are beyond our direct reach and realise the
importance of working with others and harnessing
the goodwill and passion of our people to amplify our
impact and effect meaningful change.
Our flagship programmes centre on improving
health and nutrition, reducing hunger and tackling
inequalities in ways that will make a lasting
difference. From our commitment to help secure
the future for farm families to partnering with local
outreach programmes, our ongoing work in global
communities enables us to nourish the lives of those
who are most in need.
Community
As the world’s leading Taste & Nutrition company,
we know that we reach millions of people every
day through our products and that we impact
on an even greater number when we include the
communities where we operate and those we
source from. The role we play in many of these
communities is critical to their success, whether
it be through the value created by our business
activities, the jobs we provide, the raw materials
we purchase or the products we produce.
7,000+
people impacted by the RAIN Programme
Photo: Women fetching water from a well in Tahoua,
Niger. Photographer Ciara Hogan/Concern Worldwide.
Photo: Mika Abdu with his daughter Habibah, Tahoua, Niger.
Photographer Darren Vaughan/Concern Worldwide.
Through our community activities we contribute to the
achievement of the following UN Sustainable Development Goals.
69

RAIN Programme
Realigning Agriculture to Improve Nutrition (RAIN) is an
integrated development programme designed to tackle
the significant barriers confronting extremely poor
households in the world’s most vulnerable regions. Kerry
has previously supported the successful implementation
of the RAIN Programme in the Mumbwa district of
Zambia. The programme is designed and operated by
leading international development agency, Concern
Worldwide.
In 2018, Kerry announced that it would commit a
further €1 million to bring a second phase of the RAIN
programme to Niger, West Africa. Niger is a landlocked
and largely arid state on the edge of the Sahara Desert
and in 2019, the Global Hunger Index (GHI) ranked Niger
101st out of 117 countries.
The population of Niger is highly dependent on small-
scale, subsistence agriculture, but with vulnerability
to drought, limited access to finance and inadequate
responses to climate change, productivity in Niger is
low. Inhabitants of the Tahoua region, where the RAIN
project is based, exist in a state of chronic poverty and
experience one of the highest rates of malnutrition
in Niger.
Through the RAIN Programme, Kerry and Concern
Worldwide aim to bring hope to those most in need
across Tahoua’s communities by focusing on the
following objectives:
> Increasing food production and diversity of
nutrient-rich diet
> Promoting key health practices for improved
maternal and child nutrition
> Improving access to reliable and safe water sources
and sanitation
> Reducing inequalities experienced by the extreme
poor and vulnerable, particularly women and girls
> Strengthening the capacity of local structures to
identify issues and solutions within the community.
In 2019, we successfully concluded the
second year of the programme and we
continue to build impact through this
partnership working with 7,000 people
across selected villages. In the key objective
areas, progress has been made as follows:
Increasing food production and diversity
of nutrient-rich diet:
> Famers have been provided with fortified
millet seed and 70 pilot farmers and
1,000 producers have been trained
on conservation agriculture and good
agricultural practices
> Food production has been increased
through kitchen ‘sack’ gardens with the
result that 115 households have already
harvested vegetables to supplement
their diet.
Promote key health practices for improved
maternal and child nutrition:
> Community volunteers have screened 600
children for malnutrition and conducted
household level education around
sanitation and exclusive breastfeeding.
Improve access to reliable and safe water
sources and improved sanitation:
> Construction of four wells equipped
with solar pumping devices has been
completed to increase safe water sources
and boost irrigation capacity for additional
food production
> Nearly one hundred sanitation sessions
carried out in all 7 villages to eliminate
dumpsites that encourage mosquitos and
increase cases of malaria.
Reduce inequalities experienced by the
extreme poor and vulnerable, particularly
women and girls:
> Sixteen Savings and Loans groups
established with 466 female members.
With the savings generated these groups
have been able to grant loans to around
100 women as well as putting aside
savings for emergency funds.
Strengthen the capacity of local structures
to identify issues and solutions within the
community
> As part of the green village approach, two
community plant nurseries have been set
up to propagate new vegetable plants
for distribution in the community. Five
nurserymen in charge of the production
have grown almost 10,000 tree plants
> There is a partnership with the Department
of Agriculture on conservation agriculture
and good agricultural practices.
Mika's Story
Mika Abdu (37) is a father of 3, living in the rural village
of Sabon Kalgo in Tahoua. Lack of sufficient rain has
led to poor harvests in recent years and his farm has
suffered. Mika’s village was selected to be part of the
RAIN Programme and now using sack gardens which
can flourish in minimal water, Mika is able to grow
additional food to support his family. “I wasn’t used to
growing plants in a sack, it was new to me” says Mika.
“But it is only now when I see what has been produced
that I understand. I now realise that what Concern has
done for us is something good.”

70
World Food Programme
Kerry is the first Irish company to partner with World
Food Programme (WFP), the food assistance branch of
the United Nations and the world’s leading humanitarian
organisation fighting hunger. Since 2016, Kerry and
WFP have been partnering in support of Project Leche,
a pioneering project that seeks to connect smallholder
dairy farmers with sustainable market opportunities,
while ensuring their product is at the quantity and quality
necessary to meet demand.
Honduras is the poorest country in Latin America with
one of the most unequal distributions of income and
resources in the world. In 2019, forecasts of below-
average rainfall persisted throughout the cropping
season. The Dry Corridor – a particularly harsh area
that is targeted by WFP assistance – is facing the longest
dry period on record since 1981, thus worsening
food insecurity and malnutrition amongst vulnerable
populations, particularly in these Southern and
Western regions.
This targeted region is a renowned area for production
of fluid milk and other dairy products. However,
production levels are low, with low sanitation measures
and insufficient knowledge of best practices of
production, manufacturing and distribution techniques.
In 2019, Kerry and WFP entered the final year of Project
Leche. As part of our commitment to supporting WFP
Honduras and to achieve lasting impact through Project
Leche,  will continue to support in an
advisory role across milk handling, milk processing and
nutrition. A more detailed report on the full impact of
Project Leche will be published in 2020.
Noon Foundation
In partnership with the Noon Memorial Legacy Trust,
Kerry has supported the development of the Noon
Hospital and Research Centre in India since 2016. The
hospital, in Rajasthan, provides essential medical services
for rural communities which would otherwise lack access
to quality healthcare. The comprehensive facility boasts
world class services with state-of-the art operating
theatres, an intensive care unit (ICU), neonatal ICU and
eye department and highly skilled staff.
As part of a five year programme of support, Kerry is
proud to have helped expand services at the hospital,
officially opening a fourth wing focused on eye care
in March 2018. India is home to the world’s largest
population of blind people and the difficulty of losing
vision is exacerbated by the fact that once blind, many
lose their livelihoods forcing them, and often their
families, into a life of poverty. However, in many instances
blindness is preventable with timely intervention.
The ‘Kerry Wing’ houses the hospital’s ophthalmic
department, which treats a variety of health issues,
including glaucoma, blindness, trachoma and cataracts
and is accredited by the state Government through the
District Blindness Control Society for prevention
of blindness.
Project Leche: Progress in 2019
Nutrition Sustainable Milk Production Education & Awareness
In 2019, 190 teachers were trained in
various modules including nutrition,
food security, hygiene practices, safe
food preparation and storage and
nutrition education. Each module
consists of eight hours of both
theoretical and practical classes.
These trainings set out to reinstate the
importance of hygiene and nutrition.
In 2019, three ‘Field Days’ took place,
in collaboration with the University
of Zamorano which saw smallholder
dairy farmers from across the region
engage in peer-to-peer exchange
and knowledge sharing. By coming
together at such events, these farmers
can better their own outputs and farm
management by exchanging technical
skills and learnings, empowering
themselves and their peers.
Through the establishment of teacher
and community networks, local
communities are empowered with
nutritional knowledge and awareness,
with the aim of encouraging community
wide healthy eating behaviours.
The teacher and school committee
networks will reinforce and continue
to contribute towards increasing
the nutritional status of school aged
children in the targeted areas.
supported by
Photo: WFP/Boone Rodriguez
71

Since opening in March 2018, the new Kerry wing has
seen over 38,000 patients and conducted more than
1,800 operations. This has been enabled directly by the
additional staff and new facilities, including a wide range
of essential equipment.
Crucially, the Noon Hospital and Research Centre
provides this intervention on the basis of need, rather
than ability to pay and offers those in the surrounding
region access to the high quality treatment that can
prevent sight loss. To date, over 20% of surgeries
undertaken at the new Kerry Wing, have been provided
at no cost to patients in need.
Connecting People
At Kerry, our committed and passionate workforce
provide a link to thousands of communities around
the world. Every day these colleagues contribute to
nourishing the life of their communities through their
roles with Kerry, but we also encourage our people to
engage in other projects that matter most to them and
those around them.
To support this, the Kerry Volunteer Programme
provides paid leave to participate in local community
programmes. Many employees have already availed of
the opportunity, often alongside their colleagues and
we continue to grow the number and impact of these
volunteers over time.
Our local community activities span a broad range of
initiatives including, enterprise, education, arts, sport
and community development. With local ownership, each
of our sites can select and engage with activities that
make a positive difference to their local communities.
Special Olympics
The mission of Special Olympics
is to provide year-round sports
training and athletic competition
in a variety of Olympic-type
sports for children and adults
with intellectual disabilities,
giving them continuing
opportunities to develop
physical fitness, demonstrate courage, experience joy
and participate in a sharing of gifts, skills and friendship
with their families, other Special Olympics athletes and
the community. This aligns with our desire at Kerry
to support the inclusion of people with intellectual
disabilities in our local communities.
In addition to the Group’s support, our people have
also taken great pride in the partnership with Special
Olympics, registering over 1,600 volunteer hours across
four countries in support of various activities, including
the World Games in Abu Dhabi in March 2019.
Sport
We believe that sport plays an important part in a
healthy active lifestyle, helping bring colleagues and
communities together and promoting both physical and
mental wellbeing. Kerry are proud supporters of many
amateur sports including all Kerry inter county GAA
teams and Rás Mumhan, Ireland’s premier international
amateur cycling event.
In 2019, The Kerry Sports Academy was offically opened
and is home to the UNESCO Chair in Inclusive Physical
Education, Sport Fitness and Recreation and CARA, the
National Centre for Adapted Physical Activity.
Corporate Philanthropist of the Year
In 2019, Kerry was named Corporate
Philanthropist of the Year by the Community
Foundation for Ireland. These annual awards
recognise those who have shown outstanding
leadership in the area of philanthropy and who,
through their giving, have made a difference in
bringing about sustainable social change.

72
Community Development
Enterprise plays a key role in maintaining strong and
vibrant communities, however, the increasing trend
towards urbanisation poses a serious challenge for many
rural locations. In Ireland, we are founder members of
the Kerry SciTech initiative, which aims to link talented
individuals with exciting opportunities across a range of
start-ups and more established companies.
We also know that not-for-profit organisations play
such a vital part in community life and we are proud
supporters of numerous local charities. We understand
that these organisations rely on volunteers to undertake
much of the unseen work and as well as our financial
assistance, we have helped develop a recognition
programme for leading social enterprises.
Support for the Arts
We are proud to sponsor the internationally acclaimed
literary festival ‘Listowel Writers Week’, including the
festivals top prize ‘The  Novel of the Year’.
We are also corporate sponsor to Ireland’s National Folk
Theatre, Siamsa Tíre, an organisation that helps keep
Irish folk traditions alive through production and training
of young people in the traditional arts.
Education
We know the importance of education for promoting
economic opportunities and as an organisation, we
offer a number of scholarships across our regions each
year. In Malaysia, Kerry has supported primary school
children by providing back-to-school packs for the urban
poor and underprivileged children, while in Panama,
Kerry colleagues have donated educational supplies and
volunteered to improve school facilities. Our sustainable
Vanilla Programme in Madagascar also has a key focus
on education (see page 62).
We are sponsors of the Origin Green Ambassador
Programme, through which ten talented individuals are
selected to complete an MSc in Business Sustainability.
The Programme is designed to help equip businesses for
the sustainability challenges that lie ahead by growing
the expertise and pool of talent within our industry. Kerry
is also a supporter of post doctoral research across the
humanities and sciences through University College
Dublin’s Newman Fellowship Programme.
Photo: Courtesy of Bord Bia.
73

STRATEGIC REPORT
RISK REPORT
The Group’s success depends on
its ability to identify and exploit the
opportunities generated by the
business and to determine the nature
and extent of the risks it is willing
to take in pursuit of achieving its
strategic objectives.
The global scale of the Group in terms
of geography and manufacturing
footprint, together with its broad
portfolio of customers, suppliers and
products, helps limit the impact that
any one risk may have. However, all
risks must be monitored and managed
to ensure that the potential impact
remains within the acceptable level of
tolerance to achieve a profitable return
for shareholders.
 Risk
Management Framework
The Board has implemented
appropriate governance structures
to ensure that there is clarity of
ownership and responsibility for risk
management throughout the Group.
An overview of the Group’s risk
management and internal control
framework, responsibilities within
it and the relationship between
functions is outlined in
the diagram below.
Board of Directors
The Board of Directors is ultimately
responsible for the management of
risk and for setting the Group’s risk
appetite. The Board ensures that
appropriate risk management and
internal control systems, designed
to identify, manage and mitigate
potential material risks to the
achievement of the Group’s strategic
and business objectives, are in place.
During the year, as part of the risk
management programme, the
Board considered how the Group’s
principal risks and uncertainties could
potentially impact the going concern
and long term viability of the Group.
The conclusions of this assessment are
outlined on page 88.
As the global leader
in the taste and
nutrition industry,
it is critical that
Kerry has a robust
risk management
framework in place
to identify, assess,
prioritise and
effectively manage
its risks in order
to ensure that it
can continue to
grow profitably.
1st LINE OF DEFENCE:
Source:
Operational Management
Nature of Assurance:
Internal controls / Direct
management monitoring
(policies, processes, KPIs,
tasks and behaviours)
2nd LINE OF DEFENCE:
Source:
Oversight Functions
Nature of Assurance:
Regular performance reviews /
Functional audits
/ Internal control
self-assessments / ICT security
monitoring
3rd LINE OF DEFENCE:
Source:
Internal Audit and other
Independent Assurance
Providers
Nature of Assurance:
Provide assurance on the
operation of the 1st and 2nd
lines of defence / Regular
reviews / Recommendations for
improvement
Board of Directors
Audit Committee
Risk Oversight Committee/Executive Management
 Risk Management Framework
Effective Risk Management

74
Audit Committee
The Board has delegated
responsibility to the Audit
Committee for providing structured
and systematic oversight of the
Group’s risk management and
internal control systems. The Audit
Committee reviews and monitors
the effectiveness of the Group’s
risk management and internal
control systems throughout the
year through its review of reports
received from Internal Audit, the
Group external auditor and senior
management on the operation of
material financial, operational and
compliance controls. The Chairman
of the Audit Committee reports to
the Board at each Board meeting on
its activities both in regard to audit
matters and risk management.
A detailed description of the activities
carried out by the Committee for the
year under review is outlined in the
Audit Committee Report on pages
107-111.
Risk Oversight Committee
The Risk Oversight Committee (ROC)
is chaired by the Chief Financial
Officer and comprises senior Group
and functional management. The
ROC supports the Audit Committee
in the risk management process
through ongoing monitoring and
evaluation of the risk environment
and the controls in place to manage
those risks, in addition to the
consideration of emerging risks
which may impact the Group in
the future. The ROC also ensures
that there is a continuous focus on
improving the effectiveness of risk
mitigation activities.
Responsibility for the Group risk
assessment process is owned by
the ROC who maintain the Group
risk register and report changes
in the Group’s principal risks and
uncertainties to the Audit Committee
and Board on an annual basis.
A schedule of presentations to the
Board and Audit Committee on the
principal risks and uncertainties
is agreed at the start of the year
and risk is a regular agenda item
at Board and Audit Committee
meetings where members of the
ROC, or nominated functional
leadership, present on these risks.
These presentations, and
subsequent discussions, assist the
Board and the Audit Committee in
assessing the potential impact of
both key existing business risks and
newly emerging risks to the Group’s
strategy and operations as well as
the effectiveness of internal controls
and procedures in place to mitigate
the risk.
Executive Management
Executive management are
responsible for ensuring the
effective operation of internal
controls which have been designed
to manage the principal risks and
uncertainties on a day-to-day basis.
The ‘three lines of defence’ model
ensures that accountability for risk
management is embedded into the
Group’s processes and procedures.
A number of management
committees have also been
established to support risk
management initiatives across
key functional areas including the
Group Finance Committee, the
ICT Security Steering Committee,
the Sustainability Council, the
Global Quality, Health, Safety and
Environmental (QHSE) Leadership
Team and the Brexit Steering
Committee.
Three Lines of Defence
The Group operates a ‘three lines of
defence’ model to ensure that there
is a clear delegation of responsibility
for the management of risk and that
communication of the risk agenda is
effective. Details of the ‘three lines
of defence’ model is outlined on
page 73.
Risk Assessment Process
The Group has a strong culture
of risk management, with a
co-ordinated bottom-up and
top-down groupwide approach
to risk assessment that facilitates
the identification and evaluation of
risks, as well as assessing how the
risks are monitored, managed and
mitigated. This process is facilitated
by Internal Audit and overseen by
the ROC. Ongoing and emerging
risks were evaluated through
bottom-up input from management
across all divisional and functional
areas who, through a programme of
one-on-one interviews and a survey,
performed a detailed review exercise
to update the Group Risk Register.
During this process all existing
strategic, operational, financial and
compliance risks are considered
along with potential new and
emerging risks at a business and
functional level throughout the
Group. In assessing the potential
impact and likelihood of each risk
identified, management evaluates
the risks at a residual level after
existing internal controls have been
considered.
A standard risk scoring matrix
provides guidance on impact and
likelihood to ensure consistency
in reporting. The output from
the interviews and survey are
consolidated and ranked to
identify the key principal risks
and uncertainties for the Group.
Executive management review and
validate the results of this process
providing further input where
necessary. The ROC then reviews the
Group Risk Register and submits it to
the Audit Committee for approval.
75

The interaction and relationships
between risks are considered and
discussed. It is acknowledged by
management and the Board that
risks do not always exist in isolation
and that the crystallisation of more
than one risk at the same time
could have a significant impact
on the Group.
The Audit Committee and Board
formally approved the Group Risk
Register and have confirmed in the
Corporate Governance Report that
a robust assessment of the Group’s
principal and emerging risks was
completed including those risks that
could threaten the business model,
future performance, solvency or
liquidity of the Group. Throughout
the year, the Board considers the
appropriateness of the strategies
and actions to address these risks
in pursuit of the Group’s strategic
objectives.
Risk Appetite
The  Board of Directors
consider and assess risks in three
broad categories namely; strategic,
operational and financial &
compliance. As a Taste & Nutrition
and Consumer Foods business, the
Board has a low risk appetite for
risks which may impact the Group’s
reputation or brands, and in the
financial & compliance or operational
areas such as product quality and
health & safety. However, in pursuit
of strategic growth objectives, the
Board understands that there is a
trade-off between risk and reward in
making certain strategic investment
decisions and a higher level of risk
may be accepted in these areas
e.g. developing market expansion,
acquisitions or capital investments.
Through the risk management
framework all strategic investment
decisions are approved by the
Board. These are supported by
documentation and presentations,
along with senior management input
to ensure that the risks associated
with each transaction are fully
understood and accepted.
Principal Risks and
Uncertainties
The table overleaf describes the
principal risks and uncertainties that
have been identified by the Board,
the mitigating actions for each and
an update on any change in the
profile of each risk during the year.
The Board has determined that
these are the principal risks and
uncertainties which could impact
the Group in the achievement of its
objectives. Additionally, each risk has
been linked to the Group’s strategies
for growth and margin expansion as
outlined in the Strategic Report on
pages 28-30.
This table presents the Board’s view
of the Group’s principal risks and
uncertainties and does not represent
an exhaustive list of all the risks that
may impact the Group. There are
additional risks which are not yet
considered material or which are not
yet known to the Board but which
could assume greater importance
in the future. Likewise, some of
the current risks may reduce in
importance as management actions
are implemented or changes in the
operating environment occur.
The Board has reviewed the principal
risks and the risk environment and
considers that while there has not
been a significant change in the
principal risks in the past year they
do continue to evolve and the Group
continues to develop mitigation
measures to address them. The
Board continues to closely monitor
the UK’s exit from the European
Union (EU), its potential impact on
future trading relationships with the
EU and the business environment
in the UK. The Board also continues
to monitor risk in the context of
the growth of the Group through
geographic expansion and ongoing
acquisitions, in addition to regulatory
change.
Emerging Risks
Emerging risks are identified,
analysed and managed as part of
the same process as the Group’s
other principal risks. Having
reviewed the outcome of the risk
assessment process, the Board is
satisfied that there are no significant
emerging risks that could impact the
achievement of the Group’s strategic
objectives in the near term. However,
there are a number of risks which
must be monitored as they may have
a potential impact for the Group in
the future. Key emerging risks in
this category include, technology
innovation and disruption, climate
change and water scarcity.

76
Risk Trend/Link Description Impact
PORTFOLIO
MANAGEMENT
Strategic Risk
Trend
Link to Strategic
Priorities
The Group operates
across a diverse portfolio
of markets, channels and
customers, and demand
for products is impacted
by factors including
economic, demographic,
technology, competitor
actions, changes in
consumer demands and
fragmentation of the
marketplace.
Failure to strategically
manage the Group’s
portfolio and evaluate,
plan and appropriately
respond to evolving
marketplace and
competitive dynamics
could have an adverse
impact on the future
growth and profitability
of the Group.
BREXIT
Strategic Risk
Trend
Link to Strategic
Priorities
The UK’s withdrawal from
the EU has the potential
to significantly change
the terms of trade which
currently exist between
the EU and Great Britain.
The Group will continue
to monitor the ongoing
political situation
and upcoming trade
negotiations. While the
outcome of these talks
is difficult to predict, the
Group has considered
a number of different
scenarios and appropriate
mitigation plans have
been developed.
If a GB-EU Free Trade
Agreement (FTA) is not
agreed by the end of the
2020 transition period,
and no extension of talks
is agreed, the default
trading scenario implies
the application of tariffs
in line with World Trade
Organisation (WTO) rules.
This may have implications
for the Group which will
need to be managed
through its sourcing policy
and pricing model and
by utilising operational
flexibility to realign supply
chains as appropriate.
Reduced access to EU
labour supply and a more
restrictive migration policy
may result in a tighter or
more expensive UK labour
market.
Link to Strategic Priorities for Growth as per the Strategic Report
Taste & Nutrition
Strategic Growth Priorities
Consumer Foods
Strategic Growth Priorities
Margin
Expansion Drivers
Principal Risks and Uncertainties
77

Mitigation Developments in 2019
– The Group’s strategy and business plans are
designed to ensure that resources are prioritised
towards those technologies and markets having the
greatest long term potential for the Group.
– Post implementation reviews are undertaken for all
major investment projects to measure returns and
inform future investment decisions.
– The Taste & Nutrition business is differentiated
in the marketplace through its ability to provide
integrated solutions and its targeted portfolio of
foundational technologies.
– The Group’s market leading investment in research
and development, consumer insight and innovation
enable it to stay ahead of ever-changing consumer
preferences and provides foresight into future
consumer demands and market and competitor
intelligence.
– The Group continued to evolve and strengthen its
operating model to ensure that it remains both fit for
purpose to deliver on its strategic plan and responsive to
changing marketplace dynamics and opportunities.
– Significant progress was made in leveraging and
strengthening the Group’s industry-leading taste and
nutrition technology portfolio which continues to provide
significant value for its customers in their quest to
differentiate themselves in an ever-evolving marketplace.
In particular, this included development in its portfolio of
foundational technologies e.g. Clean Label preservation,
Clean Taste and Probiotics.
– A cross functional Executive Steering Committee
meets on a regular basis to consider and assess the
potential consequences of the UK’s withdrawal from
the EU.
– The Group’s operational footprint across Europe
and the UK provides it with a well-balanced and
flexible platform from which to serve European and
Global customers, regardless of the outcome of the
Brexit process.
– The Group has considerable expertise in managing
cross-border product movements.
– The Group has invested in IT systems and processes to
ensure it is ready to deal with the potential for increased
customs documentation and regulatory requirements.
– In order to minimise the cost implications of trade tariffs,
the Group plans to optimise its global sourcing capabilities
as well as localising raw material sourcing and finished
goods production where feasible.
– Where on-costs resulting from the change in trade tariffs
cannot be eliminated through other means, the Group
plans to recover increased costs through customer pricing.
– The Group continued to monitor the potential impact
of changes in the labour market arising from the UK’s
withdrawal from the EU and related events.
Risk Trend
Risk is unchanged Risk has increased Risk has decreased

78
Risk Trend/Link Description Impact
GEOPOLITICAL
/DEVELOPING
MARKETS
Strategic Risk
Trend
Link to Strategic
Priorities
As a global business
operating in 150+
countries, the Group is
exposed to economic and
political instability that
may reduce demand for
its products.
In addition, the
Group must deal with
increasingly complex
legal and regulatory
frameworks, currency
volatility, trade policies,
tariffs and sanctions and
varying standards of
quality and security across
many jurisdictions.
Failure to monitor change
and volatility across the
Group’s markets may
have a potential impact
on the future growth and
profitability of the Group.
With developing markets
as a key pillar for future
growth, the Group is
exposed to potentially
increased economic
and political volatility in
addition to the ongoing
risk of regional or global
pandemic outbreaks such
as the coronavirus.
BUSINESS
ACQUISITION
AND
DIVESTITURE
Strategic Risk
Trend
Link to Strategic
Priorities
Acquisitions and
divestitures continue
to be a core element of
the Group’s growth and
portfolio management
strategy which presents
risks around due diligence,
execution and integration
of businesses.
A failure to successfully
identify, execute or
properly integrate
acquisitions or execute
divestments in a timely
and effective manner
could impact profitability
and impede the strategic
development of the
Group.
Link to Strategic Priorities for Growth as per the Strategic Report
Taste & Nutrition
Strategic Growth Priorities
Consumer Foods
Strategic Growth Priorities
Margin
Expansion Drivers
79

Mitigation Developments in 2019
– As an established international business, the
Group has considerable experience of operating in
countries during periods of economic and political
volatility.
– Rigorous due diligence is conducted when entering
or commencing business activities in new markets.
– The breadth of the Group’s portfolio and its
geographic reach help to mitigate its exposure to
any particular localised risk.
– Local management engage with governments and
local regulatory organisations to contribute to, and
anticipate, important changes in public policy.
– The Group’s legal, regulatory and compliance
functions ensure that applicable laws and
regulations are complied with across all jurisdictions
and monitor ongoing developments.
– Group hedging policies are in place to reduce
transactional currency exposures.
– Crisis management and business continuity
plans are in place to minimise the impact of any
significant incidents.
– The Group has invested in enhanced supply chain
technology solutions to support its international business
in an increasingly complex trading environment.
– The Group continued to invest in its talent pipeline to
ensure that the appropriate skills and expertise are
available to support its growth in developing markets.
– The Group, in conjunction with an external provider,
completed an assessment of its people security crisis
management plan, following which an updated plan was
developed and is being deployed across the Group.
– The Group has significant expertise in identifying
and evaluating appropriate opportunities and
conducting due diligence and subsequent
transaction execution.
– The Group has a dedicated Mergers and
Acquisitions (M&A) team with extensive knowledge
and experience.
– All potential transactions are assessed and
evaluated to ensure the Group’s defined strategic
and financial criteria are met. The Board approves
the business case, integration plan and funding
requirements for all transactions.
– The Group’s detailed due diligence programmes are
supported by external specialists when necessary.
– A strong governance process is in place to oversee
the acquisition integration process.
– The Group works with the acquired entity
management teams to ensure that processes are
in place to develop and strengthen key acquired
talent and support is being provided to facilitate an
efficient integration process.
– Post-acquisition reviews are conducted by senior
management and results and learnings are
presented to the Board on a regular basis.
– During the year, the Board considered and approved all
new acquisitions.
– The Group further strengthened its resource capability in
the M&A team to support its growth strategy. The internal
team is supplemented by external specialist resources as
and when required.
Risk Trend
Risk is unchanged Risk has increased Risk has decreased

80
Risk Trend/Link Description Impact
TALENT
MANAGEMENT
Operational Risk
Trend
Link to Strategic
Priorities
The ability to attract,
develop, engage and
retain appropriately
qualified talent with the
necessary capabilities
and skillsets is critical if
the Group is to continue
to compete and grow
effectively.
A failure to ensure that a
strong senior leadership
talent pipeline is in place
may impact the Group’s
ability to achieve its
strategic growth priorities.
QUALITY,
FOOD SAFETY &
REGULATORY
Operational Risk
Trend
Link to Strategic
Priorities
Adherence to stringent
food quality and safety
controls is critical to
ensure the safety and
integrity of raw materials
and products throughout
the Group’s supply chain.
The Group must also
ensure compliance with
continuously evolving legal
and regulatory obligations
in the areas of food safety,
quality, labelling and the
environment.
A material breach of food
quality or safety controls
or other regulations
could expose the Group
to product liability claims,
product recalls, litigation,
customer dissatisfaction
or consumer illness, which
may have a negative
impact on the Group’s
results and/or reputation.
Link to Strategic Priorities for Growth as per the Strategic Report
Taste & Nutrition
Strategic Growth Priorities
Consumer Foods
Strategic Growth Priorities
Margin
Expansion Drivers
81

Mitigation Developments in 2019
– The Group has objective recruitment and selection
processes, effective employment policies and
systems, a robust approach to succession planning
and a range of talent initiatives, including Group led
senior leadership development programmes.
– Talent management is regularly discussed at Group
Executive, Nomination Committee and Board
meetings.
– A globally consistent approach is in place to identify,
assess and accelerate talent readiness to meet
succession planning needs.
– Remuneration policies are designed with clear links
to strategic growth priorities and high performance
criteria including a balance of short and long term
incentives.
– Structured graduate and mentoring programmes
are in place to develop skills and capabilities that will
enable future growth.
– The Group cascaded a leader-led engagement programme
to embed its Purpose and Values to all employees.
– The Group conducted a groupwide employee engagement
survey, the results of which were reviewed by Executives
and the Board to agree global priorities for 2020.
– The Board endorsed a revised approach to executive
succession planning and agreed a revised set of leadership
competencies.
– A risk mitigation plan for ensuring leadership continuity for
key executive roles and strengthening the talent pipeline
was reviewed and approved by the Nomination Committee.
– An annual global review of talent and succession pools for
all senior roles was completed and approved by Executives;
development plans were updated for identified talent to
strengthen core capabilities and accelerate succession
readiness.
– The Group maintains industry-leading food safety
and traceability processes and procedures across all
its manufacturing sites.
– Each site has a team dedicated to ensuring
compliance with Group and industry standards and
the Group routinely monitors performance against
key metrics.
– Regular audits of manufacturing sites against
recognised global food safety standards are
conducted by internal teams, customers and other
independent agencies.
– The Group operates stringent controls across its
supply chain including audits and strict approval of
its suppliers supported by rigorous quality checking
of all ingredients.
– The Group’s regulatory function closely monitors
and engages with external industry organisations
on emerging issues.
– Appropriate crisis management processes are in
place to deal with any incident that may arise.
– Adequate product liability insurance is in place
across the Group.
– The Group has maintained a continued focus on
achieving a ‘right first time’ quality culture through people
development and ongoing enhancement of its Food Safety
programmes.
– A number of key appointments were made to further
strengthen the global quality leadership team.
– A strong capital investment programme in the Group’s
manufacturing facilities supports a continued focus on
improving quality standards.
– The Group continues to enhance its global quality
standards and policies to include key learnings and
industry and regulatory changes.
Risk Trend
Risk is unchanged Risk has increased Risk has decreased

82
Risk Trend/Link Description Impact
HEALTH
& SAFETY
Operational Risk
Trend
Link to Strategic
Priorities
The health and safety
of employees, sub-
contractors, customers
and other visitors is of
paramount importance to
the Group.
In addition, the Group
must comply with local
safety regulations in
multiple jurisdictions.
Health and safety
incidents may give rise
to injuries or fatalities,
legal liability, significant
costs and damage to the
Group’s reputation.
MARGIN
MANAGEMENT
Operational Risk
Trend
Link to Strategic
Priorities
The Group’s cost base
and margin can be
impacted by fluctuations
in commodities, freight,
energy, labour and
other input costs. These
fluctuations can be
influenced by global
supply and demand,
weather events, political
decisions or changes in
regulations.
Failure to pass on cost
increases to customers
in an inflationary
environment with
increased competitive
pressures may impact the
Group’s margins.
Link to Strategic Priorities for Growth as per the Strategic Report
Taste & Nutrition
Strategic Growth Priorities
Consumer Foods
Strategic Growth Priorities
Margin
Expansion Drivers
83

Mitigation Developments in 2019
– Health and safety continues to be a key priority
for the business. The development of a strong
safety culture is driven by senior leadership across
each region who are accountable for the safety
performance of their business.
– Both global and regional health and safety
managers are in place with responsibility for
enforcing strong health and safety standards across
the Group.
– A robust health and safety framework is in place
throughout the Group’s operations requiring all
employees to complete formal health and safety
training on a regular basis.
– Group health and safety policies are in place
outlining required standards, governance, roles and
responsibilities at all sites.
– Root cause analysis is conducted for any issues
identified through investigation of serious incidents.
– A global health and safety reporting process is
in place to support the measurement of KPIs
against industry standards.
– The ‘tone from the top’ on health and safety has been
reinforced across all locations in the Group.
– An improvement of 17% was achieved in the global Total
Recordable Incident Rate (TRIR) metric.
– The Group continued to monitor evolving regulatory
requirements and implement required changes as
necessary.
– The Group maintains a strong commercial focus
on procurement, pricing and cost improvement
initiatives and monitors pricing performance on an
ongoing basis.
– The commercial implications of commodity
price movements are continuously assessed and,
where appropriate, are reflected in the pricing of
our products.
– Active risk management processes are in place
which, in certain cases, includes taking purchasing
cover on a back to back basis. In addition, exchange
rate hedging is in place where necessary.
– Contractual mechanisms are in place with
many customers to pass-through changes in
commodity prices.
– The Group continued to invest substantial resources
in upgrading talent, systems and processes across
its global commercial and procurement organisation.
These investments enable the Group to keep pace with
the ongoing challenges and complexities of the global
marketplace.
– During the year, the regional commercial finance teams
were reorganised with a focus on optimising the efficiency
and effectiveness of the pricing process.
Risk Trend
Risk is unchanged Risk has increased Risk has decreased

84
Risk Trend/Link Description Impact
KERRYCONNECT
Operational Risk
Trend
Link to Strategic
Priorities
As part of the strategy to
roll-out a common ICT
solution and standard
ways of working across the
Group, the deployment of
Kerryconnect continued
in the North America
region during 2019 and
is planned to complete in
2021.
Project delays or go-live
issues may dilute critical
resources and disrupt
operations reducing the
Group’s ability to serve
customers.
In addition, poor
management of the
project costs or an under
delivery of projected
efficiencies may have a
negative financial impact
on the Group.
INFORMATION
SECURITY &
CYBERCRIME
Operational Risk
Trend
Link to Strategic
Priorities
The Group is dependent
on a robust ICT
infrastructure for the
operation of its principal
business processes.
There is a global threat of
significant and increasingly
sophisticated cyber-
attacks including phishing,
ransomware, malware and
social engineering.
A successful cyber-
attack, internal breach
or other systems failure
could result in business
interruption, loss of
confidential personal
or business data or an
inability to pay and receive
money. This could have
a significant customer,
financial, reputational and
regulatory impact for the
Group.
Link to Strategic Priorities for Growth as per the Strategic Report
Taste & Nutrition
Strategic Growth Priorities
Consumer Foods
Strategic Growth Priorities
Margin
Expansion Drivers
85

Mitigation Developments in 2019
– The Kerryconnect Programme is supported by an
Executive Steering team and a robust governance
framework.
– The Kerryconnect implementation team has
accumulated significant knowledge and experience
from roll-outs across other regions (Europe, APMEA,
LATAM).
– As in other regions, a phased deployment approach
to rollout is being taken in North America.
– Critical KPIs and other issues are reviewed at
regular steering meetings.
– Kerryconnect was deployed to six sites in Canada and the
United States without any significant business interruption.
– Contingency plans were developed and tested to manage
the impact of legacy dual running over the period of the
project.
– The Group has a specialist ICT Security team and
a comprehensive series of ICT security controls in
place which are aligned to a globally recognised
Information Security Control framework.
– The ICT Security team continuously monitor
developments in cyber security threats, engaging
with third party specialists as appropriate.
– The Group invests significant resources in
continuing to increase employee awareness in
relation to risks such as phishing and malware.
– Appropriate policies are in place regarding
the protection of both business and personal
information, as well as the use of IT systems and
applications by employees. This includes oversight
and governance of privileged access.
– Business continuity, disaster recovery and crisis
management plans are in place and are tested on a
regular basis.
– An appropriate data protection governance
structure for the Group is in place led by an
experienced Data Protection Officer.
– Regular audits are conducted both by ICT
auditors within the Internal Audit function and
by independent external specialists to assess the
Group’s cyber security practices.
– The Group maintains a cyber insurance policy.
– The Group continued to strengthen its data loss
prevention controls through the deployment of additional
software solutions.
– The Group continued to invest in its employee awareness
programme.
– Enhancements were deployed in relation to the
management of network access controls.
– The Group engaged a third party Security Operations
vendor to provide a global 24/7 security monitoring
service.
– Considerable progress was made in testing and refining
the Group’s Incident Response processes.
Risk Trend
Risk is unchanged Risk has increased Risk has decreased

86
Risk Trend/Link Description Impact
INTELLECTUAL
PROPERTY
MANAGEMENT
Operational Risk
Trend
Link to Strategic
Priorities
The Group’s unique mix of
Intellectual Property (IP)
is created by combining
carefully managed
material sourcing, recipe
formulation and process
technology expertise.
The protection of IP is
critical given that it is a key
component of the Group’s
value creation model and
supports its unique and
differentiated position in
the marketplace.
Failure to put in place
appropriate processes,
systems and physical
security controls to protect
IP owned by the Group
may result in the loss of
commercially sensitive
and/or Kerry proprietary
information which may
have an adverse impact on
revenue and profitability.
TAXATION
Financial and
Compliance Risk
Trend
Link to Strategic
Priorities
Given the Group’s global
network, it is exposed to an
increasingly complex and
evolving international tax
environment. The Group’s
tax liability or reporting
requirements may be impacted
by local or international
legislative changes, evolving
legal interpretations, tax audits
and transfer pricing judgements.
Changes in the
international tax
environment and
associated local tax
legislation may expose
the Group to adverse tax
consequences.
TREASURY
Financial and
Compliance Risk
Trend
Link to Strategic
Priorities
The international nature
of the Group’s operations
means that it has
transactions and activities
across many jurisdictions
which expose it to liquidity,
foreign exchange, interest
rate and counterparty
risks.
Failure to manage these
risks could negatively
impact on financial
performance of the Group.
Link to Strategic Priorities for Growth as per the Strategic Report
Taste & Nutrition
Strategic Growth Priorities
Consumer Foods
Strategic Growth Priorities
Margin
Expansion Drivers
87

Mitigation Developments in 2019
– The importance of IP protection and its role in future
innovation, is deeply embedded within the culture of
the Group.
– The Group has developed a global centre of expertise
to provide legal and technical support in the area of IP
protection.
– Appropriate policies and procedures are in place
to provide guidance in relation to the capture,
exploitation and protection of IP.
– The Group invests in training programmes to ensure
that all employees understand the value of IP and their
responsibility to ensure that it is protected.
– Appropriate processes are in place to ensure that IP
held within ICT systems is adequately protected.
– Non-disclosure agreements with third parties are in
place and IP protection clauses are a standard element
of both commercial and employment contracts.
– The Group has processes in place to monitor the
external environment for potential IP infringement and
appropriate action is taken when issues are identified.
– The Group maintains an ongoing focus on improving
the physical security environment.
– The Group continued to develop and enhance IP
protection practices globally.
– The Group’s cross functional centre of IP expertise
ensured that all new technologies developed during the
year were protected through patent applications or trade
secrets, ensuring that investments made by the Group
are ultimately safeguarded. Furthermore, as required,
outside counsel was engaged to ensure that any potential
infringements of IP by employees or competitors were
dealt with appropriately.
– The Group’s patent portfolio was considerably augmented
during 2019 through successful new patent applications
and patent acquisitions.
– The Group continued to invest in employee training
programmes to raise awareness of the importance of IP
asset protection in all interactions with both internal and
external stakeholders.
– The Group employs a team of dedicated tax experts
responsible for ensuring compliance with all taxation
matters globally. A programme of continuous
professional development ensures that the team is up
to date on evolving tax law changes.
– The Group engages external taxation advisors where
appropriate.
– The Group constructively engages with tax authorities
across the jurisdictions in which it operates.
– The Audit Committee receives updates from management
in relation to the status of ongoing tax authority reviews
and matters such as changes in tax laws.
– The Group continued to monitor developments in
international tax legislation, while maintaining a consistent
focus on ensuring compliance with new legislative
requirements.
– The Group continued to proactively engage with relevant
tax authorities.
– A Group Finance Committee monitors treasury risk
on an ongoing basis.
– The Group maintains significant cash and debt
resources with relatively long term maturities to
ensure the Group’s liquidity requirements are met.
– The Group’s Treasury function actively manages all
treasury risks through cashflow forecasts, foreign
currency exposure netting and hedging, monitoring
and meeting funding requirements across its
jurisdictions and management of interest rate and
counterparty risk.
– The Group strengthened its liquidity position by extending
the maturity date of its Revolving Credit Facility in addition
to the issuance of a ten year €750m bond.
– The Group facilitated liquidity extensions into a number of
additional jurisdictions.
– Continuous monitoring of exposure to individual
banks and the tightening of counter-party limits where
appropriate.
Risk Trend
Risk is unchanged Risk has increased Risk has decreased

88
Going Concern
The Consolidated Financial
Statements have been prepared
on the going concern basis of
accounting.
The Directors have considered the
Group’s business activities and
how it generates value, together
with the main trends and factors
likely to affect future development,
business performance and position
of the Group as described in the
Business Reviews on pages 42-48.
The Group’s 2020 budget was
reviewed and approved at the
December Board meeting. The
Directors have also examined the
financial position of the Group,
including cash flows, liquidity
position, borrowing facilities,
financial instruments and financial
risk management, as described
on pages 34-40 and additionally
as described in note 24 to the
financial statements.
As a result of this review, the
Directors report that they have
satisfied themselves and consider
it appropriate that the Group and
the Company is a going concern,
having adequate resources to
continue in operational existence
for the foreseeable future and
have not identified any material
uncertainties that cast a significant
doubt on the Group’s and the
Company’s ability to continue as a
going concern over a period of at
least 12 months.
Viability Assessment
Assessment of Prospects
In line with Provision 31 of the
2018 UK Corporate Governance
Code, the Directors have carried
out a rigorous review of the
prospects of the Group over the
medium term. In assessing the
prospects of the Group and its
ability to meet its liabilities as
they fall due, the Board has taken
account of the Group’s five-year
strategic planning cycle, capital
investment plans, the business
model, its diverse portfolio and the
innovation pipeline. The Directors
have also considered the Group’s
strong cash generation and debt
maturity profile in addition to the
principal risks and uncertainties
detailed on pages 75-87. The
financial position of the Group, its
cash flows, liquidity position and
borrowing facilities are outlined
in the financial review on pages
34-40.
Assessment of Viability
Although the Group’s strategic
planning cycle covers a period of
five years, the Board considers
that three years is the most
appropriate period to assess the
long term viability of the Group
as current capital expenditure
plans, commercial arrangements
and financial projections are
considered to be more reliable
and robust over this period.
The Board has considered how
the occurrence of one or more
of the Group’s principal risks and
uncertainties could materially
impact the Group’s business
model, future performance,
solvency or liquidity by assessing
the impact of these risks in severe
but plausible scenarios.
While each of the principal
risks and uncertainties could
have an impact on the Group’s
performance, a significant food
quality failure, an acquisition not
delivering expected returns or a
failure to achieve targeted revenue
or margins were considered most
likely to threaten the Group’s long
term viability.
These scenarios were stress
tested both individually and in
combination to assess their impact
on the Group’s solvency, liquidity
and cash flow. This analysis
indicated that significant headroom
existed in all scenarios tested. In
addition, the Board considers that
the diverse nature of the Group’s
geographies, markets, customer
base, and product portfolio
provide significant mitigation
against the impact of a serious
business interruption.
Viability Statement
Based on their assessment
of prospects and viability, the
Directors have concluded that they
have a reasonable expectation that
the Group will be able to continue
in operation and meet its liabilities
as they fall due over the three year
period of the assessment.
GOING CONCERN AND VIABILITY ASSESSMENT
The Board, having reviewed the Group’s principal risks and uncertainties, including emerging risks, assessed
the going concern and long term viability of the Group in line with the requirements of the 2018 UK Corporate
Governance Code and the Irish Annex. Its conclusions on these assessments are outlined below.
89
DIRECTORS’
REPORT


90
Mr. Philip Toomey (66)
Chairman of the Board
Philip has extensive business
leadership and international
experience following an
executive career in the
financial services industry
practice at Accenture.
Philip brings financial and
operational expertise as well
as significant board level
experience.
Philip was formerly Global
Chief Operating Officer for
the financial services industry
practice at Accenture and also
a member of the Accenture
Global Leadership Council.
Philip is a Fellow of Chartered
Accountants Ireland.
Philip was appointed
Chairman of the Board in
May 2018 and has served as a
Director for eight years. He is
Chairman of the Nomination
Committee having previously
served as Senior Independent
Director and Chairman of the
Audit Committee.
Appointed: 20 February 2012
and as Chairman 3 May 2018
Committee Membership
N
Mr. Gerry Behan (55)
Executive Director
President and CEO
Kerry Taste & Nutrition
Gerry has over 30 years
experience in the Group and
has extensive knowledge
of the global food and
beverage industry.
He has a wealth of business
leadership experience,
financial and operational
expertise and brings a
strategic mindset in the
advancement of Kerry’s
leading taste and nutrition
capabilities and unique
positioning.
Gerry joined Kerry’s
graduate recruitment
programme in 1986 and
has held a number of senior
financial and business
management roles, primarily
in the Americas region,
including regional
Chief Operating Officer
and regional Chief
Executive Officer.
He was appointed President
and Chief Executive Officer
of Kerry’s Global Taste &
Nutrition business in 2011.
Gerry has served as an
Executive Director on the
Board for 12 years.
Appointed: 13 May 2008
Mr. Edmond Scanlon (46)
Executive Director
Chief Executive Officer
Edmond is a highly
experienced leader in the
global food and beverage
industry having spent almost
20 years in senior roles
across the Group. Edmond
brings a strategic mindset
to drive Group performance
and growth as well as
significant financial and
operational expertise.
Edmond joined Kerry’s
graduate development
programme in Ireland in
1996. Over his career he
has held leadership roles
in the Group’s Flavours
and Applied Health
and Nutrition (formerly
Functional Ingredients and
Actives) businesses as well
as heading up the Group’s
activities in China and the
Asia Pacific region.
Edmond was appointed
Executive Director and Group
Chief Executive Officer in
October 2017.
Appointed: 1 October 2017
Ms. Marguerite Larkin (48)
Executive Director
Chief Financial Officer
Marguerite brings extensive
financial knowledge and risk
management expertise as well
as being a highly experienced
business leader.
Marguerite has over 25 years
international experience
having served as lead client
partner at Deloitte Ireland for
a number of multinationals
operating in a broad range
of industries including food
and beverage, pharma and
technology.
During her career with
Deloitte, Marguerite served
as a senior partner and held
a number of leadership roles
within Deloitte Ireland.
Marguerite is a Fellow of
Chartered Accountants
Ireland and holds a Bachelor
of Commerce degree and
Masters in Accountancy.
Marguerite was appointed
Executive Director and Group
Chief Financial Officer in
September 2018.
Appointed: 30 September 2018
Committee Membership Key
A Audit Committee
N Nomination Committee
R Remuneration Committee
Indicates Committee Chair
DIRECTORS’ REPORT
BOARD OF DIRECTORS
Chairman & Executive Directors
91

Dr. Hugh Brady (60)
Independent Non-Executive Director
Hugh’s biomedical research and
academic background brings an
invaluable perspective to the Board
particularly in the areas of health
and wellbeing. He also brings a
broad range of international and
leadership experience.
Hugh is currently President and
Vice Chancellor of the University of
Bristol in the UK, a position he has
held since 2015.
Hugh had a successful career as a
physician and biomedical research
scientist in the US where he served
on the faculty of Harvard Medical
School for almost a decade prior
to returning to his alma mater
as Professor of Medicine and
Therapeutics in University College
Dublin (UCD). He was previously
President of UCD from 2004 to 2013.
He is a non-Executive Director on
the Board of ICON plc where he also
serves on the Audit Committee.
Hugh joined both the Audit and
Nomination Committees in 2015.
Appointed: 24 February 2014
Committee Membership
A N
Mr. Gerard Culligan (45)
Independent Non-Executive Director
Gerard has considerable knowledge
of the food industry, in particular
the dairy and agribusiness sectors,
as well as many years business
management experience. He brings
insights to the Board that are
reflective of the Group’s heritage
and the dairy community that he
represents.
Gerard operates his own business
in the agribusiness sector and is a
director and co-owner of two private
companies in the marine industry.
Appointed: 1 June 2017
Dr. Karin Dorrepaal (58)
Independent Non-Executive Director
Karin is an experienced business
leader who also brings extensive
pharmaceutical market knowledge.
She has wide ranging experience
as a non-Executive Director on an
international basis.
During her career she was an
Executive Director on the Board
of Schering AG in Berlin with
responsibility for the Diagnostic
Imaging business as well as
worldwide manufacturing and
procurement and was a partner at
the NY and Amsterdam office of
an international consultancy firm
(formerly known as Booz Allen &
Hamilton) where she specialised in
the pharmaceutical industry.
Karin holds a Ph.D. and an MBA.
She is currently a non-Executive
Director on the Boards of
Gerresheimer AG, Paion AG (vice
Chairperson) and Almirall S.A. Karin
is also a director of a number of
private companies.
Karin joined the Remuneration
Committee in January 2015 and
the Nomination Committee in
December 2015.
Appointed: 1 January 2015
Committee Membership
R N
Ms. Joan Garahy (57)
Senior Independent
Non-Executive Director
Joan has significant financial
services and investment experience
having spent over 30 years advising
on and managing investment
funds. Joan is also an experienced
non-Executive Director and has
particular expertise in financial and
remuneration matters.
Joan is Managing Director of
ClearView Investments & Pensions
Limited and previously held other
leadership roles in the Investment
and pensions industry including with
the National Treasury Management
Agency (Ireland) and with Hibernian
Investment Managers.
Joan is currently non-Executive
Director at ICON plc and Irish
Residential Properties REIT plc.
She is also a director of a number
of private companies.
In February 2012, Joan was
appointed Chairperson of the
Remuneration Committee and
joined the Audit Committee on
the same date. She was appointed
Senior Independent Director on 3
May 2018.
Appointed: 11 January 2012 and
as Senior Independent Director
3 May 2018
Committee Membership
A
R
Non-Executive Directors
Mr. James C. Kenny (66)
Independent Non-Executive Director
James’ business leadership
background coupled with his
US market knowledge and
international diplomatic
experience brings a key set
of skills to the Board.
James was formerly Executive
Vice President of US based Kenny
Construction Inc. and President
of Kenny Management Services
Inc. He previously served as US
Ambassador to Ireland from July
2003 to June 2006.
James is currently a non-Executive
Director on the Board of Hub
Group, a multimodal transportation
company, listed on the NASDAQ.
James joined both the
Remuneration and Nomination
Committees in February 2012.
Appointed: 1 June 2011
Committee Membership
R N
Mr. Tom Moran (64)
Independent Non-Executive Director
Tom is an experienced leader who
brings extensive knowledge of the
food and agriculture industries
combined with a broad range of
international diplomacy skills. He
is also a member of a number of
boards and committees.
Tom had a long and distinguished
career within the Irish Public Sector
where he served as Secretary
General of the Irish Department
of Agriculture, Food and the
Marine and also held a number of
international policy and international
trade negotiation leadership roles.
Tom is currently a Board member of
An Bord Bia, the Irish Food Board,
and chairs its Dairy Subsidiary
Board. He is also Chairman of
the Irish Government Public
Appointments Service. Tom is a
registered Chartered Director.
Tom joined the Audit Committee
in December 2015 and the
Remuneration Committee in
February 2016.
Appointed: 29 September 2015
Committee Membership
R
A
Mr. Con Murphy (55)
Independent Non-Executive Director
Con has a deep knowledge of the
food industry, in particular the
dairy and agribusiness sectors.
He brings insights to the Board
that are reflective of the Group’s
heritage and the dairy community
that he represents.
Con operates his own business
in the agribusiness sector and
is a member of the Board of a
small private company. He was
previously the Chairman of the
Irish Montbeliarde Cattle Society.
Appointed: 1 June 2017
Mr. Christopher Rogers (59)
Independent Non-Executive Director
Christopher is an experienced
non-Executive Director with a broad
business leadership background who
also brings extensive knowledge of
the foodservice industry together
with financial and risk management
expertise.
He was formerly an Executive
Director of Whitbread plc for 11
years, serving as Finance Director for
7 years and then as Global Managing
Director of Costa Coffee.
Christopher is currently non-
Executive Senior Independent
Director at Travis Perkins plc and non-
Executive Director at Vivo Energy plc
and Walker Greenbank plc.
Christopher is a Fellow of Chartered
Accountants England and Wales. He
is also a visiting Fellow at Durham
University (UK).
He was appointed Chairman of the
Audit Committee with effect from 8
May 2018.
Appointed: 8 May 2018
Committee Membership
A

92
Directors and
Other Information
Directors
Philip Toomey, Chairman
Edmond Scanlon, Chief Executive Officer*
Marguerite Larkin, Chief Financial Officer*
Gerry Behan, President & CEO Kerry Taste & Nutrition*
Hugh Brady
Gerard Culligan
Karin Dorrepaal
Joan Garahy
James C. Kenny
Tom Moran
Con Murphy
Christopher Rogers
*Executive Director
Secretary and Registered Office
Ronan Deasy
 plc
Prince’s Street
Tralee
Co. Kerry
V92 EH11
Ireland
Registrar and Share Transfer Office
Ronan Deasy
Registrar’s Department
 plc
Prince’s Street
Tralee
Co. Kerry
V92 EH11
Ireland
Website
www.kerrygroup.com
DIRECTORS’ REPORT
REPORT OF THE DIRECTORS
93

The Directors submit their Annual Report together with
the audited Consolidated Financial Statements for the
year ended 31 December 2019.
Principal Activities
 is a world leader in the global food industry.
The Group’s industry-leading portfolio of taste and nutri-
tion foundational technologies and integrated systems
deliver unique, innovative solutions to customers across
the food, beverage and pharmaceutical industries. Kerry
Foods, the Group’s Consumer Foods business, is a leader
in its categories in the chilled cabinet primarily in the Irish
and UK markets.
Listed on the Euronext Dublin and London Stock Ex-
changes, Kerry has an international presence with 151
manufacturing facilities across the world.
Results and Review of the Business
The Directors are pleased to report another good per-
formance for 2019 with an increase in constant currency
adjusted earnings per share (EPS), which is before brand
related intangible asset amortisation and non-trading
items (net of related tax), of 8.3% over 2018 to 393.7
cent (2018 currency adjusted: 363.5 cent). Basic EPS of
320.4 cent increased by 4.7%. Trading margin for the
year increased by 30bps to 12.5% (2018: 12.2%). The
Group achieved a free cash flow of €515m (2018: €447m).
Further details of the results for the year are set out in the
Consolidated Income Statement and in the related notes
forming part of the Consolidated Financial Statements.
The Group’s financial key performance indicators are
discussed on pages 32-33.
The Chairman’s Statement, the Chief Executive Officer’s
Review, the Business Reviews and the Financial Review,
which are included in the Strategic Report on pages
12-48, report on the performance of the Group’s busi-
ness, including acquisitions during the year and on future
developments.
Dividends
On 17 February 2020, the Directors recommended a
final dividend totalling 55.1 cent per share in respect of
the year ended 31 December 2019 (see note 10 to the
financial statements). This final dividend per share is an
increase of 12.0% over the final 2018 dividend per share
paid on 10 May 2019. This dividend is in addition to the
interim dividend paid to shareholders on 15 November
2019, which amounted to 23.5 cent per share.
The payment date for the final dividend is 15 May 2020 to
shareholders registered on the record date 17 April 2020.
Events After the Balance Sheet Date
Other than the proposed final dividend, there have been
no other significant events, outside the ordinary course of
business, affecting the Group since 31 December 2019.
Principal Risks and Uncertainties
In accordance with Section 327(1)(b) of the Companies
Act 2014, Regulation 5(4)(c)(ii) of the Transparency (Direc-
tive 2004/109/EC) Regulations 2007 and the Transparency
Rules of the Central Bank of Ireland, a description of the
principal risks and uncertainties facing the Group are
outlined in the Risk Report on pages 75-87.
Research and Development
The Group is fully committed to ongoing technological in-
novation in all sectors of its business, providing integrated
customer focused product development and support by
leveraging our global technology capabilities and exper-
tise. To facilitate this, the Group has invested in highly
focused research, development and application centres of
excellence with a strategically located Global Technology
& Innovation Centre, based in Naas, Ireland which is sup-
ported by Regional Development & Application Centres
and a global knowledge management infrastructure.
Expenditure on research and development applications
and technical support amounted to €291.4m in 2019
(2018: €274.6m).
Sustainability
The Group continued to deliver on its sustainability
performance with the successful conclusion of the five
year Towards 2020 programme. A new sustainability pro-
gramme to better enable our Purpose will be launched in
the second quarter of 2020.
The Group remains committed to the highest standards
of business and ethical behaviour, to fulfilling its respon-
sibilities to the communities it serves and to the creation
of long term value for all stakeholders on a socially and
environmentally sustainable basis.
Details regarding the Group’s sustainability performance,
policies and programmes in respect of the environment,
marketplace, workplace and the community are outlined
in the Sustainability Review on pages 49-72.
Share Capital
Details of the share capital are shown in note 27 of the
financial statements. The authorised share capital of
the Company is €35,000,000 divided into 280,000,000 A
ordinary shares of 12.5 cent each, of which 176,514,942
shares were in issue at 31 December 2019.
The A ordinary shares rank equally in all respects.
There are no limitations on the holding of securities in
the Company.

94
There are no restrictions on the transfer of fully paid
shares in the Company, but the Directors have the power
to refuse the transfer of shares that are not fully paid.
There are no deadlines for exercising voting rights other
than proxy votes, which must be received by the Company
at least 48 hours before the time of the meeting at which
a vote will take place. There are no restrictions on voting
rights except:
– where the holder or holders of shares have failed to
pay any call or instalment in the manner and at the time
appointed for payment; or
– the failure of any shareholder to comply with the terms
of Article 13 of the Company’s Articles of Association
(disclosure of beneficial interest).
The Company is not aware of any agreements between
shareholders which may result in restrictions on the
transfer of securities or on voting rights.
The Directors have the authority to issue new shares
in the Company up to a maximum of 20 million new A
ordinary shares. This authority will expire on the earlier of
the conclusion of the 2020 Annual General Meeting (AGM)
and close of business on 1 August 2020 and it is intended
to seek shareholder approval to renew the authority at
the AGM to be held on 30 April 2020.
Shareholders approved the authority for the Directors
to allot shares for cash on a non-pro rata basis up to
a maximum of 8,815,127 shares at the AGM held on 2
May 2019, representing 5% of the A Ordinary Shares in
issue on 1 March 2019. Shareholders also approved an
authority to allot a further 8,815,127 A Ordinary Shares
(5%) for cash on a non pro rata basis provided the
additional authority will only be used for the purpose of
an acquisition or specified capital investment announced
contemporaneously with the issue or which has taken
place in the preceding six month period and is disclosed
with the announcement of the issue. Neither authorities
have been exercised and will expire on the earlier of the
conclusion of the 2020 AGM and close of business on 1
August 2020. It is intended to seek shareholder approval
for their renewal at the 2020 AGM. During 2019, 216,526
shares were allotted pursuant to the Company’s Short
and Long Term Incentive Plans as a result of shares which
vested and options which were exercised. Further details
are shown in note 27 to the financial statements.
The Company may purchase its own shares in accordance
with the Companies Act 2014 and the Company’s Articles
of Association. At the 2019 AGM, shareholders passed a
resolution authorising the Company to purchase up to
5% of its own issued share capital, but the authority was
not exercised. This authority is due to expire on the earlier
of the conclusion of the 2020 AGM and close of business
on 1 August 2020 and it is intended to seek shareholder
approval for its renewal at the 2020 AGM.
Substantial Interests
The Directors have been notified of the following
shareholdings of 3% or more in the issued share capital
of the Company:
Shareholder
Number
Held %
Kerry Co-operative Creameries
Limited (KCC)
22,413,456 12.7%
Blackrock Investment
Management
10,028,236 5.7%
Apart from the aforementioned, the Company has not
been notified of any interest of 3% or more in the issued
share capital of the Company.
Directors
The Board, at the date of this report, consists of a
Chairman, three Executive and eight independent Non-
Executive Directors. The names and biographical details
of the Directors are set out on pages 90-91. Following
the individual performance evaluation of all Directors,
as outlined in the Corporate Governance Report on
page 105, the Board recommends the re-election of all
Directors seeking re-election.
The Directors’ and Company Secretary’s interests in
shares and debentures are included in the Remuneration
Report on page 136.
Board and Committee Changes
There were no changes to the composition of the Board
and its Committees during 2019.
Mr. James C. Kenny will retire from the Board at the
conclusion of the AGM to be held on 30 April 2020 and
will not seek re-election.
The Articles of Association empower the Board to
appoint Directors, but also require such Directors to
retire and submit themselves for re-election at the next
AGM following their appointment. For the purposes of
the European Communities (Takeover Bids (Directive
2004/25/EC)) Regulations 2006 specific rules regarding
the appointment and re-election of Directors are referred
to in the Nomination Committee Report.
Corporate Governance
The Corporate Governance Report on pages 98-106
sets out the Company’s application of the principles, and
compliance with the Provisions of the 2018 UK Corporate
Governance Code and Irish Annex (the new Code).
Non-Financial Information
Pursuant to the European Union (Disclosure of Non-
Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017, the Group
is required to report on certain non-financial information
to provide an understanding of its development,
95

performance, position and the impact of its activities,
relating to, at least, environmental matters, social
matters, employee matters, respect for human rights and
bribery and corruption. Information on these matters
can be found in the following sections of the Annual
Report, which are deemed to form part of this Report:
Sustainability Review on pages 49-72, Our Business
Model on pages 24-25, the Risk Report on pages 73-88.
Information on diversity can be found in the Nomination
Committee Report on pages 112-115.
Going Concern and
Long Term Viability Statements
The going concern and longer term viability statements in
the Risk Report on page 88 set out the Company’s basis
for the adoption of the going concern basis of accounting
in preparing the Consolidated Financial Statements and
the basis for the Directors’ conclusion that they have a
reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall
due over the next three years.
Directors’ Responsibility Statement
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable laws and regulations.
Irish company law requires the Directors to prepare
financial statements for each financial year, which give
a true and fair view of the assets, liabilities and financial
position of the Company and the Group, and of the
profit or loss of the Group for that period. Under that
law the Directors have elected to prepare group financial
statements in accordance with International Financial
Reporting Standards (‘IFRSs’) and IFRSs as adopted by the
European Union and Article 4 of the IAS Regulation and
have also chosen to prepare the parent company financial
statements under IFRSs and IFRSs as adopted by the
European Union. In preparing the financial statements,
the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and estimates that are reasonable
and prudent;
– state that the financial statements comply with IFRS and
IFRSs as adopted by the European Union; and
– prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group will continue in business.
The Directors are responsible for ensuring that the
Company keeps adequate accounting records which
correctly explain and record the transactions of the
Company, enabling at any time the assets, liabilities,
financial position and profit or loss of the Company to
be determined with reasonable accuracy and ensuring
that the financial statements are prepared in accordance
with IFRSs and IFRSs as adopted by the European Union,
comply with the Companies Act 2014 and as regards
to the Group financial statements, Article 4 of the
IAS Regulation and enable the financial statements to
be audited.
The Directors are also responsible for safeguarding the
assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for
the maintenance and integrity of the corporate and
financial information included on the Group’s website
www.kerrygroup.com. Irish legislation governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
In accordance with the Transparency (Directive 2004/109/
EC) Regulations 2007 and the Transparency Rules of the
Central Bank of Ireland, the Directors are required to
include a management report containing a fair review of
the business and a description of the principal risks and
uncertainties facing the Group. The Directors are also
required by applicable law and the Listing Rules issued by
Euronext Dublin and the UK Listing Authority to prepare
a Directors’ Report and reports relating to Directors’
remuneration and corporate governance.
Each of the Directors, whose names and functions are
listed on page 92, confirms that, to the best of their
knowledge and belief:
– the Consolidated Financial Statements for the year
ended 31 December 2019 have been prepared in
accordance with IFRSs and IFRSs as adopted by the
European Union and give a true and fair view of the
assets, liabilities, and financial position of the Group
and the undertakings included in the consolidation,
taken as a whole, as at that date and its profit for the
year then ended;
– the Company financial statements, prepared in
accordance with IFRSs and IFRSs as adopted by the
European Union and as applied in accordance with the
Companies Act 2014, give a true and fair view of the
assets, liabilities and financial position of the Company
as at 31 December 2019;
– the Financial and Business Reviews on pages 34-48
include a fair review of the development and
performance of the business for the year ended
31 December 2019 and the position of the Company
and the Group at the year end;
– the Risk Report provides a description of the principal
risks and uncertainties which may impact the future
performance of the Company and the Group at the year
end; and
– the Annual Report and Consolidated Financial
Statements, taken as a whole, provides the information
necessary for shareholders to assess the Company’s
and Group’s position and performance, business model
and strategy and is fair, balanced and understandable.

96
Directors’ Compliance Policy Statement
It is the policy of the Company to comply with its relevant
obligations (as defined in the Companies Act 2014). The
Directors have drawn up a compliance policy statement
(as defined in section 225(3)(a) of the Companies Act
2014) and arrangements and structures are in place that
are, in the Directors’ opinion, designed to secure material
compliance with the Company’s relevant obligations. The
Directors confirm that these arrangements and structures
were reviewed during the financial year. As required by
Section 225(2) of the Companies Act 2014, the Directors
acknowledge that they are responsible for the Company’s
compliance with the relevant obligations. In discharging
their responsibilities under Section 225, the Directors
relied on the advice both of persons employed by the
Company and of third parties who the Directors believe
have the requisite knowledge and experience to advise
the Company on compliance with its relevant obligations.
Accounting Records
To ensure that proper accounting records are kept for the
Company in accordance with section 281 to 285 of the
Companies Act 2014, the Directors employ appropriately
qualified accounting personnel and maintain appropriate
accounting policies and systems.
The accounting records of the Company are maintained
at the Company’s registered office.
Accountability and External Audit
A statement relating to the Directors’ responsibilities in
respect of the preparation of the financial statements
is set out on page 95 with the responsibilities of the
Company’s external Auditors outlined on page 145.
The Consolidated Financial Statements on pages 146-215
have been audited by PricewaterhouseCoopers (PwC),
Chartered Accountants.
The external Auditors, PwC who were appointed in
March 2016, will continue in office in accordance with
Section 383(2) of the Companies Act 2014. A resolution
authorising the Directors to determine their remuneration
will be proposed at the Annual General Meeting.
Disclosure of Information to the
External Auditors
Each of the Directors, who were members of the Board
at the date of approval of this Report of the Directors,
confirms that:
– so far as they are aware there is no relevant audit
information of which the Company’s external auditors
are unaware; and
– they have taken all the steps that they ought to have
taken as a Director in order to make themselves aware
of any relevant audit information and to establish
that the Company’s external auditors are aware of
that information.
Memorandum and Articles of
Association
The Company’s Memorandum and Articles of Association
set out the objects and powers of the Company. The
Articles of Association of the Company may only be
amended by way of special resolution approved by
shareholders in a general meeting.
A copy of the Articles of Association can be obtained from
the Company’s website www.kerrygroup.com.
Change of Control Provisions
The Group’s revolving credit facility includes a ‘Change
of Control’ provision which requires the Group to notify
the lending institutions of a change of control event
occurring. Each lender has the option to withdraw their
facilities in the event of a change of control occurring
unless they agree otherwise in writing.
Certain public senior notes issued by the Group contain
a provision that requires the Group to make an offer
to repurchase the notes, in the event that a change of
control occurs which leads to a downgrading of the rating
assigned to the notes below investment grade.
Other than the ‘Change of Control’ provisions in those
arrangements, the Group is not a party to any other
significant agreements which contain such a provision.
Political Donations
During the year, the Company made no political
contributions which require disclosure under the Electoral
Act, 1997.
Group Entities
The principal subsidiaries and associated undertakings
are listed in note 36 to the financial statements.
Retirement Benefits
Information in relation to the Group’s retirement benefit
schemes is given in note 26 to the financial statements.
Taxation
So far as the Directors are aware, the Company is not
a close company within the definition of the Taxes
Consolidation Act, 1997. There has been no change in this
respect since 31 December 2019.
Financial Instruments
The financial risk management objectives and policies,
along with a description of the use of financial
instruments are set out in note 24 to the financial
statements.
97

Information Required to be Disclosed
by Listing Rule 6.1.77, Republic of
Ireland Listing Authority
For the purposes of Listing Rule 6.1.77, the information
required to be disclosed can be found in the following
locations:
Section Topic Location
(1) Interest capitalised
Statement of
accounting policies
(2)
Publication of unaudited
financial information
Supplementary
information
(3)
Details of small related
party transactions
Note 33 to the
financial statements
(4)
Details of long term
incentive schemes
Remuneration
Committee Report
(5) – (14)
Section 5 – 14 of
Listing Rule 6.1.77
Not applicable
Cross References
All information cross referenced in this report forms part
of the Report of the Directors.
Signed on behalf of the Board:
Philip Toomey Edmond Scanlon
Chairman Chief Executive Officer
17 February 2020 17 February 2020

98
DIRECTORS’ REPORT
GOVERNANCE REPORT
CORPORATE GOVERNANCE REPORT
Dear Shareholder,
I am pleased to present
the  Corporate
Governance Report for the
year ended 31 December 2019.
The Board is committed to ensuring
that the Group achieves the highest
standards of governance in line
with best practice. Following the
publication of the 2018 UK Corporate
Governance Code (the new Code),
the Board reviewed its corporate
governance policy and processes
and implemented the appropriate
changes required to comply with
the new Code.
The Corporate Governance Report
describes how we apply the main
Principles of good governance as
set out in the 2018 UK Corporate
Governance Code and the Irish
Annex (the Code). On behalf of the
Board I can confirm that for the
year under review the Group has
complied with all relevant Provisions
of the new Code other than certain
remuneration Provisions which will be
considered as part of the Executive
Directors’ remuneration policy review
to be conducted in 2020 in line
with the normal three year cycle.
Further details are outlined in the
Remuneration Committee Report
on page 116.
The Board sets the tone and shared
values for the way in which the
Group operates and recognises
the importance of culture to the
success of the business model.
During 2019, the Group articulated
its Purpose, refreshed its Values
and communicated both across
the organisation via leader led
Kerry Way workshops. The Board
also assessed and monitored the
Group’s culture to ensure that it is
aligned with the Group’s strategy and
Values and is adequately embedded
across the Group.
As a Board, we recognise the
benefits of understanding the
views of all our stakeholders and
we ensure that their interests are
regarded in Board discussions and
in our decision making. Enhanced
engagement mechanisms, including
the appointment of a designated
workforce engagement Director were
introduced during 2019. Details of
stakeholder engagement activities
during the year are outlined on
pages 100-103.
The Board, in conjunction with the
Nomination Committee, ensures that
there are robust plans in place to
facilitate Board, executive and senior
management succession.
Diversity at Board level has been a
focus for the Nomination Committee
for a number of years and continues
to be a key factor when considering
Board refreshment. During 2019,
the Nomination Committee reviewed
senior management development
and succession plans to ensure the
appropriate level of skills and diversity
exists, to support the delivery of the
Group’s strategy and financial targets.
Improving and monitoring diversity
beyond gender and below Board level
will continue to be a key area of focus
for the Board and the Executive Team
in 2020.
Each year the Board undertakes a
formal evaluation of its effectiveness
and that of its Committees. In 2019,
this was externally facilitated by
Independent Audit Limited. Following
this review, the Directors determined
that the Board and its Committees
are operating effectively. Details
of the process and the resulting
actions from the Board performance
evaluation are outlined on page 105.
Details of the Group’s activities
and the operations of the Board,
contained in the following report,
outline the manner in which the
Group has achieved compliance
with the Code through the activities
and operations of the Board and its
Committees during the year.
Philip Toomey
Chairman of the Board
Philip Toomey
Chairman of the Board
99

Schedule of Matters Reserved for the Board
– Appointments to the Board;
– Ensuring compliance with corporate governance, legal,
statutory and regulatory requirements;
– Approval of the overall Group strategic and operating plans;
– Monitoring and reviewing risk management and internal
control systems;
– Monitoring and assessing culture;
– Reviewing and assessing the adequacy of the Group’s
whistleblowing arrangements;
– Approval of acquisitions and divestitures;
– Approval of significant capital expenditure;
– Approval of Treasury policy including changes to the Group’s
capital structure;
– Approval of dividend policy and dividends;
– Approval of annual budgets;
– Approval of preliminary results, interim management
statements and interim financial statements;
– Assessment of the long term viability of the Group and the
going concern assumption; and
– The preparation of, and confirmation that, the annual
report and financial statements present a fair, balanced
and understandable assessment of the Company’s position
performance and prospects.
Board Role and Operations
The Board currently comprises of 12 members, a
non-Executive Chairman, Chief Executive Officer, Chief
Financial Officer, one other Executive Director, and eight
non-Executive Directors.
The Directors are of the opinion that the composition
of the Board provides the extensive relevant business
experience needed to oversee the effective operation
of the Group’s activities and that the individual
Directors bring a diverse range of skills, knowledge and
experience, including financial as well as industry and
international experience, necessary to provide effective
governance and oversight of the Group.
The Board’s role is to promote the long term sustainable
success of the Company generating value for all its
stakeholders, including shareholders, employees,
customers, suppliers and the communities in which
it operates, while exercising business judgement on
developing strategy, and managing the risks that face
the organisation. It is also responsible for establishing
the purpose, instilling the appropriate values and
behaviours, together with monitoring and assessing
culture throughout the organisation.
The Board has a formal schedule of matters specifically
reserved to it for decision as noted below and has
delegated other responsibilities to management for day-
to-day operations within the context of the 
Governance Framework as outlined above.
Board Leadership and Company Purpose
 Governance Framework
 has a clear Governance Framework with defined responsibilities and accountabilities as outlined in the
diagram below. This Governance Framework is designed to safeguard long term shareholder value and ensure that
the Group contributes to wider society.

100
The Chairman ensures that all Directors have full and
timely access to such information as they require to
discharge their responsibilities fully and effectively. Board
papers are issued to each Director at least one week in
advance of Board meetings and include the meeting
agenda, minutes of the previous Board meeting and
all papers relevant to the agenda. The Chairman, in
conjunction with the Company Secretary, has primary
responsibility for setting the agenda for each meeting.
All Directors continually receive comprehensive reports
and documentation on all matters for which they have
responsibility to allow them to fully complete their duties
as a Director. All Directors participate in discussing
strategy, trading updates, financial performance,
significant risks and operational activities as well as the
Group’s Purpose, Values and culture. Board meetings are
of sufficient duration to ensure that all agenda items and
any other material non-agenda items that may arise are
adequately addressed.
In accordance with an agreed procedure, in the
furtherance of their duties, each Director has the
authority to engage independent professional advice at
the Company’s expense. There is a Directors and Officers
liability policy in place for all Directors and Officers of the
Company against claims from third parties relating to the
execution of their duties as Directors and Officers of the
Company and any of its subsidiaries.
Strategy
The Group communicated the five year strategic plan
for 2018-2022 to the market at a Capital Markets Day
held in 2017. During 2019, as part of the annual strategy
review, the Board received presentations from Group and
divisional management on progress to date implementing
the strategies for growth, margin expansion and return
on investment that underpin the plan and its associated
financial targets. Through this review, the Board is able
to assess and identify changing and emerging risks and
opportunities which could impact the Group and provide
input and strategic guidance as required.
The Board ensures that the decisions it makes are
aligned with the achievement of the Group’s strategy and
are made in the long term interest of the Group and its
stakeholders. This is particularly the case when deciding
how to prioritise the allocation of resources (human
and financial capital) across competing research and
development activities, acquisition opportunities and major
capital expenditure projects.
During the year, the Board also reviewed the business
model and how it is executed. The Board is satisfied that
the business model is both sustainable in the long term
and optimally structured to enable delivery of the
Group’s strategy.
Purpose, Values and Culture
As the world leader in taste and nutrition, our Purpose is to
Inspire Food and Nourish Life. This is a core element of The
Kerry Way which was formalised through a collaborative
process with input from employees across the Group and
approved by the Board.
The Group’s Purpose guides us on the journey to make it
easier and more valuable for customers to do business
with Kerry, as the Group seeks to make a greater, more
lasting difference in the world. The Board is satisfied that
the strategies for the Taste & Nutrition and Consumer
Foods businesses are aligned to the Group’s Purpose.
The Board is also guided by the Group’s Purpose during
its discussions and when making decisions on the matters
that are reserved for its consideration. Further details of
the Group’s Purpose are outlined on pages 6-7.
The Group’s Values of Courage, Ownership, Inclusiveness,
Open-mindedness and Enterprising Spirit are also a core
element of The Kerry Way and underpin its Purpose.
These Values were approved by the Board during 2019
and reflect the best of the Group’s heritage in line with our
forward looking ambition. Further details of our Values are
outlined on page 19.
The Group’s culture is based on a common understanding
of our Values, underpinned by our foundation of Safety
First, Quality Always and a robust risk management
framework consisting of policies and procedures,
including a Code of Conduct which defines business
conduct standards for anyone working for, or on behalf
of, the Group.
The Board recognises the importance of its role in setting
the tone of Kerry’s culture and embedding it throughout
the Group. In addition to the Board, the executives have
responsibility to ensure that the policies and behaviours
set at Board level are effectively communicated and
implemented throughout the Group. The Kerry Way
framework articulates the Group’s Purpose and Values
and the myKerry intranet site provides a platform for
employees to access the Group’s policies.
The Board monitors and assesses the culture of the Group
through a number of mechanisms including policy and
compliance processes, internal audit, formal and informal
channels for employees to raise concerns including the
ourVoice employee engagement survey and the Group’s
whistleblowing arrangement. If the Board is concerned
or dissatisfied with any behaviors or actions, it seeks
assurance from the executives that corrective action is
being taken.
Stakeholder Engagement
While the Board’s primary duty is to act in a way that
promotes the long term success of the Company for
the benefit of the shareholders, the Directors also
acknowledge the need to have regard to the interests of
all other stakeholders in their discussions and decision
making. Engagement with stakeholders enables better
informed decision making, thereby increasing the
likelihood of long term successful outcomes. Similarly, the
Board also recognises the need to maintain a reputation
for high standards of business conduct in its actions and
decisions. Details of our stakeholder engagement are set
out in the table on pages 101-102.
101

Shareholders Our Engagement
The Board ensures it has an effective channel of communication with existing and potential shareholders.
The Investor Relations team and Executive Management maintain ongoing engagement with the investment
community, through a variety of different mediums including investor meetings and conferences, investor events,
ongoing investor calls and correspondence. During 2019, meetings were held with over 580 investors in 13 cities
and five investor conferences were held at the Global Technology & Innovation Centre in Naas, Ireland.
In addition, a significant amount of published material including results releases, presentations, share price
information and news releases are accessible to all shareholders on the Group’s website www.kerrygroup.com.
Shareholder presentations are made at the time of release of the Group’s interim and full year results, following
which the Chief Executive Officer and Chief Financial Officer provide the Board with an update on feedback received.
Regular updates are provided by the Chief Financial Officer to the Board on matters raised by shareholders and
analysts as well as updates on the composition of the Group’s share register.
Attendance of, and questions from, shareholders at the Company’s Annual General Meeting (AGM) are welcomed
by the Board. The AGM also provides an opportunity for the Directors to deliver presentations on the business to
shareholders, both institutional and private. Further details are outlined on page 103.
Material Matters
Matters of importance to shareholders include the Group’s strategic development, financial performance,
environmental, social and governance matters, Board composition and succession planning, and Executive
Directors remuneration related matters.
Our Response
When necessary, the Board and Committee Chairpersons engage with shareholders on specific topics and where
relevant provide feedback to the Directors. During 2019, the Chairman of the Board met with the Company’s
largest shareholder and the Remuneration Committee Chairperson consulted with a number of large institutional
shareholders.
All the Committee Chairpersons attend the AGM and are available throughout the year to meet shareholders
on request.
Employees Our Engagement
The Group undertakes regular two-way engagement activities with our 26,000+ employees including employee
briefings and Town Halls led by business leadership teams and the ourVoice employee engagement survey followed
by team feedback sessions. During 2019, leader led Kerry Way workshops were held across the global organisation
to communicate and embed the Group’s Purpose and refreshed Values. By the end of the year, 90% of all Group
employees had participated in these workshops.
Updates on employee engagement activities were presented to the Board and the Nomination Committee by the
executives on a regular basis throughout the year. Board members also engaged directly with business leadership
teams and emerging talent when the Board meetings were held in Poland and Naas and during individual visits to
other Group locations.
Material Matters
Key themes identified from employee feedback included enhanced leadership development, refined operating
model and career development opportunities.
Our Response
The Board appointed a designated workforce engagement Director and approved a workforce engagement plan.
The Board provided feedback and insight on, and ultimately approved, The Kerry Way framework, a refreshed set
of Kerry Leadership Competencies and Values, enhancements to the Group’s operating model as well as the action
plans agreed to address the matters raised by employees as part of the ourVoice engagement survey.
Details of employee engagement and activities are outlined in Our People on pages 18-23 and the Sustainability
Review on pages 49-72.

102
Customers &
Consumers
Our Engagement
Kerry operates a proven customer-centric business model that enables us to work side by side with customers as
their co-creation partner of choice. The Group interacts with customers on a daily basis at multiple levels such as
dedicated relationship and account managers and tailored innovation forums. During 2019, the Group conducted a
customer satisfaction survey with its major customers as well as engaging with them as part of the development of
a new sustainability programme.
Feedback from customer engagement activities was discussed at each Board meeting as part of the business
updates provided by the Executive Directors. The Board also received customer related presentations from the
Group Head of Sustainability as well as other senior managers over the course of the year. As part of the Board
visit to Poland in June 2019, Board members engaged directly with representatives of major customers in Eastern
Europe to enhance the Board’s understanding of the Group’s activities and customer requirements in that
marketplace.
Material Matters
Our customers are responding to the unprecedented level of disruption in the food and beverage industry by
delivering authentic products that combine both great taste while meeting nutrition and functionality demands. Key
for customers to win in this fast moving environment is the ability to bring more products to market and at pace.
Our Response
During the year, the Board approved changes to the Group’s operating model to enhance the Group’s ability
to meet customer requirements in the most innovative, effective and efficient way possible. When approving
acquisitions and capital expenditure investments, the Board is mindful of the impact that the decision will have
on the Group’s ability to help our customers to achieve their growth ambitions. The Board approves the Group’s
significant investment in Research & Development activities and together with management ensure that this
resource is focused on those projects that can best meet customers’ needs and thereby enable the Group to
achieve its strategic objectives in relation to revenue growth, margin expansion, return on investment and enabling
food production in a more environmentally sustainable manner. Examples include the launch during the year of
the Group’s Radicle™ brand of plant-based offerings and the investment needed to develop an enhanced predictive
artificial intelligence (AI) tool, Kerry Trendspotter™ to understand new trends in the marketplace.
Further details are outlined in Our Business Model on pages 24-25, Our Strategy on pages 28-30 and the
Sustainability Review on pages 49-72.
Suppliers Our Engagement
Kerry engages with suppliers on a daily basis to manage ongoing operational activities through a dedicated
procurement function. In addition, the Group has identified key suppliers with whom we have more strategic
relationships.
Updates on supplier engagements were provided to the Board throughout the year by the Executive Directors and
specifically by the Group Head of Sustainability as part of his Board briefings in relation to the Group’s Sustainability
Programme.
Material Matters
Matters of importance to our suppliers include cost recovery, availability of supply and sustainable sourcing,
with the ethical treatment of workers in the supply chain being an area of increasing focus. During 2019, the
impact of Brexit on availability and cost of supply was also a topic which received particular attention in our
Consumer Foods division.
Our Response
Through the Group’s Sustainability Programme, the Board ensures that the organisation works with suppliers
who provide raw materials to the required safety and quality standards, produced on a sustainable basis and
with the proper regard for the fair treatment of all workers in the supply chain.
Further details are outlined in the Sustainability Review on pages 60-63.
Community Our Engagement
Kerry engages with community representative bodies, charities and leading non-governmental organisations in all
the locations in which it operates. Our employees support community projects in different countries and participate
in our Kerry Volunteer programme.
The Board reviews our local community plan as part of the overall sustainability programme.
Material Matters
Matters of importance include employment and local economic development, environmentally responsible food
production and community support programmes.
Our Response
Details of the Group’s community engagement activities are outlined in the Sustainability Review on pages 68-72.
103

Consideration of Stakeholder Views in
the Decision Making Process
By understanding the matters of importance to our
stakeholders, the Board can consider their needs and
concerns in its decision making. The Board ensures that
material decisions which could impact on stakeholder
groups are taken with due regard to their interests.
During 2019, the Board improved its stakeholder
engagement mechanisms and the procedures to ensure
that stakeholder interests are considered in its discussions
and decision making. The Board is committed to enhance
these procedures further.
Annual General Meeting
All Directors attend the AGM and are available to meet with
shareholders and answer questions as required. Notice
of the AGM, proxy statement and the Annual Report and
financial statements are sent to shareholders at least 20
working days before the meeting. A separate resolution is
proposed at the AGM on each substantially separate issue
including a particular resolution relating to the adoption
of the Directors’ and Auditors’ reports and the financial
statements. Details of the proxy votes for and against
each resolution, together with details of votes withheld
are announced after the result of the votes by hand. These
details are published on the Group’s website following the
conclusion of the AGM. At the AGM held on 2 May 2019,
there were no material votes cast against any resolutions.
Whistleblowing Arrangement
The Group’s whistleblowing arrangement includes an
externally facilitated multi-lingual hotline ‘Express a
Concern’ through which all employees and third parties
can raise concerns in confidence about possible wrong
doings in financial reporting and other matters, 24 hours a
day by phone or online.
All whistleblowing incidents are reviewed by the Head of
Internal Audit and formally investigated by the relevant
functional heads depending on the nature of the
concern raised.
In 2019, the Audit Committee reviewed the whistleblowing
incidents and outcomes and provided updates to the
Board which enabled the Board to assess the adequacy
of the whistleblowing arrangements and to review the
reports arising from its operation. The Board is satisfied
that the Group’s whistleblowing arrangements are
operating effectively.
Chairman and Chief Executive Officer
The roles of the Chairman and Chief Executive Officer
are separate and the division of duties between them is
formally established, set out in writing and agreed by the
Board. The Chairman is responsible for leadership of the
Board and ensuring its effectiveness in all respects. The
Executive Directors, led by the Chief Executive Officer, are
responsible for the management of the Group’s business
and the implementation of Group strategy and policy.
Senior Independent Director
Ms. Joan Garahy is the Group’s Senior Independent
Director (SID). The principal role of the SID is to provide
a sounding board for the Chairman and to act as an
intermediary for other Directors as required. The
SID is responsible for the appraisal of the Chairman’s
performance throughout the year. She is also available to
meet shareholders upon request, in particular if they have
concerns that cannot be resolved through the Chairman or
the Chief Executive Officer.
Non-Executive Directors
The non-Executive Directors’ main responsibilities are to
review the performance of management and the Group’s
financial information, assist in strategy development,
and ensure appropriate and effective systems of internal
control and risk management are in place. The non-
Executive Directors review the relationship with external
auditors through the Audit Committee and monitor
the remuneration structures and policy through the
Remuneration Committee.
The non-Executive Directors provide a valuable
breadth of experience and independent judgement
to Board discussions.
Company Secretary
Each Director has access to the advice and services of
the Company Secretary, whose responsibilities include
ensuring that Board procedures are followed, assisting
the Chairman in relation to corporate governance matters,
ensuring the Company complies with its legal and
regulatory obligations and facilitating appropriate quality
information flows between the business and the Board.
Time Commitment
Under the terms of their appointment all Directors agreed
to the time commitment schedule which requires them to
allocate sufficient time to discharge their responsibilities
effectively. This matter is considered by the Nomination
Committee on an ongoing basis in accordance with its
Terms of Reference.
Independence
The Board, as a whole, has assessed the non-Executive
Directors’ independence and confirmed that, in its opinion,
all non-Executive Directors are independent in accordance
with the Code. The Board notes that Dr. Hugh Brady
and Ms. Joan Garahy serve on the Board of ICON plc.
The Board is satisfied that they are able to apply objective
and independent judgement to act in the best interest
of the Company.
Division of Responsibilities

104
Conflicts of Interest
Under the terms of their appointment all Directors have
continuing obligations to update the Chairman as soon
as they become aware of a situation that could give rise
to a conflict or a potential conflict of interest.
Board Committees
The Board has three Committees, the Audit Committee,
the Nomination Committee and the Remuneration
Committee, which support the operation of the Board
through their focus on specific areas of governance.
Each Committee is governed by its terms of reference,
available from the Group’s website (www.kerrygroup.
com) or upon request, which sets out how it should
operate including its role, membership, authority
and duties. Reports on the activities of the individual
Committees are presented to the Board by the respective
Committee Chairpersons.
Further details on the duties, operation and activities of
all Board Committees can be found in their respective
reports on pages 107-139 and these reports form part of
the Governance Report.
Meetings and Attendance
The Board meets sufficiently regularly to ensure that
all its duties are discharged effectively. All Directors are
expected to prepare for and attend meetings of the
Board, the Committee of which they are members and
the AGM. Should any Director be unable to attend a
Board meeting in person, conferencing arrangements
are available to facilitate participation. In the event that
a Board member cannot attend or participate in the
meeting, the Director may discuss and share opinions
on agenda items with the Chairman, Chief Executive
Officer, Senior Independent Director or Company
Secretary in advance of the meeting. During the year,
additional Board meetings were convened to discuss
strategic acquisition opportunities. As a result a total
of 14 meetings were held in 2019, and individual
attendance at the Board and Committee meetings is
set out in the table below.
Directors Board
Audit
Committee
Nomination
Committee
Remuneration
Committee

* Executive Directors
Attendance statistics represent: Total number of meetings attended by the Director / Total number of meetings held during the year.
105

Board Induction and Development
On appointment to the Board, each new non-Executive
Director undergoes a full formal induction programme.
This induction includes an overview of their duties and
responsibilities as a Director, presentations on the Group’s
operations and results, meetings with key executive
management and an outline of the principal risks and
uncertainties of the Group.
Throughout the year, the Board as a whole engages
in development through a series of consultations with
subject matter experts on a range of topics including
risk management, corporate governance and strategy.
Presentations are also made by Executive Directors and
senior management on various topics throughout the
year in relation to their areas of responsibility.
On an annual basis, a Board meeting is combined with
a comprehensive schedule of activities over a week
long period, to allow Directors further develop their
understanding of the Group’s activities and meet with
local senior management and emerging talent. The
June 2019 Board meeting was held in Krakow, Poland.
The visit focused on Kerry’s Taste & Nutrition strategy
for Europe and Russia with presentations received on
strategy, market updates and trading performance from
the Polish, Russian, Eastern Europe and Northern Europe
senior management teams. An economic update on the
Polish market was also presented by an external industry
expert. Representatives from a major customer in Eastern
Europe were also invited to present and engage in
discussion with the Board on their experience of working
with Kerry. While in Poland, the Board hosted a dinner
with key stakeholders including employees, customers,
representatives of government and trade and enterprise
agencies. This provided an informal opportunity for the
Board to engage with stakeholders in the local market.
The November Board meeting was held at the Group’s
Global Technology & Innovation Centre in Naas, Ireland.
During the visit, the Board met with the Taste & Nutrition
European leadership team who briefed Board members
on progress achieved implementing the strategic priorities
for growth across all end use markets in the region.
As part of their personal development plans, individual
non-Executive Directors were also afforded the
opportunity to visit a number of the Group’s international
facilities and operations. In 2019, the Chairman Mr. Philip
Toomey visited sites in Ireland and France, attended the
opening of a new manufacturing facility in Tumkur, India,
and together with Mr. Christopher Rogers visited the
North America Savoury Taste Centre of Excellence and
manufacturing facility in Clark, New Jersey, USA.
Individual Board members training requirements are
reviewed with the Chairman and Company Secretary and
training is provided to address these needs.
Board Performance Evaluation
In accordance with provisions of the Code, a performance
evaluation of the Board is carried out annually and
facilitated externally every third year.
In 2019, the Board engaged Independent Audit Limited
(Independent Audit) to facilitate the performance
evaluation. Independent Audit, based in the UK, is
recognised as a leading firm of board performance
evaluators. Independent Audit has no connections to
.
The review, performed during October and November
2019, considered the effectiveness of the Board and its
Committees. Independent Audit gathered the views of all
Directors, the Company Secretary and a number of senior
executives through interviews. In addition, as part of
the evaluation process Independent Audit observed the
October Board meeting, the November Audit Committee
meeting and reviewed Board and Committee papers.
The topics covered during the Board performance
evaluation included Board composition and succession
planning, Board remit and responsibility, Board meetings
and communication, strategy, risk, performance and
culture. A thorough discussion followed a presentation
of the findings made to the Board by Independent Audit
at the December Board meeting. Each Committee also
considered the observation specific to their work.
The Chairman appraised the performance of each
of the non-Executive Directors by meeting each
Director individually. The key areas reviewed were
independence, contribution and attendance at Board
meetings, interaction with Executive Directors, the
Company Secretary and senior management, ability to
communicate issues of importance and concern, their
knowledge and effectiveness at meetings and the overall
time and commitment to their role on the Board.
In addition, the Senior Independent Director formally
appraised the performance of the Chairman. This appraisal
was similar to the non-Executive Director evaluation
process which included feedback from all Directors on the
Chairman’s performance during the year.
During the year, the non-Executive Directors met without
the presence of the Executive Directors and, led by the
Chairman, undertook a formal review of the performance
of the individual Executive Directors.
Overall, the Board concluded that the outcomes of
the evaluation process have been positive and have
confirmed to the Chairman that the Board and its
Committees operate effectively, and that each Director
contributes to the overall effectiveness and success of the
Group. The actions identified from the 2019 performance
evaluation included recommendations to improve certain
Board reporting and the approach to specific areas of risk
management.
Progress against recommendations from the previous
internal evaluation were also considered and the Board is
satisfied that improvements have been made which have
enhanced the operation and effectiveness of both the
Board and its Committees.
The Chairman, along with the Company Secretary, will
ensure that actions identified from the 2019 report
and areas for consideration arising from the Directors’
appraisal, where identified, will be considered during 2020.
Composition, Succession and Evaluation

106
Risk Management and Internal Controls
The internal control framework in 
encompasses the policies, processes, tasks and
behaviours, which together facilitate the Group’s
effective and efficient operation by enabling it to respond
appropriately to significant business, operational,
financial, compliance and other risks to achieve its
business objectives.
The systems which operate in  provide
reasonable, but not absolute, assurance on:
– the safeguarding of assets against unauthorised use or
disposition; and
– the maintenance of proper accounting records and the
reliability of the financial information produced.
The Board has delegated certain duties to the Audit
Committee in relation to the ongoing monitoring and
review of risk management and internal control systems.
The work performed by the Audit Committee is described
in its report on pages 107-111.
Full details of the risk management systems are described
in the Risk Report on pages 73-75.
The principal risks and uncertainties facing the Group,
including those that could threaten the business model,
future performance, solvency or liquidity are described
on pages 75-88. Emerging risks are also identified,
analysed and managed as part of the same process as
the Group’s other principal risks as described on page 75.
The Directors confirm that they have carried out a robust
assessment of these risks and the actions that are in place
to mitigate them.
The Directors confirm that they have also reviewed the
effectiveness of the systems of risk management and
internal control which operated during the period covered
by these financial statements and up to the date of this
report. Based on the review performed, the Directors
concluded that for the year ended 31 December 2019, the
Group’s systems of risk management and internal control
were effective. The procedures adopted comply with the
guidance contained in Guidance on Risk Management,
Internal Control and Related Financial and Business
Reporting (2014) as published by the Financial Reporting
Council in the UK.
Features of Internal Control in Relation
to the Financial Reporting Process
The main features of the internal control and risk
management systems of the Group in relation to the
financial reporting process include:
– The Board review and approve a detailed annual budget
and monitor performance against the budget through
periodic Board reporting;
– Prior to submission to the Board with a
recommendation to approve, the Audit Committee
review the Interim Management Statements, the
Interim and Annual Consolidated Financial Statements
and all formal announcements relating to these
statements;
– Adherence to the Group Code of Conduct and Group
policies published on the Group’s intranet ensures the
key controls in the internal control system are complied
with;
– Monthly reporting and financial review meetings are
held to review performance at business level ensuring
that significant variances between the budget and
detailed management accounts are investigated and
that remedial action is taken as necessary;
– The Group has a Financial Compliance function to
establish compliance polices and monitor compliance
across the countries in which the Group operates;
– The Group operates a control self-assessment system
covering the key controls for a number of key Financial
and Operational functions within the Group;
– A well-resourced and appropriately skilled Finance
function is in place throughout the Group;
– Completion of key account reconciliations at reporting
unit and Group level;
– Centralised Taxation and Treasury functions and
regional Shared Service Centres established to facilitate
appropriate segregation of duties;
– The Group Finance Committee has responsibility for
raising finance, reviewing foreign currency risk, making
decisions on foreign currency and interest rate hedging
and managing the Group’s relationship with its finance
providers;
– The Board, through the Audit Committee, completes an
annual assessment of risks and controls;
– Appropriate ICT security environment; and
– The Internal Audit function continually reviews
the internal controls and systems and makes
recommendations for improvement which are reported
to the Audit Committee.
Fair, Balanced and Understandable
The Directors have concluded that the Annual Report
and Consolidated Financial Statements, taken as a whole,
provides the information necessary for shareholders
to assess the Group’s and Company’s position and
performance, business model and strategy and is fair,
balanced and understandable. This assessment was
completed by the Audit Committee and the activities
undertaken in reaching this conclusion are outlined
on page 109.
Audit, Risk and Internal Control
107

The report details how the Audit
Committee fulfilled its responsibilities
during the year under the 2018 UK
Corporate Governance Code and the
Irish Annex (the Code) and the 2016
Financial Reporting Council (FRC)
Guidance on Audit Committees.
During the year, we continued to
focus our efforts on the Committee’s
core areas of responsibility of
maintaining integrity across all
aspects of Group financial reporting,
internal control, risk management
and audit quality. The chart on
page 108 outlines the allocation of
the Committee’s time across these
various activities.
The Committee is responsible for
assisting the Board in regard to the
assessment of the principal risks
facing the Group, including reviewing
the Group’s risk management and
internal control systems. The work
performed by the Committee in
this regard encompassing ongoing
monitoring and the review of
effectiveness is detailed on page 110.
The Committee is also responsible
for monitoring the integrity of the
Group’s Financial Statements and
any formal announcement relating to
the Group’s financial performance. In
addition, the Committee assisted the
Board in determining that the Annual
Report and Consolidated Financial
Statements, when taken as a whole,
is fair, balanced and understandable
and provides the information
necessary for shareholders to assess
the Group’s and the Company’s
position, performance, business
model and strategy. The work
completed in this regard is set out on
page 109.
As outlined on page 111, the
Committee has considered the
requirements of the Companies Act
2014 in relation to the Directors’
Compliance Statement and is satisfied
that appropriate steps have been
undertaken by the Company to
ensure that it is materially compliant
with its relevant obligations.
Our engagement with the Group
Internal Audit function and external
auditor is detailed on pages 110-111.
An external review of the Committee
was conducted by Independent Audit
Limited (Independent Audit) during
2019 and the outcome of this review
was that the Committee was satisfied
that it is operating effectively. Further
details are set out on page 108.
In July, together with the Chairman
of the Board, Mr. Philip Toomey, I
visited the North American Savoury
Taste Centre of Excellence and
manufacturing facility in Clark,
New Jersey, USA and met with key
members of the North American
leadership team. On a number of
occasions during the year I also
visited the Global Technology &
Innovation Centre in Naas, Ireland
where I met with members of senior
management and the Group Internal
Audit team.
I trust you will find this report useful
in understanding the operation
and activities of the Committee
during the year. I will be available to
shareholders at the forthcoming AGM
to answer any questions relating to
the role of the Committee.
Christopher Rogers
Chairman of the Audit Committee
DIRECTORS’ REPORT
GOVERNANCE REPORT
AUDIT COMMITTEE REPORT
Dear Shareholder,
On behalf of the Audit
Committee it is my pleasure to
present our report for the year
ended 31 December 2019.
Christopher Rogers
Chairman of the Audit Committee

108
Roles and Responsibilities
The main roles and responsibilities of the Committee,
which reflect the Code and the Guidance on Audit
Committees, are set out in its written terms of reference
which are available from the Group’s website
www.kerrygroup.com or upon request.
The key responsibilities outlined in the terms of reference
are included in the table below:
Primary Responsibilities of the Audit Committee
– Ensuring the interests of shareholders are properly
protected in relation to financial reporting and internal
control;
– Assisting the Board in executing its duties in relation to
risk management and oversight and monitoring of internal
controls;
– Monitoring the work of the Internal Audit function and
ensuring that it is operating effectively;
– Making recommendations to the Board in relation to the
appointment, re-appointment and removal of the Group’s
external auditor as well as monitoring their effectiveness and
independence;
– Reviewing the Interim Management Statements, the
Interim and Annual Consolidated Financial Statements and
considering the appropriateness of accounting policies and
practices;
– Advising the Board on whether it believes there are any
material uncertainties that may impact the Group’s ability
to continue as a going concern or impact the Group’s long
term viability;
– Advising the Board on whether the Annual Report and
Consolidated Financial Statements, when taken as a whole
is fair, balanced and understandable;
– Supporting the Board in assessing the effectiveness of the
Group’s whistleblowing arrangements; and
– Advising the Board in relation to compliance with stock
exchange and other legal or regulatory requirements.
During the year, the Audit Committee Chairman provided
a letter to the Board outlining how the Committee
discharged its duties in 2019.
Committee Membership
During 2019, the Audit Committee comprised four
independent non-Executive Directors; Dr. Hugh Brady,
Ms. Joan Garahy, Mr. Tom Moran and was chaired by Mr.
Christopher Rogers.
As required by the Code, the Board is satisfied that both
Mr. Christopher Rogers and Ms. Joan Garahy meet the
requirements for recent and relevant financial experience.
The Board is satisfied that together, the members of
the Committee, as set out in their biographical details
on page 91, bring a broad range of relevant experience
and expertise, from a wide variety of industries and
backgrounds, and as a whole have competence relevant
to the sectors in which the Group operates. The Company
Secretary is the Secretary of the Committee.
Committee Meetings
The Committee met six times during the year and
attendance at these meetings is detailed on page 104.
Typically, the Chief Executive Officer, the Chief Financial
Officer, the Group Financial Controller, the Company
Secretary and the Head of Internal Audit, as well as
representatives of the external auditor are invited to
attend meetings of the Committee. In addition, the
Chairman of the Board attends meetings at the invitation
of the Committee. When required, other key executives
and senior management are invited to attend meetings
to provide a deeper insight on agenda items related to
the Group’s principal risks.
The Committee meet with the external auditor and
the Head of Internal Audit, without other executive
management being present, on an annual basis in order
to discuss any issues which may have arisen in the year
under review.
After each Committee meeting, the Chairman of the
Committee reports to the Board on the key issues which
have been discussed.
The allocation of the Audit Committee’s time across each
of its key activities is detailed below.
Committee Evaluation
As outlined in detail on page 105, an external review of
the Board and its Committees took place in 2019. This
process was externally facilitated by Independent Audit.
The evaluation was carried out based on interviews held
between Independent Audit and the Chair, Committee
members and the Head of Internal Audit. In addition,
as part of the evaluation process, Independent Audit
observed the November Committee meeting and
reviewed the corresponding papers. The Committee
considered the outcome of this review and a number of
recommendations were agreed relating to the Group’s
approach to specific areas of risk management which will
form part of the agenda for the Committee meetings in
the coming year.
Allocation of Time
Financial Reporting
Internal Control and
Risk Management
External Audit
Internal Audit
Other
109

Significant Financial Reporting Judgements
Business
Combinations
The Group acquired eleven businesses during the financial year which were accounted for as business
combinations. The Committee reviewed the methodology and assumptions applied in determining these
provisionally estimated fair values and found the methodology and assumptions to be appropriate following
discussion with senior management and the external auditor.
Impairment of
Goodwill and
Indefinite Life
Intangible Assets
Goodwill and indefinite life intangible assets, as disclosed in note 12 to the Consolidated Financial Statements,
represents the largest number on the Group balance sheet at €3.9 billion. The Committee considered the
process to complete the annual impairment review of the Group’s goodwill and indefinite life intangible assets
and specifically the assumptions used for the future cash flows, discount rates, terminal values and growth rates.
The Committee found that the methodology used for the above valuation and annual impairment review are
appropriate following discussions with senior management and the external auditor.
Taxation Significant judgement and a high degree of estimation is required when arriving at the Group’s tax charge and
liability. The Committee, in conjunction with tax professionals, reviewed and discussed the basis for the judgments
in relation to uncertain tax positions and challenged management on their assertions and also considered the
outcome of the external auditors’ review of the tax charge and liability. As a result, the Committee believes the
impact of uncertain tax positions has been appropriately reflected in the tax charge and liability.
During the year, the Audit Committee also completed
an internal review of its own effectiveness. On the basis
of both the external and internal reviews, the Audit
Committee was deemed to have operated effectively
during the period under review. The Committee is
satisfied that formal and transparent arrangements
exist for considering corporate reporting, risk
management, internal control principles and for
maintaining an appropriate relationship with the
Group’s external auditor.
Key Activities
Financial Reporting and Significant
Financial Judgements
The Audit Committee reviewed the Interim Management
Statements, the Interim and Annual Consolidated Financial
Statements and all formal announcements relating to
these statements before submitting them to the Board
of Directors with a recommendation to approve. These
reviews focused on, but were not limited to:
– the appropriateness and consistency of accounting
policies and practices;
– the going concern assumption;
– compliance with applicable financial reporting
standards, corporate governance requirements and
the clarity and completeness of disclosures; and
– significant areas in which judgement had been applied
in the preparation of the Consolidated Financial
Statements in accordance with the accounting policies.
A key responsibility of the Committee is to consider
the significant areas of complexity, management
judgement and estimation that have been applied in the
preparation of the Consolidated Financial Statements.
The Committee has, with the support of PwC as external
auditor, reviewed the suitability of the accounting policies
which have been adopted and whether management
have made appropriate judgements and disclosures. The
table below sets out the significant matters considered by
the Committee in relation to the Consolidated Financial
Statements for the year ended 31 December 2019.
Fair, Balanced and Understandable
At the request of the Board, the Audit Committee
reviewed the content of the Annual Report to ensure
that it is fair, balanced and understandable, and provides
the information necessary for shareholders to assess
the Group’s and the Company’s position, performance,
business model and strategy.
In satisfying this responsibility, the Committee
considered the following:
– the timetable for the co-ordination and preparation
of the Annual Report and Consolidated Financial
Statements, including key milestones as presented
at the December Audit Committee meeting;
– the systematic approach to review and sign-off carried
out by senior management with a focus on consistency
and balance;
– a detailed report from senior finance management
was presented to the Audit Committee outlining the
process through which they assessed the narrative and
financial sections of the 2019 Annual Report to ensure
that the criteria of fair, balanced and understandable
has been achieved; and
– the draft Annual Report and Consolidated Financial
Statements were available to the Audit Committee
in sufficient time for review in advance of the
Committee meeting to facilitate adequate
discussion at the meeting.
Having considered the above, in conjunction with the
consistency of the various elements of the reports,
the narrative reporting and the language used, the
Committee confirmed to the Board that the Annual
Report and Consolidated Financial Statements, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess
the Group’s and the Company’s position, performance,
business model and strategy.

110
Internal Control and Risk Management
The Audit Committee supports the Board in its duties
to review and monitor, on an ongoing basis, the
effectiveness of the Group’s risk management and
internal control systems. A detailed overview of the
Group’s risk management framework is set out in the
Risk Report on pages 73-75.
Throughout the year, the Committee:
– reviewed and approved the assessment of the principal
risks and uncertainties, including emerging risks, that
could impact the achievement of the Group’s strategic
objectives as described on pages 76-87;
– received presentations on a selection of principal risks
and discussed with senior management the material
internal controls that exist to mitigate these to levels
within the Group’s risk appetite;
– reviewed quarterly reports from the Head of
Internal Audit based on internal audits completed
outlining non-compliances with Group controls and
managements’ action plans to address them;
– considered reports from the Head of Internal Audit on
fraud investigations or other significant control matters
which occurred during the year and approved plans to
address and remediate the issues identified;
– received updates from the Group Financial Controller
on any control weaknesses identified through monthly
financial review meetings;
– considered the results of the Kerry Control Reporting
System (the internal control self-assessment review of
material finance, operational and compliance controls)
and concluded that the controls are operating
effectively;
– assessed the Group’s risk management and internal
control framework in line with the FRC Guidance
on Risk Management, Internal Control and Related
Financial and Business Reporting; and
– reviewed the report from the external auditor in
respect of significant financial accounting and
reporting issues, together with significant internal
control weakness observations.
The Audit Committee, having assessed the above
information, is satisfied that the internal control and risk
management framework is operating effectively and has
reported this opinion to the Board.
Internal Audit
The Audit Committee is responsible for monitoring and
reviewing the operation and effectiveness of the Internal
Audit function including its focus, plans, activities and
resources. To fulfil these duties the Committee:
– reviewed and approved the Group Internal Audit
function’s strategy and annual plan to ensure
alignment with the Group’s principal risks;
– considered and were satisfied that the competencies,
experience and level of resources within the Internal
Audit team were adequate to achieve the proposed
plan;
– considered the role and effectiveness of internal audit
in the overall context of the Group’s risk management
framework and was satisfied that the function has
appropriate standing within the Group;
– received quarterly updates from the Head of Internal
Audit on progress against the agreed plan including
the results of internal audit reports and management’s
actions to remediate issues identified;
– received updates on the nature and extent of non-
audit activity performed by internal audit;
– held a meeting with the Head of Internal Audit without
the presence of management;
– ensured that the Head of Internal Audit had regular
meetings with the Chairman of the Audit Committee
and had access to the Chairman of the Board if
required; and
– ensured co-ordination between Group Internal Audit
and the external auditor to maximise the benefits from
clear communication and co-ordinated activities.
In order to comply with the Chartered Institute of
Internal Auditors (CIIA) requirements, an External Quality
Assessment (EQA) by an independent body is conducted
at least every five years to confirm conformance with the
International Professional Practice Framework (IPPF) of
the CIIA. The most recent EQA was completed in 2017
and the next review will be completed in 2022. On an
annual basis, to ensure ongoing compliance with the
IPPF, the Internal Audit function has a Quality Assurance
and Improvement Program (QAIP) in place.
On the basis of the above the Committee concluded that
for 2019 the Internal Audit function operated effectively
and is satisfied that the quality, experience and expertise
of the function is appropriate for the Group.
External Auditor
On behalf of the Board, the Audit Committee has
primary responsibility for overseeing the relationship
with, and performance of, the external auditor. This
includes making recommendations to the Board on
the appointment, re-appointment and removal of the
external auditor, assessing their independence and
effectiveness and approving the audit fee.
During the year, the Committee met with the external
auditor without management present to discuss any
issues that may have arisen during the audit of the
Group’s Consolidated Financial Statements.
Independence and Provision of Non-Audit Services
The Committee is responsible for ensuring that the
external auditor is independent and for implementing
appropriate safeguards where the external auditor also
provides non-audit services to the Group.
PwC confirmed to the Audit Committee that they are
independent from the Group under the requirements of
the Irish Auditing and Accounting Supervisory Authority’s
Ethical Standards for Auditors. The current audit lead
engagement partner on the Group’s audit is John
McDonnell who was appointed in 2016 and it is planned
that he will rotate off the team at the end of the audit
of the results for financial year 2020 in order to ensure
continued independence and objectivity.
111

In accordance with the Group’s policy on the hiring of
former employees of the current external auditor, the
Committee reviews and approves any appointment of an
individual, within three years of having previously been
employed by the current external auditor, to a senior
managerial position in the Group.
A formal policy governing the provision of non-audit
services by the external auditor is in place and this policy
is reviewed and approved by the Audit Committee on an
annual basis. This policy is designed to safeguard the
objectivity and independence of the external auditor and
to prevent the provision of services which could result
in a potential conflict of interest. The policy outlines the
services that can be provided by the external auditor,
the relevant approval process for these services, and
those services which the external auditor is prohibited
from providing (as outlined in Article 5 of EU Regulation
537/2014). Prohibited services include activities
such as certain tax services, book-keeping and work
relating to the preparation of accounting records and
financial statements that will ultimately be subject to
external audit, financial information system design and
implementation, internal auditing and any work where
a mutuality of interest is created that could compromise
the independence of the external auditors.
In 2019, all non-audit services and fees were approved by
the Audit Committee in line with policy. The Committee
is satisfied that the non-audit fees paid to PwC, which
were minimal, did not compromise their independence
or objectivity. Full details of the fees paid to the external
auditors during the year are outlined in note 3 to the
financial statements. Having considered all of the above,
the Committee concluded that the Group’s external
auditor is independent.
Effectiveness
Post completion of the 2018 audit, in conjunction with
PwC, review meetings were held with senior finance
management across all regions and it was confirmed
by both parties that no issues had arisen during the
audit process.
At the November Audit Committee meeting, PwC
outlined to the Committee in detail the external
audit plan. The Committee discussed the significant
audit risks and key audit matters, audit scope and
materiality amongst other matters. The Audit Committee
agreed that the plan and the materiality at which any
misstatements should be reported by PwC to the
Committee was appropriate.
Prior to the finalisation of the 2019 Consolidated
Financial Statements, the Audit Committee received a
detailed presentation and final report from PwC. The
Committee also considered feedback from the lead
partner and senior executives in concluding that PwC
effectively delivered against the objectives of the agreed
audit plan.
In assessing the effectiveness of the external auditor, the
Audit Committee also considered the following:
– the quality of presentations to the Board and Audit
Committee;
– the technical insights provided relevant to the Group;
and
– their demonstration of a clear understanding of the
Group’s business and key risks.
On the basis of the above the Committee is satisfied with
the effectiveness of the external auditors.
Appointment
PwC were appointed as Group auditor in March 2016
following a comprehensive tender process which was
overseen by the Audit Committee. On an annual basis,
the Committee reviews the appointment of the external
auditor, taking into account the auditor’s effectiveness
and independence. On that basis, the Committee
recommended to the Board that PwC should continue in
office as the auditor to the Group in respect of the year
ending 31 December 2020.
The Audit Committee approved the remuneration of the
external auditor, details of which are set out in note 3 to
the Consolidated Financial Statements.
Directors’ Compliance Statement
During the year, the Audit Committee reviewed the
appropriateness of the Directors’ Compliance Policy
Statement and also received a report from senior
management on the review undertaken during
the financial year of the compliance structures and
arrangements in place to ensure the Company’s material
compliance with its relevant obligations. On the basis of
this review, the Committee confirmed to the Board that in
its opinion the Company is in material compliance with its
relevant obligations.
Whistleblowing and Fraud
Arrangements
In accordance with the Provisions of the Code,
the responsibility for overseeing whistleblowing is
within the remit of the Board. During 2019, at the
request of the Board, the Committee considered the
Group’s whistleblowing arrangements and assisted
the Board in its assessment of the adequacy of these
arrangements. Details of the Group’s whistleblowing
arrangements are outlined in the Corporate Governance
Report on page 103.
The Committee also considered the Group’s procedures
for fraud prevention and detection to ensure that
these arrangements allow for the proportionate
and independent investigation of such matters and
appropriate follow up action. Following this review, the
Audit Committee confirmed to the Board that it was
satisfied that the Group’s fraud prevention procedures
were adequate.

112
The Nomination Committee is
responsible for evaluating the
structure, size, composition and
successional needs of the Board
and its Committees and making
recommendations on same, with
due regard for Board diversity.
Additionally, the Committee is
responsible for the review of
the results of the annual Board
evaluation process as it relates
to the Board and Committee
performance and composition.
During the year under review,
the Committee continued to lead
the Board refreshment process
ensuring that the composition
of the Board and its Committees
has the correct balance of skills,
knowledge, experience, diversity
and independence, and that a
pipeline of appropriate talent has
been identified. The Committee
engaged with independent
external search consultants to
identify an appropriate pipeline of
new independent non-Executive
Directors.
The Committee also reviewed
senior management development
and succession plans whilst having
regard to diversity below Board
level and taking account of business
growth and geographic expansion.
During 2019, the Committee
reviewed the Company’s corporate
governance policy and processes
in the context of the 2018 UK
Corporate Governance Code (the
new Code) and implemented
appropriate changes. These changes
included appointing a designated
workforce engagement Director and
ensuring that an orderly succession
for senior management, having
regard to diversity targets, exists.
The Committee also considered
changes implemented by the
Board and other Committees to
comply with the requirements of
the new Code.
An external review of the
effectiveness of the Board and
its Committees was facilitated by
Independent Audit Limited during
2019 and the outcome of this review
is that the Board and its Committees
consider that they are operating
effectively.
The Committee’s priorities for the
coming year will focus on Board
refreshment taking account of
all skill sets required, diversity
and planned retirements over
the coming years, as well as
ensuring that senior management
development and succession
planning can support the delivery of
Group strategy. The Committee will
also continue to focus on diversity
and inclusion in the wider workforce.
Philip Toomey
Chairman of the Nomination Committee
DIRECTORS’ REPORT
GOVERNANCE REPORT
NOMINATION COMMITTEE REPORT
Dear Shareholder,
On behalf of the Nomination
Committee, I am pleased to
present our report for the year
ended 31 December 2019.
This report sets out the
Committee’s key activities
in 2019 as well as the
Committee’s priorities
for 2020.
Philip Toomey
Chairman of the
Nomination Committee
113

Role and Responsibilities
The main roles and responsibilities of the Committee,
which were reviewed during 2019, are set out in written
terms of reference which are available from the Group’s
website www.kerrygroup.com or upon request.
The key responsibilities outlined in the terms of reference
are included in the following table:
Primary Responsibilities of the Nomination
Committee
– Evaluating the balance of skills, experience, independence,
knowledge and diversity of the Board to ensure optimum
size and composition;
– Ensuring an appropriate nomination process is in place for
Board appointments;
– Ensuring a formal induction plan is in place for each new
Director on appointment;
– Reviewing a candidate’s other commitments to ensure
that on appointment, a candidate has sufficient time to
undertake the role;
– Reviewing the Board diversity policy;
– Making recommendations to the Board on the appointment
and re-appointment of both Executive and non-Executive
Directors;
– Making recommendations to the Board concerning
membership of Board Committees in consultation with the
Chairs of the Committees;
– Ensuring plans and processes are in place for succession
planning for Directors, including the Chairman, Senior
Independent Director, non-Executive Directors and senior
management positions; and
– Overseeing the conduct of the annual evaluation of the
Board and its Committees.
The Chairman of the Board or an independent non-
Executive Director of the Company acts as the Chairman
of the Committee. The Chairman of the Board does not
chair the Committee when it is dealing with the matter of
succession to the Chairmanship.
Committee Membership
During 2019, the Nomination Committee comprised
three independent non-Executive Directors; Dr. Hugh
Brady, Dr. Karin Dorrepaal, Mr. James C. Kenny and was
chaired by Mr. Philip Toomey.
The Board ensures that the membership of the
Nomination Committee is refreshed in accordance with
the Group’s Corporate Governance Policy. The quorum for
Committee meetings is two and only Committee members
are entitled to attend. The Nomination Committee
may extend an invitation to other persons to attend
meetings or to be present for particular agenda items as
required. The Company Secretary acts as Secretary of the
Committee.
During 2019, the Committee continuted to work with
Spencer Stuart, an international specialist recruitment
firm, to assist with Board refreshment. Spencer Stuart
has no other connection to the Group.
1. Assessment
2. Requirement
– 
The Nomination Committee conducts
Board Evaluation
– 
Considers the skill set, experience,
balance and diversity of the Board
– 
If a requirement is identified, the
Committee prepares a detailed job
description outlining the particular skills
and experience required
3. Search
4. Screening
5. Interview
6. Approval
– 
Conducts search through third party search
agency, Directors or other stakeholders
– 
Search based on job description identified
– 
Screening carried out by third party as
selected by the Committee
– 
Interview and selection process led
by the Committee
– 
Results are reviewed by the Committee who
select candidates and recommend them to
the Board for approval
– 
Board of Directors consider the candidate(s)
recommended by the Committee and
approve the candidate(s)
– 
In accordance with the Articles of
Association, all newly appointed Directors
are subject to election at the AGM following
their appointment
Committee Meetings
The Committee met four times during the year and
attendance at these meetings is outlined on page 104.
Nomination Process
There is a formal, rigorous and transparent procedure
determining the nomination for appointment of new
Directors to the Board. Candidates are identified and
selected on merit against objective criteria and with due
regard to the benefits of diversity on the Board. The
Committee engages specialist recruitment consultants
to assist in the identification and selection process.
The Committee makes recommendations to the
Board concerning appointments of Executive or non-
Executive Directors, having considered the blend of
skills, experience, independence and diversity deemed
appropriate and reflecting the global nature of the Group.
The Nomination Committee also makes recommendations
to the Board concerning the re-appointment of any non-
Executive Director at the conclusion of their specified term
and the re-election of all Directors who are the subject of
annual rotation. The terms and conditions of appointment
of non-Executive Directors are set out in formal letters
of appointment, which are available for inspection at the
Company’s registered office during normal office hours
and at the AGM of the Company.
The key stages in the nomination process are outlined in
the following diagram:

114
Board Refreshment Policy
On an ongoing basis, the Nomination Committee reviews
and assesses the structure, size, composition, diversity and
overall balance of the Board and makes recommendations
to the Board with regard to refreshment.
Appointments to the Board are for a three year period,
subject to shareholder approval and annual re-election,
after consideration of annual performance evaluation and
statutory provisions relating to the removal of a Director.
The Board may appoint such Directors for a further term
not exceeding three years and may consider an additional
term if deemed appropriate.
During the year, the Chairman conducted a rigorous
review of all other non-Executive Directors as part of the
Board evaluation process, taking into account the need
for progressive refreshment of the Board. The Board
explains to shareholders, in the papers accompanying the
resolutions to elect and re-elect the non-Executive Directors,
why it believes the individual should be re-elected based on
the results of the formal performance evaluation.
Succession Planning
The Nomination Committee reviews the succession
plans for the Board and its Committees on an ongoing
basis to ensure an orderly refreshment of membership,
taking into account Group strategy, the challenges and
opportuntities facing the Group and the skills, knowledge
and experience required.
The Committee also reviews succession plans for
senior management, which form part of the Group’s
overall annual approach to succession planning and
agrees these with the Chief Executive Officer before
being presented to the Board. The succession planning
process includes defining success criteria for key roles,
identifying and evaluating candidate pools and aligning
development activities with individual and business needs
to ensure leadership continuity and improve the depth
of the leadership succession pipeline. This process is
fully documented and monitored throughout the year in
conjunction with the Committee.
Diversity Policy
Diversity is fully embraced at Kerry and the Group
is committed to having a work environment that is
respectful of everyone. In order to achieve a positive and
productive workplace, all employees must work together
and realise each individual has something unique to
contribute to the overall success of Kerry.
The Group’s Diversity, Inclusion and Belonging Policy is an
integral part of the Group Code of Conduct ensuring that
diversity and inclusion are embedded in ’s
core Values. Within this, the Group seeks to recruit, hire
and retain the best talent from a diverse mix of gender,
background, nationality, ethnicity and other attributes
with the skills and experiences to drive innovative thinking
to enable a sustained competitive advantage.
The Board believes in the benefits of having a diverse
Board and the value that it can bring to its effective
operation. In accordance with the Board Diversity Policy,
differences in background, gender, skills, experiences,
nationality, ethnicity and other attributes are considered in
determining the optimum composition of the Board with
the aim to balance it appropriately. All Board appointments
are made on merit, with due regard to diversity. The
Board currently has a 25% female representation. In
line with its diversity policy, and recommended best
practice, the Board’s ambition is to increase this number
further. The Board also has an ambition to increase the
representation of members with diverse factors such as
nationality, ethnicity and other attributes. In reviewing
Board composition and agreeing a job specification for
new non-Executive Director appointments, the Committee
considers the benefits of all aspects of diversity including,
but not limited to, those described above, in order to
complement the range and balance of skills, knowledge
and experience on the Board. As part of the identification
process external search consultants are required to
present a list of potential candidates, who meet the stated
specification and requirements comprising candidates of
diverse backgrounds, for consideration by the Committee.
During 2019, diversity targets for the senior management
succession pipeline were agreed with the Executive
Directors and approved by the Board to ensure the
leadership teams and internal talent pipelines better
reflect the broader mix of people within the Group.
Further details of the Group Diversity, Inclusion and
Belonging Policy, and the activities undertaken on diversity
and inclusion are outlined in Our People on page 20.
A summary of the Group’s current position relating to
Board and senior management diversity is provided below:
Executive / Non-Executive Directors
Executive

Subject Committee Activity
Board
Refreshment
There were no changes to the Board during the year. The Committee continues to consider Board
refreshment and build a succesion pipeline taking account of all skill sets required, diversity and
planned retirements over the coming years.
The Committee engaged with independent external search consultants Spencer Stuart to assist and
advise on the strategy for Board succession and refreshment in the future.
Committee
Refreshment
There were no changes to the composition of the Board Committees during the year. The Committee
will continue to consider Committee refreshment over the coming years.
Board Size and
Composition
In 2019, as part of its remit, the Committee considered the size and composition of the Board. At 31
December 2019, the Board comprised 12 members. The Committee will continue to consider both
Board size and composition during 2020.
Re-appointment
of Chairman
During the year, Mr. Philip Toomey completed his current term as non-Executive Director and Chairman.
After detailed consideration, including a review of his performance and tenure, the Board, upon the
recommendation of the Committee agreed that he should serve an additional term.
Re-appointment of non-
Executive Directors
During the year, Mr. James Kenny and Ms. Joan Garahy each completed their current terms as
non-Executive Directors. After detailed consideration, including a review of their performance and
independence, the Board, upon the recommendation of the Committee, agreed that they should serve
additional terms.
Re-election of Directors The Committee recommended that all Directors, subject to and seeking re-election, be put forward for
re-election at the Group’s next AGM.
Board and Committees
Effectiveness
Evaluation
As outlined in detail on page 105, an external evaluation of the Board and its Committees took place in
2019. The Committee agreed the terms of reference for the evaluation of the Board and its Committees.
This process was externally facilitated by Independent Audit. The evaluation was carried out based on
interviews held between Independent Audit and the Chair, Board members, the Company Secretary
and other senior executives. Independent Audit observed the October Board meeting, the November
Audit Committee meeting and reviewed Board and Committee papers. A thorough discussion followed a
presentation of the findings made to the Board by Independent Audit at the December Board meeting.
The Committee considered the outcome of this review. Each recommendation was assessed and an
action plan was developed to address areas for potential improvement.
These recommendations will form part of the agenda for Committee meetings in the coming year. The
conclusion from the evaluation process is that the Board and its Committees, have operated effectively
during the period under review.
Senior Management
Development and
Succession
During the year, the Committee reviewed senior management development and succession plans
having regard to agreed diversity targets to ensure the appropriate level of skills and diversity will exist
to support the delivery of the Group’s strategy.
Corporate Governance
Review
During 2019, the Committee reviewed the Company’s corporate governance policy in the context of
the 2018 UK Corporate Governance Code, with particular reference to new guidance in respect of
Board and management diversity, director independence, Purpose, assessing and monitoring culture
and effective engagement with stakeholders including the workforce. On the recommendation of the
Committee, Mr. Tom Moran was appointed designated workforce engagement Director.
Terms of Reference During the year, the Committee reviewed and updated its Terms of Reference. A copy of these terms is
available on the Group website www.kerrygroup.com.
Key Activities
The key activities of the Committee throughout the year are detailed below:

116
DIRECTORS’ REPORT
GOVERNANCE REPORT
REMUNERATION COMMITTEE REPORT
As an Irish incorporated company
Kerry is not required to comply with
the UK legislation which requires
UK companies to submit their
remuneration policies to a binding
shareholder vote every three years.
However, as a matter of best corporate
governance practice, we submitted our
Remuneration Policy to a non-binding
advisory vote at the 2018 Annual
General Meeting (AGM).
The Committee is satisfied that the
policy has operated as intended and
that no changes are needed as a result
of a review of its operation in 2019
or for any other reason. No changes
are therefore proposed for this year.
The Committee will undertake a full
review of the policy in 2020 in order
to bring the policy to shareholders
at our 2021 AGM which is the third
anniversary of shareholders approving
our current policy. As part of the policy
review the Committee will take into
account the requirements of the EU
Shareholders’ Rights Directive which
we expect will be transposed into Irish
law during the course of 2020 as well
as the requirements of the 2018 UK
Corporate Governance Code to which I
refer further below.
2018 UK Corporate
Governance Code
During 2019, the Committee
broadened its remit and implemented
the other new requirements of the
2018 UK Corporate Governance Code
other than those which may result in
structural changes to the Remuneration
Policy. The Committee will give careful
consideration to these requirements as
part of the policy review which will be
undertaken in 2020.
The Committee has agreed that for new
appointments to the Board pension
contribution rates, or payments in lieu,
will be aligned with those available to
the majority of the workforce in their
country of appointment.
Pay for Performance
The Committee ensures alignment
with shareholders’ long term interests
by aligning remuneration metrics with
the Group’s business model
and strategic objectives and by
ensuring sufficient stretch in the
performance targets.
Drivers of
Shareholder Return
As outlined in the Strategic Report on
page 32, Volume Growth and Margin
Expansion are the main drivers of
Adjusted Earnings Per Share (EPS)
which is the key performance metric
for measuring growth. Return on
Average Capital Employed (ROACE) is
a key measure of how efficiently the
Group employs its available capital.
Cash Conversion is an important
indicator of the cash the Group
generates for reinvestment or for
return to shareholders.
These are the main Group metrics
which drive the Executive Director’s
Short Term Incentive Plan (STIP) and
Long Term Incentive Plan (LTIP).
Together these metrics deliver Total
Shareholder Return which aligns the
interest of the Executive Directors
with that of the shareholders. Our
remuneration philosophy also
supports our long term approach by
deferring a significant part of annual
and long term variable remuneration
into share awards, which provides
clear alignment with the long term
interests of shareholders, together
with requiring executives to acquire
and maintain significant shareholdings
in the Group.
In line with best market practice,
malus and clawback provisions apply
to the Executive Director’s STIP and
LTIP awards.
Section A:
Chairperson’s
Annual Statement
Dear Shareholder,
On behalf of the Remuneration
Committee, I am pleased
to present the Directors’
Remuneration Report for the
year ended 31 December 2019.
Remuneration Policy
The Group’s Remuneration Policy
is outlined in Section C on pages
121-126. This Policy provides the
framework for remuneration decisions
made by the Committee for the
three year period 2018 - 2020. The
Committee is confident that the
Group’s Remuneration Policy operates
to the highest standards in achieving
its strategic objectives, is properly
governed and is in line with applicable
best market practice. Furthermore,
it ensures that Executive Director
remuneration is aligned to the Group’s
Purpose and Values and can be clearly
linked to the successful delivery of the
Group’s strategy.
117

Remuneration Policy Implementation 2020
During 2019, the Committee considered the operation of the policy to ensure it is aligned with shareholder interests,
promotes long term sustainable success and can be clearly linked to the successful delivery of the Group’s Purpose, Values
and long term strategy. The Committee considered, as part of its review, the remuneration and policies applicable to the
general workforce. The Committee concluded that no changes are required to the operation of the policy for 2020.
Basic Salary
For 2020, the basic salaries of the Executive Directors will be increased in line with increases for the general workforce
(a range of 2.5% - 3%) in Ireland and the US respectively.
2020 Short and Long Term Incentive Plans
As part of its review, the Committee considered the performance metrics, weightings and target calibration for the STIP and
LTIP incentive schemes to ensure that they continue to support the strategic plan and long term sustainable success of the
Group. The Committee concluded, following the review, that the schemes are operating as intended and no changes will be
made to the metrics and weightings for 2020. Annual bonus maximum opportunity and the LTIP award levels will also remain
unchanged for 2020.
Non-Executive Director Fees for 2020
The last review of non-Executive Director Remuneration levels was undertaken in 2017 and increases were made effective
from 1 January 2018. There are no proposed changes to either the Chairman’s or other non-Executive Directors fees and
Committee fees for 2020.
During 2019, the Board approved the appointment of Mr. Tom Moran as the designated workforce engagement Director.
The Committee approved an additional annual fee of €12,000 for this position. The Committee plans to undertake a review
of the non-Executive Directors’ remuneration policy and fee levels in 2020.
Remuneration Policy Outturn 2019
In 2019, the Group delivered a good financial performance with constant currency adjusted earnings per share growth of
8.3% driven by volume growth, well ahead of our markets, and a 30bps expansion in trading margin. The performance table
below shows the performance versus target for the key metrics in our STIP and LTIP plans.
2019 STIP Performance Target Results 2017-19 LTIP Performance (3 years) Target Results
Group volume growth 3.0% 2.8%
Adjusted EPS growth in
constant currency
10% 8.8%
Group margin expansion 20 bps 30 bps Total Shareholder Return
Median to 75th
percentile
Top Quartile
Group cash conversion 70% 73.9% ROACE 12% 12.3%
As can be seen in the Total Shareholder Return graph Kerry has generated a 100% return for shareholders (including
reinvestment of dividends) over the last 5 years.
5 Year Total Shareholder Return
(Value of €100 Invested on 31/12/2014)
Kerry MSCI Europe Food Producers E300 Food & Beverage
2019 Short Term Incentive Plan Outturn
The accompanying chart, which shows the very good
Group performance over the last 5 years, also illustrates
the challenging and stretching nature of targets set by
the Committee for performance metrics used for annual
incentive purposes.
TSR Growth, Enterprise Value Growth & Annual
Incentive Payout
For 2019, STIP payouts to Executive Directors were on
average 73% of the maximum available opportunity. The
Committee exercised independent judgement when
authorising this outcome and considers it to be reflective
of the Group’s and the individual Executive Directors’
performance during the year as well as the challenging and
stretching nature of the targets set.
Long Term Incentive Plan 2017-2019 Outturn
The final outturn of the 2017-19 LTIP award was 62.8%
of maximum opportunity. The Committee exercised
independent judgement when authorising this outcome
and considers it to be reflective of the Group’s underlying
performance during the three year performance period.
CEO Pay Ratio
While not a requirement for Irish listed companies, in line
with the Group’s commitment that its remuneration policies,
practices and reporting reflect best corporate governance
practices the Committee has quantified and disclosed the
CEO pay ratio in this year’s report.
Discretion
The Committee is satisfied, in reviewing the remuneration
for 2019 against performance that there has been an
appropriate link between reward and performance and
that discretion did not need to be used. In assessing
performance, the Committee considered relevant
environmental, social, and governance matters that it
needed to take account of when reviewing the
remuneration outcomes.
Other Matters
Appointment of Remuneration Committee
Advisor
During 2019, the Committee completed a formal tender
process for the appointment of its advisor which included a
number of leading remuneration advisory firms. Following
the conclusion of this process, the Committee selected Korn
Ferry as its Remuneration Advisor and they assumed the
role with effect from 16 September 2019.
Committee Performance
An external review of the Committee was conducted by
Independent Audit Limited during 2019 and the outcome
of this review was that the Committee is operating
effectively. Further details are set out on page 105.
Conclusion
The Committee continues to review the Group’s
remuneration policy to ensure that it remains aligned to
long term shareholders’ interests, is correctly reported in line
with relevant legislation and provides the right framework
to attract, retain and motivate the Executive Directors in line
with the pay for performance principle.
As in previous years, the Remuneration Report is being put
to shareholders for an advisory vote. Last year 94.4% of our
shareholders who voted, voted in favour of the Report
and I hope our shareholders continue their support at
this year’s AGM.
Finally, I would like to take this opportunity to thank the
members of the Remuneration Committee for their
continued commitment and support during the year.
Joan Garahy
Chairperson of the Remuneration Committee
Section B: Remuneration
Committee & Key Activities
Committee Membership
During 2019, the Remuneration Committee comprised four
independent non-Executive Directors; Mr. James C. Kenny,
Dr. Karin Dorrepaal, Mr. Tom Moran and was chaired by
Ms. Joan Garahy. Details of the skills and experience of the
Directors are contained in the Directors’ biographies on
pages 90-91.
Role and Responsibilities
On behalf of the Board, the Remuneration Committee is
responsible for determining the remuneration policy for
the CEO and other Executive Directors and, following the
new Code, senior management on an annual basis. The
CEO is invited to attend Remuneration Committee meetings
but does not attend Committee meetings when his own
remuneration is discussed. The Committee also has access
to internal and external professional advice as required. The
Committee follows an annual and tri-annual calendar with
matters scheduled and planned well in advance. Decisions
are made within agreed reference terms, with additional
meetings held as required. In considering the agenda, the
Committee gives due regard to overall business strategy,
the interests of shareholders and the performance of the
Group. The main responsibilities of the Committee, which
were reviewed during 2019, are set out in written terms of
reference which are available from the Group’s website
www.kerrygroup.com or upon request.
Remuneration Committee Meetings and Activities 2019
The Committee met four times during the year and attendance at these meetings is outlined on page 104.
The key activities undertaken by the Committee in discharging its duties during 2019 are set out below:
Primary Responsibilities of the Remuneration
Committee
– To determine the remuneration policy for, and set the
remuneration of the CEO, Executive Directors and senior
management;
– To review the remuneration of the Chairman;
– To receive the recommendations of the CEO and set the
salaries and overall remuneration of senior management;
– To review and approve incentive plan structures and targets;
– To agree the design of all share incentive plans for approval
by the shareholders;
– To ensure the contractual terms of Executive Directors and
senior management are deemed fair and reasonable;
– To place before shareholders at each AGM, a Directors’
Remuneration Report setting out the Group’s policy and
disclosures on remuneration;
– To arrange where appropriate, external benchmarking of
overall remuneration levels and the effectiveness of incentive
schemes;
– To review annually its own performance and terms of reference
to ensure it is operating effectively;
– To engage with the workforce to explain how executive
remuneration aligns with the wider company pay policy;
– To review workforce remuneration and related policies and
the alignment of incentives and rewards with the Group’s
culture, and take these into account when setting the policy
for executives; and
– To exercise discretion when appropriate, in the interest of
alignment and fairness.
Subject Remuneration Committee Activity
Remuneration
Report
A review of best practice remuneration reporting was completed during 2019 to ensure compliance
with relevant legislation and reporting requirements while also ensuring the delivery of a report which is
transparent and understandable for all shareholders. As part of this review, the Committee considered
the recent updates and guidance issued by the main shareholder representative bodies and proxy
agencies, together with the 2014 Irish Companies Act, the EU Shareholders’ Rights Directive (which has
not yet been transposed into Irish law), the 2018 UK Corporate Governance Code and the UK Companies
(Miscellaneous Reporting) Regulations 2018.
2018 UK Corporate
Governance Code
The Committee considered the implications of the 2018 UK Corporate Governance Code and as a
consequence broadened the remit of the Committee and implemented the other changes required
by the new Code excluding those that may result in structural changes to the Remuneration Policy.
The Committee will carefully consider these structural changes as part of the Executive Directors’
remuneration policy review in 2020.
Basic Salary The Committee continued to monitor the level of basic salaries of the CEO and Executive Directors in line
with market practice.
See Implementation Section on page 127 for details on the outcome of the review.
Short Term Incentive
Plan (STIP)
The metrics for the STIP awards were reviewed during 2019 to ensure they continue to be aligned with
Group strategy and that the associated targets are appropriately stretching.
See Implementation Section on page 127 for details on the outcome of the review.

120
Subject Remuneration Committee Activity
Long Term Incentive
Plan (LTIP)
The Committee considered the overall effectiveness of the LTIP in 2019 to ensure that the metrics
continue to be aligned with Group strategy and that the associated targets are appropriately stretching.
See Implementation Section on page 128 for details on the outcome of the review.
Chairman &
Non-Executive
Directors’ Fees
In line with the normal 3 year cycle a detailed review of the Chairman and non-Executive Directors
fees was undertaken in 2017 with the assistance of Willis Towers Watson. In the intervening years, the
Committee continues to monitor the level of the Chairman’s fees and the Executive Directors monitor
those of the non-Executive Directors and report to the Board.
During 2019, the Board approved the appointment of Mr. Tom Moran as the designated workforce
engagement Director. The Committee approved an additional annual fee of €12,000 for this position.
See Implementation Section on page 128 for details of current fee levels.
Senior Management In accordance with the terms of the new Code the Committee set the remuneration arrangements for
senior management and the Company Secretary.
Workforce
Remuneration and
Related Policies
During the year, the Committee was provided with information on pay policies and procedures for the
wider workforce to consider and review fairness and alignment with Group strategy and the Executive
Directors remuneration policy, as well as to inform its decision making in relation to Executive Director
remuneration. This included an update on the Total Reward Review that is underway across eight
countries representing 80% of the wider workforce and an overview of the approach for the annual pay
reviews in all the countries in which the Group operates as well as the structure and annual cost of the
STIP and LTIP awards below Board level.
Shareholder
Consultation
In early 2019, the Committee consulted with a number of the Company’s major institutional shareholders
and with proxy agencies regarding the proposed increase to the CEO’s salary. The Committee welcomed
the engagement and the shareholders consulted were supportive of the proposal put forward.
The Committee reviewed the results of the shareholder vote on the Remuneration Report at the 2019
AGM noting that 94.4% of shareholders supported the Report. The Committee also reviewed the
additional feedback received from the shareholder proxy agencies.
Committee Evaluation As outlined on page 105 an external review of the Board and its Committees took place in 2019.
The outcome of the review is that the Remuneration Committee is operating effectively.
Appointment of
Remuneration
Committee Advisor
During 2019, the Committee conducted a formal tender process for the appointment of its principal
advisor. The process involved a Request for Proposal, submissions by a number of leading remuneration
advisory firms and presentations to the Committee Chair. Following the conclusion of this process the
Committee selected Korn Ferry as its Remuneration Advisor and they assumed the role with effect from
16 September 2019 replacing Willis Towers Watson who retired on the same date.
Terms of Reference During the year, the Committee reviewed and updated its Terms of Reference. A copy of these terms is
available on the Group website www.kerrygroup.com.
Work of the Committee in determining Executive Director Remuneration
The Committee considers the appropriateness of the Executive Directors’ remuneration not only in the context of overall
business performance and environmental, governance and social matters but also in the context of wider workforce pay
conditions (taking into account workforce policies and practices) and external market data to ensure that it is fair and
appropriate for the role, experience of the individual, responsibilities and performance delivered.
Furthermore the Committee is satisfied, in reviewing the remuneration for 2019 against performance that there has been an
appropriate link between reward and performance and that discretion did not need to be used. In assessing performance,
the Committee considered relevant environmental, social, and governance matters that it needed to take account of when
reviewing the remuneration outcomes.
The Committee concluded that the Policy has operated as intended, that there was a strong link between pay and performance
and that no changes to the Policy are needed as a result of the review of operation in 2019.
Remuneration Committee Advisors
The Remuneration Committee is authorised by the Board to appoint external advisors. Korn Ferry were appointed as
Remuneration Committee Advisor in 2019. Korn Ferry has also provided other human capital related services to the Group
during the year through a separate part of the business. The Committee is comfortable that the controls in place at Korn
Ferry do not result in the potential for any conflicts of interest to arise.
The fees incurred with Korn Ferry and Willis Towers Watson for advising the Committee in 2019 were €45,400 (2018: €nil)
and €46,900 (2018: €81,000) respectively.
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Section C: Remuneration Policy
As an Irish incorporated company  plc is not
required to comply with the UK legislation which requires
UK companies to submit their remuneration policies to
a binding shareholder vote every three years or earlier if
changes are required prior to this. However, in recognition
of the commitment that Kerry’s remuneration policies,
practices and reporting reflect best corporate governance
practices we submitted our Remuneration Policy to a non-
binding advisory vote at the 2018 Annual General Meeting.
Similarly,  plc is not required to comply with
the remuneration reporting regulation contained in the
UK Companies (Miscellaneous Reporting) Regulations 2018
but follows the requirements as a matter of best practice
unless they conflict with Irish or other legal requirements
or there are other reasons where it is considered not
practicable to do so.
The Company is operating its remuneration arrangements
in line with the approved Remuneration Policy, which came
into effect in 2018 and will apply for up to three years.
The Committee is comfortable that the policy remains
appropriate supporting the Group’s business strategy and
that no changes are required prior to the triennial vote at
the 2021 AGM. The current policy is reproduced below for
ease of reference. The Committee will review the policy in
2020 and a new policy will be brought to shareholders for
approval at the 2021 AGM.
Following the publication of the 2018 UK Corporate
Governance Code, the Committee implemented all of the
changes recommended by the new Code, other than those
that may result in structural changes to the Remuneration
policy in order to better align with emerging best practice.
Changes implemented during 2019 include broadening of
the Committee’s remit to include responsibility for setting
the remuneration of senior management and the Company
Secretary. The Committee also decided that the pension
contribution rates for any newly appointed Executive
Directors will be aligned to those available to the general
workforce in the country in which they are appointed.
The Committee will give careful consideration to the
Code Provisions that may result in structural changes to
the current Remuneration Policy as part of its scheduled
overall review of policy during 2020. The structural changes
for consideration are extending the existing two year
holding period from 50% to 100% of any LTIP awards
that vest, broadening the existing malus and clawback
provisions, formalising a post-employment shareholding
policy and reviewing the pension contribution rates for
incumbent Executive Directors. The pension contribution
rates for both the CEO and CFO were reduced to 18%
on their appointment in 2017 and 2018 respectively. The
contribution rates for their predecessors were 24% and
30% respectively.
The Committee will also consider, as part of the policy
review, the requirements of the EU Shareholders’ Rights
Directive which have not yet been transposed into Irish law,
in anticipation of this happening during 2020.
The Group’s Executive Director remuneration philosophy
is to ensure that executive remuneration is aligned to the
Group’s Purpose and Values, supports strategy, promotes
the long term success of the Company and properly reflects
the duties and responsibilities of the executives, and is
structured to attract, retain and motivate individuals of the
highest quality on an international basis. Remuneration
includes performance related elements designed to align
Directors’ interests with those of shareholders and to
promote long term sustainable growth and performance
at the highest levels in line with the Group’s strategy.
In setting remuneration levels, the Committee has regard
to comparable Irish, UK, USA and European companies
(including all the companies in the LTIP peer group), which
are comparable to the Group in terms of size, geographical
spread and complexity of business, and operate in the food
and beverage and other sectors. It also considers workforce
remuneration and related policies and employment
conditions elsewhere in the Group.
The Committee considers the level of pay in terms of
the balance between the fixed and variable elements of
remuneration. Fixed elements of remuneration are defined
as basic salary, pension and other benefits with the variable
elements being performance related incentives with both
short and long term components.
A high proportion of Executive Directors’ potential
remuneration is based on short term and long term
performance related incentive programmes.
By incorporating these elements, the Remuneration
Committee believes that the interest and risk appetite of the
Executive Directors is properly aligned with the interests of
the shareholders and other stakeholders. When authorising
remuneration outcomes, the Committee exercises
independent judgement and discretion, taking account of
Group and individual performance as well as the investor
experience, environmental, governance and social matters
and wider workforce pay conditions to ensure that it is fair
and appropriate for the role, experience of the individual,
responsibilities and performance delivered.
Necessary expenses incurred undertaking company
business, are reimbursed and/or met directly so that
Executive Directors are no worse off on a net of tax
basis for fulfilling company duties.

122
The Committee considers that the Executive Director remuneration policy and practices address the matters set out in the
Code as outlined below:
Matters Examples
Clarity The policy is clear, uncomplicated and well understood by the Executive Directors. It has been clearly
communicated to shareholders and proxy agencies. Our Chief Human Resources Officer’s (CHRO)
role has direct responsibility for engaging with our employees and collaborates closely with Mr. Tom
Moran, our designated workforce engagement Director. The Committee monitors the effectiveness
of engagement with the wider workforce through updates provided by the CHRO and the designated
workforce engagement Director. The Board is comfortable that our remuneration policy is clearly
understood by employees.
Simplicity The Committee considers that the current remuneration policy is simple and well understood.
The remuneration policy is aligned with the strategy and business model of the Group. The Committee
has purposefully avoided any complex structures which have the potential to be misunderstood and
deliver unintended outcomes.
Risk The remuneration policy is designed to discourage inappropriate risk taking and to ensure that it is
not rewarded. This is achieved by (i) the balanced use of both short term and long term incentive plans
which employ a blend of financial, non financial and shareholder return targets (ii) the significant role
played by equity in our incentive plans together with shareholding requirements and (iii) malus and
clawback provisions.
Predictability Executive Directors’ remuneration is subject to individual participation caps, with our share based
plans also subject to market standard dilution limits. The scenario charts on page 126 illustrate how the
rewards potentially receivable by our Executive Directors vary based on performance delivered and
share price growth.
Proportionality There is a clear link between individual rewards, delivery of strategy and long term performance. In
addition, the significant role played by STIP and LTIP / ‘at risk’ pay, together with the structure of the
Executive Directors service contracts, ensures that poor performance is not rewarded.
Alignment to Culture Kerry has a relentless focus to delivering for our shareholders and other stakeholders and this is fully
aligned with our remuneration policy in that employee personal success is directly linked to the success
of the Group through the short term and long term incentive plans and targets we operate.
The Committee is satisfied the remuneration policy is fully aligned with the Group’s diverse,
entrepreneurial and results focused culture which is underpinned by our Values of Courage, Ownership,
Inclusiveness, Open-mindedness and Enterprising Spirit.
123

Remuneration Policy Table
The following table details the remuneration policy for the Executive Directors:
Purpose and Link to Strategy Operation Opportunity
Performance
Metrics
Basic Salary
Reflects the value of the individual,
their skills and experience
Competitive salaries are set to
promote the long term success of
the company and attract, retain
and motivate Executive Directors
to deliver strong performance for
the Group in line with the Group’s
strategic objectives
– Remuneration Committee sets the basic salary
and benefits of each Executive Director
– Determined after taking into account a
number of elements including the Executive
Directors’ performance, experience and level
of responsibility
– Paid monthly in Ireland and bi-weekly in the US
– Salary is referenced to job responsibility and
internal/external market data
– Pay conditions across the Group are also
considered when determining any basic
salary adjustments
– Set at a level to
attract, retain and
motivate Executive
Directors
– Reviewed annually
– Full benchmark review
undertaken every
three years
– Not applicable
Benefits
To provide a competitive benefit
package aligned with the role and
responsibilities of Executive Directors
– These benefits primarily relate to the use of a
company car or a car allowance
– Not applicable – Not applicable
Pension
To provide competitive retirement
benefits to attract and retain
Executive Directors
– Pension arrangements may vary based on the
executives’ location
– Irish resident Executive Directors participate
in the general employee defined contribution
pension scheme or receive a contribution to
an after tax savings scheme (where the lifetime
earnings cap has been reached)
– The existing Executive Director in the US
participates in the Group’s defined benefit and
defined contribution pension schemes
– Pension values may
vary based on local
practice
– Not applicable
Short Term Performance Related Incentives (STIP)*
To incentivise the achievement, on
an annual basis, of key performance
metrics and short term goals
beneficial to the Group and the
delivery of the Group’s strategy
A 25% deferral in shares/options
provides a 2 year retention element
and aligns Executive Directors
interests with shareholders’ interests
– Achievement of predetermined performance
targets set by the Remuneration Committee
– Performance targets aligned to published strategic
targets
– 75% of the award payable in cash
– 25% awarded by way of shares/options to be
issued two years after vesting following a deferral
period
– Malus and clawback provisions are in place for
awards under the STIP (see page 125)
– Maximum opportunity
is 125% - 150% of
basic salary
– Target opportunity
is 70% of maximum
opportunity for on-
target performance
– Volume
Growth
– Margin
Expansion
– Cash
Conversion
– Personal and
Strategic
Objectives

124
Pensions
The Group CEO participates in the general employee Irish defined contribution scheme and the CFO participates in an after
tax savings scheme, in lieu of pension benefits. The existing US resident Executive Director participates in a US defined
contribution scheme and a US defined benefit pension scheme.
Service Contracts
The CEO and Executive Directors have service contracts in place which can be terminated by either party giving 12 months’
notice. In addition, all service contracts include pay in lieu of notice, non-compete and non-solicitation provisions of up to
12 months’ post departure, in order protect the Group’s customer base, employees and intellectual property.
No ex-gratia severance payments are provided for in respect of the CEO or Executive Directors.
Remuneration Policy for Recruitment of New Executive Directors
The Remuneration Committee will determine the contractual terms for new Executive Directors, subject to appropriate
professional advice to ensure that these reflect best practice and are subject to the limits specified in the Group’s approved
policy as set out in this report.
Salary levels for new Executive Directors will take into account the experience and calibre of the individual and his/her
remuneration expectations. Where it is appropriate to offer a lower salary initially, a series of increases to the desired salary
positioning may be made over subsequent years, subject to individual performance and development in the role.
Pension and benefits will be provided in line with the approved policy, with relocation, travel or other expenses provided if
necessary.
The structure of the variable pay element will be in accordance with and subject to the limits set out in the Group’s approved
policy detailed above. Different performance measures may be set initially for STIP in the year an Executive Director joins the
Group taking into account the responsibilities of the individual and the point in the financial year that he/she joins the Board.
Subject to the rules of the scheme, an LTIP award may be granted after joining the Group.
Purpose and Link to Strategy Operation Opportunity
Performance
Metrics
Long Term Performance Related Incentives (LTIP)**
Retention of key personnel and
incentivisation of sustained
performance against key Group
strategic metrics over a longer
period of time
Share based to provide alignment
with shareholder interests
A 50% deferral provides a
retention element and aligns
Executive Directors’ interests with
shareholders’ interests
– The awards vest depending on a number of
separate performance metrics being met over a
three year performance period
– Conditional awards over shares or share options
in the Group
– 50% of the earned award delivered at vesting
date
– 50% of the earned award issued following a
two year deferral period (i.e. giving a combined
performance period and deferral period of 5
years)
– Malus and clawback provisions are in place for
awards under LTIP (see page 125)
– Maximum opportunity
is 180% - 200% of
basic salary
– Target opportunity
is 50% of maximum
opportunity for on-
target performance
– Adjusted
Earnings Per
Share
– Total
Shareholder
Return
– Return on
Average
Capital
Employed
Shareholding Requirement
Maintain alignment of the interests of
the shareholders and the Executive
Directors and commitment over the
long term
– Executive Directors are expected to build and to
hold shares in the Company to a minimum level
of 180% - 200% of their basic salary over a five
year period
– Not applicable – 180% - 200%
of basic salary
* The Committee may, at its discretion amend or vary the performance metrics of the STIP related Incentives and the calculation
methodology for those performance metrics when appropriate, in the interest of alignment and fairness.
** In line with plan rules the Committee may, at its discretion and after consulting with the Irish Association of Investment Managers, amend
or vary the performance metrics of the LTIP related Incentives, the calculation methodology for those performance metrics and the
composition of the TSR peer group when appropriate, in the interest of alignment and fairness.
125

If it is necessary to buy-out incentive pay or benefit arrangements (which would be forfeited on leaving the previous
employer) in the case of an external appointment, this would be provided for taking into account the form (cash or
shares), timing and expected value (i.e. likelihood of meeting any existing performance criteria) of the remuneration
being forfeited. The general policy is that payment should be no more than the Committee considers is required to
provide reasonable compensation for remuneration being forfeited and any payment made will be restricted to a
maximum of one year’s target remuneration.
The Group’s policy is that the period of notice for new Executive Directors should not exceed 12 months and should
include pay in lieu of notice, non-compete and non-solicitation provisions to protect the Group.
The Committee will ensure that any arrangements agreed will be in the best interests of the Company and shareholders.
Payments for Loss of Office
In the event of a Director’s departure, the Group’s policy on termination is as follows:
– The Group will pay any amounts it is required to make in accordance with or in settlement of a Director’s statutory
employment rights and in line with their employment agreement;
– The Group will seek to ensure that no more is paid than is warranted in each individual case;
– STIP and LTIP awards will be paid out in line with plan rules on exit (i.e. for good leavers as defined in the LTIP rules),
with awards prorated to normal vesting date, subject to performance and a 2 year holding requirement; and
– Other payments, such as legal or other professional fees, repatriation or relocation costs and/or outplacement fees,
may be paid if it is considered appropriate and at the discretion of the Committee.
A Director’s service contract may be terminated without notice and without any further payment or compensation, except for
sums accrued up to the date of termination, on the occurrence of certain events such as gross misconduct.
Change of Control
Outstanding STIP and LTIP awards/options would normally vest and become exercisable on a change of control, subject
to plan rules, including the satisfaction of any performance conditions and pro-rating. The Committee may exercise its
discretion to vary the level of vesting having regard to the circumstances and reasons for the events giving rise to the change
of control.
Malus / Clawback
The Committee has the discretion to reduce or impose further conditions on the STIP and LTIP awards prior to vesting
(malus). The Committee further has the discretion to recover incentives paid within a period of two years from vesting
(clawback), where the Audit Committee determines that:
– a material misstatement of the Company’s audited financial results or a serious wrongdoing has occurred; and
– as a result of that misstatement or serious wrongdoing, there will need to be a restatement of the accounts and that the
incentive awarded was in excess of the amount that would have been awarded, had there not been such a misstatement.
Any recalculation shall be effected in such manner and subject to such procedures as the Group determines to be measured
and appropriate, including repayment of any excess incentive or set off against any amounts due or potentially due to the
participant under any vested or unvested incentive awards.
The Company retains the right to apply the malus and clawback provisions to former directors STIP and LTIP awards. Other
elements of remuneration are not subject to malus or clawback provisions.
Alignment with Workforce Pay and Policies
The remuneration policy provides an overview of the structure that operates for the Company’s Executive Directors and
senior management. Differences in quantum will depend on size of the role and responsibility, the location of the role and
local market practice.
When setting the remuneration policy for Executive Directors, the Remuneration Committee considers the pay policies and
procedures for the wider workforce. The key difference is that, overall, remuneration policy for the Executive Directors is
more heavily weighted towards variable pay compared to other employees.
Basic salaries are operated under the same policy as detailed in the remuneration policy table with comparator groups used
as a reference point. The Committee considers the basic salary increase for the broader workforce when determining the
annual salary review for the Executive Directors.
Senior management are invited to participate in both the STIP and LTIP to incentivise performance through the achievement
of short term and long term objectives and through the holding of shares in the Group.

126
Alignment with Culture
When setting the metrics for the STIP for Executive
Directors, the Remuneration Committee set financial,
personal and strategic objectives which are fully aligned
with and reinforce the cultural priorities of the Group.
Details of financial, personal and strategic objectives are
outlined on pages 130-131.
Consultation with Employees
While the Committee currently does not consult directly
with employees when setting remuneration for Executive
Directors, it does take into account the remuneration
structures, policies and practices in the Group as a whole,
the feedback from employee engagement activities and
the information provided by our external advisors. In
addition, matters relating to remuneration which come
to the attention of Mr. Tom Moran, in his capacity as the
designated workforce engagement Director, are reported
to the Committee. The Group has a number of different
channels for engagement and the Committee will consider
how it can engage more effectively with the wider workforce
to explain broader pay policies and practices and the
alignment to the Executive Directors’ Remuneration Policy.
Consultation with Shareholders
The Committee considers the guidelines issued by the major
institutional shareholders and the bodies representing
them and the feedback provided by such proxy agencies
and shareholders, when completing its annual and triennial
review of the Group’s Executive Remuneration policies and
practices. The Committee engaged with a number of major
institutional shareholders and proxy agencies during 2019
to consult with them on the proposed changes to the CEO
base salary. The Committee is committed to continued
consultation with shareholders and will engage with them
during 2020 as part of its remuneration policy review.
Non-Executive Directors’
Remuneration Policy
Non-Executive Directors’ fees, which are determined by the
Executive Directors, fairly reflect the responsibilities and
time spent by the non-Executive Directors on the Group’s
affairs. In determining the fees, which are set within the
limits approved by shareholders, consideration is given to
both the complexity of the Group and the level of fees paid
to non-Executive Directors in comparable companies. On a
three year cycle, a detailed review is carried out in relation
to non-Executive Directors’ fees and any recommendations
are presented to the Executive Directors for approval. The
last review was undertaken in 2017. Non-Executive Directors
do not participate in the Group’s incentive plans, pension
arrangements or other elements of remuneration provided
to the Executive Directors. Non-Executive Directors are
reimbursed for travel and accommodation expenses (and
any personal tax that may be due on those expenses).
Non-Executive Directors are encouraged to build up a
shareholding in the Company.
Illustration of Remuneration Policy
The following diagram shows the minimum, target,
maximum and maximum +50% composition balance
between the fixed and variable remuneration components
for each Executive Director effective for 2020. The inner
most circle represents the minimum potential scenario for
remuneration, with the 2nd circle representing target, the
3rd circle representing maximum potential and the outer
circle representing maximum potential plus 50% increase in
the LTIP share value.
Edmond Scanlon
Gerry Behan
Marguerite Lark

Section D: Remuneration Policy Implementation
PART I: REMUNERATION POLICY IMPLEMENTATION 2020
This part of the report sets out how the Remuneration Policy as described on pages 121-126 will operate in 2020.
Basic Salary and Benefits
The salaries of the Executive Directors for the year commencing on 1 February 2020, together with the comparative figures,
are as follows:
The increases in salaries for the Executive Directors are in line with increases for the general workforce in Ireland (2.5%)
and the US (3.0%).
Benefits relate primarily to the use of a company car/car allowance. Any travel arrangements or travel costs required for
business purposes will also be met by the Group, on a net of tax basis.
Pensions
The Group CEO participates in the general employee Irish defined contribution scheme and the CFO participates in an after
tax savings scheme, in lieu of pension benefits. The existing US resident Executive Director participates in a US defined
contribution scheme and a US defined benefit pension scheme.
Short Term Performance Related Incentive Award (STIP)
A review of the STIP metrics was completed in 2019 to ensure that they remain appropriate, linked to strategy and targets
are appropriately calibrated. The Committee concluded that no changes were required to the performance metrics and
weightings in 2020 as they continue to support our business strategy and the ongoing enhancement of shareholder value
through a focus on a return for shareholders, increasing profit and cash generation.
The maximum STIP opportunity remains the same as 2019, 150% of salary for the CEO and 125% of salary for the CFO
and CEO Taste & Nutrition.
2020 STIP – Performance Metrics and Weightings
CEO CFO CEO Taste &
Nutrition

* The above metrics are measured at a Group level for the CEO and CFO and at a Taste & Nutrition level for the CEO of Taste & Nutrition.
The Committee is of the view that a 70% of maximum award payout for on target performance is appropriate taking into
account the level of stretch in the targets set. Due to their commercial sensitivity, the Committee is of the view that it would
be detrimental to the Company to disclose the targets in advance of or during the relevant performance period.
The Committee will disclose the targets and performance against them in next year’s Remuneration Report.

128
Alignment to Strategy
The above are considered key metrics as they align with the Group’s strategic objectives while also ensuring the long term
operational and financial stability of the Group. Volume Growth and Margin Expansion are key performance metrics as they
are the main drivers of Adjusted EPS Growth. Cash Conversion is key to ensuring there are sufficient funds available for
reinvestment or for return to shareholders. Personal and Strategic objectives, that are relevant to each Executive Director’s
specific area of responsibility, are key in ensuring focus on the strategic and functional priorities of the business.
25% of the overall annual incentive payment is delivered through shares/share options, with the remaining 75% being
delivered in cash. A two year deferral period is in place for share/share option awards that vest under the scheme.
Long Term Performance Related Incentive Plan (LTIP)
A review of the LTIP metrics was completed in 2019 to ensure that they remain appropriate, linked to strategy and targets
are appropriately calibrated. The Committee concluded that no changes were required.
The LTIP award levels remain unchanged from 2019, with a maximum opportunity of 180% to 200% of basic salary.
LTIP Award Year 2020
Performance Metrics Threshold Target Maximum
EPS (50% weighting)*
Position of Kerry in
peer group
Median Median
to 75th%
Greater
than 75th%
% of award which vests 30% 30% - 100% 100%
* Adjusted EPS growth is measured on a constant currency basis
How Remuneration Links with Strategy
The table below demonstrates how the performance metrics for STIP and LTIP align to and support our business strategy.
Performance Measure Strategic Priority Incentive Scheme
Volume growth Key driver of revenue growth STIP
Margin expansion Key driver of profit growth STIP
Cash conversion Cash generation for reinvestment or return to shareholders STIP
Personal and strategic
objectives
Reward the development and execution of business strategies STIP
Adjusted EPS growth Delivery of the Group’s long term growth strategy LTIP
TSR Delivery of shareholder value LTIP
ROACE Balance growth and return LTIP
See Financial Key Performance Indicators (KPIs) on pages 32-33 for more information on the link between the performance metrics used for
incentive purposes and the Group’s Strategic Plan.
Non-Executive Director Remuneration Review
In line with the three year review cycle the Chairman and non-Executive Directors fees were reviewed during 2017 and
increases were made effective from 1 January 2018. There are no proposed changes to the Chairman and non-Executive
Director fees for 2020.
During 2019, the Board approved the appointment of Mr. Tom Moran as the designated workforce engagement Director.
The Committee approved an additional annual fee of €12,000 for this position.
Non-Executive Directors may be reimbursed for travel and accommodation expenses (and any personal tax that may be due
on those expenses). Non-Executive Directors do not participate in the Company’s incentive plans. However Non-Executive
Directors are encouraged to build up a personal shareholding.
129

PART II: REMUNERATION POLICY OUTTURN 2019
Disclosures regarding Directors’ remuneration have been drawn up on an individual Director basis in accordance with the
requirements of the 2014 Irish Companies Act, the UK Corporate Governance Code, the Irish Annex, the Euronext Dublin
Stock Exchange and the UK Listing Authority.
The information in the tables 1, 4, 5, 6, 7 and 8 below including relevant footnotes (identified as audited) forms an
integral part of the audited consolidated financial statements as described in the basis of preparation on page 154. All
other information in the remuneration report is additional disclosure and does not form an integral part of the audited
consolidated financial statements.
Executive Directors’ Remuneration
Table 1: Individual Remuneration for the year ended 31 December 2019 (Audited)
Irish Based Directors
Euros
US Based Director
US Dollars

Note 1: The benefits figure for Edmond Scanlon and Marguerite Larkin in 2019 includes an amount for life cover.
Note 2: The pension figure for Edmond Scanlon relates to Irish defined contribution pension benefits. Brian Mehigan and Marguerite Larkin
received a taxable cash payment in lieu of pension benefits and the figures included above reflect this including life cover in 2018. The
pension figure for Gerry Behan includes both defined benefit and defined contribution retirement benefits.
Note 3: This STIP amount represents 75% delivered in cash with 25% delivered by way of shares/share options which are deferred for two years.
Note 4: The share price used to calculate the value of the LTIP is the average share price for the three months up to the end of the year being
reported. A positive share price movement versus that applicable at the date the conditional awards were granted has increased the
valuation of the awards (that will vest in 2020) over the 3 years by €349,532 for Edmond Scanlon and by €510,501 for Gerry Behan.
Note 5: Marguerite Larkin was appointed as CFO and to the Board on 30 September 2018. Her 2018 remuneration reflected in the table above
relates to remuneration for the period 30 September to 31 December 2018.
Note 6: Brian Mehigan retired as a Director on 28 December 2018.
Note 7: The table shows the Executive Director’s pay in the currency of payment to ensure clarity in reflecting the year on year payment
comparisons.
Note 8: The total remuneration for Executive Directors was €8,878m (2018: €7,852m) using a US dollar exchange of 1.12 (2018: 1.18).
Basic Salary Increases
Edmond Scanlon’s base salary as Group CEO was increased by 8% (to reflect his growth in role, individual performance
and the increase in the Group’s scale and complexity) together with the standard inflation increase of 2.5% effective from
1 February 2019. The basic salaries of Marguerite Larkin and Gerry Behan were increased by 2.5% and 3% respectively
effective from 1 February 2019 in line with increases for the general workforce in Ireland and the US respectively.

Link to strategy Volume Growth is a key
performance metric as it is one
of the main drivers of Adjusted
EPS Growth
Margin Expansion is a key
performance metrics as it
is another main driver of
Adjusted EPS Growth
Cash Conversion is key
to ensuring there are
sufficient funds available
for reinvestment or for
return to shareholders
* The above metrics are measured at Group level for the CEO and CFO and at Taste & Nutrition level for the CEO of Taste & Nutrition.
When setting the targets above the Committee considered them to be appropriate as they are aligned with the Group’s
strategic plan, are reflective of overall market conditions, and take account of planned investments (both capital and
operational) that the Group is making to enable the achievement of its strategic priorities for growth as well as necessary
working capital builds to mitigate the Brexit and Kerryconnect risks. The Committee also concluded that there was no
requirement to exercise discretion as the 2019 STIP outcome reflected the underlying performance of the business.
Personal and Strategic Objectives – 10% weighting
The table below sets out the performance outcome for the personal and strategic element of the STIP.
Metric 4. Personal and Strategic (All – 10% weighting)
CEO & CFO T&N CEO
Targets
Threshold 0 0
Target 7 7
Max 10 10
Actual performance 8 8
Bonus outcome 8% 8%
Link to strategy Specific to the Executive Directors responsibility linked to strategic plan implementation and
talent management.
Details of Personal and Strategic Objectives
The Executive Directors are also measured against Personal and Strategic objectives, which this year focus on Purpose
and Values, Sustainability, Portfolio Optimisation, Operating Model and Talent. Performance against these objectives is
determined by the Committee by reference to key targets agreed with the executives at the start of the year.
131

Directors Achievements Bonus Outcome
CEO – Purpose/Values/Sustainability: Championed the Group’s new Purpose statement and
refreshed Values as they were communicated and embedded across the organisation,
further strengthening alignment with the Group’s culture and long term strategy. Led the
development of the Group’s refreshed sustainability vision and programme.
– Portfolio Optimisation: Identified and executed M&A transactions to optimise the Group’s
business and technology portfolios.
– Operating Model: Led and embedded significant enhancements to the Group’s operating
model, driving commercial excellence, global consistency and agility.
– Talent and Succession: Led a structured review of talent pipeline strength and delivered a
cohesive plan to strengthen senior management succession.
8%
CFO – Purpose/Values/Sustainability: Championed the Group’s new Purpose statement and
refreshed Values as they were embedded across the organisation; ensured full alignment
of performance measures and KPIs. Co-led the development of the Group’s refreshed
sustainability vision and strategy with particular focus on performance measures and KPIs.
– Portfolio Optimisation: Identified and executed M&A transactions to optimise the Group’s
business and technology portfolios.
– Operating Model: Co-led enhancements to the Group’s operating model ensuring full
alignment of the finance operating model.
– Talent and Succession: Delivered a cohesive plan to strengthen finance leadership,
capability and executive succession.
8%
CEO T&N – Purpose/Values/Sustainability: Championed the Group’s new Purpose statement and
refreshed Values as they were communicated and embedded across the Taste & Nutrition
organisation. Co-led the development of the Group’s refreshed sustainability vision and
programme, ensuring alignment and capability of the Taste & Nutrition organisation for
execution of the strategy.
– Portfolio Optimisation: Identified and executed M&A transactions, together with other
initiatives within the existing Taste & Nutrition organisation, to optimise the growth and
return from the businesses and technology portfolios in the division.
– Operating Model: Further enhanced the Taste & Nutrition operating model in line with
Group strategy, driving commercial excellence, global consistency and agility.
– Talent and Succession: Delivered a cohesive plan to strengthen leadership capability and
executive succession across Taste & Nutrition in support of the division’s growth ambitions.
8%
The Committee reviewed progress against these objectives and concluded that good progress was made by the Executive
Directors against the objectives outlined above, which resulted in an award that was slightly higher than target.
The targets for the Executive Directors, which were set by the Remuneration Committee, were challenging and stretching in
the current environment and as a result an average weighted payout of 72.7% of max opportunity was achieved.
Long Term Incentive Plan (LTIP)
2013 LTIP
The terms and conditions of the plan were approved by shareholders at the 2013 AGM. The Remuneration Committee
approves the terms, conditions and allocation of conditional awards under the Group’s LTIP to Executive Directors and senior
management. Under this plan, Executive Directors and senior management are invited to participate in conditional awards
over shares or share options in the Company.
Subject to performance metrics being met over a three year performance period, the LTIP award will vest on the third
anniversary of the date of grant. 50% of the award is delivered at the vesting date with the remaining 50% of the award being
delivered following a two year deferral period. This provides for a combined performance period and deferral period of five
years for half of the award that vests.
The first conditional awards under this scheme were made to Executive Directors in 2013. The maximum award that can be
made to an individual Executive Director under the LTIP over a 12 month period is equivalent to 180% - 200% of basic salary
for that period.
An award may lapse if a participant ceases to be employed within the Group before the vesting date. The market price of the
shares on the date of each award outlined above is disclosed in note 28 to the financial statements.
The proportion of each conditional award which vests will depend on the adjusted EPS growth, TSR and ROACE performance
of the Group during the relevant three year performance period.

132
2017 LTIP Awards
Set out below is the performance against targets for the 2017 LTIP award where the three year performance period ended
on 31 December 2019 and the award vests in 2020.
EPS Performance Test
Up to 50% of the award vests according to the Group’s average adjusted EPS growth over the performance period. This
measurement is determined by reference to the growth in the Group’s adjusted EPS calculated on a constant currency
basis in each of the three financial years in the performance period in accordance with the vesting schedule outlined in
the following table:
Adjusted EPS Growth Per Annum Percentage of the Award Which Vests
Threshold 6% 25%
Target 10% 50%
Maximum 12% 100%
Below 6% none of the award vests. Between 6% and 10%, 25% - 50% vesting occurs on a straight line basis. Between 10%
and 12%, 50% - 100% vesting occurs on a straight line basis.
The outcome of the EPS performance test, calculated on a constant currency basis, is an annual average adjusted EPS
growth of 8.8% which results in an award outcome of 21.3% out of a possible maximum of 50%.
TSR Performance Test
30% of the award vests according to the Group’s TSR performance over the period measured against the TSR performance
of a peer group of listed companies over the same three year performance period. The peer group consists of Kerry and the
following companies:
Chr. Hansen Givaudan Kellogg’s Sensient Technologies
Barry Callebaut Glanbia McCormick & Co. Symrise
Corbion Greencore Nestlé Tate & Lyle
Aryzta Danone Novozymes Unilever
General Mills IFF Premier Foods
When assessing whether the performance hurdle has been met, this measurement is determined by reference to the
ranking of Kerry’s TSR over the three year performance period, in comparison with the TSR performance of the companies in
the peer group. The awards vest in line with the following table:
Position of Kerry in the Peer Group Percentage of the Award Which Vests
Below median 0%
Median 30%
Between median and 75th percentile Straight line between 30% and 100%
Greater than 75th percentile 100%
The performance graph on page 133 shows Kerry’s TSR compared to the peer companies over the three year performance
period from 1 January 2017 to 31 December 2019 for the LTIP awards which issued in 2017. These awards have a vesting
date on or before 30 April 2020.
133



Top Quartile 2nd Quartile 3rd Quartile 4th Quartile
The outcome of the measurement of the TSR condition in relation to the 2017 awards is in the top quartile, resulting in an
award outcome of 30% out of a possible maximum of 30%.
ROACE Performance Test
20% of the award vests according to the Group’s ROACE over the performance period. ROACE represents a good perspective
on the Group’s internal rate of return and financial added value for shareholders. ROACE supports the strategic focus on
growth and margins through ensuring cash is reinvested to generate appropriate returns.
This measurement is determined by reference to the ROACE in each of the three financial years included in the
performance period:
Return on Average Capital Employed Percentage of the Award Which Vests
Threshold 10% 25%
Target 12% 50%
Maximum 14% 100%
Below 10% none of the award vests. Between 10% and 12%, 25% - 50% vesting occurs on a straight line basis. Between 12%
and 14%, 50% - 100% vesting occurs on a straight line basis.
The outcome of the measurement of the ROACE condition in relation to the 2017 awards is a ROACE of 12.3% which resulted
in a reward outcome of 11.5% out of a maximum of 20%.
Table 3: Overall Outcome of the 2017 LTIP Award Vesting in 2020

2013 LTIP Plan Top Quartile* 30% 8.8% growth* 21.3% 12.3% 11.5% 62.8%
* See TSR, EPS and ROACE tables above for details of performance metrics.
The Committee concluded that there was no requirement to exercise discretion as the 2017-19 LTIP outcome reflected the
underlying business performance during the three year performance period.

134
Summary of outstanding LTIP awards
The following table shows the Executive Directors’ and Company Secretary’s interests under the LTIP. Conditional awards
at 1 January 2019 relate to awards made in 2016, 2017 and 2018 which have a three year performance period. The 2016
awards vested in 2019. The 2017 and 2018 awards will potentially vest in 2020 and 2021 respectively. The market price of
the shares on the date of each award is disclosed in note 28 to the financial statements.
Executive Directors’ and Company Secretary’s Interests in Long Term Incentive Plan
Table 4: Individual Interest in LTIP (Audited)
LTIP

Edmond Scanlon 2013 59,089 _ (3,801) (2,166) 24,324 77,446 €95.40
Marguerite Larkin 2013 7,031 _ _ _ 13,538 20,569 €95.40
Gerry Behan 2013 59,155 (12,168) _ (6,934) 17,352 57,405 €95.40
Company Secretary
Ronan Deasy 2013 13,246 _ (1,996) (1,137) 2,901 13,014 €95.40
Conditional LTIP awards made in 2019 have a three year performance period and will potentially vest in 2022. 50% of the
shares/share options which potentially vest under the LTIP, are issued immediately upon vesting. The remaining 50% of the
award is issued to participants following a two year deferral period.
The following table shows the share options which are held by the Executive Directors and the Company Secretary under the
STIP and LTIP:
Table 5: Share Options Held Under the STIP and LTIP (Audited)
Share Options
Outstanding at
1 January 2019
Share Options
Exercised
During the Year
Share Options
Vested During
the Year1
Share Options
Outstanding at 31
December 2019
Exercise Price
Per Share
Directors
Edmond Scanlon 9,537 _ 6,286 15,823 €0.125
Marguerite Larkin1
_ _ 696 696 €0.125
Company Secretary
Ronan Deasy 3,390 (2,310) 2,333 3,413 €0.125
Note 1: Share Options which vested in March 2019 related to 2016 LTIP awards and 25% of the 2018 STIP (paid in March 2019). 50% of share
options vested under the LTIP are subject to a two year deferral period and 25% of the STIP payments which are delivered in share
options are subject to a two year deferral period.
Once vested, share options under the LTIP can be exercised for up to seven years before they lapse. For share options
subject to the two year deferral period, they can be exercised for up to five years following the end of the two year deferral
period, before they lapse i.e. seven years following the vest date.
135

Executive Directors’ Pensions
The pension benefits under defined benefit pension plans for Gerry Behan during the year are outlined in the following table.
Table 6: Defined Benefit – Pensions Individual Summary (Audited)
Accrued Benefits on Leaving Service at End of Year
Increase During the Year
(Excluding Inflation)
$’000
Accumulated Total
at End of Year
$’000
Transfer Value of Increase in
Accumulated Accrued Benefits
$’000
Gerry Behan

Note: The table shows the Executive Director’s pension in the currency of payment to ensure clarity in reflecting the year on year payment
comparisons.
Note: Contributions were made to an Irish defined contribution plan in respect of Edmond Scanlon. Marguerite Larkin receives a taxable
cash payment in lieu of pension benefits. These contributions are reflected in the single figure table (table 1) on page 129.
Non-Executive Directors’ Remuneration Paid in 2019
Table 7: Remuneration Paid to Non-Executive Directors in 2019 (Audited)
Fees 2019
€
Fees 2018
€
Hugh Brady 98,000 98,000
Gerard Culligan 78,000 78,000
Karin Dorrepaal 98,000 98,000
Michael Dowling* - 148,958
Joan Garahy 128,000 123,000
James C. Kenny 117,000 117,000
Tom Moran** 105,000 98,000
Con Murphy 78,000 78,000
Christopher Rogers*** 103,000 68,666
Philip Toomey 357,500 277,667
1,162,500 1,185,291
* Retired on 3 May 2018.
** Appointed as designated workforce engagement Director 18 June 2019. Details of the remuneration in respect of these additional
responsibilities are outlined on page 128.
*** Appointed to the Board on 8 May 2018.
During 2019, the Board approved the appointment of Mr. Tom Moran as the designated workforce engagement Director.
The Committee approved an additional annual fee of €12,000 for this position.
Non-Executive Directors’ remuneration consists of fees only. Non-Executive Directors are reimbursed for travel and
accommodation expenses and any personal tax that may be due on those expenses. The gross amount of these expenses
that were deemed to be taxable is €20,623.

136
Payments to Former Directors
Table 8: Payments to Former Directors (Audited)
Former Director 2019 2018
€’000 €’000
Stan McCarthy – 1,259
Flor Healy – –
Brian Mehigan – –
– 1,259
The above former Executive Directors received no payments during 2019 in respect of their duties as Executive Directors.
Vested 2014 LTIP awards and vested 2016 STIP awards, which were subject to a two year deferral period and delivered in
2019, were disclosed in previous annual reports when earned and therefore are not disclosed in the table above.
Payment for Loss of Office
There were no payments for loss of office in 2019 (2018: €nil).
Directors’ and Company Secretary’s Interests
There have been no contracts or arrangements with the Company or any subsidiary during the year, in which a Director
of the Company was materially interested and which were significant in relation to the Group’s business. The interests of
the Directors and the Company Secretary of the Company and their spouses and minor children in the share capital of the
Company, all of which were beneficial unless otherwise indicated, are shown below:
Table 9: Directors and Company Secretary Shareholdings
- Deferred1
– 2,415 2,415 – 1,862 1,862
Note 1: The deferred shares and share options above, relate to 25% of the Executive Directors 2017 and 2018 STIP awards and 50% of the
2015 and 2016 LTIP award (vested in March 2018 and 2019 respectively). These awards are subject to a two year deferral period and
will be delivered in shares/share options in March 2020 and March 2021 respectively.
137

Shareholding Guidelines
The table below sets out the Executive Directors’ shareholding at 31 December 2019 shown as a multiple of basic salary.
Refer to the Remuneration Policy Table on page 124 in Section C for details of the Executive Director shareholding
requirements.
Table 10: Individual Shareholding as a Multiple of Basic Salary
Executive Director As a Multiple of Basic Salary1
Edmond Scanlon2
2.4x
Marguerite Larkin3
0.3x
Gerry Behan 8.7x
Note 1: The share price used to calculate the above is the share price as at 31 December 2019 and shareholding is based on all shares held
and vested option awards (including deferred) reflected in table 9 on page 136.
Note 2: Edmond Scanlon has met his minimum shareholding requirement being 2x basic salary.
Note 3: Marguerite Larkin, in line with policy, has five years from the date on her appointment in September 2018 to increase her
shareholding to the minimum 1.8x basic salary.
TSR Performance and Chief Executive Officer Remuneration
The graph below illustrates the TSR performance of the Group over the past ten years showing the increase in value of
€100 invested in Group’s shares from 31 December 2009 to 31 December 2019. Also outlined in the table on page 138,
the remuneration of the Chief Executive Officer is calculated in line with the methodology captured under legislation
which was enacted for UK incorporated companies.
10 Year Total Shareholder Return

138
Table 11: Remuneration Paid to the CEO 2010 – 2019
Table 12: CEO Pay v Normal Employee Pay Comparison
In line with the European Shareholders Rights Directive (which has not yet been transposed into Irish law), outlined below is
the annual change over the last five financial years for:
– the remuneration of the CEO;
– the average remuneration of employees of the Company (calculated on a full time equivalent basis) other than directors; and
– the performance of the company.
2015 2016 2017* 2018** 2019
Chief Executive Officer
Basic pay YoY % change 2% 9% 2.5% 0% 10.5%
All Group Employees
Average basic pay YoY % change 3.6% 3.5% 3.1% 2.8% 2.9%
* Based on Stan McCarthy’s basic pay and annual incentive
** Based on Edmond Scanlon’s basic pay and annual incentive
Performance of the Company: 5 Year Total Shareholder Return
Total
remuneration
Table 13: CEO Ratio
The UK Companies (Miscellaneous Reporting) Regulations 2018 require certain UK incorporated companies to publish
the ratio of CEO remuneration to UK staff pay. Although not a requirement for Irish incorporated companies, the ratio of
the CEO’s total remuneration to that of the median Irish employee is disclosed in the table below in line with the Group’s
commitment to ensure that its remuneration policies, practices and reporting reflect best corporate governance practices.
€
Chief Executive Officer’s: Total remuneration 3,991,000
Median Irish employee: Total remuneration 40,592
Median Irish employee: Salary only 37,823
Median pay ratio – Total remuneration 98x
Median pay ratio – excluding all variable short and long term incentives 34x
The Committee believes that our senior executives should have a significant proportion of their pay directly linked to
Group performance in order to drive alignment with shareholders. A significant portion of the Chief Executive Officer’s
remuneration is therefore delivered through the Group’s short term and long term performance related incentives,
where awards are linked to Group performance and share price movements over time. The median Irish employee
does not participate in the Group’s short term or long term performance related incentive plans, with the result that
total remuneration ratios may fluctuate from year to year. The Committee has therefore also provided the median pay
ratio excluding short term and long term incentives. In providing the CEO ratio we have used Method C as set out in the
regulations but have applied the principles of Method A.
Relative Importance of Spend on Pay
The total amount spent on Executive Director remuneration (including Long Term Incentive Plan) and overall employee
pay is outlined below in relation to retained profit, dividends paid and taxation paid.
The Group offers Executive Directors and senior management the opportunity to participate in share based schemes as part
of the Group’s remuneration policy. In line with best practice guidelines, the Company ensures that the level of share awards
granted under these schemes, over a rolling ten year period, does not exceed 10% of the Group’s share capital. The dilution
resulting from vested share awards/share options for the ten year period to 31 December 2019 is 0.9%. This level of dilution
is well below the maximum dilution level recommended for executive share based incentive plans.
The potential future dilution level from unvested share awards/share options as a result of these schemes is a further 0.7%.
Statement on Shareholder Voting
Below is an overview of the voting which took place at the most recent AGMs to approve the Directors’ Remuneration Policy
and the Directors Remuneration Report.
Table 14: Votes on Remuneration
Total Votes Cast Votes For Votes Against Votes Withheld/Abstained
Remuneration Policy (2018 AGM)
100,762,070 98,418,376 2,343,694 261,701
97.7% 2.3%
Directors Remuneration Report (2019 AGM)
104,363,190 98,494,564 5,868,626 2,162,326
94.4% 5.6%
The Committee appreciates the level of support shown by the shareholders for the Remuneration Report and is committed
to continued consultation with shareholders with regard to the remuneration policy.

140
INDEPENDENT AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF  PLC
Report on the audit of the financial
statements
Opinion
In our opinion,  plc’s consolidated financial
statements and Company financial statements (the ‘financial
statements’):
– give a true and fair view of the Group’s and the Company’s
assets, liabilities and financial position as at 31 December
2019 and of the Group’s profit and the Group’s and the
Company’s cash flows for the year then ended;
– have been properly prepared in accordance with
International Financial Reporting Standards (‘IFRSs’) as
adopted by the European Union and, as regards the
Company’s financial statements, as applied in accordance
with the provisions of the Companies Act 2014; and
– have been properly prepared in accordance with
the requirements of the Companies Act 2014 and,
as regards the consolidated financial statements, Article 4
of the IAS Regulation.
We have audited the financial statements, included within the
Annual Report, which comprise:
– the Consolidated and Company balance sheets as at 31
December 2019;
– the Consolidated income statement and Consolidated
statement of comprehensive income for the year then
ended;
– the Consolidated and Company statements of cash flow for
the year then ended;
– the Consolidated and Company statements of changes in
equity for the year then ended; and
– the notes to the financial statements, which include a
description of the significant accounting policies.
Certain required disclosures have been presented elsewhere
in the Annual Report, rather than in the notes to the financial
statements and are described as being an integral part of
the financial statements as set out in the basis of preparation
on page 154. These are cross-referenced from the financial
statements and are identified as audited.
Our opinion is consistent with our reporting to the
Audit Committee.
Separate opinion in relation to IFRSs
as issued by the IASB
As explained in note 1 to the financial statements, the Group,
in addition to applying IFRSs as adopted by the European
Union, has also applied IFRSs as issued by the International
Accounting Standards Board (IASB).
In our opinion, the consolidated financial statements comply
with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (‘ISAs (Ireland)’) and applicable
law. Our responsibilities under ISAs (Ireland) are further
described in the Auditors’ responsibilities for the audit of the
financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in Ireland, which includes IAASA’s Ethical
Standard as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the best of our knowledge and belief, we declare that non-
audit services prohibited by IAASA’s Ethical Standard were not
provided to the Group or the Company.
Other than those disclosed in note 3 to the financial
statements, we have provided no non-audit services to the
Group or the Company in the period from 1 January 2019 to
31 December 2019.
141

Our Audit Approach
Overview
Materiality
– €38 million (2018: €33.5 million) - Consolidated financial statements.
– Based on approximately 5% of profit before taxation and non-trading items.
– €8 million (2018: €7.3 million) - Company financial statements.
– Based on approximately 1% of net assets of the Company.
Audit scope
– 
We conducted audit work in 40 reporting components. We paid particular attention to
these components due to their size or characteristics and to ensure appropriate audit
coverage. An audit on the full financial information of 36 components was performed
and specified procedures on selected account balances of a further 4 components were
performed. We also performed audit work at each of the principal shared service centres.
– 
Taken together, the reporting components where an audit on the full financial information
was performed accounted for in excess of 90% of Group revenues and Group profit before
taxation and non-trading items.
Key audit matters
– Goodwill and indefinite life intangible assets impairment assessment.
– Business combinations.
– Income taxes.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there
was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit
of the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters,
and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Goodwill and indefinite life intangible
assets impairment assessment
Refer to note 1 ‘Statement of accounting
policies’ and note 12 ‘Intangible assets’.
The Group has goodwill and indefinite
life intangible assets of €3,911 million
at 31 December 2019 representing
approximately 41% of the Group’s total
assets at year end.
Goodwill and indefinite life intangible
assets are subject to impairment testing
on an annual basis or more frequently if
there are indicators of impairment.
We focused on this area given the scale of
the assets and because the determination
of whether an impairment charge for
goodwill or indefinite life intangible
assets was necessary involves significant
judgement in estimating the future results
of the business and determining the
appropriate discount rate to use.
Our audit team assisted by our in-house valuation experts interrogated the Group’s
impairment models and evaluated the methodology followed and key assumptions used.
We assessed management’s future cash flow forecasts, and the process by which
they were drawn up, and concluded they were consistent with the latest management
approved five year forecast. In evaluating these forecasts we considered the Group’s
historic performance and its past record of achieving strategic objectives. We also tested
the mathematical accuracy of the cash flow model.
We satisfied ourselves as to the appropriateness of the Group’s forecast growth rate
assumptions used to calculate terminal values at year five, by comparing them to
independent sources (for example, OECD statistics) of projected growth rates for
each region.
We challenged management’s calculation of the discount rates used by recalculating an
acceptable range of discount rates (adjusted to reflect risks associated with each Group
of CGUs) using observable inputs from independent external sources and concluded the
discount rates used by management fell within that range.
We performed our own sensitivity analysis on the impact of changes in key assumptions
on the impairment assessment, for example the cash flows, discount rates and the rates
of growth assumed by management.
We assessed the appropriateness of the related disclosures within the financial statements.

142
Key audit matter How our audit addressed the key audit matter
Business combinations
Refer to note 1 ‘Statement of accounting policies’ and note 30
‘Business combinations’.
The Group completed 11 acquisitions during 2019, the most
significant of which were Southeastern Mills and Ariake U.S.A.,
Inc. which are both in the Americas region of the Taste and
Nutrition segment.
The Group was required to determine the fair values of all
acquired assets and liabilities including the identification and
valuation of intangible assets. The most significant acquired asset
in all cases was brand related intangibles.
In accordance with IFRS3, ‘Business Combinations’, with the
exception of the Southeastern Mills acquisition which has been
finalised, the valuations referred to above have been prepared on
a provisional basis. The Group will finalise its valuations within the
12-month measurement period.
We focused on this area as significant judgement is exercised in
selecting an appropriate valuation model.
Judgement is also exercised in determining assumptions such as
revenue growth rates and the excess earnings rate which underlie
the cash flows in the models.
Other important estimates include the discount rate and
contributory asset charge.
We obtained and evaluated the reports prepared by
management’s valuation specialists to value brand related
intangibles.
We were assisted by our in-house valuation experts in assessing
the reasonableness of the valuation methodologies and
assumptions used by the Group.
We considered the assumptions used to derive the cash flows
underlying the valuation model, (including the growth rate and
the excess earnings rate) by agreeing them to the board approved
business case and external data where available.
We also considered the discount rate and contributory asset
charge in light of the acquiree’s industry and geography.
We were satisfied that the methodology and assumptions used
were reasonable.
Income taxes
Refer to note 1 ‘Statement of accounting policies’, note 7 ‘Income
taxes’ and note 17 ‘Deferred tax assets and liabilities’.
The global nature of the Group means that it operates across
a large number of jurisdictions and is subject to periodic
challenges by local tax authorities on a range of tax matters
during the normal course of business. Tax legislation is open to
different interpretations and the tax treatments of many items
is uncertain. Tax audits can require several years to conclude,
and transfer pricing judgements may impact the Group’s tax
liabilities. Management judgement and estimation is required in
the measurement of uncertain tax positions in the context of the
recognition of current and deferred tax assets/liabilities.
This area required our focus due to its inherent complexity and
the estimation and judgement involved in the measurement of
uncertain tax positions in the context of the recognition of current
and deferred tax assets/liabilities.
We obtained an understanding of the Group tax strategy
through discussions with management and the Group’s in-house
tax specialists.
The team, assisted by PwC International and Irish taxation
specialists, challenged judgements used and estimates made
by management to measure uncertain tax positions in the
context of the recognition of current and deferred tax assets/
liabilities. This included obtaining explanations regarding the
tax treatment applied to material transactions and evidence to
corroborate management’s explanations. Such evidence included
management’s communications with local tax authorities and
copies of the tax advice obtained by management from its
external tax advisors.
Based on the evidence obtained, while noting the inherent
uncertainty with such tax matters, we determined the
measurement of uncertain tax positions in the context of the
recognition of current and deferred tax assets/liabilities as at
31 December 2019 to be within an acceptable range of
reasonable estimates.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group, the accounting processes and controls, including those
performed at the Group’s shared service centres and the industry in which the Group operates.
The Group is structured along two operating segments: Taste & Nutrition and Consumer Foods across 32 countries. The
majority of the Group’s components are supported by one of five principal shared service centres in Ireland, Malaysia, the
United Kingdom and the United States.
We determined that an audit of the full financial information should be performed at 36 components due to their size or risk
characteristics and to ensure appropriate coverage. These 36 components span 13 countries and included components that
control central Group functions such as Treasury and Employee Benefits. Taken collectively these components represent the
principal business of the Group and account for in excess of 90% of Group revenue and Group profit before taxation and
non-trading items. Specific audit procedures on certain balances and transactions were performed at 4 of the remaining
reporting components primarily to ensure appropriate audit coverage.
143

The Group team performed the audit of the central
function components and component auditors within
PwC ROI and from other PwC network firms, operating
under our instruction, performed the audit on all other
components and the required supporting audit work at
each of the five principal shared service centres.
The Group team were responsible for the scope and
direction of the audit. Where the work was performed
by component auditors, we determined the level of
involvement the Group team needed to have to be able
to conclude whether sufficient appropriate audit evidence
had been obtained as a basis for our opinion on the
consolidated financial statements as a whole.
In the current year, senior representatives from the Group
team continued a programme of planned site visits that
is designed so that senior team members will visit the
full scope audit locations regularly on a rotational basis.
During 2019, the Group team visited component locations
in Ireland, the USA and Asia Pacific.
These visits involved meeting with our component teams
to confirm their audit approach. The visits also involved
discussing and understanding the significant audit risk
areas, holding meetings with local management, and
obtaining updates on local laws and regulations and other
relevant matters. In addition to the visits noted above,
the Group team interacted regularly with the component
teams during all stages of the audit. Post audit conference
calls were held with all in scope audit teams to discuss
their final key audit findings which were reviewed in detail
by members of the Group team. In addition to this, the
Group engagement team reviewed certain audit working
papers of significant components.
This, together with audit procedures performed by the
Group team over IT systems, treasury, post-retirement
benefits, the consolidation process and key audit matters
including uncertain tax positions, impairment testing
of goodwill and indefinite lived intangible assets, and
business combinations, gave us the evidence we needed
for our opinion on the consolidated financial statements as
a whole.
Materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements
as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole as
follows:
Consolidated
financial
statements
Company
financial
statements
Overall
materiality
€38 million
(2018: €33.5 million).
€8 million
(2018: €7.3 million).
How we
determined it
Approximately 5% of
profit before taxation
and non-trading items.
Approximately 1%
of net assets of the
Company.
Rationale for
benchmark
applied
We applied this
benchmark because
in our view this is a
metric against which the
recurring performance
of the Group is
commonly measured
by its stakeholders
and it results in using
a materiality level that
excludes the impact of
volatility in earnings.
The entity is a
holding Company
whose main activity
is the management
of investments in
subsidiaries.
We agreed with the Audit Committee that we would report
to them misstatements identified during our audit above
€1.8 million (Group audit) (2018: €1.7 million) and €400,000
(Company audit) (2018: €360,000) as well as misstatements
below that amount that, in our view, warranted reporting
for qualitative reasons.
Going concern
In accordance with ISAs (Ireland) we report as follows:
Reporting obligation Outcome
We are required to report if we
have anything material to add
or draw attention to in respect
of the directors’ statement in
the financial statements about
whether the directors considered
it appropriate to adopt the going
concern basis of accounting in
preparing the financial statements
and the directors’ identification of
any material uncertainties to the
Group’s or the Company’s ability to
continue as a going concern over
a period of at least twelve months
from the date of approval of the
financial statements.
We have nothing material
to add or to draw
attention to. However,
because not all future
events or conditions
can be predicted, this
statement is not a
guarantee as to the
Group’s or the Company’s
ability to continue as a
going concern.
We are required to report if the
directors’ statement relating to
going concern in accordance with
Rule 6.1.82 (3) (a) of the Listing
Rules for Euronext Dublin is
materially inconsistent with our
knowledge obtained in the audit.
We have nothing to report.

144
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the
other information. Our opinion on the financial statements
does not cover the other information and, accordingly,
we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to
perform procedures to conclude whether there is a material
misstatement of the financial statements or a material
misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
With respect to the Directors’ Report, we also considered
whether the disclosures required by the Companies Act 2014
(excluding the information included in the ‘Non Financial
Statement’ as defined by that Act on which we are not
required to report) have been included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, ISAs (Ireland), the
Companies Act 2014 (CA14) and the Listing Rules applicable to
the Company (Listing Rules) require us to also report certain
opinions and matters as described below (required by ISAs
(Ireland) unless otherwise stated).
Directors’ Report
– 
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Directors’ Report
(excluding the information included in the ‘Non Financial
Statement’ on which we are not required to report) for the
year ended 31 December 2019 is consistent with the financial
statements and has been prepared in accordance with the
applicable legal requirements. (CA14)
– 
Based on our knowledge and understanding of the Group and
Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Directors’ Report (excluding the information included in the
‘Non Financial Statement’ on which we are not required to
report). (CA14)
Corporate governance statement
– 
In our opinion, based on the work undertaken in the course of
the audit of the financial statements,
– 
the description of the main features of the internal control and
risk management systems in relation to the financial reporting
process included in the Corporate Governance Report; and
– 
the information required by Section 1373(2)(d) of the
Companies Act 2014 included in the Report of the Directors;
is consistent with the financial statements and has been prepared in
accordance with section 1373(2) of the Companies Act 2014. (CA14)
– 
Based on our knowledge and understanding of the Company
and its environment obtained in the course of the audit of
the financial statements, we have not identified material
misstatements in the description of the main features of the
internal control and risk management systems in relation to
the financial reporting process and the information required
by section 1373(2)(d) of the Companies Act 2014 included in
the Corporate Governance Report and the Report of the
Directors. (CA14)
– 
In our opinion, based on the work undertaken during the course
of the audit of the financial statements, the information required
by section 1373(2)(a),(b),(e) and (f) of the Companies Act 2014
and regulation 6 of the European Union (Disclosure of Non-
Financial and Diversity Information by certain large undertakings
and Groups) Regulations 2017 is contained in the Directors’
Report. (CA14)
The directors’ assessment of the prospects of the Group and of
the principal risks that would threaten the solvency or liquidity
of the Group
We have nothing material to add or to draw attention to regarding:
– 
The directors’ confirmation on page 106 of the Annual Report
that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its
business model, future performance, solvency or liquidity.
– 
The disclosures in the Annual Report that describe those risks
and explain how they are being managed or mitigated.
– 
The directors’ explanation on page 88 of the Annual Report as to
how they have assessed the prospects of the Group, over what
period they have done so and why they consider that period to
be appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We have nothing to report having performed a review of the
directors’ statement that they have carried out a robust assessment
of the principal risks facing the Group and the directors’ statement
in relation to the longer-term viability of the Group. Our review
was substantially less in scope than an audit and only consisted of
making inquiries and considering the directors’ process supporting
their statements; checking that the statements are in alignment
with the relevant provisions of the UK Corporate Governance Code
(the ‘Code’); and considering whether the statements are consistent
with the knowledge and understanding of the Group and the
Company and their environment obtained in the course of the
audit. (Listing Rules)
145

Other Code provisions
We have nothing to report in respect of our responsibility to
report when:
– 
The statement given by the directors on page 95 that they
consider the Annual Report taken as a whole to be fair,
balanced and understandable and provides the information
necessary for the members to assess the Group’s and
Company’s position and performance, business model and
strategy is materially inconsistent with our knowledge of the
Group and Company obtained in the course of performing
our audit.
– 
The section of the Annual Report on page 109 describing the
work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
– 
The directors’ statement relating to the Company’s
compliance with the Code and the Irish Corporate
Governance Annex does not properly disclose a departure
from a relevant provision of the Code or the Annex specified,
under the Listing Rules, for review by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Directors’ Responsibility
Statement set out on page 95, the directors are
responsible for the preparation of the financial statements
in accordance with the applicable framework and for being
satisfied that they give a true and fair view.
The directors are also responsible for such internal control
as they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the Group’s and the Company’s
ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free
from material misstatement, whether due to fraud or
error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in
accordance with ISAs (Ireland) will always detect a material
misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the IAASA website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-
a98202dc9c3a/Description_of_auditors_responsibilities_
for_audit.pdf
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared
for and only for the Company’s members as a body in
accordance with section 391 of the Companies Act 2014
and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is
shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2014 opinions on
other matters
– We have obtained all the information and explanations
which we consider necessary for the purposes of our
audit.
– In our opinion the accounting records of the Company
were sufficient to permit the Company financial
statements to be readily and properly audited.
– The Company balance sheet is in agreement with the
accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report
to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by sections
305 to 312 of that Act have not been made. We have no
exceptions to report arising from this responsibility.
We are required by the Listing Rules to review the
six specified elements of disclosures in the report to
shareholders by the Board on directors’ remuneration.
We have no exceptions to report arising from this
responsibility.
Prior financial year Non Financial Statement
We are required to report if the Company has not provided
the information required by Regulation 5(2) to 5(7) of the
European Union (Disclosure of Non-Financial and Diversity
Information by certain large undertakings and Groups)
Regulations 2017 in respect of the prior financial year. We
have nothing to report arising from this responsibility.
Appointment
We were appointed by the members on 28 April 2016
to audit the financial statements for the year ended 31
December 2016 and subsequent financial periods. The
period of total uninterrupted engagement is 4 years,
covering the years ended 31 December 2016 to 31
December 2019.
John McDonnell
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm

Continuing operations
Revenue 2 7,241.3 - 7,241.3 6,607.6 - 6,607.6
Trading profit 2/3 902.7 - 902.7 805.6 - 805.6
Intangible asset amortisation 12 (64.3) - (64.3) (53.8) - (53.8)
Non-trading items 5 - (110.9) (110.9) - (66.9) (66.9)
Operating profit 3 838.4 (110.9) 727.5 751.8 (66.9) 684.9
Finance income 6 0.3 - 0.3 0.5 - 0.5
Finance costs 6 (81.9) - (81.9) (67.5) - (67.5)
Profit before taxation 756.8 (110.9) 645.9 684.8 (66.9) 617.9
Income taxes 7 (98.6) 19.2 (79.4) (89.2) 11.8 (77.4)
Profit after taxation attributable to owners of the parent 658.2 (91.7) 566.5 595.6 (55.1) 540.5
Earnings per A ordinary share Cent Cent
- basic 9 320.4 305.9
- diluted 9 319.9 305.7
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
Profit after taxation attributable to owners of the parent 566.5 540.5
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Fair value movements on cash flow hedges 7.2 2.2
Cash flow hedges - reclassified to profit or loss from equity 24 0.1 (2.5)
Net change in cost of hedging 24 0.6 (2.0)
Deferred tax effect of fair value movements on cash flow hedges 17 (1.4) (0.2)
Exchange difference on translation of foreign operations 67.0 (0.9)
Fair value movement on revaluation of financial assets held at fair value through
other comprehensive income
13 (1.0) (1.9)
Items that will not be reclassified subsequently to profit or loss:
Re-measurement on retirement benefits obligation 26 14.0 34.5
Deferred tax effect of re-measurement on retirement benefits obligation 17 (2.0) (6.3)
Net income recognised directly in total other comprehensive income 84.5 22.9
Total comprehensive income 651.0 563.4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Group:
At 1 January 2018 22.0 398.7 (214.4) 3,366.9 3,573.2
Profit after tax attributable to owners of the parent - - - 540.5 540.5
Other comprehensive (expense)/income - - (5.1) 28.0 22.9
Total comprehensive (expense)/income - - (5.1) 568.5 563.4
Dividends paid 10 - - - (114.4) (114.4)
Share-based payment expense 28 - - 12.2 - 12.2
At 31 December 2018 22.0 398.7 (207.3) 3,821.0 4,034.4
Adjustment on initial application of IFRS 16 ‘Leases’ 11 - - - (9.4) (9.4)
Adjusted balances at 1 January 2019 22.0 398.7 (207.3) 3,811.6 4,025.0
Profit after tax attributable to owners of the parent - - - 566.5 566.5
Other comprehensive income - - 73.9 10.6 84.5
Total comprehensive income - - 73.9 577.1 651.0
Shares issued during the financial year 27 0.1 - - - 0.1
Dividends paid 10 - - - (128.3) (128.3)
Share-based payment expense 28 - - 14.4 - 14.4
At 31 December 2019 22.1 398.7 (119.0) 4,260.4 4,562.2
Other Reserves comprise the following:									
									
Company:
At 1 January 2018 22.0 398.7 53.1 271.9 745.7
Profit after tax 8 - - - 158.9 158.9
Other comprehensive income - - - - -
Total comprehensive income - - - 158.9 158.9
Dividends paid 10 - - - (114.4) (114.4)
Share-based payment expense 28 - - 12.2 - 12.2
At 31 December 2018 22.0 398.7 65.3 316.4 802.4
Profit after tax 8 - - - 140.3 140.3
Other comprehensive income - - - - -
Total comprehensive income - - - 140.3 140.3
Shares issued during the financial year 27 0.1 - - - 0.1
Dividends paid 10 - - - (128.3) (128.3)
Share-based payment expense 28 - - 14.4 - 14.4
At 31 December 2019 22.1 398.7 79.7 328.4 828.9
Other Reserves comprise the following:
Note
Operating activities
Trading profit 29 902.7 805.6
Adjustments for:
Depreciation (net) 191.4 134.1
Change in working capital 29 (63.9) (78.8)
Pension contributions paid less pension expense (26.7) (40.0)
Payments on non-trading items (89.1) (59.8)
Exchange translation adjustment (2.5) 0.5
Cash generated from operations 911.9 761.6
Income taxes paid (67.2) (46.1)
Finance income received 0.5 0.5
Finance costs paid (81.3) (65.0)
Net cash from operating activities 763.9 651.0
Investing activities
Purchase of assets (net) 29 (315.6) (296.1)
Proceeds from the sale of assets 5 32.8 10.6
Capital grants received 3.0 -
Purchase of businesses (net of cash acquired) 30 (562.7) (476.8)
Payments relating to previous acquisitions (5.3) (11.9)
Purchase of share in associates and joint ventures - (14.5)
Income received from associates and joint ventures 14 - -
Net cash used in investing activities (847.8) (788.7)
Financing activities
Dividends paid 10 (128.3) (114.4)
Payment of lease liabilities 11 (35.5) -
Issue of share capital 27 0.1 -
Repayment of borrowings (564.4) (2.5)
Increase in borrowings 950.0 352.7
Net cash movement due to financing activities 221.9 235.8
Net increase in cash and cash equivalents 138.0 98.1
Cash and cash equivalents at beginning of the financial year 403.9 305.6
Exchange translation adjustment on cash and cash equivalents 7.8 0.2
Cash and cash equivalents at end of the financial year 29 549.7 403.9
Reconciliation of Net Cash Flow to Movement in Net Debt
Net increase in cash and cash equivalents 138.0 98.1
Cash flow from debt financing (385.6) (350.2)
Changes in net debt resulting from cash flows (247.6) (252.1)
Fair value movement on interest rate swaps (net of adjustment to borrowings) 29 12.5 (2.6)
Exchange translation adjustment on net debt 29 (4.2) (27.1)
Movement in net debt in the financial year (239.3) (281.8)
Net debt at beginning of the financial year (1,623.5) (1,341.7)
Net debt at end of the financial year 23 (1,862.8) (1,623.5)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
Operating activities
Trading profit 29 152.4 154.9
Adjustments for:
Depreciation 11 - 0.1
Change in working capital 29 (22.7) 36.1
Payments on non-trading items (1.5) -
Net cash from operating activities 128.2 191.1
Investing activities
Investments in subsidiary undertakings 15 - (76.7)
Net cash from investing activities - (76.7)
Financing activities
Dividends paid 10 (128.3) (114.4)
Issue of share capital 27 0.1 -
Net cash movement due to financing activities (128.2) (114.4)
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of the financial year - -
Cash and cash equivalents at end of the financial year 29 - -
COMPANY STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

154
1. Statement of accounting policies
General information				
 plc is a public limited company incorporated in
the Republic of Ireland. The registered number is 111471 and
registered office address is Prince’s Street, Tralee, Co. Kerry,
V92 EH11, Ireland. The principal activities of the Company
and its subsidiaries are described in the Business Reviews
and note 36 ‘Group entities’.				
						
Basis of preparation
The consolidated financial statements of  plc have
been prepared in accordance with International Financial
Reporting Standards (‘IFRS’), International Financial Reporting
Interpretations Committee (‘IFRIC’) interpretations and those
parts of the Companies Act, 2014 applicable to companies
reporting under IFRS. The financial statements comprise the
Consolidated Income Statement, the Consolidated Statement
of Comprehensive Income, the Consolidated Balance Sheet,
the Company Balance Sheet, the Consolidated Statement
of Changes in Equity, the Company Statement of Changes
in Equity, the Consolidated Statement of Cash Flows, the
Company Statement of Cash Flows and the notes to the
financial statements. The financial statements include the
information in the remuneration report that is described
as being an integral part of the financial statements. Both
the Parent Company and Group financial statements have
also been prepared in accordance with IFRS adopted by
the European Union (‘EU’) which comprise standards and
interpretations approved by the International Accounting
Standards Board (‘IASB’). The Group financial statements
comply with Article 4 of the EU IAS Regulation. IFRS adopted
by the EU differs in certain respects from IFRS issued by the
IASB. References to IFRS hereafter refer to IFRS adopted by
the EU. 						
			
The Parent Company’s financial statements are prepared
using accounting policies consistent with the accounting
policies applied to the consolidated financial statements by
the Group.						
				
The consolidated financial statements have been prepared
under the historical cost convention, as modified by the
revaluation of certain financial assets and liabilities (including
derivative financial instruments) and financial asset
investments which are held at fair value. Assets classified as
held for sale are stated at the lower of carrying value and fair
value less costs to sell. The investments in associates and
joint ventures are accounted for using the equity method.
								
The consolidated and company financial statements have
been prepared on a going concern basis of accounting.
								
The consolidated financial statements contained herein
are presented in euro, which is the functional currency of
the Parent Company,  plc. The functional
currencies of the Group’s main subsidiaries are euro,
US dollar and sterling.					
					
In the 2019 consolidated financial statements, the Group
has re-presented corresponding 2018 balances to align with
current year presentation in operating profit (note 3).
The comparative amount for other general overheads of
€808.7m was previously disclosed as other external charges
of €445.1m and other operating charges of €363.6m. These
changes in presentation do not impact on the classification
of any line items on the Group’s Consolidated Income
Statement, Balance Sheet or other primary statements.
								
Certain income statement headings and other financial
measures included in the consolidated financial statements
are not defined by IFRS. The Group make this distinction to
give a better understanding of the financial performance of
the business. 						
				
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the
financial statements of the Company and the entities
controlled by the Company (its subsidiaries), all of which
prepare financial statements up to 31 December. Accounting
policies of subsidiaries are consistent with the policies
adopted by the Group. Control is achieved where the
Company has the power over the investee, has exposure
or has rights to variable returns from its involvement
with the investee and has the ability to use its power to
affect its returns.
The results of subsidiaries acquired or disposed of during
the financial year are included in the Consolidated Income
Statement from the date the Company gains control until
the date the Company ceases to control the subsidiary.
All inter-group transactions and balances are eliminated
on consolidation. 					
		
Associates
Associates are all entities over which the Group has
significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting
rights. Significant influence is the power to participate in
the financial and operating policy decisions of the investee
but is not control or joint control over those policies.
Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost.
On acquisition of the investment in associate, any excess
of the cost of the investment over the Group’s share of the
net fair value of the identifiable assets and liabilities of the
investee is recognised as goodwill, which is included within
the carrying value of the investment.			
							
The Group’s share of its associates’ post-acquisition profits
or losses is recognised in ‘Share of associates and joint
ventures (profit)/loss after taxation’ within Trading Profit in
the Consolidated Income Statement, and its share of
post-acquisition movements in reserves is recognised in
reserves. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment,
less any impairment in value. Where indicators of impairment
arise, the carrying amount of the associate is tested for
impairment by comparing its recoverable amount with
its carrying amount. 					
					
								
		
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
155

1.	
Statement of accounting policies (continued)
Basis of consolidation (continued)		
Associates (continued)					
Unrealised gains arising from transactions with associates are
eliminated to the extent of the Group’s interest in the entity.
Unrealised losses are eliminated to the extent that they do
not provide evidence of impairment. The accounting policies
of associates are amended where necessary to ensure
consistency of accounting treatment at Group level.
Joint ventures
Joint ventures are all entities over which the Group has joint
control, whereby the Group has rights to the net assets of the
arrangement, rather than rights to its assets and obligations
for its liabilities. Investments in joint ventures are accounted
for using the equity method of accounting and are initially
recognised at cost. On acquisition of the investment in joint
venture, any excess of the cost of the investment over the
Group’s share of the net fair value of the identifiable assets
and liabilities of the investee is recognised as goodwill, which
is included within the carrying value of the investment.
The Group’s share of its joint ventures’ post-acquisition
profits or losses is recognised in ‘Share of associates and joint
ventures (profit)/loss after taxation’ within Trading Profit in
the Consolidated Income Statement, and its share of post-
acquisition movements in reserves is recognised in reserves
until the date on which joint control ceases. The cumulative
post-acquisition movements are adjusted against the carrying
amount of the investment, less any impairment in value.
Where indicators of impairment arise, the carrying amount
of the joint venture is tested for impairment by comparing its
recoverable amount with its carrying amount.
Unrealised gains arising from transactions with joint ventures
are eliminated to the extent of the Group’s interest in the
entity. Unrealised losses are eliminated to the extent that
they do not provide evidence of impairment. The accounting
policies of joint ventures are amended where necessary to
ensure consistency of accounting treatment at Group level.
Revenue
Revenue represents the value of the consideration received
or receivable, for taste and nutrition applications and
consumer foods chilled food products, from third party
customers. Revenue is recorded at invoice value, net of
discounts, allowances, volume and promotional rebates and
excludes VAT. Revenue is recognised when control of the
products has transferred, which is usually upon shipment, or
in line with terms agreed with individual customers. Revenue
is recorded when there is no unfulfilled obligation on the part
of the Group. An estimate is made on the basis of historical
sales returns and is recorded to allocate these returns to the
same period as the original revenue is recorded. Rebates and
discounts are provided for based on agreements or contracts
with customers, agreed promotional arrangements and
accumulated experience using the expected value method.
Any unutilised accrual is released after assessment that the
likelihood of such a claim being made is highly improbable.
The Group disaggregates revenue by End Use Market (EUM)
and primary geographic market. An EUM is defined as the
market in which the end consumer or customer of Kerry’s
product operates. The economic factors within the EUMs
of Food, Beverage and Pharma which affect the nature,
amount, timing and uncertainty of revenue and cash flows
are similar.
Trading profit
Trading profit refers to the operating profit generated by the
businesses before intangible asset amortisation and gains
or losses generated from non-trading items. Trading profit
represents operating profit before specific items that are not
reflective of underlying trading performance and therefore
hinder comparison of the trading performance of the Group’s
businesses, either year-on-year or with other businesses.
Segmental analysis
Operating segments are reported in a manner consistent
with the internal management structure of the Group and
the internal financial information provided to the Group’s
Chief Operating Decision Maker (the Executive Directors)
who is responsible for making strategic decisions, allocating
resources, monitoring and assessing the performance
of each segment. Trading profit as reported internally
by segment is the key measure utilised in assessing the
performance of operating segments within the Group.
Other Corporate activities, such as the cost of corporate
stewardship and the cost of the Kerryconnect programme,
are reported along with the elimination of inter-group
activities under the heading ‘Group Eliminations and
Unallocated’. Intangible asset amortisation, non-trading
items, net finance costs and income taxes are managed on a
centralised basis and therefore, these items are not allocated
between operating segments and are not reported per
segment in note 2.
The Group has determined it has two reportable segments:
Taste & Nutrition and Consumer Foods. The Taste & Nutrition
segment is the global leader in the development of taste and
nutrition solutions for the food, beverage and pharmaceutical
industries across Ireland, Europe, Americas and APMEA. Our
broad technology foundation, customer-centric business
model, and industry leading integrated solutions capability
make Kerry the co-creation partner of choice. The Consumer
Foods segment is an industry‐leading manufacturer of chilled
food products primarily in Ireland and in the UK.
Property, plant and equipment
Property, plant and equipment, other than freehold land,
are stated at cost less accumulated depreciation and any
accumulated impairment losses. Cost comprises purchase
price and other directly attributable costs. Freehold land
is stated at cost and is not depreciated. Depreciation on
the remaining property, plant and equipment is calculated
by charging equal annual instalments to the Consolidated
Income Statement at the following annual rates:
- Buildings 2% - 5%
- Plant, machinery and equipment 7% - 25%
- Motor vehicles 20%		
			
The charge in respect of periodic depreciation is calculated
after establishing an estimate of the asset’s useful life and
the expected residual value at the end of its life. Increasing/
(decreasing) an asset’s expected life or its residual value
would result in a (decreased)/increased depreciation charge
to the Consolidated Income Statement as well as an increase/
(decrease) in the carrying value of the asset.
The useful lives of Group assets are determined by
management at the time the assets are acquired and
reviewed annually for appropriateness. These lives are
based on historical experience with similar assets as well as
anticipation of future events, which may impact their life, such
as changes in technology. Historically, changes in useful lives
or residual values have not resulted in material changes to
the Group’s depreciation charge.

156
1.	
Statement of accounting policies (continued)
Property, plant and equipment (continued)
Assets in the course of construction for production or
administrative purposes are carried at cost less any
recognised impairment loss. Cost includes professional
fees and other directly attributable costs. Depreciation of
these assets commences when the assets are ready for their
intended use, on the same basis as other property assets.
Leasing
At the commencement date of the lease, the Group
recognises a right-of-use asset and a lease liability on the
balance sheet. The right-of-use asset is measured at cost,
which consists of the initial measurement of the lease liability,
any initial direct costs incurred by the Group in setting up/
entering into the lease, an estimate of any costs to dismantle
and remove the asset at the end of the lease and any
payments made in advance of the lease commencement date
(net of any incentive received).
The Group depreciates right-of-use assets on a straight-line
basis from the lease commencement date to the earlier
of the end of the useful life or the end of the lease term.
The carrying amounts of right-of-use assets are reviewed
at each balance sheet date to determine whether there is
any indication of impairment. An impairment loss is
recognised when the carrying value of an asset exceeds
its recoverable amount.
The Group measures the lease liability at the present value
of the lease payments unpaid at that date, discounted using
the applicable incremental borrowing rate. Lease payments
included in the measurement of the lease liability comprises
of fixed or variable payments (based on an index or rate),
amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably
certain to be exercised.
Subsequent to the initial measurement, the liability will be
reduced for payments made and increased for the interest
applied and it is remeasured to reflect any reassessment or
contract modifications. When the lease liability is remeasured,
the corresponding adjustment is reflected in the right-of-use
asset or in the Consolidated Income Statement if the right-of-
use asset is already reduced to zero.
The Group has elected to record short-term leases of less
than 12 months and leases of low-value assets as defined in
IFRS 16 as an operating expense in the Consolidated Income
Statement on a straight-line basis over the lease term.
The Group has also elected not to separate non-lease
components from lease components, and instead account
for each lease component and any associated non-lease
components as a single lease component further increasing
the lease liability.
The Group adopted IFRS 16 ‘Leases’ using the modified
retrospective approach. Accordingly, the comparative
information has not been restated and continues to be
accounted for in accordance with the Group’s previous
accounting policy under IAS 17 ‘Leases’.
Leasing policy applicable before 1 January 2019
(Operating leases)
Annual rentals payable under operating leases are charged to
the Consolidated Income Statement on a straight-line basis
over the period of the lease.
Assets classified as held for sale
Assets are classified as held for sale if their carrying value
will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as
met if, at the financial year end, the sale is highly probable,
the asset is available for immediate sale in its present
condition, management is committed to the sale and the
sale is expected to be completed within one year from the
date of classification.
Assets classified as held for sale are measured at the lower
of carrying value and fair value less costs to sell.
Intangible assets
Goodwill
Goodwill arises on business combinations and represents
the excess of the cost of acquisition over the Group’s interest
in the fair value of the identifiable assets and liabilities of a
subsidiary entity at the date control is achieved.
Goodwill arising on acquisitions before the date of transition
to IFRS has been retained at the previous Irish/UK GAAP
amounts subject to impairment testing. Goodwill written off
to reserves under Irish/UK GAAP prior to 1998 has not been
reinstated and is not included in determining any subsequent
profit or loss on disposal.
At the date control is achieved, goodwill is allocated for the
purpose of impairment testing to groups of cash generating
units (CGUs) provided they represent the lowest level at
which management monitor goodwill for impairment
purposes. Goodwill is not amortised but is reviewed for
indications of impairment at least annually and is carried at
cost less accumulated impairment losses, where identified.
Impairment is recognised immediately in the Consolidated
Income Statement and is not subsequently reversed. On
disposal of a subsidiary, the attributable amount of goodwill
(not previously written off to reserves) is included in the
determination of the profit or loss on disposal.
Brand related intangibles
Brand related intangibles acquired as part of a business
combination are valued at their fair value at the date
control is achieved. Intangible assets determined to have
an indefinite useful life are not amortised and are tested
for impairment at least annually. Indefinite life intangible
assets are those for which there is no foreseeable limit
to their expected useful life. In arriving at the conclusion
that these brand related intangibles have an indefinite life,
management considers the nature and type of the intangible
asset, the absence of any legal or other limits on the assets’
use, the fact the business and products have a track record
of stability, the high barriers to market entry and the Group’s
commitment to continue to invest for the long term to extend
the period over which the intangible asset is expected to
continue to provide economic benefits. The classification of
intangible assets as indefinite is reviewed annually.
Finite life brand related intangible assets are amortised
over the period of their expected useful lives, which range
from 2 to 20 years, by charging equal annual instalments
to the Consolidated Income Statement. The useful life used
to amortise finite intangible assets relates to the future
performance of the assets acquired and management’s
estimate of the period over which economic benefit will
be derived from the asset. Historically, changes in useful
lives have not resulted in material changes to the Group’s
amortisation charge.				
157

1.	
Statement of accounting policies (continued)
Intangible assets (continued)
Computer software
Computer software separately acquired, including computer
software which is not an integral part of an item of computer
hardware, is stated at cost less any accumulated amortisation
and any accumulated impairment losses. Cost comprises
purchase price and other directly attributable costs.
Costs relating to the development of computer software
for internal use are capitalised once the recognition criteria
outlined as follows are met:				
- an asset can be separately identified;			
-	
it is probable that the asset created will generate future
economic benefits;
-	
the development cost of the asset can be measured
reliably;
-	
it is probable that the expected future economic benefits
that are attributable to the asset will flow to the entity;
and
- the cost of the asset can be measured reliably.
Computer software is amortised over its expected useful
life, which ranges from 3 to 7 years, by charging equal
annual instalments to the Consolidated Income Statement.
Amortisation commences when the assets are ready for use.
Impairment of non-financial assets			
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation. They are tested
annually for impairment or when indications exist that
the asset may be impaired. For the purpose of assessing
impairment, these assets are allocated to groups of cash
generating units (CGUs) using a reasonable and consistent
basis. An impairment loss is recognised immediately in the
Consolidated Income Statement for the amount by which the
asset’s carrying value exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less
costs to sell or its value in use. Value in use is determined
as the discounted future cash flows of the CGU. The key
assumptions during the financial year for the value in use
calculations are discount rates, cash flows and growth rates.
When an impairment loss (other than on goodwill)
subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount,
not exceeding its carrying amount that would have been
determined had no impairment loss been recognised for the
asset in prior years. Assets that are subject to amortisation
are reviewed for impairment whenever events or changes
in circumstances indicate the carrying amount may not be
recoverable. Impairment is reviewed by assessing the asset’s
value in use when compared to its carrying value.
The carrying amounts of property, plant and equipment are
reviewed at each balance sheet date to determine whether
there is any indication of impairment. An impairment loss is
recognised when the carrying value of an asset exceeds its
recoverable amount.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Cost includes raw materials, direct labour and all
other expenditure incurred in the normal course of business
in bringing the products to their present location and
condition. Cost is calculated at the weighted average cost
incurred in acquiring inventories. Net realisable value is the
estimated selling price of inventory on hand less all further
costs to completion and all costs expected to be incurred in
distribution and selling.
Write-downs of inventories are primarily recognised
under ‘raw materials and consumables’ in the Consolidated
Income Statement.
Income taxes
Income taxes include both current and deferred taxes.
Income taxes are charged or credited to the Consolidated
Income Statement except when they relate to items charged
or credited directly in other comprehensive income or
shareholders’ equity. In this instance the income taxes are
also charged or credited to other comprehensive income or
shareholders’ equity.
The current tax charge is calculated as the amount payable
based on taxable profit and the tax rates applying to those
profits in the financial year together with adjustments
relating to prior years. Deferred taxes are calculated using
the tax rates that are expected to apply in the period when
the liability is settled or the asset is realised, based on tax
rates that have been enacted or substantively enacted at the
balance sheet date.
The Group is subject to uncertainties, including tax audits,
in any of the jurisdictions in which it operates. The Group
accounts for uncertain tax positions in line with IFRIC
23 ‘Uncertainty over Income Tax Treatments’. The Group
considers each uncertain tax treatment separately or
together with one or more uncertain tax treatments based
on which approach better predicts the resolution of the
uncertainty. If the Group concludes that it is not probable
that a taxation authority will accept an uncertain tax
treatment the Group reflects the effect of the uncertainty
in determining the related taxable profit, tax bases, unused
tax losses, unused tax credits or tax rate. The Group reflects
the effect of uncertainty for each uncertain tax treatment
using an expected value approach or a most likely approach
depending on which method the Group expects to better
predict the resolution of the uncertainty. The unit of account
for recognition purposes is the income tax/deferred tax
assets or liabilities and the Group does not provide separately
for uncertain tax positions. When the final tax outcome
for these items is different from amounts recorded, such
differences will impact the income tax and deferred tax in the
period in which such a determination is made, as well as the
Group’s cash position.
Deferred taxes are calculated based on the temporary
differences that arise between the tax base of the asset or
liability and its carrying value in the Consolidated Balance
Sheet. Deferred taxes are recognised on all temporary
differences in existence at the balance sheet date except for:
-	
temporary differences which arise from the initial
recognition of an asset or liability in a transaction other
than a business combination that at the time of the
transaction does not affect accounting or taxable profit
or loss, or on the initial recognition of goodwill for which
a tax deduction is not available; and
-	
temporary differences which arise on investments in
subsidiaries where the timing of the reversal is controlled
by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
The recognition of a deferred tax asset is based upon
whether it is probable that sufficient and suitable taxable
profits will be available in the future, against which the
reversal of temporary differences can be deducted. Deferred
tax assets are reviewed at each reporting date.

158
1.	
Statement of accounting policies (continued)
Income taxes (continued)
Current income tax assets and current income tax liabilities
are offset where there is a legally enforceable right to offset
the recognised amounts and the Group intends to settle on
a net basis. Deferred income tax assets and deferred income
tax liabilities are offset where there is a legally enforceable
right to offset the recognised amounts, the deferred tax
assets and deferred tax liabilities relate to taxes levied by the
same taxation authority and the Group intends to settle on a
net basis.
Retirement benefits obligation
Payments to defined contribution plans are recognised in
the Consolidated Income Statement as they fall due and
any contributions outstanding at the financial year end are
included as an accrual in the Consolidated Balance Sheet.
Actuarial valuations for accounting purposes are carried
out at each balance sheet date in relation to defined benefit
plans, using the projected unit credit method, to determine
the schemes’ liabilities and the related cost of providing
benefits. Scheme assets are accounted for at fair value using
bid prices.
Current service cost and net interest cost are recognised
in the Consolidated Income Statement as they arise. Past
service cost, which can be positive or negative, is recognised
immediately in the Consolidated Income Statement. Gains
or losses on the curtailment or settlement of a plan are
recognised in the Consolidated Income Statement when
the curtailment or settlement occurs. Re-measurement on
retirement benefits obligation, comprising actuarial gains
and losses and the return on plan assets (excluding amounts
included in net interest cost) are recognised in full in the
period in which they occur in the Consolidated Statement of
Comprehensive Income.
The defined benefit liability recognised in the Consolidated
Balance Sheet represents the present value of the
defined benefit obligation less the fair value of any plan
assets. Defined benefit assets are also recognised in the
Consolidated Balance Sheet but are limited to the present
value of available refunds from, and reductions in future
contributions to, the plan.
Provisions
Provisions can be distinguished from other types of liability
by considering the events that give rise to the obligation and
the degree of uncertainty as to the amount or timing of the
liability. These are recognised in the Consolidated Balance
Sheet when:
-	
the Group has a present obligation (legal or constructive)
as a result of a past event;
-	
it is probable that the Group will be required to settle the
obligation; and
-	
a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate
of the amount required to settle the present obligation at
the balance sheet date, after taking account of the risks and
uncertainties surrounding the obligation.
The outcome depends on future events which are by
their nature uncertain. In assessing the likely outcome,
management bases its assessment on historical experience
and other factors that are believed to be reasonable in the
circumstances. Provisions are disclosed in note 25 to the
consolidated financial statements.				
Non-trading items
Certain items, by virtue of their nature and amount, are
disclosed separately in order for the user to obtain a proper
understanding of the financial information. These items
relate to events or circumstances that are not related to
normal trading activities and are labelled collectively as
‘non-trading items’.
Non-trading items include gains or losses on the disposal
of businesses, disposal of assets (non-current assets and
assets classified as held for sale), costs in preparation of
disposal of assets, material restructuring costs and material
transaction, integration and restructuring costs associated
with acquisitions. Non-trading items are disclosed in note 5
to the consolidated financial statements.
Research and development expenditure
Expenditure on research activities is recognised as an
expense in the financial year it is incurred.
Development expenditure is assessed and capitalised as an
internally generated intangible asset only if it meets all of the
following criteria:
-	
it is technically feasible to complete the asset for use
or sale;
-	
it is intended to complete the asset for use or sale;
-	
the Group has the ability to use or sell the intangible
asset;
-	
it is probable that the asset created will generate future
economic benefits;
-	
adequate resources are available to complete the asset
for sale or use; and
-	
the development cost of the asset can be measured
reliably.
Capitalised development costs are amortised over their
expected economic lives. Where no internally generated
intangible asset can be recognised, product development
expenditure is recognised as an expense in the financial
year it is incurred. Accordingly, the Group has not capitalised
product development expenditure to date.
Grants
Grants of a capital nature are accounted for as deferred
income in the Consolidated Balance Sheet and are released
to the Consolidated Income Statement at the same rates
as the related assets are depreciated. Grants of a revenue
nature are credited to the Consolidated Income Statement to
offset the matching expenditure.
Dividends
Dividends are accounted for when they are approved,
through the retained earnings reserve. Dividends proposed
do not meet the definition of a liability until such time as they
have been approved. Dividends are disclosed in note 10 to
the consolidated financial statements.
Share-based payments
The Group has granted share-based payments to
Executive Directors and senior executives under a long
term incentive plan and to Executive Directors under a
short term incentive plan.
The equity-settled share-based awards granted under these
plans are measured at the fair value of the equity instrument
at the date of grant. The cost of the award is charged to the
Consolidated Income Statement over the vesting period of
the awards based on the probable number of awards that
will eventually vest, with a corresponding credit to
shareholders’ equity.
159

1.	
Statement of accounting policies (continued)
Share-based payments (continued)
For the purposes of the long term incentive plan, the fair
value of the award is measured using the Monte Carlo Pricing
Model. For the short term incentive plan, the fair value of the
expense equates directly to the cash value of the portion of
the short term incentive plan that will be settled by way of
shares/share options.
At the balance sheet date, the estimate of the level of vesting
is reviewed and any adjustment necessary is recognised in
the Consolidated Income Statement and in the Statement of
Changes in Equity. Share-based payments are disclosed in
note 28 to the consolidated financial statements.
Foreign currency
Foreign currency transactions are translated into functional
currency at the rate of exchange ruling at the date of the
transaction. Exchange differences arising from either the
retranslation of the resulting monetary assets or liabilities
at the exchange rate at the balance sheet date or from the
settlement of the balance at a different rate are recognised in
the Consolidated Income Statement when they occur.
On consolidation, the income statements of foreign currency
subsidiaries are translated into euro at the average exchange
rate. If this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction
dates, a weighted average rate is used. The balance sheets of
such subsidiaries are translated at the rate of exchange at the
balance sheet date. Resulting exchange differences arising
on the translation of foreign currency subsidiaries are taken
directly to a separate component of shareholders’ equity.
Goodwill and fair value adjustments arising on the acquisition
of foreign subsidiaries are treated as assets and liabilities of
the foreign subsidiaries and are translated at the closing rate.
On disposal of a foreign currency subsidiary, the cumulative
translation difference for that foreign subsidiary is recycled
to the Consolidated Income Statement as part of the profit or
loss on disposal.
Borrowing costs
Borrowing costs incurred for qualifying assets, which take a
substantial period of time to construct, are added to the cost
of the asset during the period of time required to complete
and prepare the asset for its intended use. Other borrowing
costs are expensed to the Consolidated Income Statement in
the period in which they are incurred.
Business combinations
The acquisition method of accounting is used for the
acquisition of subsidiaries. The cost of the acquisition is
measured at the aggregate fair value of the consideration
given. The acquiree’s identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition
under IFRS 3 ‘Business Combinations’ are recognised at
their fair value at the date the Group assumes control of
the acquiree. Acquisition related costs are recognised in the
Consolidated Income Statement as incurred. If the business
combination is achieved in stages, the acquisition date
fair value of the Group’s previously held investment in the
acquiree is remeasured to fair value at the acquisition date
through profit or loss.
Certain assets and liabilities are not recognised at their fair
value at the date control was achieved as they are accounted
for using other applicable IFRSs.
These include deferred tax assets/liabilities and also any
assets related to employee benefit arrangements.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts
for the items for which the valuation of the fair value of assets
and liabilities acquired is still in progress. Those provisional
amounts are adjusted during the measurement period of
one year from the date control is achieved when additional
information is obtained about facts and circumstances which
would have affected the amounts recognised as of that date.
Where applicable, the consideration for the acquisition
includes any asset or liability resulting from a contingent
consideration arrangement measured at fair value at the
date control is achieved. Subsequent changes in such fair
values are adjusted against the cost of acquisition where
they qualify as measurement period adjustments. All
other subsequent changes in the fair value of contingent
consideration classified as an asset or liability are accounted
for in accordance with relevant IFRSs.
Any fair value adjustments in relation to acquisitions
completed prior to 1 January 2010 have been accounted for
under IFRS 3 ‘Business Combinations (2004)’.
Investments in subsidiaries
Investments in subsidiaries held by the Parent Company
are carried at cost less accumulated impairment losses.
Investments in associates and joint ventures
Investments in associates and joint ventures held by
the Group are accounted for using the equity method,
after initially being recognised at cost in the Consolidated
Balance Sheet.
Financial instruments
Financial assets and financial liabilities are recognised on the
Consolidated Balance Sheet when the Group becomes party
to the contractual provisions of the instrument.
Financial assets and liabilities are initially measured at fair
value plus transaction costs, except for those classified as fair
value through profit or loss, which are initially measured at
fair value.
All financial assets are recognised and derecognised on a
trade date basis, where the purchase or sale of a financial
asset is under a contract whose terms require delivery of the
financial asset within the timeframe of the market concerned.
Financial assets and liabilities are offset and presented on
a net basis in the Consolidated Balance Sheet, only if the
Group holds an enforceable legal right of set off for such
amounts and there is an intention to settle on a net basis or
to realise an asset and settle the liability simultaneously. In all
other instances they are presented gross in the Consolidated
Balance Sheet.
The Group classifies its financial assets in the following
measurement categories:
-	
those to be measured subsequently at fair value (either
through OCI or through profit or loss); and
- those to be measured at amortised cost.
The classification depends on the Group’s business model for
managing the financial assets and the contractual terms of
the cash flows. For assets measured at fair value, gains and
losses will either be recorded in profit or loss or OCI.

160
1.	
Statement of accounting policies (continued)
Financial instruments (continued)
For investments in equity instruments that are not held for
trading, this will depend on whether the Group has made
an irrevocable election at the time of initial recognition to
account for the equity investment at fair value through other
comprehensive income (FVOCI).
Debt instruments:
Subsequent measurement of debt instruments depend on
the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories into which the Group classifies its
debt instruments:
-	
Amortised cost: Assets that are held for collection
of contractual cash flows, where those cash flows
represent solely payments of principal and interest, are
measured at amortised cost. Any gain or loss arising on
derecognition is recognised directly in the Consolidated
Income Statement. Impairment losses are presented in
the Consolidated Income Statement.
-	
FVOCI: Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal
and interest, are measured at FVOCI. The Group have no
debt instruments measured at FVOCI.
-	
FVPL: Assets that do not meet the criteria for amortised
cost or FVOCI are measured at FVPL. In addition, assets
that are irrevocably designated as FVPL at origination to
eliminate or significantly reduce an accounting mismatch
are also measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is
recognised in the Consolidated Income Statement.
Equity instruments:
The Group subsequently measures all equity investments at
fair value. Where the Group’s management has elected to
present fair value gains and losses on equity investments in
OCI, there is no subsequent reclassification of fair value gains
and losses to the Consolidated Income Statement following
the derecognition of the investment. Dividends from such
investments continue to be recognised in the Consolidated
Income Statement when the Group’s right to receive
payments is established.
Changes in the fair value of financial assets measured at
FVPL (Rabbi Trust assets) are recognised in the Consolidated
Income Statement. Impairment losses (and reversal of
impairment losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair value.
Trade and other receivables:
Trade receivables are amounts due from customers for goods
sold or services performed in the ordinary course of business.
Trade receivables are recognised initially at the amount
of consideration that is unconditional unless they contain
significant financing components, when they are recognised
at fair value. The Group holds the trade receivables with the
objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost using the
effective interest method.
Cash and cash equivalents:
Cash and cash equivalents carried at amortised cost consists
of cash at bank and in hand, bank overdrafts held by the
Group and short term bank deposits with a maturity of three
months or less from the date of placement. Cash at bank
and in hand and short term bank deposits are shown under
current assets on the Consolidated Balance Sheet.
Bank overdrafts are shown within ‘Borrowings and overdrafts’
in current liabilities on the Consolidated Balance Sheet but
are included as a component of cash and cash equivalents
for the purpose of the Statement of Cash Flows. The carrying
amount of these assets and liabilities approximates to their
fair value.
Financial liabilities measured at amortised cost
Other non-derivative financial liabilities consist primarily of
trade and other payables and borrowings. Trade and other
payables are stated at amortised cost, which approximates to
their fair value given the short term nature of these liabilities.
Trade and other payables are non-interest bearing.
Debt instruments are initially recorded at fair value, net
of transaction costs. Subsequently they are reported at
amortised cost, except for hedged debt. To the extent that
debt instruments are hedged under qualifying fair value
hedges, the carrying value of the debt instrument is adjusted
for changes in the fair value of the hedged risk, with changes
arising recognised in the Consolidated Income Statement.
The fair value of the hedged item is primarily determined
using the discounted cash flow basis.
Financial liabilities at fair value through profit or loss (FVPL)
Financial liabilities at FVPL arise when the financial liabilities
are either derivative liabilities held for trading or they are
designated upon initial recognition as FVPL.
The Group classifies as held for trading certain derivatives
that are not designated and effective as a hedging
instrument. The Group does not have any other financial
liabilities classified as held for trading.
Impairment of financial assets
The Group assesses on a forward looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost and FVOCI. The impairment methodology
applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified
approach permitted by IFRS 9 ‘Financial Instruments’, which
requires expected lifetime losses to be recognised from initial
recognition of the receivables. Further detail is provided in
note 19.
Derecognition of financial liabilities
The Group derecognises financial liabilities only when the
Group’s obligations are discharged, cancelled or expired.
Derivative financial instruments and hedge accounting
Derivatives are carried at fair value. The Group’s activities
expose it to risks of changes in foreign currency exchange
rates and interest rates in relation to international trading
and long term debt. The Group uses foreign exchange
forward contracts, interest rate swaps and forward rate
agreements to hedge these exposures. The Group does not
use derivative financial instruments for speculative purposes.
When cross currency interest rate swaps are used to hedge
interest rates and foreign exchange rates, the change in
the foreign currency basis spreads element of the contract
that relates to the hedged item is recognised within other
reserves under the cost of hedging reserve.
At inception of the hedge relationship, the Group documents
the economic relationship between hedging instruments and
hedged items including whether changes in the cash flows
of the hedging instruments are expected to offset changes
in the cash flows of hedged items. The Group documents its
risk management objective and strategy for undertaking its
hedge transactions.
161

1.	
Statement of accounting policies (continued)
Financial instruments (continued)
Fair value of financial instrument derivatives
The fair value of derivative instruments is calculated using
quoted prices. Where such prices are not available a
discounted cash flow analysis is used based on the applicable
yield curve adjusted for counterparty risk for the duration and
currency of the instrument, which are observable:
-	
foreign exchange forward contracts are measured using
quoted forward exchange rates to match the maturities
of these contracts; and
-	
interest rate swaps are measured at the present value
of future cash flows estimated and discounted based
on the applicable yield curves adjusted for counterparty
credit risk.
Cash flow hedges
Where derivatives, including forward foreign exchange
contracts and floating to fixed interest rate swaps or cross
currency swaps are used, they are primarily treated as
cash flow hedges. The gain or loss relating to the effective
portion of the interest rate swaps and cross currency interest
rate swaps is recognised in other comprehensive income
and is reclassified to profit or loss in the period when the
hedged item is recognised through profit or loss. All effective
amounts are directly offset against movements in the
underlying hedged item. Any ineffective portion of the hedge
is recognised in the Consolidated Income Statement. The
gain or loss relating to the effective portion of forward foreign
exchange contracts is recognised in other comprehensive
income and is reclassified to profit or loss in the period
the hedged item is recognised through profit or loss. Any
ineffective portion of the hedge is recognised
in the Consolidated Income Statement. When the hedged
firm commitment or forecasted transaction occurs and
results in the recognition of an asset or liability, the amounts
previously recognised in the hedge reserve, within other
comprehensive income are reclassified through profit or
loss in the periods when the hedged item is impacting the
Consolidated Income Statement.
When a hedging instrument expires, or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative deferred gain or loss and
deferred cost of hedging in equity at that time remains
in equity until the forecast transaction occurs, resulting in
the recognition of a non-financial asset, such as inventory.
When the forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred cost of
hedging that were reported in equity are immediately
reclassified to profit or loss.
Cash flow hedge accounting is applied to foreign exchange
forward contracts which are expected to offset the changes
in fair value of expected future cash flows. In order to achieve
and maintain cash flow hedge accounting, it is necessary for
management to determine, at inception and on an ongoing
basis, whether a forecast transaction is highly probable.
Fair value hedges
Where fixed to floating interest rate swaps are used, they are
treated as fair value hedges when the qualifying conditions
are met. Changes in the fair value of derivatives that are
designated as fair value hedges are recognised directly in the
Consolidated Income Statement, together with any changes
in the fair value of the hedged asset or liability that are
attributable to the hedged risk.
Hedge accounting is derecognised when the hedging
relationship ceases to exist. The fair value adjustment to
the carrying amount of the hedged item arising from the
hedged risk is amortised over the remaining maturity of the
hedged item through the Consolidated Income Statement
from that date.
Trading derivatives
Certain derivatives which comply with the Group’s financial
risk management policies are not accounted for using hedge
accounting. This arises where the derivatives; (a) provide a
hedge against foreign currency borrowings without having
to apply hedge accounting; or (b) where management have
decided not to apply hedge accounting. In these cases the
instrument is reported independently at fair value with any
changes recognised in the Consolidated Income Statement.
In all other instances, cash flow or fair value hedge
accounting is applied.
Critical accounting estimates and judgements
Preparation of the consolidated financial statements requires
management to make certain estimations, assumptions
and judgements that affect the reported profits, assets
and liabilities.
Estimates and underlying assumptions are reviewed on an
on-going basis. Changes in accounting estimates may be
necessary if there are changes in the circumstances on which
the estimate was based or as a result of new information or
more experience. Such changes are recognised in the period
in which the estimate is revised.
In particular, information about significant areas of
estimation that have the most significant effect on the
amounts recognised in the consolidated financial statements
are described below and in the respective notes to the
consolidated financial statements.
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets are
impaired or whether a reversal of an impairment of intangible
assets (other than on goodwill) should be recorded requires
comparison of the value in use for the relevant groups of
cash generating units (CGUs) to the net assets attributable
to those CGUs. The value in use calculation is based on an
estimate of future cash flows expected to arise from the
CGUs and these are discounted to net present value using
an appropriate discount rate. The tests are dependent on
management’s estimates, in particular in relation to the
forecasting of future cash flows, the discount rates applied to
those cash flows, the expected long term growth rate of the
applicable businesses and terminal values. Such estimates
are subject to change as a result of changing economic
conditions. As forecasting future cash flows is dependent
upon the Group successfully leveraging its base of intangible
assets over the long term, estimates are required in relation
to future cash flows which will support the asset value. These
estimates may depend upon the outcome of future events
and may need to be revised as circumstances change. Details
of the assumptions used and key sources of estimation
involved are outlined in note 12 to these consolidated
financial statements.
Business combinations
When acquiring a business, the Group is required to bring
acquired assets and liabilities on to the Consolidated Balance
Sheet at their fair value, the determination of which requires
a significant degree of estimation.

162
1.	
Statement of accounting policies (continued)
Critical accounting estimates and judgements (continued)
Business combinations (continued)
Acquisitions may also result in intangible benefits being
brought into the Group, some of which qualify for recognition
as intangible assets while other such benefits do not meet
the recognition requirements of IFRS and therefore form part
of goodwill. Estimation is required in the assessment and
valuation of these intangible assets. For intangible assets
acquired, the Group bases valuations on expected future
cash flows. This method employs a discounted cash flow
analysis using the present value of the estimated after-tax
cash flows expected to be generated from the purchased
intangible asset using risk adjusted discount rates, revenue
forecasts and estimated customer attrition as appropriate.
The period of expected cash flows is based on the expected
useful life of the intangible asset acquired.
Depending on the nature of the assets and liabilities acquired,
determined provisional fair values may be associated with
uncertainty and possibly adjusted subsequently as allowed by
IFRS 3 ‘Business Combinations’.
Business combinations are disclosed in note 30 to the
consolidated financial statements.
Income tax charge and income/deferred tax assets
and liabilities
Significant judgement and a high degree of estimation is
required in determining the income tax charge as the Group
operates in many jurisdictions and the tax treatment of
many items is uncertain with tax legislation being open to
different interpretation. Furthermore, the Group can also be
subject to uncertainties, including tax audits in any of the
jurisdictions in which it operates, which by their nature, are
often complex and can require several years to conclude.
The Group considers these uncertain tax positions in the
recognition of its income tax/deferred tax assets or liabilities.
In line with its accounting policy, the Group bases its
assessment on the probability of a tax authority accepting its
general treatment having regard to all information available
on the tax matter and when it is not probable reflects the
uncertainty in income tax/deferred tax assets or liabilities.
When applying its accounting policy at the year end the
Group generally considered each uncertain tax treatment
separately and reflected the effect of the uncertainty in the
income tax/deferred tax assets or liabilities using an expected
value approach as this better predicts the resolution of
the uncertainty. Such estimates are determined based on
management judgement, interpretation of the relevant tax
laws, correspondence with the relevant tax authorities and
external tax advisors and past practices of the tax authorities.
Where the final outcome of these tax matters is different
from the amounts that were recorded, such differences will
impact the income tax and deferred tax charge in the period
in which such determination is made.
Income taxes and deferred tax assets and liabilities are
disclosed in notes 7 and 17 to the consolidated financial
statements, respectively.
Other areas
Other areas where accounting estimates and judgements
are required, though the impact on the consolidated
financial statements is not considered as significant as those
mentioned above, are non-trading items (note 5), property,
plant and equipment including right-of-use assets (note
11), intangible assets (note 12), financial asset investments
(note 13), assets classified as held for sale (note 18), rebates
included in trade and other receivables (note 19), financial
instruments (notes 23 and 24), provisions (note 25) and
retirement benefits obligation (note 26).
Leasing has been included above as this is the first year
of adoption of IFRS 16. In determining the incremental
borrowing rate for lease contracts/liabilities the Group, where
possible, has utilised external benchmarked information and
takes into consideration credit rating, applicable margin for
lease by currency, interest rate for the lease term and applies
a currency premium where applicable. The Group has applied
judgement in determining the lease term of contracts that
include renewal options. If the Group is reasonably certain
of exercising such options this will impact the lease term and
accordingly the amount of lease liabilities and right-of-use
assets recognised. The Group reassesses these estimates
and judgements if a significant event or a significant change
in circumstances occurs.
163

1.	
Statement of accounting policies (continued)			
New standards and interpretations
Certain new and revised accounting standards and new International Financial Reporting Interpretations Committee (‘IFRIC’)
interpretations have been issued. The Group intends to adopt the relevant new and revised standards when they become effective
and the Group’s assessment of the impact of these standards and interpretations is set out below.
The following Standards and Interpretations are effective for the Group in 2019 but do not have a
material effect on the results or financial position of the Group:
Effective Date
- IFRS 16 Leases
IFRS 16, published in January 2016, replaces the existing standard IAS 17 ‘Leases’. IFRS
16 eliminates the classification of leases as either operating leases or finance leases
for lessees. It introduces a single lessee accounting model, which requires a lessee to
recognise assets and liabilities for all leases with a term of more than 12 months with
certain exceptions and to recognise depreciation of lease assets separately from interest
on lease liabilities in the income statement.
The Group has adopted IFRS 16 using the modified retrospective approach, under which
the cumulative effect of initial application of €12.1m and a deferred tax asset of €2.7m
was recognised in retained earnings at 1 January 2019. Accordingly, the comparative
information presented for 2018 has not been restated - i.e. it is presented, as previously
reported, under IAS 17 and related interpretations. Right-of-use assets for property leases
were measured on transition as if the new rules had always been applied, but discounted
at the incremental borrowing rate at 1 January 2019. All other right-of-use assets were
measured at the amount of the lease liability on adoption.
As at 31 December 2018, the Group had non-cancellable operating lease commitments
of €83.1m and finance lease commitments of €nil. Of these commitments, approximately
€1.0m relate to short-term leases and €0.1m are low-value leases which will be recognised
on a straight-line basis as an expense in the Consolidated Income Statement. The Group
has recognised right-of-use assets of €95.2m and lease liabilities of €107.3m on 1 January
2019, the transition date. A reconciliation explaining the difference between the IAS 17
operating lease commitments at year end and the lease liability at the date of transition to
IFRS 16 ‘Leases’ has been included in note 11. The weighted average incremental borrowing
rate applied to lease liabilities at the date of initial application was 6.7%. The Group has
also elected not to separate non-lease components from lease components, and instead
account for each lease component and any associated non-lease components as a single
lease component further increasing the lease liability at 1 January 2019. The Group has
excluded initial direct costs incurred in entering into the leases recognised on transition on
1 January 2019, these costs are included for leases entered into since this date.
1 January 2019
- IAS 19 (Amendments) Employee Benefits - Plan Amendment, Curtailment or Settlement 1 January 2019
- IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 ‘Uncertainty over Income Tax Treatments’ was issued in June 2017 and clarifies
how to apply the recognition and measurement requirements in IAS 12 when there is
uncertainty over income tax treatments.
The Group had previously accounted for uncertain tax positions in line with IFRIC 23 and
therefore, there is no impact to the Group in 2019 in respect of IFRIC 23.
The Group considers each uncertain tax treatment separately or together with one or
more uncertain tax treatments based on which approach better predicts the resolution
of the uncertainty. If the Group concludes that it is not probable that a taxation authority
will accept an uncertain tax treatment, the Group reflects the effect of the uncertainty in
determining the related taxable profit, tax bases, unused tax losses, unused tax credits
or tax rate. The Group reflects the effect of uncertainty for each uncertain tax treatment
using an expected value approach or a most likely approach depending on which method
the Group expects to better predict the resolution of the uncertainty. The unit of account
for recognition purposes is the income tax/deferred tax assets or liabilities and the Group
does not provide separately for uncertain tax positions.
1 January 2019

164
1.	
Statement of accounting policies (continued)			
New standards and interpretations (continued)
The following Standards and Interpretations are not yet effective for the Group and are not expected to have
a material effect on the results or financial position of the Group:
Effective Date
- IFRS 3 (Amendments) Business Combinations 1 January 2020
- 
IFRS 9, IAS 39 & IFRS 7
(Amendments)
Interest Rate Benchmark Reform 1 January 2020
- IAS 1 (Amendments) Presentation of Financial Statements 1 January 2020
- IAS 8 (Amendments) Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2020
- 
The Conceptual
Framework
Revised Conceptual Framework for Financial Reporting 1 January 2020
- IFRS 17 Insurance Contracts
IFRS 17 published in May 2017 will be effective for reporting periods beginning on
or after 1 January 2021. The Group is currently assessing the potential impact of the
standard on future periods however it is not expected that it will have a material impact.
1 January 2021
165

2. Analysis of results
The Group has determined it has two reportable segments: Taste & Nutrition and Consumer Foods. The Taste & Nutrition segment
is the global leader in the development of taste and nutrition solutions for the food, beverage and pharmaceutical industries across
Ireland, Europe, Americas and APMEA. Our broad technology foundation, customer-centric business model, and industry-leading
integrated solutions capability make Kerry the co-creation partner of choice. The Consumer Foods segment is an industry‐leading
manufacturer of chilled food products primarily in Ireland and in the UK.						
Taste &
Nutrition
2External revenue 5,939.1 1,302.2 - 7,241.3 5,272.4 1,335.2 - 6,607.6
Inter-segment revenue 78.5 4.4 (82.9) - 78.2 3.8 (82.0) -
Revenue 6,017.6 1,306.6 (82.9) 7,241.3 5,350.6 1,339.0 (82.0) 6,607.6
Trading profit 918.5 98.9 (114.7) 902.7 805.3 100.1 (99.8) 805.6
Intangible asset amortisation (64.3) (53.8)
Non-trading items (110.9) (66.9)
Operating profit 727.5 684.9
Finance income 0.3 0.5
Finance costs (81.9) (67.5)
Profit before taxation 645.9 617.9
Income taxes (79.4) (77.4)
Profit after taxation attributable to owners of the parent 566.5 540.5
Segment assets and liabilities
Segment assets 6,268.5 925.7 2,310.1 9,504.3 5,492.1 938.1 1,893.5 8,323.7
Segment liabilities (1,565.7) (311.8) (3,064.6) (4,942.1) (1,201.1) (348.2) (2,740.0) (4,289.3)
Net assets 4,702.8 613.9 (754.5) 4,562.2 4,291.0 589.9 (846.5) 4,034.4
Other segmental information
Property, plant and equipment
additions
247.2 32.7 0.7 280.6 259.1 23.6 1.0 283.7
Depreciation (net) 164.6 22.7 4.1 191.4 115.0 18.5 0.6 134.1
Intangible asset additions 1.3 2.0 51.9 55.2 0.3 2.1 28.0 30.4
Intangible asset amortisation 23.0 6.8 34.5 64.3 17.1 6.6 30.1 53.8

166
2. Analysis of results (continued)
Revenue analysis
Disaggregation of revenue from external customers is analysed by End Use Market (EUM), which is the primary market in which
Kerry’s products are consumed, and primary geographic market. An EUM is defined as the market in which the end consumer or
customer of Kerry’s product operates. The economic factors within the EUMs of Food, Beverage and Pharma and within the primary
geographic markets which affect the nature, amount, timing and uncertainty of revenue and cash flows are similar.
Analysis by EUM
Taste &
Nutrition
Food 4,161.5 1,302.2 5,463.7 3,617.6 1,335.2 4,952.8
Beverage 1,507.6 - 1,507.6 1,390.8 - 1,390.8
Pharma 270.0 - 270.0 264.0 - 264.0
External revenue 5,939.1 1,302.2 7,241.3 5,272.4 1,335.2 6,607.6
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical split:					
 plc is domiciled in the Republic of Ireland and the revenues from external customers in the Republic of Ireland were
€437.4m (2018: €456.9m). The non-current assets located in the Republic of Ireland are €930.3m (2018: €1,000.3m).
Revenues from external customers include €1,527.9m (2018: €1,560.8m) in the UK and €2,597.5m (2018: €2,189.5m) in the USA.
The non-current assets in the UK are €737.2m (2018: €668.9m) and in the USA are €2,142.5m (2018: €1,924.8m).
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8
‘Operating Segments’. The accounting policies of the reportable segments are the same as the Group’s accounting policies as
outlined in the Statement of Accounting Policies. Under IFRS 15 ‘Revenue from Contracts with Customers’ revenue is primarily
recognised at a point in time. Revenue recorded over time during the year was not material to the Group.
167

3. Operating profit
(i) Analysis of costs by nature
Revenue 
Less operating costs:
Raw materials and consumables 
Other general overheads 
Staff costs 
Depreciation:
- property, plant and equipment 
- right-of-use assets 
Capital grants amortisation 
Loss allowances on trade receivables 
Foreign exchange (gains)/losses 
Change in inventories of finished goods 
Share of associates and joint ventures (profit)/loss after tax during the financial year 
Trading profit 
Intangible asset amortisation 
Non-trading items
Operating profit
And is stated after charging:
Research and development costs 								
(i) Taste & Nutrition acquisition related costs				
	
During the year, acquisition integration and restructuring costs of €63.1m (2018: €44.2m) primarily related to costs of integrating
recent acquisitions into the Group’s operations and transaction expenses incurred in completing current year acquisitions. These
costs reflect the closure of factories, relocation of resources and the restructuring of operations in order to integrate the acquired
businesses into the existing Kerry operating model. A tax credit of €14.9m (2018: €10.1m) arose due to tax deductions available on
acquisition integration and restructuring costs.								
Other transaction costs of €17.6m related to a material transaction process that the Group participated in. These costs primarily
related to external costs associated with deal preparation, integration planning and due diligence. The associated tax credit is
€nil (2018: €nil).									
										
169

5. Non-trading items (continued)
(ii) Consumer Foods Realignment Programme
	
During 2019, the Consumer Foods business completed a programme to simplify its business model in terms of footprint and
resources in response to the challenging marketplace. The charge relating to this in 2019 is €26.7m, which reflects redundancies,
relocation of resources and the streamlining of operations. The associated tax credit is €4.5m (2018: €nil).
	
In 2018, Consumer Foods completed its Brexit Mitigation Programme whereby certain sourcing and production activities were
relocated and other activities restructured as a consequence of Brexit in order to reduce the Group’s sterling transaction exposure.
The net charge relating to this in 2019 is €nil (2018: €15.1m) and the associated tax credit is €nil (2018: €2.2m).			
						
(iii) Loss on disposal of businesses and assets
	
During the year, the Group disposed of property, plant and equipment primarily in the UK, US and Australia for a consideration of
€32.8m resulting in a loss of €3.5m for the year ended 31 December 2019. In 2018, the Group disposed of property, plant and
equipment primarily in Italy, Malaysia and the US for a consideration of €10.6m resulting in a loss of €1.0m. Also in 2018, the Group
disposed of investments in associates for a combined consideration of €1.1m resulting in a loss of €4.4m. Please see note 29 for a
reconciliation of the loss and cash impact on disposal of businesses and assets.
A tax charge of €0.2m (2018: €0.5m) arose on the disposal of assets and businesses.
There were no impairments of assets held for sale recorded in the financial year.
6. Finance income and costs
Recognition in the Consolidated Income Statement (before credit on non-trading items)
Current tax expense in the financial year 86.3 64.3
Adjustments in respect of prior years (0.2) (2.7)
86.1 61.6

	
The tax on the Group’s profit before taxation differs from the amount that would arise applying the standard corporation tax rate in
Ireland as follows:				

Profit before taxation 645.9 617.9
Taxed at Irish Standard Rate of Tax (12.5%) 80.7 77.2
Adjustments to current tax and deferred tax in respect of prior years (1.3) (1.1)
Net effect of differing tax rates 3.6 8.1
Changes in standard rates of taxes 2.3 (2.9)
Income not subject to tax (2.2) (1.3)
Utilisation of unprovided deferred tax assets (1.0) (1.4)
Other adjusting items (2.7) (1.2)
Income tax expense 79.4 77.4
					
	
An increase in the Group’s applicable tax rate of 1% would reduce profit after taxation by €6.4m (2018: €6.2m). Factors that may
affect the Group’s future tax charge include the effects of restructuring, acquisitions and disposals, changes in tax legislation and
rates and the use of brought forward losses.

8. Profit attributable to  plc					
	
In accordance with section 304(2) of the Companies Act, 2014, the Company is availing of the exemption from presenting its
individual income statement to the Annual General Meeting and from filing it with the Registrar of Companies. The Company’s profit
after taxation for the financial year is €140.3m (2018: €158.9m).					
		
				
9. Earnings per A ordinary share					

Basic earnings per share
Profit after taxation attributable to owners of the parent 320.4 566.5 305.9 540.5
Diluted earnings per share
Profit after taxation attributable to owners of the parent 319.9 566.5 305.7 540.5
Number of Shares Note

Basic weighted average number of shares 176.8 176.7
Impact of share options outstanding 0.3 0.1
Diluted weighted average number of shares 177.1 176.8
Actual number of shares in issue as at 31 December 27 176.5 176.3
		
10.Dividends		

Group and Company:
Amounts recognised as distributions to equity shareholders in the financial year
Final 2018 dividend of 49.20 cent per A ordinary share paid 10 May 2019
(Final 2017 dividend of 43.90 cent per A ordinary share paid 18 May 2018) 86.7 77.4
Interim 2019 dividend of 23.50 cent per A ordinary share paid 15 November 2019
(Interim 2018 dividend of 21.00 cent per A ordinary share paid 16 November 2018) 41.6 37.0
128.3 114.4
Since the financial year end the Board has proposed a final 2019 dividend of 55.10 cent per A ordinary share which amounts to
€97.3m. The payment date for the final dividend will be 15 May 2020 to shareholders registered on the record date as at 17 April
2020. The consolidated financial statements do not reflect this dividend.
11.Property, plant and equipment
Notes

Group:

The Group have applied the modified retrospective transition approach and have not restated comparative amounts for the years prior
to first adoption.

172
11.Property, plant and equipment (continued)
(i) Property, plant and equipment analysis

Group:
Cost
At 1 January 2018 1,051.5 1,822.2 211.5 14.7 3,099.9

174
11.Property, plant and equipment (continued)
(ii) Right-of-use assets analysis (continued)
The right-of-use assets consist of:						
-	
land and buildings for warehouse space, offices and manufacturing facilities. The lease terms vary and range from 1 to 94 years
with an average of 8 years for buildings and an average of 55 years for land;				
-	
machinery, equipment, tools, furniture and other equipment when combined are insignificant to the total leased assets
portfolio and have an average lease term of 4 to 5 years; and
-	
motor vehicles for management and sales functions and trucks for distribution in specific businesses. The lease terms for
motor vehicles range from 1 to 8 years with an average of 4 years.					
							

At 1 January 2019, on transition to IFRS 16, the Group recognised right-of-use assets of €95.2m and lease liabilities of €107.3m.
The Group recorded the difference of €12.1m and the related deferred tax asset of €2.7m in retained earnings.			
			
(iii) Lease Disclosures		
(iii.i) Amounts recognised in the Consolidated Income Statement: 2019
€’m
Depreciation charged during the financial year 35.2
Expenses relating to short-term leases 1.9
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets 0.2
Interest on lease liabilities*:
- on transition to IFRS 16 4.6
- leases entered into during the financial year 1.7
* included in interest payable
(iii.ii) Amounts recognised in the Consolidated Statement of Cash Flows: 2019
€’m
Total cash outflow for leases during the year* 43.9
* includes interest expense and principal repayments of lease liabilities and short-term and low-value lease expenses
(iii.iii) At the balance sheet date the Group had commitments under non-cancellable leases
which fall due as follows:
2019
€’m
Within 1 year 34.9
Within 2 to 5 years 57.2
After 5 years 17.3
109.4
(iv) Reconciliation of IAS 17 lease commitments and IFRS 16 lease liability
2019
€’m
Future minimum lease payments under non-cancellable operating leases as at 31 December 2018 83.1
- additional leases identified for acquisitions as part of the measurement period 6.2
- future lease payments on renewal options that are reasonably certain 26.7
- non-lease components 14.3
- future lease payments on short-term leases (1.0)
- future lease payments on low-value leases (0.1)
Total future lease payments 129.2
Effect of discounting (21.9)
Lease liability at 1 January 2019 107.3
							
175

12.Intangible assets					
Allocation of the purchase price in a business combination affects the results of the Group as finite life intangible assets are
amortised, whereas indefinite life intangible assets, including goodwill, are not amortised. This could result in differing amortisation
charges based on the allocation to finite life and indefinite life intangible assets.
Included in the cost of brand related intangibles are intangibles of €1,307.2m (2018: €1,175.9m) which have indefinite lives.
Approximately €16.5m (2018: €11.4m) of computer software additions during the year were internally generated. Included in this
are payroll costs of €11.2m (2018: €8.3m). The Group has not capitalised product development expenditure in 2019 (2018: €nil).
The Group has no separate individual intangible asset that is material, as all intangibles acquired are integrated and developed
within the existing business.

176
12.Intangible assets (continued)				
Impairment testing
Goodwill and indefinite life intangibles are subject to impairment testing on an annual basis, or more frequently if there are
indicators of impairment. These assets are allocated to groups of cash generating units (CGUs). The recoverable amount of each
of the four CGUs is determined on value in use calculations. Intangible assets acquired in a business combination are allocated to
CGUs that are expected to benefit from the business acquisition, rather than where the assets are owned.
Cash flow forecasts employed for the value in use calculations are for a five year period approved by management and a terminal
value which is applied to the year five cash flows. The terminal value reflects the discounted value of the cash flows beyond year five
which is based on the weighted average long term growth rates for each CGU.
No impairment was recognised in 2019 or 2018 as a result of the impairment testing which identified significant headroom in the
recoverable amount of the related CGUs as compared to their carrying value. In 2019, there was no specific impairment charge
(2018: €nil) in relation to goodwill recorded in non-trading items in the Consolidated Income Statement due to the classification of a
business as held for sale.
A summary of the allocation of the carrying value of goodwill and indefinite life intangible assets by CGU, is as follows:										
Key assumptions				
Forecasts are generally derived from a combination of internal and external factors based on historical experience and take account
of expected growth in the relevant region. The key assumptions for calculating value in use calculations are those relating to the
discount rate, growth rate and cash flows. The table below outlines the weighted average discount rates and weighted average long
term growth rates used in the terminal value for each CGU:				
					
					
Management estimate discount rates using pre-tax rates consistent with the Group’s weighted average cost of capital and the risks
specific to the CGUs. A higher discount rate is applied to higher risk markets, while a lower rate is applied to more stable markets.
Long term growth rates are based on external market data and are broadly in line with long term industry growth rates. Generally,
lower growth rates are used in mature markets while higher growth rates are used in emerging markets.
The assumptions used by management in estimating cash flows for each CGU include future profitability, capital expenditure
requirements and working capital investment. The cash flows included in the value in use calculations are generally determined
based on historical performance, management’s past experience, management’s expectation of future trends affecting the industry
and other developments and initiatives in the business. Capital expenditure requirements to maintain the CGUs performance and
profitability are based on the Group’s strategic plans and broadly assume that historic investment patterns will be maintained.
Working capital requirements are forecast to move in line with activity. 				
177

12.Intangible assets (continued)
Impairment testing (continued)
Sensitivity analysis
Sensitivity analysis has been performed across the four CGUs. If the discount rate was 1% higher than management’s estimates,
there would have been no requirement for the Group to recognise any impairment charge in 2019 or 2018. Further, a 5% increase
would not have resulted in an impairment charge in 2019 or 2018 as there is headroom in the discounted cash flows. If the
estimated growth rate was 1% lower than management’s estimates, there would have been no requirement for the Group to
recognise any impairment charge in 2019 or 2018. If the estimated cash flows were 5% lower than management’s estimates, again
there would have been no requirement for the Group to recognise any impairment charge in 2019 or 2018. Management believes
that no reasonable change, in normal circumstances, in any of the above key assumptions would cause the carrying value of any
CGU to exceed its recoverable amount.
13.Financial asset investments
FVOCI
						
Investments held at fair value through other comprehensive income					
These represent investments in equity securities. These investments have no fixed maturity or coupon rate. A fair value assessment
was performed in 2019 which resulted in a decrease to the carrying value of these assets of €1.0m (2018: €1.9m) through other
comprehensive income.					
						
Other investments					
The Group maintains a Rabbi Trust in respect of a non-qualified deferred compensation plan in the USA. The assets of the trust
primarily consist of equities, bonds and cash which are restricted for use. The equities and bonds are fair valued through profit
or loss at each financial year end using quoted market prices. The corresponding liability is recognised within other non-current
liabilities (note 22).

178
14.Investments in associates and joint ventures					
Notes

At 1 January 15.6 5.8
Acquisition - 15.6
Disposal 5 - (5.5)
Share of profit/(loss) after tax during the financial year 3 0.6 (0.3)
At 31 December 16.2 15.6
						
In 2018, the Group entered into a joint venture through the purchase of a 55% shareholding in Proparent B.V. for a total
consideration of €15.6m. Proparent B.V. owns Ojah B.V., an alternative protein and extrusion business based in The Netherlands.
The Group has a call option to acquire the remaining 45% interest under an agreed valuation methodology in 2022. The Group is
satisfied that the fair value attached to this call option is nominal.					
						
During 2018, the Group disposed of its 42.8% shareholding in The Bodychef Limited and its 28.6% shareholding in Everdine Holding
S.a.r.l. from the investment in associates line in the Consolidated Balance Sheet for a combined consideration of €1.1m resulting in a
loss of €4.4m.					
15.Investments in subsidiaries					

Company:
At 1 January 714.4 637.7
Additions - 76.7
At 31 December 714.4 714.4
						
In 2018, the Company increased its investment in Kerry Holding Co. in the US in order to fund acquisitions.
16.Inventories							

Raw materials and consumables 441.8 367.1
Finished goods and goods for resale 515.2 480.9
Expense inventories 36.3 29.8
At 31 December 993.3 877.8
								
Write-downs of inventories recognised as an expense approximates to 1.2% (2018: 0.9%) of raw materials and consumables in the
Consolidated Income Statement.
179

17.Deferred tax assets and liabilities							
The following is an analysis of the movement in the major categories of deferred tax liabilities/(assets) recognised by the Group:

At 1 January 2018 67.8 205.3 (21.2) (22.4) (34.0) 195.5
Consolidated Income Statement movement 7 8.5 2.5 (1.0) 7.3 1.3 18.6
Recognised in other comprehensive income (OCI)
during the financial year
- - - 6.3 0.2 6.5
Related to businesses acquired/(disposed) 3.9 59.5 - - 0.7 64.1
Exchange translation adjustment 2.1 1.6 0.7 (0.4) (1.7) 2.3
At 31 December 2018 82.3 268.9 (21.5) (9.2) (33.5) 287.0
Adjustment on initial application of IFRS 16 ‘Leases’ (2.7) - - - - (2.7)
Adjusted balances at 1 January 2019 79.6 268.9 (21.5) (9.2) (33.5) 284.3
Consolidated Income Statement movement 7 (4.2) 2.1 2.5 3.8 (4.8) (0.6)
Recognised in OCI during the financial year - pension
& hedging
- - - 2.0 1.4 3.4
Related to businesses acquired/(disposed) 3.1 7.1 (0.7) - (1.1) 8.4
Exchange translation adjustment 2.1 3.5 (0.3) 0.1 (0.9) 4.5
At 31 December 2019 80.6 281.6 (20.0) (3.3) (38.9) 300.0
								
The short term temporary differences and other temporary differences recognised in other comprehensive income comprise fair
value movements on cash flow hedges of €1.4m (2018: €0.2m). In the above table, NOLs refers to Net Operating Losses.
The following is an analysis of the deferred tax balances (after offset) for balance sheet purposes:			

Deferred tax assets (38.9) (37.1)
Deferred tax liabilities 338.9 324.1
300.0 287.0
The total deductible temporary differences for which deferred tax assets have not been recognised is €27.4m (2018: €22.9m).
The Group does not have any unrecognised losses which have an expiry date.
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on the unremitted
earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of the temporary differences and
it is probable that the temporary differences will not reverse in the foreseeable future. The deferred tax liabilities which have not
been recognised in respect of these temporary differences are not material as the Group can rely on the availability of participation
exemptions and tax credits in the context of the Group’s investments in subsidiaries.
An increase of 1% in the tax rates at which deferred tax is calculated would increase the net deferred tax balance of the Group by
€14.5m (2018: €13.3m).
18.Assets classified as held for sale

Property, plant and equipment - 2.0
- 2.0
In 2019, the Group reclassified certain property, plant and equipment from held for sale to property, plant and equipment in the
Taste & Nutrition segment in Europe.
Trade receivables 1,002.4 906.4 - -
Loss allowances (35.7) (31.5) - -
Trade receivables due within 1 year 966.7 874.9 - -
Other receivables and prepayments 56.8 53.6 - -
Amounts due from subsidiaries - - 135.8 94.1
VAT receivable 40.4 38.9 - -
Receivables due after 1 year 2.4 0.4 - -
1,066.3 967.8 135.8 94.1
All receivable balances are due within 1 year except for €2.4m (2018: €0.4m) outlined above. All receivable balances are within terms
with the exception of certain trade receivables which are past due and are detailed below.
The following table shows an analysis of trade receivables split between past due and within terms accounts, where past due is
deemed to be when an account exceeds the agreed terms of trade:
				
Note

Within terms 823.9 734.0
Past due not more than 1 month 100.4 108.2
Past due more than 1 month but less than 2 months 31.1 24.7
Past due more than 2 months but less than 3 months 9.2 6.3
Past due more than 3 months 2.1 1.7
Trade receivables (net) 966.7 874.9
						
The following table summarises the movement in loss allowances:					
						

At beginning of financial year 31.5 29.0
Increase in loss allowance charged to the Consolidated Income Statement 3 6.5 8.5
Utilised during the financial year (3.1) (5.7)
Exchange translation adjustment 0.8 (0.3)
At end of the financial year 35.7 31.5
						
Trade and other receivables are stated at amortised cost less loss allowances. The fair value of these receivables approximates their
carrying value as these are short term in nature; hence, the maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. The expected loss rates are based on the payment profiles of sales and the corresponding
historical credit loss experience. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors, including the GDP of the countries in which it sells its goods and services, that affect the ability of
customers to settle receivables.
Before accepting any new customer, the Group uses a credit scoring system to assess the potential customer’s credit quality and
defines credit limits by customer. These credit limits are reviewed regularly throughout the financial year. The Group does not
typically require collateral in respect of trade receivables.
There is no significant concentration of credit risk or transaction currency risk with respect to trade receivables, as the Group
has a large number of internationally dispersed customers. Further disclosures on currency risk are provided in note 24 to the
financial statements.
181

Trade payables 1,376.9 1,285.9 15.7 -
Other payables and accruals 202.0 177.6 - 0.5
Lease liabilities 34.9 - - -
Deferred payments on acquisition of businesses 13.0 10.1 5.8 5.8
PAYE 9.1 2.9 - -
Social security costs 7.1 5.6 - -
1,643.0 1,482.1 21.5 6.3
Trade and other payables are stated at amortised cost, which approximates to fair value given the short term nature of these
liabilities. The above balances are all due within 1 year.
21.Deferred income					
Capital grants
At beginning of the financial year 22.4 24.1 0.1 0.1
Grants received during the financial year 3.2 0.6 - -
Amortised during the financial year 3 (2.4) (2.3) - -
Disposal (0.2) (0.1) - -
Exchange translation adjustment 0.1 0.1 - -
At end of the financial year 23.1 22.4 0.1 0.1
Analysed as:
Current liabilities 2.2 1.2 - -
Non-current liabilities 20.9 21.2 0.1 0.1
23.1 22.4 0.1 0.1
There are no material unfulfilled conditions or other contingencies attaching to any government grants received.			
Other payables and accruals 84.7 82.6 - -
Lease liabilities 74.5 - - -
Deferred payments on acquisition of businesses 8.7 - - -
167.9 82.6 - -
All of the above balances are due within 2 to 5 years except for €17.3m (2018: €0.2m) which is not due until after 5 years.		
			

1Group:
Financial asset investments 13 - 37.4 - 4.3 41.7
Forward foreign exchange contracts 24 (i.i) - - 12.0 - 12.0
Interest rate swaps 24 (ii.ii) - - 128.4 - 128.4
Trade and other receivables 19 1,066.3 - - - 1,066.3
Cash at bank and in hand 24 (iii.i) 554.9 - - - 554.9
Total financial assets 1,621.2 37.4 140.4 4.3 1,803.3
Current assets 1,621.2 - 57.7 - 1,678.9
Non-current assets - 37.4 82.7 4.3 124.4
1,621.2 37.4 140.4 4.3 1,803.3
Borrowings and overdrafts 24 (iii.i) (2,521.2) (24.9) - - (2,546.1)
Forward foreign exchange contracts 24 (i.i) - - (12.1) - (12.1)
Interest rate swaps 24 (ii.ii) - - - - -
Trade and other payables 20/22 (1,810.9) - - - (1,810.9)
Total financial liabilities (4,332.1) (24.9) (12.1) - (4,369.1)
Current liabilities (1,833.5) (0.3) (12.1) - (1,845.9)
Non-current liabilities (2,498.6) (24.6) - - (2,523.2)
(4,332.1) (24.9) (12.1) - (4,369.1)
Total net financial (liabilities)/assets (2,710.9) 12.5 128.3 4.3 (2,565.8)
Included in the above table are the following components of net debt:
Analysis of total net debt by category
Bank overdrafts (5.2) - - - (5.2)
Bank loans (1.2) - - - (1.2)
Senior notes (2,514.8) (24.9) - - (2,539.7)
Borrowings and overdrafts (2,521.2) (24.9) - - (2,546.1)
Interest rate swaps - - 128.4 - 128.4
Cash at bank and in hand 554.9 - - - 554.9
Total net debt (1,966.3) (24.9) 128.4 - (1,862.8)
							
All Group borrowings are guaranteed by  plc. No assets of the Group have been pledged to secure the borrowings.
Part of the Group’s debt portfolio includes US$750m of senior notes issued in 2013 and US$408m of senior notes issued in 2010.
At the time of issuance, US$250m of the 2013 senior notes and US$500m of the 2010 US$600m senior notes were swapped, using
cross currency swaps, to euro. US$192m of the 2010 senior notes were repaid in January 2017 and the related swaps matured at
that date. In addition, the Group holds €750m of senior notes issued in 2015, of which €175m were swapped, using cross currency
swaps, to US dollar. No interest rate derivatives were entered into for the September 2019 €750m senior notes issuance.
The adjustment to senior notes classified under liabilities at fair value through profit or loss of €24.9m (2018: €13.2m) represents the
part adjustment to the carrying value of debt from applying fair value hedge accounting for interest rate risk. This amount is primarily
offset by the fair value adjustment on the corresponding hedge items being the underlying cross currency interest rate swaps.
183

23.Analysis of financial instruments by category (continued)
				

184
23.Analysis of financial instruments by category (continued) 			
The following table outlines the financial assets and liabilities held by the Company at the balance sheet date:		
Notes

Company:
Financial assets at amortised cost
Cash at bank and in hand - -
Trade and other receivables 19 135.8 94.1
Total financial assets - all current 135.8 94.1
Financial liabilities at amortised cost
Borrowings and overdrafts - -
Trade and other payables 20 (21.5) (6.3)
Total financial liabilities - all current (21.5) (6.3)
Total net financial assets 114.3 87.8
24.Financial instruments			
Capital management			
The financing structure of the Group is managed in order to optimise shareholder value while allowing the Group to take advantage
of opportunities that might arise to grow the business. The Group targets acquisition and investment opportunities that are value
enhancing and the Group’s policy is to fund these transactions from cash flow or borrowings while maintaining its investment grade
debt status. 			
				
The capital structure of the Group consists of debt related financial liabilities, cash and cash equivalents, deferred payments on
acquisitions of businesses and equity attributable to owners of the parent, comprising issued capital, reserves and retained earnings
as disclosed in the Consolidated Statement of Changes in Equity, as represented in the table below:			
				
Notes

Issued capital and reserves attributable to owners of the parent 4,562.2 4,034.4
Total net debt 23 1,862.8 1,623.5
Deferred payments on acquisition of businesses 20/22 21.7 10.1
6,446.7 5,668.0
				
In June 2019, the Group completed a five year €1.1bn revolving credit facility which matures in June 2024 and replaced the existing
facility that was due to mature in April 2022. The facility contains two extension options exercisable on the 1st and 2nd anniversaries
of the facility and which, if exercised, will extend the maturity date of the facility to June 2026. In keeping with the Group’s
commitment to ESG, the facility incorporates a price adjustment mechanism which is linked to the Group meeting or exceeding
its carbon, water and waste efficiency metrics.
In September 2019, the Group issued €750m senior notes carrying an annual coupon of 0.625%. These notes are rated by S&P and
Moody’s and are listed on Euronext Dublin. The proceeds of the issuance were used primarily to repay existing debt and for general
corporate purposes.
The senior notes issued by the Group in 2013, 2015 and 2019 are rated by S&P and Moody’s.
Capital is managed by setting net debt to earnings before finance income and costs, income taxes, depreciation (net), intangible
asset amortisation and non-trading items (EBITDA) targets while allowing flexibility to accommodate significant acquisition
opportunities. Any expected variation from these targets should be reversible within 18 to 24 months; otherwise consideration
would be given to issuing additional equity in the Group.
185

24.Financial instruments (continued)			
Capital management (continued)			
Net debt is subject to seasonal fluctuations that can be up to 25% above year end debt levels.
The senior notes of $408m issued in 2010 remain outstanding and this series of notes carry financial covenants calculated in
accordance with the Note Purchase Agreement. The principal financial covenants are:			
- the ratio of Net debt to EBITDA of a maximum of 3.5 times; and			
- EBITDA to Net interest charge of a minimum of 4.75 times.
At 31 December these ratios were as follows:			
2019
Times
2018
Times
Net debt: EBITDA* 1.8 1.7
EBITDA: Net interest* 13.2 14.7
* Calculated in accordance with lenders’ facility agreements which take account of adjustments as outlined on page 218.		
No other financial arrangements carry financial covenants.
Financial risk management objectives
The Group has a clearly defined Financial Risk Management Programme, which is approved by the Board of Directors and is subject
to regular monitoring by the Finance Committee and Group Internal Audit. The Group operates a centralised treasury function,
which manages the principal financial risks of the Group and Company.
The principal objectives of the Group’s Financial Risk Management Programme are:			
- to manage the Group’s exposure to foreign exchange rate risk;			
- to manage the Group’s exposure to interest rate risk;			
- to ensure that the Group has sufficient credit facilities available to manage liquidity risk; and			
- to ensure that counterparty credit risk is monitored and managed.
Residual exposures not managed commercially are hedged using approved financial instruments. The use of financial derivatives is
governed by the Group’s policies and procedures. The Group does not engage in speculative trading.
The principal objectives of the Group’s Financial Risk Management Programme are further discussed across the following categories:
(i) 	
Foreign exchange rate risk management - key foreign exchange exposure of the Group and the disclosures on forward foreign
exchange contracts.			
(ii) 	
Interest rate risk management - key interest rate exposures of the Group and the disclosures on interest rate derivatives.
(iii) Liquidity risk management - key banking facilities available to the Group and the maturity profile of the Group’s debt.
(iv) Credit risk management - details in relation to the management of credit risk within the Group.
(v) Price risk management - key price risk exposures of the Group.
(vi) Fair value of financial instruments - disclosures in relation to the fair value of financial instruments.
(vii) Offsetting financial instruments - disclosures in relation to the potential offsetting values in financial instruments.
(i) Foreign exchange rate risk management
The Group is exposed to transactional foreign currency risk on trading activities conducted by subsidiaries in currencies other than
their functional currency. Group policy is to manage foreign currency exposures commercially and through netting of exposures
wherever possible. Any residual exposures arising on foreign exchange transactions are hedged in accordance with Group policy
using approved financial instruments, which consist primarily of spot and forward exchange contracts and currency swaps.
As at 31 December, the Group had an exposure to a USA dollar liability of €26.4m (2018: €12.3m) and a sterling asset of €11.7m
(2018: €4.8m). Based on these net positions, as at 31 December 2019, a weakening of 5% of the US dollar and sterling against all
other key operational currencies, and holding all other items constant, would have increased the profit after taxation of the Group
for the financial year by €0.7m (2018: €0.4m).
The Group’s gain or loss on the retranslation of the net assets of foreign currency subsidiaries is taken directly to the translation
reserve. As at 31 December 2019 a 5% strengthening of the euro against the US dollar and sterling, holding all other items constant,
would have resulted in an additional translation reserve loss of €21.7m (2018: €21.5m) and €23.0m (2018: €21.7m), respectively.
(i.i) Forward foreign exchange contracts
The Group’s activities expose it to risks of changes in foreign currency exchange rates in relation to international trading, primarily
sales in US dollar and sterling out of the Eurozone and sales and purchases in US dollar in APMEA. The Group uses forward foreign
exchange contracts to hedge these exposures. All such exposures are highly probable. Derivative financial instruments are held in
the Consolidated Balance Sheet at their fair value.

										
* Location of line item in the Consolidated Balance Sheet
1 Other current financial instruments									
2 Other non-current financial instruments									
										
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item
is more than twelve months and as a current asset or liability if the maturity of the hedged item is less than twelve months.
The Group adopted the hedge accounting requirements of IFRS 9 ‘Financial Instruments’. The Group enters into hedge relationships
when there is an economic relationship between the underlying highly probable forecasted transactions (hedged item) and
the forward foreign exchange contracts (hedged instruments). As the critical terms match for the prospective assessment of
effectiveness, a qualitative assessment is performed. The Group has established a 1:1 hedge ratio as the underlying risks in the
forward foreign currency exchange contract are identical to the hedged risk components. Hedge effectiveness is determined at the
origination of the hedging relationship. In instances where changes occur to the hedged item which result in the critical terms no
longer matching, the Group uses the hypothetical derivative method to assess effectiveness.
The Group does not hold any forward foreign exchange contracts classified as fair value hedges.
The following table details the foreign exchange contracts classified as cash flow hedges at 31 December:		
Fair Value Liability Notional Principal


Forward foreign exchange contracts
oss 1.7 4.5
0.1 1.1
The fair value included in the hedging reserve will primarily be released to the Consolidated Income Statement within 6 months (2018:
6 months) of the balance sheet date. All forward contracts relate to sales revenue and purchases made in their respective currencies
and forward foreign exchange contracts that provide a hedge against foreign currency receivables from ‘within Group’ lending.
187

24.Financial instruments (continued)			
Financial risk management objectives (continued)
(i) Foreign exchange rate risk management (continued)
(i.i) Forward foreign exchange contracts (continued)
The following table details the impact of forward foreign exchange contracts* - cash flow hedges on the Consolidated Income
Statement and Consolidated Statement of Comprehensive Income during the financial year:

Movements recognised in the Consolidated Statement of Comprehensive Income
Total hedging gain recognised in OCI in the financial year (2.4) 2.7
Amount reclassified from OCI to profit or loss 0.6 (2.1)
(1.8) 0.6
Movements recognised in the Consolidated Income Statement
Income reclassified from OCI to profit or loss 1
(0.6) 2.1
Ineffectiveness recognised in profit or loss 1
- -
(0.6) 2.1
										
* Location of line item in the Consolidated Income Statement							
1 Other general overheads									
There were no transactions during 2019 or 2018 which were designated as hedges that did not occur, nor are there hedges on
forecast transactions that are no longer expected to occur.
(ii) Interest rate risk management 									
The Group is exposed to interest rate risk as the Group holds borrowings on both a fixed and floating basis. This exposure to
interest rate risk is managed by optimising the mix of fixed and floating rate borrowings and by using interest rate swaps, cross
currency swaps and forward rate agreements to hedge these exposures, in accordance with Group policy as approved by the Board
of Directors. The Group reviews the mix of fixed and floating rate borrowings on an ongoing basis and adjusts where necessary to
comply with Group policy. Derivative financial instruments are held in the Consolidated Balance Sheet at their fair value.		
							
(ii.i) Interest rate profile of financial liabilities excluding related derivatives fair value
The Group’s exposure to interest rates on financial assets and liabilities are detailed in the table below including the impact of cross
currency swaps (CCS) on the currency profile of net debt:
Total
Euro (1,286.0) (411.0) (1,697.0) (149.3) (1,547.7)
Sterling 77.9 - 77.9 77.9 -
US Dollar (887.4) 411.0 (476.4) (253.7) (222.7)
Others 129.2 - 129.2 129.2 -
At 31 December 2019 (1,966.3) - (1,966.3) (195.9) (1,770.4)
Euro (1,016.2) (399.8) (1,416.0) (622.6) (793.4)
Sterling 51.0 - 51.0 51.0 -
US Dollar (805.5) 399.8 (405.7) (187.3) (218.4)
Others 64.2 - 64.2 64.2 -
At 31 December 2018 (1,706.5) - (1,706.5) (694.7) (1,011.8)
The currency profile of debt highlights the impact of the US$658m (2018: US$658m) of cross currency swaps entered into at the
time of issuance of senior notes. For the 2013 senior notes, US$250m were swapped from US dollar fixed to euro fixed and are
accounted for as cash flow hedges. For the 2010 senior notes, US$408m were swapped from US dollar fixed to euro floating and
are accounted for as fair value hedges. The retranslation of the foreign currency debt of US$658m (2018: US$658m) to the balance
sheet rate resulted in a foreign currency loss of €116.3m (2018: €105.1m) which is directly offset by a gain of €116.3m (2018:
€105.1m) on the application of hedge accounting on the cross currency swaps.

188
24.Financial instruments (continued)			
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.i) Interest rate profile of financial liabilities excluding related derivatives fair value (continued)
In addition, the Group holds €750m of senior notes issued in 2015, of which €175m were swapped, using cross currency swaps,
from euro fixed to US dollar floating and are accounted for as fair value hedges of the related debt. The fair value of the related
derivative includes an asset of €1.5m (2018: €4.8m) for movement in exchange rates since the date of execution which is directly
offset by a loss of €1.5m (2018: €4.8m) on the application of hedge accounting on the cross currency swaps.
The floating rate financial liabilities are at rates which fluctuate mainly based upon LIBOR or EURIBOR and comprise of bank
borrowings and other financial liabilities bearing interest rates fixed in advance for periods ranging from 1 to 6 months. At the
financial year end 10% (2018: 41%) of net debt and 30% (2018: 52%) of gross debt was held at floating rates. If the interest rates
applicable to floating rate net debt were to rise by 1% holding all other items constant, the profit of the Group before taxation and
non-trading items in the Consolidated Income Statement could decrease by 1% (2018: 1%).					
				
(ii.ii) Interest rate swap contracts
The Group’s activities expose it to risks of changes in interest rates in relation to long term debt. The Group uses interest rate swaps,
cross currency swaps and forward rate agreements to hedge these exposures. Derivative financial instruments are held in the
Consolidated Balance Sheet at their fair values.
The Group adopts an ‘exit price’ approach to valuing interest rate derivatives to allow for credit risk.
The following table details the portfolio of interest rate derivative contracts* at the balance sheet date:			
Designated in a hedging relationship:
Interest rate swap contracts - cash flow hedges (a) 18.4 - 18.4 5.2 - 5.2
- non-current 2
18.4 - 18.4 5.2 - 5.2
Interest rate swap contracts - fair value hedges (b) 110.0 - 110.0 96.5 (5.5) 91.0
- current 1
45.7 - 45.7 - - -
- non-current 2
64.3 - 64.3 96.5 (5.5) 91.0
Interest rate swap contracts 128.4 - 128.4 101.7 (5.5) 96.2
										
* Location of line item in the Consolidated Balance Sheet
1 Other current financial instruments
2 Other non-current financial instruments
The Group adopted the hedge accounting requirements of IFRS 9 ‘Financial Instruments’. The Group enters into hedge relationships
when there is an economic relationship between the identified notional amount of the underlying debt instrument (hedged item)
and the interest rate swap contract (hedged instrument).
Interest rate swap									
As the critical terms match for the prospective assessment of effectiveness, a qualitative assessment is performed. The Group has
established a 1:1 hedge ratio as the underlying risks in the interest rate swap contracts are identical to the hedged risk components.
Hedge effectiveness is determined at the origination of the hedging relationship. In instances where changes occur to the
hedged item which result in the critical terms no longer matching, the Group uses the hypothetical derivative method to assess
effectiveness. Hedge ineffectiveness may occur due to the credit/debit value adjustment on the interest rate swaps which is not
matched by the loan.									
										
Cross currency interest rate swap									
The Group uses the hypothetical derivative method to assess effectiveness for such swaps as while the critical terms match, both
qualitative and quantitative assessments are required to be performed as there remains characteristics in cross currency interest
rate swap contracts that are not present in the hedged item, being basis risks. The Group has established a 1:1 hedge ratio as the
underlying risks in the cross currency interest rate swap contracts are identical to the hedged risk components. Hedge effectiveness
is determined at the origination of the hedging relationship and at each reporting date.
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged
item is more than twelve months and as a current asset or liability if the maturity of the hedged item is less than twelve months.
The classification of the maturity profile of the interest rate derivative contracts are set out in the following tables (a) and (b).		
							
										
189

24.Financial instruments (continued)			
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts (continued)
(a) Interest rate swap contracts - cash flow hedges
Under interest rate swap contracts, including cross currency interest rate swaps, the Group agrees to exchange the difference
between the fixed and floating rate interest amounts calculated on the agreed notional principal amounts.
The following table details the notional principal amounts and remaining terms of the cash flow hedges, where the Group receives a
floating or a fixed interest rate and pays fixed interest rate on swaps as at 31 December:				
Average Contracted
Fixed Interest Rate   Fair Value Asset Notional Principal
2019
%
2018
%


Interest rate swap contracts
2 - 5 years 2.58 2.58 18.4 5.2 222.7 218.4
Interest rate swap contracts - cash flow hedges 18.4 5.2 222.7 218.4
The following table details the impact of interest rate swap contracts* - cash flow hedges on the Consolidated Balance Sheet
as at 31 December:							

Interest rate swap contracts - cash flow hedges 18.4 5.2
Fixed rate borrowings:
Amount reclassified from hedge reserve to profit or loss re: foreign exchange rate fluctuations1
(27.2) (23.0)
Retained earnings and other reserves:
Cash flow hedging reserve 9.8 18.9
Cost of hedging reserve (1.4) (1.6)
Accumulated hedge ineffectiveness 0.4 0.5
(18.4) (5.2)
* Location of line item in the Consolidated Balance Sheet								
1 Borrowings & overdrafts									
										
The following table details the impact of interest rate swap contracts - cash flow hedges on the Consolidated Statement of
Comprehensive Income during the financial year:								

Total hedging (loss)/gain recognised in cash flow hedging reserve (4.3) 10.3
Total hedging gain/(loss) recognised in cost of hedging reserve 0.2 (1.6)
Amount reclassified from hedge reserve to profit or loss re: foreign exchange rate fluctuations (4.2) (9.8)
Amount reclassified from OCI to profit or loss re: interest rate fluctuations (0.5) (0.4)
Ineffectiveness recognised in profit or loss (0.1) 0.8
Net impact (8.9) (0.7)
										

190
24.Financial instruments (continued)			
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts (continued)
(a) Interest rate swap contracts - cash flow hedges (continued)
The following table details the income/(expense) impact of interest rate swap contracts* - cash flow hedges and the hedged item on
the Consolidated Income Statement during the financial year:

Interest rate swap contracts - cash flow hedges:
Foreign exchange rate fluctuations 1
4.2 9.8
Amount reclassified from OCI to profit or loss re: interest rate fluctuations 2
0.5 0.4
Ineffectiveness recognised in profit or loss 2
0.1 (0.8)
Fixed rate borrowings:
Foreign exchange rate fluctuations 1
(4.2) (9.8)
Net impact 0.6 (0.4)
										
* Location of line item in the Consolidated Income Statement
1 Other general overheads
2 Finance costs
The interest rate swaps settle on a 6 monthly basis, the difference between the floating rate or fixed rate due to be received and the
fixed rate to be paid are settled on a net basis. 								
(b) Interest rate swap contracts - fair value hedges
Under interest rate swap contracts including cross currency interest rate swaps, the Group agrees to exchange the difference
between the floating and fixed interest amounts calculated on the agreed notional principal amounts.
The following table details the notional principal amounts and remaining terms of the fair value hedges, where the Group receives a
fixed interest rate and pays a floating interest rate on swaps as at 31 December:
Average Contracted
Fixed Interest Rate Fair Value Asset Notional Principal
Interest rate swap contracts - fair value hedges 110.0 91.0 761.1 749.8
The interest rate swaps settle on a 6 monthly or annual basis. The floating interest rate paid by the Group is based on 6 month
EURIBOR or LIBOR. All hedges are highly effective on a prospective and retrospective basis.
191

24.Financial instruments (continued)			
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts (continued)
(b) Interest rate swap contracts - fair value hedges (continued)
The following table details the impact of interest rate swap contracts* - fair value hedges and the hedged items on the Consolidated
Balance Sheet as at 31 December:									

										
* Location of line item in the Consolidated Balance Sheet								
1 Borrowings and overdrafts									
2 	
Receivables: €175m of the 2015 senior notes issuance were swapped from Euro to US dollars and subsequently on-lent from a Euro entity
to a US dollar entity
The following table details the impact of interest rate swap contracts - fair value hedges on the Consolidated Statement of
Comprehensive Income during the financial year:								

Amounts recognised in the cost of hedging reserve (0.8) 3.6
The following table details the income/(expense) impact of interest rate swap contracts*/** - fair value hedges and the hedged
items on the Consolidated Income Statement during the financial year:						

										
* Location of line item in the Consolidated Income Statement
** Location of line item in the Consolidated Balance Sheet
1 Other general overheads									
2 Finance costs
3 	
Receivables: €175m of the 2015 senior notes issuance were swapped from Euro to US dollars and subsequently on-lent from a Euro entity to a
US dollar entity within the Group

192
24.Financial instruments (continued)			
Financial risk management objectives (continued)
(iii) Liquidity risk management									
Liquidity risk considers the risk that the Group could encounter difficulties in meeting obligations associated with financial liabilities
that are settled by delivering cash or another financial asset. There is no significant concentration of liquidity risk.
Group funding and liquidity is managed by ensuring that sufficient facilities are available from diverse funding sources with an
appropriate spread of debt maturities to match the underlying assets. The Group uses cash flow forecasts to constantly monitor the
funding requirements of the Group.
Group businesses are funded from cash generated from operations, borrowings from banks and senior notes from capital markets.
It is Group policy to ensure that:									
- sufficient facilities are available to cover its gross forecast debt by at least 1.25 times; and					
- at least 75% of total facilities available are committed.
Both targets were met at 31 December 2019 and 2018.
Funding is sourced from banks via syndicated and bilateral arrangements and from institutional investors.
All Group credit facilities are arranged and managed by Group Treasury and approved by the Board of Directors. Where possible,
facilities have common security, financial covenants and terms and conditions.
At 31 December 2019, the Group had undrawn committed bank facilities of €1,100m (2018: €750m), and a portfolio of undrawn
standby facilities amounting to €330m (2018: €320m). The undrawn committed facilities comprise primarily of a revolving credit
facility maturing between 4 - 5 years (2018: between 3 - 4 years).								
(iii.i) Contractual maturity profile of non-derivative financial instruments						
The following table details the Group’s remaining contractual maturity of its non-derivative financial instruments excluding trade
and other payables (note 20) and other non-current liabilities (note 22), of which €1,630.0m (2018: €1,472.0m) is payable within 1
year, €147.9m (2018: €82.4m) between 2 and 5 years and €11.3m (2018: €0.2m) is payable after 5 years. The balances include the
impact of lease liabilities in 2019. This information has been drawn up based on the undiscounted cash flows of financial liabilities to
the earliest date on which the Group can be required to repay. The analysis includes both interest commitments and principal cash
flows. To the extent that interest rates are floating, the rate used is derived from interest rate yield curves at the end of the reporting
date and as such, are subject to change based on market movements.
On demand &
up to 1 year

Bank overdrafts (5.2) - - - (5.2)
Bank loans - (1.2) - - (1.2)
Senior notes (185.3) - (777.6) (1,551.9) (2,514.8)
Borrowings and overdrafts (190.5) (1.2) (777.6) (1,551.9) (2,521.2)
Deferred payments on acquisition of businesses (13.0) (2.7) (6.0) - (21.7)
(203.5) (3.9) (783.6) (1,551.9) (2,542.9)
Interest commitments (53.2) (52.8) (105.2) (34.6) (245.8)
At 31 December 2019 (256.7) (56.7) (888.8) (1,586.5) (2,788.7)
Reconciliation to net debt position:
Borrowings and overdrafts (190.5) (1.2) (777.6) (1,551.9) (2,521.2)
Senior notes - fair value adjustment (0.3) - (7.0) (17.6) (24.9)
Borrowings - reported (190.8) (1.2) (784.6) (1,569.5) (2,546.1)
Interest rate swaps 45.7 - 52.0 30.7 128.4
Cash at bank and in hand 554.9 - - - 554.9
Total net debt as at 31 December 2019 409.8 (1.2) (732.6) (1,538.8) (1,862.8)
							
Bank overdrafts (9.9) - - - (9.9)
Bank loans (3.9) (1.5) (350.0) - (355.4)
Senior notes - (181.7) (762.1) (811.2) (1,755.0)
Borrowings and overdrafts (13.8) (183.2) (1,112.1) (811.2) (2,120.3)
Deferred payments on acquisition of businesses (10.1) - - - (10.1)
(23.9) (183.2) (1,112.1) (811.2) (2,130.4)
Interest commitments (56.6) (48.8) (118.1) (33.6) (257.1)
At 31 December 2018 (80.5) (232.0) (1,230.2) (844.8) (2,387.5)
Reconciliation to net debt position:
Borrowings and overdrafts (13.8) (183.2) (1,112.1) (811.2) (2,120.3)
Senior notes - fair value adjustment - (1.8) 1.3 (12.7) (13.2)
Borrowings - reported (13.8) (185.0) (1,110.8) (823.9) (2,133.5)
Interest rate swaps - 42.8 28.0 25.4 96.2
Cash at bank and in hand 413.8 - - - 413.8
Total net debt as at 31 December 2018 400.0 (142.2) (1,082.8) (798.5) (1,623.5)
(iii.ii) Contractual maturity profile of derivative financial instruments
The following table details the Group’s remaining contractual maturity of its derivative financial instruments. The table has been
drawn up based on the undiscounted net cash inflows and outflows on derivative instruments that settle on a net basis. To the
extent that the amounts payable or receivable are not fixed, the rate used is derived from interest rate yield curves at the end of
the reporting date and as such are subject to change based on market movements.
On demand &
up to 1 year
Interest rate swaps inflow 73.2 27.3 98.9 18.0 217.4
Interest rate swaps outflow (20.0) (19.2) (40.9) - (80.1)
Net interest rate swaps inflow 53.2 8.1 58.0 18.0 137.3
Forward foreign exchange contracts outflow (0.1) - - - (0.1)
At 31 December 2019 53.1 8.1 58.0 18.0 137.2
On demand &
up to 1 year

194
24.Financial instruments (continued)			
Financial risk management objectives (continued)
(iii) Liquidity risk management (continued)
(iii.ii) Contractual maturity profile of derivative financial instruments (continued)
Included in the interest rate swaps inflow and outflow is the foreign currency differential on final maturity of the cross currency
interest rate swaps as follows:						
							
Swaps inflow						
- Up to 1 year - swaps inflow of €45.4m (2018: €nil)						
- 1 - 2 years - swaps inflow of €nil (2018: €41.9m)						
- 2 - 5 years - swaps inflow of €54.6m (2018: €48.1m)						
- Greater than 5 years - swaps inflow of €17.8m (2018: €19.9m)						
							
(iii.iii) Summary of borrowing arrangements						
(a) Bank loans						
Bank loans comprise committed term loan facilities, committed revolving credit facilities, bilateral term loans and other uncommitted
facilities:						
- Demand facilities;						
- Syndicate revolving credit facilities of €1.1bn maturing June 2024; and						
- Bilateral term loans with maturities ranging up to 1 year.						
							
(b) 2019 Euro senior note - public						
The Group issued a 10 year euro note of €750m at an interest rate of 0.625% with a maturity date on 20 September 2029.		
				
(c) 2015 Euro senior note - public						
The Group issued a debut 10 year euro note of €750m at an interest rate of 2.375% with a maturity date on 10 September 2025.
					
(d) 2013 US dollar senior note - public						
The Group issued a debut 10 year USA public note of US$750m at an interest rate of 3.2% with a maturity date on 9 April 2023.
					
(e) 2010 Senior notes - private						
The Group placed US$600m of senior notes with USA institutional investors in four tranches with maturity as follows:		
- Tranche A of US$192m - matured and repaid on 20 January 2017						
- Tranche B of US$208m - maturing on 20 January 2020						
- Tranche C of US$125m - maturing on 20 January 2022						
- Tranche D of US$75m - maturing on 20 January 2025						
							
The interest rates listed above are before the effects of related interest rate swaps.					
The 2010 senior notes have financial covenants attached to them. The Group was in full compliance with these covenants for the
financial years 2019 and 2018.						
							
(iv) Credit risk management						
Cash deposits and other financial assets give rise to credit risk on the amounts due from counterparties.
The Group controls and monitors the distribution of this exposure by ensuring that all financial instruments are held with reputable
and financially secure institutions and that exposure to credit risk is distributed across a number of institutions. At 31 December
2019 and 2018 all cash, short-term deposits and other liquid investments had a maturity of less than 3 months.
Credit risk exposure to financial institutions is actively managed across the portfolio of institutions by setting appropriate credit
exposure limits based on a value at risk calculation that takes EBITDA of the Group and calculates approved tolerance levels based
on credit default swap rates for the financial institutions. These levels are applied in controlling the level of material surplus funds
that are placed with counterparties and for controlling the institutions with which the Group enters into derivative contracts. Credit
default swaps for those financial institutions are as published by independent credit rating agencies and are updated and reviewed
on an ongoing basis.
The Group’s exposure to its counterparties is continuously monitored and the aggregate value of transactions entered into is spread
amongst approved counterparties.
Trade receivables consist of a large number of customers, spread across diverse geographical areas. Ongoing credit evaluation is
performed on the financial condition of accounts receivable at operating unit level at least on a monthly basis.
The Group’s maximum exposure to credit risk consists of gross trade receivables (note 19), cash deposits (note 23) and other
financial assets (note 23), which are primarily interest rate swaps and foreign exchange contracts.
In relation to credit risk on derivative financial instruments, where appropriate, the Group credit risk is actively managed across the
portfolio of institutions through monitoring the credit default swaps (CDS) and setting appropriate credit exposure limits based on
CDS levels. These levels are applied in controlling the level of material surplus funds that are placed with counterparties and for
controlling institutions with which the Group enters into derivative contracts.					
195

24.Financial instruments (continued)			
Financial risk management objectives (continued) 							
(v) Price risk management						
The Group’s exposure to equity securities price risk, due to financial asset investments held, is considered to be low as the level of
securities held versus the Group’s net assets is not material. 						
							
(vi) Fair value of financial instruments						
(a) Fair value of financial instruments carried at fair value						
Financial instruments recognised at fair value are analysed between those based on:				
- quoted prices in active markets for identical assets or liabilities (Level 1);					
- 	
those involving inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly
(as prices) or indirectly (derived from prices) (Level 2); and						
- those involving inputs for the assets or liabilities that are not based on observable market data (unobservable inputs) (Level 3).
Fair Value
Hierarchy

Financial assets
Interest rate swaps: Non-current Level 2 82.7 101.7
Current Level 2 45.7 -
Forward foreign exchange contracts: Current Level 2 12.0 10.0
Financial asset investments: Fair value through profit or loss Level 1 37.4 30.0
Fair value through other comprehensive income Level 3 4.3 5.3
Financial liabilities
Interest rate swaps: Non-current Level 2 - (5.5)
Forward foreign exchange contracts: Non-current Level 2 - (0.1)
Current Level 2 (12.1) (11.0)
							
The reconciliation of Level 3 assets is provided in note 13. There have been no transfers between levels during the current or prior
financial year.						
							
(b) Fair value of financial instruments carried at amortised cost						
Except as detailed in the following table, it is considered that the carrying amounts of financial assets and financial liabilities
recognised at amortised cost in the financial statements approximate their fair values.				

Financial liabilities
Senior notes - Public Level 2 (2,151.4) (2,217.1) (1,398.6) (1,377.0)
Senior notes - Private Level 2 (363.4) (372.9) (356.4) (358.8)
(2,514.8) (2,590.0) (1,755.0) (1,735.8)
(c) Valuation principles						
The fair value of financial assets and liabilities are determined as follows:						
- 	
assets and liabilities with standard terms and conditions which are traded on active liquid markets are determined with
reference to quoted market prices. This includes equity investments;						
- 	
other financial assets and liabilities (excluding derivatives) are determined in accordance with generally accepted pricing models
based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar
instruments. This includes interest rate swaps and forward foreign exchange contracts which are determined by discounting
the estimated future cash flows; 						
- 	
the fair values of financial instruments that are not based on observable market data (unobservable inputs) requires entity
specific valuation techniques. Disclosures are set out in note 13; and						
- 	
derivative financial instruments are calculated using quoted prices. Where such prices are not available, a discounted cash
flow analysis is performed using the applicable yield curve for the duration of the instruments. Forward foreign exchange
contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates adjusted
for counterparty credit risk, which is calculated based on credit default swaps of the respective counterparties. Interest rate
swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves
derived from quoted interest rates adjusted for counterparty credit risk, which is calculated based on credit default swaps of the
respective counterparties.						
							

196
24.Financial instruments (continued)			
Financial risk management objectives (continued)
(vii) Offsetting financial instruments						
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting
agreements. The ISDA agreements do not meet the criteria for offsetting in the Consolidated Balance Sheet. This is because the
Group does not have any current legally enforceable right to offset recognised amounts, because the right to offset is enforceable
only on the occurrence of future events such as a default on the bank loans or other credit events. No collateral is paid or received.
The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.
The table also sets out where the Group has offset bank overdrafts against cash at bank and in hand based on a legal right of offset
as set out in the banking agreements.						
Gross amounts
of financial
assets in the
Consolidated
Balance Sheet

Gross amounts
of financial
liabilities in the
Consolidated
Balance Sheet
€’m
Amounts
of financial
instruments
presented in the
Consolidated
Balance Sheet

Related
financial
instruments
that are not
offset

Net amount

At 31 December 2019
Financial assets
Cash at bank and in hand 554.9 - 554.9 - 554.9
Forward foreign exchange contracts 12.0 - 12.0 (8.3) 3.7
Interest rate swaps 128.4 - 128.4 - 128.4
695.3 - 695.3 (8.3) 687.0
Financial liabilities
Bank overdrafts - (5.2) (5.2) - (5.2)
Forward foreign exchange contracts - (12.1) (12.1) 8.3 (3.8)
Interest rate swaps - - - - -
- (17.3) (17.3) 8.3 (9.0)
At 31 December 2018
Financial assets
Cash at bank and in hand 413.8 - 413.8 - 413.8
Forward foreign exchange contracts 10.0 - 10.0 (8.5) 1.5
Interest rate swaps 101.7 - 101.7 (5.5) 96.2
525.5 - 525.5 (14.0) 511.5
Financial liabilities
Bank overdrafts - (9.9) (9.9) - (9.9)
Forward foreign exchange contracts - (11.1) (11.1) 8.5 (2.6)
Interest rate swaps - (5.5) (5.5) 5.5 -
- (26.5) (26.5) 14.0 (12.5)

At 1 January 2018 51.3 11.1 62.4
(Released)/provided during the financial year (0.4) 1.5 1.1
Utilised during the financial year (5.5) - (5.5)
Transferred to payables and accruals - (5.4) (5.4)
Exchange translation adjustment (0.2) - (0.2)
At 31 December 2018 45.2 7.2 52.4
Provided during the financial year 0.8 9.6 10.4
Utilised during the financial year - - -
Transferred to payables and accruals - (4.9) (4.9)
Exchange translation adjustment 0.6 (0.1) 0.5
At 31 December 2019 46.6 11.8 58.4

Analysed as:
Current liabilities 25.2 20.3
Non-current liabilities 33.2 32.1
58.4 52.4
Insurance
The Group operates a level of self-insurance. Under these arrangements, the Group retains certain exposures up to pre-determined
self-insurance levels. The amount of self-insurance is reviewed on a regular basis to ensure it remains appropriate. The provision
for these exposures represents amounts provided based on advice from insurance consultants, industry information, actuarial
valuation and historical data in respect of claims that are classified as incurred but not reported and outstanding loss reserves. The
methodology of estimating the provision is periodically reviewed to ensure that the assumptions made continue to be appropriate.
The utilisation of the provision is dependent on the timing of settlement of the outstanding claims. Historically, the average time for
settlement of outstanding claims ranges from 2 to 4 years from claim date.				
					
Non-trading items				
Non-trading items relate to restructuring and acquisition integration provisions incurred in 2019 and 2018 together with a residual
amount incurred in 2013. These costs are expected to be paid within 24 months.
26.Retirement benefits obligation
The Group operates post-retirement benefit plans in a number of its businesses throughout the world. These plans are structured
to accord with local conditions and practices in each country they operate in and can include both defined contribution and defined
benefit plans. The assets of the schemes are held, where relevant, in separate trustee administered funds.
Defined benefit post-retirement schemes exist in a number of countries in which the Group operates, primarily in Ireland and the
Netherlands (Eurozone), the UK and the USA (included in Rest of World). These defined benefit plans, most of which are closed to
future accrual, comprise final salary pension plans, career average salary pension plans and post-retirement medical plans. The
post-retirement medical plans operated by the Group relate primarily to a number of USA employees. Defined benefit schemes in
Ireland, the UK, and the USA are administered by Boards of Trustees. The Boards of Trustees generally comprise of representatives
of the employees, the employer and independent trustees. These Boards are responsible for the management and governance of
the plans including compliance with all relevant laws and regulations.
The values used in the Group’s consolidated financial statements are based on the most recent actuarial valuations and have been
updated by the individual schemes’ independent and professionally qualified actuaries to incorporate the requirements of IAS
19 ‘Employee Benefits’ in order to assess the liabilities of the various schemes as at 31 December 2019 using the projected unit
credit method. All assets in the schemes have been measured at their fair value at the balance sheet date. Full actuarial valuations
for funding purposes are carried out for the Group’s pension plans in line with local requirements. The actuarial reports are not
available for public inspection.							
								

198
26.Retirement benefits obligation (continued)
The Group continues to harmonise, standardise and integrate the benefit offering to employees across the countries in which
it operates. In 2019, a number of deferred members transferred their past service benefits out of the Irish defined benefit plans.
In 2018, following consultation with employees, a decision was made to close the UK defined benefit scheme to future accrual from
5 April 2018 with future service being offered to employees in the defined contribution scheme.
The defined benefit plans expose the Group to risks such as interest rate risk, investment risk, inflation risk and mortality risk.
Interest rate risk
The calculation of the present value of the defined benefit obligation is sensitive to the discount rate which is derived from the
interest yield on high quality corporate bonds at the balance sheet date. Market conditions in recent years have resulted in volatility
in discount rates which has significantly impacted the present value of the defined benefit obligation. Such changes lead to volatility
in the Group’s Consolidated Balance Sheet, Consolidated Income Statement and Consolidated Statement of Comprehensive Income.
Interest rates also impact on the funding requirements for the plans.
Investment risk
The net deficit recognised in the Consolidated Balance Sheet represents the present value of the defined benefit obligation less the
fair value of the plan assets. When assets generate a rate of return less than the discount rate this results in an increase in the net
deficit. Currently the plans have a diversified portfolio of investments in equities, bonds and other types of asset classes. External
investment consultants periodically conduct an investment review and advise on the most appropriate asset allocation taking
account of asset valuations, funding requirements, liability duration and the achievement of an appropriate return on assets.
Inflation risk
A significant proportion of the defined benefit obligation is linked to inflation, therefore an increase in inflation rates will increase
the defined benefit obligation. However, a portion of the plan assets are inflation-linked debt securities which mitigates some of the
effects of inflation movements.
Mortality risk		
The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of plan
participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the
defined benefit obligation.
(i) Recognition in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income
The following amounts have been recognised in the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income in relation to defined contribution and defined benefit post-retirement plans:			

Service cost:
- Costs relating to defined contribution schemes 64.0 57.9
- Current service cost relating to defined benefit schemes 2.7 6.9
- Past service and settlements (9.9) (23.1)
Net interest cost 0.8 1.4
Recognised in the Consolidated Income Statement 57.6 43.1
Re-measurements of the net defined benefit liability:
- Return on plan assets (excluding amounts included in net interest cost) (198.5) 99.7
- Experience losses/(gains) on schemes’ liabilities 3.3 (26.8)
- Actuarial gains arising from changes in demographic assumptions (8.9) (19.4)
- Actuarial losses/(gains) arising from changes in financial assumptions 190.1 (88.0)
Recognised in the Consolidated Statement of Comprehensive Income (14.0) (34.5)
Total 43.6 8.6
The total service cost is included in total staff numbers and costs (note 4) and the net interest cost is included in finance income and
costs (note 6).
199

26.Retirement benefits obligation (continued)
(ii) Recognition in the Consolidated Balance Sheet							
The Group’s net defined benefit post-retirement schemes’ deficit at 31 December, which has been recognised in the Consolidated
Balance Sheet, was as follows:							
31 December
Present value of defined benefit obligation (1,441.6) (1,280.4)
Fair value of plan assets 1,429.7 1,227.2
Net recognised deficit in plans before deferred tax (11.9) (53.2)
Net related deferred tax asset 3.3 9.2
Net recognised deficit in plans after deferred tax (8.6) (44.0)
(iii) Financial and demographic assumptions							
The principal financial assumptions used by the Group’s actuaries in order to calculate the defined benefit obligation at 31
December, some of which have been shown in range format to reflect the differing assumptions in each scheme, were as follows:
Inflation assumption 1.50 2.60 2.50 1.60 3.10 2.50
Rate of increase in salaries N/A* N/A* 3.00 N/A* N/A* 3.00
Rate of increase for pensions in payment
and deferred pensions
1.50 1.80 - 2.60 - 1.55 - 1.60 2.10 - 2.90 -
Rate used to discount schemes’ liabilities 1.15 - 1.50 2.10 2.50 - 3.00 2.20 3.00 3.75 - 4.25
								
* Not applicable due to closure of the Irish, Netherlands and UK defined benefit plans to future accrual during 2016 to 2018.		
The most significant demographic assumption is mortality. The mortality assumptions used are based on advice from the pension
schemes’ actuaries and reflect each scheme’s population. The life expectancy of a member retiring at 31 December at age 65,
now and in 20 years’ time, some of which have been shown in range format to reflect the differing assumptions in each scheme,
is as follows:							
There are inherent uncertainties surrounding the financial and demographic assumptions adopted by the Group. The assumptions
may differ from the actual data as a result of changes in economic and market conditions as well as the actual experience within
each scheme. The present value of post-retirement benefit schemes’ liabilities is heavily dependent on the discount rate. As the
discount rate is based on a market driven measure, which is the interest yield on high quality corporate bonds at the balance
sheet date, the present value of post-retirement benefit schemes’ liabilities can fluctuate significantly from valuation to valuation.
The expected rate of inflation impacts the schemes’ liabilities in that inflation is the basis for the calculation of the assumed future
salary and revaluation increases in each scheme where applicable. In relation to demographic assumptions, differing expectations
regarding current and future changes in mortality rates can have a significant impact on the schemes’ liabilities.
The table below gives an approximate indication of the impact of a change in the principal financial actuarial assumptions (discount
rate, inflation rate, salary increases and pensions in payment and deferred pension increases) and the principal demographic
actuarial assumption (mortality) on the schemes’ liabilities. The present value of the defined benefit obligation has been calculated
using the projected unit credit method. The impact on the defined benefit obligation at 31 December 2019 is calculated on the basis
that only one assumption is changed with all other assumptions remaining unchanged. The assessment of the sensitivity analysis
below could therefore be limited as a change in one assumption may not occur in isolation as assumptions may be correlated. There
have been no changes from the previous year in the methods and assumptions used in preparing the sensitivity analysis.		
					

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26.Retirement benefits obligation (continued)
(iii) Financial and demographic assumptions (continued)
Assumption Change in assumption Impact on schemes’ liabilities
Discount rate Increase/decrease of 0.50% Decrease/increase of 11.2%
Inflation rate Increase/decrease of 0.50% Increase/decrease of 7.8%
Salary increases Increase/decrease of 0.50% Increase/decrease of 0.0%
Pensions in payment and deferred
pensions increases
Increase/decrease of 0.50% Increase/decrease of 5.2%
Mortality Increase/decrease in life expectancy of 1 Year Increase/decrease of 3.6%
(iv) Reconciliations for defined benefit plans					
The movements in the defined benefit schemes’ obligation during the financial year were:

Present value of the defined benefit obligation at beginning of the financial year (1,280.4) (1,477.3)
Current service cost (2.7) (6.9)
Past service and settlements 9.9 23.1
Interest expense (34.3) (35.0)
Contributions by employees - (1.1)
Benefits paid 59.7 79.8
Re-measurements:
- experience (losses)/gains on schemes’ liabilities (3.3) 26.8
- actuarial gains arising from changes in demographic assumptions 8.9 19.4
- actuarial (losses)/gains arising from changes in financial assumptions (190.1) 88.0
Decrease arising on settlement 31.0 0.4
Exchange translation adjustment (40.3) 2.4
Present value of the defined benefit obligation at end of the financial year (1,441.6) (1,280.4)
Present value of the defined benefit obligation at end of the financial year that relates to:
Wholly unfunded plans (20.0) (19.3)
Wholly or partly funded plans (1,421.6) (1,261.1)
(1,441.6) (1,280.4)
						
The weighted average duration of the defined benefit obligation at 31 December 2019 is approximately 21 years (2018:
approximately 21 years).
The movements in the schemes’ assets during the financial year were:

Fair value of plan assets at beginning of the financial year 1,227.2 1,353.0
Interest income 33.5 33.6
Contributions by employer 19.5 23.8
Contributions by employees - 1.1
Benefits paid (59.7) (79.8)
Re-measurements:
- return on plan assets (excluding amounts included in net interest cost) 198.5 (99.7)
Decrease arising on settlement (31.0) (0.4)
Exchange translation adjustment 41.7 (4.4)
Fair value of plan assets at end of the financial year 1,429.7 1,227.2
						
						
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26.Retirement benefits obligation (continued)
(iv) Reconciliations for defined benefit plans (continued)					
The fair values of each of the categories of the pension schemes’ assets at 31 December were as follows:			

Equities
- Global Equities 662.1 567.1
- Emerging Market Equities 67.3 57.1
- Global Small Cap Equities 3.5 3.1
Government Fixed Income 25.9 96.6
Other Fixed Income 473.3 349.0
Multi-asset Funds
- Diversified Growth Funds 166.6 148.2
- Hedge Funds 0.1 0.1
Cash and other 30.9 6.0
Total fair value of pension schemes’ assets 1,429.7 1,227.2
The majority of equity securities and bonds have quoted prices in active markets. The schemes’ assets are invested with professional
investment managers. Investments in the Group’s own financial instruments, if any, are solely at the discretion of the investment
managers concerned. The actual amount of the Group’s own financial instruments held by the pension schemes during 2019 and
2018 were not material. No property held by the pension schemes was occupied by the Group nor were any other pension schemes’
assets used by the Group during 2019 or 2018.
In 2018, the UK scheme invested in a pooled Liability Driven Investment (LDI) strategy and the Irish Schemes invested in a similar
LDI strategy during 2019. The primary goal of this asset class is to mitigate volatility and enable better matching of investment
returns with the cash outflows required to pay benefits. The pooled LDI solutions invest in various levered and unlevered bonds and
the value of the LDI assets at 31 December 2019 across UK and Irish schemes was €337.0m (2018: €204.3m) which is based on the
latest market bid price for the underlying investments, which are traded daily on liquid markets.				
(v) Funding for defined benefit plans					
The Group operates a number of defined benefit plans in a number of countries and each plan is required to be operated in
line with local legislation, conditions, practices and the regulatory framework in place for the specific country. As a result, there
are a number of different funding arrangements in place that accord with the specific local legislative, regulatory and actuarial
requirements.
Funding for each plan is carried out by cash contributions from the Group’s subsidiaries. These funding arrangements have been
advised by the pension schemes’ actuaries and agreed between the Group and the relevant Trustees. It is the aim of the Group to
eliminate actuarial deficits, on average over seven to eight years. Actuarial valuations, which are not available for public inspection,
are carried out every three years in Ireland and the UK; and every year in the USA. During the financial year ending 31 December
2020, the Group expects to make contributions of approximately €16.2m to its defined benefit plans.
27.Share capital

Group and Company:
Authorised
280,000,000 A ordinary shares of 12.50 cent each 35.0 35.0
Allotted, called-up and fully paid (A ordinary shares of 12.50 cent each)
At beginning of the financial year 22.0 22.0
Shares issued during the financial year 0.1 -
At end of the financial year 22.1 22.0
The Company has one class of ordinary share which carries no right to fixed income.					
						

202
27.Share capital (continued)
Shares issued 					
During 2019 a total of 216,526 (2018: 116,011) A ordinary shares, each with a nominal value of 12.50 cent, were issued at nominal
value per share under the Long Term and Short Term Incentive Plans.
The total number of shares in issue at 31 December 2019 was 176,514,942 (2018: 176,298,416).
Share buy back programme
At the 2019 Annual General Meeting, shareholders passed a resolution authorising the Company to purchase up to 5% of its own
issued share capital. In 2019 and 2018, no shares were purchased under this programme.				
						
28.Share-based payments					
The Group operates two equity-settled share-based payment plans. The first plan is the Group’s Long Term Incentive Plan and the
second is the element of the Group’s Short Term Incentive Plan that is settled in shares/share options after a 2 year deferral period.
Details on each of these plans are outlined below.
The Group recognised an expense of €14.4m (2018: €12.2m) related to equity-settled share-based payment transactions in the
Consolidated Income Statement during the financial year. The expectation of meeting performance criteria was taken into account
when calculating this expense.
(i) Long Term Incentive Plan					
The Group operates an equity-settled Long Term Incentive Plan (LTIP) under which an invitation to participate was made to
Executive Directors and senior executives. The proportion of each invitation which vests will depend on the Adjusted Earnings Per
Share (EPS) performance, Total Shareholder Return (TSR) and Return on Average Capital Employed (ROACE) of the Group during a
three year period (‘the performance period’). The invitations made in 2017, 2018 and 2019 will potentially vest in 2020, 2021 and in
2022 respectively. 50% of the award will be issued at the date of vesting, with 50% being issued after a 2 year deferral period.
Up to 50% of the shares/share options subject to an invitation will vest according to the Group’s Adjusted EPS growth calculated
on a constant currency basis compared with target during the performance period. Up to 30% of the shares/share options subject
to an invitation will vest according to the Group’s TSR performance during the performance period measured against the TSR
performance of a peer group of listed companies. The remaining 20% of the shares/share options will vest according to the Group’s
ROACE versus predetermined targets. An invitation may lapse if a participant ceases to be employed within the Group before the
vesting date.
Under the Long Term Incentive Plan (LTIP), the Group introduced career shares awards, under which an invitation to participate was
made to a limited number of senior executives. The proportion of each invitation which vests will depend on personal objectives
during a three year period (‘the performance period’) and the senior executives remaining within the Group for a four year period
(‘the retention period’). The invitations made in 2015, 2017, 2018 and 2019 will potentially vest in 2021, 2022/2023, 2024 and 2025
respectively. An invitation may lapse if a participant ceases to be employed within the Group before the vesting date.
203

28.Share-based payments (continued)
(i) Long Term Incentive Plan (continued) 				
A summary of the status of the LTIP as at 31 December and the changes during the financial year are presented below:
Number of
Conditional
Awards
2019
Number of
Conditional
Awards
2018
Outstanding at beginning of the financial year 1,143,665 1,107,335
Forfeited (77,784) (124,867)
Shares vested (68,094) (90,547)
Share options vested (107,713) (110,180)
Relinquished (101,492) (121,467)
New conditional awards 508,435 483,391
Outstanding at end of the financial year 1,297,017 1,143,665
Number of
Share Options
2019
Number of
Share Options
2018
Share options arising under the LTIP
Outstanding at beginning of the financial year 180,615 141,517
Options released at vesting date 58,316 59,266
Options released from deferral 36,113 22,385
Exercised (148,770) (42,553)
Outstanding and exercisable at end of the financial year 126,274 180,615
						
Share options under the LTIP scheme have an exercise price of 12.50 cent. The remaining weighted average life for share options
outstanding is 4.4 years (2018: 4.1 years). The weighted average share price at the date of exercise was €101.09 (2018: €87.64).
49,397 share options (2018: 50,914 share options) which vested in the financial year are deferred and therefore are not exercisable
at year end.
At the invitation grant date, the fair value per conditional award and the assumptions used in the calculations are as follows:

Award at
Grant Date
Conditional Award Invitation date March 2019 March 2018 March 2017 March 2016
Year of potential vesting 2022/2025 2021/2024 2020/2023 2019
Share price at grant date €95.40 €81.95 €74.52 €79.80
Exercise price per share/share options €0.125 €0.125 €0.125 €0.125
Expected volatility 19.3% 19.8% 20.7% 19.1%
Expected life 3/7 years 3/7 years 3/7 years 3 years
Risk free rate (0.5%) (0.5%) (0.8%) (0.5%)
Expected dividend yield 0.7% 0.7% 0.7% 0.7%
Expected forfeiture rate 5.0% 5.0% 5.0% 5.0%
Weighted average fair value at grant date €78.00/€95.92 €66.52/€77.96 €61.64/€70.94 €68.72
Valuation model Monte Carlo
Pricing
Monte Carlo
Pricing
Monte Carlo
Pricing
Monte Carlo
Pricing

204
28.Share-based payments (continued)
(i) Long Term Incentive Plan (continued)
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years.
Market based vesting conditions, such as the TSR condition, have been taken into account in establishing the fair value of equity
instruments granted. The TSR performance over the period is measured against the TSR performance of a peer group of listed
companies. Non‐market based performance conditions, such as the EPS and ROACE conditions, were not taken into account in
establishing the fair value of equity instruments granted, however the number of equity instruments included in the measurement
of the transaction is adjusted so that the amount recognised is based on the number of equity instruments that eventually vest.
				
(ii) Short Term Incentive Plan
In 2013 the Group’s Short Term Incentive Plan (STIP) for Executive Directors was amended to incorporate a share-based payment
element with 25% of the total bonus to be settled in shares/share options. The shares/share options awarded as part of this scheme
will be issued 2 years after the vesting date once a deferral period has elapsed. There are no further performance conditions
relating to the shares/share options during the deferral period.
There are 4,829 share options (2018: 5,172 share options) outstanding and exercisable in relation to the STIP.
A share-based payment expense is recognised in the Consolidated Income Statement for the scheme to reflect the cash value of the
bonus to be paid by way of shares/share options. The issuance of shares/share options under the STIP, which relate to the 2015 and
2016 financial years were released from deferral in 2017 and 2018 respectively. The issuance of shares/share options under the STIP
which related to the 2018 and 2019 financial years will be released from deferral in 2020 and 2021 respectively.
29.Cash flow components									
(i) Cash flow analysis									
Notes

Profit before taxation 645.9 617.9 137.5 154.9
Intangible asset amortisation 12 64.3 53.8 - -
Non-trading items 5 110.9 66.9 14.9 -
Finance income 6 (0.3) (0.5) - -
Finance costs 6 81.9 67.5 - -
Trading profit 902.7 805.6 152.4 154.9
Change in working capital
Increase in inventories (78.6) (50.1) - -
(Increase)/decrease in trade and other receivables (49.9) (44.0) (41.7) 21.7
Increase in trade and other payables 45.7 23.8 4.6 2.2
Increase/(decrease) in non-current liabilities 4.5 (20.7) - -
Share-based payment expense 28 14.4 12.2 14.4 12.2
(63.9) (78.8) (22.7) 36.1
Purchase of assets
Purchase of property, plant and equipment (258.9) (274.3) - -
Purchase of intangible assets 12 (55.2) (30.4) - -
(Purchase)/sale of financial assets 13 (1.5) 8.6 - -
(315.6) (296.1) - -
Cash and cash equivalents
Cash at bank and in hand 23 554.9 413.8 - -
Bank overdrafts 23 (5.2) (9.9) - -
549.7 403.9 - -
205

Assets and businesses
Property, plant and equipment 11 (36.3) (5.2)
Investments in associates 14 - (5.5)
Assets classified as held for sale - (6.3)
Net assets and businesses disposed (36.3) (17.0)
Consideration
Cash received 32.8 11.6
Total consideration received 32.8 11.6
Loss on disposal of assets and businesses 5 (3.5) (5.4)
															
* Liabilities from financing activities.

206
30.Business combinations							
During 2019, the Group completed a total of eleven acquisitions, all of which are 100% owned by the Group unless otherwise stated.
Notes
Total
2019
€’m
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment 11 115.1
Brand related intangibles 12 237.0
Current assets
Cash at bank and in hand 2.9
Inventories 17.1
Trade and other receivables 11.2
Current liabilities
Trade and other payables (14.8)
Non-current liabilities
Deferred tax liabilities (7.2)
Other non-current liabilities (0.3)
Total identifiable assets 361.0
Goodwill 12 200.7
Total consideration 561.7
Satisfied by:
Cash 546.9
Deferred payment 14.8
561.7
Net cash outflow on acquisition: Total
2019
€’m
Cash 546.9
Less: cash and cash equivalents acquired (2.9)
Prepayments in relation to 2020 acquisitions 18.7
562.7
The acquisition method has been used to account for businesses acquired in the Group’s financial statements. Given that the
valuation of the fair value of assets and liabilities recently acquired is still in progress, some of the above values are determined
provisionally. The valuation of the fair value of assets and liabilities will be completed within the measurement period. For the
acquisitions completed in 2018, there have been no material revisions of the provisional fair value adjustments since the initial
values were established. The Group performs quantitative and qualitative assessments of each acquisition in order to determine
whether it is material for the purposes of separate disclosure under IFRS 3 ‘Business Combinations’. None of the acquisitions
completed during the period were considered material to warrant separate disclosure.
The goodwill is attributable to the expected profitability, revenue growth, future market development and assembled workforce of
the acquired businesses and the synergies expected to arise within the Group after the acquisition. €194.4m of goodwill recognised
is expected to be deductible for income tax purposes.
Transaction expenses related to these acquisitions of €7.1m were charged in the Group’s Consolidated Income Statement during
the financial year. The fair value of the financial assets includes trade and other receivables with a fair value of €11.2m and a gross
contractual value of €11.2m. 							
					
207

30.Business combinations (continued)						
From the date of acquisition, the acquired businesses have contributed €140.9m of revenue and €10.6m of profit after taxation
attributable to owners of the parent to the Group. If the acquisition dates had been on the first day of the financial year, the
acquired businesses would have contributed €202.9m of revenue and €14.0m of profit after taxation attributable to owners of the
parent to the Group.
The following acquisitions were completed by the Group during 2019:						
Acquisition Acquired Principal activity
Southeastern Mills January Southeastern Mills, located in the USA, is a leading food manufacturer specialising
in coating and seasoning systems.
Ariake U.S.A., Inc. March Ariake is a manufacturer of natural clean label savoury solutions, based in the USA.
Muskvale Flavours & Fragrances March Muskvale Flavours & Fragrances, based in Australia, creates and sells flavours
and fragrances.
ComeIn Food Systems August ComeIn Food Systems, located in Mexico, produce seasonings and
functional ingredients.
Saporiti Whipping Agents August Saporiti Whipping Agents, based in Brazil, specialises in whipping
agents technology.
Isoage Technologies August Isoage Technologies is a USA based supplier of fermentation technology and
functional ingredients to the food, dairy and pet industries.
Ensyn Technologies August Ensyn Technologies are experts in Rapid Thermal Processing technology which
forms the base for many smoke products, based in Canada.
Pevesa Biotech S.A.U. September Pevesa, based in Spain, is a specialist plant protein isolates and hydrolysates
business, serving key nutrition applications.
Biosecur Lab September Biosecur is a supplier of natural antimicrobials made from citrus extracts,
based in Canada.
Serve Food Solutions September Serve Food Solutions, based in the USA, provides solutions to manufacturers and
foodservice companies.
Diana Food (Georgia, USA) November Diana Food, based in Georgia, USA, is a savoury taste manufacturer of natural clean
label technologies.
			
									
31.Contingent liabilities				

Company:
(i) Guarantees in respect of borrowings of subsidiaries 2,521.2 2,120.3
									
(ii) 	
For the purposes of Section 357 of the Companies Act, 2014, the Company has undertaken by Board resolution to indemnify
the creditors of its subsidiaries incorporated in the Republic of Ireland, as set out in note 36, in respect of all amounts shown
as liabilities or commitments in the statutory financial statements as referred to in Section 357 (1) (b) of the Companies Act,
2014 for the financial year ending on 31 December 2019 or any amended financial period incorporating the said financial year.
All other provisions of Section 357 have been complied with in this regard. The Company has given similar indemnities in relation
to its subsidiaries in Germany (section 264 of the Commercial Code), Luxembourg (Article 70 of the Luxembourg law of 19
December 2002 as amended) and the Netherlands (Article 2:403 of the Dutch Civil Code), as set out in note 36. In addition,
the Company has also availed of the exemption from filing subsidiary financial statements in Luxembourg, Germany, the
Netherlands and Ireland. 							
									
The Company does not expect any material loss to arise from these guarantees and considers their fair value to be negligible.
						
									

208
32.Other financial commitments 								
Commitments for the acquisition of property, plant, equipment and computer software at 31 December for which no provision has
been made in the accounts are as follows:								

Group:
Commitments in respect of contracts placed 109.1 104.6
Expenditure authorised by the Directors but not contracted for at the financial year end 115.5 113.7
224.6 218.3
33.Related party transactions 							
(i) Trading with Directors							
In their ordinary course of business as farmers, certain Directors have traded on standard commercial terms with the Group’s
Agribusiness division. Aggregate purchases from, and sales to, these Directors amounted to €0.2m (2018: €0.2m) and €0.1m (2018:
€0.1m) respectively. The trading balance outstanding to the Group at the financial year end was €nil (2018: €0.1m).
All transactions with Directors were on standard commercial terms. The amounts outstanding are unsecured and will be settled in
cash. No expense has been recognised in the financial year for bad or doubtful debts in respect of amounts owed by Directors.
(ii) Trading between Parent Company and subsidiaries
Transactions in the financial year between the Parent Company and its subsidiaries included dividends received of €172.5m (2018:
€177.5m), cost recharges of €19.0m (2018: €19.6m), and trade and other receivables of €135.8m (2018: €94.1m). The Parent
Company has also provided a guarantee in respect of borrowings of subsidiaries which is disclosed in note 31.
(iii) Trading with associates and joint ventures							
Details of transactions and balances outstanding with associates and joint ventures are as follows:			
Rendering of services Sale of goods
Amounts receivable/
(payable) at 31 December



Associates - - - (0.3) - -
Joint ventures 0.1 - 0.4 - - -
These trading transactions are undertaken and settled at normal trading terms. The Group had amounts payable to joint ventures of
€0.2m (2018: €nil). A loan of €0.2m was advanced to Proparent B.V. (2018: €nil) with interest charged on commercial terms.
(iv) Trading with other related parties
As detailed in the Directors’ Report, Kerry Co-operative Creameries Limited is considered to be a related party of the Group as a
result of its significant shareholding in the Parent Company. During 2019, dividends of €17.3m (2018: €15.6m) were paid to Kerry
Co-operative Creameries Limited based on its shareholding. A subsidiary of  plc traded product to the value of €0.1m
(2018: €0.1m) on behalf of Kerry Co-operative Creameries Limited.
(v) Transactions with key management personnel		
The Board of Directors are deemed to be key management personnel of  plc as they are responsible for planning,
directing and controlling the activities of the Group.
In addition to their salaries and short-term benefits, the Group also contributes to post-retirement defined benefit, defined
contribution and saving plans on behalf of the Executive Directors (note 26). The Directors also participate in the Group’s Long Term
Incentive Plan (LTIP) (note 28).
Remuneration cost of key management personnel is as follows:							

Short term benefits (salaries, fees and other short term benefits) 6.7 6.7
Post-retirement benefits 0.5 0.6
LTIP accounting charge 2.3 2.4
Other long term benefits - -
Termination benefits - -
Total 9.5 9.7
209

33.Related party transactions (continued) 							
(v) Transactions with key management personnel (continued)		
Retirement benefit charges of €0.2m (2018: €0.1m) arise under a defined benefit scheme relating to 1 Director (2018: 1 Director)
and charges of €0.3m (2018: €0.5m) arise under a defined contribution scheme relating to 2 directors (2018: 3 Directors). The LTIP
accounting charge above is determined in accordance with the Group’s accounting policy for share-based payments.
Post-retirement benefits in the above table and the statutory and listing rules disclosure in respect of pension contributions in the
Executive Directors’ remuneration table in the remuneration report are determined on a current service cost basis.			
				
The aggregate amount of gains accruing to Executive Directors on the exercise of share options is €nil (2018: €1.1m). Dividends
totalling €0.1m (2018: €0.1m) were also received by key management personnel during the financial year, based on their personal
interests in the shares of the company.							
							
								
34.Events after the balance sheet date							
Since the financial year end, the Group has proposed a final dividend of 55.10 cent per A ordinary share (note 10).
There have been no other significant events, outside the ordinary course of business, affecting the Group since 31 December 2019.
						
								
35.Reserves							
Fair value through other comprehensive income reserve (FVOCI)
The fair value through other comprehensive income reserve represents the unrealised gains and losses on the financial assets held
at fair value through other comprehensive income by the Group.							
								
Capital redemption reserve
Capital redemption reserve represents the nominal cost of the cancelled shares in 2007.					
		
Other undenominated capital							
Other undenominated capital represents the amount transferred to reserves as a result of renominalising the share capital of the
Parent Company due to the euro conversion in 2002.							
								
Share-based payment reserve							
The share-based payment reserve relates to invitations made to employees to participate in the Group’s Long Term Incentive Plan
and the element of the Group’s Short Term Incentive Plan that is settled in shares/share options. Further information in relation to
this share-based payment is set out in note 28.							
								
Translation reserve							
Exchange differences relating to the translation of the balance sheets of the Group’s foreign currency operations from their
functional currencies to the Group’s presentation currency (euro) are recognised directly in other comprehensive income and
accumulated in the translation reserve.							
								
Hedging reserve							
The hedging reserve represents the effective portion of gains and losses on hedging instruments from the application of cash flow
hedge accounting for which the underlying hedged transaction is not impacting profit or loss. The cumulative deferred gain or loss
on the hedging instrument is reclassified to profit or loss only when the hedged transaction affects the profit or loss.
Cost of hedging reserve
The cost of hedging reserve arises from where the Group has entered into cross currency interest rate swaps. Such cross currency
interest rate swaps have basis risk as there are characteristics in the cross currency interest rate swap contracts that are not present
in the hedged item, being currency basis spreads.
Retained earnings
Retained earnings refers to the portion of net income, which is retained by the Group rather than distributed to shareholders
as dividends.				


3. Trading Profit								
Trading profit refers to the operating profit generated by the businesses before intangible asset amortisation and gains or losses
generated from non-trading items. Trading profit represents operating profit before specific items that are not reflective of
underlying trading performance and therefore hinder comparison of the trading performance of the Group’s businesses, either
year-on-year or with other businesses.								

Operating profit 727.5 684.9
Intangible asset amortisation 64.3 53.8
Non-trading items 110.9 66.9
Trading profit 902.7 805.6
								
								
4. Trading Margin
Trading margin represents trading profit, expressed as a percentage of revenue.

Trading profit 902.7 805.6
Revenue 7,241.3 6,607.6
Trading margin 12.5% 12.2%
								
								
5. Operating Profit								
Operating profit is profit before income taxes, finance income and finance costs.					

Profit before tax 645.9 617.9
Finance income (0.3) (0.5)
Finance costs 81.9 67.5
Operating profit 727.5 684.9
								
								
6. 	
Adjusted Earnings Per Share and Growth in Adjusted Earnings Per Share on a
Constant Currency Basis								
The growth in adjusted earnings per share on a constant currency basis is provided as it is considered more reflective of the
Group’s underlying trading performance. Adjusted earnings is profit after taxation attributable to owners of the parent before
brand related intangible asset amortisation and non-trading items (net of related tax). These items are excluded in order to assist in
the understanding of underlying earnings. A full reconciliation of adjusted earnings per share to basic earnings is provided below.
Constant currency eliminates the translational effect that arises from changes in foreign currency year-on-year. The growth in
adjusted earnings per share on a constant currency basis is calculated by comparing current year adjusted earnings per share to
the prior year adjusted earnings per share retranslated at current year average exchange rates. 			
t
Basic earnings per share 320.4 305.9
Brand related intangible asset amortisation 21.4 16.3
Non-trading items (net of related tax) 51.9 31.2
Adjusted earnings per share 393.7 353.4
Impact of retranslating prior year adjusted earnings per share at current year average exchange rates - 10.1
Adjusted earnings per share on a constant currency basis 393.7 363.5
Growth in adjusted earnings per share on a constant currency basis 8.3% 8.6%
								
								

218
7. Free Cash Flow								
Free cash flow is trading profit plus depreciation, movement in average working capital, capital expenditure, payment of lease
liabilities, pensions costs less pension expense, finance costs paid (net) and income taxes paid.
Free cash flow is seen as an important indicator of the strength and quality of the business and of the availability to the Group of
funds for reinvestment or for return to shareholders. Movement in average working capital is used when calculating free cash flow
as management believes this provides a more accurate measure of the increase or decrease in working capital needed to support
the business over the course of the year rather than at two distinct points in time and more accurately reflects fluctuations caused
by seasonality and other timing factors. Average working capital is the sum of each month’s working capital over 12 months. Below
is a reconciliation of free cash flow to the nearest IFRS measure, which is ‘Net cash from operating activities’.		

Net cash from operating activities 763.9 651.0
Difference between movement in monthly average working capital and movement in the financial
year end working capital
(25.6) 21.7
Expenditure on acquisition integration and restructuring costs 89.1 59.8
Purchase of assets (315.6) (296.1)
Payment of lease liabilities (35.5) -
Proceeds from the sale of property, plant and equipment 32.8 10.6
Capital grants received 3.0 -
Exchange translation adjustment 2.5 (0.5)
Free cash flow 514.6 446.5
								
								
8. Cash Conversion								
Cash conversion is defined as free cash flow, expressed as a percentage of adjusted earnings after tax.			

Free cash flow 514.6 446.5
Profit after taxation attributable to owners of the parent 566.5 540.5
Brand related intangible asset amortisation 37.8 28.8
Non-trading items (net of related tax) 91.7 55.1
Adjusted earnings after tax 696.0 624.4
Cash Conversion 74% 72%
								
								
9. Financial Covenants								
The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated in accordance with lenders’ facility agreements using
an adjusted EBITDA, adjusted finance costs (net of finance income) and an adjusted net debt value to adjust for the impact of non-
trading items, acquisitions net of disposals, deferred payments in relation to acquisitions and lease liabilities. As outlined on page
185, these ratios are calculated in accordance with lenders’ facility agreements and these agreements specifically require these
adjustments in the calculation.								
Covenant
2019
Times
2018
Times
Net debt: EBITDA Maximum 3.5 1.8 1.7
EBITDA: Net interest Minimum 4.75 13.2 14.7
								
								
219

10.Average Capital Employed								
Average capital employed is calculated by taking an average of the shareholders’ equity and net debt over the last three reported
balance sheets plus an additional €527.8m relating to goodwill written off to reserves pre conversion to IFRS.		

Shareholders’ equity 4,562.2 4,186.5 4,034.4 3,773.6 3,573.2
Goodwill amortised (pre conversion to IFRS) 527.8 527.8 527.8 527.8 527.8
Adjusted equity 5,090.0 4,714.3 4,562.2 4,301.4 4,101.0
Net debt 1,862.8 1,918.2 1,623.5 1,403.3 1,341.7
Total 6,952.8 6,632.5 6,185.7 5,704.7 5,442.7
Average capital employed 6,590.3 5,777.7
								
11.Return on Average Capital Employed (ROACE)
This measure is defined as profit after taxation attributable to owners of the parent before non-trading items (net of related tax),
brand related intangible asset amortisation and finance income and costs expressed as a percentage of average capital employed.

Profit after taxation attributable to owners of the parent 566.5 540.5
Non-trading items (net of related tax) 91.7 55.1
Brand related intangible asset amortisation 37.8 28.8
Net finance costs 81.6 67.0
Adjusted profit 777.6 691.4
Average capital employed 6,590.3 5,777.7
Return on average capital employed 11.8% 12.0%
								
								
12.Total Shareholder Return 								
Total shareholder return represents the change in the capital value of  plc shares plus dividends in the financial year.
2019 2018
Share price (1 January) €86.50 €93.50
Interim dividend (cent) 23.5 21.0
Dividend paid (cent) 49.2 43.9
Share price (31 December) €111.10 €86.50
Total shareholder return 29.3% (6.8%)
								
								
13.Market Capitalisation								
Market capitalisation is calculated as the share price times the number of shares issued.				
2019 2018
Share price (31 December) €111.10 €86.50
Shares in issue (‘000) 176,514.9 176,298.4
Market capitalisation (€’m) 19,610.8 15,249.8
			
					
14.Enterprise Value								
Enterprise value is calculated as per external market sources. It is market capitalisation plus reported borrowings less total cash and
cash equivalents.
								
15.Net Debt								
Net debt comprises borrowings and overdrafts, interest rate derivative financial instruments and cash at bank and in hand. See full
reconciliation of net debt in note 23 to the financial statements on pages 182-184.Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
—
Annual Report &
Financial Statements 2019


Global Innovation Centre
Kingscourt, Ireland
—
We believe we have to challenge building
industry traditions through innovating
advanced materials and digital technologies
to achieve a net zero emissions future.
, our new Global Innovation Centre,
empowers us to continue to thrive in a
changing world, while asking the big
questions that will lead us to a more
sustainable, circular and healthy future.
Our Planet Passionate sustainability vision
is driving everything that we do. 
embodies this, being a high-performance,
low-carbon building envelope.
Climate change is the single most
important issue facing the world
today and our most urgent priority.
At , we are committed
to driving a more sustainable
approach to our business in
response to these issues. Energy
conservation has always been
at the core of our products, and
how we run our business. Through
Planet Passionate we will reduce
carbon and energy in both our
manufacturing processes and
products, and continue our
relentless pursuit of low-carbon
buildings that deliver more
performance and value, with
clear targets to strive for by 2030.
Gene M. Murtagh
CEO, 
2
2
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Business & Strategic Report
Chairman’s Statement 10
Business Model & Strategy 12
Chief Executive’s Review 20
Financial Review 30
Risk & Risk Management 36
Sustainability Report 42
Directors' Report
The Board 58
Chairman’s Introduction 60
Report of the Nomination &
Governance Committee 62
Report of the Remuneration Committee 70
Report of the Audit Committee 82
Report of the Directors 88
Financial Statements 96
Independent Auditor’s Report 98
Financial Statements 102
Notes to the Financial Statements 109
Other Information
Alternative Performance Measures 148
Shareholder Information 151
Principal Subsidiary Undertakings 153
Group Five Year Summary 156
—
CONTENTS
Project Case Studies:
Madison Fire Station #14 USA 8-9
Haus Gables USA 40-41
Western Australia Museum Australia 56-57
Studley Castle Hotel UK 68-69
Aico UK 80-81
Holiday Inn USA 94-95
 is our new Global Innovation Centre,
dedicated to advanced material science
and the digitalisation of construction.
It has been built to the highest standards
of sustainable design and is a showcase
for high-performance building envelope
design using 18  products and
systems. The building itself is a living
research project, providing a foundation
for future value creating innovation.
The value we create
Within our 2019 Annual Report
we highlight a number of case
studies which demonstrate
the many ways in which
 creates superior
value for building owners and
building occupants, utilising
innovative products that can
meaningfully contribute to
a more sustainable future.
18  products and
systems have been utilised on
, from across each of our
five businesses.
’s high-performance building
envelope and optimised lighting
contribute to an expected 50%
outperformance versus the
ASHRAE 90.1-2010 baseline.
QuadCore™ panels enabled us to
reduce insulation thickness by
over 50% versus mineral wool,
increasing useable space and
ultimately the value of the asset.
 uses sensors to measure light,
noise, temperature, air quality and
air pressure to enhance indoor
comfort for occupants and as
research for future innovation.
’s unitised systems
and coordinated supply chain
delivered a significantly faster
build time when compared
with a built-up system.
 is a finalist for Project
of the Year, Irish Construction
Excellence (ICE) Awards 2020.
The QuadCore™ panels used
on  are made using
renewable energy and contain
over 15% recycled content.
 is targeting LEED
V.4 Gold Certification.
Sustainable Development
Goals (SDGs)
At  we recognise
that action, at scale,
is urgently needed to
avert a climate emergency.
As a business leader we are
committed to contributing
toward the UN’s Sustainable
Development Goals through
our products, our processes,
our partnerships and
our people.


Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information



—

With its geometric exterior
resembling a crystal-like structure,
the venue has already become a Yas
Island landmark, significantly adding
to the integrated leisure, lifestyle
and entertainment experiences
available to visitors.
CLYMB Abu Dhabi
Abu Dhabi, UAE
1bn
We are committed to recycling
1 billion ocean recovered plastic
bottles per annum from 2025.
—
Find out more in our
Sustainability Report
400
Our wind turbine at Holywell in Wales,
will save over 800 tonnes of CO₂
emissions per year. This is roughly the
equivalent to the combined annual
emissions from 400 average petrol cars.
35,000
Our manufacturing facility at
Castleblayney will use nearly
100% energy generated by
solar panels. We will save
over 35,000 tonnes of CO₂.
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information


—

5
4
—
Lower Mill Estate
Cotswolds, UK
The Lower Mill Estate, a development of
sustainable holiday homes in the Cotswolds,
is offering holiday homemakers the best in
bespoke, energy efficient properties. The
 TEK System has enabled a high
level of design flexibility and exceptional
out-of-the-box building fabric performance,
as well as maximising construction
efficiency and minimising site waste.
—
WE ARE
PLANET
PASSIONATE
OUR COMMITMENTS
—
The total projected energy savings* over the lifetime of the
 insulation systems, sold worldwide in 2019, is equivalent to:
OUR IMPACT
—
79m
Taking seventy-
nine million cars
off the road
annually
18.1
Up to 18.1 times the
the annual electricity
consumption of
Greater London
441m
Over four hundred
and forty-one million
barrels of oil
259
The annual output
of 259 gas-fired
power stations
Insulation:
 TEK Building System
Credit: Habitat First Group
*figures are based on savings of insulation systems in use for 60 years.
2020 2025 2030
ENERGY - Maintain our Net Zero Energy status
- Increase our direct use of renewable energy to 60% by 2030
- Increase our on-site generation of renewable energy to 20% by 2030
- Install solar PV systems on all wholly owned facilities by 2030

CARBON - Net zero carbon manufacturing by 2030
- 50% reduction in product CO₂ intensity from our primary
supply partners by 2030
- 100% zero emission company funded cars by 2025

CIRCULARITY - 1 billion PET bottles upcycled into our manufacturing processes by 2025
- All QuadCore™ insulation to utilise upcycled PET by 2025
- Zero company waste to landfill by 2030
WATER - 5 active ocean clean-up projects by 2025
- 100 million litres of rainwater harvested by 2030
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information


7
6
—
1 Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
2 Operating profit before amortisation of intangibles
Directors' Report
Sustainability Report Financial Statements Other Information
Chairman's Statement Business Model & Strategy Chief Executive’s Review Financial Review Risk & Risk Management
Business & Strategic Report


—

—
BUSINESS &
STRATEGIC
REPORT
UniQuad® Translucent Walls
The UniQuad® translucent daylighting
system contributed to the station’s LEED
Platinum rating and its 70% energy
saving versus comparable facilities.
2,630 square feet of natural
daylighting and its associated
health benefits.
Optimal light levels help to reduce
stress, improve concentration and
promote positive emotional functioning
to the fire fighters on duty.
Unitised design enabled fast, efficient
installation and superior quality control.
Soft, ambient light illuminates the
station at night, giving it a strong,
visible presence in the community.
UniQuad® aluminium contains up
to 40% recycled content, with
polycarbonate containing up to
10% recycled content and the product
itself is continuously recyclable.
LEED Platinum
We wanted daylighting, but with a west
orientation for the main facade of the
building, we knew we’d have to work hard
to control solar gain and glare. Instead of
all glass, we looked for another material.
How could we minimise solar gain and glare?
The product really stood out for its qualities
of daylighting and energy efficiency. The
patterning, and the modularity of the
system all worked out with our design.
Mark Kruser, AIA, Project Manager, OPN Architects
Madison Fire Station #14
Wisconsin, USA
Directors' Report
Sustainability Report Financial Statements Other Information
Business Model & Strategy Chief Executive’s Review Financial Review Risk & Risk Management
Business & Strategic Report
Chairman's Statement


Business
&
Strategic
Report
11
10
—
By focusing on our four key strategic
pillars: increased penetration of our
existing product suite; the continued
evolution of ’s geographic
footprint; differentiation from our
competitors driven by innovation;
and our new Planet Passionate
goals;  has delivered a ninth
straight year of trading profit growth.
Deeper penetration into our existing
markets remains a core focus, and
the successful integration of our
Synthesia and Balex acquisitions
throughout 2019 bolstered our
position in Europe, whilst the
acquisition of Bacacier during the
year also gives us a market leading
position in France.
At the same time we built on our
entry into new geographies, such as
Latin America and Southeast Asia,
which are converting from traditional
building methods to more advanced
building solutions. We continued our
organic expansion with the successful
commissioning of a new insulated
panel facility in the south of Brazil.
The first full year of our partnership
with Jindal Mectec has performed
well, whilst our office in Singapore
continues to grow and provides
a bridgehead to explore further
opportunities in Southeast Asia.
2019 was also a landmark year
for ’s commitment to
innovation, with the completion of
, our new Global Innovation
Centre in Kingscourt.  has
been built to the highest standards
of sustainable design and is a
showcase for  products
and systems. Significant research
activities going on in this state-
of-the-art facility include the
development of a new fibre-free
A1 AlphaCore® insulation board,
the next generation of our market-
leading QuadCore™ insulated panels
and Kooltherm® insulation boards,
and a revolutionary new integrated
solar PV panel, all designed to help
our customers efficiently reduce
energy costs and the environmental
footprint of their businesses.
This year  also unveiled the
next phase in its programme to be a
leader in tackling climate change. As
part of our 10-year Planet Passionate
strategy,  has committed
to hitting 12 ambitious targets by
2030, including increasing on-site
generation of renewable energy to
20%, achieving a net zero carbon
impact from our manufacturing
processes, and committing to a
target of upcycling one billion PET
plastic bottles per annum from 2025.
Management and employees
During the year the Board visited
our Joris Ide site in Germany, and
the recently acquired Balex facility in
Poland. We were pleased to have the
opportunity to meet with local staff
and management, to see the great
work they are doing and to hear,
from them, their plans for the future.
On behalf of the Board, I want to
thank all ’s management
and employees across the globe for
their hard work and contribution to
’s success in 2019, and we
look forward to visiting and meeting
with more of the local teams in 2020.
Dividend
The Board is recommending a final
dividend of 33.5 cent per share, which
if approved at the Annual General
Meeting, will give a total dividend for
the year of 46.5 cent, an increase
of 11% on prior year. This continues
the Board’s policy of growing the
shareholder dividend in line with the
Company’s continued progression.
If approved, the final dividend will be
paid (subject to Irish withholding tax
rules) on 7 May 2020 to shareholders
on the register at close of business
on 27 March 2020.
In 2019  continued its
evolution as the global leader in high-
performance insulation and building
envelope solutions. It marked another
year of record financial performance
with total sales of €4.7bn and a
trading profit of over €497m.
Board governance and composition
The Board is committed to high
standards of corporate governance
and has refined its approach to align
with the principles of the new UK
Corporate Governance Code (2018).
Further details of the best practice
governance policies and procedures
we have adopted are set out in the
Directors’ Report of this annual
report. The Board, through the Audit
Committee, carefully monitors and
manages risk across the business,
and throughout the year the Board
engaged in dialogue with our major
shareholders on the Company’s
strategic and financial performance
as detailed in the Financial Review
in this Annual Report, as well as on
our remuneration policy as set out
in the Remuneration Report. We
look forward to continuing this open
dialogue with our stakeholders in the
years ahead.
As part of the process of continually
refreshing the Board, we were pleased
to announce the appointment of
Anne Heraty as a non-executive
director to the Board last August.
Anne has more than two decades
of experience as an entrepreneur
and CEO of an international plc,
and we are delighted to welcome
her to our Board.
Earlier during 2019, Helen Kirkpatrick
retired as a non-executive director
having served for almost 12 years on
the Board and various committees.
On behalf of the Board, I would like
to thank Helen for her wise counsel
and contribution to  during
those years.
Looking ahead
Whilst 2019 presented challenges
which the business has successfully
navigated, I am confident that the
diverse and globalised business we
have built is well placed to address
whatever new challenges and
opportunities 2020 may present. Our
focus remains on continued growth
both organically and through a
disciplined acquisition strategy. This is
supported by investment in research
and development to ensure we have
a product suite that outperforms
the competition, and a sustainable
business model through our Planet
Passionate goals, which leads our
customers to choose .
Eugene Murtagh
Chairman
21 February 2020
—
CHAIRMAN’S
STATEMENT
Hungary
APZ Test Track, Zalaegerszeg
Insulated Panels:
Dri-Design Rainscreen Facade
IPN Karrier Panel
2
2
Directors' Report
Sustainability Report Financial Statements Other Information
Chairman's Statement Chief Executive’s Review Financial Review Risk & Risk Management
Business Model & Strategy
Business & Strategic Report


—

Business
&
Strategic
Report
13
12
—
Product
Product is at the core of ’s mission to deliver better buildings for all. We are the
market leader in innovating high-performance building envelopes and continue to
push the boundaries of what is possible for efficiency in buildings. We extended our
commitment to innovation in 2019 with the opening of our state-of-the-art innovation
centre, , at our home base in Ireland.
Energy/Carbon Saving
's innovative insulation technologies significantly improve the energy performance
of building envelopes. Our QuadCore™ and Kooltherm® solutions are up to twice as thermally
efficient as traditional fibre based materials and unlike legacy insulation, our advanced
insulation doesn't slump or sag and so retains its performance for its lifetime.
Space/Dimensions
High-performance insulation enables a thinner application of insulation for the same energy
performance, thereby adding valuable internal space in construction or renovation. In an
environment where space is becoming an increasingly scarce commodity, this drives real value
for a building owner or occupier.
Health & Wellbeing
Our range of insulation systems enable optimised air tightness, improving thermal comfort
within a building, while thinner dimensions of insulation and our daylighting solutions bring
more natural light into a building. Access floors help to circulate air for heating or cooling
and can enable personal comfort controls to individual occupants. Our water harvesting
solutions can help to prevent flooding and polluted run-off to local waterways.
Speed/Ease of build
’s insulated panel is a single component system. The system can be quickly and easily
installed through a single-fix installation process. As well as reducing days of labour on-site,
the rapid speed of installation reduces the risk of accidents, as less time is spent working at
height. It also means that the building is weathertight sooner, allowing internal fit-out and
external finishing to commence earlier, minimising delays and the need for multiple trades.
Aesthetics
The outer envelope forms your first impression of a building. The case studies we present
throughout this report and online are testament to the impact of a high-end architectural
facade finish. ’s facade and daylighting solutions integrate with our
high-performance insulation systems to deliver a truly exceptional building envelope.
Planet Passionate/Sustainability
At  we understand the importance of the resources that we rely on to deliver our
best-in-class products – the people that drive a culture of innovation and entrepreneurship,
the communities that we embrace, and the natural resources that we employ. We have
committed to Net Zero Energy operations from 2020, Net Zero Carbon operations from
2030 and a 50% reduction in product CO₂ intensity from our primary suppliers by 2030.
Read more about our Planet Passionate commitments in the Sustainability Report.
Awards/Certification
Environmental certification can help to attract tenants and purchasers and to protect and
enhance future asset value. ’s products contribute to the achievement of credits in
green building rating systems such as BREEAM, LEED and WELL across multiple categories
including energy, materials, indoor air quality and innovation.


—

Business
&
Strategic
Report
13
12
—
 is the global leader in
high-performance insulation and
building envelopes. Our mission is
to accelerate a net zero emissions
future with the wellbeing of
people and planet at its heart.
We do this through enabling
high-performance buildings
that can save more energy,
carbon and water.
Through our relentless
development of innovative and
proprietary technology we have
created a portfolio of products
which create value across a
number of key metrics. Critically,
through the differentiated thermal
performance of our innovative
solutions, we help design teams,
architects and ultimately our
customers to play their part in
tackling climate change. Today,
the construction and operation
of buildings together account
for 36% of global energy use
and 39% of energy-related CO₂
emissions when upstream
power generation is included.
Action, at scale, is urgently
needed.
Founded in Kingscourt, Co Cavan,
 has expanded into a truly
global business operating in over
70 countries and employing more
than 15,000 people. We execute our
strategy across four strategic pillars
and five businesses.
Our businesses:
1.Insulated Panels
 Insulated Panels is
the world’s largest and leading
manufacturer of high-performance
insulated panel building envelopes.
Powered by ’s proprietary
and differentiated insulation core
technologies, a  panelised
envelope provides building owners
with consistently superior build quality
and lifetime thermal performance
compared with built-up constructions
using traditional insulation.
2. Insulation Boards
 is a world leader in
Insulation Boards, pipework and
ducting. Our advanced insulation
technologies deliver superior thermal
performance and air-tightness when
compared with traditional insulation,
resulting in thinner solutions that offer
multiple advantages including more
internal floorspace and daylighting.
3. Light & Air
 Light & Air is established
as a global leader providing a full
suite of daylighting solutions, as
well as natural ventilation and
smoke management solutions,
which complement our existing
building envelope technologies.
—
THE VALUE
WE CREATE
Thermal comfort, indoor air quality
and natural daylighting are widely
recognised as the most important
factors affecting occupant wellbeing
in buildings.
4. Data & Flooring
 is the world's largest
supplier of raised access flooring.
Raised access flooring is the most cost
effective way of creating a flexible
working environment by utilising the
floor void to manage the distribution
of M&E services and HVAC systems.
Our systems have many benefits
including optimising overall building
height, achieving faster construction
with greater design flexibility, enabling
easier reconfiguration of a workspace,
and improving indoor air quality.
5. Water & Energy
Sustainable water management
is rapidly becoming one of the
greatest challenges of our time.
We manufacture and support
pioneering new technologies
to preserve and protect water.
 is also a market leading
manufacturer of innovative
energy management solutions.
—
BUSINESS MODEL
& STRATEGY
2
2
Directors' Report
Sustainability Report Financial Statements Other Information
Chairman's Statement Chief Executive’s Review Financial Review Risk & Risk Management
Business Model & Strategy
Business & Strategic Report
15
14
—
PENETRATION
Increased penetration of ’s product
suite. Underpinned by efficiency gains from
high-performance building envelopes,
regulatory changes and an increasing
awareness of the long-term environmental
impact of inefficient building design:
→ Continued penetration growth and conversion
from traditional insulation and building methods
has been, and will continue to be,
a core driver of our success.
→ Ongoing revisions to key EU legislation including
the Energy Performance of Buildings Directive
(EPBD) continue to drive industry to take action.
→ QuadCore™ now represents 9% of ’s
global insulated panel sales and Kooltherm®
represents 39% of ’s insulation board
sales. ’s best-in-class proprietary
products continue to drive penetration as
architects and design teams seek out advanced
solutions for energy efficient building envelopes.
→ The rising tide of climate awareness and
compulsion to take action is an underlying
positive trend for structural penetration gains
over the long-term.
PLANET PASSIONATE
In 2019, we launched our new Planet Passionate
programme across  and to the
industry. This is a critical first step in the next
phase of our journey to proactively address
the key sustainability challenges that face
our planet. Through our Net Zero Energy
programme, we have already made great
strides in powering our business on renewable
energy, and with Planet Passionate we are
setting ourselves even more challenging goals
for the next 10 years. We are committing to
hard targets in the areas of energy, carbon,
circularity and water.
→ Energy: Increase our direct use of renewable
energy to 60% of total energy use, increase
on-site generation to 20% and deploy rooftop
Solar PV on all wholly owned sites by 2030.
→ Carbon: Net zero carbon manufacturing,
100% zero emission company funded cars, and
a 50% reduction in product carbon intensity
from primary supply partners by 2030.
→ Circularity: Zero company waste to landfill
by 2030 and upcycling 1 billion PET bottles into our
manufacturing processes per annum from 2025.
→ Water: Harvest 100 million litres of rainwater
by 2030 and support 5 ocean clean up
projects by 2025.
GLOBAL
The continued evolution of ’s
geographic footprint as we build market
leading positions globally:
→  has evolved into a truly global
business. Ten years ago 52% of our end-market
exposure was in the UK and Ireland, in 2019
it was less than 25. Over the past two years
we have entered markets which are only
beginning to embark on the conversion to high-
performance building envelopes such as Brazil,
Colombia and India.
→ In 2019 we opened a new facility in Cambui,
Brazil, to support the ongoing development
of  Isoeste and conversion of the
Brazilian market.
→  Light & Air opened a new facility
in Saint-Priest in 2019. The 30,000m2
campus
will be central to expanding our capabilities
and presence in France and Southern Europe
and exemplifies what can be achieved with
 systems, achieving BREEAM
“Very good” certification.
→ We acquired Bacacier, an integrated metal
profiling and insulated panel distributor with an
extensive network across France. We look forward
to working with the Bacacier team to further
develop the region.
Business
&
Strategic
Report


—

—
BUSINESS MODEL
& STRATEGY
STRATEGIC
GOALS & PILLARS
→ To be the leader in high-performance
insulation globally with proprietary and
differentiating technologies.
→ To be the world’s leading provider of low
energy building envelopes – Insulate and
Generate.
→ To expand globally, bringing high-
performance building envelope solutions
to markets which are at an earlier stage in
the evolution of sustainable and efficient
building methods.
→ To deliver 20% Return on Investment.
→ To progress our Net Zero Energy goal
by delivering on our ambitious 10-year
Planet Passionate commitments which
aim to make significant advances in
the sustainability of both our business
operations and our products.
→ To advance materials, building systems and
digital technologies to address issues such
as climate change, circularity and the
protection of our natural world.
Strategic
Pillars
Strategic
Goals
Left:
Ireland
Project Showrooms,
Dublin
Insulated Panels:
QuadCore™ Trapezoidal
Roof and Wall Panels;
Day-Lite Trapezoidal
Rooflights
INNOVATION
Differentiation from competitors driven
by superior innovation:
→ ’s , our new Global Innovation
Centre, opened its doors in 2019. Built to the
highest standards of sustainable design, 
is a showcase for high-performance building
materials, incorporating 18  products
and systems. Containing state-of-the-art
research equipment and prototyping capabilities,
 is home to a team of people dedicated to
research and development in advanced material
science and will further our commitment to a
more sustainable, circular and healthy future.
→ Development of a pioneering integrated
insulated panel with solar technology,
and the fibre-free, A-Class insulation material.
→ The digitalisation of , transforming
how we do business and how our specifiers
and customers interact with us now and in
the future.
→ Co-innovating with the industry. 
sponsored the 2019 Rotman Design Challenge,
tasking students with the topic of disruption in
the construction industry and sought innovative
solutions to the question of where disruption will
come from in the industry and in what form.
2
2
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Business
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Strategic
Report
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16
—
—
BUSINESS MODEL
& STRATEGY
2019 IN A
NUTSHELL
How we create value
> Product innovation and
differentiation
> Excellent customer service
> Energy efficient sustainable
building envelope solutions
> We operate our businesses
to the highest standards
> We acquire excellent businesses
> We recycle capital to
optimise returns
> We maintain financial discipline
> We balance our portfolio of
businesses across product
and geography
> We drive sustainable practices
in our operations through our
Planet Passionate initiatives
Revenue
€4.7bn
How we operate
159
Global manufacturing facilities
15,000+
Employees
> Management controls
> Quality systems
> Responsible supply
chain partnerships
Applications
> Retail
> Distribution
> Leisure
> Accommodation
> Food
> Manufacturing
> Data Management
> Infrastructure
Trading Profit2
€497.1m
EBITDA1
€579.8m
Total Shareholder Return
47.2%
EPS
204.6c
Free cash
€337.1m
ROCE
17.3%
Dividend
46.5c
Value created
5%
Data & Flooring
7%
Light & Air
4%
Water & Energy
65%
Insulated Panels
85%
Energy Efficiency
& Conversion
19%
Insulation Boards
15%
Other
Products Drivers
18%
Residential
12%
Office & Data
19%
UK
70%
Commercial
& Industrial
53%
Europe
7%
Rest of World
21%
Americas
80%
New Build
70%
Direct
Geography Sector
End-Market Channel
20%
Refurbishment
30%
Via Distribution
1 Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
2 Operating profit before amortisation of intangibles
Ireland
IMC Cinema, Kilkenny
Insulated Panels:
Steel Framing System; QuadCore™ Karrier;
Dri-Design Shadow, Shingle, Evolution Axis
2
2
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Business
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Home to various research groups of the
Energy Research Accelerator (ERA),
the collaboration provides world class
laboratory and office space for industry
leading academics and post graduate
students. It is the first truly embedded
cross-disciplinary energy research hub in
the UK and it required a building fit for
accelerating research into sustainability.
Constructingexcellence.org.uk
The RAD Building
Nottingham University, UK
–
Product
@
Energy/
Carbon
Saving @
Space/
Dimensions
@
Health &
Wellbeing
@
Speed/
Ease of build
@
Aesthetics
@
Planet
Passionate/
Sustainability @
Awards/
Certifications
@
@
@
@
@
@
@
 TEK™ Cladding Panel
’s TEK™ Cladding Panels
supported construction of an airtight,
high-performance building envelope,
helping to reduce estimated energy
demand to below 15 kWh/m2
/yr.
Changing the specification to a thinner
build using  TEK™ Cladding
Panels saved up to 250mm wall
depth versus the original specification,
maximising the useable floor space.
The RAD Building prioritises user
wellbeing by maintaining thermal
comfort levels through carefully
regulated internal environments.
The offsite production and dry, panelised
construction of the  TEK™ Panels
supported a fast and predictable build,
making the building weathertight at an
early stage.
The factory-engineered SIPs afforded
considerable design freedom,
allowing the architects to create a striking
building with a unique and dynamic
appearance.
The facility at which 
TEK™ Cladding Panels are produced,
carries FSC®- C109304 and PEFC
Chain of Custody certification.
The RAD Building has been designed
to achieve BREEAM ‘Excellent’
and was the 2019 winner of the East
Midlands Constructing Excellence
Sustainability Award.
—
19
18
Click here to see more
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Business
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21
20
—
2019 capped off a decade of great
progress for  with revenue
and trading profit ahead of prior year
by 7% and 12% respectively.
—
CHIEF
EXECUTIVE’S
REVIEW
Business Review
2019 capped off a decade of great
progress for  with revenue
and trading profit ahead of prior year
by 7% and 12% respectively. Over
the past decade sales and trading
profit grew in excess of fourfold and
sevenfold respectively. Group sales
reached almost €4.7bn, and trading
profit €497m. Despite the significant
macro instability in a number of our
key markets the Group performed
well in the first half, but was weaker
towards year end. Predictably, the
UK was the most notable illustration
of this.
Underlying volume growth at the
larger Insulated Panels and Insulation
Boards divisions was 4% and 8%
respectively. Underlying revenue
was 1% ahead in Insulated Panels
and 1% lower in Insulation Boards
reflecting the impact of lower
pricing due to raw material
deflation over prior year.
During the year we invested a
total of €305m continuing on
our path of both organic and new
acquisition expansion worldwide.
New facilities were either completed
or commenced in Sweden, UAE,
USA, the Netherlands and Brazil.
Acquisition investment was €144m,
comprising most notably Bacacier
in France for €122m.
2019 marked the launch of our global
Planet Passionate initiative, building
upon the last decade of progress
on our Net Zero Energy agenda. We
have now embarked on our next
ambitious 10 year journey to radically
advance  across the four
key themes of Energy, Carbon,
Circularity and Water. This agenda
is central to our purpose and entails
the following targets and timelines:
ENERGY
- Maintain our Net Zero Energy
status
- Increase our direct use of
renewable energy to 60% by 2030
- Increase our on-site generation of
renewable energy to 20% by 2030
- Install solar PV systems on all
wholly owned facilities by 2030
CARBON
- Net zero carbon manufacturing
by 2030
- 50% reduction in product CO₂
intensity from our primary
supply partners by 2030
- 100% zero emission company
funded cars by 2025
CIRCULARITY
- 1 billion PET bottles upcycled
into our manufacturing
processes per annum from 2025
- All QuadCore™ insulation to
utilise upcycled PET by 2025
- Zero company waste to
landfill by 2030
WATER
- 5 active ocean clean-up
projects by 2025
- 100 million litres of rainwater
harvested by 2030
Financial Highlights:
→ Revenue up 7% to €4.7bn,
(pre-currency, up 6%).
→ Trading profit up 12% to €497.1m,
(pre-currency, up 10%).
→ Free cashflow up 9% to €337.1m.
→ Group trading margin of 10.7%,
an increase of 50bps.
→ Basic EPS up 11% to 204.6 cent.
→ Final dividend per share of
33.5 cent. Total dividend for the
year up 10.7% to 46.5 cent.
→ Year-end net debt1 of €633.2m
(2018: €728.3m). Net debt to
EBITDA2 of 1.1x (2018: 1.4x).
→ ROCE of 17.3% (2018: 16.8%).
Operational Highlights:
→ Insulated Panels sales growth
of 7%. Strong performance in
the Americas, Mainland Europe
performed well overall with the
notable exception of Germany.
Difficult UK market particularly in
the second half. Further headway
in key markets on QuadCore™,
now 9% of global sales.
→ Insulation Boards sales growth
of 2%. Continuing progress on
Kooltherm® and share gain from
traditional materials.
→ Strong underlying volume growth
of 4% and 8% in Insulated Panels
and Insulation Boards partially
offset by the pricing impact of
raw material deflation.
→ Light & Air sales growth
of 12% buoyed by a strong
performance in the US. Solid
activity in Mainland Europe.
Daylighting centre of excellence
under construction in Ireland.
→ Water & Energy sales growth of
3% with progress in the Nordics,
a difficult UK environment
and more subdued rainwater
harvesting activity in Australia.
→ Data & Flooring sales growth
of 13% reflecting strong
datacentre activity and
geographic expansion in Europe.
1 Net Debt and EBITDA both pre-IFRS 16
2 Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
Dubai
Bluewaters Island
Insulation Boards:
Kooltherm® K10 Soffit Board
2
2
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Business
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23
22
—
2
Turnover
€3,031.9m
+7%(1)
2018: €2,823.1m
2
Trading Profit
€316.1m
+12%
2018: €281.8m
2
Trading Margin
10.4%
+40bps
2018: 10.0%
QuadCore™ penetration reached 9%
globally, with sales up 36% over prior
year. In Mainland Europe, the trading
picture was quite mixed overall
although most regions started the
year ahead of 2018. France and
Spain performed particularly well
throughout the year as the 
model has become more embedded
in these markets in recent years. In
the Benelux, revenue was marginally
ahead although the Netherlands
weakened in the last quarter owing
to environmental legislation that
affected progress on many building
sites. This headwind is expected to
ease somewhat in 2020. The German
market has been key for us in recent
years although it stagnated during
2019. We have taken steps to ensure
our competitiveness is enhanced,
including significant focus on
QuadCore™. Poland and the
broader Central European markets
were steady as was our activity in
the Nordics.
Significant progress was achieved
across all markets in the Americas
over the year. Penetration in the
USA and Canada has continued to
grow as modern and more efficient
methods of construction become
increasingly adopted and 's
solutions become the basis of
specification in many applications
which historically would have used
more traditional materials. The roll-
out of QuadCore™ is also gaining
momentum and this will be further
enabled with the new production
line in Modesto, California, that
is nearing completion. In Latin
America, progress has also been
encouraging with a gradual gain in
position in Mexico and continuing
our momentum in Brazil where we
opened a new facility in Cambui
late last year. We have also broken
ground on a fifth plant in the region
which will be in southern Brazil. Other
regions in Latin America are now also
under developmental review.
At the outset of 2019 the UK backlog
and general activity was healthy,
showing no signs of the weakness
that ensued in the second half of
the year. As the political uncertainty
grew through the year more building
projects were postponed which,
when combined with accelerating
deflation in the latter part of the
year, resulted in a disappointing
outturn overall. QuadCore™,
however, continued to grow in share.
With the momentum in QuadCore™
continuing through early 2020,
together with a more stable political
backdrop, we should see activity
improve from the evident weakness
of the first quarter.
Activity for Insulated Panels in
Australia was solid over the year
while in New Zealand the business
advanced significantly over 2018.
Although relatively embryonic in
Southeast Asia, revenue has grown
year-on-year and we continue to
build a base level of demand in the
region which should necessitate local
manufacturing in the not too distant
future. Our Indian business delivered
its plan for the year, while the Middle
East remains a challenge for the
Panels business.
Volume growth in Ireland was
healthy for most of the year but
weakened towards year-end,
pointing towards a slow start
to 2020.
INSULATED PANELS
—
(1) Comprising underlying +1%, currency +1% and acquisitions +5%. Like-for-like volume +4%.
Australia
Perth Stadium Train Station
Insulated Panels:
 KingZip® Roof Panel System
2
2
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25
24
—
2
Turnover
€876.9m
+2%(1)
2018: €864.1m
2
Trading Profit
€117.1m
+11%
2018: €105.1m
2
Trading Margin
13.4%
+120bps
2018: 12.2%
On the whole, the Insulation Boards
business performed well across
Continental Europe. 2018 was marred
by heavy raw material inflation
followed by rapid deflation through
2019. This led to a challenge in
maintaining price, and of course
margins. Despite this, volumes grew
substantially in the Benelux and
Southern Europe and improved in
Germany and the Nordics. A new
Kooltherm® plant will come on
stream later this year in Sweden
to support continued conversion
from legacy mineral fibre insulation.
Kooltherm® volumes grew by 15%
in the year.
In the UK, volumes were strong in
the early part of the period followed
by weakness in the latter half of the
year, largely owing to the uncertain
political backdrop which was very
pronounced at that point.
Progress continued in North America
where our presence to date has been
limited to a single XPS facility in the
North East. We expect to build and
commission a new PIR/QuadCore™
board facility during 2021/2022
which will be the first plant of our
phased roll-out in the US, and will
sit alongside a new Insulated Panel
facility currently under development
in Pennsylvania.
Our business in the Middle East
delivered another year of solid
growth largely in the Industrial
Insulation sphere. Strong recovery
was evident in the Australasia market
as Kooltherm® grew its presence
against local legacy mineral fibre and
other insulation materials. In Ireland,
the business had a solid outcome for
the year across both the Insulation
Board and structural residential
Timberframe business units.
INSULATION BOARDS
—
(1) Comprising underlying -1%, currency +1% and acquisitions +2%. Like-for-like volume +8%.
Netherlands
De Woldring Locatie
Insulation Boards:
 Unidek SIPS
2
2
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Business
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26
—
WATER & ENERGY
—
LIGHT & AIR
—
Revenue grew by 12% in 2019 and
trading profit by 17% aided by
improving synergies and efficiencies
as this relatively embryonic business
segment evolves. The story was
somewhat mixed however with
activity in Germany weakening
notably through the second half and
the Benelux performing similarly. In
contrast to this, France and Southern
Europe generally experienced
attractive growth supported by the
recently commissioned new facility
in Lyon from which we anticipate
continued momentum through
the current year.
North America delivered a stand-
out performance across both the
standard and architecturally bespoke
offerings. The UniQuad® wall-light,
produced near Chicago, has also
been launched across Europe where
we anticipate penetration growth in
the coming years.
Work has commenced on a
significant plant expansion in Ireland
to extrude polycarbonate daylighting
for both roof and wall applications
and we anticipate production to
commence mid-2021.
2019 was a year of stability for the
Water & Energy business segment
with profit in line with prior year. The
UK and Ireland were both broadly
flat on prior year, Mainland Europe
grew and in Australia sales weakened
as housing starts in New South
Wales came under pressure. This
pattern can be expected to continue
into the current year and longer
term we would expect to grow large
scale water storage applications in
more rural and afforested parts of
Australia. The focus of this wider unit
will increasingly revolve around water
applications with a plan to establish
a more global footprint beyond the
European and Australian presence
we currently have.
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Business
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29
28
—
DATA & FLOORING
—
2019 was a positive year for our
global Data & Flooring business
segment largely driven by an
increased product offering into
the data sector and our growing
geographic presence in Europe.
The UK was predictably weak
however as office construction
faltered particularly in the greater
London area. We anticipate this
trend to remain a drag through 2020,
compensated somewhat by growth
in Germany and the Benelux. Whilst
the data opportunity remains front
and central to the division’s future,
the projects can be large and lumpy
with respect to the timing, resulting
in an inconsistent pattern of revenue.
2020 is expected to be no different
in that regard.
Innovation
During the year we completed and
opened our Global Innovation Centre,
, which sits alongside our
headquarters in Kingscourt, Ireland.
The primary near-term focus is to
soft launch PowerPanel® 2.0, and the
fibre-free A1 AlphaCore™ before the
end of 2020. Both will offer 
a significantly broadened specification
opportunity and will no doubt be
followed by more advanced iterations
over the coming years. QuadCore™
2.0 and the next generation of
Kooltherm® are also at the early
stages of development as part of our
ongoing innovation agenda.
Looking Ahead
As flagged in our most recent
trading update underlying sales in
the early part of 2020 are behind
prior year. Despite the poor start we
have experienced some element of
recovery in order placement in recent
weeks and our backlog globally is in
reasonable shape. This could point
towards an improved second quarter.
Our acquisitions pipeline is healthy
with a number of projects currently
under consideration. Furthermore,
the understandable ratcheting in
recent months of the climate debate
chimes fully with the advanced
energy efficiency solutions provided by
 and our Planet Passionate
agenda. This, combined with the
global footprint of our business and
the strength of the Group’s balance
sheet, positions  well for the
years ahead.
Gene M. Murtagh
Chief Executive Officer
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30
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Overview of results
Group revenue increased by 7% to
€4.7bn (2018: €4.4bn) and trading
profit increased by 12% to €497.1m
(2018: €445.2m) with an increase of
50 basis points in the Group’s trading
profit margin to 10.7% (2018: 10.2%).
Basic EPS for the year was 204.6 cent
(2018: 184.0 cent), representing an
increase of 11%.
The Group’s underlying sales and
trading profit growth by division
are set out to the right:
Sales Underlying Currency Acquisition Total

The Group’s trading profit measure is earnings before interest, tax and
amortisation of intangibles:
Trading Profit Underlying Currency Acquisition Total
Insulated Panels +7% +1% +4% +12%
The key drivers of sales and trading profit performance in each division
are set out in the Business Review.
The Financial Review provides an
overview of the Group’s financial
performance for the year ended
31 December 2019 and of the Group’s
financial position at that date.
—
FINANCIAL
REVIEW
UK
The Box Museum, Plymouth
Insulated Panels:
QuadCore™ Karrier Hook-On Cassette
2
2
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32
—
IFRS 16 Leases
A new accounting standard, IFRS
16 Leases, was adopted with effect
from 1 January 2019. The standard
requires leases which were previously
treated as operating leases to be
recognised as a lease liability with
the associated asset capitalised
and treated as a right of use asset.
On 1 January 2019, €127.9m of
leases were recognised as liabilities
on adoption of the standard and
€128.8m capitalised as right of use
assets. During 2019 depreciation on
the right of use assets was €30.0m
and the associated lease rental
charge decreased by €31.8m leading
to an increase in operating profit of
€1.8m. The interest charge on the
associated leases was €3.8m and the
aggregate impact of IFRS 16 on profit
before tax was a decrease of €2.0m.
Finance costs (net)
Finance costs for the year increased
by €2.7m to €20.8m (2018: €18.1m).
A net non-cash charge of €0.1m
(2018: credit of €0.6m) was recorded
in respect of swaps on the Group’s
USD private placement notes. The
Group’s net interest expense on
borrowings (bank and loan notes)
was €16.7m (2018: €18.0m). This
decrease reflects lower average
gross and net debt levels in 2019. The
interest expense is driven extensively
by gross debt balances with low cash
yields in the current environment.
An amount of €3.8m (2018: €nil)
was recorded as interest on leases
capitalised in accordance with IFRS
16 which was adopted with effect
from 1 January 2019.
Taxation
The tax charge for the year was
€76.6m (2018: €69.1m) which
represents an effective tax rate
of 16.9% (2018: 17.1%). The decrease
in the effective rate reflects,
primarily, the change in the
geographical mix of earnings year
on year and reductions in certain
territorial tax rates.
Dividends
The Board has proposed a final
dividend of 33.5 cent per ordinary
share payable on 7 May 2020 to
shareholders registered on the
record date of 27 March 2020. When
combined with the interim dividend
of 13.0 cent per share, the total
dividend for the year increased to
46.5 cent (2018: 42.0 cent),
an increase of 10.7%.
Retirement benefits
The primary method of pension
provision for current employees
is by way of defined contribution
arrangements. The Group has two
legacy defined benefit schemes in the
UK which are closed to new members
and to future accrual. In addition,
the Group has a number of smaller
defined benefit pension liabilities in
Mainland Europe. The net pension
liability in respect of all defined
benefit schemes was €15.1m (2018:
€13.1m) as at 31 December 2019.
Intangible assets and goodwill
Intangible assets and goodwill
increased during the year by €98.0m
to €1,600.1m (2018: €1,502.1m).
Intangible assets and goodwill of
€95.2m were recorded in the year
relating to acquisitions completed
by the Group. An increase of €24.7m
arose due to year end exchange
rates used to translate intangible
assets and goodwill other than
those denominated in euro, offset
by annual amortisation of €21.9m
(2018: €22.2m).
Financial key performance
indicators
The Group has a set of financial key
performance indicators (KPIs) which
are presented in the table below.
These KPIs are used to measure
the financial and operational
performance of the Group and are
used to track ongoing progress
and also in achieving medium and
long term targets to maximise
shareholder return.
2019 2018
Insulated Panels 10.4% 10.0%
Insulation Boards 13.4% 12.2%
Light & Air 7.7% 7.4%
Water & Energy 6.8% 7.0%
Data & Flooring 11.4% 11.9%
Key performance indicators 2019 2018
Basic EPS growth 11% 16%
Sales growth 7% 19%
Trading margin 10.7% 10.2%
Free cashflow (€m) 337.1 308.4
Return on capital employed 17.3% 16.8%
Net debt/EBITDA 1.1x 1.4x
(a) Basic EPS growth. The growth in
EPS is accounted for primarily by
a 12% increase in trading profit.
The minority interest amount
increased year on year due to
a strong performance at the
Group’s operations which have
minority stakeholders, leading to
a basic EPS increase of 11%.
(b) Sales growth of 7% (2018: 19%)
was driven by a 5% contribution
from acquisitions, a 1% increase
in underlying sales and a 1%
increase due to the effect of
currency translation. Whilst
underlying sales growth overall
was a modest 1%, volume growth
exceeded this in many markets
although was partially offset
by price deflation due to raw
material price reductions.
(c) Trading margin by division is
set out below:
Free cashflow 2019 2018
€m €m
EBITDA1
579.8 521.2
Movement in
working capital2
5.6 2.3
Movement in
provisions
1.7 (5.8)
Net capital
expenditure
(154.3) (131.3)
Net interest paid (16.7) (15.6)
Income taxes paid (87.2) (75.0)
Other including
non-cash items
8.2 12.6
Free cashflow 337.1 308.4
1 Earnings before finance costs, income
taxes, depreciation, amortisation and
the impact of IFRS 16
2 Excludes working capital on acquisition
but includes working capital
movements since that point
Working capital at year-end was
€582.8m (2018: €543.9m) and
represents 11.9% (2018:11.5%)
of annualised turnover based on
fourth quarter sales. This metric is
closely managed and monitored
throughout the year and is subject
to a certain amount of seasonal
variability associated with trading
patterns and the timing of
significant purchases of steel and
chemicals. The movement year
on year reflects a 40 basis points
increase in underlying working
capital levels primarily due to
higher inventory levels in recently
acquired businesses.
(e) Return on capital employed,
calculated as operating profit
divided by total equity plus net
debt, was 17.3% in 2019 (2018:
16.8%) or 17.7% including
the annualised impact of
acquisitions. The creation of
shareholder value through the
delivery of long term returns well
in excess of the Group’s cost
of capital is a core principle of
’s financial strategy. The
increase in profitability together
with the deployment of further
capital has enhanced returns on
capital during the year.
The Insulated Panels division
trading margin advanced year
on year reflecting ongoing
progress in sales of QuadCore™
and the market mix of sales. The
trading margin improvement in
the Insulation Boards division
reflects a positive Kooltherm®
mix, operating leverage as a
consequence of volume growth
and a positive lag effect on
raw material price reductions.
The increased trading margin
in Light & Air reflects improved
efficiencies overall and the
market mix of sales. The Water
& Energy trading margin was
broadly stable year on year.
The decrease in trading margin
in Data & Flooring reflects the
geographic market and product
mix of sales year on year.
Movement in net debt 2019 2018
€m €m
Free cashflow 337.1 308.4
Acquisitions (142.2) (469.2)
Deferred consideration paid (59.7) (3.1)
Share issues 0.1 0.1
Repurchase of treasury shares (0.6) -
Dividends paid (77.6) (68.3)
Dividends paid to non-controlling interests (0.4) (0.1)
Cashflow movement 56.7 (232.2)
Exchange movements on translation 8.4 (2.2)
Deferred consideration 30.0 (30.0)
Movement in net debt 95.1 (264.4)
Net debt at start of year (728.3) (463.9)
Net debt at end of year (633.2) (728.3)
(f) Net debt to EBITDA measures
the ratio of net debt to earnings
and at 1.1x (2018: 1.4x) is
comfortably less than the
Group’s banking covenant of
3.5x in both 2019 and 2018. The
calculation is pre-IFRS 16 which
is consistent with the Group’s
banking covenant.
Acquisitions and capital
expenditure
During the period the Group made
the following acquisitions for a
total upfront cash consideration
of €142.2m.
On 6 November 2019, the purchase
of 85% of Group Bacacier SAS for
an initial cash amount of €122.0m.
The Group also made a number of
smaller acquisitions during the year
for a combined cash consideration
of €22.2m:
→ the purchase of 100% of the
share capital of WeGo Floortec
GmbH, a German manufacturer
of access floors;
→ the purchase of 100% of the
share capital of Epur SA, a French
water treatment business; and
→ the purchase of the assets of
SkyCo, a US Light & Air business.
The deferred consideration paid
during the period of €59.7m (2018:
€3.1m) represents €30m relating to
the Synthesia business which was
acquired in 2018 and €29.7m relating
to the Isoeste business which was
acquired in 2017.
Capital structure and
Group financing
The Group funds itself through a
combination of equity and debt.
Debt is funded through syndicated
and bilateral bank facilities and
private placement loan notes.
The primary bank debt facility is
a €451m revolving credit facility,
which was undrawn at year end
and which matures in June 2022.
In June 2019 an additional 3
year bank facility of €300m was
arranged, which was undrawn
at year end. As at 31 December
2019, the Group also had private
placement loan note funding net
of related derivatives totalling
€814m. The weighted average
maturity of the notes is 4.5 years.
Subsequent to the year end the
Group arranged a bilateral ‘Green
Loan’ of €50m to fund the Group’s
Planet Passionate initiatives.
The Group had significant available
undrawn facilities and cash balances
which, in aggregate, were €942m
at 31 December 2019. This, together
with the Green Loan of €50m
provides appropriate headroom for
ongoing operational requirements
and development funding.
Net debt
Net debt decreased by €95.1m
during 2019 to €633.2m
(2018: €728.3m).
This is analysed in the table below:
(d) Free cashflow is an important
indicator and it reflects the
amount of internally generated
capital available for re-
investment in the business or
for distribution to shareholders.
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Key financial covenants
The majority of Group borrowings
are subject to primary financial
covenants calculated in accordance
with lenders’ facility agreements
which exclude the impact of IFRS 16:
- A maximum net debt to
EBITDA ratio of 3.5 times; and
- A minimum EBITDA to net
interest coverage of 4 times.
The performance against these
covenants in the current and
comparative year is set out below:
2019 2018
Covenant Times Times
Net
debt/
EBITDA
Maximum
3.5
1.1 1.4
EBITDA/
Net
interest
Minimum
4.0
34.1 28.8
Investor relations
 is committed to
interacting with the international
financial community to ensure a
full understanding of the Group’s
strategic plans and its performance
against these plans. During the
year, the executive management
and investor team presented at nine
capital market conferences and
conducted 351 institutional one-
on-one and group meetings.
Share price and market
capitalisation
The Company’s shares traded in
the range of €35.70 to €55.25
during the year. The share price
at 31 December 2019 was €54.45
(31 December 2018: €37.38) giving
a market capitalisation at that
date of €9.9bn (2018: €6.7bn).
Total shareholder return for
2019 was 47.2%.
Financial risk management
The Group operates a centralised
treasury function governed by a
treasury policy approved by the
Group Board. This policy primarily
covers foreign exchange risk, credit
risk, liquidity risk and interest rate
risk. The principal objective of the
policy is to minimise financial risk
at reasonable cost. Adherence to
the policy is monitored by the CFO
and the Internal Audit function.
The Group does not engage in
speculative trading of derivatives
or related financial instruments.
Geoff Doherty
Chief Financial Officer
21 February 2020
USA
Case Western Reserve University
Data & Flooring:
ConCore 1000 & Composite Board
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Overall responsibility for risk
management lies with the Board
who ensures that risk awareness
is set at an appropriate level. To
ensure that risk awareness is set
at an appropriate level, the Audit
Committee assists the Board by
taking delegated responsibility
for the risk identification and
assessment, in addition to reviewing
the Group’s risk management
and internal control systems and
making recommendations to the
Board thereon.
The chairman of the Audit
Committee reports to the Board
at each Board meeting on its
activities, both in regard to audit
matters and risk management.
The activities of the Audit
Committee are set out in detail in
the Report of the Audit Committee
contained in this Annual Report.
The Board monitors the Group’s
risk management systems through
this consultation with the Audit
Committee but also through
the Group’s divisional monthly
management meetings, where at
least two executive directors are
present. The risks and trends are
the focus of each division’s monthly
management meeting, where their
performance is also assessed against
budget, forecast and prior year. Key
performance indicators are used to
benchmark operational performance
for all manufacturing sites.
In addition to this ongoing
assessment of risk within the
divisions, the Audit Committee
oversees an annual risk assessment
for the Group whereby each
divisional management team is
formally asked to prepare a risk
assessment for their business. This
assessment involves evaluating
group-wide risks, as put forward
by the Board, and also presenting
additional risks that are specific
to their business.
While it is acknowledged that the
Group faces a variety of risks, the
Board, through the processes set out
above, has identified the principal
risks and uncertainties that could
potentially impact upon the Group’s
short to medium term strategic
goals and these are as set out in
the following table.
's strategic pillars that
may be impacted by these risks
and uncertainties are:
Innovation;
Global;
Penetration;
Planet Passionate.
Risk and impact Actions to mitigate
Volatility in the macro environment
 products are targeted at both
the residential and non-residential
(including retail, commercial, public
sector and high-rise offices) construction
sectors. As a result, demand is dependent
on activity levels which may vary by
geographic market and is subject to the
usual drivers of construction activity,
(i.e. general economic conditions and
volatility, Brexit, political uncertainty
in some regions, interest rates,
business/consumer confidence levels,
unemployment, population growth).
While construction markets are
inherently cyclical, changing building
and environmental regulations continue
to act as an underlying positive structural
trend for demand for many of the
Group’s products.
The exposure to the cyclicality of any one construction
market is partially mitigated by the Group’s diversification,
both geographically and by product.
As set out in the Business Model & Strategy, the Group has
mitigated this risk through diversification as follows:
- Significant globalisation strategy with a presence
in over 70 markets;
- Launch of new innovative products and an approach of
continuous improvement to existing product lines; and
- Acquisitions made during the year extend the geographic
reach of the Group.
The full details of these diversifications are set out in
the Business Model & Strategy report contained in this
Annual Report.
Failure to innovate
Failing to successfully manage and
compete with new product innovations,
changing market trends and consumer
tastes could have an adverse effect on
’s market share, the future
growth of the business and the margins
achieved on the existing product line.
Innovation is one of ’s four pillars to increasing
shareholder value and therefore plays a key role within
the Group.
There is a continual review of each division’s product
portfolios at both the executive and local management level
to ensure that they target current and future opportunities
for profitable growth.
This risk is further mitigated by continuing innovation and
compelling marketing programmes. The launch of  in
2019 has served to enhance the capabilities of the Group
to innovate.  also has a deep understanding of
changing consumer and industry dynamics in its key markets
and continues to refine its omnichannel customer centric
approach, enabling management to respond appropriately
to issues which may impact business performance.
Product failure
A key risk to ’s business is the
potential for functional failure of our
product which could lead to health, safety
and security issues for both our people
and our customers.
The  brand is well established
and is a key element of the Group’s overall
marketing and positioning strategy.
In the event of a product failure, the
 brand and/or reputation could
be damaged and if so, this could lead to a
loss of market share.
Dedicated structures and processes are in place to manage
and monitor product quality controls throughout the
business:
- The majority of new products go through a certification
process which is undertaken by a recognised and
reputable authority (for example, in the UK it is the
Building Research Establishment, BRE) before it is brought
to market.
- Our businesses employ quality control specialists and
operate strict policies to ensure consistently high
standards
are maintained in relation to the sourcing and handling
of raw materials.
- The construction of a dedicated  fire engineering
research centre, using  products, allows for more
expedient and in-depth testing to take place.
- Quality audits are undertaken at our manufacturing sites.
Over 70 of our facilities are ISO 9001 certified.
- Effective training is delivered to our staff.
- We proactively monitor the regulatory and legislative
environment.
As a leading building supplies manufacturer
in a highly competitive international
environment,  is exposed to a
variety of risks and uncertainties which are
monitored and controlled by the Group’s
internal risk management framework.
—
RISK & RISK
MANAGEMENT
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Risk and impact Actions to mitigate
Business interruption (including IT continuity and climate change)
’s performance is
dependent on the availability and
quality of its physical infrastructure,
its proprietary technology, its
raw material supply chain and its
information technology. The safe and
continued operation of such systems
and assets is threatened by natural
and man-made perils and is affected
by the level of investment available
to improve them.
The building industry as a whole
is going through some significant
change with respect to building
regulations and codes. The risks
associated with misunderstanding
some of the potential changes and
the nature of our product set is one
that is more prevalent today.
Embedded within Climate Change
risks are energy regulations, change
in customer preferences and global
supply.
Any significant or prolonged
restriction to its physical
infrastructure, the necessary raw
materials or its IT systems and
infrastructure could have an adverse
effect on ’s business
performance.
 insists on industry leading operational processes and
procedures to ensure effective management of each facility.
The Group invests significantly in a rigorous programme of
preventative maintenance on all key manufacturing lines to
mitigate the risk of production line stoppages.
The impact of production line stoppages is also mitigated
by having business continuity plans in place to allow for the
transfer of significant volume from any one of our 95 plants in
the Insulated Panels division or 27 plants in the Insulation Boards
division to another in the event of a shutdown.
In addition, and as part of our consequential loss insurance,
 is subject to regular reviews of all manufacturing sites
by external risk management experts, with these reviews being
aimed at enhancing ’s risk profile.
Climate related risks are managed through significant
investment in product development which help mitigate climate
change along with our ambitious commitments to reduce our
own environmental footprint.
 is focused on developing, enhancing and protecting
its IP portfolio. As a global leader in building envelope solutions,
 considers its IP security to be paramount. In addition
to trade secret policies and procedures,  has developed
appropriate IP strategies to protect and defend against
infringements.
In an effort to reduce ’s exposure to raw material supply
chain issues,  retains strong relationships with a wide
range of raw material suppliers to limit the reliance on any one
supplier or even a small number of suppliers.
 continues to inform all stakeholders of the
characteristics of our product offerings, their appropriate
application and benefits to limit the risk of misunderstanding
within the building industry.
’s IT infrastructure is constantly reviewed and updated
to meet the needs of the Group. Procedures have been
established for the protection of this infrastructure and all other IT
related assets. These include the development of IT specific business
continuity plans, IT disaster recovery plans and back-up delivery
systems, to reduce business disruption in the event of a major
technology failure.
Credit risks and credit control
As part of the overall service
package,  provides credit
to customers and as a result there
is an associated risk that the
customer may not be able to pay
outstanding balances.
At the year-end, the Group was
carrying a receivables book of
€716.3m expressed net of provision
for default in payment. This
represents a net risk of 15% of
sales. Of these net receivables,
approximately 67% were covered by
credit insurance or other forms of
collateral such as letter of credit
and bank guarantees.
Each business unit has rigorous, established procedures and
credit control functions around managing its receivables and
takes action when necessary.
Trade receivables are primarily managed through strong credit
control functions supplemented by credit insurance to the extent
that it is available. All major outstanding and overdue balances
together with significant potential exposures are reviewed
regularly and concerns are discussed at monthly meetings at
which the Group’s executive directors are present.
Control systems are in place to ensure that credit authorisation
requests are supported with appropriate and sufficient
documentation and are approved at appropriate levels in the
organisation.
Risk and impact Actions to mitigate
Employee development and retention
The success of  is built
upon effective management teams
committed to achieving a superior
performance in each division.
Failure to attract, retain or develop
these teams could have an impact
on business performance.
 is committed to ensuring that the necessary procedures
are in place to attract, develop and retain the skill levels needed
to achieve the Group’s strategic goals. These procedures include
strong recruitment processes, succession planning, remuneration
reviews, including both long and short term incentive plans, and
targeted career development programmes.
Fraud and cybercrime
 is potentially exposed to
fraudulent activity, with particular
focus on the Group’s online banking
systems, online payment procedures
and unauthorised access to internal
systems.
The security and processes around the Group’s IT and banking
systems are subject to review by divisional management and
internal audit. These systems are continually reviewed with
updates and improvements implemented as required. Robust IT
and security policy documents and related alerts are circulated
by Group management to all divisions to ensure a consistent and
effective approach is taken across the Group.
Acquisition and integration of new businesses
Acquisitive growth is an important
element of ’s development
strategy. A failure to execute and
properly integrate significant
acquisitions and capitalise on the
potential synergies they bring may
adversely affect the Group.
All potential acquisitions are rigorously assessed and evaluated,
both internally and by external advisors, to ensure any potential
acquisition meets ’s strategic and financial criteria.
This process is underpinned by extensive integration procedures
and the close monitoring of performance post acquisition by both
divisional and Group management.
 also has a strong track record of successfully integrating
acquisitions and therefore management have extensive knowledge
in this area which it utilises for each acquisition.
Health and safety
The nature of ’s operations
can expose its contractors,
customers, suppliers and other
individuals to potential health and
safety risks.
Health and safety incidents can
lead to loss of life or severe injuries.
A robust health and safety framework is in place throughout the
Group’s operations requiring all employees to complete formal
health and safety training on a regular basis.
The Group monitors the performance of its health and safety
framework, and takes immediate and decisive action where
non-adherence is identified.
The development of a strong safety culture is driven by
management and employees at every level and is a core part
of doing business with integrity.
Laws and regulations
 is subject to a broad
range of existing and evolving
governance requirements,
environmental, health and safety
and other laws, regulations and
standards which affect the way
the Group operates. Non-
compliance can lead to potential
legal liabilities and curtail the
development of the Group.
’s in-house legal team is responsible for monitoring
changes to laws and regulations that affect the business and is
supported by external advisors.
A comprehensive framework of policies are in place that set
out the way employees and suppliers are expected to conduct
themselves.
Training is provided through a variety of mediums in key areas of
legal and regulatory compliance, including a suite of mandatory
training for those that join .
A robust whistleblowing process is in place that allows the
anonymous reporting through an independent hotline of any
suspected wrongdoing or unethical behaviour, including reporting
instances of non-compliance with laws and regulations. All
reported cases are investigated.
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Kooltherm® K20 Concrete
Sandwich Board
Using a combination of Cross-Laminated
Timber (CLT) and Kooltherm®, Haus
Gables achieved
an R-Value of 20.5 with only 2 inches
of insulation.
Kooltherm® halved the insulation
thickness required versus traditional
materials. This was a key consideration
for Haus Gables with a breadth of just
18ft, equivalent to a mobile home.
The Kooltherm® used on Haus Gables
was manufactured with a blowing
agent that has zero Ozone Depletion
Potential, Low Global Warming
potential, HCFC and CFC free.
Through the innovative use of CLT
and Kooltherm®, Haus Gables was
erected in just over two weeks,
drastically reducing labour time on
site and therefore labour costs.
Haus Gables has been featured in
multiple influential architecture and
design magazines globally for its
innovative use of materials and its
striking design.
The Kooltherm® used on Haus
Gables was manufactured using
renewable energy.
Architectural League Prize for
Young Architects + Designers,
Jennifer Bonner, Winner.
The whole thing looked like
an architectural model being
assembled in place. If you squint
your eyes, watching the panels
being installed at that scale, one
could imagine, ‘This is the way
we cut up materials—chipboard,
foam core, and whatever else is
on our desks—and make models’.
Jennifer Bonner, Director MALL and Assistant Professor
at Harvard University Graduate School of Design
Haus Gables
Atlanta, USA
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—
SUSTAINABILITY
REPORT
’s Mission
To accelerate a net zero emissions future with the
wellbeing of people and planet at its heart. We do
this through enabling high-performance buildings
that can save more energy, carbon and water.
We recognise the vital importance
of achieving this while: enhancing
the safety and wellbeing of people
in buildings; enabling the circular
economy; and always delivering more
performance and value. We believe
the answers lie in challenging building
industry traditions with innovation
in advanced materials and digital
technologies. What defines us is our
relentless pursuit for better building
performance whilst being Planet
Passionate in everything we do.
Our commitment to sustainability
is instilled at every level of
 and at every step in
the manufacturing process.
In developing our approach to
sustainability we have built on
materiality assessments conducted
at a divisional level as well as
incorporating guidelines from
recognised associations such as
the Sustainable Accounting
Standards Board (SASB) and the
Task Force on Climate-related
Financial Disclosures (TCFD), of
which  is a signatory.
 recognises that it has a
responsibility as a business leader to
contribute towards the achievement
of the United Nation's Sustainable
Development Goals (SDGs). With
the case studies in this report we
demonstrate how we are making
a difference through our solutions
and through our operations.
—
PEOPLE
PASSIONATE
Despite our size, we retain
our heritage and culture as
a family business, with very
high value placed on people,
relationships and communities
which are at the very heart
of how we do business.
—
PLANET
PASSIONATE
Through Planet Passionate we
are playing our part to tackle
climate change by increasing
our use of renewable energy,
reducing carbon in our business
operations and value chain,
increasing our recycling of
rainwater and waste and by
accelerating our participation
in the circular economy.
—
PRODUCT
PASSIONATE
Today, the construction and
operation of buildings together
account for 36% of global
energy use and 39% of energy-
related CO₂ emissions when
upstream power generation is
included. The energy efficiency
of buildings is therefore
fundamental to combating
climate change.
@  takes the welfare of our employees very seriously.
We are deeply saddened to report that there was a workplace
fatality in the business in 2019. We will do our utmost to learn
from this tragedy and to continually improve processes and
training to achieve our target of zero fatalities across our
business in the future.
@ In 2019,  has invested over €2m on projects to enhance
health and safety processes and culture across our business.
Our Lost Time Incident rate fell by almost 7% in 2019, or by
more than 12% over the past 2 years.
@ We continue to champion diversity across the business. The
percentage of females in  increased again in 2019 to
almost 19%. Additionally, the percentage of females on the
executive management team grew to 27%.
@ Over 90 additional high-potential candidates had the opportunity
to broaden their business and leadership skills on development
programmes in 2019.
@  supports local community projects at a global level.
For 2019, we highlight a number of projects we supported which
championed the development and protection of children.
See more on pages 54 - 55.
@ Energy: In 2019 we achieved 90% of our Net Zero Energy goal
throughout our operations and are firmly on track to achieve
100% by 2020. We generated 5.3% of our energy on 
sites and 22% of wholly owned sites have deployed rooftop Solar
PV systems.
@ Carbon: We achieved a 92% reduction in energy carbon
intensity in 8 years and began to implement our zero-emissions
car strategy. In November 2019 we held our annual supplier
day forum with specific focus given to our new sustainability
programme. Productive discussions and workshops were held
throughout the day with a range of suppliers resulting in some
collaborative projects that will support the delivery of our supply
chain targets.
@ Circularity: We upcycled 385 million PET bottles into our
manufacturing processes and through our new Planet Passionate
program we are aiming to achieve zero waste to landfill
throughout our business by 2030.
@ Water: We harvested 21.5 million litres of rainwater across our
manufacturing operations and entered into a partnership with
The Ecoalf Foundation, a venture which collects waste in the
Mediterranean Sea for recycling or repurposing where possible.
@ The largest influence  has on the SDGs is through our
solutions in use. As demonstrated throughout this report our
advanced building envelope solutions help building owners to
reduce energy emissions. The total energy saved over the lifetime
of the  insulation systems, sold worldwide in 2019, is an
estimated 751 million MWh of energy or 172 million tonnes of CO₂e.
@ Our solutions also help to enhance occupant health and wellbeing
through improved thermal comfort, natural daylighting,
ventilation, and increased space. Our advanced insulation is also
free from health concerns associated with airborne fibres.
@ Our Water & Energy business helps building owners to sustainably
manage water as a resource and can help to protect local
communities through reducing flood risk and the risk of polluted
run-off to waterways.
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 is driven by a belief that advanced materials and methods
of construction hold the answer to some of the great challenges
that our planet and society face. From products that insulate better
while creating more internal space, to those that harness more
natural daylight, we are dedicated to pushing the boundaries of high-
performance envelope design with a core focus on energy efficiency.
Since the beginning,  has
been committed to innovation so
we can make building better. It’s
something we demonstrate daily
across our business. We believe we
must challenge building industry
traditions through innovating in
advanced materials and digital
technologies to achieve a net zero
carbon emissions future. ’s
products and systems therefore
enable higher lifetime energy and
carbon savings, and enhance and
protect the value of assets.
This culture of innovation is why
 has created ,
our Global Innovation Centre.
The building itself is a showcase for
high-performance envelope design
using 18  products and
systems. Both a place of research
and a living research project, 
asks the big questions that will lead
us to a more sustainable and healthy
future while delivering enhanced
value, convenience and efficiencies
to our customers.
Our aim is to continue to deliver
breakthrough products such as
QuadCore™ and Kooltherm® and to
do this while progressing sustainability
practices within our operations.
In 2019, 90% of our operational energy
use was matched by renewable
energy, on target to be 100% by 2020.
We also upcycled the equivalent of
385 million PET bottles bottles into
our manufacturing processes. Learn
more about our commitments to the
environment in our Planet Passionate
section of this Sustainability Report.
In 2019 we launched a QuadCore™
Roof Board, advanced progress on
the PV solar integrated PowerPanel®
2.0 and the fibre-free A1 classified
AlphaCore®. QuadCore™ 2.0 and the
next generation of Kooltherm® are
also in development.
's insulation systems, sold in
2019, will save an estimated 751 million
MWh of energy or 172 million tonnes
of CO₂e over their lifetime. Over 62%
of our products contribute directly
towards delivering the UN SDGs.
—
PRODUCT PASSIONATE
—
PLANET PASSIONATE
—
PEOPLE PASSIONATE
Fire Testing and Research
 is committed to delivering
high-performance, innovative
building solutions that are
underpinned by extensive fire testing,
including large-scale system testing.
We have carried out over 2,000 fire
tests to national, international and
insurance industry standards, across
our full range of insulated panel,
rainscreen facade and insulation
board products and systems. As part
of our ongoing commitment to fire
safety and product development,
we are investing €5m in a global
state-of-the-art facility dedicated
to fire engineering research. Offering
a comprehensive resource of fire a
comprehensive fire science resource,
its mission to advance knowledge
and understanding of how building
materials, products and complete
systems perform when subjected
to fire. Based in North Wales, the
centre will be open to visitors from
April 2020 and will welcome research
partnerships and collaboration from
across industry and academia.
In addition, our new  Global
Innovation Centre is focused on
the digitalisation of construction
and is developing new technologies
and tools to enable end-to-end
digital traceability from test to site
and beyond to the full life cycle of
a building.
Extensive Reaction to Fire and
Fire Resistance Testing
Reaction to fire relates to the
combustibility and ignitability of
building materials and can be used
to determine how much energy they
contribute to the growth of a fire.
These tests can range from small
scale product tests, sometimes
involving just a few grams of
product, to large scale system tests
involving products incorporated
into structures up to 9 metres high
and enclosures up to 10 metres in
length. Large scale system testing is
the most reliable way of assessing
the performance of products and
systems irrespective of material
classifications. Large scale reaction
to fire system tests performed on
our products and systems include
BS 8414; AS 5113; LPS 1181 and 1208;
FM 4470, 4471, 4880, 4881, 4882 and
4924; IS0 13784; LEPIR II; NFPA 285
and 286; and SP Fire 105.
Fire resistance is the measure of how
building elements can effectively
withstand and contain fire whilst
continuing to perform their
given function.
These tests are typically performed
by testing with large scale furnaces
with minimum dimensions of 3 metres
by 3 metres. Test results can include
integrity, insulation, heat radiation
and load bearing capacity. Test
methods employed to assess the fire
resistance capabilities of our products
and systems include EN 1364, EN
1365, EN 1366 and ASTM E119.
Compliance with regulatory and
insurance industry requirements.
QuadCore™ Technology is an
advanced high-performance
closed-cell rigid insulation solution
offering a unique combination of
fire performance certification
when used as a core in our insulated
panel systems.
Panel systems incorporating
QuadCore™ Technology achieve
excellent performance in a range of
fire tests for regulatory compliance,
are approved to insurance industry
standards and achieve high levels
of fire resistance.
The Kooltherm® range of Insulation
Boards and KoolDuct® pre-insulated
ductwork are manufactured
with a phenolic insulation core, which
has been proven through a rigorous
programme of testing to offer
superior fire and smoke performance
to other commonly used rigid
thermoset insulants.
 has a comprehensive
range of building facade systems
incorporating QuadCore™ technology
and Kooltherm® boards that have
successfully passed large scale facade
tests around the globe including,
but not limited to, NFPA 285 (North
America), LEPIR II (France), SP Fire
105 (Nordics), AS 5113 (Australia),
ISO 13785-2 (Czech Republic), MSZ
14800-6 (Hungary) and met the
requirements of BR135 when tested
to BS 8414 (UK).
Please refer to product literature
and datasheets for details of
configurations and requirements to
meet specific performance levels.
Performance in real fire situations
Testing and certification to regulatory
and insurance industry requirements,
with particular emphasis on
large scale system testing, is the
cornerstone of ’s strategy
to demonstrate the fire safety of
our products and systems. However,
we believe that it’s important to
know how our products and systems
perform in real fire situations.
Across the world, we have examples
of independently researched real fire
case studies which have proven the
performance of insurer approved
insulated panel systems and a Therma
roof board system. Over the years we
have built up a library of real fire case
studies. Case studies include building
occupancytypes such as retail,
healthcare,education, food processing
and storage, manufacturing, logistics
and distribution, car showrooms
and car parks.
79m
Taking seventy-nine
million cars off the
road annually
18.1
Up to 18.1 times the
the annual electricity
consumption of
Greater London
441m
Over four hundred
and forty-one million
barrels of oil
259
The annual output
of 259 gas-fired
power stations
The total projected energy savings* over the lifetime of the  insulation systems,
sold worldwide in 2019, is equivalent to:
*figures are based on savings of insulation systems in use for 60 years.
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Important factors in choosing metal panels
for this project were schedule, speed, durability,
efficiency and the one-shot envelope. Having one
product delivered on site and then installed and
finished is a huge benefit to a project in terms
of schedule and managing construction costs -
particularly in terms of labour.
Jason Gamache, Principal Architect, MCG Architecture
—
PRODUCT PASSIONATE
—
CASE STUDIES
—
SUSTAINABLE
BUILDINGS
Alaska Airlines Hangar
USA
 Insulated Panels:
 KS Micro-Rib Wall Panels
Energy efficiency was a key
challenge with this project because
of the harsh Alaskan conditions
and the large opening created by
the hangar doors. Insulated panels
enabled the architect to meet
Anchorage’s code for continuous
insulation, despite these challenges.
The construction season is
incredibly short in Alaska so speed
of build was another key factor in
the design stage. Insulated panels
reduced the time on site and
negated the need for temporary
enclosure, which would have
needed to be heated.
’s single product solution
contributed to the sustainability
goals of the project by significantly
reducing the waste versus what
would have been generated with
a built-up system.
—
SUSTAINABLE
BUILDINGS
Two Southbank Place
UK
 Data & Flooring:
 RMG 600 Simploc
The rainwater and stormwater tanks
installed at Marrickville library have
a capacity of 57,000 litres. These will
supply over 100,000 waste flushes
annually and provide irrigation for
the trees and green spaces.
A very important role of rainwater
harvesting is to reduce peak flows
and total volume of stormwater.
This can improve the water quality
and waterway health by reducing
polluted run-off to local waterways.
The tanks have been installed in the
children’s garden and will be used as
an environmental education tool.
Inner West Council (Marrickville
Council) is part of The Strategy
for a Water Sensitive Community
which aims to move current urban
water management in Marrickville
to a more sustainable and flexible
approach that promotes liveable,
productive, resilient and sustainable
communities. At , we have
set ourselves the ambitious goal to
harvest 100 million litres of our own
water needs by 2030.
Southbank Place is a hive of activity,
featuring world-class arts venues,
globally recognised landmarks, and
attractions ranging from ferry tours
of the River Thames, to boutique
shops and fine dining. To cater for
the growing interest in the location,
a £1.5 billion mixed-use site has
been developed. Southbank Place
comprises seven new buildings,
including luxury apartments, retail
units, restaurants and commercial
spaces, all clustered around the iconic
Shell Tower. Two Southbank Place
provides 15 floors of premium office
space and a winter garden.
The build programme had to work
around design challenges such as a
London Underground line running
beneath the building’s footprint
and the creation of a new ticket
hall. So, with a tight deadline to
meet, the specified products and
materials needed to be quick and
straightforward to install. The
construction team also made use of
available  BIM objects to aid
project planning and clash detection.
’s flooring solution helped to
futureproof the building as a suitable
environment for co-working.
Our access floor’s chain of custody
certification and environmental
certification contributed to Two
Southbank Place achieving BREEAM
‘Excellent’ certification.
—
SUSTAINABLE
CITIES
Marrickville Library
Australia
 Water & Energy:
 Made to Measure
Rainwater Harvesting and
Stormwater Tanks
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2020 2025 2030
ENERGY - Maintain our Net Zero Energy status
- Increase our direct use of renewable energy to 60% by 2030
- Increase our on-site generation of renewable energy to 20% by 2030
- Install solar PV systems on all wholly owned facilities by 2030

CARBON - Net zero carbon manufacturing by 2030
- 50% reduction in product CO₂ intensity from our primary
supply partners by 2030
- Zero emission company cars by 2025
•
CIRCULARITY - 1 billion PET bottles upcycled into our manufacturing processes by 2025
- All QuadCore™ insulation to utilise upcycled PET by 2025
- Zero company waste to landfill by 2030

WATER - 5 active ocean clean-up projects by 2025
- 100 million litres of rainwater harvested by 2030

PARTNERSHIPS
Through Planet Passionate we aim
to make a significant reduction
in our environmental footprint,
enhance the environmental
performance of our products and
make a meaningful contribution
towards the achievement of the
UN Sustainable Development Goals.
Our Planet Passionate committee is a
global team consisting of 17 dedicated
and passionate people representing
all business units and all geographies.
This team collaborates and shares
best practice in order to deliver our
ambitious 2030 targets. Our Global
Head of Sustainability reports Planet
Passionate developments directly to
the CEO, Gene Murtagh.
ENERGY
Net Zero Energy*
In 2019 we made significant progress
towards our Net Zero Energy goal of
matching 100% of our operational
energy use with renewable energy –
achieving 90% NZE up from 75% in
2018. This was achieved through the
implementation of our three step
strategy: Save More, Generate More
and Buy More.
Save More
Improving the energy efficiency of
our operations remains the highest
priority across . A wide
range of projects were implemented
on many sites during 2019 including
the following;
→ Insulation to reduce heat loss;
→ LED lighting installations
including daylight dimming
and occupancy sensing;
→ Optimised daylighting solutions
including roof and wall lights;
→ Heat recovery systems;
→ Compressed air system
improvements;
→ Destratification fans to improve
heat distribution;
→ Low energy process equipment
installation;
→ Transitioned forklifts from
LPG to renewable energy;
→ Optimised the use of lower gauge
steel in access floor panels,
saving wielding energy;
→ Power factor correction systems.
A key part of the “Save More”
strategy has been employee
awareness and training.
Implementation of Energy
Management Standard ISO 50001
in several of our manufacturing sites
has also been effective in driving
energy efficiency improvements
and increased use of sub-metering
has facilitated accurate targeting
of energy saving opportunities.
Our efforts to make further
improvements will continue in 2020
and beyond. In 2019 we implemented
multiple energy efficiency projects
across the Group which will deliver
approximately 7710 t/C02e of
carbon savings per annum.
Generate More
A key foundation of our “Generate
More” strategy has been investing in
on-site generation. In 2019 5.3% of
our total energy use was generated
from renewable sources on our
own manufacturing sites, we have
ambitious targets to grow this. The
technologies presently in use include:
→ Solar PV;
→ Solar thermal;
→ Biomass heat;
→ Biomass CHP (electricity);
→ Wind;
→ Anaerobic digestion.
 is at the forefront of driving the agenda
toward a more sustainable future. We launched our
Net Zero Energy agenda in 2011 and are on target
to match 100% of our operational energy use with
renewable energy in 2020. Building upon the last
decade of progress, we have now embarked on
our next ambitious 10-year journey to radically
advance  across the four key themes
of Energy, Carbon, Circularity and Water.
—
PRODUCT PASSIONATE
—
PLANET PASSIONATE
—
PEOPLE PASSIONATE
Climate change is the single most
important issue facing the world
today and our most urgent priority.
At , we are committed to
driving a more sustainable approach
to our business in response to these
issues. Through Planet Passionate we
will reduce carbon and energy in both
our manufacturing processes and
products and continue our relentless
pursuit of low-carbon buildings that
deliver more performance and value,
with clear targets to strive for by 2030.
Gene M Murtagh, CEO
* Net Zero Energy: We aim to
achieve net zero energy by the
end of 2020. We have defined net
zero energy as meaning: the non-
renewable energy use associated
with our manufacturing sites will be
minimised through a combination of
energy efficiency measures, on-site
renewable energy generation and
the purchase of certified renewable
energy from the grid. Our remaining
non-renewable energy use will be
offset by the purchase renewable
energy certificates.
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Buy More
The purchase of renewable energy
from the grid is an important part
of our strategy. Our preferred option
is to purchase certified renewable
energy (both electricity and gas)
direct from our suppliers but where
this is not possible, we have made
purchases of Guarantees of Origin
(GOs) in Europe, Renewable Energy
Certificates (RECs) in North America
and International Renewable
Energy Certificates (iRECs) in
other regions as necessary.
Further to our Net Zero Energy
target, through Planet Passionate
we aim to increase our direct use
of renewable energy to 60% of
total energy use, increase on-site
generated energy to a minimum
of 20% and deploy rooftop solar
PV systems on all wholly owned
 sites by 2030.
CARBON
Our progress towards our Net Zero
Energy goal to date has enable use
to reduce our energy related carbon
intensity per €‘000 turnover by
92% in just 8 years.
 continues to respond
to the CDP Climate Change
questionnaire. Out of the thousands
of companies which responded,
 was recognised among the
top 2% that earned a spot on the
prestigious CDP Climate A list.
Through Planet Passionate we
aim to achieve Net Zero Carbon
manufacturing and a 50% reduction
in product CO₂ intensity from
primary supply partners by 2030.
We are also targeting 100% zero
emission company funded cars by
2025. In November 2019 we held our
annual Supplier Forum with specific
focus given to our new sustainability
programme. Productive discussions
and workshops were held throughout
the day with a range of suppliers
resulting in some collaborative
projects that will support the delivery
of our supply chain targets. We
will continue to build our supplier
relationships and engagement
strategy moving forward.
CIRCULARITY
Waste
In 2019  recycled 65% of its
waste, down from 68% in 2018. The
decrease is primarily as a result of
the impact of acquired businesses.
We aim to bring those businesses
on our waste reduction journey and
through our new Planet Passionate
program, implement our zero waste
to landfill throughout the Group
by 2030. We aim to share learnings
from our more mature facilities,
for example: our UK Data & Flooring
Technology achieved zero waste to
landfill in 2019.
PARTNERSHIPS
→ World Green Building Council:
 has signed on to be
the primary sponsor of this
programme for the next two
years. We have also signed up to
the Net Zero Carbon Buildings
Commitment, aiming for our
entire building portfolio to
achieve net zero operational
carbon by 2030.
→ Science-Based Target
Initiative:  has
committed to and verified its
science-based targets.
→ RE100:  is a gold
member of the RE100. RE100
is a collaborative, global
initiative of influential businesses
committed to 100% renewable
electricity, working to increase
demand for, and delivery of
renewable electricity.
→ EP100:  is a member
of the EP100. EP100 brings
together a growing group
of energy-smart companies
committed to improving their
energy productivity and doing
more with less.
→ CE100:  is a member
of the CE100 network and the
Built Environment working group
which aims to accelerate the
circular economy across the
global construction sector.
→ ECOALF Foundation: 3-year
partnership with the ECOALF
Foundation aiming to support
their Upcycling the Oceans
projects.
→ Born Free: 3-year partnership
to support the conservation
and education work to help
protect the lion population in
Meru, Kenya.
Through Planet
Passionate we
aim to increase
our direct use of
renewable energy
to 60% of total
energy use.

has committed
to send zero
waste to landfill
by 2030.
PET upcycling
 upcycled 385 million
PET bottles into its manufacturing
processes in 2019 and committed to
a target of upcycling one billion PET
plastic bottles per annum by 2025.
In addition,  entered into
a three-year partnership with the
ECOALF Foundation to support and
expand their project which removes
150 tonnes of plastic waste from
the Mediterranean Sea each year,
about 10% of which is PET. Ocean
PET recovered from the ECOALF
project is added to the upcycled
PET bottles and used to make
’s insulation. Through Planet
Passionate,  now plans to
support four further ocean clean-up
projects by 2025.
WATER
Although water is a small proportion
of inputs into our operations, we aim
to manage this precious resource in
the most responsible manner possible.
In general, water is mainly used for
sanitation purposes and 
continues to aim to maximise water
conservation through the use of
rainwater harvesting and other water
saving initiatives such as sensoring
systems and water flow regulators.
Through Planet Passionate we aim
to increase our harvested rainwater
use to 100 million litres by 2030
(2019: 21.5 million litres).
Our Data & Flooring Technology
manufacturing site in Red Lion US
is one of the largest consumers od
water in the Group and in 2019 the
conservation of water amounted to
8.9 million litres (which is 63.8 % of
total usage) through water recycling.
ENERGY: OUR JOURNEY TO DATE
Net Zero Energy
Energy Costs
Light and heat costs as a % of turnover
Energy Intensity
kWh per € turnover
Energy Carbon Intensity
CO₂ tonnes per €'000 of turnover
Renewable Energy Usage
Renewable energy used (GWh)
On-site Energy Generation
Renewable energy generated
on-site (GWh)
Renewable Electricity Usage
Renewable electricity used (GWh)
2017 2018
69% 75% 90%
2019
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What has been achieved at  would
not be possible without the people that work
hard every day to drive the company forward.
A dynamic and motivated workforce is key to
delivering against the future growth strategy
of the business. For this reason, talent is at the
heart of future planning at .
—
PRODUCT PASSIONATE
—
PLANET PASSIONATE
—
PEOPLE PASSIONATE
International participants on the
2019 programme represented 14
diverse locations, including Brazil,
USA and Europe, with female
participants representing 24% (up
from 11% in the first cohort).
A new Enterprise Leadership
Programme is being launched in
2020 along the lines of the previous
global development programme in
2017 –2018. To-date, over 60% of
our executives who attended this
programme have been promoted
to the next level or have taken on
increased responsibilities.
We are also launching a coaching
skills programme in 2020 for
managers and business leaders,
initially in Ireland and the UK, with a
view to a wider global roll-out. This is
part of a long-term strategy to build
an internal cadre of coaches who are
skilled in developing not only their
own teams but can also contribute
to the development of global talent.
Protect
 takes the safety of our
employees incredibly seriously. All
accidents, as well as near misses, are
recorded and reviewed. Health and
Safety (H&S) is under on-going review
at a facility and divisional level and a
Group H&S Committee sits at least
twice a year. It is an opportunity for
all divisions and geographies to share
best practice and discuss operational
experiences that will improve the
welfare of all our employees.
We are deeply saddened to report
that during the year, an accident at
one of our Belgian facilities tragically
resulted in a workplace fatality.
Together with the local authorities
and independent specialists retained
by the company, we are fully
examining the circumstances of
this incident. We will use the learnings
from this tragedy to continually
improve processes and training to
achieve our target of zero fatalities
across all of our businesses in
the future.
In 2019 we invested over €4m on
improving processes and H&S culture.
Over 60 of our manufacturing
facilities are certified to ISO 18001
or equivalent standard. Over the
past three years, all of our sites
have been audited by internal H&S
teams. Sites which are certified to
ISO 18001 standards are externally
audited annually.
Equal opportunities, employee
rights and diversity
 is committed to providing
equal opportunities from recruitment
and appointment, training and
development to appraisal and
promotion opportunities for a
wide range of people, free from
discrimination or harassment and in
which all decisions are based on work
criteria and individual performance.
We see diversity and inclusiveness as
an essential part of our productivity,
creativity and innovation. Diversity
is widely promoted within ,
over one third of recruits on our
graduate programme are female, and
24% of the participants on our PEAK
programme are female, both well
above the  average (19%).
’s leadership team holds an
annual Talent Forum in September to
review succession plans, metrics on
key positions hired throughout the
year and to forecast future talent
gaps as part of our human capital
risk assessment.
Attract
We have a number of initiatives at
 to attract top talent. One
of the key, group wide, initiatives
is the graduate programme which
saw graduates in 2019 up over
26% on prior year. One third of the
participants were female, significantly
above the company average. The
highlight of the programme was the
Graduate Projects Showcase which
was hosted for the first time in ,
our new Global Innovation Centre,
where five teams presented strategic
projects to senior executives from
across .
 became a corporate
partner of UNITECH from January
2020. This is an international body
that represents the most prestigious
engineering schools in the top nine
universities in Ireland, the UK and
Europe. This will give  an
extensive platform to attract talent
from all engineering disciplines who
can go on to build their careers in
our global business.
Retain
At  we use multiple tools
to drive talent retention. These
include traditional motivational tools
such as reviews and objective
setting, but there is also the
opportunity to join a network of
people across the company to drive
real change through innovation
and through engagement with our
Planet Passionate initiatives.
Our employees are already reaching
out to play a role in our Planet
Passionate initiatives – such as
car-pooling, organising local beach
clean-ups and increasing recycling
in our offices. We are building
a network of Planet Passionate
Champions to help scale local
action at our sites across the globe.
The network will convene once
a quarter to share ideas and to
progress initiatives identified across
the business which will contribute to
achieving our Planet Passionate goals.
Develop
PEAK was launched in 2018 and
is targeted at developing high-
potential managers for future senior
leadership roles. The core objective
of the programme is to deepen
’s leadership bench-
strength to match the increasing
scale and global nature of the
business. Since its launch in April
2018, 56 managers have participated
in this six-month programme which
has strengthened cross divisional
relationships as well as furthering
integration of executive talent from
recent acquisitions. Another aim is
to increase leadership diversity by
deepening and widening the pool
of future senior leaders.
Health and Safety Investments
in 2019 include:
- Roof replacements in two of
our facilities to improve working
conditions and reduce slippage
risk from leaks.
- Employment of external
consultants to update and
improve training and to upgrade
processes and procedures, where
necessary.
- Improvements in mechanisms
for assisting employees when
lifting panels, such as cranes with
vacuum lifters and lift tables.
- General safety upgrades to
machines where opportunities
for improvement have been
identified.
- General and emergency lighting
upgrades.
Hazard Identification Processes
include (but are not limited to):
- All near misses are assessed
and processes are updated.
- Employees are encouraged to
make suggestions for process
improvements.
- Safety walks by responsible
persons.
- Periodic workplace inspections.
- Risk assessment on new
machines at installation.
Injury Frequency Rate
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It is important that our businesses
have the flexibility to support
initiatives which are relevant to
the local workforce and to the
communities in which they operate.
In 2019 we are proud to have
supported a wide range of initiatives,
including: runs against cancer,
stimulating the local environment
through beekeeping, community
tidy-towns initiatives, festive
family box donations and multiple
sponsorship and fundraising events.
World Water Day
In 2019  went blue for World
Water Day. Our Water & Energy
division launched a campaign to
raise awareness about water as a
resource, and to raise funds for the
"Just a drop" foundation.
The children are our future
Children led a climate revolution
in 2019, urging those in power to
take action. Nearly 8 million people
reportedly took part in protests
across the globe in March and
September. In this year’s report
we want to highlight a number
of projects in which 
supported the development and
protection of children across the
globe in 2019:
→ In Ireland we have supported
Junior Achievement Ireland (JAI)
for over 16 years.JAI encourages
young people to stay in education
and helps them to develop the
skills they need to succeed in
a changing world. 
volunteers have presented to
students on the value of STEM
subjects and we have been
inspiring students through tours
of our newly opened Global
Innovation Centre, .
→ In Poland,  supported
a local children’s home in Sienno
which provides shelter to 40
children between the ages of 4
and 16. Our employees donated
toys and sports equipment for
Children’s Day and donated funds
to support the summer camp.
→ For the past 5 years,  has
supported Gena Heraty’s project
in Haiti which provides shelter and
care for over 70 orphans, 30 of
which have special needs. Gena
was named the Irish Red Cross
Humanitarian of the Year in 2019.
Supply chain engagement
 has developed an ethical
and procurement strategy for
procuring materials and services
in a sustainable way, and we seek
to build and maintain long term
relationships with key suppliers and
contractors to ensure that they are
aligned to the same standards. Many
of our suppliers are accredited to ISO
9001, ISO 14001 and OHSAS 18001,
which cover quality, environmental
and health and safety management
systems. In November 2019 we held
our annual Supplier Forum with
specific focus given to our new
sustainability programme. Productive
discussions and workshops were
held throughout the day with a
range of suppliers resulting in some
collaborative projects that will
support the delivery of our goal for
a 50% reduction in product CO₂
intensity from our primary supply
partners by 2030.
Customer experience programme
Everything that our customers
experience with  matters
to us. Whether it’s the performance
of our product solutions, the
responsiveness of our service teams
or the efficiency of our deliveries, we
strive to provide a positive experience
to all our customers.
To help us achieve our strategic
goals we have introduced four
key commitment areas into our
businesses on which we are focusing
as part of our customer excellence
programme:
→ Deliver a memorable customer
experience.
→ Develop the employee
experience, so our teams never
want to work for anyone else.
→ Measure what our customers
actually experience.  is
currently in its first phase of a
Group wide customer experience
programme. We have had over
10,000 responses and have
very ambitious targets for this
programme in the short to
medium term. We look forward
to updating you as we go
through the process.
→ Continue to innovate.
 grew out of a family business and
those family values continue to shape how we
engage with our communities today. Decades
on,  remains deeply rooted in the
community of Kingscourt, Ireland, where the
business was founded. Being engaged in our
local communities is a core element of the
culture of .
OUR COMMUNITIES
1 2 3 4
Our policies
Aims
→ Comply with all local laws in
the countries we operate in.
→ Ensure supply chain
accountability.
Modern slavery
Slavery and human trafficking
are abhorrent crimes and we all
have a responsibility to ensure
that they do not continue. At
 we pride ourselves on
conducting our business ethically
and responsibly. The Modern Slavery
Act 2015 became UK legislation and
required all large UK companies
and businesses who supply goods
or services in the UK to publish
a slavery and human trafficking
statement each financial year
on their website.  is
fully committed to ensuring that
modern slavery is not taking place
in our business or any of our supply
chains. We adopted and published
our policy statement at the end
of 2016 and all our businesses are
responsible for ensuring supplier
compliance with the legislation.
Photo captions:
1 Children participating in
JAI's 'Futurewize' programme
2 First Day at School, NPH, Haiti
3  Water & Energy employees
enjoying World Water Day
4 Children from the Sienno Children's
Home on summer camp
 Water
& Energy launch
World Water Day
campaign.
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DIRECTORS'
REPORT
 Insulated Panels
BENCHMARK Hook-on Cassettes
The Karrier panels provided over double
the thermal values specified for the
project, directly impacting the HVAC
systems’ output, operating costs and
maintenance requirements.
With such a large cantilever over the
existing heritage building, weight was a
crucial consideration and a key reason
in switching from pre-cast concrete to a
light-weight panel solution.
Air leakage rates achieved on the
project are excellent, critical for
protecting the museum’s important
artefacts and very difficult to achieve
using traditional methods of construction.
The pre-modularisation of the panels
and the roof liner panel enabled a fast
enclosure of the building envelope and
an earlier start on internal works versus
traditional methods of construction.
The panel’s metallic finishes echo the
vast landscapes of Western Australia
and reflect the State’s mineral heritage
and the origins of the WA Museum.
Local material sourcing was a key focus
for this project. Given ’s global
manufacturing capacity, it contributed
to the achievement of 80% of
materials being locally sourced.
The new Museum for Western Australia
is among six national finalists for
the 2020 Australian Construction
Achievement Award.
’s BENCHMARK Hook-On
Cassette’s were chosen for the project
due to their efficiency in speed of
construction, airtightness, thermal
performance, and aesthetic potential,
all encompassed by a through wall
25 year performance warranty as
an added benefit.
Alex Dennis, National Business Development Manager
 Insulated Panels, Australia
Western Australia Museum
Perth, Australia
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The Board
Directors' Report

Directors'
Report
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58
—
Chairman
Eugene Murtagh
(Age 77)
Ireland
Eugene Murtagh is the non-executive Chairman of the Group.
Key skills & experience: Eugene founded the  business in 1965 and, as CEO until 2005, he
led its growth and development to become an international market leader. As Chairman, he sets
the tone at the top, developing and embedding values. He has an unrivalled understanding of the
Group, its business and its ethos, and demonstrates outstanding leadership and governance skills.
Chief Executive Officer
Gene M. Murtagh
(Age 48)
Ireland
Gene Murtagh is the Group Chief Executive Officer. He was appointed to the Board in November
1999.
Key skills & experience: Gene joined the Group in 1993 and was appointed CEO in 2005. He was
previously the Chief Operating Officer from 2003 to 2005, and prior to that he was managing
director of the Group’s Insulated Panel business and of the Water & Energy business. He leads the
development of the Group’s strategy and has a deep knowledge of all of the Group’s businesses
and the wider construction materials industry.
Executive directors
Geoff Doherty
(Age 48)
Ireland
Geoff Doherty is the Group Chief Financial Officer. He joined the Group, and was appointed to the
Board, in January 2011.
Key skills & experience: Prior to joining  Geoff was the Chief Financial Officer of
Greencore  and Chief Executive of its property and agribusiness activities. He is a qualified
chartered accountant, with extensive experience of capital markets and financial management in
an international manufacturing environment.
Russell Shiels
(Age 58)
United States
of America
Russell Shiels is President of ’s Insulated Panels business in the Americas as well as
’s global Data & Flooring business. He joined the Board in December 1996.
Key skills & experience: Russell has experience in many of the Group’s key businesses, and was
previously Managing Director of the Group’s Building Components and Data & Flooring businesses
in the UK. He brings to the Board his particular knowledge of the building envelope market in the
Americas, as well as his understanding of the office and datacentre market globally.
Peter Wilson
(Age 63)
United Kingdom
Peter Wilson is Managing Director of the Group’s global Insulation Boards business. He was
appointed to the Board in February 2003.
Key skills & experience: Peter has been with the Group since 1981, and has led the Insulation
Boards division since 2001. He has unrivalled knowledge and experience of the global insulation
industry, gained over almost 40 years’ in the business.
Gilbert McCarthy
(Age 48)
Ireland
Gilbert McCarthy is Managing Director of the Group’s Insulated Panels businesses in the UK, Ireland,
Western Europe, Middle East and Australasia. He was appointed to the Board in September 2011.
Key skills & experience: Gilbert joined the Group in 1998, and has held a number of senior
management positions including managing director of the Off-site division and general manager
of the Insulation Boards business. He brings to the Board his extensive knowledge of the building
envelope industry, in particular in Western Europe and Australasia.
Non-executive directors
Linda Hickey
(Age 58)
Ireland
Independent
Linda Hickey was appointed to the Board in June 2013, and is appointed as the Senior Independent
Director.
Key skills & experience: Linda is a registered stockbroker and was formerly the Head of Corporate
Broking at Goodbody Capital Markets where she worked closely with multi-national corporates
and the investor community. Previous experience includes working at NCB Stockbrokers and Merrill
Lynch. Her considerable knowledge and experience of capital markets and corporate governance
provide important insights to the Board.
Qualifications: B.B.S.
External appointments: Chair of the board of the Irish Blood Transfusion Service, and non-executive
director of Cairn Homes plc.
Michael Cawley
(Age 65)
Ireland
Independent
Michael Cawley was appointed to the Board in May 2014.
Key skills & experience: Michael is a chartered accountant, and was formerly Chief Operating Officer
& Deputy Chief Executive of Ryanair. His extensive international financial and business experience as
well as his role on other audit committees are an asset to the Board and to the Audit Committee.
Qualifications: B. Comm., F.C.A.
External appointments: Chairman of Hostelworld , and non-executive director of Flutter
Entertainment plc and Ryanair Holdings plc.
John Cronin
(Age 60)
Ireland
Independent
John Cronin was appointed to the Board in May 2014.
Key skills & experience: John is a qualified solicitor, and partner and former chairman of McCann
FitzGerald. He has more than 30 years’ experience in corporate, banking, structured finance
and capital markets matters. He is a member of the International Bar Association, and is a past
President of the British Irish Chamber of Commerce. His valuable legal, corporate governance and
capital markets experience brings a unique perspective to the Board.
Qualifications: B.A. (Mod) Legal Science, Solicitor in Ireland and England & Wales.
External appointments: Non-executive director of The Dublin Theatre Festival.
Bruce
McLennan
(Age 55)
Australia
Independent
Bruce McLennan was appointed to the Board in June 2015.
Key skills & experience: Bruce is Managing Director and Co-Head of Advisory at Gresham Advisory
Partners Limited. He is also a Member of the Australian Institute of Company Directors, Australian
Society of Certified Practising Accountants, and a Fellow of the Financial Services Institute of
Australia. He brings to the Board over 30 years’ experience in investment banking, and a broad
knowledge of international capital markets and strategic and corporate planning.
Qualifications: B.Bus, M. Comm.
External appointments: Member of the Australian Government Takeovers Panel.
Dr Jost
Massenberg
(Age 63)
Germany
Independent
Jost Massenberg was appointed to the Board in February 2018.
Key skills & experience: Jost was Chief Executive Officer of Benteler Distribution International
GmbH, and was formerly the Chief Sales Officer and a member of the executive board of
ThyssenKrupp Steel Europe AG. His more than 30 years’ industry experience in European steel and
major manufacturing businesses are of enormous benefit to the Board.
Qualifications: PhD Business Admin.
External appointments: Chairman of VTG Aktiengesellschaft, and a non-executive director in a
number of large private companies.
Anne Heraty
(Age 59)
Ireland
Independent
Anne Heraty was appointed to the Board in August 2019.
Key skills & experience: Anne is the founder and Chief Executive Officer of Cpl Resources plc.
She has over 20 years’ experience running an international recruitment and outsourcing business
and is currently on the Board of IBEC, having previously held a number of other non-executive
directorships, and brings this broad business and entrepreneurial experience to the Board.
Qualifications: B.A. in Mathematics & Economics.
External appointments: Chief Executive Officer of Cpl Resources plc.
Company Secretary
Lorcan Dowd
(Age 51)
Ireland
Lorcan Dowd was appointed Head of Legal and Group Company Secretary in July 2005.
Key skills & experience: Lorcan qualified as a solicitor in 1992. Before joining  he was Director
of Corporate Legal Services in PwC in Belfast, having previously worked as a solicitor in private practice.
The Board provides entrepreneurial
leadership and sets the governance
framework for the Group.
—
THE
BOARD
Board Committees: Audit Nomination & Governance Remuneration
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Chairman’s Introduction
Directors' Report


—

Directors'
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60
—
The Financial Reporting Council’s
(‘FRC’) 2018 U.K. Corporate
Governance Code (the ‘New Code’)
came into effect for  from
1 January 2019. In publishing the
Code, the FRC has aimed to
emphasise the importance of good
corporate governance to long-term
sustainable success.
Throughout 2019 the Board took
a number of steps to refine its
approach to reflect the altered
focus of the New Code, relating to:
→ Board Leadership and
Company Purpose
→ Division of Responsibilities
→ Composition, Succession
and Evaluation
→ Audit, Risk and Internal Control
→ Remuneration
The New Code aims to return to
a principle based approach to
governance, as opposed to risking
an overly prescriptive regime. A
cornerstone of safeguarding our
long-term ambitions has been a
commitment to high standards of
corporate governance, as well as a
Board with a depth of experience
and expertise. In making and
implementing actions, the Board
aims to maintain a balance between
short-term pressures for change and
the long-term impacts of decisions.
As a Board, we hope you find our
reporting to be meaningful in
detailing how we have applied the
revised principles under the New
Code. In areas where we have
deviated from any provisions of
the New Code, we aim to provide
clarity as to how we continue to
meet the Principles of the Code and
demonstrate why our approach
represents less governance risk
based on our strategy, business
and outlook.
During the past year, the Board
was pleased to engage with major
shareholders on a number of
occasions. In addition to the many
investor and executive management
meetings held throughout the year,
the Chair of the Remuneration
Committee has engaged with a host
of our major shareholders to discuss
the outcome of the 2019 AGM, as
well as changes to our remuneration
policy in light of updates to the
UK Code. Further details of these
discussions are detailed in the Report
of the Remuneration Committee
contained in this Annual Report.
On behalf of the Board, I would like
to thank those shareholders who
provided their views on governance
and strategy during the past year.
Eugene Murtagh
Chairman
At , the Board sets this strategy and
oversees the values and behaviours that shape our
high-performance culture. A sound understanding of how
performance is generated over time has been key in steering
strategies toward the level of sustainable value creation we
have delivered. I fundamentally believe we have an effective
and entrepreneurial Board in place which has unlocked
significant value for our stakeholders and wider society.
—
CHAIRMAN’S
INTRODUCTION
USA
Seattle Opera Centre
Insulated Panels:
 
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Report of the Nomination & Governance Committee
Directors' Report

Directors'
Report
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62
—
This statement outlines how  has
applied the principles and complied with
the provisions set out in the UK Corporate
Governance Code (July 2018) (‘the Code’).
—
REPORT OF THE
NOMINATION &
GOVERNANCE
COMMITTEE
The full text of the Code and
of the Irish Corporate Governance
Annex can be obtained from
the following websites respectively:
www.frc.org.uk
www.euronext.com
Statement of compliance
The directors confirm that the
Company has throughout the
accounting period ended 31
December 2019 complied with the
provisions of the UK Corporate
Governance Code (July 2018) in
the manner hereinafter detailed.
Stakeholder views
The Board is cognisant of the principle
underpinning Provision 5 of the New
Code,which asks Boards to have
regard for engagement mechanisms
with stakeholders.The Board is fully
aware of its responsibilities in this
regard and other sections in this
Annual Report set out clearly the
long-lasting partnerships we have
developed with customers,suppliers
and communities. We are also aware
of the importance of engagement
with the workforce to the development
of strategy as well as uncovering of
risk and promoting new opportunities.
The Board is pleased to confirm that
Linda Hickey has been appointed
as the director responsible for
workforce engagement to facilitate
the channelling of employee views
to Board discussions.This process of
engagement will also allow the Board
to consistently assess and monitor the
evolution of the company’s corporate
culture,while promoting the ability of
the workforce to raise concerns.
Audit Committee
Michael Cawley (Chair) Appointed 2014 Independent
Anne Heraty Appointed 2019 Independent
Bruce McLennan Appointed 2020 Independent
Nomination & Governance Committee
Eugene Murtagh (Chair) Appointed 1998
Gene M. Murtagh Appointed 2007
John Cronin Appointed 2014 Independent
Bruce McLennan Appointed 2017 Independent
Jost Massenberg Appointed 2019 Independent
Remuneration Committee
Linda Hickey (Chair) Appointed 2015 Independent
Michael Cawley Appointed 2014 Independent
Bruce McLennan Appointed 2017 Independent
Board committees
The Board has established the
following committees: Audit,
Nomination & Governance, and
Remuneration committees. All
committees of the Board have
written terms of reference setting out
their authorities and duties and these
terms are available on the Group’s
website www..com.
The Members of each committee
as at the date hereof, and the date
of their first appointment to the
committee, are set out below. The
details of each committee’s activities
during the year are detailed in their
respective reports as set out in this
Annual Report.
Attendance at Board and Committeee meetings
during the year ended 31 December 2019
Board Audit Nominations Remuneration

Column A - indicates the number of meetings held during the period the director was a member of the Board and/or Committee
Column B - indicates the number of meetings attended during the period the director was a member of the Board and/or Committee
USA
Broadwater Office
Insulated Panels:
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Report of the Nomination & Governance Committee
Directors' Report


—

Directors'
Report
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64
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Board composition and
responsibilities
There is a clear division of
responsibilities within the Group
between the Board and executive
management, with the Board
retaining control of strategic and
other major decisions. The Chairman
leads the Board and is responsible for
its overall effectiveness in directing
the Company. One of the key roles for
the Chairman in doing so is promoting
a culture of objectivity, openness and
debate. In addition, the Chairman
facilitates constructive board relations
and the effective contribution of all
non-executive directors, and ensures
that directors receive accurate, timely
and clear information.
The balance of skills, background and
diversity of the Board contributes
to the effective leadership of the
business and the development of
strategy. The Board’s composition
is central to ensuring all directors
contribute to discussions.
As a means to foster challenge and
director engagement, led by the
senior independent director, the non-
executive directors meet without the
Chairman present at least annually.
Likewise, the Chairman holds
meetings with the non-executive
directors without the executives
present. In each of these settings,
there is a collegiate atmosphere that
also lends itself to a level of scrutiny,
discussion and challenge.
All directors have access to
the advice and services of the
Company Secretary. The Company
has procedures whereby directors
(including non-executive directors)
receive formal induction and
familiarisation with ’s
business operations and systems
on appointment, including trips to
manufacturing sites with in-depth
explanations of the processes
involved at the site.
Shareholders’ meetings and rights
The Company operates under the
Irish Companies Act 2014 (the
‘Act’). This Act provides for two
types of shareholder meetings: the
Annual General Meeting (‘AGM’)
with all other meetings being called
Extraordinary General Meetings
(‘EGM’).
The Company must hold an AGM
each year in addition to any other
shareholder meeting in that year.
The main features of the
Group’s internal control and risk
management systems that relate
specifically to the Group’s financial
reporting processes are:
→ Budgets and Strategic Plans
are approved annually by the
Board and compared to actual
performance and forecasts on a
monthly basis;
→ Sufficiently sized finance
teams with appropriate level of
experience and qualifications
throughout the Group;
→ Formal Group Accounting Manual
in place which clearly sets out
the Group financial policies in
addition to the formal controls;
→ Formal IT and Treasury policies
and controls in place;
→ Centralised Tax and Treasury
functions;
→ Sales are submitted and reviewed
on a weekly basis whilst full
reporting packs are submitted
and reviewed on a monthly basis;
and
→ Internal audit function review
financial controls and report
results/findings on a quarterly
basis to the Audit Committee.
In addition, the main features of
the Group’s internal control and
risk management systems that
relate specifically to the Group’s
consolidation process are:
→ The review of reporting packages
for each entity as part of the
year-end audit process;
→ The reconciliation of reporting
packages to monthly
management packs as part of
the audit process and as part of
management review;
→ The validation of consolidation
journals as part of the
management review process and
as an integral component of
the year-end audit process;
→ The review and analysis of
results by the Chief Financial
Officer and the auditors with the
management of each division;
→ Consideration by the Audit
Committee of the outcomes
from the annual risk assessment
of the business;
→ The review of internal and external
audit management letters by
the Chief Financial Officer, Head
of Internal Audit and the Audit
Committee; and the follow up of
any critical management letter
points to ensure issues highlighted
are addressed.
Further information on the risks
faced by the Group and how they
are managed are set out in the Risks
& Risk Management section of this
Annual Report.
Leadership
The Nomination and Governance
Committee (the 'committee'),
leads the process for appointments
while ensuring plans are in place
for orderly succession to both the
Board and senior management
positions. A fundamental aspect
of overseeing appointments to
senior management remains the
development of a diverse pipeline.
In terms of non-executive directors,
the committee remains guided by
the principle that all appointments
will be made on merit, but having
regard, where possible to diversity
of gender, age and nationality.
The non-executive directors on the
Board currently have the following
mix of skills and experience as set
out in the table below:
Effectiveness and independence
The committee has reviewed
the size and performance of the
Board during the year and this
process occurs annually. The Board
continues to ensure that each of the
non-executive directors, excluding
the Chairman, remain impartial and
independent in order to meet the
challenges of the role.
Throughout the year, more than
half of the Board, excluding the
Chairman, comprised independent
non-executive directors. Linda Hickey
is the senior independent director on
the Board. The senior independent
director provides a sounding board
for the Chairman and serves as an
intermediary for the other directors
and shareholders when necessary.
The directors consider that there is
strong independent representation
on the Board.
The Board has had due regard
to various matters which might
affect, or appear to affect, the
independence of certain of the
directors. The Board considers that
each of the non-executive directors
(excluding the Chairman of the
Board) are independent.
In determining the independence
of John Cronin, both at the time of
his appointment and subsequently
as part of annual reviews of the
Board’s composition, the committee
had particular regard for his
position as a partner of McCann
FitzGerald, one of the Company’s
legal advisors. The committee
concluded that Mr Cronin was fully
independent, taking into account
the following material factors:
→ He has no role in the selection
or retention of legal advisors
to the Company;
The ordinary business of an AGM
is to receive and consider the
Company’s Annual Report and
statutory financial statements, to
review the affairs of the Group, to
elect directors, to declare dividends,
to appoint or reappoint auditors and
to fix the remuneration of auditors
and directors.
The Chairman of the Board of
Directors shall preside as chairman
of every general meeting and in his
absence, one of the directors present
will act in the capacity of chairman.
The quorum for a general meeting
shall be not less than three members
present in person or by proxy and
entitled to vote. At any general
meeting, a resolution put to the vote
of the meeting shall be decided by
a show of hands unless a poll is duly
demanded. All ordinary shares rank
pari passu and carry equal voting
rights. Every member present in
person or by proxy shall upon a show
of hands have one vote, and every
member present in person or by
proxy shall upon a poll have one vote
for each share of which they are the
holder. In the case of an equality of
votes the Chairman shall, both on a
show of hands and at a poll, have a
casting vote.
Further details of shareholders rights
with regards the General Meetings are
set out in the Shareholder Information
section of this Annual Report.
Internal control and risk
management systems
The Board confirms that there is
an ongoing process for identifying,
evaluating and managing any
significant risks faced by the Group.
This process has been in place for
the year under review and up to the
date of approval of the financial
statements and it is regularly
reviewed by the Board in compliance
with ‘Guidance on Risk Management,
Internal Control and Related Financial
and Business Reporting’ issued by the
Financial Reporting Council.
The Board has delegated
responsibility to the Audit
Committee to monitor and review
the Group’s risk management
and internal control processes,
including the financial, operational
and compliance controls,
through detailed discussions with
management and the executive
directors, the review and approval
of the internal audit reports, which
focus on the areas of greatest risk
to the Group, and the external audit
reports, as part of both the year-
end audit and the half year review
process, all of which are designed
to highlight the key areas of control
weakness in the Group. Further
details of the work conducted by
the Audit Committee in this regard
is detailed in the Report of the
Audit Committee contained in
this Annual Report.
Name Nationality International Financial Governance Leadership Industry Legal
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Directors' Report


—

Directors'
Report
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66
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The Board concluded that neither
Ms Hickey’s nor Mr Cronin’s
independence was affected and
considers that between them they
bring valuable financial, capital
markets, governance and legal risk
experience to the Board.
Conflict of Interests
Acknowledging the importance
of independent representation to
the effective functioning of the
Board, as well as the scrutiny and,
when necessary, the challenging
of management, as part of the
evolution of our governance
framework, the Committee
developed and approved a conflicts
of interest policy which will guide all
decisions of the Board when actual
or potential conflicts of interest arise.
The policy stipulates that directors
are required to avoid situations
where they have, or could have,
a direct or indirect interest that
conflicts, or may conflict, with the
Company’s interests. Directors
are required to give notice of
any potential situational and/
or transactional conflicts, which
are considered at the following
Board meeting and, if appropriate,
situational conflicts are authorised.
Directors are not allowed to
participate in such considerations or
to vote regarding their own conflicts.
External commitments
Non-executive directors, including
the Chairman, may serve on other
boards provided they continue
to demonstrate the requisite
commitment to discharge their
duties effectively. The Committee
reviews the extent of the directors’
other interests on an ongoing basis
throughout the year. The Committee
is satisfied that each of the directors
commits sufficient time to their
duties in relation to the Company.
The Chairman and each of the
directors have also confirmed they
have sufficient time to fulfil their
obligations to the Company.
In assessing the time commitments
of Board members, the Committee
had particular regard for the
external commitments of Michael
Cawley, who is also a non-executive
director of Ryanair Holdings plc, and
Flutter Entertainment plc, as well
as Chairman of Hostelworld . The Committee recognises the
views expressed by shareholders in
this area, as the demands of being
a director have grown considerably
in the past decade. The committee
reviewed Mr Cawley’s attendance
and contribution as a non-executive
director, as well as his other
mandates. It was noted that since
his appointment as a non-executive
director, Mr Cawley has attended
100% of the Audit Committee
meetings and has only missed
one out of a total of 82 Board and
committee meetings. The committee
has engaged with Mr Cawley and
noted his assurances that he will
continue to devote sufficient time
to the Board. The committee will
continue to keep under review
the external commitments of
all Directors.
Performance evaluation
 has in place formal
procedures for the evaluation
of its Board, committees and
individual directors. The purpose of
this formal evaluation is to ensure
that the Board of Directors (on
a collective and individual basis)
is performing effectively and to
ensure stakeholder confidence in
the Board. The Chairman reviews
annually the performance of the
Board of Directors, the conduct of
Board meetings and committee
meetings, and the general corporate
governance of the Group.
An externally facilitated review of
the Board’s performance was carried
out during 2018 by Better Boards.
We will conduct another external
evaluation within three years in line
with best practice.
Board changes
During the past year, we continued
to deliberately refresh the Board. As
a Board, we are fully aware of the
benefits of balancing longer serving
and newly appointed Directors,
which is central to the generation of
new business strategies.
In May 2019, having served for
almost 12 years, Helen Kirkpatrick
stepped down from the Board.
Ms Kirkpatrick’s input was hugely
valuable to the Board, as well as
to all the key committees she sat
on. Later in the year, Anne Heraty
was appointed as a non-executive
Director. With over two decades
experience as the CEO of a public
company, Ms Heraty deepens
the diversity of background and
expertise to our Board significantly.
In considering the appointment of a
new non-executive to the Board, the
committee considered whether or
not to engage a firm of consultants
to assist in the process, but decided
that in order to ensure best fit
with the Company, it would use
its internal knowledge and existing
pool of candidates, before selecting
and recommending Ms Heraty’s
appointment to the Board.
Succession Planning
One of the primary remits of the
committee is to ensure that robust
succession plans are in place for the
directors and senior management,
taking into consideration planned
and unplanned departures, as
well as the strategic evolution of
the business. Aligning succession
planning to our strategy is a
cornerstone of strong committee
and Board governance, and will
continue to be a focus of
the committee in the coming period.
One specific update to the New
Code is that, generally, chairs
should not remain in place for over
nine years, although there is an
exception to this rule to facilitate
succession planning, and the
committee, much like the New Code,
recognises that governance is not
always best served by rigid guidance,
particularly for a position as
important as that of the Chairman.
As the founder of the business in
1965, Eugene Murtagh has led
its growth and development as
both Chairman and CEO until
his retirement as CEO in 2005. As
Chairman, Mr Murtagh has been
instrumental in setting the tone at
the top, developing and embedding
values as well as encouraging
performance and ensuring that
management have the necessary
support and controls in place to
deliver on its strategy. Mr Murtagh
has now indicated to the Board
that it is his intention to retire
as Chairman and non-executive
director within the next 18 months.
The committee believes that this
is an appropriate timeline which
balances the need for stability and
continuity whilst ensuring an orderly
transition takes place between
him and his successor during what
will be a significant change in the
leadership of the Board. In line
with best practice, Mr Murtagh will
not Chair the committee when his
successor is being selected.
→ All work undertaken by McCann
FitzGerald for the Company is
managed by other employees
within the firm, and there are
formal arrangements in place,
both at McCann FitzGerald and
, to ensure there are no
conflicts of interests;
→ Mr Cronin is an experienced and
accomplished corporate lawyer
who adds important legal and
regulatory experience to the
Board;
→ Since his appointment to the
Board, Mr. Cronin has not had
any involvement in advising the
Company on any legal matters;
→ The total fees paid to McCann
FitzGerald during the year were
€125,947 (2018: €114,533) and
account for substantially less
than 1% of McCann FitzGerald’s
annual revenues.
In these circumstances the Board
concluded that there was no material
relationship, financial or otherwise,
which might either directly or
indirectly influence his judgement.
In addition to these considerations,
given the potential for a perceived
conflict of interests, at the time
of Mr Cronin’s appointment, we
engaged with ISS to discuss the steps
we had taken to avoid any conflicts
developing during his tenure in order
to alleviate any potential shareholder
concerns. Both parties were satisfied
at the time that the relationship
was not likely to impact Mr Cronin’s
independence as a director, and the
Company agreed to disclose annually
the fees paid to McCann FitzGerald
as a related party transaction.
In assessing the independence of
Linda Hickey, the Board had due
regard to her previous position as
a senior executive at Goodbody
Stockbrokers, one of the Company’s
corporate brokers. Ms Hickey
retired from her role at Goodbody
Stockbrokers in 2019. Moreover, the
annual level of fees and expenses
paid to Goodbody Stockbrokers were
normally in the region of €50,000
for corporate broking services during
her tenure there. In assessing Ms.
Hickey's independence annually,
the Committee also took into
account her invaluable experience
in working for two of the largest
Irish stockbroking firms. In Ireland,
she has unrivalled experience in
capital markets and particularly Irish
public companies, which is hugely
valuable to the Company and our
shareholders.
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Directors'
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–
We recommended  for
the Studley Castle Hotel as our
client wanted to ensure a thermally
efficient build to minimise costs
and maximise benefits. Given
our experience working with its
products, we were confident we
could deliver this. In addition, we
could also accomplish excellent
indoor air quality as there are no
fibres emitted from the insulation.
Samuel Hitch, Managing Director, Chase Insulations Ltd.
Studley Castle Hotel
Studley, United Kingdom
Kooltherm® Pipe Insulation
Studley Castle’s refurbishment was
designed to exceed current energy
performance requirements.
Kooltherm® Pipe Insulation enabled
a reduction in the insulation thickness
by 25-30%, a significant benefit in a
space constrained application.
Over 15,000 linear metres of pipework
supply the hotel’s 200 guest rooms.
With low VOC emissions, Kooltherm®
Pipe Insulation helped to achieve
excellent indoor air quality.
Thinner insulation helped to increase
clearances, making the installation
easier and more efficient.
Kooltherm® Pipe Insulation holds
a highest possible BRE Green Guide
rating of A+ and is manufactured to
a BS EN ISO 14001, qualifying for the
Responsible Sourcing credit.
Kooltherm® Pipe Insulation qualifies
for the highest possible BRE Green
Guide rating of A/A+ and is
manufactured to a BS EN 14001
Environmental Management System.

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Directors'
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Corporate governance
developments
As an Irish listed company, 
reports against the provisions of
the UK Corporate Governance Code
(July 2018). This latest iteration
of the Code has broadened the
role of the committee, as well as
introducing additional practices
concerning director pay, all of which
have been carefully considered by
the committee during the year
and extensively discussed with
shareholders.
As noted in last year’s Remuneration
Report, the EU Shareholders’ Rights
Directive, which includes a focus on
directors’ remuneration disclosures
and shareholder approval of the
directors’ remuneration policy,
has yet to be transposed into Irish
law and it is not yet clear how
this will be finally implemented in
Ireland. Nevertheless, in advance
of that transposition taking place,
 proposed an advisory
vote on its remuneration policy at
its 2019 Annual General Meeting,
and we were pleased that this was
supported by more than three
quarters of shareholders.
Shareholder consultation
At the 2019 AGM, 23% of
shareholders opposed the resolution
relating to our remuneration policy.
When engaging with shareholders
around the AGM, we developed a
clear understanding of the concerns
of those who voted against the
remuneration policy, as well as
those who supported the resolution
while noting minor concerns. During
engagement with shareholders, the
most common areas of discussion
related to pension contribution
levels; post-cessation shareholding
guidelines; and the adoption of post-
vesting holding for PSP Awards. In
the period since the 2019 AGM, we
wrote to shareholders representing
more than half of our issued share
capital and again engaged with a
number of our major shareholders.
While it is not always possible
to reach a consensus of views,
particularly when discussing
remuneration, we believe we have
addressed the common themes
emerging from the programme
of shareholder engagement.
Consequently, the committee has
implemented the following changes
to our incentive framework:
→ The inclusion of a two-year post-
vesting holding period under the
PSP;
→ A reduction in pension
contributions for all future
executive directors, which will be
aligned with the rate applicable
to the workforce in the relevant
local market; and
→ The introduction of a post-
cessation shareholding guideline
for all new executive directors,
with the current shareholding
guidelines applying for two years
after an executive’s departure.
Following confirmation of the
proposed changes, we again
engaged with shareholders to detail
the background to the changes and
to foster mutual understanding of
the steps we have taken to meet the
evolution of market best-practice in
the UK & Ireland. On behalf of the
committee, I want to thank all those
shareholders who took the time to
engage with us. We are pleased
that shareholders were supportive
of the changes we have made. The
input of our shareholders is key to
our aim of consistently improving
transparency and we have used
certain aspects of the feedback
to enhance our disclosure.
Prior to my appointment as Chair,
I had served on the committee for
four years and have developed a
fundamental understanding of the
company’s incentive framework,
its link to the Group’s strategy,
and the strong alignment between
’s performance and our
executive directors’ remuneration.
Our remuneration philosophy
Central to our approach to
remuneration are the principles of
simplicity, pay for performance and
transparency. Variable remuneration
is only paid for strong performance
and maximum payouts will only
be realised for truly exceptional
performance. A significant portion
of remuneration is delivered through
equity, ensuring strong levels of
alignment between the interests
of management and shareholders.
In contrast to many of our peers
in the UK & Ireland, our incentive
framework is based on straight-
forward metrics. The EPS measure
we employ under both the annual
bonus and Performance Share Plan
(PSP) is identical to that which we
report in the income statement and
is not subject to any adjustments.
This approach cascades through
the organisation and promotes
transparency and simplicity for
participants and our shareholders.
Our relentless focus on simplicity
and a high-performance culture
has been instrumental in driving the
growth of the business and significant
value creation for stakeholders.
Business performance and
pay outcomes
2019 was another year of strong
performance for the Group across
a number of measures. In the face
of some mixed markets and a
relatively weaker second half,
Group revenue increased 7% to
€4.7bn, and Trading Profit was
up 12% to €497.1m, reflecting
both volume growth and a healthy
focus on margin management.
Earnings Per Share (‘EPS’) rose
11% to 204.6 cent and Total
Shareholder Return (‘TSR’) for
the year was 47.2%, which are two
of the key performance measures
used to determine the executives’
performance-related pay. This
has resulted in varying levels of
bonus being achieved, with 71% of
the Group EPS targets achieved, and
between 82% - 100% of the divisional
profit targets having been met.
The strength of the Group’s
performance has also been reflected
in the achievement of top quartile
TSR performance among the peer
group for the ninth cycle in a row
which, together with strong long-
term EPS growth, resulted in the
2017 PSP Awards vesting at 100%
of maximum. Further details on
outcomes under our incentive plans
are set out later in this report.
Linda Hickey
Chair of the Remuneration
Committee
—
REPORT OF THE
REMUNERATION
COMMITTEE
Fixed pay v Variable pay
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Pensions
Over the past 12 months, the issue
of pensions, and specifically any
disparity between contribution
levels for executives and the wider
workforce, has become an area of
focus for a number of investors.
We have reflected on the range
of viewpoints expressed to the
committee on this, resulting in the
amendment to our policy to limit
all pensions for future executives
to those available to the workforce
in the relevant local market. While
there are a number of investors
that expect pensions to be similarly
reduced for incumbent directors,
there was also a clear recognition
in our discussions with shareholders
that addressing this issue for new
hires is more achievable than
seeking to change the contracts
for incumbent executive directors.
By reducing pensions for all future
executives to those levels available
to the general workforce, the
committee has taken steps to
align the current remuneration
policy with the revised provisions
of the UK Code.
To provide greater clarity, and in
response to the feedback received
from shareholders, we set out in
more detail below how the pension
contributions for the incumbent
executive directors are calculated.
As outlined in our Remuneration
Policy, the Group operates a
defined contribution pension
scheme for executive directors,
and contributions are determined
on an individual basis and take
into account a number of factors
including age, length of service,
and number of years to retirement.
→ For both the CEO and CFO,
contributions are determined by
reference to their salary, being
c. 18% and 24% respectively. In
relation to the Divisional MD’s,
Gilbert McCarthy’s contributions
are at 20% of base salary,
whereas in the case of both Peter
Wilson and Russell Shiels, there
are specific legacy contractual
arrangements in place.
→ Peter Wilson, who has been
employed with  for
almost 40 years, receives a base
pension contribution of 21%. In
2010 the committee negotiated
a revised contract with him
which included an increase in his
pension contribution by £75,000
per annum until retirement, and
in 2016, as part of its strategic
planning, the Company agreed
to extend his retirement age by
five years to 65.
→ Similarly, the contract of Russell
Shiels, who joined the Group in
1996, was renegotiated in 2013,
and his pension contributions
were increased by $100,000 per
annum until retirement. In 2018,
as part of its strategic planning,
the Company agreed with Mr
Shiels to extend his retirement
age by five years to 65.
In line with good practice, the
Committee will keep under review
pension contributions for the
current executives, noting however
that these are legacy contractual
arrangements that were put in
place many years ago. The
committee has taken appropriate
measures to ensure contributions
for future executives are fully
aligned with those of the relevant
local workforce. We consider the
steps we have taken have ensured
our alignment with evolving best-
practice without causing disruption
at a critical juncture in the Group’s
strategic development.
2019 Remuneration at a glance
This section provides a snapshot of
remuneration received by executive
directors during 2019.
Salary
As flagged in last year’s Annual
Report, the CEO received a base
salary increase of 5% in 2019. Peter
Wilson, managing director of the
Group’s global Insulation Board
received an increase of 10% in 2019,
with other executives receiving an
increase of 3% in line with those
awarded to the general workforce.
Further details of the directors'
salaries and total remuneration are
set out in the Remuneration Table
on page 74.
Annual bonus
The maximum annual bonus
potential of 150% of basic salary
for the CEO and CFO was based
on achievement of Group EPS
performance targets. For Divisional
MDs, bonuses were based on a
combination of stretching profit
targets for their respective divisions,
plus an element of Group EPS
targets. The final outturns of the
annual performance bonuses are
detailed in full below:
The CEO and CFO achieved 71%
of maximum target, which is the
equivalent of 106% of salary for each
executive. Payouts for the divisional
MDs ranged from 95% to 106% of
salary, with Russell Shiels and Peter
Wilson each having exceeded 100%
of their divisional profit target and
Gilbert McCarthy having achieved
82% of his target.
Performance Share Plan
The Performance Share Plan (‘PSP’)
awards vesting in May 2020, relate
to awards granted in 2017.
These awards were subject to EPS
growth and relative TSR performance
targets measured over the period
from the start of 2017 to the end of
2019. Target and actual outturns are
set out in the table below. 100% of
awards granted will vest in May 2020.
Summary of Remuneration Policy
Set out below is a summary of
the remuneration policy approved
by shareholders at the 2019 AGM
(as updated following shareholder
consultation).
The policy is guided by the following
overarching principles:
→ Simplicity
→ Transparency
→ High-performance
How it Operates Maximum Opportunity
Base salary Base salaries are reviewed annually by the Remuneration
Committee in the last quarter of each year. Increases
will generally be in line with increases across the Group,
but may be higher or lower in certain circumstances
to reflect performance, changes in remit, roles and
responsibilities, or to allow newly appointed executives to
move progressively towards market norms.
No prescribed
maximum
Pensions The Group operates a defined contribution pension
scheme for executive directors. Pension contributions
are calculated on base salary only. Contributions are
determined on an individual basis and take into account
a number of factors including age, length of service,
and number of years to retirement. The committee may
alternatively pay a cash amount subject to all applicable
employee and employer payroll taxes and social security.
No current maximum for
incumbent executives. For all future
appointments, pensions will be
capped at the rate applicable to the
workforce in the relevant local market.
Benefits Executive directors’ benefits include but are not limited
to life and health insurance, the use by the executive
directors of company cars (or a taxable car allowance),
and relocation or similar allowances on recruitment,
each in line with typical market practice.
No prescribed maximum
Annual
bonus
Executive directors receive annual performance related
bonus based on the attainment of financial targets
set prior to the start of each year by the committee.
Bonuses are paid on a sliding scale if the targets are
met. Maximum bonus is only achieved if ambitious
incremental growth targets are achieved. No more than
100% of salary may be delivered in cash through the
bonus plan. Any performance related bonus achieved in
excess of the amount payable in cash is satisfied by the
grant of share awards, which are deferred for two years.
150% of base salary
Part deferred
PSP Executive directors are entitled to participate in the
Group’s Performance Share Plan (PSP). Under the terms
of the PSP, performance shares are awarded to the
executive directors and the senior management team.
The performance shares will vest after three years only
if the Company’s underlying performance has improved
during the 3-year performance period, and if certain
performance criteria are achieved over the performance
period. The awards are subject to a two-year post-
vesting holding period.
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In addition to the framework outlined,
the following are key structural
aspects of the remuneration policy.
Executive director
shareholding guidelines
The committee recognises that share
ownership is important in aligning the
interests of management with those of
shareholders. Shareholding guidelines
are in place whereby all executive
directors are required to acquire a
holding of shares in the Company
equal to 200% of salary. The executive
directors in practice hold significantly
in excess of this requirement, and
details of these shareholdings are
provided in the Report of the Directors
contained in this Annual Report. With
effect from 2020, newly appointed
executive directors will also be subject
to a post-employment shareholding
policy equal to 200% of salary. The
committee concluded that it was
not necessary to implement post-
employment guidelines for the current
executive directors, having regard
to their long-standing high levels
of shareholdings and their existing
contractual arrangements.
Clawback
The committee recognises that there
could potentially be circumstances
in which performance related pay
(either annual performance related
bonuses and/or PSP Awards)
is paid out and where certain
circumstances later arise which
bring the committee to conclude
that the payment should not have
been made in full or in part. The
clawback of performance related
pay, and malus provisions (where
awards are reduced to nil before they
have vested) would apply in certain
circumstances including:
→ a material misstatement of the
Company’s financial results;
→ a material breach of an
executive’s contract of
employment;
→ error in calculation;
→ failure of risk management;
→ corporate failure;
→ any wilful misconduct,
recklessness, and/or fraud
resulting in serious damage
to the financial condition
or business reputation of
the Company.
The committee may adjust the
bonus and PSP that is payable if it
considers the formulaic outcome is
not representative of the underlying
performance of the Company,
investor experience or employee
reward outcome.
The remuneration policy approved
at the 2019 AGM is set out in full in
the 2018 Annual Report and on our
website at the following address:
www..com.
Performance related bonus
In 2019 all executive directors were
eligible for a maximum performance
related bonus opportunity of up to
150% of base salary. The CEO and
CFO’s annual performance related
bonuses were based on Group EPS
growth targets over prior year, with
the maximum annual performance
related bonus being payable on
the achievement of 20% Group
EPS growth over prior year. The
committee considers this to be a
truly stretching target.
For each of the Divisional MDs, up to
40% of their total bonus opportunity
was based on achieving stretching
divisional profit targets, with
maximum bonus being payable on
the achievement of 10% divisional
profit growth. A further 60% of
the Divisional MDs’ total bonus
opportunity was payable on the
achievement of the same Group
EPS targets as for the CEO and
CFO, ensuring a healthy balance
between incentivising divisional
and Group growth.
While the Group delivered another
year of record results, with trading
profit up 12% and EPS up 11%, no
participant received maximum
payouts. The top-end Group EPS
target was not achieved, and the
varying divisional performances
resulted in different levels of bonus
payouts being earned. This underpins
the committee’s philosophy that
truly stretching performance is
needed for executives to receive
maximum payouts. A proportion of
the payouts have been deferred into
shares for two years.
The table below sets out the
performance against targets for
each of the executive directors
in respect of the year ended
31 December 2019.
We do not disclose the specific targets for the Divisional MDs, and
performance against them, as these are commercially sensitive
figures. While the committee is fully aware of the expectation that
all bonus targets are disclosed in the year of payment, the specific
targets for the Divisional MDs would provide information that would
not otherwise be available to competitors.
Max.
opportunity
Total non-executive pay 649 650
Total Directors’ remuneration 10,854 10,227
(1) Russell Shiels’ remuneration is denominated in USD, and has been converted to Euro at the following average rates USD: 1.120 (2018: 1.181).
(2) Peter Wilson’s remuneration was denominated in GBP in 2018, and has been converted to Euro at the following average rate GBP: 0.885.
(3) The Group operates a defined contribution pension scheme for executive directors. Certain executives have elected to receive part of their
prospective pension entitlement as a non-pensionable cash allowance in lieu of the pension benefit foregone, subject to all applicable
employee and employer payroll taxes.
(4) Benefits principally relate to health insurance premiums and company cars/car allowances. In the case of Russell Shiels the cost of life
insurance and permanent health benefit is also included.
(5) Performance pay is earned for meeting clearly defined EPS growth and divisional profit targets. Details of the bonus plan and targets are set
out on page 75 of the Remuneration Report.
(6) The charge to the Consolidated Income Statement represents the current year cost of the unvested PSP Awards granted to the Executive
Directors. Details of the valuation methodology are set out in Note 3 to the Financial Statements.
(7) Non-executive directors receive a base fee of €75,000 per annum, plus an additional fee of between €7,500 and €10,000 for chairmanship of
Board committees. They do not receive any pension benefit, or any performance or share based remuneration.
(8) Helen Kirkpatrick retired as a non-executive director on 03/05/2019.
(9) Anne Heraty was appointed as a non-executive director on 01/08/2019.
2
2
2
2
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In addition, the committee
reviewed the vesting outcomes to
ensure they reflected overall group
performance, individual contribution
as well as shareholder and the wider
workforce experience throughout
the performance period. In light of
the strong performance, including
three-year revenue growth of 50%,
three-year trading profit growth of
46% and absolute TSR growth of
111% over the performance period,
the committee concluded that
the PSP vesting conditions had
been satisfied in full and were an
accurate reflection of the Group’s
performance.
Non-executive directors
The non-executive directors each
receive fees which are approved
by the Board as a whole. The
Chairman’s fee is €191,000. The
basic non-executive director fee
is €75,000. An additional fee of
€7,500 is paid for chairing the
Remuneration Committee, and a fee
of €10,000 for chairmanship of the
Audit Committee and for the Senior
Independent Director, to reflect the
additional role and responsibilities
(only one additional fee is paid if a
director has dual roles).
Performance Share Plan
The committee reviewed the extent to which the vesting targets in respect
of the PSP Awards granted in 2017 had been met by reference to EPS and TSR
targets over the three-year performance period to 31 December 2019. In 2017,
the committee granted PSP Awards that were 50% based on EPS growth
targets and 50% based on TSR targets:

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Directors'
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—
Committee Governance
The Remuneration Committee
comprises three independent
non-executive directors, Linda
Hickey (Chair), Michael Cawley and
Bruce McLennan. The Company
Secretary acts as the secretary to
the committee. The Chief Executive
does not normally attend meetings
but provides input where relevant,
to the committee Chair prior to the
meeting. No individual is present
at a meeting when the terms of his
own remuneration are discussed. The
terms of reference are available on
the Company’s website:
www..com
External advisors
The Remuneration Committee
obtained advice during the year
from independent remuneration
consultants Korn Ferry. Korn Ferry
is a member of the Remuneration
Consultants Group and a signatory to
its Code of Conduct, and all advice is
provided in accordance with this code.
Korn Ferry did not provide any other
services to  Group during the
year. Accordingly, the committee is
satisfied that the advice obtained was
objective and independent.
The Remuneration Committee met
four times during the year. Each
meeting was attended by all the
members of the committee, and
an overview of the workings of the
committee is set out below.
Implementation of
Remuneration Policy for 2020
The core principles of our
remuneration philosophy as outlined
earlier, frame our approach to 2020,
namely simplicity, reward for high-
performance, and transparency.
Base salary and pension
As detailed in our 2018 Annual Report,
the committee carried out a review
of each of the divisional directors’
roles. While recognising stakeholder
concerns about any increases in pay,
it was clear from the review that Peter
Wilson’s role as Managing Director
of the global Insulation business had
increased over several years in terms
of size and complexity, but at the
same time his salary was misaligned
to levels in the rest of the business.
While this discrepancy was reduced
somewhat in 2019, Mr Wilson will
receive a salary increase of 7.5% in
2020. Following this increase, the
committee is satisfied that it has
largely addressed the findings of
the review and is comfortable that
Mr Wilson’s salary is now set at an
appropriate level. Salaries for the
other executive directors for 2020
have been increased by 2% in line with
increases in the rest of the workforce.
As outlined previously, the committee
has made a significant change to
the company’s policy on pensions,
with the pension contributions of new
executive directors limited to the levels
applicable to the wider workforce in
the market in which they work. While
there are no changes to previously
agreed contractual entitlements
for incumbent executive directors,
the Committee is aware of rapidly
evolving expectations in this area and
will continue to keep this aspect of
executive remuneration under review.
Annual Bonus
The maximum bonus opportunity for
all the executive directors is 150% of
salary (unchanged from 2019) with
up to 100% of salary earned through
the bonus plan delivered in cash and
up to 50% of salary being deferred
into shares in the Company for two
years. For 2020, the committee has
determined that the performance
measures will remain unchanged
from 2019. For the CEO and CFO,
bonuses will continue to be based
on Group EPS growth targets. For
Divisional MDs, 40% of their total
bonus opportunity is based on the
achievement of divisional profit
growth targets, and 60% of their
total bonus opportunity is based
on the achievement of Group EPS
growth targets over prior year.
The committee has carefully
considered alternative financial
measures for the annual bonus
and remains of the view that EPS
provides the strongest alignment to
the business strategy as well as being
a critical key performance indicator.
Targets are set using unadjusted
audited EPS, as reported in our
annual accounts, which creates a
strong alignment with shareholders’
experience and promotes simplicity
and transparency. EPS targets will be
disclosed with performance against
them in the 2020 Remuneration
Report. The committee is also
keenly monitoring the Net Promoter
Score (NPS) programme launched
by  across the Group in
2019. NPS measures the customer
experience across a range of
aspects in the business, and as
such it closely aligns our strategy
with the experience of one of our
most important stakeholders,
our customers. The committee is
reviewing the implementation of the
NPS programme and is considering
bringing it in as an additional
performance measure in the annual
bonus plan in the period ahead.
Performance
Measures
Weighting Percentage
vesting at
threshold
Threshold
vesting
target
Maximum
vesting
target*
EPS 50% 25% 6% 12%
TSR 50% 25% Median Upper quartile
* Straight line vesting between threshold and maximum vesting
Total Shareholder Returns

Engage independent consultants •

Review of overall remuneration policy •

Review executives’ salary, role and responsibilities for 2020 •

Review non-executives’ fees for 2020 •

Approve Executive’s pension arrangements •
Performance pay
Assess Group and individual performance against targets for 2018 •

Confirm percentage of performance bonus achieved for 2018 •

Confirm vesting of 2017 Deferred Share Awards •
Agree Group and individual performance targets for 2020 •

PSP Awards
Assess performance of 2016/2018 PSP Awards against targets •

Determine percentage of 2016/2018 PSP Awards which vest •
Review performance measures for PSP Awards for 2019 •
Agree targets and level for grants of PSPs Awards for 2019 •

Governance
Review and approve Remuneration Report for Annual Report 2018 •
•=
Update on governance and remuneration trends generally •

Consult with shareholders and consider feedback on new Remuneration Policy •

Consider shareholder votes and feedback from AGM 2019 •

Review of consultants’ performance and independence •

Performance share awards
For 2020, the CEO will receive an
award over shares with a market
value of 175% of base salary. The
other executive directors will receive
awards over shares with a market
value of approximately 150% of
base salary (subject to adjustment
to ensure internal parity and to
manage exchange rate fluctuations
between the divisional directors).
The committee will keep this
approach under review and ensure
that it does not breach the overall
limits contained in the PSP rules.
Following a review of the
performance framework, the
committee has selected the same
performance measures as employed
for the 2019 PSP Awards. Half of the
award will be based on EPS growth
targets and the other half on relative
TSR against the same peer group as
the 2019 awards.
Annually, the committee conducts
a rigorous test to ensure targets
remain stretching yet realistic and
are appropriately aligned with our
risk appetite as well as internal and
external forecasts. The committee
set the following targets which,
given the market and business
outlook from which these targets
will be measured, it considers to
be demanding.
The clarity and simplicity of the
performance measures are a
cornerstone of our approach to
remuneration and have served the
Company and our shareholders well
since the introduction of the PSP.
Non-executive director fees
There is no change to the non-
executive director fees for 2020.
Performance graph
The graph below shows the
Company’s TSR performance against
the performance of the ISEQ and
FTSE 250 indices over the 10 year
period to 31 December 2019.
2
2
2
2
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Directors' Report


—

Directors'
Report
 Topdek KS1000TD
Roof Panel
 KS1000 Microrib Architectural
Wall Panels
 KS1000 Optimo
 panels enabled the
considerable gain needed in thermal
performance to offset the large glass
content in the building envelope.
Utilising insulated panels enabled
a thinner insulation versus
traditional materials thereby
increasing useable space.
Employee health and wellbeing was
a key consideration for the project.
The building was designed to provide
a comfortable, yet stimulating,
environment to work in.
Insulated panels helped to reduce
labour time and number of trades
and the option to specify a complete
range of roof, gutter and wall panels
simplified the project coordination.
Longspan wall panels reduce vertical
joints, maximising the aesthetic
properties of the panels. The vast
array of colours and finishes enabled
the architect to achieve their brief.
The QuadCore™ used on the
Aico building was made using
renewable energy and contains
20-25% recycled steel.
It is intended that the Aico building
will be entered for multiple awards,
with both design and sustainability
as key considerations.
–
Credit: ©Richard Stonehouse
We worked with  on the Aico
building because of the great technical
knowledge and back up from 
employees at site and office level, and
the ability to specify products that
meet the brief in terms of aesthetics
and technical standards. We also valued
the opportunity to specify a suite of
products from the same source that will
seamlessly integrate with each other.

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Report of the Audit Committee
Directors' Report


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Directors'
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82
—
This report details how the
Audit Committee has met its
responsibilities under its Terms of
Reference, the Irish Companies Act
2014 and under the UK Corporate
Governance Code (July 2018) in the
last twelve months.
The Audit Committee focused
particularly on the appropriateness
of the Group’s financial statements.
The committee has satisfied
itself, and has advised the Board
accordingly, that the 2019 Annual
Report and financial statements are
fair, balanced and understandable,
and provide the information
necessary for shareholders to assess
the Company’s performance,
business model and strategy.
The significant issues that the
committee considered in relation
to the financial statements and
how these issues were addressed
are set out in this report.
The Audit Committee note the
requirements under section 225 of
the Irish Companies Act 2014 to
present a Directors' Compliance
Statement, and has ensured that
the directors are aware of their
responsibilities and comply fully with
this provision.
One of the Audit Committee’s
key responsibilities is to review the
Group’s risk management and
internal controls systems, including
in particular internal financial
controls. During the year, the
committee carried out a robust
assessment of the principal risks
facing the company and monitored
the risk management and internal
control system on an on-going basis.
Further details in regard to these
matters are also set out in the Risk
& Risk Management section of this
Annual Report
The committee also reviewed the
effectiveness of both the external
audit process and the internal audit
function as part of the continuous
improvement of financial reporting
and risk management across
the Group.
Michael Cawley
Chairman, Audit Committee
Role and Responsibilities
The Board has established an Audit
Committee to monitor the integrity of
the Company’s financial statements
and the effectiveness of the Group’s
internal financial controls. The
committee’s role and responsibilities
are set out in the committee’s Terms
of Reference which are available from
the Company and are displayed on
the Group’s website (www..
com). The Terms of Reference are
reviewed annually and amended
where appropriate. During the year
the committee worked with the
external auditors, internal audit, and
members of the senior management
team in fulfilling these responsibilities.
The Audit Committee report deals
with the key areas in which the
Audit Committee plays an active
role and has responsibility. These
areas are as follows:
1. Financial reporting and related
primary areas of judgement;
2. The external audit process;
3. The Group’s internal audit
function;
4. Risk management and
internal controls; and
5. Whistleblowing procedures.
Committee membership
As at 31 December 2019, the Audit
Committee comprised of three
independent non-executive directors
who are Michael Cawley (Chairman),
Anne Heraty and John Cronin.
Anne Heraty joined the committee
on 1 August 2019. Linda Hickey
and John Cronin retired from the
committee in May 2019 and February
2020 respectively, and Bruce
McLennan was also appointed to
the committee in February 2020.
The biographies of each can be
found in the Board section of this
annual report.
The Board considers that the
committee as a whole has an
appropriate and experienced blend
of commercial, financial and industry
expertise to enable it to fulfil its
duties, and that the committee
chairman, Michael Cawley B.COMM.,
F.C.A., has appropriate recent and
relevant financial experience.
Meetings
The committee met four times
during the year ended 31 December
2019 and attendance at the
meetings is noted below. Activities
of the Audit Committee in each
meeting is noted below.
Committee Member Attended Eligible Appointment Date
Michael Cawley (Chairman) 5 5 2014
Anne Heraty 3 3 2019
Linda Hickey (retired) 1 1 2013
John Cronin (retired) 5 5 2015
Bruce McLennon - - 2020
As chairman of the Audit Committee
I am pleased to present the report
of the committee for the year ended
31 December 2019.
—
REPORT OF
THE AUDIT
COMMITTEE
Audit Committee activities FEB JUN AUG OCT NOV
Financial reporting
Review and approve preliminary & half-year results •

Consider key audit and accounting issues and judgements •

Approve going concern and viability statements •

Consider accounting policies and the impact of new accounting standards •

Review management letter from auditors •

Review of any related party matters and intended disclosures •

Review Annual Report, and confirm if fair, balanced and understandable •

External auditors
Plan for year-end audit & half-year review •

Approval of audit engagement letter and audit fees •

Confirm auditor independence, materiality of fees and non-audit services •

Assessment and selection of external auditor for 2020 •

Internal audit and risk management controls
Review of internal audit reports and monitor progress on open actions •

Approve internal audit plan and resources, taking account of risk management •

Review of financial, IT and general controls •

Monitor Group whistleblowing procedures •
Assessment of the principal risks and effectiveness of internal control systems •

Governance
Accounting standards update •

Corporate governance update •

Evaluation of external and internal audit function •

Directors’ Compliance Statement policy and procedures •

IT governance and risk management •

General Data Protection Regulation legislation •

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Directors'
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—
Each committee meeting was
attended by the Group Chief
Financial Officer and the Head of
Internal Audit. The external auditors
also attended these meetings as
required. The Company Secretary
is the secretary of the Audit
Committee. Other directors can
attend the meetings as required.
The chairman of the Audit
Committee also met with both
the Head of Internal Audit and the
external audit lead partner outside
of committee meetings as required
throughout the year.
Committee Evaluation
As outlined in the Report of the
Nomination and Governance
Committee contained in this Annual
Report, the performance of the
Board also includes a review of the
committees. Any recommendations
raised in relation to the Audit
Committee are acted upon in a
formal and structured manner. No
issues were identified for the year
ending 31 December 2019.
Financial Reporting
The committee is responsible for
monitoring the integrity of the
Group’s financial statements and
reviewing the financial reporting
judgements contained therein.
The financial statements are
prepared by a finance team with
the appropriate qualifications
and expertise.
The Committee confirmed to
the Board that the Annual Report,
taken as a whole, is fair, balanced
and understandable and provides
the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy.
In respect of the year to 31 December
2019, the committee reviewed:
→ the Group’s Trading Updates
issued in May and November
2019;
→ the Group’ s Interim Report
for the six months to 30 June
2019; and
→ the Preliminary Announcement
and Annual Report to
31 December 2019.
In carrying out these reviews,
the committee:
→ reviewed the appropriateness
of Group accounting policies
and monitored changes to and
compliance with accounting
standards on an on-going basis;
→ discussed with management
and the external auditors the
critical accounting policies
and judgements that had
been applied;
→ compared the results with
management accounts
and budgets, and reviewed
reconciliations between these
and the final results;
→ discussed a report from the
external auditors at that meeting
identifying the significant
accounting and judgemental
issues that arose in the course of
the audit;
→ considered the management
representation letter requested
by the auditors for any non-
standard issues and monitored
action taken by management as
a result of any recommendations;
→ discussed with management
future accounting developments
which are likely to affect the
financial statements;
→ reviewed the budgets and
strategic plans of the Group in
order to ensure that all forward
looking statements made within
the Annual Report reflect the
actual position of the Group; and
→ considered key areas in which
estimates and judgement had
been applied in preparation
of the financial statements
including, but not limited
to, a review of fair values
on acquisition, the carrying
amount of goodwill, intangible
assets and property, plant
and equipment, litigation and
warranty provisions, recoverability
of trade receivables, valuation
of inventory, hedge accounting
treatments, and treasury and
tax matters.
The primary areas of judgement
considered by the committee in
relation to the Group’s 2019 financial
statements, and how they were
addressed by the committee are set
out overleaf.
Each of these areas received
particular focus from the external
auditor, who provided detailed
analysis and assessment of the
matter in their report to the
committee.
In addition, the Internal Audit team
review the businesses covered in their
annual Internal Audit Plan, as agreed
by the committee, and report their
findings to the Audit Committee
throughout the year. These internal
audit reviews are focused on areas
of judgement such as warranty
provisions, trade receivables and
inventory and provide the committee
information on the adequacy and
appropriateness of provisions in
these areas.
Primary areas of
judgement
Committee activity
Consideration
of impairment
of goodwill
The committee considered the annual impairment assessment of goodwill prepared
by management for each Cash Generating Unit (“CGU”) using a discounted cash flow
analysis based on the strategic plans approved by the Board, including a sensitivity analysis
on key assumptions. The primary judgement areas were the achievability of the long
term business plans and the key macroeconomic and business specific assumptions. In
considering the matter, the committee discussed with management the judgements made
and the sensitivities performed. Further detail of the methodology is set out in Note 9 to
the financial statements.
KPMG also provided the committee with their evaluation of the impairment review process.
 completed 4 acquisitions during the financial year. The allocation of goodwill to
CGUs is not yet complete for all acquisitions but the methodology of the assessments of such
items of goodwill was presented to the committee and the results were deemed appropriate.
Adequacy of
warranty provisions
The committee reviewed the judgements applied by management in assessing both specific
and risk based warranty provisions at 31 December 2019. The committee reviewed and
discussed with management the monthly reports presented to the Board which set out,
for each of the Group’s divisions, warranty provisions and warranty costs and analyse these
costs as a percentage of divisional sales. A retrospective review of warranty provisions at
31 December 2018 was also carried out in order to note any indication of management
bias within the provisions and none was noted. The committee was satisfied that such
judgements were appropriate and the risk had been adequately addressed.
Recoverability
of trade receivables
and adequacy
of receivables
provision
The committee reviewed the judgements applied by management in determining the
bad debts provision at 31 December 2019. The committee reviewed and discussed with
management the monthly board report which sets out aged analysis of gross debtor
balances and associated bad debt provisions and reviewed security (including credit
insurance) that is in place. A retrospective review of bad debt provisions at 31 December 2018
was also carried out in order to note any indication of management bias within the provisions
and none was noted. The committee was satisfied that such judgements were appropriate
and the risk had been adequately addressed.
Valuation of
inventory and
adequacy of
inventory
provision
The committee reviewed the valuation and provisioning for inventory at 31 December 2019.
The main area of judgement was the level of provisioning required for slow moving and
obsolete inventory. The committee reviewed and discussed with management the monthly
board report which sets out, for each of the Group’s divisions, gross inventory balances and
associated obsolescence provision including an analysis by inventory, category and ageing.
A retrospective review of inventory provisions at 31 December 2018 was also carried out in
order to note any indication of management bias within the provisions and none was noted.
The committee was satisfied that such judgements were appropriate and the risk had been
adequately addressed.
Taxation Provisioning for potential current tax liabilities and the level of deferred tax asset recognition
in relation to accumulated tax losses are underpinned by a range of judgements. The
committee addresses these issues through a range of reporting from senior management
and a process of challenging the appropriateness of management’s views including the
degree to which these are supported by professional advice from external legal and other
advisory firms. This assessment was conducted in line with the provisions of IFRIC 23.
The Group’s accounting manual sets out detailed policies that prescribe the methodology to
be used by management in calculating the above provisions. Each division formally confirms
compliance with these policies on an annual basis.
The committee was satisfied that such judgements were appropriate and the risk had been
adequately addressed.
Accounting
for acquisitions
Total acquisition consideration in 2019 amounted to €144m. The committee discussed
with management and the external auditors the accounting treatment for newly acquired
businesses, and the related judgements made by management, and were satisfied that the
treatment in the Group’s financial statements was appropriate.
UK
Science and Technology Facilities Council
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Report of the Audit Committee
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Directors'
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—
External auditor
The Audit Committee has
responsibility for overseeing the
Group’s relationship with the external
auditor including reviewing the
quality and effectiveness of their
performance, their external audit
plan and process, their independence
from the Group, their appointment
and their audit fee proposals.
Performance and audit plan
Following the completion of
the 2018 year-end audit, the
committee carried out a review of
the effectiveness of the external
auditor and the audit process. This
review involved discussions with
both group management and
internal audit and feedback provided
by divisional management. The
committee continues to monitor
the performance and objectivity of
the external auditors and takes this
into consideration when making
its recommendations to the Board
on the remuneration, the terms of
engagement and the re-appointment,
or otherwise, of the external auditors.
Prior to commencement of the
2019 year-end audit and half-year
review, the committee approved
the external auditors’ work plan
and resources and agreed with the
auditor’s various key areas of focus,
including accounting for acquisitions,
impairments, warranty provisions, as
well as a particular focus on certain
higher risk jurisdictions.
During the year, the committee met
with the external auditors without
management being present. This
meeting provided the opportunity
for direct dialogue and feedback
between the committee and the
auditor, where they discussed
inter alia some of the key audit
management letter points.
EU Audit Reform
The regulatory framework for the
Group’s statutory audit is governed
by EU legislation under Directive
2014/56/EU and Regulation EU No.
537/2014. EU Audit reform legislation
is applicable in the Member States of
the European Union, including Ireland.
Under this legislation,   is considered a Public Interest
Entity (“PIE”). Key developments
falling from the implementation of
this legislation are:
→ a requirement that the PIE
changes its statutory auditor every
the predefined criteria set as part
of the selection process.
As a result of this process, the
Company's auditors, KPMG
Chartered Accountants, will continue
in office and will retire following the
conclusion of the audit for the 2019
financial year, with the Board then
appointing EY as Group external
auditor with effect from financial
year commencing 1 January 2020.
On behalf of the committee, I would
like to thank each of the firms who
participated in the tender process,
along with KPMG who provided the
highest level of audit and assurance
services during their tenure.
Internal audit
The committee reviewed and agreed
the annual internal audit plan,
which the committee believes is
appropriate to the scope and nature
of the Group. The internal audit
plan is risk based, with all divisions
audited every year, and all new
businesses audited within 12 months
of acquisition.
The committee reviewed reports
from the Head of Internal Audit at
its quarterly meetings. These reports
enable the committee to monitor the
progress of the internal audit plan,
to discuss key findings and the plan
to address them in addition to status
updates of previous key findings.
The committee is responsible for
reviewing the effectiveness of the
internal audit function and does so
based upon discussion with Group
management, the Group’s external
auditor and feedback provided
by divisional management. The
committee was satisfied that the
internal audit is working effectively,
improves risk management
throughout the Group and that the
internal audit team is sufficiently
resourced in addition to having
the adequate level of experience
and expertise.
Risk Management and
Internal controls
The Audit Committee has been
delegated, from the Board, the
responsibility for monitoring the
effectiveness of the Group’s system of
risk management and internal control.
The Audit Committee monitors
the Group’s risk management
and internal control processes
through detailed discussions
with management and executive
directors, the review and approval
of the internal audit reports, which
focus on the areas of greatest risk
to the Group, and the external audit
reports, as part of both the year-
end audit and the half year review
process, all of which highlight the
key areas of control weakness in
the Group. All weaknesses identified
by either internal or external audit
are discussed by the committee
with Group management and an
implementation plan for the targeted
improvements to these systems is put
in place. The implementation plan is
being overseen by the Group Chief
Financial Officer and the committee
is satisfied that this plan is being
properly executed.
As part of its standing schedule of
business, the committee carried out
an annual risk assessment of the
business to formally identify the key
risks facing the Group. Full details
of this risk assessment and the key
risks identified are set out in the Risk
& Risk Management section of this
Annual Report.
These processes, which are used by
the Audit Committee to monitor the
effectiveness of the Group’s system
of risk management and internal
control, are in place throughout the
accounting period and remain in
place up to the date of approval of
this Annual Report.
The main features of the Group’s
internal control and risk management
systems that specifically relate to
the Group’s financial reporting and
accounts consolidation process are set
out in the Report of the Nomination
and Governance Committee
contained in this Annual Report.
Whistleblowing procedures
The Group has a Code of Conduct,
full details of which are available
on the Group’s website
(www..com).
Based on the standards set out
in this Code of Conduct, the
Group employs a comprehensive,
confidential and independent
whistleblowing phone service to
allow all employees to raise their
concerns about their working
environment and business
practices. This service then allows
management and employees to
work together to address any
instances of fraud, abuse and other
misconduct in the workplace.
Any instances of fraud, abuse
or misconduct reported on the
whistleblowing phone service are
reported to the Head of Internal
Audit and the Company Secretary,
who then evaluate each incident
for onward communication to
the committee. This onwards
communication consists of the full
details of the incident, key control
failures, any financial loss and
actions for improvement.
During the year, the committee
reviewed the Group’s whistleblowing
process and were satisfied with the
design and operating effectiveness
of the process.
Audit Services Non-Audit Services
Audit V Non Audit Services Remuneration
2017 €2.0m
2018 €2.6m €0.9m
2019 €2.6m €0.9m
€0.7m
ten years (following rotation, the
statutory audit firm cannot be
reappointed for four years);
→ a requirement that certain
procedures are followed for
the selection of the new
statutory auditor; and
→ restrictions on the entitlement
of the statutory auditing firm to
provide certain non-audit services.
 has fully complied
with such EU Audit Reform from the
period commencing 1 January 2017.
With regards audit firm rotation, EY
has been selected as the external
auditor for the financial year
commencing 1 January 2020. The
selection process is outlined in more
detail below.
Independence and objectivity
The committee is responsible for
ensuring that the external auditor is
objective and independent. KPMG has
been the Group’s auditor since 2011,
following a formal tender process in
which a number of leading global
firms submitted written tenders and
presentations. The lead audit partner
is rotated every five years.
The committee received
confirmation from the auditors
that they are independent of the
Group under the requirements of the
Financial Reporting Council’s Ethical
Standards for auditors. The auditors
also confirmed that they were not
aware of any relationships between
the Group and the firm or between
the firm and any persons in financial
reporting oversight roles in the Group
that may affect its independence.
Non-audit services
In order to further ensure
independence, the committee has a
policy on the provision of non-audit
services by the external auditors that
seeks to ensure that the services
provided by the external auditors are
not, or are not perceived to be, in
conflict with auditor independence.
By obtaining an account of all
relationships between the external
auditors and the Group, and by
reviewing the economic importance
of the Group to the external auditors
by monitoring the audit fees as a
percentage of total income generated
from the relationship with the Group,
the committee ensured that the
independence of the external audit
was not compromised. An analysis
of fees paid to the external auditor,
including the non-audit fees, is set
out in Note 5 and below.
Audit tender & rotation of auditors
A competitive audit tender
process was launched in 2019. The
committee was responsible for the
design and operation of the tender
process. The objectives were for
the process to be efficient, fair and
transparent and to submit two firms
to the Board for appointment, with a
reasoned preference for a single firm.
Following the issuance of a Request
for Proposal, a number of measures
took place including visits to key
manufacturing sites, numerous
meetings with senior management
and assurance that each of the firms
would be suitably independent should
they be appointed. The principal
assessment criteria included:
→ Audit quality;
→ Experience; and
→ Cultural fit
Subsequent to an evaluation of
proposals and interactions, it was
decided to take two firms to make
final presentations to the committee
and Group Chief Financial Officer.
Following these final presentations,
the committee recommended to
the Board that EY be appointed
to succeed KPMG as the Group’s
external auditor. The committee
believes that the strength and
experience of the EY team best met


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Directors'
Report
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—
Revenue (€bn)
Principal Activities
 is the global leader in high-
performance insulation and building
envelope solutions. 
 is a holding company
for the Group’s subsidiaries and
other entities. The Group’s principal
activities comprise the manufacture
and distribution of the following
product suites as part of the
complete “Building Envelope”:
Insulated panels
Structural framing
Architectural facades
Rigid insulation boards
Building services insulation
Engineered timber systems
Natural daylighting
Ventilation and smoke
management solutions
Raised access floors
Datacentre storage solutions
Energy storage solutions
Rainwater and wastewater solutions
Renewable energy systems
 comprises five key
business divisions which are
Insulated Panels, Insulation Boards,
Light & Air, Water & Energy and
Data & Flooring. These divisions offer
a suite of complementary building
envelope solutions for both the new
build and refurbishment markets.
Results and Dividends
Group turnover for the year ended
31 December 2019 was €4.7bn (2018:
€4.4bn), trading profit was €497.1m
(2018: €445.2m), and earnings per
share were 204.6 cent (2018: 184.0
cent). The Consolidated Income
Statement is set out later in this
Annual Report and a detailed review
of the Group’s performance from a
financial and operational perspective
is contained within the Business
& Strategic Report.
Trading Profit (€m) EPS (cent)
The directors of   (“”) have pleasure in
presenting their report with the
audited financial statements for
the year ended 31 December 2019.
—
REPORT
OF THE
DIRECTORS

An interim dividend of 13.0 cent per
share was paid to shareholders on 4
October 2019 (2018: 12.0 cent). The
directors are recommending a final
dividend of 33.5 cent per share for
the year ended 31 December 2019
(2018: 30.0 cent), giving a total
dividend for the year of 46.5 cent
(2018: 42.0 cent). The final dividend
if approved at the Annual General
Meeting will be paid on 7 May 2020
to shareholders on the register at
close of business on 27 March 2020.
Business Review
The Business & Strategic Report
contained in this Annual Report,
including the Chief Executive’s
Review and the Financial Review,
sets out management’s review of
the Group’s business during 2019.
The key points include:
→ Revenue up 7% to €4.7bn.
→ Trading profit up 12% to €497.1m.
→ Free cashflow up 9% to €337.1m.
→ Group trading margin of 10.7%.
→ Basic EPS up 11% to 204.6 cent.
→ Year-end net debt1 of €633.2m
(2018: €728.3m). Net debt to
EBITDA2 of 1.1x (2018: 1.4x).
→ ROCE of 17.3% (2018: 16.8%).
→ Insulated Panels sales growth
of 7%. Strong performance in
the Americas, Mainland Europe
performed well overall with the
notable exception of Germany.
Difficult UK market particularly in
the second half. Further headway
in key markets on QuadCore™.
→ Insulation Boards sales growth
of 2%. Continuing progress on
Kooltherm® and share gain
from traditional materials.
→ Strong underlying volume
growth of 4% and 8% in
Insulated Panels and Insulation
Boards partially offset by the
pricing impact of raw material
deflation.
→ Light & Air sales growth of
12% buoyed by a strong
performance in the US.
Solid activity in Mainland
Europe. Daylighting centre of
excellence under construction
in Ireland.
→ Water & Energy sales growth
of 3% with progress in
the Nordics, a difficult UK
environment and more
subdued rainwater harvesting
activity in Australia.
→ Data & Flooring sales growth
of 13% reflecting strong
datacentre activity and
geographic expansion in Europe.
+7% +12% +11%
The Business and Strategic Report
contained in this Annual Report
sets out the “four pillars” of
’s strategy, which are:
INNOVATION
Differentiation from competitors
driven by superior innovation.
PENETRATION
Increased penetration of ’s
product suite underpinned
by efficiency gains from high-
performance building envelopes,
regulatory changes and an
increasing awareness of the long-
term environmental impact of
inefficient building design.
GLOBAL
The continued evolution of
’s geographic footprint
as we build market leading
positions globally.
PLANET PASSIONATE
In 2019, we launched our new
Planet Passionate Programme
across our entire group and to the
industry. This is a critical first step
in the next phase of our journey
to proactively address the key
sustainability challenges that face
our planet. Through our Net Zero
Energy Programme, we have already
made great strides in powering
our business on renewable energy,
and with Planet Passionate we
are setting ourselves even more
challenging goals for the next 10
years. We are committing to hard
targets in the areas of energy,
carbon, circularity and water.
1 Net Debt and EBITDA both pre-IFRS 16
2 Earnings before finance costs, income
taxes, depreciation, amortisation and
the impact of IFRS 16.
France
Champagne Palmer & Co
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The Board Chairman’s Introduction Report of the Nomination & Governance Committee Report of the Remuneration Committee Report of the Audit Committee Report of the Directors
Directors' Report


Directors'
Report
91
90
—
Throughout 2019,  made
significant progress in pursuit
of this strategy with the result
that  has continued to
deliver year on year growth. This
strategy will remain the focus of the
execution of ’s strategic
plan for the foreseeable future.
Principal Risks and Uncertainties
The principal risks and uncertainties
facing the Group, and the actions
taken by  to mitigate
them are detailed in the Risk & Risk
Management Report contained in this
Annual Report. The principal risks are:
→ Volatility in the macro
environment;
→ Failure to innovate;
→ Product failure;
→ Business interruption
(including IT continuity and
climate change);
→ Credit risks and credit control;
→ Employee development
and retention;
→ Fraud and cybercrime;
→ Acquisition and integration
of new businesses;
→ Health and safety;
→ Laws and regulations.
Key Performance Indicators
The directors are pleased to report
on the very positive performance
during 2019 against its key
performance indicators. A detailed
commentary incorporating key
performance indicators is contained
within the Financial Review and
the Sustainability Report in this
Annual Report. A number of the key
performance indicators have been
included in more detail on page 148
‘Alternative Performance Measures’.
The key performance indicators for
 upon which particular
emphasis is placed are listed below.
Innovation
Since the beginning,  has
been committed to innovation so
we can make building better. It’s
something we demonstrate daily
across our business. We believe we
have to challenge building industry
traditions through innovation in
advanced materials and digital
technologies in order to achieve a
net zero emissions future. ’s
products and systems therefore
ensure longer lifetime energy and
carbon savings.
In the year ended 31 December
2019, the Group’s research and
development expenditure amounted
to €31.9m (2018: €30.5m) in
addition to over €10 million of
capital expenditure on  and our
new fire research facility. Research
and development expenditure is
generally written off in the year
in which it is incurred. During
the year, we opened , our
new Global Innovation Centre in
Kingscourt, further demonstrating
our commitment to innovation.
’s continuing investment in
research and development involves
over 40 key projects. In 2019 we
launched QuadCore™ Roof Board and
continued to progress development
on the following key projects:
→ PV solar-integrated
PowerPanel® 2.0;
→ Fibre-free A1 classified
AlphaCore® insulation;
→ QuadCore™ 2.0;
→ Kooltherm® 200 series;
→ Unitised facade solutions;
→ Digitalisation of the
construction industry; and
→ Prismatic daylighting.
Corporate Governance
The directors are committed to
achieving the highest standards of
corporate governance. A statement
describing how  has
applied the principles of good
governance set out in the UK
Corporate Governance Code (July
2018) is included in the Report of
the Nomination and Governance
Committee contained in this Annual
Report. The Corporate Governance
Statement is treated as forming part
of this Annual Report.
Code Of Conduct
 is committed to acting
responsibly in its business and
maintaining high standards of ethics
and integrity in all of its dealings
with its stakeholders, be they
investors, customers, suppliers, its
people or the community it operates
in.  has a Code of Conduct
which sets the standard by which
all employees across the Group are
expected to conduct themselves.
The Code sets out the fundamental
principles which all directors, officers
and employees of  are
required to adhere to in meeting
those standards.
Sustainability
Our mission is to accelerate a net zero
emissions future with the wellbeing
of people and planet at its heart.
We do this through enabling high-
performance buildings that can
save more energy, carbon and water.
Aligned with our mission, we aim to
make significant advances in the
sustainability of both our business
operations and our products.
In 2011 we set ourselves an almost
impossible challenge: by 2020, on an
aggregated basis, we committed to
matching 100% of our operational
energy with renewable energy.
Through this programme we
have reduced our energy carbon
intensity 6-fold, introduced solar PV
to 22% of our wholly owned sites,
and instigated significant on-site
generation projects. As we reach
the successful conclusion of our 10
year Net Zero Energy Programme
in 2020, we are launching a new 10
year Planet Passionate Programme,
setting ourselves challenging targets
in the areas of energy, carbon,
circularity and water. Learn more
at www..com under
‘Our Commitments’ and in the
Sustainability Report contained in
this Annual Report.
Accounting Records
The directors are responsible for
ensuring that accounting records, as
outlined in Sections 281 to 285 of the
Irish Companies Act 2014, are kept
by the Group. The directors have
provided appropriate systems and
resources, including the appointment
of suitably qualified accounting
personnel, to maintain adequate
accounting records throughout
the Group, in order to ensure that
the requirements of Sections 281
to 285 are complied with. The
accounting records of the Company
are maintained at the principal
executive offices located at Dublin
Road, Kingscourt, Co. Cavan,
A82 XY31, Ireland.
The European Communities
(Takeover Bids (Directive 2004/25/
EC)) Regulations 2006
Structure of the Company’s
share capital
At 31 December 2019, the Company
had an authorised share capital
comprised of 250,000,000
(2018: 250,000,000) ordinary
shares of €0.13 each and the
Company’s total issued share
capital comprised 182,785,222
(2018: 182,171,120) Ordinary
Shares, of which the Company
held 1,907,826 (2018: 1,969,143)
Ordinary Shares in treasury.
KPIs
Further information required
by Regulation 21 of the above
Regulations as at 31 December
2019 is set out in the Shareholder
Information section of this
Annual Report.
Directors and Secretary
The directors and secretary of the
Company at the date of this report
are as shown in this Annual Report on
pages 58 and 59. Ms Helen Kirkpatrick
retired as a non-executive director
following conclusion of the AGM
on 3 May 2019, and Ms Anne
Heraty was appointed as a
non-executive director with
effect from 1 August 2019.
Directors’ & Secretary’s Interests
In Shares
The beneficial interests of the
directors and secretary and their
spouses and minor children in the
shares of the Company at the end
of the financial year are as follows:Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Business & Strategic Report Sustainability Report Financial Statements Other Information
The Board Chairman’s Introduction Report of the Nomination & Governance Committee Report of the Remuneration Committee Report of the Audit Committee Report of the Directors
Directors' Report

Directors'
Report
93
92
—
Details of the directors’ and
secretary’s share options at the end
of the financial year are set out in
the report of the Remunerati
Committee contained in this Annual
Report. As at 21 February 2020,
there have been no changes in the
directors’ and secretary’s interests in
shares since 31 December 2019.
Conflicts Of Interest
None of the directors have any direct
or indirect interest in any contract or
arrangement subsisting at the date
hereof which is significant in relation
to the business of the Company
or any of its subsidiaries nor in the
share capital of the Company or any
of its subsidiaries.
Financial Instruments
In the normal course of business,
the Group has exposure to a variety
of financial risks, including foreign
currency risk, interest rate risk,
liquidity risk and credit risk. The
Company’s financial risk objectives
and policies are set out in Note 19
of the financial statements.
Political Donations
Neither the Company nor any of its
subsidiaries have made any political
donations in the year which would
be required to be disclosed under
the Electoral Act 1997.
Subsidiary Companies
The Group operates from 159
manufacturing sites, and has
operations in over 70 countries
worldwide.
The Company’s principal subsidiary
undertakings at 31 December 2019,
country of incorporation and nature
of business are listed in the Principle
Subsidiary Undertakings section of
this Annual Report.
The Company does not have any
branches outside of Ireland.
Outlook
The Board fully endorses the outlook
“Looking Ahead” expressed in
the Chief Executive’s Review in
this Annual Report.
Significant Events Since Year-end
There have been no significant
events since the year-end.
Going Concern
The directors have reviewed budgets
and projected cash flows for a
period of not less than 12 months
from the date of this Annual
Report, and considered the Group's
net debt position and capital
commitments, available committed
banking facilities and other relevant
information, including the economic
conditions currently affecting the
building environment generally and
the Group’s Strategic Plan. On the
basis of this review the directors
have concluded that there are no
material uncertainties that would
cast significant doubt over the
Company’s and the Group’s ability
to continue as a going concern. For
this reason, the directors consider
it appropriate to adopt the going
concern basis in preparing the
financial statements.
Viability Statement
In accordance with Provision 31 of
the 2018 UK Corporate Governance
Code, the directors are required
to assess the prospects of the
Company, explain the period over
which we have done so and state
whether we have a reasonable
expectation that the Company will
be able to continue in operation and
meet liabilities as they fall due over
this period of assessment.
The directors have assessed the
prospects of the Group over the
three-year period to February 2023.
The directors concluded that three
years was an appropriate period
for the assessment, having had
regard to:
→ the Group’s rolling Strategic Plan
which extends to 2023;
→ the Group’s long-term funding
commitments, some of which fall
to be repaid during the period;
→ the inherent short-cycle nature
of the construction market
including the Group’s order bank
and project pipeline; and
→ the potential impact of macro-
economic events and political
uncertainty in some regions such
as the UK and Middle East.
It is recognised that such future
assessments are subject to a level
of uncertainty that increases with
time, and therefore future outcomes
cannot be guaranteed or predicted
with certainty.
The Group Strategic Plan is approved
by the Board, building upon the
divisional management plans
as well as the Group’s strategic
goals. It is based on a number of
cautious assumptions concerning
macro growth and stability in our
key markets, and continued access
to capital to support the Group’s
ongoing investments. The strategic
plan is subject to stress testing
which involves flexing a number of
the main assumptions underlying
the forecast in severe but reasonable
scenarios. Such assumptions are
rigorously tested by management
and the directors. It is reviewed
and updated annually and was
considered and approved by the
Board at its meeting in October 2019.
In making this assessment, the
directors have considered the
resilience of the Group, taking
account of its current position
and the principal risks facing the
business as outlined in the Risk &
Risk Management Report contained
in this Annual Report, and the
Group’s ability to manage those
risks. The risks have been identified
using a top-down and bottom-
up approach, and their potential
impact was assessed having regard
to the effectiveness of controls
in place to manage each risk. In
assessing the prospects of the Group
such potential impacts have been
considered as have the mitigating
factors in place.
Based on this assessment the
directors have a reasonable
expectation that the Group will
be able to continue in operation
and meet its liabilities as they fall
due over the three-year period of
their assessment.
Directors’ Responsibility
Statement
Each of the directors whose names
and functions are set out in the
Board section of this Annual Report
confirm their responsibility for
preparing the Annual Report and the
consolidated and company financial
statements in accordance with
applicable Irish law and regulations.
Company law in Ireland requires
the directors to prepare financial
statements for each financial year.
Under that law the directors have to
prepare the consolidated financial
statements in accordance with
International Financial Reporting
Standards (IFRSs) as adopted by
the European Union (EU). The
directors have elected to prepare
the company financial statements
in accordance with IFRSs as adopted
by the EU and as applied by the
Irish Companies Act 2014. The
financial statements are required by
law to give a true and fair view of
the assets, liabilities and financial
position of the Group and company
and of the profit or loss of the Group
for that period. In preparing those
financial statements, the directors
are required to:
→ select suitable accounting
policies and then apply them
consistently;
→ make judgements and estimates
that are reasonable and prudent;
→ state whether applicable IFRSs
have been followed, subject to
any material departures disclosed
and explained in the financial
statements; and
→ prepare the financial statements
on the going concern basis unless
it is inappropriate to presume
that the Company, and the
Group as a whole, will continue
in business.
The directors are responsible for
keeping accounting records which
disclose with reasonable accuracy at
any time the financial position of the
Group and the Company and which
enable them to ensure that the
financial statements comply with the
Irish Companies Act 2014 and Article
4 of the IAS Regulation.
They are responsible for safeguarding
the assets of the Group and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities.
The directors are responsible for
the maintenance and integrity
of the corporate and financial
information on the Company’s
website. Legislation in the Republic
of Ireland governing the preparation
and dissemination of financial
statements may differ from
legislation in other jurisdictions.
In accordance with Transparency
(Directive 2004/109/EC) Regulations
2007 and the Transparency Rules of
the Financial Regulator, the directors
confirm that to the best of their
knowledge:
→ the Group financial statements
and the Company financial
statements, prepared in
accordance with the applicable
set of accounting standards, give
a true and fair view of the assets,
liabilities, financial position and
profit or loss of the Group and
Company; and
→ the Report of the Directors
includes a fair review of the
development and performance
of the business and the position
of the Group and Company,
together with a description of the
principal risks and uncertainties
that they face.
They are also satisfied in compliance
with Provision 27 of the 2018 UK
Corporate Governance Code:
→ that the Annual Report and
financial statements, taken as
a whole, is fair, balanced and
understandable and provides
the information necessary
for shareholders to assess the
Group’s position, business model
and strategy.
Directors’ Compliance Statement
The directors acknowledge that
they are responsible for securing
the Company’s compliance with its
relevant obligations in accordance
with Section 225(2)(a) of the Irish
Companies Act 2014 (the “Act”)
(described below as the “Relevant
Obligations”).
In accordance with Section 225 (2)
(b) of the Act, the directors confirm
that they have:
1. drawn up a Compliance Policy
Statement setting out the
Company’s policies (that are,
in the opinion of the directors,
appropriate to the Company)
in respect of the compliance by
the Company with its Relevant
Obligations;
2. put in place appropriate
arrangements or structures that,
in the opinion of the directors,
provide a reasonable assurance
of compliance in all material
respects with the Company’s
Relevant Obligations; and
3. during the financial year to which
this report relates, conducted
a review of the arrangements
or structures that the directors
have put in place to ensure
material compliance with the
Company’s Relevant Obligations.
Audit Information
Each of the directors have taken all
the steps that they should or ought
to have taken as a director in order
to make himself or herself aware
of any relevant audit information
and to establish that the Group’s
statutory auditors are aware of that
information. So far as the directors
are aware, there is no relevant
information of which the Group’s
statutory auditors are unaware.
Auditor
During 2019, the Board carried out
an audit tender process, details
of which are more particularly
set out in the Report of the Audit
Committee contained in this Annual
Report. As a result of this process,
the Company’s auditors, KPMG
Chartered Accountants, will, in
accordance with Section 383(2) of
the Companies Act 2014, continue
in office and will retire following the
conclusion of the audit for the 2019
financial year, with the Board then
appointing EY as Group external
auditor with effect for the financial
year ending 31 December 2020.
On Behalf Of The Board
Gene M. Murtagh,
Chief Executive Officer

Business & Strategic Report Sustainability Report Financial Statements Other Information
Directors' Report


Directors'
Report
—
95
94
Using QuadCore™ allowed us
to use a two-inch panel and go
beyond code, without adding
any additional insulation.
We’ve used insulated panels
before and we were confident
that this would be fastest
and most economical way
to rebuild the hotel.
Joseph Sorci, Principal Architect and President,
Florida Architects
Holiday Inn
Panama City, USA
BENCHMARK Designwall 2000 and
Designwall 4000 featuring QuadCore™
technology.
The Holiday Inn Panama City
goes beyond code using a 2 inch
QuadCore™ Panel.
QuadCore(tm) reduced insulation
thickness by approximately 50% versus
traditional materials, adding over
3,000 sq ft of indoor space.
QuadCore™ Panels are GREENGUARD
Gold certified, and earn Material
Health Silver certification.
The Holiday Inn was the first major
hotel to reopen in the area after the
devastation of Hurricane Michael,
having been completely rebuilt
in just nine months.
The BENCHMARK Designwall panels
are finished in Granitstone,
a  speciality finish that
has the look of stucco masonry.
 BENCHMARK insulated
panels contain up to 90% recycled
steel content.
IHG Hotels and Resorts have an
internal “Green Engage” system
for driving sustainability.
–
Product
@
Energy/
Carbon
Saving @
Space/
Dimensions
@
Health &
Wellbeing
@
Speed/
Ease of build
@
Aesthetics
@
Planet
Passionate/
Sustainability @
Awards/
Certifications
@
@
@
@
@
@
@
Click here to see more
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2
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Business & Strategic Report Directors' Report
Sustainability Report Other Information
Independent Auditor’s Report Financial Statements Notes to the Financial Statements
Financial Statements


—

Financial
Statements
97
PB
—


—

97
—
96
Independent Auditor’s Report 98
Consolidated Income Statement 102
Consolidated Statement
of Comprehensive Income 102
Consolidated Statement of Financial Position 103
Consolidated Statement of Changes in Equity 104
Consolidated Statement of Cash Flows 106
Company Statement of Financial Position 107
Company Statement of Changes in Equity 108
Company Statement of Cash Flows 108
Notes to the Financial Statements
1 Statement of Accounting Policies 109
2 Segment Reporting 117
3 Employees 119
4 Finance Expense And Finance Income 120
5 Profit For The Year Before Income Tax 120
6 Directors’ Remuneration 121
7 Income Tax Expense 121
8 Earnings Per Share 122
9 Goodwill 123
10 Other Intangible Assets 124
11 Property, Plant and Equipment 125
12 Investments in Subsidiaries 126
13 Inventories 126
14 Trade and Other Receivables 126
15 Trade and Other Payables 127
16 Leases 127
17 Interest Bearing Loans
and Borrowings 128
18 Deferred Consideration 129
19 Financial Risk Management
and Financial Instruments 130
20 Provisions for Liabilities 139
21 Deferred Tax Assets and Liabilities 139
22 Business Combinations 140
23 Share Capital 142
24 Share Premium 142
25 Treasury Shares 142
26 Retained Earnings 143
27 Dividends 143
28 Non-Controlling Interest 143
29 Reconciliation of Net Cash Flow
to Movement in Net Debt 143
30 Guarantees and Other Financial Commitments 144
31 Pension Obligations 144
32 Related Party Transactions 147
33 Post Balance Sheet Events 147
34 Approval of Financial Statements 147
Other Information
Alternative Performance Measures 148
Shareholder Information 151
Principal Subsidiary Undertakings 153
5 Year Summary 156
—
FINANCIAL
STATEMENTS
Australia
Mullum Mullum Stadium
Insulated Panels:
Rainscreen facade in Shingle and Evolution
2
2
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Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Business & Strategic Report Directors' Report
Sustainability Report Other Information
Financial Statements Notes to the Financial Statements
Independent Auditor’s Report
Financial Statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 
OPINION AND CONCLUSIONS ARISING FROM OUR AUDIT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 
OPINION AND CONCLUSIONS ARISING FROM OUR AUDIT


—

Financial
Statements
99
98
—
1 Opinion: our opinion on
the financial statements
is unmodified
We have audited the Group and
Company financial statements of
 (“the Company”)
for the year ended 31 December 2019,
which comprise the Consolidated
Income Statement, the Consolidated
Statement of Comprehensive Income,
the Consolidated Statement of Financial
Position, the Consolidated Statement
of Changes in Equity, the Consolidated
Statement of Cash Flows, the Company
Statement of Financial Position, the
Company Statement of Changes in
Equity, the Company Statement of Cash
Flows and the related notes, including
the accounting policies in note 1. The
financial reporting framework that has
been applied in their preparation is Irish
Law and International Financial Reporting
Standards (“IFRS”) as adopted by the
European Union and, as regards the
Company financial statements, as applied
in accordance with the provisions of the
Companies Act 2014.
In our opinion:
> the financial statements give a true
and fair view of the assets, liabilities
and financial position of the Group
and Company as at 31 December 2019
and of the Group’s profit for the year
then ended;
> the Group financial statements
have been properly prepared in
accordance with IFRS as adopted by
the European Union;
> the Company financial statements
have been properly prepared in
accordance with IFRS as adopted by
the European Union, as applied in
accordance with the provisions of the
Companies Act 2014; and
> the Group and Company financial
statements have been properly
prepared in accordance with the
requirements of the Companies
Act 2014 and, as regards the Group
financial statements, Article 4 of the
IAS Regulation.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(Ireland) (“ISAs (Ireland)”) and applicable
law. Our responsibilities under those
standards are further described in the
Auditor’s Responsibilities section of our
report. We believe that the audit evidence
we have obtained is a sufficient and
appropriate basis for our opinion. Our
audit opinion is consistent with our report
to the Audit Committee.
We were appointed as auditor by the
directors on 17 June 2011. The period of
total uninterrupted engagement is the 9
financial years ended 31 December 2019.
We have fulfilled our ethical responsibilities
under, and we remained independent of
the Group in accordance with, ethical
requirements applicable in Ireland,
including the Ethical Standard issued
by the Irish Auditing and Accounting
Supervisory Authority (“IAASA”) as applied
to listed public interest entities. No non-
audit services prohibited by that standard
were provided.
2 Key audit matters: our
assessment of risks of
material misstatement
Key audit matters are those matters
that, in our professional judgment, were
of most significance in the audit of the
financial statements and include the
most significant assessed risks of material
misstatement (whether or not due to
fraud) identified by us, including those
which had the greatest effect on: the
overall audit strategy; the allocation of
resources in the audit; and directing the
efforts of the engagement team. These
matters were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters.
We continue to perform procedures over
acquisition accounting. However, given
the number of significant acquisitions
has reduced we have not assessed this
as one of the most significant risks in our
current year audit and, therefore, it is not
separately identified in our report this year.
In arriving at our audit opinion above, the
key audit matters, in decreasing order of
audit significance, were as follows:
Group audit matters
Warranty provisions €109.7 million
(2018: €104.3 million)
Refer to page 85 (Report of the Audit
Committee), page 114 (accounting policy)
and Note 20 to the financial statements.
The key audit matter
The Group’s business involves the sale of
products under warranty, some of which
use new technology and applications.
Accordingly, the Group has recorded
significant warranty provisions which are
inherently judgemental in nature. These
provisions are required in order for the
Group to record an appropriate estimate
of the ultimate costs of repairing and
replacing product that is ascertained to
be faulty.
How the matter was addressed
in our audit
Our audit procedures included, among
others, assessing: management’s
approach to identifying, recording and
monitoring potential claims; consideration
of the nature and basis of the provision
and the range of potential outcomes;
correspondence in relation to specific
claims; progress on individual significant
claims; and relevant settlement history of
claims and utilisation of related provisions.
We considered the rollout of new
technology and products and challenged
the Group’s assumptions in relation to
potential failure rates, considering past
failure rates and related settlements
where necessary. We substantively tested
material movements in the provision and
considered the accounting for movements
in the provision balances and the related
disclosures for compliance with IAS 37.
Based on evidence obtained, we
found that management’s process
for identifying and quantifying
warranty provisions was appropriate
and that the resulting provision is not
materially misstated.
Goodwill €1,506.9 million
(2018: €1,391.0 million)
Refer to page 85 (Report of the Audit
Committee), page 111 (accounting policy)
and Note 9 to the financial statements.
The key audit matter
There is a risk in respect of the
recoverability of the Group’s significant
goodwill balance if future cash flows are
not sufficient to recover the carrying value
of the Group’s goodwill; this could occur
if demand is weak or due to the nature
of the cost base in certain markets. We
focus on this area due to the inherent
uncertainty involved in forecasting and
discounting future cash flows, which rely
on the management’s assumptions and
estimates of future trading performance,
which are the basis of the assessment
of recoverability.
How the matter was addressed
in our audit
Our audit procedures in this area included,
among others, assessing the Group’s
impairment models for each CGU and
evaluating the assumptions used by
the Group in the model, specifically the
cash flow projections, perpetuity rates
and discount rates. We compared the
Group’s assumptions, where possible, to
externally derived data and performed
our own assessment in relation to key
model inputs, such as projected economic
growth, competition, cost inflation
and discount rates. We examined the
sensitivity analysis performed by Group
management and performed our own
sensitivity analysis in relation to the key
assumptions. We compared the sum of
the discounted cash flows to the Group’s
market capitalisation. We also assessed
whether the disclosures in relation to
the key assumptions and in respect of
the sensitivity of the outcome of the
impairment assessment to changes in
those key assumptions were appropriate.
Based on evidence obtained, we found
that the key assumptions used by
management were appropriate, and
supported management’s conclusion that
no impairment of goodwill was required.
Company audit matter
Investment in subsidiaries €1,201.4
million (2018: €1,191.0 million)
Refer to page 111 (accounting policy) and
Note 12 to the financial statements.
The key audit matter
The investments in subsidiary
undertakings are carried in the
Company’s financial statements at
cost less impairment. Impairments are
determined by reference to the subsidiary
undertakings’ fair value.
How the matter was addressed
in our audit
In this area our audit procedures included,
among others, assessing the carrying
value of subsidiaries for any objective
indicators of impairment.
Based on the results of our testing, we
found management’s assessment that no
impairment is required to be reasonable.
3 Our application of
materiality and an overview
of the scope of our audit
Materiality for the Group financial
statements as a whole was set at
€22.3 million (2018: €19.5 million).
This has been calculated using a
benchmark of Group profit before
taxation (of which it represents 5%
(2018: 5%)), which we have determined,
in our professional judgement, to be
one of the principal benchmarks within
the financial statements relevant to
members of the Company in assessing
financial performance.
Materiality for the Company financial
statements as a whole was set at €13.2m
(2018: €13.0m), determined with reference
to a benchmark of Company’s total assets
of which it represents 1% (2018: 1%).
We report to the Audit Committee all
corrected and uncorrected misstatements
we identified through our audit in excess
of €500,000 (2018: €500,000), in addition
to other audit misstatements below that
threshold that we believe warranted
reporting on qualitative grounds.
The structure of the Group’s finance
function is such that certain transactions
and balances are accounted for by the
central Group finance team, with the
remainder accounted for in the Group’s
reporting components. We performed
comprehensive audit procedures, including
those in relation to the significant risks
set out above, on those transactions and
balances accounted for at Group. The
Group audit team carried out the audit of
the Company financial statements.
In respect of components, based on our
assessment of the financial significance of
each of the Group’s 274 components, we
determined that there were:
> 51 components ‘full scope
components’ where audits of the
financial information of those
components were performed;
> 15 components ‘specific scope
components’ where audit procedures
over specified financial statement
captions were performed, due to the
risk of potential misstatement of the
Group financial statements caused by
errors in those captions; and
> 208 components where the audit
procedures comprised analytical
review procedures to ensure that our
initial assessment that there were
no significant risks of misstatement
of the Group financial statements in
those components was appropriate.
The coverage we obtained was as follows:
Full scope
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 
OPINION AND CONCLUSIONS ARISING FROM OUR AUDIT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 
OPINION AND CONCLUSIONS ARISING FROM OUR AUDIT

Financial
Statements
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100
—
The audits undertaken for Group reporting
purposes at the key reporting components
were all performed to component
materiality levels. These component
materiality levels were set individually
for each component and ranged from
€10,000 to €7,350,000. Detailed audit
instructions were sent to the component
auditors in all of these identified locations.
These instructions covered the significant
audit areas to be covered by these audits
(which included the relevant key audit
matters detailed above) and set out the
information required to be reported to the
Group audit team.
Senior members of the Group audit team
were directly responsible for the audit of
21 full scope components and 6 specific
scope components. In respect of the other
30 full scope components and 9 specific
scope components carried out by other
component auditors (all KPMG member
firms), senior members of the Group
audit team:
> participated in planning calls to
ensure that the audit instructions
were understood;
> inspected the audit workpapers
in respect of significant audit risk
areas; and
> participated in closing conference
calls, during which the results of
the audit were discussed by local
management, the local audit team,
Group management and the Group
audit team.
Based on the above procedures, the
Group audit team was satisfied with the
coverage obtained and the audit work
performed in respect of each component.
4 We have nothing to
report on going concern
We are required to report to you if:
> we have anything material to add or
draw attention to in relation to the
directors’ statement in note 1 to the
financial statements on the use of the
going concern basis of accounting
with no material uncertainties that
may cast significant doubt over the
Group and Company’s use of that
basis for a period of at least twelve
months from the date of approval of
the financial statements; or
> the related statement under the
Listing Rules (Euronext Dublin and the
London Stock Exchange) set out on
page 92 is materially inconsistent with
our audit knowledge.
We have nothing to report in
these respects.
5 We have nothing to report on
the other information in the
Annual Report
The directors are responsible for the
other information presented in the
Annual Report together with the financial
statements. The other information
comprises the information included in the
directors’ report, Business and Strategic
Report and the Other Information Report.
The financial statements and our auditor’s
report thereon do not form part of the
other information. Our opinion on the
financial statements does not cover the
other information and, accordingly, we
do not express an audit opinion or, except
as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider
whether, based on our financial
statements audit work, the information
therein is materially misstated or
inconsistent with the financial statements
or our audit knowledge. Based solely on
that work we have not identified material
misstatements in the other information.
Based solely on our work on the other
information we report that, in those
parts of the directors’ report specified
for our review:
> we have not identified material
misstatements in the directors’ report
or other accompanying information;
> in our opinion, the information given
in the directors’ report is consistent
with the financial statements;
> in our opinion, the directors’ report
has been prepared in accordance with
the Companies Act 2014.
Disclosures of principal risks and
longer-term viability
Based on the knowledge we acquired
during our financial statements audit,
we have nothing material to add or draw
attention to in relation to:
> the directors’ statement of risk and
risk management on pages 36 to
39, concerning the disclosures of
principal risks, describing these risks
and explaining how they are being
managed and mitigated;
> the directors’ confirmation within the
report of the Audit Committee on
page 82 that they have carried out
a robust assessment of the principal
risks facing the Group, including those
that would threaten its business
model, future performance, solvency
and liquidity; and
> the directors’ explanation in the
directors’ report of how they have
assessed the prospects of the Group,
over what period they have done so
and why they considered that period
to be appropriate, and their statement
as to whether they have a reasonable
expectation that the Group will be
able to continue in operation and
meet its liabilities as they fall due
over the period of their assessment,
including any related disclosures
drawing attention to any necessary
qualifications or assumptions.
Other corporate
governance disclosures
We are required to address the
following items and report to you in the
following circumstances:
> Fair, balanced and understandable
(set out on pages 92 to 93): if we have
identified material inconsistencies
between the knowledge we acquired
during our financial statements
audit and the directors’ statement
that they consider that the Annual
Report and financial statements
taken as a whole is fair, balanced
and understandable and provides
the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy;
> Report of the Audit Committee (set
out on pages 82 to 87): if the section
of the Annual Report describing
the work of the Audit Committee
does not appropriately address
matters communicated by us to the
Audit Committee;
> Statement of compliance with UK
Corporate Governance Code (set
out on page 90): if the directors’
statement does not properly disclose
a departure from provisions of the UK
Corporate Governance Code specified
by the Listing Rules of Euronext Dublin
and the London Stock Exchange for
our review.
We have nothing to report in
these respects.
In addition, as required by the Companies
Act 2014, we report, in relation to
information given in the Corporate
Governance Statement on pages 62 to
67, that:
> based on the work undertaken
for our audit, in our opinion, the
description of the main features of
internal control and risk management
systems in relation to the financial
reporting process for preparing the
Group financial statements, and
information relating to voting rights
and other matters required by the
European Communities (Takeover Bids
(Directive 2004/EC) Regulations 2006
and specified for our consideration,
are consistent with the financial
statements and have been prepared
in accordance with the Act; and
> based on our knowledge and
understanding of the Company and
its environment obtained in the
course of our audit, we have not
identified any material misstatements
in that information.
> the Corporate Governance
statement contains the information
required by the European Union
(Disclosure of Non-Financial and
Diversity Information by certain
large undertakings and groups)
Regulations 2017.
We also report that, based on work
undertaken for our audit, all of the
other information required by the
Act is contained in the Corporate
Governance Statement.
6 Our opinions on other matters
prescribed the Companies Act
2014 are unmodified
We have obtained all the information and
explanations which we consider necessary
for the purpose of our audit.
In our opinion, the accounting records of
the Company were sufficient to permit
the financial statements to be readily
and properly audited and the Company’s
statement of financial position is in
agreement with the accounting records.
7 We have nothing to report on
other matters on which we are
required to report by exception
The Companies Act 2014 requires us
to report to you if, in our opinion, the
disclosures of directors’ remuneration and
transactions required by sections 305 to
312 of the Act are not made.
The Companies Act 2014 also requires
us to report to you if, in our opinion,
the Company has not provided the
information required by section 5(2) to
(7) of the European Union (Disclosure of
Non-Financial and Diversity Information
by certain large undertakings and groups)
Regulations 2017 for the year ended
31 December 2018 as required by the
European Union (Disclosure of Non-
Financial and Diversity Information by
certain large undertakings and groups)
(amendment) Regulations 2018.
The Listing Rules of the Euronext Dublin
and the London Stock Exchange require us
to review:
> the directors’ statement, set out on
page 92, in relation to going concern
and longer-term viability;
> the part of the Corporate Governance
Statement on page 90 relating to
the Company’s compliance with
the provisions of the UK Corporate
Governance Code and the Irish
Corporate Governance Annex
specified for our review; and
> certain elements of disclosures in the
report to shareholders by the Board of
Directors’ remuneration committee.
8 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement
set out on page 92 to 93, the directors
are responsible for: the preparation
of the financial statements including
being satisfied that they give a true and
fair view; such internal control as they
determine is necessary to enable the
preparation of financial statements that
are free from material misstatement,
whether due to fraud or error; assessing
the Group and Company’s ability to
continue as a going concern, disclosing,
as applicable, matters related to going
concern; and using the going concern
basis of accounting unless they either
intend to liquidate the Group or the
Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue our opinion in
an auditor’s report. Reasonable assurance
is a high level of assurance, but does not
guarantee that an audit conducted in
accordance with ISAs (Ireland) will always
detect a material misstatement when
it exists. Misstatements can arise from
fraud, other irregularities or error and
are considered material if, individually
or in aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis
of the financial statements. The risk of
not detecting a material misstatement
resulting from fraud or other irregularities
is higher than for one resulting from error,
as they may involve collusion, forgery,
intentional omissions, misrepresentations,
or the override of internal control and may
involve any area of law and regulation
not just those directly affecting the
financial statements.
A fuller description of our responsibilities
is provided on IAASA’s website at https://
www.iaasa.ie/getmedia/b2389013-1cf6-
458b-9b8f-a98202dc9c3a/Description_
of_auditors_responsiblities_for_audit.pdf
9 The purpose of our audit
work and to whom we owe
our responsibilities
Our report is made solely to the
Company’s members, as a body, in
accordance with section 391 of the
Companies Act 2014. Our audit work has
been undertaken so that we might state
to the Company’s members those matters
we are required to state to them in an
auditor’s report and for no other purpose.
To the fullest extent permitted by law, we
do not accept or assume responsibility
to anyone other than the Company and
the Company’s members, as a body, for
our audit work, for our report, or for the
opinions we have formed.
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Financial Statements
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 61.0 4.0
Effective portion of changes in fair value of cash flow hedges (0.2) 0.3
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit pension schemes 31 (0.2) 0.9
Income taxes relating to actuarial (losses)/gains on defined benefit pension schemes 21 - (0.2)
Total other comprehensive income 60.6 5.0
Total comprehensive income for the year 438.4 340.8
Attributable to owners of  430.2 337.1
Attributable to non-controlling interests 28 8.2 3.7
438.4 340.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019
ASSETS
NON-CURRENT ASSETS
—

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CONSOLIDATED
STATEMENT
OF
CHANGES
IN
EQUITY
FOR
THE
YEAR
ENDED-
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Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2019
Note 
OPERATING ACTIVITIES
Profit for the year 377.8 335.8
Add back non-operating expenses:
Income tax expense 7 76.6 69.1
Depreciation of property, plant and equipment 5 114.5 76.0
Amortisation of intangible assets 10 21.9 22.2
Impairment of non-current assets 11 0.2 5.2
Employee equity-settled share options 13.1 12.3
Finance income 4 (2.9) (1.4)
Finance expense 4 23.7 19.5
Profit on sale of property, plant and equipment 5 (3.3) (4.9)
Movement of deferred consideration (0.6) 0.8
Changes in working capital:
Inventories 5.8 4.7
Trade and other receivables 57.3 (33.0)
Trade and other payables (57.5) 30.6
Other:
Change in provisions 1.7 (5.8)
Pension contributions 31 (1.2) (0.8)
Cash generated from operations 627.1 530.3
Income tax paid (87.2) (75.0)
Interest paid (19.5) (17.0)
Net cash flow from operating activities 520.4 438.3
INVESTING ACTIVITIES
Additions to property, plant and equipment (161.0) (144.2)
Proceeds from disposals of property, plant and equipment 6.7 12.9
Purchase of subsidiary undertakings 22 (142.2) (461.0)
Purchase of financial asset - (8.2)
Payment of deferred contingent consideration in respect of acquisitions 18 (59.7) (3.1)
Interest received 2.8 1.4
Net cash flow from investing activities (353.4) (602.2)
FINANCING ACTIVITIES
Drawdown of loans 29 7.8 445.0
Repayment of loans and borrowings 29 (181.6) (92.7)
Payment of lease liability 16 (31.8) -
Proceeds from share issues 0.1 0.1
Repurchase of shares 25 (0.6) -
Dividends paid to non-controlling interest 28 (0.4) (0.1)
Dividends paid 27 (77.6) (68.3)
Net cash flow from financing activities (284.1) 284.0
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS 29 (117.1) 120.1
Effect of movement in exchange rates on cash held 13.5 (2.2)
Cash and cash equivalents at the beginning of the year 294.5 176.6
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 190.9 294.5
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019
Note 
ASSETS
NON-CURRENT ASSETS
Investments in subsidiaries 12 1,201.4 1,191.0
CURRENT ASSETS
Amounts owed by group undertakings 14 128.7 112.7
Cash and cash equivalents 0.1 0.1
TOTAL ASSETS 1,330.2 1,303.8
LIABILITIES
CURRENT LIABILITIES
Amounts owed to group undertakings 15 61.3 -
Payables 15 0.2 0.2
TOTAL LIABILITIES 61.5 0.2
NET ASSETS 1,268.7 1,303.6
EQUITY
Equity attributable to owners of 
Share capital 23 23.8 23.7
Share premium 24 95.6 95.6
Capital redemption reserve 0.7 0.7
Treasury shares 25 (11.8) (12.7)
Retained earnings 26 1,160.4 1,196.3
TOTAL EQUITY 1,268.7 1,303.6
Gene M. Murtagh Geoff Doherty 21 February 2020
Chief Executive Officer Chief Financial Officer


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Financial
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2
2
2
2
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
1 STATEMENT OF ACCOUNTING POLICIES
General information
 is a public limited
company registered and domiciled in
Ireland. Its registered number is 70576 and
the address of its registered office is at
Dublin Road, Kingscourt, Co Cavan.
The Group’s principal activities comprise
the manufacture of insulated panels, rigid
insulation boards, architectural facades,
data and flooring technology, daylighting
and ventilation systems and water and
energy solutions. The Group’s Principal
Subsidiary Undertakings are set out
on page 153 to 155.
Statement of compliance
The consolidated and Company financial
statements have been prepared in
accordance with International Financial
Reporting Standards (IFRSs) and their
interpretations issued by the International
Accounting Standards Board (IASB) as
adopted by the EU and those parts of
the Companies Acts 2014, applicable
to companies reporting under IFRS and
Article 4 of the IAS Regulation.
The Company has availed of the exemption
in Section 304 of the Companies Act 2014
and has not presented the Company
Income Statement, which forms part of
the Company’s financial statements, to its
members and the Registrar of Companies.
Basis of preparation
The financial statements have been
prepared on a going concern basis,
under the historical cost convention, as
modified by:
> measurement at fair value of share
based payments at initial date of award;
> certain derivative financial
instruments and deferred contingent
consideration recognised and
measured at fair value; and
> recognition of the defined benefit
liability as plan assets less the
present value of the defined
benefit obligation.
The accounting policies set out below
have been applied consistently to all years
presented in these financial statements,
unless otherwise stated.
These consolidated financial statements
have been prepared in Euro.The Euro is the
presentation currencyof the Group and the
functional and presentation currencyof
the Company.
TheGroupusesanumberofAlternative
PerformanceMeasures(APMs)throughout
thesefinancialstatementstogiveassistance
toinvestorsinevaluatingtheperformanceof
theunderlyingbusinessandtogiveabetter
understandingofhowmanagementreview
andmonitorthebusinessonanongoing
basis.TheseAPMshavebeendefinedand
explainedinmoredetailonpage 148 to 150.
Comparative information has been
represented where necessary, to
present the financial statements on a
consistent basis.
Changes in Accounting Policies
and Disclosures
New and amended standards and
interpretations effective during 2019
IFRS 16 Leases
IFRS 16 is effective for accounting periods
beginning on or after 1 January 2019,
and the Group adopted IFRS 16 with
effect from 1 January 2019. IFRS 16 sets
out the principles for the recognition,
measurement, presentation and disclosure
of leases for both the lessee and the
lessor. For lessees, IFRS 16 eliminates the
classification of leases as either operating
leases or finance leases and introduces a
single lessee accounting model whereby
all leases are accounted for as finance
leases, with some exemptions for short-
term and low-value leases. It also includes
an election which permits a lessee not
to separate non-lease components (e.g.
maintenance) from lease components
and instead capitalise both the lease cost
and associated non-lease cost.
The standard primarily affects the
accounting for the Group’s operating
leases. The application of IFRS 16 results in
the recognition of additional assets and
liabilities in the Consolidated Statement of
Financial Position and in the Consolidated
Income Statement it replaces the
straight-line operating lease expense with
a depreciation charge for the right of
use asset and an interest expense on the
lease liabilities.
The incremental borrowing rate is the rate
of interest that the lessee would expect to
incur on funds borrowed over a similar term
and securityto obtain a comparable value
to the right of use asset in the relevant
economic environment.The Group’s
weighted average incremental borrowing
rate pertaining to these leases is 3%.
Definition of a lease
Previously, the Group determined
at contract inception whether an
arrangement was or contained a lease
under IFRIC 4 Determining Whether
an Arrangement contains a Lease. The
Group now assesses whether a contract
is or contains a lease based on the new
definition of a lease. Under IFRS 16, a
contract is, or contains a lease if the
contract conveys a right to control the use
of an identified asset for a period of time
in exchange for consideration.
On transition to IFRS 16, the Group
elected to apply the practical expedient
to grandfather the assessment of which
transactions are leases. It applied IFRS
16 only to contracts that were previously
identified as leases. Contracts that were
not identified as leases under IAS 17 and
IFRIC 4 were not reassessed. Therefore,
the definition of a lease under IFRS 16 has
been applied only to contracts entered
into or changed on or after 1 January 2019.
Transition
The Group adopted the new
standard by applying the modified
retrospective approach.
At transition, for leases classified as
operating leases under IAS 17, lease
liabilities were measured at the present
value of the remaining lease payments,
discounted at the applicable incremental
borrowing rate as at 1 January 2019. All
right of use assets were measured at the
amount of the lease liability on adoption,
adjusted by the amount of any prepaid or
accrued interest payments.
Previously under IAS 17 operating lease
rentals were charged to the Income
Statement on a straight-line basis over
the term of the lease.
The Group availed of the recognition
exemption for short-term and low-value
leases and used hindsight when determining
the lease term if the contract contains
options to extend or terminate the lease.
The Group also elected not to separate non-
lease components from lease components
and instead capitalise both the lease cost
and associated non-lease cost.
The Group has also availed of the practical
expedient which allows for a single discount
rate to be applied to a portfolio of leases
with reasonably similar characteristics.
The Group had a small number of finance
leases under IAS 17. For these leases, the
carrying amount of the asset and liability
at 1 January 2019 were recognised at the
equivalent carrying amount under IAS 17
immediately before that date.
On 1 January 2019 €127.9m of leases were
recognised as liabilities on adoption of the
standard and €128.8m capitalised as right
of use assets. During 2019, depreciation
on the right of use assets was €30.0m
and associated lease rentals decreased by
€31.8m leading to an increase in operating
profit of €1.8m. The interest charge on
the associated leases was €3.8m and the
aggregate impact of IFRS 16 on profit
before tax was a decrease of €2.0m. The
adoption of IFRS 16 reduced the 2019
EPS by 1 cent. While IFRS 16 had no net
impact on cash and cash equivalents at
the end of 2019, it had an impact on the
cashflow statement in respect of profit,
depreciation and finance expense by
amounts outlined above, offset by the
payment of lease liabilities of €31.8m.
Further details outlining the impact on the
financial statements on transition to IFRS
16 is outlined in note 16.
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2019
Balance at 1 January 2019 23.7 95.6 0.7 (12.7) 1,196.3 1,303.6
Shares issued 0.1 - - - - 0.1
Repurchase of shares - - - (0.6) - (0.6)
Employee share based compensation - - - 1.5 13.1 14.6
Dividends paid - - - - (77.6) (77.6)
Transactions with owners 0.1 - - 0.9 (64.5) (63.5)
Profit for the year - - - - 28.6 28.6
Balance at 31 December 2019 23.8 95.6 0.7 (11.8) 1,160.4 1,268.7
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018
Balance at 1 January 2018 23.6 95.6 0.7 (14.0) 1,242.6 1,348.5
Shares issued 0.1 - - - - 0.1
Repurchase of shares - - - - - -
Employee share based compensation - - - 1.3 12.3 13.6
Dividends paid - - - - (68.3) (68.3)
Transactions with owners 0.1 - - 1.3 (56.0) (54.6)
Profit for the year - - - - 9.7 9.7
Balance at 31 December 2018 23.7 95.6 0.7 (12.7) 1,196.3 1,303.6
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2019

OPERATING ACTIVITIES
Profit for the year after tax 28.6 9.7
Net cash flow from operating activities 28.6 9.7
FINANCING ACTIVITIES
Change in receivables (13.3) 57.2
Change in payables 61.3 -
Repurchase of shares (0.6) -
Exercise or lapsing of share options 1.5 1.3
Proceeds from share issues 0.1 0.1
Dividends paid (77.6) (68.3)
Net cash flow from financing activities (28.6) (9.7)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 0.1 0.1
Net increase in cash and cash equivalents - -
CASH AND CASH EQUIVALENTS AT END OF YEAR 0.1 0.1
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued)
Measurement
The Group recognises right of use assets
representing its right to use the underlying
assets and lease liabilities representing
its obligation to make lease payments
at the lease commencement date. The
right of use assets are initially measured
at cost, and subsequently measured at
cost less accumulated depreciation and
impairment losses.
Lease liabilities are measured at the
present value of the future lease
payments, discounted at the Group’s
incremental borrowing rate. Subsequent
to the initial measurement, the lease
liabilities are increased by the interest cost
and reduced by lease payments made.
The right of use assets and lease liabilities
are remeasured when there are changes
in the assessment of whether an
extension option is reasonably certain to
be exercised or a termination option is
reasonably certain not to be exercised or
where there is a change in future lease
payments as a result of a change in an
index or rate.
The Group has applied judgement to
determine the lease term of contracts
that include termination and extension
options. If the Group is reasonably certain
to exercise such options, the relevant
amount of right of use assets and lease
liabilities are recognised. The Group has
also applied judgement in determining the
incremental borrowing rate, the basis of
which is set out above.
IFRIC 23 Uncertainty over income
tax treatment
IFRIC 23 is effective for accounting periods
beginning on or after 1 January 2019, and
the Group adopted IFRIC 23 with effect
from 1 January 2019. IFRIC 23 sets out how
to determine taxable profits and losses, tax
bases, unused tax losses, unused tax credits
and tax rates when there is uncertainty
over income tax treatments under IAS 12
Income Taxes. Where the Group considers it
is probable that an uncertain tax treatment
will not be accepted by a tax authority it
is measured using either the most likely
amount method or the expected value
method, as appropriate. The adoption
and application of IFRIC 23 did not have a
material impact on the Group.
The new standards, amendments to standards and interpretations are as follows:
Effective Date – periods
beginning on or after
IFRS 16: Leases (13 January 2016) 1 January 2019
IFRIC 23: Uncertainty over income tax treatment (7 June 2017) 1 January 2019
The following amended standards and interpretations do not have a significant impact on the Group’s consolidated financial statements:
Effective Date – periods
beginning on or after
Annual Improvements to IFRS Standards 2015–2017 Cycle –various standards 1 January 2019
Amendments to IAS 19: Plan amendment, curtailment or settlement 1 January 2019
Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures 1 January 2019
Amendments to IFRS 9: Prepayment Features with Negative Compensation 1 January 2019
Amendments to References to Conceptual Framework in IFRS Standards. 1 January 2020
Definition of Material (Amendments to IAS 1 and IAS 8) 1 January 2020
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) 1 January 2020
Basis of consolidation
The Group consolidated financial
statements incorporate the financial
statements of the Company and its
subsidiary undertakings.
Subsidiaries
Subsidiaries are entities controlled by
the Group. The Group controls an entity
when it is exposed to, or has the rights
to, variable returns from its involvement
with the entity and has the ability to
affect those returns through its power
over the entity.
Subsidiaries are included in the Group
financial statements from the date on
which control over the entity is obtained
and cease to be consolidated from the
date on which control is transferred out
of the Group.
Transactions eliminated
on consolidation
Intragroup transactions and balances,
and any unrealised gains arising from such
transactions, are eliminated in preparing
the consolidated financial statements.
Unrealised losses are eliminated in the
same manner as unrealised gains, but only
to the extent that there is no evidence
of impairment.
Segment reporting
The Group’s accounting policy for
identifying segments is based on internal
management reporting information
that is routinely reviewed by the Board of
Directors, which is the Chief Operating
Decision Maker (CODM) for the Group.
The measurement policies used for the
segment reporting under IFRS 8 are the
same as those used in the consolidated
financial statements. Segment results that
are reported to the CODM include items
directly attributable to a segment as well as
those that can be allocated on a reasonable
basis. Unallocated items comprise mainly
corporate assets, finance income and
expenses and tax assets and liabilities.
The Group has determined that it has five
operating segments: Insulated Panels,
Insulation Boards, Water & Energy,
Data & Flooring and Light & Air.
Revenue recognition
The Group uses the five-step model as
prescribed under IFRS 15 on the Group’s
revenue transactions. This includes
the identification of the contract,
identification of the performance
obligations under same, determination
of the transaction price, allocation of
the transaction price to performance
obligations and recognition of revenue.
Typically, individual performance
obligations are specifically called out in
the contract which allows for accurate
recognition of revenue as and when
performances are fulfilled.
1 STATEMENT OF ACCOUNTING POLICIES (continued)
The point of recognition arises when
the Group satisfies a performance
obligation by transferring control of a
promised good or service to the customer,
which could occur over time or at a
point in time. Invoicing occurs at the
point of final delivery of the product or
performance obligation, at which point
a right is established for unconditional
consideration as control passes to the
customer. Typically, payment terms are 30
days from the end of the month in which
the invoice is raised.
Research and Development
Expenditure on research and development
is recognised as an expense in the
period in which it is incurred. An asset is
recognised only when all the conditions
set out in IAS 38 Intangible Assets are met.
Business Combinations
Business combinations are accounted for
using the acquisition method as at the
date of acquisition.
In accordance with IFRS 3 Business
Combinations,the fair value of consideration
paid for a business combination is measured
as the aggregate of the fair values at the
date of exchange of assets given and
liabilities incurred or assumed in exchange for
control.The assets,liabilities and contingent
liabilities of the acquired entity are measured
at fair value as at the acquisition date.
When the initial accounting for a business
combination is determined,it is done so on
a provisional basis with any adjustments
to these provisional values made within
12 months of the acquisition date and are
effective as at the acquisition date.
To the extent that deferred consideration
is payable as part of the acquisition cost
and is payable after one year from the
acquisition date, the deferred consideration
is discounted at an appropriate interest
rate and, accordingly, carried at net
present value (amortised cost) in the
Group Statement of Financial Position.The
discount component is then unwound as an
interest charge in the Consolidated Income
Statement over the life of the obligation.
Where a business combination agreement
provides for an adjustment to the cost
of a business acquired contingent on
future events, other than put options
held by non-controlling interests, the
Group accrues the fair value of the
additional consideration payable as a
liability at acquisition date. This amount is
reassessed at each subsequent reporting
date with any adjustments recognised in
the Income Statement.
If the business combination is achieved
in stages, the fair value of the acquirer’s
previously held equity interest in the
acquiree is re-measured at the acquisition
date through the Income Statement.
Transaction costs are expensed to the
Income Statement as incurred.
Put options held by non-controlling
interest shares
Any contingent consideration is
measured at fair value at the date of
acquisition. Where a put option is held
by a non-controlling interest (“NCI”) in
a subsidiary undertaking, whereby that
party can require the Group to acquire
the NCI’s shareholding in the subsidiary
at a future date, but the NCI retain
present access to the results of the
subsidiary, the Group applies the present
access method of accounting to this
arrangement. The Group recognises a
contingent consideration liability at fair
value, being the Group’s estimate of the
amount required to settle that liability
and a corresponding reserve in equity. Any
subsequent remeasurements required due
to changes in fair value of the put liability
estimation are recognised in the Put
Option Reserve in equity.
Goodwill
Goodwill arises on business combinations
and represents the difference between
the fair value of the consideration and
the fair value of the Group’s share of the
identifiable net assets of a subsidiary at
the date of acquisition.
The Group measures goodwill at the
acquisition date as:
> the fair value of the consideration
transferred; plus
> the recognised amount of any
non-controlling interests in the
acquiree; plus
> if the business combination is
achieved in stages, the fair value of
the pre-existing equity interest in the
acquiree; less
> the net recognised amount (generally
fair value) of the identifiable assets
acquired and liabilities assumed.
Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses.
As at the acquisition date,any goodwill
acquired is allocated to each of the cash
generating units expected to benefit from the
combination’s synergies.The cash generating
units represent the lowest level within the
Group which generate largely independent
cash inflows and these units are not larger
than the operating segments (before
aggregation) determined in accordance with
IFRS 8 Operating Segments.
Goodwill is tested for impairment at the
same level as the goodwill is monitored
by management for internal reporting
purposes, which is at the individual cash
generating unit level.
Goodwill is subject to impairment testing
on an annual basis and at any time during
the year if an indicator of impairment
is considered to exist. The goodwill
impairment tests are undertaken at a
consistent time each year. Impairment is
determined by assessing the recoverable
amount of the cash generating unit
to which the goodwill relates. Where
the recoverable amount of the cash
generating unit is less than the carrying
amount, an impairment loss is recognised
in the Income Statement. Impairment
losses arising in respect of goodwill are not
reversed following recognition.
On disposal of a subsidiary,the attributable
amount of goodwill,not previouslywritten
off,is included in the calculation of the
profit or loss on disposal.
Intangible Assets
(other than goodwill)
Intangible assets separately acquired
are capitalised at cost. Intangible
assets acquired as part of a business
combination are capitalised at fair value
as at the date of acquisition.
Following initial recognition, intangible
assets, which have finite useful lives,
are carried at cost or initial fair value
less accumulated amortisation and
accumulated impairment losses.
The amortisation of intangible assets is
calculated to write off the book value of
intangible assets over their useful lives on
a straight-line basis on the assumption of
zero residual value. Amortisation charged
on these assets is recognised in the
Income Statement.
The carrying amount of intangible assets
is reviewed for indicators of impairment
at each reporting date and is subject
to impairment testing when events or
changes of circumstances indicate that the
carrying values may not be recoverable.
The estimated useful lives are as follows:
Customer relationships 2 - 6 years
Trademarks & Brands 2 - 12 years
Patents 8 years
Technological know how
and order backlogs 5 - 10 years
Amortisation methods, useful lives and
residual values are reviewed at each
reporting date and adjusted as necessary.


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Sustainability Report Financial Statements Other Information
Business & Strategic Report Directors' Report
Sustainability Report Other Information
Independent Auditor’s Report Financial Statements Notes to the Financial Statements
Financial Statements
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued)
Foreign currency
Functional and presentation currency
The individual financial statements of
each Group company are measured
and presented in the currency of the
primary economic environment in which
the company operates, the functional
currency. The Group financial statements
are presented in Euro, which is the
Company’s functional currency.
Transactions and balances
Transactions in foreign currencies are
translated into the functional currency
at the exchange rates at the date of the
transaction.Monetary assets and liabilities
denominated in foreign currencies are
translated to the functional currency at the
exchange rates at the reporting date.All
currency translation differences on monetary
assets and liabilities are taken to the Income
Statement,except when deferred in equity
as qualifying net investment hedges,
which is recognised in the Statement of
Comprehensive Income.
Goodwill and fair value adjustments arising
on the acquisition of a foreign entity
are initially translated at the exchange
rate at the date of acquisition and then
subsequently these assets and liabilities are
treated as part of a foreign entity and are
translated at the closing rate.
Exchange rates of material currencies used were as follows:
Average rate Closing rate
2019 2018 2019 2018
Euro =
Pound Sterling 0.877 0.885 0.852 0.898
US Dollar 1.120 1.181 1.121 1.144
Canadian Dollar 1.485 1.530 1.461 1.557
Australian Dollar 1.610 1.580 1.600 1.620
Czech Koruna 25.669 25.648 25.414 25.711
Polish Zloty 4.297 4.260 4.260 4.299
Hungarian Forint 325.31 318.78 330.52 321.02
Brazilian Real 4.415 4.307 4.512 4.435
Foreign operations
The Income Statement, Statement
of Financial Position and Cash Flow
Statement of Group companies that have
a functional currency different from that
of the Company are translated as follows:
> Assets and liabilities at each reporting
date are translated at the closing rate
at that reporting date.
> Results and cash flows are translated
at actual exchange rates for the year,
or an average rate where this is a
reasonable approximation.
All resulting exchange differences
are recognised in the Statement of
Comprehensive Income and accumulated
as a separate component of equity, the
Translation Reserve.
On disposal of a foreign operation, any
such cumulative retranslation differences,
previously recognised in equity, are
reclassified to the Income Statement as
part of gain or loss on disposal.
Inventories
Inventories are stated at the lower of cost
and net realisable value.
Cost is based on the first-in, first-out
principle and includes all expenditure
incurred in acquiring the inventories and
bringing them to their present location
and condition.
> Raw materials are valued at
the purchase price including
transport, handling costs and net of
trade discounts.
> Work in progress and finished goods
are carried at cost consisting of direct
materials, direct labour and directly
attributable production overheads
and other costs incurred in bringing
them to their existing location
and condition.
Net realisable value represents the
estimated selling price less costs to
completion and appropriate marketing,
selling and distribution costs.
A provision is made, where necessary,
in all inventory categories for obsolete,
slow-moving and defective items.
Income tax
Income tax in the Income Statement
represents the sum of current income
tax and deferred tax not recognised in
other comprehensive income or directly
in equity.
Current tax
Current tax represents the expected tax
payable or recoverable on the taxable
profit for the year using tax rates and laws
that have been enacted or substantively
enacted, at the reporting date and taking
into account any adjustments from
prior years. Liabilities for uncertain tax
treatments are recognised in accordance
with IFRIC 23 and are measured using
either the most likely amount method or
the expected value method - whichever
better predicts the resolution of
the uncertainty.
Deferred tax
Deferred tax is recognised on all
temporary differences at the reporting
date. Temporary differences are defined
as the difference between the tax bases
of assets and liabilities and their carrying
amounts in the consolidated financial
statements. Deferred tax assets and
liabilities are not subject to discounting
and are measured at the tax rates that
are expected to apply in the period in
which the asset is realised or the liability
is settled based on tax rates and tax laws
that have been enacted or substantively
enacted at the reporting date.
Deferred tax liabilities are recognised for
all taxable temporary differences (i.e.
differences that will result in taxable
amounts in future periods when the
carrying amount of the asset or liability is
recovered or settled).
Deferred tax assets are recognised in
respect of all deductible temporary
differences (i.e. differences that give
rise to amounts which are deductible in
determining taxable profits in future periods
when the carrying amount of the asset
or liability is recovered or settled), carry-
forward of unused tax credits and unused
tax losses to the extent that it is probable
that taxable profits will be available against
which to offset these items.
The carrying amounts of deferred tax
assets are subject to review at each
reporting date and reduced to the extent
that future taxable profits are considered
to be inadequate to allow all or part of
any deferred tax asset to be utilised.
1 STATEMENT OF ACCOUNTING POLICIES (continued)
Changes in deferred tax assets or liabilities
are recognised as a component of tax
income or expense in profit or loss,
except where they relate to items that
are recognised in other comprehensive
income or directly in equity, in which case
the related deferred tax is also recognised
in other comprehensive income or
equity, respectively.
Grants
Grants are initially recognised as deferred
income at their fair value when there is a
reasonable assurance that the grant will
be received, and all relevant conditions
have been complied with.
Capital grants received and receivable in
respect of property, plant and equipment
are treated as a reduction in the cost
of that asset and thereby amortised to
the Income Statement in line with the
underlying asset.
Revenue grants are recognised in
the Income Statement to offset the
related expenditure.
Property, Plant and Equipment
Property, plant and equipment is
measured at cost less accumulated
depreciation and accumulated
impairment losses.
Depreciation is provided on a straight line
basis at the rates stated below, which
are estimated to reduce each item of
property, plant and equipment to its
residual value by the end of its useful life:
Freehold
buildings
Freehold land is stated at cost and is
not depreciated.
The estimated useful lives and residual
values of property, plant and equipment
are determined by management at
the time the assets are acquired and
subsequently, re-assessed at each
reporting date. These lives are based on
historical experience with similar assets
across the Group.
In accordance with IAS 36 Impairment of
Assets, the carrying values of property,
plant and equipment are reviewed at
each reporting date to determine whether
there is any indication of impairment.
An impairment loss is recognised
whenever the carrying value of an asset
or its cash generating unit exceeds its
recoverable amount.
Impairment losses are recognised in
the Income Statement. Following the
recognition of an impairment loss, the
depreciation charge applicable to the
asset or cash generating unit is adjusted
to allocate the revised carrying amount,
net of any residual value, over the
remaining useful life.
Assets under construction are carried at
cost less any recognised impairment loss.
Depreciation of these assets commences
when the assets are ready for their
intended use.
Leases (Note 16)
Upon adoption of IFRS 16 the accounting
policy for the year ended 31 December
2019 is as follows:
The Group recognises right of use assets
representing its right to use the underlying
assets and lease liabilities representing
its obligation to make lease payments
at the lease commencement date. The
right of use assets are initially measured
at cost, and subsequently measured at
cost less accumulated depreciation and
impairment losses.
Depreciation is provided on a straight line
basis over the period of the lease, or useful
life if shorter.
Lease liabilities are measured at the
present value of the future lease
payments, discounted at the applicable
incremental borrowing rate. Subsequent
to the initial measurement, the lease
liabilities are increased by the interest cost
and reduced by lease payments made.
The right of use assets and lease
liabilities are remeasured when there are
changes in the assessment of whether
an extension option is reasonably
certain to be exercised or a termination
option is reasonably certain not to be
exercised or where there is a change in
future lease payments as a result of a
change in an index or rate. The Group
applies judgement when determining
the lease term where renewal and
termination options are contained in the
lease contract.
Prior to 1 January 2019 the policy was
as follows:
Leases are classified as finance leases
wherever substantially all of the risk and
rewards of ownership of the asset have
transferred to the lessee. All other leases
are classified as operating leases.
Assets held under finance leases are
capitalised at the inception of the lease
in the Statement of Financial Position at
the lower of its fair value and the present
value of the minimum lease payments
and are depreciated over their useful lives
with any impairment being recognised in
the Income Statement.
Retirement benefit obligations
The Group operates defined contribution
and defined benefit pensions schemes.
Defined contribution pension schemes
The costs arising on the Group’s defined
contribution schemes are recognised in
the Income Statement in the period in
which the related service is provided.
The Group has no legal or constructive
obligation to pay further contributions
in the event that these plans do
not hold sufficient assets to provide
retirement benefits.
Defined benefit pension schemes
The Group’s net obligation in respect
of defined benefit plans is calculated
separately for each plan by estimating the
amount of future benefit that employees
have earned in return for their service in
the current and prior periods, discounting
that amount and deducting the fair value
of any plan assets.
The calculation is performed annually by
a qualified actuary using the projected
unit credit method. When the calculation
results in a benefit to the Group, the
recognised asset is limited to the total of
any unrecognised past service costs and
the present value of economic benefits
available in the form of any future refunds
from the plan or reductions in future
contributions to the plan.
Remeasurements of the net defined
benefit liability or asset, which comprise
actuarial gains and losses, the return
on plan assets (excluding interest)
and the effect of the asset ceiling,
are recognised immediately in other
comprehensive income.
The Group determines the net interest
expense on the net defined benefit liability
or asset by applying the discount rate
used to measure the defined benefit
obligation at the beginning of the annual
period to the then net defined benefit
liability or asset, taking into account any
changes in the net defined benefit liability
or asset during the period as a result of
contributions and benefit payments.
Net interest expense and other expenses
related to defined benefit plans are
recognised in profit or loss.
When the benefits of a plan are changed
or when a plan is curtailed, the resulting
change in benefit that relates to past
service or the gain or loss on curtailment
is recognised immediately in profit or loss.
The Group recognises gains and losses on
the settlement of a defined benefit plan
when the settlement occurs.

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Financial Statements
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued)
Provisions
A provision is recognised in the Statement
of Financial Position when the Group has a
present constructive or legal obligation as
a result of a past event and it is probable
that an outflow of economic benefit will
be required to settle the obligation and
the amount of the obligation can be
estimated reliably.
A specific provision is created when a
claim has actually been made against
the Group or where there is a known
issue at a known customer’s site, both
relating to a product or service supplied
in the past. In addition, a risk-based
provision is created where future claims
are considered incurred but not reported.
The warranty provision is based on
historical warranty data and a weighting
of all possible outcomes against their
associated probabilities.
Specific provisions will generally be
aged as a current liability, reflecting the
assessment that a current liability exists
to replace or repair product sold on foot
of an accepted valid warranty issue.
Only where the liability is reasonably
certain not to be settled within the next
12 months, will a specific provision be
categorised as a long-term obligation.
Risk-based provisions will generally be
aged as a non-current liability, reflecting
the fact that no warranty claim has yet
been made by the customer.
Provisions which are not expected to give
rise to a cash outflow within 12 months of
the reporting date are, where material,
determined by discounting the expected
future cash flows. The unwinding of the
discount is recognised as a finance cost.
Dividends
Final dividends on ordinary shares are
recognised as a liability in the financial
statements only after they have been
approved at the Annual General Meeting
of the Company. Interim dividends on
ordinary shares are recognised when they
are paid.
Cash and cash equivalents
Cash and cash equivalents principally
comprise cash at bank and in hand and
short term deposits with an original
maturity of three months or less.
Derivative financial instruments
Derivative financial instruments,
principally interest rate and currency
swaps, are used to hedge the Group’s
foreign exchange and interest rate
risk exposures.
Derivative financial instruments are
recognised initially at fair value and
thereafter are subsequently remeasured
at their fair value. Fair value is the
amount for which an asset could be
exchanged, or a liability settled, between
knowledgeable willing parties in an arm’s
length transaction. The fair value of these
instruments is the estimated amount
that the Group would receive or pay to
terminate the swap at the reporting
date, taking into account current
interest and currency exchange rates
and the current creditworthiness of the
swap counterparties.
The Group designates all of its derivatives
in one or more of the following types
of relationships:
i. Fair value hedge: Hedges the exposure
to movements in fair value of
recognised assets or liabilities that are
attributable to hedged risks.
ii. Cash flow hedge: Hedges the Group’s
exposures to fluctuations in future
cash flow derived from a particular
risk associated with recognised assets
or liabilities or forecast transactions.
iii. Net investment hedge: Hedges the
exchange rate fluctuations of a net
investment in a foreign operation.
At inception of the transaction, the Group
documents the relationship between
the hedging instruments and hedged
items, including the risk management
objectives and strategy in undertaking
the hedge transactions. The Group also
documents its assessment, both at
inception and on an ongoing basis, as to
whether the derivatives that are used in
hedging transactions are highly effective
in offsetting changes in fair values or cash
flows of hedged items.
Fair value hedge
Any gain or loss resulting from the re-
measurement of the hedging instrument
to fair value is reported in the Income
Statement, together with any changes
in the fair value of the hedged asset
or liability that are attributable to the
hedged risk. The gains or losses of a
hedging instrument that are in hedge
relationships with borrowings are included
within Finance Income or Finance Expense
in the Income Statement. In the case
of the related hedged borrowings, any
gain or loss on the hedged item which is
attributable to the hedged risk is adjusted
against the carrying amount of the
hedged item and is also included within
Finance Income or Finance Expense in the
Income Statement.
If the hedge no longer meets the criteria
for hedge accounting, the adjustment to
the carrying amount of the hedged item is
amortised on an effective interest basis to
the Income Statement with the objective
of achieving full amortisation by maturity
of the hedged item.
Cash flow hedge
The effective part of any gain or loss
on the derivative financial instrument
is recognised in other comprehensive
income and presented in the Cash
Flow Hedge Reserve in equity with the
ineffective portion being recognised
within Finance Income or Finance Expense
in the Income Statement. If a hedge of
a forecasted transaction subsequently
results in the recognition of a financial
asset or a financial liability, the associated
gains and losses that were recognised
directly in other comprehensive income
are reclassified into profit or loss in the
same period or periods during which the
asset acquired or liability assumed affects
profit or loss. For cash flow hedges, other
than those covered by the preceding
statements, the associated cumulative
gain or loss is removed from other
comprehensive income and recognised
in the Income Statement in the same
period or periods during which the hedged
forecast transaction affects profit or
loss. The ineffective part of any gain or
loss is recognised immediately in the
Income Statement.
Hedge accounting is discontinued when
a hedging instrument expires or is sold,
terminated or exercised, or no longer
qualifies for hedge accounting. The
cumulative gain or loss at that point
remains in other comprehensive income
and is recognised when the transaction
occurs. If a hedged transaction is no
longer expected to occur, the net
cumulative gain or loss recognised in other
comprehensive income is transferred to
the Income Statement in the period.
Net investment hedge
Any gain or loss on the hedging
instrument relating to the effective
portion of the hedge is recognised in other
comprehensive income and presented in
the Translation Reserve in equity. The gain
or loss relating to the ineffective portion is
recognised immediately in either Finance
Income or Finance Expense in the Income
Statement. Cumulative gains or losses
remain in equity until disposal of the net
investment in the foreign operation at
which point the related differences are
reclassified to the Income Statement as
part of the overall gain or loss on sale.
1 STATEMENT OF ACCOUNTING POLICIES (continued)
Financial Assets
On initial recognition, a financial asset is
classified as measured at amortised cost
or fair value with any movement being
reflected through other comprehensive
income or the income statement.
On initial recognition of an equity
investment that is not held for trading,
the Group may irrevocably elect to present
subsequent changes in the investment’s
fair value in other comprehensive income.
This election is made on an investment-
by-investment basis.
The Group applies the simplified approach
for expected credit losses (ECL) under
IFRS 9 Financial Instruments, which
requires expected lifetime losses to
be recognised from initial recognition
of receivables. Trade receivables are
considered for impairment on a case by
case basis, when they are past due or
when objective evidence is received that
a specific counterparty may default.
Trade receivables are written-off when
there is no reasonable expectation of
recovery. In the event recoveries are made,
these are recognised in the Consolidated
Income Statement.
Financial Liabilities
Financial liabilities held for trading are
measured at fair value through the profit
and loss, and all other financial liabilities
are measured at amortised cost unless
the fair value option is applied.
Finance Income
Finance income comprises interest income
on funds invested and any gains on
hedging instruments that are recognised
in the Income Statement. Interest income
is recognised as it accrues using the
effective interest rate method.
Finance Expense
Finance expense comprises interest
payable on borrowings calculated using
the effective interest rate method,
fair value gains and losses on hedging
instruments that are recognised in the
Income Statement, the net finance cost
of the Group’s defined benefit pension
scheme, lease interest and the discount
component of the deferred consideration
which is unwound as an interest charge
in the Income Statement over the life of
the obligation.
Borrowing costs
Borrowing costs directly attributable to
qualifying assets, as defined in IAS 23
Borrowing costs, are capitalised during
the period of time that is necessary to
complete and prepare the asset for its
intended use. Other borrowing costs are
expensed to the Income Statement in the
period in which they are incurred.
Share Based Payment Transactions
The Group grants equity settled share
based payments to employees through
the Performance Share Plan and the
Deferred Bonus Plan.
The fair value of these equity settled
transactions is determined at grant
date and is recognised as an employee
expense in the Income Statement, with
the corresponding increase in equity,
on a straight line basis over the vesting
period. The fair value at the grant date
is determined using a combination of
the Monte Carlo simulation technique
and a Black Scholes model, excluding the
impact of any non-market conditions.
Non-market vesting conditions are
included in the assumptions about the
number of options that are expected to
vest. At each reporting date, the Group
revises its estimates of the number of
options that are likely to vest as a result of
non-market conditions. Any adjustment
from this revision is recognised in the
Income Statement with a corresponding
adjustment to equity.
Where the share based payments give
rise to the issue of new share capital, the
proceeds received by the Company are
credited to share capital (nominal value)
and share premium (where applicable)
when the share entitlements are exercised.
Where the share based payments give
rise to the re-issue of shares from treasury
shares, the proceeds of issue are credited
to share premium.
The Group does not operate any cash-
settled share based payment schemes or
share based payment transactions with
cash alternatives as defined in IFRS 2.
Treasury Shares
Where the Company purchases its own
equity share capital, the consideration
paid is deducted from total shareholders’
equity and classified as treasury shares
until such shares are cancelled or reissued.
Where such shares are subsequently sold
or reissued, any consideration received
is included in share premium account.
No gains or losses are recognised on the
purchase, sale, cancellation or issue of
treasury shares.
Non-controlling interest
Non-controlling interests represent the
portion of the equity of a subsidiary not
attributable either directly or indirectly to
the parent company and are presented
separately in the Income Statement and
within equity in the Statement of Financial
Position, distinguished from shareholders’
equity attributable to owners of the
parent company.
Accounting Estimates
and Judgements
In the process of applying the Group’s
accounting policies, as set out on pages
108 to 116, management are required
to make estimates and judgements
that could materially affect the Group’s
reported results or net asset position.
Notwithstanding that the areas below
represent estimation and judgement
at the end of the reporting period, the
directors are satisfied that none of these
areas have a significant risk of resulting
in a material adjustment to the carrying
amounts of assets and liabilities within
the next financial year.
The areas where key estimates and
judgements were made by management
and are material to the Group’s reported
results or net asset position, are
as following:
Impairment (Note 9)
The Group is required to review assets for
objective evidence of impairment.
It does this on the basis of a review of the
budget and rolling 5 year forecasts (4 year
strategic plan, as approved by the Board,
plus year 5 forecasted by management),
which by their nature are based on a
series of assumptions and estimates.
The Group has performed impairment
tests on those cash generating units
which contain goodwill, and on any assets
where there are indicators of impairment.
The key assumptions associated with
these reviews are detailed in Note 9. This is
an area of estimation and judgement.
Guarantees & warranties (Note 20)
Certain products carry formal guarantees
of satisfactory functional and aesthetic
performance of varying periods following
their purchase. Local management
evaluate the constructive or legal
obligation arising from customer feedback
and assess the requirement to provide for
any probable outflow of economic benefit
arising from a settlement. This is an area
of estimation and judgement.


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Financial Statements
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued)
Recoverability of trade receivables
(Note 14)
The Group provides credit to customers
and as a result there is an associated risk
that the customer may not be able to pay
outstanding balances. Trade receivables
are considered for impairment on a case
by case basis, when they are past due
at the reporting date or when objective
evidence is received that a specific
counterparty may default.
Under IFRS 9 the Group uses an allowance
matrix to measure Expected Credit Loss
(ECL) of trade receivables from customers.
Loss rates are calculated using a “roll
rate” method based on the probability
of a receivable progressing through
successive chains of non-payment to
write-off. The rates are calculated at a
business unit level which reflects the risks
associated with geographic region, age,
mix of customer relationship and type
of product purchased. This is an area
of estimation.
Valuation of inventory (Note 13)
Inventories are measured at the lower of
cost and net realisable value. The Group’s
policy is to hold inventories at original
cost and create an inventory provision
where evidence exists that indicates
net realisable value is below cost for a
particular item of inventory. Damaged,
slow-moving or obsolete inventory are
typical examples of such evidence. This is
an area of estimation.
Leases (Note 16)
The Group has applied judgement to
determine the lease term of contracts
that include termination and extension
options. If the Group is reasonably certain
to exercise such options, the relevant
amount of right of use assets and lease
liabilities are recognised. The Group has
also applied judgement in determining the
incremental borrowing rates.
Business Combinations (Note 22)
Business combinations are accounted
for using the acquisition method which
requires that the assets and liabilities
assumed are recorded at their respective
fair values at the date of acquisition. The
application of this method requires certain
estimates and assumptions relating, in
particular, to the determination of the fair
values of the acquired assets and liabilities
assumed at the date of acquisition.
For intangible assets acquired, the Group
bases valuations on expected future cash
flows. This method employs a discounted
cash flow analysis using the present value
of the estimated cash flows expected to
be generated from these intangible assets
using appropriate discount rates and
revenue forecasts. The period of expected
cash flows is based on the expected useful
life of the intangible asset acquired.
Measurement of deferred contingent
consideration and put option liabilities
related to business combinations require
assumptions to be made regarding
profit forecasts and discount rates used
to arrive at the net present value of the
potential obligations. The Group has
considered all available information
in arriving at the estimate of liabilities
associated with deferred contingent
consideration obligations. This is an area
of estimation and judgement.
Income taxes (Note 7)
The Group is subject to income tax in
numerous jurisdictions.Significant
judgement is required in determining the
worldwide provision for income taxes.
There are manytransactions for which the
ultimate tax determination is uncertain.
The Group recognises liabilities based on
estimates of whether additional taxes
will be due.Once it has been concluded
that a liabilityneeds to be recognised,the
liabilityis measured based on the tax laws
that have been enacted or substantially
enacted at the end of the reporting period.
The amount shown for current taxation
includes an estimate for uncertain tax
treatments where the group considers it
probable that uncertain tax treatments
will not be accepted by tax authorities
and the estimate is measured using either
the most likely amount method or the
expected value method as appropriate,
prescribed by IFRIC 23.Where the final tax
outcome of these matters is different from
the amounts that were initiallyestimated,
such differences will impact the income tax
and deferred tax provisions in the period in
which such determination is made.
Deferred tax assets are recognised
to the extent that it is probable that
future taxable profit will be available
against which the unused tax losses
and unused tax credits can be utilised.
The Group estimates the most probable
amount of future taxable profits, using
assumptions consistent with those
employed in impairment calculations,
and taking into consideration applicable
tax legislation in the relevant jurisdiction.
These calculations also require the use
of estimates.
Deferred Contingent Consideration
(Note 18)
Measurement of put option liabilities
require assumptions to be made regarding
profit forecasts and discount rates used
to arrive at the net present value of the
potential obligations. The Group has
considered all available information
in arriving at the estimate of liabilities
associated with put option obligations.
This is an area of estimation.
2 SEGMENT REPORTING
In identifying the Group’s operating segments, management based its decision on the product supplied by each segment and the
fact that each segment is managed and reported separately to the Chief Operating Decision Maker. These operating segments are
monitored and strategic decisions are made on the basis of segment operating results.
Operating segments
The Group has the following five operating segments:
Insulated Panels Manufacture of insulated panels, structural framing and metal facades.
Insulation Boards Manufacture of rigid insulation boards, building services insulation and engineered timber systems.
Light & Air Manufacture of daylighting, smoke management and ventilation systems.
Water & Energy Manufacture of energy and water solutions and all related service activities.
Data & Flooring Manufacture of data centre storage solutions and raised access floors.
Analysis by class of business
Segment revenue and disaggregation of revenue
Insulated
Panels
€m
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
€m
Data &
Flooring
€m
Total
€m
Total revenue – 2019 3,031.9 876.9 327.7 208.1 214.5 4,659.1
Total revenue – 2018 2,823.1 864.1 291.8 202.9 190.6 4,372.5
Disaggregation of revenue 2019
Point of Time 3,025.2 834.4 202.3 207.4 186.1 4,455.4
Over Time & Contract 6.7 42.5 125.4 0.7 28.4 203.7
3,031.9 876.9 327.7 208.1 214.5 4,659.1
Disaggregation of revenue 2018
Point of Time 2,816.8 831.8 190.4 201.6 166.2 4,206.8
Over Time & Contract 6.3 32.3 101.4 1.3 24.4 165.7
2,823.1 864.1 291.8 202.9 190.6 4,372.5
The disaggregation of revenue by geography is set out in more detail on page 118.
The segments specified above capture the major product lines relevant to the Group.
The combination of the disaggregation of revenue by product group, geography and the timing of revenue recognition capture the
key categories of disclosure with respect to revenue. Typically, individual performance obligations are specifically called out in the
contract which allow for accurate recognition of revenue as and when performances are fulfilled. Given the nature of the Group’s
product set, customer returns are not a significant feature of our business model. No further disclosures are required with respect to
disaggregation of revenue other than what has been presented in this note.
Inter-segment transfers are carried out at arm’s length prices and using an appropriate transfer pricing methodology. As inter-
segment revenue is not material, it is not subject to separate disclosure in the above analysis. For the purposes of the segmental
analysis, corporate overheads have been allocated to each division based on their respective revenue for the year.
Segment result (profit before net finance expense)
Insulated
Panels
€m
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
€m
Data &
Flooring
€m
Total
2019
€m
Total
2018
€m
Trading profit –2019 316.1 117.1 25.2 14.2 24.5 497.1
Intangible amortisation (13.1) (4.9) (2.9) (0.9) (0.1) (21.9)
Operating profit –2019 303.0 112.2 22.3 13.3 24.4 475.2
Trading profit –2018 281.8 105.1 21.5 14.2 22.6 445.2
Intangible amortisation (12.2) (4.4) (4.4) (1.2) - (22.2)
Operating profit - 2018 269.6 100.7 17.1 13.0 22.6 423.0
Net finance expense (20.8) (18.1)
Profit for the year before tax 454.4 404.9
Income tax expense (76.6) (69.1)
Net profit for the year 377.8 335.8


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
2 SEGMENT REPORTING (continued)
The Group has a presence in over 90 countries worldwide. The revenues from external customers and non-current assets (as defined
in IFRS 8) attributable to the country of domicile and all foreign countries or regions of operation are as set out above and specific
regions are highlighted separately on the basis of materiality.
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8. The
individual entities within the Group each have a large number of customers spread across various activities, end-uses and geographies.
3 EMPLOYEES
a) Employee numbers
The average number of persons employed by the Group in the financial year was:
2019
Number
2018
Number
Production 9,046 8,235
Sales and distribution 2,895 2,623
Management and administration 2
b) Employee costs, including executive directors

Wages and salaries 651.2 579.5
Social welfare costs 78.0 68.9
Pension costs - defined contribution (note 31) 20.1 15.5
Share based payments and awards 13.1 12.3
762.4 676.2
Actuarial losses/(gains) recognised in other comprehensive income 0.2 (0.9)
762.6 675.3
c) Employee share based compensation
The Group currently operates a number of equity settled share based payment schemes; two Performance Share Plans (PSP)
and a Deferred Bonus Plan, which was introduced in 2015. The details of these schemes are provided in the Report of the
Remuneration Committee.
Performance Share Plan (PSP)
Number of PSP Options
2019 2018
Outstanding at 1 January 2,149,827 2,498,209
Granted 539,988 552,325
Forfeited (76,361) (65,266)
Lapsed (10,781) (6,636)
Exercised (649,562) (828,805)
Outstanding at 31 December 1,953,111 2,149,827
Of which, exercisable 399,257 478,945
The Group recognised a PSP expense of €12.9m (2018: €11.7m) in the Income Statement during the year. All PSP options are
exercisable at €0.13 per share. For PSP options that were exercised during the year the average share price at the date of exercise was
€44.99 (2018: €38.96). The weighted average contractual life of share options outstanding at 31 December 2019 is 2.6 years (2018:
3.5 years). The weighted average exercise price during the period was €0.13 (2018: €0.13).
The fair values of options granted under the PSP scheme during the current and prior year were determined using the Black Scholes
Model or the Monte Carlo Pricing Model as appropriate. The key assumptions used in the model were as follows:
Assets –2019 2,495.9 832.2 348.0 191.8 188.2 4,056.1
Assets –2018 2,231.7 782.2 331.2 180.3 166.3 3,691.7
Derivative financial instruments 27.3 27.6
Cash and cash equivalents 190.9 294.5
Deferred tax asset 14.1 15.6
Total assets as reported in the Consolidated Statement of Financial Position 4,288.4 4,029.4
Liabilities –2019 (831.4) (194.4) (80.2) (64.2) (41.5) (1,211.7)
Liabilities –2018 (755.0) (179.2) (73.2) (58.2) (35.1) (1,100.7)
Interest bearing loans and borrowings (current and non-current) (851.4) (1,020.2)
Derivative financial instruments (current and non-current) (0.1) -
Income tax liabilities (current and deferred) (104.8) (119.6)
Total liabilities as reported in the Consolidated Statement of Financial Position (2,168.0) (2,240.5)
Other segment information
Insulated
Capital investment –2019 * 135.7 36.8 11.8 4.5 4.0 192.8
Capital investment –2018 * 160.8 87.9 22.7 7.1 2.8 281.3
Depreciation included in segment result –2019 (70.9) (24.2) (8.3) (6.1) (5.0) (114.5)
Depreciation included in segment result –2018 (49.8) (15.9) (4.8) (2.4) (3.1) (76.0)
Non-cash items included in segment result –2019 (7.6) (2.7) (0.7) (0.8) (1.3) (13.1)
Non-cash items included in segment result –2018 (7.4) (2.5) (0.5) (0.8) (1.1) (12.3)
* Capital investment also includes fair value of property, plant and equipment and intangible assets acquired in business combinations.
Analysis of segmental data by geography
Republic of
Income Statement Items
Revenue –2019 176.0 891.8 2,286.7 990.9 313.7 4,659.1
Revenue –2018 156.0 938.2 2,092.3 887.6 298.4 4,372.5
Statement of Financial Position Items
Non-current assets –2019 * 64.0 411.4 1,415.8 605.4 207.7 2,704.3
Non-current assets –2018 * 52.7 375.2 1,227.0 524.5 188.8 2,368.2
Other segmental information
Capital investment –2019 15.2 18.2 106.3 49.1 4.0 192.8
Capital investment –2018 6.0 23.9 204.8 27.8 18.8 281.3
* Total non-current assets excluding derivative financial instruments and deferred tax assets.


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3 EMPLOYEES (continued)
2019 Awards 2018 Awards
Share price at grant date €38.80 €35.55
Exercise price per share €0.13 €0.13
Expected volatility 30% 26%
Expected dividend yield 1.3% 1.2%
Risk-free rate (0.07%) 0.08%
Expected life 3 years 3 years
The resulting weighted average fair value of options granted in the year was €29.67 (2018: €26.21).
As set out in the Report of the Remuneration Committee, the number of options that will ultimately vest is contingent on market
conditions such as Total Shareholder Return and non market conditions such as the Earnings Per Share of the Group. Market
conditions were taken into account in determining the above fair value, and non market conditions were considered when estimating
the number of shares that will eventually vest. Expected volatility was determined by calculating the historical volatility of the
Group and peer company share prices over the previous 3 years. The Report of the Remuneration Committee sets out the current
companies within the peer group.
Deferred Bonus Plan
As set out in the Report of the Remuneration Committee, the Deferred Bonus Plan (DBP) is intended to reward incremental
performance over and above the growth targeted by the annual performance related bonus. Any DBP bonus earned for such
incremental performance is satisfied by the payment of deferred share awards. These shares are held for the benefit of the individual
participants for two years without any additional performance conditions. These shares vest after two years but are forfeited if the
participant leaves the Group within that period.
During the year, 15,718 (2018: Nil) were granted under the DBP and 49,924 (2018: 50,607) awards were exercised. 15,718 awards
remain outstanding at 31 December 2019. A charge of €0.2m was recognised in the Income Statement for 2019 (2018: €0.6m).
4 FINANCE EXPENSE AND FINANCE INCOME

Finance expense
Lease interest 3.8 -
Deferred contingent consideration fair value movement 0.1 0.3
Bank loans 2.4 2.7
Private placement loan notes 17.2 16.7
Fair value movement on derivative financial instrument 2.6 (3.1)
Fair value movement on private placement debt (2.5) 2.5
Other interest 0.1 0.4
23.7 19.5
Finance income
Interest earned (2.9) (1.4)
Net finance cost 20.8 18.1
No costs were reclassified from other comprehensive income to profit during the year (2018: €nil).
5 PROFIT FOR THE YEAR BEFORE INCOME TAX

The profit before tax for the year is stated after charging/(crediting):
Distribution expenses 224.6 202.1
Product development costs (total, including payroll) 31.9 30.5
Depreciation 114.5 76.0
Amortisation of intangible assets 21.9 22.2
Foreign exchange net gains 0.7 (1.7)
Profit on sale of property, plant and equipment (3.3) (4.9)
5 PROFIT FOR THE YEAR BEFORE INCOME TAX (continued)
Analysis of total auditor’s remuneration for audit services
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7 INCOME TAX EXPENSE (continued)
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of
the Group:

Profit for the year 454.4 404.9
Applicable notional tax charge (12.5%) 56.8 50.6
Expenses not deductible for tax purposes 9.0 5.1
Net effect of differing tax rates 15.3 16.3
Utilisation of unprovided deferred tax assets (1.5) (0.8)
Other items (3.0) (2.1)
Total income tax expense 76.6 69.1
The total tax charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which
the Group operates. No significant change is expected to the standard rate of corporation tax in the Republic of Ireland which is
currently 12.5%.
The methodology used to determine the recognition and measurement of uncertain tax positions is set out in Note 1 ‘Statement of
Accounting Policies’.
The total value of deductible temporary differences which have not been recognised is €29.7m (2018: €31.4m) consisting mainly of
tax losses forward. €1.3m of the losses expire within 10 years while all other losses may be carried forward indefinitely.
No provision has been made for tax in respect of temporary differences arising from unremitted earnings of foreign operations
as there is no commitment to remit such earnings and no current plans to do so. Deferred tax liabilities of €10.9m (2018: €8.9m)
have not been recognised for withholding tax that would be payable on unremitted earnings of €219.6m (2018: €177.2m) in
certain subsidiaries.
8 EARNINGS PER SHARE
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders 369.4 330.9
NWeighted average number of ordinary shares for the calculation of basic earnings per share 180,586 179,840
Dilutive effect of share options 1,489 1,696
Weighted average number of ordinary shares for the calculation of diluted earnings per share 182,075 181,536
2019
€ cent
2018
€ cent
Basic earnings per share 204.6 184.0
Diluted earnings per share 202.9 182.3
Adjusted basic earnings per share 215.0 193.5
Adjusted diluted earnings per share 213.2 191.7
Adjusted basic earnings reflects the profit attributable to ordinary shareholders after eliminating the impact of the Group’s
intangible amortisation charge, net of tax.
Adjusted diluted earnings reflects the profit attributable to ordinary shareholders after eliminating the impact of the Group’s
intangible amortisation charge, net of tax and the dilutive effect of share options. Dilution is attributable to the weighted average
number of share options outstanding at the end of the reporting period.
The number of options which are anti-dilutive and have therefore not been included in the above calculations is nil (2018: nil).
9 GOODWILL
At 1 January 1,391.0 1,095.7
Additions relating to acquisitions (Note 22) 92.5 296.8
Net exchange movement 23.4 (1.5)
Carrying amount 31 December 1,506.9 1,391.0
At 31 December
Cost 1,574.6 1,458.7
Accumulated impairment losses (67.7) (67.7)
Carrying amount 1,506.9 1,391.0
Cash generating units
Goodwill acquired through business combinations is allocated, at acquisition, to CGUs that are expected to benefit from
synergies in that combination. The CGUs are the lowest level within the Group at which the associated goodwill is monitored for
internal management reporting purposes and are not larger than the operating segments determined in accordance with IFRS 8
Operating Segments.
A total of 11 (2018: 11) CGUs have been identified and these are analysed between the five business segments in the Group as set out
below. Assets and liabilities have been assigned to the CGUs on a reasonable and consistent basis.
Cash generating units Goodwill (€m)
2019 2018 2019 2018
Insulated Panels 6 6 918.3 827.2
Insulation Boards 1 1 235.7 232.5
Light & Air 1 1 178.0 174.2
Water & Energy 1 1 83.8 78.7
Data & Flooring 2 2 91.1 78.4
Total 11 11 1,506.9 1,391.0
Significant goodwill amounts
Management has assessed that, in line with IAS 36 Impairment of Assets, there are 5 CGUs that are individually significant (greater
than 10% of total goodwill) that require additional disclosure and are as follows:
Panels
North America
Panels
Western Europe
Panels
The goodwill allocated to these 5 CGUs accounts for 82% of the total carrying amount of €1,506.9m. The remaining goodwill balance
of €271.0m (2018: €400.1m) is allocated across the other 6 CGUs (2018: 7 CGUs), none of which are individually significant.
None of the individually significant CGUs are included in the “Sensitivity analysis” section as it is not considered reasonably possible
that there would be a change in the key assumptions such that the carrying amount would exceed value-in-use. Consequently, no
further disclosures have been provided for these CGUs.


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9 GOODWILL (continued)
Impairment testing
Goodwill acquired through business combinations has been allocated to the above CGUs for the purpose of impairment testing.
Impairment of goodwill occurs when the carrying value of the CGU is greater than the present value of the cash that it is expected
to generate (i.e. the recoverable amount). The Group reviews the carrying value of each CGU at least annually or more frequently if
there is an indication that a CGU may be impaired.
The recoverable amount of each CGU is determined from value-in-use calculations. The forecasts used in these calculations are
based on a 4 year financial plan approved by the Board of Directors, plus year 5 as forecasted by management, and specifically
excludes any future acquisition activity. They include assumptions regarding future organic growth with cash flows after year 5
assuming to continue in perpetuity at a general growth rate of 2% (Panels LATAM 4%), reflecting the relevant CGU inflation, but
no other growth. The use of cash flows in perpetuity is considered appropriate in light of the Group’s established history of earnings
growth and cash flow generation, its strong financial position and the nature of the industry in which the Group operates.
The value in use calculation represents the present value of the future cash flows, including the terminal value, discounted at a
rate appropriate to each CGU. The real pre-tax discount rates used range from 6.5% to 10.2% (2018: 8.0% to 12.5%). These rates
are based on the Group’s estimated weighted average cost of capital, adjusted for risk, and are consistent with external sources
of information.
The cash flows and the key assumptions used in the value in use calculations are determined based on the historical performance
of the Group, its strong current financial position as well as management’s knowledge and expectation of future trends in the
industry. Expected future cash flows are, however, inherently uncertain and are therefore liable to material change over time. The key
assumptions used in the value in use calculations are subjective and include projected EBITDA margins, net cash flows, discount rates
used and the duration of the discounted cash flow model.
Sensitivity analysis
Sensitivity analysis was performed by adjusting cash flows, the discount rate and the average operating margin of each division by
over 25% and by reducing the long-term growth rate to zero. Each test resulted in a positive recoverable amount for each CGU under
each approach. Management believes, therefore, that any reasonable change in any of the key assumptions would not cause the
carrying value of goodwill to exceed the recoverable amount, thereby giving rise to an impairment.
10 OTHER INTANGIBLE ASSETS
Customer
Cost 583.7 1,245.4 36.3 1,865.4
Accumulated depreciation and impairment charges (182.7) (809.2) (23.0) (1,014.9)
Net carrying amount 401.0 436.2 13.3 850.5
At 1 January 2018, net carrying amount 337.5 355.3 10.5 703.3
Acquisitions through business combinations (Note 22) 47.8 44.9 1.0 93.7
Additions 34.9 102.8 6.6 144.3
Disposals (4.6) (2.8) (0.6) (8.0)
Reclassification (0.7) - 0.7 -
Depreciation charge for year (12.7) (58.5) (4.8) (76.0)
Impairment charge for year (0.1) (5.1) - (5.2)
Effect of movement in exchange rates (1.1) (0.4) (0.1) (1.6)
At 31 December 2018, net carrying amount 401.0 436.2 13.3 850.5
Included within the cost of land and buildings and plant, machinery and other equipment are assets in the course of construction to
the value of €2.3m and €66.2m respectively (2018: €21.6m and €66.7m). These assets have not yet been depreciated.
The Group has no material investment properties and hence no property assets are held at fair value.
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The directors consider that the carrying amount of trade and other payables approximates to their fair value.

Company
Current
Amounts owed to group undertakings 61.3 -
Payables 0.2 0.2
61.5 0.2
The amounts due to group undertakings are unsecured, interest free and are repayable on demand.
16 LEASES
A new accounting standard, IFRS 16 Leases, was adopted with effect from 1 January 2019. The standard requires leases which were
previously treated as operating leases to be recognised as a lease liability with the associated asset capitalised and treated as a right
of use asset. On 1 January 2019 €127.9m of leases were recognised as liabilities on adoption of the standard and €128.8m capitalised
as right of use assets. During 2019 depreciation on the right of use assets was €30.0m and associated lease rental charge decreased
by €31.8m leading to an increase in operating profit of €1.8m. The interest charge on the associated leases was €3.8m and the
aggregate impact of IFRS 16 on profit before tax was a decrease of €2.0m.
€m
Cash and cash equivalents 190.9 294.5
Derivative financial instruments 27.3 27.4
Current borrowings (3.1) (53.2)
Non-current borrowings (848.3) (967.0)
Deferred consideration - (30.0)
Total Net Debt (633.2) (728.3)
The Group’s core funding is provided by five private placement loan notes; one USD private placement totalling $200m matures in
August 2021, and four EUR private placements totalling €662.5m which will mature in tranches between March 2021 and January
2028. The notes have a weighted average maturity of 4.5 years.
The Group also has two revolving credit facilities. The €300m facility matures in June 2022 and the €451m facility also matures in
June 2022. No amount was drawn on either of the facilities as at 31 December 2019. The Group had no committed bilateral bank
facilities at year end, however, a green loan of €50m had been agreed but was undrawn.
More details of the Group’s loans and borrowings are set out in Note 19.
Net debt, which is an Alternative Performance Measure, is stated net of interest rate and currency hedges which relate to hedges of
debt. Foreign currency derivative assets of €nil (2018: €0.2m) and foreign currency derivative liabilities of €0.1m (2018: €nil) which are
used for transactional hedging are not included in the definition of net debt. Lease liabilities recognised due to the implementation of
IFRS 16 and deferred contingent consideration have also been excluded from the calculation of net debt.
18 DEFERRED CONSIDERATION

At 1 January 196.1 117.5
Deferred consideration arising on acquisitions (note 22) - 30.0
Deferred contingent consideration arising on acquisitions (note 22) 2.0 1.4
Movement in deferred contingent consideration arising from fair value adjustment (0.5) 1.1
Put liability arising on current year acquisitions (note 22) 26.7 24.5
Movement in put liability arising from fair value adjustment 22.7 35.4
Amounts paid
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18 DEFERRED CONSIDERATION (continued)
For each acquisition for which deferred contingent consideration has been provided, an annual review takes place to evaluate if the
payment conditions are likely to be met.
During the year the Group paid €30m of deferred consideration relating to the Synthesia business which was acquired in 2018 (2018:
€nil). In addition, the Group paid €29.7m of deferred contingent consideration relating to the Isoeste business which was acquired in
2017 (2018: €nil).
During the prior year the Group paid €3.1m of deferred contingent consideration relating to the PAL business which was acquired
in 2014.
The deferred contingent consideration arising on current year acquisitions relates to Group Bacacier SAS.
The put liability arising on current year acquisitions is recognised with respect to the potential amounts payable to the 15%
shareholders of Group Bacacier SAS.
The amount of the deferred contingent consideration and put liability that have been recognised are arrived at by the application of
a range of outcomes and associated probabilities in order to determine the carrying amounts.
Liabilities in the range of €nil to €11.3m could arise with respect to potential deferred contingent consideration obligations and €nil to
€182.1m with respect to potential put option obligations.
The put option in the shareholders’ agreement with non-controlling shareholders of Isoeste is exercisable from 2023. The
undiscounted expected cash outflow is estimated to be €118.6m (2018: €96m).
The put option in the shareholders’ agreement with non-controlling shareholders of PanelMET is exercisable from 2022. The
undiscounted expected cash outflow is estimated to be €9.1m (2018: €12.2m).
The put option in the shareholders’ agreement with non-controlling shareholders of  Jindal is exercisable from 2022. The
undiscounted expected cash outflow is estimated to be €26.8m (2018: €25.8m).
There are two put options in the shareholders’ agreement with non-controlling shareholders of Group Bacacier SAS. The first option
relating to 10% of shares is exercisable from 2021 and the related undiscounted expected cash flow is estimated to be €17.1m. The
second option for the remaining 5% of shares is exercisable from 2022 and the related undiscounted expected cash outflow is
estimated to be €10.5m.
For the purposes of the fair value assessments all of the put option liabilities are valued using the option price formula in the
shareholders’ agreement and the most recent financial projections. These are classified as unobservable inputs.
In the case of Isoeste, PanelMET,  Jindal and Group Bacacier SAS call options rest over the remaining shareholding held by
non-controlling interests, which are exercisable by the Group in a very limited range of circumstances. No value has been attributed
to these call options.
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Financial Risk Management
In the normal course of business, the Group has exposure to a variety of financial risks, including foreign currency risk, interest
rate risk, liquidity risk and credit risk. The Group’s focus is to understand these risks and to put in place policies that minimise the
economic impact of an adverse event on the Group’s performance. Meetings are held on a regular basis to review the result of the
risk assessment, approve recommended risk management strategies and monitor the effectiveness of such policies.
The Group’s risk management strategies include the usage of derivatives (other than for speculative transactions), principally
forward exchange contracts, interest rate swaps, and cross currency interest rate swaps.
Liquidity risk
In addition to the high level of free cash flow, the Group operates a prudent approach to liquidity management using a mixture of
long-term and short-term debt, cash and cash equivalents, to enable it to meet its liabilities when due.
The Group’s core funding is provided by a number of private placement loan notes totalling €840.9m. The notes have a weighted
average maturity of 4.5 years.
The primary bank debt facility is a €451m revolving credit facility, which was undrawn at year end and which matures in June 2022. In
June 2019 an additional 3 year bank facility of €300m was arranged, which was undrawn at year end. Subsequent to the year end the
Group arranged a bilateral ‘Green Loan’ of €50m to fund the Group’s Planet Passionate initiatives.
Both the private placements and the revolving credit facility have an interest cover test (Net Interest: EBITDA must exceed 4 times)
and a net debt test (Net Debt: EBITDA must be less than 3.5 times). These covenant tests have been met for the covenant test
period to 31 December 2019.
The Group also has in place a number of uncommitted bilateral working capital facilities to serve its working capital requirements.
These facilities total €43m (2018: €44m) and are supported by a Group guarantee. Core funding arrangements arise from a wide and
varied number of institutions and, as such, there is no significant concentration of liquidity risk.
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
The following are the carrying amounts and contractual maturities of financial liabilities (including estimated interest payments):
Carrying
amNon derivative financial instruments
Bank loans 180.1 180.1 52.8 3.3 123.4 0.6
Private placement loan notes 835.9 930.5 20.0 20.0 357.1 533.4
Lease obligations per banking covenants 4.2 4.2 0.4 1.7 - 2.1
Lease liabilities - - - - - -
Trade and other payables 772.8 772.8 772.8 - - -
Deferred consideration 30.0 30.0 30.0 - - -
Deferred contingent consideration 166.1 173.1 29.6 - 131.3 12.2
Derivative financial liabilities/(assets)
Interest rate swaps used for hedging:
Carrying values (0.3) - - - - -
Net inflows - 0.4 0.1 0.1 0.2 -
Cross currency interest rate swaps used for hedging:
Carrying value (27.1) - - - - -
- outflow - 104.1 3.1 3.4 97.6 -
- inflow - 136.0 6.2 6.2 123.6 -
Foreign exchange forwards used for hedging:
Carrying value assets (0.2) - - - - -
Carrying value liabilities - - - - - -
- outflow - 4.7 4.7 - - -
- inflow - 4.8 4.8 - - -
For provisions, the carrying amount represents the Group’s best estimate of the expected future outflows. As it does not represent a
contractual liability at the year end, no amount has been included as a contractual cash flow.


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19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Deferred contingent consideration, which includes any put option liabilities, is valued using the relevant agreed multiple of the
expected future EBITDA in each acquired business which is appropriately discounted using a risk-adjusted discount rate. The
estimated fair value of contingent consideration would decrease if EBITDA was lower or if the risk adjusted discount rate was higher.
The range of outcomes are set out in Note 18.
The actual future cash flows could be different from the amounts included in the tables above, if the associated obligations were to
become repayable on demand as a result of non-compliance with covenants or other contractual terms. No such non-compliance
is envisaged.
Market Risks
Foreign exchange risk
There are two types of foreign currency risk to which the Group is exposed, namely transaction risk and translation risk. The objective
of the Group’s foreign currency risk management strategy is to manage and control market risk exposures within acceptable
parameters. As set out below the Group uses derivatives to manage foreign exchange risk. Transactions involving derivatives are
carried out in accordance with the Treasury policy. The Group seeks to apply hedge accounting, where practicable, to manage
volatility in profit or loss.
Transaction risk
Apart from transaction risk on debt, this arises where operating units have input costs or sales in currencies other than their
functional currencies. These exposures are internally hedged as far as possible. Group policy is to hedge up to a maximum of 75% of a
forecast exposure. Material exposures are hedged on a rolling 12 months basis. The Group’s principal exposure relates to GBP and USD,
with less significant exposures to certain central European currencies.
In addition, where operating entities carry monetary assets and liabilities at year end denominated other than in their functional
currency, their translation at the year-end rates of exchange into their functional currency will give rise to foreign currency gains and
losses. The Group seeks to manage these gains and losses to net to nil.
Based on current cash flow projections for the businesses to 31 December 2020, it is estimated that the Group is long GBP£61m (2018:
long GBP£110m) and short US$25m (2018: short US$35m). At 31 December 2019 these amounts were unhedged.
Translation risk
This exists due to the fact that the Group has operations whose functional currency is not the Euro, the Group’s presentational
currency. Changes in the exchange rate between the reporting currencies of these operations and the Euro, have an impact on the
Group’s consolidated reported result. For 2019, the impact of changing currency rates versus Euro compared to the average 2018
rates was positive €61.0m (2018: positive €4.0m). The key drivers of the change year on year are the movements in GBP and USD. In
common with many other international groups, the Group does not currently seek to externally hedge its translation exposure.
Sensitivity analysis for primary currency risk
A 10% volatility of the EUR against GBP and USD in respect of transaction risk in the reporting entities functional currency would
impact reported after tax profit by €4.9m (2018: €14.5m) and equity by €4.9m (2018: €14.3m).
US Dollar Loan Notes
2011 Private Placement
In 2011, the Group issued a private placement of US$200m fixed interest 10 year bullet repayment loan notes maturing in August
2021. In order to align the Group’s debt profile with its risk management strategy, the Group entered into a number of hedging
transactions in order to mitigate the associated foreign exchange and interest rate exposures. The Group entered into US dollar fixed
/GBP floating cross currency interest rate swaps for US$118.6m of the private placement. The benchmark interest rate and credit
spread have been separately identified and designated for hedge accounting purposes. The Group also entered into US dollar interest
rate swaps for US$40m of the private placement. The fixed rate and maturity date on the swaps match the fixed rate on the private
placement for all instruments. The instruments were designated as hedging instruments at inception and continued to qualify as
effective hedges under IAS 39 at 31 December 2019.
Interest rate risk
The Group has an exposure to movements in interest rates on its debt portfolio, and on its cash and cash equivalent balances and
derivatives. The Group policy is to ensure that at least 40% of its debt is fixed rate.
In respect of interest bearing loans and borrowings, the following table indicates the effective average interest rates at the year-end
and the periods over which they mature. Interest on interest bearing loans and borrowings classified as floating rate is repriced at
intervals of less than one year. The table further analyses interest bearing loans and borrowings by currency and fixed/floating mix
and has been prepared both before and after the impact of derivatives.
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Before the impact of hedging transactions
As at 31 December 2019 Weighted average
effective interest rate
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19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Before the impact of hedging transactions
As at 31 December 2018 Weighted average
effective interest rate
Total
€Trade receivables arise from a wide and varied customer base spread across various activities, end users and geographies, and as
such there is no significant concentration of credit risk. The Group’s credit risk management policy in relation to trade receivables
involves periodically assessing the financial reliability of customers, taking into account their financial position, past experience
and other factors. The utilisation of credit limits is regularly monitored and a significant element of credit risk is covered by credit
insurance or other forms of collateral such as letters of credit or bank guarantees.
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
At 31 December, the exposure to credit risk for trade receivables by geographic region was as follows:
anels customers 493.6 496.4
Insulation Boards customers 151.8 153.2
Other 124.9 141.9
770.3 791.5
The Group uses an allowance matrix to measure Expected Credit Loss (ECL) of trade receivables from customers. The ECL simplified
approach has been adopted.
Loss rates are calculated using a roll rate method based on the probability of a receivable progressing through successive chains of
non-payment to write-off. The rates are calculated at a business unit level which reflects the risks associated with geographic region,
age, mix of customer relationship and type of product purchased. The identifiable loss pertaining to cash positions is immaterial.
The following table provides the information about the exposure to credit risk and ECL’s for trade receivables as at 31 December 2019.
Weighted
The following table provides the information about the exposure to credit risk and ECL’s for trade receivables as at 31 December 2018.
Weighted
Loss rates are based on actual credit loss experience over an appropriate diverse sample of trading periods. Trade receivables are
written off when there is no reasonable expectation of recovery.

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19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Balance at 1 January 56.4 51.1
Arising on acquisition 1.1 10.8
Written off during the year (7.3) (9.5)
Net remeasurement of loss allowance 2.9 4.3
Effect of movement in exchange rates 0.9 (0.3)
At 31 December 54.0 56.4
There are no material trade receivables written off during 2019 (2018: €nil) which are still subject to enforcement activity.
The decrease in the expected credit loss allowance during 2019 reflects the reduction in the gross carrying amount of trade receivables.
Cash & cash equivalents
On the Group’s cash and cash equivalents and derivatives, counterparty risk is managed by dealing with banks that have a minimum
credit rating and by spreading business across a portfolio of 9 relationship banks.
Financial instruments by category
The carrying amount of financial assets presented in the Statement of Financial Position relate to the following measurement
categories as defined in IAS 39:
2It is considered that the carrying amounts of the above financial assets approximate their fair values.
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
The carrying amounts of financial liabilities presented in the Statement of Financial Position relate to the following measurement
categories as defined in IFRS 9:
Financial
liabilities
in fair value
hedge
Borrowings - - 3.1 - 3.1
Leases liabilities - - 25.6 - 25.6
Trade payables - - 404.9 - 404.9
Accruals - - 316.3 - 316.3
Derivative financial instruments - - - 0.1 0.1
Deferred consideration - - - - -
Deferred contingent consideration - - - - -
- - 749.9 0.1 750.0
Non current:
Borrowings 36.3 - 812.0 - 848.3
Lease liabilities - - 96.7 - 96.7
Deferred contingent consideration - 186.5 - - 186.5
36.3 186.5 908.7 - 1,131.5
2018
Current:
Borrowings - - 53.2 - 53.2
Lease liabilities - - - - -
Trade payables - - 397.5 - 397.5
Accruals - - 341.1 - 341.1
Deferred consideration - 30.0 - - 30.0
Deferred contingent consideration - 29.5 - - 29.5
- 59.5 791.8 - 851.3
Non current:
Borrowings 35.2 - 931.8 - 967.0
Lease liabilities - - - - -
Deferred contingent consideration - 136.6 - - 136.6
35.2 136.6 931.8 - 1,103.6
Fair value hierarchy
Financial assets and liabilities recognised at fair value are analysed between those based on quoted prices in active markets for
identical assets or liabilities (Level 1), those involving inputs other than quoted prices that are observable for the assets or liabilities,
either directly or indirectly (Level 2); and those involving inputs for the assets or liabilities that are not based on observable market
data (Level 3) as set out in note 18.
Normally, the derivatives entered into by the Group are not traded in active markets. The fair values of these contracts are estimated
using a valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates (Level 2).
All derivatives entered into by the Group are included in Level 2 and consist of foreign currency forward contracts, interest rate swaps
and cross currency interest rate swaps.
As at 31 December 2019 As at 31 December 2018
Financial Assets
Interest rate swaps - 27.3 - - 27.4 -
Foreign exchange contracts for hedging - - - - 0.2 -
Financial Liabilities
Deferred contingent consideration - - 11.3 - - 38.9
Deferred consideration - - - 30.0 - -
Put option - - 175.2 - - 127.2
Foreign exchange contracts for hedging - 0.1 - - - -

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19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
The principal movements in Level 3 liabilities in 2019 are set out in the table below:
Balance

Settlement Fair value
movement
Arising on
acquisition
Translation
adjustment
Balance
31 Dec
2019

Deferred contingent consideration 38.9 (29.7) (0.5) 2.0 0.6 11.3
Put option liabilities 127.2 - 22.7 26.7 (1.4) 175.2
166.1 (29.7) 22.2 28.7 (0.8) 186.5
The principal movements in Level 3 liabilities in 2018 are set out in the table below:
Balance
1 Jan
2018
Settlement Fair value
movement
Arising on
acquisition
Translation
adjustment
Balance
31 Dec
2018

Deferred contingent consideration 43.0 (3.1) 1.1 1.4 (3.5) 38.9
Put option liabilities 74.5 - 35.4 24.5 (7.2) 127.2
117.5 (3.1) 36.5 25.9 (10.7) 166.1
During the year ended 31 December 2019, the put liabilities were reassessed based on the most recently available financial
information. There were no significant changes in the business or economic circumstances that affect the fair value of financial
assets and liabilities, no reclassifications and no transfers between levels of the fair value hierarchy used in measuring the fair value of
the financial instruments.
Except as detailed below, it is considered that the carrying amounts of financial assets and financial liabilities recognised at
amortised cost approximate their fair values.
As at 31 December 2019 As at 31 December 2018

Private placement loan notes 840.9 902.3 2 835.9 889.0 2
Capital Management Policies and Procedures
The Group employs a combination of debt and equity to fund its operations. As at 31 December the total capital employed in the
Group was as follows:

The Board’s objective when managing capital is to maintain a strong capital base so as to maintain the confidence of investors,
creditors and the market. The Board monitors the return on capital (defined as total shareholders’ equity plus net debt), and
targets a return in excess of 20% together with a dividend level that is compatible with industry norms, but which also reflects any
exceptional market conditions.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and
the advantages and security afforded by a sound capital position. The Group actively manages foreign currency and interest rate
exposure, as well as actively managing the net asset position, in order to create bottom line value. This necessitates the development
of a methodology to optimise the allocation of financial resources on the one hand and the return on capital on the other.
The Board closely monitors externally imposed capital restrictions which are present due to covenants within the Group’s core
banking facilities.
There were no changes to the Group’s approach to capital management during the year.

Guarantees and warranties
At 1 January 104.3 101.0
Arising on acquisitions (Note 22) 1.8 9.4
Provided during year 54.4 38.2
Claims paid (29.5) (27.4)
Provisions released (23.3) (16.7)
Effect of movement in exchange rates 2.0 (0.2)
At 31 December 109.7 104.3
Current liability 58.0 47.5
Non-current liability 51.7 56.8
109.7 104.3
The Group manufactures a wide range of insulation and related products for use primarily in the construction sector. Some products
carry formal guarantees of satisfactory performance of varying periods following their purchase by customers and a provision is
carried in respect of the expected costs of settling warranty and guarantee claims which arise. Both the number of claims and
the cost of settling the claim are sensitive to change but not to such an extent as would cause a material change in the provision.
Provisions are reviewed by management on a regular basis, and adjusted to reflect the current best estimate of the economic
outflow. If it is no longer probable that an outflow of economic benefits will be required, the related provision is reversed.
For the non-current element of the provision, the Group anticipates that these will be utilised within three years of the reporting date.
Discounting of the non-current element has not been applied because the discount would be immaterial.
The Group is not engaged in any material litigation.
21 DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities arising from temporary differences and unused tax losses after offset are as follows:

Deferred tax assets 14.1 15.6
Deferred tax liabilities (31.9) (40.8)
Net Position (17.8) (25.2)
Deferred tax arises from differences in the carrying value of items such as property, plant and equipment, intangibles, pension
obligations, and other temporary differences in the financial statements and the tax base established by the tax authorities.
The movement in the net deferred tax position for 2019 is as follows:
Balance
1 Jan
2019
Recognised
in profit
or loss
Recognised
in equity
Recognised
in other
comprehensive
income
Translation
adjustment
Arising on
acquisitions
Balance
31 Dec
2019
 €m
Property, plant and
equipment (45.8) 5.0 - - (0.6) - (41.4)
Intangibles (29.4) 3.0 - - (0.2) (0.2) (26.8)
Other temporary differences 40.8 (0.2) 1.7 - 0.1 0.1 42.5
Pension obligations 0.8 0.3 - - (0.1) (0.1) 0.9
Unused tax losses 8.4 (1.7) - - 0.3 - 7.0
(25.2) 6.4 1.7 - (0.5) (0.2) (17.8)


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21 DEFERRED TAX ASSETS AND LIABILITIES (continued)
The movement in the net deferred tax position for 2018 is as follows:
Balance
1 Jan
2018
Recognised
in profit
or loss
Recognised
in equity
Recognised
in other
comprehensive
income
Translation
adjustment
Arising on
acquisitions
Balance
31 Dec
2018
 €m
Property, plant and
equipment (40.6) (4.2) - - - (1.0) (45.8)
Intangibles (24.9) 6.1 - - (0.1) (10.5) (29.4)
Other temporary differences 35.8 (5.9) 0.9 - 0.5 9.5 40.8
Pension obligations 0.9 - - (0.2) 0.1 - 0.8
Unused tax losses 6.6 1.8 - - - - 8.4
(22.2) (2.2) 0.9 (0.2) 0.5 (2.0) (25.2)
22 BUSINESS COMBINATIONS
A key strategy of the Group is to create and sustain market leading positions through acquisitions in markets it currently operates
in, together with extending the Group’s footprint in new geographic markets. In line with this strategy, the principal acquisitions
completed during the year were as follows:
In November 2019, the Group acquired 85% of the share capital of Group Bacacier SAS a French integrated profiling and insulated
panel distributor. The total consideration, including debt acquired amounted to €122.0m, representing the maximum amount of
identifiable consideration, comprising of €120.0m paid in cash on completion and €2.0m in deferred contingent consideration.
Put options are also in place over the remaining 15% of the business, the details of which are set out in note 18.
The Group also made a number of smaller acquisitions during the year for a combined cash consideration of €22.2m:
> the purchase of 100% of the share capital of WeGo Floortec GmbH, a German manufacturer of access floors;
> the purchase of 100% of the share capital of Epur SA, a French water treatment business; and
> the purchase of the assets of SkyCo, a US Light & Air business.
The table below reflects the fair value of the identifiable net assets acquired in respect of the acquisitions completed during the year.
Any amendments to fair values will be made within the twelve month period from the date of acquisition, as permitted by IFRS 3,
Business Combinations.
Bacacier
€m
Other*
€m
Total
€m
Non-current assets
Intangible assets 1.9 0.8 2.7
Property, plant and equipment (including Right of Use assets) 25.2 6.6 31.8
Deferred tax asset - - -
Current assets
Inventories 29.2 2.1 31.3
Trade and other receivables 33.7 5.8 39.5
Current liabilities
Trade and other payables (36.6) (6.3) (42.9)
Provisions for liabilities (0.3) (1.5) (1.8)
Non-current liabilities
Trade and other payables (3.6) (1.4) (5.0)
Deferred tax liabilities - (0.2) (0.2)
49.5 5.9 55.4
Total identifiable assets
Non-controlling interest arising on acquisition (Note 28) (3.7) - (3.7)
Goodwill 76.2 16.3 92.5
Total consideration 122.0 22.2 144.2
Satisfied by:
Cash (net of cash acquired) 120.0 22.2 142.2
Deferred contingent consideration 2.0 - 2.0
122.0 22.2 144.2
*Included in Other are certain immaterial remeasurements of prior year accounting estimates.
22 BUSINESS COMBINATIONS (continued)
The acquired goodwill is attributable principally to the profit generating potential of the businesses, together with cross-
selling opportunities and other synergies expected to be achieved from integrating the acquired businesses into the Group’s
existing business.
In the post-acquisition period to 31 December 2019, the businesses acquired during the current year contributed revenue of €38.7m
and trading profit of €2.0m to the Group’s results.
The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €4,834.9m and
€509.5m respectively.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €40.6m. The fair
value of these receivables is €39.5m, all of which is recoverable, and is inclusive of an aggregate impairment provision of €1.1m.
There is €2.7m of goodwill (2018: €nil) which is expected to be deductible for tax purposes.
The Group incurred acquisition related costs of €2.4m (2018: €3.3m) relating to external legal fees and due diligence costs. These
costs have been included in operating costs in the Consolidated Income Statement.
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of Group
Bacacier SAS due to the relative size of the acquisition and the timing of the transaction. Any amendments to these fair values within
the twelve-month timeframe from the date of acquisition will be disclosable in the 2020 Annual Report, as stipulated by IFRS 3.
Prior year acquisitions
In the prior year, the Group acquired 100% of the share capital of Synthesia Group (“Synthesia”), 100% of the share capital of Balex
Metal sp. z.o.o. (“Balex”), 100% of the share capital of Vestfold Plastindustri AS and Vestfold Plastindustri Eiendom AS, 51% of the
share capital of Jindal Mectec Private Limited, the assets of H2Enviro, an Australian water tanks business and two smaller bolt-on
European businesses.
The fair values as recognised at 31 December 2018 of the acquired assets and liabilities at acquisition are set out below:
Synthesia
€m
Balex
€m
Other
€m
Total
€m
Non-current assets
Intangible assets 31.5 7.9 3.9 43.3
Property, plant and equipment 42.8 42.3 8.6 93.7
Deferred tax asset 3.3 0.7 2.8 6.8
Current assets
Inventories 49.1 30.0 4.8 83.9
Trade and other receivables 70.4 18.1 4.2 92.7
Current liabilities
Trade and other payables (59.6) (23.4) (28.5) (111.5)
Provisions for liabilities (5.6) (0.9) (2.9) (9.4)
Non-current liabilities
Retirement benefit obligation - - - -
Deferred tax liabilities (7.9) (1.8) 0.9 (8.8)
124.0 72.9 (6.2) 190.7
Total identifiable assets
Non-controlling interest arising on acquisition (Note 28) - - 4.9 4.9
Goodwill 119.4 124.7 52.7 296.8
Total consideration 243.4 197.6 51.4 492.4
Satisfied by:
Cash (net of cash acquired) 213.4 197.6 50.0 461.0
Deferred contingent consideration 30.0 - 1.4 31.4
243.4 197.6 51.4 492.4
In the post-acquisition period to 31 December 2018, the acquired businesses contributed revenue of €416.3m and trading profit of
€35.0m to the Group’s results.
The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €4,522.7m
and €449.5m.
The Group incurred acquisition related costs of €3.3m (2018: €3.6m) relating to external legal fees and due diligence costs. These
costs have been included in operating costs in the Income Statement.


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Financial Statements
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
23 SHARE CAPITAL

Authorised
250,000,000 Ordinary shares of €0.13 each
(2018: 250,000,000 Ordinary shares of €0.13 each) 32.5 32.5
Issued and fully paid
Ordinary shares of €0.13 each
Opening balance –182,171,120 (2018: 181,342,315) shares 23.7 23.6
Shares allotted – 614,102 (2018: 828,805) shares 0.1 0.1
Closing balance –182,785,222 (2018: 182,171,120) shares 23.8 23.7
There were no adjustments to the authorised share capital during the year (2018: nil).
Details of share options exercised are set out in Note 3 to the financial statements.
24 SHARE PREMIUM

At 1 January 95.6 95.6
At 31 December 95.6 95.6
25 TREASURY SHARES
Consideration paid
2019 2018
No. of
shares
Consideration
paid
€
Total
€m
No. of
shares
Consideration
paid
€
Total
€m
At 1 January 1,969,143 6.40 12.7 2,019,750 6.89 14.0
Repurchase of shares 15,718 40.50 0.6 - - -
Shares issued (77,035) (18.63) (1.5) (50,607) 25.10 (1.3)
At 31 December 1,907,826 6.21 11.8 1,969,143 6.40 12.7
Nominal value
2019 2018
No. of
shares
Nominal
value
€
Total
€
No. of
shares
Nominal
value
€
Total
€
At 1 January 1,969,143 0.13 255,988 2,019,750 0.13 262,567
Repurchase of shares 15,718 0.13 2,043 - - -
Shares issued (77,035) 0.13 (10,015) (50,607) 0.13 (6,579)
At 31 December 1,907,826 0.13 248,016 1,969,143 0.13 255,988
During the year, the Company issued 77,035 treasury shares in satisfaction of obligations falling under share schemes.
The Company holds 1.0% (2018: 1.1%) of the issued ordinary share capital as treasury shares.
26 RETAINED EARNINGS
In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual
Income Statement to the Annual General Meeting and from filing it with the Registrar of Companies. The Company’s profit for the
financial year was €28.6m (2018: €9.7m).
27 DIVIDENDS

Equity dividends on ordinary shares:
2019 Interim dividend 13.0 cent (2018: 12.0 cent) per share 23.6 21.7
2018 Final dividend 30.0 cent (2017: 26.0 cent) per share 54.0 46.6
77.6 68.3
Proposed for approval at AGM
Final dividend of 33.5 cent (2018: 30.0 cent) per share 60.6 54.1
This proposed dividend for 2019 is subject to approval by the shareholders at the Annual General Meeting and has not been included
as a liability in the Statement of Financial Position of the Group as at 31 December 2019 in accordance with IAS 10 Events after the
Reporting Period. The proposed final dividend for the year ended 31 December 2019 will be payable on 7 May 2020 to shareholders on
the Register of Members at close of business on 27 March 2020.
28 NON-CONTROLLING INTEREST

At 1 January 38.6 39.9
Profit for the year attributable to non-controlling interest 8.4 4.9
Arising on acquisition (Note 22) 3.7 (4.9)
Dividends paid to minorities (0.4) (0.1)
Share of foreign operations’ translation movement (0.2) (1.2)
At 31 December 50.1 38.6
During the current year, the Group acquired 85% of the ordinary share capital of Group Bacacier SAS, a French Insulated Panels
business. As part of the acquisition, the Group recognised the 15% non-controlling interest of €3.7m.
Further details are provided in Note 22.
29 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

Movement in cash and bank overdrafts (117.1) 120.1
Drawdown of loans (7.8) (445.0)
Repayment of loans and borrowings 181.6 92.7
Decrease/(increase) in deferred consideration 30.0 (30.0)
Change in net debt resulting from cash flows 86.7 (262.2)
Translation movement - relating to US dollar loan (5.0) (5.5)
Translation movement – other 13.5 (1.9)
Derivative financial instruments movement (0.1) 5.2
Net movement 95.1 (264.4)
Net debt at start of the year (728.3) (463.9)
Net debt at end of the year (633.2) (728.3)
Lease liabilities of €122.3m are excluded from net debt.


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
29 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (continued)
A reconciliation of liabilities arising from financing activities is set out below.
Balance
1 Jan
2019
Repayments Deferred
Consideration
Drawdowns/
Receipts
Non cash
movements
Balance
31 Dec
2019

Bank loans and borrowings 184.3 (181.6) - 7.8 - 10.5
Loan notes 835.9 - - - 5.0 840.9
Derivatives (27.4) - - - 0.1 (27.3)
Deferred Consideration 30.0 - (30.0) - - -
1,022.8 (181.6) (30.0) 7.8 5.1 824.1
A reconciliation of liabilities arising from financing activities in 2018 is set out below.
Balance
1 Jan
2018
Repayments Deferred
Consideration
Drawdowns/
Receipts
Non cash
movements
Balance
31 Dec
2018

Bank loans and borrowings 7.3 (92.7) - 270.0 (0.3) 184.3
Loan notes 655.4 - - 175.0 5.5 835.9
Derivatives (22.2) - - - (5.2) (27.4)
Deferred Consideration - - 30.0 - - 30.0
640.5 (92.7) 30.0 445.0 - 1,022.8
30 GUARANTEES AND OTHER FINANCIAL COMMITMENTS
(i) Guarantees and contingencies
The Group’s principal debt facilities are secured by means of cross guarantees provided by . These include drawn
private placement notes of US$200m and €662.5m and undrawn banking facilities of €751m.
(ii) Future capital expenditure
Capital expenditure in subsidiary entities, approved by the directors but not provided in the financial statements, is as follows:

Contracted for 24.7 49.7
Not contracted for 48.2 20.9
72.9 70.6
31 PENSION OBLIGATIONS
The Group operates defined contribution schemes in each of its main operating locations. The Group also has a number of defined
benefit schemes in the UK and mainland Europe.
Defined contribution schemes
The total cost charged to profit or loss of €20.1m (2018: €15.5m) represents employer contributions payable to these schemes in
accordance with the rules of each plan. An amount of €3.1m (2018: €4.3m) was included at year end in accruals in respect of defined
contribution pension accruals.
Defined benefit schemes/obligations
The Group has two legacy defined benefit schemes in the UK, both of which are closed to new members and to future accrual. The
total pension contributions to these schemes for the year amounted to €nil (2018: €0.1m) and the expected contributions for 2020
are €nil.
The Group also has pension obligations in mainland Europe which are accounted for as defined benefit obligations. These
obligations have been accounted for in line with the Group’s existing pension obligations whereby companies are not required to
fund independent schemes for post employment benefit obligations. Instead, commencing from the date the employee becomes
eligible to receive the income stream, this obligation is satisfied from available cash resources of the relevant employing company. A
provision has been made for the unfunded liability. €0.9m of pension entitlements have been paid to retired former employees during
the year (2018: €0.8m).
31 PENSION OBLIGATIONS (continued)
The pension costs relating to all of the above defined benefit obligations are assessed in accordance with the advice of qualified
actuaries. In the case of the two UK legacy schemes, the most recent actuarial valuations were performed as of 31 December 2019.
In general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to members of
the various schemes.
The extent of the Group’s obligation under these schemes is sensitive to judgemental actuarial assumptions, of which the principal
ones are set out below. It is not considered that any reasonable sensitivity analysis on these assumptions would materially alter the
scheme obligations.
2019 2018
Life expectancies
Life expectancy for someone aged 65 - Males 21.6 21.9
Life expectancy for someone aged 65 - Females 23.3 23.8
Life expectancy at age 65 for someone aged 45 - Males 22.9 23.3
Life expectancy at age 65 for someone aged 45 - Females 24.8 25.4
Rate of increase in salaries 0% - 2.75% 0% - 2.75%
Rate of increase of pensions in payment 0% -1.9% 0% - 2.1%
Rate of increase for deferred pensioners 1.9% 2% - 2.2%
Discount rate 0.7% - 2.0% 1.2% - 2.8%
Inflation rate 1.5% - 2.65% 1.5% - 3.2%
Movements in net liability recognised in the Statement of Financial Position

Net liability in schemes at 1 January (13.1) (13.6)
Acquired (2.7) -
Employer contributions 1.2 0.8
Recognised in income statement (0.7) (1.1)
Recognised in statement of comprehensive income (0.2) 0.9
Foreign exchange movement 0.4 (0.1)
Net liability in schemes at 31 December (15.1) (13.1)
Defined benefit pension income/expense recognised in the Income Statement

Current service cost (0.4) (1.3)
Settlements of scheme obligations (0.3) (0.1)
Transfer - 0.3
Total, included in operating costs (0.7) (1.1)
Movement on scheme obligations (2.0) (1.8)
Interest on scheme assets 2.0 1.8
Net interest expense, included in finance expense (Note 4) - -


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (continued)
31 PENSION OBLIGATIONS (continued)
Analysis of amount included in other comprehensive income

Actual return less interest on scheme assets 6.1 (4.2)
Experience gain arising on scheme liabilities 0.1 -
Actuarial gain arising from changes in demographic assumptions 1.6 0.4
Actuarial (loss)/gain arising from changes in financial assumptions (8.0) 4.7
(Loss)/gain recognised in other comprehensive income (0.2) 0.9
The cumulative actuarial loss recognised in other comprehensive income to date is €18.5m (2018: €18.3m).
In 2019, the actual return on plan assets was a gain of €8.1m (2018: loss of €2.4m).
Asset Classes and Expected Rate of Return
The assets in the scheme at each year end were as follows:
2019 2018
Asset Classes as % of Total Scheme Assets
Equities 41.2% 53.0%
Bonds (Corporates) 0.4% 0.3%
Cash 0.4% 0.2%
Liability Driven Investment (LDI) 58.0% 46.5%
100% 100%
The net pension liability is analysed as follows:

Equities 33.4 37.5
Bonds (Corporates) 0.3 0.2
Cash 0.4 0.2
Property 7.1 -
Liability Driven Investment (LDI) 39.8 33.2
Fair market value of plan assets 81.0 71.1
Present value of obligation (96.1) (84.2)
Deficit (15.1) (13.1)
Analysed between:
Funded schemes’ surplus 9.2 7.4
Unfunded obligations (24.3) (20.5)
(15.1) (13.1)
Related deferred tax (asset) (0.9) (0.8)

Changes in present value of defined benefit obligations
At 1 January 84.2 90.5
Acquired through business combination 2.7 -
Current service cost 0.4 1.3
Interest cost 2.0 1.8
Benefits paid (3.2) (2.4)
Settlement 0.1 (0.1)
Actuarial losses/(gains) 6.3 (5.1)
Effect of movement in exchange rates 3.6 (0.7)
Transfer - (1.1)
At 31 December 96.1 84.2
31 PENSION OBLIGATIONS (continued)

Changes in present value of scheme assets during year
At 1 January 71.1 76.9
Acquired through business combination - -
Interest on scheme assets 2.0 1.8
Employer contributions 0.1 0.1
Benefits paid (2.1) (1.7)
Settlement (0.2) (0.2)
Actual return less interest 6.1 (4.2)
Effect of movement in exchange rates 4.0 (0.8)
Transfer - (0.8)
At 31 December 81.0 71.1
32 RELATED PARTY TRANSACTIONS
The principal related party relationships requiring disclosure under IAS 24 Related Party Disclosures relate to (i) transactions between
group companies, (ii) compensation of key management personnel and (iii) goods and services purchased from directors.
(i) Transactions between subsidiaries and associates are carried out on an arm’s length basis.
The Company received dividends of €20.0m from subsidiaries (2018: €nil), and there was a net decrease in the intercompany
balance of €45.3m (2018: €55.2m decrease).
Transactions with the Group’s non-wholly owned subsidiaries primarily comprise trading sales and capital funding, carried out on
an arm’s length basis. These transactions are not considered to be material.
(ii) For the purposes of the disclosure requirements of IAS 24 Related Party Disclosures, the term “key management personnel”
(i.e. those persons having the authority and responsibility for planning, directing and controlling the activities of the Company),
comprise the board of directors who manage the business and affairs of the Company. As identified in the Report of the
Remuneration Committee, the directors, other than the non-executive directors, serve as executive officers of the Group.
Key management personnel compensation is set out in Note 6.
Mr Eugene Murtagh received dividends of €11.9m during the year from the Group (2018: €10.9m). Dividends of €0.98m were paid
to other key management personnel (2018: €0.92m).
(iii) The Group purchased legal services in the sum of €125,947 (2018: €114,533) from McCann FitzGerald Solicitors, a firm in which
Mr John Cronin is a partner.
33 POST BALANCE SHEET EVENTS
There have been no material events subsequent to 31 December 2019 which would require adjustment to or disclosure in this report.
34 APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the directors on 21 February 2020.
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Alternative Performance Measures
Other Information
—
OTHER
INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
The Group uses a number of metrics, which are non-IFRS measures, to monitor the performance of its operations.
The Group believes that these metrics assist investors in evaluating the performance of the underlying business. Given that these
metrics are regularly used by management, they also give the investor an insight into how Group management review and monitor
the business on an ongoing basis.
The principal APMs used by the Group are defined as follows:
Trading profit
This comprises the operating profit as reported in the Income Statement before intangible asset amortisation and non trading items.
This equates to the Earnings Before Interest, Tax and Amortisation (“EBITA”) of the Group. Trading profit is used by management as it
excludes items which may hinder year on year comparisons.
2019 2018
Financial Statements Reference €m €m
Trading profit Note 2 497.1 445.2
Trading margin
Measures the trading profit as a percentage of revenue.
2019 2018
Financial Statements Reference €m €m
Trading Profit Note 2 497.1 445.2
Total Group Revenue Note 2 4,659.1 4,372.5
Trading margin 10.7% 10.2%
Net interest
The Group defines net interest as the net total of finance expense and finance income as presented in the Income Statement. The
impact of IFRS 16 is excluded from the calculation which is consistent with the terms and conditions of the covenants as set out in
the Group’s external borrowing arrangements.
2019 2018
Financial Statements Reference €m €m
Finance Expense Note 4 23.7 19.5
Finance Income Note 4 (2.9) (1.4)
Less lease interest (IFRS 16) Note 4 (3.8) -
Net Interest 17.0 18.1
Adjusted earnings per share
The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact, net of tax, of intangible amortisation.
The Group defines adjusted diluted earnings per share as basic earnings per share adjusted for the impact, net of tax, of intangible
amortisation and the dilutive effect of share options.
Dilution is attributable to the weighted average number of share options outstanding at the end of the reporting period.
2019 2018
Financial Statements Reference €m €m
Profit attributable to ordinary shareholders Note 8 369.4 330.9
Intangible amortisation Note 2 21.9 22.2
Intangible amortisation tax impact Note 21 (3.0) (5.1)
388.3 348.0
Weighted average number of shares (‘000) Note 8 180,586 179,840
Adjusted earnings per share 215.0 cent 193.5 cent
Weighted average number of shares for dilutive
calculation (‘000) Note 8 182,075 181,536
Adjusted diluted earnings per share 213.2 cent 191.7 cent
Free cash flow
Free cash flow is the cash generated from operations after net capital expenditure, interest paid, income taxes paid and lease
payments and reflects the amount of internally generated capital available for re-investment in the business or for distribution
to shareholders.
2019 2018
Financial Statements Reference €m €m
Net cash flow from operating activities Consolidated Statement of Cash Flows 520.4 438.3
Additions to property, plant, equipment and
intangibles Consolidated Statement of Cash Flows (161.0) (144.2)
Proceeds from disposals of property, plant and
equipment Consolidated Statement of Cash Flows 6.7 12.9
Interest received Consolidated Statement of Cash Flows 2.8 1.4
Lease payments Consolidated Statement of Cash Flows (31.8) -
Free cash flow 337.1 308.4
Return on capital employed (ROCE)
ROCE is the operating profit before interest and tax expressed as a percentage of the net assets employed. The net assets employed
reflect the net assets, excluding net debt, at the end of each reporting period.
2019 2018
Financial Statements Reference €m €m
Net Assets Consolidated Statement of Financial Position 2,120.4 1,788.9
Net Debt Note 17 633.2 728.3
2,753.6 2,517.2
Operating profit before interest and tax Consolidated Income Statement 475.2 423.0
Return on capital employed 17.3% 16.8%


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Shareholder Information
Other Information
Net debt
Net debt represents the net total of current and non-current borrowings, current and non-current derivative financial instruments,
(excluding foreign currency derivatives which are used for transactional hedging), and cash and cash equivalents as presented
in the Statement of Financial Position. Lease liabilities recognised due to the implementation of IFRS 16 and deferred contingent
consideration have also been excluded from the calculation of net debt. Consistent with the 2018 APMs, this definition is in
accordance with the terms and conditions of the covenants as set out in the Group’s external borrowing arrangements.
2019 2018
Financial Statements Reference €m €m
Net Debt Note 17 633.2 728.3
EBITDA
The Group defines EBITDA as earnings before finance costs, income taxes, depreciation, amortisation and the impact of IFRS 16.
2019 2018
Financial Statements Reference €m €m
Trading profit Condensed Consolidated Income Statement 497.1 445.2
Depreciation Consolidated Statement of Cash Flows 114.5 76.0
Lease liability payments Consolidated Statement of Cash Flows (31.8) -
EBITDA 579.8 521.2
Net debt: EBITDA
Net debt as a ratio to 12 month EBITDA. EBITDA is solely adjusted for the impact of IFRS 16 Leases which is in accordance with the
terms and conditions of the covenants as set out in the Group’s external borrowing arrangements.
2019 2018
Financial Statements Reference €m €m
Net Debt Note 17 633.2 728.3
EBITDA 579.8 521.2
Net Debt: EBITDA times 1.09 1.40
Working capital
Working capital represents the net total of inventories, trade and other receivables and trade and other payables, net of
transactional foreign currency derivative excluded from net debt.
2019 2018
Financial Statements Reference €m €m
Trade and other receivables Note 14 794.2 798.6
Inventories Note 13 557.6 524.9
Trade and other payables Note 15 (768.9) (779.8)
Foreign currency derivatives excluded from
net debt Note 19 (0.1) 0.2
Working capital 582.8 543.9
Working capital ratio
Measures working capital as a percentage of October to December turnover annualised. The annulations on turnover reflects the
current profile of the Group rather than a partial reflection of any acquisitions completed during the period.
2019 2018
Financial Statements Reference €m €m
Working capital 582.8 543.9
October - December turnover annualised 4,877.0 4,711.6
Working Capital ratio 11.9% 11.5%
—
SHAREHOLDER
INFORMATION

Financial
Statements
151
150
—
The Annual General Meeting
The Annual General Meeting of
the Company will be held at the
InterContinental Hotel, Ballsbridge,
Dublin 4 on Friday 1 May 2020 at
10.00 a.m.
Notice of the 2020 AGM will be
made available to view online at
www..com/agm2020
You may submit your votes electronically
by accessing Computershare’s website:
http://www.eproxyappointment.com/
You will be asked for your Shareholder
Reference Number (SRN), Control
Number, and PIN, all of which will have
been sent to shareholders in advance of
the meeting. To be valid, your proxy vote
must be received by Computershare no
later than 10.00 am on Wednesday 29
April 2020 (48 hours before the meeting).
Amalgamation of
Shareholding Accounts
Shareholders who receive duplicate sets
of Company mailings due to multiple
accounts in their name should write to
the Company’s Registrar to have their
accounts amalgamated.
Warning to Shareholders
Many companies have become aware
that their shareholders have received
unsolicited phone calls or correspondence
concerning investment matters. These are
typically from overseas based “brokers”
who target shareholders offering to
sell them what often turn out to be
worthless or high-risk shares in US or UK
investments. They can be very persistent
and extremely persuasive. Shareholders
are therefore advised to be very wary
of any unsolicited advice, offers to buy
shares at a discount or offers of free
company reports.
Please note that it is very unlikely
that either the Company or the
Company’s Registrar, Computershare,
would make unsolicited telephone
calls to shareholders and that any
such calls would relate only to official
documentation already circulated to
shareholders and never in respect of
investment “advice”.
If you are in any doubt about the veracity
of an unsolicited phone call, please
call either the Company Secretary or
the Registrar.
Company Information
 was incorporated on 14 August 1979. It is an Irish domiciled company
and the registered office is , Dublin Road, Kingscourt, Co. Cavan, A82
XY31, Ireland. The registered company number of  is 70576.
Share Registrar
Administrative enquiries about the holding of  shares should be
directed to:
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Principal Subsidiary Undertakings
Other Information
—
PRINCIPAL
SUBSIDIARY
UNDERTAKINGS
List of principal subsidiary and joint venture companies and the percentage shareholding held by, either directly or indirectly, pursuant to Section 314 of the Companies Act 2014:


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Information Required By
The European Communities
(Takeover Bids (Directive
2004/25/EC)) Regulations 2006
The information required by Regulation
21 of the above Regulations as at
31 December 2019 is set out below.
Rights and obligations attaching to
the Ordinary Shares
The Company has no securities in issue
conferring special rights with regards
control of the Company.
All Ordinary Shares rank pari passu, and
the rights attaching to the Ordinary
Shares (including as to voting and
transfer) are as set out in the Company’s
Articles of Association (“Articles”). The
Articles of Association also contain the
rules relating to the appointment and
removal of directors, rules relating to the
amending the Articles of Association,
the powers of the Company’s directors
and in relation to issuing or buying
back by the Company of its shares. A
copy of the Articles may be found on
www..com or may be obtained
on request to the Company Secretary.
Holders of Ordinary Shares are entitled
to receive duly declared dividends in cash
or, when offered, additional Ordinary
Shares. In the event of any surplus arising
on the occasion of the liquidation of the
Company, shareholders would be entitled
to a share in that surplus pro rata to their
holdings of Ordinary Shares.
Holders of Ordinary Shares are entitled
to receive notice of and to attend, speak
and vote in person or by proxy, at general
meetings having, on a show of hands,
one vote, and, on a poll, one vote for
each Ordinary Share held. Procedures and
deadlines for entitlement to exercise, and
exercise of, voting rights are specified in
the notice convening the general meeting
in question. There are no restrictions on
voting rights except in the circumstances
where a “Specified Event” (as defined in
the Articles) shall have occurred and the
Directors have served a Restriction Notice
on the shareholder. Upon the service
of such Restriction Notice, no holder of
the shares specified in the notice shall,
for so long as such notice shall remain
in force, be entitled to attend or vote at
any general meeting, either personally or
by proxy.
Holding and transfer of ordinary shares
The Ordinary Shares may be held in
either certificated or uncertificated form
(through CREST).
Save as set out below, there is no
requirement to obtain the approval of
the Company, or of other shareholders,
for a transfer of Ordinary Shares. The
Directors may decline to register (a) any
transfer of a partly-paid share to a person
of whom they do not approve, (b) any
transfer of a share to more than four joint
holders, (c) any transfer of a share on
which the Company has a lien, and (d)
any transfer of a certificated share unless
accompanied by the share certificate
and such other evidence of title as may
reasonably be required. The registration
of transfers of shares may be suspended
at such times and for such periods (not
exceeding 30 days in each year) as the
Directors may determine.
Transfer instruments for certificated
shares are executed by or on behalf of
the transferor and, in cases where the
share is not fully paid, by or on behalf of
the transferee. Transfers of uncertificated
shares may be effected by means
of a relevant system in the manner
provided for in the Companies Act, 1990
(Uncertificated Securities) Regulations,
1996 (the “CREST Regulations”) and
the rules of the relevant system. The
Directors may refuse to register a transfer
of uncertificated shares only in such
circumstances as may be permitted or
required by the CREST Regulations.
Rules concerning the appointment
and replacement of the directors and
amendment of the Company’s Articles
Unless otherwise determined by ordinary
resolution of the Company, the number
of Directors shall not be less than two or
more than 15.
Subject to that limit, the shareholders
in general meeting may appoint any
person to be a director either to fill a
vacancy or as an additional director. The
directors also have the power to co-opt
additional persons as directors, but any
director so co-opted is under the Articles
required to be submitted to shareholders
for re-election at the first annual general
meeting following his or her co-option.
The Articles require that at each annual
general meeting of the Company one-
third of the directors retire by rotation.
However, in accordance with the
recommendations of the UK Corporate
Governance Code, the directors have
resolved they will all retire and submit
themselves for re-election by the
shareholders at the Annual General
Meeting to be held on 1 May 2020.
The Company’s Articles may be amended
by special resolution (75% majority of
votes cast) passed at general meeting.
Powers of directors including powers in
relation to issuing or buying back by the
Company of its shares
Under its Articles, the business of the
Company shall be managed by the
directors, who exercise all powers
of the Company as are not, by the
Companies Acts or the Articles, required
to be exercised by the Company in
general meeting.
The directors are currently authorised to
issue a number of shares equal to the
authorised but as yet unissued share
capital of the Company on such terms
as they may consider to be in the best
interests of the Company, under an
authority that was conferred on them
at the Annual General Meeting held on 3
May 2019. The directors are also currently
authorised on the issue of new equity for
cash to disapply the strict statutory pre-
emption provisions that would otherwise
apply, provided that the disapplication
is limited to the allotment of equity
securities in connection with (i) any rights
issue or any open offer to shareholders, or
(ii) the allotment of shares not exceeding
in aggregate 5% of the nominal value
of the Company’s issued share capital,
or (iii) for the purpose of financing (or
refinancing) an acquisition or other capital
investment of a kind contemplated by
the UK Pre-emption Group not exceeding
in aggregate 5% of the nominal value of
the Company’s issued share capital. Both
these authorities expire on 1 May 2020
unless renewed and resolutions to that
effect are being proposed at the Annual
General Meeting to be held on 1 May 2020.
The Company may, subject to the
Companies Acts and the Articles,
purchase any of its shares and may either
cancel or hold in treasury any shares
so purchased, and may re-issue any
such treasury shares on such terms and
conditions as may be determined by the
directors. The Company shall not make
market purchases of its own shares unless
such purchases have been authorised by a
special resolution passed by the members
of the Company at a general meeting. At
the Annual General Meeting held on 3 May
2019, shareholders passed a resolution
giving the Company, or any of its
subsidiaries, the authority to purchase up
to 10% of the Company’s issued Ordinary
Shares. At the Annual General Meeting to
be held on 1 May 2020, shareholders are
being asked to renew this authority.
Miscellaneous
There are no agreements between
shareholders that are known to
the Company which may result in
restrictions on the transfer of securities or
voting rights.
Certain of the Group’s banking facilities
include provisions that, in the event of a
change of control of the Company, could
oblige early prepayment of the facilities.
Certain of the Company’s joint venture
arrangements also contain provisions
that would allow the counterparty to
terminate the agreement in the event of
a change of control of the Company. The
Company’s Standard Share Option Scheme
and Performance Share Plan each contain
change of control provisions which allow
for the acceleration of the exercise of share
options/awards in the event of a change of
control of the Company.
There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of
office or employment (whether through
resignation, purported redundancy or
otherwise) that occurs because of a
takeover bid.
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements
Alternative Performance Measures Shareholder Information Group Five Year Summary
Principal Subsidiary Undertakings
OBusiness & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements
Alternative Performance Measures Shareholder Information Principal Subsidiary Undertakings Group Five Year Summary
Other Information
2019 2018 2017 2016 2015
Results (amounts in €m)
Revenue 4,659.1 4,372.5 3,668.1 3,108.5 2,774.3
Trading profit 497.1 445.2 377.5 340.9 255.9
Profit before tax 454.4 404.9 346.5 314.0 232.0
Operating cashflow 627.1 530.3 362.5 377.1 382.5
Equity (amounts in €m)
Gross assets 4,288.4 4,029.4 3,235.6 3,004.6 2,549.1
Working capital 582.8 543.9 477.8 382.7 301.8
Total shareholder equity 2,120.4 1,788.9 1,568.0 1,471.5 1,293.8
Net debt 633.2 728.3 463.9 427.9 328.0
Ratios
Net debt as % of total shareholders’ equity 29.9% 40.7% 29.6% 29.1% 25.4%
Current assets/current liabilities 1.66 1.59 1.65 1.56 1.43
Net debt/EBITDA 1.09 1.40 1.05 1.06 1.04
Per Ordinary Share (amounts in €cent)
Earnings 204.6 184.0 159.0 143.8 106.7
Operating cashflows 347.3 294.9 202.1 212.3 217.1
Net assets 1,174.2 994.7 876.7 828.4 734.2
Dividends 46.5 42.0 37.0 33.5 25.0
Average number of employees 14,529 13,469 11,133 10,396 8,595
Business & Strategic Report Directors' Report
Sustainability Report Financial Statements Other Information
Perform
Sustain
Grow
Annual Report
and Accounts 2019
 is
a leading Agri-Services group,
employing over 2,500 people
across seven countries.
From
Sky to
Soil
50,000
Trial Units
Perform
Origin delivered a strong
performance in FY19
with a 15.6% growth in
operating profit1
.
See more in the Chief Financial
Officer’s Review on page 14
Sustain
We aim to build a sustainable
business and deliver long-term
value to stakeholders in a
responsible and ethical manner.
See more in the Sustainability
Report on page 50
Grow
Origin’s strategic ambition is to
deliver a mix of organic growth
and growth by acquisition.
See more in the Strategy
section on page 24
1 Operating profit is stated before amortisation of non-ERP intangible assets and exceptional items and before the Group’s
share of profits of associates and joint venture.
73
Demonstration Farms
12m ha
Direct Farm Customer Footprint
Strategic Report
At a Glance 6
Chairman’s Statement 8
Chief Executive’s Review 10
Chief Financial Officer’s Review 14
Our Business 22
Strategy 24
Business Model 28
Key Performance Indicators 30
Business Review Ireland and the UK 32
Business Review Continental Europe 38
Business Review Latin America 44
Sustainability Report 50
Risk Report 62
Governance
Board of Directors 72
Directors’ Report 74
Chairman’s Overview 77
Corporate Governance Statement 78
Nomination and Corporate Governance
Committee Report 84
Audit and Risk Committee Report 87
Remuneration Committee Report 91
Financial Statements
Company Information 110
Statement of Directors’ Responsibilities 111
Independent Auditors’ Report 112
Consolidated Income Statement 120
Consolidated Statement of Comprehensive Income 121
Consolidated Statement of Financial Position 122
Consolidated Statement of Changes in Equity 124
Consolidated Statement of Cash Flows 125
Group Accounting Policies 126
Notes to the Group Financial Statements 137
Company Accounting Policies 192
Company Balance Sheet 194
Company Statement of Changes in Equity 195
Notes to the Company Financial Statements 196
Contents
The Group operates in
seven countries across
Ireland, the UK, Continental
Europe and Latin America.
See Ireland and the UK on page 32
See Continental Europe on page 38
See Latin America on page 44
Our objective is to grow a
sustainable agri-services
business which optimises
value for our stakeholders.
See Strategy on page 24
See Business Model on page 28
Highlights
Origin delivered a strong
performance in 2019
with 15.6% growth in
operating profit1
.
> Group revenue increase of 10.5% to
€1,798.2 million, and up 7.2% on an
underlying basis.
> Operating profit1
of €82.3 million, an
increase of 15.6% and up 3.5% on an
underlying basis.
> Group operating margin1
of 4.6%, an
increase of 20 basis points.
> Adjusted diluted earnings per share2
up
7.9% to 52.65 cent.
> Acquisitions contributed 3.2% to sales
growth and 12.0% to operating profit
growth in the year.
> Strong cash conversion with free cash
flow generation of €54.0 million
(2018: €56.6 million).
> Increase in net debt to €75.6 million
(2018: €38.4 million).
> Proposed 1.5% increase in total dividend
to 21.32 cent (2018: 21.0 cent).
> Good first-time contribution from
Fortgreen acquisition in Latin America.
> Exceptional charge of €7.0 million,
principally due to a non-cash impairment
relating to our Ukrainian business.		

Dividend per Share
1. Before amortisation of non-ERP intangible assets and
exceptional items, and before the Group’s share of profits of
associates and joint venture.
2. Before amortisation of non-ERP intangible assets, net
of related deferred tax (2019: €7.1m, 2018: €4.9m) and
exceptional items, net of tax (2019: €7.0m, 2018: €Nil)
3. Excluding currency movements.
Note: All references to constant currency in this
Annual Report are due to the fact that the translation
of non-euro denominated earnings are impacted by
movements in local currency rates versus the euro, the
Group’s presentation currency. In order to reflect
underlying performance more accurately in the period,
the Group calculates results on a constant currency basis
by retranslating non-euro denominated current year
earnings at prior year exchange rates.
3
North Berwick, United Kingdom
Andreea Ailenei, on-farm with the Agrii team
assessing the progress of this season’s wheat crop
Find out more
Case Study: Transferring Knowledge on page 35
Case Study: RHIZA on page 36
4
Strategic Report
5
Strategic
Report
Perform
At a Glance
A focused Agri-Services
group providing services
and technology.
Our businesses specialise in the
provision of independent and
innovative advice, inputs and
related services to farmers to
help them optimise crop yield
and economic returns on a
sustainable basis.
Business-to-Business
Agri-Inputs
Provides procurement and supply
chain solutions to the Irish, UK, Belgian
and Brazilian primary food production
sectors covering the macro inputs that
drive on-farm efficiency, i.e. prescription
blended fertilisers and animal feed
ingredients. In addition, Origin is a
market leader in advisory, service and
input provision to the professional
sports turf, landscaping and amenity
sectors in the UK.
Integrated Agronomy and
On-Farm Services
Provides agronomy advice, services
and inputs directly to arable, fruit and
vegetable growers in the UK, Poland,
Romania and Ukraine. Our customised
solutions ensure the delivery of crop
production systems that adhere to the
highest safety, quality, environmental and
sustainability standards.
Digital Agricultural Services
Provides bespoke digital agronomy
applications and agri-tech services to
primary producers, input manufacturers
and agri-service companies.
Our Segments
Latin
America
This segment includes
the Group’s newly
acquired operations in
Brazil. Find out more on
pages 44 to 49.
Continental
Europe
This segment includes
the Group’s operations in
Poland, Romania, Ukraine
and Belgium. Find out
more on pages 38 to 43.
Ireland and
the UK
This segment includes the
Group’s wholly-owned Irish
and UK-based operations
in addition to the Group’s
associates and joint venture
undertakings. Find out more
on pages 32 to 37.
€1.6bn
Revenue
Ireland & the UK Continental Europe Latin America
1. Before amortisation of non-ERP intangible assets and exceptional items, and before the Group’s share of profits of
associates and joint venture.
7
Strategic
Report
Dear Shareholder
Group Performance
I am pleased to report that Origin delivered another
strong performance in 2019 as Group operating profit
increased 15.6% to €82.3 million and adjusted diluted
earnings per share increased 7.9% to 52.65 cent.
Our trading performance supports the strategic
decision last year to add regional diversity to
the Group’s portfolio, as an excellent first-time
contribution from our Latin American division
combined with strong underlying growth in Ireland
and the UK, more than offset a challenging operating
environment in Continental Europe. Details of our
financial performance are set out in the Chief Financial
Officer’s Review on pages 14 to 21.
Strategic Development
The Group’s strategy remains a fundamental focus for
the Board, particularly in the context of a rapidly evolving
technical and competitive landscape. In April, we held a
two-day strategic planning event, resulting in a collective
ambition to 2023 and a roadmap to achieve these goals.
In May, the Group hosted a Capital Markets Day in
London, providing greater insights into Origin’s leading
market positions, integrated supply chains and multiple
routes to market across strategic geographic locations.
At this event we published medium-term financial
targets to 2023 for the first time as follows:
> Digital Hectares: 4.0 million.
Further illustrations on the implementation of our
strategic priorities during the year are outlined on pages
32 to 49 within the Business Review sections of the
Annual Report.
One of the key strategic developments in the current
year has been our first-time entry into Latin America.
Our acquisition of Fortgreen, a Brazilian value-added
crop nutrition and speciality inputs business has
delivered in line with expectation and presents an
exciting vehicle for future growth. In Q4, we also
completed the previously announced acquisition of a
20% stake in the agronomy services and crop inputs
business Ferrari Zagatto.
Chairman
'
s Statement
Rose Hynes
Non-Executive Chairman
One of the key strategic developments
in the current year has been our
first-time entry into Latin America.
8
In July, we announced a conditional
agreement for the disposal of 31
acres of land in Cork, Ireland, owned
by the Group for a cash consideration
of up to €47.5 million. The transaction
remains subject to the satisfaction
of a number of conditions and will
require the relocation of our Cork
fertiliser facility.
Sustainability
As a Group, we recognise the valuable
role Origin plays in promoting
sustainable food production systems
and balancing economic growth with
environmental and social wellbeing.
Sustainability is central to our
business model however, our
sustainability programme is on a
journey of continuous improvement.
In 2019, we undertook a materiality
assessment, using an independent
external adviser, which included
consultations with internal and
external stakeholders. The analysis
of this materiality assessment has
helped us to prioritise key material
sustainability issues for Origin,
focus on critical areas of impact
and align our priorities with our
stakeholders’ expectations. We also
calculated our Scope 1 and Scope
2 greenhouse gas emissions for the
three financial years 2017, 2018 and
2019. Further details are set out in
the Sustainability Report on pages
50 to 61.
Dividend
The Board recommends a final
dividend of 18.17 cent per ordinary
share payable on 13 December 2019
to shareholders registered on the
record date 29 November 2019.
Subject to approval at the Annual
General Meeting, this will bring the
total dividend per ordinary share for
the year ended 31 July 2019 to 21.32
cent (an increase of 1.5% on the
2018 total dividend). This represents
a distribution of 40.5% of adjusted
diluted earnings per share.
Board and Governance
The Board is committed to
maintaining the highest standard of
governance practices to ensure the
effective stewardship and long-
term success of the Group. The
Board continues its commitment
to applying the principles of
the Quoted Companies Alliance
Corporate Governance Code (‘QCA
Code’) as the basis for its corporate
governance framework. Full details
of our approach to governance are
set out in the Corporate Governance
Statement on pages 78 to 83.
I am delighted to welcome Barbara
Keane who joined as Group General
Counsel and Company Secretary in
May 2019.
I would also like to thank all members
of the Board for their continued
support for the business and their
consistent hard work and ongoing
contribution to the success of Origin.
Management and Employees
Our accomplishments are
primarily attributed to the hard
work, dedication and innovation
of our people, which allows us
to focus relentlessly on serving
our customers and to continually
improve our performance.
In recognition of this commitment,
we progressed our employee
engagement programme ’Let’s
Talk’, to help us gain a greater
understanding of our employees’
experience working for Origin
and identify areas where we can
enhance this experience. As part
of the programme, the Board took
the opportunity in February to visit
the Group’s operations in Poland
and the UK where we met with
employees to listen to their views
first hand.
On behalf of the Board, I would like
to thank our CEO, our management
team and employees for their
ongoing commitment to the success
of the Group during the year.
Outlook
The Group enters FY20 in a position
of strength, with a strong cashflow
and balance sheet position. While
market sentiment remains broadly
positive across our respective
geographies, the political and
economic uncertainty of Brexit and
other regulatory developments may
present some near-term challenges
for agronomy services and crop
inputs in FY20.
Factoring in these immediate
challenges and the medium-term
outlook for agriculture and food
production, we look forward with
optimism and are well-positioned
to capitalise on the Group’s scalable
and diversified market positions,
integrated crop services business
model and strong balance sheet
to deliver strong growth, cash
generation and returns in line with
our 2023 targets.
On behalf of the Board, I would like
to thank you our shareholders, for
your continued support.
Rose Hynes
Non-Executive Chairman
24 September 2019
1.5% increase in proposed
dividend to 21.32 cent
21.
32cent
Operating profit amounted to
€82.3m, an increase of 15.6%
€82.3m
€
Find out more
Strategy on page 24
Sustainability on page 50
9
Strategic
Report
FY19 was a significant year of progress for Origin, with
the Group achieving a strong financial performance
in addition to delivering upon a number of important
strategic goals. The results reflect the successful
execution of our vision which is to be the leading and
trusted partner of choice to the farmers, growers and
amenity professionals we serve.
Sustainability is central to this vision. Origin is
committed to making a positive contribution through
our products, services and operations, to promoting
sustainable food production systems and helping to
meet growing food demand.
Over the past decade, our strategy has led us to market
leading positions, with crop science and expert research
at the heart of our business. In collaboration with our
technology and supply partners, we have developed
an integrated business model focused on delivering
customised crop production systems which optimise
profitability and competitiveness, environmental
sustainability and yield enhancement to over 50,000
farmers, growers and amenity professionals.
FY19 Progress
There has been a strong performance in FY19, with
the Group benefiting from favourable organic and
acquisition growth.
Chief Executive’s Review
Tom O’Mahony
Chief Executive Officer
Over the past decade, our
strategy has led us to market
leading positions, with crop
science and expert research
at the heart of our business.
Dear Shareholder
10
Our FY19 results reflect a
commitment to maintaining a
diversified business portfolio with
an excellent first-time contribution
from our Latin America division
together with the benefit of strong
demand levels in Ireland and the
UK more than offsetting the impact
of a more challenging operating
environment in Continental Europe,
where highly competitive trading
conditions within the Ukrainian
market impacted profitability.
Divisional Review -
Sustain, Perform, Grow
Ireland and the UK - Sustain
Ireland and the UK achieved
a very good performance in
the period, recording an 8.6%
growth in underlying operating
profit at constant currency. The
performance reflects favourable
demand for agronomy services
and crop inputs together with
the benefit of strong operational
execution throughout the year.
A full business review of
performance in Ireland and the
UK is set out on page 32.
The key priority for growth is to
capitalise on our market leadership
through leveraging the Group’s
strong technical and application
focus to accelerate product and
service extension. We remain
focused on optimising farm
level gross margin and delivering
enhanced return on investment
to customers through establishing
leading digitally enabled crop
technology and advice models
and decision support tools
that complement our existing
agronomist-farmer service offers.
Over the medium-term, we
anticipate changes to existing farm
structures, in part accelerated by
Brexit. Origin is well placed to meet
the evolving needs of the industry.
Continental Europe – Perform
Continental Europe encountered a
challenging operating environment
during the year which resulted
in lower margins and operating
profits, primarily driven by the
under-performance of our
Ukrainian business.
A full business review of
performance in Continental
Europe is set out on page 38.
Our key focus is to drive and
implement performance through
the delivery of volume growth and
increased market share in the
value-added segments of agronomy
services and crop input distribution.
This strategy leverages Origin’s
central capabilities to build
value through the Group’s
input portfolios, research and
development capabilities and digital
agronomy platforms.
Latin America (‘LATAM’) – Grow
Origin made its first-time entry
into the Latin American market
in the current year following the
acquisition of Fortgreen in Brazil.
Fortgreen is a product-based
business with strong farm linkages
and is focused on the growing
value-added segments of speciality
crop inputs and bespoke nutrition.
A full business review of
performance in LATAM is set
out on page 44.
Business integration is progressing
to plan, reflected in an excellent
first-time contribution in line with
pre-acquisition expectations.
The acquisition of a 20%
shareholding in the Brazilian
business Ferrari Zagatto E Cia.
Ltda., (‘Ferrari’) announced in the
prior financial year, completed on
10 June 2019. Ferrari is a leading
provider of agronomy services,
inputs, crop handling and marketing
services. Ferrari provides an
important route-to-market for
Fortgreen’s speciality inputs and
nutrition offering.
The principal highlights are as follows:
Financial
>
> 15.6% growth in operating profit.
>
> Strong contribution from
associates & JV.
>
> 7.9% increase in adjusted
diluted EPS to 52.65 cent.
>
> Year-end leverage at 0.87x.
>
> Proposed 1.5% increase in
total dividend to 21.32 cent
per share.
Operational
>
> Strong business and operational
execution in Ireland / UK
and LATAM.
>
> Highly challenging market
dynamics in Ukraine drives
lower performance in
Continental Europe.
>
> Digital services enablement and
coverage progressing to plan
with over 1 million hectares
on-boarded.
Strategic
>
> Successful LATAM expansion
providing geographic and
portfolio diversification.
>
> Enhanced product-
based capabilities driving
differentiation and
momentum in value-added
agronomy portfolios.
>
> Continued strengthening
of organisation and
leadership team.
11
Strategic
Report
Digital Agricultural Services
The development and roll out of
Origin’s digital services offering
continued at pace this year, with
over 1 million hectares on-boarded
on our digital agronomy platform.
To meet the growing demand for
data-driven decision making at farm
level, Origin has developed a suite
of proprietary agronomist-farmer
enabled digital applications designed
to optimise crop performance and
input utilisation.
To further improve our customer
offering, the Group’s digital agronomy
and precision farming capabilities
were merged under a new digital
services brand called RHIZA. RHIZA
facilitates the delivery of advanced
adaptive agronomy to build micro
knowledge at field level. This data
driven and digitally enabled approach
utilises predictive diagnostic
capabilities to produce more
comprehensive agronomy advice to
sustainably maximise available soil
and crop genetic potential, delivering
enhanced long-term returns to
primary producers.
FY23 Ambition
In May this year at the Origin
Capital Markets Day in London,
we set out our five-year financial
and operational ambition for FY19
to FY23.
Delivering customised crop
production systems to over
50,000 farmers, growers and
amenity professionals
>50
,
000
There has been a strong
Origin performance in
FY2019 driven by good
organic and acquisition
led growth.
A summary of our ambition to FY23 is set out below:
Key Performance Indicator Metric
>
> Group operating profit CAGR 5% - 9%
>
> % of operating profit derived from markets
outside of Ireland/UK
+40%
>
> Organic operating profit CAGR 3% - 4%
>
> Acquisition enabled operating profit CAGR 2% - 5%
>
> Group Return on Invested Capital 12% - 15%
>
> Free Cash Flow ratio 70% - 100%
>
> Digital hectares on-boarded 4 million
Summary and Outlook
FY19 was a progressive year for
Origin, reflecting our commitment
to maintaining a diversified business
portfolio. An excellent first-time
contribution from Latin America
together with the benefit of strong
demand levels in Ireland and the
UK more than offset the impact of a
challenging operating environment
in Continental Europe, where highly
competitive trading conditions with
the Ukrainian market impacted
profitability.
Demand for agronomy services and
crop inputs for Ireland and the UK
are expected to normalise in FY20
and to be lower than the above
average market demand levels
experienced in FY19. Fertiliser and
feed demand are not expected to
match the demand created by the
fodder crisis in the first half of FY19.
Our Continental European and Latin
American segments are expected to
grow in FY20 in line with our long-
term guidance. Against the backdrop
of the uncertain nature of Brexit,
and its timing and implementation,
we continue to prioritise a prudent
approach to risk management and
capital allocation.
Origin is well positioned to
capitalise on the Group’s scalable
and diversified market positions,
integrated crop services business
model and strong balance sheet to
deliver on our 2023 financial and
strategic objectives.
Tom O’Mahony
Chief Executive Officer
24 September 2019
12
Find out more
Strategy on page 24
Sustainability on page 50
Research trials being
undertaken at Fortgreen’s
technical facility
Strategic
Report
13
Overview of Results
Chief Financial Officer’s Review
This Financial Review provides an overview
of the Group’s financial performance for
the year ended 31 July 2019 and of Origin’s
financial position at that date.
>
> Group revenue increase of 10.5% to
€1,798.2 million, and 7.2% on an
underlying basis.
>
> Operating profit1
of €82.3 million, an increase of
15.6% and up 3.5% on an underlying basis.
>
> Group operating margin1
of 4.6%, an increase of
20 basis points.
>
> Adjusted diluted earnings per share3
up
7.9% to 52.65 cent.
>
> Acquisitions contributed 3.2% to sales
growth and 12.0% to operating profit
growth in the year.
>
> Strong cash conversion with free cash
flow generation of €54.0 million
(2018: €56.6 million).
>
> Increase in net debt to €75.6 million
(2018: €38.4 million).
>
> Proposed 1.5% increase in total dividend
to 21.32 cent (2018: 21.0 cent).
>
> Good first-time contribution from
Fortgreen acquisition in Latin America.
>
> Exceptional charge of €7.0 million, principally
due to a non-cash impairment relating to
our Ukrainian business.		
Sean Coyle
Chief Financial Officer
14
Results Summary 2019 2018

Revenue 1,798.2 1,627.5
Operating profit 1
82.3 71.2
Associates and joint venture 2
, net 6.7 7.2
Total Group operating profit 1
89.0 78.4
Finance expense, net (11.8) (8.1)
Profit before tax 1
77.2 70.3
Income tax 4
(10.4) (8.6)
Adjusted net profit 66.8 61.7
Adjusted diluted EPS (cent) 3
52.65 48.80
Net debt5
(75.6) (38.4)
Adjusted Net Profit Reconciliation 2019 2018

Reported net profit 52.7 56.8
Amortisation of non-ERP intangible assets 8.8 5.7
Tax on amortisation of non-ERP related intangible assets (1.7) (0.8)
Exceptional items (net of tax) 7.0 -
Adjusted net profit 66.8 61.7
Reporting Segments
The Group has three separate reporting segments as set out below.
Ireland and the UK
This segment includes the Group’s wholly-owned Irish and UK-based Business-to-Business Agri-Input operations,
Integrated Agronomy and On-Farm Service operations and the Digital Agricultural Services business. In addition, this
segment includes the Group’s associates and joint venture undertakings.
Continental Europe
This segment includes the Group’s operations in Poland, Romania, Ukraine and Belgium.
Latin America
This segment includes the Group’s operations in Brazil.
An analysis of segmental revenues and operating profit for the Group before the Group’s share of revenue / operating
profit from associates and joint venture is set out below:
Revenue
Group revenue increased by 10.5% to €1,798.2 million from €1,627.5 million in the prior year. On an
underlying basis, at constant currency, revenue increased by €117.3 million driven by strong growth in
crop protection, seeds and fertiliser volumes, and an increase in fertiliser prices.
Operating Profit1
Operating profit1
increased by 15.6% to €82.3 million compared to €71.2 million in the previous year.
Acquisitions contributed €8.5 million to operating profit in the year, with our new Latin American
segment delivering €8.1 million. On an underlying basis, operating profit1
increased by €2.5 million
(3.5%) primarily driven by increased volumes and margins in Ireland and the UK.
Operating Profit Bridge
Seasonality
The Group’s operating profit1
profile is significantly weighted towards the latter half of the financial year.
An analysis of the quarterly revenue and operating profit1
is set out in the following table:

Revenue 430.0 271.6 595.4 501.2 1,798.2
Operating profit 1

was generated in the seasonally more important second half of the
current year, an increase of €4.4 million (6.4%) on the second half of 2018. The extended season
experienced in 2018 resulted in increased contributions in Q4 2018 and Q1 2019.
FY18 Underlying Acquisitions FY19 Currency FY19
Associates and Joint Venture
Origin’s share of the profit after interest and taxation from associates and joint venture amounted to
€6.7 million in the period (2018: €7.2 million).
Finance Expense and Net Debt
Net debt at 31 July 2019 was €75.6 million5
compared to net debt of €38.4 million5
at the end of the
previous year, reflecting a €62.4m spend on acquisitions and investment capital expenditure. Average
net debt amounted to €270.6 million compared to €226.0 million last year.
Net finance costs amounted to €11.8 million, an increase of €3.7 million on the prior year level. The
higher finance costs were driven by the first time cost of financing the acquisition of the Brazil-based
Fortgreen business, additional cost of working capital financing due to an increase in the level of sales,
combined with increased financing rates in Continental Europe. The average and year end net debt
increase is principally attributable to the acquisition cost and working capital investment relating to
Fortgreen and an increased investment in Group working capital.
Taxation
The effective tax rate for the year ended 31 July 2019 was 15.0% (2018: 14.0%), and reflects the mix of
geographies where profits were earned in the year.
Disposal of Cork Dockland Properties
Origin announced during the year that it had reached conditional agreement for the disposal of up
to 31 acres of land owned by the Group in Ireland at South Docklands in Cork (‘Docklands’) for a cash
consideration of up to €47.5 million.
The transaction is subject to the satisfaction of a number of conditions necessary to realise the full
disposal proceeds including the granting of various permissions and approvals and the relocation of
the Group’s existing operating business in Docklands at an economically viable cost to an alternative
location in Cork.
Exceptional Items
Exceptional items net of tax amounted to a charge of €7.0 million in the year. These principally relate
to the impairment of goodwill and intangibles in Ukraine, acquisition and restructuring costs and
a fair value adjustment on the Group’s investment properties and property, plant and equipment
associated with the proposed sale of the Group’s Cork properties. Exceptional items are summarised
in the table below:
Year ended 31 July 2019
€’m
Impairment of investment in Ukraine, net of put option gain 7.3
Fair value adjustment and related costs on investment properties (5.4)
Impairment of property, plant and equipment 4.1
Arising on associates and joint venture 0.4
Pension and rationalisation related costs 0.3
Transaction, other related costs and movements in contingent consideration, net 0.3
Total exceptional items, net of tax 7.0
Adjusted Diluted Earnings per Share3
(‘EPS’)
EPS amounted to 52.65 cent per share, an increase of 7.9% from 2018. The year-on-year increase
of 3.85 cent per share can be summarised as follows:
Strategic
Report
Dividends
In line with the progressive dividend policy announced at the 2019 Capital Markets Day, the Board
recommends an increased final dividend of 18.17 cent per ordinary share which, when combined with
the interim dividend of 3.15 cent per ordinary share, brings the total dividend for the year to 21.32
cent per ordinary share (2018: 21.0 cent), an increase of 1.5%. Subject to shareholder approval at the
Annual General Meeting, this final dividend will be paid on 13 December 2019 to shareholders on the
register on 29 November 2019.
Capital Structure – Bank Facilities
The financial structure of the Group is managed to maximise shareholder value while providing the
Group with the flexibility to take advantage of opportunities to develop the business. The Group targets
acquisition and investment opportunities that are value enhancing and the Group’s policy is to fund
these transactions in the most efficient manner.
During the year the Group extended €300.0 million of its core syndicated facilities for a further two
years. At year end the Group had unsecured committed banking facilities of €430.0 million (2018:
€430.0 million), of which €30.0 million will expire in August 2021, €100.0 million will expire in May 2022
and €300.0 million will expire in June 2024.
Acquisitions
During the year, Origin acquired a 65% interest in Fortgreen and a 20% interest in Ferrari Zagatto in
Brazil. In addition, the Group made investments in the UK with the acquisition of Symbio and VCS.
Integration is progressing to plan and performance is at pre-acquisition expectation.
Total acquisition expenditure during the year amounted to €54.6 million.
Cash Flow and Net Debt
Actual net debt at 31 July 2019 was €75.6 million5
compared to €38.4 million5
at the end of the previous
year. The majority of Group borrowings are subject to financial covenants calculated in accordance with
lenders’ facility agreements. The Group’s balance sheet is in a strong position. Group Treasury monitors
compliance with all financial covenants which at 31 July 2019 included:
Working Capital
For the year ended 31 July 2019, there was a working capital outflow of €12.7 million primarily due to an
investment in working capital in Fortgreen in Brazil and increased year-on-year sales across the Group.
Working capital allocation remains a key priority for the Group given the associated funding costs. The
year end represents the low point in the working capital cycle for the Group reflecting the seasonality
of the business.
Return on Capital Employed
Return on capital employed is a key performance indicator for the Group, with Origin delivering
13.2% in 2019 (2018: 13.5%), as follows:
2019 2018

Total assets 1,305.5 1,204.1
Total liabilities (959.7) (873.8)
Adjusted for:
Net debt5
75.6 38.4
Tax, put option and derivative financial instruments, net 60.0 30.5
Accumulated amortisation 54.9 48.0
Capital employed – 31 July 536.3 447.2
Average capital employed (Group Net Assets as defined below) 675.3 581.6
Operating profit (excluding exceptional items) 73.5 65.5
Amortisation of non-ERP intangible assets 8.8 5.7
Share of profit of associates and joint venture 6.7 7.2
EBITA (as defined below) 89.0 78.4
Return on capital employed 13.2% 13.5%
For the purposes of this calculation, ROCE represents Group earnings before interest, tax and
amortisation of non-ERP related intangible assets from continuing operations (‘EBITA’) taken as a
percentage of Group net assets:
(i) EBITA includes the net profit contribution from associates and joint venture (after interest and tax)
and excludes the impact of exceptional and non-recurring items.
(ii) Group Net Assets means total assets less total liabilities excluding net debt, derivative financial
instruments, put option liabilities, accumulated amortisation of non-ERP related intangible assets
and taxation related balances. Group Net Assets are also adjusted to reflect the average level of
acquisition investment spend and the average level of working capital for the accounting period.
19
Strategic
Report
Free Cash Flow
The Group generated free cash flow in the year of €54.0 million (2018: €56.6 million). Free cash flow
is an important metric as it indicates the amount of internally generated capital that is available for
re-investment in the business or for distribution to the shareholders.
2019 2018

EBITDA (excluding associates and joint venture) 90.6 78.6
Interest paid (11.4) (6.9)
Tax paid (12.6) (10.4)
Routine capital expenditure (6.9) (7.9)
Working capital (outflow) / inflow (12.7) 0.7
Dividends received 7.0 2.5
Free cash flow 54.0 54.0 56.6
Free cash flow means the total of earnings before interest, tax, depreciation, amortisation of non-
ERP related intangible assets and exceptional items of wholly-owned businesses (‘EBITDA’) adjusted
to take account of interest, tax, routine capital expenditure, working capital cash-flows and
dividends received.
Post-Employment Benefit Obligations
The Group operates a number of defined benefit and defined contribution pension schemes with
assets held in separate trustee administered funds. All of the defined benefit schemes have been
closed to new members for a number of years and the majority are closed to future accrual.
Under IAS 19, ‘Employee Benefits’ the amounts recognised in the Consolidated Statement of
Financial Position as at 31 July 2019 are as follows:
2019 2018

Non-current liabilities
(Liability) / asset in defined benefit schemes (1.5) 0.7
The movement during the year can be summarised as follows:
€’m
Net asset at 1 August 2018 0.7
Current and past service costs (0.5)
Gain on settlement 0.5
Other finance expense, net -
Contributions paid 1.3
Remeasurements (3.6)
Translation 0.1
Net liability at 31 July 2019 (1.5)
The remeasurements of €3.6 million principally relate to changes in financial assumptions together with
remeasurement gains on scheme assets.
20
Risk Exposures
The Group’s international operations expose it to different financial risks that include currency risk,
credit risk, liquidity risk and interest rate risk. The Group has a risk management programme in place
which seeks to limit the impact of these risks on the financial performance of the Group. The Board has
determined the policies for managing these risks. It is the policy of the Board to manage these risks in
a non-speculative manner. Details of the Group’s risk exposures and the controls in place to monitor
such exposures are set out in Note 22 to the financial statements.
Share Price
The Group’s ordinary shares traded in the range of €6.12 to €4.80 during the year from 1 August 2018 to
31 July 2019. The Group’s share price at 31 July 2019 was €4.95 (31 July 2018: €6.04).
Investor Relations
Our corporate strategy aims to create long-term value. We support this strategy through regular and
open communication with all capital market participants. We engage with institutional investors in
numerous one-on-one meetings, as well as at roadshows and conferences worldwide.
Contact with institutional shareholders is the responsibility of the executive management team
including the Chief Executive Officer, Chief Financial Officer, Group Finance Director and Head of
Investor Relations.
During the year there were 150 meetings / conference calls with institutional investors across nine
financial centres. In addition, in May 2019 the Group held a Capital Markets Day in London with
presentations from the Chief Executive Officer and key divisional management, and a detailed overview
of our 2023 strategic ambition.
Sean Coyle
Chief Financial Officer
24 September 2019
1 Operating profit and total Group operating profit are stated before amortisation of non-ERP intangible assets
and exceptional items.
2 Share of profit of associates and joint venture represents profit after interest and tax before exceptional items.
3 Adjusted diluted earnings per share is stated before amortisation of non-ERP intangible assets, net of related deferred
tax (2019: €7.1m, 2018: €4.9m) and exceptional items, net of tax (2019: €7.0m, 2018: €Nil).
4 Income tax before tax impact of exceptional items and excluding tax on amortisation of non-ERP intangible assets.
5 Including restricted cash of €Nil (2018: €0.5m).
21
Strategic
Report
Our Business
A market leader through
acquisition, integration
and organic growth.
Origin is a recognised leader
in the European Agri-Services
market with operations in six
countries and during the year
entered the Latin American market
with acquisitions in Brazil. The
Group supports primary producers
across all our markets.
What is Agronomy?
Agronomy combines crop science
and applied farming expertise to
enable growers to optimise the
productivity of crops, whilst
caring for the consumer, the soil
and the environment.
What is an Agronomist?
An Agronomist is a specialist plant
and soil scientist who works directly
with farmers to provide innovative
research-based advice and supply
inputs and other related services,
to optimise crop production, on a
sustainable basis.
What do Agronomists do?
Our Agronomists act as a
trusted adviser to farmers in
the provision of a range of services
and inputs including:
> specialist advice;
> seed inputs;
> crop protection products; and
> nutrition products.
Ireland and the UK Continental Europe
Latin America
Our Brands
22
Foundations
> Well-established brands.
> Experienced and
committed people.
> Strong on-farm presence.
> Flexible production
facilities to cater
for high seasonal
variation in demand.
Innovation and R&D
> Leading bespoke fertiliser
blender.
> Continuous and
technically-led
product development.
> Environmentally sustainable
product offering.
> Continuing benchmarking
of production and plant
performance.
Supply Chain
> Strategic locations and
geographic spread.
> Well-invested blending
and formulation facilities.
> Market share provides
supply chain flexibility.
> Strong supplier partnerships.
> Focus on health and safety.
Our Approach to Integrated Agronomy:
Application Research
and Analysis
> Investment in research and
development to optimise
crop productivity.
> 50,000 trial units managed
across the UK, Continental
Europe and Latin America.
> Collaboration with key industry
partners and universities.
> Analysis of the needs of
primary producers.
Prescription Development
> Advise primary producers on
all components of crop and
field management.
> Recommendation of customised
solutions to optimise crop
yields and quality.
> Ensuring environmental
and regulatory compliance
requirements are met.
Application and Delivery
> Delivery of customised
solutions to primary producers.
> Supply of seed, nutrition and
crop protection technology
to farms.
> Provision of ongoing advice
and monitoring on the
timing of the application of
these products.
> Use of technology to optimise
service delivery to primary
producers.
What sets us apart
Our Approach to Business-to-Business Agri-Inputs:
23
Strategic
Report
Strategy
Long-term relationships as trusted
adviser and input provider to
farmers, growers and amenity
professionals. 				
			
Leading market positions,
integrated supply chains and
multiple routes to market across
strategic geographic locations. 		
Pioneering agricultural R&D and
technical innovation delivering
customised agronomic solutions
which accelerate productivity and
maximise efficiency for customers.
		
Digital technology optimised
by expert agronomist-led
stewardship, providing localised
and prescriptive solutions to
farmers, growers and amenity
professionals.
Positioned to capitalise on evolving
structural market trends of
increasing farm commercialisation,
professionalisation and
specialisation. 				
			
Strong cash generation and
conversion capabilities. 			
			
Balance sheet strength to drive
organic growth, international
expansion and future M&A
opportunities. 				
		
Progressive dividend policy
delivering consistent shareholder
returns.				
People
Innovation
Integrity
Partnerships
Community
Investment Case
Our Vision
To be the leading and trusted partner
of choice to the farmers, growers and
amenity professionals we serve.
Our Purpose
Optimising sustainable agriculture and
food production through innovation,
research & development and
agronomic expertise.
Our Values
24
A mix of organic growth and acquisition driven by growth

Opportunity to use
existing Routes to Market
Sourcing Opportunities /
Product Mix Change
Product Based
Capabilities
Focus on
Return on Investment
Group ROCE
12-15%
Free Cash
Flow Ratio
70-100%
Digital Platform
4m Ha
Our Ambition 2023
Perform, Sustain, Grow
Origin is pursuing a clear long-term
strategy which is based on our
purpose, vision and values. The
Group’s strategy seeks to retain
the culture and successful value-
add approach that differentiates
Origin, while strengthening our
routes to market.
Origin’s strategic ambition to 2023
emphasises the need for evolving
agronomic led solutions, that
meet the advancing needs of all
stakeholders, collectively growing
profitability in a sustainable and
socially responsible manner.
To achieve this, ambitious financial
and non-financial targets have been
set, which will be delivered through
a combination of organic and
acquisition driven growth.
25
Strategic
Report
Strategy
Scale
> Concentrate on target geographies
with long-term growth potential.
> Build complementary product based
and distribution capabilities.
> Origin delivered revenue growth of
10.5% and operating profit growth
of 15.6% in FY19.
> First-time entry into Latin America
following the acquisition of Brazilian
speciality inputs business Fortgreen
and the purchase of a 20% interest
in the agronomy services and crop
inputs business Ferrari Zagatto.
> Increased digital agronomy footprint
to 1 million ha.
> The Group will continue to focus
on strategic opportunities to
complement our existing market
positions and enhance our product
capability through a combination of
organic and acquisition driven growth.
> We will continue to invest in strategic
capital expenditure opportunities to
maximise value-add opportunities
within our existing markets across
both our fertiliser blending and
product formulation plants in addition
to our digital platform.

Focus
Strategic Priorities
Strategic
Priority
Market
Focus
> Customisation and localisation.
> Investments in digital and agronomic
capabilities to promote sustainable
food production systems.
> During the year, the Group’s digital
agronomy and precision farming
capabilities were merged under a new
identity called RHIZA.
> The Group also launched the UK’s
first precision soil map and added
additional capabilities to our digital
platform Contour.
> Opened six new Digital Technology
Farms in the UK, providing farmers and
growers with an opportunity to attend
open days and observe digital best
practice on a commercial scale.
> Near market product research,
development and innovation
via our technology centres and
demonstration farms remains
central to the Group’s strategy. Our
continued ability to provide our
customers with the most effective
and proven technologies will enable
us to strengthen our position as
market leaders.
26
People &
Organisations
> Ongoing people and talent
development.
> Devolved accountability and autonomy
to execute growth agenda.
> The Group has over 2,500 employees,
800 of whom are customer facing
agronomists and sales staff.
> Launched an employee engagement
strategy ‘Let’s Talk’.
> Origin is a people-focused business,
recognising that the quality of our
people differentiates us within
the market place and is a key
competitive advantage for the
Group. We focused on the wellbeing
of our people and invested in their
ongoing development. We listened
to their opinions and implemented
changes when necessary to maintain
their full engagement.
> The Group will continue to invest in
our people, providing the necessary
support, development, infrastructure
and environment to deliver our
strategic agenda, drive performance
and grow our reputation as an
employer of choice for the very best
talent within the Agri and Amenity
services sectors. Focus will remain
on our employee engagement
programme, through ongoing Group
wide focus groups and business
unit visits.
Portfolio
Positioning
> Maintain differentiated position as
specialist route-to-market for
crop technologies.
> Optimise Group position through
balanced business portfolio and
geographical diversification.
> Continued expansion of Origin’s
enhanced efficiency fertiliser range
across Ireland, the UK and Belgium.
> Acquisition of UK biological
crop input business Symbio,
strengthening the Group’s own
product-based capabilities.
> Geographic diversification
progressed, following entry into
Latin America. Operating profit
contribution from geographies
outside of Ireland and the UK
increased by 4% to 27% of Group
operating profit.
> Maintain focus on the development
of operations across our core
geographies and product areas which
are value enhancing, present future
growth opportunities and deliver on
the Group’s capital return targets.
> Expand operating profit contribution
from geographies outside of Ireland
and the UK in line with 2023 target
of >40%.
Strategic
Report
27
Business Model
What we do
and how we
add value
Inputs
People
Partnerships
Financial &
Strategic Planning
Knowledge & IP
Supply Chain
& Logistics
Sustainability
Our Offer:
Nutrition
Crop Protection
Seed
Digital
Expertise / Advice /
Prescription
28
Our Brands:
Agrii
Goulding
Fortgreen
RHIZA
Rigby Taylor
Origin Fertilisers
Linemark
Our Channels:
Business-to-Business
Agronomist
Our End-User:
Farmers & Growers
Amenity Professionals
Outputs
Yield Enhancement
Profitability &
Competitiveness
Environmental
Stewardship
Maximise
Shareholder
Return
Find out more
Case Study in
Continental Europe
on page 42
Find out more
Chief Financial
Officer’s Review
on page 14
Find out more
Sustainability Report
on page 50
Find out more
KPI’s on page 30
29
Strategic
Report
ROCE is defined as Group
earnings before interest,
tax and amortisation
of non-ERP related
intangible assets taken
as a percentage of Group
Net Assets.
13.2%
(2018:13
.
5%)
A key element of the
Group’s strategic ambition
to 2023 is to deliver ROCE
of 12 – 15%.
Measures adjusted
diluted EPS in the
current year compared
to the prior year.

The Group’s aim is to
target growth in adjusted
diluted EPS, while
recognising that factors
outside our control may
cause inter-year variances.
Key Performance Indicators
Origin employs financial and non-financial Key
Performance Indicators (‘KPIs’) which benchmark
progress towards our strategic priorities. KPIs are
reviewed and monitored on a regular basis and are
amended to reflect better the Group’s key performance
measures when required.
Adjusted Diluted
Earnings per
Share (‘EPS’)
Return on
Capital Employed
(‘ROCE’)
Measures operating
profit contribution from
geographies outside
Ireland and the UK as
a percentage of total
operating profit.

The Group’s aim is to
grow the operating
profit contibution from
geographies outside of
Ireland and the UK to in
excess of 40% of total
operating profit by 2023.
Geographic
Diversity
KPI
Description
Link to Strategy
Current Year
Historic Result
Strategic

Measuring
Our Strategic
Progress
Measures the number of
farm hectares uploaded
to the Group’s digital
platforms.
1m ha
(2018:0
.
7m ha)
The Group’s aim is to
grow the number of farm
hectares on our digital
platforms to in excess
of 4.0 million hectares
by 2023.
Measures the number of
agronomists and sales
representatives available
to customers to ensure
that the appropriate
mix of experience and
expertise is available.

Our target is to remain
adequately resourced
with skilled agronomists
and sales representatives
who can meet our
customers’ needs.
Measures the total
dividend per ordinary
share proposed in the
current financial year.
21.32c
+1.5%
The Group’s strategic
ambition to 2023 is to
deliver a progressive
dividend policy with a
payout ratio > 35%.
Measures free cash flow
as a percentage of profit
after tax of wholly-owned
businesses, excluding
exceptional items and
amortisation on non-ERP
related intangible assets.
A key element of the
Group’s strategic ambition
to 2023 is to deliver
a Free Cash Flow Ratio
of 70 – 100%.
Free Cash
Flow Ratio
Dividend Number of
Agronomists and
Sales Staff
Digital
Hectares
Strategic Priorities Key: Find out more
Chief Financial Officer’s
Review on page 14
2016 2017 2018 2019
Scale People & Organisations Portfolio Positioning Market Focus
Strategic
Report
31
Origin has leading positions in the UK
Integrated Agronomy Services market,
the Irish and UK Fertiliser and Speciality
Nutrition markets and the UK Amenity
inputs market. These market positions
were achieved through a combination of
acquisitions and organic growth, enabling
us to support primary food producers and
influence food production across Ireland
and the UK.
Ireland
and the UK
iFarms B2B Sites Technology Centres
Business Review
UK
Ireland
Find out more about
Origin’s digital capabilities
on page 36
32
Ireland and the UK delivered a very
strong performance, recording
an 11.0% increase in underlying
revenue and an 8.6% increase in
underlying operating profit.
Underlying volume growth for
agronomy services and crop inputs
was 6.8% in the period. Volume
development was supported by
strong demand for crop inputs
reflecting a combination of robust
activity in-field, early procurement
planning by primary producers
for crop protection products for
application in 2020 and higher
feed and fertiliser volumes in the
period following the impact of poor
grass growing conditions in 2018.
Market volumes are expected to
normalise in 2020 compared with
the above average demand levels
experienced in 2019.
Operating margin decreased by 10
basis points to 5.2% primarily due
to the impact of increased fertiliser
volumes and prices, offsetting the
favourable margin development
achieved across our agronomy
services and inputs portfolio.
Integrated Agronomy and
On-Farm Services
Integrated Agronomy and On-
Farm Services delivered a good
performance during the year,
recording higher volumes,
revenues and margins across its
service and input portfolios.
Demand for agronomy services and
inputs was driven by favourable
operating conditions and was
supported by the beneficial impact
of sterling weakness on growers’
crop margins.
Performance in the period also
benefited, in part, from early
procurement planning by farmers
and growers to secure supply
of specific crop technologies
for in-field application in 2020
whose product registrations are
scheduled to expire after 2019.
Good progress was achieved in the
further development of the Group’s
agronomy portfolio across high
value and speciality crop sectors.
Digital Agricultural Services
Origin has developed a suite of
agronomist-farmer enabled digital
applications designed to optimise
crop performance and input
utilisation.
During the year, the Group’s
digital agronomy and precision
farming capabilities were merged
under a new identity called
RHIZA. RHIZA facilitates novel
and enhanced engagement with
farmers through offering real-
time and prescriptive digital
agronomy solutions which address
complex requirements relating
to environmental stewardship,
compliance, risk management and
field level crop performance.
The development and roll-out of
Origin’s digital offering continued
at pace during the year, with over
Change on prior year
Customers
Operational Review
Overview
33
Strategic
Report
Business Review
Ireland and the UK
1.0 million hectares on-boarded to
date and firmly on track to deliver
our target of 4.0 million hectares
by 2023.
Business-to-Business
Agri-Inputs
Business-to-Business Agri-Inputs
performed strongly in the period,
delivering good growth in operating
profits, supported by favourable
volume development.
Fertiliser
Fertiliser recorded higher
volumes and profits in the period.
Performance reflected the benefit of
favourable weather conditions and
a stable pricing environment which
positively influenced purchasing
decisions on-farm.
The successful integration of the
UK based Bunn Fertiliser, acquired
in 2018, was a key enabler of an
enhanced supply chain and customer
service capability to meet higher
demand in the period and to address
farmers’ increasingly sophisticated
requirements relating to soil fertility
and crop nutrition.
Margins continue to be positively
supported by growth in volumes of
enhanced efficiency fertiliser and
bespoke nutrition applications.
Amenity
Amenity recorded lower revenues
and profits in the period.
The residual impact of unseasonal
weather conditions in 2018 was
reflected in elevated carryover
stockholdings at customer level which
led to lower demand in the period.
Performance was favourably
supported through new customer
gains in Home & Garden and by
the first-time contribution from
Symbio, the speciality biological
crop technology business acquired
in November 2018.
Feed Ingredients
Feed Ingredients delivered a very
satisfactory result in the year
reflecting the benefit of strong
operational execution and a robust
volume performance following the
exceptional demand experienced
in 2018.
Volume development in the
period was positively supported
by higher livestock numbers and
generally stable returns for primary
dairy producers.
The Group’s animal feed
manufacturing associate, John
Thompson & Sons Limited, in which
the Group has a 50% shareholding,
delivered a very satisfactory
performance in the period.
Origin is a leading international
agri-services group providing
crop inputs, specialist agronomy
advice and digital agricultural
solutions to farmers, growers and
amenity professionals.
Find out more
See RHIZA case study on page 36
See Linemark case study on page 37
Profit by Geography1
73%
1. Operating profit before amortisation of non-ERP
intangible items and exceptional items
Ireland & the UK Continental Europe Latin America
10%
17%
34
Andreea is the Digital Programme Manager for RHIZA
UK. Based in Berwickshire, in the Scottish Borders,
Andreea works with Agrii UK’s regional directors
and Origin’s digital team to develop and promote
differentiated product offerings to support the
adoption of Origin’s digital technologies on-farm.
Andreea, a qualified electronics, telecommunication
and IT engineer, joined Origin’s Romanian Digital
division in 2017, where she applied her expertise to
the discovery, promotion and development of digital
technologies in agriculture.
As part of Origin’s team in Romania, Andreea
supported the creation of the Group’s digital and
precision offering adapted for the Romanian market
and the adoption of Contour, the Digital platform
developed by Origin.
After 18 months working with the team in Romania,
Andreea availed of the opportunity to join Agrii UK
where she has played a key role in the launch of
the RHIZA brand.
On a daily basis, Andreea’s role highlights how
the agricultural industry benefits from digital and
technology innovations and how Origin as a Group can
benefit from transfer of knowledge and people across
the geographies in which we operate.
Case Study
Andreea Ailenei
Transferring Knowledge
Read more on our
Strategic Priorities
on page 26
100-2
,000ha 385
Customer Profile Sales Force
35
Strategic
Report
Business Review
Ireland and the UK
During the year, the Group’s digital agronomy
and precision farming capabilities were merged under
a new identity called RHIZA. RHIZA delivers solutions
to farmers and growers addressing environmental
stewardship, compliance and risk management
together with field level data driven decision support
tools to manage crop performance. RHIZA is built on
a deep understanding of both farming and the new
opportunities of digital agriculture and agronomy.
The range of services offered by RHIZA include field
level imaging, nutrient planning applications, pest
and disease models, yield prediction models and
soil sampling.
The application of RHIZA technologies improves
profitability and productivity in every field and is
already in use on over 500,000 hectares in the UK
alone, and over 1,000,000 hectares across Europe
and Africa. RHIZA is designed for all farms providing
unique satellite data, crop growth models, hyper
local weather data and pest and disease models and
soil sampling capabilities allowing the creation of
management zones and improved in-field decision
making. Within the RHIZA portfolio, the Contour web
app and interface allows farmers to create nutrient
plans, seed rate maps and identify areas requiring
cultivation management – RHIZA helps farmers make
more informed and accurate decisions and has put
the future of farming in their hands.
RHIZA
The Future of Farming
in Your Hands
Case Study
RHIZA is in use on over
in the UK
500,000ha
See non-financial
KPI’s on page 30
36
Over the past 20 years, Linemark has become a
world leader in providing line-marking products
and sports advertising solutions to the professional
sports and amenity sector in the UK and beyond,
currently exporting to 34 countries worldwide.
Linemark uses innovative grass-marking technology,
promoting sustainability by reducing paint
consumption by up to 75%, cutting energy and
water consumption, and using recycled packaging.
Linemark also supplies paint for use in sports
advertising, including on-field branding at televised
sporting events such as football and rugby matches.
Linemark’s products have been used at some of the
most prestigious stadiums in the world, including Old
Trafford (Manchester), Wembley Stadium (London),
Anfield Stadium (Liverpool), Etihad Stadium
(Manchester), Borrusia Dortmund (Germany) and
Barcelona (Spain).
Linemark
The Choice of Champions
See our Sustainability
Report on page 50
Linemark
exports to
34
Countries
worldwide
Case Study
Strategic
Report
37
Origin is a recognised market leader in
the provision of Agronomy Services and
Crop Inputs in our Continental European
markets. Through our agri-services
businesses in Poland, Romania, Ukraine
and our fertiliser operation in Belgium,
the Group has extensive experience
supporting primary food producers
throughout these markets.
Technology Centres Demonstration Farms B2B Site
Continental
Europe
Business Review
Promoting Knowledge Transfer
Find out more
See case study
on page 42
38
Overview
Continental Europe encountered a
challenging operating environment
during the year which resulted
in lower margins and operating
profits primarily driven by the
under-performance of our
Ukrainian business.
Underlying business volumes
declined by 2.9% in the period and
operating margins reduced by 60
basis points to 3.2%.
Belgium
Belgium delivered a strong
performance in the year,
recording solid volume and margin
development. Margins were
favourably supported by growth
in sales of speciality and bespoke
nutrition applications.
Poland
Poland performed in line with the
prior period.
While volume development in the
period was impacted by lower
demand due to a reduction in
early autumn crop plantings,
performance benefited from the
ongoing enhancement of Origin’s
seed and speciality nutrition
portfolios through the further
development of the Group’s
product based capabilities.

1 Excluding crop marketing. While crop marketing has a significant impact on revenue, its impact on operating profit is insignificant. For the
year ending 31 July 2019 crop marketing revenues and profits attributable to Continental Europe amounted to €165.1 million and €0.3 million
respectively (2018: €158.4 million and €0.2m respectively). An analysis of revenues, profits and margins attributable to agronomy services
and inputs more accurately reflects the underlying drivers of business performance.
2 Before amortisation of non-ERP intangible assets and exceptional items
3 Excluding currency movements and the impact of acquisitions
4 Excluding currency movements
1. Revenue and Operating profit excluding
crop marketing.
39
Strategic
Report
Business Review
Continental Europe
Romania
Romania achieved higher revenues
and profits in challenging operating
conditions.
Good volume momentum was
achieved across all market channels
against lower demand due to the
impact of extended dry conditions
on winter oilseed rape plantings.
Performance benefited from
improved commercial effectiveness
together with good progress
achieved in the period relating to
customer channel integration and
business portfolio alignment.
Ukraine
Ukraine recorded a significant
reduction in profitability in the
period. Business performance
reflected a market characterised
by lower liquidity and excess
inventories which drove highly
competitive trading conditions.
In the context of this challenging
market backdrop, the Group
continues to prioritise operational
and working capital efficiencies
along with the further development
of high service agronomy channels
and precision digital offerings.
Origin is a recognised leader in the
provision of Agronomy Services and
Crop Inputs across our Continental
European markets in Poland,
Romania, Ukraine and Belgium.
Find out more
See Agricultura Plus case study on page 42
See FoliQ case study on page 43
Profit by Geography1

1. Operating profit before amortisation of non-ERP
intangible items and exceptional items
Continental Europe Ireland & the UK Latin America
A qualified agronomist and MBA graduate, Valerian
holds a MSc in Sustainable Agriculture from the
Faculty of Agriculture in Bucharest and a PhD in plant
physiology from Uni Hohenheim, Stuttgart, Germany.
Valerian joined Origin in December 2014 to
support the Group’s entry into the Romanian
market. Following the acquisitions of Comfert and
Redoxim, Valerian was the ideal candidate to assume
responsibility for the creation of Agricultura Plus,
Origin’s R&D and Digital structure tailored for the
Romanian market.
Under Valerian’s stewardship Agricultura Plus is
emulating the successes of Origin’s UK research
facilities, demonstrating value to farmers via the
adoption of classical and digital crop technologies.
Case Study
Valerian Istoc
Business Development Director
See more on our
Digital offering
on page 36
100-50
,
000ha
Customer Profile Sales Force
335
Valerian reviewing maize
trials with Mihnea Pojoga
of Agriculture Plus
41
Strategic
Report
Business Review
Continental Europe
Agricultura Plus was established in 2017 to facilitate
the knowledge transfer and rapid deployment of crop
technologies and field management strategies into
the Romanian market.
Building on the success of our UK based R&D
programmes, Agricultura Plus uses an integrated
approach to investigate all components of successful
crop production systems in localised conditions. As a
result, our local agronomists are equipped with the
latest information to deliver bespoke recommendations,
inputs and intelligent agricultural solutions to maximise
farmers’ production returns.
“Based on the size of my farm, I thought it was
too small for a precision advice service.
I first engaged the service across several
fields that I considered of ‘low potential’
yielding 1,700-1,800 kg o
f sunflower / ha. A
soil analysis identified a low pH level in
addition to Phosphorus and Zinc deficiency.
Based on the findings, my agronomist Alin
prescribed a customised soil nutrition
programme, prompting a change to the range
of fertilisers used in order to match the
crops’ nutritional requirements. As a result
the fields delivered a 1.2 tonnes increase in
yield, one of the highest sunflower yields in
my area. The trial convinced me to engage the
services across the whole farm”.
– Miclescu Radu, Botosani, Romania, Farm Area 350 ha
Agricultura Plus
Leading by example
Case Study
See more on our
Digital offering
on page 36
Building on the success of our UK
based R&D programmes, Agricultura
Plus uses an integrated approach
to investigate all components of
successful crop production systems
in localised conditions.
42
FoliQ developed
over the past
25yrs
FoliQ is a range of liquid foliar fertilisers
containing the optimum composition of macro
and micronutrients to promote plant nutrition
and health. Its primary innovation lies in
fragmentation of incorporated nutrients to the
size of nanoparticles.
Developed over the past 25 years, FoliQ is one of
the strongest brands of foliar fertiliser within the
Polish market, maximizing crop performance and
therefore yield through the delivery of:
> efficient nutrient uptake;
> quick and efficient plant nutrition;
> more intensive growth of plants;
> increased tolerance of plants to stress
conditions; and
> enhancement of plant resistance to diseases.
Having successfully proven the product efficacy
through localised trials, Origin exports FoliQ to
nine countries to meet a growing demand for foliar
nutrition products.
FoliQ
Own Product
Based Capability
Case Study
Read more on our
Strategic Priorities
on page 26
43
Strategic
Report
In June 2018, Origin announced it had
reached agreement to acquire a 65%
controlling interest in Fortgreen and a
20% shareholding in Ferrari Zagatto.
Both entities are based in Paraná State
in Brazil and represent the Group’s first
entry into the Latin American market.
The 65% controlling interest in Fortgreen
was completed in August 2018, with
the 20% shareholding in Ferrari Zagatto
completed in June 2019.
Latin
America
Business Review
Fortgreen: Enhancing Origin’s
product based capabilities
Find out more
Case study
page 49
Fortgreen Sites Ferrari Zagatto Sites
Paraná State
Brazil
44
Overview
Origin made its first-time entry into
the Brazilian agri-services market
following the completion of the
acquisition of Fortgreen in August
2018. Fortgreen, headquartered in
Paraná State in southern Brazil, is
focused on the development and
marketing of speciality inputs and
value-added crop nutrition.
Latin America has delivered an
excellent first-time contribution
in the period, with performance
in line with pre-acquisition
expectations. Integration is
progressing to plan, including
the development of partnerships
with other Origin entities to
enhance the Group’s own product
based capabilities.
Brazil
Performance in the year was
supported by good growth in
soluble nutrition technologies
for grain and speciality crop
applications and aided by a strong
harvest for Brazil’s principal spring
crop, soya. The Group has invested
in additional production and
storage capability to support
this growth.
The acquisition of a 20%
shareholding in the Brazilian
business Ferrari Zagatto E Cia.
Ltda., (‘Ferrari’) announced in the
prior financial year, completed on
10 June 2019. Also headquartered
in Paraná State, Ferrari is a
leading provider of agronomy
services, inputs, crop handling
and marketing services. Ferrari
provides an important route-to-
market for Fortgreen’s speciality
inputs and nutrition offering. As
Ferrari was acquired close to the
year end, its contribution to the
overall result was immaterial.
Strategic
Report
Business Review
Latin America
Latin America has delivered an
excellent first-time contribution
in the period. Integration
is progressing to plan, with
performance in line with
pre-acquisition expectations.
Research trials being
undertaken at Fortgreen’s
technical facility
Profit by Geography1
10%
1. Operating profit before amortisation of non-ERP
intangible items and exceptional items

A qualified agronomic engineer and MBA graduate,
Leonardo holds a MSc in Plant Nutrition where he
specialised in production management.
Leonardo joined Origin through the acquisition
of Fortgreen in 2018. As Head of Technical and
Operations in Fortgreen he holds strategic
responsibility for new product development
within local and international markets. Leonardo and
his team are an integral part of the Group’s plans to
transfer formulation expertise into existing European
markets, bringing extensive formulation and
production knowledge across both fertiliser and
speciality inputs.
Case Study
Leonardo Pereira
In Profile
Leonardo on-farm in Paraná state
Read more on our Strategic
Priorities on page 26
47
Strategic
Report
Business Review
Latin America
Strategic
Report
At
a
Glance
Extensive trials
across Brazil have
demonstrated
yield increases
versus the market
standard products,
averaging between
5-8 additional bags of
soya bean per hectare.
Zinc is one of the most widespread micronutrient
deficiencies in crops, resulting in stunted plant
growth, an elongated crop maturity period and
inferior harvest quality. ZC Full Patriot is a seed
treatment formulation developed in-house by
Fortgreen using Zinc Complex technology.
ZC Full Patriot works to physiologically
stimulate plants delivering:
> greater germination and emergence;
> higher germination and emergence speed
in stressful situations; and
> better crop establishment.
Extensive on-farm trials across Brazil have
demonstrated yield increases versus the market
standard products, delivering 4 – 6% additional
yield in soya crops. ZC Full Patriot is one of a range
of in-house product formulations developed by
Fortgreen, with broader application use across
Origin Group markets, to address localised
agronomic challenges.
ZC Full Patriot
Own Product Based
Capability
Case Study
48
During the year, the Group completed the
acquisition of Fortgreen in Brazil which was the
Group’s first-time entry into the Brazilian
agri-services market. Fortgreen, headquartered
in Paraná State in southern Brazil, is focused
on the development and marketing of speciality
inputs and value-added crop nutrition.
Fortgreen was founded in 2004 and is an
established leader in the manufacture and
marketing of a complete portfolio of related
crop technologies covering foliar fertilisers,
bio stimulants, adjuvants and control release
and slow release fertilisers. Fortgreen operates
a comprehensive research and new product
development capability and services approximately
1,200 customers through an established business-
to-business and retail distribution network.
Fortgreen
In Profile
Case Study
Fortgreen services
approximately
1,
200
customers through an established
Business-to-Business and retail
distribution network
See Origin at a glance on page 6
See Our Business on page 22
49
Strategic
Report
Sustainability Report
Introduction
In a world facing global challenges of unprecedented
levels, such as food insecurity, resource scarcity and
climate change, Origin as a leading Agri-Services
Group knows that the current food production system
needs to adapt and change, and we have a role to play
in that transformation.
With sustainability at the centre of our business model,
we are focused on making a positive contribution,
through our products, services and operations, to
promoting sustainable food production systems and
helping to meet the growing food demand.
During the year, we formalised our vision and purpose as
we seek to embed sustainability in everything we do. Our
vision is to be the leading and trusted partner of choice
to the farmers, growers and amenity professionals we
serve. Our purpose is to sustain land and lives through
our expertise, innovation and research and development.
Activities we engaged in during the year included;
concluding our first stakeholder driven materiality
assessment, mapping our strategic priorities to the UN
Sustainable Development Goals, calculating our Scope 1
and Scope 2 greenhouse gas emissions and developing a
diversity, inclusion and equal opportunities strategy. We
also continued to develop our reporting in line with the EU
Non-Financial Reporting Directive (2014/95/EU). Details
of these activities are outlined later in this report.
Materiality
Origin’s sustainability journey is one of continuous
development. In 2018, we identified, prioritised and
validated 23 distinct sustainability factors which we
considered to be relevant to our organisation. In 2019,
we undertook a materiality validation assessment, using
an independent external adviser, to further understand
the expectations of our key stakeholders and refine our
own priorities. Details of the materiality process are
outlined as follows:
At Origin, our strategic objective is to
build a sustainable business and deliver
long term value to shareholders in a
responsible and ethical manner, in line
with evolving societal expectations.
Defining the sustainability factors
Definitions for each of the 23
sustainability factors were set out
for the stakeholders.
Engaging with stakeholders
Stakeholder groups were engaged through
the following means:
> Interviews were held with
Customers, Suppliers,
Regulators, Industry Associations,
Academics, Research Professionals,
Shareholders and Lenders.
> Surveys were completed by employees.
Prioritising results
Ratings of high, medium or low were
assigned against each sustainability
factor based on the results from the
internal and external stakeholder
engagement. A sustainability factor
register was developed.
Validating the results
Results were validated by our
Sustainability Steering Group.
Outcomes
Informed the Sustainability Report
content and structure. Provided
a structure and valuable insight to
continuously improve the Group’s
sustainability programme and the
stakeholder engagement processes.
Materiality Process
50
UN Sustainable
Development Goals (‘SDGs’)
The UN Sustainable Development
Goals provide a globally accepted
roadmap for addressing many of
the most urgent global, economic,
environmental and social
challenges. The success of SDGs
will be determined by business
action and we believe that Origin
as a leading Agri-Services Group
has an important part to play.
Using the findings of the
materiality validation exercise,
we mapped our sustainable
priorities and strategic goals to
the UN SDGs. We believe Origin’s
products and services contribute
to transformation towards
sustainable food production as
underpinned by SDGs 2, 6, 12,
13 and 15. These interconnected
goals provide us with significant
business opportunities but we
also recognise that a lack of
progress on delivering these goals
will challenge the sustainability of
agriculture. Further details of our
product and service offerings are
outlined in the Business Review
on pages 32 to 49.
Through our operations and supply
chain we can actively support the
delivery of SDGs 8, 9, 17 as these
goals are closely aligned with our
strategic priorities and will enable
us to develop and deliver more
sustainable products and services
to customers, and society at large.
Materiality Matrix
High > Health, nutrition and
food safety.
> Wildlife and biodiversity.
> Water stewardship.
> Business integrity.
> Climate-smart agriculture.
> Long-lasting relationships and quality of service.
> Product research and innovation.
> People’s health and safety.
> Soil and crop health.
> Promoting sustainable food production systems.
Medium > Community education
and support.
> Genetic enhancement.
> Industry leadership and
collaboration.
> Local socio-economic
impact.
> Cyber-security and data protection.
> Diversity, Inclusion and Equality.
> Digital transformation (local solutions).
> Employee attraction, development and engagement.
> Geopolitical and regulatory developments.
> Financial stability and sustainable growth.
> Supplier relationships.
> Respecting human rights in the value chain.
Low > Organic farming.
Low Medium High
Importance to Origin Enterprises
Importance
to
Industry
Stakeholders
The outcome of this assessment has confirmed good alignment among internal and external
stakeholders, with certain sustainability factors being more relevant to different stakeholder
groups. The assessment has identified key themes which will be central to the development of the
Group’s Sustainability Programme as we seek to ensure continued alignment with the business and
stakeholders needs. It has also enabled us to identify the UN Sustainable Development Goals most
closely aligned to Origin’s business. The topics covered in this report are designed to reflect the
outputs of this materiality assessment.
Find out more
IQ case study on page 53
Gender Diversity on page 54
51
Strategic
Report
Origin is a business centred around
people, where strong working
relationships form the basis of
our success. We believe that by
attracting motivated, highly skilled
employees, and nurturing their talent
and individuality, we can create
opportunities to fulfil their potential
and provide our business with a
strong competitive advantage.
Our core values describe the culture
Origin aspires to, the beliefs we hold
and the behaviours expected of
all employees.
Attracting and developing
our people
Origin recognises the importance
of attracting the best talent into
our business, particularly in the
highly competitive agri-food sector,
where superb global leadership
opportunities lie. To attract the
most talented candidates in the
industry, we invest in cultivating
long-term partnerships with
potential candidates, forming
relationships with industry
and leading universities and
demonstrating the potential for
career growth in the Group.
Attracting young, enthusiastic,
talented professionals, and growing
our talent through continuous
learning and development is a key
part of our succession planning
and preparing our business for
the future.
We provide in-country IQ
programmes which enhance
employees’ current performance
and prepare them for future roles.
Through the Personal Development
Plans we also develop personal,
academic, technical and digital
skillsets of our employees.
The IQ programmes include
classroom and online training
solutions from industry-leading
educational institutions and internal
industry experts, together with
mentoring from senior agronomists
and management within the business.
During the year, employees
participated in 1,475 training
courses across the Group.
People
Our core
values are
as follows:
People
Innovation
Integrity
Partnerships
Community
We grow
futures
together
We do the
right thing
We
contribute to
the success
of the
communities
where we
operate
Adding value
to lifelong
relationships
We shape
the future
IQ Programme Elements
Establish
> BASIS / FACTS certification.
> Mentoring from senior
agronomists and management.
Educate
> BASIS advanced certification.
Personal Effectiveness /
Complementary Courses
> Training in project management,
consultative sales, communication
and presentation skills.
> Technical training.
Management Development Training
> Leadership training.
> Team Management.
> Strategy and financial management.
There are four elements to the IQ programme as follows:
52
Origin believes that by attracting
motivated, highly skilled employees,
and nurturing their talent and
individuality, we can create
opportunities to fulfil their potential
and provide our business with a
strong competitive advantage.
Kathryn’s passion and appreciation for farming and
food production goes back to her family roots where
she was born and raised on a fruit and vegetable
farm in the Vale of Evesham. After completing a
BSc in Geography from the University of Leicester
and an MSc in Agronomy and Crop Production from
the University of Warwick, Kathryn joined Agrii
UK in August 2015 where she has worked with the
agronomy, sales and technical teams.
In January 2016, she commenced the IQ Establish
and Educate programmes, where she received
FACTS certification through the internal training
programme in March 2016, and completed the
BASIS training with Harper Adams University in July
2016. In April 2016, she commenced the IQ personal
effectiveness / complementary training which
includes modules on sales and communication,
time management, environmental legislation,
seed genetics, soil management and farm business
management. As part of the IQ programme she also
completed several sessions with representatives
of the main crop protection manufacturers which
has provided her with greater insight into the active
ingredient development processes.
The IQ programme has benefitted Kathryn and
Agrii UK by increasing her confidence and skills
to take on new customers from both competitors
and retiring Agrii agronomists. To date Kathryn has
achieved a 100% customer retention rate. The IQ
training programme has also given Kathryn skills
to increase her profile in the industry, where she
presents courses to farmers and sprayer operators on
behalf of the National Register of Sprayer Operators.
Finally, it has provided her with the knowledge and
tools to advise on agronomic matters such as soil
management and environmental legislation ensuring
the highest standards of services are provided to Agrii
UK customers, and help future proof the role of an
agronomist in a rapidly changing industry.
“The IQ programme has provided me with
the knowledge and tools to develop my
agronomic and management skills for the
benefit of Agrii and its customers.”
Case Study
Kathryn Styan
Agronomist at
Agrii UK
See more on
Our Business
on page 22
53
Strategic
Report
Engaging our people
At Origin we recognise the value of
sharing our ideas and information
with each other and our stakeholders,
and aim to create a workplace where
our people have an opportunity to
make a meaningful contribution to
the success of the business.
To develop our culture of open
communication we launched our
Employee Engagement Strategy ‘Let’s
Talk’ during 2018. The purpose of the
strategy is to allow us to enhance
our existing feedback mechanisms,
better understand the employee
experience across the Group, bring
greater awareness and alignment to
our vision and values and provide our
Board and Executive Management
with the insights necessary to make
informed decisions. During 2019, our
Chairman, Chief Executive Officer,
Chief Financial Officer and designated
Non-Executive Directors visited sites
in Poland and the UK. During these
visits, they received guided tours of
the sites and held focus groups and
Q&A sessions with the employees.
As outlined in last year’s Annual
Report, we undertook an employee
engagement survey in two of our
business units in 2018. In 2019, as
part of our ‘Let’s Talk’ strategy, we
conducted the inaugural Group-
wide employee engagement
survey to provide us with a better
understanding of how our employees
view the organisation. Employees
across the Group were given the
opportunity to participate in the
survey, where a 68% response rate
was achieved. The overall employee
engagement score was 86%.
The results from the employee
engagement survey and the site
visits have provided confirmation of
areas where we are doing well and
insights into areas where there is an
opportunity to improve, with action
plans being developed by our Human
Resources Teams across the Group. In
2020, we will conduct a Group-wide
survey to help assess the outcomes of
action plans, in our effort to continue
to improve engagement with our
people and their experience at
Origin. Our Chairman, Chief
Executive Officer, Chief Financial
Officer and designated Non-Executive
Directors will continue to visit sites
throughout the Group as part of the
‘Let’s Talk’ strategy.
Building a culture of
Health and Safety
Health and Safety of our employees
is a primary responsibility of Origin,
where we demand the highest
safety standards in everything we
do. The importance of Health and
Safety aligns with the views of our
internal and external stakeholders,
as determined from our materiality
assessment. Led by our local
Health and Safety Officers, each
business unit has a health and safety
management system reflecting the
specific risks from their operations.
We continuously invest in and refine
our processes and procedures to
ensure high safety standards in each
business unit. We also share best
practice among our business units
to ensure consistent performance
across the Group.
We measure performance on
an ongoing basis and reports
are presented to business unit
management at every meeting.
Reports are also presented at regular
intervals to the Origin Board.
One of our key measures is Lost
Time Injuries (‘LTIs’), defined as an
accident resulting in at least one day
lost after the date of the accident. A
total of 20 LTIs were recorded in the
Group during the financial year ended
31 July 2019.
Nurturing Diversity and Inclusion
Origin is committed to the principles
of diversity, inclusion and equal
opportunities as we understand
these principles are essential
elements to our success. We aim to
foster a diverse and inclusive culture,
that attracts and develops diverse
talent and creates a workforce that
mirrors society and understands its
diverse needs.
In 2019, we continue to develop and
implement diversity, inclusion and
equal opportunities programmes
as part of our strategy. These
programmes will focus on areas such
as developing new communication
channels to embed the diversity and
inclusion principles, launching on-
line training modules, engaging with
external groups and advisory bodies,
and improving internal reporting to
measure and monitor the diversity
profile of our workforce.
We welcome a greater
representation of female talent
across all functions in our business
particularly at management level
and we are committed to extending
equal opportunities to all individuals
in line with our policies. Details of
female representation at Origin
Board, management level and in
the wider employee population are
outlined below.
We are a member of the 30% Club,
and support our Chairman, R Hynes
as a Member of the Advisory Group
of the Balance for Better Business;
both of which are committed to
achieving better gender balance at
all levels of organisations.
Further details of the Board Diversity
Policy are outlined in the Nomination
and Corporate Governance Report on
page 84.
Gender diversity
25% female representation at Origin Board 21% female representation at management level 27% female representation of Origin employees

At Origin, doing business with
integrity is a core value of the Group
and a foundation for our long-term
success. Business results must
always be achieved ethically and in a
responsible manner.
Anti-Bribery and Corruption
Origin operates an Anti-Bribery and
Corruption policy which states that
no employees or representatives
of any Group business is to offer or
accept any bribe, including small
facilitation payments, or engage in
any form of corrupt practice. The
policy is designed to ensure that
each business unit within the Group,
applies appropriate steps to comply
with Origin’s ethical standards so
that the Company and its employees
are protected from any penalties,
fines and / or reputational damage.
Origin launched an e-learning
training programme in 2018 which
has been rolled out to employees
across the Group to help them
understand their obligations.
Respect for Human Rights
We conduct our business in a
manner that respects the rights
and dignity of all people. Origin has
suitable Human Resources policies
and procedures which apply to each
business in the Group.
Origin is also committed to
upholding human and labour
rights in its supply chain and
welcomed the introduction of
the UK Modern Slavery Act. Origin
published its statement in response
to the Act in 2017 which can be
found on the Company’s website
www.originenterprises.com. The
Group has procedures including the
issuing of supplier questionnaires
to assess the risk of human rights
abuses taking place within its supply
chain. A copy of the UK Modern
Slavery Act is issued to all new
starters as part of their induction
programme to increase awareness
of the Act.
As one of the leading providers
of agri-inputs and agronomic
services, we have a responsibility
to manage the activities within
our own operating businesses to
support long-term environmental
sustainability through the adoption of
environmental stewardship practices
amongst our customer base.
Origin is focused on the energy
efficiency of our own operating
businesses, where we undertake
energy audits to identify
opportunities to reduce consumption.
Origin also adheres to strict principles
of environmental stewardship in all
our activities ensuring appropriate
care is taken throughout the
product life cycle, through the use
of appropriate management systems
and processes and continuous
investment in infrastructure. These
management systems encompass
environmental matters including
control of major accident hazards
and product traceability.
Greenhouse Gas Emissions
This is the first year in which
consolidated data for our Group
Scope 1 (transport and heating
fuel) and Scope 2 (electricity use)
greenhouse gas (‘GHG’) emissions
has been collated. Origin’s absolute
Scope 1 and Scope 2 GHG emissions
increased by approximately 3%
and 1% in 2018 and 2019 compared
to the base year 2017, driven by
the addition of new businesses
in the UK, Belgium and Brazil. We
are actively seeking to reduce our
energy consumption through the
introduction of various initiatives.
Waste
Minimising waste is an important
part of reducing our direct impact
on the environment. We aim to
reduce all waste being generated
across the Group and divert waste
away from landfill.
We place specific emphasis on the
type of packaging used for our crop
nutrition and protection products,
with all packaging made from 100%
recyclable material. We continue
to work closely with the respective
authorities in the countries we
operate in to assist our customers
in recycling this packaging.
Business Ethics and Integrity
Environment
Absolute CO2
emissions
(000’s tonnes)
(Direct – transport
and heating fuel)
Scope 2
(Indirect -
electricity use)
Estimates included in the
calculations are as follows
(21% – FY17), (20% – FY18)
and (24% – FY19)
Carbon Intensity
(tonnes CO2
E / Average no. of employees)

Strategic
Report
Promoting
Sustainable Food
Production Systems
Evolution of
Agronomy
*Comparative figures based on MAP Yields 2014 – 2018 compared to DEFRA average for England and DEFRA South West.
Graphical illustration is management’s estimate of average adult daily calorie intake provided through wheat
consumption. Yield data sourced from Department for Environment Food and Rural Affairs (DEFRA) using United
Kingdom cereal yields from 1885 onwards.
Crop yields relatively
static since 

Modernisation
> Seed genetics.
> Fertiliser application.
Advanced Adaptive
Agronomy
> Digitally enabled.
> Hyper localisation.
> Bespoke prescriptions.
> Climate sensitive practices.
1980s Today Potential
Integrated Agronomy
> Risk management.
> Precision applications.
> Environmental stewardship.
> Influencing farm business.
Water
Our water consumption is low
compared to manufacturing
industries due to the nature of our
formulation and distribution model.
The potential impact associated
with a product spillage represents
a risk for our business. Due care
is exercised to ensure that all
waste water complies with relevant
legislation and the Group continues
to invest in infrastructure and
management systems to minimise
potential spillages or other forms of
water contamination. In addition the
Group invests significant effort in
the education of our customers on
best practice.
Promoting sustainable food
production systems
We recognise the unique contribution
Origin can make in strengthening the
sustainable agricultural community.
We are mindful not only of the
decisions taken within our own
organisation, but equally our ability
to promote best practice through
the responsible use of crop inputs
and the adoption of sustainable food
production systems.
Our agronomists constantly
challenge the status quo and create
a platform through a knowledge-led
approach, that delivers increased
yields, resilience to climate
instability and higher health and
vitality for farming. It is widely
recognised that agriculture has
a unique role to play in climatic
change and equally, we witness
opportunities where agricultural
practices play a significant role
in helping to mitigate the effects
of climate change. In our bid
to promote sustainable food
production and an enhanced
environment, Origin employs the
skills and local knowledge of its
highly skilled agronomist workforce
to bridge the gap between formal
scientific research and the
experience of farmers, growers
and amenity professionals to adopt
the most appropriate practices
tailored for individual field, crop and
landscape requirements.
Origin has developed a range of prescription
blended compound fertilisers in which the
analysis is formulated to match specific soil and
crop nutrition requirements.
Nutri-Match® offers:
> unlimited choice of fertiliser analyses;
> up to 14 essential nutrients; and
> targeted nutrition to match individual
soil types and crops.
A broad-spectrum soil analysis provides the
essential information to build a nutrient
programme. Data from the Professional Agricultural
Analysis Group identified that 90% of UK soils have
sub-optimal fertility, highlighting a clear need for
more targeted nutrition.
Based on the soil results, a qualified crop nutrition
adviser interprets the results and an Origin
NUTRI-MATCH® prescription fertiliser is formulated
to optimise soil fertility, crop yield and crop quality.
NUTRI-MATCH® delivers:
> increased Nutrient Use Efficiency;
> optimum environmental protection; and
> increased return on investment.
Nutri-Match®
Case Study
Read more on our
Business Model
on page 28
58
Developing Solutions for
climate-smart agriculture
Through ongoing near market
research and product formulation
programmes, Origin places significant
emphasis on soil regeneration,
biodiversity and crop health. In
doing so we also acknowledge the
immense role nutritional products
play in strengthening soil health
and vitality.
Responsible Approach
to Stewardship
Origin’s agronomist led advisory
model is based on the premise of
increasing yields on the existing
agricultural land base whilst
protecting biodiversity and
the environment.
To support this practice, our
agronomists adopt an integrated
approach to land and crop
stewardship through the practice
of Integrated Pest Management
(‘IPM’). IPM is a holistic approach
to sustainable crop protection
that focuses on managing insects,
weeds and diseases through
a combination of cultural,
physical, biological and chemical
methods that are cost-effective,
environmentally sound and
socially acceptable.
IPM comprises three main activities:
> management of pests, weeds
and diseases through the use
of biological, physical and
cultivation means as well as crop
protection chemistry;
> monitoring of crops to observe
levels of both pests and beneficial
species that can provide natural
control mechanisms; and
> using pest prediction models and
economic thresholds, to better
judge the requirement and timing
of interventions.
These techniques include
crop rotations, variety choice
management, appropriate cultivation
method, target product dose rates
and environmental biotechnology
where benefits have been verified
through in-house R&D trials.
Our agronomists constantly challenge
the status quo and create a platform
through a knowledge-led approach,
that delivers increased yields,
resilience to climate instability and
higher health and vitality for farming.
59
Strategic
Report
Black-grass control is one of the biggest
agronomic challenges to face arable farmers
across much of Europe. The weed, which is
entirely spread by seed, can spread ten-fold
in a single year and severely limit a crop’s
yield potential.
The application of herbicides alone is not
sufficient to control the spread of black-grass.
To address the challenge, we have conducted
extensive trials for over two decades to find
an effective solution for black-grass using an
integrated approach now known as the Stow
Longa model. This management model, delivers
up to 98% control of black-grass within a
field achieving yield benefits of greater than
5.5 tonnes per ha through a combination of
management decisions based on cultivation
methods, crop rotation, seed rates, nutrition,
variety and modifying drilling date.
Black-grass
Control
Case Study
Read more on the
Evolution of Agronomy
on page 56
Symbio, acquired during the current year, is
an environmental biotechnology company that
specialises in the identification, selection and
use of soil bacteria, fungi and the organisms
found in healthy soil to maximise plant growth
and strength whilst optimising chemical
use within cost effective Integrated Pest
Management Programmes (‘IPM’).
Through collaborative partnerships with
global researchers, biotech laboratories
and agronomists, Symbio has successfully
developed innovative sustainable technologies
addressing the needs of:
> sports pitches and fine turf;
> arboriculture & forestry;
> horticulture;
> vegetable and arable crops; and
> the bio-organic garden.
Using a balanced combination of biology,
chemistry and physics, Symbio’s product range
consists of natural biotechnical products
such as mycorrhizae, compost teas, soil
bacteria and fungi, which complement and
in certain instances replace conventional
plant management techniques as part of an
effective IPM programme.
Symbio
The environmental
biotechnology
company
Case Study
60
Rigby Taylor has undertaken a major initiative to
help reverse the national decline in pollinating
insects by introducing an urban flower seed mixture
named Euroflor Banquet to the landscape industry
that contains the best species for pollinators, whilst
delivering high performance flower displays.
Banquet mixture is the result of information
obtained from independent research by the Urban
Pollinators Group, a national research programme
run by Bristol, Edinburgh, Leeds and Reading
Universities (2010-2013).
The research revealed that no one mix would meet
the complex ecological demands of the diverse
pollinator groups throughout the different stages in
their life cycles – from early to late flowering, native
and horticultural species, plants for egg laying,
nectar for energy and pollen for protein.
Ten Euroflor Pollin-8 mixtures are now available
that ensures a longer seasonal supply of nectar
and pollen and a more diverse range of habitats
whilst at the same time providing attractive
flower displays.
Project
Pollin-8
Case Study
In Africa, farmers and finance providers partner
through RHIZA’s GRID and Contour services, helping
farmers grow successful crops and building trust
between them.
Contour’s satellite imagery allowed Derek Nicolle,
General Manager of Mkushi Estates, Zambia to
increase water efficiency through early detection.
“The irrigation error we experienced was invisible to
the naked eye,” says Mr Nicolle. “With cutting-edge
digital agronomy tools, we were able to pick up on
the error early enough in the growing cycle to fix the
problem”. “The Contour app is a great tool both
for the bank and the farmers. It helps the farmers
save money through improved decision making that
makes them more efficient. It also helps us monitor
the farmers’ progress and gives us great insight into
the season the farmers are experiencing,” said Leon
Kotze, Stanbic Bank Head of Agriculture.
Together with crop performance monitoring, yield
forecasts and nutrition recommendations, farmers
illustrate their output potential, while financial
institutions mitigate risk in lending, support their
customers with agronomic information, and reduce the
cost of monitoring and lending to farmers.
GRID digital solution
to support access
to finance in
developing countries
Case Study
See more on our
Digital offering
on page 36
Strategic
Report
61
Risk Report
Risk Management
The Board has overall responsibility for risk management
and internal control systems throughout the Group.
The Audit and Risk Committee assists the Board by
taking delegated responsibility for risk identification
and assessment and for reviewing the Group’s risk
management and internal control systems, along with
making recommendations to the Board regarding the
operation of the Group’s Risk Management Framework.
In 2015, the Board established a Risk Committee
to ensure focus on risk management. During the
past four years, the Risk Committee strengthened
risk management systems and promoted a strong
risk management culture throughout the Group. In
September 2018, the Board approved the amalgamation
of the Audit and Risk Committees.
The detailed Terms of Reference of the Audit and Risk
Committee are available on the Company’s website:
www.originenterprises.com. The principal duties and
responsibilities of the Audit and Risk Committee related
to risk management for the year ended 31 July 2019 are
listed below:
> continually review the Group’s overall risk
assessment processes and its capability to identify
and mitigate new risk types;
> consider the output of the consolidated risk map
produced and the appropriateness of the positioning
of individual risks;
> review and approve the statements to be included in
the Annual Report concerning risk management.
> work and liaise as necessary with all other Board
committees;
> annually review the Audit and Risk Committee’s
Terms of Reference and carry out its performance
evaluation review; and
> report to the Board on how it has discharged
its responsibilities.
Risk Management Framework
The Group has an enterprise-wide Risk Management
Framework and a formal risk assessment process in
place through which risks are identified and mitigating
controls are evaluated. The Risk Management
Framework and the formal risk assessment process
helps to reduce the possibility of the Group failing to
achieve its strategic objectives.
The risk assessment process is driven by business
unit management who are best placed to identify the
significant ongoing and emerging risks facing their
businesses. The outputs of these risk assessment
processes are subject to review and the risks identified,
together with associated mitigating controls, are also
subject to audit as part of operational / financial
audit programmes.
The Group’s Risk Management Framework is set out
diagrammatically below and incorporates the ‘three lines
of defence’ approach as follows:
> the first line comprises business unit and functional
management who have day-to-day responsibility
for anticipating, identifying and managing risk along
with devising, implementing and upholding effective
internal controls in each respective business unit and
functional area;
> the second line comprises Group oversight functions
who provide specific functional expertise; and
> the third line comprises Internal Audit and external
professional advisers who provide an additional level of
independent assurance.
The Board, supported by the Audit and
Risk Committee, has overall responsibility
to ensure the principal risks faced by the
Group are identified, evaluated and
adequately managed.
Identifying,
evaluating and
managing risks
62
• Group and Business
Unit Risk Maps
• Risk Register
• Financial Reporting
• Internal Control Systems
• Whistleblowing and Fraud
• Internal Audit
Executive
Group Risk
Committee
Senior
Management
Team
Audit & Risk
Committee
Business Unit /
Functional
Management
1st Line of Defence
Owns and
manages risk
Group Oversight
Function
2nd Line of Defence
Oversees risk and
provides support
Internal Audit /
Other Assurance
Providers
3rd Line of Defence
Independent
assurance
Risk Management Framework
 Board
63
Strategic
Report
The length of tenure of the Directors on the Audit and Risk Committee as at 31 July 2019 is set out below:
Length of tenure on Audit and Risk Committee* Years
Kate Allum 3.75
Gary Britton 3.77
Hugh McCutcheon 7.63
* Following the amalgamation of the Audit and Risk Committees, the length of tenure for a Director represents the longest tenure of
that Director on either Committee.
Roles and Responsibilities
The roles and responsibilities in respect of the key elements of the Risk Management Framework are set
out below:
 Board > Set strategic objectives.
> Set delegation of authority.
> Continually review and monitor key risks of the Group.
> Report on the effectiveness of the risk management and internal
control systems.
Audit and Risk Committee > Review the Group’s overall risk assessment processes.
> Review and monitor the key risks of the Group and the mitigating
actions in place.
> Review and consider reports from Internal and External Audit.
> Review internal control systems.
> Review whistleblowing arrangements and concerns raised through
this channel.
> Review procedures for identifying and preventing fraud and bribery.
> Liaise with other Board Committees.
> Report to the Board on how it has discharged its responsibilities.
Executive Group Risk
Committee
> Meets, directs and supports the business units on risk management.
> Develop the risk management and control environment.
> Perform risk deep dives for Group functions and units.
> Identify and share best practices for managing risk.
> Review, assess and support the implementation of agreed risk mitigation and
control programmes.
Senior Management Team > Develop the risk management and control environment.
> Review, assess and support the implementation of agreed risk mitigation and
control programmes.
Group Oversight Function > Oversee business unit and functional risk management.
> Promote the importance of a strong control environment.
> Additional focus in respect of Group finance, risk management, tax, treasury,
legal, information technology and security.
Group Internal Audit > Monitor the effectiveness of the Group Risk Management Framework.
> Develop risk based internal audit plans.
> Identify areas for improvement and assess status of mitigating controls.
> Provide independent and objective assurance on risk matters to the Audit
and Risk Committee.
The Audit and Risk Committee comprises three Independent Non-Executive Directors, Gary Britton
(Non-Executive Director, Chairman of the Audit and Risk Committee), Hugh McCutcheon (Senior Independent
Director) and Kate Allum (Non-Executive Director).
64
Risk Register and Risk
Mapping Process
The Group’s risk management
process requires risk registers and
risk maps that reflect the current
risk profile of the Group and its units
and functions.
Each business unit is required
to maintain a risk register, which
is reviewed and updated for
submission to the Head of Risk
and Internal Audit on a quarterly
basis. A risk register template,
pre-populated with a number of
relevant risks covering strategic,
operational, financial and compliance
areas has been developed. This
template is then completed by each
business unit, with the impact and
probability of occurrence for each
risk determined and scored. A risk
scoring matrix is issued to ensure
a consistent approach is taken
when completing the probability
and impact assessments. New or
emerging risks are added to the risk
register as they are identified.
From these risk registers a risk
map is created for each business.
This requires input from senior
management in each business unit.
The Group risk register and risk
map is prepared and maintained
by the Head of Risk and Internal
Audit and is updated to reflect
any significant changes noted
during the reviews of business
unit risk registers.
The Group and business unit risk
maps are reviewed quarterly by the
Executive Group Risk Committee
before principal risks are reported
to the Board’s Audit and Risk
Committee during the financial year.
Deep dives of key risks and feedback
to business leaders are performed
by both the Executive Group Risk
Committee and the Audit and Risk
Committee during the financial year.
2019 Highlights
In order to continuously improve
the risk management framework
and integrate it into day-to-day
operations, a number of activities
were carried out during the year
ended 31 July 2019:
> Creation of the Executive Group
Risk Committee (members include
senior management who meet on
a quarterly basis).
> Appointment of Risk Champions
at Group and business unit level to
ensure adequate risk ownership
and actions.
> Appointment of key leaders to
the Group to support the risk
management process (Head of
Risk and Internal Audit and Group
General Counsel).
> Presentation of key risks and
challenges for each business unit
at the 2019 Strategy Day.
Viability Statement
Going concern and the viability
statement
Details on the Directors’ assessment
of the Group’s viability and ability to
continue as a going concern are set
out below.
Going concern
The Group’s business activities
and financial performance are
set out in the Strategic Report on
pages 6 to 69. As set out in the
financial statements, the Group
has generated cash flows from
operating activities of €53.1 million
during the year and its net debt at
31 July 2019 is €75.6 million. Having
assessed the relevant business risks,
the Directors believe the Group is
well placed to manage its business
risks successfully.
The Directors have a reasonable
expectation, having made
appropriate enquiries, that the
Group and the Company have
adequate resources to continue
in operational existence for the
foreseeable future. For this reason,
they continue to adopt the going
concern basis in preparing the
financial statements.
Viability statement
The Directors have assessed the
Group’s viability over a three year
period as part of the Group’s
strategic planning activities.
The Directors concluded that a
three year period was the most
appropriate period to undertake this
assessment, and the Directors have
no reason to believe the Group will
not be viable over a longer period.
As part of the exercise to assess
viability, a review of the principal
risks and uncertainties facing the
Group was undertaken and the
potential impact on the Group’s
strategic plan, financial performance
and liquidity was considered. Based
on the results of the analysis the
Board has a reasonable expectation
that the Group will be able to
continue in operation and meet its
liabilities as they fall due over the
three year period.
Principal Risks and Uncertainties
The principal risks and uncertainties
which have the potential, in the
short to medium-term, to have a
significant impact on the Group’s
business operations and strategy are
set out on pages 66 to 69.
The risks outlined are not listed in
order of importance. In addition, the
principal mitigation measures are
outlined. These mitigation measures
are designed to give reasonable
but not absolute protection against
the impact of each of the potential
events in question.
These risks represent the Board’s
view of the principal risks and
uncertainties at this point in time,
though it should be noted that
this is not an exhaustive list of all
relevant risks and uncertainties.
Matters which are not known to the
Board or events which the Board
currently considers to be of low
likelihood or low financial impact
could emerge and give rise to
material consequences.
65
Strategic
Report
Impact Mitigation Risk
Movement
Strategic
Priority
Strategic / Commercial
Competitor activity, product innovation, pricing and margin erosion
The Group operates in a competitive
environment where the pace of
innovation, changes in regulatory
requirements including chemical
product revocations and the impact
of competitors’ activity, could have an
adverse impact on margin and on the
Group’s results, including the risk of
impairment of assets.
The business operates Group-wide
product forums, undertakes extensive
application research and innovation
and focuses on sales, marketing and
distribution targeted at ensuring the
Group is at the forefront of application
methodologies, product innovation and the
delivery of superior advisory and inputs
offerings. In addition, the Group actively
monitors competitor activity and develops
strategies to maintain its competitive
advantage. The business also employs
experienced teams who track potential or
actual changes in regulatory requirements,
such that they can be managed and, where
possible, mitigated against.
Acquisitions and corporate development
The Group faces risks and challenges
associated with acquiring new
businesses including the failure to
identify suitable acquisitions, to
integrate acquisitions properly and to
identify accurately all potential liabilities
at the time of acquisition.
All significant acquisitions must be
approved by the Board. Financial, legal,
commercial and operational due diligence
is performed both by external consultants
and in-house resources in advance of
all acquisitions. There is substantial
experience within the Group which lends
itself to strong project management
capability in the area of acquisitions,
transaction completion and integration.
Commodity price volatility
The Group is exposed to commodity
price risk, particularly in its Agri-Inputs
business. It is also indirectly exposed
to output price volatility in commodity
markets which impacts on the value of
outputs to the Group’s end customer.
The Group prioritises margin delivery and
cost management as key focus points in
mitigating input commodity price risk.
From an output perspective the business
is focused on maximising yield for the
end customer by providing value added
services, technologies and inputs that
address the quality, efficiency and output
requirements of primary food producers.
Link to Strategic Priorities Key:
The principal risks and uncertainties
Scale People & Organisations Portfolio Positioning Market Focus
66
Impact Mitigation Risk
Movement
Strategic
Priority
Strategic/Commercial continued
Political
The Group is a multinational organisation
and may be negatively impacted by
political decisions, civil unrest or other
developments in the geographies in
which it operates.
Political decisions and civil unrest are not
within the control of the Group nor have
they had a major impact on the Group’s
performance to date. Nevertheless, the
Group monitors these risks and actively
manages its businesses to ensure minimum
disruption to its operations.
Operational
Compliance with legislation and regulations including environmental and health and safety matters
Compliance with laws and regulations
is of critical importance to the Group.
The business is subject to legislation in
many areas including Health and Safety,
emissions and effluent controls. Failure
to comply with applicable legislation
or regulatory obligations could result
in enforcement action, legal liabilities,
costs and damage to the Group’s
reputation. Product availability and
potential changes in the regulatory
environment and legislation could also
have a material impact on the Group’s
results and reputation.
The Group monitors closely all changes
to legislation and regulation. It operates
thorough hygiene and health and safety
systems across its businesses, has well-
established product, environmental and
discharge controls which ensure product
traceability. The Group also develops new
products, diverse sources of supply and
distribution capability for its products to
ensure it continues to compete effectively
and to anticipate and meet customer
requirements on a continuing basis.
Adverse weather and climate change
Adverse weather conditions, changes
in weather patterns and the impact of
climate change affect farming conditions
and yields. The environment in which the
Group operates is highly seasonal. As a
result, the Group’s earning’s profile is
significantly weighted towards the second
half of the financial year. This seasonality
and the inherent uncertainty of weather
conditions has an ongoing impact on
working capital requirements and can
significantly impact the Group’s results.
Weather conditions and climate change
are not within the control of the Group.
Nevertheless, the Group monitors these
risks and focuses on the management of
the earnings profile, geographical diversity,
investment in working capital, along with
the monitoring of weather and climate
change by divisional and Group managers.
Procurement and supply chain
The Group sources its products from a
number of significant suppliers. The loss
of any, or a number, of these suppliers
could have a material impact on the
Group’s profitability and the ability to
meet customer requirements.
The Group endeavours to maintain close
commercial relationships with all its
suppliers, the most significant of whom
are large multinational organisations which
supply across the Group’s geographical
markets. The Group through its research
and development capabilities, in
collaboration with suppliers, customers
and research bodies, is well positioned to
develop innovative solutions to meet its
customer needs.
Increased risk No Change
Risk Movement Key:
67
Strategic
Report
Impact Mitigation Risk
Movement
Strategic
Priority
Recruitment and retention of key personnel
The ongoing success of the Group is
dependent on attracting and retaining
high quality senior management and
front-line employees who can effectively
implement the Group’s strategy.
The Group mitigates this risk through
succession planning, strong recruitment
processes, training programmes and
offering competitive and attractive
remuneration and benefits packages.
IT / Disaster recovery / Cyber security
The Group is a multinational business
with operations in a number of countries.
The Group’s IT strategy and its use of
technology is key across the organisation
and a robust IT disaster recovery plan is
of high importance. Significant challenges
would arise in the event there was a
lack of access to the IT systems and
environment or through cybercrime.
The Group ensures the presence of a
robust IT strategy together with a related
disaster recovery plan, both of which
are frequently reviewed and updated.
The Group’s IT strategy and disaster
recovery plan is overseen by the Group
Chief Information Officer. Cyber security
controls are in place, which are managed
by external technical experts.
Financial
Brexit uncertainty
The Group has operations within and
outside the European Union. The UK’s
referendum decision to leave the EU
(‘Brexit’) has increased uncertainty,
particularly in relation to foreign
exchange rates, interest rates and the
short to medium-term outlook for the
UK economy. There is a risk that this
uncertainty could reduce demand in the
Group’s UK market, in other markets
where there is currently a significant
trade relationship with the UK and
could adversely impact the financial
performance of the Group. There is also
a risk that any continuing and sustained
weakening of sterling will impact the
Group’s translation of its sterling
earnings with consequential impacts on
the reported performance and results of
the Group.
Management and the Board are continually
monitoring the potential impacts of the
UK’s referendum decision to leave the
EU on all of the Group’s operations. Any
potential developments, including new
information and policy indications from
the UK Government and the EU, will be
reviewed on an ongoing basis with a view
to taking appropriate actions targeted at
managing and, where possible, mitigating
the consequences of Brexit.
This includes contingency planning to
ensure security of supply chain and the
obtaining of required certifications in the
case of a limited transition period and / or
the imposition of tariffs.
Link to Strategic Priorities Key: Scale People & Organisations Portfolio Positioning Market Focus
68
Impact Mitigation Risk
Movement
Strategic
Priority
Financial continued
Banking, credit, liquidity and market risk
The Group is a multinational organisation
with interests both within and outside the
Eurozone. As a result, Origin is subject
to the risk of adverse movements in
foreign exchange rates, fluctuations in
interest rates and other market risks
(including movements in the market value
of investments which impact the funding
levels of our defined benefit pension
schemes). The Group is also exposed
to credit risk arising on customer
receivables and financial assets.
The Group Treasury Department mitigates
such risks under the supervision of
the CFO. Foreign exchange rate and
interest rate exposures are managed
through appropriate derivative financial
instruments. Where available / appropriate
credit insurance is in place to mitigate
credit risk. Financial Risk Management
objectives and policies are further
discussed in Note 22 to the financial
statements. The Group closely monitors
the ongoing costs of its defined benefit
schemes and has closed all such schemes
to new members.
Fraud
The Group, like all businesses, is at
risk of fraudulent activities from both
internal and external sources.
The Group places a high importance on
the design and ongoing effectiveness of
its internal control process. Physical and
IT-based security measures are in place
across the Group’s subsidiaries to mitigate
such risk. There are whistleblowing
arrangements in place throughout the
Group. In addition, where economically
available, the Group has appropriate
insurances in place to provide cover
against such an event.
EU Farm Subsidy Payments
The Group has operations within and
outside the European Union. The
uncertainty in relation to EU farm
subsidy payments in the UK and in other
EU countries, in the medium-term,
could reduce demand in the Group’s
European markets which could adversely
impact the financial performance of
the Group.
Management and the Board are monitoring
the potential impact of changes in EU farm
subsidy payments with a view to taking the
appropriate actions targeted at managing
and where possible mitigating the risk in
the event it occurs.
Increased risk No Change
Risk Movement Key:
69
Strategic
Report
Find out more
Case study on page 42
Origin at a glance on page 6
Senoiu, Calarasi County, Romania
Members of the Agricultura Plus team on site
in Calarasi County, Romania reviewing the
progress of maize trials
70
Governance
71
Governance
Sustain
Rose Hynes (62)
Non-Executive Director
Nationality: Irish
Date of appointment:
1 October 2015
Committee membership:
Chairman of the Nomination
and Corporate Governance
Committee and a member of
the Remuneration Committee.
Skills and experience:
Rose previously held a number
of senior executive positions
with GPA Group plc in the
period 1988-2002, including
General Counsel and Head of
the Commercial Department.
Rose is an Associate of the
Irish Institute of Taxation and
of the Chartered Institute
of Arbitrators. She is a law
graduate of University College
Dublin and a lawyer.
Principal current
directorships:
Chairman of Shannon Group
plc and Non-Executive
Director of Total Produce plc,
IPL Plastic Inc. and Eircom
Holdings (Ireland) Limited.
Tom O’Mahony (57)
Chief Executive Officer
Nationality: Irish
Date of appointment:
9 February 2007
Skills and experience:
Tom has been Chief Executive
Officer of Origin since its
formation in 2006. Prior to
his appointment he was Chief
Operations Officer of IAWS
Group plc having previously
held a number of senior
management positions at IAWS,
spanning functional areas
including corporate
development, business
integration and financial
control within the Group.
Sean Coyle (46)
Chief Financial Officer
Nationality: Irish
Date of appointment:
1 October 2018
Skills and experience:
Sean joined the Group as
Chief Financial Officer in
September 2018. Sean was
previously at UDG Healthcare
plc where he held a number
of roles, including Group
Finance Director and Managing
Director of its Healthcare
Supply Chain Division. Prior
to UDG Healthcare, Sean was
Chief Financial Officer and
an Executive Director of Aer
Lingus plc. He also spent over
10 years at Ryanair Holdings
plc where he held a number of
senior management positions.
Sean is a fellow of Chartered
Accountants Ireland having
trained with KPMG in Dublin.
Declan Giblin (63)
Executive Director
Nationality: Irish
Date of appointment:
15 October 2008
Skills and experience:
Declan is Chief Executive
Officer, Latin America,
having previously held the
role of Head of Corporate
Development of Origin.
He was formerly Chief
Executive of Masstock
and has been the driving
force behind the
development of Agrii
over a 25-year period.
Declan is a fellow of the
Chartered Institute of
Management Accountants
having previously worked
with PwC.
The Board of Origin comprises a
Non-Executive Chairman, three
Executive Directors and four
Non-Executive Directors.
Board of Directors
Non-Executive Chairman Executive Directors
72
Kate Allum (54)
Non-Executive Director
Nationality: British
Date of appointment:
1 October 2015
Committee membership:
Chairman of the Remuneration
Committee and a Member of
the Audit and Risk Committee.
Skills and experience:
Kate previously held a number
of senior management
positions in the food and
agricultural sector, including
Chief Executive of CeDo
Limited and First Milk Limited
and Head of European
Supply Chain for McDonald’s
Restaurants.
Principal current
directorships:
Non-Executive Director of
Cranswick plc, Stock Spirits
plc and SIG plc.		
Gary Britton (65)
Non-Executive Director
Nationality: Irish
Date of appointment:
1 October 2015
Committee membership:
Chairman of the Audit and Risk
Committee and a Member of
the Nomination and Corporate
Governance Committee.
Skills and experience:
Gary was previously a partner
in KPMG where he served in
a number of senior positions,
including the firm’s Board,
the Remuneration and Risk
Committees and as head of
its Audit Practice. Gary was
formerly a Non-Executive
Director of The Irish Stock
Exchange plc and KBC Bank
Ireland plc.
Gary is a fellow of Chartered
Accountants Ireland, the
Institute of Directors and the
Institute of Banking. He is also
a Certified Bank Director as
designated by the Institute
of Banking.
Principal current
directorships:
Non-Executive Director
of Cairn Homes plc.
Hugh McCutcheon (65)
Non-Executive Senior
Independent Director
Nationality: Irish
Date of appointment:
21 November 2011
Committee membership:
Member of the Audit and Risk
and Nomination and Corporate
Governance Committees.
Skills and experience:
Hugh spent over 20 years with
Davy and was for more than 10
years the Head of Corporate
Finance and a member of
the firm’s Board. Hugh has
worked with a whole range
of corporate clients and with
the Department of Finance.
Hugh is a fellow of Chartered
Accountants Ireland having
trained with PwC.
Principal current
directorships:
Non-Executive Director of
IPL Plastics Inc. and an
Alternate Director at the
Irish Takeover Panel.
Christopher Richards (65)
Non-Executive Director
Nationality: British
Date of appointment:
1 October 2015
Committee membership:
Member of the
Remuneration Committee.
Skills and experience:
Christopher is Executive
Chairman and Interim Chief
Executive Officer of Plant
Health Care plc. He has more
than 30 years international
experience in the agriculture
industry and currently farms
in the West of England.
Christopher previously spent
20 years in various leadership
roles with Syngenta and its
predecessor companies
before serving as Chief
Executive Officer and, later,
Non-Executive Chairman of
Arysta Life Science.
Principal current
directorships:
Non-Executive Chairman of
Nanoco Group plc and
Non-Executive Director of
Volac International Limited.
Non-Executive Directors
73
Governance
Principal Activity and Business Review
The Group’s principal activities comprise the provision
of value added services, technologies and inputs that
address the quality, efficiency and output requirements
of primary food producers. The manufacturing, research
and development, trading, distribution and digital services
operations are based in Ireland, the UK, Belgium, Brazil,
Poland, Romania and Ukraine.
During the year under review, the Group completed the
acquisition of a 65% interest in Fortgreen and a 20%
interest in Ferrari Zagatto in Brazil.
A comprehensive review of the performance and
development of the Group is included in the Chief
Executive’s Review on pages 10 to 13 and the Chief
Financial Officer’s Review on pages 14 to 21. The
Directors consider the state of affairs of the Company
and the Group to be satisfactory. A list of the Group’s
principal subsidiaries and associates is set out in Note
34 to the Group financial statements.
The key performance indicators relevant to the Group are
set out in the Strategic Report on pages 30 and 31.
Results for the Year
The results for the year are set out in the Consolidated
Income Statement on page 120. Revenue for the financial
year was €1,798.2 million (2018: €1,627.5 million). The
profit after tax and exceptional items for the financial year
was €52.7 million (2018: €56.8 million).
Future Developments
The Group will continue to pursue new developments
to enhance shareholder value, through a combination
of organic growth, acquisitions and development
opportunities.
Dividends
The Board is recommending a final dividend of 18.17
cent per ordinary share which, when combined with the
interim dividend of 3.15 cent per ordinary share, brings
the total dividend for the year to 21.32 cent per ordinary
share (2018: 21.0 cent). Subject to shareholder approval,
the final dividend is payable on 13 December 2019 to
shareholders on the register on 29 November 2019.
Share Capital and Treasury Shares
At 31 July 2019, the Company’s total authorised share
capital comprised 250,000,000 ordinary shares of €0.01
each (2018: 250,000,000), and the Company’s total
issued share capital (including treasury shares) comprised
126,396,184 ordinary shares of €0.01 each (2018:
126,382,206). At 31 July 2019, 800,330 securities were
held as treasury shares (2018: 800,330). Details of the
share capital of the Company are set out in Note 27 to
the Group financial statements and are deemed to form
part of this report.
In respect of share transfers, the Directors may refuse
to register any share transfer unless: (i) it is in respect
of a share on which the Company does not have a
lien; (ii) it is in respect of only one class of shares; (iii)
it is in favour of not more than four joint holders as
transferees; (iv) no restriction has been imposed and
is in force on the transferor or transferee in default
of complying with a notice to disclose beneficial
ownership under the Articles of Association or under
Chapter 4 of Part 17 of the Companies Act 2014; and (v)
the required formalities for the registration of transfers
have been satisfied. With the exception of transfers of
shares through a stock exchange on which the shares
are traded, the Directors may also decline to register:
(i) any transfer of a share which is not fully paid; or
(ii) any transfer to or by a minor or person of unsound
mind but this shall not apply to a transfer of such a
share resulting from a sale of the share through a stock
exchange on which the share is traded.
The rights and obligations of the ordinary shares are set
out in the Articles of Association of the Company which
are available on the Company’s website:
www.originenterprises.com.
Directors’ Report
The Directors present their Annual Report together with the
audited consolidated financial statements of the Group for the
year ended 31 July 2019, which are prepared in accordance with
International Financial Reporting Standards (‘IFRSs’) as adopted
by the EU.
74
Principal Risks and Uncertainties
Under Irish Company law (Section 327(1)(b) of the
Companies Act 2014), the Directors are required to give a
description of the principal risks and uncertainties facing
the business. These are set out in the Risk Report on
pages 62 to 69.
Financial Instruments and Financial Risk
The financial risks of the Group include market risks,
liquidity risks and credit risks. Details of the financial
instruments used, along with the financial management
objectives and policies to which they relate, are set out in
Note 22 to the Group financial statements.
Corporate Governance
The Corporate Governance Statement on pages 78 to 83
sets out the Group’s application of corporate governance
principles, the Group’s system of risk management and
internal control and the adoption of the going concern
basis in preparing the financial statements. The Corporate
Governance Statement shall be treated as forming part of
the Directors’ Report.
Directors and Company Secretary
Changes to the Board of Directors during the year:
> Sean Coyle was appointed to the Board as an
Executive Director on 1 October 2018.
> Peter Dunne resigned as Company Secretary on
28 May 2019.
> Barbara Keane was appointed as Company Secretary
on 28 May 2019.
The names of the persons who are Directors are
set out below.
Directors:
Rose Hynes
(Non-Executive Chairman)
Tom O’Mahony
(Chief Executive Officer)
Sean Coyle
(Chief Financial Officer)
Declan Giblin
(Executive Director)
Kate Allum
(Non-Executive Director)
Gary Britton
(Non-Executive Director)
Hugh McCutcheon
(Non-Executive Senior Independent Director)
Christopher Richards
(Non-Executive Director)
Company Secretary:
Barbara Keane
The biographical details of the Directors are set out on
pages 72 and 73 of this Annual Report.
Directors’ Interests in Share Capital at 31 July 2019
The interests of the Directors and the Company Secretary
in the shares of the Company are set out in the Annual
Report on Remuneration on pages 99 to 106.
Substantial Holdings		
As at 24 September 2019, the Directors have been notified
of the following shareholdings which amount to 3% or
more of the Company’s issued ordinary share capital:
Number
of shares
%
Artemis Investment
Management LLP
17,135,975 13.6%
Setanta Asset
Management Limited
16,868,628 13.4%
FMR LLC 11,378,695 9.1%
Invesco Limited 9,990,594 7.9%
DNCA Finance 5,627,688 4.5%
Bank of Montreal 4,221,360 3.4%
Prudential plc 3,929,351 3.1%
Directors’ Compliance Statement
The Directors acknowledge that they are responsible
for securing compliance by the Company with its
relevant obligations as defined in the Companies Act
2014 (hereinafter called the Relevant Obligations).
The Directors confirm that they have drawn up and
adopted a compliance policy statement setting out
the Company’s policies that, in the Directors’ opinion,
are appropriate to the Company in respect of its
compliance with its Relevant Obligations.
The Directors further confirm that the Company has put
in place appropriate arrangements or structures that are,
in the Directors’ opinion, designed to secure material
compliance with its Relevant Obligations and that they
have reviewed the effectiveness of these arrangements or
structures during the financial period to which this Annual
Report relates.
Audit and Risk Committee
Pursuant to the Company’s Articles of Association, the
Board has established an Audit and Risk Committee
that in all material respects meets the requirements of
Section 167 of the Companies Act 2014. The Audit and
Risk Committee was fully constituted and active during
the current financial period under review in this Annual
Report. Separate Audit and Risk Committees were active
during the Company’s prior financial year.
75
Governance
Disclosure of Information to Auditors
The Directors in office at the date of this report have
each confirmed that:
• as far as he / she is aware, there is no relevant audit
information of which the Company’s statutory auditors
are unaware; and
• he / she has taken all the steps that he / she ought
to have taken as a Director in order to make himself
/ herself aware of any relevant audit information and
to establish that the Company’s statutory auditors are
aware of that information.
Accounting Records
The Directors believe that they have complied with the
requirements of Section 281 to 285 of the Companies
Act 2014 with regard to accounting records by employing
personnel with appropriate expertise and by providing
adequate resources to the finance function. The
accounting records of the Company are maintained at the
Company’s registered office at: 4-6 Riverwalk, Citywest
Business Campus, Dublin 24.
Corporate Social Responsibility
Origin recognises the importance of conducting its
business in a socially responsible manner. The Group
understands its responsibilities as an important member
of the communities in which it operates and aims to
not only provide employment opportunities to the local
population but to earn a positive reputation in those
communities by carrying out its commercial dealings and
operations with integrity and in compliance with local and
national regulations.
The Directors believe that the Group’s long-term
success will benefit from a motivated and committed
workforce and, therefore, aims to provide its employees
with an environment to work safely and develop their
skills and practices in a well-structured manner. Health
and Safety in the workplace is given high priority across
the Group and is driven internally by health and safety
reviews and procedures.
Non-Financial Statement
For the purposes of Statutory Instrument S.I.360 /
2017 European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and
groups) Regulations 2017, the areas of environmental
matters, social and employee matters, respect for
human rights, and bribery and corruption are discussed
in the following sections of the Strategic Report: Strategy
on pages 24 to 27, Business Model on pages 28 and
29, Key Performance Indicators on pages 30 and 31,
Sustainability Report on pages 50 to 61, and Risk Report
on pages 62 to 69, and are deemed to be incorporated in
this part of the Directors’ Report.
Research and Development
Certain Group companies are involved in research and
development activities which are focused on improving
the quality, capabilities and range of technologies available
to support our businesses.
Political Donations
No political donations were made in the current year
(2018: €Nil).
Events since the end of the Financial Year
There were no material events since the end of the
financial year to report.
Auditors
The auditors, PricewaterhouseCoopers, will continue
in office in accordance with Section 383(2) of the
Companies Act 2014.
On behalf of the Board
Rose Hynes
Director
24 September 2019
Tom O’Mahony
Director
24 September 2019
76
In Origin, we view high
standards of corporate
governance as a vital element
of how we conduct our
business and achieve long-
term success for the Group.
Chairman’
s Overview
We, as a Board of Directors, regard
strong governance as one of
the foundations of a sustainable
corporate growth strategy. The
Board applies the principles of
the Quoted Companies Alliance
Corporate Governance Code (‘QCA
Code’) as the basis for its corporate
governance framework. In doing so,
the Board is committed to continue
to apply the highest standards of
corporate governance consistent
with the size and complexity of
the business.
Details of our compliance with
the QCA Code are outlined in our
Corporate Governance Statement
on pages 78 to 83. There are
detailed reports from our respective
Audit and Risk, Remuneration,
and Nomination and Corporate
Governance Committees, on pages
84 to 106. Developments on our
Committee structures during the
year included an amalgamation
of the Audit Committee and Risk
Committee, a replacement of
the Chief Executive Officer, Tom
O’Mahony, on the Nomination and
Corporate Governance Committee,
so that it now solely comprises
Non-Executive Directors, and
the formalisation of the ad-
hoc Acquisitions and Disposals
Committee to a standard Board
Committee. A detailed Risk Report is
outlined on pages 62 to 69.
The Board recognises the
importance of maintaining a culture
across the Group that promotes
ethical behaviour and values and
supports excellence in our business.
We also have a strong boardroom
culture, with constructive challenge
flowing freely from the Non-
Executive Directors, underpinned
by a mutual respect between
all Directors.
On an ongoing basis, I seek to ensure
that we have the right balance of
skills, experience, diversity and
independence on the Board. The
Board recently set a target of
achieving a minimum of 33% female
representation on the Board by the
end of 2020.
We are pleased to welcome a new
Executive Director to the Board this
year. Sean Coyle commenced as
Chief Financial Officer in September
2018 and was appointed to the Board
on 1 October 2018. We also welcome
Barbara Keane who joined as Group
General Counsel and was appointed
by the Board as Company Secretary
on 28 May 2019.
Following the completion of a three-
year term on the Board in 2018, Kate
Allum, Gary Britton and Christopher
Richards were each considered for
a second term as Non-Executive
Directors and re-appointed on 1
October 2018. The Board also
undertook a similar process in
respect of the Chair, following which
I was re-appointed as Chairman on
1 October 2018.
The Board currently comprises five
Non-Executive Directors and three
Executive Directors. Biographies of
the Directors are set out on pages
72 and 73. In accordance with the
new re-election policy adopted by
the Board in 2018, all Directors will
retire at the 2019 AGM and offer
themselves for re-election.
During the year, the annual
performance evaluation of the Board
and its Committees was conducted
internally. I am pleased to report
that the findings of this review were
positive. More information on this
process is outlined on page 82 of
this report.
The Board continues to invest
time in the development of
skills and knowledge relevant to
the performance of our duties.
During the year we received
presentations from professional
advisers on developments in
corporate governance, anti-bribery
and corruption, and executive
remuneration.
Rose Hynes
Chairman
24 September 2019
Dear Shareholder
77
Governance
The Board of Origin is
committed to applying
the principles of the QCA
Code. This statement
details the Company’s
key governance principles
and practices, how it
has complied with the
principles of the QCA Code
and how the application of
the QCA Code supports the
Company’s medium to
long-term success. A
copy of the QCA Code
can be obtained from the
Quoted Companies Alliance
website, www.theqca.com.
The Board of Directors
The Board of Origin currently
comprises a Non-Executive
Chairman, four Non-Executive
Directors and three Executive
Directors, namely the Chief
Executive Officer (‘CEO’), the
Chief Financial Officer (‘CFO’) and
the Chief Executive Officer, Latin
America. The role of the Board is to
provide leadership and the Directors
are collectively responsible for the
long-term success of the Group.
The offices of the Chairman and
the CEO are separate and clearly
distinct. The division of their
responsibilities is set out in writing
and has been approved by the Board.
The CEO, together with the other two
Executive Directors is responsible for
the day-to-day running of the Group,
carrying out an agreed strategy
and implementing specific Board
decisions. Detailed biographies of
current Directors are set out on
pages 72 and 73.
The Board has delegated some of
its duties and responsibilities to the
various Committees of the Board
whose composition and activities are
set out in their reports on pages 84
to 106. A Risk Report is outlined on
pages 62 to 69.
Directors have access to
independent professional advice
in the furtherance of their duties
should they think it necessary.
Schedule of Matters
Reserved for the Board
There are certain matters that are
deemed sufficiently significant to be
reserved for the Board. A schedule
of matters, set out below, reserved
for the Board, has been reviewed by
the Board during the year to ensure
it continues to be appropriate for
the Company.
Matters reserved for the
Board include:
Setting of Group strategy and
long-term objectives.
Approval of the Annual Report,
annual and interim results,
interim management statements
and any non-routine stock
exchange announcements.
Approval of the annual budget.
Approval of the dividend policy.
Changes to the Company’s capital
structure.
Policy on remuneration for
Executive Directors and senior
management team.
Approval of significant acquisitions.
Approval of significant capital
expenditure.
Corporate Governance Statement
Corporate Governance Framework
Chief
Executive
Officer
Executive
Directors
Remuneration
Committee
Nomination
and Corporate
Governance
Committee
Internal
Audit
Audit
and Risk
Committee
 Board
Acquisitions
and Disposals
Committee
Group
Executive
Risk
Committee
78
Chairman
The Chairman is responsible for
the leadership of the Board and
ensuring it is effective in carrying
out all aspects of its duties and
responsibilities. The Chairman is also
responsible for setting the Board’s
agenda and ensuring that adequate
time is available for the consideration
of all agenda items, in particular
strategic issues. The Chairman is
the link between the Board and
the Company. She is specifically
responsible for establishing and
maintaining an effective working
relationship with the Chief Executive
Officer and promotes a culture
of open dialogue between the
Executive and Non-Executive
Directors. She has the responsibility
to ensure that there is ongoing
and effective communication with
shareholders and to ensure that
members of the Board develop and
maintain an understanding of the
views of the shareholders.
Chief Executive Officer
The Chief Executive Officer
is responsible for the day-to
-day management of the
Group’s operations and for the
implementation of Group strategy
and policies agreed by the Board. The
Chief Executive also has a key role in
the process of setting and reviewing
strategy. The Chief Executive instils
the Company’s culture and standards
which include appropriate corporate
governance throughout the Group.
In executing his responsibilities, the
Chief Executive is supported by the
Chief Financial Officer and the Chief
Executive Officer, Latin America, who
together are responsible for ensuring
that high quality, timely information is
provided to the Board on the Group’s
financial and strategic performance.
Non-Executive Directors
The Non-Executive Directors’
main responsibilities are to
review the performance of senior
management and the Group’s
financial information, assist
in strategy development, and
ensure appropriate and effective
systems of internal control and
risk management are in place. The
Non-Executive Directors review the
relationship with external auditors
and monitor the risk management
framework through the Audit
and Risk Committee, monitor
the remuneration structures and
policy through the Remuneration
Committee and consider the Board
composition, succession planning
and best corporate governance
practices through the Nomination
and Corporate Governance
Committee. The Non-Executive
Directors provide a valuable breadth
of experience and independent
judgement to Board discussions.
Details of the Non-Executive
Directors are set out on pages 72
and 73.
Senior Independent Director
The Senior Independent Director
is responsible for providing advice
to the Chairman as necessary,
serving as an intermediary to the
other Directors when necessary,
supporting the Chairman with the
annual Board evaluation if required,
leading an annual performance
review of the Chairman, and being
available to shareholders should they
have any matters for discussion other
than through the normal channels.
Company Secretary
All Directors have access to the
advice and services of the Company
Secretary, who is responsible for
ensuring compliance with Board
procedures. The Company Secretary
is also responsible for supporting
the Chairman and other Board
members as necessary, including
the management of Board and
Committee meetings, advising on
Directors’ duties and facilitating
appropriate, quality and timely
information flows between the
business and the Board. Both the
appointment and removal of the
Company Secretary are matters for
the Board as a whole.
Appointment of Directors
The Nomination and Corporate
Governance Committee is
responsible for reviewing the
structure, size and composition
(including the skills, knowledge,
experience and diversity) of the
Board and making recommendations
to the Board with regard to
any new appointments of Non-
Executive Directors. The report
of the Nomination and Corporate
Governance Committee is set out on
pages 84 to 86.
The Board may appoint a person
willing to act as a Director, either
to fill a vacancy or as an additional
Director, provided that the
appointment does not cause the
number of Directors to exceed 15
as set out in the Company’s Articles
of Association. Such new Directors
will hold office only until the next
AGM, at which the new Director will
be subject to election by ordinary
resolution of the Company.
The terms of appointment of each
of the Non-Executive Directors are
set out in the Directors’ Letters
of Appointment and are available
for inspection at the Company’s
registered office during normal
office hours and at the AGM of
the Company. New Non-Executive
Directors are appointed to serve an
initial three-year term of office
which may be extended, subject to
Board approval.
Re-election of Directors
The Company’s Articles of
Association provide that one third
of the Directors shall retire by
rotation each year. New Directors are
subject to election by shareholders
at the next AGM following their
appointment. Following a change to
the Directors’ re-election policy last
year, all Directors now retire annually
and offer themselves for re-election
at the AGM.
Details of the length of tenure
of each Director on the Board
as at 31 July 2019 are set out in
the Nomination and Corporate
Governance Committee Report
on page 85.
Induction and Training
All new Directors are
comprehensively briefed on the
Group and its operations upon
joining the Board. They also receive
extensive induction materials (via the
Directors’ electronic boardroom).
Training requirements are considered
as part of the annual Board
evaluation process.
During the year professional advisers
advised the Board on developments
in corporate governance, anti-
bribery and corruption, and
executive remuneration.
79
Governance
The Chairman and Company
Secretary review Directors’ training
and development needs on an
ongoing basis, as appropriate.
Independence
The Board has carried out its annual
evaluation of the independence of
each of its Non-Executive Directors
and has given regard to the highest
standards in governance in doing
so. Non-Executive Directors should
be independent in character
and judgement and free from
relationships or circumstances which
are likely to affect, or could appear
to affect, the Directors’ judgement.
Since their appointment, all
current Non-Executive Directors,
including the Chairman, have been
considered by the Board to be
independent and free from any
business or other relationship
which could materially affect their
judgement. The Board notes that
Rose Hynes and Hugh McCutcheon
serve together on the board of IPL
Plastics Inc. The Board remains
satisfied that they are able to
apply objective, unfettered and
independent judgement and act in
the best interest of the Company
regardless of this relationship.
More than half of the Board
comprises Non-Executive Directors,
in line with the highest standards
of governance.
Commitment
Under the terms of their
appointment, all Directors agreed
to the time commitment schedule
which requires them to allocate
sufficient time to discharge
their responsibilities effectively.
This matter is considered by
the Nomination and Corporate
Governance Committee on an
ongoing basis in accordance with its
terms of reference.
Board Meetings
A schedule of Board and Committee
meetings is circulated to all
Board members annually setting
out the dates on which Board
and Committee meetings will be
held. Board papers are circulated
electronically at least three days in
advance of the meetings.
During the year ended 31 July
2019 the Board held a total of ten
scheduled meetings. There is regular
contact between meetings in order
to progress the Company’s business.
Individual attendance at Board
meetings and Committee meetings
is set out in the table below.
Committees
The Board has delegated
certain responsibilities to Board
Committees, namely:
> Audit and Risk Committee.
> Remuneration Committee.
> Nomination and Corporate
Governance Committee.
> Acquisitions and Disposals
Committee.
These Committees operate under
clearly defined, formal Terms of
Reference and report to the Board
at each Board meeting via the
relevant Committee’s Chairman.
The Terms of Reference for the
Committees were reviewed during
the year and will continue to be
subject to an annual review in future
years. Any revisions will be proposed
by the respective Committees and
then approved by the Board. The
Terms of Reference for each Board
Committee are available to view on
the Company’s website:
www.originenterprises.com.
Audit and Risk Committee
The Audit Committee and the Risk
Committee were amalgamated
in September 2018. The primary
function of the amalgamated Audit
and Risk Committee is to assist the
Board in fulfilling its financial and risk
oversight responsibilities. Further
details of the activities of the Audit
and Risk Committee are set out in
the report on pages 87 to 90.
Board Audit and
Risk
Remuneration Nomination
and
Corporate
Governance
Audit Risk
Directors
Kate Allum 10/10 4/4 5/5 – 1/1 1/1
Gary Britton 10/10 4/4 – 2/2 1/1 1/1
Sean Coyle 9/9 – – – – –
Declan Giblin 10/10 – – – – –
Rose Hynes 10/10 – 5/5 3/3 – –
Hugh McCutcheon 10/10 4/4 – 3/3 1/1 1/1
Tom O’Mahony 10/10 – – 1/1 – –
Christopher Richards 10/10 – 5/5 – – –
						
The attendance statistics represent:
Total number of meetings attended by the Director / Total number of meetings held during the year to which the Director was eligible to attend.
The Audit and Risk Committees each held a meeting in September, after which the two Committees were amalgamated.
Board of Directors:
Attendance at Meetings During the Year Ended 31 July 2019
80
Remuneration Committee
The Remuneration Committee is
responsible for determining the
remuneration policy for the Executive
Directors, Chairman and the Senior
Management Team. Further details
of the activities of the Remuneration
Committee are set out in the report
on pages 91 to 106.
Nomination and Corporate
Governance Committee
The role of the Nomination and
Corporate Governance Committee
was expanded during the year to
include corporate governance
matters. The Committee is
responsible for reviewing the
structure, size and composition of
the Board, including with respect to
diversity of background and gender
and having regard to the Group’s
businesses and strategic objectives,
and for considering any corporate
governance developments that may
affect the Company. Tom O’Mahony,
Executive Director and Chief
Executive Officer, stepped down
from the Nomination and Corporate
Governance Committee on 26
September 2018 and was replaced
by Gary Britton. The Nomination and
Corporate Governance Committee
is now comprised solely of Non-
Executive Directors. Further details
of the activities of the Nomination
and Corporate Governance
Committee are set out in the report
on pages 84 to 86.
Acquisitions and Disposals
Committee
The pre-existing ad-hoc Acquisitions
and Disposals Committee was
formalised to a standard Board
Committee in September 2019
in recognition of the continuing
importance and value of the
Committee. The Committee is
responsible for providing guidance
when sought by management on
the search for acquisitions and
acquisition related matters, and for
considering any recommendations
from management in regard to
specific divestments.
Remuneration
It has been the Company’s practice
since 2015 to put the Remuneration
Report to an advisory, non-binding
shareholder vote at the AGM.
Accordingly, the Annual Report
on Remuneration will be put to an
advisory, non-binding shareholder
vote at the Company’s 2019 AGM.
Share Ownership and Dealing
Details of each of the Directors’
interests in Origin’s shares are set
out in the Remuneration Committee
Report on pages 91 to 106.
The Board has adopted the Origin
Enterprises plc Share Dealing Policy
(the ‘Policy’). The Policy relates
to the dealings in shares of the
Company by Directors and certain
employees of the Group and is
designed to ensure that these
individuals neither abuse, nor set
themselves under suspicion of
abusing, information held about
the Group which is not in the public
domain. It is also designed to ensure
compliance with the EU Market
Abuse Regulation (596 / 2014) which
came into effect on 3 July 2016.
The Policy requires Directors
and certain employees to obtain
clearance from the Company
Secretary and the Non-Executive
Chairman prior to dealing in the
shares of the Company and prohibits
them outright from dealing in shares
during prohibited periods and when
in possession of inside information.
Risk Management and Internal
Control Procedures
The Board is responsible for
identifying, evaluating and managing
the principal risks faced by the
Group in achieving its strategic
objectives. It is ultimately
responsible for monitoring risk
management systems including
financial controls, controls in
respect of the financial reporting
process and controls of an
operational and compliance nature.
The Group’s internal control systems
are designed to manage, rather
than eliminate, the risk of failure to
achieve the Group’s objectives and
can only provide reasonable, and not
absolute, assurance against material
misstatement or loss.
The Board has delegated
responsibility for the ongoing
monitoring of the effectiveness of
the risk management and internal
control systems to the Audit and Risk
Committee. Details in relation to the
Audit and Risk Committee’s work in
this regard are set out in the Audit
and Risk Committee Report on pages
87 to 90.
The Directors have established
a number of key procedures
designed to provide an effective
system of internal control and risk
management. The key procedures
which are supported by detailed
controls and processes include:
Internal Audit
A Group internal audit function,
led by a newly appointed Head of
Risk and Internal Audit, undertakes
examinations of business processes
on a risk basis and reports to the
Audit and Risk Committee on
controls throughout the Group.
Control Environment
Maintaining an organisation structure
with defined lines of responsibility
and specified delegation of authority
within which the Group’s activities
can be planned and monitored. The
control environment is overseen by
experienced Group and divisional
management teams.
Financial Reporting
A comprehensive financial reporting
system involving setting of annual
budgets and plans, timely monthly
reporting and variance analysis
and ongoing review, supported by
information systems developed for
this purpose.
Whistleblowing Arrangements
The Audit and Risk Committee
is responsible for the review of
the Company’s whistleblowing
arrangements and for ensuring that
these arrangements are suitable for
the Group’s employees. The Audit
and Risk Committee reviewed these
arrangements during the year and
satisfied itself that they are adequate
for the needs of the Group.
Risk Management Framework
The Group has a robust Risk
Management Framework to identify,
manage and monitor risks. The Group
established an Executive Group Risk
Committee to further strengthen the
Group’s focus on risk management
and internal control systems.
Details of the operation of the Risk
Management Framework are outlined
in the Risk Report on pages 62 to 69.
81
Governance
Annual Review of Internal
Controls and Risk
Management Systems
The Directors confirm that they have
conducted an annual review of the
effectiveness of internal control
and risk management systems as
operated up to and including the
date of approval of the financial
statements. This has had regard to
the processes for identifying the
principal business risks facing the
Group, the methods for managing
those risks, the controls that are
in place to contain them and the
procedures to monitor them.
Consolidated Financial
Statements
The consolidated financial
statements are prepared subject
to the oversight and control of the
Chief Financial Officer, ensuring
correct data is captured and all
information that is required to
be provided is disclosed. The
consolidated financial statements
are reviewed by the Audit and
Risk Committee and approved
by the Board.
Board Evaluation
The Board conducts an annual
evaluation of its performance
and that of each of its principal
committees, the Audit and Risk,
Remuneration, and Nomination and
Corporate Governance Committees,
with the evaluation being externally
facilitated every three years. In the
year ended 31 July 2019, this process
was conducted internally following
last year’s external facilitation. The
internal review led by the Chairman,
comprised of a self-assessment
questionnaire completed by each
Director and a Board discussion on
the outcome at the June 2019 Board
meeting. The review considered
a range of factors, including the
balance of skills and experience of
the Board members, independence
of the Board, Board diversity, the
Board agenda and relations between
the Executive and Non-Executive
Directors. The results of the review
demonstrated that the Board was
operating effectively. Actions were
agreed which will be implemented by
the Chairman during the current year.
The Chairman met with the other
Non-Executive Directors without
the Executive Directors present on a
number of occasions during the year.
Executive Directors’ performance
is reviewed by the Remuneration
Committee in conjunction with the
Chief Executive Officer, except in the
case of his own performance review.
The Committees of the Board
followed a similar process in
assessing their effectiveness
during the year.
Culture
Origin operates a decentralised
business model, where each country
and business have unique elements
in their culture. These businesses,
centred on employees and
customers, operate within a group
culture, that strives for innovation
and operational and people
excellence. The close involvement of
the Executive Directors and senior
executives with the businesses
continues to foster a culture of
excellence across the Group.
Through the Group’s principles and
policies, the Directors are committed
to ethical behaviours and values. The
Board receive regular contributions
from senior executives, including
updates on culture, principles and
policies, at meetings of the Board
and Committees to assess that
ethical values and behaviours are
recognised and respected through
the Group.
Employee Engagement
During the year, the Board
launched an employee engagement
programme ‘Let’s Talk’ to enable
regular two-way dialogue between
the Board and the Group’s
employees. This programme allows
Non-Executive Directors to meet
management and employees on site
visits, where the Chairman, CEO,
CFO and designated Non-Executive
Directors are informed of local
market conditions and operations
as well as relevant local matters.
During the year, the Non-Executive
Directors visited sites in Poland and
the UK. Further details of the site
visits are outlined in the Sustainability
Report on pages 50 to 61.
Relations with Shareholders
The Board has responsibility
for ensuring that satisfactory
engagement with the Company’s
shareholders takes place.
Presentations are made to both
existing and prospective institutional
shareholders, principally after the
release of the interim and annual
results. Origin issues an interim
management statement twice
yearly. Information is disseminated
to shareholders and the
market generally, via regulatory
information services, as well as
the Company’s website:
www.originenterprises.com,
which provides the full text of
press releases and all regulatory
announcements. All current and
historical Annual and Interim
Reports and investor presentations
are also made available on the
Company’s website.
The Board is kept informed of the
views of shareholders through
the Chief Executive Officer, Chief
Financial Officer and Head of
Investor Relations’ attendance at
investor meetings, capital market
days and results presentations.
Furthermore, relevant feedback
from such meetings, investor
relations reports and broker notes
are provided to the entire Board
on a regular basis. The Chairman
is also readily available to meet
institutional shareholders as and
when appropriate. The Senior
Independent Director and other
Non-Executive Directors will attend
meetings with major shareholders
if requested. No such meetings
were requested during the year.
The Company Secretary engages
annually with proxy advisers in
advance of the AGM.
The Executive Directors have held
over 150 separate meetings and
conference calls with existing and
prospective shareholders during the
financial year, including:

All shareholders are given the
opportunity to ask questions at
the AGM, which this year will take
place at The Merrion Hotel, Upper
Merrion Street, Dublin 2 at 11.00am
on Wednesday, 20 November 2019.
The Group Chairman along with
the Chairs of the Audit and Risk,
Remuneration, and Nomination and
Corporate Governance Committees,
will be available to answer questions
at that meeting. Further information
on the AGM will be made available on
publication of the notice of the AGM.
A copy of the Memorandum and
Articles of Association of the
Company may be inspected at the
registered office of the Company
or on the Company’s website:
www.originenterprises.com.
General Meetings
Matters of Ordinary Business
General meetings of the Company
are convened in accordance with,
and governed by, the Articles of
Association and the Companies Act
2014. The Company is required to
hold an AGM at intervals of no more
than 15 months from the previous
AGM, provided that an AGM is held
in each calendar year. The AGM has
the power to consider the following
matters, which are deemed by the
Articles of Association to be items
of ordinary business: (i) declaring a
dividend; (ii) the consideration of the
financial statements and reports of
the Directors and Auditor; (iii) the
election of Directors in the place
of those retiring by rotation or
otherwise; (iv) the re-appointment
of the retiring Auditor and the
fixing of the remuneration of the
Auditor; (v) generally authorising
the Directors, for a period to expire
no later than the conclusion of the
next AGM, to allot relevant securities
with a nominal value not exceeding
the authorised but unissued share
capital of the Company; (vi) generally
authorising the Directors, for a
period to expire no later than the
conclusion of the next AGM, to allot
equity securities non-pre-emptively;
and (vii) generally authorising the
Directors, for a period to expire no
later than the conclusion of the next
AGM, to exercise the power of the
Company to make market purchases
of the Company’s shares.
Matters of Special Business
All other business transacted at an
AGM and all business transacted at
an Extraordinary General Meeting (an
‘EGM’) are deemed by the Articles of
Association to be special business.
Matters which must be attended
to by the Company in general
meeting pursuant to the Companies
Act 2014 include: (i) amending
the Memorandum and Articles of
Association; (ii) changing the name
of the Company; (iii) increasing
the authorised share capital,
consolidating or dividing share
capital into shares of larger or smaller
amounts or cancelling shares which
have not been taken by any person;
(iv) reducing the issued share capital;
(v) approving the holding of the AGM
outside the State; (vi) commencing
the voluntary winding up of the
Company; (vii) re-registering the
Company as a company of another
type; (viii) approving a substantial
property transaction between
the Company and a Director; (ix)
approving a guarantee or security for
a loan or similar transaction made
by the Company to a Director or
connected person of a Director; and
(x) approving the draft terms of a
cross-border merger.
Attendance at Meetings and
Exercise of Voting Rights
A quorum for an AGM or an EGM
of the Company is constituted by
three members entitled to vote
and present in person, by proxy or
duly authorised representative in
the case of a corporate member.
The passing of resolutions at a
general meeting, other than special
resolutions, requires a majority of
more than 50% of the votes cast.
To be passed, a special resolution
requires a majority of at least 75%
of the votes cast.
Votes may be given either
personally or by proxy or by a
duly authorised representative
of a corporate member. Subject
to rights or restrictions for the
time being attached to any class
or classes of shares, on a show
of hands, every member present
in person and every proxy or duly
authorised representative of a
corporate body shall have one
vote. No individual shall have
more than one vote and, on a poll,
every member present in person
or by proxy, or a duly authorised
representative of a corporate body,
shall have one vote for every share
carrying voting rights of which the
individual is the holder.
The instrument appointing a proxy
must be deposited at the registered
office of the Company or at another
place specified for that purpose in
the notice of the meeting, not less
than 48 hours before the time for
holding the meeting or adjourned
meeting at which the person named
in the instrument proposes to vote.
Restrictions may be placed on
specified shares such that their
holder or holders will not be entitled
to vote at any general meeting, in
circumstances where the holder or
holders of those shares has failed to
pay any call at the time appointed for
payment or the holder or holders has
failed to comply, to the satisfaction
of the Directors, with a notice
to disclose beneficial ownership
under the Articles of Association or
under Chapter 4 of Part 17 of the
Companies Act 2014.
Shareholders have the right to
attend, speak and vote at general
meetings. In accordance with
Irish company law, the Company
specifies a record date for each
general meeting, by which date
shareholders must be registered
in the Register of Members of the
Company in order to be entitled
to attend.
D&O Insurance
The Company maintains Directors’
and Officers’ liability insurance
cover, the level of which is
reviewed annually.
83
Governance
As Chairman of the Nomination and
Corporate Governance Committee
I am pleased to present the report
of the Nomination and Corporate
Governance Committee for the year
ended 31 July 2019. This report has
been prepared by the Nomination
and Corporate Governance
Committee and approved by
the Board.
The role of the Committee was
expanded during the year to include
corporate governance matters.
The Terms of Reference were
accordingly reviewed and updated
to include governance related
matters in line with best practice. The
responsibilities of the Committee are
summarised in the following report
and are set out in full in the Terms of
Reference for the Nomination and
Governance Committee which are
available on the Company’s website:
www.originenterprises.com.
The Board of Origin continues to be
committed to apply the principles
of the Quoted Companies Alliance
Corporate Governance Code (‘QCA
Code’). Details of the Company’s
compliance with the QCA Code
are outlined in the Governance
Section of the Annual Report on
pages 78 to 83. The Committee
also keeps under review corporate
governance developments with the
aim of ensuring that the Company’s
corporate governance policies and
practices continue to be in line with
best practice.
The Committee is responsible
for reviewing the structure, size
and composition of the Board,
including with respect to diversity
of background and gender, having
regard to the Group’s businesses and
strategic objectives.
The Committee also keeps under
review the leadership needs of
the organisation, both Executive
Directors and Non-Executive
Directors, with a view to ensuring the
continued ability of the organisation
to compete effectively in the market
place, having regard to strategic and
commercial changes affecting the
Company and the environment in
which it operates.
Further to announcements in
2018, Sean Coyle assumed the
role of Chief Financial Officer on 1
September 2018 and was appointed
to the Board on 1 October 2018 as
Executive Director. During the year,
the Board appointed Barbara Keane
to the role of Group General Counsel
and Company Secretary, further
underpinning the Company’s focus
on corporate governance.
The Committee, excluding the
Chairman, undertook a process
which led to the recommendation
to the Board that Rose Hynes be
re-appointed as Non-Executive
Chairman of the Board for an
additional three-year term
commencing on 1 October 2018.
The Committee also undertook
a process which led to the
recommendations to the Board
that Kate Allum, Gary Britton and
Christopher Richards each be re-
appointed as Non-Executive Director
for an additional three-year term
commencing on 1 October 2018.
Tom O’Mahony, Executive Director
and Chief Executive Officer, stepped
down from the Nomination and
Corporate Governance Committee
on 26 September 2018 and was
replaced by Gary Britton.
The Nomination and Corporate
Governance Committee is
now solely comprised of
Non-Executive Directors.
This report sets out further details of
the duties and responsibilities of the
Committee, as well as an overview of
its activities during the year.
Rose Hynes
Chairman of the Nomination and
Corporate Governance Committee
24 September 2019
Nomination and
Corporate Governance
Committee Report
Further biographical details of the
members of the Nomination and
Corporate Governance Committee are
set out on pages 72 and 73.
About this Committee
The Nomination and Corporate Governance Committee comprises
three independent Non-Executive Directors:
• Rose Hynes (Non-Executive Chairman).
• Hugh McCutcheon (Non-Executive Senior Independent Director).
• Gary Britton (Non-Executive Director, Chairman of
the Audit and Risk Committee).
Dear Shareholder
84
Duties and Responsibilities
The principal duties and
responsibilities of the Nomination
and Corporate Governance
Committee include the following:
> regularly review the structure, size
and composition (including the
skills, knowledge, experience and
diversity) of the Board and make
recommendations to the Board
with regard to any changes;
> consider succession planning
for Directors and other senior
executives, taking into account
the challenges and opportunities
facing the Company, and the skills
and expertise needed on the
Board in the future;
> keep under review the leadership
needs of the organisation, both
Executive Directors and Non-
Executive Directors, with a view
to ensuring the continued ability
of the organisation to compete
effectively in the marketplace;
> review annually the time required
of each of the Non-Executive
Directors in discharging their
responsibilities;
> before any appointment is
made to the Board, evaluate the
balance of skills, knowledge,
experience and diversity on the
Board, and, in the light of this
evaluation, prepare a description
of the role and capabilities
required for a particular
appointment;
> be responsible for identifying and
nominating, for the approval of
the Board, candidates to fill Board
vacancies as and when they arise;
> make recommendations to
the Board as regards the
re-appointment of any
Non-Executive Director at the
conclusion of their specified
term of office;
> make recommendations to
the Board concerning suitable
candidates for the role of Senior
Independent Director and the
appointment of any Director to
Executive or other office;
> make recommendations to the
Board as regards membership
of each of the Audit and Risk
Committee, the Remuneration
Committee, the Acquisitions
and Disposals Committee and
any other Board Committees as
appropriate;
> conduct an annual Committee
evaluation process and additionally
review the results of the Board’s
performance evaluation process
that relate to the composition of
the Board;
> keep under review corporate
governance developments that
might affect the Company, with
the aim of ensuring that the
Company’s corporate governance
policies and practices continue to
be in line with best practice;
> ensure that the principles set out
in the QCA Code are observed;
and
> review the disclosures and
statements made in the report
to shareholders on corporate
governance contained in the
Annual Report.
Length of Tenure
The length of tenure of the Directors
on the Board and on the Nomination
and Corporate Governance
Committee as at 31 July 2019 is set
out below.
Length of tenure
on Board
Years
Kate Allum 3.83
Gary Britton 3.83
Sean Coyle 0.83
Declan Giblin 10.80
Rose Hynes 3.83
Hugh McCutcheon 7.69
Tom O’Mahony 12.48
Christopher Richards 3.83
Average tenure 5.89
Length of tenure
on Nomination and
Corporate Governance
Committee
Years
Rose Hynes 3.75
Hugh McCutcheon 3.75
Gary Britton 0.84
Meetings
The Nomination and Corporate
Governance Committee met three
times during the year.
Board Composition
Appointment of Chief
Financial Officer
Sean Coyle assumed the role
of Chief Financial Officer on 1
September 2018 and was appointed
to the Board on 1 October 2018.
Appointment of Group General
Counsel and Company Secretary
Barbara Keane assumed the role of
Group General Counsel on 13 May
2019 and was appointed as Company
Secretary on 28 May 2019.
Elections and Re-elections
at AGM
Sean Coyle was elected by
the shareholders as a Director
at the Company’s AGM on
23 November 2018.
In accordance with the Company’s
Directors’ re-election policy and
best practice corporate governance,
all Directors now offer themselves
for re-election on an annual
basis. Kate Allum, Gary Britton,
Declan Giblin, Rose Hynes, Hugh
McCutcheon, Tom O’Mahony and
Christopher Richards were elected
by the shareholders as Directors at
the Company’s AGM on 23 November
2018. All Directors will retire at the
2019 AGM and offer themselves for
re-election.
Re-appointment of Chairman
During the year, Rose Hynes
completed her first three-year
term as Non-Executive Chairman.
Following a comprehensive
review of her skills, experience,
independence and knowledge, the
Committee, excluding the Chairman,
recommended to the Board and
the Board concluded, that Rose
Hynes continues to be effective and
independent and make a valuable
contribution to the Board, and in
order to maintain continuity on the
Board and its Committees, she be
re-appointed to serve an additional
term of Chairman.
85
Governance
Re-appointment of
Non-Executive Directors
During the year, Kate Allum,
Gary Britton and Christopher
Richards each completed their
first three-year term as Non-
Executive Directors. Following a
comprehensive review of their
respective skills, experience,
independence and knowledge, the
Committee recommended to the
Board and the Board concluded,
that as each of Kate Allum, Gary
Britton and Christopher Richards
individually continue to be effective
and independent and make a
valuable contribution to the Board,
and in order to maintain continuity
on the Board and its Committees,
they be re-appointed to serve an
additional term.
Boardroom Diversity
The Board is keen to ensure the
Group benefits from the existence
of a high quality and diverse Board
comprising of individuals with an
appropriate balance of skills and
experience. In accordance with
our Board Diversity Policy, diversity
in background, skills, experience,
race, gender and other attributes
are considered in determining
the optimum composition of the
Board with an aim to balance
it appropriately. All Board
appointments are made on merit
with due regard to diversity.
In reviewing Board composition, the
Committee will consider the benefits
of all aspects of diversity including,
but not limited to, those described
above, in order to maintain an
appropriate range and balance of
skills, experience and background on
the Board.
The Board currently comprises eight
members in total, of which three
are Executive and five are Non-
Executive (including the Chairman).
Female Directors constitute 25%
of the Board. The Board has set a
target of achieving a minimum of
33% female representation on the
Board by the end of 2020.
Succession Planning
The Board, through the Nomination
and Corporate Governance
Committee, is committed to
effectively managing leadership
succession and assessing the
senior executives’ talent pool in
the Group. The Board proactively
engages with senior executives,
through regular contributions from
the senior management teams at
Board and Committees meetings
and by their own attendance at
staff conferences. Ongoing updates
on succession planning are also
provided to the Board by the Chief
Executive Officer.
Annual Evaluation
of Performance
The Board conducts an annual
evaluation of its own performance
and that of its Committees and
Committee Chairmen. In the year
ended 31 July 2019, the Nomination
and Corporate Governance
Committee carried out an
evaluation of its own performance.
The conclusion from this process
was that the performance of
the Nomination and Corporate
Governance Committee and of
the Chairman of the Committee
were satisfactory.
86
I am pleased to present the report
of the Audit and Risk Committee for
the year ended 31 July 2019 which
has been prepared by the Audit and
Risk Committee and approved by
the Board. The principal duties and
responsibilities of the Audit and Risk
Committee as well as an overview
of its activities for the year ended
31 July 2019 are summarised in the
following report.
The Audit and Risk Committees
were amalgamated in September
2018 and the Terms of Reference of
the amalgamated Committee are
available on the Company’s website:
www.originenterprises.com. I would
like to thank Hugh McCutcheon for
his dedication and professionalism in
conducting his role as Chairman of
the Audit Committee prior to
the amalgamation.
During the year, the Committee
appointed a new Head of Risk and
Internal Audit and established an
Executive Group Risk Committee to
further strengthen the Group’s focus
on risk management and internal
control systems. A key responsibility
of the Audit and Risk Committee
for the year ended 31 July 2019
is to review the Company’s risk
management and internal control
systems. Details in regard to these
matters are set out in the Risk Report
on pages 62 to 69.
Also this year, the Committee
conducted a competitive tender
process for the appointment of an
External Auditor. Pursuant to this
tender, PricewaterhouseCoopers
(‘PwC’), the current External Auditor
to the Group, was appointed for the
year ending 31 July 2020.
Gary Britton
Chairman of the Audit
and Risk Committee
24 September 2019
Audit and Risk
Committee Report
About this Committee
The Audit and Risk Committee comprises three independent
Non-Executive Directors:
> Gary Britton (Non-Executive Director, Chairman of the Audit
and Risk Committee).
> Hugh McCutcheon (Non-Executive Senior Independent Director).
> Kate Allum (Non-Executive Director, Chairman of the
Remuneration Committee).
The members of the Committee have significant financial
and business experience.
Dear Shareholder
87
Governance
Duties and Responsibilities
The principal duties and
responsibilities of the Audit
and Risk Committee include
the following:
> monitor the integrity of the
financial statements (including
the Annual Report, Interim
Report and preliminary results
announcements);
> monitor and review the financial
reporting process, reviewing and
challenging the judgements of
management in relation to interim
and annual financial statements;
> review the effectiveness of the
Company’s internal financial
controls and internal control and
risk management systems, along
with reviewing and approving the
statements to be included in the
Annual Report concerning internal
control and risk management
systems;
> review the Company’s
whistleblowing arrangements;
> review the Company’s procedures
for detecting and preventing
fraud;
> review the Company’s systems and
controls for the prevention
of bribery;
> review the effectiveness of the
Internal Audit function;
> review and monitor management’s
responsiveness to the findings and
recommendations of the
Internal Auditor;
> oversee the relationship with
the External Auditor, including
(but not limited to) monitoring
all matters associated with the
appointment, terms, remuneration
and performance of the External
Auditor and reviewing the scope
and results of the audit and the
effectiveness of the process; and
> annually review the Audit and Risk
Committee’s Terms of Reference
and conduct a performance
evaluation of the Committee.
Length of Tenure
The length of tenure of the Directors
on the Audit and Risk Committee as
at 31 July 2019 is set out below:
Length of tenure
on Audit and Risk
Committee*
Years
Kate Allum 3.75
Gary Britton 3.77
Hugh McCutcheon 7.63
* Following the amalgamation of the Audit
and Risk Committees, the length
of tenure for a Director represents
the longest tenure of that Director on
either Committee.
Meetings
The Audit and Risk Committee met
five times during the year. Each
Committee meeting was attended by
the Chief Financial Officer. The Head
of Risk and Internal Audit and the
External Auditor also attended these
meetings as required. The Audit and
Risk Committee also met with both
the Head of Risk and Internal Audit
and the External Audit Lead Partner
without executive management
being present.
Financial Reporting
The primary role of the Audit and
Risk Committee, in relation to
financial reporting, is to review the
appropriateness of the half-year and
annual financial statements, with
both management and the External
Auditor, and to report to the Board.
This review focuses on, amongst
other matters:
> the quality and acceptability of
accounting policies and practices;
> the clarity of the disclosures
and compliance with financial
reporting standards and relevant
financial and governance reporting
requirements; and
> material areas in which significant
judgements have been applied or
there has been discussion with the
External Auditor.
As part of this review, the Audit and
Risk Committee considers reports
from the Chief Financial Officer
and the reports from the External
Auditor on the outcomes of its
annual audit. The Audit and Risk
Committee assesses the External
Auditor annually in respect of its
independence and objectivity, taking
into account relevant professional
and regulatory requirements and the
relationship with the Auditor as a
whole. In addition, the Audit and Risk
Committee reviews and considers
the Company’s draft Annual Report
and the Group’s financial statements
in advance of final approval.
Ahead of final approval of the Annual
Report and the financial statements,
the Audit and Risk Committee
discussed with management the key
sources of estimation and critical
accounting judgements outlined
in Note 33 to the Group’s financial
statements. The significant areas
of focus considered by the Audit
and Risk Committee in relation to
the Group’s financial statements for
the year ended 31 July 2019, and
how these have been addressed,
are listed on page 89. In concluding
that the list represents the primary
areas of judgement, the Audit
and Risk Committee considered a
detailed report which referenced
both quantitative and qualitative
judgement factors across each
significant account balance,
assessing the impact on the user of
the financial statements. These are
also areas of higher audit risk and,
accordingly, the External Auditor
reported to the Audit and Risk
Committee on these judgements
which were then duly considered by
the Audit and Risk Committee.
88
The significant areas of judgement that were discussed at the interim and year-end Audit and Risk Committee
meetings included:
Key Audit Judgements
Area of Judgement Discussion
Goodwill The Committee recognises that impairment reviews of goodwill involves a range of
judgemental assumptions.
These assumptions typically include business plans and projections, cash flow forecasts and
associated discount rates. Management provided the Committee with an analysis of the
impairment reviews undertaken by cash-generating units, including the forecasts and key
assumptions used together with a summary of the results. Following the results of these
impairment reviews, an impairment of €7.9 million was recognised in relation to the goodwill
in respect of the Group’s Ukrainian business. This analysis, together with the detail set out
in Note 14 to the financial statements, was reviewed and challenged by the Committee.
Following these discussions, the Committee is satisfied that the approach to impairment
reviews, the key assumptions made and conclusions reached, are appropriate.
Settlement price
adjustments
payable
The Committee acknowledges the level of judgement required in estimating settlement
price adjustments payable given the complexity of such arrangements in addition to the
timing of payment.
The Committee discussed the basis used for calculating settlement price adjustments, the
historical accuracy of settlement price adjustment calculations, the level of judgement
required and the expected settlement date of related payments, with management. Following
these discussions, the Committee is satisfied that the accounting treatment adopted is
appropriate and that settlement price adjustments are accurately stated at year end.
Rebates
receivable
The Committee considered the basis used for calculating rebates receivable, the historical
accuracy of rebate calculations, the level of judgement required and the settlement date of
rebate payments. This was achieved through a review of the calculation and discussion with
management.
In addition, the Committee considered the value of rebates received after the year end
relating to the current financial year to support the judgements taken in the financial
statements. The Committee is satisfied that the accounting treatment adopted is appropriate
and that rebates receivable at the year end are recoverable.
Risk Management, Internal
Control and Internal Audit
The Audit and Risk Committee
has been delegated responsibility
by the Board for reviewing the
effectiveness of the Company’s
internal financial controls
and internal control and risk
management systems.
The Chairman of the Audit and Risk
Committee reports to the Board
on the Audit and Risk Committee’s
activities and how it has discharged
its responsibilities in this regard.
During the year, the Committee
appointed a new Head of Risk and
Internal Audit and established an
Executive Group Risk Committee to
further strengthen the Group’s focus
on risk management and internal
control systems.
Risk Management
The Committee’s main duties from
a risk management perspective
encompass the review of the
Group’s overall risk assessment
processes, including the ability
to identify and manage new risks.
Additionally, it is responsible for
considering the appropriateness
of the Group’s risk review process
and advising the Board in respect
of the current risk exposures of
the Group.
The Committee has responsibility for
reviewing the Group’s risk register
and ensuring that the processes for
identifying, managing and mitigating
risks are operating effectively. The
principal risks facing the Group and
the processes and steps taken to
mitigate these risks are set out in
the Risk Report on pages 62 to 69.
Internal Control and
Internal Audit
The Audit and Risk Committee
considers the results of internal
control reviews and reviews the
effectiveness of the Internal Audit
function, ensuring it is adequately
resourced and has conducted an
annual review of its effectiveness,
as part of its annual activities.
The Group’s internal control
systems are designed to manage,
rather than eliminate, the
risk of failure to achieve the
Group’s objectives, and can
only provide reasonable, and
not absolute, assurance against
material misstatement or loss.
In assessing what constitutes
reasonable assurance, the Audit
and Risk Committee considers
the materiality of financial
89
Governance
and operational risks and the
relationship between the costs
of, and benefit from, internal
control systems.
The Head of Risk and Internal Audit
has responsibility for all Internal
Audit matters and ensuring the
effective operation of the Internal
Audit function. The transition of
the internal audit activities from
the third party outsourced service
provider EY to the Head of Risk
and Internal Audit is ongoing and
expected to be completed in FY20.
The new Head of Risk and Internal
Audit independently reports to
the Audit and Risk Committee in
relation to the work and findings of
the Internal Audit function.
Each year, the Internal Audit
function sets out a rolling
programme of Internal Audit
reviews to be carried out across
the Group’s businesses throughout
Ireland, the UK, Continental
Europe and Latin America. The
Internal Audit review programme is
tailored to focus attention on the
particular financial reporting and
operational risks at each location,
which may have a material financial
impact on the Group’s results.
The Audit and Risk Committee
receives this annual audit plan in
advance, reviews the adequacy of
the plan and considers whether
it represents an appropriate
allocation of Internal Audit
resources given its knowledge of
the Group’s risk profile.
The Internal Audit function
reports its findings to the Audit
and Risk Committee with each
report comprising findings and
detailed recommendations as to
processes and controls which
could be implemented or improved
in order to reduce the level of
financial reporting and operating
risk. It also updates the Audit and
Risk Committee on processes
and improvements made, where
appropriate, at each location since
its previous Internal Audit review.
External Auditor
The Audit and Risk Committee
oversees the relationship with the
External Auditor, including approval
of the External Auditor’s fees.
PwC conducted the external audit
in respect of the year ended
31 July 2019.
Appointment, Independence
and Effectiveness
The Audit and Risk Committee
considers the re-appointment of the
External Auditor each year, whilst
assessing its independence on an
ongoing basis. The External Auditor
is required to rotate the Audit
Partner every five years. The current
Audit Partner has completed one
year as Auditor for the Company.
In addition, the Audit and
Risk Committee considers the
effectiveness of the external
audit process on an annual basis,
reporting its findings to the Board
as part of its recommendations.
This process is carried out with
the completion of a detailed
questionnaire which includes
consideration of the Audit
Partner, the audit approach,
communication, independence,
objectivity and reporting.
The questionnaire is completed
and the results are considered
by members of the Audit and
Risk Committee.
External Audit Services Tender
PwC has been the Group’s External
Auditor since 2010. Pursuant to the
Committee’s Terms of Reference,
which require an external audit
tendering process to be conducted
at least once every ten years, a
competitive tender process was
conducted during the year for the
External Audit service commencing
in the year ending 31 July 2020.
The process involved a Request for
Proposal, extensive submissions by
a number of leading audit firms, and
presentations to the Audit and Risk
Committee and senior management,
and concluded in May 2019.
Following evaluation of the bids, the
Audit and Risk Committee provided
the Board with its recommendation
to appoint PwC as External Auditors
for FY20 onwards.
Non-Audit Services
During the year, the Audit and Risk
Committee undertook its annual
review of the policy on engagement
of the External Auditor to provide
non-audit services. This policy is
designed to further safeguard the
independence and objectivity of
the External Auditor. Details of
the amounts paid to the External
Auditor for non-audit services are
set out in Note 5 to the Group’s
financial statements.
Whistleblowing Arrangements
The Audit and Risk Committee
is responsible for the review of
the Company’s whistleblowing
arrangements and for ensuring
that these are suitable for the
Group’s employees. The Audit and
Risk Committee reviewed these
arrangements during the year
and satisfied itself that they
are adequate for the needs of
the Group.
Annual Evaluation
of Performance
The Board conducts an annual
evaluation of its own performance
and that of its Committees and
Committee Chairmen. In the year
ended 31 July 2019, the Audit and
Risk Committee carried out an
evaluation of its own performance.
The conclusion from this process
was that the performance of the
Audit and Risk Committee and of
the Chairman of the Committee
were satisfactory.
Reporting
The Chairman of the Audit and Risk
Committee reports to the Board
at each meeting on the activities
and key discussion areas of the
Audit and Risk Committee. The
Chairman of the Audit and Risk
Committee attends the Company’s
AGM to answer questions on
the report on the Audit and Risk
Committee’s activities and matters
within the remit of the Audit
and Risk Committee’s role and
responsibilities.
90
Dear Shareholder
On behalf of the Board, I am pleased
to present the Remuneration
Committee Report for the year
ended 31 July 2019. The objective of
the report is to provide shareholders
with information on the Company’s
remuneration policy to enable them
to understand the link between
remuneration structures and the
Group’s financial performance.
The responsibilities of the
Remuneration Committee are
summarised in this report and
are set out in full in the Terms of
Reference for the Remuneration
Committee which are available
on the Company’s website:
www.originenterprises.com.
Governance Structure
As an Irish incorporated company,
Origin is not subject to UK legislation
on the disclosure of Directors’
remuneration. That said, we
recognise the importance of having
remuneration policies, practices
and reporting that reflect best
corporate governance practices,
having regard to the Company’s size
and the markets on which its shares
are traded.
We are ensuring that there is a
demonstrable link between reward
and long-term value creation.
Origin’s remuneration policy seeks
to incentivise Executives to create
shareholder value and consequently
their remuneration is weighted
towards performance-related
elements with targets to incentivise
the delivery of strategy over the
short and long-term.
Performance for the Year
Ended 31 July 2019
Origin achieved a year of strong
underlying performance. Operating
profit increased by 15.6% in the
year, an increase of 15.5% on
an underlying basis at constant
currency. Adjusted diluted earnings
per share were 52.65 cent, an
increase of 7.9% on a reported basis
and 7.8% on an underlying basis
at constant currency. Return on
invested capital, a key metric for
Origin, was 13.2%.
Pay Outcomes for 2019
Annual bonus is based on a
combination of financial and non-
financial metrics. Details of the
financial and non-financial metrics
are set out on pages 103 and 104.
The performance for the year ended
31 July 2019 has been reflected in
bonus outcomes of 78% to 78.5%
of the maximum.
The long-term incentives granted
in March 2017 had a performance
period for the three years ended
31 July 2019, with 52.5% expected
to vest. During the year a further
share award was made to Executive
Directors under the Company’s 2015
Long-Term Incentive Plan (‘2015
LTIP’). Details of the individual awards
made under the 2015 LTIP and the
relevant performance conditions for
these awards are set out later in this
report. The Committee is satisfied
that the incentive outcomes are a fair
reflection of performance over the
relevant performance periods.
Activities in 2019
As well as overseeing the matters
detailed as the Committee’s
principal duties and responsibilities
in the year, the Committee also
reviewed and proposed changes
to the 2015 LTIP for shareholder
approval at the Company’s Annual
General Meeting on 20 November
2019. The changes include the
inclusion of a clause to reduce
formulaic vesting outcomes,
broadening of clawback and malus
provisions, greater flexibility to tailor
metrics in line with the Company’s
evolving strategy and formalising the
policy on leavers. Further details are
available on page 100.
The Remuneration Committee
believes that all of the actions
which it has taken on remuneration
matters in the last year are in the
best interest of shareholders.
Remuneration at Origin remains
appropriate, with incentive
arrangements which are well
designed and support the Company’s
overall strategy, and which are
subject to rigorous oversight by
the Committee.
We hope that we will continue
to receive your support at the
forthcomming AGM.
Kate Allum
Chairman of the
Remuneration Committee
24 September 2019
Remuneration
Committee Report
About this Committee
The Remuneration Committee comprises
three independent Non-Executive Directors:
• Kate Allum (Non-Executive Director,
Chairman of the Remuneration Committee).
• Rose Hynes (Non-Executive Chairman).
• Christopher Richards (Non-Executive Director).
91
Governance
Duties and Responsibilities
The principal duties and
responsibilities of the Remuneration
Committee include the following:
> set an appropriate remuneration
policy for Executive Directors and
the Group’s Chairman;
> recommend and monitor the level
and structure of remuneration for
senior management;
> determine the total individual
remuneration package of each
Executive Director, the Group
Chairman and other designated
Senior Executives including
bonuses, incentive payments,
share options and other awards;
> approve the design of, and
determine targets for, any
performance related pay schemes
operated by the Company and
approve the total annual payments
made under such schemes;
> determine the policy for, and
scope of, pension arrangements
for each Executive Director;
> review the design of all share
incentive plans for approval by the
Board and shareholders;
> ensure that contractual terms on
termination of any Director, and
any payments made, are fair to the
individual, and the Company and
that failure is not rewarded;
> oversee any major changes in
employee benefits structures
throughout the Group; and
> ensure the Company maintains
contact as required with its
principal shareholders regarding
remuneration matters.
Length of Tenure
The Remuneration Committee
comprises three Independent
Non-Executive Directors,
Kate Allum (Non-Executive
Director and Chairman of the
Remuneration Committee), Rose
Hynes (Non-Executive Chairman)
and Christopher Richards (Non-
Executive Director). The quorum
for Committee meetings is two
and only members are entitled
to attend. The Remuneration
Committee may extend an invitation
to other persons to attend meetings
to be present for particular agenda
items as required.
The Company Secretary is secretary
to the Remuneration Committee.
The length of tenure of the current
Remuneration Committee members
as at 31 July 2019 is set out below:
Length of tenure
on Remuneration
Committee
Years
Kate Allum 3.77
Rose Hynes 3.77
Christopher Richards 3.75
Meetings and Committee
Governance
The Remuneration Committee
met five times during the financial
year. For full details on individual
Remuneration Committee members’
attendance at meetings, see page
80. The principal activities carried
out included:
> annual review of the Terms of
Reference for the Committee;
> review of the remuneration policy;
> consideration of the 2019 bonus
scheme for Executives;
> approval of the awards under the
2015 LTIP and SAYE scheme;
> consideration of proposed
changes to 2015 LTIP; and
> annual review of the Committee
effectiveness.
The Committee has access to
independent advice and consults
with shareholders where it considers
it appropriate to do so. During the
current year, FIT Remuneration
Consultants advised the Company
on the impact of legislative and
corporate governance changes on
remuneration policy and reporting,
and in respect of the proposed
changes to the 2015 LTIP.
FIT Remuneration Consultants are
members of the Remuneration
Consultants Group and abide by the
Remuneration Consultants Group
Code of Conduct, which requires
its members’ advice to be objective
and impartial. The fees paid to
FIT Remuneration Consultants in
respect of Remuneration Committee
matters over the financial year under
review was £20,536.
The remuneration of the Group
Chairman and the Executive
Directors is determined by the
Board on the advice of the
Remuneration Committee, with
the Group Chairman absenting
herself from all discussions relating
to her remuneration.
Annual Evaluation of
Performance
The Board conducts an annual
evaluation of its own performance
and that of its Committees and
Committee Chairmen. In the
year ended 31 July 2019, the
Remuneration Committee carried
out an evaluation of its own
performance. The conclusion
from this process was that the
performance of the Remuneration
Committee and of the Chairman of
the Committee were satisfactory.
Directors’ Remuneration Policy
The Directors’ remuneration policy
(the ‘Remuneration Policy’) is set
out below. As an Irish incorporated
company, Origin is not required
to comply with UK legislation
which requires UK companies
to submit their remuneration
policies to a binding shareholder
vote. However, we recognise the
importance of having remuneration
policies, practices and reporting
that reflect best corporate
governance practices. In formulating
our Remuneration Policy, full
consideration has been given to
good practice, having regard to the
Company’s size and the markets on
which its shares are traded.
The Company aims to provide a
remuneration structure that is
aligned with shareholders’ interests,
is competitive in the marketplace,
and motivates Executive Directors
to deliver sustainable value for
shareholders. The Group’s policy
is that performance-related
components should form a
significant portion of the Directors’
overall remuneration package,
with maximum total potential
rewards being earned through
the achievement of challenging
performance targets based on
measures that represent the
best interests of shareholders.
92
Consideration of
Shareholder Views
The Remuneration Committee
considers shareholder feedback
received at each year’s AGM.
This feedback, in addition to
any feedback received during
any meetings held from time to
time, is considered as part of the
Remuneration Committee’s annual
review of the Remuneration Policy.
In addition, the Remuneration
Committee will seek to engage
directly with major shareholders and
their representative bodies, should
any material changes be proposed to
the prevailing Remuneration Policy.
Details of votes cast for and
against the resolution at last year’s
AGM to approve the Company’s
Remuneration Report are set out in
the Annual Report on Remuneration
on page 106.
Summary of the Remuneration Policy
The table below summarises the Remuneration Policy for 2019 onwards:
Element of Remuneration Approach Maximum opportunity
Salary
To provide competitive
fixed remuneration and
to motivate Executive
Directors of superior
calibre in order to deliver
for the business.
To attract and retain
skilled and experienced
Executives.
The basic salary for each Executive
Director is reviewed annually by the
Remuneration Committee.
Individual salary adjustments take into account:
> each Executive Director’s performance against
agreed challenging objectives;
> the Group’s financial circumstances; and
> competitive market practice.
There is no prescribed
maximum annual increase.
The Remuneration Committee
is guided by general increases
in the market for the functional
roles held by the respective
Executive Directors along
with general increases for the
broader employee population
of the Group. On occasion, the
Remuneration Committee may
need to recognise, for example,
an increase in the scale, scope
or responsibility of a role.
Salary will be benchmarked
against market rates at least
every three years.
Current salary levels are set out
on page 99.
Benefits
To provide benefits
consistent with
the market.
Current benefit provision may include a company
car or car allowance and private health insurance.
Other benefits may be payable, where appropriate.
Specifically, these may include payments
related to relocation, accommodation and
travel allowances.
Not applicable.
Assignment Allowance
To provide benefits
to reflect additional
responsibilities and
personal disruption.
As disclosed in last year’s report, this additional
element of fixed pay will be paid for three years
from financial year 2019 to the Chief Executive
Officer, Latin America.
It does not form part of the base salary for the
purposes of pension, annual bonus, LTIP or
other benefits.
£225,000 p.a. for 3 years
commencing on 1 October 2018.
93
Governance
Bonus
Incentivises annual
achievement of
performance targets.
Bonus payments to the Chief Executive Officer
and the Chief Financial Officer are based on
the meeting of pre-determined targets against
financial measures, in addition to the attainment
of corporate and personal objectives. These are
approved by the Remuneration Committee annually.
Bonus payments to the Chief Executive Officer,
Latin America are based on the meeting of
pre-determined targets for financial measures
of the Group and performance in Latin America
in addition to the attainment of corporate and
personal objectives. This arrangement is expected
to apply for three years from financial year
2019. Measures and targets are approved by the
Remuneration Committee annually. Any pay-
outs under the bonus scheme during the three-
year period will be deferred in their entirety
and will remain subject to the Chief Executive
Officer, Latin America serving the full three-year
assignment term.
Bonus payments are not pensionable.
Annual incentive payments are determined by the
Remuneration Committee after the year end based
on actual performance achieved against these
targets. The Remuneration Committee can apply
appropriate discretion in specific circumstances in
determining the incentive payment to be awarded.
For the CEO’s and CFO’s 2019 bonus, 80% of the
maximum Group bonus potential is based on
financial targets (namely adjusted diluted earnings
per share (‘EPS’) and Group Operating Cash Flow )
and 20% is based on other corporate and personal
objectives.
The measures, their weighting and the targets are
reviewed on an annual basis. On the basis that the
targets are commercially sensitive, they are not
being disclosed prospectively. The targets and
outcomes for 2019’s bonuses are disclosed on
page 103 and 104.
A clawback provision is in operation.
Maximum bonus of 100% of
basic salary in cash.
Maximum bonus of 150% of
basic salary, deferred in cash,
as follows:
> 100% of basic salary relates to
a mix of both Group and Latin
America financial measures
and corporate / personal
objectives.
> 50% of basic salary relates
solely to Latin America
financial measures. These
are assessed annually and
any payment will be made
after the completion of 2021
financial year.
Element of Remuneration Approach Maximum opportunity
94
Long-Term Incentive Plan (2015) (‘LTIP’)
Designed to align the
interests of Executives
with the delivery
of sustainable earnings
growth and the interests
of shareholders.
Grant of options at a set €Nil or nominal option
price, conditional on the achievement of
challenging performance targets over a
three-year period. A two-year holding period
follows the testing period, ensuring Executives’
interests are aligned with those of shareholders
over the five-year period.
Clawback provisions apply in any circumstance in
which the Remuneration Committee believes they
are appropriate. The clawback provisions apply
throughout the overall five-year period.
Performance is measured over three years and is
currently based on a combination of adjusted
diluted EPS growth, return on invested capital
(‘ROIC’) performance and free cash flow ratio
(‘FCFR’) performance.
The Committee has discretion to use different or
additional performance measures to ensure that
LTIP awards remain appropriately aligned to the
business strategy and objectives. The Committee
will consider the Group’s overall performance
before determining the final vesting level.
Shareholder approval is being sought for
amendments to the 2015 LTIP and further details
of the changes are provided on page 100.
Further detail of the 2019 grant and long-term
incentive schemes are operated is included in
Note 9 to the Group’s financial statements.
Plan limits:
> 100% (normal limit) of
basic salary.
> 200% (exceptional limit
– e.g. recruitment) of
basic salary.
All employee share plans
To encourage employee
share ownership and
therefore increase
alignment with
shareholders’ interests.
2015 UK / Ireland Sharesave Scheme
A HMRC / Irish Revenue approved plan under which
regular monthly savings are made over a three-year
period which can be used to fund the exercise of
an option, the exercise price being discounted by
up to 20%.
Performance conditions are not applicable to
any employee share plans.
2015 UK / Ireland Sharesave Plan
Maximum permitted savings of
£500 / €500 per month across
all ongoing Sharesave contracts
for any individual.
Share ownership guidelines
To increase alignment of
Executives’ interests with
shareholders’ interests.
Executive Directors are required to retain
50% of the net-of-tax amount vested in LTIP
shares until the guideline is met.
LTIP retention guideline applies
until the Executive Director
holds shares to the value of
100% of salary.
Element of Remuneration Approach Maximum opportunity
95
Governance
Pension
To provide retirement
benefits.
The Group operates defined benefit, defined
contribution and / or salary supplement
arrangements.
Life cover of up to four times salary is
also provided.
The defined benefit arrangement applies to
one Executive Director and relates to an
historic agreement.
Defined contribution benefit
of up to 15% of basic salary,
including for the most recent
Executive Director appointment
(35% for the Chief Executive
Officer in connection with
historic arrangements).
Non-Executive Director fees
Reflect time commitments
and the responsibilities of
each role.
Reflect fees paid by
similarly sized companies.
Fees are reviewed on an annual basis and are
intended to be in line with the general market.
The remuneration for each Non-Executive Director
is set by a subcommittee of the Board, comprising
Executive Directors only.
As with Executive Directors, there
is no prescribed maximum annual
increase. General increases in
the Non-Executive Director
market and general increases
received by the broader
employee population are taken
into account. On occasion, an
increase in the scale, scope or
responsibility of a role may need
to be recognised.
Current fee levels are set out
on page 101.
Notes:
A description of how the Company intends to implement the Remuneration Policy is set out in the
Annual Report on Remuneration.
Differences between the Group’s policy for the remuneration of Executive Directors (as set out
above) and its approach to the remuneration of employees generally include:
> a lower level of maximum annual bonus opportunity (or zero bonus opportunity) may apply to
employees other than the Executive Directors and certain Senior Executives;
> benefits offered to certain employees generally comprise the provision of healthcare and company
car benefits where required for the role or to meet market norms;
> the majority of employees participate in local defined contribution pension arrangements
(post-employment benefits are detailed in Note 26 to the financial statements);
> participation in the LTIP is currently limited to the Executive Directors and selected Senior
Executives (other employees are eligible to participate in the Company’s Sharesave Scheme); and
> participation in a cash-based long-term incentive is limited to certain selected
Senior Executives.
In general, these differences arise from the development of remuneration arrangements that
are market competitive for the various categories of individuals. They also reflect the fact, in the
case of the Executive Directors and Senior Executives, a greater emphasis tends to be placed on
performance-related pay.
The choice of performance metrics applicable to the annual bonus scheme reflect the
Remuneration Committee’s belief that any incentive compensation should be appropriately
stretching and tied to the delivery of earnings, other financial KPIs and specific corporate and
individual objectives.
The performance conditions applicable to the 2015 LTIP were selected by the Remuneration
Committee on the basis that they reward the delivery of long-term returns to shareholders and the
Group’s financial growth and are consistent with the Company’s objective of sustainable long-term
value to shareholders.
Element of Remuneration Approach Maximum opportunity
96
The Remuneration Committee operates share plans in accordance with their respective rules and
in accordance with the Rules for Euronext Growth companies, the Rules for AIM companies and
the rules of Irish Revenue and HMRC, where relevant. The Remuneration Committee, consistent
with market practice, retains discretion over a number of areas relating to the operation and
administration of the plans.
Details of remuneration received by the Directors including salary and fees, taxable benefits,
assignment allowances, pension contributions, annual bonuses and long-term incentive awards are
set out in the Annual Report on Remuneration.
Service Contracts for Executive Directors
The Remuneration Committee reviews the contractual terms for any new Executive Directors to
ensure these reflect best market practice.
The current service agreements of the Executive Directors are not fixed term and in the case of the
Chief Executive Officer (‘CEO’) / Chief Financial Officer (‘CFO’) are terminable by either the Company
giving 12 months’ notice or the respective Executive Director giving six months’ notice and, in the
case of the Chief Executive Officer, Latin America, 24 months’ notice by either party (arising as a
result of his historical contract arrangements). The notice periods for all future appointments will be
no longer than 12 months.
The service contracts make provision, at the Board’s discretion, for early termination by way of
payment of salary in lieu of notice. Incidental expenses may also be payable where appropriate.
In calculating the amount payable to an Executive Director on termination of employment, the
Board would take into account the commercial interests of the Company.
Provision Detailed terms
Notice period Six months’ notice from the CEO / CFO and 12 months’ notice
from the Company.
24 months’ notice from the Chief Executive Officer, Latin America
and from the Company.
Payments in lieu of notice For any unexpired period of notice on termination, up to 12
months’ salary (and other remuneration) in respect of the CEO
/ CFO and 24 months’ salary in respect of the Chief Executive
Officer, Latin America.
Incentive schemes In certain good leaver situations, annual bonus may be payable
with respect to performance in the financial year of cessation
(pro-rated for time, unless the Committee determines otherwise).
In the case of the LTIP, the default treatment is that any unvested
awards lapse on cessation of employment.
In certain good leaver situations, participants’ awards would
normally vest at their original vesting date and be subject to
performance testing and a pro-rata reduction.
Change of control No Executive Director’s contract contains additional provisions in
respect of change of control.
Non-Executive Directors
Each of the Non-Executive Directors are appointed under a letter of appointment, detailing
arrangements that may generally be terminated at will, by either party, without compensation.
Their appointment is reviewed on a three-year basis. All Directors retire annually and offer
themselves for re-election at the AGM.
97
Governance

Remuneration Outcomes in Different Performance Scenarios
Remuneration consists of fixed pay (salary, pension and benefits), short-term variable pay and
long-term variable pay. A significant portion of Executive Directors’ remuneration is linked to the
delivery of key business goals over the short and long-term and the creation of shareholder value.
The chart below illustrates the composition of the Executive Directors’ remuneration packages for
2020 at different levels of performance, both as a percentage of total remuneration opportunity
and as total value.
Notes:
‘Minimum’ includes the value of fixed pay and assignment allowance.
‘Target’ includes fixed pay and ‘target’ annual bonus (50% of the maximum) and threshold vesting of
the maximum LTIP (30% of the maximum).
‘Maximum’ includes fixed pay and maximum annual bonus (100% of salary for CEO and CFO and 150%
of salary for Chief Executive, Latin America) and full vesting of LTIP awards (100% of salary).
98
Analysis of
financial bonus
metrics
Annual Report on Remuneration
Implementation of the Remuneration Policy for the Year Ending 31 July 2020
A summary of how the Remuneration Policy will be applied during the financial year ending
31 July 2020 is set out below.
Basic Salary for Executive Directors
The Remuneration Committee has maintained salary at 2019 levels for the 2020 financial year
with no increases to be awarded.
Executive Director () 2020 2019 % increase

1 The salary included for S Coyle represents his annual salary.
2 Remuneration in respect of D Giblin is set in Sterling and has been translated to Euro at an average exchange rate (0.88272)
for 2019. For the purposes of the above table, the average exchange rate for 2019 has also been used to translate the related
salary for 2020. In Sterling, Declan Giblin’s salary amounts to £375,000.
Assignment Allowance
The Assignment Allowance will remain at the same level for the three financial years 2019 to 2021.
Executive Director () 2020 2019
D Giblin 1
255 255
			
1 Remuneration in respect of D Giblin is set in Sterling and has been translated to Euro at an average exchange rate (0.88272)
for 2019. The assignment allowance applied from 1 October 2018. For the purposes of the above table the average exchange
rate for 2019 has also been used to translate the related assignment allowance for 2020. In Sterling, Declan Giblin’s assignment
allowance amounts to £225,000.
Annual Bonus
The maximum bonus achievable in 2020 for T O’Mahony will remain at 100% of basic salary, and for
S Coyle will be 100% of basic salary. The maximum bonus achievable in 2020 for Declan Giblin will
remain at 150% of basic salary. The performance measures have been chosen to provide alignment
with the Group’s strategy. The targets are appropriately stretching and tied to the delivery of earnings
targets, other financial KPIs and specific corporate and individual objectives.
ROIC is an important key performance measure for the Group, however, given that it is included
as a long-term incentive measure it is no longer included as part of the annual bonus performance
measures.
The key metrics underlying the 2019 bonus plan were as follows:
Key metrics underlying the 2019 bonus plan –
T O’Mahony and S Coyle (100% of salary)
Corporate/personal objectives
Financial targets
EPS
Operating cash flow
Financial and
non-financial
bonus metrics

Governance
Corporate objectives include the successful completion of a number of acquisitions, the rollout of
an employee engagement strategy and the development of a Group-wide five-year strategic plan and
for the CEO, Latin America include Latin America strategic objectives.
The above charts exclude the additional 50% of salary bonus opportunity which applies for 2019-
2021 and was disclosed last year. Any bonus under this arrangment is paid after financial year 2021.
The measures, their weighting and the targets are reviewed on an annual basis. On the basis that the
2020 targets are commercially sensitive, they are not being disclosed prospectively.
Pension Arrangements
D Giblin participates in the UK defined benefit section of the Group’s UK pension scheme, which
relates to a historic arrangement.
T O’Mahony and S Coyle each participate in the defined contribution section of the Group’s Irish
pension scheme. Whilst the Company contributes 35% of salary to T O’Mahony’s pension, this is
in connection with historic arrangements. For the most recent Executive Director appointment,
S Coyle, the Company contributes 15% of salary to his pension.
Members of the Irish and UK pension schemes are entitled to life assurance cover of up to four times
salary and a retirement pension subject to the scheme rules. If a member dies whilst in pensionable
service, the value of the members’ retirement account will be used by the trustees to provide a lump
sum and / or a pension payable to dependents.
Long-Term Incentives Share-Based
2015 LTIP
The Committee is proposing certain changes to the current 2015 Long-Term Incentive Plan which will
require shareholder approval at the AGM on 20 November 2019. The changes take into account good
and typical market practice and are summarised below:
> inclusion of the ability for the Committee to reduce the formulaic vesting outcomes if it is not
reflective of a participants contribution or Origin’s performance;
> alignment of the treatment of good leavers’ vested and unvested awards so that a 2 year holding
period applies in both cases; and to give the Committee discretion to accelerate vesting;
> broadening of clawback and malus triggers to include material misstatement, error, gross
misconduct, insolvency and reputational damage; and
> removal of the hard wired performance criteria to enable the Committee to set different conditions
if appropriate including divisional measures for senior executive participants.
Key metrics underlying the 2019 bonus plan – D Giblin (100% of salary)
EPS
Operating cash flow
Latin America financial targets
Corporate / personal objectives
Financial targets
Analysis of
financial bonus
metrics

Financial and
non-financial
bonus metrics
In addition to the three-year performance period under the LTIP, all awards are subject to an
additional two-year holding period ensuring that the LTIP has a five-year time horizon in line with
best practice.
A summary of the awards made under the 2015 LTIP is set out on page 104.
A summary of the performance conditions applicable to awards that have been granted to date
under the LTIP is set out below.
Metric Weighting Vesting at
threshold
Condition
Adjusted Diluted
Earnings per
Share (‘EPS’)
30% 30% Adjusted Diluted EPS growth over the three-
year period in excess of 5% on a pro-rata
basis (straight-line) to 10% (maximum stretch)
for full pay-out.
Return on
Invested Capital
(‘ROIC’) (i)
40% 30% An average annual ROIC of at least 12.5%
(threshold) on a pro-rata basis to 17.5%
(maximum stretch) for full pay-out.
Free Cash
Flow Ratio) (ii)
30% 30% An average annual free cash flow
ratio of at least 50% (threshold) on a
pro-rata basis to 100% (maximum stretch) for
a full pay-out.
(i) For the purposes of these calculations, the definition of ROIC used is consistent with the definition of ROCE as set out in the
Chief Financial Officer’s Review on page 19.
(ii) The definition of Free Cash Flow Ratio is set out in the Chief Financial Officer’s Review on page 20.
The Remuneration Committee will consider further LTIP awards during the financial year 2020, but
before doing so will, as is normal, review the continued appropriateness of the performance metrics
and the related targets for awards. Details of any LTIP awards made in the financial year 2020,
including performance measurements and targets, will be disclosed in the Remuneration Report for
the financial year 2020.
Non-Executive Director Fees
Fees for the Non-Executive Directors for the 2019 and 2020 financial years are detailed below.
Position 2020

Governance
Remuneration Outcomes
for the Year Ended 31 July 2019
Directors’ remuneration (audited) for the year ended 31 July 2019 was as follows:
* S Coyle was oppointed to the Board on 1 October 2018. The amounts included in the table above represents emoluments for
the period 1 October 2018 to 31 July 2019.
** I Hurley resigned from the Board on 28 February 2018. The amounts included in the table above represents emoluments for the
period 1 August 2017 to 28 February 2018.
***R McHugh retired from the Board on 17 May 2018. The amounts included in the table above represents emoluments for the
period 1 August 2017 to 17 May 2018.
102
Notes:
1 Salary and Fees (audited)
In 2019, D Giblin received a salary of £375,000, converted at an average exchange rate of 0.88272
(2018: 0.88677). The amount charged and disclosed in the 2018 accounts was €423,000, based on a
sterling salary of £375,000.
2 Taxable Benefits (audited)
Benefits include a company car or company car allowance (D Giblin, T O’Mahony and S Coyle) and
private medical insurance (including immediate family members) (D Giblin and S Coyle). Benefits also
include mileage claimed by Non-Executive Directors for travel to Board meetings, which has been
grossed up for Irish tax purposes.
3 Assignment Allowance (audited)
In 2019, D Giblin received an assignment allowance of £187,500, converted at an average exchange
rate of 0.88272. This allowance applied from 1 October 2018.
4 Pensions (audited)
The Company contributes 35% of salary to T O’Mahony’s pension and 15% of salary to S Coyle’s
pension.
Figures for D Giblin represent the defined benefit provision for the year in respect of his membership
of a UK scheme, as calculated in line with applicable legislation.
Number of Directors
2019 2018
Retirement benefits are accruing to the following number
of Directors under:
Defined contribution scheme
Defined benefit scheme
5 Annual Bonus
The financial measures applying to the CEO’s and CFO’s 2019 bonus were EPS (50% of salary) and
Operating Cash Flow (‘OCF’) (30% of salary), along with the achievement of specified corporate
and personal objectives measures over the course of the 2019 financial year.
Financial measures – CEO / CFO
30% of salary is payable for achieving threshold EPS and 15% of salary is payable for achieving threshold Operating Cash Flow.
For the CEO, Latin America, 60% of 2019 bonus was based on EPS (37.5% of salary), OCF (22.5% of
salary) and 20% was based on Latin America financial measures.
Financial measures – CEO, Latin America
23% of salary is payable for achieving threshold EPS and 11% of salary is payable for achieving threshold Operating Cash Flow.
The CEO, Latin America, earned a bonus of 17.1% out of a possible 20% of salary based on the Latin
America EBIT and Latin America OCF financial measures.
103
Governance
In addition, and as disclosed in last year’s report, the CEO, Latin America can earn an additional 50%
of salary per annum based on Latin America related financial objectives for three years commencing
1 October 2018. Latin America performance for the first year has been strong and bonus has accrued
as a result. However, a full, rounded assessment of performance over the full three year period
will be undertaken after the end of the three year performance period (i.e. in October 2021) to
determine the total bonus payable.
Corporate and personal objectives
For 2019, non-financial objectives included the successful completion and integration of a number
of acquisitions, the rollout of an employee engagement strategy and the development of a Group-
wide five-year strategic plan. In relation to the above objectives, the CEO and CFO earned 15.5% and
15.4% respectively out of maximum of 20% of salary.
In relation to Latin America objectives, the CEO, Latin America earned 14.2% out of a maximum of
20% of salary.
In total the CEO, CFO and the CEO, Latin America earned bonuses to the value of 78.1%, 78% and
78.5% respectively out of a possible 100% of salary.
The Remuneration Committee believes that this combination of financial and personal objectives
strongly aligns with the Group’s strategic goals and the determination of bonus outcomes elsewhere
in the Group.
6 Long-Term Incentives
LTIP awards vesting based on performance to 31 July 2019.
The Directors were granted LTIP awards in March 2017 which are due to vest in March 2020. These
awards are based on performance over the three-year period ending 31 July 2019.
The performance criteria applying to these awards and achievement is set out in the table below:
T O’Mahony / D Giblin
Metric Weighting Threshold Maximum Actual
performance
Outcome
(% vesting)
Adjusted Diluted EPS 30% 5% 10% 5.8% 40.6%
Return on Invested Capital 40% 12.5% 17.5% 13.5% 43.8%
Free Cash Flow ratio 30% 50% 100% 82.9% 76.0%
Overall 52.50% of the 2017 LTIP is expected to vest in March 2020.
A summary of the awards made during the year, on 2 October 2018, under the LTIP is set out below.
Executive Director Face value of
award at grant
Number of
shares awarded
End of
performance
period
Date from which
exercisable

				
The number of shares awarded under the 2015 LTIP was calculated using the closing share price of
€5.65 on 1 October 2018. The performance measures applying to these awards is set out on page 101.
104
			
LTIP awards are subject to the performance conditions outlined in the Long-Term Incentives section
of the Annual Report on Remuneration, set out on pages 100 and 101.
Non-Executive Directors do not participate in any Group share incentive or award scheme.
Statement of Directors’ and Company Secretary’s Shareholdings and
Share Interests (audited)
Beneficially
owned at 1
August 2018
Beneficially
owned at 31
July 2019
Unvested LTIP
awards at 31
July 2019
Outstanding share
awards under all
employee share plans
The shareholdings held by T O’Mahony and D Giblin are substantially in excess of the share ownership
guidelines in place.
S Coyle, having joined the Company in September 2018, holds 19% of his salary.
The value of shareholdings held by the Executive Directors is based on their shares held at the
share price of €4.95 at 31 July 2019. Details of share ownership guidelines are set out on page 95
of this report.
105
Governance
Our Purpose
Optimising sustainable agriculture
and food production through
innovation, research & development
and agronomic expertise.
Find out more
Sustainability on page 50
Governance
107
Statements
Statement of Directors’ Responsibilities
The Directors are responsible for
preparing the Annual Report and the
Group and Company financial statements,
in accordance with Irish law.
Irish law requires the Directors to prepare Group and
Company financial statements for each financial year,
giving a true and fair view of the assets, liabilities and
financial position of the Group and the Company and the
profit or loss of the Group for the period. Under that law
and in accordance with the Rules of the AIM and ESM
exchanges issued by the London and Euronext Growth
Stock Exchanges, the Directors have prepared the Group
financial statements in accordance with International
Financial Reporting Standards (‘IFRSs’) as adopted by
the EU (‘EU IFRS’) with those parts of the Companies
Act 2014 applicable to companies reporting under EU
IFRS. The Directors have prepared the Company financial
statements in accordance with Irish Generally Accepted
Accounting Practice (accounting standards issued by
the UK Financial Reporting Council, including Financial
Reporting Standard 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland and Irish law).
Under Irish law the Directors shall not approve the
Group and Company financial statements unless they are
satisfied that they give a true and fair view of the Group’s
and Company’s assets, liabilities and financial position as
at the end of the financial year and of the profit or loss
of the Group for the financial year.
In preparing the Group and Company financial
statements, the Directors are required to:
>
> select suitable accounting policies and then apply
them consistently;
>
> make judgements and estimates that are reasonable
and prudent;
>
> state whether the financial statements have been
prepared in accordance with applicable accounting
standards and identify the standards in question and
ensure that they contain the additional information
required by the Companies Act 2014; and
>
> prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to:
>
> correctly record and explain the transactions of the
Group and Company;
>
> enable, at any time, the assets, liabilities and
financial position of the Group and Company and
profit or loss of the Group to be determined with
reasonable accuracy; and
>
> enable the Directors to ensure that the financial
statements comply with the Companies Act 2014
and enable those financial statements to be audited.
The Directors are also responsible for safeguarding the
assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and the requirements of the AIM
and ESM Rules, the Directors are also responsible for
preparing a Directors’ report that complies with that law
and those rules.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Group’s website. Legislation in the
Republic of Ireland governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
Rose Hynes		 Tom O’Mahony
Director			Director
24 September 2019 24 September 2019
112
Independent Auditors’ Report to the
Members of 
Report on the financial statements
Opinion
In our opinion:
>
> ’s Group financial statements and Company financial statements (the “financial
statements”) give a true and fair view of the Group’s and the Company’s assets, liabilities and financial position
as at 31 July 2019 and of the Group’s profit and cash flows for the year then ended;
>
> the Group financial statements have been properly prepared in accordance with International Financial
Reporting Standards (“IFRSs”) as adopted by the European Union;
>
> the Company financial statements have been properly prepared in accordance with Generally Accepted
Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council of the UK,
including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland” and Irish law); and
>
> the financial statements have been properly prepared in accordance with the requirements of the Companies
Act 2014.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”),
which comprise:
>
> the Consolidated Statement of Financial Position as at 31 July 2019;
>
> the Company Balance Sheet as at 31 July 2019;
>
> the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year
then ended;
>
> the Consolidated Statement of Cash Flows for the year then ended;
>
> the Consolidated Statement of Changes in Equity for the year then ended;
>
> the Company Statement of Changes in Equity for the year then ended;
>
> the Group Accounting Policies and Company Accounting Policies; and
>
> the Notes to the Group Financial Statements and the Notes to the Company Financial Statements.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in
the Notes to the financial statements. These are cross-referenced from the financial statements and are identified
as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and
applicable law. Our responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for
the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit
of the financial statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
113
Financial
Statements
Independent Auditors’ Report to the
Members of  - continued
Our audit approach
Overview
Materiality
>
> €3.4 million (2018: €3.2 million) - Group financial statements
>
> Based on 5% of profit before tax and exceptional items.
>
> €2 million (2018: €2.5 million) - Company financial statements
>
> Based on 0.75% of net assets (2018: 1% of net assets).
Audit scope
>
> We conducted audit work on 14 reporting components. We paid particular
attention to these components due to their size or risk characteristics and to
ensure appropriate audit coverage. An audit of the full financial information of
these 14 components was performed.
>
> Taken together, the reporting components where an audit of the full financial
information was performed accounts for in excess of 95% of Group revenues,
95% of Group profit before tax and exceptional items and 90% of total assets.
Key audit matters
>
> Goodwill.
>
> Settlement price adjustments.
>
> Rebates receivable.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Materiality
Audit
scope
Key audit
matters
114
Key audit matter How our audit addressed the key audit matter
Goodwill
See accounting policy in relation to
impairment, Note 14 – Goodwill and intangible
assets and Note 33 – Accounting estimates and
judgements.
The Group has goodwill of €176.29m at 31 July
2019 representing approximately 13.5% of the
Group’s total assets at year end. Identified
cash generating units (CGUs) containing
goodwill are subject to impairment testing on
an annual basis or more frequently if there
are indicators of impairment. The Group
recognised an impairment in the current year
of €7.9m in respect of the full amount of the
Ukraine CGU.
The value in use calculations used in the
impairment testing have been prepared using
the board approved budgets and forecasts for
each CGU. The impairment models are based
on a cash flow forecast for Year 1 extracted
from the 2019 budgets approved by the board.
Growth rates are then applied to the Year 1
forecasted cash flows to forecast Years 2 &
3. The terminal value growth rates used for
periods beyond Year 3 are based on the long
term growth for the country of operation of
each CGU.
We focused on this area given the scale of
the assets and because the determination
of whether an impairment charge for
goodwill was necessary involves significant
judgement in estimating the future
performance of the CGUs.
We determined the key assumptions used in
the value in use calculations as sales growth &
product mix in Year 1 budgets, Year 2 and Year
3 growth rates, terminal value growth rates
and discount rates.
In particular, we focused on the Ukraine
CGU which had the lowest headroom in the
prior period, and where second half trading
and forecasts led to a potential impairment
indicator being identified by management.
We obtained the Group’s impairment models and evaluated the
methodology used. We tested the mathematical accuracy of the
underlying calculations in the models and found them to be correct.
We evaluated management’s expected future cash flows for Year 1 and
the process by which they were developed, including comparing them
to the latest board approved budgets. We assessed the underlying
key assumptions in the Year 1 budget, and the growth rates applied
for Years 2 & 3 by considering the Group’s past record of achieving its
forecasts over time, taking into account the impact of factors such
as changes in weather, crop conditions, product mix and competitor
activity and found the key assumptions to be reasonable.
We used PwC specialists in assessing management’s calculation of
discount rates. Our specialists developed a range of discount rates
for each CGU that in their view of various economic indicators would
be appropriate in estimating the value in use of the CGUs. We are
satisfied that the discount rate used by the Group for each CGU falls
within those ranges.
We considered the appropriateness of the Group’s long term forecast
growth rate assumptions used to calculate terminal values by
comparing them to independent sources, including publicly available
information and concluded that they fell within a reasonable range for
each CGU.
We performed sensitivity analysis on the impact of changes in key
assumptions on the impairment assessments for CGUs. For the
UK CGUs we considered more adverse scenarios to take account
of potential impacts of Brexit on future cash flows. Across our
sensitivities, no impairment was identified.
We assessed the appropriateness of the related disclosures within the
financial statements, in particular the disclosure of the reduction in
the actual and projected cash flows which resulted in the impairment
in relation to the Ukraine CGU and we consider the disclosures
included in Note 14 to be reasonable.
Independent Auditors’ Report to the
Members of  - continued
115
Financial
Statements
Key audit matter How our audit addressed the key audit matter
Settlement price adjustments
See accounting policy in relation to revenue
and Note 33 – Accounting estimates and
judgements.
The estimation of final settlement prices for
some customers in the Group is subject to
considerable management judgement due to
an absence of contractual arrangements and
the fact that negotiations with customers are
not normally concluded until several months
after year end.
As set out in Note 33, the estimation of the
final settlement price adjustment is impacted
by commodity prices, competitor pricing
pressures, prevailing market conditions and
the timing of the Group’s financial year end as
it is non coterminous with the year end of its
main customers.
We focused on this area given the level
of judgement involved and the level of
fluctuation in final settlement prices
historically.
We compared the process undertaken by management in compiling
the settlement price adjustment to revenue and trade receivables
to that applied in the prior period and found it to be consistent.
The key inputs to the calculation of the settlement price
adjustment include invoice prices, estimated settlement prices
and invoice quantities. For a sample of transactions, we tested
the accuracy of the calculation and agreed the invoice prices and
quantities to underlying documentation.
We obtained an understanding from management of the significant
judgements exercised in estimating the final settlement price
and we evaluated those judgements in the context of known
market developments, including trends in commodity prices. We
determined that management applied a reasonable approach,
taking into account the level of inherent estimation uncertainty
given the nature of these settlement priceadjustments. Based on
our procedures, we concluded the price settlement adjustments
were reasonable.
We also performed a look back test designed to assess the accuracy
of the prior year estimate by comparing a sample of prior year
settlement price adjustments to credit notes issued to the customer.
We reviewed the related disclosures within the financial statements
and concluded that they were appropriate.
Rebates receivable
See accounting policy in relation to rebates.
See also Note 18 – Trade and other receivables
and Note 33 – Accounting estimates and
judgements.
The Group has entered into a number of
rebate and incentive arrangements with
some of its suppliers. Although a significant
portion of rebates receivable are contractual
and are based on net settlement prices, for
some rebate arrangements the amount of the
rebate is dependent on the level of purchase
volumes. The processes used to estimate
rebates receivable also require an element of
manual calculation.
We focused on this area as due to the
number of arrangements in place, the
range of contractual terms and the manual
calculations, there is an increased risk of error
in the calculation of rebates receivable at the
year end. The rebate receivable have been
included within trade and other receivables in
Note 18.
We obtained and read copies of relevant supplier rebate
agreements and met with relevant members of management in
order to understand the impact of these arrangements on the
financial statements.
For rebates related to net settlement prices, we tested a sample of
rebates receivable at the year end by agreeing the quantities and
gross price to the original invoices and the net settlement prices to
contractual agreements, which were independently confirmed by
suppliers.
For a sample of volume related rebates receivable, we confirmed
rebate terms with suppliers and tested the inputs to the
calculation to source documentation.
For rebates earned and received during the year, we tested a
sample of these against credit notes received. We independently
confirmed these credit notes with relevant suppliers.
We performed a look back test designed to assess the accuracy
of the prior year estimate by comparing a sample of prior year
rebates receivable to credit notes received from the supplier
for net settlement and volume based rebates. We independently
confirmed these credit notes with relevant suppliers.
Based on these procedures we determined that the amounts had
been recognised in the correct period, calculated appropriately
based on the contracted rates in the supplier agreements we
obtained and the estimates were reasonable.
Independent Auditors’ Report to the
Members of  - continued
116
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group, the accounting processes and
controls, and the industry in which the Group operates.
The Group is structured along three operating segments: Ireland and the United Kingdom, Continental Europe and
Latin America. The Group financial statements are a consolidation of 19 reporting units, comprising the Group’s
operating businesses and centralised functions.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be
performed at the reporting units by us, as the Group engagement team, or component auditors within PwC ROI,
from other PwC network firms and from one non-PwC firm operating under our instruction. Where the work was
performed by component auditors, we determined the level of involvement we needed to have in the audit work at
those reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a
basis for our opinion on the Group financial statements as a whole.
As part of our Group audit scoping we identified 14 Origin reporting units, which in our view, required an audit of
their full financial information due to their size or risk characteristics. These operations accounted for in excess
of 95% of Group turnover, 95% of Group profit before tax and exceptional items and 90% of total assets. Taken
collectively these reporting units represent the principal business units of the Group.
The Group audit team follows a programme of planned site visits that is designed so that senior team members visit
the reporting components on a rotational basis. In addition to these visits at the planning stage, post audit conference
calls or onsite visits were held to discuss component auditor’s key audit findings.
This, together with additional procedures over central functions, IT systems, treasury and areas of judgement including
the key audit matters noted above, taxation, business combinations and post-retirement benefits performed at the
Group level, gave us the evidence we needed for our opinion on the Group financial statements as a whole.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Company financial statements
Overall materiality €3.4 million (2018: €3.2 million). €2 million (2018: €2.5 million).
How we determined it 5% of profit before tax and exceptional
items.
0.75% of net assets (2018: 1% of
net assets).
Rationale for benchmark applied We have applied this benchmark because
in our view this is a metric against
which the recurring performance of
the Group is commonly measured by its
stakeholders.
We applied this benchmark,
as the Company is primarily an
investment holding Company.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit
above €0.17 million (Group audit) (2018: €0.3 million) and €0.1 million (Company audit) (2018: €0.3 million) as well as
misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Independent Auditors’ Report to the
Members of  - continued
117
Financial
Statements
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report to
you where:
>
> the Directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
>
> the Directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the Group’s or the Company’s ability to continue to adopt the going concern basis
of accounting for a period of at least twelve months from the date when the financial statements are authorised
for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s or the Company’s ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and
our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to
the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Directors’ Report, we also considered whether the disclosures required by the Companies Act
2014 (excluding the information included in the “Non-Financial Statement” as defined by that Act on which we are not
required to report) have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland) and
the Companies Act 2014 require us to also report certain opinions and matters as described below:
>
> In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’
Report (excluding the information included in the “Non-Financial Statement” as defined by that Act on which
we are not required to report) for the year ended 31 July 2019 is consistent with the financial statements and
has been prepared in accordance with the applicable legal requirements.
>
> Based on our knowledge and understanding of the Group and Company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the Directors’ Report (excluding
the information included in the “Non-Financial Statement” as defined by that Act on which we are not required
to report).
Independent Auditors’ Report to the
Members of  - continued
118
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities set out on page 111, the Directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view.
The Directors are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the IAASA
website at: https:/
/www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_
responsibilities_for_audit.pdf
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our prior consent in writing.
Independent Auditors’ Report to the
Members of  - continued
119
Financial
Statements
Other required reporting
Companies Act 2014 opinions on other matters
>
> We have obtained all the information and explanations which we consider necessary for the purposes of
our audit.
>
> In our opinion the accounting records of the Company were sufficient to permit the Company financial
statements to be readily and properly audited.
>
> The Company Balance Sheet is in agreement with the accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no
exceptions to report arising from this responsibility.
Prior financial year Non-Financial Statement
We are required to report if the company has not provided the information required by Regulation 5(2) to 5(7) of the
European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017 in respect of the prior financial year. We have nothing to report arising from this responsibility.
Paul O’Connor
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
24 September 2019
Independent Auditors’ Report to the
Members of  - continued
120
Consolidated Income Statement
Revenue 1 1,798,197 - 1,798,197 1,627,533 - 1,627,533
Cost of sales (1,527,363) - (1,527,363) (1,389,926) - (1,389,926)
Gross profit 270,834 - 270,834 237,607 - 237,607
Operating costs 2, 3 (197,340) (6,574) (203,914) (172,072) 663 (171,409)
Share of profit of
associates and
joint venture 7 6,717 (423) 6,294 7,221 - 7,221
Operating profit 5 80,211 (6,997) 73,214 72,756 663 73,419
Finance income 4 1,519 - 1,519 1,432 - 1,432
Finance expense 4 (13,327) - (13,327) (9,514) - (9,514)
Profit before
income tax 68,403 (6,997) 61,406 64,674 663 65,337
Income tax
(expense)/credit 3,10 (8,730) 44 (8,686) (7,900) (652) (8,552)
Profit for the year 59,673 (6,953) 52,720 56,774 11 56,785
2019 2018
Basic earnings
per share 11 41.98c 45.22c
Diluted earnings
per share 11 41.60c 44.94c
121
Financial
Statements
Consolidated Statement of Comprehensive Income
For the financial year ended 31 July 2019
Profit for the year 52,720 56,785
Other comprehensive (expense)/ income Items that are not reclassified
subsequently to the Group income statement:
Group/Associate defined benefit pension obligations
- remeasurements on Group’s defined benefit pension schemes (3,599) 3,628
- deferred tax effect of remeasurements 450 (504)
- share of remeasurements on associate’s defined benefit pension schemes (1,668) 5,865
- share of deferred tax effect of remeasurements - associates 284 (997)
Items that may be reclassified subsequently to the Group income statement:
Group foreign exchange translation details
- exchange difference on translation of foreign operations (3,507) (1,243)
Group/Associate cash flow hedges
- effective portion of changes in fair value of cash flow hedges 100 1,396
- fair value of cash flow hedges transferred to operating costs and other income (2,783) 888
- deferred tax effect of cash flow hedges 369 (333)
- share of associates and joint venture cash flow hedges 727 4,827
- deferred tax effect of share of associates and joint venture cash flow hedges (91) (603)
Other comprehensive (expense) / income for the year, net of tax (9,718) 12,924
Total comprehensive income for the year attributable to equity shareholders 43,002 69,709
122
Consolidated Statement of Financial Position
As at 31 July 2019
Notes 2019

ASSETS
Non-current assets			
Property, plant and equipment 12 108,411 117,929
Investment properties 13 4,221 11,825
Goodwill and intangible assets 14 271,085 216,334
Investments in associates and joint venture 15 47,140 48,171
Other financial assets 16 607 450
Derivative financial instruments 22 - 835
Post employment benefit surplus 26 - 725
Deferred tax assets 23 3,620 3,280
Total non-current assets 435,084 399,549
Current assets
Properties held for sale 13 24,135 -
Inventory 17 202,806 194,192
Trade and other receivables 18 529,328 461,199
Derivative financial instruments 22 2,345 1,399
Restricted cash - 500
Cash and cash equivalents 20 111,830 147,212
Total current assets 870,444 804,502
TOTAL ASSETS 1,305,528 1,204,051
123
Financial
Statements
Consolidated Statement of Financial Position - continued
As at 31 July 2019
Notes EQUITY
Called up share capital presented as equity 27 1,264 1,264
Share premium 160,498 160,422
Retained earnings and other reserves 184,077 168,561
TOTAL EQUITY 345,839 330,247
LIABILITIES
Non-current liabilities
Interest-bearing borrowings 21 163,236 165,232
Deferred tax liabilities 23 23,143 22,171
Put option liability 25 29,607 5,531
Provision for liabilities 24 4,166 8,045
Post employment benefit obligations 26 1,476 -
Derivative financial instruments 22 912 46
Total non-current liabilities 222,540 201,025
Current liabilities
Interest-bearing borrowings 21 24,190 20,836
Trade and other payables 19 686,175 638,161
Corporation tax payable 11,845 8,143
Provision for liabilities 24 14,452 5,467
Derivative financial instruments 22 487 172
Total current liabilities 737,149 672,779
TOTAL LIABILITIES 959,689 873,804
TOTAL EQUITY AND LIABILITIES 1,305,528 1,204,051
On behalf of the Board
Cash flows from operating activities
Profit before tax 61,406 65,337
Exceptional items 6,997 (663)
Finance income (1,519) (1,432)
Finance expenses 13,327 9,514
Profit on disposal of property, plant and equipment (292) (285)
Share of profit of associates and joint venture 15 (6,717) (7,221)
Depreciation of property, plant and equipment 12 8,300 7,451
Amortisation of intangible assets 14 11,059 7,946
Employee share-based payment charge 8 999 180
Pension contributions in excess of service costs 26 (741) (852)
Payment of exceptional rationalisation costs (1,342) (3,334)
Payment of exceptional acquisition costs (1,775) (3,688)
Operating cash flow before changes in working capital 89,702 72,953
Movement in inventory (2,408) (28,505)
Movement in trade and other receivables (50,450) (58,469)
Movement in trade and other payables 40,118 87,713
Cash generated from operating activities 76,962 73,692
Interest paid (11,349) (6,927)
Income tax paid (12,572) (10,428)
Cash inflow from operating activities 53,041 56,337
Cash flows from investing activities
Proceeds from sale of investment property 750 -
Proceeds from sale of property, plant and equipment 1,005 1,410
Purchase of property, plant and equipment (12,049) (11,602)
Additions to intangible assets 14 (4,346) (5,645)
Arising on acquisitions (36,554) (23,857)
Payment of contingent acquisition consideration 24 (1,705) (1,627)
Proceeds from sale of Chemicals division - 5,250
Payment of put option liability 25 (3,594) -
Restricted cash 500 (500)
Acquisition / loan to associate (4,671) 85
Dividends received from associates 7,037 2,483
Cash outflow from investing activities (53,627) (34,003)
Cash flows from financing activities
Drawdown of bank loans 228,996 141,775
Repayment of bank loans (238,491) (158,155)
Shares issued 76 -
Payment of dividends to equity shareholders (26,371) (26,371)
Cash outflow from financing activities (35,790) (42,751)
Net decrease in cash and cash equivalents (36,376) (20,417)
Translation adjustment 21 (2,298) 261
Cash and cash equivalents at start of year 126,559 146,715
Cash and cash equivalents at end of year 20,21 87,885 126,559
126
Group Accounting Policies
 (the ‘Company’) is a company domiciled and incorporated in Ireland. The Company registration
number is 426261 and the Company address is 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland. The
Group’s financial statements for the year ended 31 July 2019 consolidate the individual financial statements of the
Company and its subsidiaries (together referred to as the ‘Group’) and show the Group’s interest in associates and
joint venture using the equity method of accounting.
The Company and Group financial statements of the Company were authorised for issue by the Directors on
24 September 2019.
Statement of compliance
As permitted by Company law and as required by the Rules of the AIM and ESM exchanges, the Group financial
statements have been prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and their
interpretations issued by the International Accounting Standards Board (‘IASB’) as adopted by the EU.
The IFRSs adopted by the EU applied by the Group in the preparation of these financial statements are those that
were effective for accounting periods beginning on or after 1 August 2018.
New IFRS accounting standards and interpretations not yet adopted by the EU and not yet effective
The Group has not applied the following IFRS’s and International Financial Reporting Interpretations Committee
(‘IFRIC’) Interpretations that have not yet been adopted by the EU.
- Amendments to IAS 19 ‘Employee benefits’.
- Amendments to IAS 28 ‘Investments in associates’.
- Annual Improvements to IFRS’s 2015-2017 Cycle.
The Group is currently assessing the impact in relation to the adoption of the above standards and interpretations for
future periods. The Directors assess that at this point they do not believe the standards will have a significant impact
on the financial statements of the Group in future periods.
New IFRS accounting standards and interpretations not yet effective
The Group has not applied the following IFRS’s and International Financial Reporting Interpretations Committee
(‘IFRIC’) Interpretations that have been issued and adopted by the EU but are not yet effective.
- IFRS 16 ‘Leases’.
- IFRIC 23 ‘Uncertainty over Income Tax Treatments’.
- Annual Improvements 2015-2017 Cycle.
- 
Amendments to IAS 19 ‘Plan Amendment, Curtailment or Settlement’.
- 
Amendments to IAS 28 ‘Long-term Interests in Associates and Joint Ventures’.
- 
Amendments to IFRS 9: Applying IFRS 9 ‘Prepayment Features with Negative Compensation’.
None of these will have a significant effect on the financial statements of the Group or parent company, except for
the following:
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces the existing guidance in IAS 17 ‘Leases’. IFRS 16 eliminates the classification of leases as
either operating leases or finance leases. It introduces a single lessee accounting model, which requires a lessee to
recognise assets and liabilities for all leases with a term of more than 12 months and to recognise depreciation of
lease assets separately from interest on lease liabilities in the income statement. The Group will apply the standard
from its mandatory adoption date of 1 August 2019.
As a result of the transition to IFRS 16, the fair value of these leases representing the present value of the lease
payments over the expected lease contract period will be recognised as a Right of Use Asset with a corresponding value
recognised as a lease liability. The Group is currently assessing the impact of IFRS 16 and estimates that the value of right-
of-use assets and the corresponding lease liability will be approximately €39.0 million to €43.0 million at transition date
on 1 August 2019.
127
Financial
Statements
Group Accounting Policies - continued
New IFRS accounting standards and interpretations not yet effective - continued
IFRS 16 ‘Leases’ - continued
The Group has decided to reduce the complexity of implementation by availing of a number of practical expedients,
including expedients for low value and short term leases, on transition on 1 August 2019. The Group will apply
the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.
Information on the Group’s leases currently classified as operating leases is provided in Note 30.
New IFRS accounting standards and interpretations adopted in 2018/19
During the year ended 31 July 2019, the Group adopted the below amendments to International Financial Reporting
Standards (‘IFRS’), International Accounting Standards (‘IAS’) and the International Financial Reporting Interpretation
Committee (‘IFRIC’) pronouncements.
None of these have a material impact on the consolidated results or financial position of the Group:
- IFRS 9 ‘Financial Instruments’.
- IFRS 15 ‘ Revenue from Contracts with Customers’.
- 
IFRIC Interpretation 22 ‘Foreign Currency Translations and Advance Consideration’.
- 
Annual Improvements to IFRS’s 2014-2016 Cycle– Amendments to IFRS 1 and IAS 28.
- 
Amendments to IFRS 2 ‘Classification and Measurement of Share-based Payment Transactions’.
- 
Amendments to IFRS 4: Applying IFRS 9 ‘Financial Instruments’ with IFRS 4 ‘Insurance Contracts’.
- 
Amendments to IAS 40 ‘Transfers of Investment Property’.
None of these have had a significant effect on the financial statements of the Group, except for the following:
IFRS 9 ‘Financial Instruments’
From 1 August 2018, the Group has adopted IFRS 9 ‘Financial Instruments’ (‘IFRS 9’), which replaces the existing
guidance in IAS 39 ‘Financial Instruments: Recognition and Measurement’, from 1 August 2018. This standard replaces
IAS 39 that relates to the recognition, classification and measurement of financial assets and financial liabilities, de-
recognition of financial instruments, impairment of financial assets and hedge accounting.
IFRS 9 eliminates the previous IAS 39 categories for financial assets of held-to-maturity, loans and receivables and
available-for-sale. Under IFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost
or fair value through other comprehensive income (“FVTOCI”), or fair value through profit or loss (“FVTPL”). This
classification is dependent on the business model for managing the financial assets and on whether the cash flows
represent solely the payment of principal and interest. The Group has quantified the impact on its consolidated
financial statements resulting from the application of IFRS 9. The vast majority of financial assets held by the Group
are trade receivables and cash.
On adoption of IFRS 9 ‘Financial Instruments’ at 1 August 2018, the Group’s management assessed the impact to the
financial assets held by the Group and classified its financial instruments into the appropriate IFRS 9 categories as follows:
Previous classification
as per IAS 39
Updated classification
as per IFRS 9
Value at 1 Aug 2018

Trade and other receivables Loans and receivables Amortised cost 440,703
Cash and cash equivalents Loans and receivables Amortised cost 147,212
Other financial assets Loans and receivables Amortised cost 450
Trade receivables and cash will be accounted for at amortised cost as the Group’s business model is to hold the
financial asset to collect contractual cash flows. IFRS 9 introduces a forward looking expected credit losses model,
rather than the current incurred loss model, when assessing the impairment of financial assets in the scope of IFRS
9. Given historic loss rates and normal receivable ageing, the move from an incurred loss model to an expected loss
model has not had a material impact.
The adoption of IFRS 9 ‘Financial Instruments’ has not had a significant impact on the Group’s accounting policies
related to financial liabilities and derivative financial instruments. IFRS 9 - ‘Financial Instruments’ requires that when
a financial liability measured at amortised cost is modified without being derecognised, a gain or loss should be
recognised in the income statement. This change in accounting policy did not have a material impact on the Group’s
financial results.
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Group Accounting Policies - continued
New IFRS accounting standards and interpretations adopted in 2018/19 - continued
IFRS 9 ‘Financial Instruments’ - continued
The Group has elected to adopt the new general hedge accounting model in IFRS 9. The new hedge accounting
does not have an impact on the Group’s accounting for hedging instruments. On this basis, the classification and
measurement changes do not have a material impact on the Group’s consolidated financial statements.
The impact of adopting IFRS 9 on the consolidated financial statements was not material for the Group and there was
no adjustment to retained earnings on application at 1 August 2018. In line with the transition guidance in IFRS 9 the
Group has not restated the 2018 prior year results on adoption.
IFRS 15 ‘Revenue from Contracts with Customers’
The Group has adopted IFRS 15 ‘Revenue from Contracts with Customers’ (“IFRS 15”), which replaces the existing
guidance in IAS 18 ‘Revenue’, from 1 August 2018. The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. Under IFRS 15,
an entity recognises revenue when (or as) a performance obligation is satisfied i.e. when ‘control’ of the goods
underlying the particular performance obligation is transferred to the customer.
Legal title of goods sold is transferred on agreed contracted terms between parties, and generally, there is one
performance obligation in each of the Group’s sale contracts resulting in the recognition of revenue at a point in
time. Based on the Group’s contractual and trading relationships, the impact of adopting IFRS 15 on the consolidated
financial statements was not material for the Group and there was no adjustment to retained earnings on application
at 1 August 2018.
The Group adopted IFRS 15 using the modified retrospective approach on 1 August 2018. The Group carried out
a review of existing contractual arrangements and determined that there was no material impact for the Group’s
revenue streams. The adoption of IFRS 15, ‘Revenue from contracts with customers’ resulted in a change to the
Group’s accounting policy for revenue recognition which is outlined below.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretation Committee (IFRS IC) interpretations as adopted by the European Union and
those parts of the Companies Act 2014 applicable to companies reporting under IFRS.
The Directors have elected to prepare the Company financial statements in accordance with FRS 102, The Financial
Reporting Standard applicable in the UK and Republic of Ireland.
The financial statements have been prepared on the going concern basis of accounting and under the historical
cost convention, as modified by the revaluation of investment properties, and certain financial assets and financial
liabilities (including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s and
Group’s accounting policies. Areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements are disclosed in Note 33.
Basis of consolidation
The Group financial statements reflect the consolidation of the results, assets and liabilities of the parent
undertaking, the Company and all of its subsidiaries, together with the Group’s share of profits/losses of associates
and joint ventures. Where a subsidiary, associate or joint venture is acquired or disposed of during the financial year,
the Group financial statements include the attributable results from, or to, the effective date when control passes,
or, in the case of associates and joint ventures, when joint control or significant influence is obtained or ceases.
129
Financial
Statements
Group Accounting Policies - continued
Basis of consolidation - continued
Subsidiary undertakings
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on
which control is transferred to the Group and are deconsolidated at the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any
non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in
the case of a bargain purchase, the difference is recognised directly in the Consolidated Income Statement
The anticipated acquisition method of accounting is applied in relation to option arrangements entered into with
minority shareholders whereby the non-controlling interest is not recognised but rather treated as already acquired by
the Group both in the Consolidated Statement of Financial Position and the Consolidated Statement of Comprehensive
Income. This treatment has been adopted as the Directors have formed the view that, based on the structure, pricing
and timing of option contracts, significant risks and rewards are deemed to have transferred to Origin.
Associates and joint ventures
Associates are those entities in which the Group has significant influence over, but not control of, the financial and
operating policy decisions. Joint ventures are those entities over which the Group has joint control, established by
contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Investments
in associates and joint ventures are accounted for using the equity method of accounting.
Under the equity method of accounting, the Group’s share of the post-acquisition profits or losses of its associates
and joint ventures is recognised in the Consolidated Income Statement. The income statement reflects, in profit
before tax, the Group’s share of profit after tax of its associates and joint ventures in accordance with IAS 28,
‘Investments in Associates and Joint Ventures’.
The Group’s interest in their net assets is included as investments in associates and joint ventures in the Consolidated
Statement of Financial Position at an amount representing cost at acquisition plus the Group’s share of post
acquisition retained income and expenses. The Group’s investment in associates and joint ventures includes goodwill
on acquisition. The amounts included in the financial statements in respect of the post acquisition income and
expenses of associates and joint ventures are taken from their latest financial statements prepared up to their
respective year ends, together with management accounts for the intervening periods to the Group’s year end.
The fair value of any investment retained in a former subsidiary is regarded as a cost on initial recognition of an
investment in an associate or joint venture. Where necessary, the accounting policies of associates and joint ventures
have been changed to ensure consistency with the policies adopted by the Group.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group
transactions, are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses
arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the
entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not
provide evidence of impairment.
130
Group Accounting Policies - continued
Rebates
Rebates are a feature of commercial arrangements with certain suppliers. Rebates received and receivable are
deducted from cost of sales in the income statement at the year end and the group is required to calculate rebates
receivable due from suppliers for volume based rebates. The calculation takes into account current performance,
historical data for prior years and a review of the terms contained within supplier contracts. Rebates receivable are
included within trade and other receivables in Note 18.
Revenue recognition applicable after 1 August 2018
Revenue represents the fair value of the sale consideration received for the goods supplied to third parties, after
deducting discounts and settlement price adjustments estimated based on individual customer arrangements and
historical experience and exclusive of value added tax.
Revenue is recognised when control of the products has transferred, which is usually upon shipment, or in line with
terms agreed with individual customers. In general, revenue is recognised to the extent that the Group has satisfied
its performance obligations to the buyer and the buyer has obtained control of the goods. Revenues are recorded
when there is no unfulfilled obligation on the part of the Group.
Revenues are recorded based on the price specified in the sales invoices/ contracts net of actual and estimated
returns, settlement price adjustments, rebates and any discounts granted and in accordance with the terms of sale.
Accumulated experience is used to estimate returns, rebates and discounts using the expected value method and
revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. Estimated
settlement price adjustments and discounts granted to customers are classified as a reduction of revenues and
netted off the related trade receivable balances in Note 18. Further details of the estimation involved in determining
settlement price adjustments at year end is included in Note 33.
Revenue recognition applicable before 1 August 2018
Revenue represents the fair value of the sale consideration received for the goods supplied to third parties, after
deducting discounts and settlement price adjustments estimated based on individual customer arrangements and
historical experience and exclusive of value added tax. Revenue is recognised when the significant risks and rewards
of ownership of the goods have passed to the buyer, it is probable that the economic benefits will flow to the Group
and the amount of revenue can be measured reliably. Estimated settlement price adjustments and discounts granted
to customers are classified as a reduction of revenues and netted off the related trade receivable balances in Note 18.
Further details of the estimation involved in determining settlement price adjustments at year end is included in Note 33.
Segmental reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are reviewed regularly by the Group’s Chief Operating
Decision Maker, being the Origin Executive Directors, to make decisions about resources to be allocated to segments
and to assess performance, and for which discrete financial information is available.
The Group has three operating segments: Ireland and UK, Continental Europe and Latin America (see Note 1 for further
information). Segment assets and liabilities consist of property, plant and equipment, goodwill and intangible assets
and other assets and liabilities that can be reasonably allocated to the reported segment. Unallocated assets and
liabilities principally include current and deferred income tax balances together with financial assets and liabilities.
Employee benefits
Group companies operate various pension schemes. The schemes are generally funded through payments to
insurance companies or trustee administered funds, determined by periodic actuarial calculations.
Pension obligations / surplus
Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated
Income Statement as the related employee service is received. The Group’s net obligation in respect of defined
benefit pension plans is calculated, separately for each plan, by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine the present value, and the fair value of any plan assets is deducted.
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Financial
Statements
Group Accounting Policies - continued
Employee benefits - continued
Pension obligations / surplus - continued
The discount rate is the yield at the year end date on high quality corporate bonds that are denominated in the
currency in which the benefits will be paid and that have maturity dates approximating the terms of the Group’s
obligations. The calculation is performed by a qualified actuary using the projected unit credit method. Fair value is
based on market price information, and in the case of quoted securities is the published bid price.
Defined benefit costs are categorised as: (1) service costs; (2) net interest expense or income; and (3)
remeasurement. Service cost includes current and past service cost as well as gains and losses on curtailments and
settlements; it is included in operating profit. Past service cost is recognised in profit or loss in the period of a plan
amendment. Net interest, is calculated by applying the discount rate to the net defined benefit asset or liability at the
beginning of the year; it is included in finance costs.
Remeasurement is comprised of the return on plan assets other than interest at the discount rate and actuarial gains
and losses; it is recognised in other comprehensive income in the period in which it arises and is not subsequently
reclassified to profit or loss. Settlement gains or losses, where they arise, are recognised in the Consolidated Income
Statement as exceptional items.
Long-Term Incentive Plans
The Group has established the ‘2015 Origin Long Term Incentive Plan’ (‘the 2015 LTIP Plan’).
All equity instruments issued under the 2015 LTIP Plan are equity settled share-based payments as defined in IFRS 2,
‘Share-based Payments’. The fair value of equity instruments issued is recognised as an expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during which the employees
become unconditionally entitled to the equity instrument. The fair value of the equity instruments issued is measured
taking into account the market related vesting conditions under which the equity instruments were issued. The plans
are subject to non-market vesting conditions and, therefore, the amount recognised as an expense is adjusted to
reflect the actual number of equity instruments that are expected to vest.
As explained further in Note 9, the Group has implemented a long term incentive plan which operates in a similar way
to a long-term cash bonus. At each balance sheet date, the related provision is calculated based on the estimated
fair value of the obligation resulting from applying a straight line charge approach to the estimated final cash
obligation over the term of the award (3 years). Remeasurements are recognised immediately through profit or loss.
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the
Consolidated Income Statement except to the extent that it relates to items recognised directly in other
comprehensive income, in which case the related tax is also recognised in the Consolidated Statement of
Comprehensive Income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws that have been
enacted or substantially enacted at the year end date, and any adjustment to tax payable in respect of previous years.
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
the Group’s provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated
tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the income tax and
tax provisions in the period in which such determination is made.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the year end date.
132
Group Accounting Policies - continued
Taxation - continued
If a temporary difference arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction does not affect accounting or taxable profit or loss, no deferred tax
is recognised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates
and joint venture, except where the timing of the reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in the foreseeable future.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be recovered. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the year end date are translated to functional
currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the Consolidated Income Statement.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments, are translated to euro
at the foreign exchange rates ruling at the year end date. The revenues and expenses of foreign operations are
translated to euro at the average exchange rates. Foreign exchange differences arising on translation of the net
assets of a foreign operation are recognised directly in the Consolidated Statement of Comprehensive Income, in
a translation reserve. Exchange gains or losses on long-term intra-Group loans that are regarded as part of the net
investment in non-euro denominated operations, are taken to the translation reserve to the extent that they are
neither planned nor expected to be repaid in the foreseeable future.
Dividends
Dividends are recognised in the period in which they are approved by the Company’s shareholders, or in the case of
an interim dividend, when it has been approved by the Board of Directors and paid.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Other
subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item
of property, plant and equipment. All other expenditure including repairs and maintenance costs is recognised in
the income statement as an expense as incurred. Depreciation is calculated to write off the cost less estimated
residual value of property, plant and equipment, other than freehold land, on a straight line basis, by reference to the
following estimated useful lives:
Buildings 20 to 50 years
Plant and machinery 3 to 15 years
Motor vehicles 3 to 7.5 years
The residual value of assets, if significant, and the useful life of assets is reassessed annually.
Gains and losses on disposals of property, plant and equipment are recognised on the completion of sale. Gains and
losses on disposals are determined by comparing the proceeds received with the carrying amount and are included in
operating profit.
Investment properties
Investment property, principally comprising land, is held for capital appreciation. Investment property is stated at fair
value. The fair value is based on the price that would be received to sell the asset in an orderly transaction between
market participants at the measurement date. Any gain or loss arising from a change in fair value is recognised in the
Consolidated Income Statement. When property is transferred to investment property following a change in use, any
difference arising at the date of transfer between the carrying amount of the property immediately prior to transfer
and its fair value is recognised in equity if it is a gain unless the increase reverses a previous impairment loss in that
property in which case the increase is recognised in profit or loss.
133
Financial
Statements
Group Accounting Policies - continued
Investment properties - continued
Upon disposal of the property, the gain would be transferred to retained earnings in equity. Any loss arising in this
manner, unless it represents the reversal of a previously recognised gain, would be recognised immediately in the
Consolidated Income Statement. Investment properties are disclosed as a Level 3 fair value if one or more of the
significant inputs is not based on observable market data and as a Level 2 fair value where all significant inputs
required to fair value the investment properties are observable.
Properties held for sale
Non-current assets that are expected to be recovered principally through sale rather than continuing use and meet
the IFRS 5 criteria are classified as held for sale. These assets are shown in the balance sheet at the lower of their
carrying amount and fair value less any costs to sell. Impairment losses on initial classification as non-current assets
held for sale and subsequent gains or losses on re-measurement are recognised in the income statement.
Leased assets
Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as
operating leases. Payments made under operating leases are charged to the Consolidated Income Statement on a
straight line basis over the lease term.
Leases, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset or
the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges,
are included in interest-bearing loans and borrowings. The interest element of the payments is charged to the
Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The asset acquired under the finance lease is depreciated over the
shorter of the useful life of the asset or the lease term.
Business combinations and goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill represents amounts
arising on acquisition of subsidiaries, associates and the joint venture. In respect of acquisitions that have occurred
since 1 August 2005, goodwill represents the difference between the cost of the acquisition and the fair value of
the net identifiable assets acquired. In respect of acquisitions prior to this date, goodwill is included on the basis
of its deemed cost, i.e. original cost less accumulated amortisation from the date of acquisition up to 31 July 2005,
which represents the amount recorded under Irish GAAP. Goodwill is now stated at cost or deemed cost less any
accumulated impairment losses. In respect of associates and the joint venture, the carrying amount of goodwill is
included in the carrying amount of the investment.
Contingent acquisition consideration
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date and
classified as a financial liability or as equity in accordance with IAS 32. Subsequent changes to the fair value of the
contingent consideration that is deemed to be a liability are recognised in accordance with IFRS 9 in profit or loss.
Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted
for within equity.
Deferred acquisition consideration
To the extent that deferred acquisition consideration is payable after more than one year from the date of
acquisition, it is discounted at an appropriate loan interest rate and accordingly, carried at net present value on
the Consolidated Statement of Financial Position. An appropriate interest charge, using the Group’s incremental
cost of capital, at a constant rate on the carrying amount adjusted to reflect market conditions, is reflected in the
Consolidated Income Statement over the earnout period, increasing the carrying amount so that the obligation will
reflect its settlement at the time of maturity.
134
Group Accounting Policies - continued
Intangible assets
Intangible assets acquired as part of a business combination are initially recognised at fair value being their deemed
cost as at the date of acquisition. These generally include brand and customer related intangible assets. Computer
software that is not an integral part of an item of computer hardware is also classified as an intangible asset. Where
intangible assets are separately acquired, they are capitalised at cost. Cost comprises purchase price and other
directly attributable costs.
Internally generated intangible assets are recognised when the following can be demonstrated;
- 
the technical feasibility of completing the intangible asset so that it will be available for use or sale,
- its intentions to complete the development,
- its ability to use or sell the intangible asset,
- its ability to generate future economic benefits,
- 
the availability of resources to complete the development; and
- 
its ability to measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets with finite lives are amortised over the period of their expected useful lives in equal annual
instalments, as follows:
Brands up to 20 years
Customer related up to 20 years
Supplier agreements up to 20 years
Developed technology up to 10 years
Computer and ERP related 3 to 10 years
Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment
losses incurred.
Impairment
The carrying amounts of the Group’s assets, other than inventories (which are carried at the lower of cost and net
realisable value), deferred tax assets (which are recognised based on recoverability), investment properties (which
are carried at fair value), and financial instruments (which are carried at fair value), are reviewed to determine
whether there is an indication of impairment when an event or transaction indicates that there may be. If any such
indication exists, an impairment test is carried out and the asset is written down to its recoverable amount. An
impairment test is carried out annually on goodwill.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the Consolidated Income Statement. Impairment losses
recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit and then, to reduce the carrying amount of the other assets in the unit on a
pro rata basis. An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is determined at either the first-in, first-out
(FIFO) method or the weighted average method, depending on the inventory type. Cost includes all expenditure,
which has been incurred in the normal course of business in bringing the products to their present location and
condition. Net realisable value is the estimated selling price of inventory on hand less all further costs to completion
and all costs expected to be incurred in marketing, distribution and selling.
Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank and in hand and
call deposits.
135
Financial
Statements
Group Accounting Policies - continued
Cash and cash equivalents - continued
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents for the purpose of the Consolidated Statement of Cash Flows.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction from the proceeds.
Financial assets and liabilities
Trade and other receivables (before 1 August 2018)
Trade and other receivables are initially measured at fair value and are, thereafter, measured at amortised cost
using the effective interest method, less any provision for impairment. Trade and other receivables are discounted
when the time value of money is considered material. A provision is established for irrecoverable amounts when
there is objective evidence (including a customer going into liquidation or receivership, the commencement of legal
proceedings or poor payment history) that amounts due under the original payment terms will not be collected.
Financial assets are derecognised when the rights to receive cashflows from the investments have expired or
have been transferred and the group have transferred substantially all risks and rewards of ownership. Where
risks associated with receivables are transferred out of the Group under receivables purchase agreements, such
receivables are recognised in the Statement of Financial Position to the extent of the Group’s continued involvement
and retained risk.
Trade and other receivables (after 1 August 2018)
From 1 August 2018 trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less loss allowance.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due. The expected loss rates are based on payment
profiles of sales and the corresponding historical credit loss experience.
Short-term bank deposits
Short-term bank deposits of greater than three months maturity which do not meet the definition of cash and
cash equivalents are classified as loans and receivables within current assets and stated at amortised cost in the
Consolidated Statement of Financial Position.
Trade and other payables
Trade and other payables are recognised initially at fair value and are subsequently measured at amortised cost, using
the effective interest method.
Derivatives
All derivatives are initially recorded at fair value on the date the contract is entered into and subsequently, at
reporting dates remeasured to their fair value. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. The gain or
loss arising on remeasurement is recognised in the income statement except where the instrument is a designated
hedging instrument.
Derivative financial instruments are used to manage the Group’s exposure to foreign currency risk and interest
rate risk through the use of forward currency contracts and interest rate swaps. These derivatives are generally
designated as cash flow hedges, as the purpose is to hedge a particular risk associated with a highly probable
forecast transaction. The Group does not enter into speculative derivative transactions.
Put option liability
Where put/call option agreements are in place in respect of shares held by non-controlling shareholders, the liability
is measured in accordance with the requirements of IAS 32 and IFRS 9 and is stated at fair value. Such liabilities are
shown as current or non-current financial liabilities in the Consolidated Statement of Financial Position.
136
Group Accounting Policies - continued
Financial assets and liabilities - continued
Put option liability - continued
At the time of acquisitions, and where the group has issued a put option over shares held by a non-controlling interest,
the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration
liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options.
Movements in the estimated liability in respect of put options are recognised in other comprehensive income.
Cash flow hedges
Subject to the satisfaction of certain criteria, relating to the documentation of the risk, objectives and strategy for
the hedging transaction and the ongoing measurement of its effectiveness, cash flow hedges are accounted for under
hedge accounting rules. In such cases, any unrealised gain or loss arising on the effective portion of the derivative
instrument is recognised in the cash flow hedging reserve, a separate component of equity. Unrealised gains or losses
on any ineffective portion of the derivative are recognised in the income statement. When the hedged transaction
occurs the related gains or losses in the hedging reserve are transferred to the Consolidated Income Statement.
Hedge accounting is discontinued when a hedging instrument expires or is sold, terminated or exercised, or no
longer qualifies for hedge accounting. The cumulative gain or loss at that point remains in equity and is recognised
in accordance with the above policy when the transaction occurs. If a hedged transaction is no longer expected
to occur, the net cumulative gain or loss recognised in other comprehensive income is transferred to the income
statement in the period.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost using an
effective interest rate method.
Finance lease liabilities
Fair value for disclosure purposes is based on the present value of future cash flows discounted at appropriate
current market rates.
Exceptional items
The Group has adopted an income statement format which seeks to highlight significant items within the Group
results for the year. The Group believes that this presentation provides a more informative analysis as it highlights
one off items. Such items may include significant restructuring costs, acquisition related costs, organisation redesign
costs, profit or loss on disposal or termination of operations, profit or loss on disposal of property, plant and
equipment, profit or loss on disposal of investments, changes in fair value of investment properties, changes in fair
value of put option liabilities, settlement gains or losses on defined benefit plans, claims and significant impairment
of assets. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature,
should be disclosed in the Consolidated Income Statement and related Notes as exceptional items.
Borrowing costs
Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in the Consolidated
Income Statement using the effective interest method.
Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or
constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where appropriate, the risks specific to
the liability.
Finance income
Finance income is recognised using the effective interest method.
137
Financial
Statements
Notes to the Group Financial Statements
1 Segment information
IFRS 8, ‘Operating Segments’, requires operating segments to be identified on the basis of internal reports that
are regularly reviewed by the Chief Operating Decision Maker (‘CODM’) in order to allocate resources to the
segments and to assess their performance.
The Group has three operating segments as follows:
Ireland and the United Kingdom
This segment includes the Group’s wholly owned Irish and UK based Business-to-Business Agri-Inputs operations,
Integrated Agronomy and On-Farm Services operations and Digital Agricultural Services business. In addition, this
segment includes the Group’s associate and joint venture undertakings.
Continental Europe
This segment includes the Group’s Business-to-Business Agri-Inputs operations, Integrated Agronomy and On-
Farm Services operations in Poland, Romania, Belgium and the Ukraine.
Latin America
Origin entered the Latin American market in August 2018 through the acquisition of Fortgreen, a business which
is focused on the development and marketing of value added crop nutrition and speciality inputs and which is
headquartered in Paraná State in southern Brazil.
Information regarding the results of each reportable segment is included below. Performance is measured based
on segment operating profit as included in the internal management reports that are reviewed by the Group’s
CODM, being the Origin Executive Directors. Segment operating profit is used to measure performance, as this
information is the most relevant in evaluating the results of the Group’s segments.
Segment results, assets and liabilities include all items directly attributable to a segment.
Segment capital expenditure is the total amount incurred during the period to acquire segment assets that are
expected to be used for more than one accounting period.
138
Notes to the Group Financial Statements
1 Segment information – continued
(a) Analysis by segment
(i) Segment revenue and result									
Ireland and the UK Continental Europe Latin America Total Group

Total revenue 1,563,259 1,395,377 605,204 589,480 33,556 - 2,202,019 1,984,857
LAssets excluding
investment in
associates and joint
venture 604,267 582,718 430,743 419,486 104,976 - 1,139,986 1,002,204
Investment in
associates and joint
venture (including
other financial
assets) 46,588 48,621 - - 1,159 - 47,747 48,621
Segment assets 650,855 631,339 430,743 419,486 106,135 - 1,187,733 1,050,825
Reconciliation to total assets as reported in Consolidated Statement of Financial Position
Cash and cash equivalents 111,830 147,212
Restricted cash - 500
Derivative financial instruments 2,345 2,234
Deferred tax assets 3,620 3,280
Total assets as reported in Consolidated Statement of Financial Position 1,305,528 1,204,051
(iv) Segment liabilities
Ireland and the UK Continental Europe Latin America Total Group
Segment liabilities 405,557 405,631 279,675 251,573 50,644 - 735,876 657,204
Reconciliation of total liabilities as reported in Consolidated Statement of Financial Position
Interest-bearing loans and liabilities 187,426 186,068
Derivative financial instruments 1,399 218
Current and deferred tax liabilities 34,988 30,314
Total liabilities as reported in Consolidated Statement of Financial Position 959,689 873,804
140
Notes to the Group Financial Statements
1 Segment information – continued
(a) Analysis by segment – continued
(v) Other segment information											
		
Ireland and the UK Continental Europe Latin America Total Group
Depreciation 5,251 5,225 2,778 2,226 271 - 8,300 7,451
Intangible
amortisation 6,607 6,155 1,884 1,791 2,568 - 11,059 7,946
Exceptional items
(Note 3) 1,509 (17) (7,604) 680 (902) - (6,997) 663
Capital expenditure
– property, plant and
equipment 8,905 5,314 2,472 6,314 561 - 11,938 11,628
Capital expenditure
– ERP and computer
intangibles 2,796 2,689 551 519 5 - 3,352 3,208
Total capital
expenditure 11,701 8,003 3,023 6,833 566 - 15,290 14,836
		
(b) Analysis by geography
Ireland and the UK Continental Europe Latin America Total Group

Revenue 1,159,437 1,038,053 605,204 589,480 33,556 - 1,798,197 1,627,533
Assets 651,693 631,339 430,743 419,486 105,297 - 1,187,733 1,050,825
IFRS 8 non-current
assets* 277,841 303,160 79,849 91,549 73,774 - 431,464 394,709
*The total non-current assets in the UK are €236.2 million (2018: €239.6 million).
141
Financial
Statements
Notes to the Group Financial Statements
2 Operating costs		
Distribution expenses 103,523 89,923
Administration expenses 85,048 76,494
Amortisation of non-ERP related intangible assets 8,769 5,655
197,340 172,072
Exceptional items (Note 3) 6,574 (663)
203,914 171,409
3 Exceptional items
Exceptional items are those that, in management’s judgement, should be separately presented and disclosed by
virtue of their nature or amount. Such items are included within the Consolidated Income Statement caption to
which they relate. The following exceptional items arose during the year:
Pension and rationalisation related costs (i) (426) (876)
Transaction related costs (ii) (273) (2,560)
Impairment in Ukraine investment, net of put option settlement (iii) (7,455) 79
Write down on property, plant and equipment (iv) (4,100) -
Fair value adjustment of investment properties and properties held for sale (iv) 5,680 2,150
Gain on disposal of business (vi) - 1,870
Total exceptional (charge)/credit before tax before associates and joint venture (6,574) 663
Arising in associates and joint venture (v) (423) -
Total exceptional (charge)/credit before tax including associates and joint venture (6,997) 663
Tax credit /(charge) on exceptional items 44 (652)
Total exceptional (charge)/credit after tax (6,953) 11
(i) Pension and rationalisation related costs
Rationalisation costs include the compensation and termination payments from restructuring programmes across
the Group. This exceptional charge also includes past service costs in respect of the defined benefit pension
scheme. The tax impact of this exceptional item in the current year is a tax credit of €0.1 million (2018: €0.2 million).
(ii) Transaction related costs
Transaction related costs principally comprise costs incurred in relation to the acquisitions completed during the
year, net of a credit relating to a movement in contingent consideration of €1.1 million. The tax impact of this item
in the current year was a tax credit of €nil (2018: €0.2 million).
(iii) Impairment in Ukraine investment, net of put option settlement
At 31 July 2019 the Directors re-assessed the valuation of goodwill and intangible assets based on the trading results
for the financial year and the forecast trading environment for the Ukrainian business. Following the re-assessment,
an impairment of €7.9 million was booked against the carrying value of the Ukraine investment (Note 14) and a write
down of €1.5 million of part of the Agroscope brand was recorded (Note 14). Also included is a credit arising on
the settlement of the Agroscope put option liability of €1.9 million (Note 25). This resulted in a total charge of
€7.5 million being recorded. The net tax impact of this exceptional item in the current year is a tax credit of
€0.2 million (2018: nil).
142
Notes to the Group Financial Statements
3 Exceptional items - continued
(iv) Write down of properties and fair value of investment properties and properties held for sale
At 31 July 2019 the valuation of the Group’s Cork properties and investment properties was determined
by the Directors using a market approach with reference to local knowledge and judgement supported by
the consideration agreed with a third party for the Cork property transaction announced to the market on
9 July 2019.
The Directors also commissioned an independent valuations expert to conduct a valuation of the Group’s non-
Cork docklands investment properties. The valuation was on the basis of fair value using a market approach
with inputs including sales of similar properties in the surrounding area and complies with the requirement of
the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards 2017 (the “RICS Red Book”)
published in June 2017.
Following these assessments, an uplift of €5.5 million was reflected in the value of the Group’s properties held
for sale and investment properties (Note 13) and a write-down of €4.1 million was reflected in the value of the
Group’s property, plant and equipment (Note 12) as at 31 July 2019. This also includes an exceptional gain of €0.5
million arising from the disposal of six acres of an investment property during 2019, partially offset by property
re-organisation costs. The tax impact of this exceptional item in the current year is a charge of
€0.4 million (2018: €0.6 million).
(v) Arising in associates and joint venture
This exceptional charge relates to past service costs in respect of the defined benefit pension scheme of associates
and joint venture. The net tax impact of this exceptional item in the current year is a tax credit of €0.1 million.
(vi) Gain on disposal of business
Following the disposal of the Group’s Chemicals business operated through Goulding Chemicals Limited and the
closure of a seed plant in the UK in 2018, a gain of €2.6 million and a loss of €0.7 million respectively were recorded
in the prior year. The tax impact of this exceptional item in the prior year was a tax charge of €0.4 million.
4 Finance income and expense		
Recognised in the Consolidated Income Statement
Finance income
Interest income on bank deposits 1,495 1,432
Defined benefit pension obligations: net interest income (Note 26) 24 -
Total finance income 1,519 1,432
Finance expenses
Interest payable on bank loans and overdrafts (13,327) (9,274)
Unwinding of discount rate on put option liability (Note 25) - (160)
Defined benefit pension obligations: net interest cost (Note 26) - (80)
Total finance expenses (13,327) (9,514)
Finance costs, net (11,808) (8,082)
Recognised directly in Other Comprehensive Income
Effective portion of changes in fair value of interest rate swaps (1,701) 825
143
Financial
Statements
Notes to the Group Financial Statements
5 Statutory and other information
Group operating profit before exceptional items is stated after charging:
Raw materials and consumables used 1,517,230 1,381,227
Amortisation of intangible assets (Note 14) 11,059 7,946
Depreciation of property, plant and equipment (Note 12) 8,300 7,451
Operating lease rentals 14,297 13,110
Foreign exchange expense 248 685
Auditors’ remuneration
Remuneration (including expenses) for the statutory audit of the entity financial statements and other services
carried out for the company by the company’s auditors is as follows:
Audit of the consolidated financial statements 555 511
Other assurance services 51 70
Other non-audit services 5 -
6 Directors’ emoluments
Emoluments 3,187 2,825
Emoluments above include the following contributions to retirement benefit schemes:
- Defined contribution 221 219
- Defined benefit 26 26
247 245
Details of LTIP awards to Directors are disclosed in Note 9. Further details are shown in the Remuneration
Committee Report on pages 91 to 106.
Retirement benefits are accruing to one director (2018: one director) under a defined benefit scheme and to two
directors (2018: two directors) under a defined contribution scheme.
7 Share of profit after tax of associates and joint venture		
Total
Group share of:
Revenue 403,822 357,324
Profit after tax, before exceptional items (Note 15) 6,717 7,221
Share of exceptional items, net of tax (Note 15) (423) -
144
Notes to the Group Financial Statements
8 Employment
The average number of persons (including Executive Directors) employed by the Group
during the year was as follows:
2019
Number
2018
Number
Sales and distribution 1,471 1,383
Production 371 376
Management and administration 693 671
2,535 2,430
2019
Number
2018
Number
Average number of Non-Executive Directors 5 6
Average number of Executive Directors 3 3
Aggregate employment costs of the Group are analysed as follows:
Wages and salaries 113,386 103,502
Social insurance costs 10,695 11,069
Retirement benefit costs (Note 26) included in Consolidated Income Statement:
- defined benefit schemes – current service cost 527 552
- defined benefit schemes – past service cost 30 -
- defined benefit schemes – net interest (income)/cost (24) 80
-defined contribution schemes 3,521 2,957
Share based payment charge 999 180
Cash based long term incentive plan 1,120 1,016
Termination benefits (Note 3) 426 876
130,680 120,232
Retirement benefit costs (Note 26) included in Other Comprehensive Income:
- defined benefit schemes – remeasurements 
145
Financial
Statements
Notes to the Group Financial Statements
9 Long Term Incentive Plans
Executive Directors and other senior employees participate in the following Long Term Incentive Plans:
2015 LTIP Plan
The 2015 Origin Long Term Incentive Plan (‘2015 LTIP Plan’) is a share-based payment plan which was approved by
the shareholders on 27 November 2015. The details of awards under the plan are as follows:
Awards
2017 Awards On 10 March 2017, under the terms of the 2015 LTIP Plan, T O’Mahony, I Hurley and
D Giblin were granted 73,529, 48,897 and 60,459 share options respectively. On the departure
of I Hurley in 2018, options granted to her lapsed with immediate effect.
2018 Awards On 28 September 2017, under the terms of the 2015 LTIP Plan, T O’Mahony, I Hurley and D Giblin
were granted 77,519, 51,550 and 63,076 share options respectively. On the departure of I Hurley
in 2018 options granted to her lapsed with immediate effect.
2019 Awards -
Directors
On 2 October 2018, under the terms of the 2015 LTIP Plan, T O’Mahony, S Coyle and
D Giblin were granted 88,496, 61,540 and 70,784 share options respectively.
2019 Awards
– Senior
management
On 2 October 2018, and 17 July 2019 under the terms of the 2015 LTIP Plan, senior management
were granted 279,401 and 313,335 share options respectively.
Targets &
Thresholds
Vesting of share options and transfer of ownership of resulting shares is determined by
reference to the following conditions:
- 
Up to 30 per cent of the shares subject to the award will vest depending on the growth in
the Company’s consolidated Adjusted Earnings per Share (“Adjusted EPS”) over a three-year
performance period starting on the first day of the financial year in which the award is granted,
determined in accordance with the table below.
Annualised Adjusted Diluted
EPS growth
Below 5 per cent
5 per cent
Between 5 per cent and 10 per cent
10 per cent and above
Proportion of the Adjusted Diluted
EPS award vesting
0 per cent
30 per cent
30 per cent- 100 per cent pro rata
100 per cent
Vesting under the EPS performance condition is also contingent on the Company’s annualised
EPS over the three year performance period being positive.
- 
Up to 40 per cent of the shares subject to an award will vest depending on the Company’s
Return On Investment Capital (“ROIC”) over a three year performance period starting on the
first day of the financial year in which the award is granted, determined in accordance with the
table below.
- 
Up to 30 per cent of the shares subject to an award will vest depending on the Company’s Free
Cash Flow Ratio (“FCFR”) over a three year performance period starting on the first day of the
financial year in which the award is granted, determined in accordance with the table below.
Average Annual FCFR
146
Notes to the Group Financial Statements
9 Long Term Incentive Plans - continued
Awards
Additional
Conditions
Additional conditions attaching to the vesting of the share options and transfer of ownership of
resulting shares include the following:
- 
as a general rule, the participant must remain in service throughout the performance period,
except in certain pre-determined circumstances;
- 
the Committee will specify a minimum retention period during which either vested options
cannot be exercised or if vested options can be exercised there will be a restriction on the
disposal of the shares acquired for the period. This period must be for a minimum of two
years; and
- 
where a participant whose primary management responsibility is in respect of a business
division of the Company is granted an award, the Remuneration Committee at its discretion
may determine that a maximum of 40 per cent of an award will be subject to divisional
financial or other performance conditions related to the business division.
Transfer of
Ownership /
Vesting
Under the terms of the 2015 LTIP Plan, awards will vest no earlier than the third anniversary
of the award date and in the case of options cannot be exercised later than the seventh
anniversary of the award date.
An award will not vest unless the Committee is satisfied that the Company’s underlying financial
performance has shown a sustained improvement in the period since the award date. If this
condition is met, the extent of vesting for awards granted to employees of the Company following
the adoption of the Plan will be determined by the performance conditions set out above.
Movement in the number of share options outstanding is as follows:
Number of share
options 2019
Number of share
options 2018
At 1 August 274,583 182,885
Forfeiture - (100,447)
Granted 813,556 192,145
At 31 July 1,088,139 274,583
Grant date Expiry date Exercise price Number of share
options 2019
Number of share
options 2018
10 March 2017 (i) 9 March 2024 €0.01 133,988 133,988
28 September 2017 (ii) 27 September 2024 €0.01 140,595 140,595
2 October 2018 (iii) 1 October 2025 €0.01 500,221 -
17 July 2019 (iv) 1 October 2025 €0.01 313,335 -
(i)	
The fair value of the share options granted was €6.16 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €6.80 at the grant date,
exercise price of €0.01 and dividend yield of 3.1 per cent.
(ii) 	
The fair value of the share options granted was €5.81 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €6.45 at the grant date,
exercise price of €0.01 and dividend yield of 3.3 per cent.
(iii) 	
The fair value of the share options granted was €5.01 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €5.65 at the grant date,
exercise price of €0.01 and dividend yield of 3.7 per cent.
(iv) 	
The fair value of the share options granted was €4.49 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €5.13 at the grant date,
exercise price of €0.01 and dividend yield of 4.1 per cent.
147
Financial
Statements
Notes to the Group Financial Statements
9 Long Term Incentive Plans - continued
Cash based long term incentive plan
During the 2017 financial year a cash based Long Term Incentive Plan (‘LTIP’) for key employees was
implemented. The LTIP is intended to enable the retention and reward of key employees who are central
to the achievement of the Group’s growth strategy in the coming years. The implementation of the scheme
commenced in 2017 when certain employees were granted awards which have the characteristics of a long
term cash bonus based on a maximum fixed amount with vesting of cash bonuses based on the achievement of
non-market performance conditions (Adjusted earnings per share, Free cash flow ratio, Return on Investment
and Earnings before interest and tax) over a three-year period to 31 July 2019. The balance payable at the end of
the three year period in 2020, based on awards outstanding at year end is €1.4 million which has been booked
within current provisions in the balance sheet and charged to the income statement within payroll costs in the
years ended 31 July 2017, 31 July 2018 and 31 July 2019 in line with the accounting policy on page 131. In order
to calculate the fair value of the obligation at the end of the term of the Plan, the Group has used the actual
results for 2017, 2018 and 2019.
During the prior year a second cash based Long Term Incentive Plan for key employees was implemented with
similar terms to the 2017 LTIP. The performance conditions for this new scheme are evaluated over a three year
period to 31 July 2020. The potential balance payable at the end of the three years is €1.3 million, of which
€0.9 million has been booked within non-current provisions in the balance sheet and charged to the income
statement within payroll costs in the years ended 31 July 2018 and 31 July 2019. In order to calculate the fair
value of the obligation at the end of the term of the plan the Group has used the actual results for 2018 and
2019 and the budget for 2020, resulting in a 41 per cent probability that the performance conditions over the
three years will be achieved and have also assumed that no members of the scheme will leave the company
before the end of the service period
During the current year a new cash based Long Term Incentive Plan for key employees was implemented with
similar terms to the 2017 LTIP. The performance conditions for this new scheme are evaluated over a three year
period to 31 July 2021. The potential balance payable at the end of the three years is €0.8 million of which €0.1
million has been booked in non-current provisions in the balance sheet and charged to the income statement
within payroll costs in the year ended 31 July 2019. In order to calculate the fair value of the obligation at the
end of the term of the plan the Group has used the actual results for 2019, the budget for 2020 and a forecast
for 2021, resulting in a 50 per cent probability that the performance conditions over the three years will be
achieved and have also assumed that no members of the scheme will leave the company before the end of the
service period.
148
Notes to the Group Financial Statements
9 Long Term Incentive Plans - continued
Save As You Earn (‘SAYE’) scheme-UK and Ireland
The Save As You Earn (SAYE) scheme (‘the scheme’) is a share based savings plan which was approved by the
shareholders on 27 November 2015. The details of awards under the plan are as follows:
Award A HMRC/Revenue approved plan under which regular monthly savings are made over a three
year period which can be used to fund the exercise of an option, the exercise price being
discounted by up to 20 per cent. The maximum permitted savings of £500/€500 per month
across all on-going sharesave contracts for any individual.
Conditions Conditions attaching to the transfer of ownership of the equity entitlements and vesting of the
share options include the following:
- in general, the employee must remain in service throughout the three year savings period;
- 
the option may not be granted if the result would be that the aggregate number of shares
issuable pursuant to options granted under the Scheme or under any other share award or
share option plan operated by the Group in the preceeding ten years exceeding 10 per cent
of the Group’s issued ordinary share capital at the date of grant; and
- 
the option may not be granted if the result would be that the aggregate number of shares
issuable pursuant to options granted under the Scheme or under any other share award or
share option plan operated by the Group in the preceeding three years exceeding 3 per cent
of the Group’s issued ordinary share capital at the date of grant.
Transfer of
Ownership/
Vesting
Under the terms of the SAYE scheme, the eligible employee will have a choice at the end of
the three year period (representing the term of the scheme), to cash in their total savings
or alternatively purchase shares at the discounted price agreed at the time of entry into the
SAYE scheme. Ownership of shares will not transfer until this time.
The value of the SAYE scheme at 31 July 2019 is as follows:
Grant date Expiry date Option price Exercise Price Share options
No of shares
2019
Share options
No of shares
2018
1 June 2016 1 June 2019 €1.78 €5.48 65,951 234,584
1 June 2017 1 June 2020 €1.93 €5.64 48,298 65,818
1 June 2018 1 June 2021 €1.40 €4.20 378,146 364,358
1 June 2019 1 June 2022 €1.42 €4.32 184,697 -
677,092 664,760
The main variable inputs used to calculate the SAYE schemes are as follows;
Scheme 1 Scheme 2 Scheme 3 Scheme 4
Share price €6.85 €7.05 €5.25 €5.40
Exercise price €5.48 €5.64 €4.20 €4.32
Term 3 years 3 years 3 years 3 years
Share price volatility 27.3% 30.1% 28.9% 27.9%
Discount rate 3.0% 3.0% 3.0% 3.0%
149
Financial
Statements
Notes to the Group Financial Statements
10 Income tax
Current tax 15,335 7,077
Deferred tax (6,649) 1,475
Income tax expense 8,686 8,552
Reconciliation of average effective tax rate to Irish corporate tax rate:
Profit before income tax 61,406 65,337
Share of profits of associates and joint venture (6,294) (7,221)
55,112 58,116
Taxation based on Irish corporate rate of 12.5 per cent 6,889 7,265
Effect of deferred tax rate change (46) 98
Expenses not deductible for tax purposes 1,645 1,377
Higher rates of tax on overseas earnings 2,143 2,208
Changes in estimate/adjustment in respect of previous periods:
- Current tax (2,633) (3,321)
- Deferred tax 132 805
Non-taxable income - (690)
Other 556 810
8,686 8,552
Movement on deferred tax (liability)/asset recognised directly in the Consolidated Statement of
Comprehensive Income (Note 23):
Relating to Group employee benefit schemes (450) 504
Property, plant and equipment 262 375
Foreign exchange 150 (55)
Hedge related (369) 333
Recognised in the Consolidated Statement of Comprehensive Income (407) 1,157
As a multinational group operating in a number of jurisdictions, the group is subject to regular audits by tax
authorities on an ongoing basis. Certain audits were closed out during the year and the majority of the move in
the current tax change in estimate figure represents the relevant adjustment.
The applicable tax rate is 15% compared to 14% in the prior year. The increase is primarily driven by movements
in profits and changes in estimates in respect of prior periods.
A deferred tax asset of €3.6 million (2018: €3.3 million) has been recognised on the basis that the realisation of
the related tax benefit through future taxable profits is probable. This includes deferred tax assets which are
recognised for tax losses carried forward to the extent that realisation of the related tax benefit through future
taxable profits is probable.
The total deductible temporary differences which have not been recognised are €16.1 million (2018: €13.7 million).
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on
the unremitted earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of
the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable
future. As the Group can rely on participations exemptions and tax credits that would be available in the context
of the Group’s investments in subsidiaries in the majority of the jurisdictions in which the Group operates,
the aggregate amount of temporary differences in respect of which deferred tax liabilities have not been
recognised would not be material.
150
Notes to the Group Financial Statements
11 Earnings per share
Basic earnings per share
Profit for the financial year attributable to equity shareholders 52,720 56,785
Weighted average number of ordinary shares for the year 125,583 125,582
Cent Cent
Basic earnings per share 41.98 45.22
Diluted earnings per share
Profit for the financial year attributable to equity shareholders 52,720 56,785

Weighted average number of ordinary shares used in basic calculation 125,583 125,582
Impact of shares with a dilutive effect 478 120
Impact of the SAYE scheme (Note 9) 677 665
Weighted average number of ordinary shares (diluted) for the year 126,738 126,367
Cent Cent
Diluted earnings per share 41.60 44.94
		
			
151
Financial
Statements
Notes to the Group Financial Statements
11 Earnings per share - continued
Adjusted basic earnings per share

Weighted average number of ordinary shares for the year 125,583 125,582
Profit for the financial year 52,720 56,785
Adjustments:
Amortisation of non-ERP related intangible assets (Note 14) 8,769 5,655
Tax on amortisation of non-ERP related intangible assets (1,709) (768)
Exceptional items, net of tax 6,953 (11)
Adjusted earnings 66,733 61,661
Cent Cent
Adjusted basic earnings per share 53.14 49.10
Adjusted diluted earnings per share

Weighted average number of ordinary shares used in basic calculation 125,583 125,582
Impact of shares with a dilutive effect 478 120
Impact of the SAYE scheme (Note 9) 677 665
Weighted average number of ordinary shares (diluted) for the year 126,738 126,367
Adjusted earnings (as above) 66,733 61,661
Cent Cent
Adjusted diluted earnings per share 52.65 48.80
152
Notes to the Group Financial Statements
12 Property, plant and equipment
At 1 August 2018 104,777 65,403 7,436 177,616
Additions 3,037 7,838 1,063 11,938
Arising on acquisition (Note 32) 3,585 560 326 4,471
Transfers to properties held for sale (Note 13) (11,215) - - (11,215)
Write down of properties (Note 3) (4,100) - - (4,100)
Disposals (481) (1,147) (1,255) (2,883)
Translation adjustments (1,451) (1,391) 151 (2,691)
At 31 July 2019 94,152 71,263 7,721 173,136
Accumulated depreciation
At 1 August 2018 14,354 41,703 3,630 59,687
Depreciation charge for year 1,979 4,972 1,349 8,300
Disposals (153) (1,019) (999) (2,171)
Translation adjustments (300) (797) 6 (1,091)
At 31 July 2019 15,880 44,859 3,986 64,725
Net book amounts
At 31 July 2019 78,272 26,404 3,735 108,411
At 31 July 2018 90,423 23,700 3,806 117,929
153
Financial
Statements
Notes to the Group Financial Statements
12 Property, plant and equipment - continued
Land and
buildings
Cost
At 1 August 2017 92,279 60,850 7,108 160,237
Additions 4,816 5,796 1,016 11,628
Arising on acquisition 8,837 1,020 230 10,087
Disposals (1,087) (2,492) (819) (4,398)
Translation adjustments (68) 229 (99) 62
At 31 July 2018 104,777 65,403 7,436 177,616
Accumulated depreciation
At 1 August 2017 12,836 38,775 3,355 54,966
Depreciation charge for year 1,708 4,804 939 7,451
Disposals (218) (1,974) (635) (2,827)
Translation adjustments 28 98 (29) 97
At 31 July 2018 14,354 41,703 3,630 59,687
Net book amounts
At 31 July 2018 90,423 23,700 3,806 117,929
At 31 July 2017 79,443 22,075 3,753 105,271
Assets held under finance leases
The net book value in respect of assets held under finance leases and accordingly capitalised in property, plant
and equipment is as follows:
154
Notes to the Group Financial Statements
Following the Cork property transaction announced on 9 July 2019, a number of properties were reclassified
as held for sale as it is expected these properties will be sold within 12 months.
(ii)	
During the year, the Group conducted a review of the property portfolio (Note 12) and transferred sites
with a carrying value of €11,215,000 to properties held for sale. The group determined that these properties
have significant development potential and are located in areas designated for future development and
regeneration.
(iii)	
During the year, six acres of an investment property were disposed of and resulted in an exceptional gain of
€0.5 million
(iv)	
Measurement of fair value
Properties held for sale
Properties held for sale are carried at fair value and regarded as a Level 3 fair value.
	
At 31 July 2019 the valuation of the Group’s Cork properties and investment properties was determined
by the Directors using a market approach with reference to local knowledge and judgement supported by the
consideration agreed with a third party for the Cork property transaction announced to the market on 9 July
2019. The conditional agreement is subject to the satisfaction of a number of conditions necessary to realise
the full disposal proceeds including the granting of various permissions and approvals and the relocation of
the Group’s existing operating business at an economically viable cost to an alternative location.
	
The fair value adjustment consists of a write down of the sites transferred from property, plant and
equipment to properties held for sale, offset by an uplift in investment properties transferred to held for
sale, resulting in a net gain of €4.7 million
Investment properties
Investment property is carried at fair value and regarded as a Level 2 fair value.
	
The Directors also commissioned an independent valuations expert to conduct a valuation of the Group’s
non-Cork docklands investment properties. The valuation was on the basis of fair value using a market
approach with inputs including sales of similar properties in the surrounding area and complies with the
requirement of the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards 2017
(the “RICS Red Book”) published in June 2017.
	
Following these assessments, an uplift of €857,000 was reflected in the value of the Group’s
investment properties.
Financial
Statements
Notes to the Group Financial Statements
14 Goodwill and intangible assets - continued
Cash generating units (CGUs)
Goodwill acquired through business combination activity has been allocated to cash-generating units
(‘CGUs’) that are expected to benefit from the business combination. The carrying amount of goodwill
allocated to cash generating units across the Group and the key assumptions used in the impairment
calculations are summarised as follows:
Impairment testing of goodwill
The recoverable amounts of cash generating units (‘CGUs’) are based on value in use computations. The cash
flow forecasts used for 2020 (Year 1) are extracted from the 2020 budget document formally approved by senior
management. The cash flow projections are based on current operating results of the individual CGUs and a
conservative assumption regarding future organic growth. For the purposes of the calculation of value in use, the
cash flows are projected over a three-year period with additional cash flows in subsequent years calculated using a
terminal value methodology.
The cash flows are discounted using appropriate risk adjusted discount rates as disclosed in the table above. Any
significant adverse change in the expected future operational results and cash flows may result in the value in use
being less than the carrying value of a CGU and would require that the carrying value of the CGU be impaired and
stated at the greater of the value in use or the fair value less costs to sell of the CGU. However, the results of the
impairment testing undertaken in the current year indicates sufficient headroom, with the exception of Ukraine
(see below).
Key assumptions include management’s estimates of future profitability, growth rates, foreign exchange rates,
discount rates, replacement capital expenditure requirements and trade working capital investment needs. These
assumptions are based on management’s past experience. Capital expenditure requirements and profitability are
based on the Group’s budgets and broadly assume that historic investment patterns will be maintained. Working
capital requirements are forecast to increase in line with activity.
During the year ended 31 July 2019, an impairment was recorded against the carrying value of the goodwill which
arose on the acquisition of Agroscope in the Ukraine. The total value of the impairment recorded against goodwill
was €7.9 million and was treated as an exceptional item in the Consolidated Group Accounts. The recoverable
amount of Agroscope was based on a value in use computation and whilst the trading performance of Agroscope
over the last number of years has been challenging, historically the results have supported the carrying value held.
Trading conditions in FY2019 deteriorated resulting in a reduction in the Agroscope reported earnings before
interest and taxation which in turn has impacted the value in use computation resulting in this year the Group
fully impairing the value of the goodwill. Management believe this is a reasonable valuation based on prior year
performance and the current trading conditions that prevail in the Ukraine.
158
Notes to the Group Financial Statements
15 Investments in associates and joint venture
At 1 August 48,171 34,206
Share of profits after tax, before exceptional items (Note 7) 6,717 7,221
Share of exceptional items, net of tax (Note 7) (423) -
Dividends received (7,037) (2,483)
Share of other comprehensive (expense)/income (748) 9,092
Acquisition of equity investment (i) 1,117 -
Translation adjustment (657) 135
At 31 July 47,140 48,171
Split as follows:
Total associates 22,961 23,265
Total joint venture 24,179 24,906
47,140 48,171
(i) On 12 June 2019, the Group acquired a 20% shareholding in Ferrari Zagatto E Cia Ltda, a Brazilian based
agronomy services and crop input distribution business.
The information below reflects the amounts presented in the financial statements of the associates and the
joint venture (and not Origin’s share of those amounts) adjusted for differences in accounting policies between
the Group and those applied by its associates and joint venture.
		
Associates and joint venture income statement (100%):
Revenue 807,644 714,648
Other comprehensive income (1,496) 18,184
Dividends received by Group (7,037) (2,483)
Exchange differences arising on consolidation (657) 135
The investment in associates and joint venture as at 31 July 2019 is analysed as follows:


Non-current assets 11,623 10,781 22,404
Current assets 32,028 34,326 66,354
Non-current liabilities (8,104) (4,669) (12,773)
Current liabilities (12,282) (15,532) (27,814)
At 31 July 2018 23,265 24,906 48,171
The amounts included in these financial statements in respect of the income and expenses of associates and the
joint venture are taken from their latest financial statements prepared up to their respective year ends together
with management accounts for the intervening periods to the Group’s year end.
159
Financial
Statements
Notes to the Group Financial Statements
16 Other financial assets
Non-current
Other financial assets
At 1 August 450 531
Advances/(repayments) during the year 178 (85)
Translation adjustments (21) 4
At 31 July 607 450
17 Inventory
Raw materials 64,698 54,967
Finished goods 122,813 126,044
Consumable stores 15,295 13,181
202,806 194,192
18 Trade and other receivables		
Trade receivables (i) 475,884 417,462
Amounts due from related parties 32,207 14,003
Value added tax 2,966 4,136
Other receivables 3,419 9,238
Prepayments and accrued income 14,852 16,360
529,328 461,199
(i) Includes rebates from suppliers
19 Trade and other payables		
Trade payables (i) 557,994 534,223
Accruals and other payables 83,583 70,582
Amounts due to other related parties 8,164 6,027
Income tax and social insurance 9,046 5,103
Value added tax 27,388 22,226
686,175 638,161
(i) 
Certain  subsidiary suppliers factor their trade payables from 
subsidiaries with third parties through supplier finance arrangements. At 31 July 2019 approximately €25.7
million (2018: €15.2 million) of the  trade payables were known to have been sold onward
under such arrangements whereby  subsidiary confirms invoices. 
continues to recognise these liabilities as trade payables and will settle the liabilities in line with the original
payment terms of the related invoices.
160
Notes to the Group Financial Statements
20 Cash and cash equivalents
In accordance with IAS 7, ‘Cash Flow Statements’, cash and cash equivalents comprise cash balances held
for the purposes of meeting short-term cash commitments and investments which are readily convertible to
a known amount of cash and are subject to an insignificant risk of changes in value. Where investments are
categorised as cash equivalents, the related balances have a maturity of three months or less from the date of
acquisition. Bank overdrafts are classified as current interest-bearing borrowings in the Consolidated Statement
of Financial Position.
Cash at bank and in hand 111,830 147,212
Bank overdrafts (Note 21) (23,945) (20,653)
Included in the Consolidated Statement of Cash Flows 87,885 126,559
Cash at bank earns interest at floating rates based on daily deposit bank rates.
Short-term deposits are made for varying periods of between one day and three months depending on the
immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.
21 Interest-bearing loans and borrowings
This Note provides information about the contractual terms of the Group’s interest-bearing loans and
borrowings, which are measured at amortised cost.
Included in non-current liabilities:
Bank loans 162,571 164,553
Finance leases 665 679
Non-current interest-bearing loans and borrowings 163,236 165,232
Included in current liabilities:
Bank overdrafts 23,945 20,653
Finance leases 245 183
Current interest-bearing loans and borrowings 24,190 20,836
Total interest-bearing loans and borrowings 187,426 186,068
161
Financial
Statements
Notes to the Group Financial Statements
Guarantees
Group borrowings are secured by guarantees from  and certain principal operational
entities of the Group.
163
Financial
Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk
The effect of initially applying IFRS 9 on the Group’s financial instruments is described in the Accounting Policies
Note on page 127. The following table outlines the financial assets and liabilities held by the Group at the balance
sheet date:

Other financial assets - - 607 607 607
Trade and other receivables - - 511,510 511,510 511,510
Derivative financial assets Level 2 2,345 - - 2,345 2,345
Cash and cash equivalents - - 111,830 111,830 111,830
Total financial assets 2,345 - 623,947 626,292 626,292
Trade and other payables - - (649,741) (649,741) (649,741)
Contingent consideration Level 3 - (13,431) - (13,431) (13,431)
Bank overdrafts - - (23,945) (23,945) (23,945)
Bank borrowings (greater than
one year)
Level 2 - - (162,571) (162,571) (162,571)
Finance lease liabilities - - (910) (910) (910)
Put option liability Level 3 (29,607) - - (29,607) (29,607)
Derivative financial liabilities Level 2 (1,399) - - (1,399) (1,399)
Total financial liabilities (31,006) (13,431) (837,167) (881,604) (881,604)
Other financial assets - 450 - 450 450
Trade and other receivables - 440,703 - 440,703 440,703
Derivative financial assets Level 2 2,234 - - 2,234 2,234
Cash and cash equivalents - 147,212 - 147,212 147,212
Total financial assets 2,234 588,365 - 590,599 590,599
Trade and other payables - - (613,795) (613,795) (613,795)
Contingent consideration Level 3 (7,591) - - (7,591) (7,591)
Bank overdrafts - - (20,653) (20,653) (20,653)
Bank borrowings (greater than
one year)
Level 2 - - (164,553) (164,553) (164,553)
Finance lease liabilities - - (862) (862) (862)
Put option liability Level 3 (5,531) - - (5,531) (5,531)
Derivative financial liabilities Level 2 (218) - - (218) (218)
Total financial liabilities (13,340) - (799,863) (813,203) (813,203)
						
164
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Estimation of fair values
Set out below are the major methods and assumptions used in estimating the fair values of the financial assets
and liabilities disclosed in the preceding table.
Trade and other receivables/payables
For any receivables and payables with a remaining life of less than six months or demand balances, the carrying
value less impairment provision, where appropriate, is deemed to reflect fair value. All other receivables and
payables are discounted to fair value on initial recognition.
Contingent consideration
The fair value of the contingent consideration has been determined based on an agreed earnings before
interest and tax based formula which includes an expectation of future trading performance (‘EBIT’)
discounted to present day value using a cost of debt rate of 3 per cent. A reconciliation from opening to
closing balance has been included in Note 24.
Cash and cash equivalents including short-term bank deposits and restricted cash
For short-term bank deposits and cash and cash equivalents, all of which have a remaining maturity of less than
three months, the carrying amount is deemed to reflect fair value.
Derivatives - forward foreign exchange contracts
Forward foreign exchange contracts are marked to market using quoted forward exchange rates at the
reporting date.
The absolute principal amount of the outstanding forward foreign exchange contracts at 31 July 2019 was
€85,462,000 (2018: €100,012,000).
The hedged highly probable forecast transactions denominated in foreign currency are expected to occur
at various dates during the next 12 months. Gains and losses recognised in the hedging reserve in equity on
forward foreign exchange contracts as of 31 July 2019 are recognised in the Consolidated Income Statement in
the period or periods during which the hedged transaction affects the Consolidated Income Statement. This is
generally within 12 months of the end of the reporting period.
Derivatives – interest rate swaps
The fair value of interest rate swaps is calculated as the present value of the expected future cash flows based
on observable yield curves.
The notional principal amounts of the outstanding interest rate swap contracts at 31 July 2019 were €101,716,000
(2018: €103,836,000).
At 31 July 2019, the average fixed interest rate on the swap portfolio was 0.72 per cent. The main floating rates
are EURIBOR and LIBOR. Gains and losses recognised in the hedging reserve in equity on interest rate swap
contracts as of 31 July 2019 will be continually released to the Consolidated Income Statement within finance
cost until the maturity of the relevant interest rate swap.
Interest-bearing loans and borrowings
For interest-bearing loans and borrowings with a contractual repricing date of less than one year, the nominal
amount is deemed to reflect fair value. For loans with repricing dates of greater than six months, the fair value
is calculated based on the present value of the expected future principal and interest cash flows discounted at
interest rates effective at the year end date and adjusted for movements in credit spreads.
Finance lease liabilities
Fair value is based on the present value of future cash flows discounted at market rates at the year end date.
165
Financial
Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Estimation of fair values - continued
Put option liability
The fair value of the put option liability has been determined based on an agreed earnings before interest and
tax based formula that is not capped which includes an expectation of future trading performance (‘EBIT’) and
timing of when the options are expected to be exercised, discounted to present day value using an appropriate
discount rate. The valuation technique applied to fair value the put option liability was the income approach. A
reconciliation from opening to closing balance has been included in Note 25.
Fair value hierarchy
The tables at the beginning of this note summarise the financial instruments carried at fair value, by valuation
method, as of 31 July 2019. Fair value classification levels have been assigned to the Group’s financial
instruments carried at fair value. The different levels assigned are defined as follows:
Level 1: Price quoted in active markets
Level 2: Valuation techniques based on observable market data
Level 3: Valuation techniques based on unobservable input
Risk exposures
The Group’s international operations expose it to different financial risks that include currency risk, credit
risk, liquidity risk, commodity price risk and interest rate risk. The Group has a risk management programme in
place which seeks to limit the impact of these risks on the financial performance of the Group. The Board has
determined the policies for managing these risks. It is the policy of the Board to manage these risks in a non-
speculative manner.
The Group has exposure to the following risks from its use of financial instruments:
>
> Credit risk
>
> Liquidity risk
>
> Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes for measuring and managing the risk. Further quantitative disclosures are included
throughout this note.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework.
The Group has established an internal audit function under the direction of the Audit Committee. Internal audit
undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which
are reported to the Audit Committee.
The Board, through its Audit Committee and Risk Committee, has reviewed the process for identifying and
evaluating the significant risks affecting the business and the policies and procedures by which these risks
will be managed effectively. The Board has embedded these structures and procedures throughout the Group
and considers these to be a robust and efficient mechanism for creating a culture of risk awareness throughout
the business.
Credit risk
Exposure to credit risk
Credit risk arises from credit to customers arising on outstanding receivables and outstanding transactions
as well as cash and cash equivalents, derivative financial instruments and deposits with banks and financial
institutions. The Group uses credit insurance where appropriate to limit the exposure.
166
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Credit risk - continued
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
There is no concentration of credit risk by dependence on individual customers or geographically. While a
high proportion of receivables are located in the UK and Continental Europe, the risk is mitigated due to the
geographic spread throughout, rather than an isolated geographic region.
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables
based on experience, customers’ track record and historic default rates. Individual risk limits are generally
set by customer and risk is only accepted above such limits in defined circumstances. The utilisation of credit
limits is regularly monitored and credit insurance is used where appropriate. Impairment provisions are used to
record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that
point the amount is considered irrecoverable and is written off directly against the trade receivable. The Group
establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables and other financial assets.
Cash and short-term bank deposits and restricted cash
Group surplus cash is invested in the form of short-term bank deposits with financial institutions. Deposit terms
are for a maximum of three months. Cash and short-term deposits are invested with institutions within Origin’s
bank financing syndicate, with limits on amounts held with individual banks or institutions at any one time.
Exposure to credit risk
The carrying amount of financial assets, net of impairment provisions represents the Group’s maximum credit
exposure. The maximum exposure to credit risk at year end was as follows:
Trade receivables
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables.
Trade receivables are monitored by geographic region and by largest customers. The maximum exposure to
credit risk for trade receivables at the reporting date by geographic region based on location of customers
was as follows:
Carrying amount
2019

Carrying amount
2018

Ireland and United Kingdom 181,676 174,868
Continental Europe 273,621 242,594
Latin America 20,587 -
475,884 417,462
167
Financial
Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Credit risk - continued
At 31 July 2019 trade receivables of €391,960,000 (2018: €355,280,000) were not past due and were not
impaired. These receivable balances relate to customers for which there is no recent history of default.
The following table details the ageing of gross trade receivables, and the related loss allowances in respect
of specific amounts expected to be irrecoverable;
Not past due 395,218 (3,258) 355,280 -
Past due 0-30 days 49,930 (765) 50,846 (3,379)
Past due 31-120 days 25,378 (3,133) 14,010 (2,535)
Past due +121 days 27,047 (14,533) 13,660 (10,420)
At 31 July 497,573 (21,689) 433,796 (16,334)
An analysis of movement in loss allowances in respect of trade receivables was as follows:
1 August (16,334) (12,036)
Charge to the Consolidated Income Statement (6,502) (4,389)
Receivables written off as uncollectable 1,023 18
Translation adjustments 124 73
31 July (21,689) (16,334)
The Group also manages credit risk through the use of a receivable purchase agreement with a financial
institution. Under the terms of this non-recourse agreement, the Group has transferred credit risk of certain
trade receivables amounting to €25.4 million as at 31 July 2019 (2018: €22.5 million). The Group has continued to
recognise an asset of €2,539,000 (2018: €2,425,000) representing the extent of its continuing involvement.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable
losses or risking damage to the Group’s reputation.
The Group’s objective is to maintain a balance between flexibility and continuity of funding. Short-term flexibility
is achieved through the availability of overdraft facilities. The Group’s policy is that not more than 40 per cent of
bank facilities should mature in the twelve-month period following the year end. As at 31 July 2019, 100 per cent
of bank facilities mature after one year.
The contractual maturities of the Group’s loans and borrowings are set out in Note 21.
168
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Liquidity risk - continued
The contractual maturities of the other financial liabilities are set out below:
Carrying
amount

Cash flow hedges are those of highly probable forecasted future income or expenses. In order to qualify for
hedge accounting, the Group is required to document the relationship between the item being hedged and the
hedging instrument and demonstrate, at inception, that the hedge relationship will be highly effective on an
ongoing basis. The hedge relationship must be tested for effectiveness on subsequent reporting dates.
There is no significant difference between the timing of the cash flows and income statement effect of cash
flow hedges.
Market risk
Market risk is the risk that changes in market prices and indices, such as foreign exchange rates, and interest
rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of
the Group’s risk management strategy is to manage and control market risk exposures within acceptable
parameters, while optimising the return earned by the Group. The Group has two types of market risk being
currency risk and interest rate risk, each of which is dealt with as follows:
Currency risk
In addition to the Group’s operations carried out in eurozone economies, it also has significant operations
in the United Kingdom and certain operations in Brazil, Poland, Romania and Ukraine. In addition, purchases
are also denominated in US dollars. As a result the Consolidated Statement of Financial Position is exposed to
currency fluctuations on foreign denominated subsidiaries. The Group manages its Consolidated Statement of
Financial Position having regard to the currency exposures arising from its assets being denominated in different
currencies. To this end, where foreign currency assets are funded by borrowing, such borrowing is generally
sourced in the currency of the related assets.
Transactional exposures arise from sales or purchases by an operating unit in currencies other than the unit’s
functional currency. The Group uses forward currency contracts to eliminate the currency exposures on certain
foreign currency purchases. The Group requires all its operating units, where possible, use forward currency
contracts to eliminate the currency exposures on certain foreign currency purchases. The forward currency
contracts must be in the same currency as the hedged item.
170
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Currency risk - continued
Exposure to currency risk
The Group’s exposure to transactional foreign currency risk at the year end date is as follows:
Trade receivables - 1,135 - 2,332 3,467
Cash and cash equivalents (182) 7,789 15,652 1,722 24,981
Other payables - (38,965) (603) (18,226) (57,794)
(182) (30,041) 15,049 (14,172) (29,346)
2018
Trade receivables - 3,787 - 185 3,972
Cash and cash equivalents 9 3,359 3,668 3,764 10,800
Other payables - (11,606) (662) (4,229) (16,497)
9 (4,460) 3,006 280 (1,725)
Hedged items are excluded from the tables above.
Currency sensitivity analysis
A 10 per cent strengthening/weakening of the euro against the following currencies at 31 July 2019 would have
affected profit or loss on a transactional basis by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2018.
A positive number below indicates an increase in profit where the euro strengthens or weakens 10 per cent
against the relevant currency.
171
Financial
Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Interest rate risk
The Group’s debt bears both floating and fixed rates of interest per the original contracts. Fixed rate debt is
achieved through the use of interest rate swaps.
At 31 July, the interest rate profile of the Group’s interest bearing financial instruments was as follows:
Carrying
amount
2019

Carrying
amount
2018

Fixed-rate instruments
Finance lease liabilities (910) (862)
At 31 July (910) (862)
Variable rate instruments
Interest-bearing borrowings (162,571) (164,553)
Bank overdraft (23,945) (20,653)
Cash and cash equivalents 111,830 147,212
At 31 July (74,686) (37,994)
Total interest-bearing financial instruments (75,596) (38,856)
Cash flow sensitivity analysis for variable rate instruments
The sensitivity analysis below is based on the exposure to interest rates for both derivatives and non-derivative
instruments. A change of 50 basis points in interest rates at the reporting date would have increased/decreased
profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same basis for 2018.
A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the possible change in interest rates.
Unhedged variable rate instruments (60,855) (304)
Bank overdraft (23,945) (120)
Cash flow sensitivity (net) (84,800) (424)

Unhedged variable rate instruments (60,717) (304)
Bank overdraft (20,653) (103)
Cash flow sensitivity (net) (81,370) (407)
A 50 basis points decrease in interest rates at the reporting date would have had the equal but opposite effect
on the above.
172
Notes to the Group Financial Statements
23 Deferred tax
The deductible and taxable temporary differences at the year end dates in respect of which deferred tax has
been recognised are analysed as follows:
Deferred tax assets (deductible temporary differences)
Pension related 860 480
Property, plant and equipment 110 30
Intangibles 1 -
Hedge related 62 -
Other deductible temporary differences 2,587 2,770
Total 3,620 3,280
Deferred tax liabilities (taxable temporary differences)
Property, plant and equipment (4,078) (5,734)
Investment property - (2,264)
Pension related (101) (91)
Intangibles (16,350) (9,926)
Hedge related - (316)
Other (2,614) (3,840)
Total (23,143) (22,171)
Net deferred tax liability (19,523) (18,891)
		
173
Financial
Statements
Notes to the Group Financial Statements
23 Deferred tax - continued
Movements in deferred tax assets and liabilities, during the year, were as follows:
Property,
plant and
equipment

Investment
property

Hedge
related

Pension
related

Intangibles

Other

Total

2019
At 1 August 2018 (5,704) (2,264) (316) 389 (9,926) (1,070) (18,891)
Recognised in the
Consolidated Income
Statement 1,440 2,264 9 (64) 1,893 1,107 6,649
Acquisitions related 494 - - - (8,304) - (7,810)
Recognised in Other
Comprehensive Income (262) - 369 450 - (150) 407
Foreign exchange and other 64 - - (16) (12) 86 122
At 31 July 2019 (3,968) - 62 759 (16,349) (27) (19,523)
2018
At 1 August 2017 (4,592) (1,620) 17 1,454 (9,831) 494 (14,078)
Recognised in the Consolidated
Income Statement 91 (644) - (563) 768 (1,107) (1,455)
Acquisitions related (815) - - - (811) (428) (2,054)
Recognised in Other
Comprehensive Income (375) - (333) (504) - 55 (1,157)
Foreign exchange and other (13) - - 2 (52) (84) (147)
At 31 July 2018 (5,704) (2,264) (316) 389 (9,926) (1,070) (18,891)
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on
the unremitted earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of
the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable
future. As the Group can rely on participation exemptions and tax credits that would be available in the context
of the Group’s investments in subsidiaries in the majority of the jurisdictions in which the Group operates,
the aggregate amount of temporary differences in respect of which deferred tax liabilities have not been
recognised would not be material.
Other deferred tax assets relate mainly to losses forward.
174
Notes to the Group Financial Statements
24 Provision for liabilities
The estimate of provisions is a key judgement in the preparation of the financial statements.
Contingent
acquisition
consideration

(i)
Rationalisation

(ii)
Other

(iii)
Total

2019
At beginning of year 7,591 1,494 4,427 13,512
Arising on acquisition (Note 32) 8,508 - - 8,508
Provided in year - - 1,120 1,120
Paid in year (1,705) (979) (587) (3,271)
Released in year (1,111) (263) - (1,374)
Currency translation adjustment 148 (1) (24) 123
At end of year 13,431 251 4,936 18,618
Current 10,410 251 3,791 14,452
Non-current 3,021 - 1,145 4,166
2018
At beginning of year 9,289 3,902 2,273 15,464
Arising on acquisition (Note 32) 500 - 2,495 2,995
Provided in year - 991 1,016 2,007
Paid in year (1,627) (3,334) (3) (4,964)
Released in year (622) (115) (1,400) (2,137)
Currency translation adjustment 51 50 46 147
At end of year 7,591 1,494 4,427 13,512
Current 1,817 1,494 2,156 5,467
Non-current 5,774 - 2,271 8,045
(i)	
Contingent acquisition consideration relates to the acquisition of Comfert SRL (‘Comfert’) in December
2015, R&T Liming in March 2016, Resterra Group (‘Resterra’) in March 2017, Fortgreen in August 2018,
Symbio in November 2018 and Vegetable Consulting Services Ltd (VCS) in March 2019. The amount
attributable to Comfert is €0.5 million, R&T Liming €0.2 million, Resterra €4.1 million, Fortgreen
€6.9 million, Symbio €0.1 million and VCS €1.6 million.
(ii)	
Rationalisation costs relate to termination payments arising from the restructuring of Agri-Services in the UK.
(iii) Other provisions relate to various onerous leases, operating and employment related costs.
175
Financial
Statements
Notes to the Group Financial Statements
25 Put option liability
At 1 August 5,531 5,450
Fair value adjustment (i) (1,937) (79)
Arising on acquisition (Note 32) 26,433 -
Interest payable (Note 4) - 160
Change in fair value of put option (ii) 2,114 -
Repayments (3,594) -
Translation adjustment 1,060 -
At 31 July 29,607 5,531
(i)	
During the year, the put option which arose on the acquisition of Agroscope was exercised and resulted in
the Group acquiring 100% of the business. The Agroscope put option was accounted for in substance as
contingent consideration and resulted in a credit to exceptional items in the income statement (Note 3).
(ii)	
As part of the Fortgreen acquisition, the Group entered into an arrangement with the minority shareholder,
under which the minority shareholder has the right at various dates to sell the remaining 35 per cent interest
to Origin based on an agreed formula. In the event that this is not exercised, Origin has a similar right to
acquire the 35 per cent interest. Origin recognised an option liability of €26.4 million which is the fair value
of the future estimated amount payable to exercise the option. This has been determined based on an
agreed formula which includes an expectation of future trading performance and timing of when the options
are expected to be exercised, discounted to present day value.
The assumption is that the holder of the Put Option will exercise this option during 2022.
26 Post employment benefit obligations
The Group operates a number of defined benefit pension schemes and defined contribution schemes with
assets held in separate trustee administered funds. All of the defined benefit schemes are closed to new
members. The trustees of the various pension funds are required by law to act in the best interests of the
scheme participants and are responsible for investment strategy and scheme administration. The majority of the
Group’s defined benefit pension schemes are closed to future benefits accrual with a small minority accruing
benefits. The level of benefits available to members depends on length of service and either their average salary
over their period of employment, their salary in the final years leading up to retirement and in some cases
historical salaries depending on the rules of the individual scheme. Under IAS 19, ‘Employee Benefits’, the total
deficit in the Group’s defined benefit schemes at 31 July 2019 was €1,476,000 (2018: surplus of €725,000).
The pension credit included in the Consolidated Income Statement for the year in respect of the Group’s
defined benefit schemes was €15,000 (2018: charge of €632,000) and a charge of €3,635,000 (2018:
€2,957,000) in respect of the Group’s defined contribution schemes.
Employee benefits included in the Consolidated Statement of Financial Position comprises the following:
(Deficit)/surplus in defined benefit schemes (1,476) 725
176
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
The valuations of the defined benefit schemes used for the purposes of the following disclosures are those
of the most recent actuarial reviews carried out at 31 July 2019 by an independent, qualified actuary. The
valuations have been performed using the projected unit method.
Employee benefit plan risks
The employee benefit plans expose the Group to a number of risks, the most significant of which are:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets
underperform this yield, this will create a deficit. The plans hold a significant proportion of equities which,
though expected to outperform corporate bonds in the long-term, create volatility and risk. The allocation to
equities is monitored to ensure it remains appropriate given the plans long-term objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the plans’ liabilities, although this will be partially offset by an
increase in the value of the plans’ bond holdings.
Inflation risk
In certain schemes the plans’ benefit obligations are linked to inflation, with the result that higher inflation will
lead to higher liabilities (although caps on the level of inflationary increases are in place). The majority of the
assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will
also increase the deficit.
Life expectancy
In the event that members live longer than assumed a further deficit will emerge in the Schemes.		
The Group targets that the investment positions are managed with an overall asset-liability matching (‘ALM’)
framework that has been developed to achieve long-term investments that are in line with the obligations
under the pension schemes. Within this framework, the Group’s ALM objective is to match assets to the
pension obligations.
Most of the plans are closed and therefore, under the projected unit credit method, the current service cost
is expected to increase as the members approach retirement and to decrease as members retire or leave
service. The expected employee and employer contributions for the year ending 31 July 2020 are €142,000 and
€1,232,000 respectively.
Financial assumptions - scheme liabilities
The significant long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as
at 31 July 2019 and 31 July 2018 are as follows:
2019 2018
Republic of Ireland schemes
Rate of increase in salaries 0.00%-2.35% 0.00%-2.35%
Discount rate on scheme liabilities 1.20% 2.10%
Inflation rate 1.50% 1.75%
UK scheme
Rate of increase in salaries 0.00%-3.50% 0.00%-3.40%
Rate of increases in pensions in payment and deferred benefits 0.00%-3.80% 0.00%-3.70%
Discount rate on scheme liabilities 2.10% 2.70%
Inflation rate 2.70% 2.60%
177
Financial
Statements
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics
and experience in both geographic regions. The mortality assumptions imply the following life expectancies in
years of an active member on retiring at age 65, 20 years from now:
Male 24.2 22.9 24.1 23.1
Female 26.2 25.0 26.1 25.0
The mortality assumptions imply the following life expectancies in years of an active member,
aged 65, retiring now:
UK
Male 22.5 21.8 22.4 21.9
Female 24.3 23.7 24.3 23.8
Sensitivity analysis for principal assumptions used to measure scheme liabilities
There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial
valuation of the Group’s defined benefit pension schemes. The following table analyses (for the Group’s Irish
and UK pension schemes) the estimated impact on plan liabilities resulting from changes to key actuarial
assumptions, whilst holding all other assumptions constant. In practice, this is unlikely to occur, and changes in
some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation
to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated
with the projected unit credit method at the end of the reporting period) has been applied as when calculating
the pension liability recognised in the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to
the previous period.

Net pension asset/(liability)
Market value of scheme assets:
Equities 2,810 - 2,810
Bonds 10,661 - 10,661
Property 2,210 713 2,923
Investment funds - 73,631 73,631
Insurance policy and insurance annuity - 7,130 7,130
Other 2,562 5,864 8,426
Total market value of assets 18,243 87,338 105,581
Present value of scheme obligations (17,431) (89,626) (107,057)
Asset/(liability) in the schemes 812 (2,288) (1,476)
Net pension asset/(liability)
Market value of scheme assets:
Equities 2,635 16,203 18,838
Bonds 8,975 - 8,975
Property 4,806 676 5,482
Investment funds - 58,373 58,373
Insurance policy and insurance annuity - 6,750 6,750
Other 53 677 730
Total market value of assets 16,469 82,679 99,148
Present value of scheme obligations (15,525) (82,898) (98,423)
Asset/(liability) in the schemes 944 (219) 725
The majority of equity securities and bonds have quoted prices in active markets.
The major categories of scheme assets are as follows:
Remeasurements:
- Experience gain/(loss) 388 (274)
- Effect of changes in demographic assumptions (813) 1,172
- Effect of changes in financial assumptions (11,524) 477
Translation adjustments 2,958 (648)
Value of scheme obligations at 31 July (107,057) (98,423)
180
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
Movement in net (liability)/asset recognised in the Consolidated Statement of Financial Position:
Net liability in schemes at 1 August 725 (3,646)
Current service cost (527) (552)
Past service cost (30) -
Gain on settlement 548 -
Employer contributions 1,298 1,404
Other finance income/(expense) 24 (80)
Remeasurements (3,599) 3,628
Translation adjustments 85 (29)
Net (liability)/asset in schemes at 31 July (1,476) 725
Analysis of defined benefit expense recognised in the Consolidated Income Statement:
Current service cost (527) (552)
Past service cost (30) -
Gain on settlement 548 -
Total recognised in operating profit (9) (552)
Net interest income/(cost) (included in financing costs Note 4) 24 (80)
Net credit/(charge) to Consolidated Income Statement 15 (632)
Maturity analysis
The maturity profile of the Group’s defined benefit obligation (on a discounted basis) is as follows:
Allocation of defined benefit obligation by participant:   
Active plan participants 3,655 16,130 19,785
Deferred plan participants 7,521 31,457 38,978
Retirees 4,349 35,311 39,660
15,525 82,898 98,423
					
Defined benefit pension credit recognised in Other Comprehensive Income
		
Remeasurement gain on scheme assets 8,350 2,253
Remeasurement (loss)/gain on scheme liabilities:
Effect of experience gains/(losses) on scheme liabilities 388 (274)
Effect of changes in demographical and financial assumptions (12,337) 1,649
Remeasurements (3,599) 3,628
Deferred tax 450 (504)
Defined benefit pension credit recognised in the Consolidated Statement
of Comprehensive Income (3,149) 3,124
The cumulative loss recognised in the Consolidated Statement of Comprehensive Income is €29,804,000
(2018: €26,655,000). The actual return on the plan assets was €10,921,000 (2018: €4,603,000).
182
Notes to the Group Financial Statements
27 Share capital		
Authorised
250,000,000 ordinary shares of €0.01 each (i) 2,500 2,500
Allotted, called up and fully paid
126,396,184 (2018: 126,382,206) ordinary shares of €0.01 each (i) (ii) (iii) 1,264 1,264
(i)	
Ordinary shareholders are entitled to dividends as declared and each ordinary share carries equal voting
rights at meetings of the Company.
(ii)	
In December 2012, the issued ordinary share capital was increased by the issue of 1,212,871 ordinary shares
of nominal value of €0.01 each, at an issue price of €4.04 each, pursuant to a share subscription by a
wholly owned subsidiary for the purposes of the Origin Long Term Incentive Plan 2012 ( “2012 LTIP Plan”).
Under the terms of the 2012 LTIP Plan, 412,541 of these shares were transferred to the directors and senior
management as a result of certain financial targets having been achieved in the three years to 31 July 2015.
The remaining 800,330 ordinary shares continue to be held as treasury shares.
(iii)	
In July 2019, the issued ordinary share capital was increased by the issue of 13,978 ordinary shares of
nominal value €0.01 each, at an issue price of €5.48 each pursuant to the terms of the Origin Save As You
Earn Scheme.
28 Dividends
The Board is recommending a final dividend of 18.17 cent per ordinary share which when combined with the
interim dividend of 3.15 cent per ordinary share brings the total dividend for the year to 21.32 cent per share
(total dividend of €26.9 million) (2018: 21.0 cent per share), an increase of 1.5%. Subject to shareholders’
approval at the Annual General Meeting, the dividend will be paid on 13 December 2019 to shareholders on
the register on 29 November 2019. In accordance with IFRS, this dividend has not been provided for in the
Consolidated Statement of Financial Position as at 31 July 2019.
183
Financial
Statements
Notes to the Group Financial Statements
29 Consolidated statement of changes in equity
Capital redemption reserve
The capital redemption reserve was created in the year ending 31 July 2011 and arose on the redemption of
deferred convertible ordinary shares
Cash flow hedge reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions that have not yet occurred.
Revaluation reserve
The revaluation reserve relates to revaluation surpluses arising on revaluations of property, plant and equipment.
Share-based payment reserve
This reserve comprises amounts credited to reserves in connection with equity awards less the effect of any
exercises of such awards.
Reorganisation reserve
The difference between the fair value of the investment recorded in the Company balance sheet and the
carrying value of the assets and liabilities transferred in 2007 on the formation of Origin has been recognised
as a reorganisation reserve in other reserves within equity together with the currency translation reserve, cash
flow reserve and revaluation reserve.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences from 1 August 2005, arising from the
translation of the net assets of the Group’s non-euro denominated operations, including the translation of the
profits of such operations from the average exchange rate for the year to the exchange rate at the year end
date. Exchange gains or losses on long-term intra-group loans that are regarded as part of the net investments
in non-euro denominated operations, are taken to the translation reserve to the extent that they are neither
planned nor expected to be repaid in the foreseeable future.
Capital management
The capital managed by the Group consists of the consolidated equity and net debt. The Group has set the
following goals for the management of its capital:
>
> to maintain a prudent net debt (as set out in Note 21) to EBITDA and interest cover ratio (interest as a
percentage of EBIT) to support a prudent capital base and ensure a long term sustainable business;
>
> to comply with covenants as determined by debt providers;
>
> to achieve an adequate return for investors; and
>
> to apply a dividend policy which takes into account the level of peer group dividends, the Group’s financial
performance and position, the Group’s future outlook and other relevant factors including tax and other
legal considerations.
The Group employs two key target ratios to monitor equity and to be compliant with its bank covenants:
>
> the Group’s net debt to EBITDA ratio is below 3.50. The ratio is 0.87 times at 31 July 2019
(2018: 0.54), 31 January 2019 2.57 times (2018: 2.17 times); and
>
> the Group’s interest cover (EBITDA to interest) is above 3.00. The ratio is 8.06 times at 31 July 2019
(2018: 9.81), 31 January 2019 9.25 times (2018: 11.24 times).
184
Notes to the Group Financial Statements
30 Commitments
Non-cancellable operating lease rentals are payable as set out below. These amounts represent minimum future
lease payments, in aggregate, that the Group are required to make under existing lease agreements.
Within one year 7,511 7,686
In two to five years 14,989 15,507
After more than five years 19,775 15,316
42,275 38,509
The Group leases a number of properties under operating leases. The leases typically run for periods of 15 to 25
years. Rents are generally reviewed every five years.
Future purchase commitments for property, plant and equipment
Financial
Statements
Notes to the Group Financial Statements
31 Related party transactions
In the normal course of business, the Group undertakes trading transactions with its associates, joint venture
and other related parties. A summary of transactions with these related parties during the year is as follows:
2019
Sale of
goods

Purchase of
goods

Receiving
services from

Rendering
services to

Total

Transactions with joint venture - (117,985) - 214 (117,771)
Transactions with associates 68,321 (316) (728) 768 68,045
Transactions with joint venture - (114,339) - 446 (113,893)
Transactions with associates 62,832 (562) (718) 1,101 62,653
Transactions with other 106 - - - 106
The trading balances owing to the Group from related parties were €32,207,000 (2018: €14,003,000) and
the trading balances owing from the Group to these related parties were €8,164,000 (2018: €6,027,000).
Other financial assets on the Consolidated Statement of Financial Position primarily comprise of €546,000
(2018: €450,000) in relation to a loan to West Twin Investments Limited.
Compensation of key management personnel
For the purposes of the disclosure requirements of IAS 24, ‘Related Party Disclosures’, the term ‘key
management personnel’ (i.e. those persons having authority and responsibility for planning, directing and
controlling the activities of the Group), comprises the Board of Directors and their management team who have
responsibility for managing the business and affairs of the Group and its reporting segments. Comparatives are
presented on a consistent basis.
Salaries and other short term employee benefits 3,390 3,073
Post employment benefits 251 245
Share-based payments 573 123
Other long term employee benefits 80 105
Total 4,294 3,546
186
Notes to the Group Financial Statements
32 Acquisition of subsidiary undertakings
During the period, the Group completed the acquisition of Fortgreen Commercial Agricola Ltda (‘Fortgreen’)
in Brazil, the acquisition of Symbio Group (‘Symbio’) in the United Kingdom and the acquisition of Vegetable
Consulting Services Limited (‘VCS’). These acquisitions complement the Group’s prescription fertilisers and
speciality nutrition business.
Details of the acquisitions are as follows:
(i)	
On 14 August 2018 the Group acquired a 65 per cent controlling interest in the Brazilian based speciality
nutrition and crop inputs business, Fortgreen Commercial Agricola Ltda.
(ii)	
On 20 November 2018 the Group completed the acquisition of 100 per cent of Eco Solutions (C & R) Limited
trading as Symbio. Based in the United Kingdom, Symbio specialises in biological based crop technologies.
(iii)	
On 31 March 2019 the Group completed the acquisition of 100 per cent of Vegetable Consulting Services
(UK) Limited. Based in the United Kingdom, VCS provides agronomy consultancy services.
The acquisition method has been used to account for businesses acquired in the Group’s financial statements.
Given that the valuation of the fair value of assets and liabilities recently acquired for Symbio and VCS is still in
progress, the following values included for these are determined provisionally. The valuation of these assets and
liabilities will be completed within the measurement period.
For the acquisitions completed in 2018, there have been no material revisions of the provisional fair value
adjustments since the initial values were established.
Details of the net assets acquired and goodwill arising from the business combinations are as follows:
187
Financial
Statements
Notes to the Group Financial Statements
32 Acquisition of subsidiary undertakings - continued
Fair
value

Assets
Non-current
Property, plant & equipment 4,471
Intangible assets 25,410
Deferred tax asset 830
Total non-current assets 30,711
Current assets
Inventory 6,078
Trade receivables 16,082
Total current assets 22,160
Liabilities
Trade payables and other (11,425)
Corporation tax (1,005)
Deferred tax liability (8,640)
Interest-bearing borrowings (8,179)
Total liabilities (29,249)
Total identifiable net assets at fair value (excluding cash acquired) 23,622
Goodwill arising on acquisition 47,873
Total net assets acquired (excluding cash acquired) 71,495
Consideration satisfied by:
Cash consideration 40,614
Cash acquired (4,060)
Net cash outflow 36,554
Put option arising from acquisition 26,433
Contingent consideration arising from acquisition 8,508
Consideration 71,495
		
188
Notes to the Group Financial Statements
32 Acquisition of subsidiary undertakings - continued
Origin acquired a 65 per cent interest in Fortgreen for cash consideration on 14 August 2018. The Group has
also entered into an arrangement with the minority shareholder, under which the minority shareholder has
the right at various dates to sell the remaining 35 per cent interest to Origin based on an agreed formula. In
the event that this is not exercised, Origin has a similar right to acquire the 35 per cent interest. Origin has
recognised an option liability of €26.4 million which is the fair value of the future estimated amount payable
to exercise the option. This has been determined based on an agreed formula which includes an expectation
of future trading performance and timing of when the options are expected to be exercised, discounted to
present day value.
Origin has elected to apply the anticipated acquisition method in accounting for the option whereby the non-
controlling interest is not recognised but rather treated as already acquired by Origin both in the Consolidated
Statement of Financial Position and the Consolidated Statement of Comprehensive Income. This treatment
has been adopted as the Directors have formed the view that based on the structure and timing of the option
contracts sufficient risks and rewards are deemed to have transferred to Origin. Profits and losses attributable
to the minority shareholder in respect of their 35 per cent interest will be presented as attributable to the
equity shareholders of Origin and not as attributable to minority interests. The €26.4 million financial liability
recognised by the Group forms part of the contingent consideration for the acquisition. For all new liabilities
recognised in respect of shares held by non-controlling shareholders, all movements in the fair value of such
options will be recognised in retained earnings.
Goodwill recognised on acquisitions is attributable to the skills and technical talent of the acquired business’
workforce and the synergies expected to be achieved from integrating the companies into the Group’s
existing business.
Contingent consideration of €6.9 million arose on the acquisition of Fortgreen. This is based on an agreed
earnings before interest tax, depreciation and amortisation based formula.
Contingent consideration arrangements require the Group to make future payments in relation to a number
of acquisitions. The expected amounts of all future payments that the Group could be required to make under
these arrangements for all current year acquisitions range from zero to €8.5 million.
Post acquisition revenues and operating profit relating to the current year acquisitions amounted to €35.9
million and €10.7 million (2018: €76.1 million and €3.3 million). If the acquisitions had occurred on 1 August 2018,
management estimates that consolidated revenue would have been €39.8 million (2018: €88.3 million) and
consolidated operating profit for the year would have been €11.8 million (2018: €4.5 million). In determining
these amounts management has assumed that the fair value adjustments that arose on the dates of acquisition
would have been the same if the acquisition occurred on 1 August 2018 (2018: 1 August 2017).
33 Accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and reported amounts of assets
and liabilities, income and expenses.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements
are described below:
189
Financial
Statements
Notes to the Group Financial Statements
33 Accounting estimates and judgements - continued
Note 3 Exceptional items
Note 10 Income Tax
Note 13 Investment properties and properties held for sale
Note 14	
Goodwill and intangible assets- measurement of the recoverable amounts of CGUs,
useful lives of intangibles
Note 18 Trade and other receivables
Note 25 Put option liability
Note 26 Post employment benefit obligations
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
the Group’s provision for income taxes. There are many transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the income tax and tax provisions in the period in which such determination is made.
Investment properties and properties held for sale are based on fair values derived from current estimated
market values for the properties, being the amount that would be received from a sale of the assets in an
orderly transaction between market participants. The valuation of investment properties and properties held
for sale is inherently subjective and is based on macro-economic factors which are outside of the Group’s
control or influence.
Impairment testing of assets, particularly of goodwill, involves estimating the future cash flows for a cash
generating unit and an appropriate discount rate to determine a recoverable value as set out in Note 14.
An element of judgement is required in estimating a portion of the rebates receivable from suppliers in
certain agricultural chemicals and fertiliser products at year end given the number and complexity of rebate
arrangements in addition to the timing of payments. There are numerous contractual terms and requirements
that must be met in order to obtain certain rebates.
The Group acknowledges the level of judgement required in estimating settlement price adjustments payable
to certain customers given the complexity of such arrangements in addition to the timing of payment. The
estimation of the final settlements payable is impacted by commodity prices, competitor pricing pressures,
prevailing market conditions and the timing of the Group’s financial year end as it is non-coterminous with
the year end of its main customers. The Group records the estimated settlement price adjustments when the
related sales are made based on market conditions and historical experience.
As part of the Fortgreen acquisition, the Group entered into an arrangement with the minority shareholder,
under which the minority shareholder has the right at various dates to sell the remaining 35 per cent interest
to Origin. In the event that this is not exercised, Origin has a similar right to acquire the 35 per cent interest.
Origin has recognised an option liability of €26.4 million which is the fair value of the future estimated amount
payable to exercise the option. The valuation of the put option liability has been determined based on an
agreed formula which includes an expectation of future trading performance and an estimated timing of when
the options are expected to be exercised, discounted to present day value.
The estimation of employee benefit costs requires the use of actuaries and the determination of appropriate
assumptions such as discount rates and expected future rates of return as set out in Note 26.
Exceptional items are those which are separately disclosed to highlight significant items, by virtue of their
scale and nature, within the Group results for the year in order to aid the user’s understanding of underlying
performance of the Group. Management exercises judgement in assessing which items are classified as
exceptional in order to ensure that the treatment of exceptional items is consistent with the accounting policy.
190
Notes to the Group Financial Statements
34 Principal subsidiaries and associated undertakings
191
Financial
Statements
Notes to the Group Financial Statements
35 Subsequent events
There have been no material events subsequent to 31 July 2019 that would require adjustment to or disclosure
in this report.
36 Approval of financial statements
The Group financial statements were approved by the Board on 24 September 2019.
192
Company Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material
in relation to the Company’s financial statements.
Basis of preparation
The Company financial statements have been prepared on a going concern basis and in accordance with Irish GAAP
(accounting standards issued by the UK Financial Reporting Council and the Companies Act 2014). The entity financial
statements comply with Financial Reporting Standard 102, The Financial Reporting Standard applicable to in the UK
and Republic of Ireland (FRS102).
The entity financial statements have been prepared under historical cost convention, as modified by the
measurement of certain financial assets and liabilities at fair value through profit or loss, and the measurement of
freehold land and buildings at their deemed cost on transition to FRS 102 on 1 August 2014.
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is calculated to write off the cost or valuation of tangible assets, other than freehold land, on a straight
line basis, by reference to the following estimated useful lives:
Fixtures and fittings 25 years
								
Investment properties
Investment properties are stated at open market value. Changes in the fair value of the investment properties are
shown in the profit and loss account for the year.
Financial assets
Investments in subsidiaries are carried at cost less accumulated impairment losses. Dividends shall be recognised
when the shareholder’s right to receive payment is established.
Retirement benefits
For the Company’s defined benefit schemes, the difference between the market value of the scheme’s assets and the
actuarially assessed present value of the scheme’s liabilities, calculated using the projected unit credit method, is
disclosed as an asset/liability in the balance sheet, to the extent that it is deemed to be recoverable.
The amount charged to operating profit is the actuarially determined cost of pension benefits promised to employees
and earned during the year plus the cost of any benefit improvements granted to members during the period.
The net interest cost on the net defined benefit liability is determined by multiplying the net defined benefit liability
by the discount rate, both as determined at the start of the financial year, taking account of any changes in the net
defined benefit liability during the financial year as a result of contribution and benefit payments. This net interest
cost is recognised in profit or loss as ‘finance expense’ and presented within ‘interest payable and similar charges’.
Actuarial gains and loss arising from experience adjustments and charges in actuarial assumptions are recognized
in other comprehensive income. These amounts together with the return on plan assets less the interest income on
plan assets included in the net interest cost, are presented in ‘remeasurement of a defined benefit liability’ in other
comprehensive income.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions or at actual rates.
The resulting monetary assets and liabilities are translated at the balance sheet rate or the transaction rate and the
exchange differences are dealt with in the profit and loss account.
Cash flow statement
The Company has taken advantage of the exemption, under FRS 102 paragraph 1.12 (b), from preparing a statement of
cash flows, on the basis that it is a qualifying entity and published Group financial statements, in which the Company’s
results are consolidated, include a cash flow statement.
193
Financial
Statements
Company Accounting Policies
Taxation
Current tax is provided on the Company’s taxable profits, at amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date, as required by FRS 102. Provision is made at the rates expected to apply when the timing differences reverse.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Long-Term Incentive Plan
The Company has granted Equity Entitlements under the Origin Enterprises Long-Term Incentive Plan 2015. All
disclosures relating to the plan are made in Note 9 to the Group financial statements.
Put option liability
Where a put/call option agreement is in place in respect of shares held by non controlling shareholders, the put
element of the liability is present valued. Such liabilities are shown as current or non-current liabilities in the
Company balance sheet. All disclosures relating to the put option liability are made in Note 25 to the Group financial
statements. All disclosures relating to the put option liability are made in Note 25 to the Group financial statements.
Related party disclosures
The Company discloses transactions with related parties that are not wholly owned within the Group. In accordance
with FRS 102 33.1A, it does not disclose transactions with members of the same group that are wholly owned.
Intangible assets
Computer software that is not an integral part of an item of computer hardware is also classified as an intangible
asset. Where intangible assets are separately acquired, they are capitalised at cost. Cost comprises purchase price
and other directly attributable costs.
Internally generated intangible assets are recognised when the following can be demonstrated;
- the technical feasibility of completing the intangible asset so that it will be available for use or sale;
- its intentions to complete the development;
- its ability to use or sell the intangible asset;
- its ability to generate future economic benefits;
- the availability of resources to complete the development; and
- its ability to measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets with finite lives are amortised over the period of their expected useful lives in equal annual
instalments, as follows:
Brands 			 up to 20 years
Intellectual property up to 20 years
Developed technology up to 10 years
Computer software 3 to 10 years
Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment
losses incurred.
General
 (the ‘Company’) is a company domiciled and incorporated in Ireland. The Company registration
number is 426261 and the Company address is 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland.
194
Company Balance Sheet
As at 31 July 2019
Notes Fixed assets
Investment properties 1 - 1,925
Tangible assets 2 947 12,181
Intangible assets 3 3,308 2,675
Post employment benefit asset 8 812 944
Financial assets 4 33,107 34,472
38,174 52,197
Current assets
Debtors 5 591,218 474,124
Cash at bank and in hand 20,778 23,668
611,996 497,792
Creditors (amounts falling due within one year) 6 (382,041) (290,108)
Net current assets 229,955 207,684
Total assets less current liabilities 268,129 259,881
Put option liability - (5,531)
Net assets 268,129 254,350
Capital and reserves
Called up share capital - presented as equity 9 1,264 1,264
Share premium 164,850 164,774
Profit and loss account and other reserves 102,015 88,312
Shareholders’ funds 268,129 254,350
The profit for the year attributable to shareholders dealt with in the financial statements of the holding company for
the year ended 31 July 2019 was €40,100,000 (2018: €28,194,000). As permitted by Section 304 of the Companies
Act 2014, the income statement of the Company has not been separately presented in these financial statements.
On behalf of the Board
During the year, six acres of an investment property were disposed of and resulted in a gain of €0.5 million.
The remainder of the property was transferred at its book value of €1.7 million to Origin Riverwalk Property Trading
Limited, a wholly-owned subsidiary.
2 Tangible fixed assets		
Land

Fixtures & fittings

Total

Cost
At 1 August 2018 11,215 1,762 12,977
Additions - 59 59
Disposals - (444) (444)
Transfer (11,215) - (11,215)
At 31 July 2019 - 1,377 1,377
Accumulated depreciation
At 1 August 2018 - 796 796
Depreciation charge for year 78 78
Disposals - (444) (444)
At 31 July 2019 - 430 430
Net book amounts
At 31 July 2019 - 947 947
At 31 July 2018 11,215 966 12,181
Land

Fixtures & fittings

Total

Cost
At 1 August 2017 11,215 1,745 12,960
Additions - 17 17
At 31 July 2018 11,215 1,762 12,977
Accumulated depreciation
At 1 August 2017 - 695 695
Depreciation charge for year - 101 101
At 31 July 2018 - 796 796
Net book amounts
At 31 July 2018 11,215 966 12,181
At 31 July 2017 11,215 1,050 12,265
197
Financial
Statements
Notes to the Company Financial Statements
3 Intangible assets
Developed
Technology

Brand

Intellectual
property

Software

Total

Cost or valuation
At 1 August 2018 1,186 383 1,778 358 3,705
Additions 904 50 - 25 979
At 31 July 2019 2,090 433 1,778 383 4,684
Amortisation
At 1 August 2018 - 39 870 121 1,030
Charge for year 111 13 161 61 346
At 31 July 2019 111 52 1,031 182 1,376
Net book amounts
At 31 July 2019 1,979 381 747 201 3,308
At 31 July 2018 1,186 344 908 237 2,675
Developed
Technology

Brand

Intellectual
property

Software

Total

Notes to the Company Financial Statements
4 Financial assets
At 1 August 34,472 34,472
Impairment (1,365) -
At 31 July 33,107 34,472
The principal subsidiaries are set out on Note 34 to the Group financial statements.
5 Debtors		
Amounts owed by subsidiary undertakings 589,571 472,096
Corporation tax 435 1,004
Other debtors 807 615
Deferred tax- revaluation of properties 405 409
591,218 474,124
Amounts owed by subsidiaries are unsecured and are repayable on demand.
6 Creditors (amounts falling due within one year)		
Amounts owed to subsidiary undertakings (i) 369,561 277,683
Trade creditors (ii) 1,297 1,714
Accruals and other payables (ii) 9,619 8,022
Retirement benefit and related liabilities 843 843
Deferred tax- revaluation of properties 721 1,846
382,041 290,108
(i) Amounts owed to subsidiaries are unsecured and are payable on demand.
(ii) Trade creditors, accruals and other payables are measured at amortised cost.
7 Deferred tax- net		
At 1 August 1,437 929
(Credit)/charge for the year (1,121) 508
At 31 July 316 1,437
		
			
199
Financial
Statements
Notes to the Company Financial Statements
8 Post employment benefit asset
The Company operates a defined benefit pension scheme which is closed to new members.
Under FRS 102 calculations, the total surplus in the Company’s defined benefit scheme at 31 July 2019 was
€812,000 (2018: surplus of €944,000). There was a gain in the profit and loss account for the period in respect
of the Company’s defined benefit scheme of €450,000 primarily due to a settlement gain of €548,000 during
the year (2018: charge of €128,000).
The expected contributions from the Company for the year ending 31 July 2020 are €354,000. The valuations
of the defined benefit schemes used for the purposes of the following disclosures are those of the most recent
actuarial valuations carried out at 31 July 2019 by an independent, qualified actuary. The valuations have been
performed using the projected unit method.
Post employment benefits included in the Company Balance Sheet comprises the following:
Surplus in defined benefit schemes (see analysis below) 812 944
Total 812 944
2019
%
2018
%
The main assumptions used by the actuary were as follows:
Rate of increase in salaries 0.00% - 2.35% 0.00%-2.35%
Discount rate in scheme liabilities 1.20% 2.10%
Inflation rate 1.50% 1.75%
Net pension asset
Market value of scheme assets:
Equities 2,810 2,635
Bonds 10,661 8,975
Property 2,210 4,806
Other 2,562 53
Total market value of assets 18,243 16,469
Present value of scheme liabilities (17,431) (15,525)
Surplus in the scheme 812 944
Movement in value of scheme assets
Value of assets at 1 August 16,469 15,872
Interest income 348 335
Settlement payment - (821)
Remeasurement gain 1,382 923
Employer contributions 395 395
Benefit payment (377) (266)
Charge for the year 26 31
At 31 July 18,243 16,469
200
Notes to the Company Financial Statements
8 Post employment benefit asset - continued
Movement in the present value of scheme obligations
Value of scheme obligations at 1 August (15,525) (16,363)
Current service costs (121) (121)
Settlement gain 548 -
Settlement payment - 821
Interest on scheme obligations (325) (342)
Remeasurement (loss)/gain (2,359) 245
Benefit payment 377 266
Employee contributions (26) (31)
Value of scheme obligations at 31 July (17,431) 15,525
		
Movement in net asset recognised in the balance sheet
At 1 August 944 (491)
Current service cost (121) (121)
Settlement gain 548 -
Employer contributions 395 395
Other finance income/(expense) 23 (7)
Remeasurement (loss)/gain (977) 1,168
Net asset in scheme at 31 July 812 944
Defined benefit expense recognised in the profit and loss account:
Current service cost (121) (121)
Settlement gain 548 -
Total recognised in operating profit 427 (121)
Interest income on scheme assets 348 335
Interest cost on scheme liabilities (325) (342)
Included in financing income/(costs) 23 (7)
Net credit/(charge) to Company’s profit and loss account 450 (128)
		
201
Financial
Statements
Notes to the Company Financial Statements
8 Post employment benefit asset - continued		
Historical information
Present value of the scheme obligation (17,431) (15,525)
Fair value of plan assets 18,243 16,469
Surplus in scheme 812 944
Actual return less expected return on scheme assets 1,382 923
Experience adjustment on scheme liabilities 244 67
Interest cost on scheme liabilities (2,603) 178
Remeasurements (977) 1,168
Deferred tax credit/(charge) 122 (146)
(Loss)/gain recognised in statement of comprehensive income (855) 1,022
		
9 Share capital
Authorised
250,000,000 ordinary shares of €0.01 each (i) 2,500 2,500
Allotted, called up and fully paid
126,396,184 (2018: 126,382,206) ordinary shares of €0.01 each (i) (ii) (iii) 1,264 1,264
(i)	
Ordinary shareholders are entitled to dividends as declared and each ordinary share carries equal voting
rights at meetings of the Company.
(ii)	
In December 2012, the issued ordinary share capital was increased by the issue of 1,212,871 ordinary shares
of nominal value of €0.01 each, at an issue price of €4.04 each, pursuant to a share subscription by a
wholly owned subsidiary for the purposes of the Origin Long Term Incentive Plan 2012 ( “2012 LTIP Plan”).
Under the terms of the 2012 LTIP Plan, 412,541 of these shares were transferred to the Directors and senior
management as a result of certain financial targets having been achieved. The remaining 800,330 ordinary
shares continue to be held as treasury shares.
(iii)	
In July 2019, the issued ordinary share capital was increased by the issue of 13,978 ordinary shares of
nominal value €0.01 each, at an issue price of €5.48 each pursuant to the terms of the Origin Save As You
Earn Scheme.
202
Notes to the Company Financial Statements
10 Contingent liabilities
In order to avail of the exemption under Section 357 of the Companies Act 2014 the Company has
guaranteed the liabilities and commitments of all of its subsidiaries registered in Ireland. The Company
has given guarantees to secure the obligations of its subsidiaries in respect of total committed bank
facilities to the value of €430 million.
11 Share-based payment
All disclosures relating to the Long-Term Incentive Plan are set out in Note 9 to the Group financial statements.
12 Statutory and other information		
Auditors’ remuneration:
- statutory audit of entity financial statements 25 23
- other assurance services 581 558
- other non-audit services 5 -
Profit for the financial year 40,100 28,194
All of the Group audit fee was recharged by the Company to its subsidiaries in the current year
13 Employment
2019
Number
2018
Number
The average number of persons employed by the Company
during the year was as follows:
Management and administration 21 19
Aggregate employment costs of the company are analysed as follows:
Wages and salaries 6,647 6,116
Social welfare costs 330 484
Cash based long term incentive plan 1,120 1,016
Pension costs:
- defined benefit schemes - statement of total recognised gains and losses 977 (1,168)
- defined benefit schemes - profit and loss account (450) 128
Share-based payment charge 999 180
9,623 6,756
203
Financial
Statements
Notes to the Company Financial Statements
14 Related party transactions
In the normal course of business, the Company undertakes arms-length transactions with its associates and
other related parties. A summary of transactions with these related parties during the year is as follows:
2019
Sale of
goods

Purchase
of goods

Rendering
services to

Receiving
services
from
Total
Transactions with joint venture - - 214 - 214
Transactions with associates - - 289 - 289
2018
Sale of
goods

Purchase
of goods

Rendering
services to

Receiving
services
from

Total
Transactions with joint venture - - 446 - 446
Transactions with associates - - 310 - 310
		
For the purposes of the disclosure requirements of FRS 102, the term ‘key management personnel’ (i.e.
those persons having authority and responsibility for planning, directing and controlling the activities of the
Company), comprises the management team who have responsibility for managing the business and affairs of
the Company. Comparatives are presented on a consistent basis.
Salaries and other short term employee benefits 2,419 2,283
Post employment benefits 225 219
Share-based payments 338 67
Other long-term employee benefits 80 105
3,062 2,674
15 Approval of financial statements
These financial statements were approved by the Board on 24 September 2019.
Other
assets
Other
assets
PAGE CONTENTS
2 Financial Summary
3 Key Statistics
4 Chairman’s Report
6 Group Chief Executive’s Report
11 Directors’ Report
15 Corporate Governance Report
30 Environmental and Social Report
37 Report of the Remuneration Committee on Directors’ Remuneration
41 Statement of Directors’ Responsibilities
43 Independent Auditor’s Report
48 Presentation of Financial and Certain Other Information
50 Detailed Index*
53 Key Information
59 Principal Risks and Uncertainties
73 Information on the Company
96 Operating and Financial Review
99 Critical Accounting Policies
111 Directors, Senior Management and Employees
119 Major Shareholders and Related Party Transactions
120 Financial Information
126 Additional Information
137 Quantitative and Qualitative Disclosures About Market Risk
142 Controls and Procedures
145 Consolidated Financial Statements
196 Company Financial Statements
202 Directors and Other Information
203 Appendix
*See Index on page 50 to 52 for detailed table of contents.
Information on the Company is available online via the internet at our website, http://corporate..com.
Information on our website does not constitute part of this Annual Report. This Annual Report and our 20-F are
available on our website.
Chairman’s Report
Dear Shareholders,
Last year we made significant progress in growing  as Europe’s largest airline group. We aim to carry 200m guests
per annum over the next 5 years. Highlights of the year include:
• Traffic grew 9% to over 142m guests
• Avg. air fares were cut 6% to €37
• Revenue rose 6% to €7.6bn. as ancillary revenue increased by 11% per guest
•  Sun (“Buzz”) was launched and traded profitably in its first year
• We acquired 100% of Lauda, and transformed its fleet and operations
• We negotiated union agreements in most of our key markets
• We took delivery of 29 B737s and 16 A320s while investing in our business for future growth
• We took decisive actions to improve on-time-performance (despite record ATC disruptions)
• We continued to deliver our environmental targets and now publish CO2 data monthly
• Over €560m was returned to shareholders via share buy-backs
At a time of excess capacity in the European short-haul market, ’s cost leadership, and strong balance sheet, means
that we are well placed to take advantage of the growth opportunities that will arise as airlines consolidate and/or exit the
market. In May, your Board approved a further €700m share buy-back program which will, depending on market
conditions, run for 9 to 12 months. Following this latest distribution,  will have returned €7bn to shareholders
since 2008.
The Board, in conjunction with management, are closely monitoring delivery delays to the Boeing 737-MAX-200 aircraft.
Subject to FAA and EASA regulatory approval, we hope to receive our first “gamechanger” aircraft sometime between
January and February 2020.  is therefore planning summer 2020 capacity on the basis of having 30 MAX aircraft,
rather than the 58 originally scheduled, which will slow down growth from approximately 7% to approximately 3% in
fiscal year 2021 where we will now carry 157m guests instead of the 162m previously expected.
As already announced, Michael O’Leary has agreed a new 5-year contract as Group CEO, which secures his services for
the Group until at least July 2024. We welcome his agreement to commit for a further 5-year period, which gives certainty
to our shareholders. Both Kyran McLaughlin and I have agreed to lead the Board until summer 2020, but we do not wish
to be considered for re-election at the September 2020 AGM. In order to ensure a smooth succession, Stan McCarthy
(who joined the Board in May 2017) agreed to become Deputy Chairman from April 2019 and will transition to Chairman
of the Board next year. Stan brings enormous international experience (as a former CEO of Kerry Group plc) and
leadership skills to the development of  over the coming years. Louise Phelan (who joined the Board in December
2012) has agreed to become Senior Independent Director when Kyran McLaughlin retires from the Board in summer 2020.
I wish to thank the 16,800 highly skilled aviation professionals across the  Group who strive, on behalf of our
142m guests, each year, to deliver the lowest fares, the best on-time performance and the greenest, cleanest air travel with
an ever-improving customer experience for the benefit of our customers, our people and our shareholders.
Yours sincerely,
David Bonderman
Chairman
5
David Bonderman
Our 2019 AGM will be the last under the Chairmanship of David Bonderman. David became an investor in, and Director
of,  in August 1996 when we operated just 12 aircraft, carried 3m passengers annually, and employed just over
600 people. Under David’s leadership over the last 24 years  has grown to operate a fleet of over 450 aircraft, we
carry 3m passengers each week, and we employ over 16,800 highly skilled aviation professionals. None of this would have
been achieved without David’s experience, leadership and expertise. His guidance as Chairman was key to our flotation
in May 1997, our first new aircraft order for 25 Boeing 737-800s, and every follow-on order since. He has guided the
Board and Management of  over the last 24 years with great wisdom and insight making us today the world’s
largest international airline. The people, passengers, and shareholders of  owe David an enormous debt of
gratitude, and on their behalf, I say a very sincere thank you to David for his time, his help and his support over the last
24 years. It has been a pleasure and a privilege to work with him.
Michael O’Leary
Group CEO
6
Group Chief Executive’s Report
Dear Shareholders,
We are pleased to present ’s 2019 Annual Report, which covers a year of significant challenges. Overcapacity in
Europe and our continuing growth saw average fares fall 6% but this stimulated traffic growth of 9% to 142m guests.
Ancillaries performed well with spend up 11% per guest. We faced a number of cost challenges including higher oil prices,
a step up in payroll costs under new 5 year pay deals for pilots and cabin crew, and an extraordinary jump in our EU261
costs due to repeated ATC strikes and staff shortages through summer 2018. As a direct result of these lower air fares, our
full year profits fell 39% to €885m (€1.02bn excl. Laudamotion start-up losses). This was a reasonable performance by a
robust business model in difficult trading circumstances. Despite these headwinds, we delivered an industry leading 96%
load factor, concluded union agreements with pilots and cabin crew in most of our major markets, and returned a further
€560m to shareholders via share buy-backs.
Revenue and Growth
Over the past year the  Group has delivered traffic growth of 9% to 142m passengers, mainly thanks to a 6% cut
in average fares to €37. This delivered price savings of over €310m to our guests. Ancillaries performed well as 
Labs continues to improve the presentation of these services, and spend rose by 11% per guest to a total of €2.4bn. summer
2018 was a very difficult period with a heat wave in Northern Europe, the distraction of the Soccer World Cup in Russia,
significant overcapacity in the EU market and an unprecedented series of ATC strikes and staff shortages, which caused
thousands of flight delays and cancellations for all airlines. We responded to these conditions by judicious base closures
(Bremen & Eindhoven) and capacity cuts at other underperforming bases. We reallocated this capacity to new country
markets in Jordan, Turkey and Ukraine. During the past winter season, overcapacity continued to exert downward pressure
on fares, particularly in Germany, where Lufthansa was allowed to buy the failed Air Berlin, and it has used this capacity
to engage in below cost selling despite its dominant market position in Germany. Demand and pricing in the U.K. has also
been dampened by continuing concerns over Brexit and slowing economic growth.
Cost Leadership
 continues to deliver the lowest unit cost of any EU airline and the cost gap between us and our competitors has
widened over the last year. Despite this, our costs rose 16% in FY19 driven mainly by higher oil prices (our fuel bill
jumped 28%, up over €500m), our payroll jumped 28% (up over €200m) mainly due to 20% pilot pay increases, and our
EU261 cost jumped 44% (up over €50m) due to repeated ATC staff shortages and strikes in summer 2018. Despite these
increases, we remain significantly lower cost on a per passenger basis than any of our competitors, and this enables us to
offer lower fares, while still delivering industry leading margins. We expect to deliver flat or slightly lower unit costs over
the coming years, particularly as the Boeing MAX deliveries ramp up, these aircraft deliver 4% more seats but 16% lower
fuel consumption. They form a critical component of our cost efficiency for the next 5 years.
7
Group Airlines
The past year has witnessed considerable turmoil in the airline business. Higher oil prices and lower fares caused a wave
of failures last winter including Primera, Small Planet, Azur, Germania, VLM, Cobalt, Flybmi and Wow. Both Alitalia
and Thomas Cook are re-structuring and are currently for sale. We expect further failures this winter if oil prices remain
elevated, and air fares continue to fall. The identity and timing of these failures is difficult to predict but we expect this
trend of EU airline failures will accelerate in winter 2019.
We have made good progress in developing our Group airlines. Buzz (formerly  Sun) operated 5 aircraft in the
Polish charter market last year, but did so profitably. This summer, Buzz has grown to 7 aircraft in the charter market, and
operates 17 of ’s scheduled aircraft all based in Poland. In April 2018, we acquired a 25% interest in Laudamotion
and this rose to 100% in December 2018. Lauda suffered a very difficult first year of operations due to the late delivery of
9, very expensive, lease aircraft from Lufthansa, which meant they released their summer 2018 schedule at very short
notice with seats being sold at very low prices, and caused Lauda to lose almost €140m in its first full year of operation.
The team at Lauda, with the support of , have now replaced these expensive Lufthansa aircraft with a fleet of 20
lower cost A320 operating leases and this, together with significant growth in Vienna and a new base in Palma, will see
Lauda significantly cut these losses in its second year. We believe Laudamotion is on track to be profitable in its 3rd
year
of activity, which will be a very significant turnaround in a short period of time by the small management team in
Laudamotion assisted by ’s low fare business model and buying power.
In June 2019, we purchased Malta Air from the Government of Malta. This airline will take over and rebrand the 6 
aircraft currently based in Malta, but they will also operate ’s 737 aircraft based in Germany, Italy and France
which will allow our pilots and cabin crew in those countries to pay their taxes in their country of residence, as opposed
to paying them in Ireland, which was required under Irish law while these aircraft were on the Irish AOC. Moving these
crews to local taxation and local contracts of employment, is central to the agreements we reached with our people and
our unions in each of these countries.
We believe this new Group structure gives  more flexibility to implement local contracts and local taxation for our
people, but also delivers lower operating costs for the Group. Laudamotion offers the Group future growth opportunities
on Airbus aircraft, while , Buzz and Malta Air will continue to grow using Boeing aircraft. Each of these 4 airlines
will compete with each other for the allocation of aircraft and capital over the coming years, which will deliver superior
returns for the Group and our shareholders.
Always Getting Better (AGB) 2019
Our AGB Customer Experience program continues to deliver real benefits for our guests. We invested heavily last year to
improve punctuality and resilience despite the challenges of frequent ATC staff shortages and strikes. We replaced
underperforming handling providers at Stansted, in Spain and Poland, and we invested in additional ground equipment
and more spare aircraft. These efforts have already delivered a 10% point improvement in our on-time performance in the
first 6 months of 2019 over 2018, with a remarkable 80% reduction in the number of cancelled flights during the same
period.
In February 2019  launched its 2019 Customer Care Improvements to enhance our customer proposition. This
campaign is driven by the principle of “More Choice, Lower Fares & Great Care” and introduces a number of new value-
add initiatives including:
• Lowest Fares - Credit to the customer’s “My” account if they find a cheaper fare within 3 hours;
• Punctuality - We deliver 90% OTP (excl. ATC) or we cut 5% off the following month’s air fares;
8
• Customer Care Charter - We process EU261 claims within 10 days and customer support moves to year round
24/7 availability, 7 days a week; and,
• Care Improvements - New 48-hour grace period for changes to bookings.
Brexit
The challenge of Brexit, and in particular the risk of a “no deal” Brexit remains worryingly high. We hope that Brexit will
be delivered by agreement between the U.K. and the European Union, which will minimise disruption to both the U.K.
and the EU economy. However, Brexit is causing considerable political uncertainty in the U.K., it has damaged investment,
economic activity, and consumer confidence, and has been a major contributor to the weakness of air fares and consumer
demand for flights from/to the U.K.
We welcome the fact that the U.K. and EU have put in place temporary measures, which will allow flights to continue
without disruption for a period of 9 months after a “no deal” Brexit. However, this will not remove longer term challenges
over flight rights and/or ownership restrictions until a trade agreement covering aviation is concluded. As an EU airline,
we believe  will be less affected by a no deal Brexit than U.K. based airlines, but we still expect adverse trading
consequences. We have put in place the necessary legal measures both to restrict non-EU shareholder voting rights, and
restrict non-EU share sales for a short period of months (after a hard Brexit), so we will ensure that  remains
majority owned and controlled within the European Union, and therefore we expect all our 4 AOC’s in Ireland, Poland,
Austria and Malta will continue to operate freely.
Boeing 737 MAX Delays
We regret the delivery delay of our first 5 Boeing 737 MAX aircraft, which were expected in spring 2019. The grounding
of the MAX, and our expectation that we will now not receive the first of these aircraft until January or February 2020,
means we are planning for summer 2020 on the basis of 30 new aircraft deliveries rather than the original plan of 58
deliveries. We expect this will slow our growth from 10m to 5m incremental guests in FY21 and we are working through
plans for judicious base cuts and closures in winter 2019 to accommodate this curtailed summer 2020 fleet and schedule.
We remain a big supporter of the Boeing MAX aircraft. They have flown successfully for some 18 months in North
America and Europe, and so we expect their grounding to be temporary, while Boeing and the Regulatory Agencies work
to deliver absolute confidence in the safety of these superb aircraft. The MAX 200 delivers 4% more seats, but at 16%
lower fuel consumption than our existing B737 fleet. These are truly game changing numbers, and will be critical to our
ability to lower costs and pass on more savings in the form of lower fares to our customers for the next 5 years.
Our Environment
Over the last year,  has invested heavily in our Environmental Programs. We have committed to going plastic free
within 5 years, we have launched an industry leading offset program as part of our booking process, we have moved to
paperless systems most notably electronic flight bags in the cockpit, and we are investing billions of dollars in new, more
efficient aircraft that will carry more guests but at significantly lower fuel consumption and noise emissions.
9
 is proud of its green heritage. We are independently ranked as the
greenest, cleanest airline in Europe. We are the first airline to publish
monthly emissions figures, which have fallen some 20% over the last 10
years, and will, we expect, fall by a further 15% over the next decade. We
are also investing substantial sums with climate action partners in Africa,
Portugal and Ireland.
These efforts were recently verified by Eurocontrol, who have confirmed
that , despite carrying considerably more passengers than any other
EU airline, ranks only 5th
in CO₂ emissions (see table below). Passengers
flying on  have already chosen to minimise their impact on the
environment by switching from other, less environmentally efficient
airlines. We oppose environmental taxes on aviation firstly, because they
don’t work (the funds are simply grabbed by Government for general use),
but more importantly, because it is a tax on poor people and on the
peripheral regions of Europe. Citizens in Ireland, the U.K., Malta and
Cyprus do not have alternative train or bicycle options. Citizens of
peripheral EU countries, such as the Baltic States, Portugal and Spain, must
fly if they wish to integrate with the rest of the European Union.
Environmental taxes discourages this free movement of Europe’s citizens,
while doing nothing to cut emissions. Aviation is already Europe’s most
efficient form of mass transport and the European Union should encourage
its citizens to fly more and drive less, as that would make a real difference
to the environment and our planet.
10
In FY19,  paid over €540m in environmental taxes
to Europe’s Governments. This figure will rise to €630m in
FY20. At more than €4 per passenger ticket, ’s
customers are already paying a disproportionate and
regressive amount of environmental taxes. If Europe’s
Governments really want to tackle emissions on air travel
then they can do so by eliminating Air Traffic Control
(ATC) delays and rerouting which currently account for
more than 10% of aviation CO₂ emissions in Europe.
Our People
Last year,  created 2,200 new jobs as our headcount grew to over 16,840 highly skilled aviation professionals. We
promoted more than 1,000 team members to more senior positions. Our new Group Airlines in Buzz (880 people),
Laudamotion (800 people) and Malta Air (270 people) will create new opportunities for internal promotions, and also
create mobility for our talented professionals to develop their careers in all aspects of the airline business.
By 2024, we expect our Group airlines to carry over 200m guests p.a., and this will allow us to create a further 5,000 jobs
within the Group while sustaining more than 150,000 support jobs in airports across Europe. Our people remain one of
our most important assets, and we continue to invest heavily in recruitment and training so that we hire the best talent
available, but also try to reach the highest possible standards both professionally and in the delivery of ’s customer
experience, while we bring low fare competition and choice to new and existing markets across Europe.
Our Shareholders
Last year was a challenging one for our shareholders. Despite the decline in the share price, which was better than and/or
in line with industry peers, we delivered further share buy-backs of over €560m. In March 2019, we announced another
€700m share buy-back. When this latest buy-back is completed, we will, over the last decade, have bought and retired
some 31% of ’s equity at an average price of just over €10.
We remain confident that the cyclical factors, which have affected our earnings and profitability over the last year, namely
higher oil prices, over capacity and lower air fares, will work its way out of the system over the next year or two and those
shareholders who continued to support our business, will be rewarded with better returns. Rest assured, we will continue
to strive to grow our low fare airline group safely, and in the best interest of our customers, our people and our shareholders.
Thank you all for your continuing support.
Michael O’Leary
Group CEO
11
Directors’ Report
Introduction
The Directors present their Annual Report and financial statements of  Holdings plc (“the Company”),
incorporated in the Republic of Ireland, and its subsidiaries (with the Company and the subsidiaries being together “the
Group”) for the year ended March 31, 2019.
Review of business activities and future developments in the business
The Company operates a low fares/low cost, short haul airline business and plans to develop this activity by
expanding its successful formula on new and existing routes. Information on the Company is set out on pages 73 to 96.
A review of the Company’s operations for the year is set out on pages 96 to 110.
Results for the year
Results for the year are set out in the consolidated income statement on page 147 and in the related notes.
Principal risks and uncertainties
Details of the principal risks and uncertainties facing the Company are detailed on pages 59 to 73.
Key performance indicators
The key performance indicators of the business are set out on pages 58; 73 to 96; and 96 to 110.
Financial risk management
Details of the Company’s financial risk management policies and exposures to market risk are set out in Note 11
on pages 169 to 179.
Share capital
The number of ordinary shares in issue at March 31, 2019 was 1,133,395,322 (2018: 1,171,142,985; and 2017:
1,217,870,999). Details of the classes of shares in issue and the related rights and obligations are set out in Note 15 on
pages 182 to 184.
Accounting records
The Directors believe that they have complied with the requirements of Section 281 to 285 of the Companies Act,
2014 with regard to adequate accounting records by employing financial personnel with appropriate expertise and by
providing adequate resources to the financial function. The accounting records of the Company are maintained at its
registered office, Airside Business Park, Swords, Co. Dublin, K67 NY94, Ireland.
Company information
The Company was incorporated on August 23, 1996 with a registered number of 249885. It is domiciled in the
Republic of Ireland and has its registered offices at , Dublin Office, Airside Business Park, Swords, Co. Dublin,
K67 NY94, Ireland. It is a public limited company and operates under the laws of Ireland.
People
At March 31, 2019, the Company had a team of 16,840 aviation professionals, compared to 14,583 at March 31,
2018 and 13,026 at March 31, 2017.
Substantial interests in share capital
Details of substantial interests in the share capital of the Company, which represent over 3% of the issued share
capital, are set out on page 119. At March 31, 2019 the free float in shares was 95.3%.
12
Directors and Company Secretary
The names of the Directors are listed on pages 111 and 112. The Company Secretary is listed on page 116. Details
of the appointment and re-election of Directors are set out on page 16.
Interests of Directors and Company Secretary
The Directors and Company Secretary who held office at March 31, 2019 had no interests other than those outlined
in Note 19(d) on page 188 in the shares of the Company or other group companies.
Directors’ and Senior Executives’ remuneration
The Company’s policy on Senior Executive remuneration is to reward its Executives competitively, but in the
context of a low cost airline, having regard to the comparative marketplace in Europe, in order to ensure that they are
motivated to perform in the best interests of the shareholders. Details of remuneration paid to senior key management
(defined as the Executive team reporting to the Board of Directors) is set out in Note 27 on page 194. Details of total
remuneration paid to the Directors is set out in Note 19 on pages 187 to 189.
Executive Director’s service contract
In February 2019, Michael O’Leary signed a 5-year contract as Group CEO, commencing on April 1, 2019, which
commits him to the Company until July 31, 2024. Mr. O’Leary is subject to a covenant not to compete with the Company
within the EU for a period of two years after the termination of his employment. Mr. O’Leary’s employment agreement
does not contain provisions providing for compensation on its termination.
Dividend policy
Details of the Company’s dividend policy are disclosed on page 121.
Share buy-back
In the year ended March 31, 2019 the Company bought back 37.8m ordinary shares at a total cost of €561m. These
buy-backs were equivalent to approximately 3.2% of the Company’s issued share capital at March 31, 2018. All of these
repurchased shares were cancelled at March 31, 2019.
In the year ended March 31, 2018 the Company bought back 44.7m shares at a total cost of €790m under its share
buy-back program and 2.0m shares underlying ADRs at a total cost of €39m under its €150m “Evergreen” ADR buy-
back program. These buy-backs were equivalent to approximately 3.8% of the Company’s issued share capital at March
31, 2017. All of these repurchased shares were cancelled at March 31, 2018.
As a result of the share buy-backs, in the year ended March 31, 2019, share capital decreased by 37.8m ordinary
shares (46.7M ordinary shares in the year ended March 31, 2018) with a nominal value of €0.2m (€0.3m in the year
ended March 31, 2018) and the capital redemption reserve increased by a corresponding €0.2m (€0.3m in the year ended
March 31, 2018). The capital redemption reserve is required to be created under Irish law to preserve permanent capital
in the Parent Company.
Directors’ Compliance Statement
The Company complies with its relevant obligations (as defined in the Companies Act 2014). The Directors have
drawn up a compliance policy statement (as defined in section 225(3)(a) of the Companies Act 2014) and appropriate
arrangements and structures are in place that are, in the Directors’ opinion, designed to secure material compliance with
the Company’s relevant obligations. The Directors confirm that these arrangements and structures were reviewed during
the financial year. As required by Section 225(2) of the Companies Act 2014, the Directors acknowledge that they are
responsible for the Company’s compliance with the relevant obligations. In discharging their responsibilities under Section
225, the Directors relied on the advice both of persons employed by the Company and of persons retained by the Company
under contract, who they believe have the requisite knowledge and experience to advise the Company on compliance with
its relevant obligations.
13
Relevant audit information
The Directors believe that they have taken all steps necessary to make themselves aware of any relevant audit
information and have established that the Company’s statutory auditors are aware of that information. In so far as they
are aware, there is no relevant audit information of which the Group’s statutory auditors are unaware.
Accountability and audit
The Directors have set out their responsibility for the preparation of the financial statements on page 41 to 42. They
have also considered the going concern position of the Company and their conclusion is set out on page 28.
The Board established an Audit Committee whose principal tasks are to consider financial reporting and internal
control issues. The Audit Committee, which consists exclusively of independent Non-Executive Directors, meets at least
quarterly to review the financial statements of the Company, to consider internal control procedures and to liaise with
internal and external auditors. In the year ended March 31, 2019 the Audit Committee met on five occasions. At least
quarterly, the Audit Committee receives an extensive report from the Head of Internal Audit detailing the reviews
performed in the year to date, and a risk assessment of the Company. This report is used by the Audit Committee and the
Board of Directors, as a basis for determining the effectiveness of internal control. The Audit Committee regularly
considers the performance of internal audit and how best financial reporting and internal control principles should be
applied.
In addition, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work
of the independent auditor. The Audit Committee pre-approves all audit and permissible non-audit services provided by
the independent auditor.
Social, environmental and ethical report
See pages 117 to 118 for details of employee and labor relations.
See pages 93 to 95 for details on environmental policies.
See page 143 for details of ’s Code of Ethics.
Air safety
Commitment to air safety is a priority of the Company. See page 83 for details.
Critical accounting policy
Details of the Company’s critical accounting policy is set out on page 99.
Subsidiary companies
Details of the principal subsidiary undertakings are disclosed in Note 27 on page 194.
Political contributions
During the financial years ended March 31, 2019, 2018 and 2017 the Company made no political contributions
which require disclosure under the Electoral Act, 1997.
Corporate Governance Statement
The Corporate Governance Statement on pages 15 to 29 forms part of the Directors’ Report.
Post balance sheet events
Details of significant post balance sheet events are set out in Note 26 on page 194.
Auditor
In accordance with Section 383(2) of the Companies Act 2014, the auditor, KPMG, Chartered Accountants, will
continue in office.
14
Annual General Meeting
The Annual General Meeting will be held at 9 a.m. on September 19, 2019 in the CityNorth Hotel and Conference
Centre, Gormanstown, Co. Meath, K32 W562, Ireland.
On behalf of the Board
David Bonderman Michael O’Leary
Chairman Group Chief Executive
July 26, 2019
15
Corporate Governance Report
 has its primary listing on Euronext Dublin, a standard listing on the London Stock Exchange and its American
Depositary Shares are listed on the NASDAQ. The Directors are committed to maintaining the highest standards of
corporate governance and this statement describes how  has applied the main and supporting principles of the 2016
U.K. Corporate Governance Code (the “2016 Code”), the version of the Code in force during the year ended March 31,
2019. This Report also covers the disclosure requirements set out in the Irish Corporate Governance Annex to the Listing
Rules of Euronext Dublin, which supplements the 2016 Code with additional corporate governance provisions and is also
applicable to .
A copy of the 2016 Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk. The Irish
Corporate Governance Annex is available on Euronext Dublin’s website, www.euronext.com. In July 2018, the Financial
Reporting Council released the 2018 U.K. Corporate Governance Code (The “2018 Code”). The 2018 Code applies to
accounting periods beginning on or after January 1, 2019, and therefore will be applicable to  for the year ended
March 31, 2020.
The Board of Directors (“the Board”)
Roles
The Board of  is responsible for the leadership, strategic direction and oversight of management of the Group.
The Board’s primary focus is on strategy formulation, policy and control. It has a formal schedule of matters specifically
reserved to it for its attention, including matters such as approval of the annual budget, large capital expenditure, and key
strategic decisions.
Other matters reserved to the Board include treasury policy, internal control, audit and risk management,
remuneration of the Non-Executive Directors and Executive management and corporate governance. The Board has
delegated responsibility for the management of the Group to the Group CEO and the Senior Management team. There is
a clear division of responsibilities between the Chairman and the Group CEO, which is set out in writing and has been
approved by the Board.
Chairman
David Bonderman has served as the Chairman of the Board since 1996. The Chairman’s primary responsibility is to
lead the Board, to ensure that it has a common purpose, is effective as a group and at individual Director level and that it
upholds and promotes high standards of integrity and corporate governance. He ensures that Board agendas cover the key
strategic issues confronting the Group; that the Board reviews and approves management’s plans for the Group; and that
Directors receive accurate, timely, clear and relevant information.
The Chairman is the link between the Board and the Company. He is specifically responsible for establishing and
maintaining an effective working relationship with the Group CEO, for ensuring effective and appropriate communications
with shareholders and for ensuring that members of the Board develop and maintain an understanding of the views of
shareholders.
While David Bonderman holds a number of other Directorships (see page 111), the Board considers that these do not
interfere with the discharge of his duties to . Mr. Bonderman has notified the Company that he plans to retire from
the Board in summer 2020 and he will not seek reelection at the September 2020 AGM.
Deputy Chairman
The Board appointed Stan McCarthy as Deputy Chairman from April 1, 2019. Mr. McCarthy has served as a Director
since May 2017.
Senior Independent Director
The Board has appointed Kyran McLaughlin as the Senior Independent Director. Mr McLaughlin is available to
shareholders who have concerns that cannot be addressed through the Chairman, Group CEO or CFO and leads the annual
Board review of the performance of the Chairman. Mr. McLaughlin has advised the Company that he plans to retire from
the Board in summer 2020 and he will not seek reelection at the September 2020 AGM. He will be replaced as Senior
Independent Director by Ms. Louise Phelan in summer 2020.
16
Company Secretary
The appointment and removal of the Company Secretary is a matter for the Board. All Directors have access to the
advice and services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are
complied with.
Membership
The Board consists of one Executive and eleven Non-Executive Directors. It is the practice of  that a majority
of the Board will be Non-Executives, each considered by the Board to be independent, and the Chairman is Non-Executive.
The Board considers the current size, composition and diversity of the Board to be appropriate, and 33% of the current
board are female. The composition of the Board and the principal Board Committees are set out in the table below as of
June 30, 2019. Biographies of the Directors are set out on pages 111 and 112. The Board, with the assistance of the
Nomination Committee, keeps Board composition under review to ensure that it includes the necessary mix of relevant
skills and experience required to perform its role.
Each Director has extensive business experience, which they bring to bear in governing the Company. The Board
considers that, between them, the Directors bring the range of skills, knowledge, diversity, and experience, including
international experience, necessary to lead the Company. The Chairman has an extensive background in this industry and
significant public company experience. Historically, the Company has always separated the roles of Chairman and CEO
for the running of the business and implementation of the Board’s strategy and policy.
(i) Roisin Brennan was appointed to the Board in May 2018.
Appointment
Directors are appointed following selection by the Nomination Committee and approval by the Board and must be
elected by the shareholders at the following Annual General Meeting. The focus of the Board, through the Nomination
Committee, is to maintain a Board with the relevant expertise, quality and experience required by  to advance the
Company and shareholder value. Roisin Brennan was appointed to the Board in May 2018.  recognises the benefits
of diversity, including gender diversity. ’s Articles of Association require that all of the Directors retire and offer
themselves for re-election within a three-year period. All Directors will be offering themselves for re-election at the AGM
on September 19, 2019.
17
Dick Milliken is Chairman of the Audit Committee, Howard Millar is Chairman of the Remuneration Committee
(“Remco”) and Michael Cawley is Chairman of the Nomination Committee (“Nomco”).
Senior Management regularly briefs the Board, including new members, in relation to operating, financial and
strategic issues concerning the Company. The Board also has direct access to senior management as required in relation
to any issues they have concerning the operation of the Company. The terms and conditions of appointment of Non-
Executive Directors are set out in their letters of appointment, which are available for inspection at the Company’s
registered office during normal office hours and at the Annual General Meeting of the Company.
Independence
The Board has carried out its annual evaluation of the independence of each of its Non-Executive Directors, taking
account of the relevant provisions of the 2016 Code, namely, whether each Director is independent in character and
judgement and free from relationships or circumstances which are likely to affect, or could appear to affect, the Director’s
judgement. The Board regards all of the Non-Executive Directors as independent and has concluded that no one individual
or group exerts an undue influence on others.
Within its independence review, the Board has considered the following items with respect to certain individual Non-
Executive Directors.
18
Other relevant factors
Non-Executive Directors hold share options over a small quantity of shares as set out on page 188. Whilst the 2016
Code notes that the remuneration of Non-Executive Directors should not ordinarily include share options, the Company
has a NASDAQ listing and has a substantial U.S. shareholder base. The granting of share options to Non-Executive
Directors to align interests of shareholders and Directors is an established market practice in the U.S. which is generally
encouraged by U.S. investors. The Company in accordance with the 2016 Code sought and received shareholder approval
to make these share option grants to its Non-Executive Directors and the Board believes the modest number of options
granted to Non-Executive Directors does not impair their independence of judgement and character.
In relation to the remaining Non-Executive Directors, with the exception of a modest grant of share options, there
were no relationships or circumstances of relevance under the 2016 Code impacting their independence.
Furthermore, in line with best governance practices,  has adopted a policy whereby all Directors retire on an
annual basis and being eligible for re-election, offer themselves for election. This therefore affords ’s shareholders
an annual opportunity to vote on the suitability of each Director.
The Nomination Committee has confirmed to the Board that it considers all Directors offering themselves for re-
election at the 2019 AGM to be independent and that they continue to effectively contribute to the work of the Board. The
Nomination Committee recommends that the Company accept the re-election of the Directors.
Board Procedures
All Directors have access to the advice and services of the Company Secretary and the Board has established a
procedure whereby Directors wishing to obtain advice in the furtherance of their duties may take independent professional
advice at the Company’s expense.
Directors meet with key Executives with a particular focus on ensuring Non-Executive Directors are fully informed
on issues of relevance to  and its operations. Extensive papers on key business issues are provided to all Directors
19
in connection with the Board meetings. All Directors are encouraged to update and refresh their skills and knowledge, for
example, through attending courses on technical areas or external briefings for Non-Executive Directors.
The Company has Directors’ and Officers’ liability insurance in place in respect of any legal actions taken against
the Directors in the course of the exercise of their duties. New Non-Executive Directors are encouraged to meet the
Executive Director and senior management for briefing on the Company’s developments and plans.
Meetings
The Board meets at least on a quarterly basis and in the year to March 31, 2019 the Board convened meetings on 13
occasions. Individual attendance at these meetings is set out in the table on page 24. Detailed Board papers are circulated
in advance so that Board members have adequate time and information to be able to participate fully at the meeting.
The holding of detailed Board meetings and the fact that many matters require Board approval, demonstrates that the
running of the Company is firmly in the hands of the Board. The Non-Executive Directors meet periodically without
Executives being present. Led by the Senior Independent Director, the Non-Executive Directors meet without the
Chairman present at least annually to appraise the Chairman’s performance and on such other occasions as are deemed
appropriate.
Remuneration
Details of remuneration paid to the Directors are set out in Note 19. Also, please see the Report of the Remuneration
Committee on Directors’ Remuneration on page 37.
Non-Executive Directors
Non-Executive Directors are remunerated primarily by way of modest Directors’ fees and, from time to time, a
modest number of share options. Full details are disclosed in Note 19(b) and 19(d) on pages 188 to 189.
Executive Director Remuneration
The Group CEO is the only Executive Director on the Board. In addition to his base salary he is eligible for a
performance bonus of up to 100% of base salary dependent upon the achievement of certain financial and personal
targets. It is considered that the significant shareholding of the Group CEO as well as share options granted as part of
his contract extension, acts to align his interests with those of shareholders and gives him a keen incentive to perform to
the highest levels. Full details of the Executive Director’s remuneration are set out in Note 19(a) on page 187.
Share Ownership and Dealing
Details of the Directors’ interests in  shares are set out in Note 19(d) on page 188.
The Board has adopted a code of dealing, to ensure compliance with the Listing Rules of Euronext Dublin and the
U.K. Financial Conduct Authority, applicable to transactions in  shares, debt instruments, derivatives or other
financial instruments by persons discharging managerial responsibilities (“PDMRs”) (e.g. Directors), persons closely
associated with persons discharging managerial responsibilities (“PCAs”) and relevant Company employees (together,
“Covered Persons”). The code of dealing also includes provisions which are intended to ensure compliance with U.S.
securities laws and regulations of the NASDAQ National market. Under the code, Covered Persons are required to notify
the Company and in the case of PDMRs and PCAs only, the Central Bank, of any transaction conducted on their own
account in  shares, debt instruments, derivatives or other financial instruments. Directors are also required to obtain
clearance from the Chairman or Group CEO (or other person designated for such purpose) before undertaking such
transactions, whilst Covered Persons who are not Directors must obtain clearance from designated senior management.
Covered Persons are prohibited from undertaking such transactions during Closed Periods as defined by the code and at
any time during which the individual is in possession of inside information (as defined in the E.U. Market Abuse
Regulation (596/2014)).
20
Board Succession and Structure
The Board plans for its own succession with guidance from the Nomination Committee. The Nomination Committee
regularly reviews the structure, size and composition (including the skills, knowledge and experience) required of the
Board compared to its current position with regard to the strategic needs of  and recommends changes to the Board.
There is a formal, thorough and transparent procedure for the appointment of new Directors to the Board. The Nomination
Committee identifies and selects candidates on merit against objective criteria, to ensure that the Board has the skills,
knowledge and expertise required.
The Board currently comprises twelve Directors. The Group CEO is the only Executive Director. The eleven Non-
Executive Directors include Chairman David Bonderman and Deputy Chairman Stan McCarthy. Biographies of all current
Directors are set out on pages 111 to 112.  considers that the Board has the correct balance and depth of skills,
knowledge, expertise and experience to optimally lead the Company and that all Directors give adequate time to the
performance of their duties and responsibilities.
 considers that all Directors discharge their Directorial duties with the objectivity and impartiality they have
demonstrated since commencing their respective roles and has determined that each of the Non-Executive Directors is
independent. In reaching that conclusion,  considered the character, judgement, objectivity and integrity of each
Director and had due regard for the 2016 Code.  continually endeavours to maintain the quality and independence
of its Board.
Diversity Report
The Board is supportive of the Lord Davies’ Report and Hampton-Alexander Review target for women to represent
33% of boards by 2020, and is pleased that as at March 31, 2019, 33% of Directors were female. Following the Board
changes effective from the 2020 AGM, this percentage will increase further. Diversity is a key criteria for the Board as
part of its renewal and succession plans, and the Board appoints members based on merit without discriminating on age,
gender, race, colour, religious or social beliefs, sexual orientation, disability or any other factors.
Board Committees
The Board of Directors has established a number of committees, including the following:
Executive Committee
The Board of Directors established the Executive Committee in August 1996. The Executive Committee can exercise
the powers exercisable by the full Board of Directors in circumstances in which action by the Board of Directors is required
but it is impracticable to convene a meeting of the full Board of Directors. Kyran McLaughlin (Chairman), David
Bonderman, Stan McCarthy, and Michael O’Leary are the members of the Executive Committee.
Audit Committee
The Board of Directors established the Audit Committee in September 1996.
Names and qualifications of members of the Audit Committee
The Audit Committee currently comprises 3 Non-Executive Directors who are independent for the purposes of the
listing rules of the NASDAQ and the U.S. federal securities laws: Dick Milliken (Chairman), Emer Daly and Roisin
Brennan. The Board has determined that Dick Milliken is the Committee’s financial expert. It can be seen from the
Directors’ biographies appearing on page 111 and 112, that the members of the committee bring to it a wide range of
experience and expertise, much of which is particularly appropriate for membership of the Audit Committee.
Number of Audit Committee meetings
The Committee met five times during the year ended March 31, 2019. Individual attendance at these meetings is set
out in the table on page 24. The CFO, the Head of Internal Audit and other senior Finance managers (as required) normally
attend meetings of the Committee. The external auditors attend as required and have direct access to the Committee
Chairman at all times. The Committee also meets separately at least once a year with the external auditors and with the
Head of Internal Audit without Executive management being present. The Head of Internal Audit has direct access to the
Audit Committee Chairman at all times.
21
Summary of the role of the Audit Committee
The role and responsibilities of the Committee are set out in its written terms of reference, which are available on the
Company’s website at https://investor..com/governance, and include:
• monitoring the integrity of the financial statements of the Group and any formal announcements relating to the
Group’s financial performance, profit guidance and reviewing significant financial reporting judgements
contained therein;
• considering significant issues in relation to the financial statements, having regard to matters communicated to it
by the auditors;
• reviewing the interim and annual financial statements, Annual Report and Form 20-F before submission to the
Board including advising the Board whether, taken as a whole, the content of the Annual Report and Form 20-F
is fair, balanced and understandable and provides the information necessary for shareholders to assess the
Company’s performance, business model and strategy;
• reviewing the effectiveness of the Group’s internal financial controls and risk management systems;
• monitoring and reviewing the effectiveness of the Group’s Internal Audit function;
• considering and making recommendations to the Board in relation to the appointment, reappointment and removal
of the external auditors and approving their terms of engagement;
• reviewing with the external auditors the plans for and scope of each annual audit, the audit procedures to be
utilised and the results of the audit;
• approving the remuneration of the external auditors, in particular ensuring that the pre-approval of non-audit
services pertains only to those services deemed permissible under Statutory Instrument No. 312 of 2016 and U.S.
SEC rules;
• assessing annually the independence and objectivity of the external auditors and the effectiveness of the audit
process, taking into consideration relevant professional and regulatory requirements and the relationship with the
external auditors as a whole, including the provision of any non-audit services;
• reviewing the Group’s arrangements for its employees to raise concerns, in confidence, about possible
wrongdoing in financial reporting or other matters and ensuring that these arrangements allow proportionate and
independent investigation of such matters and appropriate follow up action; and
• reviewing the terms of reference of the Committee annually.
These responsibilities of the Committee are discharged in the following ways:
• The Committee reviews the interim and Annual Reports as well as any formal announcements relating to the
financial statements and guidance before submission to the Board. The review focuses particularly on any changes
in accounting policy and practices, major judgemental areas and compliance with stock exchange, legal and
regulatory requirements. The Committee receives reports from the external auditors identifying any accounting
or judgemental issues requiring its attention;
• The Committee also meets with management and external auditors to review the Annual Report and Form 20-F,
which is filed annually with the Irish Companies Office and with the United States Securities and Exchange
Commission respectively;
• The Committee regularly reviews risk management reports completed by management;
• The Committee conducts an annual assessment of the operation of the Group’s system of internal control based
on a detailed review carried out by the internal audit function. The results of this assessment are reviewed by the
Committee and are reported to the Board;
• The Committee makes recommendations to the Board in relation to the appointment of the external auditor. Each
year, the Committee meets with the external auditor and reviews their procedures and the safeguards which have
been put in place to ensure their objectivity and independence in accordance with regulatory and professional
requirements;
• The Committee reviews and approves the external audit plan and the findings from the external audit of the
financial statements;
22
• The Committee receives reports from the Head of Internal Audit detailing the reviews performed during the year
and a risk assessment of the Company;
• The Committee has a process in place to ensure the independence of the external auditor is not compromised,
which includes monitoring the nature and extent of services provided by the external auditor through its annual
review of fees paid to the external auditor for audit and non-audit services. Pre-approval from the Committee is
required for all non-audit services to be provided by the external auditor. The Committee’s review process was
reviewed and updated during fiscal year 2017 to ensure full compliance with EU Audit Reform legislation which
is applicable to the Company’s financial year commencing April 1, 2017. Only those services deemed permissible
under Statutory Instrument No. 312 of 2016 and U.S. SEC rules, may be provided by the external auditor.
Accordingly, the external auditor is permitted to provide non-audit services that are not, or not perceived to be,
in conflict with auditor independence, provided it has the skill, experience, competency and integrity to perform
the work, and is considered by the Committee to be the most appropriate party to provide such services in the
best interests of the Company. Furthermore, effective for the Company’s financial year commencing April 1,
2020, permitted non-audit services will be capped at 70% of the average statutory audit fees over the preceding
three years. Details of the amounts paid to the external auditors during the year for audit and other services are
set out in Note 19 on page 187; and
• The Committee receives presentations in areas such as treasury operations, information systems and security,
including cyber security, and specifically in relation to the Group.
In addition, the Committee was requested by the Board to consider whether the Annual Report, taken as a whole, is
fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy. In doing so, the Committee considered whether the financial statements are
consistent with the Chairman’s Report, the Group Chief Executive’s Report and operating and financial information
elsewhere in the Annual Report.
In considering the fairness, balance and understandability of the Annual Report, the Committee had regard to the
significant issues considered by the Committee in relation to the financial statements, set out below. Each of these
significant issues was addressed in the report received from the external auditor and was discussed with management and
the external auditor.
The Committee reported to the Board its conclusion that the Annual Report, taken as a whole is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s performance, business
model and strategy.
Significant issues considered by the Committee in relation to the financial statements and how these issues were addressed,
having regard to matters communicated to it by the auditors
• On page 99, the critical accounting policy referred to is that for long lived assets. There is a detailed description
of the matters of estimate and the judgemental issues arising from the application of the Company’s policy for
accounting for such assets and how the Company dealt with these. The Audit Committee had detailed discussions
with management around its conclusions in relation to the expected useful lives of the assets, the expected residual
value of the assets, the estimated cost of major airframe and engine overhaul, and whether there are impairment
indicators in respect of the assets. In particular, the Audit Committee considered manufacturers’ recommendations,
expert valuation analysis and other available marketplace information in respect of the expected useful and residual
lives of the assets, and whether there were any impairment indicators associated with ’s aircraft fleet. The
Committee agreed with management’s approach and conclusions in relation to the accounting for long lived assets.
• In considering management’s assessment of the Group’s ability to continue as a going concern, the Committee
had regard to available sources of finance including access to the capital markets, the cash on hand of
approximately €3.2bn at March 31, 2019 and the sensitivity to changes in these items. The Committee considered
the Group’s cash generation projections through to the end of the current aircraft purchase program in the financial
year ending March 31, 2024. On the basis of the review performed, and the discussions held with management,
the Committee was satisfied that it was appropriate that the financial statements should continue to be prepared
on a going concern basis, and that there were no material uncertainties that may cast significant doubt on the
Group’s ability to continue as a going concern which need to be disclosed in the Annual Report. Please also refer
to the Company’s Viability Statement on page 28.
23
The Committee considered the requirements under section 225 of the Irish Companies Act 2014 in relation to the
Directors’ Compliance Statement which applied to the Company for the year ended March 31, 2019 and has ensured that
the Directors are aware of their responsibilities and fully comply with this provision.
In addition, the Committee updated the prior year evaluation of the external audit process. The Committee considered
a range of factors including the quality of service provided, the specialist expertise of the external auditor, the level of
audit fees and independence. The Committee have evaluated the work completed by the external auditor in the year to
March 31, 2019, taking into account the fees paid to KPMG, and are satisfied with their effectiveness, objectivity and their
independence.
The Committee typically meets the external auditors four times per year. At these meetings:
• the external audit plan is considered and approved;
• the quarterly, interim and annual results are considered and are recommended to the Board for approval, following
consideration of the significant issues relating to these matters, having regard to matters communicated to the
Audit Committee by the external auditors;
• the Annual Report and Form 20-F, which is filed annually with the United States Securities and Exchange
Commission, Euronext Dublin and the London Stock Exchange, is considered and recommended to the Board for
approval;
• the procedures and safeguards which the external auditors have put in place to ensure their objectivity and
independence in accordance with regulatory and professional requirements are reviewed;
• the letters of engagement and representation are reviewed; and
• the fees paid to the external auditor for audit and non-audit work are reviewed, to ensure that the fee levels are
appropriate and that audit independence is not compromised through the level of non-audit fees and the nature of
non-audit work carried out by the external auditor. The Committee’s policy is to expressly pre-approve every
engagement of ’s independent auditor for all audit and non-audit services provided to the Company. Only
those services deemed permissible under Statutory Instrument No. 312 of 2016 and U.S. SEC rules may be
provided by the external auditor.
KPMG have been auditor to  since the incorporation of  DAC in 1985. The last external audit tender
was conducted in 2010. Detailed consideration was given to the external audit arrangements in 2013. Under the
requirements imposed by EU Audit Reform legislation for the rotation of the external auditor, KPMG will be required to
cease acting as statutory auditor effective for the Company’s financial year ending March 31, 2024.
Remuneration Committee
The Board of Directors established the Remuneration Committee in September 1996. This committee has authority
to determine the remuneration of Senior Executives of the Company and to administer the stock option plans described
below. Senior Management remuneration is comprised of a fixed basic pay and performance related bonuses which are
awarded based on a combination of the achievement of individual objectives and the Company’s financial performance
measured against the annual budget. The Board of Directors as a whole determines the remuneration and bonuses of the
Group CEO, who is the only Executive Director. Howard Millar (Chairman), Stan McCarthy and Julie O’Neill are the
members of the Remuneration Committee.
The role and responsibilities of the Remuneration Committee are set out in its written terms of reference, which are
available on the Company’s website, https://investor..com/governance. The terms of reference of the Remuneration
Committee are reviewed annually.
Nomination Committee
Michael Cawley (Chairman), David Bonderman and Louise Phelan are the members of the Nomination Committee.
The Nomination Committee assists the Board in ensuring that the composition of the Board and its Committees is
appropriate to the needs of the Company by:
• assessing the skills, knowledge, experience and diversity required on the Board and the extent to which each are
represented;
24
• establishing processes for the identification of suitable candidates for appointment to the Board; and
• overseeing succession planning for the Board and senior management.
The role and responsibilities of the Nomination Committee are set out in its written terms of reference, which are
available on the Company’s website, https://investor..com/governance. The Nomination Committee uses its
members’ extensive business and professional contacts to identify suitable candidates. The Terms of Reference of the
Nomination Committee are reviewed annually. The focus of the Nomination Committee is to maintain a Board which
comprises the necessary expertise, quality and experience required by  to advance the Company and shareholder
value.  recognises the benefits of gender diversity.
Safety and Security Committee
The Board of Directors established the Air Safety and Security Committee in March 1997 to review and discuss air
safety and related issues. The Safety and Security Committee reports to the full Board of Directors each quarter. The Safety
and Security Committee is composed of a main board Director, Mike O’Brien and the  DAC Accountable Manager,
Neil Sorahan (who both act as co-chairman), as well as the following Executive Officers of : Messrs. Bellew,
Wilson, the Chief Pilot, Capt. Ray Conway and the Chief Risk Officer, Ms. Carol Sharkey. A number of other managers
are invited to attend, as required, from time to time.
Code of Business Conduct
’s standards of integrity and ethical values have been established and are documented in ’s Code of
Business Conduct. This code is applicable to all  employees. There are established channels for reporting code
violations or other concerns in a confidential manner. The Personnel Department investigates any instances and the Head
of Internal Audit reports findings directly to the Audit Committee. The Code is available on the Company’s website,
https://investor..com/governance.
Attendance at Board and Committee meetings during the year ended March 31, 2019:
(i) Roisin Brennan was appointed to the Board in May 2018.
25
Performance Evaluation
The Board has established a formal process to annually evaluate the performance of the Board, that of its principal
Committees, the Audit, Nomination and Remuneration committees, and that of the Group CEO, the Chairman and
individual Non-Executive Directors. Based on the evaluation process completed, the Board considers that the principal
Committees have performed effectively throughout the year. As part of the Board evaluation of its own performance,
questionnaires are circulated to all Directors. The questionnaire is designed to obtain Directors’ comments regarding the
performance of the Board, the effectiveness of Board communications, the ability of Directors to contribute to the
development of strategy and the effectiveness with which the Board monitors risk and oversees ’s progress.
Directors are also invited to make recommendations for improvement. The Board of Directors considered that the self-
assessment process followed by  provides sufficient insights into the effectiveness of the Board, creates a roadmap
of areas for improvement, and enhances the performance and effectiveness of the Board.
The Chairman, on behalf of the Board, reviews the evaluations of performance of the Non-Executive Directors on an
annual basis. The Non-Executive Directors, led by the Senior Independent Director, meet annually without the Chairman
present to evaluate his performance, having taken into account the views of the Executive Director. The Non-Executive
Directors also evaluate the performance of the Executive Director. These evaluations are designed to determine whether
each Director continues to contribute effectively and to demonstrate commitment to the role.
The Board considers the results of the evaluation process and any issues identified. The above evaluations were
conducted in May 2018 and were presented to the Board at the September 2018 Board meeting in respect of the year under
review. The May 2019 evaluations will be presented to the Board at the September 2019 Board meeting.
Shareholders
 recognises the importance of communications with shareholders.  communicates with all of its
shareholders following the release of quarterly and annual results directly via road shows, investor days, and/or by
conference calls. The Group CEO, CFO, Head of Investor Relations, and other senior managers participate in these events.
During the year ended March 31, 2019 the Company held discussions with a substantial number of institutional
investors, analysts, The Investor Forum, ESG advisors incl. (MSCI, Sustainalytics and ISS-Ethics) and proxy advisor firms
(incl. ISS, Glass Lewis and PIRC).
The Board is kept informed of the views of shareholders through the Executive Director and Senior Management’s
attendance at investor presentations and results presentations. Furthermore, relevant feedback from such meetings and
investor relations analyst reports are provided to the entire Board on a regular basis. In addition, the Board determines, on
a case by case basis, specific issues where it would be appropriate for the Chairman, Deputy Chairman, Senior Independent
Director and/or Chairs of other Board Committees to communicate directly with shareholders or to indicate that they are
available to communicate if shareholders so wish. If any of the Non-Executive Directors wishes to attend meetings with
major shareholders, arrangements are made accordingly.
General Meetings
All shareholders are given adequate notice of the Annual General Meeting (“AGM”) at which a Director reviews the
results and comments on current business activity. Financial, operational and other information on the Company is
provided on the Company website, https://investor..com.
 will continue to propose a separate resolution at the AGM on each substantially separate issue, including a
separate resolution relating to the Directors’ Report and financial statements. In order to comply with the 2016 Code,
proxy votes will be announced at the AGM, following each vote on a show of hands, except in the event of a poll being
called. The Board Chairman and the Chairmen of the Audit and Remuneration Committees are available to answer
questions from all shareholders.
The Group CEO makes a presentation at the Annual General Meeting on the Group’s business and its performance
during the prior year and answers questions from shareholders. The AGM affords shareholders the opportunity to question
the Chairman and the Board.
All holders of Ordinary Shares are entitled to attend, speak and vote at general meetings of the Company, subject to
limitations described under note “Limitations on the Right to Own Shares” on page 128. In accordance with Irish company
26
law, the Company specifies record dates for general meetings, by which date shareholders must be registered in the
Register of Members of the Company to be entitled to attend. Record dates are specified in the notes to the Notice
convening the meeting.
Shareholders may exercise their right to vote by appointing a proxy or proxies, by electronic means or in writing, to
vote some or all of their shares. The requirements for the receipt of valid proxy forms are set out in the notes to the Notice
convening the Meeting.
A shareholder or group of shareholders, holding at least 5% of the issued share capital, has the right to requisition an
extraordinary general meeting. A shareholder, or a group of shareholders, holding at least 3% of the issued share capital
of the Company, has the right to put an item on the agenda of an AGM or to table a draft resolution for an item on the
agenda of any general meeting (whether an AGM or an EGM) provided that such item is accompanied by reasons justifying
its inclusion or the full text of any draft resolution proposed to be adopted at the general meeting. A request by a member
to put an item on the agenda or to table a draft resolution shall be received by the Company in hardcopy form or in
electronic form at least 42 days before the meeting to which it relates.
Notice of the Annual General Meeting and the Form of Proxy are sent to shareholders at least 21 days before the
meeting. The Company’s Annual Report is available on the Company’s website, https://investor..com. The Annual
General Meeting will be held at 9 a.m. on September 19, 2019 in the City North Hotel and Conference
Centre, Gormanston, Co. Meath, K32W562, Ireland.
All general meetings other than the Annual General Meeting are called Extraordinary General Meetings (“EGM”).
An EGM must be called by giving at least 21 clear days’ notice. Except in relation to an adjourned meeting, three members,
present in person or by proxy, entitled to vote upon the business to be transacted, shall be a quorum. The passing of
resolutions at a general meeting, other than special resolution, requires a simple majority. To be passed, a special resolution
requires a majority of at least 75% of the votes cast. Votes may be given in person by a show of hands, or by proxy.
At the Meeting, after each resolution has been dealt with, details are given of the level of proxy votes cast on each
resolution and the numbers for, against and withheld. This information is made available on the Company’s website
following the meeting. At the 2018 AGM, discretionary proxies representing approximately 3.4% of shares were voted
in favour of all resolutions by the meeting’s Chairman. The Company will continue to report such discretionary proxy
voting in future Annual Reports.
Risk Management and Internal Control
The Directors have overall responsibility for the Company’s system of risk management and internal control and for
reviewing its effectiveness. The Directors acknowledge their responsibility for the system of risk management and internal
control which is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide
only reasonable and not absolute assurance against material misstatement or loss.
In accordance with the Financial Reporting Council’s “Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting”, most recently revised in September 2014, the Board confirms that there is an ongoing
process for identifying, evaluating and managing any significant risks faced by the Group, that it has been in place for the
year under review and up to the date of approval of the financial statements and that this process is regularly reviewed by
the Board.
In accordance with the provisions of the 2016 Code, the Directors review the effectiveness of the Company’s system
of internal control including:
• Financial
• Operational
• Compliance
• Risk Management
27
The Board is ultimately responsible for the Company’s system of risk management and internal controls and for
monitoring its effectiveness. The key procedures that have been established to provide effective risk management and
internal control include:
• a strong and independent Board which meets at least four times per year and has separate Group CEO and Chairman
roles;
• a clearly defined organisational structure along functional lines and a clear division of responsibility and authority
in the Company, including the appointment of a Chief Risk Officer in May 2018;
• a comprehensive system of internal financial reporting which includes preparation of detailed monthly management
accounts, providing key performance indicators and financial results for each major function within the Company;
• preparation and issue of financial reports to shareholders and the markets, including the Annual Report and
consolidated financial statements, is overseen by the Audit Committee. The Company’s financial reporting process
is controlled using documented accounting policies and reporting formats, supplemented by detailed instructions
and guidance on reporting requirements. The Company’s processes support the integrity and quality of data,
including appropriate segregation of duties. The financial information of the parent entity and all subsidiary entities,
which form the basis for the preparation of the consolidated financial statements are subject to scrutiny by Group
level senior management. The Company’s financial reports, financial guidance, and Annual Report and consolidated
financial statements are also reviewed by the Audit Committee of the Board in advance of being presented to the
full Board for their review and approval;
• quarterly reporting of the financial performance with a management discussion and analysis of results;
• weekly Management Committee meetings, comprising of heads of departments, to review the performance and
activities of each department in the Company;
• detailed budgetary process which includes identifying risks and opportunities and which is ultimately approved at
Board level;
• Board approved capital expenditure and Audit Committee approved treasury policies which clearly define
authorisation limits and procedures;
• an internal audit function which reviews key financial and business processes and controls, and which has full and
unrestricted access to the Audit Committee;
• an Audit Committee which approves audit plans, considers significant control matters raised by management and
the internal and external auditors and which is actively monitoring the Company’s compliance with section 404 of
the Sarbanes Oxley Act of 2002;
• established systems and procedures to identify, control and report on key risks. Exposure to these risks is monitored
by the Audit Committee and the Management Committee; and
• a risk management program is in place throughout the Company whereby Executive management review and
monitor the controls in place, both financial and non-financial, to manage the risks facing the business.
The Board has satisfied itself on the effectiveness of the internal control systems in operation and it has reviewed and
approved the reporting lines to ensure the ongoing effectiveness of the internal controls and reporting structures.
On behalf of the Board, the Audit Committee has reviewed the effectiveness of the Company’s system of risk
management and internal control for the year ended March 31, 2019 and has reported thereon to the Board. The Audit
Committee monitors management’s response to significant control failure or weakness in the risk management process,
receives regular progress updates, and ensures issues are sufficiently remediated.
The Board has delegated to Executive management the planning and implementation of the systems of internal
control within an established framework which applies throughout the Company.
Takeover Bids Directive
Information regarding rights and obligations attached to shares are set forth in Note 15 on pages 182 to 184.
Shares in the  employee share schemes carry no control rights and shares are only issued (and gain voting
rights) when options are exercised by employees.
28
’s Articles of Association do not contain any restrictions on voting rights. However, there are provisions in
the Articles which allow the Directors to (amongst other things) restrict the voting rights of shares held by non-EU
nationals if the Board believes the number of non-EU nationals holding shares in  would put it in breach of the
regulations, licences and permits which allow it to operate.
 has not received any notifications from shareholders (as shareholders are obliged to do) regarding any
agreements between shareholders which might result in restrictions on the transfer of shares.
Details of the rules concerning the removal and appointment of the Directors are set out above as part of the Directors’
Report. There are no specific rules regarding the amendment of the Company’s Articles of Association.
Details of the Company’s share buy-back program are set forth on page 121. The shareholders approved the power
of the Company to buy-back shares at the 2006 AGM and at subsequent general meetings.
None of the significant agreements to which the Company is party to, contain change of control provisions. As
referred to above in the Directors’ Report, the Group CEO’s employment agreement does not contain provisions providing
for compensation on his termination.
Going Concern
After making enquiries, the Directors have formed a judgement, at the time of approving the financial statements,
that there is a reasonable expectation that the Company and the Group as a whole have adequate resources to continue in
operational existence for a period of at least twelve months from the date of approval of the financial statements. For this
reason, they continue to adopt the going concern basis in preparing the financial statements. The Directors’ responsibility
for preparing the financial statements is explained on page 41 and the reporting responsibilities of the auditor are set out
in their report on page 43.
Viability Statement
The Company’s internal strategic planning processes currently extend to March 2024 which covers the delivery
timeframe for the Company’s existing aircraft orders and its long-term passenger growth target to 200m customers p.a.
Future assessments of the Company’s prospects are subject to uncertainty that increases with time and cannot be
guaranteed or predicted with certainty.
The Directors have taken account of the Company’s strong financial and operating condition, its BBB+ (stable) credit
rating (with both standard & Poor’s and Fitch ratings), the principal risks and uncertainties facing the Company, as outlined
in the Principal Risks and Uncertainties section starting on page 59, and the Company’s ability to mitigate and manage
those risks. Appropriate stress-testing of the Company’s internal budgets are undertaken by management on an ongoing
basis to consider the potential impact of severe but plausible scenarios in which combinations of principal risks materialise
together.
Based on this assessment, the Directors have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the course of the existing Boeing aircraft orders.
29
Compliance Statement
 has complied, throughout the year ended March 31, 2019, with the provisions set out in the U.K. Corporate
Governance Code and the requirements set out in the Irish Corporate Governance Annex, except as outlined below. The
Group has not complied with the following provisions of the 2016 Code, but continues to review these situations on an
ongoing basis:
• Non-Executive Directors participate in the Company’s share option plans. The 2016 Code requires that, if
exceptionally, share options are granted to Non-Executive Directors that shareholder approval should be sought in
advance and any shares acquired by exercise of the options should be held until at least one year after the Non-
Executive Director leaves the board. In accordance with the 2016 Code, the Company sought and received
shareholder approval to make certain stock option grants to its Non-Executive Directors and as described above, the
Board believes the quantum of options granted to Non-Executive Directors is not so significant as to impair their
independence.
• Certain Non-Executive Directors, namely Messrs. Bonderman and McLaughlin, having been offered for annual re-
election for the duration of their tenure, have each served more than nine years on the Board. As described further
above, given the other significant commercial and professional commitments of these Non-Executive Directors, and
taking into account that their independence is considered annually by the Board, the Board does not consider their
independence to be impaired in this regard.
On behalf of the Board
David Bonderman Michael O’Leary
Chairman Group Chief Executive
July 26, 2019
30
Environmental and Social Report
’s Environmental and Social Policy facilitates our growth objectives while reducing our environmental
impact.  management is responsible for implementing our priorities, including those that ensure compliance, enable
the achievement of our targets, and manage environmental risk. The Board of  has oversight to ensure management
fulfils Company policy, including environmental and social policy. For a detailed description of corporate governance
procedures and structures in place within the Group, please refer to the Corporate Governance statement on page 15.
1. Environmental Policy and Carbon Emissions
’s low fare, customer friendly growth is being delivered in an environmentally sustainable way with
industry leading load factors and through investing in new aircraft and engine technology while adopting the most
efficient operations to give  the lowest CO2 per passenger km of any major EU airline. Since launching its
Environmental Policy document in March 2018,  has been committed to ambitious future environmental
targets that build on our impressive achievements to date, including commitments to address climate change.
Europe’s Greenest & Cleanest Airline
As well as being Europe’s favourite airline, with the best
customer service,  is Europe’s cleanest, greenest major
airline because we:
• Operate only point-to-point routes with industry-leading
(96%) load factors;
• Continuously invest in fuel-efficient new aircraft and
improved engine technology;
• Conduct the most efficient operational procedures in the
industry;
• Reduce our noise footprint by 86% with the introduction
of the Boeing 737-800NG and will reduce it by 93% with
the introduction of the Boeing 737-MAX.
Aviation is the most efficient form of mass point-to-point
transport, accounting for just 2% of EU man-made CO2
emissions. Even as a very small part of a big problem, aviation
must play its role in addressing climate change; and , as
Europe’s largest and most successful airline group, is committed
to leading the way. We support the Paris Agreement to limit
global temperature rise to less than 2°C above pre-industrial
levels. We support IATA’s 2050 target for an aviation sector that
emits a net 50% less CO2 against 2005 levels.
31
 is a member of the United Nations Global Compact initiative, which advocates that:
1. Business should support a precautionary approach to environmental challenges;
2. Business should undertake initiatives to promote greater environmental responsibility; and
3. Businesses should encourage the development and diffusion of environmentally friendly technologies.
Environmental Priorities
Through a process of continuous improvement, we will:
• Continue to comply fully with the environmental rules, regulations, standards, and codes of practice that
apply to our sites, our people and our operations;
• Limit the impact of aircraft noise on local environments; our new Boeing 737-MAX aircraft (expected to
arrive in fiscal year 2020) will further reduce noise by up to 40% per seat;
• Minimise fuel and energy consumption to limit our emissions of greenhouse gases and pollutants impacting
air quality;
• Commit to achieving an emissions rate of 60 grams of CO2 per passenger km by 2030, which is 10% lower
than our current rate and 31% lower than the average of the four other biggest European airlines;
• Offer our customers an easy-to-use voluntary mechanism to offset the carbon cost of their journeys;
• Work with our environmental partners to invest voluntary customer carbon offsets in nature based projects;
• Work to remove all non-recyclable plastics from our operations over a 5 year timeframe; and
• Continue to report monthly CO2 emissions ( was the first EU airline to do so).
Our Climate Targets
To deliver on our environmental commitment,  has announced a 2030 carbon efficiency target and an
absolute climate target for 2050.
The use of alternative fuels:
• Alternative fuels are an opportunity for the aviation sector due to their potential to reduce lifecycle
greenhouse gas emissions.
• Governments and fuel suppliers must prioritise the development of alternative fuels that deliver significant
lifecycle CO2 savings.
• Alternative fuels in aviation should be regulated by one set of global rules that treat all airlines equally.
32
• The methods of quantifying lifecycle CO2 savings from alternative fuels should apply uniformly to all
airlines.
• The CO2 savings from an airline’s use of alternative fuels must be
traceable and verifiable.
’s five-year plan to eliminate non-recyclable plastics
•  is committed to minimising our environmental impact, and over
a five-year timeframe, we will work to eliminate all non-recyclable
plastics from our operations.
• We will work with our suppliers to replace our current non-recyclable
plastics with environmentally friendly alternatives such a bio-degradable
cups, wooden cutlery and paper packaging.
• We will roll out our plastics-free policy across our entire operation – ground operations, engineering, inflight,
at our bases and at our Head Office.
Carbon Offset Scheme
In 2018 we introduced a voluntary option within our booking process which allows customers to make a
donation to offset their carbon emissions. The funds raised from these voluntary customer donations (over 2% of
our customers contributed €1m in fiscal year 2019 alone) are distributed annually to our environmental partners
for investment in nature-based projects in Africa, Ireland and Portugal.
Environmental Taxes
In fiscal year 2019,  paid more than €540m in environmental taxes and this will rise to €630m in
fiscal year 2020 (approximately 11% of the average ticket price at €4.12 per passenger).
ETS and CORSIA
Market Based Measures:  has participated in the EU Emissions Trading System (ETS) since 2012
and will continue to comply fully with current and future emissions regulations. As a short-haul airline operating
almost entirely within the EU, 84% of ’s emissions are subject to the EU ETS. This is a much higher
proportion than legacy carriers, due to the EU’s decision to suspend the operation of the ETS on flights to / from
non-EU countries. We believe that a single global market-based mechanism is the best way to govern emissions
across the entire aviation industry. Accordingly, we support the replacement of ETS with ICAO’s CORSIA.
Action Plan
Environmental policy is an integral part of ’s business, not a stand-alone issue. Our Environmental
Policy Action Plan is, therefore, central to what we do. As part of our Action Plan we undertake to do the
following:
1. Report our progress toward the 2030 climate target at least annually;
2. Procure new fuel efficient, aircraft that deliver improvements in our fleet’s fuel efficiency;
33
3. Deliver fuel efficient operations and report on the savings from these activities;
4. Engage aircraft manufacturers on the need for ambitious low emissions aircraft designs;
5. Monitor the opportunities and risks posed by the emerging low carbon aviation fuels market;
6. Monitor the opportunities and risks posed by the implementation of the ICAO CORSIA system;
7. Include in our corporate risk register a full set of climate related and environmental risks, including weather and
physical events (e.g. volcanic activity), and geopolitical disruptions; and
8. Offer our customers an easy-to-use transparent mechanism to offset the carbon cost of their journeys.
Noise, Emissions and Fuel Efficiency
 is committed to reducing emissions and noise through investments in “next generation” aircraft and engine
technologies. We are installing winglets on our aircraft that save fuel by reducing drag and new light weight seats that
lower fuel consumption by reducing weight.  cuts noise and emissions through optimised flight operations, these
initiatives include:
• Our “one engine taxi” policy means we turn off one engine when taxiing-in on the runway which reduces
emissions and noise.
• Our aircraft fly at a low ‘Cost Index’ which means slower speeds that result in reduced fuel burn and emissions.
• Continuous Descent Operations (CDO) keep our aircraft higher for longer before descending at a continuous rate
to the runway for landing. This results in less time at lower altitudes which means less fuel is burnt, less emissions
are produced and noise is reduced by avoiding the use of engine thrust.
• Continuous Climb Operations (CCO) optimise our aircrafts take off profile to climb to the most fuel efficient
level with optimal air speed and optimal engine thrust settings resulting in significant fuel economy and reduced
noise and emissions.
• Our fleet is equipped and our crew are trained to use Performance Based Navigation (PBN) to ensure we fly the
most accurate flight paths for greater fuel efficiency and noise abatement.
’s current fleet of Boeing 737-800s have a reduced noise footprint of 86% over the Boeing 737-200 on a per
passenger basis. The Boeing 737-MAX-200 will further reduce this to 93% over the Boeing 737-200.
 was ranked No.1 of 30 airlines for Noise Abatement Compliance at London Stansted Airport routinely
delivering over 99% compliance and No.1 for Continual Descent Arrival at 7 U.K. airports
• 100% of  aircraft meet ICAO Environmental Protection NOx Standard (Chapter 6)
• 100% of  aircraft meet ICAO Environmental Protection Noise Standard (Chapter 4)
Boeing 737- MAX-200 (“Gamechanger”)
The Boeing 737-MAX aircraft, which are due to start delivering in fiscal year 2020, represent the newest generation
of Boeing's 737 aircraft. It is a short-to-medium range aircraft and seats 197 passengers (4% more than the 189 seat Boeing
737-800NG fleet).  has 135 firm orders and 75 options for the Gamechanger.
The new CFM LEAP-1B engines, combined with Scimitar winglets and other aerodynamic improvements, will
reduce fuel consumption by approximately 16% per seat compared to the Boeing 737-800NGs and will also cut noise
emissions by up to 40% per seat.
34
Dublin Head Office
In 2014  moved into a new 100,000 sq. ft. office building in Airside Business Park, Co. Dublin, Ireland which
houses its Irish operations including  Labs, the state-of-the-art digital and IT innovation hub. A further 120,000
sq. ft. energy efficient facility is currently under construction within the  Campus at Airside and will be completed
in the first half of 2020.
Other initiatives include:
• The use of solar panels to heat water in the building;
• Moving to a paperless office, to reduce the need for printing;
• Electronic flight bags mean that our cockpits are already paperless
• Recycling paper, toner, computer equipment and other waste;
• A canteen with a focus on healthy food and nutrition;
• Discounted gym membership for staff, to promote exercise and a healthy work/life balance; and
• Operating the “Cycle to Work” Scheme, which allows staff to purchase a bicycle in a tax efficient manner. This
contributes to lowering carbon emissions, reducing traffic congestion and improving the health and fitness levels
of its people.
2. Safety and Quality
 has an industry leading 34-year safety record. Safety is ’s No.1 priority and we invest heavily in
safety-related equipment, training and internal (confidential) reporting systems.  has:
• over 16,800 skilled aviation professionals;
• an industry leading Safety Management System;
• a Board Air Safety and Security Committee to review and discuss air safety and related issues;
• launched its current Safety Strategy in December 2016 which will ensure that safety and security remain at the
heart of everything we do in ;
• a world leading operational flight data monitoring (“OFDM”) system;
• a Local Air Safety Group (“LASG”) at each of the 86 bases across Europe. The LASGs operate independently of
 Management. De-identified minutes are sent to the Safety Services Office in Dublin who are responsible
for ensuring that matters raised are appropriately addressed by management;
• state of the art simulator training centers in the U.K., Italy and Dublin, including 11 Full Motion simulators;
• installed 7 Fixed Base simulators in its training centers, with another 3 on order;
• installed 1 Boeing MAX simulators, with another 4 on order;
• the industry’s first full size Boeing NG maintenance training aircraft based at London Stansted;
• acquired a Boeing 737-700 aircraft for pilot training;
• equipped most of its fleet with the Runway Awareness and Advisory System (“RAAS”), which is an electronic
detection system that provides aircraft crews with information relating to the aircraft’s position relative to the
airport’s runway.
35
• a 24-hour Safety Office and training and reporting systems;
• independent safety audits and safety reporting channels from front line to Board level; and
• implemented industry leading fixed 5/4 rosters which consists of 5 days on, followed by 4 days off for pilots and
5/3 for Cabin Crew, 5 days on followed by 3 days off which provides an excellent work life balance.
3. Social and People Management
Training, career development and promotion opportunities are available and encouraged for all of ’s people.
 remains a committed equal opportunities employer regardless of nationality, race, gender, marital status, disability,
age, sexual orientation, religious or political beliefs. The Group selects and promotes its people on the basis of merit and
capability, providing the most effective use of resources.
In December 2017  announced that it would recognise pilot and cabin crew trade unions for collective
bargaining purposes. Since then,  has concluded agreements with trade unions in its major markets. 
considers its relations with its people to be good.
Job Creation, Economic Growth & Integration
 has more than 16,800 aviation professionals from over 60 different nationalities who crew and support
’s aircraft fleet. Last year over 1,000 of its people were promoted and we created approximately 2,200 new jobs.
 has also created over 100,000 indirect jobs based on Airport Council International figures.
In May 2018 CEPS (Centre for European Policy Studies) released the findings of a research project exploring the
impact of low-cost carriers in Europe in terms of integration and patterns of mobility. The report, titled ‘Low-Cost Airlines:
Bringing the EU Closer Together’, considered several channels to assess the extent of the contribution of low-cost carriers
like  to European integration including labour and student mobility, business travel and leisure tourism. The report
found that LCC’s played a vital role in bringing Europe closer together by fostering mobility and making air travel
affordable to a wider public.
Charities
 supports numerous charities across Europe. Each year ’s
people select nominated charities and the Company has recently selected
ISPCC / Childline as its chosen Irish charity partner and Fundación Pequeño
Deseo as its official European partner for 2019. The Group also regularly
makes donations to various charities from the proceeds of sales of its onboard
scratch cards. In 2017 the Company established the  Foundation to
work with selected charitable partners and educational projects across Europe.
Between 2008 and 2019, the  contributed over €8m to designated
charities across Europe.
This foundation sponsors the  Professor of Entrepreneurship (a
€1.5m commitment over 5-years) at Trinity College Dublin’s Business School.
 also has a 3-year Premier Corporate Partnership with the National Gallery of Ireland in Dublin. The partnership,
which runs until 2020, enables  to support the arts under its “Always Getting Better” (“AGB”) program.
4. Ethics and Transparency
’s Code of Business Conduct and Ethics
 is committed to conducting business in an ethical fashion that complies with all laws and regulations in all
of the countries in which  operates. Employees and representatives of  must consider how their actions
affect the integrity and credibility of the Group as a whole. ’s Code of Business Conduct and Ethics (“Code”) sets
out the principles that constitute ’s way of doing business. The Code is reviewed and approved by the Audit
Committee of the Board at least annually. The Group CEO and management at all levels of  are responsible for
ensuring adherence to this Code. They are expected to promote an “open door” policy so that they are available to anyone
with ethical concerns, questions or complaints. All concerns, questions, and complaints are taken seriously and handled
promptly, confidentially and professionally.
36
Modern Slavery Act 2015
 does not tolerate any infringement of human rights, including the use of forced, compulsory or trafficked
labor, or anyone held in slavery or servitude (whether adults or children) in any part of our business or supply chain. We
endeavour to only use suppliers that adhere to these principles and provide a safe and healthy working environment for
their employees.
Anti-Bribery and Corruption
 has an anti-bribery and corruption policy which does not condone bribery or corruption in any form.
Employees must not give or offer anything of material value to any customer or supplier as an inducement to obtain
business or favourable treatment. Similarly, employees must not accept anything with a monetary value for themselves or
others, in return for giving favourable treatment to customers or suppliers.
37
Report of the Remuneration Committee on Directors’ Remuneration
1. The Remuneration Committee (“Remco”)
The Board of Directors established Remco in September 1996. This committee has the authority to determine the
remuneration of Senior Management of the Company and to administer the Company’s stock options plans as described
on page 126. The members of Remco are Howard Millar (Chairman), Julie O’Neill and Stan McCarthy. The role and
responsibilities of Remco are set out in its written terms of reference, which are available on the Company’s website,
https://investor..com/governance. All members of Remco have access to the advice of the Group CEO and may,
in the furtherance of their duties, obtain independent professional advice at the Company’s expense.
2. Remuneration Policy
The policy of the Company is to ensure that the Group CEO and the senior management team are rewarded
competitively, but in keeping with the ethos of a low-cost airline, having regard to the comparative marketplace in Ireland
and the U.K. to ensure that they are motivated to deliver in the best interests of the shareholders.
The remuneration of senior management is structured towards a relatively low basic salary (by EU airline
comparatives) and a bonus scheme which allows senior managers to earn up to a maximum of 100% of their base pay
each year by way of performance related bonus. In selecting annual performance targets, Remco takes into account the
Group’s strategic objectives, short and long-term business priorities. The Group CEO and each senior manager’s bonus
is determined annually with up to 50% of the total quantum being determined by reference to achieving the Company’s
budgeted profit after tax (“PAT”) for the fiscal year, and up to 50% of the total quantum being determined by reference
to a written assessment of the Group CEO and each senior manager’s personal performance against a list of rigorous
performance targets for their individual department or areas of responsibility for that fiscal year. These personal
performance targets focus on strategic objectives such as traffic targets, ancillary revenue growth, cost control, customer
service metrics, and operational performance (including punctuality). Historically, senior managers have rarely received
100% of their bonus entitlement, the average in recent years (when budgeted PAT has been achieved) is between 70%
to 90%. As part of the Company’s cost saving initiatives, and in recognition of the reduced profitability in fiscal year
2019, the senior management team (excluding the Group CEO who has agreed to a 50% reduction in both his base pay
and annual performance bonus for the 5-year term of his new Group CEO contract) accepted a pay freeze for fiscal year
2020.
The Company has a policy of minimising management expenses and accordingly it does not provide defined benefit
pensions, company cars, or unvouched expenses to senior managers. All expense claims must be fully vouched and are
rigorously vetted on a monthly basis by the CFO and Group CEO.
The total remuneration paid to senior management (defined as the Executive team reporting to the Board of
Directors) is set out in Note 27 of the consolidated Financial Statements. Company policy in respect of granting share
options is dealt with in section 6 below.
The Group CEO is the only Executive Director of the Board. In the year ended March 31, 2019, the Group CEO’s
base pay was unchanged at €1.058m per annum. His maximum bonus was fixed at €990,000 of which he received
€768,000 or 78% of the maximum entitlement. As the airline only achieved 65% of its budgeted PAT he received 65%
of the €495,000 payable by reference to achieving budgeted PAT. He also received 90% of the €495,000 payable by
reference to the Board’s assessment of the CEO’s personal performance against a written list of 9 performance objectives
for the year to March 31, 2019. These performance objectives, which were both strategic and operational, included traffic
growth, customer service, cost control, operational efficiency (including punctuality) and other targets. The Group
CEO’s pay and bonus, compared against the CEO pay of other large European airlines, is set out below.
38
The Company does not provide the Group CEO with any pension contributions which is in keeping with the low-
cost ethos of the airline.
3. Group CEO New 5-year Contract
In February 2019  announced that Michael O’Leary had signed a new five-year contract as Group CEO
commencing April 1, 2019 and expiring on July 31, 2024. As part of this contract the Group CEO has agreed to a 50%
cut in base pay from approximately, €1m to €500,000 per annum, a 50% cut to his maximum annual bonus (to €500,000)
and, inline with best practice in the updated Corporate Governance Code, he does not receive any pension benefits from
. This new contract also includes 10m share options, which are exercisable at a price of €11.12 if the net income
of  Holdings plc exceeds €2bn in any year up to 2024 and/or the share price of  Holdings plc exceeds
€21 for a period of 28 days between April 1, 2021 and March 31, 2024. These ambitious profit and share price targets
means that the Group CEO is fully aligned with, and committed to delivering superior returns for shareholders over the
next 5 years. The Group CEO is subject to a covenant not to compete with the Company within the E.U. for two years
after the termination of his employment. The options grant contains malus and clawback provisions and does not contain
provisions providing for compensation on termination.
The maximum annual accounting cost of the Group CEO’s remuneration is €2.8m over the 5-year term, comprising
of base pay of €500,000 per annum, maximum performance bonus of up to €500,000 per annum and a €1.8m charge for
10m share options granted. This maximum payout will only arise if the Group CEO is awarded 100% of his performance
bonus and that the long-term share option vesting targets of a €21 share price and/or €2bn net income are achieved.
 Group CEO’s remuneration is considerably lower than many other European airline CEOs and less than Mr
O’Leary was paid in fiscal year 2016, 2017 and 2019.
4. Performance
Profit after tax for the fiscal year 2019 declined by 39% to €885m, due to a weak fare environment (6% fall in
average airfares), excess capacity in European short-haul, one-off 20% pilot pay increases to combat high pilot turnover
in late 2017/early 2018, higher EU261 compensation costs due to record ATC staff shortages/strikes in summer 2018,
fuel costs which rose by €450m for the full year, and year-one start up losses in Laudamotion.
39
5. Non-Executive Directors
Details of remuneration paid to Non-Executive Directors is set out in Note 19 (b) on page 188 of the consolidated
Financial Statements. In keeping with the Company’s low-cost ethos, the level of Non-Executive Director fees is low
by EU airline industry comparatives.
Directors are appointed following selection by the Nomination Committee and approval by the Board and must be
elected by the shareholders at the AGM following their appointment. ’s Articles of Association require that all
Directors retire after a fixed period not exceeding 3 years.  has adopted a policy whereby all Directors retire on
an annual basis and being eligible for re-election, offer themselves for election. This therefore gives ’s
shareholders an annual opportunity to vote on the suitability of each Director.
None of the Non-Executive Directors hold a service agreement with the Company that provides for benefits upon
termination.
6. Share Options
A description of the Company’s share options scheme is available on page 126. Details of the share options granted
to Executive and Non-Executive Directors are set forth in Note 19(d) to the consolidated Financial Statements.
Share options are granted occasionally (under Options Plan 2013), at the discretion of the Board and Remco to
incentivise superior performance by the management team, to encourage their long-term commitment to  and to
align the objectives of management with those of the shareholders. We encourage management, through share options,
to think and act like long term shareholders and prioritize shareholder returns. Options will only be exercisable where
exceptional profit or share price targets have been achieved over a 5-year period from date of grant. Managers must
remain in full time employment with the Group for a 5-year period from the grant date in order to exercise these options.
The 5-year targets set by Remco are ambitious, with the most recent grant (fiscal year 2019) setting performance vesting
targets of a €21 share price and/or €2bn net income by fiscal year 2024. The fiscal year 2019 options grant contains
malus and clawback provisions.
As at March 31, 2019, Non-Executive Directors held a modest number of share options as set out on page 188.
Whilst the 2016 Code discourages the grant of options to Non-Executive Directors, the Company has a policy of
complying with these codes or explaining why it does not. In this case, because of its substantial NASDAQ listing and
US shareholder base, where US investors generally encourage and promote modest Non-Executive Directors’ options,
the Company has granted a small amount of share options to certain Non-Executive Directors. The Company, in
accordance with the 2016 Code, sought and received shareholder approval to make these share option grants and Remco
believes that this very modest number of options does not impair the independence of judgement or character of Non-
Executive Directors.
 fully complies with the Investment Association’s Principles of Remuneration whereby the Company’s
share options schemes do not exceed 10% of the issued share capital in any rolling 10 year period.
Details of employee share option plans are set forth on pages 183 to 184 in Note 15(c) to the consolidated Financial
Statements.
7. LTIP 2019
The current share options plan, which was approved by shareholders at the 2013 AGM (“Options Plan 2013”),
encouraged our people to think and act like long-term shareholders and prioritise sustainable returns. While this plan has
been successful, following a broad review of our variable pay arrangements during the past year, it became clear that there
is a need to put in place a more regular, formalized, long-term incentive arrangements for our senior managers. As such,
at the 2019 AGM we will be putting forward for shareholder approval the 2019 Long-Term Incentive Plan (“LTIP 2019”).
Under this new framework, senior managers may be eligible to receive regular annual awards, typically of whole shares
rather than share options, with vesting based on performance against stretching three-year targets. In light of the award of
options in February 2019 to the Group CEO under Options Plan 2013, Remco has determined that no awards will be made
to the Group CEO under the new incentive plan for the duration of his existing five-year contract out to July 2024. It is
proposed that Non-Executive Directors be permitted to receive share awards (but not options) under the new plan but in
line with good corporate governance, such awards will not be subject to performance conditions.
40
This more formal framework will over time provide senior managers with a schedule of overlapping awards, each
aligned with key performance goals for their respective periods. In this manner Remco considers that it will act as a more
effective driver of sustainable returns than the current framework. It is also recognized that the framework is more aligned
with the general direction of the market, with arrangements in close peers, and with the expectations of many shareholders.
The performance conditions attached to LTIP 2019 awards are currently expected to be an equal weighting of three-
year EPS growth and three-year relative TSR performance against airline peers. EPS provides a direct measure of bottom-
line financial performance and is a key performance indicator for , while TSR measures the Company’s relative
performance against peers and reflects the overall shareholder experience.
8. Directors’ Pension Benefits
None of the Directors, including the Executive Director, receive any pension benefits as set forth in Note 19(c) to
the consolidated Financial Statements.
9. Directors’ Shareholdings
The interests of each Director, that held office at the end of fiscal year 2019, in the share capital of the Company
as at March 31, 2019, are set forth in Note 19(d) to the consolidated Financial Statements.
10. Shareholders’ Vote on Remuneration
A resolution to approve the Remuneration Report is put to shareholders at the Company’s AGM. This advisory and
non-binding resolution is often referred to as a “say on pay”. Details of the voting outcomes at the 2016, 2017 and 2018
AGMs are set out below:
At the 2018 AGM discretionary proxies representing approximately 3.4% of shares were voted in favour of the
resolutions by the meeting’s Chairman.
The Company has actively engaged with shareholders, The Investor Forum, and the large ESG proxy advisor firms
(ISS, Glass Lewis, MSCI, Sustainalytics, and PIRC) on corporate governance matters in recent years.
41
Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements,
in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year.
Under that law, the Directors are required to prepare the Group financial statements in accordance with IFRS as adopted
by the European Union and applicable law including Article 4 of the IAS Regulation. The Directors have elected to prepare
the Company financial statements in accordance with IFRS as adopted by the European Union as applied in accordance
with the provisions of Companies Act 2014. In preparing the Group Financial Statements the Directors have also elected
to comply with IFRS as issued by the International Accounting Standards Board (“IASB”).
Under company law the Directors must not approve the Group and Company financial statements unless they are
satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company and
of the Group’s profit or loss for that year.
In preparing each of the Group and Parent Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
• assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules of the Central Bank of Ireland to include a management report containing a fair review of the business
and a description of the principal risks and uncertainties facing the Group.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy
at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that
the financial statements comply with the provision of the Companies Act 2014. The Directors are also responsible for
taking all reasonable steps to ensure such records are kept by its subsidiaries which enable them to ensure that the financial
statements of the Group comply with the provisions of the Companies Act 2014 including Article 4 of the IAS Regulation.
They are responsible for such internal controls as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for
safeguarding the assets of the Group, and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the
requirements of the Companies Act 2014.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Group’s and Company’s website, https://investor..com. Legislation in the Republic of Ireland
concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
42
Responsibility Statement as required by the Transparency Directive and U.K. Corporate Governance Code
Each of the Directors, whose names and functions are listed on pages 111 to 112 of this annual report, confirm
that, to the best of each person’s knowledge and belief:
• The Group financial statements, prepared in accordance with IFRS as adopted by the European Union and IFRS as
issued by the IASB, and the Company financial statements prepared in accordance with IFRS as adopted by the
European Union and IFRS as issued by the IASB, as applied in accordance with the provisions of Companies Act
2014, give a true and fair view of the assets, liabilities, and financial position of the Group and Company at March
31, 2019 and of the profit or loss of the Group for the year then ended;
• The Directors’ Report contained in the Annual Report includes a fair review of the development and performance of
the business and the position of the Group and Company, together with a description of the principal risk and
uncertainties that they face; and The Annual Report and financial statements, taken as a whole, provides the
information necessary to assess the Group’s performance, business model and strategy and is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company's position and
performance, business model and strategy.
On behalf of the Board
David Bonderman Michael O’Leary
Chairman Group Chief Executive
July 26, 2019
43
Independent auditor’s report to the members of  Holdings plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of  Holdings plc (‘the Company’) and subsidiaries (together, “the Group”)
for the year ended March 31, 2019 which comprise the Consolidated and Company Balance Sheets, the Consolidated
Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of
Changes in Shareholder’s Equity, the Consolidated and Company Statements of Cash Flows, and related notes, including
the summary of significant accounting policies set out in Note 1. The financial reporting framework that has been applied
in their preparation is Irish Law and International Financial Reporting Standards (“IFRS”) as adopted by the European
Union and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the
Companies Act 2014.
In our opinion:
• the Consolidated Financial Statements give a true and fair view of the assets, liabilities and financial position of the
Group as at March 31, 2019 and of its profit for the year then ended;
• the Company Financial Statements give a true and fair view of the assets, liabilities and financial position of the
Company as at March 31, 2019;
• the Consolidated Financial Statements have been properly prepared in accordance with IFRS as adopted by the
European Union;
• the Company Financial Statements have been properly prepared in accordance with IFRS as adopted by the European
Union, as applied in accordance with the provisions of the Companies Act 2014; and
• the Consolidated Financial Statements and Company Financial Statements have been properly prepared in accordance
with the requirements of the Companies Act 2014 and, as regards the Consolidated Financial Statements, Article 4 of
the IAS Regulation.
Our separate opinion in relation to IFRS as issued by the IASB is unmodified
As explained in note 1 on page 151 of the Consolidated Financial Statements, the Group, in addition to complying with its
legal obligation to comply with IFRS as adopted by the European Union, has also prepared its Consolidated Financial
Statements in compliance with IFRS as issued by the International Accounting Standards Board (“IASB”).
In our opinion:
• the Consolidated Financial Statements give a true and fair view of the assets, liabilities and financial position of the
Group as at March 31, 2019 and of its profit for the year then ended; and
• the Consolidated Financial Statements have been properly prepared in accordance with IFRS as issued by the IASB.
Basis for opinions
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section of our report.
We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion
is consistent with our report to the audit committee.
We were appointed as auditor by the Directors on December 31, 1985. The period of total uninterrupted engagement is
the 33 years ended March 31, 2019. We have fulfilled our ethical responsibilities under, and we remained independent of
the Group in accordance with, ethical requirements applicable in Ireland, including the Ethical Standard issued by the Irish
Auditing and Accounting Supervisory Authority (IAASA) as applied to public interest entities. No non-audit services
prohibited by that standard were provided.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
44
by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matter was as follows (unchanged from 2018):
Aircraft residual values, estimated useful lives, and estimated cost of major airframe and engine overhaul – carrying
value of aircraft €8,912.5m (2018 - €8,052.2m).
Refer to page 20 (Audit Committee Report), pages 153 to 154 (accounting policy) and pages 161 to 162 (financial
disclosures)
The key audit matter How the matter was addressed in our audit
The Group has aircraft with a carrying value of
€8,912.5m as at March 31, 2019 (2018:
€8,052.2m) including engines and related
equipment. Aircraft are depreciated on a straight-
line basis over their estimated useful lives, of 23
years from date of manufacture, to estimated
residual values, of 15% of current market value of
new aircraft, determined periodically, based on
independent valuations and actual aircraft
disposals during prior periods. On acquisition, an
element of the cost of the acquired aircraft is
attributed to its service potential, reflecting the
maintenance condition of its engines and airframe
and is depreciated over the period until its next
major overhaul (component accounting).
The Group makes estimates about its expected
useful lives, expected residual values and the
estimated cost of major airframe and engine
overhaul. The Group operates a fleet primarily
comprising of owned Boeing 737-800 ‘next
generation’ aircraft, all of which are aged between
one and 16 years. There is an active and established
market for this asset class. However, changes to the
expected useful lives, residual values or estimated
major airframe and engine overhaul costs, of the
Group’s owned aircraft fleet, could have a material
impact on the depreciation charge and
consequently the profit for the year.
Our audit procedures included, amongst others, testing
the design, implementation and effectiveness of the key
controls over the estimates of aircraft useful economic
life and residual value, and the estimated cost of major
airframe and engine overhaul.
We compared the Group’s estimates of expected useful
life and residual value to manufacturers’
recommendations, to published estimates of other
international airlines and to independent expert
commentary.
We assessed the allocation of purchase price to the
various components of the aircraft to ensure that the
value allocated to its service potential compares with
actual historic invoiced costs.
We agreed the fair value of this aircraft type to
independent third party valuation reports prepared by
specialist aircraft valuation experts to assess the
accuracy of the residual value estimate.
We considered the key assumptions underpinning the
Group’s near and medium term financial projections and
compared against historical performance and estimates
of the likely economic conditions in its principal
markets.
We assessed the adequacy of the related disclosures.
Our procedures in respect of this risk were performed as
planned. We are satisfied that the Group’s judgements
with regard to estimates of aircraft residual values,
useful life and cost of major airframe and engine
overhaul were reasonable.
Due to the nature of the Company’s activities, there are no key audit matters that we are required to communicate in
accordance with ISAs (Ireland).
Our application of materiality and an overview of the scope of our audit
Materiality for the Consolidated Financial Statements as a whole was set at €47.3m (2018: €80m). Materiality for the
Company financial statements was set at €10m (2018: €15m).
45
Materiality has been calculated as 5% of the benchmark of Group profit before tax which we have determined in our
professional judgement, to be one of the principal benchmarks within the financial statements relevant to members of the
Company in assessing the financial performance of the Group. For the Parent Company, materiality has been calculated
based on 1% of the benchmark of net assets.
We report to the Audit Committee all corrected and uncorrected misstatements we identified through our audit with a
value in excess of €2.4m (Group) and €0.5m (Parent Company) in addition to other audit misstatements below that
threshold that we believe warranted reporting on qualitative grounds.
The Group is headquartered, managed and controlled from Ireland, and all of the audit work covering the Group’s
revenues, profit for the year and its assets and liabilities and the audit work covering the Company is undertaken and
performed by the audit engagement team based in Dublin.
We have nothing to report on going concern
We are required to report to you if:
• we have anything material to add or draw attention to in relation to the Directors’ Statement on page 28 of the
Corporate Governance Report on the use of the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Group and Company’s use of that basis for a period of at least twelve months from
the date of approval of the financial statements; or
• if the related statement under the Listing Rules is materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
Other information
The Directors are responsible for the preparation of the other information presented in the Annual Report together with
the financial statements. The other information comprises the information included in the Annual Report other than the
financial statements and our auditor’s report thereon.
The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on
the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
Based solely on our work on the other information we report that, in those parts of the Directors’ Report specified for our
consideration:
• we have not identified material misstatements in the Directors’ Report;
• in our opinion, the information given in the Directors’ Report is consistent with the financial statements; and
• in our opinion, the Directors’ Report has been prepared in accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw
attention to in relation to:
• the Principal Risks and Uncertainties disclosures describing these risks and explaining how they are being managed
and mitigated;
• the Directors’ confirmation within the Viability Statement included in the Corporate Governance Report on page 28
that they have carried out a robust assessment of the principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and liquidity; and
46
• the Directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what
period they have done so and why they considered that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items and report to you in the following circumstances:
• Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge we acquired
during our financial statements audit and the Directors’ statement that they consider that the Annual Report and
financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group’s position and performance, business model and strategy;
• Report of the Audit Committee: if the section of the Annual Report describing the work of the Audit Committee does
not appropriately address matters communicated by us to the Audit Committee;
• Statement of compliance with U.K. Corporate Governance Code: if the directors’ statement does not properly disclose
a departure from provisions of the U.K. Corporate Governance Code specified by the Listing Rules for our review.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance
Report on pages 15 to 29, that:
• based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and
risk management systems in relation to the financial reporting process, and information relating to voting rights and
other matters required by the European Communities (Takeover Bids (Directive 2004/EC) Regulations 2006 and
specified for our consideration, is consistent with the financial statements and has been prepared in accordance with
the Act;
• based on our knowledge and understanding of the Company and its environment obtained in the course of our audit,
we have not identified any material misstatements in that information; and
• the Corporate Governance Report contains the information required by the European Union (Disclosure of Non-
Financial and Diversity Information by certain large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our audit, the information required by the Act is contained in the
Corporate Governance Report.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and
properly audited and the financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of Directors’ remuneration and
transactions required by Sections 305 to 312 of the Act are not made.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information
required by section 5(2) to (7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain
large undertakings and groups) Regulations 2017 for the year ended March 31, 2019 as required by the European Union
(Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) (amendment)
Regulations 2018.
47
The Listing Rules of the Euronext Dublin and U.K. Listing Authority require us to review:
• the Directors’ Statement, set out on page 28, in relation to going concern and longer-term viability;
• the part of the Corporate Governance Report on page 29 relating to the Company’s compliance with the provisions of
the U.K. Corporate Governance Code and the Irish Corporate Governance Annex specified for our review; and
• certain elements of disclosures in the report to shareholders by the Board of Directors’ remuneration committee.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 41, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error; assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group
or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered
material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements. The risk of not detecting a material misstatement resulting from fraud or
other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control and may involve any area of law and regulation and not just those
directly affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-
a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act
2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for
our report, or for the opinions we have formed.
July 26, 2019
Emer McGrath
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
48
Presentation of Financial and Certain Other Information
As used herein, the term “ Holdings” refers to  Holdings plc. The term the “Company” refers to
 Holdings or  Holdings together with its consolidated subsidiaries, as the context requires. The term
“” refers to  DAC, a wholly owned subsidiary of  Holdings, together with its consolidated
subsidiaries, unless the context requires otherwise. The term “fiscal year” refers to the 12-month period ended on March
31 of the quoted year. The term “Ordinary Shares” refers to the outstanding par value 0.600 euro cent per share common
stock of the Company. All references to “Ireland” herein are references to the Republic of Ireland. All references to the
“U.K.” herein are references to the United Kingdom and all references to the “United States” or “U.S.” herein are
references to the United States of America. References to “U.S. dollars,” “dollars,” “$” or “U.S. cents” are to the currency
of the United States, references to “U.K. pound sterling,” “U.K. £” and “£” are to the currency of the U.K. and references
to “€,” “euro,” “euros” and “euro cent” are to the euro, the common currency of nineteen member states of the European
Union (the “EU”), including Ireland. Various amounts and percentages set out in this Annual Report have been rounded
and accordingly may not total.
The Company owns or otherwise has rights to the trademark ®
in certain jurisdictions. See “Item 4.
Information on the Company—Trademarks.” This report also makes reference to trade names and trademarks of
companies other than the Company.
The Company publishes its annual and interim consolidated financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”). Additionally, in
accordance with its legal obligation to comply with the International Accounting Standards Regulation (EC 1606 (2002)),
which applies throughout the EU, the consolidated financial statements of the Company must comply with International
Financial Reporting Standards as adopted by the EU. Accordingly, the Company’s consolidated financial statements and
the selected financial data included herein comply with International Financial Reporting Standards as issued by the IASB
and also International Financial Reporting Standards as adopted by the EU, in each case as in effect for the year ended and
as of March 31, 2019 (collectively referred to as “IFRS” throughout).
The Company publishes its consolidated financial statements in euro. Solely for the convenience of the reader,
this report contains translations of certain euro amounts into U.S. dollars at specified rates. These translations should not
be construed as representations that the converted amounts actually represent such U.S. dollar amounts or could be
converted into U.S. dollars at the rates indicated or at any other rate. Unless otherwise indicated, such U.S. dollar amounts
have been translated from euro at a rate of €1.00 = $1.228, or $1.00 = €0.891, the official rate published by the U.S. Federal
Reserve Board in its weekly “H.10” release (the “Federal Reserve Rate”) on March 31, 2019. The Federal Reserve Rate
for euro on July 19, 2019 was €1.00 = $1.122 or $1.00 = €0.891. See “Item 3. Key Information—Exchange Rates” for
information regarding historical rates of exchange relevant to the Company, and “Item 5. Operating and Financial Review
and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk” for a discussion of the effects
of changes in exchange rates on the Company.
49
Cautionary Statement Regarding Forward-Looking Information
Except for the historical statements and discussions contained herein, statements contained in this report
constitute “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended
(the “Securities Act”), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “should,” “intend,”
and similar expressions or variations on such expressions. Any filing made by the Company with the U.S. Securities and
Exchange Commission (the “SEC”) may include forward-looking statements. In addition, other written or oral statements
which constitute forward-looking statements have been made and may in the future be made by or on behalf of the
Company, including statements concerning its future operating and financial performance, the Company’s share of new
and existing markets, general industry and economic trends and the Company’s performance relative thereto and the
Company’s expectations as to requirements for capital expenditures and regulatory matters. The Company’s business is to
provide a low-fares airline service in Europe, and its outlook is predominantly based on its interpretation of what it
considers to be the key economic factors affecting that business and the European economy. Forward-looking statements
with regard to the Company’s business rely on a number of assumptions concerning future events and are subject to a
number of uncertainties and other factors, many of which are outside the Company’s control, that could cause actual results
to differ materially from such statements. It is not reasonably possible to itemize all the many factors and specific events
that could affect the outlook and results of an airline operating in the European economy. Among the factors that are
subject to change and could significantly impact ’s expected results are the airline pricing environment, fuel costs,
competition from new and existing carriers, market prices for replacement aircraft and aircraft maintenance services,
aircraft availability, “Brexit” (as defined below), costs associated with environmental, safety and security measures,
significant outbreaks of airborne disease, terrorist attacks, cyber-attacks, actions of the Irish, U.K., EU and other
governments and their respective regulatory agencies, dependence on external service providers and key personnel,
fluctuations in currency exchange rates and interest rates, fluctuations in corporate tax rates, changes to the structure of
the European Union and the euro, airport handling and access charges, litigation, labor relations, the economic environment
of the airline industry, the general economic environment in Europe, the general willingness of passengers to travel,
continued acceptance of low fares airlines and flight interruptions caused by Air Traffic Controllers (“ATC”) strikes and
staff shortages, extreme weather events or other atmospheric disruptions. The Company disclaims any obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
50
TABLE OF CONTENTS
PART I
Item 1. Identity of Directors, Senior Management and Advisers 53
Item 2. Offer Statistics and Expected Timetable 53
Item 3. Key Information 53
The Company 53
Selected Financial Data 54
Exchange Rates 56
Selected Operating and Other Data 58
Risk Factors 59
Item 4. Information on the Company 73
Introduction 73
Strategy 74
Route System, Scheduling and Fares 78
Marketing and Advertising 79
Reservations on .Com 79
Aircraft 80
Ancillary Services 82
Maintenance and Repairs 82
Safety Record 83
Airport Operations 84
Fuel 85
Insurance 86
Facilities 87
Trademarks 88
Government Regulation 89
Description of Property 96
Item 4A. Unresolved Staff Comments 96
Item 5. Operating and Financial Review and Prospects 96
History 96
Business Overview 98
Recent Operating Results 99
Critical Accounting Policies 99
Results of Operations 100
Fiscal Year 2019 Compared with Fiscal Year 2018 100
Fiscal Year 2018 Compared with Fiscal Year 2017 103
Seasonal Fluctuations 105
Recently Issued Accounting Standards 105
Liquidity and Capital Resources 105
Trend Information 109
Off-Balance Sheet Transactions 110
Inflation 110
51
Item 6. Directors, Senior Management and Employees 111
Directors 111
Executive Officers 116
Compensation of Directors and Executive Officers 117
Staff and Labor Relations 117
Item 7. Major Shareholders and Related Party Transactions 119
Major Shareholders 119
Related Party Transactions 119
Item 8. Financial Information 120
Consolidated Financial Statements 120
Other Financial Information 120
Significant Changes 122
Item 9. The Offer and Listing 123
Trading Markets and Share Prices 123
Item 10. Additional Information 126
Description of Capital Stock 126
Options to Purchase Securities from Registrant or Subsidiaries 126
Articles of Association 127
Material Contracts 128
Exchange Controls 129
Limitations on Share Ownership by Non-EU Nationals 129
Taxation 131
Documents on Display 136
Item 11. Quantitative and Qualitative Disclosures About Market Risk 137
General 137
Fuel Price Exposure and Hedging 138
Foreign Currency Exposure and Hedging 139
Interest Rate Exposure and Hedging 140
Item 12. Description of Securities Other than Equity Securities 141
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies 142
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 142
Item 15. Controls and Procedures 142
Disclosure Controls and Procedures 142
Management’s Annual Report on Internal Control Over Financial Reporting 142
Changes in Internal Control Over Financial Reporting 143
Item 16. Reserved 143
Item 16A. Audit Committee Financial Expert 143
Item 16B. Code of Ethics 143
Item 16C. Principal Accountant Fees and Services 143
Item 16D. Exemptions from the Listing Standards for Audit Committees 144
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 144
52
Item 16F. Change in Registrant’s Certified Accountant 144
Item 16G. Corporate Governance 144
Item 16H. Mine Safety Disclosure 145
PART III
Item 17. Financial Statements 145
Item 18. Financial Statements 145
53
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
THE COMPANY
 operates a low fare, low cost scheduled airline group serving short-haul, point-to-point routes from 86
bases to airports across Europe, which together are referred to as “’s bases.” For a list of these bases, see “Item 4.
Information on the Company—Route System, Scheduling and Fares.”  pioneered the low-fares air travel model
in Europe in the early 1990s. As of June 30, 2019, the Company offered over  short-haul flights per day serving over
 airports across Europe, with a fleet of  Boeing 737 aircraft and 20 Airbus A320 aircraft. A detailed description of
the Company’s business can be found in “Item 4. Information on the Company.”
54
SELECTED FINANCIAL DATA
The following tables set forth certain of the Company’s selected consolidated financial information as of and for
the periods indicated. Financial information presented in euro in the table below has been derived from the consolidated
financial statements that are prepared in accordance with IFRS. The financial information for fiscal year 2019 has been
translated from Euro€ to U.S.$ using the Federal Reserve Rate on March 31, 2019. This information should be read in
conjunction with: (i) the audited consolidated financial statements of the Company and related notes thereto included in
Item 18 and (ii) “Item 5. Operating and Financial Review and Prospects.”
Income Statement Data:
Fiscal year ended March 31,
56
EXCHANGE RATES
The following table sets forth, for the periods indicated, certain information concerning the exchange rate
between: (i) the U.S. dollar and the euro; (ii) the U.K. pound sterling and the euro; and (iii) the U.K. pound sterling and
the U.S. dollar. Such rates are provided solely for the convenience of the reader and are not necessarily the rates used by
the Company in the preparation of its consolidated financial statements included in Item 18. No representation is made
that any of such currencies could have been, or could be, converted into any other of such currencies at such rates or at
any other rate.
U.S. dollars per €1.00(a)
End of Average
Year ended December 31, Period (b) Low High

Month ended
J
(a) Based on the Federal Reserve Rate for euro.
(b) The average of the relevant exchange rates on the last business day of each month during the relevant period.
(c) Based on the composite exchange rate as quoted at 5 p.m., New York time, by Bloomberg/Reuters.
(d) Based on the Federal Reserve Rate for U.K. pound sterling.
As of July , 2019, the exchange rate between the U.S. dollar and the euro was €1.00 = $1.122, or $1.00 = €
0.891 and the exchange rate between the U.K. pound sterling and the U.S. dollar was U.K. £1.00 = $1.249, or $1.00 =
U.K. £0.800. As of July 25, 2019 the exchange rate between the U.K. pound sterling and the euro was U.K. £1.00 = €
1.117, or €1.00 = U.K. £0.895. For a discussion of the impact of exchange rate fluctuations on the Company’s results of
operations, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
58
SELECTED OPERATING AND OTHER DATA
The following tables set forth certain operating data of  for each of the fiscal years shown. Such data are
derived from the Company’s consolidated financial statements prepared in accordance with IFRS and from certain other
data, and are not audited. For definitions of the terms used in this table, see the Glossary in Appendix A.
Fiscal Year Ended March 31,
59
RISK FACTORS
Risks Related to the Company
Changes in Fuel Costs and Availability Affect the Company’s Results. Jet fuel is subject to wide price fluctuations
as a result of many economic and political factors and events occurring throughout the world that  can neither
control nor accurately predict, including increases in demand, sudden disruptions in supply and other concerns about global
supply, as well as market speculation. Oil prices in fiscal year 2019 increased when compared to fiscal year 2018. As
international prices for jet fuel are denominated in U.S. dollars, ’s fuel costs are also subject to certain exchange
rate risks. Substantial price increases, adverse exchange rates, or the unavailability of adequate fuel supplies, including,
without limitation, any such events resulting from international terrorism, prolonged hostilities in the Middle East or other
oil-producing regions or the suspension of production by any significant producer, may adversely affect ’s
profitability. In the event of a fuel shortage resulting from a disruption of oil imports or otherwise, additional increases in
fuel prices or a curtailment of scheduled services could result.
 has historically entered into hedging arrangements providing for substantial protection against
fluctuations in fuel prices, generally through forward contracts covering periods of up to 18 months of anticipated jet fuel
requirements.  is exposed to risks arising from fluctuations in the price of fuel, and movements in the euro/U.S.
dollar exchange rate because of the limited nature of its hedging program, especially in light of recent volatility in the
relevant currency and commodity markets. Any movements in fuel costs could have a material adverse effect on ’s
financial performance. In addition, any strengthening of the U.S. dollar against the euro could have an adverse effect on
the cost of buying fuel in euro.
No assurances whatsoever can be given about trends in fuel prices. Average fuel prices for future years may be
significantly higher than current prices. There also cannot be any assurance that ’s current or any future
arrangements will be adequate to protect  from increases in the price of fuel or that  will not incur losses
due to high fuel prices, either alone or in combination with other factors. Because of ’s low fares and its no-fuel-
surcharges policy, as well as ’s expansion plans, which could have a negative impact on yields, its ability to pass
on increased fuel costs to passengers through increased fares or otherwise is somewhat limited. The expansion of ’s
fleet has resulted and will likely continue to result in an increase in ’s aggregate fuel consumption.
Additionally, declines in the price of oil may expose  to some risk of hedging losses that could lead to
negative effects on ’s financial condition and/or results of operations.
 is Subject to Cyber Security Risks and May Incur Increasing Costs in an Effort to Minimize Those Risks.
As almost all of ’s reservations are made through its website and mobile app, security breaches could expose it to
a risk of loss or misuse of customer information, litigation and potential liability. A third party service organization is used
for the reservation process which is also subject to cyber security risks.  takes steps to secure its website and is
fully compliant with the Payment Card Industry Data Security Standard “PCI DSS”. Nevertheless, the security measures
which have been or will be implemented may not be effective, and ’s systems may be vulnerable to theft, loss,
damage and interruption from a number of potential sources and events, including unauthorized access or security
breaches, cyber-attacks, computer viruses, power loss, or other disruptive events.  may not have the resources or
technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Attacks may be targeted at
, its customers and suppliers, or others who have entrusted it with information.
In addition, data and security breaches can also occur as a result of non-technical issues, including breaches by
 or by persons with whom it has commercial relationships that result in the unauthorized release of personal or
confidential information. Any such cyber-attack or other security issue could result in a significant loss of reservations and
customer confidence in the website and its business which, in turn, could have a material adverse effect on ’s
operating results or financial condition and potentially entail its incurring significant litigation or other costs.
 is subject to increasingly complex data protection laws and regulations. ’s business involves the
processing and storage on a large scale of personal data relating to its customers, employees, business partners and others
and is therefore subject to new and increasingly complex data protection laws and regulations.  is subject to the
60
European Union’s General Data Protection regulation 2016/679 (the “GDPR”) (which became fully applicable on May
25, 2018) as well as relevant national implementing legislation (Irish Data Protection Act 2018), which introduced a
number of new significant obligations and requirements upon subject companies.  has set up a Privacy Working
Group, which assists the Company Data Protection Officer, to ensure data protection compliance and to implement any
additional controls to facilitate compliance with the GDPR and other data protection laws in the future. Ensuring
compliance with data protection laws is an ongoing commitment which involves substantial costs, and it is possible that,
despite ’s efforts, governmental authorities or third parties will assert that ’s business practices fail to
comply with these laws and regulations. If its operations are found to be in violation of any of such laws and regulations,
 may be subject to significant civil, criminal and administrative damages, penalties and fines, as well as reputational
harm, which could have a material adverse effect on its business, financial condition or results of operations.
 Has Seasonally Grounded Aircraft. In prior years, in response to typically lower traffic and yields from
November to March (inclusive) (“winter”), higher airport charges and/or taxes and, at times, higher fuel prices, 
adopted a policy of grounding a certain portion of its fleet during the winter months.  carries out its scheduled
heavy maintenance during the winter months which also results in the grounding of aircraft. In the winter of fiscal year
2019,  grounded approximately  aircraft (compared with 60 aircraft in fiscal year 2018) and the Company intends
to again ground a similar number of aircraft in fiscal year 2020. ’s policy of seasonally grounding aircraft presents
some risks. While  seeks to implement its seasonal grounding policy in a way that will allow it to reduce the
negative impact on operating income by operating flights during periods of high oil prices to high cost airports at low
winter yields, there can be no assurance that this strategy will be successful.
While seasonal grounding does reduce ’s variable operating costs, it does not avoid fixed costs such as
aircraft ownership costs, and it also decreases ’s potential to earn ancillary revenues. Decreasing the number and
frequency of flights may also negatively affect ’s labor relations, including its ability to attract flight personnel
only interested in year round employment. Such risks could lead to negative effects on ’s financial condition and/or
results of operations.
Currency Fluctuations Affect the Company’s Results. Although  is headquartered in Ireland, a significant
portion of its operations are conducted in the U.K. Consequently, the Group has significant operating revenues and
operating expenses, as well as assets and liabilities, denominated in U.K. pounds sterling. In addition, fuel, aircraft,
insurance, and some maintenance obligations are denominated in U.S. dollars. ’s operations and financial
performance can therefore be significantly affected by fluctuations in the values of the U.K. pound sterling and the U.S.
dollar.  is particularly vulnerable to direct exchange rate risks between the euro and the U.S. dollar because a
significant portion of its operating costs are incurred in U.S. dollars and substantially none of its revenues are denominated
in U.S. dollars.
Although the Company engages in foreign currency hedging transactions between the euro and the U.S. dollar
and, from time to time, between the euro and the U.K. pound sterling, hedging activities are not expected to eliminate
currency risks. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
The continuing uncertainty associated with the Brexit process could adversely affect ’s business. The
withdrawal/transition agreement negotiated by the EU and the U.K. government has not been approved by the U.K.
parliament. As an outcome from this impasse, the EU has granted an extension period to the Article 50 negotiation process,
which will run until October 31, 2019 unless an agreement is concluded in the interim.
There remain two fundamental steps to effect an orderly exit of the U.K. from the EU: (i) agreement on the
withdrawal/transition process, including an agreed political declaration on the future trading framework; and (ii) detailed
agreement on the full set of future trading arrangements. The future arrangements between the EU and the U.K. could
directly impact ’s business in a number of ways. Arrangements which may impact ’s business include,
inter alia, the status of the U.K. in relation to the EU’s open air transport market, freedom of movement between the U.K.
and the EU, employment rules governing the relationship between the U.K. and the EU, and the tax status of EU member
state entities operating in the U.K. Adverse changes to any of these arrangements, and even uncertainty over potential
changes during any period of negotiation, could potentially materially impact on ’s financial condition and results
of operations in the U.K. or other markets  serves.
61
As a result of no-deal contingency measures unilaterally implemented by both the EU and U.K., the risk of a
cessation of flights between the U.K. and the EU27 in a no-deal scenario has been substantially reduced. In the event of
market access restrictions between the U.K. and non-EU destinations (and in respect of U.K. domestic traffic), 
expects to be able to use its U.K. subsidiary  U.K. Limited (“ U.K.”), which received an Air Operator
Certificate and Operating Licence (“U.K. AOC”) from the U.K. Civil Aviation Authority (“U.K. CAA”) in December
2018. Alternatively, the Company may decide to cancel such routes.
 is exposed to Brexit-related risks and uncertainties, as approximately 22% of revenue in fiscal year 2019
came from operations in the U.K., although this was offset somewhat by approximately 18% of ’s non-fuel costs
in fiscal year 2019 which were related to operations in the U.K.
Brexit could also present  with a number of potential regulatory challenges. Brexit could lead to
potentially divergent national laws and regulations as the U.K. determines which EU laws to replace or replicate. It also
requires special efforts to ensure ’s continuing compliance with EU Regulation No. 1008/2008, which requires
that air carriers registered in EU member states be majority-owned and effectively controlled by EU nationals. The Board
of Directors has taken action to ensure continuing compliance with EU Regulation No. 1008/2008 if U.K. holders of the
Company’s shares are no longer designated as EU nationals. For additional information, please see “Item 3 – Risks Related
to Ownership of the Company’s Ordinary Shares or ADRs”.
Brexit has caused, and may continue to cause, both significant volatility in global stock markets and currency
exchange rate fluctuations, as well as create significant uncertainty among U.K. businesses and investors. In particular,
the pound sterling has lost approximately 12% and 11% of its value against the U.S. Dollar and the euro respectively since
the Referendum. Further, the Bank of England and other observers have warned of a significant probability of a Brexit-
related recession in the U.K. The Company earns a significant portion of its revenues in pounds sterling, and any significant
decline in the value of the pound and/or recession in the U.K. would materially impact its financial condition and results
of operations. For the remainder of fiscal year 2020, taking account of timing differences between the receipt of sterling
denominated revenues and the payment of sterling denominated costs,  estimates that every 1 pence sterling
movement in the €/£ exchange rate will impact income by approximately €7 million. For additional information, please
see “Item 3 – Currency Fluctuations Affect the Company’s Results”.
The Company May Not Be Successful in Increasing Fares to Cover Rising Business Costs.  operates a
low-fares airline. The success of its business model depends on its ability to control costs so as to deliver low fares while
at the same time earning a profit.  has limited control over its fuel costs and already has comparatively low
operating costs. In periods of high fuel costs, if  is unable to further reduce its other operating costs or generate
additional revenues, operating profits are likely to fall. Furthermore, as part of its change in marketing and airport strategy,
the Company expects increased marketing and advertising costs along with higher airport charges due to the increasing
number of primary airports to which it operates.  cannot offer any assurances regarding its future profitability.
Changes in fuel costs and availability could have a material adverse impact on ’s results. See “—The Company
Faces Significant Price and Other Pressures in a Highly Competitive Environment” below and “—Changes in Fuel Costs
and Availability Affect the Company’s Results” above.
The Company Faces Significant Price and Other Pressures in a Highly Competitive Environment. 
operates in a highly competitive marketplace, with a number of low-fare, traditional and charter airlines competing
throughout its route network. Airlines compete primarily in respect of fare levels, frequency and dependability of service,
name recognition, passenger amenities (such as access to frequent flyer programs), and the availability and convenience
of other passenger services. Unlike , certain competitors are state-owned or state-controlled flag carriers and in
some cases may have greater name recognition and resources and may have received, or may receive in the future,
significant amounts of subsidies and other state aid from their respective governments. In addition, the EU-U.S. Open
Skies Agreement allows U.S. carriers to offer services in the intra-EU market, which could eventually result in increased
competition in the EU market. See “Item 4. Information on the Company—Government Regulation—Liberalization of the
EU Air Transportation Market.”
The airline industry is highly susceptible to price discounting, in part because airlines incur very low marginal
costs for providing service to passengers occupying otherwise unsold seats. Both low-fare and traditional airlines
62
sometimes offer low fares in direct competition with  across a significant proportion of its route network as a result
of the liberalization of the EU air transport market and greater public acceptance of the low-fares model. Any decrease in
fuel prices may enable weaker, unhedged, airlines to pass through fuel savings via lower fares. There is no guarantee that
lower fuel prices will not lead to greater price competition and encourage new entrants to the market in the short to medium
term.
In addition to traditional competition among airline companies and charter operators who have entered the low-
fares market, the industry also faces competition from ground transportation (including high-speed rail systems) and sea
transportation alternatives, as businesses and recreational travelers seek substitutes for air travel.
Although  intends to assert its rights against any predatory pricing or other similar conduct, price
competition both among airlines and between airlines and ground and sea transportation alternatives could reduce the level
of fares and/or passenger traffic on ’s routes to the point where profitability may not be achievable.
The Company Will Incur Significant Costs Acquiring New Aircraft and Any Instability in the Credit and Capital
Markets Could Negatively Impact ’s Ability to Obtain Financing on Acceptable Terms. ’s continued
growth is dependent upon its ability to acquire additional aircraft to meet additional capacity needs and to replace older
aircraft.  had over 470 aircraft in its fleet as at June 30, 2019 and has ordered an additional 210 737-MAX-200
aircraft (including 135 firm and 75 option aircraft) for delivery post June 30, 2019 to fiscal year 2024 pursuant to contracts
with the Boeing Company (““Boeing,” and such contract, the “2014 Boeing Contract”).  expects to have
approximately 585 narrow body aircraft in its fleet by March 31, 2024, depending on the level of lease returns, Boeing’s
ability to fulfill the 2014 Boeing Contract and aircraft disposals. For additional information on the Company’s aircraft
fleet and expansion plans, see “—A majority of ’s aircraft and certain parts are sourced from a single supplier;
therefore,  would be materially and adversely affected if such supplier were unable to provide additional equipment
or support,” and “Item 4. Information on the Company—Aircraft” and “Item 5. Operating and Financial Review and
Prospects - Liquidity and Capital Resources.” There can be no assurance that this planned expansion will not outpace the
growth of passenger traffic on ’s routes or that traffic growth will not prove to be greater than the expanded fleet
can accommodate. In either case, such developments could have a material adverse effect on the Company’s business,
results of operations, and financial condition.
As a result of a 2013 purchase agreement with Boeing (the “2013 Boeing Contract”), the 2014 Boeing Contract
and other general corporate purposes,  DAC has raised and expects to continue to raise substantial debt financing,
including ’s issuance of €750m in 1.125% unsecured Eurobonds with a 6.5-year tenor in February 2017 that is
guaranteed by  Holdings, and a €750m unsecured (5-year term) syndicated bank loan facility entered into in May
2019. ’s ability to raise unsecured or secured debt to pay for aircraft is subject to potential volatility in the
worldwide financial markets. Additionally, ’s ability to raise unsecured or secured debt to pay for aircraft as they
are delivered is subject to various conditions imposed by the counterparties and debt markets to such loan facilities and
related loan guarantees, and any future financing is expected to be subject to similar conditions. Any failure by 
to comply with such conditions and any failure to raise necessary amounts of unsecured or secured debt to pay for aircraft,
would have a material adverse effect on its results of operations and financial condition.
Using the debt capital markets to finance the Company requires the Company to retain its investment grade credit
ratings (the Company has a BBB+ (stable) credit rating from both S&P and Fitch Ratings). There is a risk that the Company
will be unable, or unwilling, to access these markets if it is downgraded or is unable to retain its investment grade credit
ratings and this could lead to a higher cost of finance for  and a material adverse effect on its results of operations
and financial condition.
 has also entered into significant derivative transactions intended to hedge some of its aircraft acquisition-
related debt obligations. These derivative transactions expose  to certain risks and could have adverse effects on
its results of operations and financial condition. See “Item 11. Quantitative and Qualitative Disclosures About Market
Risk.”
A majority of ’s aircraft and certain parts are sourced from a single supplier; therefore,  would
be materially and adversely affected if such supplier were unable to provide additional equipment or support. Because
 currently sources the majority of its aircraft and many related aircraft parts from Boeing, if  was unable to
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acquire additional aircraft from Boeing, or if Boeing was unable or unwilling to make timely deliveries of aircraft or to
provide adequate support for its products, ’s operations could be materially and adversely affected. For example,
in 2019 certain global aviation regulators and airlines grounded the Boeing 737-MAX-8 in response to accidents involving
aircraft flown by Lion Air and Ethiopian Airlines (the “Directives”). It is unclear when or if such Directives will be lifted.
As of March 31, 2019,  has up to 210 (135 firm and 75 options) Boeing 737-MAX-200 on order from Boeing
under the 2014 Boeing Contract, and  had expected, given the planned delivery schedule, to operate approximately
30 of such aircraft by summer 2020. In connection with the Directives, the initial delivery of the Boeing 737-MAX-200
aircraft under the 2014 Boeing Contract has been delayed by Boeing, possibly to between January and February 2020
(subject to U.S. Federal Aviation Administration (“FAA”) and EASA certification). There can be no assurances regarding
when ’s deliveries of the Boeing 737-MAX-200 will commence. The long-term operational and financial impact
of the Directives is uncertain and could negatively affect  based on a number of factors, including, among others,
public perception of the safety of the Boeing 737-MAX-200 (and Boeing aircraft generally), the period of time the ordered
aircraft are unavailable and the associated loss of anticipated flight capacity. As such, the Directives and their impact on
Boeing have caused, and are expected to continue to cause, significant disruption to ’s customers and financial
costs to .
The Company’s Growth May Expose it to Risks. ’s operations have grown rapidly since it pioneered the
low-fares operating model in Europe in the early 1990s.  intends to continue to expand its fleet and add new
destinations and additional flights, with the goal of increasing ’s booked passenger volumes to approximately
200m passengers per annum by March 31, 2024, an increase of approximately 41% from the approximately 142m
passengers booked in fiscal year 2019. However, no assurance can be given that this target will be met. If growth in
passenger traffic and ’s revenues do not keep pace with the planned expansion of its fleet,  could suffer
from overcapacity and its results of operations and financial condition (including its ability to fund scheduled purchases
of the new aircraft and related debt repayments) could be materially adversely affected.
The continued expansion of ’s fleet and operations combined with other factors, may also strain existing
management resources and related operational, financial, management information and information technology systems.
Expansion will generally require additional skilled personnel, equipment, facilities and systems. An inability to hire skilled
personnel or to secure required equipment and facilities efficiently and in a cost-effective manner may have a material
adverse effect on ’s ability to achieve its growth plans and sustain or increase its profitability.
’s New Routes and Expanded Operations May Have an Adverse Financial Impact on its Results. When
 commences new routes, its load factors and fares tend to be lower than those on its established routes and its
advertising and other promotional costs tend to be higher, which may result in initial losses that could have a material
negative impact on ’s results of operations as well as require a substantial amount of cash to fund. In addition,
there can be no assurance that ’s low-fares service will be accepted on new routes.  also periodically runs
special promotional fare campaigns, in particular in connection with the opening of new routes. Promotional fares may
have the effect of increasing load factors and reducing ’s yield and passenger revenues on such routes during the
periods that they are in effect.  has significant cash needs as it expands, including the cash required to fund aircraft
purchases or aircraft deposits related to the acquisition of aircraft. There can be no assurance that  will have
sufficient cash to make such expenditures and investments, and to the extent  is unable to expand its route system
successfully, its future revenue and earnings growth will in turn be limited. See “—The Company Will Incur Significant
Costs Acquiring New Aircraft and Any Instability in the Credit and Capital Markets Could Negatively Impact ’s
Ability to Obtain Financing on Acceptable Terms” above.
’s Continued Growth is Dependent on Access to Suitable Airports; Charges for Airport Access are Subject
to Increase. Airline traffic at certain European airports is regulated by a system of grandfathered “slot” allocations. Each
slot represents authorization to take-off and land at the particular airport at a specified time. As part of ’s recent
strategic initiatives, which include more flights to primary airports,  is operating to an increasing number of slot
coordinated airports, a number of which have constraints at particular times of the day. There can be no assurance that
 will be able to obtain a sufficient number of slots at slot-coordinated airports that it may wish to serve in the future,
at the time it needs them, or on acceptable terms. There can also be no assurance that its non-slot constrained bases, or the
other non-slot constrained airports  serves, will continue to operate without slot allocation restrictions in the future.
See “Item 4. Information on the Company—Government Regulation—Slots.” Airports may impose other operating
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restrictions such as curfews, limits on aircraft noise levels, mandatory flight paths, runway restrictions, and limits on the
number of average daily departures. Such restrictions may limit the ability of  to provide service to or increase
service at such airports.
’s future growth also materially depends on its ability to access suitable airports located in its targeted
geographic markets at costs that are consistent with ’s strategy. Any condition that denies, limits, or delays
’s access to airports it serves or seeks to serve in the future would constrain ’s ability to grow. A change in
the terms of ’s access to these facilities or any increase in the relevant charges paid by  as a result of the
expiration or termination of such arrangements and ’s failure to renegotiate comparable terms or rates could have
a material adverse effect on the Company’s financial condition and results of operations. For additional information, see
“Item 4. Information on the Company—Airport Operations—Airport Charges.” See also “—The Company Is Subject to
Legal Proceedings Alleging State Aid at Certain Airports” below.
Labour Relations Could Expose the Company to Risk.  announced in December 2017 its decision to
recognise trade unions for collective bargaining purposes. Since then,  has concluded Collective Labour
Agreements (“CLA’s”) with Trade Unions in most of its major markets. The CLA’s concluded to date vary by country but
include agreements on recognition, seniority, base transfers, promotions, pay and rostering arrangements. Negotiations
with unions representing both pilots and cabin crew throughout Europe are continuing and further CLA’s are expected to
be concluded this year.
As of March 31, 2019, over 99% of  pilots have already accepted an updated pay deal but there is still the
potential for claims from unions to increase pay over and above what has already been agreed. There may be a push for
legacy type working conditions which if acceded to could decrease the productivity of pilots, increase costs and have an
adverse effect on profitability.  intends to retain its low fare high people productivity model; however, there may
be periods of labour unrest as unions challenge the existing high people productivity model which may have an adverse
effect on customer sentiment and profitability.
 is currently in the process of transitioning from Irish to local contracts of employment in a number of EU
countries which could impact on costs, productivity and complexity of the business. Any subsequent decision to switch to
lower cost locations could result in redundancies and a consequent deterioration in labour relations.
The Company is Dependent on External Service Providers.  currently assigns its engine overhauls and
“rotable” repairs to outside contractors approved under the terms of Part 145, the European regulatory standard for aircraft
maintenance (“Part 145”) established by the European Aviation Safety Agency (“EASA”). The Company also assigns its
passenger, aircraft and ground handling services at airports (other than Dublin, London Stansted and certain airports in
Poland, Spain and Portugal) to established external service providers. See “Item 4. Information on the Company—
Maintenance and Repairs—Heavy Maintenance” and “Item 4. Information on the Company—Airport Operations - Airport
Handling Services.”
The termination or expiration of any of ’s service contracts or any inability to renew them or negotiate
replacement contracts with other service providers at comparable rates could have a material adverse effect on the
Company’s results of operations.  will need to enter into airport service agreements in any new markets it enters,
and there can be no assurance that it will be able to obtain the necessary facilities and services at competitive rates. In
addition, although  seeks to monitor the performance of external parties that provide passenger and aircraft
handling services, the efficiency, timeliness, and quality of contract performance by external providers are largely beyond
’s direct control.  expects to be dependent on such outsourcing arrangements for the foreseeable future.
The Company is Dependent on Key Personnel. ’s success depends to a significant extent upon the efforts
and abilities of its senior management team, including Michael O’Leary, the Group CEO, and key financial, commercial,
operating, IT and maintenance personnel. See “Item 6. Directors, Senior Management and Employees—Compensation of
Directors and Executive Officers—Employment and Bonus Agreement with Mr. O’Leary.” ’s success also
depends on the ability of its Executive Officers and other members of senior management to operate and manage
effectively, both independently and as a group. Although ’s employment agreements with Mr. O’Leary and several
of its other Senior Executives contain non-competition and non-disclosure provisions, there can be no assurance that these
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provisions will be enforceable in whole or in part. Competition for highly qualified personnel is intense, and either the loss
of any Executive Officer, senior manager, or other key employee without adequate replacement or the inability to attract
new qualified personnel could have a material adverse effect upon ’s business, operating results, and financial
condition.
The Company Faces Risks Related to its Internet Reservations Operations and its Elimination of Airport Check-
in Facilities. ’s flight reservations are made through its website, mobile app and Global Distribution Systems
including Travelport (which operates the Galileo and Worldspan GDS) and Sabre (collectively, the “GDSs”) (GDSs).
 has established contingency programs which include hosting its website in multiple locations and having a back-
up booking engine available to support its existing booking platform in the event of a breakdown in this facility.
Nonetheless, the process of switching over to the back-up engine could take some time and there can be no assurance that
 would not suffer a significant loss of reservations in the event of a major breakdown of its booking engine or other
related systems, which, in turn, could have a material adverse effect on ’s operating results or financial condition.
All  passengers are required to use Internet check-in. Internet check-in is part of a package of measures
intended to reduce check-in lines and passenger handling costs and pass on these savings by reducing passenger airfares.
 has deployed this system across its network. Any disruptions to the Internet check-in service as a result of a
breakdown in the relevant computer systems or otherwise could have a material adverse impact on these service-
improvement and cost-reduction efforts. There can be no assurance, however, that this process will continue to be
successful or that consumers will not switch to other carriers that provide standard check-in facilities, which would
negatively affect ’s results of operations and financial condition.
The Company is Subject to Legal Proceedings Alleging State Aid at Certain Airports. Formal investigations are
ongoing by the European Commission into ’s agreements with the Paris (Beauvais), La Rochelle, Carcassonne,
Girona, Reus, Târgu Mures and Montpellier airports, and ’s agreements from 2009 with Frankfurt (Hahn) airport.
The investigations seek to determine whether the agreements constitute illegal state aid under EU law. The investigations
are currently expected to be completed in 2019, with the European Commission’s decisions being appealable to the EU
General Court. Between 2010 and 2019, investigations into ’s agreements with the Bratislava, Tampere, Marseille,
Berlin (Schönefeld), Aarhus, Dusseldorf (Weeze), Brussels (Charleroi), Alghero, Stockholm (Västerås) and Lübeck
airports, and into ’s agreements prior to 2009 with Frankfurt (Hahn) concluded with findings that these agreements
contained no state aid. Between 2014 and 2016, the European Commission announced findings of state aid to  in
its arrangements with Pau, Nimes, Angouleme, Altenburg, Zweibrücken, Cagliari and Klagenfurt airports, ordering
 to repay a total of approximately €22.5m of alleged state aid.  appealed these seven “aid” decisions to the
EU General Court. In late 2018, the General Court upheld the Commission’s findings regarding ’s arrangements
with Pau, Nimes, Angouleme and Altenburg airports, and overturned the Commission’s finding regarding ’s
arrangement with Zweibrücken airport.  has appealed these four negative findings to the European Court of Justice.
These appeals are expected to take at least two years. The appeal proceedings before the General Court regarding ’s
arrangements with Cagliari and Klagenfurt airports are also expected to take approximately two years. In addition to the
European Commission investigations,  is facing an allegation that it has benefited from unlawful state aid in a
German court case in relation to its arrangements with Frankfurt (Hahn). Adverse rulings in the above state aid matters
could be used as precedents by competitors to challenge ’s agreements with other publicly owned airports and
could cause  to strongly reconsider its growth strategy in relation to public or state-owned airports across Europe.
This could in turn lead to a scaling-back of ’s overall growth strategy due to the smaller number of privately owned
airports available for development.
No assurance can be given as to the outcome of these legal proceedings, nor as to whether any unfavorable
outcomes may, individually or in the aggregate, have a material adverse effect on the results of operations or financial
condition of .
For additional information, please see “Item 8. Financial InformationOther Financial InformationLegal
Proceedings.”
The Company Faces Risks Related to Unauthorized Use of Information from the Company’s Website.
Screenscraper websites gain unauthorized access to ’s website and booking system, extract flight and pricing
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information and display it on their own websites for sale to customers at prices which may include hidden intermediary
fees on top of ’s fares.  does not allow any such commercial use of its website and objects to the practice
of screenscraping also on the basis of certain legal principles, such as database rights and copyright protection, etc. 
is currently involved in a number of legal proceedings against the proprietors of screenscraper websites in Ireland,
Germany, The Netherlands, France, Spain, Italy, Switzerland and the U.S.. ’s objective is to prevent any
unauthorized use of its website.  does allow certain companies who operate fare comparison (i.e. not reselling)
websites to access its schedule and fare information for the purposes of price comparison provided they sign a licence and
use the agreed method to access the data.  also permits Travelport (trading as Galileo and Worldspan) and Sabre,
GDS operators, to provide access to ’s fares to traditional and corporate travel agencies.  has obtained both
favorable and unfavorable rulings in its actions in EU member states against screenscrapers. However, pending the
outcome of these legal proceedings and if  were to be ultimately unsuccessful in them, the activities of
screenscraper websites could lead to a reduction in the number of customers who book directly on ’s website and
consequently to a reduction in ’s ancillary revenue stream. Also, some customers may be lost to  once
they are presented by a screenscraper website with a  fare inflated by the screenscraper’s intermediary fee. This
could also adversely affect ’s reputation as a low-fares airline, which could negatively affect ’s results of
operations and financial conditions.
For additional details, see “Item 8. Financial Information—Other Financial Information—Legal Proceedings—
Legal Proceedings Against Internet Ticket Touts.”
The Irish Corporation Tax Rate Could Rise. The majority of  Holding’s profits are subject to Irish
corporation tax at a statutory rate of 12.5%. There remains a risk that the Irish government could increase Irish corporation
tax rates above 12.5% in order to repay current or future loans or to increase tax revenues.
At 12.5%, the rate of Irish corporation tax is lower than that applied by most of the other European Union member
states, and has periodically been subject to critical comment by the governments of other EU member states. Although the
Irish government has repeatedly publicly stated that it will not increase corporation tax rates, there can be no assurance
that such an increase in corporation tax rates will not occur.
In the event that the Irish government increases corporation tax rates or changes the basis of calculation of
corporation tax from the present basis, any such changes would result in the Company paying higher corporation taxes
and would have an adverse impact on ’s cash flows, financial position and results of operations.
Change in EU Regulations in Relation to Employers and Employee Social Insurance Could Increase Costs.
European legislation governs the country in which employees and employers must pay social insurance costs. Under the
terms of legislation introduced in 2012, employees and employers must pay social insurance in the country where the
employee is based. Prior to June 2012,  paid employee and employer social insurance in the country under whose
laws the employee’s contract of employment was governed, which was either the U.K. or Ireland. The legislation
introduced in 2012 included grandfathering rights whereby existing employees (i.e. those employed prior to the
introduction of the new legislation in June 2012) were exempt from the effects of the new legislation for a period of 10
years up until 2022 provided they did not transfer between bases. Each country within the EU has different rules and rates
in relation to the calculation of employee and employer social insurance contributions and any increase in the rates of
contributions will have a material adverse effect on ’s cash flows, financial position and results of operations.
 is Subject to Tax Audits. The Company operates in many jurisdictions and is, from time to time, subject
to tax audits, which by their nature are often complex and can require several years to conclude. While the Company is of
the view that it is tax compliant in the various jurisdictions in which it operates, there can be no guarantee, particularly in
the current economic environment, that it will not receive tax assessments following the conclusion of the tax audits. In
the event that the Company is unsuccessful in defending its position, it is possible that the effective tax rate, employment
and other costs of the Company could materially increase. See “—The Irish Corporation Tax Rate Could Rise” above.
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Risks Associated with the euro. The Company is headquartered in Ireland and its reporting currency is the euro.
As a result of the uncertainty arising from the Eurozone debt crisis, there was widespread speculation regarding the future
of the Eurozone. In addition, following the 2016 Brexit Referendum, the U.K. invoked the declaration required by Article
50 of the Lisbon Treaty to begin the process by which the U.K. will leave the EU. As a result, the pound sterling has been
volatile against the euro and could become more volatile as we approach the Brexit date (currently October 31, 2019).
 predominantly operates to/from countries within the Eurozone and has significant operational and financial
exposures to the Eurozone that could result in a reduction in the operating performance of  or the devaluation of
certain assets.  has taken certain risk management measures to minimize any disruptions; however, these risk
management measures may be insufficient.
The Company has cash and aircraft assets and debt liabilities that are denominated in euro on its balance sheet.
In addition, the positive/negative mark-to-market value of derivative-based transactions are recorded in euro as either
assets or liabilities on the Company’s balance sheet. Uncertainty regarding the future of the Eurozone could have a
materially adverse effect on the value of these assets and liabilities. In addition to the assets and liabilities on ’s
balance sheet, the Company has a number of cross currency risks as a result of the jurisdictions of the operating business
including non-euro revenues, fuel costs, certain maintenance costs and insurance costs. A strengthening in the value of the
euro primarily against U.K. pound sterling and other non-Eurozone currencies such as Polish zloty or a weakening against
the U.S. dollar could have a material adverse impact the operating results of the Company.
Recession, austerity and uncertainty in connection with the euro could also mean that  is unable to grow.
The recent European recession, austerity measures still in effect in several European countries and social and political
instability associated with the influx of refugees related to the wars in Syria and Afghanistan could mean that  may
be unable to expand its operations due to lack of demand for air travel.
Risks associated with the Company’s restructuring. Over the course of fiscal year 2019 and into fiscal year 2020,
the Company has undergone a corporate restructuring which resulted in the transition from a single airline operating model
(i.e.  DAC) to an airline modeled through five entities:  DAC,  Sun (to be rebranded as Buzz in
late 2019), Laudamotion GmbH (“Laudamotion”),  U.K. and, in June 2019, Malta Air Limited (“Malta Air” and,
collectively the “Airline Entities”).
The cost of implementing these plans has been material, and the Company may continue to incur additional
material expenses in relation thereto. In addition, the implementation of the changes involves a number of risks related to
both the revised structure and also the process of transition to such new structure. For example:
• Increased costs and complexity related to establishing and maintaining intra-company agreements for
management, funding, shared services and customer support between the Airline Entities;
• Increased costs and complexity related to compliance with the applicable regulatory authorities and legal
regimes governing each Airline Entity;
• Operational risks related to the addition of Airbus aircraft to the Company’s predominantly Boeing fleet,
including impacts related to expanding the Company’s aircraft maintenance programs;
• Development and implementation of consistent and efficient operating models across the Airline Entities; and
• Potential accounting consequences, including tax costs, as a result of asset transfers in connection with the
restructuring.
As a result, the implementation of the restructuring could have a material adverse effect on the Company's
business, its financial condition, results of operations and prospects.
Entry into service of the Boeing 737-MAX-200.  has 135 Boeing 737-MAX-200 aircraft on firm order
from Boeing. These aircraft were originally due to commence delivery in April 2019. However, an airworthiness directive
from the FAA has grounded the Boeing 737-MAX-8 aircraft until further notice. Due to its larger seat density and the
addition of two additional emergency doors, the Boeing 737-MAX-200 will require a unique certification permit from the
FAA and EASA prior to its release to service. There can be no assurance that the 737-MAX-8 and the 737-MAX-200 will
receive FAA and EASA regulatory approval or on what date any such approval will be granted.
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There also can be no assurance that EASA will not, now or in the future, apply additional maintenance and/or,
simulator training in relation to the operation of the 737-MAX-200 aircraft, that will materially increase the cost of
operating this aircraft type. In addition, should any negative public perception develop in relation to the safety of the
Boeing 737-MAX aircraft series, ’s growth plans and profitability could be materially adversely affected.
Risks Related to the Airline Industry
The Airline Industry Is Particularly Sensitive to Changes in Economic Conditions: A Continued Recessionary
Environment Would Negatively Impact ’s Result of Operations. ’s operations and the airline industry in
general are sensitive to changes in economic conditions. Unfavorable economic conditions such as government austerity
measures, the uncertainty relating to the Eurozone and the U.K. following Brexit, high unemployment rates, constrained
credit markets and increased business operating costs could lead to reduced spending by both leisure and business
passengers. Unfavorable economic conditions, such as the conditions persisting as of the date hereof, also tend to impact
’s ability to raise fares to counteract increased fuel and other operating costs. A continued recessionary
environment, combined with austerity measures by European governments and increased Brexit-related uncertainty in the
U.K., will likely negatively impact ’s operating results. It could also restrict the Company’s ability to grow
passenger volumes, secure new airports and launch new routes and bases, and could have a material adverse effect on its
financial results.
The Introduction of Government/Environmental Taxes on Travel Could Damage ’s Ability to Grow and
Could Have a Material Adverse Impact on Operations. Travel taxes are levied on a per passenger basis in a number of
 markets. In the U.K., Air Passenger Duty (APD) is charged at £13 per adult passenger. In Germany there is an air
passenger tax of €7.50. Similar taxes exist in Morocco (€9), Norway (NOK80), Sweden (SEK60), Italy (municipal taxes
of €6.50) and Austria (€3.50). These taxes are levied as a flat amount per departing passenger and account for a higher
percentage when applied to low fares. In ’s experience the imposition of travel taxes reduces the growth potential
of a market as fares do not increase by the amount of the tax. In most markets transfer passengers are exempt from these
taxes and as a result they distort the market by giving an unfair subsidy to inefficient high cost airlines who operate
connecting flight networks.
Other governments have also introduced or may introduce similar taxes, including additional environmental air
travel levies such as the proposed French departure tax of €1.50 for flights within the EU announced in July 2019. See
“Item 4. Information on the Company—Airport Operations—Airport Charges.” The introduction of government taxes on
travel has had a negative impact on passenger volumes, particularly given the current period of decreased economic
activity. The introduction of further government taxes on travel across Europe could have a material adverse effect on
’s financial results.
Political uncertainty and an increase in trade protectionism could have a material adverse effect on ’s
business, results of operation and financial condition. The current U.S. administration has voiced strong concerns about
imports from countries that it perceives as engaging in unfair trade practices, and has imposed tariffs on certain goods
imported into the United States and raised the possibility of imposing significant, additional tariff increases. The
announcement of unilateral tariffs on imported products by the U.S. has triggered retaliatory actions from certain foreign
governments and may trigger retaliatory actions by other foreign governments, potentially resulting in a “trade war”.
Certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods. Others are
considering the imposition of sanctions that will deny U.S. companies access to critical raw materials. These measures
could increase the price of goods and services globally and may affect , which has exposure, either directly or
indirectly, to certain raw materials, including steel used for aircraft it purchases and jet fuel. A “trade war” of this nature
or other governmental action related to tariffs or international trade agreements could have a material adverse effect on
demand for ’s services, its costs, customers, suppliers and/or the Irish, EU, U.S. or world economy or certain
sectors thereof and, thus, ’s business and financial results.
The Company is Substantially Dependent on Discretionary Air Travel. Because a substantial portion of airline
travel (both business and personal) is discretionary and because  is substantially dependent on discretionary air
travel, any prolonged general reduction in airline passenger traffic could have a material adverse effect on the Company’s
profitability or financial condition. Similarly, any significant increase in expenses related to security, insurance or related
69
costs could have a material adverse effect on the Company’s profitability or financial condition. As a consequence, any
future aircraft safety incidents (particularly involving other low-fare airlines or aircraft models flown by ), changes
in public opinion regarding the environmental impacts of air travel, terrorist attacks in Europe, the U.S. or elsewhere,
significant military actions by the United States or EU nations, or any related economic downturn may have a material
adverse effect on demand for air travel and thus on ’s business, operating results, and financial condition. See “—
The Company is Dependent on the Continued Acceptance of Low-fares Airlines.”
EU Regulation on Passenger Compensation Could Significantly Increase Related Costs. EU Regulation (EC) No.
261/2004 requires airlines to compensate passengers (holding a valid ticket) who have been denied boarding or whose
flight has been cancelled or delayed more than 3 hours on arrival. The regulation calls for compensation of €250, €400, or
€600 per passenger, depending on the length of the flight and the cause for the cancellation or delay, i.e. whether it is
caused by “extraordinary circumstances”. As ’s average flight length is less than 1,500 km – the upper limit for
short-haul flights – the amount payable is generally €250 per passenger. Passengers subject to flight delays over two hours
are also entitled to “assistance,” including meals, drinks and telephone calls, as well as hotel accommodation if the delay
extends overnight. For delays of over five hours, the airline is also required to offer the option of a refund of the cost of
the unused ticket. There can be no assurance that the Company will not incur a significant increase in costs in the future
due to the impact of this regulation if  experiences a large number of delays or cancelled flights, which could occur
as a result of certain types of events beyond its control. Further, recently courts in several jurisdictions have been narrowing
the definition of the term “extraordinary circumstances”, thus allowing increased consumer claims for compensation. In
September 2015, the Court of Justice of the EU, in Van der Lans v KLM, held that airlines are required to provide
compensation to passengers even in the event of a flight cancellation on account of unforeseen technical defects. Further,
in April 2018, the Court of Justice of the EU found in Krusemann v TUIfly that “wildcat” strikes which stem from
restructuring measures taken by an air carrier do not constitute extraordinary circumstances.  considers that the
union-led strikes which it experienced during 2018 can be differentiated from the Krusemann case, because it believes the
union-led strikes were beyond ’s control and did not stem from a decision taken by , but there is a risk that
courts may find differently. See “—Risks Related to the Airline Industry— Extreme Weather Events Could Affect the
Company and Have a Material Adverse Effect on the Company’s Results of Operations” below.
Under the terms of Regulation (EC) No. 261/2004, described above, in addition to the payment of compensation, 
has certain duties to passengers whose flights are cancelled. In particular,  is required to reimburse passengers who
have had their flights cancelled for certain reasonable, documented expenses – primarily for accommodation and food.
Passengers must also be given a re-routing option if their flight is delayed over three hours or if it is cancelled. Such re-
routing options are not limited to  flights and other carriers must be considered if no suitable  flight can be
sourced. If a passenger elects for a refund, ’s re-routing obligations cease.
Environmental Regulation such as EU Regulation of Emissions Trading Will Increase Costs. Many aspects of
’s operations are subject to increasingly stringent national and international laws, regulations and levies protecting
the environment, including those relating to carbon emissions, clean water, management of hazardous materials and
climate change. Compliance with existing and future environmental laws, regulations and levies can require significant
expenditures, and violations can lead to significant fines, penalties and reputational damage.
In particular, the EU Emissions Trading Scheme (“ETS”), is a cap-and-trade system for CO2 emissions to
encourage industries to improve their CO2 efficiency. Under the legislation, airlines are granted initial CO2 allowances
based on historical performance and a CO2 efficiency benchmark. Any shortage of allowances has to be purchased in the
open market and/or at government auctions. The cost of such allowances increased significantly during fiscal year 2019
and has continued to rise in the fiscal year 2020. There can be no assurance that  will be able to obtain sufficient
carbon credits or that the cost of the credits will not have a material adverse effect on the Company’s business, operating
results, and financial condition.
Extreme Weather Events Could Affect the Company and Have a Material Adverse Effect on the Company’s
Results of Operations. In 2010 and 2011 a significant portion of the airspace over northern Europe was closed by authorities
as a result of safety concerns presented by emissions of ash from an Icelandic volcano, which resulted in the cancellation
of a significant number of flights.
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Extreme weather events may happen again and could lead to further significant flight cancellation costs which
could have a material adverse impact on the Company’s financial condition and results of operations. Furthermore, the
occurrence of such events and the resulting cancellations due to the closure of airports could also have a material adverse
effect on the Company’s financial performance indirectly, as a consequence of changes in the public’s willingness to travel
within Europe due to the risk of flight disruptions.
Any Significant Outbreak of any Airborne Disease Could Significantly Damage ’s Business. Worldwide,
there has, from time to time, been substantial publicity in recent years regarding certain potent influenza viruses and other
disease epidemics. Publicity of this type may have a negative impact on demand for air travel in Europe. Past outbreaks
of MERS, SARS, foot-and-mouth disease, avian flu, swine flu and the Zika virus have adversely impacted the travel
industries, including aviation, in certain regions of the world, including Europe. The Company believes that if any
influenza or other pandemic becomes severe in Europe, its effect on demand for air travel in the markets in which 
operates could be material, and it could therefore have a significantly adverse effect on the Company’s financial
performance. A severe outbreak of swine flu, MERS, SARS, foot-and-mouth disease, avian flu or another pandemic or
livestock-related disease may also result in European or national authorities imposing restrictions on travel, further
damaging ’s business. A serious pandemic could therefore severely disrupt ’s business, resulting in the
cancellation or loss of bookings, and adversely affecting ’s financial condition and results of operations.
The Company is Dependent on the Continued Acceptance of Low-fares Airlines. In past years, accidents or other
safety-related incidents involving certain other low-fares airlines have had a negative impact on the public’s acceptance
of such airlines. Any adverse event potentially relating to the safety or reliability of low-fares airlines (including accidents
or negative reports from regulatory authorities) could adversely impact the public’s perception of, and confidence in, low-
fares airlines like  (regardless of ’s own safety record), and could have a material adverse effect on
’s financial condition and results of operations. In particular, an accident or other safety-related incident involving
an aircraft operated by another airline of the same model or manufacturer as operated by  could have a material
adverse effect on  if such accident or other safety-related incident resulted in actions or investigations by global
aviation authorities or created a public perception that ’s operations are not safe or reliable, or are less safe or
reliable than other airlines. Such regulatory actions and/or public perceptions could, in turn, result in adverse publicity for
, cause harm to ’s brand and reduce travel demand on ’s flights, resulting in a material adverse
effect on the Company’s financial condition and results of operations. For additional information, see “—Risks Related
to the Company—A majority of ’s aircraft and certain parts are sourced from a single supplier; therefore, 
would be materially and adversely affected if such supplier were unable to provide additional equipment or support.”
The Company Faces the Risk of Loss and Liability.  is exposed to potential catastrophic losses that may
be incurred in the event of an aircraft accident or terrorist incident. Any such accident or incident could involve costs
related to the repair or replacement of a damaged aircraft and its consequent temporary or permanent loss from service. In
addition, an accident or incident could result in significant legal claims against the Company from injured passengers and
others who experienced injury or property damage as a result of the accident or incident, including ground victims. 
currently maintains passenger liability insurance, employer liability insurance, aircraft insurance for aircraft loss or
damage, and other business insurance in amounts per occurrence that are consistent with industry standards.
 currently believes its insurance coverage is adequate (although not comprehensive). However, there can
be no assurance that the amount of insurance coverage will not need to be increased, that insurance premiums will not
increase significantly, or that  will not be forced to bear substantial losses from any accidents not covered by its
insurance. Airline insurance costs increased dramatically following the September 2001 terrorist attacks on the United
States. See “The Company is Substantially Dependent on Discretionary Air Travel” above. Substantial claims resulting
from an accident in excess of related insurance coverage could have a material adverse effect on the Company’s results of
operations and financial condition. Moreover, any aircraft accident, even if fully insured, could lead to the public
perception that ’s aircraft were less safe or reliable than those operated by other airlines, which could have a
material adverse effect on ’s business.
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EU Regulation No. 2027/97, as amended by Regulation No. 889/2002, governs air carrier liability. See “Item 4.
Information on the Company—Insurance” for details of this regulation. This regulation increased the potential liability
exposure of air carriers such as . Although  has extended its liability insurance to meet the requirements of
the regulation, no assurance can be given that other laws, regulations, or policies will not be applied, modified or amended
in a manner that has a material adverse effect on ’s business, operating results, and financial condition.
Airline Industry Margins are Subject to Significant Uncertainty. The airline industry is capital intensive and is
characterized by high fixed costs and by revenues that generally exhibit substantially greater elasticity than costs. Although
fuel accounted for approximately % of total operating expenses in fiscal year 2019, management anticipates that this
percentage may vary significantly in future years. See “—Changes in Fuel Costs and Availability Affect the Company’s
Results” above. The operating costs of each flight do not vary significantly with the number of passengers flown, and
therefore, a relatively small change in the number of passengers, fare pricing, or traffic mix could have a disproportionate
effect on operating and financial results. Accordingly, a relatively minor shortfall from expected revenue levels could have
a material adverse effect on the Company’s growth or financial performance. See “Item 5. Operating and Financial Review
and Prospects.” The very low marginal costs incurred for providing services to passengers occupying otherwise unsold
seats are also a factor in the industry’s high susceptibility to price discounting. See “Risks Related to the Company—The
Company Faces Significant Price and Other Pressures in a Highly Competitive Environment” above.
Safety-Related Undertakings Could Affect the Company’s Results. Aviation authorities in Europe and the United States
periodically require or suggest that airlines implement certain safety-related procedures on their aircraft. In recent years,
the FAA and EASA have required a number of such procedures with regard to Boeing 737 aircraft, including major
modifications to implement changes to the take-off configuration warning lights, cabin pressurization system, pitot system
heating, CFM fan blade nondestructive testing (NDT) on certain production CFM-56 engines, fuel tank boost pump
electrical arcing protection, and the European Commission’s Datalink mandate. Additionally, global aviation authorities
are currently undertaking certain safety reviews of the Boeing 737-MAX-8 as a result of the grounding of such aircraft
due to safety concerns in March 2019, which has delayed the delivery of 737-MAX-200 aircraft ordered from Boeing.
’s policy is to implement any required safety procedures in accordance with FAA and EASA guidance and to
perform such procedures in close collaboration with Boeing. To date, all such procedures have been conducted as part of
’s standard maintenance program and have not interrupted flight schedules nor required any material increases in
’s maintenance expenses. However, there can be no assurance that the FAA and EASA or other regulatory
authorities will not recommend or require other safety-related undertakings or that such undertakings would not adversely
impact ’s operating results or financial condition.
There also can be no assurance that new regulations will not be implemented in the future that would apply to
’s aircraft and result in an increase in ’s cost of maintenance, delays in the delivery of aircraft or other costs
beyond management’s current estimates. In addition, should ’s aircraft cease to be sufficiently reliable or should
any public perception develop that ’s aircraft are less than completely reliable, ’s business could be
materially adversely affected.
Risks Related to Ownership of the Company’s Ordinary Shares or ADRs
EU Rules Impose Restrictions on the Ownership of  Holdings’ Ordinary Shares by Non-EU Nationals,
and the Company has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals. EU Regulation No.
1008/2008 requires that, in order to obtain and retain an operating license, an EU air carrier must be majority-owned and
effectively controlled by EU nationals. The Board of Directors of  Holdings is given certain powers under 
Holdings’ articles of association (the “Articles”) to take action to ensure that the number of Ordinary Shares held in 
Holdings by non-EU nationals (“Affected Shares”) does not reach a level that could jeopardize the Company’s entitlement
to continue to hold or enjoy the benefit of any license, permit, consent, or privilege which it holds or enjoys and which
enables it to carry on business as an air carrier. The Directors, from time to time, set a “Permitted Maximum” on the
number of the Company’s Ordinary Shares that may be owned by non-EU nationals at such level as they believe will
comply with EU law. The Permitted Maximum is currently set at 49.9%. In addition, under certain circumstances, the
Directors can take action to safeguard the Company’s ability to operate by identifying those Ordinary Shares, ADSs or
Affected Shares which give rise to the need to take action and treat such Ordinary Shares, the American Depositary
Receipts (“ADRs”) evidencing such ADSs, or Affected Shares as “Restricted Shares.”
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The Board of Directors may, under certain circumstances, deprive holders of Restricted Shares of their rights to
attend, vote at, and speak at general meetings, and/or require such holders to dispose of their Restricted Shares to an EU
national within as little as 21 days. The Directors are also given the power to transfer such Restricted Shares themselves
if a holder fails to comply. In 2002, the Company implemented measures to restrict the ability of non-EU nationals to
purchase Ordinary Shares, and non-EU nationals are currently effectively barred from purchasing Ordinary Shares, and
will remain so for as long as these restrictions remain in place. There can be no assurance that these restrictions will ever
be lifted. Additionally, these foreign ownership restrictions could result in ’s exclusion from certain stock tracking
indices. Any such exclusion may adversely affect the market price of the Ordinary Shares and ADRs. Since April 2012,
the Company has had the necessary authorities in place to repurchase ADRs as part of its general authority to repurchase
up to 10% of the issued share capital in the Company. See “Item 10. Additional Information—Limitations on Share
Ownership by Non-EU Nationals” for a detailed discussion of restrictions on share ownership and the current ban on share
purchases by non-EU nationals.
In light of the uncertainty surrounding Brexit, on 8 March 2019 the Board of Directors passed a number of
resolutions which will become effective from the date on which U.K. nationals cease to qualify as nationals of Member
States for the purposes of Article 4 of EU Regulation No. 1008/2008 ("Hard Brexit Day"). In accordance with the powers
delegated to the Board of Directors pursuant to the Articles, the Board has resolved that with effect from Hard Brexit Day:
(i) All Ordinary Shares and Depositary Shares held by or on behalf of non-EU (including U.K.) shareholders
will be treated as "Restricted Shares" (within the meaning of the Articles);
(ii) Restricted Share Notices will be issued to the registered holder(s) of each Restricted Share, specifying that
the holder(s) of such shares shall not be entitled to attend, speak or vote at any general meeting of the
Company for so long as those shares are treated as Restricted Shares;
(iii) Notwithstanding the powers vested in the chairman of general meetings of the Company pursuant to Article
41(J)(i) of the Articles, the chairman will not vote any Restricted Shares at any meeting of the Company.
Licensing authorities in Austria, Ireland and Poland have confirmed respectively in the case of Laudamotion,
 DAC and  Sun that these resolutions ensure that the Company’s subsidiaries will remain complaint with
EU Regulation No. 1008/2008 should Hard Brexit Day occur. These resolutions will remain in place until the Board
determines that the ownership and control of the Company is no longer such that there is any risk to the airline licences
held by the Company's subsidiaries pursuant to EU Regulation No. 1008/2008. For the avoidance of doubt, the prohibition
(referred to in the second paragraph of this section) on non-EU nationals acquiring Ordinary Shares in  Holdings
plc, as announced by the Company on 5 February 2002, continues to apply. Consequently, with effect from Hard Brexit
Day, U.K. nationals will not be permitted to acquire Ordinary Shares in the Company. In addition, in order to provide
contingency in the event of disruption to existing traffic rights on Brexit, in December 2018 the Company’s subsidiary,
 U.K., secured a U.K. AOC.
As of June 30, 2019, ADRs accounted for approximately 44.3% of  Holdings’ issued ordinary shares (assuming
conversion of all outstanding ADRs into Ordinary Shares).
Holders of Ordinary Shares are Currently Unable to Convert those Shares into ADRs. In an effort to increase the
percentage of its share capital held by EU nationals, on June 26, 2001,  Holdings instructed The Bank of New
York Mellon, the depositary for its ADR program (the “Depositary”), to suspend the issuance of new ADRs in exchange
for the deposit of Ordinary Shares until further notice. Holders of Ordinary Shares cannot convert their Ordinary Shares
into ADRs during this suspension, and there can be no assurance that the suspension will ever be lifted. See also “—EU
Rules Impose Restrictions on the Ownership of  Holdings’ Ordinary Shares by Non-EU nationals and the Company
has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals” above.
The Company’s Results of Operations May Fluctuate Significantly. The Company’s results of operations have
varied significantly from quarter to quarter, and management expects these variations to continue. See “Item 5. Operating
and Financial Review and Prospects—Seasonal Fluctuations.” Among the factors causing these variations are the airline
industry’s sensitivity to general economic conditions, the seasonal nature of air travel, accounting standards in relation to
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the timing of recognition of revenue and trends in airlines’ costs, especially fuel costs. Because a substantial portion of
airline travel (both business and personal) is discretionary, the industry tends to experience adverse financial results during
general economic downturns. The Company is substantially dependent on discretionary air travel.
The trading price of  Holdings’ Ordinary Shares and ADRs may be subject to wide fluctuations in
response to quarterly variations in the Company’s operating results and the operating results of other airlines. In addition,
the global stock markets from time to time experience extreme price and volume fluctuations that affect the market prices
of many airline company stocks. These broad market fluctuations may materially adversely affect the market price of the
Ordinary Shares and ADRs.
 Holdings May or May Not Pay Dividends. Since its incorporation in 1996,  Holdings, has only
occasionally declared special dividends on both its Ordinary Shares and ADRs.  Holdings’ ability to pay dividends
in the future will be dependent on the financial performance of the Company and there is no guarantee that any further
dividends will be paid. See “Item 8. Financial Information—Other Financial Information—Dividend Policy.” As a holding
company,  Holdings does not have any material assets other than its shares in the Company’s operating airlines
and in other entities within the  Holdings group structure.
Increased Costs for Possible Future ADR and Share Repurchases. As the ADRs have historically traded on the
NASDAQ Stock Market (“NASDAQ”) at a premium compared to Ordinary Shares, the inclusion of ADRs in buy-back
programs may result in increased costs in performing share buy-backs. Over the past five years the Company has
repurchased shares as follows:
Ordinary Ordinary Shares Total Total Average Price per
Shares Underlying ADR Share Spent Share
Fiscal Year M’ M’ M’ €’M €
2015 10.9 — 10.9 112 10.28
2016 33.8 19.9 53.7 706 13.15
2017 50.7 21.6 72.3 1,018 14.08
2018 44.7 2.0 46.7 829 17.75
2019 37.8 — 37.8 561 14.84
Item 4. Information on the Company
INTRODUCTION
 Holdings was incorporated in 1996 as a holding company for  Limited, now known as  Designated
Activity Company (“DAC”). The latter operates a low fare, scheduled-passenger airline serving short- haul, point-to-point
routes mainly within Europe. In fiscal year 2019, the Company set up  Sun (a Polish charter and scheduled
passenger airline with a Polish AOC), acquired Laudamotion (an Austrian scheduled passenger airline with an Austrian
AOC), and set-up  U.K. (with a U.K. AOC). In June 2019, Malta Air became the fifth airline in the  Group.
See “Item 5. Operating and Financial Review and Prospects—History” for detail on the history of the company. As of
June 30, 2019,  had a principal fleet of over 455 Boeing 737 aircraft and 20 Airbus A320 aircraft, and offered over
2,500 scheduled short-haul flights per day serving over 200 airports (including 86 bases) largely throughout Europe. See
Item 4. “Route System, Scheduling and Fares—Route System and Scheduling” for more details of ’s route
network. See “Item 5. Operating and Financial Review and Prospects—Seasonal Fluctuations” for information about the
seasonality of ’s business.
 recorded a profit on ordinary activities after taxation of €885.0m in fiscal year 2019, as compared with a
profit of €1,450.2m in fiscal year 2018. This 39% decrease was primarily attributable to lower fares due to over-capacity
in European short-haul, a 28% increase in fuel costs, a 33% increase in staff costs and a €139.5m start-up loss in
Laudamotion.  generated an average booked passenger load factor of approximately 96% in fiscal year 2019,
compared to 95% in fiscal year 2018, and average booked passenger fare of €37.18 per passenger in fiscal year 2019,
down from €39.40 in the prior fiscal year. The Company has focused on maintaining low operating costs (€47.02 per
passenger in fiscal year 2019, an increase from €42.08 in fiscal year 2018).
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Management believes that the market’s acceptance of ’s low-fares service is reflected in the “
Effect” – ’s history of stimulating significant annual passenger traffic growth on the routes where it commences
service. For example, the number of scheduled airline passengers traveling on  routes increased from 0.7 million
passengers in 1991 to 142.1 million passengers in fiscal year 2019. Most international routes  has begun serving
have recorded significant traffic growth in the period following ’s commencement of service, with 
typically capturing the largest portion of such growth on each route. A variety of factors contributed to this increase in air
passenger traffic, including the development of the Irish, U.K., and European economies in past years. However,
management believes that the most significant factors driving such growth across all its European routes have been
’s low-fares policy and its favorable results compared to many competitors in terms of flight punctuality, levels of
lost baggage, and rates of flight cancellations.
The address of  Holdings’ registered office is: c/o  DAC, Dublin Office, Airside Business Park,
Swords, County Dublin, K67 NY94, Ireland. The Company’s contact person regarding this Annual Report on Form 20-F
is: Neil Sorahan, Chief Financial Officer (same address as above). The telephone number is +353-1-945-1212 and
facsimile number is +353-1-945-1213. Under its current Articles,  Holdings has an unlimited corporate duration.
STRATEGY
’s objective is to establish itself as Europe’s biggest scheduled passenger airline group, through continued
improvements and expanded offerings of its low-fares service. In the highly challenging current operating environment,
 seeks to offer low fares that generate increased passenger traffic while maintaining a continuous focus on
cost-containment and operating efficiencies. The key elements of ’s long-term strategy are:
Low Fares. ’s low fares are designed to stimulate demand, particularly from fare-conscious leisure and
business travelers who might otherwise use alternative forms of transportation or choose not to travel at all.  sells
seats on a one-way basis, thus eliminating minimum stay requirements from all travel on  scheduled services.
 sets fares on the basis of the demand for particular flights and by reference to the period remaining to the date of
departure of the flight, with higher fares typically charged on flights with higher levels of demand and for bookings made
nearer to the date of departure.  also periodically runs special promotional fare campaigns. See Item 4. “Route
System, Scheduling and Fares—Widely Available Low Fares” below.
Customer Service. ’s strategy is to deliver the best customer service performance in its peer group.
According to airlines’ own published statistics,  delivers industry leading punctuality (target >90%) and fewer lost
bags than its peer group in Europe.  achieves this by focusing strongly on the execution of these services. 
conducts a daily conference call with airport personnel at each of its base airports, during which the reasons for each “first
wave” flight delay and baggage short-shipment are discussed in detail and logged to ensure that the root cause is identified
and rectified. Subsequent (consequential) delays and short shipments are investigated by  ground operations
personnel. Customer satisfaction is also measured by regular online, “mystery-passenger” and “by passenger” surveys.
 is continuously implementing new strategic initiatives that are expected to improve its customer service
offering. In recent years,  introduced a series of customer-service related initiatives under the AGB customer
experience program, including an easy-to-navigate website, a mobile app, reduced penalty fees, allocated seating, security
fast track at selected airports and more customer-friendly baggage allowances and change flight policies.  has also
introduced several important products and bundles that improve its offering to customers.  Groups is a dedicated
booking service designed for groups travelling together. Furthermore, these customer-service related initiatives include
scheduling more flights to primary airports, selling flights via travel agents on GDS, marketing spending to support these
initiatives, and adjusting the airline’s yield management strategy with the goal of increasing load factors and yield.
Frequent Point-to-Point Flights on Short-Haul Routes.  provides frequent point-to-point service on
short-haul routes. In fiscal year 2019,  flew an average route length of 774 miles and an average flight duration of
approximately 1.9 hours. Short-haul routes allow  to offer its low fares and frequent service, while eliminating the
need to provide unnecessary “frills,” like free in-flight meals and movies, otherwise expected by customers on longer
flights. Point-to-point flying (as opposed to hub-and-spoke service) allows  to offer direct, non-stop routes and
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avoid the costs of providing “through service,” for connecting passengers, including baggage transfer and transit passenger
assistance.
Low Operating Costs. Management believes that ’s operating costs are among the lowest of any European
scheduled-passenger airline group.  strives to reduce or control four of the primary expenses involved in running
a major scheduled airline: (i) aircraft equipment and finance costs; (ii) personnel costs; (iii) customer service costs; and
(iv) airport access and handling costs:
(i) Aircraft Equipment and Finance Costs.  currently operates “next generation” Boeing 737-800s and
expects to commence operating the updated Boeing 737-MAX-200 aircraft in fiscal year 2020. The operation of
primarily a single aircraft type (mainly B737s) enables  to limit the costs associated with personnel
training, maintenance, and the purchase and storage of spare parts while also affording the Company greater
flexibility in the scheduling of crews and equipment. Management also believes that the terms of ’s
contracts with Boeing are very favorable to . The strength of ’s balance sheet and cashflows also
enables the group to lease aircraft at attractive rates (such as the A320s leased by Laudamotion). See Item 4.
“Aircraft” below for additional information on ’s fleet. The Company has a BBB+ (stable) rating from
both S&P and Fitch Ratings (see Item 3. “The Company Will Incur Significant Costs Acquiring New Aircraft
and Any Instability in the Credit and Capital Markets Could Negatively Impact ’s Ability to Obtain
Financing on Acceptable Terms” above) and can raise inexpensive unsecured debt in the Capital Markets. The
Company also finances aircraft from its strong cashflows.
(ii) Personnel Costs.  endeavors to control its labor costs through incentivizing high productivity.
Compensation for personnel emphasizes productivity-based pay incentives. These incentives include sales bonus
payments for onboard sales of products for cabin crew and payments based on the number of hours or sectors
flown by pilots and cabin crew within strict limits set by industry standards or regulations fixing maximum
working hours.
(iii) Customer Service Costs.  has entered into agreements with external contractors at certain airports for
ticketing, passenger and aircraft handling, and other services that management believes can be more
cost-efficiently provided by third parties.  negotiates competitive rates for such services by negotiating
fixed-price, multi-year contracts. The development of its own Internet booking facility has allowed  to
eliminate travel agent commissions. As part of its strategic initiatives, and the AGB customer experience program,
the Company has broadened its distribution base by making ’s fares available to Travelport (trading as
Galileo and Worldspan) and Sabre at nominal cost to the Company. Direct sales via the  website and
mobile app continues to be the prime generator of scheduled passenger revenues.
(iv) Airport Access and Handling Costs.  prioritizes airports that offer competitive prices. ’s
record of delivering a consistently high volume of passenger traffic growth at many airports has allowed it to
negotiate favorable growth contracts with such airports, although the recent change in strategy by the Company
has seen it access more primary airports, which typically have higher airport charges and greater competition
along with slot limitations. Secondary and regional airports also generally do not have slot requirements or other
operating restrictions that can increase operating expenses and limit the number of allowed take-offs and landings.
 endeavors to reduce its airport charges by opting, when practicable, for less expensive gate locations as
well as outdoor boarding stairs, rather than jetways, which are more expensive and operationally less efficient to
use.  requires all passengers to check-in on the Internet, which reduces waiting times at airports and speeds
a passenger’s journey from arrival at the airport to boarding, as well as significantly reducing airport handling
costs.  has also introduced a checked-bag fee, which is payable on the Internet at the time of booking or
post booking and is aimed at reducing the number of bags carried by passengers in order to further reduce handling
costs. See “Item 3. Risk Factors—Risks Related to the Company—The Company Faces Risks Related to its
Internet Reservations Operations and its Elimination of Airport Check-in Facilities.”
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Taking Advantage of the Internet. ’s reservation system operates under a hosting agreement with
Navitaire which currently extends to November 2025. As part of the implementation of the reservation system, Navitaire
developed an Internet booking facility. The  system allows Internet users to access its host reservation system and
to make and pay for confirmed reservations in real time through the .com website. The Company also has a mobile
app which makes it simpler and easier for customers to book  flights. The website and app also offer customers
the ability to add additional ancillary products on day of travel (e.g. bags, priority boarding and fast track).  has
continued to invest in its website with the key features being personalization, a “My ” account, easier booking
flow, more content, faster, intuitive and fully responsive for mobile devices. The “My ” registration service, which
allows customers to securely store their personal and payment details, has also significantly quickened the booking process
and made it easier for customers to book a flight. Membership of “My ” is automatic for all bookings.  will
endeavor to continue to improve its website and mobile app through a series of ongoing upgrades.
Commitment to Safety and Quality Maintenance. Safety is the primary priority of . This commitment
begins with the hiring and training of ’s pilots, flight attendants, and maintenance personnel and includes a policy
of maintaining its aircraft in accordance with the highest European industry standards.  has not had a single
passenger or flight crew fatality as a result of an accident with one of its aircraft in its 34-year operating history. Although
 seeks to maintain its fleet in a cost-effective manner, management does not seek to extend ’s low-cost
operating strategy to the areas of safety, maintenance, training or quality assurance. Routine aircraft maintenance and
repair services are performed primarily by , at ’s main bases, but are also performed at other base airports
by maintenance contractors approved under the terms of an EASA Part 145 approval.  currently performs the
majority of heavy airframe maintenance in-house, but contracts with other parties who perform engine overhaul services
and rotable repairs.  also outsources some heavy maintenance activity. These contractors also provide similar
services to a number of other airlines, including Southwest Airlines, British Airways, Air France, Alitalia, Turkish Airlines,
Norwegian Airlines, Aer Lingus and SAS.
Enhancement of Operating Results through Ancillary Services.  distributes accommodation services and
travel insurance primarily through its website. For accommodation services (hotels, B&Bs, apartments, hostels, etc.),
 currently has a contract with five providers (Hotels.com, Hotelopia.com, HRS.com,  Rooms Direct and
Hostelsclub) to market hotels and other accommodation offerings during and after the booking process.  also offers
airport transfers and car park services through its website and on board its aircraft.  offers car hire services via a
contract with CarTrawler. Ancillary revenues accounted for approximately 32% of ’s total operating revenues in
fiscal year 2019 and approximately 28% of ’s total operating revenues in fiscal year 2018. See “—Ancillary
Services” below and “Item 5. Operating and Financial Review and Prospects—Results of Operations—Fiscal Year 2019
Compared with Fiscal Year 2018—Ancillary Revenues” for additional information.
Focused Criteria for Growth.  believes it will have opportunities for continued growth by: (i) using
aggressive fare promotions to stimulate demand; (ii) initiating additional routes in the EU; (iii) initiating additional routes
in countries party to a European Common Aviation Agreement with the EU that are currently served by higher-cost,
higher-fare carriers; (iv) increasing the frequency of service on its existing routes; (v) starting new domestic routes within
individual EU countries; (vi) considering acquisition opportunities that may become available in the future; (vii)
connecting airports within its existing route network; (viii) establishing new bases; and (ix) initiating new routes not
currently served by any carrier.
Responding to Market Challenges. In recent periods, ’s low-fares business model faced substantial
pressure due to significantly increased fuel costs and reduced economic growth (or economic contraction) in some of the
economies in which it operates. The Company has aimed to meet these challenges by: (i) grounding approximately 65
aircraft in fiscal year 2019 during the winter season; (ii) disposing of aircraft (lease hand backs totaled 5 in fiscal year
2019); (iii) controlling costs; and (iv) renegotiating contracts with existing suppliers, airports and handling companies.
There can be no assurance that the Company will be successful in achieving all of the foregoing or taking other similar
measures, or that doing so will allow the Company to earn profits in any period. See “Item 3. Key Information—Risk
Factors—Risks Related to the Company—Changes in Fuel Costs and Availability Affect the Company’s Results” and
“—The Company May Not Be Successful in Increasing Fares and Revenues to Cover Rising Business Costs.”
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In prior years, in response to an operating environment characterized by high fuel prices, typically lower seasonal
yields and higher airport charges and/or taxes,  adopted a policy of grounding a certain portion of its fleet during
the winter months.  also carries out its scheduled aircraft maintenance at this quieter time of the year. While
seasonal grounding does reduce the Company’s operating costs, it also decreases ’s winter season flight and non-
flight revenues. Decreasing the number and frequency of flights may also negatively affect the Company’s labor relations,
including its ability to attract flight personnel interested in full-time employment. See “Item 3. Key Information—Risk
Factors— has Seasonally Grounded Aircraft.”
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ROUTE SYSTEM, SCHEDULING AND FARES
Route System and Scheduling
As of July 25 2019, the Company offered over 2,500 scheduled short-haul flights per day serving over 200
airports largely throughout Europe. The following table lists ’s operating bases:
Operating Bases

(a) In February 2019,  announced that it would open a base in Toulouse from October 2019.
(b) In March 2019,  announced that it would open a base in Katowice from October 2019.
See Note 17, “Analysis of operating revenues and segmental analysis,” to the consolidated financial statements
included in Item 18 for more information regarding the geographical sources of the Company’s revenue.
’s objective is to schedule a sufficient number of flights per day on each of ’s routes to satisfy
demand for ’s low-fares service.  schedules departures on its most popular routes at frequent intervals
normally between approximately 6:00 a.m. and 11:30 p.m. Management regularly reviews the need for adjustments in the
number of flights on all of its routes.
As part of ’s AGB customer experience program  has focused on high frequency and business
friendly timings between Europe’s main business centers.
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During fiscal year 2019,  launched 316 new routes across its network. See “Item 3. Risk Factors—Risks
Related to the Company—’s New Routes and Expanded Operations May Have an Adverse Financial Impact on
Its Results.”
Widely Available Low Fares
 offers low fares, with prices generally varying on the basis of advance booking, seat availability and
demand.  sells seats on a one-way basis, thus removing minimum stay requirements from all travel on 
scheduled services. All tickets can be changed, subject to certain conditions, including fee payment and applicable upgrade
charges. However, tickets are generally non-cancelable and non-refundable and must be paid for at the time of reservation.
’s discounted fares are driven by ’s “load factor active – yield passive” policy whereby seats are
priced to ensure that high load factor targets are achieved.
 also periodically runs special promotional fare campaigns, in particular in connection with the opening
of new routes, and endeavors to always offer the lowest fare on any route it serves. Promotional fares may have the effect
of increasing load factors and reducing ’s yield and passenger revenues on the relevant routes during the periods
they are in effect.  expects to continue to offer significant fare promotions to stimulate demand in periods of lower
activity or during off-peak times for the foreseeable future.
MARKETING AND ADVERTISING
’s primary marketing strategy is to emphasize its widely available low fares, route choice and great
service. In doing so,  primarily advertises its services in national and regional media across Europe. In addition,
 uses advertising and social media. Other marketing activities include the distribution of advertising and
promotional material and cooperative advertising campaigns with other travel-related entities, including local tourist
boards.  also regularly contacts people registered in its database to inform them about promotions and special
offers.
RESERVATIONS ON .COM
Passenger airlines generally rely on travel agents (whether traditional or online) for a significant portion of their
ticket sales and pay travel agents’ commissions for their services, as well as reimbursing them for the fees charged by
reservation systems providers. In contrast,  requires passengers to make reservations and purchase tickets directly
through the Company (.com, Lauda.com and sun.com). The vast majority of such reservations and
purchases are made through the website .com although an increasing number of customers are also booking via
Lauda.com and sun.com.  is therefore not reliant on travel agents. See “—Strategy—Taking Advantage of
the Internet” above for additional information.
’s reservations system is hosted under an agreement with the system provider, Navitaire. Under the
agreement, the system serves as ’s core seating inventory and booking system. In return for access to these system
functions,  pays transaction fees that are generally based on the number of passenger seat journeys booked through
the system. Navitaire also retains a back-up booking engine to support operations in the event of a breakdown in the main
system. Over the last several years,  has introduced a number of Internet-based customer service enhancements
such as Internet check-in, security fast-track, priority boarding service and fully allocated seating as part of the AGB
customer experience program.  also requires Internet check-in for all passengers. These enhancements and changes
have been made to reduce waiting time at airports and speed a passenger’s journey from arrival at the airport to boarding,
as well as significantly reduce airport handling costs. The Company has also entered into an agreement with the GDSs
Travelport (which operates the Galileo and Worldspan GDS) and Sabre. The Company’s fares (except for the three lowest
fare categories) are currently distributed on the GDSs’ systems.  has negotiated an attractive per segment price
which enables it to sell tickets via travel agents at no commission to a mix of largely business/corporate travelers. See
“Item 3. Key Information—Risk Factors—Risks Related to the Company— Faces Risks Related to Unauthorized
Use of Information from the Company’s Website.”
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AIRCRAFT
Boeing Aircraft
As of June 30, 2019, the Company had a fleet of 455 Boeing 737 aircraft which are currently operated by ,
 Sun (soon to be rebranded Buzz) and Malta Air. The fleet was composed of Boeing 737-800 “next generation”
aircraft, each having 189 seats. The Company’s fleet totaled 455 Boeing 737-800s at March 31, 2019.
Between March 1999 and June 2019,  took delivery of 531 new Boeing 737-800 “next generation” aircraft
under its contracts with Boeing and disposed of 76 such aircraft, including 51 lease handbacks.
Under the terms of the 2013 Boeing Contract,  agreed to purchase 183 Boeing 737-800 aircraft over a
five year period from fiscal years 2015 to 2019, with delivery beginning in September 2014 and ending in December 2018.
These aircraft benefited from a net effective price not dissimilar to that under the 2005 Boeing Contract. Under the terms
of the 2014 Boeing contract,  has agreed to purchase up to 210 new Boeing 737-MAX-200 aircraft (135 firm orders
and 75 aircraft subject to option) over a five year period from fiscal year 2020 to 2024, with delivery expected to begin in
fiscal 2020 (subject to delays related to safety reviews by global regulators of the Boeing 737-MAX aircraft). The new
aircraft will be used on new and existing routes to grow the Company’s business.
The Boeing 737-800 is a short-to-medium range aircraft and seats 189 passengers. The basic price (equivalent to
a standard list price for an aircraft of this type) for each of the Boeing 737-800 series aircraft under the 2013 Boeing
Contract was approximately US$78.5m and this basic price was increased for certain “buyer-furnished” equipment,
amounting to approximately US$2.9m per new aircraft, which the Company asked Boeing to purchase and install on each
of the new aircraft. In addition, an “Escalation Factor” was applied to the basic price to reflect increases in the Employment
Cost Index and Producer Price Index between the time the basic price was set in the 2013 Boeing Contract and the period
18 to 24 months prior to the delivery of any such new aircraft.
Boeing granted the Company certain price concessions as part of the 2013 Boeing Contract. These took the form
of credit memoranda to the Company for the amount of such concessions, which were applied toward the purchase of
goods and services from Boeing or toward certain payments, other than advance payments, in respect of the new aircraft.
Boeing and CFMI (the manufacturer of the engines fitted on the 2013 Boeing Contract aircraft) also agreed to provide
 with certain allowances for promotional and other activities, as well as providing certain other goods and services
to  on concessionary terms. Those credit memoranda and promotional allowances effectively reduced the price of
each new aircraft payable by the Company. As a result, the “effective price” (the purchase price of the aircraft net of
discounts received from Boeing) of each aircraft under the 2013 Boeing Contract was significantly below the basic price
mentioned above. The effective price applied to all Boeing 737-800 aircraft delivered under the 2013 Boeing Contract.
The Boeing 737-MAX-200 represents the newest generation of Boeing's 737 aircraft. It is a short-to-medium
range aircraft and seats 197 passengers (eight more than ’s existing 189 seat fleet). The basic price (equivalent to
a standard list price for an aircraft of this type) for each of the Boeing 737-MAX-200 series aircraft under the 2014 Boeing
Contract is approximately US$102m and the basic price will be increased for certain "buyer-furnished" equipment,
amounting to approximately US$1.6m per new aircraft, which the Company has asked Boeing to purchase and install on
each of the new aircraft. In addition, an “Escalation Factor” will be applied to the basic price to reflect increases in the
Employment Cost Index and Producer Price Index between the time the basic price was set in the 2014 Boeing Contract
and the planned month of delivery of any such new aircraft.
In a similar manner to the 2013 Boeing Contract, Boeing has granted  certain price concessions as part of
the 2014 Boeing Contract. As a result, the "effective price" (the purchase price of the new aircraft net of discounts received
from Boeing) of each new aircraft will be significantly below the basic price mentioned above. The effective price applies
to all new aircraft due for delivery from fiscal year 2020.
For additional details on the Boeing contracts, scheduled aircraft deliveries and related expenditures and their
financing, as well as the terms of the arrangements under which the Company currently leases 26 of the aircraft in its
operating fleet, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources.”
81
The Boeing 737 is the world’s most widely used commercial aircraft and exists in a number of generations, the
Boeing 737-MAX-200 being the most recent in current production.
The Boeing 737-800s are fitted with CFM 56-7B engines and have advanced CAT III Autoland capability,
advanced traffic collision avoidance systems, and enhanced ground-proximity warning systems. The Boeing 737-MAX-
200 CFM LEAP-1B engines which, combined with the Advanced Technology winglet and other aerodynamic
improvements, will reduce fuel consumption by up to approximately 16% on a per seat basis compared to the Boeing 737-
800s in ’s configuration and reduce operational noise emissions by approximately 40%.
The Boeing 737-MAX-200 aircraft could impact the Company insofar as the residual value of its Boeing 737-800
aircraft could be reduced when it enters production, currently expected to be in fiscal year 2020. For additional information,
please see “Item 3 – A majority of ’s aircraft and certain parts are sourced from a single supplier; therefore, 
would be materially and adversely affected if such supplier were unable to provide additional equipment or support”.
At March 31, 2019, the average aircraft age of the Company’s Boeing 737-800 fleet was approximately 7 years.
Airbus Aircraft
As of March 31, 2019 the Company had a fleet of 16 leased Airbus A320 aircraft. The Company expects to
operate approximately 35 leased A320 aircraft by summer 2020. These aircraft are operated by Laudamotion and have
180 seats. They are powered by a mix of CFM 56-7B and Pratt & Whitney V2500 engines. The average lease term on the
agreements is 5 years and the average aircraft age at March 31, 2019 was approximately 12 years.
Summary
The Company expects to have an operating fleet comprising approximately 585 narrow body aircraft at March
31, 2024, depending on the level of lease handbacks and aircraft disposals. The operating fleet will comprise of a mix of
Boeing 737-800, Boeing 737-MAX-200 and Airbus A320 aircraft. The Boeing 737-MAX-200 aircraft are expected to be
delivered in fiscal year 2020 and will have 197 seats.
Training and Regulatory Compliance
 currently owns and operates 11 Boeing 737-800NG and 1 Boeing 737-MAX full flight simulators for
pilot training. The simulators were purchased from CAE Electronics Ltd. of Quebec, Canada (“CAE”).  has ordered
4 new Boeing 737-MAX full flight simulators from CAE which will deliver in fiscal year 2020 and 2021. In addition,
 has also purchased 7 new state of the art fixed base simulators from Multi Pilot Simulations (“MPS”) which are
used for pilot assessments and pilot training.  has 3 additional fixed base simulators on order from MPS.
Management believes that  is currently in compliance with all applicable regulations and EU directives
concerning its fleet of Boeing 737 and Airbus A320 aircraft and will comply with any regulations or EU directives that
may come into effect in the future. However, there can be no assurance that the FAA or other regulatory authorities will
not recommend or require other safety-related undertakings that could adversely impact the Company’s results of
operations or financial condition, in particular safety-related undertakings related to the Boeing 737-MAX-200. See “Item
3. Key Information—Risk Factors—Risks Related to the Airline Industry— Safety-Related Undertakings Could Affect
the Company’s Results.”
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ANCILLARY SERVICES
 provides various ancillary services and engages in other activities connected with its core air passenger
service, including non-flight scheduled services, internet-related services, and the in-flight sale of beverages, food, and
merchandise. See “Item 5. Operating and Financial Review and Prospects—Results of Operations—Fiscal Year 2019
Compared with Fiscal Year 2018—Ancillary Revenues” for additional information.
 primarily markets accommodation services, holidays, car hire and travel insurance through its website
and mobile app. For hotel and accommodation services,  launched  Rooms in October 2016 to market
hotels, hostels, B&Bs, homestays and villas during and after the booking process.  receives a commission on these
sales and is currently re-investing the commission into the development of this business by providing travel credits
(redeemable against future flights) to the “My ” account of customers who book a room via  Rooms.
 offers car hire services via a contract with CarTrawler.
 markets car parking, attractions and activities on its website & mobile app.  also sells gift
vouchers, which are redeemable online.
MAINTENANCE AND REPAIRS
General
As part of its commitment to safety,  endeavors to hire qualified maintenance personnel, provide proper
training to such personnel, and maintain its aircraft in accordance with EASA Regulations and European industry
standards. While  seeks to maintain its fleet in a cost-effective manner, management does not seek to extend
’s low-cost operating strategy to the areas of maintenance, training or quality control.
’s quality assurance department deals with oversight of all maintenance activities in accordance with
EASA Part 145. EASA, which established Part 145, came into being on September 28, 2003; through the adoption of
Regulation (EC) No. 1592/2002 of the European Parliament, and its standards superseded the previous Joint Aviation
Authority (“JAA”) requirements. See “Government RegulationRegulatory Authorities” below.  is licenced to
operate approved maintenance training courses under a Part 147 approval from the U.K. CAA in its training school at
London Stansted Airport and Glasgow Prestwick. It is also licenced to operate approved maintenance training courses
under a Part 147 approval by the Irish Aviation Authority (“IAA”) in Dublin and by the Italian Civil Aviation Authority
(“ENAC”) in Bergamo.
 is itself an EASA Part 145-approved maintenance organization and provides its own routine aircraft
maintenance and repair services.  also performs certain checks on its aircraft, including pre-flight and daily checks
at some of its bases, as well as A-checks at its Dublin, London (Stansted), Glasgow (Prestwick), Kaunas, Madrid, Wroclaw,
Seville and Bergamo facilities.  performs the majority of Boeing 737-800 heavy airframe maintenance inhouse
with a seasonal use of third party maintenance repair and overhaul (the “MRO”) facilities.  operates a three-bay
hangar facility at its base at Glasgow (Prestwick) in Scotland. In addition,  has hangar facilities in Kaunas,
Lithuania and Wroclaw, Poland which are used for C-check maintenance activities.
 has a five-bay hangar and stores facility at its London (Stansted) airport base to allow  to carry
out additional line maintenance on its expanding fleet. This facility also incorporates four flight simulator devices, together
with a cabin crew trainer and associated training rooms. The Stansted facility was extended to accommodate an additional
four full flight simulators which was completed in September 2018.  installed its first Boeing 737-MAX-200 full
flight simulator in Stansted in March 2019.  has completed the building of a separate training facility adjacent to
the hangar to accommodate a full size Boeing 737NG training aircraft to allow for cabin crew and engineering training.
 carries out A-checks and line maintenance in its single-bay aircraft hangar facility in Bremen.  has a 30-
year sole-tenancy agreement with Frankfurt (Hahn) airport and has taken acceptance of a two-bay hangar and stores
facility. This facility allows  to carry out additional line maintenance including A-checks.  has a single bay
hangar, has leased a second hangar and is constructing a third hangar in Bergamo, Italy which are used for line maintenance
activities and A-checks.  has also built a technological centre of excellence in Bergamo to accommodate two full
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motion simulators, two fixed base simulators and a full size Boeing 737NG training aircraft to allow for pilot, engineering
and cabin crew training.
Maintenance and repair services that may become necessary while an aircraft is located at some of the other
airports served by  are provided by other EASA Part 145-approved contract maintenance providers. Aircraft return
each evening to ’s bases, where they are examined by either ’s approved personnel or by local EASA Part
145-approved companies.
Heavy Maintenance
As noted above,  currently has sufficient capacity itself to be able to carry out all of the routine
maintenance work required on its Boeing 737-800 and Airbus A320 fleet.
 contracts out engine overhaul service for its Boeing 737-800 aircraft to CFM under a ten year agreement
from December 2017, with an option for extension, which is pursuant to the previous General Electric Engine Services
agreement. This comprehensive maintenance contract provides for the repair and overhaul of the CFM56-7B series engines
fitted to ’s Boeing 737-800 aircraft, the repair of parts and general technical support for the fleet of engines. CFM
mainly uses its EASA Part 145-approved repair facility in Cardiff, Wales for this work, but also uses its EASA Part 145-
approved facility in Celma, Brazil. By contracting with experienced EASA Part 145-approved maintenance providers,
management believes it is better able to ensure the quality of its aircraft and engine maintenance.  assigns a EASA
Part 145-certified mechanic to oversee all heavy maintenance and to authorize all engine overhauls performed by third
parties. Maintenance providers are also monitored closely by the national authorities under EASA and national regulations.
 has been training engineering staff over the past year with Boeing and CFM in advance of the introduction of the
Boeing 737-MAX-200 aircraft in fiscal year 2020.
 expects to be dependent on external service contractors for A320 and B737 heavy maintenance,
particularly for engine and component maintenance, for the foreseeable future, notwithstanding the additional capabilities
provided by its maintenance facilities at Dublin, Glasgow (Prestwick), London (Stansted), Frankfurt (Hahn), Kaunas,
Wroclaw, Madrid, Bremen, Seville and Bergamo. See “Item 3. Key Information—Risk Factors—Risks Related to the
Company—The Company Is Dependent on External Service Providers.”
SAFETY RECORD
 has not had a single passenger or flight crew fatality in its 34-year operating history. 
demonstrates its commitment to safe operations through its safety training procedures, its investment in safety-related
equipment, and its adoption of an internal open and confidential reporting system for safety issues. The Company’s Board
of Directors also has a Safety and Security Committee to review and discuss air safety and related issues. Mike O’Brien,
a Non-Executive Director, is the joint chairman of this committee, (along with the  DAC Accountable Manager,
Neil Sorahan), and reports to the Board of Directors. ’s Chief Risk Officer, Carol Sharkey, chairs quarterly
meetings of the Group airlines Accountable Managers. This forum facilitates the sharing of best Safety and Security
practice across the Group.
’s flight crew training is oriented towards accident prevention and integrates with the Safety Management
System to cover all aspects of flight operations. Threat and Error Management (“TEM”) is at the core of all flight crew
training programs.  maintains full control of the content and delivery of all flight crew training, including initial,
recurrent, and upgrade phases. All training programs are approved by the IAA, which regularly audits operations control
standards and flight crew training standards for compliance with EU legislation. All Boeing 737-800s that  has
bought or committed to buy are certified for Category IIIA landings (automatic landings with minimum horizontal
visibility of 200 meters and a 50 feet decision height).
84
 has a comprehensive and documented Safety Management System. Management encourages flight crews
to report any safety-related issues through the Air Safety Report (“ASR”) reporting program, which is available online
through ’s Crewdock system. Also available to crew is ’s Confidential Reporting System (“RCRS”) which
affords personnel the opportunity to report directly to the Flight Safety Officer any event, error, or discrepancy in
operations that they do not wish to report through standard reporting channels. RCRS is designed to increase management’s
awareness of problems that may be encountered by personnel in their day-to-day operations. Management uses the de-
identified information reported through all reporting systems to modify operating procedures and improve flight operation
standards. Additionally,  promotes the use of CHIRP, a confidential reporting system that is endorsed by the U.K.
CAA as an alternative confidential reporting channel.
 has installed an automatic data capturing system on each of its Boeing 737 and A320 aircraft. This system
captures and downloads aircraft performance information for use as part of Operational Flight Data Monitoring (“OFDM”)
which automatically provides a confidential report on exceedances from normal operating limitations detected during the
course of each flight. The purpose of this system is to monitor operational trends and inform management of any instance
of an operational limit being exceeded. By analyzing these reports, management can identify undesirable trends and
potential areas of operational risk, so as to take steps to rectify such deviations, thereby ensuring adherence to ’s
flight safety standards.
AIRPORT OPERATIONS
Airport Handling Services
 provides its own aircraft and passenger handling and ticketing services at Dublin Airport. Third parties
provide these services to  at most other airports it serves. Blue Handling (part of the Omniserve Group) provides
’s ticketing, passenger and aircraft handling, and ground handling services at ’s largest base, Stansted,
while similar services in continental Europe are generally provided by the local airport authorities, either directly through
sub-contractors, or partners in self-handling at airports in Spain (including the Canary Islands), Portugal and Poland.
Management attempts to obtain competitive rates for such services by negotiating multi-year contracts at fixed prices.
These contracts are generally scheduled to expire in one to five years, unless renewed, and certain contracts may be
terminated by either party before their expiry upon prior notice.  will need to enter into similar agreements in any
new markets it may enter. See “Item 3. Key Information—Risk Factors—Risks Related to the Company—The Company
Is Dependent on External Service Providers.”
Airport Charges
As with other airlines,  must pay airport charges each time it lands and accesses facilities at the airports
it serves. Depending on the policy of the individual airport, such charges can include landing fees, passenger loading fees,
security fees and parking fees.  attempts to negotiate discounted fees by delivering annual increases in passenger
traffic and/or access to new destinations, and opts, when practicable, for less expensive facilities, such as less convenient
gates and the use of outdoor boarding stairs rather than more expensive jetways. Nevertheless, there can be no assurance
that the airports  uses will not impose higher airport charges in the future and that any such increases would not
adversely affect the Company’s operations.
Over time, various governments have introduced or planned to introduce additional taxes or levies on departing
passengers that would have made air travel more expensive and likely reduced demand. While a number of these taxes
have been reduced or cancelled since introduction, or not introduced at all, no assurance can be given that these or similar
taxes or levies will not be reintroduced in the future at similar levels or higher levels, which could have a negative impact
on demand for air travel.
In addition,  has a 10 year growth agreement with Manchester Airports Group plc, the owners of London
(Stansted), in relation to an expansion of capacity at London (Stansted) in return for significant airport charge reductions
for the incremental passenger volumes delivered. Once this 10 year growth deal expires (2023),  may be subject
to increased airport charges at London (Stansted) as the airport is no longer subject to regulation.
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See “Item 3. Risk FactorsRisks Related to the Company’s Continued Growth is Dependent on
Access to Suitable Airports; Charges for Airport Access are Subject to Increase.” See also “Item 8. Financial
InformationOther Financial InformationLegal ProceedingsEU State Aid-Related Proceedings” for information
regarding legal proceedings in which ’s economic arrangements with several publicly owned airports are being
contested.
FUEL
The cost of jet fuel accounted for approximately 36% and 35% of ’s total operating expenses in the fiscal
years ended March 31, 2019 and 2018, respectively. In each case, this accounts for costs after giving effect to the
Company’s fuel hedging activities but excludes de-icing costs, which accounted for approximately 1.0% and 1.0% of total
fuel costs in the fiscal years ended March 31, 2019 and 2018 respectively. The future availability and cost of jet fuel cannot
be predicted with any degree of certainty, and ’s low-fares policy limits its ability to pass on increased fuel costs
to passengers through increased fares. Jet fuel prices are dependent on crude oil prices, which are quoted in U.S. dollars.
If the value of the U.S. dollar strengthens against the euro, ’s fuel costs, expressed in euro, may increase even in
absence of any increase in the U.S. dollar price of jet fuel.  has also entered into foreign currency forward contracts
to hedge against some currency fluctuations. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—
Foreign Currency Exposure and Hedging.”
 has historically entered into arrangements providing for significant protection against fluctuations in fuel
prices, generally through forward contracts covering periods of up to 18 months of anticipated jet fuel requirements. See
“Item 3. Key Information—Risk Factors—Risks Related to the Company—Changes in Fuel Costs and Availability Affect
the Company’s Results” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Fuel Price Exposure
and Hedging” for additional information on recent trends in fuel costs and the Company’s related hedging activities, as
well as certain associated risks. See also “Item 5. Operating and Financial Review and Prospects—Fiscal Year 2019
Compared with Fiscal Year 2018—Fuel and Oil.”
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INSURANCE
 is exposed to potential catastrophic losses that may be incurred in the event of an aircraft accident or
terrorist incident. Any such accident or incident could involve costs related to the repair or replacement of a damaged
aircraft and its consequent temporary or permanent loss from service. In addition, an accident or incident could result in
significant legal claims against the Company from injured passengers and others who experienced injury or property
damage as a result of the accident or incident, including ground victims.  maintains aviation third-party liability
insurance, passenger liability insurance, employer liability insurance, Directors’ and officers’ liability insurance, aircraft
insurance for aircraft loss or damage, and other business insurance in amounts per occurrence consistent with industry
standards.  believes its insurance coverage is adequate, although not comprehensive. There can be no assurance
that the amount of such coverage will not need to be increased, that insurance premiums will not increase significantly or
that  will not be forced to bear substantial losses from accidents. ’s insurance does not cover claims for
losses incurred when, due to unforeseen events, airspace is closed and aircraft are grounded, such as the airspace closures
described in “Item 3. Risk Factors – Risks Related to the Airline Industry – Extreme Weather Events Could Affect the
Company and Have a Material Adverse Effect on the Company’s Results of Operations.
The cost of insurance coverage for certain third-party liabilities arising from “acts of war” or terrorism increased
dramatically as a result of the September 11, 2001 terrorist attacks. ’s insurers have indicated that the scope of the
Company’s current war-related insurance coverage may exclude certain types of catastrophic incidents, which may result
in the Company seeking alternative coverage.
 has established Aviation Insurance (IOM) Limited (“AIL”), a wholly owned insurance company
subsidiary, to provide the Company with self-insurance as part of its ongoing risk-management strategy. AIL underwrites
a portion of the Company’s aviation insurance program, which covers not only the Company’s aircraft but also its liability
to passengers and to third parties. AIL reinsures virtually all of the aviation insurance risk it underwrites with recognized
third parties in the aviation reinsurance market, with the amount of AIL’s maximum aggregate exposure not currently
subject to such reinsurance agreements being equal to approximately $15.0m. In addition to aviation insurance, AIL
underwrites most of the single and multi-trip travel insurance policies sold on .com.
Council Regulation (EC) No. 2027/97, as amended by Council Regulation (EC) No. 889/2002, governs air carrier
liability. This legislation provides for unlimited liability of an air carrier in the event of death or bodily injuries suffered
by passengers, implementing the Warsaw Convention of 1929 for the Unification of Certain Rules Relating to
Transportation by Air, as amended by the Montreal Convention of 1999.  has extended its liability insurance to
meet the appropriate requirements of the legislation. See “Item 3. Key Information—Risk Factors—Risks Related to the
Airline Industry—The Company Faces the Risk of Loss and Liability” for information on the Company’s risks of loss and
liability.
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FACILITIES
The following are the principal facilities owned or leased by the  Group:
Site Area Floor Space
Location (Sq. Meters) (Sq. Meters) Tenure Activity
Dublin Airport 1,370 1,649 Leasehold Administrative Offices
Airside Business Park, Dublin 12,286 9,443 Freehold Office & Simulator Training Center
Vienna Airport (Hangar) 10,467 5,597 Leasehold Aircraft Maintenance
Vienna Airport (Hangar) 225 225 Leasehold Aircraft Maintenance
Vienna Airport (Hangar) 635 635 Leasehold Aircraft Maintenance and Administration
Vienna Airport 1,239 1,239 Leasehold Aircraft Maintenance
Vienna, Austria 1,325 1,325 Leasehold Administrative Offices
Dublin Airport (Hangar No. 1) 1,620 1,620 Leasehold Aircraft Maintenance
Dublin Airport (Hangar No. 2) 5,200 5,000 Leasehold Aircraft Maintenance
Enterprise House, Stansted 516 516 Leasehold Administrative Offices
Satellite 3, Stansted Airport 605 605 Leasehold Operations Center
Stansted Airport (Hangar) 12,161 10,301 Leasehold
Aircraft Maintenance and Simulator
Training Center
Stansted Airport 375 375 Leasehold Training Center
Stansted Storage Facilities 378 531 Leasehold Aircraft Maintenance
East Midlands Airport 3,890 2,801 Freehold Simulator Training Center
East Midlands Airport 2,045 634 Leasehold Training Center
Prestwick Airport (Hangar) 10,052 10,052 Leasehold Aircraft Maintenance
Bremen Airport 5,952 5,874 Leasehold Terminal and Aircraft Maintenance Hangar
Frankfurt (Hahn) Airport (Hangar) 5,064 5,064 Leasehold
Aircraft Maintenance & Simulator
Training Center
Bergamo Airport (Hangar) 4,125 2,200 Leasehold Aircraft Maintenance
Bergamo Airport Technological
Centre of Excellence 5,000 2,500 Freehold
Cabin Crew, Engineering & Simulator
Training Center
Wroclaw Airport, Poland (Hangar) 8,701 7,484 Leasehold Aircraft Maintenance
Wroclaw, Poland 1,935 1,935 Leasehold Travel Labs Poland
Warsaw, Poland 512 512 Leasehold Administrative Offices
Skavsta Airport (Hangar) 1,936 1,936 Leasehold Aircraft Maintenance
Kaunas Airport (Hangar) 4,500 4,500 Leasehold Aircraft Maintenance
Madrid Airport (Hangar) 1,850 1,850 Leasehold Aircraft Maintenance
Madrid, Spain 1,914 1,914 Leasehold Travel Labs Madrid
Seville, Spain (Hangar) 9,800 8,000 Leasehold Aircraft Maintenance
 has agreements with the DAA, the Irish government authority charged with operating Dublin Airport, to
lease check-in counters and other space at the passenger and cargo terminal facilities at Dublin Airport. The airport office
facilities used by  at London (Stansted) are leased from the airport authority; similar facilities at each of the other
airports  serves are provided by third party service providers.
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TRADEMARKS
’s name and logo are registered as European Union Trade Marks (“EUTMs”).  has also registered
the slogans “.com The Low Fares Website” and “Low Fares. Made Simple” and the domain name
“hotels.com” as EUTMs. An EUTM allows a trademark owner to obtain a single registration of its trademark,
which registration affords uniform protection for that trademark in all EU member states. The registration gives 
an exclusive monopoly over the use of its trade name in respect of similar services and the right to sue for trademark
infringement should another party use an identical or similar mark in relation to identical or similar services.
 may be required to apply to the U.K. Intellectual Property Office to register its trademarks in the U.K.
post-Brexit.
’s trademarks include:
• European Union (Word) Trade Mark registration number 004168721 comprised of the word “” in classes
16, 28, 35, 36, 37, 38, 39 and 42 (Nice Classification) (registered);
• European Union (Figurative) Trade Mark registration number 00338301 comprising the following graphic
representation:
in classes 16, 35, 36, 37, 38, 39 and 42 (Nice Classification) and class 22.1.16 (Vienna classification) (registered);
• European Union (Word) Trade Mark registration number 004187721 comprised of the word
“hotels.com” in classes 16, 39 and 43 (Nice Classification) (registered); and
• European Union (Word) Trade Mark registration number 013185988 comprised of the word “LOW FARES.
MADE SIMPLE” in classes 16, 28, 35, 36, 37, 38, and 42 (Nice Classification) (registered).
THE ENVIRONMENT
In March 2018,  launched a new Environmental Policy, which commits to what management believes are
ambitious future environmental targets building on impressive achievements to date, including commitments to address
climate change, and the priorities and policies which will allow  to continue to lower CO2 emissions and noise
pollution.
’s Environmental Policy illustrates ’s commitment to managing its impact on the environment by:
• Leading the way as Europe’s greenest, cleanest airline;
• Committing to ambitious environmental targets;
• Investing billions of euro in new, fuel efficient aircraft;
• Committing to eliminate non-recyclable plastics within a 5 year timeframe; and
• Allowing customers to voluntarily offset the carbon cost of their flights.
 manages its impact on the environment and lowers CO2 emissions by operating the youngest fleet in Europe,
achieving high load factors and efficient fuel burn. These enable  to minimise fuel and energy consumption and
reduce noise pollution.
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GOVERNMENT REGULATION
Regulatory Authorities
EU air carriers such as the Company and the Airline Entities are generally able to provide passenger services on
domestic routes within any EU member state outside their home country of operations without restriction, subject to
applicable EU regulations implemented by the European Commission and EASA, as well as oversight by the European
Organization for the Safety of Air Navigation (“Eurocontrol”). The Airline Entities are also subject to national regulation
in their home countries, which is implemented primarily by (i) in Ireland, the Irish Commission for Aviation Regulation
(“CAR”), the IAA and the Irish Department of Transport, Tourism and Sport (“DTTAS”) in the case of  DAC, (ii)
in Poland, the Polish Civil Aviation Authority (“Polish CAA”) in the case of  Sun, (iii) in Austria, Österreichische
Gesellschaft für Zivilluftfahrt (“Austro Control”) and the Austrian Federal Ministry for Transport, Innovation and
Technology (“Austrian BMVIT”) in the case of Laudamotion, (iv) in the United Kingdom, the UK CAA and the UK
Department for Transport (“U.K. DfT”) in the case of  U.K., and (v) in Malta, Transport Malta and the Maltese
Civil Aviation Directorate (“Maltese CAD”) in the case of Malta Air.
Management believes that the present regulatory environment in the EU is generally characterized by high
sensitivity to safety and security issues, which is demonstrated by intensive reviews of safety-related procedures, training,
and equipment by the national and EU regulatory authorities.
Ireland
Commission for Aviation Regulation. The CAR is responsible for issuing operating licences to Irish air carriers
under the provisions of EU Regulation 1008/2008. The criteria for granting an operating licence include, inter alia, an air
carrier’s financial fitness, the adequacy of its insurance, and the fitness of its management. In addition, Irish and EU
regulations require that (i) the air carrier must be owned, for the purposes of EU Regulation 1008/2008, and continue to
be owned (directly or through majority ownership) by EU member states and/or EU nationals and (ii) the air carrier must
at all times be effectively controlled by such EU member states or EU nationals. The CAR has broad authority to revoke
an operating licence. See “Item 10. Additional Information––Limitations on Share Ownership by Non-EU Nationals.” See
also “Item 3. Risk Factors––Risks Related to Ownership of the Company’s Ordinary Shares or ADRs—EU Rules Impose
Restrictions on the Ownership of  Holdings’ Ordinary Shares by Non-EU nationals and the Company has Instituted
a Ban on the Purchase of Ordinary Shares by Non-EU Nationals” above.
’s current operating licence (No 05/16) was issued by the CAR on September 20, 2016 and is subject to
periodic review.
Irish Aviation Authority. The IAA is primarily responsible for regulating the safety, security and technical aspects
of aviation in Ireland. The IAA has broad regulatory and enforcement powers, including the authority to require reports
and investigate and institute enforcement proceedings.
To operate in the EU, an Irish air carrier is required to hold an AOC granted by the IAA attesting to the air
carrier’s operational and technical competence to conduct airline services with specified types of aircraft. The IAA has
broad authority to amend or revoke an AOC, with ’s ability to continue to hold its AOC being subject to ongoing
compliance with current and future applicable statutes, rules and regulations pertaining to the airline industry. ’s
DAC’s current AOC (No IE 07/94) was issued by the IAA on October 3, 2016.
Each aircraft operated by  DAC is required to have a Certificate of Airworthiness issued by the IAA. The
validity of each Certificate of Airworthiness, and the Company’s Flight Operations Department, flight personnel, flight
and emergency procedures, aircraft, and maintenance facilities are each subject to periodic review and inspections by the
IAA.
90
Department of Transport, Tourism and Sport. The DTTAS is responsible for implementation of certain EU and
Irish legislation and international standards relating to air transport.
Poland
Polish Civil Aviation Authority. The Polish CAA is a government body and the civil aviation supervisory authority in
Poland. Apart from certification and licencing of airlines, the Polish CAA performs operational and regulatory functions
in all matters relating to qualifications of personnel, safety, security, as well as maintaining registers of aircraft, personnel
and training entities, amongst others.
The Company’s subsidiary,  Sun, obtained an AOC (No PL-066) and operating licence (No ULC-LER-1/4000-
0156/06/17) from the Polish CAA in April 2018.
Austria
Österreichische Gesellschaft für Zivilluftfahrt. Austro Control is - among others - responsible for the management of the
Austrian aircraft register, ensuring compliance with national and European civil aviation standards, ensuring compliance
with air traffic regulations, supervising maintenance and aviation operations and issuing pilot licenses. Laudamotion’s
flight operations, aircraft, maintenance facilities and flight crew are subject to ongoing review and inspections by Austro
Control.
Austrian Federal Ministry for Transport, Innovation and Technology. The Austrian BMVIT is the supreme
authority for civil aviation in Austria and is, among others, responsible for issuing airline licences and overseeing
compliance with the requirements of EU Regulation 1008/2008.
The Company’s subsidiary, Laudamotion, holds an AOC (No A-089) issued by the Austro Control on February
03, 2016 and an operating licence (GZ. BMVIT-51.335/0003-IV/L2/2019) issued by the Austrian BMVIT on May 5, 2019.
U.K.
U.K. Civil Aviation Authority. The U.K. CAA is primarily responsible for: ensuring safety standards, consumer protection,
efficient use of airspace and security risks. To operate in the EU, a U.K. air carrier is required to hold an AOC granted by
the CAA attesting to the air carrier’s operational and technical competence to conduct airline services with specified types
of aircraft. The CAA has an authority to amend or revoke the AOC, with  U.K.’s ability to continue to hold its
AOC being subject to ongoing compliance with applicable statutes.  U.K.’s flight operations, aircraft, maintenance
facilities and air crew are subject to ongoing review and inspections by the CAA.
The Company’s subsidiary,  U.K., obtained an AOC (No GB 2451) and an operating license (No GB 2451) from
the U.K. CAA on December 20, 2018.
U.K. Department for Transport. The U.K. DfT is responsible for implementation of certain EU and U.K. legislation and
international standards relating to air transport.
Malta
Maltese Civil Aviation Directorate. The Maltese CAD is Malta's aviation regulator, assisting the Maltese Director General
for Civil Aviation in fostering the development of civil aviation in Malta within a safety oversight system. The Maltese
CAD is responsible for: the safety of aircraft, aircraft and aerodrome operators, air navigation service providers, licensing
of aeronautical personnel and the conclusion of international air services agreements. To operate in the EU, a Maltese air
carrier is required to hold an AOC granted by the Maltese CAD attesting to the air carrier’s operational and technical
competence to conduct airline services with specified types of aircraft. The Maltese CAD has an authority to amend or
revoke the AOC, with Malta Air’s ability to continue to hold its AOC being subject to ongoing compliance with applicable
statutes. Malta Air’s flight operations, aircraft, maintenance facilities and air crew are subject to ongoing review and
inspections by the Maltese CAD.
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The Company’s subsidiary, Malta Air, obtained an AOC (No MT-57) and operating license (No (CAD/MT-57) from the
Maltese CAD on June 12, 2019.
Transport Malta. Transport Malta is a government body overseeing transport in Malta, including the work of the Maltese
CAD. It is responsible for implementation of certain EU and Maltese legislation and international standards relating to air
transport.
European Union
The European Aviation Safety Agency. EASA is an agency of the EU that has been given specific regulatory and
executive tasks in the field of aviation safety. The purpose of EASA is to draw-up common standards to ensure the highest
levels of safety, oversee their uniform application across Europe and promote them at the global level.
The European Organization for the Safety of Air Navigation. Eurocontrol is an autonomous international
organization established under the Eurocontrol Convention of December 13, 1960. Eurocontrol is responsible for, inter
alia, the safety of air navigation and the collection of route charges for en route air navigation facilities and services
throughout Europe.
Ireland is a party to several international agreements concerning Eurocontrol. These agreements have been
implemented in Irish law, which provides for the payment of charges to Eurocontrol in respect of air navigation services
for aircraft in airspace under the control of Eurocontrol. The relevant legislation imposes liability for the payment of any
charges upon the operators of the aircraft in respect of which services are provided and upon the owners of such aircraft
or the managers of airports used by such aircraft. , as an aircraft operator, is primarily responsible for the payment
to Eurocontrol of charges incurred in relation to its aircraft. The legislation also authorizes the detention of aircraft in the
case of default in the payment of any charge for air navigation services by the aircraft operator or the aircraft owner, as
the case may be. This power of detention extends to any equipment, stores or documents, which may be onboard the
aircraft when it is detained, and may result in the possible sale of the aircraft.
European Commission. The European Commission is in the process of introducing an updated legislative package
to its “single European sky” policy called “SES2+”, which would lead to changes to air traffic management and control
within the EU. The “single European sky” policy currently consists of the Framework Regulation (Reg. (EC) No.
549/2004) plus three technical regulations on the provision of air navigation services, organization and use of the airspace
and the inter-operability of the European air traffic management network. These regulations were amended by the so-
called “Single European Sky II” regulation (EU Regulation 1070/09), which focused on air traffic control (“ATC”)
performance and extended the authority of EASA to include Airports and Air Traffic Management. The objective of the
policy is to enhance safety standards and the overall efficiency of air traffic in Europe, as well as to reduce the cost of air
traffic control services.
The European Commission has published guidelines on the financing of airports and start-up aid to airlines by
regional airports that place restrictions on the incentives public airports can offer to airlines delivering traffic, when
compared with the commercial freedom available to private airports.
The European Union has also adopted legislation on airport charges (EU Directive 2009/12), which was originally
intended to address abusive pricing at monopoly airports. However, the legislation includes all European airports with
over five million passengers per year. Management believes that this will likely increase the administrative burdens on
smaller airports and may lead to higher airport charges, while the scope that exists within this Directive to address abuses
of their dominant positions by Europe’s larger airports is very limited. See “Item 8. Financial InformationOther
Financial InformationLegal ProceedingsEU State Aid-Related Proceedings.”
The European Union has passed legislation calling for increased transparency in airline fares, which requires the
inclusion of all mandatory taxes, fees, and charges in advertised prices.  includes this information in its advertised
fares in all markets where it operates.
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Registration of Aircraft
Pursuant to the Irish Aviation Authority (Nationality and Registration of Aircraft) Order 2015 (the “Order”), the
IAA regulates the registration of aircraft in Ireland. In order to be registered or continue to be registered in Ireland, an
aircraft must be wholly owned by either (i) a citizen of Ireland or a citizen of another member state of the EU having a
place of residence or business in Ireland or (ii) a company registered in and having a place of business in Ireland and
having its principal place of business in Ireland or another member state of the EU and not less than two-thirds of the
Directors of which are citizens of Ireland or of another member state of the EU. As of the date of this report, eleven of the
twelve Directors of  Holdings are citizens of Ireland or of another member state of the EU. An aircraft will also
fulfill these conditions if it is wholly owned by such citizens or companies in combination. Notwithstanding the fact that
these particular conditions may not be met, the IAA retains discretion to register an aircraft in Ireland so long as it is in
compliance with the other conditions for registration under the Order. Any such registration may, however, be made
subject to certain conditions. In order to be registered, an aircraft must also continue to comply with any applicable
provisions of Irish law. The registration of any aircraft can be cancelled if it is found that it is not in compliance with the
requirements for registration under the Order and, in particular: (i) if the ownership requirements are not met; (ii) if the
aircraft has failed to comply with any applicable safety requirements specified by the IAA in relation to the aircraft or
aircraft of a similar type; or (iii) if the IAA decides in any case that it is not in the public interest for the aircraft to remain
registered in Ireland.
The Company’s aircraft operated by  Sun are registered in Poland, the aircraft operated by  U.K.
are registered in the U.K., the aircraft operated by Laudamotion are registered in Austria and the aircraft operated by Malta
Air are registered in Malta. In each of these countries similar regulations apply to the registration of aircraft as those
described above in relation to aircraft operated by  DAC, which are registered in Ireland.
Regulation of Competition
Competition/Antitrust Law. It is a general principle of EU competition law that no agreement may be concluded
between two or more separate economic undertakings that prevents, restricts or distorts competition in the common market
or any part of the common market. Such an arrangement may nevertheless be exempted by the European Commission, on
either an individual or category basis. The second general principle of EU competition law is that any business or
businesses having a dominant position in the EU common market or any substantial part of the common market may not
abuse such dominant position. Similar competition laws apply at national level in EU member states.  is subject to
the application of the general rules of EU competition law as well as specific rules on competition in the airline sector.
An aggrieved person may sue for breach of EU competition law in the courts of a member state and/or petition
the European Commission for an order to put an end to the breach of competition law. The European Commission also
may impose fines and daily penalties on businesses and the courts of the member states may award damages and other
remedies (such as injunctions) in appropriate circumstances.
Competition law in Ireland is primarily embodied in the Competition Acts 2002 to 2017. This legislation is
modeled on the EU competition law system. The Irish rules generally prohibit anti-competitive arrangements among
businesses and prohibit the abuse of a dominant position. These rules are enforced either by public enforcement (primarily
by the Competition and Consumer Protection Commission) through both criminal and civil sanctions or by private action
in the courts. These rules apply to the airline sector, but are subject to EU rules that override any contrary provisions of
Irish competition law.  has been subject to an abuse-of-dominance investigation by the Competition and Consumer
Protection Commission in relation to service between Dublin and Cork. The Competition and Consumer Protection
Commission (then known as the Competition Authority) closed its investigation in July 2009 with a finding in favor of
.
State Aid. The EU rules control aid granted by member states to businesses on a selective or discriminatory basis.
The EU Treaty prevents member states from granting such aid unless approved in advance by the EU. Any such grant of
state aid to an airline is subject to challenge before the EU or, in certain circumstances, national courts. If aid is held to
have been unlawfully granted it may have to be repaid by the airline to the granting member state, together with interest
thereon. See “Item 3. Key InformationRisk FactorsRisks Related to the Company—The Company Is Subject to Legal
93
Proceedings Alleging State Aid at Certain Airports” and “Item 8. Financial InformationOther Financial
InformationLegal Proceedings.”
Data Protection
’s processing of personal data is subject to increasingly complex data protection laws including the EU’s
GDPR as well as relevant national implementing legislation (Irish Data Protection Act 2018). The GDPR became directly
applicable across the member states of the European Economic Area on May 25, 2018 replacing the former data protection
regime under Directive 95/46/EC. The GDPR imposes strict obligations on persons who process personal data, including
requirements to implement appropriate security measures to ensure transfers of personal data are made securely and only
where the transferor can guarantee that such personal data will be treated in accordance with the GDPR. There is an
obligation to report data breaches which are likely to result in a risk to the rights and freedoms of natural persons (and in
some instances an obligation to inform the data subjects) within stipulated timeframes. The GDPR also provides data
subjects with enhanced rights in respect of their personal data. It introduces new data subject rights, such as the “right to
be forgotten” (to be erased from the databases of organisations holding their personal data, including erased from third
party providers databases, provided there are no legitimate grounds for retaining the personal data) and the right to “data
portability” (the right to receive the personal data concerning the data subject in a structured and commonly used and
machine-readable format and to transmit that data to a nominated third party).
A breach of the GDPR may result in the imposition of fines by supervisory authorities up to €20m or 4% of
annual group-wide turnover (whichever is higher). Supervisory authorities also have the power to audit businesses and
require measures be taken by businesses to rectify any non-compliance (which can include orders to suspend data
processing activities). Additionally, data subjects are entitled to seek compensation for any damage (including non-
material damage) suffered in the event that the processing of their personal data is in breach of the GDPR’s requirements.
See “Item 3. Key Information – Risk Factors –  is subject to increasingly complex data protection laws and
regulations”
Environmental Regulation
Aircraft Noise Regulations.  is subject to international, national and, in some cases, local noise regulation
standards. EU and Irish regulations have required that all aircraft operated by  comply with Stage 3 noise
requirements. All of ’s aircraft currently comply with these regulations. Certain airports in the U.K. (including
London Stansted and London Gatwick) and continental Europe have established local noise restrictions, including limits
on the number of hourly or daily operations or the time of such operations.
Company Facilities. Environmental controls are generally imposed under Irish law through property planning
legislation, specifically the Local Government (Planning and Development) Acts of 1963 to 1999, the Planning and
Development Acts 2000 to 2016 and regulations made thereunder. At Dublin Airport,  operates on land controlled
by the DAA. Planning permission for its facilities has been granted in accordance with both the zoning and planning
requirements of Dublin Airport. There is also specific Irish environmental legislation implementing applicable EU
directives and regulations, to which  adheres. From time to time, noxious or potentially toxic substances are held
on a temporary basis within ’s engineering facilities at Dublin Airport, Glasgow (Prestwick), London (Stansted),
Frankfurt (Hahn), Stockholm (Skavsta), Bergamo, Wroclaw, Kaunas, Sevilla, Madrid and Vienna. However, at all times
’s storage and handling of these substances complies with the relevant regulatory requirements. At all ’s
Glasgow (Prestwick) and London (Stansted) maintenance facilities, all normal waste is removed in accordance with the
Environmental Protection Act of 1996 and Duty of Care Waste Regulations. For special waste removal,  operates
under the Special Waste Regulations 1998. At all other non-U.K. facilities  adheres to all local and EU regulations.
’s Policy on Noise and Emissions.  is committed to reducing emissions and noise through
investments in “next generation” aircraft and engine technologies and the implementation of certain operational and
commercial decisions to minimize the environmental impact of its operations. According to the Air Travel Carbon and
Energy Efficiency Report published by Brighter Planet,  is the industry leader in terms of environmental efficiency,
and the Company is constantly working towards improving its performance.
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In December 2005,  completed the fleet replacement program it commenced in 1999. All of ’s
older Boeing 737-200A aircraft were replaced with Boeing 737-800 “next generation” aircraft, and  now operates
a fleet of mainly Boeing 737-800 “next generation” aircraft with an average age of 7 years. The design of the new aircraft
is aimed at minimizing drag, thereby reducing the rate of fuel burn and noise levels. The engines are also quieter and more
fuel-efficient. Furthermore, by moving to a younger Boeing 737-800 “next generation” fleet,  reduced the unit
emissions per passenger due to the inherent capacity increase in the Boeing 737-800 aircraft. The Boeing 737-800 “next
generation” aircraft have a significantly superior fuel-burn to passenger-kilometer ratio than ’s former fleet of
Boeing 737-200A aircraft. In September 2014,  entered into an agreement with Boeing to purchase up to 200
Boeing 737-MAX-200 aircraft (including 100 firm orders and 100 aircraft subject to option). The Boeing 737-MAX-200
aircraft are expected to deliver between fiscal year 2020 and fiscal year 2024. The contract was approved by the
shareholders of the Company at an extraordinary general meeting (“EGM”) on November 28, 2014. In June 2017, the
Group agreed to purchase an additional 10 Boeing 737-MAX-200 aircraft. This brings the total number of 737-MAX-200
aircraft on order to 210, with a list value of approximately $21.5bn (assuming all options are exercised). In April 2018,
the Company announced that it has converted 25 Boeing 737-Max-200 options into firm orders. This brings the Company’s
firm order to 135 Boeing 737-Max-200s with a further 75 options remaining. These aircraft have 197 seats and are fitted
with CFM-LEAP-1B engines which, combined with the Advanced Technology winglet and other aerodynamic
improvements, will reduce fuel consumption by up to approximately 16% on a per seat basis compared to the Boeing 737-
800s in ’s configuration and reduce operational noise emissions by approximately 40%. See “—Aircraft” above
for details on ’s fleet plan.
 has also installed winglets on all of its existing Boeing 737 aircraft and all future Boeing 737s will also
be fitted with winglets. Winglets reduce both the rate of fuel burn and carbon dioxide emissions by approximately 4% and
also reduce noise emissions.
In addition,  has distinctive operational characteristics that management believes are helpful to the general
environment. In particular, :
• operates with a high-seat density of 189 seats (which will increase to 197 when the Boeing 737-MAX-200
starts being delivered in fiscal year 2020) and an all-economy configuration, as opposed to the 162 seats and
two-class configuration of the Boeing 737-800 aircraft used by traditional network airlines, reducing fuel
burn and emissions per seat-kilometer flown. The Laudamotion A320 fleet has a high density of 180 seats;
• has reduced per-passenger emissions through higher load factors (96% in fiscal year 2019);
• better utilizes existing infrastructure by operating out of underutilized secondary and regional airports
throughout Europe, which limits the use of holding patterns and taxiing times, thus reducing fuel burn and
emissions and reducing the need for new airport infrastructure;
• provides mainly direct services as opposed to connecting flights, in order to limit the need for passengers to
transfer at main hubs and thus reduces the number of take-offs and landings per journey from four to two,
reducing fuel burn and emissions per journey; and
• has no scheduled late-night departures of aircraft, reducing the impact of noise emissions.
Emissions Trading. On November 19, 2008, the European Union adopted legislation to add aviation to the EU
Emissions Trading Scheme as of 2012. This scheme, which has thus far applied mainly to energy producers, is a cap-and-
trade system for CO2 emissions to encourage industries to improve their CO2 efficiency. Under the legislation, airlines
were granted initial CO2 allowances based on historical “revenue ton kilometers” and a CO2 efficiency benchmark. Any
shortage of allowances has to be purchased in the open market and/or at government auctions. Management believes that
this legislation is likely to have a negative impact on the European airline industry.  takes its environmental
responsibilities seriously and intends to continue to improve its environmental efficiency and to minimize emissions.
Under Regulation 7 of The U.K. Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, 
is obliged to state its annual quantity of emissions in tons of carbon dioxide equivalent. ’s EU Emissions Trading
Scheme monitoring, reporting and allowance surrender obligations are mandated on a calendar year basis. During calendar
year 2018,  emitted 11,710,635 tCO2 (Calendar 2017: 10,765,881), which equates to 0.085 tCO2 (Calendar 2017:
0.084) per passenger.
95
Aviation Taxes.  is fundamentally opposed to the introduction of additional aviation taxes, including new
environmental taxes, fuel taxes or emissions levies.  has offered, and continues to offer, among the lowest fares in
Europe, to make passenger air travel affordable and accessible to European consumers.  paid over €540m in various
environmental taxes in fiscal year 2019 and this amount will grow to circa €630m in fiscal year 2020.  believes
that the imposition of additional taxes on airlines will not only increase airfares, but will discourage new entrants into the
market, resulting in less choice for consumers.  believes this would ultimately have adverse effects on the European
economy in general.
As a company,  believes in free market competition and that the imposition of aviation taxation would
favor the less efficient flag carriers – which generally have smaller and older aircraft, lower load factors, and a much higher
fuel burn per passenger, and which operate primarily into congested airports – and reduce competition. Furthermore, the
introduction of a tax at a European level only would distort competition between airlines operating solely within Europe
and those operating also outside of Europe.  believes that the introduction of such a tax would also be incompatible
with international law.
Airport charges
The EU Airport Charges Directive of March 2009 sets forth general principles that are to be followed by airports
with more than five million passengers per annum, and to the airport with the highest passenger movement in each Member
State, when setting airport charges, and provides for an appeals procedure for airlines in the event that they are not satisfied
with the level of charges. However,  does not believe that this procedure is effective or that it constrains those
airports that are currently abusing their dominant position, in part because the legislation was transposed improperly in
certain countries, such as Ireland and Spain, thereby depriving airlines of even the basic safeguards provided for in the
Directive. This legislation may in fact lead to higher airport charges, depending on how its provisions are applied by EU
member states and subsequently by the courts.
Slots
Currently, many of ’s airports have no “slot” allocation restrictions; however, traffic at a substantial
number of the airports  serves, including its primary bases is regulated by means of “slot” allocations, which
represent authorizations to take off or land at a particular airport within a specified time period. In addition, EU law
currently regulates the acquisition, transfer and loss of slots. The European Commission adopted a regulation in April 2004
(Regulation (EC) No. 793/2004) that made some minor amendments to the then existing allocation system. Slots may be
transferred from one route to another by the same carrier, transferred within a group or as part of a change of control of a
carrier, or swapped between carriers. In April 2008, the European Commission issued a communication on the application
of the slot allocation regulation, signaling the acceptance of secondary trading of airport slots between airlines. This is
expected to allow more flexibility and mobility in the use of slots and will further enhance possibilities for market entry
at slot constrained airports. Any future legislation that might create an official secondary market for slots could create a
potential source of revenue for certain of ’s current and potential competitors, many of which have many more
slots allocated at primary airports at present than . The European Commission proposed a revision to the slots
legislation reflecting the principle of secondary trading. This revision has been negotiated by the EU institutions since
2014 and is currently stalled. Slot values depend on several factors, including the airport, time of day covered, the
availability of slots and the class of aircraft. ’s ability to gain access to and develop its operations at slot-controlled
airports will be affected by the availability of slots for takeoffs and landings at these specific airports. New entrants to an
airport are currently given certain privileges in terms of obtaining slots, but such privileges are subject to the grandfathered
rights of existing operators that are utilizing their slots. There is no assurance that  will be able to obtain a sufficient
number of slots at the slot-controlled airports that it desires to serve in the future at the time it needs them or on acceptable
terms.
Other
Health and occupational safety issues relating to  DAC are largely addressed in Ireland by the Safety, Health and
Welfare at Work Act, 2005 (as amended) and other regulations under that act. Although licences or permits are not issued
under such legislation, compliance is monitored by the Health and Safety Authority (the “Authority”), which is the
96
regulating body in this area. The Authority periodically reviews  DAC’s health and safety record and when
appropriate, issues improvement notices or prohibition notices.  DAC has responded to all such notices to the
satisfaction of the Authority. Other safety issues are covered by the Irish Aviation Orders, which may vary from time to
time.
The Austrian Employment Protection Act (Arbeitnehmerschutzgesetz), published in BGBl. 450/1994, with amendments
and other regulations under that Act, applies to Laudamotion. Compliance is monitored by the Austrian Department of
Labour, Social Affairs, Health and Consumer Protection.
For Malta Air, health and occupational safety issues are addressed in the Maltese Occupational Health and Safety Authority
Act XXVII of 2000. Compliance is monitored by the Occupational Health and Safety Authority (“OHSA”), which enforces
the law in workplaces. OHSA advises the Minister responsible for occupational health and safety regarding the making of
regulations to promote, maintain and protect a high level of occupational health and safety, as well as takes enforcement
action. OHSA can also carry out investigations on any matter concerning occupational health and safety.
Health and occupational safety issues relating to  U.K. are addressed by the Health and Safety at Work Act.
Compliance is monitored by the Health and Safety Executive (“HSE”), which enforces the law in workplaces.
The Polish Labour Code (Journal of Laws of 2019, item 1040, with amendments) covers health and occupational safety
issues. Under Article 18 of the Labour Code, compliance with provisions on health and occupational safety is monitored
by the National Labour Inspectorate (“Państwowa Inspekcja Pracy”) and the National Sanitary Inspectorate (“Państwowa
Inspekcja Sanitarna”). The Company’s operations are subject to the general laws of Ireland, Austria, Malta, Poland, and
the United Kingdom, and, insofar as they are applicable, the laws of the EU. The Company may also become subject to
additional regulatory requirements in the future. The Company is also subject to local laws and regulations at locations
where it operates and the regulations of various local authorities that operate the airports it serves.
DESCRIPTION OF PROPERTY
For certain information about each of the Company’s key facilities, see “—Facilities” above. Management
believes that the Company’s facilities are suitable for its needs and are well maintained.
Item 4A. Unresolved Staff Comments
There are no unresolved staff comments.
Item 5. Operating and Financial Review and Prospects
The following discussion should be read in conjunction with the audited consolidated financial statements of the
Company and the notes thereto included in Item 18. Those consolidated financial statements have been prepared in
accordance with IFRS.
HISTORY
’s current business strategy dates to the early 1990s, when  became the first European airline to
replicate the low-fares, low-cost operating model pioneered by Southwest Airlines Co. in the United States. During the
period between 1992 and 1994,  expanded its route network to include scheduled passenger services between
Dublin and Birmingham, Manchester and Glasgow (Prestwick). In 1994,  began standardizing its fleet by
purchasing used Boeing 737-200A aircraft to replace substantially all of its leased aircraft. Beginning in 1996, 
continued to expand its service from Dublin to new provincial destinations in the U.K. In August 1996, Irish Air, L.P., an
investment vehicle led by David Bonderman and certain of his associates at the Texas Pacific Group, acquired a minority
interest in the Company.  Holdings completed its initial public offering in June 1997.
From 1997 through June 30, 2019,  launched service on more than 2,100 routes throughout Europe and
also increased the frequency of service on a number of its principal routes. During that period,  established 86
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airports as bases of operations. During fiscal years 2019 and 2020 the Company established a low cost airline Group adding
startup airlines in Poland ( Sun) and the U.K. ( U.K.) along with the acquisition of Laudamotion (Austria)
and Malta Air (Malta) to  DAC in Ireland. See “Item 4. Information on the Company—Route System, Scheduling
and Fares” for a list of these bases.  has increased the number of booked passengers from approximately 4.9m in
fiscal year 1999 to approximately 142.1m in fiscal year 2019. As of June 30, 2019,  had a principal fleet of 455
Boeing 737-800 aircraft and 20 Airbus A320 aircraft and now serves over 200 airports.
 expects to have approximately 585 narrow body aircraft in its operating fleet by March 31, 2024. This is
subject to lease handbacks and disposals over the period to March 31, 2024 meeting current expectations. See “Liquidity
and Capital Resources” and “Item 4. Information on the CompanyAircraft” for additional details.
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BUSINESS OVERVIEW
Since  pioneered its low cost operating model in Europe in the early 1990s, its passenger volumes and
scheduled passenger revenues have increased significantly because the Company has substantially increased capacity and
demand has been sufficient to match the increased capacity. ’s annual booked passenger volume has grown from
approximately 0.9m passengers in the calendar year 1992 to approximately 142.1m passengers in fiscal year 2019.
’s revenue passenger miles (“RPMs”) increased approximately 9% from 101,022m in fiscal year 2018 to
109,976m in fiscal year 2019 due to an increase of approximately 9% in scheduled available seat miles (“ASMs”) from
105,735m in fiscal year 2018 to 115,524m in fiscal year 2019. Scheduled passenger revenues increased from €5,134.0m
in fiscal year 2018 to €5,261.1m in fiscal year 2019. Average booked passenger fare decreased from €39.40 in fiscal year
2018 to €37.03 in fiscal year 2019.
Expanding passenger volumes and capacity, high load factors and aggressive cost containment have enabled
 to continue to generate operating profits despite increasing price competition and increases in certain costs.
’s total break-even load factor was 73% in fiscal year 2018 and 83% in fiscal year 2019. Cost per passenger was
€42.08 in fiscal year 2018 and €47.02 in fiscal year 2019, with the higher fuel cost per passenger of €17.08 in fiscal year
2019 as compared to €14.60 in fiscal year 2018 being the most significant factor behind this increase.  recorded
operating profits of €1,667.3m in fiscal year 2018 and €1,016.8m in fiscal year 2019. The Company recorded a profit after
taxation of €1,450.2m in fiscal year 2018 and €885.0m in fiscal year 2019.  took delivery of 29 Boeing 737-800
aircraft in fiscal year 2019. The Company is planning on the basis of taking delivery of approximately 30 Boeing 737-
MAX-200 aircraft in advance of summer 2020 and expects that these deliveries, net of lease handbacks and aircraft sales,
will allow for an approximately 3% increase in fiscal year 2020 traffic. See “Item 3. Key Information—Risk Factors—
Risks Related to the Company—  Has Seasonally Grounded Aircraft.”
Historical Results Are Not Predictive of Future Results
The historical results of operations discussed herein may not be indicative of ’s future operating
performance. ’s future results of operations will be affected by, among other things, overall passenger traffic
volume; the availability of new airports for expansion; fuel prices; the airline pricing environment in a period of increased
competition; the ability of  to finance its planned acquisition of aircraft and to discharge the resulting debt service
obligations; economic and political conditions in Ireland, the U.K. and the EU; the ability of the Company to generate
profits for new acquisitions; terrorist threats or attacks within the EU; seasonal variations in travel; developments in
government regulations, litigation and labor relations; foreign currency fluctuations, the impact of the banking crisis and
potential break-up of the Eurozone; Brexit; the availability of aircraft; competition and the public’s perception regarding
the safety of low-fares airlines; changes in aircraft acquisition, leasing, and other operating costs; flight interruptions
caused by extreme weather events or other atmospheric disruptions; aircraft safety concerns; flight disruptions caused by
periodic and prolonged ATC strikes in Europe; the rates of income and corporate taxes paid, and the impact of the financial
and Eurozone crisis.  expects its depreciation, staff and fuel charges to increase as additional aircraft and related
flight equipment are acquired. Future fuel costs may also increase as a result of the depletion of petroleum reserves, the
shortage of fuel production capacity and/or production restrictions imposed by fuel oil producers. Maintenance expenses
may also increase as a result of ’s fleet expansion and replacement program. In addition, the financing of new
Boeing 737-800 and Boeing 737-MAX-200 aircraft will increase the total amount of the Company’s outstanding debt and
the payments it is obliged to make to service such debt. The cost of insurance coverage for certain third-party liabilities
arising from “acts of war” or terrorism increased dramatically following the September 11, 2001 terrorist attacks. See
“Item 3. Key Information—Risk Factors—Risks related to the Airline Industry— The Company is Substantially
Dependent on Discretionary Air Travel.”
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RECENT OPERATING RESULTS
The Company’s profit after tax for the quarter ended June 30, 2019 (the first quarter of the Company’s fiscal year
2019) was €242.9m as compared to €309.2m for the corresponding period of the previous year. The Company recorded a
decrease in operating profit, from €370.5m in the first quarter of fiscal year 2019 to €275.2m in the recently completed
quarter. Total operating revenues increased from €2,078.9m in the first quarter of fiscal year 2019 to €2,312.4m in the first
quarter of fiscal year 2020. Operating expenses increased from €1,708.4m in the first quarter of fiscal year 2019 to
€2,037.2m in the first quarter of fiscal year 2020, due primarily to increases in the cost of fuel and the increased costs
associated with the growth of the airline group. The Company’s cash and cash equivalents, restricted cash and financial
assets with terms of less than three months amounted to €4,115.8m at June 30, 2019 as compared with €3,635.1m at June
30, 2018.
CRITICAL ACCOUNTING POLICIES
The following discussion and analysis of ’s financial condition and results of operations is based on its
consolidated financial statements, which are included in Item 18 and prepared in accordance with IFRS.
The preparation of the Company’s financial statements requires the use of estimates, judgments, and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the periods presented. Actual results may differ from these estimates.
The Company believes that its critical accounting policy, which requires management’s most difficult, subjective
and complex judgments, is that which is described in this section. This critical accounting policy, the judgments and other
uncertainties affecting application of this policy and the sensitivity of reported results to changes in conditions and
assumptions are factors to be considered in reviewing the consolidated financial statements included in Item 18 and the
discussion and analysis below. For additional detail on this policy, see Note 1, “Basis of preparation and significant
accounting policies,” to the consolidated financial statements included in Item 18.
Long-lived Assets
As of March 31, 2019,  had €bn of long-lived assets, of which €8.9bn were aircraft. In accounting for
long-lived assets,  must make estimates about the expected useful lives of the assets, the expected residual values
of the assets, the cost of major airframe and engine overhaul and the potential for impairment based on the fair value of
the assets and the cash flows they generate.
In estimating the lives, expected residual values of its aircraft and the cost of major airframe and engine overhaul,
 has primarily relied on its own and industry experience, recommendations from Boeing, the manufacturer of all
of the Company’s aircraft, valuations from appraisers and other available marketplace information. Subsequent revisions
to these estimates, which can be significant, could be caused by changes to ’s maintenance program, changes in
utilization of the aircraft, governmental regulations on aging of aircraft, changes in new aircraft technology, changes in
governmental and environmental taxes, changes in new aircraft fuel efficiency and changing market prices for new and
used aircraft of the same or similar types.  evaluates its estimates and assumptions in each reporting period, and,
when warranted, adjusts these assumptions. Generally, these adjustments are accounted for on a prospective basis, through
depreciation expense.
 periodically evaluates its long-lived assets for impairment. Factors that would indicate potential
impairment would include, but are not limited to, significant decreases in the market value of an aircraft, a significant
change in an aircraft’s physical condition and operating or cash flow losses associated with the use of the aircraft. While
the airline industry as a whole has experienced many of these factors from time to time,  has not yet been seriously
impacted and continues to record positive cash flows from these long-lived assets. Consequently,  has not yet
identified any impairments related to its existing aircraft fleet. The Company will continue to monitor its long-lived assets
and the general airline operating environment.
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The Company’s estimate of the recoverable amount of aircraft residual values is % of current market value of
new aircraft, determined periodically, based on independent valuations and actual aircraft disposals during prior periods.
Aircraft are depreciated over a useful life of 23 years from the date of manufacture to residual value.
RESULTS OF OPERATIONS
The following table sets forth certain income statement data (calculated under IFRS) for  expressed as a
percentage of ’s total revenues for each of the periods indicated:
FISCAL YEAR 2019 COMPARED WITH FISCAL YEAR 2018
Profit after taxation.  recorded a profit on ordinary activities after taxation of €885.0m in fiscal year 2019,
as compared with a profit of €1,450.2m in fiscal year 2018. This 39% decrease was primarily attributable to higher fuel
prices, pilot pay increases, higher EU261 compensation costs due to the high level of ATC strikes/disruptions and year 1
start up losses in Laudamotion which became a subsidiary in August 2018.
Scheduled revenues. 's scheduled passenger revenues increased by 2%, from €5,134.0m in fiscal 2018 to
€5,261.1m in fiscal year 2019, primarily reflecting the 9% increase in the number of booked passengers from 130.3m to
142.1m, offset by the 6% decrease in average fare from €39.40 to €37.03. Booked passenger load factors increased to 96%
in fiscal year 2019 compared with 95% in fiscal year 2018.
Passenger capacity during fiscal year 2019 increased by 9% due to an increase in the average number of aircraft
in the fleet. Scheduled passenger revenues accounted for 68% of 's total revenues in fiscal year 2019 and 72% in
fiscal year 2018.
Ancillary revenues. 's ancillary revenues, which comprise revenues from non-flight scheduled operations,
in-flight sales and internet-related services, increased by 21%, from €2,017.0m in fiscal year 2018 to €2,436.3m in fiscal
year 2019, while ancillary revenues per booked passenger increased by 11% to €17.15 from €15.48. The overall increase
in ancillary revenues was stimulated by an increase in the sales of reserved seating and priority boarding offset by the
timing of revenue recognition on certain fees (approximately €38m) following the transition to IFRS 15.
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Operating expenses. As a percentage of total revenues, 's operating expenses increased from 77% in the
fiscal year 2018 to 87% in fiscal year 2019. Total revenues increased by 8%, slower than the 22% increase in operating
expenses. In absolute terms, total operating expenses increased by 22%, from €5,483.7m in fiscal year 2018 to €6,680.6m
in fiscal year 2019, principally as a result of increased costs associated with the growth of the airline group. Route charges,
depreciation, maintenance, materials and repairs and aircraft rentals all remained flat as a percentage of total revenues.
while fuel and oil expenses, airport and handling charges, staff costs (reflecting pilot pay increases and higher engineering
headcount) and marketing, distribution and other (which includes EU261 compensation costs) increased. Total operating
cost per passenger increased by 12%, with the increase reflecting, principally, a 17% increase in per passenger fuel costs,
with an increase in non-fuel costs of 9%.
The Company's decision to ground aircraft during the winter months did not have a material impact on the results
of the Company for fiscal year 2019 and, at present, is not anticipated to have a material impact on future operations. The
Company anticipates that any revenues which could have been generated had the Company operated the grounded aircraft
would have been lower than the operating costs associated with operating these aircraft, including fuel costs, airport
charges and taxes. The Company does not anticipate that any material staff costs will be incurred during future periods of
the grounding of aircraft, as the relevant crews can be furloughed under the terms of their contracts without compensation
and the maintenance costs associated with the grounded aircraft will be minimal. However, the Company will still incur
aircraft ownership costs comprised of depreciation and amortization costs, lease rentals costs and financing costs.
The following table sets forth the amounts in euro cent of, and percentage changes in, 's operating
expenses (on a per-passenger basis) for fiscal years 2019 and 2018 under IFRS. These data are calculated by dividing the
relevant expense amount (as shown in the consolidated financial statements) by the number of booked passengers in the
relevant year as shown in the table of "Selected Operating and Other Data" in Item 3 and rounding to the nearest euro cent;
the percentage change is calculated on the basis of the relevant figures before rounding.
Fiscal Year Fiscal Year
Ended Ended
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Fuel and oil. 's fuel and oil costs per passenger increased by 17%, while in absolute terms, these costs
increased by 28% from €1,902.8m in fiscal year 2018 to €2,427.3m in fiscal year 2019, in each case after giving effect to
the Company's fuel hedging activities. The 28% increase reflected higher hedged fuel prices and a 9% increase in block
hours. Fuel and oil costs include the direct cost of fuel, the cost of delivering fuel to the aircraft, aircraft de-icing and EU
emissions trading costs. The average fuel price paid by  (calculated by dividing total fuel costs by the number of
U.S. gallons of fuel consumed) increased by 8% from €1.65 per U.S. gallon in fiscal year 2018 to €1.79 per U.S. gallon in
fiscal year 2019, in each case after giving effect to the Company's fuel hedging activities.
Airport and handling charges. 's airport and handling charges per passenger increased by 4% in fiscal year
2019 compared to fiscal year 2018. In absolute terms, airport and handling charges increased by 13%, from €938.6m in
fiscal year 2018 to €1,061.5m in fiscal year 2019, broadly reflecting the 9% increase in passenger numbers.
Staff costs. 's staff costs, which consist primarily of salaries, wages and benefits, increased by 22% on a per-
passenger basis, while in absolute terms, these costs increased by 33%, from €738.5m in fiscal year 2018 to €984.0 million
in fiscal year 2019. The increase in absolute terms was primarily attributable the 9% increase in block hours, pilot pay
increases, additional engineering headcount and the impact of a 3% pay increase for non-flight-staff awarded in April
2018.
Route charges. 's route charges per passenger decreased by 3%. In absolute terms, route charges increased
by 6%, from €701.8m in fiscal year 2018 to €745.2m in fiscal year 2019, primarily as a result of the 9% increase in sectors
offset by a decrease in unit rates.
Depreciation. 's depreciation per passenger increased by 5%, while in absolute terms these costs increased
by 14% from €561.0m in fiscal year 2018 to €640.5m in fiscal year 2019. The increase was primarily attributable to 29
additional owned aircraft in the fleet compared to fiscal year 2018.
Marketing, distribution and other expenses. 's marketing, distribution and other operating expenses, including
those applicable to the generation of ancillary revenues, increased by 22% on a per-passenger basis in fiscal year 2019,
while in absolute terms, these costs increased by 33%, from €410.4m in fiscal year 2018 to €547.3m in fiscal year 2019,
with the overall increase reflecting higher EU261 costs arising mainly from ATC strikes/disruptions and related
cancellations during the year.
Maintenance, materials and repairs. 's maintenance, materials and repair expenses, which consist primarily
of the cost of routine maintenance provision for leased aircraft and the overhaul of spare parts, increased by 18% on a per-
passenger basis, while in absolute terms these expenses increased by 29% from €148.3m in fiscal year 2018 to €190.9m
in fiscal year 2019. The increase in absolute terms during the fiscal year was due to the higher number of shop visits for
older aircraft and the timing of lease handbacks.
Aircraft rentals. Aircraft rental expenses amounted to €83.9m in fiscal year 2019, a 2% increase from the €82.3m
reported in fiscal year 2018, reflecting the increase in leases due to the addition of the Laudamotion A320 fleet offset by
the handback of 6 B737 leases.
Operating profit. As a result of the factors outlined above, operating profit decreased by 44% on a per-passenger
basis in fiscal year 2019, while, in absolute terms, it decreased by 39% from €1,667.3m in fiscal year 2018 to €1,016.8m
in fiscal year 2019.
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Finance expense. 's interest and similar charges decreased by €1.0m, from €60.1m in fiscal year 2018 to
€59.1m in fiscal year 2019 primarily due to lower gross debt.
Finance income. ’s interest income increased by €1.7m from €2.0m in fiscal year 2018 to €3.7m in fiscal
year 2019, primarily due to higher interest rates on deposits.
Foreign exchange gains/losses.  recorded foreign exchange losses of €3.5m in fiscal year 2019, and gains of
€2.1m in fiscal year 2018, primarily due to the impact of change in euro exchange rates against the U.S. dollar.
Taxation. The effective tax rate for fiscal year 2019 was 6.7%, as compared to an effective tax rate of 10.0% in fiscal
year 2018, reflecting the recognition of a deferred tax asset in Laudamotion.
FISCAL YEAR 2018 COMPARED WITH FISCAL YEAR 2017
Profit after taxation.  recorded a profit on ordinary activities after taxation of €1,450.2m in fiscal year
2018, as compared with a profit of €1,315.9m in fiscal year 2017. This 10% increase was primarily attributable to an 8%
increase in revenues (due to a 9% increase in traffic) and an 8% fuel saving per passenger
Scheduled revenues. 's scheduled passenger revenues increased by 5%, from €4,868.2m in fiscal year
2017 to €5,134.0m in fiscal year 2018, primarily reflecting the 9% increase in the number of booked passengers from
120.0m to 130.3m, partially offset by the 3% decrease in average fare from €40.58 to €39.40. Booked passenger load
factors increased to 95% in fiscal year 2018 compared with 94% in fiscal year 2017.
Passenger capacity during fiscal year 2018 increased by 7% due to the increase in the average number of aircraft
in the fleet. Scheduled passenger revenues accounted for 72% of 's total revenues for fiscal year 2018, compared
with 73% of total revenues in fiscal year 2017.
Ancillary revenues. 's ancillary revenues, which comprise revenues from non-flight scheduled operations,
in-flight sales and internet-related services, increased by 13%, from €1,779.6m in fiscal year 2017 to €2,017.0m in fiscal
year 2018, while ancillary revenues per booked passenger increased by 4% to €15.48 from €14.83. The overall increase in
ancillary revenues reflects the higher uptake of reserved seating, priority boarding and car hire offset by lower travel
insurance and hotels.
Operating expenses. As a percentage of total revenues, 's operating expenses remained flat at 77% in
fiscal year 2018. Total revenues increased by 8%, faster than the 7% increase in operating expenses. In absolute terms,
total operating expenses increased by 7%, from €5,113.8m in fiscal year 2017 to €5,483.7m in fiscal year 2018, principally
as a result of increased costs associated with the airline. Airport and handling charges, staff costs, route charges,
maintenance, materials and repairs and aircraft rentals all remained flat as a percentage of total revenues, while fuel and
oil expenses decreased and depreciation and marketing, distribution and other increased. Total operating cost per
passenger decreased by 1%, with the decrease reflecting, principally, an 8% reduction in per passenger fuel costs offset by
an increase in non-fuel costs of 3%.
The Company's decision to ground aircraft during the winter months did not have a material impact on the results
of the Company for fiscal year 2018 and, at present, is not anticipated to have a material impact on future operations. The
Company anticipates that any revenues which could have been generated had the Company operated the grounded aircraft
would have been lower than the operating costs associated with operating these aircraft, including fuel costs, airport
charges and taxes. The Company does not anticipate that any material staff costs will be incurred during future periods of
the grounding of aircraft, as the relevant crews can be furloughed under the terms of their contracts without compensation
and the maintenance costs associated with the grounded aircraft will be minimal. However, the Company will still incur
aircraft ownership costs comprised of depreciation and amortization costs, lease rentals costs and financing costs.
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The following table sets forth the amounts in euro cent of, and percentage changes in, 's operating
expenses (on a per-passenger basis) for fiscal years 2018 and 2017 under IFRS. These data are calculated by dividing the
relevant expense amount (as shown in the consolidated financial statements) by the number of booked passengers in the
relevant year as shown in the table of "Selected Operating and Other Data" in Item 3 and rounding to the nearest euro cent;
the percentage change is calculated on the basis of the relevant figures before rounding.
Fiscal Year Fiscal Year
Fuel and Oil. 's fuel and oil costs per passenger decreased by 8%, while in absolute terms, these costs
decreased by 1% from €1,913.4m in fiscal year 2017 to €1,902.8m in fiscal year 2018, in each case after giving effect to
the Company's fuel hedging activities. The 1% decrease reflected lower hedged fuel prices offset by a 10% increase in
block hours. Fuel and oil costs include the direct cost of fuel, the cost of delivering fuel to the aircraft, aircraft de-icing
and EU emissions trading costs. The average fuel price paid by  (calculated by dividing total fuel costs by the
number of U.S. gallons of fuel consumed) decreased by 10% from €1.83 per U.S. gallon in fiscal year 2017 to €1.65 per
U.S. gallon in fiscal year 2018, in each case after giving effect to the Company's fuel hedging activities.
Airport and handling charges. 's airport and handling charges per passenger remained flat in fiscal year
2018 compared to fiscal year 2017. In absolute terms, airport and handling charges increased by 9%, from €864.8m in
fiscal year 2017 to €938.6m in fiscal year 2018, reflecting the 9% increase in passenger numbers.
Route charges. 's route charges per passenger decreased by 1%. In absolute terms, route charges increased
by 7%, from €655.7m in fiscal year 2017 to €701.8m in fiscal year 2018, primarily as a result of the 7% increase in sectors.
Staff costs. 's staff costs, which consist primarily of salaries, wages and benefits, increased by 7% on a
per-passenger basis, while in absolute terms, these costs increased by 17%, from €633.0m in fiscal year 2017 to €738.5m
in fiscal year 2018. The increase in absolute terms was primarily attributable to the 10% increase in block hours, pilot
salary increases, and the impact of a 2% pay increase in April 2017 offset by weaker sterling against the euro.
Depreciation. 's depreciation per passenger increased by 4%, while in absolute terms these costs increased
by 13% from €497.5m in fiscal year 2017 to €561.0m in fiscal year 2018. The increase was primarily attributable to 50
additional owned fleet in the fleet compared to fiscal year 2017. See "-Critical Accounting Policies- Long-lived Assets"
above.
Marketing, distribution and other expenses. 's marketing, distribution and other operating expenses,
including those applicable to the generation of ancillary revenues, increased by 17% on a per-passenger basis in fiscal year
2018, while in absolute terms, these costs increased by 27%, from €322.3m in fiscal year 2017 to €410.4m in fiscal year
2018, with the overall increase reflecting an additional €25m in EU261 costs arising from September/October 2017 flight
cancellations. EU261 costs increased as passengers have a higher propensity to claim than in prior years. Marketing costs
were broadly flat compared to fiscal year 2017 and distribution costs increased at a slower rate than onboard sales.
Maintenance, materials and repairs. 's maintenance, materials and repair expenses, which consist
primarily of the cost of routine maintenance provision for leased aircraft and the overhaul of spare parts, decreased by 3%
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on a per-passenger basis, while in absolute terms these expenses increased by 5% from €141.0m in fiscal year 2017 to
€148.3m in fiscal year 2018. The increase in absolute terms during the fiscal year was due to the timing of maintenance
checks partially offset by fewer leased aircraft in the fleet.
Aircraft rentals. Aircraft rental expenses amounted to €82.3m in fiscal year 2018, a 4% decrease from the €86.1
million reported in fiscal year 2017, reflecting the smaller leased fleet.
Operating profit. As a result of the factors outlined above, operating profit remained flat on a per-passenger basis
in fiscal year 2018, while, in absolute terms, it increased by 9% from €1,534.0m in fiscal year 2017 to €1,667.3m in fiscal
year 2018.
Finance expense. 's interest and similar charges decreased by 11%, from €67.2m in fiscal year 2017 to
€60.1m in fiscal year 2018, primarily due to lower interest rates and repayments of debt.
Finance income. ’s interest income decreased by €2.2m from €4.2m in fiscal year 2017 to €2.0m in fiscal
year 2018, primarily due to significantly lower deposit interest rates.
Foreign exchange gains/losses.  recorded foreign exchange gains of €2.1m in fiscal year 2018, and €0.7m
losses in fiscal year 2017, primarily due to the impact of change in euro exchange rates against the U.S. dollar and U.K.
pound sterling.
Taxation. The effective tax rate for fiscal year 2018 was 10.0%, as compared to an effective tax rate of 10.5% in
fiscal year 2017. The effective tax rate reflects the statutory rate of Irish corporation tax of 12.5%.  recorded an
income tax charge of €161.1m in fiscal year 2018, compared with a tax charge of €154.4m in fiscal year 2017.
SEASONAL FLUCTUATIONS
The Company’s results of operations have varied significantly from quarter to quarter, and management expects
these variations to continue. Among the factors causing these variations are the airline industry’s sensitivity to general
economic conditions and the seasonal nature of air travel.  typically records higher revenues and income in the
first half of each fiscal year ended March 31 than the second half of such year.
RECENTLY ISSUED ACCOUNTING STANDARDS
Please see Note 1 to the consolidated financial statements included in Item 18 for information on recently issued
accounting standards that are material to the Company.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity. The Company finances its working capital requirements through a combination of cash generated from
operations, debt capital market issuances and bank loans for the acquisition of aircraft. See “Item 3. Key Information—
Risk Factors—Risks Related to the Company—The Company Will Incur Significant Costs Acquiring New Aircraft and
any instability in the Credit and Capital Markets Could Negatively Impact ’s Ability to Obtain Financing on
Acceptable Terms” for more information about risks relating to liquidity and capital resources. The Company had cash
and liquid resources at March 31, 2019 and 2018 of €3,160.0m and €3,645.5m, respectively. The decrease at March 31,
2019 primarily reflects net capital expenditure of €1,546.7m, shareholders returns of €560.5m and debt repayments of
€422.8m, offset by a profit after tax of €885.0m.
The Company’s net cash inflows from operating activities in fiscal years 2019 and 2018 amounted to €2,017.5m
and €2,233.2m, respectively. The €215.7m decrease in net cash flows from operating activities for fiscal year 2019
compared to fiscal year 2018 was principally due to a lower profit after tax of €565.2m offset by an increase in trade
payables.
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During the last two fiscal years, ’s primary cash requirements have been for operating expenses, additional
aircraft including advance payments in respect of new Boeing 737 aircraft and related flight equipment, payments on
related indebtedness and payments of corporation tax as well as share buy-backs of €560.5m in fiscal year 2019 and
€829.1m in fiscal year 2018. Cash generated from operations and the issuance of a €750m in 1.125% unsecured Eurobonds
with a 6.5 year tenor in February 2017 have been the primary source for these cash requirements.
The Company’s net cash inflows from operating activities in fiscal years 2018 and 2017 amounted to €2,233.2m
and €1,927.2m, respectively. The €306.0m increase in net cash flows from operating activities for fiscal year 2018
compared to fiscal year 2017 was principally due to higher profit after tax of €134.3m, depreciation and receipts for future
flights offset by a decrease in trade payables.
The Company’s net cash used in investing activities in fiscal year 2019 totaled €1,002.4m, primarily reflecting
the Company’s capital expenditures, as described in more detail below.
The Company’s net cash used in investing activities in fiscal year 2018 totaled €719.4m, primarily reflecting the
Company’s capital expenditures.
Net cash used in financing activities totaled €854.5m in fiscal year 2019, largely reflecting shareholders returns
of €531.6m and repayments of long term borrowings of €422.8m.
Net cash used in financing activities totaled €1,222.8m in fiscal year 2018, largely reflecting shareholders returns
of €829.1m and repayments of long term borrowings of €458.9m.
Capital Expenditures. The Company’s net cash outflows for capital expenditures in fiscal years 2019 and 2018
were €1,546.7m and €1,470.6m respectively.  has traditionally funded a significant portion of its acquisition of
new Boeing 737-800 aircraft and related equipment through borrowings under facilities provided by international financial
institutions on the basis of guarantees issued by the Export-Import Bank of the United States (“Ex-Im Bank”). At March
31, 2019,  had a fleet of 455 Boeing 737-800 aircraft, 144 of which were funded by Ex-Im Bank-guaranteed
financing. Other sources of on-balance-sheet aircraft financing utilized by  are Japanese Operating Leases with
Call Options (“JOLCOs”), which are treated as finance leases (12 of the aircraft in the fleet as of March 31, 2019) and
commercial debt financing (3 of the aircraft in the fleet as of March 31, 2019). Of ’s total fleet of 455 Boeing 737-
800 aircraft at March 31, 2019 there were 26 aircraft which were financed through operating lease arrangements, 183
aircraft were financed from ’s own resources on an unsecured basis and the remaining 87 aircraft have no
outstanding debt remaining.  has generally been able to generate sufficient funds from operations to meet its non-
aircraft acquisition-related working capital requirements. Management believes that the working capital available to the
Company is sufficient for its present requirements and will be sufficient to meet its anticipated requirements for capital
expenditures and other cash requirements for fiscal year 2020.
The following table sets forth the dates on which and the number of aircraft that will be delivered to the Company:
Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31,
Fiscal Year End 2019 2020 2021 2022 2023 2024 Total
Opening Fleet 431 471 499 529 556 577 431
Deliveries under 2013 Boeing Contract 29 — — — — — 29
Firm deliveries under 2014 Boeing Contract — 20 52 29 24 10 135
Option Aircraft under 2014 Boeing Contract — — 8 28 25 14 75
Planned returns or disposals (5) (11) (30) (30) (28) (16) (120)
A320 operating leases 16 19 — — — — 35
Closing Fleet 471 499 529 556 577 585 585
Best estimates, subject to FAA & EASA regulation approval of the MAX-200 aircraft
Capital Resources. ’s long-term debt (including current maturities) totaled €3,644.4m at March 31, 2019
and €3,963.0m at March 31, 2018, with the change being primarily attributable to debt repayments. Please see the table
“Obligations Due by Period” below for more information on ’s long-term debt (including current maturities) and
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finance leases as of March 31, 2019. See also Note 11 to the consolidated financial statements included in Item 18 for
further information on the maturity profile of the interest rate structure and other information on the Company’s
borrowings.
At March 31, 2019, 144 of the aircraft in ’s fleet had been financed through loan facilities with various
financial institutions active in the structured export finance sector and supported by a loan guarantee from Ex-Im Bank.
Each of these facilities takes essentially the same form and is based on the documentation developed by  and Ex-
Im Bank, which follows standard market forms for this type of financing. In November 2010,  financed 7 aircraft
through a U.S. dollar-denominated Ex-Im Bank Capital Markets Product (“Eximbond”). The Eximbond has essentially
the same characteristics as all previous Ex-Im Bank guaranteed financings with no additional obligations on . On
the basis of an Ex-Im Bank guarantee with regard to the financing of up to 85% of the eligible U.S. and foreign content
represented in the net purchase price of the relevant aircraft, the financial institution investor enters into a commitment
letter with the Company to provide financing for a specified number of aircraft benefiting from such guarantee; loans are
then drawn down as the aircraft are delivered and payments to Boeing become due. Each of the loans under the facilities
are on substantially similar terms, having a maturity of 12 years from the drawdown date and being secured by a first
priority mortgage in favor of a security trustee on behalf of Ex-Im Bank.
At March 31, 2019, there were 16 A320 leased aircraft in the Laudamotion fleet. 6 of these aircraft were operating
leases provided by Lufthansa. These 6 aircraft were ready for hand back/were handed back to Lufthansa at June 30, 2019.
There were 20 operating leased A320 aircraft in the Laudamotion fleet at June 30, 2019.
Through the use of interest rate swaps or cross currency interest rate swaps,  has effectively converted a
portion of its floating-rate debt under its financing facilities into fixed-rate debt. Approximately 15% of the loans for the
aircraft acquired under the above facilities are not covered by such swaps and have therefore remained at floating rates
linked to EURIBOR, this is currently managed as part of the  risk management strategy. The net result is that
 has effectively swapped or drawn down fixed-rate euro-denominated debt with remaining maturities of up to 5
years in respect of approximately 85% of its outstanding aircraft debt financing at March 31, 2019 and approximately 15%
of total debt was floating rate at that date.
’s ability to obtain additional loans pursuant to each of the facilities to finance the price of future Boeing
737-800 and Boeing 737-MAX-200 aircraft purchases is subject to the issuance of further bank commitments and the
satisfaction of various contractual conditions. These conditions include, among other things, the execution of satisfactory
documentation, the requirement that  perform all of its obligations under the Boeing agreements and provide
satisfactory security interests in the aircraft (and related assets) in favor of the lenders and Ex-Im Bank, and that 
not suffer a material adverse change in its conditions or prospects (financial or otherwise). In addition, as a result of the
Company obtaining a BBB+ (stable) credit rating from Standard & Poor’s (“S&P”) and Fitch Ratings and following
’s issuance of €850m in 1.875% unsecured Eurobonds with a 7-year tenor in June 2014, issuance of €850m in
1.125% unsecured Eurobonds with an 8-year tenor in March 2015 and issuance of €750m in 1.125% unsecured Eurobonds
with an 6.5-year tenor in February 2017 under its EMTN program, the Company may decide in the future to issue additional
debt from capital markets to finance future aircraft deliveries. As part of its Ex-Im Bank guarantee-based financing of the
Boeing 737-800s,  has entered into certain lease agreements and related arrangements. Pursuant to these
arrangements, legal title to 144 aircraft delivered and remaining in the fleet as of March 31, 2019 rests with a number of
United States special purpose vehicles (the “SPVs”). The SPVs are the borrowers of record under the loans made or to be
made under the facilities, with all of their obligations under the loans being guaranteed by  Holdings.
These aircraft are financed using a standard Ex-Im Bank “orphan” ownership structure. The shares of the SPVs
(which are owned by an unrelated charitable association and not by ) are in turn pledged to a security trustee in
favor of Ex-Im Bank and the lenders.  operates each of the aircraft pursuant to a finance lease it has entered into
with the SPVs, the terms of which mirror those of the relevant loans under the facilities.  has the right to purchase
the aircraft upon termination of the lease for a nominal amount. Pursuant to this arrangement,  is considered to
own the aircraft for accounting purposes under IFRS.  does not use special purpose entities for off-balance sheet
financing or any other purpose which results in assets or liabilities not being reflected in ’s consolidated financial
statements. In addition to its purchase option under the finance lease,  is entitled to receive the balance of any
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proceeds received in respect of the aircraft that remain after Ex-Im Bank and the lenders are paid what they are owed under
the loan guarantees.
 has a track record in securing finance for similar sized aircraft purchases. The 1998, 2002, 2003 and 2005
Boeing Contracts totaling 348 aircraft were financed with approximately 66% U.S. Ex-Im Bank loan guarantees and capital
markets (with 85% loan to value) financing, 24% through sale and operating leaseback financing, and 10% through
JOLCOs and commercial debt. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital
Resources.”
Under the Aviation Sector Understanding which came into effect from January 1, 2013, the fees payable to Ex-
Im Bank for the provision of loan guarantees have significantly increased, thereby making it more expensive than more
traditional forms of financing. As a result,  intends to finance the new aircraft obtained under the 2013 and 2014
Boeing Contracts through a combination of internally generated cash flows, debt financing from commercial banks, debt
financing through the capital markets in a secured and unsecured manner, JOLCOs and sale and operating leasebacks.
These forms of financing are generally accepted in the aviation industry and are currently widely available for companies
who have the credit quality of .  may periodically use Ex-Im Bank loan guarantees when appropriate.
 intends to finance pre-delivery payments (“Aircraft Deposits”) to Boeing in respect of the new aircraft via
internally generated cash flows similar to all previous Aircraft Deposit payments.
At March 31, 2019,  had 42 operating lease aircraft in the fleet including the 16 Laudamotion Airbus
A320 leases. As a result,  operates, but does not own, these aircraft, which were leased to provide flexibility for
the aircraft delivery program.  has no right or obligation to acquire these aircraft at the end of the relevant lease
terms. All 42 operating leases are U.S. dollar-denominated and require  to make fixed rental payments. 32 of these
leases are due to mature in the next 2 years. In addition to the above, the Company financed 30 of the Boeing 737-800
aircraft delivered between March 2005 and March 2014 with 13-year euro-denominated JOLCOs. 12 of these JOLCO
arrangements are still outstanding as of March 31, 2019. These structures are accounted for as finance leases and are
initially recorded at fair value on the Company’s balance sheet. Under each of these contracts,  has a call option to
purchase the aircraft at a pre-determined price after a period of 10.5 years, which it may exercise.  exercised this
option for 12 of these aircraft in fiscal year 2019. 3 aircraft have been financed through euro-denominated 12-year
amortizing commercial debt transactions.
Since, under each of the Company’s operating leases, the Company has a commitment to maintain the relevant
aircraft, an accounting provision is made during the lease term for this obligation based on estimated future costs of major
airframe, engine maintenance checks and restitution of major life limited parts by making appropriate charges to the
income statement calculated by reference to the number of hours or cycles operated during the year. Under IFRS, the
accounting treatment for these costs with respect to leased aircraft differs from that for aircraft owned by the Company,
for which such costs are capitalized and amortized.
 currently has corporate ratings of BBB+ (stable) from both S&P and Fitch Ratings and a €5bn EMTN
program.  issued €850m in unsecured Eurobonds with a 7-year tenor at a coupon of 1.875% in June 2014, €850m
in unsecured Eurobonds with an 8-year tenor at a coupon of 1.125% in March 2015 and €750m in unsecured Eurobonds
with a 6.5-year tenor at a coupon of 1.125% in February 2017 under this program. All of these issuances are guaranteed
by  Holdings. The Company used the proceeds from these issuances for general corporate purposes.
In May 2019  DAC entered into a €750m unsecured term loan facility, with a syndicate of 10 banks. The
facility is at a cost of 0.65% per annum and has a 5 year tenor. The facility is for general corporate purposes.
CONTRACTUAL OBLIGATIONS
The table below sets forth the contractual obligations and commercial commitments of the Company with
definitive payment terms, which will require significant cash outlays in the future, as of March 31, 2019. These obligations
primarily relate to ’s aircraft purchase and related financing obligations, which are described in more detail above,
and do not reflect the Eurobond issuances in June 2014, March 2015 and February 2017. For additional information on
the Company’s contractual obligations and commercial commitments, see Note 23 to the consolidated financial statements
included in Item 18.
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The amounts listed under “Finance Lease Obligations” reflect the Company’s obligations under its JOLCOs. See
“Item 5. Operating and Financial Review and Prospects Liquidity and Capital Resources.”
The amounts listed under “Purchase Obligations” in the table reflect obligations for aircraft purchases and are
calculated by multiplying the number of aircraft the Company is obligated to purchase under its current agreements with
Boeing during the relevant period by the Basic Price for each aircraft pursuant to the relevant contract, with the dollar-
denominated Basic Price being converted into euro at an exchange rate of $1.1217= €1.00 (based on the European Central
Bank Rate on March 31, 2019). The relevant amounts therefore exclude the effect of the price concessions granted to
 by Boeing and CFM, as well as any application of the Escalation Factor described below. As a result, ’s
actual expenditures for aircraft during the relevant periods will be lower than the amounts listed under “Purchase
Obligations” in the table.
With respect to purchase obligations under the terms of the 2013 Boeing Contract and 2014 Boeing Contract, the
Company was required to pay Boeing 1.0% of the Basic Price of each of the 318 firm-order Boeing 737 aircraft at the time
the contracts were signed (such deposit being fully refundable if the Company had not received the shareholder approval
at the EGMs on June 18, 2013 and November 28, 2014), and will be required to make periodic advance payments of the
purchase price for each aircraft it has agreed to purchase during the course of the two-year period preceding the delivery
of each aircraft. As a result of these required advance payments, the Company will have paid up to 30% of the Basic Price
of each aircraft prior to its delivery (including the addition of an estimated “Escalation Factor” but before deduction of
any credit memoranda and other concessions); the balance of the net price is due at the time of delivery. The Company
has suspended the payment of advance payments to Boeing pending confirmation of the return to service date of the Boeing
MAX fleet, which was grounded by EASA and the FAA in March 2019, and the delivery of ’s Boeing 737-MAX-
200 firm orders.
The amounts listed under “Operating Lease Obligations” reflect the Company’s obligations under its aircraft
operating lease arrangements at March 31, 2019.
Obligations Due by Period
Contractual Obligations Total Less than 1 year 1-2 years 2-5 years After 5 years
(in millions of euro)
Long-term Debt (a) 3,447.3 290.9 259.2 2,897.2 —
Finance Lease Obligations 197.1 18.5 178.6 — —
Purchase Obligations (b) 12,336.1 4,294.8 3,289.6 4,751.7 —
Operating Lease Obligations 290.1 103.5 60.7 116.0 9.9
Future Interest Payments (c) 159.9 47.0 44.8 67.9 0.2
Total Contractual Obligations € 16,430.5 € 4,754.7 € 3,832.9 € 7,832.8 € 10.1
(a) For additional information on ’s long-term debt obligations, see Note 11 and Note 23 to the consolidated
financial statements included in Item 18.
(b) These are noted at a non-discounted “list” price. For additional information on ’s purchase obligation, see
Note 23 to the consolidated financial statements included in Item 18.
(c) In determining an appropriate methodology to estimate future interest payments  has applied either the
applicable fixed rate or currently applicable variable rate where appropriate. These interest rates are subject to change
and amounts actually due may be higher or lower than noted in the table above.
TREND INFORMATION
For information concerning the principal trends and uncertainties affecting the Company’s results of operations
and financial condition, see “Item 3. Key Information—Risk Factors,” “Item 5. Operating and Financial Review and
Prospects—Business Overview,” “—Results of Operations,” “—Liquidity and Capital Resources” and “Item 4.
Information on the Company—Strategy—Responding to Current Challenges” above.
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OFF-BALANCE SHEET TRANSACTIONS
 uses certain off-balance sheet arrangements in the ordinary course of business, including financial
guarantees and operating lease commitments. Details of each of these arrangements that have or are reasonably likely to
have a current or future material effect on the Company’s financial condition, results of operations, liquidity or capital
resources are discussed below.
Operating Lease Commitments. The Company has entered into a number of sale-and-leaseback transactions in
connection with the financing of a number of aircraft in its fleet. See “—Liquidity and Capital Resources—Capital
Resources” above for additional information on these transactions.
Guarantees.  Holdings has provided an aggregate of €3,796.7m (as at March 31, 2019) in letters of
guarantee to secure obligations of certain of its subsidiaries in respect of loans, capital market transactions and bank
advances, including those relating to aircraft financing and related hedging transactions. This amount excludes guarantees
given in relation to the 2014 Boeing contract under which there was a total of 210 aircraft (135 firm orders and 75 options)
outstanding as at March 31, 2019 amounting to approximately $21bn at list prices.
INFLATION
Inflation did not have a significant effect on the Company’s results of operations and financial condition during
the three fiscal years ended March 31, 2019.
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Item 6. Directors, Senior Management and Employees
 Holdings was established in 1996 as a holding company for . The management of 
Holdings and  are integrated, with the two companies having the same Directors and Executive Officers.
DIRECTORS
The following table sets forth certain information concerning the Directors of  Holdings and  as
of July 25, 2019:
Name Age Positions
David Bonderman (a)(b) 76 Chairman and Director
Roisin Brennan (c) 54 Director
Michael Cawley (b) 65 Director
Emer Daly (c) 56 Director
Stan McCarthy (a)(e) 61 Director
Kyran McLaughlin (a) 75 Director
Howard Millar (e) 58 Director
Dick Milliken (c) 68 Director
Mike O’Brien (d) 75 Director
Michael O’Leary (a) 58 Director and Group CEO
Julie O’Neill (e) 64 Director
Louise Phelan (b) 52 Director
(a) Executive Committee. (d) Safety Committee.
(b) Nomination Committee. (e) Remuneration Committee.
(c) Audit Committee.
David Bonderman (Chairman) is co-founder and chairman of TPG. TPG is a leading global alternative asset firm which
manages more than $105bn in assets and has offices around the world. Mr. Bonderman has served as a director for 
since August 1996, and as chairman since December 1996. Mr. Bonderman also serves on the boards of the following
public companies: Allogene Therapeutics, Inc.; China International Capital Corporation Limited; and TPG Pace Holdings
Corp. In addition, he serves on the boards of The Wilderness Society, the Grand Canyon Trust; the American Himalayan
Foundation; and the Rock and Roll Hall of Fame Foundation, Inc. He is a U.S. citizen.
Roisin Brennan has served as a Director since May 2018. Ms. Brennan is a former Chief Executive of IBI Corporate
Finance Ltd where she had extensive experience advising public companies in Ireland. She is currently a Non-Executive
Director of Hibernia REIT plc, Musgrave Group plc and Dell Bank International DAC having previously been a Non-
Executive Director of DCC plc from 2005 until 2016. She is an Irish Citizen.
Michael Cawley has served as a Director since September 2014. Mr. Cawley previously worked with  for 17 years
as ’s Deputy CEO and Chief Operating Officer and contributed significantly to ’s growth and success until
he retired in March 2014. Mr. Cawley’s other Non-Executive Directorships include Paddy Power plc, Kingspan Group
plc, Hostelworld Group plc and he is also Chairman of Fáilte Ireland, the Irish tourism authority. He is an Irish citizen.
Emer Daly has served as a Director of  since December 2017. Ms. Daly is currently Board Chairman at RSA
Insurance Ireland DAC and a Non-Executive Director of Chetwood Financial Limited and RGA International Reinsurance
Company DAC. Ms. Daly previously served as a Non-Executive Director of Permanent TSB Group plc and as a Director
of Payzone Plc. Ms. Daly also held senior roles with PricewaterhouseCoopers and AXA Insurance for over 20 years. She
is an Irish citizen.
Stan McCarthy was appointed as a Director of  in May 2017 and Deputy Chairman in April 2019. Mr. McCarthy
was Chief Executive of Kerry Group from January 2008 until September 2017. Mr. McCarthy joined Kerry Group in 1976
and worked in a number of finance roles before being appointed as Vice President of Sales and Marketing in the USA in
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1991, as President of Kerry North America in 1996 and as a Director of Kerry Group in 1999. He has dual Irish and U.S.
citizenship.
Kyran McLaughlin has served as a Director since January 2001, and is Deputy Chairman at Davy Stockbrokers. Mr.
McLaughlin advised  during its initial flotation on the Dublin and NASDAQ stock markets in 1997. Mr.
McLaughlin also serves as a Director of a number of Irish private companies. He is an Irish citizen.
Howard Millar was appointed as a Director of  in August 2015. Mr. Millar had served as Deputy Chief Executive
Officer and Chief Financial Officer from 2003 to December 2014 having previously been Director of Finance from 1993
and Financial Controller in 1992. Mr. Millar is Chairman of BDO Ireland, a member of Irelandia Aviation’s advisory
board and a Non-Executive Director of Applegreen plc. Mr. Millar currently serves as Chief Executive Officer of Sirius
Aviation Capital Holdings Ltd. He is an Irish citizen.
R.A. (Dick) Milliken has served as a Director since July 2013 having previously been Chief Financial Officer of the
Almac Group and former Chief Executive Officer of Lamont plc. Mr. Milliken serves as a Director of Bank of Ireland
Mortgage Bank, where he is Chairman of the Audit Committee. Mr. Milliken is also Chairman of Northern Ireland Science
Park and a Director of a number of private companies. He is a British citizen.
Mike O’Brien was appointed as a Director of  in May 2016. Mr. O’Brien has a long and distinguished career in
the aviation industry having retired in 2016 as Head of Flight Operations Inspectorate with the Maltese Civil Aviation
Authority where he served from 2001 having previously spent 10 years as the Head of Operations Standards with the Irish
Aviation Authority. Mr. O’Brien served 4 years as the Chief Pilot and Flight Operations Manager of  from 1987
to 1991. He has also operated many different commercial aircraft types throughout the years ranging from the Douglas
DC3 to the Airbus A330 as an instructor and examiner with Aer Turas, GPA/Air Tara and Gulf Air. Mr. O’Brien is the
co-chairman of the Company’s Safety and Security Committee. He is an Irish citizen.
Michael O’Leary has served as a Director of  since 1988 and as CEO since 1994. Mr. O’Leary was appointed
Group CEO in April 2019. He is an Irish citizen.
Julie O’Neill has served as a Director since December 2012 having previously served as Secretary General of the Irish
Department of Transport from 2002 to 2009 and, in a career that spanned 37 years in the Irish public service, worked in
strategic policy development and implementation in eight Government Departments. She chairs the Sustainable Energy
Authority of Ireland and is a Senior Independent Director of Permanent Group TSB plc and an independent Non-Executive
Director of AXA Life Europe. She is an Irish citizen.
Louise Phelan has served as a Director since December 2012. Ms. Phelan is a former Vice-President for PayPal (Global
Operations, Europe, Middle East & Africa) and is a member of the Board of Voxpro since January 2016. She is an Irish
citizen.
The Board of Directors has established a number of committees, including the following:
Executive Committee. The Board of Directors established the Executive Committee in August 1996. The
Executive Committee can exercise the powers exercisable by the full Board of Directors in circumstances in which action
by the Board of Directors is required but it is impracticable to convene a meeting of the full Board of Directors. Messrs.
Bonderman, McCarthy, McLaughlin and O’Leary are the members of the Executive Committee.
Remuneration Committee. The Board of Directors established the Remuneration Committee in September 1996.
This committee has authority to determine the remuneration of Senior Executives of the Company and to administer the
stock option plans described below. Senior Management remuneration is comprised of a fixed basic pay and performance
related bonuses which are awarded based on a combination of budget and non-budget performance criteria. The Board of
Directors as a whole determines the remuneration and bonuses of the Group CEO, who is the only Executive Director. Mr.
McCarthy, Mr. Millar and Ms. O’Neill are the members of the Remuneration Committee.
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Audit Committee. The Board of Directors established the Audit Committee in September 1996 to make
recommendations concerning the engagement of independent external auditors; to review with the auditors the plans for
and scope of each annual audit, the audit procedures to be utilized and the results of the audit; to approve the professional
services provided by the auditors; to review the independence of the auditors; and to review the adequacy and effectiveness
of the Company’s internal accounting controls. Mr. Milliken, Ms. Daly and Ms. Brennan are the members of the Audit
Committee. In accordance with the recommendations of the Irish Combined Code of Corporate Governance (the
“Combined Code”), a senior independent Non-Executive Director, Mr. Milliken, is the chairman of the Audit Committee.
All members of the Audit Committee are independent for the purposes of the listing rules of the NASDAQ and the U.S.
federal securities laws.
Nomination Committee. The Board of Directors established the Nomination Committee in May 1999 to make
recommendations and proposals to the full Board of Directors concerning the selection of individuals to serve as Executive
and Non-Executive Directors. The Board of Directors as a whole then makes appropriate determinations regarding such
matters after considering such recommendations and proposals. Messrs. Bonderman, Cawley and Ms. Phelan are the
members of the Nomination Committee.
Safety and Security Committee. The Board of Directors established the Safety and Security Committee in March
1997 to review and discuss air safety and related issues. The Safety and Security Committee reports to the full Board of
Directors each quarter. The Safety and Security Committee is composed of Mr. O’Brien and Mr. Sorahan, Accountable
Manager  DAC (who both act as co-chairman), as well as the following Executive Officers of : Messrs.
Bellew, Wilson, the Chief Pilot, Captain Ray Conway and the Chief Risk Officer, Ms. Carol Sharkey. A number of other
managers are invited to attend, as required, from time to time.
Powers of, and Action by, the Board of Directors
The Board of Directors is empowered by the Articles of Association of  Holdings (the “Articles”) to carry
on the business of  Holdings, subject to the Articles, provisions of general law and the right of stockholders to give
directions to the Directors by way of ordinary resolutions. Every Director who is present at a meeting of the Board of
Directors of  Holdings has one vote. In the case of a tie on a vote, the chairman of the Board of Directors has a
second or tie-breaking vote. A Director may designate an alternate Director to attend any Board of Directors meeting, and
such alternate Director shall have all the rights of a Director at such meeting.
The quorum for a meeting of the Board of Directors, unless another number is fixed by the Directors, consists of
three Directors, a majority of whom must be EU nationals. The Articles require the vote of a majority of the Directors (or
alternates) present at a duly convened meeting for the approval of any action by the Board of Directors.
Composition and Term of Office
The Articles provide that the Board of Directors shall consist of no fewer than three and no more than 15
Directors, unless otherwise determined by the stockholders. There is no maximum age for a Director and no Director is
required to own any shares of  Holdings.
Directors are elected (or have their appointments confirmed) at the annual general meetings of stockholders.
Exemptions from NASDAQ Corporate Governance Rules
The Company relies on certain exemptions from the NASDAQ corporate governance rules. These exemptions,
and the practices the Company adheres to, are as follows:
• The Company is exempt from NASDAQ’s quorum requirements applicable to meetings of shareholders,
which require a minimum quorum of 33% for any meeting of the holders of common stock, which in the
Company’s case are its Ordinary Shares. In keeping with Irish generally accepted business practice, the
Articles provide for a quorum for general meetings of shareholders of three shareholders, regardless of the
level of their aggregate share ownership.
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• The Company is exempt from NASDAQ’s requirement with respect to Audit Committee approval of related-
party transactions, as well as its requirement that shareholders approve certain stock or asset purchases when
a Director, officer or substantial shareholder has an interest. The Company is subject to extensive provisions
under the Listing Rules of the Euronext Dublin governing transactions with related parties, as defined therein,
and the Irish Companies Act also restricts the extent to which Irish companies may enter into related-party
transactions. In addition, the Articles contain provisions regarding disclosure of interests by the Directors
and restrictions on their votes in circumstances involving conflicts of interest. The concept of a related party
for purposes of NASDAQ’s Audit Committee and shareholder approval rules differs in certain respects from
the definition of a transaction with a related party under the Irish Listing Rules.
• NASDAQ requires shareholder approval for certain transactions involving the sale or issuance by a listed
company of common stock other than in a public offering. Under the NASDAQ rules, whether shareholder
approval is required for such transactions depends, among other things, on the number of shares to be issued
or sold in connection with a transaction, while the Irish Listing Rules require shareholder approval when the
value of a transaction, as measured under any one or more of four class tests, exceeds a certain percentage
of the size of the listed company undertaking the transaction as measured for the purposes of same tests.
• NASDAQ requires that each issuer solicit proxies and provide proxy statements for all meetings of
shareholders and provide copies of such proxy solicitation to NASDAQ. The Company is exempt from this
requirement as the solicitation of holders of ADSs is not required under the Irish Listing Rules or the Irish
Companies Act. However, it is ’s policy to solicit holders of ADSs and will continue to do so, unless
it becomes necessary to restrict non-EU shareholders voting rights because of Brexit. For additional
information, please see “Item 3 – Risks Related to Ownership of the Company’s Ordinary Shares or ADRs”.
Details of ’s annual general meetings and other shareholder meetings, together with the requirements
for admission, voting or the appointment of a proxy are available on the website of the Company in
accordance with the Irish Companies Act and the Company’s Articles of Association.
• NASDAQ requires that all members of a listed company’s Nominating Committee be independent Directors,
unless the Company, as a foreign private issuer, provides an attestation of non-conforming practice based
upon home country practice and then discloses such non-conforming practice annually in its Form 20-F.
The Company also follows certain other practices under the U.K. Corporate Governance Code in lieu of those set
forth in the NASDAQ corporate governance rules, as expressly permitted thereby. Most significantly:
Independence. NASDAQ requires that a majority of an issuer’s Board of Directors be “independent” under the
standards set forth in the NASDAQ rules and that Directors deemed independent be identified in the Company’s Annual
Report on Form 20-F. The Board of Directors has determined that each of the Company’s eleven Non-Executive Directors is
“independent” under the standards set forth in the U.K. Corporate Governance Code (the “Code”).
Under the Code, there is no bright-line test establishing set criteria for independence, as there is under NASDAQ
Rule 5605(a)(12). Instead, the Board of Directors determines whether the Director is “independent in character and
judgment,” and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the
Director’s judgment. Under the Code, the Board of Directors may determine that a Director is independent notwithstanding
the existence of relationships or circumstances which may appear relevant to its determination, but it should state its reasons
if it makes such a determination. The Code specifies that relationships or circumstances that may be relevant include whether
the Director: (i) has been an employee of the relevant company or group within the last five years; (ii) has had within the last
three years a direct or indirect material business relationship with such company; (iii) has received payments from such
company, subject to certain exceptions; (iv) has close family ties with any of the company’s advisers, Directors or senior
employees; (v) holds cross-Directorships or other significant links with other Directors; (vi) represents a significant
shareholder; or (vii) has served on the Board of Directors for more than nine years.
In determining that each of the eleven Non-Executive Directors is independent under the Code standard, the 
Holdings Board of Directors identified such relevant factors with respect to Non-Executive Directors Messrs. Bonderman,
McLaughlin, Cawley, Millar, O’Brien and Ms. Phelan.
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The Board has also considered the independence of David Bonderman given his shareholding in  Holdings
plc. As at March 31, 2019, David Bonderman had a beneficial shareholding in the Company of 7,535,454 ordinary shares,
equivalent to 0.66% of the issued share capital. Having considered this shareholding in light of the number of issued shares
in  Holdings plc and the financial interest of the Director, the Board has concluded that the interest is not so material
as to breach the spirit of the independence rule contained in the Code.
The Board has considered Kyran McLaughlin's independence given his role as Deputy Chairman and Head of
Capital Markets at Davy Stockbrokers. Davy Stockbrokers are one of 's corporate brokers and provide corporate
advisory services to  from time to time. The Board has considered the fees paid to Davy Stockbrokers for these
services and believe that they are immaterial to both  and Davy Stockbrokers given the size of each organization's
business operations and financial results. Having considered this relationship, the Board has concluded that Kyran
McLaughlin continues to be an independent Non-Executive Director within the spirit and meaning of the Code Rules.
The Board has considered Michael Cawley’s independence given that he served as Deputy Chief Executive Officer
and Chief Operating Officer of  from 2003 to March 2014 and before that as ’s Chief Financial Officer and
Commercial Director from 1997. The Board has considered Michael’s employment and has concluded that Michael Cawley
is an independent Non-Executive Director within the spirit and meaning of the Code Rules.
The Board has considered Howard Millar’s independence given that he was ’s Deputy Chief Executive up
to December 31, 2014, and Chief Financial Officer up to September 30, 2014. The Board has considered Howard’s
employment and has concluded that Howard Millar is an independent Non-Executive Director within the spirit and meaning
of the Code Rules.
The Board has considered Mike O’Brien’s independence given that he served as Chief Pilot and Flight Operations
Manager of  from 1987 to 1991. The Board has considered Mr. O’Brien’s employment and has concluded that he is
an independent Non-Executive Director within the spirit and meaning of the Code Rules.
The Board has also considered the independence of Louise Phelan given her previous role as Vice President for
PayPal for Global Operations Europe, Middle East and Africa. PayPal is one of ’s payment service providers. The
Board has considered the services provided by PayPal and have concluded that Louise Phelan is an independent Non-
Executive Director within the spirit and meaning of the Code Rules.
The Board has further considered the independence of Messrs. David Bonderman and Kyran McLaughlin as they
have each served more than nine years on the Board. The Board considers that each of these Directors is independent in
character and judgment as they either have other significant commercial and professional commitments and/or bring their
own level of senior experience gained in their fields of international business and professional practice. When arriving at this
decision, the Board has taken into account the comments made by the Financial Reporting Council in their report dated
December 2009 on their review of the impact and effectiveness of the Code, in particular their comment that independence
is not the primary consideration when assessing the composition of the Board, and that the over-riding consideration should
be that the Board is fit for purpose.
The NASDAQ independence criteria specifically state that an individual may not be considered independent if,
within the last three years, such individual or a member of his or her immediate family has had certain specified relationships
with the company, its parent, any consolidated subsidiary, its internal or external auditors, or any company that has significant
business relationships with the company, its parent or any consolidated subsidiary. Neither ownership of a significant
amount of stock nor length of service on the Board is a per se bar to independence under the NASDAQ rules.
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EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Executive Officers of  at July 25, 2019:
Name Age Position
Peter Bellew 54 Chief Operations Officer
John Hurley 44 Chief Technology Officer
Kenny Jacobs 45 Chief Marketing Officer
Juliusz Komorek 41 Chief Legal and Regulatory Officer; Company Secretary
David O’Brien 55 Chief Commercial Officer
Michael O’Leary 58 Group Chief Executive Officer
Carol Sharkey 44 Chief Risk Officer
Neil Sorahan 47 Chief Financial Officer
Edward Wilson 55 Chief People Officer
Peter Bellew. Peter was appointed COO in December 2017. He returned to  from Malaysia Airlines where he was
Group CEO. He is a 30-year veteran of the travel and aviation business. He previously worked for  from 2006 to
2014 where he held various positions including Director of Flight Operations and Head of Sales and Marketing. Prior to
that he worked in the tour operating and airports sector. In July 2019, Peter informed the Company that he plans to step
down from his current role and leave the Group at the end of December 2019.
John Hurley. John was appointed CTO in September 2014. He joined  from Houghton Mifflin Harcourt, where
he was Vice-President of Engineering and Product Operations, Director of Platform Development and Software
Development Program Manager. He was previously Production Manager at both Intuition Publishing Ltd and Education
Multimedia Group and has over 19 years of experience in the IT industry.
Kenny Jacobs. Kenny was appointed CMO in January 2014. He is responsible for sales, digital marketing and customer
service at . Previously Kenny was CMO for Moneysupermarket plc. which has a set of digital brands. Kenny has
spent much of his career in retail with Tesco PLC as marketing Director in Tesco Ireland and brand Director for Tesco
U.K. Prior to that he worked for German retailer Metro Group GmbH in various roles in marketing and IT in Europe and
Asia.
Juliusz Komorek. Juliusz was appointed CLRO; Company Secretary in June 2015, having served as Company Secretary
and Director of Legal and Regulatory Affairs since May 2009, and Deputy Director of Legal and Regulatory Affairs since
2007. Prior to joining the Company in 2004, Juliusz had gained relevant experience in the European Commission’s
Directorate General for Competition and in the Polish Embassy to the EU in Brussels, as well as in the private sector in
Poland and the Netherlands. Juliusz is a lawyer, holding degrees from the universities of Warsaw and Amsterdam.
David O’Brien. David was appointed CCO in January 2014 having previously served as ’s Director of Flight and
Ground Operations from December 2002. A graduate of the Irish Military College, David followed a military career with
positions in the airport sector and agribusiness in the Middle East, Russia and Asia.
Michael O’Leary. Michael has served as a Director of  DAC since 1988 and a Director of  Holdings since
1996. Michael was appointed CEO of  in 1994 and Group CEO in April 2019, having previously served as CFO
since 1988.
Carol Sharkey. Carol was appointed CRO in May 2018 having held the position of Director of Safety and Security since
2014. She has worked at  since 1995 having previously held roles in inflight, flight operations and in recent years
has overseen the flight safety department.
Neil Sorahan. Neil was appointed CFO in October 2014, having previously served as ’s Finance Director since
June 2006. Prior to that he was Group Treasurer from January 2003. Before joining , Neil held various finance and
treasury roles at CRH plc.
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Edward Wilson. Eddie was appointed CPO in December 2002, prior to which he served as Head of Personnel since
joining  in December 1997. Prior to joining , he served as Human Resources Manager for Gateway 2000
and held a number of other human resources-related positions in the Irish financial services sector.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
The aggregate amount of compensation paid by  Holdings and its subsidiaries to its 9 Executive Officers
named above in fiscal year 2019 was €12.4m. For details of Mr. O’Leary’s compensation in such fiscal year, see “—
Employment and Bonus Agreement with Mr. O’Leary” below.
Each of  Holdings’ Non-Executive Directors is entitled to receive €35,000 plus expenses per annum, as
remuneration for their services to  Holdings. The Chairman of the Board receives a fee of €100,000 per annum.
The additional remuneration paid to all Committee members for service on that committee is €15,000 per annum, with the
exception of the Chairman of the Safety and Security Committee who is entitled to receive €40,000 per annum in
connection with the additional duties in relation to that committee.
For further details of stock options that have been granted to the Company’s employees, including the Executive
Officers, see “Item 10. Additional Information—Options to Purchase Securities from Registrant or Subsidiaries,” as well
as Note 16 to the consolidated financial statements included herein.
Remuneration Agreement with Mr. O’Leary
The Group CEO is the only Executive Director of the Board. In February 2019  announced that Mr. O’Leary
had signed a new five-year contract as Group CEO commencing April 1, 2019 and expiring on July 31, 2024. As part of
this contract the Group CEO has agreed to a 50% cut in base pay from approximately €1m to €500,000 per annum, a
50% cut to his maximum annual bonus (to €500,000) and, in line with best practice in the updated Corporate Governance
Code, he does not receive any pension benefits from . This new contract also includes 10m share options at a
strike price of €11.12 which are exercisable at a price of €11.12 if the net income of  Holdings plc exceeds €2bn
in any year up to 2024 and/or the share price of  Holdings plc exceeds €21 for a period of 28 days between April
1, 2021 and March 31, 2024. The maximum total cost of the Group CEO’s remuneration is therefore €2.8m per annum
(including a €1.8m share based payments accounting charge) over the 5 year term of the Group CEO’s contract of
employment.
STAFF AND LABOR RELATIONS
The following table sets forth the details of ’s team (including new airlines  Sun and Laudamotion)
at each of March 31, 2019, 2018 and 2017:
Number of Staff at March 31,
Classification 2019 2018 2017
Management 177 120 116
Administrative/IT Labs 992 780 603
Maintenance 426 156 152
Ground Operations 704 433 413
Pilots 5,446 4,831 4,058
Cabin Crew 9,095 8,263 7,684
Total 16,840 14,583 13,026
While  continues the transition to collective bargaining with unions, these unions may have unrealistic
expectations and agitate for unproductive work practices which if acceded to would add to the complexity and costs to the
business.  will continue to defend its existing high productivity business model.  believes that existing
terms and conditions for both pilots and cabin crew are industry leading among European low cost B737 operators with
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competitive pay, advantageous fixed rosters, outstanding promotional opportunities and a wide choice of base locations
across Europe.
’s pilots, cabin crew, maintenance and ground operations personnel undergo continuous recurrent
training. A substantial portion of the training for ’s cabin crew is devoted to safety procedures, and cabin crew are
required to undergo annual evacuation and fire drill training during their tenure with the airline.  also provides
salary increases to its engineers who complete advanced training in certain fields of aircraft maintenance.  utilizes
its own Boeing 737-800 aircraft simulators for pilot training.
European regulations require pilots to be licensed as commercial pilots with specific ratings for each aircraft to
be flown. In addition, European regulations require all commercial pilots to be medically certified as physically fit.
Licenses and medical certification are subject to periodic re-evaluation and require recurrent training and recent flying
experience in order to be maintained. Maintenance engineers must be licensed and qualified for specific aircraft types.
Cabin crew must undergo initial and periodic competency training. Training programs are subject to approval and
monitoring by the competent authority. In addition, the appointment of senior management personnel directly involved in
the supervision of flight operations, training, maintenance and aircraft inspection must be satisfactory to the competent
authority. Based on its experience in managing the airline’s growth to date, management believes that there is a sufficient
pool of qualified and licensed pilots, engineers and mechanics within the EU to satisfy ’s anticipated future needs
in the areas of flight operations, maintenance and quality control. The consolidation within the aviation industry, airline
closures and downsizing has resulted in an increase in pilot applications to join .  has also been able to
satisfy its needs for additional pilots and cabin crew through the use of contract agencies. These contract pilots and cabin
crew are included in the table above.
’s crew earn productivity-based incentive payments, including a sales bonus for onboard sales for flight
attendants and payments based on the number of hours or sectors flown by pilots and cabin crew (within limits set by
industry standards or regulations governing maximum working hours). Pilots at all of ’s bases are covered by the
terms of existing collective agreements on pay, allowances and rosters which fall due for negotiation at various dates
between 2020 and 2023 however these agreements are likely to be replaced by Collective Labour Agreements (CLA)
negotiated with the unions and Company Councils in each country. ’s pilots are currently subject to IAA-approved
limits of 900 flight-hours per calendar year. For fiscal year 2019, the average flight-hours for ’s pilots amounted
to approximately 67 hours per month and approximately 807 hours for the complete year, a 1.8% decrease on the previous
fiscal year.
If more stringent regulations on flight hours were to be adopted, ’s flight personnel could experience a
reduction in their total pay due to lower compensation for the number of hours or sectors flown and  could be
required to hire additional flight personnel.
 Holdings’ shareholders have approved a number of share option plans for employees and Directors.
 Holdings has also issued share options to several of its senior managers. For details of all outstanding share
options, see “Item 10. Additional Information––Options to Purchase Securities from Registrant or Subsidiaries.”
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Item 7. Major Shareholders and Related Party Transactions
As of June 30, 2019, there were 1,125,383,206 Ordinary Shares outstanding. As of that date, 99,768,952 ADRs,
representing 498,844,760 Ordinary Shares, were held of record in the United States by 50 holders, and represented in the
aggregate 44.3% of the number of Ordinary Shares then outstanding. See “Item 10. Additional InformationArticles of
Association” and “Limitations on Share Ownership by Non-EU Nationals.”
MAJOR SHAREHOLDERS
Based on information available to  Holdings, the following table summarizes the holdings of those
shareholders holding 3% or more of the Ordinary Shares as of June 30, 2019, June 30, 2018 and June 30, 2017, the latest
practicable date prior to the Company’s publication of its statutory Annual Report in each of the relevant years.
As of June 30, 2019 As of June 30, 2018 As of June 30, 2017
% of % of % of
No. of Shares Class No. of Shares Class No. of Shares Class
Harris Associates 92,645,690 8.2 % - - - -
Baillie Gifford 61,916,922 5.5 % 55,403,057 4.8 % 61,407,951 5.1 %
Capital 59,883,817 5.3 % 196,038,142 17.0 % 174,732,018 14.5 %
AKO Capital 54,851,101 4.9 % - - - -
Michael O’Leary 44,096,725 3.9 % 44,096,725 3.8 % 46,096,725 3.8 %
HSBC Holdings PLC - - 55,792,770 4.8 % 112,027,084 9.3 %
Fidelity - - 63,587,530 5.5 % 70,116,745 5.8 %
As of June 30, 2019, the Directors of  Holdings as a group owned 53,057,387 Ordinary Shares,
representing 4.7% of  Holdings’ outstanding Ordinary Shares as of such date. See also Note 19(d) to the
consolidated financial statements included herein. Each of ’s shareholders has identical voting rights with respect
to its Ordinary Shares.
As of March 31, 2019, there were 1,133,395,322 Ordinary Shares outstanding.
Based on information available to  Holdings plc, the following table summarizes shareholdings in excess
of 3% or more of the Ordinary Shares as of March 31, 2019, March 31, 2018 and March 31, 2017.
As of March 31, 2019 As of March 31, 2018 As of March 31, 2017
% of % of % of
No. of Shares Class No. of Shares Class No. of Shares Class
Capital 100,394,424 8.9 % 193,229,822 16.5 % 175,034,773 14.4 %
Harris Associates 77,228,695 6.8 % - - - -
Baillie Gifford 58,805,558 5.2 % 45,244,444 3.9 % 61,526,458 5.1 %
AKO Capital 51,079,882 4.5 % - - - -
Michael O’Leary 44,096,725 3.9 % 46,096,725 3.9 % 50,096,725 4.1 %
Fidelity - - 67,919,641 5.8 % 70,634,226 5.8 %
HSBC Holdings PLC - - 64,191,568 5.5 % 105,488,520 8.7 %
RELATED PARTY TRANSACTIONS
The Company has not entered into any “related party transactions” (except for remuneration paid by  to
members of senior management and the Directors as disclosed in Note 27 to the consolidated financial statements) in the
three fiscal years ending March 31, 2019 or in the period from March 31, 2019 to the date hereof.
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Item 8. Financial Information
CONSOLIDATED FINANCIAL STATEMENTS
Please refer to “Item 18. Financial Statements.”
OTHER FINANCIAL INFORMATION
Legal Proceedings
The Company is engaged in litigation arising in the ordinary course of its business. Although no assurance can
be given as to the outcome of any current or pending litigation, management does not believe that any such litigation will,
individually or in the aggregate, have a material adverse effect on the results of operations or financial condition of the
Company, except as described below.
EU State Aid-Related Proceedings. Since 2002, the European Commission has examined the agreements between
 and various airports to establish whether they constituted illegal state aid. In many cases, the European
Commission has concluded that the agreements did not constitute state aid. In other cases,  has successfully
challenged the EU commission finding that there was state aid. In July and October 2014, the European Commission
announced findings of state aid to  in its arrangements with Pau, Nimes, Angouleme, Altenburg and Zweibrücken
airports, ordering  to repay a total of approximately €9.9m of alleged aid. In July and November 2016, the
European Commission announced findings of state aid to  in its arrangements with Cagliari and Klagenfurt
respectively, ordering  to repay approximately €12.6m of alleged aid.  appealed the 7 “aid” decisions to
the EU General Court. In late 2018, the General Court upheld the Commission’s findings regarding ’s
arrangements with Pau, Nimes, Angouleme and Altenburg airports, and overturned the Commission’s finding regarding
’s arrangement with Zweibrücken airport.  has appealed these 4 negative findings to the European Court
of Justice. These appeals are expected to take at least 2 years. The appeal proceedings before the General Court regarding
’s arrangements with Cagliari and Klagenfurt airports are expected to take approximately 2 years.
 is facing similar legal challenges with respect to agreements with certain other airports, notably Paris
(Beauvais), La Rochelle, Carcassonne, Girona, Reus, Târgu Mureș, Montpellier and Frankfurt (Hahn). These
investigations are ongoing and  currently expects that they will conclude in 2019, with any European Commission
decisions appealable to the EU General Court.
 is also facing an allegation that it has benefited from unlawful state aid in a German court case in relation
to its arrangements with Frankfurt (Hahn).
Adverse rulings in the above or similar cases could be used as precedents by competitors to challenge ’s
agreements with other publicly-owned airports and could cause  to strongly reconsider its growth strategy in
relation to public or state-owned airports across Europe. This could in turn lead to a scaling back of ’s growth
strategy due to the smaller number of privately owned airports available for development. No assurance can be given as
to the outcome of these proceedings, nor as to whether any unfavorable outcomes may, individually or in the aggregate,
have a material adverse effect on the results of operations or financial condition of the Company.
Legal Proceedings Against Internet Ticket Touts. The Company is involved in a number of legal proceedings
against internet ticket touts (“screenscraper websites”) in Ireland, Germany, the Netherlands, France, Italy, Switzerland
and the U.S.. Screenscraper websites gain unauthorized access to ’s website and booking system, extract flight and
pricing information and display it on their own websites for sale to customers at prices which include intermediary fees on
top of ’s fares.  does not allow any such commercial use of its website and objects to the practice of
screenscraping also on the basis of certain legal principles, such as database rights, copyright protection, etc. The
Company’s objective is to prevent any unauthorized use of its website. The Company also believes that the selling of
airline tickets by screenscraper websites is inherently anti-consumer as it inflates the cost of air travel. At the same time,
 encourages genuine price comparison websites which allow consumers to compare prices of several airlines and
then refer consumers to the airline website in order to perform the booking at the original fare.  offers licenced
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access to its flight and pricing information to such websites.  also permits GDSs to provide access to ’s
fares to traditional bricks and mortar travel agencies. The Company has received favorable rulings in France, Germany,
Ireland, Italy and The Netherlands, and unfavorable rulings in Germany, Spain, France and Italy. However, pending the
outcome of these legal proceedings and if  were to be ultimately unsuccessful in them, the activities of
screenscraper websites could lead to a reduction in the number of customers who book directly on ’s website and
loss of ancillary revenues which are an important source of profitability through the sale of car hire, hotels and travel
insurance etc. Also, some customers may be lost to the Company once they are presented by a screenscraper website with
a  fare inflated by the screenscraper’s intermediary fee. See Item 3. Key Information—Risk Factors—Risks Related
to the Company—" Faces Risks Related to Unauthorized Use of Information from the Company’s Website.”
U.S. Litigation. In November 2018, a putative securities class action complaint was filed against  and Mr.
O’Leary in the United States District Court for the Southern District of New York (the “District Court”). The District
Court appointed a lead plaintiff, the City of Birmingham Retirement and Relief System and City of Birmingham Firemen’s
and Policemen’s Supplemental Pension System (the “Birmingham Funds”), in January 2019. The Birmingham Funds filed
an amended complaint in April 2019 that purports to be on behalf of purchasers of  American Depositary Shares
(“ADSs”) between May 30, 2017 and September 28, 2018. The amended complaint alleges, among other things, that in
filings with the SEC, investor calls, interviews, and other communications,  and/or Mr. O’Leary made materially
false and misleading statements and omissions regarding employment and financial data, employee negotiation processes,
the September 2017 pilot rostering management issue, and the likelihood and financial impact of unionization, which
allegedly artificially inflated the market value of ’s securities. In June 2019,  and Mr. O’Leary filed a
motion to dismiss.
Dividend Policy
Since its incorporation as the holding company for  in 1996,  Holdings has only occasionally
declared special dividends on both its Ordinary Shares and ADRs. The Directors of the Company declared on May 21,
2012 that  Holdings intended to pay a special dividend of €0.34 per ordinary share (approximately €492m) and
this special dividend was paid on November 30, 2012. The Company indicated on May 19, 2014 that it planned to pay a
special dividend of up to approximately €520m in the fourth quarter of fiscal year 2015, and this special dividend was paid
on February 27, 2015. In September, 2015 the Company announced a B share scheme of €398m to return the proceeds
from the sale of its shares in Aer Lingus to shareholders; payments to shareholders issued in October 2015.
Share Buy-back Program
Following shareholder approval at the 2006 annual general meeting, a €300m share buy-back program was
formally announced on June 5, 2007. Permission was received at the annual general meeting held on September 20, 2007
to repurchase a maximum of 75.6m Ordinary Shares representing 5% of the Company’s then outstanding share capital.
The €300m share buy-back of approximately 59.5m Ordinary Shares, representing approximately 3.8% of the Company’s
pre-existing share capital, was completed in November 2007. In February 2008, the Company announced a second share
buy-back program of up to €200m worth of Ordinary Shares, which was ratified by shareholders at the annual general
meeting held on September 18, 2008. 18.1m Ordinary Shares were repurchased under this program at a cost of
approximately €46m. The Company also completed share buy-backs of €125m in respect of 36.5m Ordinary Shares in
fiscal year 2012 and 15m Ordinary Shares at a cost of approximately €68m in fiscal year 2013.
In April 2012, the Company held an EGM to authorize the Directors to repurchase Ordinary Shares and ADRs
for up to 5% of the issued share capital of the Company traded on the NASDAQ. Up until April 2012, shareholders had
only authorized the Directors to repurchase Ordinary Shares. As the ADRs typically trade at a premium compared to
Ordinary Shares, this has resulted in increased costs in performing share buy-backs and may continue to do so in the future.
This authority was renewed at the Annual General Meeting held on September 20, 2013 and at subsequent Annual General
Meetings and an Extraordinary General Meeting in 2016.
In fiscal year 2014, 69.5m Ordinary Shares (including Ordinary Shares underlying just over 6m ADRs) were
repurchased at a cost of approximately €482m. In February 2015, the Company announced a €400m ordinary share buy-
back program which was completed between February and August 2015. In February 2016, the Company announced an
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€800m Ordinary Share buy-back program (including Ordinary Shares underlying ADRs) and this program was
subsequently increased to €886m in June 2016. €418m of this program was completed in fiscal year 2016 to buy-back
approximately 29.1m shares (including approximately 19.9m shares underlying ADRs) with the remaining €468m spent
in fiscal year 2017 to buy-back approximately 36m shares (including approximately 3.9m shares underlying ADRs). In
addition to the above, in fiscal year 2017, the Company bought back 36.4m shares (including approximately 17.7m shares
underlying ADRs) at a total cost of approximately €550m during the period November 2016 to February 2017. In February
2017 the Company announced the commencement of a €150m share buy-back program in respect of shares underlying
ADRs. The Company bought back approximately 2m shares underlying ADRs at a cost of €39m under this program during
fiscal year 2018. In addition to the above, in fiscal year 2018, the Company bought back 33m shares at a total cost of
€600m under its €600m share buy-back program which commenced in May 2017 and 11.7m shares at a total cost of €190m
under it €750m share buy-back which commenced in February 2018. In fiscal year 2019 the Company bought back 37.8m
shares at a total cost of approximately €561m under its €750m share buy-back which commenced in February 2018.
As of July 25, 2019 the Company had bought back approximately 12.3m shares at a cost of €137.6m under its €
700m share buy-back program (including Ordinary Shares underlying ADRs) which was announced and commenced in
May 2019. All Ordinary Shares (including ADRs which represent five Ordinary Shares) repurchased have been cancelled.
See “Item 9. The Offer and Listing - Trading Markets and Share Prices” below for further information regarding
share buy-backs.
SIGNIFICANT CHANGES
In April 2019, the Group concluded a low cost, €750m unsecured (5 year syndicated) bank facility for general
corporate purposes. This facility was fully drawn down in May 2019.
Between April 1, 2019 and July 25, 2019, the Company had bought back 12.3m ordinary shares at a total cost of
€137.6m under its €700m share buy-back which commenced in May 2019. This was equivalent to 1.1% of the Company’s
issued share capital at March 31, 2019. All ordinary shares repurchased are cancelled.
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Item 9. The Offer and Listing
TRADING MARKETS AND SHARE PRICES
The primary market for  Holdings’ Ordinary Shares is Euronext Dublin; Ordinary Shares are also traded
on the London Stock Exchange. The Ordinary Shares were first listed for trading on the Official List of Euronext Dublin
on June 5, 1997 and were first admitted to the Official List of the London Stock Exchange on July 16, 1998.
ADRs, each representing 5 Ordinary Shares, are traded on NASDAQ. The Bank of New York Mellon is 
Holdings’ depositary for purposes of issuing ADRs evidencing the ADSs. The following tables set forth, for the periods
indicated, the reported high and low closing sales prices of the ADRs on NASDAQ and for the Ordinary Shares on
Euronext Dublin and the London Stock Exchange, and have been adjusted to reflect the two-for-one split of the Ordinary
Shares and ADRs effected on February 26, 2007:
*All quarterly high and low prices for ADRs and Ordinary Shares in the following tables refer to calendar year
quarters and not fiscal year quarters.
ADRs
125
Since certain of the Ordinary Shares are held by brokers or other nominees, the number of direct record holders
in the United States, which is reported as 50, may not be fully indicative of the number of direct beneficial owners in the
United States, or of where the direct beneficial owners of such shares are resident.
In order to increase the percentage of its share capital held by EU nationals, beginning June 26, 2001, 
Holdings instructed the Depositary to suspend the issuance of new ADRs in exchange for the deposit of Ordinary Shares
until further notice. Therefore, holders of Ordinary Shares cannot currently convert their Ordinary Shares into ADRs. The
Depositary will however convert existing ADRs into Ordinary Shares at the request of the holders of such ADRs. The
Company in 2002 implemented additional measures to restrict the ability of non-EU nationals to purchase Ordinary Shares.
As a result, non-EU nationals are currently effectively barred from purchasing Ordinary Shares. See “Item 10. Additional
Information—Limitations on Share Ownership by Non-EU Nationals” for additional information.
The Company, at its AGM and EGM of the Shareholders, has, in recent years, passed a special resolution
permitting the Company to engage in Ordinary Share buy-back programs subject to certain limits noted below. Since June
2007 (when the Company engaged in its first Ordinary Share buy-back program) the Company has repurchased the
following Ordinary Shares:
Year Ended March 31, No. of shares (m) Approx. cost ()
All Ordinary Shares repurchased have been, or will be, cancelled.
The maximum price at which the Company may repurchase Ordinary Shares traded on Euronext Dublin or the
London Stock Exchange is the higher of (i) 5% above the average market value of the Company’s Ordinary Shares on the
trading venue where the shares are being repurchased for the 5 business days prior to the date of purchase; and (ii) the
price stipulated by the European Commission-adopted regulatory technical standards pursuant to article 5(6) of the EU
Market Abuse Regulation 596/2014, being the higher of the last independent trade and the highest current independent bid
on the trading venue on which the shares are being repurchased. The maximum price at which the Company may
repurchase Ordinary Shares which underlie the Company’s ADSs traded on NASDAQ is 5% above the average market
value of one-fifth of the Company’s ADSs on NASDAQ for the 5 business days prior to the date of purchase (as one ADS
represents 5 Ordinary Shares).
The minimum price at which the Company may repurchase Ordinary Shares is their nominal value of 0.600 euro
cent (€0.006).
At an EGM of Shareholders held on April 19, 2012, the Company obtained a new repurchase authority which
enables the Company to repurchase the Company’s ADRs which are traded on NASDAQ. The maximum price at which
Ordinary Shares which underlie the Company’s ADRs can be repurchased is 5% above one-fifth of the average market
value of the Company’s ADRs as quoted on NASDAQ, for the five business days prior to the date of purchase (as one
ADS represents five Ordinary Shares). Any ADRs purchased are converted to Ordinary Shares by the Company’s brokers
for subsequent repurchase and cancellation by the Company.
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As of June 30, 2019, the total number of options over Ordinary Shares outstanding under all of the Company’s
share option plans was 39.6 million, representing 3.5% of the Company’s issued share capital at that date.
Item 10. Additional Information
DESCRIPTION OF CAPITAL STOCK
 Holdings’ capital stock consists of Ordinary Shares, each having a par value of 0.600 euro cent. As of
March 31, 2019, a total of 1,133,395,322 Ordinary Shares were outstanding. On February 26, 2007,  effected a 2-
for-1 share split as a result of which each of its then existing Ordinary Shares, par value 1.27 euro cent, was split into two
new Ordinary Shares, par value 0.635 euro cent.
On October 27, 2015, the Company completed a capital reorganisation which involved the consolidation of its
ordinary share capital on a 39 for 40 basis which resulted in the reduction of ordinary shares in issue by 33.8 million
ordinary shares to 1,319.3 million as at that date. The nominal value of an ordinary share was also reduced from 0.635
euro cent each to 0.600 euro cent each under the reorganisation. All ‘B’ Shares and Deferred Shares issued in connection
with the B scheme were either redeemed or cancelled during the period such that there were no ‘B’ Shares or Deferred
Shares remaining in issue as at March 31, 2016. Each Ordinary Share entitles the holder thereof to one vote in respect of
any matter voted upon by  Holdings’ shareholders.
OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
During fiscal year 2014,  Holdings’ shareholders approved a stock option plan at the Company’s annual
general meeting on September 20, 2013 (referred to herein as “Option Plan 2013”), under which all employees and
Directors are eligible to receive options. Grants of options were permitted to take place at the close of any of the ten years
beginning with fiscal year 2014. All options will be subject to a 5-year performance period beginning with the year in
which a grant occurs. The Remuneration Committee has discretion to determine the financial performance targets that
must be met with respect to the financial year. Those targets will relate directly to the achievement of certain year-on-year
growth targets in the Company’s profit after tax figures for each of the financial years of the performance period and/or
certain share price targets. The Option Plan 2013 replaced all stock options plans previously approved by shareholders for
all future grants, as these previously approved plans have expired.
Under Option Plan 2013, 36 senior managers and 6 of the current Non-Executive Board members were granted
10m share options, in the aggregate, at a strike price of €6.25 in July 2014. These options vested in May 2019 for
Managers/Directors who continued to be employed at April 30, 2019 and are exercisable between June 2019 and July
2022. Also under Option Plan 2013, 3.5m share options were granted, in aggregate, to Executive Officers (excluding the
CEO) at a strike price of €6.74 in October 2014. These options are exercisable between September 2019 and October 2021.
They will only vest if certain exceptional targets in relation to net profit and/or share price are achieved and will only be
available to senior managers who continue to be employed by the Company through July 31, 2019. In November 2014,
5m options were granted to Mr. O’Leary under Option Plan 2013 as part of his 5-year employment contract. These options
which were granted at a strike price of €8.35 are exercisable between September 2019 and November 2021. They will
only vest if certain exceptional targets in relation to net profit and/or share price are achieved and will only be available if
Mr. O’Leary continues to be employed by the Company through July 31, 2019. During fiscal year 2016, 30,000 options
were granted under Option plan 2013 to new Non-Executive Board members at a strike price of €11.38. These options
vested in May 2019 and are exercisable between August 2019 and August 2021. During the fiscal year 2017, 34 senior
managers (excluding the Executive Officers) were granted 3m share options, in aggregate, at a strike price of €12.00.
These options, which are exercisable between August 2021 and August 2023, will only vest if certain targets in relation to
net profit and / or share price are achieved and will only be available to managers who continue to be employed by the
Company through March 31, 2021.
During fiscal year 2019 10m options were granted to Mr. O’Leary under Option Plan 2013 as part of his new 5-
year contract as Group CEO. These options, which were granted at a strike price of €11.12, are exercisable between
September 2024 and February 2026. They will only vest in their entirety if the Groups profit after tax exceeds €2bn or,
alternatively, the Company’s share price is equal to or exceeds €21 for any 28 day calendar period between April 1, 2021
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and March 31, 2024 and will only be available if Mr. O’Leary continues to be employed by the Company through July 31,
2024.
During fiscal year 2019, 102 senior managers and the 11 Non-Executive Board Members were granted 10m share
options, in the aggregate, at a strike price of €11.12 and are exercisable between September 2024 and February 2026 and
have the same vesting conditions as Mr. O’Leary’s fiscal year 2019 grant referred to above.
The aggregate of 34.3m Ordinary Shares that would be issuable upon exercise in full of the options that were
outstanding as of June 30, 2019 under the Company’s option plan represent approximately 3% of the issued share capital
of  Holdings as of such date. Of such total, options in respect of an aggregate of 25.1m Ordinary Shares were held
by the Directors and Executive Officers of  Holdings. For further information, see Notes 16 and 19 to the
consolidated financial statements included herein.
ARTICLES OF ASSOCIATION
The following is a summary of certain provisions of the Articles of Association of  Holdings. This
summary does not purport to be complete and is qualified in its entirety by reference to the complete text of the Articles.
Objects.  Holdings’ objects, which are detailed in its Articles, are broad and include carrying on business
as an investment and holding company.  Holdings’ Irish company registration number is 249885.
Directors. Subject to certain exceptions, Directors may not vote on matters in which they have a material interest.
The ordinary remuneration of the Directors is determined from time to time by ordinary resolutions of the shareholders.
Any Director who holds any executive office, serves on any committee or otherwise performs services, which, in the
opinion of the Directors, are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration
as the Directors may determine. The Directors may exercise all the powers of the Company to borrow money. The
Directors are not required to retire at any particular age. There is no requirement for Directors to hold shares. The Articles
of Association provide that one-third of the Directors (rounded down to the next whole number if it is a fractional number)
retire and offer themselves for re-election at each annual general meeting of the Company. However, in compliance with
the recommendations of the U.K. Corporate Governance Code, all Directors retire and present themselves for re-election
by the shareholders annually. All of the shareholders entitled to attend and vote at the annual general meeting of the
Company may vote on the re-election of Directors.
Annual and General Meetings. Annual and extraordinary meetings are called upon 21 days’ advance notice. All
 shareholders may appoint proxies electronically to attend, speak, ask questions and vote on behalf of them at
annual general meetings and to reflect certain other provisions of those Regulations. All holders of Ordinary Shares are
entitled to attend, speak at and vote at general meetings of the Company, subject to limitations described below under “—
Limitations on the Right to Own Shares.”
Rights, Preferences and Dividends Attaching to Shares. The Company has only three classes of shares, Ordinary
Shares with a par value of 0.600 euro cent per share, B Shares with a nominal value of 0.050 cent per share and Deferred
Shares with a nominal value of 0.050 cent per share. The B Shares and the Deferred Shares were created at an EGM of
the Company held on October 22, 2015 in connection with a return of value to shareholders arising from the sale of the
Company’s shareholding in Aer Lingus plc, and no such shares remain in issue. Accordingly, the Ordinary Shares
currently represent the only class of shares in issue and rank equally with respect to payment of dividends and on any
winding-up of the Company. Any dividend, interest or other sum payable to a shareholder that remains unclaimed for one
year after having been declared may be invested by the Directors for the benefit of the Company until claimed. If the
Directors so resolve, any dividend which has remained unclaimed for 12 years from the date of its declaration shall be
forfeited and cease to remain owing by the Company. The Company is permitted under its Articles to issue redeemable
shares on such terms and in such manner as the Company may, by special resolution, determine. The Ordinary Shares
currently in issue are not redeemable. The liability of shareholders to invest additional capital is limited to the amounts
remaining unpaid on the shares held by them. There are no sinking fund provisions in the Articles of the Company.
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Action Necessary to Change the Rights of Shareholders. The rights attaching to shares in the Company may be
varied by special resolutions passed at meetings of the shareholders of the Company.
Limitations on the Rights to Own Shares. The Articles contain detailed provisions enabling the Directors of the
Company to limit the number of shares in which non-EU nationals have an interest or the exercise by non-EU nationals of
rights attaching to shares. See “—Limitations on Share Ownership by Non-EU Nationals” below. Such powers may be
exercised by the Directors if they are of the view that any licence, consent, permit or privilege of the Company or any of
its subsidiaries that enables it to operate an air service may be refused, withheld, suspended or revoked or have conditions
attached to it that inhibit its exercise and the exercise of the powers referred to above could prevent such an occurrence.
The exercise of such powers could result in non-EU holders of shares being prevented from attending, speaking or voting
at general meetings of the Company and/or being required to dispose of shares held by them to EU nationals.
Disclosure of Share Ownership. Under Irish law, the Company can require parties to disclose their interests in
shares. The Articles of the Company provide that the Directors will not register any person as a holder of shares unless
such person has completed a declaration indicating his/her nationality and the nature and extent of any interest which
he/she holds in Ordinary Shares. See, also “—Limitations on Share Ownership by non-EU nationals” below. Under Irish
law, if a party acquires or disposes of Ordinary Shares so as to bring his interest above or below 5% of the total issued
share capital of the Company, he must notify the Company of that. Euronext Dublin must also be notified of any acquisition
or disposal of shares that brings the shareholding of a party above or below certain specified percentages – i.e., 10%, 25%,
50% and 75%.
Other Provisions of the Articles of Association. There are no provisions in the Articles:
(i) delaying or prohibiting a change in the control of the Company, but which operate only with respect to a
merger, acquisition or corporate restructuring;
(ii) discriminating against any existing or prospective holder of shares as a result of such shareholder owning a
substantial number of shares; or
(iii) governing changes in capital,
in each case, where such provisions are more stringent than those required by law.
MATERIAL CONTRACTS
On March 19, 2013, the Company announced that it had entered into an agreement with Boeing to purchase 175
Boeing 737-800NG aircraft, over a 5 year period from fiscal year 2015 to 2019 in accordance with the terms of the contract.
The contract was approved by the shareholders of the Company at an EGM on June 18, 2013. In April 2014, the Company
agreed to purchase an additional 5 Boeing 737-800 next generation aircraft and in February 2015, the Company agreed to
purchase an additional 3 Boeing 737-800 next generation. This brings the total number of 737-800 next generation aircraft
ordered to 183, with a list value of approximately $14.4 billion. At March 31, 2019, all of the 183 aircraft had been
delivered.
In September 2014, the Group entered into an agreement with Boeing to purchase 200 Boeing 737-MAX-200
aircraft (100 firm orders and 100 aircraft subject to option), over a 5 year period from fiscal year 2020 to 2024 in accordance
with the terms of the contract. The contract was approved by the shareholders of the Company at an EGM on November
28, 2014. In June 2017, the Group agreed to purchase an additional 10 Boeing 737-MAX-200 aircraft. This brings the total
number of 737-MAX-200 aircraft on order to 210, with a list value of approximately $21bn (assuming all options are
exercised). In April 2018, the Company announced that it has converted 25 Boeing 737-MAX-200 options into firm orders.
This brings the Company’s firm order to 135 Boeing 737-MAX-200s with a further 75 options remaining.
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EXCHANGE CONTROLS
Except as indicated below, there are no restrictions on non-residents of Ireland dealing in Irish securities
(including shares or depositary receipts of Irish companies such as the Company). Dividends and redemption proceeds
also continue to be freely transferable to non-resident holders of such securities.
Under the Financial Transfers Act 1992 (the “1992 Act”), the Minister for Finance of Ireland may make provision
for the restriction of financial transfers between Ireland and other countries. Financial transfers are broadly defined, and
the acquisition or disposal of the ADRs, which represent shares issued by an Irish incorporated company, the acquisition
or the disposal of Ordinary Shares and associated payments may fall within this definition. Dividends or payments on the
redemption or purchase of shares and payments on the liquidation of an Irish-incorporated company would fall within this
definition.
The 1992 Act prohibits financial transfers involving President Lukashenko, the Belarusian leadership and certain
other officials of Belarus, the late Slobodan Milosevic and associated persons, certain persons indicted by the International
Criminal Tribunal for the former Yugoslavia, Burma (Myanmar), certain persons and entities associated with the now
deceased Usama Bin Laden, the Al-Qaeda network and the Taliban of Afghanistan, the Democratic Republic of Congo,
certain persons in Egypt, certain activities, persons and entities in Eritrea, the Republic of Guinea, the Democratic People’s
Republic of Korea (North Korea), Iraq, Côte d’Ivoire, certain activities in Lebanon, certain activities in Liberia and the
former Liberian President Charles Taylor, his immediate family and close associates, Libya, certain persons and activities
in Sudan and South Sudan, Somalia, certain persons in Tunisia, Zimbabwe, certain activities, persons and entities in Syria
and Iran, certain persons, entities and bodies in Ukraine, certain persons, entities and bodies in the Republic of Guinea-
Bissau, certain known terrorists and terrorist groups, and countries that harbor certain terrorist groups, without the prior
permission of the Central Bank of Ireland.
Any transfer of, or payment in respect of, an ADS involving the government of any country that is currently the
subject of United Nations sanctions, any person or body controlled by any of the foregoing, or any person acting on behalf
of the foregoing, may be subject to restrictions pursuant to such sanctions as implemented into Irish law. The Company
does not anticipate that Irish exchange controls or orders under the 1992 Act or United Nations sanctions implemented
into Irish law will have a material effect on its business.
LIMITATIONS ON SHARE OWNERSHIP BY NON-EU NATIONALS
The Board of Directors of  Holdings is given certain powers under the Articles to take action to ensure
that the number of Ordinary Shares held in  Holdings by non-EU nationals does not reach a level which could
jeopardise the Company’s entitlement to continue to hold or enjoy the benefit of any licence, permit, consent or privilege
which it holds or enjoys and which enables it to carry on business as an air carrier (a “Licence”). In particular, EU
Regulation 1008/2008 requires that, in order to obtain and retain an operating licence, an EU air carrier must be majority-
owned and effectively controlled by EU nationals. As described below, the Directors from time to time set a “Permitted
Maximum” on the number of Ordinary Shares that may be owned by non-EU nationals at such level as they believe will
comply with EU law. The Permitted Maximum is currently set at 49.9%.
In accordance with its Articles,  Holdings maintains a separate register (the “Separate Register”) of
Ordinary Shares in which non-EU nationals, whether individuals, bodies corporate or other entities, have an interest (such
shares are referred to as “Affected Shares” in the Articles). Interest in this context is widely defined and includes any
interest held through ADRs in the Ordinary Shares of  Holdings underlying the relevant ADRs. The Directors can
require relevant parties to provide them with information to enable a determination to be made by the Directors as to
whether Ordinary Shares are, or are to be treated as, Affected Shares. If such information is not available or forthcoming
or is unsatisfactory then the Directors can, at their discretion, determine that Ordinary Shares are to be treated as Affected
Shares. Registered holders of Ordinary Shares are also obliged to notify the Company if they are aware that any Ordinary
Share which they hold ought to be treated as an Affected Share for this purpose. With regard to ADRs, the Directors can
treat all of the relevant underlying shares as Affected Shares unless satisfactory evidence as to why they should not be so
treated is forthcoming.
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In the event that, inter alia, (i) the refusal, withholding, suspension or revocation of any Licence or the imposition
of any condition which materially inhibits the exercise of any Licence (an “Intervening Act”) has taken place, (ii) the
Company receives a notice or direction from any governmental body or any other body which regulates the provision of
air transport services to the effect that an Intervening Act is imminent, threatened or intended, (iii) an Intervening Act may
occur as a consequence of the level of non-EU ownership of Ordinary Shares or (iv) an Intervening Act is imminent,
threatened or intended because of the manner of share ownership or control of  Holdings generally, the Directors
can take action pursuant to the Articles to deal with the situation. They can, inter alia, (i) remove any Directors or change
the chairman of the Board of Directors, (ii) identify those Ordinary Shares, ADRs or Affected Shares which give rise to
the need to take action and treat such Ordinary Shares, ADRs, or Affected Shares as Restricted Shares (see below) or (iii)
set a “Permitted Maximum” on the number of Affected Shares which may subsist at any time (which may not, save in the
circumstances referred to below, be lower than 40% of the total number of issued shares) and treat any Affected Shares
(or ADRs representing such Affected Shares) in excess of this Permitted Maximum as Restricted Shares (see below).
In addition to the above, if as a consequence of a change of law or a direction, notice or requirement of any state,
authority or person it is necessary to reduce the total number of Affected Shares below 40% or reduce the number of
Affected Shares held by any particular stockholder or stockholders in order to overcome, prevent or avoid an Intervening
Act, the Directors may resolve to (i) set the Permitted Maximum at such level below 40% as they consider necessary in
order to overcome, prevent or avoid such Intervening Act, or (ii) treat such number of Affected Shares (or ADRs
representing Affected Shares) held by any particular stockholder or stockholders as they consider necessary (which could
include all of such Affected Shares or ADRs) as Restricted Shares (see below). The Directors may serve a Restricted Share
Notice in respect of any Affected Share, or any ADR representing any ADS, which is to be treated as a Restricted Share.
Holders of restricted shares may be deprived of the rights to attend, vote and speak at general meetings, which they would
otherwise have as a consequence of holding such Ordinary Shares or ADRs. Holders of restricted shares may also be
required to dispose of the Ordinary Shares or ADRs concerned to an EU national (so that the relevant shares (or shares
underlying the relevant ADRs) will then cease to be Affected Shares) within 21 days or such longer period as the Directors
may determine. The Directors are also given the power to transfer such Restricted Shares, themselves, in cases of non-
compliance with the Restricted Share Notice.
To enable the Directors to identify Affected Shares, transferees of Ordinary Shares are generally required to
provide a declaration as to the nationality of persons having interests in those shares. Stockholders are also obliged to
notify  Holdings if they are aware that any shares, which they hold, ought to be treated as Affected Shares for this
purpose. Purchasers or transferees of ADRs need not complete a nationality declaration because the Directors
automatically treat all of the Ordinary Shares held by the Depositary as Affected Shares. ADS holders must open ADR
accounts directly with the Depositary if they wish to provide to  Holdings nationality declarations (or such other
evidence as the Directors may require) in order to establish to the Directors’ satisfaction that the Ordinary Shares
underlying such holder’s ADRs are not Affected Shares.
In deciding which Affected Shares are to be selected as Restricted Shares, the Directors may take into account
which Affected Shares have given rise to the necessity to take action. Subject to that they will, insofar as practicable, firstly
view as Restricted Shares those Affected Shares in respect of which no declaration as to whether or not such shares are
Affected Shares has been made by the holder thereof and where information which has been requested by the Directors in
accordance with the Articles has not been provided within specified time periods and, secondly, have regard to the
chronological order in which details of Affected Shares have been entered in the Separate Register and, accordingly, treat
the most recently registered Affected Shares as Restricted Shares to the extent necessary. Transfers of Affected Shares to
Affiliates (as that expression is defined in the Articles) will not affect the chronological order of entry in the Separate
Register for this purpose. The Directors do however have the discretion to apply another basis of selection if, in their sole
opinion, that would be more equitable. Where the Directors have resolved to treat Affected Shares held by any particular
stockholder or stockholders as Restricted Shares (i) because such Affected Shares have given rise to the need to take such
action or (ii) because of a change of law or a requirement or direction of a regulatory authority necessitating such action
(see above), such powers may be exercised irrespective of the date upon which such Affected Shares were entered in the
Separate Register.
The Permitted Maximum is currently set at 49.9%. This maximum level can be reduced at any time if it becomes
necessary for the Directors to exercise their powers in the circumstances described above. The decision to make any such
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reduction or to change the Permitted Maximum from time to time will be published in at least one national newspaper in
Ireland and in any country in which the Ordinary Shares or ADRs are listed. The relevant notice will specify the provisions
of the Articles that apply to Restricted Shares and the name of the person or persons who will answer queries relating to
Restricted Shares on behalf of  Holdings. The Directors shall publish information as to the number of shares held
by EU nationals annually.
In an effort to increase the percentage of its share capital held by EU nationals, on June 26, 2001, 
Holdings instructed the Depositary to suspend the issuance of new ADSs in exchange for the deposit of Ordinary Shares
until further notice to its shareholders. Holders of Ordinary Shares cannot convert their Ordinary Shares into ADRs during
such suspension, and there can be no assurance that the suspension will ever be lifted.
As a further measure to increase the percentage of Ordinary Shares held by EU nationals, on February 7, 2002,
the Company issued a notice to shareholders to the effect that any purchase of Ordinary Shares by a non-EU national after
such date will immediately result in the issue of a Restricted Share Notice to such non-EU national purchaser. The
Restricted Share Notice compels the non-EU national purchaser to sell the Affected Shares to an EU national within 21
days of the date of issuance. In the event that any such non-EU national shareholder does not sell its Ordinary Shares to
an EU national within the specified time period, the Company can then take legal action to compel such a sale. As a result,
non-EU nationals are effectively barred from purchasing Ordinary Shares for as long as these restrictions remain in place.
There can be no assurance that these restrictions will ever be lifted.
As an additional measure, to ensure the percentage of shares held by EU nationals remains at least 50.1%, at the
EGM held on April 19, 2012, the Company obtained a repurchase authority which will enable the repurchase of ADRs for
up to 5% of the issued share capital of the Company traded on the NASDAQ. This authority was renewed at each
subsequent Annual General Meeting up to and including fiscal year 2019.
Concerns about the foreign ownership restrictions described above could result in the exclusion of  from
certain stock tracking indices. Any such exclusion may adversely affect the market price of the Ordinary Shares and ADRs.
See also “Item 3. Risk Factors––Risks Related to Ownership of the Company’s Shares or ADRs—EU Rules Impose
Restrictions on the Ownership of  Holdings’ Ordinary Shares by Non-EU Nationals and the Company has
Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals” above.
As of July 25, 2019, EU nationals owned at least 52.2% of  Holdings’ Ordinary Shares (assuming
conversion of all outstanding ADRs into Ordinary Shares.
In order to protect the Company’s operating licence and ensure that the Company (and its subsidiary EU airlines)
remain majority EU owned and controlled in the event of a no-deal or “hard” Brexit, on March 8, 2019 the Board resolved
that with effect from the date on which U.K. nationals cease to qualify as nationals of Member States for the purposes of
Article 4 of EU Regulation 1008/2008 all Ordinary Shares and Depositary Shares held by or on behalf of non-EU
(including U.K.) shareholders will be treated as Restricted Shares. These measures will remain in place until the Board
determines that the ownership and control of the Company is no longer such that there is any risk to the airline licences
held by the Company’s subsidiaries pursuant to EU Regulation 1008/2008.
TAXATION
Irish Tax Considerations
The following is a discussion of certain Irish tax consequences of the purchase, ownership and disposition of
Ordinary Shares or ADRs. This discussion is based upon tax laws and practice of Ireland at the date of this document,
which are subject to change, possibly with retroactive effect. Particular rules may apply to certain classes of taxpayers
(such as dealers in securities) and this discussion does not purport to deal with the tax consequences of purchase, ownership
or disposition of the relevant securities for all categories of investors.
The discussion is intended only as a general guide based on current Irish law and practice and is not intended to
be, nor should it be considered to be, legal or tax advice to any particular investor or stockholder. Accordingly, current
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stockholders or potential investors should satisfy themselves as to the overall tax consequences by consulting their own
tax advisers.
Dividends. If  Holdings pays dividends or makes other relevant distributions, the following is relevant:
Withholding Tax. Unless exempted, a withholding at the standard rate of income tax (currently 20%) will apply
to dividends or other relevant distributions paid by an Irish resident company. The withholding tax requirement will not
apply to distributions paid to certain categories of Irish resident stockholders or to distributions paid to certain categories
of non-resident stockholders.
The following Irish resident stockholders, inter-alia, are exempt from withholding if they make to the Company,
in advance of payment of any relevant distribution, an appropriate declaration of entitlement to exemption:
• Irish resident companies;
• Pension schemes approved by the Irish Revenue Commissioners (“Irish Revenue”);
• Qualifying fund managers or qualifying savings managers in relation to approved retirement funds (“ARF”s)
or approved minimum retirement funds (“AMRF”s);
• Personal Retirement Savings Account (“PRSA”) administrators who receive the relevant distribution as
income arising in respect of PRSA assets;
• Qualifying employee share ownership trusts;
• Collective investment undertakings;
• Tax-exempt charities;
• Designated brokers receiving the distribution for special portfolio investment accounts;
• Any person who is entitled to exemption from income tax under Schedule F on dividends in respect of an
investment in whole or in part of payments received in respect of a civil action or from the Personal Injuries
Assessment Board for damages in respect of mental or physical infirmity;
• Certain qualifying trusts established for the benefit of an incapacitated individual and/or persons in receipt
of income from such a qualifying trust;
• Any person entitled to exemption to income tax under Schedule F by virtue of Section 192(2) Taxes
Consolidation Act (“TCA”) 1997;
• Unit trusts to which Section 731(5)(a) TCA 1997 applies; and
• Certain Irish Revenue-approved amateur and athletic sport bodies.
The following non-resident stockholders are exempt from withholding if they make to the Company, in advance
of payment of any dividend, an appropriate declaration of entitlement to exemption:
• Persons (other than a company) who (i) are neither resident nor ordinarily resident in Ireland and (ii) are
resident for tax purposes in (a) a country which has signed a tax treaty with Ireland (a “tax treaty country”)
or (b) an EU member state other than Ireland;
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• Companies not resident in Ireland which are resident in an EU member state or a tax treaty country, by virtue
of the law of an EU member state or a tax treaty country and are not controlled, directly or indirectly, by an
Irish resident or Irish residents;
• Companies not resident in Ireland which are directly or indirectly controlled by a person or persons who are,
by virtue of the law of a tax treaty country or an EU member state, resident for tax purposes in a tax treaty
country or an EU member state other than Ireland and which are not controlled directly or indirectly by
persons who are not resident for tax purposes in a tax treaty country or EU member state;
• Companies not resident in Ireland the principal class of shares of which is substantially and regularly traded
on a recognized stock exchange in a tax treaty country or an EU member state including Ireland or on an
approved stock exchange; or
• Companies not resident in Ireland that are 75% subsidiaries of a single company, or are wholly-owned by
two or more companies, in either case the principal classes of shares of which is or are substantially and
regularly traded on a recognized stock exchange in a tax treaty country or an EU member state including
Ireland or on an approved stock exchange.
In the case of an individual non-resident stockholder resident in an EU member state or tax treaty country, the
declaration must be accompanied by a current certificate of tax residence from the tax authorities in the stockholder’s
country of residence. In the case of both an individual and corporate non-resident stockholder resident in an EU member
state or tax treaty country, the declaration also must contain an undertaking by the individual or corporate non-resident
stockholder that he, she or it will advise the Company accordingly if he, she or it ceases to meet the conditions to be
entitled to the DWT exemption. No declaration is required if the stockholder is a 5% parent company in another EU
member state in accordance with section 831 TCA 1997. Neither is a declaration required on the payment by a company
resident in Ireland to another company so resident if the company making the dividend is a 51% subsidiary of that other
company.
American Depositary Receipts. Special arrangements with regard to the dividend withholding tax obligation apply
in the case of Irish companies using ADRs through U.S. depositary banks that have been authorized by the Irish Revenue.
Such banks, which receive dividends from the company and pass them on to the U.S. ADR holders beneficially entitled to
such dividends, will be allowed to receive and pass on the gross dividends (i.e., before withholding) based on an “address
system” where the recorded addresses of such holder, as listed in the depositary bank’s register of depositary receipts, is
in the United States.
Taxation on Dividends. Companies resident in Ireland other than those taxable on receipt of dividends as trading
income are exempt from corporation tax on distributions received on Ordinary Shares from other Irish resident companies.
Stockholders that are “close” companies for Irish taxation purposes may, however, be subject to a 20% corporation tax
surcharge on undistributed investment income.
Individual stockholders who are resident or ordinarily resident in Ireland are subject to income tax on the gross
dividend at their marginal tax rate, but are entitled to a credit for the tax withheld by the company paying the dividend.
The dividend will also be subject to the universal social charge. An individual stockholder who is not liable or not fully
liable for income tax by reason of exemption or otherwise may be entitled to receive an appropriate refund of tax withheld.
A charge to Irish social security taxes can also arise for such individuals on the amount of any dividend received from the
Company.
Except in certain circumstances, a person who is neither resident nor ordinarily resident in Ireland and is entitled
to receive dividends without deductions is not liable for Irish tax on the dividends. Where a person who is neither resident
nor ordinarily resident in Ireland is subject to withholding tax on the dividend received due to not benefiting from any
exemption from such withholding, the amount of that withholding will generally satisfy such person’s liability for Irish
tax.
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Capital Gains Tax. A person who is either resident or ordinarily resident in Ireland will generally be liable for
Irish capital gains tax on any gain realized on the disposal of the Ordinary Shares or ADRs. The current capital gains tax
rate is 33%. A person who is neither resident nor ordinarily resident in Ireland and who does not carry on a trade in Ireland
through a branch or agency will not be subject to Irish capital gains tax on the disposal of the Ordinary Shares or ADRs.
Irish Capital Acquisitions Tax. A gift or inheritance of the Ordinary Shares or ADRs will be within the charge to
Irish Capital Acquisitions Tax (“CAT”) notwithstanding that the donor or the donee/successor in relation to such gift or
inheritance is resident outside Ireland. CAT is charged at a rate of 33% above a tax-free threshold. This tax-free threshold
is determined by the amount of the current benefit and of previous benefits taken since December 5, 1991, as relevant,
within the charge to CAT and the relationship between the donor and the successor or donee. Gifts and inheritances
between spouses (and in certain cases former spouses) are not subject to CAT.
In a case where an inheritance or gift of the Ordinary Shares or ADRs is subject to both Irish CAT and foreign
tax of a similar character, the foreign tax paid may in certain circumstances be credited in whole or in part against the Irish
tax.
Irish Stamp Duty. It is assumed for the purposes of this paragraph that ADRs are dealt in on a recognized stock
exchange in the United States (NASDAQ is a recognized stock exchange in the United States for this purpose). Under
current Irish law, no stamp duty will be payable on the acquisition of ADRs by persons purchasing such ADRs or on any
subsequent transfer of ADRs. A transfer of Ordinary Shares (including transfers effected through Euroclear U.K. & Ireland
Limited) wherever executed and whether on sale, in contemplation of a sale or by way of a gift, will be subject to duty at
the rate of 1% of the consideration given or, in the case of a gift or if the purchase price is inadequate or unascertainable,
on the market value of the Ordinary Shares. Transfers of Ordinary Shares that are not liable for duty at the rate of 1% (e.g.,
transfers under which there is no change in beneficial ownership) may be subject to a fixed duty of €12.50.
The Irish Revenue treats a conversion of Ordinary Shares to ADRs made in contemplation of a sale or a change
in beneficial ownership (under Irish law) as an event subject to stamp duty at a rate of 1%. The Irish Revenue has indicated
that a re-conversion of ADRs to Ordinary Shares made in contemplation of a sale or a change in beneficial ownership
(under Irish law) will not be subject to a stamp duty. However, the subsequent sale of the re-converted Ordinary Shares
may give rise to Irish stamp duty at the 1% rate. If the transfer of the Ordinary Shares is a transfer under which there is no
change in the beneficial ownership (under Irish law) of the Ordinary Shares being transferred, nominal stamp duty only
may be payable on the transfer. Under Irish law, it is not clear whether the mere deposit of Ordinary Shares for ADRs or
ADRs for Ordinary Shares would be deemed to constitute a change in beneficial ownership. Accordingly, it is possible
that holders would be subject to stamp duty at the 1% rate when merely depositing Ordinary Shares for ADRs or ADRs
for Ordinary Shares and, consequently, the Depositary reserves the right in such circumstances to require payment of
stamp duty at the rate of 1% from the holders.
The person accountable for payment of stamp duty is the transferee or, in the case of a transfer by way of a gift
or for a consideration less than the market value, all parties to the transfer. Stamp duty is normally payable within 30 days
after the date of execution of the transfer. Late or inadequate payment of stamp duty will result in liability for interest,
penalties and fines.
United States Federal Income Tax Considerations
The following is a summary of certain U.S. federal income tax considerations relating to the purchase, ownership
and disposition of Ordinary Shares or ADRs by a beneficial owner of the Ordinary Shares or ADRs who is a citizen or
resident of the United States, a U.S. domestic corporation or otherwise subject to U.S. federal income tax on a net income
basis in respect of the Ordinary Shares or the ADRs (“U.S. Holders”). This summary does not purport to be tax advice or
a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase the Ordinary
Shares or the ADRs, including the alternative minimum tax and Medicare tax on net investment income. In particular, the
summary deals only with U.S. Holders that will hold Ordinary Shares or ADRs as capital assets and generally does not
address the tax treatment of U.S. Holders that may be subject to special tax rules such as banks, regulated investment
companies, insurance companies, tax-exempt organizations dealers in securities or currencies, partnerships or partners
therein, entities subject to the branch profits tax, traders in securities electing to mark to market, persons that own 10% or
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more of the stock of the Company (measured by vote or value), U.S. Holders whose “functional currency” is not U.S.
dollars or persons that hold the Ordinary Shares or the ADRs as a synthetic security or as part of an integrated investment
(including a “straddle” or hedge) consisting of the Ordinary Shares or the ADRs and one or more other positions.
This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history,
existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as currently in effect.
These authorities are subject to change, possibly on a retroactive basis. In addition, this summary assumes the deposit
agreement, and all other related agreements, will be performed in accordance with their terms.
Holders of the Ordinary Shares or the ADRs should consult their own tax advisors as to the U.S. or other tax
consequences of the purchase, ownership, and disposition of the Ordinary Shares or the ADRs in light of their particular
circumstances, including, in particular, the effect of any foreign, state or local tax laws.
For U.S. federal income tax purposes, holders of the ADRs generally will be treated as the beneficial owners of
the Ordinary Shares represented by those ADRs.
Taxation of Dividends
The gross amount of any dividends (including any amount withheld in respect of Irish taxes) paid with respect to
the Ordinary Shares, including Ordinary Shares represented by ADRs, will generally be includible in the taxable income
of a U.S. Holder when the dividends are received by the holder, in the case of Ordinary Shares, or when received by the
Depositary, in the case of ADRs. Such dividends will not be eligible for the “dividends received” deduction allowed to
U.S. corporations in respect of dividends from a domestic corporation. Dividends paid in euro generally should be included
in the income of a U.S. Holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day
they are received by the holder, in the case of Ordinary Shares, or the Depositary, in the case of ADRs. U.S. Holders
generally should not be required to recognize any foreign currency gain or loss to the extent such dividends paid in euro
are converted into U.S. dollars immediately upon receipt.
Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received
by an individual with respect to the Ordinary Shares or ADRs will be taxable at the preferential rates for “qualified
dividends” if (i) the Company is eligible for the benefits of a comprehensive income tax treaty with the United States that
the Internal Revenue Service (“IRS”) has approved for the purposes of the qualified dividend rules and (ii) the Company
was not, in the year prior to the year in which the dividend is paid, and is not, in the year in which the dividend is paid, a
passive foreign investment company (a “PFIC”). The Convention between the Government of the United States of America
and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect
to Taxes on Income and Capital Gains, dated as of July 28, 1999 (the “U.S.-Ireland Income Tax Treaty”) has been approved
for the purposes of the qualified dividend rules. Based on the Company’s audited financial statements and relevant market
data, the Company believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its fiscal
2019 taxable year. In addition, based on the Company’s audited financial statements and its current expectations regarding
the value and nature of its assets, the sources and nature of its income, and relevant market data, the Company does not
anticipate becoming a PFIC for its fiscal 2020 taxable year.
Dividends received by U.S. Holders generally will constitute foreign source and “passive category” income for
U.S. foreign tax credit purposes. Subject to limitations under U.S. federal income tax law concerning credits or deductions
for foreign taxes, any Irish taxes withheld at the appropriate rate from cash dividends on the Ordinary Shares or ADRs
may be treated as a foreign income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability (or at a
U.S. Holder’s election, may be deducted in computing taxable income if the U.S. Holder has elected to deduct all foreign
income taxes for the taxable year). The rules with respect to foreign tax credits are complex and U.S. Holders should
consult their own tax advisors concerning the implications of these rules in light of their particular circumstances.
Distributions of Ordinary Shares that are made as part of a pro rata distribution to all stockholders generally
should not be subject to U.S. federal income tax, unless the U.S. Holder has the right to receive cash or property, in which
case the U.S. Holder will be treated as if it received cash equal to the fair market value of the distribution.
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Taxation of Capital Gains
Upon a sale or other disposition of the Ordinary Shares or ADRs, U.S. Holders will recognize gain or loss for
U.S. federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized
on the disposition and the U.S. Holder’s tax basis, determined in U.S. dollars, in the Ordinary Shares or ADRs. Generally,
such gains or losses will be capital gains or losses, and will be long-term capital gains or losses if the Ordinary Shares or
ADRs have been held for more than one year. Short-term capital gains are subject to U.S. federal income taxation at
ordinary income rates. Gains realized by a U.S. Holder generally should constitute income from sources within the United
States for foreign tax credit purposes and generally should constitute “passive category” income for such purposes. The
deductibility of capital losses, in excess of capital gains, is subject to limitations.
Deposits and withdrawals of Ordinary Shares by U.S. Holders in exchange for ADRs should not result in the
realization of gain or loss for U.S. federal income tax purposes.
Foreign Financial Asset Reporting.
Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of
U.S.$50,000 are generally required to file an information statement along with their tax returns, currently on IRS Form
8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S.
financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial
institutions. The understatement of income attributable to “specified foreign financial assets” in excess of U.S.$5,000
extends the statute of limitations with respect to the tax return to six years after the return was filed. U.S. Holders who
fail to report the required information could be subject to substantial penalties. Prospective investors are encouraged to
consult with their own tax advisors regarding the possible application of these rules, including the application of the rules
to their particular circumstances.
Information Reporting and Backup Withholding
Dividends paid on, and proceeds from, the sale or other disposition of the Ordinary Shares or ADRs that are made
within the United States or through certain U.S. related financial intermediaries generally will be subject to information
reporting and may also be subject to backup withholding unless the holder (i) provides a correct taxpayer identification
number and certifies that it is not subject to backup withholding or (ii) otherwise establish an exemption from backup
withholding. Backup withholding is not an additional tax. Any amounts withheld may be allowed as a refund or credit against
a U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
DOCUMENTS ON DISPLAY
Copies of  Holdings’ Articles may be examined at its registered office and principal place of business at
its Dublin Office, Airside Business Park, Swords, County Dublin, K67 NY94, Ireland and are also available on the 
website.
 Holdings also files reports, including Annual Reports on Form 20-F, periodic reports on Form 6-K and
other information, with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You
may read and copy any materials filed with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330.
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Item 11. Quantitative and Qualitative Disclosures About Market Risk
GENERAL
 is exposed to market risks relating to fluctuations in commodity prices, interest rates and currency
exchange rates. The objective of financial risk management at  is to minimize the negative impact of commodity
price, interest rate and foreign exchange rate fluctuations on the Company’s earnings, cash flows and equity.
To manage these risks,  uses various derivative financial instruments, including cross currency swaps,
interest rate swaps, foreign currency forward contracts and commodity forwards. These derivative financial instruments
are generally held to maturity and are not actively traded. The Company enters into these arrangements with the goal of
hedging its operational and balance sheet risk. However, ’s exposure to commodity price, interest rate and currency
exchange rate fluctuations cannot be neutralized completely.
In executing its risk management strategy,  currently enters into forward contracts for the purchase of
some of the jet fuel (jet kerosene) that it expects to use. It also uses foreign currency forward contracts intended to reduce
its exposure to risks related to foreign currencies, principally the U.S. dollar. Furthermore, it enters into interest rate
contracts with the objective of fixing certain borrowing costs and hedging principal repayments, particularly those
associated with the purchase of new Boeing 737s.  is also exposed to the risk that the counterparties to its derivative
financial instruments may not be creditworthy. If a counterparty was to default on its obligations under any of the
instruments described below, ’s economic expectations when entering into these arrangements might not be
achieved and its financial condition could be adversely affected. Transactions involving derivative financial instruments
are also relatively illiquid as compared with those involving other kinds of financial instruments. It is ’s policy not
to enter into transactions involving financial derivatives for speculative purposes.
The following paragraphs describe ’s fuel hedging, foreign currency and interest rate swap arrangements
and analyze the sensitivity of the market value, earnings and cash flows of the financial instruments to hypothetical changes
in commodity prices, interest rates and exchange rates as if these changes had occurred at March 31, 2019. The range of
changes selected for this sensitivity analysis reflects ’s view of the changes that are reasonably possible over a
one-year period.
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FUEL PRICE EXPOSURE AND HEDGING
Fuel costs constitute a substantial portion of ’s operating expenses (approximately 36% and 35% of such
expenses in fiscal years 2019 and 2018, respectively, after taking into account ’s fuel hedging activities). 
engages in fuel price hedging transactions from time to time, pursuant to which  and a counterparty agree to
exchange payments equal to the difference between a fixed price for a given quantity of jet fuel and the market price for
such quantity of jet fuel at a given date in the future, with  receiving the amount of any excess of such market price
over such fixed price and paying to the counterparty the amount of any deficit of such fixed price under such market price.
 has historically entered into arrangements providing for substantial protection against fluctuations in fuel
prices, generally through forward contracts covering periods of up to 18 months of anticipated jet fuel requirements. See
“Item 3. Key Information—Risk Factors—Risks Related to the Company—Changes in Fuel Costs and Availability Affect
the Company’s Results” for additional information on recent trends in fuel costs and the Company’s related hedging
activities, as well as certain associated risks. See also “Item 5. Operating and Financial Review and Prospects—Fiscal
Year 2019 Compared with Fiscal Year 2018—Fuel and Oil.” As of July 25, 2019,  had entered into forward jet
fuel (jet kerosene) contracts covering approximately 90% of its estimated requirements for the fiscal year ending March
31, 2020 at prices equivalent to approximately $709 per metric ton. In addition, the Company had entered into forward jet
fuel hedging contracts covering approximately 37% of its estimated requirements for the fiscal year ending March 31,
2021 at prices equivalent to approximately $632 per metric ton with respect to its expected fuel purchases beyond that
period.
While these hedging strategies can cushion the impact on  of fuel price increases in the short term, in the
medium to longer-term, such strategies cannot be expected to eliminate the impact on the Company of an increase in the
market price of jet fuel. The unrealized losses or gains on outstanding forward agreements at March 31, 2019 and 2018,
based on their fair values, amounted to a €185.2m loss and €209.8m gain (gross of tax), respectively. Based on ’s
fuel consumption for fiscal year 2019, a change of $1.00 in the average annual price per metric ton of jet fuel would have
caused a change of approximately €3.3m in ’s fuel costs. See “Item 3. Key Information—Risk Factors—Risks
Related to the Company—Changes in Fuel Costs and Availability Affect the Company’s Results.”
Under IFRS, the Company’s fuel forward contracts are treated as cash-flow hedges of forecast fuel purchases for
risks arising from the commodity price of fuel. The contracts are recorded at fair value in the balance sheet and are re-
measured to fair value at the end of each fiscal period through equity to the extent effective, with any ineffectiveness
recorded through the income statement. The Company has considered these hedges to be highly effective in offsetting
variability in future cash flows arising from fluctuations in the market price of jet fuel because the jet fuel forward contracts
typically relate to the same quantity, time, and location of delivery as the forecast jet fuel purchase being hedged and the
duration of the contracts is typically short. Accordingly, the quantification of the change in expected cash flows of the
forecast jet fuel purchase is based on the jet fuel forward price, and in fiscal years 2018 and 2019, the Company recorded
no hedge ineffectiveness within earnings. The Company has recorded no level of ineffectiveness on its jet fuel hedges in
its income statements to date. In fiscal year 2019, the Company recorded a negative fair-value adjustment of €185.2m (net
of tax), and in fiscal year 2018 the Company recorded a positive fair-value adjustment of €132.6m (net of tax) within
accumulated other comprehensive income in respect of jet fuel forward contracts.
139
FOREIGN CURRENCY EXPOSURE AND HEDGING
In recent years, ’s revenues have been denominated primarily in two currencies, the euro and the U.K.
pound sterling. The euro and the U.K. pound sterling accounted for approximately 67% and 23%, respectively, of
’s total revenues in fiscal year 2019 (2018: 66% and 24% respectively). As  reports its results in euro, the
Company is not exposed to any material currency risk as a result of its euro-denominated activities. ’s operating
expenses are primarily euro, U.K. pounds sterling and U.S. dollars. ’s operations can be subject to significant direct
exchange rate risks between the euro and the U.S. dollar because a significant portion of its operating costs (particularly
those related to fuel purchases) is incurred in U.S. dollars, while practically none of its revenues are denominated in U.S.
dollars. Appreciation of the euro against the U.S. dollar positively impacts ’s operating income because the euro
equivalent of its U.S. dollar operating costs decreases, while depreciation of the euro against the U.S. dollar negatively
impacts operating income. It is ’s policy to hedge a significant portion of its exposure to fluctuations in the
exchange rate between the U.S. dollar and the euro. From time to time,  hedges its operating surpluses and shortfalls
in U.K. pound sterling.  matches certain U.K. pound sterling costs with U.K. pound sterling revenues and may
choose to sell any surplus U.K. pound sterling cash flows for euro.
Hedging associated with the income statement. In fiscal years 2019 and 2018, the Company entered into a series
of forward contracts, principally euro/U.S. dollar forward contracts to hedge against variability in cash flows arising from
market fluctuations in foreign exchange rates associated with its forecast fuel, maintenance and insurance costs. At March
31, 2019, the total unrealized gain relating to these contracts amounted to €235m, compared to a €183m unrealized total
unrealized loss at March 31, 2018.
Under IFRS, these foreign currency forward contracts are treated as cash-flow hedges of forecast U.S. dollar and
U.K. pound sterling purchases to address the risks arising from U.S. dollar and U.K. pound sterling exchange rates. The
derivatives are recorded at fair value in the balance sheet and are re-measured to fair value at the end of each reporting
period through equity to the extent effective, with ineffectiveness recorded through the income statement. 
considers these hedges to be highly effective in offsetting variability in future cash flows arising from fluctuations in
exchange rates, because the forward contracts are timed so as to match exactly the amount, currency and maturity date of
the forecast foreign currency-denominated expense being hedged. In fiscal year 2019, the Company recorded a positive
fair-value adjustment of €97.5m (net of tax) within accumulated other comprehensive income in respect of these contracts,
as compared to a negative fair-value adjustment of €729.2m (net of tax) in fiscal year 2018.
Hedging associated with the balance sheet. In prior years, the Company entered into a series of cross currency
interest rate swaps to manage exposures to fluctuations in foreign exchange rates of U.S. dollar-denominated floating rate
borrowings, together with managing the exposures to fluctuations in interest rates on these U.S. dollar-denominated
floating rate borrowings. Cross currency interest rate swaps are primarily used to convert a portion of the Company’s U.S.
dollar-denominated debt to euro and floating rate interest exposures into fixed rate exposures and are set so as to match
exactly the critical terms of the underlying debt being hedged (i.e. notional principal, interest rate settings, re-pricing
dates). These are all classified as cash-flow hedges of the forecasted U.S. dollar variable interest payments on the
Company’s underlying debt and have been determined to be highly effective in achieving offsetting cash flows.
Accordingly, no ineffectiveness has been recorded in the income statement relating to these hedges.
At March 31, 2019, the fair value of the cross-currency interest rate swap agreements relating to this U.S. dollar-
denominated floating rate debt was represented by a gain of €4.0m (gross of tax) compared to a loss of €6.7m (gross of
tax) in fiscal 2018. In fiscal year 2019, the Company recorded a positive fair-value adjustment of €0.9m (net of tax),
compared to a negative fair-value adjustment of €12.8m (net of tax) in fiscal year 2018, within accumulated other
comprehensive income in respect of these contracts.
Hedging associated with capital expenditures. During fiscal years 2019 and 2018, the Company also held a series
of euro/U.S. dollar contracts to hedge against changes in the fair value of aircraft purchase commitments under the Boeing
contracts, which arise from fluctuations in the euro/U.S. dollar exchange rates. At March 31, 2019, the total unrealized
gain relating to these contracts amounted to €284.7m, compared to €413.7m unrealized loss at March 31, 2018.
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Under IFRS, the Company generally accounts for these contracts as cash-flow hedges. Cash-flow hedges are
recorded at fair value in the balance sheet and are re-measured to fair value at the end of the financial period through equity
to the extent effective, with any ineffectiveness recorded through the income statement. The Company has found these
hedges to be highly effective in offsetting changes in the fair value of the aircraft purchase commitments arising from
fluctuations in exchange rates because the forward exchange contracts are always for the same amount, currency and
maturity dates as the corresponding aircraft purchase commitments.
At March 31, 2019, the total unrealized gains relating to these contracts amounted to €284.7m, while at March
31, 2018 unrealized loss amounted to €413.7m. Under IFRS, the Company recorded a positive fair-value adjustment of
€610.5m and fair-value adjustments of €573.1m for cash-flow hedges in fiscal years 2019 and 2018, respectively. No fair-
value adjustments were recorded with respect to fair-value hedges in fiscal years 2019 and 2018 as the Company did not
enter in to any fair value hedges
A plus or minus change of 10% in relevant foreign currency exchange rates, based on outstanding foreign
currency-denominated financial assets and financial liabilities at March 31, 2019 would have no impact on the income
statement (net of tax) (2018: €nil; 2017: €nil). The same movement of 10% in foreign currency exchange rates would have
a positive €893.7m impact (net of tax) on equity if the rate fell by 10% and negative €731m impact (net of tax) if the rate
increased by 10%. (2018: €866.1m positive or €708.6m negative; 2017: €336.1m positive or €410.7m negative).
INTEREST RATE EXPOSURE AND HEDGING
The Company’s purchase of 159 of the 455 Boeing 737-800 aircraft in the fleet as of March 31, 2019 has been
funded by financing in the form of loans supported by a loan guarantee from Ex-Im Bank (with respect to 144 aircraft),
JOLCOs (12 aircraft) and commercial debt (3 aircraft). In addition, the Company has raised unsecured debt via capital
market bond issuances. The Company had outstanding cumulative borrowings under the above facilities of €3,644m with
a weighted average interest rate of 1.38% at March 31, 2019. See “Item 5. Operating and Financial Review and Prospects—
Liquidity and Capital Resources—Capital Resources” for additional information on these facilities and the related swaps,
including a tabular summary of the “Effective Borrowing Profile” illustrating the effect of the swap transactions (each of
which is with an established international financial counterparty) on the profile of ’s aircraft-related debt at March
31, 2019. At March 31, 2019, the fair value of the interest rate swap agreements relating to this debt was represented by a
gain of €4.0m (gross of tax), as compared with a loss of €6.7m at March 31, 2018. See Note 11 to the consolidated financial
statements included in Item 18 for additional information.
If  had not entered into such derivative agreements, a plus or minus one percentage point movement in
interest rates would impact the fair value of this liability by approximately €2.9m.
Interest rate risk. Based on the levels of and composition of year-end interest bearing assets and liabilities,
including derivatives, at March 31, 2019, a plus one-percentage-point movement in interest rates would result in a
respective decrease of €5.1m (net of tax) in net interest income and expense in the income statement and a minus one-
percentage-point movement in interest rates would result in a respective increase of €9.9 million (net of tax) in net interest
income and expense in the income statement (2018: €15.4m; 2017: €25.8m).
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Item 12. Description of Securities Other than Equity Securities
Holders of ADSs are required to pay certain fees and expenses. The table below sets forth the fees and expenses
which, under the deposit agreement between the Company and The Bank of New York Mellon, holders of ADRs can be
charged or be deducted from dividends or other distributions on the deposited shares. The Company and The Bank of New
York Mellon have also entered into a separate letter agreement, which has the effect of reducing some of the fees listed
below.
Persons depositing or withdrawing ADSs must pay: For:
$5.00 (or less) per 100 ADSs (or portion of 100
ADSs).
Issuance of ADSs, including issuances resulting from a distribution of
common shares or rights or other property.
Cancellation of ADSs for the purpose of withdrawal, including if the
deposit agreement terminates.
$0.02 (or less) per ADS. Any cash distribution to the holder of the ADSs.
$0.02 (or less) per ADS per calendar year. Depositary services.
A fee equivalent to the fee that would be
payable if securities distributed to the holder of
ADSs had been shares and the shares had been
deposited for issuance of ADSs.
Distribution of securities distributed by the issuer to the holders of
common securities, which are distributed by the depositary to ADS
holders.
Registration or transfer fees. Transfer and registration of shares on ’s share register to or from
the name of the depositary or its agent when the holder of ADSs deposits
or withdraws common shares.
Expenses of the depositary. Cable, telex and facsimile transmissions (when expressly provided for
in the deposit agreement).
Expenses of the depositary in converting foreign currency to U.S.
dollars.
Taxes and other governmental charges the
depositary or the custodian have to pay on any
ADSs or common shares underlying ADSs (for
example, stock transfer taxes, stamp duty or
withholding taxes).
As necessary.
Any charges incurred by the depositary or its
agents for servicing the deposited securities.
As necessary.
Reimbursement of Fees
From April 1, 2018 to June 30, 2019 the Depositary collected annual depositary services fees equal to
approximately $1.7m from holders of ADSs, net of fees paid to the Depositary by the Company.
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
The Company has carried out an evaluation, as of March 31, 2019, under the supervision and with the
participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act). There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the
controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives. Based upon the Company’s evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that, as of March 31, 2019, the disclosure controls and procedures were effective
to provide reasonable assurance that information required to be disclosed in the reports the Company files or submits under
the Exchange Act is recorded, processed, summarized and reported as and when required, within the time periods specified
in the applicable rules and forms, and that it is accumulated and communicated to the Company’s management, including
the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting, (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with IFRS. The Company’s internal control over
financial reporting includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the Company are being made only in accordance with authorizations of management and Directors; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
The Company’s management evaluated the effectiveness of the Company’s internal control over financial
reporting as of March 31, 2019, based on the criteria established in the 2013 Framework in “Internal Control — Integrated
Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on
the evaluation, management has concluded that the Company maintained effective internal control over financial reporting
as of March 31, 2019.
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There has been no change in the Company’s internal control over financial reporting during fiscal year 2019 that
has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
The Company’s Board of Directors has determined that Dick Milliken qualifies as an “Audit Committee financial
expert” within the meaning of this Item 16A. Mr. Milliken is “independent” for purposes of the listing rules of NASDAQ.
Item 16B. Code of Ethics
The Company has adopted a broad Code of Business Conduct and Ethics that meets the requirements for a “code
of ethics” as defined in Item 16B of Form 20-F. The Code of Business Conduct and Ethics applies to the Company’s Chief
Executive Officer, Chief Financial Officer, Chief Accounting Officer, controller and persons performing similar functions,
as well as to all of the Company’s other officers, Directors and employees. The Code of Business Conduct and Ethics is
available on ’s website at http://www..com. (Information appearing on the website is not incorporated by
reference into this Annual Report.) The Company has not made any amendment to, or granted any waiver from, the
provisions of this Code of Business Conduct and Ethics that apply to its Chief Executive Officer, Chief Financial Officer,
Chief Accounting Officer, controller or persons performing similar functions during its most recently completed fiscal
year.
Item 16C. Principal Accountant Fees and Services
Audit and Non-Audit Fees
The following table sets forth the fees billed or billable to the Company by its independent auditors, KPMG,
during the fiscal years ended March 31, 2019, 2018 and 2017:
Audit fees in the above table are the aggregate fees billed or billable by KPMG in connection with the audit of
the Company’s annual financial statements, as well as work that generally only the independent auditor can reasonably be
expected to provide, including the provision of comfort letters, statutory audits, discussions surrounding the proper
application of financial accounting and reporting standards and services provided in connection with certain regulatory
requirements including those under the Sarbanes-Oxley Act of 2002.
Audit related fees comprise fees for financial due diligence services.
Tax fees include fees for all services, except those services specifically related to the audit of financial statements,
performed by the independent auditor’s tax personnel, work performed in support of other tax-related regulatory
requirements and tax compliance reporting.
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Audit Committee Pre-Approval Policies and Procedures
The Audit Committee expressly pre-approves every engagement of ’s independent auditors for all audit
and non-audit services provided to the Company.
Item 16D. Exemptions from the Listing Standards for Audit Committees
None.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table details purchases by the Company of its Ordinary shares in fiscal year 2019.
Total Number of Average Price
Ordinary Shares Paid Per
Month / Period Purchased (a) Ordinary Share

(a) The Ordinary Share purchases in the table above have been made pursuant to publicly announced plans or programs,
and consist of open-market transactions conducted within defined parameters pursuant to the Company’s repurchase
authority from shareholders granted via a special resolution.
(b) From April 1, 2019 to July 25, 2019 the Company bought back 12.3 million ordinary shares, at a total cost of €137.6
million, for cancellation. Cumulatively these buy-backs are equivalent to 1.1% of the issued share capital of the
Company at March 31, 2019.
See “Item 8. Financial Information—Other Financial Information—Share Buy-Back Program” and “Item 9. The
Offer and Listing—Trading Markets and Share Prices” for further information regarding the Company’s Ordinary Share
buy-back program, pursuant to which all of the shares purchased by the Company and disclosed in the table above were
purchased.
Item 16F. Change in Registrant’s Certified Accountant
Not applicable.
Item 16G. Corporate Governance
See “Item 6. Directors, Senior Management and Employees—Directors—Exemptions from NASDAQ Corporate
Governance Rules” for further information regarding the ways in which the Company’s corporate governance practices
differ from those followed by domestic companies listed on NASDAQ.
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Item 16H. Mine Safety Disclosure
Not applicable.
PART III
Item 17. Financial Statements
147
Consolidated Income Statement
Year ended Year ended Year ended
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Consolidated Statement of Comprehensive Income
Year ended Year ended Year ended

Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Cash-flow hedge reserve-effective portion of fair value changes to derivatives, net of
tax:
Effective portion of changes in fair value of cash-flow hedges 325.5 (809.5) 927.1
Net change in fair value of cash-flow hedges transferred to property, plant and equipment 59.6 108.4 109.7
Net change in fair value of cash-flow hedges transferred to profit or loss 249.2 119.5 (514.3)
Net movements in cash-flow hedge reserve 634.3 (581.6) 522.5
Total other comprehensive income/(loss) for the year, net of income tax 634.3 (581.6) 522.5
Total comprehensive income for the year – all attributable to equity holders of parent 1,519.3 868.6 1,838.4
The accompanying notes are an integral part of the consolidated financial statements.
On behalf of the Board
David Bonderman Michael O’Leary
Chairman Group Chief Executive
July 26, 2019
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Consolidated Statement of Changes in Shareholders’ Equity
Issued Share Other Other Reserves
Ordinary Share Premium Retained Undenominated Other
Shares Capital Account Earnings Capital Treasury Hedging Reserves Total
150
Consolidated Statement of Cash Flows
Note Year ended Year ended Year ended
Included in the cash flows from operating activities for the year are the
following amounts:
Interest income received 3.2 2.9 6.6
Interest expense paid (60.6) (56.1) (69.5)
The accompanying notes are an integral part of the consolidated financial statements.
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Notes forming part of the Consolidated Financial Statements
1. Basis of preparation and significant accounting policies
The accounting policies applied in the preparation of the consolidated financial statements for fiscal year
2019 are set out below. These have been applied consistently for all periods presented, except as otherwise stated.
(i) Business activity
 DAC and its subsidiaries (“ DAC”) has operated as an international airline since commencing
operations in 1985. On August 23, 1996,  Holdings Limited, a newly formed holding company, acquired the
entire issued share capital of  DAC. On May 16, 1997,  Holdings Limited re-registered as a public
limited company,  Holdings plc (the “Company”).  Holdings plc and its subsidiaries are hereafter
together referred to as “ Holdings plc” (or “we”, “our”, “us”, “” or the “Company”) and currently
operate a low-fares airline headquartered in Dublin, Ireland. In 2017  Holdings incorporated  Sun and
in 2018 it acquired Laudamotion. The principal trading activities of the Group are undertaken by  DAC,
 Sun and Laudamotion.
(ii) Statement of compliance
In accordance with the International Accounting Standards (“IAS”) Regulation (EC 1606 (2002)) which
applies throughout the European Union (“EU”), the consolidated financial statements have been prepared in
accordance with International Accounting Standards and International Financial Reporting Standards (“IFRS”) as
adopted by the EU (“IFRS as adopted by the EU”), which are effective for the year ended and as at March 31, 2019.
In addition to complying with its legal obligation to comply with IFRS as adopted by the EU, the consolidated financial
statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board
(“IASB”) (“IFRS as issued by the IASB”). The consolidated financial statements have also been prepared in
accordance with the Companies Act 2014.
Details of legislative changes and new accounting standards or amendments to accounting standards, which
are not yet effective and have not been early adopted in these consolidated financial statements, and the likely impact
on future financial statements are set forth below in the prospective accounting changes section.
(iii) Basis of preparation
These consolidated financial statements are presented in euro millions, the euro being the functional currency
of the parent entity and the majority of the group companies. They are prepared on the historical cost basis, except for
derivative financial instruments which are stated at fair value, and share-based payments, which are based on fair value
determined as at the grant date of the relevant share options. Certain non-current assets, when they are classified as
held for sale, are stated at the lower of cost and fair value less costs to sell.
(iv) New IFRS standards adopted during the year
The following new and amended standards, have been issued by the IASB, and have also been endorsed by
the EU. These standards are effective for the first time for the financial year beginning on April 1, 2018 and therefore
have been applied by the Group for the first time in these consolidated financial statements:
IFRS 15: “Revenue from Contracts with Customers including Amendments to IFRS 15” (effective for fiscal
periods beginning on or after January 1, 2018):
The Group has adopted IFRS 15 with effect from April 1, 2018. The standard establishes a five-step model
to determine when to recognise revenue and at what amount. Revenue is recognised when the good or service has
been transferred to the customer and at the amount to which the entity expects to be entitled.
The impact of initially applying the standard is mainly attributed to certain ancillary revenue streams where
the recognition of revenue is deferred under IFRS 15 to the flight date where it was previously recognised on the date
of booking. For the majority of our revenue, the manner in which we previously recognised revenue is consistent with
the requirements of IFRS 15. The change in the timing of ancillary revenue recognition means that an increased
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amount of revenue will be recognised in the first half of the year under IFRS 15, with less revenue recognised in the
second half of the year, particularly in Quarter 4.
The Group has adopted IFRS 15 using the cumulative effect method (without practical expedients), with the
effect of initially applying this standard recognised at the date of initial application (i.e. April 1, 2018). Accordingly,
the comparatives have not been restated – i.e. they are presented, as previously reported, under IAS 18 and related
interpretations. The impact on transition to IFRS 15 was a reduction in retained earnings (net of tax) of €249m at
April 1, 2018.
The impact of adopting IFRS 15 on the Group’s balance sheet as at March 31, 2019 was an increase in the
amount of unearned revenue of €287m, compared with the amount that would have been recognised under IAS 18 and
related interpretations. The impact on the income statement and the statement of comprehensive income is to decrease
ancillary revenue in the year ended March 31, 2019 by €38m.
IFRS 9: “Financial Instruments” (effective for fiscal periods beginning on or after January 1, 2018)
The Group has adopted IFRS 9 with effect from April 1, 2018 and has not restated comparative
information. The standard introduces a new model for the classification and measurement of financial assets, a new
impairment model based on expected credit losses and a new hedge accounting model to more closely align hedge
accounting with risk management strategy and objectives. This standard replaces IAS 39 Financial Instruments:
Recognition and Measurement.
Financial assets, excluding derivatives, are accounted for at amortised cost, fair value through other
comprehensive income or fair value through profit or loss depending on the nature of the contractual cash flows of the
asset and the business model in which it is held. Accordingly, no transition adjustment to carrying values arose in the
year ended March 31, 2019. Neither was there a material increase in provisions as a result of applying the new expected
loss impairment model to our financial assets as a result of adoption of IFRS 9 in the year ended March 31, 2019. All
of ’s financial assets continue to be held at amortised cost. The Group has elected not to adopt the new general
hedge accounting model in IFRS 9.
The following other changes to IFRS became effective for the Group during the financial year:
• Amendments to IFRS 2: ”Classification and Measurement of Share-based Payment Transactions” (effective
for fiscal periods beginning on or after January 1, 2018)
• Annual Improvements to IFRS 2014-2016 Cycle (effective for fiscal periods beginning on or after January
1, 2018)
• IFRIC Interpretation 22: “Foreign Currency Transactions and Advance Consideration” (effective for fiscal
periods beginning on or after January 1, 2018)
• Amendments to IAS 40: “Transfers of Investment Property” (effective for fiscal periods beginning on or after
January 1, 2018)
The adoption of these new or amended standards did not have a material impact on the Group’s financial
position or results from operations in the year ended March 31, 2019.
(v) Prospective IFRS accounting changes, new standards and interpretations not yet effective
The following new or revised IFRS standards and IFRIC interpretations will be adopted for the purposes of
the preparation of future financial statements, where applicable. Those that are not as yet EU endorsed are flagged.
More detailed transitional impact for IFRS 16 is included below. While under review, we do not anticipate that the
adoption of the other new or revised standards and interpretations will have a material impact on our financial position
or results from operations.
• IFRS 16: “Leases” (effective for fiscal periods beginning on or after January 1, 2019) (see below)
• IFRIC 23: “Uncertainty over Income Tax Treatments” (effective for fiscal periods beginning on or after
January 1, 2019)
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• Amendments to IFRS 9: “Prepayment Features with Negative Compensation” (effective for fiscal periods
beginning on or after January 1, 2019) (see below)
• Amendments to IAS 28: “Long-term interests in Associates and Joint Ventures” (effective for fiscal periods
beginning on or after January 1, 2019)
• Annual improvements to IFRS Standards 2015-2017 Cycle (effective for fiscal periods beginning on or after
January 1, 2019)
• Amendments to IAS 19: “Plan Amendment, Curtailment or Settlement” (effective for fiscal periods
beginning on or after January 1, 2019)
• Amendments to References to the Conceptual Framework in IFRS Standards (effective for fiscal periods
beginning on or after January 1, 2020)*
• Amendments to IFRS 3: “Business Combinations” (effective for fiscal periods beginning on or after January
1, 2020)*
• Amendments to IAS 1 and IAS 8: “Definition of Material” (effective for fiscal periods beginning on or after
January 1, 2020)*
• IFRS 17: Insurance Contracts (effective for fiscal periods beginning on or after January 1, 2021)*
*These standards or amendments to standards are not as yet EU endorsed
IFRS 16: Leases (effective for fiscal periods beginning on or after January 1, 2019):
IFRS 16 introduces a single, on-balance sheet, lease accounting model for lessees. A lessee recognises a
right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to
make lease payments.
The Group has applied IFRS 16 using the modified retrospective approach, under which the cumulative effect
of initial application is recognized in retained earnings at April 1, 2019.
The Group has elected not to recognise right-of-use assets and lease liabilities for some leases of low-value
assets and has applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12
months of lease term.
The standard is effective for fiscal periods beginning on or after January 1, 2019. Early adoption is permitted
for entities that apply IFRS 15: Revenue from Contracts with Customers at or before the date of initial application of
IFRS 16.  does not intend to early adopt IFRS 16.
The impact of the IFRS 16 transition will increase non-current assets on April 1, 2019 by €130m, increase
liabilities by €140m and reduce equity (and distributable reserves) by €10m.
(vi) Critical accounting policies
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income
and expenses. These estimates and associated assumptions are based on historical experience and various other factors
believed to be reasonable under the circumstances, and the results of such estimates form the basis of judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could
differ materially from these estimates. These underlying assumptions are reviewed on an ongoing basis. A revision to
an accounting estimate is recognised in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if these are also affected. Principal sources of estimation
uncertainty have been set forth in the critical accounting policies section below. Actual results may differ from
estimates.
The Company believes that its critical accounting policies, which are those that require management’s most
difficult, subjective and complex judgements, are those described in this section. These critical accounting policies,
the judgements and other uncertainties affecting application of these policies and the sensitivity of reported results to
changes in conditions and assumptions are factors to be considered in reviewing the consolidated financial statements.
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Long-lived assets
As of March 31, 2019,  had €9.0bn of property, plant and equipment long-lived assets, virtually all
of which consisted of aircraft. In accounting for long-lived assets,  must make estimates about the expected
useful lives of the assets, the expected residual values of the assets and the potential for impairment based on the fair
value of the assets and the cash flows they generate.
In estimating the lives and expected residual values of its aircraft,  has primarily relied on its own and
industry experience, recommendations from the Boeing Company (“Boeing”), the manufacturer of all of the
Company’s owned aircraft, and other data available in the marketplace. Subsequent revisions to these estimates, which
can be significant, could be caused by changes to ’s maintenance program, changes in utilisation of the aircraft,
changes to governmental regulations on aging aircraft, and changing market prices for new and used aircraft of the
same or similar types.  evaluates its estimates and assumptions in each reporting period, and, when warranted,
adjusts these assumptions. Generally, these adjustments are accounted for on a prospective basis, through depreciation
expense.
 periodically evaluates its long-lived assets for impairment. Factors that would indicate potential
impairment would include, but are not limited to, significant decreases in the market value of an aircraft, a significant
change in an aircraft’s physical condition and operating or cash flow losses associated with the use of the aircraft.
While the airline industry as a whole has experienced many of these factors from time to time,  has not yet
been seriously impacted and continues to record positive cash flows from these long-lived assets. Consequently,
 has not yet identified any impairments related to its existing aircraft fleet. The Company will continue to
monitor its long-lived assets and the general airline operating environment.
The Company’s estimate of the recoverable amount of aircraft residual values is 15% of current market value
of new aircraft, determined periodically, based on independent valuations and actual aircraft disposals during prior
periods. Aircraft are depreciated over a useful life of 23 years from the date of manufacture to residual value.
(vii) Basis of consolidation
The consolidated financial statements comprise the financial statements of  Holdings plc and its
subsidiary undertakings as of March 31, 2019. Subsidiaries are entities controlled by . Control exists when
 is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee.
All inter-company account balances and any unrealised income or expenses arising from intra-group
transactions have been eliminated in preparing the consolidated financial statements.
The results of subsidiary undertakings acquired or disposed of in the period are included in the consolidated
income statement from the date of acquisition or up to the date of disposal. Upon the acquisition of a business, fair
values are attributed to the separable net assets acquired.
(viii) Summary of significant accounting policies
Accounting for business combinations
Business combinations are accounted for using the acquisition method from the date that control is transferred
to the Group. Under the acquisition method, consideration transferred is measured at fair value on the acquisition date,
as are the identifiable assets acquired and liabilities assumed. When the initial values of assets and liabilities in a
business combination have been determined provisionally, any subsequent adjustments to the values allocated to the
identifiable assets and liabilities (including contingent liabilities) are made within twelve months of the acquisition
date and presented as adjustments to the original acquisition accounting. Acquisition related costs are expensed in the
period incurred.
Accounting for subsidiaries
Subsidiaries are all entities controlled by the Group. The Group controls an entity when it is exposed to (has
rights to) variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. The results of subsidiary undertakings acquired during the year are included in the consolidated
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income statement from the date at which control of the entity was obtained. They continue to be included in the
consolidated income statement until control ceases.
Accounting for investments in associates
An associate is an entity over which the Company has significant influence. Significant influence is the power
to participate in the financial and operating decisions of the entity, but is not control over these policies. The
Company’s investment in associates was accounted for using the equity method. The consolidated income statement
reflects the Company’s share of profit/losses after tax of the associate. Investments in associates are carried on the
consolidated balance sheet at cost adjusted for post-acquisition changes in the Company’s share of net assets, less any
impairment in value. If necessary, any impairment losses on the carrying amount of the investment in the associate
are reported within the Company’s share of equity accounted investments results in the consolidated income statement.
If the Company’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil
and recognition of further losses is discontinued except to the extent that the Company has incurred obligations in
respect of the associate.
Foreign currency translation
Items included in the financial statements of each of the group entities are measured using the currency of
the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial
statements are presented in euro, which is the functional currency of the majority of the group entities.
Transactions arising in foreign currencies are translated into the respective functional currencies at the rates
of exchange in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
are re-translated at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities
denominated in foreign currencies are translated to euro at foreign exchange rates in effect at the dates the transactions
were effected. Foreign currency differences arising on retranslation are recognised in profit or loss, except for
differences arising on qualifying cash-flow hedges, which are recognised in other comprehensive income.
Segment reporting
Operating segments are reported in a manner consistent with the internal organisational and management
structure and the internal reporting information provided to the Chief Operating Decision Maker (CODM), who is
responsible for allocating resources and assessing performance of operating segments. The Company is managed as a
single business unit that provides low fares airline-related services, including scheduled services, and ancillary services
including hotel, travel insurance and internet and other related services to third parties, across a European route
network. The new group structure announced in February 2019 comes into effect after March 31, 2019, accordingly
the Group remained managed as a single business unit and is reported as a single reportable segment.
Income statement classification and presentation
Individual income statement captions have been presented on the face of the income statement, together with
additional line items, headings and sub-totals, where it is determined that such presentation is relevant to an
understanding of our financial performance, in accordance with IAS 1, “Presentation of Financial Statements”.
Expenses are classified and presented in accordance with the nature-of-expenses method. We disclose
separately on the face of the income statement, within other income and expense, gain on sale of associates, share of
associate losses and gains or losses on disposal of property, plant and equipment. The presentation of gains or losses
on the disposal of property, plant and equipment within other income/(expense) accords with industry practice.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and provisions for
impairments, if any. Cost includes expenditure that is directly attributable to the acquisition of the asset. Cost may
also include transfers from other comprehensive income of any gain or loss on qualifying cash-flow hedges of foreign
currency purchases of property, plant and equipment.
Borrowing costs directly attributable to the acquisition or construction of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use, are capitalised, until such time as
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the assets are substantially ready for their intended use. Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
Depreciation is calculated so as to write off the cost, less estimated residual value, of assets on a straight-line
basis over their expected useful lives at the following annual rates:
Rate of
Depreciation
Hangar and buildings 5 %
Plant and equipment (excluding aircraft) 20-33.3 %
Fixtures and fittings 20 %
Motor vehicles 33.3 %
Aircraft are depreciated on a straight-line basis over their estimated useful lives to estimated residual values.
The estimates of useful lives and residual values at year-end are:
Number of Owned Aircraft
Aircraft Type at March 31, 2019 Useful Life Residual Value
Boeing 737-800s 429 (a) 23 years from date of 15% of current market value of new
manufacture aircraft, determined periodically
(a) The Group operated 471 aircraft as of March 31, 2019, of which 26 were leased Boeing 737-800 aircraft and 16 were leased
Airbus A320 aircraft.
The Company’s estimate of the recoverable amount of aircraft residual values is 15% of current market value
of new aircraft, determined periodically, based on independent valuations and actual aircraft disposals during prior
periods.
An element of the cost of an acquired aircraft is attributed on acquisition to its service potential, reflecting
the maintenance condition of its engines and airframe. This cost, which can equate to a substantial element of the total
aircraft cost, is amortised over the shorter of the period to the next maintenance check (usually between 8 and 12 years
for Boeing 737-800 aircraft) or the remaining life of the aircraft. The costs of subsequent major airframe and engine
maintenance checks are capitalised and amortised over the shorter of the period to the next check or the remaining life
of the aircraft.
Advance and option payments made in respect of aircraft purchase commitments and options to acquire
aircraft are recorded at cost. On acquisition of the related aircraft, these payments are included as part of the cost of
aircraft and are depreciated from that date.
Rotable spare parts held by the Company are classified as property, plant and equipment if they are expected
to be used over more than one period.
Gains and losses on disposal of items of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised on a net basis
within other income/(expenses) in profit or loss.
Aircraft maintenance costs
The accounting for the cost of providing major airframe and certain engine maintenance checks for owned
aircraft is described in the accounting policy for property, plant and equipment.
For aircraft held under operating lease agreements,  is contractually committed to either return the
aircraft in a certain condition or to compensate the lessor based on the actual condition of the airframe, engines and
life-limited parts upon return. In order to fulfill such conditions of the lease, maintenance, in the form of major airframe
overhaul, engine maintenance checks, and restitution of major life-limited parts, is required to be performed during
the period of the lease and upon return of the aircraft to the lessor. The estimated airframe and engine maintenance
costs and the costs associated with the restitution of major life-limited parts, are accrued and charged to profit or loss
over the lease term for this contractual obligation, based on the present value of the estimated future cost of the major
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airframe overhaul, engine maintenance checks, and restitution of major life-limited parts, calculated by reference to
the number of hours flown or cycles operated during the year.
’s aircraft operating lease agreements typically have a term of seven years, which closely correlates
with the timing of heavy maintenance checks. The contractual obligation to maintain and replenish aircraft held under
operating lease exists independently of any future actions within the control of . While  may, in very
limited circumstances, sub-lease its aircraft, it remains fully liable to perform all of its contractual obligations under
the ‘head lease’ notwithstanding any such sub-leasing.
All other maintenance costs, other than major airframe overhaul, engine maintenance checks, and
restitution of major life-limited parts costs associated with leased aircraft, are expensed as incurred.
Intangible assets - landing rights
Intangible assets acquired are recognised to the extent it is considered probable that expected future benefits
will flow to the Company and the associated costs can be measured reliably. Landing rights acquired as part of a
business combination are capitalised at fair value at that date and are not amortised, where those rights are considered
to be indefinite. The carrying values of those rights are reviewed for impairment at each reporting date and are subject
to impairment testing when events or changes in circumstances indicate that carrying values may not be recoverable.
No impairment to the carrying values of the Company’s intangible assets has been recorded to date.
Other financial assets
Other financial assets comprise cash deposits of greater than three months’ maturity. All amounts are
categorised as amortised cost (prior years: “loans and receivables”) and are recognised initially at fair value and then
subsequently at amortised cost, using the effective interest method in the balance sheet.
Derivative financial instruments
 is exposed to market risks relating to fluctuations in commodity prices, interest rates and currency
exchange rates. The objective of financial risk management at  is to minimise the impact of commodity price,
interest rate and foreign exchange rate fluctuations on the Company’s earnings, cash flows and equity.
To manage these risks,  uses various derivative financial instruments, including interest rate swaps,
foreign currency forward contracts and commodity contracts. These derivative financial instruments are generally held
to maturity. The Company enters into these arrangements with the goal of hedging its operational and balance sheet
risk. However, ’s exposure to commodity price, interest rate and currency exchange rate fluctuations cannot
be neutralised completely.
Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition,
derivative financial instruments continue to be re-measured to fair value, and changes therein are accounted for as
described below.
The fair value of interest rate swaps is computed by discounting the projected cash flows on the Company’s
swap arrangements to present value using an appropriate market rate of interest. The fair value of forward foreign
exchange contracts and commodity contracts is determined based on the present value of the quoted forward price.
The credit quality of  and counterparties are considered in setting fair value. Recognition of any resultant gain
or loss depends on the nature of the item being hedged.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a
recognised asset or liability or a highly probable forecasted transaction, the effective part of any gain or loss on the
derivative financial instrument is recognised in other comprehensive income (in the cash flow hedging reserve on the
balance sheet). When the hedged forecasted transaction results in the recognition of a non-financial asset or liability,
the cumulative gain or loss is removed from other comprehensive income and included in the initial measurement of
that asset or liability. Otherwise the cumulative gain or loss is removed from other comprehensive income and
recognised in the income statement at the same time as the hedged transaction. The ineffective part of any hedging
transaction and the gain or loss thereon is recognised in the income statement immediately.
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When a hedging instrument or hedge relationship is terminated but the underlying hedged transaction is still
expected to occur, the cumulative gain or loss at that point remains in other comprehensive income and is recognised
in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to
take place, the cumulative unrealised gain or loss recognised in other comprehensive income is recognised in the
income statement immediately.
Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability or
an unrecognised firm commitment, any gain or loss on the hedging instrument is recognised in the income statement.
The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss also being
recognised in the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on invoiced price on an
average basis for all stock categories. Net realisable value is calculated as the estimated selling price arising in the
ordinary course of business, net of estimated selling costs.
Trade and other receivables and payables
Trade and other receivables and payables are stated on initial recognition at fair value plus any incremental
direct costs and subsequently at amortised cost, net (in the case of receivables) of any impairment losses, which
approximates fair value given the short-dated nature of these assets and liabilities.
Cash and cash equivalents
Cash represents cash held at banks and available on demand, and is categorised for measurement purposes as
amortised cost (prior years “loans and receivables”).
Cash equivalents are current asset investments (other than cash) that are readily convertible into known
amounts of cash, typically cash deposits of more than one day but less than three months at the date of purchase.
Deposits with maturities greater than three months but less than one year are recognised as short-term investments,
are categorised as amortised cost (prior years “loans and receivables”) and are carried initially at fair value and then
subsequently at amortised cost, using the effective-interest method.
Interest-bearing loans and borrowings
All loans and borrowings are initially recorded at fair value, being the fair value of the consideration received,
net of attributable transaction costs. Subsequent to initial recognition, non-current interest-bearing loans are measured
at amortised cost, using the effective interest yield methodology.
Leases
Leases under which the Company assumes substantially all of the risks and rewards of ownership are
classified as finance leases. Assets held under finance leases are capitalised in the balance sheet, at an amount equal
to the lower of their fair value and the present value of the minimum lease payments, and are depreciated over their
estimated useful lives. The present values of the future lease payments are recorded as obligations under finance leases
and the interest element of a lease obligation is charged to the income statement over the period of the lease in
proportion to the balances outstanding.
Other leases are operating leases and the associated leased assets are not recognised on the Company’s
balance sheet. Expenditure arising under operating leases is charged to the income statement as incurred. The
Company also enters into sale-and-leaseback transactions whereby it sells the rights to an aircraft to an external party
and subsequently leases the aircraft back, by way of an operating lease. Any profit or loss on the disposal where the
price achieved is not considered to be at fair value is spread over the period during which the asset is expected to be
used. The profit or loss amount deferred is included within “other creditors” and split into components of greater than
and less than one year.
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Provisions and contingencies
A provision is recognised in the balance sheet when there is a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefit will be required to settle the obligation. If
the effect is material, provisions are determined by discounting the expected future outflow at a pre-tax rate that reflects
current market assessments of the time value of money and, when appropriate, the risks specific to the liability.
The Company assesses the likelihood of any adverse outcomes to contingencies, including legal matters, as
well as probable losses. We record provisions for such contingencies when it is probable that a liability will be incurred
and the amount of the loss can be reasonably estimated. A contingent liability is disclosed where the existence of the
obligation will only be confirmed by future events, or where the amount of the obligation cannot be measured with
reasonable reliability. Provisions are re-measured at each balance sheet date based on the best estimate of the
settlement amount.
In relation to legal matters, we develop estimates in consultation with internal and external legal counsel
taking into account the relevant facts and circumstances known to us. The factors that we consider in developing our
legal provisions include the merits and jurisdiction of the litigation, the nature and number of other similar current and
past litigation cases, the nature of the subject matter of the litigation, the likelihood of settlement and current state of
settlement discussions, if any.
Revenues
Scheduled revenues comprise the invoiced value of airline and other services, net of government taxes.
Revenue from the sale of flight seats is recognised in the period in which the service is provided. Unearned revenue
represents flight seats sold but not yet flown and a provision for government tax refund claims attributable to unused
tickets, and is included in accrued expenses and other liabilities. Revenue, net of government taxes, is released to the
income statement as passengers fly. Unused tickets are recognised as revenue on a systematic basis, such that twelve
months of time expired revenues are recognised in revenue in each fiscal year.
Ancillary revenues are recognised in the income statement in the period the ancillary services are provided.
Share-based payments
The Company engages in equity-settled, share-based payment transactions in respect of services received
from certain employees. The fair value of the services received is measured by reference to the fair value of the share
options on the date of the grant. The grant measurement date is the date that a shared understanding of the terms of
the award is established between the Company and the employee. The cost of the employee services received in respect
of the share options granted is recognised in the income statement over the period that the services are received, which
is the vesting period, with a corresponding increase in equity. To the extent that service is provided prior to the grant
measurement date, the fair value of the share options is initially estimated and re-measured at each balance sheet date
until the grant measurement date is achieved. The fair value of the options granted is determined using a binomial
lattice option-pricing model, which takes into account the exercise price of the option, the current share price, the risk-
free interest rate, the expected volatility of the  Holdings plc share price over the life of the option and other
relevant factors. Non-market vesting conditions are taken into account by adjusting the number of shares or share
options included in the measurement of the cost of employee services so that ultimately, the amount recognised in the
income statement reflects the number of vested shares or share options.
Retirement benefit obligations
The Company provides certain employees with post-retirement benefits in the form of pensions. The
Company currently operates a number of defined contribution schemes.
Costs arising in respect of the Company’s defined contribution pension schemes (where fixed contributions
are paid into the scheme and there is no legal or constructive obligation to pay further amounts) are charged to the
income statement in the period in which they are incurred. Any contributions unpaid at the balance sheet date are
included as a liability.
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Taxation
Income tax on the profit or loss for a year comprises current and deferred tax. Income tax is recognised in the
income statement except to the extent that it relates to items recognised in other comprehensive income (such as certain
hedging derivative financial instruments, available-for-sale assets, retirement benefit obligations). Current tax payable
on taxable profits is recognised as an expense in the period in which the profits arise using tax rates enacted or
substantively enacted at the balance sheet date.
Deferred income tax is provided in full, using the balance sheet liability method, on temporary differences
arising from the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates and legislation enacted or substantively enacted by the balance sheet
date and expected to apply when the temporary differences reverse.
The following temporary differences are not provided for: (i) the initial recognition of assets and liabilities
that effect neither accounting nor taxable profit and (ii) differences relating to investments in subsidiaries to the extent
that it is probable they will not reverse in the future.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which temporary differences can be utilised. The carrying amounts of deferred tax assets are reviewed at each
balance sheet date and reduced to the extent that it is no longer probable that a sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be realised.
Social insurance, passenger taxes and sales taxes are recorded as a liability based on laws enacted in the
jurisdictions to which they relate. Liabilities are recorded when an obligation has been incurred.
Tax liabilities are based on the best estimate of the likely obligation at each reporting period. These estimates
are subject to revision based on the outcome of tax audits and discussions with revenue authorities that can take several
years to conclude.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary
shares and share options are recognised as a deduction from equity, net of any tax effects. When share capital
recognised as equity is repurchased, the amount of consideration paid, which includes any directly attributable costs,
net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares
and are presented as a deduction from total equity, until they are cancelled.
Dividend distributions are recognised as a liability in the period in which the dividends are declared by the
Company’s shareholders.
At March 31, 2019, aircraft with a net book value of €2,394.9m (2018: €2,934.9m; 2017: €3,442.4m) were
mortgaged to lenders as security for loans. Under the security arrangements for the Company’s new Boeing 737-800
“next generation” aircraft, the Company does not hold legal title to those aircraft while these loan amounts remain
outstanding.
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At March 31, 2019, the cost and net book value of aircraft included advance payments on aircraft of €711.4m
(2018: €558.4m; 2017: €687.0m). Such amounts are not depreciated. The cost and net book value also includes
capitalised aircraft maintenance, aircraft simulators and the stock of rotable spare parts.
The net book value of assets held under finance leases at March 31, 2019, 2018 and 2017 was €197.8m,
€267.2m and €362.8m, respectively.
During the fiscal year 2019, €nil (2018: €3.1m; 2017: €1.4m) of borrowing costs were capitalized as part of
property, plant and equipment. (Borrowing costs had been capitalized in prior years as follows: 2018: 1.125%; 2017:
1.125%).
3. Business combinations
Acquisition of a Subsidiary
In April 2018, the Company purchased a 24.9% stake in Laudamotion for consideration of €15 million. This
investment was accounted for using the equity method. In August 2018, the Company acquired a further 50.1% of
the shares and voting interests in Laudamotion. As a result, the Group’s equity interest increased from 24.9% to 75%,
with a put option over the remaining 25%. From this date, the Group had a controlling interest and Laudamotion has
been accounted for as a consolidated subsidiary. In December 2018, the Company subsequently exercised the put
option and increased its holding in Laudamotion to 100%.
As part of purchase accounting,  recognized a gain on sale of associate of €6 million within the
consolidated income statement. The put option over the remaining 25% ownership interest in Laudamotion was
accounted for under the anticipated acquisition method i.e. the 25% residual interest was deemed to have been acquired
at the date of acquisition and the financial liability arising from the put option was included in the consideration
transferred at its fair value of €6 million (see table below).
Laudamotion provides the Group access to valuable landing slots at slot constrained airports in Germany,
Austria and Spain.
Consideration transferred and assets and liabilities assumed
The following table summarises the fair value of assets acquired and liabilities assumed at the date of
acquisition of control and the consideration transferred to acquire control of Laudamotion:
Year ended

Consideration:
Consideration (liabilities and cash paid) 32.0
Fair value of existing equity interest 6.0
Settlement of pre-existing loans 60.5
98.5
Net assets acquired:
Intangible assets 99.6
Cash and cash equivalents 7.0
Other assets acquired 43.4
Liabilities assumed (51.5)
98.5
The excess of the purchase consideration over the acquired assets and assumed liabilities, was entirely
attributable to the value of identifiable intangible assets acquired, being the aforementioned landing slots.
Accordingly, no goodwill was recognised in respect of the Laudamotion acquisition. Further, no contingent liabilities
were recognised in respect of the Laudamotion acquisition.
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In the year ended March 31, 2019, Laudamotion contributed revenue of €134.5m and an operating loss of
€172.9m to the Group’s results.  also recognised €15.8m in share of losses in associate prior to consolidation
of Laudamotion in August 2018, and recognised a deferred tax credit of €43.2m relating to the recognition of a deferred
tax asset in respect of Laudamotion’s post-acquisition losses. The Company projects the availability of sufficient
future profits, to utilise these losses.
If the acquisition date for the Lauda business combination had been at the beginning of the year, Lauda would
have contributed the following revenue and loss for the year to the Group’s results:
Year ended
March 31,
2019
Landing slots were acquired with the acquisition of Buzz Stansted Limited in April 2003 and Laudamotion
in fiscal year 2019.
As these landing slots have no expiry date and are expected to be used in perpetuity, they are considered to
be of indefinite life and accordingly are not amortised. The Company also considers that there has been no impairment
of the value of these rights to date. The recoverable amount of these rights has been determined on a value-in-use
basis, using discounted cash-flow projections for a twenty-year period for each route that has an individual landing
right. The calculation of value-in-use is most sensitive to the operating margin and discount rate assumptions.
Operating margins are based on the existing margins generated from these routes and adjusted for any known trading
conditions. The trading environment is subject to both regulatory and competitive pressures that can have a material
effect on the operating performance of the business. Foreseeable events, however, are unlikely to result in a change of
projections of a significant nature so as to result in the landing rights’ carrying amounts exceeding their recoverable
amounts. These projections have been discounted based on the estimated discount rate applicable to the asset of 6%
for 2019, 6% for 2018 and 4% for 2017.
5. Derivative financial instruments
The Audit Committee of the Board of Directors has responsibility for monitoring the treasury policies and
objectives of the Company, which include controls over the procedures used to manage the main financial risks arising
from the Company’s operations. Such risks comprise commodity price, foreign exchange and interest rate risks. The
Company uses financial instruments to manage exposures arising from these risks. These instruments include
borrowings, cash deposits and derivatives (principally jet fuel derivatives, interest rate swaps, cross-currency interest
rate swaps and forward foreign exchange contracts). It is the Company’s policy that no speculative trading in financial
instruments takes place.
The Company’s historical fuel risk management policy has been to hedge between 70% and 90% of the
forecast rolling annual volumes required to ensure that the future cost per gallon of fuel is locked in. This policy was
adopted to prevent the Company being exposed, in the short term, to adverse movements in global jet fuel prices.
However, when deemed to be in the best interests of the Company, it may deviate from this policy. In June 2019 the
Board of Directors amended the Company’s Treasury policy to hedge approximately 50% of fuel commodity
exposures on a 12 to 18 month rolling basis, starting with fiscal year 2021. At July 25, 2019, the Company had hedged
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approximately 90% (2018: 90%, 2017: 90%) of its estimated fuel exposure for the next fiscal year and approximately
37% of its estimated fuel exposure for the fiscal year 2021.
Foreign currency risk in relation to the Company’s trading operations largely arises in relation to non-euro
currencies. These currencies are primarily U.K. pounds sterling and the U.S. dollar. The Company manages this risk
by matching U.K. pounds sterling revenues against U.K. pounds sterling costs. Surplus U.K. pounds sterling revenues
are sometimes used to fund forward foreign exchange contracts to hedge U.S. dollar currency exposures that arise in
relation to fuel, maintenance, aviation insurance, and capital expenditure costs and excess U.K. pounds sterling are
converted into euro. Additionally, the Company swaps euro for U.S. dollars using forward currency contracts to cover
any expected U.S. dollar outflows for these costs. From time to time, the Company also swaps euro for U.K. pounds
sterling using forward currency contracts to hedge expected future surplus U.K. pounds sterling. From time to time
the Company also enters into cross-currency interest rate swaps to hedge against fluctuations in foreign exchange rates
and interest rates in respect of U.S. dollar denominated borrowings.
The Company’s objective for interest rate risk management is to reduce interest-rate risk through a
combination of financial instruments, which lock in interest rates on debt and by matching a proportion of floating
rate assets with floating rate liabilities. In addition, the Company aims to achieve the best available return on
investments of surplus cash – subject to credit risk and liquidity constraints. Credit risk is managed by limiting the
aggregate amount and duration of exposure to any one counterparty based on third-party market-based ratings. In line
with the above interest rate risk management strategy, the Company has entered into a series of interest rate swaps to
hedge against fluctuations in interest rates for certain floating rate financial arrangements and certain other obligations.
The Company has also entered into floating rate financing for certain aircraft, which is matched with floating rate
deposits. Additional numerical information on these swaps and on other derivatives held by the Company is set out
below and in Note 11 to the consolidated financial statements.
The Company utilises a range of derivatives designed to mitigate these risks. All of the above derivatives
have been accounted for at fair value in the Company’s balance sheet and have been utilised to hedge against these
particular risks arising in the normal course of the Company’s business. All have been designated as hedging
derivatives for the purposes of IAS 39 / IFRS 9 and are fully set out below.
Derivative financial instruments, all of which have been recognised at fair value in the Company’s balance
sheet, are analysed as follows:
Non-current assets
Gains on cash-flow hedging instruments – maturing after one year 227.5 2.6 23.0
227.5 2.6 23.0
Current assets
Gains on cash flow hedging instruments – maturing within one year 308.7 212.1 286.3
308.7 212.1 286.3
Total derivative assets 536.2 214.7 309.3
Current liabilities
Losses on cash flow hedging instruments – maturing within one year (189.7) (190.5) (1.7)
(189.7) (190.5) (1.7)
Non-current liabilities
Losses on cash flow hedging instruments – maturing after one year (8.0) (415.5) (2.6)
(8.0) (415.5) (2.6)
Total derivative liabilities (197.7) (606.0) (4.3)
Net derivative financial instrument position at year-end 338.5 (391.3) 305.0
All of the above gains and losses were unrealised at the year-end.
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The table above includes the following derivative arrangements:
(a) The derivative arrangements in the above table have been netted for disclosure purposes only. The amounts
included on the Balance Sheet are gross amounts.
(b) Cross currency swap financial assets all relate to cross currency interest rate swaps at March 31, 2019 (see Note
11 to the consolidated financial statements). In prior years, both cross currency interest rate swaps and interest
rate swaps were used to hedge the company’s exposure to interest rate fluctuations.
(c) Additional information in relation to the above cross currency swaps and forward currency contracts (i.e. notional
value and weighted average interest rates) can be found in Note 11 to the consolidated financial statements.
(d) €185.2m commodity forward contracts relate to jet fuel derivative financial liabilities of €189.7m and financial
assets of €4.5m (see Note 11 of the consolidated financial statements).
The Company enters in to derivative transactions with a number of different counterparties with which there
are International Swaps and Derivatives Association (“ISDA”) master agreements in place. As the Company does not
intend to settle derivatives net, nor is any collateral posted for derivative transactions, no netting has been applied to
the derivative balances. Of the Company’s total derivative assets of €536.2m, €72.2m are available for offset against
derivative liabilities under master netting arrangements.
Interest rate swaps are primarily used to convert a portion of the Company’s floating rate exposures on
borrowings into fixed rate exposures and are set so as to match exactly the critical terms of the underlying debt being
hedged (i.e. notional principal, interest rate settings, re-pricing dates). These are all designated in cash-flow hedges of
the forecasted variable interest payments and rentals due on the Company’s underlying debt and operating leases and
have been determined to be highly effective in achieving offsetting cash flows. Accordingly, no ineffectiveness has
been recorded in the income statement relating to these hedges in the current and preceding years.
The Company also utilises cross currency interest rate swaps to manage exposures to fluctuations in foreign
exchange rates of U.S. dollar denominated floating rate borrowings, together with managing the exposures to
fluctuations in interest rates on these U.S. dollar denominated floating rate borrowings. Cross currency interest rate
swaps are primarily used to convert a portion of the Company’s U.S. dollar denominated debt to euro and floating rate
interest exposures into fixed rate exposures and are set so as to match exactly the critical terms of the underlying debt
being hedged (i.e. notional principal, interest rate settings, re-pricing dates). These are all designated in cash-flow
hedges of the forecasted U.S. dollar variable interest payments on the Company’s underlying debt and have been
determined to be highly effective in achieving offsetting cash flows. Accordingly, no ineffectiveness has been recorded
in the income statement relating to these hedges in the current year.
Foreign currency forward contracts may be utilised in a number of ways: forecast U.K. pounds sterling and
euro revenue receipts are converted into U.S. dollars to hedge against forecasted U.S. dollar payments principally for
jet fuel, insurance, capital expenditure and other aircraft related costs. These are designated in cash-flow hedges of
forecasted U.S. dollar payments and have been determined to be highly effective in offsetting variability in future cash
166
flows arising from the fluctuation in the U.S. dollar to U.K. pounds sterling and euro exchange rates for the forecasted
U.S. dollar purchases. Because the timing of anticipated payments and the settlement of the related derivatives is very
closely coordinated, no ineffectiveness has been recorded for these foreign currency forward contracts in the current
or preceding years (the underlying hedged items and hedging instruments have been consistently closely matched).
The Company also utilises jet fuel forward contracts to manage exposure to jet fuel prices. These are used to
hedge the Company’s forecasted fuel purchases, and are arranged so as to match as closely as possible against
forecasted fuel delivery and payment requirements. These are designated in cash-flow hedges of forecasted fuel
payments and have been determined to be highly effective in offsetting variability in future cash flows arising from
fluctuations in jet fuel prices. No ineffectiveness has been recorded on these arrangements in the current or preceding
years.
The European Union Emissions Trading System (“EU ETS”) began operating for airlines on January 1, 2012.
 recognises the cost associated with the purchase of carbon credits as part of the EU ETS as an expense in the
income statement. This expense is recognised in line with fuel consumed during the fiscal year as the Company’s
carbon emissions and fuel consumption are directly linked.
The (gains)/losses arising on the hedging of aircraft capital expenditure are recognised as part of the
capitalised cost of aircraft additions, within property, plant and equipment. The (gains)/losses arising on the hedging
of interest rate swaps, commodity forward contracts and forward currency contracts (excluding aircraft firm
commitments) are recognised in the income statement when the hedged transaction occurs.
The following table indicates the amounts that were reclassified from other comprehensive income into the
income statement, analysed by income statement category, in respect of cash-flow hedges realised during the year:
Year ended March 31,
2019 2018 2017
  
Commodity forward contracts
Reclassification adjustments for (gains)/losses recognised in fuel and oil operating
expenses, net of tax 256.4 117.8 (504.6)
Interest rate swaps
Reclassification adjustments for (gains)/losses recognised in finance expense, net of tax 0.5 2.3 1.1
Foreign currency forward contracts
Reclassification adjustments for (gains) recognised in fuel and oil operating expenses,
net of tax (7.7) (0.5) (10.8)
249.2 119.6 (514.3)
The following table indicates the amounts that were reclassified from other comprehensive income into the
capitalised cost of aircraft additions within property, plant and equipment, in respect of cash-flow hedges realised
during the year:
Year ended March 31,
2019 2018 2017
  
Foreign currency forward contracts
Recognised in property plant and equipment – aircraft additions 59.6 108.4 109.7
59.6 108.4 109.7
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The following tables indicate the periods in which cash flows associated with derivatives that are designated
as cash-flow hedges were expected to occur and to impact on profit or loss, or property, plant and equipment as of
March 31, 2019, 2018 and 2017:
Net Expected
Carrying Cash
Amount Flows 2020 2021 2022 2023 Thereafter
      
Derivative transactions entered into by the Company with any particular counterparty are not settled net and
there are no provisions within these agreements to off-set similar transactions.
6. Inventories
 
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7. Other assets
At March 31,
2019 2018 2017
  
Prepayments 237.2 235.2 221.1
Interest receivable 0.8 0.3 1.0
238.0 235.5 222.1
All amounts fall due within one year.
8. Trade receivables
At March 31,
2019 2018 2017
  
Trade receivables 59.6 57.7 54.4
Allowance for impairment (0.1) (0.1) (0.1)
59.5 57.6 54.3
All amounts fall due within one year.
There has been no change to the allowance for impairment during the year (2018: nil; 2017: nil). There were
no bad debt write-offs in the year (2018: nil; 2017: nil).
No individual customer accounted for more than 10% of our accounts receivable at March 31, 2019, at March
31, 2018 or at March 31, 2017.
At March 31, 2019, €0.8m (2018: €0.8m; 2017: €0.8m) of our total accounts receivable balance were past
due, of which €0.2m (2018: €0.2m; 2017: €0.2m) was impaired and provided for (50% loss allowance) and €0.6m
(2018: €0.6m; 2017: €0.6m) was considered past due but not impaired for which the expected credit loss was
considered immaterial.
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9. Restricted cash
Restricted cash consists of €34.9m (2018: €34.6m; 2017: €11.8m) placed in escrow accounts for certain legal
cases and appeals (which accounts for the majority of the balance).
10. Accrued expenses and other liabilities
At March 31,
2019 2018 2017
  
Accruals 320.8 445.5 348.0
Indirect tax and duties 709.0 648.4 576.4
Unearned revenue 1,962.3 1,408.3 1,332.8
2,992.1 2,502.2 2,257.2
Indirect tax and duties comprises:
At March 31,
2019 2018 2017
  
PAYE (payroll taxes) 20.1 15.7 9.5
Other tax (principally air passenger duty in various countries) 688.9 632.7 566.9
709.0 648.4 576.4
11. Financial instruments and financial risk management
The Company utilises financial instruments to reduce exposures to market risks throughout its business.
Borrowings, cash and cash equivalents and liquid investments are used to finance the Company’s operations.
Derivative financial instruments are contractual agreements with a value that reflects price movements in an
underlying asset. The Company uses derivative financial instruments, principally jet fuel derivatives, interest rate
swaps, cross-currency interest rate swaps and forward foreign exchange contracts to manage commodity risks, interest
rate risks and currency exposures and to achieve the desired profile of fixed and variable rate borrowings and leases
in appropriate currencies. It is the Company’s policy that no speculative trading in financial instruments shall take
place.
The main risks attaching to the Company’s financial instruments, the Company’s strategy and approach to
managing these risks, and the details of the derivatives employed to hedge against these risks have been disclosed in
Note 5 to the consolidated financial statements.
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(a) Financial assets and financial liabilities – fair values
The carrying value and fair value of the Company’s financial assets by class and measurement category at
March 31, 2019, 2018 and 2017 were as follows:
Cash- Total
Amortised Flow Carrying Total Fair
Cost Hedges Value Value
   
At March 31, 2019
Cash and cash equivalents 1,675.6 — 1,675.6 —
Financial asset: cash > 3 months 1,484.4 — 1,484.4 —
Restricted cash 34.9 — 34.9 —
Derivative financial instruments:
- U.S. dollar currency forward contracts — 527.7 527.7 527.7
- Cross-currency swaps — 4.0 4.0 4.0
- Jet fuel derivative contracts — 4.5 4.5 4.5
Trade receivables 59.5 — 59.5 —
Other assets 0.8 — 0.8 —
Total financial assets at March 31, 2019 3,255.2 536.2 3,791.4 536.2
Cash- Total
Loans and Flow Carrying Total Fair
Receivables Hedges Value Value
   
At March 31, 2018
Cash and cash equivalents 1,515.0 — 1,515.0 —
Financial asset: cash > 3 months 2,130.5 — 2,130.5 —
Restricted cash 34.6 — 34.6 —
Derivative financial instruments:
- U.S. dollar currency forward contracts — 4.6 4.6 4.6
- Interest rate swaps — 0.3 0.3 0.3
- Jet fuel derivative contracts — 209.8 209.8 209.8
Trade receivables 57.6 — 57.6 —
Other assets 0.3 — 0.3 —
Total financial assets at March 31, 2018 3,738.0 214.7 3,952.7 214.7
Cash- Total
Loans and Flow Carrying Total Fair
Receivables Hedges Value Value
   
At March 31, 2017
Cash and cash equivalents 1,224.0 — 1,224.0 —
Financial asset: cash > 3 months 2,904.5 — 2,904.5 —
Restricted cash 11.8 — 11.8 —
Derivative financial instruments:
- U.S. dollar currency forward contracts — 239.4 239.4 239.4
- Interest rate swaps — 11.7 11.7 11.7
- Jet fuel derivative contracts — 58.2 58.2 58.2
Trade receivables 54.3 — 54.3 —
Other assets 1.0 — 1.0 —
Total financial assets at March 31, 2017 4,195.6 309.3 4,504.9 309.3
The Company has not disclosed the fair value of the financial instruments: cash and cash equivalents,
financial assets: cash > 3 months with maturities less than 1 year, restricted cash, trade receivables and other assets
because their carrying amounts are a reasonable approximation of their fair values due to the short term nature of the
instruments.
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The carrying values and fair values of the Company’s financial liabilities by class and category were as
follows:
Liabilities at Total
Amortised Cash-Flow Carrying Total Fair
Cost Hedges Value Value
   
At March 31, 2019
Current and non-current maturities of debt 3,644.4 — 3,644.4 3,725.3
Derivative financial instruments:
-U.S. dollar currency forward contracts — 8.0 8.0 8.0
-Jet fuel derivative contracts — 189.7 189.7 189.7
-Interest rate swaps — — — —
Trade payables 573.8 — 573.8 —
Accrued expenses 320.8 — 320.8 —
Total financial liabilities at March 31, 2019 4,539.0 197.7 4,736.7 3,923.0
At March 31, 2018
Current and non-current maturities of debt 3,963.0 — 3,963.0 4,061.0
Derivative financial instruments:
-U.S. dollar currency forward contracts — 599.0 599.0 599.0
-Jet fuel derivative contracts — — — —
-Interest rate swaps — 7.0 7.0 7.0
Trade payables 249.6 — 249.6 —
Accrued expenses 445.5 — 445.5 —
Total financial liabilities at March 31, 2018 4,658.1 606.0 5,264.1 4,667.0
At March 31, 2017
Current and non-current maturities of debt 4,384.5 — 4,384.5 4,474.4
Derivative financial instruments:
-GBP currency forward contracts — 0.5 0.5 0.5
-Jet fuel derivative contracts — — — —
-Interest rate swaps — 3.8 3.8 3.8
Trade payables 294.1 — 294.1 —
Accrued expenses 348.0 — 348.0 —
Total financial liabilities at March 31, 2017 5,026.6 4.3 5,030.9 4,478.7
The Company has not disclosed the fair value for financial liabilities such as trade payables and accrued
expenses because their carrying amounts are a reasonable approximation of their fair values due to the short term
nature of the instruments.
Estimation of fair values
Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly
transaction between market participants at the measurement date. The following methods and assumptions were used
to estimate the fair value of each material class of the Company’s financial instruments:
Financial instruments measured at fair value
Derivatives – interest rate swaps: Discounted cash-flow analyses have been used to determine the fair
value, taking into account current market inputs and rates. The Company’s credit risk and counterparty’s credit risk is
taken into account when establishing fair value. (Level 2)
Derivatives – currency forwards and aircraft jet fuel contracts: A comparison of the contracted rate to
the market rate for contracts providing a similar risk profile at March 31, 2019 has been used to establish fair value.
The Company’s credit risk and counterparty’s credit risk is taken into account when establishing fair value. (Level 2)
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Financial instruments not measured at fair value
Fixed-rate long-term debt: The repayments which  is committed to make have been discounted at
the relevant market rates of interest applicable (including credit spreads) at the relevant reporting year end date to
arrive at a fair value representing the amount payable to a third party to assume the obligations.
The table below analyses financial instruments carried at fair value in the balance sheet categorised by the
type of valuation method used. The different valuation levels are defined as follows:
• Level 1: Inputs are based on unadjusted quoted prices in active markets for identical instruments.
• Level 2: Inputs are based on quoted prices for identical or similar instruments in markets that are not active,
quoted prices for similar instruments in active markets, and model-based valuation techniques for which
all significant assumptions are observable in the market or can be corroborated by observable market data
for substantially the full term of the asset or liability.
• Level 3: Inputs for the asset or liability are not based on observable market data.
Level 1 Level 2 Level 3 Total
   
  
Jet fuel forward contracts – fair value (185.2) 209.8 58.2
(185.2) 209.8 58.2
All of the above commodity contracts are matched against highly probable forecast commodity cash flows.
(c) Maturity and interest rate risk profile of financial assets and financial liabilities
At March 31, 2019, the Company had total borrowings of €3,644.4m (2018: €3,963.0m; 2017: €4,384.5m)
from various financial institutions and the debt capital markets. Financing for the acquisition of 144 Boeing 737-800
“next generation” aircraft (2018: 153; 2017: 174) was provided on the basis of guarantees granted by the Export-
Import Bank of the United States. The guarantees are secured with a first fixed mortgage on the delivered aircraft. The
remaining long-term debt relates to three unsecured Eurobonds, two for €850m and one for €750m, 42 aircraft held
under finance leases (2018: 16; 2017: 22) and 3 aircraft financed by way of other commercial debt (2018: 6; 2017: 6).
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The maturity profile of the Company’s financial liabilities (aircraft provisions, trade payables and accrued
expenses) at March 31, 2019 was as follows:
Weighted
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Interest rates on cash and liquid resources are generally based on the appropriate EURIBOR, LIBOR or bank
rates dependent on the principal amounts on deposit.
(d) Foreign currency risk
The Company has exposure to various foreign currencies (principally U.K. pounds sterling and U.S. dollars)
due to the international nature of its operations. The Company manages this risk by matching U.K. pound sterling
revenues against U.K. pound sterling costs. Any remaining unmatched U.K. pound sterling revenues are used to fund
U.S. dollar currency exposures that arise in relation to fuel, maintenance, aviation insurance and capital expenditure
costs or are sold for euro. The Company also sells euro forward to cover certain U.S. dollar costs. Further details of
the hedging activity carried out by the Company are disclosed in Note 5 to the consolidated financial statements.
The following table shows the net amount of monetary assets of the Company that are not denominated in
euro at March 31, 2019, 2018 and 2017. Such amounts have been translated using the following year-end foreign
currency rates in 2019 €/£: 0.8606; €/$: 1.1217 (2018: €/£: 0.8756; €/$:1.2321; 2017: €/£: 0.8555; €/$: 1.0691).
March 31, 2019 March 31, 2018 March 31, 2017
euro euro euro
GBP U.S.$ equiv. GBP U.S.$ equiv. GBP U.S.$ equiv.
£M $M  £M $M  £M $M 
Monetary assets
U.K. pounds sterling cash and liquid
resources 17.0 — 19.6 12.2 — 13.9 8.0 — 9.4
U.S. Dollar cash and liquid resources — 485.2 432.5 — 168.0 136.3 — 10.6 10.0
17.0 485.2 452.1 12.2 168.0 150.2 8.0 10.6 19.4
The following table shows the net amount of monetary liabilities of the Company that are not denominated
in euro at March 31, 2019, 2018 and 2017. Such amounts have been translated using the following year-end foreign
currency rates in 2019 €/£: 0.8606; €/$: 1.1217 (2018: €/$1.2321; 2017: €/$1.0691).
March 31, 2019 March 31, 2018 March 31, 2017
euro euro euro
U.S.$ equiv. U.S.$ equiv. U.S.$ equiv.
$M  $M  $M 
Monetary liabilities
U.S dollar long term debt 202.4 180.5 246.1 199.8 288.8 270.1
The Company has entered into cross currency swap arrangements to manage exposures to fluctuations in
foreign exchange rates on these U.S. dollar denominated floating rate borrowings, together with managing the
exposures to fluctuations in interest rates on these U.S. dollar denominated floating rate borrowings. The fair value
of these cross currency swap instruments at March 31, 2019 was €1.7m (2018: €0.3m; 2017: €11.3m) which has been
classified within current assets (2018: current assets; 2017: current assets), specifically derivative assets falling due
within one year (see Note 5 to the consolidated financial statements).
(e) Credit risk
The Company holds significant cash balances, which are classified as either cash and cash equivalents or
financial assets >3 months. These deposits and other financial instruments (principally certain derivatives and loans
as identified above) give rise to credit risk on amounts due from counterparties. Credit risk is managed by limiting the
aggregate amount and duration of exposure to any one counterparty through regular review of counterparties’ market-
based ratings, Tier 1 capital level and credit default swap rates and by taking into account bank counterparties’
systemic importance to the financial systems of their home countries. The Company typically enters into deposits and
derivative contracts with parties that have high investment grade credit rating from the main rating agencies, including
Standard & Poor’s (“S&P”), Moody’s and Fitch Ratings. The maximum exposure arising in the event of default on
the part of the counterparty is the carrying value of the relevant financial instrument. The Company is authorised to
place funds on deposit for periods up to 3 years. The Board of Directors monitors the return on capital as well as the
level of dividends to ordinary shareholders on an ongoing basis.
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The Company’s revenues derive principally from airline travel on scheduled services, internet income and
in-flight and related sales. Revenue is primarily derived from European routes. No individual customer accounts for a
significant portion of total revenue.
At March 31, 2019, €0.8m (2018: €0.8m; 2017: €0.8m) of our total accounts receivable balance were past
due, of which €0.2m (2018: €0.2m; 2017: €0.2m) was impaired and provided for (50% loss allowance) and €0.6m
(2018: €0.6m; 2017: €0.6m) was considered past due but not impaired for which the expected credit loss was
considered immaterial.
(f) Liquidity and capital management
The Company’s cash and liquid resources comprise cash and cash equivalents, short-term investments and
restricted cash. The Company defines the capital that it manages as the Company’s long-term debt and equity. The
Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and
to maintain sufficient financial resources to mitigate against risks and unforeseen events.
The Company finances its working capital requirements through a combination of cash generated from
operations, bank loans and debt capital market issuances for general corporate purposes including the acquisition of
aircraft. The Company had cash and liquid resources at March 31, 2019 of €3,194.9m (2018: €3,680.1m; 2017:
€4,140.3m). During the year, the Company funded €1,546.7m in purchases of property, plant and equipment (2018:
€1,470.6m; 2017: €1,449.8m). Cash generated from operations has been the principal source for these cash
requirements, supplemented primarily by general corporate purposes debt capital markets issuances. During the year,
the Company funded €560.5m (€531.6m net of tax refund) in share buy-backs (2018: €829.1m; 2017: €1,017.9m).
Cash generated from operations has been the principal source for these cash requirements.
The Board of Directors periodically reviews the capital structure of the Company, considering the cost of
capital and the risks associated with each class of capital. The Board approves any material adjustments to the capital
structure in terms of the relative proportions of debt and equity.
 has generally been able to generate sufficient funds from operations to meet its non-aircraft
acquisition-related working capital requirements. Management believes that the working capital available to the
Company is sufficient for its present requirements and will be sufficient to meet its anticipated requirements for capital
expenditures and other cash requirements for fiscal year 2020.
(g) Guarantees
The Company has provided €3,796.7 million (2018: €4,118.2 million; 2017: €5,055.2 million) in letters of
guarantee to secure obligations of subsidiary undertakings in respect of loans, bank advances and long dated foreign
currency transactions.
In order to avail itself of the exemption contained in Section 357 of the Companies Act, 2014, the holding
company,  Holdings plc, has guaranteed the liabilities of its subsidiary undertakings registered in Ireland. As
a result, the subsidiary undertakings have been exempted from the requirement to annex their statutory financial
statements to their annual returns.
(h) Sensitivity analysis
(i) Interest rate risk: Based on the levels of and composition of year-end interest bearing assets and
liabilities, including derivatives, at March 31, 2019, a plus or minus one-percentage-point movement in interest rates
would result in a respective increase or decrease of €5.1m (net of tax) in net interest income and expense in the income
statement (2018: €8.5m; 2017: €25.8m) and a nil increase or decrease in equity (2018: €0.5m; 2017: nil). All of the
Group’s interest rate swaps (to the extent that it has any) are used to swap variable rate debt to fixed rate debt;
consequently, any changes in interest rates would have an equal and opposite income statement effect for both the
interest rate swaps and the debt.
(ii) Foreign currency risk: A plus or minus change of 10% in relevant foreign currency exchange rates,
based on outstanding foreign currency-denominated financial assets and financial liabilities at March 31, 2019 would
have no impact on the income statement (net of tax) (2018: nil; 2017: nil). The same movement of 10% in foreign
currency exchange rates would have a positive €893.7m impact (net of tax) on equity if the rate fell by 10% and a
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negative €731.0m impact (net of tax) if the rate increased by 10% (2018: €866.1m positive or €708.6m negative;
2017: €336.1m positive or €410.7m negative).
(i) Notional principal amounts
(i) Forward foreign exchange contracts:
  
Notional amounts
Forward foreign exchange contracts 4,007.0 4,665.0 8,672.0
The notional principle amount of outstanding forward foreign exchange contracts at March 31, 2019 amounted to
€8,672m. These foreign currency exchange contracts are treated as cash flow hedges to hedge jet fuel, capital
expenditure and maintenance contracts in US dollars.
(ii) Cross currency swaps: The Group has cross currency swaps to swap fixed rate US dollar denominated debt of
US$98.04m into fixed rate euro debt of €77.84m. As at March 31, 2019 the hedged euro fixed interest rate varies
between 1.54% to 1.79% depending on the various tranches.
(iii) Jet fuel forward contracts: The Group has entered into jet fuel swap forward contracts with a number of
counterparties to hedge jet fuel purchases over a period of up to 18 months. The notional amount of these contracts
are €2,482m ($2,784m) at an average hedged rate per tonne of $705.4.
12. Deferred and current taxation
The components of the deferred and current taxation in the balance sheet are as follows:
  
Reconciliation of deferred tax
At beginning of year 395.2 473.1 385.5
New temporary differences on property, plant and equipment, derivatives, pensions
and other items 22.2 (77.9) 87.6
At end of year 417.4 395.2 473.1
The charge in the year to March 31, 2019 consisted of temporary differences of a charge of €69m for property, plant
and equipment, deferred tax losses (including IFRS 15 adjustment of €35.6m) and a credit of €91.2m for derivatives.
The charge in the year to March 31, 2018 consisted of temporary differences of a charge of €9.1m for property, plant
and equipment recognised in the income statement and a credit of €87.0m for derivatives recognised in other
comprehensive income. The charge in the year to March 31, 2017 consisted of temporary differences of a charge of
€10.5m for property, plant and equipment and a charge of €0.3m for other temporary differences, both recognised in
the income statement, and a charge of €76.6m for derivatives recognised in other comprehensive income.
The components of the tax expense in the income statement were as follows:
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
Corporation tax charge in year 96.5 152.0 143.6
Deferred tax charge relating to origination and reversal of temporary differences (33.4) 9.1 10.8
63.1 161.1 154.4
The following table reconciles the statutory rate of Irish corporation tax to the Company’s effective
corporation tax rate:
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
% % %
Statutory rate of Irish corporation tax 12.5 12.5 12.5
Adjustments for earnings and losses taxed at other rates (5.8)* (2.9) (2.2)
Other differences - 0.4 0.2
Total effective rate of taxation 6.7 10.0 10.5
* Includes the recognition of a deferred tax asset in respect of net operating losses incurred in Laudamotion (taxable at 25%).
Deferred tax applicable to items charged or credited to other comprehensive income were as follows:
At March 31,
2019 2018 2017
  
Defined benefit pension obligations — — —
Derivative financial instruments (91.2) (87.0) 76.6
Total tax charge in other comprehensive income (91.2) (87.0) 76.6
The majority of current and deferred tax recorded in each of fiscal years 2019, 2018 and 2017 relates to
domestic tax charges and there is no expiry date associated with these temporary differences. In fiscal year 2019, the
Irish corporation tax rate remained at 12.5%.
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The principal components of deferred tax at each year-end were:
At March 31,
2019 2018 2017
  
Arising on capital allowances and other temporary differences 375.7 444.7 435.6
Arising on derivatives 42.3 (48.9) 38.1
Arising on pension (0.6) (0.6) (0.6)
Total 417.4 395.2 473.1
The Company recognised all required deferred tax assets and liabilities at March 31, 2019, 2018 and 2017.
No deferred tax has been provided for un-remitted earnings of overseas subsidiaries. No temporary differences arise
on the carrying value of the tax base of subsidiary companies as the Company’s trading subsidiaries are resident in
countries with which Ireland has concluded double taxation agreements.
13. Provisions
At March 31,
2019 2018 2017
  
Provision for aircraft maintenance on operating leased aircraft (a) 130.7 133.2 133.3
Provision for pension obligation (b) 4.9 4.9 4.9
135.6 138.1 138.2
At March 31,
2019 2018 2017
  
(a) Provision for aircraft maintenance on operating leased aircraft
At beginning of year 133.2 133.3 144.4
Increase in provision during the year 19.8 13.8 25.6
Utilisation of provision upon the hand-back of aircraft (22.3) (13.9) (36.7)
At end of year 130.7 133.2 133.3
During fiscal year 2019, the Company returned 5 aircraft held under operating lease to the lessors.
The expected timing of the outflows of economic benefits associated with the provision at March 31, 2019,
2018 and 2017 are as follows:
Carrying
Value 2020 2021 2022 2023 Thereafter
     
  
(b) Provision for pension obligation
At beginning of year 4.9 4.9 4.9
Movement during the year — — —
At end of year 4.9 4.9 4.9
See Note 21 to the consolidated financial statements for further details.
14. Other creditors
In prior years this consisted of deferred gains arising from the sale and leaseback of aircraft. During fiscal
year 2019, 5 sale-and-leaseback aircraft were returned and  did not enter into sale-and-leaseback arrangements
for any new Boeing 737-800 “next generation” aircraft (2018: 2; 2017: nil). Total sale-and-leaseback aircraft at March
31, 2019 was 26.
15. Issued share capital, share premium account and share options
(a) Share capital
At March 31,
2019 2018 2017
  
Authorised/Share Capital reorganisation
1,550,000,000 ordinary equity shares of 0.600 euro cent each 9.3 9.3 9.3
1,368,000,000 'B' Shares of 0.050 euro cent each 0.7 0.7 0.7
1,368,000,000 Deferred shares of 0.050 euro cent each 0.7 0.7 0.7
10.7 10.7 10.7
Allotted, called-up and fully paid:
1,133,395,322 ordinary equity shares of 0.600 euro cent each 6.8 — —
1,171,142,985 ordinary equity shares of 0.600 euro cent each — 7.0 —
1,217,870,999 ordinary equity shares of 0.600 euro cent each — — 7.3
During fiscal year 2016, the Group returned €398m to shareholders via a B share scheme, and completed a
capital reorganisation which involved the consolidation of its ordinary share capital on a 39 for 40 basis. The Group’s
shareholders approved the creation of two new authorised share classes being the ‘B’ Shares and Deferred Shares
classes to effect this B share scheme and 1,353,149,541 ‘B’ Shares and 663,060,175 Deferred Shares were
subsequently issued. Arising out of the ordinary share consolidation the number of ordinary equity shares in issue was
reduced by 33,828,739 ordinary equity shares from 1,353,149,541 immediately prior to the implementation of the B
Share scheme to 1,319,320,802 ordinary equity shares in issue upon completion of the B Share scheme and the nominal
value of an ordinary equity share was reduced from 0.635 euro cent each to 0.6 euro cent each. All ‘B’ Shares and
Deferred Shares issued in connection with the B Share scheme were either redeemed or cancelled during the year
ended March 31, 2017 such that there were no ‘B’ Shares or Deferred Shares remaining in issue as at March 31, 2017.
Other movement in the share capital balance year-on-year principally relates to the cancellation of 37.8m
shares relating to share buy-backs (2018: 46.7m; 2017: 72.8m). There were no new shares issued in fiscal year 2019
(2018: nil; 2017: nil).
Ordinary equity shares do not confer on the holders thereof the specific right to be paid a dividend out of
profits.
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(b) Share premium account
At March 31,
2019 2018 2017
  
Balance at beginning of year 719.4 719.4 719.4
Balance at end of year 719.4 719.4 719.4
(c) Share options and share purchase arrangements
The Company has adopted a number of share option plans, which allow current or future employees or
Directors to purchase shares in the Company up to an aggregate of approximately 5% (when aggregated with other
ordinary shares over which options are granted and which have not yet been exercised) of the outstanding ordinary
shares of  Holdings plc, subject to certain conditions. All grants are subject to approval by the Remuneration
Committee. These are exercisable at a price equal to the market price of the ordinary shares at the time options are
granted. The key terms of these option plans include the requirement that certain employees remain in employment
with the Company for a specified period of time and that the Company achieves certain net profit targets and/or share
price targets.
Details of the share options outstanding are set out below:
Weighted
Share Options Average
M Exercise Price

The mid-market price of  Holdings plc’s ordinary shares on Euronext Dublin at March 31, 2019 was
€11.67 (2018: €16.00; 2017: €14.53). The highest and lowest prices at which the Company’s shares traded on Euronext
Dublin in fiscal year 2019 were €16.72 and €10.04 respectively (fiscal year 2018 were €19.39 and €14.55 respectively;
fiscal year 2017 were €14.96 and €10.46 respectively). There were no options exercisable at March 31, 2019 (2018:
nil; 2017: nil). The average share price for fiscal year 2019 was €13.28 (2018: €16.95; 2017: €13.28).
There were no options exercised during fiscal years 2019, 2018 and 2017.
At March 31, 2019 the range of exercise prices and weighted average remaining contractual life of
outstanding options are shown in the table below.
Options outstanding
Weighted-
average Weighted-
Number remaining average
Range of exercise outstanding contractual life exercise
price (€) M (years) price (€)
6.25-10.99 17.3 2.95 6.96
11.00-17.55 22.5 6.58 11.24
The Company has accounted for its share option grants to employees at fair value, in accordance with IFRS
2, using a binomial lattice model to value the option grants. This has resulted in a charge of €7.7m to the income
statement (2018: €6.4m; 2017: €5.7m charge) being recognised within the income statement in accordance with
employee services rendered.
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Year ended
March 31, 2019
Fair value at grant date 1.68
Share price at grant date 11.12
Exercise price 11.12
Dividend yield 3%
Volatility 25%
Risk free interest rate —
Expected term (years) 7 years
A blend of the historical and implied volatilities of the Company’s own ordinary shares is used to determine
expected volatility for share option granted. The weighted-average volatility is determined by calculating the
weighted-average of volatilities for all share options granted in a given year. The expected term of share option grants
represents the weighted-average period the awards are expected to remain outstanding. For share options granted in
2017, we estimated the weighted-average expected term based on historical exercise data. The service period is five
years.
The risk-free interest rate assumption was based on Eurozone zero-coupon bond instruments whose term was
consistent with the expected term of the share option granted. The expected dividend yield assumption was based on
our history and expectation of dividend payouts.
16. Other equity reserves
The total share based payments reserve at March 31, 2019 was €29.0m (2018: €21.3m; 2017: €14.9m). The
treasury reserve amounted to €nil at March 31, 2019 (2018: €nil; 2017: €nil). The total cash-flow hedge reserve
amounted to positive €274.6m at March 31, 2019 (2018: negative €359.7m; 2017: positive €221.9m). Further details
of the group’s derivatives are set out in Notes 5 and 11 to the consolidated financial statements.
17. Analysis of operating revenues and segmental analysis
The Company is managed as a single business unit that provides low fares airline-related services, including
scheduled services, internet and other related services to third parties across a European route network. The Company
primarily operates a single fleet of aircraft (455 Boeing 737 aircraft and 16 Airbus A320 aircraft at March 31, 2019),
that is deployed through a single route scheduling system.
The Company determines and presents operating segments based on the information that internally is
provided to Michael O’Leary, Group CEO, who is the Company’s Chief Operating Decision Maker (CODM). There
have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since the
prior year. The new group structure announced in February 2019 comes into effect after March 31, 2019, accordingly
the Group remained managed as a single business unit and is reported as a single reportable segment.
When making resource allocation decisions, the CODM evaluates route revenue and yield data, however
resource allocation decisions are made based on the entire route network and the deployment of the entire aircraft
fleet, which are largely uniform in type. The objective in making resource allocation decisions is to maximise the
consolidated financial results, rather than results on individual routes within the network.
The CODM assesses the performance of the business based on the consolidated adjusted profit/(loss) after
tax of the Company for the year. This measure excludes the effects of certain income and expense items, which are
unusual, by virtue of their size and incidence, in the context of the Company’s ongoing core operations, such as the
impairment of a financial asset investment, accelerated depreciation related to aircraft disposals and one off release of
ticket sale revenue. The losses associated with the acquisition of Laudamotion in August 2018, were non-recurring
due to the start-up nature of the airline during the year ended March 31, 2019.
All segment revenue is derived wholly from external customers and, as the Company has a single reportable
segment, inter-segment revenue is zero.
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The Company’s major revenue-generating asset class comprises its aircraft fleet, which is flexibly employed
across the Company’s integrated route network and is directly attributable to its reportable segment operations. In
addition, as the Company is managed as a single business unit, all other assets and liabilities have been allocated to
the Company’s single reportable segment.
Reportable segment information is presented as follows:
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
E  
Reportable segment assets 13,250.7 12,361.8 11,989.7
Reportable segment liabilities 8,035.8 7,892.9 7,566.7
(i) External revenues includes €134.5m of Laudamotion revenues for the year ended March 31, 2019 only.
(ii) Reportable segment profit after income tax includes €139.5m of Laudamotion losses for the year ended March
31, 2019.
Entity-wide disclosures:
In accordance with IFRS 8 paragraph 13, revenue by country of origin has been provided where revenue for
that country is in excess of 10% of total revenue. Ireland is presented as it represents the country of domicile. “Other
European countries” includes all other countries in which the Group has operations.
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
Ancillary Revenues
Ancillary revenues comprise revenues from non-flight scheduled operations, in-flight sales and Internet-
related services.
Non-flight scheduled revenue arises from the sale of priority boarding, allocated seats, room reservations, car
hire, travel insurance and other sources, including excess baggage charges and administration fees, all directly
attributable to the low-fares business.
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All of the Company’s operating profit arises from low-fares airline-related activities, its only business
segment. The major revenue earning assets of the Company are its aircraft. As the majority of the Groups’ aircraft
were registered in Ireland at March 31, 2019 profits accrue principally in Ireland. Since the Company’s aircraft fleet
is flexibly employed across its route network in Europe, there is no suitable basis of allocating such assets and related
liabilities to geographical segments.
18. Staff numbers and costs
The average weekly number of staff, including the Executive Director, during the year, analysed by category,
was as follows:
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
Flight and cabin crew 13,911 12,334 11,150
Sales, operations, management and administration 2,027 1,469 1,288
15,938 13,803 12,438
At March 31, 2019 the Company had a team of 16,840 aviation professionals (2018: 14,583). Fiscal year
2019 includes Laudamotion and  Sun (Buzz).
The aggregate payroll costs of these persons were as follows: Year ended Year ended Year ended
March 31, March 31, March 31,
20(a) Costs in respect of defined-contribution benefit plans and other pension arrangements were €8.6m in 2019
including Laudamotion (2018: €5.8m; 2017: €4.8m).
(b) In the year ended March 31, 2019 the charge in the income statement of €7.7m for share based compensation
comprises a charge for the fair value of various share options granted, which are being recognised in the income
statement in accordance with services rendered.
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19. Statutory and other information Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
Directors’ emoluments:
-Fees 0.7 0.7 0.6
-Share based compensation 1.9 1.5 1.5
-Other emoluments 1.8 1.1 2.0
Total Directors’ emoluments 4.4 3.3 4.1
Auditor’s remuneration (including reimbursement of outlay):
- Audit services (i) 0.5 0.4 0.4
- Audit related services (ii) - 0.1 -
- Tax advisory services (iii) 0.2 0.2 0.5
Total fees 0.7 0.7 0.9
Included within the above total fees, the following fees were payable to other
KPMG firms outside of Ireland:
Audit services (i) 0.1 - -
Audit related services (ii) - 0.1 -
Tax advisory services (iii) 0.1 0.2 0.2
Total fees 0.2 0.3 0.2
Depreciation of owned property, plant and equipment 633.4 548.7 478.7
Depreciation of property, plant and equipment held under finance leases 7.1 12.3 18.8
Operating lease charges, principally for aircraft 83.9 82.3 86.1
(i) Audit services comprise audit work performed on the consolidated financial statements, including statutory
financial statements of subsidiary entities. In 2019 €1,000 (2018: €1,000; 2017: €1,000) of audit fees relate to
the audit of the Parent Company.
(ii) Audit related services comprise financial due diligence services.
(iii) Tax services include all services, except those services specifically related to the audit of financial statements,
performed by the independent auditor’s tax personnel, supporting tax-related regulatory requirements, and tax
compliance and reporting.
(a) Fees and emoluments - Executive Director Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
Basic salary 1.06 1.06 1.06
Bonus (performance and target-related) 0.77 — 0.95
Share based compensation 1.55 1.25 1.25
3.38 2.31 3.26
During the years ended March 31, 2019, 2018, and 2017 Michael O’Leary was the only Executive Director.
He waived his entitlement to an annual bonus in financial year 2018 following the pilot rostering failure of September
2017.
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(b) Fees and emoluments – Non-Executive Directors Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
Fees
Emoluments
Share based compensation 0.29 0.27 0.27
Total 0.97 0.93 0.90
(i) Roisin Brennan was appointed to the Board of Directors effective in May 2018.
(ii) Emer Daly was appointed to the Board of Directors effective in December 2017.
(iii) John Leahy served on the Board of Directors between August 2015 and September 2016.
(iv) Stan McCarthy was appointed to the Board of Directors effective in May 2017.
(v) Charles McCreevy retired from the Board of Directors effective in September 2018.
(vi) Declan McKeon retired from the Board of Directors effective in September 2018.
(vii) Mike O’Brien was appointed to the Board effective in May 2016.
(viii)James Osborne passed away in August 2017.
(c) Pension benefits
From October 1, 2008, Michael O’Leary was no longer an active member of a Company defined-benefit plan.
The total accumulated accrued benefit for Mr. O’Leary at March 31, 2019 was €0.1m (2018: €0.1m; 2017:
€0.1m). Pension benefits have been computed in accordance with Section 6.1 of the Listing Rules of Euronext Dublin.
Increases in transfer values of the accrued benefits have been calculated as at the year-end in accordance with version
1.1 of Actuarial Standard of Practice PEN-11. No Non-Executive Directors are members of the Company defined-
benefit plan.
Mr. O’Leary is a member of a defined-contribution plan. During the years ended March 31, 2019, 2018 and
2017 the Company did not make contributions to the defined-contribution plan for Mr. O’Leary. No Non-Executive
Directors are members of the Company defined-contribution plan.
(d) Shares and share options
(i) Shares
 Holdings plc is listed on the Euronext Dublin, London and NASDAQ stock exchanges.
189
The beneficial interests as at March 31, 2019, 2018 and 2017 of the Directors in office at March 31, 2019
and of their spouses and dependent children in the share capital of the Company are as follows:
(a) 30,000 options were granted to these Directors at an exercise price of €6.25 (the market value at the date of grant)
during fiscal year 2015 and are exercisable between May 21, 2019 and July 1, 2022 subject to the Director still
being a Non-Executive Director of the Company through April 30, 2019.
(b) 5,000,000 options were granted to Mr.O’Leary during fiscal year 2015 at an exercise price of €8.345 (the market
value at the date of grant) and are exercisable between September 2019 and November 2021 subject to him still
being an employee of the Company through July 31, 2019.
(c) 30,000 options were granted to this Director at an exercise price of €11.38 (the market price at the date of grant)
during fiscal year 2016 and are exercisable between May 21, 2019 and July 1, 2022.
(d) 50,000 options were granted to these Directors at an exercise price of €11.12 (the market value at the date of
grant) during fiscal year 2019. These options are exercisable between September 2024 and February 2026 subject
to the Director still being a Non-Executive Director of the Company through July 31, 2024.
(e) 10,000,000 options were granted to Mr. O’Leary at an exercise price of €11.12 (the market value at the date of
grant) during fiscal year 2019. These options are exercisable between September 2024 and February 2026 subject
to him still being an employee of the Company through July 31, 2024.
In fiscal year 2019 the Company incurred total share-based compensation expense of €1.9m (2018: €1.5m;
2017: €1.5m) in relation to Directors.
190
20. Finance expense
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
Interest payable 59.1 60.1 67.2
Interest arising on pension liabilities — — —
59.1 60.1 67.2
21. Pensions
Defined-contribution schemes
At March 31, 2019 the Company operates defined-contribution retirement plans in Ireland and the U.K. The
costs of these plans are charged to the consolidated income statement in the period in which they are incurred. The
pension cost of these defined-contribution plans was €8.6m in 2019 (2018: €5.8m; 2017: €4.8m)
Defined-benefit schemes
During fiscal year 2016 the Company closed the defined benefit plan for U.K. employees to future accruals.
The net pension liability recognized in the consolidated balance sheet for the scheme at March 31, 2019 was €4.1m
(2018: €4.1m; 2017: €4.1m). Costs associated with the scheme during fiscal year 2019 was €nil (2018: €nil; 2017:
€nil).
The amounts recognised in the consolidated balance sheet in respect of defined benefit plans are as follows:
At March 31,
2019 2018 2017
  
Present value of benefit obligations (15.0) (15.0) (15.0)
Fair value of plan assets 10.3 10.3 10.3
Present value of net obligations (4.7) (4.7) (4.7)
Related deferred tax asset 0.6 0.6 0.6
Net pension liability (4.1) (4.1) (4.1)
22. Earnings per share
At March 31,
2019 2018 2017
Basic earnings per ordinary share (€) 0.7739 1.2151 1.0530
Diluted earnings per ordinary share (€) 0.7665 1.2045 1.0464
Number of ordinary shares (in Ms) used for EPS (weighted average)
Basic 1,143.6 1,193.5 1,249.7
Diluted (a) 1,154.6 1,204.0 1,257.5
(a) Details of share options in issue have been described more fully in Note 15 to the consolidated financial
statements. See below for explanation of diluted number of ordinary shares.
Diluted earnings per share takes account solely of the potential future exercise of share options granted under
the Company’s share option schemes. For fiscal year 2019, the weighted average number of shares in issue of 1,154.6m
includes weighted average share options assumed to be converted, and equal to a total of 11.0m shares. For fiscal year
2018, the weighted average number of shares in issue of 1,204.0m includes weighted average share options assumed
to be converted, and equal to a total of 10.5m shares. For fiscal year 2017, the weighted average number of shares in
issue of 1,257.5m includes weighted average share options assumed to be converted, and equal to a total of 7.8m
shares.
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of the
share options was based on quoted market prices for the year during which the options were outstanding.
191
23. Commitments and contingencies
Commitments
In September 2014, the Group agreed to purchase up to 200 (100 firm orders and 100 subject to option)
Boeing 737-MAX-200 aircraft from The Boeing Corporation during the period fiscal year 2020 to fiscal year 2024
(the “2014 Boeing Contract”). This agreement was approved at an EGM of  Holdings plc on November 28,
2014. In June 2017, the Group agreed to purchase an additional 10 Boeing 737-MAX-200 aircraft. This brings the
total number of 737-MAX-200 aircraft on order to 210, with a list value of approximately $21bn (assuming all options
are exercised). In April 2018, the Company announced that it has converted 25 Boeing 737-MAX-200 options into
firm orders. This brings the Company’s firm order to 135 Boeing 737-MAX-200s with a further 75 options remaining.
The table below details the firm aircraft delivery schedule at March 31, 2019 and March 31, 2018 for the
Group pursuant to the 2014 Boeing contracts.
Basic
Aircraft Firm Aircraft Aircraft Firm Aircraft Firm Aircraft price per
Delivered at Deliveries Delivered at Deliveries Deliveries aircraft
March 31, Fiscal Year March 31, Fiscal Year Post Fiscal Year Firm Aircraft (U.S.$
2018 2019 2019 2020 2020 Total million)
2014 Contract — — — 20 115 135 102.50
The “Basic Price” (equivalent to a standard list price for an aircraft of this type) for each aircraft governed
by the 2013 Boeing contract will be increased by (a) an estimated U.S.$2.9m per aircraft for certain “buyer furnished”
equipment the Group has asked Boeing to purchase and install on each of the aircraft, and (b) an “Escalation Factor”
designed to increase the Basic Price, as defined in the purchase agreement, of any individual aircraft by applying a
formula which reflects increases in the published U.S. Employment Cost and Producer Price indices between the time
the Basic Price was set and the period of 18 to 24 months prior to the delivery of such aircraft.
The “Basic Price” (equivalent to a standard list price for an aircraft of this type) for each aircraft governed
by the 2014 Boeing contract will be increased by (a) an estimated U.S.$1.6m per aircraft for certain “buyer furnished”
equipment the Group has asked Boeing to purchase and install on each of the aircraft, and (b) an “Escalation Factor”
designed to increase the Basic Price, as defined in the purchase agreement, of any individual aircraft by applying a
formula which reflects increases in the published U.S. Employment Cost and Producer Price indices between the time
the Basic Price was set and the period of 18 to 24 months prior to the delivery of such aircraft.
Boeing has granted  certain price concessions as part of the Boeing 2013 Contract and the 2014
Contract. These take the form of credit memoranda to the Group for the amount of such concessions, which the Group
may apply toward the purchase of goods and services from Boeing or toward certain payments, other than advance
payments, in respect of the purchase of the aircraft under the various Boeing contracts.
Boeing and CFMI (the manufacturer of the engines to be fitted on the purchased aircraft) have also agreed to
give the Group certain allowances in addition to providing other goods and services to the Group on concessionary
terms. These credit memoranda and allowances will effectively reduce the price of each aircraft to the Group. As a
result, the effective price of each aircraft (the purchase price of the new aircraft net of discounts received from Boeing)
will be significantly below the Basic Price mentioned above. At March 31, 2019 and March 31, 2018, the total potential
commitment to acquire all 135 (2018: 164; 2017: 179) “firm” aircraft, not taking such increases and decreases into
account, will be approximately U.S. $13.8bn (2018: $16.1bn; 2017: U.S. $16.5bn).
Operating leases
The Company financed 76 of the Boeing 737-800 aircraft delivered between December 2003 and March 2014
under 7-year, sale-and-leaseback arrangements with a number of international leasing companies, pursuant to which
each lessor purchased an aircraft and leased it to  under an operating lease. Between October 2010 and March
2019, 50 operating lease aircraft were returned to the lessor at the agreed maturity date of the lease. At March 31, 2019
 had 26 Boeing 737 operating lease aircraft in the fleet and 16 A320s. As a result,  operates, but does
not own, these aircraft.  has no right or obligation to acquire these aircraft at the end of the relevant lease terms.
All 36 remaining operating leases are U.S. dollar-denominated which require  to make fixed rental payments.
The Company had an option to extend the initial period of seven years on 10 of the remaining operating lease aircraft
192
as at March 31, 2019, on pre-determined terms. As at March 31, 2019 the Company has exercised 10 of these options
to extend. The following table sets out the total future minimum payments of leasing 36 aircraft (2018: 31 aircraft;
2017: 33 aircraft), at March 31, 2019, 2018 and 2017, respectively:

  
8
Finance leases
The Company financed 30 Boeing 737-800 aircraft delivered between March 2005 and March 2014 with 13-
year euro-denominated Japanese Operating Leases with Call Options (“JOLCOs”). These structures are accounted for
as finance leases and are initially recorded at fair value in the Company’s balance sheet. Under each of these contracts,
 has a call option to purchase the aircraft at a pre-determined price after a period of 10.5 years, which it may
exercise.  exercised this option for 12 of these aircraft in fiscal year 2019 (2018: 6; 2017: 4). 3 aircraft have
been financed through euro-denominated 12 year amortising commercial debt transactions.
The following table sets out the total future minimum payments of leasing the remaining 12 aircraft (2018:
16 aircraft; 2017: 22 aircraft) under JOLCOs at March 31, 2019, 2018 and 2017, respectively:
At March 31,
2019 2018 2017
Present Present Present
value of value of value of
Minimum Minimum Minimum Minimum Minimum Minimum
payments payments payments payments payments payments
     
Commitments resulting from the use of derivative financial instruments by the Company are described in
Notes 5 and 11 to the consolidated financial statements.
Contingencies
The Company is engaged in litigation arising in the ordinary course of its business. Although no assurance
can be given as to the outcome of any current or pending litigation, management does not believe that any such
litigation will, individually or in the aggregate, have a material adverse effect on the results of operations or financial
condition of the Company, except as described below.
Since 2002, the European Commission has examined the agreements between  and various airports
to establish whether they constituted illegal state aid. In many cases, the European Commission has concluded that the
agreements did not constitute state aid. In other cases,  has successfully challenged the EU commission finding
that there was state aid. In July and October 2014, the European Commission announced findings of state aid to
 in its arrangements with Pau, Nimes, Angouleme, Altenburg and Zweibrücken airports, ordering  to
repay a total of approximately €9.9m of alleged aid. In July and November 2016, the European Commission
announced findings of state aid to  in its arrangements with Cagliari and Klagenfurt respectively, ordering
 to repay approximately €12.6m of alleged aid.  appealed the seven “aid” decisions to the EU General
Court. In late 2018, the General Court upheld the Commission’s findings regarding ’s arrangements with Pau,
Nimes, Angouleme and Altenburg airports, and overturned the Commission’s finding regarding ’s
193
arrangement with Zweibrücken airport.  has appealed these four negative findings to the European Court of
Justice. These appeals are expected to take at least two years. The appeal proceedings before the General Court
regarding ’s arrangements with Cagliari and Klagenfurt airports are expected to take approx. two years.
 is facing similar legal challenges with respect to agreements with certain other airports, notably Paris
(Beauvais), La Rochelle, Carcassonne, Girona, Reus, Târgu Mureș, Montpellier and Frankfurt (Hahn). These
investigations are ongoing and  expects that they will conclude in 2019, with any European Commission
decisions appealable to the EU General Court.
 is also facing an allegation that it has benefited from unlawful state aid in a German court case in
relation to its arrangements with Frankfurt (Hahn).
Adverse rulings in the above or similar cases could be used as precedents by competitors to challenge
’s agreements with other publicly-owned airports and could cause  to strongly reconsider its growth
strategy in relation to public or state-owned airports across Europe. This could in turn lead to a scaling back of
’s growth strategy due to the smaller number of privately owned airports available for development. No
assurance can be given as to the outcome of these proceedings, nor as to whether any unfavorable outcomes may,
individually or in the aggregate, have a material adverse effect on the results of operations or financial condition of
the Company.
24. Note to cash flow statement
At March 31,
2019 2018 2017
  
Ne194
25. Shareholder returns
In the year ended March 31, 2019 the Company bought back 37.8m ordinary shares at a total cost of
approximately €561m (€531.6m net of tax refund). This buy-back was equivalent to approximately 3.2% of the
Company's issued share capital at March 31, 2019. All of these repurchased ordinary shares were cancelled at March
31, 2019.
In the year ended March 31, 2018 the Company bought back 46.7m ordinary shares at a total cost of
approximately €829m. This buy-back was equivalent to approximately 3.8% of the Company’s issued share capital at
March 31, 2018. All of these repurchased ordinary shares were cancelled at March 31, 2018.
In the year ended March 31, 2017 the Company bought back 72.3m ordinary shares at a total cost of
approximately €1,018m. This is equivalent to approximately 5.6% of the Company’s issued share capital at March
31, 2017. All of these repurchased ordinary shares were cancelled at March 31, 2017.
As a result of the share buy-backs, in the year ended March 31, 2019, share capital decreased by 37.8m
ordinary shares (46.7m ordinary shares in the year ended March 31, 2018) with a nominal value of €0.2m (€0.3m in
the year ended March 31, 2018) and the other undenominated capital reserve increased by a corresponding €0.2m (€
0.3m in the year ended March 31, 2018). The other undenominated capital reserve is required to be created under Irish
law to preserve permanent capital in the Parent Company.
26. Post-balance sheet events
In May 2019, the Group concluded a low cost, €750m unsecured (5 year) syndicated bank facility for general
corporate purposes. The facility is at a margin of 0.65% over cost of funds, and is a bullet repayment with a 5 year
tenor. This facility was fully drawn down in May 2019.
In June 2019, management committed to a plan to sell 10 of the Company’s Boeing 737-800 aircraft.
Accordingly, these aircraft are presented as assets held for sale as at 30 June 2019. Efforts to sell these aircraft have
started and the sale is expected to be completed over the coming months. At 30 June 2019, these assets are stated at
the lower of their carrying amount and fair value less costs to sell.
Between April 1, 2019 and July 25, 2019, the Company had bought back 12.3m ordinary shares at a total cost
of €137.6m under its €700m share buy-back which commenced in May 2019. This was equivalent to 1.1% of the
Company’s share capital at March 31, 2019. All ordinary shares repurchased are cancelled.
27. Subsidiary undertakings and related party transactions
The following are the principal subsidiary undertakings of  Holdings plc:
Information regarding all other subsidiaries will be filed with the Company’s next Irish Annual Return as
provided for by Section 316(1) of the Irish Companies Act, 2014.
In accordance with the basis of consolidation policy, as described in Note 1 of these consolidated financial
statements, the subsidiary undertaking referred to above have been consolidated in the financial statements of 
Holdings plc for the years ended March 31, 2019, 2018 and 2017.
The total amount of remuneration paid to senior key management (defined as the Executive team reporting
to the Board of Directors, as set out on page 116, together with all Non-Executive Directors) amounted to €13.4m in
195
the fiscal year ended March 31, 2019 (2018: €10.7m; 2017: €11.4m), the majority of which comprises short-term
employee benefits.
Year ended Year ended Year ended
March 31, March 31, March 31,
2019 2018 2017
  
28. Date of approval
The consolidated financial statements were approved by the Board of Directors of the Company on July 26,
2019.
196
Company Balance Sheet
At March 31,
2019 2018 2017
Note   

Operating activities
Profit for the year - 1,300.1 750.0
Net cash provided by operating activities - 1,300.1 750.0
Investing activities
Decrease/(increase) in investments in subsidiaries 5.4 (5.4) -
Decrease/(increase) in loans to subsidiaries 526.6 (465.0) 269.2
Net cash from/(used in) investing activities 532.0 (470.4) 269.2
Financing activities
Shareholder returns (net of tax) (531.6) (829.1) (1,017.9)
The accompanying notes are an integral part of the financial information.
199
Notes forming part of the Company Financial Statements
29. Basis of preparation and significant accounting policies
The Company’s financial statements have been prepared in accordance with International Accounting Standards
and International Reporting Standards (collectively “IFRS”) as adopted by the European Union (EU), which are
effective for the year ended as at March 31, 2019. In addition to complying with its legal obligation to comply with
IFRS as adopted by the EU, the consolidated financial statements comply with IFRS as issued by the International
Accounting Standards Board (“IASB”). The consolidated financial statements have also been prepared in accordance
with the Companies Act, 2014. The Company financial statements are presented in euro millions, being its functional
currency. They are prepared on an historical cost basis except for certain share based payment transactions, which are
based on fair values determined at grant date.
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income
and expenses. These estimates and associated assumptions are based on historical experience and various other factors
believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
materially from these estimates. These underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if these are also affected. Principal sources of estimation
uncertainty have been set out in the critical accounting policy section in Note 1 to the consolidated financial
statements. Such uncertainties may impact the carrying value of investments in subsidiaries at future dates.
Statement of compliance
The Company financial statements have been prepared in accordance with IFRS as adopted by the EU. In
addition to complying with its legal obligation to comply with IFRS as adopted by the EU, the Company financial
statements comply with IFRS as issued by the IASB. The Company financial statements have also been prepared in
accordance with the Companies Act, 2014. On publishing parent entity financial statements together with group
financial statements the Company is taking advantage of the exemption contained in Section 304 of the Companies
Act, 2014 not to present its individual income statement, statement of comprehensive income and related notes that
form a part of these approved financial statements.
The directors have reviewed all new or revised IFRS standards and IFRIC interpretations, effective for future
financial years, as set forth in Note 1 to the consolidated financial statements, and have concluded their adoption will
not have a significant impact on the parent entity financial statements.
Share-based payments
The Company accounts for the fair value of share options granted to employees of a subsidiary as an increase in
its investment in that subsidiary. The fair value of such options is determined in a consistent manner to that set out in
the Group share-based payment accounting policy and as set out in Note 15 (c) to the consolidated financial statements.
Income taxes
Income taxes are accounted for by the Company in a manner consistent to that set out in the Group income tax
accounting policy.
Financial assets
The Company holds investments in subsidiary companies, which are carried at cost less any impairments.
200
Guarantees
The Company occasionally guarantees certain liabilities of subsidiary companies. These are considered to be
insurance arrangements and are accounted for as such i.e. a contingent liability until such time as it becomes probable
that the Company will be required to make a payment under the guarantee. Additional details are provided in Note
34 to these company financial statements.
Loans and borrowings
All loans and borrowings are initially recorded at the fair value of consideration received, net of attributable
transaction costs. Subsequent to initial recognition, non-current interest bearing loans are measured at amortised cost,
using the effective interest yield methodology.
Balance at start of year 129.2 117.4 111.7
(Decrease)/Increase in investments (5.4) 5.4 -
New investments in subsidiaries by way of share option grant to
subsidiary employees 7.7 6.4 5.7
Balance at end of year 131.5 129.2 117.4
31. Loans and receivables from subsidiaries
  
Due from  DAC (subsidiary) 858.7 1,385.3 920.2
858.7 1,385.3 920.2
All amounts due from subsidiaries are interest free and repayable upon demand. The expected credit loss
associated with the above balances is considered to be insignificant.
32. Amounts due to subsidiaries
Year Ended Year Ended Year Ended
March 31, March 31, March 31,
2019 2018 2017
  
Due to  DAC (subsidiary) 35.2 35.2 35.2
35.2 35.2 35.2
At March 31, 2019,  Holdings plc had borrowings of €35.2 million (2018: €35.2 million; 2017: €35.2
million) from  DAC. The loan is interest free and repayable on demand.
201
33. Financial instruments
The Company does not undertake hedging activities on behalf of itself or other companies within the Group.
Financial instruments in the Company primarily take the form of loans to subsidiary undertakings.
Amounts due to or from subsidiary undertakings (primarily  DAC) in the form of inter-company loans
are interest free and are repayable upon demand and further details of these have been given in Notes 31 and 32 of
these Company financial statements. These inter-company balances are eliminated in the group consolidation.
The euro is the functional and presentation currency of the Company and all transactions entered into by the
Company are euro denominated. As such, the Company does not have any significant foreign currency risk.
The credit risk associated with the Company’s financial assets principally relates to the credit risk of the
 Group as a whole.  has received a BBB+ (stable) credit rating from both Standard and Poor’s and
Fitch Ratings. Additionally, the Company had guaranteed certain subsidiary company liabilities. Details of these
arrangements are given in Note 34 of these Company financial statements.
34. Contingencies
a) The Company has provided €3,796.7 million (2018: €4,118.2 million; 2017: €5,055.2 million) in letters of
guarantee to secure obligations of subsidiary undertakings in respect of loans, bank advances and long dated foreign
currency transactions.
b) In order to avail itself of the exemption contained in Section 357 of the Companies Act, 2014, the holding
company,  Holdings plc, has guaranteed the liabilities of its subsidiary undertakings registered in Ireland. As
a result, the subsidiary undertakings have been exempted from the requirement to annex their statutory financial
statements to their annual returns.
Details of the Group’s principal subsidiaries have been included at Note 27.
35. Dividends
Please refer to Note 25 of the Consolidated Financial Statements.
36. Post-balance sheet events
Please refer to Note 26 of the Consolidated Financial Statements.
37. Date of approval
The Company financial statements were approved by the Board of Directors of the Company on July 26, 2019.
203
APPENDIX A
GLOSSARY
Certain of the terms included in the section on Selected Operating and Other Data and elsewhere in this
Annual Report on Form 20-F have the meanings indicated below and refer only to ’s scheduled passenger
service.
Average Booked Passenger Fare Represents the average fare paid by a fare-paying passenger who has
booked a ticket.
Average Daily Flight Hour Utilization Represents the average number of flight hours flown in service per
day per aircraft for the total fleet of operated aircraft.
Average Fuel Cost Per U.S. Gallon Represents the average cost per U.S. gallon of jet fuel for the fleet
(including fueling charges) after giving effect to fuel hedging
arrangements.
Average Length of Passenger Haul Represents the average number of miles traveled by a fare-paying
passenger.
Ancillary Revenue per Booked Passenger Represents the average revenue earned per booked passenger flown
from ancillary services.
Baggage Commissions Represents the commissions payable to airports on the revenue
collected at the airports for excess baggage and airport baggage fees.
Booked Passenger Load Factor Represents the total number of seats sold as a percentage of total seat
capacity on all sectors flown.
Break-even Load Factor Represents the number of RPMs at which passenger revenues would
have been equal to operating expenses divided by ASMs (based on
Average Yield per RPM). For the purposes of this calculation, the
number of RPMs at which passenger revenues would have been
equal to operating expenses is calculated by dividing operating
expenses by Average Revenue per RPM.
Cost Per Booked Passenger Represents operating expenses divided by revenue passengers
booked.
Net Margin Represents profit after taxation as a percentage of total revenues.
Number of Airports Served Represents the number of airports to/from which the carrier offered
scheduled service at the end of the period.
Number of Owned Aircraft Operated Represents the number of aircraft owned and operated at the end of
the period.
Operating Margin Represents operating profit as a percentage of total revenues.
Part 145 The European regulatory standard for aircraft maintenance
established by the European Aviation Safety Agency.
Revenue Passengers Booked Represents the number of fare-paying passengers booked.
Sectors Flown Represents the number of passenger flight sectors flown.
Leading
Innovating
Delivering
for a Sustainable Future
Annual Report 2019

Smurfit Kappa (‘SKG’), a
FTSE 100 company, is one
of the leading providers of
paper-based packaging
solutions in the world.

Overview

Strategic Report

Governance

We operate across 35 countries
with around 46,000 employees
in over 350 production sites and
revenue of €9.0 billion in 2019.
Our purpose is to meet the needs
of our customers, to generate
superior returns for our
shareholders, and to invest in our
people, the communities in which
we operate and the environment.
Find out more on pages 4 to 7.

Financial Statements

Supplementary Information

Overview

01-15

Who We Are

1

Financial Highlights of 2019

2

Where We Operate

4

Our Business Model

6

Innovation

8

Our Sustainable Approach

12

Strategic Report

16-53

Chair’s Statement

16

Group Chief Executive Officer’s Statement

20

Strategy

24

Key Performance Indicators

26

Risk Report

30

Finance Review

34

Stakeholder Engagement

38

Sustainability

40

People

46

Governance

54-83

Board of Directors

54

Corporate Governance Statement

57

Audit Committee Report

62

Remuneration Report

65

Nomination Report

78

Sustainability Committee Report

80

Directors’ Report

81

Statement of Directors’ Responsibilities

83

Financial Statements

84-161

Independent Auditor’s Report

84

Consolidated Income Statement

89

Consolidated Statement of
Comprehensive Income

90

Consolidated Balance Sheet

91

Company Balance Sheet

92

Consolidated Statement of Changes in Equity

93

Company Statement of Changes in Equity

94

Consolidated Statement of Cash Flows

95

Company Statement of Cash Flows

96

Notes to the Consolidated Financial Statements

97

Supplementary
Information

162-166

Alternative Performance Measures

162

Shareholder Information

166


Financial Highlights of 2019

Continuing
to deliver
A year of strong delivery
and performance.

Revenue (million)

EBITDA* (million)

EBITDA Margin* (%)

These financial key performance indicators are not defined under International Financial Reporting Standards (‘IFRS’). Further information in relation to these Alternative Performance Measures (‘APMs’)
is included in the Supplementary Information section on pages 162 to 165.



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Free Cash Flow* (million)

Net Debt* (million)

Return On Capital Employed* (%)

Pre-exceptional Basic Earnings Per Share*
(cent)

Net Debt to EBITDA*
(times)
Where We Operate

A world leader with
operations in 35 countries
We are one of the largest integrated manufacturers of paper-based packaging
solutions in the world. We are located in 23 countries in Europe and 12 in the
Americas. In Europe, we are the leader by production volume in corrugated
packaging and containerboard and in Latin America we are the only large-scale
pan-regional player.
Forestry Plantations
(hectares)

Fibre Sourcing

Mills

Converting Plants

Other Production
Facilities

The Americas
Revenue

€2
billion
1%
The Group’s operations in the Americas comprise a system of mills and
plants that primarily produce a full line of containerboard that is converted
into corrugated containers. Our operations in the Americas also include
forestry; other types of paper, such as boxboard, sack paper and graphic
paper; and paper-based packaging, such as folding cartons and paper sacks.
Find out more on page 21.



2019 Gross Sales Volume (million tonnes)

Containerboard – 1.3
Other paper
and board – 0.3
Corrugated – 1.4
Other paper-based
packaging – 0.1

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

What Sets Us Apart
Our Scale and Geographic Diversity
Our large manufacturing footprint provides us with a clear point of differentiation because the
corrugated packaging market is a localised market and therefore converting plants need to be
close to customers (within 300kms). Our unique global footprint makes us well placed to reliably
deliver on customer requirements.

Europe
Revenue

€7
billion
1%
We are the European leader in the production of corrugated packaging,
containerboard and bag-in-box. The Europe segment includes mills and
plants that primarily produce a full line of containerboard that is converted
into corrugated containers. In addition, we produce other types of paper,
such as solidboard, sack kraft paper and graphic paper; and other paperbased packaging, such as solidboard packaging and folding cartons; and
bag-in-box packaging.

2019 Gross Sales Volume (million tonnes)

Find out more on page 21.

Our Business Model

We’re a packaging leader
in a growth sector
We design, manufacture and supply innovative packaging
solutions to promote and protect our customers’ products.

Range of Tools

We employ a range of ‘Innotools’, unique to
Smurfit Kappa, enabling us to create the optimal
fit-for-purpose packaging solutions for our customers.

Data and Insights

Packaging Design and Development

We are a highly innovative, design-led company.
Our approach to innovation is data-driven and focused
on solving our customers’ challenges, whether through
packaging development, process improvement or
optimising supply chain efficiency.

Virgin/
recovered
paper fibres

Recovered
paper facilities

Our unique approach to innovation for business
success is based on combining science, experience,
geographic diversity, big data and creativity on a scale
and with a depth not seen elsewhere in the industry.
See more in our Innovation
section on pages 8 to 11.

Distribution and
consumption

Customers

Culture and People

At Smurfit Kappa, we recognise that culture plays a fundamental role in
the delivery of our strategy and the Board is ultimately responsible for
ensuring that our activities reflect the culture we wish to instil in our
colleagues and other stakeholders to drive appropriate behaviours. Our
focus on culture and learning from one another is continuous, which
helps us to adapt to a changing environment and ensure our culture
supports our business model.
6



Overview

Strategic Report

Governance

Our Integrated Model

We have an integrated system of containerboard mills
and corrugated box plants. Our recycling, wood
procurement and forestry operations provide raw
material to our containerboard mills, who produce
a full line of containerboard which is converted into
corrugated containers.

Financial Statements

Supplementary Information

Our vertical integration is key to guaranteeing security
of supply for our customers and enabling us to drive
efficiencies across the whole supply chain with
technological advances, paper machine optimisation
and logistics management, which in turn means we
can offer optimal paper design, quality and logistics.
We have lower exposure to volatility in containerboard
prices and our integrated structure ensures that we
provide a stable outlet for our product through the
uncertainty of market falls and rises.

Sustainability

Production of
containerboard

Our circular business model, from replacing
natural resources to recycling materials and
optimising processes, including reducing CO2
emissions, gives us a competitive advantage.
Our embedded Chain of Custody ensures that close
to 100% of our raw material comes from sustainable
and/or certified sources regardless of whether is it
virgin or recycled.

Sustainability Leadership

Conversion into
corrugated board
sheets

We are focused on reducing our CO2 footprint, improving
water discharge quality and eventually sending zero
waste to landfill. SKG supports our customers to address
their sustainability needs using data driven innovation.

Better Planet Packaging

As a leader in sustainable packaging we have a
responsibility to respond to the challenge the world
faces with litter and single use plastics. To address this
we have introduced our Better Planet Packaging
initiative, read more on pages 12 to 15.

Conversion
into boxes

The Board is committed to promoting a
strong and positive culture that is aligned
with strategy and based on our values of:
• Safety
• Loyalty
• Integrity
• Respect
• Teamwork
• Entrepreneurship

See more in our Sustainability
section, pages 40 to 45.

These values foster the guiding principles by
which we operate:
• Inclusion and Diversity
• Recognition
• Performance
• Accountability
Smurfit Kappa unites some 46,000 people around
the globe. Our people are at the heart of all our
operations. We can only achieve sustainable
long-term success by developing our people’s

talent, expertise and innovation. A company
with a strong culture and an engaged
workforce generates higher productivity
and growth, as well as being able to innovate
at a greater pace to satisfy customers.

See more in our Stakeholder
Engagement and People sections
on pages 38 to 39 and 46 to 53.



7

Innovation

Our culture of innovation
is based on experience,
science, creativity and data
with state of the art facilities
ensuring we’re ready for the
challenges of the future.

8



Overview

Our approach to
innovation demonstrates
how we help our
customers save more,
sell more, optimise their
packaging solutions and
improve the consumer
experience.

Strategic Report

Governance

Financial Statements

Supplementary Information

Our Approach:

Knowledge, experience and passion
Our primary goal is to support our customers through the dedication and creativity of
our people. Our people are highly motivated, well trained and have unrivalled packaging
expertise which provides the foundation for our innovation.

Customer focus, understanding
our customers’ markets
We look past our products and go one step further to provide our customers with
the best data and analysis to make better business decisions with minimal risk.
Innovation challenges the status quo and is a fundamental part of our strategy.
Our approach to innovation is market driven and focused on solving our customers’
challenges, whether through customer insights, packaging solutions development,
process improvement or optimising supply-chain efficiency.

Science of innovation
At Smurfit Kappa, innovation is data driven. We have a supporting network of
laboratories, facilities and applications to help us create fit-for-purpose, cost-effective
and sustainable packaging solutions.

Creative design thinking
With over 1,000 designers across our business and over 7,500 packaging concepts, we
use cutting edge technology to provide innovative designs in packaging and display for
our customers.



9

Innovation continued

SupplySmart
SupplySmart is a combination of unique tools,
data and expertise that enables customers to
optimise their supply chain with improved packaging
solutions with the reassurance they're making
fully risk-assessed decisions that will deliver
measurable cost savings.

Automated packing line

100%

SKG engages with businesses using a proven six-step
methodology, designed to help our customers make the
most informed packaging choices to deliver the best
return while minimising risk.

Automated Packaging Solution
Topro, a producer of mobility aid products, needed
smarter transport packaging in order to minimise logistics
costs and environmental impact. They also wanted to
improve production efficiency and automate their entire
packaging process. Together with Topro, we assessed the
supply chain throughout Europe and with the help of
Paper to Box, defined the required packaging criteria and
functionality. Our new tapered box solution allowed better
pallet fill with 180 more products per truck. Our solution
for Topro reduced logistics costs by 40% and their
packing line is now 100% automated.

eSmart
Our eSmart process is designed to improve
all aspects of eCommerce packaging,
from packing line to supply chain to
customer experience.
SKG helps customers manage complexity by
analysing their eCommerce business across 12 key
areas – from optimising their planning, increasing
supply chain efficiency and delivering a positive
customer experience this analysis helps to identify
areas for improvement and further development.

Sustainable Packaging
Using our expertise and eSmart service, we
identified a sustainable packaging concept
for Jardines de Los Andes, a leading flower
grower in Colombia, that would protect even
the most delicate blooms through a complex
eCommerce supply chain, while delighting
the recipient. The beautifully designed and
branded packaging is 100% recyclable and
biodegradable. The new packaging, designed
for a wedding bouquet line, contributed to
sales growth of 300%.

Sales growthOverview

ShelfSmart
The right shelf-ready packaging is proven to
boost sales quickly and cost effectively, giving
our customers maximum brand benefit where
it matters most – at the point of purchase.
ShelfSmart is an innovative retail merchandising
service designed to develop scalable, riskproofed shelf-ready packaging solutions.

Strategic Report

Governance

Financial Statements

Supplementary Information

Shelf-Ready Packaging
A German yoghurt producer was facing the challenge of a
highly competitive market and a decreasing market share.
Their packaging didn’t stand out on the shelf, they were not
communicating with the target market. Smurfit Kappa
worked with the customer at a ShelfSmart workshop to
create a fresh new design with improved brand impact. Eye
tracking technology confirmed that the new design stands
out, with increased visibility of 37%.
Increased visibility

Our Sustainable Approach

Better Planet Packaging
seeks to reduce packaging
waste and address the
challenges of litter that ends
up in our oceans and landfill.
Overview

Smurfit Kappa continues
to lead in innovative
sustainable packaging
solutions for our
customers, led by our
'Better Planet Packaging'
initiative which provides
our customers with
sustainable solutions
today, ready for the
challenges of tomorrow.

Strategic Report

Governance

Financial Statements

Supplementary Information

In doing this we:

Develop and design paper-based
packaging concepts and materials
with improved functionalities,
that are fully renewable, recyclable
and biodegradable as alternatives
for today’s unsustainable packaging
solutions.
Educate and inspire all stakeholders
to understand the role sustainable
packaging can play in addressing the
challenges of waste.
Support our customers and
other stakeholders to develop
a go-to-market strategy and
implementation plan for
paper-based packaging alternatives.



13

Our Sustainable Approach continued

Develop
and Design
We are working with customers
(and many other stakeholders) to
deliver innovative, sustainable
packaging solutions, including
TopClip (pictured).
These solutions include alternatives to
traditional fruit and vegetable packaging
(Safe&Green), a paper-based solution to
traditional wood and plastic pallets, a
lightweight sustainable alternative to
wooden pallet tops (TOPPSafe™) and a
portfolio of products to replace single-use
plastic in the bundling of cans and bottles
(TopClip, Green Clip and Nor-Grip), to
name a few. We are working to develop
paper-based packaging with functional
barrier properties, that is fully renewable,
recyclable and biodegradable and new
recycling systems (linked to the paper
recycling system) to recycle packaging
that is 'unrecyclable' today.

Education and
Inspiration
As part of the Better Planet Packaging ('BPP')
initiative, Smurfit Kappa is actively engaging
with networks and organisations to educate
on the challenges and opportunities in paper-based
packaging solutions. We aim to inspire our
customers and the wider public about the role
sustainable packaging can play in reducing
environmental impact.
SKG’s engagement with customers was best illustrated
with two flagship events, our biennial Innovation Event
in May 2019, hosted over 350 customers from across
the globe and our inaugural ‘Global Better Planet
Packaging Day’ in November 2019. This year, we
launched the ‘BPP starts with ME’ internal campaign
to ensure that, as a Group, we are working hard
towards removing plastics in our daily lives, both
at home and at work. On 21 September 2019,
over 8,000 employees from Smurfit Kappa
came together to take part in World
Cleanup Day and clean designated
areas in 28 countries across Europe
and the Americas.

14



Overview

Replacing Single-Use
Plastics in Beverage Packs
Smurfit Kappa has launched a portfolio
of sustainable packaging solutions for
bundling canned and bottled beverages.

Strategic Report

Governance

Supplementary Information

Implement
and Support

GreenClip, TopClip and Nor-Grip are three
new innovative corrugated products which
eliminate the need for single-use plastic and
are 100% recyclable and biodegradable.

We support customers in the development
of a sustainable packaging strategy, a
go-to-market strategy and implementation
plan for paper-based packaging alternatives
for today's unsustainable packaging solutions.

All three innovative products were
showcased at Smurfit Kappa’s first ever
Better Planet Packaging Day.

We analyse proposed solutions
for recyclability, design for recycling
and biodegradability.

Recyclable and biodegradable

Successful Packaging
Collaboration

100%

Financial Statements

Smurfit Kappa has worked with a wellknown Belgian specialty brewer, Kasteel
Brouwerij Vanhonsebrouck, to produce,
implement and market a sustainable outer
carton concept that eliminated the need for
shrink film. The company invested in a fully
circular canning line which includes a new
innovative, branded and sustainable outer
pack that is easy to recycle.

Paper-based solution

100%

Global Better Planet
Packaging Day
On 21 November 2019, we hosted
our inaugural Global Better Planet
Packaging Day. This event saw us welcome
over 650 brand owners and retailers to our
Global Experience Centre network in 27
locations, across three continents. The day
involved a combination of educational and
inspirational lectures followed by a series
of interactive workshops aimed at helping
our customers to design packaging that
helps rather than harms our planet.

Customers welcomed on Global BPP day

+650
Smurfit
S
f Kappa Annual Report 2019

15

Chair's Statement

2019
in Review
In this, my first statement as Chair,
I am delighted to report that 2019
represents another year of strong
delivery and performance for SKG.

Irial Finan
Chair

(%,7'$ZDVb|PLOOLRQDLQFUHDVHRQ
with earnings growth and improved margins in both
Europe and the Americas. These results reflect
the benefits of our customer-focused innovation,
our sustainability credentials, the resilience of the
Group's integrated model, the returns from our
strategic capital spend programme and the
contribution from acquisitions. The 2019 outcome
also reflects our performance culture, which has, at
its core, an unrelenting customer focus.
Our employees, and the commitment shown by
them, is fundamental to the delivery of what is
another year of record EBITDA for the Group.
On behalf of the Board, I would like thank the
entire Smurfit Kappa team for their continued
professionalism, focus and dedication.

Medium-Term Plan
In February 2018, the Group set out a four-year
Medium-Term Plan (‘MTP’). The plan set out
ambitious targets to strengthen our position
as a leader in the global paper-based packaging
industry; and to continue to drive superior returns
for shareholders. The plan identified a range of
investments to accelerate our ability to serve
the growing needs of our customers and their
demand for what we have described as ‘Better
Planet Packaging’. It ensures we retain a
world-class containerboard and corrugated
system; maintain our leadership in sustainable
packaging; and continue our relentless drive for
customer-focused innovation. Our plan, however,
remains flexible and agile and we maintain a
disciplined, returns-focused approach to capital

allocation. The progress we have made during
2019 is set out in the Group CEO’s Statement on
pages 20 to 23 of this report.

Board Changes
The Smurfit Kappa Board recognises the
importance of Board refreshment and therefore
reviews its composition and skillset on an annual
basis. In 2019, we appointed Dr Lourdes Melgar to
the Board as an independent, non-executive
Director with effect from 1 January 2020.
Lourdes, a Mexican citizen, is recognised for her
expertise in the areas of energy, sustainability
and public policy. In her career she has held a
number of roles at the top levels of government,
in academia and in the private sector.

Further information in relation to Alternative Performance Measures ('APMs') referenced in this statement is included in the Supplementary Information section on pages 162 to 165.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

2019 represents another
year of strong delivery
and performance for
Smurfit Kappa.”

Her extensive career in energy, sustainability and
business in Latin America will add valuable insight
to the Board and we look forward to working with
her. Lourdes has joined the Audit and
Sustainability Committees.
There were also a number of retirements from
the Board during 2019; most notably Liam
O’Mahony. Liam joined the Group Board in 2007
and served as Chair from December 2008. He led
the Group during a period of significant
transformation and left us in an extremely healthy
position and well positioned for further growth in
the years ahead. On behalf of the entire Board and
all of our employees, we extend our sincere
appreciation to Liam for his contribution and
stewardship of the Group.
In addition to Liam’s retirement, Roberto Newell,
who had served on the Board since 2010, and
Christel Bories, who had served on the Board
since 2012, retired from the Board in December
2019. We are grateful to Roberto and Christel for
their respective contributions to Smurfit Kappa
over the last number of years. Roberto served as
our Senior Independent Director since 2017 and
we are pleased that Gonzalo Restrepo has
succeeded him in that role.

Governance and Oversight
As we move into 2020, we continue to refine
our governance framework to reflect the
requirements of the 2018 iteration of the
Corporate Governance Code. As a Board,
we welcome the Financial Reporting
Council’s introduction of the 2018 Code,
with a more principle based approach to
corporate governance.
A number of the governance revisions to the
2018 Code were made in areas where we as a
Group already show leadership. The Code places
an emphasis on the Company’s relationship with
its shareholders and other stakeholders and
highlights the importance of establishing a
corporate culture aligned with the Company’s
purpose and business strategy, and which
promotes integrity and values diversity. It also

reiterates the importance of employee
engagement and development to ensure that
the employee voice is consistently heard and
considered at Board-level.
During the year, we formed a Sustainability
Committee, the purpose of which is to provide
direction and oversight of the sustainability
strategy for the benefit of all our stakeholders.
Its remit encompasses Planet, People and
Business, further details of which are set
out on page 80 of this report and also later
in this statement.
The Board, following the introduction of the
2018 Code, will continue to enhance the
integration of the Code into our corporate
governance framework.

Employee Engagement and Development
Employee engagement has always been a key
consideration of the Board and one which has
continuously developed over time. Now, in line
with the requirements of the 2018 Code, our
newly formed Sustainability Committee, under
its People agenda, is responsible for the direction
and oversight of workforce engagement on
behalf of the Board.
Over the last number of years, employee
engagement surveys have been conducted
across the 46,000 employees in the Group. During
2019, the outcome of a pulse survey conducted
showed an increase in employee engagement.
In 2020, another engagement survey of all
employees will be conducted. As a Board, we
are looking for continuous improvement in
our employee engagement scores.
In addition, the Board has always had direct
interaction with employees through a
comprehensive programme of plant visits.
During 2019, I visited over 20 of our operations
across Europe and the Americas, following which
I reported back to the Board on my experiences,
including my interactions with the workforce.
A number of our other Directors also visited

operations across the Group during 2019. In
addition, the Board continued its ongoing
programme of making at least one trip annually
as a group to the operations. This year our trip was
to Germany where we visited our recycled
containerboard mill in Zülpich and our corrugated
plant in Brühl. These visits are considered very
valuable in giving members of the Board a deeper
first-hand understanding of the strategic
positioning of our operations as well as the
strength of our teams and the benefits to the
local communities.
We recognise that a central element of our
continued success is the quality of our people.
To ensure SKG attracts, retains and develops
the best talent, we partner with leading global
business schools such as INSEAD to develop
global training programmes across our business.
In the last three years alone, over 1,400 employees
have participated in these programmes across
the Group with many thousands more on local
educational training programmes. Further details
on these programmes are outlined on page 50
of this report.

Stakeholder Engagement
A key focus of the 2018 Code is on stakeholder
engagement. This is an area where we have
strong foundations on which to build. In addition
to enhanced employee engagement as set out
above, we continue to work collaboratively with
our customers and suppliers. These close
relationships with customers, suppliers and
development partners aid product innovation as
well as promoting our sustainability agenda. Our
engagement with the communities in which
we operate is a core management priority and
is aided by the Smurfit Kappa Foundation, as
detailed further on page 39.
In the period ahead, a key focus for me as Chair
will be to spend a lot of time listening to and
understanding our key stakeholders: customers,
colleagues, suppliers, shareholders and the
communities in the countries in which we operate.



17

Chair's Statement continued

Our Shareholders

Dividends

Following my appointment as Chair, I sought to
meet as many of our major shareholders as
possible. I am grateful for the substantial number
of shareholders who took the time to engage with
me, to foster mutual understanding of what is
important to the Group and our investors. The
engagement provided valuable insights which I
have relayed to the Board. Under my stewardship,
consistent interaction with our shareholders will
remain a priority as part of our commitment to
the highest standards of corporate governance.

Dividends remain a central component of our
commitment to deliver value for our shareholders.
The Board is proposing a 12% increase in the final
dividend to 80.9 cent per share. In combination
with the interim dividend of 27.9 cent per share, this
will deliver a total dividend of 108.8 cent per share;
an 11% increase on 2018. This is our eighth year
of consecutive increases in dividends and a
statement of our confidence in the strength
and capability of the business.

Outlook
Sustainability
Sustainability is a central part of SKG’s business
strategy. During the course of 2019, the focus on
climate change, plastics and sustainability has
intensified. Smurfit Kappa has a central role to
play in working with customers to reduce waste,
increase the use of recyclable and biodegradable
materials through the supply chain and to provide
innovative, sustainable packaging solutions for
our customers. This will be led by our ‘Better
Planet Packaging’ initiative which provides our
customers with sustainable solutions today,
ready for the challenges of tomorrow.
We welcome and embrace the challenge to
make our products, operations, raw materials
and supply chain more environmentally
sustainable, more circular and more socially
robust year-on-year and in doing so to make a
contribution to tackling climate change both for
SKG, our customers and their consumers.
In May 2019, the Group launched its twelfth
annual Sustainable Development Report. An
ambitious new set of sustainability goals was
unveiled having met or exceeded previous targets
ahead of their 2020 deadline. Smurfit Kappa
continues to have a long-term commitment to
making real and measurable progress against
our three pillars: minimising our environmental
impact, respecting people and making an
impactful business. Further details are set out
in the Sustainability report on pages 40 to 45.
As well as the challenges and business
opportunities it provides, we see sustainability
as a key platform for differentiation in
a competitive market and I am pleased to
acknowledge third party recognition of our
work in this area, details of which are set out
in our Group CEO's Statement.
As previously mentioned, in order to provide
direction and oversight of the Group’s
sustainability strategy, the Board has established
a Sustainability Committee of the Board, details
of which are set out on page 80.

18



We continue to implement our strategy, creating
a sustainable business that builds on our strengths
and will generate value for all stakeholders over the
long term. The delivery of another year of record
financial performance in 2019 is the outcome of
the hard work and dedication of our 46,000
HPSOR\HHVDFURVV|FRXQWULHV
From a demand perspective, 2020 has started
well and, while macro and economic risks remain,
we expect another year of strong free cash
flow and consistent progress against our
strategic objectives.

Irial Finan
Chair

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

We welcome and embrace the challenge
to make our products, operations,
raw materials and supply chain more
environmentally sustainable, more
circular and more socially robust.”



19

Group Chief Executive Officer's Statement

Delivering on
our Vision
I am pleased to report that 2019 has
delivered another record EBITDA result.
$Wb|PLOOLRQRXUIXOO\HDU(%,7'$
was 7% higher than the previous record
reported in 2018 with an increased
EBITDA margin of 18.2%.

Tony Smurfit
Group Chief
Executive Officer

2019 Overview
5HYHQXHIRUWKHIXOO\HDUZDVb|PLOOLRQ
up over 1% on 2018 reflecting the benefits of
resilient box pricing, volume growth and the net
contribution from acquisitions and disposals.
2XU(%,7'$RIb|PLOOLRQZDVb|PLOOLRQ
DKHDGRI,QDGGLWLRQWRWKHb|PLOOLRQ
positive impact of IFRS 16, Leases, both Europe
and the Americas continued to perform well. On
an underlying basis, Group EBITDA was down 1%
on 2018, with Europe down 3%, offset in part by
the Americas, up 7%.

The Group reported a strong free cash flow of
b|PLOOLRQLQFRPSDUHGWRb|PLOOLRQLQ
2018. This result primarily reflected our EBITDA
growth and working capital inflow and was partly
offset by higher outflows for capital expenditure
and other items.
The Group's 2019 performance represents
another milestone towards the realisation of
our vision to be a globally admired company
that dynamically delivers secure and superior
returns for all stakeholders. Across 35 countries,
we continue to create market leading innovative
solutions for over 65,000 customers, delivering
sustainable and optimised paper-based packaging.

Further information in relation to Alternative Performance Measures ('APMs') referenced in this Statement is included in the Supplementary Information section on pages 162 to 165.

20



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

2019 is another milestone towards the
realisation of our vision to be a globally
admired company that dynamically
delivers secure and superior returns
for all stakeholders.”

Europe
The Europe segment is the larger of the Group’s
two segments, accounting for 77% of revenue
and 81% of EBITDA in 2019. Our Europe segment
is highly integrated. It includes a system of mills
and plants that primarily produce a full line of
containerboard that is converted into corrugated
containers. In addition, the Europe segment
also produces other types of paper, such as
solidboard, sack kraft paper and graphic paper;
and other paper-based packaging, such as
solidboard packaging and folding cartons; and
bag-in-box packaging.
The Group currently has facilities in 23 countries
in Europe. These comprise 22 mills (of which 17
produce containerboard), 193 converting plants
(the majority of which produce corrugated
packaging products) and 29 other production
facilities carrying out related activities. The mills
are supported by 18 recovered fibre collection
facilities and two wood procurement operations.
The Group’s European containerboard mill
system consists of three kraftliner mills; in
Sweden, France and Austria, which between them
SURGXFHGDSSUR[LPDWHO\|PLOOLRQWRQQHVRI
brown and white kraftliner in 2019, and 14 recycled
containerboard mills. In 2019, our 14 recycled
FRQWDLQHUERDUGPLOOVSURGXFHGRYHU|PLOOLRQ
tonnes of paper.
We also have two virgin fibre based mills in Spain,
which in 2019 produced approximately 140,000
tonnes of sack kraft paper and approximately
80,000 tonnes of machine glazed (‘MG’) paper.
In 2019, our three mills in Germany together
produced approximately 340,000 tonnes of
solidboard and boxboard and approximately
70,000 tonnes of graphicboard. The Parenco
containerboard mill, in the Netherlands, in
addition produced 240,000 tonnes of graphic
paper in the year.
On the conversion side, the operations comprise
50 sheet plants and 110 corrugated plants which
produced approximately 9.0 billion square metres

|PLOOLRQWRQQHV LQ,QDGGLWLRQZHKDYH
plants which produce high-end differentiated
packaging products such as litho-laminated
corrugated products, display units and
solidboard-based packaging, all of which extend
the range of packaging solutions in our portfolio.
Our converting operations are supported by a
number of other small plants producing pre-print
packaging, fulfilment activities and other
packaging related products. Our Europeanmanaged bag-in-box operations comprise eight
plants located in Europe, Argentina, Canada,
Mexico and the United States.
Our European business continued to perform
strongly in 2019, delivering an EBITDA margin of
19.0%, up from 18.3% in 2018, on revenues of
b|PLOOLRQ FRPSDUHGWRb|PLOOLRQLQ
 ,Q(XURSH(%,7'$LQFUHDVHGE\b|PLOOLRQ
RUWRb|PLOOLRQ&RUUXJDWHGGHPDQG
growth was approximately 4%, or approximately
1.5% for the year on an organic basis. On an
operational basis, demand growth was
approximately 2% for the year. The Group
continued to advance its Medium-Term Plan
('MTP') in 2019, with the implementation of a
number of significant projects across our
corrugated and paper divisions. During 2020, the
Group will complete a number of major European
paper projects and will continue to invest in its
market-facing corrugated division to capitalise
on the many opportunities and secular trends.
European pricing for testliner and kraftliner at
December 2019 reduced by €145 per tonne and
€185 per tonne respectively from the high of
October 2018. In light of strong demand for
recycled containerboard and tighter inventories,
we have informed our customers of a €60 per tonne
price increase effective for all new orders.
In 2019, the Group completed acquisitions in
Bulgaria and Serbia and our entry into these
markets represents a further step in the Group’s
South Eastern European strategy. The integration
of these assets is progressing well, complementing
the Group’s broader integrated system.

In August 2019, the Italian Competition Authority
(‘ICA’) notified approximately 50 companies, of
which Smurfit Kappa Italia S.p.A. was one, that an
investigation had found the companies to have
engaged in anti-competitive practices, in relation
WRZKLFKWKH,&$OHYLHGDILQHRIb|PLOOLRQRQ
Smurfit Kappa Italia S.p.A. We are very
disappointed with the decision of the ICA on many
levels and are vigorously appealing this decision
on both administrative and substantive grounds.
This process may take a number of years. SKG is
committed to the highest standards of conduct in
its business and does not tolerate any actions
that are inconsistent with its values.
Our Americas segment is also highly integrated.
Like our Europe segment, it includes a system of
mills and plants that primarily produce a full line of
containerboard that is converted into corrugated
containers. The Americas segment, which
includes a number of Latin American countries
and the United States, also comprises forestry;
other types of paper, such as boxboard, sack paper
and graphic paper; and paper-based packaging,
such as folding cartons and paper sacks.
The Group’s operations in the Americas consist
of 12 paper mills in five countries (Argentina,
Brazil, Colombia, Mexico and the United States)
producing containerboard, boxboard, sack paper
and graphic paper with a combined production of


21

Group Chief Executive Officer's Statement continued

EBITDA the Americas (million)

by 22 recovered fibre facilities in seven countries
and forestry operations in Colombia. We have 40
corrugated plants in nine countries with 2019

We also have 12 other converting plants in six
countries producing mainly paper sacks or
folding cartons, a preprint facility and three foam
packaging plants in Mexico and one flexible
packaging plant in El Salvador.
The Group’s Americas business continues to
provide geographic diversification and growth
opportunities. The Americas region continued to
perform well in 2019 with our three main countries
of Colombia, Mexico and the United States having
strong financial performances; with demand in
Colombia particularly strong.
Our performance in the Americas resulted in an
EBITDA increase of 13% versus 2018, with
UHSRUWHG(%,7'$RIb|PLOOLRQ2XU(%,7'$
margin in the Americas continues to improve, up
from 15.7% in 2018 to 17.5% in 2019 on revenues
RIb|PLOOLRQ FRPSDUHGWRb|PLOOLRQLQ
2018). Colombia, Mexico and the United States
delivered approximately 84% of the region’s
earnings with strong year-on-year performances
in all three countries. The increasing focus on
sustainable packaging solutions, together with
the Group’s unique pan-American offering, have
continued to help strengthen relationships and
drive growth in the region.
In Colombia, volumes were up 9% for the year
driven by continued high growth in the FMCG
sector and flower markets. In June, the Group
announced the successful tender offer to acquire
the non-controlling interest in Cartón de
Colombia S.A. The consideration paid amounted
company, bringing our shareholding to 97.7%.
In Mexico, EBITDA margin continued to improve
versus 2018 supported by our strong and
developing market offering and position. In the
United States, EBITDA and EBITDA margin
continued to improve year-on-year due to a
strong operational performance in our mill
system and lower recovered fibre costs. Similar
to Europe, the Group advanced its MTP during
the year, with the successful completion of a
number of projects in Colombia, Mexico and the
United States. The region continues to advance
some significant and exciting projects for 2020
and beyond.
As discussed in the 2018 Annual Report,
following the deconsolidation of our Venezuelan
operations in August 2018, the Group initiated
international arbitration proceedings to protect
the interests of its stakeholders and seek
compensation from the government of
Venezuela. This continues to progress.

Capital Structure
December 2019, resulting in a net debt to
EBITDA ratio of 2.1 times compared to 2.0 times
at the end of December 2018. Our net debt to
EBITDA at December 2019 was negatively
impacted by the adoption of IFRS 16, increasing
RXUQHWGHEWE\b|PLOOLRQ7KH*URXSpVEDODQFH
sheet continues to provide considerable financial
strategic flexibility, subject to the stated leverage
range of 1.75x to 2.5x through the cycle and SKG’s
Ba1/BB+/BB+ credit rating.
In 2019 we extended our debt maturity profile and
decreased our average interest rate as a result of
a number of actions which we undertook during
the year. Consequently, at December 2019,
the Group’s average interest rate was 3.18%
compared to 3.63% at December 2018. The
Group’s diversified funding base and long dated
maturity profile of 5.5 years provide a stable
funding outlook.

In looking at our more consumer-oriented
corrugated division, progress has been made
across a number of investments, installing a
variety of machinery to cater for high growth
trends requiring speciality gluing machines for
eCommerce, casemakers with ‘shelf-ready
packaging’ functionality or high quality print
machines to create greater impact for our
customers’ products at the point of purchase.
Having achieved many of our objectives ahead of
plan, and in light of a number of new opportunities
that we have, supported by mega-trends, a new
iteration of our strategic investments plan is under
way and we will update the market in due course.

Commercial Offering and Innovation
What defines us in Smurfit Kappa is our customer
focus. We have the scale, the experience, the
innovation and the desire to help support our
customers’ needs in a dynamic and sustainable way.
We have the right people and the best applications
and tools to help our customers to succeed in their
markets. We do this by reducing cost, driving
innovation and differentiation and mitigating risk for
our customer; all in a sustainable manner. We have
developed 27 innovation centres across our
operations in Europe and the Americas to help this
process. Equally, we continue to invest in, and
acquire, high quality assets in existing or adjacent
markets which are highly complementary with our
existing businesses.
As consumer purchasing habits evolve, the
importance of how our customers’ product looks
on-shelf, or how it arrives when ordered online, is a
key merchandising consideration in today’s world.
SKG is uniquely positioned to capitalise on this
trend with its unrivalled market offering that
enables our customers to increase sales, reduce
costs and reduce risk. Customers benefit from
SKG’s innovative business applications, such as
ShelfSmart, SupplySmart and eSmart, along with
our geographic coverage, Global Experience
Centre network and depth of data to provide
innovative and sustainable packaging solutions.

Medium-Term Plan
The Group has demonstrated substantial
progress on our MTP since its announcement in
capital projects have been approved or spent
under the MTP covering almost 100 projects. In
Europe, the main paper projects have either been
started or completed in most instances. The
most significant achievement was the acquisition
of Reparenco in 2018, delivering in year one, what
would otherwise have been a multi-year capital
project through to 2021. This again highlights the
flexibility of the plan.

The Group continues to progress its industry
leading ‘Better Planet Packaging’ initiative, which
seeks to reduce packaging waste by creating
more sustainable packaging solutions through
design, innovation and recycling capabilities. Our
engagement with customers, both current and
prospective, on this initiative was best illustrated
with two flagship events, our biennial Innovation
Event in May hosted over 350 customers from
across the globe and our inaugural ‘Global Better
Planet Packaging Day’ on 21 November, which
involved over 650 brand owners and retailers
across our global operations, with our Global
Experience Centre network providing a unique

Overview

platform for the day. These innovation events
were an industry-leading response to our
customers’ request for help in moving away
from less sustainable packaging materials.
The commercial pipeline in Smurfit Kappa has
grown considerably on the back of this and we
expect it to be a driver of incremental demand.
The Group's unrivalled market offering is
supported by our ongoing capital expenditure
programmes and by the leading sustainable
business practices across all our operations.
In 2019, the Group’s leadership in innovation
was recognised with 63 national or international
awards for packaging innovation, sustainability,
design and print. The Group’s operations received
awards in Argentina, Austria, Belgium, Brazil,
Bulgaria, Colombia, the Czech Republic, France,
Ireland, Mexico, the Netherlands, Russia, Sweden
and the UK.
As ever, I would like to thank all our customers
worldwide for the continuing confidence and trust
they place in us and we look forward to continuing
to work with them to enhance their success in
their marketplaces.

Sustainability
In May 2019, the Group launched its twelfth
annual Sustainable Development Report.
An ambitious new set of sustainability goals
was unveiled after having met or exceeded
previous targets ahead of their 2020 deadline.
Smurfit Kappa continues to have a long-term
commitment to making real and measurable
progress against its strategic priorities within
all areas of sustainability: Planet, People
and Business.
The report is evidence of our industry-leading
transparency and demonstrates how Smurfit
Kappa is making progress in supporting the 2030
United Nations Sustainable Development Goals.
For Smurfit Kappa, sustainability is not only
about mitigating climate change and reducing
inefficiency. For packaging to be truly sustainable,
it must be produced and designed in a sustainable
fashion and be biodegradable within a relatively
short time. Paper-based packaging is uniquely
positioned to do this.
Looking beyond our own operations, the Group
continues to lead in innovative, sustainable
packaging solutions for our customers, led by our
‘Better Planet Packaging’ initiative, which provides
our customers with sustainable solutions today,
ready for the challenges of tomorrow.

Strategic Report

Governance

The Group is actively committed to social and
environmental best practices. We are proud to
support and develop the many Corporate Social
Responsibility initiatives in the countries in which
we operate. In association with our related
foundations, our social investments focus on the
education of disadvantaged children and young
people. Such initiatives are consistent with our
long-term commitment to support and develop
programmes that benefit our communities, and
form an integral part of our corporate values.
The Group is listed on the FTSE4Good, Euronext
Vigeo Europe 120, STOXX Global ESG Leaders
and Ethibel’s sustainable investment register.
The Group was also included in the newly formed
Solactive ISS ESG Beyond Plastic Waste Index,
which recognises companies active in the
reduction of plastic pollution. SKG also performs
strongly across a variety of third party
certification bodies, including MSCI, CDP,
Sustainalytics and EcoVadis.

Our People
A key competitive advantage and point of
differentiation is our people, both as individuals
and as members of cohesive teams. Our
continued focus is on recruiting, developing,
motivating and retaining skilled employees, who
are dedicated to working together to support and
service our diverse customer base.
Our commitment to our people is reflected in our
people strategy, as we strive towards our ambition
of being recognised as a globally admired
company, a great place to work for all our
employees and a company of choice for top talent.
We want our colleagues to come to work every day
and not only be themselves, but be the best they
can possibly be. We put our employees at the core
of our business, because we know that our
success is driven by this highly motivated team.

Financial Statements

Supplementary Information

The safety of every member of our team is the
number one priority for the Group. We continue to
ensure that our approach to safety remains
embedded into our ways of working.
Having moved to using the Total Recordable Injury
Rate ('TRIR') metric in 2018, we again achieved an
improvement in our Health and Safety metrics in
2019. Overall, we have seen a year-on-year
reduction in the TRIR of 17% during 2019. We also
further developed our Health and Safety campaign
during 2019, now titled 'Safety for Life
Conversations'. The aim of this new element of the
campaign is to ensure that safety conversations
become part of our employees’ everyday lives both
at work and at home.
I would like to acknowledge the effort and
commitment of all our employees in the 35
countries in which we operate, for their significant
contribution to the results achieved in 2019. We
look forward to the challenges and opportunities
of 2020, to progressing on our medium-term plan
and to continuing our efforts to make SKG the
safest and most customer-focused company in
which to work in our industry.

Tony Smurfit
Group Chief Executive Officer

What defines us in Smurfit Kappa
is our customer focus. We have
the scale, the experience, the
innovation and the desire to help
support our customers’ needs in
a dynamic and sustainable way.”


Strategy

Delivering an increasingly
strong return on capital
Our vision is to be a globally admired business, dynamically delivering
secure and superior returns for all stakeholders.
Strategic Objective
The Group’s objective is to develop long-term
customer relationships by providing customers
with differentiated sustainable packaging
solutions that enhance the customers’ prospects
of success in their end markets.

Strategic Priorities

Market
position

Expand our market
positions in Europe and the
Americas through selective
focused growth.

Partner
of choice

Become the supplier/partner
of choice.

Operational
excellence

Enhance our operational
excellence through the
continuous upgrade of
our customer offering.

Investment
in people

Recruit, retain, develop and
motivate the best people.

Capital
allocation

Maintain a disciplined
approach to capital allocation
and maintain the focus on
cash generation.

Our Ambition is to Maintain our
Premier Position by Delivering:

Superior customer satisfaction;
The most sustainable, biodegradable solution
for our customers and their end customers;
Cost and operating efficiencies;
Proactive environmental awareness; and
Continuous improvement in the areas of
health and safety and sustainability.

Outlook
SKG remains well positioned to build upon our
strong performance in 2019. Going forward,
we will continue to implement our strategy,
creating a sustainable business that builds
on our strengths and will generate value for
all stakeholders over the long-term. We will
continue to lead in innovative, sustainable
packaging solutions for our customers, led by
our ‘Better Planet Packaging’ initiative which
provides our customers with sustainable
solutions today, ready for the challenges of
tomorrow. We remain relentlessly focused on
employee training and development in order to
help our people to reach their full potential within
the organisation. Our strategy remains flexible
and agile and we maintain a disciplined, returns
focused approach to capital allocation.

24



Description

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

The Strategic Priorities are linked to Key
Performance Indicators on pages
26 to 29 and to Risks on pages 30 to 33.

Objectives

Progress in the Year

Organic growth from increased market share through consolidating, and where appropriate,
extending our leadership position; and
Pursuit of accretive acquisitions in higher growth markets such as Eastern Europe
and Latin America.

Set out in the Group Chief Executive Officer’s
Statement on pages 20 to 23.

Deepening our understanding of our customers’ world and developing proactive initiatives to
improve their offering;
Constantly innovating our products, service, quality and delivery in order to develop and/or
maintain preferred supplier status; and
Pursuing superior performance measured against clearly defined metrics in all aspects of our
business and at all levels in our organisation.

Set out in the Innovation section on pages 8 to 11.

Improving the output from our high quality asset base through judicious capital investment,
continuous improvement programmes, transfer of best practice, industrial engineering and
other progressive initiatives;
Increasing the proportion of differentiated ideas, sustainability initiatives, products and services
on offer to our customers through the use of the Group’s development and technology centres,
our sustainability credentials and our innovation tools; and
Ensuring that the driving force behind all our operations is one of customer satisfaction and
excellence in the marketplace.

Set out in the Group Chief Executive Officer’s
Statement on pages 20 to 23.

Set out in the People section on pages 46 to 53.

High quality graduate and other recruitment initiatives, progressive goal setting, and performance
appraisal programmes;
Focused job training and coaching;
Cross-divisional in-house development programmes; and
Selective executive development programmes.

Preserving our credit rating and our position as a strong crossover credit;
Capital spending to optimise our asset base and enhance operating efficiency;
Acquiring strategically attractive and accretive assets; and
Progressive dividend supported by strong free cash flow.

Set out in the Finance Review on pages 34 to 37.
Key Performance Indicators

Measuring
our progress
The Group has a range of Key Performance Indicators (‘KPIs’) which
we use to monitor our performance and measure progress.
Financial KPIs


Definition

Performance

EBITDA is the key performance measure of the
Group’s operating segments. It is an appropriate
and useful measure used to compare recurring
financial performance between periods.

(%,7'$IRUZDVb|PLOOLRQb|PLOOLRQ
ahead of 2018. This reflects the benefits of our
customer-focused innovation, the resilience of
the Group’s integrated model, the benefits of our
capital spend programme, the contribution from
acquisitions, volume growth, lower recovered
fibre costs and the impact of IFRS 16. In addition
WRWKHb|PLOOLRQSRVLWLYHLPSDFWRI,)56
both Europe and the Americas continued to
perform well.

Definition

Performance

EBITDA margin is a measure of profitability by
taking our EBITDA divided by revenue.

EBITDA margin was 18.2% in 2019 compared to
17.3% in 2018 with improvement in both Europe
and the Americas. In Europe, our overall margin
strengthened from 18.3% in 2018 to 19.0% in
2019. In the Americas, our margin improved from
15.7% in 2018 to 17.5% in 2019. Colombia, Mexico
and the US delivered approximately 84% of the
region’s earnings with strong year-on-year
performances in all three countries.

Definition

Performance

Net debt comprises borrowings net of cash
and cash equivalents and restricted cash. We
believe that this measure highlights the overall
movement resulting from our operating and
financial performance.

1HWGHEWDPRXQWHGWRb|PLOOLRQDW'HFHPEHU
FRPSDUHGWRb|PLOOLRQDW'HFHPEHU
7KH\HDURQ\HDULQFUHDVHRIb|PLOOLRQ
UHIOHFWHGIUHHFDVKIORZRIb|PLOOLRQIRUWKH
year, more than offset by net investment and
ILQDQFLQJRXWIORZVRIb|PLOOLRQWKHXSOLIWRI
b|PLOOLRQWRQHWGHEWIRUOHDVLQJ WKH,)56
transition), the amortisation of deferred debt issue
costs, net negative translation adjustments and
net debt acquired.

Strategic Priorities

Further information in relation to the definition and calculation of these Alternative Performance Measures ('APMs') is included in the Supplementary Information section on pages 162 to 165.



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Key to Strategic Priorities

Market
Position

Partner
of Choice

Operational
Excellence

Investment
in People

Capital
Allocation

Financial KPIs continued

Net Debt*
to EBITDA (times)

2.1x
2018: 2.0x

Definition

Performance

Leverage (ratio of net debt to EBITDA)
is an important measure of our overall
financial position.

:LWKQHWGHEWRIb|PLOOLRQDQG(%,7'$RI
b|PLOOLRQRXUOHYHUDJHUDWLRZDVWLPHV
at December 2019 compared to 2.0 times at
December 2018, well within our target leverage
range of 1.75x to 2.5x. The increase in our
leverage was driven primarily by the increase
in net debt which was impacted by IFRS 16 and
the Group’s acquisition activity, partly offset
by the increase in EBITDA. Excluding the effect
of IFRS 16 on net debt and EBITDA, leverage
would be 2.0 times at December 2019.

Definition

Performance

FCF is the result of the cash inflows and outflows
from our operating activities, and is before those
arising from acquisition and disposal activities.
We use FCF to assess and understand the total
operating performance of the business and to
identify underlying trends.

)&)RIb|PLOOLRQLQZDVb|PLOOLRQKLJKHU
WKDQWKHb|PLOOLRQUHSRUWHGLQ(%,7'$
JURZWKRIb|PLOOLRQDZRUNLQJFDSLWDOLQIORZ
and the absence in 2019 of the exceptional
RXWIORZRIb|PLOOLRQZHUHSDUWO\RIIVHWE\KLJKHU
outflows for capital expenditure and other items.

Strategic Priorities

Free Cash Flow (‘FCF’)*
(million)

€547
2018: €494

Link to Remuneration
Strategic Priorities

Return on*
Capital Employed
(‘ROCE’) (%)

17.0
2018: 19.3

See Remuneration Report for Annual Bonus,
Deferred Annual Bonus Plan (’DABP’) and
Performance Share Plan (‘PSP’) metrics,
pages 65 to 77.

Definition

Performance

ROCE is an effective measure of ensuring that we
are generating profit from the capital employed.

At 17.0% for 2019 our ROCE was in line with our
medium-term target of 17%. With a lower level of
operating profit combined with a higher level of
average capital employed, our ROCE decreased
from 19.3% at December 2018.

Link to Remuneration
See Remuneration Report for Annual Bonus,
DABP and PSP metrics, pages 65 to 77.

Strategic Priorities



27

Key Performance Indicators continued

Financial KPIs continued

Earnings per
Share (‘EPS’) (cent)
Pre-Exceptional Basic EPS*

Definition

Performance

EPS serves as an effective indicator of a
company’s profitability and, in conjunction
with other metrics such as ROCE, is a measure
of a company’s financial strength. The calculation
of EPS is shown in Note 10 to the Consolidated
Financial Statements.


Definition

Performance

A safe and healthy workplace is a fundamental
right for every person at Smurfit Kappa, and is
a business imperative for the Group. We are
committed to maintaining a productive and safe
workplace in every part of our Company by
minimising the risk of accidents, injury and
exposure to health hazards for every employee
and all sub-contractors.

We have committed to a 5% reduction in our Total
Recordable Injury Rate (‘TRIR’). The target was
set in 2018, when we reached a base line of 1.01.
Our result for the year 2019 was 0.84, a reduction
of 17% on 2018.

Link to Remuneration
See Remuneration Report for Annual Bonus
metrics, pages 65 to 77.

Further information in relation to the definition and calculation of these Alternative Performance Measures ('APMs') is included in the Supplementary Information section on pages 162 to 165.


Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Key to Strategic Priorities

Market
Position

Partner
of Choice

Operational
Excellence

Investment
in People

Capital
Allocation

Non-Financial KPIs continued

CO2 Emissions
Reduction (%)
Definition

Performance

Although our industry is energy intensive, it is also
one of the most energy efficient and we are
among the most significant users of renewable
energy. Climate change drives change in society,
and in our case it stimulates product design
improvements to lower customer carbon
footprints, encourages production efficiency
and informs how we invest for the long-term.

We have committed to a 40% reduction in scope
1 and 2 fossil fuel based CO2 emissions in our mill
system compared to 2005 levels by 2030 (goal
updated in 2018). In 2019, we reached a reduction
of 32.9% compared to 29% in 2018.

Strategic Priorities

We are reducing the carbon intensity of our
energy mix by reducing the use of fossil fuels
and promoting renewable sources where
economically viable. We are also saving energy
by closing loops in our production process. We
make a significant impact in the value chain
through smart packaging solutions that can
significantly lower customer emissions. We help
them optimise their packaging to avoid product
waste, minimise over-specified packaging and
increase recycling.

Chain of Custody (%)

Definition

Performance

Our industry is a significant user of wood fibre.
It is our basic raw material, and we take
responsibility to ensure its origin is sustainable.
The recyclability of paper fibres is another
important factor in the sustainability of our
products, and we apply a balanced approach
to the use of both virgin and recycled fibres.

We have committed to selling over 90% of our
products as Chain of Custody certified to our
customers. We reached this target level in 2016
and our ambition is to maintain and improve this.
Our result for the full year 2019 was 92.1%.

Strategic Priorities

Independent third-party certification is the most
reliable means to promote sustainable forest
management and combat deforestation. We
manage our forest holdings based on three
sustainable development principles: to promote
economic growth, responsibly use natural
resources and foster social equity wherever our
plantations and forests are located. We have
certified all our plantations and forest holdings
to FSC® and/or PEFC™ where practical.
To extend our approach to our customers,
we have committed to selling our packaging solutions
as Chain of Custody certified. This transparent
approach makes our and our customers’
commitment visible to the end consumer.

Risk Report

Risk identification,
assessment and management
The Board determines the nature and extent of the principal risks it is willing to accept
to achieve its strategic objectives. Risks are identified and evaluated and appropriate
risk management strategies are implemented at each level in the organisation.
Risk Management and Internal Control
The Board has overall responsibility for the
Group’s system of risk management and internal
control and for monitoring and reviewing its
effectiveness, in order to safeguard shareholders’
investments and the Group’s assets. Such a
system is designed to manage rather than
eliminate the risk of failure to achieve business
objectives and can therefore only provide
reasonable and not absolute assurance against
material misstatement or loss. The Board carries
out a review of the effectiveness of the Group’s
risk management and internal control systems
at least annually.
Group executive management is responsible for
implementing strategy and for the continued
development of the Group’s operations within
parameters set down by the Board. Day-to-day
management of the Group’s operations is
devolved to operational management within
clearly defined authority limits and subject to
timely reporting of financial performance.
Management at all levels is responsible for
internal control over the respective operations
that have been delegated to them. As such,
the system of internal control throughout the
Group’s operations ensures that the organisation
is capable of responding quickly to evolving
operational and business risks and that
significant internal control issues, should they
arise, are reported promptly to appropriate
levels of management.
The Board is responsible for determining the
nature and extent of the principal risks it is willing
to accept to achieve its strategic objectives. Risk
assessment and evaluation is an integral part
of the management process throughout the
Group. Risks are identified and evaluated, and
appropriate risk management strategies are
implemented at each level. The key business risks
are identified by the Executive Risk Committee.

30



The Audit Committee and the Board in
conjunction with senior management review
the key business risks faced by the Group and
determine the appropriate course of action to
manage these risks. The Audit Committee is
responsible for reviewing the effectiveness of
the Group’s system of internal control including
risk management on behalf of the Board and
reports to the Board on all significant matters.

Risk Register Process
The Group’s risk register process is based
upon a Group standardised approach to risk
identification, assessment and review with a
clear focus on mitigating factors and assignment
of responsibility to risk owners,
The risk registers incorporate risk profiling against
Group defined risk categories which include;
strategic, operational, environmental, legal,
economic/political/market, technological and
financial risks. Each individual risk identified is
assessed based upon potential impact and
likelihood of occurrence criteria. New or emerging
risks are added to the risk registers as they are
identified and assessed accordingly.
Divisional management is responsible for
reviewing the Country/Cluster risk registers
and updating the Divisional risk registers
accordingly, which are reviewed and approved
by the Divisional risk committees.
The Group risk register is updated to reflect any
significant changes in the Divisional registers or
Group level risks following consultation with the
Group’s subject matter experts. The Executive
Risk Committee reviews and assesses the Group
Risk Register and identifies the principal risks. The
Group Risk Register is then reviewed by the Audit
Committee and the Board. Formal risk reporting
timetables and structures are in place across the
Group and are adhered to by Country/Cluster,
Divisional and Group senior management.

Viability Statement
The Directors have assessed the prospects of the
Group over a three-year period. The Directors
consider this period to be appropriate as the
Group’s strategic business plan is devised and
assessed over a three-year period in line with the
cyclical nature of the business in which the Group
operates. A three-year consolidated financial
model was built using a bottom-up approach
reflecting the Group’s current position and
including annual budgeting, medium-term
planning, and management’s estimates of future
profitability taking into account a number of factors
including the budget and external economic
factors and assumptions as appropriate (including
the OECD expectations on GDP growth and the
Fastmarkets RISI paper packaging forecast). The
model incorporates and considers the important
indicators of performance of the operations of the
Group; EBITDA, EBITDA margin, free cash flow,
net debt, net debt to EBITDA, return on capital
employed and earnings per share.
The Directors have undertaken a robust
assessment of the principal risks facing the
Group, as detailed in this section, which would
threaten the Group’s business model, future
performance, solvency or liquidity. Using the
principal risks identified, stress test scenario
analysis has been applied to the Group’s
consolidated financial model to assess the
effect on the Group’s key indicators of
underlying performance.
Based on the results of this analysis, the Directors
confirm they have a reasonable expectation that
the Group will be able to continue in operation
and meet its liabilities as they fall due over the
three-year period of their assessment.

Overview

Strategic Report

Governance

Going Concern

Emerging Risks

After making enquiries, the Directors have a
reasonable expectation that the Company and
the Group as a whole, have adequate resources
to continue in operational existence for the
foreseeable future. For this reason, they continue
to adopt the going concern basis in preparing the
Consolidated Financial Statements.

In addition to considering current principal
risks we also looked at emerging risk as part
of our overall risk management processes.
Management have identified climate change as
being an emerging risk. Changes in weather
patterns resulting in more regular flooding or
water shortages, or catastrophic events such
as earthquakes could give rise to business
interruptions in our operations and our supply

Financial Statements

Supplementary Information

chain and potentially increase the cost of raw
materials like wood where access to forests is
hampered or forests are made more vulnerable to
pests and diseases due to unseasonable weather.
While this is not yet considered a principal risk we
are now integrating the assessment of climate
related risks into our standard risk reporting
process in order to assess the potential risk to
our strategy and the need for investment to
mitigate against the risk.

Risk Management Framework
The Group’s risk management framework is
embedded within our organisational structure.
Risk management is owned by management at
each reporting level and is evaluated and
reviewed on a continuous basis.

Our risk management framework comprises:
operational management, who have
responsibility for identifying, managing and
mitigating risk within their local operations
on a day-to-day basis; Country/Cluster and
Divisional management who are responsible for

oversight and monitoring; and the Executive
Risk Committee who are responsible for
oversight together with the identification,
management and mitigation of Group level
risks. Group Internal Audit acts as an
independent assurance provider.

Group Risk
Register

Executive Risk
Committee

Group EXCOMM

ÐõòøóÜèñìòõ
Management

Group Internal
Audit Report

Operational
and Divisional
Management

Subject Matter
Experts

External
Advisors

Group
Internal Audit



31

Risk Report continued
Key to Strategic Priorities
Market
Position

Key to Risk Trend
Operational
Excellence

Partner
of Choice

Investment
in People

Capital
Allocation
Increased

Risk Description

Reduced

No Change

Mitigation

Trend
If the current economic climate
were to deteriorate, for example as
a result of geopolitical uncertainty
(including Brexit), trade tensions or
the coronavirus outbreak, it could
result in an increased economic
slowdown which, if sustained over
any significant length of time, could
adversely affect the Group’s financial
position and results of operations.

As a highly integrated player, we are better able to cope with the effects of an economic downturn
than a pure paper or corrugated producer.
The Group supplies 60%–70% of its packaging to FMCG customers whose consumption volumes
remain relatively stable through market downturns.
The Group’s customer base is spread across Europe and the Americas spanning 35 countries across
multiple industries.
The Group could significantly curtail capital expenditure and take additional cost cutting measures
within a relatively short period as we have done in the past.
Stress testing for the viability statement indicates we will continue to have significant headroom on
our covenants even in a sustained downturn.

The cyclical nature of the packaging

industry could result in overcapacity
and consequently threaten the Group’s 
pricing structure.


As a highly integrated player, we are better able to cope with the effects of cyclicality and capacity
additions than a pure paper or corrugated producer.
Our differentiation programmes ensure we are at the forefront of the industry in developing
cost-efficient solutions for our customers through performance packaging, quality management,
supply chain optimisation and strong sustainability credentials. This service offering distinguishes
the Group from pure commodity suppliers, providing a support for more stable pricing.
Our continuous investment programmes in our operations ensure we remain competitive and have
low cost mill systems. In an environment of overcapacity, our well invested, low cost mill system will
enable the Group to continue economic production through a period of lower prices while higher
cost mills will be forced to shut.

If operations at any of the Group’s
•
facilities (in particular its key mills) were
interrupted for any significant length
•
of time, it could adversely affect the
Group’s financial position and results
•
of operations.
•

The Group ensures that all facilities have adequate insurance to mitigate the impact of
significant interruption.
Operational contingency plans are in place for all mills and plants in the event of a shutdown, which
have been demonstrated to work during shorter interruptions in the past.
In Europe, the Group has a network of operations which can facilitate the transfer of significant
volume to other mills in the event of a shutdown. Furthermore, our European Paper Sourcing
operation centrally coordinates all external paper purchases for the European operations.
There is continuous investment in a rigorous programme of preventative maintenance for all key
mills and other plants.

ÛäúÖä÷èõìäïöäñçØ÷ëèõÒñóø÷Ìòö÷ö
Price fluctuations in raw materials and •
energy costs could adversely affect the
Group’s manufacturing costs.
•

•
•
•

The Group maintains a dedicated purchasing function which has responsibility for all input costs and
ongoing cost reduction programmes.
The Group maintains a strong supply arrangement for approximately 75% of its recovered fibre
requirements which provides it with security of supply for its primary raw material while maintaining
an optimum level of flexibility with respect to pricing.
In line with the usual time lag, the Group would expect implemented containerboard price increases
to support corrugated price recovery of increased input cost.
A proactive policy of forward pricing is in place which is designed to minimise where possible material
short-term volatility in energy price risk within approved parameters.
The Group continually invests in a range of cost reduction projects, primarily in the areas of energy
and raw material efficiency that can deliver demonstrable economic returns.

The Group is exposed to currency
exchange rate fluctuations.


The Group ensures that short-term trading exposures are hedged and where practical local
operations are financed as much as possible in local currency.
The Group continually monitors and manages its foreign currency exposures for all countries and
constantly seeks opportunities to reduce these exposures. The Group Treasury Policy sets out
rules and guidance for managing this area.

Overview

Risk Description

Strategic Report

Governance

Financial Statements

Supplementary Information

Mitigation

Trend

The Group may not be able to
•
attract and retain suitably qualified
employees as required for its business. •

Continuous development by our HR department of a People Strategy to attract, engage, train,
motivate and retain our people.
MyVoice surveys are undertaken to measure employee engagement and set future priorities as well
as programmes to increase engagement.
Processes in place to identify and develop our high potential people together with a continuous
focus on leadership training and succession planning.
Development of our existing competitive remuneration packages and review processes.
Reinforcement of our talent recruitment strategy (universities, graduate programmes, etc.), to
attract highly talented people with the potential to become the future leaders of the Group.


Failure to maintain good health and
safety practices may have an adverse
effect on the Group’s business.


Health and Safety is a core consideration in all management reviews. The protection of
the health and safety of the workforce is a continual focus in an industry with a broad profile
of hazards.
Increased focus is given to the strict adoption of good management, employee practices and a
mind-set that complements existing risk mitigation measures. Divisional Health and Safety
managers are in place with responsibility for enforcing good health and safety standards across their
respective regions.
The Group has an established formal practice of investigating accidents and preparing safety
bulletins which are shared across divisions.
Group wide auditing process based on current high risk activities.
Annual safety improvement planning.

Legislation and Regulation – Environmental
The Group is subject to a growing
•
number of environmental laws and
regulations, and the cost of compliance
or the failure to comply with current
•
and future laws and regulations may
negatively affect the Group’s business. •


The Group’s environmental policies ensure each site has a manager who is responsible for
environmental issues including monitoring air, noise and water emissions and ensuring that
the site is running within its permits.
The Group’s environmental management is in contact with appropriate local authorities and
environmental upgrades are made in consultation with them.
All our paper and board mills are operated under an EMS (Environmental Management System)
(ISO 14001).
We continuously invest in our operations, to ensure compliance with environmental legislation.
The Group has an IT reporting system in over 300 sites ensuring environmental data is reported
on a regular basis.
The Group has a centralised co-ordination of all environmental activity providing a key interface to
the EU, supported by a committee of senior executives who meet regularly to review such issues,
and report directly to the Group CEO.
For newly acquired entities robust environmental due diligence is performed.

Legislation and Regulation – Anti-trust
The Group is subject to anti-trust and
similar legislation in the jurisdictions
in which it operates.

Revised Group Competition Law Compliance Policy is in place and communicated to all employees. All
managers and market-facing employees are required to formally confirm adherence to the policy for
the preceding calendar year by signing a Competition Law Compliance Certificate on an annual basis.
Group General Counsel advises and supports employees and management in this area.
Regular communication and promotion of Competition Law Compliance and other similar
legislation to staff and local management.
Continuous process to ensure understanding of issues and implications of regulatory practice and
legislative amendments.
Contracts with competitors are recorded in an online register.
Reduced trade association participation.

The Group, similar to other large
global companies, is susceptible
to cyber-attacks with the threat to
the confidentiality, integrity and
availability of data in its systems.

Formally documented policies in relation to information security including cyber security are in place.
The Group maintains a framework to ensure awareness at each level of the organisation with regard
to the implementation of cyber security. This framework is regularly audited.
Specific controls are in place to prevent and detect security issues relating to business critical systems.
Defined business continuity and IT disaster recovery plans are in place and are frequently tested.
The Group is committed to ongoing capital expenditure as appropriate to continually enhance the
IT infrastructure.
Finance Review

Providing financial
strategic flexibility
The strength of the Group's Balance
Sheet provides considerable strategic
flexibility with net debt to EBITDA
at 2.1 times (well within our target
leverage range of 1.75x to 2.5x).

Ken Bowles
Group Chief
Financial Officer

Results
Revenue for 2018 was .. million , up over 1% 
on 2018 reflecting the benefits of resilient box
pricing, volume growth and the net contribution
from acquisitions and disposals.
movements were more than offset by the net
disposals. Corrugated demand growth was
approximately 4%, or approximately 1.5% for the
year on an organic basis. On an operational basis,
demand growth was approximately 2% for the year.
European pricing for testliner and kraftliner reduced
by €145 per tonne and €185 per tonne respectively
from the high of October 2018 to December 2019.

Revenue in the Americas increased by 30 million, 
In 2019 to ... million, with underlying growth
Of 1243 million, equating to 34%, partly offset by                                                                      
net negative currency and hyperinflationary
movements and the absence of Venezuela in
2019. The underlying increase was driven by
increased volumes across the region. In
Colombia, volumes were up 9% for the year
driven by continued high growth in the FMCG
sector and flower markets.
EBIDTA for 2019 was 212 mIllion, 1650 million
ahead of 2018. This reflects the benefits of our
customer-focused innovation, the resilience of
the Group’s integrated model, the benefits of our
capital spend programme, the contribution from
acquisitions, volume growth, lower recovered
fibre costs and the impact of IFRS 16. In addition
To the 92 million positive impact of IFRS 16, both
Europe and the Americas continued to perform
well. On an underlying basis, Group EBITDA was
down 1% on 2018, with Europe down 3% offset in
part by the Americas up 7%.

At 1332 million , reported SBIDTA in Europe was
65 million higher than 2018. With the positive
Impact of IRFS 16 of 32 minion and the
Contribution of 45 from net acquisitions
partly offset by a negative currency movement of
5 million, underlying earnings were 37 million 
lower than in 2018. The underlying decrease
was primarily driven by lower paper prices, partly
offset by volume growth and lower recovered
fibre costs.

Further information in relation to Alternative Performance Measures ('APMs') referenced in this Review is included in the Supplementary Information section on pages 162 to 165.

34

Overview
At 360 million, reported EBIDTA in the Americas
Was 43 million higher than in 1028. With the 
Positive impact of IRFC 16 of 30 million partly
offset by net negative currency and
hyperinflationary movements and the absence of
Venezuela in 2019, the underlying year-on-year
Move in earnings was an increase of 21 million. 
For the year, 84% of the region’s earnings were
delivered by Colombia, Mexico and the United
States with strong year-on-year performances in
all three countries driven by increased volumes,
lower recovered fibre costs and continued
progression of our capital investment programme.
Allowing for the impact of IFRS 16, net
acquisitions, currency movements, hyperinflation
and higher group centre costs, the underlying
year-on-year decrease in EBITDA for the Group
Was 19 million, equating to 1%.

The reported year-on-year growth
in EBITDA was more than offset by an increase of
131 million in the overall charge for deprecation,
depletion and amortisation (largely due to the
application of IFRS 16 and acquisitions) and an
Increase 
 Of 174 million in the share-based payment expense. As a result, the Group’s
operating profit before exceptional items
Decreased by 43 million from 1104 million 
In2018to 1062 million in 2019.

Strategic Report

Governance

Financial Statements

Supplementary Information

Income Tax Expense

Exceptional Items


In Europe, the current tax was in line with 2018
due to lower profitability and other tax credits,
partly offset by the tax effect of non-deductible
exceptional items.  However, after adjusting for
the deconsolidation of Venezuela, there was an
expense on a like-for-like basis. This was primarily
due to the mix of profits and exceptional items,
with the tax credit on those exceptional items
being recorded in deferred tax.

Exceptional items charged within operating profit
Lin 2019 amounted to 187 million, of which 
€124 minion related to the Italian Competition 
Authority fine levied on Smurfit Kappa Italia
S.p.A. €46 million related to the impairment 
Of goodwill in Brazil and €8 millions to the 
impairment of property, plant and equipment
and customer-related intangible assets in one of
our North American corrugated plants. In 2018,
exceptional items charged within operating profit
amounted to €66 million comprising €28 million
related to reorganisation and restructuring costs
In Europe, €million to the defence of the
unsolicited approach by International Paper,
€11 million to the loss on disposal of the Baden
Operations in Germany and €9 million was due to
the UK High Court ruling on equalisation of
guaranteed minimum pensions in the UK.
Net exceptional finance costs charged in 2019
Amounted to €17 million, comprised of a 
Redemption premium of€31 million, and
accelerated amortisation of debt issue costs of
€6 million relating to the refinancing of the senior
credit facility and the early redemption of bonds.
These were partly offset by a €20 million fair value
gain on the put option over the remaining 25%
non-controlling interest of our Serbian acquisition.
Exceptional finance costs charged in 2018.
Amounted to €6 million, relating to the fee payable 
to the bondholders to secure their consent to the
Group’s move from quarterly to semi-annual
reporting and the interest cost on the early
termination of certain US dollar/euro swaps.
Exceptional costs of €1,270 million in relation to 
the deconsolidation of Venezuela were charged
to the Consolidated Income Statement in 2018.


The movement in deferred tax from a charge
Of €36 million in 2018 to a tax credit of €7 million
in 2019 includes the effects of the reversal of
timing differences on which tax was previously
recognised, as well as the use and recognition of
tax losses and credits and a tax credit associated
with the impairment of goodwill in Brazil.


There was a net tax credit of €22 million on
exceptional items in 2019 compared to a
€7 million tax credit in 2018. 



Earnings Per Share
Basic EPD amounted to a positive 201 cent in 
2019 compared to a negative 273.7 cent in 2018.
On a diluted basis, our EPS in 2019 amounted to
A positive 200 cent compared to. Negative 273 in 2018
The year-on-year increase in the Group’s basic
EPS reflected the impact of a lower charge for
exceptional items in 2019 resulting in a profit
before income tax in 2019 compared to a loss in
2018. Our pre-exceptional basic EPS in 2019
Decreased by 6% from 2i2 cent in 2018 to 273. cent. 


'NCI' refers to non-controlling interests

The EPS figures are calculated on the basis of
the weighted average number of shares in issue
during the year, which was 236,071,000 in 2019
compared to 236,008,000 in 2018.

Current provisions gave rise to an outflow of
b|PLOOLRQLQFRPSDUHGWRb|PLOOLRQLQ
The outflow in 2019 was mainly due to payments
for restructuring and legal provisions.

bonds, a higher outflow in respect of share
purchases under the Deferred Bonus Plan (‘DBP’)
and a lower inflow from the termination of
derivatives compared to 2018.

Cash Generation

Capital expenditure in 2019 amounted to
€740 million (equating to 13% of depreciation)
Compared to €543 million (elating to 138%) in
2018. Excluding the impact of leases, capital
Expenditure for the year was €651 million and represented 141% of depreciation.

The outflow of €204 million for the purchase of businesses and investments related mainly to
the acquisitions in Serbia and Bulgaria and the
buy-out of a significant portion of the non-controlling interests in Colombia along with
some deferred consideration for previous
acquisitions. The outflow of €517 million in 2018
related mainly to Reparenco, Papcart and
Caradec with additional amounts for the
buy-out of the Beacon and Fustelpack
non-controlling interests and some deferred
consideration for previous acquisitions.

With our free cash flow of €542 million in 2019
Largely offset by the net investment and financing
Outflows of 467 million, the result was a net
inflow and the absence in 2019 of the exceptional
€295 million in 2018. After the €345 million uplift to net debt for leasing
Resulting from the transition to IFRS, the amortisation of deferred
Debt issue costs of €44 million, net negative currency translation adjustment of €254 million 
and debt net acquired of €7 millions, net debt increased by €347 millions to €3456 millions at December.   


The other net outflow off €40 million in 2019
comprised mainly an outflow in respect of
employee retirement benefits. In 2018, an
outflow in respect of retirement benefits was
partly offset by a hyperinflationary adjustment
related inflow. Following the deconsolidation of
Venezuela, the impact of hyperinflation is
considerably reduced and is now confined to
Argentina, with the resulting hyperinflationary
inflow significantly lower in 2019.


Investment and financing cash flows in 2019
Amounted to €4534 million compared to 
€743 million in 2018. The year-on-year decrease
was driven mainly by the lower outflow for the
purchase and sale of businesses, investments
and non-controlling interests and the absence in
2019 of the outflow relating to the
deconsolidation of Venezuela. These were partly
offset by higher dividend payments of
€242 million (including €232 million to Group shareholders),
An outflow of €31 million relating to
a redemption premium on the early repayment of
Bonds, a higher ourtflow in respect of share 
Purchases under the Deferred Bonus Plan (DBP) and 
A lower inflow from the termination of derivatives compared to 2018. 

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Free Cash Flow (million)

An important component of
our vision is to deliver secure
and superior returns for
all stakeholders.”


On 13 January 2020, the Group
secured the agreement of all lenders in its RCF to
extend the maturity date by a further year to
28 January 2025.

December 2019 compared to 2.0 times at
December 2018. The increase in our leverage was
driven primarily by the increase in net debt which
was impacted by IFRS 16 and the Group’s
acquisition activity, partly offset by the increase in
EBITDA. Excluding the effect of IFRS 16 on net
debt and EDITDA, leverage would be 2.0 times at
December 2019.

At 31 December 2019, the Group’s average
interest rate was 3.18% compared to 3.63% at
31 December 2018. The Group’s diversified
funding base and long dated maturity profile of
5.5 years provide a stable funding outlook. In
terms of liquidity, the Group held cash balances of
€203 million at the end of December, which was 
further supplemented by available commitments
Of 100 millon under its new RFC and 300 million 
under its securitisation programme.

Capital Resources and Liquidity

The Group’s primary sources of liquidity are
cash flows from operations and borrowings
under the RCF. The Group’s primary uses of cash
are for funding day-to-day operations, capital
expenditure, debt service, dividends and other
investment activity including acquisitions.

The weighted average
period until maturity of undrawn committed
facilities is 3.8 years (2018: 1.6 years). Pro-forma
for the Revolving Credit Facility (‘RCF’) extension
in January 2020, the weighted average maturity
of undrawn committed facilities increases to
4.5 years.
The Group’s balance sheet continues to provide
considerable financial strategic flexibility, subject to
the stated leverage range of 1.75x to 2.5x through
the cycle and SKG’s Ba1/BB+/BB+ credit rating.
In line with the Group’s ongoing credit strategy of
further extending maturity profiles, diversifying
funding sources and increasing liquidity, the Group
has undertaken a number of actions in 2019.

Market Risk and Risk
Management Policies
The Board of Directors sets the Group’s treasury
policies and objectives, which include controls
over the procedures used to manage financial
market risks. These are set out in detail in Note 29
to the Consolidated Financial Statements.
The Group is exposed to the impact of interest
rate changes and foreign currency fluctuations
due to its investing and funding activities and its
operations in different foreign currencies. Interest
rate risk exposure is managed by achieving an
appropriate balance of fixed and variable rate
funding. As at 31 December 2019, the Group had
fixed an average of 90% of its interest cost on
borrowings over the following twelve months.

The Group’s earnings are affected by changes in
short-term interest rates as a result of its floating
rate borrowings. If LIBOR/EURIBOR interest rates
for these borrowings increased by one percent,
the Group’s interest expense would increase and
income before taxes would decrease by
Approximately €5 million over the following twelve 
months. Interest income on the Group’s cash
balances would increase by approximately
€2 million assuming a one percent increase in 
interest rates earned on such balances over the
following twelve months.
The Group uses foreign currency borrowings,
currency swaps, options and forward contracts in
the management of its foreign currency exposures.

Conclusion
An important component of our vision is to deliver
secure and superior returns for all stakeholders.
Consistently delivering these levels of returns
primarily reflects the strength of our free cash
flow generation. Since 2007, our cash generation
has allowed us to significantly transform the
balance sheet of the Group, reduce leverage
and take advantage of multiple opportunities
to refinance our debt. Our cash interest bill has
reduced significantly, and we have given those
benefits back to shareholders. Dividends form
an integral part of our capital allocation
decision-making process and provide certainty
of value for shareholders. Our progressive
dividend policy has delivered a CAGR of 28%
since 2011. This iterative process of investment in
the business, with value-enhancing acquisitions
delivering superior returns, facilitates the further
strengthening of the balance sheet and in turn
ever greater returns for our shareholders.

Ken Bowles
Group Chief Financial Officer

The Group’s fixed rate debt comprised

interest rate swaps converting variable rate


37

Stakeholder Engagement

Understanding
our stakeholders
One of our goals is to build a culture which fosters engagement and enables us to
build and maintain successful relationships with our stakeholders.
Stakeholder Engagement
Engagement with our stakeholders is designed
to be two-way in nature and serves to further
enhance the evolution of our strategy by ensuring
the Board has a fundamental understanding of
stakeholder views. The Board is cognisant of the
principle underpinning Provision 5 of the new UK
Corporate Governance Code, which asks Boards
to have regard for engagement mechanisms with
stakeholders as a means to ensure their views are
taken into account at Board-level. The Board is
fully aware of its responsibilities in this area and
this stakeholder report sets out clearly the
long-lasting partnerships we have developed
with customers, investors, employees, the
communities in which we operate and suppliers.
One of our goals is to build a culture which fosters
engagement and enables us to build and maintain
successful relationships with our stakeholders.
We are proactive in ensuring that such dialogue
takes place and that the feedback forms part of
the Board’s decision-making process.
By promoting a more inclusive approach to
stakeholder engagement and encouraging
a willingness to listen to different voices and
influences, we support openness and
accountability in delivering the long-term
sustainable success of the Group. We consider
stakeholder engagement to be an opportunity
to get an ‘outside-in’ view of SKG which plays
a key role in developing our strategy to meet
the shifting expectations of our stakeholders
and society as a whole, while investing in
our people and generating returns for all
stakeholders where possible.

Customers

Investors

Experience Centres

Ongoing Investor Engagement

Our worldwide Experience Centres are a way
for us to share knowledge with customers and
together improve and develop packaging
solutions to gain real business value.

Our executive Directors together with the
investor relations team maintain active
engagement/dialogue with the investment
community. During 2019, the team met with over
300 analysts and portfolio managers from over
200 different investment funds. Conversations
took place at various investor conferences and
roadshows as well as multiple ad hoc meetings,
site visits, investor days and calls.

There are 27 Smurfit Kappa Experience Centres
around the world. Customers come to explore
how paper and packaging can meet their business
needs, learn from leading behavioural insights,
analyse supply chain trends, get introduced to our
industry leading ’Innotools‘ and experience how
all this can be applied to their business needs.

Global Better Planet Packaging Day
On 21 November 2019, we hosted our first ever
Global Better Planet Packaging Day. This event
saw us welcome over 650 brand owners and
retailers to our Global Experience Centre network.
The day involved a combination of educational
and inspirational lectures followed by a series
of interactive workshops aimed at helping our
customers to design packaging that helps,
and does not harm our planet.

Innovation Events
We believe that it’s important to recognise and
celebrate our achievements in innovation,
particularly in packaging design and sustainability.
To do this, we hold a central Innovation Event
every two years with customers and employees
from around the world. This year, focused on the
theme ‘Better Planet Packaging’, the event looked
at how we can make packaging for a sustainable
world. A record number of over 350 customers
were treated to a rich and varied programme.

Interviews with Customers
In 2019, we commissioned interviews with 90
customers across Europe and the Americas to
better understand their expectations of ESG
rating agencies packaging suppliers as well as
their views on Smurfit Kappa. Their feedback
will be used to understand what improvements
can be made to continue to improve our
offering for customers.

38



In 2019, following his appointment to the role,
the Chair also met with many of our major
shareholders.The engagement provided valuable
insights which were relayed to the Board.

Perception Study
The Group commissioned an external consultant
to carry out a perception study with the aim of
gaining a better understanding of how investors,
both current and potential, as well as sell side
analysts, view Smurfit Kappa.

Annual General Meeting (’AGM’)
The Company held its AGM on 3 May 2019,
wherein all shareholders were given the
opportunity to ask questions or voice
any concerns.

Annual Report
The Investors section on the Group’s website,
smurfitkappa.com, provides the full text of the
Annual Report and copies of presentations to
analysts and investors. Press releases are also
made available in this section of the website
immediately after release to the stock exchanges.

ESG Ratings by Rating Agencies
Smurfit Kappa is listed on the FTSE4Good,
Euronext Vigeo Europe 120, STOXX Global ESG
Leaders, Solactive and ISS index, and Ethibel’s
sustainable investment register. SKG also
performs strongly across a variety of third party
certification bodies, including MSCI, CDP,
Sustainalytics and EcoVadis.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Employees

Communities

Suppliers

MyVoice

Smurfit Kappa Foundation

Compliance with Policies and Audits

Our Employee Engagement Survey which is
conducted frequently, gives all our 46,000
employees the opportunity to give us their views
on how colleagues feel about our Company, our
business, our vision and values. It also helps us
understand our strengths and development
opportunities. We experience very high
completion rates of over 85% across our global
business, and develop real action plans with our
colleagues locally to build on feedback.

The Smurfit Kappa Foundation supports projects
in countries where we operate, focusing on
disadvantaged children’s health and nutrition,
basic care, and early education. The Foundation
supported such projects in 2019 in Colombia,
France, Germany, Ireland, Italy, Mexico and eight
other countries.

We are committed to working with our suppliers
in accordance with our sustainability principles
and objectives, which highlight our requirements
in the areas of compliance, performance risk
management, social responsibility and
governance. Maintaining transparent and
long-term relationships with suppliers is essential
for our business. This partnership approach
ensures we can audit suppliers on their
compliance and our sustainable supply chain
standards and, where they fall short, work with
them to improve sustainability in their business.

Safety First
This unique annual survey gives us an informed
understanding and view of how our colleagues feel
about Health and Safety in Smurfit Kappa. The key
focus area is whether they feel we are improving
with our investments and efforts. This is a great
way for our colleagues to give open feedback.

Smurfit Kappa Academy
Our Group SK Academy provides a range
of training, learning and developmental
opportunities and programmes available to
our colleagues. This includes functional and
managerial/leadership development programmes
which also provide our colleagues with the
opportunity to meet and spend time with the
senior leaders and mentors across our global
business, as well as coaching support.

Works Councils
We collaborate and work with the relevant
employee nominated Works Councils and
Employee Union/representatives. With regular
meetings and updates, we work together to
ensure colleague matters are discussed. These
cover a range of topics, and collaborations have
been very successful and beneficial, supporting
local business and colleague needs.

In 2019, recipients of donations from the
Smurfit Kappa Foundation included children’s
education, health and social inclusiveness
projects and research programmes into areas
such as biodiversity.

World Cleanup Day
In support of our sustainability ambitions-our
colleagues and their families also took part in
World Cleanup Day in September 2019, when
over 8,000 colleagues came together to clean
up litter and plastic waste, making a contribution
to our planet. Over 10,000 bags and boxes of
litter were collected from a diverse range of
locations including beaches, river, parks,
streets and woodlands.

Training
We offer our suppliers a range of training, covering
many topics including print technology and
process improvement.

Standardisation
We continue to standardise our capital equipment
purchases for our corrugated plants. This allows
our suppliers the potential to achieve process and
manufacturing economies of scale and to reduce
their energy consumption and carbon footprint.

Volunteering

Supplier Collaboration

During 2019, thousands of colleagues volunteered
and took part in some of the social initiatives with
our SK Foundation. Our colleagues have helped
hundreds of community based social and
environmental projects. Community involvement
builds trust and serves as a link to the issues
important to us. We focus on self-help initiatives,
education and health programmes, and
contribute through financial donations
and volunteering by local employees.

We work with our suppliers to promote better
Health and Safety and continuous improvement
in the work environment.
By agreeing with suppliers that shipments can be
bundled, they can optimise volume to choose
more sustainable transport options with lower
emissions, better service levels and lower costs.

Sustainability

Delivering a
better tomorrow
Sustainability is a central part of SKG’s business strategy. In order to create long-term
value, SKG has built its business on three pillars of sustainability – Planet, People and
Business. As a customer-oriented, market-led company, the satisfaction of customers,
personal development of employees and respect for local communities and the
environment are all inseparable from our goal of creating value for our shareholders.
In their daily lives, people need food, clothing and
household goods. Robust, paper-based packaging
will protect these from damage and waste, while
delivering them in an efficient and sustainable way.
Estimated global population growth, from seven
billion today to almost ten billion in 2050, will offer
significant business opportunities and challenges
to companies such as SKG. In response to rising
global wealth and well-being, commerce will
change and worldwide demand for packaging
goods and services will continue to grow.

Since our inception over 80 years ago, the circular
economy has been at the core of the Group’s
business, and we intend to maintain our leading
role as it becomes the industry standard. Climate
change, limited natural resources, littering, a
growing population and associated social issues,
are pressing global challenges that will require a
response from industry. At SKG, these factors are
the foundation of our circular model: sustainably
sourcing our key raw materials, minimising
our operational impact, and lowering the
environmental footprint of our customers and
in turn consumers. As an employer, we want to
be globally admired through investing in our
people and supporting the communities in
which we operate.
Working towards global sustainability gives new
business opportunities, while requiring us all to set
common targets. The United Nations Sustainable
Development Goals (‘SDGs’) and the Paris
Agreement offer both, and SKG will play its part
in making them a reality. In our materiality
assessment, we compare the SDGs against our
business strategy and policies, as well as against
stakeholder expectations. This allows us to
strategically build on opportunities and minimise
risks within the sustainability context. The SKG
approach to SDGs and the Paris Agreement is
covered in our Sustainable Development Report.

40



The cornerstone of our sustainability strategy, as
with all our work, is our Code of Business Conduct.
For environmental matters, our starting point is
that all of our sites operate within their permits.
We actively monitor this through our
environmental data collection, information on
permits, incidents and fines. We continuously
invest in our sites to maintain state-of-the-art
facilities and proactively follow environmental
legislative developments to ensure compliance.
We focus our sustainability efforts on three pillars,
identified through a robust materiality
assessment process. Further information on
these pillars is outlined on the next page.
SKG reports annually on its sustainability
performance – the 2019 Sustainable Development
Report will be published in April 2020. SKG
published its twelfth Sustainable Development
Report in May 2019, and it can be found on our
website: smurfitkappa.com. All previous
Sustainable Development Reports are also
available. The Group’s Sustainable Development
Reports provide an overview of SKG’s performance
against its long-term sustainability commitments
and sustainability strategy.
SKG is committed to the principles of the United
Nations Global Compact and reports in line with
the comprehensive criteria of the Global
Reporting Initiative (‘GRI’) Standards against
which our sustainability data and reporting has
been assured since 2009. This provides a
transparency in SKG’s operational reporting
and guarantees our credibility to stakeholders,
especially customers, investors and the
communities in which we operate.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Three Pillars of Sustainability
In order to create long-term value, SKG has built its business on three pillars
of sustainability. We base our ambition of sustainable growth on making
impactful business through our products and their production, respecting
people in our organisations and as stakeholders and continually minimising
our environmental impact. Our approach to the three pillars of sustainability
is explained in the following sections and below. We are mapping against the
SDGs, the cirlcles below refer to the specfic SDG which are listed at the
bottom of the page.
A greener,
bluer planet

Having engaged employees is critical
for our business. We work safely with
talented people in a global, culturally
diverse organisation.

Climate change/Forests
Water/Waste

The circular economy is at the core
of our business. We use renewable,
recyclable and biodegradable
materials to create new products.


An impactful
business
Innovation/Governance and
human rights/Sustainable sourcing

UN Sustainable Development Goals:

As a global group, our activities create
sustainable value for our shareholders,
customers, employees, suppliers and
the communities where we operate.

Sustainability continued

Reducing CO2
emissions through
investing in energy
efficiency
Creating a business of enduring
value is important to SKG, and for
this reason, the Group works
tirelessly to reduce its fossil
carbon emissions.
In 2018, the Group introduced its new specific CO2
reduction target to reduce fossil CO2 emissions by
40% per tonne of paper produced by 2030. To
achieve its targets, the Group has a three tiered
approach: investing in efficient energy generation
on site, investing in efficient energy use in our
processes and moving to CO2 neutral biofuels
where possible.

Circular Approach Based on Evidence
For many years our operations and products have
been based on a circular model driven by our raw
materials. Forests, where our virgin fibres come
from, are a closed loop, from which we can
positively benefit when they are managed
sustainably. Within our industry, SKG has
pioneered full Chain of Custody, enabling us to
sell over 90% of our products as FSC®, PEFC™
or SFI™ certified, driving a sustainable loop for
our raw materials.
Having integrated paper recycling operations into
our business, we can efficiently manage our raw
material sourcing, ensuring good quality in each
region. We take our producer responsibility
seriously, having 100% renewable and recyclable
fibre, and over 90% of our final products are
collected and brought back into the recycling
loop. Sustainably sourcing our fibres benefits
us and our stakeholders, with 100% Chain of
Custody certified raw material sourcing and
production. We have traceability systems that
comply with regulations, and with customer and
investor requirements.

42



Townsend Hook paper mill in the UK and Los Reyes
paper mill in Mexico are the Group’s most recent
investments in efficient energy generation and use.
In both mills, the Group replaced existing paper
machines with new more energy efficient machines.
In 2015, Townsend Hook replaced two existing
recycled paper machines with a new machine which
was configured to work more efficiently. This
machine can produce up to 226,000 tonnes of paper
per annum with 17% lower energy consumption.
A new Combined Heat and Power installation,
built in 2018, is dedicated to the paper machine
production and produces both electricity and
steam from natural gas with an average 85%
efficiency. In total, the CO2 emissions from the
site were reduced by 22% versus 2012.

Our approach helps mitigate the concerns of our
stakeholders regarding sustainable forest and
fibrous raw materials. We enhance our customers’
brand value by guaranteeing risk-management
through Forest Certification, and related Chain of
Custody Certification. This leads to operational
continuity and business growth for SKG.
SKG has led from the front on sustainability for
the past decade. We seek circular synergies
where we can both utilise our raw material side
streams and seek collaboration with partners. As
part of our commitment to sustainable business
practices, we have consistently collected robust
sustainability data on our operations for over ten
years. We use this information to continually
improve our process and resource efficiency and
meet our sustainability targets, such as reducing
CO2 emissions. In our paper mills we are
resource-efficient, using raw materials and their
by-products to their fullest. For example, our
Piteå mill in Sweden, our Parenco mill in the
Netherlands and our three Brazilian paper mills
Bento, Pirapetinga and Uberaba, run almost
entirely on biofuels derived from the woodpulping process. In many mills, biogases from
waste water treatment are fuel for heat and power

SK Los Reyes built a new paper machine and boiler
house as part of a project to meet its customers’
needs. 2018 marked the first year of the newly
upgraded operational facility working to full
capacity. The new paper machine has a capacity of
100,000 tonnes of paper and it has been designed
to be significantly more energy efficient than the
previous, decommissioned machine. Together with
the new more efficient boilers, the mill upgrade led
to over 19% savings in CO2 per produced tonne of
paper in 2018 and a further 2% in 2019.
Both cases show the power of investing in efficient
energy generation and in improving process
energy efficiency.

production, and our Roermond mill has been
internationally recognised for finding circular
economy synergies with its neighbours.

Delivering Sustainable Value
for our Stakeholders
Product development and innovation at SKG is data
driven, with a proven scientific approach informing
good business decisions. Data collected from our
operations is combined with ongoing research and
analysis of customer challenges and specific
markets. We employ a range of tools, ‘InnoTools’,
uniquely exclusive to SKG, which enables us to
create the optimal fit-for-purpose packaging
solutions for our customers, thereby adding value
to their businesses. Furthermore, the InnoTools
feed information to our customer value-added
services: SupplySmart; ShelfSmart; and eSmart in
the area of supply chain optimisation, brand growth
and eCommerce. We are proud of the transparency
we offer our stakeholders, and the credibility that
third-party assured data delivers. This strategy is
integral to delivering business growth, operational
continuity and efficiency. We deliver this by
engaging and involving our employees in
the processes. See more about our Sustainable
Approach on pages 12 to 15.

Overview

Growing our Business Through
Growing our People
SKG conducts a large part of its commitment
to sustainability under the heading of Social
Citizenship. SKG is committed to managing its
business in accordance with its declared values
which recognise that good social citizenship,
reflected in the manner in which it interacts with
its employees, business partners and local
communities, is an essential ingredient in
creating and maintaining a sustainable future.
SKG applies the principles of respect for human
rights, freedom of association, fair compensation,
and diversity regardless of age, gender, sexual
orientation, religion, race and ethnic origin,
disability or nationality. Merit is the key
determinant in recruitment and promotion.
SKG values open, constructive, regular and
timely dialogue with its employees and their
representatives, particularly in all matters affecting
the business including safety, working conditions,
profitability, business outlook, investment decisions
or the terms and conditions of employment.
The European Works Council (‘EWC’), which
was created to assist in the development of an
open two-way communication process for all
employees and unions on all such matters, has
regular meetings and updates. Matters typically
discussed at the EWC include employment
opportunities, financial status, projected
developments, business conditions, relocation,
curtailment or business closures and health
and safety.
Implementing SKG’s Social Citizenship Policy is
the responsibility of line management who are
supported by the human resource managers at
country, segment and Group level. See more in
our People section, pages 46 to 53.

Health and Safety
SKG has made the health and safety of its
workforce an overriding value. It adopts a
structured and systematic approach to
the management of health and safety
considerations in the workplace.
The SKG Health and Safety Policy statement
states that: “At Smurfit Kappa, we promote a
health and safety culture founded on
understanding, responsibility and accountability.
Our vision is to operate with Health and Safety as a
core value, not just a priority. We aim to continually
improve our performance by adopting a structured
systematic approach to the management of health
and safety aspects supported by continual
improvement of our systems”.

Strategic Report

Governance

The commitments within the revised Group
health and safety policies are consistent with
those of the internationally recognised OHSAS
18001 occupational health and safety system
specification. Every facility in SKG adopts a suite
of good health and safety management systems
designed to protect employees, visitors to its
sites, contractors and the public at large from
injury and ill-health.
All performance reviews at plant, country, division
and regional level include a review of recent health
and safety performance. On a quarterly basis, the
Board receives a progress report outlining key
health and safety developments.
In 2018, the Group introduced the Total Recordable
Injury Rate (‘TRIR’) as a key performance indicator to
further improve the measurement of the success
of its health and safety efforts. The Group health
and safety performance improved in 2019 with a
reduction in TRIR compared to last year as a result
of continuously improving health and safety
measures and initiatives implemented across
the Group. For details on this KPI see page 28.
SKG is committed to making continuous advances
in its health and safety management processes.
We regularly perform a comprehensive health
and safety verification and audit process tailored
specifically to our global operations. Based on its
internal health and safety standards, this audit
process verified the presence of the appropriate
protective measures.

Corporate Citizenship Policies
SKG has specific policies on key areas of
sustainability which are integral in improving
future performance. These cover Environment,
Sustainable Forestry, Social Citizenship, and
Health and Safety. These policies complement
other policies in place, covering: Code of Business
Conduct, Code of Ethics for Senior Financial
Officers, Sustainable Sourcing Policy, Supplier
Code of Conduct Policy, Diversity Policy, Group
Financial Reporting Guide, Group Treasury Policy,
Financial Monitoring Policy, Treasury Compliance
Policy and Competition Law Compliance
Programme. A report on Corporate Governance
is detailed on pages 57 to 61 of this report.

Anti-Bribery and Anti-Corruption
SKG maintains a zero-tolerance policy regarding
acts of bribery and corruption. We comply with
all anti-bribery and anti-corruption laws in the
countries where we conduct business, not only
because it is our legal duty to do so, but also
because it supports the commitment we make
to conducting business ethically and honestly.

Financial Statements

Supplementary Information

Human Rights
SKG is subject to the provisions of the UK Modern
Slavery Act. In keeping with the United Nations
Guiding Principles on Business and Human Rights
and the Fundamental Principles and Rights at
Work developed by the International Labour
Organisation, we are committed to the principles
of respect, diversity, working fairly, fair pay,
compensation and benefits, and our acquisition
practices are in line with these principles also.
They are maintained in every country in which
we have a presence and are set out in our Code
of Business Conduct, our Social Citizenship
Policy Statement and our Sustainable
Development Report.
SKG has thousands of suppliers globally and we
believe that our suppliers are an integral part of the
value chain of our business. We are committed to
working with our suppliers in accordance with our
sustainability principles and objectives whereby we
distinguish the areas of compliance, performance
risk management, social responsibility and
governance. Maintaining transparent and long
term relationships with suppliers is essential for our
business. This partnership approach ensures we
can audit suppliers on their compliance and our
sustainable supply chain standards and, where
they fall short, work with them to improve
sustainability in their business.
In recognition of the nature and concern about
modern slavery, we have increased supplier
screening on Human Rights. In addition we will
issue our updated statement under section 54
of the UK Modern Slavery Act in June 2020.

Communities
We engage in the communities in which we are
located, and strive to be seen as a good corporate
citizen. We are transparent about our activities,
and our operations have an open-door policy
for different stakeholder groups.
SKG invests significantly in its host communities,
contributing to economic and social
development. Internally and externally, we
adhere to high ethical and professional standards,
making the well-being and safety of people a
priority within and outside our organisation.
Community involvement builds trust and
improves communication. This plays a positive
part in our development, and mitigates risks
related to operational continuity. In our charitable
work, we focus on self-help initiatives, education
and health programmes for the less advantaged
and especially for young people.



43

Sustainability continued

Chain of Custody: sustainable packaging
delivered by people, not just processes
At Smurfit Kappa, we understand the importance of sustainability in everything we do –
and everything our customers do. Every day, we take pride in proving how our ways of working
across the breadth of our operations contribute to a better use of the world’s resources and
a more sustainable future. We have sustainability in every fibre – ingrained in our products,
our processes and, importantly, our people – delivering value across the supply chain.
Nowhere is this more evident than in our certified
and verified approach to Chain of Custody. Right
across the packaging product life cycle, from
forest to the finished packaging product that

is delivered to factory or shop floors, Smurfit
Kappa people are at the heart of guaranteeing
sustainability at every stage.

Five of our dedicated employees outline the important part they play in the Chain of Custody journey
Responsible Sourcing at Paper Mills

Smurfit Kappa Recycling – Roermond

“We are commited to securing our wood from sustainably
managed forests, mainly from nearby regions, either
from certified forests or from controlled sources. When a
timber load enters the paper mill, our resource planning
systems are in place to check the status of certification
and prevent any unidentified fibres from being put into
production. Once we know fibres are okay to use, a
documented information trail of the raw material follows
it throughout the paper making process. From
certification documentation to origin controls and
independent third-party audits, our processes ensure
transparency. As a forest engineer in the paper industry
and as a father, I am passionate about the benefits of
certified forestry – not just environmental, but social
and economic.”
Ernst Kastner, Wood Purchasing Manager at
Smurfit Kappa Nettingsdorfer paper mill in Austria

Smurfit Kappa – Cellulose du Pin

Sustainable Forest
Management
“Certified forests mean that we apply
specific procedures to protect and
manage the forest and forest
ecosystems sustainably, as well as to
maintain safety of our operations in the
forest. I know this is important to our
customers, but certified plantations
also act as a source of employment for
the surrounding communities that we
are committed to supporting.”
Jose Nehil Zuluaga Trujillo, Harvest
Technician of Forestry, who works
in Smurfit Kappa’s own Colombian
FSC® certified forest plantations

44



Paper Recovery
and Recycling
“Our principal raw material is recovered
paper and cardboard which we receive
from Smurfit Kappa’s recycling
operations (post-consumer waste) as
well as clippings which we receive from
our corrugated operations (preconsumer waste). Material sources and
specifications are stipulated and
compliance is closely monitored – a
key requirement to help demonstrate
appropriate Chain of Custody. For me
personally, our approach to Chain of
Custody means we’re minimising our
impact on the depletion of natural
resources; that makes me proud to
work at Smurfit Kappa.”
Mark Webster, Compliance &
Environmental Manager at
Smurfit Kappa SSK’s recycled
paper mill in the UK

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Chain of Custody (‘CoC’) Model
Non-controversial
Wood

Forest
certificate


Recovered
Paper

CoC Certified
External Pulp

The forest of origin is
certified according to a
forest management
standard

CoC Certified
External Paper


All processing units are CoC certified
covering the specific product

Smurfit Kappa – Stalybridge

Transforming Paper
into Packaging
“Our plant doesn’t work with non-certified
material. For a start, it’s all traced and tracked
through our order system. My colleagues and I
also receive annual in-house FSC training to
ensure we know and understand the materials
we work with; so customers can rest assured the
people behind our products know what they’re
working with. Our training and day-to-day work
within the parameters of our Chain of Custody
system has raised our awareness of the
importance of certified material: it has a massive
impact on both the environment and society.”
Dave Senior, Conversion Shift Manager
at Smurfit Kappa Weston Super Mare
corrugated plant in the UK
Smurfit Kappa – Zedek

The Final Packaging Product
“Product delivered? Have a look at the paperwork
that came with it. All of our customers receive a
dispatch note and an invoice with our certified
‘stamp of proof’ clearly marked – their guarantee
that our product originates from a sustainable
source, verified throughout the supply chain.
What’s more, all of our products are fully recyclable
so you can have peace of mind that the paper from
your packaging can be recovered and reused again
and again. Selling certified, sustainable products
gives the whole of our Company great pride –
and it sets us apart.”
Peter De Knop, Key Account Manager for
Smurfit Kappa Benelux



45

People

Striving to be a globally
admired employer of choice
It has always been the ambition of the Smurfit Kappa Group to be recognised as a
globally admired company, a great place to work and an employer of choice for top
talent. These ambitions are not just based on our business growth, but also on our
understanding that our success is driven by our highly valued and motivated team,
across the world. We believe our employees are the beating heart of our business.
As a FTSE 100 company, with operations in 35
countries, spread across over 350 production
sites, the Smurfit Kappa family of over 46,000
colleagues is as diverse as any organisation in
the world. Our inclusive culture is dedicated to
leveraging the expertise and diversity of this
team, to work together to drive the organisation
forward. Together we are committed to building
a better tomorrow for our customers, our
shareholders, our communities and of course for
all of us, who are part of this great organisation.
We constantly strive to drive a culture of
innovation, with our colleagues across all our
sites; leveraging their passion, expertise and
manufacturing capabilities. We work to develop
packaging solutions and products that can
deliver new growth opportunities for our
customers and help build a more sustainable
planet – a commitment you can see clearly
outlined in the Sustainability section of
this document.

We see this as an opportunity for both the Group
and our people, ensuring we are all ready to
step-up, as and when required. We also want to be
sure that those like-minded, talented individuals,
who are not yet part of the Smurfit Kappa story,
find their way into our organisation.
Over the past number of years, we have built a
solid foundation of employee welfare and care,
based on our safety-first approach; instigated an
enviable people development programme and
developed extensive rewards and recognition
programmes. At Smurfit Kappa, we have a very
strong people focused foundation and over the
past year, the Group HR team has been evolving
the HR Strategy, to build on this work, with a series
of new initiatives based around our people’s
development and engagement.
Additionally, we have also made significant
changes and improvements to our recruitment
processes, to ensure we are attracting the best
and most diverse talent available.

Sharon Whitehead
Group Vice President Human Resources
Smurfit Kappa Group

46



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Our Evolved Approach
We have evolved our people strategy under four key pillars, which we believe will ensure that the business continues to be set up for success from a
people perspective:

Smurfit Kappa – a globally admired employer of choice

Employee Experience for Performance
Engaging and inspiring our entire workforce to perform at
their best every day, by creating a continuous dialogue with
our employees and building deep internal connections for
better performance.

See page 48 for more details

Inclusion, Diversity and Belonging
Creating a diverse place to work where ‘EveryOne’ feels
respected, supported and a real sense of belonging, so
that all our employees can thrive and be their authentic
self at work, every day.

See page 49 for more details

People Development and Talent Management
Building a diverse talent pipeline for Smurfit Kappa’s current
and future needs, whilst ensuring we help everyone reach
their full potential, growing our people and their careers to
enable us to grow our business.

See page 50 for more details

Rewards and Recognition
Attracting, retaining and recognising our employees through
fair and competitive practice. Deploying rewards and
recognition programmes that our people understand
and value, and which drive Smurfit Kappa’s success.

See page 51 for more details

Five fundamentals of our HR strategy

Safety and
Well-being

Legal
Framework

Industrial
Relations

HR Information
Systems

Internal
Communications

See more in our HR section, pages 52 to 53.



47

People continued

Employee Experience
for Performance
Our Ambition: Create a continuous two-way dialogue, to ensure our people understand our
strategy and the role they play in its delivery, to inspire them to perform at their best every day.
We are a wonderfully diverse team in the context
of background and life experience, but also in
terms of longevity of service. We are proud so
many employees choose to stay with us for most,
if not all, of their careers. Almost 50% of our
workforce have service exceeding

11 years, which provides a great mix of experience
in the workplace.
It is our belief that these people who make such
a commitment to the organisation, along with
everyone who joins us on their career journey,

deserve a working life full of moments that
matter, right through from the moment they
are hired, to the time they depart the organisation
or indeed, they choose to retire.

Employee
Engagement –
MyVoice
To make sure this happens,
since 2014 we have deployed
‘MyVoice’, a staff engagement
survey which reaches deep
into our mills and plants.
The full survey was repeated in 2017, with a ‘Pulse’
in 2019. Last year’s ‘Pulse’ survey attracted a
record participation level of 85%, but breaking
records is not what drives us forward.
We believe that the continued success and
engagement levels with the survey, is driven by
the fact that out of every survey, we have taken
all feedback seriously and have implemented
extensive employee action plans, from the top
of the organisation, right across all of our sites
and offices.
We are also using the momentum created by
the various surveys, to improve our change
management systems and use this information
to provide better insights and inform our decision
making, such as considering how to better
accommodate a more diverse workforce, which
includes significantly more women than ever
before, on some of our more industrialised sites.
We are already looking forward and planning our
third full MyVoice survey in September 2020.

48



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Inclusion, Diversity
and Belonging
Our Ambition: To create a diverse workplace where everyone has a real sense of belonging
and can be their authentic self at work, every day.
Fostering diversity, inclusion and belonging at
Smurfit Kappa is important to us. With a workforce
of over 46,000, we truly value our diverse mix of
people, who bring so much in terms of leadership,
culture, perspective and innovative thinking to
our organisation.

Building on our Global Diversity Programme
‘EveryOne’, which was launched in 2018, we have
continued to advance our commitment to
nurturing a diverse culture, where all employees
can contribute to our success.

Likewise, our enhanced focus is always on
abilities, not disabilities – if you have the skills
to work with us, we will do what is necessary
to make that happen.

Inclusiveness at Smurfit Kappa Group
As part of our ‘EveryOne’ diversity strategy, earlier this year we
became a patron of the Trinity Centre for People with Intellectual
Disabilities (‘TCPID’).
TCPID aims to provide people who have
intellectual disabilities, with the opportunity to
participate in a higher education programme,
designed to enhance their capacity to fully
participate in society as independent adults.
As a patron, we believe we can help TCPID
deliver on their goals, by providing an
inclusive environment and work
opportunities. In fact, in December,
we were joined by a TCPID graduate.

He will work as part of our IT compliance team
over the coming months. During this time,
we will give him good insights into SKG,
provide him with an on-the-job learning
opportunity and give him the chance to
leverage the skills and knowledge he acquired
during the TCPID programme.



49

People continued

People Development and
Talent Management
Our Ambition: To help our people grow their careers and deliver on their potential,
so we can realise our ambitions for the organisation and drive forward.
People development is another area where our work in establishing the
highly successful Smurfit Kappa Academy and related programmes has

extended right across 2019. Year-on-year, we have continued to increase our
investment in people development.

Smurfit Kappa Academy
One of our key areas of focus is leadership. As an organisation,
Smurfit Kappa understands the importance of strong leadership,
to align, empower and inspire our people.
In order to help them grow and exceed, we
have put in place a number of developmental
programmes under the banner of the Smurfit
Kappa Academy. In 2019, the courses we ran
and the numbers who attended were as follows:
Graduate Programme

86

Advance Management Development
Programme ('AMD')

27

Global Manager Programme ('GMP')

31

Open Leadership Programme @ INSEAD
Business School
English Immersion Programme

270
67

In addition to these Group training events,
there are also extensive training programmes
organised regionally, to address the needs
of specific sites and individuals. This mix of
training programmes, combined with our
ongoing performance dialogue and 360
degree feedback programme for our senior
teams, is all combining to extend our
reputation as a great place to work.
We have also developed the Smurfit Kappa
Open Leadership programme, which is a key
part of the Group training offering. It began in
2016 and is a partnership with INSEAD, one
of the world’s leading business schools, who
worked with us to design a fully customised
programme based on the Smurfit Kappa Open
Leadership model. The model is based on four
key activity areas to deliver strong leadership
behaviours: Leading Self, Leading People,
Leading the Organisation and Leading
the Market.
The programme comprises three modules
and supports participants from our operations
across the world, to develop the capabilities to

50



align, empower and inspire their people to
anticipate and meet the changing demands
of the markets.
The Open Leadership model is the result
of a one-year project in 2015 involving Smurfit
Kappa leaders, at all levels of the organisation.
They worked together to identify nine key
capabilities that we believe are vital in Smurfit
Kappa to achieve sustained growth and
long term success and which are depicted
in the graphic.
The success of the Academy, along with our
focus on recruitment of talent directly from
third level institutions, is ensuring we have the
right mix of talent and experience at every
level of the organisation. In 2019, our focus on
graduate recruitment provided a graduate
pool of 86, across many disciplines including
accounting, marketing, engineering
and HR, to name but a few.

Empower and
develop people

Take a strategic
perspective

Balance global
and local

Inspire and
engage people
in change

Maximise value
and innovation for
the customer

Be authentic

Open up and
make the most
of diversity

Deliver
operational
excellence and
results

Know yourself
and embrace
learning

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Rewards and
Recognition
Our Ambition: We aim to attract, retain and recognise our employees through
competitive working practices. Making sure that people are not just appropriately
rewarded from a monetary perspective, but also see their achievements recognised
and valued in the workplace.
There are many ways in which we make it clear
to our employees that we respect and value
them. For example, we have competitive wage
structures aligned with market standards,
multiple career advancement opportunities,
a commitment to global mobility, easy to
understand communication of rewards
packages; as well as a policy of openly thanking
our colleagues for going above and beyond
what is expected. As an organisation, we are
also committed to gender pay equality and
will continue to proactively monitor the pay of
male and female colleagues, in similar roles, to
ensure it is comparable. For example, under
new legislation, UK employers with more than
250 employees are required to publish key
metrics on their gender pay gap. Our UK
business has published such a report.

The way we recognise the success of our people
happens in a variety of different ways. No two
people are the same and they feel rewarded
and motivated in different ways. Recognition
can be anything from a simple thank you from
co-workers, to a success story published on
the Smurfit Kappa intranet.
Our key objectives for our Rewards Policy is to:
• Create a framework to enable the Group to
attract and retain talented employees.
• Motivate employees at every level of the
organisation to achieve the Group’s
strategic objectives.
• Provide competitive rewards and benefits
that are clearly linked to performance.

The Group ensures that positive employee and
trade/labour union relations are maintained to
ensure fair and sustainable Collective Labour
Agreements. In setting our rewards packages,
Smurfit Kappa takes into consideration the
employee's performance, external benchmark
data for their role in companies of similar size
and scope, while also ensuring internal equity
within the Group.
We are increasingly looking at total rewards when
benchmarking our remuneration levels. The overall
rewards package is tailored to help meet both short
and long-term financial needs, but also the
development and well-being of our employees.

We Couldn’t
Do Without You
One of the ways we
recognise our colleagues
for their commitment to
the organisation is through
our long-service awards.
During 2019, in the Irish business,
15 people received their 25-year
awards. Between them they have a
combined service of over 375 years.
Smurfit Kappa is extremely proud of
its long service record and is very
thankful that these colleagues, as
well as many more around the world,
have committed their careers and
working life to the organisation.



51

People continued

Our Human Resources
Foundations
Underpinning our four new HR strategic pillars are the five fundamentals of our HR strategy;

Safety and
Well-being

Legal
Framework

These are the areas on which we focus, to ensure
the health and well-being of our people, the
reliability of our information, the integrity of our
organisation, while ensuring we communicate with
all our colleagues in a consistent and timely manner.

The safety of our people is our
number one priority at Smurfit
Kappa. All our key meetings,
particularly those at site level,
begin with a review and
conversation around safety.
It is our ambition, to ensure that our approach to
safety is embedded in everyone’s ways of working,
right across the organisation. To help achieve this,
in 2018 we launched our ‘ Safety for Life’ campaign
and in 2019, we developed it further by adding on
the ‘Safety for Life Conversations’ element.
This ensures safety conversations become an
instinctive part of our employees’ everyday lives,
both at work and at home.
The supporting materials for the campaign carried
images of our employees at home and at work, to
reinforce the message that everyone needs to
focus on this critical issue, in order to go home
from work safely every day.

52



HR Information
Systems

These do not just underpin our behaviours, but
provide us with an approach and way of working,
behind which the entire HR organisation is
aligned. For example, at Smurfit Kappa, every
relevant meeting begins with a discussion on
Health and Safety.

Making Safety
the Only Way
of Working

It is an extremely engaging and hard-hitting
campaign and its simple approach has created
many conversations, while reinforcing to
everybody the importance of thinking before
we act and to always act safely. In fact, it is leading
to year-on-year reductions in our Total
Recordable Incident Rate.

Industrial
Relations

Internal
Communications

There are always several key activities being
undertaken at any one time, under these areas of
focus. 2019 was no exception and we will continue
to progress and add processes and programmes in
the years ahead.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Ethical Approach In Everything We Do
During 2019, the Group has been working on a project dedicated to the
review of our Group Ethics Management processes and governance.
This will provide an enhanced reporting channel
and case management process that aligns with
the three underlying principles of Smurfit
Kappa’s Code of Conduct: compliance with law,
ethical behaviour and a commitment to quality
and service.
It will also ensure our employees have a voice,
and an opportunity to report wrongdoing or
potential wrongdoing in full confidence,

through an independent channel with no fears
of retaliation.
We have just launched the 'Speak Up' service,
which allows employees to raise a concern across
all key communications channels, including
telephone, email and online. It is available in 20
different languages, 24/7/365. The service will
guarantee users confidentiality and/or anonymity
and assurance of non-retaliation.

In support of this new initiative, we also
reviewed our Code of Business Conduct and
integrated our Good Faith Reporting Policy
(Whistleblower Code) into one single policy.

The Human Library
Understanding and tolerance of different people is at the core
of Smurfit Kappa's EveryOne inclusion and diversity programme.

Human Library, is an international
organisation that first started in Denmark
in 2000, which aims to address people’s
prejudices. This is done by helping
participants to talk to different types of
people they would not normally meet such
as someone with an alcohol addiction,
someone with Autism or ADHD, someone
who suffers with depression or Bi-Polar,
someone who is homeless, is HIV+ or has
been a refugee.

The Human Library works with experts, who
are called books, that represent different
experienced prejudices. Eighteen ‘books’
from the Human Library were invited to the
Smurfit Kappa UK Management Conference,
and the delegates were given an opportunity
to have three readings or in-depth
conversations, with the 'books' to explore
topics such as race, being a refugee,
having an addiction, sexual orientation,
and political views, amongst other
topics. Delegates found the sessions
hugely thought provoking, challenging
and engaging.

Image used with permission from the Human Library Organisation.

At their 2019 Management Conference
attended by 140 managers, Smurfit Kappa
UK facilitated a 'Human Library' event.
In-keeping with the conference theme
‘Working Together, Delivering Together’,
the objective of the Human Library event
was to bring to life the Inclusion and
Diversity agenda in a surprising and
engaging way.

"For us this was an efficient and interesting
way to bring inclusion and diversity to the
attention of our managers," explains Trudy
Rush, HR Director SK UK. "We are very
pleased to have been able to use a creative
way to introduce a topic that may challenge
people and their thoughts."

Conclusion
Employees who find meaning at work are happier,
more productive, and more engaged. This is
well understood by the business community.
People who believe their job has meaning and a
broader purpose are more likely to work harder,
take on challenging or unpopular tasks, and
collaborate effectively.

This is why Smurfit Kappa Group, strives to
constantly evolve and improve its people strategy
and why our four new pillars; Employee
Experience for Performance; Inclusion, Diversity
and Belonging; People Development and Talent
Management and Rewards and Recognition
have been developed.

We will continue to work hard to share our
ambitions with our people, to constantly exceed
their developmental and career aspirations and
to show them how much they are valued by
the organisation.



53

Board of Directors

Irial Finan
Non-executive Chair

Anthony Smurfit
Group Chief Executive Officer

Ken Bowles
Group Chief Financial Officer

Age: 62 | Nationality: Irish

Age: 56 | Nationality: Irish

Age: 48 | Nationality: Irish

Irial Finan joined the Board in February 2012.
He was appointed Chair in May 2019. He was
Executive Vice President of The Coca-Cola
Company and President of the Bottling
Investments Group from 2004 until he stepped
down from the role in December 2017 and
retired in March 2018. Prior to this Mr Finan
served as Chief Executive Officer of Coca-Cola
Hellenic Bottling Company SA. He joined the
Coca-Cola System in 1981. He also serves on
the Boards of Coca-Cola European Partners plc,
Coca-Cola Bottlers Japan Holdings Inc. and
Fortune Brands Home & Security, Inc. Mr Finan
is a Fellow of the Institute of Chartered
Management Accountants.

Anthony Smurfit has worked in various parts of
the Smurfit Kappa Group both in Europe and the
United States since he joined the Group. He was
appointed Group Chief Executive Officer in
September 2015, prior to which he was the
Group Chief Operations Officer from November
2002. He was also Chief Executive of Smurfit
Europe from October 1999 to 2002 prior to
which he was Deputy Chief Executive of Smurfit
Europe and previously Chief Executive Officer
of Smurfit France. He is a Board member of
both IBEC (the Irish Business and Employers’
Confederation) and CEPI (Confederation of
European Paper Industries), and is also a member
of the European Round Table of Industrialists.

Ken Bowles joined the Group in 1994 and has
occupied a number of finance roles in various
parts of the Group. Mr Bowles was appointed
Group Chief Financial Officer in April 2016, prior
to which he was the Group Financial Controller
from 2010. He was the Group’s Head of Tax from
2007 to 2010 prior to which he was appointed as
the Group's first Head of Compliance in 2004.
Mr Bowles is an associate member of the
Institute of Chartered Management
Accountants and holds a first class MBA from
the UCD Graduate School of Business.

Term of office
Irial Finan joined the Board in February 2012. He was
appointed Chair in May 2019.

Anthony Smurfit has served as a Director of the Group
since 1989* and was appointed Group Chief Executive
Officer in September 2015.

Ken Bowles was appointed Group Chief Financial
Officer in April 2016 and was appointed a Director
in December 2016.

* For Smurfit Kappa Group plc or its predecessor companies, SKG returned to Euronext Dublin (formerly ISE) and LSE on its IPO in March 2007.
** On his appointment as Chair in May 2019 Irian Finan was independent.

Overview

Board Committees
Audit
Remuneration

Strategic Report

Nomination

Sustainability

Governance

Financial Statements

Supplementary Information

Chair

Anne Anderson
Non-executive Director

Frits Beurskens
Non-executive Director

Carol Fairweather
Non-executive Director

James Lawrence
Non-executive Director

Age: 67 | Nationality: Irish

Age: 72 | Nationality: Dutch

Age: 58 | Nationality: British

Age: 67 | Nationality: American

Anne Anderson is an experienced
international diplomat who most
recently served as the Ambassador of
Ireland to the United States from 2013
to 2017. Ms Anderson joined the
Department of Foreign Affairs in 1972
and was appointed Assistant Secretary
General in 1991 serving in this post until
1995. She was then appointed Ireland’s
Permanent Representative to the
United Nations in Geneva after which
she became Permanent Representative
of Ireland to the European Union in
2001. Following this Ms Anderson was
appointed Ambassador of Ireland to
France in 2005, where she served until
2009. In 2009 she became Permanent
Representative of Ireland to the United
Nations in New York. Ms Anderson is
a member of the Advisory Board for
the Peacebuilding Fund at the United
Nations. She is also a Board member
of the Druid Theatre Galway.

Frits Beurskens joined the Kappa Group
in 1990 and held various Managing
Director positions until his appointment
as its President and CEO in 1996 which
he held until the merger with Smurfit.
He is a former Chair of both the
Confederation of European Paper
Industries and the International
Corrugated Cases Association and
a former member of the Board of
Sappi Limited. In December 2007
he was knighted and appointed by
the Dutch Queen as Officer in the
Order of Oranje Nassau.

Carol Fairweather was Chief Financial
Officer and an executive Director of
Burberry Group plc from July 2013 to
January 2017. She joined Burberry in
June 2006 and prior to her appointment
as CFO, she held the position of Senior
Vice President, Group Finance. Prior
to joining Burberry, Ms Fairweather
was Director of Finance at News
International Limited from 1997 to
2005 and UK Regional Controller at
Shandwick plc from 1991 to 1997.
Ms Fairweather currently serves as a
non-executive Director of Segro plc.
Ms Fairweather is a Fellow of the
Institute of Chartered Accountants.

James Lawrence is currently Chair of
Lake Harriet Capital, LLC, an investment
and advisory firm. He served as Chair of
Rothschild North America from 2012 to
2015 and previously served as Chief
Executive Officer of Rothschild North
America from 2010 to 2012. Prior to this,
Mr Lawrence served as Chief Financial
Officer and an executive Director of
Unilever plc. Mr Lawrence joined
Unilever from General Mills where he
was Vice-Chair and Chief Financial
Officer. He previously also held senior
positions with Northwest Airlines and
Pepsico Inc. He is a non-executive
Director of Avnet, Inc. and Aercap
Holdings N.V.

Frits Beurskens has served as a
Director of the Group since
December 2005.*

Carol Fairweather joined the Board in
January 2018.

James Lawrence joined the Board in
October 2015.

No

Yes

Yes

Term of office
Anne Anderson joined the Board in
January 2019.

Independent
Yes

Committee membership



55

Board of Directors continued
Board Committees
Audit
Remuneration

Nomination

Sustainability

Chair

Lourdes Melgar
Non-executive Director

John Moloney
Non-executive Director

Jørgen Buhl Rasmussen
Non-executive Director

Gonzalo Restrepo
Senior Independent Nonexecutive Director

Age: 57 | Nationality: Mexican

Age: 65 | Nationality: Irish

Age: 64 | Nationality: Danish

Age: 69 | Nationality: Colombian

Lourdes Melgar is a consultant and
scholar recognised for her expertise in
the areas of energy, sustainability and
public policy. During her career, she held
various positions in Mexico’s foreign
service. During the design and
implementation of Mexico’s energy
reform, Dr Melgar served as
Vice-Minister for Electricity from 2012
to 2014 and was appointed ViceMinister for Hydrocarbons, a position
she held until 2016. Dr Melgar is
currently a Research Affiliate at the
Center for Collective Intelligence at MIT
and a non-resident Fellow at the Center
of Energy of the Baker Institute. She
currently serves on the Board of Grupo
Financiero Santander Mexico.

John Moloney is the former Group
Managing Director of Glanbia plc, a
global performance nutrition and
ingredients company. He served as
Group Managing Director of Glanbia plc
from 2001 until he retired from this
position in November 2013. He joined
Glanbia plc in 1987 and held a number
of senior management positions
before he was appointed Deputy
Group Managing Director in 2000.
He is Chair of DCC plc.

Jørgen Buhl Rasmussen is the former
Chief Executive Officer of Carlsberg AS.
He served as the Chief Executive
Officer of Carlsberg AS from 2007 until
he retired from this position in 2015
having joined the company in 2006.
He previously held senior positions in
several global FMCG companies,
including Gillette Group, Duracell,
Mars and Unilever over the previous
28 years. He is Chair of Novozymes
AS and Chair of Unhrenholt AS and
an Advisory Board member of
Blazar Capital.

Gonzalo Restrepo is the former Chief
Executive Officer of Almacenes Exito
SA, a leading retail company in Latin
America and a subsidiary of the French
company, Casino Group. He served as
the Chief Executive Officer of
Almacenes Exito from 1990 until he
retired from this position in 2013.
He is a non-executive Director of Cardif
Colombia Seguros Generales SA.
He is a member of the Entrepreneurs
Council of Proantioquia in Colombia.

Term of office
Lourdes Melgar joined the Board in
January 2020.

John Moloney joined the Board in
December 2013.

Jørgen Buhl Rasmussen joined the
Board in March 2017.

Gonzalo Restrepo joined the Board in
June 2015.

Yes

Yes

Yes

Independent
Yes

Committee membership

56



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Corporate Governance Statement

The Directors are committed to maintaining the highest standards of corporate
governance. This Corporate Governance Statement describes how throughout
the financial year ended 31 December 2019 Smurfit Kappa Group plc applied the
principles of the 2018 UK Corporate Governance Code (‘the Code’) published by
the Financial Reporting Council (‘FRC’). The Directors believe that the Group has
complied with the provisions of the Code throughout the year under review.
The Directors welcomed the publication by the FRC of its new UK Corporate
Governance Code in July 2018 and its focus on the themes of corporate and
Board culture, stakeholder engagement and sustainability, which as this
report highlights are critical for SKG if we are to build a sustainable business.
We will continue to evolve our governance framework to ensure that we
remain compliant with the Code and meet best practice requirements.
A copy of the Code can be obtained from the FRC’s website: www.frc.org.uk.

Membership, Board Size and Independence
Following the appointment of Dr Lourdes Melgar, there are eleven Directors
on the Board, comprising: a non-executive Chair, two executive Directors
and eight non-executive Directors. The Board of Directors and their
biographical details are set out on pages 54 to 56. The Board considers that
the Board comprising eleven Directors is not so large as to be unwieldy and
that the Directors, having a broad spread of nationalities, backgrounds and
expertise, bring the breadth and depth of skills, knowledge and experience
that are required to effectively lead the Group.

Board of Directors
The Board is primarily responsible for the long-term success of the Group,
for setting the Group’s strategic aims, for the leadership and control of the
Group and for reviewing the Group’s system of internal control and risk
management. There is a clear division of responsibilities within the Group
between the Board and executive management. The Board retains control
of strategic and other major decisions under a formal schedule of matters
reserved to it which includes:
• Approval of the Group’s strategy which is set out on pages 24 and 25
• Board appointments including those of the Chair, Group Chief Executive
Officer and other executive Directors
• Appointment and removal of Group Secretary
• Agreement of terms of appointment of the Chair, Group Chief Executive
Officer and other executive Directors
• Agreement of any fundamental changes to the Group management
and control structure
• Approval of the annual financial budgets
• Approval of capital expenditure above fixed limits
• Approval of material acquisitions and disposals of businesses
• Approval of the Trading Statements, the Interim Report, the Preliminary
Results Release and the Annual Report
• Establishment and review of corporate governance policy and practice
• Monitoring of the Group’s risk management and internal control systems
• Confirming that the Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the position and performance of the Group, its
business model and strategy.
As recommended by the Code, the roles of Chair and Group Chief Executive
Officer are held by separate individuals and the division of responsibilities
between them is clearly established and has been set out in writing and
approved by the Board. The Board has delegated responsibility for the
day-to-day management of the Group, through the Group Chief Executive
Officer, to executive management. The Group Chief Executive Officer is
responsible for implementing strategy and policy as approved by the Board.
As discussed below, the Board has also delegated some of its responsibilities
to Committees of the Board. The powers of Directors are determined by
Irish legislation and the Articles of Association of the Company. The
Directors have access to independent professional advice at the Group’s
expense, if and when required. No such advice was sought by any Director
during the year. The Board Committees are provided with sufficient
resources to undertake their duties.

The Group has in place an effective Board which provides the highest
standards of governance to an internationally diverse business with interests
spanning three continents and 35 individual countries. Each of the Group’s
non-executive Directors has broad-based international business expertise
and many have gained significant and relevant industry specific expertise
over a number of years. The composition of the Board reflects the need, as
outlined by the Code, for an effective Board to maintain a balance of ‘skills,
knowledge and experience’. The experience of each Director is set out in
their biographies which are detailed on pages 54 to 56.
In particular, a central aspect of maintaining Board effectiveness is an
ongoing programme of Board refreshment, which fosters the sharing of
diverse perspectives in the boardroom and the generation of new strategies
and business ideas. The Board’s ongoing refreshment has continued,
with the appointment of Dr Melgar to the Board. The Board continues
to include an appropriate balance of longer serving and more recently
appointed Directors.
The Board through the Nomination Committee reviews the composition
of the Board on an annual basis. This includes a review of refreshment and
renewal policies, Board diversity, including gender diversity and the skills,
knowledge and experience of the Directors.
An independent external evaluation of the Board and its Committees was
conducted by Independent Audit in 2019. The process concluded that
overall the Board and its Committees continue to operate effectively.
The Board will focus on implementing the actions arising from the review
going forward.
Following these reviews, the Board is satisfied that the Board and its
Committees have the appropriate balance of skill, experience, diversity,
independence and knowledge of the Group to enable the Directors to
discharge their respective duties and responsibilities effectively and believe
the Board has a sufficient balance of diversity. The culture of the Board is
open, transparent and collegiate. The Chair demonstrates leadership and
encourages an open and transparent style around the Board table.
The Code recommends that, apart from the Chair, at least half of the Board
of Directors of a listed company should comprise non-executive Directors
determined by the Board to be independent. During the year under review,
the Company complied with the Code recommendation on composition
and independence.

The Board with the support of the Group Secretary is satisfied that it has the
policies, processes, time and information to function effectively.



57

Corporate Governance Statement continued
The Board reviewed the composition of the Board and determined that
Ms Anderson, Ms Fairweather, Mr Lawrence, Dr Melgar, Mr Moloney, Mr Buhl
Rasmussen and Mr Restrepo are independent. In reaching that conclusion
the Board took into account the principles relating to independence
contained in the Code and specifically whether any non-executive Director:
• is or has been an employee of the Group within the last five years;
• has or has had within the last three years, a material business relationship
with the Group;
• has received or receives remuneration from the Group apart from a
Director’s fee, participates in the Group’s share plans, or is a member of
the Group’s pension scheme;
• has close family ties with any of the Group’s advisers, Directors or senior
employees;
• holds cross-directorships or has significant links with other Directors
through involvement in other companies or bodies;
• represents a significant shareholder; or
• has served on the Board for more than nine years from the date of their
first appointment.
The Board is satisfied that the independence of the relevant Directors is not
compromised by these or any other factors.
While Mr Beurskens was previously an employee of the Group and receives
fees from a Group subsidiary, the Board does not believe these facts
compromise his independence of judgement, his contribution to the Board
or the quality of his oversight.
The Chair was independent on appointment.

External Directorships and Time Commitment
For executive Directors the Board believes that there is benefit for the
Group if they hold non-executive directorships with other companies as
it enhances their overall business experience. Consequently, the
executive Directors are encouraged to accept a small number of external
appointments as non-executive directors or on industry associations.
Directors are permitted to retain any payments received in respect of
such appointments.
In relation to non-executive Directors the Chair is satisfied that each
has demonstrated that he/she has sufficient time to meet his/her
Board responsibilities.
Mr Finan was appointed as non-executive Director of Fortune Brands
Home & Security, Inc. in February 2019. The Board are satisfied that the
responsibilities resulting from this appointment will not impact on Mr Finan’s
time commitment to the Group. Prior to accepting the appointment,
Mr Finan discussed the nature of the role and the time commitment involved
with the Chair.

Remuneration
Details of remuneration paid to Directors (executive and non-executive)
are set out in the Remuneration Report on pages 65 to 77. Non-executive
Directors are paid fees for their services and none of their remuneration
is performance related. They are not eligible to participate in the Group’s
annual bonus scheme or long-term incentive plans (‘LTIP’). Non-executive
Directors’ fees are not pensionable. The Remuneration Report will be
presented to shareholders for the purposes of a non-binding advisory
vote at the AGM on 30 April 2020.

Executive and Non-Executive Directors – Experience and Skills
Each of the executive Directors has extensive experience of the paperbased packaging industry. Their knowledge is supported by the general
business skills of the individuals involved and previous relevant experience.
The non-executive Directors use their broad based skills, their diverse range
of business and financial experiences and their international backgrounds in
reviewing and assessing any opportunities or challenges facing the Group
and play an important role in developing the Group’s strategy and
scrutinising the performance of management in meeting the Group’s goals
and objectives. Frits Beurskens has the additional benefit of many years
exposure to paper-based packaging companies either as employee,
director or stakeholder which complements the experiences of the
executive Directors. The diversity of skills and experiences are set out in
extensive detail in the biographies of the Directors on pages 54 to 56.

Chair
Mr Irial Finan, who joined the Board in February 2012, was appointed Chair
with effect from 3 May 2019 succeeding Mr. Liam O’Mahony who retired as a
non-executive Director and Chair on the same date. As recommended by
the Code, the Chair was independent at his time of appointment. The Chair
is responsible for the leadership of the Board and the efficient and effective
working of the Board. He sets and manages the Board agenda in order that
at appropriate times it addresses all matters reserved to the Board and
ensures that adequate time is available for discussion on strategy and the
strategic issues facing the Group. He ensures that the Directors receive
accurate, timely and clear information, and that the Directors are updated
periodically on the views or concerns of the major investors. He also ensures
that a culture of openness and debate is fostered to facilitate the effective
contribution of the non-executive Directors to the Board.

Appointments, Retirement and Re-election to the Board
Any Director co-opted to the Board by the Directors is subject to election by
the shareholders at the first Annual General Meeting (‘AGM’) after their
appointment and, pursuant to the Articles of Association of the Company, all
Directors are subject to re-election at intervals of no more than three years.
However, in accordance with the Code, the Directors individually retire at
each AGM and submit themselves for re-election if appropriate.
The procedures governing the appointment and replacement of Directors
are contained in the Company’s Articles of Association. Changes to the
Articles of Association must be approved by the shareholders in accordance
with Irish company law.
The standard letter of appointment of non-executive Directors will be
available for inspection at the AGM and is available on request, from the
Company Secretary.
Dr Melgar is offering herself up for election and each of the other Directors,
are offering themselves for re-election at the 2020 AGM.

58



Senior Independent Director
Mr Gonzalo Restrepo was appointed the Group’s Senior Independent
Director in December 2019. His duties include being available to
shareholders if they have concerns which cannot be resolved through
the Chair or Group Chief Executive Officer or where contact with either of
them is inappropriate. He is available to serve as an intermediary for other
Directors where necessary. The Senior Independent Director also conducts
an annual evaluation of corporate governance compliance, the operation
and performance of the Board, the Directors, its Committees and the
Chair’s performance in conjunction with the other non-executive Directors
on an annual basis except in the year when an external evaluation takes place.

Group Secretary
The Directors have access to the advice and services of the Group Secretary
who is responsible to the Board for ensuring that Board procedures are
followed, applicable rules and regulations are complied with and that the
Board is advised on its corporate governance obligations and developments
in best practice. The Group Secretary is responsible for formal minuting of
any unresolved concerns that any Director may have with the operation of
the Company. During the year, there were no such unresolved issues. The
Group Secretary also acts as secretary to all of the Board Committees.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Board Meetings

Succession Planning and Diversity

The Board meets at least five times each year with additional meetings as
required. The Board met five times in 2019. Details of the meetings held
during the period are contained in the schedule below, which also includes
information on individual attendance. The Board holds at least one of
its meetings each year at a Group operation to give the Directors an
opportunity to meet with a wider range of management and to see and
remain familiar with the Group’s operating activities. In 2019, the July Board
meeting was held in Düsseldorf and the Board visited the Brühl and Zülpich
plants. The Board is supplied on a timely basis in advance of Board meetings
with a Board Report comprising strategic updates, operational, financial,
health and safety, and investor relations information together with Board
papers on key issues in a form and of a quality to enable it to discharge
its duties effectively. The Board papers also include the minutes of all
Board Committee meetings and at each Board meeting the Chair of
each Committee gives a report on major agenda items discussed at
Committee meetings held since the last Board meeting.

The Board believes that appointing the best people to the Group’s Board is
critical to the success of the Company and as a result all appointments are
made purely on merit regardless of gender, race, religion, age or disability.
The Board recognises that diversity is an essential cornerstone for building
long-term business success and ensures different perspectives are
introduced into Board discussion. The Board considers gender, tenure and
a wide geographical experience base to be essential aspects of diversity
for a company with businesses in 35 countries worldwide, with seven
nationalities represented on the Board. This policy plays a key role in the
Group’s succession planning when considering new appointments to
the Board, such as Dr Melgar’s appointment in January 2020. Suitable
candidates are selected on the basis of their relevant experience,
employment background, skills, knowledge and insight, having due
regard to the benefits of diversity to the Board.

When Directors are unable to attend a meeting, having been advised in the
Board papers circulated prior to the meeting of the matters to be discussed,
they are given an opportunity to make their views known to the Chair or the
Group Chief Executive Officer prior to the meeting.

Attendance at Board Meetings
During the Year to 31 December 2019

I
Column A indicates the number of meetings held during the period the Director was a
member of the Board and was eligible to attend and Column B indicates the number of
meetings attended.
** Mr O’Mahony retired from the Board in May 2019.
*** Ms Bories and Mr Newell retired from the Board in December 2019.
**** Dr Melgar joined the Board in January 2020.

Induction and Development
On appointment, all non-executive Directors receive comprehensive
briefing documents on the Group, its operations and their duties as a
Director. They are also given presentations by the senior management
team and are given the opportunity to visit sites and meet with the local
management. Having been appointed in January 2019, Anne Anderson
completed an induction process. As part of this she visited a number of the
Group's operations in the Netherlands and in the USA. Ms Anderson also
received a briefing on directors duties under Irish Company Law and relevant
securities laws applicable to Smurfit Kappa Group. During the year, Directors
meet with senior management at Board meetings, on individual site visits
and at the annual visit by the Board to a Group operation. As noted above,
the July Board meeting was held in Düsseldorf and the Board visited the
Brühl and Zülpich plants. Directors also receive regular briefings and
presentations on a wide range of the Group’s activities together with all
significant analyst and rating reports. All Directors are encouraged to
go for training to ensure they are kept up to date on relevant legal
developments or changes in best practice.

During the year, the Nomination Committee evaluated the composition of
the Board with respect to the balance of skills, knowledge, experience and
diversity, including geographical and gender diversity, on the Board and
updated a policy document on Board succession.

External Board Evaluation
In 2019, an externally facilitated evaluation of the Board and its Committees
was conducted by Independent Audit. This process was completed in
accordance with the requirement to have an evaluation externally facilitated
every three years under Provision 21 of the Code. The process involved
experienced evaluators from Independent Audit conducting confidential one
to one interviews with each Director, the Group Secretary and the Head of
Internal Audit. The evaluators also attended and observed a Board meeting
as well as an Audit, Remuneration and Nomination Committee meeting.
The report received from Independent Audit was considered by the Board
at its meeting on 5 December 2019. An evaluator from Independent Audit
attended for part of that meeting to provide a summary of and to facilitate
the discussion of their report. Following this discussion, the Board formally
concluded on its own performance, on the performance of Committees and
on the performance of individual Directors, including the Chair. The Board
agreed on a number of actions, primarily arising from the Independent
Audit report, which will be implemented during the year.

Internal Board Evaluation
The Senior Independent Director co-ordinates a rigorous annual evaluation
of the operation and performance of the Board, the Directors, its
Committees and the performance of the Chair except in years when an
external evaluation is carried out. This is achieved through the completion
of a detailed questionnaire by each Director and separate discussions with
each Director. In addition, the Chair conducts an annual evaluation of the
performance of the Directors. The Committees undertake an annual
evaluation of their performance and report back to the Board. At least
once a year the Chair meets with the non-executive Directors without
the executive Directors to review the Board’s performance. The Board
discusses the results of its evaluations in order to identify and address
areas in which the effectiveness of the Board might be improved.

Share Ownership and Dealing
Details of Directors’ shareholdings are set out on pages 73 and 76. The
Group has a policy on dealing in shares that applies to restricted persons
comprising all Directors, senior management and certain other employees.
Under the policy, restricted persons are required to obtain clearance from
prescribed persons before dealing. Restricted persons are prohibited from
dealing in SKG securities during designated closed periods and at any
other time when the individual is in possession of Inside Information (as
defined by the Market Abuse Regulation (EU 596/2014)).



59

Corporate Governance Statement continued
Board Committees
As recommended by the Code, the Board has established three
Committees to assist in the execution of specific matters within its
responsibility. These are the Audit Committee, the Remuneration
Committee and the Nomination Committee. The responsibilities of each
of these Committees are set out clearly in written terms of reference, which
are reviewed annually and are available on the Group’s website. During 2019,
the Board also established a Sustainability Committee with responsibility
to provide direction and oversight of the sustainability strategy of the
Group. The Chair of each Committee reports to the Board on the major
agenda items discussed since the last Board meeting and the minutes
of all Committee meetings are circulated to all of the Directors.
The current membership of each Committee, details of attendance and
each member’s tenure are set out in the individual Committee reports on
pages 62 to 80.

The Group issues its Annual Report, preliminary and interim reports and
trading statements promptly to shareholders and also publishes them on
the Group’s website: smurfitkappa.com. The Group operates an investor
relations section on the website, which in addition to the above reports
and statements, contains investor presentations and all press releases
immediately after their release to the Stock Exchanges.
The Group’s AGM affords each shareholder the opportunity to engage with
and question the Chair of the Board, the Chairs of all Committees and all
other Board members. The Notice of the AGM and related papers together
with the Annual Report are sent to shareholders at least 20 working days
before the meeting. In addition, the Group responds throughout the year
to numerous queries from shareholders on a broad range of issues.

Shareholder Meetings and Shareholder Rights
Shareholders’ meetings are governed by the Articles of Association of the
Company and the Companies Act 2014 (as amended) (the ‘Companies Act’).

Stock Exchange Listings
Smurfit Kappa Group plc, which is incorporated in Ireland and subject to Irish
company law, has a premium listing on the London Stock Exchange and a
secondary listing on Euronext Dublin (formerly the ISE).
For this reason, Smurfit Kappa Group plc is not subject to the same ongoing
listing requirements as those which would apply to an Irish company with a
primary listing on Euronext Dublin including the requirement that certain
transactions require the approval of shareholders. For further information,
shareholders should consult their own financial adviser.

Communication with Shareholders
The Board gives a high priority to effective communications with
shareholders and recognises the benefits of shareholder engagement in
order to foster mutual understanding of the Company’s strategy and the
views of major investors. On a day-to-day basis, contact with institutional
shareholders is the responsibility of the Group Chief Executive Officer,
the Group Chief Financial Officer and the Head of Investor Relations.
There is regular dialogue with individual shareholders, as well as general
presentations, plant visits, attendance at relevant conferences and
conference calls and presentations, as applicable, at the time of the
release of the Annual Report, preliminary and interim reports and trading
statements. Investors and analysts also attend the Group’s Innovation Event
which is held every two years. The Chair, Group Chief Executive Officer,
Group Chief Financial Officer, Chief Executive Officer Europe and the Chief
Executive Officer the Americas also participate in these events. The Chair,
Senior Independent Director and any other member of the Board are
available to meet major investors if required. The Chair also had a number
of meetings with major shareholders during the year.
The papers for each Board meeting include a comprehensive report
summarising investor relations activity during the preceding period including
contacts between executive management and current and prospective
institutional shareholders. The views and issues highlighted by shareholders
are also included in the report.

60



The Company must hold an AGM each year in addition to any other
shareholder meeting in that year and must specify that meeting as such
in the notices calling it. The Directors may convene general meetings.
Extraordinary general meetings may also be convened as provided by
the Companies Act. Notice of a general meeting must be provided as
required by the Companies Act.
At its general meetings, the Company proposes a separate resolution on
each substantially separate issue and does not bundle resolutions together
inappropriately. Resolutions on consideration of the Annual Report, the
Directors’ Remuneration Report and the Remuneration Policy (on adoption)
are put to shareholders at the AGM.
The Chair of the Board of Directors or, in his absence, another Director
nominated by the Directors will preside as Chair of a general meeting.
Ordinary Shares carry voting rights. Three members entitled to vote at the
meeting present either in person or by proxy constitute a quorum. Votes
may be given either personally or by proxy. On a show of hands, every
member present in person and every proxy will have one vote and on a poll,
every member present in person or by proxy, shall have one vote for every
share carrying voting rights of which he/she is the holder. The following
persons may demand a poll: the Chair of a general meeting, at least three
members present in person or by proxy having the right to vote at the
meeting, any member(s) present in person or by proxy representing at least
one-tenth of the total voting rights of all the members having the right to
vote at the meeting, or, a member(s) present in person or by proxy holding
shares on which an aggregate sum has been paid up equal to not less than
one-tenth of the total sum paid up on all the shares conferring that right.
The Companies Act provides for a number of key powers of general
meetings, including the right to elect or re-elect a Director, the right to
give authority to the Company to disapply pre-emption rights, the right to
give authority to the Company to buy back shares and the right to amend
the Memorandum and Articles of Association of the Company.

Overview

Strategic Report

The Companies Act also provides for a number of shareholder rights in
respect of the general meeting and the methods of exercising those rights,
which are set out in the notes to the Notice of the AGM, including the right a)
to table agenda items and resolutions for inclusion on the agenda of an annual
general meeting, b) to table a draft resolution in respect of an item already on
the agenda of the general meeting, c) to ask questions in relation to an item
on the agenda of a general meeting and d) to appoint a proxy electronically.

Code of Business Conduct
The Smurfit Kappa Code of Business Conduct includes principles of best
practice in this area which apply to the Group’s Board of Directors, officers
and employees worldwide. We also require individuals, entities, agents or
anyone acting on the Group’s behalf to comply with its Code of Business
Conduct. The Code of Business Conduct was reviewed and updated during
2019 and now incorporates the Group's Good Faith Reporting Policy. The
Code of Business Conduct is available on the Group’s website: smurfitkappa.
com and is translated into 17 languages.

Sustainability
In order to create long-term value, our Company has built its business on
three pillars of sustainability – Planet, People and Business. This means
respecting the social environment we are in, and ensuring that the impacts
on nature and natural resources do not exceed the needs of future
generations. SKG manages its business in a way which recognises its key
responsibilities in all material aspects of sustainability especially in the areas
of Environment, Sustainable Forestry, Social Citizenship and Health and
Safety. The Group’s principles are summarised on pages 40 to 45 and are
described in detail in the Sustainable Development Report for 2018 which
is available on the Group’s website. The Sustainable Development Report
for 2019 will be published in April 2020. The new Board Sustainability
Committee is responsible for guiding and overseeing the Group‘s
sustainability strategy going forward.

Risk Management and Internal Control

Governance

Financial Statements

Supplementary Information

Financial Reporting
As part of its overall system of internal control, the Group has in place control
and risk management systems to govern the Group’s financial reporting
process and the process for the preparation of the Group’s Consolidated
Financial Statements. The requirements for producing financial information
are governed by the Group’s Financial Reporting Guide and Financial
Monitoring Policy which gives guidance on the maintenance of records
that accurately and fairly reflect transactions, provide reasonable assurance
that transactions are recorded correctly to permit the preparation of
Consolidated Financial Statements in accordance with International
Financial Reporting Standards and that require reported data to be reviewed
and reconciled. These systems include the following financial reporting
controls: access controls, reconciliations, verification controls, asset security
controls and segregation of duties. Segment management and the Group’s
executive management team review the results of the operations on a
monthly basis. The Group’s executive management team receive detailed
monthly reports from all operations and meet with segment management
at least on a quarterly basis to review the year-to-date results against budget
and rolling forecasts enabling them to monitor and challenge any variance
against the expected financial outcome for the period. Internal Audit review
financial controls in different locations on a test basis each year and report
quarterly to the Audit Committee. Each operation through to segment level
is required to self-assess on the effectiveness of its financial control
environment. This includes the completion of an Internal Control
Questionnaire which is reviewed by the Group Financial Controller
and audited on a test basis by Internal Audit. Senior management
representations with respect to the Group Consolidated Financial
Statements showing a true and fair view are also required and supplied
at year-end.

Directors’ Report
The Change of Control, Capital Structure and Purchase of Own Shares
information are set out on pages 81 to 82 of the Directors’ Report and form
part of this Corporate Governance Statement.

The Board has overall responsibility for the Group’s system of risk
management and internal control and for monitoring and reviewing its
effectiveness, in order to safeguard shareholders’ investments and the
Group’s assets. Details in relation to Risk Management and Internal
Control are included in the Risk Report on pages 30 to 33.
The Directors confirm there is an ongoing process for identifying, evaluating
and managing the emerging and principal risks faced by the Group which is in
accordance with the FRC’s Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting. This process has been in place
throughout the accounting period and up to the date of approval of the
Annual Report and Consolidated Financial Statements and is subject to
regular review by the Board.
The Directors confirm that they have carried out a robust assessment of
the emerging and principal risks facing the Group’s business model, future
performance, solvency and liquidity. The Directors also confirm they
have conducted an annual review of the effectiveness of the Group’s risk
management and system of internal control up to and including the date
of approval of the Annual Report and Consolidated Financial Statements.
This had regard to the emerging and principal risks that could affect the
Group’s business (as outlined on pages 30 to 33), the methods of managing
those risks, the controls that are in place to contain them and the
procedures to monitor them.



61

Audit Committee Report
Dear Shareholder
I am pleased to present the Audit Committee
report for the 2019 financial year. The
purpose of this report is to provide an
overview of how we have carried out
our responsibilities during the year.”
Carol Fairweather
Chair of Audit Committee
6 March 2020

Committee Members
C. Fairweather (Chair)
J. Lawrence
L. Melgar
J. Moloney

Role of the Audit Committee
The Committee is responsible for providing oversight and assurance to the
Board regarding:
• the integrity of the published financial statements and the significant
financial reporting judgements;
• internal financial controls and risk management and internal
control systems;
• the Internal Audit function;
• the External Audit arrangements; and
• whether the Annual Report taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and performance, business
model and strategy.
The Terms of Reference of the Committee were updated in December 2019
to reflect the revised Code and are available on smurfitkappa.com.

Membership of the Committee
The Board has reviewed and updated the composition of the Committee
during the year and is satisfied that the mix of business and financial
experience and sector expertise enables the Committee to effectively fulfil
its responsibilities. The biographical details of each member are set out on
pages 54 to 56. The Committee is currently comprised of four independent
non-executive Directors. Of these, Mr James Lawrence and I, the
Committee Chair, have recent and relevant financial experience.

Meetings
The Committee met five times during the year under review. Details of the
Committee members and meetings attended are provided in the adjacent
table. The Group Chief Financial Officer, the Group Internal Auditor, and
senior members of the Group finance team normally attend meetings of
the Committee. The Group Chief Executive Officer periodically attends
meetings of the Committee. The External Auditor also attends all meetings
and together with the Group Internal Auditor have direct access to the
Committee Chair at all times. In advance of every meeting, the Committee
Chair meets individually with the Group Chief Financial Officer, Group
finance team, the Group Internal Auditor and the External Auditor.
Attendance Record

AColumn A indicates the number of meetings held during the period the Director was a member
of the Board and was eligible to attend and Column B indicates the number of meetings
attended.
** Ms Anderson was appointed to the Committee and Mr Finan retired from the Committee in
February 2019. Ms Anderson retired from the Committee in December 2019.
*** Ms Bories and Mr Newell retired from the Board, and Mr Buhl Rasmussen and Mr Restrepo
retired from the Committee in December 2019.
**** Dr Melgar was appointed to the Committee in January 2020.

How the Committee has Discharged its Responsibilities
Over the course of the year, we continued to focus on our usual work in
relation to financial and risk related matters as set out below. In addition,
we also specifically focused on the following matters
• the implementation of IFRS 16, Leases, and its impact on the financial
statements. See Note 4 to the Consolidated Financial Statements for
further information;
• the continued evolution of the Group’s risk function and the focus on
emerging risks; and
• the integration of newly acquired businesses.

Overview

Strategic Report

Financial Reporting and Significant Matters Related to the
Consolidated Financial Statements
The Group’s Consolidated Financial Statements are prepared by finance
personnel with the appropriate level of qualifications and expertise. The
Committee reviewed all published financial and narrative statements of the
Company, including the annual and interim reports, preliminary results’
announcement, trading statements and any other formal announcement
relating to its financial performance. The Committee reported its views to
the Board to assist in the Board’s approval of the results announcements.
The Committee assessed whether suitable accounting policies had been
adopted and whether management has made appropriate estimates and
judgements. The Committee considered management’s position in relation
to the main financial reporting judgements.
The Committee also reviewed reports by the External Auditor on the
hard-close and year-end audit procedures which highlighted any matters
identified from the work undertaken on the external audit.
Insofar as it relates to audit and risk management, the Committee
considered all material information presented with the financial statements,
such as the strategic report and the corporate governance statements.
The significant matters that the Committee considered in relation to the
Consolidated Financial Statements are detailed on the next page.

Fair, Balanced and Understandable
The Code requires that a fair, balanced and understandable assessment of
the Company’s position and prospects be presented by the Board and that
they consider that the Annual Report and Financial Statements, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and performance,
business model and strategy.
The Committee, on behalf of the Board, considered and discussed with
management the key processes that they have in place for the preparation
of the Annual Report including their detailed planning and co-ordination as
well as comprehensive review procedures. This allowed the Committee to
confirm to the Board that the Annual Report, taken as a whole, is fair,
balanced and understandable and that it provides the necessary information
for shareholders to assess the Group’s position and performance, business
model and strategy. In addition, the Committee noted the formal processes
performed by KPMG in relation to the Annual Report.

Governance

Financial Statements

Supplementary Information

Risk Management and Internal Control
The Group’s internal control and risk management systems are embedded
within the organisation structure.
The Committee is responsible for reviewing the adequacy and effectiveness
of the internal control system and risk management on behalf of the Board.
The Committee has reviewed the adequacy and effectiveness of the Group’s
internal control systems regularly through various activities including:
• reviewing the effectiveness of its risk management processes;
• reviewing and challenging management’s self-assessment of the internal
control framework;
• the work undertaken by internal and external auditors in relation to
internal controls; and
• the regular reporting on any control, fraud related or whistleblowing issues.
Having completed its review of the effectiveness of the Group’s system of
internal controls including risk management, the Committee confirms that it
has not been advised of, or identified, any significant failings or weaknesses.
For further details on the Group’s Risk Management and Internal Control
please see the Risk Report on pages 30 to 33.

External Auditor
The Committee is responsible for overseeing the relationship with,
and the performance of, the External Auditor. This includes making a
recommendation on the appointment, reappointment and removal
of the External Auditor, assessing their independence, involvement in
fee negotiations and assessing their performance.
During the year, the Committee considered the effectiveness and
independence of the External Auditor and confirmed its satisfaction on
both. This review involved discussions with both Group management and
Internal Audit and feedback provided by divisional management. The
Committee continues to monitor the performance and objectivity of the
External Auditor and takes this into consideration when making its
recommendation to the Board.
Prior to the commencement of the 2019 year-end audit, the Committee
approved the External Auditor’s strategy and plan and agreed the scope
of the audit, the key risks, the proposed audit fee and the terms of
engagement. The Committee has recommended to the Board that the
current External Auditor, KPMG, be proposed for reappointment at the
forthcoming AGM.

Internal Audit
The Group operates an internally resourced Internal Audit function which
reports directly to the Committee. The Committee reviewed and approved
the annual Internal Audit plan and related resourcing requirements to deliver
the plan.
The Committee reviewed the quarterly reports from the Internal Auditor
summarising audit findings, agreed actions and recommendations and
reviewed progress on addressing the actions and recommendations.
The Committee reviewed the effectiveness of the Internal Audit function
and was satisfied it was operating effectively within the current remit. The
Committee met privately with the Internal Auditor during the year.

Whistleblowing
The Committee is responsible for ensuring that the Group maintains
suitable whistleblowing arrangements. During 2019, the Group completed a
review of the whistleblower policy and arrangements. The outcome of this
review resulted in the implementation of ‘Speak Up’ (further details included
on page 53), a third party system which provides an enhanced reporting
channel and case management process that aligns with the Smurfit Kappa
Code of Conduct which was also updated during 2019 and now incorporates
the Group's Good Faith Reporting Policy.

KPMG attended all the Audit Committee meetings during the year and had
a number of private meetings with the Committee during the year.
KPMG has been the Group’s auditor since 2018, following a formal
tender process.

External Auditor Non-Audit Services
The Committee recognises that the independence of the External Auditor
is an essential part of the audit framework and the assurance that it provides.
The Committee has adopted a policy which sets out the types of permitted
and non-permitted non-audit services and those which require explicit
prior approval.
Non-audit services provided by the External Auditor must be considered by
the Committee to be necessary in the interests of the business and, by their
nature, these services could not easily be provided by another professional
auditing firm.
The provision of tax advisory services and due diligence/transaction
services may be permitted with the Committee’s prior approval. The
provision of internal audit services, valuation work and any other activity
that may give rise to any possibility of self-review are not permitted
under any circumstance.



63

Audit Committee Report continued
All contracts for non-audit services in excess of €50,000 must be notified to
and pre-approved by the Chair of the Committee. Details of the amounts
paid to the External Auditor during the year for audit and other services are
set out in Note 6 on page 111. Fees paid to KPMG for non-audit work in 2019
DPRXQWHGWRb|PLOOLRQDQGWRWDORIWKHIHHVSDLGIRUWKHVWDWXWRU\
audit (2018: 12%).

Going Concern and Viability Statement
The Committee reviewed the paper prepared by management that
supports the going concern assumption and the viability statement.
The Committee was comfortable with the process that had been followed
and with the stress testing scenarios that had been applied based on the
Group’s principal risks. These statements are included in the Risk Report
on pages 30 to 33.

During the year, there were no circumstances where KPMG was engaged
to provide services which might have led to a conflict of interests or
compromised their independence.

Significant Matters Related to the Consolidated Financial Statements
Significant Matter

Action Taken/Conclusions

Assessment of the Carrying Value of Goodwill
7KH*URXSKDVJRRGZLOORIb|PLOOLRQDW'HFHPEHU
2019. The Group performs an impairment review at
least annually and at any time an impairment is considered
to exist.

The Committee considered management’s assessment of the carrying value of
goodwill relating to groups of cash-generating units (‘CGUs’). The Committee
considered the methodology applied and the key assumptions (including future
profitability and terminal growth and discount rates) used in the assessment.
The Committee also considered a number of different scenarios to test the sensitivity
of the model to changes in its key drivers and to understand the level of headroom
available at a CGU level.
The Committee was satisfied that the judgements made by management are
UHDVRQDEOHDQGWKDWH[FHSWIRUWKHb|PLOOLRQFKDUJHLQUHODWLRQWR%UD]LOJRRGZLOOLV
not impaired, and the disclosures in Note 13 to the Consolidated Financial Statements
are appropriate.

Valuation of Defined Benefit Obligations
The Group has defined benefit obligations totalling
b|PLOOLRQDW'HFHPEHU

The Committee considered the key assumptions management used in determining
the defined benefit liabilities (which included a full actuarial valuation of the unfunded
liabilities undertaken by independent experts) and was satisfied that they were
reasonable, appropriate and consistent with market practice.

Exceptional Items
The Group has recognised exceptional charges totalling
b|PLOOLRQLQ

The Committee considered management’s proposed treatment of each of the items
LQFOXGHGZLWKLQH[FHSWLRQDOFKDUJHVZKLFKWRWDOOHGb|PLOOLRQ
The Committee was satisfied that the size and nature of the items included within the
exceptional charge were consistent with the Group’s accounting policy and were
appropriately disclosed.

Committee Evaluation

Coming Year

An independent external evaluation of the Board and its Committees was
conducted by Independent Audit in 2019, details of which are outlined in the
Corporate Governance Statement on page 59. The evaluation concurred
with the Board's plans to reduce the size of the Audit Committee's
membership and the changes took effect from 1 January 2020. Overall
the Committee was considered to be operating effectively and efficiently.

During the coming year, we will continue with our reviews of the
financial reporting process and internal controls and risk management
processes including identification of emerging risks.

64



The periodic independent external quality assessment of the Internal Audit
function will be carried out during the year and the report will be considered
by the Committee.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Remuneration Report
Dear Shareholder
I am pleased to present our Directors’ Remuneration
Report for the financial year ended 31 December 2019,
my first as Chair of the Remuneration Committee.
I also want to thank Irial Finan for his leadership of the
Committee over the last number of years, including the
development of the current Remuneration Policy which
was approved by shareholders at the 2018 AGM.”
John Moloney
Chair of Remuneration Committee
6 March 2020

Committee Members
J. Moloney (Chair)
I. Finan
C. Fairweather
J. Buhl Rasmussen
G. Restrepo

Although the Group is listed on the London Stock Exchange, given that the
Group is incorporated in Ireland, it is not subject to the UK remuneration
reporting regulations (The Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013) which apply to UK
incorporated companies only. Nevertheless, the Committee recognises the
importance of effective corporate governance and is therefore voluntarily
adopting a number of the requirements of these reporting regulations.
The current Directors’ Remuneration Policy was approved by shareholders
at the 2018 AGM by way of an advisory vote and is subject to renewal at the
2021 AGM (in line with the normal three-year cycle). The Committee has
reviewed the EU Shareholders’ Rights Directive (‘SRDII’). While the Irish
legislation implementing SRDII has not yet been published, the current policy
was drafted in anticipation of SRDII, and the Committee is satisfied that the
Group is complying with best practice in respect of remuneration reporting.
In addition, the Committee proposes to present a new policy for shareholder
approval at the 2021 AGM to ensure full compliance with SRDII and the
implementing legislation.
In line with our commitment to effective corporate governance, the annual
Remuneration Report has been drafted to cover the key requirements of
the UK remuneration reporting regulations. In addition, where appropriate,
the report has been updated to cover additional Irish remuneration reporting
requirements, which do not take effect until next year. The annual
Remuneration Report will be subject to an advisory vote at the 2020 AGM.

Link Between Remuneration and Strategy
As set out in further detail throughout the Annual Report, Smurfit Kappa’s
strategic objective is to develop long-term customer relationships by
providing customers with differentiated sustainable packaging solutions
that enhance the customers’ prospects of success in their end markets.
To deliver this, the Group’s key aims are:
• expand our market position in Europe and the Americas through
selective focused growth;
• become the supplier/partner of choice;
• enhance our operational excellence through the continuous upgrade
of our customer offering;
• recruit, retain, develop, and motivate the best people; and
• maintain a disciplined approach to capital allocation and the focus on
cash generation.
Successful delivery of our strategy will continue to build a sustainable
business delivering long-term shareholder value, profit growth and
positive returns on capital.
Executive Director remuneration arrangements are aligned with the delivery
of our strategy through the underpinning performance metrics, which
include: profit based metrics (Earnings Before Interest and Tax (‘EBIT’) for
the annual bonus and EPS for the LTIP); cash based metrics (FCF for the
annual bonus); return based metrics (ROCE for the annual bonus and LTIP);
shareholder return metrics (relative Total Shareholder Return ('TSR') for
the LTIP); and key non-financial metrics.



65

Remuneration Report continued
2019 Performance and Incentive Out-turns

Corporate Governance Code

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ROCE of 17.0% compared to 19.3% in 2018. In this context, the Committee
reviewed performance against the metrics under the annual bonus plan for
2019 and approved a bonus of 71% of maximum for the executive Directors.
In line with the Remuneration Policy, 50% of the annual bonus award will be
deferred into shares for three years.

Last year the Committee made two changes to the approach to
remuneration for executive Directors following the publication of the UK
Corporate Governance Code in July 2018:
• Holding periods: increased the time horizons for long-term incentive
awards, such that no part of the award (except to cover taxes due) will be
released before the fifth anniversary of grant; and
• Pensions: we made a commitment that pension provisions for any new
executive appointments will be no higher than the pension contributions
offered to other employees within the Group in the relevant jurisdiction.

The Committee is conscious that during 2019, one of the Group’s
subsidiaries, Smurfit Kappa Italia, S.p.A. (‘SKI’), was found to have engaged
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by the Italian Competition Authority (‘ICA’). As set out elsewhere in the
report, SKG is very disappointed with the decision of the ICA and is currently
appealing the decision on both administrative and substantive grounds,
with the process expected to take a number of years. In light of the appeal
process currently underway, the Committee has determined that the
deferred bonus awards for the executive Directors will be subject to an
additional underpin condition, with the final level of pay-out to be
determined on conclusion of the appeal.
The performance period for the 2017 DABP award (the final award to
executive Directors under the plan) ended on 31 December 2019. Based
on performance against the three-year FCF and ROCE targets, the awards
will vest at 100% of the maximum.
The Committee considered that the Remuneration Policy operated
as intended during 2019 and that the annual bonus and DABP
out-turns were an appropriate reflection of the Executives’ and
the Company’s performance.

During 2019 the Committee considered the other provisions of the Code
and from 2020 we are making the following changes to our approach:
• Post-employment share ownership requirements: share ownership
requirements that apply during employment will continue to apply for
two years post-employment. The in-employment guideline (300% of
salary for the CEO and 200% of salary for the CFO) will apply in full for
the first year post-employment and apply at 50% for the second year
post-employment.
• Malus and clawback triggers: the triggers in which malus and clawback can
be applied have been expanded to include situations of corporate failure.
The Committee is also mindful of the new UK legislation requiring companies
to disclose the CEO pay ratio data. Although this legislation does not apply
to SKG, the Committee has voluntarily published the ratio of the CEO’s pay
to selected Irish employees. This information is set out on page 71.

Conclusion
On behalf of the Committee, I thank you for your continued support and
we trust that you find the report informative. As always, I welcome any
comments you have.

Further details on performance against the targets are set out on
pages 69 to 71.

Performance Share Plan (‘PSP’) Targets 2020-2022

How we will Implement Our Policy in 2020

Each year the Committee reviews PSP performance measures and targets
to ensure that they continue to incentivise executives to achieve clearly
defined stretching long-term targets. Performance targets are determined
in line with the Group’s annual budgeting, Medium-Term Planning and
viability statement processes, which are built taking into account a number
of factors including the budget and external economic factors (including
the OECD expectations on GDP growth and the Fastmarkets RISI paper
packaging forecasts).

The table on the adjacent page sets out a summary of how our
Remuneration Policy will be implemented in 2020 in respect of executive
Directors and non-executive Directors. The Remuneration Policy approved
by shareholders at the 2018 AGM can be found on pages 86 to 90 within our
2017 Annual Report and is available from our website at
https://www.smurfitkappa.com/investors/reports-and-presentations

A key assumption is forecasted paper (containerboard and recovered paper)
price movements beyond the budget year to which extent the Group uses
information from the Fastmarkets RISI paper packaging forecasts.
In light of the above factors, the Committee has considered the EPS and
ROCE targets that will apply to the 2020 PSP awards and has set three-year
targets that we consider stretching in the context of the above, with details
set out on page 67. Given that performance will be impacted by actual paper
price movements, to ensure that pay-outs are appropriate, in the event
that paper prices in the period differ materially from current forecasts,
the Committee will use its judgement to review the formulaic outcome to
ensure that vesting levels accurately reflect the underlying performance
of the business. Any adjustments made to the formulaic outcome will be
clearly communicated to investors at the end of the performance period.

66



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Executive Directors
Component

Implementation in 2020
Group Chief Executive Officer

Basic Salary

Group Chief Financial Officer

The Group CEO's salary is not being increased for 2020. The Group CFO's salary is being increased by 3.5% effective
1 January 2020. The salary increase for the Group CFO is broadly aligned with both the average increases for executives
in SKG’s main geographies and the increase for the wider workforce.
A. Smurfit=€1,112,133 p.a.

Actual targets have not been disclosed prospectively due to commercial sensitivity.
50% will be delivered in cash and 50% will be deferred into Company shares for three years.
A. Smurfit (maximum)=150% of salary
Performance
Share Plan
(‘PSP’)

K. Bowles (maximum)=150% of salary

Performance measured over three years against three equally weighted measures. Awards are subject to a post-vesting
holding period such that they are released following the fifth anniversary of the grant date.
Measure

Threshold Vesting
(25% of maximum)

Maximum Vesting
(100% of maximum)

EPS (pre-exceptional items – cumulative over
three years)

6
Straight line vesting between points
*Measured against the following peers: Billerud Korsnas, Cascades, DS Smith, Empresas Cmpc, Graphic Packaging,
International Paper, Klabin, Mayr-Melnhof, Metsa Board, Mondi, Packaging Corporation of America, Stora Enso,
UPM-Kymmene and WestRock.
A. Smurfit (maximum)=225% of salary

K. Bowles (maximum)=180% of salary

Share
Ownership
Requirements

A. Smurfit is required to build a shareholding equivalent
to 300% of basic salary.

K. Bowles is required to build a shareholding equivalent to
200% of basic salary.

Postemployment
Share
Ownership
Requirements

The share ownership requirement will apply for the first year post-departure and 50% of the requirement will apply for the
second year post departure.

Recovery
Provisions

Recovery provisions (clawback and malus) may apply to the Annual Bonus and Performance Share Plan. The provisions may be
enforced in the event of:
• a material misstatement of the Group’s consolidated audited financial statements;
• where an award was determined by reference to an assessment of a performance condition which was based on an error,
or inaccurate or misleading information;
• fraud or other material financial irregularity affecting the Group;
• the occurrence of an event that causes or is likely to cause reputational damage to the Group;
• serious misconduct by a participant;
• a corporate failure in any Group Member or a relevant business unit; or
• other circumstances which the Committee in its discretion considers to be similar in their nature or effect as the above.
Recovery provisions may be enforced in respect of the cash bonus for three years following payment, in respect of deferred
shares for three years from grant and in respect of PSP awards for five years from grant.


67

Remuneration Report continued
The following table summarises how the Remuneration Policy fulfils the factors set out in Provision 40 of the 2018 UK Corporate Governance Code:
Code

SKG Remuneration

Clarity
Remuneration arrangements should
be transparent and promote effective
engagement with shareholders and
the workforce.

The annual bonus and PSP have been designed to incentivise executives to achieve clearly defined
stretching targets. Performance measures and targets are reviewed each year by the Committee to
ensure that they continue to be clear and appropriate.

Simplicity
Remuneration structures should avoid
complexity and their rationale and
operation should be easy to
understand.

In 2018 the Committee replaced our deferred bonus matching plan with a new performance share plan
aligned with market practice. This move supports our aim of operating a simple remuneration structure
with a single long-term incentive plan operating separately from the annual bonus.

Risk
Remuneration arrangements should
ensure reputational and other risks
from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated.

The Remuneration Policy, approved at the 2018 AGM, was designed to support the Group’s business
strategy and the objective of developing superior, sustainable returns and value at acceptable levels of
risk but with a clear and intelligible link to performance and the financial prosperity of the Group.

Predictability
The range of possible values of
rewards to individual Directors and
any other limits or discretions should
be identified and explained at the
time of approving the policy.

The Committee believes it is important for executive Directors and senior management that a
significant portion of the package is performance related. The potential value and composition of
the executive Directors’ remuneration packages at below threshold, target and maximum scenarios
under our Remuneration Policy are set out on page 88 of the 2017 Annual Report.

Proportionality
The link between individual awards,
the delivery of strategy and the
long-term performance of the
Company should be clear. Outcomes
should not reward poor performance.

Payments from the annual bonus and PSP require delivery against stretching performance conditions.
The performance conditions are directly linked to the Group’s strategy and KPIs.
The Committee has discretion to override formulaic out-turns to ensure that they are appropriate
and reflective of overall performance.

Alignment to Culture
Incentive schemes should drive
behaviours consistent with company
purpose, values and strategy.

Smurfit Kappa is a multinational Group and it is important that remuneration packages in each
geographical location are fair and competitive for that location and at a most senior level, on an
international basis.
Details of how our remuneration arrangements support delivery of the Group’s strategy are set
out in the covering letter from the Chair of the Committee.

Non-Executive Directors
The table below sets out a summary of non-executive Director fees. No changes were made to fees for 2020.
Annual Fee

Chair
Non-executive Director base fee
Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Total Executive Directors’ Remuneration in 2019
The following table shows a single figure of total remuneration for each executive Director for the years 2019 and 2018. The individual remuneration in the
tables below is also set out on page 75.
LTIP

Benefits include the use of a company car, club subscriptions or cash equivalent.
Includes the total bonus paid in respect of 2019 and 2018, including deferred amounts.
Deferred matching shares – for 2019 this represents the matching shares that vested in February 2020 at the grant price in 2017. They vested at 100% of maximum as a result of the achievement
of the relevant performance targets for the three-year period ended 31 December 2019 (see page 71 for further details). For 2018 this represents the matching shares that vested in February 2019
at the grant price in 2016. They vested at 51.6% of maximum as a result of the achievement of the relevant performance targets for the three-year period ended 31 December 2018.
Share price appreciation element – the estimated additional value generated through share price growth over the grant price in 2017 and 2016. For the 2017 grants the share price used is €33.49
compared to the grant price of €25.71 per share. For the 2016 grants the share price used is €25.81 compared to the grant price of €22.84 per share.

Pensions
Mr Smurfit and Mr Bowles participated in a Group contributory defined benefit pension plan based on an accrual rate of 1/60th of pensionable salary for each
year of pensionable service and was designed to provide two thirds of salary at retirement for full service. The defined benefit plan which Mr Smurfit and
Mr Bowles are members of closed to future accrual with effect from 30 June 2016 and was replaced by a defined contribution plan. All pension benefits are
determined solely in relation to basic salary.
The Irish Finance Act 2006 effectively established a cap on pension provision by introducing a penalty tax charge on pension assets in excess of the higher
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Committee of SKG decided that Irish based executive Directors should have the option once they reached the cap of continuing to accrue pension benefits
as previously, or of choosing an alternative arrangement with a similar overall cost to the Group.
Mr Smurfit (in 2019 and 2018) chose an alternative arrangement which involved capping his individual pension in line with the provisions of the Finance Act
and receiving a supplementary taxable non-pensionable cash allowance, in lieu of prospective pension foregone. This was calculated based on actuarial
advice as the equivalent of the reduction in SKG’s liability to the individual and spread over the term to retirement as annual compensation allowances and
was fixed at 30 June 2016 on the closure of the defined benefit plan to future accrual. For 2019, the non-pensionable cash allowance for Mr Smurfit
represented 20.5% of salary. Mr Bowles also chose the alternative arrangement with the cash allowance in the year representing 17% of salary. In 2018 the
total contribution was 17% of salary (partly paid into the defined contribution plan until his individual cap was met and the remainder as a cash allowance).
The pension provision for any new executive appointment will be no higher than the pension contributions offered to other employees within the Group in
the relevant jurisdiction.

Annual Bonus
Executive Directors participate in an annual bonus scheme which was based on the achievement of clearly defined stretching annual financial targets,
together with targets for Health and Safety and personal/strategic goals for each of the executive Directors.

2019 Annual Bonus
The key target areas as well as their weightings and the specific targets for the 2019 annual bonus plan are set out in the table below:
Performance Metrics

Remuneration Report continued
Personal/Strategic Goals
The following table sets out the executive Directors’ achievements against their personal/strategic objectives for 2019:
Executive

Achievement Against Personal/Strategic Objectives

Mr Smurfit

Innovation
• 63 innovation/design awards won in 2019 (up from 52 in 2018).
• Successful biennial Innovation Event held in May 2019 attended by over 350 customers.
• Inaugural ‘Global Better Planet Packaging Day’ in November 2019 which involved over 650 brand owners and
retailers across the SKG Global Experience Centre network.
Sustainability
• Strong progress made against Sustainability metrics, including:
Ɵ Further reduction in CO2 emissions. In 2019 we reached a 33% reduction in the specific CO2 emissions per
tonne of paper produced compared to 2005 (up from 29% in 2018).
Ɵ 92% of all deliveries to customers are certified Chain of Custody (up from 88% in 2018).
People
• Successful retention of key personnel and maintained focus and motivation across the wider management Group.
• New Talent Management approach encompassing succession planning developed and implemented.
• Increase in employee engagement for pulse survey conducted in 2019.
• Higher female participation (over 30%) on all training programmes.
Acquisitions/Disposals
• During 2019 successfully completed the acquisition of Vitavel AD in Bulgaria and completed the buyout of a
significant portion of the non-controlling interest in Colombia.
• Integration of all acquisitions in France, Serbia, Bulgaria and Reparenco in the Netherlands is progressing well.
Stakeholder Engagement
• Continuous engagement with shareholders in 2019, with the executive Directors meeting with over 200 analysts
and portfolio managers.

Mr Bowles

Finance
• Successfully issued €750 million senior notes at a record coupon for the Group, announced in September 2019.
Internal Audit
• 2019 internal audit plan of 72 audits completed with 94% achieving a positive assessment.
People
• In particular, maintained focus, motivation and retention across the financial community within the Group.
• New Talent Management approach encompassing succession planning developed and implemented.
• Increase in employee engagement for pulse survey conducted in 2019.
• Higher female participation (over 30%) on all training programmes.
Acquisitions/Disposals
• During 2019 successfully completed the acquisition of Vitavel AD in Bulgaria and completed the buyout of a
significant portion of the non-controlling interest in Colombia.
• Integration of all acquisitions in France, Serbia, Bulgaria and Reparenco in the Netherlands is progressing well.
Stakeholder Engagement
• Continuous engagement with shareholders in 2019, with the executive Directors meeting with over 200 analysts
and portfolio managers.

Following consideration of performance against the targets, and in the context of the wider performance of the Group, the Committee did not consider it
necessary to apply discretion to the out-turns and approved the following annual bonuses for 2019:
2019


In line with the Remuneration Policy, half of the bonuses shown above were paid in cash and half were deferred into Company shares which vest after three
years subject to the continuity of employment of the executive or in certain circumstances based on normal good leaver provisions.
As set out in the cover letter from the Committee Chair, the Committee has determined that the deferred bonus awards for the executive Directors will be
subject to an additional underpin condition, with the final level of pay-out to be determined on conclusion of the appeal of the fine levied by the Italian
Competition Authority.
Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Deferred Annual Bonus Plan
Awards Vesting in Respect of Performance to 31 December 2019
In 2017, Mr Smurfit and Mr Bowles were granted Matching Share Awards which vested based on the achievement of performance targets for the three-year
period ending on 31 December 2019. The targets for the three-year period ending on 31 December 2019 which were set in 2017, were as follows:
Targets and Match Matrix

Three-Year Performance Period 2017 – 2019
ROCE

Level of Performance Attained Over
Three-Year Period
ROCE and FCF for the three-year period to December 2019 amounted to 51.5% and €1,288 million respectively and as a result a maximum 3 times
match was approved by the Committee in February 2020. In line with our normal approach we exclude items which would affect comparability such as
acquisitions and disposals, the hyperinflationary effects of Venezuela and the impacts of IFRS 16, Leases, which happened during the three-year period
to 31 December 2019.
Following consideration of performance against targets, and in the context of the wider performance of the Group, the Committee did not consider it
necessary to apply discretion to the out-turns and approved the level of vesting of the 2017 DABP awards.

Share Awards Granted During the Year
During the year, executive Directors were granted Deferred Share Awards in respect of the 2018 annual bonus. They were also granted Performance
Share Plan Awards that may vest based on the achievement of performance targets for the three-year period ending on 31 December 2021. Performance
Share Plan Awards are subject to a holding period such that they are released following the fifth anniversary of the grant date.
Details of the executive Directors’ awards are set out below. Further detail on the executive Directors’ outstanding shares are set out on page 74.
Type of Interest

Share price of deferred shares granted in March 2019 was €26.13. Awards will vest based on continued employment to February 2022 (subject to leaver provisions within the plan rules).
Share price of performance shares granted in March 2019 was €24.66. Awards are subject to three equally weighted performance conditions: EPS (pre-exceptional); ROCE; and TSR against a bespoke
peer group. Details of the underlying targets are set out in the Annual Report 2018.

Percentage Change in Group Chief Executive Officer Remuneration in Relation to all Employees
Details of the percentage change in the salary, annual bonus and benefits from 2018 to 2019 for the Group CEO and all employees are set out below:
Basic Salary

Group Chief Executive Officer
All employees

* Due to data availability, it is not possible to calculate the percentage change in benefits for all employees for the purpose of this table.

Chief Executive Officer Pay Ratio
The Committee is mindful of the new UK legislation requiring companies to disclose the CEO pay ratio data. Although this legislation does not apply to SKG,
the Committee has voluntarily published the ratio. The following table sets out the Group CEO pay ratio against Irish employees within the Group, which is
considered the most relevant reference point as the Group’s headquarters are in Ireland.
Population


Total remuneration for each individual in the above data has been calculated on the same basis as the Group CEO’s annual total remuneration for the same
period in the single figure table. For part-time employees their relevant pay and benefit components have been adjusted to the equivalent full-time figure
for the relevant business.



71

Remuneration Report continued
Relative Importance of Spend on Pay
The following tables set out the amounts and percentage change in profit, dividends and total employee costs for the financial year ended 31 December
2019 against 2018.

Profit before income tax and exceptional items
Dividends paid to shareholders
Total employee costs1

Total employee costs for continuing operations, includes wages and salaries, social insurance costs, share-based payment expense, pension costs and redundancy costs for all employees, including
Directors. The average full time equivalent number of employees, including Directors and part-time employees in continuing operations was 46,563 (2018: 46,025).


PBT and exceptionals

Dividends paid

Total employee costs

Total Shareholder Return Performance
The performance graph below shows the Group TSR performance from 31 December 2009 to 31 December 2019 against the performance of the FTSE 100
and FTSE 250 over the same period. Both the FTSE 100 and FTSE 250 have been chosen, as during the relevant period these are the two broad equity
market indices of which the Group has been a member.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Group Chief Executive Officer Remuneration
The table below summarises the single figure of total remuneration for the Group Chief Executive Officer for the past ten years as well as how the actual
awards under the annual bonus and LTIP compare to the maximum opportunity.


The Matching and Conditional Matching Awards granted in 2017, 2016, 2015, 2014, 2013, 2012 and 2011 vested in February 2020, 2019, 2018, 2017, 2016, 2015 and 2014 respectively based on the
achievement of the relevant performance targets for the three-year periods ending on 31 December 2019, 2018, 2017, 2016, 2015, 2014 and 2013.
The awards under the 2007 Share Incentive Plan (‘SIP’) vested 30% in February 2013 with the TSR condition being at the median.
The SIP awards vested 100% in February 2012 with the TSR condition being in the upper quartile of the peer group.
The SIP awards lapsed in March 2011 having failed to meet the required performance conditions.
The annual bonus award for 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 was paid 50% in cash and 50% in Deferred Share Awards.

The information below forms an integral part of the audited Consolidated Financial Statements as described in the Basis of Preparation on page 97.

Pension Entitlements – Defined Benefit

Accrued pension benefit is that which would be paid annually on normal retirement date.

Additional Information
Payments to Former Directors
There were no payments made to former Directors in the year.

Payments for Loss of Office
There were no payments for loss of office made in the year.

Executive Directors’ Interests in Share Capital at 31 December 2019
The table below summarises the personal shareholdings of each executive Director. The figures include beneficially owned shares and unvested share
awards which are not subject to further performance criteria (other than continued employment) on a net of tax basis.

The changes in the executive Directors’ interests (beneficially owned shares) between 31 December 2019 and 6 March 2020 were as follows: Mr Smurfit and
Mr Bowles increased their holdings by 22,186 and 9,807 shares respectively in February 2020, following the vesting of Deferred and Matching Share Awards.

External Appointments
The Company recognises that, during their employment with the Company, executive Directors may be invited to become non-executive Directors of other
companies and that such duties can broaden their experience and knowledge. Executive Directors may, with the written consent of the Company, accept
such appointments outside the Company, and the policy is that any fees may be retained by the Director.



73


The deferred shares vested and were distributed in February 2019. The market price at date of distribution was €25.81.
Based on the achievement of the relevant performance targets for the three-year period ending on 31 December 2018, the matching shares vested in February 2019 with a match of 1.162 times the
level of the Matching Share Award and were distributed in February 2019. The market price at the date of distribution was €25.81.
The deferred shares vested in February 2020 and were distributed.
Based on the achievement of the relevant performance targets for the three-year period ending on 31 December 2019, the matching shares vested in February 2020 with a match of 3 times the level of
the Matching Share Award. The market price at the date of distribution was €33.49.
Deferred awards are subject to holding period.

The market price of the Company’s shares at 31 December 2019 was €34.26 and the range during 2019 was €23.12 to €34.74.

Performance Share Plan Awards
PSP Awards were granted to eligible employees in 2019. Awards may vest based on the achievement of the relevant performance targets for the three-year
period ending on 31 December 2021.
Remuneration Report continued
Share-based Payment
The executive Directors receive Deferred Share Awards and Performance Share Awards, details of which are outlined on page 74 of this report. 
Non-Executive Directors’ Interests in Share Capital at 31 December 2019
The interests of the non-executive Directors and Secretary in the shares of the Company as at 31 December 2019 which are beneficial unless otherwise
indicated are shown below. The Directors and Secretary have no beneficial interests in any of the Group’s subsidiary or associated undertakings.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information


* Column A indicates the number of meetings held during the period the Director was a member of the Board and was eligible to attend and Column B indicates the number of meetings attended.
** Ms Bories retired from the Board in December 2019.
*** Mr O’Mahony retired from the Board in May 2019.

Statement on Shareholder Voting
The Company is committed to ongoing shareholder dialogue when formulating remuneration policy. If there are substantial numbers of votes against
resolutions in relation to Directors’ remuneration, the Company will seek to understand the reasons for any such vote and will provide details of any
actions in response to such a vote.
The following table shows the voting outcome at the 3 May 2019 AGM for the 2018 Directors’ Remuneration Report and the voting outcome at the
4 May 2018 AGM for the Directors’ Remuneration Policy.
Votes For and
Discretionary


The Committee has undertaken a range of important activities during the
past year, with a particular focus on Board and Committee refreshment.
From 1 January 2019, the Committee also began operating under the new
UK Corporate Governance Code (‘Code’), which includes updated guidance
for Nomination Committees of companies listed on Euronext Dublin and the
LSE. The review and adoption of the principles of the new Code formed part
of the Committee’s activity during the year with consequent changes to its
terms of reference.
The primary role of the Committee is to monitor and maintain an appropriate
balance of skills, experience, independence and diversity on the Board while
regularly reviewing its structure, size and composition. It is also responsible
for ensuring there is a formal, rigorous and transparent process for the
appointment of new Directors to the Board. Succession planning is a
fundamental aspect of the Committee’s work both for Directors and senior
management. Our succession planning process is regularly reviewed by
the Committee, aided by regular updates from our Group VP of Human
Resources and senior management on the development of the talent
pipeline and recruitment throughout the organisation.
During the year, the Committee oversaw the nomination process resulting in
the appointment of Dr Lourdes Melgar in December 2019. Lourdes joined
the Board on 1 January 2020 and further deepens the diversity of experience
and knowledge on the Board. As part of ongoing Board refreshment, in
addition to Liam O’Mahony who retired in May 2019 after twelve years,
Roberto Newell and Christel Bories retired in December 2019 after nine and
seven years on the Board, respectively. On behalf of the Committee and the
entire Board, I would like to thank Liam, Roberto and Christel for their
valuable insight and unwavering commitment over their tenures. Following
the retirement of Roberto who served as Chair of the Committee since
May 2017, I was appointed Chair, effective from 6 December 2019.
As a Committee, we also lead oversight of the annual Board evaluation
process to assess the performance of individual Directors and the
effectiveness of the Board and its Committees. In 2019, an external

78



evaluation took place, which was carried out by Independent Audit. Details of
this evaluation are set out in greater detail on page 59.

The Role of the Committee is to:
lead the process for appointments to the Board and make
recommendations to the Board;
evaluate the balance of skills, knowledge, experience and diversity, both
gender and geographical, on the Board and its Committees to ensure
they continue to operate effectively;
prepare descriptions of the role and requirements for new appointees;
and
give full consideration to succession planning for Directors and senior
management.

Where necessary, the Committee uses the services of external advisors in
order to assist in the search for new appointments to the Board. Advisors
are provided with a brief which takes into consideration the skills, experience
and diversity, both gender and geographical, required at the time to give
balance to the Board. When suitable candidates have been identified, some
Committee members will meet with them and if a candidate is agreed upon,
the Committee will then recommend the candidate to the Board. All
appointments to the Board are approved by the Board as a whole.
All newly appointed Directors are subject to election by shareholders at
the AGM following their appointment and in compliance with the Code,
all Directors are required to retire at each AGM and offer themselves
for re-election.
The terms and conditions of appointment of non-executive Directors are
available for inspection at the Company’s registered office during normal
business hours and at the AGM of the Company. The role and responsibilities
of the Committee are set out in its Terms of Reference which are available
on the Group’s website: smurfitkappa.com. The Terms of Reference are
reviewed each year by the Committee.

Overview

Strategic Report

Governance

Membership of the Committee
The Committee is currently comprised of five non-executive Directors.
The Committee met five times during the year under review. Details of
Committee members and meetings attended are provided in the table
below. The Group Chief Executive Officer normally attends meetings of the
Committee and the Group VP of Human Resources attends as appropriate.
Attendance Record

Financial Statements

Supplementary Information

As announced last year, Mr O’Mahony retired from the Board following the
AGM in May 2019. Subsequent to Dr Melgar’s appointment in December,
with effect from 1 January 2020, it was announced that Senior Independent
Director, Mr Newell, and Ms Bories had stepped down from the Board in
December 2019. Following a recommendation by the Committee, and prior
to his appointment to the Committee, Gonzalo Restrepo succeeded
Roberto as Senior Independent Director.

Appointment Date



Column A indicates the number of meetings held during the period the Director was
a member of the Committee and was eligible to attend and Column B indicates the number
of meetings attended.
** Mr Finan joined and Mr O’Mahony retired from the Board in May 2019. Mr Newell retired and
Mr Restrepo joined the Committee and was elected Chair in December 2019.
*** Ms Anderson joined the Committee in February 2019.

Main Activities During the Year
During the year, the Committee evaluated the composition of the Board
with respect to the balance of skills, knowledge, experience and diversity,
including geographical and gender diversity on the Board and updated a
policy document on Board succession. The Committee was also apprised of
the key aspects of the revised Code as it relates to Nomination Committees.
The Committee has reviewed, in detail, the composition, succession and
evaluation section of the Code as well as the relevant sections of the
Financial Reporting Council’s Guidance on Board Effectiveness.
The Committee oversaw the external evaluation process which took place
during the past year. As part of that process, the Committee was deemed to
be operating at a high standard. In terms of enhancements, the Committee
will ensure greater focus is placed on planning for unplanned departures in
the future and, more importantly, augment the alignment of succession
planning with the evolution of strategy.

Refreshing the Board and its Committees
During the year, the Committee instructed Korn Ferry to identify appropriate
candidates for appointment to the Board based on a profile and skillset
agreed by the Chair and the Committee. The Committee also provided input
into the shortlist of candidates with members meeting candidates prior to
recommending their appointment to the Board. After considering a number
of candidates put forward by Korn Ferry as meeting the required profile and
skill set, and following a robust interview process carried out in accordance
with the Code’s supporting principle that Board appointments should be
made “on merit, against objective criteria and with due regard for the
benefits of diversity on the Board”, the Committee recommended that
Dr Lourdes Melgar be appointed to the Board. The appointment of
Dr Melgar, with effect from 1 January 2020, was confirmed by the Board
LQ'HFHPEHU|'U0HOJDUpVH[WHQVLYHFDUHHULQHQHUJ\VXVWDLQDELOLW\
and business in Latin America will add valuable insight to the Board.
Dr Melgar’s biography is set out on page 56. Korn Ferry have no other
affiliation with the Group.

Board Balance and Effectiveness
As is the case each year, the Committee reviewed the size and performance
of the Board during 2019. Key elements of ensuring the Board continues
to operate at a high standard is independent oversight and a diverse
background of skills, which allows non-executive Directors to scrutinise
and, when necessary, challenge management proposals and strategy.
The Committee continues to review that each of the non-executive
Directors, excluding the Chair, remain impartial and independent in
order to meet the challenges of their roles.
Throughout the year, over half of the Board comprised independent
non-executive Directors. Gonzalo Restrepo is the Senior Independent
Director of the Company. The Senior Independent Director provides
a sounding board for the Chair and serves as an intermediary for the
other Directors and shareholders when necessary.
The Board has had due regard to various matters which might affect,
or appear to affect, the independence of certain of the Directors.
The Board considers that other than Mr Beurskens, each of the
non-executive Directors is independent. In determining the independence
of the non-executives, the Committee scrutinised any issues relating
to actual or perceived conflicts of interest.

Boardroom and Senior Management Diversity
As a global business, diversity is an integral part of how we do business. The
Board and Committee recognise the value of gender diversity to the Group
and is committed to increasing the representation of females within senior
management roles. At Board level, women represent 27% of our Directors.
Notwithstanding this policy, any search for Board candidates and any
subsequent appointments are made purely on merit regardless of ethnicity,
gender, religion, age or disability. We look to ensure we have the appropriate
balance of skills, diversity of knowledge and thinking, professional and
geographic backgrounds and experience on our Board and recruit
accordingly. We are committed to appointing the best people and ensuring
that all employees have an equal chance of developing their careers within
the Group. As such, we do not think it is appropriate to set specific targets
for Board appointments.



79

Sustainability Committee Report

Sustainable business practices have been at the centre of Smurfit Kappa’s
strategy since the business was founded. The Group recycles packaging
(handling over 7 million tonnes of recovered fibre in 2019) and promotes the
use of our paper-based packaging among our customers and continues to
assess ways to increase the recovery of paper-packaging waste; produce
our products more efficiently and reduce our environmental impact.
In addition to recycled fibre, wood fibres are a core component of our paper
products which strongly links Smurfit Kappa to the bio economy and through
that to the circular economy. Whether they are virgin or recycled fibres, from
our own sustainably managed forests and plantations or those of others, we
make sure that their credentials are of the highest standard and are Chain of
Custody certified.
As the business has evolved, we have also expanded our focus to provide
customers with innovative sustainable packaging solutions which reduces
their waste and which not only provides an attractive merchandising medium
but also provides an efficient and environmentally friendly transport and
packaging solution which reduces transport costs and associated emissions.
Our commitment to provide innovative, sustainable packaging solutions for
our customers, is embodied in our ‘Better Planet Packaging’ initiative which
is intended to provide our customers with sustainable packaging solutions
to address their sustainability needs today and tomorrow and provides us
with a key platform for different options in a competitive market.
We also believe that sustainable and responsible business practices are central
to our corporate culture and how we engage with our employees. We are a
responsible employer and the health, safety and well-being of our employees
is a core value of how we conduct our business each and every day.
During 2018, we met or exceeded all of our sustainability related targets
ahead of their 2020 deadline. We set new targets in 2019 and continue to
invest time and resources to meet and exceed those targets. Further
details are set out in our Sustainable Development Report released in
May 2019 which is available on our website.

80



While the Group is intensely proud of its progress to reduce its own
environmental footprint and work with our customers to do the same, during
the course of 2019 we recognised the growing global debate and emphasis
on addressing a range of environmental, social and governance issues; most
notably issues affecting climate change, carbon emission and plastic waste.
Against this backdrop, the Board reviewed the Group’s sustainability
and corporate social responsibility objectives and decided to establish a
permanent sub-committee of the Board with responsibility for Sustainability.
The purpose of the Committee is to, provide direction and oversight of
SKG's sustainability strategy for the benefit of all of the Group’s stakeholders.
In line with the requirements of the 2018 UK Corporate Governance Code,
the Committee will also be responsible for the engagement with the
workforce on behalf of the Board. On an annual basis, this report will set
out the details on our engagement with the workforce.
We look forward to reporting on our continued progress to all of our
stakeholders in the years ahead.

Membership of the Committee
The Committee is currently comprised of three non-executive Directors.
The Committee was established during 2019 and met once during the year
under review. Details of Committee members and meetings attended are
provided in the table below. The Group Chief Executive Officer, Group Chief
Financial Officer, Group V.P. Human Resources and Group Vice President
Development may attend meetings of the Committee.
Attendance record


Column A indicates the number of meetings held during the period the Director was a
member of the Committee and was eligible to attend and Column B indicates the number
of meetings attended.
** Dr Melgar was appointed to the Committee in January 2020.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Directors’ Report
Report of the Directors

Directors

The Directors submit their Report and Audited Financial Statements for
the financial year ended 31 December 2019.

The members of the current Board of Directors are named on pages 54 to
56 together with a short biographical note on each Director. Dr. Lourdes
Melgar was appointed to the Board as a non-executive Director on 1 January
2020. Ms. Christel Bories and Mr. Roberto Newell acted as non-executive
Directors of the Company until their retirement from the Board, effective
5 December 2019.

Principal Activity and Business Review
The Group is an integrated paper and paperboard manufacturer and
converter whose operations are divided into Europe and the Americas.
Geographically, the major economic environments in which the Group
conducts its business are Europe (principally the Eurozone, Sweden and
the United Kingdom) and the Americas (principally Argentina, Brazil,
Colombia, Mexico and the United States).

On 3 May 2019 Mr. Irial Finan was appointed Chair succeeding Mr. Liam
O'Mahony who retired as a non-executive Director and Chair on the
same date.

The Chair’s Statement, Group Chief Executive Officer’s Statement, Strategy
Statement, Finance Review (including financial risk management policies),
Stakeholder Engagement, Sustainability report and People report on
pages 16 to 25 and 34 to 53 report on the performance of the Group
during the year and on future developments.

Any Director co-opted to the Board by the Directors is subject to election
by the shareholders at the first AGM after their appointment and, pursuant
to the Articles of Association of the Company, all Directors are subject to
re-election at intervals of no more than three years. However, in compliance
with the Code, all Directors will retire at the 2020 AGM.

Results for the Year

To enable shareholders to make an informed decision, reference should
be made to pages 54 to 56 which contains a biographical note on each
Director offering themselves for re-election and to the Notice of the AGM
which explains why the Board believes the relevant Directors should be
re-elected. The Directors intend to confirm at the AGM that the
performance of each individual seeking re-election continues to be
effective and demonstrates commitment to the role.

The results for the year are set out in the Consolidated Income Statement
on page 89.
Financial key performance indicators are set out on pages 26 to 28.
The Consolidated Financial Statements for the financial year ended
31 December 2019 are set out in detail on pages 89 to 161.

Dividends
In October 2019, an interim dividend of 27.9 cent per share was paid to
holders of ordinary shares. The Board is recommending a final dividend of
80.9 cent per share for 2019. Subject to shareholders’ approval at the AGM
on 30 April 2020, it is proposed to pay the final dividend on 15 May 2020 to
all holders of ordinary shares on the share register at the close of business
on 17 April 2020.

Research and Development
The Company’s subsidiaries are engaged in ongoing research and
development aimed at providing innovative paper-based packaging
solutions and improving products and processes and expanding product
ranges. Expenditure on research and development in the year amounted
to €8 million.

Accounting Records
The Directors are responsible for ensuring that adequate accounting
records, as outlined in Section 281-286 of the Companies Act, are kept by
the Company. The Directors are also responsible for the preparation of
the Annual Report. The Directors have appointed professionally qualified
accounting personnel with appropriate expertise and have provided
adequate resources to the finance function in order to ensure that those
requirements are met. The accounting records of the Company are
maintained at the Group’s principal executive offices, located at Beech Hill,
Clonskeagh, Dublin 4, D04 N2R2.

Shareholders are referred to the information contained in the Corporate
Governance Statement on pages 57 to 61 concerning the operation
of the Board and the composition and functions of the Committees
of the Board.

Directors’ and Secretary’s Interests
Details of the Directors’ and Company Secretary’s interests in the share
capital are set out in the Remuneration Report on pages 73, 74 and 76 and
are incorporated into this Directors’ Report.

Principal Risks and Uncertainties
Under Irish company law (Section 327 of the Companies Act), the Directors
are required to give a description of the principal risks and uncertainties
which the Group faces. These principal risks and uncertainties are set out on
pages 32 and 33, and form part of this report as required by Section 327 of
the Companies Act.

Corporate Governance
Under Section 1373 of the Companies Act, the Directors’ Report is required
to include a Corporate Governance Statement. The Directors’ Corporate
Governance Statement is set out on pages 57 to 61 and forms part of this
report. The Audit Committee Report, the Remuneration Report, the
Nomination Report and the Sustainability Committee Report are set
out on pages 62 to 80.

Subsidiary and Associated Undertakings
A list of the Group’s principal subsidiaries and associates as at 31 December
2019 is set out in Note 34 to the Consolidated Financial Statements.


The table above shows all notified shareholdings in excess of 3% of the issued ordinary share capital of the Company as at 31 December 2019 and
6 March 2020.



81

Directors’ Report continued
Audit Committee
The Group has established an Audit Committee. The responsibilities of the Audit Committee are outlined on page 62.

Non-Financial Information
Pursuant to the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (the
‘Non-Financial Regulations’), the Group is required to report certain non-financial information to provide an understanding of its development, performance,
position and the impact of its activities. We have set out the location below of the information required by the Non-Financial Regulations in this Annual
Report. Each referenced section of the Annual Report is deemed to form part of this Directors’ Report:
Requirement

Relevant Policies

Section(s) in Annual Report

Pages

Environmental Matters

Environmental Policy, Sustainable Sourcing
Policy, Sustainable Forestry and Fibre Sourcing
Policy

Sustainability

40 to 45

Social Matters

Social Citizenship Policy

Sustainability, People

40 to 45

Employee Matters

Code of Conduct, Health and Safety Policy,
Social Citizenship Policy

Sustainability, People

40 to 53

Human Rights

Code of Conduct, Social Citizenship Policy

Sustainability

40 to 45

Anti-Corruption and Bribery

Code of Conduct

Sustainability

40 to 45

Business Model

Our Business Model

6 to 7

Principal Risks

Risk Report

30 to 33

Non-Financial KPIs

Key Performance Indicators

28 to 29

In addition to the information required by the Non-Financial Regulations, the Group publishes a comprehensive, assured Sustainable Development Report
which details our sustainability strategy, corporate social responsibilities and commitments to social matters. The 2019 Sustainable Development Report
will be published on our website in April 2020.

Purchase of Own Shares
Special resolutions will be proposed at the AGM to renew the authority
of the Company, or any of its subsidiaries, to purchase up to 10% of the
Company’s ordinary shares in issue at the date of the AGM and in relation
to the maximum and minimum prices at which treasury shares (effectively
shares purchased by the Company and not cancelled) may be re-issued
off-market by the Company. If granted, the authority will expire on the
earlier of the date of the AGM in 2021 or 29 July 2021.
A similar authority was granted at the AGM in 2019, which is due to expire on
the earlier of the date of the AGM in 2020 or 2 August 2020. Information on
the acquisition and disposal of own shares is set out in Note 23 to the
Consolidated Financial Statements.

Change of Control
On a change of control following a bid, the Lenders under the new RCF
would have the option to cancel the commitments under the facility and/or
to declare all outstanding amounts immediately due and payable, and under
the Senior Notes Indentures the Group is obliged to offer to repurchase
the notes at 101% of the principal amount due.

Capital Structure
Details of the structure of the Company’s capital are set out in Note 23 to
the Consolidated Financial Statements and are deemed to form part of this
Directors’ Report. Details of the Group’s long-term incentive plans are set
out in the Remuneration Report and Note 26 to the Consolidated Financial
Statements and are incorporated into this Directors’ Report.

The Directors also confirm that appropriate arrangements and structures
are in place which, in the Directors’ opinion, are designed to secure material
compliance with the Company’s Relevant Obligations. For the financial year
ended 31 December 2019, the Directors, with the assistance of the Audit
Committee, have conducted a review of the arrangements and structures
in place. In discharging their responsibilities under Section 225 of the
Companies Act, the Directors relied on the advice of persons who the
Directors believe have the requisite knowledge and experience to advise
the Company on compliance with its Relevant Obligations.

Financial Instruments
In the normal course of business, the Group has exposure to a variety of
financial risks, including foreign currency risk, interest rate risk, liquidity risk
and credit risk. The Group and Company financial risk objectives and policies
are set out in Note 29 to the Consolidated Financial Statements.

Disclosure of Information to the External Auditor
Each of the Directors individually confirm that:
• in so far as they are aware, there is no relevant audit information of which
the Company’s External Auditor is unaware; and
• they have taken all the steps that they ought to have taken as Directors in
order to make themselves aware of any relevant audit information
and to establish that the Company’s External Auditor is aware of such
information.

External Auditor

Directors’ Compliance Statement

KPMG, Chartered Accountants, were first appointed statutory auditors on
4 May 2018 and have been reappointed annually since that date and persuant
to section 383(2) will continue in office.

The Directors acknowledge that they are responsible for securing
compliance by the Company of its relevant obligations as set out in
the Companies Act (the ‘Relevant Obligations’).

A. Smurfit
Director

The Directors further confirm that there is a Compliance Policy Statement in
place setting out the Company’s policies which, in the Directors’ opinion, are
appropriate to ensure compliance with the Company’s Relevant Obligations.

82



6 March 2020

K. Bowles
Director

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the
Group and Company Financial Statements, in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group and Company
Financial Statements for each financial year. Under that law, the Directors
are required to prepare the Group Financial Statements in accordance
with International Financial Reporting Standards (‘IFRS’) as adopted by the
European Union and applicable law including Article 4 of the IAS Regulation.
The Directors have elected to prepare the Company Financial Statements
in accordance with IFRS as adopted by the European Union as applied in
accordance with the provisions of Companies Act 2014.
Under company law the Directors must not approve the Group and
Company Financial Statements unless they are satisfied that they give a true
and fair view of the assets, liabilities and financial position of the Group and
Company and of the Group’s profit or loss for that year. In preparing each of
the Group and Company Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable IFRS as adopted by the European Union have
been followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and the Parent Company
will continue in business.
The Directors are also required by the Transparency (Directive 2004/109/
EC) Regulations 2007 and the Transparency Rules to include a management
report containing a fair review of the business and a description of the
principal risks and uncertainties facing the Group.

Responsibility Statement as Required by the Transparency
Directive and UK Corporate Governance Code
Each of the Directors, whose names and functions are listed on pages 54
to 56 of this Annual Report, confirm that, to the best of each person’s
knowledge and belief:
• The Group Financial Statements, prepared in accordance with IFRS as
adopted by the European Union and the Company Financial Statements
prepared in accordance with IFRS as adopted by the European Union as
applied in accordance with the provisions of Companies Act 2014, give
a true and fair view of the assets, liabilities, and financial position of the
Group and Company at 31 December 2019 and of the profit or loss of the
Group for the year then ended;
• The Directors’ Report contained in the Annual Report includes a fair
review of the development and performance of the business and the
position of the Group and Company, together with a description of the
principal risk and uncertainties that they face; and
• The Annual Report and Financial Statements, taken as a whole, provides
the information necessary to assess the Group’s performance, business
model and strategy and is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
On behalf of the Board
A. Smurfit
Director

K. Bowles
Director

6 March 2020

The Directors are responsible for keeping adequate accounting records
which disclose with reasonable accuracy at any time the assets, liabilities,
financial position and profit or loss of the Company and which enable them
to ensure that the Financial Statements of the Company comply with the
provisions of the Companies Act 2014. The Directors are also responsible
for taking all reasonable steps to ensure such records are kept by its
subsidiaries which enable them to ensure that the Financial Statements of
the Group comply with the provisions of the Companies Act 2014 including
Article 4 of the IAS Regulation. They are responsible for such internal
controls as they determine is necessary to enable the preparation of
Financial Statements that are free from material misstatement, whether
due to fraud or error, and have general responsibilities for safeguarding the
assets of the Company and the Group, and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for preparing a Directors’ Report that
complies with the requirements of the Companies Act 2014.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group’s and Company’s
website. Legislation in the Republic of Ireland concerning the preparation
and dissemination of Financial Statements may differ from legislation in
other jurisdictions.



83

Independent Auditor’s Report to the Members of Smurfit Kappa Group plc

Opinion
We have audited the Financial Statements of Smurfit Kappa Group plc (‘the Company’) and its subsidiaries (together ‘the ‘Group’) for the year ended
31 December 2019, which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated and Company
Balance Sheet, Consolidated and Company Statements of Changes in Equity, Consolidated and Company Statements of Cash Flows, and the related notes,
including the Summary of Significant Accounting Policies set out in Note 2. The financial reporting framework that has been applied in their preparation is Irish
Law and International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and, as regards the Company Financial Statements,
as applied in accordance with the provisions of the Companies Act 2014.
In our opinion:
• the Financial Statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 December 2019 and
of the Group’s profit for the year then ended;
• the Group Financial Statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the Company Financial Statements have been properly prepared in accordance with IFRS as adopted by the European Union, as applied in accordance
with the provisions of the Companies Act 2014; and
• the Group and Company Financial Statements have been properly prepared in accordance with the requirements of the Companies Act 2014 and,
as regards the Group Financial Statements, Article 4 of the IAS Regulation.

Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (‘ISAs (Ireland)’) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities section of our report. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit Committee.
We were appointed as auditor by the shareholders on 4 May 2018. The period of total uninterrupted engagement is the two years, ended 31 December 2019.
We have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with, ethical requirements applicable in Ireland,
including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (‘IAASA’) as applied to public interest entities. No non-audit
services prohibited by that standard were provided.

Key Audit Matters: Our Assessment of Risks of Material Misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the Financial Statements and include the
most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:

Goodwill Impairment Assessment €2,383 Million (2018 – €2,361 Million)
Refer to Note 2 (accounting policy) and Note 13 (financial disclosures)
The Key Audit Matter

How the Matter was Addressed in our Audit

The Group has significant goodwill arising from acquisitions amounting to
€2,383 million at 31 December 2019.

We obtained and documented our understanding of the process followed
by management in calculating the recoverable amount of each CGU and
tested the design and implementation of the relevant controls therein.

Goodwill is required to be tested at least annually for impairment irrespective
of whether there are indicators of impairment. The Group has performed an
impairment assessment as of 31 December 2019. The goodwill is allocated
to 15 groups of cash-generating units (‘CGUs’) – three of which individually
account for between 10% and 20% of the total carrying amount.
The recoverable amount of goodwill is arrived at by forecasting and
discounting future cash flows to determine value-in-use for each CGU.
We focus on this area due to the significance of the balance compared to
total assets of the Group and the inherent judgement and assumptions
involved in forecasting future cash flows.

We paid particular attention to the Brazilian CGU due to the CGU having
limited headroom in the past. As reported in Note 13, an impairment was
recorded, as approved by the Board, and we specifically addressed the
appropriateness of the impairment as part of our audit procedures.
We assessed the Group’s valuation models and calculations by:
• checking the mathematical accuracy of the model;
• assessing and challenging the appropriateness of the discount rates
applied and the future operating cash flow assumptions in determining
the value-in-use of each CGU using our valuation specialist and by
comparing the assumptions, where possible, to externally derived data
as well as our own assumptions;
• assessing and challenging the reasonableness of the long-term economic
growth rate applied for each CGU by comparing the Group’s assumptions,
where possible, to externally derived data as well as our own assumptions;
• performing sensitivity analysis on the impact of changes in the
assumptions; and
• comparing the Group’s market capitalisation to the carrying value of the
Group’s net assets.
We assessed the disclosures in the Financial Statements relating to the
impairment testing methodology, sensitivity analysis and other matters.
We found that management’s judgements were appropriate and supported
by reasonable assumptions. We found the disclosures to be adequate.

84



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Key Audit Matters: Our Assessment of Risks of Material Misstatement continued
Defined Benefit Pension Liability – Valuation of €899 Million (2018 – €804 Million)
Refer to Note 2 (accounting policy) and Note 25 (financial disclosures).
The Key Audit Matter

How the Matter was Addressed in our Audit

The Group operates a number of defined benefit pension schemes.

We obtained and documented our understanding of the process for the
accounting for defined benefit pension schemes and tested the design
and implementation of the relevant controls.

Accounting for such schemes gives rise to an element of judgement and
volatility arising from movements in actuarial assumptions and the selection
of same.
We focus on this area due to the level of estimation uncertainty involved and
the sensitivity of the pension liabilities to changes in assumptions applied.

We inquired as to any changes or proposed changes to pension
arrangements to assess any impact on the accounting treatment applied.
We inspected Board minutes to identify any items arising that may impact
on the pension arrangements in place.
We performed substantive testing on the key data underlying the actuarial
assessment and the maintenance of each scheme’s membership data.
We challenged, with the support of our actuarial specialist, the key
assumptions applied to this data to determine the Group’s gross obligation,
being the discount rates, inflation rate and mortality/life expectancies.
This included a comparison of these key assumptions against externally
derived data. We also considered the adequacy of the Group’s disclosures
in respect of the sensitivity of the net deficit to these assumptions.
We evaluated the work completed by external experts used by management.
We found the key assumptions used in, and the resulting estimate of, the
valuation of the retirement benefit obligations within the Group to be
reasonable and the related disclosures to be appropriate.

We updated our risk assessment during 2019, which resulted in a number of key audit matters that were reported in 2018 being removed as key audit matters
in 2019. The risks and the factors leading to a reduced risk in 2019 are as follows:
• Venezuela – deconsolidation: this was a specific event in 2018 that was not repeated in 2019;
• Taxation – valuation of deferred tax assets and provision for uncertain tax positions: the performance of the French Component improved in 2019 which
resulted in reduced complexity and subjectivity in the valuation of the deferred tax asset. In addition, a number of uncertain tax positions were
successfully resolved in 2019; and
• Acquisition accounting: current year acquisitions were not deemed significant after considering the transaction value compared to the market
capitalisation of the Group and the impact on the Balance Sheet of the Group.
We continue to perform audit procedures over each of these areas, however as noted, we have not assessed these as the most significant risks in the current
year audit and, therefore, they are not separately identified in our report this year.



85

Independent Auditor’s Report to the Members of Smurfit Kappa Group plc continued

Company Key Audit Matter
Investment in Subsidiaries – Carrying Value €2,100 Million (2018 – €2,078 Million)
Refer to Note 2 (accounting policy) and Note 14 (financial disclosures)
The Key Audit Matter

How the Matter was Addressed in our Audit

The investment in subsidiary undertakings is carried in the Balance Sheet of
the Company at cost less impairment. There is a risk in respect of the carrying
value of these investments if future cash flows and performance of these
subsidiaries is not sufficient to support the Company’s investments.

We obtained and documented our understanding of the process
surrounding impairment considerations and tested the design and
implementation of the relevant controls therein.

We focus on this area due to the significance of the balance to the Company
Balance Sheet and the inherent uncertainty involved in forecasting and
discounting future cash flows.

Our audit procedures in this area included:
• consideration of management’s assessment of impairment indicators;
• comparing the carrying value of investments in the Company’s Balance
Sheet to the net assets of the subsidiary Financial Statements; and
• considering the audit work performed in respect of current year results
of subsidiaries and the valuation of goodwill and intangible assets.
We found management’s assessment of the carrying value of the
investment in subsidiary undertakings to be appropriate.

Our Application of Materiality and an Overview of the Scope of our Audit
The materiality for the Group Financial Statements as a whole was set at €36 million (2018: €35 million). This has been calculated based on the Group EBITDA
of €1,650 million (2018: €1,545 million) of which it represents approximately 2.2% (2018: 2.2%). In determining that EBITDA was the most appropriate
benchmark, we considered the prevalence of EBITDA as a measure of performance for the Group and the wider industry within analyst reports, industry
commentaries and investor communications. We considered the determined materiality in the context of other commonly used benchmarks including
pre-exceptional profit before tax, revenue and net assets and determined materiality of €36 million to be reasonable.
We report to the Audit Committee all corrected and uncorrected misstatements we identified through our audit in excess of €1 million (2018: €1 million),
in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
Materiality for the Company Financial Statements as a whole was set at €21 million (2018: €21 million) determined with reference to a benchmark of the
Company’s total assets of which it represents 1% (2018: 1%).
The scope of our audit was tailored to reflect the Group’s structure, activities and financially significant operations. The Group is structured across two
operating segments, Europe and the Americas. The operations of the Group are significantly disaggregated, split across a large number of operating plants
in 35 countries. Reporting components are considered by individual operating plants, a combination of plants or on a geographical basis.
Through our scoping procedures we identified those reporting units for which we deemed that a complete financial audit was required, due to size, potential
risks identified and to ensure appropriate coverage. We also subjected certain reporting units to specified risk-focused audit procedures. Such reporting
units were not individually financially significant enough to require a full scope audit for Group purposes, but did present specific individual risks that needed
to be addressed. The reporting units identified amounted to 85% (2018: 92%) of the Group’s EBITDA, 79% (2018: 80%) of the Group’s revenue, and 85%
(2018: 87%) of the Group’s total assets.
The Group audit team instructed component auditors as to the significant areas to be addressed, including the relevant risks detailed above, and the
information to be reported to the Group audit team.
The Group audit team approved the materiality for components, which ranged from €1.8 million to €10 million (2018: €1.4 million to €10 million), having regard
to the mix of size and risk profile of the components across the Group. The work on all components was performed by component auditors and the audit of
the Company was performed by the Group team. For the residual components, we performed analysis at an aggregated Group level to re-examine our
assessment that there were no significant risks of material misstatement within these components.
The Group audit team visited or held video and telephone conference meetings with all significant components in order to assess the audit risk and strategy
and audit work undertaken. At these visits and meetings, a review of workpapers was undertaken by the Group audit team and the findings reported to the
Group audit team by the component auditor were discussed in detail.

We Have Nothing to Report on Going Concern
We are required to report to you if:
• we have anything material to add or draw attention to in relation to the Directors’ statement within the Risk Report on page 31 on the use of the going
concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and Company’s use of that basis for a period
of at least twelve months from the date of approval of the Financial Statements; or
• the related statement under the Listing Rules of Euronext Dublin and the UK Listing Authority set out on page 31 is materially inconsistent with our
audit knowledge.
We have nothing to report in these respects.

86



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Other Information
The Directors are responsible for the preparation of the other information presented in the Annual Report together with the Financial Statements. The other
information comprises the information included in the Directors’ Report and the Overview, Strategic Report and Governance sections of the Annual Report.
The Financial Statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the Financial Statements does not
cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our Financial Statements audit work, the information therein is
materially misstated or inconsistent with the Financial Statements or our audit knowledge. Based solely on that work we have not identified material
misstatements in the other information.
Based solely on our work on the other information we report that, in those parts of the Directors’ report specified for our consideration:
• we have not identified material misstatements in the Directors’ Report;
• in our opinion, the information given in the Directors’ Report is consistent with the Financial Statements; and
• in our opinion, the Directors’ Report has been prepared in accordance with the Companies Act 2014.

Disclosures of Principal Risks and Longer-term Viability
Based on the knowledge we acquired during our Financial Statements audit, we have nothing material to add or draw attention to in relation to:
• the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated;
• the Directors’ confirmation within the Risk Report on page 31 that they have carried out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future performance, solvency and liquidity; and
• the Directors’ explanation in the Risk Report of how they have assessed the prospects of the Group, over what period they have done so and why they
considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.

Other Corporate Governance Disclosures
We are required to address the following items and report to you in the following circumstances:
• Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge we acquired during our Financial Statements
audit and the Directors’ statement that they consider that the Annual Report and Financial Statements taken as a whole is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy;
• Report of the Audit Committee: if the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee; and
• Statement of compliance with UK Corporate Governance Code: if the Directors’ statement does not properly disclose a departure from provisions of the
UK Corporate Governance Code specified by the Listing Rules of Euronext Dublin and the UK Listing Authority for our review.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Statement on pages 57 to 61, that:
• based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and risk management systems in
relation to the financial reporting process, and information relating to voting rights and other matters required by the European Communities (Takeover
Bids (Directive 2004/EC) Regulations 2006 and specified for our consideration, is consistent with the Financial Statements and has been prepared in
accordance with the Act;
• based on our knowledge and understanding of the Company and its environment obtained in the course of our audit, we have not identified any material
misstatements in that information; and
• the Corporate Governance Statement contains the information required by the European Union (Disclosure of Non-Financial and Diversity Information
by certain large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance Statement.

Remuneration Report
In addition to our audit of the Financial Statements, the Directors have engaged us to audit the information in the Remuneration Report that is described
as having been audited, which the Directors have decided to prepare as if the Company were required to comply with the requirements of Schedule 8 to
The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008 No. 410) made under the UK Companies Act 2006.
In our opinion the part of the Remuneration Report which we were engaged to audit has been properly prepared in accordance with Schedule 8 to The Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the UK Companies Act 2006, as if those requirements
were to apply to the Company.

Our Opinions on Other Matters Prescribed by the Companies Act 2014 are Unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were sufficient to permit the Financial Statements to be readily and properly audited and the Financial
Statements are in agreement with the accounting records.



87

Independent Auditor’s Report to the Members of Smurfit Kappa Group plc continued

We Have Nothing to Report on Other Matters on Which we are Required to Report by Exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of Directors’ remuneration and transactions required by Sections 305
to 312 of the Act are not made.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by section 5(2) to (7) of
the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 for the year ended
31 December 2019 as required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
(amendment) Regulations 2018.
The Listing Rules of Euronext Dublin and the UK Listing Authority require us to review:
• the Directors’ statement, set out on pages 30 and 31, in relation to going concern and longer-term viability;
• the part of the Corporate Governance Statement on pages 57 to 61 relating to the Company’s compliance with the provisions of the UK Corporate
Governance Code and the Irish Corporate Governance Annex specified for our review; and
• certain elements of disclosures in the report to shareholders by the Remuneration Committee.

Respective Responsibilities and Restrictions on use
Directors’ Responsibilities
As explained more fully in their statement set out on page 83, the Directors are responsible for: the preparation of the Financial Statements including being
satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of Financial Statements that are
free from material misstatement, whether due to fraud or error; assessing the Group and Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other
irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the Financial Statements. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher
than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and
may involve any area of law and regulation and not just those directly affecting the Financial Statements.
A fuller description of our responsibilities is provided on IAASA’s website at https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/
Description_of_auditors_responsiblities_for_audit.pdf

The Purpose of our Audit Work and to Whom we Owe our Responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has been
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members,
as a body, for our audit work, for our report, or for the opinions we have formed.
Roger Gillespie
for and on behalf of
KOverview

Strategic Report

Governance

Financial Statements

Supplementary Information

Consolidated Income Statement
For the Financial Year Ended 31 December 2019
2019

Note

Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating expenses
Operating profit
Finance costs
Finance income
Share of associates’ profit (after tax)
Deconsolidation of Venezuela
Profit/(loss) before income tax
Income tax expense

Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January
Movement in cash and cash equivalents

Cash and cash equivalents at 31 December

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Notes to the Consolidated Financial Statements
For the Financial Year Ended 31 December 2019
1. General Information
Smurfit Kappa Group plc (‘SKG plc’ or ‘the Company’) and its subsidiaries (together ‘SKG’ or ‘the Group’) primarily manufacture, distribute and sell
containerboard, corrugated containers and other paper-based packaging products. The Company is a public limited company whose shares are publicly
WUDGHG,WLVLQFRUSRUDWHGDQGGRPLFLOHGLQ,UHODQG7KHDGGUHVVRILWVUHJLVWHUHGRIILFHLV%HHFK+LOO&ORQVNHDJK'XEOLQ|'15,UHODQG
The Consolidated Financial Statements of the Group for the financial year ended 31 December 2019 were authorised for issue in accordance with a
resolution of the Directors on 6 March 2020.

2. Summary of Significant Accounting Policies
The Group has consistently applied the following significant accounting policies to all periods presented, unless otherwise stated, see New and Amended
Standards and Interpretations Effective During 2019 below in relation to IFRS 16, Leases.

Statement of Compliance
The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) issued by the
International Accounting Standards Board (‘IASB’) as adopted by the European Union (‘EU’), those parts of the Companies Act 2014 applicable to companies
reporting under IFRS and Article 4 of the IAS Regulation. The Company Financial Statements have been prepared in accordance with IFRS adopted by the EU
as applied in accordance with the provisions of the Companies Act 2014. IFRS adopted by the EU differ in certain respects from IFRS issued by the IASB.
References to IFRS hereafter refer to IFRS adopted by the EU.

Basis of Preparation
The Consolidated Financial Statements are presented in euro rounded to the nearest million. They have been prepared under the historical cost convention
except for the following which are recognised at fair value: certain financial assets and liabilities including derivative financial instruments; biological assets;
share-based payments at grant date; pension plan assets; and contingent consideration. The financial statements of subsidiaries whose functional currency
is the currency of a hyperinflationary economy are stated in terms of the measuring unit currency at the end of the reporting period. This is the case for the
Group’s subsidiaries in Argentina.
The preparation of financial statements in accordance with IFRS requires the use of accounting judgements, estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. The areas involving a higher degree of judgement and areas where assumptions and estimates
are significant are discussed in the Significant Accounting Judgements, Estimates and Assumptions note.
The Consolidated Financial Statements include the information in the Remuneration Report that is described as being an integral part of the Consolidated
Financial Statements.

New and Amended Standards and Interpretations Effective During 2019
The Group has applied the following standards, interpretations and amendments with effect from 1 January 2019:
• IFRS 16, Leases;
• Amendments to IFRS 9, Prepayment Features with Negative Compensation;
• Amendments to IAS 28, Long-term Interests in Associates and Joint Ventures;
• Annual Improvements 2015-2017 Cycle;
• Amendments to IAS 19, Plan Amendment, Curtailment or Settlement; and
• IFRIC 23, Uncertainty over Income Tax Treatments.
The effect of applying IFRS 16 is disclosed in the Changes in Significant Accounting Policies note. The other changes listed above did not result in material
changes to the Group’s Consolidated Financial Statements.

New and Amended Standards and Interpretations Issued but not yet Effective or Early Adopted
A number of new standards and interpretations have been issued but are not yet effective for the Group. These standards are either not expected to have a
material effect on the Consolidated Financial Statements or they are not currently relevant for the Group.

Basis of Consolidation
The Consolidated Financial Statements include the annual Financial Statements of the Company and all of its subsidiaries and associates, drawn up to
31 December.
Subsidiaries
Subsidiaries are entities controlled by the Group. They are consolidated from the date on which control is obtained by the Group. They are deconsolidated
from the date on which control is lost by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Where necessary, the accounting policies of subsidiaries have been
modified to ensure consistency with the policies adopted by the Group. Intragroup transactions, intragroup balances and any unrealised gains and losses
arising from intragroup transactions are eliminated in preparing the Consolidated Financial Statements, except to the extent that such a loss provides
evidence of impairment. The Company’s investments in subsidiaries are carried at cost less impairment.
Non-controlling interests represent the portion of a subsidiary’s equity which is not attributable to the Group. They are presented separately in the
Consolidated Financial Statements. Changes in ownership of a subsidiary which do not result in a change of control are treated as equity transactions.



97

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
2. Summary of Significant Accounting Policies continued
Basis of Consolidation continued
Associates
Associates are entities in which the Group has significant influence arising from its power to participate in the financial and operating policy decisions of the
investee. Associates are recognised using the equity method from the date on which significant influence is obtained until the date on which such influence
is lost. Under the equity method investments in associates are recognised at cost and subsequently adjusted to reflect the post-acquisition movements in
the Group’s share of the associates’ net assets. The Group profit or loss includes its share of the associates’ profit or loss after tax and the Group’s other
comprehensive income includes its share of the associates other comprehensive income. The Group’s investment in associates includes goodwill identified
on acquisition, net of any accumulated impairment losses. Losses in associates are not recognised once the Group’s carrying value reaches zero, except
to the extent that the Group has incurred further obligations in respect of the associate. Unrealised gains arising from transactions with associates are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are similarly eliminated to the extent that they do not provide evidence
of impairment. Where necessary, the accounting policies of associates are modified to ensure consistency with Group accounting policies.

Revenue
The Group’s revenue is primarily derived from the sale of containerboard, corrugated containers and other paper-based packaging products. All revenue
relates to revenue from contracts with customers. Contracts with customers include a single performance obligation to sell these products and do not
generally contain multiple performance obligations. Revenue comprises the fair value of the consideration receivable for goods sold to third party customers
in the ordinary course of business. It excludes sales based taxes and is net of allowances for volume based rebates and early settlement discounts.
The transaction price is the contracted price with the customer adjusted for volume based rebates and early settlement discounts. Goods are often sold
with retrospective volume rebates based on aggregate sales over a certain period of time and early settlement discounts. Revenue from these sales is
recognised based on the price specified in the contract, net of the estimated rebates and discounts. Accumulated experience is used to estimate and
provide for the rebates and discounts, using the most likely amount method, and revenue is only recognised to the extent that it is highly probable that
a significant reversal will not occur. No element of financing is deemed present as the sales are made with credit terms consistent with market practice
and are in line with normal credit terms in the entities’ country of operation.
Revenue is recognised when control of the goods has transferred to the customer, being when the goods are delivered to the customer and there is no
unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the goods have been shipped to the specific
location, the risks of obsolescence and loss have been transferred to the customer and the customer has accepted the goods in accordance with the
sales contract. For the Group, revenue is recognised at the point in time when delivery to the customer has taken place.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of
time is required before the payment is due.

Foreign Currency
Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which
the entity operates (‘the functional currency’). The Consolidated Financial Statements of the Group are presented in euro which is the presentation currency
of the Group and the functional currency of the Company.
Transactions and Balances
Transactions in foreign currencies are translated into the functional currency of the entity at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into functional currencies at the foreign exchange rate ruling at the
EDODQFH|VKHHWGDWH1RQPRQHWDU\DVVHWVDQGOLDELOLWLHVFDUULHGDWFRVWDUHQRWVXEVHTXHQWO\UHWUDQVODWHG1RQPRQHWDU\DVVHWVFDUULHGDWIDLUYDOXHDUH
subsequently remeasured at the exchange rate at the date of valuation. Foreign exchange differences arising on translation are recognised in profit or loss
with the exception of differences on foreign currency borrowings that qualify as a hedge of the Group’s net investment in foreign operations. The portion of
exchange gains or losses on foreign currency borrowings used to provide a hedge against a net investment in a foreign operation and that is determined
WR|EHDQHIIHFWLYHKHGJHLVUHFRJQLVHGLQRWKHUFRPSUHKHQVLYHLQFRPH7KHLQHIIHFWLYHSRUWLRQLVUHFRJQLVHGLPPHGLDWHO\LQWKH&RQVROLGDWHG
,QFRPH|6WDWHPHQW
Group Companies
The assets and liabilities of entities that do not have the euro as their functional currency, including goodwill and fair value adjustments arising on acquisition,
are translated to euro at the foreign exchange rates ruling at the balance sheet date. Their income, expenses and cash flows are translated to euro at average
exchange rates during the year. However, if a Group entity’s functional currency is the currency of a hyperinflationary economy, that entity’s financial
statements are first restated in accordance with IAS 29, Financial Reporting in Hyperinflationary Economies (see Reporting in Hyperinflationary Economies).
Under IAS 29, income, costs and balance sheet amounts are translated at the exchange rates ruling at the balance sheet date. All resulting exchange
differences are recognised in other comprehensive income.
On consolidation, foreign exchange differences arising on translation of net investments including those arising on long-term intragroup loans deemed
to be quasi-equity in nature are recognised in other comprehensive income. When a quasi-equity loan ceases to be designated as part of the Group’s net
investment, accumulated currency differences are reclassified to profit or loss only when there is a change in the Group’s proportional interest. On disposal
of a foreign operation, accumulated currency translation differences are reclassified to profit or loss as part of the overall gain or loss on disposal.

98



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

2. Summary of Significant Accounting Policies continued
Reporting in Hyperinflationary Economies
When the economy of a country in which we operate is deemed hyperinflationary and the functional currency of a Group entity is the currency of that
hyperinflationary economy, the financial statements of such Group entities are adjusted so that they are stated in terms of the measuring unit current at the
end of the reporting period. This involves restatement of income and expenses to reflect changes in the general price index from the start of the reporting
period and restatement of non-monetary items in the balance sheet, such as property, plant and equipment and inventories, to reflect current purchasing
power as at the period end using a general price index from the date when they were first recognised. The gain or loss on the net monetary position for the
year is included in finance costs or income. Comparative amounts are not restated. The restated income, expenses and balance sheets are translated to
euro at the closing rate at the end of the reporting period. Differences arising on translation to euro are recognised in other comprehensive income.
Argentina became hyperinflationary during 2018 when the three-year cumulative inflation rate using the wholesale price index exceeded 100% indicating
that Argentina is a hyperinflationary economy for accounting purposes. Consequently, it was considered as such from 1 July 2018 and the Group has applied
the hyperinflationary accounting requirements to the results of our Argentinian operations from the beginning of 2018.

Business Combinations
The Group uses the acquisition method in accounting for business combinations. Under the acquisition method, the assets, liabilities and contingent
liabilities of an acquired business are initially recognised at their fair value at the date of acquisition; which is the date on which control is transferred to the
Group. The cost of a business combination is measured as the aggregate of the fair values at the date of exchange of any assets transferred, liabilities
assumed and equity instruments issued in exchange for control. When settlement of all or part of a business combination is deferred, the fair value of the
deferred component is determined by discounting the amounts payable to their present value at the date of exchange. The discount component is unwound
as an interest expense in the Consolidated Income Statement over the life of the obligation. Where a business combination agreement provides for an
adjustment to the cost of the combination which is contingent on future events, the contingent consideration is measured at fair value. Any subsequent
remeasurement of the contingent amount is recognised in the Consolidated Income Statement if it is identified as a financial liability.
When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values allocated to the identifiable
assets and liabilities are made within twelve months of the acquisition date. Non-controlling interests are measured either, at their proportionate share of
the acquiree’s identifiable net assets or, at fair value as at the acquisition date, on a case by case basis. Acquisition related costs are expensed as incurred.
Where a put option is held by a non-controlling interest in a subsidiary whereby that party can require the Group to acquire the non-controlling interest’s
shareholding in the subsidiary at a future date and the non-controlling interest does not retain present access to the results of the subsidiary, the Group
applies the anticipated acquisition method of accounting to the arrangement. The Group recognises a contingent consideration liability at fair value, being
the Group’s estimate of the amount required to settle that liability, which is included in the consideration transferred. Any subsequent remeasurements
required due to changes in the fair value of the put liability are recognised in the Consolidated Income Statement. Where the Group has a call option over the
shares held by a non-controlling interest in a subsidiary, whereby the Group can require the non-controlling interest to sell its shareholding in the subsidiary
at a future date, the option is classified as a derivative and is recognised as a financial instrument on inception with fair value movements recognised in the
Consolidated Income Statement.

Goodwill
Goodwill is the excess of the cost of an acquisition over the Group’s share of the fair value of the identifiable assets, liabilities and contingent liabilities
acquired. When the fair value of the identifiable assets and liabilities acquired exceeds the cost of the acquisition the values are reassessed and any remaining
gain is recognised immediately in the Consolidated Income Statement. Goodwill is allocated to the groups of cash-generating units (‘CGUs’) that are
expected to benefit from the synergies of the combination. This is the lowest level at which goodwill is monitored for internal management purposes.
After initial recognition goodwill is measured at cost less any accumulated impairment losses.

Intangible Assets
These include software development costs as well as marketing and customer related intangible assets generally arising from business combinations. They
are initially recognised at cost which, for those arising in a business combination, is their fair value at the date of acquisition. Subsequently, intangible assets
are carried at cost less any accumulated amortisation and impairment. Cost is amortised on a straight-line basis over their estimated useful lives which vary
from two to twenty years. Carrying values are reviewed for indicators of impairment at each reporting date and are subject to impairment testing when
events or changes in circumstances indicate that the carrying values may not be recoverable. Further information is provided in the Goodwill and Intangible
Assets note.

Property, Plant and Equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment charges. Cost includes expenditure that is directly
attributable to the acquisition of the assets. Software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any retired
component is derecognised. Other repair and maintenance expenditure that does not meet the asset recognition criteria is expensed in the Consolidated
Income Statement as incurred. Assets are depreciated from the time they are available for use, however land is not depreciated. Depreciation on other
assets is calculated to write off the carrying amount of property, plant and equipment, on a straight-line basis at the following annual rates:
• Buildings:
2 – 5%
• Plant and equipment:
3 – 33%



99

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
2. Summary of Significant Accounting Policies continued
Property, Plant and Equipment continued
The estimated residual value and the useful lives of assets are reviewed at each balance sheet date. Gains and losses on disposals are determined by
comparing the proceeds with the carrying amount. These are included in the Consolidated Income Statement.
Capitalisation of costs in respect of constructing an asset commences when it is probable that future economic benefits associated with the asset will
flow to the Group and the cost of the asset can be measured reliably. Cost includes expenditure that is directly attributable to the construction of the asset.
Construction in progress is not depreciated and is assessed for impairment when there is an indicator of impairment. When these assets are available for
use, they are transferred out of construction in progress to the applicable heading under property, plant and equipment.

Impairment
Goodwill
Goodwill is subject to impairment testing on an annual basis at a consistent time each year and at any time an impairment indicator is considered to
exist. Impairment is determined by comparing the carrying amount to the recoverable amount of the groups of CGUs to which the goodwill relates.
The recoverable amount is the greater of; fair value less costs to sell, and value-in-use. When the recoverable amount of the groups of CGUs is less
than the carrying amount, an impairment loss is recognised.
Where goodwill forms part of a group of CGUs and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the group of CGUs retained.
In the year in which a business combination occurs, and the goodwill arising affects the goodwill allocation to CGUs, the groups of CGUs are tested for
impairment prior to the end of that year. Impairment losses on goodwill are recognised in the Consolidated Income Statement and are not reversed
IROORZLQJ|UHFRJQLWLRQ
Impairment of Non-financial Assets
Long-term tangible and intangible assets that are subject to depreciation or amortisation are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the Consolidated Income Statement for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value-in-use. When assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial
assets that have suffered impairment losses are reviewed for possible reversal of the impairment at each reporting date. The impairment loss is only
reversed to the extent that the asset’s carrying amount does not exceed that which would have been determined had no impairment been recognised.
Impairment of Financial Assets
For trade receivables, the Group applies the simplified approach permitted by IFRS 9. The Group’s impairment policy is explained in the Trade and Other
Receivables note.

Biological Assets
The Group holds standing timber which is classified as a biological asset and is stated at fair value less estimated costs to sell. Changes in value are
recognised in the Consolidated Income Statement. The fair value of standing timber is calculated using weighted average prices for similar transactions
with third parties. At the time of harvest, wood is recognised at fair value less estimated costs to sell and transferred to inventory.

Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is determined on a first-in, first-out basis and includes
expenditure incurred in acquiring the inventories and bringing them to their present location and condition. Raw materials are valued on the basis of purchase
cost on a first-in, first-out basis. For finished goods and work-in-progress, cost includes direct materials, direct labour and attributable overheads based
on normal operating capacity and excludes borrowing costs. The cost of wood is its fair value less estimated costs to sell at the date of harvest, determined
in accordance with the policy for biological assets. Any change in value at the date of harvest is recognised in the Consolidated Income Statement. Net
realisable value is the estimated proceeds of sale less costs to completion and any costs to be incurred in selling and distribution. Full provision is made
for all damaged, deteriorated, obsolete and unusable materials.

Financial Instruments
Trade receivables and debt instruments issued are initially recognised when they are originated. All other financial instruments are recognised when the
Group becomes a party to its contractual provisions. A financial asset (unless it is a trade receivable without a significant financing component) or financial
liability is initially recognised at fair value plus, for an item not at fair value through profit or loss (‘FVPL’), transaction costs that are directly attributable to its
acquisition or issue.
On initial recognition, a financial asset is classified as measured at amortised cost, or fair value through other comprehensive income (‘FVOCI’), or FVPL.
The classification is based on the business model for managing the financial assets and the contractual terms of the cash flows. Reclassification of financial
assets is required only when the business model for managing those assets changes. Financial assets are derecognised when the Group’s contractual rights
to the cash flows from the financial assets expire, are extinguished or transferred to a third party.
Financial liabilities are classified as measured at amortised cost or FVPL. Financial liabilities are derecognised when the Group’s obligations specified in the
contracts expire, are discharged or cancelled. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial
liability, the difference between the carrying amount extinguished and the consideration paid, (including any non-cash assets transferred or liabilities
assumed) is recognised in profit or loss.

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Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

2. Summary of Significant Accounting Policies continued
Financial Instruments continued
Cash and Cash Equivalents
Cash and cash equivalents comprise; cash balances held to meet short-term cash commitments, and; investments which are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value. Where investments are categorised as cash equivalents, the related balances have
a maturity of three months or less from the date of acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are included as a component of cash and cash equivalents for the purpose of the Consolidated Statement of Cash Flows. Cash and cash
equivalents are stated at amortised cost.
Restricted Cash
Restricted cash comprises cash held by the Group but which is ring-fenced or used as security for specific financing arrangements, and to which the Group
does not have unfettered access. Restricted cash is stated at amortised cost.
Equity Instruments
Equity instruments are measured at fair value with fair value gains and losses recognised in other comprehensive income. Dividend income is recognised in
profit or loss. There is no reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Any gains and losses will
be reclassified within equity from the FVOCI reserve to retained earnings.
Debt Instruments
Listed and unlisted debt instruments are measured at fair value with fair value gains and losses recognised in profit or loss. Interest and dividend income is
recognised in profit or loss.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method. Fixed rate borrowings, which have been hedged to floating rates are measured at amortised cost adjusted for changes in value
attributable to the hedged risk arising from changes in underlying market interest rates. Borrowings are classified as current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least one year after the balance sheet date.
Securitised Assets
The Group has entered into a series of securitisation transactions involving certain of its trade receivables and the establishment of certain special purpose
entities to effect these transactions. These special purpose entities are consolidated as they are considered to be controlled by the Group. The related
securitised assets continue to be recognised on the Consolidated Balance Sheet.
Trade and Other Receivables
Trade and other receivables (unless it is a trade receivable without a significant financing component) are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less loss allowance. Trade receivables without a significant financing component are initially
measured at the transaction price.
Trade and Other Payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Derivative Financial Instruments and Hedging Activities
The Group uses derivative financial instruments to manage certain foreign currency, interest rate and commodity price exposures. All derivatives are
recognised at fair value. The treatment of changes in fair value depends on whether the derivative is designated as a hedging instrument, the nature of
the item being hedged and the effectiveness of the hedge. The Group designates certain derivatives as follows:
• hedges of a particular risk associated with a recognised floating rate asset or liability or a highly probable forecast transaction (cash flow hedges);
• hedges of changes in the fair value of a recognised asset or liability (fair value hedges); and
• hedges of net investments in foreign operations (net investment hedges).
At inception the Group documents the relationship between the hedging instrument and hedged items, its risk management objectives and the strategy
for undertaking the transaction. The Group also documents its assessment of whether the derivative is highly effective in offsetting changes in fair value
or cash flows of hedged items, both at inception and in future periods.
The fair values of various derivative instruments used for hedging purposes are disclosed in the Financial Instruments note. Movements on the cash flow
hedging reserve and cost of hedging reserve in shareholders’ equity are shown in the Capital and Reserves note. The full fair value of a hedging derivative is
classified as a non-current asset or liability when its remaining maturity is more than one year; it is classified as a current asset or liability when its remaining
maturity is less than one year. Non-hedging derivative assets and liabilities are classified as current or non-current based on expected realisation or
settlement dates.



101

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
2. Summary of Significant Accounting Policies continued
Derivative Financial Instruments and Hedging Activities continued
Cash Flow Hedges
Changes in the fair value of derivative hedging instruments designated as cash flow hedges are recognised in other comprehensive income to the extent
that the hedge is effective. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
When designating a foreign exchange derivative contract as a cash flow hedge, the currency basis spread is excluded and accounted for separately as a cost
of hedging, being recognised in a cost of hedging reserve within equity.
Amounts accumulated in other comprehensive income are reclassified to the Consolidated Income Statement in the same periods that the hedged items
affect profit or loss as follows:
• The reclassified gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the Consolidated
Income Statement within finance income or costs respectively.
• When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset
when it is recognised. The deferred amounts are ultimately recognised in profit or loss as the hedged item affects profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is
discontinued prospectively. The cumulative gain or loss previously recognised in other comprehensive income remains there until the forecast transaction
occurs, unless the hedged transaction is no longer expected to occur, in which case the cumulative gain or loss that was previously recognised in other
comprehensive income is transferred to the Consolidated Income Statement.
Fair Value Hedges
Where derivative hedging instruments are designated as fair value hedges, any gain or loss arising from the remeasurement of the hedging instrument to fair
value is reported in the Consolidated Income Statement together with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk. When the hedging instrument no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of the hedged item is
amortised to the Consolidated Income Statement over the period to maturity.
Net Investment Hedges
Hedges of net investments in foreign operations are accounted for in a similar manner to cash flow hedges. Any gain or loss on the hedging instrument
relating to the effective portion of the hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised
immediately in the Consolidated Income Statement within finance income or costs respectively. Gains and losses accumulated in other comprehensive
income are reclassified to profit or loss when the foreign operation is sold.
Derivatives not Designated as Hedges
Changes in the fair value of derivatives which are not designated for hedge accounting are recognised in the Consolidated Income Statement.

Fair Value Hierarchy
The Group reports using the fair value hierarchy in relation to its assets and liabilities which are measured at fair value except for those which are exempt as
defined under IFRS 13, Fair Value Measurement. The fair value hierarchy categorises into three levels the inputs to valuation techniques used to measure fair
value, which are described as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs, other than quoted prices included within Level 1, that are observable for the asset or liability either directly (as prices) or indirectly (derived
from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of
resources will be required to settle the obligation and the amount can be reliably estimated. If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance expense.
A contingent liability is not recognised but is disclosed where the existence of an obligation will only be confirmed by future events or where it is not probable
that an outflow of resources will be required to settle the obligation or where the amount of the obligation cannot be measured with sufficient reliability.
Contingent assets are not recognised but are disclosed where an inflow of economic benefits is probable.

Finance Costs and Income
Finance costs comprise interest expense on borrowings (including amortisation of deferred debt issue costs), certain foreign currency translation losses
related to financing, unwinding of the discount on provisions, borrowing extinguishment costs, fair value loss on financial assets, fair value loss on put
options arising in business combinations, net interest cost on net pension liability, net monetary loss arising in hyperinflationary economies, the interest
element of lease payments and losses on derivative instruments that are not designated as hedging instruments and are recognised in profit or loss.
Borrowing costs are recognised in profit or loss using the effective interest method. Borrowing costs that are directly attributable to the acquisition
or construction of a qualifying asset are capitalised as part of the cost of that asset. All other borrowing costs are recognised as an expense in the
Consolidated Income Statement.

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Strategic Report

Governance

Financial Statements

Supplementary Information

2. Summary of Significant Accounting Policies continued
Finance Costs and Income continued
Finance income comprises interest income on funds invested, certain foreign currency translation gains related to financing, fair value gain on financial
assets, fair value gain on put options arising in business combinations, net monetary gain arising in hyperinflationary economies, gains on derivative
instruments that are not designated as hedging instruments and are recognised in profit or loss and dividend income. Interest income is recognised
as it accrues using the effective interest method. Dividend income is recognised on the date that the Group’s right to receive payment is established.

Income Taxes
The income tax expense recognised in each financial year comprises current and deferred tax and is recognised in the Consolidated Income Statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the related tax is similarly
recognised in other comprehensive income or in equity.
Current Income Tax
Current tax consists mainly of the expected tax payable or recoverable on the taxable income for the year using the applicable tax rates during the year and
any adjustment to tax payable in respect of previous years.
Deferred Income Tax
Deferred income tax is provided using the liability method, on temporary differences between the carrying amounts of assets and liabilities in the
Consolidated Financial Statements and their tax bases. If the temporary difference arises from the initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction does not affect accounting nor taxable profit or loss, it is not recognised. Deferred
tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax liabilities are
not recognised if they arise from the initial recognition of goodwill.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not subject to discounting.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease, if the contract conveys a right
to control the use of an identified asset for a period of time in exchange for consideration. The Group recognises a right-of-use asset and a lease liability at
the lease commencement date which is the date at which the asset is made available for use by the Group.
The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for
certain remeasurements of the lease liability. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
restoration costs and lease payments made at or before the commencement date less any lease incentives received. The right-of-use asset is depreciated
on a straight-line basis over the shorter of its estimated useful life and the lease term. Where the lease contains a purchase option the asset is written off over
the useful life of the asset when it is reasonably certain that the purchase option will be exercised. Right-of-use assets are subject to impairment testing.
The lease liability is initially measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate known at the commencement date, payments for a purchase
option, payments for an optional renewal period and termination option payments if the Group is reasonably certain to exercise those options. The lease
term is the non-cancellable period of the lease adjusted for any renewal or termination options which are reasonably certain to be exercised. Management
applies judgement in determining whether it is reasonably certain that a renewal or termination option will be exercised. The variable lease payments that do
not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. The Group has
elected to avail of the practical expedient not to separate lease components from any associated non-lease components. Lease liabilities are included
LQ|ERUURZLQJV
The lease payments are discounted using the lessee’s incremental borrowing rate as the interest rate implicit in the lease is generally not readily
determinable. Incremental borrowing rates are determined using a build-up approach that uses externally benchmarked information adjusted to take
consideration of the lessee’s risk profile and the specific lease characteristics. These characteristics include the type of leased asset, the term of the lease
and the currency of the lease.
After the commencement date, the lease liability is measured at amortised cost using the effective interest method. It is remeasured if there is a
modificiation, a change in future lease payments arising from a change in an index or rate, or if the Group changes its assessment of whether it is reasonably
certain to exercise an option within the contract.
The Group has elected to apply the recognition exemptions for short-term and low-value leases and recognises the lease payments associated with these
leases as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases with a lease term of 12 months or less.
Low-value assets comprise certain items of IT equipment and small items of office furniture.



103

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
2. Summary of Significant Accounting Policies continued
Leases continued
Accounting Policy Applied Before 1 January 2019
Arrangements which transfered substantially all of the risks and rewards of ownership of an asset to the Group were classified as finance leases. They were
capitalised at inception at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease obligations, net of
finance costs, were included in borrowings. The interest element of lease payments was expensed in the Consolidated Income Statement over the lease
period so as to produce a constant periodic rate of interest. Assets acquired under finance leases were depreciated over the shorter of the useful life of the
asset and the lease term.
Arrangements in which substantially all of the risks and rewards of ownership of an asset were not transferred to the Group by the lessor were classified as
operating leases. Operating lease rentals, net of incentives received from the lessor, were expensed in the Consolidated Income Statement on a straight-line
basis over the lease term.
Arrangements comprising transactions that did not take the legal form of a lease but conveyed the right to use an asset in return for payment, or a series of
payments, were assessed to determine whether the arrangement contained a lease.

Retirement Benefit Obligations
7KH*URXSRSHUDWHVERWKGHILQHGEHQHILWDQGGHILQHGFRQWULEXWLRQSHQVLRQSODQVWKURXJKRXWLWVRSHUDWLRQVLQDFFRUGDQFHZLWKORFDOFRQGLWLRQVDQG|SUDFWLFH
For defined contribution pension plans, once contributions have been paid, the Group has no further payment obligations. Contributions are recognised as
an employee benefit expense as service is received from employees in the Consolidated Income Statement. Prepaid contributions are recognised as an
asset only to the extent that a cash refund or a reduction in future payments is available.
The defined benefit pension plans are funded by payments to separately administered funds or in certain countries, in accordance with local practices,
scheme liabilities are unfunded and recognised as liabilities in the Consolidated Balance Sheet.
The costs and liabilities of defined benefit pension plans are calculated using the projected unit credit method. Actuarial calculations are prepared by
independent, professionally qualified actuaries at each balance sheet date. The present value of the defined benefit obligation is determined by discounting
the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be
paid, and that have terms approximating to the terms of the related obligation.
Defined benefit costs are categorised as: (1) service cost; (2) net interest expense or income; and (3) remeasurement. Service cost includes current and past
service cost (which can be negative or positive) as well as gains and losses on settlements; it is included in operating profit. Past service cost is recognised at
the earlier of the date when the plan amendment or curtailment occurs and the date that the Group recognises related restructuring costs. A gain or loss
on settlement is recognised when the settlement occurs. Net interest, included within finance costs, is calculated by applying the discount rate to the net
defined benefit asset or liability at the beginning of the year. Remeasurement is comprised of the return on plan assets (excluding net interest) and actuarial
gains and losses; it is recognised in other comprehensive income in the period in which it arises and is not subsequently reclassified to the Consolidated
Income Statement.
The net surplus or deficit arising on the Group’s defined benefit pension plans, together with the liabilities associated with the unfunded plans, are shown
either within non-current assets or liabilities in the Consolidated Balance Sheet. The defined benefit pension asset or liability comprises the total for each
plan of the present value of the defined benefit obligation less the fair value of plan assets. Fair value of plan assets is based on market price information and
in the case of published securities, it is the published bid price. Any pension asset is limited to the present value of economic benefits available in the form of
refunds from the plans or reductions in future contributions. The deferred tax impact of pension plan surpluses and deficits is disclosed separately within
deferred income tax assets or liabilities, as appropriate.

Share-based Payments
The Group grants equity settled share-based payments to certain employees as part of their remuneration; there are no cash-settled share-based
payments. The fair value of grants is determined at the date of grant and is expensed in the Consolidated Income Statement over the vesting period with a
corresponding increase in equity. Fair value incorporates the effect of market-based conditions. Non-market-based vesting conditions are only taken into
account when assessing the number of awards expected to vest such that the cumulative expense recognised equates to the number of grants that actually
vest. The periodic expense/credit recognised in the Consolidated Income Statement is calculated as the difference between the cumulative expense as
estimated at the start and end of the period.
The cumulative expense is reversed when an employee in receipt of share options terminates service prior to completion of the vesting period or when a
non-market-based performance condition is not expected to be met. No reversal of the cumulative charge is made where awards do not vest due to a
market-based vesting condition.
Where the Group receives a tax deduction for share-based payments, deferred tax is provided on the basis of the difference between the market price of the
underlying equity at the date of the financial statements and the exercise price of the option. As a result, the deferred tax impact will not directly correlate
with the expense reported.
Proceeds received from the exercise of options, net of any directly attributable transaction costs, are credited to the share capital and share
SUHPLXP|DFFRXQWV

104



Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

2. Summary of Significant Accounting Policies continued
Exceptional Items
The Group has adopted an income statement format which seeks to highlight significant items within the Group results for the year. The Group believes this
format is useful as it highlights one-off items, where significant, such as reorganisation and restructuring costs, profit or loss on disposal of operations, profit
or loss on disposal of assets, impairment of assets, legislative and regulatory fines, foreign exchange gains or losses on currency devaluations, profit or loss
on early extinguishment of debt and fair value gains or losses on put options arising in business combinations. Judgement is used by the Group in assessing
the particular items, which by virtue of their size and nature, are disclosed as exceptional items.

Emissions Rights and Obligations
As a result of the European Union Emission Trading Scheme the Group receives free emission rights in certain countries. Rights are received annually and the
Group is required to surrender rights equal to its actual emissions. A provision is only recognised when actual emissions exceed the emission rights granted.
Any additional rights purchased are recognised at cost and they are not subsequently remeasured. Where excess certificates are sold to third parties, the
Group recognises the consideration receivable within cost of sales in the Consolidated Income Statement.

Government Grants
Government grants are recognised at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with any
related conditions. Grants that compensate the Group for expenses are offset against the related expense in the Consolidated Income Statement in the
same accounting periods. Grants related to the cost of an asset are recognised in the Consolidated Income Statement over the useful life of the asset within
administrative expenses.

Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.

Own Shares
Ordinary shares acquired by the Company or purchased on behalf of the Company are deducted from equity. No gain or loss is recognised in profit or loss on
the purchase, sale, issue or cancellation of the Company’s ordinary shares.

Dividend Distributions
Dividend distributions to the Company’s shareholders are recognised as liabilities in the period in which the dividends are approved by the
Company’s shareholders.

3. Significant Accounting Judgements, Estimates and Assumptions
Preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities. These judgements, estimates and assumptions are subject to continuing re-evaluation and are based on
historical experience and other factors, including expectations of future events that are believed to be reasonable. Actual outcomes may differ significantly
from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant are set
out below.

Significant Accounting Judgements
Consolidation of Structured Entities
The Group is a party to an arrangement involving securitisation of certain of its trade receivables. The arrangement required the establishment of certain
special purpose entities (‘SPEs’) which are not owned by the Group. However, the SPEs are consolidated as management considers them to be controlled
by the Group. The securitised receivables and the borrowings of the SPEs are recognised in the Consolidated Balance Sheet.
The Group has established a trust which facilitates the operation of the Group’s long-term incentive plans. While the Group does not hold any of the equity
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Financial Statements.
Impairment of Goodwill
Judgement is required in determining whether goodwill is impaired or not. The Group tests annually whether goodwill has suffered any impairment.
The recoverable amounts of groups of CGUs have been determined based on value-in-use calculations. The principal assumptions used to determine
value-in-use relate to future cash flows and the time value of money. Further information is provided in the Goodwill and Intangible Assets note.
Income Taxes
Provisions for taxes require judgement in interpreting tax legislation, current case law or practice. It may be unclear how tax law or practice applies to a
particular transaction or set of circumstances. In some instances this may not be known until a tax authority or a court makes a decision in an examination,
audit or appeal. The Group considers such uncertain tax positions together or separately depending on which approach better predicts how the
uncertainties can be resolved. Where the Group concludes it is not probable that a tax authority will fully accept its assessment of an uncertain tax position,
it reflects the effect of the uncertainty as the most likely amount or the expected value. In addition, the Group recognises deferred tax assets, mainly
relating to unused tax losses, when it is probable that the assets will be recovered through future profitability and planning. The assessment of recoverability
involves judgement.
Exceptional Items
Judgement is required in determining which items by virtue of their size and nature are considered exceptional and separately disclosed in the Consolidated
Income Statement. The Group has outlined significant items which it believes are exceptional, due to both their size and nature, within the accounting policy
for exceptional items in the Summary of Significant Accounting Policies note.


105

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
3. Significant Accounting Judgements, Estimates and Assumptions continued
Significant Accounting Estimates and Assumptions
Measurement of Defined Benefit Obligations
The cost of defined benefit pension plans and the present value of pension obligations are determined using actuarial valuations. These valuations involve
making various assumptions that may differ significantly from actual developments in the future. The assumptions include determination of appropriate
discount rates, future salary increases, inflation, mortality rates and future pension increases. Due to the complex nature of the valuations the Group
employs an international network of professional actuaries to perform these valuations. The critical assumptions and estimates applied along with a
sensitivity analysis are provided in the Employee Benefits note.

4. Changes in Significant Accounting Policies
IFRS 16, Leases, replaces IAS 17, Leases, and related interpretations. IFRS 16 sets out the principles for the recognition, measurement, presentation and
disclosure of leases for both the lessee and the lessor. For lessees, IFRS 16 eliminates the classification of leases as either operating leases or finance leases
and introduces a single lessee accounting model with some exemptions for short-term and low-value leases. The lessee recognises a right-of-use asset
representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.
The Group has adopted IFRS 16 using the modified retrospective approach, with a date of initial application of 1 January 2019. Under this method, the impact
of the standard is calculated retrospectively, however, the cumulative effect arising from the new leasing rules is recognised at the date of initial application.
Accordingly, the comparative information presented for 2018 has not been restated. The new accounting policy is disclosed in the Summary of Significant
Accounting Policies note.

The Group’s Leasing Activities and how these are Accounted for
The Group leases a range of assets including property, vehicles and plant and equipment. Further information regarding the Group’s leasing activities is
disclosed in the Leases note.
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all
of the risks and rewards of ownership to the Group. Payments made under operating leases (net of any incentives received from the lessor) were charged to
profit or loss on a straight-line basis over the period of the lease. Under IFRS 16, the Group applies a single recognition and measurement approach for all
leases, except for short-term and low-value assets, and recognises right-of-use assets and lease liabilities.

Transition
On transition to IFRS 16, the Group has elected to apply the practical expedient to grandfather the assessment of which transactions are or contain leases.
It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not
reassessed.
At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments,
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• their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s incremental borrowing rate at the
date of initial application – the Group applied this approach for certain property leases; or
• an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other leases.
The Group applied the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17.
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
• Used hindsight when determining the lease term if the contract contained options to extend or terminate the lease.
• Relied on its assessment of whether leases were onerous under IAS 37, Provisions, Contingent Liabilities and Contingent Assets, immediately before the
date of initial application to meet the impairment requirement.
For leases previously classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at 1 January 2019 were
determined as the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

Impact on Consolidated Financial Statements
Impact on Transition
On transition to IFRS 16, the Group recognised additional right-of-use assets and additional lease liabilities relating to operating leases, recognising the
difference in retained earnings. Right-of-use assets were adjusted by an onerous lease contract which was previously reported in ‘Provisions for liabilities’.
The impact on transition is summarised below.
1 January
2019
€m

Right-of-use assets
Deferred income tax assets
Provisions for liabilities
Lease liabilities presented in borrowings
Retained earnings

106



331
4
(5)
361
(21)

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

4. Changes in Significant Accounting Policies continued
Impact on Consolidated Financial Statements continued
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using the lessee’s incremental
borrowing rate at 1 January 2019. The weighted average rate applied was 3%.
The lease liabilities as at 1 January 2019 can be reconciled to the operating lease commitments as at 31 December 2018 as follows:
€m

Operating lease commitments at 31 December 2018
Add:
Extension options reasonably certain to be exercised
Non-lease components
Less:
Commitments relating to short-term and low-value leases

332

Total future lease payments
Effect of discounting
Finance lease liabilities recognised at 31 December 2018

423
(62)
19

Lease liabilities at 1 January 2019

380

80
13
(2)

The impact of IFRS 16 on the Consolidated Financial Statements is set out in the Leases note. The impact of IFRS 16 on our Alternative Performance
Measures (‘APMs’) is set out in the Supplementary Information section on pages 162 to 165.

5. Segment and Revenue Information
The Group has identified operating segments based on the manner in which reports are reviewed by the Chief Operating Decision Maker (‘CODM’).
The CODM is determined to be the executive management team responsible for assessing performance, allocating resources and making strategic
decisions. The Group has identified two operating segments: 1) Europe and 2) the Americas.
The Europe and the Americas segments are highly integrated. They include a system of mills and plants that primarily produce a full line of containerboard
that is converted into corrugated containers within each segment. In addition, the Europe segment also produces other types of paper, such as solidboard,
sack kraft paper and graphic paper; and other paper-based packaging, such as solidboard packaging and folding cartons; and bag-in-box packaging. The
Americas segment, which includes a number of Latin American countries and the United States, also comprises forestry; other types of paper, such as
boxboard, sack paper and graphic paper; and paper-based packaging, such as folding cartons and paper sacks. Inter-segment revenue is not material. No
operating segments have been aggregated for disclosure purposes.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment
capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year. Additionally,
there are central costs which represent corporate governance costs, including executive costs, and costs of the Group’s legal, company secretarial, pension
administration, tax, treasury and controlling functions and other administrative costs.
Segment profit is measured based on EBITDA1. Segment assets consist primarily of property, plant and equipment, right-of-use assets, biological assets,
goodwill and intangible assets, inventories, trade and other receivables, deferred income tax assets and cash and cash equivalents. Group centre assets are
comprised primarily of property, plant and equipment, other investments, derivative financial assets, deferred income tax assets, cash and cash equivalents
and restricted cash. Segment liabilities are principally comprised of borrowings, operating liabilities, deferred income tax liabilities and employee benefits.
Group centre liabilities are comprised of items such as borrowings, employee benefits, derivative financial instruments, deferred income tax liabilities and
certain provisions.
Segment capital expenditure comprises additions to property, plant and equipment (Note 12), goodwill and intangible assets (Note 13), biological assets
(Note 16) and right-of-use assets (Note 30) including additions resulting from acquisitions through business combinations (Note 32).
Inter-segment transfers or transactions are entered into under normal commercial terms and conditions that would also be available to unrelated third
parties. Inter-segment transactions are not material.
1
Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
6. Cost and Income Analysis continued
Exceptional items charged within operating profit in 2019 amounted to €178 million, of which €8 million related to the impairment of property, plant and
equipment and customer related intangible assets in one of our North American corrugated plants. €124 million related to the Italian Competition Authority
fine levied on Smurfit Kappa Italia S.p.A., further details can be found in Note 27. The remaining €46 million related to the impairment of goodwill in Brazil.
Management has reassessed the expected future business performance in the country as a result of the continuing difficult economic conditions and
consequently the projected cashflows are lower, giving rise to an impairment charge.
Exceptional items charged within operating profit in 2018 amounted to €66 million. This comprised the cost of countering the unsolicited approach from
International Paper of €18 million, the loss on the disposal of the Baden operations in Germany of €11 million, the guaranteed minimum pension (‘GMP’)
adjustment in the United Kingdom of €9 million and restructuring costs in Europe of €28 million.
During the third quarter of 2018, the Government of Venezuela took control of Smurfit Kappa Carton de Venezuela’s (‘SKCV’) business and operations. As a
result of this action, SKG plc was no longer able to exercise control over its Venezuelan business and operations. As a consequence of the Group’s loss of
control over SKCV, the Group deconsolidated its Venezuelan operations with effect from August 2018 and recorded an exceptional charge of €1,270 million
in the Consolidated Income Statement.
The Group’s Consolidated Financial Statements were impacted as follows: write down of net assets of €61 million included in the Consolidated Balance
Sheet with a corresponding charge in the Consolidated Income Statement and legal and reorganisation costs of €13 million charged to the Consolidated
Income Statement.
As required under IAS 21, The Effects of Changes in Foreign Exchange Rates, currency was recycled on deconsolidation. This resulted in a non-cash
exceptional charge to the Consolidated Income Statement of €1,196 million, with a corresponding credit of €1,196 million to the Consolidated Statement
of Comprehensive Income. This had no impact on the net assets or total equity of the Group. It represented the transfer of negative currency reserves,
generated by previous devaluations of the Bolivar Fuerte, from the foreign currency translation reserve into the retained earnings reserve.

Expenses by nature:
Raw materials and consumables
Employee benefit expense
Energy
Maintenance and repairs
Transportation and storage costs
Depreciation, amortisation and depletion
Impairment of assets
Reorganisation and restructuring costs
Lease expense
Loss on disposal of business
Foreign exchange gains and losses
Other expenses


Included within the expenses by nature above are research and development expenses of €8 million (2018: €7 million). Research and development expenses
are included within administrative expenses in the Consolidated Income Statement.
Directors’ remuneration is shown in the Remuneration Report and in Note 31.

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6. Cost and Income Analysis continued

The employee benefit expense comprises:
Wages and salaries
Social insurance costs
Share-based payment expense
Defined benefit expense
Defined contribution plan expense
Reorganisation and restructuring costs1
Charged to operating profit – pre-exceptional
Exceptional – reorganisation and restructuring costs
Exceptional – GMP equalisation
Finance costs
Actuarial loss on pension schemes recognised in other comprehensive income
Total employee benefit expense
Finance income:
Other interest receivable
Foreign currency translation gain on debt
Fair value gain on derivatives not designated as hedges
Exceptional fair value gain on financial liabilities
Fair value gain on financial assets
Net monetary gain – hyperinflation

Finance costs:
Interest payable on bank loans and overdrafts
Interest payable on leases
Interest payable on other borrowings
Exceptional finance costs associated with debt restructuring
Exceptional consent fee – reporting waiver
Exceptional interest on early termination of cross currency swaps
Unwinding discount element of provisions
Foreign currency translation loss on debt
Fair value loss on derivatives not designated as hedges
Fair value loss on financial assets
Net interest cost on net pension liability
Net monetary loss – hyperinflation

The exceptional finance costs of €37 million comprise of a redemption premium of €31 million and the accelerated amortisation of the debt issue costs of
€6 million relating to the refinancing of the senior credit facility and the early redemption of bonds. The exceptional finance income of €20 million relates to
the fair value gain on the Serbian put option at 31 December 2019.
The exceptional finance cost of €6 million in 2018 related to the fee of €4 million payable to the bondholders to secure their consent to the Group’s move
from quarterly to semi-annual reporting and €2 million in relation to the interest cost on the early termination of certain US dollar/euro swaps. The swaps
were terminated following the paydown of the US dollar element of the 2018 bonds.
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9. Income Tax Expense continued
The income tax expense for the financial year 2019 is €42 million lower than in the comparable period in 2018. However, in 2018 the income tax expense
included a €14 million charge for Venezuela which does not occur in 2019 as it was deconsolidated for the full year. The remaining €28 million net reduction in
the tax expense is mainly attributable to lower profitability in 2019 and other tax credits, offset in part by the tax effect of non-deductible exceptional items.
There is a net €1 million increase in current tax. In Europe, the current tax is in line with 2018 due to lower profitability and other tax credits, partly offset by the
tax effect of non-deductible exceptional items. In the Americas, the current tax expense is €1 million higher than in the comparable period. However, after
adjusting for the deconsolidation of Venezuela, there is an overall €15 million net increase in current tax expense on a like-for-like basis. This is primarily due
to the mix of profits and exceptional items, with the tax credit on those exceptional items being recorded in deferred tax.
The movement in deferred tax from a charge of €36 million in 2018 to a tax credit of €7 million in 2019 includes the effects of the reversal of timing differences
on which tax was previously recognised, as well as the use and recognition of tax losses and credits and a tax credit associated with the impairment of
goodwill in Brazil.
There is a net tax credit of €22 million on exceptional items in 2019 compared to a €7 million tax credit in the prior year.

Reconciliation of the Effective Tax Rate
The following table relates the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of the Group:

Profit/(loss) before income tax
Profit/(loss) before income tax multiplied by the standard rate of tax of 12.5% (2018: 12.5%)
Effects of:
Income subject to different rates of tax
Other items
Adjustment to prior period tax
Effect of previously unrecognised losses
Deconsolidation of Venezuela


Factors That May Affect the Future Tax Expense and Other Disclosure Requirements
Unremitted Earnings in Subsidiaries and Associates
The Group has not made provision for deferred tax in relation to temporary differences applicable to investments in subsidiaries on the basis that the Group
can control their timing and choose which temporary timing differences will reverse. The Group is not obliged to remit earnings from subsidiaries. It is
probable that the Group would only remit earnings which can benefit from the availability of participation tax exemption or sufficient tax credits (actual or
deemed) to ensure there is no additional tax due. The aggregate amount of this temporary difference is approximately €860 million (2018: €782 million).
Due to the absence of control in the context of associates (significant influence by definition) deferred tax liabilities are recognised where necessary in
respect of the Group’s investment in these entities.
The total tax expense in future periods will be affected by changes to the corporation tax rates in force and legislative changes that broaden the tax base or
introduce other minimum taxes in the countries in which the Group operates. The tax expense may also be impacted by changes in the geographical mix
RI|HDUQLQJV
The current tax expense may also be impacted, inter alia, by changes in the excess of tax depreciation (capital allowances) over accounting depreciation,
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There are no income tax consequences for the Company in respect of dividends which were proposed prior to the issuance of the Consolidated Financial
Statements for which a liability has not been recognised.



113

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
10. Earnings per Share (‘EPS’)
Basic
Basic EPS is calculated by dividing the profit/(loss) attributable to owners of the parent by the weighted average number of ordinary shares in issue during the
year less own shares.
2019

Diluted
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary
shares. These comprise convertible, deferred and matching shares issued under the Group’s long-term incentive plans. Details of these plans are set out
in Note 26. Where the conditions governing exercisability of these shares have been satisfied as at the end of the reporting period, they are included in the
FRPSXWDWLRQRIGLOXWHGHDUQLQJVSHURUGLQDU\|VKDUH
2019
At 31 December 2018, there were 1,563,662 potential ordinary shares in issue that could dilute EPS in the future, but these were not included in the
computation of diluted EPS in the year because they would have the effect of reducing the loss per share. Accordingly, there was no difference between
basic and diluted loss per share in 2018.

Overview

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Supplementary Information

11. Dividends
The following dividends were declared and paid by the Group.

Final: paid 72.2 cent per ordinary share on 10 May 2019 (2018: paid 64.5 cent per ordinary share on 11 May 2018)
Interim: paid 27.9 cent per ordinary share on 25 October 2019 (2018: paid 25.4 cent per ordinary share on 26 October 2018)

The Board is recommending a final dividend of 80.9 cent per ordinary share (approximately €193 million) for 2019 to all ordinary shareholders on the share
register at the close of business on 17 April 2020, subject to the approval of the shareholders at the Annual General Meeting.

12. Property, Plant and Equipment
Land and
Buildings
Financial year ended 31 December 2018
Opening net book amount
Reclassifications
Additions
Acquisitions
Depreciation charge
Retirements and disposals
Deconsolidation of Venezuela
Hyperinflation adjustment
Foreign currency translation adjustment
Financial year ended 31 December 2019
Opening net book amount
Adjustment on initial application of IFRS 16 (Note 4)1


At 1 January 2019
Reclassifications
Additions
Acquisitions
Depreciation charge
Impairments
Retirements and disposals
Hyperinflation adjustment
Foreign currency translation adjustment


Capitalised leased assets in relation to leases that were classified as ‘finance leases’ under IAS 17.



115

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
12. Property, Plant and Equipment continued
Land and Buildings
Included in land and buildings is an amount for land of €384 million (2018: €353 million).

Construction in Progress
Included in land and buildings and plant and equipment are amounts of €40 million (2018: €21 million) and €345 million (2018: €286 million) respectively,
for construction in progress.

Assets Pledged as Security
Assets with a carrying value of €18 million (2018: €18 million) are pledged as security for loans held by the Group.

Capitalised Leased Assets – 2018
Included in the net book amount of property, plant and equipment at 31 December 2018 is an amount for capitalised leased assets of €19 million.
The depreciation charge for capitalised leased assets was €2 million and the related finance charges amounted to €1 million. The net carrying amount
by class of assets at 31 December 2018 was as follows:
2018
€m

Cogeneration facilities
Other plant and equipment
Plant and equipment
Buildings

From 2019, following the adoption of IFRS 16, leased assets are presented as a separate line item in the Consolidated Balance Sheet. Details in relation to the
adoption of IFRS 16 are set out in Note 4. Information in relation to leased assets is set out in Note 30.

Capital Commitments
The following capital commitments in relation to property, plant and equipment were authorised by the Directors, but have not been provided for in the
Consolidated Financial Statements:

Contracted for
Not contracted for


Impairments
Impairment tests for items of property, plant and equipment are performed on a cash-generating unit basis when impairment triggers arise. The recoverable
amounts of property, plant and equipment are based on the higher of fair value less costs to sell and value-in-use. Value-in-use calculations are based
on cash flow projections and discount rates for items of property, plant and equipment. Impairment charges are recognised within cost of sales in the
Consolidated Income Statement. In 2019, the Group recorded an impairment charge of €4 million in relation to one of our North American corrugated plants.

Capitalised Borrowing Costs
In 2019, the Group capitalised borrowing costs of €2 million (2018: €2 million) on qualifying assets. Borrowing costs were capitalised at an average rate of
3.7% (2018: 3.8%).

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Financial year ended 31 December 2018
Opening net book amount
Additions
Acquisitions
Amortisation charge
Deconsolidation of Venezuela
Reclassifications
Hyperinflation adjustment
Foreign currency translation adjustment

Financial year ended 31 December 2019
Opening net book amount
Additions
Acquisitions
Amortisation charge
Impairment
Hyperinflation adjustment
Foreign currency translation adjustment


The useful lives of intangible assets other than goodwill are finite and range from two to twenty years. Amortisation is recognised as an expense within cost
of sales and administrative expenses in the Consolidated Income Statement.
Marketing related intangible assets relate mainly to trade names which arise from business combinations and are amortised over their estimated useful
lives of seven to ten years. Customer related intangible assets relate mainly to acquisitions and to customer relationships which arise from business
combinations. They are amortised over their estimated useful lives of two to twenty years. Software assets relate to computer software, other than
software for items of machinery that cannot operate without it; such software is regarded as an integral part of the related hardware and is classified
as property, plant and equipment. Computer software assets have estimated useful lives of three to five years for amortisation purposes.
In 2019, goodwill of €43 million and customer related intangible assets of €30 million arose on the acquisition of a paper mill and corrugated plant in Serbia.
A further €12 million of goodwill arose on the acquisition of plants in France and Bulgaria. In 2018, goodwill of €109 million arose on the acquisition of
Reparenco in the Netherlands.

Impairment Testing of Intangible Assets
The Group assesses whether there is an indication that an intangible asset may be impaired. During the year, such an assessment gave rise to an impairment
test in one of our North American corrugated plants to compare the carrying value of these assets with their recoverable amount. The recoverable amount
was based on a value-in-use calculation. This resulted in an impairment charge of €4 million being recognised within cost of sales.



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Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
13. Goodwill and Intangible Assets continued
Impairment Testing of Goodwill
Goodwill arising as part of a business combination is allocated to groups of cash-generating units (‘CGUs’) for the purpose of impairment testing based on
the Group’s existing business segments or, where appropriate, by recognition of a new CGU. The CGU groups represent the lowest level at which goodwill is
monitored for internal management purposes and are not larger than the operating segments determined in accordance with IFRS 8, Operating Segments.
A total of 15 groups (2018: 15) of CGUs have been identified and these are analysed between the two operating segments as follows:
2019
Number
A summary of the allocation of the carrying value of goodwill by operating segment is as follows:

Europe
The Americas

An impairment charge of €46 million arose in 2019 in relation to Brazil and was recognised in other operating expenses. Management reassessed the
expected future business performance in the country as a result of the continuing difficult economic conditions and consequently the projected cashflows
are lower, giving rise to the impairment charge. The goodwill relating to our operations in Brazil pre-impairment represented 2% of the Group’s total goodwill.
No impairment arose in 2018 in any CGU as the recoverable amount of the groups of CGUs, based on value-in-use and estimated using the methodology
outlined below, exceeded the carrying amount.

Impairment Testing Methodology and Results
The recoverable amount of each CGU is based on a value-in-use calculation. The cash flow forecasts for the purposes of these calculations are based on a
nine-year plan approved by senior management. Cash flow forecasts use growth factors consistent with historical growth rates as adjusted for the cyclical
nature of the business and are validated by reference to external data where available. The terminal value is estimated by applying an appropriate earnings
multiple to the average cash flows for years one to nine. The Group believes a nine-year forecast is appropriate to use for the impairment test, due to the
cyclical nature of the business in which the Group operates and the long-term lives of its assets.
Forecasts are derived from a combination of internal and external factors based on historical experience and take into account the cyclicality of cash flows
typically associated with these groups of CGUs. The cash flows, including terminal value estimations, are discounted using appropriate pre-tax discount rates.
Key assumptions include management’s estimates of future profitability, replacement capital expenditure requirements, trade working capital investment
needs and discount rates. Key assumptions in determining terminal value include earnings multiples.
Of the goodwill allocated to each of the 15 groups of CGUs, three units individually account for between 10% and 20% of the total carrying amount of
b|PLOOLRQDQGDUHVXPPDULVHGLQWKHWDEOHEHORZ$OORWKHUXQLWVDFFRXQWLQGLYLGXDOO\IRUOHVVWKDQRIWKHWRWDOFDUU\LQJDPRXQWDQGDUHQRWUHJDUGHG
as individually significant. The additional disclosures required under IAS 36, Impairment of Assets in relation to significant goodwill amounts arising in each of
the three groups of CGUs are as follows:
Europe
France

Carrying amount of goodwill (€ million)
Basis of recoverable amount
Discount rate applied (pre-tax)
Earnings multiple used for terminal value
Excess of value-in-use (€ million)

The key assumptions used for these three CGUs are consistent with those addressed above. The values applied to each of the key assumptions are derived
from a combination of internal and external factors based on historical experience and take into account the cyclicality of cash flows typically associated with
these groups of CGUs.

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13. Goodwill and Intangible Assets continued
Impairment Testing Methodology and Results continued
Management has determined forecast profitability based on past performance and its expectation of the current market conditions taking into account the
cyclical nature of the business.
The table below identifies the amounts by which each of the key assumptions must change in order for the recoverable amount to be equal to the carrying
amount of the three CGUs identified as individually significant.
Europe
France

Increase in pre-tax discount rate (percentage points)
Reduction in terminal value multiple
Reduction in EBITDA

The recoverable amount of the Argentina and Chile CGU is estimated to exceed the carrying value of the CGU by €3 million (2018: €37 million). The goodwill
relating to our operations in Argentina and Chile represents 1% of the Group’s total goodwill. The reduction in headroom resulted from the recent
deterioration in the Argentinian economy. We will continue to monitor the CGU throughout 2020. For the other CGUs, any reasonable movement in the
assumptions used in the impairment test would not result in an impairment.

Listed on a recognised stock exchange.

Equity Instruments Designated at FVOCI
Equity instruments designated at FVOCI relate to an investment in equity shares of a non-listed company. The Group designated the equity instrument at
FVOCI because it represents an investment that the Group intends to hold for the long-term for strategic purposes. In 2019, the Group made a fair value
adjustment to its investment in equity instruments which is now valued at nil.
Listed and Unlisted Debt Instruments
The Group designated listed and unlisted debt instruments as FVPL as the cash flows do not represent solely payments of principal and interest.
In 2019, fair value gains of €1 million (2018: €1 million loss) on debt instruments were recognised in finance income (2018: finance costs).
Information about the Group’s fair value measurement of its investments is included in Note 29.


15. Investment in Associates

At 1 January
Share of profit for the year
Dividends received from associates
Foreign currency translation adjustment
Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
16. Biological Assets
At 1 January
Increases due to new plantations
Harvested timber transferred to inventories
Change in fair value less estimated costs to sell
Deconsolidation of Venezuela
Foreign currency translation adjustment

At 31 December 2019, the Group’s biological assets consist of 68,000 (2018: 67,000) hectares of forest plantations which are held for the production of
paper and packaging products or sale to third parties. These plantations provide the Group’s mills in Colombia with a significant proportion of their total wood
fibre needs.
The Group’s biological assets are measured at fair value and have been categorised within level 2 of the fair value hierarchy. There were no transfers between
any levels during the year. Level 2 fair values of forest plantations have been derived using the valuation techniques outlined in the accounting policy note for
biological assets.
The Group is exposed to a number of risks related to its plantations:

Regulatory and Environmental Risks
The Group is subject to laws and regulations in various countries in which it operates. The Group has established environmental policies and procedures
aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the
systems in place are adequate to manage those risks.

Supply and Demand Risk
The Group is exposed to risks arising from market fluctuations in the price and sales volume of similar wood. Where possible the Group manages this risk
by aligning its harvest volume to demand for its manufactured products. Management performs regular industry trend analysis to ensure that the Group’s
pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with the expected demand.

Climate and Other Risks
The Group’s forests are exposed to the risk of damage from climatic changes, diseases, fires and other natural forces. The Group has extensive processes in
place aimed at monitoring and mitigating those risks, including regular forest health inspections and industry pest and disease surveys.

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17. Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where they relate to
income taxes levied by the same tax authority on either a taxable entity or different taxable entities where their intention is to settle the balances on a
net basis. This is set out below:

Deferred tax assets
Deferred tax assets/liabilities available for offset

Deferred tax liabilities
Deferred tax assets/liabilities available for offset

Deferred tax assets have been recognised in respect of deductible temporary differences to the extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilised.
Deferred tax assets have been recognised in respect of tax losses available for carry forward when the Group considers it is probable that future taxable
profit will be available against which the unused tax losses can be utilised. Where the Group considers that the recovery of such losses is not probable, no
asset is recognised.
The movement in net deferred tax balances during the year was as follows:
Note

Opening balance
Adjustment on initial application of IFRS 16 (Note 4)
At 1 January
Movement recognised in the Consolidated Income Statement
Movement recognised in the Consolidated Statement of Comprehensive Income
Acquisitions and disposals
Transfer between current and deferred tax
Hyperinflation adjustment – recognised in equity
Deconsolidation of Venezuela
Foreign currency translation adjustment
Deferred tax assets have not been recognised in respect of the following (tax effects):

Tax losses
Deferred interest

No deferred tax asset is recognised in respect of the above assets on the grounds that there is insufficient evidence that the assets will be recoverable.
In the event that sufficient profits are generated in the relevant jurisdictions in the future these assets may be recovered.
No deferred tax assets have been recognised in respect of gross tax losses amounting to €56 million (2018: €50 million) that can be carried forward against
future taxable income. The expiry dates in respect of these losses are as follows:

Expiry dates

18. Inventories

Raw materials
Work in progress
Finished goods
Consumables and spare parts

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Amounts falling due after more than one financial year:
Other receivables

The carrying amount of trade and other receivables equate to their fair values due to their short-term maturities.
The Group has securitised €607 million (2018: €643 million) of its trade receivables. The securitised receivables have not been derecognised as the Group
remains exposed to certain related credit risk. As a result, both the underlying trade receivables and the associated borrowings are shown in the
Consolidated Balance Sheet.
Amounts due from Group companies are unsecured, interest free and repayable on demand.

Impairment Losses
The movement in the allowance for impairment in respect of trade receivables was as follows;

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss
provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
The expected loss rates are based on the historical payment profiles of sales and the corresponding historical credit losses experienced. The historical loss
rates are adjusted to reflect current and forward-looking information on macroeconomic factors if there is evidence to suggest that these factors affect the
ability of the customers to settle the receivables.
On that basis, the loss allowance was determined as follows for trade receivables:
2019
Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
19. Trade and Other Receivables continued
Impairment losses in respect of trade receivables are included in administrative expenses in the Consolidated Income Statement. Trade receivables written
off as uncollectable are generally eliminated from trade receivables and the loss allowance when there is no expectation of recovering additional cash.
Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the
Group and a pattern of failure to make contractual payments.
Trade receivables with a contractual amount of €4 million written off during the period are still subject to enforcement activity.

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23. Capital and Reserves
Share Capital
The authorised share capital of the Company comprises ordinary shares and various classes of convertible shares.

Restriction on Transfer of Shares
The Directors, at their absolute discretion and without assigning any reason therefore, may decline to register any transfer of a share which is not fully paid or
any transfer to or by a minor or person of unsound mind but this shall not apply to a transfer of such a share resulting from a sale of the share through a stock
exchange on which the share is listed.
The Directors may also refuse to register any instrument of transfer (whether or not it is in respect of a fully paid share) unless it is: a) lodged at the Registered
Office or at such other place as the Directors may appoint; b) accompanied by the certificate for the shares to which it relates and such other evidence as the
Directors may reasonably require to show the right of the transferor to make the transfer; c) in respect of only one class of shares; and d) in favour of not more
than four transferees.
All convertible shares (classes B, C, D convertible shares) are subject to restrictions as to their transferability. Generally they are not transferable either at all
or without consent of the Directors, save by transmission on the death of a holder.

Ordinary Shares
Subject to the Articles of Association of SKG plc, the holders of ordinary shares are entitled to share in any dividends in proportion to the number of shares
held by them and are entitled to one vote for every share held by them at a general meeting. On a return of capital (whether on repayment of capital,
liquidation or otherwise) the assets and/or capital legally available to be distributed shall firstly be distributed amongst the holders of ordinary shares, in
proportion to the number of ordinary shares held by them, of the nominal value of their ordinary shares, secondly (to the extent available) distributed
amongst the holders of convertible shares, in proportion to the number of convertible shares held by them, of the nominal value of their convertible shares
and the balance (if any) shall be distributed amongst the holders of ordinary shares in proportion to the number of ordinary shares held by them.

Convertible Shares
The holders of convertible shares have no right to participate in the profits of SKG plc and are not entitled to receive notice of, attend or vote at general
meetings or to vote on any members’ resolution (save for any resolution with regard to the rights of convertible shares). On return of capital (whether on
repayment of capital, liquidation or otherwise) the assets and/or capital legally available to be distributed shall, subject first to the rights of the holders of
ordinary shares be distributed amongst the holders of convertible shares, in proportion to the number of convertible shares held by them, of the nominal
value of their convertible shares.

Restriction of Rights
If the Directors determine that a Specified Event as defined in the Articles of Association of SKG plc has occurred in relation to any share or shares, the
Directors may serve a notice to such effect on the holder or holders thereof. Upon the expiry of fourteen days from the service of any such notice, for so long
as such notice shall remain in force no holder or holders of the share or shares specified in such notice shall, in relation to such specified shares, be entitled to
attend, speak or vote either personally, by representative or by proxy at any general meeting of the Company or at any separate general meeting of the class
of shares concerned or to exercise any other right conferred by membership in relation to any such meeting.
The Directors shall, where the shares specified in such notice represent not less than 0.25 per cent of the class of shares concerned, be entitled: to withhold
payment of any dividend or other amount payable (including shares issuable in lieu of dividend) in respect of the shares specified in such notice; and/or to
refuse to register any transfer of the shares specified in such notice or any renunciation of any allotment of new shares or debentures made in respect
thereof unless such transfer or renunciation is shown to the satisfaction of the Directors to be a bona fide transfer or renunciation to another beneficial
owner unconnected with the holder or holders or any person appearing to have an interest in respect of which a notice has been served.

Overview

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23. Capital and Reserves continued
Reverse Acquisition Reserve
This reserve arose on the creation of a new parent of the Group prior to listing.

Cash Flow Hedging Reserve
This reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments (net of tax) related to hedged
transactions that have not yet occurred.

Cost of Hedging Reserve
The cost of hedging reserve reflects the gain or loss on the portion excluded from the designated hedging instrument that relates to the currency basis
spread on foreign exchange contracts. It is initially recognised in other comprehensive income and accounted for similarly to gains or losses in the cash flow
hedging reserve.

Foreign Currency Translation Reserve
This reserve comprises all foreign currency translation adjustments arising from the translation of the Group’s net investment in foreign operations as well as
from the translation of liabilities that hedge those net assets.

Share-based Payment Reserve
This reserve represents the amounts credited to equity in relation to the share-based payment expense recognised in the Consolidated Income Statement,
net of deferred shares distributed by the SKG Employee Trust to participants of the Deferred Annual Bonus Plan.

Own Shares
This represents ordinary shares acquired and disposed of by the SKG Employee Trust under the terms of the Deferred Annual Bonus Plan and the Deferred
Bonus Plan.
As at 31 December 2019 the nominal value of own shares held was €1,592 (2018: €1,072). In 2019, own shares were purchased at an average price of €26.13
(2018: €30.09) per share. The number of own shares held represents 0.7% (2018: 0.4%) of the total called up share capital of the Company. Each of these
have the same nominal value as the ordinary shares.

FVOCI Reserve
Equity instruments are measured at fair value with fair value gains and losses recognised in other comprehensive income. These changes are
accumulated within the FVOCI reserve within equity. The Group transfers amounts from this reserve to retained earnings when the relevant equity
securities are derecognised.



127

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
24. Borrowings
Analysis of Total Borrowings

Revolving credit facility – interest at relevant interbank rate (interest rate floor of 0%) + 0.9%1, 8
Senior credit facility2
Revolving credit facility – interest at relevant interbank rate + 1.1%
)DFLOLW\$WHUPORDQtLQWHUHVWDWUHOHYDQWLQWHUEDQNUDWH||
US$292.3 million 7.5% senior debentures due 2025 (including accrued interest)8
Bank loans and overdrafts
€200 million receivables securitisation variable funding notes due 2022 (including accrued interest)7
€230 million receivables securitisation variable funding notes due 20237
€400 million 4.125% senior notes due 2020 (including accrued interest)3, 8
€250 million senior floating rate notes due 2020 (including accrued interest)3, 8
€500 million 3.25% senior notes due 2021 (including accrued interest)3, 8
€500 million 2.375% senior notes due 2024 (including accrued interest)8
€250 million 2.75% senior notes due 2025 (including accrued interest)8
€1,000 million 2.875% senior notes due 2026 (including accrued interest)4, 8
€750 million 1.5% senior notes due 2027 (including accrued interest)5, 8
Revolving credit facility (‘RCF’) of €1,350 million maturing in 2024. In January 2020, the Group secured the agreement of all lenders in its RCF to extend the maturity date by a further year to
-DQXDU\|
(a) Revolver loans – €339 million, comprising €124 million and US$241 million.
(b) Drawn under ancillary facilities and facilities supported by letters of credit – nil.
(c) Other operational facilities including letters of credit – €7 million.
In January 2019, the senior credit facility which was due to mature in March 2020 was refinanced with a new five-year RCF.
€400 million 4.125% senior notes due 2020, €250 million senior floating rate notes due 2020 and €500 million 3.25% senior notes due 2021 were redeemed in full in October 2019.Maturity of Undrawn Committed Facilities

The Group’s primary sources of liquidity are cash flows from operations and borrowings under the Revolving Credit Facility (‘RCF’). The Group’s primary
uses of cash are for funding day to day operations, capital expenditure, debt service, dividends and other investment activity including acquisitions.
The Group’s borrowing agreements contain certain covenants that restrict the Group’s flexibility in certain areas such as incurrence of additional
indebtedness and the incurrence of liens. The Group’s borrowing agreements also contain financial covenants, the primary ones being a maximum net
borrowings to EBITDA of 3.75 times and a minimum EBITDA to net interest of 3.00 times. The Group is in full compliance with the requirements of its
covenant agreements throughout each of the periods presented. At 31 December 2019, as defined in the relevant facility agreement, net borrowings to
EBITDA was 2.1 times (2018: 2.0 times) and EBITDA to net interest was 10.4 times (2018: 10.1 times). Excluding the impact of the application of IFRS 16,
Leases net borrowings to EBITDA would be 2.0 times and EBITDA to net interest would be 10.6 times at 31 December 2019.

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24. Borrowings continued
Maturity of Undrawn Committed Facilities continued
The Group has in place a trade receivables securitisation programme of up to €200 million at a margin of 1.375% and a February 2022 maturity. Receivables
generated by certain of its operating companies in Austria, Belgium, Italy and the Netherlands are sold to a special purpose Group subsidiary to support the
funding. A conduit of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (trading as Rabobank) provides €154 million of the funding and a conduit of
Landescovnantbank Hessen-Thüringen Girozentrale (trading as Helaba Bank) provides €46 million of the funding.
The Group also has a trade receivables securitisation programme of up to €230 million at a margin of 1.2% and a June 2023 maturity. Receivables generated
by certain of its operating companies in the UK, Germany and France are sold to special purpose subsidiaries and entities to support the funding provided by
Lloyds Banking Group.
Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
25. Employee Benefits
The Group operates both defined benefit and defined contribution pension plans throughout its operations in accordance with local requirements and
practices. These plans have broadly similar regulatory frameworks. The major plans are of the defined benefit type and are funded by payments to separately
administered funds. In these defined benefit plans, the level of benefits available to members depends on length of service and their average salary over their
period of employment or their salary in the final years leading up to retirement or leaving. While the majority of the defined benefit plans are funded, in certain
countries, such as Germany, Austria and France, plan liabilities are for the most part unfunded and recognised as liabilities in the Consolidated Balance Sheet.
In these countries, a full actuarial valuation of the unfunded liabilities is undertaken by independent actuaries on an annual basis. Responsibility for
governance of the plans, including investment decisions and contribution schedules, lies with the Company and the boards of trustees.
The most significant defined benefit plans are in the United Kingdom, the Netherlands, Ireland and Germany. The most recent valuations of the significant
funded plans are as follows:
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25. Employee Benefits continued
Mortality Assumptions
In assessing the Group’s post retirement liabilities, the mortality assumptions chosen for the principal plans above are based on the country’s population
mortality experience, large pension scheme mortality experience and the plan’s own mortality experience. Following a mortality investigation carried out
by the pension scheme trustees in the United Kingdom, the mortality tables changed in 2017, resulting in a slightly lower life expectancy. A further decrease
of life expectancy occurred in 2018 and 2019, in line with general trends in the United Kingdom. In 2018, in the Netherlands mortality tables were updated,
reflecting a slight disimprovement in assumed longevity. In 2019, the fund-specific correction factors were adjusted to take into account fund-specific
mortality. These fund-specific correction factors decrease the mortality probabilities compared to the unadjusted standard mortality table. In comparison
to the correction factors used in 2018, the 2019 correction decreases the mortality probability slightly. In Ireland, the assumptions used are from the 2019
actuarial valuation. In Germany, the mortality table, which was updated in 2019, is that specified by statutory authorities. In all cases, the mortality tables
used allow for future improvements in life expectancy.
The current life expectancies underlying the valuation of the plan liabilities for the significant plans are as follows:
Ireland

Deferred Bonus Plan
In May 2018, the SKG plc Annual General Meeting approved the adoption of the DBP which replaced the deferred element of the existing long-term incentive
plan, the DABP described below.
Participants may be granted an award up to 150% of salary (other than a recruitment award). The actual bonus earned in any financial year is based on
the achievement of clearly defined stretching annual financial targets for some of the Group’s Key Performance Indicators (‘KPIs’). For 2019, these were
Earnings before Interest and Tax (‘EBIT’), Return on Capital Employed (‘ROCE’) and Free Cash Flow (‘FCF’), together with targets for health and safety
and personal/strategic targets for the executive Directors.
The structure of the plan is that 50% of any annual bonus earned for a financial year will be deferred into SKG plc shares (‘Deferred Shares’) to be granted in
the form of a Deferred Share Award. The Deferred Shares will vest (i.e. become unconditional) after a three-year holding period based on a service condition
of continuity of employment or in certain circumstances, based on normal good leaver provisions.
A summary of the activity under the DBP, for the period from 1 January 2019 to 31 December 2019 is presented below:
Number
Outstanding

The fair value of the Deferred Share Awards granted in 2019 was €26.13 which was the market value of the deferred shares granted.
Deferred Share Awards were granted in 2019 to eligible employees in respect of the financial year ended 31 December 2018.
The total DBP charge for the year comprises a charge pertaining to the Deferred Share Awards granted in respect of 2018 and to be granted in respect
of 2019.

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019

26. Share-based Payment continued
Performance Share Plan
In May 2018, the SKG plc Annual General Meeting approved the adoption of the PSP, which replaced the existing long-term incentive plan, the matching
element of the DABP described below.
Participants may be granted an award up to 225% of salary (other than a recruitment award). Awards may vest after a three-year performance period to the
extent to which the performance conditions have been met. Awards may also be subject to an additional holding period following vesting (of up to two years),

The performance targets assigned to the PSP awards are set by the Remuneration Committee on the granting of awards at the start of each three-year
cycle and are set out in the Remuneration Report.
The actual number of shares that will vest under the PSP is dependent on the performance conditions of the Group’s EPS, ROCE and Total Shareholder
Return (‘TSR’) (relative to a peer group) targets measured over the same three-year performance period. PSP performance conditions will be reviewed at the
end of the three-year performance period and the PSP shares awarded will vest depending upon the extent to which these performance conditions have
been satisfied.
The fair values assigned to the EPS and ROCE components of the PSP are equivalent to the share price on the date of award.
The Monte Carlo simulation approach was used to calculate the fair value of the TSR component of the PSP award at the 2018 and 2019 grant dates.
The expected volatility rate applied was based upon both the historical and implied share price volatility levels of the Group. For the 2019 award, a rate
of 26.3% was used (2018 award: 23.5%). The risk free interest rate used for the 2019 award was (0.162%) (2018 award: (0.024%)).
The total PSP charge for the year comprises a charge pertaining to the awards granted in respect of 2018 and 2019.
A summary of the awards granted under the PSP is presented below:
Number of Shares
Deferred Annual Bonus Plan
In May 2011, the SKG plc Annual General Meeting approved the adoption of the 2011 DABP, which replaced the existing long-term incentive plan, the 2007 SIP.
Awards to each eligible employee under the DABP were subject to the level of annual bonus earned by the employee in any year. The maximum annual
potential bonus for eligible employees in the DABP was 150% of salary. The actual bonus earned in any financial year was based on the achievement of clearly
defined stretching annual financial targets for some of the Group’s KPIs.
The structure of the plan was that 50% of any annual bonus earned for a financial year was deferred into SKG plc shares to be granted in the form of a
Deferred Share Award. These Deferred Shares vest (i.e. become unconditional) after a three-year holding period based on a service condition of continuity
of employment or in certain circumstances, based on normal good leaver provisions.
At the same time as the grant of a Deferred Share Award, a Matching Share Award could be granted up to the level of the Deferred Share Award. Following
a three-year performance period, the Matching Shares could vest up to a maximum of three times the level of the Deferred Share Award. Matching Share
Awards would vest provided that the Remuneration Committee considered the Group’s ROCE and TSR to be competitive when compared to the
constituents of a peer group of international paper and packaging companies over that performance period. The actual number of Matching Shares that
would vest under the Matching Share Awards was dependent on the performance conditions of the Group’s FCF and ROCE targets measured over the
same three-year performance period on an inter-conditional basis and the multiplier was calculated by interpolation.
In 2018, the Group introduced the PSP which replaced the Matching Share Award and the DBP which replaced the deferred element of the DABP.

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26. Share-based Payment continued
Deferred Annual Bonus Plan continued
The total DABP charge for the year comprises two elements; a) a charge pertaining to the Deferred Share Awards granted in respect of 2016 and 2017 and
b) a charge in respect of the Matching Share Awards granted in respect of 2016.
The actual performance targets assigned to the Matching Share Awards were set by the Remuneration Committee on the granting of awards at the start
of each three-year cycle. The Group was required to lodge the actual targets with the Group’s auditors prior to the grant of any awards under the DABP.
A summary of the activity under the DABP, for the period from 1 January 2018 to 31 December 2019 is presented below:
Number Outstanding
Deferred
Share Award
The fair value of the awards granted in 2018 was €30.09 which was the market value on the date of the grant.

The Deferred Share Awards and Matching Share Awards which were granted in 2016 in respect of the financial year ended 31 December 2015 vested in
February 2019 and were distributed to relevant employees. The market price at the date of vesting was €25.81.
The Deferred Share Awards and Matching Share Awards which were granted in 2017 in respect of the financial year ended 31 December 2016 vested in
February 2020 and were distributed to relevant employees. The market price at the date of vesting was €33.49. Details of the performance targets and
results for the three-year period to 31 December 2019 are set out in the Remuneration Report.

2007 Share Incentive Plan
This scheme has expired for the purpose of issuing invitations to subscribe for convertible shares. However a number of convertible shares issued under
this plan have not yet been converted to ordinary shares. Further details are provided below.
In March 2007, SKG plc adopted the 2007 SIP. The 2007 SIP was amended in May 2009. Incentive awards under the 2007 SIP were in the form of new
class B and new class C convertible shares issued in equal proportions to Participants at a nominal value of €0.001 per share. On satisfaction of specified
performance criteria the new class B and new class C convertible shares automatically converted on a one-to-one basis into class D convertible shares.
The class D convertible shares may be converted by the holder into ordinary shares upon payment of the agreed conversion price. The conversion price
for each D convertible share was set at the average market value of an ordinary share for the three dealing days immediately prior to the date that the
Participant was invited to subscribe less the nominal subscription price. Each award has a life of ten years from the date of issuance of the new class B
and new class C convertible shares. The performance period for the new class B and new class C convertible shares was three financial years.
A summary of the activity under the 2007 SIP, as amended, for the period from 1 January 2018 to 31 December 2019 is presented below:

Deferred and Contingent Consideration
Deferred and contingent consideration represents the deferred and contingent element of acquisition consideration payable. The balance at 31 December
2019 relates to the acquisition of the following:
• Avala Ada and Fabrika Hartije Beograd, Serbia (2019) – deferred consideration payable in 2022 and deferred contingent consideration for the remaining
25% of the acquisition, payable between 2021 and 2023 through a put/call option facility;
• INPA, Brazil (2015) – deferred consideration payable in 2020; and
• Chatziioannou, Greece (2017) – deferred consideration payable in 2020.
The fair value adjustment of €20 million relates to the fair value gain on the valuation of the Serbian put option as at 31 December 2019.

Restructuring
These provisions relate to irrevocable commitments in respect of restructuring programmes throughout the Group. The provision made in 2019 relates
to restructuring and reorganisation undertaken in Europe. The current year utilisation of the provision related largely to the closure of the City of Industry
plant in North America and ongoing restructuring throughout Europe.

Environmental
Provisions for environmental costs mainly relate to the reinstatement of landfill sites and other remediation and improvement costs incurred in compliance
with either local or national environmental regulations together with constructive obligations stemming from established practice. The timing of settlement
of these provisions is not certain particularly where provisions are based on past practice and there is no legal obligation.

Legal
Legal represents provisions for certain legal claims brought against the Group by various parties in the ordinary course of business. Provisions are expensed
in the Consolidated Income Statement within administrative expenses and other operating expenses. A provision was made in 2019 mainly due to the Italian
Competition Authority (‘ICA’) fine. In August, the ICA notified approximately 50 companies, of which Smurfit Kappa Italia S.p.A. was one, that an investigation
had found the companies to have engaged in anti-competitive practices, in relation to which the ICA levied a fine of €124 million on Smurfit Kappa Italia S.p.A.
We will vigorously appeal this decision on both administrative and substantive grounds. This process may take a number of years. Legal provisions are
uncertain as to timing and amount as they are subject to ongoing cases.

Other
Other comprises a number of provisions including: liabilities arising from dilapidations amounting to €7 million (2018: €10 million); employee compensation in
certain countries in which we operate amounting to €22 million (2018: €21 million); Venezuelan legal and reorganisation costs following the deconsolidation
of our Venezuelan operations amounting to €5 million (2018: €13 million); and numerous other items which are not individually material and are not readily
grouped together.
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28. Trade and Other Payables

Amounts falling due within one financial year:
Trade payables
Payroll taxes
Value added tax
Social insurance
Accruals
Capital payables
Other payables
Amounts payable to Group companies

Excludes statutory taxes and prepayments.

The financial assets of the Company of €252 million consist of assets at amortised cost.

31 December 2019

Liabilities per Consolidated Balance Sheet:
Borrowings
Derivative financial instruments
Trade and other payables1
Deferred contingent consideration
Deferred consideration

1

Excludes statutory taxes and employee benefits.

The financial liabilities of the Company of €10 million consist of other financial liabilities.
Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
29. Financial Instruments continued
Financial Instruments by Category continued

31 December 2018

Assets per Consolidated Balance Sheet:
Equity instruments
Listed and unlisted debt instruments
Derivative financial instruments
Trade and other receivables1
Cash and cash equivalents
Restricted cash

Excludes statutory taxes and prepayments.

The financial assets of the Company of €220 million consist of assets at amortised cost.

31 December 2018

Liabilities per Consolidated Balance Sheet:
Borrowings
Derivative financial instruments
Trade and other payables1
Deferred consideration

1

Excludes statutory taxes and employee benefits.

The financial liabilities of the Company of €5 million consist of other financial liabilities.
Exposure to credit, interest rate, liquidity, energy and currency risks arise in the normal course of the Group’s business. Derivatives are generally used to
economically hedge exposure to fluctuations in these risks.

Key Financial Risks and Financial Risk Management Resulting from the Use of Financial Instruments and Related Sensitivity Analysis
Financial and Credit Risk Management
The operating parameters and policies of the Group’s treasury management function are established under formal Board authority. The Treasury Policy
covers the areas of funding, counterparty risk, foreign exchange, controls and derivatives. Risk arising on counterparty default is controlled within a
framework of dealing with high quality institutions and, by policy, limiting the amount of credit exposure to any one bank or institution. The Group uses
financial instruments, including fixed and variable rate debt to finance operations, for capital spending programs and for general corporate purposes.
Additionally, financial instruments, including derivative instruments are used to hedge exposure to interest rate, commodity and foreign currency risks.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item.
The Group does not use financial instruments for trading purposes. The Group mitigates the risk that counterparties to derivatives will fail to perform by
contracting with major financial institutions having high credit ratings and considers the likelihood of counterparty failure to be low. Trade debtors arise
from a wide and varied customer base. There is no significant concentration of credit risk amongst any of the Group’s most significant financial assets.
The Group also holds no collateral in respect of its principal credit exposures.
The successful management of the Group’s currency and interest rate exposure depends on a variety of factors, some of which are outside its control.
The Group is exposed to the impact of interest rate changes and foreign currency fluctuations due to its investing and funding activities and its operations
in foreign currencies. The Group manages interest rate exposure to achieve what management considers to be an appropriate balance of fixed and variable
rate funding. To achieve this objective the Group enters into interest rate swaps, options and forward rate agreements. Interest rate swap agreements are
primarily used to change the interest payable on its underlying borrowings from variable to fixed rate. Tables detailing the impact of any such swaps on the
Group’s financial instruments have been set out elsewhere in this note.
The Group manages its balance sheet having regard to the currency exposures arising from its assets being denominated in a wide range of currencies. To
this end, where foreign currency assets are funded by local borrowing, such borrowing is generally sourced in the currency of the related assets. The Group
also hedges currency exposure through the use of currency swaps, options and forward contracts. Tables detailing the impact of these derivatives on the
currency profile of the Group’s financial instruments have been set out elsewhere in this note.

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Supplementary Information

29. Financial Instruments continued
Key Financial Risks and Financial Risk Management Resulting from the Use of Financial Instruments and Related Sensitivity Analysis
continued
Further details on certain specific financial risks encountered have been set out below.
Interest Rate Risk
The Group is exposed to changes in interest rates, primarily changes in Euribor. The revolving credit facility is variable rate debt, as are the Group’s
securitisation facilities. Interest rate changes therefore generally do not affect the market value of such debt but do impact the amount of the Group’s
interest payments and, therefore, its future earnings and cash flows, assuming other factors are held constant. At 31 December 2019, the Group had
fixed an average of 90% (2018: 79%) of its interest cost on borrowings over the following 12 months. Holding all other variables constant, including levels
of indebtedness, at 31 December 2019 a one percentage point increase in variable interest rates would have an estimated impact on pre-tax interest
expense of approximately €5 million (including the effect of interest rate swaps) over the following 12 months. Interest income on our cash balances
would increase by approximately €2 million, assuming a one percent increase in interest rates earned on such balances over the following twelve months.
The Group has entered into one or more interest rate protection agreements (principally interest rate swaps and cross currency interest rate swaps), which
establish a fixed interest rate with respect to certain of its borrowings. Tables detailing the fixed and floating variable rate debt together with the impact of
the related interest rate and cross currency swaps have been set out elsewhere in this note.
Currency Sensitivity
The Group operates in the following principal currency areas (other than euro): Swedish Krona, Sterling, Latin America (comprising mainly Mexican Peso,
Colombian Peso and Brazilian Real), US Dollar and Eastern Europe (comprising mainly the Polish Zloty, the Czech Koruna, the Russian Rouble and the Serbian
Dinar). At the end of 2019, approximately 99% (2018: 99%) of its non euro denominated net assets consisted of the Swedish Krona 24% (2018: 26%), Sterling
9% (2018: 9%), Latin American currencies 44% (2018: 53%), US Dollar 3% (2018: 1%) and Eastern European currencies 19% (2018: 10%). The Group believes
that a strengthening of the euro exchange rate by 1% against all other foreign currencies from the 31 December 2019 rate would reduce shareholders’ equity
by approximately €20 million (2018: €16 million).
Commodity Price Risk
Containerboard
The Group is exposed to commodity price risks through its dependence on recovered paper, the principal raw material used in the manufacture of
recycled containerboard. The price of recovered paper is dependent on both demand and supply conditions. Demand conditions include the production
of recycled containerboard in Europe and the demand for recovered paper for the production of recycled containerboard outside of Europe, principally in
Asia. Supply conditions include the rate of recovery of recovered paper, itself dependant on historic pricing related to the cost of recovery, and some slight
seasonal variations.
Just over 1.05 metric tonnes of recovered paper are required to manufacture 1.0 metric tonne of recycled containerboard. Consequently, an increase in the
price of recovered paper of, for example, €20 per tonne would increase the cost of production of recycled containerboard by approximately €21 per tonne.
Historically, increases in the cost of recovered paper, if sustained, have led to a rise in the price of recycled containerboard, with a lag of one to
two months.
The price of recovered paper can fluctuate significantly within a given year, affecting the operating results of the Group’s paper processing facilities. The
Group seeks to manage this risk operationally rather than by entering into financial risk management derivatives. Accordingly, at each of 31 December 2019
and 2018, there were no derivatives held to mitigate such risks.
In addition, developing policy changes in the EU with regard to renewable energy sources have created an additional demand for wood, the principal raw
material used in the manufacture of kraftliner. This has the effect of potentially increasing the price of wood and consequently the cost of the Group’s raw
materials. At each of 31 December 2019 and 2018, the Group held no derivatives to mitigate such risks.
Energy
The cost of producing the Group’s products is also sensitive to the price of energy. The Group’s main energy exposure is to the cost of gas and electricity.
These energy costs have experienced significant price volatility in recent years, with a corresponding effect on Group production costs. Natural gas prices,
relevant to the Group, started the year at €23.92 per megawatt-hour, decreased to €10.84 in August 2019 and was €15.90 per megawatt-hour in December
2019, giving an average price of €15.42 for 2019. The Group has entered into a limited level of energy derivative contracts to economically hedge a portion of
its energy costs in Sweden. The Group has also fixed a certain level of its energy costs through contractual arrangements directly with its energy suppliers.
Carbon prices increased significantly in 2019, leading to increased electricity market prices and overall energy costs.
The Group’s overall energy costs increased by approximately 8% when compared to 2018 mainly due to acquisitions.



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Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
29. Financial Instruments continued
Key Financial Risks and Financial Risk Management Resulting from the Use of Financial Instruments and Related Sensitivity Analysis
continued
Tables detailing the Group’s energy derivatives have been set out elsewhere in this note.
Liquidity Risk
The Group is exposed to liquidity risk which arises primarily from the maturing of short-term and long-term debt obligations and derivative transactions.
The Group’s policy is to ensure that sufficient resources are available either from cash balances, cash flows or undrawn committed bank facilities, to ensure
all obligations can be met as they fall due. To achieve this objective, the Group:
• maintains cash balances and liquid investments with highly rated counterparties;
• limits the maturity of cash balances; and
• borrows the bulk of its debt needs under committed bank lines or other term financing and by policy maintains a minimum level of undrawn
FRPPLWWHG|IDFLOLWLHV
The Group has entered into a series of borrowing arrangements in order to facilitate its liquidity needs in this regard and the key terms of those arrangements
are described within Note 24 and within certain tables set out below. At each year-end, the Group’s rolling liquidity reserve (which comprises cash and
undrawn committed facilities and which represents the amount of available cash headroom in the Group’s funding structure) was as follows:

Management monitors rolling cash flow forecasts on an ongoing basis to determine the adequacy of the liquidity position of the Group. This process also
incorporates a longer term liquidity review to ensure refinancing risks are adequately catered for as part of the Group’s strategic planning. The Group
continues to benefit from its existing financing package and debt profile. In addition, the Group’s operating activities are cash generative and expect to
be so over the foreseeable future; the Group has committed undrawn facilities of €1,334 million at 31 December 2019; and the Group has cash and cash
equivalents of €189 million at 31 December 2019.
The maturity dates of the Group’s main borrowing facilities as set out in Note 24, together with the liquidity analysis as set out in this note, more fully
describes the Group’s longer term financing risks.
Capital Risk Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other stakeholders and to maintain an optimal capital structure to reduce the overall cost of capital.
In managing its capital structure, the primary focus of the Group is the ratio of net debt as a multiple of EBITDA (earnings before exceptional items,
share-based payment expense, share of associates’ profit (after tax), net finance costs, income tax expense, depreciation and depletion (net) and intangible
asset amortisation). Maximum levels for this ratio are set under Board approved policy. At 31 December 2019 the net debt to EBITDA ratio of the Group was
2.1 times (net debt of €3,483 million) which compares to 2.0 times (net debt of €3,122 million) at the end of 2018. This gives the Group continuing headroom
compared to the actual covenant level at 31 December 2019 of 3.75 times. Excluding the impact of the application of IFRS 16, Leases the net debt to EBITDA
ratio would be 2.0 times at 31 December 2019.
On the basis of pre-exceptional operating profit, the Group’s return on capital employed was 17.0% compared to 19.3% in 2018. The return on capital
employed comprises pre-exceptional operating profit plus share of associates’ profit (after tax) as a percentage of average capital employed (where average
capital employed is the average of total equity and net debt at the current and prior year end). Capital employed at 31 December 2019 was €6,476 million,
(2018: €6,012 million). The post-exceptional return on capital employed was 14.2% in 2019 (2018: 18.1%).
The capital employed of the Company at 31 December 2019 was €2,100 million (2018: €2,078 million).
Credit Risk
Credit risk arises from credit exposure to trade debtors, cash and cash equivalents including deposits with banks and financial institutions, derivative financial
instruments and investments. The Group has no sovereign exposures and no material debtors with Government agencies. The maximum exposure to credit
risk is represented by the carrying amount of each asset.
Trade debtors arise from a wide and varied customer base spread throughout the Group’s operations and as such there is no significant concentration of
credit risk. Credit evaluations are performed on all customers over certain thresholds and all customers are subject to continued monitoring at operating
company level. Further information on the Group approach to providing for expected credit losses is set out in Note 19.
Risk of counterparty default arising on cash and cash equivalents and derivative financial instruments is controlled within a framework of dealing with high
quality institutions and, by policy, limiting the amount of credit exposure to any one bank or institution. Of the Group’s total cash and cash equivalents
(including restricted cash) at 31 December 2019 of €203 million, 52% was with financial institutions in the A rating category of Standard & Poor’s or Moody’s
and 29% was with financial institutions in the AA/Aa or higher rating category.

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Supplementary Information

29. Financial Instruments continued
Key Financial Risks and Financial Risk Management Resulting from the Use of Financial Instruments and Related Sensitivity Analysis
continued
The remaining 19% was represented mainly by cash held with banks in Latin America which fell outside the A or higher ratings categories. At 31 December
2019 derivative transactions were with counterparties with ratings ranging from BB- to AA- with Standard & Poor’s or B3 to Aa2 with Moody’s.
At each reporting date, there were no significant concentrations of credit risk which individually represented more than 10% of the Group’s financial assets.
A geographical analysis of the Group’s segment assets has been provided in Note 5.
Market Risk – Equity Instruments
The Group’s equity instruments principally comprise an investment in an unlisted entity which operates in a similar paper processing market to the Group in
Europe. In 2019 the Group made a fair value adjustment to the unlisted investment which is now valued at nil.
Market Risk – Listed and Unlisted Debt Instruments
The Group’s listed and unlisted debt instruments principally comprise investments held relating to unfunded pension liabilities. These investments are being
carried at their estimated fair value and the Group’s maximum exposure to risks associated with these investments is represented by their carrying amounts.
Further details on equity instruments and listed and unlisted debt instruments are set out in Note 14.
Derivative Positions
Derivative financial instruments recognised as assets and liabilities in the Consolidated Balance Sheet both as part of cash flow hedges and other economic
hedges which do not meet the criteria for hedge accounting under IFRS 9, have been set out below:

Current derivative assets
Cash flow hedges:
Foreign currency forwards
Cross currency swaps
Not designated as hedges:
Foreign currency forwards
Cross currency swaps
Energy hedging contracts
Total current derivative assets

Current derivative liabilities
Cash flow hedges:
Interest rate swaps
Foreign currency forwards
Cross currency swaps
Not designated as hedges:
Foreign currency forwards
Cross currency swaps
Energy hedging contracts
Total current derivative liabilities
Total derivative liabilities
Net asset/(liability) on derivative financial instruments

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
29. Financial Instruments continued
Fair Value Hierarchy
Fair value measurement at 31 December 2019

Other investments:
Listed
Unlisted
Derivative financial instruments:
Assets at fair value through profit or loss
Derivatives used for hedging
Derivative financial instruments:
Liabilities at fair value through profit or loss
Derivatives used for hedging
Deferred contingent consideration

Fair value measurement at 31 December 2018

Other investments:
Listed
Unlisted
Derivative financial instruments:
Assets at fair value through profit or loss
Derivatives used for hedging
Derivative financial instruments:
Liabilities at fair value through profit or loss
Derivatives used for hedging

The fair value of listed investments is determined by reference to their bid price at the reporting date. Unlisted investments are valued using recognised
valuation techniques for the underlying security including discounted cash flows and similar unlisted equity valuation models.
The fair value of the derivative financial instruments set out above has been measured in accordance with level 2 of the fair value hierarchy. All are plain
derivative instruments, valued with reference to observable foreign exchange rates, interest rates or broker prices.

F
The valuation model for the unlisted investment measured in accordance with level 3 of the fair value hierarchy is based on market multiples derived from
quoted prices of companies comparable to the investee, adjusted for the effect of the non-marketability of the equity securities, and the revenue and
EBITDA of the investee. The estimate is adjusted for the net debt of the investee. In 2019 the Group made a fair value adjustment to the unlisted investment
measured in accordance with level 3 of the fair value hierarchy which is now valued at nil. Further details of the listed and unlisted investments are
set out in Note 14.
Deferred contingent consideration arose in relation to the put option on the acquisition of Serbia (Note 27) in the period. The valuation model for the
deferred contingent consideration measured in accordance with level 3 of the fair value hierarchy is based on the present value of the expected payment
discounted using a risk-adjusted discount rate. The unobservable input in determining the fair value is the underlying profitability of the business unit to
which the consideration relates. A reasonable change to the unobservable inputs would have an immaterial impact on the fair value of the deferred
contingent consideration.
There were no reclassifications or transfers between the levels of the fair value hierarchy during the period.

Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

29. Financial Instruments continued
Cash Flow Hedging
As more fully set out in this note, the Group principally utilises interest rate swaps to swap its variable rate debt into fixed rates. The Group has also
designated a number of cross currency swaps which swap fixed US dollar debt into fixed euro debt as cash flow hedges where permitted. These swaps
are designated as cash flow hedges and are set so as to closely match the critical terms of the underlying debt being hedged.
Hedge ineffectiveness is determined at the inception of the hedge relationship and through periodic prospective hedge effectiveness assessments to
ensure that an economic relationship exists between the hedged item and the hedging instrument. The Group determines the existence of an economic
relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and notional
amounts. The Group does not hedge 100% of its loans, therefore the hedged item is identified as a proportion of the outstanding loans up to the notional
amount of the swaps. As the Group enters into hedge relationships where the critical terms of the hedging instrument materially match the terms of the
hedged item, a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical
terms no longer match exactly with the critical terms of the hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness.
Hedge ineffectiveness for interest rate swaps and cross currency swaps may occur due to:
• the effect of the counterparty’s and the Group’s own credit risk on the fair value of the swaps which is not reflected in the change in the fair value of the
hedged cash flows attributable to the change in the hedged risk;
• changes in the contractual terms or timing of the payments on the hedged item; or
• the fair value of the hedging instrument on the hedge relationship designation date (if not zero).
There was no material ineffectiveness in hedged risk in relation to these hedges in 2019 and 2018. Amounts accounted for in the cash flow hedging reserve
in respect of these swaps during the current and preceding periods have been set out in the Consolidated Statement of Comprehensive Income. These fair
value gains and losses are expected to impact on profit and loss over the period from 2020 to 2023, in line with the underlying debt being hedged.
The Group has also entered into a limited number of bunker fuel swaps to hedge against variability in the cost of bunker fuel included in certain of its shipping
contracts. Hedge effectiveness is assessed using the same principles as those used for designated interest rate and cross currency swaps. In hedges of
bunker fuel costs ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated or if there are changes in the
credit risk of the Group or the counterparty. These hedges have been highly effective in achieving offsetting cash flows with no ineffectiveness recorded.
These fair value gains and losses are expected to impact on profit and loss over the period from 2020 to 2021.
In addition, certain subsidiaries use foreign currency forward contracts to hedge forecast foreign currency sales and purchases. Such forward contracts
are designated as cash flow hedges and are set so as to closely match the critical terms of the underlying cash flows. Hedge effectiveness is assessed using
the same principles as those used for designated interest rate, cross currency and bunker fuel swaps. In hedges of foreign currency sales and purchases
ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated or if there are changes in the credit risk of the
Group or the counterparty. These hedges have been highly effective in achieving offsetting cash flows with no ineffectiveness recorded. These fair value
gains and losses are expected to impact on profit and loss during 2020.
The Group’s hedging reserves disclosed in Note 23 relate to the following hedging instruments:
Cost of Hedging

Following the decision in 2017 by the U.K. Financial Conduct Authority in the UK to phase out the London Interbank Offered Rate (‘LIBOR’) by the end of 2021
and the recent reforms of the Euro Interbank Offered Rate (‘EURIBOR’) from the previous quote-based methodology to a new hybrid methodology, the
Group has evaluated its floating rate debt maturing after 2021. The Group believes that its contracts with interest rates based on these benchmark rates
adequately provide for an alternative calculation of interest in the event that they are unavailable. The Group believes that it is well placed to manage the
discontinuation, reform or replacement of these important benchmark rates and that the impact on the Group and its ability to manage its interest rate
risk will be immaterial.
Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

29. Financial Instruments continued
Foreign Exchange Risk Management
The Group manages its balance sheet having regard to the currency exposures arising from its assets being denominated in a wide range of currencies. To
this end, where foreign currency assets are funded by local borrowing, such borrowing is generally sourced in the currency of the related assets. The Group
also hedges a portion of its currency exposure through the use of currency swaps and forward contracts. At 31 December 2019 the Group had entered into
€232 million (2018: €309 million) currency equivalent of forward contracts and there were no option contracts outstanding in respect of its day to day
trading. At 31 December 2019 the Group had also entered into further short-term currency swaps of €634 million equivalent (2018: €538 million) as part of
its short-term liquidity management.
The Group is exposed to transactional foreign exchange currency risk to the extent that there is a mismatch between the currencies in which sales,
purchases, receivables and borrowings are denominated and the respective functional currencies of the Group companies. The Group’s risk management
policy allows the hedging of estimated foreign currency exposure in respect of highly probable forecast sales and purchases, primarily in Sweden and Poland.
As such, certain subsidiaries enter into foreign currency forward contracts to hedge highly probable forecast foreign currency sales and purchases for which
hedge accounting under IFRS 9 is applied.
The effects of the designated foreign currency forwards on the Group’s financial position and performance are as follows:

The Group also enters into longer term cross currency swap arrangements in respect of its US dollar debt, which are set out in more detail in the tables below.
In addition, the Group entered into a number of cross currency swaps in respect of the funding of its acquisition in Brazil, which are set out in more detail in the
table below.
Outstanding currency swap agreements at 31 December 2019 are summarised as follows:

Notes to the Consolidated Financial Statements continued
For the Financial Year Ended 31 December 2019
29. Financial Instruments continued
Foreign Exchange Risk Management continued
Outstanding currency swap agreements at 31 December 2018 are summarised as follows:

Total fixed rate liabilities
Floating rate instruments
Assets:
Cash and cash equivalents
Restricted cash
Total floating rate assets
Liabilities:
Revolving credit facility
2022 receivables securitisation
2023 receivables securitisation
Bank loans/overdrafts
Effect of interest rate swaps
Total floating rate liabilities
Total net position
The fair value of trade and other receivables and payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.
The fair value of listed financial assets is determined by reference to their bid price at the reporting date. Unlisted financial assets are valued using recognised valuation techniques for the underlying
security including discounted cash flows and similar unlisted equity valuation models.
The carrying amount reported in the Consolidated Balance Sheet is estimated to approximate to fair value because of the short-term maturity of these instruments and, in the case of the receivables
securitisation, the variable nature of the facility and repricing dates.
The fair value of forward foreign currency, energy and commodity contracts is based on their listed market price if available. If a listed market price is not available, then fair value is estimated by
discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds). The
fair value of interest rate swaps is based on discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the
measurement date.
The fair value (level 2) of the senior credit facility is based on the present value of its estimated future cash flows discounted at an appropriate market discount rate at the balance sheet date. The fair
value (level 2) of the revolving credit facility is based on the present value of its estimated future cash flows discounted at an appropriate market discount rate at the balance sheet date.
The fair value (level 2) is based on broker prices at the balance sheet date.
The fair value of deferred consideration is based on the present value of the expected payment, discounted using an appropriate market discount rate at the balance sheet date.
The fair value of deferred contingent consideration is based on the present value of the expected payment, discounted using a risk-adjusted discount rate.

The fair value of the Company’s financial assets and financial liabilities approximates to their carrying values.

In 2018, the Group recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance leases’ under IAS 17 only. For adjustments recognised on adoption of IFRS 16 on
1 January 2019 please refer to the Changes in Significant Accounting Policies note. The maturity analysis of lease liabilities is included in the Financial Instruments note.

Additions to the right-of-use assets during 2019 were €87 million, of which €8 million related to acquired right-of-use assets (Note 32).

Amounts Recognised in the Consolidated Income Statement
The Consolidated Income Statement includes the following amounts relating to leases:
Leasing Activites
The Group enters into leases for a range of assets, principally relating to property. These property leases, which consist of office buildings and warehouses,
have varying terms, renewal rights and escalation clauses, including periodic rent reviews linked with indices. The Group also leases vehicles which include
motor vehicles for management and sales functions and trucks for distribution. Plant and equipment includes a lease for a cogeneration facility (previously
classified as a finance lease under IAS 17).
The effect of excluding future cash outflows arising from variable lease payments, termination options, residual value guarantees, and leases not yet
commenced from lease liabilities was not material for the Group. Income from subleasing and gains/losses on sale and leaseback transactions were not
material for the Group. The terms and conditions of these leases do not impose significant financial restrictions on the Group.

Extension and Termination Options
Extension and termination options are included in a number of property, equipment and vehicle leases throughout the Group. They are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
In determining whether or not a renewal or termination option will be taken, the following factors are normally the most relevant.
• If there are significant penalties to terminate (or not to extend), the Group is typically reasonably certain to extend (or not terminate).
• If leasehold improvements are expected to have a significant remaining value, when the option becomes exercisable, the Group is typically reasonably
certain to extend (or not to terminate).
• Strategic importance of the asset to the Group.
• Past practice.
• Costs and business disruption to replace the asset.
The lease term is reassessed if an option is actually exercised (or not exercised) and this decision has not already been reflected in the lease term as part
of a previous determination. The assessment of reasonable certainty is revised only if a significant change in circumstances occurs, which affects this
assessment, and this is within the control of the lessee.

Comparative Lease Disclosures Under IAS 17
Operating Leases
Future minimum lease payments under non-cancellable operating leases were as follows:
2018
€m

Within one year
Within two to five years
Over five years


The Group leased properties, plant and equipment and vehicles under operating leases. The leases had various terms, escalation clauses and renewal rights.
Finance Leases
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments were as follows:

A full list of subsidiaries and associates will be annexed to the Annual Return of the Company to be filed with the Irish Registrar of Companies.
The companies operate principally in their countries of incorporation.

160
Overview

Strategic Report

Governance

Financial Statements

Supplementary Information


Overview

Strategic Report

Governance

Financial Statements

Supplementary Information

Free Cash Flow (‘FCF’) continued
The summary cash flow is prepared on a different basis to the Consolidated Statement of Cash Flows under IFRS (‘IFRS cash flow’) and as such the
reconciling items between EBITDA and (increase)/decrease in net debt may differ from amounts presented in the IFRS cash flow. The principal differences
are as follows:
(a) The summary cash flow details movements in net debt. The IFRS cash flow details movements in cash and cash equivalents.
(b) FCF reconciles to cash generated from operations in the IFRS cash flow as shown in the table below. The main adjustments are in respect of cash interest,
capital expenditure and tax payments.
(c) The IFRS cash flow has different sub-headings to those used in the summary cash flow.
Ɵ Current provisions in the summary cash flow are included within ‘change in employee benefits and other provisions’ in the IFRS cash flow.
Ɵ The total of capital expenditure and change in capital creditors in the summary cash flow includes additions to intangible assets which are shown
separately in the IFRS cash flow. It also includes right-of-use assets which are excluded from additions to property, plant and equipment and biological
assets in the IFRS cash flow.
Ɵ ‘Other’ in the summary cash flow includes changes in employee benefits and other provisions (excluding current provisions), amortisation of capital
grants, receipt of capital grants and dividends received from associates which are shown separately in the IFRS cash flow.
A reconciliation of FCF (APM) to cash generated from operations (IFRS measure) is included below.

Reconciliation of Free Cash Flow to Cash Generated from Operations

Free cash flow
Reconciling items:
Cash interest
Capital expenditure (net of change in capital creditors)
Tax payments
Sale of property, plant and equipment
Lease terminations/modifications (in ‘Other’ in summary cash flow)
Profit on sale of property, plant and equipment – non-exceptional
Receipt of capital grants (in ‘Other’ in summary cash flow)
Dividends received from associates (in ‘Other’ in summary cash flow)
Non-cash financing activities
Cash generated from operations


Return on Capital Employed (‘ROCE’)
Definition
ROCE measures profit from capital employed. It is calculated as operating profit before exceptional items plus share of associates’ profit (after tax) divided
by the average capital employed (where average capital employed is the average of total equity and net debt at the current and prior year end).
The photos in this report have been taken in
a number of locations across the 35 countries
in which we operate.

The outer cover of this report has been laminated
with a biodegradable film.
Around 20 months after composting, an additive
within the film will initiate the process of oxidation.

Annual Report
and Accounts 2019
 is at the
forefront of the global
fresh produce industry.
Operating primarily across Europe, North America
and South America,  is involved in the
growing, sourcing, importing, packaging, marketing
and distribution of an extensive selection of fresh
fruits, vegetables and flowers – ranging from the
familiar to the truly exotic.
Financial Highlights
1. Strategic Report 3.
Strategic Report
Where We Operate 2
History and Growth 4
Chairman’s Statement 6
Our Strategy and Business Model 8
Our Supply Chain and Product Portfolio 10
Financial Growth 12
Risks and Risk Management 14
Sustainability 20
Chief Executive’s Review 46
Financial Review 50
Governance
Board of Directors and Secretary 58
Directors’ Report 60
Corporate Governance Report 63
Audit Committee Report 70
Compensation Committee Report 73
Nomination Committee Report 79
Financial Statements
Statement of Directors’ Responsibilities 81
Independent Auditor’s Report 82
Group Income Statement 87
Group Statement of Comprehensive Income 88
Group Balance Sheet 89
Group Statement of Changes in Equity 90
Group Statement of Cash Flows 92
Group Reconciliation of Net Debt 93
Notes to the Group Financial Statements 94
Company Balance Sheet 175
Company Statement of Changes in Equity 176
Company Statement of Cash Flows 177
Notes to the Company Financial Statements 178
Glossary: Alternative Performance Measures 181
Directors and Other Information 186
Shareholder Information 187
Find out more on totalproduce.com
2

Where We Operate
 is the world’s premier
fresh produce provider. Local at heart,
global by nature, our operations
extend across 30 countries, while
serving many more. Our international
reach brings flexibility to our supply
chain, synergies and efficiencies to
our operations, broadens our core
competencies and capacities and
enriches cultural diversity within
our organisation.
For our customers, our physical presence across the world
differentiates , positioning our operations at
the very heart of the markets in which we trade and in the
world’s primary production centres.
Serving the wholesale, foodservice and retail sectors,
 is a complete fresh produce solution
provider – offering a comprehensive range of services
to our customers ranging from simple service provision
to complete category management.
36
Number of facilities
in North America
35
Number of facilities
in South America
58
Number of facilities
in Central America
Our Global
Footprint

1. Strategic Report 3.
9
Number of facilities
in Rest of the world
112
Number of facilities
in Europe
The map above is a representative depiction only and also does not include Dole farming interests.
4

An Evolving
Business
Over a century and a half of trading, 
has evolved into one of the world’s premier fresh
produce providers extending our reach, broadening
our offering and delivering to consumers the cream
of the crop from close to home and across the globe.
History and Growth

1. Strategic Report 3.
Chairman’s Statement
Continued
Growth in 2019
We are pleased to report that
the Group has continued to
grow in 2019, recording a 22.4%
growth in revenue and 41.4%
growth in adjusted earnings
per share primarily due to the
investment in Dole.”
Strategic developments
In 2019, we continued to make progress
in advancing our strategic goals.
The Group completed the acquisition of the
initial tranche of 45% of Dole Food Company
(‘Dole’) on 1 July 2018. The 2019 financial
year is therefore the first full year to reflect
this transaction. Further details on the
transaction structure are outlined on pages
127 to 131 in Note 15 of the accompanying
Financial Statements.
Dole is one of the world’s leading fresh
produce companies, with an iconic brand
and leading market positions and scale.
The transaction brings together two industry
leaders, with complementary market
positions in various produce categories,
creating a combined group with increased
scale, geographic and product diversification.
It represents a very significant step for the
Group and a continuation of its successful
expansion strategy.
The performance in 2019 year has been
positive for the Group. In 2019, there has
been a strong increase in the adjusted
EBITDA in Dole led by a recovery in
the Fresh Vegetable division. Dole also
completed the sale of its Scandinavian
salad business in 2019.
In 2019, the Executive Directors, and senior
and divisional management of the Group
have worked closely with their Dole
counterparts on targeted synergy projects
aimed at generating benefits for both parties.
Other developments
During the year, the Group made some
bolt-on investments in the fresh produce
sector in Europe, as well as investments in
existing joint ventures with total investment
of €10m including deferred and contingent
consideration payable on the achievement
of future profit targets.
Further examples of our strategic priorities
being implemented during the year are in
included in Our Strategy and Business
Model section on pages 8 and 9.
7

2.
1. Strategic Report 3.
Summary of financial
performance in 2019
 reported strong results in
2019. The reported results for year ended
31 December 2019 include the Group’s 45%
share of Dole for the full year, whilst 2018
included the five months of Dole from the
date of the deal completed 1 August 2018
to 29 December 2018.
Total revenue in 2019 grew 22.4% to
€6,173m (2018: €5,043m), adjusted EBITDA
increased by 52.1% to €202.8m (2018:
€133.3m) with adjusted EBITA increasing
53.1% to €150.1m (2018: €98.0m). Adjusted
earnings per share (pre-IFRS 16 Leases) of
14.86 (2018: 10.51 cent) was 41.4% ahead
of prior year. The increase on the prior year
was mainly due to the incremental impact of
the acquisition of Dole and a good recovery
in the Fresh Vegetable division in Dole.
Sustainability
Environmental, Social
and Governance (ESG)
As sustainability becomes increasingly
important to all of us, we continue
to recognise, as a global Group, our
responsibilities in relation to environmental
and social issues. Sustainability has always
been central to our Group’s strategy and
business model, with Sustainable Business
Practices, The People Behind our Produce
and Responsible Fiscal Oversight being
three of our core strategic priorities (see
page 8 for more detail). We are committed
to building a better business in a responsible
and sustainable way for all of our
stakeholders.
It is very encouraging to report upon the
work undertaken by our Sustainability
Steering and Working Group (SSWG)
and our local operations during 2019 on
ESG matters. We operate in an industry
known for its health benefits and the low
environmental impact of its products. We
have therefore chosen the UN Sustainable
Development Goal 3 “Good Health and
Well-being” as our pillar goal, with our
aim being to increase the consumption
of healthy fruit and vegetables. The
introduction of new formalised structures
includes a panel who will meet regularly
to share ideas and adopt new policies and
practices, which will be established by the
committee and approved by the Board.
The SSWG has developed its sustainability
agenda for 2020 and the Board will be
updated on its progress at each
scheduled meeting.
Corporate Governance
The Board is committed to integrity, high
ethical values and professionalism in all
of its activities and operations. The Board
recognises the importance of maintaining
the highest standards of corporate
governance and that it is accountable to its
shareholders in this regard. The Board has
adopted the Quoted Companies Alliance
(QCA) Corporate Governance Code, issued
in April 2018. Full details of our approach
to governance are set out in the Corporate
Governance Report on pages 63 to 69.
Board changes
The Board values the benefits of diversity
and the Nomination Committee considers
the benefits of diversity to complement the
range and balance of skills, knowledge and
experience. During the year, as part of a
planned transition to provide orderly Board
refreshment and succession, the Board
appointed the following two new
independent Non-Executive Directors:
• Imelda Hurley, a finance professional with
significant international and agri-industry
experience; and
• Helen Nolan, a highly experienced
financial executive with the Bank of Ireland
where she was also Group Secretary.
We wish to acknowledge and pay tribute to
Frank Gernon and Jerome Kennedy who
have advised the Board that they will retire as
Directors on 31 March 2020. Frank has been
with the Group as a key executive for over
40 years and held various senior accounting
and financial positions, including that of
Finance Director of the Group until August
2009. Frank’s industry knowledge and
financial leadership has been invaluable, and
we are deeply grateful to him for the key role
he has played in developing the business into
the leading international fresh produce group
it is today. Jerome has been a Non-Executive
Director of the Group since 2006 and was
also Chairman of the Audit Committee
and a member of the Compensation and
Nomination Committees. During these years,
Jerome has provided valuable guidance
and wisdom as the Group has grown its
international presence. We wish both Frank
and Jerome the very best for the future.
Following these changes, the Board will be
made up of six independent Non-Executive
directors and three Executive Directors.
Brexit and international trade
The result of the UK’s exit from the European
Union (‘Brexit’) on 31 January 2020 and its
impact in terms of the exit deal, including
tariffs and trade agreements remain unclear.
Brexit committees set up in relevant areas
of the business continue to assess and
prepare for the risks and opportunities
that may arise.
With continuing uncertainty surrounding
global trade, the impact of any tariffs
on international trade will continue to
be monitored by the Group.
COVID-19 outbreak
The Group continues to monitor COVID-19.
While it is too early to form a definitive view,
with a broad spread of resources and
operations, the Group does not expect
any disruption to be material.
Dividend
The Board is recommending a final dividend
of 2.5770 cent per share, representing a
2.5% increase on 2018. This, together with
the interim dividend of 0.9129 cent per
share, brings the total 2019 dividend to
3.4899 cent per share, an increase of 1.8%
on 2018. This represents a distribution of
almost 25% on the reported adjusted fully
diluted earnings per share.
Our people
The Group’s success reflects the superb
skills and very hard work of all our talented
people. On behalf of the Board, I would like
to thank them for their continued efforts
and commitment to the Group.
Outlook
The Group is monitoring COVID-19 and
while it is too early to form a definitive
view, any disruption is not expected to be
material. Trading in early 2020 has been
satisfactory and the Group is targeting
continued growth.
C P McCann
Chairman
8

Our Strategy and Business Model
Our Strategy and
Business Model
Our principal risks are set out on pages 15 to 18.
Our Global
Reach
Local by Heart, Global by Nature
the resources of a multi-national
alongside local expertise
and experience.
• Global & Local Procurement.
• Local Infrastructure.
The People
Behind Our
Produce
Recognise and develop
the talents of our skilled
and committed people.
• Value and develop existing
employees’ experiences
and knowledge.
• Welcome new entrants,
ideas and talents.
Responsible
Fiscal
Oversight
Timely and accurate reporting across
financial and non-financial aspects
of our business. Maintaining the highest
standards of Corporate Governance.
• Establish strong reporting
teams to consolidate Group
information.
• Adoption of QCA Corporate
Governance Code.
Operational
Excellence
Consistently deliver
excellence across a
best-in-class supply chain.
• Promote continuous
improvement and excellence.
Strategic Priorities What This Means Our Business Model
Efficient
Route
to Market
Let’s grow together working with
growers, partners and customers
to secure synergies and efficiencies
across the supply chain.
• Continued acquisitions
and partnerships.
• Collective resources
strengthen us.
Sustainable
Trading
Practices
A responsible leader in an
industry known for its health
and environmental benefits.
• Act with integrity in our
business operations.
• Seek to reduce our
impact on the environment.
9

2.
1. Strategic Report 3.
* Figure excludes Dole.
Countries we
operate in
30
Countries we
source from
100
Be it operational innovation in terms of product service or product innovation in
varieties, packaging or range,  is determined to lead the marketplace.
Our focus on compostable plastics within our packaging range, as explained on
page 35, is one example of this innovation at work.
Our people are key to the success of the Group. Therefore, their development through
projects such as the Global Key Talent Programme and the lean management system
implemented in Spain (see page 38) and their involvement in community efforts, are
encouraged throughout the Group. See page 42 to learn how our new GROW building
in Sweden is dedicated to enhancing the experience of working for .
2019:
Number of
employees
6k*
2019:
Employees with
service >3 years
53%*
The Group is firmly committed to business integrity, high ethical values and
professionalism in all of its activities and operations. This is set out in our Corporate
Governance Report on pages 63 to 69. We believe this strategic priority will help
ensure the best value for shareholders in the long-term as well as allowing the
company to continue to grow successfully.
2015-2019: EPS
Compound
Annual Growth
8.9%
2015-2019: Total
Dividend Compound
Annual Growth
6.0%
Investment
in bolt-ons in
Europe
€10m
Strategy in Action
Our global footprint, as illustrated on pages 2 to 3, demonstrates that we are uniquely
positioned to be able to offer our customers and consumers alike, the best of both
worlds; the cream of locally grown crops from passionate local growers and the
finest fresh produce from the most accomplished producers across the globe.
This is further illustrated on pages 10 to 11.
Our industry leading vertically integrated supply chain extends across the globe
incorporating over 250 facilities including farms, vessels, manufacturing facilities, cold
storage warehousing and packhouses. The introduction of the Dole Food Company
into the Group added over 125,000 acres of produce to our supply chain. Further
detail on our supply chain and our product portfolio is illustrated on pages 10 to 11.
Vision 20/20 is a group wide initiative seeking to play our part in protecting our
natural resources and encouraging others to do likewise. 2019 saw our first
submission to the Carbon Disclosure Project, an important step in our ongoing
journey to being an ever more sustainable company. Some examples of our work
in this area are provided on pages 20 to 45.
Locations
250
Customers
>25k*
Target for 2020
carbon emissions
reduction in Ireland
40%
10

Our Supply Chain and Product Portfolio
Farm
to Fork
 differs from many of its peers by virtue
of its local and global infrastructure, and specifically
the distribution capacity and on-the-ground presence
in key growing regions around the world. ’s
influence extends from seed to store and farm to fork,
adding value to our produce and the service we provide.
Distributing over 400 million cartons of fresh fruits and vegetables annually, the
Group’s size and reach across the supply chain bring together the collective resources
of a global multinational with the market knowledge of local management: generating
synergies, creating efficiencies and adding value. In customising our supply chain, we
strive to translate our competitive advantages – our people, suppliers, infrastructure,
relationships – into value for our customers: delivering a superior service to them,
and to the consumer: produce which exceeds expectations.
1
PRODUCTION
Growing the finest fresh
produce from close
to home and around
the world.
QUALITY
ASSURANCE
Ensuring best practices
are applied right across
the supply chain.
AGRONOMIC
SUPPORT
Working hand in glove with
growers to deliver the cream
of the crop.
4
3
SHIPPING
Navigating the globe to deliver
produce in pristine condition.
2
11

2.
1. Strategic Report 3.
2019 Revenue Breakdown1
MARKETPLACE
DISTRIBUTION
Bringing to bear our global
infrastructure to close
the gap between grower
and consumer.
CONSUMER
Empowering the consumer – educating,
inspiring and promoting consumption
and the integration of fresh produce in
a healthy lifestyle.
CATEGORY
MANAGEMENT
Tailoring a mix of products,
packaging and promotions to
maximise the performance of
the fresh produce category.
MARKETPLACE
OPERATIONS
Employing state-of-the-art
technologies to store, pack,
ripen and manage our portfolio
of products.
1 Assuming 100% consolidation of Dole.
Europe 46%
North America 47%
RoW 7% Vegetables 28%
Pineapples 4%
Other Fruit 42%
Bananas 26%
By geography: By product:
12

Financial Growth
Growth
in Numbers
The Group has demonstrated a strong track record of
executing its strategy over the past number of years
and has grown both organically and by acquisition.
In the five year period ending 2019, the Group has
recorded an annual compound growth rate of 15.6%
in total revenue and 8.9% in adjusted fully diluted
earnings per share.

Total revenue1
(including share of joint ventures and associates) 6,173m 5,043m 4,286m 3,762m 3,454m 3,129m
Group revenue 3,729m 3,728m 3,674m 3,105m 2,875m 2,667m
Adjusted EBITDA1
202.8m 133.3m 104.4m 94.8m 82.8m 73.0m
Adjusted EBITA1
150.1m 98.0m 83.5m 73.7m 64.1m 56.7m
Adjusted profit before tax1
98.3m 76.9m 76.7m 67.7m 58.0m 51.2m
Profit before tax 76.5m 69.8m 72.5m 50.6m 46.8m 44.3m
Adjusted fully diluted earnings per share (cent)1
pre-IFRS 16 Leases 14.86 10.51 13.48 12.07 10.58 9.45
Adjusted fully diluted earnings per share (cent)1
14.12 10.51 13.48 12.07 10.58 9.45
Basic earnings per share (cent) 13.72 9.37 14.80 8.91 9.07 8.83
1 Key performance Indicators are defined on pages 181 to 185.
Board of
Directors
Risks and Risk Management
Risks and Risk
Management
Internal controls and
management of risk
Risk management
The Board is ultimately responsible for the
overall system of internal controls applied
in the Company and its subsidiaries and
for reviewing the effectiveness of these
controls. Some of this responsibility has
been delegated to the Audit Committee.
The Group’s control system is designed
to actively manage rather than eliminate
the risks of failure to achieve its business
objectives. The internal controls system
is designed to provide reasonable but
not absolute assurance against material
misstatement or loss.
The Group’s multinational operations expose
it to different financial risks that include
foreign exchange, credit, liquidity, interest
rate, and equity price risks. The Group has
a risk management programme in place
which seeks to limit the impact of these
risks on the performance of the Group and
it is the Group’s policy to manage these
risks in a non-speculative manner. Details
of the policies and control procedures
used to manage the financial risks involved,
including hedging strategies, are set out
in the accompanying financial statements.
Risk management within  plc
is co-ordinated by an Executive Risk
Committee (‘ERC’ or the ‘Committee’)
which directs the implementation of the
process consistently throughout the Group.
The members of the Committee include
the Chief Executive (Chairman), the Finance
Director, an Executive Director, the Company
Secretary, the Head of Internal Audit and
a representative of senior management.
Risk identification
Responsibility for the identification and
evaluation of financial, operational and
compliance risks is delegated to senior
management, which reports back to the
Committee. The Committee meets during
the year, as required, to review the relevant
findings, identify strategic risks and make
recommendations. The Committee reports
its findings to the Audit Committee, which
in turn reports to the Board.
Sustainability
During 2019 the Group structures around
sustainability were formalised and the
Sustainability Steering and Working Group
(SSWG) was established and directed
to report through the risk management
structures. This will ensure that senior
management, the Committee and the
Board are kept up to date on material
sustainability issues.
Risk appetite
The Board believes that the risk management
processes in place facilitate informed
decision making at both operational and
Board level. Reviews of the principal risks,
including those that would threaten the
business model, future performance,
solvency or liquidity, are evaluated.
Risk assurance
There are various complementary structures
in place, supporting the Board, that provide
assurance regarding the risk mitigations and
controls in place. These include the Audit
Committee, External and Internal Audit,
Senior Management, and the Executive
Risk Committee.
 plc has established a
strong reporting and internal audit function
and its effectiveness is reviewed by the
Audit Committee. The reporting structure,
internal audit and risk management
functions complement each other and,
together with divisional management,
provide the Board with distinct sources
of reasonable assurance as to the
effectiveness of the system of internal
controls that underlies the Group’s
control environment.
The Board conducts its own risk
identification and assessment so that it is
sufficiently aware of the principal threats
to which the Group may be exposed. The
Board’s review includes strategic, financial,
operational and compliance controls and
risk management systems. On an annual
basis the Board confirms they are satisfied
with the effectiveness of the internal control
systems in place.
The Board, through the ERC and the Audit
Committee, has reviewed the process for
identifying and evaluating the significant
risks affecting the business and the policies
and procedures by which these risks
are managed effectively. The Board has
embedded these structures and procedures
throughout the Group and considers these
to be a robust and efficient mechanism for
creating a culture of risk awareness at every
level of management.
15

2.
1. Strategic Report 3.
Risk and risk description Key control and mitigation activities Strategic priorities
Economic and political risk
Global economic conditions and the stability
of the markets in which we operate could impact
on the Group’s performance.
• The Group’s management monitors global
developments and the organisation structure
enables prompt response, where appropriate,
to changing market conditions.
• The Group is geographically well diversified with
operations in 30 countries across five continents.
• The Group sources produce from numerous
regions to ensure continuous supply.
Food safety
Profitability in the fresh produce sector is dependent
on high quality of supplies and consistency of delivery.
It is possible that serious quality issues, and in
particular, contamination of product, whether deliberate
or accidental, could have a negative impact on revenue.
• Management undertakes ongoing reviews
to ensure food safety policies and procedures
continue to be effective and that adequate
resources are in place.
• The Group has very close and well-established
relationships with its growers and only buys product
when comfortable with the grower’s reputation and
commitment to food safety.
• The Group sources produce from numerous
regions to ensure continuous supply.
Corporate communication and shareholders
The Group as a publicly listed company, undertakes
regular communications with its shareholders.
These communications may contain forward-looking-
statements which by their nature involve uncertainty
and actual results or developments may differ materially
from the expectations expressed or implied in these
communications. Failure to deliver on performance
indications communicated to stakeholders could result
in a reduction in share price, reduced earnings and
reputational damage.
• Structures are in place at operational and divisional
levels to ensure accurate and timely reporting.
• The operational and financial performance of the
Group is reported to the Board on a monthly basis.
• Stock Exchange Announcements including
preliminary and interim results announcements
are all approved by the Board and by the Audit
Committee as required/covered by their respective
terms of reference.
• The Group places a high priority on communications
with stakeholders and devotes considerable time and
resources each year to stakeholder engagement.
• The Group has an active investor relations
programme and meets regularly with investors
and analysts and in particular at the time of the
announcements of preliminary and interim results.
The Directors regard the process of risk
management as a positive medium for
change, adding value in the interests
of shareholders by utilising sound and
considered judgment, while simultaneously
making the organisation alert to best
management practices.
Dole Fruit Company
Joint ventures are those entities over which
the Group exercises control jointly, under
a contractual agreement, with one or more
parties. Associates are those entities in
which the Group has significant influence,
but not control of the financial and operating
policies. Following the acquisition of 45% of
Dole Fruit Company (‘Dole’) during 2018,
Dole now represents the largest joint venture
within the Group. Dole has identified its risk
universe which it seeks to mitigate through
its risk management procedures. The risks
identified by Dole include, but are not limited
to, food safety, growing activities, foreign
exchange, weather, fluctuations in inputs
and labour cost and availability.
Principal risks and uncertainties
Under Irish company law, the Group and
Company are required to give a description
of the principal risks and uncertainties which
they face. These principal risks, the actions
taken to mitigate against them and their
relationship to our strategic priorities are
set out below. This is not intended to be
an exhaustive analysis of all risks currently
facing the Group and does not list the risks
in any order of priority.
Global Reach Sustainable Trading Practices People Behind Our Produce
Efficient Route to Market Operational Excellence Responsible Fiscal Oversight
16

Risks and Risk Management continued
Risk and risk description Key control and mitigation activities Strategic priorities
Key customer relationships and credit risk
The Group’s customer base consists primarily of
retailers, wholesalers and food service operators.
The increasing concentration of customers can
increase credit risk. Changes in the trading
relationships with major customers, or of their
procurement policies, could positively or adversely
affect the operations and profitability of the Group.
In addition, the Group faces strong competition in its
various markets and, if it fails to compete effectively,
its business, results and financial condition could be
adversely affected.
• Customer relationships are developed at both
local and at senior management level to reduce
risk and ensure that value is maintained for both
 and the customer.
• There is a focus on improving choice, price and
service to our customers on an ongoing basis.
• Credit risk is managed by credit management
structures and reviews.
• The utilisation of credit limits is regularly monitored,
and a significant element of the credit risk is
covered by credit insurance.
Key supplier relationships
The Group sources its products from a significant
number of suppliers. The loss of any of these could
have an adverse impact on the Group. Additionally, the
Group may enter into seasonal purchase agreements
committing it to purchase fixed quantities of produce at
fixed prices. The Group is exposed to the risk of losses
arising from any inability to sell on these committed
quantities and/or achieve the committed price.
• Key supplier relationships are actively managed
by local and senior management. Any changes
are communicated to executive management to
ensure timely reaction to mitigate risks.
• The Group sources produce from numerous
regions and suppliers worldwide to ensure
continuity of supply.
• Internal procedures are in place for the approval
and monitoring of any seasonal arrangements.
Acquisition activity
Growth through acquisition is a key element of the
Group’s strategy to create shareholder value. A failure to
identify, execute or properly integrate acquisitions could
impact on profit targets, the strategic development of
the Group and consequently shareholder value.
• The Group has traditionally grown through acquisition
and has a long-proven track record in identifying and
integrating acquisitions.
• Executive, senior and local management, together
with a dedicated in-house corporate finance team,
engage in a continuous and active review of
acquisitions.
• All potential acquisitions are subject to an assessment
of the strategic fit within the Group and ability to
generate a return on capital employed in excess
of the cost of capital of the Group.
• The Group conducts extensive due diligence
using both internal and external resources prior
to completing any acquisitions.
• Board approval of the business case for all
significant acquisitions is in place.
• The Group has appropriate credit facilities available
to fund acquisitions.
• Senior management are responsible for the
oversight and successful integration of new
investments.
Global Reach Sustainable Trading Practices People Behind Our Produce
Efficient Route to Market Operational Excellence Responsible Fiscal Oversight
17

2.
1. Strategic Report 3.
Risk and risk description Key control and mitigation activities Strategic priorities
Regulation and compliance
The Group operates in a number of jurisdictions and
is therefore exposed to a wide range of legal and
regulatory frameworks.
• There is regular monitoring and review of
changes in law and regulation in relevant areas.
• Management has access to the appropriate
professional advisors in the relevant areas of
compliance.
• There is ongoing training arranged to ensure
compliance.
Access to credit and interest rate fluctuations
The Group is exposed to fluctuations in credit markets
which could impact the availability and cost of financing
and consequently the Group’s ability to grow through
acquisition.
• The Group has facilities with a number of
recognised international banks and funding
providers with varied maturity profiles.
• The Group ensures that sufficient funds and
resources are available to meet expected liabilities
and to finance the growth of the business through a
combination of cash and cash equivalents, operating
cash flows and undrawn committed facilities.
• The Group has in place approved facilities giving
access to appropriate long-term borrowings as
and when required.
Retention of key personnel
and talent management
The Group is dependent on the continuing commitment
of its Directors and senior management team. The loss
of such key personnel without adequate replacement
could have an adverse effect on the Group’s business.
• Throughout the Group there is a focus on
succession planning, and it is formally assessed
and reviewed by the Board.
• Recruitment policies, management incentives and
training and development programmes have all
been established to encourage the retention of
key personnel.
• The Nomination Committee regularly assess
Board composition and also examine Group
succession plans.
IT systems and cyber-security
The Group relies on information technology and
systems to support our business. Failure to ensure that
our core operational systems are available to service
business requirements could impact the day-to-day
operations of the Group. In addition, the exploitation
of vulnerabilities in IT systems either accidental or
malicious, including those resulting from cyber-security
attacks, could adversely impact the Group’s business.
• The Group has robust Information Security and
Computer User policies regarding the protection of
business and personal information and governing
the use of IT assets.
• The Group seek to manage this risk, in conjunction
with our external partners, through a range of
measures which include monitoring of threats,
testing for vulnerabilities, provision of resilience
and reviewing cyber-security standards.
• Independent, external and internal, reviews of
our core operational systems are performed
on an on-going basis.
• There is a Group policy on backups in place and
these are regularly tested.
18

Risks and Risk Management continued
Risk and risk description Key control and mitigation activities Strategic priorities
Goodwill impairment
Sustained underperformance in any of the Group’s
cash generating units may result in a material write
down of goodwill. While such a write down would
be a non-cash charge it could have a substantial
impact on the Group’s income statement and
shareholders’ equity.
• During the monthly reporting process indicators
of goodwill impairment are monitored. Where
necessary there is communication with senior
management in order to ensure that potential
impairment issues are highlighted and where
practical corrective action is taken.
• The Group tests goodwill annually for impairment
on 31 December, or more frequently if there are
indications that goodwill might be impaired.
• The results of the goodwill impairment assessment
are reported to the Audit Committee and the Board.
• Further information on how the risk posed by goodwill
impairment is managed is outlined in Note 14 of the
attached Consolidated Financial Statements.
Foreign currency
As a large multinational group with extensive operations
worldwide the Group is exposed to translational and
transactional currency fluctuations. The principal
currency risk to which the Group is exposed, is adverse
currency movements on translation of the results and
balance sheets of foreign currency denominated
operations into Euro, the Group’s reporting currency.
Adverse changes in exchange rates will have an impact
on the Group’s reported results and shareholders’ equity.
The annual impact of such movements is reported in
the Consolidated Statement of Comprehensive Income.
Foreign currency risk also arises from foreign currency
transactions within each individual entity.
• The Group finances its initial overseas investments by,
as far as is appropriate, matching foreign currency
borrowings which naturally hedge the translation
movement on foreign currency investments.
• Repayments and interest on borrowings are
therefore denominated in currencies that match the
cash flows generated by the underlying businesses.
• Group operations manage their individual
transactional foreign exchange risk against their
functional currency and material currency risks are
managed by utilising forward contracts to cover
committed exposures.
Unusual weather patterns
External factors, such as unusual weather conditions,
can disrupt the supply and demand dynamics of
fresh produce.
• The diversified nature of the Group’s sourcing
activities actively mitigates against this risk.
• Local management are responsible for monitoring
and planning for extreme changes in local weather
patterns.
Global Reach Sustainable Trading Practices People Behind Our Produce
Efficient Route to Market Operational Excellence Responsible Fiscal Oversight
19

2.
1. Strategic Report 3.
Viability Statement
Going concern and
the viability statement
The following statements detail the
Director’s assessment of the Group’s
viability and ability to continue as
a going concern.
Going concern
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position
are set out in the Strategic Report. The
Group’s financial position, its cash flows,
liquidity position and borrowing facilities
are described in the Financial Review on
pages 50 to 57. In addition, Note 35 to the
financial statements outlines the Group’s
financial risk management objectives,
details of its financial instruments and
hedging activities and its exposure to
credit risk, currency risk and liquidity risk.
The Group has considerable financial
resources and a diversified geographic
presence with a large base of customers
and suppliers. Having assessed the
relevant business risks, the Directors
believe the Company is well placed to
manage its business risks successfully.
The Directors are satisfied that the
Company, and the Group as a whole
have adequate resources to continue in
operational existence for the foreseeable
future. Accordingly, they have adopted
the going concern basis in preparing the
financial statements.
Viability statement
The Directors have assessed the Group’s
viability over a three-year period. Whilst
the Directors have no reason to believe
the Group will not be viable over a longer
period, this has been deemed appropriate
due to the current financial and operating
cycles of the Group. In making this
assessment of viability, the Board carried
out an assessment of the principal risks
and uncertainties facing the Group. The
Group’s current position, prospects and
strategy were all considered as part of
this review. Based on the results of the
analysis the Board has a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the three-
year assessment period.

20
Sustainability
1. Strategic Report 3.
2.
Total Pro
The
Sustainability
Report
Environmental, Social and Governance
matters and the pursuit of sustainable
production and commercial practices
lie at the heart of ’s
business model. We are committed to
pursuing best practice throughout our
organisation and at all times conducting
our business in a responsible, inclusive
and constructive manner.
During 2019 we have formalised our structures at Group level
but continue to encourage local initiatives. This report will
provide a summary of our work to date such as our move
to renewable energy in  Ireland.
22

Strategy
and
Governance
Environment
Ethical and
Social
Economic
Sustainability continued
Sustainability –
Let’s Grow Together
Building a better business in a responsible and sustainable
way for all of our stakeholders.
Introduction
On our formation in 2007, 
selected “Let’s Grow Together” as our
tagline and our corporate call to action.
Though short and succinct, it encapsulates
a business ethos relevant to all of our
stakeholders. It speaks of our determination
to be inclusive, of our collaborative approach
to doing business and of our ambition, not
only to succeed, but to create value and
equitably share returns and resources for the
collective betterment of our wider stakeholder
set. In many respects, it sets the tone for our
collective approach to all things Sustainable.
Environmental, Social and Governance
(ESG) issues are core to how responsible
businesses operate and as a Group we
are committed to adopting and endorsing
best practices for the industry and regions
in which we work, to facilitate, engage,
promote and actively contribute. Our
industry is recognised for its virtuous
properties – the products we market are
associated with the highest nutritional
value and the lowest environmental impact
of all the primary foodstuffs.
However, we are committed to doing
more – more for all of our stakeholders;
our shareholders, our colleagues, our
customers, our suppliers, our credit
providers and for the communities in
which we work – pages 44 to 45 set out
examples of the types of projects our
operating companies undertake locally.
On pages 30 to 33 we set out examples of
the progress made in 2019 in environmental
areas including measurement of our Group
carbon consumption, our first submission
to the Carbon Disclosure Project and
 Ireland’s adoption of
renewable energy. In 2020, this work
will continue as we measure our water
footprint for the first time.
Similarly, our efforts to reduce plastic in
our packaging are described on pages
34 to 35, while the steps we take to meet
our responsibilities to our colleagues and
our communities, including examples of
Group and local initiatives are outlined in
more detail on pages 36 to 43.
We plan to update our report on the Group’s
sustainability work in Spring 2020 and
together with our Corporate Governance
Report on pages 63 to 69 will complement
the information in this report.
Let’s Grow Together
23

2.
1. Strategic Report 3.
Our structures
During 2019 our structures around ESG
matters were formalised. Our Sustainability
Steering and Working Group (SSWG), led
by our Finance Director, brings together
colleagues from functions such as technical,
operational, finance and marketing with
support from other areas such as human
resources. The SSWG are charged with
developing our policies and practices in
environmental and social issues and are
supported by local representatives from
our operating companies. The committee
reports directly to the Board and through
our existing risk management structures
(as set out on page 14), ensuring senior
management and the Board are kept
updated on all relevant ESG related matters.
We believe a detailed materiality analysis is
an important tool for identifying the most
significant sustainability issues with respect
to both our business and our stakeholders’
priorities. Using the SASB Materiality
Map as a reference point, our SSWG,
in conjunction with an external expert,
has begun the process of developing a
Group materiality matrix (see below).
We identified the 3E’s, namely Environment,
Economic and Ethical and Social, as the
central pillars instructing our analysis of
the material issues. As a diversified group
with over 250 locations across the globe,
these pillars serve as a framework under
which local operations can define their
own policies and practices.
Subject to ongoing review across 2020 and
beyond, as this matrix evolves, we expect it
will refine further our working group’s focus
and our choice of projects undertaken at a
local level.
Materiality matrix
Environmental
1 Energy & GHG
2 Water consumption
3 Waste management
4 Packaging innovation
Economic
5 Regulatory compliance
6 Customer relationships
7 Consumer trends
8 Risk management
9 Financial returns
10 Stakeholder engagement
Ethical & social
11 Ethical sourcing
12 Food safety and quality
13 Promotion of healthy
food and nutrition
14 Employee development
and engagement
15 Diversity and inclusion
16 Community engagement
Influence
on
stakeholder
decision
making
2
3
4
Relative importance to 
5 6
7
8
9
11
24

Our Commitment
to the SDGs
 recognises the United Nation’s Sustainable Development Goals
and have selected 1 pillar goal and 3 priority goals as our focus for 2019 and 2020.
Our approach to pursuing
UN Sustainability Goals
We share the UN’s ambition to address
the global challenges we collectively face,
including those related to poverty, inequality,
climate, environmental degradation,
prosperity, and peace and justice. We work
with stakeholders across the fresh produce
supply chain to pursue these goals and have
formulated our Group’s Corporate Social
Responsibility policies and practices around
the framework and principles upon which
they are based.
 is wholly committed to the
pursuit of the UN’s 17 Sustainability Goals
collectively. However, with a view to focusing
our resources to maximum effect, we have
targeted four goals; one as our ‘pillar’ goal
and three as priority goals across 2019
and 2020.
Pillar Goal
Goal 3, promoting ‘Good Health and
Well-Being’ speaks to the very core of
what we do in . As such,
it is our permanent, ‘Pillar’ UN Sustainable
Development Goal. Specifically, provision
3.4 targets a one third reduction in mortality
from non-communicable diseases by 2030.
The contribution fresh produce consumption
makes to reducing the risk of non-
communicable disease is widely recognised.
Every day, across all of our global operations,
we work tirelessly to promote the integration
of fresh fruits and vegetables into a balanced
diet. We do this in the hope of inspiring
consumers to make better dietary choices
which can contribute to better health and
general wellbeing.
Priority Goals across 2019/20
Goal 12: Responsible Consumption and
Production and specifically clause 12.6.1,
encourages companies to adopt sustainable
practices and integrate sustainability data
into their reporting cycle. In our pursuit of
this Goal we have initiated ‘Vision 20/20’, our
Group-wide project on carbon consumption
which is profiled on pages 30 and 31. Vision
20/20 is also a necessary building block in
our pursuit of Goal 13: Climate Action and
specifically its call for the implementation of
measures to reduce carbon consumption
and mitigate our impact on climate change.
Our efforts to remove, reduce, recycle,
replace and reuse plastics as detailed on
pages 34 and 35 illustrates our Group’s
commitment to Goal 14: Promoting the
Conservation and Sustainable Use of
Oceans by limiting the damage caused
by plastic packaging in our seas.
Sustainability continued
UN Sustainable Development Goals (UN SDG):
25

2.
1. Strategic Report 3.
Objective Action
3.4 Reduce Non-Communicable
diseases by 1/3.
12.6.1 Adopt sustainable practices
and integrate sustainable information.
13.2 Integrate climate change measures
into policies, strategies and planning.
14.C Enhance the conservation
and sustainable use of oceans.
The promotion of fresh produce
consumption and a healthy diet.
P
i
l
l
a
rGoal
P
r
i
o
r
i
t
y
Goal 19/20
P
r
i
o
r
i
t
y
Goal 19/20
P
r
i
o
r
i
t
y
Goal 19/20
Priority Goals across 2019/20
26

R
E
C
O
M
M
E
N
D
E
D
C
O
N
S
U
M
P
T
I
O
N
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N
V
I
R
O
N
M
E
N
T
A
L
I
M
P
A
C
T
ENVIRONMENTAL PYRAMID
FOOD PYRAMID
Sweets
Beef
Cheese
Eggs
Poultry
Fish
Cookies
Milk
Yogurt
Olive Oil
Dried Fruit
Bread, Pasta,
Potatoes, Rice
Legumes
Fruit
Vegetables
Beef
Fish
Cheese
Pork
Olive Oil
Poultry
Dried Fruit
Legumes
Eggs
Sweets
Yogurt
Pasta
Cookies
Rice
Milk
Bread
Potatoes
Fruit
Vegetables
HIGH LOW
LOW HIGH
E
N
V
I
R
O
N
M
E
N
T
A
L
T
T
I
M
P
A
P
P
C
T
Po
Olive
Poultr
Dried Fru
Legumes
Eggs
Sweets
Yogurt
Pasta
Cookies
Rice
Milk
Bread
Potatoes
Fruit
Vegetables
Sweets
Beef
Cheese
Eggs
Poultry
Fish
Cookies
Milk
Yogurt
live O
Fruit
,
LOW
OW
R
E
C
Oil
Sustainability continued
Our Industry
In  we are immensely proud of the fact that
the products that we sell, fresh fruits and vegetables, are
widely understood to be the most nutritious foodstuff with
the least environmental impact.
Recent years has seen a hardening of
the scientific consensus recognising that
what we eat is one of the most powerful
drivers behind many of the world’s major
environmental issues, including climate
change. The UN’s Intergovernmental Panel
on Climate Change has identified switching
to a plant-based diet as having the potential
to make a hugely important contribution in
fighting climate change.
In , the virtuous properties
of our products, rather than breeding
complacency, inspires us to reduce ever
further the environmental footprint of our
own operations.
The Double Pyramid
The Double Pyramid has become a useful
tool for the communication of sustainable
diets, reminding us of the importance of
our food choices in terms of health and the
environment. The Double Pyramid shows
us how those foods of low environmental
impact are the same foods that nutritionists
advise us to consume the most, while those
with a higher ecological footprint are those
that should be consumed in moderation.
27

2.
1. Strategic Report 3.
775
1205
0 2000 4000 6000 8000 25,000 45,000 60,000 70,000
/
20,000
8000
4000
2000
1000
/ / /
9250
8305
5505
3085
1360
1255
1050
3420
4020
1565
1660
600
490
4405
3745
3720
25,895
2100
2155
2590
1795
BEEF
CHEESE
BUTTER
RICE
EGGS
POULTRY
LEGUMES
DRIED FRUIT
YOGURT
MARGARINE
MILK
BREAD
VEGETABLES
POTATOES
BREAKFAST CEREALS
FISH
PORK
COOKIES
FRUIT
SUGAR
OLIVE OIL
PASTA
SWEETS
cooking
Legend
Carbon Footprint
gCO2 – eq per kg or liter of food
min max
Average data + cooking
100
50
25
15
5
74
18
19
13
13
14
16
13
11
10
8
3
4
3
7
146
13
79
61
48
44
5
66
66
45
12
cooking
Legend
Ecological Footprint
m2
global per kg or liter of food
min max
average data + cooking
BEEF
FISH
BUTTER
CHEESE
MARGARINE
PORK
OLIVE OIL
POULTRY
LEGUMES
DRIED FRUIT
EGGS
YOGURT
SWEETS
PASTA
BREAKFAST CEREALS
MILK
RICE
COOKIES
BREAD
FRUIT
POTATOES
VEGETABLES
Carbon footprint
Fruit and vegetables rank amongst the
three least impactful foodstuffs based on
the greenhouse gas emissions produced
across their entire lifecycle. In fact, fresh
produce is associated with only a fraction
of the emissions of other foodstuffs.
The Carbon Footprint measures the
greenhouse gas emissions during the entire
life cycle of a food and is calculated in grams
of CO2
equivalent (gCO2
eq) per kilogram
or litre of food. For each group of foods,
the reported value is the average of the
various sources used.
Ecological footprint
Vegetables and fruit respectively are
associated with the lowest and second
lowest ecological impact of all major
foodstuffs. Again, the impact associated
with the production of fresh produce is
marginal compared with the likes of beef,
fish and dairy products.
The Ecological Footprint calculates the
Earth’s capacity to regenerate resources and
absorb emissions, and is measured in global
square meters per kilogram or litre of food.
For each group of foods, the reported value
is the average of the various sources used.
28

Sustainability continued
Promoting Good
Health & Wellbeing
 Nordic consumer insights into
fresh produce consumption in Sweden.
That fresh fruits and vegetables are an
essential component of a healthy diet is
beyond dispute. Promoting consumption
in a manner relevant to the contemporary
marketplace, however, requires a deep
understanding of the motivations
underpinning consumer behaviour.
Garnering such an understanding is a
challenge that has been taken up by Total
Produce Nordic through their Kostministeriet
initiative- its sole purpose: to improve
people’s health by increasing consumption
of fruit and vegetables.
Kostministeriet’s mission is to democratise
the consumption of produce and specifically
targets the consumers that eat the least
produce. At the heart of the initiative lies two
extensive market research efforts completed
together with Kairos Future, an international
research company.
The objective of the research is to extract
the consumer insights required to explain
why Swedish consumers in general eat
less produce than the recommended
500 grams of fruit per day. Sampling more
than 10,000 respondents between the age
18 and 74, the initiative is an ambitious,
comprehensive undertaking.
Kostministeriet’s reports are the most
extensive ever conducted in Sweden
with respect to people’s consumption
of produce.
The findings of the latest report,
FOG2019, have been filtered down to
7 specific learnings about consumers
consumption and attitudes towards fruit
and vegetables. ’s ambition
is to, in cooperation with customers and
other interested stakeholders, integrate
the lessons arising from research into the
product range they make available in the
marketplace; promoting consumption at
point of sale.
In addition to research, Kostministieret
aspires to contribute to changing the
perception of produce. The initiative has
been supported by multiple prize-winning
social media campaigns that, with humour,
creates awareness about the 500-gram
recommendation, such as “the Durian
Challenge”, challenging influential YouTubers
to eat 500 grams of “the world’s most
disgusting fruit.”
Similarly, under the auspices of the
Kostministeriet project,  Nordic
has partnered with the Swedish Basketball
Association offering free fruit to 7-12 year
old basketball players attending local
tournament ‘Easy Basket’ throughout the
country. It also offers free education for
school chefs on applying the research
learnings to use, cook and present fruit
and vegetables in ways children like.
The education is conducted together with
NGO Skolmatens Vänner (“The School
Meal Friends”).
Promoting a healthy diet requires the
participation of a multitude of stakeholders
across society. Through initiatives like
Kostministieret,  has
demonstrated its ongoing commitment
to playing an active role in driving
consumption forward.
29

2.
1. Strategic Report 3.
29
30

DISCLOSURE INSIGHT ACTION
Sustainability continued
An Agent of
Carbon Reduction
 is, by its very nature, and by virtue of the products we sell,
the scale and reach of our business and our role in delivering the most
efficient route to market, an agent of carbon reduction.
Globally, the end product of our efforts to
pursue synergies is most typically logistical
and operational consolidation. The single,
large, carbon efficient consignments on our
ships, lorries and vans offer a compelling
contrast to the multiple smaller, carbon
intensive individual journeys associated
with a fragmented supply base.
Locally, in implementing our ‘Local Produce
First’ policy, we work to facilitate and assist
local growers, manage seasonality, and
importantly, promote locally sourced fresh
fruit and vegetables to consumers. In doing
so we, together with our retail partners, play
a hugely important role in reducing the food
miles associated with the fresh produce.
Our products are inherently environmentally
friendly. Fruit and vegetable production is
associated with a much smaller environmental
footprint than other comparable foodstuffs;
a fact reflected in a widening consensus
amongst environmentalists that meaningfully
addressing climate change will inevitably
require a move on the part of consumers
towards plant-based diets.
Vision 20/20
Measuring our footprint
In February 2019  launched
our ambitious ‘Vision 20/20’ initiative;
a Group-wide review of the Greenhouse
Gas emissions associated with our
operations internationally.
Our objective was to provide increased
transparency to our stakeholders with respect
to the environmental impact of our operations
and establish a definitive benchmark with
which we can measure the effectiveness of
our efforts to minimise our carbon footprint
going forward. Phase One; a root and branch
review and profiling of our Group’s collective
carbon consumption concluded in July 2019,
culminating with a submission to the Carbon
Disclosure Project for rating.
Reducing our footprint
The completion of the measurement stage
of Vision 20/20 provided a platform for our
ongoing journey. Building on work already
underway throughout our operations
internationally, the next stage focuses
on the identification of opportunities to
reduce our environmental footprint and the
implementation of the changes required to
make it happen. This process has already
begun. Vision 20/20 is another step in the
right direction towards becoming an ever
more sustainable business.
Page 32 demonstrates one example of the
positive impacts of this initiative.
31

2.
1. Strategic Report 3.
Upgrading infrastructure across the supply
chain in carbon reduction: partnering producers
in reducing carbon consumption
 recognises that addressing
the environmental impact of our products
and operations requires constructive
cooperation across the supply chain. It
starts at production. We work with the very
best; growers who put sustainability at the
heart of their business. O’Shea’s farm in
Kilkenny, who established Iverk Produce in
1980, which is now a partner in the Total
Produce Group, is a case in point.
In April 2019 O’Shea’s installed 960
individual solar panels which generate
enough electricity to power 40 homes
each year. This innovation builds on earlier
initiatives including introducing a reed-bed
waste-water management system, reducing
packaging and installing LED lights and
variable speed drives which have delivered
energy savings on O’Shea’s farm of
over 30pc.
Across our own international operations we
are working too, to decrease our collective
footprint. In Haluco, our leading marketer of
Dutch grown salad products, the installation
of solar panels and LED lighting in its primary
facility late in 2018, contributed to a 55%
reduction in carbon consumption.
Another Dutch initiative began in September
2019 when LED lighting was introduced
to the TPH Vastgoed building in Venlo
and is expected to yield a 60% reduction
in carbon consumption going forward.
As our Vision 20/20 project evolves, we are
determined to identify further opportunities
such as these as we strive to make a material
impact on our Group carbon footprint.
32

Sustainability continued
 Ireland
targets 40% reduction
in carbon consumption
by the end of 2020
On 1 September 2019, the  Irish operations moved
to 100% renewable electric energy sources to power its business
units across the island of Ireland.
This transition applied to twenty-two units in all; eighteen in the Republic and four in Northern Ireland including
central distribution centres, production facilities, regional depots and the Group’s Dublin head office.
The company partnered with Electric Ireland in the Republic of Ireland and Go Power
in Northern Ireland with Captured Carbon Ltd verifying the green energy source declarations.
It is anticipated that this initiative, alongside additional carbon reducing measures already in place,
will deliver a 40% reduction in like for like carbon consumption by the end of 2020.
Part of ‘Vision 20/20’, the integration of renewable energy into the Group’s Irish operations
is also making an important contribution to ’s ongoing commitments to Origin Green,
Ireland’s national sustainability programme.
33

2.
1. Strategic Report 3.
local
&
global
34

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Sustainability continued
Working to
Reduce Plastics
There is today a widespread consensus that we need
to address the amount of conventional plastics used
in packaging including the packaging of fresh produce.
 is deeply committed to this goal. Our strategy for achieving this end
remains focused on removing, recycling and/or replacing plastic currently in place
across our produce portfolio internationally.
Attitudes around
plastic packaging
A preference for loose fruit and vegetable
alternatives is evident, however 2/3 say
they regularly buy fresh produce in plastic
packaging but would prefer not to and a
marginally smaller proportion say they would
choose environmentally friendly produce
where possible. About 3 in 10 are against
excessive plastic packaging.1
1 Listening to the consumer: Total
Produce/Behaviour & Attitudes research
into the use of plastic on fresh produce,
May 2019. Sample 1,000. Market: Ireland.
Working with other
stakeholders
Conscious that we in  cannot
effect change alone, we are constructively
engaging with other stakeholders including
retailers, waste management companies
and Government bodies. Collectively,
we are committed to educating and
inspiring consumers on responsible
waste management. For ,
this entails providing complete solutions
such as on-pack guides, online videos
and in-store information points.
35

2.
1. Strategic Report 3.
Introducing  compostable packaging
The launch of our  Compostable
range in 2019 was an important development
in our work to reduce plastics. The culmination
of 18 months research, testing and trialling,
the range provides a sustainable packaging
solution for the consumer in the here and
now without compromising on convenience,
food safety or shelf-life.
Available in a variety of brands, including the
iconic Dole brand (pictured), the range has
been developed to be consumer orientated,
environmentally responsible, practical
from a waste disposal perspective and
sensibly priced.
A ‘one stop shop’ solution for
consumers, all elements of
our packs, from the flexible
film, to the trays and even the
ink used to print the labelling
is compostable. No sorting
is required in the home, beyond disposal in
the food waste bin. Our packaging, when
composted, biodegrades substantially
within 3 months and completely within
a 6 month period.
Reassuring the consumer
The  Compostable range
is accredited to the highest international
standards and, importantly, where possible
tested in local markets for compatibility with
the local waste management infrastructure.
Our packs, for example, were the first fresh
produce products to be accredited with the
Cré mark awarded by the Irish Compost
Association, denoting that the range is ‘Food
Waste Bin’ compatible in Ireland. This offers
the consumer the reassurance that these
packs have not only been scientifically
tested but trialled in real life conditions by
Irish waste management companies and
found to decompose as promised.
Our ambition for
compostable packaging
In the longer term, our goal remains the
pursuit of a circular plastic economy where
our packaging will be recycled and reused,
and we continue to work towards that end.
In the meantime, while the necessary
infrastructure develops to accommodate
this, we believe Compostable Packaging
offers a viable alternative to conventional
plastics in the short and medium term. It
allows us to empower consumers to make
responsible decisions with our packaging
right now – ensuring that long life plastics do
not continue to contaminate our ecosystem.
Local initiatives
Across our international operations, we’re
committed to leading the way in introducing
more sustainable packaging. OTC Organics
have introduced South African Organic
Table Grape packs in innovative recycling
packaging and in North America Oppy’s
sustainability initiatives have seen the
introduction of sustainable kiwi packs.
36

Sustainability continued
The People Behind
Our Produce
A commitment to growth and in particular to integrating
new businesses into the Group is ingrained in our business model.
New partners invariably bring new people into our family. We are privileged to be the beneficiaries of an
ongoing infusion of new produce people; experienced professionals possessing diverse talents, ideas and
core competencies. The combination of these new people working alongside our existing loyal and talented
colleagues is at the core of our successful growth. In 2019 the Group employed 6,005 people.
Republic of Ireland 13% | UK 29% | Rest
of Europe 40% | USA 4% | Canada 5% |
Rest of World 9%
Employees by geographical location
Employee development
Along with locally established programmes,
the Organisational Development Director
works with the Group’s Senior Management
and HR professionals to ensure succession
plans and talent development programmes
are in place across the Group. These
programmes aid employees in their personal
development in addition to providing the
Group with talent to meet current and
future business needs.
The Group’s global expansion has provided
opportunities for staff to work in different
markets and develop cross-cultural skills.
Team members who choose to work
in new markets gain important personal
developmental experience and also
help facilitate the geographical growth
of the Group.
>25%
Colleagues part of Group
for 10 years or more
37

2.
1. Strategic Report 3.
Diversity
and inclusion
Recognising the value that diversity and inclusion can bring, the Group has adopted
a Diversity and Equal Opportunities policy. The Group is committed to ensuring, that
throughout the Group, no employee receives less favourable treatment or is unlawfully
discriminated against on the grounds of sex, racial or ethnic origin, religion or belief,
disability, age or sexual orientation.
Rewarding
employees
Remuneration policies are developed
at a local level and offer pay, social and
pension benefits which are in line with
local or industry practice. We aim to reward
employees, not only financially through
base salary, incentives and benefits,
but also through career development,
international opportunities and by
creating an environment in which
employees can flourish.
Group companies report on gender pay
as required by local regulations.
Social
Local communities
We endeavour to support local communities
where we operate and they all have differing
needs. We believe local management are
best placed to consider where our support
is most effective. Working with programmes
such as Junior Achievement Ireland and
Solas Business (pairing businesses with
local schools) or our sponsorship of the
Argofruta Foundation in Brazil are just two
positive examples of how this local approach
benefits communities.
38

Sustainability continued
Employee engagement and collective responsibility
in Spain; application of the lean management system
in Grupo Eurobanan
The Lean Management System is a
managerial discipline put into practice in
businesses across the world, including in
Grupo Eurobanan’s operations in Spain. At
its heart lies a commitment to empowering
employees, encouraging participation in the
management of the business and inviting
staff to contribute every day to improving
the company’s operational performance by
devising and implementing work practices
that deliver continuous improvement across
the organisation.
In implementing Lean Management,
Eurobanan’s goal is to increase process
productivity across all areas by eliminating
waste, which is defined by Eurobanan as
everything that does not add value to
the company.
For the company, the dividends associated
with Lean Management are clear; those
most familiar with operations are tasked
with increasing efficiency, leading to
higher productivity.
For employees, it provides an opportunity to
participate in the process; in the management
of the business and in improving the
environment in which they work. It promotes
a sense of collective responsibility and
affords the opportunity to demonstrate their
capabilities beyond their day to day tasks.
Successes are shared, challenges are faced
together and the performance of the business
is improved for the betterment of all. Every
summer the company organises a team
building event in which all the different
departments are mixed into various
competing groups and afterwards an
enjoyable barbecue is held.
39

2.
1. Strategic Report 3.
Committed to
Being Pro-active
and Constructive
Human rights
Group companies apply HR policies and
procedures which ensure that the rights
of employees in the businesses are fully
respected.
Group companies, which are subject to
reporting under legislation, such as the UK
Modern Slavery Act 2015, have published
statements on their websites. We are
committed to maintaining and improving
systems and procedures to avoid
inadvertent complicity in human rights
violations related to our own operations,
our supply chain and our products.
Anti-bribery and corruption
 endeavours to operate its
business to very high standards in all
respects, and to conduct its business in an
honest and ethical manner. It is the policy
of  in carrying on its business
to comply with all laws, both local and
overseas. In line with this, the Group is
committed to complying with all applicable
bribery and anti-corruption laws in any
country in which a Group subsidiary
operates. The Group expects its employees
in each country to comply with these laws,
and to act professionally, fairly and with
integrity in all of their business dealings.
Codes of best practice
 is satisfied that we have the
appropriate risk management procedures
in place to ensure that we comply with the
highest standards in relation to food safety
regulations. In addition, ,
through its subsidiaries, has established
Codes of Best Practice with which direct
suppliers are expected to comply. These are
designed to reduce any potential negative
impact of agricultural production on the
environment and to ensure safe working
conditions and fair treatment for workers
in compliance with internationally accepted
labour standards.
 is a member of
GLOBALG.A.P., established by major food
retailers and suppliers across Europe to
address consumer concerns about food
safety, environmental protection and worker
welfare and to promote safe and sustainable
agriculture. GLOBALG.A.P. has adopted
an extensive range of guidelines on these
matters, resulting in the GLOBALG.A.P.
accreditation. This standard establishes
the minimum requirements to be met
by growers of fruit and vegetables that
supply global retailers.
The  Group is also a member
of SEDEX (The Social and Ethical Data
Exchange), a body dedicated to the auditing
of global producers to ensure ethical trading
practices are adhered to.
In , we recognise that our
responsibilities concerning sustainability
matters are ongoing. We are committed
to being pro-active and constructive in
addressing all such matters and to actively
participate in industry forums on social,
ethical, environmental and health and
safety issues.
40

Sustainability continued
At Production –
Fundación Dale
As a primary grower of international renown, Dole Food Company,
which joined the  family in 2018, operates at the very
forefront of global production. Farming over 125,000 acres, Dole
is committed to embracing the responsibilities and exceeding the
expectations associated with industry leadership.
Fundación Dale, the body charged with
implementing Corporate Responsibility
and Sustainability in Dole operations
across Ecuador and Peru exemplifies
Dole’s approach to production in developing
nations; promoting fundamental values of
Transparency, Human Development and
‘Attention To The User’ – seeking to satisfy
and exceed the expectations of internal and
external stakeholders. Activities centre on
Health Promotion, Education, Community
and Investment.
41

2.
1. Strategic Report 3.
Health
Across Ecuador and Peru, the Fundación
Dale oversees the provision of a wide array
of specialised medical care to Dole workers
and their families. Typically, the Fundación
Dale health teams, consisting of general
practitioners, specialists and nurses attend
to more than 48,000 people each year.
Services vary from general medical services
to specialised care such as Dermatology,
Odontology, Optometry and Cardiology.
In addition, health and safety promotion
programmes, occupational and pre-
occupational medical programmes and
checks ups and preventative health
lectures are provided to employees
on an ongoing basis.
Education
Improving the education conditions
for children and young people in the
communities in which Dole operates is a
key priority for Fundación Dale. Dale operates
two educational centres of its own in Vicente
Piedrahita in Los Ríos and Ecuador País
Amazónico in Guayas Province. Combined,
these facilities cater for 800 students providing
a quality education that includes the core
state curriculum and learning about emerging
technologies, sports and cultural activities.
Dole CSR Mission
Statement
At Dole we believe that sustainability
is achieved by treating people, natural
resources, the environment and
communities as their most precious
assets. Business can be important
agents of change by creating
products and services valued by
society, providing jobs and using
resources efficiently. As a company
dedicated to making the world a
better place to live now, and in the
future, DOLE’s mission is:
1. To provide the world with healthy
and nutritious foods.
2. To offer our employees competitive
salaries and a safe working
environment, respecting
worker’s rights.
3. To promote the development and
prosperity of our communities.
4. To protect natural resources and
actively seek ways to reduce our
environmental impact.
Health 83% | Education 11% |
Community projects 6%
Investment in social causes
Dental services and health promotion
programmes are also provided in the
schools.
Community development
Fundación Dale is committed to improving
the living conditions and social development
in the local communities and towns associated
with its production. The Fundación provides
preventative health lectures, nutrition lectures,
workshops on gender equality, computer
lectures and funding for infrastructure
reconstruction projects. In addition, the
Fundación actively supports the formation
and training of community committees;
groups of local people dedicated to
contributing to improving local amenities
and services and contributing to community
development in general.
Investment
The Dale Fundación allocates some
$2.3 million to social causes. In investing
in the people behind their produce, Dole is
recognising workers for their contribution to
their success and seeking to contribute in a
meaningful way to the communities in which
they grow.
people
behind our
produce
Sustainability continued

1. Strategic Report 3.
 Nordic
opens the ‘GROW’
employee hub
Our Nordic operations have facilities including Central
Distribution Centres, packhouses and logistics hubs across
the Swedish city of Helsingborg. It is fitting then that it was
here that the ‘GROW’ employee hub was opened in 2019.
A purpose built resource open to all employees of  and their families, the 2,800
sq metre GROW facility is located off site and includes a gym, coffee dock, squash &
basketball courts, ‘chill out’ zones and office space. The ethos underpinning GROW is
centred on three cornerstones; People, Community and Culture. The atmosphere is relaxed,
welcoming and inclusive; the aesthetics promoting a sense of security, harmony and of
being close to nature – a theme very much in keeping with our day to day business.
GROW serves as a focal point for contributing to the health & wellbeing and ongoing
professional development of employees. A centre for the education and training of staff,
it provides a casual, informal venue for hosting leadership programmes, management
courses, ambassador programmes and induction training. Education extends to inspiring
and facilitating staff in making healthy lifestyle choices. The exercise area within the GROW
complex consists of a fully equipped and certified Hammer Strength gym, a section for
Crossfit inspired workouts and an arena with a terrace for all kinds of sporting activities while
trained health coaches are also made available.
 Nordic’s GROW facilities exemplifies our broader philosophy when it comes
to our people. Its goal and our goal is to encourage our colleagues to feel like they belong,
to challenge them to develop and convince them that in ; because of our people,
our community and our culture, they will be able to ‘GROW’ into all that they can be.
44

Sustainability continued
Local
Initiatives
Oppy Canada
• Fundraising week raising $20k for BC
Cancer Foundation
• Produce Business Magazines award for
Pepper Up Campaign which included
emphasis on Fair Trade peppers
• Sustainable kiwi packs
Dole
• Fundación Dale (pages 40 to 41)
Brazil
• Argofruta Foundation
Gambles Canada
• Outstanding Regional Partnership Award for
Ontario from Diabetes Canada
45

2.
1. Strategic Report 3.
Ireland
• Working with Junior
Achievement Ireland and Solas
• Carbon reduction initiatives
(pages 32 to 33)
• Wholefoods Wholesale support
of Special Olympics Ireland
• First fresh produce company
to receive Cré accreditation
 Nordic
• GROW Hub pages 42 to 43
• Research programme (pages 28 to 29)
• New facility in Copenhagen reducing our
carbon footprint
Hòrtim Czech Republic/Slovakia
• Financial and material support of the LILA
Home in Otnice
The Netherlands
• OTC Organics BV introduction of sustainable
packaging for their organic grapes.
• Introduction of solar panels and LED lighting
in Haluco BV
• Total Exotics BV donate fruit to Maasstad
Hospital three times per week
 Indigo, France
• Providing fresh produce to charities through
Imagine 84
Suri Agrofresh India
• Investment in solar panel projects to power
facilities in Delhi and Mumbai
 UK
• Support of Eat Them to
Defeat Them campaign
• Adoption of renewable energy
Spain
• Lean Management Working Practices
(page 38)
• Working with CHEP to share, reuse and
recycle pallets
46

Chief Executive’s Review
Strong Performance
in 2019 with Benefit
of Full Year of Dole
 delivered
strong results in 2019
with the full year benefit
of Dole acquisition.”
47

2.
1. Strategic Report 3.
Summary
The 2019 financial year is the first full year
of the Dole acquisition which, completed
after receiving regulatory approval on 31 July
2018. The comparative 2018 period includes
the results of Dole for the five-month period
from 1 August 2018 to 29 December 2018.
Total revenue of €6,173m, adjusted EBITDA
of €202.8m and adjusted EBITA of €150.1m
was 22.4%, 52.1% and 53.1% respectively
ahead of prior year. Adjusted fully diluted
earnings per share (pre-IFRS 16 Leases)
of 14.86 cent (2018: 10.51 cent) was up
41.4% on prior year. The results benefitted
from the incremental impact of Dole for full
year 2019 compared with five months in
2018 and the improvement in the Dole Fresh
Vegetable division.
Operating profit before exceptional items
increased 14.2% to €82.3m (2018: €72.1m)
due primarily to the incremental contribution
from Dole offset by lower profits in some
subsidiaries in the Eurozone. Including
exceptional items, operating profits increased
by 12.4% to €87.5m (2018: €77.9m).
Segmental performance
The table that follows details a segmental
breakdown of the Group’s revenue
and adjusted EBITA for the year ended
31 December 2019. The European
and International operating segments
are primarily involved in the procurement,
marketing and distribution of hundreds
of lines of fresh fruit and vegetables. The
Group’s 45% share of the results of Dole are
included as a separate operating segment.
Dole is one of the world’s leading producers,
marketers and distributors of fresh fruit and
vegetables which it sells and distributes
through a wide network in North America,
Europe, Latin America, the Middle East and
Africa. Segment performance is evaluated
based on total revenue and adjusted EBITA.
Total revenue increased 22.4% to €6,173m
(2018: €5,043m) with adjusted EBITA
increasing by 53.1% to €150.1m (2018:
€98.0m) due to the incremental benefit of
the acquisition of Dole, the increase in the
results of the Fresh Vegetable division in
Dole and good trading in the International
division offset in part by the competitive
conditions in certain markets in the
Eurozone. On a like-for-like basis, excluding
acquisitions, divestments and currency
translation, revenues were 2% behind the
prior year with a small decrease in volume
partially offset by price increases.
Fresh produce markets in 2019 were
particularly competitive in certain parts of
Europe. The International division performed
strongly in the year, helped by good pricing
and margins in some key categories.
This was offset in part by the poor weather
in California in April to June, which led to
less optimal growing conditions and weaker
trading in the strawberry-growing operation.
The uncertainty surrounding international
trade led to a small reduction of exported
goods from the US to India and China
due to higher tariffs.

Chief Executive’s Review continued
Europe – Non-Eurozone
This segment includes the Group’s
businesses in the Czech Republic, Poland,
Scandinavia and the UK. Revenue decreased
by 0.6% to €1,503m (2018: €1,512m). This
was due in particular to the adverse impact
of the translation of the results of foreign
currency denominated operations into Euro,
the cessation of a small distribution business
in the second half of 2018, offset in part
by the incremental contribution of bolt-on
acquisitions. On a like-for-like basis excluding
divestments, acquisitions and disposals,
revenue decreased by circa 0.5% with a
small decrease in volumes offset in part by
marginal average price increases. Adjusted
EBITA decreased marginally by 2.4% to
€40.6m (2018: €41.6m) due to currency
translation and reduced earnings in some
joint ventures and associates.
Europe – Eurozone
This segment includes the Group’s
businesses in France, Ireland, Italy, the
Netherlands and Spain. Revenue decreased
by 4.6% to €1,638m (2018: €1,717m) with
a 20.1% decrease in adjusted EBITA to
€21.8m (2018: €27.3m). Trading conditions
were challenging, particularly in the
Netherlands in the vegetable and salad
categories where the market remains very
competitive. Trading was satisfactory in
Southern Europe but behind a particularly
strong comparative year in 2018. Excluding
the effect of acquisitions and divestments,
revenue on a like-for-like basis was circa 5%
behind prior year due to volume decreases
partially offset by a marginal price increases.
International
This division includes the Group’s
businesses in North America, South
America and India. Revenue increased
by 8.2% to €1,272m (2018: €1,175m)
with the benefit on translation of the results
to Euro of the stronger US and Canadian
Dollar which strengthened by 5.2% and
2.8% respectively. On a like-for-like basis
excluding effects of currency, revenue
increased circa 3% due to higher average
pricing with volumes similar to prior year.
Domestic US volumes have marginally
increased offset by a small drop in US
export volumes to India and China due
to increased tariffs.
Adjusted EBITA increased 18.0% to €22.3m
(2018: €18.9m) with a particularly good
performance in the second half of the year
with favourable trading conditions, pricing
and margins in many product categories.
The reported result also benefitted from
the stronger US and Canadian Dollars which
benefitted the results on translation to Euro.
This was partially offset by the effect of the
poor weather in California in April to June,
which led to weakness in the results of a
strawberry-growing operation.
Dole
This segment includes the Group’s share
of the results of Dole. As noted earlier, the
Group completed the acquisition of the initial
tranche of 45% of Dole on 31 July 2018 and
is equity accounting for its 45% share of the
results of Dole on an IFRS basis with effect
from 1 August 2018. The 2019 financial year
is therefore the first full year to reflect this
transaction with the comparative 2018 year
reflecting the results of Dole for five months
from 1 August 2018 to 29 December 2018.
Dole’s financial calendar consists of
13 periods of four weeks, and the 2019
results reflected the 52-week period ended
28 December 2019. Dole’s overall business
is seasonal, with the greater share of
adjusted EBITA earned in the first half
of the financial year. As Dole is vertically
integrated, its operations are sensitive
to a number of factors, including weather-
related phenomena and the effects on
industry volumes, prices, produce quality
and growing costs.
On an IFRS basis, Dole has recorded
revenues of $4,566m (€4,048m) for the year
ended 28 December 2019. Adjusted EBITDA
was $245.0m (€217.2m) with adjusted EBITA
of $173.8m (€154.0m). For the comparative
five-month period ended 29 December
2018, Dole recorded revenues of $1,767m
(€1,538m), adjusted EBITDA of $59.5m
(€51.8m) and adjusted EBITA of
$27.3m (€23.7m).
Trading for the year ended 28 December
2019 has been strong with a good recovery
in adjusted EBITDA. Revenues on a like-for-
like basis, excluding the disposal of the salad
business in Sweden, were 1.5% ahead of the
prior year. Adjusted EBITDA and adjusted
EBITA increased, led by a recovery in the
Fresh Vegetable division which was impacted
by two industry-wide safety notices in 2018,
not directly linked to Dole, which affected
romaine lettuce.
For the full year 2019, ’s 45%
share of revenue and adjusted EBITA was
€1,821m and €65.4m. For the five-month
period ending December 2018, Total
Produce’s 45% share of revenue and
adjusted EBITA was €692m and €10.3m
respectively with the net result reflecting that
earnings are weighted towards the first half of
the year and the impact of the industry-wide
safety notices in the second half of 2018.
Further details on the acquisition of Dole and
its financial performance and position for the
year ended 28 December 2019 are outlined
in Note 15 of the financial statements.
Acquisitions and developments
During the year, the Group made
committed investments of almost
€10m in bolt-on investments and joint
ventures in Europe. The construction
of a state-of-the-art fresh salad facility in
Scandinavia with a partner completed in
December 2019. This ongoing investment
demonstrates the Group’s commitment
to investing in facilities to deliver bespoke
services and products to meet our
customers’ needs.
During the year, the Executive Directors and
senior management in Dole have worked
closely on various projects and synergy
initiatives. Good progress has been made
to date.
49

2.
1. Strategic Report 3.
Sustainability
Local at Heart, global by nature, we have
always encouraged local initiatives on
environmental, social and governance
matters while developing group solutions
such as our compostable packaging (see
page 35). During 2019, we began the process
of co-ordinating these activities through our
Sustainability Steering and Working Group
(SSWG). Led by our Finance Director, Frank
Davis, the SSWG has calculated our carbon
footprint and made a submission to the
Carbon Disclosure Project for the first time.
A panel of colleagues from across the Group
will meet with the SSWG regularly to establish
an open forum where best practice and
innovative ideas can be shared.
Good progress has been made by our
SSWG during 2019, and continues into
2020 and beyond. As part of our framework
we have chosen three UN Sustainable
Development Goals as priority goals for 2019
and 2020. Our sustainability section on pages
20 to 45 provides an overview of our work in
this area and it is planned to provide a more
detailed update later in the year.
Brexit and international trade
The result of the UK’s exit from the European
Union (‘Brexit’) on 31 January 2020 and its
impact in terms of the exit deal including
tariffs and trade agreements remain unclear.
Brexit committees, set up in relevant areas
of the business continue to assess and
prepare for the risks and opportunities
that may arise.
With continuing uncertainty surrounding
global trade, the impact of any tariffs on
international trade will continue to be
monitored by the Group.
COVID-19 outbreak
The Group is monitoring COVID-19. While
it is too early to form a definitive view, with
a broad spread of resources and operations,
the Group does not expect any disruption
to be material.
Summary
The results for 2019 were strong and
reflect the incremental impact of the full
year of Dole and the recovery of the Fresh
Vegetable division in Dole. During the
year, the Executive Directors and senior
management in Dole have worked closely
on various projects and synergy initiatives.
We will continue to work closely, bringing
together two industry leaders and creating
a combined Group with increased scale
and geographic and product diversification.
R P Byrne
Chief Executive
50

Financial Review
Strong Growth
in Earnings
and Cashflow
Generation
The Group is pleased to report
strong growth in earnings and
cashflows in 2019.”
Summary of results
Including the Group’s share of the results of
Dole for the year ended 31 December 2019,
total revenue of €6,173m, adjusted EBITDA
of €202.8m and adjusted EBITA of €150.1m
were 22.4%, 52.1% and 53.1% respectively
ahead of the prior year. Adjusted fully diluted
earnings per share pre the effect of the new
lease accounting standard (IFRS 16 Leases)
was 14.86 cent, an increase of 41.4%. The
increase is due to the incremental impact
of the acquisition of Dole for the full year
in 2019 when compared with 2018.
The Group is cash-generative with
adjusted operating cash flows of €59.4m
(2018: €52.9m) and free cashflow increasing
to €35.0m (2018: €31.2m).
51

2.
1. Strategic Report 3.
Key performance indicators1
Earnings metrics
Acquisition related intangible asset amortisation charges (including the Group’s share within joint ventures
and associates) (12,997) (12,965)
Fair value movements on contingent consideration 204 4,043
Acquisition related costs within subsidiaries (177) (105)
Share of joint ventures and associates’ net financial expense (40,817) (13,784)
Share of joint ventures and associates’ income tax (before tax on exceptional items) (14,059) (3,153)
Operating profit before exceptional items 82,268 72,058
Net financial expense before exceptional items (10,967) (7,365)
Profit before tax before exceptional items 71,301 64,693
Exceptional items 5,232 5,125
Profit before tax 76,533 69,818
Income tax expense (10,329) (16,014)
Profit after tax 66,204 53,804
Attributable to:
Equity holders of the parent 53,302 35,793
Non-controlling interests 12,902 18,011
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases)1
14.86 10.51
Adjusted fully diluted earnings per share1
14.12 10.51
Basic earnings per share 13.72 9.37
Fully diluted earnings per share 13.69 9.34
1 Key performance indicators are defined on pages 181 to 185.
2 Depreciation charge on right of use assets includes the Group’s share of the depreciation charge of joint ventures and associates.
3 Depreciation charge includes the depreciation charge of the Group’s property, plant and equipment, the Group’s share of the
depreciation charge of joint ventures and associates, and amortisation charges of computer software (which are classified as
intangible assets in accordance with IFRS).
52

Financial Review continued
IFRS 16 Leases
The Group has adopted IFRS 16 Leases with effect from 1 January 2019. IFRS 16 introduces a single lessee accounting model with the
majority of all lease agreements resulting in the recognition of a right of use asset and a lease liability on the balance sheet. The prior period
information is not restated and the effect of applying the standard to leases that were previously classified as operating leases is set out in
the table below:
Impact on the Balance Sheet ROU Asset Lease Liability
1 January 2019, on transition €115.3m (€121.1m)
31 December 2019 €111.2m (€118.6m)
Impact on the Income Statement for the year ended 31 December 2019 Subsidiaries
Share of JVs &
Associates Total
Adjusted EBITA (operating leases charges less ROU asset depreciation) +€1.2m +€5.6m +€6.8m
Interest charge on lease liability (€3.0m) (€7.8m) (€10.8m)
Impact on profit before tax (€1.8m) (€2.2m) (€4.0m)
Impact on fully diluted adjusted earnings per share (€0.74 cent)
Further information on IFRS 16 is set out on pages 94 to 96 of the accompanying financial statement.
Revenue, adjusted EBITA and operating profit
An analysis of the factors influencing the changes in revenue, adjusted EBITA and operating profit is provided in the Chief Executive’s Review
on pages 46 to 49.
Translation of foreign currencies
The reporting currency of the Group is the Euro. Group results are impacted by fluctuations in exchange rates year-on-year versus the Euro.
The rates used in the translation of the results and balance sheet into Euro are set out in Note 38 of the accompanying financial statements.
In 2019, there were movements in some of the major currencies in the Group against the Euro, the Group’s reporting currency. In particular,
the average US Dollar, Canadian Dollar and Pound Sterling strengthened by 5.2%, 2.8% and 1.2% respectively. This was partly offset by
the weakening of the average Swedish Krona and Brazilian Real by 3.1% and 1.9% respectively. The effect of these currency movements
(excluding Dole) had a positive impact on retranslation of the results of foreign currency denominated operations into Euro with a positive
impact of €51m (0.8%) on revenue and €0.8m (0.5%) on adjusted EBITA.
At 31 December 2019, the closing exchange rates for Canadian Dollar, Pound Sterling, US Dollar, and Czech Koruna rates had strengthened
by 6.4%, 5.3%, 2% and 1.2% respectively against the Euro when compared with the exchange rates that prevailed at 31 December 2018.
This was partly offset by the weakening of the Swedish Krona and Brazilian Real by 2.5% and 1.6% respectively. The various movements
in closing exchange rates led to a net gain on the retranslation of the opening net assets to the closing rate. This was offset by a net loss
on the foreign currency movements on foreign currency denominated borrowings which are used to hedge net assets of foreign currency
denominated subsidiaries, joint ventures and associates. The net translation adjustment gain was recorded in a separate translation reserve
within equity.
Share of profits of joint ventures and associates
The Group’s share of the after-tax profits of joint ventures and associates increased to €37.7m (2018: €4.5m) with the increase due primarily
to the incremental impact of the acquisition of a 45% interest in Dole.
The Group’s share of after-tax profits of Dole for the year amounted to €26.4m (€19.3m before exceptional items). This compares with the
after tax loss of €6.4m (€2.7m before exceptional items) recognised in the five-month period ended 29 December 2018. Further details of the
performance of Dole and its financial position at the end of the year are outlined in Notes 4 and 15 of the accompanying financial statements.
Excluding the contribution from Dole, the share of after-tax profits of joint ventures and associates increased to €11.3m (2018: €10.8m).
Dividends declared from joint ventures and associates in the year amounted to €11.1m (2018: €11.2m) with €10.7m (2018: €10.9m) received
in cash reflecting the Group’s continued focus on cash return from these investments.

2.
1. Strategic Report 3.
Amortisation of acquisition related intangible assets
Acquisition related intangible asset amortisation within subsidiaries amounted to €10.3m (2018: €10.3m) in the year, with additional
amortisation charges due to recent acquisitions offset by other assets becoming fully amortised. The share of intangible asset amortisation
within joint ventures and associates was €2.7m (2018: €2.7m).
Exceptional items
Exceptional items in the year amounted to a net gain after tax of €5.2m (2018: €3.7m gain). The net gain in 2019 primarily relates to the Group’s
share of €7.0m of net gains within Dole. A full analysis of exceptional items for both 2019 and 2018 are set out in Note 7 of the accompanying
financial statements and have been excluded from the calculation of the adjusted numbers.
Net financial expense
Net financial expense (before exceptional items) in the year increased to €11.0m (2018: €7.4m). The first-time application of IFRS 16 Leases
from 1 January 2019 accounted for €3.0m of this increase along with the effect of higher average net debt in the year due to the acquisition
of Dole. This was partly offset by the lower cost of funding. The Group’s share of the net interest expense of joint ventures and associates
in the year was €40.8m (2018: €13.8m) due to the incremental impact of Dole.
Profit before tax and adjusted profit before tax
Excluding acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and share
of joint venture interest and tax which is netted in profit before tax in the statutory income statement, the adjusted profit before tax increased
by 27.9% in the year to €98.3m (2018: €76.9m) due primarily to the increased contribution from Dole partly offset by a reduction in profits in
some entities in the Eurozone and higher interest charges as referred to above. Statutory profit before tax after these items increased 9.6%
to €76.5m (2018: €69.8m).
Taxation
The adjusted tax charge for the year, including the Group’s share of joint ventures and associates tax and before non-trading items, as
set out on page 182 of the accompanying financial information, was €27.5m (2018: €18.6m) representing an underlying tax rate of 28.0%
(2018: 24.2%) when applied to the Group’s adjusted profit before tax. The increase is primarily due to the inclusion of the higher underlying
tax rate in Dole.
Non-controlling interests share of profit after tax
The non-controlling interests’ share of after-tax profits in the year was €12.9m (2018: €18.0m). Included in this was the non-controlling interests’
share of the net charge on exceptional items, amortisation charges and acquisition related costs (net of tax) of €2.9m (2018: €Nil). Excluding
these non-trading items, the non-controlling interests’ share of adjusted after tax profits was decreased by €2.2m to €15.8m (2018: €18.0m)
with the decrease primarily due to the non-controlling interests share of lower earnings in certain non-wholly owned companies in Europe.
Earnings per share
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases) was 14.86 cent, an increase of 41.4% due to the benefit of the Dole acquisition
offset in part by higher interest charges to fund the Dole transaction and challenging conditions in some markets in the Eurozone. Including the
effect of IFRS 16, adjusted fully diluted earnings per share increased by 34.3% to 14.12 cent per share (2018: 10.51 cent).
Management believes that adjusted fully diluted earnings per share, which excludes acquisition related intangible asset amortisation charges
and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses
on foreign currency denominated intercompany borrowings, exceptional items and the related tax on these items, provides a fairer reflection
of the underlying trading performance of the Group.
Basic earnings per share and diluted earnings per share after these non-trading items amounted to 13.72 cent per share (2018: 9.37 cent)
and 13.69 cent per share (2018: 9.34 cent) respectively.
Note 10 of the accompanying financial information provides details of the calculation of the respective earnings per share amounts.
Dividend
The Board is proposing a 2.5% increase in the final dividend to 2.5770 (2018: 2.5140) cent per share subject to the approval of shareholders
at the forthcoming AGM. If approved, this dividend will be paid on 20 May 2020 to shareholders on the register at 14 April 2020, subject to
dividend withholding tax. The total dividend for 2019 will amount to 3.4899 (2018: 3.4269) cent per share and represents an increase of 1.8%
on 2018. The total dividend represents a pay-out of almost 25% of the reported adjusted fully diluted earnings per share. If the 2019 final
dividend is approved, the compounded annual growth rate in dividends since 2015 will be 6.0%.
54

Summary balance sheet
The summary balance sheet at 31 December 2019 is presented below. Net assets have increased by 6.6% in the year to €549.9m (2018: €515.6m)
and shareholders’ equity increased by 4.2% to €451.1m (2018: €433.1m) due in large part to the increase in carrying amount of Dole.

Tangible assets and right of use assets 300.4 183.2
Goodwill and intangible assets 268.5 267.0
Investment – Dole joint venture 264.9 245.9
Investments (mainly other joint ventures and associates) 109.1 115.2
Working capital 7.6 5.2
Non-current receivables and payables (net) 21.3 21.3
Contingent and deferred consideration and other provisions (16.8) (27.4)
Put option liability (26.6) (35.0)
Post-employment benefit obligations (net of deferred tax) (15.2) (14.1)
Taxation (excluding deferred tax on employee benefit liabilities) (22.0) (26.0)
Lease liability (120.1) –
Net debt (221.2) (219.7)
Net assets 549.9 515.6
Shareholders’ equity 451.1 433.1
Non-controlling interests 98.8 82.5
Shareholders’ equity and non-controlling interests 549.9 515.6
Investment in Dole
As referred to above, the Group’s investment in Dole and its financial contribution is treated as a joint venture and accounted for under the
equity method in accordance with IFRS following completion of the acquisition of a 45% interest on 31 July 2018. Below is a reconciliation
of the Group’s 45% interest in Dole for the year.
Carrying value of the investment in Dole at the start of the year 245.9 –
Arising on acquisition – 249.9
Retained earnings adjustment on transition to IFRS 16 (3.3) –
Group share of profit/(loss) for period attributable to equity shareholders 26.4 (6.4)
Group share of other comprehensive income and expense for period attributable to equity shareholders (9.2) (3.3)
Foreign exchange movement 5.1 5.7
Total carrying amount of 45% interest in Dole at year end 264.9 245.9
Further detailed financial information on Dole is outlined in Note 15 in the accompanying financial statements.
Shareholders’ equity
Shareholders’ equity increased by €18m to €451.1m (2018: €433.1m). On adoption of IFRS 16 Leases, the net impact to Shareholders’
equity at 1 January 2019 was a reduction of €6.8m. The increase was due to profit after tax of €53.3m attributable to equity shareholders
and a currency translation gain of €3.9m on the retranslation of the net assets of foreign currency denominated operations into Euro. This
was offset by remeasurement losses of €5.7m (net of deferred tax) on post-employment benefit schemes, effective portions of cashflow
hedges movements (net of deferred tax) of €4.6m, a €10.3m movement in the put option reserve and the payment of dividends of €13.3m
to equity shareholders of the Company. The movement in shareholders’ equity is summarised in the movement note that follows:
Financial Review continued
55

2.
1. Strategic Report 3.

Shareholders’ equity as at 1 January as presented in balance sheet 433.1 259.8
Adjust for impact of transition to IFRS 16 net of tax1
(6.7) –
Adjustment for non-controlling interests subject to put options transferred for presentation purposes (34.7) (26.8)
Balance at 1 January 391.7 233.0
Profit for the year attributable to equity shareholders 53.3 35.8
Other comprehensive income attributable to equity shareholders
Remeasurement gains on post-employment defined benefit pension schemes (net of deferred tax) (5.7) 4.5
Net revaluation gains on property, plant and equipment (net of deferred tax) 2.5 0.3
Net gain/(loss) on the translation of net assets of foreign currency denominated operations 3.9 (8.4)
Net changes in fair value of cost of hedging and effective portion of cashflow hedges (4.6) 0.9
Total other comprehensive income directly attributable to equity shareholders (3.9) (2.7)
Total comprehensive income for the year, net of tax 49.4 33.1
New shares issued 0.1 141.4
Share-based payment expense 0.1 0.6
Dividends paid to equity shareholders (13.3) (13.1)
Recognition of put options over non-controlling interest shares – (0.9)
Put option extinguished 11.7 –
Remeasurement of put option liability (3.3) 4.7
Other (1.3) (0.4)
Total transactions with equity holders of the parent (6.0) 132.3
As at 31 December 435.1 398.4
Transfer of non-controlling interests subject to put options for presentation purposes 16.0 34.7
Balance as at 31 December as presented in the balance sheet 451.1 433.1
1 The Group has adopted IFRS 16 Leases with effect from 1 January 2019. IFRS 16 introduces a single lessee accounting model with the
majority of all lease agreements resulting in the recognition of a right of use asset and a lease liability on the balance sheet. On transition
to IFRS 16, the Group recognised additional right of use assets, lease liabilities and restoration provisions with the difference being
recognised in reserves. Further information of the adoption of IFRS 16 is set on pages 94 to 96 of the accompanying financial statements.
Put option liability
As set out in Note 28 of the accompanying financial statements, the Group has a number of contractual put options and forward
commitments in place in relation to non-controlling interest (‘NCI’) shares in subsidiaries whereby the NCI shareholder can require the Group
or the Group has agreed to acquire (‘forward commitment’) the shares in these subsidiaries at various future dates. The value of the put
option recognised represents management’s best estimate of the fair value of the amounts that may be payable discounted to net present
value. This liability has been recognised in a put option reserve attributable to the equity holders of the parent.

Balance at beginning of year 35.0 39.0
Arising on acquisition (Note 1) – 0.9
Extinguished during the year (11.7) –
Fair value movement on put option recognised directly within equity 3.3 (4.7)
Foreign exchange movements – (0.2)
Balance at end of year 26.6 35.0
In 2019, the fair value of such put options recognised relating to current year acquisitions was nil (2018: €0.9m). The fair value movement
on such put options in the year of €3.3m (2018: €4.7m loss) represented a fair value increase in the put option liability and was recognised
as a debit to shareholders equity.
During the year, and with the consent of the Group, a non-controlling shareholder sold their shares to existing management. As a result,
the put option between the Group and this non-controlling shareholder was extinguished.
56

Financial Review continued
As outlined in the Group accounting policies on page 94, where the non-controlling shareholder retains a present ownership interest in
shares subject to a put option or a forward commitment, the Group applies the partial recognition of non-controlling interest method for put
options and forward commitments. The non-controlling interest is therefore recognised in the traditional manner but is transferred against
the put liability reserve for presentation purposes in the balance sheet. The non-controlling interest subject to the put option is therefore
recognised in the traditional manner but is transferred against the put liability reserve for presentation purposes in the balance sheet.
The transfer at 31 December 2019 was €16.0m (2018: €34.7m).
Employee Benefit Obligations
The following is a summary of the Group’s employee benefit obligations.

Employee defined benefit pension schemes obligations (before deferred tax) (10.8) (10.9)
Other post-employment obligations (5.9) (5.0)
Employee benefit obligations before deferred tax (16.7) (15.9)
Less related deferred tax asset 1.5 1.8
Net employee benefit obligations after deferred tax (15.2) (14.1)
Employee Defined Benefit Pension Schemes
The Group has a number of defined benefit pension schemes in Ireland, the UK, Continental Europe and North America. The Group’s
balance sheet at 31 December 2019 reflects net pension obligation of €10.8m (2018: €10.9m) in respect of schemes in deficit, resulting
in a net deficit of €9.3m (2018: €9.1m) after deferred tax.
The pension deficit of €10.8m at 31 December 2019 was a marginal reduction on the deficit of €10.9m at 31 December 2018. There was
an 11% average return on pension scheme assets in the year and a reduction in both the Irish and UK inflation assumptions which decreases
the net present value of the scheme’s obligations. This was offset by the impact of a reduction in the discount rates for the Irish and UK
schemes, which results in an increase in the net present value of the schemes’ obligations. The discount rate in Ireland and the Eurozone
decreased to 1.4% (2018: 2.1%) and in the UK decreased to 2.0% (2018: 2.9% – 3.0%). The inflation assumption for Ireland and the Eurozone
decreased to 1.4% (2018: 1.60%) and in the UK decreased to 2.7% (2018: 3.2%). Further details on the Group’s employee defined benefit
obligations are set out in Note 32 of the accompanying financial statements.
Funds flow
Net debt (which excludes leases liabilities) at 31 December 2019 of €221.2m (2018: €219.7) marginally increased in the year. Average net
debt for the year was €284.0m compared with €217.1m in 2018 with the increase due to the incremental impact of financing the acquisition
of the initial 45% interest in Dole on 31 July 2018. In addition, the Group has non-recourse trade receivables financing of €46.4m at
31 December 2019 (2018: €30.0m).
The Group generated €52.8m (2018: €68.1m) in adjusted operating cash flows before working capital outflows with the decrease due to
lower earnings in subsidiaries and higher finance costs due to funding of the Dole acquisition. The working capital inflow in 2019 was €6.5m
(2018: outflow of €15.2m) assisted by the incremental increase in non-recourse trade receivables financing. After working capital movements,
adjusted operating cash flows were €59.4m (2018: €52.9m). Cash outflows on routine capital expenditure, net of disposals, were €19.0m
(2018: €22.1m). Dividends received from joint ventures and associates in the year were €10.7m (2018: €10.9m), representing the Group’s
continued focus on cash returns from these investments. Dividends paid to non-controlling interests increased to €16.1m (2018: €10.5m),
which reflects dividends on increased prior year profits and the non-controlling interests share of prior year exceptional items.
Free cashflow generated by the Group increased to €35.0m (2018: €31.2m) with the benefit of the higher working capital inflows offset in part
by higher dividends to non-controlling interests. Free cashflow is the measure of the funds available after outflows relating to routine capital
expenditure, dividends to non-controlling interests but before acquisition related expenditure, development capital expenditure and the
payment of dividends to equity shareholders.
Cash outflows on acquisitions and investments amounted to €14.5m (2018: €259.6m) with the payments in 2019 due to investments in
bolt-on acquisitions and the final payment of the Dole transaction costs. Contingent and deferred consideration payments relating to prior
period acquisitions were €11.1m (2018: €7.0m). Payments for non-routine property and plant additions amounted to €4.5m (2018: €7.4m).
The Group distributed €13.3m (2018: €13.1m) in dividends to equity shareholders in the year representing payment of final 2018 dividend and
the 2019 interim dividend. Proceeds from share issue were €0.1m in the year (2018: €141.4m) of which €141.0m in 2018 related to the
proceeds of the share placing in February 2018 to fund the 45% investment in Dole. At 31 December 2019, there was a €2.7m loss (2018:
€1.7m gain) on the translation of foreign currency denominated net debt to Euro due primarily due to the stronger US Dollar and Sterling
partly offset by a weaker Swedish Krona.
1. Strategic Report 3.

Adjusted EBITDA 202.8 133.3
Deduct adjusted EBITDA of joint ventures and associates (121.1) (44.5)
Net financial expense and tax paid (26.3) (20.5)
Other (2.6) (0.2)
Adjusted operating cash flows before working capital movements 52.8 68.1
Working capital movements 6.6 (15.2)
Adjusted operating cash flows1
59.4 52.9
Routine capital expenditure net of routine disposal proceeds (19.0) (22.1)
Dividends received from joint ventures and associates 10.7 10.9
Dividends paid to non-controlling interests (16.1) (10.5)
Free cash flow1
35.0 31.2
Cashflows from exceptional items 5.8 3.0
Acquisition payments, net1
(14.5) (259.6)
Net cash/(debt) assumed on acquisition of subsidiaries 2.1 3.8
Contingent and deferred consideration payments (11.1) (7.0)
Non-routine capital expenditure/property additions (4.5) (7.4)
Dividends paid to equity shareholders (13.3) (13.1)
Proceeds from issue of share capital – share placing 0.1 141.4
Other – (0.6)
Total net debt movement in year (0.4) (108.3)
Net debt at beginning of year (219.7) (113.1)
Finance leases reclassified from net debt on adoption of IFRS 16 1.6 –
Foreign currency translation (2.7) 1.7
Net debt1
at end of year (221.2) (219.7)
1 Key metrics including net debt are defined on pages 181 to 185 of the accompanying financial statements.
Net debt and group financing
As outlined above, net debt (which excludes lease liabilities) marginally increased in the year from €219.7m to €221.2m. At 31 December
2019, the Group had available cash balances of €115.5m and interest-bearing borrowings (including overdrafts) of €336.7m. Net debt to
adjusted EBITDA was 1.1 times and interest was covered 13.7 times by adjusted EBITA, both comfortably within existing bank covenants.
Average net debt for 2019 was €284.0m (2018: €217.1m). In addition, the Group has non-recourse trade receivables financing at
31 December 2019 of €46.4m (2018: €30.0m).
It is the policy of the Group to have adequate facilities available, providing the Group with the flexibility to take advantage of opportunities
to develop the business. The Group’s financial position remains strong. At 31 December 2019, the Group has approval of committed and
uncommitted term borrowings of up to €623m (2018: €632m) in addition to approved overdrafts of €109m (2018: €104m).
Sustainability
During the year, we have made significant progress in our efforts to co-ordinate and formalise our work on sustainability, including the
development of our Sustainability Steering and Working Group, of which I am a member. During 2019, we calculated our Scope 1 and
Scope 2 greenhouse gas emissions for the first time and made our first submission to the Carbon Disclosure Project. Already management
are taking steps to use the data to target changes – please refer to the  Ireland case study on page 32. In January 2020, we
began the process again and are gathering the data for our 2019 carbon footprint and have expanded the scope to include our water usage.
Using the SASB materiality map, we have begun the process of developing our materiality matrix which will focus our work in 2020 and
beyond. We look forward to engaging with our stakeholders to develop this further and focus on continuous improvement. Our work to
date is elaborated in more detail on pages 20 to 45.
Summary
Overall, the Group has reported strong results in 2019 with the incremental benefit from the Dole transaction which completed on 31 July
2018. Revenue grew 22.4% to €6.2 billion with a 52.1% increase in adjusted EBITDA to €202.8m. Adjusted fully diluted earnings per share
increased 34.3% to 14.12 and pre-IFRS 16 Leases grew 41.4% to 14.86 cent. The Group continues to be cash-generative with growth in free
cashflow in 2019 to €35.0m (2018: €31.4m).
F J Davis
Finance Director
58

Board of Directors and Secretary
Rose Hynes (62)
Non-Executive, BCL, AITI
Rose Hynes was appointed to the Board on 28 November 2006.
She is the nominated Senior Independent Non-Executive Director.
Rose, a lawyer, is Chairman of Origin Enterprises plc and Chairman
of Shannon Group plc. She is also Director of a number of other
companies. Rose previously held senior executive positions with
GPA Group plc.
Frank Davis (60)
Finance Director, LLB, MA, FCCA, BL, FCIArb
Frank Davis was appointed to the position of Finance Director and
to the Board of  on 1 August 2009 having previously
held the roles of Company Secretary/CFO from 30 December 2006.
Frank joined Fyffes in 1983 and held a number of senior positions
before becoming Finance Director of the General Produce division in
2002. An accountant by profession, he is also a qualified barrister-at-
law (Honorable Society of King’s Inn) and a Fellow of the Chartered
Institute of Arbitrators.
Rory Byrne (59)
Chief Executive, B Comm, FCA
Rory Byrne was appointed as Chief Executive of 
on 30 December 2006. Rory has extensive experience in the fresh
produce industry, having joined Fyffes in 1988, where he held a
number of senior positions including Finance Director of the Group’s
UK business and Managing Director of its Spanish operations before
becoming Managing Director of the General Produce division from
2002 and appointed to the position of Executive Director in 2006.
Carl McCann (66) Chair
Chairman, BBS, MA, FCA
Carl McCann was appointed as Chairman of  on
30 December 2006. Prior to this, he joined Fyffes in 1980 and
held a number of senior positions including that of Vice Chairman
before he was appointed Chairman in 2003. He is also Chairman
of Balmoral International Land Holdings plc and is a director of
a number of other companies.
Seamus Taaffe (69) Chair
Non-Executive, B Comm, FCA
Seamus Taaffe was appointed to the Board on 12 October 2012.
Seamus is Chairman of the Audit Committee and a member of the
Nomination Committee. Previously, Seamus was a senior partner in
KPMG where he was responsible for auditing and advising a wide range
of listed and mid-market companies until he retired in 2009. Seamus
was also a Non-Executive Director of Independent News & Media plc
where he was Chairman of the Audit and Risk Committee, and is
director of a number of private Irish companies and organisations.
Kevin Toland (54) Chair
Non-Executive, FCMA
Kevin Toland was appointed to the Board as a Non-Executive
Director on 1 July 2015. Kevin is Chairman of the Compensation
Committee. He is currently CEO of Aryzta plc and was previously
the CEO of daa plc which operates the Dublin and Cork airports,
Aer Rianta international and daa international, the international
airport group. Kevin is also an IBEC board member and previously
held senior executive positions with a number of international
companies.
59

1. 3.
2. Governance
Helen Nolan (62)
Non-Executive, B Comm, FCA
Helen was appointed to the Board as a Non-Executive Director on
1 July 2019 and is a member of the Audit Committee. Helen has
extensive experience in senior leadership roles across a variety of
industries including her former role as a senior executive and Group
Secretary at Bank of Ireland. She is a non-executive director of Our
Lady’s Hospice and chaired the Audit Committee of the Department
of Agriculture for a number of years.
Jacinta Devine (47)
Company Secretary, FCA
Jacinta Devine was appointed to the position of Company Secretary
of  on 1 June 2017 having previously held the role of
Assistant Company Secretary. Jacinta is also the Divisional Finance
Director of Ireland and the UK. Prior to the formation of Total
Produce, Jacinta joined Fyffes in 1996 and during this time
held a number of senior accounting and financial positions.
Michael Meghen (65)
Non-Executive, BBS LLB
Michael Meghen was appointed to the Board as an Non-Executive
Director on 1 July 2018. Michael is a member of the Compensation
Committee and a member of the Nomination Committee. He is a
solicitor by profession and was a senior corporate partner in Arthur
Cox, Ireland’s largest legal firm, until his retirement as a partner more
than five years ago. He has significant knowledge and experience in
Mergers and Acquisitions and in cross-border transactions.
Imelda Hurley (48)
Non-Executive, FCA, BBS
Imelda Hurley was appointed to the Board as a Non-Executive Director
on 2 January 2019 and is a member of the Audit Committee. Imelda
has over twenty years’ experience in leadership roles across a variety
of industries including significant international and agri industry
experience. She is currently CEO of Coillte and was previously Director/
Chief Financial Officer of Origin Enterprises plc. She has also held
senior executive positions with PCH International and Greencore
Group plc and been a non-executive director of Valeo Foods and Bord
Gais Eireann.
Committee Membership: Audit Committee Nomination Committee Compensation Committee
60

Directors’ Report
The Directors present their report to the shareholders, together with the audited financial statements of the Group and Company, for the year
ended 31 December 2019.
Principal activities and business review
 plc is one of the largest fresh produce distributors in the world with operations in 30 countries. A detailed business review is
included in the Chief Executive’s Review on pages 46 to 49 and in the Financial Review on pages 50 to 57, including an analysis of the key
performance indicators used to measure performance. These are defined as revenue, margin, volume, average price and, adjusted EBITDA
and adjusted EBITA. Pages 14 to 19 of this report details the key business and financial risks faced by the Group.
Results for the year
Details of the profit for the year are set out in the income statement for the year ended 31 December 2019 on page 87.
Dividend
An interim dividend of 0.9129 cent (2018: 0.9129 cent) per share was paid on 11 October 2019. The Directors have proposed, subject to
shareholder approval at the Annual General Meeting (‘AGM’), the payment of a final dividend for 2019 of 2.5770 cent (2018: 2.5140 cent) per
share. If approved, the dividend will be paid on 20 May 2020 to shareholders on the register at 14 April 2019, subject to dividend withholding
tax. The total dividend of 3.4899 cent per share for 2019 represents an increase of 1.8% on the total 2018 dividend of 3.4269 cent per share.
Future developments
A review of future developments of the business is included in the Chairman’s Statement on page 6.
Directors and company secretary
The names of the persons who were Directors during the year are set out below. H F Nolan was appointed to the Board as an independent
Non-Executive Director on 1 July 2019. J F Gernon and J J Kennedy will retire from the Board on 31 March 2020. There were no other
changes to the Directors and Company Secretary since the 2019 AGM.
Executive:
In accordance with the Constitution of the Company, H F Nolan will retire at the 2020 AGM and, being eligible, will offer herself for election.
In accordance with the Constitution of the Company, Carl McCann, Frank Davis and Seamus Taaffe will retire from the Board by rotation and,
being eligible, offer themselves for re-election at the 2020 AGM.
Directors interests
Details of the Directors share interests and interests in share options of the Company and Group companies are set out in the Compensation
Committee Report on pages 73 to 78.
Post balance sheet events
There have been no other material events subsequent to 31 December 2019 which would require disclosure or require adjustment in the
financial statements.
Share capital
The issued share capital of  plc at 31 December 2019 consisted of 388,524,962 ordinary shares (excluding 22,000,000
treasury shares).
Each share has a nominal value of 1 cent. All shares, other than treasury shares, have equal voting and dividend rights.
61

1. 3.
2. Governance
Substantial holdings
The Directors have been notified of the following significant interests in the issued ordinary share capital of the Company as at 4 March 2020:
Number of
ordinary shares %
Balkan Investment Company and related parties (including Arnsberg Investment Company) 49,016,821 12.62
Franklin Templeton Institutional LLC 46,726,552 12.03
GMT Capital Corp 23,230,739 5.98
FMR LLC 19,598,064 5.04
La Financiere De L’Echiquier SA 15,537,156 4.00
BNP Paribas Investment Partners SA 14,612,708 3.76
BDL Capital Management, SAS 12,967,795 3.34
Impax Asset Management Limited 11,869,074 3.05
Except as disclosed above, the Group has not received any notification from any person confirming that such person is interested, directly or
indirectly, in 3% or more of the issued share capital (excluding treasury shares) of the Company, nor is it aware of any person who directly or
indirectly, jointly or severally, exercises or could exercise control over the Group.
Directors’ interests in contracts
None of the Directors had a beneficial interest in any material contract to which the Company or any of its subsidiaries was a party during the
year. One of the Directors had an indirect interest in the Group’s investment in a joint venture and this is noted in Note 34 of the accompanying
financial statements.
Treasury shares
At 31 December 2019, the total number of treasury shares amounted to 22,000,000 ordinary 1 cent shares at a cost of €8,580,000
(2018: 22,000,000 1 cent shares at a cost of €8,580,000). These shares represent 5.36% (2018: 5.36%) of the ordinary shares in issue
at 31 December 2019. In respect of these treasury shares all rights (including voting and dividend rights) are suspended until those shares
are reissued and therefore are not included in the earnings per share calculations.
Principal risks and uncertainties
The Board has overall responsibility for the Group’s systems of risk management and internal control. Details of the structures in place are
set out on pages 14 to 19. These have been designed to manage rather than eliminate risk of failure to achieve business objectives and
reasonable, but not absolute assurance, against material misstatement or loss.
Under Irish company law, the Group and the Company are required to give a description of the principal risks and uncertainties which they
face. These principal risks are set out within the Risk and Risk Management section on pages 15 to 18.
Accounting records
The Directors believe that they have complied with the requirements of Sections 281-285 of the Companies Act, 2014, with regard to adequate
accounting records by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function.
The accounting records of the Company are maintained at 29 North Anne Street, Dublin 7, Ireland.
Relevant audit information
The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are each aware, there is no relevant
audit information of which the Group’s auditor is unaware; and each Director has taken all the steps that they ought to have taken as a
Director to make themselves aware of any relevant audit information and to establish that the Group’s auditor is aware of that information.
Audit committee
The Group has established an Audit Committee. The responsibilities of the Audit Committee are outlined on page 70.
Directors compliance statement
It is the policy of the Company to comply with its relevant obligations (as defined in the Companies Act 2014). The Directors, in accordance
with Section 225(2) of the Companies Act 2014, acknowledge that they are responsible for securing the Company’s compliance with certain
obligations specified in that section arising from the Companies Act 2014 and Tax laws (‘relevant obligations’). In discharging their responsibilities
under Section 225, the Directors relied on the advice of third parties whom the Directors believe have the requisite knowledge and experience
to advise the Company on compliance with its relevant obligations. The Directors confirm that:
• a compliance policy statement has been drawn up setting out the Company’s policies with regard to such compliance;
• appropriate arrangements and structures that, in their opinion, are designed to secure material compliance with the Company’s relevant
obligations, have been put in place; and
• a review has been conducted, during the financial year, of the arrangements and structures that have been put in place to secure the
Company’s compliance with its relevant obligations.
62

Directors’ Report continued
EU non-financial reporting
The Company, under the EU Non-Financial Reporting Directive, is required to identify and report on material non-financial areas of the
business. The table below indicates where further information can be found on each area.
Reporting Requirements Our Policies & Practices Page Reference
Environmental Matters Vision 20/20 Page 30
Social and Employee Matters Diversity Policy
People Development Strategy Page 36
Respect for Human Rights Local HR Policies Page 39
Anti-bribery and Corruption Anti-bribery and corruption practices Page 39
Political donations
During the current and prior year, the Group and Company did not make any donations disclosable in accordance with the Electoral Act, 1997.
Auditor
The auditor, KPMG, Chartered Accountants, will continue in office in accordance with Section 383(2) of the Companies Act, 2014.
Subsidiaries, joint ventures and associates
Information on the Group’s principal subsidiaries, joint ventures and associates is included in Note 40 of the accompanying financial statements.
Annual General Meeting
The 2020 AGM will be held at 10.30 am on 15 May 2020 in the Marker Hotel, Grand Canal Square, Docklands, Dublin 2. Full details of the
2020 AGM will be contained in the Notice of the AGM which will be circulated to shareholders in April 2020.
On behalf of the Board
C P McCann F J Davis
Chairman Finance Director
1. 3.
2. Governance
Corporate Governance Report
Chairman’s Introduction to the Corporate Governance Report
Dear shareholder,
The Board of  plc is firmly committed to business integrity, high ethical values and professionalism in all of its activities and
operations. Our strategic priorities, as outlined on page 8, are all underpinned by a strong company culture of conducting business in an
honest and ethical manner. The Board recognises the importance of maintaining the highest standards of corporate governance and that it is
accountable to its shareholders in this regard. The Board has adopted the Quoted Companies Alliance (QCA) Corporate Governance Code,
issued in April 2018. The Code is constructed around ten broad principles as explained in the Corporate Governance Statement that follows.
Recent developments
The Board understands the importance of keeping its succession plans under continuous review. The Board also believes that it is important
to have individual Directors who have a very clear understanding of the Group’s business and strategy. The Board values the benefits diversity
can bring and the Nomination Committee considers the benefits of all aspects of diversity to complement the range and balance of skills,
knowledge and experience on the Board. During the year, the Board appointed two new independent Non-Executive Directors, Imelda Hurley
(appointed on 2 January 2019), a finance professional, who has significant international and agri-industry experience and Helen Nolan
(appointed on 1 July 2019), a highly experienced financial executive with the Bank of Ireland where she was also Group Secretary. The skills
and experience brought by these new independent Non-Executive Directors complement and enhance the existing Board and are very
relevant as the Group continues to grow.
Frank Gernon and Jerome Kennedy have advised the Board that they will retire as Directors on 31 March 2020. Following these changes
the Board will be made up of six independent Non-Executive Directors and three Executive Directors. The Board is pleased to note that,
at this point, it will have realised the Irish Governments Balance for Better Business 2023 target for ISEQ 20 companies of 33% female
representation on the Board.
In addition a review of Board Committee membership was
undertaken during the year and the changes set out below were
adopted. Where relevant, existing Non-Executive Directors worked
alongside new committee members to ensure an effective handover
and the continuation of committee effectiveness.
• E I Hurley joined the Audit Committee on 4 March 2019.
• R B Hynes and J J Kennedy retired from the Audit Committee
on 30 June 2019.
• J J Kennedy retired from the Nomination Committee on 30 June
2019 and M J Meghen was appointed to the Committee on
1 July 2019.
• R B Hynes and J J Kennedy retired from the Compensation
Committee on 30 June 2019 and K E Toland and M J Meghen
were appointed as Committee members with effect from
1 July 2019.
• H F Nolan was appointed to the Audit Committee on 1 July 2019.
The Corporate Governance Statement describes our corporate
governance arrangements including the application of the QCA
principles.
C P McCann
Chairman
64

Corporate Governance Report continued
Corporate Governance Statement
The Board of  plc have committed to apply the principles of the QCA Code. This statement details the Company’s key
governance principles and practices and how it has complied fully with the principles of the QCA Code.
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
The Company has maintained a consistent business model and strategy since the inception of the Group in 2006 which is described on pages
8 to 9. The Group’s vision is to continue to develop our position as one of the world’s leading fresh produce companies. The Group’s ambition
is to deliver long-term stakeholder value by leveraging our collective skills at a local level and by continued global growth by acquisition and
through partnerships.
Key challenges to delivering our business model and strategy are identified and addressed through the risk management process. This is set out in
principle 4. The Group strives to constantly review and improve our processes in line with industry best practice and new regulatory requirements.
Principle 2: Seek to understand and meet shareholder needs and expectations
Communication with shareholders is given a high priority by  plc. The Group recognises the importance of maintaining regular
dialogue and meetings with shareholders to ensure the Group’s strategy and performance are understood. The Group communicates with its
shareholders by way of the AGM combined with the Annual Report and the financial statements, preliminary and interim results announcements
and presentations, which are disseminated to shareholders via our website. Stock Exchange announcements in respect of trading updates and
corporate activity are similarly published on our website.
The contents of the Annual Report including the Operating Review, the Financial Review, the Directors’ Report and Financial Statements
(in addition to Stock Exchange announcements, Preliminary Results Announcements and Interim Results Announcements) have been
reviewed by the Board in order to ensure a balanced and clear presentation so that the Group’s position and results may be properly
appreciated by shareholders.
The Board considers that the Annual Report and accounts taken as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s position, performance, business model and strategy.
In addition, the Group successfully engages with its existing and potential institutional shareholders through investor meetings, conference
calls, analysts’ briefings and attending various broker conferences throughout the year and more particularly after the announcement of the
preliminary and interim results. During the year there were 96 meetings, calls and presentations held with shareholders, including:
Date Detail Activity
January 2019 Investor Meetings Davy Conference, New York
March 2019 2018 Preliminary Results Roadshows in Dublin, London & Paris
March 2019 Investor Meetings Goodbody Conference, Paris
May 2019 Trading Update and AGM Conference calls and meetings
August 2019 2019 Interim Results Roadshows in London & Amsterdam
September 2019 Investor Meetings Roadshows in Dublin, London & Amsterdam
October 2019 Broker desk meetings Goodbody Conference, Paris
The Executive Directors and Non-Executive Directors are kept informed on investor issues and the outcome of meetings with shareholders.
The Chairman is available to discuss strategy and governance with major shareholders. The Chairman and the Senior Independent
Non-Executive Director are available to address concerns with shareholders which cannot be addressed through normal channels.
In addition the Committee Chairs are available to discuss significant matters relating to their areas of responsibilities with shareholders.
A business presentation is provided at the Company’s AGM followed by a question and answer forum which offers shareholders the
opportunity to interact with the Board. The AGM is valued by the Board as an occasion where individual shareholders’ views and
suggestions can be noted and considered by the Directors.
Details of proxy voting are announced in respect of each resolution considered at the AGM or at any EGM and subsequently posted on our
website www.totalproduce.com. The Company arranges for the Notice of the AGM and related papers to be sent to shareholders at least
20 clear working days in advance of the meeting. If 20% or more of the votes have been cast against a resolution the company will engage
with significant shareholders to understand the reasons behind such votes.
Contact details for those responsible for shareholder liaison can be found on the website www.totalproduce.com
65

1. 3.
2. Governance
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
In addition to our shareholders, our understanding of the nature of the responsibilities to the wider group of stakeholders is unambiguous.
We understand that this engagement is a key part of the long-term success of the Group.
As a customer orientated organisation, the delivery of premium quality, safe, traceable produce to the consumer must always remain our
primary concern. We acknowledge these responsibilities inherent in the pursuit of this goal, most notably to the emerging and developing
nations from which we source, and more specifically to our local and global partners in production. These responsibilities extend beyond the
growers and their people to the environment in which they operate. We are also committed to meeting our broader social and commercial
responsibilities to our own employees and shareholders – as we are to our wider social obligations to the communities we serve across the
global marketplace.
Local at heart, global by nature,  operates a decentralised structure. Local operations, experienced as they are in the dynamics of
the local marketplace, identify the required resources and establish relationships specific to their own market and circumstance. In consultation
with regional management, Group management assesses the collective requirements of our operations and seeks to leverage the cumulative
strength of the broader Group, endeavouring to deliver synergies, efficiencies and ultimately a competitive advantage.
Customers, growers and suppliers
The fresh produce industry is very much people orientated. A commitment to effectively and transparently engage with stakeholders
permeates throughout our organisation locally and internationally. Engagement with customers and growers in our industry, both formally
and informally, is typically conducted on a daily basis.
Consumers
Co-ordinating the complete supply and demand chain is what we do. In doing so, our ambition is to satisfy the global fresh produce
consumer, with whom we engage via a broad suite of marketing communications including digital media such as Facebook, Twitter,
Instagram, YouTube and a variety of websites and Smartphone Apps.
Employees
We recognise too, our responsibility to engage with our own employees.  operates a relatively flat operational structure and
employee engagement varies across our operations from informal open door policies where there is an open invitation to all employees
to contribute to decision making, to more formalised structures in other markets.
Environmental, Social and Governance
The European Commission has published recommendations governing the recognition, measurement and disclosure of environmental
issues in the annual reports of companies. Although the provisions of the recommendations are not binding on the Group in the conduct
of its business, the Group recognises its social responsibility and endorses the growing trend towards environmental accountability.
The influence and impact of engagement and feedback from our broad stakeholder base is presently most obvious in our ongoing efforts to
Reduce, Remove and Replace single-use plastic with compostable plastic packaging (see pages 34 to 35 for more information on the work
in this area).
The Group actively promotes best business practices and standards that seek to enhance the health, education and conditions of workers
and their families and to universally encourage the use of sustainable farming methods by its suppliers.  is supportive of
governmental efforts to combat slavery and human trafficking, as outlined in the  UK Modern Slavery Act Statement which
is available on the  UK website.
Our Sustainability report, set out on pages 20 to 45, includes examples of our work in these areas.
66

Corporate Governance Report continued
Corporate Governance Statement continued
Principle 4: Embed effective risk management, considering both opportunities and threats throughout the organisation
Risk management within  plc is co-ordinated by an Executive Risk Committee (‘ERC’ or the ‘Committee’) which directs the
implementation of the process consistently throughout the Group. Responsibility for the identification and evaluation of financial, operational and
compliance risks is delegated to senior management, which reports back to the Committee. The Committee meets during the year, as required,
to identify, assess and manage risk. In this process it reviews the relevant findings, and makes recommendations. The Committee reports its
findings and recommendations to the Audit Committee, which in turn reports to the Board. Please see the Risk and Risk Management Report
on pages 14 to 19 for further information including the principal risks faced by the Group.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chairman
 plc is led by a strong and effective Board of Directors and its members acknowledge their collective responsibility and legal
obligation for defining the corporate governance arrangements. Ultimate responsibility for the approach to and quality of the Corporate
Governance structures rests with the Chairman.
 considers that the structure of its Board is appropriate for the AIM and Euronext Growth markets on which its shares are traded,
allowing for an efficient decision making process. All of the Directors have fiduciary responsibilities to shareholders. In addition, the Executive
Directors are responsible for the operation of the business while the Non-Executive Directors bring independent objective judgment to bear on
Board decisions by constructively challenging management and helping to develop and execute the Group’s strategic objectives.
Each of the Executive Directors has extensive knowledge of the fresh produce industry, in addition to wide-ranging business skills and
commercial acumen. This is complemented by the broader industry expertise and background of the Non-Executive Directors. All of the
Directors take their roles and responsibilities seriously and undertake their duties diligently. The Board as a whole is therefore well placed
to address any major challenges for  should they arise. All of the Directors bring objective judgment to bear on issues
of strategy, performance, resources (including key appointments) and standards of conduct.
Effective governance is fostered by the separation of the roles of the Executive Chairman and the Chief Executive, as this division of
responsibilities at the head of the Group ensures a balance of power and authority. The Executive Chairman has overall responsibility for
Group strategy and to see that the Group achieves a satisfactory return on investment for shareholders. The Chairman oversees the operation
and effectiveness of the Board and ensures appropriate interaction between it, executive management and the Company’s shareholders.
The Chief Executive is responsible for developing and delivering the Group’s strategy, and ensuring, along with the Finance Director, that the
Directors receive accurate, timely and clear information, and is accountable for the overall performance and day-to-day management.
In light of the Group’s continued expansion, E I Hurley and H F Nolan were appointed to the Board as Non-Executive Directors during 2019.
As detailed in our Chairman’s Corporate Governance statement on page 63 committee membership was reviewed during 2019 and changes
adopted.
Each of the Non-Executive Directors bring considerable business experience and independent challenge to the Board’s deliberations and an
unfettered perspective to their advisory and monitoring roles.
The Board considers that the independent Non-Executive Directors are sufficient to maintain the balance between Executive Directors
and Non-Executive Directors on the Board. Following the Board changes announced in May 2019, which will be effective 31 March 2020,
the Board will be made up of six independent Non-Executive Directors and three Executive Directors.
The terms and conditions relating to the appointment of the Non-Executive Directors are available for inspection at Charles McCann
Building, Rampart Road, Dundalk, Co. Louth, during normal office hours.
Independence of Non-Executive Directors
The Board has determined all of the Non-Executive Directors to be independent. In arriving at its conclusion, the Board considered many
factors including, inter alia, whether any of the Non-Executive Directors:
• has been an employee of the Group within the last five years;
• has, or had within the last three years, a material business relationship with the Group either directly or as a partner, shareholder, director
or senior employee of a body that has such a relationship with the Group;
• receives remuneration from the Group other than a director’s fee, participates in the Group’s share option or a performance related pay
scheme or is a member of the Group’s pension scheme;
• has close family ties with any of the Group’s direct advisers, Directors or senior employees;
• holds cross-directorships or has significant links with other Directors through involvement in other companies or bodies;
• represents a significant shareholder; or
• has served on the Board for more than nine years from the date of their first election.
R B Hynes was first elected to the Board in May 2007. The Board has assessed and concluded that notwithstanding her tenure on the
Board, and having regard to her knowledge and experience, that she is independent of management and that she discharges her duties
in an independent manner.

1. 3.
2. Governance
Operation of the Board
The Board met regularly throughout the financial year with 7 scheduled Board meetings, in addition to which meetings are called as and
when warranted by matters arising. Attendance at scheduled Board and Committee meetings during the year was as follows:

* Helen Nolan was appointed to the Board as a Non-Executive Director on 1 July 2019.
All Directors attended all Committee meetings held during their period as members of their respective committees.
C P McCann, J F Gernon and R P Byrne attended Compensation Committee meetings as required. R P Byrne, F J Davis and J F Gernon
attended Audit Committee meetings when required.
Additional Board or Committee meetings were held to issue formal approvals, or deal with other matters of a routine or administrative nature.
Under their terms of appointment, Non-Executive Directors provide confirmation, on an annual basis, that any other commitments do not
impact on their role with .
Board papers and key information are shared prior to each meeting to allow sufficient time for the Directors to be briefed on the matters thus
enabling them to actively contribute to Board and Committee meetings.
The Chairman held meetings with the Non-Executive Directors without the Executives present. There is interaction, as necessary, between
senior executive management and Board members.
The Board has identified and formally adopted a schedule of key matters that are reserved for its decision, including the annual budgets,
interim and preliminary results announcements, the Annual Report, interim and final dividends, the appointment or removal of Directors and
the Company Secretary, circulars to shareholders, Group treasury policies and capital expenditures and acquisitions in excess of €20m.
Certain other matters are delegated to Board Committees, the details of which are set out under Principle 9.
Principle 6: Ensure that between the Directors they have the necessary up-to-date experience, skills and capabilities
 plc is led by a strong and effective Board of Directors. The Directors of the Company are detailed on page 60.
Please see pages 58 to 59 for further information in regard to the relevant experience, skills and capabilities that each Director brings to the
Board. In addition, each of the Directors are diligent in their approach and draw on their personal experience and knowledge to address all of
the matters that require attention at Board and Committee meetings. Both individually and as a group they strive to create shareholder value
whilst also taking into account the wider stakeholder group.
Board members are selected (refer to the Nomination Committee terms of reference detailed on page 79) for their relevant experience, and
appropriate training is available to them whenever necessary. On an annual basis Directors confirm to the Chairman that their training and
development needs have been met. Directors receive a full, formal and tailored induction into the Group’s activities and into the operation
and procedures of the Board on their appointment.
R B Hynes is the Senior Independent Non-Executive Director, with the primary role of supporting the Group Chairman on all governance
related matters. She is available to shareholders, and other stakeholders, if they have concerns which they have been unable to resolve
through the normal channels of Chairman, Chief Executive Officer or other Executive Directors.
The Company has access to external professional advisors including, but not limited to, Actuaries, Auditors, Legal Advisors, Tax Advisors
and Accountants available to them to provide independent advice on all significant matters which arise during the course of the year.
68

Corporate Governance Report continued
Corporate Governance Statement continued
Principle 6: Ensure that between the directors they have the necessary up-to-date experience, skills and capabilities continued
There is an agreed Board procedure facilitating Directors to take independent professional advice, in the furtherance of their duties, at the
Company’s expense. Each Board member has access to the impartial advice and services of the Company Secretary, who is responsible to
the Board for ensuring that appropriate procedures are followed. The appointment and removal of the Company Secretary is a matter for the
Board as a whole. The Company has put in place a Directors’ and Officers’ liability insurance policy.
The Constitution of the Company requires that one-third of the Board must, by rotation, seek re-election at the AGM each year.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
On an annual basis, the Board evaluates its own performance and that of its Committees and of each individual Director. The Board considers
that the objectivity brought to bear by the Non-Executive Directors combined with the experience of the Executive Directors is key to ensuring
that the evaluation is robust.
In assessing the performance of the Board in 2019, the Directors considered such matters as the appropriateness of its composition,
its effectiveness in developing Group strategy, its contribution to managing the Group’s business and operational risks, its response to
developing issues and its communications with the Group’s stakeholders. The evaluation procedures are reviewed each year to ensure
they are appropriate. The next Board evaluation will take place before the end of 2020.
The Nomination Committee regularly assesses the Board’s composition, Board members and the various Board roles. The Committee
keeps the Group’s succession plans under continuous review.
The Committee and the Board understand the importance of ensuring diversity including gender and the key role a diversified Board plays in
ensuring effectiveness. The Board takes diversity into consideration whilst ensuring that the best people are nominated to all appointments,
and suitable candidates are selected on the basis of relevant experience, backgrounds, skills and knowledge and insight, having due regard
to the benefits of Board diversity.
In assessing the performance of the committees of the Board, the Directors considered the appropriateness of their composition and terms
of reference, their effectiveness in fulfilling their roles and their interaction with the Board.
The assessment of the performance of individual Directors included consideration of their contribution to the effective functioning of the
Board, the appropriateness of their knowledge, skill and experience levels and their commitment to their roles. In addition, the Non-Executive
Directors meet without the Chairman annually to appraise the effectiveness of the Chairman.
The Chairman summarised the outcome of these evaluation processes and reported them to the Board. The Board also concluded that the
procedures were considered adequate and no amendments to them were recommended. The Board concluded that the Board, the Directors
and its Committees were effective in the performance of their duties.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
69

1. 3.
2. Governance
In , we take great pride in our reputation as a trustworthy partner embracing our responsibilities in the pursuit of best practice.
The Board ensures that the Company has the means to determine that ethical values and behaviours are recognised and respected. The
foundations upon which this reputation has been built are to be found in the set of values which define the manner in which we conduct our
business. Please see our Sustainability Report on pages 20 to 45.
 endeavours to operate its business to very high standards in all respects, and to conduct its business in an honest and ethical
manner. It is the policy of  to carry on its business in compliance with the law, including, but not limited to, those laws relating to
bribery and anti-corruption. The Group requires its employees to comply with the law, and to act professionally, fairly and with integrity. Good
Faith reporting procedures have been established to allow staff to report concerns. Key internal structures such as the risk management
procedures, Audit Committee and internal audit provide assurance that these values are being recognised and valued.
 seeks to promote alignment with the Company’s corporate culture throughout the Group. We preserve and augment our
culture by placing ‘cultural fit’ at the very heart of our criteria when assessing new acquisitions and partnerships, in order to bring together
like-minded businesses in pursuit of our common goals.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making
The Board believes the combination of Executive and Non-Executive Directors leads to effective Corporate Governance Structures.
Additional assurance is provided through the Audit Committee, Compensation Committee and Nomination Committee. The Board believe
the current structures in place are appropriate, given the Company’s size and the markets on which its shares are traded, but continue to
review corporate governance arrangements on an ongoing basis.
Board Committees
There are three principal Board committees, the Audit, the Compensation and the Nomination Committees.
Audit Committee
Please refer to pages 70 to 72 for further details of the composition, terms of reference and activities of the Audit Committee.
Compensation Committee
Please refer to pages 73 to 78 for full details of the composition, terms of reference and activities of the Compensation Committee.
Nomination Committee
Please refer to page 79 for full details of the composition, terms of reference and activities of the Nomination Committee.
Principle 10: Communicate how the Company is governed and is performing by maintaining dialogue with shareholders and
other relevant stakeholders
As previously set out under Principle 2 the Board consider Shareholder Communication to be a high priority. Historical reports, presentations
and news can be found on our website www.totalproduce.com
The outcome of all votes cast at shareholder meetings are announced at the time and the outcome of all votes at the AGM will be recorded
on our website.
Each year our Board Committees detail the work undertaken during the year. To view these reports for 2019 please refer to below:
Audit Committee Report – see pages 70 to 72.
Compensation Committee Report – see pages 73 to 78.
Nomination Committee Report – see page 79.
70

Audit Committee Report
Membership
The members of the Audit Committee (the ‘Committee’), all of whom are independent Non-Executive Directors, are S J Taaffe (Chairman),
E I Hurley and H F Nolan. J J Kennedy and R B Hynes retired from the Audit Committee on 30 June 2019. E I Hurley and H F Nolan joined
the Audit Committee on 4 March 2019 and 1 July 2019 respectively. Biographical details for these Directors are set out on pages 58 to 59.
The Board is satisfied that the members of the Committee have recent and relevant experience and a mix of skills and expertise in commercial,
financial and audit matters arising from the positions they hold or have held in other organisations.
Roles & responsibilities
The Committee’s responsibilities are set out in the terms of reference of the Audit Committee, which are available on request from the
Company Secretary, and are designed to provide appropriate assurance on governance arrangements, with regard to the Company’s size
and the markets on which it is traded. They are summarised as follows:
1. to approve the terms of engagement and remuneration of the external auditor and to recommend to the Board, when appropriate, any
change in the external auditor;
2. to agree, in advance, with the external auditor the nature and scope of their audit as set out in their audit plan;
3. to annually assess and monitor the independence, objectivity and effectiveness of the external auditor. As part of this process, the
Committee reviews the implementation of its policy in relation to the provision of non-audit services by the external auditor, taking into
account relevant ethical guidance;
4. to agree with the Board (and to subsequently monitor) a policy on the employment by the Group of former employees of the external
auditor;
5. to conduct the tender process, when required, and make recommendations to the Board, about the appointment, reappointment and
removal of the auditor, and approving the remuneration and terms of engagement of the external auditor;
6. to review the Group’s interim results and preliminary results announcements, financial information and full year consolidated financial
statements and to report to the Board on the outcome of these reviews. As part of this process, the Committee considers:
• the appropriateness of the Group’s accounting policies, including any changes in these policies;
• any significant judgmental matters;
• any significant adjusted and unadjusted audit differences;
• the continuing appropriateness of the going concern assumption;
• the contents of the Chief Executive’s and Financial Reviews as set out in the Annual Report;
• compliance with relevant financial reporting standards, and related legislative requirements; and
• compliance with legal and Stock Exchange requirements.
7. to provide advice (where requested by the Board) on whether the annual report and accounts, taken as a whole is fair, balanced and
understandable;
8. to review any issues raised by the external auditor during the conduct of their audit. As part of this review, the Committee considers any
report from the external auditor on their findings in relation to the Group’s financial systems and controls, together with any management
responses. In addition, the Committee reviews the representation letters required by the external auditor as part of the audit, prior to
their endorsement by the Board. The Committee also meets the external auditor independently of management at least annually;
9. to review the Group’s statement on internal control systems and the risk management framework, prior to endorsement by the Board;
10. to review and to report to the Board on the effectiveness of the Group’s internal controls including co-ordination between the internal
and external auditors and the adequacy of the internal audit function;
11. to approve, in consultation with the Chairman of the Board, the appointment and removal of the Head of Internal Audit;
12. to consider any major findings from internal investigations and the Company’s response;
13. to review the Group’s arrangements for employees to raise concerns, in confidence, about possible impropriety in financial reporting or
other matters and to ensure there is provision for a proportionate investigation and follow-up of such matters; and
14. to report to the Board on how it has discharged its responsibilities;
15. to review, at least annually, the Committee’s own performance and terms of reference and to recommend any changes it considers
necessary to the Board for approval.
Meetings
The Committee met four times during 2019, attendance at which is set out on page 67. The Finance Director, Executive Director and Head
of Internal Audit attend all meetings of the Committee. Representatives from the external auditors would usually attend three meetings. The
Company Secretary acts as secretary to the Committee and the minutes of the Committee meetings are made available to the Board. During
the year, three meetings took place in advance of scheduled Board meetings at which the Chairman of the Committee provided a report to
the Board on the activity of the Committee and the matters of particular relevance to the Board in the conduct of its work. Separately the
Committee meets with the external auditor and the Head of Internal Audit without any members of senior management being present.
Activities
Financial Reporting and Significant Financial Judgments
The primary role of the Committee in relation to financial reporting is to review with both senior management and the external auditor the
appropriateness and integrity of the half-year and annual financial statements, the interim and preliminary results announcements and the
Annual Report.
71

1. 3.
2. Governance
In fulfilling these responsibilities, the Committee concentrated on, amongst other matters:
• the appropriateness of the Group’s accounting policies and practices;
• the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting guidance;
• material areas in which significant judgments had been applied or where discussions had taken place with the external auditor; and
• whether the Annual Report and Financial Statements, taken as a whole, are fair, balanced, understandable and provide the information
necessary for shareholders to assess the Group’s performance, business model and strategy.
The Committee considered various reports from and discussions with management and KPMG, (the Group’s external auditor), in support
of the half-year and full-year financial statements and results announcements.
Internal Control and Risk Management
The Board has delegated responsibility for the ongoing monitoring of the effectiveness of the risk management and internal control to the
Committee. The Committee reviewed the Group’s overall approach to risk management and control, and its processes, outcomes and
disclosures. In fulfilling its oversight responsibilities, the Committee met with senior members of management and the Head of Internal Audit
to discuss the overall system of internal controls applied in the Group. As set out on page 14 of the Risk and Risk Management Report, risk
management within the Group is co-ordinated by the Executive Risk Committee (‘ERC’). The Chief Executive, as chairman of the ERC, met with
the Committee to provide an update on the work completed during the year including the review of relevant findings and the consideration of
operational and corporate risks. Following this meeting, the Chairman provided an update to the Board at the November Board meeting.
Internal Audit
The Head of Internal Audit attended all four meetings of the Committee during the year and presented the quarterly reports of audits
performed during that period and management responses to audits completed in previous periods. The Committee reviewed the Internal
Audit plan for the year and agreed its resource requirements with the Head of Internal Audit. The Committee met with the Head of Internal
Audit during the year without management being present. The Committee carried out an evaluation of the performance of the internal audit
function and was satisfied with the effectiveness of the function.
2019 significant financial reporting judgments and disclosures
Goodwill and Intangible Assets
As detailed in Note 14 to the financial statements, the Group had goodwill and intangible assets of €268.5m at 31 December 2019. The
Committee considered the impairment reviews undertaken by management in order to satisfy itself that this balance was reasonable and
appropriate. Impairment reviews are carried out annually on 31 December or more frequently if there are indications that goodwill might
be impaired.
In conducting their impairment reviews, management determine the recoverable amount of each cash generating unit (CGU) and compare
this to the carrying value. The recoverable amount of each CGU is determined based on a value-in-use calculation using cash flows derived
from the approved 2020 budget with cashflows thereafter calculated using a terminal value methodology.
Management advised the Committee that future cashflows of each CGU had been estimated based on assumptions regarding future profitability,
replacement capital expenditure requirements and working capital investment and discounted using rates reflecting the current market
assessment of the risk specific to each CGU. Sensitivity analysis was performed based on changes to the assumptions and discount rates.
Following these procedures, the Committee is satisfied with the approach to the impairment reviews.
Acquisition Accounting
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control
is transferred to the Group. The application of this method requires certain estimates and assumptions, particularly concerning the
determination of the fair values of the acquired assets and liabilities assumed at the date of acquisition.
The Committee recognises the level of management judgment involved in estimating the fair value at acquisition date of the assets and
liabilities of each component.
The Committee reviewed external valuation documents along with Notes 15 and 31 and discussed estimates and assumptions with
management. In addition, the Committee discussed and agreed with management’s recommendations on the estimated useful lives
of intangible assets arising on the Group’s acquisitions.
Following these procedures, the Committee is satisfied with the management’s assessment of the fair value of assets and liabilities
acquired through acquisitions and is satisfied that the relevant disclosures are complete, accurate and understandable.
72

Audit Committee Report continued
Independence of external auditor
It is the Committee’s responsibility to monitor the performance, objectivity and independence of the external auditor, currently KPMG. During
the year the Committee met with KPMG to agree the audit plan and scope for the 2019 audit. The Committee also agreed the terms of the
engagement letter and approved, on behalf of the Board, the fees payable for the audit.
As part of the approval of the appointment of the external auditor, the Committee sought confirmation from the external auditor that it is, in its
professional judgment, independent of  plc. The Committee monitors the nature, extent and scope of non-audit services provided
by the external auditor on an ongoing basis. In this regard, the engagement of the external auditor to provide any non-audit services, where the
expected costs exceed a pre-approved limit, requires the approval of the Audit Committee.
Four key principles underpin the provision of non-audit services by the external auditor, namely that the auditor shall not:
• audit its own firm’s work;
• make management decisions for the Group;
• have a mutuality of financial interest with the Group; or
• be put in the role of advocate for the Group.
The amounts paid to the external auditor during the financial year for audit and non-audit services are disclosed on page 112.
The Committee also reviewed the Group’s practices in respect of the hiring of former employees of the external auditor, in order to assess
whether such appointments might affect, or appear to affect, the external auditor’s independence, and where appropriate approve such
appointments.
KPMG has been the Group’s external auditor firm since the formation of the Group in December 2006. The external auditor is required to
rotate the audit partner responsible for the Group every five years. The current audit partner has been in place for five years. During the year,
the Committee carried out its annual assessment of the effectiveness of the external audit process and considered the tenure, quality and
fees of the auditor.
The Committee concluded that it continued to be satisfied with the performance of KPMG who remain effective, objective and independent
and that a tender for audit work is not necessary at this time. On this basis, the Committee recommended to the Board that KPMG be
re-appointed as the Group’s external auditor for a further year. The Board accepted the Committee’s recommendation and a non-binding
resolution to confirm the re-appointment of KPMG as external auditor will be put to shareholders at the forthcoming AGM in May 2020.
Evaluation of the Audit Committee
The Board evaluated the performance of the Committee and the Committee carried out a self-assessment of its performance, and each
concluded that the Committee was performing effectively.
73

1. 3.
2. Governance
Compensation Committee Report
Composition and terms of reference of the Compensation Committee
The members of the Compensation Committee (‘the Committee’), all of whom are independent Non-Executive Directors, are K E Toland (Chairman)
and M J Meghen. The Chairmanship of the Committee has rotated and K E Toland succeeded R B Hynes with effect from 1 July 2019. K E Toland
and M J Meghen joined the Compensation Committee on 1 July 2019, and R B Hynes and J J Kennedy retired from the Committee on 30 June
2019. All members bring significant expertise to their roles on the Committee due to their broad commercial and professional experience over many
years and, in some cases, as Directors of other publicly listed companies. These Directors have no financial interest and no potential conflicts of
interest, other than as shareholders, in the matters to be decided, and no day-to-day involvement in the running of the business.
The terms of reference, which are available on request from the Company Secretary, of the Committee are as follows:
• to establish the Company’s policy on Executive Directors’ remuneration;
• to establish the terms of service agreements, remuneration packages and employment conditions of Executive Directors;
• to review the ongoing appropriateness and relevance of the remuneration policy;
• the objective of such policy shall be to ensure that members of the executive management of the Company are provided with appropriate
incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to
the success of the Company;
• within the terms of the agreed policy and in consultation with the Executive Chairman to determine the total individual remuneration
package of each Executive Director including bonuses, incentive payments and share options or other share awards;
• where appropriate, to recommend to shareholders the establishment of long-term incentive schemes, to set appropriate performance
targets for such schemes, to define the basis of participation in such schemes and to determine the grant of awards under such
schemes;
• to approve the granting of share options to Executive Directors and employees, and to determine whether the conditions as set out in
Clause 7 of the December 2006 share option scheme have been achieved;
• to ensure that contractual terms on termination and any payments made are fair to the individual and the Company; that failure is not
rewarded and that the duty to mitigate loss is fully recognised;
• in determining such packages and arrangements, give due regard to any relevant legal requirements, the recommendations in the UK
Code and the Listing Rules of the AIM/Euronext Growth Market and associated guidance;
• to monitor the level and structure of remuneration for senior management as determined by the Board; and
• to review and note annually the remuneration trends across the Company or Group.
The Executive Chairman of  plc is consulted about the remuneration of other Executive Directors, and the Committee is
authorised to obtain access to professional advice, if deemed appropriate. The Committee can recommend changes to the remuneration
structure for senior management.
The remuneration of the Non-Executive Directors is approved by the Board.
Remuneration policy
 is an international group of companies with activities in 30 countries. The Group’s policy on Executive Directors’ remuneration is
designed to ensure that employment and remuneration conditions for senior executives’ reward, retain and motivate them to perform in the best
interests of shareholders. The Group continues to build upon and enhance the existing remuneration policy so that it is reflective of: (a) best
practice; (b) has clear alignment with shareholders’ interests; and (c) promotes the long-term success of the Group.
Executive Directors are paid fees in respect of their director roles and responsibilities on the Boards of  plc, and other group
companies (‘director fees’). These fees are commensurate with fees paid to Non-Executive Directors. In addition, Executive Directors receive
further remuneration as described below.
The recurring elements of the remuneration package for Executive Directors are basic pensionable salary, director fees, benefits,
contributions to pensions, and annual variable incentives in the form of bonuses and share awards under the short term incentive plan.
The shareholdings of all Executive Directors are set out in more detail on page 77. These shareholdings are significant and demonstrate
their ongoing commitment to the long-term success of the Group and in each case represent greater than 600% of salary.
74

Executive Directors’ basic salary and benefits
Basic salaries of Executive Directors are reviewed annually by the Committee with regard to personal performance, Group performance
and competitive market practice.
The annual review undertaken with regard to 2019 indicated that some adjustment in basic salaries was appropriate, given the significant
growth in the Group as a result of the transformational investment in the Dole Food Company, and the substantial and consequential
increase in the role and responsibilities of Executive Directors. In the context of the expansion of those roles, the high performance of the
team and the importance of the executive team for the long-term success of the Group, increases in basic salaries were awarded in 2019 as
set out in the table below, at a level to reflect a more appropriate compensation for the increase in the scope and responsibility of their roles.
Following this annual review, the basic salaries and fees of the Executive Directors for the year ended 31 December 2019 represented
increases over the prior year as shown in the table below:
Salary

Annual bonus awards
The Group provides annual bonus awards, excluding the short term incentive plan, to Executive Directors. These bonus awards, save in
exceptional circumstances, are limited to 200% of the aggregate of a Director’s fee for Board memberships and basic salary at target
performance. The level of these bonus awards in any one year will depend on an assessment of individual performance against personal
objectives, and short and long-term corporate objectives. The bonus awards are subject to the approval of the Committee.
Short term incentive plan
The Group provides for annual share awards under a short term incentive plan approved by the Committee (the ‘ plc short
term incentive plan’) for Executive Directors effective for the year ending 31 December 2019, based on achievement of separately agreed
performance measures for the Group for the year ending 31 December 2019. It is the general policy of the Company that awards under
 short term incentive plan are receivable in shares after the deduction for relevant taxes and cannot normally be disposed
of for at least five years from the date of purchase.
Performance measure Minimum award Maximum award
Growth in adjusted earnings per share over
previous year
5% of the aggregate of Director fees and basic
salary for EPS growth of 5%
33% of the aggregate of Director fees
and basic salary for EPS growth of 15%
Growth in average share price for the year over
the average share price for the previous year
5% of the aggregate of Director fees and basic
salary for growth in average share price of 5%
33% of the aggregate of Director fees
and basic salary for growth in average
share price of 15%
Total shareholder return (‘TSR’) benchmarked
against a comparator group of 16 other
companies
10% of the aggregate of Director fees and
basic salary for achievement of median TSR
34% of the aggregate of Director fees
and basic salary for achievement of 75th
percentile TSR
The comparator group for 2019 comprised: AarhusKarlshamn, Amsterdam Commodities, Agrana Beteiligungs, Axfood, Costa Group, Cranswick
plc, Emmi Ag, Fresh Del Monte Produce, Glanbia, Greencore Group, Greenyard, Marr, Sligro Food Group, Tate & Lyle and Valora.
Further information on the 2019 awards is contained on page 76.
An Executive participating in the short term incentive plan is not eligible for a grant of an award under the employee share option scheme
during the term of the plan.
The Non-Executive Directors are not eligible to participate in this scheme.
Compensation Committee Report continued
75

1. 3.
2. Governance
Pensions
The Committee has approved an arrangement under which the Executive Directors have agreed to cap their pension entitlements in line with
the provisions of the Finance Acts 2006 and 2011, and receive a supplementary, taxable, non-pensionable cash allowance or a contribution
to a defined contribution scheme in lieu of the prospective pension entitlements foregone.
The actual cash allowances or contributions to a defined contribution scheme in lieu of the prospective pension entitlements foregone for 2019
are detailed in Note 3 on page 76. In the case of all Directors whose pension entitlements have been capped, pensions are calculated to provide
for two thirds of the aggregate of Director fees and basic pensionable salary to the date of opt out with benefits in respect of dependants
continuing to accrue. The supplementary cash allowances have been reduced to allow for increases in dependants’ benefits that accrued
during the year.
Employee share option scheme
It is the Group’s policy to grant share options as an incentive to enhance performance and to encourage employee share ownership in
the Company. The current employee share option scheme was approved in December 2006. The percentage of share capital which can
be issued under the scheme and individual limits comply with institutional guidelines.
At end of 2019, there were no options granted to Executive Directors (2018: Nil). During 2019, no share options were exercised by the
Executive Directors. No new options were granted to Executive Directors in 2019.
Employee profit sharing scheme
The Company has an employee profit sharing scheme under which the trustees of this scheme purchase shares in the market on behalf
of employees of the Group. In December 2019, 35,528 ordinary 1 cent shares were purchased by the trust at market value on behalf of the
Executive Directors under this scheme in respect of 2019. The shares appropriated to the Executive Directors are included in the Directors’
share interests disclosed on page 77. Non-Executive Directors do not participate in this scheme.
Service contracts
No service contracts exist between the Company and any of the Group’s subsidiaries, and any Executive or Non-Executive Director.
Directors’ interests in contracts
None of the Directors had a beneficial interest in any material contract to which the Company or any of the Group’s subsidiaries were a party
during the current financial year.
Directors’ remuneration
The Directors’ remuneration for the year was as follows:
Executive Directors Non-Executive Directors Total
Basic salaries and Director fees 1,786 1,617 503 328 2,289 1,945
Annual bonus awards 968 1,140 – – 968 1,140
Other benefits 43 40 – – 43 40
Pension contributions/related payments 288 288 – – 288 288
Short term incentive plan 546 282 – – 546 282
Other share awards – 925 – – – 925
Total 3,631 4,292 503 328 4,134 4,620
Number of Directors (average) 4 4 6.5 4.5 10.5 8.5
In accordance with IFRS 2 Share-based Payments, an expense of €Nil (2018: €Nil) has been recognised in the income statement in respect
of share options granted in the past to Executive Directors.
During 2018, bonus awards were made to Executive Directors in recognition of their commitment and effort during that year in connection with
the investment in Dole Food Company.
76

Compensation Committee Report continued
Directors’ remuneration continued
Salary or Fees
Annual
Bonus Awards
Other
benefit1
Pension
contributions STIP
Other Share
Award
Audited
total
Total Remuneration 
1 Other benefits above for Executive Directors relate entirely to motor expenses.
2 C P McCann is also the Chairman of Balmoral International Land Holdings plc (‘Balmoral’). In accordance with the terms of the Business
Transfer Agreement between  plc and Balmoral,  plc recharged an agreed portion of his employment costs
(excluding bonus) to Balmoral to reflect the allocation of his time between these two roles. All amounts reflected above represent the
portion of his remuneration attributable to  plc, and is net of agreed recharges to Balmoral. The recharge of C P McCann’s
employment costs to Balmoral ceased with effect from 1 August 2018.
3 No pension contributions were made on behalf of the Executive Directors to the scheme as their benefits under this scheme are now
limited for reasons explained on page 75. As a result, the Compensation Committee approved cash payments or contributions to a
defined contribution pension of €179,000 and €109,000 (2018: €179,000 and €109,000) respectively to R P Byrne and F J Davis, to
compensate each of the Directors for the value of their defined benefit pension entitlements foregone, net of employer’s social insurance
contributions.
Short term incentive plan
The table below sets out the actual performance outcomes for the year ended 31 December 2019 under each of the three performance
measures of the short term incentive plan.
Target performance Actual Actual
Minimum Maximum Outcome
Vested
% of salary
Growth in adjusted EPS 5% 15% 41.4% 33%
Growth in average share price 5% 15% -28.6% 0%
TSR Ranked 8th Ranked 4th or higher Ranked 13th 0%
Total 33%
The Committee awarded €546,000 in payments to Executive Directors for the year ended 31 December 2019, of which €411,000 is payable
in shares which are to be purchased and held by the trustees of the  plc short term incentive plan for the benefit of the
individual participants and cannot normally be disposed of for a period of at least five years from the date of purchase. The balance of
€135,000 shall be payable in cash to settle relevant taxes. The awards to individual Executive Directors were as follows: C P McCann
(€216,000), R P Byrne (€198,000) and F J Davis (€132,000).
The Committee awarded €282,000 in payments to Executive Directors for the year ended 31 December 2018, of which €213,000 were paid
in shares on 7 March 2019. On this date, the trustees of the  plc short term incentive plan purchased a total number of 116,771
ordinary shares of  plc. The ordinary shares are held by the Trust on behalf of the Directors, and cannot normally be disposed
of for a period of at least five years from the date of purchase. The details of shares allotted to individual Directors are as follows: C P McCann
(62,290 shares), R P Byrne (28,481 shares) and F J Davis (26,000 shares).
77

1. 3.
2. Governance
Pension entitlements of Executive Directors
The pension benefits attributable to the Executive Directors during the year, and the total accrued pensions at the end of the year where
applicable, were as follows:
Executive Directors
Increase
in accrued
pension during
(a) The increase in accrued pension during the year excludes inflation. No net increase accrued in the year to any Director as the inflationary
increase each Director would have received reduced the value of the pension benefits by more than the increase in value of dependants’
pension benefits accrued.
(b) The transfer value of the increase in accrued pension has been calculated based on actuarial advice. These transfer values do not
represent sums paid or due, but are the amounts that the pension scheme would transfer to another pension scheme in relation to
the benefits accrued in the year, in the event of a member of the scheme leaving service.
(c) This represents the pension that would be paid annually, on retirement date based on service to the end of this accounting period.
Directors share interests
The interests of the Directors in the issued share capital of  plc at 31 December 2019, together with their interests at
31 December 2018, are shown below:
Number of
ordinary shares
at 31 December 2019
Number of
ordinary shares
at 31 December 2018
* With effect from August 2018, C P McCann’s beneficial interest decreased by 385 shares as a consequence of his minor child, with a
beneficial interest in 385 shares, reaching 18 years of age.
All of the above interests were beneficially owned.
The number of shares held by the executive directors expressed as a percentage of the aggregate of a Director’s fee for Board memberships
and basic salary at 31 December 2019 are shown below:
Directors
Number of
ordinary shares
at 31 December 2019
Percentage of
salary/Directors’ fees at
31 December 2019
Interests of Company Secretary
The total interest, including the share options held by the Secretary of the Company in office at 31 December 2019 and 31 December 2018,
amount to an interest of less than 1% of the issued voting share capital of  plc. The Company is therefore availing of the
exemption under Section 260 of the Companies Act 2014 not to disclose the interest.
78

Directors’ interests in share options
At 31 December 2019 and 31 December 2018, the Directors did not have any beneficial interests in share options in the Company.
At 31 December 2019 and 31 December 2018, the Company Secretary had an interest in options granted over 125,000 shares with
an exercise price of €0.669 per share and over 125,000 shares with an exercise price of €1.55 per share.
By virtue of Chapter 5 of Part 5 of the Companies Act, 2014, R P Byrne is deemed to have a non-beneficial interest in options granted
over 125,000 shares with an exercise price of €0.669 per share and over 125,000 shares with an exercise price of €1.55 per share.
The market price of the Company’s shares at 31 December 2019 was €1.43 and the range during 2019 was €1.23 to €1.93. There have been no
movements in the share interests and interest in share options of the Directors between the year-end and March 2020. Options granted are only
exercisable when the adjusted earnings per share figure, in respect of the third or any subsequent accounting period after the end of the base year
(i.e. accounting period preceding the date of the grant), is greater than the adjusted earnings per share figure for the base year by a percentage which
is not less than (on a year-on-year basis) the annual percentage increase in the consumer price index plus 5% compounded during that period.
Evaluation of the Compensation Committee
The performance of the Committee was evaluated by the Board and the Committee, and both concluded that the Committee was
performing effectively.
Compensation Committee Report continued
79

1. 3.
2. Governance
Nomination Committee Report
Membership
The members of the Nomination Committee (the ‘Committee’), are C P McCann (Chairman), R P Byrne, S J Taaffe and M J Meghen.
M J Meghen joined the committee on 1 July 2019. Biographical details for these Directors are set out on pages 58 to 59.
The Committee comprises two Executive Directors and two Non-Executive Directors, and so a majority of the Committee’s members cannot
be considered independent. However, considering the size of the Board, a 50:50 split is considered appropriate by the Board.
Roles & responsibilities
The terms of reference of the Committee, which are available on request from the Company Secretary, are to evaluate the balance of skills,
knowledge and experience of the Board, to consider the need for any new or additional appointments, where necessary to prepare a list
of potential candidates and forward the names of potential candidates to the Board for its consideration and, if appropriate, approval.
Meetings
The Committee had two scheduled meetings during 2019, attendance at which is set out on page 67. The minutes of the Committee
meetings are made available to the Board.
Activities
The Committee regularly assesses the Board’s composition, the Board members and the various Board roles. The Committee has
further reviewed the Group succession plans and concluded that they are appropriate. The Committee and the Board understand the
importance of ensuring diversity, including gender, and the key role a diversified Board plays in ensuring effectiveness. The Committee
has recommended changes, which were implemented by the Board, and are outlined in the Chairman’s Corporate Governance Statement.
Having regard for the benefits of diversity, the Board takes it into consideration whilst ensuring that the best people are nominated to all
appointments, and suitable candidates are selected on the basis of relevant experience, background, skills and knowledge and insight.
Diversity
A strategic priority of the Group is to recognise and develop the talents of the Group’s employees. As part of this, the Committee consider
diversity in respect of appointments and succession planning. During 2019, the Committee developed a Board Diversity Policy which was
approved by the Board. In addition, the  Diversity and Equal Opportunities policy, which applies to all Group employees, was
issued in August 2019.
The Board currently comprises 11 Directors of which four are Executive and seven are Non-Executive. Twenty-seven percent of the Board
are female Directors.
Frank Gernon and Jerome Kennedy have advised the Board that they will retire as Directors on 31 March 2020. The Board will comprise
nine directors, of which three will be Executive and six will be Independent Non-Executive. The Committee is pleased to note that, at this
point, it will have realised the Irish Governments Balance for Better Business 2023 target for ISEQ 20 companies of 33% female
representation on the Board.
Evaluation of the Nomination Committee
As detailed on page 68, Board and Committee evaluations are internally facilitated. The Board evaluated the performance of the Committee,
and the Committee carried out a self-assessment of its performance, and each concluded that the Committee was performing effectively.
80

Contents
Statement of Directors’ Responsibilities 81
Independent Auditor’s Report 82
Group Income Statement 87
Group Statement of Comprehensive Income 88
Group Balance Sheet 89
Group Statement of Changes in Equity 90
Group Statement of Cash Flows 92
Group Reconciliation of Net Debt 93
Notes to the Group Financial Statements 94
Company Balance Sheet 175
Company Statement of Changes in Equity 176
Company Statement of Cash Flows 177
Notes to the Company Financial Statements 178
Glossary: Alternative Performance Measures 181
Directors and Other Information 186
Shareholder Information 187
Financial Statements
81

1. 2. 3. Financial Statements
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. Under that law and in
accordance with AIM/Euronext Growth Rules, the Directors are required to prepare the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU and applicable law and have elected to prepare the Company
financial statements in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies
Act 2014.
Under company law the Directors must not approve the Group and Company financial statements unless they are satisfied that they give
a true and fair view of the assets, liabilities and financial position of the Group and Company and of the Group’s profit or loss for that year.
In preparing each of the Group and Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with International Financial Reporting Standards as adopted by the EU; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets,
liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial statements of the Company
comply with the provisions of the Companies Act 2014. The Directors are also responsible for taking all reasonable steps to ensure such
records are kept by its subsidiaries which enable them to ensure that the financial statements of the Group comply with the provisions of the
Companies Act 2014. They are also responsible for safeguarding the assets of the Company and the Group, and for taking reasonable steps
for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing a Directors’ report that
complies with the requirements of the Companies Act 2014.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
C P McCann F J Davis
Chairman Finance Director
4 March 2020 4 March 2020
Statement of Directors’ Responsibilities in
Respect of the Annual Report and Financial Statements
82

Independent Auditor’s Report
to the Members of  plc
Independent Auditor’s Report to the Members of  plc
Opinion:
We have audited the financial statements of  plc for the year ended 31 December 2019 which comprise the Group Income
Statement, the Group Statement of Comprehensive Income, the Group and Company Statements of Changes in Equity, the Group and
Company Balance Sheets, the Group and Company Statement of Cash Flows and the related notes, including the summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is Irish Law and International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU) and, as regards the Parent Company financial statements as applied
in accordance with the provisions of the Companies Act 2014.
In our opinion:
• the Group financial statements give a true and fair view of the assets, liabilities and financial position of the Group as at 31 December
2019 and of its profit for the year then ended;
• the Parent Company statement of financial position gives a true and fair view of the assets, liabilities and financial position of the Parent
Company as at 31 December 2019;
• the Group financial statements have been properly prepared in accordance with IFRS as adopted by the EU;
• the Parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the EU as applied in
accordance with the provisions of the Companies Act 2014; and
• the Group financial statements and Company financial statements have been properly prepared in accordance with the requirements
of the Companies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the audit of the financial statements section of our report. We
have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with ethical requirements that are
relevant to our audit of financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory
Authority (IAASA), as applied to listed entities.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
83

1. 2. 3. Financial Statements
(i) Group: Goodwill and intangibles €268.5 million (2018: €266.9 million)
Refer to accounting policy on page 98 and financial statement disclosures in Notes 14 and 15.
The key audit matter How the matter was addressed in our audit
There is a risk in respect of the carrying value of the Group’s goodwill
and intangible assets if future cash flows are not sufficient to support
the Group’s investments. This could be due to changes in market
preferences or customer demand and the level of cost inflation in
certain markets. We focus on this area due to the significance of
the carrying value of goodwill and intangible assets in relation to the
Balance Sheet and the inherent uncertainty involved in forecasting
and discounting future cash flows.
We considered the appropriateness of the key judgments made
in the determination of the value in use calculations for each CGU.
We assessed the Group’s valuation models and calculations by:
• checking the mathematical accuracy of the model;
• considering the historical accuracy of the Group’s forecasts;
• assessing the appropriateness of the discount rates applied
in determining the value in use of each CGU;
• assessing the reasonableness of the long-term economic growth
rate applied;
• comparing the Group’s assumptions, where possible, to
externally derived data as well as our own assumptions and
performing sensitivity analysis on the impact of changes in
these assumptions;
• based on the results of these procedures we directed our
attention to particular CGU’s where trading has been historically
weak and/or where there was little headroom and so indicators
of impairment were present;
• comparing the Group’s market capitalisation and value in use
calculations to the carrying value of the Group’s net assets.
We also assessed whether the disclosures in relation to the key
assumptions and in respect of the sensitivity of the outcome of
the impairment assessment to changes in those key assumptions
were appropriate.
Based on evidence obtained, we found that management’s judgments
and valuation models were appropriate. We consider the carrying
value of the Group’s goodwill and intangible assets to be supported
by the valuation models and inherent assumptions therein. We also
found all relevant disclosures to be adequate.
84

Independent Auditor’s Report
to the Members of  plc continued
Key audit matters: our assessment of risks of material misstatement continued
(ii) Group: Finalisation of acquisition accounting on investment in joint ventures and associates
Refer to accounting policy on page 96 and Note 31 to the financial statements.
The key audit matter How the matter was addressed in our audit
The Group completed the acquisition accounting for one significant
investment in a joint venture which it invested in, in 2018. The
applicable accounting standards allows a 12-month measurement
period to finalise acquisition accounting. The joint venture comprises
of several components in multiple jurisdictions and accounting for the
completed transaction involved estimating the fair value at acquisition
date and subsequently in the measurement period of the assets and
liabilities, including the identification and valuation, when appropriate,
of intangible assets. Significant judgment has been exercised by
management in establishing the fair values of the identifiable assets
and liabilities acquired together with the goodwill arising on the
investment.
Our audit procedures in the current year, among others, in this area
included the following:
• considering the appropriateness of the fair value adjustments
booked in the measurement period;
• assessing the models built to value bearer plants and biological
assets by considering the performance of the models in the
current year;
• considering whether the finalised goodwill balance appears
reasonable given current year results and future projections;
• assessing IFRS competence of the auditors of the joint venture
and directing and inspecting the work performed by the auditors
of the new joint venture;
• inspecting the disclosures made in relation to adjustments
booked in the measurement period to ensure they are
appropriate and complete.
Based on evidence obtained, we found that the key assumptions used
in finalising the acquisition accounting for the investment and the
related disclosures to be appropriate.
(iii) Parent: Investment in subsidiaries (carrying value of €390 million (2018: €390 million)
Refer to accounting policy on page 97 and Note 2 to the company financial statements.
The key audit matter How the matter was addressed in our audit
The investment in subsidiary undertakings are carried in the balance
sheet of the parent company at cost less any impairments. There is
a risk in respect of the carrying value of these investments if future
cashflows and performance of these subsidiaries is not sufficient
to support the Company’s investments. We focus on this area due
to the materiality of the amounts and the inherent uncertainty involved
in forecasting and discounting future cash flows.
Our audit procedures in this area included the following:
• comparing the carrying value of investments in the parent’s
accounts to the net assets within the subsidiary accounts; and
• consideration of the audit work performed in respect of current
year results of subsidiaries and the valuation of goodwill and
intangible assets.
Based on evidence obtained, we consider the carrying value of
investment in subsidiaries to be appropriate.
85

1. 2. 3. Financial Statements
Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at €6 million (2018: €6 million). This represents 3% of adjusted EBITDA
(2018: adjusted EBITDA 5%), which we have determined, in our professional judgment, to be one of the principal benchmarks within the
financial statements relevant to members of the company in assessing financial performance.
Materiality for the Parent Company financial statements as a whole was set at €2 million, determined with reference to a benchmark of total
assets of which it represents 0.5%.
We report to the Audit Committee all corrected and uncorrected misstatements we identified through our audit in excess of €300,000
(2018: €300,000), in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
The structure of the Group’s finance function is such that certain transactions and balances are accounted for by the central Group finance
team, with the remainder accounted for in the Group’s reporting components. We performed comprehensive audit procedures, including
those in relation to the significant risks set out above, on those transactions and balances accounted for at Group and component level.
At a component level, audits for Group reporting purposes were performed for key identified reporting components. Our audits covered
99% of total Group revenue, and 95% of the Group’s net assets.
The audits undertaken for Group reporting purposes at the key reporting components were all performed to component materiality levels.
These component materiality levels were set individually for each component and ranged from €30k to €5.4m. Detailed audit instructions
were sent to the auditors in all of these identified locations. These instructions covered the significant audit areas to be covered by these
audits and set out the information required to be reported to the Group audit team. The work on 10 of the 28 components (2018: 10 of the
28 components) was performed by the Group audit team, including the audit of the Parent company, and the remainder were performed by
component auditors.
Members of the Group audit team, including the lead engagement partner, attended (in person or by telephone conference) each divisional
closing meeting at which the results of component audits within each division were discussed with divisional and Group management.
Senior members of the Group audit team also visited certain component locations (including those acquired in the period) in order to assess
the audit risk and strategy and work undertaken. Telephone conference meetings were also held with these component auditors and certain
others that were not physically visited. At these visits and meetings, the findings reported to the Group audit team were discussed in more
detail, and any further work required by the Group audit team was then performed by the component auditor.
We have nothing to report on going concern
We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an
undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the
date of approval of the financial statements. We have nothing to report in these respects.
Other information
The Directors are responsible for the other information presented in the annual report together with the financial statements. The other
information comprises the information included in the directors’ report, the non-financial statement included in the responsible business
report, strategic report, corporate governance report, audit committee report and compensation committee. The financial statements and
our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Based solely on our work on the other information we report that;
• we have not identified material misstatements in the directors’ report;
• in our opinion, the information given in the directors’ report is consistent with the financial statements;
• in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.
86

Independent Auditor’s Report
to the Members of  plc continued
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited
and the Company’s financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required
by sections 305 to 312 of the Act are not made.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 81, the directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-
a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Conall O’Halloran
for and on behalf of KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
4 March 2020
87

1. 2. 3. Financial Statements
Revenue, including Group share of joint ventures
and associates 1 6,173,195 – 6,173,195 5,043,490 – 5,043,490
Group revenue 1 3,729,346 – 3,729,346 3,727,591 – 3,727,591
Cost of sales (3,212,057) – (3,212,057) (3,220,805) – (3,220,805)
Gross profit 517,289 – 517,289 506,786 – 506,786
Operating expenses (net) 3 (455,371) (1,816) (457,187) (432,618) 9,450 (423,168)
Share of profit/(loss) of joint ventures – Dole 4 19,327 7,048 26,375 (2,697) (3,658) (6,355)
Share of profit of joint ventures – Other 4 10,658 – 10,658 8,685 – 8,685
Share of profit of associates 4 666 – 666 2,183 – 2,183
Operating profit before acquisition-related
intangible asset amortisation 92,569 5,232 97,801 82,339 5,792 88,131
Acquisition-related intangible asset amortisation 14 (10,301) – (10,301) (10,281) – (10,281)
Operating profit after acquisition-related
intangible asset amortisation 82,268 5,232 87,500 72,058 5,792 77,850
Financial income 5 2,754 – 2,754 2,484 1,220 3,704
Financial expense 5 (13,721) – (13,721) (9,849) (1,887) (11,736)
Profit before tax 71,301 5,232 76,533 64,693 5,125 69,818
Income tax expense 8 (10,282) (47) (10,329) (14,619) (1,395) (16,014)
Profit for the year 61,019 5,185 66,204 50,074 3,730 53,804
Attributable to:
Equity holders of the parent 53,302 35,793
Non-controlling interests 12,902 18,011
66,204 53,804
Earnings per ordinary share:
Basic 10 13.72 cent 9.37 cent
Fully diluted 10 13.69 cent 9.34 cent
On behalf of the Board
C P McCann F J Davis
Chairman Finance Director
Group Income Statement
for the year ended 31 December 2019
88

Notes
Profit for the year 66,204 53,804
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation effects:
– foreign currency net investments – subsidiaries 5,664 (6,416)
– foreign currency net investments – joint ventures and associates 15 3,274 3,236
– foreign currency recycled to income statement on joint venture/associate becoming a subsidiary – 90
– foreign currency borrowings designated as net investment hedges (3,397) (4,387)
Effective portion of changes in fair value of cash flow hedges, net 35 (149) 340
Changes in fair value of cost of hedging, net of recycling 35 137 23
Deferred tax on items above 30 (9) (97)
Share of joint ventures and associates effective portion of cash flow hedges (5,101) 51
Share of joint ventures and associates deferred tax on items above 497 696
916 (6,464)
Items that will not be reclassified to profit or loss:
Remeasurement (loss)/gain on employee benefit schemes 32 (3,009) 6,677
Revaluation gain on property, plant and equipment, net 11 2,095 475
Deferred tax on items above 30 (966) (1,172)
Share of joint ventures gain on revaluation of property, plant and equipment 1,369 –
Share of joint ventures loss on employee benefit schemes (2,601) (1,867)
Share of joint ventures deferred tax on items above (75) 854
(3,187) 4,967
Other comprehensive (expense)/income for the year (2,271) (1,497)
Total comprehensive income for the year 63,933 52,307
Attributable to:
Equity holders of the parent 49,417 33,071
Non-controlling interests 22 14,516 19,236
63,933 52,307
Group Statement of Comprehensive Income
for the year ended 31 December 2019
89

1. 2. 3. Financial Statements
Notes

Assets
Non-current
Property, plant and equipment 11 175,485 175,825
Right of use assets 12 113,032 –
Investment property 13 11,843 7,344
Goodwill and intangible assets 14 268,462 266,950
Investments in joint ventures and associates – Dole 15 264,893 245,881
Investments in joint ventures and associates – Other 15 104,050 105,172
Other investments 16 2,743 3,465
Other receivables 19 19,796 18,724
Deferred tax assets 30 13,497 12,393
Total non-current assets 973,801 835,754
Current
Inventories 17 98,031 90,295
Biological assets 18 3,965 5,066
Trade and other receivables 19 380,791 392,786
Other investments 16 2,306 6,612
Corporation tax receivables 2,439 4,523
Derivative financial instruments 35 4,489 4,388
Cash and cash equivalents 20 115,529 102,299
Total current assets 607,550 605,969
Total assets 1,581,351 1,441,723
Equity
Share capital 21 4,105 4,104
Share premium 21 295,487 295,421
Other reserves 21 (131,309) (123,057)
Retained earnings 282,816 256,654
Total equity attributable to equity holders of the parent 451,099 433,122
Non-controlling interests 22 98,768 82,483
Total equity 549,867 515,605
Liabilities
Non-current
Interest-bearing loans and borrowings 23 250,572 263,356
Lease liabilities 24 99,770 –
Other payables 26 2,904 1,611
Contingent consideration and other provisions 27 7,957 12,931
Put option liability 28 23,083 34,975
Corporation tax payable 6,541 6,676
Deferred tax liabilities 30 27,731 31,140
Employee benefits 32 16,736 15,964
Total non-current liabilities 435,294 366,653
Current
Interest-bearing loans and borrowings 23 86,150 58,686
Lease liabilities 24 20,306 –
Trade and other payables 26 475,202 482,934
Contingent consideration and other provisions 27 8,534 14,333
Put option liability 28 3,529 –
Derivative financial instruments 35 305 296
Corporation tax payable 2,164 3,216
Total current liabilities 596,190 559,465
Total liabilities 1,031,484 926,118
Total liabilities and equity 1,581,351 1,441,723
On behalf of the Board
C P McCann F J Davis
Chairman Finance Director
Group Balance Sheet
as at 31 December 2019
Net cash flows from operating activities before working capital movements 36 67,249 65,208
Movements in working capital 36 6,527 (20,265)
Net cash flows from operating activities 73,776 44,943
Investing activities
Acquisition of subsidiaries 31 (6,683) (2,496)
Cash assumed on acquisition of subsidiaries, net 31 2,308 3,833
Acquisition of, and investment in joint ventures and associates
(including acquisition fees and net of loans advanced/repaid) (7,145) (251,949)
Payments of contingent consideration 27 (11,103) (7,009)
Acquisition of equity investments (150) –
Proceeds from disposal of investments for resale 1,043 –
Proceeds from disposal of joint ventures and associates 48 –
Disposal of investment in subsidiary to non-controlling interests 22 – 286
Cash/(bank overdraft) derecognised on disposal of subsidiaries (191) –
Acquisition of property, plant and equipment (19,518) (25,942)
Acquisition of intangible assets-computer software (4,621) (4,352)
Acquisition of intangible assets – brands 14 – (19)
Development expenditure capitalised 14 (62) (121)
Proceeds from disposal of property and plant and equipment – routine 678 797
Proceeds from exceptional items – from disposals of investments 9,307 5,876
Dividends received from joint ventures and associates 15 10,652 10,908
Government grants received 106 11
Net cash flows from investing activities (25,331) (270,177)
Financing activities
Drawdown of borrowings 23 345,764 436,319
Repayment of borrowings 23 (333,211) (329,766)
Lease payments 24 (17,902) –
Proceeds from the issue of share capital, net 21 67 141,408
Capital element of finance lease repayments – (681)
Acquisition of non-controlling interests 22 (1,656) (490)
Capital contribution by non-controlling interests 22 – 130
Dividends paid to non-controlling interests 22 (16,055) (10,535)
Dividends paid to equity holders of the parent 9 (13,313) (13,062)
Net cash flows from financing activities (36,306) 223,323
Net increase/(decrease) in cash, cash equivalents and overdrafts 12,139 (1,911)
Cash, cash equivalents and bank overdrafts at start of period 92,739 88,979
Net foreign exchange difference 1,149 5,671
Cash, cash equivalents and bank overdrafts at 31 December 20 106,027 92,739
Group Statement of Cash Flows
for the year ended 31 December 2019
93

94

Reporting entity
 plc (the ‘Company’) is a company tax resident and incorporated in Ireland. The consolidated financial statements as at, and
for the year ended, 31 December 2019 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s
interests in associates and joint ventures.
The individual and Group financial statements of the Company were authorised for issue by the Directors on 4 March 2020.
The accounting policies for the year ended 31 December 2019 are set out below.
Statement of compliance
As permitted by European Union (EU) law and in accordance with AIM/Euronext Growth rules, the consolidated financial statements have
been prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and their interpretations issued by the International
Accounting Standards Board (‘IASB’) as adopted by the EU.
The individual financial statements of the Company (‘Company financial statements’) have been prepared in accordance with IFRSs as
adopted by the EU and as applied in accordance with the Companies Act 2014 which permits a company that publishes its Company and
Group financial statements together to take advantage of the exemption in Section 304(2) of the Companies Act, 2014, from presenting to its
members its Company income statement, statement of comprehensive income and related notes that form part of the approved Company
financial statements.
The IFRSs adopted by the EU and applied by the Company and Group in the preparation of these financial statements are those that were
effective for the accounting period ending 31 December 2019.
Basis of preparation
The consolidated financial statements, which are presented in Euro, the Company’s functional currency, rounded to the nearest thousand
(unless otherwise stated), have been prepared under the historical cost convention, except for the following material items:
• derivative financial instruments are measured at fair value;
• financial instruments at fair value through profit or loss are measured at fair value;
• biological assets are measured at fair value less estimated point of sale costs;
• land and buildings and investment properties are measured at fair value;
• contingent consideration is measured at fair value; and
• put option obligations are measured at fair value.
The methods used to measure fair values are discussed further within the relevant notes.
The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected. The key estimates and assumptions used
in applying the Group’s accounting policies and in measuring its assets and liabilities are set out in Note 37.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous year except for the following new and amended IFRS and IFRIC
interpretations adopted by the Group and Company in these financial statements:
• IFRS 16 Leases
• IFRIC 23 Uncertainty over Income Tax Treatments (no material impact on financial statements)
• Prepayment Features with Negative Compensation – Amendments to IFRS 9 (no material impact on financial statements)
• Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28 (no material impact on financial statements)
• Plan Amendment, Curtailment or Settlement – Amendments to IAS 19 (no material impact on financial statements)
• Annual improvements to IFRSs 2015 – 2017 Cycle – Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23 (no material impact
on financial statements)
IFRS 16 Leases
The Group has initially adopted IFRS 16 Leases with effect from 1 January 2019.
IFRS 16 introduces a single lessee accounting model to be adopted and accordingly the majority of all lease agreements will now result
in the recognition of a right of use asset and a lease liability on the balance sheet. This will increase the Group’s recognised assets and
liabilities. The income statement charge in relation to all leases will now comprise a depreciation element relating to the right of use asset
and also a financing charge relating to the lease liability. Lessor accounting remains similar to previous accounting policies.
The Group has applied IFRS 16 using the modified retrospective approach on transition, under which the cumulative effect of initial
application is recognised in equity as an adjustment to the opening balance of retained earnings, non-controlling interest and currency
translation reserve at 1 January 2019. The comparative information for prior periods has not been restated. It is presented as previously
reported under IAS 17 and related interpretations.
Notes to the Group Financial Statements
for the year ended 31 December 2019
Significant Accounting Policies
95

1. 2. 3. Financial Statements
The details of the changes in accounting policies are disclosed below.
Definition of a lease
Under IFRS 16 a contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. On transition to IFRS 16, the Group used the practical expedient to grandfather the assessment of which
contracts were leases and therefore applied IFRS 16 on transition only to those contracts that had previously been identified as leases.
Changes as a lessee
As a lessee, the Group previously classified leases as operating or finance leases based on whether the lease transferred substantially all of the
risks and rewards of ownership. Under IFRS 16, the Group recognises right of use assets and lease liabilities for most leases on its balance
sheet. However, the Group has elected not to recognise right of use assets and lease liabilities for some short-term leases and leases of
low-value assets. The Group recognises the lease payments for these leases as an expense on a straight-line basis over the lease term.
Transition
At transition, for leases previously classified as operating leases under IAS 17, lease liabilities were measured as the present value of the
remaining lease payments, discounted at the incremental borrowing rate at 1 January 2019. Right of use assets were measured at either:
• their carrying amount if IFRS 16 had been applied since the commencement date, discounted using the incremental borrowing rate at
1 January 2019. The Group applied this approach for certain property leases; or
• an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. The Group applied this
approach to all other leases.
The Group used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:
• Applied the exemption not to recognise right of use assets and lease liabilities for leases with less than 12 months of a lease term.
• Excluded initial direct costs from measuring the right of use asset at the date of initial application.
• Used hindsight when determining the lease term if the contract contained options to extend or terminate the lease.
At transition, for leases previously classified as finance leases under IAS 17, the carrying amount of the right of use asset and lease liability
at 1 January 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.
Impact on the financial statements
Impact on transition
On transition to IFRS 16, the Group recognised additional right of use assets, lease liabilities and restoration provisions with the difference
being recognised in reserves. The impact on transition is summarised below:
1 January 2019
Right of use assets 115,336
Lease liabilities (121,101)
Restoration provisions (905)
Investment in joint ventures and associates – Dole (3,326)
Prepayments/accruals (net) 1,513
Deferred tax asset 368
Retained earnings 6,937
Non-controlling interests 1,337
Currency translation reserve (159)
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its
incremental borrowing rate at 1 January 2019. The weighted average rate applied was 2.6%.
The lease liabilities recognised at 1 January 2019 can be reconciled to the operating lease commitments as at 31 December 2018 as follows:
Operating lease commitment at 31 December 2018 86,583
Extension options reasonably certain to be exercised 59,416
Non-lease components 3,360
Commitments relating to low-value and short-term leases (997)
Lease contracts not commenced at 1 January 2019 (5,635)
Effect of discounting (21,626)
Operating lease liabilities recognised at 1 January 2019 121,101
Finance lease liabilities recognised at 31 December 2018 1,636
Lease liabilities at 1 January 2019 122,737
96

Impact on the balance sheet at year end
As a result of initially applying IFRS 16, in relation to leases that were previously classified as operating leases, the Group recognised
€111,193,000 of right of use assets and €118,568,000 of lease liabilities at 31 December 2019. See Note 12 and Note 24 for carrying
amounts of right of use assets and lease liabilities.
Impact on the income statement in the year
For subsidiaries in relation to those leases previously classified as operating leases, under IFRS 16, the Group has recognised depreciation
and interest costs instead of an operating lease expense. During the year to 31 December 2019 the Group recognised €18,576,000 of
depreciation costs and €2,957,000 of interest costs from these leases. Under IAS 17, the operating lease cost associated with these leases
would have been €19,777,000.
The Group’s share of depreciation costs and of interest costs of joint ventures and associates from leases that would previously have been
classified as operating leases amounted to €28,843,000 and €7,847,000 respectively. Under IAS 17 the Group’s share of the operating lease
cost associated with these leases would have been €34,482,000.
The net incremental impact on Group’s profit after tax and non-controlling interests in the year was a decrease of €2,882,000.
The incremental impact of IFRS 16 on fully diluted and adjusted fully diluted earnings per share was a decrease of 0.74 cent for the year.
Impact on the cashflow statement in the year
As a result of initially applying IFRS 16, in relation to leases that were previously classified as operating leases, the net cashflows from
operating activities decreased by €16,821,000 and net cashflows from financing activities increased by €16,821,000.
Accounting for subsidiaries, joint ventures and associates
Group financial statements
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the consolidated financial statements from the date on which control is transferred to the Group and are no
longer consolidated from the date that control ceases. The amounts included in these financial statements in respect of the subsidiaries are
taken from their latest financial statements prepared up to their respective year ends, together with management accounts for the intervening
periods to the year end, where relevant. All significant subsidiaries have coterminous financial year ends. Where appropriate, the accounting
policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in
preparing the consolidated financial statements, except to the extent they provide evidence of impairment.
Profit or loss and each component of other comprehensive income are attributed to the equity shareholders of the Company, and to the
non-controlling interests, even if this results in the non-controlling interests having a negative balance.
Joint ventures and associates
Joint ventures are those entities over which the Group exercises control jointly, under a contractual agreement, with one or more parties.
Associates are those entities in which the Group has significant influence, but not control of, the financial and operating policies. Investments
in joint ventures and associates are accounted for by using the equity method of accounting. Under the equity method of accounting, the
Group’s share of the post-acquisition profits or losses of its joint ventures and associates are recognised in the Group income statement.
The income statement reflects in the profit before tax, the Group’s share of profit after tax of its joint ventures and associates in accordance
with IAS 28 Investments in Associates and Joint Ventures (2011).
The Group’s interest in the net assets of joint ventures and associates are included as investments in joint ventures and associates in the
Group’s balance sheet at an amount representing the Group’s share of the fair value of the identifiable net assets at acquisition, plus the
Group’s share of post-acquisition retained income and expenses and goodwill arising on the Group’s investment. The amounts included in
these financial statements in respect of the post-acquisition income and expenses of joint ventures and associates are taken from the latest
financial statements prepared up to the respective financial year ends together with management accounts for the intervening periods to
the period end, where appropriate. All material joint ventures and associates have either coterminous financial year ends, or accounting
year ends within three months of that of the Group. In the case of the latter, appropriate adjustments are made for the effects of significant
transactions or events that occur between that date and the date of the Group’s financial statements. Where appropriate, the accounting
policies of joint ventures and associates have been changed to ensure consistency with the policies adopted by the Group.
Unrealised gains and income and expenses arising from transactions with associates and joint ventures are eliminated to the extent of the
Group’s interest in the equity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not
provide evidence of impairment.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Significant Accounting Policies continued
97

1. 2. 3. Financial Statements
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any
long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that
the Group has an obligation or has made payments on behalf of the investee.
Company financial statements
Investments in subsidiaries, joint ventures and associates are carried at cost less impairment. Dividend income is recognised when the right
to receive payment is established.
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into account potential
voting rights that are substantive rights.
Acquisitions on or after 1 January 2010
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as the fair value of the consideration
transferred plus the recognised amount of any non-controlling interests in the acquiree plus if the business combination is achieved in
stages, the fair value of the existing equity interest in the acquiree less the fair value of the identifiable assets and acquired liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised in the income statement.
Transaction costs associated with the acquisition, except those relating to the issue of debt or equity securities, are expensed as incurred.
Contingent consideration is measured at fair value at the date of acquisition. Where the contingent consideration is classified as equity,
it is not subsequently remeasured and the settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of
contingent consideration are recognised in the income statement.
When share-based payment awards are required to be exchanged for awards held by the acquiree’s employees and relate to past services,
then all or a portion of the amount of the acquirer’s replacement awards are included in measuring the consideration transferred in the
business combination. The determination is based on the market-based value of the replacement awards compared with the market-based
value of the acquiree’s awards, and the extent to which the replacement awards relate to past and/or future service.
Acquisitions before 1 January 2010
For acquisitions prior to 1 January 2010, goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value
of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was
recognised in the income statement. Subsequent to acquisition, any fair value adjustments to contingent consideration are adjusted
against goodwill.
Transaction costs, other than those associated with the issue of debt or equity securities that the Group incurred in connection with the
business combinations, were capitalised as part of the cost of acquisition.
Non-controlling interests
Under IFRS 3 Business Combinations, an entity has a choice on a combination by combination basis to measure any non-controlling interest
(‘NCI’) in the acquiree at either the proportionate share of the acquiree’s identifiable assets or fair value. Within the business combinations
note, the Group states which method has been used within current year acquisitions.
Fair value measurement of pre-existing interests in acquiree
In accordance with IFRS 3 Business Combinations, the cost of an acquiree acquired in stages is measured using the ‘fair value as deemed
cost’ method. The cost of an acquiree acquired in stages is measured as the sum of the fair value of the previously held interest plus the fair
value of any additional consideration transferred at the date the additional investment is made. Any resulting gain or loss on fair valuing the
original investment is taken to the income statement and any other comprehensive income recognised in prior periods in relation to the
previously held shareholding is reclassified to the income statement.
98

Put options over non-controlling interest shares
If a put option is held by a non-controlling interest (‘NCI’) in a subsidiary undertaking, whereby the holder of the put option can require the
Group to acquire the NCI’s shareholding in the subsidiary at a future date, the Group examines the nature of such a put option. The Group
assesses whether or not the NCI continues to have a present ownership interest in the shares subject to the put option. Present ownership
interest can be evidenced by NCI continuing to have a right to the receipt of dividends, or benefiting from increases in net assets while
holding a voting entitlement to the shares subject to the put option. If it is deemed that the put option holders continue to have a present
ownership interest, the Group applies the partial recognition of NCI method as follows:
(a) the Group continues to recognise the amount that would have been recognised for the non-controlling interest, including an update to
reflect its share of profit and losses, dividends and other changes;
(b) the Group recognises a financial liability in accordance with IAS 32 being the estimate of the fair value of the consideration to acquire the
NCI shares that are subject to the put option and records this in a separate reserve in equity;
(c) changes in the fair value of the financial liability are reflected as a movement in the put option; and
(d) for presentation purposes in the balance sheet, the Group transfers the non-controlling interest subject to the put option as an offset to
the put option reserve in equity.
If the NCI put option is exercised, the same treatment is applied up to the date of exercise. The amount recognised as the financial liability
at that date is extinguished by the payment of the exercise price. If the put option expires unexercised, the position is unwound so that the
non-controlling interest is recognised as the amount it would have been as if the put option had never been granted and the financial liability
is derecognised with a corresponding credit to the put option reserve in equity.
If the NCI does not have present ownership rights from the put option, then the transaction is accounted for as if the Group had acquired the
NCI at the date of entering into the put option.
Forward commitments over non-controlling interest shares
If a forward commitment is in place to acquire the shares held by an NCI in a subsidiary undertaking, whereby the Group has an irrevocable
agreement to acquire the NCI’s shareholding in the subsidiary at a future date, the Group examines the nature of such a commitment. The Group
assesses whether or not the NCI continues to have a present ownership interest in the shares subject to commitment. Present ownership interest
can be evidenced by the NCI continuing to have a right to the receipt of dividends, or benefiting from increases in net assets while holding a voting
entitlement to the shares subject to the forward commitment. If it is deemed that the non-controlling shareholders continue to have a present
ownership interest, the Group applies the partial recognition of NCI method as outlined above in the accounting policy for put options over
non-controlling interest shares.
Call options over non-controlling interest shares
If the Group has a call option over the shares held by an NCI in a subsidiary undertaking, where the Group can require the NCI to sell its
shareholding in the subsidiary at a future date, the option is classified as a derivative and is recognised as a financial instrument on inception
with fair value movements recognised in the income statement.
Put and call options over shareholdings of joint venture and associate interests
If there are put and call options over the remaining shares in joint venture and associate undertakings, the option is classified as a derivative
instrument on inception with fair value movements recognised in the income statement.
Goodwill
Goodwill represents amounts arising on the acquisition of subsidiaries, joint ventures and associates as a result of the fair value of
consideration transferred exceeding net identifiable assets and liabilities acquired. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment at a consistent time each financial year. Goodwill is stated at the amount originally recognised
less any accumulated impairment losses. In respect of joint ventures and associates, the carrying amount of goodwill is included in the
carrying amount of the investment.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with
the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the
cash-generating unit retained.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Significant Accounting Policies continued
99

1. 2. 3. Financial Statements
Intangible assets
Research and development
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is
recognised in the income statement as an expense as incurred.
Development activities involve a plan or design for the production of new and substantially improved products and processes. Development
expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the
asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the
asset for its intended use. Capitalised expenditure is measured at cost less accumulated amortisation. Capitalised development expenditure is
amortised to the income statement after commercial production has begun on a straight-line basis over its expected useful life of between five
and seven years.
Customer relationships, supplier relationships and brands
Intangible assets acquired as part of a business combination are valued at their fair value at the date of acquisition. These include customer
relationships, supplier relationships and brands. Intangible assets are amortised to the income statement on a straight-line basis over the
period of their expected useful lives as follows:
• Customer relationships: 3-15 years;
• Supplier relationships: 3-15 years;
• Brands: 10-15 years;
• Dole brand consisting of the DOLE brand trademark and trade name is considered to have an indefinite life because it is expected to
generate cash flows indefinitely and as such is not amortised.
Software costs
Costs incurred on the acquisition of computer software and software licences are capitalised. Other costs directly associated with
developing and maintaining computer software programmes are capitalised once the recognition criteria set out in IAS 38 Intangible
Assets are met. Computer software is amortised over periods of between three to eight years using the straight-line method.
Property, plant and equipment
Land and buildings are measured at fair value with changes in fair value reflected within the statement of comprehensive income, except
impairment losses, which are recognised in the income statement unless they reverse a previous revaluation gain. The fair value is the price
that would be returned if the asset were sold in an orderly transaction between market participants based on the asset’s highest and best
use. Such valuations are determined taking into consideration values of comparable transactions for similar properties in the same locations
as those of the Group where they are available or on the use of valuation techniques including the use of market yield on comparable
properties. Information on the basis on which such valuations were undertaken in the year is set out in Note 11.
Where appropriate, registered independent appraisers, having relevant recognised professional qualifications and recent experience in the
locations and categories, prepare the valuations every three to five years, with valuations updated annually in the interim by Directors, having
due regard to advice of professionally qualified consultants. Where there is an absence of or reduced level of transactions of a similar nature,
the valuations of such properties are determined by Directors with reference to local knowledge, valuation techniques and judgment in
consultation with property advisors.
Bearer plants are living plants used in the supply or production of agricultural produce for more than one period that are not likely to be sold
as agricultural produce. Bearer plants are measured at cost less accumulated depreciation and impairment losses.
Plant and equipment is stated at cost less accumulated depreciation and impairment losses. Expenditure incurred to replace a component
of property, plant and equipment that is accounted for separately is capitalised. Other subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the item of property, plant and equipment. All other expenditure, including repairs and
maintenance costs, is recognised in the income statement as an expense as incurred.
Depreciation is calculated to write off the carrying amount of property, plant and equipment, other than freehold land, on a straight-line basis,
by reference to the following estimated useful lives:
• Freehold buildings: 30-50 years;
• Plant and equipment: 5-15 years;
• IT equipment: 3-5 years;
• Motor vehicles: 5 years; and
• Bearer plants: 1-30 years.
The residual value of assets, if not insignificant, and the useful life of assets are reassessed annually. Gains and losses on disposals of
property, plant and equipment are recognised on the completion of sale. Gains and losses on disposals are determined by comparing the
proceeds received with the carrying amount and are included in operating profit.
100

Investment property
Investment property, principally comprising land, office buildings and warehouses, is property (including separate, self-contained parts
of such buildings) which is held for rental income or capital appreciation and is not occupied by the Group. Investment property is stated
initially at cost and subsequently at fair value. The fair value is the price that would be returned if the asset were sold in an orderly transaction
between market participants based on the asset’s highest and best use. Such valuations are determined by benchmarking against
comparable transactions for similar properties in the same locations as those of the Group or on the use of valuation techniques, including
the use of market yield on comparable properties. Information on the basis on which such valuations were undertaken in the year is set
out in Note 13. All gains or losses arising from a change in fair value are recognised in the income statement. When property is transferred
to investment property following a change in its use, any differences arising at the date of transfer between the carrying amount of the
property prior to transfer and its fair value is recognised in other comprehensive income if it is a gain. Upon disposal of the property,
the gain is transferred to retained earnings. Any loss arising in this manner, unless it represents the reversal of a previously recognised gain,
is recognised in the income statement.
Biological assets
Certain of the Group’s subsidiaries, joint ventures and associates, involved in the production of fresh produce, hold biological assets, which
include agricultural produce due for harvest on plantations. Biological assets are measured at fair value less estimated costs to point of sale,
with any resultant gain or loss recognised in the income statement. Point of sale costs include all costs that would be necessary to sell the
assets, excluding costs necessary to bring the assets to market.
Foreign currency including Net Investment Hedges
Transactions in foreign currencies are translated into the functional currency of the entity at the foreign exchange rate ruling at the date of the
transaction. Non-monetary assets carried at historic cost are not subsequently retranslated. Non-monetary assets carried at fair value are
subsequently remeasured at the exchange rate at the date of valuation.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the
foreign exchange rate ruling at that date. Foreign exchange movements arising on such translation are recognised in the income statement.
The assets and liabilities of foreign currency denominated operations, including goodwill and fair value adjustments arising on consolidation,
are translated to Euro at the foreign exchange rates ruling at the reporting date. The income and expenses of foreign currency denominated
operations are translated to Euro at the average exchange rate for the year. Foreign exchange movements arising on translation of the net
investment in a foreign operation, including those arising on long-term intra-Group loans deemed to be quasi equity in nature, are recognised
directly in other comprehensive income, in the currency translation reserve. The portion of exchange gains or losses on foreign currency
borrowings used to provide a hedge against a net investment in a foreign operation that is designated as a hedge of those investments
is recognised directly in other comprehensive income to the extent that they are determined to be effective. The ineffective portion is
recognised in the income statement.
Any movements that have arisen since 1 January 2004, the date of transition to IFRS, are recognised in the currency translation reserve
and are reclassified through the income statement on disposal of the related business. Translation differences that arose before the date
of transition to IFRS in respect of all non-Euro denominated operations are not presented separately.
Impairment of non-financial assets
The carrying amounts of the Group’s assets other than inventories (which are carried at the lower of cost and net realisable value), biological
assets (which are measured at fair value less estimated costs to point of sale) certain financial assets (which are carried at fair value) and
deferred tax assets (which are recognised based on recoverability), are tested for impairment when an event or transaction indicates that
an impairment may have occurred, except for goodwill and indefinite lived intangibles which are tested annually for impairment. If any such
indication exists, an impairment test is carried out and the asset is written down to its recoverable amount as appropriate.
The recoverable amount of an asset is the greater of its fair value less cost to sell and value-in-use. In assessing value-in-use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
Goodwill and intangible assets with an indefinite useful life are tested for impairment at 31 December each year. Impairment losses are
recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the unit
on a pro-rata basis.
An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Significant Accounting Policies continued
101

1. 2. 3. Financial Statements
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the first-in, first-out principle
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, including bank deposits of less than three months maturity on
acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as
a component of cash and cash equivalents for the purpose of the cashflow statement.
Employee benefits
Short term employee benefits
Short term employee benefits are recognised as an expense as the related employee service is received.
Retirement benefit obligations – Group financial statements
Obligations for contributions to defined contribution pension schemes are recognised as an expense in the income statement as services
from employees are received. Under such schemes, the Group has no obligation to make further contributions to these schemes beyond
the contracted amount. Prepaid contributions are recognised as an asset to the extent that the employee service has not yet been received.
The defined benefit pension asset or liability in the Group balance sheet comprises the total for each plan of the present value of the defined
benefit obligation less the fair value of plan assets (measured at fair value) out of which the obligations are to be settled directly.
The liabilities and costs associated with the Group’s defined benefit pension schemes are assessed on the basis of the projected unit
credit method by professionally qualified actuaries and are arrived at using actuarial assumptions based on market expectations at the
reporting date.
The discount rates employed in determining the present value of the schemes’ liabilities are determined by reference to market yields at
the reporting date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-
employment benefit obligations. The expected increase in the present value of scheme liabilities arising from employee service in the current
or prior periods is recognised in arriving at the operating profit or loss together with the interest return on the schemes’ assets and the
increase during the period in the present value of the schemes’ liabilities arising from the passage of time. Differences between the actual
return on plan assets less the interest return on plan assets, together with the effect of changes in the current or prior assumptions
underlying the liabilities, are recognised in other comprehensive income.
When the benefits of a defined benefit scheme are changed or the obligation is curtailed or settled, the related income or expense is recognised
in the income statement as a past service cost. Settlements, curtailments and past service cost changes trigger a remeasurement of the
obligations and related assets in the income statement.
Retirement benefit obligations – Company financial statements
The Company is not the sponsoring employer for any of the Group’s defined benefit pension schemes. There is no stated policy within
the Group in relation to the obligations of Group companies to contribute to scheme deficits. Group companies make contributions to the
schemes as requested by the sponsoring employers.
Employee share-based payment transactions
The Group grants equity settled share-based payments to employees. The fair value of these payments is determined at the date of grant
and is expensed to the income statement on a straight-line basis over the vesting period. The fair value is determined using a binomial
model, as measured at the date of grant, excluding the impact of any non-market conditions. Non-market vesting conditions are included
in assumptions about the number of options that are expected to vest.
At each reporting date, the Group revises its estimates of the number of options or awards that are expected to vest, based on non-market
conditions recognising any adjustment in the income statement, with a corresponding adjustment to equity.
Taxation
Taxation on the profit or loss for the financial year comprises current and deferred tax. Taxation is recognised in the income statement
except to the extent that it relates to items recognised directly in other comprehensive income, in which case the related tax is recognised
in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the financial year, using tax rates and laws that have been enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous financial years.
Deferred tax is provided using the balance sheet liability method on temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. If the temporary difference arises from the initial
recognition of an asset or liability, in a transaction other than a business combination, that at the time of the transaction does not affect
accounting or taxable profit or loss, it is not recognised. Deferred tax is provided on temporary differences arising on investments in
102

Taxation continued
subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in the foreseeable future or where no taxation is expected to arise on any ultimate
remittance. The amount of deferred tax provided is based on the expected manner of the realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
IFRIC 23 ‘Uncertainty over Income Tax Treatments’ was issued in June 2017 and clarifies how to apply the recognition and measurement
requirements in IAS 12 when there is uncertainty over income tax treatments. The Group had previously accounted for uncertain tax
positions in line with the principles of IFRIC 23 and therefore, there is no impact to the Group in 2019 in respect of IFRIC 23.
The Group considers each uncertain tax treatment separately or together with one or more uncertain tax treatments, based on which
approach better predicts the resolution of the uncertainty. If the Group concludes that it is not probable that the relevant authority will accept
an uncertain tax treatment, the Group reflects the effect of the uncertainty in determining the related taxable profit, tax bases, unused tax
losses, unused tax credits or tax rate. The Group reflects the effect of uncertainty for each uncertain tax treatment using an expected value
approach or a most likely approach, depending on which method the Group expects to better predict the resolution of the uncertainty.
The unit of account for recognition purposes is the income tax/deferred tax assets or liabilities and the Group does not provide separately
for uncertain tax positions.
Assets held under leases – Accounting policy until 31 December 2018
Finance leases
Leases of property, plant and equipment, where the Group retains substantially all the risks and rewards of ownership, are classified as
finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased item and the present
value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant
interest charge on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in interest-
bearing loans and borrowings, allocated between current and non-current as appropriate. The interest element of the finance cost is charged
to the income statement over the lease period. Assets held under finance leases are depreciated over the shorter of their expected useful lives
or the lease term, taking into account the time period over which benefits from the leased assets are expected to accrue to the Group.
Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases, net of incentives received from the lessor, are charged to the income statement on a straight-line
basis over the period of the lease. Income earned from operating leases is credited to the income statement when earned.
Assets held under leases – Accounting policy from 1 January 2019
The Group recognises a right of use asset and a lease liability at the lease commencement date.
The right of use asset is initially measured at cost and subsequently at cost less accumulated depreciation and impairments, and adjusted
for certain remeasurements of the lease liability. The cost of the right of use asset includes the lease liability recognised, any initial direct
costs, restoration costs and payments made on or before the lease commencement date less any lease incentives received. The right of
use asset is depreciated on a straight-line basis over the lower of the lease term and the useful life of the asset. Where the lease contains a
purchase option and the lessee is reasonably certain to exercise the purchase option the asset is depreciated over the useful life of the asset.
Right of use assets are subject to impairment testing.
The lease liability is initially measured as the present value of the lease payments to be made over the term of the lease, discounted using
the rate implicit in the lease or, where this is not available, the Group’s incremental borrowing rate. Lease payments include fixed and variable
lease payments, and amounts expected to be paid under residual value guarantees. Lease payments also include the exercise price of a
purchase option where the Group is reasonably certain that they will exercise the option and also any termination costs associated with
a lease where the lease term reflects the termination of the lease.
The lease liability is subsequently increased by the interest cost of the lease liability and decreased by lease payments made. The lease
liability is remeasured when there is a change in future lease payments as a result of a change in an index or rate, a change in the amount
expected to be paid under a residual value guarantee, or a change in the assessment of whether a purchase or termination option is
reasonably expected to be exercised or not exercised. The Group has availed of the practical expedient not to separate lease components
from any associated non-lease components for leases of plant and equipment and motor vehicles.
The Group has applied judgment in determining the lease term for leases where they are the lessee and the lease contract contains
renewal and/or termination options. The assessment of whether the Group is reasonably certain to exercise such options impacts the
lease term which in turn impacts the right of use asset and lease liability to be recognised.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Significant Accounting Policies continued
103

1. 2. 3. Financial Statements
Lessor – Accounting policy until 31 December 2018
For contracts entered into before 1 January 2019, the Group determined whether the arrangement was or contained a lease based
on the assessment of whether:
• Fulfilment of the arrangement was dependent on the use of a specific asset or assets; and
• The arrangement had conveyed a right to use the asset if one of the following was met:
– The purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the
output;
– The purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant
amount of the output; or
– Facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of the output,
and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.
When the Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an operating lease.
To classify each lease, the Group made an overall assessment of whether the lease transferred substantially all of the risks and rewards
incidental to ownership of the underlying assets. If this was the case, then the lease was a finance lease; if not, then it was an operating
lease. As part of this assessment, the Group considered certain indicators such as whether the lease was for the major part of the economic
life of the asset.
Lessor – Accounting policy from 1 January 2019
At inception or modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each
lease component on the basis of their relative standalone prices.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards
incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part
of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract.
The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of
‘other operating income’.
Government grants
Government grants for the acquisition of assets are recognised at their fair value when there is reasonable assurance that the grant will be
received and any conditions attaching to them have been fulfilled. The grant is held on the balance sheet as a deferred credit and released
to the income statement over the periods appropriate to match the related depreciation charges, or other expenses of the asset, as they
are incurred.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, it is
probable that an outflow of economic benefits will be required to settle the obligation and the outflow can be measured reliably. If the effect
is material, provisions are measured by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money and, where appropriate, the risks specific to the liability.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
When the Company or a Group company purchases the Company’s equity share capital and holds the shares as treasury shares, the
consideration paid, including directly attributable incremental costs (net of taxes), is recognised as a deduction from equity and is presented
in the own shares reserve until the shares are sold, reissued or cancelled.
Where the Company or a Group company purchases the Company’s equity share capital and cancels the shares, the nominal value of the
shares cancelled is credited to undenominated capital. The total consideration paid, including directly attributable incremental costs (net of
taxes), is recognised as a reduction in retained earnings.
104

Financial instruments
Trade and other receivables
Trade receivables are initially measured at their transaction price and other receivables are initially measured at fair value and are thereafter
measured at amortised cost using the effective interest method less any provision for impairment.
A provision for impairment of trade and other receivables is recognised based on the expected credit losses (‘ECL’) for those trade and other
receivables. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash
shortfalls related to the receivable.
Loss allowances are based on lifetime ECLs, except for the following which are measured as twelve-month ECLs:
• Trade receivables;
• Other receivables which have been determined to be low risk at the reporting date; and
• Other receivables for which there has not been a significant increase in credit risk (i.e. the risk of a default occurring) at the reporting date
since the other receivable first originated
A rating system has been utilised in relation to other receivables. A significant increase in credit risk is determined to have occurred if the
rating of this system disimproves by a predetermined amount.
Trade receivables are considered to be in default if repayment is considered unlikely or if the trade receivable is more than 180 days past
due. Other receivables are considered to be in default if the receivable is not collected within the agreed terms.
Lifetime ECLS are the ECLs that result from all possible default events over the expected life of a receivable. Twelve-month ECLs are the
portion of ECLs that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected
life of the receivable is less than 12 months).
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Equity investments
In accordance with IFRS 9, equity investments are now measured at fair value through profit or loss (‘FVTPL’). Net gains or losses, including
any interest or dividend income, are recognised in profit or loss.
Derivative financial instruments
Foreign currency derivatives are entered into only when they match an existing foreign currency asset or liability, or where they are used
to hedge a forecasted transaction. Derivative financial instruments are measured at fair value at each reporting date and the movement
in fair value is recognised in the income statement unless they are designated as cash flow hedges under IFRS 9 Financial Instruments.
Where such instruments are classified as cash flow hedges, and subject to the satisfaction of certain criteria relating to the documentation
of the risk, objectives and strategy for the hedging transaction and the ongoing measurement of its effectiveness, they are accounted for
in accordance with hedge accounting rules. In such cases, any gain or loss arising on the effective portion of the derivative instrument is
recognised in the other comprehensive income hedging reserve, as a separate component of equity. Gains or losses on any ineffective
portion of the derivative are recognised in the income statement. Either the change in the fair value of the spot element or the entire change
in the fair value of the forward exchange contracts is designated as the hedging instrument in cash flow hedging relationships. Where
only the change in the fair value of the spot element of the forward exchange contract is designated the change in fair value of the forward
element of forward exchange contracts (‘forward points’) is separately accounted for as a cost of hedging and recognised in the cost of
hedging reserve within equity.
When the hedged forecast transaction results in the recognition of a non-financial item such as inventory, the amount accumulated in
the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item when it is recognised,
where material.
For all other hedged forecast transactions when the hedged transaction matures, the related gains or losses in the hedging reserve and
the cost of hedging reserve are transferred to the income statement.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation
is revoked, then hedge accounting is discontinued prospectively. If the hedged item is a non-financial asset, the amount accumulated in the
hedging reserve and the cost of hedging reserve remains in equity until initial recognition of the non-financial assets. For other hedged items,
accumulated amounts are reclassified to the income statement in the same period as the expected hedged future cash flows effect profit or
loss. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive income is reclassified to profit or loss.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Significant Accounting Policies continued
105

1. 2. 3. Financial Statements
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income
statement over the period of the borrowings on an effective interest basis.
Revenue
Revenue is recognised at a point in time when control of the goods has transferred to the customer, which can be on shipping or delivery
depending on the terms of trade with the customer. Revenue is measured as the consideration that is expected to be received for the sale
of these goods, excluding value added tax, after eliminating sales within the Group.
Finance income and finance expense
Finance income comprises interest income on funds invested and other receivables like grower loans. It also includes dividends received
from financial assets. Interest income is recognised as it accrues using the effective interest method. Dividends are recognised when
received or entitlement to dividend is declared.
Finance expense comprises interest expense on borrowings, interest expense relating to IFRS 16 Leases, unwinding of the discount on
provisions, borrowing extinguishment costs and arrangement fees. Borrowing costs incurred in the construction of major assets which
take a substantial period of time to complete are capitalised in the financial period in which they are incurred. All other finance costs are
recognised in the income statement using the effective interest method.
Segmental reporting
Operating segments, defined as components of the Group that engage in business activities from which they may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components, are reported in a manner
consistent with the internal reporting provided to the Chief Operating Decision-Maker (‘CODM’). The CODM, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Executive Directors of the Board.
Exceptional items
The Group has adopted an accounting policy that seeks to highlight significant items within the Group’s results. The Group believes that
this presentation provides a more helpful analysis as it highlights one-off items and non-trading items. Such items may include significant
restructuring costs, profit or loss on disposal or termination of operations, costs of material product recalls, litigation costs and settlements,
profit or loss on disposal of investments, significant impairment of goodwill and other assets, significant curtailment or settlement gains/
losses on post-employment defined benefit schemes, gains and losses on mark to market of derivative financial instruments, currency
translation on long-term foreign currency denominated term intercompany borrowings together with significant fair value movements
recognised in respect of investment properties. Judgment is used by the Group in assessing the particular items which by virtue of their
scale and nature, should be disclosed in the income statement and related notes as exceptional items.
Dividend distribution
Dividends on ordinary shares are recognised as a liability in the Group’s financial statements in the period in which they are declared by the
Company. In the case of interim dividends, these are considered to be declared when they are paid. In the case of final dividends, these are
declared when approved by the shareholders at the AGM.
New standards and interpretations not applied
Amendments to existing standards
The following amendments to existing standards have been published and are mandatory for the Group’s accounting periods beginning
on or after 1 January 2020 or later periods, but have not been early adopted:
Standard/Interpretation
Effective date – for accounting
periods beginning on or after:
• Amendments to References to Conceptual Framework in IFRS Standards1
1 January 2020
• Definition of a Business (Amendments to IFRS 3)1
Not yet endorsed
• Definition of Material (Amendments to IAS 1 and IAS 8)1
1 January 2020
• IFRS 17 Insurance Contracts1
Not yet endorsed
• Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and
Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(September 2014)1
Endorsement postponed
• Interest Rate Benchmark Reform (Amendments to IFRS 9 and IFRS 7)1
1 January 2020
1 These standards are not expected to have a material impact on the Group financial statements.
106

1. Revenue

Group revenue 3,729,346 3,727,591
Plus:
Share of revenue of joint ventures – Dole 1,821,400 692,239
Share of revenue of joint ventures – Other 632,934 622,295
Share of revenue of associates 75,687 74,447
Total share of revenue of joint ventures and associates 2,530,021 1,388,981
Less:
Elimination of proportionate share of transactions between Group subsidiaries
and joint ventures and associates1
(86,172) (73,082)
Total revenue 6,173,195 5,043,490
1 For calculation of total revenue, which includes Group’s share of joint ventures and associates, the Group eliminates the proportionate
share of revenue transactions between Group subsidiaries and joint ventures and associates.
2. Segmental analysis
Segmental Analysis
IFRS 8 Operating Segments (‘IFRS 8’) sets out the requirements for disclosure of financial and descriptive information about the operating
segments, products and the geographical areas in which the Group operates, as well as information on major customers.
In accordance with IFRS 8, the Group’s reportable operating segments, based on how performance is assessed, and resources are
allocated, are as follows:
• Europe – Non-Eurozone: This operating segment is an aggregation of six operating segments in the Czech Republic, Poland, Scandinavia
and the United Kingdom. These segments have been aggregated as they all are primarily involved in the procurement, marketing and
distribution of fresh produce and share other similar economic characteristics in terms of sourcing and distribution arrangements, net
margins earned and operate in similar regulatory environments. Up to the middle of 2018, it also included a small healthfoods business
that has been discontinued.
• Europe – Eurozone: This reportable segment is an aggregation of thirteen operating segments principally in France, Ireland, Italy, the
Netherlands and Spain. These segments have been aggregated as they all are primarily involved in the procurement, marketing and
distribution of fresh produce and some healthfoods and consumer goods products, and share other similar economic characteristics in
terms of sourcing and distributions arrangements, net margins earned, transact in Euro and operate in the same regulatory environment.
• International: This segment is an aggregation of five operating segments in North America, one in South America and one in India. These
segments have been aggregated as they all are primarily involved in the procurement, marketing and distribution of fresh produce and
share other similar economic characteristics in terms of sourcing and distribution arrangements, net margins earned and operate in
similar regulatory environments. They also primarily transact in US Dollar.
• Dole: This operating segment represents the Group’s 45% interest in Dole. Dole is one of the world’s leading producers, marketers and
distributors of fresh fruit and vegetables. It has an iconic brand and leading market positions and scale. It is one of the world’s largest
producers of bananas and pineapples, and a leader in other fresh fruits, value added and fresh-packed vegetables and berries. In terms
of market share they hold the number one and three positions respectively for bananas in North America and Europe, and are number
two and three respectively for pineapples in North America and Europe. They sell and distribute throughout a wide network in North
America, Europe, Latin America, the Middle East and Africa.
Segment performance is evaluated based on revenue and adjusted EBITA. Management believes that adjusted EBITA, while not a
defined term under IFRS, gives a fair reflection of the underlying trading performance of the Group. Adjusted EBITA represents earnings
before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration,
unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany
borrowings and exceptional items. It also excludes the Group’s share of these items within joint ventures and associates. Adjusted EBITA
is therefore measured differently from operating profit in the Group financial statements as explained and reconciled in full detail in the
analysis that follows.
Finance costs, finance income and income taxes are managed on a centralised basis. These items are not allocated between operating
segments for the purposes of the information presented to the Chief Operating Decision-Maker (‘CODM’) and are accordingly omitted
from the detailed segmental analysis that follows.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
107

Adjusted EBITA per management reporting 150,114 98,022
Acquisition related intangible asset amortisation for subsidiaries (i) (10,301) (10,281)
Share of joint ventures and associates acquisition related intangible asset amortisation (i) (2,696) (2,684)
Fair value movements on contingent consideration (ii) 204 4,043
Acquisition related costs within subsidiaries (iii) (177) (105)
Share of joint ventures and associates’ net financial expense (iv) (40,817) (13,784)
Share of joint ventures and associates’ tax (before tax on exceptional items) (iv) (14,059) (3,153)
Operating profit before exceptional items 82,268 72,058
Net financial expense before exceptional items (v) (10,967) (7,365)
Profit before tax before exceptional items 71,301 64,693
Exceptional items (Note 7) (vi) 5,232 5,125
Profit before tax 76,533 69,818
(i) Acquisition related intangible asset amortisation charges are not allocated to operating segments in the Group’s management reports.
(ii) Fair value movements on contingent consideration are not allocated to operating segments in the Group’s management reports.
(iii) Acquisition related costs are transaction costs directly related to acquisitions of subsidiaries completed and are not allocated to operating
segments in the Group’s management reports.
(iv) Under IFRS, included within profit before tax is the Group’s share of joint ventures’ and associates’ profit after acquisition related
intangible asset amortisation charges, tax and interest. In the Group’s management reports, these items are excluded from the adjusted
EBITA calculation.
(v) Financial income and expense is primarily managed at Group level, and is therefore not allocated to operating segments in the Group’s
management reports.
(vi) Exceptional items (Note 7) are not allocated to operating segments in the Group’s management reports.
Business segment assets and liabilities


Europe – Non-Eurozone 407,614 12,026 419,640 187,585
Europe – Eurozone 271,770 47,435 319,205 180,482
International 274,650 45,711 320,361 119,521
Dole – 245,881 245,881 –
Total Group 954,034 351,053 1,305,087 487,588
Unallocated assets and liabilities* 136,636 438,530
Total assets/liabilities 1,441,723 926,118
* Unallocated assets consist of investment property, other investments, cash and cash equivalents, deferred tax assets and corporation
tax receivable. Unallocated liabilities consist of interest-bearing loans and borrowings, contingent consideration, put option liability,
corporation tax payable, deferred tax liabilities and employee benefit liabilities.
Other segmental disclosures
Share of joint
ventures and
associates
adjusted
EBITA(i)
(i) Share of joint ventures and associates EBITA is after deduction of non-controlling interest’s share of profit.
(ii) Includes joint ventures and associates share of depreciation of property, plant and equipment and right of use assets.
(iii) Includes joint ventures and associates share of acquisition related intangible asset amortisation.
Country of domicile and geographic disclosures
The Group headquarters is domiciled in the Republic of Ireland.
The breakdown of external customer revenue by geographical region is Republic of Ireland €383,394,000 (2018: €382,842,000),
UK €589,451,000 (2018: €579,496,000), Rest of Europe €2,082,856,000 (2018: €2,181,372,000) and Rest of World €3,117,494,000
(2018: €1,899,780,000).
Non-current assets, excluding employee benefit assets and deferred tax assets, are held in Republic of Ireland €44,179,000
(2018: €34,330,000), UK €88,232,000 (2018: €76,345,000), Rest of Europe €334,777,000 (2018: €260,066,000) and Rest of World
€493,116,000 (2018: €452,620,000).
No one individual customer accounts for more than 10% of total revenue.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

Distribution expenses (391,480) – (391,480) (378,581) – (378,581)
Administrative expenses (66,933) – (66,933) (60,728) – (60,728)
Other operating expenses (2,477) (1,816) (4,293) (1,446) (17,813) (19,259)
Other operating income 5,519 – 5,519 8,137 27,263 35,400
Total (455,371) (1,816) (457,187) (432,618) 9,450 (423,168)
Other operating expenses and income comprise the following (charges)/credits:
Other operating expenses

Foreign exchange losses (1,445) (1,329)
Loss on disposal of property, plant and equipment (43) (3)
Loss on termination of IFRS 16 lease (146) –
Loss on disposal of intangible assets – (9)
Fair value movement on biological assets(a)
(Note 18) (666) –
Acquisition related costs in subsidiaries(b)
(177) (105)
(2,477) (1,446)
Exceptional items in other operating expenses (Note 7)
Restructuring costs and costs associated with disposal/termination of businesses (1,816) (4,891)
Impairment of goodwill – (9,060)
Costs associated with the Dole transactions, net – (2,558)
Cost of GMP equalisation in UK defined benefit pension plans – (1,304)
Total (4,293) (19,259)
(a) In prior year, the fair value movements on biological assets were classified within cost of sales. The fair value gain for year ended 2018
was just €6,000 and given materiality the comparative financial statements have not been restated for this reclassification amount.
(b) Acquisition related costs include transaction costs directly related to the acquisitions of subsidiaries. These costs include legal fees
and other professional service fees.
Other operating income

Rental income 2,033 1,955
Amortisation of government grants 63 75
Grant income credited directly to income statement 82 68
Gain on disposal of property, plant and equipment 356 495
Foreign exchange gains 1,235 1,442
Gain on derivative financial instruments at fair value through the income statement 115 59
Movement on provisions 489 –
Fair value movements and gain on disposal of other investments 942 –
Fair value movements on contingent consideration (Note 27) 204 4,043
5,519 8,137
Exceptional items in other operating income (Note 7)
Gain on disposal of farming investment – 14,728
Foreign currency gain relating to proceeds from share placing – 12,535
Total 5,519 35,400
110

4. Share of profit of joint ventures and associates
The Group’s share of the profit after tax of joint ventures and associates is equity accounted and is presented as a single line item in the
Group income statement.
Group’s share of:
Revenue 1,821,400 632,934 75,687 2,530,021
Operating profit before exceptional items 69,320 15,193 2,320 86,833
Exceptional items (Note 7) 5,523 – – 5,523
Operating profit after exceptional items 74,843 15,193 2,320 92,356
Financial expense (38,951) (1,328) (538) (40,817)
Profit before tax 35,892 13,865 1,782 51,539
Income tax expense (8,637) (2,870) (1,027) (12,534)
Profit after tax 27,255 10,995 755 39,005
Non-controlling interests (880) (337) (89) (1,306)
Attributable to equity shareholders 26,375 10,658 666 37,699

Group’s share of:
Revenue 692,239 622,295 74,447 1,388,981
Operating profit before exceptional items 10,678 12,305 2,777 25,760
Exceptional items ( Note 7) (4,580) – – (4,580)
Operating profit after exceptional items 6,098 12,305 2,777 21,180
Financial expense, net (12,675) (691) (418) (13,784)
Profit before tax (6,577) 11,614 2,359 7,396
Income tax (expense)/credit 603 (2,643) (191) (2,231)
Profit after tax (5,974) 8,971 2,168 5,165
Non-controlling interests (381) (286) 15 (652)
Attributable to equity shareholders (6,355) 8,685 2,183 4,513
Profit after tax above includes the following (charges)/credits:
Group’s share of:
Depreciation of property, plant and equipment (28,409) (3,638) (823) (32,870)
Depreciation of right of use assets (25,014) (4,043) (58) (29,115)
Amortisation of acquisition related intangible assets – (2,083) (613) (2,696)
Deferred tax credit on amortisation of acquisition related intangible assets – 490 75 565
Group’s share of:
Depreciation of property, plant and equipment (12,616) (3,301) (762) (16,679)
Amortisation of acquisition related intangible assets – (2,094) (590) (2,684)
Deferred tax credit on amortisation of acquisition related intangible assets – 389 71 460
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Recognised in the income statement:
Interest income 2,754 2,484
Financial income before exceptional items 2,754 2,484
Interest expense on financial liabilities measured at amortised cost (9,391) (8,463)
Cash inflow from interest rate swap – 11
Interest expense on finance leases – (110)
Interest expense on lease liabilities (Note 24) (2,995) –
Other interest expense (1,335) (1,287)
Financial expense before exceptional items (13,721) (9,849)
Net financial expense before exceptional items (10,967) (7,365)
Exceptional items in net financial expense (Note 7)
Costs associated with the Dole transactions, net – (667)
Net financial expense after exceptional items (10,967) (8,032)
Analysed as follows:
Amounts relating to items not at fair value through income statement (10,967) (8,032)
Net financial expense recognised in the income statement (10,967) (8,032)
Recognised in other comprehensive income:
Foreign currency translation effects:
– foreign currency net investments – subsidiaries 5,664 (6,416)
− foreign currency net investments – joint ventures and associates 3,274 3,236
– foreign currency losses/(gains) recycled to income statement on joint venture/associate becoming a subsidiary – 90
– foreign currency borrowings designated as net investment hedges (3,397) (4,387)
Effective portion of changes in fair value of cash flow hedges 88 1,480
Fair value of cash flow hedges transferred to the income statement and recognised in cost of sales (237) (1,140)
Cost of hedging reserve – changes in fair value 90 (200)
Cost of hedging reserve – reclassified to profit or loss 47 223
Net financial expense recognised in other comprehensive income 5,529 (7,114)
112

6. Group operating profit
Group operating profit has been arrived at after charging the following amounts:

Depreciation of property, plant and equipment within subsidiaries:
– owned assets 17,773 16,694
– held under finance lease – 500
Depreciation of right of use assets 19,253 –
Share of joint venture and associate’s depreciation charges 32,870 16,679
Share of joint venture and associate’s depreciation of right of use assets 29,115 –
Amortisation of intangible assets within subsidiaries
– acquisition related intangible assets 10,301 10,281
– development costs 238 267
– computer software 2,046 1,397
Share of joint venture and associates intangible asset amortisation 2,696 2,684
Impairment losses:
– goodwill and intangible assets – 9,060
Operating lease rentals:*
– land and buildings 498 14,890
– plant and equipment 675 2,434
– motor vehicles 391 2,440
* After transition to IFRS 16 Leases on 1 January 2019, the rental charge in 2019 relates to just short-term and low-value leases.
Fees paid to auditors (KPMG)

Audit services1
1,809 1,703
Other assurance services2
261 238
Tax advisory services 267 310
Other non-audit services 476 652
2,813 2,903
1 Includes €90,000 (2018: €98,000) relating to Group share of joint venture and associate fees.
2 Includes €9,000 (2018: €9,000) relating to Group share of joint venture and associate fees.
Included in the amounts above are the following fees paid to KPMG Dublin; Audit services €459,000, (2018: €477,000), other assurance
services €100,000 (2018: €87,000), tax advisory services €123,000 (2018: €163,000) and other non-audit services €74,000 (2018: €575,000).
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
1. 2. 3. Financial Statements
7. Exceptional items
In accordance with the Group accounting policy, the following items have been presented as exceptional items for the year ended
31 December 2019:

(Loss)/gain on disposal of investment (a) (670) 14,728
Restructuring costs and costs associated with disposal/termination of a business (b) (1,146) (4,891)
Share of joint ventures and associates exceptional items – Dole (c) 5,523 (4,580)
Foreign currency gains arising on foreign currency denominated intercompany borrowings
relating to proceeds from share placing (d) – 12,535
Impairment of goodwill (e) – (9,060)
Costs associated with the Dole transactions, net (f) – (3,225)
Charge on employee defined benefit obligations (g) – (1,304)
Total exceptional items (before share of joint ventures and associates’ tax) 3,707 4,203
Share of joint ventures and associates’ tax on exceptional items – Dole (c) 1,525 922
Exceptional items within profit before tax* 5,232 5,125
Net tax charge on exceptional items (h) (47) (1,395)
Total net of tax 5,185 3,730
Attributable as follows:
Equity holders of the parent 5,246 560
Non-controlling interests (61) 3,170
5,185 3,730
* Of the €5,232,000 net exceptional credit in 2019, €1,816,000 has been recognised as net operating expense and €7,048,000 net
exceptional gain has been recognised within profits of joint ventures and associates. Of the €5,125,000 net exceptional gain in 2018,
€9,450,000 has been recognised as net exceptional operating expense, €3,658,000 has been recognised as a loss within joint ventures
and associates and €667,000 recognised as an exceptional financial expense.
(a) (Loss)/Gain on disposal of farming/equity investment
In July 2018, a subsidiary of the Group disposed of an interest in a farming entity for consideration of shares in an equity investment which
was to be realised over a period of two to three years and could vary depending on certain circumstances. The exceptional loss of €0.7m
in 2019 represents the gain on the equity investments sold in the year less the fair value movement on the remaining equity investment and
associated costs. The exceptional gain of €14.7m in 2018 represented the gain on the disposal of the investments that were received at that
date, the fair value movement on the investment held in escrow at 31 December 2018 and net of all associated costs.
(b)Restructuring costs and costs associated with disposal and termination of businesses
In the second half of 2019, the Group incurred losses of €0.6m on the disposal of and termination of two small businesses in the Non-
Eurozone Division. Restructuring charges of €0.5m were incurred in the year on ongoing restructuring programmes in the Eurozone Division.
In the second half of 2018, the Group ceased operations in a non-performing sports supplements business in the UK. The total costs
associated with the termination of this business were €2.3m, including the write-off of fixed assets, intangible assets, other assets and
redundancies. The Group implemented restructuring programmes in a number of entities primarily within the Eurozone Division in late
2018 with the €2.6m of costs associated with these programmes being recorded as an exceptional cost in the income statement.
(c) Share of joint ventures and associates exceptional items – Dole
The Group’s share of the exceptional items in Dole in 2019 was a net gain of €5.5m (five-month period ended 29 December 2018 was a loss
of €4.6m). The share of the associated tax credit was €1.5m (2018: €0.9m).
Included in these exceptional items are net gains of €11.8m (2018: €Nil) on disposals of businesses/assets, net gains of €0.1m (2018: €Nil)
on mark to market of derivative financial instruments and foreign currency gains/losses on long-term foreign currency denominated
intercompany borrowings, net restructuring charges of €4.1m (2018: €2.5m), transaction costs of €0.6m (2018: €0.6m) and costs of €1.7m
(2018: €1.5m) associated with industry-wide product recalls.
(d)Foreign currency gains arising on foreign currency denominated intercompany borrowings relating to proceeds from
share placing
In February 2018, the Group issued 63 million new ordinary shares, raising proceeds of €141m (net of associated costs) to finance the
Dole transaction. The net proceeds from this share placing were used, via an intercompany loan, to purchase US Dollars in February.
The strengthening of the US Dollar from the date of purchase to when the intercompany loan was converted to equity in August 2018,
following completion of the Dole transaction, resulted in a foreign currency gain of €12.5m.
114

7. Exceptional items continued
(e) Impairment of goodwill
In December 2018, the Group recognised a non-cash impairment charge of €9.1m in relation to its fresh produce businesses in the
Netherlands which have experienced a difficult trading environment resulting in a slower recovery than had been anticipated.
(f) Costs associated with the Dole transactions, net
Costs associated with the committed financing and other transaction costs associated with Dole net of interest income on the proceeds
of the share placing were €0.9m in the period to 30 June 2018 and totalled €3.2m in the year ended 31 December 2018.
(g)Charge on employee defined benefit obligations
As explained in further detail in Note 32, a charge of €1.3m relating to the UK defined benefit pension schemes was recognised in the 2018
income statement as a result of the UK High Court ruling that pension benefits must be equalised in respect of Guaranteed Minimum
Pensions (GMPs) accrued between 17 May 1990 and 5 April 1997.
(h)Tax charge on exceptional items
The net tax effect of the items above was a net cash inflow of €5.8m in the year (2018: €3.0m) including cashflows relating to prior period
exceptional items.
Effect of exceptional items on cash flow statement
The net effect of the items above was a cash inflow of €5.8m (2018: €3.0m), including cashflows relating to prior period exceptional items.
8. Income tax expense
Recognised in the income statement:

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and from 19% to 17% (effective 1 April 2020) were
substantively enacted on 6 September 2016. This will reduce the Group’s future current tax charge in respect of its UK operations. Deferred
tax balances must be recognised at the future tax rate applicable when the balance is expected to unwind. UK deferred tax balances have
been calculated based on the tax rates substantively enacted at the reporting date.
A reduction in the US Federal Corporate Income Tax (‘CIT’) rate from 35% to 21% (effective from 1 January 2018) was substantively enacted
on 22 December 2017. The US Federal CIT rate reduction will reduce the Group’s future current tax charge in respect of its US operations.
Deferred tax balances must be recognised at the future tax rate applicable when the balance is expected to unwind. US deferred tax
balances have been calculated based on the tax rates substantively enacted at the reporting date.
There were no other material changes in corporation tax rules in other jurisdictions in 2019 or 2018.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
115

1. 2. 3. Financial Statements
Reconciliation of effective tax rate
Total income tax expense in the income statement 13.51 10,329 22.94 16,014
Deferred tax recognised directly in other comprehensive income

Deferred tax on revaluation of property, plant and equipment, net 932 106
Deferred tax on remeasurement (loss)/gain on post-employment defined benefit schemes, net 34 1,066
Deferred tax on effective portion of cash flow hedges, net (15) 90
Deferred tax on changes in fair value of cost of hedging, net 24 7
Total deferred tax charge recognised in other comprehensive income 975 1,269
9. Dividends paid and proposed

Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for the year ended 31 December 2018: 2.5140 cent (2017: 2.4527 cent) 9,767 9,517
Interim dividend for the year ended 31 December 2019: 0.9129 cent (2018: 0.9129 cent) 3,546 3,545
Total: 3.4269 cent per share (2018: 3.3656 cent) 13,313 13,062
Proposed for approval at AGM (not recognised as a liability as at 31 December)
Equity dividends on ordinary shares:
Final dividend for the year ended 31 December 2019: 2.5770 (2018: 2.5140 cent) 10,012 9,766
It is proposed that a final dividend of 2.5770 cent per ordinary share be paid to ordinary shareholders. These proposed dividends have not
been provided for in the Company or Group balance sheet in accordance with IAS 10 Events After the Reporting Period. The final dividend
is subject to approval by the Group’s shareholders at the Annual General Meeting.
The proposed final dividend for the year will be paid on 20 May 2020 to shareholders on the register at 14 April 2020, subject to dividend
withholding tax.
116

10. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year, excluding shares purchased by the Company and held as treasury shares.
In November 2010, the Group purchased 22,000,000 of its own shares which are held as treasury shares. In respect of the shares that
are held by the Group (treasury shares), all rights (including voting and dividend rights) are suspended until those shares are reissued and
therefore they are not included in earnings per share calculations. Details relating to the purchase of the Group’s own shares in prior periods
are outlined in Note 21.

Profit for the financial year attributable to equity holders of the parent 53,302 35,793
‘000 ‘000
Shares in issue at beginning of year 410,429 346,829
New shares issued from exercise of share options (weighted average) 51 275
New shares issued from share placing (weighted average) – 56,786
Shares repurchased by company (weighted average)* (2) –
Effect of treasury shares held (22,000) (22,000)
Weighted average number of shares 388,478 381,890
Basic earnings per share – cent 13.72 9.37
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding after adjustment for the effects of all ordinary shares and options with a dilutive effect.

Profit for the financial year attributable to equity holders of the parent 53,302 35,793
‘000 ‘000
Weighted average number of shares 388,478 381,890
Effect of share options with a dilutive effect 817 1,257
Weighted average number of shares (diluted) 389,295 383,147
Diluted earnings per share – cent 13.69 9.34
The average market value of the Company’s share for the purpose of calculating the dilutive effect of share options was based on quoted
market prices for the year, during which the options were outstanding.
* The Company purchased and cancelled 4,500 of its shares during 2019.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
117

1. 2. 3. Financial Statements
Adjusted basic earnings per share and adjusted fully diluted earnings per share
Management believes that adjusted fully diluted earnings per share as set out below provides a fairer reflection of the underlying trading
performance of the Group after eliminating the effect of acquisition related intangible asset amortisation charges and costs, fair value
movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign
currency denominated intercompany borrowings and exceptional items and the related tax on these items.
Adjusted basic earnings per share is calculated by dividing the adjusted profit attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year, excluding shares purchased by the Company which are held
as treasury shares.
Adjusted fully diluted earnings per share is calculated by dividing the adjusted profit attributable to ordinary equity holders of the parent
by the weighted average number of ordinary shares outstanding after adjustment for the effects of all ordinary shares and options with
a dilutive effect.

Profit for the financial year attributable to ordinary equity holders of the parent 53,302 35,793
Adjustments
Exceptional items – net of tax (Note 7) (5,185) (3,730)
Acquisition related intangible asset amortisation within subsidiaries (Note 14) 10,301 10,281
Share of joint ventures and associates acquisition related intangible asset amortisation (Note 4) 2,696 2,684
Acquisition related costs within subsidiaries (Note 3) 177 105
Fair value movements on contingent consideration (Note 3) (204) (4,043)
Tax effect of amortisation charges of goodwill, intangible assets and fair value movements
on contingent consideration (3,188) (805)
Non-controlling interests share of the items above (2,915) 1
Adjusted profit attributable to equity holders of the parent 54,984 40,286

Weighted average number of shares 388,478 381,890
Weighted average number of shares (diluted) 389,295 383,147
Adjusted basic earnings per share – cent 14.15 10.55
Adjusted fully diluted earnings per share – cent 14.12 10.51
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases) – cent 14.86 10.51
Land and buildings are stated at fair value while plant and equipment, motor vehicles and bearer plants are stated at depreciated historic
cost. There is €385,000 included in the carrying amount of property, plant and equipment at 31 December 2019 that relate to assets under
construction (2018: €1,165,000).
Measurement of fair value of land and buildings
(i) Fair value hierarchy
Fair value is defined as the price that would be received if the asset was sold in an orderly transaction between market participants based on
the asset’s highest and best use. Valuations are reviewed each year by the Directors in order to ensure that the fair value of a revalued asset
is not materially at variance from its carrying amount. Where appropriate, registered independent appraisers having relevant recognised
professional qualifications and recent experience in the locations and category of properties being valued prepare the valuations every three
to five years, with valuations updated annually in the interim by the Directors, having due regard to the advice of professionally qualified
consultants, where it is deemed appropriate.
At 31 December 2019, the Group undertook an exercise to revalue its properties. Properties occupied by the Group included in land and
buildings comprise industrial and office buildings and related land in a number of locations, the largest of which are in Scandinavia, the
Czech Republic, Spain, the Netherlands and the UK. In excess of seventy-five per cent of the value of land and buildings was determined by
registered independent appraisers within the past five years. The basis for such valuations is described in further detail below. The valuations
of a number of properties were determined by the Directors with reference to local knowledge, valuation techniques and judgment after
consultation with property advisors. The Directors are satisfied with the basis upon which these valuations have been prepared.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
1 Assets valued at depreciated historic cost include buildings that were recently constructed and leasehold improvements.
All fair values above have been designated as Level 3 in the fair value hierarchy.
(ii) Level 3 fair value for land and buildings
The following table shows a reconciliation from the opening balance to the closing balance for Level 3 fair values:

Balance at beginning of year 116,762 115,535
Arising on acquisition of subsidiaries – 2,002
Arising from business disposals – –
Reclassification to/from plant and equipment 25 (1,826)
Reclassification to investment property (4,065) –
Additions in year 2,236 5,216
Depreciation charge in year (3,306) (3,291)
Disposals in year (20) (6)
Foreign exchange movement 681 (1,343)
Income/(expense) included in other comprehensive income:
– Fair value gains 2,555 2,549
– Fair value losses (460) (2,074)
Balance at end of year 114,408 116,762
120

11. Property, plant and equipment continued
Measurement of fair value of land and buildings continued
Level 3 fair value for land and buildings continued
Fair value gains in 2019 amounting to €2,555,000 (2018: €2,549,000) and fair value losses in the same period of €460,000 (2018: €2,074,000)
were recognised in the statement of other comprehensive income. Net deferred tax charge of €932,000 (2018: charge of €106,000) on
revaluation of land and buildings were also recognised in the statement of other comprehensive income for the year as a result of both
revaluation movements and changes in underlying tax rates. The non-controlling interests’ share of net revaluation movements in other
comprehensive income, net of deferred taxes, was a credit of €529,000 (2018: credit of €68,000).
The depreciated historic cost of land and buildings which were revalued amounted to €86,800,000 (2018: €90,753,000).
Valuation technique and significant unobservable inputs
The following table shows the valuation techniques used in measuring the fair value of land and buildings as well as the significant
unobservable inputs used.
Valuation technique Significant unobservable inputs
Inter-relationship between key unobservable
inputs and fair value measurement
Comparable market transactions
(for land and buildings) price per
square metre:
This method of valuation is used for
land and buildings held for own use.
The value is based on comparable
market transactions.
As described in accounting policy and disclosures changes on pages 94 to 96, the Group has initially adopted IFRS 16 Leases with effect
from 1 January 2019. Included in the carrying amount above, is €111,193,000 in relation to leases that would previously be classified as
operating leases.
IFRS 16 introduces a single lessee accounting model to be adopted, and accordingly the majority of all lease agreements will now result
in the recognition of a right of use asset and a lease liability on the balance sheet. This will increase the Group’s recognised assets and
liabilities. The income statement charge in relation to all leases will now comprise a depreciation element relating to the right of use asset
and also a financing charge relating to the lease liability. Lessor accounting remains similar to previous accounting policies. See page 103
for further details.
13. Investment property

Balance at beginning of year 7,344 7,203
Arising on acquisition of subsidiaries (Note 31) – 223
Reclassification from property, plant and equipment (Note 11) 4,065 –
Foreign exchange movement 434 (82)
Balance at end of year 11,843 7,344
Investment property, comprising land and buildings, is held for capital appreciation and/or rental income and is not occupied by the Group.
This also includes parts of properties owned by the Group which are sublet to third parties. The Group’s investment properties at
31 December 2019 are located in the UK and Ireland.
Measurement of fair value
(i) Fair value hierarchy
The carrying amount of investment property within the Group’s subsidiaries is the fair value of the property as determined by the Directors.
In preparing the property valuations, the Directors consulted with registered independent appraisers having an appropriate recognised
professional qualification and with recent experience in the location and category being valued. In general, valuations have been undertaken
having regard to comparable market transactions between informed market participants at the ‘highest and best use’. In excess of sixty
percent of the value of investment property was determined by registered independent appraisers within the past five years.
The fair value measurement for investment property of €11,843,000 (2018: €7,344,000) has been categorised as a Level 3 fair value based
on the input to the valuation technique used (see Note 37).
(ii) Level 3 fair value
The table above reflects the reconciliation from opening balance to closing balance for Level 3 fair values. All investment property was
measured using the comparable market transaction method.
No fair value movements were identified in 2019 (2018: €Nil) in relation to investment property.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
123

1. 2. 3. Financial Statements
Valuation technique and significant unobservable inputs for material properties were as follows:
Valuation technique Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair
value measurement
Comparable market
transactions for material
investment properties:
This method of valuation is
used for land and buildings
held for sale or capital
appreciation. The value is
based on comparable market
transactions after discussion
with independent registered
property appraisers.
Year ended 31 December 2019
Opening carrying amount 51,879 24,103 8,127 182,841 266,950
Arising on acquisition of subsidiaries (Note 31) 2,392 189 434 3,567 6,582
Arising on termination and disposal of businesses (Note 31) – – – (691) (691)
Additions – – 4,299 – 4,299
Capitalisation of development expenditure – 62 – – 62
Disposals – (13) – – (13)
Amortisation of acquisition related intangible assets (7,113) (3,188) – – (10,301)
Development and software amortisation – (238) (2,046) – (2,284)
Foreign exchange movement 1,337 647 (86) 1,960 3,858
Closing carrying amount 48,495 21,562 10,728 187,677 268,462
At 31 December 2019
Cost 122,216 41,013 18,204 208,254 389,687
Accumulated amortisation and impairment (73,721) (19,451) (7,476) (20,577) (121,225)
Closing carrying amount 48,495 21,562 10,728 187,677 268,462
Year ended 31 December 2018
Opening carrying amount 57,655 27,376 5,170 190,880 281,081
Arising on acquisition of subsidiaries (Note 31) 811 93 – 1,749 2,653
Arising on termination and disposal of businesses (47) (358) (124) – (529)
Additions – 19 4,501 – 4,520
Capitalisation of development expenditure – 121 – – 121
Disposals – – (9) – (9)
Amortisation of acquisition related intangible assets (7,031) (3,250) – – (10,281)
Impairment – – – (9,060) (9,060)
Development and software amortisation – (267) (1,397) – (1,664)
Foreign exchange movement 491 369 (14) (728) 118
Closing carrying amount 51,879 24,103 8,127 182,841 266,950
At 31 December 2018
Cost 118,356 39,684 13,510 203,389 374,939
Accumulated amortisation and impairment (66,477) (15,581) (5,383) (20,548) (107,989)
Closing carrying amount 51,879 24,103 8,127 182,841 266,950
124

14. Goodwill and intangible assets continued
Other intangible assets
Other intangible assets include brands of €7,115,000 (2018: €7,828,000), supplier relationships of €14,109,000 (2018: €15,771,000) and
capitalised research and development €338,000 (2018: €504,000).
Amortisation and impairment charges
Intangible assets are amortised to the income statement over their estimated useful lives as follows:
• Customer relationships: 3 to 15 years;
• Brands: 10 to 15 years;
• Supplier relationships: 3 to 15 years;
• Capitalised development costs: 5 to 7 years;
• Software: 3 to 8 years.
Amortisation charges for acquisition related intangible assets (customer relationships, brands and supplier relationships) are separately
disclosed in the Group income statement. Amortisation charges for capitalised development costs and software are allocated to distribution
expenses. Impairment losses are allocated to other operating expenses.
Goodwill and intangible assets arising on acquisition
Goodwill and intangible assets arising in connection with acquisitions are set out in Note 31.
Impairment testing and goodwill
The Group tests goodwill annually for impairment on 31 December, or more frequently if there are indications that goodwill might be impaired.
For the purposes of impairment testing, goodwill is allocated to divisions that represent the lowest level within the Group at which goodwill
is monitored, which is not higher than the operating segments identified before aggregations. A reportable operating level summary of the
goodwill is presented below.
2019
Number
of CGUs
2018
Number
of CGUs
The recoverable amount of each cash-generating unit (‘CGU’) has been determined based on a value-in-use calculation using cash flows derived
from the approved 2020 budget with cash flows thereafter calculated using a terminal value methodology assuming 1.5 % p.a. inflation. No other
growth is assumed. The pre-tax discount rates applied to cash flow projections of the CGUs range from 8.8% to 18.1% (2018: 9.2% to 15.7%).
Projected cash flows are most sensitive to assumptions regarding future profitability, replacement capital expenditure requirements and
working capital investment. The values applied to these key assumptions are derived from a combination of external and internal factors,
based on past experience together with management’s future expectations about business performance.
Discount rates reflect the current market assessment of the risk specific to each CGU. The discount rates were estimated by calculating
a CGU-specific weighted average cost of capital to reflect the market assessment of risks specific to each CGU for which the cash flow
projections have not been adjusted.
The Group’s earnings are significantly dependent on the selling prices and margins obtained for products sold. These, in turn, are largely
determined by market supply and demand. Fresh produce supplies in individual markets are affected by the geography of production,
growing conditions (including climate), seasonality and perishability. Market demand is a function of population size, per capita consumption,
the availability and quality of individual products, competing products, climatic, economic and other general conditions in the marketplace.
Excess produce leading to reduced selling prices (particularly for products purchased under contract) could have a material adverse effect
on the Group’s business, results of operations and financial condition.
Applying the techniques above, an impairment charge of €Nil (2018: €9,060,000) relating to goodwill was recognised in the income
statement in 2019. The impairment charges in 2018 related to the fresh produce businesses in the Netherlands, which had experienced
a difficult trading environment resulting in a slower recovery than had been anticipated.
Sensitivity analysis
The value-in-use calculations are sensitive to changes in the assumptions, particularly relating to assumptions of cash flows generated by the
individual CGUs and discount rates applied to these cash flows. Sensitivity analysis was performed based on changes to each of these factors.
A 10% reduction in the cash flow projections would result in an impairment of €1,567,000 arising. If the pre-tax discount rates applied to the
cash flows had been 10% higher, an impairment of €357,000 would have arisen.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

Year ended 31 December 2019
Opening carrying amount 245,881 87,335 17,837 351,053
Arising on transition to IFRS 16 (a) (3,326) – – (3,326)
Share of profit after tax (Note 4) 26,375 10,658 666 37,699
Share of other comprehensive (expense)/income, net (5,947) 35 – (5,912)
Recognised directly in equity – (151) – (151)
Investment in joint ventures and associates – cash (b) – 1,672 – 1,672
Repayment of long-term loans (net) – (2,024) – (2,024)
Associate becoming an investment (d) – – (2,200) (2,200)
Disposal – (58) – (58)
Dividends declared (e) – (10,251) (833) (11,084)
Foreign exchange movement 1,910 1,021 343 3,274
Closing carrying amount 264,893 88,237 15,813 368,943
Analysed as follows
Equity investment 264,893 87,737 15,813 368,443
Long-term loans – 500 – 500
Carrying amount 264,893 88,237 15,813 368,943
Year ended 31 December 2018
Opening carrying amount – 90,731 15,690 106,421
Share of profit/(loss) after tax (Note 4) (6,355) 8,685 2,183 4,513
Share of other comprehensive expense, net (234) (32) – (266)
Investment in joint ventures and associates – cash (b) 249,853 1,099 594 251,546
Investment in joint ventures – contingent consideration (b) – (419) – (419)
Joint venture becoming a subsidiary (c) (Note 31) – (2,760) – (2,760)
Associate becoming an investment (d) – – (26) (26)
Dividends declared (e) – (10,294) (898) (11,192)
Foreign exchange movement 2,617 325 294 3,236
Closing carrying amount 245,881 87,335 17,837 351,053
Analysed as follows
Equity investment 245,881 84,811 17,837 348,529
Long-term loans – 2,524 – 2,524
Carrying amount 245,881 87,335 17,837 351,053
Details of the Group’s principal joint ventures and associates are set out in Note 40.
(a) Adjustment arising on transition to IFRS 16
As explained on page 94 in Changes in accounting policy and disclosures, the Group has adopted IFRS 16 Leases using the modified
retrospective approach, with the date of initial application of 1 January 2019. On transition to IFRS 16, the Group recognised additional right
of use assets, leases liabilities and restoration provisions with the difference being recognised in reserves. The impact on retained earnings
on transition of joint ventures and associates to IFRS 16 was €3,326,000.
(b)Investment in joint ventures and associates*
Investments in 2019
During 2019, the Group invested €1,672,000 in cash in a number of joint ventures in Europe.
Investments in 2018
On 31 July 2018, the Group completed the transaction to acquire a 45% stake in Dole Food Company (‘Dole’) for $300m. For further details
on this investment, see pages 127 to 131.
During 2018, the Group also invested €1,693,000 in cash in a number of joint ventures and associates in North America and Europe.
In 2018, the contingent consideration estimate for a joint venture acquired in 2017 was finalised and the provisional contingent consideration
estimate was updated within 12 months of the acquisition date, in accordance with IFRS 3 Business Combinations, resulting in a reduction in
contingent consideration of €419,000. Based on materiality, the 2017 balance sheet was not restated and the adjustment was recognised as
a current year movement in 2018.
126

15. Investments in joint ventures and associates continued
(b)Investment in joint ventures and associates* continued
Investments in 2018 continued
* For the aforementioned acquisitions, the purchase method of accounting has been applied. The initial assignment of fair values to net
assets has been performed on a provisional basis in respect of these acquisitions given the timing of the completion of these transactions
and will be finalised within twelve months from the acquisition date as permitted by IFRS 3 Business Combinations.
(c) Joint ventures becoming a subsidiary
In 2018, the Group acquired further shareholdings in joint ventures in the UK and Scandinavia. As a result of this increased shareholding,
the joint ventures became subsidiaries from this date. The carrying value of the original shareholdings at the date of acquisition of €2,760,000
was deemed to be their fair value. As a result of the joint ventures becoming subsidiaries, €90,000 of currency translation losses related to
these joint ventures in the currency translation reserve were reclassified to the income statement.
(d)Associate becoming an investment
In 2019 and 2018, as a result of changes in shareholder arrangements and the Group no longer having significant influence in two associate
investments, the Group ceased equity accounting for these two investments. The carrying value of these investments at the date that the
arrangements changed was deemed to equate to fair value and the value was reclassed to other investments and accounted for as an other
financial asset.
(e) Dividends declared by joint ventures and associates
Dividends of €11,084,000 (2018: €11,192,000) were declared by joint ventures and associates during the year. The cash received from
dividends in 2019 was €10,652,000 (2018:€10,908,000).
Additional discloses on Group’s joint ventures and associates
The following additional disclosures are set out in respect of the Group’s share of joint ventures and associates:
Non-current assets 724,882 90,716 11,713 827,311
Other current assets 346,093 87,560 20,162 453,815
Cash and cash equivalents 25,939 25,472 3,356 54,767
Interest-bearing loans and borrowings (542,449) (17,698) (5,416) (565,563)
Non-current liabilities (165,985) (13,585) (753) (180,323)
Current liabilities (247,703) (76,021) (16,283) (340,007)
Lease liability (117,974) (29,001) (319) (147,294)
Non-controlling interests (3,679) (932) (391) (5,002)
Share of net assets 19,124 66,511 12,069 97,704
Goodwill 245,769 21,726 3,744 271,239

Non-current assets 608,480 58,096 15,406 681,982
Other current assets 339,494 89,792 17,810 447,096
Cash and cash equivalents 33,881 22,323 1,930 58,134
Interest-bearing loans and borrowings (564,676) (15,044) (4,486) (584,206)
Non-current liabilities (177,282) (11,145) (4,518) (192,945)
Current liabilities (233,052) (76,982) (11,669) (321,703)
Lease liability – – – –
Non-controlling interests (3,354) (1,108) (305) (4,767)
Share of net assets 3,491 65,932 14,168 83,591
Goodwill 242,390 21,403 3,669 267,462
Balance at 31 December 245,881 87,335 17,837 351,053
Other transactions
During the year, a joint venture of the Group disposed of assets to a wholly owned subsidiary of Balmoral International Holdings plc, a related
party of the Group under the AIM/Euronext Growth rules. The total consideration for the transaction (inclusive of deferred and contingent
consideration) was €6,400,000.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
1. 2. 3. Financial Statements
Material Joint Ventures
The Group has one joint venture which is material to the Group, and which is equity accounted, Dole Food Company Inc (‘Dole’).
The registered address of Dole is One Dole Drive, Westlake Village, California 91362, United States.
On 1 February 2018, the Group announced that it had entered into a binding agreement to acquire a 45% stake in Dole Food Company
(‘Dole’) from Mr. David H. Murdock for a cash consideration of $300 million (the ‘First Tranche’). The acquisition of the First Tranche was
approved by the Board of Directors of  and was initially subject to anti-trust review in a limited number of jurisdictions.
On 30 July 2018, the European Commission (the ‘EC’) approved the acquisition of the First Tranche. The EC approval was conditional on the
divestment of Saba Fresh Cut AB (the Swedish bagged salad business owned by Dole). This limited disposal had no material impact on the
strategic rationale or the commercial value of the transaction. As all other transaction conditions precedent were satisfied at this date, the
acquisition of the First Tranche completed on 31 July 2018.
In addition, and at any time after closing of the First Tranche, the Group has the right, but not the obligation, to acquire (in any one or more
tranches of 1%) up to an additional 6% of Dole common stock (the ‘Second Tranche’). In the event the Group exercises the right to acquire
the additional 6% the total consideration for the 51% stake shall be $312 million.
Following the second anniversary of the closing of the First Tranche, the Group has the right, but not the obligation, to acquire the balance
of Dole common stock (the ‘Third Tranche’), whereby the consideration for the Third Tranche is to be calculated based on nine times the
three-year average historical Dole Adjusted EBITDA less net debt. However, in no event shall the Third Tranche purchase price be less than
$250 million or exceed $450 million (such cap subject to increase after six years). The Third Tranche consideration is payable in cash or, if the
parties mutually agree,  stock.
From the fifth anniversary of completion of the acquisition of the First Tranche, in the event the Group has not exercised its right to acquire
100% of Dole, Mr. David H. Murdock is permitted to cause a process to market and sell 100% of Dole common stock.
On completion of the acquisition of the First Tranche on 31 July 2018, the Group and Mr. David H. Murdock have balanced governance
rights with respect to Dole. The Board of Directors of Dole comprises six members, three of which are appointed by  and
three by Mr. David H. Murdock. Mr. David H. Murdock remains Chairman of Dole and Carl McCann was appointed Vice Chairman. Major
decisions require consent of at least one Board member appointed by each of  and Mr. David H. Murdock.
The investment in Dole and its financial contribution is being treated as a joint venture and accounted for under the equity method in
accordance with IFRS in the consolidated Group accounts following completion of the acquisition of the First Tranche on 31 July 2018,
and until an exercise of the Third Tranche.
 is therefore equity accounting for its 45% share of the results of Dole with effect from 1 August 2018. The overall business
is seasonal with the greater share of EBITDA in the first half of the financial year. The 2019 financial year is the first full year reflecting
this transaction.
The table on page 128 summarises the consideration paid and fair value of the net identifiable assets of Dole on acquisition, as prepared in
accordance with IFRS. The initial assignment of fair values to net assets for this investment was performed on a provisional basis in respect
of this acquisition, given the timing of completion of the transaction and could be finalised within twelve months from the acquisition date. A
number of adjustments were identified and are presented in the table below. There was no income statement impact from these adjustments
in the period from the date of acquisition to 31 December 2018. Given that the adjustments are all equity accounted for within investment in
joint ventures and associates on the Balance Sheet, no adjustment was required in the  Group balance sheet.
128

15. Investments in joint ventures and associates continued
Material Joint Ventures continued
Consideration paid
Updated within 12-month period Provisional acquisition accounting

Cash consideration 300,000 256,208 300,000 256,208
Acquisition fees (net of contribution from Dole)(a)
1,605 1,370 1,605 1,370
Fair value of Second Tranche Option(b)
(4,940) (4,218) (4,940) (4,218)
Total cost of acquisition 296,665 253,360 296,665 253,360
Fair value of indemnification assets on acquisition(c)
(4,106) (3,507) (4,106) (3,507)
Total deemed cost of acquisition 292,559 249,853 292,559 249,853
Fair value identifiable assets and liabilities on acquisition
Intangible assets – Brand 287,033 245,135 287,033 245,135
Property, plant and equipment 1,007,623 860,539 1,007,623 860,539
Assets held for sale/Actively marketed property 185,178 158,148 185,178 158,148
Other non-current assets 104,541 89,281 104,541 89,281
Other current assets 868,558 741,774 868,558 741,774
Net debt (1,342,601) (1,146,621) (1,342,601) (1,146,621)
Employee benefit obligations (183,532) (156,742) (183,532) (156,742)
Other non-current liabilities (282,197) (241,005) (286,085) (244,325)
Other current liabilities (599,132) (511,676) (599,132) (511,676)
Non-controlling interests (7,978) (6,813) (7,978) (6,813)
Fair value of identifiable assets and liabilities on acquisition 37,493 32,020 33,605 28,700
’s 45% share of identifiable assets & liabilities on acquisition 16,872 14,409 15,122 12,915
Goodwill arising 275,687 235,444 277,437 236,938
(a) As part of the Securities Purchase Agreement, it was agreed that Dole would make a contribution of $15m to cover professional and advisory
fees relating to the transaction.
(b) As part of the provisions of acquisition accounting, a fair value was determined for the Second Tranche Option which is recognised as a
current derivative financial asset on the  Group balance sheet and correspondingly reduces the deemed cost of the acquisition
of the First Tranche. The fair value of the Third Tranche Option was not deemed material at the date of acquisition or at 31 December 2019.
(c) As part of the Securities Purchase Agreement, the seller provided indemnities against certain liabilities outstanding at the date of acquisition.
The fair value of these indemnities was recognised as an asset on the  Group balance sheet with a corresponding reduction
in the deemed cost of the acquisition.
Summary of Financial Information for Dole
Dole’s financial calendar consists of thirteen periods of four weeks and the 2019 financial year began on 30 December 2018 and ended
on 28 December 2019.
The following is the summarised financial information of Dole for the year ended 28 December 2019 and the 5-month period ended
29 December 2018 based on consolidated financial statements prepared under IFRS, modified for fair value adjustments on acquisition
and differences in the Group’s accounting policies.
Summary income statement (in USD’000)
Effective portion of cashflow hedges, net of recycling (12,753) 239
Remeasurement loss on employee benefit schemes (6,459) (4,764)
Revaluation gain on property, plant and equipment 3,411 –
Deferred tax on items above 1,048 3,927
Foreign currency translation effects (8,015) (7,908)
Other comprehensive expense for the period (net of tax) (22,768) (8,506)
Non-controlling interests share – –
Attributable to equity shareholders (22,768) (8,506)
Group’s 45% share of other comprehensive expense attributable to equity shareholders (10,246) (3,828)
Summary income statement (in €’000)
12 months ended 28 December 2019 5 months ended 29 December 2018
Revenue 4,047,555 – 4,047,555 1,538,309 – 1,538,309
Operating profit 154,044 12,274 166,318 23,730 (10,178) 13,552
Net financial expense (69,465) – (69,465) (28,168) – (28,168)
Leasing interest expense (17,093) – (17,093) – – –
Profit/(loss) before tax 67,486 12,274 79,760 (4,438) (10,178) (14,616)
Income tax (22,582) 3,388 (19,194) (707) 2,048 1,341
Profit/(loss) for period 44,904 15,662 60,566 (5,145) (8,130) (13,275)
Non-controlling interests (1,954) – (1,954) (848) – (848)
Profit/(loss) for period attributable to
equity shareholders 42,950 15,662 58,612 (5,993) (8,130) (14,123)
Group’s 45% share of profit/(loss)
attributable to equity shareholders 19,327 7,048 26,375 (2,697) (3,658) (6,355)
Summary of other comprehensive income statement (in €’000)
Effective portion of cashflow hedges, net of recycling (11,414) 208
Remeasurement loss on employee benefit schemes (5,781) (4,148)
Revaluation gain on property, plant and equipment 3,041 –
Deferred tax on items above 938 3,419
Foreign currency translation effects (7,173) (6,885)
Other comprehensive expense for the period (net of tax) (20,389) (7,406)
Non-controlling interests share – –
Attributable to equity shareholders (20,389) (7,406)
Group’s 45% share of other comprehensive expense attributable to equity shareholders (9,175) (3,333)
Key performance indicators
15. Investments in joint ventures and associates continued
Impact of IFRS 16 on Dole
Impact on transition
As explained on pages 94 to 96 in changes in accounting policy and disclosures, the Group has adopted IFRS 16 Leases using the modified
retrospective approach, with the date of initial application of 1 January 2019. On transition to IFRS 16, the Group recognised additional right
of use assets, lease liabilities and restoration provisions with the difference being recognised in reserves. The impact on transition in Dole is
summarised as follows, with numbers stated in USD$’000 at 100%:
2019
US$’000
Right of use assets 314,938
Lease liabilities (324,660)
Prepaid/Deferred rent (net) (1,558)
Deferred tax asset 2,820
Retained earnings 8,460
Impact for the year ended 28 December 2019
As a result of applying IFRS 16 to leases that were previously classified as operating leases, the Group has recognised depreciation
and interest costs instead of an operating lease expense. During the year ended 28 December 2019, Dole recognised $62,710,000 of
depreciation costs and $17,984,000 of interest costs from these leases. Under IAS 17 the operating lease costs associated with these
leases would have been $75,920,000.
Right of use assets
The following is a reconciliation of the total right of use lease assets in the year and does not represent Group share.
2019
US$’000
Opening balance at 30 December 2018 –
Reclassification of assets held under finance leases from property, plant and equipment on adoption of IFRS 16 21,062
Arising on adoption of IFRS 16 314,938
Additions, disposals, foreign exchange (net) 14,529
Depreciation charge to income statement (62,461)
Depreciation capitalised as crop growing costs (9,000)
Closing value at 28 December 2019 279,068
Lease liabilities
The following is a reconciliation of the total lease liabilities in the year and does not represent Group share.
2019
US$’000
Opening balance at 30 December 2018 –
Reclassification of finance leases on adoption of IFRS 16 22,264
Arising on adoption of IFRS 16 324,660
Payments during period (90,148)
Interest charge to income statement 20,057
Interest expense capitalised as crop growing costs 3,100
Additions, disposals, foreign exchange (net) 14,101
Closing value at 28 December 2019 294,034
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

Intangible assets – Brand 285,540 286,299 254,592 250,155
Property, plant and equipment 1,069,546 1,045,465 953,622 913,477
Right of use assets 279,068 – 248,821 –
Assets held for sale/Actively marketed property 64,760 102,730 57,741 89,760
Other non-current assets 107,753 113,058 96,074 98,784
Other current assets 862,588 863,439 769,096 754,431
Net debt (1,287,328) (1,349,976) (1,147,800) (1,179,545)
Employee benefit obligations (175,059) (185,734) (156,085) (162,286)
Lease liabilities (294,034) – (262,165) –
Other non-current liabilities (238,636) (261,258) (212,771) (228,275)
Other current liabilities (617,365) (592,726) (550,452) (517,892)
Non-controlling interests (9,170) (8,531) (8,176) (7,454)
Fair value of net assets attributable to equity shareholders 47,663 12,766 42,497 11,155
’s 45% share of net assets 21,448 5,745 19,124 5,020
Goodwill 275,687 275,687 245,769 240,861
Total carrying value of 45% interest in Dole 297,135 281,432 264,893 245,881
* As explained on page 127, the fair value of the net identifiable assets of Dole were revised and finalised within twelve months from the
acquisition date.

Opening carrying value of 45% investment in Dole 281,432 – 245,881 –
Retained earnings adjustment on transition to IFRS 16 (3,807) – (3,326) –
Arising on acquisition – 292,559 – 249,853
Group share of profit/(loss) for period attributable to equity shareholders 29,756 (7,299) 26,375 (6,355)
Group share of other comprehensive expense for period attributable to equity
shareholders (10,246) (3,828) (9,175) (3,333)
Foreign exchange movement – – 5,138 5,716
Closing carrying value of 45% interest in Dole 297,135 281,432 264,893 245,881
In 2018, Dole commissioned the building of two new refrigerated container vessels with a contractual price of $40.9m per vessel ($81.8m in
total) to replace two existing vessels. The first vessel is expected to be delivered in late 2020, with the second to follow in 2021. Under the
terms of the contracts, progress payments are to be made as construction milestones are achieved. The first progress payments of $12.3m
were made in 2019, with further estimated payments of $45.0m due in 2020.
Goodwill impairment of Dole review
The Group tests goodwill (including goodwill in joint ventures and associates) annually for impairment on 31 December, or more frequently
if there are indications that goodwill might be impaired. See Note 14 for further details on Goodwill impairment testing.
For the purposes of impairment testing of goodwill held by  relating to its investment in Dole, the total business of Dole is
considered a cash-generating-unit (‘CGU’). The goodwill balance within Dole is not allocated to individual divisions.
The recoverable amount of the Dole CGU has been determined based on a value-in-use calculation using cash flows derived from the
approved 2020 budget with cash flows thereafter calculated using a terminal value methodology assuming 2.5% p.a. inflation. No other
growth is assumed. The pre-tax discount rate applied to cash flow projections of the CGU was 8.9%.
Projected cash flows are most sensitive to assumptions regarding future profitability, replacement capital expenditure requirements and
working capital investment. The values applied to these key assumptions are derived from a combination of external and internal factors,
based on past experience together with management’s future expectations about business performance.
The discount rate reflects the current market assessment of the risk specific to the CGU. The discount rate was estimated by calculating
a CGU-specific weighted average cost of capital to reflect the market assessment of risk specific to each CGU for which the cash flow
projections have not been adjusted.
132

15. Investments in joint ventures and associates continued
Goodwill impairment of Dole review continued
The earnings of Dole are significantly dependent on the selling prices and margins obtained for products sold. These, in turn, are largely
determined by market supply and demand. Fresh produce supplies in individual markets are affected by the geography of production,
growing conditions (including climate), seasonality and perishability. Market demand is a function of population size, per capita consumption,
the availability and quality of individual products, competing products, climatic, economic and other general conditions in the marketplace.
Excess produce leading to reduced selling prices (particularly for products purchased under contract) could have a material adverse effect
on the Group’s business, results of operations and financial condition.
Applying the techniques above, no impairment charge (2018: €Nil) relating to goodwill was recognised in the income statement in 2019.
Sensitivity analysis
The value-in-use calculations are sensitive to changes in the assumptions, particularly relating to assumptions of cash flows generated by the
individual CGUs and discount rates applied to these cash flows. Sensitivity analysis was performed, based on changes to each of these factors.
A 10% reduction in the cash flow projections would not result in an impairment. Similarly, if the pre-tax discount rates applied to the
cashflows had been 10% higher, no impairment would result.
Non-material joint ventures
The following is summarised financial information for the Group’s interest in non-material joint ventures, based on the amounts reported in
the Group’s consolidated financial statements:
Carrying value

Biological assets consist of unharvested fruits growing on bearer plants and are measured at their fair value less estimated costs to point of
sale with any resultant gain or loss recognised in the income statement within other operating income/expense. In the prior year, fair value
movements on biological assets were classified within cost of sales. The fair value gain for year ended 2018 was just €6,000 and given
materiality the comparative financial statements have not been restated for this reclassification amount. Point of sale costs include all costs
that would be necessary to sell the assets, excluding costs necessary to bring the assets to market. Where fair value cannot be measured
reliably, biological assets are measured at cost.
The following table details the fair values of the Group’s biological assets:

Fair value hierarchy
The fair value measurements for the Group’s biological assets have been categorised as Level 3 fair values, based on the inputs to the
valuation techniques used which are not based on observable market data.
134

18. Biological assets continued
Valuation technique and significant unobservable inputs
The fair value of biological assets is determined by management using a discounted cash flow approach, and the table below summarises
the unobservable inputs used for strawberries.
Product Valuation technique Significant unobservable inputs
Inter-relationship between key unobservable
inputs and fair value measurement
Strawberries Discounted cash flows
This method of valuation considers the
present value of the net cash flows
expected to be generated by the
biological assets. The cash flow
projections include estimates of yields,
sales prices, production and harvest
costs. The expected net cash flows
are discounted using a risk-adjustment
factor to factor in volatility of weather,
production and pricing and future
farming costs.
Inclusive of:
• estimated yields based on historical yields
that are adjusted to reflect current growing
conditions, variety of product and farm
locations 29 tonnes per acre (2018: 29 tonnes
per acre).
• estimated cash inflows based on forecast
pricing (US$0.41 to US$6.45 per kg –
weighted average US$2.77 per kg)
(2018: US$0.33 to US$6.55 per kg –
weighted average US$2.63 per kg).
• estimated production, harvesting and
transportation costs
• risk-adjusted discount rates of 17.0%
(2018: 27.0%).
The estimated fair value would
increase/(decrease) if:
• estimated yields were higher/
(lower)
• estimated fruit prices were
higher/(lower)
• estimated production,
harvesting and transportation
costs were lower/(higher)
• the risk-adjusted discount
rates were lower/(higher)
Risk management strategy related to biological assets
Supply and demand risk
The Group is exposed to risks arising from fluctuations in the price and sales volume of all its fruits and vegetables. Management of
subsidiaries of the Group which are involved in growing perform regular industry trend analysis to project harvest volumes and pricing.
Where possible, the Group manages this risk by aligning its harvest volumes to market supply and demand.
Climate and other risks
The Group’s plantations are at risk to damage from climatic changes, unusual weather patterns, diseases, forest fires and other natural
forces. The Group has processes in place to monitor and to mitigate risks where possible, including regular crop inspection and pest and
disease surveys.
19. Trade and other receivables

Non-current
Non-trade receivables due from joint ventures and associates 7,779 8,707
Other receivables 12,017 10,017
19,796 18,724
Current
Trade receivables due from third parties 304,360 326,427
Trade receivables due from joint ventures and associates 15,650 10,460
Irish value added tax 676 826
Other tax 6,817 6,352
Other receivables 36,993 32,485
Prepayments 11,818 11,491
Non-trade receivables due from joint ventures and associates 4,477 4,745
380,791 392,786
Total 400,587 411,510
Details of impairment provisions netted against the carrying value of trade and other receivables above are set out in Note 35.
Other receivables (both current and non-current) include loans and advances to suppliers.
See Note 35 for an analysis of credit risk on trade and other receivables to understand how the Group manages and measures credit quality
of trade and other receivables.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
135

1. 2. 3. Financial Statements
20. Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents comprise cash balances held for the purposes of meeting short-term cash commitments and call deposits,
which are readily convertible to a known amount of cash within a short time frame of between one day and three months.

Share capital
At 31 December 2019, the authorised share capital was €10,000,000 (2018: €10,000,000) divided into 1,000,000,000 ordinary shares
of 1 cent each. The issued share capital at that date was 410,524,962 ordinary shares (2018: 410,429,462).
During the year, the Group received consideration of €67,000 (2018: €394,000) from the issue of 100,000 (2018: 600,000) shares that were
issued to satisfy the exercise of 100,000 (2018: 600,000) share options.
On 1 February 2018, a total of 63 million new ordinary shares were placed (the ‘Placing Shares’) in a placing transaction at a price of €2.30
per Placing Share, raising gross proceeds of €145 million or circa $180 million (before expenses) to finance the Dole transaction. Net of
expenses, the proceeds were €141 million (circa $175 million). The Placing Shares represented approximately 19% of the Company’s issued
ordinary share capital (excluding treasury shares) prior to the placing. The new issued shares were admitted to the Irish Stock Exchange and
the London Stock Exchange on the Euronext Growth Market and AIM respectively on 5 February 2018.
At 31 December 2019, the Company held 22,000,000 treasury shares in the Company (2018: 22,000,000). All rights (including voting and
dividend rights) in respect of these treasury shares are suspended until these shares are reissued.
Allotted, called-up and fully paid
In issue at beginning of year 410,429 4,104 346,829 3,468
Shares issued by the Company in share placing – – 63,000 630
Shares repurchased by the Company (4) – – –
Shares issued on exercise of share options 100 1 600 6
In issue at end of year 410,525 4,105 410,429 4,104

At beginning of year 295,421 150,763
Cash received on placing shares in excess of cost price of shares – 144,270
Cash received on exercise of share options in excess of cost price of shares 66 388
At end of year 295,487 295,421
Attributable Profit/(Loss) of the Company
The loss attributable to equity holders of the parent recorded within the financial statements of the Company for the year ended
31 December 2019 was €1,597,000 (2018: loss of €4,555,000). As permitted by Section 304 of the Companies Act 2014, the statement
of comprehensive income of the Company has not been separately presented in these financial statements.
136

21. Capital and reserves continued
Other reserves

Undenominated capital (a) 140 140
Own shares reserve (b) (8,580) (8,580)
Currency translation reserve (c) (18,699) (22,721)
Revaluation reserve (d) 30,809 28,336
Other equity reserves (e) (134,979) (120,232)
Total (131,309) (123,057)
(a) Undenominated capital
This reserve arises on the cancellation of ordinary shares purchased under share buy-back programmes. There were no share buy-backs
in 2019 and 2018.
(b) Own shares reserve
The reserve for the Company’s own shares comprises the cost of the Company’s shares held by the Company. At 31 December 2019,
the Company held 22,000,000 (31 December 2018: 22,000,000) of the Company’s shares as treasury shares.
(c) Currency translation reserve
The translation reserve comprises all foreign exchange differences from 1 January 2004, arising from the translation of the net assets of the
Group’s non-Euro denominated operations, including the translation of the profits and losses of such operations from the average exchange rate
for the year to the exchange rate at the reporting date, as well as from the translation of borrowings designated as a hedge of those net assets.
(d) Revaluation reserve
The revaluation reserve relates to revaluation surpluses arising on revaluations of property occupied by the Group. This reserve is not
distributable to shareholders under Irish company law.
(e) Other equity reserves
Other equity reserves comprise the de-merger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and put option
reserve.

Balance as at 1 January 2019 as presented in the balance sheet (122,521) 1,904 750 (63) (302) (120,232)
Adjust for NCI subject to put option transferred for presentation purposes – – – – (34,673) (34,673)
Balance at 1 January 2019 (122,521) 1,904 750 (63) (34,975) (154,905)
Comprehensive income
Profit for the year – – – – – –
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation – – 33 – – 33
Effective portion of cash flow hedges, net – – (148) – – (148)
Changes in fair value of cost of hedging, net – – – 155 – 155
Deferred tax on items taken directly to other comprehensive income – – 30 (30) – –
Share of joint ventures and associates effective portion of cashflow
hedges – – (5,101) – – (5,101)
Share of joint ventures and associates deferred tax on items above – – 497 – – 497
Total included in other comprehensive income – – (4,689) 125 – (4,564)
Total included in comprehensive income – – (4,689) 125 – (4,564)
Transactions with equity holders of the parent
New shares issued – (20) – – – (20)
Put option liability extinguished (Note 28) – – – – 11,657 11,657
Fair value movements on put option liability (Note 28) – – – – (3,294) (3,294)
Share-based payment transactions (Note 32) – 109 – – – 109
Total transactions with equity holders of the parent – 89 – – 8,363 8,452
Balance at 31 December 2019 (122,521) 1,993 (3,939) 62 (26,612) (151,017)
Transfer of NCI subject to put options for presentation purposes (Note 22) – – – – 16,038 16,038
Balance at 31 December 2019 as presented in the balance sheet (122,521) 1,993 (3,939) 62 (10,574) (134,979)
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

Balance as at 1 January 2018 as presented in the balance sheet (122,521) 1,444 (231) – (12,173) (133,481)
Adjustment on adoption of IFRS 9 on 1 Jan 2018 – – 51 (51) – –
Adjust for NCI subject to put option transferred for presentation purposes – – – – (26,788) (26,788)
Balance at 1 January 2018 (122,521) 1,444 (180) (51) (38,961) (160,269)
Comprehensive income
Profit for the year – – – – – –
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation – – – – 154 154
Effective portion of cash flow hedges, net – – 248 – – 248
Changes in fair value of cost of hedging, net – – – (14) – (14)
Deferred tax on items taken directly to other comprehensive income – – (65) 2 – (63)
Share of joint ventures and associates effective portion of cashflow
hedges – – 51 – – 51
Share of joint ventures and associates deferred tax on items above – – 696 – – 696
Total included in other comprehensive income – – 930 (12) 154 1,072
Total included in comprehensive income – – 930 (12) 154 1,072
Transactions with equity holders of the parent
New shares issued – (97) – – – (97)
Recognition of put option liability on acquisition (Note 28) – – – – (896) (896)
Fair value movements on put option liability (Note 28) – – – – 4,728 4,728
Share-based payment transactions (Note 32) – 557 – – – 557
Total transactions with equity holders of the parent – 460 – – 3,832 4,292
Balance at 31 December 2018 (122,521) 1,904 750 (63) (34,975) (154,905)
Transfer of NCI subject to put options for presentation purposes (Note 22) – – – – 34,673 34,673
Balance at 31 December 2018 as presented in the balance sheet (122,521) 1,904 750 (63) (302) (120,232)
(i) De-merger reserve
The operations of the Company were de-merged from Fyffes plc on 30 December 2006, and acquired on that date by the Company. The
operations had always constituted a separate business segment within Fyffes plc and, consequently, in the Group financial statements of Total
Produce plc after the de-merger, the financial position was presented to shareholders on the basis of the carrying value of the assets previously
reported to them. In accordance with Section 62 of the Companies Act 1963, the ordinary shares issued by the Company were recorded at
their fair value on the date of issue. The difference between the fair value of the consideration received by the Company and the carrying values
at which the net assets were previously reported has been recognised in the Group financial statements as a de-merger reserve.
(ii) Share option reserve
The share option reserve comprises the amounts expensed in the income statement in connection with share-based payment transactions.
When options vest or lapse, the fair value of the share options is reclassified to retained earnings.
(iii) Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have not yet occurred.
(iv) Cost of hedging reserve
The cost of hedging reserve comprises the effective portion of the net change in the fair value of hedging instruments attributable to forward points.
(v) Put option reserve
The Group has a number of contractual put options and forward commitments in place in relation to non-controlling interest (‘NCI’) shares in
subsidiaries whereby the NCI shareholder can require the Group to acquire or the Group has agreed to acquire (‘forward commitment’) the
shares in these subsidiaries at various future dates. The value of the put option or forward commitment liability recognised and subsequent
fair value movements are recognised in the put option reserve. For presentation purposes in the balance sheet, the NCI subject to the put is
transferred to the put option reserve in equity.
138

21. Capital and reserves continued
Capital management
The Board regularly reviews and monitors the Group’s capital structure with a view to maintaining a strong capital base in order to sustain
market confidence in the business. This involves considering dividends paid to shareholders, the amount of liquid assets on the balance
sheet and return on capital (based on shareholders’ equity, the composition of which is set out on page 90). The Group operates a share
option scheme and an employee profit sharing scheme, which allows employees to use part of their profit sharing awards to acquire shares
in the Company.
The Group has the authority to purchase its own shares. This authority permits the Group to buy up to 10% of the issued share capital at a
price which may not exceed 105% of the average price over the previous five trading days. On 27 January 2016, the Group completed the
€20,000,000 share buy-back programme that commenced on the 9 October 2015, with a total of 14,017,270 ordinary shares repurchased
at a total cost of €20,361,000 including associated costs. The repurchased ordinary shares were cancelled. The share buy-back programme
was earnings accretive.
In November 2010, the Group also exercised this authority and completed a share buy-back of 22,000,000 shares at a cost of €8,580,000,
plus costs of €107,000. These shares are held as treasury shares unless reissued or cancelled. The Group continues to consider exercising
its authority should the opportunity arise, and the Group will seek to renew this authority at the forthcoming AGM on 15 May 2020.
22. Non-controlling interests

Balance at 1 January as presented in the balance sheet 82,483 79,774
Adjust for transition to IFRS 16 (1,337) –
Balance at 1 January as presented in the balance sheet (restated) 81,146 79,774
Adjust for non-controlling interest subject to put option transferred for presentation purposes (Note 21 ) 34,673 26,788
As at 1 January 115,819 106,562
Share of profit after tax 12,902 18,011
Share of items recognised in other comprehensive income (31) 303
Share of foreign exchange movement 1,645 922
Share of comprehensive income 14,516 19,236
Non-controlling interests arising on acquisition (Note 31) 959 2,314
Acquisition of non-controlling interests (a) (554) (723)
Disposal of subsidiary (b) 121 –
Disposal of shareholding to non-controlling interest (c) – 275
Contribution by non-controlling interests (d) – 130
Dividends paid to non-controlling interests (e) (16,055) (10,638)
Balance at end of year 114,806 117,156
Transfer of NCI subject to put options to the put option reserve for presentation purposes (Note 21) (16,038) (34,673)
Balance at end of year as presented in the balance sheet 98,768 82,483
(a) Acquisition of non-controlling interests
During 2019, the Group acquired additional shares in subsidiaries in North America and Scandinavia for consideration of €1,656,000. These
changes in the Group’s ownership interest in existing subsidiaries were accounted for as equity transactions. The difference of €1,102,000
between the fair value of the consideration of €1,656,000 and the book value of the non-controlling interest acquired of €554,000 was
accounted for directly in retained earnings as a charge.
During 2018, the Group acquired additional shares in subsidiaries in the UK and Continental Europe for consideration of €1,111,000, including
€621,000 contingent on future profit targets being achieved. These changes in the Group’s ownership interest in existing subsidiaries were
accounted for as equity transactions. The difference of €388,000 between the fair value of the consideration of €1,110,000 and the book
value of the non-controlling interest acquired of €723,000 was accounted for directly in retained earnings as a charge.
(b)Disposal of subsidiary
During 2019, the Group disposed of a small produce business in the Eurozone at a loss of €572,000. The non-controlling interest share of
net identifiable assets and liabilities disposed of was €121,000 (Note 31).
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
139

1. 2. 3. Financial Statements
(c) Disposal of shareholding to non-controlling interests
In 2018, the Group disposed of a portion of its shareholdings in subsidiaries in Europe to non-controlling interests with a carrying value of
€275,000. The Group received cash consideration of €286,000 with the difference of €11,000 between the fair value of the consideration
and the book value of the non-controlling interest disposed of accounted for directly in retained earnings as a credit.
(d)Contribution by non-controlling interests
In 2018, non-controlling interests in subsidiaries made cash capital contributions of €130,000.
(e) Dividends paid to non-controlling interests
In 2019, dividends of €16,055,000 (2018: €10,638,000) were declared payable to non-controlling interests. The cash paid as dividend
to non-controlling interests in 2019 were €16,055,000 (2018: €10,535,000).
Additional disclosures
The Group has two subsidiaries with non-controlling interests which are material to the Group as follows:
• EurobananCanarias S.A. The Group owns 50% of the EurobananCanarias S.A. subgroup, with a registered address of
EurobananCanarias S.A. is Avda. de Anaga No 11, 38001 Santa Cruz de Tenerife, Spain.
• Grandview Ventures Limited. The Group owns 65% of Grandview Ventures Limited (‘Oppy’), a Canadian fresh produce group, with
a registered address of 2800 Park Place, 666 Burrard Street, Vancouver BC V6C 2Z7.
The following is the summarised financial information for both EurobananCanarias S.A. and Oppy based on their consolidated financial
statements prepared in accordance with IFRS, modified for fair value adjustments on acquisition and differences in the Group’s accounting
policies. The information is before inter company eliminations with other companies in the Group.
EurobananCanarias S.A. Oppy Group

Total revenue (including share of joint ventures) 438,583 426,947 739,161 676,556
Group revenue 413,401 402,303 701,517 643,273
Profit after tax 11,737 11,806 5,788 20,356*
Profit after tax attributable to non-controlling interests 7,104 7,031 2,248 7,707
Other comprehensive (expense)/income (38) 217 2,008 1,018
Total comprehensive (expense)/income 11,699 12,023 7,796 21,374
Total comprehensive income attributable to non-controlling interests 7,059 7,158 2,911 8,512
Current assets 92,276 88,737 84,255 96,621
Non-current assets 54,569 39,156 60,007 57,221
Current liabilities (59,195) (53,821) (73,860) (78,485)
Non-current liabilities (13,677) (2,597) (30,255) (27,319)
Net assets 73,973 71,475 40,147 48,038
Net assets attributable to non-controlling interests 44,244 42,400 19,483 22,813
Net increase in cash and cash equivalents (1,244) 3,446 2,753 8,484
Dividends paid to non-controlling interests during the year 4,905 4,044 6,013 2,438
Impact on transition to IFRS 16 Leases on retained earnings
Impact on net assets (976) – (362) –
Impact on net assets attributable to non-controlling interest (661) – (228) –
* Includes an exceptional profit after tax of €176,000 (2018: €12,754,000).
140

23. Interest-bearing loans and borrowings

Non-current
Bank borrowings 250,572 262,188
Finance lease liabilities – 1,168
250,572 263,356
Current
Bank overdrafts 9,502 9,560
Bank borrowings 76,648 48,658
Finance lease liabilities – 468
86,150 58,686
Total 336,722 322,042
Borrowings are repayable as follows:

Bank borrowings and overdrafts
Within one year 86,150 58,218
After one year but within two years 53,641 122,191
After two years but within five years 196,782 127,764
After five years 149 12,233
336,722 320,406
Finance lease liabilities
Within one year – 468
After one year but within five years – 1,168
– 1,636
Total 336,722 322,042
Further details in relation to the Group’s borrowings are set out in Note 35.
Total future minimum lease payments on finance leases amounted to €1,698,000 at 31 December 2018. Total interest-bearing loans and
borrowings include borrowings of €3,422,000 (2018: €3,666,000) secured on property, plant and equipment.
Reconciliation of movements of interest-bearing loans and borrowings to cash flows arising from financing activities
Bank overdrafts
used for cash
management
purposes
Balance at 31 December 2018 9,560 310,846 1,636 322,042
Finance leases reclassified on adoption of IFRS 16 – – (1,636) (1,636)
Balance at 1 January 2019 9,560 310,846 – 320,406
Changes from financing cash flows
Drawdown of borrowings – 345,764 – 345,764
Repayment of borrowings – (333,211) – (333,211)
Total changes from financing cash flows – 12,553 – 12,553
Changes from cash flows (195) – – (195)
Net foreign exchange movement 137 3,821 – 3,958
Balance at 31 December 2019 9,502 327,220 – 336,722
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

1. 2. 3. Financial Statements
Reconciliation of movements of interest-bearing loans and borrowings to cash flows arising from financing activities
continued
Bank overdrafts
used for cash
management
purposes


As described in changes in accounting policy and disclosures on pages 94 to 96, the Group has initially adopted IFRS 16 Leases with effect
from 1 January 2019. Included in the balance above, is €118,568,000 in relation to leases that would previously have been classified as
operating leases.
IFRS 16 introduces a single lessee accounting model to be adopted, and accordingly the majority of all lease agreements will now result
in the recognition of a right of use asset and a lease liability on the balance sheet. This will increase the Group’s recognised assets and
liabilities. The income statement charge in relation to all leases will now comprise a depreciation element relating to the right of use asset
and also a financing charge relating to the lease liability. Lessor accounting remains similar to previous accounting policies. See page 103
for further details.
See Note 35 for contractual cashflows relating to lease liabilities.
During the year, a subsidiary of  plc continued to lease a number of buildings from Balmoral International Holdings plc as part
of its normal trading activities. Balmoral International Holdings plc is a related party of the Group under the AIM/Euronext Growth rules. The
total lease payment for the year was €1,233,500.
142

25. Analysis of net debt
Net debt is a non-IFRS measure which comprises bank deposits, cash and cash equivalents and current and non-current borrowings.
For 2019, it excludes lease liabilities. For 2018, it includes finance lease liabilities. The calculation of net debt at 31 December 2019 and
31 December 2018 is as follows:

Current assets
Bank balances (Note 20) 99,445 91,099
Call deposits (demand balances) (Note 20) 16,084 11,200
Current liabilities
Bank overdrafts (Note 23) (9,502) (9,560)
Current bank borrowings (Note 23) (76,648) (48,658)
Finance leases (Note 23) – (468)
Non-current liabilities
Non-current bank borrowings (Note 23) (250,572) (262,188)
Finance leases (Note 23) – (1,168)
Net debt at end of year (221,193) (219,743)
Average net debt for the year ended 31 December 2019 was €284,019,000 (2018: €217,114,000). The Group also manages credit risk
through the use of a number of sales of receivables arrangements. Under the terms of these agreements the Group has transferred
substantially all of the credit risk of the trade receivables which are subject to these agreements. Accordingly, €46,409,000 (2018:
€29,967,000) has been derecognised at year-end.
26. Trade and other payables

Non-current
Other payables 2,904 1,611
Current
Trade payables 361,832 365,071
Trade payables due to joint ventures and associates 9,523 10,802
Non-trade payables due to joint ventures and associates 25 22
Accruals 58,963 71,438
Deferred consideration 257 137
Other payables 27,526 19,895
Irish payroll tax and social welfare 2,748 2,875
Irish value added tax 837 1,073
Other tax 13,491 11,621
Total 478,106 484,545
For information on the Group’s contractual maturity analysis of all liabilities, including trade and other payables, please refer to Note 35.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
143

1. 2. 3. Financial Statements
27. Contingent consideration and other provisions
Total contingent consideration amounts to €14,860,000 (2018: €24,517,000) and represents provision for the net present value of the
amounts expected to be payable in respect of acquisitions which are subject to earn-out arrangements.
Other provisions of €620,000 (2018: €2,747,000) represent costs that are expected to be incurred associated with the restructuring
of a business in the Eurozone division and costs associated with the termination of a business in the Non-Eurozone division.
Restoration provisions of €1,011,000 represent costs that are expected to be incurred to return leasehold premises to their original condition
when the lease expires.
Contingent
consideration
Balance at beginning of year 34,465 – – 34,465
Paid during year (7,009) – – (7,009)
Fair value movements credited to income statement1
(Note 3) (4,043) – – (4,043)
Arising on acquisition of subsidiaries (Note 31) 1,126 – – 1,126
Arising on acquisition of non-controlling interests (Note 22) 621 – – 621
Arising during the year – 3,265 – 3,265
Utilised in the year – (503) – (503)
Arising on acquisitions of joint ventures and associates (Note 15) (419) – – (419)
Foreign exchange movements (224) (15) – (239)
Balance at end of year 24,517 2,747 – 27,264
Non-current 12,931 – – 12,931
Current 11,586 2,747 – 14,333
Balance at end of year 24,517 2,747 – 27,264
1 The impact of fair value movements of contingent consideration in respect of acquisitions of subsidiaries, joint ventures and associates to
a decrease in the amount payable of €204,000 (2018: decrease of €4,043,000). The impact of these revisions is recognised in the Group
income statement within other operating income and expenses (Note 3).
See Note 35 for contractual cash flows and fair value disclosures on the measurement of contingent consideration, restoration and other
provisions at 31 December 2019.
144

28. Put option liability
The Group has a number of contractual put options and forward commitments in place in relation to non-controlling interest (‘NCI’) shares in
subsidiaries whereby the NCI shareholder can require the Group, or the Group has agreed to acquire (‘forward commitment’) the shares in
these subsidiaries at various future dates. The value of the put option recognised represents management’s best estimate of the fair value
of the amounts which may be payable discounted to net present value. This liability has been recognised in a put option reserve attributable
to the equity holders of the parent (Note 21).
As outlined in the Group accounting policies on page 98, where the non-controlling shareholder retains a present ownership interest in
shares subject to a put option or a forward commitment, the Group applies the partial recognition of non-controlling interest method for
put options and forward commitments.
The non-controlling interest is therefore recognised in the traditional manner but is transferred against the put liability reserve for presentation
purposes in the balance sheet.

Balance at beginning of year 34,975 38,961
Arising on acquisition – 896
Extinguished during the year1
(11,657) –
Fair value movement on put option recognised directly within equity 3,294 (4,728)
Foreign exchange movements – (154)
Balance at end of year 26,612 34,975
Non-current 23,083 34,975
Current 3,529 –
Balance at end of year 26,612 34,975
1 During the year, and with the consent of the Group, a non-controlling shareholder sold their shares to other third parties
(existing management). As a result, the put option between the Group and this non-controlling shareholder was extinguished.
See Note 35 for contractual cash flows and fair value disclosures on the measurement of put option liabilities over non-controlling
interest shares.
29. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as set out below. For 2018, these amounts represented the minimum future lease
payments, in aggregate, that the Group was required to make under existing lease agreements. For 2019, as a result of the adoption of IFRS
16 Leases, these amounts represent the minimum future lease payments for short-term and low-value leases, for which a right of use asset
and lease liability are not recognised, as allowed in accordance with IFRS 16.

Less than one year 667 19,094
Between one and five years 15 41,059
More than five years – 26,430
Total 682 86,583
The Group leases certain items of property, plant and equipment under operating leases. During the financial year, €1,564,000
(2018: €19,764,000) was recognised as an expense in the income statement in respect of operating leases.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
145

1. 2. 3. Financial Statements
Leases as lessor
The Group leases property under both cancellable and non-cancellable operating leases. Non-cancellable operating lease rental receivables
are set out below. These amounts represent the minimum future lease receipts, in aggregate, that the Group will receive under existing lease
agreements.

Property, plant and equipment 824 (8,660) (7,836) 1,076 (8,087) (7,011)
Goodwill and intangible assets – (18,416) (18,416) – (20,172) (20,172)
Investment property 3 (663) (660) – (628) (628)
Net right of use asset 703 – 703 – – –
Derivative financial instruments 75 (14) 61 74 (9) 65
Employee benefits 1,743 – 1,743 2,139 – 2,139
Trade and other payables 5,337 (69) 5,268 4,784 (204) 4,580
Other items 857 (469) 388 808 (2,872) (2,064)
Tax value of losses carried forward 4,515 – 4,515 4,344 – 4,344
Deferred tax assets/(liabilities) 14,057 (28,291) (14,234) 13,225 (31,972) (18,747)
Set-off of deferred tax (560) 560 – (832) 832 –
Net deferred tax assets/(liabilities) 13,497 (27,731) (14,234) 12,393 (31,140) (18,747)
Deferred tax assets have not been recognised in respect of the following:

Tax losses 9,369 7,364
No deferred tax asset is recognised in relation to certain income tax losses incurred by the Group on the grounds that there is insufficient
evidence that the assets will be recoverable. In the event that sufficient profits are generated in the relevant jurisdictions in the future, these
assets may be recovered. The estimated unrecognised deferred tax asset at 31 December 2019 is €3,910,000 (2018: €2,153,000).
No deferred tax asset is recognised in relation to certain capital losses incurred by the Group on the grounds that there is insufficient
evidence that the assets will be recoverable. The estimated unrecognised deferred tax asset at 31 December 2019 is €5,459,000 (2018:
€5,211,000).
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries, branches, associates and joint ventures where the Group
does not anticipate additional tax on any ultimate remittance.

Property, plant and equipment (7,011) – (94) (932) 50 – 151 (7,836)
Goodwill and intangible assets (20,172) – 2,623 – (469) (398) – (18,416)
Investment property (628) – 3 – (35) – – (660)
Derivative financial instruments 65 – 9 (9) (8) – 4 61
Employee benefits 2,139 – (440) (34) 78 – – 1,743
Trade and other payables 4,580 – 382 – 87 8 211 5,268
Net right of use asset – 368 340 – (5) – – 703
Other items (2,064) – 2,587 – (135) – – 388
Tax value of losses carried forward 4,344 – 467 – 4 66 (366) 4,515
Net deferred tax assets/(liabilities) (18,747) 368 5,877 (975) (433) (324) – (14,234)
Property, plant and equipment (6,798) (199) (106) 106 (14) – (7,011)
Goodwill and intangible assets (18,960) (1,190) – (133) (124) 235 (20,172)
Investment property (636) – – 8 – – (628)
Derivative financial instruments 154 15 (97) (7) – – 65
Employee benefits 2,860 348 (1,066) (3) – – 2,139
Trade and other payables 6,105 (1,007) – 21 55 (594) 4,580
Other items (2,081) (429) – 79 8 359 (2,064)
Tax value of losses carried forward 3,700 637 – 7 – – 4,344
Net deferred tax assets/(liabilities) (15,656) (1,825) (1,269) 78 (75) – (18,747)
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
147

1. 2. 3. Financial Statements
31. Acquisitions and disposals of subsidiaries
Summary of investments in 2019
A key part of the Group’s strategy is growth by acquisition. In line with this strategy, the Group made a number of acquisitions in the Fresh
Produce sector in Europe in 2019, with initial cash spend of €6,683,000 (2018: €2,496,000), deferred consideration of €114,000 (2018: €Nil),
with a further €1,461,000 (2018: €1,126,000) of contingent consideration payable dependent on the achievement of profit targets.
Summary of fair values of assets and liabilities acquired
The table below provides details on the total fair value of acquisitions of subsidiaries in 2019. None of the business combinations completed
during the period were considered sufficiently material to warrant separate disclosure of the fair values attributable to those combinations.

Consideration paid and payable
Cash consideration 6,683 2,496
Contingent consideration (Note 27) 1,461 1,126
Deferred consideration 114 –
Total fair value of consideration 8,258 3,622
Identifiable assets acquired and liabilities assumed
Property, plant and equipment (Note 11) 1,054 2,422
Right of use assets (Note 12) 3,564 –
Investment property (Note 13) – 223
Intangible assets – Customer relationships (Note 14) 2,392 811
Intangible assets – Software (Note 14) 434 –
Intangible assets – Supplier relationships, brand and other (Note 14) 189 93
Inventories 590 945
Trade and other receivables 9,859 9,794
Cash, and cash equivalents 2,308 3,833
Lease liabilities (Note 24) (3,553) –
Corporation tax 58 (92)
Trade and other payables (10,921) (11,007)
Deferred tax asset (Note 30) 74 55
Deferred tax liability (Note 30) (398) (130)
Fair value of net identifiable assets and liabilities acquired 5,650 6,947
Non-controlling interests arising on acquisition
Non-controlling interests measured at fair value – 157
Non-controlling interests measured at share of net assets 959 2,157
Total value of non-controlling interests arising on acquisition (Note 22) 959 2,314
Goodwill calculation
Fair value of consideration 8,258 3,622
Fair value of pre-existing interest in acquiree (Note 15) – 2,760
Fair value of net identifiable assets and liabilities acquired (5,650) (6,947)
Non-controlling interest arising on acquisition (Note 22) 959 2,314
Goodwill arising (Note 14) 3,567 1,749
Cash flows relating to acquisition of subsidiaries

Cash consideration for acquisition of subsidiary undertakings (6,683) (2,496)
Cash, cash equivalents and bank overdrafts acquired 2,308 3,833
Cash inflow/(outflow) per statement of cash flows (4,375) 1,337
Cash consideration paid
The cash spend on acquisitions in 2019 was €6,683,000 (2018: €2,496,000). Net of cash, cash equivalents and bank overdrafts acquired the
net cash outflow was €4,375,000 (2018: inflow €1,337,000).
148

31. Acquisitions and disposals of subsidiaries continued
Contingent consideration
The Group has agreed to pay selling shareholders additional consideration of €1,633,000 (2018: €1,134,000) in future periods, which is
payable on achievement of certain profit criteria. The fair value of this contingent consideration at the date of acquisition of €1,461,000
(2018: €1,126,000) was calculated by using the expected present value technique.
Fair value of identifiable assets and liabilities assumed
The acquisition method of accounting has been used to consolidate businesses acquired. Other than liabilities for contingent consideration,
no contingent liabilities have been recognised on the business combinations in either year. Should any fair values need to be adjusted they
will be reflected in the acquisition accounting within one year of the acquisition date in line with the provisions of IFRS 3 Business
Combinations.
Goodwill arising
The principal factor contributing to the recognition of goodwill of €3,567,000 (2018: €1,749,000) is the value and skills of the assembled
workforce in the acquired entities along with anticipated costs savings and synergies arising from integration into the Group’s existing
businesses.
Acquisition related costs
The Group incurred acquisition related costs of €177,000 (2018: €105,000) on legal and professional fees and due diligence in respect
of the completed acquisitions. These costs have been included within other operating expenses (Note 3).
Effect of acquisitions on income statement in the year
The acquisitions of subsidiaries in 2019 contributed €32,098,000 to total revenue in the period and €441,000 to Group operating profit.
These numbers exclude the contributions from any joint venture and associate investments completed in the year.
If the acquisition date for these business combinations was 1 January 2019, the estimated total revenue for the year ended 31 December
2019 would have been €6,225,834,000 and estimated operating profit after exceptional items would have been €87,751,000. These numbers
exclude the contributions from any joint ventures and associates completed in the year.
Disposal of interest in subsidiary and trading assets
During 2019, the Group disposed of two small business produce business in Europe for nil consideration resulting in a net loss on disposal
of €572,000.

Identifiable assets acquired and liabilities disposed of
Right of use asset (Note 12) 645
Trade and other receivables 219
Cash and cash equivalents 191
Trade and other payables (452)
Contingent consideration liability disposed (Note 27) (189)
Lease liability (Note 24 ) (654)
Book value of net assets/(liabilities) and liabilities disposed (240)
Calculation of loss on disposal
Fair value of consideration received –
Less book value of net assets and liabilities disposed of 240
Less goodwill related to business disposed (Note 14) (691)
Non-controlling interests share of net identifiable assets and liabilities disposed of (Note 22) (121)
Loss on disposal of business (recognised within other operating expenses as an exceptional item) (572)
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
149

1. 2. 3. Financial Statements
32. Employee benefits
Remuneration

Wages and salaries 231,611 222,272
Social security contributions 39,502 37,983
Employee post-employment obligations cost – defined contribution schemes 9,014 8,337
Employee post-employment obligations cost – defined benefit schemes 1,677 2,035
Employee post-employment obligations cost – other post-employment obligations 547 442
Termination benefits 1,039 1,228
Equity settled share-based compensation expense 109 557
Short term incentive payment plan 546 282
Recognised in the income statement 284,045 273,136
Charge on the Group’s employee defined benefit obligations – 1,304
Recognised in the income statement – exceptional item (Note 7) – 1,304
Remeasurement loss/(gain) on post-employment defined benefit schemes 2,683 (6,323)
Remeasurement loss/(gain) on other post-employment benefit schemes 326 (354)
Recognised in the statement of other comprehensive income 3,009 (6,677)
Employee numbers – Group (Average)
2019
Number
2018
Number
Production 1,328 1 189
Sales and distribution 3,962 3 881
Administration 715 685
6,005 5,755
Post-employment benefit obligations at year-end

Employee defined benefit pension schemes obligations 10,828 10,941
Other post-employment benefit obligations 5,908 5,023
16,736 15,964
Employee defined benefit pension schemes obligations
The Group operates a number of defined benefit and defined contribution pension schemes. The schemes are set up under trusts and the
assets of the schemes are therefore held separately from those of the Group.
The pension charge in the income statement for the year in respect of the Group’s defined benefit schemes was €1,677,000 (2018: €2,035,000).
In addition to this charge, in 2018 there was an exceptional income statement charge of €1,304,000). On 26 October 2018, the UK High
Court ruled (in a landmark case relating to the Lloyds Banking Group’s pension schemes) that pension benefits must be equalised in
respect of Guaranteed Minimum Pensions (GMPs) accrued between 17 May 1990 and 5 April 1997. The calculation of the GMP equalisation
adjustment required was complex with each pension having to be equalised. The Group engaged the services of an actuary to perform
an estimate of the impact of GMP and a charge of €1,304,000 was recognised as a past service cost in the income statement and classified
as an exceptional item. There were no exceptional charges in 2019.
The charge in the income statement in respect of the Group’s defined contribution schemes was €9,014,000 (2018: €8,337,000).
The Group operates six funded defined benefit pension schemes. Two of these schemes are based in Ireland, two are based in the United
Kingdom with smaller schemes in the Netherlands and North America. The pension benefits payable on retirement in the UK, Ireland and
North America are determined based on years of service and the levels of salary. The scheme in the Netherlands provides pension benefits
based on career average salary.
150

32. Employee benefits continued
Employee defined benefit pension schemes obligations continued
Defined benefit pension schemes represent a significant commitment of the Group’s resources and they are exposed to the volatility
of market conditions. The values of pension assets are exposed to worldwide conditions in equity and bond markets. The underlying
calculation of pension scheme liabilities are subject to changes in discount rates, inflation rates and the longevity of scheme members. The
cost of defined benefit schemes and in particular the method used to value liabilities in the current historically low interest rate environment
has resulted in significant volatility and cost to the Group. In addition, the cost of operating defined benefit pension plans has increased due
to more stringent funding rules and increased regulations. Over the last number of years the Group, with appropriate professional advice,
has been exploring strategies to de-risk its exposure.
The schemes in Ireland have been closed to new entrants since 2009 and salaries for defined benefit purposes have been capped with any
salary increases above the cap pensionable on a defined contribution basis. In 2017, the Group initiated an Enhanced Transfer Value (‘ETV’)
programme whereby an offer was made to all active and deferred members of the Irish defined benefit pension schemes (‘Schemes’) to transfer
their accumulated accrued benefits from the Schemes, eliminating future accrual of benefits in the Schemes, and receive a transfer value above
the statutory minimum amount. This programme has reduced the volatility of the Schemes going forward. Both of the UK schemes are also
closed to new entrants and to new accruals. The schemes in the Netherlands and North America are also closed to new entrants.
The accompanying disclosures relate to all of the Group’s defined benefit retirement schemes in Ireland, the UK, the Netherlands and North
America. The previous full actuarial valuations of these schemes, for the purposes of these disclosures, were updated to 31 December 2019.
Full actuarial valuations were carried out on both of the Irish schemes at 1 January 2019, and on the two UK schemes at 31 December 2018
and 5 April 2018. The last full actuarial valuation of the schemes in the Netherlands and North America were at 31 December 2017.
All calculations were carried out by independent actuaries using the projected unit method. The actuarial reports are not available for
public inspection; however, the results of the valuations are advised to members of the schemes. The scheme assets do not include any
shareholdings in the Company.
Assumptions
The financial assumptions that have the most significant impact on the results of the actuarial valuations are those relating to the discount
rate used to convert future pension liabilities to current values and assumptions on expected rates of increases in salaries and pension and
assumptions on inflation.
Scheme liabilities
The calculation of the present value of the defined benefit obligations is sensitive to changes in the discount rate. The discount rate is based
on the interest yield at the balance sheet date on high-quality corporate bonds of a currency and term consistent with the currency and term
of the post-employment benefit obligation. Changes in the discount rate can lead to volatility in the Group’s balance sheet, income statement
and statement of comprehensive income.
The majority of the Group’s defined benefit obligations are linked to inflation and higher inflation will lead to higher scheme obligations,
although caps are in place to protect schemes against extreme inflation.
The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of plan members.
An increase in the life expectancy of plan members will increase the defined benefit obligation.
The principal long-term actuarial assumptions used by the Group’s actuaries in the computation of the defined benefit liabilities arising
on the pension schemes at 31 December 2019 and 31 December 2018 are as follows:
Ireland UK Netherlands North America
2019 2018 2019 2018 2019 2018 2019 2018
Rate of increase in salaries 0.00%-

1. 2. 3. Financial Statements
Future life expectancy assumptions
The Group uses certain mortality rate assumptions when determining the net present value of scheme liabilities under IAS 19 Employee
Benefits (2011). These assumptions conform to best practice and, based on these assumptions, the assumed life expectancies were
as follows:
Life expectancy of a current pensioner aged 65:
Ireland UK Netherlands North America
2019 2018 2019 2018 2019 2018 2019 2018
Male 22.3 22.4 20.9 21.8 20.9 20.8 22.0 22.0
Female 24.1 24.3 23.2 24.1 23.3 23.2 24.0 24.0
Life expectancy of a 45-year-old active employee at expected retirement age of 65:
Ireland UK Netherlands North America
2019 2018 2019 2018 2019 2018 2019 2018
Male 23.7 24.1 22.2 23.6 23.1 23.0 23.0 23.0
Female 25.7 26.1 24.6 25.8 25.3 25.2 25.0 25.0
Fair value of assets at 1 January 2018 79,501 83,310 11,205 1,327 175,343
Interest income on scheme assets 1,588 2,136 232 55 4,011
Remeasurement (loss)/gain on scheme assets (2,046) (5,016) (329) 1 (7,390)
Administration expenses paid from scheme – – (53) – (53)
Employer contributions 935 1,141 476 141 2,693
Employee contributions 76 – 61 – 137
Benefit payments (2,289) (1,817) (71) (137) (4,314)
Settlement payments from plan assets (663) – – (663)
Foreign exchange movements – (947) – (51) (998)
Fair value of assets at 31 December 2018 77,102 78,807 11,521 1,336 168,766
Interest income on scheme assets 1,630 2,390 252 56 4,328
Remeasurement gain on scheme assets 3,678 8,292 2,161 15 14,146
Administration expenses paid from scheme – – (51) – (51)
Employer contributions 3,134 1,281 451 – 4,866
Employee contributions 68 – 57 – 125
Benefit payments (2,378) (2,162) (81) (144) (4,765)
Foreign exchange movements – 4,719 – 93 4,812
Fair value of assets at 31 December 2019 83,234 93,327 14,310 1,356 192,227
Movements in the present value of scheme obligations in the balance sheet
Total
Present value of obligations at 1 January 2018 (81,763) (96,270) (12,365) (1,652) (192,050)
Current service cost (1,140) – (465) – (1,605)
Past service credit – (1,304) – – (1,304)
Interest expense on scheme obligations (1,612) (2,455) (256) (65) (4,388)
Employee contributions (76) – (61) – (137)
Benefit payments 2,289 1,817 71 137 4,314
Settlement of defined benefit obligations 663 – – – 663
Remeasurements:
– effect of changes in demographic assumptions 21 1,505 69 – 1,595
– effect of changes in financial assumptions 1,867 9,035 313 – 11,215
– effect of experience adjustments 874 – 61 (32) 903
Foreign exchange movements – 1,028 – 59 1,087
Present value of obligations at 31 December 2018 (78,877) (86,644) (12,633) (1,553) (179,707)
Current service cost (985) – (389) – (1,374)
Interest expense on scheme obligations (1,631) (2,610) (274) (65) (4,580)
Employee contributions (68) – (57) – (125)
Benefit payments 2,378 2,162 81 144 4,765
Remeasurements:
– effect of changes in demographic assumptions 775 1,695 – – 2,470
– effect of changes in financial assumptions (8,770) (11,527) (2,422) (25) (22,744)
– effect of experience adjustments 670 2,783 (8) – 3,445
Foreign exchange movements – (5,099) – (106) (5,205)
Present value of obligations at 31 December 2019 (86,508) (99,240) (15,702) (1,605) (203,055)
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
153

1. 2. 3. Financial Statements
Current service cost (1,140) – (465) – (1,605)
Interest on scheme obligations (1,612) (2,455) (256) (65) (4,388)
Interest on scheme assets 1,588 2,136 232 55 4,011
Administration expenses paid from plan – – (53) – (53)
Recognised within distribution and administration expenses (1,164) (319) (542) (10) (2,035)
Settlements – recognised as exceptional item – (1,304) – – (1,304)
Defined benefit pension expense recognised in the income statement (1,164) (1,623) (542) (10) (3,339)
Defined benefit pension remeasurement gain/(loss) recognised in other comprehensive income

Remeasurement gain on scheme assets 3,678 8,292 2,161 15 14,146
Remeasurement (loss)/gain on scheme liabilities:
– effect of changes in demographic assumptions 775 1,695 – – 2,470
– effect of changes in financial assumptions (8,770) (11,527) (2,422) (25) (22,744)
– effect of experience adjustments 670 2,783 (8) – 3,445
Remeasurement (loss)/gain recognised in other comprehensive income (3,647) 1,243 (269) (10) (2,683)
154

32. Employee benefits continued
Employee defined benefit pension schemes obligations continued
Defined benefit pension remeasurement gain/(loss) recognised in other comprehensive income continued
Ireland

Remeasurement (loss)gain on scheme assets (2,046) (5,016) (329) 1 (7,390)
Remeasurement gain/(loss) on scheme liabilities:
– effect of changes in demographic assumptions 21 1,505 69 – 1,595
– effect of changes in financial assumptions 1,867 9,035 313 – 11,215
– effect of experience adjustments 874 – 61 (32) 903
Remeasurement gain/(loss) recognised in other comprehensive income 716 5,524 114 (31) 6,323
A2018
Total return on assets (458) (2,880) (97) 56 (3,379)
The cumulative remeasurement loss before deferred tax recognised in the statement of other comprehensive income is €66,884,000
(2018: €64,201,000).
The expected normal level of employer contributions for the year ended 31 December 2019 is €2,987,000.
The weighted average duration of the defined benefit obligation was 19.2 years at 31 December 2019 (31 December 2018: 20.5 years).
Sensitivity of pension liability to judgmental assumptions
Actuarial assumptions have a significant impact on the reported net pension obligation. Analysed below is the impact of certain movements
in key assumptions at 31 December 2019. A sensitivity analysis was not performed on the North American scheme as the scheme is
not material.

Discount rate
– 0.25% increase in discount rate (reduces obligation) 3,596 4,681 925 9,202
– 0.25% decrease in discount rate (increases obligation) (3,840) (5,102) (1,013) (9,955)
Inflation rate
– 0.50% increase in inflation rate (increases obligation) (2,786) (9,014) (28) (11,828)
– 0.50% decrease in inflation rate (reduces obligation) 2,647 7,984 19 10,650
Pensionable salary increase
– additional 1.00% increase in pensionable salary (increases obligation) (1,252) (2,662) (281) (4,195)
– decrease of 1.00% in pensionable salary (reduces obligation) 1,485 2,462 313 4,260
Pension increase
– additional 1.00% increase in pension (increases obligation) (11,603) (10,616) (2,277) (24,496)
– decrease of 1.00% in pension (reduces obligation) 6,960 10,098 – 17,058
Life expectancy
– additional 1 year life expectancy (increases obligation) (2,958) (3,442) (482) (6,882)
– decrease of 1 year in life expectancy (reduces obligation) 2,952 3,401 472 6,825
Although the analysis above does not take full account of the distribution of cash flows expected under the plan, it does provide an
approximation of the sensitivity of the assumptions shown.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
155

1. 2. 3. Financial Statements
Other post-employment benefit obligations
The table below summarises the movements in the net liability of the Group’s other post-employment benefit obligations.

Net liability at beginning of year (5,023) (5,293)
Net expense recognised in the income statement (451) (442)
Remeasurement (loss)/gain recognised in other comprehensive income (326) 354
Employee contributions to schemes (23) (12)
Benefits paid 272 180
Foreign exchange movements (357) 190
Net liability at end of year (5,908) (5,023)
Certain employees in one of the Group’s North American subsidiaries hold non-voting shares in the subsidiary. The Company has a
contractual arrangement in place to pay holders of these shares an agreed benefit on retirement, based on profit levels in the Company,
to redeem these shares.
In accordance with IAS 19 Employee Benefits (2011), the net liability of the obligation is measured as the net present value of the amounts
that are expected to be paid to employees for the shares at retirement.
The interest expense, which represents the unwinding of the net present value of the liabilities, is charged to the income statement.
Remeasurement gains and losses, representing all other changes to the estimate of the liability, are recognised in other comprehensive income.
Determining the valuation of the obligations requires the determination of appropriate assumptions such as projected growth in profits,
forfeiture rates and retirement dates. The principal assumptions are the budget for the following financial year plus an annual growth rate
of 5% (2018:5%) discounted to net present value using a discount rate of 8.01% (2018:8.56%). Based on past experience, a forfeiture
rate of zero is assumed.
Share-based payment
Income statement charge

Employee share option charge 109 557
The Group established a share option scheme in December 2006 which entitles certain employees to purchase shares in  plc.
In accordance with the terms of the scheme, the options granted are exercisable at the market price prevailing at the date of the grant of
the option.
The share options granted only vest when the adjusted earnings per share figure, in respect of the third or any subsequent accounting
period after the end of the basis year (i.e. accounting period preceding the date of the grant), is greater than the adjusted earnings per share
figure for the basis year by a percentage which is not less than (on a year-on-year basis) the annual percentage increase in the consumer
price index plus 5% compounded during that period. The share options vest subject to the achievement of the performance condition
above. The contractual life of the options is ten years.
Details of options granted under these schemes are as follows:
Date of Grant Date of expiry
Number of
options
Weighted
26 March 2013 25 March 2023 4,050,000 0.669 0.2040
10 March 2016 9 March 2026 4,175,000 1.55 0.4140
As explained above, the date at which employees may exercise their options is based on a non-market-related performance condition.
The fair value of services received in return for share options granted is measured by reference to the fair value of the share options
at the date of grant. The estimate of the fair value of options granted during the year was measured based on a binomial lattice model.
The contractual life of the options, which is ten years, is used as an input in this model. Expectations of early exercise are incorporated
into the binominal lattice model and are reflected in the assumptions.
156

32. Employee benefits continued
Share-based payment continued
The assumptions used in the binominal model for calculating the fair value of share options granted in 2013 and 2016 were as follows:
Assumptions used
Options
granted in
2016
Options
granted in
2013
Weighted average exercise price 1.55 0.669
Expected volatility 34% 40%
Option life 9.76 years 9.65 years
Expected dividend yield 2.50% 3.25%
Risk-free interest rate 0.306% 1.43%
The expected volatility and option life are expressed as weighted averages used in modelling in the binominal lattice model. The expected
volatility is based on the historic volatility of the share price and the historical volatility of similar quoted companies.
Share options are subject to vesting conditions which comprise a service condition and a non-market-related performance condition, which
is the achievement of growth in adjusted earnings per share as set out earlier.
A summary of the activity during the year under the Group’s share option schemes, together with the weighted average exercise price of the
share options, is as follows:
Outstanding options at beginning of year 5,625,000 1.3151 6,275,000 1.2541
Exercised during the year1
(100,000) (0.6690) (600,000) (0.6575)
Forfeited during year – – (50,000) (1.5500)
Options outstanding at end of year 5,525,000 1.3268 5,625,000 1.3151
1 The weighted average share price at the date of exercise of these options was €1.52 (2018: €2.03).
Analysis of the closing balance – outstanding at end of year:
Date of grant Date of expiry
26 March 2013 25 March 2023 1,400,000 0.669 1,500,000 0.669
10 March 2016 9 March 2026 4,125,000 1.55 4,125,000 1.55
5,525,000 5,625,000
The options outstanding at 31 December 2019 have an exercise price in the range of €0.669 to €1.55 (2018: €0.669 to €1.55) and have a
weighted average contractual life of 5.4 (2018: 6.4 years).
Analysis of the closing balance – exercisable at the end of the year:
Date of grant Date of expiry
26 March 2013 25 March 2023 1,400,000 0.669 1,500,000 0.669
1,400,000 1,500,000
The market price of the Company’s shares at 31 December 2019 was €1.43 and the range during 2019 was €1.23 to €1.93.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

1. 2. 3. Financial Statements
33. Capital commitments and contingencies
Capital commitments
The Directors have authorised capital expenditure of €15,492,000 (2018: €21,969,000) at the reporting date. Capital expenditure contracted
for at 31 December 2019 amounted to €1,347,000 (2018: €3,766,000).
Subsidiaries
Each of the following Irish registered subsidiaries of the Company may avail of the exemption from filing its statutory financial statements for
the year ended 31 December 2019 as permitted by Section 357 of the Companies Act 2014 and, if any of these Irish registered subsidiaries
of the Company elects to avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all
commitments entered into by such wholly-owned subsidiary, including amounts shown as liabilities (within the meaning of Section 357 (1) (b)
of the Companies Act 2014) in such wholly-owned subsidiary’s statutory financial statements for the year ended 31 December 2019:
Bolanpass Limited  Ireland Limited
 C Holdings Limited  Management Services Limited
 International Limited Waddell Limited
 International Holdings Limited
Guarantees
Company
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies or joint ventures and
associates within the Group, the Company considers these to be insurance arrangements and accounts for them as such. The Company
treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make
a payment under the guarantee. The following are details of contracts made by the Company at 31 December 2019 to guarantee the
indebtedness of other companies or joint ventures and associates within the Group:
(i) The Company has guaranteed bank borrowings of subsidiaries in the amount of €313,949,000 (2018: €312,864,000).
(ii) The Company has guaranteed bank borrowings of €4,285,000 (2018: €3,850,000) within joint venture and associate companies.
(iii) The Company has given guarantees in respect of other trading obligations arising in the ordinary course of business of €391,000
(2018: (€Nil).
Group
In addition to the Company guarantees above, certain Group subsidiaries have given guarantees totalling €7,826,000 (2018: €8,162,000)
in respect of other trading obligations arising in the ordinary course of business and guarantees totalling €5,827,000 (2018: €Nil) in respect
of bank borrowings within joint ventures and associates.
Contingencies
From time to time, the Group is involved in claims and legal actions, which arise in the normal course of business. Based on information
currently available to the Group, and legal advice, the Directors believe such litigation will not, individually or in aggregate, have a material
adverse effect on the financial statements and that the Group is adequately positioned to deal with the outcome of any such litigation.
34. Related parties
Identity of related parties
Under IAS 24 Related Party Disclosures, the Group has a related party relationship with its joint ventures and associates. Transactions with
the Group’s joint ventures and associates are set out below.
IAS 24 also requires the disclosure of compensation paid to the Group’s key management personnel. This comprises its Executive Directors,
Non-Executive Directors, Company Secretary and other senior management within the Group.
Remuneration of key management personnel

Short term benefits (salary, bonus, incentives) 8,146 8,025
Post-employment benefits 716 697
Share-based payment expense 28 1,073
Remuneration 8,890 9,795
Short term incentive plan(a)
546 282
Total 9,436 10,077
(a) The Compensation Committee made an award of €546,000 (2018: €282,000) to the Executive Directors under the short-term incentive
plan. See page 76 for details.
158

34. Related parties continued
Related party transactions with joint ventures and associates
The Group trades in the normal course of its business, in some situations under supply contracts, with its joint ventures and associates.
A summary of transactions with these related parties during the year is as follows:
Purchases
Joint ventures 73,975 93,907 69,726 73,312
Associates 20,360 15,938 14,157 39,012
94,335 109,846 83,883 112,324
The amounts due from and to joint ventures and associates at the year-end are disclosed, in aggregate, in Notes 19 and 26 respectively.
The Group’s significant joint ventures and associates are set out on page 174.
Related party transactions with shareholders in Group companies
The Group, in its ordinary course of business, trades and enters into agreements to purchase and sell goods and services with a number
of non-controlling shareholders of Group companies. During the year, the Group entered into the following transactions with non-controlling
shareholders in Group companies.

Purchases of goods 213,206 211,658
Sales of goods 1,661 1,638
Receipt of services 2,401 683
Rental and warehouse agreements 1,557 1,492
Net interest income (26) (29)
All transactions between the Group and non-controlling shareholders of Group companies are at arm’s length.
The amounts due to and from non-controlling shareholders of Group companies at year end are as follows:

Amounts within other receivables – non-current 88 750
Amounts within trade receivables – current 829 359
Amounts within other receivables – current 295 580
Amounts within trade payables – current 14,427 14,755
Amounts within other payables – current 1,124 1,126
Related party transactions with companies that are provided with key management services
Up to 1 August 2018, the Group provided key management services to Balmoral International Land Holdings plc (‘Balmoral’) and therefore
they were considered a related party up to this date for the purposes of IAS 24 Related Party Disclosures. From 1 August 2018 onwards,
they were no longer a related party for the purposes of IAS 24 Related Party Disclosures. In 2018, the Group paid expenses (mainly rental
expenses) of €1,340,000 and received income of €221,000. Income related to expenses recharged by the Group to Balmoral and related
to costs incurred by the Group on behalf of Balmoral, including recharges in respect of administration expenses and a portion of the
employment costs of the Chairman.
The amount owed from Balmoral at the year-end was €Nil (2018: €1,000) and the amount owed to Balmoral was €Nil (2018: €52,000).
The Group has an investment in a 50:50 joint venture company with Balmoral. ’s investment in this joint venture company in
2019 was €Nil (2018: €44,000). The Group’s share of operating losses of this joint venture in 2019 was €Nil (2018: €44,000). The carrying
value of the investment in this joint venture at 31 December 2019 was €Nil (2018: €Nil).
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
1 The Group has availed of the exemption under IFRS 7 Financial Instruments: Disclosure for additional disclosures where fair value closely
approximates carrying value.
* For the purposes of this analysis, prepayments have not been included within other receivables. Carrying value of trade receivables and
other receivables are stated net of impairment provision where appropriate and consequently fair value is considered to approximate to
carrying value.
160

35. Financial instruments and financial risk continued
Measurement of fair values
Set out below are the major methods and assumptions used in estimating the fair values of the financial assets and liabilities disclosed in the
preceding table.
Other investments
Under IFRS 9, other investments are measured at fair value which is based on quoted market prices where available.
Cash and cash equivalents, including short-term bank deposits
For short-term bank deposits and cash and cash equivalents, all of which have a remaining maturity of less than three months, the carrying
amount is deemed to reflect fair value.
Trade and other receivables and trade and other payables
For receivables and payables, the carrying value less impairment provision, where appropriate, is deemed to reflect fair value.
Derivative financial instruments (forward currency contracts and interest rate swaps)
Forward currency contracts are valued using quoted forward exchange rates at the reporting date. The fair value of interest rate swaps
is calculated as the present value of the estimated future cash flows.
Derivative financial instruments (option to acquire shareholding in subsidiaries, joint ventures and associates)
The fair value of call options over shareholdings in subsidiaries, joint ventures and associates is valued by comparing the estimated market
value of the shareholdings which are subject to call options with the actual call option price. A comparison is made to market multiples paid
for similar companies and a discount applied if the shareholdings do not provide governance rights or veto rights over operating decisions
and dividend policies to a third party.
Interest-bearing loans and borrowings
For floating rate interest-bearing loans and borrowings with a contractual repricing date of less than six months, the nominal amount is
deemed to reflect fair value. For loans with repricing dates of greater than six months, the fair value is calculated based on the present
value of the expected future principal and interest cash flows discounted at interest rates effective at the reporting date and adjusted for
movements in credit spreads.
Contingent consideration
Fair value is based on the present value of expected payments discounted using a risk-adjusted discount rate. The expected payment
is determined by forecasting the acquiree’s earnings over the applicable period.
Other provisions
For other provisions, the carrying amount, which represents the costs expected to be paid, discounted to fair value where appropriate,
is deemed to reflect fair value.
Put option liabilities
This valuation model is based on the present value of expected payments, discounted using a risk-adjusted discount rate. The expected
payment is determined in accordance with the put option price formula, budgets for future years and the application of a steady growth rate.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
161

1. 2. 3. Financial Statements
At 31 December 2019 and 31 December 2018, the Group recognised and measured the following financial instruments at fair value:
Assets measured at fair value
At fair value through profit or loss
Other investments 5,049 4,554 – 495
Foreign exchange contracts 33 – 33 –
Options to acquire additional shares in subsidiaries, joint ventures and associates 4,405 – – 4,405
Designated as hedging instruments
Foreign exchange contracts 51 – 51 –
Liabilities measured at fair value
At fair value through profit or loss
Foreign exchange contracts (16) – (16) –
Interest rate swap – – – –
Contingent consideration (14,860) – – (14,860)
At fair value through equity
Put option liability (26,612) – – (26,612)
Designated as hedging instruments
Foreign exchange contracts (289) – (289) –
Interest rate swap – – – –

Assets measured at fair value
At fair value through profit or loss
Other investments 10,077 9,550 – 527
Interest rate swap 1 1
Options to acquire additional shares in subsidiaries, joint ventures and associates 4,317 – – 4,317
Designated as hedging instruments
Foreign exchange contracts 70 – 70 –
Liabilities measured at fair value
At fair value through profit or loss
Foreign exchange contracts (8) – (8) –
Interest rate swap (12) – (12) –
Contingent consideration (24,517) – – (24,517)
At fair value through equity
Put option liability (34,975) – – (34,975)
Designated as hedging instruments
Foreign exchange contracts (276) – (276) –
162

35. Financial instruments and financial risk continued
Fair value hierarchy continued
Level 2 and 3 fair values
Type Valuation technique Significant unobservable inputs
Inter-relationship between key unobservable inputs
and fair value measurement
Contingent
consideration
Discounted cash flows: This valuation
model considers the present value of
expected payment, discounted using
a risk-adjusted discount rate. The
expected payment is determined by
forecasting the acquiree’s earnings
over the applicable period.
• Forecast compound annual
growth in EBITA in range of 4%
to 20% (weighted average 16%)
• Risk-adjusted discount rates of
3.5% to 4% (weighted average
3.9%)
The estimated fair value would
increase/(decrease) if:
• EBITA growth was higher/(lower)
• Risk-adjusted discount rate was
lower/(higher)
Put option liability Discounted cash flows: This valuation
model considers the present value
of expected payment, discounted
using a risk-adjusted discount rate.
The expected payment is determined
in accordance with the put option
price formula, budgets for future
years and the application of a steady
growth rate.
• Forecast compound annual
growth in EBITA in range of 1%
to 2.15% (weighted average 2.1%)
• Risk-adjusted discount rates of
4% to 8.5% (weighted average
8.3%)
The estimated fair value would
increase/(decrease) if:
• EBITA growth was higher/(lower)
• Risk-adjusted discount rate was
lower/(higher)
Option to acquire
additional shares
in subsidiaries,
joint ventures and
associates
Comparable market transactions:
This valuation model considers
market multiples and enterprise
valuations for comparable
companies. A discount rate is
applied where the shareholdings
subject to the call options do not
provide governance rights to a
third party.
• Adjusted EBITDA multiple
of nine times less net debt
• Discount up to 80% where
shareholdings subject to call
options do not provide a third
party with governance rights
The estimated fair value would
increase/(decrease) if:
• EBITDA multiples were higher/
(lower)
• Discount rate was (higher)/lower
Forward exchange
contracts and interest
rate swaps
Market comparison techniques:
The fair values are based on
broker quotes.
Not applicable Not applicable
Additional disclosures for Level 3 fair value measurements
Contingent consideration
The fair value of contingent consideration represents provision for the net present value of amounts expected to be payable in respect of
acquisitions which are subject to earn-out arrangements (Note 27).

Balance at beginning of year 24,517 34,465
Paid during year (11,103) (7,009)
Arising on acquisition of subsidiaries (Note 31) 1,461 1,126
Arising on acquisition of non-controlling interests (Note 22) – 621
Released on disposal of subsidiaries (Note 31) (189) –
Arising on acquisition of joint ventures and associates (Note 15) – (419)
Foreign exchange movements 378 (224)
Included in the income statement
– Fair value movements (credited)/charged to income statement (Note 3) (204) (4,043)
Balance at end of year 14,860 24,517
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
163

1. 2. 3. Financial Statements
Put option liability
Within certain Group companies, non-controlling shareholders have a put option to put their shareholding to . The fair value
of the put option liability represents the provision for the net present value of amounts expected to be payable on exercise of the put option
(Note 28).

Balance at beginning of year 34,975 38,961
Arising on acquisitions of subsidiaries – 896
Extinguished during the year1
(11,657) –
Fair value movements on put option recognised directly within equity 3,294 (4,728)
Foreign exchange movements on put option recognised directly within equity – (154)
Balance at end of year 26,612 34,975
1 During the year, and with the consent of the Group, a non-controlling shareholder sold their shares to other third parties (existing
management). As a result, the put option between the Group and this non-controlling shareholder was extinguished.
Risk exposures
The Group’s multinational operations expose it to various financial risks that include credit risk, liquidity risk, currency risk and interest rate
risk. The Group has a risk management programme in place which seeks to limit the impact of these risks on the financial performance of
the Group and it is the policy to manage these risks in a non-speculative manner.
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• currency risk
• interest rate risk
• equity price risk
This note presents information about the Group’s exposure to each of the above risks and the Group’s objectives, policies and processes
for measuring and managing the risk. Further quantitative disclosures are included throughout this note.
The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Board has established the Executive Risk Committee (‘ERC’), which is responsible for developing and monitoring the Group’s risk
management policies. The members of the ERC include the Chief Executive, the Group Finance Director, a Group Executive Director,
the Head of Internal Audit, the Company Secretary and a representative from senior management. Risk evaluation and recommendations
for strategic change are reviewed by the ERC who report their findings to the Audit Committee for its consideration. The Audit Committee,
in turn, report these findings to the Board, enabling corrective initiatives to be undertaken where appropriate.
The Group has established a strong internal audit function under the direction of the Audit Committee. Internal Audit undertakes both regular
and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. For further
details, please refer to the Risk section on pages 14 to 19.
The Board, through its Audit Committee and the ERC, has reviewed the process for identifying and evaluating the significant risks affecting
the business and the policies and procedures by which these risks will be managed effectively. The Board has embedded these structures
and procedures throughout the Group, and considers these to be a robust and efficient mechanism for creating a culture of risk awareness
at every level of management.
Credit risk
Credit risk arises from credit to customers and joint ventures and associates arising on outstanding receivables and outstanding
transactions, as well as cash and cash equivalents, other investments, derivative financial instruments and deposits with banks
and financial institutions.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group has detailed
procedures for monitoring and managing the credit risk related to its trade receivables based on experience, customers’ track records and
historic default rates. Individual risk limits are generally set by customer, and risk is accepted above such limits only in defined circumstances.
The utilisation of credit limits is regularly monitored, and a significant element of the credit risk is covered by credit insurance. The impairment
provision is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible, at which point
the amount is considered irrecoverable and is written off directly against the trade receivable.
164

35. Financial instruments and financial risk continued
Credit risk continued
Trade and other receivables continued
The Group also makes advances to key suppliers, generally to secure produce in key categories. Advances made are generally interest-
bearing and recovered through deduction from payments made in respect of produce delivered by the counterparty.
Under IFRS 9, a provision for impairment of trade and other receivables is recognised based on the Expected Credit Losses (‘ECL’) for those
trade and other receivables. Loss allowances are based on lifetime ECLs, except for the following which are measured as 12-month ECLs:
• Trade receivables;
• Other receivables which have been determined to be low-risk at the reporting date; and
• Other receivables for which there has not been a significant increase in credit risk (i.e. the risk of a default occurring) at the reporting date
since the other receivable first originated
A rating system has been utilised in relation to other receivables. A significant increase in credit risk is determined to have occurred if the
rating of this system disimproves by a predetermined amount.
Trade receivables are considered to be in default if repayment is considered unlikely. Other receivables are considered to be in default if the
receivable is not collected within the agreed terms.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a receivable. 12-month ECLs are the portion
of ECLs that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of
the receivable is less than 12 months).
The expected loss rates for trade receivables are based on the payment profile of these receivables over a thirteen month period and the
corresponding historical credit losses that have been experienced in this period. The historical loss rates are adjusted to reflect current and
forward-looking information available that affect the ability of the customer to settle the receivable.
The expected loss rates for other receivables are based on the repayment profiles of individual receivables over a three-year period and the
corresponding historical credit losses that have been experienced in this period. The historical loss rates are adjusted to reflect current and
forward-looking information available that affect the ability of the other receivable to repay the balance.
Under IAS 39, the Group established an allowance for impairment that represented its estimate of incurred losses in respect of trade and
other receivables and investments. The main components of this allowance were a specific loss component that relates to individually
significant exposures and a collective loss component established for groups of similar assets in respect of losses that had been incurred
but not yet identified.
Cash and bank deposits
The Group’s exposure to credit risk relating to cash and short-term deposits is managed by depositing funds with a number of different
individual banks or institutions at any one time. Limits applied to individual counterparty banks are reviewed regularly, along with their
individual credit ratings.
Other investments
The Group has investments in companies with a strategic interest to the Group and limits its exposure by ensuring that such investments
are of a non-speculative nature.
Loans to joint ventures and associates
The Group has advanced loans to certain joint ventures and associates. The Group limits its exposure through active participation in
the execution of joint control and significant influence, through regular reviews of the business plans and results of its joint ventures and
associates, and by ensuring such funds are used in a non-speculative manner by its joint ventures and associates. Funding to joint ventures
and associates is generally undertaken only where it is matched by comparable contributions from the joint venture partner or other investors.
The carrying amount of financial assets, net of impairment provisions, represents the Group’s maximum credit exposure. The maximum
exposure to credit risk at year end was as follows:

Other investments (Note 16) 5,049 10,077
Cash and cash equivalents (Note 20) 115,529 102,299
Trade and other receivables* (Note 19) 388,769 400,019
Derivative financial instruments 4,489 4,388
Total 513,836 516,783
* For the purposes of this analysis, prepayments have not been included within trade and other receivables.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
165

1. 2. 3. Financial Statements
Trade receivables
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables. Trade receivables are
monitored by geographic region and by largest customers. The maximum exposure to credit risk for trade receivables at the reporting date
by reporting segments was as follows:
Carrying
amount
Europe – Eurozone 116,905 118,017
Europe – Non-Eurozone 135,641 148,070
International 67,464 70,800
Total 320,010 336,887
The Group also manages credit risk through the use of a number of sales or receivables arrangements. Under the terms of these
agreements the Group has transferred substantially all of the credit risk of the trade receivables which are subject to these agreements.
Accordingly, €46,409,000 (2018: €29,967,000) has been derecognised at year end.
The following table details the ageing of gross trade receivables including equivalent amounts due from joint ventures and associates, and
the related loss allowance:
Balance at end of year (5,628) (5,058)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group operates a prudent approach to liquidity management using a combination of long and short-term debt and cash and cash
equivalents to meet its liabilities when due. This is in addition to the Group’s high level of operating cash flow generation.
It is the policy of the Group to have adequate facilities available at all times to cover unanticipated financing requirements. The Group has
approved committed and uncommitted borrowing facilities of up to €623m (2018: €632m) in addition to approved overdrafts and working
capital facilities of €109m (2018: €104m). The Directors believe that, as a result, the Group is well-placed to refinance or repay all borrowings
due for repayment as they fall due.
The following are the contractual maturities of the financial liabilities, including estimated interest payments:
Non-derivative financial liabilities

1. 2. 3. Financial Statements
Market risk
Market risk is the risk that changes in market prices and indices, such as foreign exchange rates and interest rates, will affect the Group’s
income or the value of its holdings of financial instruments. The objective of the Group’s risk management strategy is to manage and control
market risk exposures within acceptable parameters, while optimising the return earned by the Group. The Group has three types of market
risk: currency risk, interest rate risk and other market price risk, which are dealt with as follows:
Currency risk
Structural currency risk
While many of the Group’s operations are carried out in Eurozone economies, it also has significant operations in the UK, Sweden, Denmark,
the Czech Republic, Canada and the USA. As a result, the Group is exposed to structural currency fluctuations including, in particular,
Sterling, Swedish Krona, US Dollar and Canadian Dollar. The Group generally finances initial overseas investments through foreign currency
borrowings which naturally hedge the foreign currency investment. Interest on borrowings is therefore denominated in currencies that match
the cash flows generated by the underlying operations of the Group which provides an economic hedge. Post initial acquisition, these
businesses generally fund their operations locally. To the extent that the net assets of foreign operations increase, the Group is exposed
on the additional net assets. Such movements are dealt with in other comprehensive income.
The following table analyses the currency of Group’s bank borrowings:
Transactional currency risk
Foreign exchange risk also arises from foreign currency transactions, assets and liabilities. Management requires all Group operations to
manage their foreign exchange risk against their functional currency. The Group’s companies in the UK, Sweden, Denmark and the Czech
Republic purchase a significant volume of fruit in Euro, and such currency risks are monitored on a daily basis and managed by utilising
spot and forward foreign currency contracts where appropriate. The vast majority of transactions entered into by the Group’s entities in the
Eurozone are denominated in their functional Euro currency, and the majority of transactions entered into by the Group’s entities in North
America are denominated in US Dollar.
Sensitivity analysis
A 5% strengthening or weakening in the Euro against Sterling, the US Dollar, Swedish Krona, Czech Koruna or the Danish krone, based
on outstanding financial assets and liabilities at 31 December 2019 and 31 December 2018, would have increased/(decreased) other
comprehensive income and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest
rates, remain constant:

35. Financial instruments and financial risk continued
Market risk continued
The effect on equity of a movement between the Euro and the currencies listed above would be offset by a translation of the net assets of
the subsidiaries against which the foreign currency borrowings are designated as hedge. The above calculations do not include the variability
in Group profitability which arises on the translation of foreign currency subsidiaries’ income statements and balance sheets to Euro, the
Group’s presentation currency.
Interest Rate Risk
The Group holds both interest-bearing assets and interest-bearing liabilities. In general, the approach employed by the Group to manage its
interest exposure is to maintain an appropriate balance between fixed and floating interest rates on its cash, short-term bank deposits and
interest-bearing borrowings. At 31 December 2019, 10% (2018: 26.2%) of the Group’s term bank borrowings were on long-term fixed rates.
In limited instances, the Group uses floating-to-fixed interest rate swaps which have the economic effect of converting borrowings from
floating to fixed rates. At year end, the interest rate profile of interest-bearing financial instruments was:

Cash flow sensitivity analysis for variable rate instruments
At 31 December 2019, the average interest rate being earned on the Group’s cash and cash equivalents was 0.0% (2018: 0.0%). At
31 December 2019, the average interest rate being paid on the Group’s borrowings was 2.01% (2018: 2.31%). An increase or decrease of
50 basis points in interest rates at the reporting date would have had the following effect on the income statement and other comprehensive
income. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.
50 basis point increase 50 basis point decrease

1. 2. 3. Financial Statements
Accounting for derivatives and hedging activities
Derivative financial instruments are measured at fair value at inception and at each reporting date, with the movement recognised in the
income statement unless they are designated as cash flow hedges under IFRS 9 Financial Instruments. Where such instruments are
classified as cash flow hedges, and subject to the satisfaction of certain criteria relating to the documentation of the risk, objectives and
strategy for the hedging transaction and the ongoing measurement of its effectiveness, they are accounted for in accordance with hedge
accounting rules. In such cases, any gain or loss arising on the effective portion of the derivative instrument is recognised in the other
comprehensive income hedging reserve, as a separate component of equity. Gains or losses on any ineffective portion of the derivative are
recognised in the income statement. Only the change in the fair value of the spot element of the forward exchange contracts is designated
as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts
(‘forward points’) is separately accounted for as a cost of hedging and recognised in the cost of hedging reserve within equity.
When the hedged forecast transaction results in the recognition of a non-financial item such as inventory, the amount accumulated in
the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item when it is recognised,
where material.
For all other hedged forecast transactions when the hedged transaction matures, the related gains or losses in the hedging reserve and the
cost of hedging reserve are transferred to the income statement.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation
is revoked, then hedge accounting is discontinued prospectively. If the hedged item is a non-financial asset, the amount accumulated in the
hedging reserve and the cost of hedging reserve remains in equity until initial recognition of the non-financial assets. For other hedged items,
accumulated amounts are reclassified to the income statement in the same period as the expected hedged future cash flows effect profit or
loss. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive income is reclassified to profit
or loss.
Derivative asset/
Derivative liability
Changes in the value of the hedging instrument recognised in OCI: (82) 170
Hedge ineffectiveness recognised in profit or loss Nil Nil
Line item in profit or loss that includes hedge ineffectiveness N/a N/a
Costs of hedging recognised in OCI: (49) 139
Amount reclassified from hedging reserve to profit or loss (15) (222)
Amount reclassified from costs of hedging reserve to profit or loss 38 9
Line item in profit or loss affected by the reclassification Revenue Cost of sales
The cash flow hedge reserve for subsidiary companies relates entirely to the spot component of currency forwards.
The Group uses foreign currency borrowings to hedge the net investment in foreign entities. The carrying value of borrowings, which are
designated as net investment hedges at the year end, amounts to €172,513,000 (2018: €192,425,000). The gains or losses on the effective
portions of such borrowings are recognised in other comprehensive income. Ineffective portions of the gains and losses on such borrowings
are recognised in the income statement although no ineffectiveness has been recognised in the current or prior period. Gains and losses
accumulated in other comprehensive income are included in the income statement on the disposal of a foreign entity.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019
Operating activities
Profit for the year 66,204 53,804
Non-cash adjustments to reconcile profit to net cash flows:
Income tax expense 8 10,329 16,014
Income tax paid (15,154) (13,349)
Depreciation of property, plant and equipment 11 17,773 17,194
Depreciation on right of use assets 12 19,253 –
Exceptional items – operating expenses 12 1,816 (9,450)
Exceptional cash flows 12 (3,489) (2,884)
Fair value movements on contingent consideration 27 (204) (4,043)
Amortisation of intangible assets – acquisition related 14 10,301 10,281
Amortisation of intangible assets – development costs capitalised 14 238 267
Amortisation of intangible assets – computer software 14 2,046 1,397
Amortisation of government grants (63) (75)
Defined benefit pension scheme expense – normal 32 1,677 2,035
Contributions to defined benefit pension schemes – normal 32 (4,866) (2,693)
Other post-employment benefit scheme expense 32 451 442
Net payments for other employee benefit scheme 32 (249) (168)
Share-based payment expense 32 109 557
Net gain on disposal of property, plant and equipment (313) (492)
Currency recycled to income statement on joint venture becoming subsidiary – 90
Movement in provisions (489) –
Fair value gain on other investments (854) –
Financial income 5 (2,754) (3,704)
Financial expense 5 13,721 11,736
Financial income received excluding exceptional items 2,005 2,245
Financial expense paid excluding exceptional items (13,149) (9,418)
Gain on non-hedging derivative financial instruments 3 (115) (59)
Loss on termination of IFRS 16 leased assets 146 –
Gain on disposal of joint venture (88) –
Fair value movements on biological assets 18 666 (6)
Share of profit of joint ventures 15 (37,033) (2,330)
Share of profit of associates 15 (666) (2,183)
Net cash flows from operating activities before working capital movements 67,249 65,208
Movements in working capital:
Movements in inventories (6,091) 1,179
Movements in biological assets 530 (851)
Movements in receivables 27,342 (23,571)
Movements in payables (15,254) 2,978
Total movements in working capital 6,527 (20,265)
Net cash flows from operating activities 73,776 44,943
37. Accounting estimates and judgments
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Management
discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting policies and estimates, and
the application of these policies and estimates.
Particular areas that are subject to accounting estimates and judgments in these financial statements are as follows:
• Note 32 – measurement of defined benefit pension obligations requires the use of actuaries and determination of appropriate
assumptions such as discount rates and mortality rates.
• Note 14 and Note 15 – impairment testing of goodwill requires assumptions in calculating underlying recoverable amounts including cash
flows generated by operating units and discount rates used to discount future cash flows.
• Note 14 – The valuation of intangible assets acquired as part of a business combination at fair value requires assumptions about the
future cash flows that these assets are expected to generate, and the discount rates used to discount future cash flows.
172

37. Accounting estimates and judgments continued
• Note 27 and Note 28 – measurement of contingent consideration and put option liabilities require assumptions to be made regarding
profit forecasts and discount rates to be used to discount these forecasts to net present value.
• Note 30 – recognition of deferred tax assets requires assessment of availability of future taxable profit against which carry forward tax
losses can be used.
• Note 35 – measurement for ECL allowance for trade receivables: key assumptions in determining the weighted average loss rate.
• Note 12 and Note 24 – measurement of right of use asset and lease liabilities require assumptions to be made regarding lease terms and
incremental borrowing rates.
Measurement of fair value
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial
assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised
into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of fair value hierarchy as the lowest level input that is significant to the
entire measurement.
The Group measures transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Note 11 – Property, plant and equipment
Note 13 – Investment property
Note 18 – Biological assets
Note 27 – Contingent consideration
Note 28 – Put option liability
Note 32 – Employee benefits
38. Translation of foreign currencies
The presentation currency of the Group is Euro, which is the functional currency of the Company. Results and cash flows of foreign currency
denominated operations have been translated into Euro at the average exchange rates for the period, and the related balance sheets have
been translated at the rates of exchange ruling at the balance sheet date. Adjustments arising on the translation of the results of foreign
currency denominated operations at average rates, and on the restatement of the opening net assets at closing rates, are accounted for
within a separate translation reserve within equity, net of differences on related foreign currency borrowings designated as hedges of those
net investments. All other translation differences are taken to the income statement. The principal rates used in the translation of results and
balance sheets into Euro were as follows:
Average rate Closing rate
2019 2018 % change 2019 2018 % change
Brazilian Real 4.4996 4.4162 (1.9%) 4.5157 4.4440 (1.6%)
Canadian Dollar 1.4864 1.5288 2.8% 1.4599 1.5601 6.4%
Czech Koruna 25.6150 25.7000 0.3% 25.4080 25.7240 1.2%
Danish Kroner 7.4647 7.4530 (0.2%) 7.4717 7.4668 (0.1%)
Indian Rupee 78.7716 80.6220 2.3% 79.9301 79.5453 (0.5%)
Polish Zloty 4.2969 4.2601 (0.9%) 4.2551 4.2973 1.0%
Pound Sterling 0.8743 0.8849 1.2% 0.8506 0.8986 5.3%
Swedish Krona 10.5858 10.2695 (3.1%) 10.4778 10.2188 (2.5%)
US Dollar* 1.1173 1.1784 5.2% 1.1216 1.1445 2.0%
* The average rate used in translating the results of Dole to Euro in 2019 was 1.1282.
39. Post balance sheet events
There have been no other material events subsequent to 31 December 2019 which would require disclosure or adjustment in the
financial statements.
Notes to the Group Financial Statements continued
for the year ended 31 December 2019

Operating activities
(Loss)/profit for the year (1,597) (4,555)
Non-cash adjustments to reconcile profit before tax to net cash flows:
Share-based payment expense 10 55
Amortisation of intangible assets – computer software 1 2 3
Loss/(gain) on disposal of subsidiary 4 –
Movement in trade and other receivables 9,869 14,877
Movement in trade and other payables 5,157 2,502
Net cash flows from operating activities 13,445 12,882
Investing activities
Capital contribution repaid 2 – 14
Net cash flows from investing activities – 14
Financing activities
New shares issued 67 394
Costs incurred re issue of new shares – (264)
Dividends paid to equity holders (13,313) (13,062)
Net cash flows from financing activities (13,246) (12,932)
Net increase in cash, cash equivalents and bank overdrafts 199 (36)
Cash, cash equivalents and bank overdrafts at 1 January 181 217
Cash, cash equivalents and bank overdrafts at 31 December 4 380 181
Disposal of subsidiary relates to a liquidation during the year. The principal subsidiaries and joint ventures and associates are set out on
pages 173 and 174.
3. Trade and other receivables

Current
Amounts due from subsidiaries 10,654 20,504
Other receivables 28 47
Prepayments – –
10,682 20,551
Amounts due from subsidiary undertakings are repayable on demand and there are no impairment provisions against these balances at year end.
4. Cash and cash equivalents

Bank balances 380 181
5. Trade and other payables

Amounts due to group undertakings 7,594 2,344
Other payables – 129
Accruals 576 540
8,170 3,013
179

1. 2. 3. Financial Statements
6. Related party transactions
The Company has a related party relationship with its subsidiaries, joint ventures and associates and with the Directors of the Company.
Details of the remuneration of the Company’s individual Directors, together with the number of  plc shares owned by them
and their outstanding share options, are set out in the Compensation Committee report on pages 73 to 78.

Dividends received from Group undertakings 1,668 1,175
7. Employee benefits
The aggregate employee costs for the Company were as follows:

Wages and salaries 1,964 4,553
Social security contributions 139 317
Pension costs – defined benefit schemes 144 170
Share-based payment transactions 10 55
2,257 5,095
The average number of employees of the Company in 2019 was 9 (2018: 11).
8. Capital commitments and contingencies
The Company has no capital commitments at 31 December 2018 (2018: €Nil).
Details in relation to contingencies and guarantees, including guarantees to avail of exemptions under Section 357 of the Companies Act,
2014, are outlined in Note 33 of the Group Financial Statements on page 157.
9. Statutory and other information
Auditors’ remuneration

Audit services 274 256
Other non-audit services 86 96
10. Financial instruments and financial risk
Accounting classifications and fair values
The following table shows the Company amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy:
Assets at
– current (Note 5) – (3,013) (3,013) n/a
– (3,013) (3,013)
* For the purpose of this analysis, prepayments have not been included.
180

10. Financial instruments and financial risk continued
Accounting classifications and fair values continued
The Company has the same risk exposures as those of the Group, as outlined in Note 35.
The Company has availed of the exemption under IFRS 7 Financial Instruments: Disclosure for additional disclosures where fair value closely
approximates carrying value.
Credit risk
Trade and other receivables above includes €10,654,000 (2018: €20,504,000) due from subsidiary undertakings. All are repayable on
demand and there were no impairment provisions against these balances at year end. The €380,000 (2018: €181,000) of cash and cash
equivalents is managed in accordance with the overall Group credit risk policy as outlined in Note 35.
Liquidity risk
The €8,170,000 (2018: €3,013,000) within trade and other payables are all due for repayment within six months.
Currency risk
All financial assets and liabilities are denominated in Euro (the functional currency of the Company) and hence no currency risk is present at
year end.
11. Post balance sheet events
There have been no material events subsequent to 31 December 2019 that would require disclosure or adjustment in the financial
statements.
12. Approval of financial statements
The Directors approved these financial statements on 4 March 2020.
Notes to the Company Financial Statements continued
For the year ended 31 December 2019
1. 2. 3. Financial Statements
Glossary
Alternative Performance Measures (APMs)
The Group uses a number of alternative performance measures (‘APMs’) that are not required under International Financial Reporting
Standards (‘IFRS’), which represent the generally accepted accounting principles (‘GAAP’) under which the Group reports. These measures
are referred to throughout the discussion of our reported operating performance and financial position, and are measures which are regularly
reviewed by Group management. The Group believes that the presentation of these APMs provides useful supplementary information which,
when viewed with the IFRS financial information, provides investors with a more meaningful understanding of the underlying financial and
operating performance of the Group.
These APMs may not be uniformly defined by all companies and, accordingly, they may not be directly comparable with similarly titled
measures and disclosures by other companies. These APMs should not be viewed in isolation or as an alternative to the equivalent GAAP
measures. The principal APMs used by the Group, together with a reconciliation where the non-GAAP measures are not readily identifiable
from the financial statements, are as follows:
Total revenue
Definition
Total revenue includes the Group’s share of the revenue of its joint ventures and associates. The calculation is presented in Note 1 to the
financial statements.
Adjusted EBITA
Definition
Earnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent
consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated
intercompany borrowings and exceptional items. It also excludes the Group’s share of these items within joint ventures and associates.
The calculation is presented in the table on page 182.
Adjusted EBITDA
Definition
Earnings before interest, tax, depreciation on property, plant and equipment, acquisition related intangible asset amortisation charges and
costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on
foreign currency denominated intercompany borrowings and exceptional items. It also excludes the Group’s share of these items within joint
ventures and associates. The calculation is presented in the table on page 182.
Adjusted EBITDA (after adding back of right of use asset depreciation)
Definition
Earnings before interest, tax, depreciation on property, plant and equipment, depreciation on right of use assets, acquisition related
intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative
financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items. It also excludes
the Group’s share of these items within joint ventures and associates. The calculation is presented in the table on page 182.
182

Adjusted profit before tax
Definition
Excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains
or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items.
It also excludes the Group’s share of these items within joint ventures and associates. The calculation is presented in the table below.
Calculation
Reference in
financial statements

Profit before tax per income statement Income Statement 76,533 69,818
Adjustments
Exceptional items Note 7 (5,232) (5,125)
Fair value movements on contingent consideration Note 3/Note 27 (204) (4,043)
Share of joint ventures and associates’ tax (before tax on exceptional items) Note 4/Note 7 14,059 3,153
Acquisition related intangible asset amortisation within subsidiaries Note 14 10,301 10,281
Share of joint ventures and associates acquisition related intangible asset amortisation Note 4 2,696 2,684
Acquisition related costs within subsidiaries Note 3 177 105
Adjusted profit before tax 98,330 76,873
Exclude
Net financial expense – subsidiaries before exceptional items Note 5 10,967 7,365
Net financial expense – share of joint ventures and associates Note 4 40,817 13,784
Adjusted EBITA 150,114 98,022
Exclude
Amortisation of software costs Note 14 2,046 1,397
Depreciation of property, plant and equipment – subsidiaries Note 11 17,773 17,194
Depreciation of property, plant and equipment – share of joint ventures and associates Note 4 32,870 16,679
Adjusted EBITDA 202,803 133,292
Exclude
Depreciation of right of use assets – subsidiaries Note 12 19,253 –
Depreciation of right of use assets – share of joint ventures and associates Note 4 29,115 –
Adjusted EBITDA (before depreciation on right of use assets) 251,171 133,292
Adjusted fully diluted earnings per share
Definition
Excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised
gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings, exceptional
items and related tax on such items. It also excludes the Group’s share of these items within joint ventures and associates. The calculation
is outlined in Note 10.
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases)
Definition
As noted in significant accounting policies on pages 94 to 96, the Group adopted IFRS 16 Leases with effect from 1 January 2019. The
Group has applied IFRS 16 using the modified retrospective approach on transition, under which the cumulative effect of initial application is
recognised in equity as an adjustment to the opening balance of retained earnings, non-controlling interest and currency translation reserve
at 1 January 2019. The comparative information for prior periods has not been restated. It is presented as previously reported under IAS 17
and related interpretations. Therefore, to ensure comparability, the Group presents below the calculation of adjusted fully diluted earnings per
share, as if IFRS 16 had not been applied for the current year.
Calculation
Reference in
financial statements

Adjusted profit attributable to equity holders of the parent Note 10 54,984 40,286
Effect of IFRS 16 Leases on adjusted profits on equity holders of the parent Note (a) 2,882 –
Adjusted profit attributable to equity holders of the parent (pre-IFRS 16 Leases) 57,866 40,286
’000 ’000
Weighted average number of shares (diluted) Note 10 389,295 383,147
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases) 14.86 10.51
(a) See change in accounting policies on pages 94 to 96 for quantification of impact of application of IFRS 16 on the reported results in 2019.
Glossary continued
Alternative Performance Measures (APMs)
183

1. 2. 3. Financial Statements
Effective tax rate calculation
Definition
The Group’s effective tax rate expresses the Group’s income tax expense (including the share of joint ventures and associates) before tax
impact of exceptional items and goodwill and intangible asset amortisation as a percentage of the Group’s adjusted profit before tax.
Calculation
Reference in
financial statements

Income tax expense Income Statement 10,329 16,014
Group share of tax charge of joint ventures and associates Note 4 12,534 2,231
Total tax charge 22,863 18,245
Adjustments
Deferred tax credit on amortisation of intangible assets – subsidiaries Note 30 2,623 (1,190)
Deferred tax credit on amortisation of intangible assets – share of joint ventures
and associates Note 4 565 460
Deferred tax charge on fair value movements on contingent consideration – 1,535
Tax charge on exceptional items in subsidiaries Note 7 (47) (1,395)
Group share of tax charge on exceptional items within joint ventures and associates Note 7 1,525 922
Tax charge on underlying activities 27,529 18,577
Adjusted profit before tax As calculated earlier 98,330 76,873
Effective tax on underlying activities 28.0% 24.2%
Net debt
Definition
Net debt is a non-IFRS measure which comprises bank deposits, cash and cash equivalents and current and non-current borrowings.
For 2019, it excludes lease liabilities. For 2018, it includes finance lease liabilities. The calculation is outlined in Note 25.
Routine capital expenditure and non-routine capital expenditure
Definition
Routine capital expenditure is cash spend on property, plant, and equipment and software (which, under IFRS, is classified within intangible
assets) less proceeds on disposal of property, plant and equipment and any expenditure classified as non-routine or development
capital expenditure.
Calculation
Reference in
financial statements

Acquisition of property, plant and equipment Cashflow statement 19,518 25,942
Acquisition of intangible assets – computer software Cashflow statement 4,621 4,352
Proceeds on disposal of property, plant and equipment Cashflow statement (678) (797)
Non-routine (development capital expenditure) Note (a) (4,470) (7,376)
Routine capital expenditure 18,991 22,121
(a) Non-routine capital expenditure is expenditure on projects to grow the business and generally relates to the acquisition, the fit out of new
facilities or extending the capacity of existing facilities.
Adjusted operating cashflow
Definition
Adjusted operating cashflow is the operating cashflow generated from operations as reported in the Group Cashflow Statement before cash
outflows associated with exceptional items less lease liability payments and development loans provided to joint ventures and associates.
Calculation
Reference in
financial statements

Net cashflow from operating activities per cashflow statement Cashflow Statement 73,776 44,943
Cash impact of exceptional items in operating cashflows Note 36 3,489 2,884
Loans to joint ventures and associates Note (a) – 5,111
Less lease liability payments Cashflow Statement (17,902) –
Adjusted operating cashflow 59,363 52,938
Note (a) – in 2018, the Group provided a loan of €5,111,000 to a joint venture of the Group to fund a development project. In the statutory
cashflow statement, this was recorded as a trade and other receivables outflow.
184

Free cash flow
Definition
Free cash flow is defined by the Group as the funds available after outflows relating to routine capital expenditure, dividends paid to
non-controlling interests but before acquisition related expenditure (including loans advanced to joint ventures and associates), development
capital expenditure and the payment of dividends to equity shareholders.
Calculation
Reference in
financial statements

Net cashflow from operating activities per cashflow statement Cashflow Statement 73,776 44,943
Cash impact of exceptional items in operating cashflows Note 36 3,489 2,884
Loans to joint ventures and associates See previous note – 5,111
Less lease liability payments Cashflow Statement (17,902) –
Dividends received from joint ventures and associates Cashflow Statement 10,652 10,908
Dividends paid to non-controlling interests Cashflow Statement (16,055) (10,535)
Routine capital expenditure As calculated earlier (18,991) (22,121)
Free Cashflow 34,969 31,190
Free cash flow conversion rate
Definition
The cash conversion ratio expresses free cashflow (before dividends paid to equity shareholders and non-controlling interests) as a
percentage of profit after tax (before exceptional items).
Calculation
Reference in
financial statements

Free cashflow As calculated earlier 34,969 31,190
Add back dividends paid to non-controlling interests Cashflow Statement 16,055 10,535
Free cashflow before dividends 51,024 41,725
Profit after tax (before exceptional items) Income Statement 61,019 50,074
Free cashflow conversion rate 84% 83%
Net Debt/Adjusted EBITDA
Definition
Net debt/adjusted EBITDA is a measure of the Group’s leverage and is calculated by dividing net debt (as defined earlier) by adjusted EBITDA (as
defined earlier).
Calculation
Reference in
financial statements
2019
Net debt Note 25 221,193
Adjusted EBITDA As calculated earlier 202,803
Net debt/Adjusted EBITDA (times) 1.1 x
Interest cover: EBITA interest cover
Definition
Interest cover is a measure of the Group’s ability to meet its interest payments and is calculated by dividing Adjusted EBITA (as defined
earlier) by net financial expense.
Calculation
Reference in
financial statements
2019
Adjusted EBITA As calculated earlier 150,114
Net financial expense Note 5 10,967
Adjusted EBITA/Net financial expense (times) 13.7 x
Glossary continued
Alternative Performance Measures (APMs)
185

1. 2. 3. Financial Statements
Acquisition related expenditure, net
Definition
Acquisition related expenditure is cash outflows in respect of acquisition and investment in subsidiaries, joint ventures and associates, non-
controlling interests and is net of contributions from non-controlling interests and proceeds on disposal of shares to non-controlling interests.
Calculation
Reference in
financial statements

Cash outflow relating to investment in joint ventures and associates Cashflow Statement 7,145 251,949
Investment in subsidiaries Note 31 6,683 2,496
Proceeds from disposal of joint venture Cashflow Statement (48) –
Loans to joint ventures and associates Note (a) – 5,111
Disposal of investment in subsidiary to non-controlling interest Cashflow Statement – (286)
Acquisition of non-controlling interests Cashflow Statement 1,656 490
Capital contribution by non-controlling interests Cashflow Statement – (130)
Proceeds on disposal of investments for resale Cashflow Statement (1,043) –
Acquisition of equity investments Cashflow Statement 150 –
Acquisition related expenditure 14,543 259,630
Note (a) – in 2018, the Group provided a loan of €5,111,000 to a joint venture of the Group to fund a development project. In the statutory
cashflow statement this was recorded as a trade and other receivables outflow.
Annual Financial Report
for the financial year ended
31 December 2019
AIB Group plc
BACKING OUR
CUSTOMERS
Gruig, Co Antrim, one of two wind farms acquired
by Foresight Group LLP in 2019 with finance
provided by AIB.
OUR PURPOSE
ISTO BACK OUR
CUSTOMERSTO
ACHIEVETHEIR
DREAMSAND
AMBITIONS
AIB is a financial services group operating predominantly in Ireland
and the United Kingdom. We provide a range of services to retail,
business and corporate customers, with market-leading positions
in key segments. AIB is our principal brand across all geographies.
In Ireland, EBS is our challenger brand and Haven is our mortgage
broker channel.
With over 2.8 million customers, we are committed to backing
sustainable communities. We pledge to do more to support the
transition to a low-carbon economy.
01 03
02
ANNUAL
FINANCIAL
REPORT 2019
ANNUAL
REVIEW
04 Financial Highlights
06 AIB at a Glance
10 Chairman’s Statement
14 Chief Executive’s Review
20 2019 Highlights
22 Overview of the Irish Economy
24 Our Strategy
32 	
Governance in AIB
38 Risk Summary
44 Board of Directors
46 Executive Committee
48 Our Non-Financial Statement
RISK
MANAGEMENT
72 Framework
79 Individual Risk Types
BUSINESS
REVIEW
52 	
Operating and
Financial Review
67 Capital
ON OUR COVER
Oweninny Wind Farm in Co Mayo,
an AIB customer.
04 06
05
This Annual Financial Report contains forward looking statements with respect to certain of the Group’s plans and its
current goals and expectations relating to its future financial condition, performance, results, strategic initiatives and
objectives. See page 376.
GOVERNANCE
AND OVERSIGHT
172 Group Directors’ Report
175 	
Schedule to the Group
Directors’ Report
178 Corporate Governance Report
194 	Report of the Board Audit
Committee
200 	Report of the Board Risk
Committee
204 	Report of the Nomination &
Corporate Governance Committee
208 	Report of the Remuneration
Committee
212 	
Corporate Governance
Remuneration Statement
219 Viability Statement
220 Internal Controls
221 Other Governance Information
222 Supervision and Regulation
GENERAL
INFORMATION
375 Shareholder Information
376 Forward Looking Statements
377 Glossary of Terms
383 Principal Addresses
384 Index
FINANCIAL
STATEMENTS
224 Directors’ Responsibility Statement
225 Independent Auditor’s Report
237 Consolidated Financial Statements
243 	Notes to the Consolidated
Financial Statements
366 	AIB Group plc Company
Financial Statements
369 	Notes to AIB Group plc
Company Financial Statements
Read more in our
Detailed Sustainability
Report 2019:
aib.ie/sustainability
Detailed Sustainability Report
for the financial year ended
31 December 2019
AIB Group plc
We pledge to
DO MORE.
FINANCIAL HIGHLIGHTS
OUR FINANCIAL
PERFORMANCE
IN 2019
2019 2018
2.37% 2.47%
Higher costs and lower income driving
increase in cost income ratio (CIR).
Renewed focus on cost discipline.
RENEWED FOCUS ON
COST DISCIPLINE
2019 impacted by exceptional items, including
provision for tracker mortgage examination, while
2018 benefited from impairment writebacks and
gain on disposal of loan portfolios. Profit before
exceptional items in 2019 is €1,091m (2018: €1,414m).
PROFIT BEFORE TAX IMPACTED BY
EXCEPTIONAL ITEMS OF €592M
COST
INCOME
RATIO1
PROFIT
BEFORE
TAX
NET
INTEREST
MARGIN
Stable customer loan yields. Impact of excess
liquidity and higher cost of MREL issuances
driving lower net interest margin (NIM) of
2.37%. Interest income in line with 2018.

1. 
Before bank levies, regulatory fees and exceptional items, cost income ratio (CIR) including these items is 82% in 2019 (2018: 63%). For exceptional items see pages 56 and 65.
2. 
Other regulatory levies and charges are now presented as bank levies and regulatory fees (€17m in 2018 previously included in operating expenses has been re-presented as bank
levies and regulatory fees).
4  Annual Review Financial Highlights
Strong capital base with solid underlying
capital generation. Proposed ordinary
dividend of €217m (8c per share).
Pro forma CET1 including TRIM4
indicative
impact of 90bps is 16.4%.
STRONG CAPITAL BASE
CET1
FULLY
LOADED
17.3%
New lending up 2% with growth
of 8% in mortgages in Ireland and
strong lending to the energy sector
offset by lower syndicated lending.
MODERATE GROWTH
IN NEW LENDING
NEW
3. Non-performing exposures (NPEs) refers to non-performing loans (NPLs) and excludes €162m of off-balance sheet commitments. For further information see pages 105 and 106.
4. For further information on TRIM see page 68.
Excluding disposal of loan portfolios and
FX impact, growth in net loan book is €0.7bn.
Gross performing loans of €58.8bn increased
by 3% (up 2% excluding FX impact).
STABLE NET LOANS AS GROSS
PERFORMING LOANS GROW 3%

Significant progress in reducing non-performing
exposures (NPEs) with a 45% reduction from
€6.1bn (9.6% of gross loans) to €3.3bn to reach
our milestone of c. 5% by end of 2019.
SIGNIFICANT REDUCTION,
5.4% OF GROSS LOANS
NON-

Annual Review
Financial Highlights
Business structure in operation from 11 November 2019.
6  Annual Review AIB at a Glance
RETAIL BANKING
Retail Banking’s core business lines include: mortgages,
consumer lending, SME lending, asset-backed lending,
wealth management, daily banking and general insurance,
as well as our Financial Solutions Group.
58%
OF NET LOANS
CORPORATE,
INSTITUTIONAL
& BUSINESS
BANKING (CIB)
27%
OF NET LOANS
Centre of Excellence approach
to management of key sectors to
bring sector-specific insights and
expertise to our customers.
SECTOR
SPECIALISTTEAMS
Trusted strategic long-term partner
for Irish businesses, with primary
focus on senior debt lending.
RELATIONSHIP
DRIVEN MODEL
Complementing traditional debt
offering through specialised finance,
commercial finance, syndicated
finance and corporate finance
advisory services, as well as Private
Banking services and advice.
CUSTOMER-FOCUSED
SOLUTIONS
Leading retail banking franchise
in Ireland with over 2.5 million
personal and SME customers.
Largest physical distribution
network in Ireland, with 296 AIB
and EBS locations and a further
c. 950 locations through the
An Post network.
No. 1 digital bank in Ireland,
with over 1.5 million active digital
customers and 1.3 million active
mobile customers.
AIB UK operates in two distinct markets: providing corporate and
commercial banking services in Great Britain, trading as Allied Irish
Bank (GB); and retail and business banking services in Northern
Ireland, trading as AIB (NI).
Group comprises wholesale treasury activities and
Group control and support functions.
Part of our Finance function, Treasury manages the
Group’s liquidity and funding position while providing
customer treasury services and economic research.
TREASURY
Group control and support functions are:
Business & Customer Services; Finance; Risk;
Legal & Corporate Governance; Human
Resources; Corporate Affairs & Strategy;
and Group Internal Audit.
CONTROL
AND SUPPORT
294k retail, corporate and
business customers across
the United Kingdom.
294k
CUSTOMERS
126k customers actively engaging
across our digital channels.
126k
DIGITALCUSTOMERS
14 business centres in Great Britain
along with 15 branches in Northern
Ireland, including six business centres
co-located in branches and one centre
for small and micro business.
29
LOCATIONS
£2.1bn £7.7bn
NET LOANS
£140m
OPERATING CONTRIBUTION1
1. Operating contribution before impairments and exceptional items
2. Excludes Group segment operating loss €0.2bn.
For a detailed report on our performance,
read the ‘Operating and financial review’
section on pages 52 to 66.
OPERATING
CONTRIBUTION1
BY SEGMENT
Retail
Banking
Corporate,
Institutional
& Business
Banking
AIB UK
NEW LENDING
8  Annual Review AIB at a Glance
Since 2001, AIB has sponsored Dublin Chamber’s Annual Dinner,
which brings over 1,600 business leaders together

Annual Review
AIB at a Glance
A GREAT INSTITUTION
WITH A STRONG
CUSTOMER FRANCHISE
At the end of his term, the Chairman reflects on
significant NPE reduction, culture development
and continued customer success in 2019.
CHAIRMAN’S STATEMENT
Richard Pym, AIB’s Chairman
10  Annual Review Chairman’s Statement
This annual report details the results for
2019 and the progress being made in the
bank. Allied Irish Banks is a great institution
with a strong and profitable customer
franchise and against that background it
is particularly regrettable that the Board is
recommending a reduction in the ordinary
dividend.
In February 2020 we made a market
announcement concerning a preliminary
decision of the Financial Services and
Pensions Ombudsman (FSPO) regarding
compensation due to a customer who
was in a previously identified group within
the tracker mortgage review, but where
the Group had concluded no financial
detriment had been incurred. The Group
is continuing to engage and consider its
position. However it is unpredictable how
these matters turn out, so we have made
additional provisions for €300m to reflect
the combined impact of application of the
compensation in that individual preliminary
decision to a wider group of around
5,900 customers in similar circumstances,
together with related potential additional
charges. This is a hit to 2019 profits and
reduced earnings per share (EPS) to 12.1c
and as a result we are recommending an
ordinary dividend of 8c per share, down
from 17c last year. However the Group
concluded the year in a strong capital
position with fully-loaded CET1 ratio of
16.4%.
In 2019 banks have been experiencing
a challenging economic environment of
negative interest rates in the Eurozone
which we expect to continue and, because
we have sheltered the vast majority of our
customers from negative deposit rates, this
has reduced the net interest margin.
There were many achievements in the year,
top of which is reducing non-performing
exposures (NPEs) down to the c. 5% level
we targeted for the end of 2019. When I
joined the bank in 2014, we had seen NPEs
peak at over €30bn, they are now down
to €3.3bn. The efforts and professionalism
of over 1,000 staff who achieved this
fantastic result is appreciated by the Board.
Additionally, the well documented tracker
mortgage remediation has, other than
the new group referred to above, been
operationally completed, with customers
repaid and put into the position they
should always have been in.
In April we announced the establishment
of a joint venture to acquire Payzone, a
leading branded provider of specialised
payment services in Ireland facilitating
WHEN I JOINED THE BANK IN
2014, WE HAD NPES PEAK AT
OVER €30BN, THEYARE NOW
DOWN TO €3.3BN
1
2
3
4
5
6
11

Annual Review
Chairman’s Statement
consumer payments by cash, card and
card-not-present for everyday consumer
needs. This acquisition, which closed in
October 2019, will enhance AIB’s fintech
capability and strengthen our position as
Ireland’s leading digitally-enabled bank.
This annual report describes the strategic
refresh and the associated targets which
the Board has agreed, reflecting the
economic and competitive environment.
There are two updated core strategic
targets on capital levels and return on
equity, which provide the corporate
financial framework within which the
bank will operate. In parallel, there is
a specific absolute cost target which is
there to provide focus for the operational
management of the bank. In a challenging
economic environment getting value from
every cent we spend is essential.
Although much progress has been made
in advancing the culture of the bank over
the decade since the financial crisis, the
Board recognises that the evolution of
culture is a continuous journey. AIB is
committed to playing a leading role in
advancing this agenda across the industry
and we welcome the establishment of the
Irish Banking Culture Board (IBCB) and
are committed to ensuring its success. We
are similarly committed to expanding our
sustainability agenda where we are the
leading bank in Ireland and more details
follow in this report.
There has been major Board rotation
during the year with four Non-Executive
Directors leaving and five arriving, and
the departure early in the year of the CEO
and CFO which was announced in 2018. I
would like to record my thanks to Catherine
Woods, Peter Hagan, Jim O’Hara and
Simon Ball for their great contributions.
They joined the bank when things were
extremely difficult and served with
distinction. I extend a welcome to Sandy
Kinney Pritchard, Ann O’Brien, Raj Singh,
Elaine MacLean and Basil Geoghegan who
are already contributing at a high level.
The non-executive group on the Board
is now 50% female and Colin’s Executive
Committee composition will shortly be the
same.
My term as Chairman has now come to
an end and my thanks go to all my Board
colleagues who have contributed hugely
to AIB and put massive amounts of time,
energy and thoughtful considerations into
our work. I thank all colleagues across the
bank for their contributions during the
year and record particular appreciation to
the Executive Directors who have been
my partners and friends over the past five
Rosy Temple of Magee, an AIB customer, which
has been in operation for 150 years in Co Donegal
THERE IS NOTHING
MORE FULFILLING IN
THE LIFE OFA BANKER
THAN TO SEE YOUR
CUSTOMERS SUCCEED
12  Annual Review Chairman’s Statement
years: the brilliant Colin, Tomás, Bernard
and Mark; and to the other members of
the leadership group who have displayed
commitment and professionalism in
difficult circumstances and transformed
the capabilities and performance of the
bank. They are a talented team and I hope
the bank can retain their services for many
years to come.
In the course of my work at AIB I have had
many enjoyable and memorable meetings
with the leaders of Irish business who are a
hugely ambitious and innovative group and
serve the country with distinction, creating
employment, opportunity and prosperity.
I have observed many examples of where
AIB has backed small ideas and seen them
grow into major businesses, and there is
nothing more fulfilling in the life of a banker
than to see your customers succeed. I
extend thanks to all our customers for their
support to us.
It has been a privilege to serve as your
Chairman since 2014 and my last act is
to sign this report but I know that much
remains to be done. I am confident that
with the current strategy, the oversight of
our refreshed Board and the leadership
of Colin and the rest of the executive
team, AIB, its customers and committed
employees will enjoy ever greater success.
Go n-éirí an t-ádh libh go léir.
RICHARD PYM CBE
Chairman
5 March 2020
The two co-chairs of AIB’s Women Matters Employee
Resource Group: Annette O’Brien and Mary Kennedy


Annual Review
Chairman’s Statement
COLIN HUNT
AIB’s Chief Executive Officer
RESTORING TRUST IN
THE ORGANISATION IS
AWORK-IN-PROGRESS
AND EVERY DAY I AM
REMINDED OFTHE
IMPORTANCE OF
THE TASK
14  Annual Review Chief Executive’s Review
In 2019, AIB further enhanced services for our customers, increased new
lending, reduced NPEs and consolidated operations.
In my first review, as Chief Executive
Officer, of AIB’s annual financial
performance, I am glad to report that the
fundamentals of the Group remain strong
with sustainable underlying profits and a
robust capital base. We are proud to be
Ireland’s leading digital bank and continue
to hold a No. 1 position across a number
of markets including mortgages and
personal loans. Further enhancing service
to our c. 2.8 million customers, increasing
our new lending volumes to €12.3bn to
support economic growth, reducing non-
performing exposures (NPEs) significantly,
addressing the challenges in the cost base
and proposing a dividend of 8c per share
to shareholders were all achieved as we
consolidated our operations to confront the
principal risks and uncertainties ahead.
Our profit performance should be
understood in the context of the current
low-interest environment that is prevailing
globally, together with the impact of
ongoing potential regulatory obligations
arising from legacy issues. We are dealing
with the latter in a transparent and
speedy manner and we will continue
to work closely with the Central Bank of
Ireland until these issues are concluded
comprehensively.
As we face into considerable headwinds
including a cooling global economy,
a still-uncertain outcome to the Brexit
trade talks, the reality of climate change,
tariff discussions in global trade and
more recently the potential impact of the
Coronavirus on markets, it is imperative
that Ireland has a robust, well-functioning
banking industry. As a financial institution
at the heart of Ireland’s economy, AIB must
be put on the strongest possible footing
with a solid balance sheet, a robust capital
structure and a controlled cost base.
We worked assiduously through 2019 to
ensure that sustainability became more
deeply ingrained in all our business
decisions. We are prepared, at every
level, to drive efficiencies throughout
our operations, pursue simplification of
products, build for a digital future and
provide trusted service to our customers.
Ultimately, when market conditions allow,
AIB wants to be in a position that enables
our major shareholder, the Government, to
recover maximum return for the taxpayer’s
investment.
One of my early priorities as Chief
Executive Officer has been to work with
our Board on the development of a multi-
year culture enhancement programme.
Restoring trust in the organisation is a work
in progress and every day I am reminded
of the importance of the task. However,
my management team, the Board and
everyone across the Group are aware
of the urgency of rebuilding a positive
reputation. This can only be done by
implementing a strict customer-first ethos
in all aspects of our business, by putting
ourselves in our customers’ shoes.
Financial performance
In 2019, our core business segments have
contributed positively to our financial
performance and we have delivered an
operating profit of €1,091m excluding
exceptionals. Profit before tax of €499m
was impacted by exceptional items. This
includes €300m additional provisions
taken to cover a range of possible
CHIEF EXECUTIVE’S REVIEW
ATTHE HEART
OF IRELAND’S
ECONOMY

Annual Review
Chief Executive’s Review
IN 2019, MORE THAN 98% OF
OUR NEW LENDING WAS OF
STRONG OR SATISFACTORY
CREDIT QUALITY
98%
outcomes and related potential additional
charges following a preliminary decision
by the Financial Services and Pensions
Ombudsman relating to a previously
identified group of customers who had an
option of a prevailing tracker rate.
While net interest income of €2,076m was
stable and loan yields remained strong, the
Group’s net interest margin (NIM) reduced
to 2.37%. This reduction was due to a
combination of factors such as the cost of
MREL-eligible issuances, lower yields on
our investment securities and the weight of
excess liquidity.
Total operating expenses for 2019 were
€1,504m1
. Exceptional items of €592m
included restitution costs and the provision
to which I referred earlier. Our cost income
ratio was 56%1
. A renewed focus on cost
discipline is a key management priority and
will continue to feature through 2020 and
beyond.
It was a busy and successful year in debt
capital markets with four transactions
totalling €2.6bn of MREL-eligible issuances
(HoldCo Senior $1bn, HoldCo Senior
€750m, AT1 €500m and Tier 2 €500m).
Every transaction was oversubscribed
by a multiple and order books were
characterised by geographically diverse
quality institutions. This now brings
our MREL eligible issuances to €4.3bn
which represents 86% of our total MREL
requirements. In September, we launched
our green bond framework showing our
intent to our investors to lead the way in
funding sustainable businesses. In 2019,
we had two upgrades from credit rating
agencies Moody’s and Fitch bringing
the AIB Group plc ratings to Baa2 and
BBB respectively. The key drivers of the
upgrades were the consistent delivery of
NPE reduction and the successful MREL
issuances. We are well positioned to
complete our MREL issuance requirement
and improve the efficiency of our capital
structure.
We have a strong capital base with a
robust pro forma fully-loaded CET1 ratio
(reflecting indicative 90bps TRIM impact) of
16.4% at 31 December 2019, well in excess
of regulatory requirements.
Non-performing exposures
AIB cannot countenance facing another
economic downturn carrying high levels
of NPEs that relate to the last crisis.
Addressing NPEs in a sustainable way
continued to be a top priority for the Group
and we made enormous headway in this
regard throughout the year. Two loan
portfolios with a combined NPE value of
c. €1.8bn, characterised by deep arrears,
were sold in 2019. Our core preference has
always been to offer a range of sustainable
solutions to our customers. In 2019, case-
by-case resolution resulted in a reduction
in NPEs of €1.0bn through cash payments.
Perhaps inevitably, the pace of reduction of
these NPEs has begun to moderate as we
deal with more difficult cases.
Overall our NPEs fell by 45% since year-
end 2018 to €3.3bn such that NPEs as a
percentage of gross loans amounted to
5.4% at year end 2019, thereby meeting our
IPO target of c. 5% by end 2019. Having
reached this significant milestone, we are
committed to further reducing NPEs given
the impact on cost, capital requirements
and balance sheet resilience.
Lending
In 2019, more than 98% of our new
lending was of strong or satisfactory credit
quality. This has contributed to 89% of AIB’s
loan book being of strong / satisfactory
quality at December 2019 (up from 83% at
2018 year-end).
New lending of €12.3bn in 2019 was
up from €12.1bn in 2018. Across our
core segments, new mortgage lending
increased 8% to €3.0bn and personal
lending increased by 15% to €1.0bn. With
the Irish economy continuing to perform
well, corporate credit demand remained
solid. We saw increased lending to the
renewable energy sector, offset by lower
syndicated and international lending.
Notwithstanding the fact that Brexit
1. Before bank levies, regulatory fees and exceptional items. CIR including these items was 82% in 2019 (2018: 63%). For exceptional items see pages 56 and 65.
16  Annual Review Chief Executive’s Review
uncertainty remained an ongoing theme in
the SME sector, new lending to the sector
increased by 7%. In the UK, new lending of
£2.1bn, an increase of 7% on the previous
year, was focused on our chosen defensive
sectors such as renewable energy and
healthcare.
Structure
In order to further simplify AIB’s operations,
we have reorganised our structure around
two core segments: Retail Banking and
Corporate, Institutional & Business Banking.
I have also made a number of changes
to our Executive Committee in recent
months, including the announcement
of Jim O’Keeffe as the new Managing
Director of Retail Banking. Cathy Bryce
returned to the Group in August 2019 to
lead the Corporate, Institutional & Business
Banking segment. In the UK Brendan
O’Connor, Managing Director of AIB UK
will leave the Group later in 2020 and I
thank him sincerely for his dedicated work
in AIB over 35 years. Robert Mulhall has
been announced as Managing Director
Designate for AIB’s UK business. Mary
Whitelaw has been appointed Director of
Corporate Affairs and Strategy. Geraldine
Casey was appointed AIB’s Chief People
Officer in January 2020. I believe that the
executive team has the right blend of skills
and experience to deliver our strategy and
back our customers over the coming years.
The latest appointment to our Executive
Committee in January 2020 means that
our Executive Committee will be gender
balanced in 2020. In addition, AIB was
recognised in the second ‘Balance for
Better Business’ report for having one of
the most gender-balanced boardrooms in
Ireland, with five women on its 10-strong
non-executive board.
Culture and our people
With nothing short of transformation
required in banking’s reputation, the AIB
Board has set a cultural ambition for the
organisation. This consists of adopting
evolved values and articulated behaviours
that involve the delivery of high quality
service and fair outcomes to our customers.
Our people are the heartbeat of
this business, and their support and
engagement is critical for our success.
A three year Wellbeing Programme was
developed by our employees for our
employees. The Wellbeing Programme has
trained 100 Wellbeing Advocates across
the business to locally lead and promote
programme initiatives and activities.
In terms of our employee engagement,
our iConnect results showed an 88%
participation rate, which is a 1% reduction
from 2018, and our employee engagement
levels moved from the 72nd to the 64th
percentile of companies in the Gallup
global database. We have been reflecting
on the messages conveyed by the survey
and are committed to continuing to focus
on making AIB an even better place to
work over the years ahead.
AIB Executive Committee

Annual Review
Chief Executive’s Review
Digital
As Ireland’s leading digital bank, we
provide the broadest, and most used
array of digital customer offerings to help
make our customers’ lives easier while
also providing leading security features to
ensure their peace of mind. Our levels of
active users and their levels of usage of our
platforms demonstrate how popular and
effective our digital channels truly are.
We listen to our customer feedback and
always monitor industry developments
to ensure we are up to date and are also
constantly adding to and enhancing our
digital offering. We will continue to invest
in our digital technology to allow us to
drive further efficiencies and deliver an
exceptional customer experience.
Sustainability strategy
We continue to describe our strategy
through the pillars – Customer First,
Simple & Efficient, Risk & Capital and
Talent & Culture. Our refreshed three-year
strategy to 2022 sees the introduction of
an additional strategic pillar – Sustainable
Communities – which sets out a clear
direction for this important agenda. In
essence, sustainable finance and climate
action now have an elevated position as
core strategic priorities and this is reflected
right across our agenda for business and
investment.
Further details on the progress made
in 2019 against our strategic pillars are
contained in a later section of this report.
We have now published our fourth
Sustainability Report which outlines the
progress AIB is making in response to the
key social, environmental and economic
issues.
In 2019, we made a meaningful
contribution to the communities in which
we operate by providing better banking
experiences for our customers through
focusing on continuous improvement. For
example, we completed the roll-out of the
Express Mortgage Journey. As regards
investing to support economic progress
and social issues, we funded multiple
projects which will deliver new housing
units as well as sponsoring community
investment through our AIB Together
Programme.
We recognise that supports are needed
to help change all our behaviours,
individually and societally, as we transition
to a lower-carbon economy. Reinforcing
our support for Ireland’s programme to
address climate change, we sponsored
Climate Finance Week Ireland in November
2019. We also launched a new 5-year fixed
green mortgage. Our green mortgage
complements our existing customer
proposition of choice and value, offering
low variable rates as well as highly
competitive fixed rates, providing longer
term value and certainty. We launched
a green bond framework, became a
Founding Signatory of the United Nations
Environment Programme - Finance
Initiative (UNEP FI). We also became a
Supporter of the Task Force on Climate-
related Financial Disclosures (TCFD). I look
forward to further aligning our activities to
the UN Sustainable Development Goals
and the Paris Agreement.
Outlook
The Irish economy enjoyed another strong
year in 2019, despite the challenges posed
by a slowdown in the global economy
and persistent uncertainty around Brexit
that weighed on business investment. We
remain alert to the threat of Brexit and its
possible negative outcomes. Agri-business,
farms and companies that rely on the UK
export market are of course unsettled and,
as their bank, AIB will continue to support
these customers.
Against this backdrop, our strategy to
2022 seeks to find the appropriate
balance between investing to sustain
OUR NEWTHREE-YEAR STRATEGY
TO 2022 SEES THE INTRODUCTION
OFAN ADDITIONAL STRATEGIC
PILLAR – SUSTAINABLE COMMUNITIES
AIB customer, Oweninney Wind Farm in Co Mayo.
Chief Executive’s Review
18  Annual Review
WE REMAIN ALERTTO THE THREAT
OF BREXITAND ITS POSSIBLE
NEGATIVE OUTCOMES
competitiveness while delivering attractive
returns.
In effect, our strategy over the next three
years will allow us to further underpin a
robust balance sheet, grow our lending
and defend our mortgage business where
we already hold a 31.4% market share,
reduce our organisational complexity,
and cost control our organisation. We will
continue to be the go-to bank for digital
offerings.
The Group’s performance in the strategic
and tactical management of cost will be
a critical determinant of AIB’s ability to
generate equity returns. Further details
on our refreshed strategy and targets are
outlined on pages 25 to 31. Following
a large amount of change across the
Group, I am satisfied that AIB is now well-
organised to deliver our strategy and meet
our new three-year targets.
As Chief Executive Officer, another key
priority is to see the full recovery of the
investment made by the State as the bank
returns, over time, to full private ownership.
We will ensure AIB remains positioned
to allow the Government recoup its
investment when markets are more
buoyant and at a time of their choosing.
Meanwhile I would like to thank my fellow
Board and Executive Committee members,
and all my colleagues across the Group for
the support I have received since taking
over as Chief Executive Officer a year ago.
I very much look forward to working with
them to deliver our refreshed three-year
strategy and financial targets for AIB.
I want to give special thanks to our
Chairman Richard Pym who is stepping
down as Non-Executive Chairman of AIB
Group plc. Richard has served AIB Group
with great distinction over the course
of the past five years. He has used his
vast pool of experience and wisdom to
guide the Group’s development and has
carried out all his duties with energy and
professionalism. Under his chairmanship,
AIB has gained in strength and stability and
is well positioned for the challenges and
opportunities that lie ahead. At a personal
level, Richard has been a vitally important
guide since I re-joined AIB in 2016 and in
particular since my appointment as Chief
Executive Officer in March of last year. The
Group is in the process of identifying the
next Chair and an announcement will be
made in due course.
I am extremely honoured to be Chief
Executive Officer of a bank that is
dedicated to playing a practical role
in supporting the economy and our
citizens to whom we owe so much. Our
stakeholder expectations are high and we
will strive to ensure we do not disappoint.
Thank you.
Annual Review
Chief Executive’s Review
PRINCIPLES FOR
RESPONSIBLE
BANKING
In September AIB became a Founding Signatory of the
United Nations Environment Programme – Finance
Initiative (UNEP FI), committing to align our business
with the Sustainable Development Goals and the Paris
Agreement on Climate Change. In that same month,
AIB also became a supporter of the Task Force on
Climate-Related Financial Disclosures (TCFD).
SUSTAINABLE
COMMUNITIES
AIB Together is our Group-wide community programme.
Each member of staff has two volunteer days a year to
support local charities of their choice including FoodCloud
and Soar, our official Community Partners. In July, EBS
became the main sponsor of the inaugural Volunteer in
Sport Awards.
AIB IN 2019
2019 HIGHLIGHTS
SUPPORTING
HOUSING SUPPLY
SUPPORT FOR
VULNERABLE
CUSTOMERS
In 2019, AIB invested in development projects to deliver an
expected 8,200 housing units. Of these, over 900 units will be
newly built social housing. One example of the kind of projects
we backed is the landmark finance package AIB funded in
December for the Circle Voluntary Housing Association, which
plans to deliver 250 social and affordable housing units over the
next 12 months.
Every day we support customers who are impacted by difficult
issues including financial abuse, dementia, mental health,
accessibility and more. In 2019, we enhanced our Vulnerable
Customer Programme, providing more support to our customer
-facing colleagues and establishing a Vulnerable Customer Support
Team to assist with complex cases and liaise with advocacy groups.
We also published a guide for customers dealing with bereavement;
‘What to do When Someone Dies’ provides clear, step-by-step advice.
FRAMING
THE FUTURE
In September, we launched a Green Bond Framework
in line with the globally recognised International Capital
Markets Association (ICMA) green bond principles. The
bond will support lending to projects in energy-efficient
building, renewable energy, CO2 reduction and other
climate-related initiatives.
BACKING CLUB
AND COUNTY
In 2019 we entered our 29th year supporting the
#Toughest players, clubs and communities across
the island of Ireland. AIB’s partnership with the
GAA incorporates title sponsor of the AIB GAA Club
Championships in hurling, football and camogie,
across Junior, Intermediate and Senior levels as well as
sponsor of the Senior Football Championship.
20  Annual Review 2019 Highlights
SUCCESSFULYEAR IN
DEBT CAPITAL MARKETS
In 2019, AIB successfully issued four bonds in Debt Capital Markets
totalling €2.6bn (HoldCo Senior $1bn and €750m, AT1 €500m
and Tier 2 €500m). Every transaction was oversubscribed and
order books were characterised by geographically diverse quality
institutions. The year closed with total MREL eligible issuance of
€4.3bn, which represents 86% of our MREL requirements. Along
with two credit rating upgrades this year (Fitch, Moody’s), this
positions AIB well for further bond issuances.
GREEN
LENDING
In June, we committed to making €5bn available to
support Ireland’s transition to a lower-carbon economy.
And in November we offered a competitive five-year
fixed rate mortgage to new and existing AIB private
dwelling house (PDH) mortgage customers whose
property has a building energy rating (BER) between
A1 and B3.
SUPPORTING CLIMATE FINANCE
WEEK IRELAND 2019
AIB was the main sponsor of Climate Finance Week Ireland (CFWI19), which took place on 4-8 November. The annual AIB
Sustainability Conference featured as a key event of the week’s schedule, with keynote speakers Jeff Furman (Ben & Jerry’s
Foundation), Sue Garrard (formerly Unilever) and Sir David King (University of Cambridge) addressing an audience of over
400 business leaders. We also launched our DO MORE campaign during CFWI19.
ACONVERSATION
ABOUT CULTURE
In September, over 800 members of our staff, representing all
business areas and career levels, had their say about the existing
culture in AIB. An initiative of the Diagnostic phase of our Group-
wide multi-year Culture Evolution Programme, the results of these
‘Culture Conversations’ provided a foundation for the Board and
Executive Committee to formulate a Cultural Ambition for AIB.
AIB EXPRESS
MORTGAGE
Following enhancements to our mortgage offering, six
out of every 10 new mortgage applications nationwide
were on our Express Mortgage journey by the end
of 2019. This new digital journey gives customers an
approval in principle within one hour and the ability to
progress their application online.
FINTECH
CAPABILITY
AIB and First Data Corporation received regulatory
approval to acquire a 95.9% stake in payments firm
Payzone in October. AIB holds a 75% stake in the
joint acquisition with First Data Corporation taking
the remaining 25%. Payzone is the largest consumer
payments network in Ireland, with more than 7,000
retail agents and more than 300,000 registered users.
MARKET-LEADING
DIGITALINNOVATION
AIB’s Mobile Banking App is the No. 1 Irish mobile banking app.
In June 2019 we hit the 1 million active mobile customer milestone
in Ireland, which increased to 1.3 million by year-end. With our
customers making 2.9 million secure transactions a month on
mobile, the introduction of card freeze/unfreeze in 2019 provided
even more flexibility.

Annual Review
2019 Highlights
EXPECT CONTINUED
GROWTH, DESPITE
UNCERTAINTY
Rising employment, spending and exports
made for a strong year of growth in 2019.
OVERVIEW OF THE IRISH ECONOMY
HOUSING
COMPLETIONS
EMPLOYMENT CORE RETAIL SALES
+18% +2.9% +4.3%
The Irish economy performed
strongly again in 2019, despite
the challenges posed by ongoing
uncertainty in relation to Brexit and a
marked slowdown in global growth.
Latest National Accounts data show
that GDP grew by 6% in the first three
quarters of the year.
Consumer spending continued
to grow at a solid pace in 2019,
underpinned by rising employment
and wages. Core retail sales
(excluding the motor trade) rose by
4.3% in the year. Total car registrations
(new and second-hand imports)
in 2019 matched the high levels
achieved in the previous year.
Business investment was subdued
in 2019, held back by the uncertainty
around Brexit and slowdown in the
global economy. Nevertheless, a
good measure of domestic economic
activity, modified final domestic
demand, grew by 3.5% year-on-year
in Q3 2019.
Exports also performed well in 2019.
Notably, service exports rose by
almost 14% in the first three quarters
of the year.
The labour market
Labour market data for 2019 also
paint a very encouraging picture
of the economy. They show that
employment rose by 2.9% for the third
consecutive year, with the number at
work increasing by 80,000 over the
course of 2019.
Meanwhile, the unemployment
rate continues to decline, albeit at
a somewhat slower pace than in
recent years. The jobless rate fell
to 4.7% in the final quarter of 2019,
down from 5.6% a year earlier.
Most encouragingly, the long-term
unemployment rate fell to just 1.6%
in 2019. The economy, therefore, is
getting very close to full employment.
The housing market
Construction output was up by 2.4%
in the first three quarters of the year,
driven by the continuing pick-up in
house-building activity. New house
completions rose by 18% to 21,241
in 2019, up from 17,952 in 2018. This
is still well short of annual housing
demand, which is widely estimated at
circa 35,000 units.
House price inflation decelerated
sharply last year despite the ongoing
shortage of houses, falling to 0.9%
year-on-year in December, well
below the peak rate seen in 2018 of
over 13%. Indeed, house prices fell in
Dublin during 2019. Rents, though,
continued to rise and were up by
4.3% year-on-year in December.
Lending activity
The ongoing recovery in housing
activity was reflected in further
growth in mortgage lending. It grew
by 9.5% to over €9.5bn in 2019, up
from €8.7bn 2018 and €7.3bn in 2017.
New lending in the SME sector was
subdued in 2019, held back by the
uncertainty around Brexit. Central
Bank data show new lending to the
SME sector amounted to €2.5bn to
end September, virtually unchanged
from the same period in 2018.
Total household debt continued to
decline in 2019, falling to €135bn by
the third quarter, from €137.5bn at
end 2018. Household indebtedness
has fallen by one-third from its
peak of €203bn at end 2008. Not
surprisingly then, there has also been
a marked decline in the household
debt/disposable income ratio in the
past decade. It stood at 116% in Q3
22  Annual Review Overview of the Irish Economy
THE ONGOING RECOVERY
IN HOUSING ACTIVITY
WAS REFLECTED IN
FURTHER GROWTH IN
MORTGAGE LENDING
2019, down from 123% at end 2018 and its peak
of 212% seen at the start of the decade. The
ratio has now returned to 2003 levels, when the
rapid growth in credit in Ireland was just getting
underway.
Brexit
The UK left the EU on 31 January 2020 after
Parliament approved a revised Withdrawal
Agreement. This includes a transition period to
end 2020, during which time the existing EU
trading rules will remain in place. The UK hopes
to conclude a trade deal with the EU before
end 2020 that will frame the basis for its future
trading relationship with Europe. These trade
talks are likely to prove very difficult. Considerable
uncertainty will persist about Brexit until the
future trading relationship is finalised.
UK economy overview and outlook
The pace of activity remained subdued in the
UK last year, with the uncertainty around Brexit
holding back investment in particular. GDP rose
by 1.4% in 2019 after growth of 1.3% in 2018, the
slowest growth rates seen since the financial
crisis a decade ago. Continuing uncertainty about
the future trading relationship with the EU could
dampen economic activity again in 2020.
Outlook for the Irish economy
Leading indicators of Irish activity softened in
2019 as the world economy lost momentum.
Nonetheless, the prospects remain favourable
for the Irish economy in 2020. Growth should be
underpinned by continuing low interest rates,
rising employment and incomes, the ongoing
rebound in housing activity, as well as a mildly
expansive stance to fiscal policy. This should result
in a solid rise in new lending activity in 2020.
Finally, the coronavirus is a new downside risk
for global growth this year. The measures to
contain the virus are already disrupting supply
chains and having a negative impact on some
sectors of the world economy. Ireland as a small
open economy will be impacted by these global
trends. It is hoped that the measures to contain
the virus prove successful, which would allow
activity in impacted sectors to rebound as the year
progresses.
Core Retail Sales (YoY, %)
Employment (‘000) & Unemployment Rate (%)
In 2017, we set a number of targets for both financial and
non-financial activities.
24  Annual Review Our Strategy
OUR STRATEGY
2020 marks the beginning of a new strategic cycle for AIB Group, having examined
macroeconomic developments, industry trends and our own business priorities.
Our strategic ambition is to be at the heart of our customers’ financial lives by
responsibly and comprehensively meeting their life-stage needs, aiming to be a
sustainable, capital-generative and efficient business. We describe our business
and strategy through five strategic pillars. The following pages contain further
information on our strategy to 2022.
A NEW STRATEGIC CYCLE 
SIMPLE & EFFICIENT 
RISK & CAPITAL
TALENT & CULTURE
SUSTAINABLE COMMUNITIES
CUSTOMER FIRST

Annual Review
Our Strategy
Our business strategy aims to achieve a balance between investing
to sustain competitiveness while delivering attractive returns.
AFIVE-PILLAR
STRATEGY
OUR STRATEGY
STRATEGY 2022
We will be at the heart of our customers’ financial lives by
responsibly and comprehensively meeting their life-stage needs.
A sustainable, capital-generative and efficient business.
Cost1
To back our customers to achieve their dreams and ambitions.
CUSTOMER FIRST
SIMPLE & EFFICIENT
TALENT & CULTURE
SUSTAINABLE COMMUNITIES
STRATEGIC PILLARS
STRATEGIC AMBITION
FINANCIAL AMBITION
FINANCIAL TARGETS
PURPOSE
For more information on the governance
of our strategy 2022 development, see page 35.
RISK
& CAPITAL
In refreshing our strategy to 2022 we set both a strategic and financial ambition for AIB Group, both of
which speak to our ambition to provide a broad range of financial services.
In an evolution of our four-pillar 2017-2019 strategy, we have added Sustainable Communities as a fifth
pillar, reflecting our ambition to be both a leading financial institution in climate action and a meaningful
part of the communities in which we operate. Our primary objectives to 2022 are: to simplify our business
in order to increase efficiency; to defend our income in an increasingly competitive environment; to diversify
our products and services; and to further control our business costs.
Our purpose remains: to back our customers to achieve their dreams and ambitions.
1. Costs before bank levies and regulatory fees and exceptional items.
2. 
See the ‘Capital’ section on page 70 for further information.
26  Annual Review Our Strategy
STRATEGIC
OUTCOMES 2022
We will maintain a high-
quality balance sheet in
order to back our customers
through potentially more
challenging economic times.
We will build a world-class
culture and consistently
meet expectations across
our five stakeholder groups:
customers, employees,
investors, society and
regulators.
We will address costs in a structured manner,
driving efficiency and innovation in our business.
We will develop life-stage appropriate products and services to
continually meet our business and personal customers’ needs and
maintain a competitive advantage.
We will support the transition to a low-carbon economy and make a
meaningful contribution to the communities in which we operate.
We will simplify the business and digitise where appropriate for the
benefit of our customers.
We will organically diversify our income to sustain underlying
profitability, particularly in the current interest rate environment.
We will invest to maintain our No. 1 position in the Irish
mortgage market, with a particular focus on digital.
A ROBUST
BALANCE SHEET
A STAKEHOLDER
MINDSET
A COST-CONTROLLED
ENVIRONMENT
MEETING LIFE-STAGE
NEEDS
A SIGNIFICANT SUSTAINABILITY
CONTRIBUTION
REDUCED ORGANISATIONAL
COMPLEXITY
DIVERSIFIED INCOME GROWTH
STRONG MORTGAGE
ADVANTAGE
In line with our strategic and financial ambitions, we anticipate eight outcomes of our three-year strategy to
2022, as listed below. With a continued focus on significantly enhancing the experience of all our customers,
we aim to grow our business organically and diversify our income to reflect the challenging interest rate
environment. And as the No. 1 digital bank in Ireland, we can leverage our market-leading platform by
enhancing and integrating more key customer journeys.
In all our actions, we will maintain a mindset that takes into account the expectations of all our stakeholders.
A CONTINUED FOCUS ON
SIGNIFICANTLY ENHANCING THE
EXPERIENCE OF OUR CUSTOMERS

Annual Review
Our Strategy
We put our customers at the heart of our organisation, providing the full range of their
financial needs conveniently and responsibly. We use technology to personalise our product
and service offerings.
LONG-TERM
TARGETS
MEASURE
MEDIUM-TERM (END 2022)
LONG-TERM
TRANSACTION NET
PROMOTER SCORE (NPS)
Measured after customer
transactions for key touch points
RELATIONSHIP NET
PROMOTER SCORE (NPS)
A measure of our personal customers’
overall AIB relationship experience
50+
MEDIUM- AND
LONG-TERM TARGETS
MEASURE
ACTIVE MOBILE USERS
Number of active users on mobile
platform
ABSOLUTE COST1
BASE
Cost of running the business,
excluding exceptional costs €1.5bn
CUSTOMER FIRST
Our organisation, technology and partnering strategies drive efficiency in our
back-, middle- and front-office operations. We foster a culture of cost-awareness and
accountability, simplifying our processes and ways of working.
SIMPLE & EFFICIENT
We have set a number of financial and non-financial
targets for both the medium-term and long-term in
line with our strategy.
1. Costs before bank levies and regulatory fees and exceptional items.
28  Annual Review Our Strategy
We maintain a strong risk management framework, high asset quality and robust capital
levels. We deploy our capital efficiently through effective risk model development, evolved
risk pricing and our strategic business model choices.
MEDIUM-TERM
TARGETS
MEASURE
CET1 RATIO
(FULLY LOADED)
A measure of our ability to withstand
financial stress and remain solvent
>14%
RETURN ON
TANGIBLE EQUITY1
A measure of how well capital is
deployed to generate earnings growth
>8%
LONG-TERM
TARGETS
MEASURE
ENGAGEMENT
Employee engagement relative to
worldwide Gallup client population TOP QUARTILE
DIVERSITY
Women as % of management
GENDER BALANCED
MEDIUM- AND
LONG-TERM TARGETS
MEASURE
ESG RATING
Composite measure based on
selected ESG rating agencies
REDUCTION IN EMISSIONS
% proportion of our emissions
reduction versus 2014 baseline 50% BY 2030
RISK & CAPITAL
We ensure that we have the right talent, skills and capabilities within the organisation
to fulfill our purpose and execute our strategy. We enable talent effectiveness through a
diverse and inclusive culture that is built on accountability, collaboration and trust.
TALENT & CULTURE
We play a leadership role in creating innovative propositions and partnerships to help
our customers in the transition to a low-carbon economy. We make a meaningful
contribution to the sustainability of the societies where we operate.
SUSTAINABLE COMMUNITIES
ABOVE AVERAGE

Annual Review
Our Strategy
OUR STRATEGY
FOCUS ON
SUSTAINABILITY
We will support the transition to a low-carbon economy and make a meaningful
contribution to the communities in which we operate.
Leading Ireland’s
transition to become a
low-carbon economy.
Building better
banking experiences
and products with a
focus on continuous
improvement and
learning from our
mistakes.
Actively investing to
support economic
progress and social
issues.
Protecting the privacy,
security and integrity of
our data and systems
to ensure responsible
practices and resilient
technology.
CULTURE & ACCOUNTABILITY
Build a world-class culture that is underpinned by our values, behaviours and actions.
CLIMATE
ACTION
BETTER BANKING
EXPERIENCE
ECONOMIC & SOCIAL
INCLUSIVITY
RESPONSIBLE &
RESILIENTTECHNOLOGY
We pledge to DO MORE.
Climate change continues to emerge as the greatest challenge of our time. We recognise
the important responsibility financial institutions have to support the transition to a low-
carbon economy. While this issue requires a long-term outlook, action is necessary now.
This is why AIB has placed sustainability at the heart of our strategy.
Our detailed Sustainability Report outlines the progress AIB Group made in 2019, including
the launch of products such as our green mortgage and commitments such as becoming
a Founding Signatory of the United Nations Environment Programme – Finance Initiative
(UNEP FI). You can read this report, as well as related accreditations, codes and policies on
www.aib.ie/sustainability
Read more in our
Detailed Sustainability
Report 2019:
aib.ie/sustainability
Detailed Sustainability Report
for the financial year ended
31 December 2019
AIB Group plc
We pledge to
DO MORE.
30  Annual Review Our Strategy
Lending criteria, terms and conditions apply. Over 18s only, security may be required. . is an authorised agent and servicer of AIB Mortgage Bank in relation to the
origination and servicing of mortgage loans and mortgages. . and AIB Mortgage Bank are regulated by the Central Bank of Ireland.
Our Green
Mortgage
is NOT
enough.
AIB Sustainability
We pledge to DO MORE.
Our pledge to Do More.
Over the last number of years at AIB we have been
working to build a more sustainable business.
We’ve invested in wind energy projects,
launched a €5 billion Climate Action Fund
and created a Green Mortgage.
And yet, it’s still not enough.
And we will keep telling ourselves that every day.
AIB alone is not the solution to climate change, but
we are doing everything we can to be a part of it.
AIB. We pledge to DO MORE.
AIB Sustainability
Lending criteria, terms and conditions apply. Credit facilities are subject to repayment capacity and financial
status and are not available to persons under 18 years of age. Security may be required. . is
regulated by the Central Bank of Ireland.
We pledge to DO MORE.
AIB Sustainability
Our investment
in wind farms
is NOT enough.
Lending criteria, terms and conditions apply. Credit facilities are subject to repayment capacity and financial
status and are not available to persons under 18 years of age. Security may be required. . is
regulated by the Central Bank of Ireland.
AIB Sustainability
Our €5 billion
Climate Action Fund
is NOT enough.
We pledge to DO MORE.
In 2019,
we launched our
DO MORE campaign

Annual Review
Our Strategy
Through a year of substantial change
on the Board, the role of corporate
governance in ensuring effective Board
decision-making has been of paramount
importance.
The Board is committed to upholding
high standards and seeking continual
enhancements. AIB’s corporate governance
standards are implemented by way of
a comprehensive suite of frameworks,
policies, procedures and standards. Such
standards are overseen by the Nomination
& Corporate Governance Committee
and are further detailed in the Corporate
Governance Report within the ‘Governance
and oversight’ section of this Annual
Financial Report on pages 178 to 192.
Below are a number of examples
which, at a high level, demonstrate our
strong corporate governance standards
throughout the year.
Succession planning and induction
Succession planning for both the Board
of Directors and Executive Committee
(ExCo) was a key focus of the Nomination
and Corporate Governance Committee,
and the Board as a whole, in 2019. This
was coupled with rolling out induction
programmes for five new Non-Executive
Directors appointed during the year.
In anticipation of Ms Catherine Woods’
retirement in October 2019 and Mr
Richard Pym indicating his intention to
CORPORATE
GOVERNANCE IN
ACTION
As new members joined in 2019, AIB’s Board oversaw
matters such as culture, strategy and Brexit preparedness.
GOVERNANCE IN AIB
AIB was recognised in the 2019 Balance for Better Business report
as having the joint-most gender balanced boardroom in Ireland
32  Annual Review Governance in AIB
AIB GROUP BOARD
BOARD
RISK COMMITTEE
BOARD AUDIT
COMMITTEE
BOARD COMMITTEE BOARD COMMITTEE BOARD COMMITTEE BOARD COMMITTEE ADVISORY COMMITTEE
NOMINATION &
CORPORATE
GOVERNANCE
COMMITTEE
SUSTAINABLE
BUSINESS ADVISORY
COMMITTEE
REMUNERATION
COMMITTEE
Quality and integrity
of accounting policies,
financial reporting and
disclosure, internal
control framework
and audit.
See page 194 for
further information.
Risk management and
compliance frameworks,
risk appetite profile,
concentrations and trends.
See page 200 for
further information.
Remuneration policies and
practices, remuneration of
Chair, CEO, Executive
Directors, ExCo and other
senior management
See page 208 for further
information.
Board composition,
committee membership,
corporate governance
policies and practices, and
succession planning.
See page 204 for
further information.
Support the Group with its
sustainable business strategy.
which includes the
development and
safeguarding of the bank’s
social licence to operate.
See pages 37 and 185
for further information.
retire in March 2020, a search process was
undertaken to identify the next Deputy
Chair, Senior Independent Director and
Chair Designate. The Group is in the
process of identifying the next Chair and an
announcement will be made in due course.
Following a review of our current Board
composition, Mr Brendan McDonagh was
appointed as Deputy Chair and Mr Tom
Foley as Senior Independent Director.
The Nomination & Corporate Governance
Committee, on behalf of the Board, has
identified a number of key skills required of
its directors. In considering its succession
planning, the Committee refers to that skills
matrix to ensure the Board is comprised of
a strong cross-section of experience and
knowledge and an appropriate balance of
skills. The key skills comprise, but are not
limited to, retail and commercial banking,
risk management, strategy development,
stakeholder management, digital focus,
customer focus, culture, leadership and
governance. In light of a review of the
skills matrix, two additional Non-Executive
Director searches are underway to ensure
the Board skills and experience remain at
their current high standard.
Led by the Chief Executive Officer in
conjunction with our Human Resources
function, succession planning at Executive
level was also a key focus in 2019. A
number of new appointments were made
to our Executive Committee as detailed
in the biography section of this Annual
Financial Report on pages 46 to 47.
Moreover, external mapping of role profiles
and identification of potential successors in
comparable industry roles was completed
for a number of Executive Committee
roles. As a result, the succession plan is
well positioned to ensure the strength of
leadership of the Group going forward.
Diversity is an important factor in
succession planning both at Board and
Executive level. Positively, it has resulted in
both the Board and Executive Committee
reaching the highest levels of gender
DIVERSITY IS AN IMPORTANT
FACTOR IN SUCCESSION PLANNING –

Annual Review
Governance in AIB
AIB NON-EXECUTIVE DIRECTORS
BOARD TENURE
0-2 years: 5
2-4 years: 3
4-6 years: 1
6-8 years: 1
balance in the Group’s history. To ensure
consistent oversight, diversity in gender at
management level was included as part of
the 2019 balanced scorecard delivered to
the Board on a quarterly basis.
Culture development
The current culture across the Group and
its cultural ambitions were front and centre
of the Board’s mind in 2019. The Board
is committed to creating and nurturing
the right culture in AIB in order to fulfill
our purpose and achieve our strategic
objectives.
The Board were fully engaged in the
culture programme in 2019, dedicating
significant agenda time for discussion,
debate and providing overall direction
to the development of the programme.
The Board attended a session as part of a
deep dive on the topic of culture, where
the Board was briefed, inter alia, on the
intrinsic links between culture and strategy
and the development of cultural ambitions.
Following this session, consideration of the
topic continued through an open forum
discussion between the Board, Executive
Committee, and staff representatives from
across the Group who shared their direct
and personal views of, and experiences in,
the Group to date.
It was acknowledged that a long-term
programme was needed to enhance
the Group’s reputation and culture and
’prove by doing’ to rebuild trust with our
customers and wider society. The Board’s
ambition, and that of the Executive
Committee, is to be the leader on culture
across the industry. The Chairman noted
that, while enhancing the culture and
reputation of the Group was a lengthy and
challenging journey, commitment levels are
high and the results would be immense.
As such, the Culture Evolution Programme
was set up with a view to creating a multi-
year programme of activity to enhance the
culture in AIB. In September, employees
were invited to take part in live ‘Culture
Conversations’, the results of which
provided a solid foundation for the Board
to formulate AIB’s cultural ambition.
Through the work on cultural evolution,
the Board aimed to dissect and truly
understand the issues emerging from
employees, agree tangible actions for
execution and assess progress. The
GENDER DIVERSITY
Female: 5
Male: 5
AGE
34  Annual Review Governance in AIB
Board took part in a number of ‘Out
and Abouts’ where they met with, and
received feedback from employees across
the business in both office and branch
environments.
2020-2022 strategy development
2019 saw the conclusion of our 2017-19
strategy and the development of the
2020-22 strategic plan which was robustly
reviewed and challenged at the Board and
Executive Committee offsite in November
and formally approved in early 2020.
Prior to that, the Board reviewed and
challenged the strategic plans at various
points throughout the year as detailed
below. Further details of the 2020-22
strategic plan are contained in the “Our
Strategy” section earlier in this Annual
Financial Report.
Brexit
Whilst the likely outcome and impact
of Brexit was unknown for much of the
year, the Board requested that an update
be provided at regular intervals, with as
much time being devoted by the Board as
necessary.
A Brexit Steering Group was set up and
provided regular updates directly to the
Board, including: an assessment of the
macroeconomic environment; an update
on the approval and withdrawal process
as relevant; and an assessment of the
impact on key UK and Ireland Brexit
Economic Indicators. Such indicators
included the EUR/GBP exchange rate, the
Purchasing Managers Index, retail sales,
the unemployment rate and tax receipts.
To further assure themselves of the
Group’s readiness, the Board requested
a deep dive as to principles to be applied
and actions which would be taken to
manage the business risk in a hard Brexit
environment. As a result of same, operating
principles were established which included
a playbook for a vast array of individual
scenarios that could potentially occur in
a hard Brexit. The Board also endorsed
additional governance steps to bolster
management’s ability to support at-risk
customers and to ensure credit was
provided in a timely manner to sustainable
customers.
The Board received updates on the
internal operational contingency plan
and the capability of the Group to serve
our customers post any Brexit-associated
deadlines. Through such updates from
the Brexit Steering Group, the Board was
satisfied that all possible contingency
actions had been taken to ensure
customers faced minimal disruption and
the sustainability of the business could
be maintained through a wide range of
potential outcomes. Further information on
Brexit and its presence as a key theme on
our risk agenda is detailed on page 77.
February 2019
Strategy framework review
and approval
March 2019
Ambition framework review
and approval
April 2019
External environment review
July 2019
Strategy update (ambition, strategic
alignment, plan for November offsite)
November 2019
Strategy offsite to include ambition
and strategy, strategic calls, targeted
outcomes, financial plan, risk review,
strategy into action
December 2019
2020-22 group strategy
and financial plan review
January/February 2020
Group strategy and financial
plan approval


Annual Review
Governance in AIB
ENGAGING WITH
OUR STAKEHOLDERS
The Board regularly engages with each of AIB’s five stakeholder groups in order to
understand their views and take them into consideration when making decisions.
GOVERNANCE IN AIB
WHO WHY HOW
Our purpose is to back our
customers to achieve their
dreams and ambitions.
Our 2.8 million customer
relationships are managed by
dedicated teams across Retail
Banking, CIB and AIB UK.
One size does not fit all, however,
we acknowledge that all our
customers desire simple and
efficient services and interactions
across all our channels. To this end,
the Board strives to make decisions
that foster that simple and efficient
approach.
Focus on the Customer First pillar
in decision-making. Minimise and
effectively limit conduct related issues
to quickly resolve customer impact.
Regular Board oversight of Net
Promoter Scores, complaint metrics,
RepTrak metrics and, importantly in
2019, potential Brexit impacts.
Including the Central Bank
of Ireland (CBI), European
Central Bank (ECB), European
Commission, Prudential
Regulation Authority (PRA),
Financial Conduct Authority
(FCA), Federal Reserve Bank
of New York (New York Fed).
The Board strives to ensure financial
stability, consumer protection and
market integrity across the banking
industries in the regions we operate.
Additionally, strong engagement
with our regulators ensures the
Group is well positioned to comply
with regulation.
Ongoing supervisory engagement,
including on-site inspections on
specific items, thematic reviews
and regular engagements with the
Board and Senior Executives.
We have a diversified
range of institutional and
individual investors. The
Irish State is a significant
shareholder of the Group.
In order to ensure maximum
potential investor return, the Board
aims to lead the Group in meeting
its financial and non-financial
targets, while fostering a culture of
cost awareness and accountability
to ensure maximum potential
investor return.
Ensuring continued compliance with
relevant legislation, regulations etc.
Meeting our shareholders at our
AGM. Information on our website.
Regular updates on our investor
relations programme including
investor engagement and feedback.
Board training session on market
views of an institutional investor.
As at 31 December 2019,
AIB employed 9,520 people
across Ireland, the United
Kingdom and the United
States of America.
The Board is acutely mindful that
our people are the key resource and
enabler for the Group to deliver its
overall ambitions. Ensuring we have
an engaged workforce of strong
calibre and reputation is critical to
delivery for all of our stakeholders,
as well as ensuring our employees
are satisfied in work.
Internal structures, on which the
Board receive updates include:
Speak Up, ongoing engagement with
Financial Services Union, Workplace
Options, Employee Resource Groups,
iConnect engagement, Culture
Evolution Programme. Meetings of
the Board and employees, formally
by invitation to Board events and
informally in ‘Out and Abouts’.
Society as a whole permeates
all of our stakeholder
considerations and also
forms a large part of our
sustainability agenda.
In our general business practice,
targeted lending activities and
societal endeavours, we strive
to make a meaningful contribution
to the sustainability of the
communities in which we operate.
Focus on the Group sustainability
agenda includes the work of the
Sustainable Business Advisory
Committee (SBAC) and the production
of the Sustainability Report. Addition
of Sustainable Communities as a fifth
strategic pillar.
OUR
CUSTOMERS
OUR
EMPLOYEES
SOCIETY
REGULATORS
OUR
INVESTORS
The approach of the Board to stakeholder engagement aligns with the UK Corporate Governance Code 2018,
which applies to the Group by virtue of its premium listing on the London Stock Exchange. Whilst not directly
applicable to the Group due to it being a provision of UK company law, the Board welcomes the fresh stance
on stakeholder engagement introduced in 2019 under section 172 of the UK Companies Act 2006. The Board
acknowledges the benefits of considering the spirit intended by such provisions as part of its decision making
process. Further detail on how the Board engages with its stakeholders is set out below.
36  Annual Review Governance in AIB
EXAMPLES OF
STAKEHOLDER
CONSIDERATION
MODERN SLAVERYACT
In December 2019 the Board reviewed the Modern
Slavery Statement as required under the UK Modern
Slavery Act 2015, which applies to the Group as it
carries on business in the UK. The Board considered
the requirements of the Act to ensure organisations do
not put profit above the welfare and wellbeing of its
employees and those working on its behalf. The Board
considered that the Statement would also provide
customers with greater confidence in the services
provided by AIB. The Act requires transparency as to how
the Group mitigates Modern Slavery risk and aims to
protect workers from exploitation.
CORPORATE DEVELOPMENT
STRATEGY DEVELOPMENT
The Board considered the acquisition of Payzone by way of a joint venture
with First Data Corporation at length and concluded that the proposed
acquisition was consistent with the Group’s strategy to evolve our customer
service and product proposition in our core market and enhance our fintech
capability. Considerations of investor return, improved offerings to customers
and impact on employees of both AIB Group and Payzone were all included
in Board discussions. Additionally, the European Commission, being the
regulator for such transactions, was consulted as appropriate.
Strategy 2020-22 was subject to a comprehensive review of the Group’s
activities and the material risks facing the Group. The Board considered all
elements of the strategy in terms of the level of impact on each stakeholder,
whether that impact may be positive or negative and the risk mitigants to
each. As part of our strategy consideration, it was agreed that the proposed
strategy broadly supported the considerations of our key stakeholders. Further
details on the Board’s role in strategy development is detailed on page 35.
SUSTAINABLE COMMUNITIES
The Sustainable Business Advisory Committee (SBAC) supports the Board
in overseeing the Group’s sustainability strategy. Through the year, SBAC
received updates and oversaw many sustainable initiatives such as the Green
Bond Framework which would allow AIB to issue green bonds and meet the
demands of investors who are increasingly seeking to invest in green bonds.
Additionally SBAC considered the Group becoming Founding Signatory of the
UNEP FI Principles for Responsible Banking at the UN General Assembly and
a supporter of the Task Force on Climate-related Financial Disclosures (TCFD)
which cumulatively position the Group strongly to deliver on its aims of long-
term sustainable growth for the benefit of our stakeholders.
CULTURALAMBITION
2019 saw the Board develop the cultural ambition for
the organisation and it is committed to playing a leading
role in enhancing culture across the industry. In addition
to the internal steps detailed on page 34, in 2019, the
Board supported the set-up of the Irish Banking Culture
Board (IBCB). The important work conducted by the IBCB,
which the Group supports, should drive better outcomes
for our customers, employees and society as a whole,
rebuilding trust and strengthening our reputation for
high standards of business conduct and a positive culture
across the Group. Robert Mulhall, member of the Executive
Committee, was designated as Executive Sponsor for
Culture across the Group and is a member of the IBCB
Board. In addition, the Group seconded a number of
individuals to assist the IBCB in its set-up phase.
IMPACTED
STAKEHOLDERS:
IMPACTED
STAKEHOLDERS:
IMPACTED
STAKEHOLDERS:
IMPACTED
STAKEHOLDERS:
IMPACTED
STAKEHOLDERS:
1
2
3
4
5
6
37

Annual Review
Governance in AIB
RISK SUMMARY
AIB implements a strong risk
management approach to protect
our business. We identify the principal
risks and uncertainties including the
key external risk drivers that could
adversely impact our customers,
our business and the delivery of our
strategic objectives. Risk is defined
as any event that could damage
the core earnings capacity of the
Group, increase cash flow volatility,
reduce capital, threaten business
reputation or viability, result in breach
of regulatory or legal obligations
or give rise to poor customer
outcomes. A cornerstone of the risk
management approach is the Three
Lines of Defence model. The First
Line of Defence owns the risks and is
responsible for identifying, reporting
and managing them. They are also
responsible for ensuring that the right
controls are in place to mitigate the
risks. The Second Line of Defence
sets the frameworks and policies for
managing specific risk areas, provides
advice and guidance in relation to the
risk and provides independent review
and challenge and reporting on AIB’s
risk profile. The Third Line of Defence
is the Group Internal Audit function
which provides independent and
objective assurance of the adequacy of
the design and operational effectiveness
of the risk and control environment.
The design and implementation of
the Three Lines of Defence model is
underpinned by eight principles that
define the key risk accountabilities.
This is set out in the chart below.
Risk governance structure
The Board has ultimate responsibility
for the governance of risk-taking
activity at AIB. This is achieved
through a risk governance structure
designed to facilitate the reporting,
evaluation and escalation of risk
concerns from business areas and
control functions upwards to the
Board. The Board is assisted in its risk
governance responsibilities by the
delegated sub-committees of the
Board and the Executive Committee:
• Board Risk Committee;
• Board Audit Committee;
• Group Risk Committee;
• Asset & Liability Committee.
HOWWE
MANAGE RISK
We use effective risk management and control, aligned to
our strategy, to guide and protect AIB.
THREE LINES OF DEFENCE MODEL AND PRINCIPLES
Frontline, operational and
support activities
FIRST LINE OF DEFENCE
PRINCIPLES
SECOND LINE OF
DEFENCE PRINCIPLES
THIRD LINE OF
DEFENCE PRINCIPLE
Risk Group Internal Audit
Principle 2
Provide risk ownership and oversight
responsibilities
Principle 3
Identifies, records, reports and
manages the risks
Principle 4
Ensures the right controls and
assessments are in place to mitigate
the risks
Principle 1
Sets the frameworks and policies
for managing specific risk types
Principle 5
Provides advice and guidance
in relation to the risk
Principle 6
Provides independent oversight and
reporting on the Group’s risk profile
Principle 7
Provides challenge to the effectiveness
of the risk management and control
processes
Principle 8
Provides independent
and objective assurance
of the adequacy of the
design and operational
effectiveness of the risks
and control environment
See the AIB Group business structure on page 6.
38  Annual Review Risk Summary
• AIB may be adversely affected by cyber attacks. The
volume and sophistication of cyber attacks continues
to increase, as online transactions become more
prevalent
• A successful attack would result in a monetary and/
or reputational impact. See section 1.6.3 (page 78) for
more detail on Cyber risk.
CYBER
TREND
IN 2019
Linking risk management to strategy
The Group’s approach to risk
management directly supports the
achievement of the Group’s purpose
and strategic objectives. In the first
instance the strategic objectives are
established and approved by the
Board. A Material Risk Assessment
(MRA) is performed annually to
identify the principal risks to which the
Group is exposed. The Board then sets
out the risk appetite for the Group to
ensure that the strategic objectives are
executed in line with the Board’s risk
appetite. The Risk Appetite Statement
is then cascaded to business
segments (Retail Banking, CIB and AIB
UK) and licenced subsidiaries. The Risk
Appetite Statement is a key part of
embedding risk culture and fostering
responsible risk-taking and risk
management behaviours throughout
the Group. Risk appetite limits are
monitored on an ongoing basis and
the Group’s compliance with limits is
reported to the Board on a monthly
basis, as well as the subsidiary Boards
on a quarterly basis, as part of Chief
Risk Officer (CRO) reporting. In each
of the Principal Risks, pages 40 to
43, a description is given as to how
the Principal Risk is managed, the
mitigating actions and the alignment
with the Group’s strategic pillars.
Top and emerging risk drivers in 2019
The CRO prepares a report for the
Group Risk Committee and Board
Risk Committee setting out the risk
profile of the Group and emerging risk
themes. The key themes considered
by the risk governance committees
during 2019 are outlined below.
These interact with the Principal
Risks to varying degrees. In the ‘Risk
Management’ section in this Report,
‘Individual risk types’, pages 79 to 170,
sets out the key risk drivers impacting
each Principal Risk.
• AIB may be adversely affected by
unexpected or complex changes in
regulation, accounting standards and
legislation. AIB may also be affected by
changes in tax requirements, including
changing interpretation by tax authorities
• A failure to meet regulatory requirements
could have a financial and/or reputational
impact. Embedding a robust and
sustainable risk culture is key to ongoing
compliance.
REGULATORYAND LEGAL CHANGE
FINANCIAL, MACROECONOMIC AND GEOPOLITICALVOLATILITY
• AIB may be adversely affected by changes
in the macroeconomic outlook, changes
in financial and credit markets, increasing
geopolitical tensions and changes in
expectations of central banks’ monetary
policies
• The continued global macroeconomic
uncertainty and the lower-for-longer
central bank interest rate policies
contribute to downward pressure on
credit quality and net interest income. See
1.6.1 (page 77) for further details on Brexit.
TREND IN 2019
Improving
Risk profile improved
during 2019
Stable
Risk profile remained
stable during 2019
Deteriorating
Risk profile deteriorated
during 2019
TREND
IN 2019
TREND
IN 2019
• AIB may be adversely affected by a change in
customer and market perceptions of the Group
• Changing perceptions could result in withdrawals
of customer deposits, an unwillingness of
customers to apply for credit and difficulty in
attracting and retaining the right talent, skills
and capabilities within the Group.
CHANGING EXTERNAL PERCEPTIONS OFAIB
TREND
IN 2019
PACE OF CHANGE IN COMPETITION, LABOUR MARKETS
AND CUSTOMER EXPECTATIONS
• AIB may be adversely affected by
the pace of change of industry best
practice, competitive landscape, labour
market including availability of skills,
demographics and/or societal behaviours
and expectations
• The rapidly changing environment
requires significant investment in order
for AIB to remain competitive, including
responding to competition from new
entrants (e.g. fintechs).
TREND
IN 2019
CLIMATE CHANGE
• AIB may be adversely affected through the
manifestation of physical risks (such as the impact on
property from weather-related events) and transition
risks (the financial risks as a result of the transition to
a low-carbon economy)
• Failure to manage these risks would result in either
financial and/or reputational impact from a lack of
adherence to sustainable principles. See section 1.6.2
(page 78) for more details on Climate risk.
TREND
IN 2019
1
2
3
4
5
6
39

Annual Review
Risk Summary
We manage the most significant risks which could
impact on achieving our strategic objectives.
Listed in alphabetical order
Business Model Risk
The risk of not achieving the Group’s
strategy or approved business plan,
either as a result of an inadequate
implementation plan, or failure to
execute on the strategy as a result
of an inability to secure the required
investment, or due to external factors.
Example
More intense price-based competition
from incumbent providers and/or new
entrants from the fintech sector.
Key mitigating
considerations and controls
• Annual Board review of strategy
• The Board receives regular
updates on performance against
strategic objectives via a quarterly
performance scorecard
• Comprehensive reports setting out
the current financial performance
against budget, multi-year financial
projections, capital plans and
economic updates
• A CRO report is produced monthly
and reviewed by the Board and
Group Risk Committees.
Alignment to strategic
priorities and pillars
• We achieve sustainable growth
by delivering long-term value to
customers and stakeholders, by
being efficient in our operations
and by pricing appropriately.
(Simple & Efficient)
• We create long-term shared
value in a sustainable way for our
customers, stakeholders and the
communities in which we live and
work. (Customer First)
• We conduct our business by putting
the customer first and doing the
right thing. (Customer First).
+ Read more: pages 168 to 169
RISK SUMMARY
OUR
PRINCIPAL
RISKS
Capital Adequacy Risk
Capital adequacy risk is the risk that
the Group does not maintain sufficient
capital to achieve our business strategy,
support our customers or to meet
regulatory capital requirements.
Example
A worsening macroeconomic
environment could lead to adverse
financial performance, which could
deplete capital resources and/or
increase capital requirements due to
a deterioration in customers’ credit
worthiness.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering key
regulatory and internal capital
requirements
• Comprehensive Internal Capital
Adequacy Assessment Process
(ICAAP) Framework and Capital
Adequacy Policy
• Regular forward-looking
assessment of capital adequacy
via annual ICAAP and quarterly
internal stress testing, which
considers a number of scenarios
including a base case, moderate
downside and severe but
plausible stress
• Monthly reporting of the Group’s
capital metrics to ALCo
• Capital contingency and recovery
planning activities.
Alignment to strategic
priorities and pillars
• We have sufficient quantity and
quality of capital to support
the Group in both normal and
stressed economic conditions and
to maintain an appropriate buffer
to minimum regulatory ratios and
to meet market and rating agency
expectations. (Risk & Capital).
+ Read more: page 154
Conduct Risk
The risk that inappropriate actions or
inactions by the Group cause poor and
unfair customer outcomes.
Example
Customer complaints outstanding without
proper investigation would lead to unfair
customer outcomes.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering
key dimensions of regulatory
compliance risk
• The Group has a Conduct Risk
Framework, which is embedded
in the organisation and provides
oversight at Executive and Board
level via the Group Conduct
Committee and the Group Product
and Proposition Committee
• A suite of policy standards that
clearly define expected standards
of behaviour including how we
lend responsibly and how we deal
with vulnerable customers
• Mandatory conduct-related
training required to be completed
by all staff.
Alignment to strategic
priorities and pillars
• We conduct our business in a fair
and transparent manner in line
with our purpose, values and
strategic ambition. (Customer First,
Talent & Culture)
• We ensure processes are in place
to minimise the systemic risk of
unfair customer outcomes arising
from inadequate product design,
sales and lifecycle processes or
market abuse. (Risk & Capital).
+ Read more: pages 166 to 167
40  Annual Review Risk Summary
Financial Risk
The uncertainty of returns attributable to
fluctuations in market factors. Where the
uncertainty is expressed as a potential
loss in earnings or value, it represents a
risk to the income and capital position of
the Group.
Example
Earnings are impacted by changes in
interest rates and/or market prices.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering key
dimensions of financial risk policies,
systems, controls and monitoring
• The Group substantially reduces
our market risk through hedging in
external markets
• Regular oversight and monitoring
by the Group’s Asset & Liability
Management Committee (ALCo)
of market risk positions and
exposures, including review of
hedging strategy.
Alignment to strategic
priorities and pillars
• We are exposed to financial
risks as a result of discretionary
and non-discretionary activities
including Credit Spread Risk, IRRBB
and Trading Book. These financial
risks are managed to limit income
volatility and their impact on
capital. (Risk & Capital, Simple
& Efficient).
+ Read more: pages 155 to 163
Funding and Liquidity Risk
The risk that the Group will not be
able to fund our assets and meet our
payment obligations as they fall due
without incurring unacceptable costs
or losses.
Example
A deterioration in either the Group’s
credit rating or a sudden and significant
withdrawal of customer deposits would
adversely impact the Group’s funding
and liquidity position.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering key
dimensions of funding and liquidity
risk
• Group funding and liquidity
strategy, policies, systems, controls
and monitoring
• Annual forward-looking Internal
Liquidity Adequacy Assessment
Process (ILAAP)
• ALCo reviews the Group’s
funding and liquidity risk position
and makes decisions on the
management of the Group’s assets
and liabilities
• Liquidity contingency and recovery
planning activities.
Alignment to strategic
priorities and pillars
• We ensure that our liquidity and
funding profile is managed to
deliver a sustainable supply of
funding for the Group’s activities
and that this profile exceeds Board
and regulatory requirements.
(Risk & Capital).
+ Read more: pages 145 to 153
Credit Risk
The risk that the Group will incur losses
as a result of a customer or counterparty
being unable or unwilling to repay a
credit exposure or commitment that it has
entered into.
Example
Changes in the economic environment
(for example Brexit uncertainty) could
impact profitability due to higher-than
-expected credit losses.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering the key
dimensions of credit risk
• The Group Credit Risk Framework
and Group Credit Risk Policy are
overarching Board-approved
documents which set out, at a high
level, the principles of how the Group
identifies, assesses, approves, monitors
and reports credit risk to ensure robust
credit risk management is in place
• 
The Group implements and operates
policies to govern the identification,
assessment, approval, monitoring and
reporting of credit risk
• Second line assurance to monitor
compliance with policies and limits
• A specialised recovery function
focuses on managing the majority
of criticised loans and deals with
customers in default, collection or
insolvency.
Alignment to strategic
priorities and pillars
• We build long-term lending
relationships with customers that
are resilient through the cycle.
(Customer First)
• Our core market is in Ireland.
(Simple & Efficient)
• We provide credit to high-quality
renewable energy and energy-
efficiency projects. (Sustainable
Communities).
+ Read more: pages 79 to 144

Annual Review
Risk Summary
Model Risk
The Group may incur a loss as a
consequence of decisions principally
based on the output of models
due to errors in the development,
implementation or use of such models.
Example
The consequences of inadequate
models include: inappropriate levels of
capital or impairments; inappropriate
credit or pricing decisions; and adverse
impacts on funding, liquidity and profits.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering key
dimensions of model risk
• A Group Model Risk Framework
and supporting policies, including
model validation
• Senior Executive committees
monitor and maintain oversight of
the performance of the Group’s
models.
Alignment to strategic
priorities and pillars
• Models should be logical and
efficient with clearly understood
and interpreted aims. (Simple &
Efficient)
• We only use appropriately
designed, deployed and
maintained models for
decision-making. (Risk & Capital)
• We develop and maintain highly
competent and skilled teams,
supported by appropriate data
governance structures and
frameworks. (Talent & Culture).
+ Read more: page 169 to 170
Operational Risk
The risk arising from inadequate or failed
internal processes, people and systems, or
from external events; including the potential
for loss arising from the uncertainty of legal
proceedings and potential legal proceedings.
Example
The dynamic threat posed by cyber risk to the
confidentiality and integrity of electronic data
or the availability of systems. The Group has
a low risk appetite for loss of confidentiality,
integrity or availability of our information assets
as a result of cyber events.
Key mitigating
considerations and controls
• Board approved and monitored risk
appetite limits covering key dimensions
of operational risk
• Operational Risk Framework and suite
of policies, setting out principles, roles
and responsibilities and governance
arrangements for the management of
operational risk across the Group
• The Group continues to invest
significantly in technology, including
cyber deterrents and defences with
controls to predict, prevent, detect and
respond to cyber risk
• The Group operates a risk and control
assessment of our processes and people
to deliver objectives and keep customers
safe.
Alignment to strategic
priorities and pillars
• We design and manage controls,
processes and systems according
to our risk frameworks and policies.
(Risk & Capital)
• We ensure the management of critical
IT delivers exemplary levels of customer
access to our services as and when they
need it. (Customer First)
• We ensure that we have the right
talent, skills and capabilities within the
organisation to support accountable,
collaborative and trusted ways of
working. (Talent & Culture)
• We ensure that “Green” products are
appropriately designed. (Sustainable
Communities).
+ Read more: pages 163 to 164
42  Annual Review Risk Summary
People and Culture Risk
The risk to achieving the Group’s
strategic objectives as a result of an
inability to recruit, retain or develop
people, or as a result of behaviours
associated with low levels of
employee engagement.
Example
Inability to attract or retain staff
with key skills could impact the
achievement of business objectives.
Key mitigating
considerations and controls.
• Board approved and monitored
risk appetite limits covering
key dimensions of people and
culture risk
• Revised career model to
empower our people to drive
their career journeys and
champion AIB’s purpose
• Focused action to attract,
retain and develop high-calibre
people
• Senior leader development
programmes are in place.
Alignment to strategic
priorities and pillars
• We retain and recruit talented
staff to support our future
strategic plans. (Talent & Culture)
• Our values and Code of
Conduct contain clear
statements of the behaviours
we expect from everyone in AIB
and we place great emphasis
on the integrity of staff and
accountability for both in-action
and actions taken. (Customer
First).
+ Read more: page 167 to 168
Regulatory Compliance Risk
The risk of legal or regulatory sanctions
or failure to protect market integrity
could result in material financial loss or
reputational damage. Failure to comply
with laws, regulations, or rules, for
example Anti-Money Laundering,
Countering Terrorist Financing and
modern slavery, as well as self regulatory
standards and codes of conduct, could
result in regulatory sanction.
Example
Failure to deliver key regulatory changes
or to comply with ongoing requirements
could result in a regulatory sanction or
fine.
Key mitigating
considerations and controls
• Board approved and monitored
risk appetite limits covering
key dimensions of regulatory
compliance risk
• Training is provided to staff on the
Group’s frameworks and policies
for regulatory compliance and
reporting
• Business policies, procedures,
systems and training in place
to help ensure compliance with
relevant regulatory requirements
• Identification, assessment and
monitoring of new or changing
laws and regulations, including
collaboration with industry bodies.
Alignment to strategic
priorities and pillars
• We have no appetite for deliberate
or systemic breaches of internal
policies, standards and compliance
obligations or the untimely
reporting and resolution of such
incidents. (Customer First, Risk &
Capital)
• We do not have relationships with,
or knowingly process transactions
involving, companies or individuals
operating from/residing in an
Extreme High Risk Country.
(Risk & Capital).
+ Read more: page 165 to 166
1

Annual Review
Risk Summary
CAROLAN
LENNON
Independent
Non-Executive Director
27 October 2016
• Board Risk
• Sustainable Business
Advisory.
Prior to her current role of
CEO of Eir, Carolan held a
variety of executive roles
in Eir Limited, including
Managing Director of
Open Eir, Acting Managing
Director Consumer and
Chief Commercial Officer.
Prior to joining Eir, she held
a number of senior roles in
Vodafone Ireland, including
Consumer Director and
Marketing Director. Carolan
is a former Non-Executive
Director of the Dublin
Institute of Technology
Foundation and the Irish
Management Institute.
Chief Executive Officer of Eir
Sits on the Council of
Patrons for Special Olympics
Ireland
OUR BOARD
OFDIRECTORS
RICHARD
PYM
Non-Executive Chairman
Independent on
appointment
NATIONALITY
DATE OF APPOINTMENT
COMMITTEE MEMBERSHIP (as at 31 December 2019)
EXPERTISE
British
13 October 2014:
Chairman designate
1 December 2014: Chairman
• Remuneration
• Nomination & Corporate
Governance (Chair).
Richard is a Chartered
Accountant with extensive
experience in financial
services. He is a former
Chairman of UK Asset
Resolution Limited, Nordax
Bank AB (publ), The
Co-operative Bank plc,
Brighthouse Group plc and
Halfords Group plc. He is
a former Non-Executive
Director of The British Land
Company plc, Old Mutual
plc and Selfridges plc.
Richard was appointed as
Chairman in 2014. In 2019,
Richard announced his
intention to step down as
Chairman of AIB Group in
March 2020.
Irish
KEY EXTERNAL APPOINTMENTS
None
SANDY KINNEY
PRITCHARD
Independent
Non-Executive Director
Irish
22 March 2019
• Board Audit (Chair)
• Board Risk.
Sandy is a University
College Dublin graduate,
with a distinguished
career across the financial
services industry. She is an
accountant who previously
was a senior partner at
PricewaterhouseCoopers
LLP and has held a
number of Non-Executive
Directorship roles,
including at Irish Life &
Permanent Plc, Skipton
Building Society, the FSCS,
TSB Bank Plc and MBNA
Ltd.
Non-Executive Director and
Chair of Audit Committee of
Credit Suisse (UK) LTD
Non-Executive Chair of the
Board of London & Country
Mortgages Ltd
BRENDAN
MCDONAGH
Independent Non-Executive
Director and Deputy Chair
27 October 2016
24 October 2019:
Deputy Chair
• Board Risk (Chair)
• Board Audit
• Remuneration
• Nomination & Corporate
Governance.
Brendan started his
banking career with HSBC
in 1979, working across
Asia, Europe and North
America, where he held
various roles such as
Group Managing Director
for HSBC Holdings Inc,
membership of the HSBC
Group Management
Board and CEO of
HSBC North America
Holdings Inc. Brendan
is a former Director of
Ireland’s National Treasury
Management Agency.
He was previously the
Executive Chairman of
Bank of N.T. Butterfield &
Son Limited.
Non-Executive Director and
Chair of Audit Committee of
UK Asset Resolution Limited
Chair of the Trinity Business
School Advisory Board
Serves on the Board of
The Ireland Funds, Ireland
Chapter
Chairman, PEAL Investment
Partners Limited
Irish
BASIL
GEOGHEGAN
Independent
Non-Executive Director
4 September 2019
• Board Risk
• Board Audit.
Basil is a partner in
PJT Partners, London.
Previously Basil was a
Managing Director at
Goldman Sachs, Deutsche
Bank and Citigroup in
London and New York. He
has broad M&A, corporate
finance and strategic
advisory experience in
the US, UK, Ireland and
internationally. He qualified
as a solicitor with Slaughter
and May. Basil is Chairman
of daa plc and Patron of
the Ireland Fund of Great
Britain. He holds an LLB
from Trinity College, Dublin
and an LLM from European
University Institute.
Chairman, daa plc
Partner, PJT Partners
Patron of IFGB (Ireland Fund
of Great Britain)
Irish
TOM
FOLEY
Senior Independent Non-
Executive Director
13 September 2012
12 October 2019:
Senior Independent Director
• Board Audit
• Nomination & Corporate
Governance.
Tom qualified as a
Chartered Accountant with
PricewaterhouseCoopers.
He is a former Executive
Director of KBC Bank
Ireland and held a variety
of senior management
and board positions with
KBC. During the financial
crisis, Tom was a member
of the Nyberg Commission
of Investigation into the
Banking Sector and the
Department of Finance
Expert Group on Mortgage
Arrears and Personal Debt.
Non-Executive Director,
Intesa Sanpaolo Life d.a.c.
Non-Executive Director,
GCM Grosvenor Alternative
Funds Master ICAV GCM
and Grosvenor Alternative
Funds ICAV
Irish
44  Annual Review Board of Directors
Irish
ANN
O’BRIEN
Independent Non-Executive
Director
Nominee of the Minister
for Finance under the
Relationship Framework in
respect of the relationship
between the Minister and
AIB Group
25 April 2019
• Remuneration
• Sustainable Business
Advisory.
Ann has over 30 years’
experience in the financial
services industry. A
graduate of both University
College Dublin and Trinity
College Dublin, for the
past 30 years, Ann has led
complex management
consulting engagements
at many of the world’s
largest global banking and
securities organisations.
Her most recent role was
as a Principal with Deloitte
in New York where she was
based for 10 years.
None
Irish
HELEN
NORMOYLE
Independent
Non-Executive Director
17 December 2015
• Sustainable Business
Advisory (Chair).
Helen is currently
Marketing Director of
Boots UK and Ireland. She
is also Chair and Director of
the Boots Charitable Trust.
Helen started her career
working for Infratest+GfK,
based in Germany. Helen
moved to Motorola, as
Director of Marketing and
then Director of Global
Consumer Insights and
Product Marketing and
thereafter to Ofcom
as Director of Market
Research. Helen also
held the roles of Chief
Marketing Officer at
Countrywide, Chief
Marketing Officer at DFS
and Director of Marketing
and Audiences at the BBC.
Marketing Director, Boots
UK and Ireland
ELAINE
MACLEAN
Independent
Non-Executive Director
4 September 2019
• Remuneration (Chair)
• Nomination & Corporate
Governance.
Elaine is a highly
experienced human
resources director
whose career began in
retail, working in human
resources roles at Harrods
and Windsmoor before
joining the Arcadia Group
as Retail Operations
Director and HR Director.
Since then, Elaine has
enjoyed a very successful
senior HR leadership
career culminating in her
appointment as Group
Human Resources Director
for Legal and General plc
in 2006. Elaine holds an
MA in English Literature
and Psychology from the
University of Glasgow.
None
British
COLIN
HUNT
Chief Executive Officer
TOMÁS
O’MIDHEACH
Chief Operating
Officer and
Deputy Chief Executive
Officer
8 March 2019 13 March 2019
None None
In March 2019, Colin
was appointed Chief
Executive Officer. He
joined AIB in August 2016
as Managing Director,
Wholesale, Institutional
& Corporate Banking.
Prior to joining AIB, he
was Managing Director
at Macquarie Capital in
Ireland. Previously, he
was a Policy Adviser at the
Departments of Transport
and Finance, Research
Director at Goodbody
Stockbrokers, Head of
Trading Research at Bank
of Ireland Group Treasury
and a country risk analyst
at NatWest. He has a Phd
in Economics from Trinity
College Dublin.
Serves on the Board
of The Ireland Funds,
Ireland Chapter
None
Irish Irish
NATIONALITY
DATE OF APPOINTMENT
COMMITTEE MEMBERSHIP (as at 31 December 2019)
EXPERTISE
KEY EXTERNAL APPOINTMENTS
• Board Risk
• Sustainable Business
Advisory.
RAJ
SINGH
Independent Non-Executive
Director
Nominee of the Minister
for Finance under the
Relationship Framework in
respect of the relationship
between the Minister and
AIB Group
25 April 2019
Raj has 34 years’ business,
risk and governance
experience gained in
large complex financial
services organisations.
Raj previously served as a
non-executive director of
a national credit bureau
and two publicly traded
financial institutions in
addition to serving on
the Boards of many
of the major banking,
insurance, reinsurance
and asset management
subsidiaries of the firms
where he has worked.
He is currently the Chief
Risk Officer and Executive
Committee member of
EFG International, a Swiss
private banking group.
Chief Risk Officer of EFG
International
American
Tomás has 25 years’
experience in the
financial services industry.
He spent 11 years with
Citibank in the UK, Spain
& Dublin where he held
several senior positions
in Finance. He joined AIB
in June 2006 to lead a
finance operating model
transformation project
and has since held
a number of senior
executive positions
including Head of Direct
Channels & Analytics
and Chief Digital Officer.
In 2019 Tomás was
appointed Deputy
Chief Executive Officer
and Executive Director.


Annual Review
Board of Directors
DONAL
GALVIN
Chief Financial
Officer
Donal joined AIB as Group
Treasurer in September
2013 and was appointed
Chief Financial Officer in
March 2019. Donal has
worked in domestic and
international financial
markets over the last 20
years. He was Managing
Director in Mizuho
Securities Asia, the
investment banking arm
of Japanese bank Mizuho,
where he was responsible
for Asian Global Markets.
Before that, he was
Managing Director
in Dutch Rabobank,
managing its London and
Asian Global Financial
Markets business and
Treasurer of Rabobank
International.
ROBERT
MULHALL
Managing Director
Designate of AIB Group
(UK) plc
Robert was announced
as Managing Director
Designate for AIB Group
(UK) subject to regulatory
approval in November
2019, prior to which he
was the bank’s Managing
Director of Consumer
Banking. Robert’s career in
AIB has spanned almost 25
years, covering a variety of
roles up to senior executive
management level.
Outside of AIB, he held
the position of Managing
Director, Distribution &
Marketing Consulting,
and Financial Services
with Accenture in North
America from 2013 to 2015.
GERALDINE
CASEY
Chief People Officer
Geraldine joined AIB in
January 2020 from her
most recent role as director
of People, Communications
and IT at Tesco Ireland.
She was also a member
of the Executive Board
of Tesco for the past 5
years and has a wealth of
experience working closely
with internal and external
stakeholders. Geraldine has
led large teams through
Culture, Process and
Organisational change.
She is an accomplished
business leader, having run
Tesco’s retail operations
at national level before
taking up her current role.
Geraldine is a business
graduate from UCC.
CATHY
BRYCE
Managing
Director of Corporate,
Institutional & Business
Banking (CIB)
Cathy joined AIB from
her most recent role at
the National Treasury
Management Agency
where she held the
position of Director,
NewERA and NDFA. As
well as her time in AIB
previously, where she
gained over 20 years’
experience in a range
of capital markets and
commercial banking
roles, Cathy has worked
in investment banking
in London with Morgan
Stanley and ABN AMRO in
Dublin. She is a business
graduate of Trinity College
Dublin and holds an MBA
from INSEAD.
EXPERTISE
DEIRDRE
HANNIGAN
Chief Risk Officer
Deirdre joined AIB from
the National Treasury
Management Agency
where she was Chief Risk
Officer and chaired the
Executive Risk Committee.
She has held a number
of senior international
risk management roles
with GE Capital and
progressively senior roles
in Bank of Ireland, primarily
in Strategy and Risk
Management. Previous to
that, she worked in Retail
and Corporate Banking
with AIB and Rabobank.
In 2010, she was admitted
as a Chartered Director to
the Institute of Directors in
London.
HELEN
DOOLEY
Group General
Counsel
Helen has over 25 years’
experience in legal
financial services, having
worked in private practice
in the City of London, Hong
Kong and Dublin, before
taking up an in-house role
as Head of Legal in EBS
Building Society in 2005.
EBS became part of the
AIB Group in 2011 and
Helen was subsequently
appointed as AIB Group
General Counsel in 2012.
Over the last 15 years,
in addition to her legal
role, Helen has also held
the Company Secretary
position and managed
the regulatory compliance
and HR functions. Helen
is currently responsible
for the Legal & Corporate
Governance function.
EXECUTIVE
COMMITTEE
46  Annual Review Executive Committee
EXPERTISE
MARY
WHITELAW
Director of Corporate Affairs
& Strategy
Mary joined AIB in 2007
and her experience
has spanned the retail,
corporate and treasury
businesses. She has
held a number of senior
leadership roles across the
bank including Chief of
Staff, Head of Strategy &
Business Performance for
Corporate and Institutional
Banking and Head of
Corporate Treasury Sales.
Prior to joining AIB, Mary
trained as a Chartered
Accountant and Chartered
Tax Adviser with PwC. She
is a graduate of University
College Dublin.
JIM
O’KEEFFE
Managing Director
of Retail Banking
Jim has worked across
many aspects of Retail
Banking including
leadership roles in IT, Direct
Channels, Mortgages
and BZWBK (now
Santander) in Poland. He
was appointed Head of
Financial Solutions Group
in 2015 with responsibility
for developing a strategy
to support customers in
financial difficulty, which
resulted in a significant
reduction in NPEs. He
was Chief Customer &
Strategic Affairs Officer
from November 2018 to
November 2019, when he
was appointed Managing
Director of Retail Banking.
BRENDAN
O’CONNOR
Managing Director of AIB
Group (UK) plc
Brendan joined AIB in 1984
and has held a number of
senior roles throughout
the organisation, both
in New York and Dublin,
including Head of AIB
Global Treasury Services,
Head of Corporate Banking
International and Head
of AIB Business Banking.
He joined the Leadership
Team as Head of Financial
Solutions Group before
moving to his current role
as Managing Director
of AIB Group (UK) plc in
November 2015. He will
step down from this role in
September 2020.
Colin Hunt (CEO) and Tomas O’Midheach (COO)
are also on the Executive Committee.
Their biographies can be found on page 45.

Annual Review
Executive Committee
OUR
NON-FINANCIAL
STATEMENT
Our non-financial statement is intended to comply with the European
Union (Disclosure of Non-Financial and Diversity Information by certain
large undertakings and groups) Regulations 2017.
The tables below offer a guide to the relevant information on key non-financial matters, including
sections of both this report and our Detailed Sustainability Report 2019. Our Detailed Sustainability
Report 2019 is published in accordance with the Global Reporting Initiative (GRI) Standards.
1. 
These policies are not published externally.
POLICIES
Environmental policy
Energy policy
POLICIES
Code of Conduct
Diversity & Inclusion code, Board Diversity policy, policies
on leave and flexible working and volunteering policy1
Selection policy1
Grievance policy1
Speak Up policy
Disciplinary policy1
ENVIRONMENTAL
MATTERS
SOCIALAND
EMPLOYEE MATTERS
INFORMATION ABOUT OUR ACTIVITIES,
POLICY OUTCOMES AND APPROACH
TO RISK MANAGEMENT
2019 Highlights, pages 20 to 21
Engaging with our Stakeholders, pages 36 to 37
Focus on Sustainability, page 30
How we Manage Risk, pages 38 to 43
See also our Detailed Sustainability Report 2019:
• Responding, ‘Climate Action’
• Risk.
INFORMATION ABOUT OUR ACTIVITIES,
POLICY OUTCOMES AND APPROACH
TO RISK MANAGEMENT
Our Strategy 2019 Outcomes ‘Talent & Culture’ page 29
Engaging with our Stakeholders, pages 36 to 37
Focus on Sustainability, page 30
Report of the Board Audit Committee, page 194
How we Manage Risk, pages 38 to 43
See also our Detailed Sustainability Report 2019:
• Responding, ‘Culture’
• Risk.
48  Annual Review Our Non-Financial Statement
1. 
These policies are not published externally.
For a copy of our Detailed Sustainability Report 2019 and
more information, including policies we publish externally,
see: aib.ie/sustainability
KEY INFORMATION
DESCRIPTION OF OUR
BUSINESS MODEL
See inside front cover
PRINCIPAL RISKS RELATING TO: SEE INDIVIDUAL RISKS:
Environmental matters Credit risk, page 79 - 144, Operational risk page 163 - 164
Social and employee matters People and culture risk, page 167 - 168
Respect for human rights
People and culture risk, page 167 - 168, Operational risk page 163 - 164,
Regulatory compliance risk, page 165 - 166
Bribery and corruption
Regulatory compliance risk, page 165 - 166, Conduct risk, page 166 - 167
See also our Detailed Sustainability Report 2019:
• Risk.
POLICY DUE DILIGENCE Risk Management Framework, pages 72 - 78
NON-FINANCIAL KEY
PERFORMANCE INDICATORS
Environmental matters
Strategic Targets ‘Reduction in Emissions’ measure,
page 29
Social and employee matters
Strategic Targets ‘Diversity’ and ‘Engagement’ measures,
page 29
Respect for human rights
Mandatory requirement for annual completion of Code
of Conduct training: see our 2019 Detailed Sustainability
Report: Responding ‘Culture’, Code of Conduct
Bribery and corruption
Mandatory requirement for annual completion of Code
of Conduct training: see our Detailed Sustainability Report
2019: Responding, ‘Culture’, Code of Conduct
POLICIES
Code of Conduct
Data Protection policy1
Third Party Management Risk policy1
RESPECT FOR
HUMAN RIGHTS
POLICIES
Code of Conduct
Anti-Bribery & Corruption policy
Conflicts of Interests policy
Anti-Money Laundering & Countering the Financing
of Terrorism policy1
BRIBERYAND
CORRUPTION
INFORMATION ABOUT OUR ACTIVITIES,
POLICY OUTCOMES AND APPROACH
TO RISK MANAGEMENT
Engaging with our Stakeholders, pages 36 to 37
General Statement on Anti-Money Laundering and
Counter Terrorism Financing: https://group.aib.ie/legal
How we Manage Risk, pages 38 to 43
See also our Detailed Sustainability Report 2019:
• Responding, ‘Culture’
• Risk.
INFORMATION ABOUT OUR ACTIVITIES,
POLICY OUTCOMES AND APPROACH
TO RISK MANAGEMENT
Focus on Sustainability, page 30
Engaging with our Stakeholders, pages 36 to 37
Data Protection Notice: https://aib.ie/dataprotection
AIB Group plc Modern Slavery Statement 2019: https://
group.aib.ie/content/dam/aib/group/Docs/modern-slavery-
statement.pdf
How we Manage Risk, pages 38 to 43
See also our Detailed Sustainability Report 2019:
• Responding, ‘Culture’
• Risk.
Detailed Sustainability Report
for the financial year ended
31 December 2019
AIB Group plc
We pledge to
DO MORE.

Annual Review
Our Non-Financial Statement
OUR PURPOSE IS TO
BACK OUR CUSTOMERS
TO ACHIEVE THEIR DREAMS
AND AMBITIONS
Business review
Business review – 1. Operating and financial review
52  Business Review
Basis of presentation
The operating and financial review is prepared using IFRS and non-IFRS measures to analyse the Group’s performance, providing
comparability year on year. These performance measures are consistent with those presented to the Board and Executive Committee.
Non-IFRS measures include management performance measures which are considered Alternative Performance Measures (“APMs”).
APMs arise where the basis of calculation is derived from non-IFRS measures. A description of the Group’s APMs and their calculation
is set out on page 65. These measures should be considered in conjunction with IFRS measures as set out in the consolidated financial
statements from page 237. A reconciliation between the IFRS and management performance summary income statements is set out on
page 66.
Figures presented in the operating and financial review may be subject to rounding and thereby differ to the risk management section
and the consolidated financial statements.
In 2019, the Group implemented the requirements of IFRS 16 Leases for the first time. As a result, operating lease rental costs
(2018: € 63 million) in General and administrative expenses have been replaced by depreciation charges on right-of-use assets
(2019: € 58 million) reported in Depreciation, impairment and amortisation and interest expense on lease liabilities (2019: € 14 million)
reported in Net interest income. For further information on basis of presentation see note 1 (n) ‘Accounting policies: Leases’ and note 3
‘Transition to IFRS 16’ in the consolidated financial statements.
Basis of calculation
Percentages are calculated on exact numbers and therefore may differ from the percentages based on rounded numbers. The impact
of currency movements is calculated by comparing the results for the current reporting period to results for the comparative reporting
period retranslated at exchange rates for the current reporting period.
Performance has been adjusted to exclude items viewed as exceptional by management and which management view as distorting comparability of
performance year on year. The adjusted performance measure is considered an APM.
(2)
Other regulatory levies and charges are now presented as bank levies and regulatory fees (€ 17 million in 2018 previously included in operating expenses
has been re-presented as bank levies and regulatory fees).
53

Business Review 1	
Net interest income of
€ 2,076 million was broadly
stable compared to 2018.
Interest income
Interest income of € 2,334 million in 2019 was in line with
2018. An increase in interest income on loans and advances to
customers, driven by higher average customer loan volumes and
yields reflecting the positive impact of new lending, was offset
by lower income on investment securities due to maturities and
disposals of higher yielding securities and reinvestment at lower
yields.
Interest expense
Interest expense of € 258 million in 2019 increased by
€ 28 million compared to 2018. The lower cost of customer
accounts was offset by an increase in cost of MREL-related
issuances and interest expense on lease liabilities under
IFRS 16. Interest expense on deposits by banks in 2018 included
€ 16 million income received on TLTRO funding.
Net interest margin
2.37%
	
NIM decreased 10 bps to
2.37% in 2019 compared to
2.47% in 2018 due to higher average interest earning assets
driven by excess liquidity, and the higher cost of funding including
MREL-related costs.
Average interest earning assets of € 87.5 billion in 2019
increased by € 2.6 billion from 2018 primarily due to higher
volumes of investment securities and funds placed with banks.
This was driven by excess liquidity mainly due to higher customer
account balances and proceeds from MREL-related issuances
partly offset by a reduction in deposits by banks.
Average balance sheet Year ended Year ended
31 December 2019 31 December 2018

Business review – 1. Operating and financial review
56  Business Review
Net credit impairment (charge)/ writeback
(€16m)
There was a net credit impairment charge of € 16 million in 2019
comprising of a € 27 million charge on loans and advances
to customers (net re-measurement of ECL allowance charge
of € 117 million, offset by recoveries of amounts previously
written-off of € 90 million) and a € 11 million writeback on
off-balance sheet exposures. There was a net credit impairment
writeback of € 204 million in 2018. This included recoveries of
amounts previously written-off of € 120 million and writeback on
loans and advances to customers of € 89 million.
See page 287 of the consolidated financial statements for more
information.
Income tax charge
€135m
The income tax charge was € 135 million in 2019 compared to a
charge of € 155 million in 2018.
The effective rate was 27.1% in 2019 compared to 12.4% in
2018. The effective tax rate is influenced by the geographic
mix of profit streams which may be taxed at different rates.
In addition, the 2019 rate reflects a reduction of € 25 million in the
deferred tax asset recognised for UK tax losses, tax provided on
unrealised gains on certain equity investments and expenses not
deductible for tax purposes.
For further information see note 19 ‘Taxation’ of the consolidated
financial statements.
Total exceptional items
€592m
2019 2018
Total exceptional items € m € m
Property strategy 8 (81)
Restitution costs (416) (120)
Provision for regulatory fines (78) –
Termination benefits (48) (21)
(Loss)/ gain on disposal of loan portfolios (40) 147
Restructuring costs (18) (20)
Gain on transfer of financial instruments – 1
IFRS 9 costs – (51)
Loss on disposal of business activities – (22)
Total exceptional items (592) (167)
These gains/ costs were viewed as exceptional by management.
Property strategy relates to the continued implementation
of the Group property strategy including the acquisition and
development of various office locations across Dublin and the
exit from Bankcentre. 2019 includes gain on disposal of land at
Bankcentre of € 21 million.
Restitution costs include a provision of € 265 million for
additional redress that may be due to a group of customers
who had an option of a prevailing tracker rate. This follows a
recent preliminary decision issued by the Financial Services and
Pensions Ombudsman. Total potential impact is € 300 million,
including a provision of € 35 million for the impact of monetary
penalties from the Central Bank of Ireland included in Provision
for regulatory fines. See note 2 ‘Critical accounting judgements
and estimates’ in the consolidated financial statements for further
information.
Restitution costs also include a further provision for customer
redress and compensation in relation to the tracker mortgage
examination of € 12 million and other personal/ SME lending
customer redress of € 61 million, along with associated costs.
Provision for regulatory fines includes a provision of € 70 million
for the potential impact of monetary penalties arising from
the Central Bank of Ireland investigation in respect of tracker
mortgages.
Termination benefits relate to the cost of the voluntary severance
programme.
(Loss)/ gain on disposal of loan portfolios reflects the disposal
of loan portfolios, resulting in a net loss of € 40 million in
2019 (includes € 4 million net gain on loans and advances to
customers measured at FVTPL).
Restructuring costs include the impairment of assets in the year.
IFRS 9 costs in 2018 represent IFRS 9 implementation costs.
Loss on disposal of business activities in 2018 relates to the
recycling of cumulative unrealised foreign currency gains and
losses following repatriation of part of the capital of foreign
subsidiaries which had ceased trading.
57

Business Review 1

Business review – 1. Operating and financial review
60  Business Review
Segment reporting
Segment overview
Following changes to the Group’s operating model in 2019 performance is now managed and reported across Retail Banking,
Corporate, Institutional & Business Banking (“CIB”), AIB UK and Group segments. The allocation of costs by segment has been
amended to reflect the revised operating model. In addition the Group has revised the methodology used to allocate funding and liquidity
income/ charges by segment. Figures for the prior year have been restated on a comparative basis. Segment performance excludes
exceptional items.
Retail Banking
Retail Banking comprises Homes & Consumer, SME and Financial Solutions Group (“FSG”) in a single integrated segment, focused on
meeting the current, emerging and future needs of our personal and SME customers.
•	
Homes & Consumer is responsible for meeting the homes needs of customers in Ireland across the AIB, EBS and Haven brands
and delivering innovative and differentiated products, propositions and services to meet our customers’ everyday banking needs
through an extensive range of physical and digital channels. Our purpose is to achieve a seamless, transparent and simple
customer experience in all of our propositions across current accounts, personal lending, payments and credit cards, deposits,
insurance and wealth to maintain and grow our market leading position.
•	
SME is a leading provider of financial services to micro and small SMEs through our sector-led strategy and local expertise with
an extensive product and proposition offering across a number of channels. Our purpose is to help our customers create and build
sustainable businesses in their communities.
•	
FSG is a standalone dedicated workout unit to which the Group has migrated the management of the majority of its non-performing
exposures (“NPEs”), predominantly consisting of homes, consumer and SME products, with the objective of delivering the Group’s
NPE strategy to reduce NPEs in line with European norms.
Corporate, Institutional & Business Banking (“CIB”)
CIB provides institutional, corporate and business banking services to the Group’s larger customers and customers requiring specific
sector or product expertise. CIB’s relationship driven model serves customers through sector specialist teams including: corporate
banking; real estate finance; business banking and energy; climate action and infrastructure. In addition to traditional credit products,
CIB offers customers foreign exchange and interest rate risk management products, cash management products, trade finance,
mezzanine finance, structured and specialist finance, equity investments and corporate finance advisory services, as well as Private
Banking services and advice. CIB also has syndicated and international finance teams based in Dublin and in New York.
AIB UK
AIB UK offers retail and business banking services in two distinct markets, a sector-led corporate and commercial bank supporting
businesses in Great Britain (“Allied Irish Bank (GB)”), and a retail and business bank in Northern Ireland (“AIB (NI)”).
Group
Group comprises wholesale treasury activities and Group control and support functions. Treasury manages the Group’s liquidity and
funding positions and provides customer treasury services and economic research. The Group control and support functions include
Business & Customer Services, Risk, Group Internal Audit, Finance, Legal & Corporate Governance, Human Resources and Corporate
Affairs & Strategy.
Segment allocations
The segments’ performance statements include all income and directly related costs, excluding overheads which are managed centrally
and the costs of which are included in the Group segment. Funding and liquidity income/ charges are based on each segment’s funding
requirements and the Group’s funding cost profile, which is informed by wholesale and retail funding costs. Income attributable to capital
is allocated to segments based on each segment’s capital requirement.
Net interest income
€1,234m Net interest income has decreased by
€ 101 million compared to 2018 reflecting the impact on income
of the continued deleveraging of non-performing loans and the
increased cost of MREL-related debt funding. This was partially
offset by the positive impact of new lending growth.
Other income
€398m Other income increased by € 8 million compared
to 2018, with increased net fee and commission income partly
offset by lower income recognised on previously restructured
loans. Net fee and commission income includes € 2 million
following the completion of the acquisition of Payzone in
November 2019.
Total operating expenses
€923m Total operating expenses increased by
€ 48 million compared to 2018, driven by an increase in
depreciation as assets created under investment programmes
were commissioned to operational use and higher personnel
costs due to the impact of salary inflation and Payzone
acquisition.
Net credit impairment writeback
€17m There was a net credit impairment writeback of
€ 17 million in 2019 comprising of a € 10 million writeback on
loans and advances to customers and a € 7 million writeback
on off-balance sheet exposures. The € 10 million writeback
comprises recoveries of amounts previously written-off of
€ 87 million, offset by net re-measurement of ECL allowance
charge of € 77 million. There was a net credit impairment
writeback of € 247 million in 2018.

Other regulatory levies and charges are now presented as bank levies and regulatory fees (€ 1 million in 2018 previously included in operating expenses
has been represented as bank levies and regulatory fees).
Business review – 1. Operating and financial review

Alternative performance measures
The following is a list, together with a description, of APMs used in analysing the Group’s performance, provided in accordance with the
European Securities and Markets Authority (“ESMA”) guidelines.
Average rate Interest income/ expense for balance sheet categories divided by corresponding average balance.
Average balance Average balances for interest-earning assets are based on daily balances for all categories with
the exception of loans and advances to banks, which are based on a combination of daily/ monthly
balances. Average balances for interest-earning liabilities are based on a combination of daily/
monthly balances, with the exception of customer accounts which are based on daily balances.
Cost income ratio Total operating expenses excluding exceptional items, bank levies and regulatory fees divided by
total operating income excluding exceptional items.
Cost income ratio (IFRS basis) Total operating expenses divided by total operating income.
Exceptional items Performance measures have been adjusted to exclude items viewed as exceptional by
management and which management view as distorting comparability of performance year on year.
The adjusted performance measure is considered an APM. A reconciliation between the IFRS and
management performance summary income statements is set out on page 66. Exceptional items
include:
–	Property strategy relates to the implementation of the Group property strategy including the exit
from Bankcentre and the acquisition and development of various office locations across Dublin.
–	Restitution costs include provision for potential customer redress and compensation in relation
to the tracker mortgage examination, and other personal/ SME lending customer redress, along
with associated costs.
–	
Provision for regulatory fines includes a provision for the potential impact of monetary penalties
arising from the Central Bank of Ireland investigation in respect of tracker mortgages.
–	Termination benefits reflect costs associated with the reduction in employees arising from the
voluntary severance programme.
–	
(Loss)/ gain on disposal of loan portfolios includes net (loss)/ gain on disposals and net gain on
loans and advances to customers measured at FVTPL.
–	Restructuring costs include the impairment of assets in the year.
–	
IFRS 9 costs in 2018 represent IFRS 9 implementation costs.
–	
Loss on disposal of business activities in 2018 relates to the recycling of cumulative unrealised
foreign currency gains and losses following repatriation of part of the capital of foreign
subsidiaries which have ceased trading.
Loan to deposit ratio Net loans and advances to customers divided by customer accounts.
Net interest margin Net interest income divided by average interest-earning assets.
Non-performing exposures Non-performing exposures as defined by the European Banking Authority, include loans and
advances to customers (non-performing loans) and off-balance sheet commitments such as loan
commitments and financial guarantee contracts.
Non-performing loans cover ECL allowance on non-performing loans as a percentage of non-performing loans.
Non-performing loans ratio Non-performing loans as a percentage of total gross loans.
Return on Tangible Equity (RoTE) Details of the Group’s RoTE is set out in the Capital Section on page 70.
Management performance -
summary income statement
The following line items in the management performance summary income statement are
considered APMs:
•	
Other income
•	
Total operating income
•	
Personnel expenses
•	
General and administrative expenses
•	
Depreciation, impairment and amortisation
•	
Total operating expenses
•	
Bank levies and regulatory fees
•	
Operating profit before impairment losses
and exceptional items
•	
Operating profit before exceptional items
•	
Profit on disposal of property
•	
Profit before exceptional items
•	
Total exceptional items
Business review – 1. Operating and financial review
66  Business Review
Reconciliation between IFRS and management performance summary income statements
Performance has been adjusted to exclude items viewed as exceptional by management and which management view as distorting
comparability of performance year on year. The adjusted performance measure is considered an APM. A reconciliation of management
performance measures to the directly related IFRS measures, providing their impact in respect of specific line items and the overall
summary income statement, is set out below.
2019 2018
IFRS – summary income statement € m € m
Net interest income 2,076 2,100
Other income 579 774
Total operating income 2,655 2,874
Total operating expenses (2,181) (1,823)
Operating profit before impairment losses 474 1,051
Net credit impairment (charge)/ writeback (16) 204
Operating profit 458 1,255
Associated undertakings 20 12
Profit/ (loss) on disposals 21 (20)
Profit before taxation 499 1,247
Income tax charge (135) (155)
Profit for the year 364 1,092
Adjustments – between IFRS and management performance
Other income of which: exceptional items
Gain on transfer of financial instruments – (1)
Loss/ (gain) on disposal of loan portfolios 40 40 (147) (148)
Total operating expenses of which: bank levies and regulatory fees 104 99
of which: exceptional items
Restitution costs 416 120
Provision for regulatory fines 78 –
Termination benefits 48 21
Restructuring costs 18 20
Property strategy 13 81
IFRS 9 costs – 573 51 293
Profit/ (loss) on disposals of which: exceptional items
Property strategy (21) –
Loss on disposal of business activities – (21) 22 22
Management performance – summary income statement
Net interest income 2,076 2,100
Performance has been adjusted to exclude items viewed as exceptional by management and which management view as distorting comparability of
performance year on year. The adjusted performance measure is considered an APM.
67

Business Review 1
Business review – 2. Capital
Objectives*
The objectives of the Group’s capital management policy are to at all times comply with regulatory capital requirements and to ensure
that the Group has sufficient capital to cover the current and future risk inherent in its business and to support its future development.
Detail on the management of capital and capital adequacy risk can be found in ‘Risk management 2.3’ on page 154.
Regulatory capital and capital ratios


Business Review 1
2
3
4
5
6
Leverage ratio
Based on the full implementation of CRD IV, the fully loaded
leverage ratio, under the Delegated Act implemented in January
2015, was 9.7% at 31 December 2019 (10.1% at 31 December
2018).
Total leverage exposures (transitional) basis increased by
€ 7.0 billion in the year, mainly driven by increases in cash
and balances at central banks € 5.4 billion, property plant and
equipment € 0.5 billion, investment securities € 0.4 billion and
derivative financial instruments € 0.4 billion.
2019 2018
Leverage Ratio Metrics € m € m
Total Exposure (Transitional Basis) 101,126 94,086
Total Exposure (Fully Loaded) 99,548 92,467
Tier 1 Capital (Transitional Basis) 11,214 11,144
Tier 1 Capital (Fully Loaded) 9,660 9,309
Leverage Ratio (Transitional Basis) 11.1% 11.8%
Leverage Ratio (Fully Loaded) 9.7% 10.1%
Finalisation of Basel III
The Group continues to closely monitor regulatory
developments to ensure that the Group maintains a strong
capital position.
One of the key areas of regulatory development is the
finalisation of Basel III reforms, exact implementation
details will be confirmed once the finalised requirements are
transposed into law over the course of the next few years.
Initial assessments signal upward pressure on RWAs, mostly in
relation to operational risk.
In relation to RWA floors, the Group’s high RWA density make it
less likely to be severely impacted by their introduction.
Minimum Requirement for Own Funds and Eligible
Liabilities (“MREL”)
The Group continues to work towards its MREL target to ensure
that there is sufficient loss absorption and re-capitalisation
capability. The Group has completed issuances of € 4.3 billion
of the € 5 billion MREL eligible liabilities needed to meet its
MREL issuance target, of which € 2.6 billion was issued in
2019.
The Single Resolution Board (“SRB”) has set the Group’s MREL
target at 16.76% of Total Liabilities and Own Funds (“TLOF”)
(representing 28.22% of RWA at 31 December 2017) to be met
by 1 January 2021.
At 31 December 2019, the Group had an actual MREL ratio of
16.27% of Total Liabilities and Own Funds and 28.50% of RWA.
The Group estimates issuances of approximately € 1 billion per
annum to meet and maintain MREL targets.
The Group continues to monitor changes in MREL requirements
together with developments in the SRB’s MREL Policy which
has the potential to impact on the Group’s MREL target.
Dividends
The Board proposes to pay an ordinary dividend of € 0.08
cent per share totalling € 217 million from 2019 profits. This is
subject to shareholder approval at the Annual General Meeting
in April 2020.
Ratings
AIB Group plc and . are rated at
investment grade with all three rating agencies, Moody’s, Fitch
and Standard & Poor’s (S&P). Moody’s upgraded AIB Group plc
Tier 2 to Baa3/Investment Grade.
AIB Group plc
During 2019, Moody’s upgraded the credit rating by one notch
to Baa2, remaining on positive outlook. This upgrade reflects
the significant reduction in non-performing loans, strengthened
capital and stable funding profile. Fitch upgraded its credit rating
by one notch to BBB, stable outlook. This upgrade reflects the
significant improvement in asset quality over the last two years.
31 December 2019
Long term Ratings Moody’s S&P Fitch
Long term Baa2 BBB- BBB
Outlook Positive Stable Stable
Investment grade   
31 December 2018
Long term Ratings Moody’s S&P Fitch
Long term Baa3 BBB- BBB-
Outlook Positive Stable Positive
Investment grade   
.
Moody’s upgraded its rating by one notch to A2, with stable
outlook. This upgrade is driven by the significant improvements
in asset quality. Fitch upgraded its rating by two notches to
BBB+, with stable outlook. These upgrades reflect, inter alia,
AIB Group plc MREL issuances which, when downstreamed to
., create an additional buffer for senior
creditors.
31 December 2019
Long term Ratings Moody’s S&P Fitch
Long term A2 BBB+ BBB+
Outlook Stable Stable Stable
Investment grade   
31 December 2018
Long term Ratings Moody’s S&P Fitch
Long term A3 BBB+ BBB-
Outlook Positive Stable Positive
Investment grade   
RoTE is considered an Alternative Performance Measure.
As part of Strategy 2020-2022, the Group has now set a revised
financial target for RoTE of greater than 8% in the medium term
(i.e. over the period to 2022). In addition, the Group has also
revised its approach to the calculation of RoTE.
This is now calculated as follows: Profit after tax less AT1
coupons paid divided by the CET1 target capital on a fully
loaded basis.
This revised RoTE calculation is seen as more appropriate on
a go forward basis as it reflects the internal measurement for
the deployment of capital and is more in line with the calculation
commonly used by investors and analysts in the marketplace.
The Group has revised its CET1 target to greater than 14% in
2020 (previously 13%).
The pro forma RoTE under the revised methodology together
with a CET1 of 14% is 4.5% for 2019.
72  Risk Management
1. Introduction
Risk management is central to how the Group conducts its business and how it helps its customers to achieve their dreams and
ambitions while safeguarding the Group. The following sections outline the Risk Management Framework in place throughout 2019.
The risk management structure in the Group includes defined lines of authority and accountability, effective processes to identify,
manage, monitor and report the risks to which the Group is or might be exposed to. Clear responsibilities for risk are defined across the
Group through a three lines of defence model which ensures effective independent oversight and assurance in respect of key decisions.
The Group’s Risk Management Framework sets out how risk is managed and articulates the integrated approach to risk management
within the Group including its licenced subsidiaries. The Risk Management Framework supports the Group in achieving its strategic
ambitions by providing a clear, concise and comprehensive approach to the governance, implementation and embedding of risk
management practices. The Risk Management Framework is reviewed and approved annually by the Board.
1.1 
Risk management principles
The twelve principles below governing the design and operation
of effective risk management within the Group.
Strategy and appetite
1.	
The Board has ultimate responsibility for the governance
of all risk taking activity in the Group
2.	
The Group’s Risk Appetite Statement defines the amount
of risk that the Group is willing to accept or tolerate in
order to deliver on its strategic and business objectives
3.	
The Group has adopted a three lines of defence model
Identification and assessment
4.	
The Group identifies, assesses and reports all its material
risks
5.	
Risk management is embedded in the strategic planning,
performance management and strategic decision making
processes of the Group
6.	
The Group develops and uses models across a range of
risks and activities to inform key strategic business and
financial processes
Monitoring, escalating and reporting
7.	
The Group understands, manages, measures, monitors
and reports all risk it takes or originates
8.	
The Group aims to provide clarity in all its communications
which will help to better inform business decisions
Risk culture
9. The Group supports the delivery of a strong risk culture
10.	
Risk management capabilities are valued, encouraged
and developed
Control environment
11.	
The Group has a system of internal controls designed to
mitigate rather than eliminate risk
12.	
The Group has implemented and embedded a
comprehensive, fit-for-purpose risk management
framework and policy architecture
1.2 Three lines of defence model
The Group operates a three lines of defence model where
each line plays a distinct role within the Group’s wider
risk governance, management, oversight and assurance
responsibilities. The Board, Board Risk Committee (“BRC”) and
Board Audit Committee (“BAC”) are ultimately responsible for
ensuring the effective operation of the three lines of defence
model. They are supported by the Executive Committees
(“ExCo”) and its sub-committees.
The following high level principles have been defined across the
three lines of defence for risk management:
Three lines of defence model high level principles
First line of
defence –
Frontline,
operational
and support
activities
Provides risk ownership and
oversight responsibilities
Identifies, records, reports and
manages the risks
Ensures that the right controls
and assessments are in place to
mitigate the risks
Second line of
defence – Risk
Sets the frameworks and policies
for managing specific risk types
Provides advice and guidance in
relation to the risk
Provides independent oversight
and reporting on the Group’s risk
profile
Provides challenges to the
effectiveness of the risk
management and control
processes
Third line of
defence – Group
Internal Audit
Provides independent and
objective assurance on the
adequacy of the design and
operational effectiveness of the
risks and control environment
Risk management – 1. Framework
73

Risk Management 1
2
3
4
5
6
1.2.1 
Roles and responsibilities across the
three lines of defence
The high level roles each line of defence play in risk
management adopted by the Group and its licenced
subsidiaries are described below. Although the licenced
subsidiaries are separate legal entities, the risk assessment,
measurement and control procedures of the Group are also
applied to the subsidiaries. The Board and its sub-committees;
Board Risk Committee and Board Audit Committee are
ultimately responsible for ensuring the effective operation of the
lines of defence model.
First line of defence
The first line of defence lies with the business line managers
who own the risk and are required to establish effective
governance and controls for their business areas to be
compliant with Group policy requirements, to maintain
appropriate risk management skills, mechanisms and toolkits,
and to act within Group risk appetite parameters set and
approved by the Board.
Second line of defence
The second line of defence comprises the Risk function and
oversees the first line, setting the frameworks, policies and
limits, consistent with the risk appetite of the Group. The second
line of defence is responsible for providing independent
oversight and challenge to business line managers with regard
to risk management. In the case of credit risk, independent
oversight includes credit risk’s role in credit sanctioning.
Oversight involves regular monitoring of business unit’s risk
management activities and reporting. Challenge requires
proactive engagement with business line managers to test
and confirm the integrity and effectiveness of first line risk
management.
Nominated ‘second line risk accountable executives’ are
responsible for ensuring the formulation of risk strategy; that
a Risk policy and framework is in place for the risks assigned
to them; that the exposure to the risk is correctly identified and
assessed according to the Group’s materiality criteria; reporting
is appropriate; identified risk events are appropriately managed
or escalated; and that independent objective analysis of the risk
is undertaken.
In setting the Risk policy, the second line of defence consult
with the first line of defence as appropriate and provide advice
and guidance to ensure the risk is sufficiently understood.
Third line of defence
Group Internal Audit’s primary responsibility is to the Board
through the Board Audit Committee. Group Internal Audit
helps the Board to carry out their corporate governance
responsibilities by providing an independent view on the key
risks facing the Group, and the adequacy and effectiveness
of governance, risk management and the internal control
environment in managing these risks. All activities undertaken
on behalf of the Group are within the scope of Group Internal
Audit.
1.3 Risk governance and oversight
The Group’s Governance and Organisation Framework
encompasses the leadership, direction and control of the
Group, reflecting guidelines, statutory obligations and ensures
that control arrangements provide appropriate governance
of the Group’s strategy, operations and mitigation of related
material risks. This is achieved through a risk governance
structure designed to facilitate the reporting, evaluation and
escalation of risk concerns, from business segments and
control functions upwards to the Board and its appointed
committees and sub-committees.
1.3.1 Board of Directors
The Board of Directors is ultimately responsible and
accountable for the effective management of risks and for the
system of internal controls in the Group. The system of internal
control is designed to ensure thorough and regular evaluation
of the nature and extent of risks, and the ability of the Group
to react accordingly. The Board is supported by a Board Risk
Committee on risk oversight matters, and by a Board Audit
Committee in relation to the effectiveness of internal control
systems designed and implemented to manage risk and by
the Executive Committee in relation to strategic risk oversight
matters.
Board Audit Committee
The Board Audit Committee is composed of Non-Executive
Directors and operates under Board approved Terms of
Reference. The Chair of the Board and the Chief Executive
Officer are not permitted to be members of the Board Audit
Committee. The Board Audit Committee is appointed by the
Board to assist the Board in fulfilling its oversight responsibilities
in relation to:
(i)	
the quality and integrity of the Group’s accounting policies,
financial and narrative reports, and disclosure practices;
(ii)	
the effectiveness of the Group’s internal control, risk
management, and accounting and financial reporting
systems;
(iii)	
the adequacy of arrangements by which staff may, in
confidence, raise concerns about possible improprieties in
matters of financial reporting or other matters; and
(iv)	
the independence and performance of the internal and
external auditors.
Board Risk Committee
The Board Risk Committee is composed of Independent Non-
Executive Directors and operates under Board approved Terms of
Reference. The Board Risk Committee is appointed by the Board
to assist in fulfilling its oversight responsibilities in relation to:
(i)	
fostering sound risk governance across all of the Group’s
entities and operations;
(ii)	
discharging its responsibilities in ensuring that risks within
the Group are appropriately identified, managed and
controlled;
(iii)	
ensuring that the Group’s strategy is informed by and
aligned with the Group’s Risk Appetite Statement taking
account of the overall risk appetite, the current financial
position of the Group and the capacity of the Group to
manage and control risks within the agreed strategy; and
74  Risk Management
(iv)	
promoting a risk awareness culture within the Group.
The Board Risk Committee oversees the risk management
function which is managed on a day-to-day basis by the
Chief Risk Officer, and liaises regularly with the Chief
Risk Officer to ensure that the development and on going
maintenance of a risk management system within the
Group is effective and proportionate to the nature, scale
and complexity of the risks inherent in the business.
1.3.2 Executive Committee
The Executive Committee is the most senior management
committee of the Group. The Executive Committee has primary
authority and responsibility for the day-to-day operations of,
and the development of strategy for the Group. The Executive
Committee works with and advises the CEO, ensuring a
collaborative approach to decision making and collective
ownership of strategy development and implementation,
including promoting action to address performance issues
as required. Certain powers and authorities of the Board
have been delegated to a number of subordinate executive
committees. While the Executive Committee has delegated
certain of its powers and authorities to these committees,
it retains ultimate accountability for the functions delegated.
Group Risk Committee
The Group Risk Committee is a sub-committee of the Executive
Committee and is chaired by the Chief Risk Officer.
The roles and responsibilities of the Group Risk Committee are:
•	
Approving risk frameworks, risk appetite statements, risk
policies and limits to manage the risk profile of the Group;
•	
Reviewing the Group’s risk profile (enterprise wide);
• 	
Periodically reviewing the effectiveness of the Group’s risk
management policies for identifying, evaluating, monitoring,
managing, and measuring significant risks;
•	
Providing oversight and challenge of regulatory, operational
and conduct risk related matters;
•	
Providing oversight and challenge of credit risk
management related matters and periodically review the
credit portfolio exposures and trends;
•	
Providing oversight and challenge of risk measurement
matters;
•	
Overseeing the development of the Group’s risk
management culture;
•	
Monitoring and reviewing the Group’s risk profile for equity
risk and the business segment limits for equity risk;
•	
Advising the Executive Committee on the risk impact of
strategic initiatives that the Group may be considering and
determining whether the initiatives are within risk appetite;
and
•	
Providing advice to the Board Risk Committee on risk
governance, current and future risk exposures and risk
appetite.
The sub-committees of the Group Risk Committee include
the Group Credit Committee, the Regulatory and Conduct
Risk Committee, the Risk Measurement Committee and the
Operational Risk Committee:
•	
The Group Credit Committee is responsible for the approval
of all large credit transactions in line with credit approval
authorities, exercising approval authority for credit policies
and recommending estimated credit loss outcomes across
the Group for onward review by the Board Audit Committee.
It approves credit inputs to credit decisioning models, as
well as reviewing and approving other credit related matters
as they occur;
•	The Regulatory and Conduct Risk Committee is responsible
for the governance and oversight of regulatory and conduct
risks;
•	
The Operational Risk Committee is responsible for the
governance and oversight of operational risks;
•	
The Risk Measurement Committee is responsible for
the governance, oversight and approval of all aspects of
the Group’s risk measurement systems, material model
methodologies as well as the maintenance of existing
material models.
Group Asset and Liability Management Committee
(“ALCo”)
ALCo is the Group’s strategic and business decision making
forum for balance sheet management matters. It is responsible
for effective balance sheet management and its alignment to
Group strategy for funding and liquidity risk, market risk and
capital adequacy risk. ALCo monitors the external economic
environment, markets and the performance of the Group and
makes commercial decisions on pricing, investments and
funding in response. The Committee was established by, and is
accountable to the Executive Committee.
1.4 Risk strategy
Integration of key risk management processes
The following section sets out at a high level the connection of
key risk management activities within the Group. It illustrates
the integration of the Group strategy through to recovery and
resolution planning.
Group strategy
The Group’s strategic ambition is to be at the heart of our
customers’ financial lives by responsibly and comprehensively
meeting their life-stage needs, aiming to be a sustainable,
capital-generative and efficient business. The Group’s strategy
is driven by the five strategic pillars that determine the areas
of focus and drive investment. The strategy is defined within
the boundaries of the Group’s Risk Appetite Statement and
approved by the Board. The Group’s Risk Appetite Statement,
defines the amount and type of risk that is willing to accept in
pursuit of its strategic goals.
Risk management – 1. Framework
75

Risk Management 1
2
3
4
5
6
Risk strategy setting
The risk strategy, articulated through the annual risk plan and
the risk objectives, is a key element in informing the Board on
how risk is to be managed. The Group has a set of strategic risk
objectives which support the delivery of the Group’s strategy
with a specific focus on the Risk and Capital pillar.
Risk culture
A strong risk culture is vital for the Group to achieve its strategic
objectives. The risk culture defines how risk is managed
and owned throughout the Group. It is the values, beliefs,
knowledge, attitudes and understanding of risk shared by
people. It sets the foundation for how the Group manages risk
in a consistent and coherent manner. Risk culture is one of the
key elements of the Group’s Risk Management Framework;
it is through the risk framework and policy documents that an
awareness of risk and control is set and cascaded throughout
the Group.
1.5 Risk management lifecycle
The key processes which support the Group’s approach to risk
management are set out below:
•	
Identification and assessment – through various
assessments and processes including analysis and testing
across material risks;
• 	
Measurement and management – management selects an
appropriate risk response: avoiding, accepting, reducing,
or sharing risk and develops a set of management
actions. These actions are activities initiated to improve
management of specific risks or in response to a risk event;
•	
Monitoring, escalating and reporting – the continuous
monitoring of risks to ensure that the key risks remain within
risk appetite; and
•	
Testing and assurance – an objective examination of
evidence for the purpose of providing an independent
assessment of governance, risk management and control
processes for the Group in relation to all risk types.
Identification
and
assessment
Measurement
and
management
Testing and
assurance
Monitoring,
escalating
and reporting
1.5.1 Identification and assessment
Risk is identified and assessed in the Group through a
combination of the following:
• Material risk assessment;
• Risk and control assessment;
• Setting risk appetite;
• Linking to the Annual Financial Plan;
• Stress testing;
• Internal Capital Adequacy Assessment Process (“ICAAP”);
• Internal Liquidity Adequacy Assessment Process (“ILAAP”);
• Recovery and resolution planning.
Material risk assessment
The material risk assessment is a top down process performed
on an annual basis for the Group which identifies the key
material risks. This assessment takes into account its strategic
objectives and incorporates both internal and external risk
information. The Board Risk Committee is responsible for the
annual approval of the Group material risk assessment whilst
the Group Risk Committee is responsible for the annual review
of the Group material risk assessment.
Risk and control assessment
First line of defence is responsible for ensuring that detailed
bottom up risk and control assessments are undertaken
for all businesses or business processes falling under their
responsibility. These assessments are performed regularly and
whenever there is a material change in organisation, business
processes or business environment.
Setting risk appetite
The Board sets the risk appetite for the Group informed by the
material risk assessment. Risk appetite is the nature and extent
of risk that the Group is willing to take, accept, or tolerate in
pursuit of its business objectives and strategy. It also informs
the Group’s strategy, and as part of the Risk Management
Framework, is a boundary condition to strategy and guides
the Group in its risk taking and related business activities.
The financial plan is tested to ensure it is within the risk appetite.
The Group Risk Appetite Statement is an articulation of the
Group’s appetite for, and tolerance of risk expressed through
qualitative statements and quantitative limits and thresholds.
The Group Risk Appetite Statement seeks to encourage
appropriate risk taking to ensure that risks are consistent with
the Group strategy and risk appetite. The Group Risk Appetite
Statement cascades into key business segments with separate
Risk Appetite Statements for each licenced subsidiary reflecting
the risk appetite of the subsidiary as a standalone entity.
The Group’s risk appetite statement is built on the following
overarching qualitative statements:
•	
We aim to grow our business by identifying, understanding
and managing all the risks that impact us, ensuring
appropriate returns for risks and by building long term
sustainable relationships with our customers which are
resilient through the cycle;
•	
We have a low appetite for income volatility and target
steady, sustainable earnings to enable appropriate regular
dividend payments;
76  Risk Management
•	
We do not have an appetite for large proprietary market risk
positions in our trading book;
•	
We accept the concentration risk arising from our focus on
markets in Ireland and the UK. Within these markets we
seek to avoid excessive concentrations to sectors or single-
names and test repayment capacity in stress conditions;
•	
We seek to attract and retain skilled staff and place great
emphasis on the integrity of staff and accountability for both
inaction and actions taken, rewarding behaviours consistent
with our brand values and code of conduct;
•	
We offer our customers transparent, consistent and fair
products and services and seek always to deliver fair
customer outcomes;
•	
We seek to maintain the highest level of availability of key
services for our customers;
•	
We seek to comply with all relevant laws and regulations,
our business is underpinned by a strong control framework;
•	
We seek to maintain a strong capital base that generates
returns in line with stakeholder and market expectations;
•	
We consider opportunities for inorganic growth that would
support the Group in terms of scale and/or capability, where
the Group has proven competence and capacity, and that
maintains alignment with our qualitative Risk Appetite
Statements; and
•	
We seek resilient, diversified funding relying significantly on
retail deposits.
Linking to the Annual Financial Plan
The financial plan is integral to how the Group manages its
business and monitors performance. It informs the delivery
of the Group’s strategy and is aligned to the Risk Appetite
Statement. It enables realistic business objectives to be set for
management, identifies accountability in the Group’s delivery
of planning targets and identifies the risks to the delivery of
the Group’s strategic goals and the mitigants of those risks.
The plan is produced under base and moderate downside
scenarios. It is the basis for assessment of business model risk
and internal capital adequacy.
Stress testing
The Group’s risk identification and assessment processes
described above are supported by a framework of stress
testing, scenario and sensitivity analysis and reverse stress
testing. It seeks to ensure that risk assessment is dynamic
and forward looking, and considers not only existing risks but
also potential and emerging threats. This enhances the overall
risk management of the Group by informing risk appetite,
capital and contingency planning and strategy formulation.
Interdependencies between the Group’s material risks are also
considered as part of the stress testing scenario impact analysis.
In addition, ad hoc stress tests are undertaken as required
to inform strategic decision making. Reverse stress testing is
undertaken as part of the Group’s recovery planning i.e. the
means by which the Group assesses the key threats to its
viability and the available mitigants to address them.
The results of internal stress tests are challenged quarterly by
the Risk function and reviewed by ALCo.
Internal Capital Adequacy Assessment Process (“ICAAP”)
It is the Group’s policy to maintain adequate capital resources at
all times, having regard to the nature and scale of its business
and the risks arising from its operations. The Internal Capital
Adequacy Assessment Process (“ICAAP”) is the process by
which the Group performs a formal and rigorous assessment
of its balance sheet, business plans, risk profile and risk
management processes to determine whether it holds adequate
capital resources to meet both internal objectives and external
regulatory requirements. Multiple scenarios are considered for
each ICAAP including both systemic and idiosyncratic stress
tests ranging from moderate to extreme and are applied to the
Group’s material risks as identified through its material risk
assessment. The time horizon of three years is aligned with the
planning horizon.
Internal Liquidity Adequacy Assessment Process (“ILAAP”)
The Internal Liquidity Adequacy Assessment Process (“ILAAP”)
is the process by which the Group performs a formal and
rigorous assessment of its balance sheet, business plans,
risk profile and risk management processes to determine
whether it holds sufficient financial resources of appropriate
quality to meet both internal objectives and external regulatory
requirements. Multiple scenarios are considered for each
ILAAP including both firm specific and systemic risk events and
a combination of both to ensure the continued stability of the
Group’s liquidity position within the Group’s pre-defined liquidity
risk tolerance levels. The stress time horizon of three years is
aligned with the planning horizon.
Recovery planning
The Group’s recovery plan sets out the arrangements and
measures that the Group could adopt in the event of severe
financial stress to restore the Group to long term viability.
The recovery plan contains a suite of recovery triggers which
identify the points at which the recovery escalation process
would be activated.
Resolution planning
Resolution is the restructuring of a group, that has failed or
is likely to fail, by a resolution authority through the use of
resolution tools in order to:
• safeguard the public interest;
• ensure the continuity of the group’s critical functions;
•	
ensure financial stability in the economy in which it
operates; and
• minimise costs to taxpayers.
The Single Resolution Board is the Group’s resolution authority.
National resolution authorities in Ireland and the UK input to
the annual resolution college (chaired by the Single Resolution
Board) to arrive at resolution decisions and a preferred
resolution strategy for the Group.
Risk management – 1. Framework
77

Risk Management 1
2
3
4
5
6
The resolution college has stated that the preferred resolution
strategy for the Group is a single point of entry bail-in via AIB
Group plc. The resolution college sets the loss absorbing
capacity requirements for Minimum Required Eligible Liabilities
and the critical functions of the Group as well as work
programmes to be implemented to mitigate any perceived
impediments to resolvability.
Senior management are responsible for implementing the
measures that are needed to make the Group resolvable.
A wide-ranging programme is in place to address the
requirements of the resolution authorities. As well as numerous
subject matter working groups, the Resolution Planning Project
Board and Resolution Steering provide key governance around
resolution planning.
1.5.2 Measurement and management
Risk measurement
Each of the material risks has a specific approach to how the
risk is measured. The Group Risk Appetite Statement and the
separate risk appetite statements for the licensed subsidiaries
contain metrics which are measured on a monthly basis against
the limits set.
Risk management
The material risk types are actively managed and measured
against their respective frameworks, policies and processes
on an ongoing basis. Risk models are used to measure credit,
market, liquidity and funding risk, and where appropriate,
capital is allocated (taking account of risk concentrations) to
mitigate material risks. The management and measurement of
the Group’s risk profile also informs the Group’s strategic and
operational planning processes.
1.5.3 Monitoring, escalating and reporting
The Group has designed risk appetite statement metrics for
each of its material risk categories. Material risks are actively
monitored under their respective frameworks and policies to
ensure material risks are managed effectively in line with the
Group’s Risk Appetite Statement. The material risk frameworks
and policies set out the process for the escalation of the
relevant risk appetite statement limit breaches.
Risk reporting
Risk reporting facilitates management decision-making and
is a critical component of risk governance and oversight. Risk
reporting processes are in place for each of the material risks
under the relevant risk frameworks and policies. This enables
management, governance committees and other stakeholders
to oversee: the effectiveness of the risk management
processes, adherence to risk policies, and (where relevant)
adherence to regulatory requirements.
Should a breach of a risk appetite statement limit occur, it
is reported to the Board and the Group’s regulator. On a
monthly basis the CRO reports actual performance against risk
appetite statements and key risk indicators to the Board Risk
Committee.
1.5.4 Testing and assurance
The material risk types are continuously tested and assured in
line with the Group assurance methodology, which distinguishes
between risk management, risk control and risk assurance.
Testing
As the Group operates the three line of defence model, each
line of defence is responsible for preparing an assurance/
business controls testing plan for the year ahead, with
consideration of the adequacy of the risk identified and the
design and effectiveness of the controls in place.
Integrated assurance
Integrated assurance is the alignment of governance, risk and
assurance activities, linked with the Group’s strategy to better
co-ordinate efforts and risk reporting, with the aim of improving
performance and resilience.
1.6 Risk management in operation
During 2019, there was increased focus around three key
risk themes, Brexit, climate risk and cyber risk. This section
describes the risk management approach adopted by the Group.
1.6.1 The UK exit from the European Union (“Brexit”)
This section outlines the steps undertaken by the Group
to manage the risks associated with Brexit. Four working
groups were established to identify any potential risks with
representatives attending from areas across the Group to
provide their subject matter expertise.
The Group manages the uncertainty and risk posed by Brexit
through a number of Brexit Readiness and Response working
groups:
• Risk Top Down Working Group
• Business Response Working Group
• Operational Continuity Working Group
• Product and Customer Readiness Working Group
Oversight of these groups is executed via the Brexit Steering
Group which provides a quarterly Brexit update to the Board.
The Group’s response to the potential impact of Brexit on
its material risks is coordinated through the Risk Top Down
Working Group, its responsibilities include:
•	
Reviewing and recommending action plans across both
the first and second line as contingency planning for a hard
Brexit outcome;
• Reviewing and challenging first line readiness; and
•	
Reviewing reports on leading Brexit risk indicators and
delivering recommendations to the CRO of any change in
the risk profile arising from Brexit.
The Board received monthly updates throughout 2019 on the
preparedness of the Group. It considered Brexit in the context
of the overall Group strategy and financial planning cycle.
This incorporates financial and risk scenarios that capture the
potential Brexit outcomes.
In a Brexit event, where there was the likelihood of a severe
stress scenario or significant customer impact, a forum called
‘the Brexit Taskforce’, would be mobilised to immediately
co-ordinate the Group’s operational response.
A ‘dry run’ of the Brexit Taskforce was conducted during 2019.
78  Risk Management
1.6.2 Climate risk
The Group has identified climate change as a key risk driver for
the business model, credit risk and operational risk.
•	
In 2019, the Risk function conducted initial research on the
subject of climate risk and its impact on overall risk and
integration into total risk management. Climate risk and its
impacts are being assessed in the Group’s 2020 Material
Risk Assessment process.
•	
A credit risk working group was established to perform a
high level portfolio review on the impact of climate change
on the Group’s portfolios.
•	
The Group’s new project finance policy sets out the rules
for financing of long term infrastructure, industrial projects
and public services. It identifies sectors which the Group is
keen to support with project finance (e.g. renewable energy)
as well as sectors which are excluded (e.g. oil and gas
exploration).
•	
In addition, a number of other sectors considered to be
incongruent with the aims of sustainability were identified
for exclusion from future lending. The Group is working to
incorporate these exclusions into credit risk policy in 2020.
•	
AIB UK is required to consider the Prudential Regulatory
Authority’s policy and supervisory statement on the financial
risks of climate change and incorporate these within the
context of the overall Group’s objective of supporting
customers to transition to a low carbon economy. Following
the publication of the Prudential Regulatory Authority Policy
Statement PS11/19 and Supervisory Statement SS3/19
concerning the management of the financial risks from
climate change, AIB UK submitted an action plan setting out
how they plan to achieve the overall management of climate
change risk.
Areas of development for 2020
In line with the Group’s 2022 strategy, risk management will
work to further integrate sustainability considerations into the
Group’s risk management approach as follows:
• 
Aligned with the Group’s focus on climate action, the Group
views climate risk as a key area that continues to evolve due
to ongoing regulatory changes and increasing understanding
of its importance. The Risk functions will continue to
integrate climate risk into overall risk management and
monitor developments to support the Group’s ambition to
build a more sustainable business.
• 
The Risk function will consider the impact of climate risk
scenario analysis in consultation with other stakeholders
and define the management information required to identify
a range of scenarios with a view to developing a climate risk
stress-testing capability.
• 
Credit risk will review the impact of climate risk on credit
frameworks and policies and will enhance these where
required.
• 
Compliance will continue to monitor relevant regulatory
guidance relating to climate risk and complete impact
assessments for all regulations which may impact the Group.
• 
Operational risk will review new and changed products with
due consideration to sustainability elements.
• 
Ongoing reviews of all other risk frameworks and policies to
consider environmental, social and governance principles
and in particular the impact of climate risk.
1.6.3 Cyber risk
This section outlines how the Group manages Cyber risk, as
a sub-risk within the Operational Risk Framework. Information
security risk is concerned with managing the risk of harm being
caused to the Group or its customers as a result of a loss of
the confidentiality, integrity or information. Cyber risk affects all
industry sectors including international banks.
The Group operates its cyber defences in line with international
standards combining controls that help predict, prevent, detect
and respond to attacks. The Group continues to improve its
defences and control environment which have proven robust
to date. Nonetheless, the Group’s cyber threat profile remains
elevated, with the threat landscape becoming more diverse, and
attacks increasing in sophistication and volume. Attackers are
using a range of advanced tools and techniques in an attempt
to disrupt the Group’s activities including:
•	
Hacking – unauthorised individuals attempting to
intentionally access information and cause harm;
•	
Malware – targeted malicious emails purportedly from
legitimate sources with the goal of installing malicious
software on a staff member’s computer;
•	
Social engineering – employing deception, manipulation
and intimidation to exploit staff members in order to obtain
information, e.g. phishing; and
•	
Distributed Denial of Service (“DDoS”) – attempting to
make an online service unavailable by overwhelming it with
requests from multiple sources.
The Group’s exposure to cyber risk is monitored by the Board
through its regular risk reporting and focused updates on
specific cyber-related topics. Key cyber risk indicators were
monitored during 2019 which included:
•	
Investment in cyber security defences; and
•	
The number of high-impact cyber security incidents.
In light of the threat profile, the Group continues to classify and
manage cyber as a high risk, informed by the annual Material
Risk Assessment.
1.6.4 Coronavirus outbreak
The recent coronavirus outbreak (COVID-19) is an emerging
risk that the Group is monitoring closely. Should the outbreak
impact on the economies or markets to which the Group or
our customers are exposed, it could potentially impact on the
Group’s performance. The Group has established a monitoring
group to assess the range of possible impacts and will continue
to respond to the situation as it evolves. Any impact will depend
on future developments, which are highly uncertain.
Risk management – 1. Framework

80  Risk Management
Risk management – 2. Individual risk types
2.1 Credit risk
Credit risk is the risk that the Group will incur losses as a result of a customer or counterparty being unable or unwilling to meet their
contractual obligations.
Based on the annual risk identification and materiality assessment, credit risk is grouped into the following four sub categories:
i.	
Counterparty risk: The risk of losses arising as a result of the counterparty not meeting their contractual obligations in full and on
time;
ii.	
Credit default risk: The current or prospective risk to capital arising from the obligors’ failure to meet the terms of any contract with
the Group;
iii.	
Concentration risk: The risk of excessive credit concentration including to an individual, counterparty, group of connected
counterparties, industry sector, a geographic region, country, a type of collateral or a type of credit facility; and
iv.	
Country risk: The risk of having exposure to a country, arising from possible changes in the business environment that may
adversely affect operating profits or the value of assets related to the country.
Credit risk exposure derives from standard on-balance sheet products such as mortgages, loans, overdrafts and credit cards. However,
credit risk also arises from other products and activities including, but not limited to: “off-balance sheet” guarantees and commitments;
the trading portfolio (e.g. bonds and derivatives); investment securities; asset backed securities; and partial failure of a trade in a
settlement or payment system.
Credit risk management
The activities which govern the management of credit risk within the Group are as follows:
–	
Formulate and implement a comprehensive credit risk strategy that is viable through various economic cycles, supported by a robust
suite of credit policies that support the Group’s approved Risk Appetite Statement and generate appropriate returns on capital within
acceptable levels of credit quality;
–	
Establish governance authority fora to provide independent oversight and assurance to the Board with regards to credit risk
management activities and the quality of the credit portfolio;
–	
Develop and continuously reinforce a strong, risk focused culture across the credit risk management functions through the credit
cycle, which supports the Group’s goals and enables business growth, provides constructive challenge and avoids risks that cannot
be adequately measured;
–	
Ensure all management and staff involved in core credit risk activities across the three lines of defence are fully capable of
conducting their duties to the highest standard in compliance with the Group’s policies and procedures;
–	
Operate within a sound and well defined credit granting process where risks for new and existing lending exposures are identified,
assessed, measured, managed and reported in line with risk appetite and the credit risk policy;
–	
Establish and enforce an efficient internal review and reporting system to manage effectively the Group’s credit risk across various
portfolios including, establishing and enforcing internal controls and assurance practices to ensure that exceptions to policies,
deviations to credit standards, procedures and limits are monitored and reported in a timely manner for review and action;
–	
Ensure a sound methodology exists to proactively assess risk and to identify deteriorating credit quality to minimise losses and
maximise recoveries in work out scenarios;
–	
Utilise management information and risk data of appropriate quality, to ensure an effective credit risk measurement process when
reporting on the holistic risk profile of the Group including any changes in risk profile and emerging or horizon risks; and
–	
Mitigate potential credit risk arising from new or amended products or activities.
The Group’s credit risk framework as outlined on pages 72 to 78 supports these credit activities and encompasses a suite of credit
policies and standards which support the credit risk sanctioning policies and policy guidance and provide a common and consistent
approach to the management of credit risk.
2.1 Credit risk
Credit risk organisation and structure
The Group’s credit risk management systems operate through a hierarchy of lending authorities. All customer loan requests are subject
to a credit assessment process. The role of the Credit Risk function is to provide direction, independent oversight of and challenge to
credit risk-taking.
Group Risk Appetite Statement
The Group’s Risk Appetite Statement (“RAS”) process sets the amount and nature of risks that the Group is willing to accept within
its risk capacity in pursuit of its financial objectives and informs both Group strategy and policies. As part of the overall framework
for risk governance, it forms a boundary condition to strategy and guides the Group in its risk-taking and related business activities.
Credit risk appetite is set at Board level and is described, reported and monitored through a suite of qualitative and quantitative metrics.
Risk appetite is stress tested to ensure limits are within the risk-taking capacity of the Group. The Group’s risk appetite for credit risk is
reviewed and approved at least annually.
Credit risk principles and policy*
The Group implements and operates policies to govern the identification, assessment, approval, monitoring and reporting of credit
risk. The Group Credit Risk Framework and Group Credit Risk Policy are overarching Board approved documents which set out, the
principles of how the Group identifies, assesses, approves, monitors and reports credit risk to ensure that robust credit risk management
is in place. These documents contain the minimum standards and principles that are applied across the Group to provide a common,
robust and consistent approach to the management of credit risk.
The Group Credit Risk Policy is supported by a suite of credit policies, standards and guidelines which define in greater detail the
minimum standards and credit risk metrics to be applied for specific products, business lines, and market segments.
Credit Risk, as an independent risk management function, monitors key credit risk metrics and trends, including policy exceptions and
breaches, reviews the overall quality of the loan book, challenges variances to planned outcomes and tracks portfolio performance
against agreed credit risk indicators. This allows the Group, if required, to take early and proactive mitigating actions for any potential
areas of concern.
Credit approval overview
The Group operates credit approval criteria which:
– Include a clear indication of the Group’s target market(s), in line with Group and segment risk appetite statements;
–	
Require a thorough understanding and assessment of the borrower or counterparty, as well as the purpose and structure of credit,
and the source of repayment; and
– Enforce compliance with minimum credit assessment and facility structuring standards.
Credit risk approval is undertaken by professionals operating within a defined delegated authority framework. However, for certain
selected retail portfolios, scorecards and automated strategies (together referred to as ‘score enabled decisions’) are deployed to
automate and to support credit decisions and credit management (e.g. score enabled auto-renewal of overdrafts).
The Board is the ultimate credit approval authority in the Group. The Board has delegated credit authority to various credit committees
and to the Chief Credit Officer (CCO). The CCO is permitted to further delegate this credit authority to individuals within the Group on
a risk appropriate basis. Credit limits are approved in accordance with the Group’s written risk policies and guidelines. All exposures
above certain levels require approval by the Group Credit Committee (“GCC”) and/or Board. Other exposures are approved according to
a system of tiered individual authorities which reflect credit competence, proven judgement and experience. Depending on the borrower/
connection, grade or weighted average facility grade and the level of exposure, limits are sanctioned by the relevant credit authority.
Material lending proposals are referred to credit units for independent assessment/approval or formulation of a recommendation and
subsequent adjudication by the applicable approval authority.
*Forms an integral part of the audited financial statements
82  Risk Management
2.1 Credit risk
Internal credit ratings*
As part of the credit approval process and the ongoing review of this process, one of the objectives of credit risk management is to
accurately quantify the level of credit risk to which the Group is exposed. The use of internal credit risk rating models is fundamental in
assessing the credit quality of loan exposures, with variants of these used for the calculation of regulatory capital. All relevant exposures
are assigned to a rating system and within that to an internal risk grade. A grade is assigned on the basis of rating criteria within each
rating model from which estimates of probability of default (PD through the cycle) are derived.
Internal credit grading and scoring systems facilitate the early identification and management of any deterioration in loan quality.
Changes in the objective information are reflected in the credit grade of the borrower with the resultant grade influencing the
management of individual loans. In line with the Group’s credit management lifecycle, heightened credit management and special
attention is paid to lower quality performing loans or ‘criticised’ loans and non-performing/defaulted loans which are defined below.
Using internal models, the Group has designed and implemented a credit grading masterscale that gives it the ability to categorise
credit risk across different rating models and portfolios in a consistent manner. The masterscale consolidates complex credit information
into a single attribute, aligning the output from the risk models with the Group’s Definition of Default policy. Credit grades are driven by
model appropriated PDs in order to provide the Group with a mechanism for ranking and comparing credit risk associated with a range
of customers. The masterscale categorises loans into a broad range of grades which can be summarised into the following categories:
strong/satisfactory grades; criticised grades; and non-performing/default loans. Page 101 and 102 sets out the profile of the Group’s
loan portfolio under each of the above grade categories.
Strong/satisfactory
Accounts are considered strong/satisfactory if they have no current or recent credit distress and the probability of default is typically less
than 6.95%, they are not in arrears and there are no indications that they are unlikely to repay.
Strong (typically with PD less than 0.99%): Strong credit with no weakness evident.
Satisfactory (typically with PD greater than or equal to 0.99% and less than 6.95%): Satisfactory credit with no weakness evident.
Criticised
Accounts of lower credit quality and considered as less than satisfactory are referred to as criticised and include the following:
Criticised watch: The credit is exhibiting weakness in terms of credit quality and may need additional management attention; the credit
may or may not be in arrears.
Criticised recovery: Includes forborne cases that are classified as performing including those which have transitioned from non-
performing forborne, but still require additional management attention to monitor for re-default and continuing improvement in terms of
credit quality.
In addition to the internal credit ratings as outlined above, the Group implemented IFRS 9 on 1 January 2018. The IFRS 9 PD modelling
approach uses a combination of rating grades and scores obtained from these credit risk models along with key factors such as age
of an account, the current/recent arrears status or the current/recent forbearance status and macroeconomic factors to obtain the
relevant IFRS 9 12 month and Lifetime PDs (i.e. point in time). The Group has set out its methodologies and judgements exercised in
determining its expected credit loss (“ECL”) under IFRS 9 on pages 88 to 98.
Non-performing/default
On 1 January 2018, the Group introduced a new definition of default aligned with the EBA ‘Guidelines on the application of the definition
of default’ under Article 178 of Capital Requirements Regulation and ECB Banking Supervision Guidance to Banks on Non-performing
loans. The Group has aligned the definitions of ‘non-performing’, ‘classification of default’ and IFRS 9 Stage 3 ‘credit impaired’, with
the exception of those loans which have been derecognised and newly originated in Stage 1 or POCI (purchased or originated credit
impaired). This alignment ensures consistency with the Group’s internal credit risk management and assessment practices.
These loans are identified as non-performing or defaulted by a number of characteristics. The key criteria resulting in a classification of
non-performing are:
–	
Where the Group considers a credit obligor to be unlikely to pay his/her credit obligations in full without realisation of collateral,
regardless of the existence of any past-due amount; or
–	
The credit obligor is 90 days or more past due on any material credit obligation. Day count starts when any amount of principal,
interest or fee has not been paid by a credit obligor on the due date.
The trigger for default is based on a calculation of the sum of all past due amounts related to the credit obligation for a retail credit
obligor or related to the credit obligations for a non-retail credit obligor. The Group’s definition of financial distress, forbearance,
non-performing exposures and unlikeliness to pay are included in the Group’s Definition of Default policy.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
83

Risk Management 1
2
3
4
5
6
2.1 Credit risk
Internal credit ratings* (continued)
Non-performing/default (continued)
Non-performing loans are analysed by the following categories on page 105:
Unlikely to pay – Where the Group considers a credit obligor to be unlikely to pay his/her credit obligations in full without realisation of
collateral, regardless of the existence of any past-due amount.
Greater than 90 days past due – Credit obligor that is past due by 90 days or more on any material obligation.
Collateral disposals – Post restructure cases requiring asset disposal as part of the restructure agreement. These loans will remain as
non-performing until the asset is sold and the loan cleared.
Non-performing loans probation – Where the credit obligor, as a result of financial distress, received a concession from the Group
on terms or conditions, and is currently operating in line with the post restructure arrangements, and will remain in the non-performing
probationary period for a minimum of 12 months before moving to a performing classification, subject to meeting defined probation
criteria.
Credit risk monitoring*
The Group has developed and implemented processes and information systems to monitor and report on individual credits and credit
portfolios in order to manage credit risk effectively. It is the Group’s practice to ensure that adequate up-to-date credit management
information is available to support the credit management of individual account relationships and the overall loan portfolio.
Credit risk, at a portfolio level, is monitored and reported regularly to senior management and to the Board Risk Committee. Credit
managers proactively manage the Group’s credit risk exposures at a transaction and relationship level. Monitoring includes credit
exposure and excess management, regular review of accounts, being up-to-date with any developments in customer business,
obtaining updated financial information and monitoring of covenant compliance. This is reported on a quarterly basis to senior
management and includes information and detailed commentary on loan book growth, quality of the loan book and expected credit
losses including individual large non-performing exposures.
Changes in sectoral and single name concentrations are tracked on a quarterly basis highlighting changes to risk concentration in the
Group’s loan book. The Group allocates significant resources to ensure ongoing monitoring and compliance with approved risk limits.
Credit risk, including compliance with key credit risk limits, is reported monthly. Once an account has been placed on a watch/early
warning list, the exposure is carefully monitored and where appropriate, exposure reductions are effected. In addition, exceptions to
credit policy are reviewed regularly.
As a matter of policy, unless pre-approved documented exceptions arise, all facilities are subject to a review on, at least, an annual
basis, even when they are performing satisfactorily. Annual review processes are supplemented by more frequent portfolio and case
review processes in addition to arrears or excess management processes.
Criticised borrowers are subject to an ‘unlikely to pay’ test at the time of annual review, or earlier, if there is a material adverse change or
event in their credit risk profile.
Through a range of forbearance solutions as outlined on page 135, the Group employs a dedicated approach to loan workout,
monitoring and proactive management of non-performing loans. A specialised recovery function focuses on managing the majority of
criticised loans and deals with customers in default, collection or insolvency. Their mandate is to support customers in difficulty while
maximising the return on non-performing loans. Whilst the basic principles for managing weaknesses in corporate, commercial and retail
exposures are broadly similar, the solutions reflect the differing nature of the assets.
Further details on forbearance are set out in ‘Risk management 2.1 Additional credit quality and forbearance disclosures on loans and
advances to customers’.
*Forms an integral part of the audited financial statements
84  Risk Management
2.1 Credit risk – Credit exposure
Credit risk mitigants*
The perceived strength of a borrower’s repayment capacity is the primary factor in granting a loan. However, the Group uses various
approaches to help mitigate risks relating to individual credits, including transaction structure, collateral and guarantees. Collateral and/
or guarantees are usually required as a secondary source of repayment in the event of a borrower’s default. The main types of collateral
for loans and advances to customers are described below under the section on Collateral. Credit policy and credit management
standards are controlled and set centrally by the Credit Risk function.
Occasionally, credit derivatives are purchased to hedge credit risk. Current levels are minimal and their use is subject to the normal
credit approval process.
The Group enters into netting agreements for derivatives with certain counterparties, to ensure that in the event of default, all amounts
outstanding with those counterparties will be settled on a net basis. Derivative transactions with wholesale counterparties are typically
collateralised under a Credit Support Annex in conjunction with the International Swaps and Derivatives Association (“ISDA”) Master
Agreement.
The Group also has in place an Interbank Exposure Policy which establishes the maximum exposure for each counterparty bank,
depending on credit rating. Each bank is assessed for the appropriate maximum exposure limit in line with the policy. Risk generating
business units in each segment are required to have an approved bank or country limit prior to granting any credit facility, or approving
any credit obligation or commitment which has the potential to create interbank or country exposure.
Collateral
Credit risk mitigation may include a requirement to obtain collateral as set out in the Group’s lending policies. Where collateral and/or
guarantees are required, they are usually taken as a secondary source of repayment in the event of a borrower’s default. The Group
maintains policies which detail the acceptability of specific classes of collateral.
The principal collateral types for loans and advances are:
– Charges over business assets such as premises, inventory and accounts receivable;
– Mortgages over residential and commercial real estate; and
– Charges over financial instruments such as debt securities and equities.
The nature and level of collateral required depends on a number of factors such as the type of the credit facility, the term of the credit
facility and the amount of exposure. Collateral held as security for financial assets, other than for loans and advances, is determined
by the nature of the instrument. Debt securities and treasury products are generally unsecured, with the exception of asset backed
securities, which are secured by a portfolio of financial assets.
Collateral is not usually held against loans and advances to banks, including central banks, except where securities are held as part of
reverse repurchase or securities borrowing transactions or where a collateral agreement has been entered into under a master netting
agreement.
For non-mortgage lending, where collateral is taken, it will typically include a charge over the business assets such as inventory and
accounts receivables. In some cases, a charge over property collateral or a personal guarantee supported by a lien over personal
assets may also be taken. Where cash flows arising from the realisation of collateral held are included in ECL assessments, in many
cases management rely on valuations or business appraisals from independent external professionals.
Methodologies for valuing collateral
As property loans, including residential mortgages, represent a significant concentration within the Group’s loans and advances to
customer’s portfolio, some key principles have been applied in respect of the valuation of property collateral held by the Group.
In accordance with the Group’s Property Valuation Policy and Guidelines, the Group uses a number of methods to assist in reaching
appropriate valuations for property collateral held. These include:
– Use of independent professional external valuations; and
– Use of internally developed methodologies, including residual valuations.
Use of independent professional external valuations represent circumstances where external firms are engaged to provide formal
written valuations in respect of the property. Up-to-date external independent professional valuations are sought in accordance with the
Group’s Property Valuation Policy and Guidelines. Available market indices for relevant assets, e.g. residential property are also used in
valuation assessments, where appropriate.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
85

Risk Management 1
2
3
4
5
6
2.1 Credit risk – Credit exposure
Credit risk mitigants* (continued)
Methodologies for valuing collateral (continued)
The residual value analysis methodology assesses the value of the asset after meeting the incremental costs to complete the
development. This approach looks at the cost of developing the asset to determine the residual value for the Group, including covering
the costs to complete and additional funding costs. The key factors considered in this methodology include:
(i) the development potential given the location of the asset;
(ii) its current or likely near term planning status;
(iii) levels of current and likely future demand;
(iv) the relevant costs associated with the completion of the project; and
(v) expected market prices of completed units.
If, following internal considerations which may include consultations with valuers, it is concluded that the optimal value for the Group
will be obtained through the development/completion of the project, a residual value methodology is used. When, in the opinion of the
Group, the land is not likely to be developed or it is non-commercial to do so, agricultural values may be applied. Alternative use value
(subject to planning permission) may also be considered.
In the context of other internal methodologies, appropriate yields are applied to current rentals in valuing investment property. When
assessing properties that are used for operational business or trading purposes, these are generally valued by applying a multiple to
stabilised EBITDA, e.g. hotels and nursing homes. For licensed premises, these are valued by applying a multiple to stabilised net
turnover (average over three years), or if available stabilised EBITDA.
When assessing the value of residential properties, recent transactional analysis of comparable sales in an area combined with the
Central Statistics Office (“CSO”) Residential Property Price index in the Republic of Ireland may be used.
The value of property collateral is assessed at loan origination and at certain stages throughout the credit life cycle e.g. including at
annual review where required, in accordance with the Property Valuation Policy and Guidelines.
Collateral and ECLs
Applying one or a combination of the above methodologies, in line with the Group’s Valuation Policy, has resulted in a wide range
of discounts to original collateral valuations, influenced by the nature, status and year of purchase of the asset. The frequency and
availability of such up-to-date valuations remain a key factor in ECLs determination. Additionally, relevant costs likely to be associated
with the realisation of the collateral are taken into account in the cash flow forecasts. The spread of discounts is influenced by the type
of collateral, e.g. land, developed land or investment property and also its location. The valuation arrived at, is therefore, a function of
the nature of the asset, e.g. unserviced land in a rural area will most likely suffer a greater reduction in value if purchased at the height
of a property boom than a fully let investment property with strong lessees.
When assessing the level of ECL allowance required for property loans, apart from the value to be realised from the collateral, other
cash flows, such as recourse to other assets or sponsor support, are also considered, where available. The other key driver is the
time it takes to receive the funds from the realisation of collateral. While this depends on the type of collateral and the stage of its
development, the period of time to realisation is typically one to five years but sometimes this time period is exceeded. These estimates
are periodically reassessed on a case by case basis.
When undertaking an ECL review for individually assessed cases that have been deemed unlikely to pay, the present value of future
cash flows, including the value of collateral held, and the likely time required to realise such collateral is estimated. An ECL allowance is
raised for the difference between this present value and the carrying value of the loan.
*Forms an integral part of the audited financial statements

2.1 Credit risk – Credit exposure
Credit risk mitigants* (continued)
Loans and advances to customers – other
In addition to the credit risk mitigants outlined on the previous page, the Group, from time to time, enters reverse repurchase
agreements with borrowers. At 31 December 2019, the Group had accepted collateral with a fair value of € 86 million in respect of
reverse repurchase agreements. There were no such agreements outstanding at 31 December 2018.
Derivatives
Derivative financial instruments are recognised in the statement of financial position at their fair value. Those with a positive fair value
are reported as assets which at 31 December 2019 amounted to € 1,271 million (2018: € 900 million) and those with a negative fair
value are reported as liabilities which at 31 December 2019 amounted to € 1,197 million (2018: € 934 million).
The enforcement of netting agreements would potentially reduce the statement of financial position carrying amount of derivative assets
and liabilities by € 575 million at 31 December 2019 (2018: € 325 million). The Group also has Credit Support Annexes (“CSAs”) in place
which provide collateral for derivative contracts. At 31 December 2019, € 643 million (2018: € 609 million) of CSAs are included within
financial assets as collateral for derivative liabilities and € 347 million (2018: € 266 million) of CSAs are included within financial liabilities
as collateral for derivative assets (note 46 to the consolidated financial statements). Additionally, the Group has agreements in place
which may allow it to net the termination values of cross currency swaps upon occurrence of an event of default.
Loans and advances to banks
Interbank placings, including central banks, are largely carried out on an unsecured basis apart from reverse repurchase agreements.
The collateral received in respect of repurchase agreements at 31 December 2019 had a fair value of € 151 million. There were no such
agreements outstanding at 31 December 2018.
Investment securities
At 31 December 2019, government guaranteed senior bank debt which amounted to € 268 million (2018: € 250 million) was held within
the investment securities portfolio.
*Forms an integral part of the audited financial statements
88  Risk Management
2.1 Credit risk
Measurement, methodologies and judgements*
Introduction
The Group has set out the methodologies used and judgements exercised in determining its expected credit loss (“ECL”) allowance for
the year to 31 December 2019.
International Financial Reporting Standard 9 (IFRS 9) introduced the expected credit loss impairment model that requires a more timely
recognition of ECL across the Group. The standard does not prescribe specific approaches to be used in estimating ECL allowances,
but stresses that the approach must reflect the following:
– An unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
– Underlying models should be point in time – recognising economic conditions;
– The ECL must reflect the time value of money;
– A lifetime ECL is calculated for financial assets in Stages 2 and 3; and
–	
Models used in the ECL calculation must incorporate reasonable and supportable information that is available without undue cost or
effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
The standard defines credit loss as the difference between all contractual cash flows that are due to an entity in accordance with the
contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate
(“EIR”) or an approximation thereof (see ‘Measurement’ section below).
ECLs are defined in IFRS 9 as the weighted average of credit losses across multiple macroeconomic scenarios, the probability of each
scenario occurring as weights and are an estimate of credit losses over the life of a financial instrument.
The ECL model applies to financial instruments measured at amortised cost or at fair value through other comprehensive income.
In addition, the ECL approach applies to lease receivables, loan commitments and financial guarantee contracts that are not measured
at fair value through profit or loss.
A key principle of the ECL model is to reflect any relative deterioration or improvement in the credit quality of financial instruments
occurring (e.g. change in the risk of a default). The ECL amount recognised as a loss allowance or provision depends on the extent of
credit deterioration since initial recognition together with the usual credit risk parameters.
Measurement bases
Under IFRS 9, there are two measurement bases:
1	
12-month ECL (Stage 1), which applies to all financial instruments from initial recognition as long as there has been no significant
increase in credit risk; and
2	
Lifetime ECL (Stages 2 and 3 and POCI), which applies when a significant increase in credit risk has been identified on an account
(Stage 2), an account has been identified as being credit-impaired (Stage 3) or when an account meets the POCI criteria.
Staging
Financial assets are allocated to stages dependent on credit quality relative to when assets were originated.
Credit risk at origination
Credit risk at origination (“CRAO”) is a key input into the staging allocation process. The origination date of an account is determined
by the date on which the Group became irrevocably committed to the contractual obligation and the account was first graded on an
appropriate model.
For undrawn credit facilities, the Group uses the date of origination as the date when it becomes party to the irrevocably contractual
arrangements or irrevocable commitment. For overdrafts which have both drawn and undrawn components, the date of origination is the
same for both.
The Group uses best available information for facilities which originated prior to a credit risk rating model or scorecard being in place.
For accounts that originated prior to 1 January 2018, a neutral view of the macroeconomic outlook at the time is used, i.e. where
macroeconomic variables are used in the Lifetime PD models, long-run averages are used instead of historical forecasts.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Stage 1 characteristics
Obligations are classified Stage 1 at origination, unless purchased or originated credit impaired (“POCI”), with a 12 month ECL being
recognised. These obligations remain in Stage 1 unless there has been a significant increase in credit risk.
Accounts can also return to Stage 1 if they no longer meet either the Stage 2 or Stage 3 criteria, subject to satisfaction of the
appropriate probation periods, in line with regulatory requirements.
Stage 2 characteristics
Obligations where there has been a ‘significant increase in credit risk’ (“SICR”) since initial recognition but do not have objective
evidence of credit impairment are classified as Stage 2. For these assets, lifetime ECLs are recognised.
The Group assesses at each reporting date whether a significant increase in credit risk has occurred on its financial obligations
since their initial recognition. This assessment is performed on individual obligations rather than at a portfolio level. If the increase is
considered significant, the obligation will be allocated to Stage 2 and a lifetime expected credit loss will apply to the obligation. If the
change is not considered significant, a 12 month expected credit loss will continue to apply and the obligation will remain in Stage 1.
SICR assessment
The Group’s SICR assessment is determined based on both quantitative and qualitative measures:
Quantitative measure: This measure reflects an arithmetic assessment of the change in credit risk arising from changes in the
probability of default. The Group compares each obligation’s annualised average probability weighted residual lifetime probability
of default (“LTPD”) at origination (see ‘Credit risk at origination’) to its annualised average probability weighted residual LTPD at the
reporting date. If the difference between these two LTPDs meets the quantitative definition of SICR, the Group transfers the financial
obligation into Stage 2. Increases in LTPD may be due to credit deterioration of the individual obligation or due to macroeconomic
factors or a combination of both. On adoption of IFRS 9, the Group determined that an account had met the quantitative measure if the
average residual LTPD at the reporting date was more than double the average residual LTPD at origination, and the difference between
the LTPDs was at least 50bps.
The impact of this measure is under regular review by the Group for items such as the (i) the volume of exposures moving frequently
between Stages 1 and 2, (ii) potential over-reliance on backstop and qualitative measures for identifying Stage 2 exposures and
(iii) comparison of Stage 1 and 2 exposures to the internal credit ratings view of exposures. In 2019, following an assessment of
mortgage exposures including the items above, a change to the quantitative SICR threshold from 50bps to 85bps was approved by the
Group. This was implemented in the Irish residential mortgage portfolio at December 2019.
Qualitative measure: This measure reflects the assessment of the change in credit risk based on the Group’s credit management
and the individual characteristics of the financial asset. This is not model driven and seeks to capture any change in credit quality that
may not be already captured by the quantitative criteria. The qualitative assessment reflects pro-active credit management including
monitoring of account activity on an individual or portfolio level, knowledge of client behaviour, and cognisance of industry and economic
trends.
The criteria for this trigger include, for example:
– A downgrade of the borrower’s/facility’s credit grade reflecting the increased credit management focus on these accounts; and/or
– Forbearance has been provided and the account is within the probationary period.
Backstop indicators: The Group has adopted the rebuttable presumption within IFRS 9 that credit obligations greater than 30 days past
due represent a significant increase in credit risk.
Where SICR criteria are no longer a trigger, the account can exit Stage 2 and return to Stage 1.
Stage 3 characteristics
Defaulted obligations (with the exception of newly originated loans that are in Stage 1 or POCI) are classified as credit impaired
and allocated to Stage 3. Where default criteria are no longer met, the obligor exits Stage 3 subject to probation period, in line with
regulatory requirements.
Two key criteria resulting in a classification of default are:
–	
Where the Group considers a credit obligor to be unlikely to pay his/her credit obligations in full without realisation of collateral,
regardless of the existence of any past-due amount; or
–	
The credit obligor is 90 days or more past due on any material credit obligation (count starts when any amount of principal, interest
or fee has not been paid by a credit obligor at the date it was due).
*Forms an integral part of the audited financial statements
90  Risk Management
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
The trigger for default is based on a calculation of the sum of all past due amounts related to the credit obligation for a retail credit
obligor or related to the credit obligations for a non-retail credit obligor. The Group’s definition of financial distress, forbearance,
non-performing exposures and unlikeliness to pay are included in the Group’s Definition of Default policy.
Loans may return to Stage 3 if any of the default triggers reoccur.
Purchased or originated credit impaired (“POCI”)
POCIs are assets originated credit impaired where the difference between the discounted contractual cash flows and the fair value at
origination is greater than or equal to 5%. The Group uses an appropriate discount rate for measuring ECL in the case of POCIs which
is the credit-adjusted effective interest rate. This rate is used to discount the expected cash flows of such assets to fair value on initial
recognition.
POCI obligations remain outside of the normal stage allocation process for the lifetime of the obligation. The ECL for POCI obligations is
always measured at an amount equal to lifetime expected credit losses. The amount recognised as a loss allowance for these assets is
the cumulative changes in lifetime expected credit losses since the initial recognition of the assets rather than the total amount of lifetime
expected credit losses.
Measurement of expected credit loss
The measurement of ECL is estimated through one of the following approaches:
i.	
Standard approach: This approach is used for the majority of exposures where each ECL input parameter (Probability of Default
- PD, Loss Given Default - LGD, Exposure at Default - EAD, and Prepayments - PP) is developed in line with standard modelling
methodology which is set out in the Group IFRS 9 ECL Model Framework and has been approved by the relevant governance
forum. The Group’s IFRS 9 models have been approved in line with the Group’s Model Governance Framework. (An overview of
credit risk models is outlined on pages 91 and 92).
ii.	
Simplified approach: For portfolios not on the standard approach, the Group has followed a simplified approach. This approach
consists of applying portfolio level ECL averages, drawn from similar portfolios, where it is not possible to estimate individual
parameters. These generally relate to portfolios where specific IFRS 9 models have not been developed due to immateriality, low
volumes or where there are no underlying grading models. As granular PDs are not available for these portfolios, a non-standard
approach to staging is required with more reliance on the qualitative criteria (along with the 30 days past due back-stop).
iii.	
Discounted cash-flows (“DCFs”): Assets are grouped together and modelled based on asset classification and sector with the
exception of those Stage 3 assets where a DCF is used. DCFs are used as an input to the ECL calculation for Stage 3 credit
impaired exposures where gross credit exposure is ≥ € 1 million (Republic of Ireland) or ≥ £ 500,000 (UK).
	
Collateral valuations and the estimated time to realisation of collateral is a key component of the DCF model. The Group
incorporates forward looking information in the assessment of individual borrowers through the credit assessment process. The DCF
assessment produces a base case ECL. This is then adjusted to incorporate the impact of multiple scenarios on the base ECL, by
using a proportional uplift obtained from ECL modelled sensitivities in the same portfolio.
iv.	
Management judgement: Where the estimate of ECL does not adequately capture all available forward looking information about
the range of possible outcomes, or where there is a significant degree of uncertainty, management judgement may be considered
appropriate for an adjustment to ECL. The management adjustment must consider all relevant and supportable information,
including but not limited to, historical data analysis, predictive modelling and management experience. The methodology to
incorporate the adjustment should consider the degree of over collateralisation (headroom) and should not result in a zero overall
ECL unless there is sufficient headroom to support this. The key judgements in the 2019 year end ECL estimates are outlined on
page 274.
Effective interest rate
The ECL must incorporate the time value of money discounted to the reporting date using the effective interest rate (“EIR”) determined
at initial recognition or an approximation thereof.
–	
The Group uses an approximation approach based on the account level interest rate when calculating ECL which is applied to both
drawn and undrawn commitments.
–	
This approach is subject to an annual assessment that all approximations remain appropriate and do not result in a material
misstatement of the ECL.
–	
The Group has tested the appropriateness of using current interest rates as an approximation for the discount rates required for
measuring ECLs. This testing determined that using the current interest rates as the discount rates is an appropriate approximation.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Policy elections and simplifications
Low credit risk exemption
The Group utilises practical expedients, as allowed by IFRS 9, for the stage allocation of particular financial instruments which are
deemed ‘low credit risk’. This practical expedient permits the Group to assume, without more detailed analysis, that the credit risk on a
financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have ‘low credit
risk’ at the reporting date. The Group allocates such assets to Stage 1.
Under IFRS 9, the credit risk on a financial instrument is considered low if:
– the financial instrument has a low risk of default;
– the borrower has a strong capacity to meet its contractual cash flow obligations in the near term; and
–	
adverse changes in economic business conditions in the longer term may, (but will not necessarily) reduce the ability of the borrower
to fulfil its contractual cash flow obligations.
This low credit risk exemption is applied to particular assets within the investment debt securities portfolio and for loans and advances to
banks, specifically, assets which have an internal grade equivalent to an external investment grade (BBB-) or higher.
If an asset does not meet the above criteria for the low credit risk exemption, further assessment is required to determine stage
allocation. If such assets are on a watch list, they are categorised as Stage 2.
Short term cash
The Group policy does not calculate an ECL for short term cash at central banks and other banks which have a low risk of default (‘PD’)
with a very low risk profile. The calculation of the ECL at each reporting date would be immaterial given these exposures’ short term
nature and their daily management.
Lease receivables and trade receivables
For lease receivables, the Group has elected to use its standard methodology for both stage allocation and the ECL calculation and has
elected to use an expedient (simplified approach) for trade receivables.
Credit risk models
Probability of default
Probability of default (“PD”) is the likelihood that an account or borrower defaults over an observation period, given that they are
not currently in default. The PD modelling approach uses a combination of rating grades/scores obtained from credit risk models,
as outlined on page 82, along with key factors such as the age of an account, the current/recent arrears status or the current/recent
forbearance status and macroeconomic factors to obtain the relevant 12 month (Stage 1) and Lifetime (Stage 2) PD.
Loss given default
Loss given default (“LGD”) is a current assessment of the amount that will not be recovered in the event of default, taking account of
future conditions. It can be thought of as the difference between the amount owed to the Group (i.e. the exposure) and the net present
value of future cash flows less any costs expected to be incurred in the recovery process. If an account returns to performing from
default (absent any loss making concession) or if the discounted post-default recoveries are equal to or greater than the exposure, the
realised loss is zero.
The LGD modelling approach depends on whether the facility has underlying security and, if so, the nature of that security. The following
sets out the approaches to the portfolios:
Retail portfolios
For unsecured loans, a cash flow curve, which estimates the cumulative cash received following default until the loan is written-off or
returns to performing, is used to estimate the future recovery amount. This is discounted at the effective interest rate and compared to
the current outstanding balance. Any shortfall between the recovery amount and the outstanding balance is the ECL.
For secured loans, the value of underlying collateral is estimated at the forecasted time of disposal (taking into account forecasted
market price growth/falls and haircuts on market values that are expected at the date of sale) in order to calculate the future recovery
amount. Estimated costs of disposal are taken into account in this calculation.
Non-retail portfolios
For unsecured loans, characteristics such as borrower sector and nature of collateral linked to affiliated accounts under the same
customer group are used to determine future losses.
For secured loans, the value of the underlying collateral is estimated at the reporting date. This is used to estimate the ECL.
*Forms an integral part of the audited financial statements
92  Risk Management
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Exposure at default
Exposure at default (“EAD”) is defined as the exposure amount that will be owed by a customer at the time of default. This will comprise
changes in the exposure amount between the reporting date and the date that the customer defaults. This may be due to repayments,
interest and fees charged and additional drawdowns by the customer.
Prepayments
For term credit products, prepayment occurs where a customer fully prepays an account prior to the end of its contractual term.
For revolving credit products, ‘prepayment’ is defined as the cessation of use and withdrawal of the facility provided that the account
was not in default prior to closure.
Prepayment is used in the lifetime ECL calculation for Stage 2 loans to account for the proportion of the facilities/customers that prepay
each year.
Determining the period over which to measure ECL
Both the origination date and the expected maturity of a facility must be determined for ECL purposes. The origination date is used to
measure credit risk at origination (as explained above).
The expected maturity is used for assets in Stage 2, where the ECL must be estimated over the remaining life of the facility.
The expected maturity approach is:
–	
Term credit products: the contractual maturity date, with exposure and survival probability adjusted to reflect behaviour i.e.
amortisation and prepayment;
–	
Revolving credit products: the period may extend beyond the contractual period over which the Group is exposed to credit risk,
e.g. overdrafts and credit cards. The Group’s approach for these is to assume an appropriate remaining term based on the
characteristics of the portfolio and sensitivity of ECLs.
Forward looking indicators in models
For ECL calculations reliant on models in the standard and simplified approaches, forward looking indicators are incorporated into the
models through the use of macroeconomic variables. These have been identified statistically as the key macroeconomic variables that
drive the parameter being assessed (e.g. PD or LGD). The final model structure incorporates these as inputs with the 12 month and
lifetime calculations utilising the macroeconomic forecasts for each scenario. See ‘macroeconomic scenarios and weightings’ below for
more detail on the process for generating scenarios and associated key macroeconomic factors relevant for the models.
Write-offs
When the prospects of recovering a loan, either partially or fully, do not improve, a point will come when it will be concluded that as there
is no realistic prospect of recovery, the loan and any related ECL will be written-off. The Group determines, based on specific criteria,
the point at which there is no reasonable expectation of recovery, e.g. inception of formal insolvency proceedings or receivership/other
formal recovery action. This is considered on a case-by-case basis.
Debt forgiveness may subsequently arise where there is a formal contract with the customer for the write-off of the loan. In addition,
certain forbearance solutions and restructuring agreements may include an element of debt write down (debt forgiveness). Details
of forbearance are set out in Risk management 2.1 Additional credit quality and forbearance disclosures on loans and advances to
customers.
The contractual amount outstanding of loans written-off during the year that are still subject to enforcement activity are outlined on page
124 and relate to non-contracted write-offs, both full and partial.
The Group recognises cash received from the customer in excess of the carrying value of the loan after a non-contracted write-off as
‘recoveries of amounts previously written-off’ in the income statement.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Macroeconomic scenarios and weightings
The macroeconomic scenarios used by the Group for ECL allowance calculations are subject to the Group’s governance process
covering the development and approval of macroeconomic scenarios for planning and stress testing i.e. through Stress Test Working
Group and Asset and Liability Committee (ALCo). The parameters used within the Group’s ECL models include macroeconomic
factors which are established drivers of the default risk and loss estimates. Therefore, a different credit loss estimate is produced for
each combination of macroeconomic factors within a particular scenario. These credit loss estimates for each given scenario are then
weighted by the assessed likelihood of occurrence of the respective scenarios to yield the ECL outcome.
Macroeconomic scenarios:
The Group’s approach is to use its base, downside (both ‘global slowdown’ and ‘disorderly’ Brexit) and upside macro-scenarios from
the financial planning and stress testing processes for IFRS 9 purposes. The inclusion of a fourth scenario in 2019 (‘global slowdown’)
was deemed necessary to ensure that different triggers of downside outcomes are available given the continued uncertainty over
the Brexit process. The use of current planning scenarios ensures that the scenarios used for IFRS 9 are consistent with the Group’s
expectations of potential outcomes at a point in time. Non-linear effects are captured in the development of risk parameters as well as
through the inclusion of both a single upside and two downside scenarios. The Group’s Economic Research Unit (ERU) provides base,
downside and upside forecasts over five years for planning/IFRS 9. These are then independently reviewed and challenged, on both a
quantitative and qualitative basis, by the Group Enterprise Risk Management (ERM) function. The base case is benchmarked against
the outlook available from official sources (e.g. Department of Finance, ESRI, IMF, etc.). Upside and downside scenarios are provided
based on realistic triggers for each scenario and represent sensitivities around the base. For IFRS 9 purposes, longer term projections
are sourced from a reputable external provider with the internal base/upside and downside scenarios converging on a linear basis
towards the external forecasts from years 5 to 8. External long term forecasts represent long term base line forecasts for the parameter/
economy in question. The forecasted scenarios are approved on a quarterly basis at Group ALCo and on an annual basis by the Board.
The scenarios are described below and reflect the views of the Group at the reporting date.
Base case: As at the reporting date, this reflects an ‘orderly’ Brexit outcome. Under this scenario, the Irish economy continues to
perform strongly in the absence of external shocks, helped by very low interest rates, mildly expansionary fiscal policy, solid growth in
exports, recovering construction sector and good growth in employment and real incomes. However, some deceleration from the very
robust growth rates seen in recent years is likely as the economy is now close to full employment and given the slowdown in growth in
Ireland’s key export markets. Irish house price inflation has decelerated over the past year reflecting the impact of the Central Bank’s
macro-prudential rules on mortgage lending and supply. House prices are expected to rise at low single digit levels, broadly in line with
wage inflation over the next five years. The rate of increase in commercial real estate prices is expected to run at low single digit levels
as the market moves closer to equilibrium.
Under an orderly Brexit, the UK economy is not expected to suffer any significant disruption and will perform at close to its long term
potential. In terms of the US economy, growth in GDP is expected to slow as a result of the diminishing effects of the significant fiscal
stimulus, a slower pace of global growth and capacity constraints in the ‘full-employment’ labour market. Growth in the eurozone is
expected to improve slightly over the forecast period.
Downside (‘disorderly’ Brexit): Under this scenario, the UK exits the EU in a disorderly manner and has to apply World Trade
Organisation (WTO) rules. There is a significant slowdown in Irish GDP in this period as a result of the deep links between the
two economies with 40% of indigenous Irish exports going to the UK, which is also the land bridge route for much of Irish exports
to mainland Europe. These exports (as well as imports from the UK) all become subject to customs checks, tariffs, increased
administration as well as regulatory costs and transport delays. As a result, this assumes that Irish GDP growth is lower in a ‘disorderly’
Brexit scenario than in the base case over the three years to 2022 although the adverse effects are offset somewhat by an expected rise
of inward investment into Ireland (as firms divert new or existing investments away from the UK).
A ‘disorderly’ Brexit results in a sharp decline in trade between the UK and EU as well as an outflow of investment from the UK,
especially from the financial sector and a decline in Foreign Direct Investment (“FDI”). The UK economy enters recession during this
period. The impact on the EU is limited as less than 10% of EU exports go to the UK and the impact on the US is even more limited.
*Forms an integral part of the audited financial statements
94  Risk Management
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Macroeconomic scenarios and weightings (continued)
Downside (‘global slowdown’): Under this scenario, the global economy continues to lose momentum. The key triggers under this
scenario are:
– a continued move towards protectionism, which would result in further escalation in trade tensions;
– an increase in risk aversion, which would cause large asset price shifts and financial market instability; and
– an ‘orderly’ Brexit outcome.
In the next three years, large developed European economies would enter a mild recession while activity in the US is subdued. For the
Irish economy, given the importance of exports as an engine of growth, the slowdown in the international economy has a significant
impact. FDI is also adversely affected with business and consumer confidence lowered as a result. There is a slowdown in the recovery
of house building and GDP growth over the first three years is significantly lower than in the base case. Irish house prices register
modest declines - the scarcity of supply and the fact that the economy continues to see some growth help support the market, although
some foreign institutional investors reduce their exposure.
Upside: Under this scenario, given the moderate pace of growth in the current cycle since the end of the 2008-2009 recession, there
is scope for stronger growth in activity over the next number of years than is forecast in the base case. The lagged effects of very loose
monetary conditions, with central banks able to maintain interest rates at low levels because of subdued inflation, would see growth
strengthen above trend in advanced economies, helped also by an improvement in productivity and a recovery in international trade
as tensions in this area subside. Additionally, other countries could follow the lead of the US and adopt a more expansionary fiscal
programme of increased capital spending and tax cuts to boost growth, most notably in Europe. The UK agrees an ‘orderly’ Brexit with
the EU.
Given Ireland’s exposure to international trade, a better than expected performance by its key trading partners would have a positive
knock-on impact on its exports and in turn, on the rate of growth of the economy. This results in stronger growth on the domestic
side of the economy also, helped by a more expansionary fiscal policy stance. House building would also pick up strongly, helped by
government measures. As a result, Irish growth rates would exceed the base case materially over the first three years of the forecast
period.
The table below sets out the average five year forecast for each of the key macroeconomic variables that are required to generate the
scenarios or are material drivers of the ECL under (i) base; (ii) downside (‘disorderly’ Brexit); (iii) downside (‘global slowdown’); and (iv)
upside scenarios at 31 December 2019 and 2018:
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Macroeconomic scenarios and weightings (continued)
The four scenarios detailed above are used to reflect a representative sample of possible outcomes (i.e. base, downside (‘disorderly’
Brexit), downside (‘global slowdown’) and upside scenarios). The ECL allowance reflects a weighted average of the credit loss estimates
under the four scenarios.
Similar to the scenario forecasts, the probability weight assigned to each scenario is proposed by the ERU, with a review and challenge
from ERM. These are subject to review and approval at Group ALCo and the probabilities described below reflect the views of the Group
at the reporting date.
The weights for the scenarios are derived based on the expert judgement, with reference to external market information, informed by a
quantitative analysis. The key quantitative analysis is a statistical distribution analysis of Irish GDP growth over different time horizons
informed by historic patterns in the economic data.
These weightings were reviewed regularly during 2019. There were two changes to the probability weightings during the reporting
period
–	
The probability of the downside scenario (prior to the additional downside scenario being added) was increased by 5% in the third
quarter of 2019 to reflect the increased uncertainty in relation to the Brexit process;
–	
A new downside scenario (‘global slowdown’) was introduced in the fourth quarter of 2019 which required a full review of the
probability weightings in order to incorporate this new scenario. As the UK election has brought increased certainty to the withdrawal
element of Brexit this was deemed to have reduced the risk of the ‘disorderly’ Brexit scenario. A review of the new ‘global slowdown’
scenario indicated that as risks to the global economy remain to the downside, that this new scenario along with the ‘disorderly’
Brexit scenario should continue to have a significant probability attached. This reflects the fact that uncertainty, evident at
31 December 2019, in relation to both Brexit and global economic conditions, continues to remain elevated.
The weights that have been applied as at the reporting date are:
Scenario Weighting
In assessing the adequacy of the ECL allowance, the Group has considered all available forward looking information as of the balance
sheet date in order to estimate the future expected credit losses. The Group, through its risk management processes (including the
use of expert credit judgement and other techniques) assesses its ECL allowance for events that cannot be captured by the statistical
models it uses and for other risks and uncertainties. The assessment of ECL at the balance sheet date does not reflect the worst case
outcome, but rather a probability weighted outcome of the four scenarios. Should the credit environment deteriorate beyond the Group’s
expectation, the Group’s estimate of ECL would increase accordingly.
*Forms an integral part of the audited financial statements
96  Risk Management
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Sensitivities
The Group’s estimates of expected credit losses are responsive to varying economic conditions and forward looking information.
These estimates are driven by the relationship between historic experienced loss and the combination of macroeconomic variables.
Given the co-relationship of each of the macroeconomic variables to one another and the fact that loss estimates do not follow a linear
path, a sensitivity to any single economic variable is not meaningful. As such, the following sensitivities are provided which indicate the
approximate impact on the current ECL allowance before the application of probability weights to the forward looking macroeconomic
scenarios. The sensitivities provide an estimate of ECL movements driven by both changes in model parameters including current
management judgements, and quantitative ‘significant increase in credit risk’ (“SICR”) staging assignments.
Relative to the base scenario, in the 100% downside ‘disorderly’ Brexit and ‘global slowdown’ scenario, the ECL allowance increases
by 19% and 12% respectively. In the 100% upside scenario, the ECL allowance declines by 9%, showing that the ECL impact of the
two downside scenarios is greater than that of the upside scenario. For 31 December 2019, a 100% downside ‘disorderly’ Brexit and
‘global slowdown’ scenarios sees a higher ECL allowance sensitivity of € 235 million and € 146 million respectively compared to base
(€ 163 million and € 74 million respectively compared to reported).
ECL allowance at 31 December 2019
Reported 100% Base 100% downside
(‘disorderly’ Brexit)
100% downside
(‘global slowdown’)
100% upside
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Management judgements
The Group reflects reasonable and supportable information that is available at the reporting date in the measurement of ECLs.
Management adjustments may be required to increase or decrease ECLs to reflect all available reasonable and supportable information
to include risk factors that have not been included in the risk measurement process or where there is insufficient time to appropriately
incorporate relevant new information. Experienced credit judgement may be used to determine the particular attributes of exposures
that have not been adequately captured in the impairment models. Adjustments are required to be directionally consistent with forward
looking forecasts, supported by appropriate documentation and subject to appropriate governance processes. If an ongoing adjustment
is required, the risk measurement methodology should be updated to eliminate the adjustment, and as such, should be temporary in
nature, where appropriate.
The ECL allowance at 31 December 2019 includes the following management adjustments:
1. Primary dwelling house (“PDH”) mortgage post model adjustments
Stage 3 PDH ECL
The Group’s strategy is to deliver sustainable long term solutions and to work with customers through their financial difficulties. This has
primarily been through work-out arrangements with customers, including split mortgages, low fixed interest rate, voluntary sale for loss,
negative equity trade down and positive equity solution or through loan recovery following realisation of collateral. The mortgage LGD
model is based on empirical internal data for such resolved cases, and represents the Group’s expected loss based on those expected
work-out strategies. However, it is recognised that alternative recovery strategies, such as portfolio sales, also need to be considered
which were not envisaged at the time of model development. Accordingly, a post model adjustment has been applied to a cohort of
loans to reflect the potential resolution outcomes not currently considered within the modelled outcome.
The post model adjustment is calculated on a range of alternative recovery assumptions (including portfolio sales). An independent
external benchmark exercise is undertaken to provide information to support the range of alternative recovery outcomes with reference
to collateral values of the loans and to the underlying market conditions. The cohort to which the overlay applies to is primarily those
PDH loans in Stage 3 and in deep arrears (greater than 180 days) and was widened in 2019 to include certain loans from the 90 to 180
days past due category (c. € 63 million).
Probability weightings are applied to reflect a range of possible outcomes, incorporating potential market uncertainty around the ultimate
execution, aligned to the Group’s four economic scenarios used for ECL calculations as outlined on pages 93 to 95.
The ECL allowance of € 552 million for residential mortgages in Ireland at 31 December 2019 includes € 208 million (after non-
contracted write-offs amounting to € 40 million in 2019) as a result of this management adjustment.
At 31 December 2018, the ECL allowance of € 686 million included a management adjustment of € 239 million.
In addition to the write-offs noted above, the main movements in the overlay during the year were due to:
• Increase in portfolio following widening of the criteria as noted above;
• Reduction in portfolio following sales;
• Revisions to collateral valuations and market conditions; and
• The impact of the outcome of the four economic scenarios compared to the outcome assessed in 2018.
The revised portfolio size and collateral valuations resulted in an income statement charge of € 16 million. The greater market and
economic uncertainty reflected in the four scenarios resulted in a further € 37 million charge. (Total income statement charge in 2019:
€ 53 million).
*Forms an integral part of the audited financial statements
98  Risk Management
2.1 Credit risk
Measurement, methodologies and judgements* (continued)
Management judgements (continued)
Forbearance product
An element of forborne loans in Stage 3 (€ 160 million), may require an alternative treatment at loan expiry in line with the Group’s
current mortgage resolution strategy. This is not currently captured within the modelled ECL outcome for this product.
Management have considered the proportion of this cohort that may require alternative treatment and a range of quantitative outcomes
in determining the estimated loss amounts at loan expiry which has resulted in a post model adjustment of € 20 million in 2019
(2018: Nil).
Lifetime interest only
A cohort of non-defaulted lifetime interest only mortgages have been identified for individual assessment to confirm likeliness to pay
(€ 103 million). The loans within this cohort have been allocated to Stage 2, pending individual assessment, reflecting management’s
qualitative judgement of a significant increase in credit risk given the additional end of term risk not fully incorporated into modelled
outcomes. This has resulted in a post model adjustment of € 9 million in 2019 (2018: Nil).
Further information on the above overlays is not provided as the Group believes that such information could compromise the resolution
outcomes given the underlying nature of the portfolios.
2. Syndicated lending portfolio
A detailed review of the ECL model for the syndicated lending portfolio in the CIB business segment was carried out in late 2019 and
it was determined that historically observed relationships between default rates and macroeconomic factors in the model needed to be
revised. As a result, a management adjustment for this portfolio of € 16 million has been applied at 31 December 2019 to increase the
ECL allowance to € 20 million (Stage 1: € 15 million and Stage 2: € 5 million).
3. AIB UK
At 31 December 2019, the AIB UK ECL allowance of € 126 million includes a € 17 million portfolio overlay to take account of the political
and economic uncertainties that exist and that were not adequately captured in the output from the macroeconomic scenarios and
weightings.
ECL governance
The Board has put in place a framework, incorporating the governance and delegation structures commensurate with a material risk,
to ensure credit risk is appropriately managed throughout the Group.
The key governance points in the ECL allowance approval process during 2019 were:
– Model Risk Committee
– Asset and Liability Committee
– Business level ECL Committees
– Group Credit Committee, and
– Board Audit Committee
For ECL governance, the Group management employs its expert judgement on the adequacy of ECL allowance. The judgements are
supported by detailed information on the portfolios of credit risk exposures, and by the outputs of the measurement and classification
approaches described above, coupled with internal and external data provided on both short term and long term economic outlook.
Business segments and Group management are required to ensure that there are appropriate levels of cover for all of its credit
portfolios and must take account of both accounting and regulatory compliance when assessing the expected levels of loss.
Assessment of the credit quality of each business segment is initially informed by the output of the quantitative analytical models
but may be subject to management adjustments. This ECL output is then scrutinised and approved at individual business unit level
(ECL Committee) prior to onward submission to the Group Credit Committee (GCC). GCC reviews and challenges ECL levels for
onward recommendation to the Board Audit Committee.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
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2.1 Credit risk – Credit exposure overview
Maximum exposure to credit risk*
Maximum exposure to credit risk from on-balance sheet and off-balance sheet financial instruments is presented before taking account
of any collateral held or other credit enhancements (unless such enhancements meet accounting offsetting requirements). For financial
assets recognised on the statement of financial position, the maximum exposure to credit risk is their carrying amount, and for financial
guarantees and similar contracts granted, it is the maximum amount the Group would have to pay if the guarantees were called upon.
For loan commitments and other credit related commitments that are irrevocable over the life of the respective facilities, it is generally
the full amount of the committed facilities.
The following table sets out the maximum exposure to credit risk that arises within the Group and distinguishes between those assets
that are carried in the statement of financial position at amortised cost and those carried at fair value at 31 December 2019 and 2018:
ECL allowance amounting to € 4 million (2018: € 4 million) included in carrying amount of investment securities at FVOCI.
There was a € 16 million net credit impairment charge in the year to 31 December 2019. This comprised of a € 27 million charge on
loans and advances to customers (net re-measurement of ECL allowance charge of € 117 million, offset by recoveries of amounts
previously written-off of € 90 million) and a € 11 million writeback for off-balance sheet exposures.
Further details on the net credit impairment charge in the year to 31 December 2019 are set out on page 287.
Risk management – 2. Individual risk types
*Forms an integral part of the audited financial statements
Risk Management 1

2.1 Credit risk – Credit profile of the loan portfolio
The Group’s customer loan portfolio comprises loans (including overdrafts), instalment credit and finance lease receivables. An overdraft
provides a demand credit facility combined with a current account. Borrowings occur when the customer’s drawings take the current
account into debit. The balance may, therefore, fluctuate with the requirements of the customer. Although overdrafts are contractually
repayable on demand (unless a fixed term has been agreed), provided the account is deemed to be satisfactory, full repayment is not
generally demanded without notice.
The following table analyses loans and advances to customers at amortised cost by segment, internal credit ratings and ECL staging at
31 December 2019 and 2018:
Amortised cost
Gross loans and advances to customers
Gross loans and advances to customers reduced by € 0.8 billion in the year to 31 December 2019. Of the total portfolio of € 62.1 billion,
€ 62.0 billion is measured at amortised cost with the remaining € 0.1 billion being measured at fair value through profit or loss.
The reduction was driven by redemptions net of interest credited and other miscellaneous movements of € 11.3 billion and disposals
of € 2.1 billion. In addition, there was a further reduction of € 0.3 billion due to write-offs. These reductions were offset against new
lending activity of € 12.3 billion in 2019 which was € 0.2 billion higher than 2018, and € 0.6 billion in foreign exchange movements.
The decrease in gross loans was evident across all asset classes with the exception of the non-property business sector which
increased by € 0.7 billion, primarily due to strong new lending volumes in the UK and CIB segments. Overall, from a segment
perspective, Retail Banking decreased by € 2.5 billion driven by the disposal of distressed loans. This was slightly offset by increases in
CIB and UK of € 1.0 billion, € 0.7 billion respectively.
The asset quality profile of the Group continues to improve and has benefited from the continued deleveraging activity on the non-
performing book, the strong quality profile of new business and lower levels of grade deterioration.
Of the total loans to customers of € 62.1 billion, € 55.3 billion or 89% are rated as either ‘strong’ or ‘satisfactory’ which is an increase of
€ 3.0 billion (2018: € 52.3 billion or 83%), and was evidenced across all segments. The ‘criticised’ classification includes ‘criticised watch’
of € 2.3 billion and ‘criticised recovery’ of € 1.2 billion, the total of which has decreased by € 1.1 billion. Overall, the total performing book
has increased by € 2.0 billion to € 58.8 billion or 95% of gross loans and advances to customers (2018: € 56.8 billion and 90%).
Stage 3 loans decreased by € 2.4 billion to € 3.1 billion. The reduction was primarily as a result of the portfolio sales completed
throughout the year which impacted all asset classes but predominately property (€ 0.6 billion), non-property business (€ 0.6 billion), and
mortgage portfolios (€ 0.4 billion). Redemptions net of interest credited across all asset classes accounted for € 0.7 billion.
Non-performing loans are aligned to the Group’s definition of default and Stage 3 credit impaired with the exception of those originating
in Stage 1 (€ 24 million) and POCI (€ 0.2 billion). Non-performing loans originating in Stage 1 decreased by € 188 million during the
year to 31 December 2019, primarily due to disposals and loan quality deterioration. Non-performing loans reduced by € 2.7 billion to
€ 3.3 billion or 5.4% of gross loans and advances to customers (2018: € 6.1 billion and 9.6%). The reduction in non-performing loans
was driven by disposals of € 1.8 billion with the remainder due to redemptions.
ECL allowance
The ECL allowance on loans and advances to customers reduced by € 0.8 billion to € 1.2 billion in the year. The reduction was
predominately in Stage 3 relating to the portfolio sales of distressed loans. The ECL cover rate decreased from 3.2% at 31 December
2018 to 2.0% at 31 December 2019. This was primarily driven by the reduction in Stage 3 cover as a result of higher cover loans being
disposed of and the increase in lower cover Stage 1 loans.
Risk management – 2. Individual risk types
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Income statement
There was a € 16 million net credit impairment charge for the year to 31 December 2019 (2018: credit impairment writeback of
€ 204 million).
This comprised of a € 27 million credit impairment charge for loans and advances to customers and an € 11 million writeback in relation
to off balance sheet exposures (2018: credit impairment writeback of € 209 million and a charge of € 6 million respectively).
The € 27 million charge comprised a € 117 million ECL re-measurement allowance offset by € 90 million recoveries of amounts
previously written-off. (2018: € 209 million writeback comprising of € 89 million and € 120 million respectively).
There were a number of drivers which contributed to the € 117 million charge, the most significant of which were: the additional ECL
allowance required for post model adjustments; the changes in macroeconomic factors; and the impact of the probability weightings
across four economic scenarios.
As outlined under the Management judgements section, the impact of the post model adjustments on the PDH ECL allowance resulted
in a charge of € 82 million in Retail Banking. The post model adjustment in relation to the syndicated lending portfolio in CIB, resulted in
a charge of € 16 million.
Enhancements in 2019 to Retail Banking models (i.e. the Retail Asset Finance LGD model and the Retail Loans and Overdrafts PD
model) resulted in a € 33 million writeback.
Changes to the macroeconomic factors and probability weightings, excluding their impacts in post model adjustments, resulted in a
€ 46 million charge, which predominantly impacted Retail Banking. In the first half year, the Group updated the House Price Index
forecast to reflect slower anticipated growth which resulted in a € 23 million charge. In the second half of 2019, a fourth macroeconomic
scenario was introduced to reflect a global slowdown accordingly, the probability weightings across the scenarios were changed, details
of which are set out on pages 93 to 95, and resulted in a charge of € 23 million.
Other than the impact of the model changes (€ 76 million) and macroeconomic factors (€ 46 million) there was a net writeback of
€ 5 million. The ECL allowance movements are outlined on pages 125 to 129.
Against a backdrop of favourable economic conditions and a strong performance by the Group’s specialised recovery function,
recoveries of amounts previously written-off amounted to € 90 million were reported in 2019 (2018: € 120 million). This relates to
€ 63 million of cash received on loans where recovery was previously considered unlikely (2018: € 76 million) and a further € 27 million
in cash receipts (2018: € 44 million) on loans, which had an element of partial write-down that cured from Stage 3 in the year without
any financial loss.
2.1 Credit risk – Credit profile of the loan portfolio
Internal credit grade profile by ECL staging (continued)
2019* 2018*
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Residential mortgages
Residential mortgages amounted to € 31.5 billion at 31 December 2019, with the majority (96%) relating to residential mortgages in the
Republic of Ireland and the remainder relating to the United Kingdom. This compares to € 32.3 billion at 31 December 2018, of which
96% related to residential mortgages in the Republic of Ireland. The split of the residential mortgage portfolio was owner-occupier
€ 29.0 billion and buy-to-let € 2.5 billion (2018: owner-occupier € 29.1 billion and buy-to-let € 3.2 billion).
At 31 December 2019, a € 0.6 billion ECL allowance was held against the Group’s residential mortgages portfolio, or 1.8% total cover
rate.
During 2019, there was a net credit impairment charge of € 93 million to the income statement. This was primarily driven by the Republic
of Ireland portfolio as a result of post model adjustments i.e. management adjustments as outlined on pages 97 and 98, resulting in a
charge of € 82 million. In addition, the Group recovered € 36 million on loans previously written-off.
Residential mortgages – page 108
– Residential mortgage portfolio at amortised cost by segment, internal credit ratings and ECL staging
Republic of Ireland residential mortgages – pages 109 to 113
– By ECL staging
– Actual and weighted average indexed loan-to-value ratios by staging
Residual debt, which is now unsecured following the disposal of property on which the residential mortgage was secured, is included in
the residential mortgage portfolio and as such, is included in the tables within this section.
Risk management – 2. Individual risk types
108  Risk Management
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Residential mortgages
The following table analyses the residential mortgage portfolio at amortised cost by segment, internal credit ratings and ECL staging at
31 December 2019 and 2018:
2019* 2018*
Retail
Banking
Risk management – 2. Individual risk types
110  Risk Management
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Republic of Ireland residential mortgages (continued)
Residential mortgages in Ireland amounted to € 30.2 billion at 31 December 2019 compared to € 31.0 billion at 31 December 2018.
The decrease in the portfolio was primarily due to loan repayments and disposals, offset by new lending. Total drawdowns in the
year were € 3 billion, of which 98% were by owner occupiers, whilst the weighted average indexed loan-to-value for new residential
mortgages was 68%. New lending in the year increased by 8% driven by the favourable macroeconomic conditions.
The split of the Irish residential mortgage portfolio is 92% owner-occupier and 8% buy-to-let and comprises 27% tracker rate,
52% variable rate and 21% fixed rate mortgages.
Non-performing loans decreased from € 3.1 billion at 31 December 2018 to € 2.2 billion at 31 December 2019, impacted by the portfolio
sales of distressed loans and also partly due to repayments/redemptions and write-offs.
Income statement
There was a net credit impairment charge of € 92 million to the income statement for the year to 31 December 2019 compared to a net
credit impairment writeback of € 82 million for 2018. The ECL allowance provision cover level at 31 December 2019 is 2% (2018: 2%).
For the Stage 3 element of the portfolio, € 0.5 billion of ECLs are held providing cover of 23% (2018: € 0.6 billion and 21% respectively).
Residential mortgage arrears
Total loans in arrears (including non-performing loans) by value decreased by 26% during the year to 31 December 2019, a decrease of
16% in the owner-occupier portfolio and a decrease of 63% in the buy-to-let portfolio. The decrease in the buy-to-let arrears was driven
by the portfolio sale of distressed loans.
The number of loans in arrears (based on number of accounts) greater than 90 days was 4.1% at 31 December 2019 and remains
below the industry average of 6.8%(1)
. For the owner-occupier portfolio, the number of loans in arrears greater than 90 days at 3.8%
were below the industry average of 6%(1)
. For the buy-to-let portfolio, loans in arrears greater than 90 days at 7.5% were below the
industry average of 14%(1)
.
(1)
Source: Central Bank of Ireland (“CBI”) Residential Mortgage Arrears and Repossessions Statistics as at 30 September 2019, based on numbers of
accounts.
Forbearance
Irish residential mortgages subject to forbearance measures decreased by € 1.1 billion from € 3.6 billion at 31 December 2018 to
€ 2.5 billion at 31 December 2019. A key feature of the forbearance portfolio is the level of advanced forbearance solutions driven by the
Group’s strategy to deliver sustainable long term solutions to customers and support customers in remaining in their family home.
Details of forbearance measures are set out in Risk Management 2.1 Additional credit quality and forbearance disclosures on loans and
advances to customers.
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Republic of Ireland residential mortgages – properties in possession(1)
The Group seeks to avoid repossession through working with customers. However, in situations where an agreement cannot be
reached, the Group proceeds with the repossession of the property or the appointment of a receiver. The Group uses external agents
to realise the maximum value as soon as is practicable. Where the Group believes that the proceeds of sale of a property will comprise
only part of the recoverable amount of the loan against which it was being held as security, the customer remains liable for the
outstanding balance and the remaining loan continues to be recognised on the statement of financial position.
The number (stock) of properties in possession at 31 December 2019 and 2018 is set out below:
2019 2018
Stock Balance
outstanding
Stock Balance
outstanding
The number of residential properties in possession relates to those held as security for residential mortgages only.
The stock of residential properties in possession decreased by 78 properties in 2019 (2018: 62 properties). This decrease relates
to the disposal of 231 properties (2018: 53 properties) which were offset by the addition of 180 properties (2018: 43 properties), the
majority of which were voluntary surrenders or abandonments. In addition, a further 27 properties were removed from the stock in 2019
(2018: 52 properties), mainly due to the sale of a portfolio of loans.
The disposal of 231 residential properties in the Republic of Ireland resulted in a total loss on disposal of € 28 million at 31 December
2019 (before ECL allowance) and compares to 31 December 2018 when 53 residential properties were disposed of resulting in a total
loss of € 7 million. Losses on the sale of such properties are recognised in the income statement as part of the net credit impairment
losses.
Republic of Ireland residential mortgages – repossessions disposed of
The following table analyses the disposals of repossessed properties for the years ended 31 December 2019 and 2018:
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Other personal (continued)
At 31 December 2019, the other personal lending portfolio of € 3.0 billion comprises € 2.3 billion in loans and overdrafts and € 0.7 billion
in credit card facilities (2018: total € 3.1 billion and € 2.3 billion and € 0.8 billion respectively). The credit quality of the portfolio remains
strong and improved during the year, with 16% categorised as less than satisfactory, of which defaulted loans amounted to € 0.2 billion
(2018: 20% and € 0.4 billion).
The demand for personal loans, which accounts for the largest portion of the portfolio, continues to be strong which is due to the
favourable economic environment and the Group’s increased automated service offering. This has resulted in an increase in new
lending of € 0.2 billion or 13% to € 1.1 billion for the year (2018: € 0.9 billion).
Stage 3 loans, predominately in Retail Banking, decreased by € 0.2 billion in the year to 31 December 2019, primarily due to portfolio
sales of distressed loans and redemptions/repayments. At 31 December 2019, the ECL allowance cover was 6% with Stage 3 cover at
60% (2018: 8% and 50% respectively).
The net credit impairment charge in the income statement amounted to € 10 million for the year to 31 December 2019 compared to a
writeback of € 13 million for the year to 31 December 2018.
Risk management – 2. Individual risk types
116  Risk Management
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Property and construction
The following table analyses property and construction lending at amortised cost by segment, internal credit ratings and ECL staging at
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Property and construction (continued)
The property and construction portfolio consists of € 7.3 billion in loans and advances measured at amortised cost together with
€ 0.1 billion of loans measured at FVTPL (total € 7.4 billion).
The portfolio measured at amortised cost amounted to 12% of total loans and advances. The portfolio comprised of 76% investment
loans (€ 5.6 billion), 14% land and development loans (€ 1.0 billion) and 10% other property and construction loans (€ 0.7 billion).
The CIB segment accounts for 57% of the portfolio, followed by the AIB UK segment at 31%.
The portfolio reduced by € 0.5 billion or 6% during the year to 31 December 2019. This reduction was driven by redemptions/
repayments net of interest credited of € 1.8 billion and disposals of € 0.7 billion as a result of the portfolio sales of distressed loans.
The reduction was mainly offset by new lending of € 2.0 billion, which was predominately in the CIB segment and is primarily to provide
senior secured funding. At 31 December 2019, € 6.5 billion of the portfolio was in a strong/satisfactory grade, which is an increase of
€ 0.7 billion in the year. The level of non-performing loans have reduced by € 1.0 billion as a result of the portfolio sales of distressed
loans and redemptions/repayments.
Property and construction loans measured at FVTPL reduced by € 70 million to € 77 million in the year to 31 December 2019, the
reduction being in non-performing loans as a result of a loan sale.
There was a net credit impairment writeback of € 46 million to the income statement in the year to 31 December 2019. This was due
to the recovery of € 19 million on loans previously written-off reflecting continued cash recoveries. There was a net re-measurement
writeback of € 27 million driven by a € 39 million writeback in Stage 3 which was mainly in individually assessed loans.
The portfolio held € 0.2 billion of ECL allowance which provide ECL allowance cover of 3%. For the Stage 3 portfolio, the ECL allowance
cover is 36% (2018: € 0.5 billion, 6% and 34% respectively).
Investment
Investment property loans amounted to € 5.6 billion at 31 December 2019 (2018: € 6.1 billion) of which € 4.2 billion related to
commercial investment. The geographic profile of the investment property portfolio is predominately in the Republic of Ireland
(€ 3.7 billion) and the United Kingdom (€ 1.6 billion).
At 31 December 2019, there was a net credit impairment writeback of € 47 million to the income statement on the investment property
element of the property and construction portfolio (2018: € 94 million).
Land and development
At 31 December 2019, land and development loans amounted to € 1.0 billion (2018: € 1.1 billion) of which € 0.2 billion related to loans in
the Retail Banking segment, € 0.6 billion in the CIB segment and € 0.2 billion in the AIB UK segment.
The income statement net credit impairment writeback for the year to 31 December 2019 was € 17 million (2018: € 26 million writeback).
Contractors
Loans to contractors remained unchanged at € 0.3 billion (2018: € 0.3 billion). However, there was a net credit impairment charge of
€ 18 million (2018: € 3 million) in the year relating to a small number of borrowers.
Risk management – 2. Individual risk types
118  Risk Management
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Non-property business
The following table analyses non-property business lending at amortised cost by segment, internal credit ratings and ECL staging at
2.1 Credit risk – Credit profile of the loan portfolio – Asset class analysis
Loans and advances to customers – Non-property business (continued)
The non-property business portfolio comprises of small and medium enterprises (“SMEs”) which are reliant on the domestic economies
in which they operate and larger corporate and institutional borrowers which are impacted by global economic conditions. The portfolio
increased by 4% (€ 0.7 billion) to € 20.3 billion in the year to 31 December 2019 due to continued demand for credit across all segments
resulting in new lending of € 6.2 billion (2018: € 6.5 billion). However, this was offset by amortisation and portfolio sales of distressed
loans. The non-property business portfolio amounted to 33% of total Group loans and advances at 31 December 2019 (2018: 31%).
The majority of the portfolio exposure is to Irish borrowers with the UK and USA being the other main geographic concentrations.
Loans graded as strong/satisfactory increased during the year to 93%, continuing the positive trend experienced in 2018 (89%), with
new drawdowns exceeding repayments coupled with upward grade migration on existing loans. The level of less than satisfactory
grades (including non-performing loans) reduced from € 2.2 billion at 31 December 2018 to € 1.5 billion at 31 December 2019, mainly
due to a reduction of € 0.6 billion in defaulted loans following the portfolio sales of distressed loans.
The following are the key themes within the main sub-sectors of the non-property business portfolio:
–	
The agriculture sub-sector comprises 9% of the portfolio at € 1.7 billion. A return to more normal weather conditions throughout
2019 helped significantly in reducing input expenditure after a challenging 2018. However, pressure on costs and output prices will
continue to be a concern in 2020 for overall farm incomes. The Group is proactively encouraging farmers to understand the impact
of future challenges on their farm business and to improve on-farm efficiencies;
–	
The hotels sub-sector comprises 11% of the portfolio at € 2.2 billion. This sector continued to perform well in the year to
31 December 2019. Tourism performed well despite softening in growth of overseas visitors which was offset by sustained strength
in the local Irish economy. Increased supply is starting to come into the Dublin, Cork and Galway markets in order to meet the
current levels of demand which may have an impact on occupancy and rates;
–	
The licensed premises sub-sector comprises 3% of the portfolio at € 0.5 billion. This sector performance is stable in areas of high
footfall, however, the challenge remains for licensed premises in more rural locations and in small towns where there is a lot of
competition;
–	
The retail/wholesale sub-sector (10% of the portfolio at € 2.0 billion) was broadly stable in the Republic of Ireland. Challenges
include Brexit uncertainty and the growing adoption of online shopping. In the UK, a number of high profile retailers have been
impacted by a drop in consumer confidence and disposable income. These headwinds, and similar trends in the US, must be
considered when reviewing the sector within the Republic of Ireland, albeit current economic performance is strong and consumer
confidence is high;
–	
The other services sub-sector comprises 29% of the portfolio at € 6.0 billion, which includes businesses such as solicitors,
accounting, audit, tax, computer services, research and development, consultancy, hospitals, nursing homes and plant and
machinery. This sub-sector has continued to perform comparatively well in 2019; and
–	
The category titled ‘Other’ totalling € 7.3 billion (36% of the portfolio) includes a broad range of sub-sectors such as energy,
manufacturing, transport and financial. The € 1.0 billion increase in the year to 31 December 2019 was driven by € 0.7 billion of new
lending in the energy sector.
The CIB segment includes € 4.8 billion (2018: € 4.6 billion) in syndicated lending exposures, an element of which is included in the
‘Other’ category referenced above. The Group has specialised lending teams which are involved in participating in the provision of
finance to US and European corporations for mergers, acquisitions, buy-outs and general corporate purposes. At 31 December 2019,
99% of the syndicated lending portfolio is in a strong/satisfactory grade. 65% of the customers in this portfolio are domiciled in the USA,
4% in the UK, and 31% in the Rest of the World (2018: 63% in the USA, 5% in the UK and 32% in the Rest of the World (primarily
Europe) respectively). The largest industry sub-sectors within the portfolio include telecoms, business services, healthcare and hotel/
leisure industries.
Strong economic growth in the Republic of Ireland has continued during 2019. Notwithstanding this, there are still challenges.
In particular, the nature of the future relationship between the UK and the EU following Brexit continues to be uncertain.
There was a net credit impairment writeback of € 30 million to the income statement for the year to 31 December 2019. This was
driven by a net re-measurement writeback of € 17 million and by recoveries of previously written-off loans of € 13 million. The net
re-measurement writeback of € 17 million was driven by a € 51 million writeback in the Retail Banking segment which was offset by a
€ 18 million charge in the UK segment and a € 16 million charge in the CIB segment. The charge in the UK reflects a small number of
borrowers and the charge in the CIB segment was driven by the management overlay in the syndicated lending portfolio.
The portfolio held € 0.3 billion in ECL allowance which provides ECL allowance cover of 2%. For the Stage 3 portfolio, the ECL
allowance cover is 32% (2018: € 0.6 billion, 3% and 37% respectively).
Risk management – 2. Individual risk types
Stage transfers are a key component of ECL allowance movements (i.e. Stage 1 to Stage 2 to Stage 3) being the primary driver of a
higher income statement charge (and vice versa) in addition to the net re-measurement of ECL due to change in risk parameters within
a stage.
Transfers from Stage 1 to Stage 2 of € 3.3 billion represent the underlying credit activity where a significant increase in credit risk
occurred at some point during the year through either the quantitative or qualitative criteria for stage movement. The main driver of the
movements to Stage 2 was the doubling of PDs, subject to 50bps. 41% of the movements relied on a qualitative or backstop indicator of
significant increase in credit risk (e.g. forbearance or movement to a watch grade) of which 3% relied solely on the backstop of 30 days
past due to identify that a significant increase in credit risk had occurred. Of the € 3.3 billion which transferred from Stage 1 to Stage 2
during the year, approximately € 2.2 billion is reported as Stage 2 at 31 December 2019.
Similarly, transfers from Stage 2 to Stage 1 of € 3.1 billion represent those loans where the triggers for significant increase in credit risk
no longer apply or loans that have fulfilled a probation period. These transfers include loans which have been upgraded through normal
credit management process.
In 2019, following an assessment of the mortgage exposures, a change to the quantitative SICR threshold from 50bps to 85bps was
approved by the Group. This was implemented in the Irish residential mortgage portfolio as at December 2019. This change resulted
in a gross loan Stage 2 to Stage 1 transfer of € 0.4 billion reflected within other movements. 99% of the loans impacted carry a strong/
satisfactory risk rating with an immaterial impact on the ECL allowance.
*Forms an integral part of the audited financial statements
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2.1 Credit risk – Credit profile of the loan portfolio
Gross loansand ECL movements (continued)
Transfers from Stage 2 to Stage 3 of € 0.7 billion represent those loans that defaulted during the period. These arose in cases where
it was determined that the customers were unlikely to pay their credit obligations in full without the realisation of collateral regardless
of the existence of any past due amount or the number of days past due. In addition, transfers also include all credit obligors that are
90 days or more past due on a material obligation. Of the transfers from Stage 2 to Stage 3 € 0.2 billion had transferred from Stage 1 to
Stage 2 earlier in the year.
Transfers from Stage 3 to Stage 2 of € 0.4 billion were mainly driven by resolution activity with the customer, through either restructuring
or forbearance previously granted and which subsequently adhered to default probation requirements. As part of the credit management
practices, active monitoring of loans and their adherence to default probation requirements is in place. Transfers from Stage 3 to Stage
1 of € 0.1 billion primarily reflect curing events from default where no forbearance measure was required.
Disposals of € 2.1 billion primarily reflects the portfolio sales of distressed loans during the year which was a key driver of the Stage 3
reductions across all sectors.
Reductions due to write-offs continue to reflect the utilisation of ECL stock as a result of the restructure of customer debt in line with the
Group’s strategy.
Recalibration and enhancements to take account of updated observed outcomes within the Group’s definition of default and the IFRS 9
staging process resulted in an increase in Stage 1 gross loans of € 50 million and a reduction in Stage 2 and Stage 3 gross loans of
€ 40 million and € 10 million respectively which are reflected within other movements.
The revision of the macroeconomic factors and probability weightings resulted in a € 46 million ECL charge.
In summary, the staging movements of the overall portfolio were as follows:
Stage 1 loans increased by € 3 billion in 2019 with an ECL of € 0.1 billion and resulting cover of 0.3%. This was primarily on foot of net
new lending and loans curing to Stage 1.
Stage 2 loans decreased by € 1.3 billion in 2019 with an ECL of € 0.2 billion and resulting cover of 5.1%. This was driven by repayments
and redemptions and loans for which a significant increase in credit risk no longer applied and/or which had completed a probation
period.
Stage 3 loans decreased by € 2.4 billion in 2019 with the ECL cover reducing from 28.3% to 27.5%. Key drivers were portfolio sales of
distressed loans and loans completing default probation periods. The reduction in cover reflects the disposal of loans which carried a
higher average ECL charge.
Further details on stage movements by asset class are set out in the tables on the following page.
1
Risk Management 1
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2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance*
Overview
Forbearance occurs when a borrower is granted a temporary or permanent concession or an agreed change to the existing contracted
terms of a facility (‘forbearance measure’) for reasons relating to the actual or apparent financial stress or distress of that borrower. This also
includes a total or partial refinancing of existing debt due to a borrower availing of an embedded forbearance clause(s) in their contract.
A forbearance agreement is entered into where a borrower is in financial difficulty to the extent that they are unable currently to repay
both the principal and interest in accordance with the existing contracted terms of a facility. A concession or an agreed change to the
contracted terms can be of a temporary (e.g. interest only) or permanent (e.g. term extension) nature.
The Group uses a range of initiatives to support its customers. The Group considers requests from customers who are experiencing
cash flow difficulties on a case by case basis in line with the Group’s Forbearance Policy and relevant procedures, and completes an
affordability/repayment capacity assessment taking account of factors such as current and likely future financial circumstances, the
borrower’s willingness to resolve such difficulties, and all relevant legal and regulatory obligations to ensure sustainable measures are
put in place as appropriate.
Group credit policies, supported by relevant processes and procedures, are in place which set out the policy rules and principles
underpinning the Group’s approach to forbearance, ensuring the forbearance measure(s) provided to borrowers are affordable and
sustainable, and in line with relevant regulatory requirements. Key principles include supporting viable Small Medium Enterprises
(“SMEs”), and providing support to enable customers remain in their family home, whenever possible. The Group has implemented the
standards for the Codes of Conduct in relation to customers in actual or apparent financial stress or distress, as set out by the Central
Bank of Ireland, ensuring these customers are dealt with in a professional and timely manner.
A request for forbearance is a trigger event for the Group to undertake an assessment of the customer’s financial circumstances prior
to any decision to grant a forbearance measure. This may result in the downgrading of the credit grade assigned and an increase in
the expected credit loss. Facilities to which forbearance has been applied continue to be classified as forborne until the forbearance
measures expire or until an appropriate probation period has passed.
The effectiveness of forbearance measures over the lifetime of the arrangements are subject to ongoing management and review.
A forbearance measure is deemed to be effective if the borrower meets the revised or original terms of the contract over a sustained
period of time resulting in an improved outcome for the Group and the borrower.
Mortgage portfolio
Under the mandate of the Central Bank’s Code of Conduct on Mortgage Arrears (“CCMA”), the Group introduced a four-step process
called the Mortgage Arrears Resolution Process, or MARP. This process aims to engage with, support and find resolution for mortgage
customers (for their primary residence only) who are in arrears, or are at risk of going into arrears.
The four step process is summarised as follows:
– Communications – We are here to listen, support and provide advice;
– Financial information – To allow us to understand the customer’s finances;
– Assessment – Using the financial information to assess the customer’s situation; and
– Resolution – We work with the customer to find an appropriate resolution.
The core objective of the process is to determine sustainable solutions that, where possible, help to keep customers in their family
home. In addition to relevant short term measures, this includes the following long term forbearance measures which have been devised
to assist existing Republic of Ireland primary residential mortgage customers in financial difficulty. The types of existing forbearance
solutions currently include; low fixed interest rate sustainable solution, split mortgages, negative equity trade down, voluntary sale for
loss, arrears capitalisation and term extension.
Non-mortgage portfolio
The Group also has in place forbearance measures for customers in the non-mortgage portfolio who are in financial difficulty.
This approach is based on customer affordability and sustainability and applying the following core principles:
– Customers must be treated objectively and consistently;
– Customer circumstances and debt obligations must be viewed holistically; and
– Solutions will be appropriately provided where customers are co-operative, and are willing but unable to pay.
The forbearance process is one of structured engagement to assess the long term levels of sustainable and unsustainable debt.
The commercial aspects of this process require that customer affordability is viewed comprehensively, to include all available sources of
finance for debt repayment, including unencumbered assets.
Types of non-mortgage forbearance include short term measures (such as interest only and capital and interest moratorium) and long term
measures (such as term extension, debt consolidation, and collateral disposal). This process may result in debt write-off, where appropriate.
See accounting policy (s) ‘Impairment of financial assets’ in note 1 to the consolidated financial statements.
*Forms an integral part of the audited financial statements
Risk management – 2. Individual risk types
136  Risk Management
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance
The following table sets out the internal credit ratings and ECL staging of forborne loans and advances to customers at 31 December
2019 and 2018:

Risk Management 1
2
3
4
5
6
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance
Republic of Ireland residential mortgages
The Group has a Mortgage Arrears Resolution Strategy (“MARS”) for dealing with mortgage customers in actual or apparent financial
difficulty, which builds on and formalises the Group’s Mortgage Arrears Resolution Process. The core objectives of MARS are to
ensure that arrears solutions are sustainable in the long term and that they comply with the spirit and the letter of all relevant regulatory
requirements. MARS includes long term forbearance measures which have been devised to assist existing Republic of Ireland primary
residential mortgage customers in financial difficulty.
Under the definition of forbearance, which complies with that prescribed by the European Banking Authority, facilities subject to
forbearance measures remain in forbearance stock for a minimum period of two years from the date forbearance is granted regardless
of the forbearance type. Therefore, cases that receive a short term forbearance measure, such as interest only and return to a full
principal and interest repayment schedule at the end of the interest only period, will remain in the stock of forbearance for at least two
years.
The following table analyses movements in the stock of residential mortgages subject to forbearance at 31 December 2019 and 2018:
Risk management – 2. Individual risk types
140  Risk Management
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance
Republic of Ireland residential mortgages (continued)
Residential mortgages subject to forbearance measures by type of forbearance (continued)
A key feature of the forbearance portfolio is the level of advanced forbearance measures (split mortgages, low fixed interest rate,
voluntary sale for loss, negative equity trade down and positive equity solutions) driven by the Group’s strategy to deliver sustainable
long term solutions to customers. Advanced forbearance solutions at € 0.5 billion accounted for 18% of the total forbearance portfolio at
31 December 2019 (2018: € 0.5 billion, 14%). Following restructure, loans are reported as defaulted for a probationary period of at least
12 months.
Other permanent standard forbearance measures are term extensions and arrears capitalisation (which often include a term extension).
Permanent forbearance measures are reported within the stock of forbearance for five years, and therefore, represent in some cases
forbearance solutions which were agreed up to five years ago. These include loans where a subsequent interest only or other temporary
arrangement had expired at 31 December 2019, but where an arrears capitalisation or term extension was awarded previously.
Arrears capitalisation continues to be the largest category of forbearance solutions at 31 December 2019, accounting for 38% by value
of the total forbearance portfolio (2018: 36%). While actually decreasing year on year, a high proportion of the arrears capitalisation
portfolio (55% by value) is Stage 3 at 31 December 2019. This reflects the historic nature of the forbearance event for part of the
portfolio and the requirement that loans complete a probationary period of at least 12 months before being upgraded from default,
as described above.
Residential mortgages subject to forbearance measures – aged analysis.
The following table sets out gross residential mortgages subject to forbearance measures analysed by credit profile and by the number
of days past due status at 31 December 2019 and 2018:
141

Risk Management 1
2
3
4
5
6
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance
Republic of Ireland residential mortgages (continued)
Republic of Ireland residential mortgages subject to forbearance measures by indexed loan-to-value ratios
The following table profiles the Republic of Ireland residential mortgage portfolio that was subject to forbearance measures by the
indexed loan-to-value ratios at 31 December 2019 and 2018:
Risk management – 2. Individual risk types
142  Risk Management
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance
Non-mortgage
The following table analyses movements in the stock of loans subject to forbearance in the Republic of Ireland and the United Kingdom
at 31 December 2019 and 2018, excluding residential mortgages which are analysed on pages 137 to 141.
143

Risk Management 1
2
3
4
5
6
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Forbearance
Non-mortgage subject to forbearance measures by type of forbearance
The Group has developed treatment strategies for customers in the non-mortgage portfolio who are experiencing financial difficulties.
The approach is based on assessing customer affordability and applying strategies that deliver a sustainable solution for the customer
and the Group.
Non-retail customers in difficulty may have exposures across a number of asset classes including SME debt, associated property
exposures and residential mortgages. The following table sets out an analysis of non-mortgage forbearance solutions at 31 December
2019 and 2018:
Risk management – 2. Individual risk types
144  Risk Management
2.1 
Credit risk
Additional credit quality and forbearance disclosures on loans and advances to customers
Republic of Ireland residential mortgages by year of origination
The following table profiles the Republic of Ireland residential mortgage portfolio by year of origination at 31 December 2019 and 2018:
A significant element (€ 11.4 billion or 38%) of the € 30.2 billion residential mortgage portfolio was originated between 2005 and 2008,
of which 13% (€ 1.5 billion) was credit impaired at 31 December 2019. This cohort was particularly impacted by reduced household
income and increased unemployment rates in the years during the financial crisis, as individual borrower exposure was higher than in
previous periods due to the property price peak in 2007. 8% of the residential mortgage portfolio was originated before 2005 of which
14% was credit impaired at 31 December 2019, while the remaining 54% of the portfolio was originated from 2009 onwards, of which
2% was credit impaired at 31 December 2019.
145

Risk Management 1
2
3
4
5
6
2.2 Funding and liquidity risk
Liquidity risk is the risk that the Group will not be able to fund its assets and meet its payment obligations as they fall due, without
incurring unacceptable costs or losses. Funding is the means by which liquidity is generated, e.g. secured or unsecured, wholesale,
corporate or retail. In this respect, funding risk is the risk that a specific form of liquidity cannot be obtained at an acceptable cost.
The objective of liquidity management is to ensure that, at all times, the Group holds sufficient funds to meet its contracted and
contingent commitments to customers and counterparties at an economic price.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for funding and liquidity risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
Funding and
liquidity risk •	
Regulatory and legal change is a key risk due to its potential impact on customer behaviours, markets and internal Group processes
and resources.
•	
Financial, macroeconomic and geopolitical volatility is a key risk driver as a negative macroeconomic environment can lead to
market instability and increased funding and liquidity risk. ‘Lower for longer’ interest rates will continue to suppress the Group’s
profitability.
•	
Cyber is a key risk driver as an increased level of cyber attacks may result in negative media commentary which increases the risk
of deposit outflows.
•	
Climate change is a key risk driver. In the event that the Group is not fully cognisant of climate change-related risks, this may
increase costs over the medium to long term (e.g. more significant weather events could begin to impact on government finances
and thereby impact sovereign bond prices).
•	
Changing external perceptions is a key risk driver as a change in the Group’s credit rating and/or changing market perception may
lead to increased funding costs.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to funding and liquidity risk including:
• Board Approved Risk Appetite Statement covering key regulatory and internal liquidity requirements,
• Comprehensive Internal Liquidity Adequacy Assessment (“ILAAP”) Framework and supporting policies,
•	
Regular forward looking assessment of liquidity adequacy through annual ILAAP and internal stress testing which considers a range
of scenarios,
• Funding contingency and Recovery Planning activities,
• Independent second line of defence review and challenge of ILAAP and Funding and Liquidity Plan.
Identification and assessment
Funding and liquidity risk is measured and controlled using a range of metrics and methodologies including Liquidity Stress Testing and
ensuring adherence to limits based on both internal limits and the regulatory defined liquidity ratios, the Liquidity Coverage Ratio (“LCR”)
and the Net Stable Funding Ratio (“NSFR”). Liquidity stress testing consists of applying severe but plausible stresses to the Group’s
liquidity buffer through time in order to simulate a survival period. The LCR is designed to promote short term resilience of the Group’s
liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days.
The NSFR has a time horizon of one year and has been developed to promote a sustainable maturity structure of assets and liabilities.
These metrics are key risk metrics for the Group and are monitored against Board approved limits.
Risk management – 2. Individual risk types
146  Risk Management
2.2 Funding and liquidity risk (continued)
Management and measurement*
The Group operates a three lines of defence model for risk management. For funding and liquidity risk, the first line of defence
comprises of the Finance function reporting to the CFO, which is responsible for providing the necessary information for the
management of the Group’s liquidity gap and the efficient management of the liquidity buffer. This involves the identification,
measurement and reporting of funding and liquidity risk and the application of behavioural adjustments to assets and liabilities.
This function is the owner of the Group’s Funding and Liquidity Plan which sets out the strategy for funding and liquidity management for
the Group and is responsible for the day-to-day management of liquidity to meet payment obligations, execution of wholesale funding
requirements in line with the Funding and Liquidity Plan and the management of the foreign exchange funding gap.
First line management of funding and liquidity risk:
–	
aims to ensure a balanced spread of repayment obligations through active management of the Group’s liability maturity profile.
Monitoring ratios also apply to longer periods for long term funding stability;
–	
aims to maintain a stock of high quality liquid assets to meet its obligations as they fall due. Discounts are applied to these assets
based upon their cash-equivalent and price sensitivity; and
– monitors net inflows and outflows on a daily basis.
The second line of defence comprises of the Risk function reporting to the CRO, which provides second line assurance over the Group’s
funding and liquidity management. This function provides oversight on the effectiveness of the risk and control environment. It proposes
and maintains the ILAAP Framework and supporting policies as the basis of the Group’s control architecture for funding and liquidity risk
activities, including the annual agreement of funding and liquidity risk limits (subject to the Board approved Risk Appetite Statement).
This function is also responsible for the integrity of the Group’s liquidity risk methodologies.
The third line of defence comprises Group Internal Audit who provide third line assurance on funding and liquidity risk.
The Group’s ILAAP encompasses all aspects of funding and liquidity management, including planning, analysis, stress testing, control,
governance, policy and contingency planning. The ILAAP considers evolving regulatory standards and aims to ensure that the Group
maintains sufficient financial resources of appropriate quality for the Group’s funding profile. On an annual basis, the Board attests to the
Group’s liquidity adequacy via the liquidity adequacy statement as part of ILAAP.
Monitoring, escalating and reporting
The Group funding and liquidity position is reported regularly to the Finance and Risk functions, Group Asset and Liability Committee
(“ALCo”), Group Risk Committee (“GRC”) and Board Risk Committee (“BRC”). In addition, the Executive Committee and the Board are
briefed on funding and liquidity on an ongoing basis.
At 31 December 2019, the Group held € 32,045 million (2018: € 29,896 million) in qualifying liquid assets (“QLA”)(1)
/contingent
funding of which € 2,617 million (2018: € 5,391 million) was not available due to repurchase, secured loans and other restrictions.
The available Group liquidity pool comprises the remainder and is held to cover contractual and stress outflows. At 31 December 2019,
the Group liquidity pool was € 29,428 million (2018: € 24,505 million). During 2019, the liquidity pool ranged from € 23,420 million to
€ 30,206 million and the average balance was € 26,754 million.
(1)
QLA is an asset that can be readily converted into cash, either with the market or with the monetary authorities, and where there is no legal, operational or
prudential impediments to their use as liquid assets.
*Forms an integral part of the audited financial statements
147

Risk Management 1
Level 1 - High Quality Liquid Assets (“HQLAs”) include amongst others, domestic currency (euro) denominated bonds issued or guaranteed by European
Economic Area (“EEA”) sovereigns, very highly rated covered bonds, other very highly rated sovereign bonds and unencumbered cash at central banks.
Level 2 - HQLAs include highly rated sovereign bonds, highly rated covered bonds and certain other strongly rated securities.
(2)
For Liquidity Coverage Ratio (“LCR”) purposes, assets outside the Liquidity function’s control can qualify as HQLAs in so far as they match outflows in the
same jurisdiction. For the Group, this means that UK HQLAs (cash held with the Bank of England) can qualify up to the amount of 30 days UK outflows
under LCR but are not included in the Group’s calculation of available QLA stocks.
(3)
Includes unsecured bank bonds and self-issued covered bonds arising from the securitisation of residential mortgage assets.
Management of the Group liquidity pool
The Group manages the liquidity pool on a centralised basis. The composition of the liquidity pool is subject to limits set by the Board
and the Risk function. These pool assets primarily comprise government guaranteed bonds, central bank reserves and internal and
external covered bonds. The Group’s liquidity buffer increased in 2019 by € 4,923 million which was predominantly due to an increase in
Ireland customer deposits, proceeds from the portfolio sale of distressed loans, proceeds from senior unsecured note and subordinated
debt issuance during the period offset by the 2019 dividend payout, maturity of senior debt and a retained covered bond redemption.
Other contingent liquidity
The Group has access to other unencumbered assets providing a source of contingent liquidity which are not in the Group’s liquidity
pool. However, these assets may be monetised in a stress scenario to generate liquidity through use as collateral for secured funding or
outright sale.
Liquidity stress testing
Liquidity stress testing is a key component of the ILAAP framework. The Group undertakes liquidity stress testing that includes both firm
specific and systemic risk events and a combination of both as a key liquidity control. Stressed assumptions are applied to the Group’s
liquidity buffer and liquidity risk drivers. The purpose of these tests is to ensure the continued stability of the Group’s liquidity position
within the Group’s pre-defined liquidity risk tolerance levels. Liquidity stress test results are reported to the ALCo, Executive Committee
and Board.
As part of its contingency and recovery planning the Group has identified a suite of potential funding and liquidity options which could be
exercised to help the Group to restore its liquidity position on the occurrence of a major stress event.
Risk management – 2. Individual risk types
148  Risk Management
2.2 Funding and liquidity risk (continued)
Liquidity regulation
The Group is required to comply with the liquidity requirements of the Single Supervisory Mechanism/Central Bank of Ireland and also
with the requirements of local regulators in jurisdictions in which it operates. In addition, the Group is required to carry out liquidity stress
testing capturing firm specific, systemic risk events and a combination of both. The Group adheres to these requirements.
The following table outlines the LCR, NSFR and Loan to Deposit Ratio (“LDR”) at 31 December 2019 and 2018:
2019 2018
Liquidity metrics % %
Liquidity Coverage Ratio 157 128
Net Stable Funding Ratio 129 125
Loan to Deposit Ratio 85 90
The Group monitors and reports its current and forecast position against CRD IV and other related liquidity metrics and has fully
complied with the minimum LCR requirement of 100% during 2019.
The calculated NSFR is based on the current Basel standard. The second Capital Requirements Regulation (CRR2), effective 27 June
2019, introduces a binding NSFR requirement of 100% and comes into force in June 2021.
Funding structure*
The Group’s funding strategy is to deliver a sustainable, diversified and robust customer deposit base at economic pricing and to further
enhance and strengthen the wholesale funding franchise with appropriate access to term markets to support core lending activities.
The strategy aims to deliver a solid funding structure that complies with internal and regulatory policy requirements and reduces the
probability of a liquidity stress, i.e. an inability to meet funding obligations as they fall due.
Customer deposits represent the largest source of funding for the Group with the core retail franchises and accompanying deposit
base in both Ireland and the UK providing a stable and reasonably predictable source of funds. Customer accounts increased by
€ 4,104 million in 2019. This was mainly due to a € 3,622 million increase in Euro deposits, primarily in current and demand deposit
accounts reflecting strong economic activity. There was an increase in the value of GBP and USD deposits of € 587 million due to
currency movements which was offset by an underlying decline in GBP deposits of € 239 million on a constant currency basis.
The management of stable retail funds is paramount to the Group’s overall funding and liquidity strategy and will be a key factor in
the Group’s capacity for future asset growth. The Group maintains access to a variety of sources of wholesale funds, including those
available from money markets, repo markets and term investors.
During 2019, senior debt increased € 1,151 million primarily reflecting € 1,640 million in new issuances offset by a € 500 million maturity.
Outstanding asset covered securities (“ACS”) at 31 December decreased € 65 million to € 3,025 million due to contractual maturities.
For further details on debt securities, see ‘Debt securities in issue’ (note 38) to the consolidated financial statements.
Following the implementation of IFRS 16 on 1 January 2019, lease liabilities of € 429 million were recognised on the balance sheet and
were the primary driver of the increase in the ‘Other’ source of funds category in the table above. For further details see ‘Transition to
IFRS 16’ (note 3) and ‘Lease liabilities’ (note 37) to the consolidated financial statements.
*Forms an integral part of the audited financial statements
2.2 Funding and liquidity risk (continued)
Composition of wholesale funding
At 31 December 2019, total wholesale funding outstanding was € 8,953 million (2018: € 7,384 million). € 1,779 million of wholesale
funding matures in less than one year (2018: € 1,130 million). € 7,174 million of wholesale funding has a residual maturity of over one
year (2018: € 6,254 million).
Outstanding wholesale funding comprised € 3,319 million in secured funding (2018: € 3,514 million) and € 5,634 million in unsecured
funding (2018: € 3,870 million).
(1)
Shown by maturity date of contract.
(2)
Shown gross of expected credit losses.
(3)
Excluding equity shares.
*Forms an integral part of the audited financial statements
Risk management – 2. Individual risk types
152  Risk Management
2.2 Funding and liquidity risk (continued)
Financial liabilities by undiscounted contractual maturity*
The balances in the table below include the undiscounted cash flows relating to principal and interest on financial liabilities and as such
will not agree directly with the balances on the consolidated statement of financial position. All derivative financial instruments have been
analysed based on their contractual maturity undiscounted cash flows.
In the daily management of liquidity risk, the Group adjusts the contractual outflows on customer deposits to reflect the inherent stability
of these deposits. Offsetting the liability outflows are cash inflows from the assets on the statement of financial position. Additionally, the
Group holds a stock of high quality liquid assets, which are held for the purpose of covering unexpected cash outflows.
The following table analyses, on an undiscounted basis, financial liabilities by remaining contractual maturity at 31 December 2019 and
2018:

*Forms an integral part of the audited financial statements
153

Risk Management 1
2
3
4
5
6
2.2 Funding and liquidity risk (continued)
Financial liabilities by undiscounted contractual maturity* (continued)
The undiscounted cash flows potentially payable under guarantees and similar contracts
The undiscounted cash flows potentially payable under guarantees and similar contracts, included below within contingent liabilities,
are classified on the basis of the earliest date the facilities can be called. The Group is only called upon to satisfy a guarantee when the
guaranteed party fails to meet their obligations. The Group expects that most guarantees it provides will expire unused.
The Group has given commitments to provide funds to customers under undrawn facilities. The undiscounted cash flows have been
classified on the basis of the earliest date that the facility can be drawn. The Group does not expect all facilities to be drawn, and some
may lapse before drawdown.
The following table analyses undiscounted cash flows potentially payable under guarantees and similar contracts at 31 December 2019
and 2018:
Analysis of loans and advances to customers by contractual residual maturity and interest rate sensitivity
The following table analyses gross loans and advances to customers by contractual residual maturity and interest rate sensitivity at
31 December 2019 and 2018. Overdrafts, which in the aggregate represent approximately 2% of the portfolio at 31 December 2019,
are classified as repayable within one year. Approximately 17% of AIB Group’s loan portfolio is provided on a fixed rate basis. Fixed
rate loans are defined as those loans for which the interest rate is fixed for the full term of the loan. The interest rate risk exposure is
managed within agreed policy parameters. The geographical concentrations are based primarily on the location of the office recording
Risk management – 2. Individual risk types
154  Risk Management
2.3 Capital adequacy risk*
Capital adequacy risk is the risk that the Group does not maintain sufficient capital to achieve its business strategy, support our
customers or to meet regulatory capital requirements.
Top and emerging risk drivers
The key risks impacting the capital adequacy position of the Group are business model risk, credit risk, market risk and operational risk,
although it should be noted that all material risks can to some degree, impact capital ratios.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to capital adequacy risk including:
• Board approved risk appetite, which includes appropriate management buffers to key regulatory and internal capital requirements;
•	
Regular forward looking assessment of capital adequacy via annual ICAAP and quarterly internal stress testing which considers a
number of scenarios, ranging from a base case to a severe but plausible stress;
• Capital contingency and recovery planning activities;
• Comprehensive ICAAP framework and capital adequacy policy;
• Independent second line of defence review and challenge of ICAAP and capital contingency plans.
Identification and assessment
Capital adequacy risk is primarily evaluated through the annual financial planning and ICAAP processes where the level of capital
required to support growth plans and meet regulatory requirements is assessed over the three year planning horizon. Plans are
assessed across a range of scenarios ranging from base case and moderate downside scenarios to a severe but plausible stress using
the Group’s stress testing methodologies. The impact of changing regulatory requirements, changes in the risk profile of the Group’s
balance sheet and other internal factors, and changing external risks are regularly assessed by first line of defence and second line of
defence teams via regular monitoring of performance against the agreed financial plan, monthly capital updates to ALCo and Group
Risk Committees and are also assessed via quarterly internal stress testing. An annual material risk assessment is conducted to identify
all relevant (current and anticipated) material risks which are then assessed from a capital perspective.
The Board reviews and approves the ICAAP on an annual basis and is also responsible for signing a capital adequacy statement
attesting that the Board has reviewed and is satisfied with the capital adequacy of the Group.
Management and measurement
The ICAAP is fully integrated and embedded in the strategic, financial and risk management processes of the Group. An ICAAP
Framework is in place which sets out the key processes, governance arrangements and roles and responsibilities which support the
ICAAP. Embedding of the ICAAP is facilitated through capital planning, the setting of risk appetite and risk adjusted performance
monitoring. In addition to the capital plan, a capital contingency plan is in place which identifies and quantifies actions which are
available to the Group in order to mitigate against the impact of a stress event. Trigger points at which these actions will be considered
are also identified. A further set of triggers and capital options are set out in the Group’s recovery plan, which presents the actions
available to the Group to restore viability in the event of extreme stress. Finally, the Group has an approved capital allocation
mechanism in place which seeks to ensure that capital is allocated on a risk-adjusted basis.
The Group uses risk adjusted return on capital for capital allocation purposes and as a behavioural driver of sound risk management.
The use of risk adjusted return on capital for portfolio management and in lending decisions continues to be an area of focus and a key
consideration for pricing of lending products, both at portfolio level and individually for large transactions.
Monitoring, escalating and reporting
The Group monitors its capital adequacy on a monthly basis when a capital reporting pack is presented to senior executive and Board
Committees setting out the evolution of the Group’s capital position. The output of quarterly stress tests is reviewed by the (“ALCo”) and
on an annual basis an ICAAP Report is produced which is a comprehensive analysis of the Group’s capital position in base and stress
scenarios over a three year horizon. This document is reviewed and approved by the Board and is submitted to the Joint Supervisory
Team, where it forms the basis of their supervisory review and evaluation process.
Further detail on the Group’s capital management, together with its overall capital position can be found in the capital management
section of the Annual Financial Report 2019.
*Forms an integral part of the audited financial statements
155

Risk Management 1
2
3
4
5
6
2.4 Financial risks (a) Market risk
Market risk refers to the risk of income and capital losses arising from adverse movements in wholesale market prices. The Group is
exposed to market risk through the following wholesale market risk factors: interest rates, foreign exchange rates, equity prices, inflation
rates and credit spreads. Changes in customer behaviours and the relationship between wholesale and retail rates give rise to changes
in the Group’s exposure to market risk factors and are also an important component of market risk.
The Group assumes market risk as a result of its banking and trading book activities. The main components of market risk are:
•	
Credit spread risk is the exposure of the Group’s financial position to adverse movements in the credit spreads of bonds held in the
trading or hold-to-collect-and-sell (“HTCS”) securities portfolio. Credit spreads are defined as the difference between bond yields
and interest rate swap rates of equivalent maturity. The HTCS bond portfolio is the principal source of credit spread risk. The Group
also monitors the credit spread risk in its hold-to-collect (“HTC”) bond portfolio;
•	
Interest rate risk in the banking book (“IRRBB”) is the current or prospective risk to both the earnings and capital of the Group as a
result of adverse movements in interest rates. Changes in interest rates impact the underlying value of the Group’s assets, liabilities
and off-balance sheet instruments and, hence, its economic value (or capital position). Similarly, interest rate changes will impact
the Group’s net interest income (NII) through interest-sensitive income and expense effects; and
•	
The Group also assumes market risk through its trading book activities which relate to all positions in financial instruments
(principally derivatives) that are held with trading intent or in order to hedge positions held with trading intent. Risks associated with
valuation adjustments such as credit value adjustment (“CVA”) and funding value adjustment (“FVA”) are managed by the trading
unit in the Group’s Treasury function.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The table below outlines and describes
which of these are key risk drivers for market risk.
Material Risk Regulatory
and legal

•	
Financial, macroeconomic and geopolitical volatility is a key risk driver as a negative macroeconomic environment can lead to
market instability and increased market risk. ‘Lower for longer’ interest rates will continue to suppress the Group’s profitability.
The recent coronavirus (COVID-19) outbreak is also an emerging risk impacting market risk factors.
•	
Climate change is increasingly a key risk driver of market prices, be that investor appetite for certain sectors or where weather
events could begin to impact on government finances and thereby impact sovereign bond prices, for example.
Key mitigating actions
• Board Approved Risk Appetite Statement covering key regulatory and internal capital requirements.
•	
Regular forward looking assessment of market risk exposure via annual Internal Capital Adequacy Assessment (“ICAAP”) and
internal stress testing which considers a range of scenarios.
• Comprehensive ICAAP Framework and supporting policies.
• Independent second line of defence review and challenge of ICAAP and market risk strategy.
Identification and assessment
Market risk is identified and assessed using portfolio sensitivities, Value at Risk (“VaR”) and stress testing. Interest rate gaps and
sensitivities to various risk factors are measured and reported on a daily basis. In terms of the VaR metric, the Group calculates a daily
historical simulation VaR to a 95% confidence level, using a one day holding period and based on one year of historic data. The Group’s
VaR models are regularly back-tested to ensure robustness. In addition to VaR, Capital at Risk (“CaR”) is also measured to a one(1)
year
time horizon, a 99% confidence level and a longer set of data.
(1)
The Capital at Risk on core trading book positions is assessed using a ten day horizon, with the exception of foreign exchange which is assessed
using a one year horizon.
Risk management – 2. Individual risk types
156  Risk Management
2.4 Financial risks (a) Market risk (continued)
Management and measurement*
The Group operates a three lines of defence model for risk management. For market risk, the first line comprises the Finance function
reporting to the CFO which is responsible for the identification and reporting of the Group’s aggregate market risk profile, managing the
Group’s financial instruments valuation processes, making structural market risk management recommendations to ALCo and managing
market risk exposure.
The Group’s Treasury function is responsible for managing market risk that has been transferred to it by the customer facing businesses
and the Group’s Asset and Liability Management (“ALM”) function which exists within Finance. Treasury also has a mandate to trade
on its own account in selected wholesale markets. The trading strategies employed by Treasury are desk and market specific with risk
tolerances approved on an annual basis through the Group’s Risk Appetite process.
The Financial Risk function is responsible for the development of the market risk measurement methodologies. It proposes and
maintains the Market Risk Management Framework and Policies as the basis of the Group’s control architecture for market risk
activities, including the annual agreement of market risk limits (subject to the Board approved Risk Appetite Statement).
The third line of defence comprises Group Internal Audit who provide third line assurance on market risk.
Market risk is managed against a range of Board approved VaR limits which cover market risk in the trading book, interest rate risk
in the banking book and credit spread risk in the banking book. The Board approved limits are supplemented by a range of ALCo
approved limits which include VaR limits, nominal and sensitivity limits and ‘stop loss’ limits. The first line documents an annual Market
Risk Strategy and Appetite statement as part of the annual financial planning cycle which ensures market risk aligns with the Group’s
strategic business plan.
Credit risk issues inherent in the market risk portfolios are also subject to the credit risk framework that was described in the previous
section.
*Forms an integral part of the audited financial statements
157

Risk Management 1
2
3
4
5
6
2.4 Financial risks (a) Market risk (continued)
Monitoring, escalating and reporting*
On a daily basis front office and risk functions receive a range of valuation, sensitivity and market risk measurement reports, while ALCo
receives a monthly market risk commentary and summary risk profile. Market risk exposures are reported to the Group Risk Committee
(“GRC”) and Board Risk Committee (“BRC”) on a monthly basis through the CRO Report.
The following table sets out financial assets and financial liabilities at 31 December 2019 and 2018 subject to market risk analysed
between trading and non-trading portfolios, showing the principal market risks to which the assets and liabilities are exposed:
2019
Market risk measures
Carrying
amount
Trading
portfolios
Non-trading
portfolios
 Risk factors
Assets subject to market risk
Cash and balances at central banks 11,982 – 11,982 Interest rate, foreign exchange
Derivative financial instruments 1,271 592 679 Interest rate, foreign exchange,
credit spreads, equity, inflation
swap rates
Loans and advances to banks 1,478 – 1,478 Interest rate, foreign exchange
Loans and advances to customers 60,888 – 60,888 Interest rate, foreign exchange
Investment securities 17,331 – 17,331 Interest rate, foreign exchange,
credit spreads, equity
Liabilities subject to market risk
Deposits by central banks and banks 823 – 823 Interest rate, foreign exchange
Customer accounts 71,803 – 71,803 Interest rate, foreign exchange
Derivative financial instruments 1,197 771 426 Interest rate, foreign exchange,
credit spreads, equity, inflation
swap rates
Debt securities in issue 6,831 – 6,831 Interest rate, credit spreads,
foreign exchange
Subordinated liabilities and other capital instruments 1,299 – 1,299 Interest rate, credit spreads
2018
Market risk measures
Carrying
amount
Trading
portfolios
Non-trading
portfolios
Risk factors
Assets subject to market risk
Cash and balances at central banks 6,516 – 6,516 Interest rate, foreign exchange
Derivative financial instruments 900 517 383 Interest rate, foreign exchange, credit
spreads, equity, inflation swap rates
Loans and advances to banks 1,443 – 1,443 Interest rate, foreign exchange
Loans and advances to customers 60,868 – 60,868 Interest rate, foreign exchange
Investment securities 16,861 – 16,861 Interest rate, foreign exchange,
credit spreads, equity
Liabilities subject to market risk
Deposits by central banks and banks 844 – 844 Interest rate, foreign exchange
Customer accounts 67,699 – 67,699 Interest rate, foreign exchange
Derivative financial instruments 934 534 400 Interest rate, foreign exchange, credit
spreads, equity, inflation swap rates
Debt securities in issue 5,745 – 5,745 Interest rate, credit spreads,
foreign exchange
Subordinated liabilities and other capital instruments 795 – 795 Interest rate, credit spreads
*Forms an integral part of the audited financial statements
Risk management – 2. Individual risk types
158  Risk Management
2.4 Financial risks (a) Market risk (continued)
Market risk profile
The table below shows the sensitivity of the Group’s banking book to an immediate and sustained 100 basis point (“bp”) movement in
interest rates in terms of the impact on net interest income over a twelve month period:
2019 2018
Sensitivity of projected net interest income to interest rate movements € m € m
+ 100 basis point parallel move in all interest rates 234 211
– 100 basis point parallel move in all interest rates (274) (245)
The above sensitivity table is computed under the assumption that all official and market rates (Euribors/Swaps) move downwards in
parallel, however, for upward rates only, the ECB refinancing rate increases by 50% of the market rates.
The interest rate sensitivity increased during the year as a result of balance sheet change and reductions in strategic interest rate
hedges being made throughout 2019.
The above analysis is subject to certain simplifying assumptions such as all interest rate movements occurring simultaneously.
Additionally, it is assumed that no management action is taken in response to the rate movements.
The following table summarises Group’s interest rate VaR profile to a 95% confidence level with a one day holding period for the
financial years to 31 December 2019 and 2018. The Group recognises the limitations of VaR models, and supplements its VaR
measures with stress tests which draw from a longer set of historical data and also with sensitivity measures.
The low level of VaR in the trading book throughout 2019 is as a result of very small discretionary positions managed by Treasury.
The higher banking book interest rate VaR is as a result of a more substantial level of interest rate risk existing in the Group’s banking
book.
Interest rate sensitivity*
The net interest rate sensitivity of the Group at 31 December 2019 and 2018 is illustrated in the following table. The table sets out
details of those assets and liabilities whose values are subject to change as interest rates change within each contractual repricing
time period. Details regarding assets and liabilities which are not sensitive to interest rate movements are included within non-interest
bearing or trading captions. The table shows the sensitivity of the statement of financial position at one point in time and is not
necessarily indicative of positions at other dates. In developing the classifications used in the table, it has been necessary to make
certain assumptions and approximations in assigning assets and liabilities to different repricing categories.
The fair value of derivative financial instruments is included within other assets and other liabilities as interest rate insensitive.
However, some derivative instruments are derived from interest sensitive financial instruments, and are shown separately below.
*Forms an integral part of the audited financial statements
159

2.4 Financial risks (a) Market risk (continued)
Interest rate benchmark reform
Authorities and regulators have requested that the market transition from interbank offered rates referred to as “IBOR” benchmark rates
(e.g. LIBOR) to alternative Risk Free Rates (RFRs) by end 2021. The reform was not contemplated when IAS 39 was published, and
consequently the IASB has published a set of temporary exceptions from applying specific hedge accounting requirements to provide
clarification on how the relevant standards should be applied in these circumstances.
The application of this set of temporary exceptions is mandatory for accounting periods starting on or after 1 January 2020, but early
adoption is permitted which the Group elected to do at 31 December 2019 (note 1 to the consolidated financial statements).
Significant judgement will be required in determining when uncertainty is expected to be resolved and, therefore, when the temporary
exceptions will cease to apply. However, at 31 December 2019, the uncertainty continued to exist and so the temporary exceptions
apply to all of the Group’s hedge accounting relationships that reference benchmarks subject to reform or replacement.
The Group has cash flow and fair value hedge accounting relationships that are exposed to different IBORs. The transition not
only impacts financial markets, but also many of the Group’s customers who have an IBOR referenced in their contract. IBORs are
extensively embedded within the Group’s processes, hence, this transformation will have far reaching impacts in terms of pricing,
operations, risk, accounting, data and technology infrastructure, along with potential conduct risk implications.
The Group mobilised an Interest Rate Benchmark Reform Transition Programme (“the Programme”) in 2018 to manage the successful
evolution to, and embedding of, RFRs. The Programme is sponsored by the Chief Financial Officer, overseen by a steering committee,
chaired by a senior Treasury executive, supported by a Project Management layer and working groups comprising representation
from customer-facing businesses, Finance, Treasury, Risk, Compliance, Legal, Operations and Customer and Strategic Affairs.
The programme is organised into four main workstreams, namely:
• Business readiness;
• Technology;
• Contract re-papering; and
• Customer communications and conduct.
The Programme is structured to deliver IBOR transition by the regulators’ deadline of 31 December 2021, with much of the recent action
focused on business readiness activities, agreeing new fallback clauses and preparing for awareness amongst the Group’s customers.
The Programme is also briefed on the activities associated with transitioning Euro OverNight Index Average (“EONIA”) to Euro short-
term rate (“€STER”).
In terms of exposures, IBORs are referenced to a significant cohort of the Group’s portfolio, including derivative and bond transactions
in the Treasury function and loans and deposits in the corporate and institutional businesses. Given the role of derivatives portfolios
in supporting interest rate risk management activities both in terms of the Group’s structural risk positions and providing solutions
to customers, the notional volumes involved are large. For example, within the derivative portfolios, there are approximately 1,700
contracts referencing Euribor, GBP LIBOR and USD LIBOR relating to approximately € 50 billion in notional principal.
The Group also has IBOR exposure within deposits and debt securities amounting to € 3.5 billion approximately. The loan portfolios
reference Euribor, GBP LIBOR and USD LIBOR (approximately € 19 billion exposure in total).
Structural foreign exchange risk
Structural foreign exchange risk is the exposure of the Group’s capital ratios to changes in exchange rates and results from net
investment in subsidiaries, associates and branches, the functional currencies being currencies other than euro. The Group is exposed
to foreign exchange risk as it translates foreign currencies into Euro at each reporting period and the currency profile of the Group’s
capital may not necessarily match that of its assets and risk-weighted assets.
Exchange differences on structural exposures are recognised in ‘other comprehensive income’ in the financial statements. The ALCo
monitors structural foreign exchange risk and the foreign exchange sensitivity of consolidated capital ratios. This impact is measured in
terms of basis points sensitivities using scenario analysis.
The table below shows the sensitivity of the Group’s fully loaded CET1 ratio to a hypothetical and sustained movement in GBP/EUR and
USD/EUR foreign exchange rates.
31 December
Sensitivity of CET1 fully loaded capital to foreign exchange movements (unaudited) 2019 2018
+ 10% move in GBP and USD FX rates (0.20%) (0.21%)
– 10% move in GBP and USD FX rates 0.19% 0.20%
The above analysis is subject to certain simplifying assumptions such as GBP/EUR and USD/EUR foreign exchange rates moving in the
same direction and at the same time.
Risk management – 2. Individual risk types
162  Risk Management
2.4 Financial risks* (b) Pension risk
Pension risk is the risk that:
–	
The funding position of the Group’s defined benefit schemes would deteriorate to such an extent that additional contributions would
be required to cover its funding obligations towards current and former employees;
– The capital position of the Group is negatively affected as funding deficits will be fully deductible from regulatory capital; and
– There could be a negative impact on industrial relations if the funding level of the scheme was to deteriorate significantly.
Identification and assessment
The IAS 19 valuation of the pension scheme assets and liabilities may vary which could impact on the Group’s capital. The Group
works with the Trustees of each scheme to monitor the performance of investments and estimates of future liability to identify deficits.
Given that variability in the value of the pension scheme assets and liabilities can impact on the Group’s capital the key processes
through which pension risk is evaluated are:
• the Internal Capital Adequacy Assessment Process (“ICAAP”) as well as quarterly internal stress tests and
•	
monthly reporting of Pension risk against risk appetite. The pension capital at risk metric is measured and reported monthly against
this watch trigger.
The Group maintains a number of defined benefit pension schemes for current and former employees. These defined benefit schemes
were closed to future accrual by the 31 December 2013 with all staff transferring to a defined contribution scheme for future service on a
standardised basis.
Each scheme has a separate trustee board and the Group has agreed funding plans to deal with deficits in each scheme. As part of
each funding agreement, the Group engages with each trustee regarding an appropriate investment strategy to reduce the risk in each
scheme.
Irish schemes that are deemed to have a deficit under the Minimum Funding Standard must prepare funding plans to address this
situation in a timely manner and submit them to the Pensions Authority for approval.
Management and measurement
The ability of the pension schemes to meet the projected pension payments is managed by the Trustees through the active
management of the investment portfolios. Although the Group has interaction with the trustees, it cannot direct the investment strategy
of the schemes.
The Group has developed a strategy going forward for each of its defined benefit schemes which include the following steps;
1. All defined benefit schemes are closed to future accrual.
2.	
They have funding plans (or are funded as required for the US schemes) and each defined benefit scheme has an investment
strategy in place.
3.	
All schemes have a strategy of de-risking in line with their regulatory requirements, funding positions and funding plans taking into
account the nature of their liabilities.
The AIB Group Irish Pension Scheme exited its funding plan on target at 30 June 2018 and now meets the minimum funding standard
requirements. The AIB Group Irish Pension Scheme’s triennial actuarial valuation was also completed at 30 June 2018, resulting in an
actuarial surplus at that date. On this basis, the AIB Group Irish Pension Scheme’s actuary has concluded that the scheme requires no
deficit funding at this time.
In December 2019, the Group agreed a revised funding arrangement for the UK scheme with the Scheme Trustee to support the
purchase of the pensioner buy-in policy in respect of the pensioner members and an assured payment policy (“APP”) in respect of the
deferred members. A contribution of £ 10 million was made in December 2019 and an additional one-off £ 12 million contribution will
also be made in 2020. Under the revised funding arrangement, the Group also expects to make annual payments of £ 18.5 million each
year during 2020 to 2023, with a final balancing payment in 2024 which is currently expected to be c. £ 50 million.
*Forms an integral part of the audited financial statements
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2
3
4
5
6
2.4 Financial risks* (b) Pension risk (continued)
Monitoring, escalating and reporting
Pension risk is monitored and controlled in line with the requirements of the Group’s pension risk framework and policy. The surplus or
deficit is monitored on a monthly basis by the Group’s risk team and is currently reported monthly in both the financial risk report to the
Group Assets and Liability Committee (“ALCo”) and the Group Chief Risk Officer report. The potential change in this value over a one-
year time period is assessed on a monthly basis and is reported versus a Group Risk Appetite Statement watch trigger. This pension
Capital at risk exposure against the watch trigger is reported in the CRO report each month.
Pension risk is also included in the quarterly internal stress test. The output of quarterly stress tests is reviewed by ALCo and on
an annual basis an ICAAP Report is produced which is a comprehensive analysis of the Group’s capital position in base and stress
scenarios over a three year horizon. This document is reviewed and approved by the Board and is submitted to the Joint Supervisory
Team.
The pension capital at risk exposure is reported against the watch trigger and is contained in the CRO report each month. While the
Group has taken certain risk mitigating actions, a level of volatility associated with pension funding remains due to potential financial
market fluctuations and possible changes to pension and accounting regulations.
2.5 Operational risk
Operational risk is the risk arising from inadequate or failed internal processes, people and systems, or from external events.
This includes legal risk – the potential for loss arising from the uncertainty of legal proceedings and potential legal proceedings,
but excludes strategic and reputational risk.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for operational risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
Operational
risk ü ü ü ü
•	
Regulatory and legal change is a key risk due to its potential impact on customer behaviours, markets and internal Group processes
and resources.
•	
Pace of change in competition, labour markets and customer expectations is a key risk driver as there is increased competition for
the appropriate skills in the market.
•	
Cyber is a key risk driver as an increased level of cyber attacks may result in increased operational failures or resources being
diverted from core tasks.
•	
Climate change is a key risk driver as the enviromental results of climate change could have a significant impact on staff, properties
and the availability of IT systems.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to operational risk including:
• Board approved and monitored risk appetite limits covering key dimensions of operational risk;
•	
Operational Risk Framework and suite of policies, setting out principles, roles and responsibilities and governance arrangements for
the management of operational risk across the Group;
•	
The Group continues to invest significantly in technology which includes cyber deterrents and defences with controls to predict,
prevent, detect and respond to cyber risk; and
•	
The Group operates a risk and control assessment of our processes and people to deliver objectives and keep customers safe.
*Forms an integral part of the audited financial statements
Risk management – 2. Individual risk types
164  Risk Management
2.5 Operational risk (continued)
Identification and assessment
Risk and Control Assessment (“RCA”) is a core process in the identification and assessment of operational risk across the Group.
The process serves to ensure that key risks are proactively identified, evaluated, monitored and reported, and that appropriate action
is taken. Self-assessment of risks is completed at business unit level and is recorded on SHIELD which is the Group’s governance,
risk and compliance system. SHIELD provides all areas with one consistent view of the risks, controls, actions and events across the
Group. SHIELD underpins an enhanced risk culture focused on ensuring better customer outcomes while helping to safeguard, protect
and support the Group. RCAs are regularly reviewed and updated by business unit management. A materiality matrix is in place to
enable the scoring of risks, and action plans must be developed to provide mitigants for the more significant risks. Monitoring processes
are in place at business unit and support level. The central operational risk team sets and maintains policies and procedures for self-
assessment and undertakes risk based reviews and testing to ensure the completeness and robustness of each business unit’s self-
assessment, and that appropriate attention is given to the more significant risks.
Management and measurement
Each business area is primarily responsible for managing its own risks. The operational risk framework includes policies specific to
key operational risks (such as information security; continuity and resilience; and third party management among others) to ensure an
effective and consistent approach to operational risk management across the Group. An important element of the Group’s operational
risk management framework is the ongoing monitoring of risks, control deficiencies and weaknesses, including tracking of operational
risk events. The Group also requires all business areas to undertake risk assessments and establish appropriate internal controls
in order to ensure that all components, taken together, deliver the control objectives of key risk management processes. The role of
operational risk is to review operational risk management activities across the Group including setting policy and promoting best practice
disciplines, augmented by an independent second line assurance process which sits within the Compliance function. In addition,
an insurance programme is in place, including a self-insured retention, to cover a number of risk events which would fall under the
operational risk umbrella. These include financial lines policies (comprehensive crime/computer crime/cyber/professional indemnity/civil
liability; employment practices liability; directors and officers liability and a suite of general insurance policies to cover such things as
property and business interruption, terrorism, combined liability and personal accident).
Monitoring, escalating and reporting
The Head of Operational Risk reports to the Chief Risk Officer, and provides information to the Board through the Board Risk
Committee, Group Risk Committee and the Operational Risk Committee. The primary objective of operational risk reporting is to
provide the Board with a timely and pertinent update on the Operational Risk profile, in order to assist the Board in discharging its
responsibilities for the oversight of risk. A secondary objective is to provide senior management with an overview of the operational
risk profile, in order to support the effective management of risks. The profile update details the current status of the Group’s key
operational risks and includes an overview of current trends and an update on recent significant events. The reporting of the Operational
Risk profile, as required, at the Group Risk and Board Risk Committees supports these two objectives. In addition, the Group Risk
Committee receive summary information on the Group’s Operational Risk profile on a regular basis through the Chief Risk Officer
(“CRO”) report. Business units are required to review and update their assessment of operational risks on a regular basis. Operational
risk teams undertake review and challenge assessments of the business unit risk assessments. In addition, assurance teams which are
independent of the business, undertake reviews of the operational controls as part of a combined regulatory/compliance/operational risk
programme.
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Risk Management 1
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5
6
2.6 Regulatory compliance risk
Regulatory compliance risk is defined as the risk of legal or regulatory sanctions or failure to protect market integrity, could result in
material financial loss or reputational damage. Failure to comply with laws, regulations, or rules, for example Anti-Money Laundering,
Countering Terrorist Financing and modern slavery, as well as self regulatory standards and codes of conduct, could result in regulatory
sanction.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for regulatory compliance risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
Regulatory
compliance
risk ü ü ü ü
•	
Regulatory and legal change is a key risk driver due to the pace and complexity of regulatory change including changes likely as a
result of Brexit.
•	
Pace of change in competition, labour markets and customer expectations is a key risk driver due to depth of regulatory supervision
resulting in increased process complexity and increased competition for the appropriate skills in the market.
•	
Climate change is a growing area of regulatory interest and together the financial, macroeconomic and geopolitical events have the
ability to quickly change the regulatory agenda.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to regulatory compliance risk. The principal compliance risk mitigants are risk identification,
assessment, measurement and the establishment of appropriate controls at business level. Compliance also provides continuous
training across the Group in relation to regulatory compliance risks, obligations and responsibilities of the business, therefore, reinforcing
a culture of compliance. The Group has insurance policies that cover certain consequences of risk events which fall under the regulatory
compliance umbrella, subject to policy terms and conditions.
Identification and assessment
The Regulatory Compliance function is specifically responsible for independently identifying and assessing current and forward
looking compliance obligations, as well as financial crime regulation and regulation on privacy and data protection. The identification,
interpretation and communication roles relating to other legal and regulatory obligations have been assigned to functions with
specialist knowledge in those areas. For example, employment law is assigned to Human Resources and taxation law to Group
Taxation. Regulatory Compliance undertakes a periodic detailed assessment of the key compliance risks and associated mitigants.
The Regulatory Compliance function operates a risk framework approach that is used in collaboration with business units to identify,
assess and manage key compliance risks at business unit level. These risks are incorporated into the risk control assessments for the
relevant business unit.
Management and measurement
The Board, operating through the Board Risk Committee, approves the Group’s compliance policy and its mandate for the Regulatory
Compliance function.
The Board is responsible for ensuring that the Group complies with its regulatory responsibilities. The Board’s responsibilities in respect
of compliance include the establishment and maintenance of the framework for internal controls and the control environment in which
compliance policy operates. The Board ensures that regulatory compliance is suitably independent from business activities and that it is
adequately resourced.
The primary role of the Regulatory Compliance function is to provide direction and advice to enable management to discharge its
responsibility for managing the Group’s compliance risks. The principal compliance risk mitigants are risk identification, assessment,
measurement and the establishment of suitable controls at business level.
Risk management – 2. Individual risk types
166  Risk Management
2.6 Regulatory compliance risk (continued)
Monitoring, escalating and reporting
Group risk assurance, within Regulatory Compliance undertakes risk-based assurance of compliance with relevant policies, procedures
and regulatory obligations. Assurance can be undertaken by either standalone independent assurance teams, or in collaboration with
other control functions such as Group Internal Audit and/or Operational Risk.
Risk prioritised annual assurance plans are prepared with assurance reviews undertaken on both a business unit and a process basis.
The annual assurance plan is reviewed regularly, and updated to reflect changes in the risk profile from emerging risks, changes in risk
assessments and new regulatory ‘hotspots’. Issues emerging from assurance activity are escalated for management attention, and
action plans and implementation dates are agreed. The implementation of these action plans is monitored by group risk assurance.
Regulatory Compliance report to the Chief Risk Officer and independently to the Board, through the Board Risk Committee, on the
effectiveness of the processes established to ensure compliance with laws and regulations within its scope.
2.7 Conduct risk
Conduct risk is defined as the risk that inappropriate actions or inactions by the Group cause poor and unfair customer outcomes.
Customer complaints outstanding without proper investigation would lead to unfair customer outcomes.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for conduct risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
Conduct risk ü ü ü ü
•	
Regulatory and legal change is a key risk driver due primarily to changing regulatory expectations which can drive an accelerated
process for product design.
•	
Financial, macroeconomic and geopolitical volatility is a key risk driver as the volatility can result in suboptimal behaviour.
•	
Pace of change in competition, labour markets and customer expectations is a key risk driver as there is increased competition for
the appropriate skills in the market.
•	
Climate change is a key risk driver as the Group responds to climate risk, reviews current products and develops new products.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to conduct risk including a Conduct Risk Framework, aligned with the Group strategy, which
is embedded in the organisation and provides oversight of conduct risks at Executive Committee and Board level by way of two key
fora. The Group Conduct Committee provides the Executive Committee oversight of conduct through promoting and supporting a
‘customer first’ culture, and also oversees the key conduct risk appetite metrics for complaints management and product reviews.
The Group Product and Proposition Committee focus is exclusively in product oversight and management, including overseeing a rolling
programme of product reviews.
Identification and assessment
The compliance and risk assurance team identify upstream conduct risk and communicate to the relevant business areas.
Management and measurement
The points below outline the management and measurement of Conduct risk;
•	
The Group Head of Customer Advocacy and team provides independent oversight and governance of conduct risk across the Group
(and is a mandatory approver of product/propositions proposals), including training and awareness building;
•	
An approved Group conduct strategy, aligned with the Group’s purpose, strategy and core values, is supported by an annual Group
action plan delivering against key strategic objectives, ensuring continued progress on embedding conduct and meeting evolving
regulatory expectations;
•	
A centralised customer care unit deals with complex complaints across the organisation;
•	
Group customer advocacy drive the vulnerable customer strategy; and
•	
Group Head of Customer Advocacy is a member of key strategic steering groups.
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Risk Management 1
2
3
4
5
6
2.7 Conduct risk (continued)
Monitoring, escalating and reporting
The points below outline how Conduct risk is monitored, escalated and reported;
•	
Quarterly Group conduct dashboard measures key management information trends under the five key conduct risk areas,
as reflected in the Group conduct action plan; and
•	
Segment Conduct Committees (operating to standard terms of reference) actively drive the conduct agendas and manage conduct
risk within their businesses. Conduct risks are assessed and monitored across the Group in line with risk management procedures,
with annual business attestation provided by senior management.
2.8 People and culture risk
People and culture risk is the risk to achieving the Group’s strategic objectives as a result of an inability to recruit, retain or develop
resources, or as a result of behaviours associated with low levels of employee engagement. It also includes the risk that the business,
financial condition and prospects of the Group are materially adversely affected as a result of inadvertent or intentional behaviours or
actions taken or not taken by employees that are contrary to the overall strategy, culture and values of the Group.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for people and culture risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
People and
culture risk ü ü
•	
Pace of change in competition, labour markets and customer expectations is a key risk driver as there is increased competition for
the appropriate skills in the market.
•	
Changing external perceptions of AIB is a key risk driver in so far as sustained negative commentary could materially impact on staff
morale.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to people and culture risk including a continuous review of the market situation and the
introduction of new career mapping which will provide a transparent and consistent view of roles and also empower all employees to
take accountability and control of their own careers.
Identification and assessment
The Group identifies and reviews employee satisfaction and engagement, indicators of culture, through the staff engagement
programme, iConnect, which is facilitated by Gallup on an annual basis. The survey includes measures on our cultural ambitions of
accountability, collaboration, trust, diversity and inclusion and safe to speak. Initiatives are undertaken at team level to continuously
identify opportunities for further employee engagement. Engagement scores have continued to improve on an annual basis since the
staff engagement programme inception.
The Group’s performance is heavily dependent on the talents and efforts of highly skilled individuals, and the continued ability of the
Group to compete effectively and implement its strategy depends on its ability to attract new employees and retain and motivate existing
employees. Competition from within the financial services industry, including from other financial institutions, as well as from businesses
outside the financial services industry for key employees is intensifying. In particular, under the terms of the recapitalisation of the
Group by the Government, the Group is required to comply with certain executive pay and compensation arrangements, including a cap
on salaries as well as a ban on bonuses and similar incentive-based compensation applicable to employees of Irish banks who have
received financial support from the Government.
The Group uses the Aspire Performance Management Programme (“Aspire”) to facilitate quality performance discussions with staff that
contribute to delivering the Group’s strategic ambitions. Aspire is designed to allow employees identify “What” personal and business
objectives are to be achieved and “How” they will behave in the delivery of those objectives. The Board assesses the Aspire outputs on
a half-year and year-end basis. Aspire allows the Group embrace the right behaviours and outcomes with equal weighting, to achieve
the Group’s strategic ambition.
Risk management – 2. Individual risk types
168  Risk Management
2.8 People and culture risk (continued)
Management and measurement
In 2017 the Group launched its ‘Purpose’, which is supported and embedded by a clear set of ‘customer first’ values. These values drive
and influence activities of all employees, guiding the Group’s dealings with customers, each other and all stakeholders. The Group’s
Code of Conduct, incorporating the risk culture principles, places great emphasis on the integrity of employees and accountability for
both actions taken and inaction. The Code sets out how employees are expected to behave in terms of the business, customer and
employee. The Code is supported by a range of employee policies, including ‘Conflicts of Interest’ and ‘Speak up’. The Group has a
disciplinary policy which clearly lays out the consequences of inappropriate behaviours.
The Group’s ‘Speak Up’ policy and process also provides those working for the Group with a protected channel for raising concerns,
which is at the heart of fostering an open and transparent working culture. The Group’s iLearn training portal, provides employees with
dedicated and bespoke curricula that allow teams and individuals to invest in themselves and, therefore, the organisation.
Monitoring, escalating and reporting
The Group has made significant steps in increasing engagement and awareness of the Group’s risk management activities by
embedding the Risk Appetite Statement in policies and frameworks of the Group. The Risk Appetite Statement contains clear
statements of intent as to the Group’s appetite for taking and managing risk, including people and culture risk. It ensures that the Group
monitors and reports against key people and culture metrics when tracking people and culture risk and change.
Internal Audit include people and culture risk on their annual plan of activities, the outputs of which are reviewed by the Board.
The Group, through the Board Audit Committee, reports and monitors issues raised through a number of channels including conflicts of
interest, disciplinary policy and speak up policy. The Board monitors and reviews progress and oversight of senior management in relation
to our people and culture ambitions through a number of datasets including iConnect, the strategy scorecard and a culture dashboard.
2.9 Business model risk
The risk of not achieving the agreed strategy or approved business plan either as a result of an inadequate implementation plan, or
failure to execute the implementation plan as a result of inability to secure the required investment, or due to factors in the economic,
political, competitive or regulatory environment. This also includes the risk of implementing an unsuitable strategy, or maintaining an
obsolete business model, in light of known internal and external factors.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for business model risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
Business
model risk ü ü ü ü ü ü
•	
Regulatory and legal change have the potential to significantly impact the business and operating model of the Group.
•	
Financial, macroeconomic and geopolitical volatility is a key risk driver as it is more difficult to forecast accurately for planning purposes
in a volatile environment than in a stable environment. This volatility also increases the risk of changed circumstances over the planning
cycle. Changes in financial or macroeconomic or geopolitical events could impact the Group’s business model, specifically, its
capital utilisation, profitability or strategy.
•	
The pace of change from competition has increased and, in particular, obtaining and retaining the right level of expertise in a
competitive labour market is a key risk driver.
• Cyber is a key risk driver as the volume and sophistication of cyber attacks could result in unexpected vulnerabilities being exposed.
• Changing external perceptions of AIB is a key risk driver as this may challenge the execution of the Group’s strategy.
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to business model risk including:
•	
Board approved Risk Appetite Statement sets the boundary for acceptable risk taking;
•	
Detailed review and challenge of plan and strategy through governance process;
•	
Independent second line of defence review and challenge of key planning and strategic assumptions;
•	
The Board receives regular updates on performance against strategic objectives by way of a quarterly scorecard and
comprehensive reports setting out the current financial performance against budget, multi-year financial projections, capital plans
and economic updates; and
•	
Risk report is produced monthly and reviewed by the Board and Group Risk Committees.
169

Risk Management 1
2
3
4
5
6
2.9 Business model risk (continued)
Identification and assessment
The Group identifies and assesses business model risk as part of its integrated planning process, which encapsulates strategic,
business and financial planning. This process drives delivery of strategic objectives aligned to the Group’s risk appetite and enables
measurable business objectives to be set for management aligned to the short, medium and long term strategy of the Group. The
outcomes of these processes form the basis of the Group’s Internal Capital Adequacy Assessment Process (“ICAAP”) and Internal
Liquidity Adequacy Assessment Process (“ILAAP”).
The Group reviews underlying assumptions on its external operating environment and, by extension, its strategic objectives on a
periodic basis, the frequency of which is determined by a number of factors including the speed of change of the economic environment,
changes in the financial services industry and the competitive landscape, regulatory change and deviations in actual business outturn
from strategic targets. In normal circumstances, this is annually. The Group’s business and financial planning process supports the
Group’s strategy. Every year, the Group prepares three-year business plans at a Group level based on macroeconomic and market
forecasts across a range of scenarios (including a range of “downside” scenarios). The plan includes an evaluation of planned
performance against a suite of key metrics, supported by detailed analysis and commentary on underlying trends and drivers, across
income statement, balance sheet and business targets. This assessment includes, but is not limited to discussion on new lending
volumes and pricing, deposits volumes and pricing, other income, cost management initiatives and credit performance. The plan is
subject to robust review and challenge through the governance process and including an independent second line of defence review
and challenge by the Risk function. The Group plan is supported by detailed business unit plans. Each business unit plan is aligned
to the Group strategy and risk appetite. The business plan typically describes the market in which the segment operates, market and
competitor dynamics, business strategy, financial assumptions underpinning the strategy, actions/investment required to achieve
financial outcomes and any risks/opportunities to the strategy.
Management and measurement
At a strategic level, the Group manages business model risk within its risk appetite framework, by setting limits in respect of measures
such as financial performance, portfolio concentration and risk-adjusted return. At a more operational level, the risk is mitigated
through periodic monitoring of variances to plan. Where performance against plan is outside agreed tolerances or risk appetite metrics,
proposed mitigating actions are presented and evaluated, and tracked thereafter. During the year, periodic forecast updates for the
full year financial outcome may also be produced. The frequency of forecast updates during each year will be determined based on
prevailing business conditions.
At an individual level, planning targets translate into accountable objectives to enable performance tracking across the Group and to
facilitate formulation and review of Executive Committee performance scorecards.
Monitoring, escalating and reporting
Performance against plan is monitored at segment level on a monthly basis and reported to senior management teams within the
business. At an overall Group level, performance against plan is monitored as part of the CFO Report which is discussed at Executive
Committee and Board on a monthly basis. Risk profile against risk appetite measures, some of which reference performance against
plan, is monitored by the Chief Risk Officer and reported on a monthly basis to the Executive Risk Committee and Board.
2.10 Model risk
The potential loss that the Group may incur, as a consequence of decisions that could be principally based on the output of models, due
to errors in the development, implementation or use of such models.
Top and emerging risk drivers
The top and emerging risks to the Group are outlined in the Risk Summary Section on page 39. The below table outlines and describes
which of these are key risk drivers for model risk.
Material Risk Regulatory
and legal
change
Financial,
macroeconomic
and geopolitical
volatility
Pace of change
in competition,
labour markets
and customer
expectations
Cyber Climate
change
Changing
external
perceptions
of AIB
Model risk ü ü ü ü
• Pace of regulatory change increases the difficulty in maintaining the Group’s suite of models.
•	
Financial, macroeconomic and geopolitical volatility is a key risk driver as a volatile external environment is more difficult to model
accurately than a stable environment.
•	
Pace of change in competition, labour markets and customer expectations is a key risk driver due to the difficulty in obtaining and
retaining the right level of expertise in a competitive labour market.
•	
Climate change is a driver of model risk because of the lack of relevant historical data to accurately model climate impacts on the
Group’s exposures.
Risk management – 2. Individual risk types
170  Risk Management
2.10 Model risk (continued)
Key mitigating actions
Key mitigating actions aim to effectively reduce the threat of a risk and the likelihood of its occurrence. The Group uses various
approaches to help mitigate risks relating to model risk including:
• Model risk framework and policy;
• Model risk governance, notably the model committees of Model Risk Committee and Risk Measurement Committee;
• Group model risk inventory and reporting;
• Risk appetite statement monitoring and reporting; and
• Second line of defence review; model validation and control testing.
Identification and assessment
The Board has ultimate accountability for ensuring that models used by the Group are fit for purpose, meet all jurisdictional regulatory
and accounting standards, and ensuring that there is clarity on the model risk strategy and framework. It is responsible for the
appointment of organisational structures to implement and manage the model risk framework and for ensuring that there are appropriate
policies in place relating to capital assessment, measurement and allocation.
Operating to the principles outlined in the model risk framework supports the Group’s strategic objectives and provides comfort to the
Board on the integrity and completeness of the model risk governance.
Management and measurement
The Group mitigates model risk by having a framework, policies and standards in place in relation to model development, operation,
and validation together with suitable resources. The Group model risk management framework is designed to ensure that model risk
in the Group is properly identified and managed across each step of the model lifecycle within an appropriate control framework.
The framework, which is aligned to the Group risk appetite framework and the Group risk management framework, describes the key
processes undertaken and reports produced in support of the framework. Models are built and validated by suitably qualified analytical
personnel, informed by relevant business and finance functions.
Models are built using the best available data, both internal and external, using international industry standard techniques. All models
are validated by an appropriately qualified team, which is independent of the model build process.
Group Internal Audit act as the “third line of defence” providing independent assurance to the Board Audit Committee and the Board
on the adequacy, effectiveness and sustainability of the governance, risk management and control framework supporting model risk
through their periodic review of the model risk management processes.
Monitoring, escalating and reporting
The Model Risk Committee acts as a sub-committee of the Risk Measurement Committee and reviews and approves the use, or
recommends to a higher governance authority, the use of the Group’s credit, operational and financial risk models. It also monitors and
maintains oversight of the performance of these models. As a material risk, the status of model risk is reported on a monthly basis in the
CRO report.
171

Governance and Oversight 1
– Group Directors' report 172
– Schedule to the Group Directors' report 175
– Corporate Governance report 178
– Report of the Board Audit Committee 194
– Report of the Board Risk Committee 200
– Report of the Nomination and Corporate Governance Committee 204
– Report of the Remuneration Committee 208
– Corporate Governance Remuneration statement 212
– Viability statement 219
– Internal controls 220
– Other governance information 221
– Supervision and regulation 222
Governance and oversight
172  Governance and Oversight
The Directors of AIB Group plc (‘the Company’) present their
report and the audited financial statements for the financial
year ended 31 December 2019. The Directors’ Responsibility
Statement is shown on page 224.
For the purposes of this report ‘AIB Group’ or ‘the Group’
comprises the Company and its subsidiaries in the financial
year ended 31 December 2019.
Results
The Group’s profit attributable to the ordinary shareholders of
the Company amounted to € 327 million and was arrived at as
shown in the consolidated income statement on page 237.
Dividend
The Board is recommending a dividend of € 0.08 per share
payable on 7 May 2020 to shareholders on the Company’s
Register of Members at the close of business on 27 March
2020.
In accordance with the “Joint Decision of the European Central
Bank and Prudential Regulatory Authority” of 25 November
2016 as updated on 3 December 2019, the Company is
required to obtain prior approval from the European Central
Bank in order to distribute dividends to shareholders.
During 2019, the Company paid a final dividend of € 0.17 per
share on 3 May 2019 to its ordinary shareholders who were on
the Register of Members at the close of business on 22 March
2019.
Going concern
The financial statements for the financial year ended
31 December 2019 have been prepared on a going concern
basis as the Directors are satisfied, having considered the
principal risks and uncertainties impacting the Group, that it has
the ability to continue in business for the period of assessment.
The period of assessment used by the Directors is 12 months
from the date of approval of these annual financial statements.
In making their assessment, the Directors considered a wide
range of information relating to present and future conditions.
These included financial plans covering the period 2020 to
2022, liquidity and funding forecasts and capital resources
projections, all of which were prepared under base and stress
scenarios.
In addition, the Directors considered the principal risks and
uncertainties which could materially affect the Group’s future
business performance and profitability and which are outlined on
pages 40 to 43.
Directors Compliance Statement
As required by section 225(2) of the Companies Act 2014, the
Directors acknowledge that they are responsible for securing
the Company’s compliance with its relevant obligations (as
defined in section 225(1)). The Directors confirm that:
(a)	
a compliance policy statement (as defined in section
225(3)(a)) has been drawn up that sets out the Company’s
policies and, in the Directors’ opinion, is appropriate to
ensure compliance with the Company’s relevant obligations;
(b)	
appropriate arrangements or structures that are, in the
Directors’ opinion, designed to secure material compliance
with the relevant obligations have been put in place; and
(c)	
a review of those arrangements or structures has been
conducted in the financial year to which this report relates.
Capital
Information on the structure of the Company’s share capital,
including the rights and obligations attaching to each class of
shares, is set out in the Schedule on pages 175 to 177 and is
part of note 42 to the consolidated financial statements.
Accounting policies
The principal accounting policies, together with the basis on
which the financial statements have been prepared, are set out
in note 1 to the consolidated financial statements.
Review of principal activities
The statement by the Chair on pages 10 to 13, the review
by the Chief Executive Officer on pages 14 to 19, and the
operating and financial review on pages 51 to 66 contain
an overview of the development of the business of the
Group during the year, of recent events, and of likely future
developments.
Directors
At 31 December 2019, the Board of Directors of the Company
was comprised of Mr Richard Pym, Mr Thomas (Tom) Foley,
Mr Basil Geoghegan, Dr Colin Hunt, Ms Sandy Kinney
Pritchard, Ms Carolan Lennon, Ms Elaine MacLean, Mr Brendan
McDonagh, Ms Helen Normoyle, Ms Ann O’Brien, Mr Tomás
O’Midheach and Mr Ranjit (Raj) Singh.
The following Board changes to the Company occurred with
effect from the dates shown:
–	
Mr Bernard Byrne resigned as CEO and Executive Director
on 8 March 2019,
–	
Dr Colin Hunt was appointed as CEO and Executive
Director on 8 March 2019,
–	
Mr Mark Bourke resigned as CFO and Executive Director
on 1 March 2019,
–	
Mr Tomás O’Midheach was appointed as Executive Director
on 13 March 2019,
–	
Ms Sandy Kinney Pritchard was appointed as
Non-Executive Director on 22 March 2019,
–	
Mr Simon Ball resigned as Non-Executive Director on
24 April 2019,
–	
Ms Ann O’Brien and Mr Ranjit (Raj) Singh were each
appointed as Non-Executive Directors on 25 April 2019,
–	
Mr Basil Geoghegan and Ms Elaine MacLean were
each appointed as Non-Executive Directors on
4 September 2019,
–	
Mr Peter Hagan resigned as Non-Executive Director on
30 September 2019, and
–	
Ms Catherine Woods and Mr Jim O’Hara each resigned as
Non-Executive Directors on 12 October 2019.
Governance and oversight –
Group Directors’ report for the financial year ended 31 December 2019
173

Governance and Oversight 1

Mr Richard Pym has informed the Board of his intention to
resign as Non-Executive Director and Chair on 6 March 2020.
The Group is in the process of identifying the next Chair and an
announcement will be made in due course.
A short biographical note on each Director is provided on pages
44 and 45.
The appointment and replacement of Directors, and their
powers, are governed by law and the Constitution of the
Company, and information on these is set out on pages 176
and 177.
Directors’ and Secretary’s Interests in the share
capital
The interests of the Directors and the Group Company
Secretary in the share capital of the Company are shown in the
Corporate Governance Remuneration statement on page 218.
Directors’ Remuneration
The Group’s policy with respect to Directors’ remuneration is
included in the Corporate Governance Remuneration statement
on pages 212 to 218. Details of the total remuneration of the
Directors in office during 2019 and 2018 are shown in the
Corporate Governance Remuneration statement on pages 216
to 218.
Non-Financial Statement
Regulations on non-financial information, which were
transposed into Irish law by the European Union (disclosure
of Non-Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017, require that
the Group report on specific topics such as environmental
matters; social and employee matters; respect for human
rights; and bribery and corruption (‘key non-financial matters’).
The Group is committed to maintaining sustainable and ethically
responsible corporate and social practices in every aspect of its
business. The table included on pages 48 and 49 of the Annual
Financial Report, together with the information it refers to, is
intended to assist shareholders to understand our position on
key non-financial matters. A description of our business model
is included on pages 6 to 8 of the Annual Financial Report and
the table on pages 40 to 43 summarises the linkage between
the Group’s strategic pillars, the principal risks and uncertainties
and the Group’s material risks. The material risks primarily
impacted by key non-financial matters include conduct risk
and people and culture risk. Further details of the Group’s risk
management governance and organisational framework can be
found on pages 72 to 78.
Substantial interests in the share capital
At 31 December 2019, the Company had been notified that the
Minister for Finance of Ireland holds 1,930,436,543 ordinary
shares representing 71.12% of the total voting rights attached to
the issued share capital.
There were no other interests disclosed to the Company in
accordance with the Market Abuse Regulation and Part 5 of the
Transparency Regulations and the related transparency rules
during the period from 31 December 2019 to 6 March 2020.
Corporate governance
The Directors’ Corporate Governance report is set out on pages
178 to 192 and forms part of this report. Additional information,
disclosed in accordance with the European Communities
(Takeover Bids (Directive 2004/25/EC)) Regulations 2006,
is included in the Schedule to the Group Directors’ report on
pages 175 to 177.
In accordance with Section 167 of the Companies Act
2014, the Directors confirm that a Board Audit Committee
is established. Details on the Board Audit Committee’s
membership and activities are shown on pages 194 to 199.
Political donations
The Directors of the Company have satisfied themselves that
there were no political contributions that require disclosure
under the Electoral Act 1997.
Accounting records
The measures taken by the Directors to secure compliance
with the Company’s obligation to keep adequate accounting
records include the use of appropriate systems and procedures,
incorporating those set out within ‘Internal controls’ in the
Corporate Governance report on pages 220 and 221, and the
employment of competent persons. The accounting records are
kept at the Company’s Registered Office at AIB Bankcentre,
Ballsbridge, Dublin 4, Ireland and at the principal addresses
outlined on page 383.
Principal risks and uncertainties
Information concerning the principal risks and uncertainties
facing the Group, as required under the terms of the European
Accounts Modernisation Directive (2003/51/EEC) (implemented
in Ireland by the European Communities (International Financial
Reporting Standards and Miscellaneous Amendments)
Regulations 2005), is set out on pages 40 to 43.
Branches outside the State
The Company has not established any branches since
incorporation. However, the Company’s principal operating
subsidiary, ., established branches, within
the meaning of EU Council Directive 89/666/EEC (implemented
in Ireland by the European Communities (Branch Disclosures)
Regulations 1993), in the United Kingdom and the United
States of America.
174  Governance and Oversight
Auditors
The auditors, Deloitte, were appointed to the Group on
20 June 2013 following shareholder approval at the 2013
Annual General Meeting on that date. Furthermore, Deloitte
were re-appointed as auditors of the Company at the last
Annual General Meeting held on 24 April 2019 and shall hold
office until the conclusion of the next Annual General Meeting
of the Company pursuant to section 382 of the Companies
Act 2014 at which time their continued appointment will be
proposed to the shareholders for approval. Deloitte have
indicated a willingness to continue in office in accordance with
section 383(2) of the Companies Act 2014.
Statement of relevant audit information
Each of the persons who is a Director at the date of approval of
this report confirms that:
(a)	
so far as the Director is aware, there is no relevant audit
information of which the company’s auditor is unaware; and
(b)	
the Director has taken all the steps that he/she ought to
have taken as a Director in order to make himself/herself
aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 330 of the Companies
Act 2014.
Other information
Other information relevant to the Group Directors’ report may be found in the following pages of the report:
			 Page
2019 financial highlights 4 and 5
Risk management 71 to 170
Non-adjusting events after the reporting period 365
The Group Directors’ report for the financial year ended 31 December 2019 comprises these pages and the sections of the report
referred to under ‘Other information’ above, which are incorporated into the Group Directors’ report by reference.
Richard Pym
Chair
Colin Hunt
Chief Executive Officer
5 March 2020
Governance and oversight –
Group Directors’ report for the financial year ended 31 December 2019
175

Governance and Oversight 1
2
3
4
5
6
Additional information required to be contained in the
Directors’ Annual Report by the European Communities
(Takeover Bids (Directive 2004/25/EC)) Regulations 2006.
As required by these Regulations, the information contained
below represents the position of the Company as of
31 December 2019.
Capital structure
The authorised share capital of the Company is € 2,500,000,000
divided into 4,000,000,000 ordinary shares of € 0.625 each
(‘Ordinary Shares’). The issued share capital of the Company is
2,714,381,237 Ordinary Shares of € 0.625 each.
Rights and obligations of each class of share
The following rights attach to Ordinary Shares:
–	
the right to receive duly declared dividends, in cash or,
where offered by the Directors, by allotment of additional
Ordinary Shares;
–	
the right to attend and speak, in person or by proxy,
at general meetings of the Company;
–	
the right to vote, in person or by proxy, at general meetings
of the Company having, in a vote taken by a show of hands,
one vote, and, on a poll, a vote for each Ordinary Share
held;
–	
the right to appoint a proxy, in the required form, to attend
and/or vote at general meetings of the Company;
–	
the right to receive, (by post or electronically), at least
21 days before the Annual General Meeting, a copy of the
Directors’ and Auditor’s reports accompanied by copies
of the balance sheet, profit and loss account and other
documents required by the Companies Act to be annexed to
the balance sheet or such summary financial statements as
may be permitted by the Companies Act;
–	
the right to receive notice of general meetings of the
Company; and
–	
in a winding-up of the Company, and subject to payments of
amounts due to creditors and to holders of shares ranking
in priority to the Ordinary Shares, repayment of the capital
paid up on the Ordinary Shares and a proportionate part
of any surplus from the realisation of the assets of the
Company.
There is, attached to the Ordinary Shares, an obligation for
the holder, when served with a notice from the Directors
requiring the holder to do so, to inform the Company in writing
within not more than 14 days after service of such notice, of
the capacity in which the shareholder holds any share of the
Company and, if such shareholder holds any share other than
as beneficial owner, to furnish in writing, so far as it is within
the shareholder’s knowledge, the name and address of the
person on whose behalf the shareholder holds such share
or, if the name or address of such person is not forthcoming,
such particulars as will enable or assist in the identification of
such person, and the nature of the interest of such person in
such share. Where the shareholder served with such notice
(or any person named or identified by a shareholder on foot of
such notice) fails to furnish the Company with the information
required within the time period specified, the shareholder shall
not be entitled to attend meetings of the Company, nor to
exercise the voting rights attached to such share, and, if the
shareholder holds 0.25% or more of the issued Ordinary
Shares, the Directors will be entitled to withhold payment of
any dividend payable on such shares, and the shareholder will
not be entitled to transfer such shares except by sale through
a Stock Exchange to a bona fide unconnected third party.
Such sanctions will cease to apply after not more than seven
days from the earlier of receipt by the Company of notice that
the member has sold the shares to an unconnected third party
or due compliance, to the satisfaction of the Company, with the
notice served as provided for above.
Restrictions on the transfer of shares
Save as set out below, there are no limitations in Irish law or in
the Company’s Constitution on the holding of Ordinary Shares,
and there is no requirement to obtain the approval of the
Company, or of other holders of Ordinary Shares, for a transfer
of Ordinary Shares.
The Ordinary Shares are, in general, freely transferable,
but the Directors may decline to register a transfer of Ordinary
Shares upon notice to the transferee, within two months after
the lodgement of a transfer with the Company, in the following
cases:
(i) a lien held by the Company on the shares;
(ii)	
a purported transfer to an infant or a person lawfully
declared to be incapable for the time being of dealing with
their affairs; or
(iii)	
a single transfer of shares which is in favour of more than
four persons jointly.
Ordinary Shares held in certificated form are transferable upon
production to the Company’s Registrar of the original share
certificate and the usual form of stock transfer duly executed by
the holder of the shares.
Shares held in uncertificated form are transferable in
accordance with the rules or conditions imposed by the operator
of the relevant system that enables title to the Ordinary Shares
to be evidenced and transferred without a written instrument,
and in accordance with the Companies Act 2014.
The rights attaching to Ordinary Shares remain with the
transferor until the name of the transferee has been entered on
the Register of Members of the Company.
Exercise of rights of shares in employee share schemes
The AIB Approved Employee Profit Sharing Scheme 1998
and the . Share Ownership Plan (UK)
provide that voting rights in respect of shares held in trust for
employees who are participants in those schemes are, on a
poll, to be exercised only in accordance with any directions
in writing by the employees concerned to the Trustees of the
relevant scheme. Following the establishment of the Company,
the shares previously held in trust in .
were exchanged, on a one-for-one basis, for new shares in the
Company.
Governance and oversight –
Schedule to the Group Directors’ report for the financial year ended 31 December 2019
176  Governance and Oversight
Deadlines for exercising voting rights
Voting rights at general meetings of the Company are exercised
when the Chair puts the resolution at issue to a vote of the
meeting. A vote decided by a show of hands is taken forthwith.
A vote taken on a poll for the election of the Chair or on a
question of adjournment is also taken forthwith, and a poll on
any other question is taken either immediately or at such time
(not being more than 30 days from the date of the meeting at
which the poll was demanded or directed) as the Chair of the
meeting directs. Where a person is appointed to vote for a
shareholder as proxy, the instrument of appointment must be
received by the Company not less than 48 hours before the
time appointed for holding the meeting or adjourned meeting at
which the appointed proxy proposes to vote, or, in the case of a
poll, not less than 48 hours before the time appointed for taking
the poll.
Rules concerning amendment of the Company’s
Constitution
As provided in the Companies Act 2014, the Company may, by
special resolution, alter or add to its Constitution. A resolution is
a special resolution when it has been passed by not less than
three-fourths of the votes cast by shareholders entitled to vote
and voting in person or by proxy, at a general meeting at which
not less than 21 clear days’ notice specifying the intention to
propose the resolution as a special resolution, has been duly
given. A resolution may also be proposed and passed as a
special resolution at a meeting of which less than 21 clear days’
notice has been given if it is so agreed by a majority in number
of the members having the right to attend and vote at any such
meeting, being a majority together holding not less than 90% in
nominal value of the shares giving that right.
Rules concerning the appointment and replacement
of Directors of the Company
–	
Other than in the case of a casual vacancy, Directors are
appointed on a resolution of the shareholders at a general
meeting, usually the Annual General Meeting.
–	
No person, other than a Director retiring at a general
meeting is eligible for appointment as a Director without
a recommendation by the Directors for that person’s
appointment unless, not less than 42 days before the date
of the general meeting, written notice by a shareholder
duly qualified to be present and vote at the meeting of
the intention to propose the person for appointment, and
notice in writing signed by the person to be proposed of
willingness to act, if so appointed, have been given to the
Company.
–	
A shareholder may not propose himself or herself for
appointment as a Director.
–	
The Directors have the power to fill a casual vacancy or
to appoint an additional Director (within the maximum
number of Directors fixed by the Company in a general
meeting), and any Director so appointed holds office only
until the conclusion of the next Annual General Meeting
following his/her appointment, when the Director concerned
shall retire, but shall be eligible for reappointment at that
meeting.
–	
One-third of the Directors for the time being (or, if their
number is not three or a multiple of three, not less than
one-third) are obliged to retire from office at each Annual
General Meeting on the basis of the Directors who
have been longest in office since their last appointment.
While not obliged to do so, the Directors have, in recent
years, adopted the practice of all (those wishing to continue
in office) offering themselves for re-election at the Annual
General Meeting.
–	
A person is disqualified from being a Director, and their
office as a Director ipso facto vacated, in any of the
following circumstances:
–	
if at any time the person has been adjudged bankrupt or
has made any arrangement or composition with his or
her creditors generally;
–	
if found to no longer have adequate decision making
capacity in accordance with law;
–	
if the person be prohibited or restricted by law from
being a Director;
–	
if, without prior leave of the Directors, he/she be absent
from meetings of the Directors for six successive
months (without an alternate attending) and the
Directors resolve that his/her office be vacated on that
account;
–	
if, unless the Directors or a court otherwise determine,
he/she be convicted of an indictable offence;
–	
if he/she be requested, by resolution of the Directors, to
resign his/her office as Director on foot of a unanimous
resolution (excluding the vote of the Director concerned)
passed at a specially convened meeting at which every
Director is present (or represented by an alternate)
and of which not less than seven days written notice of
the intention to move the resolution and specifying the
grounds therefor has been given to the Director; or
–	
if he/she has reached an age specified by the
Directors as being that at which that person may not
be appointed a Director or, being already a Director, is
required to relinquish office and a Director who reaches
the specified age continues in office until the last day of
the year in which he/she reaches that age.
–	
In addition, the office of Director is vacated, subject to any
right of appointment or reappointment under the Company’s
Constitution, if:
–	
not being a Director holding for a fixed term an
executive office in his/her capacity as a Director, he/she
resigns their office by a written notice given to the
Company, upon the expiry of such notice; or
–	
being the holder of an executive office other than for a
fixed term, the Director ceases to hold such executive
office on retirement or otherwise; or
–	
the Director tenders his/her resignation to the Directors
and the Directors resolve to accept it; or
–	
the Director ceases to be a Director pursuant to any
provision of the Company’s Constitution.
Governance and oversight –
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–	
Notwithstanding anything in the Company’s Constitution or
in any agreement between the Company and a Director,
the Company may, by ordinary resolution of which extended
notice has been given in accordance with the Companies
Act 2014, remove any Director before the expiry of his/her
period of office.
–	
The Minister for Finance has the power to nominate
two Non-Executive Directors in accordance with the
Relationship Framework between the Group and the State
and certain provisions as outlined therein. The Relationship
Framework is available on the Group’s website at
https://aib.ie/investorrelations/about-aib/relationship-with-
irish-state
The powers of the Directors
Under the Company’s Constitution, the business of the
Company is to be managed by the Directors, who may exercise
all the powers of the Company subject to the provisions of
the Companies Act, the Constitution of the Company, and
to any directions given by special resolution of a general
meeting. The Company’s Constitution further provides that the
Directors may make such arrangement as may be thought fit
for the management, organisation and administration of the
Company’s affairs, including the appointment of such executive
and administrative officers, managers and other agents as they
consider appropriate, and may delegate to such persons (with
such powers of sub-delegation as the Directors shall deem fit)
such functions, powers and duties as the Directors may deem
requisite or expedient.
178  Governance and Oversight
Chair’s introduction
Dear Shareholder,
I am pleased to present our Corporate Governance report for
2019. This report explains how corporate governance standards
are applied across the Group, how the Board implements and
oversees such standards, how the Board operates, and how
it performed in its 2019 effectiveness evaluation. This report
should be read in conjunction with the ‘Governance in AIB’
section which sets out examples of our corporate governance
standards being applied in practice during the year and also
with the reports of each Board Committee.
The Board as a whole is very cognisant of its accountability to
stakeholders for the overall direction and control of the Group.
Collectively, we remain committed to the principles of strong
corporate governance and to creating sustainable, long term
value for our shareholders and society. We recognise the
importance of a robust and effective corporate governance
framework which will provide us with the support to ensure
sound and timely decision-making.
To achieve these aims, it is imperative that we ensure
compliance with applicable legal and regulatory requirements.
This report provides statements of compliance with our
key corporate governance requirements. Key information
in this report is presented under the headings of the new
UK Corporate Governance Code 2018. Whilst the status
of compliance with the various requirements is of utmost
importance, the Board also seeks to adhere to the underlying
principles and ways of working recommended by those
requirements in order to bring accountability, transparency and
integrity to the fore of our decision-making.
Richard Pym
Chair of the Board
Corporate Governance arrangements and practices
The Group’s Governance Framework (the ’Framework’)
underpins effective decision-making and accountability and
is the basis on which the Group conducts its business and
engages with customers and other stakeholders. It ensures
that organisational and control arrangements are appropriate
to the governance of the Group’s strategy and operations
and the mitigation of related material risks. The Framework
encompasses AIB Group plc and its subsidiaries (collectively
referred to as ‘AIB Group’ or the ‘Group’).
The Framework takes account of the many statutory and
regulatory obligations that apply to the Group, including various
corporate governance codes, regulations and best practice
standards and guidelines, Irish company law, the Listing Rules
of the Main Securities Market of Euronext Dublin and the
London Stock Exchange, the UK Corporate Governance Code
2018 and, in relation to the UK businesses, UK company law.
Further detail on the Group’s governance practices is available
on http://aib.ie/investorrelations.
The Group’s governance arrangements include:
•	
a Board of Directors of sufficient size and expertise,
the majority of whom are independent Non-Executive
Directors, to oversee the operations of the Group, led by
a Chair who has the relevant qualifications, expertise and
background to effectively discharge that role;
•	
a Chief Executive Officer to whom the Board has delegated
responsibility for the day-to-day running of the Group,
the selection, motivation and direction of senior executive
management, and for the operational management,
compliance and performance of all the Group’s businesses;
•	
a clear organisational structure with well defined,
transparent and consistent lines of responsibility;
•	
a framework and policy architecture which comprises a
comprehensive and coherent suite of frameworks, policies,
procedures and standards covering business and financial
planning, corporate governance and risk management;
•	
effective structures and processes to identify, manage,
monitor and report the risks to which the Group is, or might
be exposed, including a three lines of defence risk
governance model; and
•	
adequate internal control mechanisms, including sound
administrative and accounting procedures, IT systems and
controls, human resource policies and practices, including
remuneration, that are consistent with and promote sound
and effective risk management.
Governance and oversight –
Corporate Governance report
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Statements of Compliance
This report, in conjunction with the Directors’ Responsibility
Statement, Corporate Governance Remuneration Statement,
Risk Governance section of the Risk Management Framework
report and the Statement on Internal Control sets out the
Group’s approach to governance in practice, the work of the
Board and its Committees and explains how the Group applied
the principles of the Central Bank of Ireland’s Corporate
Governance Requirements for Credit Institutions 2015 (the
‘2015 Requirements’), European Union (Capital Requirements)
Regulations 2014 (S.I. 158/2014) (‘CRD’) and UK Corporate
Governance Code 2018 (the ‘Code’) during 2019 under the
headings prescribed under the Code. Further detail is set out
below.
Central Bank of Ireland’s Corporate Governance
Requirements for Credit Institutions 2015 and European
Union (Capital Requirements) Regulations 2014
As a financial holding company, AIB Group plc is not directly
required to comply with the 2015 Requirements (which is
publicly available on www.centralbank.ie).
., the principal subsidiary of AIB
Group plc, is a credit institution and is subject to the 2015
Requirements, including compliance with requirements
specifically relating to ‘high impact institutions’ and additional
corporate governance obligations on credit institutions deemed
significant for the purposes of CRD (which is publicly available
on www.irishstatutebook.ie).
The governance structures of AIB Group plc and Allied Irish
Banks, p.l.c. are mirrored. As such, the 2015 Requirements
and the applicable corporate governance aspects of CRD
are applied across both entities. During 2019, AIB Group was
materially compliant with the 2015 Requirements and applicable
corporate governance aspects of CRD.
UK Corporate Governance Code 2018 and Irish Corporate
Governance Annex
AIB Group plc, by virtue of its primary listing on the London
Stock Exchange, is subject to the provisions of the Code (which
is publicly available on www.frc.org.uk). The Code is not a rigid
set of rules but instead consists of principles and provisions.
The Listing Rules to which the Group is subject, require it to
apply the main principles and report to shareholders on how
it has complied with the Code, and where the Group has not,
explain the rationale for same.
The ways in which the Group complied with the Code are
detailed throughout this report and cross-referencing can
be found on page 193. The areas of the Code with which
the Group did not comply, or where enhancements were
implemented to ensure full compliance, are set out below.
Additional obligations apply to the Group under the Irish
Corporate Governance Annex (publicly available on www.ise.ie),
which applies to relevant Irish companies with a primary listing
on the Main Securities Market of Euronext Dublin. The Group is
fully compliant with the Irish Corporate Governance Annex.
180  Governance and Oversight
UK Corporate Governance Code 2018 - Compliance and Enhancements
During 2019, the Group applied the main principles and complied with all provisions of the Code other than in instances related to
Section 5: Remuneration, in particular principle R and provisions 32, 36 and 37. The rationale for non-compliance with these principles,
and as such, the areas which the Group is required to explain, are set out below:
Principles and Provisions to ‘Explain’
Please note the Principles and Provisions detailed below have
been shortened for ease of reference. For the full wording of the
Principles and Provisions below, please refer to the Code which
is available at www.frc.org.uk
Rationale
Provision 32:
The board should establish a remuneration committee of
independent Non-Executive Directors, with a minimum
membership of three. Before appointment as chair of the
remuneration committee, the appointee should have served on
a remuneration committee for at least 12 months.
At 31 December 2019, the Remuneration Committee was
composed of Ms Elaine MacLean (Chair), Mr Richard Pym,
Mr Brendan McDonagh and Ms Ann O’Brien.
Ms MacLean did not serve on a remuneration committee for
at least 12 months prior to her appointment as Remuneration
Committee Chair. This matter was considered at length upon
her appointment. By virtue of Ms MacLean’s strong human
resources and reward experience, coupled with her regular
attendance at remuneration committee meetings during her
career, the Board was of the view that she was eminently
qualified for the role of Remuneration Committee Chair.
Principle R:
Exercise of independent judgement and discretion when
authorising remuneration outcomes.
Provision 36:
Remuneration schemes should promote long term
shareholdings by executive directors that support alignment
with long term shareholder interests.
Provision 37:
Remuneration schemes and policies should enable the use of
discretion to override formulaic outcomes.
Provision 38:
The pension contribution rates for executive directors, or
payments in lieu, should be aligned with those available to the
workforce.
Due to certain agreements in place with the Irish State,
the Remuneration Committee and the Board are restricted
in their ability to fully comply with Principle R and associated
provisions.
Under such agreements, the implementation of variable
remuneration structures is not permitted, the Board’s discretion
is limited and, as such, the Board cannot be in compliance with
the recommendation to exercise independent judgement.
Should variable remuneration be introduced, the Group notes
and will fully adhere to these principles and provisions in the
design, implementation and operation of any future variable
remuneration structures.
The current status of pension arrangements is considered to
be fair in light of the remuneration restrictions. The rates of
contribution for executive directors and all employee pensions
are fully transparent in the Remuneration Policy contained in
this Annual Financial Report.
Governance and oversight –
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Having reviewed the Group’s existing governance arrangements against the Code and industry best practice, a number of
enhancements to documentation and practices have been introduced including updates to the Group’s Governance and Organisation
Framework, Board Governance Manual and a number of the Terms of Reference of Board Committees. Enhancements to practices,
including but not limited to those set out below, have been implemented:
Areas of Enhancements
Please note the Principles
and Provisions detailed
below have been shortened
for ease of reference. For the
full wording of the Principles
and Provisions below, please
refer to the Code which is
available at www.frc.org.uk
Implementation in AIB
Provision 15:
Board Composition:
Additional external
appointments should not
be undertaken without
prior approval of the
board, with the reasons
for permitting significant
appointments explained in
the annual report.
Due to the time-sensitive nature of some additional commitments, the Board has agreed that
proposed additional commitments will be considered by the Chair and Group Company Secretary
in the first instance. Where the additional commitment results in an additional directorship as
defined by the Capital Requirements Directive IV, full Board pre-clearance will be required. All other
commitments will be assessed by the Chair and Group Company Secretary in the first instance
who will consider the time commitment involved and refer onwards, to the Board, if deemed
necessary. During 2019, no Executive Director held an external appointment in a FTSE 100
company.
Provision 17/23:
The Group is required to
develop a diverse pipeline
for succession, a policy
on diversity and inclusion,
detailing its objectives
and linkage to company
strategy, how it has been
implemented and progress
on achieving the objectives.
The Board recognises Diversity and Inclusion (‘D&I’) as a cornerstone of culture within the
organisation and as such the D&I strategy was reviewed and integrated within the overall culture
evolution programme. It is the Board’s belief that a continued focus on D&I will fundamentally
improve the decision-making capability of the organisation, through better challenge, more
comprehensive analysis and mitigating the risk of group-think.
To achieve this, the Board has set medium-term D&I objectives supported by short term activities
and outcomes. As part of the Sustainable Business Advisory Committee’s responsibility to consider
and advise on D&I of the Group’s workforce, the Committee was provided with measurement data
in relation to gender balance at senior management and by business function.
Stakeholder Engagement: The Board recognises the importance of Provision 5 of the Code relating to stakeholder
engagement with a particular focus on engagement with the workforce. The ways in which
the Board engages with the Group’s stakeholders are outlined on page 36. With regard to
engagement with the workforce, during 2019, the Board did not utilise the particular methods set
out in the Code. Rather, the Board engaged with, and considered the views of the workforce in its
discussions and decision-making, through a variety of means such as:
–	
face-to-face meetings through the ‘Out and Abouts’ schedule of visits to branches and offices
around the Republic of Ireland and the United Kingdom as further detailed on page 187;
– 
conversations with a number of employees whereby employees were invited to meet the Board
to provide their direct personal views of, and experiences in, AIB as further detailed on page 187;
–	
taking account of the views of c. 800 employees across the Group who participated in a series
of ‘Culture Conversations’ to help inform the Board in defining the Group’s cultural ambition; and
–	
taking an in-depth look at the results of the 2019 colleague engagement surveys ‘iConnect’ and
‘Pulse’ which gave the Board first-hand insights into the views of employees.
The Board believes that the foregoing has been effective in ensuring that it had a good
understanding of the views of the employees at different levels and locations throughout the Group
and these views inform the Board as part of its decision-making. The Board will consider any
enhancements required to these arrangements during 2020.
Other minor
enhancements:
Enhanced formality to the performance reviews of senior management by the Nomination and
Corporate Governance Committee on a regular basis.
Additional commentary in this Annual Financial Report on auditor independence and how their
objectivity is safeguarded.
182  Governance and Oversight
Board Leadership and Company Purpose
Role of the Board
The Group is headed by an effective Board which is collectively
responsible for the long term, sustainable success of the Group,
generating value for shareholders and contributing to wider
society. The Board is supported by the Executive Committee,
being the most senior management committee of the Group
which is responsible for maintaining effective oversight of the
Group consistent with Board-approved policy.
The Group maintains a clear division of responsibilities,
including between the Chair, who is responsible for the overall
leadership of the Board and for ensuring its effectiveness,
and the CEO, who manages and leads the business. No one
individual has unfettered powers of decision. Key roles and
responsibilities and a formal schedule of matters specifically
reserved for Board decision are clearly defined, documented
and communicated to key stakeholders via the Group’s
website at https://aib.ie/investorrelations/about-aib/corporate-
governance
The Board is responsible for corporate governance,
encompassing leadership, direction and control of the Group.
It assesses the basis on which the Group generates and
preserves value over the long term and is accountable to
shareholders for financial performance. The Board is also
responsible for approving high-level policy and strategic
direction in relation to the nature and scale of risk that the
Group is prepared to assume in order to achieve its strategic
objectives, and for maintaining an appropriate system of
internal controls. The Board receives regular updates on the
Group’s risk profile through the Chief Risk Officer’s monthly
report, and relevant updates from the Chair of the Board
Risk Committee. An overview of the Board Risk Committee’s
activities is detailed on pages 200 to 203.
The Board supports and strives to operate in accordance
with the Group’s purpose and values at all times. The Board
regularly challenges Management as to whether the purpose,
values and strategic direction of the Group align with its desired
culture, or if they do not, whether there are options to mitigate
negative stakeholder impacts.
While arrangements have been made by the Directors for the
delegation of the management, organisation and administration
of the Group’s affairs, certain matters are reserved specifically
for decision by the Board. The schedule of matters reserved for
the Board is reviewed at least annually to ensure that it remains
relevant, and was recently updated to reflect any enhancements
required under evolving corporate governance requirements
and industry best practice.
Board Focus in 2019
While not intended to be exhaustive, below is a high level overview of a number of matters considered by the Board and Board
Committees during 2019.
Financial
2020 – 2022 Financial Plan and
Investment Plan
2018 results and analyst presentations
Approval of dividend
Funding and Liquidity Policy
ICAAP/ILAAP including Capital
Adequacy Statement, Liquidity
Adequacy Statement and the
Contingency Funding Plan
Governance
Board Effectiveness
Chair’s performance review
Board Diversity Policy
Corporate Governance frameworks
Investor Relations activities
AGM briefing
Subsidiary Governance
Board and Executive Succession
Planning
Deputy Chair and Chair Succession
Processes
Strategy
Progress implementing the Group’s
strategy
Brexit
Future environment and business
model
Strategy and integrated financial
planning 2020 – 2022
Property strategy
Non-Performing Exposure strategy and
progress against targets
Organisational Structure changes
Culture and Values
Culture Evolution Programme
(see page 183 for further details)
Updates on talent and culture across
the business
Sustainability Report and various matters
of importance to the sustainability
agenda such as climate action
Employee engagement
Customer First activities and
customer outcomes
Risk Management
Group Risk Appetite Statement
IRB Model Programme progress
Risk Policies and Frameworks
Group’s Remuneration Policy
Group Recovery Plan
General material risks, including those
related to Brexit and the wider macro-
economy
Regulatory
Regulatory updates
Regulatory inspections
AML and CTF updates
Market Abuse Regulation practices
Related Party Lending considerations
Outcome of Supervisory Review and
Evaluation Process
Regular Updates
Business and Financial Performance
Tracker Mortgage Review Programme
Risk Management
Chair’s activities
Board Committee activities
Group Company Secretary activities
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Board interaction with the Culture Evolution Programme
Following on from work in 2018 to enhance the Group’s culture and following the Central Bank of Ireland (“CBI”) culture review, the
Board devoted significant meeting time in 2019 to both the Behaviour and Culture (“B&C”) and Diversity & Inclusion (“D&I”) agendas.
This time included, but was not limited to:
Playback of the CBI feedback on the Group’s B&C and D&I
plans and the interpretation of findings from CBI review and
Irish Banking Culture Board (“IBCB”) survey results. This was
followed by an analysis of associated risks and underlying
behaviours across the Group.
One-to-one engagement meetings between each Board
Director and the Executive Committee Culture sponsor, in
order to get individual Director perspectives on Culture across
the Group and the future plans.

In May, a number of AIB employees, with varying experiences,
tenure and roles with the Group were invited to meet the Board
to provide their direct personal views of, and experiences in AIB
to date, highlighting areas requiring enhancement and greater
focus. Key matters discussed by these employees included:
– the importance of communication,
– the effectiveness of conversations and connectivity,
–	
the importance of listening to employees to ensure the
operation of effective teams,
–	
the benefits to be derived from really understanding the
purpose and customer impact of key projects; and
–	
the benefits of certain activities to the Group outside of the
need to meet regulatory requirements.
The Board noted the valuable input from the employees and
considered all feedback at length.
In December 2019, the Board received a CBI letter closing
out the Behaviour and Culture Review Action Plan and
Diversity and Inclusion Assessment.
Review and consideration of feedback provided by a wider
employee base through “Culture Conversations” which
took place across the Group facilitated by Senn Delaney,
an external firm which focuses on transforming cultures in large
organisations.
The Board requested that a behavioural psychologist be
commissioned to analyse the Group’s current culture through
available cultural data. As a result, an externally facilitated
training workshop was held in May by Denison Consulting on
best-practice in Culture evolution at which they provided their
independent analysis and insights on the Group’s existing
culture.
A programme activity update was included in the CEO Report
in months where a specific culture topic was not presented.
The Board was provided with information to facilitate
discussion on the outcomes of the initial review phase,
specifically, regarding the outcome of the culture conversations
referred to above.
The Board reviewed the cultural ambition road map, including
the evolution of the Group’s brand values and from/to model
regarding underlying behaviours across the Group.
The Board will continue to focus on the delivery of the Culture
Evolution Programme in 2020.
Conflicts of Interest
The Board approved Code of Conduct and Conflicts of Interest
Policy sets out how actual, potential or perceived conflicts of
interest are to be evaluated, reported and managed to ensure
that Directors act at all times in the best interests of the Group
and its stakeholders. Executive Directors, as employees of the
Group, are also subject to the Group’s Code of Conduct and
Conflicts of Interests Policy for employees.
Stakeholder Engagement
The five designated stakeholder groups in AIB are customers,
employees, investors, society, and the Group’s regulators.
In order for the Group to meet its responsibilities to its
stakeholders, it is acknowledged that the Board should ensure
effective engagement with, and encourage participation from,
these parties.
Engaging with the Group’s stakeholders helps the Group
to learn about the issues that are important to them and
understand what they expect from the Group. In doing so,
the Group can consider the best course of action for all
stakeholders, evolve the Group’s approach and, where a
required course of action may negatively impact a stakeholder,
the Group can strive to limit the impact as far as practicable.
The Group engages with stakeholders through various means
such as face-to-face meetings including scheduled meetings
and out of course meetings on specific topics, research, media
engagement, the Group’s in-house experts liaising directly
with associated business, public and charitable groups and
participation in expert fora and events.
The Annual General Meeting (‘AGM’) is an opportunity for
shareholders to hear directly from the Board on the Group’s
performance and strategic direction, and importantly, to ask
questions. Details in relation to the 2020 AGM along with
other shareholder-related information can be found on pages
221 and 375 and on the Group’s website at https://aib.ie/
investorrelations/shareholder-information/annual-general-
meeting
Further details on the Group’s stakeholder engagement as
required under the UK Corporate Governance Code 2018 can
be found on page 36.
184  Governance and Oversight
Division of Responsibilities
Key Roles and Responsibilities
Chair
Mr Richard Pym leads the Board, setting its agenda, ensuring
Directors receive adequate, accurate and timely information,
facilitating the effective contribution of the Non-Executive
Directors, ensuring the proper induction of new Directors,
the on going training and development of all Directors, and
reviewing the performance of individual Directors. Mr Pym was
appointed as Chair of the Group in 2014. Mr Pym currently
has no other external directorship commitments. Mr Pym
announced his intention to retire as Chair of the Group in March
2020. The Group is in the process of identifying the next Chair
and an announcement will be made in due course. Mr Pym’s
biographical details are available on page 44.
Senior Independent Director
As Senior Independent Director (‘SID’), Mr Tom Foley acts
as a conduit for the views of shareholders and is available
as an alternate point of contact to address any concerns or
issues they feel have not been adequately dealt with through
the usual channels of communication. The SID also leads
the annual review of the Chair’s performance and succession
planning for the Chair’s role. He attends meetings with major
shareholders as required, to listen to their views in order to
develop a balanced understanding of the issues of concern to
them. Mr Foley was appointed to the role of Senior Independent
Director on 12 October 2019, following Ms Catherine Woods’
retirement, and his biographical details are available on page 44.
Deputy Chair
Mr Brendan McDonagh was appointed as Deputy Chair
on 24 October 2019. In this role, Mr McDonagh steps in as
acting Chair of the Board wherever necessary, and ensures
continuity of the Chair role as required. He deputises for the
Chair, supporting the Chair in representing and acting as a
spokesperson for the Board. The Deputy Chair is available to
the Directors for consultation and advice. Ms Catherine Woods
held the position of Deputy Chair up to 12 October 2019 when
she retired from the Group.
Independent Non-Executive Directors
As an integral component of the Board, Independent Non-
Executive Directors represent a key layer of oversight of the
activities of the Group. In their role, Independent Non-Executive
Directors scrutinise the performance of management in meeting
agreed objectives and monitor their reporting on performance.
They bring an independent viewpoint to the deliberations of the
Board that is objective and independent of the activities of the
Management and of the Group. They constructively challenge
and help develop proposals on strategy and other key matters.
Biographical details for each of the Independent Non-Executive
Directors are available on pages 44 and 45.
Chief Executive Officer (CEO)
Dr Colin Hunt manages the Group on a day-to-day basis
and makes decisions on matters affecting the operation,
performance and strategy of the Group’s business.
The Executive Committee assists and advises him in reaching
decisions on the Group’s strategy, governance and internal
controls, performance and risk management. Dr Hunt was
appointed CEO of the Group with effect from 8 March 2019.
His biographical details are available on page 45.
Mr Bernard Byrne, the previous CEO, stepped down from his
executive duties and from the Board on 8 March 2019 and
resigned from the Company on 26 April 2019.
Executive Directors
Executive Directors have executive functions in the Group in
addition to their Board duties. The role of Executive Directors,
led by the CEO, is to propose strategies to the Board and,
following challenging Board scrutiny, to execute the agreed
strategies to the highest possible standards.
At 31 December 2019, the Board had two Executive Directors,
the CEO, who is referenced above, and the Chief Operating
Officer and Deputy CEO, Mr Tomás O’Midheach.
Mr Mark Bourke resigned as an Executive Director and Chief
Financial Officer (‘CFO’) with effect from 1 March 2019.
Executive Committee
The Executive Committee is the most senior management
committee of the Group and is accountable to the CEO.
Subject to financial and risk limits set by the Board, and
excluding those matters which are reserved specifically for
the Board, the Executive Committee, under the stewardship
of the CEO, has responsibility for the day-to-day management
of the Group’s operations. Biographical details of all Executive
Committee members can be found on pages 46 and 47.
Board Committees
The Board is assisted in the discharge of its duties by a number
of Board Committees, whose purpose is to consider, in greater
depth than would be practicable at Board meetings, matters for
which the Board retains responsibility. The composition of such
Committees is formally reviewed on an annual basis however,
as indicated throughout this Annual Financial Report this is, in
fact, a continuous process and aligns to the Board’s succession
planning process. Each Committee operates under Terms of
Reference approved by the Board and the Board Committee’s
Terms of Reference are available on the Group’s website at
https://aib.ie/investorrelations/about-aib/corporate-governance
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The minutes of all meetings of Board Committees are circulated
to all Directors for information and are formally noted by the
Board. The Chairs of the Committees brief the Board on the
activities of the Committee on a regular basis. Papers for all
Board Committee meetings are also made available to all
Directors, irrespective of membership. Access to minutes and
papers is carefully considered and is restricted where a conflict
of interest or confidentiality issue exists.
There is a Sustainable Business Advisory Committee in place,
which is an advisory committee to the Board. It is comprised of
Non-Executive Directors and members of senior management
in order to support the execution of the Group’s sustainability
strategy. Its remit includes the development and safeguarding
of the Group’s ‘social license to operate’, such that the Group
plays its part in helping its customers and society prosper as
an integral component of the Group’s business and operations.
Further details on the Group’s sustainability-related activities
are available in the Annual Review section of this Annual
Financial Report.
Reports from the Board Audit Committee, the Board Risk
Committee, the Nomination and Corporate Governance
Committee and the Remuneration Committee are presented
later in this Annual Financial Report.
Group Company Secretary
The Directors have access to the advice and services of
Ms Helen Dooley, the Group Company Secretary and Group
General Counsel, who advises the Board on all governance
matters, ensuring that Board procedures are followed and
that the Group is in compliance with applicable rules and
regulations. The Group Company Secretary facilitates
information flows within and between the Board and its
Committees and senior executive management. The Group
Company Secretary communicates with shareholders as
appropriate, and ensures that due regard is paid to their
interests. Both the appointment and removal of the Group
Company Secretary is a matter for the Board as a whole.
The previous Group Company Secretary, Ms Sarah McLaughlin,
resigned on 12 July 2019.
Relationship with the Irish State
The Group has received significant support from the Irish
State (the ‘State’) in the context of the financial crisis due to its
systemic importance to the Irish financial system. Following a
reduction in its shareholding during 2017, the State now holds
71.12% of the issued ordinary shares of AIB Group plc.
The relationship between the Group and the State is governed
by a Relationship Framework. Within the Relationship
Framework, with the exception of a number of important
items requiring advance consultation with or approval by the
State, the Board retains responsibility and authority for all of
the operations and business of the Group in accordance with
its legal and fiduciary duties and retains responsibility and
authority for ensuring compliance with the regulatory and legal
obligations of the Group.
In considering the matters reserved for the Board, it should be
noted that certain of those matters require advance consultation
with, or consent from, the Minister for Finance. The conditions
under which such prior consultation or approvals are required
are outlined in the Relationship Framework which is available
on the Group’s website at https://aib.ie/investorrelations/about-
aib/relationship-with-irish-state
Board Meetings
In 2019, 12 scheduled meetings of the Board and 5 additional
out of course meetings were held. The Chair and the Chairs of
each Committee ensure Board and Committee meetings are
structured to facilitate open discussion, constructive challenge
and debate. The Board receives a comprehensive update from
the Chief Executive Officer, Chief Financial Officer, Chief Risk
Officer and Chief Operating Officer each month. The remainder
of the agenda is built from the indicative work programme
which includes strategic items, any activities out of the ordinary
course of business, requested in depth reviews and scheduled
updates on key projects. There is a set escalation process in
place through Executive and Board Committees which ensure
the Board receives the necessary information at the appropriate
time to enable the right decisions to be taken. The Chair leads
the agenda setting process, supported by the CEO and Group
Company Secretary.
In the rare event of a Director being unable to attend a meeting,
the Chair of the relevant meeting discusses the matters
proposed with the Director concerned in advance of the meeting
whenever possible, to determine their support and feedback
on the matters proposed. The Chair represents those views
on behalf of the Director at the meeting. The attendance of
Directors at meetings of the Board and Board Committees is
detailed on page 187.
In its work, the Board is supported by its Committees which
make recommendations, where appropriate, on matters
delegated to them under their respective Terms of Reference.
Each Committee Chair provides an update to the Board on
matters discussed at the preceding Committee meeting and an
annual report is provided from each Committee to the Board to
ensure appropriate oversight.
186  Governance and Oversight
How our Board Meetings work
In advance
of the next
calendar year

Meeting dates and locations are agreed in advance to ensure contributors/attendees etc. are well
prepared for required timelines and potential visits both at a senior management and operational level.
An indicative Work Programme including the Board’s Continuous Education Programme is prepared in
advance of the calendar year, informed by the Board’s agreed priorities, the integrated strategy, financial
planning and risk assessment process.
The Work Programme is shared with key internal stakeholders to ensure preparedness and alignment
across the Group.
Agenda setting
The Chair sets the agenda for each Board meeting in consultation with the Group Company Secretary
and the CEO.
The draft Board agenda is reviewed by the Executive Committee to seek input on any other matters of
relevance requiring the Board’s attention and to ensure any emerging issues receive adequate agenda
time.
Paper
preparation
Unless circumstances or the nature of the topic determine otherwise, matters requiring Board attention
are generally considered at an executive governance forum in advance.
All papers must be drafted within set templates and guidelines. Such templates include a requirement
to consider the implications of the paper content against the Group’s strategic pillars, with particular
reference to any risk considerations, with papers for decision generally being accompanied by a review
from the Risk function.
Paper
distribution
Meeting papers are typically distributed one week in advance via a secure electronic board portal to afford
Directors sufficient time to review papers in advance of the meeting.
Before the
Board meeting
Board Committee meetings are normally held in the days prior to the Board meeting.
Private sessions between the Non-Executive Directors and members of management may be held to
further explore matters.

Board education sessions usually take place on the evening before the Board meeting. These sessions
are provided by a mix of internal and external facilitators.
During the
Board meeting
In his opening remarks, the Chair sets the focus of each meeting. The Chair will then facilitate the
meeting with the support of the Group Company Secretary to ensure sufficient time is afforded to each
agenda item with all Directors’ views and, where relevant, challenge being aired. In bringing discussions
to a conclusion, the Chair will confirm the Board’s collective position.
Presenters are requested to take each paper as read, and highlight the key matters requiring the Board’s
attention to ensure sufficient time is spent on the key issues.
The Chair and the Chief Executive Officer provide updates on matters of relevance from their own internal
and external engagements in the recent period.

The Group Company Secretary will draw the Board’s attention to any matter of importance and remind
the Directors of their obligations under certain statutory or regulatory requirements, where necessary.
Any actual, potential or perceived conflicts of interest are monitored and managed appropriately
throughout the meeting.
After the
Meeting
Minutes and actions arising from the meeting are produced and circulated to the Chair for feedback,
review and agreement within agreed timeframes.
Actions are provided to action owners to ensure responses are prepared and updates provided for the
next meeting or within agreed time frames.
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Attendance at Board meetings of AIB Group plc is outlined
below. Attendance at Board Committees is reported in the
respective Committee reports which appear later in this report.
Board (scheduled) Board (out of course)
Directors
Eligible
to attend Attended
Eligible
to attend Attended
During 2019, the Non-Executive Directors also met on a
number of occasions in the absence of the Executive Directors.
The composition of the Board of AIB Group plc and Allied Irish
Banks, p.l.c. is the same. Throughout 2019, a number of the
Non-Executive Directors were also Non-Executive Directors
of the Group’s other material regulated subsidiary companies,
namely AIB Group (UK) p.l.c., AIB Mortgage Bank, EBS d.a.c.
and EBS Mortgage Finance. This facilitates oversight of
subsidiary activities.
Outside of the Group’s Board Meetings
Attendance at Board and Board Committee meetings is only
one part of the role of a Non-Executive Director. In addition to
such meetings and other scheduled activities such as the Board
Continuous Education Programme, Non-Executive Directors
undertake a full programme of activities. Importantly, these
activities include regular meetings with senior management,
employees and the Regulator to increase their understanding
of the business and the regulatory environment in which the
Group operates.
In 2019, the Board wanted to meet employees in less formal
settings. To facilitate more informal meetings, members of the
Board accompanied Executive Committee members on ‘Out
and Abouts’ with visits to various sites, meeting with employees
informally, learning about their work, their views on the Group,
and ways in which the Board and Executive Committee could
help to enable the teams to fulfil their purpose in more simple
and efficient ways. Following these sessions, Board members
relayed their experiences to the Board as a whole commenting
on a variety of matters including the culture and behaviours
being displayed across the business and any feedback received
from employees.
Access to Advice
There is a procedure in place to enable the Directors to take
independent professional advice, at the Group’s expense.
The Group holds insurance cover to protect Directors and
Officers against liability arising from legal actions brought
against them in the course of their duties.
The Board’s Professional Development and Continuous Education Programme
The Board’s Professional Development programme is multi-faceted and facilitated through:
Formal Induction Programme: This was refreshed in 2019,
particularly due to the number of new directors joining the
Board. As an introduction, and to ensure all Directors receive
a similar understanding of how the Group operates and the
key issues that it faces, a suite of induction documentation is
furnished to all incoming Directors via an online Board portal.
In addition, a series of meetings with senior management
from across the organisation are also arranged. Thereafter,
the Head of Corporate Governance, the Chair and the
incoming Director design a bespoke additional induction
programme as required.
Access to an online Corporate Governance Library which
is a simple access point for all corporate governance
standards, requirements and internal documentation.
Access to the suite of AIB Group iLearn courses. Whilst
formal Board training is provided in a collaborative,
presentation setting, Directors have access to the AIB
Group online suite of training courses should they wish to
undertake additional self-learning.
Site visits across the Group including meetings with staff and
customers.
Formal Board training: The 2019 Continuous Education
Programme, the specific topics of which are noted below,
was developed in conjunction with the indicative Work
Programme to ensure that Directors receive up-to-date
training on topics prior to reviewing Board papers on
same. The programme of training topics was developed
by the Corporate Governance and Group Organisation
Effectiveness team. Sessions were delivered by both internal
and external presenters, in some cases jointly. The Irish
Management Institute was engaged to source external
presenters for a number of topics throughout the year:
•	
Listing obligations, Corporate Governance requirements
and Conversations with an Investor;
• Corporate reputation;
• Culture;
• Resolution planning;
• Growth strategies;
• Anti-Money laundering; and
• Cyber security.
188  Governance and Oversight
Composition, Succession and Evaluation
Board Composition
At 31 December 2019, the Board comprised the Chair who was independent on appointment, nine independent Non-Executive Directors
and two Executive Directors. The names of the Directors, with brief biographical notes, are shown on pages 44 and 45 and further
details on independence considerations are set out on page 189.
The Board deems the appropriate number of Directors to meet the requirements of the business to be between 10 and 14 but
acknowledges that this number may go beyond 14 in the short term to accommodate succession planning activities and to ensure the
timely induction and development of new Directors.
There was a significant amount of change to the Board in 2019 as illustrated below.
Appointments during 2019 Board and Committee Chair Role When
Dr Colin Hunt Chief Executive Officer March 2019
Mr Tomás O’Midheach Chief Operating Officer and Deputy Chief Executive Officer March 2019
Ms Sandy Kinney Pritchard Non-Executive Director
Chair of Board Audit Committee
March 2019
April 2019
Ms Ann O’Brien Non-Executive Director April 2019
Mr Raj Singh Non-Executive Director April 2019
Mr Basil Geoghegan Non-Executive Director September 2019
Ms Elaine MacLean Non-Executive Director and Chair of Remuneration Committee September 2019
Mr Brendan McDonagh* Chair of Board Risk Committee
Deputy Chair
September 2019
October 2019
Mr Tom Foley* Senior Independent Non-Executive Director October 2019
Resignations during 2019 Board and Committee Chair Role When
Mr Mark Bourke Executive Director March 2019
Mr Bernard Byrne Chief Executive Officer March 2019
Mr Simon Ball Non-Executive Director April 2019
Mr Peter Hagan Non-Executive Director and Chair of Board Risk Committee July 2019
Mr Jim O’Hara Non-Executive Director and Chair of Remuneration Committee October 2019
Ms Catherine Woods Senior Independent Non-Executive Director,
Deputy Chair and Chair of Board Audit Committee
October 2019
*Existing Board members who assumed a new role.
Board Appointments
The review of the appropriateness of the composition of the
Board and Board Committees is a continuous process, and
recommendations are made based on merit and objective
criteria, having regard to the collective skills, experience,
independence and knowledge of the Board along with its
diversity requirements.
In addressing appointments to the Board, a role profile for
proposed new directors is prepared by the Group Company
Secretary on the basis of the criteria laid down by the
Nomination and Corporate Governance Committee, taking
into account the existing skills and expertise of the Board and
the anticipated time commitment required. The services of
experienced third party professional search firms are retained
for Non-Executive Director appointments where required
and deemed necessary by the Nomination and Corporate
Governance Committee. In all recruitment processes, the Group
aims to ensure a formal, rigorous and, acknowledging the need
for confidentiality, transparent process.
Prior to recommendations for appointment of a given candidate,
a comprehensive due diligence process is undertaken, which
includes the candidate’s self-certification of probity and financial
soundness, external references and external checks. The due
diligence process facilitates the Nomination and Corporate
Governance Committee in satisfying itself as to the candidate’s
independence, fitness and probity, and capacity to devote
sufficient time to the role. A final recommendation is made
to the Board by the Nomination and Corporate Governance
Committee.
The Relationship Framework specified by the Minister for
Finance (the ‘Minister’), which governs the relationship between
AIB and the Minister, on behalf of the Irish State as shareholder,
requires the Board to consult with the Minister before appointing,
reappointing or removing the Chair or Chief Executive Officer
and in respect of any other proposed Board appointments.
A Board-approved Policy for the Assessment of the Suitability of
Members of the Board, which outlines the Board appointment
process, is in place, and is in accordance with applicable joint
guidelines issued by the European Securities and Markets
Authority and European Banking Authority.
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Terms of appointment and time commitment
Non-Executive Directors are generally appointed for a three
year term, with the possibility of renewal for a further three
years on the recommendation of the Nomination and Corporate
Governance Committee. Any additional term beyond six years
will be subject to annual review and approval by the Board.
Following appointment, in accordance with the requirements
of the Company’s Constitution, Directors are required to retire
at the next Annual General Meeting (‘AGM’). Directors may
go forward for reappointment, and are subsequently required
to make themselves available for reappointment at intervals
of not more than three years. The 2020 AGM is scheduled
for 29 April 2020. The Board has adopted the practice that all
directors will retire from office at the date of the AGM and may
choose to offer themselves for reappointment.
Letters of appointment, as well as dealing with terms of
appointment and appointees’ responsibilities, stipulate that a
specific time commitment is required from Directors. Copies of
Directors’ letters of appointment are available to shareholders
for inspection at the AGM and at the Registered Office during
business hours on request from the Group Company Secretary.
Non-Executive Directors are required to devote such time as
is necessary for the effective discharge of their duties. The
estimated minimum time commitment set out in the terms of
appointment is 30 to 60 days per annum including attendance
at Committee meetings.
Before being appointed, Directors disclose details of their other
significant commitments along with a broad indication of the
time absorbed by such commitments. Before accepting any
additional external commitments, including other directorships
that might impact on the time available to devote to their role,
the agreement of the Chair and the Group Company Secretary,
and in certain cases the Board as a whole and/or the Central
Bank of Ireland, must be sought.
Balance and Independence
The Board has determined that all of the Non-Executive
Directors in office at 31 December 2019, namely Mr Tom Foley,
Mr Basil Geoghegan, Ms Sandy Kinney Pritchard, Ms Carolan
Lennon, Ms Elaine MacLean, Mr Brendan McDonagh, Ms Helen
Normoyle, Ms Ann O’Brien and Mr Raj Singh are independent
in character and judgement and free from any business or other
relationships with the Company or the Group which could affect
their judgement.
In determining independence, the Board had particular regard
to the fact that Ms O’Brien and Mr Singh were appointed
following their nomination by the Minister for Finance in Ireland,
who controls c. 71% of the Group’s issued share capital.
In determining that they should properly be considered to
be independent, the Board gave due regard to the following
matters: the nature and history of the shareholding and the
alignment of the Irish State’s interests with other shareholders,
the nature of the individuals nominated and the process
followed in identifying them for nomination, their performance
and nature of their contribution to the business of and matters
discussed at the Board and the Relationship Framework with
the Irish State. The Board is satisfied that in carrying out of
their duties as Directors, Ms O’Brien and Mr Singh are able to
exercise independent and objective judgement without external
influence.
Responsibility has been delegated by the Board to the
Nomination and Corporate Governance Committee for ensuring
an appropriate balance of experience, skills and independence
on the Board. Non-Executive Directors are appointed so as
to provide strong and effective leadership and appropriate
challenge to executive management.
Mr Richard Pym was determined as independent on
appointment as required under the UK Corporate Governance
Code 2018.
The independence of each Director is considered by the
Nomination and Corporate Governance Committee prior to
appointment and reviewed annually thereafter.
Diversity
Employee diversity and inclusion in the Group is addressed
through policy, practices and values which recognise that
a productive workforce comprises of different work styles,
cultures, generations, genders and ethnic backgrounds.
The Group opposes all forms of unlawful or unfair
discrimination. The efficacy of related policy and practices and
the embedding of the Group’s values is overseen by the Board.
The Board recognises and embraces the benefits of diversity
among its own members, including the diversity of skills,
experience, background, gender, ethnicity and other qualities,
and is committed to achieving the most appropriate blend and
balance of diversity possible over time.
Whilst the Board recognises that diversity is wider than gender,
in order to achieve its objective to build a diverse Board, it has
set measurable targets and objectives around the under-
represented gender in its Board Diversity Policy.
The original Board Diversity Policy for AIB Group was
introduced in 2015 with an initial target to ensure the
percentage of females on the Board reached or exceeded
25 per cent by the end of 2016. This target was met in October
2016. On review of the Board Diversity Policy in July 2019,
the Board set a new target to achieve 30 per cent female
representation by the end of 2020 and thereafter, to take
opportunities to increase the number of female directors over
time, where that is consistent with other skills and diversity
requirements.
At 31 December 2019, the percentage of females on the Board
stood at 41 per cent and the Board is confident it will continue to
exceed its target in 2020.
In terms of implementation of the Board Diversity Policy,
the Nomination and Corporate Governance Committee
(the ‘Committee’) reviews and assesses the Group Board
composition and has responsibility for leading the process
for identifying and nominating, for approval by the AIB Group
190  Governance and Oversight
Board, candidates for appointment as directors. In reviewing
AIB Group Board composition, balance and appointments,
the Committee considers candidates on merit against objective
criteria and with due regard for the benefits of diversity,
in order to maintain an appropriate range and balance of skills,
experience and background on the Board. Where external
search firms are engaged to assist in a candidate search,
they will be requested to aim for a fair representation of both
genders to be included in the initial list of potential candidates
so that the Committee has a balanced list from which to select
candidates for interview.
The Board Diversity Policy and monitoring of performance
relative to targets set out therein is a matter for the Committee,
which discusses progress against agreed targets. A copy of the
Board Diversity Policy is available on the Group’s website at
https://aib.ie/investorrelations/about-aib/corporate-governance
The Board Sustainable Business Advisory Committee is tasked
with considering and advising on the Group’s policies relating to
employee diversity in the Group generally.
Board Effectiveness
The Board conducts an annual evaluation of its effectiveness,
and is required to have an external evaluation conducted once
every three years. Having conducted a successful external
evaluation in 2017, which was facilitated by Lintstock and
reported on in the 2017 Annual Financial Report, an internal
evaluation was carried out in 2018 and again, in 2019.
The Chair of the Board leads the annual review of the Board’s
effectiveness and that of its Committees and individual Directors
with the support of the Nomination and Corporate Governance
Committee, which he also chairs.
The objective of these evaluations is to review the Board’s
composition, expertise, diversity and how effectively members
work together to achieve objectives. It also reviews past
performance with the aim of identifying any opportunities
for improvement, determining whether the Board and its
Committees are as a whole effective in discharging their
responsibilities and, in the case of individual Directors,
to determine whether each Director continues to contribute
effectively and to demonstrate commitment to the role.
2019 Internal Effectiveness Evaluation
The 2019 evaluation was led by the Chair with the support
of the Head of Corporate Governance. Whilst the evaluation
was internal in nature, as with the 2018 evaluation, it was
facilitated by the provision of formal questionnaires by Lintstock.
Lintstock is an independent external consultancy firm, which
also conducted an effectiveness evaluation of the Group’s UK
subsidiary during 2019 but has no other connection to AIB
Group.
The provision of the questionnaires and production of a
consolidated results report facilitated comparison of the 2019
outcome to 2018 in order to ascertain the level of progress
made in the intervening period.
Each Director completed online questionnaires, which sought
their views on a range of topics including Board composition
and expertise, Board culture and dynamics, the Board’s
calendar and agenda, the quality and timeliness of information,
strategy and operational matters, risk management and internal
control, succession planning, human resource management,
and priorities. Similar questionnaires were completed for each
Board Committee, an evaluation of the Chair and individual
director self-assessment.
As a key part of the evaluation process, the Chair met with each
Director to review their individual performance. These reviews
included discussion of the Director’s individual contributions
and performance at the Board and relevant Board Committees,
the conduct of Board meetings, the performance of the Board
as a whole and its Committees, compliance with Director-
specific provisions of the relevant Central Bank of Ireland
Corporate Governance Requirements for Credit Institutions
2015, the requirements of the Central Bank’s Fitness and
Probity Regulations, and any other specific matters which the
Chair and/or Directors wished to raise.
The performance of the Chair was also assessed. It was led
by the SID, who met with the Board to discuss the Chair’s
performance in his absence. The SID subsequently provided an
update on the positive outcome of the review to the Chair.
The findings of the Board and Board Committee evaluations
were reviewed by the Group Company Secretary. The summary
findings were then shared and discussed with the Chair and
feedback on each of the Committees was shared with the
individual Committee chairs. Feedback on individual Directors
was shared directly by Lintstock with the Chair. The results
culminated in a consolidated report on the findings of the full
evaluation process being presented to the Board and the
Committees in November and December 2019.
Highlights from the 2019 internal Board
Effectiveness Evaluation
The outcome of the evaluation was generally positive,
particularly in light of the substantial change seen at Board
and Board Committee level. The evaluation concluded that the
Board continued to be effective, with all Directors demonstrating
very strong commitment to their roles which at times required
them to go above and beyond their required time commitment
to the role.
Overall the effectiveness of the Board and its Committees
improved year on year. The key themes identified through the
Board evaluation included succession planning and integrating
new appointments, the focus of the Board on strategy to include
devoting more time to market, technology and competitor
reviews and monitoring the execution of key projects and
ensuring lessons learned were taken and distilled through the
business.
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As a result of the evaluation, the Board agreed a new set of Board priorities to align with the Group embarking on a new three-year
strategy to include:
Simplification Modernise and simplify the Group, reducing ‘cost to serve’ and error.
Sustainability Create leadership of the sustainability agenda in Ireland benefitting customers and wider civil society.
Culture Create a culture which encourages the right behaviours towards customers and colleagues.
Leadership Build leadership and talent to develop and sustain the Group through generations.
Bring Resolution of
the Past to an end
With particular reference to non-performing exposures and conduct failures.
Returns
Create an operating model which delivers to shareholders an appropriately attractive return for the
use of their capital.
During the evaluation, many directors commented favourably on the performance of the Board as a whole, describing it as positively
diverse and benefiting from a good mix of skills.
Recommendations from the 2019 review and actions in respect of each which are actively underway, included:
Focus of meetings
The Board expressed an appetite for its work programme to be enhanced to increase information and
time spent on (i) strategic forward looking topics (ii) customers (including market research) particularly
Small and Medium Enterprise customer journeys, (iii) competitors, (iv) technology and (v) costs.
The Board highlighted the need to maintain an appropriate balance between legacy and forward
looking matters. In response to these requests, the indicative Work Programme has been enhanced
to allow increased time for these matters and additional Non-Executive Director only meetings.
Additionally, monthly reporting has been enhanced to deliver better engagement with Management on
core business objectives and strategic issues through the use of key performance indicators as well
as more forward looking analysis.
Culture
The Board wanted to ensure focus remained on enhancing the Boards’ monitoring of culture and
behaviours through (i) sustained engagement with the Executive Committee Culture Sponsor,
(ii) continued focus on culture in its own right, rather than embedded within larger topics, (iii) focus on
the Board’s own culture and how it impacts the organisation, (iv) enhancement of clarity across the
organisation in relation to the Group’s whistleblowing and “speak up” policies and procedures and
(v) KPIs to be developed to help measure and assess progress on culture. These actions have been
taken into consideration in agenda planning and in the work of the Culture Evolution Programme.
Talent monitoring
Whilst acknowledged as a matter for the Nomination and Corporate Governance Committee, it was
agreed that the executive succession plan should be shared with the Board in association with key
people risk and the appropriateness of processes for managing and developing talent. An action was
taken whereby training would be developed to assist attendees at Board and Board Committees to
make impactful presentations and contributions at the meetings and to improve visibility for the Board
of the management layer immediately below the Executive Committee and consider the inclusion of
middle management at Board events.
Board papers
Recognising the progress made in 2018, the Board requested the continuation of the action to
enhance the clarity and conciseness of papers through the use of key issues, summaries and
increased clarity on the recommendations in the papers from the business areas.
192  Governance and Oversight
Progress against the 2018 internal Board Effectiveness Evaluation
A summary of the Board’s progress against the actions arising from the 2018 external effectiveness review are set out below.
Board Papers –
Brevity and Clarity
While observations on the volume of papers did appear again during the 2019 effectiveness review,
improvements to the quality and consistency of papers were acknowledged. These improvements
were driven by enhancements to templates, paper drafting guidelines and workshops with regular
paper submitters. An ongoing drive to reduce the length of Board papers has also seen positive
results albeit continuous improvement is still required.
Decision
Implementation
The Board was keen to implement a more formal process to assess the quality of implementation
of Board decisions and review their effectiveness. To facilitate this, the Board was provided with
a summary of key decisions taken from July 2018 to June 2019 with an updated status provided.
A similar look back exercise is scheduled for December 2020 to ensure the Board continues to have
oversight of the implementation of such decisions and their effectiveness.
Board Work
Programme
Acknowledging that the focus of meetings arose again in the 2019 effectiveness evaluation, the
indicative Board Work Programme was reviewed in early 2019 to further consider the time spent by
the Board and ensure appropriate focus was placed on strategic matters, culture and behaviours.
Enhanced
Stakeholder
Engagement
In the 2018 review, Directors cited a desire to enhance engagement with key stakeholders with a
particular focus on customers and employees. Through a series of informal visits known as ‘Out
and Abouts’ as detailed in this Corporate Governance report, branch visits and various staff events,
the Board took the opportunity to increase face-to-face meetings with employees throughout 2019.
Further details on stakeholder engagement are outlined on page 36.
Audit, Risk and Internal Control
The Board has delegated responsibility for the consideration
and approval of certain items pertaining to audit, risk and
internal control to the Board Audit Committee and Board Risk
Committee. Where required, topics will be referred onward
to the Board as a whole for further discussion or approval.
Information on the activities of the Board Audit Committee and
Board Risk Committee in 2019 can be found in the reports of
these Committees, which form part of this Governance and
oversight section of the Report.
Remuneration
The Board has delegated responsibility for the consideration
and approval of the remuneration arrangements of the Chair,
Executive Directors, Executive Committee members, the Group
Company Secretary and certain other senior executives to
the Remuneration Committee. The Board as a whole, with
the Non-Executive Directors abstaining, considers the fees
paid to Non-Executive Directors. Information on the activities
of the Remuneration Committee in 2019 can be found in the
Remuneration report, which forms part of this Governance and
oversight section of the Report.
Governance and oversight –
Corporate Governance report
193

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UK Corporate Governance Code Disclosures Index
The ethos of the UK Corporate Governance Code 2018 (2018 Code) aligns with the Board’s focus on ensuring long-term sustainability
and the continued importance of the cultural evolution programme, stakeholder engagement and succession planning. Following the
Code’s publication in 2018, 2019 was a year of embedding new processes and implementing enhancements, where required.
Further to the information on UK Code Compliance and Enhancements set out on pages 180 and 181, including the rationale for certain
instances of non-compliance, the below table outlines where the disclosures on how AIB has applied the main principles of the 2018
Code can be found. The Group’s Statement of Compliance with the 2018 Code is on page 179.
Code Principle Section Page
Section 1. Board Leadership and Company Purpose
A. A successful company is led by an effective and entrepreneurial board, whose role is
to promote the long term sustainable success of the company, generating value for
shareholders and contributing to wider society.
● 
Board Leadership and Company Purpose 182
B. The board should establish the company’s purpose, values and strategy, and satisfy
itself that these and its culture are aligned. All directors must act with integrity, lead by
example and promote the desired culture.
● Corporate Governance in Action
● 
Board Leadership and Company Purpose
32
182
C. The board should ensure that the necessary resources are in place for the company
to meet its objectives and measure performance against them. The board should
also establish a framework of prudent and effective controls, which enable risk to be
assessed and managed.
● Risk Governance and Oversight
● 
Corporate Governance arrangements and practices
● 
Internal Controls
73
178
220
D. In order for the company to meet its responsibilities to shareholders and stakeholders,
the board should ensure effective engagement with, and encourage participation
from, these parties.
● Engaging with Our Stakeholders
● 
UK Corporate Governance Code 2018 –
Compliance and Enhancements
● Stakeholder Engagement
36
180
183
E. The board should ensure that workforce policies and practices are consistent with
the company’s values and support its long term sustainable success. The workforce
should be able to raise any matters of concern.
● 
Board Leadership and Company Purpose
● Report of the Board Audit Committee
182
194
Section 2. Division of Responsibilities
F. The chair leads the board and is responsible for its overall effectiveness in directing
the company. The chair should demonstrate objective judgement throughout their
tenure and promote a culture of openness and debate. In addition, the chair facilitates
constructive board relations and the effective contribution of all non-executive
directors, and ensures that directors receive accurate, timely and clear information.
● Division of Responsibilities
● Balance and Independence
184
189
G. The board should include an appropriate combination of executive and non-executive
(and, in particular, independent non-executive) directors, such that no one individual
or small group of individuals dominates the board’s decision-making. There should
be a clear division of responsibilities between the leadership of the board and the
executive leadership of the company’s business.
● 
Board Leadership and Company Purpose
● 
Division of Responsibilities
182
184
H Non-executive directors should have sufficient time to meet their board
responsibilities. Non-executive directors should provide constructive challenge,
strategic guidance, offer specialist advice and hold management to account.
● Division of Responsibilities
● Board Appointments
184
188
I. The board, supported by the company secretary, should ensure that it has the
policies, processes, information, time and resources it needs in order to function
effectively and efficiently.
● Division of Responsibilities
● 
Board Effectiveness
184
190
Section 3. Composition, succession and evaluation
J. Appointments to the board should be subject to a formal, rigorous and transparent
procedure, and an effective succession plan should be maintained for board and
senior management. Both appointments and succession plans should be based
on merit and objective criteria, and promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
● Corporate Governance in Action
● 
Composition, succession and evaluation
● 
Report of the Nomination and
Corporate Governance Committee
32
188
204
K. The board and its committees should have a combination of skills, experience and
knowledge. Consideration should be given to the length of service of the board as a
whole and membership regularly refreshed.
● 
Composition, succession and evaluation
● 
Report of the Nomination and
Corporate Governance Committee
188
204
L. Annual evaluation of the board should consider its composition, diversity and how
effectively members work together to achieve objectives. Individual evaluation should
demonstrate whether each director continues to contribute effectively.
● 
Composition, succession and evaluation
● Board Effectiveness
188
190
Section 4. Audit, Risk and Internal Control
M. The board should establish formal and transparent policies and procedures to ensure
the independence and effectiveness of internal and external audit functions and
satisfy itself on the integrity of financial and narrative statements.
● Report of the Board Audit Committee 194
N. The board should present a fair, balanced and understandable assessment of the
company’s position and prospects.
● Report of the Board Audit Committee
● Directors’ Responsibility Statement
194
224
O. The board should establish procedures to manage risk, oversee the internal control
framework, and determine the nature and extent of the principal risks the company is
willing to take in order to achieve its long term strategic objectives.
● Risk Governance and Oversight
● Report of the Board Audit Committee
● Report of the Board Risk Committee
73
194
200
Section 5. Remuneration
P. Remuneration policies and practices should be designed to support strategy and
promote long term sustainable success. Executive remuneration should be aligned to
company purpose and values, and be clearly linked to the successful delivery of the
company’s long term strategy.
● Report of the Remuneration Committee
● Corporate Governance Remuneration Statement
208
212
Q. A formal and transparent procedure for developing policy on executive remuneration
and determining director and senior management remuneration should be established.
No director should be involved in deciding their own remuneration outcome.
● Report of the Remuneration Committee
● Corporate Governance Remuneration Statement
208
212
R. Directors should exercise independent judgement and discretion when authorising
remuneration outcomes, taking account of company and individual performance, and
wider circumstances.
● 
UK Corporate Governance Code 2018 –
Compliance and Enhancements
● Corporate Governance Remuneration Statement
180
212
194  Governance and Oversight
Letter from Sandy Kinney Pritchard,
Chair of the Board Audit Committee
Dear Shareholder,
On behalf of the Board Audit Committee (‘the Committee’), I am
pleased to deliver my first report to you on the Committee’s
activities during the financial year ended 31 December 2019.
2019 was a year of significant change for the Committee.
Following my appointment to the Board in March 2019, I was
appointed Committee Chair in April 2019, taking the mantle
from Ms Catherine Woods following her eight year tenure as
Chair. I would like to take this opportunity to acknowledge the
positive contributions of Ms Catherine Woods, Mr Peter Hagan
and Mr Jim O’Hara who stepped down from the Committee this
year. In September, we were delighted to welcome Mr Basil
Geoghegan to the Committee. Basil’s considerable corporate
and non-executive experience is a valuable addition to the
Committee.
The Group Head of Internal Audit resigned from the Group
in April 2019, at which time an interim appointment to the
role was approved. Over the course of the year, a robust
selection process was conducted by the Committee to
appoint a successor to this role. I am pleased to note that we
have selected a strong internal candidate who is currently
progressing though the regulatory approval process. During
this period of substantial change, the Committee continuously
assessed the performance and independence of the Internal
Audit function, and the Committee is satisfied that all
appropriate structures remained in place throughout the year.
The Committee is tasked with ensuring that the Group operates
a strong control environment and acts independently of
Management so that the interests of shareholders and other
stakeholders are appropriately protected in relation to internal
control and financial reporting.
With regard to the internal control environment, the Committee
continued to monitor the effectiveness of the three lines of
defence model across the Group, with a primary focus on
activity overseen by the third line of defence. To this end, the
Committee received regular reports from the Group Internal
Audit function regarding control issues identified through the
execution of the internal audit plan, as well as Management’s
response to those issues. Audit engagements were rated
based on the strength of both the control environment in
operation, and Management’s awareness of the risks facing
their business areas, and the controls in place to mitigate
those risks. The 2020 Audit Plan was subject to robust review
and challenge on a number of occasions by the Committee in
order to ensure the appropriate coverage and focus on the risk
profile of the Group. The Committee also considered reports
and presentations from the External Auditor, Chief Financial
Officer and the Risk function on the effectiveness of the control
environment.
In light of a sustained focus on the enhancement of the three
lines of defence model, the Committee continued to assess
control issues against a number of “Key Control Enhancement
Themes”, each owned by an accountable Executive
Committee Member. In 2019, the themes included Key Person
Succession, Oversight of Subsidiaries, IT Governance, Third
Party Management, Credit and Compliance Risk Management
including Anti Money Laundering.
The Committee has responsibility for ensuring that appropriate
arrangements are in place by which employees can, in
confidence, raise concerns regarding possible improprieties
in matters of financial reporting or other matters. We
received updates from Management regarding the Group’s
whistleblowing or “Speak Up” governance arrangements in
place. A deep dive review of whistleblowing governance and
support structures was undertaken in 2019, with a number
of enhancements proposed for implementation in 2020.
The Committee will monitor the progress of the delivery of those
enhancements, and will continue to ensure that appropriate
support and arrangements are in place for staff in this regard
throughout the coming year.
A primary role of the Committee is to consider the significant
matters relating to the annual and interim accounts. Key
accounting judgements are subject to in depth discussion
and challenge with Management and the External Auditor in
advance of recommending to the Board. This ensures that all
financial reports, including the annual report and accounts,
taken as a whole, are considered to be a fair, balanced and
understandable assessment of the Group’s financial position,
and provide the necessary information for shareholders to
assess the Company’s performance, risks, business model and
strategy.
Governance and oversight –
Report of the Board Audit Committee
195

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The key matters of judgement considered by the Committee in
relation to the 2019 financial statements, and how they were
addressed, are set out below:
Impairment of financial assets
On 1 January 2018, the Group transitioned to the financial
instruments accounting standard IFRS 9. This accounting
standard requires losses to be reflected on an expected
credit loss (“ECL”) basis. Expected credit losses are required
to incorporate forward looking information, reflecting
Management’s view of potential future economic environments.
The complexity involved required Management to develop new
methodologies involving the use of subjective judgements as
well as significant changes to systems, processes and controls.
The key judgements include:
•	
Determining the criteria for a significant increase in credit
risk relative to origination and for being classified as credit
impaired;
•	
Developing the appropriate models, probability of default
(PD) and loss given default (LGD) assumptions for
measuring ECL;
•	
Determining the life of a financial instrument and therefore,
the period over which to measure ECL;
•	
Key assumptions, including collateral valuation and cash
flow timings, used in discounted cash-flows (‘DCFs’) of
individually assed loans. DCFs are the most significant
input to the ECL calculation for non-retail Stage 3 loans;
• 
Post model adjustments determined by Management for
certain portfolios; and
•	
Establishing the number and relative weightings for forward
looking macroeconomic scenarios for ECL.
The Committee obtained regular and detailed reports and
presentations from Management throughout 2019 on the ECL
outcomes and the process for updating the key assumptions
noted above. The Committee particularly focused on changes
to models and the criteria for determining a significant increase
in credit risk, as well as the full embedding of IFRS 9 processes
and controls in 2019. The Committee also considered the
reports of independent assurance processes within the Group
as well as reports from Internal Audit. In relation to forward
looking macroeconomic scenarios, the Committee considered
and challenged the process used by Management to determine
the assumptions and weightings, including the potential
impact of Brexit and a wider global economic slowdown.
The Committee has also reviewed the sensitivities and
disclosures in the Risk management section of this report and
and is satisfied that these are balanced and fair. Based on the
work performed, the Committee concurred that the judgements
and assumptions used in determining the ECL provision at
31 December 2019 were appropriate.
Deferred taxation
The Group has recognised deferred tax assets for unutilised
tax losses totalling € 2,771 million. It is assessed that it will
take in excess of 20 years for the deferred tax asset to be
utilised. The assessment of the conditions for the recognition
of a deferred tax asset is a critical judgement particularly given
the inherent uncertainties associated with projecting profitability
over a long time period.
In assessing the recognition of the deferred tax assets, the
Committee has considered the Group’s financial plan and the
growth assumptions and profitability levels underpinning the
plan. The Committee noted that reduced profitability forecasts in
the plan has resulted in the period of utilisation of the deferred
tax asset to increase. As a result, the Committee reassessed
the range of positive and negative evidence prepared by
Management and the inherent uncertainties in any long term
assumptions and projections. Based on this evidence, the
Committee agreed that the recognition basis for the deferred tax
asset remains appropriate and that the assumptions used by
Management in assessing the recognition of deferred tax assets
are reasonable.
Retirement benefit obligations
There is a high degree of estimation and judgement in the
calculation of retirement benefit liabilities. These liabilities
are highly sensitive to changes in the underlying actuarial
assumptions including the discount rate, pension in payment
increases and inflation rates.
In assessing the reasonableness of defined benefit obligation
assumptions, the Committee has reviewed reports by
Management setting out the processes for deriving the key
assumptions and how these assumptions are benchmarked
to external market data. The Committee has also reviewed
assessments by independent actuaries who have provided an
expert opinion to Management. Based on the work performed,
the Committee agreed that the assumptions supporting the
retirement benefit liabilities are reasonable.
Provisions for liabilities and commitments
The measurement of provisions, including those for customer
redress and related matters, is highly judgemental. Back in
2017, following review and analysis of the parameters of
the Central Bank of Ireland’s Tracker Mortgage Examination
framework, the Group concluded that a cohort of customers
who were never on a tracker rate would be paid compensation.
However, in January 2020, the Group received a preliminary
Financial Services and Pensions Ombudsman (“FSPO”)
decision which upheld a claim by an impacted customer
within this cohort and awarded further redress. The Group
considered this preliminary decision and recorded a provision
of € 265 million based on an initial assessment of the
likelihood that additional redress may be due to all customers
in this cohort. The Group recognises that there is a range of
possible outcomes and has created this provision, which was
subject to review and approval by the Board. This represents
Management’s best estimate of loss taking into account the
available evidence and assessment of the potential outcomes
in finalising this matter with the relevant stakeholders.
The Committee has reviewed the position and the process
for estimating the provision. Based on its assessment, the
Committee has concluded that this provision is reasonable
taking into account the inherent uncertainties in the calculation
and the judgemental nature of key assumptions, particularly
relating to the identification of impacted customers and related
redress costs. The Committee has also reviewed the disclosure
set out on pages 277 and 328 of this report.
196  Governance and Oversight
Impairment of investment of AIB Group plc in
.
The Group completed a corporate reorganisation during 2017
which included the creation of a new Group holding company,
AIB Group plc. The Company balance sheet included a
€ 12.9 billion investment in . before
the impairment assessment. The Company reviews its equity
investment for impairment at the end of each reporting period if
there are indications that impairment may have occurred.
The testing for possible impairment involves comparing
the estimated recoverable amount of an investment with
its carrying amount. Where the recoverable amount is less
than the carrying amount, the difference is recognised as an
impairment provision in the Company’s financial statements.
The recoverable amount is the higher of fair value less costs to
sell and value-in-use (“VIU”).
At 31 December 2019, the Group has assessed an impairment
of € 3,444 million in the carrying value of its investment in Allied
Irish Banks, p.l.c. based on its VIU. There is a significant level
of judgement associated with the determination of the VIU
as it is predicated on the achievement of future projections.
The Committee has considered the key assumptions
determined by Management, including future growth and
discount rates. The Committee also considered reports
commissioned by Management from independent experts
which included benchmarking to external data. Based on
the assessment of this expert opinion, the Committee has
concluded that the judgements supporting the impairment
calculation are reasonable.
Further details on the Committee’s responsibilities, membership
and the record of attendance at meetings during 2019 are
outlined in the full report of the Committee.
I am honoured to take on the responsibility of the role of Chair
of the Board Audit Committee and appreciate the considerable
support afforded to me in my transition into the role from my
fellow Members, both past and current. I would like to extend
my heartfelt thanks to Catherine Woods, my predecessor, who
laid the strong foundations for the effective and robust manner
in which the Committee discharges its duties.
Sandy Kinney Pritchard,
Committee Chair
Governance and oversight –
Report of the Board Audit Committee
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Report of the Board Audit Committee
Membership and meetings
In 2019, the composition of the Committee changed
significantly, with the resignation of three committee members
including the Committee Chair. Succession planning throughout
2018 and 2019 resulted in the appointment of two new Directors
to the Committee, including Ms Sandy Kinney Pritchard as
Committee Chair. The Committee, as at 31 December 2019,
comprised four Non-Executive Directors, all deemed to be
independent, and who the Board determined have the collective
skills, competence and relevant experience to enable the
Committee to discharge its responsibilities. To ensure co-
ordination of the work of the Board Risk Committee with the
risk related considerations of the Board Audit Committee, three
Members of the Committee are also members of the Board
Risk Committee. This common membership provides effective
oversight of relevant risk and finance issues. Details of each of
the Members are outlined on pages 44 and 45.
The Committee met on 13 occasions during 2019, ten of
which were scheduled, and three of which were out of course
meetings. In addition to the regular schedule of meetings, the
Committee met jointly on one occasion with the Board Risk
Committee to discuss a matter relevant to the remit of both
committees. The Members held an additional deep dive meeting
with the Interim Group Head of Internal Audit and members of
the senior Audit Management team to discuss the 2020 Group
Internal Audit plan. Scheduled meetings were attended by
the Chief Financial Officer, the Chief Risk Officer, the Interim
Group Head of Internal Audit and the Lead Audit Partner from
the External Auditor, Deloitte. Other senior Executives also
attended by invitation, where appropriate.
In the course of the year, the Committee also met with the Chief
Financial Officer, the Interim Group Head of Internal Audit,
the Chief Risk Officer and twice with the External Auditor in
the absence of Management. The Chair and Members of the
Committee, together with their attendance at meetings, are set
out below.
Current Committee members are shown below. Members who
retired during the year are shaded.
Member attendance during 2019*:
Eligible to attend Attended
Sandy Kinney Pritchard 9 8
Tom Foley 13 13
Basil Geoghegan 4 4
Brendan McDonagh 13 11
Catherine Woods 10 9
Peter Hagan 9 8
Jim O’Hara 10 7
*
As indicated in the Report, there were a number of membership
changes throughout the year which, in turn, led to differences in the
number of Committee meetings individual directors were eligible to
attend.
To ensure ongoing awareness of the work of the Committee by
all Directors, the Committee Chair provided an update to the
Board following each meeting on the key items discussed and
considered by the Committee.
Committee purpose
A full overview of the responsibilities of the Committee is set
out in its Terms of Reference. The Committee is appointed by
the Board to assist them in fulfilling its independent oversight
responsibilities in relation to:
•	
the quality and integrity of the Group’s accounting policies,
financial and narrative reports, and disclosure practises;
•	
the effectiveness of the Group’s internal control, risk
management and financial reporting systems;
•	
the adequacy of arrangements by which staff may, in
confidence, raise concerns regarding possible improprieties
in matters of financial reporting or other matters;
•	
the independence and performance of the Internal and
External Auditors.
The Committee’s Terms of Reference can be found on the
Group’s website at: https://aib.ie/investorrelations/about-aib/
corporate-governance
198  Governance and Oversight
Matters considered by the Committee
The following, while not intended to be exhaustive, is a summary of key items considered, reviewed and/or approved or recommended
by the Committee during the year:
Area of focus Role of the Committee
Financial and
Narrative Reporting
– 
Recommended to Board the approval of the Annual and Interim Financial Report.
– 
Reviewed and recommended as appropriate significant financial reporting judgements and
accounting assumptions made by Management.
– 
Reviewed and approved, as appropriate, new accounting policies and changes to existing policies
prior to implementation, including those supporting the application of IFRS 16 Leases.
– 
Considered the minutes of the Group Disclosure Committee in advance of recommending the
financial statements to the Board.
Internal Control
– 
Received reports from Management regarding the operation and effectiveness of the system of
controls over financial reporting. This includes Managements assessment of IT controls and the
mitigation of IT risks, including conclusions from reviews by Internal and External audit.
– 
Received reports from Management regarding key internal controls in respect of fraud prevention
and detection.
– 
Approved Directors’ statements concerning internal controls to be included in the Annual Financial
Report.
– 
Reviewed the minutes of the subsidiary audit committees of AIB Group (UK) p.l.c., EBS d.a.c. and
AIB Mortgage Bank.
Code of Conduct
and “Speak Up”
Policy
– 
Received reports on the operation of the Group Code of Conduct and Conflicts of Interest Policy
across the Group.
– 
Received reports regarding the operation of the “speak up” policy and all other whistleblowing
options available in the Group.
– 
Considered proposed enhancements to the governance structures in place to support the Group’s
“speak up” arrangements.
Internal Auditor
– 
Considered the findings of internal audit reports and special investigation reports, and
Management’s response to actions outlined therein.
– 
Monitored progress against the agreed 2019 Group Internal Audit Plan, and progress against
issues raised.
– 
Considered the annual and half year audit opinion in relation to the overall control environment.
– 
Approved the Annual Internal Audit Plan for 2020.
– 
Approved the Group Internal Audit Charter.
– 
Approved the approach to compliance with Article 191 of the Capital Requirements Regulation,
including the output of the Annual General Risk Assessment relating to Internal Models.
External Auditor
– 
Reviewed the scope of the statutory external audit, as well as the findings, conclusions and
recommendations of the External Auditor.
– 
Reviewed and made recommendations to the Board regarding the Audit Representation Letter.
– 
Reviewed the annual report from Management regarding the employment of former employees of
the External Auditor across the Group.
– 
Reviewed the level of non-audit fees paid to the External Auditor.
– 
Approved the fees paid to the External Auditor.
Governance and oversight –
Report of the Board Audit Committee
199

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Internal Audit
The Committee provided assurance to the Board regarding the
independence and performance of the Group Internal Audit
function. It also considered and approved the annual audit plan
with reference to the material risks of the business and the
adequacy of resources allocated to the function. Throughout
the year, the Chair of the Committee met with Group Internal
Audit Management between scheduled meetings of the
Committee to discuss material issues arising as well as to plan
forthcoming agendas and the focus of upcoming Committee
meetings. The Committee also met with the Interim Group
Head of Internal Audit in private session during 2019, in the
absence of Management. The Group Head of Internal Audit has
unrestricted access to the Chair of the Board Audit Committee.
The Committee is responsible for making recommendations
in relation to the Group Head of Internal Audit, including their
appointment, replacement and remuneration, in conjunction
with the Remuneration Committee, and confirming the Group
Head of Internal Audit’s independence. To this end, following the
resignation of the Group Head of Internal Audit, the Committee
conducted a selection process to identify an appropriate
successor to that role. Following a robust and formal selection
process, an internal candidate was selected as the successful
candidate, and approved for the role by the Committee.
The Nomination and Corporate Governance Committee further
endorsed that appointment, subject to the required regulatory
approvals.
External Audit
Following a tender process in 2013, Deloitte were appointed
as the Group’s Auditor. Mr John McCarroll was appointed
lead Audit Partner in March 2018 and has continued in that
role throughout 2019. In line with the relevant EU Directive
requirements, and strong corporate governance practices, the
next tendering process for a new Group auditor will be no later
than 2023.
The Committee provided oversight in relation to the Auditor’s
effectiveness and relationship with the Group including
agreeing the Auditor’s terms of engagement, remuneration and
monitoring the independence and objectivity of the Auditor.
To help ensure the objectivity and independence of the Auditor,
the Committee has established a policy on the engagement
of the Auditor to supply non-audit services, which outlines the
quantum of non-audit fees for which the use of the Auditor is
pre-approved. It also provides guidance regarding which non-
audit services require specific approval from the Committee
before they are contracted and those from which the Auditor is
excluded. Further details on the approach can be found on the
Group’s website at: https://aib.ie/investorrelations/about-aib/
corporate-governance
In addition, the Committee provided oversight in monitoring the
effectiveness of the policy for the employment of individuals
previously employed by the Auditor. The Committee received
an update on the application of that policy, including the number
of former employees of the external auditor currently employed
in senior management positions in the Group, and assisted
the Committee in assessing the Auditor’s independence
and objectivity in respect of the audit. The policy for the
employment of individuals previously employed by the Auditor
was established in 2016 in accordance with the EU Audit
Regulations 537/2014 and Directive 2014/56/EU, which was
transposed into Irish law on 25 July 2018.
The Committee considered the detailed audit plan in respect of
the annual and interim financial statements and the Auditor’s
findings, conclusions and recommendations arising from the
half-yearly review and annual audit. The Committee satisfied
itself with regard to the Auditor’s effectiveness, independence
and objectivity through a number of mechanisms throughout
the year. These included consideration of the work undertaken,
confidential discussions with the Auditor and feedback received
from Management.
The Committee recommends that Deloitte should be
reappointed as the Auditors at the Annual General Meeting
on 29 April 2020. This recommendation is based on the
considerations set out above in addition to the Committee’s
determination of the Auditor’s effectiveness, independence and
objectivity.
Performance evaluation
An internal performance evaluation of the Board was conducted
in 2019, as noted on page 190; this included a review of the
Committee. The overall results of that review were positive
and concluded that the Committee continued to operate in an
efficient manner. Minor enhancements have been agreed by the
Committee and will be tracked for conclusion in 2020.
200  Governance and Oversight
Letter from Brendan McDonagh,
Chair of the Board Risk Committee
Dear Shareholder,
On behalf of the Board Risk Committee (‘the Committee’),
I am pleased to deliver my first report to you on the Committee’s
activities throughout the financial year ended 31 December
2019.
The significant changes on the Group Board which have been
outlined to you within the Corporate Governance report of
this Annual Financial Report were mirrored at the Committee
level. Following a four year tenure as Committee Chair, and
seven years as Director, Mr Peter Hagan retired in September.
Peter strongly steered the Committee through a period where
its mandate continued to grow, with enhanced focus on the
material risks facing the Group. In addition, 2019 also saw
Ms Catherine Woods and Mr Simon Ball retire from the Group.
I would like to take this opportunity to thank them all for their
considerable contribution to the Committee.
We welcomed Ms Sandy Kinney Pritchard, Mr Raj Singh and
Mr Basil Geoghegan to the Committee in 2019, bringing with
them substantial corporate understanding and practical risk
management experience. I look forward to their continued
support in the coming year.
Throughout the year, the Committee continued to discharge
its roles and responsibilities, with detailed consideration given
to a wide range of both existing and emerging risks facing
the Group, whilst remaining cognisant of uncertainties within
the macroeconomic environment. To that end, the Committee
received regular reports from the Chief Risk Officer on the
foremost risks facing the Group, which focused on the material
risks, as well as a number of key matters, including the external
environment, the Group’s capacity for keeping pace with a
challenging regulatory change agenda, a focus on conduct risk
considerations, overall regulatory compliance and operational
risk.
Credit risk management was at the forefront of considerations
of the Committee throughout the year, particularly in light of
the possibility of a disorderly UK exit from the European Union.
The Credit Risk profile was reported to the Committee at each
of its meetings, with a focus on specific risk areas at appropriate
junctures throughout the year. For instance, in response to
political uncertainty surrounding Brexit, a number of changes
to the Group Risk Appetite Statement (“RAS”) were proposed
via a standalone Brexit RAS, with a view to ensuring enhanced
monitoring and oversight of new lending, credit quality and
portfolio composition metrics. A full analysis of credit risk early
warning indicators on a sectoral basis was also undertaken,
in order to assess any evidence of weakness in specific sectors
in advance of Brexit. The Committee also obtained detailed
analysis from first and second line management regarding the
composition of specific loan portfolios in both the eurozone and
United States markets, in order to better understand overall
portfolio quality and composition, as well as the key risks and
related management controls underpinning the effective day-to-
day management of those portfolios.
The Group RAS formulation is an iterative process for the
Committee each year, whereby Management assesses the risk
profile of the Group, the macroeconomic environment, and the
overall position of the Group in an economic context. Following
that, the RAS is proposed to the Committee. After a number
of robust review and challenge sessions, the Committee
recommended the 2020 Risk Appetite Statement to the Board
for approval.
This year, the Committee was also pleased to observe the
continued embedding and enhancement of the three lines of
defence model across the Group. Clear examples of strong risk
review and oversight of key strategic matters by the second line
of defence were evidenced throughout the year.
As was the case in 2018, the ongoing development of the
Group’s modelling capabilities and key deliverables was
an area of sustained focus for both the Committee and the
Board, including the output of stress testing and economic
assumptions. A key focus of the Committee was on Internal
Ratings Based (“IRB”) modelling capabilities, and the
processes, infrastructure and governance in place to support
the delivery and use of those models. Engagement with the
Joint Supervisory Team (“JST”) will continue throughout 2020
regarding the Group’s IRB implementation plan.
The Committee also received regular reports regarding the
Group’s compliance with relevant Anti-Money Laundering and
Counter Terrorist Financing regulation, as well as compliance
with all relevant sanctions regimes.
Other areas of focus for the Committee during 2019 included:
– 
Review of the output of inspections from the JST and other
regulatory bodies, with any Risk Mitigation Programme
(“RMP”) action points subject to review and approval by
the Committee. The Committee also maintained oversight
of open RMP actions on an ongoing basis throughout the
year;
– 
Consideration of the evolving risk themes of cyber risk and
climate risk, and the actions underway to address same;
– 
Progress against the implementation of Payment Services
Directive 2 regulatory requirements, with a focus on the
rollout of strong customer authentication to impacted
customers;
– 
Oversight and approval of risk frameworks and policies, in
line with the Group risk policy architecture;
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– 
The capital and liquidity position of the Group, with
particular reference to the contingent elements of the
Internal Capital Adequacy Assessment Process (“ICAAP”)
and Internal Liquidity Adequacy Assessment Process
(“ILAAP”);
– 
Ongoing monitoring of the achievement of the Risk Function
Plan, Operational Risk Plan and Compliance Plan by the
Group Risk Function, with regular updates provided by the
CRO regarding same;
–	
An assessment of the outsourcing and cloud policy and the
third party management framework put in place to ensure
consistent and robust application of that policy;
– Pillar 3 Disclosures; and
–	
Consideration of the Group Equity Investment Framework
and Strategy.
The Committee’s focus throughout 2020 will continue to be on
ensuring appropriate oversight of the Group’s risk appetite, risk
management structure, policies and procedures, as well as
challenging as to whether the Management controls in place
are adequately robust to ensure the Group achieves its overall
purpose and strategic goals in an appropriately risk controlled
manner.
Brendan McDonagh
Committee Chair
202  Governance and Oversight
Report of the Board Risk Committee
Membership and meetings
As at 31 December 2019, the Committee comprised five Non-
Executive Directors, all deemed to be independent. Further
details on independence considerations are located at page
189. The Board has determined that the Committee members
have the collective skills and relevant experience to enable
the Committee to discharge its responsibilities. To ensure
co-ordination of the work of the Committee with the risk related
considerations of the Board Audit Committee, Mr Brendan
McDonagh, Ms Sandy Kinney Pritchard and Mr Basil
Geoghegan are also members of the Board Audit Committee.
This common membership provides effective oversight of
relevant risk and finance issues. In addition, to ensure that
remuneration policies and practices are consistent with and
promote sound and effective risk management, common
membership between the Committee and the Remuneration
Committee is maintained through the joint membership of both
Committees of Mr Brendan McDonagh. Details of each of the
Members are outlined on pages 44 and 45.
The Committee met on eleven occasions during 2019, eight of
which were scheduled and one of which was a joint meeting
with the Remuneration Committee. All meetings were attended
by the Chief Financial Officer, the Chief Risk Officer, the Group
Head of Internal Audit, and the Lead Audit Partner from the
External Auditor, Deloitte. Other senior executives also attended
by invitation, where appropriate. The Chief Risk Officer
attended all meetings of the Committee and has unrestricted
access to the Chair of the Board Risk Committee, and met
twice in confidential session with the Committee, in the absence
of Management. Additionally, the Committee also met with
the Group Chief Compliance Officer, the Chief Credit Officer
and the Chief Financial Officer in confidential session on one
occasion each throughout the year. The Chair of AIB Group
(UK) p.l.c. also attends meetings of the Committee by invitation,
where appropriate.
The Chair and Members of the Committee, together with their
attendance at scheduled meetings, are shown below.
Current Committee members are shown below. Members who
retired during the year are shaded.
Member attendance during 2019*:
Eligible to attend Attended
Brendan McDonagh 12 12
Basil Geoghegan 4 4
Sandy Kinney Pritchard 9 9
Raj Singh 7 7
Carolan Lennon 12 11
Peter Hagan 9 9
Simon Ball 4 4
Catherine Woods 9 9
*
As indicated in the Report, there were a number of membership
changes throughout the year which, in turn, led to differences in the
number of Committee meetings individual directors were eligible to
attend.
To ensure the continued awareness of the Committee’s work
by all Directors, the Committee Chair provided an update to
the Board following each meeting on the key items discussed
and considered by the Committee. The Committee Chair
continued to remain satisfied that the skills and experience of
the Committee Members enable the Committee to provide the
independent risk oversight it is tasked with, while maintaining a
constructive relationship with Management.
Committee Purpose
A full overview of the responsibilities of the Committee is set out
in its Terms of Reference. The Committee assists the Board in
proactively fostering sound risk governance across the Group
by ensuring that risks are appropriately identified and managed,
and that the Group’s strategy is informed by, and aligned with,
the Board approved risk appetite. The remit of the Committee
continues to evolve year on year. However, its primary roles and
responsibilities are:
•	
fostering sound risk governance across the Group’s
operations, encompassing all operations, legal entities
and branches in Ireland, the United Kingdom and the
USA, taking a forward looking perspective and anticipating
changes in business conditions;
•	
discharging its responsibilities in ensuring that risks within
the Group are appropriately identified, reported, assessed,
managed and controlled to include commission, receipt and
consideration of reports on key strategic and operational
risk issues;
•	
ensuring that the Group’s overall actual and future risk
appetite and strategy, taking into account all types of risks,
are aligned with the business strategy, objectives, corporate
culture and values of the institution; and
•	
promoting a risk awareness culture within the Group.
The responsibilities of the Committee are discharged through
its meetings, and through the regular commissioning, receiving
and considering of reports from the Chief Risk Officer, the Chief
Credit Officer, the Chief Financial Officer and the Group Head of
Internal Audit, all of whom attend meetings of the Committee.
The Committee’s Terms of Reference can be found on the
Group’s website at: https://aib.ie/investorrelations/about-aib/
corporate-governance
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Matters considered by the Committee
The following, while not intended to be exhaustive, is a summary of the key items considered, reviewed and/or approved or
recommended by the Committee during the year:
Area of focus Role of the Committee
Risk Appetite,
Risk Profile and Key
Risk Areas/Issues
– 
Reviewed regular reports from the Chief Risk Officer which provide an overview of key material
risks, including funding and liquidity, capital adequacy, credit risk, market risk, regulatory risk,
business risk, conduct risk, cyber risk, model risk, operational risk and people and culture risk and
related mitigants.
– 
Reviewed and recommended the Group Risk Appetite Statement (“RAS”) to the Board for
approval, whilst ensuring alignment to the Group’s business objectives, and that the subsequent
business and strategic plans were developed in line with agreed RAS metrics.
– 
Monitored the Group’s risk profile against agreed Group RAS metrics on an ongoing basis, and
recommended changes to the Group RAS as appropriate.
– 
Reviewed periodic reports and presentations from Management and the Chief Credit Officer
regarding the credit quality, performance, provision levels and outlook of key credit portfolios
within the Group.
– 
Assessed credit risk performance and trends, including regular updates on significant credit
transactions.
– 
Reviewed the ongoing operational risk profile, including significant operational risk events and
potential risks.
– 
Received status updates regarding Brexit planning.
– 
Reviewed and approved the Group’s Pillar 3 Report.
Risk Frameworks
and Policies
– 
Approved and recommended risk frameworks and policies as appropriate, including those relating
to credit risk, model risk, people and culture risk and funding and liquidity.
– 
Reviewed and recommended the Group Equity Strategy and Framework for approval.
Liquidity, Funding
and Capital
– 
Reviewed and recommended as appropriate capital, funding and liquidity planning, including
consideration of Group ICAAP and ILAAP reports and related Group wide stress test scenarios.
Compliance
– 
Received reports from the Money Laundering Reporting Officer regarding the status of the Anti-
Money Laundering/Counter Terrorist Financing control environment, and compliance with Anti-
Money Laundering/Financial Sanctions policies and frameworks.
Chief Risk Officer
and Group Risk
Function
– 
Received reports regarding the structure and operation of the Risk and Compliance functions and
progress against deliverables.
Internal Ratings
Based Model and
Model Risk
– 
Received reports from the Chief Risk Officer regarding the status of modelling capabilities across
the Group, as well as progress against set deliverables.
Regulatory
Engagement
– 
Reviewed quarterly reports regarding the status of Risk Mitigation Programme action plans.
– 
Reviewed and recommended as appropriate Management action plans put in place to address
failings identified as part of regulatory onsite inspections.
– 
Considered any relevant regulatory correspondence which required the Committee’s attention.
Performance evaluation
An internal performance evaluation of the Board was conducted in 2019 as noted on page 190 and this included a review of the
Committee. The overall results of that review concluded that the Committee continued to operate in an efficient manner. Members noted
the importance of continuing to ensure that the Committee maintains appropriate focus and oversight of the material risks facing the
Group, and allow sufficient time to discharge those responsibilities. Some minor areas for enhancement have been set out in actions
which will be tracked for conclusion in 2020.
204  Governance and Oversight
Letter from Richard Pym,
Chair of the Nomination and
Corporate Governance Committee
Dear Shareholder,
On behalf of the Nomination and Corporate Governance
Committee (the “Committee”), I am pleased to present our
report on the Committee’s activity during the financial year
ended 31 December 2019.
The year was dominated by succession planning. Following on
from substantial change in 2018, 2019 brought about further
change with the appointments to the Board of Dr Colin Hunt,
Chief Executive Officer (“CEO”) and Mr Tomás O’Midheach,
Chief Operating Officer and Deputy CEO both as Executive
Directors, Ms Sandy Kinney Pritchard, Ms Ann O’Brien, Mr Raj
Singh, Mr Basil Geoghegan and Ms Elaine MacLean were each
appointed as Non-Executive Directors.
Regrettably, 2019 also brought the retirements of a number
of our long standing Non-Executive Directors: Mr Simon Ball,
Mr Peter Hagan, Ms Catherine Woods and Mr Jim O’Hara, as
well as the resignation of Mr Bernard Byrne, CEO and Mr Mark
Bourke, Chief Financial Officer as detailed in last year’s Annual
Financial Report.
These changes also impacted the Committee’s composition as
Mr Ball, Ms Woods and Mr O’Hara stepped down during the
year. Ms MacLean joined the Committee in September 2019,
Mr Foley in October and Mr Brendan McDonagh in November.
We believe that the current Committee composition is strong
with good diversity of experience augmented by Ms MacLean’s
extensive human resources background.
As noted earlier in this Annual Financial Report and as
announced in October 2019, I intend to retire as Chair of the
Group in March 2020. Prior to this decision, I had requested
the previous Deputy Chair, Ms Catherine Woods, to commence
a process to identify a potential Chair Designate. On review
of our current Board and following Catherine’s retirement,
current board member Mr Brendan McDonagh was appointed
as Deputy Chair and Mr Tom Foley was appointed as Senior
Independent Director, both effective from October 2019.
With regard to my successor, a rigorous process has been
undertaken through which the Committee, in my absence,
has met with a number of internal and external candidates.
The Group is in the process of identifying the next Chair and an
announcement will be made in due course.
These changes and the continuous review of the Board
Succession Plan culminated in the identification of retail
banking and accountancy as two specific skill sets which may
require enhancement on the Board as we prepare for future
board rotation. In order to ensure the Board continues to
maintain its current high level of experience and suitability, the
Committee requested two searches be conducted to identify
the most appropriate candidates in these fields. The searches
are ongoing and further announcements will be made in due
course on selection of the preferred candidates and upon the
conclusion of the associated regulatory processes.
Through both past and current searches, candidates are
required to be of sufficient calibre and experience for
appointment to the Board as Non-Executive Directors and
also have the ability to facilitate a culture where there is a
commitment to high standards of conduct and customer
fairness. Importantly, through the Committee’s work, diversity
was also a key consideration and I am delighted that the Group
was highlighted as an organisation with one of the most gender
balanced boardrooms of companies in Ireland with a 50/50 split
between the genders of our Non-Executive Directors.
The developments at Board level were coupled with substantial
change to our Executive Committee (“ExCo”), the composition
of which was recommended to the Committee by the CEO to
align with a refreshed operating structure. Executive succession
planning is vital to ensuring the long term sustainability of the
business and I am encouraged to see a strong, diverse ExCo
in place, particularly given a backdrop of the remuneration
restrictions applied to the Group but not to many of our
competitors.
Moreover, the ExCo succession plan was reviewed at multiple
intervals throughout the year by the Committee to ensure
the Group has robust successors to the ExCo members and
importantly, to identify employees across the Group who may
be successors to senior management in the longer term and
thereby develop a strong succession pipeline.
Turning to the Committee’s corporate governance oversight
responsibilities, throughout 2019 we took time to ensure
we were fulfilling our obligations under existing corporate
governance requirements and that we were well positioned for
the introduction of new requirements with particular reference
to the UK Corporate Governance Code 2018 which is further
detailed in the Corporate Governance report.
Our work in 2019 also included a refresh of the Non-Executive
Directors’ induction plan, substantial oversight of subsidiary
board succession planning and governance standards, as well
as the annual requirements to complete a collective suitability
assessment of the Board, review the time committed to the
Group by each Non-Executive Director and to review the various
codes and policies which fall within the Committee’s remit.
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As this is my final report to you in this role, I would like to thank
my fellow Committee Members both past and present for their
unwavering commitment in what was another extremely busy
year. I am very grateful to the Committee for the amount of time
and effort committed to finding the best possible candidates to
ensure a strong Board is in place to lead the Group in the years
ahead.
I am confident that my successor will continue to focus on
building the human resources to lead the business into a
positive and sustainable future.
Richard Pym
Committee Chair
206  Governance and Oversight
Report of the Nomination and Corporate Governance
Committee
The Committee composition changed significantly in 2019
with the retirement of Mr Simon Ball, Mr Jim O’Hara and
Ms Catherine Woods and the appointment of Ms Elaine
MacLean, Mr Tom Foley and Mr Brendan McDonagh as
Committee members.
As at 31 December 2019, the Committee was comprised of
three Non-Executive Directors, all deemed to be independent
and the Chair, who was independent on appointment.
Throughout the year, the Committee’s composition was
fully compliant with the Central Bank of Ireland’s Corporate
Governance Requirements for Credit Institutions 2015,
the UK Corporate Governance Code 2018 and the Capital
Requirements Directive IV.
The Chair of the Board is the Chair of the Committee and chairs
all meetings, other than when the Committee is dealing with
the process for appointing a successor to the role of Board
Chair. In such instances, the Senior Independent Director,
Ms Catherine Woods up to October 2019 and thereafter,
Mr Tom Foley, leads the Committee discussions.
Biographical details of each of the Committee Members are
outlined on pages 44 and 45.
The Committee met fourteen times during 2019, four of
which were scheduled meetings. The Chair and Members of
the Committee, together with their attendance at meetings,
are shown below. The Committee meets regularly with no
management present. The Chief Executive Officer, Chief
People Officer and other members of Management are invited
to attend meetings where the agenda item is relevant and their
attendance is requested by the Committee.
Current Committee members are shown below. Members who
retired during the year are shaded.
Member attendance during 2019*:
Eligible to attend Attended
Richard Pym 12 12
Tom Foley 2 2
Elaine MacLean 4 4
Brendan McDonagh 1 0**
Jim O’Hara 12 11
Catherine Woods 12 11
Simon Ball 4 4
*  
As indicated in the Report, there were a number of membership
changes throughout the year which, in turn, led to differences in the
number of Committee meetings individual directors were eligible to
attend.
**
Mr McDonagh was unable to attend this meeting due to his attendance
being required at a regulatory meeting at the same time.
During 2019, the Committee engaged Korn Ferry to facilitate
searches for a Chair Designate and Non-Executive Directors.
It should be noted that Korn Ferry have been engaged by the
Group for a number of candidate searches in recent years and
to conduct a number of internal management assessments.
Separately, Korn Ferry has been appointed by the Minister
for Finance to conduct a Remuneration Review; confirmation
was received that Korn Ferry employees who carried out the
candidate search processes were separate to those engaged
in the Minister’s Review. The Group is mindful at all times of the
need to avoid possible conflicts of interest.
The Institute of Directors were also engaged for a number of
candidate searches for Non-Executive Directors for the Group’s,
various Irish subsidiaries, and Heidrick and Struggles were
engaged similarly by AIB Group (UK) p.l.c. Whilst the search
firms were engaged by and for the subsidiaries, the results of
such searches were reported to the Committee.
Individual Directors do not have any material connections with
the aforementioned search firms. Notwithstanding that, it may
be the case that individual Directors may be considered within
candidate searches being conducted by those firms from time
to time for other clients or that individual directors may have
engaged these search firms through prior engagement in other
external executive or non-executive roles.
To ensure ongoing awareness of the Committee’s activities
by the full Board, the Chair provides an update to the Board
following each meeting on the key items discussed and
considered by the Committee. Additionally, Committee meeting
minutes are generally tabled for information at the next
scheduled Board meeting following their approval and the
Committee provides an annual written report to the Board on its
activities during the preceding twelve months.
Committee Purpose
A full overview of the responsibilities of the Committee is set
out in its Terms of Reference. Included among these are the
following:
•	
to support and advise the Board in fulfilling its oversight
responsibilities in relation to the composition of the
Board by ensuring it is comprised of individuals who are
best able to discharge the duties and responsibilities of
Directors to include leading the process for nominations
and appointments to the Board and Board Committees
as appropriate, and making recommendations on these
matters to the Board for its approval;
•	
to support and advise the Board in fulfilling its oversight
responsibilities in relation to the composition of the Group’s
Executive Committee and the composition of the boards of
its licensed subsidiaries; and
•	
to keep Board governance arrangements, corporate
governance compliance and related policies under review
and make appropriate recommendations to the Board to
ensure corporate governance practices are consistent with
best practice corporate governance standards.
The Committee’s Terms of Reference can be found on the
Group’s website at: https://aib.ie/investorrelations/about-aib/
corporate-governance
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Matters considered by the Committee
The following, while not intended to be exhaustive, is a summary of the key items considered, reviewed and/or approved or
recommended by the Committee during the year:
Area of focus Role of the Committee
Non-Executive
Board composition
and succession
planning
– 
Robustly considered the Board and Board Committee’s collective skillset, suitability and
composition. Reviewed and enhanced the three year Board succession plan to ensure
preparedness for anticipated changes over that period and provide additional coverage in the
event of unanticipated changes.
– 
Conducted a robust internal and external search for a new Deputy Chair, Chair Designate and
additional Non-Executive Directors. The Committee engaged Korn Ferry, prepared candidate
specifications for the roles, oversaw the search processes for candidates, assessed potential
successors for Board roles, and kept the Board abreast of progress. Open advertising for the
Board positions was not used by AIB in 2019 as the Committee believes that targeted recruitment
is the optimal way of recruiting for such positions.
– 
Shortlisted candidates were interviewed by Committee Members, or where necessary due
to changes in Committee membership, designated interview panel members. Thereafter, the
Committee met as a whole to discuss feedback and reach consensus prior to recommending to
the Board for consideration and approval.
– Reviewed the appointment of the Senior Independent Director.
– 
Assessed collective suitability of the Board and the independence of individual Directors
against certain criteria, including whether Directors were demonstrably independent and free of
relationships and other circumstances that could affect their judgement, and whether they met
criteria set out in applicable Irish and UK codes, standards and regulations as detailed in the
Corporate Governance report.
Executive
Committee
succession
planning
– 
Considered proposals for appointments to the Executive Committee on foot of changes brought
about under a new business operating model in November 2019.
– 
Considered proposals for appointments to the roles of Group Head of Internal Audit and Chief
People Officer.
– Considered enhancements to the executive management succession strategy.
Subsidiary Director
Succession
Planning and
Subsidiary
Oversight
– 
Considered the material subsidiary boards’ collective composition whilst acknowledging the final
approval of all appointments and succession planning for the subsidiary boards rested with each
separate board.
– 
Engaged the Institute of Directors in Ireland to conduct searches for new Non-Executive Directors
to material subsidiaries in the Republic of Ireland.
– 
Oversaw the engagement of Heidrick and Struggles to assist AIB Group (UK) p.l.c. in its searches
for new Non-Executive Directors.
– 
Received regular updates regarding compliance by the material licensed subsidiaries with
applicable regulation and guidance.
Corporate
Governance
considerations
– 
Received regular updates on the compliance status of the Group with regard to the updated UK
Corporate Governance Code 2018, potential items for explanation and discussing the implications
of same.
– 
Considered the Group’s corporate governance policies and procedures. Policies reviewed during
2019 included the Board Governance Manual and matters reserved for the Board, the Board
Code of Conduct and Conflicts of Interests Policy, the Board Diversity Policy, the Governance and
Organisation Framework and Committee Terms of Reference. Additionally, received bi-annual
corporate governance updates to include the compliance status of the Group and upcoming
compliance requirements.
Performance Evaluation
An internal performance evaluation of the Board and Board Committees was conducted during 2019 as noted in the Corporate
Governance report contained in this Annual Financial Report, and included a review of the Committee. The review concluded that the
Committee continued to operate in an efficient manner, particularly in light of the heightened level of change to the Board’s composition
during the year. During the evaluation, the Committee Members emphasised the importance of continued focus on executive succession
planning and ensuring upcoming corporate governance requirements were monitored to ensure the Group was appropriately positioned
for potential change. Consideration to the phasing of length of tenure of Non-Executive Directors was highlighted as an area of
consideration for 2020 to prevent concurrent retirement of directors in the future.
208  Governance and Oversight
Letter from Elaine MacLean,
Chair of the Remuneration Committee
Dear Shareholder,
I am pleased to present my first report on the Remuneration
Committee’s (the “Committee”) activity during the financial year
ended 31 December 2019. I joined the Committee and was
appointed Chair in September 2019.
My report is provided on behalf of the Committee as a whole,
and on its behalf, I would like to acknowledge the steadfast
dedication of Mr Simon Ball who stepped down from the
Committee in April 2019 and Mr Jim O’Hara, who chaired the
Committee from 2012 to September 2019. Mr O’Hara was
a strong leader who made a significant contribution to the
Committee during his tenure.
The Committee composition further changed in 2019 with
Ms Ann O’Brien joining in April 2019 and her experience
gained through her career has provided helpful insights to the
Committee.
Acknowledging previous Remuneration Reports of the
Committee, through my own research into the Group and my
induction upon appointment, I have learned how the remit of
Management and the Committee with regard to remuneration
across the Group is impacted by the remuneration restrictions
contained in certain agreements with the Irish State following
the State’s recapitalisation of the Group in 2010 and 2011
(“State Agreements”). Such restrictions affect the ability of the
Group to implement a variable pay structure that would be
the norm for many of our comparative peers and, due to the
resultant increase risk of employee attrition, negatively impacts
on the long term sustainability of the Group.
Since joining the Board, I have seen first-hand the continuing
impact of these restrictions on the Group’s ability to retain and
attract key management, particularly as new competitors enter
the Irish financial services market who are not subject to the
same restrictions. The Committee and the Board as a whole
are acutely aware of, and concerned about, the impact of these
continuing restrictions and we await the outcome of the Minister
for Finance’s review on this matter as also noted in the 2018
Report of the Remuneration Committee.
In line with its annual review cycle, the Committee reviewed
the Group Remuneration Policy in 2019 which continues to
be governed in accordance with the remuneration restrictions
contained in the State Agreements. The Committee’s desired
remuneration policy continues to be the implementation of a
competitive, market-aligned, performance-related remuneration
model, fully compliant with the Capital Requirements Directive
IV and EBA Guidelines on Sound Remuneration Policies,
which will mitigate the Group’s key people risks and align the
remuneration of our staff with the achievement of the Group’s
strategic objectives. However, due to the current restrictions,
this has yet to be achieved.
When the State’s remuneration review concludes and clarity is
provided on any potential recommendations that might arise,
the Committee will consider the Group’s Remuneration Policy
with, where required, the necessary presentation of an updated
Remuneration Policy to shareholders being arranged thereafter.
Further information on the Group Remuneration Policy is
contained in the Report following this letter.
Notwithstanding the aforementioned restrictions, during 2019,
the Committee continued its efforts to ensure it was well
positioned should the Group return to a variable remuneration
environment in the future whilst continuing its business as
usual. To that end, in January the Committee received specific
training alongside our Board Risk Committee colleagues on
the EBA Guidelines on Sound Remuneration Policies which
positioned both Committees for robust and challenging review
of the material risk taker processes, remuneration-associated
elements of the Risk Appetite Statement and the potential
future implementation of any new remuneration structures.
Additionally, the Committee spent a substantial amount of time
in 2019 reviewing the remuneration levels of members of the
Executive Committee and Heads of Control functions to ensure
all roles were appropriately remunerated and supported the
long term sustainability of the Group, whilst adhering to the
restrictions.
Compliance with the UK Corporate Governance Code 2018
was a key theme of the Committee’s work during 2019 and
compliance with the remuneration elements have been
independently assured by external consultants. Further
information on the compliance status of the Group as a whole
with the UK Corporate Governance Code is detailed in the
Corporate Governance report.
The Committee considered the Group’s preparation for the
introduction of the Gender Pay Gap Information Act in the
Republic of Ireland which is expected in 2020-21 following the
Irish Government approving the Gender Pay Gap Information
Bill in June 2018. This will facilitate the introduction of
mandatory Gender Pay Gap reporting. Upon the relevant
requirements being available, the Committee will consider any
required actions to ensure reporting is compliant.
Finally, the Committee appointed PricewaterhouseCoopers
as its new remuneration consultants. We thank Willis Towers
Watson for their support in recent years.
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Looking ahead, the Committee will continue its work with
Management to oversee and, where required, challenge
proposals to ensure appropriate remuneration structures are
in place across the Group in line with our strategic aims, the
restrictions to which the Group is subject and ultimately create
a structure that operates in the best interests of the Group’s
employees, shareholders and other stakeholders.
I am eager to continue my learning about the Group in the next
year and fostering strong relationships with our stakeholders,
including seeing many of our shareholders at the AGM and
having the opportunity to hear their views on remuneration
matters.
Elaine MacLean
Committee Chair
210  Governance and Oversight
Report of Remuneration Committee
Membership and Meetings
The Committee composition changed significantly in 2019 with
the resignation of two Committee members, Mr Simon Ball
and Mr Jim O’Hara, and the appointment of Ms Ann O’Brien
as a Committee member and Ms Elaine MacLean as the
new Committee Chair. At 31 December 2019, the Committee
comprised of three Independent Non-Executive Directors and
the Chair of the Board, who was independent on appointment.
Further details on independence considerations are set out on
page 189.
The Committee’s composition is fully compliant with the
Central Bank of Ireland’s Corporate Governance Requirements
for Credit Institutions 2015 and the Capital Requirements
Directive IV. The composition of the Committee is not in full
compliance with the UK Corporate Governance Code 2018 (the
“Code”) with particular reference to Provision 32 of the Code
regarding the tenure of Ms MacLean serving on a remuneration
committee. The Committee and the Board as a whole are
satisfied that the composition of the Committee is appropriate
and have chosen to explain this area of non-compliance
under the ‘comply and explain’ principle of the Code. Further
information on compliance with the Code is located in the
Corporate Governance report.
In order to ensure that remuneration policies and practices
are consistent with, and promote, sound and effective risk
management, common membership between the Remuneration
Committee and the Board Risk Committee is maintained, with
Mr Brendan McDonagh providing this overlap.
Biographical details of each of the Committee members are
outlined on pages 44 and 45.
The Committee met eleven times during 2019, five of which
were scheduled meetings and one being a joint meeting with
the Board Risk Committee. The Chair and Members of the
Committee, together with their attendance at meetings, are
shown below.
The Committee met on one occasion with no management
present. The Chief Executive Officer, the Chief People Officer,
Head of Reward and other members of Management are invited
to attend the meetings where the agenda item is relevant and
at the request of the Committee. The Chief Risk Officer is a
permanent attendee unless the topic under discussion relates
to her own remuneration or that of her executive colleagues.
No member of Management is permitted to attend where
a specific proposal relating to their own remuneration is
scheduled for discussion.
Current Committee members are shown below. Members who
retired during the year are shaded.
Member attendance during 2019*:
Eligible to attend Attended
Elaine MacLean 3 3
Brendan McDonagh 11 10
Ann O’Brien 6 5
Richard Pym 11 11
Jim O’Hara 9 8
Simon Ball 5 5
*
As indicated in the Report, there were a number of membership
changes throughout the year which, in turn, led to differences in the
number of Committee meetings individual directors were eligible to
attend.
During 2019, the Committee used the services of Willis Towers
Watson (“WTW”) and PricewaterhouseCoopers (“PwC”) for
advice on market-based remuneration practices, compliance
and training. WTW had a standing invitation to attend
Committee meetings up to December 2019.
In December 2019, the Committee appointed PwC as its
designated remuneration advisors. Prior to their appointment,
PwC were invited to attend a number of meetings in 2019 to
provide advice and guidance on matters of remuneration policy
and going forward, they have a standing invitation to attend
Committee meetings where their advice would enhance the
discussion at the Committee.
WTW, the designated remuneration advisors for the Committee
up to December 2019, are solely focused on Human Resources
and remuneration consultancy and have no other relationship
with the Group. PwC provide a range of consultancy services to
the Group.
To ensure ongoing awareness of the Committee’s activities by
the full Board, the Committee Chair provides an update to the
Board following each meeting on the key items discussed and
considered by the Committee.
Committee Purpose
A full overview of the responsibilities of the Committee is set out
in its Terms of Reference and include responsibility:
•	
to oversee the design and implementation of the Group’s
overall Remuneration Policy for employees and directors,
designed to support the long term business strategy, values
and culture of the Group as well as to promote effective
risk management and comply with applicable legal and
regulatory requirements;
•	
to oversee the operation of Group-wide remuneration
policies and practices for all employees, with specific
reference to Executive Directors, the Chief Executive
Officer, Executive Committee members, Heads of Control
Functions and Material Risk Takers; and
•	
to perform any other functions appropriate to a
Remuneration Committee or assigned to it by the Board.
The Committee discharges its responsibility whilst operating
under the principle that no individual shall be involved in
deciding their own remuneration. The Committee’s Terms
of Reference can be found on the Group’s website at
https://aib.ie/investorrelations/about-aib/corporate-governance
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Matters considered by the Committee
The following, while not intended to be exhaustive, is a summary of the key items considered, reviewed and/or approved or
recommended by the Committee during the year:
Area of focus Role of the Committee
Remuneration
Model and Key
Remuneration Risks
– 
Considered the impact of the continuing remuneration constraints across the Group and the
associated heightened people risk.
– 
Reviewed the total remuneration of each member of the Executive Committee and various Heads
of Control functions.
– 
Considered the implementation of a commission scheme for staff of Payzone upon the
completion of the Group’s joint venture acquisition of Payzone.
– 
Considered the continued appropriateness or otherwise of the Group’s Remuneration Policy
and the likely outcome of the Irish Minister for Finance’s review into remuneration in the banking
industry.
– 
Considered the potential to introduce additional commission schemes across the Group
acknowledging the restrictions in certain State Agreements.
– 
Reviewed the impact of the revised career structure on the employee base by both level and
location.
– 
Received an update on the preparation for Gender Pay Gap reporting in anticipation of related
legislation being implemented in the Republic of Ireland in the coming years.
Compliance and
annual matters
for review
– 
Reviewed the composition and remuneration components of Identified Staff and the process for
the identification of Material Risk Takers.
– 
Reviewed the duties and responsibilities of the Committee in accordance with the requirements of
Capital Requirements Directive IV (“CRD IV”), EBA guidelines on sound remuneration practices
and monitored ongoing compliance with relevant statutory disclosures, regulatory requirements
and guidelines.
– 
Reviewed the compliance status of the Group with the remuneration elements of the updated UK
Corporate Governance Code 2018 with any amendments being approved to the Remuneration
Policy and Terms of Reference as required.
Performance Evaluation
An internal performance evaluation of the Board and Board Committees was conducted during 2019 as noted in the Corporate
Governance report in this Annual Financial Report, and included a review of the Committee. The review concluded that the Committee
continued to operate in an efficient manner, with progress made when compared to the previous year. In particular, the composition
of the Committee and the support provided by in-house resources were strengthened throughout the year. The Committee Members
highlighted the need for further enhancements to the quality of external advice provided to the Committee and the appointment of PwC
was welcomed.
Directors’ Remuneration
Details of the total remuneration of the Directors in office during 2019 and 2018 are shown in the Corporate Governance Remuneration
statement on pages 216 and 217. Dr Hunt is a Non-Executive Director of The Ireland Funds, Ireland Chapter which is a charitable
organisation and company limited by guarantee. Dr Hunt receives no remuneration for this role. Mr O’Midheach does not currently hold
any external Non-Executive Directorships. Limitations on such external directorships are outlined in CRD IV and both of the Group’s
Executive Directors are fully compliant with these limitations.
212  Governance and Oversight
Remuneration Constraints
The Group has been required to comply with certain executive
pay and compensation restrictions following the Group’s
re-capitalisation by the Irish Government in 2010 and 2011.
The application of market aligned remuneration policies
and practices are significantly constrained by the terms of
Subscription and Placing Agreements entered into between AIB
and the Irish Government. In particular, AIB is precluded from
introducing any new bonus or incentive schemes, allowances
or other fringe benefits without prior agreement with the State.
Consequently, the absence of performance based variable pay,
combined with the requirement to operate within an overall cap
on individual salaries and allowances of € 500,000, precludes
AIB from aligning the remuneration of key executives and other
key employees with the achievement of longer term customer,
financial and strategic targets.
Remuneration Policy and Governance
The Group Remuneration Policy sets the framework for all
remuneration related policies, procedures and practices for all
employees and directors of AIB Group. The principal aim of
the Remuneration Policy is to support AIB in becoming a bank
to believe in, recognised for outstanding customer experience
and superior financial performance. The Remuneration Policy
is designed to foster a truly customer focused culture; to
create long term sustainable value for our customers and
shareholders; to attract, develop and retain the best people and
to safeguard the Group’s capital, liquidity and risk positions.
The Board recognises that the long term success of the Group
is dependent on the talent of employees and, in particular, the
ability to consistently perform at the highest level in the best
interests of our customers. The Board aims to ensure that
remuneration is aligned with performance and that employees
are rewarded fairly and competitively within the remuneration
constraints, for their contribution to the Group’s future success
and growth. The Group is committed to a simple, transparent
and affordable reward structure which is fair, performance
based, externally aligned and risk aligned. The scope of the
Remuneration Policy applies to all employees and directors of
the Group.
The Remuneration Policy is governed by the Remuneration
Committee on behalf of the Board. The Committee is
responsible for determining the Remuneration Policy and
for overseeing its implementation. The Committee oversees
the operation and effectiveness of the Remuneration Policy,
including the process for the identification of material risk
takers. The Committee’s governance role in this respect is
outlined in its Terms of Reference. The Committee further
ensures that the Remuneration Policy and practices are subject
to a review at least annually, taking into account the alignment
of remuneration to the Group’s culture for all employees
and executive directors. The annual review is informed by
appropriate input from the Group’s risk and internal audit
functions to ensure that remuneration policies and practices
are operating as intended, are consistently applied across the
Group and are compliant with regulatory requirements.
During 2019, the Remuneration Policy and the Committee’s
Terms of Reference were updated to incorporate amendments
relating to the UK Corporate Governance Code 2018.
Regarding provision 40 of the Code, the Remuneration Policy
sets the framework which underpins remuneration policies and
practices equally for executive directors and all employees.
In particular:
Clarity Remuneration arrangements are
clearly outlined and the policy is
publicly available;
Simplicity The Group is committed to a simple
reward structure as outlined in the
policy;
Risk The Group’s fixed remuneration
arrangements operate under strict
remuneration constraints. If variable
schemes were introduced in the future,
the design of any such schemes would
include full risk assessment measures;
Predictability If variable schemes were introduced
in the future, specific details, including
worked examples, of directors
remuneration would be included in
the policy;
Proportionality The Group’s existing remuneration
structure does not provide for the
awarding of any individual awards; and
Alignment to
culture
The Group does not currently operate
any incentive schemes other than a
small number of limited commission
schemes.
These schemes are designed to
ensure that the rights and interests
of customers are protected at all
times through robust customer centric
performance criteria, the prevention
of conflicts of interest and the
assessment and mitigation of risks to
the customer.
In relation to provision 41 of the Code:
•	
Executive director remuneration is governed by the policy
and determined by the Committee;
•	
In 2019, new career levels were introduced with market
related pay ranges for each level. All employees were
mapped to a career level and associated pay range based
on their level of accountability;
• 
The Report of the Remuneration Committee describes the
operation of the policy;
•	
As the same remuneration restrictions remained in place
and there were no material changes to remuneration policy
during 2019, shareholder engagement was not required in
this area;
•	
The Corporate Governance report references engagement
with the workforce; and
•	
In the absence of variable remuneration, discretion is not a
material factor.
Governance and oversight –
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It should be noted that some of the provisions of the Code
(including provisions 36 and 37) are not currently applicable to
the Group, as the Group does not operate variable incentive
arrangements, other than a small number of limited commission
schemes.
European Banking Authority (EBA) Guidelines
Remuneration policies, procedures and practices reflect the
provisions, where applicable, of national and EU legislation,
State Agreements and commitments provided to the Irish
Government, the Capital Requirements Directive (CRD IV) and
relevant guidelines issued by the European Banking Authority
(EBA) and other regulatory authorities. In the absence of
variable incentive schemes, there was little scope in practice
to apply the provisions of the EBA Guidelines pertaining to
variable remuneration. The Remuneration Policy incorporates
the provisions of the EBA Guidelines in relation to the ongoing
design, implementation and governance of remuneration.
Pillar 3 and Other Remuneration Disclosures
The Group publishes additional remuneration disclosures in the
annual Group Pillar 3 Report. These disclosures provide further
details in relation to the Group’s decision making process
and governance of remuneration, the link between pay and
performance, the remuneration of those employees whose
professional activities are considered to have a material impact
on the Group’s risk profile and the key components of the
Group’s remuneration structure. The Group’s Pillar 3 Report is
available on the Group website.
EBA remuneration benchmarking requirements require the
Group to disclose remuneration data in respect of material risk
takers and high earners (those earning above € 1 million) to
the Central Bank of Ireland. The Group continued to comply
with these reporting requirements during 2019. There were
no employees whose total remuneration exceeded € 1 million
during 2019.
The Group published its gender pay gap report for 2018 in 2019
in relation to its UK based employees. The disclosures are
available on the AIB (GB) website, www.aibgb.co.uk.
Identified Staff and Risk Oversight
The Group is required to maintain a list of employees whose
professional activities have a material impact on the Group’s
risk profile (“Identified Staff”). The list of Identified Staff is
prepared using a combination of qualitative and quantitative
criteria in accordance with the relevant EU regulations and
guidelines together with additional criteria specific to the
Group’s structure, business activities and risk profile. The list
is prepared at Group and subsidiary levels for the Republic of
Ireland and the United Kingdom.
A key principle of the Remuneration Policy is the promotion
of a strong risk culture and risk taking which is aligned to the
Group’s Risk Appetite Statement. The Remuneration Committee
is supported by the Chief Risk Officer in its assessment of
the key risks that should be considered in the context of the
Group’s remuneration structure and future remuneration
strategy. The Chief Risk Officer attends all meetings of the
Remuneration Committee.
Reward Structure and Operation in 2019
The continued existence of remuneration constraints
significantly impedes the Group’s ability to apply its desired
remuneration policy and to implement market aligned
remuneration policies and practices. In particular, the Group
is precluded from introducing any new bonus or incentive
schemes, allowances or other fringe benefits without prior
agreement with the State. Consequently, the absence
of performance based variable pay, combined with the
requirement to operate within an overall cap on individual
salaries and allowances of € 500,000, precludes the Group
from aligning the remuneration of key executives and other
key employees with the achievement of longer term customer,
financial and strategic targets.
During 2019, remuneration across the Group continued to be
principally comprised of fixed pay elements encompassing
base salary, allowances and employer pension contributions.
Base salary endeavours to reflect the size and level of
responsibilities attaching to individual roles while allowances
are paid in lieu of benefits generally available in the external
market. The Group operates defined contribution pension
schemes which followed the closure of all Group defined
benefit schemes to future accrual on 31 December 2013.
Further details in respect of the Group’s fixed pay elements are
provided in the table below.
Increases to salary in 2019 were awarded following the annual
pay review process, through promotion, progression and, in
exceptional cases, through out-of-course increases to retain
business critical staff and key skills. A number of employees
also received increases to align their salary to the new ranges
that were introduced.
Pay increases under the 2019 annual pay review comprised
of two individual components: a flat rate increase to base pay,
as well as an increase aligned to individual performance ratings.
These increases represented a one year agreement with
employee representatives arising from the recommendations
of the Workplace Relations Commission (WRC). Separate
recommendations were issued for each of the jurisdictions of
the Republic of Ireland, Northern Ireland and Great Britain.
The next annual pay review is due to take place in April 2020.
The remuneration of Executive Directors and members of ExCo
was determined and approved by the Remuneration Committee
within the remuneration constraints set by the State.
There were no general short or long term variable incentive
schemes or share incentive schemes in operation during 2019.
The Group operates three local business commission schemes.
These schemes are designed to protect the rights and interests
of customers through customer centric performance criteria,
the prevention of conflicts of interest and the assessment and
mitigation of risks to the customer. The maximum amount
payable to any individual per year is € 20,000.
214  Governance and Oversight
Remuneration of Executive Directors and ExCo
The remuneration of Executive Directors and members of the
ExCo is determined by the Remuneration Committee. The level of
remuneration aims to provide an appropriate level of competitive
remuneration commensurate with the size and functional
responsibilities attaching to roles.
In line with current remuneration restrictions on the introduction
of variable pay and a cap on individual salaries and allowances
of € 500,000, remuneration principally consists of base salary,
allowances and pension contributions. Allowances consist of
non-pensionable cash allowances of up to € 30,000, subject to
salary and allowances remaining within the € 500,000 cap, while
employer pension contributions of 20% of base salary are payable
in respect of Executive Directors and ExCo members.
Following a review of compliance with the UK Corporate
Governance Code, the pension arrangements of Executive
Directors and ExCo members were considered by the Committee
and deemed to be appropriate, due to the remuneration
restrictions in place at this time.
The Group appointed a new Chief Executive Officer in March
2019. In line with the cap on salaries and allowances imposed
by existing remuneration restrictions, the Chief Executive Officer
was appointed on a base salary of € 500,000 together with an
employer pension contribution of 20% (€ 100,000) to a defined
contribution scheme.
The Chief Operating Officer (who is also Deputy Chief Executive
Officer) was appointed as an Executive Director in March 2019.
His base salary is € 485,000, with a non-pensionable allowance of
€ 15,000 and an employer pension contribution of 20% (€ 97,000)
to a defined contribution scheme.
There were no bonuses, shares or other incentive schemes paid
or awarded to Executive Directors or ExCo members in 2019.
The Committee undertakes a periodic review of the remuneration
of Executive Directors and ExCo members against external
benchmark data.
Governance and oversight –
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Fixed Pay Elements
The principal fixed pay design elements are outlined below.
Pay Element Rationale and
alignment to Strategy
Design and Operation Performance Assessment and
Maximum Potential Value
Base Salary To attract, motivate and
retain the right calibre
of individuals to support
the Group’s future
success and growth.
Base salary is designed to reflect
individual experience, contribution and
the size and level of responsibilities
attached to each role.
Base salaries are typically reviewed
annually as part of the annual pay
review process with increases taking
effect from 1 April.
Base salaries of Executive Directors
and members of the Executive
Committee are reviewed annually
by the Remuneration Committee on
behalf of the Board.
Increases in base salary are performance
based, determined by performance against
objectives which reflect the Group’s strategy,
goals and values and typically occur as part
of the annual pay review process.
Increases may also arise through progression
and promotion and, in exceptional cases,
through out of-course increases to retain key
talent and skills.
Base salaries of all employees, including
Executive Directors, are managed in
accordance with existing remuneration
restrictions.
The annual base salary for each Executive
Director is set out in the Directors
Remuneration Report.
Allowances To provide a contribution
to market aligned
benefits and allowances
generally available in
the market.
Non-pensionable cash allowances
are provided to eligible employees
according to their career level.
Non-pensionable allowances for senior
career levels range from € 10,000 to € 20,000
per annum (£ 8,300 to £ 11,000 in the UK).
Allowances of up to € 30,000 per annum
(£ 14,000 in the UK) are payable to Executive
Directors and ExCo members.
Pension To enable employees
plan for an appropriate
standard of living in
retirement.
Employees are entitled to participate
in the Group’s Defined Contribution
Scheme with a monthly contribution
based on a percentage of base salary.
Executive Directors and Executive
Committee members are also
entitled to participate in the Defined
Contribution Scheme.
In the UK, employees may elect to
receive cash in lieu of their pension
contribution.
A standard contribution of 10% of base salary
plus an additional matching contribution
of up to 8%, depending on the age of the
employee.
The employer pension contribution
for Executive Directors and Executive
Committee members is up to 20% of base
salary.
Other
Benefits
To provide affordable
benefits in accordance
with general market
practice.
Benefits include medical insurance
(US and UK employees only), income
protection, death-in-service cover and
free banking services.
Relocation costs, including tax advice,
accommodation and flight allowances,
may be provided in line with market
practice.
The Remuneration Committee retains
the right to provide additional benefits
subject to current remuneration
restrictions.
The Group does not operate a company car
scheme. A functional car policy is in place
based on role requirements.
216  Governance and Oversight
Governance and oversight –
Corporate Governance Remuneration statement
Directors’ remuneration*
The following tables detail the total remuneration of the Directors in office during 2019 and 2018:
2019
Directors’ fees
Parent and
Irish subsidiary
companies(1)
Directors’
fees
AIB Group
(UK) p.l.c.(2)
Salary Annual
taxable
benefits(3)
Pension
contribution(4)
Total
Remuneration € 000 € 000 € 000 € 000 € 000 € 000
Executive Directors
Colin Hunt 407 – 81 488
Tomás O’Midheach 379 22 76 477
786 22 157 965
Non-Executive Directors
Tom Foley(2)
93 34 127
Basil Geoghegan 28 28
Sandy Kinney Pritchard 73 73
Carolan Lennon 80 80
Elaine MacLean 26 26
Brendan McDonagh 109 109
(Deputy Chair)
Helen Normoyle 75 75
Ann O’Brien 51 51
Richard Pym(1(a))
365 365
(Chair)
Raj Singh 55 55
955 34 989
Former Directors
Simon Ball 47 47
Mark Bourke 105 – 17 122
Bernard Byrne 93 – 19 112
Peter Hagan 70 70
Anne Maher(5)
41
Jim O’Hara 98 98
Catherine Woods 147 147
Other(6)
11
Total 1,637
(1)
Fees paid to Non-Executive Directors in 2019 were as follows:
(a) Mr Richard Pym, Chair, was paid a non-pensionable flat fee of € 365,000, which includes remuneration for all services as a Director;
(b)	
All other Non-Executive Directors were paid a basic, non-pensionable fee in respect of service as a Director of € 65,000 and additional non-
pensionable remuneration in respect of other responsibilities, such as through the chairmanship or membership of Board Committees or the board
of a subsidiary company or performing the role of Deputy Chair, Senior Independent Non-Executive Director;
(2)
Current or former Non-Executive Directors of AIB Group plc and ., as applicable, who also serve as Directors of AIB Group (UK)
p.l.c. (“AIB UK”) are separately paid a non-pensionable flat fee, which is independently agreed and paid by AIB UK, in respect of their service as a Director
of that company. In that regard, Mr Foley earned fees as quoted during 2019;
(3)
‘Annual taxable benefits’ represents a non-pensionable cash allowance in lieu of company car, medical insurance and other contractual benefits;
(4)
‘Pension contribution’ represents agreed payments to a defined contribution scheme to provide post-retirement pension benefits for Executive Directors
from normal retirement date. The fees of the Chair, Deputy Chair and Non-Executive Directors are non-pensionable;
(5)
Ms Anne Maher is a former Non-Executive Director of . who has, since her resignation, continued as a Director of the Corporate
Trustee of the AIB Irish Pension Scheme and of the AIB Defined Contribution Scheme, in respect of which she earned fees as quoted; and
(6)
‘Other’ represents the payment of pensions to former Directors or their dependants granted on an ex-gratia basis and are fully provided for in the
Statement of Financial Position.
*Forms an integral part of the audited financial statements
217

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Directors’ remuneration* (continued)
2018
Directors’ fees
Parent and
Irish subsidiary
companies
Directors’
fees
AIB Group
(UK) p.l.c.
Salary Annual
taxable
benefits
Pension
contribution
Total
Remuneration € 000 € 000 € 000 € 000 € 000 € 000
Executive Directors
Mark Bourke 490 10 98 598
Bernard Byrne 500 – 100 600
990 10 198 1,198
Non-Executive Directors
Simon Ball 95 95
Tom Foley 88 34 122
Peter Hagan 95 95
Carolan Lennon 80 80
Brendan McDonagh 94 94
Helen Normoyle 75 75
Jim O’Hara 115 115
Richard Pym 365 365
(Chair)
Catherine Woods 180 180
(Deputy Chair)
1,187 34 1,221
Former Directors
Declan Collier 7 7
Anne Maher 39 39
Other 11
Total 1,278
*Forms an integral part of the audited financial statements
218  Governance and Oversight
Directors’ remuneration* (continued)
Interests in shares
The beneficial interests of the Directors and the Group
Company Secretary in office at 31 December 2019, and of their
spouses and minor children, in the Company’s ordinary shares
are as follows:
Ordinary shares 31 December
2019
1 January
2019**
Directors:
Tom Foley 2,501 2,501
Basil Geoghegan – –
Colin Hunt 12,500 –
Sandy Kinney Pritchard – –
Carolan Lennon 7,700 7,700
Elaine MacLean – –
Brendan McDonagh 10,000 10,000
Helen Normoyle 2,000 2,000
Ann O'Brien – –
Tomas O'Midheach 4 4
Richard Pym 30,000 2,000
Raj Singh – –
Group Company Secretary:
Helen Dooley – –
**or date of appointment, if later
The following table sets out the beneficial interests of the
Directors and Executive Committee (Members of the Executive
Committee at 31 December 2019) members of AIB as a group
(including their spouses and minor children):
Title
of class
Identity of person
or group
Number
owned
Percent
of class
Ordinary
shares
Directors and Executive
Committee members of
AIB as a group
64,784 ***
***
The total ordinary shares in issue at 31 December 2019 was
2,714,381,237.
Share options
No share options were granted or exercised during 2019,
and there were no options to subscribe for ordinary shares
outstanding in favour of the Executive Directors or Group
Company Secretary at 31 December 2019.
Performance shares
There were no conditional grants of awards of ordinary shares
outstanding to Executive Directors or the Group Company
Secretary at 31 December 2019.
Apart from the interests set out above, the Directors and Group
Company Secretary in office at 31 December 2019 and their
spouses and minor children, have no other interests in the
shares of the Company.
There were no changes in the interests of the Directors and
the Group Company Secretary shown above between 31
December 2019 and 5 March 2020.
The year end closing price of the Company’s ordinary shares on
the Main Market of Euronext Dublin was € 3.106 per share.
Service contracts
All Executive Directors have a service contract whereas all Non-
Executive Directors have a letter of appointment.
In respect of Executive Directors, no service contract exists
between the Company and any Director which provides for a
notice period from AIB Group of greater than one year.
Non-Executive Directors are appointed for an initial term of
three years. Terms of office for Non-Executive Directors will not
be extended beyond nine years in total unless the Board, on the
recommendation of the Nomination and Corporate Governance
Committee, concludes that such extension is necessary and
appropriate.
All Directors, should they choose to stand, are subject to annual
re-election by shareholders.
Governance and oversight –
Corporate Governance Remuneration statement
*Forms an integral part of the audited financial statements
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Viability statement
In accordance with provision 31 of the UK Corporate
Governance Code published in July 2018, the Directors have
assessed the viability of the Group taking into account its
current position, the prevailing economic and trading conditions
and principal risks facing the Group over the next three years to
31 December 2022.
Horizon period
The Directors concluded that three years was an appropriate
period to assess the viability of the Group for the following
reasons:
•	
It is the same period used within the Group for the strategic
and financial planning process;
•	
The Group prepares its annual Internal Capital Adequacy
Assessment (“ICAAP”) and Internal Liquidity Adequacy
Assessment (“ILAAP”) on an annual basis using a three
year time horizon;
•	
A three year time horizon is used for both internal and
regulatory stress testing. Where certain impacts can be
assessed reliably beyond the 3 year forecast horizon, a
quantification is performed (for example the ECB Prudential
provisioning backstop for non-performing exposures) and
considered;
•	
A three year time horizon is consistent with the internal risk
management practices within the Group, including but not
limited to: setting of the Risk Appetite, the Material Risk
Assessment as well as Recovery and Resolution planning.
Considerations in assessing viability of the Group
Assessment of prospects
The assessment of the Group’s prospects is built up based on
the current financial position of the Group including its funding
and liquidity on pages 145 to 153 and capital position as set out
on pages 67 to 70.
The Group has completed a review of its Strategy, covering the
period of assessment which is described on pages 24 to 29.
The Board participated fully in the strategic process by means
of regular updates during the year and an extended Board
meeting in November 2019. Furthermore, the Directors robustly
assessed the risks facing the Group including those that would
threaten the competitive position of the business, its operational
capacity as well as the Group’s governance and internal control
systems.
During the year, the Directors rely on the following processes to
identify and assess risks which could impact on the continued
viability of the Group:
• 
The Group’s Material Risk Assessment process seeks
to ensure that all significant risks to which the Group is
exposed have been identified and are being appropriately
managed. New and emerging risks are also identified and
mitigating actions are put in place.
•	
As part of the setting of the Group’s risk appetite,
consideration is given to the amount of risk the Group is
willing to accept in pursuit of its strategic objectives.
• 
On a quarterly basis, internal stress testing of the Group’s
capital and liquidity position is performed. This is conducted
using a variety of different macroeconomic scenarios.
•	
In recovery and resolution planning, consideration is given
to market factors and the operational resiliency of the Group
•	
The regular reporting of the Group’s financial performance
by the Chief Financial Officer and the reporting of the
Group’s risk profile by the Chief Risk Officer.
A full description of the principal risks facing the Group is
provided in the Risk management section – Individual risk types
pages 79 to 170.
Assessment of viability
The financial planning process is the main tool for assessing
the continued financial prospects of the Group. The plan is
a detailed three year financial forecast for each division, and
includes forecasts of operating results, headcount, investment
expenditure and new strategic initiatives. Progress against
the plan is reported monthly to the Executive Committee and
the Board. Updated forecasts are prepared as required and
mitigating management actions are taken where required.
The Board considers the independent review of the plan by
the Risk function covering the alignment of the plan with Group
strategy and the risk appetite. This review also identifies the key
risks to delivery of the Group’s plan.
The plan uses the Group’s base case forecast, but also
includes consideration of downside scenarios. In 2019, the
Group considered three downside scenarios; (i) a global
downturn impacting on the Group’s core markets in Ireland, UK
and USA; (ii) a Brexit scenario, comprising of a disorderly exit of
the UK from the European Union; and (iii) a severe but plausible
scenario which is used for internal stress testing of the Group’s
capital position. The Group’s severe scenario is typically more
severe than the regulatory stress tests. In addition, the Group
performs regular stress testing of its liquidity position, and
during 2019 conducted specific liquidity stress tests in response
to changing Brexit conditions.
As part of the internal capital adequacy assessment process,
material risks and emerging risks to the Group’s financial
performance are considered in terms of their potential impact
on the Group’s position. These risks are set out on pages 38 to
43. Stress testing not only includes changes in macroeconomic
forecasts but also other factors such as; financial crime losses,
disruption to IT systems or cost of a cyber incident as well as
financial loss arising from compliance or conduct issues.
After considering these risks, and reviewing the financial plan
for the Group as well as the results of stress testing scenarios,
the Group continues to;
•	
Demonstrate internal capital generation through continued
profitability in each of the forecast years;
• 
Remain in excess of its regulatory capital requirements;
•	
Have significant liquidity over its liquidity coverage ratio and
net stable funding ratio.
Statement of viability
On the basis of the above, the Directors believe, taking into
account the Group’s current position, and subject to the
identified risks, the Group will be able to continue in operation
and meet its liabilities as they fall due over the three year period
of assessment.
Governance and oversight –
Viability statement
220  Governance and Oversight
Internal controls
Directors’ Statement on Risk management and
Internal controls
The Board of Directors is responsible for the effective
management of risks and opportunities and for the system of
internal controls in the Group. The Group operates a continuous
risk management process which identifies and evaluates the
key risks facing the Group and its subsidiaries. The system of
internal controls is designed to ensure that there is thorough
and regular evaluation of the nature and extent of risks and
that the Group is able to react accordingly, rather than to
eliminate risk. This is done through a process of identification,
measurement, monitoring and reporting, which provides
reasonable, but not absolute, assurance against material
misstatement, error, loss or fraud. This process includes an
assessment of the effectiveness of internal controls, which was
in place for the full year under review up to the date of approval
of the financial statements, and which accords with the Central
Bank of Ireland’s Corporate Governance requirements for Credit
Institutions 2015 and the UK Corporate Governance Code.
Supporting this process, the Group’s system of internal controls
is based on the following:
Board Governance and Oversight
– 
The Board has ultimate responsibility for reviewing
the effectiveness of the system of internal control on a
continuous basis and is supported by a number of sub-
committees including Board Audit Committee (“BAC”),
Board Risk Committee (“BRC”), Remuneration Committee
and Nomination and Corporate Governance Committee.
– 
The BRC is responsible for fostering sound risk governance
across all of the Group’s entities and operations, ensures
risks within the Group are appropriately identified, managed
and controlled and ensures that the Group’s strategy is
informed by, and aligned with, the Group’s Risk Appetite
Statement and tolerance for future strategy.
– 
The BAC reviews various aspects of internal control,
including the design and operating effectiveness of the
internal controls in place supporting the application of the
Group’s accounting policies, provision of statutory accounts
and financial and narrative reports, and financial reporting
systems. It also ensures that no restrictions are placed on
the scope of the statutory audit or the independence of the
internal audit function.
– 
The Chief Financial Officer (“CFO”), the Chief Risk Officer
(“CRO”) and the Group Internal Auditor are involved in all
meetings of the BAC and BRC.
– 
The Group’s remuneration policies are set and governed
by the Remuneration Committee whose purpose, duties
and membership are to ensure that remuneration policies
and practices are consistent with and promote effective risk
management.
– 
The Nomination and Corporate Governance Committee’s
responsibilities include, amongst others, leading the
process for Board appointments and making the
recommendations to the Board in this regard, monitoring
succession planning at Board and Executive Committee
levels and reviewing the Group’s corporate governance
practices.
Executive Risk management and controls
– 
The Executive Committee (“ExCo”) is the most senior
management committee of the Group and accountable
to the CEO, with responsibility for establishing business
strategy, risk appetite, enterprise risk management and
control.
– 
The Group operates a ‘three lines of defence’ framework in
the delineation of accountabilities for risk governance.
– 
The Group Risk Committee (“GRC”) which is a sub-
committee of the ExCo reviews the effectiveness and
application of the Group’s risk frameworks and policies,
risk profile, risk concentrations and adherence to Board
approved risk appetite and limits.
– 
The Group Asset and Liability Committee (“ALCo”) is
a sub-committee of the ExCo and acts as the Group’s
strategic balance sheet management forum that combines a
business decisioning and risk governance mandate.
– 
There is a centralised risk control function headed by
the CRO who is responsible for ensuring that risks are
identified, measured, monitored and reported on, and for
reporting on risk mitigation actions.
– 
The Risk function is responsible for establishing and
embedding risk management frameworks, ensuring that
material risk policies are reviewed, and reporting on
adherence to risk limits as set by the Board of Directors.
– 
The Group’s risk profile is measured against its risk appetite
on a monthly basis and exceptions are reported to the
GRC and BRC through the monthly CRO report. Elements
of the CRO report are also contained in the Executive
Management Report reported to the full Group Board
monthly. Material breaches of risk appetite are escalated to
the Board and reported to the Central Bank of Ireland/Joint
Supervisory Team (“JST”).
– 
The centralised credit function is headed by a Chief Credit
Officer who reports to the CRO.
– 
Compliance, which is part of the Risk function, provides
advisory services to the Group and monitors and reports
on conduct of business and financial crime compliance
and forthcoming regulations across the Group, and on
Management’s focus on compliance matters.
– 
There is an independent Group Internal Audit function which
is responsible for independently assessing the effectiveness
of the Group’s corporate governance, risk management
and internal controls and reports directly to the Chair of the
BAC.
– 
AIB employees who perform pre-approved controlled
functions/controlled functions meet the required standards
as outlined in AIB’s Fitness and Probity programme.
For further information, on the Risk management framework of
the Group, see pages 72 to 78 of this report.
Governance and oversight –
Internal controls
221

Governance and Oversight 1
2
3
4
5
6
Internal controls (continued)
Executive risk management and controls (continued)
In the event that material failings or weaknesses in the
systems of risk management or internal control are identified,
Management are required to attend the relevant Board forum to
provide an explanation of the issue and to present a proposed
remediation plan. Agreed remediation plans are tracked to
conclusion, with regular status updates provided to the relevant
Board forum.
Given the work of the Board, BRC, BAC and representations
made by the ExCo during the year, the Board is satisfied
that the necessary actions to address any material failings or
weaknesses identified through the operation of the Group’s risk
management and internal control framework have been taken,
or are currently being undertaken.
Taking this and all other information into consideration as
outlined above, the Board is satisfied that there has been an
effective system of control in place throughout the year.
Other governance information
Relations with shareholders
The Group has a number of procedures in place to allow its
shareholders and other stakeholders to stay informed about
matters affecting their interests. In addition to this Annual
Financial Report, which is available on the Group’s website
at www.aib.ie/investorrelations and sent in hard copy to those
shareholders who request it, the following communication tools
are used by the Group:
Shareholders’ Report
The Shareholders’ Report (‘the Report’) is a summary version
of AIB’s Annual Financial Report. The Report, which covers the
Group’s performance in the previous year, is available on the
Group’s website and sent in hard copy to those shareholders
who request it. The Report does not form part of the Annual
Financial Report and is for reference purposes only.
Website
The Group’s website, contains, for the years since 2000,
the Annual Financial Report, the Interim Report/Half-Yearly
Financial Report, and the Annual Report on Form 20-F for
relevant years. In accordance with the Transparency (Directive
2004/109/EC) (Amendment)(No.2) Regulations 2015, this and
all future Annual and Half-Yearly Financial Reports will remain
available to the public for at least ten years. For the period 2008
to 2013, the Annual Financial Report and the Annual Report
on Form 20-F were combined. The Group’s presentation to
fund managers and analysts of annual and interim financial
results are also available on the Group’s website. None of
the information on the Group’s website is incorporated in, or
otherwise forms part of, this Annual Financial Report.
Annual General Meeting (“AGM”)
The AGM is an opportunity for shareholders to hear directly
from the Board on the Group’s performance and developments
of interest for the year to date and, importantly, to ask
questions.
All shareholders of the Company are invited to attend the AGM.
Separate resolutions are proposed on each separate issue
and voting is conducted by way of poll. The votes for, against
and withheld on each resolution, including proxies lodged, are
subsequently published on the Group’s website. Proxy forms
provide the option for shareholders to direct their proxies to
withhold their vote. It is usual for all Directors to attend the AGM
and to be available to meet shareholders before and after the
meeting. The Chairs of the Board Committees are available to
answer questions about the Committee’s activities. A help desk
facility is available to shareholders attending. The Company’s
2020 AGM is scheduled to be held on 29 April 2020, at the
Ballsbridge Hotel, Ballsbridge, Dublin 4 and it is intended that
Notice of the Meeting will be made available on the Group’s
website and sent in hard copy to those shareholders who
request it, at least 20 working days before the meeting, in
accordance with UK Code requirements.
Governance and oversight –
Internal controls / Other governance information
222  Governance and Oversight
Throughout 2019, the Group continued to work with its
regulators, which include the European Central Bank (“ECB”),
the Central Bank of Ireland (“CBI”), the Prudential Regulation
Authority (“PRA”), the Financial Conduct Authority (“FCA”) in
the United Kingdom (“UK”), the New York State Department of
Financial Services (“NYSDFS”) and the Federal Reserve Bank
of New York in the United States of America (“USA”).
AIB Group plc is the holding company of Allied Irish Banks,
p.l.c. (the principal operating company of AIB Group) and as
such AIB Group plc is subject to consolidated supervision with
respect to . and other credit institutions
and investment firms in the Group.
Current climate of regulatory change
The level of regulatory change remained high in 2019 as
the regulatory landscape for the banking sector continued to
evolve, with a large volume of significant regulatory initiatives
becoming effective. There was an increased focus on regulatory
supervision.
The Regulatory focus on Conduct and Culture will continue in
2020 and beyond, with anticipated regulatory developments in
the form of the Senior Executive Accountability Regime, and
review of the Fitness and Probity requirements.
The Group is committed to proactively identifying regulatory
obligations arising in each of the Group’s operating markets
in Ireland, the UK and the USA and ensuring the timely
implementation of regulatory change.
Throughout 2019, the Group continued cross-functional
programmes to ensure the Group met its new regulatory
requirements. In particular, the Group focused on the EU
directives on the prevention of the use of the financial system
for the purpose of money laundering and terrorist financing
the “4th AML Directive, the implementation of PSD2 Strong
Customer Authentication requirements; the Credit Reporting Act
2013 asset finance reporting to the central credit register; the
EBA Guidelines on Outsourcing, EBA Guidelines on connected
clients/large exposures and the EU Regulations on Cross
Border Payments.
2020 will continue to see regulators and supervisors
assessing how recent key regulatory requirements have been
implemented, the level of regulatory change is expected to
remain at high levels in 2020 and beyond.
United Kingdom
During 2019, AIB Group (UK) p.l.c. continued to prioritise
compliance with its regulatory obligations in Great Britain and
Northern Ireland and will remain focused on this throughout
2020.
Regulatory change horizon – UK
AIB Group (UK) p.l.c. is subject to the European Regulation
described under “Current climate of regulatory change” above
and works closely with AIB Group to ensure the requirements
are implemented compliantly taking into consideration UK
regulatory requirements. During the transition period, as set
out in the Withdrawal Bill, the UK will remain aligned to EU
regulations until at least 31 December 2020. Post the transition
period, there may well be areas of regulatory divergence.
As further regulatory reforms continue to emerge from the
regulators, AIB Group (UK) p.l.c. will continue to focus on
the management of regulatory change and its compliance
obligations.
In addition, AIB Group (UK) p.l.c. continues to focus on the
implementation of the retail banking market investigation order
(2017) (the “Order”). The Order will provide for remedies to
market-wide issues identified as part of the Competition and
Markets Authority’s Retail Banking Market Investigation into the
Personal Current Accounts and SME Banking markets in the
UK, in particular, the creation of an Open Banking infrastructure
aimed at fostering competition.
2019 saw a focus on regulatory interventions to limit the cost
of credit, particularly unauthorised overdrafts and anti-fraud
measures such as ‘Confirmation of Payee’ and this focus will
continue throughout 2020. In addition, UK regulators are placing
a focus on enhancing operational resilience in the UK financial
services sector and requiring banks to make plans to take
account of climate change.
United States
Compliance with federal and state banking laws and
regulations
During 2019, AIB’s state-licensed branch in New York continued
to prioritise compliance with its regulatory obligations in the USA
and will remain focused on this throughout 2020. In particular,
it will continue to monitor ongoing business activities with
regard to the Dodd Frank Act 2010. In addition, particular focus
will be given to the new Transaction Monitoring and Filtering
Programme Regulation and Cybersecurity Regulation from the
NYSDFS.
Governance and oversight –
Supervision and Regulation
223
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2
3
4
5
6
Financial Statements
Financial statements
Page
1 Directors' Responsibility Statement 224
2 Independent Auditor's Report 225
3 Consolidated financial statements 237
4 Notes to the consolidated financial statements 243
5 AIB Group plc company financial statements 366
6 Notes to AIB Group plc company financial statements 369
224  Financial Statements
The following statement which should be read in conjunction with the statement of Auditor’s responsibilities set out with their Audit
Report, is made with a view to distinguishing for shareholders the respective responsibilities of the Directors and of the Auditors in
relation to the financial statements.
The Directors are responsible for preparing the Annual Financial Report and the Group and Company financial statements,
in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. Under that law,
the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards
(“IFRSs”) as adopted by the EU and have elected to prepare the Company financial statements in accordance with IFRSs as adopted
by the EU and as applied in accordance with the provisions of the Companies Act 2014.
In preparing both the Group and Company financial statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and estimates that are reasonable and prudent;
– state that the financial statements comply with IFRSs as adopted by the EU; and
–	
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2014. They are
also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and Company and to
prevent and detect fraud and other irregularities. Under applicable law and corporate governance requirements, the Directors are also
responsible for preparing the Directors’ Report and the reports relating to the Directors’ remuneration and corporate governance that
comply with that law and the relevant listing rules of Euronext Dublin (the Irish Stock Exchange) and the UK Listing Authorities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Each of the Directors whose names and functions are listed on pages 44 and 45 confirm, to the best of their knowledge and belief, that:
– they have complied with the above requirements in preparing the financial statements;
–	
the Group financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the state of
the Group’s affairs as at 31 December 2019 and of its profit for the year then ended;
–	
the Company financial statements prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the state of
the Company’s affairs as at 31 December 2019;
–	
the Directors’ report, Business review and Risk management sections, contained in the Annual Financial Report provide a fair
review of the development and performance of the business and the financial position of the Group, together with a description of
the principal risks and uncertainties faced by the Group; and
–	
the Annual Financial Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for
shareholders to assess the Group’s and the company’s position and performance, business model and strategy.
For and on behalf of the Board
Richard Pym
Chairman
Colin Hunt
Chief Executive Officer
5 March 2020
Directors’ Responsibility Statement
225
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2
3
4
5
6
Financial Statements
Independent auditor’s report to the members of AIB Group plc
Report on the audit of the financial statements
Opinion on the financial statements of AIB Group plc (the “Company”)
In our opinion, the Group and Company financial statements:
–	
give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 December 2019 and of
the profit of the Group for the financial year then ended; and
–	
have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements
of the Companies Act 2014 and as regards the Group financial statements, Article 4 of the IAS Regulation.
The financial statements we have audited comprise:
The Group financial statements:
– the Consolidated Income Statement;
– the Consolidated Statement of Comprehensive Income;
– the Consolidated Statement of Financial Position;
– the Consolidated Statement of Cash Flows;
– the Consolidated Statement of Changes in Equity; and
– the related notes 1 to 59, including a summary of significant accounting policies as set out in note 1.
The Company financial statements:
– the Company Statement of Financial Position;
– the Company Statement of Cash Flows;
– the Company Statement of Changes in Equity; and
– the related notes a to m, including a summary of significant accounting policies as set out in note a.
The relevant financial reporting framework that has been applied in the preparation of the Group and Company financial statements is
the Companies Act 2014 and International Financial Reporting Standards (“IFRS”) as adopted by the European Union
(“the relevant financial reporting framework”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable law.
Our responsibilities under those standards are described below in the “Auditor's responsibilities for the audit of the financial statements”
section of our report.
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority
(“IAASA”), as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year were:
– Expected credit losses on loans and advances to customers;
– Recoverability of deferred tax asset;
– Defined benefit obligations;
– Provision for tracker mortgage examination;
– Impairment of investment in subsidiary (Company only key audit matter); and
– IT systems and controls.
Within this report, any new key audit matters are identified with and any key audit matters
which are the same as the prior year are identified with .
Materiality We determined materiality for:
– the Group to be € 55 million based on approximately 7% of adjusted Profit Before Tax (“PBT”); and
– the Company to be € 54 million which is 0.5% of total equity of the Company.
Independent Auditor’s Report
226  Financial Statements
Scoping We focused the scope of our Group audit primarily on the audit work in AIB Group plc and four
legal entities all of which were subject to individual statutory audit work, whilst the other legal
entities were subject to specified audit procedures, where the extent of our testing was based
on our assessment of the risks of material misstatement and of the materiality of the Group’s
operations in those entities. These audits and specified audit procedures covered over 94% of the
Group’s total assets and 92% of the Group’s total operating income.
Significant changes
in our approach
Key audit matters
As part of our 2019 audit we have identified two new key audit matters:
– 
Impairment of investment in subsidiary (Company only key audit matter): An impairment test
was performed by the Company on its investment in its subsidiary. A value in use (“VIU”)
model was used to calculate an estimated recoverable amount. We regard this area as a key
audit matter due to the fact that the assumptions used in the VIU model involve significant
Management judgement and estimation.
–	
IT systems and controls: We regard this area as a key audit matter owing to the high level of IT
dependency within the Group, the associated complexity and the risk that automated controls
are not designed and operating effectively.
Materiality
For the current year we have considered adjusted PBT to be the critical component for determining
materiality. The adjusted PBT is normalised to remove the effect of certain restitution items which
are considered not to reflect the long-term performance of the Group.
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the Annual Financial Report, in relation to which ISAs (Ireland) or the
Listing Rules require us to report to you whether we have anything material to report, add or draw attention to:
–	
the Directors’ confirmation in the Annual Financial Report on page 219 that they have carried out a robust assessment of the
principal and emerging risks facing the Group and the Company, including those that would threaten its business model, future
performance, solvency or liquidity;
–	
the disclosures on pages 38 to 43 in the Annual Financial Report that describe the principal risks, procedures to identify emerging
risks, and an explanation of how they are being managed or mitigated;
–	
the Directors’ statement on page 172 in the Annual Financial Report about whether the Directors considered it appropriate to
adopt the going concern basis of accounting in preparing the financial statements and the Directors’ identification of any material
uncertainties to the Group’s and the Company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
–	
whether the Directors’ statement relating to going concern required in accordance with Listing Rules 6.1.82(3) is materially
inconsistent with our knowledge obtained in the audit; or
–	
the Directors’ explanation on page 219 in the Annual Financial Report as to how they have assessed the prospects of the Group
and the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the Group and the Company will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit for the financial
statements of the current financial year and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Independent Auditor’s Report
227
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6
Financial Statements
Expected credit losses on loans and advances to customers
Key audit matter
description
In line with IFRS 9, losses on financial assets which are classified at amortised cost are recognised
on an Expected Credit Loss (“ECL”) basis. ECLs are required to incorporate forward looking
information, reflecting Management’s view of potential future economic environments. The complexity
involved in the calculations require Management to develop methodologies involving the use of
significant judgements.
Expected credit loss allowances on loans and advances to customers was € 1,238 million at
31 December 2019 (2018: € 2,039 million).
Measurement of the ECL allowance on loans and advances to customers is a key audit matter as the
determination of assumptions for ECLs is highly subjective due to the level of judgement applied by
Management. The most significant judgements include:
–	
Determining the criteria for a significant increase in credit risk (“SICR”), and for being classified
as credit impaired;
– Accounting interpretations and assumptions used to build the models that calculate the ECL;
–	
The determination of key assumptions, including collateral valuation and cashflow timings, used
in discounted cash flows (“DCFs”) of individually assessed loans;
– The completeness and accuracy of data used to calculate the ECL;
–	
The completeness and valuation of post-model adjustments determined by Management for
certain higher risk portfolios and to address known model limitations; and
–	
Establishing the number and relative weightings for forward looking macroeconomic scenarios
applied in measuring the ECL. This is highly subjective given that such assumptions are subject
to significant uncertainty related to future economic outcomes, including the impact of Brexit.
This results in a wide range of possible outcomes.
Please also refer to page 194 (Audit Committee Report), page 263 (Accounting Policy (s) –
Impairment of financial assets), Note 2 – Critical accounting judgements and estimates, Note 15 –
Net credit impairment (charge)/writeback and Note 26 – ECL allowance on financial assets.
How the scope of our
audit responded to the
key audit matter
We tested key controls supporting the calculation of ECLs on loan and advances to customers
focusing on:
– model development, validation and approval to ensure compliance with IFRS 9 requirements;
–	
review and approval of key assumptions, judgements and macroeconomic forward looking
information used in the models;
–	
the integrity of data used as input to the models including the transfer of data between source
systems and the ECL models;
– the application of SICR criteria and the definition of default used to determine stage outcomes;
– governance and approval of post-model adjustments recorded by Management;
– governance and approval of the output of IFRS 9 models; and
– front line credit monitoring and assessment controls including annual case file reviews.
Our testing included an evaluation of the design and implementation of these key controls. Where
control deficiencies were identified we tested compensating controls implemented to produce the
ECLs and financial statement disclosures. We also assessed Management review controls and
governance controls including attendance at and observation of Board Risk Committee and Group
Credit Committee meetings.
We evaluated IT system controls including assessing data inputs and general IT controls. We tested
the completeness and accuracy of key data inputs and reconciled to source systems, where
appropriate.
We critically assessed the ECL models developed by the Group. In conjunction with Deloitte credit
modelling specialists, we challenged judgements and assumptions supporting the ECL requirements
of IFRS 9. These included assumptions used in the ECL models applied in stage allocation,
calculation of lifetime probability of default and methods applied to derive loss given default rates.
We evaluated the methodology and performed code reviews for a sample of models.
228  Financial Statements
We assessed the reasonableness of forward looking information incorporated into the impairment
calculations. We challenged the macroeconomic scenarios chosen and changes to the weightings
applied. This included benchmarking the economic data used to recognised external data sources.
We also considered the impact of key uncertainties, including Brexit as well as assumptions made by
Management around a ‘Global Slowdown’ scenario.
We considered material post-model adjustments applied by Management to address model and
data limitations. We challenged the rationale for these adjustments and performed testing on their
calculation and application.
In examining a risk based sample of DCF individually assessed loan cases, we challenged Management
on the judgements made regarding the application of the default policy, status of loan restructures,
collateral valuation and realisation time frames and examined the credit risk functions analysis of data
at a portfolio level. Where appropriate, this work involved assessing third party valuations of collateral,
internal valuation guidelines derived from benchmark data, external expert reports on borrowers’
business plans and enterprise valuations. This allowed us to determine whether appropriate valuation
methodologies were used and to assess the objectivity of the external experts used.
We considered significant items impacting the ECL allowance balance. This included portfolio sales
and non-contracted write-offs, as well as recoveries on amounts previously written-off.
We evaluated the adequacy of disclosures made in the financial statements. In particular, we focused
on challenging Management that the disclosures were sufficiently clear in highlighting the significant
uncertainties that exist in respect of the ECL allowance and the sensitivity of the allowance to
changes in the underlying assumptions.
Based on the evidence obtained, we found that the ECLs on loans and advances to customers are
within a range we consider to be reasonable.
Recoverability of deferred tax asset
Key audit matter
description
The key audit matter relates to the incorrect recognition or measurement of the deferred tax asset.
Deferred tax assets of € 2,771 million (2018: € 2,808 million) are recognised for unutilised tax losses
to the extent that it is probable that there will be sufficient future taxable profits against which the
losses can be used.
The assessment of the conditions for the recognition of a deferred tax asset is a critical Management
judgement, given the inherent uncertainties associated with projecting profitability over a long time
period. This is highly subjective given the significant uncertainty related to future economic outcomes,
including the impact of Brexit and a potential global economic slowdown. The Group has reassessed
profitability and growth forecasts for the period 2020 to 2022. This forecast has been revised
downwards and results in an increase in the expected deferred tax utlisation period.
Please refer to page 194 (Audit Committee Report), page 253 (Accounting Policy (k) – Income tax,
including deferred income tax), Note 2 – Critical accounting judgements and estimates and Note 33 –
Deferred taxation.
How the scope of our
audit responded to the
key audit matter
We have evaluated the design and determined the implementation of key controls over the
preparation of financial plans and budgets.
We assessed whether the level of forecasted profits were appropriate by challenging the growth,
profitability and economic assumptions. We tested the accuracy of Management’s forecasting
process by reviewing previous forecasts and comparing to actual results.
We reviewed the model used by Management to assess the likelihood of future profitability and
challenged Management’s assessment of a range of positive and negative evidence for the projection
of long-term future profitability.
We compared Management’s assumptions to industry norms and other economic metrics where
possible. We reviewed Management’s analysis of the “more likely than not” test and assessed the
adequacy of the financial statement disclosures.
Based on the evidence obtained, we found that the assumptions used by Management in the
recognition of the deferred tax asset is within a range we consider to be reasonable.
Independent Auditor’s Report
229
 1
2
3
4
5
6
Financial Statements
Defined benefit obligations
Key audit matter
description
The key audit matter is that the recognition and measurement of defined benefit obligations of
€ 5,904 million (2018: € 5,323 million) is inappropriate.
There is a high degree of estimation and judgement in the calculation of defined benefit obligations.
A material change in the liability can result from small movements in the underlying actuarial
assumptions, specifically the discount rates, pension in payment increases and inflation rates.
Please refer to page 194 (Audit Committee Report), page 252 (Accounting Policy (j) – Employee
benefits), and Note 2 – Critical accounting judgements and estimates and Note 34 – Retirement
benefits.
How the scope of our
audit responded to the
key audit matter
We understood the key controls over the completeness and accuracy of data extracted and supplied
to the Group’s actuary, which is used in the valuation of the Group’s defined benefit obligations.
We also evaluated the design and implementation of the relevant controls for determining the
actuarial assumptions and the approval of those assumptions by Management.
We have utilised Deloitte actuarial specialists as part of our team to assist us in challenging the
appropriateness of actuarial assumptions with particular focus on discount rates, pension in payment
increases and inflation rates.
Our work included inquiries with Management and their actuaries to understand the processes and
assumptions used in calculating the defined benefit obligations. We benchmarked economic and
demographic assumptions against market data and assessed Management adjustments to market
rates for Company and scheme specific information. For scheme specific assumptions we considered
the scheme rules, historic practice and other information relevant to the selection of the assumption.
We evaluated and assessed the adequacy of disclosures made in the financial statements, including
disclosures of the assumptions and sensitivity of the defined benefit obligation to changes in the
underlying assumptions.
Based on the evidence obtained, we concluded that assumptions used by Management in the
actuarial valuations for defined benefit obligations are within a range we consider to be reasonable.
Provision for tracker mortgage examination
Key audit matter
description
The calculation of provisions for the tracker mortgage examination is highly judgemental and involves
the use of several Management assumptions including the identification of relevant impacted
customers, related redress costs and potential enforcement fines. There is also a risk that known
and emerging issues may not be appropriately disclosed in the financial statements. As a result, we
consider this a key audit matter.
Included in Note 40 - Provisions for liabilities and commitments the Group has recorded a provision of
€ 271 million (2018: € 10 million) for customer redress and compensation and € 70 million (2018: Nil)
for related enforcement fines expected to be imposed.
Please refer to page 194 (Audit Committee Report), page 269 (Accounting Policy (z) – Non-credit risk
provisions), Note 2 – Critical accounting judgements and estimates, Note 40 - Provisions for liabilities
and commitments, and Note 47 – Memorandum items: contingent liabilities and commitments, and
contingent assets.
How the scope of our
audit responded to the
key audit matter
We have evaluated the design and determined the implementation of the Group’s relevant controls
over the identification, measurement and the disclosure of the provision. We also assessed
Management review and governance controls.
We reviewed the correspondence with regulators, the Financial Services and Pensions Ombudsman
(“FSPO”) and legal advice obtained. We assessed Management’s interpretation of the impact of this
decision. We reviewed the basis for recording a provision taking into consideration the information
available and the requirements of IAS 37. We also considered Management’s interactions with
regulators including the status of the enforcement process.
230  Financial Statements
Given the inherent uncertainty in the calculation of the provision and its judgemental nature, we
evaluated the adequacy of disclosures made in the financial statements. We challenged Management
on the disclosures, in particular, whether they are sufficiently clear in highlighting the exposures that
remain, the significant uncertainties that exist in respect of the provisions and the sensitivity of the
provisions to changes in the underlying assumptions.
Based on the evidence obtained, we found that the assumptions used by Management in
measurement of the provision for the tracker mortgage examintions are within a range we consider to
be reasonable.
Impairment of investment in subsidiary (Company only Key Audit Matter)
Key audit matter
description
The key audit matter relates to the recoverability of the Company’s investment in its subsidiary
undertaking and the significant judgements and estimates required to determine its recoverable
amount.
Following a corporate reorganisation during 2017, the Group implemented a new holding company,
AIB Group plc, which holds the Group’s investment in . The Company accounts
for its investment in subsidiary at cost less provisions for impairment. At the end of each reporting
period, the Company reviews its investment for impairment if there are indications that impairment
may have occurred.
As at 31 December 2019, the market capitalisation of the Company’s investment was lower than
the carrying amount of the investment. This is considered an indicator of potential impairment.
An impairment test was performed by the Company using a VIU model to calculate an estimated
recoverable amount.
The assumptions used in the VIU model involved significant Management judgement and estimation.
This includes determining future cash flow projections during the period of the financial plan and the
choice of growth and discount rates.
The carrying amount of the Company’s investment in subsidiary at 31 December 2019 was
€ 9,996 million (2018: € 12,940 million). As a result of the impairment test the recoverable
amount was calculated at € 9,496 million and this resulted in an impairment charge for 2019 of
€ 3,444 million.
Please refer to page 194 (Audit Committee Report), page 249 (Accounting Policy (d) – Basis of
consolidation), Note 2 – Critical accounting judgements and estimates and Note e – Investment in
subsidiary undertaking (AIB Group Company financial statements).
How the scope of our
audit responded to the
key audit matter
We evaluated the design and determined the implementation of key controls over the preparation of
financial plans and budgets.
We assessed whether the level of forecasted profits was appropriate by challenging the growth,
profitability and economic assumptions. We tested the accuracy of Management’s forecasting
process by reviewing previous forecasts and comparing to actual results.
In conjunction with our Deloitte Banking valuation specialist we evaluated the methodology utilised by
the Company in preparing the VIU calculation. In particular, we challenged the assumptions used in
assessing the recoverability of the investment. We independently sourced market information around
discount rates and growth rates. We determined a range of estimates around these assumptions and
the resulting impairment charge.
Given the inherent uncertainty in the calculation of a recoverable amount for the investment,
we evaluated adequacy of the disclosures made in the financial statements. We challenged
Management on the disclosures, in particular, whether they are sufficiently clear in highlighting the
key assumptions and the sensitivity of the investment to changes in the underlying assumptions.
Based on the evidence obtained, we concluded that the assumptions used by Management in
assessing the recoverability of the investment in . are within a range we
consider reasonable.
Independent Auditor’s Report
231
Financial Statements
IT systems and controls
Key audit matter
description
The Group’s financial reporting processes are reliant on processes, controls and data managed by
IT systems. The IT environment is complex and pervasive to the operations of the Group due to
the large volume of transactions processed daily and the reliance on automated and IT dependent
manual controls. This risk is also impacted by dependency on third parties and outsourced
arrangements as well as migration to new systems.
Our planned audit approach relies extensively on IT applications and the operating effectiveness of
the control environment. As part of our assessment of the IT environment, we considered privileged
user access management controls to be critical in ensuring that only appropriately authorised
changes are made to relevant IT systems. Moreover, appropriate access controls contribute to
mitigating the risk of potential fraud or error as a result of changes to applications or processing
unauthorised transactions.
We regard this area as a key audit matter owing to the high level of IT dependency within the Group,
as well as the associated complexity and the risk that automated controls are not designed and
operating effectively.
How the scope of our
audit responded to the
key audit matter
We examined the design of the governance framework associated with the Group’s IT architecture
We gained an understanding and tested relevant General IT Controls for systems we considered
relevant to the financial reporting process, including access management, programme development
and change management.
We gained an understanding of relevant IT controls over applications, operating systems
and databases that are relevant for the financial reporting process and tested their operating
effectiveness.
We assessed the relevent automated controls within business processes and the reliability of relevant
reports used as part of manual controls. This included assessing the integrity of system interfaces,
the completeness and accuracy of data feeds and automated calculations.
We tested user access by assessing the controls in place for in-scope applications and verifying the
addition and removal of users.
While we identified certain design and operating effectiveness deficiencies in relation to user access
controls, we tested validation activities performed by Management and compensating controls to
mitigate the risk of fraud or error as a result of unauthorised transactions. Based on this testing we
were able to place reliance on IT controls for the purpose of our audit.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole,
and not to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with
respect to any of the risks described above, and we do not express an opinion on these individual matters.
232  Financial Statements
Our application of materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group to be € 55 million, which is approximately 7% of adjusted PBT. In the prior year, we determined
materiality with reference to an unadjusted PBT. For the current year, we have considered adjusted PBT to be the critical component for
determining materiality. We used an adjusted PBT normalised to remove the effect of certain restitution items which are considered not
to reflect the long-term performance of the Group. We have considered quantitative and qualitative factors such as understanding the
entity and its environment, history of misstatements, complexity of the Group and the reliability of the control environment.
We determined materiality for the Company to be € 54 million which is 0.5% of Company total equity. We have selected total equity as
an appropriate benchmark for Company materiality as the Company’s primary purpose is to act as a holding company with investments
in the Group’s primary subsidiary and therefore a profit based measure is not relevant.
Group materiality
Adjusted PBT € 799 m
Group materiality
€ 55 m
Component materiality
range € 9 m to € 15 m
Audit Committee reporting
threshold € 2.75 m
We agreed with the Board Audit Committee that we would report to them any audit differences in excess of € 2.75 million, as well
as differences below that threshold which, in our view, warranted reporting on qualitative grounds. We also report to the Board Audit
Committee on material disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
We determined the scope of our Group audit by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at the Group level.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by us, as the
Group engagement team, or by auditors within Deloitte network firms operating under our instruction (“component auditors”). Where
the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those
components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the
consolidated financial statements as a whole.
Based on that assessment, we focused our Group audit work in AIB Group plc and the four legal entities as disclosed in Note 48 to the
consolidated financial statements, all of which were subject to individual statutory audits, whilst the other legal entities were subject to
specified audit procedures, where the extent of our testing was based on our assessment of the risks of material misstatement and of
the materiality of the Group’s operations in those entities. These audits and specified audit procedures covered over 94% of the Group’s
total assets and 92% of the Group’s total operating income. In addition, audits will be performed for statutory purposes for all legal
entities.
We also tested the consolidation process and carried out analytical procedures to assess there were no additional significant risks of
material misstatement arising from the aggregated financial information of the remaining entities not subject to audit or specified audit
procedures.
Independent Auditor’s Report

Financial Statements
An overview of the scope of our audit (continued)
The Group audit team sent component auditors detailed instructions on audit procedures to be undertaken and the information to be
reported back to the Group audit team. Regular contact was maintained throughout the course of the audit with component auditors
which included holding Group planning meetings, maintaining communications on the status of the audits and continuing with a
programme of planned visits designed so that the Group audit team met each significant component audit team during the year.
The levels of coverage of key financial aspects of the Group by type of audit procedures as set out below:
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Financial
Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other
information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the
following conditions:
–	
Fair, balanced and understandable – the statement given by the Directors that they consider the Annual Financial Report and
financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders
to assess the Group’s and the Company’s position and performance, business model and strategy is materially inconsistent with our
knowledge obtained in the audit; or
–	
Board Audit Committee reporting – the section describing the work of the Board Audit Committee does not appropriately address
matters communicated by us to the Board Audit Committee; or
– 	
Directors’ statement of compliance with the UK Corporate Governance Code and the Irish Corporate Governance Annex – the
parts of the Directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate
Governance Code and the Irish Corporate Governance Annex containing provisions specified for review by the auditor in
accordance with Listing Rule 6.1.85 and Listing Rule 6.1.86 do not properly disclose a departure from a relevant provision of the UK
Corporate Governance Code or the Irish Corporate Governance Annex.
234  Financial Statements
Responsibilities of Directors
As explained more fully in the Directors’ Responsibility Statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
–	
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
–	
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group and Company’s internal control.
–	
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the Directors.
–	
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or
conditions may cause the Company (or where relevant, the Group) to cease to continue as a going concern.
–	
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
–	
Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group to express
an opinion on the consolidated financial statements. The Group auditor is responsible for the direction, supervision and performance
of the Group audit. The Group auditor remains solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that the auditor
has complied with relevant ethical requirements regarding independence, including the Ethical Standard for Auditors (Ireland) 2016, and
communicates with them all relationships and other matters that may reasonably be thought to bear on the auditor’s independence, and
where applicable, related safeguards.
Independent Auditor’s Report

Financial Statements
Where the auditor is required to report on key audit matters, from the matters communicated with those charged with governance, the
auditor determines those matters that were of most significance in the audit of the financial statements of the current period and are
therefore, the key audit matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, the auditor determines that a matter should not be communicated
in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
– We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
–	
In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly
audited.
– The Company Statement of Financial Position is in agreement with the accounting records.
–	
In our opinion the information given in those parts of the Directors’ report as specified for our review is consistent with the financial
statements and the Directors’ report has been prepared in accordance with the Companies Act 2014.
Corporate Governance
We report, in relation to information given in the Governance and oversight section of the Annual Financial Report on pages 171 to 222
that:
–	
In our opinion, based on the work undertaken during the course of the audit, the information given in the Governance and oversight
section of the Annual Financial Report pursuant to subsections 2(c) and (d) of section 1373 of the Companies Act 2014 is consistent
with the Company’s statutory financial statements in respect of the financial year concerned and such information has been
prepared in accordance with section 1373 of the Companies Act 2014. Based on our knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have not identified any material misstatements in this information.
–	
In our opinion, based on the work undertaken during the course of the audit, the Governance and oversight section of the Annual
Financial Report contains the information required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and groups) Regulations 2017 (as amended); and
–	
In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373(2)
(a), (b), (e) and (f) of the Companies Act 2014 is contained in the Governance and oversight section of the Annual Financial Report.
236  Financial Statements
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we
have not identified material misstatements in those parts of the Directors’ report as specified for our review.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by
Regulation 5(2) to 5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and
Groups) Regulations 2017 (as amended) for the financial year ended 31 December 2019. We have nothing to report in this regard.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion, the
disclosures of Directors’ remuneration and transactions specified by law are not made.
The Listing Rules of Euronext Dublin require us to review six specified elements of disclosures in the report to shareholders by the
Board of Directors’ Remuneration Committee. We have nothing to report in this regard.
Other matters which we are required to address
Following the recommendation of the Board Audit Committee of ., we were appointed at the Annual General
Meeting on 20 June 2013 to audit the financial statements for the financial year ended 31 December 2013. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 7 years, covering the years ending 2013 to
2019.
Following the corporate restructure of AIB Group plc in 2017 which led to the implementation of AIB Group plc, we were appointed on
21 September 2017 to audit the financial statements of AIB Group plc for the financial year ended 31 December 2017 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 3 years,
covering the years ending 2017 to 2019.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Company in
conducting the audit.
Our audit opinion is consistent with the additional report to the Board Audit Committee that we are required to provide in accordance
with ISA (Ireland) 260.
John McCarroll
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2
Dublin
5 March 2020
Notes: An audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this,
and in particular on whether any changes may have occurred to the financial statements since first published. These matters are the
responsibility of the Directors but no control procedures can provide absolute assurance in this area.
Legislation in Ireland governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.
Independent Auditor’s Report
Financial Statements
1 Accounting policies (continued)
The significant accounting policies that the Group applied in the preparation of the financial statements are set out in this section.
(a) Reporting entity
AIB Group plc (‘the parent company’ or ‘the Company’) is a company domiciled in Ireland. The address of the Company’s Registered
Office is Bankcentre, Ballsbridge, Dublin 4, Ireland. AIB Group plc is registered under the Companies Act 2014 as a public limited
company under the company number 594283 and is the holding company of the Group.
The consolidated financial statements for the year ended 31 December 2019 include the financial statements of AIB Group plc and
its subsidiary undertakings, collectively referred to as ‘AIB Group’ or ‘the Group’, where appropriate, including certain special purpose
entities and the Group’s interest in associates using the equity method of accounting and are prepared to the end of the financial period.
The Group is and has been primarily involved in retail and corporate banking.
(b) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Accounting Standards and International
Financial Reporting Standards (collectively “IFRSs”) as adopted by the European Union (“EU”) and applicable for the financial year
ended 31 December 2019. The consolidated financial statements also comply with those parts of the Companies Act 2014 and the
European Union (Credit Institutions: Financial Statements) Regulations 2015 applicable to companies reporting under IFRS, and the
Asset Covered Securities Acts 2001 and 2007. The accounting policies have been consistently applied by Group entities and are
consistent with the previous year, apart from policy adopted as a result of the implementation of IFRS 16 Leases.
(c) Basis of preparation
Functional and presentation currency
The financial statements are presented in euro, which is the functional currency of the parent company and a significant number of its
subsidiaries, rounded to the nearest million.
Basis of measurement
The financial statements have been prepared under the historical cost basis, with the exception of the following assets and liabilities
which are stated at their fair value: derivative financial instruments, financial instruments at fair value through profit or loss, certain
hedged financial assets and financial liabilities and investment securities at FVOCI.
The financial statements comprise the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated and the holding company’s separate statements of financial position, the consolidated and the holding company’s separate
statements of cash flows, and the consolidated and the holding company’s separate statements of changes in equity together with
the related notes. These notes also include financial instrument related disclosures which are required by IFRS 7 and revised IAS 1,
contained in the ‘Financial review’ and the ‘Risk management’ sections of this Annual Financial Report. The relevant information on
those pages is identified as forming an integral part of the audited financial statements.
Use of judgements and estimates
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of certain assets, liabilities, revenues and expenses, and disclosures of contingent assets
and liabilities. The estimates and assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances. Since management’s judgement involves making estimates concerning the likelihood of future
events, the actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected.
The estimates that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the
next year are in the areas of expected credit losses on financial instruments; the recoverability of deferred tax; determination of the fair
value of certain financial assets and financial liabilities; retirement benefit obligations; and provisions for liabilities and commitments.
A description of these judgements and estimates is set out in ‘Critical accounting judgements and estimates’ on pages 273 to 277.
Notes to the consolidated financial statements
246  Financial Statements
1 Accounting policies (continued)
(c) Basis of preparation (continued)
Going concern
The financial statements for the financial year ended 31 December 2019 have been prepared on a going concern basis as the Directors
are satisfied, having considered the risks and uncertainties impacting the Group, that it has the ability to continue in business for the
period of assessment. The period of assessment used by the Directors is twelve months from the date of approval of these annual
financial statements.
First time adoption of new accounting standard/amendments to standards
The following new standard and amendments to standards have been adopted by the Group during the year ended 31 December 2019.
IFRS 16 Leases
The effective date for IFRS 16 Leases was 1 January 2019 and was adopted by the Group on that date. The new standard replaces
IAS 17 Leases.
The Group is applying this standard using the modified retrospective approach. Therefore, the comparative financial information for
2018 is not being restated as allowed in IFRS 16 paragraph C7 and continues to be reported under IAS 17. Accordingly, accounting
policy (n) ‘Leases’ as set out in the Annual Financial Report 2018 applies for comparative information.
The total impact of IFRS 16 over the life of a lease will be neutral on the income statement, however, its implementation will result in a
higher charge in the earlier years following implementation with a lower charge in later years. This impact is not material in the financial
year to 31 December 2019.
Details on the impact of adopting IFRS 16 are set out in note 3 to these financial statements.
Interest Rate Benchmark Reform
Amendments to IFRS 9 Financial Instruments; Amendments to IAS 39 Financial Instruments: Recognition and Measurement; and
Amendments to IFRS 7 Financial Instruments: Disclosures.
In September 2019, the IASB amended some of its requirements for hedge accounting in order to support the provision of useful
financial information by companies during the period of uncertainty arising from the phasing out of interest-rate benchmarks such as
interbank offered rates (IBORs) and their replacement with alternative nearly risk-free interest rates. These amendments allow hedging
relationships affected by the IBOR reform to be accounted for as continuing hedges.
The Group has early adopted these amendments for the financial year to 31 December 2019. The Group will continue to apply the
amendments to IFRS 9 and IAS 39 until the uncertainty arising from interest rate benchmark reform with respect to the timing and
amount of underlying cash flows ends. The Group has assumed that this uncertainty will not end until the Group’s contracts that
reference IBORs are amended or fallback clauses are added to existing contracts.
For further details of Interest Rate Benchmark Reform see page 161.
Definition of Material (Amendments to IAS 1 and IAS 8)
The amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policy, Changes in Accounting Estimates
and Errors which were issued in October 2018 and effective for reporting periods beginning on or after 1 January 2020 with earlier
application permitted, clarify the definition of material as follows:
“Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary
users of general purpose financial statements make on the basis of those financial statements, which provide financial information about
a specific reporting entity”.
The amendments are aimed at improving the understanding of the existing requirements rather than to significantly impact current
materiality judgements. The new definition of material is to be used to assess whether information, either individually or in combination
with other information, is material in the context of the financial statements.
The amendments are not expected to significantly impact on the Group’s interpretation of material.
The Group early adopted these amendments with effect from 1 January 2019.
Other amendments resulting from Improvements to IFRSs which the Group adopted in 2019 did not have a material impact on the
accounting policies, financial position or performance of the Group.
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1 Accounting policies (continued)
(d) Basis of consolidation
Subsidiary undertakings
A subsidiary undertaking is an investee controlled by the Group. The Group controls an investee when it has power over the investee,
is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee. Subsidiaries are consolidated in the Group’s financial statements from the date on which control commences
until the date that control ceases.
The Group reassesses whether it controls a subsidiary when facts and circumstances indicate that there are changes to one or more
elements of control.
Loss of control
If the Group loses control of a subsidiary, the Group:
(i)	
derecognises the assets (including any goodwill) and liabilities of the former subsidiary at their carrying amounts at the date control
is lost;
(ii)	
derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date control is lost (including any
attributable amounts in other comprehensive income);
(iii) recognises the fair value of any consideration received and any distribution of shares of the subsidiary;
(iv) recognises any investment retained in the former subsidiary at its fair value at the date when control is lost; and
(v) recognises any resulting difference of the above items as a gain or loss in the income statement.
The Group subsequently accounts for any investment retained in the former subsidiary in accordance with IFRS 9 Financial Instruments,
or when appropriate, IAS 28 Investments in Associates and Joint Ventures.
Structured entities
A structured entity is an entity designed so that its activities are not governed by way of voting rights. The Group assesses whether it
has control over such an entity by considering factors such as the purpose and design of the entity; the nature of its relationship with the
entity; and the size of its exposure to the variability of returns of the entity.
Business combinations
The Group accounts for the acquisition of businesses using the acquisition method except for those businesses under common control.
Under the acquisition method, the consideration transferred in a business combination is measured at fair value, which is calculated as
the sum of:
– the acquisition date fair value of assets transferred by the Group;
– liabilities incurred by the Group to the former owners of the acquiree; and
–	
the equity interests issued by the Group in exchange for control of the acquiree.
Acquisition related costs are recognised in the income statement as incurred.
Goodwill is measured as the excess of the sum of:
– the fair value of the consideration transferred;
– the amount of any non-controlling interests in the acquiree; and
– the fair value of the acquirer’s previously held equity interest in the acquiree, if any; less
– the net of the acquisition date fair value of the identifiable assets acquired and liabilities assumed.
The Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf of
individuals, trusts, retirement benefit plans and other institutions. These assets, and income arising thereon, are excluded from the
financial statements, as they are not assets of the Group.
Notes to the consolidated financial statements
248  Financial Statements
1 Accounting policies (continued)
(d) Basis of consolidation (continued)
Non-controlling interests
For each business combination, the Group recognises any non-controlling interest in the acquiree either:
– at fair value; or
– at their proportionate share of the acquiree’s identifiable net assets.
For changes in the Group’s interest in a subsidiary that do not result in a loss of control, the Group adjusts the carrying amounts of the
controlling and non-controlling interests to reflect the changes in their relative interests in the subsidiary. The difference between the
change in value of the non-controlling interest and the fair value of the consideration paid or received is recognised directly in equity and
attributed to the equity holders of the parent.
Common control transactions
The Group accounts for the acquisition of businesses and investments in subsidiary undertakings between members of the Group at
carrying value at the date of the transaction unless prohibited by company law or IFRS. This policy also applies to the acquisition of
businesses by the Group of other entities under the common control of the Irish Government. Where the carrying value of the acquired
net assets exceeds the fair value of the consideration paid, the excess is accounted for as a capital contribution (accounting policy (aa)
‘Equity’ – capital contributions). On impairment of the subsidiary in the parent company’s separate financial statements, an amount
equal to the impairment charge net of tax in the income statement is transferred from capital contribution reserves to revenue reserves.
The entire capital contribution is transferred to revenue reserves on final sale of the subsidiary.
For acquisitions under common control, comparative data is not restated. The consolidation of the acquired entity is effective from the
acquisition date with intercompany balances eliminated at a Group level on this date.
Associated undertakings
An associated undertaking is an entity over which the Group has significant influence, but not control, over the entity’s operating and
financial policy decisions. If the Group holds 20% or more of the voting power of an entity, it is presumed that the Group has significant
influence, unless it can be clearly demonstrated that this is not the case.
Investments in associated undertakings are initially recorded at cost and increased (or decreased) each year by the Group’s share
of the post acquisition net income (or loss), and other movements reflected directly in other comprehensive income of the associated
undertaking.
Goodwill arising on the acquisition of an associated undertaking is included in the carrying amount of the investment. When the Group’s
share of losses in an associate has reduced the carrying amount to zero, including any other unsecured receivables, the Group does
not recognise further losses, unless it has incurred obligations to make payments on behalf of the associate.
Where the Group continues to hold more than 20% of the voting power in an investment but ceases to have significant influence,
the investment is no longer accounted for as an associate. On the loss of significant influence, the Group measures the investment at
fair value and recognises any difference between the carrying value and fair value in profit or loss and accounts for the investment in
accordance with IFRS 9 Financial Instruments.
The Group’s share of the results of associated undertakings after tax reflects the Group’s proportionate interest in the associated
undertaking and is based on financial statements made up to a date not earlier than three months before the period end reporting date,
adjusted to conform with the accounting policies of the Group.
Since goodwill that forms part of the carrying amount of the investment in an associate is not recognised separately, it is, therefore,
not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single
asset when there is objective evidence that the investment in an associate may be impaired.
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1 Accounting policies (continued)
(d) Basis of consolidation (continued)
Transactions eliminated on consolidation
Intra-group balances and any unrealised income and expenses arising from intra-group transactions are eliminated on consolidation.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Unrealised gains and losses on transactions with associated undertakings are eliminated to the extent of the Group’s interest in the
investees.
Consistent accounting policies are applied throughout the Group for the purposes of consolidation.
Parent Company financial statements: Investment in subsidiary and associated undertakings
The Company accounts for investments in subsidiary and associated undertakings that are not classified as held for sale at cost less
provisions for impairment. If the investment is classified as held for sale, the Company accounts for it at the lower of its carrying value
and fair value less costs to sell.
The Company reviews its equity investment for impairment at the end of each reporting period if there are indications that impairment
may have occurred.
The testing for possible impairment involves comparing the estimated recoverable amount of an investment with its carrying amount.
Where the recoverable amount is less than the carrying amount, the difference is recognised as an impairment provision in the
Company’s financial statements. The recoverable amount is the higher of fair value less costs to sell and value-in-use (“VIU”).
Dividends from a subsidiary or an associated undertaking are recognised in the income statement when the Company’s right to receive
the dividend is established.
(e) Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using their functional currency, being the
currency of the primary economic environment in which the entity operates.
Transactions and balances
Foreign currency transactions are translated into the respective entity’s functional currency using the exchange rates prevailing at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate prevailing at the
period end. Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-translation at period
end exchange rates of the amortised cost of monetary assets and liabilities denominated in foreign currencies are recognised in the
income statement. Exchange differences on equities and similar non-monetary items held at fair value through profit or loss are reported
as part of the fair value gain or loss. Exchange differences on equities designated at FVOCI, together with exchange differences on a
financial liability designated as a hedge of the net investment in a foreign operation are reported in other comprehensive income.
Foreign operations
The results and financial position of all Group entities that have a functional currency different from the euro are translated into euro as
follows:
–	
assets and liabilities including goodwill and fair value adjustments arising on consolidation of foreign operations are translated at the
closing rate;
–	
income and expenses are translated into euro at the average rates of exchange during the period where these rates approximate to
the foreign exchange rates ruling at the dates of the transactions;
– foreign currency translation differences are recognised in other comprehensive income; and
–	
since 1 January 2004, the Group’s date of transition to IFRS, all such exchange differences are included in the foreign currency
cumulative translation reserve within shareholders’ equity. When a foreign operation is disposed of in full, the relevant amount of this
reserve is transferred to the income statement. When a subsidiary is partly disposed of, the relevant proportion of foreign currency
translation reserve is re-attributed to the non-controlling interest. In the case of a partial disposal, a pro-rata amount of the foreign
currency cumulative translation reserve is transferred to the income statement. This also applies in the case where there has not
been a reduction in the overall percentage holding, i.e. repayment of capital.
Notes to the consolidated financial statements
250  Financial Statements
1 Accounting policies (continued)
(f) Interest income and expense recognition
Interest income and expense is recognised in the income statement using the effective interest method.
Effective interest rate
The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of
the financial instrument to:
– the gross carrying amount of the financial asset; or
– the amortised cost of the financial liability.
The application of the method has the effect of recognising income receivable and expense payable on the instrument evenly in
proportion to the amount outstanding over the period to maturity or repayment. In calculating the effective interest rate for financial
instruments other than credit impaired assets, the Group estimates cash flows (using projections based on its experience of customers’
behaviour) considering all contractual terms of the financial instrument but excluding expected credit losses. The calculation takes into
account all fees, including those for any expected early redemption, and points paid or received between parties to the contract that are
an integral part of the effective interest rate, transaction costs and all other premiums and discounts.
All costs associated with mortgage incentive schemes are included in the effective interest rate calculation. Fees and commissions
payable to third parties in connection with lending arrangements, where these are direct and incremental costs related to the issue of a
financial instrument, are included in interest income as part of the effective interest rate.
Amortised cost and gross carrying amount
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at
initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any
difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
The gross carrying amount of a financial asset is the amortised cost before adjusting for any loss allowance.
Calculation of interest income and interest expense
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the
asset is not credit impaired) or to the amortised cost of the liability.
For financial assets that have become credit impaired subsequent to initial recognition, interest income is calculated by applying the
effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit impaired, the calculation of interest
income reverts to the gross basis.
However, for financial assets that were credit impaired on initial recognition, interest income is calculated by applying the credit adjusted
effective interest rate to the amortised cost of the financial asset. The calculation of interest income does not revert to a gross basis,
even if the credit risk of the asset improves.
When a financial asset is no longer credit impaired or has been repaid in full (i.e. cured without financial loss), the Group presents
previously unrecognised interest income as a reversal of credit impairment/recovery of amounts previously written-off.
Interest income and expense on financial assets and liabilities classified as held for trading or at FVTPL is recognised in ‘other interest
income and similar income’ or ‘interest expense’ in the income statement, as applicable.
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1 Accounting policies (continued)
(f) Interest income and expense recognition (continued)
Presentation
Interest income and expense presented in the consolidated income statement include:
– Interest on financial assets and financial liabilities measured at amortised cost calculated on an effective interest basis;
– Interest on investment debt securities measured at FVOCI calculated on an effective interest basis;
– Interest on financial assets measured at FVTPL;
–	
Net interest income and expense on qualifying hedge derivatives designated as cash flow hedges or fair value hedges which are
recognised in interest income or interest expense; and
– Interest income and funding costs of trading portfolio financial assets.
The Group policy for the recognition of leasing income is set out in accounting policy (n).
(g) Dividend income
Dividends on equity investments measured at FVTPL are recognised in the income statement when the entity's right to receive payment
is established. Dividends on equity investments measured at FVOCI are recognised in the income statement provided that they
represent a return on capital.
(h) Fee and commission income
The measurement and timing of recognition of fee and commission income is based on the core principles of IFRS 15 Revenue from
Contracts with Customers.
The principles in IFRS 15 are applied using the following 5 step model:
– Identify the contract(s) with a customer;
– Identify the performance obligations in the contract;
– Determine the transaction price;
– Allocate the transaction price to the performance obligations in the contract; and
– Recognise revenue when or as the Group satisfies its performance obligations.
Fee and commission income is recognised when the performance obligation in the contract has been performed, ‘point in time’
recognition, or ‘over time’ recognition if the performance obligation is performed over a period of time unless the income has been
included in the effective interest rate calculation.
The Group includes in the transaction price, some or all of an amount of variable consideration estimated only to the extent that it
is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty
associated with the variable consideration is subsequently resolved.
The majority of the Group’s fee and commission income arises from retail banking activities. Loan syndication fees are recognised as
revenue when the syndication has been completed and the Group has retained no part of the loan package for itself or retained a part at
the same effective interest rate as applicable to the other participants.
Foreign exchange income is fee income that is derived from arranging foreign exchange transactions on behalf of customers.
Such income is recognised when the individual performance obligation has been fulfilled.
Portfolio and other management advisory and service fees are recognised based on the applicable service contracts. Asset
management fees relating to investment funds are recognised over time in line with the performance obligation. The same principle is
applied to the recognition of income from wealth management, financial planning and custody services that are continuously provided
over an extended period of time.
Commitment fees together with related direct costs, for loan facilities where drawdown is probable, are deferred and recognised as
an adjustment to the effective interest rate on the loan once drawn. Commitment fees in relation to facilities where drawdown is not
probable are recognised over the term of the commitment on a straight-line basis. Other credit related fees are recognised over time
in line with the performance obligation except arrangement fees where it is likely that the facility will be drawn down, and which are
included in the effective interest rate calculation.
Notes to the consolidated financial statements
252  Financial Statements
1 Accounting policies (continued)
(i) Net trading income
Net trading income comprises gains less losses relating to trading assets and trading liabilities and includes all realised and unrealised
fair value changes. Interest revenue and dividend income on trading assets are shown in ‘interest income’ and ‘dividend income’
respectively.
(j) Employee benefits
Retirement benefit obligations
The Group provides employees with post-retirement benefits mainly in the form of pensions.
The Group provides a number of retirement benefit schemes including defined benefit and defined contribution as well as a hybrid
scheme that has both defined benefit and defined contribution elements. In addition, the Group contributes, according to local law in
the various countries in which it operates, to governmental and other schemes which have the characteristics of defined contribution
schemes. The majority of the defined benefit schemes are funded.
Full actuarial valuations of defined benefit schemes are undertaken every three years and are updated to reflect current conditions at
each year end reporting date.
Scheme assets are measured at fair value determined by using current bid prices, except for insurance policies acquired as part of a
buy in. If the policies are qualifying policies under IAS 19 and if the timing and amount of payments under the policies exactly match
some or all of the benefits payable under the scheme, then the present value of the related obligation is determined and is deemed to
be the fair value of the insurance policies to be included in plan assets.
Scheme liabilities are measured on an actuarial basis by estimating the amount of future benefit that employees have earned for their
service in current and prior periods and discounting that benefit at the market yield on a high quality corporate bond of equivalent term
and currency to the liability. The calculation is performed by a qualified actuary using the projected unit credit method. The difference
between the fair value of the scheme assets and the present value of the defined benefit obligation at the year end reporting date
is recognised in the statement of financial position. Schemes in surplus are shown as assets and schemes in deficit, together with
unfunded schemes, are shown as liabilities. A surplus is only recognised as an asset to the extent that it is recoverable through a
refund from the scheme or through reduced contributions in the future. Actuarial gains and losses are recognised immediately in other
comprehensive income.
The cost of providing defined benefit pension schemes to employees, comprising the net interest on the net defined benefit liability/
(asset), calculated by applying the discount rate to the net defined benefit liability/(asset) at the start of the annual reporting period,
taking into account contributions and benefit payments during the period, is charged to the income statement within personnel
expenses.
Re-measurements of the net defined benefit liability/(asset), comprising actuarial gains and losses and the return on scheme assets
(excluding amounts included in net interest on the net defined benefit liability/(asset)) are recognised in other comprehensive income.
Amounts recognised in other comprehensive income in relation to re-measurements of the net defined benefit liability/(asset) will not be
reclassified to profit or loss in a subsequent period.
In early 2017, the Board reassessed its obligation to fund increases in pensions in payment. The Board confirmed that funding of
increases in pensions in payment is a decision to be made by the Board each year where increases are discretionary. This was based
on actuarial and external legal advice obtained.
The Group recognises the effect of an amendment to a defined benefit scheme when the plan amendment occurs, which is when the
Group introduces or withdraws a defined benefit scheme, or changes the benefits payable under existing defined benefit schemes.
A curtailment is recognised when a significant reduction in the number of employees covered by a defined benefit scheme occurs.
A settlement is a transaction that eliminates all further legal or constructive obligations for part or all of the benefits provided under a
defined benefit scheme. Gains or losses on plan amendments, curtailments and settlements are recognised in the income statement.
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1 Accounting policies (continued)
Retirement benefit obligations (continued)
Changes with regard to benefits payable to retirees which represent a constructive obligation under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets are accounted for as a past service cost. These are recognised in the income statement.
The costs of managing the defined benefit scheme assets are deducted from the return on scheme assets. All costs of running the
defined benefit schemes are recognised in the income statement when they are incurred.
The cost of the Group’s defined contribution schemes is charged to the income statement in the accounting period in which it is incurred.
Any contributions unpaid at the year end reporting date are included as a liability. The Group has no further obligation under these
schemes once these contributions have been paid.
Short term employee benefits
Short term employee benefits, such as salaries and other benefits, are accounted for on an accruals basis over the period during which
employees have provided services. Bonuses are recognised to the extent that the Group has a legal or constructive obligation to its
employees that can be measured reliably. The cost of providing subsidised staff loans is charged within personnel expenses.
Termination benefits
Termination benefits are recognised as an expense at the earlier of when the Group can no longer withdraw the offer of those benefits
and when the Group recognises costs for a restructuring under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which
includes the payment of termination benefits.
For termination benefits payable as a result of an employee’s decision to accept an offer of voluntary redundancy, which is not within the
scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, the Group recognises the expense at the earlier of when the
employee accepts the offer and when a restriction on the Group’s ability to withdraw the offer takes effect.
(k) Income tax, including deferred income tax
Income tax comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to
items recognised in other comprehensive income, in which case it is recognised in other comprehensive income. Income tax relating
to items in equity is recognised directly in equity. However, the income tax consequences of payments on financial instruments that are
classified as equity but treated as liabilities for tax purposes are recognised in profit or loss if those payments are distributions of profits
previously recognised in profit or loss.
Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at the
reporting date and any adjustment to tax payable in respect of previous years.
Deferred income tax is provided, using the balance sheet liability method, on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax is determined using tax rates based on
legislation enacted or substantively enacted at the reporting date and expected to apply when the deferred tax asset is realised or the
deferred tax liability is settled. Deferred income tax assets are recognised when it is probable that future taxable profits will be available
against which the temporary differences will be utilised. The deferred tax asset is reviewed at the end of each reporting period and the
carrying amount will reflect the extent that sufficient taxable profits will be available to allow all of the asset to be recovered.
The tax effects of income tax losses available for carry forward are recognised as an asset to the extent that it is probable that future
taxable profits will be available against which these losses can be utilised.
Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting group and where there is both
the legal right and the intention to settle the current tax assets and liabilities on a net basis or to realise the asset and settle the liability
simultaneously.
Notes to the consolidated financial statements
254  Financial Statements
1 Accounting policies (continued)
(k) Income tax, including deferred income tax (continued)
The principal temporary differences arise from depreciation of property, plant and equipment, revaluation of certain financial assets
and financial liabilities including derivative contracts, provisions for pensions and other post-retirement benefits, and in relation to
acquisitions, on the difference between the fair values of the net assets acquired and their tax base.
Deferred income tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not reverse in
the foreseeable future. In addition, the following temporary differences are not provided for: goodwill, the amortisation of which is not
deductible for tax purposes, and assets and liabilities the initial recognition of which, in a transaction that is not a business combination,
affects neither accounting nor taxable profit. Income tax payable on profits, based on the applicable tax law in each jurisdiction,
is recognised as an expense in the period in which the profits arise.
(l) Financial assets
Recognition and initial measurement
The Group initially recognises financial assets on the trade date, being the date on which the Group commits to purchase the assets.
Loan assets are recognised when cash is advanced to borrowers.
Financial assets measured at amortised cost or at fair value through other comprehensive income (“FVOCI”) are recognised initially at
fair value adjusted for direct and incremental transaction costs. Financial assets measured at fair value through profit or loss (“FVTPL”)
are recognised initially at fair value and transaction costs are taken directly to the income statement.
Derivatives are measured initially at fair value on the date on which the derivative contract is entered into. The best evidence of the
fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless
the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument
(i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets.
Profits or losses are only recognised on initial recognition of derivatives when there are observable current market transactions or
valuation techniques that are based on observable market inputs.
Classification and subsequent measurement
On initial recognition, a financial asset is classified and subsequently measured at amortised cost, FVOCI or FVTPL.
The classification and subsequent measurement of financial assets depend on:
– The Group's business model for managing the asset; and
– The cash flow characteristics of the asset (for assets in a ‘hold-to-collect’ or ‘hold-to-collect-and-sell’ business model).
Based on these factors, the Group classifies its financial assets into one of the following categories:
– Amortised cost
Assets that have not been designated as at FVTPL, and are held within a ‘hold-to-collect’ business model whose objective is to hold
assets to collect contractual cash flows; and whose contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest. The carrying amount of these assets is calculated using the effective interest method and is adjusted on each
measurement date by the expected credit loss allowance for each asset, with movements recognised in profit or loss.
– Fair value through other comprehensive income (“FVOCI”)
Assets that have not been designated as at FVTPL, and are held within a ‘hold-to-collect-and-sell’ business model whose objective
is achieved by both collecting contractual cash flows and selling financial assets; and whose contractual terms give rise on specified
dates to cash flows that are solely payments of principal and interest (“SPPI”). Movements in the carrying amount of these assets are
taken through other comprehensive income (“OCI”), except for the recognition of credit impairment gains or losses, interest revenue or
foreign exchange gains and losses, which are recognised in profit or loss. When a financial asset is derecognised, the cumulative gain
or loss previously recognised in OCI is reclassified from equity to profit or loss other than in the case of equity instruments designated at
FVOCI.
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1 Accounting policies (continued)
(l) Financial Assets (continued)
– Fair value through profit or loss (“FVTPL”)
Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. Gains or losses (excluding interest
income or expense) on such assets are recognised in profit or loss on an ongoing basis.
In addition, the Group may irrevocably designate a financial asset as at FVTPL that otherwise meets the requirements to be measured
at amortised cost or at FVOCI if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
– Embedded derivatives
Certain hybrid contracts may contain both a non-derivative host and an ‘embedded derivative’. Under IFRS 9, there is no bifurcation
of embedded derivatives from the host financial asset. As a result, such financial assets will generally fail the SPPI test unless the
embedded derivative does not substantially modify the cash flows that would otherwise be required by the contract. Those failing the
SPPI test will be classified and measured at FVTPL.
Business model assessment
The Group makes an assessment of the objective of the business model at a portfolio level, as this reflects how portfolios of assets are
managed to achieve a particular objective, rather than management's intentions for individual assets.
The assessment considers the following:
– The strategy for the portfolio as communicated by management;
– How the performance of the portfolio is evaluated and reported to senior management;
– The risks that impact the performance of the business model, and how those risks are managed;
–	
How managers of the business are compensated (i.e. based on fair value of assets managed or on the contractual cash flows
collected); and
– The frequency, value and timing of sales in prior periods, reasons for those sales, and expectations of future sales activity.
Financial assets that are held for trading or managed within a business model that is evaluated on a fair value basis are measured at
FVTPL because the business objective is neither hold-to-collect contractual cash flows nor hold-to-collect-and-sell contractual cash
flows.
Characteristics of the contractual cash flows
An assessment (‘SPPI test’) is performed on all financial assets at origination that are held within a ‘hold-to-collect’ or ‘hold-to-collect-
and-sell’ business model to determine whether the contractual terms of the financial assets give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal outstanding. For the purposes of this assessment, ‘principal’ is defined
as the fair value of the financial asset at initial recognition. ‘Interest’ is defined as consideration for the time value of money, for the credit
risk associated with the principal amount outstanding, and for other basic lending risks and costs (i.e. liquidity, administrative costs),
and profit margin.
The SPPI test requires an assessment of the contractual terms and conditions to determine whether a financial asset contains any
terms that could modify the timing or amount of contractual cash flows of the asset, to the extent that they could not be described as
solely payments of principal and interest. In making this assessment, the Group considers:
–	
Features that modify the time value of money element of interest (e.g. tenor of the interest rate does not correspond with the
frequency within which it resets);
– Terms providing for prepayment and extension;
– Leverage features;
– Contingent events that could change the amount and timing of cash flows;
– Terms that limit the Group's claim to cash flows from specified assets; and
– Contractually linked instruments.
Contractual terms that introduce exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending
arrangement do not give rise to contractual cash flows that are solely payments of principal and interest on the principal amount
outstanding.
Notes to the consolidated financial statements
256  Financial Statements
1 Accounting policies (continued)
(l) Financial Assets (continued)
Reclassifications
Reclassifications of financial assets to alternative measurement categories, (e.g. from amortised cost to FVOCI), should be very
infrequent, and will only occur when, and only when, the Group changes its business model for managing a specific portfolio of financial
assets.
Investments in equity instruments
Equity instruments are classified and measured at FVTPL with gains and losses reflected in profit or loss.
On initial recognition, the Group may elect to irrevocably designate at FVOCI, an equity instrument that is not held for trading.
This election is made on an instrument-by-instrument basis. When this election is used, fair value gains and losses are recognised in
OCI and are not subsequently reclassified to profit or loss on derecognition of the equity instrument.
(m) Financial liabilities and equity
The Group categorises financial liabilities as at amortised cost or as at fair value through profit or loss.
The Group recognises a financial liability when it becomes party to the contractual provisions of the contract.
Issued financial instruments or their components are classified as liabilities where the substance of the contractual arrangement results
in the Group having a present obligation to either deliver cash or another financial asset to the holder, to exchange financial instruments
on terms that are potentially unfavourable or to satisfy the obligation otherwise than by the exchange of a fixed amount of cash or
another financial asset for a fixed number of equity shares.
Financial liabilities are initially recognised at fair value, being their issue proceeds (fair value of consideration received), net of
transaction costs incurred. Financial liabilities are subsequently measured at amortised cost, with any difference between the proceeds
net of transaction costs and the redemption value recognised in the income statement using the effective interest method.
Where financial liabilities are classified as trading they are also initially recognised at fair value with the related transaction costs taken
directly to the income statement. Gains and losses arising from subsequent changes in fair value are recognised directly in the income
statement within net trading income.
Preference shares which carry a mandatory coupon are classified as financial liabilities. The dividends on these preference shares are
recognised in the income statement as interest expense using the effective interest method.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Any gain or loss on
the extinguishment or re-measurement of a financial liability is recognised in profit or loss.
Issued financial instruments are classified as equity when the Group has no contractual obligation to transfer cash, or other financial
assets or to issue a variable number of its own equity instruments. Incremental costs directly attributable to the issue of equity
instruments are shown as a deduction from the proceeds of issue, net of tax.
(n) Leases
Lessor
Assets leased to customers are classified as finance leases if the lease agreements transfer substantially all the risks and rewards of
ownership, with or without ultimate legal title. When assets are held subject to a finance lease, the present value of the lease payments,
discounted at the rate of interest implicit in the lease, is recognised as a receivable. The difference between the total payments
receivable under the lease and the present value of the receivable is recognised as unearned finance income, which is allocated to
accounting periods under the pre-tax net investment method to reflect a constant periodic rate of return.
Assets leased to customers are classified as operating leases if the lease agreements do not transfer substantially all the risks and
rewards of ownership. The leased assets are included within property, plant and equipment on the statement of financial position
and depreciation is provided on the depreciable amount of these assets on a systematic basis over their estimated useful lives.
Lease income is recognised on a straight-line basis over the period of the lease unless another systematic basis is more appropriate.
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1 Accounting policies (continued)
(n) Leases (continued)
Lessee
Leases are recognised, measured and presented in line with IFRS 16 Leases.
Identifying a lease
The Group assesses whether a contract is, or contains, a lease at inception of the contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This assessment
involves the exercise of judgement about whether it depends on a specified asset, whether the Group obtains substantially all the
economic benefits from the use of that asset, and whether the Group has the right to direct the use of the asset.
This policy is applied to all of its contracts that meet the definition of a lease.
The Group has elected to apply the practical expedient to account for each lease component and any non-lease component as a single
lease component.
Lease term
The lease term comprises the non-cancellable period of the lease contract for which the Group has the right to use an underlying asset
together with:
– periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option; and
– periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option.
Recognition
The Group recognises a right-of-use asset and a lease liability at the commencement date of the contract for all leases except for short
term leases of 12 months or less or leases where the underlying asset is of low value i.e. the value of the underlying asset, when new,
is less than € 5,000/£ 5,000. The commencement date is the date on which a lessor makes an underlying asset available for use by the
Group.
Initial measurement of right-of-use asset
Right-of-use assets are initially measured at cost, which comprises:
– the amount of the initial measurement of the lease liability;
– any lease payments made at or before the commencement date, less any lease incentives;
– any initial direct costs incurred by the Group; and
–	
an estimate of costs to be incurred by the Group in dismantling and removing the underlying assets or restoring the site on which
the assets are located.
The Group provides for dilapidations/restoration costs where it has been identified or planned that it intends on exiting the premises,
and/or where it has completed extensive modifications. The Group recognises asset restoration obligations mainly in relation to leased
head office locations and branches and any other space which would need to be restored to their previous condition when the lease
ends. Asset restoration obligations are capitalised as part of the cost of right-of-use assets and depreciated over the asset’s estimated
useful life on a straight-line basis.
Subsequent measurement of right-of-use asset
After the commencement date, a right-of-use asset is measured at cost less any accumulated depreciation and any accumulated
impairment losses and adjusted for any re-measurement of the lease liability. The Group applies IAS 36 Impairment of Assets as set out
in the Group’s accounting policy (x) ‘Impairment of property, plant and equipment, goodwill and intangible assets’ to determine whether
the right-of-use asset is impaired and to account for any impairment loss identified.
The Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-
use asset and the end of the lease term on a straight-line basis. When determining the relevant time period to calculate depreciation,
the Group uses the lease term as determined in the initial recognition calculation.
Notes to the consolidated financial statements
258  Financial Statements
1 Accounting policies (continued)
(n) Leases (continued)
Initial measurement of lease liability
The lease liability is initially measured at the present value of the lease payments that are payable over the lease term, discounted using
the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the
Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
– fixed payments, including in-substance fixed payments;
– variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
– amounts expected to be payable by the Group under a residual value guarantee;
– the exercise price of a purchase option if the Group is reasonably certain to exercise;
– lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and
– payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.
Lease payments exclude variable elements which are dependent on external factors, e.g. payments that are based on transaction
volume/usage. Variable lease payments that are not included in the initial measurement of the lease liability are recognised directly in
the income statement in the period in which the event or condition that triggers these payments occurs.
VAT payments are not included in the calculation of the lease liability. These are expensed to the income statement when incurred and
are included in ‘Operating expenses’ (note 13) within ‘General and administrative expenses’.
Where a lease agreement contains a clause to restore the asset to a specified condition i.e. restoration/dilapidation costs, the Group
recognises a provision for restoration costs under IAS 37 in its statement of financial position under ‘Provisions for liabilities and
commitments’.
Subsequent measurement of lease liability
After the commencement date, the Group measures the lease liability by:
– increasing the carrying amount to reflect interest on the lease liability;
– reducing the carrying amount to reflect lease payments made; and
– re-measuring the carrying amount to reflect any reassessment or lease modifications.
The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there is a change in future
lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be
payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or
termination option.
When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset,
or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to Nil.
Lease modifications
Lease modifications arise from changes to the underlying contract between the Group and the lessor. The accounting for the
modification is dependent on whether the modification is considered a separate lease or not.
A lease modification is accounted for as a separate lease if both the modification increases the scope of the lease by adding the right to
use one or more underlying assets and the consideration for the lease increases by an amount commensurate with the standalone price
for the increase in scope. If both criteria are met, the Group adopts the accounting policy on the initial recognition and measurement of
lease liabilities and right-of-use assets.
If a lease modification fails the test above or the modification is of any other type (e.g. a decrease in scope from the original contract),
the Group must modify the initially recognised components of the lease contract.
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1 Accounting policies (continued)
(n) Leases (continued)
The accounting treatment required for lease modifications that are not accounted for as separate leases is as follows:
Decrease in scope:
(a) Re-measure lease liability using revised discount rate*;
(b) Decrease right-of-use asset by its relative scope compared to the original lease; and
(c) Difference between (a) and (b) recognised as a gain or loss in the income statement in ‘Profit on disposal of leases’.
All other lease modifications:
(a) Re-measure lease liability using the revised discount rate*; and
(b) Re-measure right-of-use asset by same amount.
*
The interest rate implicit in the lease for the remainder of the lease term is used. If this cannot be readily determined, the incremental borrowing rate at the
effective date of the modification is used.
Sublease accounting
Where the Group sub-leases an asset (intermediate lessor) which it has leased from another lessor (the ‘head lessor’ who ultimately
owns the asset from a legal perspective), the Group, assesses whether the sub-lease is a finance or operating lease in the context of
the right-of-use asset being leased, not the actual underlying asset.
Statement of financial position
The Group presents right-of-use assets in ‘Property, plant and equipment’ and lease liabilities as a separate line item in the statement of
financial position.
Practical expedients
The Group has elected to apply the practical expedient not to recognise right-of-use assets and lease liabilities for short term leases
i.e. leases that have a lease term of 12 months or less and for leases of low-value assets (i.e. leases where the value of the underlying
asset when new is less than € 5,000/£ 5,000). The lease payments associated with these leases are recognised as an expense on
a straight-line basis over the lease term. The election to adopt the recognition exemption for short term leases is made by class of
underlying asset to which the right-of-use relates.
The Group has elected to apply the practical expedient, as allowed by IFRS 16, to apply the Standard to a portfolio of leases with
similar characteristics when it expects that the effects on the financial statements of applying the Standard to the portfolio would not
differ materially from applying this Standard to the individual leases within the portfolio. The Group has applied the portfolio approach
to its leases of motor vehicles and the spaces in which its offsite ATMs are located. On this basis, the Group has made estimates and
assumptions that reflect the size and composition of the portfolio.
Under IAS 17
Until 31 December 2018, under the requirements of IAS 17, the Group’s policy for operating leases for the comparative period for
the year ended 31 December 2018 was as follows: Operating lease rentals payable were recognised as an expense in the income
statement on a straight-line basis over the lease term unless another systematic basis is more appropriate.
(o) Determination of fair value of financial instruments
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to
which the Group has access at that date. The Group considers the impact of non-performance risk when valuing its financial liabilities.
Financial instruments are initially recognised at fair value and, with the exception of financial assets at fair value through profit or loss,
the initial carrying amount is adjusted for direct and incremental transaction costs. In the normal course of business, the fair value on
initial recognition is the transaction price (fair value of consideration given or received). If the Group determines that the fair value at
initial recognition differs from the transaction price and the fair value is determined by a quoted price in an active market for the same
financial instrument, or by a valuation technique which uses only observable market inputs, the difference between the fair value at initial
recognition and the transaction price is recognised as a gain or loss. If the fair value is calculated by a valuation technique that features
significant market inputs that are not observable, the difference between the fair value at initial recognition and the transaction price
is deferred. Subsequently, the difference is recognised in the income statement on an appropriate basis over the life of the financial
instrument, but no later than when the valuation is supported by wholly observable inputs; the transaction matures; or is closed out.
Notes to the consolidated financial statements
260  Financial Statements
1 Accounting policies (continued)
(o) Determination of fair value of financial instruments (continued)
Subsequent to initial recognition, the methods used to determine the fair value of financial instruments include quoted prices in active
markets where those prices are considered to represent actual and regularly occurring market transactions. Where quoted prices are
not available or are unreliable because of market inactivity, fair values are determined using valuation techniques. These valuation
techniques maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The valuation techniques used
incorporate the factors that market participants would take into account in pricing a transaction. Valuation techniques include the use of
recent orderly transactions between market participants, reference to other similar instruments, option pricing models, discounted cash
flow analysis and other valuation techniques commonly used by market participants.
Quoted prices in active markets
Quoted market prices are used where those prices are considered to represent actual and regularly occurring market transactions for
financial instruments in active markets.
Valuations for negotiable instruments such as debt and equity securities are determined using bid prices for asset positions and ask
prices for liability positions.
Where securities are traded on an exchange, the fair value is based on prices from the exchange. The market for debt securities
largely operates on an ‘over the counter’ basis which means that there is not an official clearing or exchange price for these security
instruments. Therefore, market makers and/or investment banks (‘contributors’) publish bid and ask levels which reflect an indicative
price that they are prepared to buy and sell a particular security. The Group’s valuation policy requires that the prices used in
determining the fair value of securities quoted in active markets must be sourced from established market makers and/or investment
banks.
Valuation techniques
In the absence of quoted market prices, and in the case of over-the-counter derivatives, fair value is calculated using valuation
techniques. Fair value may be estimated using quoted market prices for similar instruments, adjusted for differences between the quoted
instrument and the instrument being valued. Where the fair value is calculated using discounted cash flow analysis, the methodology
is to use, to the extent possible, market data that is either directly observable or is implied from instrument prices, such as interest rate
yield curves, equities and commodities prices, credit spreads, option volatilities and currency rates. In addition, the Group considers the
impact of own credit risk and counterparty risk when valuing its derivative liabilities.
The valuation methodology is to calculate the expected cash flows under the terms of each specific contract and then discount these
values back to a present value. The assumptions involved in these valuation techniques include:
–	
The likelihood and expected timing of future cash flows of the instrument. These cash flows are generally governed by the terms of
the instrument, although management judgement may be required when the ability of the counterparty to service the instrument in
accordance with the contractual terms is in doubt. In addition, future cash flows may also be sensitive to the occurrence of future
events, including changes in market rates; and
–	
Selecting an appropriate discount rate for the instrument, based on the interest rate yield curves including the determination of
an appropriate spread for the instrument over the risk-free rate. The spread is adjusted to take into account the specific credit risk
profile of the exposure.
All adjustments in the calculation of the present value of future cash flows are based on factors market participants would take into
account in pricing the financial instrument.
Certain financial instruments (both assets and liabilities) may be valued on the basis of valuation techniques that feature one or more
significant market inputs that are not observable. When applying a valuation technique with unobservable data, estimates are made
to reflect uncertainties in fair values resulting from a lack of market data, for example, as a result of illiquidity in the market. For these
instruments, the fair value measurement is less reliable. Inputs into valuations based on non-observable data are inherently uncertain
because there is little or no current market data available from which to determine the price at which an orderly transaction between
market participants would occur under current market conditions. However, in most cases there is some market data available on which
to base a determination of fair value, for example historical data, and the fair values of most financial instruments will be based on some
market observable inputs even where the non-observable inputs are significant. All unobservable inputs used in valuation techniques
reflect the assumptions market participants would use when fair valuing the financial instrument.
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1 Accounting policies (continued)
(o) Determination of fair value of financial instruments (continued)
The Group tests the outputs of the valuation model to ensure that it reflects current market conditions. The calculation of fair value for
any financial instrument may require adjustment of the quoted price or the valuation technique output to reflect the cost of credit risk and
the liquidity of the market, if market participants would include one, where these are not embedded in underlying valuation techniques or
prices used.
The choice of contributors, the quality of market data used for pricing, and the valuation techniques used are all subject to internal
review and approval procedures.
Transfers between levels of the fair value hierarchy
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
occurred.
(p) Sale and repurchase agreements (including stock borrowing and lending)
Financial assets may be lent or sold subject to a commitment to repurchase them (‘repos’). Such securities are retained on the
statement of financial position when substantially all the risks and rewards of ownership remain with the Group. The liability to the
counterparty is included separately on the statement of financial position. Similarly, when securities are purchased subject to a
commitment to resell (‘reverse repos’), or where the Group borrows securities, but does not acquire the risks and rewards of ownership,
the transactions are treated as collateralised loans, and the securities are not usually included in the statement of financial position.
The difference between the sale and repurchase price is accrued over the life of the agreements using the effective interest method.
Securities lent to counterparties are also retained in the financial statements. The exception to this is where these are sold to third
parties, at which point the obligation to repurchase the securities is recorded as a trading liability at fair value and any subsequent gain
or loss included in trading income.
(q) Derivatives and hedge accounting
Derivatives, such as interest rate swaps, options and forward rate agreements, futures, currency swaps and options, and equity
index options are used for trading purposes while interest rate swaps, currency swaps, cross currency interest rate swaps and credit
derivatives are used for hedging purposes.
The Group maintains trading positions in a variety of financial instruments including derivatives. Trading transactions arise both as a
result of activity generated by customers and from proprietary trading with a view to generating incremental income.
Non-trading derivative transactions comprise transactions held for hedging purposes as part of the Group’s risk management strategy
against assets, liabilities, positions and cash flows.
Derivatives
Derivatives are measured initially at fair value on the date on which the derivative contract is entered into and subsequently
re-measured at fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions,
and from valuation techniques using discounted cash flow models and option pricing models as appropriate. Derivatives are included in
assets when their fair value is positive, and in liabilities when their fair value is negative, unless there is the legal ability and intention to
settle an asset and liability on a net basis.
The best evidence of the fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of the consideration
given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions
in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data
from observable markets.
Profits or losses are only recognised on initial recognition of derivatives when there are observable current market transactions or
valuation techniques that are based on observable market inputs.
Notes to the consolidated financial statements
262  Financial Statements
1 Accounting policies (continued)
(q) Derivatives and hedge accounting (continued)
Hedging
The Group has opted to remain with the IAS 39 hedge accounting requirements until macro hedge accounting is addressed by the IASB
as part of a separate project. This is an accounting policy choice allowed by IFRS 9.
All derivatives are carried at fair value and the accounting treatment of the resulting fair value gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Where derivatives are held for
risk management purposes, and where transactions meet the criteria specified in IAS 39 Financial Instruments: Recognition and
Measurement, the Group designates certain derivatives as either:
– hedges of the fair value of recognised assets or liabilities or firm commitments (‘fair value hedge’); or
–	
hedges of the exposure to variability of cash flows attributable to a recognised asset or liability, or a highly probable forecasted
transaction (‘cash flow hedge’); or
– hedges of a net investment in a foreign operation.
When a financial instrument is designated as a hedge, the Group formally documents the relationship between the hedging instrument
and hedged item as well as its risk management objectives and its strategy for undertaking the various hedging transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values or cash flows of the hedged items.
The Group discontinues hedge accounting when:
a) it is determined that a derivative is not, or has ceased to be, highly effective as a hedge;
b) the derivative expires, or is sold, terminated, or exercised;
c) the hedged item matures or is sold or repaid; or
d) a forecast transaction is no longer deemed highly probable.
To the extent that the changes in the fair value of the hedging derivative differ from changes in the fair value of the hedged risk in the
hedged item; or the cumulative change in the fair value of the hedging derivative differs from the cumulative change in the fair value of
expected future cash flows of the hedged item, ineffectiveness arises. The amount of ineffectiveness, (taking into account the timing of
the expected cash flows, where relevant) provided it is not so great as to disqualify the entire hedge for hedge accounting, is recorded in
the income statement.
In certain circumstances, the Group may decide to cease hedge accounting even though the hedge relationship continues to be highly
effective by no longer designating the financial instrument as a hedge.
Fair value hedge accounting
Changes in fair value of derivatives that qualify and are designated as fair value hedges are recorded in the income statement, together
with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. If the hedge no longer meets the
criteria for hedge accounting, the fair value hedging adjustment cumulatively made to the carrying value of the hedged item is, for items
carried at amortised cost, amortised over the period to maturity of the previously designated hedge relationship using the effective
interest method. For debt securities measured at FVOCI, the fair value adjustment for hedged items is recognised in the income
statement using the effective interest method. If the hedged item is sold or repaid, the unamortised fair value adjustment is recognised
immediately in the income statement.
Cash flow hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is initially recognised
directly in other comprehensive income and included in the cash flow hedging reserve in the statement of changes in equity. The amount
recognised in other comprehensive income is reclassed to profit or loss as a reclassification adjustment in the same period as the
hedged cash flows affect profit or loss, and in the same line item in the statement of comprehensive income. Any ineffective portion of
the gain or loss on the hedging instrument is recognised in the income statement immediately.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain
or loss recognised in other comprehensive income from the time when the hedge was effective remains in equity and is reclassified to
the income statement as a reclassification adjustment as the forecast transaction affects profit or loss. When a forecast transaction is
no longer expected to occur, the cumulative gain or loss that was recognised in other comprehensive income from the period when the
hedge was effective is reclassified to the income statement.
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1 Accounting policies (continued)
(q) Derivatives and hedge accounting (continued)
Net investment hedge
Hedges of net investments in foreign operations, including monetary items that are accounted for as part of the net investment, are
accounted for similarly to cash flow hedges. The effective portion of the gain or loss on the hedging instrument is recognised in other
comprehensive income and the ineffective portion is recognised immediately in the income statement. The cumulative gain or loss
previously recognised in other comprehensive income is recognised in the income statement on the disposal or partial disposal of the
foreign operation. Hedges of net investments may include non-derivative liabilities as well as derivative financial instruments.
Derivatives that do not qualify for hedge accounting
Certain derivative contracts entered into as economic hedges do not qualify for hedge accounting. Changes in the fair value of these
derivative instruments are recognised immediately in the income statement.
(r) Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of (i) the consideration
received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been
recognised in OCI is recognised in profit or loss. Relevant costs incurred with the disposal of a financial asset are deducted in computing
the gain or loss on disposal.
Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not recognised in
profit or loss on derecognition of such securities. However, the amount held in investment securities reserves is transferred to revenue
reserves on derecognition. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the
Group is recognised as a separate asset or liability.
The Group enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all
or substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not
derecognised. Examples of such transactions are securities lending and sale-and-repurchase transactions.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to which it is exposed to changes in the value of the transferred asset.
In certain transactions, the Group retains the obligation to service the transferred financial asset for a fee. The transferred asset is
derecognised if it meets the derecognition criteria. An asset or liability is recognised for the servicing contract if the servicing fee is more
than adequate or is less than adequate for performing the servicing.
The write-off of a financial asset constitutes a derecognition event. Where a financial asset is partially written-off, and the portion written-
off comprises specifically identified cash flows, this will constitute a derecognition event for that part written-off.
(s) Impairment of financial assets
The Group recognises loss allowances for expected credit losses at each balance sheet date for the following financial instruments that
are not measured at FVTPL:
– Financial assets at amortised cost;
– Financial assets at FVOCI (except for equity instruments);
– Lease receivables;
– Financial guarantee contracts issued; and
– Loan commitments issued.
Investments in equity instruments are recognised at fair value, accordingly, expected credit losses are not recognised separately for
equity instruments.
Notes to the consolidated financial statements
264  Financial Statements
1 Accounting policies (continued)
(s) Impairment of financial assets (continued)
ECLs are the weighted average of credit losses. These are an estimate of credit losses over the life of a financial instrument.
When measuring ECLs, the Group takes into account:
– probability-weighted outcomes;
– the time value of money so that ECLs are discounted to the reporting date; and
–	
reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
The amount of ECLs recognised as a loss allowance depends on the extent of credit deterioration since initial recognition. There are two
measurement bases:
–	
12-month ECLs (Stage 1), which applies to all items as long as there is no significant deterioration in credit quality since initial
recognition; and
–	
Lifetime ECLs (Stages 2 and 3), which applies when a significant increase in credit risk has occurred on an individual or collective
basis.
The 12 month ECL is the portion of lifetime expected credit losses that represent the expected credit losses that result from default
events on a financial instrument that are possible within the 12 months after the reporting date. Lifetime ECL is the expected credit
losses that result from all possible default events over the expected life of a financial instrument.
In the case of Stage 2, credit risk on the financial instrument has increased significantly since initial recognition but the instrument is not
considered credit impaired. For a financial instrument in Stage 3, credit risk has increased significantly since initial recognition and the
instrument is considered credit impaired.
Financial assets are allocated to stages dependent on credit quality relative to when the asset was originated.
A financial asset can only originate in either Stage 1 or as purchased or originated credit impaired (“POCI”). The ECL held against an
asset depends on a number of factors, one of which is its stage allocation. Assets allocated to Stage 2 and Stage 3 have lifetime ECLs.
Collateral and other credit enhancements are not considered as part of stage allocation. Collateral is reflected in the Group’s loss given
default models (‘LGD’).
Purchased or originated credit impaired
Purchased or originated credit impaired (“POCI”) financial assets are those that are credit-impaired on initial recognition. The Group
may originate a credit-impaired financial asset following a substantial modification of a distressed financial asset that resulted in
derecognition of the original financial asset.
POCIs are assets originated credit impaired where the difference between the discounted contractual cash flows and the fair value at
origination is greater than or equal to 5%. The Group uses an appropriate discount rate for measuring ECL in the case of POCIs which
is the credit-adjusted EIR. This rate is used to discount the expected cash flows of such assets to fair value on initial recognition.
POCIs remain outside of the normal stage allocation process for the lifetime of the obligation. The ECL for POCIs is always measured
at an amount equal to lifetime expected credit losses. The amount recognised as a loss allowance for these assets is the cumulative
changes in lifetime expected credit losses since the initial recognition of the assets rather than the total amount of lifetime expected
credit losses.
At each reporting date, the Group recognises the amount of the change in lifetime expected credit losses as a credit impairment gain or
loss in the income statement. Favourable changes in lifetime expected credit losses are recognised as a credit impairment gain, even if
the favourable changes exceed the amount previously recognised in profit or loss as a credit impairment loss.

Financial Statements
1 Accounting policies (continued)
(s) Impairment of financial assets (continued)
Modification
From time to time, the Group will modify the original terms of a customer’s loan either as part of the ongoing relationship or arising from
changes in the customer’s circumstances such as when that customer is unable to make the agreed original contractual repayments.
A modification refers to either:
– A change to the previous terms and conditions of a debt contract; or
– A total or partial refinancing of a debt contract.
Modifications may occur for both customers in distress and for those not in distress. Any financial asset that undergoes a change or
renegotiation of cash flows and is not derecognised is a modified financial asset.
When modification does not result in derecognition, the modified assets are treated as the same continuous lending agreement
but requires a modification gain or loss to be taken to profit or loss immediately. The gross carrying amount of the financial asset is
recalculated as the present value of the renegotiated or modified contractual cash flows discounted at the financial asset’s original
effective interest rate. Any costs or fees incurred adjust the carrying amount of the modified financial asset and are amortised over the
remaining term of the modified financial asset.
The stage allocation for modified assets which are not derecognised is by reference to the credit risk at initial recognition of the original,
unmodified contractual terms i.e. the date of initial recognition is not reset.
Where renegotiation of the terms of a financial asset leads to a customer granting equity to the Group in exchange for any loan balance
outstanding, the new instrument is recognised at fair value with any difference to the loan carrying amount recognised in the income
statement.
Derecognition occurs if a modification or restructure is substantial on a qualitative or quantitative basis. Accordingly, certain forborne
assets are derecognised. The modified/restructured asset (derecognised forborne asset (‘DFA’)) is considered a ‘new financial
instrument’ and the date that the new asset is recognised is the date of initial recognition from this point forward. DFAs are allocated to
Stage 1 on origination and follow the normal staging process, thereafter.
If there is evidence of credit impairment at the time of initial recognition of a DFA, and the fair value at recognition is at a discount to the
contractual amount of the obligation, the asset is deemed to be a POCI. POCIs are not allocated to stages but are assigned a lifetime
PD and ECL for the duration of the obligation’s life. Where the modification/restructure of a non-forborne credit obligation results in
derecognition, the new loan is originated in Stage 1 and follows the normal staging process thereafter.
Collateralised financial assets – Repossessions
The ECL calculation for a collateralised financial asset reflects the cash flows that may result from foreclosure, costs for obtaining and
settling the collateral, and whether or not foreclosure is probable.
For loans that are credit impaired, the Group may repossess collateral previously pledged as security in order to achieve an orderly
realisation of the loan. The Group will then offer this repossessed collateral for sale. However, if the Group believes the proceeds of
the sale will comprise only part of the recoverable amount of the loan with the customer remaining liable for any outstanding balance,
the loan continues to be recognised and the repossessed asset is not recognised. However, if the Group believes that the sale proceeds
of the asset will comprise all or substantially all of the recoverable amount of the loan, the loan is derecognised and the acquired asset
is accounted for in accordance with the applicable accounting standard. Any further impairment of the repossessed asset is treated as
an impairment of that asset and not as a credit impairment of the original loan.
Financial assets at FVOCI
The ECL allowance for financial assets measured at FVOCI does not reduce the carrying amount in the statement of financial position
because the carrying amount of these assets is fair value. However, an amount equal to the ECL allowance that would arise if the assets
were measured at amortised cost is recognised in other comprehensive income (‘OCI’) as an accumulated credit impairment amount,
with a corresponding charge to profit or loss. The accumulated loss recognised in OCI is recycled to the profit or loss upon derecognition
of the assets (together with other accumulated gains and losses in OCI).
Notes to the consolidated financial statements
266  Financial Statements
1 Accounting policies (continued)
(s) Impairment of financial assets (continued)
Write-offs and debt forgiveness
The Group reduces the gross carrying amount of a financial asset either partially or fully when there is no reasonable expectation of
recovery.
Where there is no formal debt forgiveness agreed with the customer, the Group may write-off a loan either partially or fully when there
is no reasonable expectation of recovery. This is considered a non-contracted write-off. In this case, the borrower remains fully liable for
the credit obligation and is not advised of the write-off.
Once a financial asset is written-off either partially or fully, the amount written-off cannot subsequently be recognised on the balance
sheet. It is only when cash is received in relation to the amount written-off that income is recognised in the income statement as a
‘recovery of bad debt previously written-off’.
Debt forgiveness arises where there is a formal contract agreed with the customer for the write-off of a loan.
(t) Collateral and netting
The Group enters into master netting agreements with counterparties, to ensure that if an event of default occurs, all amounts
outstanding with those counterparties will be settled on a net basis.
Collateral
The Group obtains collateral in respect of customer advances where this is considered appropriate. The collateral normally takes the
form of a lien over the customer’s assets and gives the Group a claim on these assets for both existing and future customer liabilities.
The collateral is, in general, not recorded on the statement of financial position.
The Group also receives collateral in the form of cash or securities in respect of other credit instruments, such as stock borrowing
contracts and derivative contracts in order to reduce credit risk. Collateral received in the form of securities is not recorded on
the statement of financial position. Collateral received in the form of cash is recorded on the statement of financial position with a
corresponding liability. Therefore, in the case of cash collateral, these amounts are assigned to deposits received from banks or other
counterparties. Any interest payable or receivable arising is recorded as interest expense or interest income respectively.
In certain circumstances, the Group will pledge collateral in respect of its own liabilities or borrowings. Collateral pledged in the form
of securities or loans and advances continues to be recorded on the statement of financial position. Collateral paid away in the form
of cash is recorded in loans and advances to banks or customers. Any interest payable or receivable arising is recorded as interest
expense or interest income respectively.
Netting
Financial assets and financial liabilities are offset and the net amount reported on the statement of financial position if, and only if, there
is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the
asset and settle the liability simultaneously. This is not generally the case with master netting agreements, therefore, the related assets
and liabilities are presented gross on the statement of financial position.
(u) Financial guarantees and loan commitment contracts
Financial guarantees are given to banks, financial institutions and other bodies on behalf of customers to secure loans, overdrafts and
other banking facilities (‘facility guarantees’) and to other parties in connection with the performance of customers under obligations
relating to contracts, advance payments made by other parties, tenders, retentions and the payment of import duties. In its normal
course of business, . (the principal operating company) issues financial guarantees to other Group entities.
A loan commitment is a contract with a borrower to provide a loan or credit on specified terms at a future date. The contract may or may
not be cancelled unconditionally at any time without notice depending on the terms of the contract.
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1 Accounting policies (continued)
(u) Financial guarantees and loan commitment contracts (continued)
Financial guarantees and loan commitment contracts are initially recognised in the financial statements at fair value on the date that the
guarantee or loan commitment is given. Subsequent to initial recognition, the Group applies the impairment provisions of IFRS 9 and
calculates an ECL allowance for financial guarantees and loan commitment contracts that are not measured at FVTPL.
The origination date for such contracts is the date when the contracts become irrevocable. The credit risk at this date is used to
determine if a significant increase in credit risk has subsequently occurred.
The ECL allowance calculated on financial guarantees and loan commitment contracts is reported within IAS 37 Provisions, Contingent
Liabilities and Contingent Assets.
(v) Property, plant and equipment
Property, plant and equipment are stated at cost, or deemed cost, less accumulated depreciation and provisions for impairment, if any.
Additions and subsequent expenditures are capitalised only to the extent that they enhance the future economic benefits expected to
be derived from the asset. No depreciation is provided on freehold land. Property, plant and equipment are depreciated on a straight
line basis over their estimated useful economic lives. Depreciation is calculated based on the gross carrying amount, less the estimated
residual value at the end of the assets’ economic lives.
The Group uses the following useful lives when calculating depreciation:

The Group depreciates right-of-use assets arising under lease obligations from the commencement date of a lease to the earlier of the
end of the useful life of the right-of-use asset and the end of the lease term on a straight-line basis. When determining the relevant time
period to calculate depreciation, the Group uses the lease term as determined in the initial recognition calculation.
The Group reviews its depreciation rates regularly, at least annually, to take account of any change in circumstances. When deciding on
useful lives and methods, the principal factors that the Group takes into account are the expected rate of technological developments
and expected market requirements for, and the expected pattern of usage of, the assets. When reviewing residual values, the Group
estimates the amount that it would currently obtain for the disposal of the asset, after deducting the estimated cost of disposal if the
asset was already of the age and condition expected at the end of its useful life.
Gains and losses on disposal of property, plant and equipment are included in the income statement. It is Group policy not to revalue its
property, plant and equipment.
(1)
Subject to the maximum remaining life of the lease.
(w) Intangible assets and goodwill
Computer software and other intangible assets
Computer software and other intangible assets are stated at cost, less amortisation on a straight-line basis and provisions for
impairment, if any. The identifiable and directly associated external and internal costs of acquiring and developing software are
capitalised where the software is controlled by the Group, and where it is probable that future economic benefits that exceed its
cost will flow from its use over more than one year. Costs associated with maintaining software are recognised as an expense when
incurred. Capitalised computer software is amortised over 3 to 7 years. Other intangible assets are amortised over the life of the asset.
Computer software and other intangible assets are reviewed for impairment when there is an indication that the asset may be impaired.
Intangible assets not yet available for use are reviewed for impairment on an annual basis.
Notes to the consolidated financial statements
268  Financial Statements
1 Accounting policies (continued)
(w) Intangible assets and goodwill (continued)
Acquired intangible assets
Customer related intangible assets and brands acquired in a business combination are recognised at fair value at acquisition date.
Customer related intangible assets and brands have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line basis to allocate the cost over their estimated useful life (6 years).
Goodwill
Goodwill is not amortised but is tested for impairment in accordance with accounting policy (x) as set out below.
(x) Impairment of property, plant and equipment, goodwill and intangible assets
Annually, or more frequently where events or changes in circumstances dictate, property, plant and equipment, goodwill and intangible
assets are assessed for indications of impairment. If indications are present, these assets are subject to an impairment review. Goodwill
and intangible assets not yet available for use are subject to an annual impairment review.
The impairment review comprises a comparison of the carrying amount of the asset or cash generating unit with its recoverable
amount. Cash-generating units are the lowest level at which management monitors the return on investment in assets. The recoverable
amount is determined as the higher of fair value less costs to sell the asset or cash generating unit and its value in use. Value in
use is calculated by discounting the expected future cash flows obtainable as a result of the asset's continued use, including those
resulting from its ultimate disposal, at a market-based discount rate on a pre-tax basis. For intangible assets not yet available for use,
the impairment review takes into account the cash flows required to bring the asset into use.
The carrying values of property, plant and equipment, goodwill and intangible assets are written down by the amount of any impairment
and this loss is recognised in the income statement in the period in which it occurs. A previously recognised impairment loss may be
reversed in part or in full when there is an indication that the impairment loss may no longer exist and there has been a change in the
estimates used to determine the asset’s recoverable amount. The carrying amount of the asset will only be increased up to the amount
that it would have been had the original impairment not been recognised. Impairment losses on goodwill are not reversed.
(y) Disposal groups and non-current assets held for sale
A non-current asset or a disposal group comprising assets and liabilities is classified as held for sale if it is expected that its carrying
amount will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly
probable within one year. For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell
the asset or disposal group.
On initial classification as held for sale, generally, non-current assets and disposal groups are measured at the lower of previous
carrying amount and fair value less costs to sell with any adjustments taken to the income statement. The same applies to gains and
losses on subsequent re-measurement. However, financial assets within the scope of IFRS 9 continue to be measured in accordance
with that standard.
Impairment losses subsequent to classification of assets as held for sale are recognised in the income statement. Subsequent increases
in fair value, less costs to sell of the assets that have been classified as held for sale are recognised in the income statement to the
extent that the increase is not in excess of any cumulative impairment loss previously recognised in respect of the asset. Assets
classified as held for sale are not depreciated.
Gains and losses on re-measurement and impairment losses subsequent to classification as disposal groups and non-current assets
held for sale are shown within continuing operations in the income statement, unless they qualify as discontinued operations.
Disposal groups and non-current assets held for sale which are not classified as discontinued operations are presented separately from
other assets and liabilities on the statement of financial position. Prior periods are not reclassified.
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Financial Statements
1 Accounting policies (continued)
(z) Non-credit risk provisions
Provisions are recognised for present legal or constructive obligations arising as consequences of past events where it is probable that
a transfer of economic benefit will be necessary to settle the obligation, and it can be reliably estimated.
When the effect is material, provisions are determined by discounting expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the liability. Payments are deducted from
the present value of the provision, and interest at the relevant discount rate is charged annually to interest expense using the effective
interest method. Changes in the present value of the liability as a result of movements in interest rates are included in other income.
The present value of provisions is included in other liabilities.
When a decision is made that a leasehold property will cease to be used in the business, provision is made, where the unavoidable
costs of future obligations relating to the lease are expected to exceed anticipated income. Before the provision is established,
the Group recognises any impairment loss on the assets associated with the lease contract.
Restructuring costs
Where the Group has a formal plan for restructuring a business and has raised valid expectations in the areas affected by the
restructuring by starting to implement the plan or announcing its main features, provision is made for the anticipated cost of
restructuring, including retirement benefits and redundancy costs, when an obligation exists. The provision raised is normally utilised
within twelve months. Future operating costs are not provided for.
Legal claims and other contingencies
Provisions are made for legal claims where the Group has present legal or constructive obligations as a result of past events and it is
more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Contingent liabilities are possible obligations whose existence will be confirmed only by the occurrence of uncertain future events or
present obligations where the transfer of economic benefit is uncertain or cannot be reliably estimated. Contingent liabilities are not
recognised but are disclosed in the notes to the financial statements unless the possibility of the transfer of economic benefit is remote.
A provision is recognised for a constructive obligation where a past event has led to an obligating event. This obligating event has left
the Group with little realistic alternative but to settle the obligation and the Group has created a valid expectation in other parties that it
will discharge the obligation.
(aa) Equity
Issued financial instruments, or their components, are classified as equity where they meet the definition of equity and confer on the
holder a residual interest in the assets of the Group.
On extinguishment of equity instruments, gains or losses arising are recognised net of tax directly in the statement of changes in equity.
Share capital
Share capital represents funds raised by issuing shares in return for cash or other consideration. Share capital comprises ordinary
shares and Subscriber Shares of the entity.
Share premium
When shares are issued at a premium whether for cash or otherwise, the excess of the amount received over the par value of the
shares is transferred to share premium.
Share issue costs
Incremental costs directly attributable to the issue of new shares or options are charged, net of tax, to equity.
Notes to the consolidated financial statements
270  Financial Statements
1 Accounting policies (continued)
(aa) Equity (continued)
Dividends and distributions
Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Company’s shareholders, or in
the case of the interim dividend when they become irrevocable having already been approved for payment by the Board of Directors.
The interim dividend may be cancelled at any time prior to the actual payment.
Dividends declared after the end of the reporting date are disclosed in note 57.
Other equity interests
Other equity interests include
– Additional Tier 1 Perpetual Contingent Temporary Write Down Securities (AT1s) (note 43); and
–	
Warrants to acquire a fixed number of the company shares for a fixed amount of currency are classified as equity instruments and
are recognised on initial recognition at the fair value of consideration received.
Distributions on the AT1s are recognised in equity when approved for payment by the Board of Directors.
Other capital reserves
Other capital reserves represent transfers from retained earnings in accordance with relevant legislation.
Capital contributions
Capital contributions represent the receipt of non-refundable considerations arising from transactions with the Irish Government
(note 53). These contributions comprise both financial and non-financial net assets. The contributions are classified as equity and
may be either distributable or non-distributable. Capital contributions are distributable if the assets received are in the form of cash or
another asset that is readily convertible to cash, otherwise, they are treated as non-distributable. Capital contributions in the statement
of financial position arose during 2011 from (a) EBS transaction and (b) non-refundable receipts from the Irish Government and the
NPRFC.
The capital contribution from the EBS transaction is treated as non-distributable as the related net assets received were largely non-
cash in nature.
Non-refundable receipts of € 6,054 million from the Irish Government and the NPRFC are distributable. These are included in revenue
reserves.
Capital redemption reserves
Capital redemption reserves arose in 2015 from the redemption of 2,140 million 2009 Preference Shares whereby on redemption, the
nominal value of shares redeemed was transferred from the share capital account to the capital redemption reserve account. In addition,
the nominal value of treasury shares cancelled was transferred from the share capital to the capital redemption reserve account.
In 2018, Subscriber Shares were redeemed resulting in a transfer of € 25,000 from revenue reserves to capital redemption reserves.
Revaluation reserves
Revaluation reserves represent the unrealised surplus, net of tax, which arose on revaluation of properties prior to the implementation of
IFRS at 1 January 2004.
Investment securities reserves
Investment securities reserves represent the net unrealised gain or loss, net of tax, arising from the recognition in the statement of
financial position of investment securities at FVOCI.
On disposal of equity securities which had been designated at FVOCI on initial recognition, any amounts held in the investment
securities reserves account is transferred directly to revenue reserves without recycling through profit or loss.
Cash flow hedging reserves
Cash flow hedging reserves represent the net gains or losses, net of tax, on effective cash flow hedging instruments that will be
reclassified to the income statement when the hedged transaction affects profit or loss.
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Financial Statements
1 Accounting policies (continued)
(aa) Equity (continued)
Revenue reserves
Revenue reserves represent retained earnings of the parent company, subsidiaries and associated undertakings together with amounts
transferred from issued share capital, share premium and capital redemption reserves following Irish High Court approval. They also
include amounts arising from the capital reduction which followed the ‘Scheme of Arrangement’ undertaken by the Group in December
2017.
The cumulative surplus/deficit within the defined benefit pension schemes and other appropriate adjustments are included in/offset
against revenue reserves.
Foreign currency cumulative translation reserves
The foreign currency cumulative translation reserves represent the cumulative gains and losses on the retranslation of the Group’s net
investment in foreign operations, at the rate of exchange at the year end reporting date net of the cumulative gain or loss on instruments
designated as net investment hedges.
Merger reserve
The merger reserve arose following the Scheme of Arrangement approved by the Irish High Court in December 2017 where a new
company, AIB Group plc (“the Company”), was introduced as the holding company of AIB Group (note 45).
In the consolidated financial statements of AIB Group plc, the carrying value of the investment in . by AIB Group
plc was eliminated against the share capital and share premium account in . and the merger reserve in AIB Group
plc resulting in a negative merger reserve.
In AIB Group plc’s company financial statements, impairment losses which arise from AIB Group plc’s investment in Allied Irish Banks,
p.l.c. will be charged to the profit or loss account and transferred to the merger reserve in so far as a credit balance remains in the
merger reserve.
Non-controlling interests
Non-controlling interests comprise equity interests which relate to the interests of outside shareholders in consolidated subsidiaries.
They also include other equity instruments such as additional tier 1 securities issued by consolidated subsidiaries.
(ab) Cash and cash equivalents
For the purposes of the cash flow statement, cash comprises cash on hand and demand deposits, and cash equivalents comprise
highly liquid investments that are convertible into cash with an insignificant risk of changes in value and with a maturity of less than three
months from the date of acquisition.
(ac) Segment reporting
An operating segment is a component of the Group that engages in business activities from which it earns revenues and incurs
expenses. The Group has identified reportable segments on the basis of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker (“CODM”) in order to allocate resources to the segment and assess its
performance. Based on this identification, the reportable segments are the operating segments within the Group, the head of each being
a member of the Executive Committee. The Executive Committee is the CODM and it relies primarily on the management accounts to
assess performance of the reportable segments and when making resource allocation decisions.
Transactions between operating segments are on normal commercial terms and conditions, with internal charges and transfer pricing
adjustments reflected in the performance of each operating segment. Revenue sharing agreements are used to allocate external
customer revenues to an operating segment on a reasonable basis.
Geographical segments provide products and services within a particular economic environment that is subject to risks and rewards
that are different to those components operating in other economic environments. The geographical distribution of profit before taxation
is based primarily on the location of the office recording the transaction. In addition, geographic distribution of loans and related
impairment is also based on the location of the office recording the transaction.
Notes to the consolidated financial statements
272  Financial Statements
1 Accounting policies (continued)
(ad) Prospective accounting changes
The following amendments to IFRS 3 which have been approved by the IASB, but not early adopted by the Group, may impact the
Group’s financial reporting in future periods. However, their impact can only be assessed as a situation arises.
Amendments to IFRS 3 Business Combinations
The amendments to IFRS 3 Business Combinations, which were issued in October 2018, clarify the definition of a business through the
following changes:
–	
To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive
process;
–	
They narrow the definitions of a business and outputs by focusing on goods and services provided to customers and by removing
the reference to an ability to reduce costs.
Effective date: Business combinations where the acquisition date is on or after annual reporting periods beginning on or after
1 January 2020.

Financial Statements
2 Critical accounting judgements and estimates
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of certain assets, liabilities, revenues and expenses, and disclosures of contingent assets
and liabilities. The estimates and assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances. Since management judgement involves making estimates concerning the likelihood of future
events, the actual results could differ from those estimates. The accounting policies that are deemed critical to the Group’s results and
financial position, in terms of the materiality of the items to which the policy is applied and the estimates that have a significant impact
on the financial statements are set out in this section. In addition, estimates with a significant risk of material adjustment in the next year
are also discussed.
Significant judgements
The significant judgements made by the Group in applying its accounting policies are set out below. The application of these judgements
also necessarily involves estimations, apart from that relating to retirement benefit obligations, which are discussed separately.
– Deferred taxation;
– Impairment of financial assets;
– Retirement benefit obligations;
– Provisions for liabilities and commitments; and
– Determination of fair value of financial instruments.
Deferred taxation
The Group’s accounting policy for deferred tax is set out in accounting policy (k) in note 1. Details of the Group’s deferred tax assets and
liabilities are set out in note 33.
A key judgement in relation to the recoverability of deferred tax assets is that it is probable that there will be sufficient future taxable
profits against which the losses can be used.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable (defined for this purpose as more likely than
not) that there will be sufficient future taxable profits against which the losses can be used. For a company with a history of recent
losses, there must be convincing other evidence to underpin this assessment.
The recognition of the deferred tax assets relies on the assessment of future profitability and the sufficiency of those profits to absorb
losses carried forward. It requires significant judgements to be made about the projection of long term future profitability because of the
period over which recovery extends.
In assessing the future profitability of the Group, the Board has considered a range of positive and negative evidence for this purpose.
Among this evidence, the principal positive factors include:
– AIB as a Pillar Bank, with a strong Irish franchise;
– the absence of any expiry dates for Irish and UK tax losses;
–	
the turnaround evident in the financial performance over the past number of years and the continuing growth in the Irish economy
since 2014;
– external forecasts for Ireland which indicate continued economic growth through the period of the medium–term financial plans;
–	
the introduction of the bank resolution framework under the BRRD and the establishment in 2017 of AIB Group plc as the new
holding company of the Group provides greater confidence in relation to the future viability of . (as the
principal operating bank subsidiary) as there are now effective tools in place that should facilitate its recapitalisation in a future crisis;
and
– the non-enduring nature of the loan impairments at levels which resulted in the losses in prior years (2009-2013).
The Board considered negative evidence and the inherent uncertainties in any long term financial assumptions and projections,
including:
– the absolute level of deferred tax assets compared to the Group’s equity;
– the quantum of profits required to be earned and the extended period over which it is projected that the tax losses will be utilised;
–	
the challenge of forecasting over a long period, taking account of the level of competition, market dynamics and resultant margin
and funding pressures;
– the impact of Brexit;
– potential instability in the eurozone and global economies over an extended period; and
–	
taxation changes (including Bank Levy and changes to the UK tax rates and the utilisation of deferred tax assets) and the likelihood
of future developments and their impact on profitability and utilisation.
Notes to the consolidated financial statements
274  Financial Statements
2 Critical accounting judgements and estimates (continued)
Deferred taxation (continued)
Profitability and growth were reassessed in the annual planning exercise covering the period 2020 to 2022 undertaken by the Group in
the second half of 2019. Growth assumptions and profitability levels underpinning the plan have been revised downwards compared to
previous years reflecting the lower for longer interest rate environment in particular, however, these are within current market norms.
Taking account of all relevant factors, and in the absence of any expiry date for tax losses in Ireland, the Group further believes that it is
more likely than not that there will be future profits in the medium term, and beyond, in the relevant Irish Group companies against which
to use the tax losses. In this regard, the Group has carried out an exercise to determine the likely number of years required to utilise
the deferred tax asset under the following scenario. Using the Group’s financial plan 2020 to 2022 as a base and a profit growth rate of
3% from 2022, it was assessed that it will take in excess of 20 years for the deferred tax asset (€ 2.7 billion) to be utilised. Furthermore,
under this scenario, it is expected that 77% of the deferred tax asset will be utilised within 20 years and 51% utilised within 15 years
(2018: 83%). If the growth rate assumption was decreased by 1%, then the utilisation period increases by a further 4 years. The Group’s
analysis of this and other scenarios examined would not alter the basis of recognition or the current carrying value. In 2018, the Group
reported that it expected that it would take less than 20 years for the deferred tax asset to be utilised.
Notwithstanding the absence of any expiry date for tax losses in the UK, the Group has concluded that the recognition of deferred tax
assets in its UK subsidiary be limited to the amount projected to be realised within a time period of 15 years. This is the timescale within
which the Group believes that it can assess the likelihood of its UK profits arising as being more likely than not. The deferred tax asset
for unutilised tax losses in the UK amounts to £ 87 million at 31 December 2019, following a write down of £ 22 million as the expected
profitability level over the 15 years has reduced.
However, for certain other subsidiaries and branches, the Group has also concluded that it is more likely than not that there will be
insufficient profits to support the recognition of deferred tax assets. The amount of recognised deferred tax assets arising from unused
tax losses amounts to € 2,771 million of which € 2,669 million relates to Irish tax losses and € 102 million relates to UK tax losses.
IAS 12 does not permit a company to apply present value discounting to its deferred tax assets or liabilities, regardless of the estimated
timescales over which those assets or liabilities are projected to be realised. The Group’s deferred tax assets are projected to be
realised over a long timescale, benefiting from the absence of any expiry date for Irish or UK tax losses. As a result, the carrying value
of the deferred tax assets on the statement of financial position does not reflect the economic value of those assets.
Impairment of financial assets
The Group’s accounting policy for impairment of financial assets is set out in accounting policy (s) in note 1. The expected credit loss
(‘ECL’) allowance for financial assets at 31 December 2019 represents Management’s best estimate of the expected credit losses on the
various portfolios at the reporting date.
The calculation of the ECL allowance is complex and therefore, an entity must consider large amounts of information in their
determination. This process requires significant use of a number of accounting judgements, estimates and assumptions, some of which,
by their nature, are highly subjective and very sensitive to risk factors such as changes to economic conditions. Changes in the ECL
allowance can materially affect net income.
The most significant judgements applied by the Group in estimating the ECL allowance are as follows:
– determining the criteria for a significant increase in credit risk and for being classified as credit impaired;
– definition of default;
–	
choosing the appropriate models and assumptions for measuring ECL, e.g. PD, LGD and EAD and the parameters to be
included within the models;
–	
determining the life of a financial instrument and therefore, the period over which to measure ECL;
–	
establishing the number and relative weightings for forward looking scenarios for each asset class and ECL, particularly, in
relation to Brexit uncertainty;
– determining post-model adjustments using an appropriate methodology; and
– assessing the impact of forbearance strategies on cash flows and therefore, the ECL allowance for restructured loans.
The management process for the calculation of the ECL allowance is underpinned by independent tiers of review. The ECL allowance is,
in turn, reviewed and approved by the Group Credit Committee on a quarterly basis with final Group levels being approved by the Board
Audit Committee. Further detail on the ECL governance process is set out on page 98.
All the Group’s segments assess and approve their ECL allowance and their adequacy on a quarterly basis. Credit quality and ECL
provisioning are independently monitored by credit and risk management on a regular basis. On an ongoing basis, the various
judgements, estimates and assumptions are reviewed in light of differences between actual and previously calculated expected losses.
These are then recalibrated and refined to reflect current and evolving economic conditions.
The significant accounting judgements noted above and made by Management in estimating the ECL allowance are outlined on pages
97 and 98 in the Risk management section of this report.

Financial Statements
2 Critical accounting judgements and estimates (continued)
Retirement benefit obligations
The Group’s accounting policy for retirement benefit schemes is set out in accounting policy (j) in note 1.
The significant judgement is that a constructive obligation has not been created, notwithstanding the decision by the Group in the
recent past, following an annual process, to fund discretionary increases in pensions in payment.
In 2017, the Board, having taken actuarial and external legal advice, determined that the funding of discretionary increases in pensions
in payment is a decision to be made by the Board annually for the Group’s main Irish schemes. A process, taking account of all relevant
interests and factors has been implemented by the Board. These interests and factors include the advice of the Actuary; the interests
of the members of the scheme; the interests of the employees; the Group’s financial circumstances and ability to pay; the views of the
Trustees; the Group’s commercial interests and any competing obligations to the State.
In early 2017, the Board implemented this process which has continued to date. The Group completed the same process early in 2020
taking account of all relevant factors and decided that funding of discretionary increases to pensions in payment was not appropriate for
2020.
The above process is a formal annual process that is carried out on a standalone basis. Therefore, no constructive obligation is being
created on behalf of scheme members with regard to future funding by the Group of increases in pensions in payment. Accordingly,
the assumption for long term rate of increases in pensions in payment is Nil. This does not reflect the ability of the Trustee to grant
increases at any point in the future when the financial position of the scheme would enable such an increase at that point in time.
Provisions for liabilities and commitments
The Group’s accounting policy for provisions for liabilities and commitments is set out in accounting policy number (z) ‘Non-credit risk
provisions’ in note 1.
The Group recognises liabilities where it has present legal or constructive obligations as a result of past events and it is more likely
than not that these obligations will result in an outflow of resources to settle the obligations and the amount can be reliably estimated.
Details of the Group’s liabilities and commitments are shown in note 40 to the financial statements.
Significant management judgement is involved in this process which, of its nature, may require revisions to earlier judgements and
estimates as matters progress towards resolution, particularly, in establishing provisions and the range of reasonably possible losses.
The recognition and measurement of liabilities, in certain instances, may involve a high degree of uncertainty, and thereby, considerable
time is expended on research in establishing the facts, scenario testing, assessing the probability of the outflow of resources and
estimating the amount of any loss. However, at the earlier stages of provisioning, the amount provided for can be very sensitive to the
assumptions used and there may be a wide range of possible outcomes in particular cases. Accordingly, in such cases, it is often not
practicable to quantify a range of possible outcomes. In addition, it is also not practicable to measure ranges of outcomes in aggregate
in a meaningful way because of the diverse nature of these provisions and the differing fact patterns.
The judgements employed in determining potential losses will change over time and the actual losses may vary significantly.
Determination of fair value of financial instruments
The Group’s accounting policy for the determination of fair value of financial instruments is set out in accounting policy (o) in note 1.
The best evidence of fair value is quoted prices in an active market but in the absence of quoted prices increased reliance is placed on
valuation techniques.
Significant judgement is required in the estimation of fair value in the absence of quoted prices. This judgement includes but is not
limited to: evaluating available market information; determining the cash flows for the instruments; identifying a risk free discount rate
and applying an appropriate credit spread.
Valuation techniques that rely to a greater extent on non-observable data than those based wholly on observable data require a higher
level of subjective management judgement relating to the applicability and functionality of internal valuation models, the significance
of inputs to the valuation of an instrument and the degree of illiquidity in certain markets to calculate a fair value. Financial instruments
which are classified under the fair value hierarchy as level 3 require a higher level of management judgement in their valuation.
Notes to the consolidated financial statements
276  Financial Statements
2 Critical accounting judgements and estimates (continued)
Determination of fair value of financial instruments (continued)
The choice of contributors, the quality of market data used for pricing, and the valuation techniques used are all subject to internal
review and approval procedures. Given the uncertainty and subjective nature of valuing financial instruments at fair value, any change
in these variables could give rise to the financial instruments being carried at a different valuation, with a consequent impact on
shareholders’ equity and, in the case of derivatives, the income statement.
A sensitivity analysis to possible changes in key variables of the fair value of financial instruments classified under the fair value
hierarchy as level 3 is set out in note 51.
Critical accounting estimates
The accounting estimates with a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next
financial year were in relation to:
– ECL allowance;
– Retirement benefit obligations;
– Provisions for liabilities and commitments; and
– Impairment of investments in subsidiaries in the separate financial statements.
ECL allowance
ECL allowances at 31 December 2019 amounted to € 1,238 million (2018: € 2,039 million). As noted above, there are significant
judgements involved in estimating ECL allowance. Certain of these estimates together with estimates which do not involve accounting
judgements may have a significant risk of material adjustment to carrying amounts of assets within the next financial year. In particular,
discounted cash-flows (‘DCFs’) are the most significant input to the ECL calculation for Stage 3 credit impaired obligors where the
gross credit exposure is ≥ € 1 million for Ireland or ≥ £ 500,000 for the UK. Collateral valuations and the estimated time to realisation of
collateral is a key component of the DCF model. The DCF assessment produces a base case ECL which is then adjusted to incorporate
the impact of multiple scenarios on the base ECL. The size of the adjustment must consider all relevant and supportable information,
including but not limited to, historical data analysis, predictive modelling and management judgement.
The macroeconomic variables used in models to calculate ECL allowance are based on assumptions, forecasts and estimates. These
are subject to change as the economic landscape changes. Accordingly, changes in local and international factors could have a material
bearing on the ECL allowance within the next financial year. The Group’s sensitivity to a range of macroeconomic factors under (i) base
forecast; (ii) upside; and (iii) downside scenarios is set out on pages 93 to 95 of the Risk Management section of this report.
Retirement benefit obligations
The Group’s accounting policy for retirement benefit obligations is set out in accounting policy (j) in note 1.
Details of the assumptions adopted by the Group in calculating the schemes’ liabilities are set out in note 34 to the financial statements.
The actuarial valuation of the schemes’ liabilities is dependent upon a number of financial and demographic assumptions which are
inherently uncertain. Changes to those assumptions could materially impact the reported amount for schemes’ liabilities and the
actuarial gains/losses reported in equity. A sensitivity analysis for the principal assumptions used to measure the schemes’ liabilities is
set out in note 34 to the financial statements.
Provisions for liabilities and commitments
Provisions for liabilities and commitments are set out in note 40 to the financial statements and their recognition involves a significant
degree of estimation. The overall provision amounting to € 503 million comprising: € 265 million in respect of tracker mortgage
customers - the ‘06-09 Ts & Cs who never had a tracker’ cohort; € 70 million in respect of potential CBI penalties; € 11 million residual
provision for tracker mortgages in respect of previous settlements and related matters; and a number of separate provisions, the
majority of which are not individually significant. The Group has not disclosed a range of outcomes for such provisions given their
diverse nature and the number of provisions involved.
In relation to the ‘06-09 Ts & Cs who never had a tracker’ cohort, in 2017, following review and analysis of the parameters of the Central
Bank of Ireland’s Tracker Mortgage Examination framework, the Group concluded that a cohort of customers who were never on a
tracker rate would be paid compensation. These customers had the option within the terms and conditions of their loan offer to choose a
prevailing tracker rate at the end of their fixed rate period. However, between October 2008 and December 2013, AIB had withdrawn the
prevailing tracker rate and as such these customers were not provided with this choice. These customers are referred to as the ’06-09
Ts & Cs who never had a tracker’ cohort. AIB paid each of these customers (c. 5,900) compensation of € 1,000 plus € 615 towards
independent advice. The customers also had the option for a 12 month period to avail of the then prevailing tracker rate at the time of the
compensation payment on a go forward basis and the right to appeal through the Independent Appeals process, being an integral part of
the CBI Tracker Mortgage Examination framework.

Financial Statements
2 Critical accounting judgements and estimates (continued)
Provisions for liabilities and commitments (continued)
At 31 December 2018, a provision amounting to € 10 million was held against, what was then considered to be, the practical completion
of the identification of all impacted accounts subject to ‘customer redress and compensation’ and the on going appeals process.
In determining this provision, the Group assessed other possible redress scenarios and concluded that the possibility of a further outflow
of economic resources was remote.
However, following a complaint to the Financial Services and Pensions Ombudsman (“FSPO”) by a customer from the ‘06-09 Ts & Cs
who never had a tracker’ cohort as outlined above, the Group received a preliminary decision in January 2020 which upheld a claim for
further redress due to this impacted customer.
The Group has considered this preliminary decision and recorded a provision of € 265 million based on an initial assessment of the
likelihood that additional redress may be due to all customers in this cohort. The Group is continuing to engage and consider its position
with regard to the impact of this preliminary decision and the methodology applied by the FSPO. There are a number of issues that need
to be resolved. Accordingly, there is a range of possible outcomes, however, the provision represents the Group’s best estimate based
on the available information at this stage.
As detailed in notes 40 and 47, AIB and EBS were advised in 2018 by the CBI of the commencement of investigations as part of an
administrative sanctions procedure in connection with the Tracker Mortgage Examination. In this regard, the Group created a provision
of € 70 million for the impact of potential monetary penalties that are expected to be imposed on the Group by the CBI being its best
estimate based on external developments in the industry at 31 December 2019. This matter is still considered to be at a relatively early
stage, and the amount provided for is subject to uncertainty with a range of outcomes possible with the final outcome being higher or
lower depending on finalisation of all matters associated with the investigation. Accordingly, this is a critical accounting estimate which
could result in a material adjustment in the next financial year but it is difficult to quantify a range of outcomes.
Other than as outlined above, there is no individually significant provision that is expected to result in a material adjustment in the next
financial year.
Impairment of investments in subsidiaries in the separate financial statements
The Group’s accounting policy for the impairment of investments in subsidiaries is set out in accounting policy (d) in note 1 and in note e
to the Company’s financial statements.
Investments in subsidiaries in the separate financial statements of the Company are reviewed for impairment when there are indications
that impairment losses may have occurred. If any such indications exist, the Company undertakes an impairment review by comparing
the carrying value of the investment in the subsidiary with its estimated recoverable amount with any shortfall being reported as
an impairment charge in the Company’s financial statements. The estimated recoverable amount is based on value-in-use (“VIU”)
calculations.
The Company tested its investment in . for impairment as the carrying value was higher than the fair value.
In determining the VIU, the estimated pre-tax cash flow projections in the Company’s financial plan for the period 2020 to 2022 were
used as a base and a growth rate of 3% from 2022 was assumed into perpetuity. These projections were discounted at a risk adjusted
interest rate of 9%. The VIU was calculated at € 9,496 million which resulted in an impairment charge of € 3,444 million.
Testing for impairment inherently involves both significant estimations which involve a high degree of uncertainty (cash flow projections
during the period of the financial plan) and judgements (choice of appropriate discount and growth rates).
Given the uncertainties and the high level of subjectivity involved in the estimation process, it is possible that the outcomes in the next
financial year could differ from the expectations on which Company’s estimates are based resulting in the recognition and measurement
of material different amounts from those estimated in these financial statements.
Details of the VIU calculation and the sensitivity of current estimates to possible changes in key variables are set out in note e.
Notes to the consolidated financial statements
278  Financial Statements
3 Transition to IFRS 16
(a) Summary
On 1 January 2019, the Group implemented the requirements of IFRS 16 Leases, a new accounting standard which replaced IAS 17
Leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between
operating and finance leases. Under IFRS 16, a lessee recognises a right-of-use asset and a lease liability. The right-of-use asset is
treated similarly to other non-financial assets and depreciated accordingly. The lease liability is initially measured at the present value of
the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that rate
cannot be readily determined, the lessee shall use their incremental borrowing rate. Lessor accounting remains largely unchanged and
the distinction between operating and finance leases is retained.
Details of the Group’s accounting policy for lessee accounting are set out in note 1 (n) ‘Leases’ to these financial statements.
The information set out below provides details relevant to understanding the impact of IFRS 16 on the Group’s financial position at
1 January 2019.
(b) Principal impacts of IFRS 16
As permitted by IFRS 16, the Group transitioned to the standard in accordance with the modified retrospective approach, and
accordingly, the information presented for 2018 has not been restated. It remains as previously reported under IAS 17 and related
interpretations. There was no impact on retained earnings arising from the adoption of IFRS 16 on 1 January 2019.
As a lessee
On initial application of IFRS 16 for operating leases, right-of-use assets were generally measured at the amount of the lease liability,
using the Group’s incremental borrowing rate at the time of initial application. The weighted average rate applied was c. 3.0%. For the
measurement of the right-of-use assets at the date of initial application, initial direct costs were not taken into account in accordance
with IFRS 16 C10 (d).
The Group elected to apply the practical expedient that allows a single discount rate to be applied to a portfolio of leases with
reasonably similar characteristics and a similar remaining lease term. The Group applied single discount rates to its leases of motor
vehicles and its leases of ATM locations.
The Group also elected to apply the practical expedient where the lease term ends within 12 months of the date of initial application to
account for such leases as short term leases with the associated lease payments being recognised as an expense for short term leases.
In addition, the Group elected to apply the practical expedient that allows an entity to rely on its assessment of whether leases were
onerous by applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application as
an alternative to performing an impairment review. This resulted in right-of-use assets being reduced by € 3 million on initial application
(note 40).
Contracts that qualified as leases as defined by IFRS 16 related primarily to property, motor vehicles and ATM locations. On initial
application of IFRS 16, the Group recognised assets and liabilities for its leases previously classified as operating leases under IAS 17,
resulting in an increase in total assets under property, plant and equipment and total liabilities at 1 January 2019. On transition to
IFRS 16, the principal impacts were the recognition of right-of-use assets of € 479 million (includes € 12 million for future dilapidation
provisions (note 40)) and lease liabilities of € 465 million. There was no impact to the reported EPS in 2019 following the adoption of
IFRS 16.
Comparative data in these financial statements has been prepared under IAS 17 Leases as allowed in IFRS 16.
As a lessor
The Group was not required to make any adjustment on transition to IFRS 16 for leases where it is a lessor, except for subleases.
At the date of initial application, the Group reassessed subleases that were classified as operating leases under IAS 17 to determine
whether these should be reclassified under IFRS 16. The Group concluded that the subleases in existence require classification as
finance leases under IFRS 16 and as a result € 4 million was recognised as finance leases in ‘Other assets’.
Notes to the consolidated financial statements
280  Financial Statements
4 Segmental information
Segment overview
Following changes to the Group’s operating model in 2019 performance is now managed and reported across Retail Banking,
Corporate, Institutional & Business Banking (“CIB”), AIB UK and Group segments. The allocation of costs by segment has been
amended to reflect the revised operating model. In addition the Group has revised the methodology used to allocate funding and liquidity
income/ charges by segment. Figures for the prior year have been restated on a comparative basis. Segment performance excludes
exceptional items.
Retail Banking
Retail Banking comprises Homes & Consumer, SME and Financial Solutions Group (“FSG”) in a single integrated segment, focused on
meeting the current, emerging and future needs of our personal and SME customers.
•	
Homes & Consumer is responsible for meeting the homes needs of customers in Ireland across the AIB, EBS and Haven brands
and delivering innovative and differentiated products, propositions and services to meet our customers’ everyday banking needs
through an extensive range of physical and digital channels. Our purpose is to achieve a seamless, transparent and simple
customer experience in all of our propositions across current accounts, personal lending, payments and credit cards, deposits,
insurance and wealth to maintain and grow our market leading position.
•	
SME is a leading provider of financial services to micro and small SMEs through our sector-led strategy and local expertise with
an extensive product and proposition offering across a number of channels. Our purpose is to help our customers create and build
sustainable businesses in their communities.
•	
FSG is a standalone dedicated workout unit to which the Group has migrated the management of the majority of its non-performing
exposures (“NPEs”), predominantly consisting of homes, consumer and SME products, with the objective of delivering the Group’s
NPE strategy to reduce NPEs in line with European norms.
Corporate Institutional & Business Banking (“CIB”)
CIB provides institutional, corporate and business banking services to the Group’s larger customers and customers requiring specific
sector or product expertise. CIB’s relationship driven model serves customers through sector specialist teams including: corporate
banking; real estate finance; business banking and energy; climate action and infrastructure. In addition to traditional credit products,
CIB offers customers foreign exchange and interest rate risk management products, cash management products, trade finance,
mezzanine finance, structured and specialist finance, equity investments and corporate finance advisory services, as well as Private
Banking services and advice. CIB also has syndicated and international finance teams based in Dublin and in New York.
AIB UK
AIB UK offers retail and business banking services in two distinct markets, a sector-led corporate and commercial bank supporting
businesses in Great Britain (“Allied Irish Bank (GB)”), and a retail and business bank in Northern Ireland (“AIB (NI)”).
Group
Group comprises wholesale treasury activities and Group control and support functions. As part of the Finance function, treasury
manages the Group’s liquidity and funding positions and provides customer treasury services and economic research. The Group
control and support functions include Business & Customer Services, Risk, Group Internal Audit, Finance, Legal & Corporate
Governance, Human Resources and Corporate Affairs & Strategy.
Segment allocations
The segments’ performance statements include all income and directly related costs, excluding overheads which are managed centrally
and the costs of which are included in the Group segment. Funding and liquidity income/ charges are based on each segment’s funding
requirements and the Group’s funding cost profile, which is informed by wholesale and retail funding costs. Income attributable to capital
is allocated to segments based on each segment’s capital requirement.

Financial Statements
23 Derivative financial instruments
Derivatives are used to service customer requirements, to manage the Group’s interest rate, exchange rate, equity and credit exposures
and for trading purposes. Derivative instruments are contractual agreements whose value is derived from price movements in underlying
assets, interest rates, foreign exchange rates or indices.
Market risk is the exposure to potential loss through holding interest rate, exchange rate and equity positions in the face of absolute and
relative price movements, interest rate volatility, movements in exchange rates and shifts in liquidity. Credit risk is the exposure to loss
should the counterparty to a financial instrument fail to perform in accordance with the terms of the contract.
While notional principal amounts are used to express the volume of derivative transactions, the amounts subject to credit risk are much
lower because derivative contracts typically involve payments based on the net differences between specified prices or rates.
Credit risk in derivative contracts is the risk that the Group’s counterparty in the contract defaults prior to maturity at a time when the
Group has a claim on the counterparty under the contract (i.e. contracts with a positive fair value). The Group would then have to
replace the contract at the current market rate, which may result in a loss. For risk management purposes, consideration is taken of the
fact that not all counterparties to derivative positions are expected to default at the point where the Group is most exposed to them.
The following table presents the notional principal amount of interest rate, exchange rate, equity and credit derivative contracts together
with the positive and negative fair values attaching to those contracts at 31 December 2019 and 2018:
At 31 December 2019, 30% of fair value relates to exposures to banks (2018: 39%).
The Group uses the same credit control and risk management policies in undertaking all off-balance sheet commitments as it does
for on-balance sheet lending including counterparty credit approval, limit setting and monitoring procedures. In addition, derivative
instruments are subject to the market risk policy and control framework as described in the 'Risk management' section of this report.
Notes to the consolidated financial statements
Trading activities
The Group maintains trading positions in a variety of financial instruments including derivatives. These derivative financial instruments
include interest rate, foreign exchange, equity and credit derivatives. Most of these positions arise as a result of activity generated by
corporate customers while the remainder represent trading decisions of the Group’s derivative and foreign exchange traders with a view
to generating incremental income.
All trading activity is conducted within risk limits approved by the Board. Systems are in place which measure risks and profitability
associated with derivative trading positions as market movements occur. Independent risk control units monitor these risks.
The risk that counterparties to derivative contracts might default on their obligations is monitored on an ongoing basis. The level of credit
risk is minimised by dealing with counterparties of good credit standing, by the use of Credit Support Annexes and ISDA Master Netting
Agreements and increased clearing of derivatives through Central Counterparties (CCPs). As the traded instruments are recognised at
market value, any changes in market value directly affect reported income for a given period.
Risk management activities
In addition to meeting customer needs, the Group’s principal objective in holding or transacting derivatives is the management of
interest rate and foreign exchange risks which arise within the banking book through the operations of the Group as outlined below.
Market risk within the banking book is also controlled through limits approved by the Board and monitored by an independent second
line risk function.
The operations of the Group are exposed to interest rate risk arising from the fact that assets and liabilities mature or reprice at different
times or in differing amounts. Derivatives are used to modify the repricing or maturity characteristics of assets and liabilities in a
cost-efficient manner. This flexibility helps the Group to achieve interest rate risk management objectives. Similarly, foreign exchange
derivatives can be used to hedge the Group’s exposure to foreign exchange risk.
The fair values of derivatives fluctuate as the underlying market interest rates or foreign exchange rates change. If the derivatives are
purchased or sold as hedges of statement of financial position items, the change in fair value of the derivatives will generally be offset by
the unrealised depreciation or appreciation of the hedged items.
To achieve its risk management objectives, the Group uses a combination of derivative financial instruments, particularly interest rate
swaps, cross currency interest rate swaps, forward rate agreements, futures, options and currency swaps, as well as other contracts.
The notional principal and fair value amounts for instruments held for risk management purposes entered into by the Group at
31 December 2019 and 2018, are presented within this note.
Financial Statements
23 Derivative financial instruments (continued)
The following table shows the notional principal amount and the fair value of derivative financial instruments analysed by product and
purpose at 31 December 2019 and 2018. A description of how the fair values of derivatives are determined is set out in note 51.
Fair value hedges are entered into to hedge the exposure to changes in the fair value of recognised assets or liabilities arising from
changes in interest rates, primarily, debt securities at FVOCI and fixed rate liabilities. The fair values of financial instruments are set out
in note 51. The net mark to market on fair value hedging derivatives, excluding accrual and risk adjustments at 31 December 2019 is
negative € 138 million (2018: negative € 79 million) and the net mark to market on the related hedged items at 31 December 2019 is
positive € 136 million (2018: positive € 78 million).
Netting financial assets and financial liabilities
Derivative financial instruments are shown on the statement of financial position at their fair value. Those with a positive fair value are
reported as assets and those with a negative fair value are reported as liabilities.
Details on offsetting financial assets and financial liabilities are set out in note 46.
Financial Statements
23 Derivative financial instruments (continued)
Nominal values and average interest rates by residual maturity
At 31 December 2019 and 2018, the Group held the following hedging instruments of interest rate risk in fair value and cash flow
hedges respectively:
This is the average interest rate on the fixed leg of swap agreements where the variable rate on the assets and liabilities in cash flow hedges is being
swapped for a fixed rate.
Notes to the consolidated financial statements
298  Financial Statements
23 Derivative financial instruments (continued)
Fair value hedges of interest rate risk
The tables below set out the amounts relating to items designated as (a) hedging instruments and (b) hedged items in fair value hedges
of interest rate risk together with the related hedge ineffectiveness at 31 December 2019 and 2018:
The classification of loans and advances to banks by geographical area is based primarily on the location of the office recording the transaction.
Loans and advances to banks include cash collateral of € 631 million (2018: € 570 million) placed with derivative counterparties in
relation to net derivative positions and placed with repurchase agreement counterparties. In addition, these include € 4 million relating to
restricted balances held in trust in respect of certain payables which are included in ‘other liabilities’ (note 39).
Under reverse repurchase agreements, the Group accepts collateral that it is permitted to sell or repledge in the absence of default
by the owner of the collateral. At 31 December 2019, the collateral received consisted of non-government securities with a fair value
of € 151 million, none of which had been resold or repledged. These transactions were conducted under terms that are usual and
customary to standard reverse repurchase agreements.
(1)
Undrawn commitments amount to € 104 million and are for less than one year.
Loans and advances to customers include cash collateral amounting to € 18 million (2018: € 79 million) placed with derivative
counterparties.
Under reverse repurchase agreements, the Group has accepted collateral with a fair value of € 86 million that it is permitted to sell or
repledge in the absence of default by the owner of the collateral.
For details of credit quality of loans and advances to customers, including forbearance, refer to the ‘Risk management’ section of this
report.
Amounts receivable under finance leases and hire purchase contracts
The following balances principally comprise of leasing arrangements and hire purchase agreements involving vehicles, plant, machinery
and equipment:
Notes to the consolidated financial statements
304  Financial Statements
26 ECL allowance on financial assets
The following table shows the movements on the ECL allowance on financial assets. Further information is disclosed in the 'Risk
management' section of this report.
Notes to the consolidated financial statements
Financial Statements
27 Investment securities (continued)
The Group has designated its investment in NAMA subordinated bonds as measured at FVOCI since this investment was held for
strategic purposes. Dividends received during the year amounted to € 23 million (2018: € 23 million) (note 7).
All equity investments apart from the NAMA subordinated bonds above are classified and measured at FVTPL.
Credit impairment losses recognised in the income statement at 31 December 2019 amounted to Nil (31 December 2018: Nil).
The following table sets out an analysis of movements in investment securities:
Notes to the consolidated financial statements
312  Financial Statements
30 Property, plant and equipment (continued)
Leased assets
Property
The Group leases property for its offices and retail branch outlets. The property lease portfolio consists of 197 leases, made up of
8 head office locations and 189 branch outlets. Lease terms are negotiated on an individual basis and contain a wide range of different
terms and conditions. Both head office properties and retail branch lease terms are typically for periods of 10 to 20 years. Most of these
leases carry statutory renewal rights, or include an option to renew the lease for an additional period after the end of the contract term.
Where the Group is likely to exercise these options, this has been taken into account in determining the lease liability and likewise,
the right-of-use asset.
The minimum lease terms remaining on the most significant leases range from 7 years to 13 years. The average lease term until a
break clause in the lease arrangements is approximately 10 years with the final contractual remaining terms ranging from 5 years to
8 years.
The most significant lease entered into in 2019 was for Heuston South Quarter in Dublin 8 with a lease term of 14 years.
Other leases
Motor vehicles
The Group leases motor vehicles, mainly for its sales staff throughout the branch network. The average lease term for motor vehicles is
3 years.
ATM offsite locations
These relate to leases for locations to house ATMs held offsite (outside of the branch network), in both the Republic of Ireland and
Northern Ireland.
Lease liabilities
A maturity analysis of lease liabilities is shown in note 37.
Financial Statements
31 Acquisition of subsidiary
The accounting policy for the acquisition of subsidiaries is set out in note 1 (d) to the financial statements in ‘Basis of consolidation’.
On 31 October 2019, Augmentum Limited (‘Augmentum’), of which 75% is owned by AIB and 25% by a non-controlling interest, First
Data Global Services Limited (part of First Data Corporation which is owned by Fiserv Inc.), acquired 96.77% of the equity share capital
and voting rights of Semeral Limited (‘Semeral’), the holding company for Payzone Ireland Limited (‘Payzone’). Total consideration
paid to 31 December 2019 amounted to € 68.9 million (excluding contingent consideration). Accordingly, Semeral is now controlled by
Augmentum which, in turn, is controlled by AIB Group.
In addition to the consideration paid/payable to Semeral shareholders, Semeral issued 407,104 ordinary shares of € 1 each to
Augmentum in October 2019 for a subscription price of € 22 million, the proceeds of which were used to repay long term debt in
Semeral. This transaction was not part of the business combination, however, it was accounted for as an investment in subsidiary
undertakings by Augmentum and consolidated accordingly.
Payzone owns a nationwide branded terminal network that distributes a wide variety of electronic products and services. It distributes
such products and services on behalf of a broad range of clients which include government agencies, local authorities, utility companies
and mobile network operators.
Payzone is the parent company of Feepay Limited (‘Feepay’) acquired in 2017 in which it holds 100% of the equity share capital.
Feepay operates on an online payment platform, under the brands of Easy Payments Plus and MyEasyPay, offering online payment
solutions to schools and sports clubs.
The acquisition of Semeral/Payzone is consistent with the Group’s strategy to make selective investments to evolve its customer service
and product proposition in its core market. It will bring significant fintech capability to AIB and will further strengthen its digital agenda in
a post PSD2/Open Banking economy.
Semeral’s consolidated financial statements are prepared for accounting periods beginning 1 October 2019 and ending 30 September
2020, accordingly, the Group has consolidated its share of results from the date of acquisition, 1 November 2019 to 31 December 2019.
In due course, the financial period of Semeral will be aligned with that of AIB.
For the two months to 31 December 2019, Semeral contributed gross revenue amounting to € 27 million (net revenue € 2 million) and
a profit of Nil million to the Group’s results. If the acquisition had occurred on 1 January 2019, Management estimates that consolidated
gross revenue would have been € 158 million (net revenue € 14 million), and consolidated profit for the year would have been Nil million.
In determining these amounts, Management has assumed that the fair value adjustments, that arose on the date of acquisition would
have been the same if the acquisition had occurred on 1 January 2019.
Semeral/Payzone was reported in the Retail Banking segment for the 2 months to 31 December 2019.
Consideration transferred
Augmentum’s investment to 31 December 2019 amounted to € 68.9 million which was funded by way of long term loans from its two
shareholders at a rate of 7.5% per annum.
Contingent consideration
Deferred consideration amounting to c. € 10 million has been agreed by Augmentum with the selling shareholders of Semeral, subject to
certain conditions. At 31 December 2019, this amount is expected to be paid in full.
Acquisition related costs
The Group incurred acquisition-related costs amounting to € 2 million on legal fees and due diligence costs of which € 0.8 million
was expensed in 2019 (2018: € 1.2 million). These are included in ‘Operating expenses’ (note 13) within ‘General and administrative
expenses’.
Notes to the consolidated financial statements
314  Financial Statements
31 Acquisition of subsidiary (continued)
Identifiable assets acquired and liabilities assumed
The following table summarises the amounts recognised at the acquisition date of assets acquired and liabilities assumed in Semeral/
Payzone:
Note € m
Intangible assets 29 50
Property, plant and equipment 30 2
Other assets 14
Cash/restricted cash 9
Borrowings (23)
Other liabilities (25)
Deferred tax liabilities 33 (5)
Accruals and deferred income (12)
Total identifiable net assets assumed 10
Trade receivables with gross contractual amounts receivable of € 10 million have a fair value of € 10 million. At acquisition date, it was
estimated that all contractual cash flows were expected to be collected.
Measurement of fair values
The acquisition date fair value of the identifiable net assets of Semeral/Payzone acquired amounted to € 10 million and comprised of:
• intangible assets – € 50 million;
• property, plant and equipment and other assets – € 16 million;
• cash – € 9 million;
• borrowings and other liabilities – € 48 million; and
• accruals, deferred income and deferred tax – € 17 million.
Assets less liabilities (other than intangible assets)
The fair value of the acquired net assets on acquisition date, apart from intangible assets, was considered to be their carrying value
since these assets and liabilities were materially short term in nature.
Intangible assets
Intangible assets acquired consisted of (i) customer contracts and customer relationships; and (ii) internally generated software.
In Semeral’s financial statements, these had not been attributed a value apart from certain software. However, as required by IFRS 3
Business Combinations, all identifiable assets acquired and liabilities assumed must be measured at fair value.
(a) Customer contracts and customer relationships (fair value € 37 million)
In order to measure the fair value of customer contracts and customer relationships, the Group used, as a valuation technique,
the income approach given the unique nature the intangible assets acquired. The income approach is a valuation technique used
to convert future amounts to a single present value. The measurement is based on the value indicated by current management
expectations about those future amounts.
Payzone acts as the payments processor for end users on behalf of customers. 70% of Payzone revenue is earned through
customer relationships which are either contracted or with a customer with whom it had a relationship for over 10 years. A further
20% of revenues are with customers that have been with Payzone for over 5 years. Access to the customer relationships was
acquired through the transaction.
The valuation of customer contracts and customer relationships was principally based on the planned EBITDA cash flows as
provided by Payzone management. A customer annual drain rate was then applied, given the nature of the customer, which gave
an average 10 year life to customers acquired. This adjustment was to cover the natural attrition of customers currently in place. In
addition, tax was deducted from the cash flows at the effective tax rate. The net cash flows were discounted at the Group’s weighted
average cost of capital of 8.8%.

Financial Statements
31 Acquisition of subsidiary (continued)
Intangible assets (continued)
(b) Internally generated software (fair value € 13 million)
	
The Group used the ‘relief-from-royalty’ method to value internally generated software. This method considers the discounted
estimated royalty payments that are expected to be avoided as a result of the patents or trademarks being owned. A royalty rate of
15% was assumed which was based on the actual 2019 IT value divided by actual revenues. The royalty rate of 15% was applied to
planned revenue as provided by Payzone management.
Measurement of non-controlling interests
Augmentum, as the immediate parent company of Semeral/Payzone, has measured the existing non-controlling interests on the basis of
their proportionate share in the recognised amounts of Semeral/Payzone’s identifiable net assets (€ 1 million).
. has measured the non-controlling interests in Augmentum on the basis of their proportionate share of the
acquisition date fair value of the identifiable net assets of Augmentum (Nil).
Goodwill arising from the acquisition has been recognised as follows:
€ m
Consideration transferred, including contingent consideration 79
Non-controlling interest, based on their proportionate interest in the
recognised amounts of assets and liabilities of Semeral/Payzone 1
Fair value of identifiable net assets acquired (10)
Goodwill 70
The goodwill is mainly attributable to Payzone’s fintech capability and its substantial payments footprint in Ireland. The Group believes
that the skills and technical talent of Payzone’s work force will complement the Group’s existing relevant workforce and that synergies
will be achieved through the combined talents of both.
The goodwill recognised is not expected to be deductible for tax purposes.
32 Other assets
(2)
Includes items in transit € 75 million and sundry debtors € 67 million (2018: Items in transit € 124 million and sundry debtors € 80 million).
Comments on the basis of recognition of deferred tax assets on unused tax losses are included in note 2 ‘Critical accounting
judgements and estimates’ on pages 273 and 274. Information on the regulatory capital treatment of deferred tax assets is included in
‘Principal risks’ on page 40 to 43.
At 31 December 2019, recognised deferred tax assets on tax losses and other temporary differences, net of deferred tax liabilities,
totalled € 2,557 million (31 December 2018: € 2,595 million). The most significant tax losses arise in the Irish tax jurisdiction and their
utilisation is dependent on future taxable profits.
Temporary differences recognised in other comprehensive income consist of deferred tax on financial assets at FVOCI, cash flow
hedges and actuarial gains/losses on retirement benefit schemes. Temporary differences recognised in the income statement consist
of provisions for expected credit losses on financial instruments, amortised income, assets leased to customers, and assets used in the
course of the business.
Net deferred tax assets at 31 December 2019 of € 2,504 million (31 December 2018: € 2,489 million) are expected to be recovered after
more than 12 months.

Financial Statements
33 Deferred taxation (continued)
For the Group’s principal UK subsidiary, the Group has concluded that the recognition of deferred tax assets be limited to the amount
projected to be realised within a time period of 15 years. This is the timescale within which the Group believes that it can assess the
likelihood of its profits arising as being more likely than not.
For certain other subsidiaries and branches, the Group has concluded that it is more likely than not that there will be insufficient profits
to support full recognition of deferred tax assets.
The Group has not recognised deferred tax assets in respect of: Irish tax on unused tax losses at 31 December 2019 of € 122 million
(31 December 2018: € 122 million); overseas tax (UK and USA) on unused tax losses of € 3,309 million (31 December 2018:
€ 3,015 million); and foreign tax credits for Irish tax purposes of € 13 million (31 December 2018: € 13 million). Of these tax losses
totalling € 3,431 million for which no deferred tax is recognised: € 19 million expires in 2032; € 39 million in 2033; € 26 million in 2034;
and € 5 million in 2035.
The aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates for which
deferred tax liabilities have not been recognised amounted to Nil (31 December 2018: Nil).
Deferred tax recognised directly in equity amounted to Nil (31 December 2018: Nil).
Analysis of income tax relating to other comprehensive income
Notes to the consolidated financial statements
318  Financial Statements
34 Retirement benefits
The Group operates a number of defined contribution and defined benefit schemes for employees. All defined benefit schemes are
closed to future accrual.
Defined contribution schemes
From 1 January 2014, all Group staff accrue future pension benefits on a defined contribution (“DC”) basis with a standard employer
contribution of 10%. An additional matched employer contribution, subject to limits based on age bands of 2%, 5% or 8% is also paid
into the schemes.
The amount included in operating expenses in respect of DC schemes is € 80 million (2018: € 75 million) (note 13).
Defined benefit schemes
All defined benefit schemes operated by the Group closed to future accrual no later than 31 December 2013 and staff transferred to
defined contribution schemes for future pension benefits. The most significant defined benefit schemes operated by the Group are the
AIB Group Irish Pension Scheme (‘the Irish scheme’) and the AIB Group UK Pension Scheme (‘the UK scheme’).
Retirement benefits for the defined benefit schemes are calculated by reference to service and Final Pensionable Salary at
31 December 2013. The Final Pensionable Salary used in the calculation of this benefit for staff is based on their average pensionable
salary in the period between 30 June 2009 and 31 December 2013. This calculation of benefit for each staff member will revalue
between 1 January 2014 and retirement date in line with the statutory requirement to revalue deferred benefits. There is no link to any
future changes in salaries.
In the main Irish Scheme, there are 16,038 members comprising 4,121 pensioners and 11,917 deferred members at 31 December
2019. 7,903 members have benefits accrued from 2007 to 2013 under a hybrid arrangement. In addition, there are 990 members
comprising 120 pensioners and 870 deferred members at 31 December 2019 in EBS Defined Benefit Schemes.
Responsibilities for governance
The Trustees of each Group pension scheme are ultimately responsible for the governance of the schemes.
Risks
Details of the pension risk to which the Group is exposed are set out in the Risk section on page 162 of this report.
Valuations
Independent actuarial valuations for the AIB Group Irish Pension Scheme (‘Irish scheme’) and the AIB Group UK Pension Scheme
(‘UK scheme’) are carried out on a triennial basis by the Schemes’ actuary, Mercer. The most recent valuation of the Irish scheme was
carried out at 30 June 2018 and reported the scheme to be in surplus. No deficit funding is required at this time as the Irish scheme
meets the minimum funding standard. The most recent valuation of the UK scheme was carried out at 31 December 2017. The Group
and the Trustee of the UK scheme have agreed funding payments under a new arrangement agreed in December 2019 which is
described in detail below.
De-risking of the UK scheme
During the second half of 2019, the Group and the Trustee undertook a substantial de-risking of the UK scheme which significantly
impacted the reported IAS 19 surplus of the scheme. The reported IAS 19 surplus of the UK scheme reduced from € 232 million
at 31 December 2018 to € 32 million at 31 December 2019. A transaction entered into involved the acquisition of two insurance
contracts from Legal and General Assurance Society (“LGAS”) using all of the assets of the UK scheme. These insurance contracts
are: a pensioner buy-in contract in respect of the pensioner members and an assured payment policy (“APP”) in respect of deferred
members. The ultimate obligation to pay the members benefits still remains with the scheme.
The pensioner buy-in contract removes financial and demographic risk attaching to the current UK pensioners. This pensioner buy-in
contract is effectively a qualifying insurance contract, and exactly matches the amount and timing of the benefits covered. Accordingly, the
fair value of the pensioner buy-in contract is set equal to the corresponding value of the liabilities, using the same assumptions with the
difference of c. £ 0.2 billion reported in net actuarial losses in retirement benefit schemes in the statement of comprehensive income.
The APP significantly reduces the inflation and interest rate risk attaching to UK deferred members although demographic risks remain.
The APP can (at the UK Trustee’s election) be partially surrendered on an annual basis for the purpose of wholly or partially funding
buy-in of further tranches of deferred members over a defined period of time. This will remove exposure to the risks not covered by the
APP over time. The fair value of the APP is measured as the estimated cost of purchasing the contract on the open market.
The Group agreed with the Scheme Trustee a revised funding arrangement for the UK scheme to support the purchase of the
pensioner buy-in contract and the APP. A contribution of £ 10 million was made in December 2019 and an additional one-off £ 12 million
contribution will also be made in 2020. Under the revised funding arrangement, the Group expects to make annual payments of
£ 18.5 million each year during 2020 to 2023, with a final balancing payment in 2024 which is currently expected to be c. £ 50 million.

Financial Statements
34 Retirement benefits (continued)
Contributions
Total contributions to all defined benefit pension schemes operated by the Group in 2019 amounted to € 43 million (2018: € 72 million).
A contribution of € 12 million was made to the Irish scheme (2018: € 9 million) to fund a discretionary increase in pensions in payment.
Contributions of £ 27 million were made to the UK scheme (2018: £ 19.1 million) as a combination of the pre-existing asset backed
funding plan and the revised funding arrangement described above which was implemented in December 2019.
Total contributions to all defined benefit pension schemes operated by the Group for the year to 31 December 2020 are estimated to be
€ 37 million.
Financial assumptions
The following table summarises the financial assumptions adopted in the preparation of these financial statements in respect of the main
schemes at 31 December 2019 and 2018. The assumptions have been set based upon the advice of the Group’s actuary.
Having taken actuarial and external legal advice, the Board determined that the funding of discretionary increases in pensions in payment is a decision to
be made by the Board annually. Accordingly, the long term rate of increases of pensions in payment is Nil. This does not reflect the ability of the Trustee to
grant increases at any point in the future when the financial position of the scheme would enable such an increase at that point in time.
(2)
The inflation assumption applies to the revaluation of deferred members’ benefits up to their retirement date.
Notes to the consolidated financial statements
320  Financial Statements
34 Retirement benefits (continued)
Funding of increases in pensions in payment for the Irish defined benefit schemes
The Board has determined that the funding of discretionary increases to pensions in payment is a decision to be made by the Board
each year. A process, taking account of all relevant interests and factors has been implemented by the Board. These interests and
factors include: the advice of the Actuary; the interests of the members of the scheme; the interests of the employees; the Group’s
financial circumstances and ability to pay; the views of the Trustees; the Group’s commercial interests and any competing obligations to
the State.
The Group completed this process early in 2020 taking account of all relevant factors and decided that the funding of discretionary
increases was not appropriate for 2020.
In 2019, under this process, the Group agreed to provide a level of funding for discretionary increases in pensions in payment for 2019
for certain schemes. The Trustees of these schemes awarded an increase in the range of 0.5% to 0.6% in respect of pensions eligible
for discretionary pension increases. This resulted in a past service cost of € 12 million in 2019.
As the decision to fund discretionary increases to pensions in payment is an annual process, the Board will go through this process
again in early 2021 for 2021.
Mortality assumptions
The life expectancies underlying the value of the scheme liabilities for the Irish and UK schemes at 31 December 2019 and 2018 are
shown in the following table:
The mortality assumptions for the Irish and UK schemes were updated in 2017 and 2019 respectively, to reflect emerging market
experience. The table shows that a member of the Irish scheme retiring at age 63 on 31 December 2019 is assumed to live on average
for 25.2 years for a male (25.0 years for the UK scheme) and 27.1 years for a female (26.7 years for the UK scheme). There will be
variation between members but these assumptions are expected to be appropriate for all members. The table also shows the life
expectancy for members aged 53 on 31 December 2019 who will retire in ten years. Younger members are expected to live longer
in retirement than those retiring now, reflecting a decrease in mortality rates in future years due to advances in medical science and
improvements in standards of living.
321
Financial Statements
34 Retirement benefits (continued)
Sensitivity analysis for principal assumptions used to measure scheme liabilities
There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial valuation of the pension
schemes. Set out in the table below is a sensitivity analysis of the key assumptions for the Irish scheme and the UK scheme at
31 December 2019.
Note that the changes in assumptions are independent of each other i.e. the effect of the reflected change in the discount rate assumes
that there has been no change in the rate of mortality assumption and vice versa.
Irish schemedefined benefit obligation
UK scheme
defined benefit obligation
Increase Decrease Increase Decrease
Other long term employee benefits
Includes additional benefits which the Group provides to employees who suffer prolonged periods of sickness, subject to the qualifying
terms of the insurer. It provides for the partial replacement of income in event of illness or injury resulting in the employee’s long term
absence from work.
Furthermore, on the death of an employee before their normal retirement date, the Group has in place insurance policies to cover the
additional financial costs to the Group under the terms of the defined benefit/defined contribution schemes.
In 2019, the Group contributed € 9 million (2018: € 9 million) towards insuring these benefits which are included in Operating expenses
(note 13).
Amounts include:
Due to associated undertakings – –
Securities sold under agreements to repurchase mature within six months and are secured by Irish Government bonds, other
marketable securities and eligible assets. These agreements are completed under market standard Global Master Repurchase
Agreements. There were no repurchase agreements outstanding at 31 December 2019 (2018: € 145 million).
Deposits by central banks and banks include cash collateral at 31 December 2019 of € 285 million (2018: € 177 million) received from
derivative counterparties in relation to net derivative positions (note 46) and also from repurchase agreement counterparties.
Financial assets pledged
Financial assets pledged under existing agreements to repurchase, for secured borrowings, and providing access to future funding
facilities with central banks and banks are detailed in the following table:
Securities sold under agreements to repurchase(1)
– 1
Other – non-controlling interests (note 44) 23 –
71,803 67,699
Of which:
Non-interest bearing current accounts 32,544 29,635
Interest bearing deposits, current accounts and short term borrowings 39,259 38,064
Amounts include:
Due to associated undertakings 208 253
(1)
Notes to the consolidated financial statements
326  Financial Statements
37 Lease liabilities (continued)
On 1 January 2019, the Group implemented the requirements of IFRS 16 Leases, a new accounting standard which replaced IAS 17.
Under IFRS 16, the lease liability is initially measured at the present value of the lease payments payable over the lease term,
discounted at a rate based on the cost of funding. Under IAS 17, leases classified as operating leases and were not recognised in the
Group’s statement of financial position. Payments made under operating leases were recognised in profit or loss on a straight-line basis
over the term of the lease. The total of future minimum lease payments under non-cancellable operating leases at 31 December 2018 is
set out in the following table:
In April 2019, AIB Group plc issued US $ 1 billion Fixed-to-Floating Rate Notes maturing on 10 April 2025. The notes bear interest on the
outstanding nominal amount as follows:
– 	
Fixed rate period from (and including) the issue date 10 April 2019 to (but excluding) the optional redemption date 10 April 2024,
at an interest rate of 4.263% per annum payable semi-annually on 10 April and 10 October each year;
– 
Floating rate period from (and including) the optional redemption date to (but excluding) the maturity date, at an interest rate of three
month U.S. dollar LIBOR plus 187.4 bps per annum payable 10 July 2024, 10 October 2024, 10 January 2025 and the maturity date.
In May 2019, AIB Group plc issued € 750 million Senior Unsecured 1.250% Notes maturing on 28 May 2024. The notes bear interest on
the outstanding nominal amount, payable annually in arrears on 28 May each year.
All issuances above by AIB Group plc are eligible to meet the Group’s MREL requirements. These instruments are redeemable for tax or
for regulatory reasons, subject to the permission of the relevant resolution authority.
Provisions utilised – (29) (2) (124) – – (155)
At 31 December 2018 – 65 39 57 25 33 219(4)
(1)
Provisions for dilapidations included in measurement of right-of-use assets (‘ROU’).
(2)
Included in ‘Operating expenses’ (note 13) within ‘General and administrative expenses’.
(3)
Included in ‘Net credit impairment (charge)/writeback’ (note 15), other than a credit of € 5 million (2018: a credit of € 2 million) which is included in
‘Net (loss)/gain on derecognition of financial assets measured at amortised cost’ (note 11).
(4)
Excluding ECLs on loan commitments and financial guarantee contracts, the total provisions for liabilities and commitments expected to be settled within
one year amount to € 380 million (31 December 2018: € 71 million).
Notes to the consolidated financial statements
328  Financial Statements
40 Provisions for liabilities and commitments (continued)
(a) Other provisions
Includes the provisions for customer redress and related matters, other restitution provisions, and miscellaneous provisions.
Tracker Mortgage Examination
The provisions at 31 December 2019 for ‘Customer redress and compensation’, including payments arising on appeals, amounted to
a) € 265 million in respect of tracker mortgage customers - the ‘06-09 who never had a tracker’ cohort; and b) € 6 million (31 December
2018: € 10 million) for previously identified impacted accounts.
Following a complaint to the Financial Services and Pensions Ombudsman (“FSPO”) by a customer from the ‘06-09 Ts & Cs who never
had a tracker’ cohort, the Group received a preliminary decision in January 2020 which upheld a claim for further redress due to this
impacted customer.
The Group has considered this preliminary decision and recorded a provision of € 265 million based on an initial assessment of the
likelihood that additional redress may be due to all customers in this cohort. The Group is continuing to engage and consider its position
with regard to the impact of this preliminary decision and the methodology applied by the FSPO. There are a number of issues that need
to be resolved. For further information see ‘Critical accounting judgements and estimates’ (note 2).
The provision of € 6 million for previously identified impacted accounts reflects the practical conclusion of impacted accounts and the
ongoing appeals process. Provisions amounting to € 181 million were created in the period 2015 to 31 December 2019 (€ 11 million in
the year to 31 December 2019). Over € 175 million of these provisions have now been utilised (€ 15 million in the year to 31 December
2019).
The provision at 31 December 2019 for ‘Other costs’ amounted to € 5 million (31 December 2018: € 5 million). Provisions amounting to
€ 94 million were created in the period 2015 to 31 December 2019 (€ 1 million in the year to 31 December 2019). Over € 89 million of
these provisions have now been utilised (€ 1 million in the year to 31 December 2019).
In March 2018, AIB and EBS were advised by the CBI of the commencement of investigations as part of an administrative sanctions
procedure in connection with the Tracker Mortgage Examination. The investigations relate to alleged breaches of the relevant consumer
protection legislation, principally, regarding inadequate controls or instances where AIB or EBS acted with a lack of transparency,
unfairly or without due skill and care. The investigations are ongoing and AIB and EBS are co-operating with the CBI.
In this regard, the Group created a provision of € 70 million for the impact of potential monetary penalties that is expected to be imposed
on the Group by the CBI being its best estimate at this time. However, this matter is ongoing and the amount provided for is subject
to uncertainty with a range of outcomes possible with the final outcome being higher or lower depending on finalisation of all matters
associated with the investigation.
Further disclosures in relation to the wider impact of Tracker Mortgage Examination are contained in note 47: Memorandum items:
contingent liabilities and commitments, contingent assets in the section ‘Legal Proceedings’.
(b) Onerous contracts
Provisions for onerous contracts at 31 December 2019 amount to € 10 million and include the unavoidable cost of leases that the Group
will exit in the short term.
At 31 December 2018, provisions for onerous contracts amounted to € 65 million. On initial application of IFRS 16 on 1 January 2019,
€ 3 million of this provision was transferred as an impairment provision against the right-of-use assets where the lease term was greater
than 12 months (note 3).
Financial Statements
Dated loan capital outstanding is repayable as follows:
5 years or more 1,299 795
Dated loan capital
The dated loan capital in this section is subordinated in right of payment to senior creditors, including depositors, of the respective
issuing entities. Following the implementation in Ireland of the EU (Bank Recovery and Resolution) Regulations 2015, these notes are
loss absorbing at the point of non-viability.
(a) € 500 million Subordinated Tier 2 Notes due 2029, Callable 2024
On 19 November 2019, AIB Group p.l.c. issued € 500 million Subordinated Tier 2 Notes due 2029, Callable 2024.
These notes mature on 19 November 2029 but may be redeemed in whole, but not in part, at the option of AIB Group p.l.c. on the
optional redemption date on 19 November 2024, subject to the approval of the regulatory authorities, with approval being conditional on
meeting the requirements of the EU Capital Requirements Regulation.
The notes bear interest on the outstanding nominal amount at a fixed rate of 1.875%, payable annually in arrears on 19 November each
year. The interest rate will be reset on 19 November 2024 to Eur 5 year Mid Swap rate plus the initial margin of 215 basis points.
(b) € 750 million Subordinated Tier 2 Notes due 2025, Callable 2020
On 26 November 2015, . issued € 750 million Subordinated Tier 2 Notes due 2025, Callable 2020.
These notes mature on 26 November 2025 but may be redeemed in whole, but not in part, at the option of . on
the optional redemption date on 26 November 2020, subject to the approval of the regulatory authorities, with approval being conditional
on meeting the requirements of the EU Capital Requirements Regulation.
The notes bear interest on the outstanding nominal amount at a fixed rate of 4.125%, payable annually in arrears on 26 November each
year. The interest rate will be reset on 26 November 2020 to Eur 5 year Mid Swap rate plus the initial margin of 395 basis points.
(c) Other dated subordinated loan capital
Following the liability management exercises and the Subordinated Liabilities Order (“SLO”) in 2011, residual balances remained
on the dated loan capital instruments above. The SLO, which was effective from 22 April 2011, changed the terms of all of those
outstanding dated loan capital instruments. The original liabilities were derecognised and new liabilities were recognised, with their
initial measurement based on the fair value at the SLO effective date. The contractual maturity date changed to 2035 as a result of the
SLO, and payment of coupons became optional at the discretion of the Group. The Board of . has considered the
matter and as at the date of this report, the Group’s position is that coupons are not paid on these instruments. These instruments will
amortise to their nominal value in the period to their maturity in 2035.
In November 2018, the Subscriber Shares were cancelled and redeemed at par.
2019
There were no movements in issued share capital during 2019.
Warrants
In 2017, AIB issued warrants to the Minister for Finance to subscribe for 271,166,685 ordinary shares of AIB representing 9.99% of
the issued share capital. The exercise price for the warrants is 200% of the Offer Price of € 4.40 per ordinary share, the Offer Price
being the price in euro per ordinary share which was payable under the IPO. This price may be adjusted in accordance with the terms
of the Warrant Instrument and the warrants will be capable of exercise by the holder of the warrants during the period commencing on
27 June 2018 and ending on 27 June 2027.
In accordance with the terms of the Warrant Agreement, no cash consideration was payable by the Minister to AIB in respect of the
issue of the warrants.
Structure of the Company’s share capital
The following table shows the structure of the Company’s share capital:
331
 1
2
3
4
5
6
Financial Statements
42 Share capital (continued)
Capital resources
The following table shows the Group's capital resources:
AT1 securities (carrying value € 494 million) issued by . in 2015 were classified as ‘other equity interests’ in the
consolidated financial statements of the overall Group both before and after the corporate restructure in 2017.
During 2019, it was determined that these securities should more correctly be classified as ‘non-controlling interests’ in the AIB Group
plc consolidated financial statements since they were issued by a subsidiary of AIB Group plc and are no longer attributable to the
owners of the parent in the Group. This reclassification is considered not to be a material presentation error.
Additional Tier 1 Perpetual Contingent Temporary Write Down Securities
In 2019, AIB Group plc (‘the Company’) issued € 500 million nominal value of Additional Tier 1 Perpetual Contingent Temporary Write
Down Securities (‘AT1s’). The securities, which are accounted for as equity in the statement of financial position, are included in the
Group’s capital base.
Interest on the securities, at a fixed rate of 5.250% per annum, is payable semi-annually in arrears on 9 April and 9 October,
commencing on 9 April 2020. On the first reset date on 9 April 2025, in the event that the securities are not redeemed, interest will
be reset to the relevant 5 year fixed rate plus a margin of 570.2 bps per annum. The interest payment is fully discretionary and
non-cumulative and conditional upon the Company being solvent at the time of payment, having sufficient distributable reserves and not
being required by the regulatory authorities to cancel an interest payment.
The securities are perpetual securities with no fixed redemption date. The Company may, in its sole and full discretion, subject to
regulatory approval, redeem all (but not some only) of the securities on any day falling in the period commencing on (and including)
9 October 2024 and ending on (and including) the first reset date or on any interest payment date thereafter at the prevailing principal
amount together with accrued but unpaid interest. In addition, the securities are redeemable at the option of the Company for certain
regulatory or tax reasons, subject to regulatory approval.
The securities, which do not carry voting rights, rank pari passu with holders of other tier 1 instruments (excluding the Company’s
ordinary shares). They rank ahead of the holders of ordinary share capital of the Company but junior to the claims of senior creditors
and to Tier 2 capital of the Company.
Following the implementation in Ireland of the EU (Bank Recovery and Resolution) Regulations 2015, these securities are loss absorbing at
the point of non-viability.
Furthermore, if the CET1 ratio of the Group at any time falls below 7%, subject to certain conditions, the Company shall write down the
AT1s by the write-down amount and irrevocably cancel any accrued and unpaid interest up to (but excluding) the write-down date. To the
extent permitted, in order to comply with regulatory capital and other requirements, the Company may reinstate any previously written down
amount.
Notes to the consolidated financial statements
332  Financial Statements
44 Non-controlling interests in subsidiaries
2019 2018
€ m € m
At 1 January – –
Transferred from other equity interests – Additional Tier 1 Securities 494 –
Acquisition of subsidiary 1 –
Non-controlling interests share of net profit 37 –
Distributions paid on Additional Tier 1 Securities issued by subsidiary (37) –
At 31 December 495 –
Of which:
Equity interests in subsidiary 1 –
Additional Tier 1 Securities 494 –
Additional Tier T 1 securities (carrying value € 494 million) issued by . in 2015 were classified as ‘other equity
interests’ in the consolidated financial statements of Group both before and after the corporate restructure in 2017 (note 43).
During 2019, it was determined that these securities should more correctly be classified as ‘non-controlling interests’ in the AIB Group
plc consolidated financial statements since they were issued by a subsidiary of AIB Group plc and are no longer attributable to the
owners of the parent in the Group. This reclassification is considered not to be a material presentation error.
(a) Additional Tier 1 Perpetual Contingent Temporary Write-down Securities
In 2015, . issued € 500 million nominal value of Additional Tier 1 Perpetual Contingent Temporary Write-down
Securities (‘AT1s’). The securities, which are accounted for as non-controlling interests in the statement of financial position, are
included in the Group’s capital base.
Interest is payable semi-annually in arrears on 3 June and 3 December at a fixed rate of 7.375% per annum. On the first reset date on
3 December 2020, in the event that the securities are not redeemed, interest will be reset to the relevant 5 year rate plus a margin of
7.339%. The interest payment is fully discretionary and non-cumulative and conditional upon . being solvent at
the time of payment, having sufficient distributable reserves and not being required by the regulatory authorities to cancel an interest
payment.
The securities are perpetual securities with no fixed redemption date. . may, in its sole and full discretion, subject
to regulatory approval, redeem all (but not some only) of the securities on the first call date or on any interest payment date thereafter
at the prevailing principal amount together with accrued but unpaid interest. In addition, the securities are redeemable at the option of
. for certain regulatory or tax reasons.
The securities, which do not carry voting rights, rank pari passu with holders of other tier 1 instruments (excluding Allied Irish Banks,
p.l.c. ordinary shares). They rank ahead of the holders of ordinary share capital of . but junior to the claims of
senior creditors and Tier 2 capital of .
Following the implementation in Ireland of the EU (Bank Recovery and Resolution) Regulations 2015, these securities are loss absorbing at
the point of non-viability.
Furthermore, if the CET1 ratio of . or of the Group at any time falls below 7% (a Trigger Event) and is not in
winding-up, subject to certain conditions AIB will write down the AT1s by the lower of the amount necessary to generate sufficient
common equity tier 1 capital to restore the CET1 ratio to 7% or the amount that would reduce the prevailing principal amount to zero.
To the extent permitted, in order to comply with regulatory capital and other requirements, . may reinstate any
previously written down amount.
(b) Non-controlling interests in subsidiary undertaking
Augmentum Limited with issued share capital of 619,761 ordinary shares of € 1.25 each, is 75% owned by AIB and 25% owned by
First Data Global Services Limited. Augmentum Limited, in turn, holds 96.77% of the equity share capital of Semeral Limited with
non-controlling interests holding the residual (note 31).
Semeral/Payzone place of business: 4 Heather Road, Sandyford Industrial Estate, Dublin 18.
For details, see note 31.
are subject to enforceable master netting arrangements or similar agreements that cover similar financial instruments, irrespective of
whether they are offset in the statement of financial position.
The similar agreements include derivative clearing agreements, global master repurchase agreements and global master securities
lending agreements. Similar financial instruments include derivatives, sales and repurchase agreements, reverse sale and repurchase
agreements, and securities borrowing and lending agreements. Financial instruments such as loans and advances and customer
accounts are not included in the tables below unless they are offset in the statement of financial position.
The Group has a number of ISDA Master Agreements (netting agreements) in place which allow it to net the termination values of
derivative contracts upon the occurrence of an event of default with respect to its counterparties. The enforcement of netting agreements
would potentially reduce the statement of financial position carrying amount of derivative assets and liabilities by € 575 million at
31 December 2019 (2018: € 325 million).
The Group’s sale and repurchase and reverse sale and repurchase transactions and securities borrowing and lending are covered by
netting agreements with terms similar to those of ISDA Master Agreements. Additionally, the Group has agreements in place which may
allow it to net the termination values of cross currency swaps upon the occurrence of an event of default.
The ISDA Master Agreements and similar master netting arrangements do not meet the criteria for offsetting in the statement of financial
position as they create a right of set-off of recognised amounts that become enforceable only following an event of default, insolvency
or bankruptcy of the Group or the counterparties. In addition, the Group and its counterparties do not intend to settle on a net basis or to
realise the assets and settle the liabilities simultaneously.
The Group provides and accepts collateral in the form of cash and marketable securities in respect of the following transactions:
– derivatives
– sale and repurchase agreements
– reverse sale and repurchase agreements
– securities lending and borrowing
Collateral is subject to the standard industry terms of Credit Support Annexes (‘CSAs’), which enable the Group to pledge or sell
securities received during the term of the transaction. The collateral must be returned on the maturity of the transaction. The terms also
give each counterparty the right to terminate the related transactions where the counterparty fails to post collateral. The CSAs in place
provide collateral for derivative contracts. At 31 December 2019, € 643 million (2018: € 609 million) of CSAs are included within financial
assets and € 347 million (2018: € 266 million) of CSAs are included within financial liabilities.
Notes to the consolidated financial statements
334  Financial Statements
46 Offsetting financial assets and financial liabilities (continued)
The following table shows financial assets and financial liabilities subject to offsetting, enforceable master netting arrangements and
similar agreements at 31 December 2019 and 2018:
Financial Statements
47 Memorandum items: contingent liabilities and commitments, and contingent assets
In the normal course of business, the Group is a party to financial instruments with off-balance sheet risk to meet the financing needs of
customers. These instruments involve, to varying degrees, elements of credit risk which are not reflected in the consolidated statement
of financial position. Credit risk is defined as the possibility of sustaining a loss because the other party to a financial instrument fails to
perform in accordance with the terms of the contract.
The Group’s maximum exposure to credit loss under contingent liabilities and commitments to extend credit, in the event of non-
performance by the other party where all counterclaims, collateral or security prove valueless, is represented by the contractual amounts
of those instruments.
The Group uses the same credit control and risk management policies in undertaking off-balance sheet commitments as it does for
‘on-balance sheet lending’.
The following table gives the nominal or contract amounts of contingent liabilities and commitments:

Contingent liabilities are off-balance sheet products and include guarantees, standby letters of credit and other contingent liability products such as
performance bonds.
(2)

A commitment is an off-balance sheet product where there is an agreement to provide an undrawn credit facility. The contract may or may not be
cancelled unconditionally at any time without notice depending on the terms of the contract.
(3)
An original maturity of up to and including 1 year or which may be cancelled at any time without notice.
(4)
An original maturity of more than 1 year.
For details of the internal credit ratings and geographic concentration of contingent liabilities and commitments, see pages 120 and 129
in the ‘Risk management’ section of this report.
Provisions for ECLs on loan commitments and financial guarantee contracts are set out in note 40.
Notes to the consolidated financial statements
338  Financial Statements
47 Memorandum items: contingent liabilities and commitments, and contingent assets (continued)
Legal proceedings
The Group, in the course of its business, is frequently involved in litigation cases. However, it is not, nor has been involved in, nor are
there, so far as the Group is aware, (other than as set out in the following paragraphs), pending or threatened by or against the Group
any legal or arbitration proceedings, including governmental proceedings, which may have, or have had during the previous twelve
months, a material effect on the financial position, profitability or cash flows of the Group.
Specifically, litigation has been served on the Group by customers that are pursuing claims in relation to tracker mortgages. Customers
have also lodged complaints to the Financial Services and Pensions Ombudsman (“FSPO”) in relation to tracker mortgages issues.
In relation to one of these complaints, the FSPO has recently issued a preliminary decision which upheld a claim by a customer for
further redress – see ‘Critical accounting judgements and estimates’ (note 2).
Further claims may also be served in the future in relation to tracker mortgages. The Group will also receive further decisions by the
FSPO in relation to complaints concerning tracker mortgages.
Based on the facts currently known and the current stages that the litigation and the FSPO’s complaints process are at, it is not
practicable at this time to predict the final outcome of this litigation/FSPO complaints, nor the timing and possible impact on the Group.
Contingent liability/contingent asset – NAMA
The Group has provided NAMA with a series of indemnities relating to transferred assets. Any indemnity payment would result in an
outflow of economic benefit for the Group.
Participation in TARGET 2 – Ireland
AIB participates in the TARGET 2 – Ireland system, the Irish component of TARGET 2, which is the real time gross settlement system
for large volume interbank payments in euro. The following disclosures relate to charges provided by AIB to secure its payment
obligations arising from participation in TARGET 2.
On 15 February 2008, AIB executed a deed of charge pursuant to which it created a first floating charge in favour of the Central Bank
of Ireland (Central Bank) over all of its right, title, interest and benefit, present and future, in and to the balances then or at any time
standing to the accounts held by AIB with any Eurosystem central bank for the purpose of participation in TARGET 2.
In addition, AIB and the Central Bank entered into a Framework Agreement in respect of Eurosystem Operations (dated 7 April 2014),
which include the credit line facility for intra-day credit in TARGET 2-Ireland. In order to secure its obligations under the Framework
Agreement, AIB executed a deed of charge (dated 7 April 2014). Pursuant to the deed, AIB created a first fixed charge in favour of
the Central Bank over all of its right, title, interest and benefit, present and future, in and to eligible assets (as identified as such by the
Central Bank) which are held in a designated collateral account.
Both deeds of charge contain provisions that during the subsistence of the security, otherwise than with the prior written consent of the
Central Bank, AIB shall not:
(a) create or attempt to create or permit to arise or subsist any encumbrance on or over the charged property or any part thereof; or
(b)	
otherwise than in the ordinary course of business, sell, transfer, lend or otherwise dispose of the property subject to the floating
charge or any part thereof or attempt or agree to do so whether by means of one or a number of transactions related or not and
whether at one time or over a period of time.
In addition, under the 2014 charge, AIB undertakes not to sell, transfer, lend or otherwise dispose of or deal in the assets subject to the
fixed charge or any part thereof or, in each case, attempt or agree to do so whether by means of one or a number of transactions related
or not and whether at one time or over a period of time.

Financial Statements
48 Subsidiaries and consolidated structured entities
The material Group subsidiary companies at 31 December 2019 and 2018 are:
Name of company Principal activity Place of
incorporation
Registered

Banking and financial services
– a licensed bank
Northern Ireland 92 Ann Street,
Belfast BT1 3HH.
The proportion of ownership interest and voting power held by AIB Group plc in . is 100%. All subsidiaries of Allied
Irish Banks, p.l.c., being the immediate subsidiary of AIB Group plc, are wholly owned apart from Augmentum Limited in which there are
non-controlling interests (note 44). Practically all subsidiaries in the Group are involved in the provision of financial services or ancillary
services.
Significant restrictions
Each of the subsidiaries listed above which is a licensed bank is required by its respective financial regulator to maintain capital ratios
above a certain minimum level. These minimum ratios restrict the payment of dividend by the subsidiary and, where the ratios fall below
the minimum requirement, will require the parent company to inject capital to make up the shortfall.
Consolidated structured entities
The Group has acted as sponsor and invested in a number of special purpose entities (“SPEs”) in order to generate funding for the
Group’s lending activities (with the exception of AIB PFP Scottish Limited Partnership). The Group considers itself a sponsor of a
structured entity when it facilitates the establishment of the structured entity.
The following SPEs are consolidated by the Group:
– Emerald Mortgages No. 5 d.a.c. (liquidator appointed in 2019);
– Mespil 1 RMBS d.a.c (liquidator appointed in 2019);
– AIB PFP Scottish Limited Partnership.
The liquidation of Emerald Mortgages No. 4 Public Limited Company was completed in 2019.
Further details on these SPEs are set out in note 49.
There are no contractual arrangements that could require AIB Group plc or its subsidiaries to provide financial support to the
consolidated structured entities listed above. During the year, neither AIB Group plc nor any of its subsidiaries provided financial support
to a consolidated structured entity and there is no current intention to provide financial support.
The Group has no interests in unconsolidated structured entities.
Notes to the consolidated financial statements
340  Financial Statements
49 Off-balance sheet arrangements and transferred financial assets
Under IFRS, transactions and events are accounted for and presented in accordance with their substance and economic reality and
not merely their legal form. As a result, the substance of transactions with a special purpose entity (“SPE”) forms the basis for their
treatment in the Group’s financial statements. An SPE is consolidated in the financial statements when the substance of the relationship
between the Group and the SPE indicates that the SPE is controlled by the entity and meets the criteria set out in IFRS 10 Consolidated
Financial Statements. The principal forms of SPE utilised by the Group are securitisations and employee compensation trusts.
Securitisations
The Group utilises securitisations primarily to support the following business objectives:
–	
as an investor, the Group has primarily been an investor in securitisations issued by other credit institutions as part of the
management of its interest rate and liquidity risks through the Treasury function;
– 	
as an investor, securitisations have been utilised by the Group to invest in transactions that offered an appropriate risk-adjusted
return opportunity; and
– as an originator of securitisations to support the funding activities of the Group.
The Group controls certain special purpose entities which were set up to support its funding activities. Details of these special purpose
entities are set out below under the heading ‘Special purpose entities’. The Group controls two special purpose entities set up in relation
to the funding of the Group Pension Schemes which are also detailed below.
Stock borrowing and lending
Securities borrowed are not recognised in the financial statements, unless these are sold to third parties, at which point the obligation to
repurchase the securities is recorded as a trading liability at fair value and any subsequent gain or loss is included in trading income.
Employee compensation trusts
The Group and some of its subsidiary companies use trust structures to benefit employees and to facilitate the ownership of the Group’s
equity by employees. The Group consolidates these trust structures where the risks and rewards of the underlying shares have not been
transferred to the employees. All outstanding shares held by Trustees were disposed of during 2018.
Transfer of financial assets
The Group enters into transactions in the normal course of business in which it transfers previously recognised financial assets.
Transferred financial assets may, in accordance with IFRS 9 Financial Instruments:
(i) continue to be recognised in their entirety; or
(ii) be derecognised in their entirety but the Group retains some continuing involvement.
The most common transactions where the transferred assets are not derecognised in their entirety are sale and repurchase
agreements, issuance of covered bonds and securitisations.
(i) Transferred financial assets not derecognised in their entirety
Sale and repurchase agreements/securities lending
Sale and repurchase agreements are transactions in which the Group sells a financial asset to another party, with an obligation to
repurchase it at a fixed price on a certain later date. The Group continues to recognise the financial assets in full in the statement of
financial position as it retains substantially all the risks and rewards of ownership. The Group’s sale and repurchase agreements are with
banks and customers. The obligation to pay the repurchase price is recognised within ‘Deposits by central banks and banks’ (note 35)
and ‘Customer accounts’ (note 36). As the Group sells the contractual rights to the cash flows of the financial assets, it does not have
the ability to use or pledge the transferred assets during the term of the sale and repurchase agreement. The Group remains exposed
to credit risk and interest rate risk on the financial assets sold. Details of sale and repurchase activity are set out in notes 35 and 36.
The obligation arising as a result of sale and repurchase agreements together with the carrying value of the financial assets pledged are
set out in the table below.
The Group enters into securities lending in the form of collateral swap agreements with other parties. The Group continues to recognise
the financial assets in full in the statement of financial position as it retains substantially all the risks and rewards of ownership. As a
result of these transactions, the Group is unable to use, sell or pledge the transferred assets for the duration of the transaction. A fee is
generated for the Group under this transaction.
341
 1
2
3
4
5
6
Financial Statements
49 Off-balance sheet arrangements and transferred financial assets (continued)
Issuance of covered bonds
Covered bonds, which the Group issues, are debt securities backed by cash flows from mortgages for the purpose of financing loans
secured on residential property through its wholly owned subsidiaries, AIB Mortgage Bank and EBS Mortgage Finance. The Group
retains all the risks and rewards of these mortgage loans, including credit risk and interest rate risk, and therefore, the loans continue
to be recognised on the Group’s statement of financial position with the related covered bonds held by external investors included
within ‘Debt securities in issue’ (note 38). As the Group segregates the assets which back these debt securities into “cover asset pools”,
it does not have the ability to otherwise use such segregated financial assets during the term of these debt securities. However, of the
total debt securities of this type issued amounting to € 11.9 billion, internal Group companies hold € 8.9 billion which are eliminated on
consolidation.
Special purpose entities
Securitisations are transactions in which the Group sells loans and advances to customers (mainly mortgages) to special purpose
entities (“SPEs”), which, in turn, issue notes to external investors. The notes issued by the SPEs are on terms which result in the Group
retaining the majority of ownership risks and rewards and therefore, the loans continue to be recognised in the Group’s statement of
financial position. The Group remains exposed to credit risk, interest rate risk and foreign exchange risk on the loans sold. The liability
in respect of the cash received from the external investors is included within ‘Debt securities in issue’ (note 38). Under the terms of the
securitisations, the rights of the investors are limited to the assets in the securitised portfolios and any related income generated by the
portfolios, without further recourse to the Group. The Group does not have the ability to otherwise use the assets transferred as part of
securitisation transactions during the term of the arrangement.
Arising from the acquisition of EBS on 1 July 2011, the Group took control of three special purpose entities which had previously been
set up by EBS: Emerald Mortgages No. 4 Public Limited Company; Emerald Mortgages No. 5 d.a.c.; and Mespil 1 RMBS d.a.c.
Emerald Mortgages No. 4 Public Limited Company
The liquidation of this company was completed in 2019.
Emerald Mortgages No. 5 d.a.c.
The total carrying amount of original residential mortgages transferred by EBS d.a.c. to Emerald Mortgages No.5 d.a.c. (‘Emerald 5’) as
part of the securitisation amounted to € 2,500 million. The carrying amount of transferred secured loans that the Group has recognised
at 31 December 2019 is Nil (2018: € 967 million). Bonds were issued by Emerald 5 to EBS d.a.c. but these were not shown in the
Group’s financial statements as they were eliminated on consolidation. The Emerald 5 mortgage portfolio was repurchased on 31 July
2019 and outstanding bonds were redeemed on 15 August 2019. A liquidator was appointed to the company on 11 December 2019.
Mespil 1 RMBS d.a.c.
The total carrying amount of secured loans that the Group has recognised at 31 December 2019 is Nil (2018: € 636 million) in relation
to the transfers from EBS d.a.c. and Haven Mortgages Limited to Mespil 1 RMBS d.a.c. The bonds issued by Mespil 1 RMBS d.a.c. to
EBS d.a.c. are not shown in the Group’s financial statements, as these bonds were eliminated on consolidation. The Mespil mortgage
portfolio was repurchased on 31 October 2019 and the bonds were redeemed on 22 November 2019. A liquidator was appointed to the
company on 5 December 2019.
Notes to the consolidated financial statements
342  Financial Statements
49 Off-balance sheet arrangements and transferred financial assets (continued)
The following table summarises as at 31 December 2019 and 2018, the carrying value and fair value of financial assets which did not
qualify for derecognition together with their associated financial liabilities:
Sale and repurchase agreements/similar products 3,285(1)(2)
146(1)
The asset pools of € 18 billion (2018: € 18 billion) in the covered bond programme have been apportioned on a pro-rata basis in relation to the value
of bonds held by external investors and those held by the Group companies. The € 4,599 million (2018: € 4,298 million) above refers to those assets
apportioned to external investors.
(4)
Included in ‘Bonds and other medium term notes’ issued by subsidiaries (note 38).
AIB Group (UK) p.l.c. Pension Scheme interest in the AIB PFP Scottish Limited Partnership
In December 2013, the Group agreed with the Trustee of the AIB UK Defined Benefit Pension Scheme (“the UK scheme”) a restructure
of the funding of the deficit in the UK scheme.
The Group established a pension funding partnership, AIB PFP Scottish Limited Partnership (“SLP”) under which a portfolio of loans
were transferred to the SLP from another Group entity, AIB UK Loan Management Limited (“UKLM”) for the purpose of ring-fencing the
repayments on these loans to fund future deficit payments of the UK scheme.
Assets ring–fenced for this purpose entitled the UK Scheme to expected annual payments in the range of £ 15 million to £ 35 million
per annum from 2016 until 2032, with a potential termination payment in 2032 of up to £ 60 million. Following the approval of the 2017
triennial valuation in May 2019, the annual payments were set at £ 15 million per annum, commencing 1 January 2019. However,
this funding plan was replaced in December 2019, as part of the de-risking of the UK Scheme (note 34), with annual payments set at
£ 18.5 million for five years from 1 January 2020 to 31 December 2024, and a final additional payment of £ 31 million expected in 2024.
The general partner in the partnership, AIB PFP (General Partner) Limited which is an indirect subsidiary of .,
has controlling power over the partnership. In addition, the majority of the risks and rewards will be borne by the Group as the pension
scheme has a priority right to the cash flows from the partnership, such that the variability in recoveries is expected to be borne by the
Group through UKLM’s junior partnership interest. As UKLM continues to bear substantially all the risks and rewards of the loans, the
loans are not derecognised from UKLM’s balance sheet and accordingly, the Group has determined that the SLP should be consolidated
into the Group.
Financial Statements
49 Off-balance sheet arrangements and transferred financial assets (continued)
(ii) 
Transferred financial assets derecognised in their entirety but the Group retains some continuing
involvement
AIB has a continuing involvement in transferred financial assets where it retains any of the risks and rewards of ownership of the
transferred financial assets. Set out below are transactions in which AIB has a continuing involvement in assets transferred.
Pension scheme
On 31 July 2012, AIB entered into a Contribution Deed with the Trustee of the AIB Group Irish Pension Scheme (‘the Irish Scheme’),
whereby it agreed to make contributions to the scheme to enable the Trustee ensure that the regulatory Minimum Funding Standard
position of non-pensioner members of the pension scheme was not affected by the agreed early retirement scheme. These contributions
amounting to € 594 million were settled through the transfer to the Irish Scheme of interests in an SPE owning loans and advances
previously transferred at fair value from the Group. The loans and advances were derecognised in the Group’s financial statements as
all of the risks and rewards of ownership had transferred.
A subsidiary company of the Group was appointed as a service provider for the loans and advances transferred. Under the servicing
agreement, the Group subsidiary company collects the cash flows on the transferred loans and advances on behalf of the pension
scheme in return for a fee. The fee is based on an annual rate of 0.125% of the principal balance outstanding of all transferred loans
and advances on the last day of each calendar month. The Group has not recognised a servicing asset/liability in relation to this
servicing arrangement as the fee is considered to be a market rate. Under the servicing agreement, the Irish Scheme has the right to
replace the Group subsidiary company as the service provider with an external third party. In 2019, the Group recognised € 0.7 million
(cumulative € 7.6 million) (2018: € 0.8 million (cumulative € 6.9 million)) in the income statement for the servicing of the loans and
advances transferred.
NAMA
During 2010 and 2011, AIB transferred financial assets with a net carrying value of € 15,428 million to NAMA. All assets transferred were
derecognised in their entirety.
As part of this transaction, the Group has provided NAMA with a series of indemnities relating to the transferred assets. Also, on the
dissolution or restructuring of NAMA, the Irish Minister for Finance (‘the Minister’) may require a report and accounts to be prepared.
If NAMA reports an aggregate loss since its establishment and this is unlikely to be made good, the Minister may impose a surcharge
on the participating institution. This will involve apportioning the loss on the participating institution, subject to certain restrictions, on
the basis of the book value of the assets transferred by the institution in relation to the total book value of assets transferred by all
participating institutions. At this stage, it is not possible to quantify the exposure to loss, if any, which may arise on the dissolution or
restructuring of NAMA.
In addition, the Group was appointed by NAMA as a service provider for the loans and advances transferred, for which it receives a
fee. The fee is based on the lower of actual costs incurred or 0.1% of the value of the financial assets transferred. The Group has not
recognised a servicing asset/liability in relation to this servicing arrangement. In 2019, the Group recognised € 3 million (cumulative
€ 94 million) (2018: € 3 million (cumulative € 91 million)) in the income statement for the servicing of financial assets transferred to
NAMA.
Notes to the consolidated financial statements
344  Financial Statements
50 Classification and measurement of financial assets and financial liabilities
Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The accounting
policy for financial assets in note 1 (l) and financial liabilities in note 1 (m), describes how the classes of financial instruments are
measured, and how income and expenses, including fair value gains and losses, are recognised.
The following table analyses the carrying amounts of the financial assets and financial liabilities by measurement category and by
statement of financial position heading at 31 December 2019 and 2018.
Financial Statements
51 Fair value of financial instruments
The term ‘financial instruments’ includes both financial assets and financial liabilities. The fair value of a financial instrument is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date in the principal, or in its absence, the most advantageous market to which the Group has access at that date.
The Group’s accounting policy for the ‘determination of fair value of financial instruments’ is set out in accounting policy number 1 (o).
The valuation of financial instruments, including loans and advances, involves the application of judgement and estimation. Market and
credit risks are key assumptions in the estimation of the fair value of loans and advances. The Group has estimated the fair value of its
loans to customers taking into account market risk and the changes in credit quality of its borrowers.
Fair values are based on observable market prices where available, and on valuation models or techniques where the lack of market
liquidity means that observable prices are unavailable. The fair values of financial instruments are measured according to the following
fair value hierarchy that reflects the observability of significant market inputs:
Level 1 – financial assets and liabilities measured using quoted market prices from an active market (unadjusted);
Level 2 –	
financial assets and liabilities measured using valuation techniques which use quoted market prices from an active market or
measured using quoted market prices unadjusted from an inactive market; and
Level 3 – financial assets and liabilities measured using valuation techniques which use unobservable market inputs.
All financial instruments are initially recognised at fair value. Financial instruments held for trading, those whose contractual terms do
not give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”), and financial instruments in
fair value hedge relationships are subsequently measured at fair value through profit or loss. Financial assets in a held-to-collect-and-
sell business model which pass the SPPI test and cash flow hedge derivatives are subsequently measured at fair value through other
comprehensive income (‘FVOCI’).
All valuations are carried out within the Finance function and valuation methodologies are validated by the independent Risk function
within the Group.
Readers of these financial statements are advised to use caution when using the data in the following tables to evaluate the Group’s
financial position or to make comparisons with other institutions. Fair value information is not provided for items that do not meet the
definition of a financial instrument. These items include intangible assets such as the value of the branch network and the long term
relationships with depositors, premises and equipment and shareholders’ equity. These items are material and accordingly, the fair value
information presented does not purport to represent, nor should it be construed to represent, the underlying value of the Group as a
going concern at 31 December 2019.
The methods used for calculation of fair value in 2019 are as follows:
Financial instruments measured at fair value in the financial statements
Trading portfolio financial instruments
The fair value of trading debt securities, together with quoted equity shares is based on quoted prices or bid/offer quotations sourced
from external securities dealers, where these are available on an active market. Where securities and equities are traded on an
exchange, the fair value is based on prices from the exchange.
Derivative financial instruments
Where derivatives are traded on an exchange, the fair value is based on prices from the exchange. The fair value of over-the-counter
derivative financial instruments is estimated based on standard market discounting and valuation methodologies which use reliable
observable inputs including yield curves and market rates. These methodologies are implemented by the Finance function and
validated by the Risk function. Where there is uncertainty around the inputs to a derivatives’ valuation model, the fair value is estimated
using inputs which provide the Group’s view of the most likely outcome in a disposal transaction between willing counterparties in
a functioning market. Where an unobservable input is material to the outcome of the valuation, a range of potential outcomes from
favourable to unfavourable is estimated.
Counterparty valuation adjustment (“CVA”) and Funding valuation adjustment (“FVA”) are applied to all uncollateralised over-the-counter
derivatives. The combination of CVA and FVA is referred to as XVA.
CVA is calculated as: Expected positive exposure (“EPE”) multiplied by probability of default (“PD”) multiplied by loss given default
(“LGD”). EPE profiles are generated at a counterparty netting set through simulation. PDs are derived from market based credit default
swaps (“CDS”) information. As most counterparties do not have a quoted CDS, PDs are derived by mapping each counterparty to
an index CDS credit grade. LGDs are based on the specific circumstances of the counterparty and take into account the valuation of
offsetting security, where applicable. For unsecured counterparties, an LGD of 60% is applied (2018: 60%).
Notes to the consolidated financial statements
346  Financial Statements
51 Fair value of financial instruments (continued)
FVA is calculated as: Expected exposure (“EE”) multiplied by funding spread (“SF”) multiplied by counterparty survival probability
(1-PD). EE profiles (net of expected positive and negative exposures) are generated at a counterparty netting set through simulation.
Funding spreads used are an average implied by CDSs for the Group’s most active external derivative counterparties. The rationale in
applying these spreads is to best estimate the FVA which a counterparty would apply in a transaction to close out the Group’s existing
positions. The application of FVA, while an overall negative adjustment, contains within it the benefit of own credit.
Within the range of estimates and fair value sensitivity measurements, a favourable and an adverse scenario have been selected
for PDs and LGDs for CVA. The favourable/adverse scenario for customer PDs are (i) a single rating upgrade and (ii) a single rating
downgrade, respectively. Customer LGDs are shifted according to estimates of improvement in value of security compared with potential
derivatives market values. Within the combination of LGD and PD, both are shifted together yielding positive and negative valuations
which are disclosed as potential alternative valuations on page 352. For FVA, a favourable scenario is the use of the bond yields of the
Group’s most active derivative counterparties while an adverse scenario is a downgrade in the CDS of the reference entities used to
derive funding spreads.
Investment securities
The fair value of investment securities has been estimated based on expected sale proceeds. The expected sale proceeds are based on
screen bid prices which have been analysed and compared across multiple sources for reliability. Where screen prices are unavailable,
fair values are estimated by valuation techniques using observable market data for similar instruments. Where there is no market data
for a directly comparable instrument, management judgement on an appropriate credit spread to similar or related instruments with
market data available is used within the valuation technique. This is supported by cross referencing other similar or related instruments.
Loans and advances to customers
The Group provides lending facilities of varying rates and maturities to corporate and personal customers.
Valuation techniques are used in estimating the fair value of loans, primarily using discounted cash flows and applying market rates
where practicable and taking credit risk into account.
In addition to the assumptions set out above under valuation techniques regarding cash flows and discount rates, a key assumption
for loans and advances is that the carrying amount of variable rate loans (excluding mortgage products) approximates to market value
where there is no significant credit risk of the borrower. For fixed rate loans, the fair value is calculated by discounting expected cash
flows using discount rates that reflect the interest rate risk in that portfolio.
The fair value of mortgage products, including tracker mortgages, is calculated by discounting expected cash flows using discount rates
that reflect the interest rate/credit risk in the portfolio.
The majority of loans and advances to customers are held at amortised cost, however, the Group has a small number of loans and
advances which are required to be measured at fair value through profit or loss (‘FVTPL’) having failed the SPPI test. The valuation
techniques used apply equally to those held at FVTPL and those held at amortised cost.
Financial instruments not measured at fair value but with fair value information presented separately in the
notes to the financial statements
Loans and advances to banks
The fair value of loans and advances to banks is estimated using discounted cash flows applying either market rates, where practicable,
or rates currently offered by other financial institutions for placings with similar characteristics.
Loans and advances to customers at amortised cost
See methodology above under the heading ‘Loans and advances to customers’.
Financial Statements
51 Fair value of financial instruments (continued)
Deposits by central banks and banks and customer accounts
The fair value of current accounts and deposit liabilities which are repayable on demand, or which re-price frequently, approximates
to their book value. The fair value of all other deposits and other borrowings is estimated using discounted cash flows applying either
market rates, where applicable, or interest rates currently offered by the Group.
Subordinated liabilities and debt securities in issue
The estimated fair value of subordinated liabilities and other capital instruments, and debt securities in issue, is based on quoted
prices where available, or where these are unavailable, are estimated using valuation techniques using observable market data for
similar instruments. Where there is no market data for a directly comparable instrument, management judgement, on an appropriate
credit spread to similar or related instruments with market data available, is used within the valuation technique. This is supported by
cross–referencing other similar or related instruments.
Other financial assets and other financial liabilities
This caption includes accrued interest receivable and payable and other receivables (including amounts awaiting settlement and
accounts payable). The carrying amount is considered representative of fair value.
Commitments pertaining to credit-related instruments
Details of the various credit-related commitments and other off-balance sheet financial guarantees entered into by the Group are
included in note 47. Fees for these instruments may be billed in advance or in arrears on an annual, quarterly or monthly basis.
In addition, the fees charged vary on the basis of instrument type and associated credit risk. As a result, it is not considered practicable
to estimate the fair value of these instruments because each customer relationship would have to be separately evaluated.
The table on the following pages sets out the carrying amount and fair value of financial instruments across the three levels of the fair
value hierarchy at 31 December 2019 and 2018:

Financial assets measured at fair value
Derivative financial instruments:
*Expected cash flows discounted at market rates, taking into consideration the fair value of collateral where relevant.
Uncollateralised customer derivatives
The fair value measurement sensitivity to unobservable inputs at 31 December 2019 ranges from (i) negative € 29 million to positive
€ 14 million for CVA (31 December 2018: negative € 35 million to positive € 19 million) and (ii) negative € 7 million to positive € 5 million
for FVA (31 December 2018: negative € 10 million to positive € 5 million).
A number of other derivatives are subject to valuation methodologies which use unobservable inputs. As the variability of the valuation is
not greater than € 1 million in any individual case or collectively, the detail is not disclosed here.
NAMA subordinated bonds
The fair value measurement sensitivity to unobservable discount rates ranges from negative € 2 million to positive € 1 million at
31 December 2019 (31 December 2018: negative € 14 million to positive € 9 million).
Visa Inc. Series B Preferred Stock
In June 2016, the Group received Series B Preferred Stock in Visa Inc. with a fair value of € 65 million as part consideration for its
holding of shares in Visa Europe. The preferred stock will be convertible into Class A Common Stock of Visa Inc. at some point in the
future. The conversion is subject to certain Visa Europe litigation risks that may affect the ultimate conversion rate. In addition, the stock,
being denominated in US dollars, is subject to foreign exchange risk.
–	
Valuation technique: Quoted market price of Visa Inc. Class A Common Stock to which a discount has been applied for the
illiquidity and the conversion rate variability of the preferred stock of Visa Inc. 41% haircut (2018: 45%). This was converted at the
year end exchange rate.
– Unobservable input: Final conversion rate of Visa Inc. Series B Preferred Stock into Visa Inc. Class A Common Stock.
–	
Range of estimates: Estimates range from (a) no discount for conversion rate variability with a discount for illiquidity only;
to (b) 75% discount for conversion rate variability.
Notes to the consolidated financial statements
352  Financial Statements
51 Fair value of financial instruments (continued)
Loans and advances to customers measured at FVTPL
The fair value measurement sensitivity to unobservable collateral values and interest rates ranges from negative € 1 million to positive
€ 5 million at 31 December 2019 (31 December 2018: negative € 2 million to positive € 13 million).
Fair value is applied in respect of secondary facilities arising on restructured loans subject to forbearance measures, on the likelihood
that additional cash flows, in excess of their primary facilitates, will be received from customers. Given the significant uncertainty with
regard to such cash flows, the Group does not attribute a fair value unless it is reasonably certain that this value will be realised.
Sensitivity of Level 3 measurements
The implementation of valuation techniques involves a considerable degree of judgement. While the Group believes its estimates of fair
value are appropriate, the use of different measurements or assumptions could lead to different fair values. The following table sets out
the impact of using reasonably possible alternative assumptions in the valuation methodology at 31 December 2019 and 2018:
2019
Relates to the largest equity investment, the carrying value of which was € 171 million at 31 December 2019 (2018: € 109 million). Sensitivity information
has not been provided for other equities as the portfolio comprises several investments, none of which is individually material.
Day 1 gain or loss:
No difference existed between the fair value at initial recognition of financial instruments and the amount that was determined at that
date using a valuation technique incorporating significant unobservable data.
Financial Statements
52 Statement of cash flows
Non-cash and other items included in profit before taxation
Financial Statements
52 Statement of cash flows (continued)
Analysis of cash and cash equivalents
For the purpose of the statement of cash flows, cash equivalents comprise the following balances with less than three months maturity
from the date of acquisition:
2019 2018
€ m € m
Cash and balances at central banks 11,982 6,516
Loans and advances to banks(1)
941(2)
730
12,923 7,246
(1)
Included in ‘Loans and advances to banks’ total of € 1,478 million (2018: € 1,443 million) set out in note 24.
(2)
Includes € 4 million relating to restricted balances held in trust in respect of certain payables which are included in ‘other liabilities’ (note 39).
The Group is required by law to maintain reserve balances with the Bank of England. At 31 December 2019, these amounted to
€ 468 million (31 December 2018: € 589 million).
There are certain regulatory restrictions on the ability of subsidiaries to transfer funds to the parent company in the form of cash
dividends, loans or advances. The impact of such restrictions is not expected to have a material effect on the Group’s ability to meet its
cash obligations.
53 Related party transactions
Related parties in the Group include the parent company, AIB Group plc, subsidiary undertakings including their non-controlling
interests, associated undertakings, joint arrangements, post-employment benefits, Key Management Personnel and connected parties.
The Irish Government is also considered a related party by virtue of its effective control of AIB. The immediate holding company and
controlling party is AIB Group plc with its Registered Office at Bankcentre, Ballsbridge, Dublin 4.
(a) Transactions with subsidiary undertakings
AIB Group plc is the ultimate parent company of the Group. Banking transactions between the parent company and its subsidiaries and
between subsidiaries are entered into in the normal course of business. These include loans, deposits, provision of derivative contracts,
foreign currency contracts and the provision of guarantees on an ‘arm’s length basis’. In 2017, a review was completed of pricing
arrangements between . and certain Irish subsidiaries. Arising from this review, new pricing agreements were
signed and implemented during 2017. The new agreements reflect OECD guidelines on transfer pricing which are the internationally
accepted principles in this area, and take account of the functions, risks and assets involved. Details of related party transactions
and balances between AIB Group plc and its subsidiaries are set out in note k to AIB Group plc Company financial statements.
In accordance with IFRS 10, ‘Consolidated Financial Statements’, transactions between the parent company and its subsidiaries and
between subsidiaries have been eliminated on consolidation.
(b) Associated undertakings and joint arrangements
From time to time, the Group provides certain banking and financial services for associated undertakings. These transactions are
made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and do not involve more than the normal risk of collectability or present other
unfavourable features. Details of loans to associates are set out in note 25 to the consolidated financial statements, while deposits from
associates are set out in note 35.
(c) Non-controlling interests
The Group has accepted a deposit from the non-controlling interests in a subsidiary which is detailed in note 44.
(d) Provision of banking and related services and funding to Group Pension schemes
The Group provides certain banking and financial services including money transmission services for the AIB Group Pension schemes.
Such services are provided in the ordinary course of business, on substantially the same terms, including interest rates, as those
prevailing at the time for comparable transactions with other persons.
During 2013, the Group established a pension funding partnership, AIB PFP Scottish Limited Partnership (“SLP”) in the UK. Following
this, a subsidiary of . transferred loans to the SLP for the purpose of ring-fencing the repayments of these loans to
fund future deficit payments of the AIB UK Defined Benefit Pension Scheme (note 49).
During 2012, AIB agreed to make certain contributions to the pension scheme which were settled through the transfer to the AIB Group
Irish Pension Scheme of interests in a special purpose entity owning loans and advances previously transferred at fair value from the
Group. A subsidiary of AIB was appointed as a service provider for the loans and advances transferred in return for a servicing fee at a
market rate (note 49).
Notes to the consolidated financial statements
356  Financial Statements
53 Related party transactions (continued)
(e) IAS 24 Related Party Disclosures
The following disclosures are made in accordance with the provisions of IAS 24 Related Party Disclosures. Under IAS 24, Key
Management Personnel (“KMP”) are defined as comprising Executive and Non-Executive Directors together with Senior Executive
Officers, namely, the members of the Executive Committee (see pages 44 to 47). As at 31 December 2019, the Group had 20 KMP
(2018: 19 KMP).
(i) Compensation of Key Management Personnel
Details of compensation paid to KMP are provided below. The figures shown include the figures separately reported in respect of
Directors’ remuneration on pages 216 to 218.
Comprises (a) in the case of Executive Directors and Senior Executive Officers: salary and a non-pensionable cash allowance in lieu of company car,
medical insurance and other contractual benefits including, where relevant, payment in lieu of notice, and (b) in the case of Non-Executive Directors:
Directors’ fees and travel and subsistence expenses incurred in the performance of the duties of their office, which are paid by the Group.
(2)
Comprises payments to defined benefit or defined contribution pension schemes, in accordance with actuarial advice, to provide post-retirement pensions.
The Group’s defined benefit pension schemes closed to future accrual with effect from 31 December 2013 and all employee pension benefits have
accrued on the basis of defined contributions since that date.
(ii) Transactions with Key Management Personnel
Loans to KMP and their close family members are made in the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable transactions with other persons of similar standing not
connected with the Group, and do not involve more than the normal risk of collectability or present other unfavourable features. Loans
to Directors and Senior Executive Officers are made on terms available to other employees in the Group generally, in accordance with
established policy, within limits set on a case by case basis.
The aggregate amounts outstanding, in respect of all loans, quasi loans and credit transactions between the Group and KMP, as defined
above, together with members of their close families and entities controlled by them are shown in the following table:
Loans outstanding
At 1 January 4.58 4.69
Loans issued during the year 0.16 0.57
Loan repayments during the year/change of KMP/other (1.74) (0.68)
At 31 December 3.00 4.58
Total commitments outstanding refer to the total of any undrawn amounts on credit cards and/or overdraft facilities provided to KMP.
Total commitments outstanding as at 31 December 2019 were € 0.16 million (2018: € 0.20 million).
Deposit and other credit balances held by KMP and their close family members as at 31 December 2019 amounted to € 3.37 million
(2018: € 6.88 million).
Financial Statements
53 Related party transactions (continued)
(f) Companies Act 2014 disclosures
(i) Loans to Directors
The following information is presented in accordance with the Companies Act 2014. For the purposes of the Companies Act disclosures,
Director means the Board of Directors and any past Directors who are Directors during the relevant period.
There were 18 Directors in office during the year, 11 of whom availed of credit facilities (2018: 8). Of the Directors who availed of credit
facilities, 7 had balances outstanding at 31 December 2019 (2018: 4 of 8).
Details of transactions with Directors for the year ended 31 December 2019 are as follows:
*
Amounts advanced and repaid are not shown for overdraft/credit card facilities as these are revolving in nature (i.e. they may be drawn,
repaid and redrawn up to their limit over the course of the year).
**The maximum debit balance is calculated by aggregating the maximum debit balance drawn on each facility during the year.
Mr Richard Pym had a credit card facility which was not used during the year. Ms Helen Normoyle and Mr Jim O’Hara also held
overdraft facilities which were not used during the year. Mr Tom Foley held a credit card facility with the Group, which held an opening
and closing balance of less than € 500 at the beginning and end of the reporting period. Ms Ann O’Brien held a credit card facility with
the Group, which had a closing balance of less than € 500, and a maximum debit balance as represented in the preceding table.
Mr Bernard Byrne, Mr Peter Hagan, Mr Brendan McDonagh, Mr Raj Singh, Ms Sandy Kinney Pritchard, Mr Basil Geoghegan and
Ms Elaine MacLean had no credit facilities with the Group in 2019.
An expected credit loss allowance is held for all loans and advances. Accordingly, an ECL allowance of c. € 164,000 is held on the
above facilities at 31 December 2019.

Financial Statements
53 Related party transactions (continued)
(f) Companies Act 2014 disclosures
(i) Loans to Directors (continued)
Details of transactions with Directors for the year ended 31 December 2018 are as follows:

*
Amounts advanced and repaid are not shown for overdraft/credit card facilities as these are revolving in nature (i.e. they may be drawn,
repaid and redrawn up to their limit over the course of the year).
**The maximum debit balance is calculated by aggregating the maximum debit balance drawn on each facility during the year.
Richard Pym had a credit card facility which was not used during the year. Helen Normoyle and Jim O’Hara also held overdraft facilities
which were not used during the year. Simon Ball had a credit card facility which held an opening and closing balance of under € 500
at the beginning and end of the reporting period. Tom Foley had a Nil balance at 31 December 2018 and a maximum debit balance as
represented in the preceding table.
Bernard Byrne, Peter Hagan and Brendan McDonagh had no facilities with the Group during 2018.
As required on transition to IFRS 9, an expected credit loss allowance was created for all loans and advances. Accordingly, an ECL
allowance of c. € 21,000 was created on 1 January 2018 and is held on the above facilities at 31 December 2018. All facilities are
performing to their terms and conditions.
Notes to the consolidated financial statements
360  Financial Statements
53 Related party transactions (continued)
(f) Companies Act 2014 disclosures
(ii) Connected persons
The aggregate of loans to connected persons of Directors, in office during the year, at 31 December, as defined in Section 220 of the
Companies Act 2014, are as follows (aggregate of 22 persons; 2018: 17 persons):
Balance at
31 December
Maximum debit balance during the year** 3,238 2,216
An expected credit loss allowance is held for all loans and advances. Accordingly, an ECL allowance of c. € 26,000 was held on the
above facilities at 31 December 2019.
*
Amounts advanced and repaid are not shown for overdraft/credit card facilities as these are revolving in nature (i.e. they may be drawn,
repaid and redrawn up to their limit over the course of the year).
**The maximum debit balance is calculated by aggregating the maximum debit balance drawn on each facility during the year.
(iii) Aggregate balance of loans and guarantees held by Directors and their connected persons
The aggregate balance of loans and guarantees held by Directors and their connected persons as at 31 December 2019 represents
less than 0.02% of the net assets of the Group (2018: 0.02%).
(g) Summary of relationship with the Irish Government
The Irish Government, as a result of both its investments in AIB and AIB’s participation in Government guarantee schemes became
a related party of AIB in 2009. Following the crisis in the Irish banking sector and the stabilisation measures adopted since 2008,
the involvement of the Irish Government in AIB and in other Irish banks has been and continues to be considerable. This involvement is
outlined below.
The Irish Government holds 71.12% of the issued ordinary share capital of AIB, accordingly, AIB is under the control of the Irish
Government. During 2019, the Irish Government received dividends amounting to € 328 million on its shareholding.
AIB enters into normal banking transactions with the Irish Government and many of its controlled bodies on ‘an arm’s length’ basis.
In addition, other transactions include the payment of taxes, pay related social insurance, local authority rates, and the payment of
regulatory fees, as appropriate.
Rights and powers of the Irish Government and the Central Bank of Ireland
The Irish Minister for Finance (‘the Minister’) and the Central Bank of Ireland (“the Central Bank”) have significant rights and powers
over the operations of AIB (and other financial institutions) arising from the various stabilisation measures. These stabilisation measures
included the Credit Institutions (Eligible Institutions Guarantee) Scheme 2009, and whilst the Group no longer has any guaranteed
liabilities, certain of the covenants of the scheme continue to apply.
These rights and powers relate to, inter alia:
– The acquisition of shares in other institutions;
–	
Maintenance of solvency ratios and compliance with any liquidity and capital ratios that the Central Bank, following consultation with
the Minister, may direct; The Group has provided NAMA with a series of indemnities relating to transferred assets. Any indemnity
payment would result in an outflow of economic benefit for the Group.
– The appointment of non-executive directors and board changes;
– The appointment of persons to attend meetings of various committees;
– Restructuring of executive management responsibilities, strengthening of management capacity and improvement of governance;
– Declaration and payment of dividends;
– Restrictions on various types of remuneration;
– Buy-backs or redemptions by the Group of its shares;
– The manner in which the Group extends credit to certain customer groups; and
–	
Conditions regulating the commercial conduct of AIB, having regard to capital ratios, market share and the Group’s balance sheet
growth.
In addition, various other initiatives such as strategies/codes of conduct for dealing with mortgage and other consumer/business loan
arrears are set out in the Risk management section of this report.

Financial Statements
53 Related party transactions (continued)
(g) Summary of relationship with the Irish Government
The relationship of the Irish Government with AIB is outlined under the following headings:
– Capital investments;
– Guarantee schemes;
– NAMA; and
– Relationship Framework.
There were no significant changes to the various aspects of the relationship in the year to 31 December 2019.
– Capital investments
	
In the years since 2008, the Irish Government implemented a number of recapitalisation measures to support the Irish banking
system including AIB Group. Certain of this capital invested in AIB Group has since been repaid, restructured or reorganised.
There were no capital transactions during 2019 or 2018.
Equity holdings
	
The Irish Government holds 1,930,436,543 ordinary shares in AIB Group plc (71.12% of total). These shares are traded on the
Euronext Dublin and London Stock Exchanges.
Capital contributions
In 2011, capital contributions totalling € 6.054 billion were made by the Irish State to AIB for Nil consideration.
Issue of warrants to the Minister for Finance
	
As part of the 2015 Capital Reorganisation, AIB entered into a Warrant Agreement with the Minister and granted the Minister the
right to receive warrants to subscribe for additional ordinary shares.
	
Following the admission to listing on the Irish Stock Exchange (now trading as Euronext Dublin) and the London Stock Exchange,
AIB issued warrants to the Minister on 4 July 2017 to subscribe for 271,166,685 ordinary shares of AIB representing 9.99% of the
issued share capital. The exercise price for the warrants is 200% of the Offer Price of € 4.40 per ordinary share, the Offer Price
being the price in euro per ordinary share which was payable under the Initial Public Offering (“IPO”). This price may be adjusted
in accordance with the terms of the Warrant Instrument and the warrants will be capable of exercise by the holder of the warrants
during the period commencing on 27 June 2018 and ending on 27 June 2027.
	
In accordance with the terms of the Warrant Agreement, no cash consideration was payable by the Minister to AIB in respect of the
issue of the warrants.
– Guarantee schemes
	
The European Communities (Deposit Guarantee Schemes) Regulations 1995 have been in operation since 1995. These regulations
guarantee certain retail deposits up to a maximum of € 100,000.
– NAMA
	
AIB was designated a participating institution under the NAMA Act in February 2010. Under this Act, AIB transferred financial assets
to NAMA for which it received consideration from NAMA in the form of NAMA senior bonds which were fully repaid during 2017 and
NAMA subordinated bonds which are detailed in note 27.
	
The Group has provided NAMA with a series of indemnities relating to transferred assets. Any indemnity payment would result in an
outflow of economic benefit for the Group.
Notes to the consolidated financial statements
362  Financial Statements
53 Related party transactions (continued)
(g) Summary of relationship with the Irish Government
Investment in National Asset Management Agency Investment d.a.c. (“NAMAIL”)
	
In March 2010, a then subsidiary of . made an equity investment in 17 million “B” shares of NAMAIL, a special
purpose entity established by NAMA. The total investment amounted to € 17 million, of which € 12 million was invested on behalf of
the AIB Group pension scheme (fair value at 31 December 2019: € 13 million; 31 December 2018: € 12 million), with the remainder
invested on behalf of clients.
– Relationship Framework
	
In order to comply with contractual commitments imposed on AIB in connection with its recapitalisation by the Irish State and with
the requirements of EU state aid applicable in respect of that recapitalisation, a Relationship Framework was entered into between
the Minister and AIB in March 2012. This provides the framework under which the relationship between the Minister and AIB is
governed. The Relationship Framework was amended and restated on 12 June 2017. Furthermore, the AIB Group plc Relationship
Framework was put in place on 8 December 2017 in substitution for the Relationship Framework dated 12 June 2017. Under the
relationship frameworks, the authority and responsibility for strategy and commercial policies (including business plans and budgets)
and conducting AIB’s day-to-day operations rest with the Board and AIB’s management team.
Balances held with the Irish Government and related entities
The following table outlines the balances held at 31 December 2019 and 2018 with Irish Government entities(1)
together with the highest

Includes all departments of the Irish Government located in the State and embassies, consulates and other institutions of the Irish Government located
outside the State. The Post Office Savings Bank (“POSB”) and the National Treasury Management Agency (“NTMA”) are included.
(2)

The highest balance during the period, together with the outstanding balance at the year end, is considered the most meaningful way of representing the
amount of transactions that have occurred between AIB and the Irish Government.
a	
Cash and balances at the central banks represent the minimum reserve requirements which AIB is required to hold with the Central
Bank. Balances on this account can fluctuate significantly due to the reserve requirement being determined on the basis of the
institution’s average daily reserve holdings over a one month maintenance period. The Group is required to maintain a monthly
average Primary Liquidity balance which at 31 December 2019 was € 622 million (2018: € 596 million).
b	
Investment securities at FVOCI at 31 December 2019 comprise € 5,296 million (2018: € 6,282 million) in Irish Government securities
held in the normal course of business and NAMA subordinated bonds of € 458 million (2018: € 468 million).
c	
Includes € 215 million (2018: € 295 million) borrowed from the Strategic Banking Corporation of Ireland (“SBCI”), the ordinary share
capital of which is owned by the Minister for Finance.
All other balances, both assets and liabilities are carried out in the ordinary course of banking business on normal terms and conditions.

Financial Statements
53 Related party transactions (continued)
(g) Summary of relationship with the Irish Government
Local government(1)
During 2019 and 2018, AIB entered into banking transactions in the normal course of business with local government bodies.
These transactions include the granting of loans and the acceptance of deposits, and clearing transactions.
(1)

This category includes local authorities, borough corporations, county borough councils, county councils, boards of town commissioners, urban district
councils, non-commercial public sector entities, public voluntary hospitals and schools.
Commercial semi-state bodies(1)
During 2019 and 2018, AIB entered into banking transactions in the normal course of business with semi-state bodies. These
transactions principally include the granting of loans and the acceptance of deposits as well as derivative and clearing transactions.
(1)
Semi-state bodies is the name given to organisations within the public sector operating with some autonomy. They include commercial organisations or
companies in which the State is the sole or main shareholder.
Financial institutions under Irish Government control/significant influence
Certain financial institutions are related parties to AIB by virtue of the Government either controlling or having a significant influence over
these institutions. The following institution is controlled by the Irish Government:
– Permanent tsb plc
The Government controlled entity, Irish Bank Resolution Corporation Limited (In Special Liquidation) which went into special liquidation
during 2013, remains a related party for the purpose of this disclosure.
In addition, the Irish Government is deemed to have significant influence over Bank of Ireland.
Transactions with these institutions are normal banking transactions entered into in the ordinary course of cash management business
under normal business terms. The transactions constitute the short term placing and acceptance of deposits, derivative transactions,
investment debt securities and repurchase agreements.
The following balances were outstanding in total to these financial institutions at 31 December 2019 and 2018:– –
Derivative financial instruments – –
(1)
The highest balance in loans and advances to banks amounted to € 43 million in respect of funds placed during the year (2018: € 2 million).
(2)

The highest balance in deposits by central banks and banks by these financial institutions amounted to € 48 million in respect of funds received during the
year (2018: € 30 million).
In connection with the acquisition by AIB Group of certain assets and liabilities of the former Anglo Irish Bank Corporation Limited
(now Irish Bank Resolution Corporation Limited (in Special Liquidation)) “IBRC”, IBRC had indemnified AIB Group for certain liabilities
pursuant to a Transfer Support Agreement dated 23 February 2011. AIB Group had made a number of claims on IBRC pursuant to the
indemnity prior to IBRC’s Special Liquidation on 7 February 2013.
AIB Group has since served notice of claim and set-off on the Joint Special Liquidators of IBRC in relation to the amounts claimed
pursuant to the indemnity and certain other amounts that were owing to AIB by IBRC as at the date of the Special Liquidation
(c. € 81.3 million in aggregate). AIB Group is currently engaging with the Joint Special Liquidators in relation to the claim. Given AIB’s
aggregate liability to IBRC at the date of Special Liquidation exceeded these claims, no financial loss is expected to occur.
Notes to the consolidated financial statements
364  Financial Statements
53 Related party transactions (continued)
(g) Summary of relationship with the Irish Government
Irish bank levy
The bank levy, introduced on certain Irish financial institutions in 2014, is calculated based on each financial institution’s Deposit Interest
Retention Tax (“DIRT”) payment in a base year. This base year changes every two years with 2017 being the base year for 2019 and
2020. The annual levy paid by the Group for 2019 and reflected in operating expenses (note 13) in the income statement amounted to
€ 35 million (2018: € 49 million).
(h) Indemnities
The Group has indemnified the Directors of Allied Irish Banks Pensions Limited and AIB DC Pensions (Ireland) Limited, the trustees
of the Group’s Ireland defined benefit pension scheme and defined contribution pension scheme, respectively, against any actions,
claims or demands arising out of their actions as Directors of the trustee companies, other than by reason of wilful default.
54 Employees
The following table shows the geographical analysis of average employees for 2019 and 2018:
Average number of staff (Full time equivalents) 2019 2018
Ireland 8,770 8,681
United Kingdom 1,026 1,066
United States of America 59 54
Total 9,855 9,801
A new operating structure was implemented in 2019, with staff numbers reported under the new segments. Prior period numbers have
not been restated under the new segment structure. The following tables show the segmental analysis of average employees for 2019
and 2018:
Group comprises wholesale treasury activities and Group control and support functions. Treasury manages the Group’s liquidity and funding positions
and provides customer treasury services and economic research. The Group control and support functions include business and customer services, risk,
audit, finance, legal and corporate governance, human resources and corporate affairs.
The average number of employees for 2019 and 2018 set out above excludes employees on career breaks and other unpaid long term
leaves.
Actual full time equivalent numbers at 31 December 2019 were 9,520 (2018: 9,831).
55 Regulatory compliance
During the years ended 31 December 2019 and 2018, the Group and its regulated subsidiaries complied with their externally imposed
capital ratios.
On 3 May 2019, following approval by the shareholders at the Annual General Meeting held on 24 April 2019, AIB Group plc paid a final
dividend of € 0.17 per ordinary share amounting in total to € 461 million. The financial statements for the year ended 31 December 2019
reflect this in shareholders’ equity as an appropriation of distributable reserves.
On 4 May 2018, AIB Group plc, paid a final dividend to its shareholders of € 0.12 per ordinary share amounting in total to € 326 million.
The Board is recommending that a final dividend of € 0.08 per ordinary share, amounting in total to € 217 million, be paid on
7 May 2020. The financial statements for the year ended 31 December 2019 do not reflect this dividend which will be accounted for in
shareholders' equity as an appropriation of distributable reserves in 2020.
58 Non-adjusting events after the reporting period
No significant non-adjusting events have taken place since 31 December 2019.
59 Approval of financial statements
The financial statements were approved by the Board of Directors on 5 March 2020.
366  Financial Statements

AIB Group plc is a company domiciled in Ireland with its Registered Office address at Bankcentre, Ballsbridge, Dublin 4, Ireland.
AIB Group plc is registered under the Companies Act 2014 as a public limited company under the company number 594283 and is the
holding company of the Group.
a Accounting policies
Where applicable, the accounting policies adopted by AlB Group plc (‘the parent company’ or ‘the Company’) are the same as those of
the Group as set out in note 1 to the consolidated financial statements on pages 244 to 272.
The parent company financial statements and related notes set out on pages 366 to 374 have been prepared in accordance with
International Financial Reporting Standards (collectively “IFRSs’’) as issued by the IASB and IFRSs as adopted by the EU and
applicable for the financial year ended 31 December 2019. They also comply with those parts of the Companies Act 2014 and with the
European Union (Credit Institutions: Financial Statements) Regulations 2015 applicable to companies reporting under lFRS.
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of certain assets, liabilities, revenues and expenses, and disclosures of contingent assets
and liabilities. The estimates and assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances. Since management judgement involves making estimates concerning the likelihood of future
events, the actual results could differ from those estimates.
A description of the critical accounting judgements and estimates is set out in note 2 to the consolidated financial statements on pages
273 to 277.
Parent Company Income statement
In accordance with Section 304(2) of the Companies Act 2014, the parent company is availing of the exemption to omit the income
statement, statement of comprehensive income and related notes from its financial statements; from presenting them to the Annual
General Meeting: and from filing them with the Registrar of Companies. The Company’s loss after taxation for the financial year ended
31 December 2019 is € 2,985 million (2018: profit € 320 million).
b Operating expenses
Amounts payable to subsidiary under Master Service Agreement 6 7

c Auditors’ fees
The disclosure of auditors’ fees is in accordance with Section 322 of the Companies Act 2014. This mandates disclosure of fees paid/
payable to the Group Auditor only (Deloitte Ireland LLP) for services relating to the audit of the Group and relevant subsidiary financial
statements. No audit fees were paid/payable to the Group Auditor (Deloitte Ireland LLP) for services relating to the audit of the financial
statements of AIB Group plc during the year to 31 December 2019.
AIB Group plc (‘the Company’) holds the entire ordinary share capital of . (‘the subsidiary’) which it acquired in
2017 (2,714,381,237 ordinary shares of nominal value € 0.625 each) and which had a book value at acquisition of € 12,940 million.
. is a financial services company incorporated and registered in Ireland with a Registered Office at Bankcentre,
Ballsbridge, Dublin 4. It is the parent company of a number of subsidiaries, both credit institutions and others, all of which are 100%
owned. It operates predominantly in Ireland, providing a comprehensive range of services to retail customers, as well as business and
corporate customers. . and its subsidiaries offer a full suite of products for retail customers, including mortgages,
personal loans, credit cards, current accounts, insurance, pensions, financial planning, investments, savings and deposits. Its products
for business and corporate customers include finance and loans, business current accounts, deposits, foreign exchange and interest
rate risk management products, trade finance products, invoice discounting, leasing, credit cards, merchant services, payments and
corporate finance.
. together with its principal subsidiaries in Ireland, AIB Mortgage Bank, EBS d.a.c. and EBS Mortgage Finance,
are regulated by the Central Bank of Ireland/Single Supervisory Mechanism. Its principal subsidiary outside the Republic of Ireland,
AIB Group (UK) p.l.c., is regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Additions
In October 2019, the Company invested € 500 million in Additional Tier 1 Securities (“AT1”) issued by . (note j).
Impairment of equity shares
The Company reviews its equity investment for impairment at the end of each reporting period if there are indications that impairment
may have occurred.
The testing for possible impairment involves comparing the estimated recoverable amount of an investment with its carrying amount.
Where the recoverable amount is less than the carrying amount, the difference is recognised as an impairment provision in the
Company’s financial statements. The recoverable amount is the higher of fair value less costs to sell and value-in-use (“VIU”).
The subsidiary’s fair value is largely that of the Company since the net assets of the subsidiary are, in effect, the same as those of the
Company. Accordingly, AIB Group plc’s market capitalisation is a proxy for the fair value of .
At 31 December 2019, the market capitalisation of AIB Group plc was € 8.5 billion. This was below the carrying amount of its equity
investment in the subsidiary and had been below that carrying amount throughout 2019. Accordingly, AIB Group plc considered that this
was an indication of impairment and performed an impairment test which compared the carrying amount with the estimated recoverable
amount as determined by a VIU calculation.
The Company uses a discounted cash flow to equity model to derive a VIU, in line with industry practice. Under this approach,
recoverable value is determined by the present value of future distributable items which takes into consideration the requirement to
retain earnings in line with relevant target capital ratios and risk-weighted assets. Accordingly, the principal inputs to the model are
(a) future profitability; (b) risk-weighted asset levels; (c) the discount rate used; and (d) target capital ratios.
The VIU was determined at € 9,496 million which was lower than the carrying amount but higher than the fair value, accordingly,
the Company recognised an impairment loss provision amounting to € 3,444 million.
Notes to AIB Group plc company financial statements
Financial Statements
e Investment in subsidiary undertaking (continued)
Basis used to calculate recoverable amount
In determining VIU, the Company used discounted cash flow projections attributable to equity shareholders. These projections were the
output arising from the recent three year Strategic Plan (2020 to 2022) approved by the Board. This output from the Plan will be used by
the Company on an on going basis during the three year planning cycle. The Strategic Plan involved significant judgements which were
subject to review and validation at a number of levels of governance and is the current best estimate of the expected cash flows over the
planning period. For cash flows beyond the planning period, the Company extrapolated into perpetuity the year 3 expected cash flows
as a base, using a long term growth rate to derive a terminal value. Risk-weighted assets are assumed to grow at the same rate as that
for long term profit growth.
The Company used the following key assumptions in the VIU calculation:
Long term profit/risk-weighted asset growth rate after 2022: 3%;
Discount rate: 9%; and
Common equity Tier 1 target: 14%.
Future profitability and growth rates are dependent on several factors, including the economic environment both local and international,
the impact of Brexit and the United Kingdom’s future relationship with Ireland and the EU, the impact of regulatory requirements on
the banking industry and the continuing developments in the financial services sector. Accordingly, there are significant uncertainties
and a high level of subjectivity involved in the estimation process. Profitability and growth were reassessed in the annual planning
exercise covering the period 2020 to 2022 undertaken by the Group in the second half of 2019. Growth assumptions and profitability
levels underpinning the plan have been revised downwards compared to previous years reflecting the ‘lower for longer’ interest rate
environment in particular, however, these are within current market norms.
The discount rate to be used in future periods may increase/decrease due to changes to the risk free rate or to the risk premium.
Changes to these inputs may increase or decrease the impairment loss provision in future periods.
The following table sets out the sensitivity of the VIU calculation to key input variables. The table reflects the impact of the variables
individually and not any interrelationships. It is possible that more than one favourable and/or unfavourable change will occur at the
same time.
31 December 2019
Favourable change Unfavourable change
bps Increase in VIU bps Decrease in VIU
€ m € m
Long term profit/risk-weighted assets growth rate 100 286 (100) (239)
Discount rate (100) 1,678 100 (1,218)
In addition, if year 3 expected cash flows that are used as a base to derive a terminal value were increased/decreased by € 100 million,
the VIU calculation would increase/decrease by c. € 1,260 million.
Given the interrelationship of changes set out in the sensitivity table above, the Company estimates that the reasonable possible range
of estimates for VIU is € 8,280 million to € 11,171 million.
372  Financial Statements
Under the Scheme of Arrangement (“the Scheme”) approved by the Irish High Court on 6 December 2017 which became effective on
8 December 2017, a new company, AIB Group plc (‘the Company’), was introduced as the holding company of AIB Group. The share
capital of ., other than a single share owned by AIB Group plc, was cancelled and an equal number of new shares
were issued by the Company to the shareholders of . The difference between the carrying value of the net assets
of . entity on acquisition by the Company and the nominal value of the shares issued on implementation of the
Scheme amounting to € 6,235 million was accounted for as a merger reserve.
In the Company’s financial statements, impairment losses which arise from the Company’s investment in . will be
charged to the profit or loss account and transferred to the merger reserve in so far as a credit balance remains in the merger reserve.
At 31 December 2019, an impairment loss provision of € 3,444 million was recognised (note e). Accordingly, this resulted in a transfer of
€ 3,444 million between merger reserve and revenue reserves.
Notes to AIB Group plc company financial statements
373
 1
2
3
4
5
6
Financial Statements
j Other equity interests
2019 2018
€ m € m
At 1 January – –
Issued during year 500 –
At 31 December 500 –
Additional Tier 1 Perpetual Contingent Temporary Write-down Securities
In 2019, AIB Group plc issued € 500 million nominal value of Additional Tier 1 Perpetual Contingent Temporary Write-down Securities
(‘AT1s’). For further details in relation to AT1s issued by the Company, see note 43 to the consolidated financial statements.
k Related party transactions
Related parties of AIB Group plc include subsidiary undertakings including their non-controlling interests, associated undertakings,
joint undertakings, post-employment benefit schemes, Key Management Personnel and connected parties. The Irish Government is also
considered a related party by virtue of its effective control of AIB Group plc.
Under a Master Service Agreement, . provides various services which include accounting, taxation and
administrative services to AIB Group plc (note b);
The following were the principal transactions during 2019 between AIB Group plc (the parent company) and .
(the subsidiary company):
Amounts included in AIB Group plc company’s income statement in relation to transactions with its immediate subsidiary, Allied Irish
Banks, p.l.c. are as follows:
2019 2018
Notes € m € m
Interest income 90 19
Operating expenses b 6 7
Dividend received 461 326
Amounts included in AIB Group plc company's statement of financial position in relation to balances with its immediate subsidiary,
. are as follows:
2019 2018
Notes € m € m
Investment in subsidiary undertaking e 9,996 12,940
Loans and advances to banks d 3,811 1,653
Prepayments and accrued income 35 19
Accruals and deferred income 13 7
The following transactions occurred between AIB Group plc and its subsidiary, . during 2019.
(a) AIB Group plc invested € 500 million in AT1 Securities (note j).
(b) AIB Group plc lent € 2,145 million to . (note d).
374  Financial Statements
l Credit risk information
The following table sets out the maximum exposure to credit risk for financial assets all of which are carried at amortised cost(1)
at
31 December 2019 and 2018:
375

General Information 1
2
3
4
5
6
General information
Shareholder information
Internet-based Shareholder Services
Ordinary Shareholders with access to the internet may:
–	
register for electronic communications on the following link, www.computershare.com/register/ie;
–	
view any outstanding payments, change your address and view your shareholding by signing into Investor Centre on
www.computershare.com/ie/InvestorCentre. You will need your unique user ID and password which you created during registration,
or register at www.computershare.com/ie/investor/register to become an Investor Centre member.
	
To register you will be required to enter the name of the company in which you hold shares, your Shareholder Reference Number
(“SRN”), your family or company name and security code (provided on screen); and
–	
download standard forms required to initiate changes in details held by the Registrar on the Investor Centre accessed above or via
the Investor Relations section of AIB’s website at www.aib.ie/investorrelations, clicking on the Shareholder Information and Personal
Shareholder Information option, and following the on-screen instructions.
Shareholders may also use AIB’s website to access the Company’s Annual Financial Report.
Stock Exchange Listings
AIB Group plc is an Irish registered company. Its ordinary shares are traded on the primary listing segment of the official list of the Irish
Stock Exchange/Euronext Dublin and the premium listing segment of the Official List of the London Stock Exchange.
Migration of Securities
The Irish Stock Exchange (now trading as Euronext Dublin) has to date relied on a Central Securities Depository (“CSD”) based in the
United Kingdom. This CSD is operated by Euroclear UK and Ireland and utilises a system called CREST to settle on-market trades of
shares in Irish listed companies like AIB.
Post Brexit, Euroclear UK and Ireland are considered a third country based CSD and therefore, not covered by the European regulatory
regime. A temporary and conditional equivalence was granted in December 2018, however, the Irish market may only continue using the
current settlement system until March 2021. Following a series of consultations with the Irish market, Euronext Dublin announced that
it will transfer the settlement of trades in Irish equities from CREST to Euroclear Bank, which is a CSD based in Belgium, before March
2021. This issue affects all companies listed on Euronext Dublin, not just AIB.
To facilitate the migration to Euroclear Bank, the Irish Government passed the Migration of Participating Securities Act in December 2019.
This legislation requires the passing of certain resolutions at an Extraordinary General Meeting (“EGM”) of the Company. At the time of
date of this Annual Financial Report a number of key issues relating to the migration remain outstanding. AIB intends to convene an EGM
to consider the migration resolutions at an appropriate time during 2020, once certainty around those key issues has been established.
Registrar
The Company’s Registrar is:376  General Information
Forward Looking Statements
This document contains certain forward looking statements with respect to the financial condition, results of operations and business
of AIB Group and certain of the plans and objectives of the Group. These forward looking statements can be identified by the fact that
they do not relate only to historical or current facts. Forward looking statements sometimes use words such as ‘aim’, ‘anticipate’, ‘target’,
‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, ‘may’, ‘could’, ‘will’, ‘seek’, ‘continue’, ‘should’, ‘assume’, or other words of similar
meaning. Examples of forward looking statements include, among others, statements regarding the Group’s future financial position,
capital structure, Government shareholding in the Group, income growth, loan losses, business strategy, projected costs, capital ratios,
estimates of capital expenditures, and plans and objectives for future operations. Because such statements are inherently subject to
risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking information. By their
nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those
expressed or implied by these forward looking statements. These are set out in Principal risks on pages 40 to 43 in the 2019 Annual
Financial Report. In addition to matters relating to the Group’s business, future performance will be impacted by Irish, UK and wider
European and global economic and financial market considerations. Any forward looking statements made by or on behalf of the Group
speak only as of the date they are made. The Group cautions that the list of important factors on pages 40 to 43 of the 2019 Annual
Financial Report is not exhaustive. Investors and others should carefully consider the foregoing factors and other uncertainties and
events when making an investment decision based on any forward looking statement.
General information
377

General Information 1
2
3
4
5
6
Additional Tier 1
Capital
Additional Tier 1 Capital (“AT1”) are securities issued by AIB and included in its capital base as fully CRD IV compliant additional tier
1 capital on a fully loaded basis.
Arrears Arrears relates to interest or principal on a loan which was due for payment, but where payment has not been received.
Customers are said to be in arrears when they are behind in fulfilling their obligations with the result that an outstanding loan is
unpaid or overdue.
Bank Recovery
and Resolution
Directive
The Bank Recovery and Resolution Directive (“BRRD”) is a European legislative package issued by the European Commission and
adopted by EU Member States. The BRRD introduces a common EU framework for how authorities should intervene to address
banks which are failing or are likely to fail. The framework includes early intervention and measures designed to prevent failure and
in the event of bank failure for authorities to ensure an orderly resolution.
Banking book A regulatory classification to support the regulatory capital treatment that applies to all exposures which are not in the trading book.
Banking book positions tend to be structural in nature and, typically, arise as a consequence of the size and composition of a bank's
balance sheet. Examples include the need to manage the interest rate risk on fixed rate mortgages or rate insensitive current
account balances. The banking book portfolio will also include all transactions/positions which are accounted for on an interest
accruals basis or, in the case of financial instruments, on a hold to collect and sell basis.
Basis point One hundredth of a per cent (0.01%), so 100 basis points is 1%. Used in quoting movements in interest rates or yields on securities.
Basis risk A type of market risk that refers to the possibility that the change in the price of an instrument (e.g. asset, liability, derivative) may
not match the change in price of the associated hedge, resulting in losses arising in the Group's portfolio of financial instruments.
Buy-to-let
mortgage
A residential mortgage loan approved for the purpose of purchasing a residential investment property.
Capital
Requirements
Directive
Capital Requirements Directive (“CRD”): Capital adequacy legislation implemented by the European Union and adopted by Member
States designed to ensure the financial soundness of credit institutions and certain investment firms and give effect in the EU to the
Basel II proposals which came into force on 20 July 2006.
Capital
Requirements
Directive IV
Capital Requirements Directive IV (“CRD IV”), which came into force on 1 January 2014, comprises a Capital Requirements
Directive and a Capital Requirements Regulation which implements the Basel III capital proposals together with transitional
arrangements for some of its requirements. The Regulation contains the detailed prudential requirements for credit institutions and
investment firms. Requirements Regulation (No. 575/2013) (“CRR”) and the Capital Requirements Directive (2013/36/EU).
Collateralised
bond obligation/
collateralised
debt obligation
A collateralised bond obligation (“CBO”)/collateralised debt obligation (“CDO”) is an investment vehicle (generally an SPE) which
allows third party investors to make debt and/or equity investments in a vehicle containing a portfolio of loans and bonds with
certain common features. In the case of synthetic CBOs/CDOs, the risk is backed by credit derivatives instead of the sale of assets
(cash CBOs/CDOs).
Commercial
paper
Commercial paper is similar to a deposit and is a relatively low-risk, short term, unsecured promissory note traded on money
markets and issued by companies or other entities to finance their short-term expenses. In the USA, commercial paper matures
within 270 days maximum, while in Europe, it may have a maturity period of up to 365 days; although maturity is commonly 30 days
in the USA and 90 days in Europe.
Commercial
property
Commercial property lending focuses primarily on the following property segments:
a) Apartment complexes;
b) Office projects;
c) Retail projects;
d) Hotels; and
e) Selective mixed-use projects and special purpose properties.
Common equity
tier 1 capital
(“CET1”)
The highest quality form of regulatory capital under Basel III that comprises ordinary shares issued and related share premium,
retained earnings and other reserves excluding cash flow hedging reserves, and deducting specified regulatory adjustments.
Common equity
tier 1 ratio
Common equity tier 1 ratio – A measurement of a bank’s common equity tier 1 capital expressed as a percentage of its total risk-
weighted assets.
Concentration
risk
Concentration risk is the risk of loss from lack of diversification, investing too heavily in one industry, one geographic area or one
type of security.
Glossary of terms
378  General Information
Contractual
maturity
The period when a scheduled payment is due and payable in accordance with the terms of a financial instrument.
Contractual
residual maturity
The time remaining until the expiration or repayment of a financial instrument in accordance with its contractual terms.
Credit default
swaps
An agreement between two parties whereby one party pays the other a fixed coupon over a specified term. The other party makes
no payment unless a specified credit event, such as a default, occurs, at which time a payment is made and the swap terminates.
Credit default swaps are typically used by the purchaser to provide credit protection in the event of default by a counterparty.
Credit
derivatives
Financial instruments where credit risk connected with loans, bonds or other risk-weighted assets or market risk positions is
transferred to counterparties providing credit protection. The credit risk might be inherent in a financial asset such as a loan or might
be a generic credit risk such as the bankruptcy risk of an entity.
Credit impaired Under IFRS 9, these are Stage 3 financial assets where there is objective evidence of impairment and, therefore, considered to be
in default. A lifetime ECL is recognised for such assets.
Credit risk The risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation.
Credit risk
mitigation
Techniques used by lenders to reduce the credit risk associated with an exposure by the application of credit risk mitigants.
Examples include: collateral; guarantee; and credit protection.
Credit spread Credit spread can be defined as the difference in yield between a given security and a comparable benchmark government security,
or the difference in value of two securities with comparable maturity and yield but different credit qualities. It gives an indication of
the issuer’s or borrower’s credit quality.
Credit support
annex
Credit support annex (“CSA”) provides credit protection by setting out the rules governing the mutual posting of collateral. CSAs
are used in documenting collateral arrangements between two parties that trade over-the-counter derivative securities. The trade
is documented under a standard contract called a master agreement, developed by the International Swaps and Derivatives
Association (“ISDA”). The two parties must sign the ISDA master agreement and execute a credit support annex before they trade
derivatives with each other.
Credit valuation
adjustment
Credit valuation adjustment (“CVA”) is an adjustment to the valuation of OTC derivative contracts to reflect the creditworthiness of
derivative counterparties.
Criticised Accounts of lower quality and considered as less than satisfactory are referred to as criticised and include the following;
Criticised watch: The credit is exhibiting weakness and is deteriorating in terms of credit quality and may need additional attention.
Criticised recovery: Includes forborne cases that are classified as performing having transitioned from default, but still requires additional management
attention to monitor for re-default and continuing improvement in terms of credit quality.
Customer
accounts
A liability of the Group where the counterparty to the financial contract is typically a personal customer, a corporation (other than a
financial institution) or the government. This caption includes various types of deposits and credit current accounts, all of which are
unsecured.
Debt
restructuring
This is the process whereby customers in arrears, facing cash flow or financial distress, renegotiate the terms of their loan
agreements in order to improve the likelihood of repayment. Restructuring may involve altering the terms of a loan agreement
including a partial write down of the balance. In certain circumstances, the loan balance may be swapped for an equity stake in the
counterparty.
Debt securities Assets on the Group’s balance sheet representing certificates of indebtedness of credit institutions, public bodies and other
undertakings.
Debt securities
in issue
Liabilities of the Group which are represented by transferable certificates of indebtedness of the Group to the bearer of the
certificates.
Default Default is considered to have occurred with regard to a credit obligor when either or both of the following events have taken place:
i. a credit obligor is past due 90 days or more on any material credit obligation to the Group; and/or
ii.	
the Group considers that the credit obligor is unlikely to pay their credit obligations, without recourse by the Group to actions
such as realising collateral (if held), or if for any other reason, the Group determines that the credit obligor is unlikely to pay
their credit obligations in full.
Derecognition The removal of a previously recognised financial asset or financial liability from the Group’s statement of financial position.
Glossary of terms
379

General Information 1
2
3
4
5
6
EBITDA Earnings before interest, tax, depreciation and amortisation.
ECB refinancing
rate
The main refinancing rate or minimum bid rate is the interest rate which banks have to pay when they borrow from the ECB under
its main refinancing operations.
ECLs Expected credit loss (“ECLs”) – The weighted average of credit losses with the respective risks of a default occurring as the weights.
Eurozone The eurozone consists of the following nineteen European Union countries that have adopted the euro as their common currency:
Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Portugal, Slovakia, Slovenia and Spain.
Exposure at
default
The expected or actual amount of exposure to the borrower at the time of default.
Exposure value For on balance sheet exposures, it is the amount outstanding less provisions and collateral held taking into account relevant netting
agreements. For off-balance sheet exposures, including commitments and guarantees, it is the amount outstanding less provisions
and collateral held taking into account relevant netting agreements and credit conversion factors.
First/second lien Where a property or other security is taken as collateral for a loan, first lien holders are paid before all other claims on the property.
Second lien holders are subordinate to the rights of first lien holders to a property security.
Forbearance Forbearance is the term used when repayment terms of a loan contract have been renegotiated in order to make these terms
more manageable for borrowers. Standard forbearance techniques have the common characteristic of rescheduling principal or
interest repayments, rather than reducing them. Standard forbearance techniques employed by the Group include: – interest only;
a reduction in the payment amount; a temporary deferral of payment (a moratorium); extending the term of the mortgage; and
capitalising arrears amounts and related interest.
Funded/
unfunded
exposures
Funded: Loans, advances and debt securities where funds have been given to a debtor with an obligation to repay at some future
date and on specific terms.
Unfunded: Unfunded exposures are those where funds have not yet been advanced to a debtor, but where a commitment exists to
do so at a future date or event.
Funding value
adjustment
Funding value adjustment (“FVA”) is an adjustment to the valuation of OTC derivative contracts due to a bank’s funding rate
exceeding the risk-free rate.
Guarantee An undertaking by the Group/other party to pay a creditor should a debtor fail to do so.
Home loan A loan secured by a mortgage on the primary residence or second home of a borrower.
Internal Capital
Adequacy
Assessment
Process
Internal Capital Adequacy Assessment Process (“ICAAP”): The Group’s own assessment, through an examination of its risk profile
from regulatory and economic capital perspectives, of the levels of capital that it needs to hold.
Internal liquidity
adequacy
assessment
process
The Internal Liquidity Adequacy Assessment Processes (“ILAAP”) is a key element of the risk management framework for credit
institutions. ILAAP is defined in the EBA’s SREP Guidelines as “the processes for the identification, measurement, management
and monitoring of liquidity implemented by the institution pursuant to Article 86 of Directive 2013/36/EU”. It thus contains all the
qualitative and quantitative information necessary to underpin the risk appetite, including the description of the systems, processes
and methodology to measure and manage liquidity and funding risks.
Internal Ratings
Based Approach
The Internal Ratings Based Approach (“IRBA”) allows banks, subject to regulatory approval, to use their own estimates of
certain risk components to derive regulatory capital requirements for credit risk across different asset classes. The relevant risk
components are: Probability of Default (“PD”); Loss Given Default (“LGD”); and Exposure at Default (“EAD”).
ISDA Master
Agreements
Standardised contracts, developed by the International Swaps and Derivatives Association (“ISDA”), used as an umbrella under
which bilateral derivatives contracts are entered into.
Leverage ratio To prevent an excessive build-up of leverage on institutions’ balance sheets, Basel III introduces a non-risk-based leverage ratio to
supplement the risk-based capital framework of Basel II. It is defined as the ratio of tier 1 capital to total exposures. Total exposures
include on-balance sheet items, off-balance sheet items and derivatives, and should generally follow the accounting measure of
exposure.
380  General Information
Liquidity
Coverage Ratio
Liquidity Coverage Ratio (“LCR”): The ratio of the stock of high quality liquid assets to expected net cash outflows over the next
30 days under a stress scenario. CRD IV requires that this ratio exceeds 100% on 1 January 2018.
Liquidity risk The risk that Group does not have sufficient financial resources to meet its obligations as they fall due, or will have to do so at an
excessive cost. This risk arises from mismatches in the timing of cash flows.
Loan to deposit
ratio
This is the ratio of loans and advances expressed as a percentage of customer accounts, as presented in the statement of financial
position.
Loan to value Loan to value (“LTV”) is an arithmetic calculation that expresses the amount of the loan as a percentage of the value of security/
collateral. A high LTV indicates that there is less of a cushion to protect the lender against collateral price decreases or increases in
the loan carrying amount if repayments are not made and interest is capitalised onto the outstanding loan balance.
Loans past due When a borrower fails to make a contractually due payment, a loan is deemed to be past due. ‘Past due days’ is a term used to
describe the cumulative number of days that a missed payment is overdue. Past due days commence from the close of business on
the day on which a payment is due but not received. In the case of overdrafts, past due days are counted once a borrower:
– has breached an advised limit;
– has been advised of a limit lower than the then current amount outstanding; or
– has drawn credit without authorisation.
When a borrower is past due, the entire exposure is reported as past due, rather than the amount of any excess or arrears.
Loss Given
Default
Loss Given Default (“LGD”) is the expected or actual loss in the event of default, expressed as a percentage of ‘exposure at default’.
Medium term
notes
Medium term notes (“MTNs”) are notes issued by the Group across a range of maturities under the European Medium Term Notes
(“EMTN”) Programme.
National Asset
Management
Agency
National Asset Management Agency (“NAMA”) was established in 2009 as one of a number of initiatives taken by the Irish
Government to address the serious problems which arose in Ireland’s banking sector as the result of excessive property lending.
Net interest
income
The amount of interest received or receivable on assets net of interest paid or payable on liabilities.
Net interest
margin
Net interest margin (“NIM”) is a measure of the difference between the interest income generated on average interest earning
financial assets (lendings) and the amount of interest paid on average interest bearing financial liabilities (borrowings) relative to the
amount of interest-earning assets.
Net Stable
Funding Ratio
Net Stable Funding Ratio (“NSFR”): The ratio of available stable funding to required stable funding over a 1 year time horizon.
New transaction
lendings
New transaction lending is defined as incremental increase in drawn balances against facilities granted for a specific period of time
whereby the borrower can draw down or repay amounts as required to manage cash flow. It includes revolving credit facilities,
overdrafts and invoice discounting facilities.
Non-performing
exposures
Non-performing exposures are defined by the European Banking Authority to include material exposures which are more than
90 days past due (regardless of whether they are credit impaired) and/or exposures in respect of which the debtor is assessed as
unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past due amount or the
number of days the exposure is past due.
Off-balance
sheet items
Off-balance sheet items include undrawn commitments to lend, guarantees, letters of credit, acceptances and other items as listed
in Annex I of the CRR.
Offsetting Offsetting, or ‘netting’, is the presentation of the net amounts of financial assets and financial liabilities in the statement of financial
position as a result of Group’s rights of set-off.
Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external
events. It includes legal risk, but excludes strategic and business risk. In essence, operational risk is a broad canvas of individual
risk types which include product and change risk, outsourcing, information security, cyber, business continuity, health and safety
risks, people risk and legal risk.
Glossary of terms
Optionality risk A type of market risk associated with option features that are embedded within assets and liabilities on the Group's balance sheet.
The embedded option features can significantly change the cash flows (and/or redemption) of the contract and can, therefore, effect
its duration, yield and pricing. Examples include bonds with early call provisions or prepayment risk on a mortgage portfolio. Where
these risks are left unhedged, it can result in losses arising in the Group's portfolio.
Prime loan A loan in which both the criteria used to grant the loan (loan-to-value, debt-to-income, etc.) and to assess the borrower’s history (no
past due reimbursements of loans, no bankruptcy, etc.) are sufficiently conservative to rank the loan as high quality and low-risk.
Principal
components
analysis
Principal components analysis (“PCA”) is a tool used to analyse the behaviour of correlated random variables. It is especially
useful in explaining the behaviour of yield curves. Principal components are linear combinations of the original random variables,
chosen so that they explain the behaviour of the original random variables, and so that they are independent of each other. Principal
components can, therefore, be thought of as just unobservable random variables. For yield curve analysis, it is usual to perform
PCA on arithmetic or logarithmic changes in interest rates. Often the data is “demeaned”; adjusted by subtracting the mean to
produce a series of zero mean random variables. When PCA is applied to yield curves, it is usually the case that the majority
(> 95%) of yield curve movements can be explained using just three principal components (i.e. a parallel shift, twist and bow).
PCA is a very useful tool in reducing the dimensionality of a yield curve analysis problem and, in particular, in projecting stressed
rate scenarios.
Private equity
investments
Equity securities in operating companies not quoted on a public exchange, often involving the investment of capital in private
companies.
Probability of
Default
Probability of Default (“PD”) is the likelihood that a borrower will default on an obligation to repay.
Regulatory
capital
Regulatory capital is determined in accordance with rules established by the SSM/ECB for the consolidated Group and by local
regulators for individual Group companies.
Re-pricing risk Re-pricing risk is a form of interest rate risk (i.e. a type of market risk) that occurs when asset and liability positions are mismatched
in terms of re-pricing (as opposed to final contractual) maturity. Where these interest rate gaps are left unhedged, it can result in
losses arising in the Group’s portfolio of financial instruments.
Repurchase
agreement
Repurchase agreement (“Repo”) is a short term funding agreement that allows a borrower to create a collateralised loan by selling
a financial asset to a lender. As part of the agreement, the borrower commits to repurchase the security at a date in the future
repaying the proceeds of the loan. For the counterparty to the transaction, it is termed a reverse repurchase agreement or a reverse
repo.
Residential
mortgage-backed
securities
Residential mortgage-backed securities (“RMBS”) are debt obligations that represent claims to the cash flows from pools of
mortgage loans, most commonly on residential property.
Risk-weighted
assets
Risk-weighted assets (“RWAs”) are a measure of assets (including off-balance sheet items converted into asset equivalents e.g.
credit lines) which are weighted in accordance with prescribed rules and formulas as defined in the Basel Accord to reflect the risks
inherent in those assets.
Securitisation Securitisation is the process of aggregation and repackaging of non-tradable financial instruments such as loans and advances, or
company cash flows into securities that can be issued and traded in the capital markets.
Single
Supervisory
Mechanism
The Single Supervisory Mechanism ("SSM") is a system of financial supervision comprising the European Central Bank (“ECB”) and
the national competent authorities of participating EU countries. The main aims of the SSM are to ensure the safety and soundness
of the European banking system and to increase financial integration and stability in Europe.
Special purpose
entity
Special purpose entity (“SPE”) is a legal entity which can be a limited company or a limited partnership created to fulfil narrow or
specific objectives. A company will transfer assets to the SPE for management or use by the SPE to finance a large project thereby
achieving a narrow set of goals without putting the entire firm at risk. This term is used interchangeably with SPV (special purpose
vehicle).
Stage allocation: Under IFRS 9, loans and advances to customers are classified into one of three stages:
Stage 1 Includes newly originated loans and loans that have not had a significant increase in credit risk since initial recognition.
Stage 2 Includes loans that have had a significant increase in credit risk since initial recognition but do not have objective evidence of being
credit impaired.
Stage 3 Includes loans that are defaulted or are otherwise considered to be credit impaired.
Stress testing Stress testing is a technique used to evaluate the potential effects on an institution’s financial condition of an exceptional but
plausible event and/or movement in a set of financial variables.
382  General Information
Structured
securities
This involves non-standard lending arrangements through the structuring of assets or debt issues in accordance with customer and/
or market requirements. The requirements may be concerned with funding, liquidity, risk transfer or other needs that cannot be met
by an existing off the shelf product or instrument. To meet this requirement, existing products and techniques must be engineered
into a tailor-made product or process.
Syndicated and
international
lending
Syndicated and international lending involves lending to entities by leveraging off their equity structures having considered the
cash generating capacity of the business and its capacity to repay any associated debt. Leveraging structures are typically used in
management and private equity buy-outs, mergers and acquisitions. Syndicated and international lending is extended typically to
non-investment grade borrowers and carries commensurate rates of return.
Tier 1 capital A measure of a bank’s financial strength defined by the Basel Accord. It captures common equity tier 1 capital and other instruments
in issue that meet the criteria for inclusion as additional tier 1 capital. These are subject to certain regulatory deductions.
Tier 2 capital Broadly includes qualifying subordinated debt and other tier 2 securities in issue. It is subject to adjustments relating to the excess
of expected loss on the IRBA portfolios over the accounting expected credit losses on the IRBA portfolios, securitisation positions
and material holdings in financial companies.
Tracker
mortgage
A mortgage with a variable interest rate which tracks the European Central Bank (“ECB”) rate, at an agreed margin above the ECB
rate and will increase or decrease within five days of an ECB rate movement.
Trade date and
settlement date
accounting
1.	
Trade date accounting records the transaction on the date on which an agreement has been entered (the trade date),
instead of on the date the transaction has been finalised (the settlement date).
2.	
Under the settlement date accounting approach, the asset is recognised on the date on which it is received by the Group,
on disposal, the asset is not derecognised until the asset is delivered to the buyer.
Value at Risk The Group’s core risk measurement methodology is based on an historical simulation application of the industry standard Value at
Risk (“VaR”) technique. The methodology incorporates the portfolio diversification effect within each standard risk factor (interest
rate, credit spread, foreign exchange, equity, as applicable). The resulting VaR figures, calculated at the close of business each
day, are an estimate of the probable maximum loss in fair value over a one day holding period that would arise from an adverse
movement in market rates. This VaR metric is derived from an observation of historical prices over a period of one year and
assessed at a 95% statistical confidence level (i.e. the VaR metric may be exceeded at least 5% of the time).
Wholesale
funding
Wholesale funding refers to funds raised from wholesale market sources. Examples of wholesale funding include senior unsecured
bonds, covered bonds, securitisations, repurchase transactions, interbank deposits and deposits raised from non-bank financial
institutions.
Yield curve risk A type of market risk that refers to the possibility that an interest rate yield curve changes its shape unexpectedly (e.g. flattening,
steepening, non-parallel shift), resulting in losses arising in the Group's portfolio of interest rate instruments.
Glossary of terms
384  General Information
A		 Page
Accounting policies 244
Annual General Meeting 375
Approval of financial statements 365
Associated undertakings 308
Auditor’s fees 288
Average balance sheets and
interest rates 53
B
Board Audit Committee 194
Board Committees 184
Board and Executive Officers 182
Business model risk 168
C
Capital 67
Capital adequacy risk 154
Capital contributions 333
Capital reserves 333
Capital redemption reserves 333
Chair’s statement 10
Chief Executive’s review 14
Conduct risk 166
Contingent liabilities and
commitments 337
Corporate Governance report 178
Credit impairment –
income statement 287
Credit ratings 82 and 134
Credit risk 79
Critical accounting judgements
and estimates 273
Currency information 365
Customer accounts 325
D
Debt securities in issue 326
Deferred taxation 316
Deposits by central banks
and banks 324
Derivative financial instruments 293
Directors 44
Directors’ interests 218
Directors’ remuneration report 216
Directors’ Responsibility Statement 224
Disposal groups and non-current
assets held for sale 292
Disposal of business 287
Distributions on equity shares 292
Dividend income 284
Dividends 365
E		 Page
Earnings per share 291
ECL 88
ECL allowance on financial assets 304
Employees 364
Exchange rates 365
F
Fair value of financial instruments 345
Finance leases and
hire purchase contracts 303
Financial and other information 365
Financial assets and
financial liabilities by
contractual residual maturity 151
Financial calendar 375
Financial liabilities by undiscounted
contractual maturity 152
Financial statements 237
Forbearance 135
Foreign exchange risk 161
Forward looking information 376
Funding and liquidity risk 145
G
Gain on financial assets 285 and 286
Glossary 377
Going concern 246
Governance and oversight 171
Group Company secretary 185
Group Internal Audit 199
I
Income statement 237
Independent auditor’s report 225
Intangible assets 309
Interest and similar income 284
Interest and similar expense 284
Interest rate risk in the banking book 155
Interest rate sensitivity 158
Investment securities 305
Investments in Group undertakings 339
Irish Government 360
L
Lease liabilities 325
Liquidity risk 145
Loans and advances to banks 302
Loans and advances to customers 303
M		 Page
Market risk 155
Memorandum items: contingent
liabilities and commitments and
contingent assets 337
Model risk 169
N
Net fee and commission income 285
Net trading (loss)/income 285
Nomination and Corporate
Governance Committee 204
Non-adjusting events
after the reporting period 365
Notes to the financial statements 243
O
Off-balance sheet arrangements and
transferred financial assets 340
Offsetting financial assets and
financial liabilities 333
Operating and financial review 52
Operating expenses 286
Operational risk 163
Other equity interests 331
Other liabilities 327
Other operating income 286
P
Pension risk 162
People and culture risk 167
Principal addresses 383
Property, plant and equipment 310
Prospective accounting changes 272
Provisions for liabilities and
commitments 327
R		
Regulatory capital and
capital ratios 67
Regulatory compliance 364
Regulatory compliance risk 165
Related party transactions 355
Report of the Directors 172
Retirement benefits 318
Risk appetite 75
Risk framework 72
Risk governance structure 38
Risk identification and
assessment process 72
Risk management 79
Risk management and
internal controls 220
Index
385


Schedule to the
Group Directors’ report 175
Segmental information 280
Share-based
compensation schemes 287
Share capital 330
Statement of cash flows 353
Statement of comprehensive income 238
Statement of changes in equity 241
Statement of financial position 239
Stock exchange listings 375
Subordinated liabilities and
other capital instruments 329
Subsidiaries and
consolidated structured entities 339
Supervision and regulation 222
T
Taxation 289
Transferred financial assets 340
V
Viability statement 219
W
Website 375
2019 Annual Report
and Form 20-F
Contents
This document constitutes the Annual Report and Financial Statements in
accordance with Irish and UK requirements and the Annual Report on Form
20-F in accordance with the US Securities Exchange Act of 1934, for CRH
plc for the year ended 31 December 2019. A cross reference to Form 20-F
requirements is included on page 267.
The Directors’ Statements (comprising the Statement of Directors’
Responsibilities, the Viability Statement and the Directors’ Compliance
Statement on pages 104 to 106), the Principal Risks and Uncertainties (on
pages 108 to 113), the Independent Auditor’s Report (on pages 116 to 124)
and the Parent Company financial statements of CRH plc (on pages 216 to
221) do not form part of CRH’s Annual Report on Form 20-F as filed with the
Securities and Exchange Commission (SEC).
Forward-Looking Statements
This document contains forward-looking statements, which by their nature
involve risk and uncertainty. Please see Disclaimer/Forward-Looking
Statements on page 103 for more information about these statements and
certain factors that may cause them to prove inaccurate.
Overview
CRH at a glance 2
Chairman’s Introduction 4
Strategy Review
Why Invest in Us 8
Our Executive Leadership 9
Chief Executive’s Review 10
Market Backdrop 12
Strategy 14
Business Model 16
Measuring Performance 18
Sustainability 20
Risk Governance 26
Business Performance
Business Overview 32
Finance Director’s Review 33
Segmental Reviews 40
Governance
Board of Directors 56
Corporate Governance Report 60
Directors’ Remuneration Report 74
Directors’ Report 102
Principal Risks and Uncertainties 108
Financial Statements
Independent Auditor’s Reports 116
Consolidated Income
Statements 128
Accounting Policies 133
Notes on Consolidated
Financial Statements 145
Supplementary
20-F Disclosures 224
Shareholder Information 248
Other Information 260
Cross Reference to Form 20-F 267
Index 270
View the Report on our website:
www.crh.com/investors/annual-reports/
CRH is the leading building materials business in the world. Our global footprint spans
30 countries, employing c. 80,300 people at over 3,100 operating locations, serving
customers across the breadth of the building materials spectrum.
Our Business
Ergon, part of CRH's Europe Materials Division, supplied 10,300m² of hollow-core floor slabs and 289 concrete beams
and columns for the construction of a new 15,000m² plumbing and heating distribution centre in Merelbeke, Belgium.
2019 Performance Highlights
CONTINUING &
DISCONTINUED
OPERATIONS1
CONTINUING
OPERATIONS
1
During 2019 the Europe Distribution business was classified as discontinued operations under IFRS 5 Non-Current Assets Held for Sale and Discontinued
Operations (refer to note 3 to the Consolidated Financial Statements for further information). Accordingly, all references to income statement data are on a
continuing operations basis throughout the Overview, Strategy Review and Business Performance sections (pages 2 to 51), unless otherwise stated.
*	
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted
investments’ profit after tax.
1. Details of how non-GAAP measures are calculated are set out on pages 225 to 228.
2 2 Our global business operates
across three Divisions: Americas
Materials, Europe Materials and
Building Products.
CRH at a glance
AMERICAS
MATERIALS
Products & Services
SALESOVERVIEW
BUILDING
PRODUCTS
Products & Services
SALES
€6.2billion Growth 0%
2018: €6.2 billion
c. 24,450 employees
c. 490 operating locations
19 countries
25%
Global Sales
Architectural
Products
Construction
Accessories
Paving & Construction
Services
Building Envelope
Infrastructure
Products
OVERVIEW
4 *	
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. See cautionary statement regarding forward-looking statements on page 103.
2. Net Debt/EBITDA (as defined)* is a non-GAAP measure as defined on page 227. The GAAP figures that are most directly comparable to the components of Net Debt/EBITDA (as defined)* include:
interest-bearing loans and borrowings (2019: €9,014 million; 2018: €9,316 million) and profit after tax (2019: €1,638 million; 2018: €1,345 million). In line with the purpose of the metric, as set out
on page 228, to “assess the Company’s level of indebtedness relative to its profitability and cash-generating capabilities”, the 2019 calculation is based on a continuing operations basis. For 2018,
the Group net debt position includes debt related to operations discontinued in 2019 and therefore for comparability purposes the 2018 calculation uses EBITDA (as defined)* from continuing and
discontinued operations.
I succeeded Nicky Hartery as Chairman on
1 January 2020. On behalf of the Board and my
fellow shareholders, I would like to pay tribute
to Nicky for his leadership and commitment in
his seven and a half years as Chairman and
to thank him for the advice and support which
he has generously provided to me during
the transition process. During Nicky's tenure
as Chairman, CRH’s market capitalisation
increased from €11 billion to €28 billion.
CRH also achieved significant profits in
2019 and is well set for further growth.
My Priorities
On taking over the role of Chairman my
priorities are as follows:
• Supporting the continued successful
implementation of CRH’s strategy, which
has been communicated previously and
which is set out on pages 14 to 17 of the
Strategy Review section;
• Ensuring that your Board and Management
continue to keep this strategy under review
so that it remains appropriate in a constantly
evolving external environment and enables
long-term sustainable value creation;
• Ensuring that the ongoing Board renewal
process, which is discussed in the
Nomination & Corporate Governance
Committee Report on pages 68 to 70, is
aligned with the strategic priorities of the
business and that the Board is composed
of Directors with the necessary qualities,
capabilities, experience and dedication to
protect and promote your interests and
those of other stakeholders in CRH;
• Providing constructive challenge to, and
support for, CRH’s committed, capable
and dynamic management team, while at
the same time having a robust succession
planning process in place for senior
executive roles;
• Enabling a continued strong focus on safety,
sustainability and CRH’s purpose and values
for the benefit of our shareholders, our
customers, employees, suppliers and wider
stakeholders; and
• Ongoing engagement with stakeholders,
particularly shareholders, to ensure that
their perspectives are understood.
2019 Performance
2019 was another year of strong delivery on
a range of strategic and operational initiatives,
whilst maintaining momentum for further
value creation. We continued to reshape the
portfolio through the divestment of our Europe
Distribution business and our 50% interest
in My Home Industries Limited (MHIL), a
cement manufacturer based in India. These
divestments were in line with our focus on
reallocating capital to sectors, geographies
and businesses more aligned with our current
strategy and business model.
During the year there was also a continued
focus on successfully integrating recent
acquisitions, such as Ash Grove Cement
Company (Ash Grove), and rigorous attention
to continually improving CRH’s operational
performance and customer offerings with
a comprehensive range of initiatives being
implemented.
The reshaping of our portfolio in 2019, ongoing
business improvement programmes and
trading performance in the year led to operating
cash generation of €3.5 billion in 2019, of which
€1.2 billion was deployed on maintenance and
expansionary/development capital expenditure,
€0.7 billion on acquisitions and €1.4 billion
was distributed to shareholders via dividends
and share buybacks. At the same time, CRH’s
balance sheet strength was enhanced resulting
in a Net Debt/EBITDA (as defined)*2
ratio of
1.7x at the year end.
Reflecting the strong performance in 2019,
CRH’s robust financial position and our
confidence for future sustainable growth, your
Board is recommending that a final dividend of
63.0c per share be paid, subject to shareholder
approval at the Annual General Meeting (AGM).
If approved, this would represent a 15%
increase in the full year dividend to 83.0c.
The Environment
Following the announcement of my
appointment as Chairman Designate in
September 2019, I met with a number of
shareholders representing c. 30% of CRH’s
share capital. One of the principal themes
in those meetings was investors’ keen
interest in understanding CRH’s approach
Richie Boucher
Chairman
2019 was another year of strong delivery
on a range of strategic and operational
initiatives, whilst maintaining momentum
for further value creation.
Chairman’s Introduction1
5
*	
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
2019 In Numbers
Operating Cash Flow
€3.5
Net Debt/EBITDA (as defined)*
at 31 December 2019
Cash Returns to Shareholders through
Dividends and Share Buybacks
EBITDA (as defined)*
€4.0
44%
%
%
of Reserves
23.
1
Female Directors on CRH Board
at 31 December 2019
1.7x 42
of Revenue from Products with
Enhanced Sustainability Attributes
Zero-Accident Locations in 2019
94
€1.4billion
billion
billion
billion
tonnes
to environmental matters. In 2018, the
Board created a new Safety, Environment
and Social Responsibility (SESR) Committee.
The operation of this Committee and its
work in 2019 on environmental sustainability
is highlighted in the Corporate Governance
Report on pages 60 to 63.
In addition, the excellent work of our
sustainability team in this area is outlined in
detail on pages 20 to 25.
CRH is on track to achieve a range of targets
underpinning its sustainability performance
by year-end 2020. The Group has already
achieved its target to reduce specific CO2
emissions by 25% compared to 1990 levels.
Utilising our own experience, expert advice and
relevant external benchmarks, further ambitious
targets and goals have been set for 2030 and
will be overseen by the Board and the SESR
Committee. Further details in relation to these
stretch targets are set out on page 21.
Your Board
Henk Rottinghuis and Pat Kennedy, who joined
the Board in 2014 and 2015 respectively, are
not seeking re-election and will be stepping
down from the Board at the conclusion of
the 2020 AGM. The Company and Board are
grateful to Henk and Pat for their significant
contributions and exemplary service during a
period of transformational change for CRH.
During 2019, Johan Karlström and Shaun
Kelly joined your Board. Johan’s most recent
executive role was as Chief Executive Officer
of Skanska AB, the international construction
company, whilst Shaun was until September
2019 Chief Operating Officer of KPMG
International, based in the United States (US).
Both Johan and Shaun bring very strong
skill sets and relevant global experience to
complement the Board and support the Group.
CRH Employees
The significant profit which CRH achieved in
2019 reflects the skills, initiative, qualities and
commitment of CRH’s employees, led by our
Chief Executive, Albert Manifold. Your Board is
grateful to Albert and his colleagues for all of
their contributions and their relentless drive to
continue to deliver sustainable value.
Richie Boucher
Chairman
27 February 2020
Inclusion and diversity is an important focus area for all CRH operating companies. Staker Parson Materials
& Construction, part of CRH’s Americas Materials Division, supports an inclusive and diverse environment
at its operations in Ogden, Utah, where it employs 300 people.
Why Invest in Us 8
Our Executive Leadership 9
Chief Executive’s Review 10
Market Backdrop 12
Strategy 14
Business Model 16
Measuring Performance 18
Sustainability 20
Risk Governance 26
8-29
Strategy Review
8 Industry Leading
Value & Returns +15.6%
Total Shareholder Return
Since 1970 CRH has delivered an industry-leading compound Total Shareholder Return (TSR)1
of 15.6%.
€100 invested in CRH shares in 1970, with dividends reinvested, would now be worth €121,000.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. TSR represents the total accumulated value delivered to shareholders (via gross dividends reinvested and share appreciation).
Why Invest in Us
Unique acquisition model
CRH builds and grows successful businesses by regularly acquiring small to mid-sized companies
that complement our portfolio and adding larger strategic deals to create further platforms for growth.
€14.0 billion
Development Spend since 2015
Long-term growth opportunity
There is natural demand for CRH products driven by population and economic growth and the need
to continually build and maintain the built environment.
+41%
Revenue Growth since 2015
Continuously improving
CRH is relentlessly focused on building better businesses through operational and commercial
excellence, coordinated and driven from the centre and delivered locally by our businesses
around the world.
500bps

EBITDA (as defined)* Margin
Improvement 2015 to 2019
Experienced leadership and strong talent pipeline
CRH’s world class leadership team has a proven track record of performance delivery,
underpinned by ongoing talent development and succession planning.
Proven track-record in cash generation and returns
Strong financial discipline is a hallmark of CRH. We have a proven, robust track record
in cash generation and returns.
+11%

Operating Cash Flows
CAGR since 2015
Scale in attractive markets
CRH is the largest building materials company in North America and a leading heavyside
business in Europe.
30
Countries Globally
Sustainable business model
To create long-term value, we embed sustainability principles in all areas of our strategy and
business model.
€8.1billion
2019 Revenue from Products with
Enhanced Sustainability Attributes
Balanced portfolio
CRH’s product range enables us to service infrastructure, residential and non-residential
demand for repair, maintenance and new build construction projects.
35%
Infrastructure
30%
Residential
35%
Non-Residential
Reserves
CRH has an extensive network of quarry locations in attractive local markets in North
America and Europe which is difficult for others to replicate.
23.1

Proven and Probable
Reserves 2019
billion
tonnes
2030
target
33%
Females in Senior Leadership
9
Our Executive Leadership
Senan Murphy
Group Finance Director
Appointed to the Board:
January 2016
Senan has over 30 years’
experience in international
business across financial services,
banking and renewable energy. He
joined CRH from Bank of Ireland
Group plc where he was the Chief
Operating Officer and a member of
the Group’s Executive Committee.
He previously held positions
as Chief Operating Officer and
Finance Director at Ulster Bank,
Chief Financial Officer at Airtricity
and numerous senior financial
roles in GE, both in Ireland and
the US.
Qualifications: BComm, FCA.
Keith Haas
President, Building Products
Keith began his business career
as an engineer at Amoco Chemical
Company and joined CRH’s
North American business in 1995.
While at CRH, he has served in a
number of business development
and executive leadership roles,
including President of our
Architectural Products Group
and subsequently President of
our Americas Products Division
between 2012 and 2018. Keith
is also on the Board of Directors
of the National Association
of Manufacturers in the US.
Qualifications: BE (Mechanical),
MBA.
David Dillon
President, Global Strategy
& Business Development
David joined CRH in 1998 in the
US, where he was Controller of
the Americas Materials Division.
He returned to Europe in 2003,
initially as Development Manager
for the Europe Materials Division.
He has since held a number of
senior operational and leadership
roles across the Group, including
Country Manager Finland in
the Europe Materials Division
and Managing Director Europe
Lightside. He was Divisional
President of Europe Lightside &
Distribution until the end of 2018.
Prior to joining CRH he held various
financial roles in the airline industry.
Qualifications: BComm, FCA.
Jim Mintern
Executive Vice President,
Chief of Staff to the Chief
Executive
Jim has over 30 years' experience
in the building materials industry,
nearly 20 years of which have
been with CRH. Jim joined CRH
as Finance Director for Roadstone
and since then has held a number
of positions across the Group,
including Managing Director of
each of the Western and Eastern
regions of our Europe Materials
Division and prior to that as
Country Manager for Ireland.
Working closely with Divisional
and operational leadership, Jim
has oversight of our Performance,
Group Technical Services, and
Safety activities.
Qualifications: BComm, FCA.
Albert Manifold
Group Chief Executive
Appointed to the Board:
January 2009
Albert was appointed a CRH
Board Director in January 2009.
He joined CRH in 1998. Prior to
this, he was Chief Operating Officer
of a private equity group. While
at CRH he has held a variety of
senior positions, including Finance
Director of the Europe Materials
Division, Group Development
Director and Managing Director
of Europe Materials. He became
Chief Operating Officer in January
2009 and was appointed Group
Chief Executive with effect from
1 January 2014.
Qualifications: FCPA, MBA, MBS.
Randy Lake
President, Americas Materials
Randy joined CRH in the Americas
in 1996 and has held several
senior operating positions across
multiple CRH businesses, initially
in Architectural Products, then
in Materials. In 2008 he was
appointed President of our
Americas Materials Performance
group, and prior to his current
role he led the launch of our
Building Solutions business.
Randy is actively involved in
the Materials industry in North
America and served as Chairman
of the US National Stone, Sand
& Gravel Association in 2018.
Qualifications: BS (Business
Administration), MBA.
Onne van der Weijde
President, Europe Materials
Onne joined CRH in January
2018 as Chief Operating Officer
for our Europe Materials Division
and was appointed Divisional
President in July 2018 with
responsibility for our cement,
lime, asphalt, aggregates and
concrete operations in mainland
Europe and in Asia. Onne has
extensive cement industry
experience, having worked across
four continents, including roles
as the CEO of Dangote Cement
in Nigeria and CEO of Ambuja
Cements Ltd. in India, prior to
joining CRH.
Qualifications: Bachelor of
Economics and Accounting, MBA.
Edwin Bouwman
Chief Human Resources Officer
Edwin joined CRH in 2009 as CFO
of our Products and Distribution
businesses in Europe and later
as CFO Europe. Edwin became a
member of CRH’s global leadership
team in 2014, was appointed Chief
Administrative Officer in 2018 and
in August 2019 took on the role of
Chief Human Resources Officer.
Prior to joining CRH, Edwin’s
career included a number of senior
leadership roles in multi-operating
company, multi-country
environments (such as Royal Dutch
Shell), and later as CFO and Board
Member for Roto Smeets Group, a
listed company in the Netherlands.
Qualifications: Drs. Economics.
Back Row / Front Row /
L to R as per biographies below.
10 As the leading building materials business
in the world, CRH has a long and proven
track record of consistently delivering for our
shareholders through the cycle. Our ability to
do so is underpinned by three core principles:
improving performance, growing our business
and creating value. Our relentless focus on
these principles supports the continuous
delivery of superior margins, returns and cash
for our shareholders.
Our strong performance in 2019, with
significant profit growth and positive
momentum across our business, has been
made possible by the strategic reshaping
of CRH over recent years.
In 2019 we significantly reshaped our business
into three Divisions: Americas Materials, Europe
Materials and a new global Building Products
Division, ensuring CRH is better positioned to
meet the changing needs of construction.
We also continued our focus on refining and
reshaping our portfolio to position our business
for higher growth and more sustainable returns.
CRH generated €2.1 billion of proceeds from
divestments in the year (2018: €3.0 billion)
which included €1.6 billion from the divestment
of our Europe Distribution business at an
attractive valuation.
Our new structure provides us with a narrower
and deeper focus, enabling us to better
leverage our global scale and drive value
above and beyond the sum of our individual
businesses.
Our ongoing strong cash generation capabilities
and balance sheet strength gives us significant
optionality, facilitating the return of €1.4 billion
(2018: €1.3 billion) of cash to shareholders in
2019 through dividends and our share
buyback programme. We invested €1.9 billion
(2018: €4.7 billion) in our business through
bolt-on acquisitions (€0.7 billion) and capital
investment (€1.2 billion), as well as significantly
reducing our year-end Net Debt/EBITDA
(as defined)* to 1.7x (2018: 2.1x).
We saw further benefits from our ongoing focus
on continuous margin improvement, particularly
in the second half of the year. The business
achieved an EBITDA (as defined)* margin
expansion of 230 basis points from continuing
and discontinued operations during the year
and we expect further progress in 2020.
Performance Highlights
Revenue from continuing and discontinued
operations increased by 6% to €28.3 billion
(2018: €26.8 billion) driven by positive
underlying construction demand and a
favourable pricing environment in our core
markets in Europe and North America.
EBITDA (as defined)* from continuing
and discontinued operations was ahead
of 2018, increasing by 25% to €4.2 billion
(2018: €3.4 billion). Reported profit after tax
was €1.9 billion (2018: €2.5 billion), reflecting
a further year of progress for the Group given
the prior year included an after-tax gain of
€1.1 billion on certain divestment activity.
Continuous business improvement and good
commercial management resulted in improved
returns. Return on Net Assets (RONA)2
for the
year was 10.1% (2018: 9.6%).
Earnings per share (EPS) for the year advanced
25% to 202.2c (2018: 161.2c) and the Board
has proposed to increase the dividend to 83.0c
per share, an increase of 15% on the previous
year’s level of 72.0c per share.
Operational Highlights
Supported by a positive economic backdrop
in the US, our businesses experienced
good momentum in underlying construction
activity. Sales in our Americas Materials
Division increased by 16% to
€10.4 billion (2018: €9.0 billion) and
EBITDA (as defined)* increased by 31%
to €2.0 billion (2018: €1.5 billion).
The Division has good exposure to the
infrastructure, residential and non-residential
sectors and performed well across key
markets despite increased raw material costs.
Weather-related headwinds experienced in
the first half of the year were offset by a good
performance in the second half of the year,
driven by volumes improvement, commercial
and operational initiatives and pricing progress.
Our US cement operations performed well
in 2019 with strong price realisation across
major markets and good synergy delivery.
The integration of Ash Grove is now complete
and the business is performing well.
In Europe, despite higher input costs, Western
European markets performed well.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. See cautionary statement regarding forward-looking statements on page 103.
2.	
RONA is a non-GAAP measure as defined on page 226. The GAAP figures that are most directly comparable to the components of RONA include: Group operating profit
(2019: €2,494 million; 2018: €2,071 million), total assets and total liabilities, respectively (2019: €37,310 million and €19,830 million respectively; 2018: €35,173 million and
€18,619 million respectively). Details of how non-GAAP measures are calculated are set out on pages 225 to 228.
Albert Manifold
Chief Executive
Our strong performance in 2019, with
significant profit growth and positive
momentum across our business, has
been made possible by the strategic
reshaping of CRH over recent years.
Chief Executive’s Review1
11
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. Details of how non-GAAP measures are calculated are set out on pages 225 to 228.
Eastern Europe benefited from higher levels
of growth, particularly in new build activity.
Construction activity in the United Kingdom
(UK) declined amidst Brexit-related uncertainty.
Overall, our Europe Materials Division
experienced a positive year with sales
increasing by 6% to €8.5 billion
(2018: €8.0 billion). Price increases and
a strong contribution from performance
improvement initiatives implemented across
the Division supported an increase of 15%
in EBITDA (as defined)* to €1.1 billion
(2018: €0.9 billion).
Against a solid demand backdrop in both
North America and Europe, as well as a
focus on commercial excellence, our newly
established Building Products Division reported
sales of €6.2 billion (2018: €6.2 billion), 2%
ahead on a like-for-like1
basis.
With an emphasis on continuous business
improvement across the Division, we saw
positive performances across all four product
groups which supported an increase of 22%
in EBITDA (as defined)* to €1.0 billion
(2018: €0.8 billion).
Portfolio Management and
Capital Allocation
Ongoing portfolio management is an
embedded practice at CRH which allows
us to reallocate capital to higher growth
markets where we see greater value-creation
opportunities.
The acquisition of Ash Grove for €2.9 billion
in 2018 strengthened our footprint in high
growth regions of the US and provided a
platform for future bolt-on activity. Our focus
in 2019 was on integrating Ash Grove into our
existing operations while continuing to leverage
synergies and drive value for our shareholders.
Bolt-on acquisitions are a fundamental
part of CRH’s growth strategy, generating
above average returns and complementing
the organic growth within our business. We
completed 62 small and medium sized
bolt-on deals for €0.7 billion in 2019
(2018: €0.7 billion) at attractive valuations.
Our vertically integrated business model
ensures that these deals enable us to provide
a full range of products and services to our
customers, while offering significant synergy
potential, delivering operational efficiencies and
driving value through the supply chain.
The majority of our divestment activity in 2019
related to the sale of our Europe Distribution
business in October for €1.6 billion. In addition,
we also completed the divestment of our
European Shutters & Awnings business for
€0.3 billion and our Perimeter Protection
business for €0.1 billion. In December we
divested our share of MHIL, our Indian joint
venture, for a total deferred consideration
of €0.3 billion.
Future Focus
We continue to actively invest in and allocate
capital to initiatives which improve our existing
businesses, including investment in capacity
upgrades and efficiency improvements.
The further refinement of our portfolio in
2019, in addition to the establishment of
our new Building Products Division has
resulted in a narrower, deeper and more
focused Group and together with ongoing
performance improvement initiatives across
our businesses, positively positions CRH to
capitalise on opportunities as they arise in the
future. Management is focused on using every
lever available to create further value for our
shareholders in 2020 and beyond.
Building a Sustainable Future
CRH is a global leader in sustainable building
materials and has a long history of producing
high-performing, climate-friendly materials
and products which play an important role in
shaping a more sustainable built environment.
This includes our concrete which is among
the most sustainable building materials in
existence when evaluated on a full life-cycle
basis. Concrete is fundamental to human
development and will continue to shape the
world we live in for generations to come.
As part of our longstanding focus on improving
the environmental performance of our materials
and products we have committed to further
reducing the CO2 intensity of our cement to
520kg CO2 /tonne of cementitious product
by 2030. This represents a 33% reduction in
specific net CO2 emissions compared with
1990 levels and covers the portfolio of cement
plants owned by CRH in 2019. In addition, the
Group has set an ambition to achieve carbon
neutrality along the cement and concrete value
chain by 2050 and we are committed to playing
our part in delivering a carbon neutral future.
We are also committed to partnering with our
customers to deliver sustainable solutions
and have set a target of generating 50% of all
product revenue from products with enhanced
sustainability attributes by 2025. These are
products which incorporate recycled materials,
use alternative fuels or energy sources, have
sustainability end-use, or a lower carbon
footprint.
See page 21 for full details of CRH’s 2030
sustainability targets.
Safety
At all of our sites, the number one priority is
the safety of our people and our approach
to workplace safety is uncompromising. I am
pleased to report that in 2019, 94% of our
locations were accident-free. We deeply regret
that there was one third-party fatality during
the year which underlines the need for us to
do even more to ensure the safety of anyone
coming into contact with our operations.
We are determined to continue to do all we
can to achieve our target of zero harm at our
operations.
Outlook
In our Americas Materials Division, supported
by continuing favourable economic conditions,
we expect growth in the US residential
and non-residential market sectors with
positive momentum in infrastructure activity,
underpinned by state and federal funding.
In our Europe Materials Division, we anticipate
positive construction demand in key markets
with steady progress in Western Europe and
good growth in Eastern Europe. While Brexit
has created uncertainty in the UK construction
market, we expect some stabilisation in 2020.
Against a positive backdrop in North America
and Europe, we expect further growth
in Building Products aided by ongoing
commercial and operational performance
initiatives.
For the Group overall, with a continued focus
on portfolio refinement, margin expansion,
cash generation and enhanced returns for
shareholders, we believe that 2020 will be a
year of further progress.
Albert Manifold
Chief Executive
27 February 2020
12 Our Balanced
Portfolio
Building a balanced portfolio is a core
constituent of our strategy and helps to
insulate our business from the impact
of cyclical fluctuations in any one of our
markets.
CRH manufactures and supplies a range of
building materials, products and innovative
solutions for the construction industry.
From primary materials that we extract,
process and supply, to products that are highly
engineered and high-value added, CRH is
uniquely positioned to address evolving trends in
global construction markets.
Our products can be found throughout the built
environment in a wide range of construction
projects from major public infrastructure to
commercial buildings and residential structures.
Demand for CRH’s materials and products is
driven by three primary demand fundamentals:
population growth, economic development and
the need to continually repair and maintain the
built environment.
Population Growth
Our materials and products are an essential
enabler of the built environment around the
world. This means there is a natural market
for our products wherever there is growth in
population and the associated construction
demand can be expected to drive day-to-day
organic growth for our businesses.
Economic Development
There is a strong correlation between population
growth and economic growth in developed
markets around the world. In addition, economic
development and growth drives investment
in residential, infrastructure and commercial
projects from the houses, roads, bridges, ports
and airports that serve our growing cities to
office blocks, retail centres and industrial and
leisure complexes.
Ongoing Repair and
Maintenance
There is a recurring need to continually repair
and maintain the existing built environment as
structures age over time.
At CRH we aim to have a portfolio which is
appropriately exposed to each of these primary
demand fundamentals, thereby ensuring
we benefit from growth and value-creation
opportunities associated with each.
Future Trends in Construction
In addition to the primary market fundamentals
driving our business today, CRH also monitors
the trends shaping the nature of construction
in the future. These include increasing
urbanisation and the growth of cities, demand
for more sustainable forms of construction and
the influence of technology and digitisation.
Adapting our business to the opportunities and
challenges created by these trends is a constant
focus for CRH and an important factor in how
we allocate our resources.
Market Backdrop
There is a natural demand for CRH’s materials and products which is driven by population and
economic growth and the need to continually build and maintain the built environment.
Three demand
fundamentals
2. ECONOMIC DEVELOPMENT
3. REPAIR AND MAINTENANCE
1. POPULATION GROWTH
By Division
41%
Americas
Materials
Percentages based on 2019 Group Sales
By End-Use
35%
Infrastructure
35%
Non-Residential
30%
Residential
Percentages based on 2019 Group Sales
New Build vs RMI
55%
New Build
45%
Repair,
Maintenance
& Improvement
(RMI)
Percentages based on 2019 Group Sales
34%
Europe
Materials
25%
Building
Products
13
The nature of construction is changing as
the industry evolves to meet the demands
of economic growth, shifting demographics
and sustainable development. Labour
constraints mean that businesses
need to adapt and bring products to
market that ease and speed up the
pace of construction while an increasing
demand for more sustainable, integrated
and value-added solutions is driving
innovation, productivity and technological
advancement across the industry.
As a leading supplier of building products
globally, CRH is at the forefront of that
change. Our businesses manufacture,
supply and deliver a wide range of high
quality, value-added, innovative products
and solutions needed to shape and
enhance the built environment for modern
communities.
Recognising the changing needs of
construction and the impact of those
changes on demand for our products,
CRH has established a new Building
Products Division to bring together related
products businesses across Europe, North
America and Asia Pacific into one global
platform, providing greater alignment on
strategies for performance improvement,
development and growth.
By establishing a single Division built
upon clusters of excellence across
Architectural Products, Building Envelope,
Infrastructure Products and Construction
Accessories, we can leverage our scale
and network capabilities to build upon
our well-established positions in existing
markets and across our core product
groups.
The new Division will also increase vertical
integration and collaboration opportunities
not only within the Division itself but also
with our materials businesses in Europe
and North America.
A key feature of the Division is its exposure
to attractive end-use markets offering
higher growth prospects and balance
through the cycle, while the lower
capital intensity of these businesses
delivers superior returns and good cash
conversion.
The Building Products Division is well
positioned to adapt and grow as markets
continue to evolve.
Introducing Building Products
Oldcastle BuildingEnvelope®
, part of CRH’s Building Products Division, supplied skylight and
architectural glass for the Leadership in Energy and Environmental Design (LEED©
) gold-certified Tepper
School of Business at Carnegie Mellon University in Pittsburgh. The products were critical to achieve the
thermal performance needed for the building’s LEED©
certification.
Market Development
Where appropriate, CRH operates a vertically
integrated business model. Organic growth is
complemented by identifying suitable businesses
which can be acquired and integrated into CRH
through bolt-on acquisitions.
Backed by a reserves network (23.1 billion
tonnes) that is difficult to replicate and strong
leadership positions in local markets, our materials
businesses are well positioned to capitalise on
value creating opportunities for consolidation and
expansion of existing operations.
Our biggest market, the US, is largely
unconsolidated. For example the top ten
aggregates businesses account for less than one
third of production. Fragmentation across the
industry creates opportunities for consolidation
through acquisitions which provide the potential
to drive further growth and value creation for our
shareholders.
North America
In North America, which includes the world’s
largest economy, the US, CRH is the largest
building materials business. Growth in North
America is underpinned by solid fundamentals
and positive demographics with the population
growing by 30 million people every decade,
driving associated construction growth.
In recent years we have reshaped and redirected
our businesses in the US to increase our
exposure to positive demand fundamentals in the
southern and western areas of the country.
Europe
In Europe, where the European Union (EU) is
the largest economic bloc in the world, CRH is
a leading heavyside building materials business.
In Western Europe, there is an attractive mix of
stable developed markets which continue to
deliver. In Eastern Europe higher growth markets
offer opportunities for growth through acquisition
activity.
Other Markets
CRH is a leading building products business
globally. This business produces high-value-
added, highly engineered products that can
be economically transported longer-distances,
opening up important export markets for CRH
beyond our core geographic footprint.
14 CRH is the leading building materials business in the world. Our focus is on creating
long-term value and delivering superior returns for our shareholders.
Strategy
Targeting superior growth and returns
OUR STRATEGY
Our strategy is to grow and improve our business in a sustainable and responsible way, through a relentless
focus on performance improvement, focused growth and value creation for the benefit of all our stakeholders.
DRIVING PERFORMANCE, GROWTH AND VALUE
TAKING A RESPONSIBLE AND SUSTAINABLE APPROACH
In executing our strategy, CRH is at all times focused on ensuring every lever we utilise to create value for our
shareholders is done so in a disciplined, responsible and sustainable manner, thereby mitigating potential risks.
FOUR PILLARS
CRH’s strategy is underpinned by four strategic objectives, which drive our ability to generate superior
margins, returns and cash on a continuous basis.
At any one time
we are engaged in
multiple initiatives
to improve our
business through
operational,
commercial and
financial excellence.
Continuous
Improvement
We allocate and
reallocate capital in
a disciplined and
focused way to
optimise the shape
of our business to
drive maximum
value for our
shareholders.
Focused
Growth
We build leadership
positions which
allow us to integrate
operations and
drive value through
harnessing the
benefits of scale and
integration.
Benefits of Scale
and Integration
We continuously
develop the next
generation of
performance
orientated,
innovative and
entrepreneurial
leaders.
Developing
Leaders
15
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
STRATEGY IN ACTION 2019
We are relentlessly focused on driving continuous
business improvement and value realisation through
operational, commercial and financial excellence
initiatives.
For example in 2019 our UK Cement & Lime business
undertook a Supply Chain Excellence (SCE) review
covering six areas: customer service offering, network
optimisation, order taking and scheduling model,
distribution road fleet strategy, value-adding technology
and organisational design. The main outcome was a
number of efficiency improvements to the businesses’
transport operating model where it expanded the scope
of its own fleet operations and moved from one national
transport partner to six regional partners. The SCE review
resulted in distribution cost savings as well as improved
customer service levels, safety improvements, increased
network resilience and capacity for growth.
Continuous Improvement
We continuously work to optimise our portfolio of
businesses through an ongoing and rigorous review
and assessment process. This informs our decisions
to allocate and reallocate capital and reshape our
business in response to changing market conditions and
opportunities. Since 2014 we have divested in
excess of €6.8 billion of businesses and surplus assets,
reallocating capital to higher growth areas.
In 2019 we continued to actively divest businesses which
were no longer a strategic fit for the Group including our
Europe Distribution business, our Shutters & Awnings
and Perimeter Protection businesses in Europe and our
cement joint venture in India. These divestments, together
with strategic acquisitions and capital investment in our
businesses, serve to support our efforts to transform
CRH into a business with a narrower and deeper focus in
attractive markets.
Focused Growth
Benefits of Scale and Integration
Our global scale and integrated business model enables
CRH to benefit from savings associated with centralising
experience, expertise, knowledge and insight.
During 2019 we continued to integrate and harmonise
procurement at a global level enabling us to deliver
procurement programmes in a more efficient and effective
way across the Group.
CRH procures c. €14 billion in products and services
annually in key areas such as raw materials, energy,
logistics, production services, consumables and
mobile plant.
By broadening the scope and depth of centralised
procurement across the Group we have made
significant progress in 2019 positively impacting Group
EBITDA (as defined)*.
In 2019 we continued our emphasis on training and
development through the continuous evolution of our
leadership programmes. These were attended by a range
of top talent from different parts of our business, ensuring
that there is a diverse, capable and expanding leadership
pool across all levels within the organisation. We piloted
a frontline leadership programme to build fundamental
leadership capabilities deep into the operations of our
business for the coming years.
We also broadened our development offering to include
critical experiences such as stretch assignments, global
collaboration projects and exposure to one-to-one
coaching as well as strengthening inclusion and diversity
training across our leadership programmes and senior
leadership teams. These initiatives support our overall
talent development approach and position us to deliver on
our business strategy into the future.
Developing Leaders
16 We continually focus on
building better businesses
through operational and
commercial excellence
initiatives designed to
maximise performance.
Continuous
Improvement
We take a disciplined and focused
approach to capital allocation and
reallocation, to ensure our capital
is deployed to where we see
optimum opportunity for growth.
Dynamic Capital
Management
Central Coordination /
Local Delivery
Our relentless focus on
performance is strategically
coordinated and driven from
the centre and delivered locally
by our operating businesses.
Disciplined Financial
Management
Our financial strength allows
us to benefit from a lower
cost of capital.
Our business is balanced
across materials, products and
end-use, servicing the breadth
of construction and mitigating
the impact of cyclical changes
in our industry.
Balanced
Portfolio
Business Model
Our
Resources
We aim to optimise our return on
the resources we use including:
How we create value and growth
CRH’s vertically integrated business model benefits from the efficient allocation of capital and
continuous business improvements across the Group.
How We
Create Value
We create value in a variety
of ways including:
17
We have a proven ability
to identify high-potential
businesses to integrate into
our Group that complement
our existing portfolio and
create further platforms
for growth at attractive
valuations.
Proven
Acquisition Model
CRH uses a dynamic
Enterprise Risk Management
(ERM) framework to identity,
manage and report risk in
a manner that supports
our strategic planning
processes, allowing us
to conduct business in a
sustainable manner.
Risk Mitigation
Benefits of Scale
and Integration
CRH’s global scale and
integrated business model
allow us to harness cost
savings and synergies
across our Group.
Why
It Matters
The value created benefits both
CRH and our stakeholders:
Value Created
in 2019
We create tangible value
for our stakeholders:
Prevented
1.6mtonnes

Benefits
to CRH
Financial strength
To support resilience,
flexibility and optionality
Investment
To drive continuous improvement
and optimise returns
Lower capital costs
Supports our ability to fund
value-creating investments
Shareholder returns
Through dividends, share buybacks
and share price appreciation
Customer solutions
Sustainable products that meet the
needs of our customers
Partner to suppliers
Resilient and reliable business partner
Job creation
Responsible employer in local
communities
Taxation contribution
Taxes paid to Governments
Benefits
to Society
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
18 Measuring Performance
CRH uses a number of financial and non-financial Key Performance Indicators (KPIs) to measure
performance across our business. KPIs are a consistent feature of how we operate and fundamental
to how we track progress towards achieving our strategic objectives.
We believe sustainability and corporate social responsibility are fundamental to CRH being the leading building materials
business in the world. We understand that a strong sustainability performance is a key driver in a competitive market and
can lead to increased business opportunities. To drive transparency and progress, we are committed to reporting on the
breadth of our sustainability performance. A selection of KPIs relating to three of our sustainability priority areas are below:
Sustainability Performance
1. CO2 emissions subject to final verification under the European Union Emissions Trading Scheme (EU ETS). CO2 emissions data includes Scope 1 (2019: 33.9m tonnes, 2018: 35.4m tonnes,
2017: 25.6m tonnes) and Scope 2 (2019: 2.6m tonnes, 2018: 2.7m tonnes, 2017: 2.6m tonnes) emissions. Scope 1 and Scope 2 emissions are as defined by the World Resources Institute
Greenhouse Gas Protocol.
2. We are highlighting the percentage of females in the senior management cohort as a KPI. Please refer to page 23 for further information on inclusion and diversity, including additional indicators.
Our focus for 2020
As we deliver our vision and
work towards our 2030 target
for 33% females in senior
leadership, our inclusion
and diversity strategy will
focus on four key areas:
communication, education,
people practices, data and
measures.
How did we do?
We recognise the real impact
of an inclusive workforce. The
percentage of females in senior
management increased in
2019 and as at 31 December
2019, 42% of the Directors of
CRH plc were female.
What do we measure?
We are committed to building
an inclusive and diverse
organisation. We measure
a range of KPIs in the area,
including the percentage of
females in senior management.
11%
10%
9%
2018 2019
2017
People
% Females in Senior Management2
11%

Environment
Greenhouse Gas Emissions1
Scope 1 and Scope 2 CO2
Emissions (kg/€ Revenue)
1.3kg/€
Revenue
Safety
% Zero-Accident Locations
94%
What do we measure?
A strong safety culture is a
key element of our business
strategy. We measure a wide
range of health and safety
KPIs including the percentage
of locations that had zero
accidents.
How did we do?
We continued to achieve
a high level (94%) of
zero-accident locations
due to an ongoing focus on
safety culture, investment
and training.
Our focus for 2020
Continued focus on
supervision, contractor
management, energy
safety and consequence
management, with the overall
aim of realising a culture
of safety and wellness and
working towards zero harm.
How did we do?
In 2019 we exceeded our
CO2
reduction commitment,
achieving a 26% decrease
compared with 1990 levels
through focusing on lower
carbon products, together
with Group-wide energy and
resource efficiency programmes.
Our focus for 2020
Our ambitious 2030 target
is 520kg CO2
/tonne of
cementitious product, a 33%
specific net CO2
reduction on
1990 levels. We have also set
an ambition to achieve carbon
neutrality along the cement
and concrete value chain by
2050.
What do we measure?
Energy efficiency and carbon
reduction are imperatives. We
measure direct and indirect
CO2
emissions as well as
specific indicators of efficiency,
including progress towards
targets.
19
€0.6bn
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. 	EBITDA (as defined)* Net Interest Cover is a non-GAAP measure as defined on page 227. The GAAP figures that are most directly comparable to the components of EBITDA (as defined)*
Net Interest Cover include: profit after tax: €1,638 million (2018: €1,345 million), finance costs: €346 million (2018: €339 million) and finance income: €20 million (2018: €34 million). Details of how
non-GAAP measures are calculated are set out on pages 225 to 228.
Financial Performance
As part of our strategic focus on continuous improvement, CRH uses financial KPIs to measure our progress and
foster positive performance behaviour. A selection of KPIs relating to four of our financial priority areas are below:
Cash Generation
Operating Cash Flow (OCF)
Our focus for 2020
Continued focus on
prudent management of
working capital and capital
expenditure to generate
strong operating cash flows
in 2020.
How did we do?
OCF was ahead in 2019 due to
strong cash generation, prudent
management of working capital
and other cash flows, combined
with the non-reoccurrence of
tax paid on the divestment
of our Americas Distribution
business in 2018.
What do we measure?
A measure of cash flows
generated to fund organic
and acquisitive growth,
dividends to shareholders,
share buybacks and debt
repayment.
€3.5bn
€1.9bn
€2.2bn
2018 2019
2017
€3.5bn
Our focus for 2020
We will continue our focus on
improving performance, growing
our business and creating value.
A further share buyback tranche
of €0.2 billion is underway and
a final dividend of 63.0c was
recommended by the Board,
a 15% increase on 2018's
full year dividend.
How did we do?
Our share buyback
programme continued in
2019 and a further €0.8 billion
was returned to shareholders.
Dividends of €0.6 billion were
paid during the year. Since
1970, CRH has delivered
a compound annual total
shareholder return of 15.6%.
What do we measure?
Among a range of measures
of shareholder returns, we
measure cash returned to
shareholders each year. This
includes dividends paid during
the year and additional cash
returned to shareholders
through our share buyback
programme.
€1.4bn
€1.3bn
€0.5bn
€1.4bn
2018 2019
€0.5bn
€0.5bn
2017
Dividends Paid Shares Re-purchased
Shareholder Returns
Cash Paid to Shareholders
€0.8bn
Financial Discipline
EBITDA (as defined)* Net Interest Cover1
Our focus for 2020
Maintain financial discipline
to ensure Net Interest Cover
remains strong. We remain
committed to protecting
our investment-grade credit
ratings.
How did we do?
EBITDA (as defined)* Net
Interest Cover at 12.3x
improved in 2019 due to
improved profitability and
Net Debt/EBITDA (as defined)*
finished at 1.7x reflecting
robust financial discipline.
What do we measure?
EBITDA (as defined)* Net
Interest Cover is a measure of
financial liquidity and capital
resources which underpins
investment-grade credit ratings
and the ability to access
finance.
10.5x
2018
10.1x
2017
12.3x
12.3x
2019
Value Creation
Return on Net Assets (RONA)
Our focus for 2020
Improving RONA through
effective margin management,
continued enhancement
of operating efficiencies
and tight working capital
management.
How did we do?
RONA at 10.1% in 2019
reflected continued
enhancement of operating
efficiencies and improved
profit margins.
What do we measure?
RONA is a measure of pre-tax
returns through excellence in
operational performance.
10.1%
9.6%
10.6%
2018 2019
2017
10.1%
€0.8bn
20 Our key sustainability priorities are determined
through a range of internal and external
processes to identify the ESG issues that
are most relevant to our business, society
and key stakeholders. These include annual
sustainability reporting by our businesses to
Group, review of issues raised through ERM
processes and regular formal materiality
assessment reviews. In 2019, we completed
a formal materiality assessment review, the
outcome of which will inform our reporting and
our evolving approach.
How We Report on Our
Performance
We are committed to reporting on the breadth
of our sustainability performance and to
publishing performance indicators, ambitions
and outcomes in key sustainability areas. We
publish an annual independently-assured
Sustainability Report, which is prepared in line
with the Global Reporting Initiative Standards
and available on www.crh.com. The 2019
Sustainability Report will be published in
March 2020. Key performance indicators on
sustainability are included on page 18 and
throughout this section.
How We View Sustainability
We aim to positively contribute to society
through the delivery of materials and products
that enhance the sustainability of structures
and consider the needs of our communities.
We believe that meeting these needs in a
manner that respects sustainability principles
and addresses potentially negative impacts will
create lasting value for all our stakeholders,
including investors, customers, employees,
partners, suppliers and local communities.
Sustainability is fundamental to achieving
our vision and is embedded in our business
strategy and approach.
How We Create
Sustainable Value
Our objective is to create sustainable value
by providing industry-leading products and
solutions to meet the construction needs of our
customers around the world. By considering
the full life-cycle of our products and innovating
to drive more sustainable outcomes in the
built environment, we aim to have a positive
impact on wider society and the environment
while increasing our ability to drive profits and
long-term value.
As well as being beneficial for our business,
these ambitions also have an outward focus.
Our actions are intended to contribute to
the delivery of key initiatives, such as the UN
Sustainable Development Goals (SDGs) and
the Paris Climate Agreement.
CRH is ranked among sector leaders by
leading Environmental, Social and Governance
(ESG) rating agencies. We are a constituent
member of indices including the FTSE4Good
Index, the STOXX®
Global ESG Leaders Index
and the Dow Jones Sustainability Index as well
as a long-term participant in CDP (formerly
Carbon Disclosure Project). In addition, many
of our operating companies have achieved
awards for excellence in sustainability.
How We Manage Sustainability
We take a risk-based, collaborative and
strategic approach to responding to global
trends in ESG areas including climate change,
urbanisation, resource scarcity, demographic
changes and technological advancements. We
regularly review our non-financial policies and
these were updated in 2019.
Risks related to sustainability are recognised
in our ERM Framework, described on pages
26 and 27, and details of sustainability risks
are included on pages 110 and 111. Our
non-financial due diligence processes are well
established, and we made no material changes
to these in 2019.
Developing a more sustainable built environment is one of the biggest contributions we can
make to society. Our ambition is to continue to drive improvement and growth across all areas of
sustainability, creating financial and non-financial value.
Sustainability
Delivering long-term value
Our Six Sustainability Priority Areas:
Customers
Safety
Collaboration
Environment
Integrity
People
21
To ensure that we continue to create sustainable value, we have set ambitious targets that are
aligned to the issues of most importance to our businesses and stakeholders. These ambitions
represent the areas in which we believe we can effect the most change.
CRH 2030 ambitions
Published in 2015, the United Nations’ (UN)
Sustainable Development Goals (SDGs) are a call
to action for a better and more sustainable future.
We have assessed the detailed targets behind each
of the 17 SDGs and identified the four that most
closely align to where we, as a building materials
company, can have the most impact and influence.
Our ambition is to
have a culture of
safety and wellness
working towards
zero harm
Why is This
Important?
There are multiple hazards
associated with our industry.
Because of this we integrate
an emphasis on safety into
everything we do.
We are focused on eliminating
fatalities and accidents in
our activities and on working
with others to drive safety
improvements across our
industry.
Our target:
Zero
fatalities
in any year
Our ambition is to play
our part in addressing
climate change as
we strive for carbon
neutrality along the
cement and concrete
value chain by 2050
Why is This
Important?
As society comes to terms with
the urgency and challenges
of climate change, we believe
we have a responsibility to
create high-performance,
low-carbon materials and
products to deliver a more
climate-resilient world. Our CO2
emissions reduction roadmap
is a science-based target (SBT)
at a 2o
scenario that has been
independently verified to be
in line with the Paris Climate
Agreement objectives.
Our target:
33%
CO2
reduction to 520kg
net CO2
/tonne cementitious
product by 2030, compared
with 1990 levels
Our ambition is to
be a business where
everyone has the
same opportunity to
develop and progress
Why is This
Important?
We recognise inclusion and
diversity as critical to sustaining
competitive advantage and
long-term success. We are
committed to building an
organisation where inclusion
and diversity is a core
leadership value, bringing
new ideas, perspectives
and ways of engaging with
people. Therefore, it is vital
we understand the barriers
to inclusion and diversity and
create purposeful change that
benefits us all.
Our target:
33%
female senior
leadership by 2030
Our ambition is to
offer more solutions
that contribute to
a sustainable built
environment
Why is This
Important?
Our customers are shaping
the sustainable built
environment of the future.
There is a demand on us
to provide the innovative
materials and solutions that
will enhance the customer’s
vision for sustainability while
ensuring a practical approach
to construction.
Our target:
50%
revenue from
products with
enhanced sustainability
attributes by 2025
22 Sustainability - continued
Managing our key priority areas
We embed a culture of safety
across all operations, as a
pre-requisite to addressing
safety risks and eliminating
accidents.
Our recently updated Health
and Safety Policy is applied
across all operating locations.
This is complemented by our
CRH Life Saving Rules, which
are a cornerstone of our safety
strategy.
Our global network of safety
officers works closely with our
businesses in implementing
policy and practice,
which is informed by the
recommendations from our
external advisory panel.
Safety
We work in an industry
with many safety risks.
Because of this, health and
safety is our top priority.
The health and safety
of our employees and
contractors is paramount.
• In 2019 94% of locations were accident-free
• 
Our accident frequency rate (number of accidents per
million manhours) has reduced by an average of 10% per
annum over the last decade
• 
We had zero employee or contractor fatalities to report in
2019. This was the first year since 2015 that there were
zero employee fatalities, and the first year since 2004
that there were zero contractor fatalities. However,
we deeply regret that one third-party fatality occurred
in 2019. We extend our sincere sympathies to their
family. We independently investigate all fatalities and
share the lessons learned as we focus on our zero
fatality target
• 
We continue to invest in safety initiatives and in the
past five years over €220 million has been invested
in this area. Focus areas include further development
of our front line leadership programme, contractor
management and safety culture, as well as electrical
and machine safety
• 
We continued to implement health and wellbeing
programmes, providing tools, social support and
strategies on physical and mental health
We work with stakeholders,
including customers and the
wider building materials industry,
to promote emissions reduction
and resource efficiency. We
apply our recently updated
Environmental Policy across all
operating companies and new
acquisitions.
Our climate strategy, which is
integrated with our business
strategy, seeks to provide more
building solutions that reduce
emissions and promote climate
resilience as well as reduce
emissions within our own
operations. Further information
on risks relating to climate,
including our approach to the
Task Force on Climate-related
Financial Disclosures (TCFD), is
included on page 27.
Environment How We Manage It How We Are Performing
With ever increasing
demands on world
resources and mounting
pressures on the global
climate, we believe that
it is important that we
continue to focus on
achieving continuous
improvement in standards
of environmental
management and
control, addressing our
environmental risks and
reducing potential impacts.
• 
In 2019 we achieved our 2020 CO2 reduction
commitment. We are now committing to an ambitious
target of 520kg CO2/tonne of cementitious product by
2030, covering the portfolio of cement plants owned by
CRH in 2019. This target is among the most ambitious
in our industry, representing a 33% reduction in
specific net cement CO2 compared with 1990 levels.
Our CO2 emissions reduction roadmap is a science-
based target (SBT) at a 2˚ scenario that has been
independently verified to be in line with the Paris
Climate Agreement objectives. We are committed
to playing our part towards delivering a carbon
neutral future with our ambition to achieve carbon
neutrality along the cement and concrete value
chain by 2050
• 
We are contributing to the circular economy and
providing end-of-product-life solutions for our
customers. In 2019, we reduced our reliance on virgin
raw materials by 35m tonnes (2018: 32m tonnes).
We used 2.2m tonnes of alternative fuels (2018:
2.1m tonnes); providing 33% of fuel requirements
for our cement plants (2018: 30%)
• 
We encourage biodiversity and 99% (2018: 98%)
of our locations have restoration plans
How We Manage It How We Are Performing
23
OPTERRA, part of CRH's Europe Materials Division, supplied concrete for this 'green bridge' on the Bundesstraße motorway project in Southern Bavaria, Germany. The project,
which runs through a forest area, includes a new motorway as well as 14 additional structures. The green bridge, completed in May 2019, will enable wildlife to cross the busy
motorway, thus reducing the impact of the project on the area's biodiversity.
We continue with our focus
on inclusion and diversity and
have a pragmatic programme
aimed at increasing social
diversity, not only of
employees, but also of the
pool of talent available to take
up opportunities in CRH.
We endeavour to ensure equal
access to rewarding career
and personal development
experiences for employees
worldwide. We place an
emphasis on training and skills
learning, as well as developing
and recruiting talented leaders
to guide our evolving and
growing company. We apply
our updated Social Policy
across all our operating
companies.
With 80,300 employees
in 30 countries, CRH is a
multinational and multicultural
organisation. Our ambition is
to be the employer of choice
in our industry, recognising
that people are critical to
sustaining competitive
advantage and long-term
success.
• 
In 2019 14% of employees were female. Of operational
staff, 7% were female, of clerical and administrative staff,
45% were female, while within senior management,
11% were female
• 
In recognition of our ambition to have greater gender
representation at senior levels of our organisation, we
have set a target of 33% female senior leadership by
2030 (2019: 15%)
• 
We continue with our employee engagement
processes. We collect information on the level
of engagement at Group level and findings are
actioned by management at operating company
level
People How We Manage It How We Are Performing
24 We take a wide view on
our stakeholder landscape
which includes investors,
customers, employees,
NGOs, local communities,
assessment organisations,
advocacy groups and other
interested parties. We interact
with legislative and regulatory
authorities at company level,
product group or regional
level, as appropriate.
We endorse human and
labour rights and support
the principles set out in the
articles of the UN’s Universal
Declaration of Human Rights
and the International Labour
Organisation’s Core Labour
Principles.
How We Manage It How We Are Performing
We engage with many
different stakeholders
around the world. As
well as carrying out our
responsibilities as a leading
business, collaboration
and engagement with
stakeholders helps us in
our ambition to contribute
to addressing global
sustainability challenges.
• 
In 2019 our Group companies hosted over 1,400
stakeholder events
• 
It is our policy to participate fully in the communities
in which we operate and to support charities and
local community projects through donations and
other assistance, actively encouraging employee
participation. In 2019 we made donations to various
organisations and initiatives, including community
development and environment, education and
research and job creation
• 
Our Supplier Code of Conduct was reviewed and
updated in 2019. We continue to assess risks and
opportunities at the commodity level and aim to
drive improvement actions at the point where we
have most influence with our suppliers
• 
In 2019 we published our annually-updated
‘Commitment to Human Rights: Modern Slavery
Statement of CRH plc’ on www.crh.com
Sustainability - continued
We work with our
customers in the design,
delivery and application of
sustainable products through
construction, building
materials and technical
support.
We place a focus on the
development of climate-
friendly building materials,
such as lower carbon
cements and recycled
aggregates, to reduce CO2
emissions, improve resource
efficiency and minimise
construction waste.
By considering the full life-
cycle of our products and
innovating to drive more
sustainable outcomes
in the built environment,
we aim to have a positive
impact on wider society
and the environment
while meeting customer
demands and delivering
profitable growth.
• 
In 2019 44% of our product revenue came from
products with enhanced sustainability attributes, such
as products that incorporate recycled material or that
have a lower carbon footprint. We have set a target
that 50% of our product revenue will come from
products with enhanced sustainability attributes by
2025
• 
Recycled asphalt pavement (RAP) and shingles
provided a fifth of raw materials requirements in
our US asphalt business (2018: 22%)
• 
We also focus on contributing to sustainable
buildings and 24% of revenue from products that
can be used directly in structures (such as concrete
and Building Envelope products) comes from
products that can be used in structures certified
to sustainability standards such as LEED©
and
BREEAM®
(2018: 24%)
Collaboration
Customers How We Manage It How We Are Performing
25
We embrace a “Speak-up” culture
where employees, customers,
suppliers and other stakeholders
are encouraged to raise any good
faith concerns they may have
relevant to the Code of Business
Conduct (CoBC), inappropriate or
illegal behaviour or violations of any
CRH policies or local laws.
Our comprehensive CoBC,
underpinned by our policies including
our Anti-Bribery Policy, explicitly
states that CRH does not tolerate
any form of bribery. At year end,
senior management complete an
Annual Compliance Certification
confirming that procedures at their
business complied with our CoBC
and accompanying policies.
How We Manage It How We Are Performing
We view integrity and
good governance as
fundamental to long-term
business success and we
are committed to meeting
the highest standards of
business conduct and
corporate governance.
• 
All new employees are provided with the CoBC
and training is provided on a regular basis to
relevant employees. In 2019, c. 34,600 employees
completed CoBC training
• 
Certain employees, determined according to
the risk profile of their role, undertake annual
advanced compliance training (ACT) covering
Anti-Bribery, Antitrust, Anti-Fraud and Anti-
Theft. In 2019 c. 9,800 employees completed
ACT training
• 
All CRH companies respect and comply with
the laws regarding political contributions in the
countries and regions in which they operate. In
the US, CRH supports the rights of employees
to participate in the political process through
employee-funded Political Action Committees
(PACs). CRH’s US operations provide administrative
support (consistent with applicable laws) to their
affiliated federal and state PACs in the US
Integrity
Employees
Local Communities
Investors
Customers
Suppliers
Government
and Regulators
Academic and
Scientific Community
Media
NGOs and
Pressure Groups
Stakeholder
How We Engage With Our Stakeholders
• Ongoing daily interactions
• Employee surveys
• Town hall meetings
• Employee newsletters
• Business performance and strategy
• Health and safety
• 
Inclusion and diversity
• One-to-one meetings
• Open days
• Site tours
• Participation in local events
• Potential local impact
• ESG
• Annual General Meeting
• One-to-one meetings and calls
• Surveys
• 
Investor conferences
and roadshows
• Ratings
• Business performance
• ESG
• Board and Executive remuneration
• Customer surveys
• Contractual meetings
• Formal market research
• Media and websites
• Packaging
• Exhibitions
• Quality and delivery
• Health and safety
• Sustainable products
• Customer relations
• Supplier surveys
• Contractual meetings
• Tender quotations
• Information requests
• Contract performance
• Human rights
• Health and safety
• Briefings
• Multi-stakeholder platforms
• Industry associations
• Audits
• Open days
• Environment and climate
• Corporate governance
• Potential local impacts
• Standard setters
• One-to-one meetings
• Seminars and lectures
• Presentations
• Round table discussions
• 
Intern, graduate and
apprenticeship programmes
• Product innovation
• Graduates and apprentices
• Eco-efficiency
• Media surveys
• Interviews
• Press releases
• 
Media briefings
• 
Social media
• Health and safety
• Business performance
• ESG
• Inclusion and diversity
• One-to-one meetings
• Presentations
• Participation in events
• Open days
• Environment and climate
• Human rights
Key Methods of Engagement Key Interests
26 Adding Value to
Decision-Making
ERM in CRH is a forward-looking, strategy-
centric approach to managing the risks inherent
in decision-making. It is a tool readily employed
by the Board and the wider business leadership,
firstly, when considering and setting strategic
objectives, and secondly, during strategic
execution to ensure we are dynamic and
responsive to threats and opportunities for the
Group.
Risk informed strategic planning is fundamentally
important to successfully address the myriad
of challenges we face in our relentless focus on
value creation. We are becoming a narrower,
deeper, more focused Group and strategic
decisions, such as the divestment of our Europe
Distribution business, are comprehensively
analysed with a risk lens during consideration
and execution.
As the leading building materials business in the
world we hold ourselves to stringent standards,
governed by our robust ERM framework. Our
framework allows us to add new depth to our
understanding of our customers and markets,
so we can buy better, run our assets better and
sell better than anyone else. It also gives us
insight to strengthen our existing platforms and
confidence to step into new markets.
ERM Framework
Our framework, embedded across the Group,
ensures a standardised, global system of
identification, management and reporting of
risks and sets out a structured and consistent
approach to threats and opportunities
throughout all our operations.
We employ the Three Lines of Defence
governance model to support the Board in its
responsibilities for risk management. Clarity
of ownership and responsibility is pervasive
throughout the Group, supported by a robust
governance structure.
Our risk framework is reinforced by integrated
processes which harness the collective risk
intelligence of the Group. The maturity of our risk
structures has integrated our bottom, middle
and top line perspectives, ensuring transparency
of threats, opportunities and controls in the
context of individually and collectively held
strategic objectives.
Risk Governance
Effective risk governance supports the realisation of our strategic objectives and the continued
success of our business. Our ERM framework is a core component of our performance orientated
culture, with leadership guided by a clear line of sight on risks and opportunities across the strategic
planning horizon. Embedding ERM into our business processes creates an environment where
leaders take a disciplined and focused view on risks to inform and hone our strategy.
Risk Management Framework
Risk Identification Viability
Impact
Risk
Appetite
Monitoring
Reporting
Risk
Governance
Risk
Strategy
Risk
Intelligence
Risk
Process
Integrated Risk Process
Given the dynamic nature of risk and the
evolutionary nature of ERM, the framework
operates as a business process at all levels
of the Group. Integration with strategy and
performance agendas, in addition to ongoing
management processes, ensures a robust and
effective risk environment assisting in maximising
the performance of our businesses.
Uncertainties that present themselves as
downside risks are assessed in line with the
Group's risk appetite and those which present
themselves as opportunities are sufficiently
explored and captured, where possible.
To reflect the Group’s diverse risk landscape
and thoroughly understand potential risks that
may materialise over the coming years, the
Group Risk function facilitates risk workshops
and Risk Committee meetings, supplemented,
for example, by seminars and regional risk
champion forums.
At CRH we believe
we realise reward
when we manage
risk effectively.
27
Climate-related Disclosures
With our global presence and industry
leadership positions, we are very aware
of our role in maintaining sustainability
principles while we fulfil the needs of each
communities’ stakeholders. We welcome
the development of recommendations for
improving climate-related disclosures and
an increasing focus from both regulators
and shareholders on our non-financial
performance. As a Group we will continue
to be diligent in ensuring transparency and
responsiveness to climate-related risks
and opportunities.
CRH is participating in a World Business
Council for Sustainable Development
(WBCSD) and Task Force on Climate-
related Financial Disclosures (TCFD)
convened “Preparer Forum” for the
construction sector to review current levels
of disclosure and develop guidelines for
the sector with respect to TCFD reporting.
We take a risk-based, collaborative
and strategic approach to responding
to climate change. The identification,
assessment and effective management
of climate-related risks and opportunities
are fully embedded in our dynamic risk
management process and our Climate
Change and Policy Principal Risk is
described in detail on pages 110 and 236.
We are committed to reporting on the
breadth of our sustainability performance
and to publishing performance indicators,
ambitions and outcomes in key
sustainability areas. We publish an annual
independently-assured Sustainability
Report, which is prepared in line with the
Global Reporting Initiative Standards and
available on www.crh.com.
First Line
of Defence
Operating company/
business leaders are
responsible for risk
identification, management
and ensuring that the control
environment is robust.
Second Line
of Defence
CRH has various oversight
functions which are
responsible for providing
subject matter expertise,
defining standards and
ensuring adherence.
Third Line
of Defence
Group Internal Audit
provides independent
assurance over the
control environment
on a continuous basis.
2019 Highlights
Risk Committee Risk Champion Network
Risk Oversight
Risk Strategy
Robust schedule with executive
representation, fostering
wide-ranging discussion and
informing strategy.
The Risk Committee provides
oversight, leadership and challenge
to the processes in place across
the Group to identify, assess and
manage risks inherent in strategic
decision-making and execution.
Redefined five year risk strategy
setting a roadmap for improvement
in risk management frameworks,
principles and practices.
Five key themes have been
identified to achieve our targeted
maturity, bringing risk closer to
our businesses, improving risk
governance and delivering value
creation.
c. 3,000 risks being managed
through our global ERM framework,
enabling full visibility, capability and
execution of strategy.
Our bottom-up reporting process
garners comprehensive risk insights
to ensure appropriate execution
of risk management and that
opportunities to leverage scale are
identified and acted upon.
c. 90 Risk Champions appointed
at all levels of the Group to support
and coordinate risk management
activities.
Our networks enhance the maturity
of the ERM framework locally and
globally by sharing risk profiles,
mitigation strategies and best
practice from around the Group.
Physical forums and virtual tools
ensure robust supports for this
cooperative community.
Responsible for monitoring and providing challenge on the principal
risks and uncertainties facing the Group. Receives regular updates
on risk management strategies, mitigation and action plans.
Executive committee responsible for setting risk strategy and
overseeing our Three Lines of Defence and how we identify, assess
and manage the principal and emerging global risks the Group
encounters in the pursuit of our strategic objectives.
Responsible for identifying and managing divisional risks, ensuring
risk management frameworks are operating effectively and
capturing upside of risk, where possible.
Embedded across businesses, functions and divisions. Responsible
for integration of risk management frameworks, regular reporting of
risks and sharing best practice mitigation.
Ultimately responsible for risk management across CRH. Sets
the risk appetite and ensures risks are managed within appetite.
Delegates responsibility to Audit Committee.
Board
Audit
Committee
Risk
Committee
Regional
Leadership
Risk
Champions
Risk Governance Framework
28 Strategic
Link between Principal Risks
and Strategic Objectives
Continuous
Improvement
Focused
Growth
Benefits of
Scale and
Integration
Developing
Leaders
PRINCIPAL STRATEGIC RISKS AND UNCERTAINTIES
Industry Cyclicality and Adverse Economic Conditions
Portfolio Management
Commodity Products and Substitution
Geopolitical and/or Social Instability
Strategic Mineral Reserves
Brexit
People Management
Joint Ventures and Associates
Operational
PRINCIPAL OPERATIONAL RISKS AND UNCERTAINTIES
Climate Change and Policy
Health and Safety Performance
Sustainability and Corporate Social Responsibility
Information Technology and/or Cyber Security
Compliance
PRINCIPAL COMPLIANCE RISKS AND UNCERTAINTIES
Laws and Regulations
Financial
PRINCIPAL FINANCIAL AND REPORTING RISKS AND UNCERTAINTIES
Financial Instruments
Defined Benefit Pension Schemes and Related Obligations
Taxation Charge and Balance Sheet Provisioning
Foreign Currency Translation
Goodwill Impairment
Changes
Climate Change and Policy has been created as a separate risk, having previously been disclosed as part of our sustainability risk. Following
detailed analysis and internal assessment carried out by the Risk Committee, and an increased focus on business continuity management,
Operational Continuity has been removed as a principal risk, with the risk being downgraded to a divisional risk.
Risk Governance - continued
The risks and uncertainties presented below, supplemented by a
broader discussion on pages 108 to 113 and 233 to 241, are
reviewed regularly and represent the principal risks and uncertainties
faced by the Group at the time of compilation of the 2019 Annual
Report and Form 20-F.
The Risk Committee helps ensure the risks highlighted in this report
are reflective of the potential barriers to the realisation of our business
strategy and that senior executives actively engage with risk, and
provide strategic direction. These risks form the basis of Board and
Audit Committee communications and discussions.
Principal Risks
Emerging Risks
The Group considers emerging risks as part of our comprehensive ERM framework.
We define an emerging risk to be a potentially significant threat where the impact
can’t yet be fully understood, restricting our ability to confidently define a strategy and
build capabilities to significantly influence the materiality of the risk.
A dynamic threat watchlist is maintained to enable early recognition of threats which
could impact the long-term performance of many areas of our business. The Risk
Committee regularly reviews the watchlist and deems certain threats to be accepted
emerging risks, which are integrated into our risk register and are subject to oversight
by the Audit Committee.
Risk Appetite Framework
The Risk Appetite Framework is a critical component
of CRH’s risk governance system through defining
the key risk parameters within which strategic
decision-making takes place, assisting with our
objectives of disciplined and focused growth.
The Board approves the Risk Appetite Framework
on an annual basis in line with good corporate
governance practice.
29
Appropriate stress testing of certain key
performance, solvency and liquidity assumptions,
such as EBITDA (as defined)* margins, Net Debt/
EBITDA (as defined)*, and EBITDA (as defined)*
Net Interest Cover, underlying the Plan has been
conducted taking account of the principal risks
and uncertainties faced and possible severe
but plausible combinations of those risks and
uncertainties. Formal and systematic analysis
of risk scenarios is a core focus of the Risk
Committee and is supplemented by the sensitivity
analysis focused on the three core scenarios
modelled above.
The sensitivity analysis presumed the availability
and effectiveness of various mitigating actions,
such as the reduction of capital expenditure and
cost rationalisation, which could realistically be
implemented to avoid or reduce the impact or
occurrence of those risks and uncertainties. In
evaluating the likely effectiveness of such actions,
the conclusions of the Board’s regular monitoring
and review of risk management and internal
control systems were taken into account.
Conclusion
While the Board acknowledges that the
potential severity, complexity and velocity of
the risks assessed may change, based on their
assessment of viability as described, the Board
has a reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities as they fall due over the aforementioned
three-year period to 31 December 2022.
Longer Term Viability Statement
Our Viability Statement, which does not form
part of the Annual Report and Form 20-F,
as filed with the SEC, has been prepared in
accordance with the UK Corporate Governance
Code 2018.
The Board has carried out a robust assessment
of our current position and the principal risks
facing the Group, including those which
would threaten its business model, future
performance, solvency or liquidity. The nature
of the strategies, practices and controls to
mitigate those risks are addressed in the
Principal Risks and Uncertainties section on
pages 108 to 113.
The Board’s consideration of the long-term
viability of the Group is an extension of the
strategic planning process. This process
includes regular budget reviews as part of the
internal reporting cycle, financial forecasting
and performance reviews, a comprehensive
enterprise risk management assessment and
scenario planning involving our principal risks
and uncertainties. Our business strategy is to
deliver sustainable value for our stakeholders
by maintaining financial and operational
discipline for the long term.
Period of Viability Statement
In accordance with Provision 31 of the UK
Corporate Governance Code 2018, the Board
has reviewed the length of time to be covered
by the Viability Statement, particularly given its
primary purpose of providing investors with a
view of financial viability that goes beyond the
period of the Going Concern Statement.
Using the Group Strategic Plan (the ‘Plan’),
which is prepared annually on a bottom up
basis and is approved by the Board, the
prospects of the Group have been assessed
over a three-year period from 1 January 2020
to 31 December 2022 inclusive.
The Board believes that a three-year viability
statement is appropriate for the following
reasons:
• 
It aligns with our normal strategic planning
time horizon and associated principal risks
and uncertainties;
• 
Construction activity, and therefore demand
for the Group’s products, is inherently
cyclical as it is influenced by global and
national economic circumstances, creating
uncertainty for long-term forecasting;
• 
It aligns with our long-term management
incentives, such as the deferred element of
the Annual Performance-related Incentive
Plan which links the value of executive
Directors’ reward with the long-term
performance of the CRH share price; and
• 
Uncertainty increases inherently with
expanding time horizons potentially
impacting the large number of external
variables that need to be factored in to
establish a reasonable and robust forecast
of the Group’s business.
Overall, a three-year period is deemed to
achieve a suitable balance between long and
short-term influences on performance.
Approach to Assessing Viability
The prospects of the Group are assessed
against the Plan and projections consider
the Group’s cash flows, committed funding
and liquidity positions, forecast future funding
requirements and other key financial ratios,
including those relevant to maintaining the
Group’s investment grade credit ratings.
In conducting the viability assessment, the
Board has considered our strong balance
sheet and cash flow generation, our dynamic
capital allocation model underpinned by
comprehensive portfolio reviews and capital
appraisals, and our philosophy of continuous
improvement.
Scenario 1:
Economic Environment
Global downturn prompting
revenue reduction and
margin compression
Scenario 2:
One-Off Expense
Impact of a potential large
event, fine and/or penalty
- Industry Cyclicality and Adverse Economic Conditions
- Portfolio Management
- Brexit
- Laws and Regulations
- Geopolitical and/or Social Instability
- Information Technology and/or Cyber Security
- Industry Cyclicality and Adverse Economic Conditions
- Portfolio Management
- Brexit
- Laws and Regulations
- Geopolitical and/or Social Instability
- Information Technology and/or Cyber Security
Scenario 3:
Combination (1 and 2)
Combination of prior
scenarios overlapping or
occurring simultaneously
Relevant Principal Risks
Scenario Modelled
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
The Joliette cement plant in Quebec, Canada, part of CRH’s Americas Materials Division, supplies more than
ten types of cement to customers across Canada and the Northeastern US. The plant has 180 employees and
has been in operation for more than 50 years. It is a pioneer in the use of Alternative Fuels and Raw Material (AFR)
in the cement production process, with more than 30% of fossil fuels replaced by alternative fuels.
Business Overview 32
Finance Director’s Review 33
Segmental Reviews 38
Business Performance
32 Business Overview
An overview of Group revenue and operating profit for each of the reporting segments for 2017,
2018 and 2019 is as follows:
(i) As set out in note 2 to the Consolidated Financial Statements on page 147 the Group has three reporting segments; Americas Materials, Europe Materials and Building Products. Comparative segment
amounts for 2017 and 2018 have been restated where required to reflect the new format for segmentation.
(ii) During 2019 the Europe Distribution business was classified as discontinued operations. Comparative amounts for 2017 and 2018 have been restated.
Americas Materials Europe Materials Building Products
2019 was another year of growth for CRH,
supported by a positive demand backdrop in
the Americas and in key regions in Europe.
With good contributions from acquisitions and
tailwinds from currency exchange movements,
sales of €28.3 billion from continuing and
discontinued operations for the period were
6% ahead of 2018.
Year-end net debt of €6.7 billion
(2018: €7.0 billion) was reflective of our strong
operating cash generation and continued
portfolio refinement with net disposal proceeds
after acquisition spend of €1.4 billion
(2018 outflow: €0.6 billion) offset by total
distributions to shareholders of €1.4 billion
(2018: €1.3 billion). Net Debt/EBITDA (as
defined)* was 1.7x (2018: 2.1x).
Key Components of 2019
Performance
Economic growth continued in the US in 2019,
with improvements in the infrastructure sector
and solid fundamentals in key residential and
non-residential markets. Headwinds driven by
flooding and wet weather in the first half of the
year were offset by a stronger second half and
like-for-like sales in Americas Materials for the
full year increased 4% over 2018.
In Europe Materials, organic sales were 5%
ahead due to good activity in key markets
and pricing progress across all product lines.
Performance was positive for our businesses
in Eastern and Western Europe, which
offset challenging trading conditions in the
UK as construction activity declined amidst
Brexit-related uncertainty.
Building Products saw continued
improvements in 2019 reflecting a positive
demand and pricing backdrop and like-for-
like sales were 2% ahead of 2018. Underlying
trends in residential and non-residential activity
were positive in the West Coast and Southern
regions of the US and our main markets in
Europe also experienced good demand.
Our Europe Distribution business was divested
at the end of October 2019 and was classified
as discontinued operations for reporting
purposes. The business experienced continued
demand in mainland Europe aided by milder
weather conditions, partly offset by challenges
in Switzerland.
EBITDA (as defined)* from continuing and
discontinued operations of €4.2 billion was
25% ahead of 2018 (2018: €3.4 billion)
with the benefit of solid underlying growth,
continued focus on operational and commercial
performance, margin-enhancing acquisition
activity and the impact of IFRS 16 Leases2
.
Reported profit after tax was €0.6 billion behind
2018 at €1.9 billion (2018: €2.5 billion), as the
prior year’s profit after tax was augmented by
the €1.1 billion after tax profit on disposal on the
sale of our Americas Distribution business.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. See cautionary statement regarding forward-looking statements on page 103.
2. The impact of IFRS 16 Leases on EBITDA (as defined)* is €378 million from continuing and discontinued operations.
The euro weakened against most major
currencies during 2019 resulting in the average
euro/US Dollar rate strengthening from 1.1810
in 2018 to 1.1195 in 2019 and the Pound
Sterling strengthening from an average 0.8847
in 2018 to 0.8778 in 2019. Overall currency
movements resulted in a favourable net foreign
currency translation impact on our results as
shown on the table on page 34. The average
and year-end 2019 exchange rates of the
major currencies impacting on the Group are
set out on page 144.
Change in Reporting Currency
to US Dollar
Within our current portfolio of businesses, our
euro denominated earnings, while sizeable,
are a relatively lower proportion of overall
earnings. To reduce the potential for foreign
exchange volatility in our future reported
earnings, the Group has decided to change
its reporting currency to US Dollar effective
from 1 January 2020.
Finance Director’s Review 20191
Senan Murphy
Finance Director
2019 was a year of continuing business
improvement with strong profit delivery,
expansion in margin and increased
cash generation.
34 Key Components of 2019 Performance
(i) CRH’s share of after-tax profits of joint ventures and associated undertakings.
(ii)	
Excludes the impact of IFRS 16 Leases on discontinued operations which is €67 million on EBITDA (as defined)*, €4 million on operating profit and
€7 million on finance costs.
Liquidity and Capital Resources
- 2019 compared with 2018
The comments that follow refer to the major
components of the Group’s cash flows for
2019 and 2018 as shown in the Consolidated
Statement of Cash Flows on page 132.
Throughout 2019, the Group remained focused
on cash management, targeting working
capital in particular. Management delivered
a net working capital outflow of €64 million
(2018: €463 million), and together with 2019’s
improved profitability and the positive impact of
the non-reoccurrence of cash outflows related
to the Americas Distribution discontinued
operation (primarily the tax paid on the profit
on disposal) the Group’s operating cash flow
increased to €3.5 billion (2018: €1.9 billion).
Working capital was €2.1 billion at year end
(2018: €2.5 billion) representing 8.5% of
continuing sales (2018: 9.4% on a continuing
and discontinued basis). CRH believes that
its current working capital is sufficient for the
Group’s present requirements.
Finance Director’s Review 2019 - continued
Focused investment in property, plant and
equipment in markets and businesses with
increased demand backdrop and efficiency
requirements, resulted in higher cash outflows
of €1.2 billion (2018: €1.1 billion), with spend
in 2019 representing 102% of depreciation
on owned assets (2018: 105%).
Reflective of the ongoing strategy of
active portfolio management, the Group
invested €0.7 billion on 62 transactions
(2018: €3.6 billion) which was financed by
divestment and disposal proceeds of
€2.1 billion (net of cash disposed and
deferred proceeds) (2018: €3.0 billion).
The Group continued its share buyback
programme and, in 2019, 27.4 million
(2018: 27.9 million) ordinary shares were
repurchased on the London Stock Exchange
(LSE) and Euronext Dublin for a total
consideration of €0.8 billion (2018: €0.8 billion),
at an average price of €28.87 (2018: €28.24)
per share. The Group announced a further
€0.2 billion tranche of the share buyback
programme on 7 January 2020 to be
completed no later than 31 March 2020.
These buybacks, together with cash dividend
payments of €0.6 billion (2018: €0.5 billion),
reflect the Group’s continued commitment
to returning excess cash to shareholders.
Year-end interest-bearing loans and borrowings
decreased by €0.3 billion to €9.0 billion
(2018: €9.3 billion). At year end, the weaker
euro against the US Dollar had a negative
translation impact on net debt.
Reflecting all these movements, net debt
of €6.7 billion at 31 December 2019 was
€0.3 billion lower than year-end 2018
(€7.0 billion). The Group is in a good financial
position. It is well funded and Net Interest
Cover (EBITDA (as defined)*/net debt related
interest costs) is 12.3x (2018: 10.5x).
The Group ended 2019 with total liquidity
of €7.4 billion, comprising €3.8 billion of cash
and cash equivalents on hand and €3.6 billion
of undrawn committed facilities which are
available until 2024. At year end, the Group
had sufficient cash balances to meet all
maturing debt obligations (including leases) for
the next four years and the weighted average
maturity of the remaining term debt was
11.6 years.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
35
In April 2019, the Group successfully carried
out an amendment and extension of its
€3.5 billion revolving credit facility.
The Group also has a US$2 billion US
Dollar Commercial Paper Programme
and a €1.5 billion Euro Commercial Paper
Programme of which there were no
outstanding issued notes at year end. The
purpose of these programmes is to provide
short-term liquidity at attractive terms.
Contractual obligations and Off-Balance Sheet
arrangements are disclosed on page 229 of
this Annual Report and Form 20-F.
Segmental Reviews
The sections on pages 38 to 51 outline the
scale of CRH’s continuing operations in
2019 and provide a more detailed review
of performance in each of CRH’s reporting
segments. A review of the discontinued
operations, Europe Distribution, is also
included on pages 49 and 52 for information.
2019
Demonstrating CRH’s strategy of active
portfolio management, the Group invested
€0.7 billion in 62 acquisition/investment
transactions in 2019 (including deferred and
contingent consideration in respect of prior
year acquisitions).
The Building Products Division completed a
total of 16 bolt-on acquisitions at a cost of
c. €460 million. Four of these acquisitions
were completed in Europe and one in
Australia at a cost of €65 million, while the
remaining 11 were completed in North
America for consideration of c. €395 million.
One of the largest acquisitions in 2019
was the November acquisition of Torrent
Resources, Inc. for c. €75 million. This
acquisition strengthens CRH’s storm
water and water management presence
in Western US and offers significant
commercial and operational synergy
potential to our Infrastructure Products
business.
The Americas Materials Division completed
27 bolt-on acquisitions and two investments
at a cost of c. €210 million, the majority
of which were designed to bolster our
operational footprint through the addition
of c. 260 million tonnes of mineral reserves.
The most significant acquisition in Americas
Materials was that of Windsor Rock
Products for c. €30 million. Windsor Rock
Development Review
Products is a strong fit with our existing
operations in Oregon and adds c. 25 million
tonnes of reserves to our portfolio.
The Europe Materials Division completed
15 bolt-on acquisitions and two investments
at a cost of c. €55 million.
On the divestment front, the Group
completed 11 transactions and realised
business and asset disposal proceeds of
€2.1 billion. The majority of divestment
proceeds related to the divestment of the
Europe Distribution business in October
2019 for a final agreed consideration of
€1.6 billion. Other transactions in 2019
included the divestment of the European
Shutters & Awnings business for a total
consideration of €0.3 billion in June, the
divestment of the Perimeter Protection
business in Europe in September 2019
for €0.1 billion together with seven smaller
business divestments completed in the US
and UK.
On 31 December 2019, the Group divested
of its share of the Indian joint venture,
MHIL, for a total deferred consideration of
€0.3 billion.
In addition to these business divestments,
the Group realised proceeds of €0.1 billion
from the disposal of surplus property, plant
and equipment.
36 Finance Director’s Review 2018
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. Net deferred tax liabilities of €447 million is stated on a continuing (€440 million) and discontinued (€7 million) basis.
The overall trading environment for the Group
in 2018 was positive with good demand and
favourable market fundamentals in the Americas
coupled with positive underlying momentum in
Europe; both experienced against a backdrop of
energy-related input cost inflation and significant
weather disruption throughout 2018. The Group
continued to focus on cash generation and
appropriate deployment of capital. Operating
cash flow for 2018 amounted to €1.9 billion
(2017: €2.2 billion) impacted by the tax paid
on the divestment of Americas Distribution.
Year-end 2018 net debt finished under
€7.0 billion (2017: €5.8 billion) after acquisition
spend net of disposal proceeds of €0.6 billion
(2017: €1.7 billion) and total distributions to
shareholders of €1.3 billion (2017: €0.5 billion).
Key Components of 2018
Performance
The overall sales movement in 2018 was a
combination of the performance of each of the
individual segments as noted below.
Despite harsh winter weather conditions
experienced in the early months and record
levels of rainfall during 2018, our Americas
Materials’ operations benefited from a positive
macroeconomic backdrop and good underlying
demand in the US. An organic sales increase of
4% was supported by growth across all sectors
in our markets.
Organic sales were up 5% in Europe Materials,
with a positive performance for our operations in
Ireland, the Benelux, Denmark and Poland partly
offset by more challenging trading conditions
in the UK, due to continued Brexit uncertainty.
The Philippine economy continued to perform
amidst inflationary pressures. However, the
resultant volume and price progress was more
than offset by cost increases, particularly in
energy.
Building Products saw growth in the US along
the West Coast and in parts of the South,
due to good residential and non-residential
construction, partly offset by softness in some
Northern US regions. With organic sales 3%
ahead of 2017, it was a year of progress for
the Division further boosted by acquisitions
in all of the product groups.
Europe Distribution, which was classified as
discontinued operations for reporting purposes,
had a mixed performance with positive
momentum in the Netherlands, partly offset by
first half challenges in Switzerland and Belgium.
EBITDA (as defined)* for 2018 amounted
to €3.2 billion, a 10% increase on 2017
(2017: €2.9 billion) as the benefit from
acquisitions and underlying growth was partly
offset by energy-related input cost inflation.
Reported profit after taxwas €0.6 billion ahead
of 2017 at €2.5 billion (2017: €1.9 billion), with
2018 profit augmented by the profit on disposal
of our Americas Distribution business partly
offset by two non-recurring one-off items
in 2017; a past service credit due to changes
in a Swiss pension scheme and a €440 million
reduction in the Group’s net deferred tax
liabilities1
due to changes in tax legislation
in the US.
The euro strengthened against most major
currencies during 2018 resulting in the average
euro/US Dollar rate weakening from 1.1297
in 2017 to 1.1810 in 2018 and the Pound
Sterling weakening from an average 0.8767
in 2017 to 0.8847 in 2018. Overall currency
movements resulted in an unfavourable net
foreign currency translation impact on our
results as shown in the table below. The
average and year-end 2018 exchange rates
of the major currencies which impacted
on the Group are set out on page 144.
Key Components of 2018 Performance
CRH’s share of after-tax profits of joint ventures and associated undertakings.
	
2018 included the impact of the non-reoccurrence of a one-off past service credit of €81 million in 2017 due to Swiss pension plan amendments,
€20 million classified as continuing operations with the remaining €61 million classified as discontinued operations.
37
Liquidity and Capital Resources
- 2018 compared with 2017
The comments that follow refer to the major
components of the Group’s cash flows for
2018 and 2017 as shown in the Consolidated
Statement of Cash Flows on page 132.
The Group maintained its focus on cash
management in 2018. Operating cash flow in
2018 was €1.9 billion (2017: €2.2 billion) which
included cash outflows of €469 million related
to the Americas Distribution discontinued
operation, primarily the tax paid on the profit
on disposal. Net working capital outflow for
2018 of €463 million (2017: €209 million
outflow) reflected trends in overall sales,
seasonal weather patterns and the impact
of acquisitions.
Focused spending on property, plant and
equipment in markets and businesses with
increased demand backdrop and efficiency
requirements, resulted in higher cash outflows
of €1.1 billion (2017: €1.0 billion).
During 2018 the Group spent €3.6 billion on
46 transactions (2017: €1.9 billion) which was
partly financed by divestment and disposal
proceeds of €3.0 billion (net of cash disposed
and deferred proceeds) (2017: €222 million).
Between 2 May and 31 December 2018,
27.9 million ordinary shares were repurchased
on the LSE and Euronext Dublin for a total
of €789 million, at an average price of €28.24
per share. This buyback, together with cash
dividend payments of €533 million in 2018
(2017: €477 million) reflected the Group’s
continued focus on returns to shareholders.
Net proceeds from share issues in 2018
was €11 million (2017: €42 million).
Year-end 2018 interest-bearing loans and
borrowings increased by €1.3 billion to
€9.3 billion (2017: €8.0 billion). At year end
2018, the weaker euro against the US Dollar
had a negative translation impact on net debt.
2018
In 2018, the Group spent a total
of c. €3.6 billion (including deferred
and contingent consideration in
respect of prior year acquisitions) on
46 acquisition/investment transactions.
On the divestment front, the Group
realised business and asset disposal
proceeds of c. €3.0 billion.
The most significant acquisition in 2018 was
the June acquisition of Ash Grove, which
gave CRH a market leadership position in the
North America cement market, allowing for
greater vertical integration with our existing
aggregates, asphalt and readymixed concrete
businesses. In addition to the acquisition of
Ash Grove, our Americas Materials Division
completed 23 bolt-on acquisitions and one
investment throughout the US and Canada
for consideration of c. €370 million.
Our Europe Materials Division completed
ten acquisitions across the UK, Ireland and
France, and one investment in Poland for
a total spend of c. €60 million. Our Building
Products Division completed an acquisition
in the UK, Germany, Belgium and Australia,
in addition to six bolt-on acquisitions in the
US at a total cost of c. €220 million. The
acquisitions of Coral Industries and SIGCO
extended Building Envelope's geographic
footprint and product offerings in the
Southeast and Northeast US, respectively.
Similarly, the Concrete Specialties acquisition
and the Ash Grove packaging division added
geographic exposure to Central US markets.
The majority of divestment proceeds related
to the divestment of our Americas Distribution
business in January 2018 for a final agreed
consideration of c. €2.4 billion. In July 2018,
the Group completed the divestment of our
DIY business in the Netherlands and Belgium,
together with certain related property assets,
for total consideration of c. €0.5 billion. A
further 18 smaller business divestments
were completed across all segments
demonstrating our continued focus on
portfolio management. In addition to these
business divestments, the Group realised
proceeds of c. €0.1 billion from the disposal
of surplus property, plant and equipment.
Development Review
2017
In 2017, the Group spent a total of €1.9 billion
(including deferred and contingent consideration
in respect of prior year acquisitions) on 34
acquisition/investment transactions. The Group
realised business and asset disposal proceeds
of €0.2 billion.
Our Americas Materials Division completed
the largest 2017 acquisition at the end of
November with the acquisition of Suwannee
American Cement together with certain other
materials assets in Florida. The total assets
acquired consisted of a 1 million tonne cement
plant in North Central Florida, 18 readymixed
concrete plants, an aggregates quarry, two
block plants and nine gunite facilities. The
Americas Materials Division also completed
12 further bolt-on acquisitions, including two
in Canada, adding c. 2.5 billion tonnes of
additional aggregates reserves resulting in a
total spend of c. €1.1 billion in 2017.
Our Europe Materials Division spent
c. €0.6 billion on eight acquisitions and one
investment, including the largest acquisition
in Europe of the Fels lime business which
was acquired at the end of October 2017.
Fels’ assets included significant high-quality
limestone reserves and 11 production locations;
nine in Germany and one in both the Czech
Republic and Russia.
The Building Products Division completed
eight acquisitions and one investment in the
US in addition to two acquisitions and one
investment in Europe in 2017 at a total cost
of c. €0.2 billion.
Business divestments during 2017, all in
Europe Materials, generated net proceeds of
c. €85 million. The remaining clay products
businesses in Europe (Belgium, Germany,
Netherlands and Poland) were divested and the
Division also sold its civil prefabricated concrete
businesses in the Benelux, along with seven
other small non-core businesses. In addition to
these business divestments, the Group realised
proceeds of c. €0.1 billion from the disposal of
surplus property, plant and equipment.
38 Roadstone, part of CRH's Europe Materials Division, developed over 4,500m³ of high-strength concrete for The Rose Fitzgerald Kennedy
Bridge in Ireland, which opened in January 2020. The three-tower, 887m extrados bridge is the longest of its type in the world. Extending
more than 230m over the River Barrow, and with a 36-metre clearance, it provides vital connectivity for surrounding communities and for
shipping navigation to the Port of New Ross.
Americas Materials  40
Europe Materials 44
Building Products  48
Segmental Reviews
40 Americas Materials
CRH’s Americas Materials Division
is the leading building materials
business in North America with
operations in 46 US states, six
Canadian provinces and three
Brazilian states.
What We Do
Our Americas Materials Division is a vertically
integrated supplier of building materials used
widely in construction projects throughout
North America. Typically, these materials
are resource-backed in mineral deposits
found within our extensive network of quarry
locations where they are processed for
supply as aggregates, asphalt, cement and
readymixed concrete.
Our operating companies across North
America supply these materials to customers
including national, regional and local
governments, contractors, homebuilders,
homeowners and sub-contractors, for use in a
broad range of construction projects including
major public infrastructure, commercial
buildings and residential structures.
Over several decades CRH has built up market
leading positions throughout North America
in aggregates and readymixed concrete while
currently being the largest producer of asphalt.
CRH is also a leading producer of cement in
North America with operations across Florida,
Texas, the Midwest and Western US, and
Canada.
In addition, the Division is a leading supplier
to highway construction projects in the US
and a significant proportion of our business
is awarded by public tender for federal,
provincial, state and local government authority
road and infrastructure projects.
How We Create Value
Our Americas Materials businesses have
established strong relationships with
customers in local markets and a deep market
knowledge that drives performance. This focus
on operational excellence at the local level
is supported by strategic oversight provided
through a lean centre which allows CRH to
leverage talent, procurement synergies, cost
management and operational excellence.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. Geography, sector exposure and end-use balance are based on sales.
2. Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226.
3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.41
Our Vertically Integrated Business
Our vertically integrated business model helps
us capture value at multiple points along the
value chain. Selling materials internally to other
CRH businesses helps us drive company-wide
growth and efficiency while ensuring that we
are maximising the use of our assets.
Materials produced by our aggregates and
cement businesses for example are purchased
by our downstream materials businesses for
products such as readymixed concrete and
asphalt. This focus on vertical integration is
embedded in our development strategy and
we typically concentrate our acquisition activity
on businesses which can be quickly integrated
within our existing network.
The US building materials sector is largely
unconsolidated; the top ten aggregates
businesses account for less than one third of
production. Backed by a reserves network
that is very difficult to replicate and strong
leadership positions in local markets, our
materials businesses are well positioned to
capitalise on value creating opportunities
for consolidation and expansion of existing
integrated operations.
The recent expansion of the Division’s footprint
in the North American cement market for
example allows for greater integration with our
existing aggregates and readymixed concrete
businesses. It also increases our exposure to
the high growth states in the Southern and
Western US where there is high population
growth and demand for our materials.
How We Structure
our Operations
Our Americas Materials Division operates
across three countries (the US, Canada and
Brazil). The Division has a network of close
to 1,450 operating locations and employs
approximately 28,600 people across 46
US states, six Canadian provinces and
three Brazilian states.
Annualised Sales Volumes3
: Aggregates: 192.2m tonnes;
Cement: 15.0m tonnes; Readymixed Concrete: 13.2m m3
;
Asphalt: 45.5m tonnes
AGGREGATES
Aggregates are naturally occurring mineral
deposits such as granite, limestone and
sandstone. Our businesses extract these
deposits and process them for sale.
ASPHALT
Asphalt is primarily used in road surfacing
and other transport infrastructure including
airport runways.
CEMENT
Cement is the primary binding agent in the
production of concrete products for the
construction industry.
RESERVES
Reserves comprise mineral deposits including limestone, granite and sandstone are found
within our extensive network of quarry locations in attractive local markets throughout
North America. For additional information on the Group’s mineral reserves, see page 231.
READYMIXED CONCRETE
Readymixed concrete is a highly versatile
building material comprised of aggregates
bound together with cement and water.
PAVING & CONSTRUCTION SERVICES
CRH is the leading supplier of product for road construction and repair/maintenance
demand in North America. Annually, our crews complete approximately €4.1 billion in
paving and construction projects.
42 Operations Review - Americas Materials
Prior Year 2018
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Following significant development activity in 2018
and the latter half of 2017, Americas Materials
operating profit was €1.0 billion in 2018, 18%
ahead of 2017. Organic sales were 4% ahead of
2017, while organic operating profit grew 3% as
the Division experienced pricing progress, with
improvements across all products. However,
margins were impacted by poor weather in key
markets and ongoing cost inflation, with notable
increases in bitumen, a key input in asphalt
production, and energy costs, including diesel
and gasoline.
Continued economic growth in the US residential,
non-residential and infrastructure sectors drove
underlying demand. Canada had moderate
GDP growth in 2018, with solid jobs growth. The
economy lost some momentum in the second
half of 2018 due to a slowdown in business and
government spending.
Continued political uncertainty in Brazil, particularly
in relation to the presidential elections as well
as a truck drivers strike, impacted the Brazilian
economy during 2018. The weakness in the
construction market continued.
Together with the Ash Grove acquisition,
Americas Materials spent €3.3 billion in 2018
on 24 bolt-on transactions, adding c. 1.6 billion
tonnes of reserves to the business.
Building Materials
Total aggregates volumes including acquisitions
increased 8% in 2018, with the impact of
inclement weather impacting like-for-like volumes,
which were 1% ahead. Average prices increased
3% on a like-for-like basis and 2% overall
compared with 2017, however margins were
under pressure due to increased input costs.
With a later start to paving projects across some
key regions and further weather-related delays
experienced in the third quarter in the North and
Central divisions, like-for-like asphalt volumes
were down 3% with total volumes down 2%.
Like-for-like prices improved 10%, but higher
bitumen costs negatively impacted margins.
Total readymixed concrete volumes were 29%
ahead of 2017 due to acquisition activity, and
prices improved 3%. Like-for-like volumes were
impacted by the unfavourable weather, though
margins improved as management continued to
focus on operational performance.
Overall paving and construction services revenue
for 2018 increased 6% and like-for-like revenue
was up 4%, mainly driven by the South division,
which benefited from a good paving season that
extended into the last quarter of 2018. Input cost
pressure, particularly in raw materials and energy,
negatively impacted overall margins in 2018.
Regional Performance
Like-for-like sales in the North division increased
4%, mainly due to improved US aggregates
volumes and prices, as well as greater
construction sales. Adverse weather however
impacted volumes across all businesses in
Canada. This together with increased input costs
resulted in operating profit finishing behind 2017.
Like-for-like South division sales increased 11%,
benefiting from increased construction activity
with several new projects undertaken in key
states. Volumes and price increases across all
products resulted in a strong operating profit
performance in 2018.
With record levels of rainfall and flooding in the
Central division, like-for-like sales decreased 4%.
Reduced volumes and margin pressure resulted
in operating profit finishing behind 2017.
With strong pricing across all products and
volumes growth aided by acquisitions, West
division sales increased 12% during 2018.
Although delayed funding in certain states
impacted like-for-like aggregates and asphalt
volumes, operating profit was ahead of 2017.
Cement
The acquisition of Ash Grove in June 2018 gave
CRH a market leadership position in the North
American cement market, and including the
partial year of ownership with our operations
in Florida, Canada and Brazil, resulted in total
cement volumes in 2018 of over ten million
tonnes.
Our US cement operations delivered higher
volumes in 2018 primarily due to the acquisition
of Ash Grove and a full year of ownership of the
Suwannee American Cement business. Strong
price realisation across our major markets and
synergies with CRH’s heritage businesses
contributed good operating profits in 2018.
Integration of the Ash Grove business progressed
well and the business performed in line with
expectations.
Cement volumes and prices in Canada were
behind 2017 due to the exit of the Maritimes
market and competitive cement market
conditions. The business continued to optimise
its terminal network and to further penetrate US
markets.
CRH Brazil cement volumes were stable, in line
with consumption trends in the Southeast region.
Selling price increases were achieved in a higher
input cost environment.
Results Analysis of change
43
Results Analysis of change
Current Year 2019
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
2019 was a strong year for Americas Materials,
generating operating profit of €1.3 billion, 26%
ahead of 2018. Headwinds driven by wet
weather and increased raw materials costs in
the first half of the year were offset by a stronger
second-half performance reflecting increased
volumes, positive pricing and reduced operating
expenses. Organic sales were 4% ahead of
2018, while organic operating profit grew 13%.
Economic activity in the US remained favourable
during 2019 with the infrastructure sector
supported by the FAST Act as well as a
significant number of local and state funded
transportation projects. The Canadian market
experienced growth during the year and
economic expansion is expected to continue at a
moderate pace.
Americas Materials completed 29 acquisitions/
investments in 2019 at a cost of c. €210 million,
strengthening its operational footprint through
the addition of c. 260 million tonnes of mineral
reserves.
Building Materials
Total aggregates volumes benefited from
acquisitions and finished 5% ahead of prior year,
while like-for-like volumes were 1% ahead as
a strong performance in the West was partly
offset by a focused reduction in lower margin
contracts in the South division. Average prices
increased 5% on a like-for-like basis and 4%
overall compared with 2018 and margins were
maintained against a backdrop of increased input
costs.
Like-for-like and total asphalt volumes were 1%
behind 2018 as flooding and tropical storms
negatively impacted our Central and South
divisions, partly offset by strong demand in the
North. Like-for-like prices improved 5%, more
than offsetting higher input costs and resulted in
strong margin expansion.
Total readymixed concrete volumes were
9% ahead of 2018 and prices improved 4%.
Like-for-like volumes were 2% ahead as poor
weather in the first half of the year for Central and
West was offset by strong volumes in the South
division. Readymixed concrete margins were
impacted by increased input costs.
Total paving and construction services revenues
were 3% ahead, 2% on a like-for-like basis, as
overall margins improved driven by favourable
regional mix and increased higher margin work
in the South and West divisions, partly offset by
challenging first-half weather in Canada.
Regional Performance
The North division comprises operations in
13 states, with key operations in Ohio, New
York, New Jersey and Michigan. Total sales in
the North division increased 5% primarily due
to favourable volumes and prices across our
product range, as well as greater construction
revenue. This improved revenue coupled with
strong cost control resulted in a good operating
profit performance.
The South division comprises operations in
12 states with key operations in Florida, West
Virginia and North Carolina. Total sales in the
division increased 1% with improved pricing in
all products largely offset by lower construction
revenue due to the timing of major projects in
key states. Strong pricing together with focused
management of operating expenses resulted in a
solid operating profit performance.
The Central division has operations in ten states,
with key operations in Texas, Arkansas and
Kansas. Weather challenges continued in the
division with flooding and record levels of rainfall
in the first half of the year; however, a strong
performance later in the year and contributions
from acquisitions helped drive a total sales
increase of 20%, 7% ahead on a like-for-like
basis. Like-for-like operating profit finished ahead
of prior year as weather challenges were offset by
favourable second-half volumes and pricing.
The West division has operations in ten states
with key operations in Utah, Idaho, Washington
and Colorado. Strong pricing across all
products and volumes growth in aggregates
and readymixed concrete supported the West
division’s total sales increase of 5%, 2% on
a like-for-like basis. Despite challenges from
weather and higher input costs, mainly bitumen
and labour, favourable pricing across all products
and tight cost control resulted in operating profit
well ahead of 2018.
Cement
Like-for-like sales volumes in our US operations
were ahead in 2019. Despite adverse weather,
strong price realisation across major markets
and good synergy delivery supported robust
operating profits. The integration of Ash Grove
is now complete and the business is performing
well.
Despite poor weather conditions in the first half of
the year, cement volumes and prices in Canada
were ahead of 2018, driven by solid market
conditions.
Cement consumption in Southeast Brazil
improved in 2019 enabling CRH to achieve
volumes growth supported by a consistent focus
on key customer segments. A strong emphasis
on logistics optimisation and price realisation
drove improved performance.
44 Europe Materials
With market leading positions
across a broad geographic footprint
and a highly integrated portfolio of
businesses, our Europe Materials
Division is a leading heavyside
materials business in Europe.
What We Do
Our Europe Materials Division manufactures
and supplies a broad range of materials for use
in construction projects including aggregates,
cement, lime, asphalt, readymixed concrete
and concrete products.
This vertically integrated business is founded
in resource-backed assets engaged in
the production and supply of cement and
aggregates along with downstream material
products such as readymixed concrete,
concrete products and asphalt.
These materials are used extensively in a wide
range of construction applications from major
public infrastructure projects to commercial
buildings and residential structures.
Our businesses are established players in local
markets and have long-standing relationships
with customers which typically range from
national, regional and local governments,
to building contractors and other construction
product and service providers.
With an extensive network in the strong and
stable markets of Western Europe, a strong
footprint in growing Eastern European markets
and an attractive position in Asia, the Division
is geographically balanced and has broad
exposure to residential, non-residential and
infrastructure sectors.
We have leading positions and a broad range
of well-established brands in most markets
across Western Europe, from Ireland and the
UK to France, Germany, Denmark, Finland,
Switzerland and Benelux. In Eastern Europe,
we have built up a strong portfolio of businesses
across eight different countries. While cement
is our core product in these Eastern European
markets, we have also developed strong
positions in the lime, readymixed concrete,
precast and aggregates sectors in recent years.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. Geography, sector exposure and end-use balance are based on sales.
2. Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226.
3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.
45
In 2019, the Division was reorganised to include
Asia, which comprises cement operations in the
Philippines where we are the second biggest
producer, along with an equity-accounted
investment in Northeast China.
How We Create Value
Value creation is an area of continuous focus
for our Europe Materials Division and we place
great emphasis on performance improvement
initiatives and collaboration across the Division.
In addition to understanding and meeting the
unique needs of local customers, our deep
market knowledge drives performance and our
extensive network allows us to leverage talent,
synergies for procurement, cost and logistics
management and drive both commercial and
operational excellence.
Our vertically integrated business model
means that we can maximise the use of our
assets through a combination of self-supply to
our downstream operations as well as sales
to our customers. With a strong pipeline of
opportunities across regions, our development
strategy is focused on identifying and integrating
bolt-on acquisitions for synergies, reserves
and further vertical integration, in addition to
opportunities to extend and strengthen existing
regional positions.
We have a strong track record in adding
businesses for vertical integration and to
strengthen regional positions, ensuring we are
competitive in all individual product lines and our
combined business delivers a stronger return on
assets and generates more cash.
How We Structure
Our Operations
Our Europe Materials Division spans 19
countries in Europe and two in Asia and is
organised across five operational clusters
(Tarmac (UK), Europe North, Europe West,
Europe East and Asia).
Europe Materials employs approximately 27,250
people at over 1,160 locations. A further 5,650
people are employed in our equity accounted
investment in China.
Annualised Sales Volumes3
: Aggregates: 115.0m tonnes;
Cement: 33.5m tonnes; Readymixed Concrete: 18.1m m3
;
Asphalt: 11.6m tonnes; Lime: 7.4m tonnes;
Concrete Products: 6.7m tonnes
Where Our Products Are Used
READYMIXED CONCRETE
Concrete is the most used man-made material
on earth. It forms the foundations of buildings
and homes, roads, tunnels and bridges, clean
water systems and clean energy structures.
Readymixed concrete is the most commonly
used form of concrete.
CEMENT
Cement is a binding agent produced from
limestone reserves and used in concrete
products including readymixed concrete, precast
concrete and mortars which are used extensively
throughout the built environment. Cement is
produced for both sale in local markets or can be
shipped by road, rail and water to other markets.
ASPHALT
Asphalt, which consists of aggregates bound together
with bitumen is widely used as a surface material
in transport infrastructure including, roads, bridges,
runways, footpaths along with amenities such as
racetracks, tennis courts and playgrounds. In recent
years, the use of recycled material in asphalt has
increased considerably.
AGGREGATES
Our businesses extract, process and supply a range of
aggregates products including sand, gravel, crushed
limestone and crushed granite. Typically aggregates
are used in building foundations, underpinning road
and rail infrastructure and in the production of products
including concrete and asphalt.
INFRASTRUCTURAL CONCRETE
While readymixed concrete is supplied to customers for
on-site casting, our infrastructural concrete businesses
produce and supply precast and pre-stressed concrete
products such as floor and wall elements, beams and
vaults, pipes and manholes. These products are delivered
to and assembled at construction sites. They are used
widely throughout the modern built environment.
PAVING & CONSTRUCTION SERVICES
In addition to the supply of asphalt and other materials
to road construction and maintenance projects, in certain
markets we also provide installation services including
crews, equipment and specialist expertise needed for
preparation, paving and maintenance of traffic flows
on projects including roads, roundabouts and
interchanges, car parks and airport runways.
LIME
CRH’s Lime businesses in Germany, Poland, Russia,
Czech Republic, UK and Ireland produce lime for use
by multiple industries including iron and steel, building
materials, sugar, agriculture and forestry. Lime can be
found in a variety of everyday products and materials
including toothpaste, drinking water, windows and
garden soil.
46 Operations Review - Europe Materials
Prior Year 2018
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
The 2018 trading performance for the Europe
Materials Division was mixed with positive results
in our operations in Ireland, the Benelux, Denmark
and Poland, with more challenging trading
conditions in the Philippines and UK. The
year-on-year organic sales growth reflected
continued price progression, however cost
inflation, which was a feature across all markets
resulted in a decrease in operating profit.
Tarmac (UK)
Despite challenging weather conditions earlier
in 2018 and ongoing political and economic
uncertainty as to the impact on construction
activity following the Brexit vote, sales in
our Tarmac business were ahead of 2017,
underpinned by growth in contracting sales and
more modest growth in other materials. Overall,
operating profit was behind compared with
2017 as continued progress on performance
improvement measures was offset by
increased input costs and a challenging market
environment.
Europe North
A positive performance in the UK lime business as
a result of strong environmental volumes partially
offset the decline in cement volumes, resulting
in overall UK sales and operating profit being
behind 2017. In Ireland, sales and operating profit
were ahead of 2017 mainly due to the continued
market recovery, particularly in the Dublin region.
Volumes increased and positive pricing trends
were evident across key products, offsetting
increased input costs, particularly energy.
Although cement and readymixed concrete
volumes in Finland were slightly behind in 2018,
aggregates volumes were higher, positively
impacted by project activity. The concrete
products business also performed well due to
good market demand, particularly residential, and
overall sales and operating profit finished ahead
of 2017.
Europe West
Sales and operating profit in France benefited
from favourable trading conditions, as good
underlying demand resulted in increased
volumes and a positive pricing environment for
key products, with the exception of the precast
concrete business, which was impacted by
project delays. Sales in the Benelux were ahead
of 2017, as a positive contribution from the
structural businesses reflected good demand
in the residential sector, together with improved
readymixed concrete pricing. Operating profit
finished ahead of 2017, benefiting from good
underlying market demand and one-off income.
In Denmark, sales and operating profit finished
ahead of 2017, as the business benefited from
good underlying demand and progress in pricing
achieved during 2018. In Spain, results advanced
on 2017, with improved pricing in cement and
readymixed concrete partly offset by lower
cement volumes, due to severe weather at the
beginning of 2018 and the conclusion of a major
project during 2018.
Despite a significant increase in cement volumes
in Switzerland, benefiting from solid construction
growth, sales and operating profit were behind
2017 due to a decline in cement and readymixed
concrete prices, reflecting strong competition. In
Germany, improved cement pricing as well as the
contribution of our lime business Fels, resulted in
sales and operating profit ahead of 2017.
Europe East
Trading in Poland was ahead of 2017 with good
performance in all businesses. Healthy volumes
were supported by the economy and the
construction sector, which continued to grow at
high rates. In addition, good price development
was achieved across all activities in a competitive
market, contributing to the positive performance
in 2018. In Ukraine, pricing improved in all
businesses in 2018 resulting in organic sales
finishing ahead year-on-year, however cement
volumes declined due to increased market
capacity and unfavourable weather conditions
during the first quarter, which combined with
cost inflation and logistical constraints resulted in
operating profit being behind 2017. Continued
solid economic and construction growth in
2018 contributed to improved sales in Hungary
and Slovakia. Despite increasing input costs,
operating profit was ahead of 2017, mainly as a
result of higher volumes across the businesses.
In Serbia, cement and readymixed concrete
volumes increased compared to 2017 and overall
sales and operating profit were ahead, supported
by performance improvement initiatives. In
Romania, after a slow start to 2018, affected by
very poor weather conditions, cement volumes
recovered and were ahead of 2017. In addition
good pricing and margin progression contributed
to sales and operating profit growth.
Asia
Against a backdrop of strong domestic demand
and accelerated government infrastructure
spending, the Philippine economy continued to
perform despite inflationary pressures and tighter
global financial conditions. Organic revenue
performance advanced due to positive prices and
ongoing demand from all segments. However,
notwithstanding this, operating profit was
significantly behind 2017 primarily due to higher
fuel and power costs, which were only partially
offset by continued commercial excellence and
operational performance initiatives.
Cement demand remained subdued in Northeast
China. Price increases partially offset lower
volumes and increased coal prices, however
Yatai Building Materials’ 2018 performance was
lower than 2017. Strong growth in MHIL volumes
in India was driven mainly by a sustained pick
up in infrastructure spend in Andhra Pradesh
and Telangana. However, prices continued to
be under pressure due to competition and large
institutional sales. Increased fuel prices were
exacerbated by adverse foreign exchange rates.
As a result, MHIL ended 2018 with operating
profit lower than 2017.
Results Analysis of change
€ million 2017 Exchange Acquisitions Divestments Pension Credit1
47
Current Year 2019
Overall Europe Materials experienced a positive
year with good sales growth and particularly
strong performances in Eastern Europe, the
Philippines, France and Ireland. Operating
profit was ahead of 2018 as price increases
and a good contribution from performance
improvement initiatives offset higher input costs
and the impact of more challenging trading
conditions in the UK.
Tarmac (UK)
Ongoing political and economic uncertainty
as a result of Brexit negatively impacted
Tarmac’s trading environment as volumes in our
aggregates and asphalt businesses finished
lower than 2018. Operating profit declined
as progress from performance improvement
initiatives was offset by challenging market
conditions and input cost inflation.
Europe North
Sales and operating profit in our UK cement
and lime business were behind 2018 as Brexit
uncertainty impacted activity levels. In Ireland,
sales and operating profit were well ahead of
2018 as the business benefited from continued
market growth, underpinned by strong demand
and some large projects in the Dublin region.
Good volumes and price growth for all key
products was achieved.
Sales and operating profit in Finland were
behind 2018 impacted by reduced demand in
the residential and infrastructure sectors. Lower
cement and readymixed concrete volumes were
partly offset by project-related aggregates sales
growth.
Europe West
Sales and operating profit in France benefited
from favourable trading conditions as good
underlying demand in the non-residential and
civil engineering sectors resulted in volumes
growth and a positive pricing environment for key
products. Ongoing performance improvement
initiatives and cost savings also positively
impacted profitability. Sales in the Benelux were
ahead of 2018, with a positive contribution from
our Dutch precast businesses reflecting good
demand in the residential sector, while improved
readymixed concrete pricing was partly offset by
weaker volumes in the Belgian precast business.
Excluding the impact of one-off income in 2018,
operating profit finished ahead of prior year.
In Denmark, sales were ahead of 2018, as the
business benefited from good demand aided
by additional production capacity together with
progress in pricing. Operating profit finished
broadly in line with prior year impacted by the
non-recurrence of one-off income in 2018. In
Spain, increased demand resulted in improved
readymixed concrete volumes and prices and
despite lower cement volumes, sales and
operating profit finished ahead of 2018.
Lower cement and readymixed concrete volumes
resulted in lower sales for Switzerland; however,
operating profit benefited from cost savings
and good delivery of performance initiatives. In
Germany, sales were marginally ahead of 2018
while operating profit was behind as cement
pricing progress was offset by lower volumes in
our lime business.
Europe East
Trading in Poland was strong with a good overall
performance for 2019. Robust cement volumes
and positive pricing supported by cost savings
initiatives resulted in operating profit ahead of
2018. In Ukraine, continued growth in cement
volumes reflected good market demand. Strong
price progression was partly offset by slightly
higher input costs and sales and operating profit
finished ahead of 2018.
Stable economic and construction growth in
2019 contributed to improved sales in Hungary
and Slovakia. Operating profit was ahead of
2018, mainly as a result of advances in pricing,
cost optimisation and savings initiatives across
the businesses. In Serbia, sales and operating
profit were ahead of 2018 with higher cement
volumes driven by continued strong construction
activity, pricing progress and cost benefits of
enhanced production facilities. In Romania,
results were ahead of 2018 due to improved
pricing combined with stronger volumes in
cement and readymixed concrete.
Asia
Domestic demand for cement in the Philippines
remained strong; however, delays in government
infrastructure spending impacted cement
volumes. While overall sales were in line with
prior year, advances in pricing, performance
improvement initiatives and cost savings resulted
in operating profit well ahead of 2018.
CRH’s operations include a 26% stake in Yatai
Building Materials in North Eastern China. Strong
volumes growth was only partly offset by lower
prices, driven by intense local competition and
lower margins on exports, resulting in higher
operating profit than prior year.
On 31 December 2019, the Group divested of
its share of the Indian joint venture, MHIL, for a
total deferred consideration of €0.3 billion. During
the year, reduced demand in housing negatively
impacted cement demand in MHIL’s key markets
in Andhra Pradesh and Telangana; despite this,
operating profit was ahead of prior year as pricing
improved.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Results Analysis of change
48 Building Products
CRH’s Building Products Division is
a leading manufacturer and supplier
of highly engineered and high
value-added building products in
19 countries around the world.
What We Do
Building Products is a new Division established
by CRH in 2019 as part of our strategy
to create a more simplified and focused
business which is better positioned to
exploit opportunities presented by economic
development, changing demographics,
sustainability and other evolving trends in
construction markets globally.
The Division brings together related products
businesses in Europe, North America and
Asia Pacific across four strategic product
groups for growth: Architectural Products,
Building Envelope, Infrastructure Products and
Construction Accessories.
These businesses are leading suppliers of
a wide range of high quality, value-added,
innovative building products and solutions,
spanning multiple construction applications
from residential and commercial structures to
public spaces and infrastructure.
Typically, they involve a high focus on
understanding the needs of our customer,
more process and product innovation and a
portfolio of products that is exportable to a
range of markets globally.
From the glazing systems that hold glass in
place, to the masonry supports that keep
walls standing, our products play a vital role
in completing construction projects big and
small. They include the products that house
the electronics that keep roads moving and
connect water and electricity to homes, offices
and factories. We supply the pavers, blocks
and patio products used to create outdoor
living spaces and pave city centres.
Bringing these related products together under
one Division provides important opportunities
to better leverage our scale, capabilities and
people to bring more consistent focus on
value.
How We Create Value
Establishing a single Building Products Division
enables us to place a consistent focus on
value creation and drive sustainable growth.
The Division is organised around similar
product groups designed to leverage scale,
drive strategy and performance excellence and
advance our digital and innovation capabilities
globally.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1. Products, sector exposure and end-use balance are based on sales.
2. Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226.
49
Our businesses have deep technical expertise
and the ability to customise solutions with
international market reach. With leadership
positions in high growth segments, our strategy
is to build and grow scalable businesses,
balanced across products, geographies and
end-use sectors, increasing the penetration of
our range of value-added products and creating
competitive advantage through strong customer
relationships, brand leadership and service.
Our development focus aims to deepen our
position in existing business product groups and
to broaden our differentiated product portfolio
through new growth platforms that are exposed
to global megatrends. By operating as one
global Building Products Division we can adapt
and grow as our markets continue to evolve.
How We Structure
Our Operations
Our Building Products Division is structured
around four core product groups: Architectural
Products, Building Envelope, Infrastructure
Products and Construction Accessories.
The Division employs approximately 24,450
people at over 490 locations across 19
countries.
Creating Value Through Our Global Scale
OUR NEW GLOBAL DIVISION
In 2019, CRH simplified its global organisation structure to three
operating Divisions; Americas Materials, Europe Materials
and a new global Division for Building Products. Forming this new
global Division, CRH recognised the significant value creation
potential of bringing together related businesses from different
parts of the world under a more unified strategy and structure for
performance improvement, growth and people development.
CONSTRUCTION ACCESSORIES
Our Construction Accessories are high-value
innovative products and engineered
solutions for challenging construction
projects. Products include a broad range of
engineered anchoring, fixing and connection
solutions as well as lifting systems, formwork
accessories and general accessories for
construction applications.
BUILDING ENVELOPE
Our Building Envelope business is a leading
integrated supplier of products specified to close
the building envelope, including architectural
glass, storefront systems, custom engineered
curtain and window wall, architectural windows,
doors and skylights.
ARCHITECTURAL PRODUCTS
Our Architectural Products business is a
leading supplier of concrete masonry, hardscape
and related products for residential, commercial & DIY
construction markets. This includes pavers, kerbs,
retaining walls and slabs, patio products and decking,
lawn and garden products as well as bagged dry-mix
cements for both private and public use.
INFRASTRUCTURE PRODUCTS
CRH’s Infrastructure Products businesses
manufacture a range of precast concrete and
polymer-based products such as underground
vaults, drainage pipe and structures, utility
enclosures and modular precast structures
which are supplied to the water, electrical,
telephone and railroad markets and to select
non-residential building applications.
CRH’s Europe Distribution businesses
supplied building materials to professional
builders, specialist heating and plumbing
contractors, and DIY customers through
a network of trusted local and regional
brands across a number of mature
markets in Western Europe.
In July 2019, following a comprehensive
strategic review, the Group entered
into a sales agreement to divest of
its Europe Distribution business. The
transaction closed on 31 October 2019.
In accordance with IFRS 5 Non-Current
Assets Held for Sale and Discontinued
Operations, the business is reported as
discontinued operations for 2019 (see
note 3 to the Consolidated Financial
Statements). Europe Distribution consisted
of three primary business areas: German
DIY (Do-It-Yourself), General Builders
Merchants (GBM) and Sanitary, Heating
and Plumbing (SHAP).
Building Products
(Discontinued Operations)
50 Operations Review - Building Products
Prior Year 2018 (Continuing Operations)
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
The commentary below excludes the trading
performance of Europe Distribution which, following
its divestment, has been classified as a discontinued
operation. Its trading performance is detailed on
page 52.
Following the disposal of Europe’s DIY business in
Benelux, Building Products sales declined 2% in
2018. However, the Division experienced underlying
growth, with organic sales 3% ahead of 2017.
Targeted price increases, operational efficiencies,
procurement initiatives and overhead cost reductions
all helped deliver improved margins despite cost
increases in raw materials, labour, and logistics.
Operating profit increased by 4% on an organic basis
as a result of the improved sales performance and
a continued focus on cost optimisation and margin
enhancement.
Construction activity in the US benefited from the
improved macroeconomic backdrop; however,
US volumes were impacted by bad winter and
wet fall weather, continued supply-side factors
such as labour and construction cost inflation, and
competitive markets. Growth was seen along the
West Coast of the US and in parts of the South due
to good residential and non-residential construction
activity, partly offset by softness in Canada and parts
of the Northern US, due to weather and slower
growth markets.
The Netherlands saw a significant improvement in
performance as the economy expanded. Activity
levels in Australia were good and the Polish market
also benefited from a strong increase in demand.
Sales in the key markets of Germany and the UK
remained stable, where the UK incurred some
headwinds on profitability driven by the under-
performance of the now divested Plaka UK business
and a changing customer mix.
Architectural Products
In North America, Architectural Products saw
modest sales growth in 2018, benefiting from
healthy residential RMI demand, but volumes were
limited by adverse weather, as well as contract
labour shortages. Demand for most products was
particularly strong along the West Coast, which
together with commercial initiatives, drove a small
increase in like-for-like sales compared with 2017.
Overall, the business saw solid operating profit
growth due to acquisition results and cost reduction
initiatives, which more than offset the unfavourable
impacts from rising logistics and input costs.
As a result of a favourable economic environment
in certain key markets, sales and operating profit in
Europe finished ahead of 2017. In Poland, operations
experienced strong demand and an improvement
in performance, through increased sales of higher
margin products and overall price improvement.
Despite the disruptive weather conditions early in
2018, sales in the German business finished ahead
of 2017, however, operational challenges and an
unfavourable sales mix resulted in operating profit
below 2017. The French business was divested in
November. The Benelux operations benefited from
higher demand in public markets.
The Shutters & Awnings business recorded a
1% increase in sales compared with 2017, whilst
operating profit remained flat. Operations in the
Netherlands were assisted by a positive economic
environment, supported by favourable weather
conditions, while a focus on improvement initiatives
and an increased online presence in the UK business
resulted in sales and margin growth. Our German
businesses were impacted by lower margins due
to increased input and labour costs in a more
competitive environment.
Building Envelope
Non-residential building activity in 2018 was muted
by higher building materials costs, increasingly tight
skilled labour markets and higher interest rates.
Building Envelope saw relatively flat organic revenue
in 2018 because of a strategic shift away from larger
projects. However, increased operating profits were
achieved due to improved trading results at its metals
and glazing hardware businesses and the inclusion of
acquisition results, which more than offset the effects
of higher labour and raw material costs.
Infrastructure Products
Sales growth in North America advanced in 2018
due to good demand for both private construction
and public infrastructure, particularly in the
Southeast, West and Mountain states of the US.
Our Infrastructure Products business recorded
significantly increased operating profits, due to
reductions in fixed overheads, better operational
execution, and good acquisition performance.
Infrastructure Products was also able to pass on
price increases to offset input cost inflation, and
the business saw backlog growth in 2018.
Network Access Products had another year of
growth in sales and operating profit. The Australian
business experienced growth driven by a robust
construction market. The French market also saw
improvements, while the underlying performance
in the UK was behind 2017 due to a change
in customer mix, which was partly offset by an
acquisition in the second quarter of 2018.
The Perimeter Protection business showed a
solid increase in sales and operating profit. In the
permanent fencing business, performance was
driven by the Netherlands, which benefited from the
strong economy, while improvement in the mobile
fencing business was driven by strong trading across
most of our key markets.
Construction Accessories
It was another year of solid organic sales and
operating profit growth, primarily driven by
improvements in Western European markets.
In Germany, labour shortages on building sites
and resulting project delays impacted overall
performance. Excluding the divested Plaka business,
trade in our UK business saw growth. The Australian
business benefited from demand in the high-rise
residential market and was boosted by an acquisition
earlier in 2018. The export market remained
important but challenging due to further project
delays, however performance in the Chinese and US
markets improved.
DIY
While DIY sales in the Benelux were down on a
like-for-like basis driven by the ongoing trend towards
online sales, focus on operational productivity
resulted in improved underlying profits. The business
was divested in July 2018.
Results Analysis of change
€ million 2017 Exchange Acquisitions Divestments Organic 2018 % change
Sales revenue 6,345 -198 +209 -269 +161 6,248 -2%
EBITDA (as defined)* 769 -26 +23 -23 +44 787 2%
Operating profit 576 -20 +13 -17 +23 575 -
EBITDA (as defined)*/sales 12.1% 12.6%
Operating profit/sales 9.1% 9.2%
51
Current Year 2019
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
The table above and commentary below exclude
the trading performance of Europe Distribution
which, following its divestment, has been
classified as a discontinued operation. Its trading
performance is detailed on page 52.
Building Products saw continued organic growth
in 2019, with sales 2% ahead of 2018, while
operating profit increased organically by 10% as a
result of increased sales and continued emphasis
on margin optimisation. Initiatives, which included
production efficiencies, commercial excellence,
procurement savings and overhead cost control
also helped to deliver improved margins.
Solid macroeconomic conditions in the US
continued to provide a positive backdrop for
construction demand. Volumes growth, especially
new residential construction activity, was limited
by higher interest rates entering 2019, as well
as continued supply-side factors such as labour
availability and construction cost inflation. Similar
to prior years, growth primarily occurred along
the West Coast, Southeast and South Central US
due to good non-residential construction activity
and positive residential RMI demand.
In Europe, markets in the Netherlands and Poland
continued to benefit from good demand. Despite
Brexit uncertainties, our businesses in the UK
showed resilience with solid performances in
the residential and telecoms sectors. Results in
Germany were impacted by slower markets and
increased competition.
2019 saw further refinement of the portfolio,
including the divestment of Europe Distribution,
the Shutters & Awnings and Perimeter Protection
businesses in Europe, together with 16 bolt-on
acquisitions, primarily at our Infrastructure and
Architectural Products businesses.
Architectural Products
Architectural Products in North America
experienced good sales growth, capitalising on
solid residential RMI demand and favourable
weather in most markets, especially in Eastern
US. Product mix optimisation and targeted selling
prices helped to recover input cost inflation
in most markets, but trading was partly offset
by challenging market conditions in Canada.
Overall, the business delivered strong operating
profit growth, bolstered by operating efficiencies,
contributions from recent acquisitions and cost
reduction initiatives.
The European businesses recorded strong sales
and profits in the first half of 2019, supported by
good weather, operational improvements and
selling price advancement. Demand slowed
during the second-half in Western Europe, with
wet weather being a contributory factor. Overall
sales and profits for the year were mixed, with
a strong performance in Poland partly offset by
some softness in Western Europe.
The Shutters & Awnings business, which was
divested in June, recorded results similar to
the comparable period in the prior year, with
the positive impact of more benign weather
conditions in the first half of the year offset by
increased competition in Germany.
Building Envelope
Building Envelope saw like-for-like sales growth
driven by good demand and increased selling
prices in our C.R. Laurence and aluminium
glazing businesses. Sales growth was limited
by competitive markets in the fabricated glass
business. In addition to revenue growth, higher
operating profits were achieved due to more
stable aluminium input costs, a strategic shift
away from larger lower margin projects and focus
on self-help initiatives.
Infrastructure Products
Our Infrastructure Products business in North
America recorded healthy sales growth in 2019
due to good demand for both private construction
and public infrastructure, particularly in the
Southeast and West regions of the US. Building
on progress from the prior year, Infrastructure
Products was successful at delivering price
increases in excess of input cost inflation.
The business recorded significantly increased
operating profit due to improved operational
efficiencies, commercial initiatives and overhead
cost control. The business also experienced
another year of backlog growth in 2019.
Our European and Australian business (formerly
Network Access Products) delivered another year
of solid growth. Performance in Europe was well
ahead of the prior year due to increased sales to
the telecom and rail sectors. However, Australian
sales were below prior year due to challenging
market conditions in the telecom sector. Overall
operating profit finished ahead of 2018.
The Perimeter Protection business was divested
in September. Compared with the same period
in 2018, the business recorded lower sales
while operating profits advanced due to cost
improvements.
Construction Accessories
The US business achieved strong organic sales
and operating profit growth due to increased
volumes and prices against the backdrop of a
solid US non-residential market. The Construction
Accessories business in Europe recorded a
4% increase in like-for-like sales compared with
prior year, along with higher operating profit,
driven by commercial excellence initiatives and
positive market trends in certain geographies.
Revenue growth was driven by the UK, France,
the Netherlands and Switzerland. Our German
business was impacted by increased competition
and market uncertainty during the second half of
the year.
Results Analysis of change
€ million 2018 Exchange Acquisitions Divestments Leases Organic 2019 % change
Sales revenue 6,248 +234 +231 -576 - +113 6,250 -
EBITDA (as defined)* 787 +33 +27 -48 +100 +62 961 22%
Operating profit 575 +25 +10 -16 +15 +59 668 16%
EBITDA (as defined)*/sales 12.6% 15.4%
Operating profit/sales 9.2% 10.7%
52 Operations Review - Building Products
Prior Year 2018
Europe Distribution realised modest
like-for-like sales growth in 2018, excluding
the change in treatment of certain direct sales.
This increase was driven mainly by our GBM
business, with ongoing positive momentum
in the Netherlands, particularly in residential
construction activity. Furthermore, our SHAP
business in Germany continued to gain market
share in a relatively flat market. These positive
developments were partly offset by challenging
market conditions in a competitive environment
across our Swiss business, particularly in the
first half of 2018. Operating profit was further
impacted by the non-recurrence of the
one-off Swiss pension scheme credit in 2018.
General Builders Merchants
Our GBM business realised solid like-for-like
sales, excluding the change in treatment of
certain direct sales, and improved like-for-like
operating profit. Positive market conditions
and performance improvement initiatives led
to continued growth of operating profit in the
Netherlands, while sales and profit growth
in Germany was partly attributable to 2017
acquisitions. Underlying sales in Switzerland
were marginally behind 2017, with the
residential market remaining challenging due
to a tendency towards multi-family homes,
which contributed to lower margin levels.
Our businesses in France and Austria were
impacted by adverse weather in the beginning
of 2018 and increased competition from new
entrants.
Sanitary, Heating and Plumbing
Our SHAP business in Germany continued to
realise growth and gained further market share,
benefiting from additional pick-up locations
and showrooms. Our Belgian business faced
some challenges in a somewhat slower
market, which negatively impacted results.
Sales and profit at our business in Switzerland
were below 2017, due to continued challenges
in the residential market and increased
competition.
Our SHAP business completed acquisitions
in Germany and Belgium in the second half of
2018. These bolt-on acquisitions had a modest
impact on sales and operating profit in 2018.
DIY
In Germany, our DIY business recovered
from the inclement weather conditions in the
beginning of 2018 and realised stable sales
and profit levels.
(Discontinued Operations)
Current Year 2019
The commentary below refers to the trading
results of Europe Distribution for the first ten
months of 2019 prior to its divestment on 31
October 2019.
Europe Distribution experienced modest
sales and profit growth during 2019 but with
mixed performances across the businesses.
Overall sales were slightly ahead with a
strong contribution from the GBM business
in Germany, which benefited from increased
end-user demand. In addition, the SHAP
businesses in Germany and Belgium continued
to gain market share in consolidating markets.
These positive developments were partly offset
by difficult market conditions in Switzerland
and slowing residential demand in the
Netherlands.
General Builders Merchants
The GBM business showed 2% sales growth
in the first ten months of 2019, with stable
operating profit. Despite slowing residential
demand in the Netherlands, overall sales in the
Dutch business were marginally ahead of 2018
and, with continued focus on performance
improvement projects, operating profit was
also ahead.
The German business showed sales growth
against an improving RMI market backdrop;
however, with an increasing portion of demand
coming from lower margin direct sales,
margins were under pressure which resulted in
operating profit being slightly behind. Market
conditions in Switzerland remained challenging
as increased competition on trade margins
more than offset stabilising demand. The
French business benefited from an improving
residential sector while sales in the Austrian
business declined due to market pressure in all
channels; however, operating profit improved
due to continued focus on our cost base.
Sanitary, Heating & Plumbing
Continued sales growth from additional
pick-up locations and further investments in
showrooms led to market share improvement
in our German and Belgian SHAP businesses.
Operating profit was ahead, benefiting from
increased volumes together with operational
improvement and procurement initiatives, partly
offset by declining results in Switzerland.
DIY
The substantial part of our European DIY
footprint was disposed in July 2018. The
remaining business, part of our overall German
Distribution operations, was divested with the
wider Europe Distribution business in October.
Results in 2019 prior to disposal were positive
with like-for-like sales ahead of 2018 for the ten
months to October.
53
Stradus, part of CRH’s Building Products Division, supplied c.1,000 Hydro Lineo XL grass tiles to pave the surroundings of an office complex in Doornik, Belgium.
The lattice structure allows water to slowly drain away, keeping the surface free from water while not overloading drainage systems.
54 HALFEN, part of CRH’s Building Products Division, supplied 200 panel anchors to affix the facade of
the new Pavilion 6 of the Paris Expo Porte de Versailles exhibition centre. The centre, which is Europe’s
largest conference venue, welcomes more than 7.5 million visitors and hosts 200 events each year.
GOVERNANCE
55
Board of Directors 56
Corporate Governance Report 60
Directors’ Remuneration Report 74
Directors’ Report 102
Principal Risks and Uncertainties 108
56 - 113
GOVERNANCE
56 Board of Directors
Skills and experience:
Richie has extensive experience in all
aspects of financial services and was
Chief Executive of Bank of Ireland Group
plc between February 2009 and October
2017. He also held a number of key senior
management roles within Bank of Ireland,
Royal Bank of Scotland and Ulster Bank.
He is a past President of the Institute of
Banking in Ireland and of the Irish Banking
Federation.
Qualifications: Bachelor of Arts
(Economics) from Trinity College, Dublin;
Fellow of the Institute of Banking in Ireland.
External appointments:
Listed: Director of Kennedy-Wilson
Holdings, Inc., a global real estate
investment company, and Eurobank
Ergasias S.A., a bank based in Athens,
Greece which has operations in Greece
and several other European counties.
Non-listed: Not applicable.
Chairman
Appointed to the Board: March 2018
Nationality: Irish Age: 61
Committee membership:
Richie
Boucher
Aq F N S R
Skills and experience:
Albert joined CRH in 1998. Prior to joining
CRH, he was Chief Operating Officer
with a private equity group. While at CRH
he has held a variety of senior positions,
including Finance Director of the Europe
Materials Division, Group Development
Director and Managing Director of Europe
Materials. He became Chief Operating
Officer in January 2009 and was appointed
Group Chief Executive with effect from
1 January 2014.
Qualifications: FCPA, MBA, MBS.
External appointments:
Listed: Non-executive Director of
LyondellBasell Industries N.V., one of the
largest plastics, chemicals and refining
companies in the world.
Non-listed: Not applicable.
Albert
Manifold
Chief Executive
Appointed to the Board: January 2009
Nationality: Irish Age: 57
Committee membership:
S
Aq
Senan
Murphy
Skills and experience:
Senan has extensive experience in
international business across financial
services, banking and renewable energy.
He joined CRH from Bank of Ireland Group
plc where he was the Chief Operating
Officer and a member of the Group’s
Executive Committee. He previously held
positions as Chief Operating Officer and
Finance Director at Ulster Bank, Chief
Financial Officer at Airtricity and numerous
senior financial roles in GE, both in Ireland
and the US.
Qualifications: Fellow of Chartered
Accountants Ireland. Senan also holds a
Bachelor of Commerce and Diploma in
Professional Accounting from University
College Dublin.
External appointments:
Listed: Not applicable.
Non-listed: Not applicable.
Group Finance Director
Appointed to the Board: January 2016
Nationality: Irish Age: 51
Committee membership:
GOVERNANCE
57
Skills and experience:
During the course of her executive
career, Gillian has held a number of
senior leadership positions in a variety
of industries, geographies and roles
including human resources, corporate
affairs and strategy. Most recently she was
Executive Vice President and Chief Human
Resources Officer at Finning International,
Inc. (the world’s largest Caterpillar
equipment dealer) with global responsibility
for human resources, talent development
and communications. She previously
held senior executive roles at Aviva,
the multinational insurance company,
as Executive Vice President Human
Resources and Executive Vice President
Strategy and Corporate Development.
Qualifications: Bachelor of Arts from the
University of Western Ontario and
a Masters of Education from
the University of Toronto.
External appointments:
Listed: Non-executive Director and
Chair of the Management Resources
& Compensation Committee of Interfor
Corporation, a Canadian listed company,
which is one of the world’s largest
providers of lumber.
Non-listed: Not applicable.
Senior Independent Director
Appointed to the Board: January 2017
Nationality: Canadian Age: 66
Committee membership:
Gillian L.
Platt
N R S
*Audit Committee Financial Expert as determined by the Board.
Non-executive Director
Appointed to the Board: December 2019
Nationality: Dual United States and Irish
Age: 60 Committee membership:
Shaun
Kelly
Skills and experience:
Shaun was until September 2019, the
Global Chief Operating Officer of KPMG
International, where he was responsible
for the execution of the firm’s global
strategy and for the delivery of various
global initiatives. Over a thirty-year career
with KPMG, the majority of which was
spent in the US, he held a variety of senior
leadership positions, including Partner
in Charge, US Transaction Services
(2001-2005), Vice Chair and Head of
US Tax (2005 to 2010) and Vice Chair
Operations and Chief Operating Officer
Americas (2010 to 2015), before his
appointment as Global Chief Operating
Officer in 2015.
Qualifications: Fellow of Chartered
Accountants Ireland and a US Certified
Public Accountant. Shaun also holds a
Bachelor of Commerce and Diploma in
Professional Accounting from University
College Dublin and an honorary doctorate
from Queen’s University Belfast.
External appointments:
Listed: Not applicable.
Non-listed: Shaun holds a number of
non-profit board memberships.
*
A
Non-executive Director
Appointed to the Board: September 2019
Nationality: Swedish Age: 63
Committee membership:
Johan
Karlström
Skills and experience:
Johan was President and Chief Executive
Officer of Skanska AB, a leading
multinational construction and project
development company until 2017. Over a
thirty-year career with Skanska, he held a
variety of leadership roles in Europe and
America, before becoming President and
Chief Executive in 2008. He also served
as President and Chief Executive Officer
of BPA (now Bravida), a listed mechanical
and installation group from 1996 to 2000.
Qualifications: Masters degree in
Engineering from the KTH Royal Institute of
Technology, Sweden.
External appointments:
Listed: Non-executive Director of
Sandvik AB.
Non-listed: Not applicable.
A R S
58 Board of Directors - continued
*Audit Committee Financial Expert as determined by the Board.
Skills and experience:
Mary is Chairman, Chief Executive
Officer and President of Johns Manville
Corporation, a Berkshire Hathaway
company, which is a leading global
manufacturer of premium-quality building
products and engineered specialty
materials. Over nearly 40 years with Johns
Manville she has held a wide range of
global leadership roles, encompassing
responsibility for business management
and strategic business development and
was also Chief Financial Officer. Mary was
until recently a non-executive Director of
Ply Gem Holdings Inc., a leader in exterior
building products in North America, and
lead Director of CoBiz Financial Inc.
Qualifications: Bachelor’s degree in
Finance from the University of Colorado;
MBA from the University of Denver.
External appointments:
Listed: Not applicable.
Non-listed: Chairman, Chief Executive
Officer and President of Johns Manville
Corporation and member of the Board of
Trustees of the University of Denver.
Non-executive Director
Appointed to the Board: October 2018
Nationality: United States Age: 61
Committee membership:
Mary K.
Rhinehart
Non-executive Director
Appointed to the Board: January 2015
Nationality: Irish Age: 66
Committee membership:
Patrick J.
Kennedy
Skills and experience:
Pat was Chairman of the Executive Board
of Directors of SHV Holdings (SHV), a large
family-owned Dutch multinational company
with a diverse portfolio of businesses,
including the production and distribution of
energy, the provision of industrial services,
heavy lifting and transport solutions, cash
and carry wholesale and the provision of
private equity. During a 32 year career
with SHV, he held various leadership
roles across SHV’s diverse portfolio of
businesses, while living in various parts
of the world, and was a member of the
Executive Board of SHV from 2001, before
becoming Executive Chairman in 2006. He
retired from SHV in mid-2014.
Qualifications: BComm, MBS.
External appointments:
Listed: Not applicable.
Non-listed: Member of the Supervisory
Skills and experience:
Heather Ann is a former Managing
Director Ireland of Reckitt Benckiser and
Boots Healthcare and was previously a
non-executive Director of Bank of Ireland
plc and IDA Ireland.
Qualifications: BComm, MBS.
External appointments:
Listed: Non-executive Director
of Greencore Group plc, Jazz
Pharmaceuticals plc and Uniphar Group
plc.
Non-listed: Director of the Institute of
Directors in Ireland.
Non-executive Director
Appointed to the Board: February 2012
Nationality: Irish Age: 58
Committee membership:
Heather Ann
McSharry
S Safety, Environment
& Social Responsibility
Committee Chairman
GOVERNANCE
59
*Audit Committee Financial Expert as determined by the Board.
Skills and experience:
Siobhán is Group Managing Director of
Glanbia plc, a global nutrition company
with operations in 32 countries, a position
she has held since 2013. She has been a
member of the Glanbia Board since 2009
and was previously Finance Director, a
role which encompassed responsibility
for Glanbia’s strategic planning. Prior
to joining Glanbia, she worked with
PricewaterhouseCoopers in Dublin and
Sydney.
Qualifications: Fellow of Chartered
Accountants Ireland; Bachelor of
Commerce; Diploma in Professional
Accounting from University College Dublin.
External appointments:
Listed: Group Managing Director of
Glanbia plc.
Non-listed: Director of the Irish Business
Employers Confederation (IBEC).
Non-executive Director
Appointed to the Board: December 2018
Nationality: Irish Age: 56
Committee membership:
Siobhán
Talbot
*
Skills and experience:
Lucinda spent the majority of her career in
investment banking, including 21 years in
UBS Investment Bank and its predecessor
firms where she worked until 2007. She
held senior management positions in the
UK and the US, including Global Head
and Chairman of UBS’ Equity Capital
Markets Group and Vice Chairman of the
Investment Banking Division.
Qualifications: Masters in Philosophy,
Politics and Economics and a Masters in
Political Science.
External appointments:
Listed: Non-executive Director of Ashtead
Group plc, Greencoat UK Wind plc and
ICG Enterprise Trust plc.
Non-listed: Non-executive Director of the
British Standards Institution.
Non-executive Director
Appointed to the Board: March 2015
Nationality: British Age: 58
Committee membership:
Lucinda J.
Riches
A F
Aq
Skills and experience:
Henk has a background in distribution,
wholesale and logistics. Until 2010, he was
Chief Executive Officer at Pon Holdings
B.V., a large, privately held international
company which is focused on the supply
and distribution of passenger cars and
trucks, and equipment for the construction
and marine sectors. He was also a
member of the Supervisory Boards of the
Royal Bank of Scotland N.V., the food-retail
group Detailresult Groep, the retail group
Blokker Holding B.V. and Chairman of
the Supervisory Board of Stork Technical
Services B.V.
Qualifications: Masters degree in Dutch
Law; PMD Harvard Business School.
External appointments:
Listed: Not applicable.
Non-listed: Chairman of Koole Terminals
B.V. Henk also holds several non-profit
board memberships.
Non-executive Director
Appointed to the Board: February 2014
Nationality: Dutch Age: 64
Committee membership:
Henk Th.
Rottinghuis
Corporate Governance Report
The Board believes that sustainability
and corporate social responsibility are
fundamental to CRH being the leading
building materials business in the world.
Chairman’s Overview
The Corporate Governance report contains
details of CRH’s governance structures and
highlights areas of focus for the Board and its
Committees during 2019. In keeping with prior
years, details of CRH’s general governance
practices are available in the governance
appendix on CRH’s website, www.crh.com
(the ‘Governance Appendix’)1
. CRH implemented
the 2018 UK Corporate Governance Code
(the ‘2018 Code’) and this Report explains
how the principles of the 2018 Code have
been applied. A copy of the 2018 Code can be
obtained from the Financial Reporting Council’s
website, www.frc.org.uk.
Shareholder Engagement
As Chairman, a core part of my role is
shareholder engagement. Therefore, following
the announcement of my appointment as
Chairman Designate in September 2019,
I contacted CRH’s largest shareholders,
representing over 50% of CRH’s issued share
capital, offering to meet with them. In addition to
an initial introduction, the purpose was to set out
my thinking in relation to the main areas of focus
for the Board and, equally importantly, to gain
an understanding of their perspectives on CRH.
I very much appreciate that a significant number
of shareholders, representing around 30% of the
shares in issue, gave freely of their time for this
engagement.
The priority areas of Board focus that I
discussed with shareholders in those meetings
are set out in my introduction to this Annual
Report and Form 20-F on page 4.
The feedback I received was consistent in a
number of respects, with support for CRH’s
strategy and a widespread view that CRH
had a strong and effective management team
led by our Chief Executive, Albert Manifold,
alongside a recognition of the importance
of having succession plans in place for key
executive roles. Shareholders also expressed
a range of views on topics such as the optimal
approach to capital allocation, the Group’s
organisation structure and portfolio, and CRH’s
remuneration structures. There was a good
understanding of the Board’s approach to
sustainability, and I was particularly pleased to
hear that shareholders were very complimentary
in respect of our approach to this critical area
and positive regarding the opportunities for CRH
to differentiate itself from other companies in the
sector. The detailed feedback from the meetings
has been considered by the Board and relevant
Committees.
Safety, Environment and
Social Responsibility
Committee
In last year’s Corporate Governance Report,
Nicky Hartery reported that the Board had set
up a new permanent Committee, the Safety,
Environment & Social Responsibility (SESR)
Committee, to ensure that sufficient time, energy
and focus was allocated to these strategically
important matters. A detailed summary of the
principal topics considered by the Committee in
2019 is set out in table 1.
During 2019, the Board and the SESR
Committee monitored developments in the
area of safety, including considering reports
on the background to (and learnings from)
serious accidents, the implementation of
recommendations from an external advisory
panel, the rollout of CRH’s frontline leadership
programme, the implementation of policies in
relation to contractor management and energy
isolation and the ongoing work to reinforce roles,
responsibilities and expectations in the area of
safety. Further details on the Group’s approach
to safety, and our ongoing objective of zero
fatalities and ambition of zero harm at every
location across our business, are set out in the
Sustainability section on pages 20 to 25.
Given that the topic of sustainability has
become a key element of shareholder and wider
stakeholder engagement, and the increased
focus on workforce engagement and corporate
purpose following the introduction of the 2018
Code, the section below highlights some of
the important initiatives in these areas that fall
under the remit of the SESR Committee. The
various ways in which CRH engages with its
stakeholders is summarised in the Sustainability
section on page 25. Feedback from stakeholder
engagement is reported to, and carefully
considered by, the Board.
Sustainability
The Board believes that sustainability and
corporate social responsibility are fundamental
to CRH being the leading building materials
business in the world. CRH is ranked amongst
industry leaders by ESG rating agencies.
1. The Governance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section 1373(2) of the Companies
Act 2014, the Governance Appendix and the risk management disclosures on pages 26 to 29 and 108 to 113 form part of, and are incorporated by reference into, this Corporate Governance Report.
The primary (premium) listing of CRH plc is on the LSE, with the listing on Euronext Dublin characterised as secondary. For this reason, CRH plc is not subject to the same ongoing listing requirements
as would apply to an Irish company with a primary listing on Euronext Dublin. For further information, shareholders should consult their financial adviser. Further details on the Group’s listing
arrangements, including its premium listing on the LSE, are set out on page 72.
Richie Boucher
Chairman
GOVERNANCE
61
SESR Committee Topics Table 1
Safety
Sustainability
Social Responsibility
Reporting
Examples of CRH Sustainability Initiatives Table 2
In addition, many of our operating companies
have been recognised for excellence in this
area. Our 2030 sustainability targets, which
have recently been agreed, are set out on
page 21 in the Sustainability section.
I am pleased to report that we have achieved
one year ahead of time our 2020 target of a
25% reduction in specific net CO2 cement
plant emissions, compared with 1990 levels.
Looking forward, our stretching and industry
leading 2030 CO2 reduction targets have been
independently verified to be in line with the Paris
Climate Agreement.
Our Chief Executive, Albert Manifold was the
inaugural president of the Global Cement &
Concrete Association (GCCA). Sustainable
development of our industry is at the core of
the GCCA’s work. We strongly believe that
collaboration like this, both within and outside
of our industry, is key to addressing global
construction challenges and sustainable
development goals while ensuring the value of
concrete as a sustainable construction material
is recognised.
Inclusion & Diversity
CRH’s inclusion and diversity (I&D) vision is set
out in table 4 on page 62. The SESR Committee
is responsible for working with management,
and monitoring progress, in relation to I&D below
Board level. The approach to I&D is based on
four initial workstreams:
• Communication;
• Education & Awareness;
• People & Practices; and
• Data & Measures
and includes the development of programmes
to address unconscious bias, toolkits to
supplement recruitment guidelines, best
practices and KPIs. The Committee receives
regular reports on progress towards each priority
objective on the I&D roadmap.
Workforce Engagement
The Board has designated the SESR Committee
with responsibility for stakeholder engagement,
including with the workforce. Given the
footprint of CRH with c. 80,300 employees in
30 countries, we believe this is the best and
most effective way of ensuring that the views of
employees are understood and are taken into
consideration in our decision-making process.
• Regular safety updates covering policies, action plans,
and the background, impact and required remediation
actions in relation to any serious incidents
Switzerland
• At one of our Jura Cement plants, over 80% of the
fuel needed for cement manufacture is supplied by
alternative fuels
• 2020 and 2030 sustainability targets
• The role of industry groups in the area of sustainability
• Trends in the built environment
• Inclusion & Diversity
• Stakeholder engagement roadmap, including
workforce engagement
• Corporate purpose
• Annual Sustainability Reports
• Updates in relation to stakeholder and regulatory
expectations
Canada
• We are working with an organisation named Carbon8
on trialling an accelerated carbonation project to
generate a lightweight aggregate by using cement plant
flue gas in combination with cement kiln dust, where the
CO2 in the flue gas is reacted with the cement kiln dust
and pelletised to form lightweight aggregate
Netherlands • Our subsidiary Cementbouw through its ‘Concrete
remains Concrete’ initiative is recycling construction
waste in its products and aims to reuse 100% of
available concrete rubble by 2025, which would replace
up to 1 million tonnes of sand and gravel
UK • Our subsidiary Tarmac is a participant in LEILAC, Low
Emissions Intensity Lime and Cement, an EU project
developing a breakthrough calciner to directly separate
and capture 95% of the CO2 released from limestone
when being transformed into clinker
62 Our Values Table 3
At CRH, our values unite us in the way we work, every day, all over the world.
To facilitate its work in this area, which will
evolve over time, the Committee has identified
a number of key areas for regular updates and
reporting.
The SESR Committee has also commenced a
number of important initiatives:
• In addition to the interaction Board
members have with employees during visits
to operations in Europe and the US, the
Committee utilised the opportunity during a
Board visit to operations in Spain to pilot a
session with employees in an open forum to
discuss their views of CRH. The conversation
focussed on the importance of safety, training
and development, I&D, the environment and
engaging with the community. It is intended
that there will be similar engagements
in other countries or regions to focus on
themes relevant to employees, and on
culture and values in particular;
• A workforce engagement project team,
made up of a cross section of employees
from across our global business, has been
established under the Chief Executive’s
sponsorship. This is a key initiative as only
a small number of such projects operate
globally each year to address critical
business issues or opportunities. The
team has been tasked with recommending
priorities and developing an implementation
plan. The outputs will be reported to the
SESR Committee; and
• During 2020, members of the SESR
Committee will have opportunities to attend
employee development programmes,
forums, conferences and other events in their
local regions.
Additional information on training provided
to employees on the CoBC and relevant
compliance policies and on the role of Internal
Audit in investigating material matters raised by
employees, is set out on page 72.
Corporate Purpose
CRH's purpose is expressed in our values, set
out in table 3 below, and is delivered through
our strategy, which is summarised on page 14.
It encompasses many different aspects, ranging
from propositions for investors, employees,
suppliers and customers, to the sustainable
operations of our companies and the products
we manufacture. Connected to all of these
elements, and to the articulation of CRH's
purpose, is CRH's brand. The SESR Committee
is currently working with management on
a project to connect these different but
complementary concepts. The aim is to set
out CRH's purpose in a way that captures
our aspirations beyond financial returns,
communicates the unique nature of CRH,
inspires our people, guides our actions, is true to
our culture and underpins our dialogue with our
stakeholders. In addition, the work on corporate
Corporate Governance Report - continued
Put
safety first
Continuously
create value
Do what we say and
lead with integrity
Operate locally, but
act as one company
Build enduring
relationships
Talented people
of all backgrounds
are welcome -
Differences are
embraced
Everyone has a
fair and equal
opportunity -
To develop
and progress
Our working
environment
supports people -
In being themselves,
performing at
their best
Inclusion & Diversity Table 4
We're committed to building an inclusive and diverse organisation where:
GOVERNANCE
63
purpose, together with CRH's approach to I&D
and employee engagement, will further facilitate
the Board's assessment of the alignment of
CRH's purpose, values and strategy with our
culture.
Re-election of Directors
I have evaluated the performance of each
Director standing for re-election and am
satisfied that each Director is committed to
their role, provides constructive challenge and
devotes sufficient time and energy to contribute
effectively to the performance of the Board.
Table 11 on page 69 provides a summary of
competencies, important to the long-term
success of the Group, that each Director
seeking re-election at the 2020 AGM brings to
the Board. Their full biographies are set out on
pages 56 to 59. I recommend that shareholders
vote in favour of the re-appointment of each
Director going forward for re-election at the
2020 AGM.
Conclusion
The Board is committed to ensuring that
CRH is an industry leader in areas such as
CO2 emissions reduction and to making the
investments in technology and knowledge
required to achieve this. We are also committed
to continuing our focus on safety, I&D and
stakeholder engagement and on the alignment
of CRH's purpose, values and culture. I strongly
believe that CRH is well positioned to meet our
challenges and to grasp strategic opportunities
for the benefit of our shareholders and
stakeholders.
Richie Boucher
Chairman
27 February 2020
The Board met on six occasions during 2019. This included site visits to Cementos Lemona S.A. in Spain and Tilcon New York Inc in the US. Such visits are an important opportunity
for the Board to meet and interact with management and employees at our operating businesses as well as in our central support functions.
Chairman’s Overview
I was appointed to the Board and as Chairman of
the Audit Committee in December 2019.
I would like to thank Bill Teuber, who chaired the
Committee from February 2018 until June 2019
and Heather Ann McSharry who acted as Interim
Audit Committee Chair until my appointment
and with whom I have worked closely since my
appointment.
On behalf of the Committee, I am pleased to
introduce the Audit Committee Report for the
year ended 31 December 2019. The purpose
of this report is to provide shareholders with an
insight into the workings of, and principal matters
considered by, the Committee in 2019. General
details in relation to the roles and responsibilities
of the Committee, its operation and the policies
applied by it, can be found in the Governance
Appendix.
Table 5 outlines the key areas that the Committee
focused on in 2019.
Audit Committee Membership
The Committee currently consists of seven
non-executive Directors considered by the Board
to be independent1
. The biographical details
of each member are set out on pages 57 to
59. Together, the members of the Committee
bring a broad range of relevant experience and
expertise from a variety of industries which is
vital in supporting effective governance. Mary
Rhinehart, Siobhán Talbot and I have been
designated by the Board as the Committee’s
financial experts and meet the specific
requirements for recent and relevant financial
experience, as set out in the 2018 Code.
External Auditors
Change of External Auditors
A key focus for the Committee for 2019 was
monitoring the plans and progress in relation
to the transition of the external audit from EY
to Deloitte with effect from the financial year
commencing 1January 2020.
During 2019, we had regular discussions and
interactions with management, EY and Deloitte on
the status of work being undertaken across the
Group to ensure that Deloitte are well prepared for
their engagement as external auditors. Briefly, the
audit transition work has included the following:
• Meetings across the Group between
management, Deloitte and EY, in order
to increase Deloitte’s knowledge and
understanding of CRH;
• Deloitte completing a review of EY’s working
papers in respect of the 2018 year-end audit
(Deloitte will also review, in due course, the
relevant papers from the 2019 year-end audit);
and
• Regular updates and reports from
management to the Committee on the
status of the transition process and activities,
including the work to monitor the termination
of services previously provided by Deloitte,
which will be prohibited when Deloitte
become CRH’s external auditor. Deloitte
has confirmed to the Committee that it has
achieved the relevant independence status.
On behalf of the Committee and the wider
Board, I would like to take this opportunity to
thank EY for their professional approach over
the years, and for their ongoing engagement
during the transition period.
Effectiveness
The Committee, on behalf of the Board, is
responsible for the relationship with the external
auditors and for monitoring the effectiveness
and quality of the external audit process. The
Committee’s primary means of assessing the
effectiveness of the external audit process
is by monitoring performance against the
agreed audit plan. In addition, we consider the
experience and knowledge of the external audit
team and the results of post-audit interviews
with management and the Audit Committee
Chairman. These annual procedures are
supplemented by periodic formal reviews of the
performance of the external auditor.
Further details in relation to the external auditors,
including information on how auditor objectivity
and independence are maintained, are included
in Section 2 of the Governance Appendix.
All of the above procedures indicated a high
level of satisfaction with the services provided by
EY to CRH during 2019.
Non-audit Fees
In order to ensure auditor independence and
objectivity, the Committee has a policy governing
the provision of audit and non-audit services by
the external auditor.
In 2019, EY provided a number of audit
services, including Sarbanes-Oxley Section 404
attestation2
, and non-audit services, including
due diligence services associated with proposed
acquisitions and disposals. EY was also engaged
during 2019 in a number of jurisdictions in which
the Group operates to provide help with local tax
compliance, advice on taxation laws and other
1. The Board has determined that all of the non-executive Directors on the Audit Committee are independent according to the requirements of Rule 10A.3 of the rules of the Securities and Exchange
Commission (SEC) and Provision 10 of the 2018 Code.
2. A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC's website, www.sec.gov.
Audit Committee Report
Shaun Kelly
Chairman of Audit Committee
A key focus for the Committee for 2019 was
monitoring the plans and progress in relation
to the transition of the external audit from EY
to Deloitte with effect from the financial year
commencing 1 January 2020.
GOVERNANCE
65
Key Areas of Focus in 2019 Table 5
Change in
Reporting
Currency
External
Auditors
What did we do?
EY has been the Group’s external auditors since 1988. Pat O’Neill has been the Group’s lead audit engagement
partner since the financial year beginning 1 January 2016.
As outlined in the 2018 Annual Report and Form 20-F, following the conclusion of a competitive tender process
during 2018 the Board selected, subject to confirmation at the 2020 AGM, Deloitte for appointment as the external
auditor with effect from the financial year commencing 1 January 2020. Richard Muschamp will be the Group’s lead
audit engagement partner. During 2019, a key area of focus for the Committee was monitoring the plans and progress
in relation to the audit transition.
Financial
Reporting
& External Audit
What did we do?
We reviewed the 2019 Annual Report and Form 20-F, together with the annual and half-year trading statements and
recommended them to Board for approval. In July, we met with EY to agree the 2019 external audit plan. Table 6 on
page 66 outlines the key areas identified as being potentially significant and how we addressed these during the year.
Impairment
Testing
What did we do?
Through discussion with both management and EY, we reviewed management’s impairment testing methodology and
processes. We found the methodology to be robust and the results of the testing process appropriate. Further details
in relation to the impairment outcome for 2019 are outlined in table 6.
Enterprise
Risk
Management
What did we do?
The Committee continued to monitor and review the Group’s Enterprise Risk Management framework, the principal
risks and uncertainties facing the Group, and the methodology and process underlying the Viability Statement included
on page 29 of our Risk Governance section. We also considered an assessment of the Group’s risk management and
internal control systems. This had regard to risk management strategies and all material controls, including financial,
operational and compliance controls that could affect the Group’s business.
IT Governance
& Cyber Security What did we do?
We continued to monitor the Group’s IT governance and information security programme and ability to address cyber
security threats.
What did we do?
Having regard to the structural shift in the Group's exposure to US dollars over recent years and the benefit of reducing
the potential for volatility in the Group's reported earnings (arising from foreign exchange translation) together with
reviewing the proposed implementation plan and related controls, the Committee was satisfied
with the appropriateness of this change.
New
Accounting
Standards
What did we do?
The Committee considered and discussed with management the impact (including disclosure) of the implementation
of the new accounting standard in relation to IFRS 16 Leases. Please see pages 133 and 134 for further information
on the impact of IFRS 16.
66 Audit Committee Report - continued
What did we do?
Through a review of the relevant management papers and in conjunction with both management
and EY, we reviewed management's impairment testing methodology and processes. For the
purposes of its impairment testing process, the Group assesses the recoverable amount of each of
CRH’s cash-generating units (see details in note 16 to the Consolidated Financial Statements) based
on a value-in-use computation. Following its deliberations, the Committee was satisfied that the
methodology used by management and the results of the assessment, together with the disclosures in
note 16, were appropriate.
Impairment
of Goodwill
What did we do?
In addition to the goodwill impairment testing process discussed above, the Group also undertook its
assessment of the potential for impairment of other non-current assets (property, plant & equipment and
financial assets) as and when indicators of impairment arise. The Committee considered the methodology
used by management in that process and was satisfied that the accounting treatment (including the
associated disclosures) was appropriate.
Impairment of
Property, Plant &
Equipment, and
Financial Assets
What did we do?
IFRS 15 Revenue from Contracts with Customers requires revenue and expenses to be recognised
on uncompleted contracts, with the underlying principle that, once the outcome of a long-term
construction contract can be reliably estimated, revenue and expenses associated with that contract
should be recognised by reference to the percentage of completion. If it is anticipated that the contract
will be onerous (i.e. its unavoidable cost exceeds the economic benefit of the contract), a provision is
created. Following discussion with management and EY, recognising that the majority of contracts were
completed within the financial year, the Committee was satisfied that the recognition of contract revenue
(including the associated disclosures) was appropriate for the Group in 2019.
Contract
Revenue
Recognition
What did we do?
During 2019, the Group completed 62 acquisitions and investments at a total cost of c. €0.7 billion.
On the divestment front, the Group completed 11 transactions and realised business and asset
disposal proceeds of c. €2.1 billion. Following discussion with management and EY, the Committee
was satisfied that the accounting treatment (including the associated disclosures) applied to all
acquisitions and divestments during 2019 was appropriate.
Accounting for
Acquisitions &
Divestments
Audit Services
Non-audit
Services
2019
6%
94%
2018
6%
94%
2017
11%
89%
Areas Identified for Focus during the 2019 External Audit Planning Process Table 6
Percentage of Audit and Non-audit Fees Table 7
GOVERNANCE
67
related matters; assignments which typically
involve relatively low fees. The Committee is
satisfied that the external auditors’ knowledge
of the Group was an important factor in choosing
them to provide these services. The Committee
is also satisfied that the fees paid to EY for non-
audit work in 2019, which amounted to €1.1
million and represented 6% of the total fees for
the year, did not compromise their independence
or objectivity. Details of the amounts paid to
the external auditors during the year for audit
and other services are set out in note 5 to the
Consolidated Financial Statements on page 153
(see also table 7 on page 66). Further details in
relation to the Group’s policy regarding non-audit
fees are set out in Section 2 of the Governance
Appendix.
Internal Audit Effectiveness
In December 2018, the Committee received and
approved the Internal Audit Charter and audit
plan for 2019. During the year, the Committee
received regular updates from the Head of
Internal Audit outlining the principal findings from
the work of Internal Audit and management’s
responses thereto.
External Quality Assessments of Internal Audit
are conducted periodically to ensure that the
Internal Audit function continues to work
efficiently and effectively and in compliance with
good practice standards.
Audit Committee Effectiveness
and Priorities for 2020
During 2019, the Committee and the Board
reviewed the operation, performance and
effectiveness of the Committee and I am pleased
to confirm that the Committee continues to
operate effectively. I would like to thank my fellow
Committee members for their commitment and
input to the work of the Committee during 2019.
Looking ahead to 2020, the Committee will
continue to focus on external audit planning, and
specifically the change of external auditors from
EY to Deloitte, together with the key ongoing
areas outlined in table 5 page 65.
Shaun Kelly
Chairman of Audit Committee
27 February 2020
In 2019 our Americas Materials Division launched a communications campaign to celebrate the people and teams
across the Division that collectively make it successful. The campaign featured six employees and their families in
a three-part video series, and profiled this Environmental Health & Safety (EHS) Coordinator from ICON Materials in
Auburn, Washington, who has been with the company for over 30 years.
Chairman’s Overview
Following my appointment as CRH Chairman,
the Board appointed me as Chairman of the
Nomination & Corporate Governance Committee
with effect from 1 January 2020 and I am
pleased to present the report of the Committee
for the year ended 31 December 2019. The
report outlines the main areas of focus of the
Committee in the past year and the areas of
priority going forward.
The Board has designated responsibility to the
SESR Committee for working with management
and monitoring improvements in I&D below
Board level. The SESR Committee’s work in this
area is summarised on pages 60 to 63.
Committee Membership
The Committee currently consists of five
non-executive Directors, considered by the
Board to be independent. The biographical
details of each member are set out on pages
56 to 58. The Chief Executive normally attends
meetings of the Committee.
Board Composition & Renewal
Renewal of the CRH Board is an ongoing
and dynamic process, with the focus of the
Committee being on ensuring that the Board
includes a diverse group of individuals based
on a broad set of factors and that renewal is
aligned with CRH's strategy and the needs of the
business.
During 2019, the Committee recommended to
the Board that the following be appointed as
non-executive Directors:
• Johan Karlström (September 2019); and
• Shaun Kelly (December 2019)
Johan Karlström was President and Chief
Executive Officer of Skanska AB, a leading
multinational construction and project
development company until 2017. Over a
thirty-year career with Skanska, he held a variety
of leadership roles in Europe and America,
before becoming President and Chief Executive
in 2008. His background and his knowledge of
our industry will be an important addition to the
collective skills and experience of the Board.
Shaun Kelly was, until September 2019,
the Global Chief Operating Officer of KPMG
International, where he was responsible for the
execution of the firm’s global strategy and for
the delivery of various global initiatives. Over a
thirty-year career with KPMG, the majority of
which was spent in the US, he held a variety
of senior leadership positions. Through his
career with KPMG, Shaun has extensive
knowledge and experience in auditing, financial
reporting, strategic development and operational
management.
Following a recommendation from the
Committee the Board asked Gillian Platt, who
has completed her initial three-year term as a
non-executive Director, to serve a second term.
At the conclusion of the 2020 AGM, Pat
Kennedy and Henk Rottinghuis will retire from the
Board. In addition to Nicky Hartery, who retired
at year end, during 2019 Don McGovern and Bill
Teuber stepped down from the Board. I would
like to thank each of them for their service and
commitment to CRH.
Going forward, ensuring that the Board
continues to have the requisite skills to support
the Company’s strategy will be a priority for my
tenure as Chairman. A particular area of focus for
renewal in the next two to three years will be on
further enhancing the Board’s expertise through
having additional colleagues, from diverse
backgrounds, join the Board who have extensive
experience of capital intensive businesses with
similar activities in North America or Europe.
As shown in table 9, the Board is balanced in
terms of tenure with five non-executive Directors
in their first term of three years; four in their
second term and one undertaking a third term
of three years.
The Committee uses the services of external
search agents for Board searches. The agencies
used for the appointments of Johan Karlström
and Shaun Kelly were Egon Zehnder and
Leaders Mores. Neither firm has any other
connection with CRH other than, in the case
of Egon Zehnder, the provision of executive
recruitment services from time to time and
in connection with the Chairman succession
process outlined below.
Chairman Succession
Nicky Hartery retired as Chairman on
31 December 2019. The process which resulted
in my appointment as Chairman was led by
Gillian Platt, Senior Independent Director, who
chaired the Nomination & Corporate Governance
Committee and the Board when Chairman
succession was being dealt with. As part of that
process, a specification for the role of Chairman
was developed by the Board and both internal
and external candidates were considered. Gillian
met with a number of shareholders prior to the
Board's decision on the next Chairman to hear
their views on the process and the key attributes
required for the role. Their feedback was
considered by the Committee and the Board.
Nomination & Corporate
Governance Committee Report
Ensuring that the Board continues to
have the requisite skills to support the
Company’s strategy will be a priority for
my tenure as Chairman.
Richie Boucher
Chairman
GOVERNANCE
69
Accounting,
Internal
Control &
Financial
Expertise
Financial
Services
Governance
Industry
Expertise
IT & Cyber
Security
M&A,
Private
Equity,
Emerging
Markets
Org change,
succession
planning, talent
management
Remuneration
Safety &
Sustainability
Strategy
70 Inclusion and Diversity
Inclusion and diversity are key factors in the
specifications given to search agents when
developing long and short lists of candidates for
consideration by the Committee. The percentage
of women directors has increased from 15%
in 2013 to 42% at 31 December 2019 and will
be 50% at the conclusion of the 2020 AGM.
In addition to gender, the Board’s focus on
diversity includes social and ethnic backgrounds,
business and geographic experience, as well as
cognitive and personal strengths. This objective
is embedded in the Board’s policy on diversity
which is set out on pages 71 and 72.
Committee Composition
During the year, the Committee considered
and made recommendations to the Board
regarding changes to the composition of the
Board’s Committees. On the recommendation
of the Committee, Shaun Kelly was appointed
as permanent Audit Committee Chairman on
his appointment to the Board. Heather Ann
McSharry acted as interim Audit Committee
Chair in the period between Bill Teuber’s
resignation from the Board and Shaun’s
appointment. Heather Ann McSharry has
succeeded me as Chairman of the Remuneration
Committee. She was a member of the
Remuneration Committee for a number of
years prior to her appointment as the CRH
Remuneration Committee Chairman.
The current committee memberships of each
Director are set out on pages 56 to 59.
Senior Executive Succession
The area of senior executive succession is
a priority for the Board. An external agency
is currently working with the management
team and provides updates to the Board on
assessment and development programmes for
c. 100 CRH individuals, with the objective of
ensuring maximum flexibility when considering
appointments for key roles. Consideration of
the benefits of the recruitment of external hires
to complement and enhance our management
teams is an important component of CRH's
strategy to ensure the Company has a
management team of the highest calibre and
quality. In addition, the Nomination & Corporate
Governance Committee is leading, on behalf
of the Board, a related process in relation
specifically to senior executive succession. The
overall approach of the Committee is to consider
succession planning over short, medium and
long term timelines.
Board Effectiveness
As reported in the 2018 Annual Report and Form
20-F, the most recent external evaluation of the
effectiveness of the Board and its Committees
was carried out by Independent Audit, which met
Board members, the Head of Internal Audit, the
Company Secretary and a number of the senior
executive management team in one-to-one
interviews. During 2019, as part of the annual
internal Board evaluation, the Senior Independent
Director undertook an internal Board evaluation
review which built upon the priorities identified as
part of the Independent Audit review, reinforced
the areas of focus for future Board renewal
outlined above, and identified ways to further
enhance the strategic planning process and the
efficient workings of the Board.
Additional Directorships
The Chief Executive, Albert Manifold, was
appointed as a non-executive Director of
LyondellBasell Industries N.V., one of the
world’s largest plastics, chemicals and refining
companies in April 2019. Prior to him accepting
the position he discussed the requirements
of the role with the Nomination & Corporate
Governance Committee and the Board. The
Committee and the Board were satisfied that
this external position would not have an adverse
impact on his responsibilities as CRH Chief
Executive and was of the view that the additional
perspectives obtained would be beneficial to him
and to the Company.
The Board also considered the appointments
of Heather Ann McSharry and Lucinda Riches
as non-executive Directors of Uniphar Group plc
and Greencoat UK Wind plc, respectively, during
2019 and was satisfied that the responsibilities
resulting from these new positions would not
adversely impact on their time commitment to
CRH.
Corporate Governance
The Committee is responsible for reviewing
the independence of Board members and
has recommended to the Board that all of
the non-executive directors be deemed
to be independent. The Committee also
monitors developments in best practice in
relation to corporate governance and makes
recommendations to the Board in relation
to changes and enhancements to current
procedures. Each year the Chairman, Senior
Independent Director and Remuneration
Committee undertake an extensive engagement
with shareholders prior to the AGM to hear their
views on AGM proposals and on governance
topics of interest to shareholders. In 2019,
shareholders representing 20% of the share
register took up the offer of a meeting. The
Committee and the Board considered the
feedback from these sessions and from other
shareholder interactions during the year.
Richie Boucher
Chairman of the Nomination
& Corporate Governance Committee
27 February 2020
Nomination Committee Report - continued
GOVERNANCE
71
Attendance at Meetings during the year ended 31 December 2019 Table 13
Name Board Acquisitions Audit Finance Nomination (i) Remuneration SESR (ii)
Total Attended 
(ii) Safety, Environment & Social Responsibility Committee.
(iii) Appointed September 2019.
(iv) Appointed December 2019.
(v) Retired April 2019.
(vi) Resigned June 2019.
Board of Directors
Membership Structure
of the Board
We consider the current size and composition
of the Board to be within a range which is
appropriate. The spread of nationalities of the
Directors reflects the geographical reach of
the Group and we consider that the Board as
a whole has the appropriate blend of skills,
knowledge and experience, from a wide range of
industries, regions and backgrounds, necessary
to lead the Group. Section 1 of the Governance
Appendix on the CRH website (www.crh.com)
contains further details on the Board’s structures
and the Board’s policies with regard to the
appointment and retirement of Directors.
Role and Responsibilities
The Board is responsible for the leadership,
oversight, control, development and long-term
success of the Group. It is also responsible for
instilling the appropriate culture, values and
behaviour throughout the organisation. There
is a formal schedule of matters reserved to
the Board for consideration and decision. This
includes the matters set out in table 12.
The Group’s strategy, which is regularly
reviewed by the Board, and business model are
summarised on pages 14 to 17.
The Board has delegated some of its
responsibilities to Committees of the Board.
While responsibility for monitoring the
effectiveness of the Group’s risk management
and internal control systems has been
delegated to the Audit Committee1
, the Board
retains ultimate responsibility for determining
the Group’s risk appetite and tolerance, and
annually considers a report in relation to the
monitoring, controlling and reporting of identified
risks and uncertainties. In addition, the Board
receives regular reports from the Chairman of
the Audit Committee in relation to the work of
that Committee in the area of risk management.
Individual Directors may seek independent
professional advice, at the expense of the
Company, in the furtherance of their duties
as a Director. The Group has a Directors’ and
Officers’ liability insurance policy in place.
Independence of Directors
The Nomination & Corporate Governance
Committee has reviewed the interests of each
Director and the Board has determined that each
non-executive Director remains independent.
Chairman
Richie Boucher was appointed Chairman of
the Group with effect from 1 January 2020.
On his appointment as Chairman, he met the
independence criteria set out in the 2018 Code.
Although he holds other directorships, the Board
has satisfied itself that these do not adversely
impact on his role as Chairman.
Policy on Diversity
We are committed to ensuring that the Board is
sufficiently diverse and appropriately balanced.
In its work in the area of Board renewal and
succession planning, the Nomination &
Corporate Governance Committee looks at
the following four criteria when considering
non-executive Director roles:
• international business experience, particularly
in the regions in which the Group operates or
into which it intends to expand;
1. In accordance with Section 167(7) of the Companies Act 2014.
Matters Reserved
to the Board
Table 12
• Appointment of Directors
• Strategic plans for the Group
• Annual budget
• Major acquisitions and disposals
• Significant capital expenditure
• Approval of full-year results and
the Annual Report and Form 20-F
• Approval of the interim results
72 • skills, knowledge and expertise (including
education or professional background) in
areas relevant to the operation of the Board;
• diversity in all aspects, including nationality,
gender, social and ethnic backgrounds,
cognitive and personal strengths; and
• the need for an appropriately sized Board
During the ongoing process of Board renewal,
each, or a combination, of these factors can take
priority. To date, the Board has not set any policy
regarding age. The ages of the Directors range
from 51 to 66, which the Nomination & Corporate
Governance Committee believes is appropriate at
the current time.
Committees
The Board has established six permanent
Committees to assist in the execution of
its responsibilities. The current permanent
Committees are:
• Acquisitions;
• Audit;
• Finance;
• Nomination & Corporate Governance;
• Remuneration; and
• Safety, Environment & Social Responsibility
Ad-hoc Committees are formed from time to time
to deal with specific matters.
Each of the permanent Committees has
Terms of Reference1
, under which authority is
delegated to them by the Board. The Chairman
of each Committee reports to the Board on
its deliberations and minutes of all Committee
meetings are circulated to all Directors. The
Chairmen of the Committees attend the AGM
and are available to answer questions from
shareholders.
Each of the Committees has reviewed their
respective Terms of Reference. The Terms of
Reference of each Committee are available on the
CRH website, www.crh.com.
Substantial Holdings
The Company is not owned or controlled
directly or indirectly by any government or by
any corporation or by any other natural or legal
person severally or jointly. The major shareholders
do not have any special voting rights. Details of
the substantial holdings as at 31 December 2019
are provided in table 14 below. The Company
has not been advised of any changes in holdings
since 31 December 2019.
Stock Exchange Listings
CRH, which is incorporated in Ireland and
subject to Irish company law, has a premium
listing on the London Stock Exchange (LSE), a
secondary listing on Euronext Dublin (formerly
the Irish Stock Exchange) and its American
Depositary Shares are listed on the New York
Stock Exchange (NYSE).
Legal and Compliance
CRH's Legal and Compliance programmes
support the Group in operating sustainably and
consistently with its values. CRH's Legal and
Compliance team provides advice, guidance
and support to executive and operational
management and works closely with them
to provide training to our employees. Legal
and Compliance provides support on a range
of matters including establishing policies
and procedures, providing compliance
training and communications, providing legal
advice on compliance and business issues,
monitoring and investigating Hotline calls,
competition/antitrust law, and ensuring the
Group is informed of any changes to regulation
and/or reporting requirements. During 2019,
Legal and Compliance priorities included
antitrust/competition law, international trade
compliance, Hotline awareness and policy
refresh.
Code of Business Conduct
The foundation of Legal and Compliance
programmes is the Code of Business Conduct
(CoBC) and supporting policies, which sets
out our standards of legal, honest and ethical
behaviour. The CoBC complies with the
applicable code of ethics regulations of the SEC
arising from the Sarbanes-Oxley Act and it also
reinforces the fundamental CRH principle that
“there is never a good business reason to do
the wrong thing.” The CoBC is applicable to
all employees of the CRH Group, including the
Chief Executive and senior financial officers. A
detailed review and benchmarking exercise has
resulted in recommendations for refresh and the
CoBC will be updated in the first half of 2020.
CRH's Internal Audit function works side-by-side
with Legal and Compliance in monitoring
compliance with the CoBC and supporting
policies, and in providing an integrated approach
to assurance. This cross-functional collaboration
supports CRH's goal: to ensure CRH leads with
integrity.
Awareness and Training
In line with our commitment to maintain high
ethical business conduct standards, the CoBC
and Advanced Compliance Training (which
includes Anti-bribery, Anti-fraud, Anti-theft
and Competition/Antitrust topics) e-Learning
modules were enhanced to include both a first
time and refresher element to the programme in
23 languages.
1. 	
The Terms of Reference of these Committees comply fully with the 2018 Code; CRH considers that the Terms of Reference are generally responsive to the relevant NYSE rules, but may not address
all aspects of these rules.
Substantial Holdings Table 14
As at 31 December 2019, the Company had received notification of the following interests in its Ordinary Share capital, which were equal to, or in excess of, 3%:
31 December 2019 31 December 2018 31 December 2017
Name
Holding/
Voting Rights
% at
year end
Holding/
Voting Rights
% at
year end
Holding/
Voting Rights
% at
year end
BlackRock, Inc. has advised that its interests in CRH shares arise by reason of discretionary investment management arrangements entered into by it or
its subsidiaries.
GOVERNANCE
73
CRH Hotline
CRH engages an external service provider to
administer an independent 24/7 multi-lingual
confidential “Hotline” facility. The CRH Hotline
allows employees, customers, suppliers and or
other external stakeholders to raise good faith
concerns that may be relevant to the CoBC,
inappropriate or illegal behaviour or violations
of any CRH policies or local laws. All concerns
are handled discreetly and are professionally
investigated with appropriate actions taken based
on investigation findings. CRH is committed to
creating an atmosphere where employees feel
empowered to speak up when they have good
faith concerns. Retaliation or reprisals are not
tolerated at CRH.
Communications with
Shareholders
Communications with shareholders are given
high priority and the Group devotes considerable
time and resources each year to shareholder
engagement. We recognise the importance of
effective dialogue as an integral element of good
corporate governance. The Investor Relations
team, together with the Chief Executive, Finance
Director and other senior executives, regularly
meet with institutional shareholders (each year
covering over 60% of the shareholder base).
Detailed reports on the issues covered in those
meetings and the views of shareholders are
circulated to the Board after each group of
meetings. Table 16 provides a brief outline of
the nature of the activities undertaken by our
Investor Relations team.
In addition to the above, major acquisitions and
disposals are notified to the Stock Exchanges in
accordance with the requirements of the Listing
Rules and development updates, giving details
of other acquisitions or disposals completed and
major capital expenditure projects, are issued
periodically.
During 2019, the former Chairman, Senior
Independent Director and Company Secretary
again participated in a number of meetings
with some of the Group’s major shareholders,
in advance of the 2019 AGM. Also, as outlined
on page 60, Mr Boucher met with a significant
portion of the Group's shareholders following his
appointment as Chairman designate. There was
also continued engagement with the Group's
major shareholders on remuneration matters.
US Listing - Additional Information Table 15
Additional details in relation to CRH’s general corporate governance practices are set out in the
Governance Appendix, which has been filed as an exhibit to the Annual Report on Form 20-F
as filed with the SEC. For the purposes of the Annual Report on Form 20-F, the Governance
Appendix, and in particular the following sections thereof, are incorporated by reference herein:
Section 1 - Frequently
Asked Questions
• Page 3: For what period are non-executive
Directors appointed?
• Page 5: What are the requirements
regarding the retirement and re-election
of Directors?
Section 2 - Operation of
the Board’s Committees
• Page 6: Audit Committee: Role and
Responsibilities
• Page 6: Audit Committee: Meetings
• Page 8: Audit Committee: Non-audit Fees
Details of the executive Directors’ service
contracts and the policy for loss of office are
set out on page 81 of the 2018 Annual
Report and Form 20-F.
The following are available on www.crh.com Table 17
Corporate Governance Investors
• Governance Appendix
• Directors’ Remuneration Policy
• Terms of Reference of the Acquisitions,
Audit, Finance, Nomination & Corporate
Governance, Remuneration and Safety,
Environment & Social Responsibility
Committees
• Memorandum and Articles of Association
of the Company
• Pre-approval policy for non-audit services
provided by the auditors
• 
Compliance & Ethics statement, Code
of Business Conduct and Hotline
contact numbers
• Annual and Interim Reports, the Annual
Report and Form 20-F (separate
documents up to 2015) and the annual
Sustainability Report
• News releases
• Webcast recordings of results briefings
• 
General Meeting dates, notices,
shareholder circulars, presentations
and poll results
• Answers to Frequently Asked Questions,
including questions regarding dividends
and shareholder rights in respect of
general meetings
Investor Relations Activities Table 16
• Formal Announcements: including the
release of the annual and interim results
and the issuance of trading statements.
These announcements are typically
accompanied by presentations and
webcasts or conference calls
• Investor Roadshows: typically held
following the release of formal
announcements, provide an opportunity
for the management team to meet
existing and/or potential investors in a
concentrated set of meetings
• Industry Conferences: attendance at key
sector and investor conferences affords
members of the senior management
team the opportunity to engage with key
investors and analysts
• Investor Briefings: in addition to regular
contact with investors and analysts
during the year, the Company periodically
holds capital market days, which include
presentations on various aspects of
CRH’s operations and strategy and
provides an opportunity for investors
and analysts to meet with CRH’s wider
management team
• Media Briefings: each year, the Company
provides media briefings on numerous
issues
Chair’s Overview
Introduction
I succeeded Richie Boucher as Committee Chair
in January 2020 following his appointment as
Group Chairman. On behalf of the Remuneration
Committee, I am pleased to introduce the
Directors’ Remuneration Report (the ‘Report’) for
the year ended 31 December 2019. Similar to
prior years, the Report is split into three sections:
• this Chair’s Statement (pages 74
to 78), which sets out:
– the Committee’s approach to setting
remuneration; and
– a high-level summary of the Group's
performance in 2019, related
remuneration outcomes and the way
in which we intend to implement
remuneration in 2020
• a summary of the Directors’ Remuneration
Policy (the ‘Policy’) (pages 80 to 86), which
was approved by shareholders at the 2019
AGM and is available at www.crh.com; and
• the Annual Report on Remuneration (pages
88 to 100), which sets out in detail the
remuneration paid to Directors in respect
of 2019 and how the Policy will operate for
2020.
Committee’s Approach to
Remuneration
The key principles underpinning the
Committee’s approach to remuneration are that
remuneration should be set at a level that:
• is fair and balanced;
• is market competitive, enabling the Company
to recruit and retain talented executives;
• incentivises executives in a way that focuses
on delivering the Company’s strategic
objectives; and
• aligns the interests of the executive team with
those of shareholders
The Committee also seeks to ensure that
updates to the Policy take into account the
views of shareholders and evolving best
practice.
The Board and the Committee are regularly
updated on the perspectives of our employees
and take these perspectives into account
when making remuneration decisions. Further
details in relation to workforce engagement on
remuneration matters are set out on page 96.
The Committee also has oversight of
remuneration policy across the Group and
endeavours to keep the principles and structure
of remuneration consistent in so far as is
possible given CRH's international footprint.
Generally speaking, total remuneration is more
variable (and, in particular, weighted towards
long-term performance) for roles with greater
levels of responsibility and scope.
In setting the remuneration policy and practices
for executive Directors, the Committee also
takes into consideration the six pillars outlined
in the 2018 Code; clarity, simplicity, risk,
predictability, proportionality and alignment
to culture, and is satisfied that the Policy
addresses each of these areas.
2019 Performance
2019 was a year of significant profit growth and
positive momentum across our businesses,
with EBITDA (as defined)* from continuing and
discontinued operations of €4.2 billion (+25%). A
total of €0.8 billion was returned to shareholders
via the ongoing share repurchase programme
while the full year dividend per share was
increased by 15%. At the same time, CRH's
balance sheet strength was enhanced with the
ratio of Net Debt to EBITDA (as defined)* of 1.7x
as at 31 December 2019 (2018: 2.1x).
Incentive Outcomes for 2019
The Group’s strong performance in 2019
is reflected in the executive Directors’
remuneration for 2019, which is summarised
on table 22 on page 79 and set out in detail on
pages 88 to 100.
Directors’ Remuneration Report
The Committee believes that the remuneration
paid to the executive Directors in respect of
2019 is appropriate and is well aligned with
the performance of the Company and the
value delivered for shareholders.
Heather Ann McSharry
Chair of the Remuneration Committee
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
GOVERNANCE
75
2019
Performance
Highlights
RETURN ON
NET ASSETS
EARNINGS
PER SHARE
202.2 cent 25% 10.1% 50bps
€3.5bn 83% €35.67 54%
Other
Updates to
Remuneration
Approach
Annual
Bonus Plan
Performance
Share Plan
(PSP)
Salary
What did we do?
We approved a 2.75% increase in salary for executive Directors in 2020, which is within the range of the
average workforce increases in CRH's core countries (2.5% to 3%).
What did we do?
We reviewed performance against the 2019 Annual Bonus Plan targets, taking into consideration the impact
of 'one-off' items and of accounting changes, as applicable, and approved the 2019 bonus payments (see
table 28 on page 89 for more details).
We also reviewed and approved the 2020 Annual Bonus Plan structure, which is similar to the structure of the
2019 Annual Bonus Plan (see page 77 for more details).
What did we do?
We reviewed the performance of the PSP award granted in 2017 against the applicable performance conditions
and approved the vesting outcome of 70.7% of maximum (see table 31 on page 91 for more details).
We also reviewed and approved the metrics and targets for the PSP awards granted in 2019 and to be granted
in 2020 (see tables 33 and 39 on pages 91 and 96 respectively).
What did we do?
We considered investor views and evolving market practice in relation to pension contributions for
executive Directors, post-employment shareholdings and the operation of the PSP (see page 77 for further
details, including the changes that have been introduced following consultation with shareholders).
We reviewed and considered workforce remuneration across the Group and the alignment with the
remuneration for executive Directors.
We have disclosed our Chief Executive pay ratio (see page 97 for further details).
What did we do?
We carried out a review of our external remuneration consultant arrangements and, following the completion
of this process, approved the reappointment of Mercer Kepler as our advisers.
We also considered and approved this 2019 Directors’ Remuneration Report.
Summary of Key Decisions Activities Table 18
OPERATING
CASH FLOW
SHARE
PRICE
76 Chair's Overview - continued
Executive Directors’ Remuneration Summary
Performance Related Variable Remuneration
Alignment of Executive Remuneration with Strategy Table 21
Performance Measure Annual Bonus PSP Reason for Selection
EPS EPS is a key measure of the underlying profitability
Cash Flow
Operating cashflow is a key measure of CRH’s ability to generate cash to fund organic and
acquisitive growth and provide returns to our shareholders via dividends and share buybacks
RONA
RONA is a key measure of CRH’s ability to create value through excellence in operational
performance
TSR TSR is a key measure of CRH’s returns to shareholders through the cycle
Personal Strategic
Objectives
Personal strategic objectives enable a focus on specific factors aligned with CRH’s short
and medium-term strategic objectives that promote long-term performance
2019 Remuneration Snapshot (full details of 2019 remuneration are set out in table 22 on page 79) Table 19
Fixed 		
Director Salary
Annual Bonus
(% of Max)
2017 PSP Award (i) (% of Max)
Albert Manifold €1,522,500 86% 70.7%
Senan Murphy €794,500 86% 70.7%
(i)	
The awards, for which performance was measured over the three-year period to end 2019, will vest at 70.7% in 2022 following the completion of a two-year
holding period. Further details in relation to the estimated value of the awards, split between the value created for performance and the value created through
share price growth, are included in table 22 on page 79. The market value per share on the date of award (in March 2017) was €30.97.
2020 Remuneration Snapshot Table 20
Director Salary
GOVERNANCE
77
Incentive Outcomes for 2019 -
continued
In respect of 2019, the Committee determined
that, based on the achievement of performance
targets, the annual bonus plan should pay
out at 86% of the maximum opportunity for
the Chief Executive and the Finance Director.
Further details in relation to the annual bonus
plan, including the relevant targets on which
the 2019 plan was based, are set out on page
88. The Committee also determined that 70.7%
of the maximum awards made in 2017 under
the PSP will vest, based on the achievement
of relevant performance criteria for the period
2017-2019. Further details in relation to the
2017 Awards, including details of the applicable
targets and performance for each of the
components of the 2017 Awards, are set out
on page 90.
In assessing performance against the relevant
metrics for the annual bonus plan and PSP,
consistent with prior years we excluded certain
non-recurring 'one-off' items.
Following consideration of the financial
performance referred to above, and the
Company's underlying performance, the
Remuneration Committee did not exercise
any discretion over the incentive outcomes for
2019 and is satisfied that the outcomes are
appropriate and balanced.
Alignment between Pay,
Performance and Strategy
The Committee is satisfied that there was a
strong alignment between the pay outcomes
outlined above and the execution of our
value creation strategy and the achievement
of strategic objectives. The connections
between the metrics used by the Committee to
incentivise management and CRH's strategy
are summarised in table 21.
Approach to Remuneration
from 2020
Pensions
In 2019, CRH’s Remuneration Policy was
updated to the effect that pension-related
contributions/allowances for newly hired
executive Directors will be in line with the
general practice for new recruits, across the
workforce, in the individual’s home jurisdiction
or, if applicable, the jurisdiction in which the
individual is to be based in their executive
Director role. For example, in Ireland and the
UK such contributions range from 8% to 12%
of base salary depending on the rules of the
relevant scheme. There was a recognition at
the time, in our discussions with shareholders
prior to the 2019 AGM, that addressing this
issue for new hires was more achievable than
seeking to change the contracts for incumbent
executive Directors, although we committed to
keeping the matter under review.
Since the 2019 AGM, there has been an
evolution in investor views on the issue of
pension contributions/allowances for incumbent
executives. The Chief Executive has considered
the matter and has voluntarily offered to
reduce the monetary value of the pension
contribution/allowance to which he is
contractually entitled by 10% per annum in
2020 and 2021, with a further reduction such
that his pension allowance will be below 25% of
salary in January 2022. His pension entitlement
will cease in August 2022 when he reaches age
60. The Finance Director’s pension contribution
is currently 25% of salary. Taking into account
his continued strong performance and the
positioning of his total remuneration, which
is lower quartile compared to the FTSE 50
excluding financial services companies which
CRH uses for benchmarking purposes, the
Committee was of the view that a change to
his pension contribution would not be fair and
balanced in the circumstances. Nevertheless,
having considered the matter, the Finance
Director has voluntarily offered to permanently
cap his entitlement at the monetary level due in
respect of 2020. The Committee has accepted
the Chief Executive’s and Finance Director’s
waiver of their contractual entitlements and
welcomes their positive initiative in this regard.
Post-employment shareholdings
The 2018 Code requires companies to
develop policies for post-employment
shareholding requirements. Prior to the 2019
AGM, we discussed with shareholders the
Committee's view that the current holding
period on our vested PSP awards provides
a considerable de facto post-employment
shareholding requirement as it continues to
apply post-cessation of employment.
Since then investor views on approaches to
post-employment shareholdings for executive
Directors have also evolved. Having considered
the matter in detail, we have decided to
introduce a new requirement whereby the
Chief Executive will be required to hold shares
equivalent to two times salary for a period of
two years post-employment. Until the two
times limit is achieved, commencing in 2020,
Deferred Share or PSP awards which vest
will be transferred on a net of tax basis to a
third party to be held in trust for Mr. Manifold’s
benefit. The shares will be held in trust on a
rolling basis, until his employment ceases and
a subsequent two-year period has elapsed.
The Committee will retain discretion on a
case by case basis to release these shares in
exceptional circumstances. A similar structure
will apply to the Finance Director, except that
the requirement in his case will be one times
salary.
2020 Remuneration
Salary
For 2020, Mr. Manifold and Mr. Murphy will
each receive a 2.75% increase, which is
broadly in line with average workforce increases
in CRH’s core countries.
Annual Bonus
The structure and metrics for the 2020 annual
bonus are unchanged from 2019, and are set
out in table 20 on page 76. The targets will be
disclosed in the 2020 Annual Report and Form
20-F.
Pensions
As outlined above, the monetary value of the
pension contribution/allowance for Mr. Manifold
will be reduced by 10% in 2020 such that his
allowance will be c. €600,000 (2019: €667,000)
and the contributions/allowance for Mr. Murphy
will be capped permanently at €204,000 (25%
of his 2020 salary).
Performance Share Plan
In 2019, the Committee introduced RONA
as a metric in the long-term PSP, to reflect a
strong desire amongst shareholders for the
introduction of a returns measure. A range
of views had been expressed regarding the
form of returns measure to be used. The
Committee chose RONA as it is the metric
used in the business and the measure that
the management team communicate to
shareholders. Following the 2019 AGM,
we received feedback from a small number
of shareholders that they would prefer an
alternative returns measure. The Committee
has also considered this matter further.
Recognising that there are arguments in
favour of other methodologies, the Committee
continues to strongly believe that RONA is
the most appropriate measure in an incentive
context and has decided to retain it as the
returns metric for PSP awards in 2020.
78 The Committee has also considered feedback
from some shareholders on the peer group
used to measure TSR performance in relation
to whether consideration should be given to
the introduction of certain companies, that
compete in individual markets in which CRH
operates but do not operate internationally,
into the peer group. Other shareholders
asked whether the relatively small market
capitalisation of some companies in the peer
group could unduly influence the performance
outcome. The Committee has considered
these views. It is satisfied that the existing
peer group achieves a robust measurement of
TSR performance against industry peers that
have similar geographic exposure to CRH. In
addition, the peer group is weighted by market
capitalisation to reduce the influence of smaller
companies. Therefore, it is proposed to retain
the existing peer group for PSP awards in
2020. However, shareholder views will be kept
under review for future awards.
In engagement with shareholders and wider
stakeholders on sustainability matters, the
potential for introducing an environmental target
into the PSP was raised. As outlined in the
Sustainability section on page 21, the Board
has set a series of ambitious environmental
targets which are in line with the Paris Climate
Agreement. However, given the very long-term
nature of those sustainability targets, the
Committee determined that it was not currently
feasible to develop robust, measurable and
stretching performance targets on an annual
or three-year performance cycle at this time.
However, this will be kept under review going
forward.
Further details in relation to the structure,
metrics and targets for the PSP awards to
be made in 2020 are set out in table 39
on page 96.
Non-executive Directors
No changes are proposed to the fees paid to
the Chairman or the non-executive Directors in
2020. Details of the fees currently payable are
set out in table 37 on page 95.
Chair's Overview - continued
Tarmac, part of CRH's Europe Materials Division, was responsible for resurfacing the world-famous racetrack at
Silverstone, home of the British Grand Prix, where Lewis Hamilton clinched a record sixth British Grand Prix victory
in 2019. The surface was designed specifically to withstand the extremes of braking and cornering generated by
high-performance racing cars and motorbikes. Tarmac used cutting-edge technology and processes to complete
the project, including the first use of 3D GPS-guided asphalt planing in the UK as well as state-of-the-art BPO
ASPHALT management system software.
Conclusion
The Committee believes that the remuneration
paid to the executive Directors in respect of
2019 is appropriate and is well aligned with
the performance of the Company and the
value delivered for shareholders. We hope to
receive your support for the Annual Report on
Remuneration at the 2020 AGM.
Heather Ann McSharry
Chair of the Remuneration Committee
27 February 2020
GOVERNANCE
79
Individual Executive Remuneration for the year ended 31 December 2019 (Audited) Table 22
Albert Manifold Senan Murphy

(fixed and performance-related)
(i) Basic Salary.
(ii) 	
Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of the
non-taxable discount on the grant of options under the Group’s 2010 SAYE Scheme.
(iii) 	
Retirement Benefit Expense: As noted on page 94, Albert Manifold receives a supplementary taxable non-pensionable cash allowance, in lieu of prospective
pension benefits foregone. This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. It is
calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as
annual compensation allowances. Senan Murphy receives a taxable non-pensionable cash supplement equivalent to 25% of his annual base salary in lieu
of a pension contribution.
(iv)	
Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2019, a bonus was payable for meeting clearly defined and stretch targets and
strategic goals. The structure of the 2019 Plan, together with details of the performance against targets and payouts in respect of 2019, are set out on pages
88 and 89. A third of the 2019 bonuses to be paid to executive Directors will be deferred into shares for a period of three years, with no additional performance
conditions. For 2018 and 2017 bonuses, 25% of executive Directors’ bonuses were paid in Deferred Shares, vesting after three years, with no additional
performance conditions.
(v)	
Long-term Incentives: In February 2020, the Remuneration Committee determined that 70.7% of the maximum PSP awards made in 2017 will vest, based on
performance. The awards are subject to a further two-year holding period and will vest in 2022. For the purposes of this table, the values of these awards have
been estimated using a share price of €33.38, being the three-month average share price to 31 December 2019, as the share price on the date of vesting is not
yet known. Amounts in the long-term incentive column for 2018 reflect the value of long-term incentive awards with a performance period ending in 2018 (i.e.
the PSP awards granted in 2016), which the Remuneration Committee determined in February 2019 had met the applicable performance targets. The awards
are scheduled to vest in 2021 following the completion of a two-year holding period. For the purposes of this table, the value of these awards have been
estimated using a share price of €24.90, being the three-month average share price to 31 December 2018. Amounts in the long-term incentive column for 2017
reflect the value of long-term incentive awards with a performance period ending in 2017 (i.e. the PSP awards granted in 2015), which the Remuneration
Committee determined in February 2018 had met the applicable performance targets. The awards are scheduled to vest in 2020 following the completion of a
two-year holding period. For the purposes of this table, the value of these awards have been estimated using a share price of €30.42, being the three-month
average share price to 31 December 2017.
80 2019 Directors’
Remuneration Policy
The Remuneration Committee’s aim is to
make sure that CRH’s pay structures are fair,
responsible and competitive, in order that
CRH can attract and retain staff of the calibre
necessary for it to compete in all of its markets.
CRH’s Remuneration Policy, which was
approved by shareholders at the 2019
AGM is available on the Group’s website,
www.crh.com, and was included in full in the
2018 Annual Report and Form 20-F. As the
Company is not seeking shareholder approval
for any revision of the Policy in 2019, the full text
of the Policy has not been reproduced in this
report. The following paragraphs and tables 23
to 27 on pages 81 and 86 provide a summary
of key elements of the Policy. The Policy is
consistent with that shown last year, save the
changes to the performance scenario charts,
the addition of post-exit shareholding guidelines
and the update to the Finance Director's service
contract.
The Group’s remuneration structures are
designed to drive performance and link
reward to the responsibilities and individual
contribution of executives, while at the same
time reflecting the risk policies of the Group. It
is our policy to grant participation in the Group’s
performance-related plans to key management
to encourage alignment with shareholders’
interests and to create a community of common
interest among different regions and nationalities.
In setting remuneration levels, the Remuneration
Committee takes into consideration the
remuneration practices of other international
companies of similar size and scope and trends
in executive remuneration generally, in each of
the regions in which the Company operates. The
Remuneration Committee is cognisant that the
pending legislation resulting from the updated
Shareholder Rights Directive will introduce new
provisions in relation to remuneration, which the
Committee will consider in due course.
Remuneration Policy Summary
The purpose of the Policy is to:
CRH’s Approach to Remuneration
Attract and retain executives of the highest calibre
Motivate and reward executives to perform in the
long-term interests of the shareholders
Provide an appropriate blend of fixed and variable
remuneration and short and long-term incentives
Foster entrepreneurship in regional companies by
rewarding the creation of shareholder value through
organic and acquisitive growth
Reflect the spread of the Group’s operations so
that remuneration packages in each geographical
area are appropriate and competitive for that area
Reflect the risk policies and appetite of the Group
GOVERNANCE
81
Future Policy Table
The purpose, operation and opportunity for the five components of executive Directors’ remuneration are summarised in table 23 below. Further
details and explanatory notes are included in the full Policy, a copy of which is available on the Group’s website, www.crh.com. The components of
remuneration comprise three fixed elements: basic salary, pension and benefits, and two variable elements: annual bonus and PSP. Details regarding
the implementation of the Policy in 2019 can be found on pages 88 to 100 of the Annual Report on Remuneration.
Policy Table Table 23
Element Fixed Base Salary Fixed Pension
Purpose
and link to
strategy
• Competitive salaries help to attract and retain staff with the
experience and knowledge required to enable the Group to
compete in its markets
• Pension arrangements provide competitive and appropriate
retirement plans
• Given the long-term nature of the business, pension is an
important part of the remuneration package to support creation
of value and succession planning
Operation • Base salaries are set by the Committee taking into account:
– the size and scope of the executive Director’s role and
responsibilities;
– the individual’s skills, experience and performance;
– salary levels at FTSE listed companies of a similar size and
complexity to CRH and other international construction and
building materials companies; and
– pay and conditions elsewhere in the Group
• Base salary is normally reviewed annually with changes generally
effective on 1 January, although the Committee may make an
out-of-cycle increase if it considers it to be appropriate
• Irish-based executive Directors may participate in a contributory
defined benefit scheme or, if they joined the Group after
1 January 2012, in a defined contribution scheme as the
defined benefit scheme which the Directors participate in is
closed to new entrants
• For new appointments to the Board the Committee may
determine that alternative pension provisions will operate (for
example a cash contribution). When determining pension
arrangements for new appointments the Committee will give
regard to existing entitlements, the cost of the arrangements,
market practice and the pension arrangements received
elsewhere in the Group. Pension contribution rates for any
newly hired executive Directors will not exceed the norm for
pension related contributions/allowances for new recruits,
across the general workforce, in the individual’s home
jurisdiction or, if applicable, the jurisdiction in which the individual
is to be based in their executive Director role
Maximum
opportunity
• Base salaries are set at a level which the Committee considers to
be appropriate taking into consideration the factors outlined in the
“operation” section above
• While there is no maximum base salary, normally increases will be
in line with the typical level of increase awarded to other employees
in the Group but may be higher in certain circumstances. These
circumstances may include:
– Where a new executive Director has been appointed at a lower
salary, higher increases may be awarded over an initial period
as the executive Director gains in experience and the salary
is moved to what the Committee considers is an appropriate
positioning;
– Where there has been a significant increase in the scope
or responsibility of an executive Director’s role or where an
individual has been internally promoted, higher salary increases
may be awarded; and
– Where a larger increase is considered necessary to reflect
significant changes in market practice
• The entitlement of individuals participating in defined
contribution schemes reflects the accumulated individual and
matching company contributions paid into the schemes. At
present no Ireland-based executive Directors are members of
a defined contribution scheme
• In relation to Mr. Manifold, who joined the Group prior to
31 December 2011, the defined benefit pension is provided
through an Irish-revenue approved retirement benefit
scheme (the ‘Scheme’). Accrued benefits for service to
31 December 2011 are based on pensionable salary and
years of service as at that date (annual accrual of 1/60th
),
with this tranche being revalued annually at the Consumer
Price Index subject to a 5% ceiling. For service subsequent
to that date a career-average revalued earnings system was
introduced with each year of service being subject to annual
revaluation on the same basis as outlined above. Mr. Manifold
has elected to cease accruing pension benefits and to receive
a supplementary taxable non-pensionable cash allowance in
lieu of pension benefits foregone as a result of the pension cap
(see page 94 for more details). This allowance is similar in value
to the reduction in the Company’s liability represented by the
pension benefit foregone. Whilst there is no absolute maximum
to the quantum of these payments they are calculated based on
actuarial advice as the equivalent of the reduction in the liability
the Company would otherwise have had under the Scheme in
respect of Mr. Manifold’s benefits and spread over the term to
retirement as annual compensation allowances
Performance
Measure
• Not applicable • Not applicable
82 Policy Table Table 23 - continued
Element Fixed Benefits
Purpose
and link to
strategy
• To provide a market competitive level of benefits for executive Directors
Operation • The Committee’s policy is to set benefit provision at an appropriate market competitive level taking into account market practice, the level
of benefits provided for other employees in the Group, the individual’s home jurisdiction and the jurisdiction in which the individual is based
• Employment-related benefits include the use of company cars (or a car allowance), medical insurance for the executive Director and his/
her family and life assurance
• In the event that the Chief Executive falls ill or is injured in such a way as which would constitute ill-health or disablement so that the Chief
Executive could not work for a period of more than six months, in lieu of the early ill-health retirement provisions in the pension scheme
which would otherwise operate in such cases, he shall be entitled to receive a disability salary of €1,000,000 per annum. Such payment
would cease when the Chief Executive reaches age 60, returns to work or if the service agreement is terminated
• Benefits may also be provided in relation to legal fees incurred in respect of agreeing service contracts, or similar agreements (for which the
Company may settle any tax incurred by the executive Director) and a gift on retirement
• The Committee may remove benefits that executive Directors receive or introduce other benefits if it is considered appropriate to do so.
The Company may also pay the tax due on benefits if it considers that it is appropriate to do so
• All-employee share schemes - executive Directors are eligible to participate in the Company’s all-employee share schemes on the same
terms as other employees. Executive Directors may also receive other benefits which are available to employees generally
• Re-location policy - where executive Directors are required to re-locate to take up their role, the Committee may determine that they
should receive appropriate re-location and ongoing expatriate benefits. The level of such benefits would be determined based on individual
circumstances taking into account typical market practice
Maximum
opportunity
• The level of benefit provided will depend on the cost of providing individual items and the individual’s circumstances, and therefore the
Committee has not set a maximum level of benefits
Performance
Measure
• Not applicable
Remuneration Policy Summary - continued
GOVERNANCE
83
Policy Table Table 23 - continued
Element
Performance-related pay -
Annual Bonus
Performance-related pay -
Performance Share Plan
Purpose
and link to
strategy
• The Annual Performance-related Incentive Plan (the "Plan") is
designed to reward the creation of shareholder value through
operational excellence and organic and acquisitive growth. The Plan
incentivises executive Directors to deliver Group and individual goals
that support long-term value creation
• A deferred element of the Plan links the value of executive Directors’
reward with the long-term performance of the CRH share price and
aligns the interests of executive Directors with shareholders' interest
• “Malus” and clawback provisions enable the Company to mitigate risk
• The purpose of the 2014 Plan is to align the interest of key
management across different regions and nationalities with
those of shareholders through an interest in CRH shares and
by incentivising the achievement of long-term performance
goals
• “Malus” and clawback provisions enable the Company to
mitigate risk
Operation • The Annual Performance-related Incentive Plan rewards executive
Directors for meeting Company performance goals over a financial
year of the Company. Targets are set annually by the Committee
• The annual bonus is paid in a mix of cash and shares (structured as a
deferred share award)
• For 2020:
– 66.7% of the bonus will be paid in cash; and
– 33.3% will be paid in shares
• In future years, the Committee may determine that a different balance
between cash and shares is appropriate and adjust the relevant
payments accordingly
• When assessing performance and determining bonus payouts the
Committee also considers the underlying financial performance of the
business to ensure it is consistent with the overall award level
• The deferred element of the bonus will be structured as a conditional
share award or nil-cost option and will normally vest after three years
from grant (or a different period determined by the Committee).
Deferred share awards may be settled in cash
• Dividend equivalents may be paid on deferred share awards in
respect of dividends paid during the vesting period. These payments
may be made in cash or shares and may assume the reinvestment of
dividends on a cumulative basis
• For deferred awards, “malus” provisions apply. Cash bonus payments
are subject to clawback of the net amount paid for a period of three
years from payment
• Awards (in the form of conditional share awards or nil-cost
options) normally vest based on performance over a period
of not less than three years. Awards may also be settled in
cash
• Awards are normally subject to an additional holding period
ending on the fifth anniversary of the grant date (or another
date determined by the Committee)
• Dividend equivalents may be paid on PSP awards that vest
in respect of dividends paid during the vesting period until
the end of the holding period. These payments may be
made in cash or shares and may assume reinvestment on a
cumulative basis
• “Malus” and clawback provisions (as set out in the rules of
the 2014 Plan) will apply to awards
Maximum
opportunity
• Maximum annual opportunity of 225% of base salary
• For 2020, the intended maximum award levels are:
– 225% of base salary for the Chief Executive; and
– 150% of base salary for the Finance Director
• Maximum annual opportunity of up to 365% of base salary
• For 2020, the intended award levels are:
– 365% of base salary for the Chief Executive; and
– 225% of base salary for the Finance Director
Performance
Measure
• The performance-related incentive plan is based on achieving clearly
defined and stretching annual targets and strategic goals set by the
Committee each year based on key business priorities
• The performance metrics used are a mix of financial targets including
return goals and personal/strategic objectives generally. Currently
80% of the bonus is based on financial performance measures
• The Committee may vary the weightings of measures but no less than
50% shall be based on financial performance measures
• A portion of the bonus metrics for any Director may be linked to his/
her specific area of responsibility
• Up to 50% of the maximum bonus will be paid for achieving target
levels of performance
• Awards to be granted in 2020 will vest based on cumulative
cash flow (50%), a relative TSR test compared to a tailored
group of key peers (25%) and RONA (25%)
• For threshold levels of performance, 25% of the award vests
• Where applicable, when determining vesting under the PSP
the Committee reviews whether the TSR performance has
been impacted by unusual events and whether it therefore,
reflects the underlying performance of the business
• The Committee may adjust the weightings of the measures
at the start of each cycle, with no measure’s weighting falling
below 25%
• The Committee may amend the performance conditions if
an event occurs that causes it to consider that an amended
performance condition would be more appropriate and
would not be materially less difficult to satisfy
84 Remuneration Policy Summary - continued
Remuneration Outcomes in different Performance Scenarios Table 24
Performance Scenario Payout Level
Minimum • Fixed pay (see table 25 for each executive Director)
• No bonus payout
• No vesting under the Performance Share Plan
On-target performance • Fixed pay (see table 25 for each executive Director)
• 50% annual bonus payout (112.5% of salary for the
Chief Executive and 75% for the Finance Director)
• 25% vesting under the Performance Share Plan (91.25% of salary for
the Chief Executive and 56.25% for the Finance Director)
Maximum performance
((i) at constant share prices;
and (ii) assuming a 50%
increase in share prices)
• Fixed pay (see table 25 for each executive Director)
• 100% annual bonus payout (225% of salary for the Chief Executive
and 150% of salary for the Finance Director)
• 100% Performance Share Plan vesting (365% of salary for the Chief
Executive and 225% for the Finance Director)
Hypothetical Remuneration Values Table 25
Salary
With effect from
1 January 2020
Benefits
Level paid
in 2019 (i)
Estimated
Pension (ii)
Total
Fixed Pay
Chief Executive (Albert Manifold)Finance Director (Senan Murphy) 
(i) Based on 2019 expenses.
(ii) See page 77 for details in relation to retirement benefit arrangements.
Remuneration Outcomes in
different Performance Scenarios
Remuneration at CRH consists of fixed pay
(salary, pension and benefits), short-term
variable pay and long-term variable pay.
A significant portion of executive Directors’
remuneration is linked to the delivery of key
business goals over the short and long-term
and the creation of shareholder value.
Table 26 shows hypothetical values of the
remuneration package for executive Directors
under four assumed performance scenarios.
No share price growth or the payment of
dividend equivalents has been assumed in
these scenarios, with the exception of the
maximum +50% share price growth scenario.
Potential benefits under all-employee share
schemes have not been included.
GOVERNANCE
85
Remuneration Arrangements
Throughout the Group
CRH operates significant operations in over
3,100 locations in 30 countries with c. 80,300
employees across the globe. Remuneration
arrangements throughout the organisation,
therefore, differ depending on the specific role
being undertaken, the level of seniority and
responsibilities, the location of the role and
local market practice. However, remuneration
arrangements are designed based on a
common set of principles: that reward should
be set at a level which is appropriate to retain
and motivate individuals of the necessary
calibre to fulfil the roles without paying more
than is considered necessary. The reward
framework is designed to incentivise employees
to deliver the requirements of their roles and
add value for shareholders.
The Group operates share participation plans
and savings-related share option schemes
for eligible employees, including executive
Directors, in all regions where the regulations
permit the operation of such plans.
Service Contracts
As part of a review and harmonisation of
executive service contracts generally in 2018,
we identified an anomaly in the Finance
Director’s service contract whereby the notice
period from the company is six months but
the restriction on termination of employment
provisions in the contract was for a period of
up to 12 months. An addendum to the Finance
Director’s service contract has since been
executed amending the notice periods to
12 months in each case.
Shareholding Guideline for
Executive Directors
Executive Directors are required to build up
(and maintain) a minimum holding in CRH
shares. The shareholding guidelines for the
Chief Executive and Finance Director are
3.5x basic salary and 2.0x basic salary
respectively, with the guidelines to be achieved
by 31 December 2023 and 31 December 2022,
respectively.
For the purposes of determining the number
of shares held by the executive Directors,
the relevant calculation will include shares
beneficially owned by the executive Directors,
annual bonus awards which are deferred into
shares for three years and PSP awards that
have met the performance criteria but are
subject to a two-year holding period prior to
release. The deferred share awards and PSP
awards subject to a two-year hold period are
not subject to any further performance criteria
other than continued employment with the
Group.
In the event that the shareholding guidelines
are not met by the applicable deadlines, the
Remuneration Committee will consider what
action to take at that time.
Post-employment Holding
Requirements
As outlined in the Chair’s Overview on page 77,
the Remuneration Committee has decided to
introduce a requirement whereby the Chief
Executive will be required to hold shares
equivalent to two times salary for a period
of two years post-employment. Accordingly,
commencing in 2020, until the two times
limit is achieved, any Deferred Share or PSP
awards which vest will be transferred on a net
of tax basis to a third party to be held in trust
for the Chief Executive’s benefit. The shares
will be held in Trust on a rolling basis, until his
employment ceases and a subsequent two
year period has elapsed. A similar structure will
apply to the Finance Director, except that the
requirement in his case will be one times salary.
86 Remuneration Policy Summary - continued
Remuneration Policy for Non-Executive Directors Table 27
• Fees are paid in cash
• Non-executive Director fees policy is to pay:
– a basic fee for membership of the Board;
– an additional fee for chairing a Committee;
– an additional fee for the role of Senior Independent Director;
– an additional fee to reflect Committee work (combined fee for all Committee roles); and
– an additional fee based on the location of the Director to reflect time spent travelling to Board
meetings
• Other fees may also be paid to reflect other Board roles or responsibilities
• In accordance with the Articles of Association, shareholders set the maximum aggregate amount
of basic fees payable to non-executive Directors. The current limit of €1,000,000 was set by
shareholders at the 2019 AGM
• The non-executive Directors do not participate in any of the Company’s performance-related
incentive plans or share schemes
• Non-executive Directors do not receive pensions
• The policy allows for the Group Chairman to be reimbursed for expenses incurred in travelling
from his residence to his CRH office on a gross up basis so that he is not at a net loss after
deduction of tax
• Benefits including retirement gifts (provided they do not exceed the de minimis threshold outlined
on page 96) may be provided if, in the view of the Board (for non-executive Directors or for the
Chairman), this is considered appropriate. The Company may gross up any expenses so that the
non-executive Directors are not at a net loss after deduction of tax. Details regarding any benefit
provided will be disclosed in the relevant year of receipt
• The remuneration of non-executive Directors is determined by a Board Committee of the
Chairman and the executive Directors
• The Remuneration Committee determines the remuneration of the Chairman within the
framework or broad policy agreed with the Board
• Remuneration is set at a level which will attract individuals with the necessary experience and
ability to make a substantial contribution to the Company’s affairs and reflect the time and travel
demands of Board duties
• Fees are set taking into account typical practice at other companies of a similar size and
complexity to CRH
• Fees are reviewed at appropriate intervals
Approach to
Setting Fees
Basis of Fees
Other Items
GOVERNANCE
87
CRH is a leading provider of structural concrete to the Danish market. In 2019, CRH Denmark, part of our Europe
Materials Division, supplied 15,000m² of materials to the ‘Karré 31’ project in the town of Holbaek, north-east of
Copenhagen. Products included hollow-core floor slabs, walls and facades for the 17-story apartment building.
GOVERNANCE
88 The Remuneration Committee
The Remuneration Committee consists of five
non-executive Directors considered by the
Board to be independent. They bring the range
of experience of large organisations and public
companies, including experience in the area
of senior executive remuneration, to enable the
Committee to fulfil its role. Their biographical
details are set out on pages 56 to 59.
A schedule of attendance at Committee
meetings is set out in table 13 on page 71.
The main focus of the Committee is to:
• determine and agree with the Board the
Group’s policy on executive remuneration;
• seek shareholder approval for the Directors’
Remuneration Policy at least every three
years;
• ensure that CRH’s remuneration structures
are fair and responsible; and
• consider and approve salaries and other
terms of the remuneration packages for
the executive Directors and the fee for the
Chairman
In addition, the Committee:
• recommends and monitors the level and
structure of remuneration for the executive
Directors and senior management; and
• oversees the preparation of this Directors’
Remuneration Report
In considering remuneration levels for executive
Directors particularly, the Committee takes into
account remuneration trends across the CRH
Group, which has a diverse range of operations
in 30 countries, in geographic regions which are
often at different stages in the economic cycle.
Annually, the Chairman of the Remuneration
Committee reviews with the Audit Committee
the Group’s remuneration structures from a risk
perspective.
Remuneration Received by Executive
Directors in Respect of 2019
Details of individual remuneration for executive
Directors for the year ended 31 December 2019,
including explanatory notes, are given in table 22
on page 79. Details of Directors’ remuneration
charged against profit in the year are given in
table 46 on page 100.
2019 Annual Bonus Plan
CRH’s Annual Bonus Plan for 2019 was based
on a combination of financial targets and
personal/strategic goals. The metrics for target
payout, which is up to a maximum of 50% of
the total annual bonus opportunity, are based
on achieving the budget set by the Board in
respect of each metric. The threshold level for
bonus payouts is for the achievement of 92% of
budget, whereas maximum payout is achieved
for stretch performance of between 105% of
budget for EPS and Cash Flow and 108% of
budget for RONA. The relative weighting of
the components of the 2019 plan, together
with details of the applicable targets and
performance for each measure is given in
table 28 on page 89.
When setting the targets for the annual bonus
plan, the Committee makes assumptions
regarding exchange rates and development
activity. The Committee also compares the
proposed targets to the outturn for the previous
year to ensure that the targets are sufficiently
stretching. In this regard, it is important to note
that the metrics in the plan are influenced by
the economic cycle and other factors, such as
ongoing portfolio management. For example,
the RONA target for 2019 was less than the
2018 outturn primarily due to the impact of the
Group's acquisition of Ash Grove Cement as
such long term value-creating acquisitions are
generally returns dilutive in the initial years post
acquisition.
When reviewing performance against the bonus
plan, the Committee typically makes a number
of routine adjustments to the financial targets, for
example, to reflect actual exchange rates, major
development activity and actual share buyback
activity during the year. For the 2019 bonus
plan, the financial targets were also adjusted
to reflect the impact of the implementation of
IFRS16 Leases. When assessing the outturn
for 2019, the Committee excluded exceptional
items which were one-off in nature and are
not expected to recur. This had the impact of
reducing the formulaic outcome for the financial
element under the 2019 bonus plan.
Details of each executive Director’s personal
and strategic objectives and their achievement
against these objectives are set out in table 29
on page 89.
Overall, the combination of the performance by
the Group in 2019 and the achievement against
personal and strategic objectives translated to
annual bonus payouts of 86% of the maximum
opportunity for Albert Manifold and Senan
Murphy, with total bonus payments of 194% of
salary and 129% of salary respectively.
In accordance with the Policy, 33% of the
bonus amounts for Albert Manifold and Senan
Murphy will be deferred into shares for a period
of three years. Deferred Share awards are not
subject to any additional performance conditions
during the deferral period and are adjusted for
dividend equivalents based on dividends paid
by CRH. Annual bonus awards are subject to
recovery provisions for three years from the date
of payment (cash awards) or grant (deferred
awards).
Annual Report on Remuneration
GOVERNANCE
89
2019 Plan - Personal/Strategic Achievement Table 29
Directors
Weighting
(% of total bonus)
Achievements
Percentage of
Maximum Awarded
Albert Manifold 20%
Safety: Supporting the launch of a safety front-line leadership programme and the
implementation of recommendations from a review by an external advisory panel of
experts, including updating policies and guidelines for contractor management, energy
isolation and consequence management.
Performance: Continued monitoring, assessment and challenge of performance
improvement across the business.
Group Leadership Team (GLT): Continued development of the GLT as a functioning
executive leadership team for CRH, including, working with the team to provide effective
management succession for senior roles across the Group.
Strategy: Continued assessment of the strategic alternatives for the Group in discussion
with the Board and senior management and ensuring that the organisation structure of
CRH is aligned with its future strategy.
17.0%
Senan Murphy 20%
Safety: Supporting the launch of a safety front-line leadership programme and the
implementation of recommendations from a review by an external advisory panel of
experts, including updating policies and guidelines for contractor management, energy
isolation and consequence management.
Performance: Continued monitoring, assessment and challenge of performance
improvement across the business.
Talent Management: Development of new processes and procedures to aid career
pathing, talent review and talent development in order to meet the longer term CRH
leadership needs.
Leadership and Strategy: Working across all business and functional areas to facilitate,
develop and progress CRH strategy and other key cross CRH priorities.
17.0%
2019 Plan - Achievement Table 28
2019 Targets - Performance needed for payout at (i)
Measure
Weighting
(% of total bonus)
Threshold Target (ii) Maximum
2019
Performance
Achieved (iii)
Percentage of
Maximum Awarded
CRH EPS 25% 183c 199c 209c 205c 20.5%
CRH Cash Flow (iv) 30% €2,553m €2,775m €2,914m €3,050m 30.0%
CRH RONA (iv) 25% 8.0% 8.7% 9.4% 9.1% 18.5%
Personal/Strategic 20% See table 29 17.0%
Total 100% 86.0%
(i)	
0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points.
(ii)	
Targets have been adjusted to reflect actual exchange rates, the actual timing of development activity, the impact of the share buyback programme and the
impact of the implementation of IFRS 16 Leases.
(iii) The outturn achieved for 2019 excludes exceptional items which were one-off in nature and not expected to recur.
(iv)	
For the purposes of the annual bonus plan, operating cash flow and RONA have been defined as reported internally. For cash flow the figure differs from the
net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows
on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly,
RONA as reported internally differs from the RONA reported in the Non-GAAP Performance Measures in this report as it reflects seasonality and the timing
impact of development activity.
Annual Bonus 2019
90 Long-term Incentives
Performance Share Plan - 2017 awards
In 2017, the executive Directors were granted
conditional awards under the 2014 PSP. The
awards were based on TSR (50% of the award)
– 25% against a tailored group of key peers
(see table 30 below) and 25% against the FTSE
All-World Construction & Materials Index – and
Cumulative Cash Flow (50% of the award), and
performance was measured over the three-year
period 1 January 2017 to 31 December 2019.
In respect of the TSR element, CRH's TSR
over the period of 15.6% ranked between the
50th and 75th percentile as compared with the
tailored peer group, but was below the TSR of
the FTSE All-World Construction & Materials
Index. Accordingly, 20.7% out of 50% will vest
for the TSR element. In respect of the cumulative
cash flow element, actual outturn over the
period was €4.5 billion, which exceeded the
stretch target of €3.7 billion, resulting in 100%
vesting for the cash flow element.
The Committee considers that the vesting
outcome is reflective of the Company’s
underlying performance over the performance
period. In particular, the Committee considered
RONA performance since 2017 as an underpin
to the TSR component. As the RONA target in
each of the annual bonus plans for 2017, 2018
and 2019 was met, the Committee determined
that the TSR vesting outcome was appropriate
and did not need to be adjusted. In accordance
with the Policy, the 2017 awards to executive
Directors will vest in 2022 on completion of
an additional two-year holding period. Vested
awards will be adjusted for dividend equivalents
based on dividends in the period from grant to
the date of vesting in 2022. Table 31 on page 91
sets out details of the relevant targets. Table 32
on page 91 sets out details of the awards.
Performance Share Plan - 2019 awards
During 2019, awards under the 2014 PSP were
made to the executive Directors, details of which
are summarised in table 34. 50% of each award
granted in 2019 is subject to a cumulative cash
flow metric. The definition of cash flow is the net
increase/decrease in cash and cash equivalents
adjusted to exclude:
• dividends to shareholders;
• acquisition/investment expenditure;
• proceeds from divestments;
• share issues (scrip dividend, share
options, other);
• financing cash flows (new loans/repayments);
• back funding pension schemes; and
• foreign exchange translation
The Remuneration Committee considers that it is
appropriate to make these adjustments in order
to remove items that do not reflect the quality
of management’s operational performance, or
are largely outside of the Company’s control.
The Remuneration Committee will also consider
whether any adjustments are required to cash
flows, for example, as a result of significant
acquisitions completed during the performance
period or a significant underspend or delay in
budgeted capital expenditure, both ordinary and
extraordinary.
25% of each award is subject to a TSR metric,
with performance being measured against
a tailored peer group (see table 30 below).
The remaining 25% of each award is subject
to a RONA metric, a key measure used by
management to assess investment opportunities
and to run the business.
Performance for the awards made in 2019
will be assessed over the three-year period to
31 December 2021. Details of the performance
targets are set out in table 33.
Awards, to the extent that they vest, will be
adjusted for dividend equivalents based on
dividends in the period from grant to the date of
vesting in 2023. “Malus” and clawback provisions
apply to the awards.
Other Employee Share Plans
Executive Directors are eligible to participate
in the 2010 Savings-related Option Scheme
(Republic of Ireland) (the ‘2010 SAYE Scheme’)
and in the Group’s Irish Revenue approved
Share Participation Scheme (the ‘Participation
Scheme’).
The 2010 SAYE Scheme is an Irish Revenue
approved plan open to all Irish employees.
Participants may save up to €500 a month from
their net salaries for a fixed term of three or five
years and at the end of the savings period they
have the option to buy CRH shares at a discount
of up to 15% of the market price on the date of
invitation of each savings contract. Details of the
outstanding awards of executive Directors under
the 2010 SAYE Scheme are set out in table 35
on pages 92 and 93.
The Participation Scheme is an Irish Revenue
approved plan and is open to all employees in
Ireland. Grants can be made to participants up to
a maximum of €12,700 annually in CRH shares.
Albert Manifold and Senan Murphy participated
in the Participation Scheme in 2019.
Peer Group for Performance Share Plan Awards (i) Table 30
(i) 	For the purposes of the PSP awards made in 2017 and 2018, the peer group also includes Braas Monier and Rockwool
Annual Report on Remuneration - continued
GOVERNANCE
7 Award Vesting Details Table 32
Executive Director Interests Held
Vesting Outcome
(% of max)
Interests
Due to Vest
Date of Vesting
Assumed
Share Price (i)
Estimated
Value
Albert Manifold 175,095 70.7% 123,792 March 2022 €33.38 €4,132,182
Senan Murphy 46,954 70.7% 33,196 March 2022 €33.38 €1,108,098
(i)	
As the share price on the date of vesting is not yet known, for the purposes of this table, the value of these awards, which were subject to a three-year
performance period ending in 2019, has been estimated using a share price of €33.38, being the three-month average share price to 31 December 2019.
Long-term Incentives - Performance Share Plan Awards
2017 Award Metrics Table 31
(i) 	
For the purposes of the PSP, operating cash flow is defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the
Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net
proceeds from the disposal of PP&E, and before deducting interest and tax payments.
(ii)	
The methodology for calculating TSR assumes all dividends are reinvested on the ex-dividend date at the closing share price on that day; the open and close price is
based on the three-month average closing price on the last day before the start of the performance period and the final day of the performance period respectively.
(iii) 	
For the purposes of the 2017 Award, TSR performance was above the median against the tailored peer group (see table 30 on page 90) and below the FTSE
All-World Construction & Materials Index. TSR performance was subject to a RONA underpin (see page 90). The cumulative cash flow for the three years to end
31 December 2019 was €4.5 billion.
Vesting Level
Vesting
The market price of the Company’s shares at 31 December 2019 was €35.67 and the range during 2019 was €22.89 to €36.25.				
(i) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the Annual Bonus Plan. Such dividend equivalents
will be released to participants on the date of release of the Deferred Shares. 								
(ii) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Share Plan. Subject to
satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting.
GOVERNANCE
93
Table 35
Granted
in 2019
Released
in 2019
Exercised
in 2019
Lapsed
in 2019
Balance at 31
December 2019
Dividends Awarded
& Released
Market Value on Date
of Exercise/Released
94 Annual Report on Remuneration - continued
Retirement Benefit Expense
Albert Manifold is a participant in a contributory
defined benefit plan which is based on an
accrual rate of 1/60th of salary1
for each year of
pensionable service and is designed to provide
two-thirds of career average salary at retirement
for full service. Albert Manifold will become
entitled to a deferred pension, payable from
Normal Retirement Age, if he leaves service prior
to Normal Retirement Age. The Finance Act
2006 established a cap on pension provisions
by introducing a penalty tax charge on pension
assets in excess of the higher of €5.4 million
(in the Finance Act 2011, this threshold was
reduced to €2.3 million and reduced further to
€2 million by the Finance (No. 2) Act 2013) or the
value of individual accrued pension entitlements
as at 7 December 2005.
As a result of these legislative changes, the
Remuneration Committee decided that executive
Directors should have the option of continuing
to accrue pension benefits as previously, or
of choosing an alternative arrangement - by
accepting pension benefits limited by the
cap - with a similar overall cost to the Group.
Albert Manifold has opted for an arrangement
whereby his pension is capped in line with the
provisions of the Finance Act 2006 and receives
a supplementary taxable non-pensionable cash
supplement in lieu of pension benefits foregone.
There was, therefore, no additional accrual in
2019. The cash pension supplement for 2019
is detailed in table 36 below. This supplement is
similar in value to the reduction in the Company’s
liability represented by the pension benefits
foregone. It is calculated based on actuarial
advice as the equivalent of the reduction in
the Company’s liability to Mr. Manifold and
spread over the term to retirement as annual
compensation allowances.
The contributory defined benefit plan in which
Albert Manifold participates closed to new
entrants at the end of 2011.
Senan Murphy receives a taxable
non-pensionable cash supplement equivalent to
25% of his annual base salary in lieu of a pension
contribution.
Details regarding the pension entitlements of
Albert Manifold are set out in table 36 below.
Details of the pension arrangements that will
apply for 2020 are set out on page 77.
Shareholding Guideline for Executive
Directors
Pursuant to the Policy, executive Directors are
required to build up (and maintain) a minimum
holding in CRH shares. The current shareholding
guideline for the Chief Executive is 3.5x basic
salary and 2.0x basic salary for the Finance
Director, to be achieved by 31 December 2023
and 31 December 2022 respectively.
The current shareholdings of executive Directors
as a multiple of basic salary are shown in table
45 on page 99. The table includes, for illustrative
purposes, shares beneficially owned by the
executive Directors as at 27 February 2020,
the estimated after tax vesting of PSP awards
subject to a two-year hold period only, which will
be released in 2020 and 2021 respectively, and
the estimated after tax vesting of Deferred Share
awards granted in respect of 2017, 2018 and
2019, as appropriate.
Non-executive Directors
The remuneration of non-executive Directors is
determined by the Board of Directors. The fees
were increased in 2019 (see table 37 for details
of the current fees). Details of the remuneration
paid to non-executive Directors in 2019 are set
out in table 38.
Proposed Implementation of
Remuneration in 2020
Basic Salary and Benefits
Details of the executive Directors’ salaries for
2020 compared with 2019 are set out in the
Committee Chair's Overview on page 76. These
increases are within the range of the average
workforce increases in CRH's core countries
(2.5% to 3%).
Executive Directors will receive benefits in line
with the 2019 Policy in 2020. The level of benefits
provided will depend on the cost of providing
individual items and the individual circumstances.
Retirement Benefit Expense
As outlined in the Chair's Overview on page
77, the monetary value of pension contribution/
allowance for Mr. Manifold will be reduced
by 10% in 2020 such that his allowance will
be c. €600,000 (2019: €667,000) and the
contribution/allowance for Mr. Murphy will be
capped permanently at €204,000 (25% of his
2020 salary).
2020 Annual Bonus Plan
The Remuneration Committee has determined
that the 2020 Annual Bonus Plan will be operated
broadly in line with the 2019 Annual Bonus Plan.
80% of the bonus will be based on financial
targets and the remaining 20% on individual
objectives aligned to key strategic areas for each
executive Director.
Pension Entitlements - Defined Benefit (Audited) Table 36
Executive Director
Increase in accrued personal pension
during 2019 (i)
€000
Transfer value of increase in dependants
pension (i)
€000
Total accrued
personal pension at year end (ii)
€000
Albert Manifold - 122 273
(i)	
As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions continue
to accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out
or due in 2019 in the event of Mr. Manifold leaving service.
(ii) The accrued pensions shown are those which would be payable annually from normal retirement date.
1. Salary is defined as basic annual salary and excludes any fluctuating emoluments.
GOVERNANCE
95
Individual Remuneration for the year ended 31 December 2019 (Audited)		 Table 38
Non-executive Directors
Fee Structure Table 37
Role
Group Chairman (including non-executive Director salary and fees for Committee work) €630,000
Basic non-executive Director fee €88,000
Committee fee €32,000
Additional fees
Senior Independent Director €25,000
Remuneration Committee Chair €30,000
Audit Committee Chairman €39,000
Fee for Europe-based non-executive Directors €15,000
Fee for US-based non-executive Directors €30,000
96 2020 Performance Share Plan Awards
For the 2020 PSP awards, awards will be
assessed over the three-year period to
31 December 2022. The metrics, weightings
and opportunity for the 2020 PSP awards are
summarised in table 39 below. The Committee
believes that the targets are robust and
stretching, with a significant increase in the level
of stretch required for the cashflow and RONA
metrics compared to 2019.
Fees Paid to Former Directors
The 2013 Large and Medium-sized Companies
and Groups (Accounts and Reports)
(Amendment Regulations) Regulations in the
UK, require disclosure of payments to former
Directors in certain circumstances. No payments
have been made to individual former Directors
in those circumstances which exceed the de
minimis threshold of €20,000 per annum set by
the Remuneration Committee.
Executives’ External
Appointments
The executive Directors may accept external
appointments with the prior approval of the
Board provided that such appointments do
not prejudice the individual’s ability to fulfil their
duties at the Group. Whether any related fees
are retained by the individual or remitted to the
Group is considered on a case-by-case basis.
Total Shareholder Return
The value at 31 December 2019 of €100 invested
in CRH in 2009, compared with the value of
€100 invested in the Eurofirst 300 Index and the
FTSE100 Index (which CRH joined in December
2011) is shown in table 40 on page 97.
TSR performance has been compared against
the FTSE100 and the Eurofirst 300 as these are
broad general market indices of which CRH is a
constituent.
The Committee, therefore, considers that they
offer a reasonable comparison for performance.
Compound TSR since the formation of the
Group in 1970 (assuming the reinvestment of
dividends) is 15.6%.
Workforce Engagement
Engagement of our workforce is at the heart of
what we do at CRH. The proximity of our senior
leaders to daily operations across CRH is a key
reason for the Company's continued success
and growth. The Company operates an annual
talent and performance review process, where
colleagues and their managers work together to
review performance and set annual goals. The
outcome of the review process is closely aligned
to remuneration, both in terms of any increase
in base salary for the next year, and any variable
remuneration component.
In order to guide our leaders' discussions with
employees across the group on remuneration
structures, there is a reward policy section,
which is based on the principles of remuneration
applied by the Remuneration Committee and
remuneration policy approved by shareholders,
in policy documents issued to the managing
directors of our operating companies.
The SESR Committee has taken formal
responsibility for workforce engagement. Its
work in this area, which will evolve over time, is
explained further in the Chairman's Overview
on pages 60 to 63. Remuneration Committee
members are kept up-to-date on the workings
of the SESR Committee and the feedback it
receives from employees on all matters including
remuneration.
Remuneration Paid to Chief
Executive 2010 – 2019
Table 41 shows the total remuneration paid
to the Chief Executive in the period 2010 to
2019 inclusive and shows bonuses and vested
long-term incentive awards as a percentage
of the maximum bonus and award that could
have been received in respect of each year.
Albert Manifold succeeded Myles Lee as Chief
Executive in January 2014.
Excluding the impact of vested share-based
awards and the non-taxable benefit associated
with participation in the Group’s Savings-related
Share Option Scheme, the percentage change
in the Chief Executive’s salary, benefits and
bonus between 2018 and 2019 was as follows:
• Salary +2.5%
• Benefits -22%
• Bonus +8%
The combined percentage change was 6%.
There was a 5% increase in the total average
employment costs in respect of employees in
the Group as a whole between 2018 and 2019.
Chief Executive Pay Ratio
Table 42 sets out the ratio of Chief Executive’s
total pay in 2019 in comparison to the 25th,
50th and 75th percentile remuneration received
by the Group’s UK employees in 2019.
Total remuneration for the lower quartile, median
and upper quartile employees were determined
using the ‘single figure’ methodology. This
methodology was chosen as it provides a
like-for-like comparison between the Chief
Executive and other employees.
For practical reasons (primarily relating
to the number of employing entities and
employees covered by this analysis), the
ranking of employees to identify the three
individuals representing 25th (P25), 50th (P50)
and 75th (P75) percentile was conducted
in November 2019. Given the timing, for
the purpose of the ranking exercise, total
remuneration was defined as the sum of base
salary, employer pension contributions and
other taxable benefits for the period 1 January
to 31 October 2019, and 2018 incentive
values. All elements of remuneration were
calculated on a full-time and full-year equivalent
basis. In January 2020, total remuneration
was recalculated for the three employees
representing P25, P50 and P75 using the same
single figure methodology used to report the
Chief Executive's remuneration.
The Committee has considered the pay data
for the three individuals identified and believes
that it fairly reflects pay at the relevant quartiles
amongst the UK employee population.
Each of the three individuals identified was a
full-time employee during the year and none
received an exceptional incentive award which
would otherwise inflate their pay figures. No
adjustments or assumptions were made by the
Committee, with the total remuneration of these
employees calculated in accordance with the
methodology used to calculate the single figure
of the Chief Executive.
With this being the first year of being expected
to publish a Chief Executive's pay ratio, there
is no comparative data against which to
compare the pay ratios detailed below. Going
forward, the Committee will monitor both the
absolute remuneration ratios and the trend over
time, and seek to understand the underlying
drivers of these. In light of the expectation
that the total remuneration pay ratio will be
volatile over time (driven in large part by the
upweighting in the Chief Executive’s package
of variable, performance-based remuneration),
the Committee has also elected to calculate
and disclose the pay ratio for base salary
alone. In line with the Committee’s policy that
executive Directors’ base salaries will normally
increase in line with the typical level of increase
awarded to other employees in the Group, it is
anticipated that this ratio will be more stable –
and representative of relative changes in fixed
pay over time.
Remuneration 2009 to 2019 inclusive Table 41
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Single figure Remuneration (€m) (i) €2.6m €2.9m €2.5m €4.2m €4.3m €5.4m €9.9m €8.7m €8.2m €9.3m
Annual Bonus (% of max) 21% 39% 28% 30% 100% 100% 98% 96% 81% 86%
Long-term incentive award vesting
98 Annual Report on Remuneration - continued
Relative Importance of
Spend on Pay
Table 43 sets out the amount paid by the Group
in remuneration to employees compared to the
amount returned to shareholders as part of the
share repurchase programme and dividend
distributions made to shareholders in 2018
and 2019. We have also shown the change in
EBITDA (as defined)* performance year-on-year
to provide an indication of the change in profit
performance.
Advisers to the Remuneration
Committee
During 2019, the Committee carried out a
review of our external remuneration consultant
arrangements and, following the completion of
this process, Mercer Kepler were reappointed
as the Committee's independent remuneration
consultants. The Committee has satisfied itself
that the advice provided by Mercer Kepler is
robust and independent and that the Mercer
Kepler engagement partner and team that
provide remuneration advice to the Committee
do not have connections with CRH plc that may
impair their independence.
Relative Importance of Spend on Pay Table 43
Remuneration received
by all employees
EBITDA
(as defined)*
Share Buyback/
Dividends
Mercer Kepler are signatories to the Voluntary
Code of Conduct in relation to executive
remuneration consulting in the UK. During
2019, Mercer Kepler provided the following
remuneration services:
• research and advice regarding remuneration
trends, best practice and remuneration levels
for executive and non-executive Directors in
companies of similar size and complexity;
• advice in relation to remuneration
matters generally; and
• attendance at Committee meetings,
when required
In 2019, Mercer Kepler’s parent, the MMC
Group, provided pensions advice and related
services to the Company. In 2019, the total fees
paid to Mercer Kepler were Stg£63,110.
2019 Annual General Meeting
The voting outcome in respect of the
remuneration-related votes at the 2019 AGM is
set out in table 47 on page 100.
On behalf of the Board
Heather Ann McSharry
Chair of Remuneration Committee
27 February 2020
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
GOVERNANCE
99
GOVERNANCE
101
Part of CRH's Americas Materials Division and in operation since January 2005, Texas Materials' plant at Seward
Junction, located in the Greater Austin metropolitan area, includes a rail terminal to facilitate delivery of aggregates
from the company’s nearby quarry in Marble Falls. The rail terminal was expanded in 2016 to help meet strong
demand in what is the fastest growing large city in the US.
GOVERNANCE
102 The Directors submit their report and the
audited Consolidated Financial Statements for
the year ended 31 December 2019.
Principal Activity, Results for the
Year and Review of Business
CRH is a leading global diversified building
materials business in the world, employing
c. 80,300 people at 3,100 locations worldwide.
We manufacture and supply a diverse range
of superior building materials and products for
use in the construction and maintenance of
infrastructure, housing and commercial projects.
Our materials and products are used extensively,
in construction projects of all sizes, all across the
world. The Group has over 1,000 subsidiary, joint
venture and associate undertakings; the principal
ones as at 31 December 2019 are listed on pages
260 to 264.
The Group's strategy, business model and
development activity are summarised on pages
8 to 29 and 32 to 52 and are deemed to be
incorporated in this part of the Directors' Report.
As set out in the Consolidated Income Statement
on page 128, the Group reported a profit before
tax for the year of €2.1 billion from continuing
operations. Comprehensive reviews of the
financial and operating performance of the
Group during 2019 are set out in the Business
Performance section on pages 32 to 52; key
financial performance indicators are set out on
pages 18 and 19.
The treasury policy and objectives of the Group
are set out in detail in note 24 to the Consolidated
Financial Statements.
During the year ended 31 December 2019,
27,357,116 million ordinary shares were
repurchased on the London Stock Exchange
and Euronext Dublin for a total of €0.8 billion,
at an average price of €28.87 per share. On
7 January 2020, the Group announced its
intention to repurchase ordinary shares on
CRH's behalf for a maximum consideration
of €200 million (the “Buyback”). The Buyback
commenced on 7 January 2020 and will end
no later than 31 March 2020. Further details
in relation to the buyback programme and the
Company's profits available for distribution are
set on pages 105 and 221 respectively.
Dividend
CRH's capital allocation policy reflects the Group's
strategy of generating industry leading returns
through value-accretive allocation of capital
while delivering long-term dividend growth for
shareholders.
The Board continues to believe that a progressive
dividend policy is appropriate for the Group and
further to the 6% dividend increase in 2018,
an interim dividend of 20.0c (2018: 19.6c) per
share was paid in September 2019. The Board
is recommending a final dividend of 63.0c per
share. This would give a total dividend of 83.0c
for the year (2018: 72.0c), an increase of 15%
over last year. The earnings per share for the year
were 240.7c, representing a cover of 2.9x the
proposed dividend for the year while continuing
operations earnings per share for the year were
202.2c, representing a cover of 2.4x the proposed
dividend for 2019.
It is proposed to pay the final dividend on 28 April
2020 to shareholders registered at the close of
business on 13 March 2020. In connection with
the share buyback programme, CRH announced
the suspension of the scrip dividend scheme on
2 May 2018. Therefore the final dividend will be
paid wholly in cash.
While the Board continues to believe that a
progressive dividend policy is appropriate for the
Group, our target is to build dividend cover to 3.0x
before one-off items over the medium-term and
accordingly, any dividend increases in coming
years will continue to lag increases in earnings per
share.
2020 Outlook
The 2020 outlook set out in the Chief Executive’s
Review on page 11 is deemed to be incorporated
in this part of the Directors’ Report.
Principal Risks and
Uncertainties
Pursuant to Section 327(1)(b) of the Companies
Act 2014, Regulation 5(4)(c)(ii) of the Transparency
(Directive 2004/109/EC) Regulations 2007, the
principal risks and uncertainties that could affect
the Group’s business are set out on pages 108
to 113 and are deemed to be incorporated in
this part of the Directors’ Report. These risks and
uncertainties reflect the international scope of the
Group’s operations and its decentralised structure.
If any of these risks occur, the Group’s business,
financial condition, results of operations, liquidity
and/or prospects could be materially adversely
affected.
Non-Financial Reporting
The European Union (Disclosure of
Non-Financial and Diversity Information by
certain large undertakings and groups)
Regulations 2017 (the ‘Non-Financial
Regulations’) require CRH to provide certain
non-financial information to investors and other
Directors’ Report
Non-Financial Reporting Table 48
Reporting Requirement Relevant Policies (i) Location of Information (ii) Pages
Environmental and Climate Related Matters Environmental Policy Sustainability and Risk Governance 20 to 29
Social & Employee Matters Health & Safety Policy, Social Policy Sustainability 20 to 25
Human Rights Social Policy, Code of Business Conduct Sustainability 20 to 25
Anti-bribery & Corruption Code of Business Conduct Sustainability 20 to 25
Business Model – Business Model 16 to 17
Non-financial KPIs – Managing Performance 18 to 19
Principal Risks – Risk Governance 26 to 29
Principal Risks and Uncertainties 108 to 113
(i) Policies are available on CRH’s website, www.crh.com.
(ii) The referenced sections are deemed to be incorporated within this Directors’ Report.
GOVERNANCE
103
1. This table contains information which is required to be provided for regulatory purposes.
2. For the purposes of the Company’s Annual Report on Form 20-F as filed with the SEC, the Sustainability Report, and any reference thereto, is explicitly excluded from this Directors’ Report.
Regulatory Information1
Table 49
Companies
Act 2014
For the purpose of Section 1373, the Corporate Governance Report on pages 60 to 73, together with the Governance Appendix located on the
CRH website (www.crh.com), which contains the information required by Section 1373(2) of the Companies Act 2014 and the risk management
disclosures on pages 26 to 29 and 108 to 113, are deemed to be incorporated in the Directors’ Report and form part of the corporate
governance statement required by Section 1373 of the Companies Act. Details of the Company’s employee share schemes and capital structure
can be found in notes 9 and 31 to the Consolidated Financial Statements on pages 156 to 158 and 198 to 200 respectively.
2006
Takeover
Regulations
For the purpose of Regulation 21 of Statutory Instrument 255/2006 European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations
2006, the rules relating to the appointment and replacement of Directors are summarised in the Governance Appendix. The Chief Executive and
the Finance Director have entered into service contracts, the principal terms of which are summarised in the 2019 Directors’ Remuneration
Policy which is available on the CRH website (www.crh.com) and are deemed to be incorporated in this part of the Directors’ Report. The
Company’s Memorandum and Articles of Association, which are available on the CRH website, are also deemed to be incorporated in this part
of the Directors’ Report. The Group has certain banking facilities and bond issues outstanding which may require repayment in the event that a
change in control occurs with respect to the Company. In addition, the Company’s Share Option Schemes and Performance Share Plan contain
change of control provisions which can allow for the acceleration of the exercisability of share options and the vesting of share awards in the
event that a change of control occurs with respect to the Company.
2007
Transparency
Regulations
For the purpose of Statutory Instrument 277/2007 Transparency (Directive 2004/109/EC) Regulations 2007, the following sections of this Annual
Report and Form 20-F are deemed to be incorporated into this part of the Directors’ Report2
: the Chairman’s Introduction on pages 4 and 5, the
Strategy Review section on pages 8 to 29, the Principal Risks and Uncertainties section on pages 108 to 113, the Business Performance
section on pages 32 to 52, the information on inclusion and diversity on pages 70 to 72, the details of earnings per Ordinary Share in note 14 to
the Consolidated Financial Statements, the details of derivative financial instruments in note 27, the details of the reissue of Treasury Shares in
note 31 and the details of employees in note 7.
Disclaimer/
Forward-
Looking
Statements
In order to utilise the “Safe Harbor” provisions of the US Private Securities Litigation Reform Act of 1995, CRH plc (the ‘Company’), and its
subsidiaries (collectively, ‘CRH’ or the ‘Group’) is providing the following cautionary statement.
This document contains certain statements that are, or may be deemed to be forward-looking statements with respect to the financial condition,
results of operations, business, viability and future performance of CRH and certain of the plans and objectives of CRH including but not limited
to the statements under: “Overview – Chairman’s Introduction”; “Strategy Review – Chief Executive’s Review – Outlook”; “Strategy Review”
regarding the Group’s strategy for future growth and delivery; “Strategy Review – Measuring Performance” with regard to our focus for 2020;
"Strategy Review – Sustainability" with regard to our strategies for our sustainability priorities; “Business Performance – Finance Director’s
Review” with respect to our belief that the Group has sufficient resources to meet its debt obligations and capital and other expenditure
requirements in 2020; “Business Performance” with respect to our expectations regarding economic activity and fiscal developments in our
operating regions; and our expectations for the residential, non-residential and infrastructure markets; the statements relating to our strategies
for individual segments and business lines in the section entitled “Segmental Reviews”; “Governance – Directors’ Remuneration Report” with
regard to growth forecasts for the coming years; and “Governance – Principal Risks and Uncertainties” with respect to the potential impact and
evolving nature of risk as well as the direction risk may be trending.
These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “anticipates”, “should”,
“could”, “would”, “targets”, “aims”, “may”, “continues”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar expressions.
These forward-looking statements include all matters that are not historical facts or matters of fact at the time of this document.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or
may not occur in the future and reflect the Company’s current expectations and assumptions as to such future events and circumstances that
may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or
implied by these forward-looking statements, certain of which are beyond our control and which include, among other things: economic and
financial conditions generally in various countries and regions where we operate; the pace of growth in the overall construction and building
materials sector; demand for infrastructure, residential and non-residential construction in our geographic markets; increased competition and its
impact on prices; increases in energy and/or raw materials costs; adverse changes to laws and regulations; approval or allocation of funding for
infrastructure programmes; adverse political developments in various countries and regions; failure to complete or successfully integrate
acquisitions; and the specific factors identified in the discussions accompanying such forward-looking statements and in the Principal Risks and
Uncertainties included on pages 108 to 113 of the Directors’ Report and in the Risk Factors included on pages 233 to 241 of this Annual Report
and Form 20-F. You are cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements are made
as of the date of this Directors’ Report. The Company expressly disclaims any obligation or undertaking to publicly update or revise these
forward-looking statements other than as required by applicable law.
The forward-looking statements in this Annual Report and Form 20-F do not constitute reports or statements published in compliance with any
of Regulations 4 to 8 and 26 of the Transparency (Directive 2004/109/EC) Regulations 2007.
Location of Information required pursuant to Listing Rule 9.8.4C Table 50
Listing Rule Information to be included (i):
LR 9.8.4 (12)
and (13)
Waivers of Dividends Disclosure: The Trustees of the Employee Benefit Trust have elected to waive dividends in respect of certain holdings of
CRH shares. See page 200 to the Consolidated Financial Statements.
(i) No information is required to be disclosed in respect of Listing Rules 9.8.4 (1), (2), (4), (5), (6), (7), (8), (9), (10), (11) and (14).
104 stakeholders necessary to provide them with an
understanding of the Company’s development,
performance, position and impact of its activity.
Table 48 on page 102 provides more details
on the information required to be provided by
the Non-Financial Regulations and where this
information has been provided in this Annual
Report and Form 20-F.
Going Concern
The time period that the Directors have
considered in evaluating the appropriateness of
the going concern basis in preparing the financial
statements for 2019 is a period of at least twelve
months from the date of approval of these
financial statements (the 'period of assessment').
The Group's business activities, together with
the factors likely to affect its future development,
performance and position are set out in the
Strategy Review and in this report on pages
8 to 29 and pages 108 to 113. The financial
position of the Group, its cash flows, liquidity
position and borrowing facilities are described
in the Business Performance Review on pages
32 to 52. In addition, notes 23 to 27 to the
Consolidated Financial Statements include the
Group's objectives, policies and processes for
managing its capital; its financial risk management
objectives; details of its financial instruments and
hedging activities; and its exposures to credit,
currency and liquidity risks.
The Group has considerable financial resources
and a large number of customers and suppliers
across different geographic areas and industries.
In addition, the local nature of building materials
means that the Group's products are not usually
shipped cross-border.
Having assessed the relevant business risks, the
Directors believe that the Group is well-placed to
manage these risks successfully and they have
a reasonable expectation that CRH plc, and the
Group as a whole, has adequate resources to
continue in operational existence for the period
of assessment with no material uncertainties.
For this reason, the Directors continue to
adopt the going concern basis in preparing the
Consolidated Financial Statements.
Viability Statement
The viability statement set out on page 29 is
deemed to be incorporated in this section of the
Directors' Report.
Risk Management
and Internal Control1
The Directors confirm that, in addition to the
monitoring carried out by the Audit Committee
under its Terms of Reference, they have
reviewed the effectiveness of the Group’s risk
management and internal control systems up
to and including the date of approval of the
financial statements. This review had regard
to all material controls, including financial,
operational and compliance controls that could
affect the Group’s business.
Directors’ Compliance Statement
It is the policy of the Company to comply
with its relevant obligations (as defined in the
Companies Act 2014). The Directors have
drawn up a compliance policy statement (as
defined in section 225(3)(a) of the Companies
Act 2014) and arrangements and structures
are in place that are, in the Directors’ opinion,
designed to secure material compliance with the
Company’s relevant obligations. The Directors
confirm that these arrangements and structures
were reviewed during the financial year. As
required by Section 225(2) of the Companies
Act 2014, the Directors acknowledge that they
are responsible for the Company’s compliance
with the relevant obligations. In discharging their
responsibilities under Section 225, the Directors
relied on the advice both of persons employed
by the Company and of persons retained by
the Company under contract, who they believe
have the requisite knowledge and experience
to advise the Company on compliance with its
relevant obligations.
Directors’ Remuneration Report
Resolution 3 to be proposed at the 2020 AGM
deals with the 2019 Directors’ Remuneration
Report (excluding the Remuneration Policy
Section), as set out on pages 74 to 100, which
the Board has again decided to present to
shareholders for the purposes of a non-binding
advisory vote. This is in line with international best
practice.
Changes to the Board
of Directors
• Mr. D.A. McGovern, Jr. retired from the Board
with effect from 25 April 2019;
• Mr. W.J. Teuber resigned from the Board with
effect from 25 June 2019;
• Mr. J. Karlström was appointed to the Board
with effect from 25 September 2019;
• Mr. S. Kelly was appointed to the Board with
effect from 3 December 2019; and
• Mr. N. Hartery retired from the Board with
effect from 31 December 2019
Under the Company’s Articles of Association,
co-opted Directors are required to submit
themselves to shareholders for election at
the AGM following their appointment and all
Directors are required to submit themselves for
re-election at intervals of not more than three
years. However, in accordance with the provisions
contained in the UK Corporate Governance
Code, the Board has decided that all Directors
eligible for re-election should retire at each AGM
and offer themselves for re-election.
Auditors
As required under Section 381(1)(b) of the
Companies Act 2014, the AGM agenda includes
a resolution authorising the Directors to fix the
remuneration of the auditors.
Section 383 of the Companies Act 2014 provides
for the automatic re-appointment of the auditor
of an Irish company at a company’s AGM, unless
the auditor has given notice in writing of his
unwillingness to be re-appointed or a resolution
has been passed at that meeting appointing
someone else or providing expressly that the
incumbent auditor shall not be re-appointed.
As outlined in the Audit Committee Report on
pages 64 and 67, following a comprehensive and
competitive tender process in 2018, the Board
has selected Deloitte to replace Ernst & Young as
the Company’s auditor with effect from the 2020
financial year. An ordinary resolution confirming
the appointing of Deloitte will be proposed at the
2020 AGM (Resolution 6).
Authority to Allot Shares
The Directors require the authority of the
shareholders to allot any unissued Ordinary Share
capital of the Company. Accordingly, an ordinary
resolution will be proposed at the 2020 AGM
(Resolution 7) to renew the annual authority for
that purpose. The authority will be for an amount
which represents just under 50% of the issued
Ordinary Share capital as at 27 February 2020.
Any allotment exceeding 33% of the issued
Ordinary Share capital will only be made pursuant
to a pre-emptive issue and no issue of shares
will be made which could effectively alter control
of the Company without prior approval of the
Company in General Meeting.
Directors’ Report - continued
1. For more information in relation to the Group’s risk management and internal control systems, please see the Risk Management and Internal Control section in the Supplementary 20-F Disclosures
section on page 242.
GOVERNANCE
105
The Directors have no present intention of
making any issue of shares, other than in
connection with the Group’s share incentive
plans and, if applicable, scrip dividend scheme.
If approved, this authority will expire on the earlier
of the date of the AGM in 2021 or 22 July 2021.
Disapplication of
Pre-emption Rights
Resolutions 8 and 9 are special resolutions
which, if approved by shareholders, will renew
the annual authorities of the Directors to
disapply statutory pre-emption rights in relation
to allotments of Ordinary Shares for cash in
certain circumstances.
Resolution 8 will, if approved, authorise
the Directors to allot Ordinary Shares on a
non-pre-emptive basis and for cash (otherwise
than in connection with a rights issue or similar
pre-emptive issue) up to a maximum nominal
value of €13,593,000. This amount represents
approximately 5% of the issued Ordinary
Share capital as at 27 February 2020, being
the latest practicable date prior to publication
of this document. Resolution 8 will also allow
the Directors to disapply pre-emption rights
in order to accommodate any regulatory
restrictions in certain jurisdictions where the
Company might otherwise wish to undertake a
pre-emptive issue.
Resolution 9 will, if approved, afford the
Directors with an additional power to allot
Ordinary Shares on a non-pre-emptive basis
and for cash up to a further 5% of the issued
share capital as at 27 February 2020. The
power conferred by Resolution 9 can be
used only in connection with an acquisition
or a specified capital investment which is
announced contemporaneously with the issue,
or which has taken place in the preceding
six-month period and is disclosed in the
announcement of the issue.
The 5% limits in Resolutions 8 and 9 include
any Treasury Shares reissued by the Company
during the same period.
The Directors confirm that in respect of
Resolutions 8 and 9, they intend to follow the
Statement of Principles updated by the
Pre-Emption Group in that allotments of
shares for cash and the reissue of Treasury
Shares on a non-pre-emptive basis (other than
for an open offer or rights issue to Ordinary
Shareholders, the operation of CRH’s employee
share schemes or in connection with an
acquisition or specified capital investment) will
not exceed 7.5% of the issued Ordinary Share
capital within a rolling three-year period without
prior consultation with shareholders.
Transactions in
Own Shares
Under the share buyback programme, a
total of 27,357,116 Ordinary/Income Shares,
equivalent to 3.42% of the Company’s issued
share capital were repurchased during
2019, at an average price of €28.87 per
share. 43,750,000 Ordinary/Income Shares,
equivalent to 5.18% of the Company’s
issued share capital were cancelled on
16 December 2019. As at 27 February 2020,
14,784,464 shares were held as Treasury
Shares, equivalent to 1.88% of the Ordinary
Shares in issue (excluding Treasury Shares)
(2019: 32,063,844 shares).
During 2019, 1,147,149 (2018: 403,933)
Treasury Shares were reissued under the
Group’s employees’ share schemes.
A special resolution will be proposed at
the 2020 AGM (Resolution 10) to renew
the authority of the Company, or any of its
subsidiaries, to purchase up to 10% of the
Company’s Ordinary/Income Shares in issue
at the date of the AGM.
If approved, the minimum price which may be
paid for shares purchased by the Company
shall not be less than the nominal value of the
shares and the maximum price will be 105% of
the higher of the last independent trade in the
Company’s shares (or current independent bid,
if higher) and the average market price of such
shares over the preceding five days. A special
resolution (Resolution 11) will also be proposed
for the purpose of renewing the authority
to set the maximum and minimum prices
at which Treasury Shares (effectively shares
purchased and not cancelled) may be reissued
off-market by the Company. If granted, both
of these authorities will expire on the earlier of
the date of the AGM in 2021 or 22 July 2021.
As at 27 February 2020, options to subscribe
for a total of 1,769,860 Ordinary/Income
Shares are outstanding, representing 0.23%
of the issued Ordinary/Income Share capital
(excluding Treasury Shares). If the authority to
purchase Ordinary/lncome Shares was used in
full, the options would represent 0.25% of the
remaining shares in issue.
The ongoing share buyback programme
is scheduled to expire on 31 March 2020.
While no decision has been made to extend
the programme, the Board believes that the
Company should retain the ability to buyback
its own shares so that it can be used in the
best interests of shareholders generally.
Authority to Offer Scrip Dividends
The scrip dividend scheme was suspended
during 2018 in connection with the buyback
programme. The buyback programme was
expected to be for a period of up to 12 months
when the suspension of the scrip dividend
programme was announced. No decision has
yet been taken on whether the scrip dividend
scheme will be re-introduced. However, to
provide flexibility should a decision be made to
re-introduce the scheme, an ordinary resolution
is being proposed to renew the Directors’
authority to make scrip dividend offers. Unless
renewed at the AGM in 2021, this authority
shall expire at the close of business on
22 July 2021.
Annual General Meeting
The Notice of Meeting for the 2020 AGM is
available on the CRH website (www.crh.com)
and is expected to be posted to shareholders
on 25 March 2020.
Statement of Directors’
Responsibilities
The Directors as at the date of this report,
whose names are listed on pages 56 to 59, are
responsible for preparing the Annual Report
and Form 20-F and Consolidated Financial
Statements in accordance with applicable laws
and regulations.
Irish company law requires the Directors to
prepare financial statements for each financial
year which give a true and fair view of the
assets, liabilities, financial position of the Parent
Company and of the Group, and of the profit
or loss of the Group taken as a whole for that
period (the ‘Consolidated Financial Statements’).
In preparing the Consolidated Financial
Statements, the Directors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• comply with applicable International Financial
Reporting Standards as adopted by the
European Union, subject to any material
departures disclosed and explained in the
financial statements; and
• prepare the financial statements on
106 the going concern basis unless it is
inappropriate to presume that the Group will
continue in business
The Directors are required by the Central Bank
(Investment Market Conduct) Rules 2019 to
include a management report containing a fair
review of the development and performance
of the business and the position of the Parent
Company and of the Group taken as a whole
and a description of the principal risks and
uncertainties facing the Group.
The Directors confirm that to the best of their
knowledge they have complied with the above
requirements in preparing the 2019 Annual
Report and Form 20-F and Consolidated
Financial Statements.
The considerations set out above for the Group
are also required to be addressed by the
Directors in preparing the financial statements
of the Parent Company (which are set out on
pages 216 to 221), in respect of which the
applicable accounting standards are those
which are generally accepted in Ireland.
The Directors have elected to prepare the
Company Financial Statements in accordance
with Irish law and accounting standards
issued by the Financial Reporting Council
and promulgated by the Institute of Chartered
Accountants in Ireland (Generally Accepted
Accounting Practice in Ireland), including
FRS 101 Reduced Disclosure Framework.
The Directors are responsible for keeping
adequate accounting records which disclose
with reasonable accuracy at any time the
financial position of the Parent Company
and which enable them to ensure that the
Consolidated Financial Statements are
prepared in accordance with applicable
International Financial Reporting Standards as
adopted by the European Union and comply
with the provisions of the Companies Act 2014
and Article 4 of the IAS Regulation.
The Directors have appointed appropriate
accounting personnel, including a professionally
qualified Finance Director, in order to ensure
that those requirements are met. The books
and accounting records of the Company
are maintained at the Group’s administrative
head offices located at Stonemason’s Way,
Rathfarnham, Dublin 16.
The Directors are also responsible for
safeguarding the assets of the Group and
hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
Each of the Directors confirms that they
consider that the Annual Report and Form
20-F and Consolidated Financial Statements,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Company's position, performance, business
model and strategy.
For the purposes of Section 330 of the
Companies Act 2014, each of the Directors
also confirms that:
• so far as they are aware, there is no relevant
audit information of which the Company’s
statutory auditors are unaware; and
• they have taken all the steps that they
ought to have taken as Directors in order
to make themselves aware of any relevant
audit information and to establish that the
Company’s statutory auditors are aware of
that information
On behalf of the Board,
R. Boucher, A. Manifold
Directors
27 February 2020
Directors’ Report - continued
GOVERNANCE
107
In July 2019, OPTERRA, part of CRH’s Europe Materials Division and one of the leading cement producers in
Germany, officially inaugurated a new exhaust gas purification system at its Karsdorf cement plant near Leipzig. The
new filter technology, which includes a state-of-the-art AUTONOX®
Low Dust System installed on the existing kilns,
enables the factory to comply with new limits for dust, ammonia and nitrogen oxide emissions.
GOVERNANCE
108 Under Section 327(1)(b) of the Companies Act 2014 and Regulation 5(4)(c)(ii) of the Transparency
(Directive 2004/109/EC) Regulations 2007, the Group is required to give a description of the principal
risks and uncertainties which it faces. These risks and uncertainties reflect the international scope of
the Group’s operations and the Group’s decentralised structure. The risks and uncertainties presented
below, which are supplemented by a broader discussion of Risk Factors set out on pages 233 to 241,
are reviewed on an annual basis and represent the principal risks and uncertainties faced by the Group
at the time of compilation of the 2019 Annual Report and Form 20-F. During the course of 2020, new
risks and uncertainties may materialise attributable to changes in markets, regulatory environments
and other factors and existing risks and uncertainties may become less relevant.
Principal Risks and Uncertainties
Portfolio Management
Description Impact How we Manage the Risk
The Group may engage in acquisition and
divestment activity during the year as part of
the Group’s active portfolio management
which presents risks around due diligence,
execution and integration of assets.
Additionally, the Group may be liable for
liabilities of companies it has acquired or
divested.
Risk trend:
Failure to identify and execute deals in
an efficient manner may limit the
Group’s growth potential and impact
financial performance.
• Expertise in identifying and evaluating targets, conducting due
diligence and executing integration
• Many core markets are fragmented and continue to offer growth
opportunities
• The Group’s detailed due diligence programmes are supported
by external specialists when necessary
Industry Cyclicality and Adverse Economic Conditions
Description Impact How we Manage the Risk
Construction activity, and therefore demand for
the Group’s products, is inherently cyclical as it
is influenced by global and national economic
circumstances, governments’ ability to fund
infrastructure projects, consumer sentiment and
weather conditions. The Group may also be
negatively impacted by unfavourable swings in
fuel and other commodity/raw material prices.
Risk trend:
Failure to predict and plan for cyclical
events or adverse economic
conditions could negatively impact
financial performance.
• Market diversification strategies, in addition to the Group’s
multiple end-use sectors
• Constant focus on cash control, strong cash generation and
disciplined financial management
• Dynamic capital allocation and reallocation aimed at ensuring
profitable growth
Principal Strategic Risks and Uncertainties
Link to strategic objective
Benefits of Scale and Integration
Continuous Improvement Focused Growth Developing Leaders
GOVERNANCE
109
Commodity Products and Substitution
Description Impact How we Manage the Risk
Many of the Group’s products are commodities,
which face strong volume and price
competition, and may be replaced by substitute
products which the Group does not produce.
Further, the Group must maintain strong
customer relationships to ensure changing
consumer preferences are addressed.
Risk trend:
Failure to differentiate and innovate
could lead to market share decline,
thus adversely impacting financial
performance.
• Strong focus on customer service ensures differentiation from
competitors
• Business-led innovation and Research and Development services
aimed at ensuring the Group aligns its products and services to
the demands of customers
• Robust cost management practices and innovation in production
processes ensure competitively-priced products
Brexit
Description Impact How we Manage the Risk
Uncertainties resulting from the UK’s withdrawal
from the European Union could pose
challenges with currency devaluations, a fall in
construction activity in the UK, challenges in
labour resources accessing the UK, movement
of goods and services and repatriating
earnings.
Risk trend:
Failure by the Group to manage the
uncertainties posed by Brexit could
result in adverse financial performance
and a fall in the Group’s net worth.
• Executive management receive regular reports on Brexit and
closely monitor the changing economic situation in the UK
• Contingency plans have been put in place within UK operations
to address the range of potential economic, financial and
operational effects of Brexit
• Stress tests and scenario analysis have been conducted to
understand potential outcomes and inform contingency plans
Principal Strategic Risks and Uncertainties - continued
Strategic Mineral Reserves
Description Impact How we Manage the Risk
Appropriate reserves are an increasingly scarce
commodity and licences and/or permits
required to enable operation are becoming
harder to secure. There are numerous
uncertainties inherent in reserves estimation
and in projecting future rates of production.
Risk trend:
Failure by the Group to plan for
reserve depletion, or to secure
permits, may result in operation
stoppages, adversely impacting
financial performance.
• Effective permit management systems in place in all operating
entities ensure compliance with permit conditions and timely
renewal
• Planning for reserves enlargement and security of permits is a
key point of focus for materials businesses
• Efficient and economic extraction and utilisation of mineral
reserves are constantly monitored
Geopolitical and/or Social Instability
Description Impact How we Manage the Risk
Adverse and fast changing economic, social,
political and public health situations in any
country in which the Group operates could lead
to business interruption, restrictions on
repatriation of earnings or a loss of plant
access.
Risk trend:
Changes in these conditions may
adversely affect the Group’s business,
results of operations, financial
condition or prospects.
• Mitigation strategies to protect CRH’s people and assets are
in place in high risk areas
• Senior management and Board monitoring of commentaries
and economic indicators
• Two-phase budgeting process with prevailing economic and
market forecasts factored in
110 Principal Strategic Risks and Uncertainties - continued
Joint Ventures and Associates
Description Impact How we Manage the Risk
The Group does not have a controlling interest
in certain of the businesses (i.e. joint ventures
and associates) in which it has invested and
may invest, which gives rise to increased
governance complexity and a need for
proactive relationship management.
Risk trend:
The lack of a controlling interest could
impair the Group’s ability to manage
joint ventures and associates effectively
and/or realise its strategic goals for
these businesses.
• Board-approved governance protocols are in place which
require acquisition/investment contracts to contain appropriate
provisions as regards future Board participation and ongoing
management and interaction, amongst other items
• In joint venture arrangements, CRH has traditionally appointed
CRH personnel, by way of the legal agreement entered into, to
facilitate integration, assist in best practice transfer and drive
performance and growth
Climate Change and Policy
Description Impact How we Manage the Risk
The cement industry has recognised the
impact of climate change and its
responsibilities in transitioning to a lower
carbon economy. The Group is exposed to
financial, reputational and market risks arising
from changes to CO2 policies and regulations.
Risk trend:
Should the Group not reduce its
greenhouse gases (GHGs) emissions
by its identified targets, the Group may
be subject to increased costs, adverse
financial performance and reputational
damage.
• The Group has delivered on a CO2 reduction programme from
2007 to 2020. A revised CO2 reduction programme has been
developed to 2030, details of which can be found on page 21 of
this Annual Report and Form 20-F. This initiative encompasses all
cement plants in our portfolio at present
• Operational improvements at plants are focused on reducing the
CO2 footprint of our businesses
• For more information please refer to page 21 in this Annual
Report and Form 20-F or to our independently-assured
Sustainability Report, which is prepared in line with the Global
Reporting Initiative Standards and is available on www.crh.com
Principal Operational Risks and Uncertainties
People Management
Description Impact How we Manage the Risk
Existing processes around people management
(such as attracting, retaining and developing
people, leadership succession planning, as well
as dealing with collective representation groups)
may not deliver, inhibiting the Group achieving
its strategy.
Risk trend:
Failure to effectively manage talent
and plan for leadership succession
could impede the realisation of
strategic objectives.
• Talent management processes are in place within operating
companies with oversight and support from Group Human
Resources and Talent Development
• Succession planning and talent management initiatives
implemented across the Group
• Positive employee and trade/labour union relations are
maintained
GOVERNANCE
111
Health and Safety Performance
Description Impact How we Manage the Risk
The Group’s businesses operate in an industry
where health and safety risks are inherently
prominent. Further, the Group is subject to
stringent regulations from a health and safety
perspective in the various jurisdictions in which
it operates.
Risk trend:
A serious health and safety incident
could have a significant impact on the
Group’s operational and financial
performance, as well as the Group’s
reputation.
• A robust health and safety framework is implemented throughout
the Group’s operations requiring all employees to complete
formal health and safety training on a regular basis
• The Group monitors the performance of its health and safety
framework, and takes immediate and decisive action where
non-adherence is identified
• The development of a strong safety culture is driven by
management and employees at every level and is a core part of
doing business with integrity
Sustainability and Corporate Social Responsibility
Description Impact How we Manage the Risk
The nature of our activities poses inherent
environmental, social and governance (ESG)
risks, which are also subject to an evolving
regulatory framework and changing societal
expectations.
Risk trend:
Failure to embed sustainability
principles within the Group's
businesses and strategy may result in
non-compliance with relevant
regulations, standards and best
practices and lead to adverse
stakeholder sentiment and reduced
financial performance.
• CRH’s strategy and business model are built around sustainable,
responsible and ethical performance. CRH takes a lead in
re-thinking the nature of future developments and communities,
offering multiple products and building solutions that enhance
the environmental performance of the built environment
• Sustainability performance continues to be subject to rigorous
external evaluation. The Group’s achievements have been
recognised through its inclusion in a variety of leading global
sustainability indices
Principal Operational Risks and Uncertainties - continued
Information Technology and/or Cyber Security
Description Impact How we Manage the Risk
The Group is dependent on information and
operational technology systems to support its
business activities. Any significant operational
event, whether caused by external attack,
insider threat or error, could lead to loss of
access to systems or data, adversely
impacting business operations.
Risk trend:
Security breaches, IT interruptions or
data loss could result in significant
business disruption, loss of
production, reputational damage
and/or regulatory penalties. Significant
financial costs in remediation are also
likely in a major cyber security
incident.
• Ongoing strategic and tactical efforts to address the evolving
nature of cyber threats and the challenges posed, including
enhancement of existing information and cyber security practices
towards best practices for organisational assets, which include
people, processes and technology
• Ongoing investment and development of risk management and
governance associated with cyber security and information
technology
112 Defined Benefit Pension Schemes and Related Obligations
Description Impact How we Manage the Risk
The assets and liabilities of defined benefit
pension schemes, in place in certain operating
jurisdictions, exhibit significant period-on-period
volatility attributable primarily to asset values,
changes in bond yields/discount rates and
anticipated longevity.
Risk trend:
Significant cash contributions may be
required to remediate deficits
applicable to past service. Fluctuations
in the accounting surplus/deficit may
adversely impact the Group’s credit
metrics thus harming its ability to raise
funds.
• De-risking frameworks (for example, Liability-Driven Investment
techniques) have been instituted to mitigate deficit volatility and
enable better matching of investment returns with the cash
outflows related to benefit obligations
• Where closure to future accrual was not feasible for legal and
other reasons, the relevant final salary schemes were transitioned
to a career-average methodology for future service with
severance of the final salary link and the introduction of defined
contribution for new entrants
Principal Financial and Reporting Risks and Uncertainties
Financial Instruments
Description Impact How we Manage the Risk
The Group uses financial instruments
throughout its businesses giving rise to interest
rate and leverage, foreign currency,
counterparty, credit rating and liquidity risks.
Risk trend:
A downgrade of the Group’s credit
ratings or inability to maintain certain
financial ratios may give rise to
increases in future funding costs and
may impair the Group’s ability to raise
funds on acceptable terms. In
addition, insolvency of the financial
institutions with which the Group
conducts business may adversely
impact the Group’s financial position.
• The Group seeks to ensure that sufficient resources are
available to meet the Group’s liabilities as they fall due through
a combination of cash and cash equivalents, cash flows and
undrawn committed bank facilities. Systems are in place to
monitor and control the Group’s liquidity risks, which are reported
to the Board on a monthly basis. Cash flow forecasting is
provided to executive management on a weekly basis
• All of the Group’s financial counterparties are leading financial
institutions of international scope with a strong investment grade
credit rating with S&P and/or Moody's
• Please see note 24 to the Consolidated Financial Statements for
further detail
Principal Compliance Risks and Uncertainties
Laws and Regulations
Description Impact How we Manage the Risk
The Group is subject to a wide variety of local
and international laws and regulations across
the many jurisdictions in which it operates,
which vary in complexity, application and
frequency of change.
Risk trend:
Potential breaches of local and
international laws and regulations
could result in the imposition of
significant fines or sanctions and may
inflict reputational damage.
• CRH’s Code of Business Conduct, which is in effect mandatorily
across the Group, stipulates best practices in relation to legal,
compliance and ethical matters amongst other issues. The Code
of Business Conduct is available on www.crh.com
• Proactive on-the-ground engagement throughout the Group,
through an extensive training programme, a dedicated
whistleblowing hotline (the results of which are reported to
the Audit Committee) and detailed policies and procedures to
support the Code of Business Conduct
GOVERNANCE
113
Principal Financial and Reporting Risks and Uncertainties - continued
Foreign Currency Translation
Description Impact How we Manage the Risk
The principal foreign exchange risks to which
the Consolidated Financial Statements are
exposed pertain to (i) adverse movements in
reported results when translated into the
reporting currency; and (ii) declines in the
reporting currency value of net investments
which are denominated in a wide basket of
currencies other than the reporting currency.
Risk trend:
Adverse changes in the exchange
rates will continue to negatively affect
retained earnings. The annual impact
is reported in the Consolidated
Statement of Comprehensive Income.
• The Group has decided to change to US Dollar reporting
currency effective 1 January 2020, in consideration of the current
portfolio and business mix which has now significantly higher US
Dollar exposure
• The Group’s activities are conducted primarily in the local
currency of operation resulting in low levels of foreign currency
transactional risk
• The Group’s established policy is to spread its net worth across
the currencies of the various operations with the objective of
limiting its exposure to individual currencies and thus promoting
consistency with the geographical balance of its operation
Goodwill Impairment
Description Impact How we Manage the Risk
Significant under-performance in any of the
Group’s major cash-generating units or the
divestment of businesses in the future may
give rise to a material write-down of goodwill.
Risk trend:
A write-down of goodwill could have a
substantial impact on the Group’s
income and equity.
• Economic indicators of goodwill impairment are monitored
closely through the monthly reporting process. Detailed
impairment testing is undertaken prior to year end
• The goodwill impairment assessment is subject to regular review
by the Audit Committee
• For further information on how the Group manages the risk
posed by goodwill impairment, please refer to note 16 to the
Consolidated Financial Statements on pages 166 to 168
Taxation Charge and Balance Sheet Provisioning
Description Impact How we Manage the Risk
The Group is exposed to uncertainties
stemming from governmental actions in respect
of taxes paid and payable in all jurisdictions of
operation. In addition, various assumptions are
made in the computation of the overall tax
charge and in balance sheet provisions which
may not be borne out in practice.
Risk trend:
Changes in tax regimes or assessment
of additional tax liabilities in future
audits could result in incremental tax
liabilities which could have a material
adverse effect on cash flows, financial
condition and results of operations.
• The Group Tax and Transfer Pricing Guidelines and SOX controls
provide a tax governance framework operable throughout the
Group
• Group Tax is managed by in-house specialists with significant
experience. The in-house expertise is supplemented by the
assistance of external advisors where required
Oldcastle Infrastructure, part of CRH’s Building Products Division, is supplying 2.1 miles of pre-fabricated concrete
box culverts to a storm water drainage project in downtown Tampa, Florida. The project will reduce flooding and
provide enhanced safety for pedestrians and vehicles. Construction is expected to be completed in 2021.
Independent Auditor’s Reports 116
Consolidated Income Statement 128
Consolidated Statement
of Comprehensive Income 129
Consolidated Balance Sheet 130
Consolidated Statement
of Changes in Equity 131
Consolidated Statement
of Cash Flows 132
Accounting Policies 133
Notes on Consolidated
Financial Statements 145
116 - 221
Financials
FINANCIALS
116 116 
Independent Auditor’s Irish Report
to the members of CRH plc
Opinion
We have audited the financial statements of CRH plc (‘the Company’) and its subsidiaries (together ‘the Group’) for the year ended 31 December 2019, which
comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Balance Sheet, the Company Statement of Changes in Equity, the
Accounting Policies including the summary of Significant Accounting Policies set out on pages 133 to 144 and notes to the financial statements. The financial
reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (IFRS) as adopted by the European
Union and, as regards the Company financial statements, Accounting Standards including FRS 101 Reduced Disclosure Framework (Irish Generally Accepted
Accounting Practice).
In our opinion:
• the Group financial statements and the Company financial statements give a true and fair view of the assets, liabilities and financial position of the Group and
the Company as at 31 December 2019 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the Company financial statements have been properly prepared in accordance with Irish Generally Accepted Accounting Practice; and
• the Group financial statements and the Company financial statements have been properly prepared in accordance with the requirements of the Companies
Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group
and Company in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the Ethical Standard as applied
to public interest entities issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Overview of our audit approach
Key audit matters • Assessment of the carrying value of goodwill
• Assessment of the carrying value of property, plant and equipment and financial assets
• Revenue recognition for construction contracts
• Accounting for acquisitions and business disposals
Audit scope • We performed an audit of the complete financial information of 14 components and performed audit
procedures on specific balances for a further 32 components
• We performed procedures at a further 19 components that were specified by the Group audit team in
response to specific risk factors
• The components where we performed either full or specific audit procedures accounted for 89% of Profit
before tax from continuing operations, 87% of Revenue and 86% of Total Assets
• ‘Components’ represent business units across the Group considered for audit scoping purposes
Materiality • Overall Group materiality was assessed to be €100 million which represents approximately 5% of Profit before
tax from continuing operations
What has changed? • In the prior year, our auditor’s report included a risk of material misstatement in relation to the purchase price
allocation for property, plant and equipment (PP&E) and provisions in connection with the Ash Grove Cement
Company (Ash Grove) acquisition. In the current year, we have removed this risk of material misstatement as
the Ash Grove acquisition was a specific 2018 event
• As discussed in the Accounting Policies to the Consolidated Financial Statements (page 133), the Group
changed its method of accounting for leases in 2019 due to the adoption of IFRS 16 Leases
117
FINANCIALS
 117
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period
and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest
effect on: our overall audit strategy, the allocation of resources in the audit and directing of the efforts of the engagement team. These matters were addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Risk Our response to the risk
Key observations communicated to the
Audit Committee
Assessment of the carrying value of
goodwill
At 31 December 2019, the Group’s carrying value
of goodwill was €8.1 billion. Goodwill is subject to
impairment testing on an annual basis and at any
time during the year if an indicator of impairment
exists. Goodwill acquired through business
combination activity has been allocated to cash-
generating units (CGUs). The recoverable amount of
the CGUs is determined based on a value-in-use
computation.
Auditing management’s annual goodwill impairment
test is considered a risk area as it is complex and
involves key judgements by management due to
the significant estimation required in determining the
fair value of each CGU especially where an indicator
of impairment exists.
In particular, judgemental aspects include
assumptions of future profitability, revenue growth,
margins and forecast cash flows, and the selection
of appropriate discount rates, all of which may be
subject to management override.
There has been no change in this risk from the prior
year.
Refer to the Audit Committee Report (page 64);
Accounting Policies (page 133); and note 16 of the
Consolidated Financial Statements (page 166).
We obtained an understanding, evaluated the
design and tested the operating effectiveness of
controls over the Group’s goodwill impairment
review process. For example, we tested controls
over the Company’s review of significant
assumptions, including future profitability, revenue
growth, margins and forecast cash flows, and the
selection of appropriate discount rates, among
others.
To test the estimated fair value of the CGUs where
indicators of impairment existed, we performed
audit procedures that included, among others,
assessing fair value methodologies and testing the
significant assumptions discussed above and the
underlying data used by the Group in its analysis.
We compared the significant assumptions used by
management to external economic forecasts and
construction activity measures, the Group’s
historical results, and evaluated whether changes in
the Group’s business would affect the significant
assumptions.
We assessed the historical accuracy of
management’s estimates and performed sensitivity
analyses of significant assumptions to evaluate the
change in the fair value of the CGUs resulting from
changes in these assumptions.
We involved valuation specialists to assist in our
evaluation of the valuation methodology and
comparison of key inputs to external market data
(principally risk-free rates, country risk premium and
inflation rates) used by management in calculating
discount rates.
We considered the adequacy of management’s
disclosures in respect of impairment testing and
whether the disclosures appropriately communicate
the underlying sensitivities.
The above procedures were performed
predominantly by the Group audit team.
We completed our planned audit procedures with
no exceptions noted.
Consistent with the previous year, two CGUs had
allocated goodwill balances of between 10% and
25% of total goodwill which the Group
considered significant and therefore warranted
separate disclosure. One CGU was determined
to be sensitive in respect of the excess of
value-in-use over its carrying value.
118 118 
Independent Auditor’s Irish Report - continued
Risk Our response to the risk
Key observations communicated to the
Audit Committee
Assessment of the carrying value of property,
plant and equipment and financial assets
In 2019 the Group’s carrying value of PP&E and
financial assets was €17.4 billion and €0.7 billion
respectively. The carrying values of PP&E and
financial assets are reviewed for indicators of
impairment at each reporting date and are subject
to impairment testing when events or changes in
circumstances indicate that the carrying values may
not be recoverable. For an asset that does not
generate largely independent cash inflows, the
recoverable amount is determined by reference to
the CGU to which the asset belongs.
Auditing management’s impairment test is
considered a risk area as it is complex and involves
key judgements by management due to the
significant estimation required in determining the fair
values of the CGUs.
Judgemental aspects include assumptions of future
profitability, revenue growth, margins and forecast
cash flows, and the selection of appropriate
discount rates, all of which may be subject to
management override.
There has been no change in this risk from the prior
year.
Refer to the Audit Committee Report (page 64);
Accounting Policies (page 133); and note 15 and
note 17 of the Consolidated Financial Statements
(pages 164 and 169).
We obtained an understanding, evaluated the
design and tested the operating effectiveness of
controls over the Group’s impairment review
process. For example, we tested controls over the
Company’s review of significant assumptions,
including future profitability, revenue growth,
margins and forecast cash flows, and the selection
of appropriate discount rates, among others.
To test the estimated fair value of the CGUs where
indicators of impairment existed, we performed
audit procedures that included, among others,
evaluation of the internal and external indicators of
impairment used within the Group’s assessment,
assessing fair values methodologies and testing the
significant assumptions discussed above and the
underlying data used by the Group in its analysis.
We compared the significant assumptions used by
management to external economic forecasts and
construction activity measures, the Group’s
historical results, and evaluated whether changes in
the Group’s business would affect the significant
assumptions.
We assessed the historical accuracy of
management’s estimates and performed sensitivity
analyses of significant assumptions to evaluate the
change in the fair value of the reporting units
resulting from changes in these assumptions.
We involved valuation specialists to assist in our
evaluation of the valuation methodology and
comparison of key inputs to external market data
(principally risk-free rates, country risk premium and
inflation rates) used by management in calculating
discount rates.
We performed the above procedures in 29
components representing 92% of total PP&E and
financial asset carrying values.
Our planned audit procedures were completed
without exception.
119
FINANCIALS
 119
Risk Our response to the risk
Key observations communicated to the
Audit Committee
Revenue recognition for construction contracts
At 31 December 2019, the Group’s revenue for
construction contracts was €5.9 billion which
represents 23% of the Group’s revenue in 2019.
Revenue yet to be recognised from fixed-price long-
term construction contracts, primarily within the
Europe Materials and Americas Materials
businesses, amounted to €1.9 billion at
31 December 2019. The majority of the Group’s
construction contracts have a maturity within one
year.
Auditing management’s revenue recognition for
construction contracts is complex and judgemental
as such recognition is materially affected by
changes in assumptions regarding the
determination of the stage of completion, the timing
of revenue recognition and the calculation under the
percentage-of-completion method. In particular,
judgemental aspects include assumptions of the
estimated materials, hours, and other costs
required to fulfil contractual performance
obligations. The nature of these judgements results
in them being susceptible to management override.
There is significant seasonality as to when services
are rendered under these construction contracts,
with the majority of the work historically performed
in the summer months and, consequently, most are
completed prior to the year end.
There has been no change in this risk from the prior
year.
Refer to the Audit Committee Report (page 64);
Accounting Policies (page 133); and note 1 of the
Consolidated Financial Statements (page 145).
We obtained an understanding, evaluated the
design and tested the operating effectiveness of
controls over the Group’s revenue recognition for
construction contracts process. For example, we
tested controls over the Company’s process for
evaluating the estimated contract value, estimated
and actual costs upon completion, including the
estimation of units of measurement, and the amount
of profit or loss to be recognised in accordance with
IFRS 15 Revenue from Contracts with Customers.
To test the revenue recognised by the Group, we
performed audit procedures that included, among
others, testing a sample of contracts and evaluating
the original executed contract including any change
orders. For these contracts, we tested key
components of the cost to complete estimates and
actual costs to date, including vouching materials,
hours, and subcontractor costs to source
documentation, and conducted interviews with and
inspected questionnaires prepared by project
personnel.
We recalculated revenues recognised and assessed
compliance with IFRS 15. In addition, our audit
procedures included performing a retrospective
review of estimated profit and costs to complete
and enquiring of key personnel regarding
adjustments for job costing and potential contract
losses.
We performed the above procedures in 8
components where 96% of construction contract
revenue was recognised during the year.
Our planned audit procedures were completed
without exception.
Our observations included an outline of the range
of audit procedures performed, the key
judgements made by management in recognising
revenue, margin and provisioning on loss-making
contracts and the results of our testing.
Accounting for acquisitions and business
disposals
During 2019, the Group completed 58 acquisitions
at a cost of €0.7 billion and realised total business
disposal proceeds of €2.4 billion across 11
disposals.
Acquisitions and business disposals continue to be
a significant focus area for the Group and an area
where we allocate significant resources in directing
the efforts of the engagement team.
Refer to the Audit Committee Report (page 64);
Accounting Policies (page 133); and notes 3, 6 and
32 of the Consolidated Financial Statements (pages
150, 154 and 201).
We obtained an understanding, evaluated the
design and tested the operating effectiveness of
controls over the Group’s accounting for
acquisitions and business disposal processes.
Our valuation specialists within the engagement
team assessed management’s purchase price
allocation adjustments, deferred consideration and
the identification and valuation of acquired intangible
assets.
In testing the accounting for business disposals, we
verified various factors including consideration, net
asset carrying value of the business disposed,
disposal costs and foreign exchange reserve
recycling.
We also considered the adequacy of the related
disclosures (note 3, 6 and 32).
The above procedures are performed both locally
and by the Group audit team, and covered 38% of
acquisition spend and 98% of disposal proceeds.
Our procedures in respect of current year
acquisitions were focused on 5 acquisitions
which together comprised 38% of total
acquisition spend and 4 business disposals
which comprised 98% of total business disposal
proceeds.
Substantial audit resources were allocated to
these procedures, in particular with respect to
the purchase price allocations for the businesses
acquired, the audit of the opening and closing
balance sheets by component teams and foreign
currency recycling on business disposals.
Our planned audit procedures in respect of
acquisitions were completed without exception.
Whilst a number of businesses were disposed of
during the year, the most significant disposal was
the disposal of the Europe Distribution business.
Our audit procedures in respect of this and all
other material disposals, were performed as
planned and without exception.
120 120 
Independent Auditor’s Irish Report - continued
Our application of materiality
We apply the concept of materiality in planning
and performing the audit, in evaluating the
effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement
that, individually or in the aggregate, could
reasonably be expected to influence the
economic decisions of the users of the financial
statements. Materiality provides a basis for
determining the nature and extent of our audit
procedures.
We determined materiality for the Group to be
€100 million (2018: €95 million), which is
approximately 5% of Group Profit before tax
from continuing operations. Profit before tax is a
key performance indicator for the Group and is
also a key metric used by the Group in the
assessment of management’s performance. We
therefore considered Profit before tax to be the
most appropriate performance metric on which
to base our materiality calculation as we
consider it to be the most relevant performance
measure to the stakeholders of the Group.
We determined materiality for the Company to
be €94 million (2018: €92 million), which is
approximately 1% (2018: 1%) of total equity.
During the course of our audit, we reassessed
initial materiality and considered that no further
changes to materiality were necessary.
Performance materiality
Performance materiality is the application of
materiality at the individual account or balance
level. It is set at an amount to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together
with our assessment of the Group’s overall
control environment, our judgement was that
performance materiality should be set at 75%
(2018: 75%) of our planning materiality, namely
€75 million (2018: €71 million). We have
re-assessed performance materiality in the
current year based on our past experience of
the risk of misstatements, both corrected and
uncorrected.
Audit work at component locations for the
purpose of obtaining audit coverage over
significant financial statement accounts is
undertaken based on a percentage of total
performance materiality. The performance
materiality set for each component is based on
the relative scale and risk of the component to
the Group as a whole and our assessment of
the risk of misstatement at that component. In
the current year, the range of performance
materiality allocated to components was
€15 million to €48 million (2018: €14 million to
€46 million).
Reporting threshold
An amount below which identified
misstatements are considered as being clearly
trivial.
We agreed with the Audit Committee that we
would report to them all uncorrected audit
differences in excess of €5.0 million (2018:
€4.75 million), which is set at approximately 5%
of planning materiality, as well as differences
below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements
against both the quantitative measures of
materiality discussed above and in light of other
relevant qualitative considerations in forming our
opinion.
An overview of the scope of
our audit report
Tailoring the scope
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for each
entity within the Group. Taken together, this
enables us to form an opinion on the
Consolidated Financial Statements.
In determining those components in the Group
to which we perform audit procedures, we
utilised size and risk criteria in accordance with
ISAs (Ireland).
In assessing the risk of material misstatement to
the Group financial statements, and to ensure
we had adequate quantitative coverage of
significant accounts in the financial statements,
we selected 46 (2018: 52) components
covering entities across Europe and the
Americas, as well as the Philippines, which
represent the principal business units within the
Group.
Of the 46 components selected, we performed
an audit of the complete financial information of
14 (2018: 18) components (‘full scope
components’) which were selected based on
their size or risk characteristics. For the
remaining 32 (2018: 34) components (‘specific
scope components’), we performed audit
procedures on specific accounts within that
component that we considered had the
potential for the greatest impact on the
significant accounts in the financial statements
either because of the size of these accounts or
their risk profile.
In addition to the 46 components discussed
above, we selected a further 19 (2018: 22)
components where we performed procedures
at the component level that were specified by
the Group audit team in response to specific
risk factors. Also, we performed review
procedures at an additional 17 (2018: 24)
components.
The reporting components where we performed
either full or specific scope audit procedures
accounted for 89% (2018: 97%) of the Group’s
Profit before tax from continuing operations,
87% (2018: 83%) of the Group’s Revenue and
86% (2018: 89%) of the Group’s Total Assets.
For the current year, the full scope components
contributed 86% (2018: 90%) of the Group’s
Profit before tax from continuing operations,
79% (2018: 75%) of the Group’s Revenue and
75% (2018: 79%) of the Group’s Total Assets.
The specific scope components contributed 3%
(2018: 7%) of the Group’s Profit before tax from
continuing operations, 8% (2018: 8%) of the
Group’s Revenue and 11% (2018: 10%) of the
Group’s Total Assets. The components where
we either performed procedures that were
specified by the Group audit team in response
to specific risk factors or review scope
procedures contributed 2% and 5% (2018: 0%
and 2%) respectively of the Group’s Profit
before tax from continuing operations, 1% and
4% (2018: 2% and 6%) respectively of the
Group’s Revenue and 7% and 2% (2018: 4%
and 2%) respectively of the Group’s Total
Assets. The audit scope of these components
may not have included testing of all significant
accounts of the component but will have
contributed to the coverage of significant risks
tested for the Group.
Of the remaining components, which together
represent 4% (2018: 1%) of the Group’s Profit
before tax from continuing operations, none is
individually greater than 5% of the Group’s
Profit before tax from continuing operations. For
these components, we performed other
procedures, including analytical review,
confirmation of cash balances, testing of
consolidation journals and intercompany
eliminations and foreign currency translation
recalculations to respond to any potential risks
of material misstatement to the Consolidated
Financial Statements.
121
FINANCIALS
 121
The charts below illustrate the coverage obtained from the work performed by our audit teams based on continuing operations.
Profit before tax from
continuing operations
86% Full
scope
3% Specific
scope
2% Specified
procedures
5% Review
scope
4% Other
procedures
Revenue
79% Full
scope
8% Specific
scope
1% Specified
procedures
4% Review
scope
8% Other
procedures
Total Assets
75% Full
scope
11% Specific
scope
7% Specified
procedures
2% Review
scope
5% Other
procedures
Involvement with component teams
In establishing our overall approach to the
Group audit, we determined the type of work
that needed to be undertaken at each of the
components by us, as the Group audit team, or
by component auditors from other EY global
network firms operating under our instruction.
For the full scope and specific scope
components, where the work was performed by
component auditors, we determined the
appropriate level of involvement to enable us to
determine that sufficient audit evidence had
been obtained as a basis for our opinion on the
Group as a whole.
We issued detailed instructions to each
component auditor in scope for the Group audit,
with specific audit requirements and requests
across key areas. The Group audit team
continued to perform a programme of site visits
at key locations across the Group, visiting 9
component teams during 2019 and visiting 50
component teams in the past five years. The
visits conducted during the year involved
discussing with the component team the audit
approach and any issues arising from their
work, meeting with local management,
attending planning and closing meetings and
reviewing key audit working papers on risk
areas. The Group audit team interacted regularly
with all component teams where appropriate
during various stages of the audit, reviewed key
working papers and were responsible for the
scope and direction of the audit process. This,
together with the additional procedures
performed at Group level, gave us appropriate
evidence for our opinion on the Consolidated
Financial Statements.
122 122 
Independent Auditor’s Irish Report - continued
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (Ireland) require us to report to you whether
we have anything material to add or draw attention to:
• the disclosures in the Annual Report set out on pages 108 to 113 that describe the principal risks and explain how they are being managed or mitigated;
• the Directors’ confirmation set out on page 104 in the Annual Report that they have carried out a robust assessment of the principal risks facing the Group
and the Company, including those that would threaten its business model, future performance, solvency or liquidity;
• the Directors’ statement set out on page 104 in the Annual Report about whether the Directors considered it appropriate to adopt the going concern basis
of accounting in preparing the financial statements and the Directors’ identification of any material uncertainties to the Group’s and the Company’s ability to
continue to do so over a period of at least 12 months from the date of approval of the financial statements;
• whether the Directors’ statement relating to going concern required under the Listing Rules of Euronext Dublin and the UK Listing Authority is materially
inconsistent with our knowledge obtained in the audit; or
• the Directors’ explanation set out on page 104 in the Annual Report as to how they have assessed the prospects of the Group and the Company, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that
the Group and the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report other than the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as
uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:
• Fair, balanced and understandable (set out on page 106) – the statement given by the Directors that they consider the Annual Report and financial
statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and the
Company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit Committee reporting (set out on page 64) – the section describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee is materially inconsistent with our knowledge obtained in the audit; or
• Directors’ statement of compliance with the UK Corporate Governance Code (set out on page 60) – the parts of the Directors’ statement required under the
Listing Rules relating to the Company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in
accordance with the Listing Rules of Euronext Dublin and the UK Listing Authority do not properly disclose a departure from a relevant provision of the UK
Corporate Governance Code
Opinions on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• in our opinion, the information given in the Directors’ Report, other than those parts dealing with the non-financial statement pursuant to the requirements of
S.I. No. 360/2017 on which we are not required to report in the current year, is consistent with the financial statements; and
• in our opinion, the Directors’ Report, other than those parts dealing with the non-financial statement pursuant to the requirements of S.I. No. 360/2017 on
which we are not required to report in the current year, has been prepared in accordance with the Companies Act 2014
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the Company
Balance Sheet is in agreement with the accounting records.
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FINANCIALS
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Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified
material misstatements in the Directors’ Report, excluding those parts dealing with the non-financial statement pursuant to the requirements of S.I.
No. 360/2017 on which we are not required to report in the current year.
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of Directors’ remuneration and transactions required by sections 305 to
312 of the Act are not made. We have nothing to report in this regard.
Respective responsibilities
Respective responsibilities of Directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities set out on page 105, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and the Company’s ability to continue as going concerns,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the
Group or the Company or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain
sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate
responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance of the entity and management.
Our approach was as follows:
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group across the various jurisdictions globally in which the
Group operates. We determined that the most significant are those that relate to the form and content of external financial and corporate governance
reporting including company law, tax legislation, employment law and regulatory compliance
• We understood how the Group is complying with those frameworks by making enquiries of management, internal audit, those responsible for legal and
compliance procedures and the Company Secretary. We corroborated our enquiries through our review of the Group’s Compliance Policies, board minutes,
papers provided to the Audit Committee and correspondence received from regulatory bodies
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by meeting with
management, including within various parts of the business, to understand where they considered there was susceptibility to fraud. We also considered
performance targets and the potential for management to influence earnings or the perceptions of analysts. Where this risk was considered to be higher, we
performed audit procedures to address each identified fraud risk. These procedures included testing manual journals and were designed to provide
reasonable assurance that the financial statements were free from fraud or error
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures included a
review of board minutes to identify any non-compliance with laws and regulations, a review of the reporting to the Audit Committee on compliance with
regulations, enquiries of internal and external legal counsel and management
A further description of our responsibilities for the audit of the financial statements is located on the IAASA’s website at:
http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf This description forms part of
our auditor’s report.
124 124 
Independent Auditor’s Irish Report - continued
Other matters which we are required to address
We were appointed by the Board of Directors following the AGM held on 25 April 2019 to audit the financial statements for the year ended 31 December 2019.
The period of total uninterrupted engagement including previous renewals and re-appointments of the firm is 32 years.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided to the Group and we remain independent of the Group in conducting our
audit.
Our audit opinion is consistent with the report to the Audit Committee.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body,
for our audit work, for this report, or for the opinions we have formed.
Pat O’Neill
for and on behalf of
Ernst & Young Chartered Accountants and Statutory Audit Firm
Dublin
27 February 2020
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 125
Independent Auditor’s US Reports
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of CRH public limited company (CRH plc):
Opinion on the Financial Statements
We have audited the accompanying Consolidated Balance Sheets of CRH plc (‘the Company’) as of 31 December 2019 and 2018, the related Consolidated
Income Statements and Consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows for each of the three years in the period
ended 31 December 2019, and the related notes (collectively referred to as the ‘financial statements’). In our opinion, the financial statements present fairly, in all
material respects, the consolidated financial position of the Company at 31 December 2019 and 2018, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended 31 December 2019, in conformity with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal
control over financial reporting as of 31 December 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organisations of the Treadway Commission (2013 Framework) and our report dated 27 February 2020 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in the Accounting Policies to the financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of
IFRS 16 Leases.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required
to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Assessment of the carrying value of goodwill
Description of the Matter At 31 December 2019, the Company’s carrying value of goodwill was €8.1 billion. As discussed in note 16 of
the financial statements, goodwill is subject to impairment testing on an annual basis and at any time during
the year if an indicator of impairment exists. The Company’s Goodwill acquired through business combination
activity has been allocated to cash-generating units (CGUs). The recoverable amount of the CGUs is
determined based on a value-in-use computation.
Auditing management’s annual goodwill impairment test is complex and judgemental due to the significant
estimation required in determining the fair value of each CGU especially where an indicator of impairment
exists. In particular, judgemental aspects include assumptions of future profitability, revenue growth, margins
and forecast cash flows, and the selection of appropriate discount rates.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s goodwill impairment review process. For example, we tested controls over the Company’s
review of significant assumptions, including future profitability, revenue growth, margins and forecast cash
flows, and the selection of appropriate discount rates, among others.
To test the estimated fair value of the Company’s CGUs where indicators of impairment existed, we
performed audit procedures that included, among others, assessing fair values methodologies and testing the
significant assumptions discussed above and the underlying data used by the Company in its analysis. We
compared the significant assumptions used by management to external economic forecasts and construction
activity measures, the Company’s historical results, and evaluated whether changes in the Company’s
business would affect the significant assumptions. We assessed the historical accuracy of management’s
126 126 
Independent Auditor’s US Reports - continued
estimates and performed sensitivity analysis of significant assumptions to evaluate the change in the fair value
of the CGUs resulting from changes in these assumptions. We involved valuation specialists to assist in our
evaluation of the valuation methodology and comparison of key inputs to external market data (principally
risk-free rates, country risk premium and inflation rates) used by management in calculating discount rates.
We also evaluated management’s disclosures in respect of impairment testing.
Assessment of the carrying value of property, plant and equipment and financial assets
Description of the Matter At 31 December 2019, the Company’s carrying value of property, plant and equipment (PP&E) and financial
assets was €17.4 billion and €0.7 billion respectively. As discussed in notes 15 and 17 of the financial
statements, the carrying values of PP&E and financial assets are reviewed for indicators of impairment at
each reporting date and are subject to impairment testing when events or changes in circumstances indicate
that the carrying values may not be recoverable. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined by reference to the CGU to which the asset belongs.
Auditing management’s impairment test is complex and judgemental due to the significant estimation
required in determining the fair value of the CGUs. In particular,judgemental aspects include assumptions of
future profitability, revenue growth, margins and forecast cash flows, and the selection of appropriate
discount rates.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s impairment review process. For example, we tested controls over the Company’s review of
significant assumptions, including future profitability, revenue growth, margins and forecast cash flows, and
the selection of appropriate discount rates, among others.
To test the estimated fair value of the Company CGUs where indicators of impairment existed, we performed
audit procedures that included, among others, evaluation of the internal and external indicators of impairment
used within the Company’s assessment, assessing fair values methodologies and testing the significant
assumptions discussed above and the underlying data used by the Company in its analysis. We compared
the significant assumptions used by management to external economic forecasts and construction activity
measures, the Company’s historical results, and evaluated whether changes in the Company’s business
would affect the significant assumptions. We assessed the historical accuracy of management’s estimates
and performed sensitivity analysis of significant assumptions to evaluate the change in the fair value of the
reporting units resulting from changes in these assumptions. We involved valuation specialists to assist in our
evaluation of the valuation methodology and comparison of key inputs to external market data (principally
risk-free rates, country risk premium and inflation rates) used by management in calculating discount rates.
Revenue recognition for construction contracts
Description of the Matter At 31 December 2019, the Company’s revenue for construction contracts was €5.9 billion. As discussed in
note 1 of the financial statements, revenue yet to be recognised from fixed-price long-term construction
contracts, primarily within the Europe Materials and Americas Materials businesses, amounted to €1.9 billion
at 31 December 2019. The majority of the Company’s construction contracts have a maturity within one year.
Auditing management’s revenue recognition for construction contracts is complex and judgemental as such
recognition is materially affected by changes in assumptions regarding the determination of the stage of
completion, the timing of revenue recognition and the calculation under the percentage-of-completion
method. In particular, judgemental aspects include assumptions of the estimated materials, hours, and other
costs required to fulfil contractual performance obligations.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s revenue recognition for construction contracts process. For example, we tested controls over
the Company’s process for evaluating the estimated contract value, estimated and actual costs upon
completion, including the estimation of units of measurement, and the amount of profit or loss to be
recognised in accordance with IFRS 15.
To test the revenue recognised by the Company, we performed audit procedures that included, among
others, testing a sample of contracts and evaluating the original executed contract including any change
orders. For these contracts, we tested key components of the cost to complete estimates and actual costs to
date, including vouching materials, hours, and subcontractor costs to source documentation, and conducted
interviews with and inspected questionnaires prepared by project personnel. We recalculated revenues
recognised and assessed compliance with IFRS 15. In addition, our audit procedures included performing a
retrospective review of estimated profit and costs to complete and enquiring of key personnel regarding
adjustments for job costing and potential contract losses.
ERNST & YOUNG
We have served as the Company’s auditor since 1988.
Dublin, Ireland
27 February 2020
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FINANCIALS
 127
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of CRH public limited company (CRH plc):
Opinion on Internal Control over Financial Reporting
We have audited CRH plc’s internal control over financial reporting as of 31 December 2019, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (2013 Framework) (the ‘COSO criteria’). In our opinion, CRH
plc (‘the Company’) maintained, in all material respects, effective internal control over financial reporting as of 31 December 2019, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the
effectiveness of internal control over financial reporting did not include the internal controls of business combinations during the year ended 31 December 2019,
which are included in the 2019 Consolidated Financial Statements of the Company and constituted 1.5% and 2.3% of total and net assets, respectively, as of
31 December 2019 and 0.8% and 0.1% of revenue and group profit, respectively, for the year then ended. Our audit of internal control over financial reporting
of the Company also did not include an evaluation of the internal control over financial reporting of business combinations completed during the year ended
31 December 2019.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated
Balance Sheets of CRH plc as of 31 December 2019 and 2018, the related Consolidated Income Statements and Consolidated Statements of Comprehensive
Income, Changes in Equity and Cash Flows for each of the three years in the period ended 31 December 2019, and the related notes (collectively referred to as
the “financial statements”) of the Company and our report dated 27 February 2020 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
ERNST & YOUNG
Dublin, Ireland
27 February 2020
128 128 
Consolidated Income Statement
for the financial year ended 31 December 2019
Notes
ASSETS
Non-current assets
15 Property, plant and equipment 17,424 15,761
16 Intangible assets 8,434 8,433
17 Investments accounted for using the equity method 690 1,163
17 Other financial assets 12 23
19 Other receivables 317 181
27 Derivative financial instruments 76 30
29 Deferred income tax assets 67 71
Total non-current assets 27,020 25,662
Current assets
18 Inventories 2,742 3,061
19 Trade and other receivables 3,767 4,074
Current income tax recoverable 20 15
27 Derivative financial instruments 6 15
25 Cash and cash equivalents 3,755 2,346
Total current assets 10,290 9,511
Total assets 37,310 35,173
EQUITY
Capital and reserves attributable to the Company’s equity holders
31 Equity share capital 272 287
31 Preference share capital 1 1
31 Share premium account 6,534 6,534
31 Treasury Shares and own shares (325) (792)
Other reserves 326 296
Foreign currency translation reserve 210 (109)
Retained income 9,922 9,812
Capital and reserves attributable to the Company’s equity holders 16,940 16,029
33 Non-controlling interests 540 525
Total equity 17,480 16,554
LIABILITIES
Non-current liabilities
22 Lease liabilities 1,240 -
26 Interest-bearing loans and borrowings 8,199 8,698
27 Derivative financial instruments 1 18
29 Deferred income tax liabilities 2,338 2,209
20 Other payables 485 472
30 Retirement benefit obligations 427 424
28 Provisions for liabilities 760 719
Total non-current liabilities 13,450 12,540
Current liabilities
22 Lease liabilities 271 -
20 Trade and other payables 4,376 4,609
Current income tax liabilities 503 443
26 Interest-bearing loans and borrowings 815 618
27 Derivative financial instruments 16 41
28 Provisions for liabilities 399 368
Total current liabilities 6,380 6,079
Total liabilities 19,830 18,619
Total equity and liabilities 37,310 35,173
R. Boucher, A. Manifold, Directors
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 131
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2019
Attributable to the equity holders of the Company
Issued
share
capital
€m
Share
premium
account
€m
Treasury
Shares/
own shares
€m
Other
reserves
€m
Foreign
currency
translation
reserve
€m
Retained
income
€m
Non-
controlling
interests
€m
Total
equity
€m
Notes
At 1 January 2019 288 6,534 (792) 296 (109) 9,812 525 16,554
Group profit for the financial year - - - - - 1,929 19 1,948
Other comprehensive income - - - - 319 1 24 344
Total comprehensive income - - - - 319 1,930 43 2,292
9 Share-based payment expense - - - 77 - - - 77
31 Shares acquired by CRH plc (Treasury Shares) - - (791) - - - - (791)
31 Treasury Shares/own shares reissued - - 35 - - (35) - -
31 Shares acquired by Employee Benefit Trust (own shares) - - (61) - - - - (61)
31 Shares distributed under the Performance Share Plan Awards - - 62 (62) - - - -
31 Cancellation of Treasury Shares (15) - 1,222 15 - (1,222) - -
12 Tax relating to share-based payment expense - - - - - 9 - 9
Share option exercises - - - - - 20 - 20
13 Dividends - - - - - (584) (10) (594)
3 Disposal of non-controlling interests - - - - - - (8) (8)
32 Non-controlling interests arising on acquisition of subsidiaries - - - - - - 1 1
Transactions involving non-controlling interests - - - - - (8) (11) (19)
At 31 December 2019 273 6,534 (325) 326 210 9,922 540 17,480
for the financial year ended 31 December 2018
At 1 January 2018 287 6,417 (15) 285 (386) 7,903 486 14,977
Group profit for the financial year - - - - - 2,517 4 2,521
Other comprehensive income - - - - 277 (26) (1) 250
Total comprehensive income - - - - 277 2,491 3 2,771
31 Issue of share capital (net of expenses) - 62 - - - - - 62
9 Share-based payment expense - - - 67 - - - 67
31 Shares acquired by CRH plc (Treasury Shares) - - (789) - - - - (789)
31 Treasury Shares/own shares reissued - - 15 - - (15) - -
31 Shares acquired by Employee Benefit Trust (own shares) - - (3) - - - - (3)
31 Shares distributed under the Performance Share Plan Awards 1 55 - (56) - - - -
12 Tax relating to share-based payment expense - - - - - (2) - (2)
Share option exercises - - - - - 7 - 7
13 Dividends (including shares issued in lieu of dividends) - - - - - (572) (12) (584)
32 Non-controlling interests arising on acquisition of subsidiaries - - - - - - 48 48
At 31 December 2018 288 6,534 (792) 296 (109) 9,812 525 16,554
for the financial year ended 31 December 2017
At 1 January 2017 285 6,237 (14) 286 629 6,472 548 14,443
Group profit for the financial year - - - - - 1,895 24 1,919
Other comprehensive income - - - - (1,015) 89 (61) (987)
Total comprehensive income - - - - (1,015) 1,984 (37) 932
Issue of share capital (net of expenses) 1 118 - - - - - 119
Share-based payment expense - - - 62 - - - 62
Treasury Shares/own shares reissued - - 2 - - (2) - -
Shares acquired by Employee Benefit Trust (own shares) - - (3) - - - - (3)
Shares distributed under the Performance Share Plan Awards 1 62 - (63) - - - -
12 Tax relating to share-based payment expense - - - - - (5) - (5)
13 Dividends (including shares issued in lieu of dividends) - - - - - (546) (8) (554)
32 Non-controlling interests arising on acquisition of subsidiaries - - - - - - 20 20
Transactions involving non-controlling interests - - - - - - (37) (37)
At 31 December 2017 287 6,417 (15) 285 (386) 7,903 486 14,977
132 132 
Consolidated Statement of Cash Flows
for the financial year ended 31 December 2019
Notes
Cash flows from operating activities
Profit before tax from continuing operations 2,115 1,741 1,685
3 Profit before tax from discontinued operations 333 1,679 328
Profit before tax 2,448 3,420 2,013
10 Finance costs (net) 445 351 349
11 Share of equity accounted investments’ profit (72) (60) (65)
6 Profit on disposals (226) (1,539) (59)
Group operating profit 2,595 2,172 2,238
15,22 Depreciation charge 1,538 1,071 1,006
16 Amortisation of intangible assets 59 61 66
15,16 Impairment charge 8 56 -
9 Share-based payment expense 77 67 65
Other (primarily pension payments) (3) (67) (186)
21 Net movement on working capital and provisions (64) (463) (209)
Cash generated from operations 4,210 2,897 2,980
Interest paid (including leases) (i) (419) (335) (317)
Corporation tax paid (325) (663) (474)
Net cash inflow from operating activities 3,466 1,899 2,189
Cash flows from investing activities
6 Proceeds from disposals (net of cash disposed and deferred proceeds) 2,096 3,009 222
Interest received 20 34 11
17 Dividends received from equity accounted investments 35 48 31
15 Purchase of property, plant and equipment (1,229) (1,121) (1,044)
32 Acquisition of subsidiaries (net of cash acquired) (650) (3,505) (1,841)
17 Other investments and advances (29) (2) (11)
21 Deferred and contingent acquisition consideration paid (48) (55) (53)
Net cash inflow/(outflow) from investing activities 195 (1,592) (2,685)
Cash flows from financing activities
31 Proceeds from issue of shares (net) - 11 42
Proceeds from exercise of share options 20 7 -
Transactions involving non-controlling interests (19) - (37)
23 Increase in interest-bearing loans and borrowings 91 1,434 1,010
23 Net cash flow arising from derivative financial instruments (36) 6 169
10 Premium paid on early debt redemption - - (18)
23 Repayment of interest-bearing loans, borrowings and finance leases (ii) (572) (246) (343)
22 Repayment of lease liabilities (iii) (317) - -
31 Treasury Shares/own shares purchased (852) (792) (3)
13 Dividends paid to equity holders of the Company (584) (521) (469)
13 Dividends paid to non-controlling interests (10) (12) (8)
Net cash (outflow)/inflow from financing activities (2,279) (113) 343
Increase/(decrease) in cash and cash equivalents 1,382 194 (153)
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January 2,346 2,135 2,449
Translation adjustment 27 17 (161)
Increase/(decrease) in cash and cash equivalents 1,382 194 (153)
25 Cash and cash equivalents at 31 December 3,755 2,346 2,135
(i) Leases include finance leases previously capitalised under IAS 17 Leases in 2018 and 2017 and all capitalised leases included as lease liabilities under
IFRS 16 Leases in 2019.
(ii) Finance leases as previously capitalised under IAS 17 in 2018 and 2017.
(iii) Repayment of lease liabilities capitalised under IFRS 16 in 2019 amounted to €386 million, of which €69 million related to interest paid which is presented
in cash flows from operating activities.
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 133
Accounting Policies
(including key accounting estimates and assumptions)
This document constitutes both the Annual
Report and the Financial Statements in
accordance with the Irish and UK requirements,
and the Annual Report on Form 20-F in
accordance with the US Securities Exchange
Act of 1934.
Basis of Preparation
The Consolidated Financial Statements of CRH
plc have been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the European Union,
which comprise standards and interpretations
approved by the International Accounting
Standards Board (IASB). IFRS as adopted by
the European Union differ in certain respects
from IFRS as issued by the IASB. However, the
Consolidated Financial Statements for the
financial years presented would be no different
had IFRS as issued by the IASB been applied.
The Consolidated Financial Statements are also
prepared in compliance with the Companies Act
2014 and Article 4 of the EU IAS Regulation.
CRH plc, the Parent Company, is a publicly
traded limited company incorporated and
domiciled in the Republic of Ireland.
The Consolidated Financial Statements, which
are presented in euro millions, have been
prepared under the historical cost convention as
modified by the measurement at fair value of
share-based payments, retirement benefit
obligations and certain financial assets and
liabilities including derivative financial
instruments.
The accounting policies set out below have
been applied consistently by all of the Group’s
subsidiaries, joint ventures and associates to all
periods presented in the Consolidated Financial
Statements.
In accordance with Section 304 of the
Companies Act 2014, the Company is availing
of the exemption from presenting its individual
profit and loss account to the Annual General
Meeting and from filing it with the Registrar of
Companies.
Adoption of IFRS and
International Financial
Reporting Interpretations
Committee (IFRIC)
interpretations
The following new standards, interpretations
and standard amendments became effective for
the Group as of 1 January 2019:
• IFRS 16 Leases
• IFRIC 23 Uncertainty over Income Tax
Treatments
• Amendments to IFRS 9 Financial
Instruments
• Amendments to IAS 19 Employee Benefits
• Amendments to IAS 28 Investments in
Associates and Joint Ventures
• Annual Improvements 2015 – 2017 Cycle
The new standards, interpretations and
standard amendments did not result in a
material impact on the Group’s results, with the
exception of IFRS 16 which is detailed below.
IFRS 16 Leases
IFRS 16 replaces IAS 17 Leases. CRH adopted
IFRS 16 by applying the modified retrospective
approach on the transition date of 1 January
2019. The Group applied the recognition
exemption for both short-term leases and
leases of low-value assets. The Group did not
avail of the practical expedient not to separate
non-lease components from lease components
or the practical expedient allowing leases
previously classified as operating leases and
ending within 12 months of the date of
transition, to be accounted for as short-term
leases. The right-of-use asset has been
calculated as the lease liability at 1 January
2019 adjusted for any prepayments, accruals
and onerous lease provisions with no
adjustment to opening retained earnings. The
Group relied on its assessment of whether
leases are onerous applying IAS 37 Provisions,
Contingent Liabilities and Contingent Assets
immediately before the date of initial application
as an alternative to performing an impairment
review.
The adoption of IFRS 16 had a material impact
on the Group’s Consolidated Financial
Statements and certain key financial metrics,
which is quantified and further explained in the
table overleaf.
134 134 
Accounting Policies - continued
Primary statement line item / financial metric
As at 1 January 2019
€m
Consolidated Balance Sheet
Property, plant and equipment (i) (ii) +1,939
Lease liabilities; net debt (i) (ii) +1,954
For the year ended
31 December 2019
€m
Consolidated Income Statement
Depreciation (i) +334
Finance costs +69
EPS (i) (iii) -3c
Consolidated Statement of Cash Flows
Net cash flow from operating activities +317
Net cash flow from financing activities -317
(i) The operating profit and depreciation impact of IFRS 16 on discontinued operations included above are +€4 million and +€63 million respectively for the
year ended 31 December 2019. The right-of-use asset and discounted lease liability related to discontinued operations are €398 million as at 1 January
2019.
(ii) The impact of the adoption of IFRS 16 on property, plant and equipment and net debt is net of existing finance leases (€23 million at 31 December 2018)
which have been recorded as part of the right-of-use assets and lease liabilities at their previous carrying amounts on 1 January 2019.
(iii) The impact of the adoption of IFRS 16 on operating profit for the year ended 31 December 2019 is €0.05 billion and has been calculated based only on the
portfolio of leases which existed at 1 January 2019.
Income Statement
Cost of sales and operating costs (excluding
depreciation) have decreased, as the Group
previously recognised operating lease expenses
in either cost of sales or operating costs
(depending on the nature of the relevant
operations and of the lease). The Group’s
operating lease expense for the year ended
31 December 2018 from continuing operations
was €533 million (2017: €513 million).
Payments for leases which meet the recognition
exemption criteria and certain other lease
payments which do not meet the criteria for
capitalisation (excluding depreciation) have been
recorded as an expense within cost
of sales and operating costs. Due to business
seasonality, certain assets are leased on a
short-term basis (i.e. 12 months or less) to deal
with peak demand. Accordingly, a portion of
costs previously classified as operating lease
expenses have not been capitalised on the
Group’s Consolidated Balance Sheet and
continue to be expensed in the Group’s
Consolidated Income Statement (see note 22).
Depreciation and finance costs have increased
due to the capitalisation of a right-of-use asset
under IFRS 16 which is depreciated over the
term of the lease with an associated finance
cost applied annually to the lease liability.
Balance Sheet
The Group has identified the minimum lease
payments outstanding (including payments for
renewal options which are reasonably certain to
be exercised) and has applied the appropriate
discount rate to calculate the present value of
the lease liability and right-of-use asset
recognised on the Consolidated Balance Sheet.
The discount rates applied were arrived at using
a methodology to calculate the incremental
borrowing rates across the Group. The
weighted average incremental borrowing rate
applied to lease liabilities on the balance sheet
was 3.95% at 1 January 2019.
A reconciliation of the operating lease commitment previously reported under IAS 17 to the discounted lease liability as at 1 January 2019 under IFRS 16 is as
follows:
As at 1 January 2019
€m
Operating lease commitment under IAS 17 1,911
Lease extensions beyond break date 632
Leases that are cancellable at any time 35
Existing IAS 17 finance leases (i) 23
Other lease payments not included in discounted lease liability under IFRS 16 (ii) (108)
Undiscounted lease liability under IFRS 16 2,493
Less impact of discounting (516)
Discounted lease liability under IFRS 16 1,977
(i) Existing IAS 17 finance leases are presented at discounted amounts as the impact of discounting on these leases is not considered material.
(ii) Other lease payments not included in the discounted lease liability under IFRS 16 include payments related to short-term and low-value leases which were
included in the operating lease commitment under IAS 17 but are exempt from capitalisation under IFRS 16.
135
FINANCIALS
 135
IFRS and IFRIC
interpretations being adopted
in subsequent years
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17. It is
expected to be effective for reporting periods
beginning on or after 1 January 2022, with
presentation of comparative figures required.
The Group is currently evaluating the impact of
this standard on future periods.
IFRS 3 Business Combinations
In October 2018, the IASB issued amendments
to IFRS 3, regarding the definition of a business.
The amendments clarify that the process
required to meet the definition of a business
(together with inputs to create outputs) must be
substantive; and, that the inputs and process
must together significantly contribute to creating
outputs. The definition of outputs has been
narrowed to focus on goods and services
provided to customers and other income from
ordinary activities. In addition, the amendments
indicate that an acquisition of primarily a single
asset or group of similar assets is unlikely to
meet the definition of a business. The
amendments will be applied prospectively for
business combinations and asset acquisitions
occurring on or after 1 January 2020. The
Group is finalising its review of the impact of this
amendment, but does not expect the
clarification to have a material impact on the
value of acquisitions or additions to property,
plant and equipment.
Disclosure Initiative –
Definition of Material
(Amendments to IAS 1 and
IAS 8)
In October 2018, the IASB issued Definition of
Material (Amendments to IAS 1 Presentation of
Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and
Errors), which will be applied prospectively from
1 January 2020. The amendments clarify and
align the definition of “material” to the definition
used in the Conceptual Framework and other
IFRS standards. Information is now considered
material if omitting, misstating or obscuring it
could reasonably be expected to influence
decisions that the primary users of general
purpose financial statements make on the basis
of those financial statements, which provide
financial information about a specific reporting
entity. This amendment is not expected to have
an impact on the Group.
Interest Rate Benchmark
Reform – Amendments to
IFRS 9, IAS 39 and IFRS 7
In September 2019, the IASB issued
amendments to IFRS 9, IAS 39 Financial
Instruments: Recognition and Measurement
and IFRS 7 Financial Instruments: Disclosures,
which concludes phase one of its work to
respond to the effects of Interbank Offered
Rates (IBOR) reform on financial reporting.
The amendments provide mandatory temporary
reliefs which enable hedge accounting to
continue during the period of uncertainty before
the replacement of an existing interest rate
benchmark with an alternative nearly risk-free
interest rate (an RFR). To the extent that a
hedging instrument is altered so that its cash
flows are based on an RFR, but the hedged
item is still based on IBOR (or vice versa), there
is no relief from measuring and recording any
ineffectiveness that arises due to differences in
their changes in fair value. The amendments are
effective from 1 January 2020 and must be
applied retrospectively. However, any hedge
relationships that have previously been de-
designated cannot be reinstated upon
application, nor can any hedge relationships be
designated with the benefit of hindsight. The
Group is currently evaluating the impact of this
amendment, but does not expect the
amendment to have a material impact.
There are no other IFRS or IFRIC interpretations
that are effective subsequent to the CRH 2019
financial year-end that would have a material
impact on the results or financial position of the
Group.
Key Accounting Policies
which involve Estimates,
Assumptions and
Judgements
The preparation of the Consolidated Financial
Statements in accordance with IFRS requires
management to make certain estimates,
assumptions and judgements that affect the
application of accounting policies and the
reported amounts of assets, liabilities, income
and expenses. Management believes that the
estimates, assumptions and judgements upon
which it relies are reasonable based on the
information available to it at the time that those
estimates, assumptions and judgements are
made. In some cases, the accounting treatment
of a particular transaction is specifically dictated
by IFRS and does not require management’s
judgement in its application.
Management considers that their use of
estimates, assumptions and judgements in the
application of the Group’s accounting policies
are inter-related and therefore discuss them
together below.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Changes in
accounting estimates may be necessary if there
are changes in the circumstances or
experiences on which the estimate was based
or as a result of new information.
The critical accounting policies which involve
significant estimates, assumptions or
judgements, the actual outcome of which could
have a material impact on the Group’s results
and financial position outlined below, are as
follows:
Impairment of goodwill –
Note 16
In the year in which a business combination is
effected and where some or all of the goodwill
allocated to a particular cash-generating unit
arose in respect of that combination, the cash-
generating unit is tested for impairment prior to
the end of the relevant annual period.
Goodwill is subject to impairment testing on an
annual basis and at any time during the year if
an indicator of impairment is considered to
exist.
Where the carrying value exceeds the estimated
recoverable amount (being the greater of fair
value less costs of disposal and value-in-use),
an impairment loss is recognised by writing
down goodwill to its recoverable amount. In
assessing value-in-use, the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset for
which the future cash flow estimates have not
been adjusted. The estimates of future cash
flows exclude cash inflows or outflows
attributable to financing activities and income
tax. The recoverable amount of goodwill is
determined by reference to the cash-generating
unit to which the goodwill has been allocated.
Impairment losses arising in respect of goodwill
are not reversed once recognised.
Goodwill relating to associates and joint
ventures is included in the carrying amount of
the investment and is neither amortised nor
individually tested for impairment. Where
indicators of impairment of an investment arise
in accordance with the requirements of IFRS 9,
the carrying amount is tested for impairment by
comparing its recoverable amount with its
carrying amount.
136 136 
Accounting Policies - continued
The impairment testing process requires
management to make significant judgements
and estimates regarding the future cash flows
expected to be generated by cash-generating
units to which goodwill has been allocated.
Future cash flows relating to the eventual
disposal of these cash-generating units and
other factors may also be relevant to determine
the fair value of goodwill. Management
periodically evaluates and updates the
estimates based on the conditions which
influence these variables. A detailed discussion
of the impairment methodology applied and key
assumptions used by the Group in the context
of goodwill is provided in note 16 to the
Consolidated Financial Statements.
The assumptions and conditions for
determining impairments of goodwill reflect
management’s best assumptions and
estimates, but these items involve inherent
uncertainties described above, many of which
are not under management’s control. As a
result, the accounting for such items could
result in different estimates or amounts if
management used different assumptions or if
different conditions occur in future accounting
periods.
Retirement benefit
obligations – Note 30
Costs arising in respect of the Group’s defined
contribution pension schemes are charged to
the Consolidated Income Statement in the
period in which they are incurred. The Group
has no legal or constructive obligation to pay
further contributions in the event that the fund
does not hold sufficient assets to meet its
benefit commitments.
The liabilities and costs associated with the
Group’s defined benefit pension schemes (both
funded and unfunded) are assessed either on
the basis of the attained age, the projected unit
credit, the current unit credit or the aggregate
cost methods by professionally qualified
actuaries and are arrived at using actuarial
assumptions based on market expectations at
the balance sheet date. The discount rates
employed in determining the present value of
the schemes’ liabilities are determined by
reference to market yields at the balance sheet
date on high-quality corporate bonds of a
currency and term consistent with the currency
and term of the associated post-employment
benefit obligations.
The net surplus or deficit arising on the Group’s
defined benefit pension schemes, together with
the liabilities associated with the unfunded
schemes, are shown either within non-current
assets or non-current liabilities in the
Consolidated Balance Sheet. The deferred tax
impact of pension scheme surpluses and deficits
is disclosed separately within deferred tax assets
or liabilities as appropriate. Remeasurements,
comprising actuarial gains and losses and the
return on plan assets (excluding net interest), are
recognised immediately in the Consolidated
Balance Sheet with a corresponding debit or
credit to retained earnings through other
comprehensive income in the period in which
they occur. Remeasurements are not reclassified
to profit or loss in subsequent periods.
The defined benefit pension asset or liability in
the Consolidated Balance Sheet comprises the
total for each plan of the present value of the
defined benefit obligation less the fair value of
plan assets out of which the obligations are to
be settled directly. Plan assets are assets that
are held by a long-term employee benefit fund
or qualifying insurance policies. Fair value is
based on market price information and, in the
case of published quoted securities; it is the
published bid price. The value of any defined
benefit asset is limited to the present value of
any economic benefits available in the form of
refunds from the plan and reductions in the
future contributions to the plan.
The Group’s obligation in respect of post-
employment healthcare and life assurance
benefits represents the amount of future benefit
that employees have earned in return for service
in the current and prior periods. The obligation
is computed on the basis of the projected unit
credit method and is discounted to present
value using a discount rate equating to the
market yield at the balance sheet date on high-
quality corporate bonds of a currency and term
consistent with the currency and estimated
term of the post-employment obligations.
Assumptions
The assumptions underlying the actuarial
valuations (including discount rates, rates of
increase in future compensation levels, mortality
rates and healthcare cost trends), from which
the amounts recognised in the Consolidated
Financial Statements are determined, are
updated annually based on current economic
conditions and for any relevant changes to the
terms and conditions of the pension and post-
retirement plans. These assumptions can be
affected by (i) for the discount rate, changes in
the rates of return on high-quality corporate
bonds; (ii) for future compensation levels, future
labour market conditions and (iii) for healthcare
cost trend rates, the rate of medical cost
inflation in the relevant regions. The weighted
average actuarial assumptions used and
sensitivity analysis in relation to the significant
assumptions employed in the determination of
pension and other post-retirement liabilities are
contained in note 30 to the Consolidated
Financial Statements.
Whilst management believes that the
assumptions used are appropriate, differences
in actual experience or changes in assumptions
may affect the obligations and expenses
recognised in future accounting periods. The
assets and liabilities of defined benefit pension
schemes may exhibit significant
period-on-period volatility attributable primarily
to changes in bond yields and longevity. In
addition to future service contributions,
significant cash contributions may be required
to remediate past service deficits. A sensitivity
analysis of the change in these assumptions is
provided in note 30.
Provisions for liabilities –
Note 28
A provision is recognised when the Group has a
present obligation (either legal or constructive)
as a result of a past event, it is probable that a
transfer of economic benefits will be required to
settle the obligation and a reliable estimate can
be made of the amount of the obligation. Where
the Group anticipates that a provision will be
reimbursed, the reimbursement is recognised
as a separate asset only when it is virtually
certain that the reimbursement will arise. The
expense relating to any provision is presented in
the Consolidated Income Statement net of any
reimbursement. Provisions are measured at the
present value of the expenditures expected to
be required to settle the obligation. The
increase in the provision due to the passage of
time is recognised as an interest expense.
Contingent liabilities arising on business
combinations are recognised as provisions if the
contingent liability can be reliably measured at
its acquisition date fair value. Provisions are not
recognised for future operating losses.
Management is not aware of any potential
changes to key assumptions that have a
significant risk of causing a material adjustment
to the carrying value of provisions within the
next financial year; however due to the nature of
some of our provisions, estimates may depend
on the outcome of future events and need to be
revised as circumstances change in future
accounting periods. Refer to note 28 for the
expected timing of outflows by provisions
category.
137
FINANCIALS
 137
Environmental and remediation
provisions
The measurement of environmental and
remediation provisions is based on an
evaluation of currently available facts with
respect to each individual site and considers
factors such as existing technology, currently
enacted laws and regulations and prior
experience in remediation of sites. Inherent
uncertainties exist in such evaluations primarily
due to unknown conditions, changing
governmental regulations and legal standards
regarding liability, the protracted length of the
clean-up periods and evolving technologies.
The environmental and remediation liabilities
provided for in the Consolidated Financial
Statements reflect the judgement applied by
management in respect of information available
at the time of determining the liability and are
adjusted periodically as remediation efforts
progress or as additional technical or legal
information becomes available. Due to the
inherent uncertainties described above, many of
which are not under management’s control,
actual costs and cash outflows could differ if
management used different assumptions or if
different conditions occur in future accounting
periods.
Legal contingencies
The status of each significant claim and legal
proceeding in which the Group is involved is
reviewed by management on a periodic basis
and the Group’s potential financial exposure is
assessed. If the potential loss from any claim or
legal proceeding is considered probable, and
the amount can be reliably estimated, a liability
is recognised for the estimated loss. Because of
the uncertainties inherent in such matters, the
related provisions are based on the best
information available at the time; the issues
taken into account by management and
factored into the assessment of legal
contingencies include, as applicable, the status
of settlement negotiations, interpretations of
contractual obligations, prior experience with
similar contingencies/claims, the availability of
insurance to protect against the downside
exposure and advice obtained from legal
counsel and other third parties. As additional
information becomes available on pending
claims, the potential liability is reassessed and
revisions are made to the amounts accrued
where appropriate. Such revisions in the
judgements and estimates of the potential
liabilities could have an impact on the results of
operations and financial position of the Group in
future accounting periods.
Insurance provisions
Insurance provisions are subject to actuarial
valuation and are based on actuarial
triangulations which are extrapolated from
historical claims experience. These provisions
include claims which are classified as “incurred
but not reported”, the status of which are
reviewed periodically by management, in
conjunction with appropriately qualified
advisors. Changes in actuarial methodologies
and assumptions, along with the receipt of new
information, could have an impact on the
financial position of the Group through
recognition of additional, or release of,
provisions in future accounting periods.
Taxation – current and
deferred – Notes 12 and 29
Current tax represents the expected tax
payable (or recoverable) on the taxable profit for
the year using tax rates enacted for the period.
Any interest or penalties arising are included
within current tax. Where items are accounted
for outside of profit or loss, the related income
tax is recognised either in other comprehensive
income or directly in equity as appropriate.
Deferred tax is recognised using the liability
method on temporary differences arising at the
balance sheet date between the tax bases of
assets and liabilities and their carrying amounts
in the Consolidated Financial Statements.
However, deferred tax liabilities are not
recognised if they arise from the initial
recognition of goodwill. In addition, deferred
income tax is not accounted for if it arises from
initial recognition of an asset or liability in a
transaction other than a business combination
that, at the time of the transaction, affects
neither accounting nor taxable profit or loss. For
the most part, no provision has been made for
temporary differences applicable to investments
in subsidiaries and joint ventures as the Group
is in a position to control the timing of reversal
of the temporary differences and it is probable
that the temporary differences will not reverse in
the foreseeable future. However, a temporary
difference has been recognised to the extent
that specific assets have been identified for sale
or where there is a specific intention to unwind
the temporary difference in the foreseeable
future. Due to the absence of control in the
context of associates (significant influence only),
deferred tax liabilities are recognised where
appropriate in respect of CRH’s investments in
these entities on the basis that the exercise of
significant influence would not necessarily
prevent earnings being remitted by other
shareholders in the undertaking.
Deferred tax is determined using tax rates (and
laws) that have been enacted or substantively
enacted by the balance sheet date and are
expected to apply when the related deferred
income tax asset is realised or the deferred
income tax liability is settled. Deferred tax
assets and liabilities are not subject to
discounting. Deferred tax assets are recognised
in respect of all deductible temporary
differences, carry-forward of unused tax credits
and unused tax losses to the extent that it is
probable that taxable profits will be available
against which the temporary differences can be
utilised. The carrying amounts of deferred tax
assets are subject to review at each balance
sheet date and are reduced to the extent that
future taxable profits are considered to be
inadequate to allow all or part of any deferred
tax asset to be utilised.
The Group’s income tax charge is based on
reported profit and enacted statutory tax rates,
which reflect various allowances and reliefs and
tax planning opportunities available to the
Group in the multiple tax jurisdictions in which it
operates. The determination of the Group’s
provision for income tax requires certain
judgements and estimates in relation to matters
where the ultimate tax outcome may not be
certain. The recognition or non-recognition of
deferred tax assets as appropriate also requires
judgement as it involves an assessment of the
future recoverability of those assets. In addition,
the Group is subject to tax audits which can
involve complex issues that could require
extended periods to conclude, the resolution of
which is often not within the control of the
Group. Although management believes that the
estimates included in the Consolidated Financial
Statements and its tax return positions are
reasonable, there is no certainty that the final
outcome of these matters will not be different
than that which is reflected in the Group’s
historical income tax provisions and accruals.
Whilst it is possible, the Group does not
currently anticipate that any such differences
could have a material impact on the income tax
provision and profit for the period in which such
a determination is made nor does it expect any
significant impact on its financial position in the
near term. This is based on the Group’s
knowledge and experience, as well as the
profile of the individual components which have
been reflected in the current tax liability, the
status of the tax audits, enquiries and
negotiations in progress at each year-end,
previous claims and any factors specific to the
relevant tax environments.
138 138 
Accounting Policies - continued
Other Significant Accounting
Policies
Basis of consolidation
The Consolidated Financial Statements include
the financial statements of the Parent Company
and all subsidiaries, joint ventures and
associates, drawn up to 31 December each
year. The financial year-ends of the Group’s
subsidiaries, joint ventures and associates are
co-terminous.
Subsidiaries
Subsidiaries are all entities over which the
Group has control. The Group controls an entity
when the Group is exposed to, or has rights to,
variable returns from its involvement with the
entity and has the ability to affect those returns
through its power over the entity. Subsidiaries
are fully consolidated from the date on which
control is transferred to the Group. They are
deconsolidated from the date that control
ceases. A change in the ownership interest of a
subsidiary without a change in control is
accounted for as an equity transaction.
When the Group holds less than the majority of
voting rights, other facts and circumstances
including contractual arrangements that give the
Group power over the investee may result in the
Group controlling the investee. The Group
reassesses whether it controls an investee if,
and when, facts and circumstances indicate
that there are changes to the elements
evidencing control.
Non-controlling interests represent the portion
of the equity of a subsidiary not attributable
either directly or indirectly to the Parent
Company and are presented separately in the
Consolidated Income Statement and within
equity in the Consolidated Balance Sheet,
distinguished from Parent Company
shareholders’ equity. Acquisitions of
non-controlling interests are accounted for as
transactions with equity holders in their capacity
as equity holders and therefore no goodwill is
recognised as a result of such transactions. On
an acquisition by acquisition basis, the Group
recognises any non-controlling interest in the
acquiree either at fair value or at the
non-controlling interest’s proportionate share of
the acquiree’s net assets.
Investments in associates and joint
ventures – Notes 11 and 17
An associate is an entity over which the Group
has significant influence. Significant influence is
the power to participate in the financial and
operating policy decisions of an entity, but is
not control or joint control over those policies.
A joint venture is a type of joint arrangement
whereby the parties that have joint control of
the arrangement have rights to the net assets of
the joint venture. Joint control is the
contractually agreed sharing of control of the
arrangement, which exists only when decisions
about the relevant activities require unanimous
consent of the parties sharing control.
The Group’s investments in its associates and
joint ventures are accounted for using the equity
method from the date significant influence/joint
control is deemed to arise until the date on
which significant influence/joint control ceases
to exist or when the interest becomes classified
as an asset held for sale.
The Consolidated Income Statement reflects
the Group’s share of profit after tax of the
related associates and joint ventures.
Investments in associates and joint ventures are
carried in the Consolidated Balance Sheet at
cost adjusted in respect of post-acquisition
changes in the Group’s share of net assets,
less any impairment in value. Loans advanced
to equity accounted investments that have the
characteristics of equity financing are also
included in the investment held on the
Consolidated Balance Sheet. If necessary,
impairment losses on the carrying amount of an
investment are reported within the Group’s
share of equity accounted investments’ results
in the Consolidated Income Statement. If the
Group’s share of losses exceeds the carrying
amount of an associate or joint venture, the
carrying amount is reduced to nil and
recognition of further losses is discontinued
except to the extent that the Group has
incurred obligations in respect of the associate
or joint venture.
Joint operations
A joint operation is a type of joint arrangement
whereby the parties that have joint control of
the arrangement have rights to the assets and
obligations for the liabilities, relating to the
arrangement.
The Group’s investments in its joint operations
are accounted for by recognising its assets and
its liabilities, including its share of any assets or
liabilities held jointly; its share of the revenue
from the sale of the output by the joint
operation; and its expenses, including its share
of any expenses incurred jointly.
Revenue recognition – Note 1
The Group recognises revenue in the amount of
the price expected to be received for goods
and services supplied at a point in time or over
time, as contractual performance obligations
are fulfilled and control of goods and services
passes to the customer. It excludes trade
discounts and value-added tax/sales tax.
Revenue derived from sale of goods
(sources other than construction
contracts)
The Group manufactures and distributes a
diverse range of building materials and
products. Whilst there are a number of different
activities across the Group; recognition of
revenue from the sale of goods is similar; being
at the point in time when control is deemed to
pass to the customer upon leaving a CRH
premises or upon delivery to a customer
depending on the terms of the sale. Contracts
do not contain multiple performance obligations
(as defined by IFRS 15 Revenue from Contracts
with Customers).
Across the Group, goods are often sold with
discounts or rebates based on cumulative sales
over a period. This variable consideration is only
recognised when it is highly probable that it will
not be subsequently reversed and is recognised
using the most likely amount or expected value
methods, depending on the individual contract
terms. In the application of appropriate revenue
recognition, judgement is exercised by
management in the determination of the
likelihood and quantum of such items based on
experience and historical trading patterns.
The Group is deemed to be a principal to an
arrangement when it controls a promised good
or service before transferring them to a
customer; and accordingly recognises revenue
on a gross basis. Where the Group is
determined to be an agent to a transaction,
based on the principal of control; the net
amount retained after the deduction of any
costs to the principal is recognised as revenue.
Within the non-construction contract
businesses no element of financing is deemed
present as transactions are all made with
average credit terms (usually 90 days),
consistent with market practice.
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Revenue derived from construction
contracts
The Group enters into a number of construction
contracts, to complete large construction
projects. Contracts usually commence and
complete within one financial period and are
generally fixed price.
The Group typically recognises revenue within
its construction contract businesses over time,
as it performs its obligations. Management
believe this best reflects the transfer of control
to the customer by providing a faithful depiction
of primarily the enhancement of a customer
controlled asset or the construction of an asset
with no alternative use. The
percentage-of-completion method is used to
recognise revenue when the outcome of a
contract can be estimated reliably. The
percentage-of-completion is calculated using
an input method and based on the proportion
of contract costs incurred at the balance sheet
date relative to the total estimated costs of the
contract. In all of our construction contract
arrangements the Group has an enforceable
right to payment for work and performance
obligations completed to date.
Some of the Group’s construction contracts
may contain forms of variable consideration that
can either increase or decrease the transaction
price. Variable consideration is estimated based
on the most likely amount or expected value
methods (depending on the contract terms) and
the transaction price is adjusted to the extent it
is probable that a significant reversal of revenue
recognised will not occur.
In some instances a customer can be billed and
revenue recognised in the period subsequent to
the contracted work being completed when
items such as variable consideration are agreed
with the customer.
Recognition of contract assets and
liabilities
In our construction contract businesses,
amounts are billed as work progresses in
accordance with pre-agreed contractual terms.
When a performance obligation is satisfied but a
customer has not yet been billed this is
recognised as a contract asset (unbilled
revenue) and included within Trade and Other
Receivables (note 19). Retentions are also a
common feature of construction contracts and
are recognised as a contract asset within Trade
and Other Receivables when we have a right to
consideration in exchange for the completion of
the contract. Retentions are consistent with
industry norms and the purpose of these is not
to provide a form of financing. Apart from
retentions, the Group does not have any
construction contracts where the period
between the transfer of the promised goods to
the customer and payment by the customer
exceeds one year. As a consequence, the
Group applies the practical expedient in
IFRS 15 and does not adjust any of its
transaction prices for the time value of money.
When consideration is received in advance of
work being performed, or we have billed an
amount to a customer that is in excess of
revenue recognised on the contract; this is
recognised as a contract liability within Trade
and Other Payables (note 20); and the revenue
is generally recognised in the subsequent
period when the right to recognise revenue has
been determined. As a result, advance
payments received for construction contract
arrangements are not considered a significant
form of financing.
Cumulative costs incurred, net of amounts
transferred to cost of sales, after deducting
onerous provisions, provisions for contingencies
and payments on account not matched with
revenue, are included as construction contract
balances in inventories (note 18). Cost includes
all expenditure directly related to specific
projects and an allocation of fixed and variable
overheads incurred in the Group’s contract
activities based on normal operating capacity.
The Group’s contracts generally are for a
duration of less than one year and therefore the
Group does not capitalise incremental contract
costs; instead expensing as incurred, as
permitted by the practical expedient under
IFRS 15.
Onerous contracts and warranties
When a contract is identified as being onerous
(i.e. its unavoidable cost exceeds the economic
benefit of the contract), a provision is created;
being the lower of costs to complete the
contract and the cost of exiting the contract.
The Group recognises a provision for
assurance-type (standard) warranties offered
across the Group under its terms and
conditions in accordance with IAS 37. The
Group provides assurance-type warranties for
general repairs and does not typically provide
service-type (extended) warranties.
Segment reporting – Note 2
Operating segments are reported in a manner
consistent with the internal organisational and
management structure and the internal
reporting information provided to the Chief
Operating Decision Maker who is responsible
for allocating resources and assessing
performance of the operating segments.
Assets and liabilities held for
sale – Note 3
Non-current assets and disposal groups
classified as held for sale are measured at the
lower of carrying amount and fair value less
costs to sell.
Non-current assets and disposal groups are
classified as held for sale if their carrying
amounts will be recovered through a sale
transaction rather than through continuing use.
This condition is regarded as met only when the
sale is highly probable and the asset or disposal
group is available for immediate sale in its
present condition subject only to terms that are
usual and customary for sales of such assets.
Management must be committed to the sale,
which should be expected to qualify for
recognition as a completed sale within
12 months from the date of classification as
held for sale.
Property, plant and equipment and intangible
assets are not depreciated or amortised once
classified as held for sale. The Group ceases to
use the equity method of accounting from the
date on which an interest in a joint venture or
associate becomes held for sale. Non-current
assets classified as held for sale and liabilities
directly associated with those assets are
presented separately as current items in the
Consolidated Balance Sheet.
Discontinued operations –
Note 3
Discontinued operations are reported when a
component of the Group, that represents a
separate major line of business or geographical
area of operation, has been disposed of, or
when a sale is highly probable; and its
operations and cash flows can be clearly
distinguished, operationally and for financial
reporting purposes, from the rest of the Group
and is classified as held for sale or has been
disposed of. The Group classifies a non-current
asset or disposal group as held for disposal if its
carrying value will be recovered through a sales
transaction or distribution to shareholders rather
than continuing use.
In the Consolidated Income Statement,
discontinued operations are excluded from the
results of continuing operations and are
presented as a single amount as profit or loss
after tax from discontinued operations.
Corresponding notes to the Consolidated
Income Statement exclude amounts for
discontinued operations, unless stated
otherwise.
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Accounting Policies - continued
Share-based payments –
Note 9
The Group operates a number of equity-settled
share-based payment plans. Its policy in
relation to the granting of share options and
awards under these plans, together with the
nature of the underlying market and non-market
performance and other vesting conditions, are
addressed in the Directors’ Remuneration
Report on page 74. The Group has no material
exposure in respect of cash-settled share-
based payment transactions and share-based
payment transactions with cash alternatives.
Awards under the Performance
Share Plans
25% of the awards under the 2014
Performance Share Plan are subject to a TSR
(and hence market-based) vesting condition
measured against a tailored sector peer group
(2018 and 2017: 50%; with 25% being
measured against a tailored sector peer group
and 25% against the FTSE All-World
Construction & Materials Index). Accordingly,
the fair value assigned to the related equity
instruments at the grant date is derived using a
Monte Carlo simulation technique to model the
combination of market-based and non-market-
based performance conditions in the plan; and
is adjusted to reflect the anticipated likelihood
as at the grant date of achieving the vesting
condition. Awards are treated as vesting
irrespective of whether or not the market
condition is satisfied, provided that all other
performance and/or service conditions are
satisfied.
In 2019 a new RONA metric of 25% was
introduced for awards made in 2019. The
remaining 50% of awards granted under the
2014 Performance Share Plan are subject to a
cumulative cash flow target (non-market-based)
vesting condition. The fair value of the awards is
calculated as the market price of the shares at
the date of grant. No expense is recognised for
awards that do not ultimately vest. At the
balance sheet date the estimate of the level of
vesting is reviewed and any adjustment
necessary is recognised in the Consolidated
Income Statement.
If awards which vest under the 2014
Performance Share Plan are allotted to an
Employee Benefit Trust, an increase in nominal
share capital and share premium are
recognised accordingly on allotment.
Savings-related Share Option
Scheme
The fair values assigned to options under the
Savings-related Share Option Scheme are
derived in accordance with the trinomial
valuation methodology on the basis that the
services to be rendered by employees as
consideration for the granting of share options
will be received over the vesting period, which is
assessed as at the grant date.
The cost is recognised, together with a
corresponding increase in equity, over the
period in which the performance and/or service
conditions are fulfilled. The cumulative expense
recognised at each reporting date until the
vesting date reflects the extent to which the
vesting period has expired and the Group’s
best estimate of the number of equity
instruments that will ultimately vest. The
Consolidated Income Statement expense/credit
for a period represents the movement in
cumulative expense recognised at the
beginning and end of that period. The
cumulative charge to the Consolidated Income
Statement is reversed only where an employee
in receipt of share options leaves service prior
to completion of the expected vesting period
and those options forfeit in consequence.
Where an award is cancelled, it is treated as if it
is vested on the date of cancellation, and any
expense not yet recognised for the award is
recognised immediately. This includes any
award where non-vesting conditions within the
control of either the Company or the employee
are not met. All cancellations of awards are
treated equally.
The proceeds received net of any directly
attributable transaction costs are credited to
share capital (nominal value) and share
premium when the options are exercised.
The dilutive effect of outstanding options is
reflected as additional share dilution in the
determination of diluted earnings per share.
Property, plant and
equipment – Note 15
The carrying value of property, plant and
equipment (excluding leased right-of-use
assets) of €15,954 million at 31 December
2019 represents 43% of total assets at that
date. Property, plant and equipment are stated
at cost less any accumulated depreciation and
any accumulated impairments except for certain
items that had been revalued to fair value prior
to the date of transition to IFRS (1 January
2004).
Repair and maintenance expenditure is included
in an asset’s carrying amount or recognised as
a separate asset, as appropriate, only when it is
probable that future economic benefits
associated with the item will flow to the Group
and the cost of the item can be measured
reliably. All other repair and maintenance
expenditure is charged to the Consolidated
Income Statement during the financial period in
which it is incurred.
Borrowing costs incurred in the construction of
major assets which take a substantial period of
time to complete are capitalised in the financial
period in which they are incurred.
In the application of the Group’s accounting
policy, judgement is exercised by management
in the determination of residual values and
useful lives. Depreciation and depletion is
calculated to write off the book value of each
item of property, plant and equipment over its
useful economic life on a straight-line basis at
the following rates:
Land and buildings
The book value of mineral-bearing land, less an
estimate of its residual value, is depleted over
the period of the mineral extraction in the
proportion which production for the year bears
to the latest estimates of proven and probable
mineral reserves. Land, other than mineral-
bearing land, is not depreciated. In general,
buildings are depreciated at 2.5% per annum
(p.a.).
Plant and machinery
These are depreciated at rates ranging from
3.3% p.a. to 20% p.a. depending on the type of
asset. Plant and machinery includes transport
which is, on average, depreciated at 20% p.a.
Depreciation methods, useful lives and residual
values are reviewed at each financial year-end.
Changes in the expected useful life or the
expected pattern of consumption of future
economic benefits embodied in the asset are
accounted for by changing the depreciation
period or method as appropriate on a
prospective basis.
Impairment of property, plant and
equipment
The carrying values of items of property, plant
and equipment are reviewed for indicators of
impairment at each reporting date and are
subject to impairment testing when events or
changes in circumstances indicate that the
carrying values may not be recoverable.
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FINANCIALS
 141
Property, plant and equipment assets are
reviewed for potential impairment by applying a
series of external and internal indicators specific
to the assets under consideration; these
indicators encompass macroeconomic issues
including the inherent cyclicality of the building
materials sector, actual obsolescence or
physical damage, a deterioration in forecast
performance in the internal reporting cycle and
restructuring and rationalisation programmes.
Similar to the process for goodwill, where the
carrying value exceeds the estimated
recoverable amount (being the greater of fair
value less costs of disposal and value-in-use),
an impairment loss is recognised by writing
down the assets to their recoverable amount. In
assessing value-in-use, the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset for
which the future cash flow estimates have not
been adjusted. The estimates of future cash
flows exclude cash inflows or outflows
attributable to financing activities and income
tax. For an asset that does not generate largely
independent cash inflows, the recoverable
amount is determined by reference to the cash-
generating unit to which the asset belongs.
Business combinations –
Note 32
The Group applies the acquisition method in
accounting for business combinations. The cost
of an acquisition is measured as the aggregate
of the consideration transferred (excluding
amounts relating to the settlement of
pre-existing relationships), the amount of any
non-controlling interest in the acquiree and, in a
business combination achieved in stages, the
acquisition-date fair value of the acquirer’s
previously-held equity interest in the acquiree.
Transaction costs that the Group incurs in
connection with a business combination are
expensed as incurred.
To the extent that settlement of all or any part of
consideration for a business combination is
deferred, the fair value of the deferred
component is determined through discounting
the amounts payable to their present value at
the date of exchange. The discount component
is unwound as an interest charge in the
Consolidated Income Statement over the life of
the obligation. Any contingent consideration is
recognised at fair value at the acquisition date
and included in the cost of the acquisition. The
fair value of contingent consideration at
acquisition date is arrived at through
discounting the expected payment (based on
scenario modelling) to present value. In general,
in order for contingent consideration to become
payable, pre-defined profit and/or profit/net
asset ratios must be exceeded. Subsequent
changes to the fair value of the contingent
consideration will be recognised in profit or loss
unless the contingent consideration is classified
as equity, in which case it is not remeasured
and settlement is accounted for within equity.
The assets and liabilities arising on business
combination activity are measured at their
acquisition-date fair values. Contingent liabilities
assumed in business combination activity are
recognised as of the acquisition date, where
such contingent liabilities are present
obligations arising from past events and their
fair value can be measured reliably. In the case
of a business combination achieved in stages,
the acquisition-date fair value of the acquirer’s
previously-held equity interest in the acquiree is
remeasured to fair value as at the acquisition
date through profit or loss. When the initial
accounting for a business combination is
determined provisionally, any adjustments to
the provisional values allocated to the
consideration, identifiable assets or liabilities
(and contingent liabilities, if relevant) are made
within the measurement period, a period of no
more than one year from the acquisition date.
Goodwill – Note 16
Goodwill arising on a business combination is
initially measured at cost, being the excess of
the cost of an acquisition over the fair value of
the net identifiable assets and liabilities
assumed at the date of acquisition and relates
to the future economic benefits arising from
assets which are not capable of being
individually identified and separately recognised.
Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses. If the cost of the acquisition
is lower than the fair value of the net assets of
the subsidiary acquired, the identification and
measurement of the related assets and liabilities
and contingent liabilities are revisited and the
cost is reassessed with any remaining balance
recognised immediately in the Consolidated
Income Statement.
The carrying amount of goodwill in respect of
associates and joint ventures is included in
investments accounted for using the equity
method (i.e. within financial assets) in the
Consolidated Balance Sheet.
Where a subsidiary is disposed of or terminated
through closure, the carrying value of any
goodwill of that subsidiary is included in the
determination of the net profit or loss on
disposal/termination.
Intangible assets (other than
goodwill) arising on business
combinations – Note 16
An intangible asset is capitalised separately
from goodwill as part of a business combination
at cost (fair value at date of acquisition).
Subsequent to initial recognition, intangible
assets are carried at cost less any accumulated
amortisation and any accumulated impairment
losses. The carrying values of definite-lived
intangible assets (the Group does not currently
have any indefinite-lived intangible assets other
than goodwill) are reviewed for indicators of
impairment at each reporting date and are
subject to impairment testing when events or
changes in circumstances indicate that the
carrying values may not be recoverable.
Intangible assets are amortised on a straight-
line basis. In general, definite-lived intangible
assets are amortised over periods ranging from
one to ten years, depending on the nature of
the intangible asset.
Amortisation periods, useful lives, expected
patterns of consumption and residual values are
reviewed at each financial year-end. Changes in
the expected useful life or the expected pattern
of consumption of future economic benefits
embodied in the asset are accounted for by
changing the amortisation period or method as
appropriate on a prospective basis.
Leases – Notes 15 and 22
The Group enters into leases for a range of
assets, principally relating to property. These
property leases have varying terms, renewal
rights and escalation clauses, including periodic
rent reviews linked with a consumer price index
and/or other indices. The Group also leases
plant and machinery, vehicles and equipment.
The terms and conditions of these leases do
not impose significant financial restrictions on
the Group.
A contract contains a lease if it is enforceable
and conveys the right to control the use of a
specified asset for a period of time in exchange
for consideration, which is assessed at
inception. A right-of-use asset and lease liability
are recognised at the commencement date for
contracts containing a lease, with the exception
of leases with a term of 12 months or less
which do not contain a purchase option, leases
where the underlying asset is of low value and
leases with associated payments that vary
directly in line with usage or sales. The
commencement date is the date at which the
asset is made available for use by the Group.
142 142 
Accounting Policies - continued
The lease liability is initially measured at the
present value of the future minimum lease
payments, discounted using the incremental
borrowing rate or the interest rate implicit in the
lease, if this is readily determinable, over the
remaining lease term. Lease payments include
fixed payments less any lease incentives
receivable, variable payments that are
dependent on a rate or index known at the
commencement date, amounts expected to be
paid under residual value guarantees and any
payments for an optional renewal period and
purchase and termination option payments, if
the Group is reasonably certain to exercise
those options. The lease term is the
non-cancellable period of the lease adjusted for
any renewal or termination options which are
reasonably certain to be exercised. Variable
lease payments that do not depend on an index
or a rate and rentals relating to low value or
short-term leases are recognised as an expense
in the period in which they are incurred.
Management applies judgement in determining
whether it is reasonably certain that a renewal,
termination or purchase option will be
exercised.
Incremental borrowing rates are calculated
using a portfolio approach, based on the risk
profile of the entity holding the lease and the
term and currency of the lease.
After initial recognition, the lease liability is
measured at amortised cost using the effective
interest method. It is remeasured when there is
a change in future minimum lease payments or
when the Group changes its assessment of
whether it is reasonably certain to exercise an
option within the contract. A corresponding
adjustment is made to the carrying amount of
the right-of-use asset.
The right-of-use asset is initially measured at
cost, which comprises the lease liability
adjusted for any payments made at or before
the commencement date, initial direct costs
incurred, lease incentives received and an
estimate of the cost to dismantle or restore the
underlying asset or the site on which it is
located at the end of the lease term. The
right-of-use asset is depreciated over the lease
term or, where a purchase option is reasonably
certain to be exercised, over the useful
economic life of the asset in line with
depreciation rates for owned property, plant
and equipment. The right-of-use asset is tested
periodically for impairment if an impairment
indicator is considered to exist.
Non-lease components in a contract such as
maintenance and other service charges are
separated from minimum lease payments and
are expensed as incurred.
Regarding the comparatives, leases where the
lessor retains substantially all the risks and
rewards of ownership are classified as
operating leases. Operating lease rentals are
charged to the Consolidated Income Statement
on a straight-line basis over the lease term.
Inventories – Note 18
Inventories are stated at the lower of cost and
net realisable value. Cost is based on the
first-in/first-out principle (and weighted average,
where appropriate) and includes all expenditure
incurred in acquiring the inventories and
bringing them to their present location and
condition. Raw materials are valued on the
basis of purchase cost on a first-in/first-out
basis. In the case of finished goods and
work-in-progress, cost includes direct materials,
direct labour and attributable overheads based
on normal operating capacity and excludes
borrowing costs.
Net realisable value is the estimated proceeds
of sale less all further costs to completion, and
less all costs to be incurred in marketing, selling
and distribution. Estimates of net realisable
value are based on the most reliable evidence
available at the time the estimates are made,
taking into consideration fluctuations of price or
cost directly relating to events occurring after
the end of the period, the likelihood of short-
term changes in buyer preferences, product
obsolescence or perishability (all of which are
generally low given the nature of the Group’s
products) and the purpose for which the
inventory is held. Materials and other supplies
held for use in the production of inventories are
not written down below cost if the finished
goods, in which they will be incorporated, are
expected to be sold at or above cost.
Cash and cash equivalents –
Note 25
Cash and cash equivalents comprise cash
balances held for the purpose of meeting short-
term cash commitments and investments which
are readily convertible to a known amount of
cash and are subject to an insignificant risk of
change in value. Bank overdrafts are included
within current interest-bearing loans and
borrowings in the Consolidated Balance Sheet.
Where the overdrafts are repayable on demand
and form an integral part of cash management,
they are netted against cash and cash
equivalents for the purposes of the
Consolidated Statement of Cash Flows.
Interest-bearing loans and
borrowings – Note 26
All loans and borrowings are initially recorded at
the fair value of the consideration received net
of directly attributable transaction costs.
Subsequent to initial recognition, current and
non-current interest-bearing loans and
borrowings are, in general, measured at
amortised cost employing the effective interest
methodology. Fixed rate term loans, which have
been hedged to floating rates (using interest
rate swaps), are measured at amortised cost
adjusted for changes in value attributable to the
hedged risks arising from changes in underlying
market interest rates. The computation of
amortised cost includes any issue costs and
any discount or premium materialising on
settlement.
Gains and losses are recognised in the
Consolidated Income Statement through
amortisation on the basis of the period of the
loans and borrowings.
Borrowing costs arising on financial instruments
are recognised as an expense in the period in
which they are incurred (unless capitalised as
part of the cost of property, plant and
equipment).
Derivative financial
instruments and hedging
practices – Note 27
In order to manage interest rate, foreign
currency and commodity risks and to realise the
desired currency profile of borrowings, the
Group employs derivative financial instruments
(principally interest rate swaps, currency swaps
and forward foreign exchange contracts).
Derivative financial instruments are recognised
initially at fair value on the date on which a
derivative contract is entered into and are
subsequently remeasured at fair value. The
carrying value of derivatives is fair value based
on discounted future cash flows and adjusted
for counterparty risk. Future floating rate cash
flows are estimated based on future interest
rates (from observable yield curves at the end of
the reporting period). Fixed and floating rate
cash flows are discounted at future interest
rates and translated at period-end foreign
exchange rates. Short dated forward foreign
exchange contracts are used to hedge the spot
price risk on currency exposures. The forward
price elements to these contracts are immaterial
and accounted for in the Consolidated Income
Statement.
At the inception of a derivative transaction, the
Group documents the relationship between the
hedged item and the hedging instrument
together with its risk management objective and
the strategy underlying the proposed
transaction. The Group also documents its
assessment, both at the inception of the
hedging relationship and subsequently on an
ongoing basis, of the effectiveness of the
hedging instrument in offsetting movements in
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FINANCIALS
 143
the fair values or cash flows of the hedged
items. Where derivatives do not fulfil the criteria
for hedge accounting, changes in fair values are
reported in the Consolidated Income Statement
and Consolidated Balance Sheet.
Fair value and cash flow hedges
The Group uses fair value hedges and cash
flow hedges in its treasury activities. For the
purposes of hedge accounting, hedges are
classified either as fair value hedges (which
entail hedging the exposure to movements in
the fair value of a recognised asset or liability or
an unrecognised firm commitment that could
affect profit or loss) or cash flow hedges (which
hedge exposure to fluctuations in future cash
flows derived from a particular risk associated
with a recognised asset or liability, or a highly
probable forecast transaction that could affect
profit or loss).
Where the conditions for hedge accounting are
satisfied and the hedging instrument concerned
is classified as a fair value hedge, any gain or
loss stemming from the remeasurement of the
hedging instrument to fair value is reported in
the Consolidated Income Statement. In
addition, any gain or loss on the hedged item
which is attributable to the hedged risk is
adjusted against the carrying amount of the
hedged item and reflected in the Consolidated
Income Statement. Where the adjustment is to
the carrying amount of a hedged interest-
bearing financial instrument, the adjustment is
amortised to the Consolidated Income
Statement with the objective of achieving full
amortisation by maturity.
Where a derivative financial instrument is
designated as a hedge of the variability in cash
flows of a recognised asset or liability or a highly
probable forecast transaction that could affect
profit or loss, the effective part of any gain or
loss on the derivative financial instrument is
recognised as other comprehensive income,
net of the income tax effect, with the ineffective
portion being reported in the Consolidated
Income Statement. The associated gains or
losses that had previously been recognised as
other comprehensive income are transferred to
the Consolidated Income Statement
contemporaneously with the materialisation of
the hedged transaction. Any gain or loss arising
in respect of changes in the time value of the
derivative financial instrument is excluded from
the measurement of hedge effectiveness and is
recognised immediately in the Consolidated
Income Statement.
Hedge accounting is discontinued when the
hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies
for hedge accounting. At that point in time, any
cumulative gain or loss on the hedging
instrument recognised as other comprehensive
income remains there until the forecast
transaction occurs. If a hedged transaction is
no longer anticipated to occur, the net
cumulative gain or loss previously recognised as
other comprehensive income is transferred to
the Consolidated Income Statement in the
period.
Net investment hedges
Where foreign currency borrowings provide a
hedge against a net investment in a foreign
operation, and the hedge is deemed to be
effective, foreign exchange differences are
taken directly to a foreign currency translation
reserve. The ineffective portion of any gain or
loss on the hedging instrument is recognised
immediately in the Consolidated Income
Statement. Cumulative gains and losses remain
in equity until disposal of the net investment in
the foreign operation at which point the related
differences are transferred to the Consolidated
Income Statement as part of the overall gain or
loss on sale.
Share capital and dividends –
Notes 31 and 13
Treasury Shares and own shares
Ordinary Shares acquired by the Parent
Company or purchased by the Employee
Benefit Trust on behalf of the Parent Company
under the terms of the Performance Share
Plans and the Restricted Share Plan are
deducted from equity and presented on the
face of the Consolidated Balance Sheet. No
gain or loss is recognised in profit or loss on the
purchase, sale, issue or cancellation of the
Parent Company’s Ordinary Shares.
Dividends
Dividends on Ordinary Shares are recognised
as a liability in the Consolidated Financial
Statements in the period in which they are
declared by the Parent Company.
Foreign currency translation
Items included in the financial statements of
each of the Group’s entities are measured using
the currency of the primary economic
environment in which the entity operates (the
functional currency). The Consolidated Financial
Statements are presented in euro, which is the
presentation currency of the Group and the
functional currency of the Parent Company.
Transactions in foreign currencies are recorded
at the rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of
exchange ruling at the balance sheet date. All
currency translation differences are taken to the
Consolidated Income Statement with the
exception of all monetary items that provide an
effective hedge for a net investment in a foreign
operation. These are recognised in other
comprehensive income until the disposal of the
net investment, at which time they are
recognised in the Consolidated Income
Statement.
Results and cash flows of subsidiaries, joint
ventures and associates with non-euro
functional currencies have been translated into
euro at average exchange rates for the year,
and the related balance sheets have been
translated at the rates of exchange ruling at the
balance sheet date. Adjustments arising on
translation of the results and net assets of
non-euro subsidiaries, joint ventures, associates
and joint operations are recognised in a
separate translation reserve within equity, net of
differences on related currency borrowings. All
other translation differences are taken to the
Consolidated Income Statement. Goodwill and
fair value adjustments arising on acquisition of a
foreign operation are regarded as assets and
liabilities of the foreign operation and are
translated accordingly.
144 144 
Accounting Policies - continued
The principal exchange rates used for the translation of results, cash flows and balance sheets into euro were as follows:
Average Year-end
euro 1 = 2019 2018 2017 2019 2018
Brazilian Real 4.4134 4.3085 3.6054 4.5157 4.4440
Canadian Dollar 1.4855 1.5294 1.4647 1.4598 1.5605
Chinese Renminbi 7.7355 7.8081 7.6290 7.8205 7.8751
Hungarian Forint 325.2967 318.8897 309.1933 330.5300 320.9800
Indian Rupee 78.8361 80.7332 73.5324 80.1870 79.7298
Philippine Peso 57.9851 62.2101 56.9734 56.9000 60.1130
Polish Zloty 4.2976 4.2615 4.2570 4.2568 4.3014
Pound Sterling 0.8778 0.8847 0.8767 0.8508 0.8945
Romanian Leu 4.7453 4.6540 4.5688 4.7830 4.6635
Serbian Dinar 117.8377 118.2302 121.3232 117.8237 118.3157
Swiss Franc 1.1124 1.1550 1.1117 1.0854 1.1269
Ukrainian Hryvnia 28.8881 32.0987 30.0341 26.7377 31.6900
US Dollar 1.1195 1.1810 1.1297 1.1234 1.1450
145
FINANCIALS
 145
Notes on Consolidated Financial Statements
1. Revenue
CRH is a leading global diversified building
materials group which manufactures and
supplies a diverse range of superior building
materials and products for use in the
construction and maintenance of infrastructure,
housing and commercial products. Our
materials and products are used extensively, in
construction projects of all sizes, all across the
world.
As discussed in more detail in note 2, the Group
has three operating segments (as identified
under IFRS 8 Operating Segments) from
1 January 2019; generating revenue through the
following activities:
Americas Materials businesses are
predominantly engaged in the production and
sale of aggregates, asphalt, cement and
readymixed concrete products and provide
asphalt paving services in the US and Canada.
This segment also includes the Group’s cement
operations in Brazil.
Europe Materials businesses are predominantly
engaged in the manufacture and supply of
cement, lime, aggregates, readymixed and
precast concrete and asphalt products. The
segment comprises businesses operating in
21 countries across Western, Central and
Eastern Europe as well as the Philippines in
Asia.
Our Building Products segment includes
businesses operating across a portfolio of
building product related platforms including
infrastructure, construction accessories,
Building Envelope, architectural products and,
up to their disposal in 2019, perimeter
protection and shutters & awnings. This
segment also included our Do-It-Yourself (DIY)
businesses in Belgium and the Netherlands
which were disposed of in 2018. The segment
comprises businesses operating in 19 countries
primarily in the US, Canada and Western
Europe.
The divestment of our Europe Distribution
business (excluding DIY Benelux), formerly part
of the Building Products segment, was
completed in 2019. As a result, it has been
classified as discontinued operations in the
current year; its performance in this year and
comparative years is therefore part of
discontinued operations. As referenced above,
DIY Benelux was separately divested in 2018
and therefore its performance up to the date of
divestment is shown as part of continuing
operations in 2018 and 2017.
As a result of the more simplified operating
structure implemented on 1 January 2019, the
classification of reported revenue into the
principal activities and products below has been
amended to better reflect the basis on which
management now reviews its businesses.
Accordingly, the revenue formerly
disaggregated across perimeter protection,
shutters & awnings, network access products,
architectural and precast products has now
been reorganised and presented in two new
categories: architectural products and
infrastructure products. Comparative amounts
for 2018 have been restated where necessary
to reflect the new format for disaggregation of
revenue.
A. Disaggregated revenue
In the following tables, revenue is disaggregated
by primary geographic market and by principal
activities and products. Due to the diversified
nature of the Group, the basis on which
management reviews its businesses varies
across the Group. Geography is the primary
basis for the Americas Materials and Europe
Materials businesses; while activities and
products are used for the Building Products
businesses.
Revenue from external customers (as defined in
IFRS 8) attributable to the country of domicile
and all foreign countries of operation greater
than 10% are included below. Further operating
segment disclosures are set out in note 2.
Year ended 31 December
Americas
Materials
2019
Europe
Materials
2019
Building
Products
2019
Total
2019
Americas
Materials
2018
Europe
Materials
2018
Building
Products
2018
Total
2018
Total
2017
Primary geographic markets €m €m €m €m €m €m €m €m €m
Continuing operations
Republic of Ireland (country of domicile) - 585 - 585 - 468 - 468 435
United Kingdom - 3,107 217 3,324 - 3,045 223 3,268 3,023
Rest of Europe (i) - 4,328 1,038 5,366 - 4,098 1,469 5,567 5,370
United States 9,207 - 4,543 13,750 7,896 - 4,065 11,961 10,844
Rest of World (ii) 1,178 474 452 2,104 1,055 431 491 1,977 1,981
Total Group from continuing operations 10,385 8,494 6,250 25,129 8,951 8,042 6,248 23,241 21,653
Discontinued operations
United States - Americas Distribution - 7 2,343
Rest of Europe (i) - Europe Distribution 3,177 3,549 3,567
Total Group 28,306 26,797 27,563
(i) The Rest of Europe principally includes Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Luxembourg, Netherlands,
Poland, Romania, Serbia, Slovakia, Spain, Sweden, Switzerland and Ukraine.
(ii) The Rest of World principally includes Australia, Brazil, Canada and the Philippines.
146 146 
1. Revenue - continued
Year ended 31 December
Americas
Materials (iii)
2019
Europe
Materials (iii)
2019
Building
Products
2019
Total
2019
Americas
Materials (iii)
2018
Europe
Materials (iii)
2018
Building
Products
2018
Total
2018
Principal activities and products €m €m €m €m €m €m €m €m
Continuing operations
Cement, lime and cement products 1,222 2,646 - 3,868 810 2,506 - 3,316
Aggregates, asphalt and readymixed products 5,046 3,061 - 8,107 4,330 2,919 - 7,249
Construction contract activities* 4,117 1,609 165 5,891 3,811 1,542 240 5,593
Architectural products - 955 2,664 3,619 - 903 2,597 3,500
Infrastructure products - 223 1,239 1,462 - 172 1,080 1,252
Construction accessories - - 590 590 - - 593 593
Architectural glass and glazing systems and
wholesale hardware distribution - - 1,592 1,592 - - 1,431 1,431
DIY - - - - - - 307 307
Total Group from continuing operations 10,385 8,494 6,250 25,129 8,951 8,042 6,248 23,241
Discontinued operations
Exterior and interior products - Americas
Distribution - 7
General Builders Merchants, DIY Germany and
Sanitary, Heating & Plumbing - Europe Distribution 3,177 3,549
Total Group 28,306 26,797
(iii) Americas Materials and Europe Materials both operate vertically integrated businesses, which are founded in resource-backed cement and aggregates
assets and which support the manufacture and supply of aggregates, asphalt, cement, readymixed and precast concrete and landscaping products.
Accordingly, for the purpose of disaggregation of revenue we have included certain products together, as this is how management review and evaluate this
business line.
There are no material dependencies or
concentrations of individual customers which
would warrant disclosure under IFRS 8. The
individual entities within the Group have a large
number of customers spread across various
activities, end-uses and geographies.
Revenue derived through the supply of services
and intersegment revenue are not material to
the Group. The transfer pricing policy
implemented by the Group between operating
segments and across its constituent entities is
described in note 34. In addition, due to the
nature of building materials, which have a low
value-to-weight ratio, the Group’s revenue
streams include a low level of cross-border
transactions.
B. Contract balances
For information on the Group’s construction
contract balances refer to notes 18, 19 and 20.
Movements in our net contract balances are not
considered significant and are primarily driven
by the timing of billing work-in-progress within
our construction contract businesses.
C. Unsatisfied long-term construction
contracts and other performance obligations
Revenue yet to be recognised from fixed-price
long-term construction contracts, primarily
within our Americas Materials and Europe
Materials businesses, amounted to
€1,867 million at 31 December 2019
(2018: €1,848 million). The Group has applied
the practical expedient of IFRS 15 Revenue
from Contracts with Customers whereby
revenue yet to be recognised on contracts that
had an original expected duration of less than
one year is not disclosed. The majority of open
contracts at 31 December 2019 will close and
revenue will be recognised within 12 months of
the balance sheet date.
* Revenue principally recognised over time. Construction contracts are generally completed within the same financial reporting year.
147
FINANCIALS
 147
2. Segment Information
Effective 1 January 2019 the Group
implemented a simplified new structure
reducing its operating segments from six to
three: Americas Materials, Europe Materials
(formerly Europe Heavyside and Asia), and a
new Building Products segment. The Building
Products segment brings together our former
Americas Products, Europe Lightside and, up to
its disposal, Europe Distribution segments.
Comparative segment amounts for 2018 and
2017 have been restated where necessary to
reflect the new format for segmentation. The
segments reflect the Group’s organisational
structure and the nature of the financial
information reported to and assessed by the
Group Chief Executive and Finance Director,
who are together determined to fulfil the role of
Chief Operating Decision Maker (as defined in
IFRS 8). No operating segments have been
aggregated to form these reportable segments.
The principal factors employed in the
identification of the three segments reflected in
this note include:
• the Group’s organisational structure in 2019
(during 2019 each divisional President
fulfilled the role of “segment manager” as
outlined in IFRS 8);
• the nature of the reporting lines to the Chief
Operating Decision Maker (as defined in
IFRS 8);
• the structure of internal reporting
documentation such as management
accounts and budgets; and
• the degree of homogeneity of products and
services within each of the segments from
which revenue is derived
The Chief Operating Decision Maker monitors
the operating results of segments separately in
order to allocate resources between segments
and to assess performance. Segment
performance is predominantly evaluated based
on operating profit. As performance is also
evaluated using operating profit before
depreciation, amortisation and impairment
(EBITDA (as defined)*), supplemental
information based on EBITDA (as defined)* is
provided overleaf. Given that net finance costs
and income tax are managed on a centralised
basis, these items are not allocated between
operating segments for the purposes of the
information presented to the Chief Operating
Decision Maker and are accordingly omitted
from the detailed segmental analysis overleaf.
There are no asymmetrical allocations to
reporting segments which would require
disclosure.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
148 148 
2. Segment Information - continued
A. Operating segments disclosures - Consolidated Income Statement data
Year ended 31 December
Revenue
Group EBITDA
(as defined)*
Depreciation,
amortisation and
impairment
Group
operating profit
Continuing operations
Americas Materials 10,385 8,951 7,970 1,960 1,493 1,270 689 484 412 1,271 1,009 858
Europe Materials 8,494 8,042 7,338 1,079 936 891 524 449 398 555 487 493
Building Products 6,250 6,248 6,345 961 787 769 293 212 193 668 575 576
Total Group from continuing operations 25,129 23,241 21,653 4,000 3,216 2,930 1,506 1,145 1,003 2,494 2,071 1,927
Discontinued operations
Americas Distribution - 7 2,343 - (5) 164 - - 21 - (5) 143
Europe Distribution 3,177 3,549 3,567 200 149 216 99 43 48 101 106 168
Total Group 28,306 26,797 27,563 4,200 3,360 3,310 1,605 1,188 1,072 2,595 2,172 2,238
Group operating profit from continuing operations 2,494 2,071 1,927
(Loss)/profit on disposals (i) (1) (27) 54
Finance costs less income (326) (305) (289)
Other financial expense (112) (46) (59)
Share of equity accounted investments’ profit (ii) 60 48 52
Profit before tax from continuing operations 2,115 1,741 1,685
(i) (Loss)/profit on
disposals
(note 6)
(ii) Share of equity
accounted investments’
profit (note 11)
Americas Materials 2 44 29 38 25 32
Europe Materials (131) 7 19 13 18 18
Building Products 128 (78) 6 9 5 2
Total Group from continuing operations (1) (27) 54 60 48 52
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
149
FINANCIALS
 149
B. Operating segments disclosures - Consolidated Balance Sheet data
As at 31 December
Total assets Total liabilities
Americas Materials 14,608 13,798 2,642 2,063
Europe Materials 11,669 10,509 3,441 2,787
Building Products 6,407 7,203 1,875 1,742
Total Group 32,684 31,510 7,958 6,592
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method 690 1,163
Other financial assets 12 23
Derivative financial instruments (current and non-current) 82 45
Income tax assets (current and deferred) 87 86
Cash and cash equivalents 3,755 2,346
Total assets as reported in the Consolidated Balance Sheet 37,310 35,173
Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:
Interest-bearing loans and borrowings (current and non-current) 9,014 9,316
Derivative financial instruments (current and non-current) 17 59
Income tax liabilities (current and deferred) 2,841 2,652
Total liabilities as reported in the Consolidated Balance Sheet 19,830 18,619
C. Operating segments disclosures - other items
Additions to non-current assets
Year ended 31 December
Property, plant and
equipment (note 15, 22)
Financial assets
(note 17) Total Group
Continuing operations
Americas Materials (i) 671 429 375 27 2 5 698 431 380
Europe Materials 491 453 404 1 - - 492 453 404
Building Products 315 209 207 - - 6 315 209 213
Total Group from continuing operations 1,477 1,091 986 28 2 11 1,505 1,093 997
Discontinued operations
Americas Distribution - - 29 - - - - - 29
Europe Distribution - 30 29 1 - - 1 30 29
Total Group 1,477 1,121 1,044 29 2 11 1,506 1,123 1,055
(i) Additions to property, plant and equipment include €86 million relating to leased mineral reserves which fall outside the scope of IFRS 16.
150 150 
2. Segment Information - continued
D. Information about geographical areas
The non-current assets (as defined in IFRS 8) attributable to the country of domicile and all foreign countries of operation, for which revenue exceeds 10%
of total external Group revenue, are set out below.
As at 31 December
Non-current assets*
2019 2018
€m €m
Republic of Ireland (country of domicile) 506 495
United Kingdom 2,772 2,461
United States 14,259 12,925
Other 9,011 9,476
Total Group 26,548 25,357
3. Assets Held for Sale and Discontinued Operations
A. Profit on disposal of discontinued operations
In October 2019, the Group completed the divestment of its Europe Distribution business, formerly part of our Building Products segment. With the exception of
our Europe Distribution business, no other businesses divested in 2019 are considered to be either separate major lines of business or geographical areas of
operation and therefore do not constitute discontinued operations as defined in IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations.
In January 2018, the Group completed the divestment of its 100% holding in Allied Building Products, the trading name of our former Americas Distribution
segment, which was considered a discontinued operation in 2018 and was classified accordingly.
Assets and liabilities that met the IFRS 5 criteria at 31 December 2019 have not been separately disclosed as held for sale as they were not considered material
in the context of the Group.
The table overleaf sets out the proceeds and related profit recognised on divestment which is included in profit after tax for the financial year from discontinued
operations.
* Non-current assets comprise property, plant and equipment, intangible assets and investments accounted for using the equity method.
151
FINANCIALS
 151
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets 1,309 472
- cash and cash equivalents 100 18
- working capital and provisions 596 367
- current tax 2 -
- lease liabilities (367) -
- deferred tax (28) (14)
- retirement benefit obligations (42) -
- non-controlling interests (8) -
Net assets disposed 1,562 843
Reclassification of currency translation effects on disposal (123) (27)
Total 1,439 816
Proceeds from disposal (net of disposal costs) 1,663 2,379
Profit on disposal from discontinued operations 224 1,563
Net cash inflow arising on disposal
Proceeds from disposal from discontinued operations 1,663 2,379
Less: cash and cash equivalents disposed (100) (18)
Total 1,563 2,361
B. Results of discontinued operations
The results of the discontinued operations included in the Group profit for the financial year are set out as follows:
Revenue 3,177 3,556 5,910
EBITDA (as defined)* 200 144 380
Depreciation (96) (41) (55)
Amortisation (2) (2) (14)
Impairment (1) - -
Operating profit 101 101 311
Profit on disposals 227 1,566 5
Profit before finance costs 328 1,667 316
Finance costs (7) - (1)
Share of equity accounted investments’ profit 12 12 13
Profit before tax 333 1,679 328
Attributable income tax expense (23) (503) (82)
Profit after tax for the financial year from discontinued operations 310 1,176 246
Profit attributable to:
Equity holders of the Company 309 1,175 245
Non-controlling interests 1 1 1
Profit for the financial year from discontinued operations 310 1,176 246
Basic earnings per Ordinary Share from discontinued operations 38.5c 141.2c 29.4c
Diluted earnings per Ordinary Share from discontinued operations 38.2c 140.5c 29.2c
Cash flows from discontinued operations
Net cash inflow/(outflow) from operating activities (i) 32 (367) 204
Net cash inflow/(outflow) from investing activities (ii) 1,542 2,339 (75)
Net cash outflow from financing activities (71) (19) (13)
Net cash inflow 1,503 1,953 116
(i) Includes the corporation tax paid on the sale of discontinued operations.
(ii) Includes the proceeds from the sale of discontinued operations.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
152 152 
4. Cost Analysis
Continuing operations
2019
€m
2018
€m
2017
€m
Cost of sales analysis
Raw materials and goods for resale 5,216 5,058 4,785
Employment costs (note 7) 3,467 3,155 2,869
Energy conversion costs 1,307 1,222 1,004
Repairs and maintenance 980 882 811
Depreciation, amortisation and impairment (i) 1,225 939 830
Change in inventory (62) (179) (117)
Other production expenses (primarily sub-contractor costs) 4,713 4,495 4,093
Total 16,846 15,572 14,275
Operating costs analysis
Selling and distribution costs 4,062 3,822 3,561
Administrative expenses 1,727 1,776 1,890
Total 5,789 5,598 5,451
(i) Depreciation, amortisation and impairment analysis
Cost of sales Operating costs Total
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
Depreciation and depletion (note 15, 22) 1,219 903 830 223 127 121 1,442 1,030 951
Amortisation of intangible assets (note 16) - - - 57 59 52 57 59 52
Impairment of property, plant and equipment (note 15) 6 36 - 1 - - 7 36 -
Impairment of intangible assets (note 16) - - - - 20 - - 20 -
Total 1,225 939 830 281 206 173 1,506 1,145 1,003
153
FINANCIALS
 153
5. Auditor’s Remuneration
Continuing operations
In accordance with statutory requirements in Ireland, fees for professional services provided by the Group’s independent auditor in respect of each of the
following categories were:
EY Ireland
(statutory auditor)
EY
(network firms) Total
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
Audit fees (i) (ii) 4 4 4 14 14 14 18 18 18
Other audit-related assurance fees (iii) (iv) - - - - 1 1 - 1 1
Tax advisory services (iv) - - - 1 - 1 1 - 1
Total 4 4 4 15 15 16 19 19 20
(i) Audit of the Group accounts includes audit of internal controls over financial reporting and parent and subsidiary statutory audit fees, but excludes
€2 million (2018: €2 million; 2017: €2 million) paid to auditors other than EY.
(ii) Audit fees including discontinued operations amounted to €18 million (2018: €19 million; 2017: €20 million).
(iii) Other assurance services includes attestation and due diligence services that are closely related to the performance of the audit.
(iv) Other audit-related assurance fees and tax advisory services including discontinued operations amounted to €nil million and €1 million respectively
(2018: €1 million and €nil million respectively; 2017: €1 million and €1 million respectively).
There were no other fees for services provided by the Group’s independent auditor (2018: €nil million; 2017: €nil million).
154 154 
6. Business and Non-Current Asset Disposals
Business disposals
Disposal of other
non-current assets Total
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
Continuing operations
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets 596 622 47 140 56 78 736 678 125
- cash and cash equivalents 45 60 11 - - - 45 60 11
- working capital and provisions 83 132 29 - - - 83 132 29
- current tax (1) (2) - - - - (1) (2) -
- lease liabilities (48) - - (29) - - (77) - -
- deferred tax (3) (2) 2 - - - (3) (2) 2
- retirement benefit obligations (2) (6) - - - - (2) (6) -
Net assets disposed 670 804 89 111 56 78 781 860 167
Reclassification of currency translation effects on disposal 66 15 9 - - - 66 15 9
Total 736 819 98 111 56 78 847 875 176
Proceeds from disposals (net of disposal costs) 699 697 99 147 100 131 846 797 230
Asset exchange (note 32) - 12 - - - - - 12 -
Profit on step acquisition (note 32) - 39 - - - - - 39 -
(Loss)/profit on disposals from continuing operations (37) (71) 1 36 44 53 (1) (27) 54
Discontinued operations
Profit on disposals from discontinued operations (note 3) 224 1,563 - 3 3 5 227 1,566 5
Total Group profit on disposals 187 1,492 1 39 47 58 226 1,539 59
Net cash inflow arising on disposal
Continuing operations
Proceeds from disposals from continuing operations 699 697 99 147 100 131 846 797 230
Less: cash and cash equivalents disposed (45) (60) (11) - - - (45) (60) (11)
Less: deferred proceeds arising on disposal (note 21) (i) (269) (10) (3) - - - (269) (10) (3)
Less: investment and loan to associate in lieu of cash
proceeds (note 17) (ii) - (85) - - - - - (85) -
Net cash inflow arising on disposal from continuing
operations 385 542 85 147 100 131 532 642 216
Discontinued operations
Net cash inflow arising on disposal from discontinued
operations (note 3) 1,563 2,361 - 1 6 6 1,564 2,367 6
Total Group net cash inflow arising on disposal 1,948 2,903 85 148 106 137 2,096 3,009 222
(i) On 31 December, CRH completed the sale of the Group’s 50% stake in its joint venture in India, MHIL for deferred proceeds of €0.3 billion which will be
received in several agreed tranches.
For the purposes of compliance with Indian law requirements, CRH is obliged to retain a minority shareholding and associated minority board
representation in MHIL both of which will further reduce as the tranches are completed. The Group no longer has any rights to share in the profit/loss of
MHIL or to receive any dividends. CRH has determined that MHIL has ceased to be a joint venture or an associate as the Group is no longer exposed to
variability of returns from the performance of MHIL and does not have significant influence (as defined under IAS 28 Interests in Associates and Joint
Ventures) over MHIL. With the other partners acting in concert to exercise control, CRH effectively retains only protective voting rights in defined limited
circumstances. Accordingly, the Group has discontinued the use of the equity method of accounting for its interest in MHIL from 31 December 2019. The
fair value of the retained interest in MHIL is recorded as a financial asset within Other Receivables as it represents a contractual right to receive cash.
(ii) In 2018, as part of the divestment of our DIY business in Belgium and the Netherlands (see note 16 and note 17 for further details) we acquired an equity
stake of 22.78% in, and advanced a loan of €50 million to the purchaser, Intergamma, which was repaid in 2019.
155
FINANCIALS
 155
7. Employment
Continuing operations
The average number of employees is as follows:
Year ended 31 December
2019 2018 2017
Americas Materials 28,576 27,272 24,077
Europe Materials 27,238 27,218 25,832
Building Products 24,437 26,399 26,927
Total Group 80,251 80,889 76,836
The average number of employees including discontinued operations was 86,951 (2018: 89,831; 2017: 89,213).
Employment costs charged in the Consolidated Income Statement are analysed as follows:
2019
€m
2018
€m
2017
€m
Wages and salaries 4,112 3,841 3,629
Social welfare costs 423 407 397
Redundancy, healthcare and other employment benefit costs 584 540 506
Share-based payment expense (note 9) 74 65 58
Total retirement benefits expense (note 30) 304 268 264
Total (i) 5,497 5,121 4,854
Total charge analysed between:
Cost of sales 3,467 3,155 2,869
Operating costs 2,017 1,956 1,975
Finance costs (net) - applicable to retirement benefit obligations (note 10) 13 10 10
Total (i) 5,497 5,121 4,854
(i) Employment costs including discontinued operations are analysed as follows:
Wages and salaries 4,455 4,226 4,221
Social welfare costs 486 478 483
Redundancy, healthcare and other employment benefit costs 605 581 576
Share-based payment expense (note 9) 77 67 65
Total retirement benefits expense (note 30) 329 296 243
Total 5,952 5,648 5,588
8. Directors’ Emoluments and Interests
Directors’ emoluments (which are included in administrative expenses in note 4) and interests are presented in the Directors’
Remuneration Report on pages 74 to 100.
156 156 
9. Share-based Payment Expense
Continuing operations
2019
€m
2018
€m
2017
€m
Performance Share Plans and Restricted Share Plan expense 71 62 55
Share option expense 3 3 3
Total share-based payment expense (i) 74 65 58
(i) The total share-based payment expense including discontinued operations amounted to €77 million (2018: €67 million;
2017: €65 million).
Share-based payment expense relates primarily to awards granted under the 2014 Performance Share Plan and the Group’s
Savings-related Share Option Schemes. The expense, which also includes charges in relation to the 2013 Restricted Share Plan, is
reflected in operating costs in the Consolidated Income Statement.
2014 Performance Share Plan
The structure of the 2014 Performance Share Plan is set out in the Directors’ Remuneration Report on page 90. An expense of
€70 million was recognised in 2019 (2018: €61 million; 2017: €54 million).
Details of awards granted under the 2014 Performance Share Plan
Number of shares
Share price at
date of award
Period to earliest
release date
Initial
award (i)
Net outstanding at
31 December 2019
Granted in 2019 €29.44 3 years 3,688,027 3,578,105
Granted in 2018 €28.32 3 years 3,863,433 3,610,323
Granted in 2017 €33.21 3 years 3,342,900 2,818,931
(i) Numbers represent the initial awards including those granted to employees of Europe Distribution in 2019, 2018 and 2017 and
Allied Building Products in 2017. The Remuneration Committee has determined that dividend equivalents will accrue on awards
under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents
will be released to participants in the form of additional shares on vesting.
25% of each award made in 2019 is subject to TSR performance measured against a tailored peer group; 25% is subject to a new
RONA metric introduced in 2019; with the remaining 50% subject to a cumulative cashflow metric (2018 and 2017: 50% of each
award is subject to a TSR measure, with 25% being measured against a tailored sector peer group and 25% against the FTSE
All-World Construction & Materials Index. The other 50% of each award is subject to a cumulative cashflow metric). Further details are
set out on page 90 in the Directors’ Remuneration Report.
The fair values assigned to the portion of awards which are subject to TSR performance against peers and, in the case of 2018 and
2017, the index, was €18.59 (2018: €13.52 and €13.18 respectively; 2017: €17.43 and €14.99 respectively). The fair value of these
awards was calculated using a TSR pricing model taking account of peer group TSR, volatilities and correlations together with the
following assumptions:
2019 2018 2017
Risk-free interest rate (%) (0.37) (0.43) (0.40)
Expected volatility (%) 23.2 27.4 30.1
The expected volatility was determined using a historical sample of daily CRH share prices.
The fair value of (i) the portion of awards subject to cash flow performance; (ii) from 2019, the portion of awards subject to a RONA
metric; and (iii) the awards with no performance conditions (which are subject to a one or three-year service period) was €29.44
(2018: €28.32; 2017: €33.21). The fair value was calculated using the closing CRH share price at the date the award was granted.
157
FINANCIALS
 157
Share Option Schemes
The 2010 Share Option Scheme was replaced in 2014 by the 2014 Performance Share Plan, and accordingly no options have been granted since 2013.
Details of movement and options outstanding under Share Option Schemes (excluding Savings-related Share Option Schemes)
Weighted average
exercise price
Number of
options
Weighted average
exercise price
Number of
options
Weighted average
exercise price
Number of
options
2019 2018 2017
Outstanding at beginning of year €16.48 800,770 €17.96 1,441,779 €21.51 2,997,495
Exercised (i) €16.65 (520,115) €19.82 (634,994) €24.85 (1,462,863)
Lapsed €16.19 (2,306) €17.36 (6,015) €24.14 (92,853)
Outstanding at end of year (ii) €16.19 278,349 €16.48 800,770 €17.96 1,441,779
Exercisable at end of year €16.19 278,349 €16.48 800,770 €17.96 1,441,779
(i) The weighted average share price at the date of exercise of these options was €29.10 (2018: €27.90; 2017: €32.24).
(ii) All options granted have a life of ten years.
2019 2018 2017
Weighted average remaining contractual life for the share options outstanding
at 31 December (years)
3.30 2.57 2.53
euro-denominated options outstanding at end of year (number) 278,349 796,850 1,436,115
Range of exercise prices (€) 16.19 16.19-17.30 16.19-21.52
Pound Sterling-denominated options outstanding at end of year (number) - 3,920 5,664
Range of exercise prices (Stg£) - 15.30 15.30-17.19
2010 Savings-related Share Option Schemes
The Group operates Savings-related Share Option Schemes. Participants may save up to €500/Stg£500 per month from their net salaries for a fixed term of
three or five years and at the end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of
invitation of each savings contract.
Details of options granted under the Savings-related Share Option Schemes
Weighted average
exercise price
Number of
options
Weighted average
exercise price
Number of
options
Weighted average
exercise price
Number of
options
2019 2018 2017
Outstanding at beginning of year €22.15/Stg£18.74 1,686,176 €21.50/Stg£18.05 1,556,299 €18.63/Stg£15.92 1,402,174
Exercised (i) €19.09/Stg£16.20 (627,034) €19.00/Stg£15.26 (161,950) €15.73/Stg£14.27 (126,472)
Lapsed €23.49/Stg£20.85 (207,070) €24.62/Stg£20.75 (209,264) €21.42/Stg£18.22 (123,455)
Granted (ii) €24.24/Stg£20.11 656,790 €23.39/Stg£20.83 501,091 €27.86/Stg£24.51 404,052
Outstanding at end of year €23.67/Stg£20.17 1,508,862 €22.15/Stg£18.74 1,686,176 €21.50/Stg£18.05 1,556,299
Exercisable at end of year €18.88/Stg£15.89 13,065 €18.75/Stg£15.54 14,059 €15.89/n/a 15,890
(i) The weighted average share price at the date of exercise of these options was €28.52 (2018: €29.54; 2017: €31.14).
(ii) Pursuant to the 2010 Savings-related Share Option Schemes operated by the Group, employees were granted options over 656,790 of CRH plc’s
Ordinary Shares (556,493 options granted in April 2019 and 100,297 options in May 2019) (2018: 501,091 share options in April 2018; 2017: 404,052
share options in March 2017). This figure comprises options over 518,944 (2018: 379,253; 2017: 304,492) shares and 137,846 (2018: 121,838; 2017:
99,560) shares which are normally exercisable within a period of six months after the third or the fifth anniversary of the contract, whichever is applicable.
The exercise price at which the options are granted under the scheme represents a discount of 15% to the market price on the date of invitation of each
savings contract.
158 158 
9. Share-based Payment Expense - continued
Continuing operations
2019 2018 2017
Weighted average remaining contractual life for the share options
outstanding at 31 December (years)
1.87 1.50 1.90
euro-denominated options outstanding at end of year (number) 290,627 304,713 304,963
Range of exercise prices (€) 17.67-27.86 14.15-27.86 13.64-27.86
Pound Sterling-denominated options outstanding at end of year (number) 1,218,235 1,381,463 1,251,336
Range of exercise prices (Stg£) 14.94-24.51 14.94-24.51 12.22-24.51
The weighted fair values assigned to options issued under the Savings-related Share Option Schemes, which were computed in accordance with the trinomial
valuation methodology, were as follows:
3-year 5-year
Granted in 2019 (April) €7.55 €7.98
Granted in 2019 (May) €6.67 €7.19
Granted in 2018 €5.38 €5.88
Granted in 2017 €5.97 €6.49
The fair value of these options were determined using the following assumptions:
2019 2018 2017
3-year 5-year 3-year 5-year 3-year 5-year
April May April May April April March March
Weighted average exercise price (€) 23.30 24.24 23.30 24.24 23.39 23.39 27.86 27.86
Risk free interest rate (%) (0.56) (0.58) (0.40) (0.41) (0.44) (0.06) (0.72) (0.45)
Expected dividend payments over the expected life (€) 2.34 2.34 4.06 4.06 2.21 3.83 2.07 3.55
Expected volatility (%) 19.6 20.0 21.1 21.3 20.0 20.5 20.9 20.6
Expected life in years 3 3 5 5 3 5 3 5
The expected volatility was determined using a historical sample of 37 month-end CRH share prices in respect of the three-year savings-related share options
and 61 month-end share prices in respect of the five-year savings-related share options. The expected lives of the options are based on historical data and are
therefore not necessarily indicative of exercise patterns that may materialise.
Other than the assumptions listed above, no other features of options grants were factored into the determination of fair value.
The terms of the options issued under the Savings-related Share Option Schemes do not contain any market conditions within the meaning of IFRS 2
Share-based Payment.
159
FINANCIALS
 159
10. Finance Costs and Finance Income
Continuing operations
2019
€m
2018
€m
2017
€m
Finance costs
Interest payable on borrowings 333 335 300
Net cost on interest rate and currency swaps 14 7 2
Mark-to-market of derivatives and related fixed rate debt:
- interest rate swaps (i) (64) 12 16
- currency swaps and forward contracts 2 (4) -
- fixed rate debt (i) 61 (16) (23)
Net loss on interest rate swaps not designated as hedges - 5 6
Net finance cost on gross debt including related derivatives 346 339 301
Finance income
Interest receivable on loans to joint ventures and associates (5) (4) (5)
Interest receivable on cash and cash equivalents and other (15) (30) (7)
Finance income (20) (34) (12)
Finance costs less income 326 305 289
Other financial expense
Premium paid on early debt redemption - - 18
Unwinding of discount element of lease liabilities (note 22) 62 - -
Unwinding of discount element of provisions for liabilities (note 28) 22 21 24
Unwinding of discount applicable to deferred and contingent acquisition
consideration and divestment proceeds 15 15 7
Pension-related finance cost (net) (note 30) 13 10 10
Total 112 46 59
Total net finance costs (ii) 438 351 348
(i) The Group uses interest rate swaps to convert fixed rate debt to floating rate. Fixed rate debt, which has been converted to floating rate
through the use of interest rate swaps, is stated in the Consolidated Balance Sheet at adjusted value to reflect movements in underlying
fixed rates. The movement on this adjustment, together with the offsetting movement in the fair value of the related interest rate swaps, is
included in finance costs in each reporting period.
(ii) Net finance costs for 2019 including discontinued operations amounted to €445 million (2018: €351 million; 2017: €349 million).
160 160 
11. Share of Equity Accounted Investments’ Profit
Continuing operations
The Group’s share of joint ventures’ and associates’ profit after tax is equity accounted and is presented as a single line item in the Consolidated Income
Statement; it is analysed as follows between the principal Consolidated Income Statement captions:
Joint Ventures Associates Total
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
2019
€m
2018
€m
2017
€m
Group share of:
Revenue 634 603 517 615 603 534 1,249 1,206 1,051
EBITDA (as defined)* 70 51 71 68 63 58 138 114 129
Depreciation and amortisation (24) (22) (27) (35) (34) (33) (59) (56) (60)
Operating profit 46 29 44 33 29 25 79 58 69
Profit on disposals - - - - 3 - - 3 -
Profit before finance costs 46 29 44 33 32 25 79 61 69
Finance costs (net) - 1 (1) (12) (9) (9) (12) (8) (10)
Profit before tax 46 30 43 21 23 16 67 53 59
Income tax expense (5) (1) (4) (2) (4) (3) (7) (5) (7)
Profit after tax (i) 41 29 39 19 19 13 60 48 52
An analysis of the profit after tax by operating segment is presented in note 2. The aggregated balance sheet data (analysed between current and non-current
assets and liabilities) in respect of the Group’s investment in joint ventures and associates is presented in note 17.
(i) Share of profit after tax for 2019 including discontinued operations amounted to €72 million (2018: €60 million; 2017: €65 million).
12. Income Tax Expense
Continuing operations
Recognised within the Consolidated Income Statement
2019
€m
2018
€m
2017
€m
(a) Current tax
Republic of Ireland 17 10 9
Overseas 345 279 275
Total current tax expense 362 289 284
(b) Deferred tax
Origination and reversal of temporary differences:
Retirement benefit obligations (1) 4 6
Share-based payment expense (5) 4 (4)
Derivative financial instruments 2 (1) 2
Other items (2017 includes deferred tax credit associated with the
“Tax Cuts and Jobs Act”) 119 100 (276)
Total deferred tax expense/(income) 115 107 (272)
Income tax reported in the Consolidated Income Statement 477 396 12
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges and profit on disposals.
161
FINANCIALS
 161
2019
€m
2018
€m
2017
€m
Recognised outside the Consolidated Income Statement
(a) Within the Consolidated Statement of Comprehensive Income:
Deferred tax - retirement benefit obligations (3) (1) (33)
Deferred tax - cash flow hedges (3) 5 -
(6) 4 (33)
(b) Within the Consolidated Statement of Changes in Equity:
Current tax
Current tax - share option exercises 4 2 2
Deferred tax
Deferred tax - share-based payment expense 5 (4) (7)
9 (2) (5)
Income tax recognised outside the Consolidated Income Statement 3 2 (38)
Reconciliation of applicable tax rate to effective tax rate
Profit before tax (€m) 2,115 1,741 1,685
Tax charge expressed as a percentage of profit before tax (effective tax rate):
- current tax expense only 17.1% 16.6% 16.9%
- total income tax expense (current and deferred) 22.6% 22.7% 0.7%
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of the Group:
% of profit before tax
Irish corporation tax rate 12.5 12.5 12.5
Higher tax rates on overseas earnings 12.1 11.6 16.3
Deferred tax credit relating to the enactment of the “Tax Cuts and Jobs Act” - - (26.1)
Other items (primarily comprising items not chargeable to tax/expenses not
deductible for tax) (2.0) (1.4) (2.0)
Total effective tax rate 22.6 22.7 0.7
Other disclosures
Effective tax rate
The 2019 effective tax rate is 22.6% (2018:
22.7%; 2017: 0.7%). The 2017 reported tax
charge included a non-cash deferred tax credit
of €440 million related to the enactment of the
“Tax Cuts and Jobs Act” in the US. The 2017
effective tax rate excluding the impact of this
exceptional deferred tax credit was 26.8%.
The tax charge associated with discontinued
operations is recognised separately in “Profit
after tax for the financial year from discontinued
operations”. See note 3 for further details.
Changes in tax rates
The total tax charge in future periods will be
affected by any changes to the tax rates in force
in the countries in which the Group operates.
Excess of capital allowances over
depreciation
The current tax charge will also be impacted by
changes in the excess of tax depreciation
(capital allowances) over accounting
depreciation. Based on current capital
investment plans, the Group expects to
continue to be in a position to claim capital
allowances in excess of depreciation in future
years.
Investments in subsidiaries
Given management’s intention not to unwind
temporary differences in respect of its
investment in subsidiaries or tax exemptions
and credits being available in the majority of
jurisdictions in which the Group operates, the
aggregate amount of deferred tax liabilities on
temporary differences which have not been
recognised would be immaterial.
Proposed dividends
There are no income tax consequences for the
Company in respect of dividends proposed
prior to issuance of the Consolidated Financial
Statements and for which a liability has not
been recognised.
162 162 
13. Dividends
The dividends paid and proposed in respect of each class of share capital are as follows:
2019
€m
2018
€m
2017
€m
Dividends to shareholders
Preference
5% Cumulative Preference Shares €3,175 (2018: €3,175; 2017: €3,175) - - -
7% ‘A’ Cumulative Preference Shares €77,521 (2018: €77,521; 2017: €77,521) - - -
Equity
Final - paid 52.40c per Ordinary Share (2018: 48.80c; 2017: 46.20c) 425 409 386
Interim - paid 20.00c per Ordinary Share (2018: 19.60c; 2017: 19.20c) 159 163 160
Total 584 572 546
Reconciliation to Consolidated Statement of Cash Flows
Dividends to shareholders 584 572 546
Less: issue of scrip shares in lieu of cash dividends (note 31) - (51) (77)
Dividends paid to equity holders of the Company 584 521 469
Dividends paid by subsidiaries to non-controlling interests 10 12 8
Total dividends paid 594 533 477
Dividends proposed (memorandum disclosure)
Equity
Final 2019 - proposed 63.00c per Ordinary Share (2018: 52.40c; 2017: 48.80c) 495 425 409
163
FINANCIALS
 163
14. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out below:
2019
€m
2018
€m
2017
€m
Numerator computations
Group profit for the financial year 1,948 2,521 1,919
Profit attributable to non-controlling interests (19) (4) (24)
Profit attributable to equity holders of the Company 1,929 2,517 1,895
Preference dividends - - -
Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted
earnings per Ordinary Share 1,929 2,517 1,895
Profit after tax for the financial year from discontinued operations - attributable to equity holders
of the Company 309 1,175 245
Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted
earnings per Ordinary Share from continuing operations 1,620 1,342 1,650
Denominator computations
Weighted average number of Ordinary Shares (millions) outstanding for the year (i) 801.3 832.4 835.6
Effect of dilutive potential Ordinary Shares (employee share options) (millions) (i) (ii) 6.4 4.2 5.2
Denominator for diluted earnings per Ordinary Share 807.7 836.6 840.8
Basic earnings per Ordinary Share 240.7c 302.4c 226.8c
Diluted earnings per Ordinary Share 238.8c 300.9c 225.4c
Basic earnings per Ordinary Share from continuing operations 202.2c 161.2c 197.4c
Diluted earnings per Ordinary Share from continuing operations 200.6c 160.4c 196.2c
(i) The weighted average number of Ordinary Shares included in the computation of basic and diluted earnings per Ordinary Share has been adjusted to
exclude shares held by the Employee Benefit Trust and Ordinary Shares repurchased and held by the Company (CRH plc) as Treasury Shares given that
these shares do not rank for dividend. The number of Ordinary Shares so held at the balance sheet date is detailed in note 31.
(ii) Contingently issuable Ordinary Shares (totalling 3,618,278 at 31 December 2019, 7,274,916 at 31 December 2018 and 5,710,247 at 31 December 2017)
are excluded from the computation of diluted earnings per Ordinary Share where the conditions governing exercisability have not been satisfied as at the
end of the reporting period or they are antidilutive for the periods presented.
164 164 
15. Property, Plant and Equipment
Land and
buildings (i)
€m
Plant and
machinery
€m
Assets in
course of
construction
€m
Total
€m
At 31 December 2019
Cost/deemed cost 9,189 16,283 674 26,146
Accumulated depreciation (and impairment charges) (2,322) (7,835) (35) (10,192)
Net carrying amount 6,867 8,448 639 15,954
At 1 January 2019, net carrying amount 6,972 8,196 593 15,761
Effect of adopting IFRS 16 (7) (20) 4 (23)
Translation adjustment 155 203 19 377
Reclassifications 101 446 (547) -
Transfer (to)/from leased assets (note 22) (5) 17 - 12
Additions at cost 72 590 567 1,229
Additions to leased mineral reserves (note 21) (ii) 86 - - 86
Arising on acquisition (note 32) 152 94 7 253
Disposals at net carrying amount (405) (120) (4) (529)
Depreciation charge for year (iii) (251) (953) - (1,204)
Impairment charge for year (iv) (3) (5) - (8)
At 31 December 2019, net carrying amount 6,867 8,448 639 15,954
Land and
buildings
€m
Plant and
machinery
€m
Other
€m
Leased right-of-use assets (v)
At 31 December 2019, net carrying amount (note 22) 1,086 337 47 1,470
Total property, plant and equipment 17,424
The equivalent disclosure for the prior year is as follows:
Land and
buildings (i)
€m
Plant and
machinery
€m
Assets in
course of
construction
€m
Total
€m
At 31 December 2018
Cost/deemed cost 9,335 15,535 629 25,499
Accumulated depreciation (and impairment charges) (2,363) (7,339) (36) (9,738)
Net carrying amount 6,972 8,196 593 15,761
At 1 January 2018, net carrying amount 6,224 6,319 551 13,094
Reclassified from held for sale 22 79 3 104
Translation adjustment 139 112 8 259
Reclassifications 71 386 (457) -
Additions at cost 74 541 506 1,121
Arising on acquisition (note 32) 832 1,759 23 2,614
Disposals at net carrying amount (158) (161) (5) (324)
Depreciation charge for year (iii) (232) (839) - (1,071)
Impairment charge for year (iv) - - (36) (36)
At 31 December 2018, net carrying amount 6,972 8,196 593 15,761
At 1 January 2018
Cost/deemed cost 8,472 13,157 551 22,180
Accumulated depreciation (and impairment charges) (2,248) (6,838) - (9,086)
Net carrying amount 6,224 6,319 551 13,094
165
FINANCIALS
 165
(i) The carrying value of mineral-bearing land included in the land and buildings category on page 164 amounted to €3,272 million at the balance sheet date
(2018: €3,112 million).
(ii) Relates to leased mineral reserves which fall outside the scope of IFRS 16.
(iii) The depreciation charge for the year includes €33 million (2018: €41 million; 2017: €55 million) relating to discontinued operations.
(iv) The impairment charge of €8 million (2018: €36 million; 2017: €nil million) principally relates to the write-down of property, plant and equipment in Americas
Materials and Europe Materials. The charge includes €1 million (2018: €nil million; 2017: €nil million) relating to discontinued operations.
(v) See note 22 for more detailed information on right-of-use assets and lease liabilities of the Group under IFRS 16.
Future purchase commitments for property, plant and equipment
2019
€m
2018 (vi)
€m
Contracted for but not provided in the financial statements 373 449
Authorised by the Directors but not contracted for 355 366
(vi) Includes contracted for but not provided for and authorised but not contracted for commitments of €22 million and €6 million respectively relating to
discontinued operations.
166 166 
16. Intangible Assets
Other intangible assets
Goodwill
€m
Marketing-
related
€m
Customer-
related (i)
€m
Contract-
based
€m
Total
€m
At 31 December 2019
Cost/deemed cost 8,378 148 512 77 9,115
Accumulated amortisation (and impairment charges) (284) (64) (276) (57) (681)
Net carrying amount 8,094 84 236 20 8,434
At 1 January 2019, net carrying amount 8,116 76 217 24 8,433
Translation adjustment 203 1 4 1 209
Arising on acquisition (note 32) 278 17 75 - 370
Disposals (503) (1) (15) - (519)
Amortisation charge for year (ii) - (9) (45) (5) (59)
At 31 December 2019, net carrying amount 8,094 84 236 20 8,434
The equivalent disclosure for the prior year is as follows:
At 31 December 2018
Cost/deemed cost 8,400 138 592 79 9,209
Accumulated amortisation (and impairment charges) (284) (62) (375) (55) (776)
Net carrying amount 8,116 76 217 24 8,433
At 1 January 2018, net carrying amount 6,905 75 204 30 7,214
Reclassified from held for sale 363 - 8 1 372
Translation adjustment 137 3 8 1 149
Reclassifications - - (2) 2 -
Arising on acquisition (note 32) 1,504 6 51 1 1,562
Disposals (773) - (9) (1) (783)
Amortisation charge for year (ii) - (8) (43) (10) (61)
Impairment charge for year (iii) (20) - - - (20)
At 31 December 2018, net carrying amount 8,116 76 217 24 8,433
At 1 January 2018
Cost/deemed cost 7,198 129 535 80 7,942
Accumulated amortisation (and impairment charges) (293) (54) (331) (50) (728)
Net carrying amount 6,905 75 204 30 7,214
(i) The customer-related intangible assets relate predominantly to non-contractual customer relationships.
(ii) The amortisation charge for the year includes €2 million (2018: €2 million; 2017: €14 million) in respect of discontinued operations, which primarily relates
to customer-related intangible assets.
(iii) In July 2018, the Group divested of its DIY business in the Netherlands and Belgium, together with certain related property assets, which formed part of the
former Europe Distribution segment, for total consideration of €0.5 billion. The decision to divest resulted in the recognition of an impairment charge of
€20 million. The recoverable amount, at the date of impairment, was based on fair value less costs of disposal. The fair value was determined using Level 2
inputs in accordance with the fair value hierarchy, as a market price was agreed and paid.
167
FINANCIALS
 167
Annual goodwill testing
The net book value of goodwill capitalised under
previous GAAP (Irish GAAP) as at the transition
date to IFRS (1 January 2004) has been treated
as deemed cost. Goodwill arising on acquisition
since that date is capitalised at cost.
Cash-generating units
Goodwill acquired through business
combination activity has been allocated to
cash-generating units (CGUs) that are expected
to benefit from synergies in that combination.
The CGUs represent the lowest level within the
Group at which the associated goodwill is
monitored for internal management purposes,
and are not larger than the operating segments
determined in accordance with IFRS 8. A total
of 25 (2018: 26) CGUs have been identified and
these are analysed between the three business
segments below. All businesses within the
various CGUs exhibit similar and/or consistent
profit margin and asset intensity characteristics.
Assets, liabilities, deferred tax and goodwill have
been assigned to the CGUs on a reasonable
and consistent basis.
Cash-generating units Goodwill
2019 2018 2019
€m
2018
€m
Americas Materials 7 7 3,558 3,441
Europe Materials 16 16 2,354 2,280
Building Products 2 3 2,182 2,395
Total Group 25 26 8,094 8,116
Impairment testing methodology and results
Goodwill is subject to impairment testing on an
annual basis. The recoverable amount of 25
CGUs is determined based on a value-in-use
computation, using Level 3 inputs in
accordance with the fair value hierarchy.
The cash flow forecasts are primarily based on
a five-year strategic plan document formally
approved by the Board of Directors and
specifically exclude the impact of future
development activity. These cash flows are
projected forward for an additional five years to
determine the basis for an annuity-based
terminal value, calculated on the same basis as
the Group’s acquisition modelling methodology.
As in prior years, the terminal value is based on
a 20-year annuity, with the exception of certain
long-lived cement assets, where an assumption
of a 30-year annuity has been used. Projected
cash flows beyond the initial evaluation period
have been extrapolated using real growth rates
ranging from 1.3% to 1.8% in the Americas,
0.7% to 2.0% in Europe and 3.1% in Asia. Such
real growth rates do not exceed the long-term
average growth rates for the countries in which
each CGU operates. The value-in-use
represents the present value of the future cash
flows, including the terminal value, discounted
at a rate appropriate to each CGU. The real
pre-tax discount rates used range from 6.6% to
8.7% (2018: 7.0% to 9.2%); these rates are in
line with the Group’s estimated weighted
average cost of capital, arrived at using the
Capital Asset Pricing Model.
The 2019 annual goodwill impairment testing
process has resulted in no intangible asset
impairments. The 2018 annual goodwill
impairment testing process resulted in an
impairment of €20 million being recorded in
respect of one CGU in our Building Products
segment.
Key sources of estimation uncertainty
The cash flows have been arrived at taking
account of the Group’s strong financial position,
its established history of earnings and cash flow
generation and the nature of the building
materials industry, where product obsolescence
is very low. However, expected future cash
flows are inherently uncertain and are therefore
liable to material change over time. The key
assumptions employed in arriving at the
estimates of future cash flows factored into
impairment testing are subjective and include
projected EBITDA (as defined)* margins, net
cash flows, discount rates used and the
duration of the discounted cash flow model.
Significant under-performance in any of CRH’s
major CGUs may give rise to a material
write-down of goodwill which would have a
substantial impact on the Group’s income and
equity, however given the excess headroom on
the models the likelihood of this happening is
not considered a realistic possibility.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
168 168 
16. Intangible Assets - continued
Significant goodwill amounts
The goodwill allocated to the Americas Cement
(Americas Materials segment) and the Americas
Building Products (Building Products segment)
CGUs account for
between 18% and 23% of the total carrying
amount shown on page 166. The goodwill
allocated to each of the remaining CGUs is less
than 10% of the total carrying value in all
other cases. The additional disclosures required
for the two CGUs with significant goodwill are
as follows:
Americas
Cement
Americas
Building Products

Goodwill allocated to the cash-generating unit at balance sheet date 
Discount rate applied to the cash flow projections (real pre-tax) 
Average EBITDA (as defined)* margin over the initial 5-year period 
The key assumptions and methodology used in
respect of these two CGUs are consistent with
those described above. The values applied to
each of the key estimates and assumptions are
specific to the individual CGUs and were
derived from a combination of internal and
external factors based on historical experience
and took into account the cash flows specifically
associated with these businesses. The cash
flows and annuity-based terminal value were
projected in line with the methodology disclosed
above.
The Americas Cement and Americas Building
Products CGUs are not included in the CGUs
referred to in the ‘Sensitivity analysis’ section
below. Given the magnitude of the excess of
value-in-use over carrying amount, and our
belief that the key assumptions are reasonable,
management believes that it is not reasonably
possible that there would be a change in the
key assumptions such that the carrying amount
would exceed the value-in-use. Consequently
no further disclosures relating to sensitivity of
the value-in-use computations for the Americas
Cement or Americas Building Products CGUs
are considered to be warranted.
Sensitivity analysis
Sensitivity analysis has been performed and
results in additional disclosures in respect of
one of the total 25 CGUs. The key assumptions,
methodology used and values applied to each
of the key assumptions for this CGU are in line
with those outlined above (a 30-year annuity
period has been used). The CGU had goodwill
of €459 million at the date of testing. The table
below identifies the amounts by which each of
the following assumptions may either decline or
increase to arrive at a zero excess of the
present value of future cash flows over the book
value of net assets in the CGU selected for
sensitivity analysis disclosures:
One cash-generating unit
Reduction in EBITDA (as defined)* margin 2.2 percentage points
Reduction in profit before tax 15.7%
Reduction in net cash flow 14.4%
Increase in pre-tax discount rate 1.3 percentage points
The average EBITDA (as defined)* margin for
this CGU over the initial five-year period was
20.2%. The value-in-use (being the present
value of the future net cash flows) was
€1,379 million and the carrying amount was
€1,176 million, resulting in an excess of
value-in-use over carrying amount of
€203 million.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
169
FINANCIALS
 169
17. Financial Assets
Investments accounted for
using the equity method
(i.e. joint ventures and associates)
Non-current
Other receivables 317 181
(i) Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance
sheet date amounting to €247 million and €183 million respectively (2018: €245 million and €168 million
respectively).
Trade and other receivables are measured at amortised cost (less any loss allowance) as the Group’s business model is
to “hold to collect” contractual cash flows, and the cash flows arising from trade and other receivables are solely
payments of principal and interest.
171
FINANCIALS
At 1 January 133 131 152
Reclassified from/(as) held for sale - 6 (6)
Translation adjustment 2 - (7)
Provided during year 45 35 32
Disposed of during year (30) (3) -
Written off during year (26) (30) (36)
Arising on acquisition (note 32) 1 6 3
Recovered during year (7) (12) (7)
At 31 December 118 133 131
Given the common profile of CRH’s customers, how customer credit risk is managed at appropriate group locations, and the breadth and scale of its
international operations, a disclosure of concentrations of credit risk by segment best enables users of financial statements to assess CRH’s credit risk
exposure. The following table sets out the gross carrying value of trade receivables and loss allowance by segment:
Gross carrying value of
trade receivables
(i) Analysis of Building Products segment by geographic location:

Customer credit risk is managed according to
established policies, procedures and controls.
Customer credit quality is assessed in line with
strict credit rating criteria and credit limits are
established where appropriate. Outstanding
customer balances are regularly monitored and
a review for indicators of impairment (evidence
of financial difficulty of the customer, payment
default, breach of contract etc.) is carried out at
each reporting date. Significant balances are
reviewed individually while smaller balances are
grouped and assessed collectively. Receivables
balances are in general unsecured and
non-interest-bearing. The trade receivables
balances disclosed above comprise a large
number of customers spread across the
Group’s activities and geographies with
balances classified as “neither past due nor
impaired” representing 65% of the total trade
receivables balance at the balance sheet date
(2018: 64%). There have been no significant
changes to the Group’s credit risk parameters
or to the composition of the Group’s trade
receivables portfolio during the financial year.
The Group applies the simplified approach to
providing for expected credit losses (ECL)
permitted by IFRS 9 Financial Instruments,
which requires expected lifetime losses to be
recognised from initial recognition of the
receivables. Receivables such as those which
relate to bonded government contracts and
receivables which fall under credit insurance are
considered low risk and would not attract a
material ECL. Given the positive economic
outlook (e.g. forecast Gross Domestic Product)
for the next 12 months in the majority of the
economies in which we operate we consider
that our ECL adequately represents the risk of
default on our receivable balances.
Trade receivables are written off when there is
no reasonable expectation of recovery, such as
a debtor failing to engage in a repayment plan
with the company. Where recoveries are made,
these are recognised in the Consolidated
Income Statement.
172 172 
19. Trade and Other Receivables - continued
Aged analysis
The aged analysis of trade receivables and amounts receivable in respect of construction contracts at the balance sheet date was as follows:
Trade receivables and amounts receivable in respect of construction contracts are in general receivable within 90 days of the balance sheet date.
173
FINANCIALS
 173
Current
Trade payables 
Construction contract-related payables 
Deferred and contingent acquisition consideration 
Accruals and other payables 
Amounts payable to equity accounted investments
Total
Non-current
Other payables 
Deferred and contingent acquisition consideration
Total(i) Construction contract-related payables include billings in excess of revenue, together with advances
received from customers in respect of work to be performed under construction contracts and
foreseeable losses thereon. €174 million was recognised in the Consolidated Income Statement
during 2019 which was included in the contract-related payables balance at 31 December 2018.
Other than deferred and contingent consideration, the carrying amounts of trade and other payables
approximate their fair value largely due to the short-term maturities and nature of these instruments.
(ii) The fair value of total contingent consideration is €248 million (2018: €220 million) (Level 3 input in the
fair value hierarchy), and deferred consideration is €87 million (2018: €119 million). On an
undiscounted basis, the corresponding future payments relating to contingent consideration, for which
the Group may be liable, ranges from €267 million to €410 million. This is based on a range of
estimated potential outcomes of the expected payment amounts. The movement in deferred and
contingent consideration during the financial year was as follows:
176 176 
22. Leases - continued
The Group avails of the exemption from capitalising lease costs for short-term leases and low-value assets where the relevant criteria are met. Variable lease
payments directly linked to sales or usage are also expensed as incurred. The following lease costs have been charged to the Consolidated Income Statement
as incurred:
Continuing operations
2019
€m
Short-term leases 171
Lease of low-value assets 7
Variable lease payments not included in the lease liability 90
Total 268
Total cash outflow for lease payments 654
Lease commitments for short-term leases are similar to the portfolio of short-term leases for which the costs, as above, were expensed to the Consolidated
Income Statement. The effect of excluding future cash outflows arising from variable lease payments, termination options, residual value guarantees and leases
not yet commenced from lease liabilities was not material for the Group. The potential undiscounted future cash outflows arising from the exercise of renewal
options that are not expected to be exercised (and are therefore not included in the lease term) are as follows:
As at
31 December
2019
€m
Within one year 2
Between one and two years 3
Between two and three years 4
Between three and four years 6
Between four and five years 7
After five years 483
Total 505
Income from subleasing and gains/losses on sale and leaseback transactions were not material for the Group.
B. IAS 17 Leases disclosures
Operating lease rentals charged to the Consolidated Income Statement for the years ended 31 December 2018 and 31 December 2017 under IAS 17 were as
follows:
2018
€m
2017
€m
Continuing operations
Hire of plant and machinery 308 279
Land and buildings 174 188
Other operating leases 51 46
Total 533 513
Lease commitments were provided for up to the earliest break clause in the lease.
As at
31 December
2018
€m
Within one year 353
After one year but not more than five years 769
More than five years 789
Total 1,911
The commitments above include €408 million of operating lease commitments relating to discontinued operations in 2018.
177
FINANCIALS
 177
23. Analysis of Net Debt
Components of net debt
Net debt is a non-GAAP measure which we provide to investors as we believe they find it useful. Net debt comprises lease liabilities under IFRS 16, cash and
cash equivalents, derivative financial instrument assets and liabilities and interest-bearing loans and borrowings and enables investors to see the economic
effects of these in total (see note 24 for details of the capital and risk management policies employed by the Group). Net debt is commonly used in
computations such as net debt as a % of total equity and net debt as a % of market capitalisation.
As at 31 December 2019 As at 31 December 2018
Fair value*

Book value

Fair value*

Book value

Lease liabilities under IFRS 16 (note 22) (i) (1,511) (1,511) - -
Interest-bearing loans and borrowings (note 26) (ii) (9,572) (9,014) (9,223) (9,316)
Derivative financial instruments (net) (note 27) 65 65 (14) (14)
Cash and cash equivalents (note 25) 3,755 3,755 2,346 2,346
Group net debt (7,263) (6,705) (6,891) (6,984)
Reconciliation of opening to closing net debt
2019
€m
2018
€m
2017
€m
At 1 January (6,984) (5,796) (5,297)
Movement in year
Effect of adopting IFRS 16 (1,954) - -
Debt, including lease liabilities, in acquired companies (note 32) (73) (74) (12)
Debt, including lease liabilities, in disposed companies 415 - -
Increase in interest-bearing loans and borrowings (91) (1,434) (1,010)
Net increase in lease liabilities under IFRS 16 (i) (163) - -
Net cash flow arising from derivative financial instruments 36 (6) (169)
Repayment of interest-bearing loans, borrowings and finance leases (ii) 572 246 343
Repayment of lease liabilities under IFRS 16 (i) 317 - -
Mark-to-market adjustment 25 2 9
Translation adjustment on financing activities (214) (133) 654
Increase in liabilities from financing activities (1,130) (1,399) (185)
Translation adjustment on cash and cash equivalents 27 17 (161)
Increase/(decrease) in cash and cash equivalents 1,382 194 (153)
At 31 December (6,705) (6,984) (5,796)
Notes (i) and (ii) are set out overleaf.
* All interest-bearing loans and borrowings are Level 2 fair value measurements.
178 178 
23. Analysis of Net Debt - continued
The following table shows the effective interest rates on period-end fixed, gross and net debt:
As at 31 December 2019 As at 31 December 2018
€m
Interest
rate
Weighted
average
fixed period
Years €m
Interest
rate
Weighted
average
fixed period
Years
Interest-bearing loans and borrowings nominal - fixed rate (iii) (8,743) (9,107)
Derivative financial instruments - fixed rate 1,599 1,726
Net fixed rate debt including derivatives (7,144) 3.4% 9.2 (7,381) 3.5% 9.8
Interest-bearing loans and borrowings nominal - floating rate (iv) (158) (157)
Adjustment of debt from nominal to book value (iii) (113) (52)
Derivative financial instruments - currency floating rate (1,534) (1,740)
Gross debt including derivative financial instruments, excluding lease
liabilities (8,949) 3.3% (9,330) 3.6%
Lease liabilities - fixed rate (1,511) -
Gross debt including derivative financial instruments, including lease
liabilities (10,460) (9,330)
Cash and cash equivalents - floating rate (note 25) 3,755 2,346
Group net debt (6,705) (6,984)
(i) All leases capitalised under IFRS 16 have been included as lease liabilities in 2019.
(ii) Interest-bearing loans and borrowings in 2018 include finance leases previously capitalised under IAS 17.
(iii) Of the Group’s nominal fixed rate debt at 31 December 2019, €1,599 million (2018: €1,726 million) is hedged to floating rate using interest rate swaps.
(iv) Floating rate debt comprises bank borrowings bearing interest at rates set in advance for periods ranging from overnight to less than one year largely by
reference to inter-bank interest rates.
179
FINANCIALS
 179
Currency profile
The currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31 December 2019 and
31 December 2018 is as follows:
euro
3,197 7,988 1,474 948 391 176 161 1,694 16,029
(i) The principal currencies included in this category are the Chinese Renminbi, the Romanian Leu, the Indian Rupee, the Ukrainian Hryvnia and the Serbian
Dinar.
(ii) All leases capitalised under IFRS 16 have been included as lease liabilities in 2019.
180 180 
23. Analysis of Net Debt - continued
Liquidity and capital resources
The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position:
Net cash inflow from operating activities 3,466 1,899 2,189
Net cash inflow/(outflow) from investing activities 195 (1,592) (2,685)
Net cash (outflow)/inflow from financing activities (2,279) (113) 343
Increase/(decrease) in cash and cash equivalents 1,382 194 (153)
Cash and cash equivalents at beginning of year, excluding overdrafts (note 25) 2,346 2,135 2,449
Effect of exchange rate changes 27 17 (161)
Cash and cash equivalents at end of year, excluding overdrafts (note 25) 3,755 2,346 2,135
Lease liabilities under IFRS 16 (1,511) - -
Bank overdrafts (41) (113) (71)
Borrowings (8,973) (9,203) (7,910)
Derivative financial instruments 65 (14) 50
Total liabilities from financing activities (10,460) (9,330) (7,931)
Net debt at end of year (6,705) (6,984) (5,796)
Cash at bank and in hand reclassified as held for sale - - (20)
Bank overdrafts reclassified as held for sale - - 5
Group net debt excluding net debt reclassified as held for sale (6,705) (6,984) (5,811)
The Group believes that its financial resources (operating cash together with cash and cash equivalents of €3.8 billion and undrawn committed loan facilities of
€3.6 billion) will be sufficient to cover the Group’s cash requirements.
At 31 December 2019, euro and US Dollar denominated cash and cash equivalents represented 52% (2018: 46%) and 23% (2018: 27%) of total cash and cash
equivalents respectively.
181
FINANCIALS
 181
Significant borrowings
The main sources of Group debt funding are public bond markets in Europe and North America. The following external bonds were outstanding as at
31 December 2019:
Annual
coupons
Outstanding
millions
Final
maturity
euro bonds 2.750% €750 2020
US Dollar 
(i) The US$300 million bond was issued in September 2003, and at time of issuance the bond was partially swapped to floating interest rates.
In August 2009 and December 2010, US$87.445 million of the issued notes were acquired by CRH plc as part of liability management
exercises undertaken and the interest rate hedge was closed out. At 31 December 2019, the remaining fair value on the hedged item on
the Consolidated Balance Sheet was US$42 millon (2018: US$45 million).
182 182 
24. Capital and Financial Risk Management
Capital management
Overall summary
The primary objectives of CRH’s capital
management strategy are to ensure that the
Group maintains a strong credit rating to
support its business and to create shareholder
value by managing the debt and equity balance
and the cost of capital. The Group is committed
to optimising the use of its balance sheet within
the confines of the overall objective to maintain
an investment grade credit rating.
The capital structure of the Group, which
comprises net debt and capital and reserves
attributable to the Company’s equity holders,
may be summarised as follows:
Capital and reserves
attributable to the
Company’s equity holders 16,940 16,029
Net debt 6,705 6,984
Capital and net debt 23,645 23,013
The Board periodically reviews the capital
structure of the Group, including the cost of
capital and the risks associated with each class
of capital. The Group manages and, if
necessary, adjusts its capital structure taking
account of underlying economic conditions; any
material adjustments to the Group’s capital
structure in terms of the relative proportions of
debt and equity are approved by the Board. In
order to maintain or adjust the capital structure,
the Group may issue new shares, dispose of
assets, amend investment plans, alter dividend
policy or return capital to shareholders.
Dividend cover for the year ended 31 December
2019 amounted to 2.90x (2018: 4.20x).
No changes were made in the objectives or
policies during 2019.
Financial risk management objectives and
policies
The Group uses financial instruments
throughout its businesses: interest-bearing
loans and borrowings, cash and cash
equivalents and leases are used to finance the
Group’s operations; trade receivables and trade
payables arise directly from operations; and
derivatives, principally interest rate and currency
swaps and forward foreign exchange contracts,
are used to manage interest rate risks and
currency exposures and to achieve the desired
profile of borrowings. With respect to interest-
bearing loans and borrowings and interest rate
swaps, the Group is aware of plans to phase
out the current benchmark for lending rates
(Inter-bank Offered Rates - IBOR), and replace it
with alternative benchmarks or reference rates.
The Group is currently performing an
assessment of the impact of the benchmark
switch. The Group does not trade in financial
instruments nor does it enter into any leveraged
derivative transactions.
The Group’s corporate treasury function
provides services to the business units,
co-ordinates access to domestic and
international financial markets, and monitors
and manages the financial risks relating to the
operations of the Group. The Group Treasurer
reports to the Director of Group Finance and the
activities of the corporate treasury function are
subject to regular internal audit. Systems and
processes are in place to monitor and control
the Group’s liquidity risks. The Group’s net debt
position forms part of the monthly
documentation presented to the Board.
The Group’s hedging activity is based on
observable economic relationships, when there
is confidence that such relationships will
continue for the foreseeable future. Matching
critical terms such as notional amount, tenor,
timing and currency, the Group establishes
relationships between a hedge item and hedge
instrument where directional response to
changes in fair value, driven by underlying
economic conditions, are opposing and
proportional in equal measure being an
economic relationship under IFRS 9. Hedging
ratios of one to one are used throughout all
hedging activity as the hedge item and hedge
instrument are of the same type and currency.
The hedges employed mitigate identified risks
and have consistently demonstrated close
economic relationships. Ineffectiveness between
the hedge item and hedge instrument are
immaterial in the overall context of the Group.
The main risks attaching to the Group’s financial
instruments are interest rate risk, foreign
currency risk, credit risk, liquidity risk and
commodity price risk. The Board reviews and
agrees policies for the prudent management of
each of these risks as documented below.
Interest rate risk
The Group’s exposure to market risk for
changes in interest rates stems predominantly
from its long-term debt obligations. Interest cost
is managed using a mix of fixed and floating rate
debt. With the objective of managing this mix in
a cost-efficient manner, the Group enters into
interest rate swaps, under which the Group
contracts to exchange, at predetermined
intervals, the difference between fixed and
variable interest amounts calculated by
reference to a pre-agreed notional principal.
Such contracts enable the Group to mitigate the
risk of changing interest rates on the fair value
of issued fixed rate debt and the cash flow
exposures of issued floating rate debt.
The majority of these swaps are designated
under IFRS 9 to hedge underlying debt
obligations and qualify for hedge accounting
treatment; undesignated financial instruments
are termed “not designated as hedges” in the
analysis of derivative financial instruments
presented in note 27.
The Group’s interest rate hedging strategy and
activity employs the premise that changes in
macro-economic factors are reflected in current
interest rates. In the economic relationship the
relative value of the fixed rate at which a bond
was issued will change in line with market
interest rates and a floating rate swap will
counterbalance changes in the bond’s fair
value. A hypothetical derivative is used to
replicate the impact that changes in market
interest rates could have on the fixed rate bond
(hedged item) which is measured against the
interest rate swap (hedge instrument). A hedge
ratio of one to one is established. Potential
sources of ineffectiveness comprise the timing
of floating rate resets and counterparty credit
adjustments to the interest rate swap. Past
observations on interest rate movements
provide evidence that such relationships will
continue for the foreseeable future. The notional
amount of interest rate swaps is set out in
note 23.
The following table demonstrates the impact on
profit before tax and total equity of a range of
possible changes in the interest rates applicable
to net floating rate borrowings, with all other
variables held constant. These impacts are
calculated based on the closing balance sheet
for the relevant period and assume all floating
interest rates and interest curves change by the
same amount. For profit before tax, the impact
shown is the impact on closing balance sheet
floating rate net debt for a full year while for total
equity the impact shown is the impact on the
value of financial instruments.
Percentage change in cost of
borrowings (i) +/- 1%

(i) Sensitivity analysis for cost of borrowing
has been presented for continuing
operations only.
183
FINANCIALS
 183
Foreign currency risk
Due to the nature of building materials, which in
general have a low value-to-weight ratio, the
Group’s activities are conducted primarily in the
local currency of the country of operation
resulting in low levels of foreign currency
transaction risk; variances arising in this regard
are reflected in operating costs or cost of sales
in the Consolidated Income Statement in the
period in which they arise.
Given the Group’s presence in 30 countries
worldwide, the principal foreign exchange risk
arises from fluctuations in the euro value of the
Group’s net investment in a wide basket of
currencies other than the euro; such changes
are reported separately within the Consolidated
Statement of Comprehensive Income. A
currency profile of the Group’s net debt and net
worth is presented in note 23. The Group’s
established policy is to spread its net worth
across the currencies of its various operations
with the objective of limiting its exposure to
individual currencies and thus promoting
consistency with the geographical balance of its
operations. In order to achieve this objective,
the Group manages its borrowings, where
practicable and cost effective, to hedge a
portion of its foreign currency assets. Hedging
is done using currency borrowings in the same
currency as the assets being hedged or through
the use of other hedging methods such as
currency swaps.
The Group’s foreign exchange hedging strategy
and activity is based on the assumption that
changes in international economic factors are
reflected in current foreign exchange rates and
impacts the translation of the Group’s non-euro
net assets. The economic relationship, being
the translation impact of the Group’s net
investment in non-euro subsidiaries (hedge
item) is hedged against a foreign currency swap
(hedge instrument) to counterbalance
movements in foreign currency rates. The
Group identifies certain portions of foreign
currency net investments where foreign
currency translation movements can be
mitigated through the use of currency swaps in
the same currency pairing. A hedge ratio of one
to one is established. As at 31 December 2019,
the notional amount of hedged net investments
was €939 million (2018: €942 million). The fair
value movements of the hedge instruments are
inverse to the impact of the translation of the
hedged net assets because the critical terms
match. This reduces the Group’s exposure to
fluctuations on the translation of the Group’s
subsidiaries with a non-euro functional currency
into euro. Potential sources of ineffectiveness
are changes in the interest rate differential of the
hedged currency pair, recorded through the
Consolidated Income Statement. Past trends
indicate that the economic relationship
described will continue for the foreseeable
future. The fair values and maturity analysis of
the hedge instruments are set out in note 27.
The following table demonstrates the sensitivity
of profit before tax and equity to selected
movements in the relevant euro/US Dollar
exchange rate (with all other variables held
constant); the US Dollar has been selected as
the appropriate currency for this analysis given
the materiality of the Group’s activities in the
US. The impact on profit before tax is based on
changing the euro/US Dollar exchange rate
used in calculating profit before tax for the
period. The impact on total equity and financial
instruments is calculated by changing the euro/
US Dollar exchange rate used in measuring the
closing balance sheet.
Percentage change in relevant

(i) Sensitivity analysis for exchange rates has
been presented for continuing operations
only.
Financial instruments include deposits, money
market funds, commercial papers, bank loans,
medium-term notes and other fixed term debt,
interest rate swaps, commodity swaps and
foreign exchange contracts. They exclude trade
receivables and trade payables.
Credit/counterparty risk
In addition to cash at bank and in hand, the
Group holds significant cash balances which
are invested on a short-term basis and are
classified as cash equivalents (see note 25).
These deposits and other financial instruments
(principally certain derivatives and loans and
receivables included within financial assets) give
rise to credit risk on amounts due from
counterparty financial institutions (stemming
from their insolvency or a downgrade in their
credit ratings). Credit risk is managed by limiting
the aggregate amount and duration of exposure
to any one counterparty primarily depending on
its credit rating and by regular review of these
ratings. Acceptable credit ratings are high
investment-grade ratings - in general -
counterparties have ratings of A3/A- or higher
from Moody’s/Standard & Poor’s ratings
agencies. The maximum exposure arising in the
event of default on the part of the counterparty
(including insolvency) is the carrying value of the
relevant financial instrument.
In its worldwide insurance programme, the
Group carries appropriate levels of insurance for
typical business risks (including product liability)
with various leading insurance companies.
However, in the event of the failure of one or
more of its insurance counterparties, the Group
could be impacted by losses where recovery
from such counterparties is not possible.
Credit risk arising in the context of the Group’s
operations is not significant with the total loss
allowance at the balance sheet date amounting
to 3.6% of gross trade receivables (2018: 3.7%).
Information in relation to the Group’s credit risk
management of trade receivables is provided in
note 19. Amounts receivable from related parties
(notes 19 and 34) are immaterial. Factoring and
credit guarantee arrangements are employed in
certain of the Group’s operations where deemed
to be of benefit by operational management.
Liquidity risk
The principal liquidity risks faced by the Group
stem from the maturation of debt obligations
and derivative transactions. A downgrade of
CRH’s credit ratings may give rise to increases
in funding costs in respect of future debt and
may impair the Group’s ability to raise funds on
acceptable terms. The Group’s corporate
treasury function ensures that sufficient
resources are available to meet such liabilities
as they fall due through a combination of cash
and cash equivalents, cash flows and undrawn
committed bank facilities. Flexibility in funding
sources is achieved through a variety of means
including (i) maintaining cash and cash
equivalents only with a diverse group of
highly-rated counterparties; (ii) limiting the
annual maturity of such balances; (iii) borrowing
the bulk of the Group’s debt requirements
under committed bank lines or other term
financing; and (iv) having surplus committed
lines of credit.
The undrawn committed facilities available to
the Group as at the balance sheet date are
quantified in note 26; these facilities span a
wide number of highly-rated financial institutions
thus minimising any potential exposure arising
from concentrations in borrowing sources. The
repayment schedule (analysed by maturity date)
applicable to the Group’s outstanding interest-
bearing loans and borrowings as at the balance
sheet date is also presented in note 26.
The Group’s €1.5 billion Euro Commercial
Paper Programme and US$2.0 billion US Dollar
Commercial Paper Programme means we have
framework programmes in the money markets
184 184 
24. Capital and Financial Risk Management - continued
in place that allow the Group to issue in the
relevant markets within a short period of time.
The Group reinstated its Registration Statement
programme in the US during 2019, which allows
it to issue SEC registered notes in the US Dollar
Debt Capital Markets.
Commodity price risk
The principal commodity price risks are
identified in a variety of highly probable and
active commodity contracts where a significant
part of the price to be paid relies on a reference
to specific floating price indices (usually US
Dollar) for a specific period. Programmes are in
place to hedge the quantities and qualities of
commodity products, including coal, high
sulphur fuel oil, diesel, electricity and carbon
credits. The aim of the programmes is to
neutralise the variability in the Consolidated
Income Statement as a result of changes in
associated commodity indices over a timeframe
of approximately five years (2018: three years).
A hedge ratio of one to one is established. Fixed
price swap contracts in the entity’s operating
currency are used to hedge the same specific
floating index risk and currency risk where it is
determined that those risks are better managed
at a fixed price rather than being exposed to
uncontrollable price fluctuations due to the
floating price index element of the contract.
Sources of ineffectiveness can relate to timing
of cash flows and counterparty credit risk
adjustments. The derivative contracts qualify for
cash flow hedge accounting under IFRS 9 and
the fair values by maturity are set out in note 27.
The notional and fair values in respect of derivative contracts as at 31 December 2019 and 31 December 2018 were as follows:
Profile of commodity products
As at 31 December 2019 As at 31 December 2018
Notional value
€m
Fair value
€m
Notional value
€m
Fair value
€m
Commodity contracts 105 - 162 -
Derivative liability - - - (27)
185
FINANCIALS
 185
The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group’s trade and other payables,
gross debt and derivative financial instruments. The tables also include the gross cash inflows projected to arise from derivative financial instruments. These
projections are based on the interest and foreign exchange rates applying at the end of the relevant financial year.
Within
Financial liabilities - cash outflows
Trade and other payables 4,376 139 40 24 165 212 4,956
Lease liabilities under IFRS 16 (i) 275 231 193 158 135 1,046 2,038
Other interest-bearing loans and borrowings 824 962 391 754 602 5,429 8,962
Interest payments on other interest-bearing loans and borrowings (ii) 307 275 258 233 227 1,856 3,156
Cross-currency swaps - gross cash outflows 1,615 13 - - - - 1,628
Other derivative financial instruments 4 1 - - - - 5
Gross projected cash outflows 7,401 1,621 882 1,169 1,129 8,543 20,745
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows (iii) (13) (13) (13) (8) (6) (12) (65)
Cross-currency swaps - gross cash inflows (1,605) (13) - - - - (1,618)
Other derivative financial instruments (4) (1) - - - - (5)
Gross projected cash inflows (1,622) (27) (13) (8) (6) (12) (1,688)
The equivalent disclosure for the prior year is as follows:
At 31 December 2018
Financial liabilities - cash outflows
Trade and other payables 4,609 160 30 18 11 348 5,176
Finance leases (i) 5 3 3 2 2 6 21
Other interest-bearing loans and borrowings 620 752 953 375 753 5,856 9,309
Interest payments on finance leases (i) - - - - - 2 2
Interest payments on other interest-bearing loans and borrowings (ii) 328 297 265 248 224 2,022 3,384
Cross-currency swaps - gross cash outflows 2,320 2 - - - - 2,322
Other derivative financial instruments 30 2 - - - - 32
Gross projected cash outflows 7,912 1,216 1,251 643 990 8,234 20,246
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows (iii) (11) (9) (9) (9) (4) (1) (43)
Cross-currency swaps - gross cash inflows (2,346) (2) - - - - (2,348)
Other derivative financial instruments (3) (2) (1) - - - (6)
Gross projected cash inflows (2,360) (13) (10) (9) (4) (1) (2,397)
(i) Finance leases in 2018 relate to leases previously capitalised under IAS 17. All leases capitalised under IFRS 16 have been included as lease liabilities in
2019.
(ii) At 31 December 2019 and 31 December 2018, a portion of the Group’s long-term debt carried variable interest rates. The Group uses the interest rates in
effect on 31 December to calculate the interest payments on the long-term debt for the periods indicated.
(iii) The Group uses interest rate swaps to help manage its interest cost. Under these contracts the Group has agreed to exchange at predetermined intervals,
the difference between fixed and variable interest amounts calculated by reference to a pre-agreed notional principal. The Group uses the interest rates in
effect on 31 December to calculate the net interest receipts or payments on these contracts.
186 186 
25. Cash and Cash Equivalents
Cash and cash equivalents balances are spread across a wide number of highly-rated financial institutions. The credit risk attaching to these items is
documented in note 24.
Cash and cash equivalents are included in the Consolidated Balance Sheet at amortised cost and are analysed as follows:
2019
€m
2018
€m
Cash at bank and in hand 1,005 814
Investments (short-term deposits) 2,750 1,532
Total 3,755 2,346
Cash at bank earns interest at floating rates based on daily deposit bank rates. Short-term deposits, which include bank and money market deposits, are made
for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective
short-term deposit rates.
26. Interest-bearing Loans and Borrowings
2019
€m
2018
€m
Bank overdrafts 41 113
Bank loans 465 356
Bonds 8,508 8,825
Finance leases (i) - 21
Other - 1
Interest-bearing loans and borrowings 9,014 9,316
Interest-bearing loans and borrowings include loans of €nil million (2018: €5 million) secured on specific items of property, plant and equipment; these figures
do not include finance leases.
(i) Finance leases in 2018 relate to leases previously capitalised under IAS 17. Refer to note 22 for all leases capitalised under IFRS 16 in 2019.
187
FINANCIALS
 187
Maturity profile of loans and borrowings and undrawn committed facilities
As at 31 December 2019 As at 31 December 2018
Loans and
borrowings
€m
Undrawn
committed
facilities
€m
Loans and
borrowings
€m
Undrawn
committed
facilities
€m
Within one year 815 - 618 -
Between one and two years 956 12 748 -
Between two and three years 385 5 948 15
Between three and four years 771 50 370 50
Between four and five years 598 3,500 776 3,500
After five years 5,489 43 5,856 18
Total 9,014 3,610 9,316 3,583
The Group manages its borrowing ability by
entering into committed borrowing agreements.
Revolving committed bank facilities are generally
available to the Group for periods of up to five
years from the date of inception. The undrawn
committed facilities figures shown in the table
above represent the facilities available to be
drawn by the Group at 31 December 2019. In
April 2019, the Group successfully extended its
€3.5 billion syndicated credit facility with a
group of bank lenders and at the same time
made a number of amendments including the
removal of all financial covenants which
improved the flexibility of the facility.
Guarantees
The Company has given letters of guarantee to
secure obligations of subsidiary undertakings as
follows: €8.5 billion in respect of loans and
borrowings, bank advances, derivative
obligations and future lease obligations (2018:
€8.9 billion) and €0.4 billion in respect of letters
of credit (2018: €0.3 billion).
Any Irish registered wholly-owned subsidiary of
the Company may avail of the exemption from
filing its statutory financial statements for the
year ended 31 December 2019 as permitted by
section 357 of the Companies Act 2014 and if
an Irish registered wholly-owned subsidiary of
the Company elects to avail of this exemption,
there will be in force an irrevocable guarantee
from the Company in respect of all
commitments entered into by such
wholly-owned subsidiary, including amounts
shown as liabilities (within the meaning of
section 357 (1)(b) of the Companies Act 2014) in
such wholly-owned subsidiary’s statutory
financial statements for the year ended
31 December 2019.
188 188 
27. Derivative Financial Instruments
The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows:
Fair value
hedges
€m
Cash flow
hedges
€m
Net
investment
hedges
€m
Not
designated
as hedges
Derivative assets
Within one year - current assets - 3 2 1 6
Between one and two years - 1 - - 1
Between three and four years 23 - - - 23
After five years 52 - - - 52
Non-current assets 75 1 - - 76
Total derivative assets 75 4 2 1 82
Derivative liabilities
Within one year - current liabilities - (8) (4) (4) (16)
Between one and two years - non-current liabilities - (1) - - (1)
Total derivative liabilities - (9) (4) (4) (17)
Net asset/(liability) arising on derivative financial instruments 75 (5) (2) (3) 65
The equivalent disclosure for the prior year is as follows:
At 31 December 2018
Derivative assets
Within one year - current assets - 3 10 2 15
Between one and two years - 2 - - 2
Between two and three years - 1 - - 1
Between four and five years 24 - - - 24
After five years 3 - - - 3
Non-current assets 27 3 - - 30
Total derivative assets 27 6 10 2 45
Derivative liabilities
Within one year - current liabilities - (32) (2) (7) (41)
Between one and two years - (2) - - (2)
After five years (16) - - - (16)
Non-current liabilities (16) (2) - - (18)
Total derivative liabilities (16) (34) (2) (7) (59)
Net asset/(liability) arising on derivative financial instruments 11 (28) 8 (5) (14)
189
FINANCIALS
 189
At 31 December 2019 and 2018, the Group
had no master netting or similar arrangements,
collateral posting requirements, or enforceable
right of set-off agreements with any of its
derivative counterparts.
Fair value hedges consist of interest rate swaps.
These instruments hedge risks arising from
changes in asset/liability fair values due to
interest rate movements.
Cash flow hedges consist of forward foreign
exchange and commodity contracts and
currency swaps. These instruments hedge risks
arising to future cash flows from movements in
foreign exchange rates and commodity prices.
Cash flow hedges are expected to affect profit
and loss over the period to maturity.
Net investment hedges comprise cross-
currency swaps and hedge changes in the
value of net investments due to currency
movements.
The profit/(loss) arising on fair value, cash flow,
net investment hedges and related hedged
items reflected in the Consolidated Income
Statement is shown below:

Fair value of hedge instruments 64 (12) (16)
Fair value of the hedged items (64) 11 18
Components of other comprehensive income - cash flow hedges
Gains/(losses) arising during the year:
- commodity forward contracts 27 (38) 9
- currency forward contracts (3) (2) (1)
Total 24 (40) 8
Fair value hierarchy
Assets measured at fair value
Fair value hedges - interest rate swaps 75 27
Cash flow hedges - cross-currency and commodity forwards 4 6
Net investment hedges - cross-currency swaps 2 10
Not designated as hedges (held for trading) - cross-currency swaps and forward foreign
exchange contracts 1 2
Total 82 45
Liabilities measured at fair value
Fair value hedges - interest rate swaps - (16)
Cash flow hedges - cross-currency and commodity forwards (9) (34)
Net investment hedges - cross-currency swaps (4) (2)
Not designated as hedges (held for trading) - cross-currency swaps and forward foreign
exchange contracts (4) (7)
Total (17) (59)
At 31 December 2019 and 2018 there were no derivatives valued using Level 1 or Level 3 fair value techniques.
1(i) This provision relates to obligations arising under the self-insurance components of the Group’s insurance arrangements which comprise employers’ liability
(workers’ compensation in the US), public and products liability (general liability in the US), automobile liability, property damage, business interruption and
various other insurances; a substantial proportion of the total provision pertains to claims which are classified as “incurred but not reported”. Due to the
extended timeframe associated with many of the insurances, a significant proportion of the total provision is subject to periodic actuarial valuation. The
projected cash flows underlying the discounting process are established through the application of actuarial triangulations, which are extrapolated from
historical claims experience. The triangulations applied in the discounting process indicate that the Group’s insurance provisions have an average life of five
years (2018: five years).
(ii) This provision comprises obligations governing site remediation, restoration and environmental works to be incurred in compliance with either local or
national environmental regulations together with constructive obligations stemming from established best practice. Whilst a significant element of the total
provision will reverse in the medium-term (two to ten years), those legal and constructive obligations applicable to long-lived assets (principally
mineral-bearing land) will unwind over a 30-year timeframe. In discounting the related obligations, expected future cash outflows have been determined
with due regard to extraction status and anticipated remaining life.
(iii) These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes, none of which are individually material to
the Group. In 2019, €29 million (2018: €30 million; 2017: €32 million) was provided in respect of rationalisation and redundancy activities as a
consequence of undertaking various cost reduction initiatives across all operations. These initiatives included removing excess capacity from manufacturing
and distribution networks and scaling operations to match market supply; back office rationalisation; and the consolidation of certain regional support
functions into central and more coordinated hubs. The Group expects that these provisions will primarily be utilised within one to two years of the balance
sheet date (2018: one to two years).
(iv) Other provisions primarily relate to legal claims, onerous contracts, guarantees and warranties and employee related provisions. The Group expects the
majority of these provisions will be utilised within two to five years of the balance sheet date (2018: two to five years); however due to the nature of the legal
provisions there is a level of uncertainty in the timing of settlement as the Group generally cannot determine the extent and duration of the legal process.
191
FINANCIALS
 191
29. Deferred Income Tax
The deductible and taxable temporary differences in respect of which deferred tax has been recognised are as follows:

Reported in balance sheet after offset
Deferred tax liabilities 2,338 2,209
Deferred tax assets (67) (71)
Net deferred income tax liability 2,271 2,138
Deferred income tax assets (deductible temporary differences)
Deficits on Group retirement benefit obligations (note 30) 91 95
Revaluation of derivative financial instruments to fair value 7 13
Tax loss carryforwards 152 153
Share-based payment expense 32 21
Provisions for liabilities and working capital-related items 257 266
Lease liabilities 283 -
Other deductible temporary differences 23 39
Total 845 587
Deferred income tax assets have been recognised in respect of all deductible temporary differences, with the exception of some tax loss carryforwards. The
amount of tax losses where recovery is not probable and is therefore not recognised in the Consolidated Balance Sheet is €1.5 billion (2018: €1.5 billion). The
vast majority either do not expire based on current tax legislation or they expire post 2024 (2018: 2023).
Deferred income tax liabilities (taxable temporary differences)
Taxable temporary differences principally attributable to accelerated tax depreciation and fair value
adjustments arising on acquisition (i) 2,819 2,701
Leased right-of-use assets 273 -
Revaluation of derivative financial instruments to fair value 11 11
Rolled-over capital gains 13 13
Total 3,116 2,725
Movement in net deferred income tax liability
At 1 January 2,138 1,571
Reclassified from held for sale - 14
Translation adjustment 51 47
Net expense for the year (ii) 112 111
Arising on acquisition (note 32) - 411
Disposal (31) (16)
Movement in deferred tax recognised in the Consolidated Statement of Comprehensive Income 6 (4)
Movement in deferred tax recognised in the Consolidated Statement of Changes in Equity (5) 4
At 31 December 2,271 2,138
(i) Fair value adjustments arising on acquisition principally relate to property, plant and equipment.
(ii) The net expense for the year includes income of €3 million (2018: expense of €4 million) relating to discontinued operations.
192 192 
30. Retirement Benefit Obligations
The Group operates either defined benefit or
defined contribution pension schemes in all of
its principal operating areas. The disclosures
included below relate to all pension schemes in
the Group.
The Group operates defined benefit pension
schemes in Belgium, Brazil, Canada, France,
Germany, Italy, the Netherlands, the Philippines,
the Republic of Ireland, Romania, Serbia,
Slovakia, Switzerland, the UK and the US. The
Group has a mixture of funded and unfunded
defined benefit pension schemes. The net
liability of the funded schemes is €98 million, net
of surpluses of €67 million (2018: €113 million,
net of surpluses of €51 million). Unfunded
obligations (including jubilee, post-retirement
healthcare obligations and long-term service
commitments) comprise of a number of
schemes in Brazil, Canada, France, Germany,
Italy, the Netherlands, the Philippines, Romania,
Serbia, Slovakia, Switzerland and the US,
totalling a net liability of €329 million (2018:
€311 million).
Funded defined benefit schemes in the Republic
of Ireland, Switzerland and the UK are
administered by separate funds that are legally
distinct from the Group under the jurisdiction of
Trustees. The Trustees of these pension funds
are required by law and by their Articles of
Association to act in the best interests of the
scheme participants and are responsible for the
definition of investment strategy and for scheme
administration. Other schemes are also
administered in line with the local regulatory
environment. The level of benefits available to
most members depends on length of service
and either their average salary over their period
of employment or their salary in the final years
leading up to retirement. The Group’s pension
schemes in Switzerland are contribution-based
schemes with guarantees to provide further
contributions in the event that certain targets
are not met, largely in relation to investment
return and the annuity conversion factor on
retirement.
Defined benefit pension schemes -
principal risks
Through its defined benefit pension and jubilee
schemes, long-term service commitments and
post-retirement healthcare plans, the Group is
exposed to a number of risks, the most
significant of which are detailed below:
Asset volatility: Under IAS 19 Employee
Benefits, the assets of the Group’s defined
benefit pension schemes are reported at fair
value (using bid prices, where relevant). The
majority of the schemes’ assets comprise
equities, bonds and property, all of which may
fluctuate significantly in value from period to
period. Given that liabilities are discounted to
present value based on bond yields and that
bond prices are inversely related to yields, an
increase in the liability discount rate (which
would reduce liabilities) would reduce bond
values, though not necessarily by an equal
magnitude.
Given the maturity of certain of the Group’s
funded defined benefit pension schemes,
de-risking frameworks have been introduced to
mitigate deficit volatility and enable better
matching of investment returns with the cash
outflows related to benefit obligations. These
frameworks entail the usage of asset-liability
matching techniques, whereby triggers are set
for the conversion of equity holdings into bonds
of similar average duration to the relevant
liabilities.
Discount rates: The discount rates employed in
determining the present value of the schemes’
liabilities are determined by reference to market
yields at the balance sheet date on high-quality
corporate bonds of a currency and term
consistent with the currency and term of the
associated post-employment benefit
obligations. Changes in discount rates impact
the quantum of liabilities as discussed above.
Inflation risk: A significant amount of the
Group’s pension obligations are linked to
inflation; higher inflation will lead to higher
liabilities (although in most cases, caps on the
level of inflationary increases are in place to
protect the schemes against extreme inflation).
Longevity risk: In the majority of cases, the
Group’s defined benefit pension schemes
provide benefits for life with spousal and
dependent child reversionary provisions;
increases in life expectancy (decreases in
mortality assumptions) will therefore give rise to
higher liabilities.
Aggregation
For the purposes of the disclosures which
follow; the schemes in Belgium, France,
Germany, Italy, the Netherlands, the Republic of
Ireland and Slovakia have been aggregated into
a “Eurozone” category on the basis of common
currency and financial assumptions; schemes in
Brazil, the Philippines, Romania, Serbia and the
UK have been aggregated into an “Other”
category.
Financial assumptions—scheme liabilities
The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities and post-retirement healthcare
obligations are as follows:
Eurozone Switzerland
United States
and Canada193
FINANCIALS
 The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 represent actuarial best practice
in the relevant jurisdictions, taking account of mortality experience and industry circumstances. For schemes in the Republic of Ireland
and the UK, the mortality assumptions used are in accordance with the underlying funding valuations. For the Group’s most material
schemes, the future life expectations factored into the relevant valuations, based on retirement at 65 years of age for current and future
retirees, are as follows:
Republic of Ireland Switzerland
United States
and Canada
The above data allows for future improvements in life expectancy.
Impact on Consolidated Income Statement
The total retirement benefit expense from continuing operations in the Consolidated Income Statement is as follows:
At 1 January 2,913 2,622
Movement in year
Interest income on scheme assets (ii) 68 59
Arising on acquisition (note 32) 3 337
Disposals (592) -
Remeasurement adjustments
- return on scheme assets excluding interest income 316 (137)
Employer contributions paid 52 118
Contributions paid by plan participants 13 14
Benefit and settlement payments (139) (130)
Administration expenses (ii) (7) (4)
Translation adjustment 55 34
At 31 December 2,682 2,913
The composition of scheme assets is as follows:
Eurozone 1,283 1,181
Switzerland 344 808
United States and Canada 845 728
Other 210 196
Total 2,682 2,913
Reconciliation of actuarial value of liabilities
At 1 January (3,337) (2,999)
Movement in year
Current service cost (ii) (60) (64)
Past service credit (net) (ii) 18 17
Interest cost on scheme liabilities (ii) (81) (69)
Arising on acquisition (note 32) (4) (452)
Disposals 636 6
Remeasurement adjustments
- experience variations 33 1
- actuarial (loss)/gain from changes in financial assumptions (384) 120
- actuarial gain from changes in demographic assumptions 18 26
Contributions paid by plan participants (13) (14)
Benefit and settlement payments 139 130
Translation adjustment (74) (39)
At 31 December (3,109) (3,337)
The composition of the actuarial value of liabilities is as follows:
Eurozone (1,425) (1,318)
Switzerland (341) (829)
United States and Canada (1,058) (946)
Other (285) (244)
Total (3,109) (3,337)
Recoverable deficit in schemes (427) (424)
Related deferred income tax asset 91 95
Net pension liability (336) (329)
The composition of the net pension liability is as follows:
Eurozone (119) (113)
Switzerland 3 (17)
United States and Canada (160) (162)
Other (60) (37)
Total (336) (329)
195
FINANCIALS
 195
(i) The total defined contribution expense including discontinued operations amounted to €267 million (2018: €235 million; 2017: €244 million).
(ii) The net defined benefit expense/(credit) includes the following relating to discontinued operations:
Charged in arriving at Group profit before finance costs:
2019
Current service cost 17 21 22
Administration expenses - 1 1
Past service credit (net) (iii) - (4) (61)
Subtotal 17 18 (38)
Included in finance income and finance costs respectively:
Interest income on scheme assets (4) (4) (4)
Interest cost on scheme liabilities 4 4 5
Net interest expense - - 1
Net expense/(credit) to Consolidated Income Statement 17 18 (37)
(iii) Past service credit in 2017 includes a gain of €81 million (€20 million relating to continuing operations and €61 million relating to
discontinued operations) due to plan amendments in Switzerland. The principal amendment related to the reduction of the annuity
conversion factor on retirement from 6.4% to 5.0% of accumulated savings.
A UK High Court ruling in October 2018 relating to the equalisation of guaranteed minimum pensions for men and women did not materially impact the liability
associated with the Group’s UK defined benefit pension schemes.
Sensitivity analysis
The revised liabilities due to the impact of a movement (as indicated belScheme liabilities at 31 December (1,425) (341) (1,058) (285) (3,109)
Revised liabilities
The above sensitivity analysis are derived through changing the individual assumption while holding all other assumptions constant.
196 196 
30. Retirement Benefit Obligations - continued
Split of scheme assets

Investments quoted in active markets
Equity instruments (i) 746 862
Debt instruments (ii) 1,594 1,596
Property 93 109
Cash and cash equivalents 27 34
Investment funds 128 9
Assets held by insurance company - 123
Unquoted investments
Equity instruments 2 2
Debt instruments (iii) 9 9
Property 52 112
Cash and cash equivalents 18 40
Assets held by insurance company 13 17
Total assets 2,682 2,913
(i) Equity instruments primarily relate to developed markets.
(ii) Quoted debt instruments are made up of €1,101 million (2018: €845 million) and €493 million
(2018: €751 million) of non-government and government instruments respectively.
(iii) Unquoted debt instruments primarily relate to government debt instruments.
Actuarial valuations - funding requirements
and future cash flows
In accordance with statutory requirements in the
Republic of Ireland and minimum funding
requirements in the UK, additional annual
contributions and lump-sum payments are
required to certain of the schemes in place in
those jurisdictions. The funding requirements in
relation to the Group’s defined benefit schemes
are assessed in accordance with the advice of
independent and qualified actuaries and
valuations are prepared in this regard either
annually, where local requirements mandate
that this be done, or at triennial intervals at a
maximum in all other cases. In the Republic of
Ireland and the UK, either the attained age or
projected unit credit methods are used in the
valuations. In the Netherlands and Switzerland,
the actuarial valuations reflect the current unit
method, while the valuations are performed in
accordance with the projected unit credit
methodology in Germany. In the US, valuations
are performed using a variety of actuarial cost
methodologies - current unit, projected unit and
aggregate cost. In Canada, the projected unit
credit method is used in valuations. The dates
of the funding valuations range from March
2016 to January 2019.
In general, funding valuations are not available
for public inspection; however, the results of
valuations are advised to the members of the
various schemes on request.
197
FINANCIALS
 197
The Group has contracted payments (presented on a discounted basis) to certain schemes in the following countries:
Within one year 2 2 19
Between one and two years 2 2 2
Between two and three years 2 2 2
Between three and four years 2 1 2
Between four and five years 2 1 1
After five years 9 6 8
Total 19 14 34
Employer contributions payable in the 2020 financial year including minimum funding payments (expressed using year-end exchange rates for 2019) are
estimated at €45 million.
Average duration and scheme composition
Eurozone Switzerland
United States
and Canada

(i) The Ordinary Shares represent 93.71% of the total issued share capital.
(ii) The Income Shares, which represent 5.86% of the total issued share capital, were created on 29 August 1988 for the express purpose of giving
shareholders the choice of receiving dividends on either their Ordinary Shares or on their Income Shares (by notice of election to the Company). The
Income Shares carried a different tax credit to the Ordinary Shares. The creation of the Income Shares was achieved by the allotment of fully paid Income
Shares to each shareholder equal to his/her holding of Ordinary Shares but the shareholder is not entitled to an Income Share certificate, as a certificate for
Ordinary Shares is deemed to include an equal number of Income Shares and a shareholder may only sell, transfer or transmit Income Shares with an
equivalent number of Ordinary Shares. Income Shares carry no voting rights. Due to changes in Irish tax legislation since the creation of the Income Shares,
dividends on the Company’s shares no longer carry a tax credit. As elections made by shareholders to receive dividends on their holding of Income Shares
were no longer relevant, the Articles of Association were amended on 8 May 2002 to cancel such elections.
(iii) During 2019 43,750,000 Ordinary Shares (including Income Shares) were cancelled. The amount paid to repurchase these shares was initially recognised
in Treasury Shares/own shares and was transferred to retained income on cancellation.
(iv) Issue of scrip shares in lieu of cash dividends:
Number of shares Price per share
2018 2017 2018 2017
May 2018: Final 2017 dividend (2017: Final 2016 dividend) 1,841,430 433,046 €27.47 €33.08
September 2018: Interim 2018 dividend (2017: Interim 2017 dividend) - 2,130,496 - €29.24
Total 1,841,430 2,563,542
In 2019, the Final 2018 and Interim 2019 dividends were paid wholly in cash in May and September respectively. The Interim 2018 dividends were also paid
wholly in cash in September 2018.
Share schemes
The aggregate number of shares which may be committed for issue in respect of any share option scheme, savings-related share option scheme, share
participation scheme, performance share plan or any subsequent option scheme or share plan, may not exceed 10% of the issued ordinary share capital from
time to time.
199
FINANCIALS
 199
Share option schemes
Details of share options granted under the Company’s Share Option Schemes and the terms attaching thereto are provided in note 9 to the financial
statements. Under these schemes, options over a total of 1,147,149 Ordinary Shares were exercised during the financial year (2018: 796,944;
2017: 1,589,335).
Number of shares
2019 2018 2017
Options exercised during the year (satisfied by the issue of new shares) - 496,661 1,589,335
Options exercised during the year (satisfied by the reissue of Treasury Shares) 1,147,149 300,283 -
Total 1,147,149 796,944 1,589,335
Share participation schemes
As at 31 December 2019, 8,174,578 (2018: 8,025,732) Ordinary Shares had been appropriated to participation schemes. In 2019, the appropriation was
satisfied by the purchase of 148,846 shares (2018: 59,666 satisfied by the issue of new shares; 103,650 by the re-issue of Treasury Shares). The Ordinary
Shares appropriated pursuant to these schemes were issued at market value on the dates of appropriation). The shares issued pursuant to these schemes are
excluded from the scope of IFRS 2 and are hence not factored into the expense computation and the associated disclosures in note 9.
Preference share capital 5% Cumulative

At 1 January 2019 and 31 December 2019 150 - 872 1
Allotted, called-up and fully paid
At 1 January 2019 and 31 December 2019 50 - 872 1
There was no movement in the number of cumulative preference shares in either the current or the prior year.
The holders of the 5% Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 5% per annum and priority in a
winding-up to repayment of capital, but have no further right to participate in profits or assets and are not entitled to be present or vote at general meetings
unless their dividend is in arrears. Dividends on the 5% Cumulative Preference Shares are payable half-yearly on 15 April and 15 October in each year. The 5%
Cumulative Preference Shares represent 0.02% of the total issued share capital.
The holders of the 7% ‘A’ Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 7% per annum, and subject to the
rights of the holders of the 5% Cumulative Preference Shares, priority in a winding-up to repayment of capital, but have no further right to participate in profits or
assets and are not entitled to be present or vote at general meetings unless their dividend is in arrears or unless the business of the meeting includes certain
matters, which are specified in the Articles of Association. Dividends on the 7% ‘A’ Cumulative Preference Shares are payable half-yearly on 5 April and
5 October in each year. The 7% ‘A’ Cumulative Preference Shares represent 0.41% of the total issued share capital.
Treasury Shares/own shares 2019
€m
2018
€m
At 1 January (792) (15)
New Shares allotted to the Employee Benefit Trust (own shares) - (56)
Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan 62 56
Shares acquired by CRH plc (Treasury Shares) (i) (791) (789)
Shares acquired by Employee Benefit Trust (own shares) (61) (3)
Treasury Shares/own shares reissued (ii) 35 15
Cancellation of Treasury Shares 1,222 -
At 31 December (325) (792)
Notes (i) to (ii) are set out overleaf.
200 200 
31. Share Capital and Reserves - continued
The movement in the number of Treasury Shares/own shares during the financial year was as follows:
Number of shares
2019 2018
At 1 January 27,843,927 391,757
New Shares allotted to the Employee Benefit Trust (own shares) - 2,034,112
Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan (2,256,986) (2,034,112)
Shares acquired by CRH plc (Treasury Shares) (i) 27,357,116 27,901,471
Shares acquired by Employee Benefit Trust (own shares) 2,189,448 108,377
Treasury Shares/own shares reissued (ii) (1,147,149) (557,678)
Cancellation of Treasury Shares (43,750,000) -
At 31 December 10,236,356 27,843,927
Split of Treasury Shares/own shares (iii)
Treasury Shares 10,011,353 27,551,386
Own shares 225,003 292,541
10,236,356 27,843,927
(i) In April 2018, CRH announced its intention to introduce a share repurchase programme (the ‘Programme’) to repurchase Ordinary
Shares (including Income Shares) of up to €1 billion. During 2018, CRH repurchased a total of 27,901,471 Ordinary Shares under
the Programme, returning a total of €0.8 billion in cash to shareholders. The Programme was extended in 2019, with CRH
repurchasing a total of 27,357,116 Ordinary Shares in 2019 and returning a further €0.8 billion to shareholders. As at 31 December
2019, a total of €1.6 billion cash has been returned to shareholders under the Programme.
On 7 January 2020, CRH announced a further extension of the Programme for an additional €200 million.
(ii) These reissued Treasury Shares were previously purchased at an average price of €30.56 (2018: €27.96).
(iii) As at the balance sheet date, the nominal value of the Treasury Shares and own shares was €3.4 million and €0.1 million
respectively (2018: €9.4 million and €0.1 million respectively). Dividends have been waived by the Trustees of the own shares.
Reconciliation of shares issued to net proceeds 2018
€m
2017
€m
Shares issued at nominal amount:
- Performance Share Plan Awards 1 1
- scrip shares issued in lieu of cash dividends - 1
Premium on shares issued 117 180
Total value of shares issued 118 182
Issue of scrip shares in lieu of cash dividends (note 13) (51) (77)
Shares allotted to the Employee Benefit Trust (vi) (56) (63)
Net proceeds from issue of shares 11 42
(vi) In 2018 and 2017, shares were allotted/re-issued to the Employee Benefit Trust to satisfy the vesting and release of awards under
the 2014 Performance Share Plan to qualifying employees. An increase in nominal Share Capital and Share Premium of €56 million
and €63 million, respectively, arose on the allotment to the Employee Benefit Trust. No such allotment occured during 2019.
Share premium 2019
At 1 January 6,534 6,417
Premium arising on shares issued - 117
At 31 December 6,534 6,534
201
FINANCIALS
 201
32. Business Combinations
The acquisitions completed during the year ended 31 December 2019 by reportable segment, together with the completion dates, are detailed below; these
transactions entailed the acquisition of an effective 100% stake except where indicated to the contrary:
Americas Materials:
Canada: Beecroft Property (14 March), Mirabel Property (7 May) and Speyside Property (23 December);
Colorado: Otter Creek Property (28 March);
Connecticut: Wallingford Property (30 January);
Florida: Golden Gate Property (7 March) and Fortress Block, LLC (28 June);
Idaho: Heyrend Property (26 November) and Greenleaf Property (27 November);
Iowa: Kenyon Property (11 January);
Kentucky: Brushy Creek Stone LLC (9 August);
Michigan: Ottawa Lake Property (31 January), Delton Property (26 April) and Dinkgrave Property (29 July);
Nebraska: Treadway Property (25 November);
New York: Solvay Rail Terminal (28 June);
North Carolina: Cherokee County Property (18 November);
Ohio: KMC Paving (8 March);
Oregon: Windsor Rock Products (1 March), The Dalles Concrete, Inc. (29 March), Hood River Sand, Gravel and Ready-Mix (29 March) and Pioneer Asphalt
(31 May);
Texas: JLB Contracting (25 January) and CIG Rail Unloading Operations (3 July);
Utah: Schmidt Property (25 November) and Grantsville Property (30 December); and
Washington: Colville Valley Concrete (2 August).
Europe Materials:
Denmark: RC Beton A/S (1 October);
Finland: certain assets of Lujabetoni Oulu (1 September) and Ämmän Betoni Oy (31 December);
France: land adjacent to Decize Quarry (19 December), land adjacent to Lumbres Quarry (20 December) and land adjacent to La Villeneuve au Châtelot Quarry
(27 December);
Poland: land adjacent to Sitkówka Quarry (13 March), land adjacent to Ożarów Quarry (23 September) and Astaldi Asphalt Plant (9 December);
Romania: certain assets of Pomponio SRL (1 October); and
UK: lands adjacent to Whisby Quarry (13 December & 20 December), land adjacent to Park Quarry (18 December), land adjacent to Block Fen Quarry
(20 December) and land adjacent to Langford Quarry (23 December).
Building Products:
Americas
Canada: Primex Technologies Inc. (9 July) and Abbotsford Concrete Products Ltd. (31 July);
Arizona: Torrent Resources, Inc. (4 November);
Florida: Suntree Technologies, Inc. (5 March) and Standard Precast Inc. (1 October);
Ohio: Buckeye Resources, Inc. (9 May);
Texas: Charlotte’s Concrete, Inc. (5 August) and certain assets of Glass Wholesalers, Inc. (13 December);
Virginia: certain assets of Allied Concrete Company, LLC (28 March); and
Washington: Quality Concrete Products, Inc. (15 February) and Granite Precasting & Concrete Inc. (6 June).
Other
Australia: Aus Pits Pty Ltd (30 August);
Germany: BVG Ranck (30 April);
Netherlands: Filoform B.V. (1 May);
Poland: Libet S.A. Lublin Paving Plant (1 March); and
UK: Isedio Ltd (30 September).
202 202 
32. Business Combinations - continued
The identifiable net assets acquired, including adjustments to provisional fair values, were as follows:
2019
€m
2018
€m
2017
€m
ASSETS
Non-current assets
Property, plant and equipment 319 2,614 1,536
Intangible assets 92 58 56
Equity accounted investments - 1 -
Total non-current assets 411 2,673 1,592
Current assets
Inventories 58 255 114
Trade and other receivables (i) 66 318 129
Cash and cash equivalents 10 69 174
Total current assets 134 642 417
LIABILITIES
Trade and other payables (73) (224) (149)
Provisions for liabilities (6) (84) (49)
Retirement benefit obligations (1) (115) (52)
Lease liabilities (64) - -
Interest-bearing loans and borrowings and finance leases* (9) (74) (12)
Current income tax liabilities 9 (15) (22)
Deferred income tax liabilities - (411) (132)
Total liabilities (144) (923) (416)
Total identifiable net assets at fair value 401 2,392 1,593
Goodwill arising on acquisition (ii) 278 1,504 487
Joint ventures becoming subsidiaries - (120) -
Non-controlling interests** (1) (48) (20)
Total consideration 678 3,728 2,060
Consideration satisfied by:
Cash payments 660 3,574 2,015
Asset exchange - 12 -
Deferred consideration (stated at net present cost) 10 10 45
Contingent consideration 8 93 -
Profit on step acquisition - 39 -
Total consideration 678 3,728 2,060
Net cash outflow arising on acquisition
Cash consideration 660 3,574 2,015
Less: cash and cash equivalents acquired (10) (69) (174)
Total outflow in the Consolidated Statement of Cash Flows 650 3,505 1,841
Notes (i) to (ii) are set out overleaf.
* Includes €6 million in 2018 relating to finance leases previously capitalised under IAS 17. All leases capitalised under IFRS 16 have been included as lease liabilities in 2019.
** Non-controlling interests are measured at the proportionate share of net assets.
203
FINANCIALS
 203
The acquisition balance sheet presented on the previous page reflects the identifiable net assets acquired in respect of acquisitions completed during 2019,
together with adjustments to provisional fair values in respect of acquisitions completed during 2018. The measurement period for a number of acquisitions
completed in 2018, including Ash Grove Cement Company, closed in 2019 with no material adjustments identified.
CRH performs a detailed quantitative and qualitative assessment of each acquisition in order to determine whether it is material for the purposes of separate
disclosure under IFRS 3 Business Combinations. None of the acquisitions completed during the year were considered sufficiently material to warrant separate
disclosure of the attributable fair values. The initial assignment of the fair values to identifiable assets acquired and liabilities assumed as disclosed are
provisional (principally in respect of property, plant and equipment) in respect of certain acquisitions due to timing of close. The fair value assigned to identifiable
assets and liabilities acquired is based on estimates and assumptions made by management at the time of acquisition. CRH may revise its purchase price
allocation during the subsequent reporting window as permitted under IFRS 3.
(i) The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €67 million (2018: €324 million;
2017: €132 million). The fair value of these receivables is €66 million (all of which is expected to be recoverable) (2018: €318 million; 2017: €129 million).
(ii) The principal factor contributing to the recognition of goodwill on acquisitions entered into by the Group is the realisation of cost savings and other
synergies with existing entities in the Group which do not qualify for separate recognition as intangible assets. Due to the asset-intensive nature of
operations in the Europe Materials and Americas Materials business segments, no significant separately identifiable intangible assets are recognised on
business combinations in these segments. €164 million of the goodwill recognised in respect of acquisitions completed in 2019 is expected to be
deductible for tax purposes (2018: €277 million; 2017: €260 million).
Acquisition-related costs for continuing operations, which exclude post-acquisition integration costs, amounting to €6 million (2018: €18 million;
2017: €10 million) have been included in operating costs in the Consolidated Income Statement (note 4).
The following table analyses the 58 acquisitions completed in 2019 (2018: 44 acquisitions; 2017: 31 acquisitions) by reportable segment and provides details of
the goodwill and consideration figures arising in each of those segments:
Number of acquisitions 
Goodwill Consideration
Profit/(loss) before tax for the financial year 2 145 (1)
The revenue and profit of the Group for the financial year determined in accordance with IFRS as though the acquisitions effected during the year had been at
the beginning of the year would have been as follows:
2019
acquisitions
CRH Group
excluding 2019
acquisitions
Pro-forma
consolidated
Group
Continuing operations €m €m €m
Revenue 458 24,925 25,383
Profit before tax for the financial year 18 2,113 2,131
There have been no acquisitions completed subsequent to the balance sheet date which would be individually material to the Group, thereby requiring
disclosure under either IFRS 3 or IAS 10 Events after the Balance Sheet Date. Development updates, giving details of acquisitions which do not require separate
disclosure on the grounds of materiality, are published periodically.
205
FINANCIALS
 205
33. Non-controlling Interests
The total non-controlling interest at 31 December 2019 is €540 million (2018: €525 million) of which €414 million (2018: €384 million) relates to Republic
Cement & Building Materials (RCBM), Inc. and Republic Cement Land & Resources (RCLR), Inc. The non-controlling interests in respect of the Group’s other
subsidiaries are not considered to be material.
Name Principal activity Country of incorporation
Economic ownership interest
held by non-controlling interest
Republic Cement & Building Materials, Inc. Manufacture, development and Philippines 45%
and Republic Cement Land & Resources Inc. sale of cement and building materials
The following is summarised financial information for RCBM and RCLR prepared in accordance with IFRS 12 Disclosure of Interests in Other Entities. This
information is before intragroup eliminations with other Group companies.
Summarised financial information 2019
€m
2018
€m
Profit/(loss) for the year 19 (11)
Current assets 190 153
Non-current assets 1,504 1,351
Current liabilities (186) (160)
Non-current liabilities (822) (712)
Net assets 686 632
Cash flows from operating activities 60 36
There were no dividends paid to non-controlling interests of the combined Philippines business during the current or the prior year.
CRH holds 40% of the equity share capital in RCBM and RCLR and has an economic interest of 55% of the combined Philippines business. Non-controlling
interest relates to another party who holds 60% of the equity share capital in RCBM and RCLR and has an economic interest of 45% of the combined
Philippines business. CRH has obtained control (as defined under IFRS 10 Consolidated Financial Statements) by virtue of contractual arrangements which give
CRH power to direct the relevant non-nationalised activities of the business, in compliance with Philippine law.
206 206 
34. Related Party Transactions
The principal related party relationships requiring disclosure in the Consolidated Financial Statements of the Group under IAS 24 Related Party Disclosures
pertain to: the existence of subsidiaries, joint ventures and associates; transactions with these entities entered into by the Group; the identification and
compensation of key management personnel; and lease arrangements.
Subsidiaries, joint ventures and associates
The Consolidated Financial Statements include the financial statements of the Company (CRH plc, the ultimate parent) and its subsidiaries, joint ventures and
associates as documented in the accounting policies on pages 133 to 144. The Group’s principal subsidiaries, joint ventures and associates are disclosed on
pages 260 to 264.
Sales to and purchases from joint ventures and associates are as follows:
Joint ventures Associates
Continuing operations
Loans extended by the Group to joint ventures and associates (see note 17) are included in financial assets. Amounts receivable from and payable to equity
accounted investments (arising from the aforementioned sales and purchases transactions) as at the balance sheet date are included as separate line items in
notes 19 and 20 to the Consolidated Financial Statements.
Terms and conditions of transactions with subsidiaries, joint ventures and associates
In general, the transfer pricing policy implemented by the Group across its subsidiaries is market-based. Sales to and purchases from joint ventures and
associates are conducted in the ordinary course of business and on terms equivalent to those that prevail in arms-length transactions. The outstanding
balances included in receivables and payables as at the balance sheet date in respect of transactions with joint ventures and associates are unsecured and
settlement arises in cash. No guarantees have been either requested or provided in relation to related party receivables and payables. Loans to joint ventures
and associates (as disclosed in note 17) are extended on normal commercial terms in the ordinary course of business with interest accruing and, in general,
paid to the Group at predetermined intervals.
Key management personnel
For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having authority and responsibility for
planning, directing and controlling the activities of the Company) comprises the Board of Directors which manages the business and affairs of the Company.
Key management remuneration amounted to: Short-term benefits 8 8 9
Post-employment benefits 1 1 1
Share-based payments - calculated in accordance with
the principles disclosed in note 9

Other than these compensation entitlements, there were no other transactions involving key management personnel.
Lease arrangements
CRH has a number of lease arrangements in place with related parties across the Group, which have been negotiated on an arms-length basis at market rates.
We do not consider these arrangements to be material either individually or collectively in the context of the 2019, 2018 and 2017 Consolidated Financial
Statements.
35. Events after the Balance Sheet Date
With effect from 1 January 2020, the Group’s reporting currency changed from euro to US Dollar to reduce the potential for foreign exchange volatility in our
future reported earnings.
36. Board Approval
The Board of Directors approved and authorised for issue the financial statements on pages 128 to 215 in respect of the year ended 31 December 2019 on
27 February 2020.
207
FINANCIALS
 207
37. Supplemental Guarantor Information
The following consolidating information presents Condensed Consolidated Balance Sheets as at 31 December 2019 and 2018 and Condensed Consolidated
Income Statements and Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flow for the years
ended 31 December 2019, 2018 and 2017 of the Company and CRH America, Inc. as required by Article 3-10(c) of Regulation S-X. This information is
prepared in accordance with IFRS with the exception that the subsidiaries are accounted for as investments under the equity method rather than being
consolidated. CRH America, Inc. is 100% owned by the Company. The Guarantees of the Guarantor are full and unconditional.
CRH plc also fully and unconditionally guarantees securities issued by CRH America Finance, Inc., which is a 100% owned finance subsidiary of CRH plc.
CRH America, Inc. (the ‘Issuer’) has the following notes which are fully and unconditionally guaranteed by CRH plc (the ‘Guarantor’):

(i) Originally issued as a US$300 million bond in September 2003. Subsequently in August 2009 and December 2010, US$87.445 million of the issued notes
were acquired by CRH plc as part of liability management exercises undertaken.
218 218 
Notes to the Company Balance Sheet
1. Basis of Preparation
The financial statements have been prepared on a going concern basis under the historical cost convention in accordance with the Companies Act 2014 and
GAAP in the Republic of Ireland (Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)). Note 2 overleaf describes the principal
accounting policies under FRS 101, which have been applied consistently.
In these financial statements the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• Statement of Cash Flows;
• Disclosures in respect of transactions with wholly-owned subsidiaries;
• Certain requirements of IAS 1 Presentation of Financial Statements;
• Disclosures required by IFRS 7 Financial Instrument Disclosures;
• Disclosures required by IFRS 13 Fair Value Measurement; and
• The effects of new but not yet effective IFRSs
The Company’s investment in shares in its subsidiaries was revalued at 31 December 1980 to reflect the surplus on revaluation of certain property, plant and
equipment (land and buildings) of subsidiaries. The original historical cost of the shares equated to approximately €9 million. The analysis of the closing balance
between amounts carried at valuation and at cost is as follows:
Deemed cost in respect of the investment in these subsidiaries amounted to €400 million at the date of transition to FRS 101.
219
FINANCIALS
 219
2. Accounting Policies
General information
CRH plc (the “Company”) and its subsidiaries
(together the “Group”) is a global diversified
building materials group which manufactures and
supplies a diverse range of superior building
materials and products for use in the construction
and maintenance of infrastructure, housing and
commercial products. The Company is a public
limited company whose shares are publicly traded.
The Company is incorporated and domiciled in the
Republic of Ireland. The Company’s registered
number is 12965 and registered office address is
42 Fitzwilliam Square, Dublin 2, Ireland.
Key accounting policies which
involve estimates, assumptions
and judgements
Preparation of the financial statements requires
management to make significant judgements and
estimates. The items in the financial statements
where these judgements and estimates have been
made include:
Financial assets
Investments in subsidiaries, are stated at cost less
any accumulated impairment and are reviewed for
impairment if there are indications that the carrying
value may not be recoverable. Impairment
assessment is considered as part of the Group’s
overall impairment assessment.
Loans receivable and payable
Intercompany loans receivable and payable are
initially recognised at fair value. These are
subsequently measured at amortised cost, less
any loss allowance.
Other significant
accounting policies
Operating income and expense
Operating income and expense arises from the
Company’s principal activities as a holding and
financing company for the Group and are
accounted for on an accruals basis.
Foreign currencies
The functional and presentation currency of the
Company is euro. Transactions in foreign
currencies are translated at the rates of exchange
ruling at the transaction date. Monetary assets and
liabilities denominated in foreign currencies are
translated into euro at the rates of exchange ruling
at the balance sheet date, with a corresponding
charge or credit to the profit and loss account.
Share issue expenses and share
premium account
Costs of share issues are written off against the
premium arising on issues of share capital.
Share-based payments
The Company has applied the requirements of
Section 8 of FRS 101.
The accounting policy applicable to share-based
payments is addressed in detail on page 140 of
the Consolidated Financial Statements.
Treasury Shares and own shares
Treasury Shares
Own equity instruments (i.e. Ordinary Shares)
acquired by the Company are deducted from
equity and presented on the face of the Company
Balance Sheet. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or
cancellation of the Company’s Ordinary Shares.
Own shares
Ordinary Shares purchased by the Employee
Benefit Trust on behalf of the Company under the
terms of the Performance Share Plan are recorded
as a deduction from equity on the face of the
Company Balance Sheet.
Dividends
Dividends on Ordinary Shares are recognised as a
liability in the Company’s Financial Statements in
the period in which they are declared by the
Company.
Dividend income
Dividend income is recognised when the right to
receive payment is established.
Cash and cash equivalents
Cash and cash equivalents comprise cash
balances held for the purpose of meeting
short-term cash commitments and investments
which are readily convertible to a known amount
of cash and are subject to an insignificant risk of
change in value. Bank overdrafts are included
within creditors falling due within one year in the
Company Balance Sheet.
220 220 
Notes to the Company Balance Sheet - continued
3. Financial Assets
The Company’s investment in its subsidiaries is as follows:
6. Auditor’s Remuneration (Memorandum Disclosure)
In accordance with Section 322 of the Companies Act 2014, the fees paid in 2019 to the statutory auditor for work engaged by the Parent Company comprised
audit fees of €20,000 (2018: €20,000) and other assurance services of €nil (2018: €nil).
221
FINANCIALS
 221
7. Dividends Proposed
(Memorandum Disclosure)
Details in respect of dividends proposed of
€495 million (2018: €425 million) and dividends
paid during the year are presented in the
dividends note (note 13) on page 162 of the
notes to the Consolidated Financial Statements.
8. Called-up Share Capital
Details in respect of called-up share capital,
preference share capital, Treasury Shares and
own shares are presented in the share capital
and reserves note (note 31) on pages 198 to
200 of the notes to the Consolidated Financial
Statements.
9. Reserves
Revaluation Reserve
The Company’s revaluation reserve arose on
the revaluation of certain investments prior to
the transition to FRS 101.
Other Reserves
The Company’s other reserves includes
€15 million undenominated share capital that
arose on the cancellation of the Treasury Shares
in 2019.
In accordance with Section 304 of the
Companies Act 2014, the Company is availing
of the exemption from presenting its individual
profit and loss account to the AGM and from
filing it with the Registrar of Companies.
The reserves of the Company available for
distribution are restricted by the amount of the
consideration paid for the Treasury Shares and
own shares held by the Company, €325 million
as at 31 December 2019 (2018: €792 million)
and the undenominated share capital of
€15 million (2018: €nil million).
10. Share-based Payments
The total expense of €77 million (2018: €67
million) reflected in the Consolidated Financial
Statements attributable to employee share
options and performance share awards has
been included as a capital contribution in
financial assets (note 3) in addition to any
payments to/from subsidiaries.
11. Section 357 Guarantees
Any Irish registered wholly-owned subsidiary of
the Company may avail of the exemption from
filing its statutory financial statements for the
year ended 31 December 2019 as permitted by
Section 357 of the Companies Act 2014 and if
an Irish registered wholly-owned subsidiary of
the Company elects to avail of this exemption,
there will be in force an irrevocable guarantee
from the Company in respect of all
commitments entered into by such wholly-
owned subsidiary, including amounts shown as
liabilities (within the meaning of Section 357
(1)(b) of the Companies Act 2014) in such
wholly-owned subsidiary’s statutory financial
statements for the year ended 31 December
2019.
Details in relation to other guarantees provided
by the Company are provided in the interest-
bearing loans and borrowings note (note 26) on
page 187 of the notes to the Consolidated
Financial Statements.
12. Directors’ Emoluments
Directors’ emoluments and interests are
presented in the Directors’ Remuneration
Report on pages 74 to 100 of this Annual
Report and Form 20-F.
13. Board Approval
The Board of Directors approved and
authorised for issue the Company Financial
Statements on pages 216 to 221 in respect of
the year ended 31 December 2019 on 27
February 2020.
CRH’s office in Atlanta, Georgia underwent a significant redesign of its 80,000 sq. ft workspace in 2019. CRH’s own
materials and products feature throughout the three office floors, including aggregates, concrete, hardware, glass
and staircases. The project was completed in June 2019, creating a state-of-the-art, open-plan work environment.
Selected Financial Data 224
Non-GAAP
Performance Measures 225
Contractual Obligations 229
Property, Plants
and Equipment 230
Mineral Reserves 231
Risk Factors 233
Corporate Governance
Practices 242
The Environment and
Government Regulations 244
Other Disclosures 245
224 - 245
Supplementary
20-F Disclosures
Number of Ordinary Shares net of Treasury Shares and own shares (ii) 789.4 815.6 838.6 832.4 822.6
(i)	
Prior year comparative income statement data has been restated to show the results of our Europe Distribution segment in discontinued operations. See
note 3 to the Consolidated Financial Statements for further details.
(ii)	 All share numbers are shown in millions of shares.
(iii) Net assets is calculated as the sum of total assets less total liabilities.
Selected Financial Data
The Consolidated Financial Statements of CRH plc
have been prepared in accordance with IFRS as
issued by the International Accounting Standards
Board.
Selected financial data is presented below for the
five years ended on 31 December 2019. For the
three years ended 31 December 2019, the
selected financial data is qualified in its entirety by
reference to, and should be read in conjunction
with, the audited Consolidated Financial
Statements, the related Notes and the Business
Performance section included elsewhere in this
Annual Report and Form 20-F.
224 SUPPLEMENTARIES
Reconciliation of Revenue, EBITDA (as defined)* and Operating Profit by segment
Year ended 31 December
Revenue
Group EBITDA
(as defined)*
Depreciation,
amortisation and
impairment
Group operating profit (i)
(i) Throughout this document, Group operating profit is reported as shown in the Consolidated Income Statement and excludes profit on disposals.
Non-GAAP Performance Measures
CRH uses a number of non-GAAP performance
measures to monitor financial performance. These
measures are referred to throughout the discussion
of our reported financial position and operating
performance and are measures which are regularly
reviewed by CRH management.
These performance measures may not be uniformly
defined by all companies and accordingly they may
not be directly comparable with similarly titled
measures and disclosures by other companies.
Certain information presented is derived from
amounts calculated in accordance with IFRS but is
not itself an expressly permitted GAAP measure.
The non-GAAP performance measures as
summarised below should not be viewed in
isolation or as an alternative to the equivalent
GAAP measure.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
225
Return on Net Assets
Assets
Segment assets (i) 32,684 31,510 26,809 27,581
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method 690 1,163 1,248 1,299
Other financial assets 12 23 25 26
Derivative financial instruments (current and non-current) 82 45 64 76
Income tax assets (current and deferred) 87 86 260 163
Cash and cash equivalents 3,755 2,346 2,115 2,449
Assets held for sale - - 1,112 -
Total assets as reported in the Consolidated Balance Sheet 37,310 35,173 31,633 31,594
Liabilities
Segment liabilities (i) 7,958 6,592 6,201 6,927
Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:
Interest-bearing loans and borrowings (current and non-current) 9,014 9,316 7,976 7,790
Derivative financial instruments (current and non-current) 17 59 14 32
Income tax liabilities (current and deferred) 2,841 2,652 2,124 2,402
Liabilities associated with assets classified as held for sale - - 341 -
Total liabilities as reported in the Consolidated Balance Sheet 19,830 18,619 16,656 17,151
(i) Segment assets and liabilities as disclosed in note 2 to the Consolidated Financial Statements.
(ii)	
Segment liabilities include lease liabilities capitalised under IFRS 16 in 2019 which are debt in nature and are therefore adjusted for in arriving at
the calculation of Group segment net assets for the calculation of RONA. Segment lease liabilities at 31 December 2019 amounted to; America
Materials €363 million, Europe Materials €493 million and Building Products €655 million.
(iii)	
For the 2018 calculation, as the net segment assets classified as held for sale at 31 December 2017 were disposed of on 2 January 2018, these
have been excluded from the prior year element. For consistency, the related immaterial operating loss of €5 million in 2018 is also excluded.
Non-GAAP Performance Measures - continued
226 SUPPLEMENTARIES
Calculation of Net Debt/EBITDA (as defined)*
2019 2018
€m €m
Net debt
Lease liabilities under IFRS 16 (i) (1,511) -
Interest-bearing loans and borrowings (i) (9,014) (9,316)
Derivative financial instruments (net) (i) 65 (14)
Cash and cash equivalents (i) 3,755 2,346
Group net debt (i) (6,705) (6,984)
EBITDA (as defined)* from continuing operations 4,000 3,216
EBITDA (as defined)* from discontinued operations 200 144
EBITDA (as defined)* from continuing and discontinued operations 4,200 3,360
Times
Net Debt divided by EBITDA (as defined)* from continuing operations (ii) 1.7
Net Debt divided by EBITDA (as defined)* from continuing and
discontinued operations (ii)
2.1
(i) These items appear in notes 22 to 27 to the Consolidated Financial Statements.
(ii) In line with the purpose of the metric, as set out on page 228, to “assess the Company’s level of indebtedness
relative to its profitability and cash-generating capabilities”, the 2019 calculation is based on a continuing
operations basis. For 2018, the Group net debt position includes debt related to operations discontinued in
2019 and therefore for comparability purposes the 2018 calculation uses EBITDA (as defined)* from continuing
and discontinued operations.
Calculation of EBITDA (as defined)* Net Interest Cover
2019 2018 2017
€m €m €m
Interest
Finance costs (i) 346 339 301
Finance income (i) (20) (34) (12)
Net interest 326 305 289
EBITDA (as defined)* from continuing operations 4,000 3,216 2,930
Times
EBITDA (as defined)* Net Interest Cover (EBITDA (as defined)* divided by net interest) 12.3 10.5 10.1
(i) These items appear on the Consolidated Income Statement on page 128.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
227
EBITDA (as defined). EBITDA is defined as
earnings before interest, taxes, depreciation,
amortisation, asset impairment charges, profit on
disposals and the Group’s share of equity
accounted investments’ profit after tax and is
quoted by management in conjunction with other
GAAP and non-GAAP financial measures, to aid
investors in their analysis of the performance of the
Group and to assist investors in the comparison of
the Group’s performance with that of other
companies. EBITDA (as defined)* and operating
profit by segment are monitored by management
in order to allocate resources between segments
and to assess performance. Given that net finance
costs and income tax are managed on a
centralised basis, these items are not allocated
between operating segments for the purpose of
the information presented to the Chief Operating
Decision Maker. EBITDA (as defined)* margin is
calculated by expressing EBITDA (as defined)* as
a percentage of sales.
Net Debt. Net debt is used by management as it
gives a more complete picture of the Group’s
current debt situation than total interest-bearing
loans and borrowings. Net debt is provided to
enable investors to see the economic effect of
gross debt, related hedges and cash and cash
equivalents in total. Net debt is a non-GAAP
measure and comprises current and non-current
interest-bearing loans and borrowings, lease
liabilities under IFRS 16, cash and cash
equivalents and current and non-current derivative
financial instruments.
Net Debt/EBITDA (as defined)* is monitored by
management and is useful to investors in
assessing the Company’s level of indebtedness
relative to its profitability and cash-generating
capabilities. It is the ratio of Net Debt to EBITDA
(as defined)* and is calculated on page 227.
EBITDA (as defined)* Net Interest Cover. EBITDA
(as defined)* Net Interest Cover is used by
management as a measure which matches the
earnings and cash generated by the business to
the underlying funding costs. EBITDA (as defined)*
Net Interest Cover is presented to provide
investors with a greater understanding of the
impact of CRH’s debt and financing arrangements.
It is the ratio of EBITDA (as defined)* to Net Interest
and is calculated on page 227.
RONA. Return on Net Assets is a key internal
pre-tax measure of operating performance
throughout the CRH Group and can be used by
management and investors to measure the relative
use of assets between CRH’s business segments
and to compare to other businesses. The metric
measures management’s ability to generate profits
from the net assets required to support that
business, focusing on both profit maximisation and
the maintenance of an efficient asset base; it
encourages effective fixed asset maintenance
programmes, good decisions regarding
expenditure on property, plant and equipment and
the timely disposal of surplus assets, and also
supports the effective management of the Group’s
working capital base. RONA is calculated by
expressing total Group operating profit as a
percentage of average net assets. Net assets
comprise total assets by segment (including assets
held for sale) less total liabilities by segment
(excluding lease liabilities and including liabilities
associated with assets classified as held for sale)
as shown on page 226 and detailed in note 2 to
the Consolidated Financial Statements, and
excludes equity accounted investments and other
financial assets, net debt (as previously defined)
and tax assets & liabilities. The average net assets
for the year is the simple average of the opening
and closing balance sheet figures.
Organic Revenue, Organic Operating Profit
and Organic EBITDA (as defined)*. CRH pursues
a strategy of growth through acquisitions and
investments, with €727 million spent on acquisitions
and investments in 2019 (2018: €3,562 million).
Acquisitions completed in 2018 and 2019
contributed incremental sales revenue of
€923 million, operating profit of €70 million
and EBITDA (as defined)* of €164 million in 2019.
Proceeds from divestments and non-current asset
disposals amounted to €2,096 million (net of cash
disposed and deferred proceeds) (2018: €3,009
million). The sales impact of divested activities in
2019 was a negative €629 million and the impact
at an operating profit and EBITDA (as defined)*
level was a negative €18 million and €52 million
respectively.
The euro weakened against most major currencies
during 2019 resulting in the average euro/US
Dollar rate strengthening from 1.1810 in 2018 to
1.1195 in 2019 and the Pound Sterling
strengthening from an average 0.8847 in 2018 to
0.8778 in 2019. Overall currency movements
resulted in a favourable net foreign currency
translation impact on our results as shown on the
table on page 34.
Because of the impact of acquisitions,
divestments, exchange translation and other
non-recurring items on reported results each year,
the Group uses organic revenue, organic operating
profit and organic EBITDA (as defined)* as
additional performance indicators to assess
performance of pre-existing (also referred to as
underlying, heritage, like-for-like or ongoing)
operations each year.
Organic revenue, organic operating profit and
organic EBITDA (as defined)* is arrived at by
excluding the incremental revenue, operating profit
and EBITDA (as defined)* contributions from current
and prior year acquisitions and divestments, the
impact of exchange translation and the impact of any
non-recurring items. In the Business Performance
section on pages 38 to 52, changes in organic
revenue, organic operating profit and organic
EBITDA (as defined)* are presented as additional
measures of revenue, operating profit and EBITDA
(as defined)* to provide a greater understanding of
the performance of the Group. A reconciliation of
the changes in organic revenue, organic operating
profit and organic EBITDA (as defined)* to the
changes in total revenue, operating profit and
EBITDA (as defined)* for the Group and by
segment, is presented with the discussion of each
segment’s performance in tables contained in the
segment discussion commencing on page 30.
Revenue from continuing and discontinued
operations, EBITDA (as defined)* from continuing
and discontinued operations and Operating Profit
from continuing and discontinued operations. As
detailed in note 3 to the Consolidated Financial
Statements, our Europe Distribution and our
Americas Distribution segments have been
classified as discontinued operations in
accordance with IFRS 5. In certain instances
throughout the Annual Report and Form 20-F we
refer to revenue, EBITDA (as defined)* and
operating profit from continuing and discontinued
operations. Information presented on this basis is
useful to investors as (i) it provides a greater
understanding of the Group’s performance and (ii)
assists investors in the comparison of the Group’s
performance with that of other companies.
A reconciliation of each of these measures is
detailed in note 2 to the Consolidated Financial
Statements and on page 225.
Cash paid to Shareholders. Cash paid to
shareholders is a measure of cash returned to
shareholders representing dividends of €0.6 billion
(2018: €0.5 billion) paid during the year and
excess cash of €0.8 billion (2018: €0.8 billion)
returned through the share buyback programme.
The metric provides information on dividend
growth for shareholders and is reflective of CRH’s
continued commitment to return excess cash to
shareholders. CRH monitor the cash paid to
shareholders as part of their overall capital
allocation strategy.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Non-GAAP Performance Measures - continued
228 SUPPLEMENTARIES
Contractual Obligations
Payments due by period Total
Less than
1 year 1-3 years 3-5 years
More than
5 years
€m €m €m €m €m
Interest-bearing loans and borrowings (i) 8,962 824 1,353 1,356 5,429
Lease liabilities under IFRS 16 (ii) 2,038 275 424 293 1,046
Estimated interest payments on contractually-committed debt (iii) 3,156 307 533 460 1,856
Deferred and contingent acquisition consideration 335 45 46 120 124
Purchase obligations (iv) 1,398 700 218 141 339
Retirement benefit obligation commitments (v) 19 2 4 4 9
Total 15,908 2,153 2,578 2,374 8,803
(i)	
Of the €9.0 billion total gross debt, €0.1 billion is drawn on revolving facilities which may be repaid and redrawn up to the date of maturity. The interest
payments are estimated assuming these loans are repaid on facility maturity dates.
(ii) Lease liabilities are presented on an undiscounted basis as detailed in note 22 and note 24 to the Consolidated Financial Statements.
(iii)	
These interest payments have been estimated on the basis of the following assumptions: (a) no change in variable interest rates; (b) no change in exchange
rates; (c) that all debt is repaid as if it falls due from future cash generation; and (d) none is refinanced by future debt issuance.
(iv)	
Purchase obligations include contracted for capital expenditure. A summary of the Group’s future purchase commitments as at 31 December 2019 for
capital expenditure is set out in note 15 to the Consolidated Financial Statements. These expenditures for replacement and new projects are in the ordinary
course of business and will be financed from internal resources.
(v)	
These retirement benefit commitments comprise the contracted payments related to our pension schemes in the UK. See further details in note 30 to the
Consolidated Financial Statements.
Quantitative and Qualitative
Information about Market Risk
CRH addresses the sensitivity of the Group’s
interest rate swaps and debt obligations to
changes in interest rates in a sensitivity analysis
technique that measures the estimated impacts on
the income statement and on equity of either an
increase or decrease in market interest rates
or a strengthening or weakening in the US Dollar
against all other currencies, from the rates
applicable at 31 December 2019, for each class of
financial instrument with all other variables
remaining constant. The technique used measures
the estimated impact on profit before tax and on
total equity arising on net year-end floating rate
debt and on year-end equity, based on either an
Contractual Obligations
increase/decrease of 1% in floating interest
rates or a 5% strengthening/weakening in the
euro/US Dollar exchange rate. The euro/US Dollar
rate has been selected for this sensitivity analysis
given the materiality of the Group’s activities in
the US. This analysis, set out in note 24 to
the Consolidated Financial Statements, is for
illustrative purposes only as in practice interest and
foreign exchange rates rarely change in isolation.
Quantitative and qualitative information and
sensitivity analysis of market risk is contained
in notes 23 to 27 to the Consolidated Financial
Statements.
Off-Balance Sheet
Arrangements
CRH does not have any off-balance sheet
arrangements that have, or are reasonably likely to
have a current or future effect on CRH’s financial
condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material
to investors.
An analysis of the maturity profile of debt, leases capitalised under IFRS 16, purchase obligations, deferred and contingent acquisition consideration and pension
scheme contribution commitments at 31 December 2019 is as follows:
229
Property, Plants and Equipment
Significant Locations – Clinker Capacity
Subsidiary Country Number of plants
Clinker capacity
(tonnes per hour)
Ash Grove United States 8 925
Republic Cement Philippines 5 628
Grupa Ożarów Poland 1 342
Podilsky Cement PJSC Ukraine 1 325
Tarmac United Kingdom 3 306
CRH Romania Romania 2 305
CRH Slovakia Slovakia 2 290
CRH Canada Canada 2 288
Irish Cement Ireland 2 288
Opterra Germany 2 268
Eqiom France 3 243
Suwannee American Cement Company United States 2 223
CRH Brazil Brazil 3 200
At 14 February 2020, CRH had a total of 3,102
building materials production locations. 1,069
locations are leased, with the remaining 2,033
locations held on a freehold basis.
The significant subsidiary locations as at
31 December 2019 are the cement facilities in the
US, Philippines, Poland, Ukraine, the UK, Romania,
Canada, Slovakia, Ireland, Germany, France and
Brazil. The clinker (the key intermediate product in
the manufacture of cement) capacity for these
locations is set out in the table below. Further
details on locations and products manufactured
are provided on pages 268 and 269. None of
CRH’s individual properties is of material
significance to the Group.
CRH believes that all the facilities are in good
condition, adequate for their purpose and suitably
utilised according to the individual nature and
requirements of the relevant operations. CRH has
a continuing programme of improvements and
replacements to properties when considered
appropriate to meet the needs of the individual
operations. Further information in relation to the
Group’s accounting policy and process governing
any impairment of property, plant and equipment is
given on page 140 and in note 15 to the
Consolidated Financial Statements on page 164.
Sources and Availability of
Raw Materials
CRH generally owns or leases the real estate on
which its main raw materials, namely aggregates,
are found. CRH is a significant purchaser of certain
important materials or resources such as cement,
bitumen, steel, gas, fuel and other energy supplies,
the cost of which can fluctuate significantly and
consequently have an adverse impact on CRH’s
business. CRH is not generally dependent on any
one source for the supply of these materials or
resources, other than in certain jurisdictions with
regard to the supply of gas and electricity.
Competitive markets generally exist in the
jurisdictions in which CRH operates for the supply
of cement, bitumen, steel and fuel.
Mine Safety Disclosures
The information concerning mine safety violations
and other regulatory matters required by Section
1503(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act is included in Exhibit 16 to
CRH’s Annual Report on Form 20-F, as filed with
the Securities and Exchange Commission (SEC).
230 SUPPLEMENTARIES
(i) The disclosures made in this category refer to those facilities which are engaged in on-site processing of reserves in the various forms.
(ii) 1 hectare equals approximately 2.47 acres.
(iii)	
Where reserves are leased, the data presented above is restricted to include only that material which can be produced over the life of the contractual
commitment inherent in the lease; the totals shown pertain only to amounts which are proven and probable. All of the proven and probable reserves are
permitted and are quoted in millions of tonnes.
(iv) Years to depletion is based on the average of the most recent three years annualised production.
(v) Annualised extraction is quoted in millions of tonnes.
Mineral Reserves
231
The Group’s reserves for the production of primary
building materials (which encompasses cement,
lime, aggregates (stone, sand and gravel), asphalt,
readymixed concrete and concrete products)
fall into a variety of categories spanning a
wide number of rock types and geological
classifications – see the table on the previous page
setting out the activities with reserves backing.
Reserve estimates are generally prepared by
third-party experts (i.e. geologists or engineers)
prior to acquisition; this procedure is a critical
component in the Group’s due diligence process in
connection with any acquisition. Subsequent to
acquisition, estimates are typically updated by
company engineers and/or geologists and are
reviewed annually by corporate and/or divisional
staff. However, where deemed appropriate by
management, in the context of large or
strategically important deposits, the services of
third-party consultant geologists and/or engineers
may be employed to validate reserves quantities
outside of the aforementioned due diligence
framework on an ongoing basis.
The Group has not employed third-parties to
review reserves over the three-year period ending
31 December 2019 other than in business
combination activities and specific instances where
such a review was warranted.
Reserve estimates are subject to annual review by
each of the relevant operating entities across the
Group. The estimation process distinguishes
between owned and leased reserves segregated
into permitted and unpermitted as appropriate and
includes only those permitted reserves which are
proven and probable. The term “permitted”
reserves refers to those tonnages which could be
economically and legally extracted or produced at
the time of the reserve determination. Permitted
owned reserve estimates are based on estimated
recoverable tonnes whilst permitted leased reserve
estimates are based on estimated total recoverable
tonnes which may be extracted over the term of
the lease contract.
Proven and probable reserve estimates are based
on recoverable tonnes only and are thus stated net
of estimated production losses and other matters
factored into the computation (e.g. required
slopes/benches). In order for reserves to qualify for
inclusion in the “proven and probable” category,
the following conditions must be satisfied:
• the reserves must be homogeneous deposits
based on drill data and/or local geology; and
• the deposits must be located on owned land or
on land subject to lease
None of CRH’s mineral-bearing properties is
individually material to the Group.
Mineral Reserves - continued
232 SUPPLEMENTARIES
This section describes the key risk factors that
could affect the Group’s business. If any of these
risks occur, the Group’s business, financial
condition, results of operations and prospects
could be materially adversely affected.
The risk factors listed below should be considered
in connection with any forward-looking statements
in this Annual Report and Form 20-F and the
cautionary statements contained in Corporate
Governance - Disclaimer/Forward-Looking
Statements on page 103.
The risk factors presented below are reviewed on
an annual basis and represent the key risk factors
faced by the Group at the time of compilation of
the 2019 Annual Report and Form 20-F. During the
course of 2020, new risk factors may materialise
attributable to changes in markets, regulatory
environments and other factors and existing risk
factors may become less relevant.
The Risk Factors have been grouped to focus on
key strategic, operational, compliance and financial
and reporting risks.
Risk Factors
Industry Cyclicality and Adverse Economic Conditions
Risk Discussion
Description:
Construction activity, and therefore demand
for the Group’s products, is inherently cyclical
as it is influenced by global and national
economic circumstances, governments’
ability to fund infrastructure projects,
consumer sentiment and weather conditions.
The Group may also be negatively impacted
by unfavourable swings in fuel and other
commodity/raw material prices.
Impact:
Failure to predict and plan for cyclical events
or adverse economic conditions could
negatively impact financial performance.
The Group’s operating and financial performance is influenced by general economic conditions and the state of
infrastructure, residential and non-residential sectors in the countries in which it operates.
In general, economic uncertainty exacerbates negative trends in construction activity leading to postponement
of orders. Construction markets are inherently cyclical and are affected by many factors that are beyond the
Group’s control, including:
• the price of fuel and principal energy-related raw materials such as bitumen and steel (which accounted
for approximately 11% of annual Group sales revenues in 2019);
• the performance of the national economies in the countries in which the Group operates, across Europe,
the Americas and Asia;
• monetary policies in the countries in which the Group operates — for example, an increase in interest
rates typically reduces the volume of mortgage borrowings thus adversely impacting residential
construction activity;
• the allocation of government funding for public infrastructure programmes, such as the development of
highways in the US under the Fixing Americas Surface Transportation Act (FAST Act); and
• the level of demand for construction materials and services, with sustained adverse weather conditions
leading to potential disruptions or curtailments in outdoor construction activity
The adequacy and timeliness of the actions taken by the Group’s management team are of critical importance
in maintaining financial performance at appropriate levels.
Each of the above factors could have a material adverse effect on the Group’s operating results and the market
price of CRH plc’s Ordinary Shares.
233
Key Strategic Risk Factors
Geopolitical and/or Social Instability
Risk Discussion
Description:
Adverse and fast changing economic, social,
political and public health situations in any
country in which the Group operates could
lead to business interruption, restrictions
on repatriation of earnings or a loss of plant
access.
Impact:
Changes in these conditions may adversely
affect the Group’s business, results of
operations, financial condition or prospects.
The Group currently operates mainly in Western Europe and North America as well as, to a lesser degree, in
developing countries/emerging markets in Eastern Europe, the Philippines, Brazil and China. The economies of
these countries are at varying stages of socioeconomic and macroeconomic development which could give rise
to a number of risks, uncertainties and challenges that could include the following:
• changes in political, social or economic conditions;
• trade protection measures and import or export licensing requirements;
• political unrest and currency disintegration;
• activism and civil disturbance, triggered by natural disasters, terrorist events, outbreak of armed conflict, etc.;
• labour and procurement practices which contravene ethical considerations;
• unexpected changes in regulatory and tax requirements;
• state-imposed restrictions on repatriation of funds; and
• outbreak of public health emergencies/epidemics/pandemics
While economic trends are positive across many of the Group’s major markets, the ongoing uncertainty around
the UK’s decision to withdraw from the European Union, together with the effects of US and China trade
negotiations and ongoing tensions in the Ukraine, where the Group has significant business interests, have
collectively contributed to heightened uncertainty, with possible upside and downside economic consequences.
Commodity Products and Substitution
Risk Discussion
Description:
Many of the Group’s products are
commodities, which face strong volume
and price competition, and may be replaced
by substitute products which the Group
does not produce. Further, the Group must
maintain strong customer relationships to
ensure changing consumer preferences are
addressed.
Impact:
Failure to differentiate and innovate could
lead to market share decline, thus adversely
impacting financial performance.
The competitive environment in which the Group operates can be significantly impacted by general economic
conditions in combination with local factors including the number of competitors, the degree of utilisation of
production capacity and the specifics of product demand. Many of the Group’s products are commodities
and competition in such circumstances is driven largely by price. Across the multitude of largely local markets
in which the Group conducts business, downward pricing pressure is experienced from time to time, and the
Group may not always be in a position to recover increased operating expenses (caused by factors such as
increased fuel and raw material prices) through higher sale prices.
The cement business, in particular, is capital intensive resulting in significant fixed and semi-fixed costs. The
Group’s profits are therefore sensitive to changes in volume, which is driven by highly competitive markets, and
impacted by ongoing capital expenditure needs.
A number of the products sold by the Group compete with other building products that do not feature in the
Group’s existing product range. Any significant shift in demand preference from the Group’s existing products
to substitute products, which the Group does not produce, could adversely impact market share and results of
operations.
Key Strategic Risk Factors - continued
Portfolio Management
Risk Discussion
Description:
The Group may engage in acquisition and
divestment activity during the year as part
of the Group’s active portfolio management
which presents risks around due diligence,
execution and integration of assets.
Additionally, the Group may be liable for
liabilities of companies it has acquired or
divested.
Impact:
Failure to identify and execute deals in an
efficient manner may limit the Group’s growth
potential and impact financial performance.
The Group’s acquisition strategy focuses on value-enhancing mid-sized acquisitions, largely in existing markets,
supplemented from time to time by larger strategic acquisitions into new markets or new building products. In
addition, as part of its ongoing commitment to active portfolio management, the Group may, from time to time,
divest businesses which are evaluated to be non-core or underperforming.
The realisation of the Group’s acquisition strategy is dependent on the ability to identify and acquire suitable
assets at appropriate prices thus satisfying the stringent cash flow and return on investment criteria
underpinning such activities. The Group may not be able to identify such companies, and, even if identified,
may not be able to acquire them because of a variety of factors including the outcome of due diligence
processes, the ability to raise funds (as required) on acceptable terms, the need for competition authority
approval in certain instances and competition for transactions from peers and other entities exploring
acquisition opportunities in the building materials sector. In addition, situations may arise where the Group
may be liable for the past acts, omissions or liabilities of companies acquired, or may remain liable in cases of
divestment; for example, the potential environmental liabilities addressed under the Sustainability and Corporate
Social Responsibility Risk Factor on page 237.
The Group’s ability to realise the expected benefits from acquisition activity depends, in large part, on its ability
to integrate newly-acquired businesses in a timely and effective manner. Even if the Group is able to acquire
suitable companies, it still may not achieve the growth synergies or other financial and operating benefits it
expected to achieve, and the Group may incur write-downs, impairment charges or unforeseen liabilities that
could negatively affect its operating results or financial position or could otherwise harm the Group’s business.
Further, integrating an acquired business, product or technology could divert management time and resources
from other matters.
234 SUPPLEMENTARIES
Brexit
Risk Discussion
Description:
Uncertainties resulting from the UK’s
withdrawal from the European Union could
pose challenges with currency devaluations,
a fall in construction activity in the UK,
challenges in labour resources accessing the
UK, movement of goods and services and
repatriating earnings.
Impact:
Failure by the Group to manage the
uncertainties posed by Brexit could result in
adverse financial performance and a fall in the
Group’s net worth.
The uncertainties around the UK’s withdrawal from the European Union leave businesses potentially open to
significant risks, which may be intensified should the UK leave without a formal agreement. Having formed
a majority Conservative government, the UK left the European Union on 31 January 2020, entering into a
transition period until 31 December 2020. Uncertainties remain throughout the transition period, and if a deal is
not agreed before 31 December 2020, the default position will be a no-deal Brexit.
Any significant economic shock caused by Brexit, the uncertainty around the process or negative consumer
sentiment could have an adverse impact on the performance of the UK’s economy, leading to a fall in demand
for the Group’s products. Commercial projects could be delayed or cancelled as businesses decide whether to
invest in the UK market or not. Mortgage interest rates could rise, and credit could tighten which may adversely
impact the residential sector leading to a fall in demand for residential housing and as such, a fall in demand
for the Group’s products. Further, government investments, infrastructure projects or initiatives may be delayed
or cancelled as government funds tighten leading to the delay or cancellation of contracts which may have an
adverse impact on the financial position of the Group.
Further, uncertainty around Brexit has created, and will continue to create, volatility for the Pound Sterling. Any
significant fall in the value of the Pound Sterling against the Group’s reporting currency could adversely impact
consolidated results and net worth. For additional information on the impact of foreign exchange movements
on the Consolidated Financial Statements for the Group for the year ended 31 December 2019, see the
Business Performance section commencing on page 30.
Strategic Mineral Reserves
Risk Discussion
Description:
Appropriate reserves are an increasingly
scarce commodity and licences and/or
permits required to enable operation are
becoming harder to secure. There are
numerous uncertainties inherent in reserves
estimation and in projecting future rates of
production.
Impact:
Failure by the Group to plan for reserve
depletion, or to secure permits, may result
in operation stoppages, adversely impacting
financial performance.
Continuity of the cash flows derived from the production and sale of the related heavyside materials and
products is dependent on satisfactory reserves planning and on the presence of appropriate long-term
arrangements for replacement. There can be no assurance that the required licences and permits will be
forthcoming at the appropriate juncture or that relevant operating entities will continue to satisfy the many terms
and conditions under which such licences and permits are granted.
The failure to plan adequately for current and future extraction and utilisation or to ensure ongoing compliance
with the requirements of issuing authorities could lead to withdrawal of the related licence or permit and
consequential disruption to operations.
People Management
Risk Discussion
Description:
Existing processes around people
management (such as attracting, retaining
and developing people, leadership succession
planning, as well as dealing with collective
representation groups) may not deliver,
inhibiting the Group achieving its strategy.
Impact:
Failure to effectively manage talent and plan
for leadership succession could impede the
realisation of strategic objectives.
The identification and subsequent assessment, management, development and deployment of talented
individuals is of major importance in continuing to deliver on the Group’s strategy and in ensuring that
succession planning objectives for key executive roles throughout its international operations are satisfied. As
well as ensuring the Group identifies, hires, integrates, develops and promotes talent, the Group must navigate
talent and front-line labour shortages, promote mobility and hire a diverse workforce.
The maintenance of positive employee and trade/labour union relations is key to the successful operation of
the Group. Some of the Group’s employees are represented by trade/labour unions under various collective
agreements. For unionised employees, the Group may not be able to renegotiate satisfactorily the relevant
collective agreements upon expiration and may face tougher negotiations and higher wage demands. In
addition, existing labour agreements may not prevent a strike or work stoppage, with any such activity creating
reputational risk and potentially having a material adverse effect on the results of operations and financial
condition of the Group.
235
Key Operational Risk Factors
Climate Change and Policy
Risk Discussion
Description:
The cement industry has recognised
the impact of climate change and its
responsibilities in transitioning to a lower
carbon economy. The Group is exposed to
financial, reputational and market risks arising
from changes to CO2 policies and regulations.
Impact:
Should the Group not reduce its greenhouse
gases (GHGs) emissions by its identified
targets, the Group may be subject
to increased costs, adverse financial
performance and reputational damage.
The impact of climate change may over time affect the operations of the Group and the markets in which
the Group operates. This could include physical risks such as acute and chronic changes in weather and/or
transitional risks such as technological development, policy and regulatory change, and market and economic
responses. Efforts to address climate change through laws and regulations, for example by requiring reductions
in emissions of GHGs such as CO2, can create economic risks and uncertainties for the Group’s businesses.
Such risks could include the cost of purchasing allowances or credits to meet GHG emissions caps, the cost
of installing equipment to reduce emissions to comply with GHG limits or required technological standards,
decreased profits or losses arising from decreased demand for the Group’s goods and higher production costs
resulting directly or indirectly from the imposition of legislative or regulatory controls. Manifestation of these
increased costs may increase the underlying cost of production of the Group’s products which may adversely
impact the financial performance of the Group.
Stakeholder expectations in relation to climate change continue to increase. The Group is subject to a broad
range of additional environmental product information requests by customers in certain regions and increasing
levels of disclosure regarding climate-related environmental performance. The Group includes within its
offerings products aimed at climate adaptation, including sustainable drainage systems, flood defences and
more resilient structures, as well as products that lower the operational carbon footprint of buildings, including
high performance glass and glazing products that incorporate innovative thermal break technologies for
superior thermal performance, precast concrete flooring and walling elements delivering energy savings, and
balcony connector products that reduce thermal bridging, delivering energy saving. If customers’ and other
stakeholders’ sustainability expectations are not satisfied, the Group’s product portfolio may be of reduced
relevance, the Group’s reputation may be harmed and the Group could experience a deterioration in financial
performance.
Please refer to page 244 of this Annual Report and Form 20-F for further details. In addition, the Group
publishes an annual independently-assured Sustainability Report, which is prepared in line with the Global
Reporting Initiative Standards and available on www.crh.com.
Key Strategic Risk Factors - continued
Joint Ventures and Associates
Risk Discussion
Description:
The Group does not have a controlling
interest in certain of the businesses (i.e. joint
ventures and associates) in which it has
invested and may invest, which gives rise to
increased governance complexity and a need
for proactive relationship management.
Impact:
The lack of a controlling interest could impair
the Group’s ability to manage joint ventures
and associates effectively and/or realise its
strategic goals for these businesses.
Due to the absence of full control of joint ventures and associates, important decisions such as the approval
of business plans and the timing and amount of cash distributions and capital expenditures, for example,
may require the consent of partners or may be approved without the Group’s consent. In addition, the lack
of controlling interest may give rise to the non-realisation of operating synergies and lower cash flows than
anticipated at the time of investment, thereby increasing the likelihood of impairment of goodwill or other assets.
These limitations could impair the Group’s ability to manage joint ventures and associates effectively and/or
realise its strategic goals for these businesses. In addition, improper management or ineffective policies,
procedures or controls for non-controlled entities could adversely affect the business, results of operations or
financial condition of the relevant investment and, by corollary, the Group.
236 SUPPLEMENTARIES
Sustainability and Corporate Social Responsibility
Risk Discussion
Description:
The nature of our activities poses inherent
environmental, social and governance (ESG)
risks, which are also subject to an evolving
regulatory framework and changing societal
expectations.
Impact:
Failure to embed sustainability principles
within the Group’s businesses and strategy
may result in non-compliance with relevant
regulations, standards and best practices and
lead to adverse stakeholder sentiment and
reduced financial performance.
The Group recognises that the demand for sustainable products is undoubtedly increasing and seeks
opportunities to deliver sustainable products, buildings and infrastructure at reduced environmental cost
throughout their lifetime. Customers, from architects and construction companies to public bodies, have an
immediate need for sustainable solutions which respond to climate change. In order to be involved in the
green agenda, the Group needs to work with customers and vendors to innovate around design, delivery
and application of products. If the Group fails to identify and execute on areas for improved sustainable
performance, the demand for the Group’s products may fall. If customers’ and other stakeholders’
sustainability expectations are not satisfied, the Group’s product portfolio will be of reduced relevance and the
Group will experience a deterioration in financial performance.
The Group is subject to a broad and increasingly stringent range of existing and evolving laws, regulations,
standards and best practices with respect to governance, the environment and social performance in each of
the jurisdictions in which it operates giving rise to significant compliance costs, potential legal liability exposure
and potential obligations for the development of its operations. These laws, regulations, standards and best
practices relate to, amongst other things, climate change, noise, emissions to air, water and soil, the use and
handling of hazardous materials and waste disposal practices.
Please refer to pages 20 to 25 of this Annual Report and Form 20-F for further details. In addition, the Group
publishes an annual independently-assured Sustainability Report, which is prepared in line with the Global
Reporting Initiative Standards and available on www.crh.com.
Key Operational Risk Factors - continued
Health and Safety Performance
Risk Discussion
Description:
The Group’s businesses operate in an
industry where health and safety risks are
inherently prominent. Further, the Group
is subject to stringent regulations from a
health and safety perspective in the various
jurisdictions in which it operates.
Impact:
A serious health and safety incident could
have a significant impact on the Group’s
operational and financial performance, as well
as the Group’s reputation.
The Group’s industry involves dangerous work and a failure to maintain the focus on making its workplaces safe
for our people could result in a deterioration in the Group’s safety performance and ultimately fatalities. Building
materials production can be hazardous and particular hazards are associated with heavy vehicles, working at
height and using mechanised processes. Additionally, the Group’s safety risks are not limited to facility sites but
extend to paving and construction sites and regular encounters with stakeholder sites. This presents a complex
challenge which requires safe behaviours and engagement from employees that match the Group’s robust
policies and procedures.
The Group is subject to a broad and stringent range of existing and evolving laws, regulations, standards
and best practices with respect to health and safety in each of the jurisdictions in which it operates. Should
the health and safety frameworks, processes and controls implemented throughout the Group to protect our
people fail, the Group would be exposed to significant potential legal liabilities and penalties. Further, high
numbers of accidents could pose additional challenges in recruiting new employees, ensuring operational
continuity and maintaining licenses and permits.
For additional information on the Group’s health and safety performance, see page 18 of the Strategy Review
section.
237
Information Technology and/or Cyber Security
Risk Discussion
Description:
The Group is dependent on information and
operational technology systems to support its
business activities. Any significant operational
event, whether caused by external attack,
insider threat or error could lead to loss
of access to systems or data, adversely
impacting business operations.
Impact:
Security breaches, IT interruptions or data
loss could result in significant business
disruption, loss of production, reputational
damage and/or regulatory penalties.
Significant financial costs in remediation are
also likely in a major cyber security incident.
The Group employs numerous operational technology and information technology systems, networks and
services, many of which are managed, hosted, provided and/or used by third parties, to assist in conducting
our business. The proper functioning of our technology and systems is critical to the efficient operation and
management of our business. The Group’s systems for protecting our assets against cyber security risks may
not always be sufficient.
As part of our business, the Group collects, processes, and retains potentially sensitive and confidential
information about our customers, suppliers, employees and business performance. Despite the security
measures we have in place, and those of third-party suppliers and vendors with which we do business, the
Group may be subject to cyber security attacks. Such attacks may result in interference with production
software, corruption or theft of sensitive data, manipulation of financial data accessible through digital
infrastructure, or reputational losses as a result of misrepresentation via social media and other websites.
Security and cyber incidents are becoming increasingly sophisticated and are continually evolving. As this
threat continues to evolve, the Group may be required to expend additional resources to continue to modify or
enhance protection measures or to investigate and remediate any vulnerability to cyber incidents. There can be
no assurance that future attacks will not be successful due to their increasing sophistication and the difficulties
in detecting and defending against them in a timely fashion.
While the Group has experienced, and expects to continue to experience, these types of threats and incidents,
the Group has not detected any material cyber security events.
Key Compliance Risk Factors
Laws and Regulations
Risk Discussion
Description:
The Group is subject to a wide variety of local
and international laws and regulations across
the many jurisdictions in which it operates,
which vary in complexity, application and
frequency of change.
Impact:
Potential breaches of local and international
laws and regulations could result in the
imposition of significant fines or sanctions and
may inflict reputational damage.
The Group is subject to various statutes, regulations and laws applicable to businesses generally in the
countries and markets in which it operates. These include statutes, regulations and laws affecting land usage,
zoning, labour and employment practices, competition/anti-trust, financial reporting, taxation, anti-bribery,
anti-corruption, international trade compliance, governance and other matters. The Group mandates that
its employees comply with its Code of Business Conduct which stipulates best practices in relation to
legal, compliance and ethical matters amongst other issues. The Code of Business Conduct is available on
www.crh.com.
The Group cannot guarantee that its employees will at all times successfully comply with all demands of
regulatory agencies in a manner which will not materially adversely affect its business, results of operations,
financial condition or prospects. There can be no assurance that the Group’s policies and procedures will
afford adequate protection against fraudulent and/or corrupt activity and any such activity could have a material
adverse effect on the Group’s business, results of operations, financial condition or prospects.
Key Operational Risk Factors - continued
238 SUPPLEMENTARIES
Key Financial and Reporting Risks Factors
Financial Instruments
Risk Discussion
Description:
The Group uses financial instruments
throughout its businesses giving rise to
interest rate and leverage, foreign currency,
counterparty, credit rating and liquidity risks.
Impact:
A downgrade of the Group’s credit ratings
or inability to maintain certain financial ratios
may give rise to increases in future funding
costs and may impair the Group’s ability to
raise funds on acceptable terms. In addition,
insolvency of the financial institutions with
which the Group conducts business may
adversely impact the Group’s financial
position.
Interest rate and leverage risks: The Group’s exposures to changes in interest rates result from investing and
borrowing activities undertaken to manage liquidity and capital requirements and stem predominantly from
long-term debt obligations. Borrowing costs are managed through employing a mix of fixed and floating rate
debt and interest rate swaps, where appropriate. As at 31 December 2019, the Group had outstanding net
indebtedness of approximately €6.7 billion (2018: €7.0 billion). Acquisition activity may impair its operating
and financial flexibility over the longer term and could adversely affect its business, results of operations and
financial position. This high level of absolute indebtedness could give rise to the Group dedicating a substantial
portion of its cash flow to debt service thereby reducing the funds available in the longer term for working
capital, capital expenditure, acquisitions, distributions to shareholders and other general corporate purposes
and limiting its ability to borrow additional funds and to respond to competitive pressures. In addition, the
Group’s level of indebtedness may give rise to a general increase in interest rates borne and there can be no
assurance that the Group will not be adversely impacted by increases in borrowing costs in the future.
The Group has a number of material interest rate derivatives and finance contracts linked to the Inter-Bank
Offered Rate (“IBOR”) which may be impacted by the transition away from IBOR linked rates to a risk-free
rate as IBOR is phased out in 2021. At this time, it is not possible to predict the effect any discontinuance,
modification or other reforms to IBOR or any other reference rate, the establishment of alternative reference
rates or the transition away from IBOR will have on contracts linked to IBOR or the broader financial markets.
Such reforms could have a significant impact on the financial markets and may impact CRH’s borrowing costs
and cash flows. Such changes may or may not adversely affect CRH’s financial position.
Foreign currency risks: If the Group’s reporting currency weakens relative to the basket of foreign currencies
in which net debt is denominated (including the Canadian Dollar, Swiss Franc, Polish Zloty, Philippine Peso
and Pound Sterling), the net debt balance would increase; the converse would apply if the Group’s reporting
currency was to strengthen. The Group may not succeed in managing these foreign currency risks. Effective
1 January 2020, the Group has decided to change reporting currency from euro to US Dollar.
Counterparty risks: Insolvency of the financial institutions with which the Group conducts business, or a
downgrade in their credit ratings, may lead to losses in derivative assets and cash and cash equivalents
balances or render it more difficult either to utilise existing debt capacity or otherwise obtain financing for
operations. The maximum exposure arising in the event of default on the part of the counterparty (including
insolvency) is the carrying amount of the relevant financial instrument.
The Group holds significant cash balances on deposit with a variety of highly-rated financial institutions (typically
invested on a short-term basis) which, together with cash and cash equivalents at 31 December 2019, totalled
€3.8 billion (2018: €2.3 billion). In addition to the above, the Group enters into derivative transactions with a
variety of highly-rated financial institutions giving rise to derivative assets and derivative liabilities; the relevant
balances as at 31 December 2019 were €82 million and €17 million respectively (2018: €45 million and
€59 million respectively). The counterparty risks inherent in these exposures may give rise to losses in the event
that the relevant financial institutions suffer a ratings downgrade or become insolvent. In addition, certain of the
Group’s activities (e.g. highway paving in the US) give rise to significant amounts receivable from counterparties
at the balance sheet date; at year-end 2019, this balance was €0.9 billion (2018: €0.9 billion). In the business
environment, there is increased exposure to counterparty default, particularly as regards bad debts.
Credit rating risks: A downgrade of the Group’s credit ratings may give rise to increases in funding costs in
respect of future debt and may, among other concerns, impair its ability to access debt markets or otherwise
raise funds or enter into letters of credit, for example, on acceptable terms. Such a downgrade may result from
factors specific to the Group, including increased indebtedness stemming from acquisition activity, or from
other factors such as general economic or sector-specific weakness or sovereign credit rating ceilings.
Liquidity risks: The principal liquidity risks stem from the maturation of debt obligations and derivative
transactions. The Group aims to achieve flexibility in funding sources through a variety of means including (i)
maintaining cash and cash equivalents with a number of highly-rated counterparties; (ii) limiting the annual
maturity of such balances; (iii) meeting the bulk of debt requirements through debt capital markets or other
term financing; and (iv) having surplus committed bank lines of credit. However, market or economic conditions
may make it difficult at times to realise this objective.
For additional information on the above risks see note 24 to the Consolidated Financial Statements.
239
Key Financial and Reporting Risks Factors - continued
Defined Benefit Pension Schemes and Related Obligations
Risk Discussion
Description:
The assets and liabilities of defined benefit
pension schemes, in place in certain
operating jurisdictions, exhibit significant
period-on-period volatility attributable primarily
to asset values, changes in bond yields/
discount rates and anticipated longevity.
Impact:
Significant cash contributions may be
required to remediate deficits applicable to
past service. Fluctuations in the accounting
surplus/deficit may adversely impact the
Group’s credit metrics thus harming its ability
to raise funds.
The assumptions used in the recognition of pension assets, liabilities, income and expenses (including discount
rates, rate of increase in future compensation levels, mortality rates and healthcare cost trend rates) are
updated based on market and economic conditions at the respective balance sheet date and for any relevant
changes to the terms and conditions of the pension and post-retirement plans. These assumptions can be
affected by (i) the discount rate, changes in the rates of return on high-quality fixed income investments;
(ii) future compensation levels, future labour market conditions and anticipated inflation; (iii) mortality rates,
changes in the relevant actuarial funding valuations or changes in best practice; and (iv) healthcare cost trend
rates, the rate of medical cost inflation in the relevant regions. The weighted average actuarial assumptions
used and sensitivity analysis in relation to the significant assumptions employed in the determination of pension
and other post-retirement liabilities are disclosed on pages 192 to 197. A prolonged period of financial market
instability or other adverse changes in the assumptions mentioned above would have an adverse impact on the
valuations of pension scheme assets.
Taxation Charge and Balance Sheet Provisioning
Risk Discussion
Description:
The Group is exposed to uncertainties
stemming from governmental actions in
respect of taxes paid and payable in all
jurisdictions of operation. In addition, various
assumptions are made in the computation of
the overall tax charge and in balance sheet
provisions which may not be borne out in
practice.
Impact:
Changes in tax regimes or assessment of
additional tax liabilities in future audits could
result in incremental tax liabilities which could
have a material adverse effect on cash flows,
financial condition and results of operations.
The Group’s income tax charge is based on reported profits and statutory tax rates, which reflect various
allowances and reliefs and tax planning opportunities available to the Group in the multiple tax jurisdictions in
which it operates. The determination of the Group’s provision for income tax requires certain judgements and
estimates in relation to matters where the ultimate tax outcome may not be certain. The recognition of deferred
tax assets also requires judgement as it involves an assessment of the future recoverability of those assets.
In addition, the Group is subject to tax audits which can involve complex issues that could require extended
periods to conclude, the resolution of which is often not within its control. Although management believes
that the estimates included in the Consolidated Financial Statements and the Group’s tax return positions are
reasonable, there can be no assurance that the final outcome of these matters will equal the estimates reflected
in the Group’s historical income tax provisions and accruals.
As a multinational corporation, the Group is subject to various taxes in all jurisdictions of operation. Due
to economic and political conditions, tax rates and the interpretation of tax rules in these jurisdictions may
be subject to significant change. For example, the 2017 US Tax Cuts and Jobs Act has made significant
changes to US tax rules. In addition, the Group’s future effective income tax rate could be affected (positively
or negatively) by changes in the mix of earnings in countries with differing statutory tax rates, changes in the
valuation of deferred tax assets or changes in tax laws or their interpretation.
Finally, recent developments, including the European Commission’s investigations on illegal state aid as well as
the Organisation for Economic Co-operation and Development project on Base Erosion and Profit Shifting may
result in changes to long-standing international tax principles, which could adversely affect the Group’s effective
tax rate or result in higher cash tax liabilities. If the Group’s effective income tax rate was to increase, its cash
flows, financial condition and results of operations could be adversely affected.
240 SUPPLEMENTARIES
Foreign Currency Translation
Risk Discussion
Description:
The principal foreign exchange risks to which
the Consolidated Financial Statements are
exposed pertain to (i) adverse movements
in reported results when translated into the
reporting currency and (ii) declines in the
reporting currency value of net investments
which are denominated in a wide basket of
currencies other than the reporting currency.
Impact:
Adverse changes in the exchange rates
will continue to negatively affect retained
earnings. The annual impact is reported in the
Consolidated Statement of Comprehensive
Income.
Given the geographic diversity of the Group, a significant proportion of its revenues, expenses, assets and
liabilities are denominated in currencies other than the Group’s reporting currency, including the Canadian
Dollar, Swiss Franc, Polish Zloty, Philippine Peso and Pound Sterling. From year to year, adverse changes in the
exchange rates used to translate these and other foreign currencies into the reporting currency have impacted
and will continue to impact consolidated results and net worth. Effective 1 January 2020, the Group has
decided to change reporting currency from euro to US Dollar.
For additional information on the impact of foreign exchange movements on the Consolidated Financial
Statements for the Group for the year ended 31 December 2019, see the Business Performance section
commencing on page 30 and note 24 to the Consolidated Financial Statements.
Goodwill Impairment
Risk Discussion
Description:
Significant under-performance in any of the
Group’s major cash-generating units or the
divestment of businesses in the future may
give rise to a material write-down of goodwill.
Impact:
A write-down of goodwill could have a
substantial impact on the Group’s income and
equity.
An acquisition generates goodwill to the extent that the price paid exceeds the fair value of the net assets
acquired. Under IFRS, goodwill and indefinite-lived intangible assets are not amortised but are subject to
annual impairment testing. Other intangible assets deemed separable from goodwill arising on acquisitions are
amortised. A detailed discussion of the impairment testing process, the key assumptions used, the results of
that testing and the related sensitivity analysis is contained in note 16 to the Consolidated Financial Statements
on pages 166 to 168.
While a goodwill impairment charge does not impact cash flow, a full write-down at 31 December 2019 would
have resulted in a charge to income and a reduction in equity of €8.1 billion (2018: €8.1 billion).
241
Compliance Statement
Non-US companies such as CRH are exempt from
most of the corporate governance rules of the
NYSE. In common with companies listed on the
LSE and Euronext Dublin, CRH’s corporate
governance practices reflect, inter alia, compliance
with (a) domestic company law; (b) the Listing
Rules of the UK Listing Authority and Euronext
Dublin; and (c) the 2018 UK Corporate
Governance Code, which is appended to the
listing rules of the LSE and Euronext Dublin.
The Board of CRH has adopted a robust set of
governance principles, which reflect the Code and
its principles-based approach to corporate
governance. Accordingly, the way in which CRH
makes determinations of Directors’ independence
differs from the NYSE rules. The Board has
determined that, in its judgement, all of the
non-executive Directors are independent. In doing
so, however, the Board did not explicitly take into
consideration the independence requirements
outlined in the NYSE’s listing standards.
Shareholder Approval of Equity
Compensation Plans
The NYSE rules require that shareholders
must be given the opportunity to vote on all
equity-compensation plans and material revisions
to those plans with certain limited exceptions. CRH
complies with Irish requirements, which are similar
to the NYSE rules. The Board, however, does not
explicitly take into consideration the NYSE’s
detailed definition on what are considered “material
revisions”.
Risk Management and
Internal Control
The Board has delegated responsibility for
monitoring the effectiveness of the Group’s risk
management and internal control systems to the
Audit Committee1
. Such systems are designed to
manage rather than eliminate the risk of failure to
achieve business objectives and, in the case of
internal control systems, can provide only
reasonable and not absolute assurance against
material misstatement or loss.
The Consolidated Financial Statements are
prepared subject to oversight and control of the
Finance Director, who seeks to ensure that data is
captured from Group locations and all required
information for disclosure in the Consolidated
Financial Statements is provided. An appropriate
control framework has been put in place around
the recording of appropriate consolidation journals
and other adjustments. The Consolidated Financial
Statements are reviewed by the internal CRH
Financial Reporting and Disclosure Group prior to
being reviewed by the Finance Director and Audit
Committee and approved by the Board of
Directors.
Group management has responsibility for major
strategic development and financing decisions.
Responsibility for operational issues is devolved,
subject to limits of authority, to product group and
operating company management. Management at
all levels is responsible for internal control over the
business functions that have been delegated.
This embedding of the system of internal control
throughout the Group’s operations is designed
to enable the organisation to respond quickly
to evolving business risks, and to ensure that
significant internal control issues, should they arise,
are reported promptly to appropriate levels of
management.
Management’s Report on
Internal Control over Financial
Reporting
In accordance with the requirements of Rule
13a-15 of the US Securities Exchange Act, the
following report is provided by management in
respect of the Company’s internal control over
financial reporting. As defined by the SEC, internal
control over financial reporting is a process
designed by, or under the supervision of, the
Company’s principal executive and principal
financial officers, or persons performing similar
functions, and effected by the Company’s Board of
Directors, management and other personnel, to
provide reasonable assurance regarding the
reliability of financial reporting and the preparation
of the Consolidated Financial Statements for
external purposes in accordance with generally
accepted accounting principles and includes those
policies and procedures that:
• pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets
of the Company;
• 
provide reasonable assurance that transactions
are recorded as necessary to permit
preparation of the Consolidated Financial
Statements in accordance with generally
accepted accounting principles, and that
receipts and expenditures of the Company
are being made only in accordance with
authorisations of management and Directors of
the Company; and
• provide reasonable assurance regarding
prevention or timely detection of unauthorised
acquisition, use or disposition of the
Company’s assets that could have a material
effect on the Consolidated Financial
Statements
Our management is responsible for establishing
and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the US Securities Exchange
Act. Our internal control system was designed to
provide reasonable assurance regarding the
reliability of financial reporting and the preparation
of our Company’s published Consolidated
Financial Statements for external purposes under
generally accepted accounting principles.
In connection with the preparation of the
Company’s annual Consolidated Financial
Statements, management has undertaken an
assessment of the effectiveness of the Company’s
internal control over financial reporting as of
31 December 2019, based on criteria established
in Internal Control - Integrated Framework (2013),
issued by the Committee of Sponsoring
Organisations of the Treadway Commission.
Corporate Governance Practices
1. In accordance with Section 167(7) of the Companies Act 2014.
242 SUPPLEMENTARIES
As permitted by the SEC, based on the quantitative
and qualitative risk factors of our acquisitions in
2019, the Company has elected to exclude an
assessment of the internal controls of these
acquisitions for the year 2019. These acquisitions,
which are listed in note 32 to the Consolidated
Financial Statements, constituted 1.5% and 2.3% of
total and net assets respectively, as of 31 December
2019 and 0.8% and 0.1% of revenue and Group
profit, respectively, for the financial year then ended.
Management’s assessment included an evaluation
of the design of the Company’s internal control
over financial reporting and testing of the
operational effectiveness of those controls. Based
on this assessment, management has concluded
and hereby reports that as of 31 December 2019,
the Company’s internal control over financial
reporting is effective.
Our auditors, EY, a registered public accounting
firm, who have audited the Consolidated Financial
Statements for the year ended 31 December
2019, have audited the effectiveness of the
Company’s internal controls over financial
reporting. Their report, on which an unqualified
opinion is expressed thereon, is included on
page 127.
Changes in Internal Control
over Financial Reporting
During 2019, there has been no change in our
internal control over financial reporting identified in
connection with the evaluation required by Rules
13a-15 that occurred during the period covered by
this Annual Report and Form 20-F that has
materially affected, or is reasonably likely to
materially affect, our internal control over
financial reporting.
Acquisitions excluded from the 2018 assessment
of internal control over financial reporting (including
the 2018 acquisition of Ash Grove) were all
successfully integrated into the CRH internal
control systems in 2019.
Evaluation of Disclosure
Controls and Procedures
Management has evaluated the effectiveness of
the design and operation of the disclosure controls
and procedures as defined in Exchange Act Rules
13a-15(e) as of 31 December 2019. Based on that
evaluation, the Chief Executive and the Finance
Director have concluded that these disclosure
controls and procedures were effective as of such
date at the level of providing reasonable
assurance.
In designing and evaluating our disclosure controls
and procedures, management, including the Chief
Executive and the Finance Director, recognised
that any controls and procedures, no matter how
well designed and operated, can provide only
reasonable assurance of achieving the desired
control objectives, and management necessarily
was required to apply its judgement in evaluating
the cost-benefit relationship of possible controls
and procedures. Because of the inherent limitations
in all control systems, no evaluation of controls can
provide absolute assurance that all control issues
and instances of fraud, if any, within the Company
have been detected.
Change In Registrant’s
Certifying Accountant
Following the issuance of a Request for Proposal
(RFP) in April 2018, the Audit Committee
recommended to the Board that Deloitte Ireland
LLP be appointed to succeed Ernst & Young as
CRH’s auditor, with effect from the financial year
commencing 1 January 2020.
As a result, following completion of the audit of
our financial statements as of and for the year
ended 31 December 2019 and the audit of the
effectiveness of internal control over financial
reporting as of 31 December 2019, Deloitte Ireland
LLP will become CRH’s external auditor, subject to
a confirmatory advisory vote at the 2020 AGM.
Ernst & Young’s reports on our Consolidated
Financial Statements for the two years ended
31 December 2019, did not contain an adverse
opinion or disclaimer of opinion or report, nor was
any report qualified or modified as to uncertainty,
audit scope or accounting principles.
During our two most recent fiscal years and to 6
March 2020, there were no disagreements with
Ernst & Young whether or not resolved, on any
matter of accounting principles or practices,
financial statement disclosure, or auditing scope or
procedures, which disagreement, if not resolved to
the satisfaction of Ernst & Young, would have
caused Ernst & Young to make a reference to the
subject matter of the disagreement in connection
with any reports it would have issued, and there
were no “reportable events” as that term is defined
in Item 16F(a)(1)(v) of Form 20-F.
We have provided Ernst & Young with a copy of
the foregoing disclosure, and we have requested
that it furnish us with a letter addressed to the SEC
stating whether or not it agrees with the above
disclosures. A copy of this letter is filed as Exhibit
15.3 to CRH’s Annual Report on Form 20-F, as
filed with the SEC.
We did not consult Deloitte Ireland LLP during our
two most recent fiscal years or to 6 March 2020
regarding (i) the application of accounting
principles to a specified transaction, either
completed or proposed, or the type of audit
opinion that might be rendered on our financial
statements; or (ii) any matter that was the subject
of a disagreement as that term is used in Item
16F(a)(1)(iv) of Form 20-F or a “reportable event”
as described in Item 16F(a)(1)(v) of Form 20-F.
243
The Environment and Government Regulations
The most important government regulations
relevant to CRH as a building materials company
are environmental laws and regulations relevant to
extractive and production processes. In the
European Union, operations are subject to national
environmental laws and regulations, most of which
now emanate from European Union Directives and
Regulations. In North America, operations may be
subject to federal, state, provincial and local
environmental laws and regulations. In other
jurisdictions, national environmental and local
laws apply.
Environmental Compliance
Policy
In order to comply with environmental regulations,
CRH has developed the following Group
environmental policy, which was reviewed and
updated during 2019. The statement of policy,
applied across all Group companies, is to:
• 
comply, at a minimum, with all applicable
environmental legislation and continually
improve environmental management, always
striving to meet or exceed industry best
practice standards, monitoring and reporting
performance to ensure Policy compliance;
• maintain open communications and ensure
that our employees and contractors adhere to
their environmental responsibilities;
• proactively address the challenges of climate
change;
• reduce emissions and optimise our use of
energy, water, land and other resources;
• promote sustainable product and process
innovation and new business opportunities
and;
• develop positive relationships with stakeholders
and strive to be good neighbours in every
community in which we operate
Achieving the Group’s environmental policy
objectives at all locations is a management
imperative; this line responsibility continues right up
to Board level where there is also a dedicated
Safety, Environment & Social Responsibility (SESR)
Committee. Daily responsibility for ensuring that the
Group’s environmental policy is effectively
implemented lies with individual location managers,
assisted by a network of Environmental Liaison
Officers (ELOs).
At each year end, the ELOs assist the Group
Sustainability team in carrying out a detailed
assessment of Group environmental performance,
which is reviewed by the SESR Committee and the
Board.
Addressing Climate Change
CRH has evaluated the risks and opportunities
arising from climate change and has put in place a
management strategy to address these. In striving
to reduce its emissions, CRH delivers carbon,
energy and financial efficiencies for its businesses
and helps to address climate change on a societal
level. There is a focus on reducing the carbon
footprint of products during manufacture and on
increasing their contribution to reducing emissions
during their lifetime. For example, CRH includes
within its offerings products aimed at climate
adaptation, including sustainable drainage systems,
flood defences, and more resilient structures.
Having achieved its 2020 CO2 reduction
commitment, CRH is now committing to a target
of 520kg CO2/tonnes of cementitious product
by 2030, covering the portfolio of cement plants
owned by CRH in 2019. This target represents
a 33% reduction in specific net cement CO2
compared with 1990 levels. We have also set an
ambition to achieve carbon neutrality along the
cement and concrete value chain by 2050.
CRH continues to be a member of the World
Business Council for Sustainable Development
(WBCSD) and is a founding member of the Global
Cement and Concrete Association (GCCA), which
is dedicated to developing and strengthening the
sector’s contribution to sustainable construction.
Through its membership of the GCCA, WBCSD
and regional industry associations including the
European Cement Association (CEMBUREAU) and
the European Lime Association (EuLA) in Europe
and the National Asphalt Pavement Association
(NAPA) and the Portland Cement Association
(PCA) in the US, CRH is actively involved in global
and regional discussions on the climate change
agenda. In regions and countries where trading
schemes are in operation, facilities that fall within
this scope of this legislation comply with CO2
“cap and trade” schemes including the European
Union Emissions Trading Scheme and other
regional schemes.
CRH acknowledges the “Paris Climate Agreement”
to limit global temperature rise to 2˚C (with efforts
towards 1.5˚C), made at the 21st
Conference of the
Parties (COP) to the United Nations Framework
Convention on Climate Change (UNFCCC) in
2015. CRH has implemented capital expenditure
programmes in its cement operations to reduce
carbon emissions in the context of international
and national commitments to reduce greenhouse
gas emissions as well as its emission reduction
programme.
In 2019 the European Commission announced the
European Green Deal, a roadmap with actions to
reach net-zero greenhouse gas emissions by
2050. As part of this plan, the European Union has
political commitments to reduce greenhouse
gases, on 1990 levels, by 50-55% by 2030.
Achieving such reductions would represent a
significant extra constraint on cement operations in
Europe.
US federal, state and local laws continue to
develop to address carbon emissions. The Group
may incur costs in monitoring and reporting
emissions. Ultimately a “cap and trade” scheme
may be implemented in the US and Canada;
depending on the scope of the legislation, this
could significantly impact certain operations in
North America. As of 14 February 2020, the Group
is not aware of any such schemes that would
materially affect its US operations, however, CRH
continuously monitors developments in regulations
and greenhouse gas initiatives involving local,
provincial, state or federal governments.
Possible Environmental
Liabilities
At 14 February 2020, there were no material
pending legal proceedings relating to site
remediation which are anticipated to have a
material adverse effect on the financial position or
results of operations or liquidity of the Group, nor
have internal reviews revealed any situations of
likely material environmental liability to the Group.
Governmental Policies
The overall level of government capital
expenditures and the allocation by state entities of
available funds to different projects, as well as
interest rate and tax policies, directly affect the
overall levels of construction activity. The terms
and general availability of government permits
required to conduct Group business also has an
impact on the scope of Group operations. As a
result such governmental decisions and policies
can have a significant impact on the operating
results of the Group.
244 SUPPLEMENTARIES
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Other Disclosures
History, Development and
Organisational Structure of
the Company
CRH is the leading building materials business in
the world. Our global footprint spans 30 countries,
employing c. 80,300 people at over 3,100
operating locations, serving customers across
the breadth of the building materials spectrum.
CRH is the largest building materials business
in North America, a leading heavyside materials
business in Europe and has positions in both
Asia and South America.
CRH manufactures and supplies a range of
building materials, products and innovative
solutions for the construction industry. From
primary materials that we extract, process and
supply, to products that are highly engineered and
high-value-added, CRH is uniquely positioned to
address evolving trends in global construction
markets. Our products can be found throughout
the built environment in a wide range of
construction projects from major public
infrastructure to commercial buildings and
residential structures.
The Group resulted from the merger in 1970
of two leading Irish public companies, Cement
Limited (established in 1936) and Roadstone
Limited (incorporated in 1949). Cement Limited
manufactured and supplied cement while
Roadstone Limited was primarily involved in
the manufacture and supply of aggregates,
readymixed concrete, mortar, coated macadam,
asphalt and contract surfacing to the Irish
construction industry.
As a result of planned geographic diversification
since the mid-1970s, the Group has expanded
by acquisition and organic growth into an
international manufacturer and supplier of building
materials.
The Company is incorporated and domiciled in the
Republic of Ireland. CRH is a public limited
company operating under the Companies Act of
Ireland 2014. The Group’s worldwide headquarters
is located in Dublin, Ireland. Our principal executive
offices are located at Stonemason’s Way,
Rathfarnham, Dublin 16, Ireland (telephone: +353
1 404 1000). The Company’s registered office is
located at 42 Fitzwilliam Square, Dublin 2, Ireland
and our US agent is CRH Americas, Inc., 900
Ashwood Parkway, Suite 600, Atlanta, Georgia
30338.
The Company is the holding company of the
Group, with direct and indirect share and loan
interests in subsidiaries, joint ventures and
associates. From Group headquarters, a small
team of executives exercise strategic control over
our decentralised operations.
In the detailed description of CRH’s business on
pages 30 to 52, estimates of the Group’s various
aggregates and stone reserves have been
provided by engineers employed by the individual
operating companies. Details of product end-use
by sector for each reporting segment are based on
management estimates.
A listing of the principal subsidiary undertakings
and equity accounted investments is contained on
pages 260 to 264.
Statements Regarding
Competitive Position and
Construction Activity
Statements made in the Business Performance
section and elsewhere in this document referring
to the Group’s competitive position are based on
the Group’s belief, and in some cases rely on a
range of sources, including investment analysts’
reports, independent market studies and the
Group’s internal assessment of market share
based on publicly available information about the
financial results and performance of market
participants.
Unless otherwise specified, references to
construction activity or other market activity relate
to the relevant market as a whole and are based
on publicly available information from a range of
sources, including independent market studies,
construction industry data and economic forecasts
for individual jurisdictions.
Exchange Rates
In this Annual Report and Form 20-F, references to
“US$”, “US Dollars” or “US cents” are to the
United States currency, references to “euro”, “euro
cent”, “cent”, “c” or “€” are to the euro currency
and “Stg£” or “Pound Sterling” are to the currency
of the United Kingdom of Great Britain and
Northern Ireland (UK). Other currencies referred to
in this Annual Report and Form 20-F include Polish
Zloty (PLN), Swiss Franc (CHF), Canadian Dollar
(CAD), Chinese Renminbi (RMB), Indian Rupee
(INR), Ukrainian Hryvnia (UAH), Philippine Peso
(PHP), Romanian Leu (RON) and Serbian Dinar
(RSD).
For a discussion on the effects of exchange rate
fluctuations on the financial condition and results
of the operations of the Group, see the Business
Performance section beginning on page 30.
Legal Proceedings
Group companies are parties to various legal
proceedings, including some in which claims
for damages have been asserted against the
companies. Having taken appropriate advice,
we believe that the aggregate outcome of such
proceedings will not have a material effect on the
Group’s financial condition, results of operations or
liquidity.
In 2015, the Swiss Competition Commission
imposed fines on the Association of Swiss
Wholesalers of the Sanitary Industry and on
major Swiss wholesalers including certain
Swiss CRH subsidiaries; the fine attributable
to these subsidiaries was CHF34 million. While
the Group remains of the view that the fine
is unjustified and it has appealed to the Swiss
Federal Appeals Court, a provision of €31 million
(2018: €30 million) is recorded in the Group’s
Consolidated Balance Sheet.
Research and Development
Research and development is not a significant
focus of the Group. CRH’s policy is to expense all
research and development costs as they occur.
Employees
The average number of employees for the past
three financial years is disclosed in note 7 to the
Consolidated Financial Statements on page 155.
No significant industrial disputes have occurred at
any of CRH’s factories or plants during the past
five years. The Group believes that relations with
its employees and labour unions are satisfactory.
Seasonality
Activity in the construction industry is
characterised by cyclicality and is dependent to
a considerable extent on the seasonal impact of
weather in CRH’s operating locations, with activity
in some markets reduced significantly in winter
due to inclement weather. First-half sales
accounted for 45% of full-year 2019 (2018: 44%),
while EBITDA (as defined)* for the first six months
of 2019 represented 36% of the full-year out-turn
(2018: 33%).
Significant Changes
Other than as disclosed in note 35 to the
Consolidated Financial Statements on page 206
no significant changes have occurred since the
balance sheet date.
Latest Practical Information
Where referenced in the Supplementary 20-F
Disclosures and Shareholder Information sections,
information is provided at the latest practicable
date, 14 February 2020.
245
Polbruk, part of CRH’s Building Products Division, supplied products for this school in Rzeszów, Poland.
Urbanika 60 slabs covered the courtyard and main entrance and a range of other products finished off
areas around the buildings, comprising over 5,000m2
of products in total.
Stock Exchange Listings 248
Ownership of Ordinary Shares 248
Dividends 250
Share Plans 251
American Depositary Shares 252
Taxation 253
Memorandum and
Articles of Association 255
General Information 257
248 - 257
Shareholder Information
CRH has a premium listing on the LSE and a
secondary listing on Euronext Dublin represented
by the ticker symbols CRH and CRG respectively.
American Depositary Shares (ADSs), each
representing one Ordinary Share, are listed on the
NYSE. The ADSs are evidenced by ADRs issued
by The Bank of New York Mellon (the ‘Depositary’)
as Depositary under an Amended and Restated
Deposit Agreement dated 28 November 2006. The
ticker symbol for the ADSs on the NYSE is CRH.
For further information on CRH shares see note 31 to the Consolidated Financial Statements.
Stock Exchange Listings
Ownership of Ordinary Shares
Share price data	
This represents a best estimate of the number of shares controlled by fund managers resident in the
geographic regions indicated. Private shareholders are classified as retail above.
(ii) As detailed in note 31 to the Consolidated Financial Statements.
Holdings
Number of
shareholders
Ownership of Ordinary Shares - continued
CREST
Transfer of the Company’s shares takes place
through the CREST system. Shareholders have the
choice of holding their shares in electronic
form or in the form of share certificates.
Where shares are held in CREST, dividends are
automatically paid in euro unless a currency
election is made. CREST members should use
the facility in CREST to make currency elections.
Such elections must be made in respect of entire
holdings as partial elections are not permissible.
On 7 January 2020, CRH announced a further
extension of the Programme for an additional
€200 million.
The tables below sets forth the Ordinary Shares
repurchased under this programme together with
details of the Ordinary Shares purchased by the
Employee Benefit Trust (EBT) during 2019 and
2018.
See note 31 to the Consolidated Financial
Statements for further details.
2018
Month
Total number of share buyback purchases
Total number of EBT purchases
Total number of shares purchased
Average price paid per
Average price paid per share in respect of 2019 EBT purchases; February €28.74, March €27.11, April €28.44
and May €28.54 (2018: March €27.57).
(ii) 
Where applicable, for shares purchased on the LSE, the average price paid per share in Pound Sterling is
disclosed.
Other than the above, there were no purchases of equity securities by the issuer and/or affiliated persons during
the course of 2019.
249
The Company has paid dividends on its Ordinary
Shares in respect of each fiscal year since the
formation of the Group in 1970. Dividends are paid
to shareholders on the Register of Members on the
record date for the dividend. Record dates are set
by the LSE and Euronext Dublin. An interim
dividend is normally declared by the Board of
Directors in August of each year and is generally
paid in September/October. A final dividend is
normally recommended by the Board of Directors
following the end of the fiscal year to which it relates
and, if approved by the shareholders at an AGM, is
generally paid in April/May of that year.
The payment of future cash dividends will be
dependent upon future earnings, the financial
condition of the Group and other factors.
The below table sets forth the amounts of interim,
final and total dividends in euro cent per Ordinary
Share declared in respect of each fiscal year
indicated. Each amount represents the actual
dividend payable. Solely for the convenience of the
reader, these dividends have been translated into
US cents per ADS using the FRB Noon Buying
Rate on the date of payment. An interim dividend
of 20.0c was paid in respect of Ordinary Shares on
25 September 2019. The final dividend, if
approved at the forthcoming AGM of shareholders
to be held on 23 April 2020, will be paid on
28 April 2020 to shareholders on the Register of
Members as at the close of business on
13 March 2020 and will bring the full-year dividend
for 2019 to 83.0c. The proposed final dividend has
been translated using the FRB Noon Buying Rate
on 14 February 2020.
Dividend Withholding Tax (DWT) must be deducted
from dividends paid by an Irish resident company,
unless a shareholder is entitled to an exemption
and has submitted a properly completed
exemption form to the Company’s Registrars, Link
Asset Services (the ‘Registrars’). DWT applies to
dividends paid by way of cash or by way of shares
under a scrip dividend scheme and is deducted at
the standard rate of Income Tax (20% throughout
2019, increased to 25% effective 1 January 2020).
Non-resident shareholders and certain Irish
companies, trusts, pension schemes, investment
undertakings and charities may be entitled to claim
exemption from DWT. Copies of the exemption
form may be obtained from the Registrars.
Shareholders should note that DWT will be
deducted from dividends in cases where a
properly completed form has not been received by
the record date for a dividend. Individuals who are
resident in the Republic of Ireland for tax purposes
are not entitled to an exemption.
Holders of Ordinary Shares who wish to have their
dividend paid direct to their bank account, by
electronic funds transfer, can do so by logging on
to www.signalshares.com, selecting CRH plc and
registering for the share portal (the ‘Share Portal’).
Shareholders should note that they will need to
have their Investor Code (found on their share
certificate), and follow the instructions online
to register.
Alternatively shareholders can complete a paper
dividend mandate form and submit it to the
Registrars. A copy of the form can be obtained by
logging onto the Registrar’s share portal and
following the instructions as set out under
Registrars on page 257. Tax vouchers will continue
to be sent to the shareholder’s registered address
under this arrangement.
Dividends are generally paid in euro. However, in
order to avoid costs to shareholders, dividends are
paid in Pound Sterling and US Dollars to
shareholders whose shares are not held in the
CREST system (see page 249) and whose
address, according to the Share Register, is in the
UK and the US respectively, unless they require
otherwise. In respect of the 2019 final dividend,
the latest date for receipt of currency elections is
13 March 2020.
Dividends in respect of 7% ‘A’ Cumulative
Preference Shares are paid half-yearly on
5 April and 5 October.
Dividends in respect of 5% Cumulative Preference
Shares are paid half-yearly on 15 April and
15 October.
Dividends
euro cent per Ordinary Share Translated1
into US cents per ADS
Proposed.
1. At the FRB Noon Buying Rate on the date of payment.
250 The Group operates share option schemes,
performance share plans, share participation
schemes and savings-related share option
schemes (the ‘Schemes’) for eligible employees in
all regions where the regulations permit the
operation of such schemes. A brief description of
the Schemes is outlined below. Shares issued
(whether by way of the allotment of new shares or
the reissue of Treasury Shares) in connection with
the Schemes rank pari passu in all respects with
the Ordinary and Income Shares of the Company.
2010 Share Option Schemes
At the AGM held on 5 May 2010, shareholders
approved the adoption of new share option
schemes to replace the schemes which were
approved in May 2000 (2000 share option
schemes). Following the approval by shareholders
of the 2014 Performance Share Plan (see below),
no further awards will be granted under the 2010
Share Option Schemes. Consequently, the last
award under the 2010 Share Option Schemes was
made in 2013.
The 2010 Share Option Schemes were based on
one tier of options with a single vesting test. The
performance criteria for the 2010 Share Option
Schemes was EPS-based. Vesting only occurred
once an initial performance target had been
reached and, thereafter, was dependent on
performance. In considering the level of vesting
based on EPS performance, the Remuneration
Committee also considered the overall results of
the Group.
Subject to the achievement of the EPS
performance criteria, options may be exercised not
later than ten years from the date of grant of the
option, and not earlier than the expiration of three
years from the date of grant. Benefits under the
schemes are not pensionable.
2010 Savings-related Share
Option Schemes
At the AGM held on 5 May 2010, shareholders
approved the adoption of savings-related share
option schemes (the ‘2010 Savings-related
Share Option Schemes’) to replace the 2000
Savings-related Share Option Schemes.
All employees of a participating subsidiary in the
Republic of Ireland or the UK, who have satisfied a
required qualifying period, are invited to participate
in this scheme.
Eligible employees who wish to participate in
the scheme enter into a savings contract with a
nominated savings institution, for a three or a
five-year period, to save a maximum of €500 or
Stg£500, as appropriate, per month.
At the commencement of each contract period
employees are granted an option to acquire
Ordinary Shares in the Company at an option price
which is equal to the amount proposed to be
saved plus the bonus payable by the nominated
savings institution at the end of the savings period.
The price payable for each Ordinary Share under
an option will be not less than the higher of par or
75% (or in the case of the UK scheme 80%) of the
market value of a share on the day the invitation to
apply for the option is issued.
On completion of the savings contract, employees
may use the amount saved, together with the
bonus earned, to exercise the option.
At 27 February 2020, 1,463,688 Ordinary Shares
have been issued1
pursuant to the 2010
Savings-related Share Option Schemes to date.
Share Participation Schemes
At the AGM on 13 May 1987, shareholders
approved the establishment of Share Participation
Schemes for the Company, its subsidiaries and
companies under its control. Directors and
employees of the companies who have at least
one year’s service may elect to participate in these
Share Participation Schemes.
At 27 February 2020, 8,175,310 Ordinary Shares
have been issued1
pursuant to the Share
Participation Schemes.
2014 Performance Share Plan
The 2014 Performance Share Plan was approved
by shareholders at the AGM on 7 May 2014. It
replaces the 2010 Share Option Schemes and the
2006 Performance Share Plan. See the 2019
Directors’ Remuneration Report on page 88 for
more details.
Restricted Share Plan
In 2013, the Board approved the adoption of
the 2013 Restricted Share Plan. Under the rules
of the 2013 Restricted Share Plan, certain senior
executives (excluding executive Board Directors)
can receive conditional awards of shares. As
(i) executive Directors are excluded from awards
and (ii) no shares are allotted or reissued to satisfy
the awards, the listing rules of the LSE and
Euronext Dublin do not require shareholder
approval for the 2013 Restricted Share Plan.
Share Plans
1. Whether by way of the allotment of new shares, the reissue of Treasury Shares or the purchase of Ordinary Shares.
251
Persons depositing or withdrawing shares must pay: For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) • Issuance of ADSs, including issuances resulting from a distribution
of shares or rights or other property
• Cancellation of ADSs for the purpose of withdrawal, including if the
deposit agreement terminates
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
(A fee equivalent to the fee that would be payable if securities distributed
had been shares and the shares had been deposited for issuance of ADSs)
• Distribution of deposited securities by the Depositary to ADS
registered holders
Applicable Registration or Transfer fees • Transfer and registration of shares on our share register to or from
the name of the Depositary or its agent when the holder deposits or
withdraws shares
Applicable Expenses of the Depositary • Cable, telex and facsimile transmissions
• Converting foreign currency to US Dollars
Applicable Taxes and other governmental charges the Depositary or
the custodian have to pay on any ADS or share underlying an ADS,
for example, stock transfer taxes, stamp duty or withholding taxes
• As necessary
Category of expense reimbursed to the Company Amount reimbursed for the year ended
31 December 2019
US$
New York Stock Exchange listing fees 71,000
Investor relations expenses 94,108
Total 165,108
The table below sets forth the types of expenses that the Depositary has paid to third parties and the
amounts reimbursed for the year ended 31 December 2019:
Category of expense waived or paid
directly to third parties
Amount reimbursed for the year ended
31 December 2019
US$
Printing, distribution and administration costs paid
directly to third parties in connection with US
shareholder communications and Annual General
Meeting related expenses in connection
with the American Depositary Share programme
947
Total 947
Fees and charges payable by a
holder of ADSs
The Depositary collects fees for delivery and
surrender of ADSs directly from investors or from
intermediaries acting for them depositing shares or
surrendering ADSs for the purpose of withdrawal.
The Depositary collects fees for making
distributions to investors by deducting those
fees from the amounts distributed or by selling a
portion of distributable property to pay the fees.
The Depositary may generally refuse to provide
fee-attracting services until its fees for those
services are paid.
Fees and direct/indirect
payments made by the
Depositary to the Company
The Depositary has agreed to reimburse certain
Company expenses related to the Company’s ADS
programme and incurred by the Company
in connection with the ADS programme. For the
year ended 31 December 2019 the Depositary
reimbursed to the Company, or paid amounts
on its behalf to third parties, a total sum of
US$166,055. This table sets forth the category
of expense that the Depositary has agreed to
reimburse to the Company and the amounts
reimbursed for the year ended 31 December 2019.
The Depositary has also agreed to waive fees for
standard costs associated with the administration
of the ADS programme and has paid certain
expenses directly to third parties on behalf of
the Company.
Under certain circumstances, including removal
of the Depositary or termination of the ADS
programme by the Company before November
2021, the Company is required to repay the
Depositary, up to a maximum of US$250,000, the
amounts waived, reimbursed and/or expenses
paid by the Depositary to or on behalf of the
Company.
American Depositary Shares
252 The following summary outlines the material
aspects of US federal income and Republic of
Ireland tax law regarding the ownership and
disposition of Ordinary Shares or ADSs. Because it
is a summary, holders of Ordinary Shares or ADSs
are advised to consult their tax advisors with
respect to the tax consequences of their
ownership or disposition. The discussion regarding
US federal income tax only applies to you if you
hold your shares or ADSs as capital assets for US
federal income tax purposes. This discussion
addresses only US federal income and Republic of
Ireland taxation and does not discuss all of the tax
consequences that may be relevant to you in light
of your individual circumstances, including foreign,
state or local tax consequences, estate and gift
tax consequences, and tax consequences arising
under the Medicare contribution tax on net
investment income or the alternative minimum tax.
This summary does not take into account the
specific circumstances of any particular holders
(such as tax-exempt entities, certain insurance
companies, broker-dealers, traders in securities
that elect to mark-to-market, investors liable for
alternative minimum tax, investors that actually or
constructively own 10% or more of the stock of
the Company (by vote or value), investors that hold
Ordinary Shares or ADSs as part of a straddle or a
hedging or conversion transaction, investors that
hold Ordinary Shares or ADSs as part of a wash
sale for tax purposes or investors whose functional
currency is not the US Dollar), some of which may
be subject to special rules. In addition, if a
partnership holds the Ordinary Shares or ADSs,
the US federal income tax treatment of a partner
will generally depend on the status of the partner
and the tax treatment of the partnership and may
not be described fully below. Holders of Ordinary
Shares or ADSs are advised to consult their tax
advisors with respect to US federal, state and
local, Republic of Ireland and other tax
consequences of owning and disposing of
Ordinary Shares and ADSs in their particular
circumstances, and in particular whether they are
eligible for the benefits of the Income Tax Treaty (as
defined below) in respect of their investment in the
Ordinary Shares or ADSs.
The statements regarding US and Irish laws set
forth below are based, in part, on representations
of the Depositary and assume that each obligation
in the Deposit Agreement and any related
agreement will be performed in accordance with
their terms.
This section is based on the Internal Revenue
Code of 1986, as amended, its legislative history,
existing and proposed US Treasury regulations,
published rulings and court decisions, and the
laws of the Republic of Ireland all as currently in
effect, as well as the Convention between the
Government of the United States of America and
the Government of Ireland for the Avoidance of
Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income and
Capital Gains (the ‘Income Tax Treaty’). These laws
are subject to change, possibly on a retroactive
basis.
In general, holders of ADSs will be treated as the
owners of Ordinary Shares represented thereby for
the purposes of the Income Tax Treaty and for US
federal income tax purposes. Exchanges of
Ordinary Shares for ADSs, and ADSs for Ordinary
Shares, generally will not be subject to US federal
income or Irish tax.
As used herein, the term “US holder” means a
beneficial owner of an Ordinary Share or ADS who,
for US federal income tax purposes: (i) is a US
citizen or resident, a US corporation, an estate
whose income is subject to US federal income tax
regardless of its source, or a trust if a US court can
exercise primary supervision over the trust’s
administration and one or more US persons are
authorised to control all substantial decisions of
the trust, and (ii) is not a resident of, or ordinarily
resident in, the Republic of Ireland for purposes of
Irish taxes.
Taxation of Dividends Paid to
US Holders
Under general Irish tax law, US holders are not
liable for Irish tax on dividends received from the
Company. On the payment of dividends, the
Company is obliged to withhold DWT. The
statutory rate during 2019 was 20% (increased to
25% effective 1 January 2020) of the dividend
payable. Dividends paid by the Company to a US
tax resident individual will be exempt from DWT
provided the following conditions are met:
1. the individual (who must be the beneficial
owner) is resident for tax purposes in the US
(or any country with which Ireland has a double
tax treaty) and neither resident nor ordinarily
resident in Ireland; and
2. 
the individual signs a declaration to the
Company, which states that he/she is a US
tax resident individual at the time of making
the declaration and that he/she will notify the
Company in writing when he/she no longer
meets the condition in (1) above; or
3. 
the individual provides the Company with a
certificate of tax residency from the US tax
authorities
Dividends paid by the Company to a US tax
resident company (which must be the beneficial
owner) will be exempt from DWT, provided the
following conditions are met:
1. 
the recipient company is resident for tax
purposes in the US (or any country with which
Ireland has a double tax treaty) and not under
the control, either directly or indirectly, of Irish
resident persons;
2. the recipient company is not tax resident in
Ireland; and
3. 
the recipient company provides a declaration
to the Company, which states that it is entitled
to an exemption from DWT, on the basis that
it meets the condition in (1) above at the time
of making the declaration, and that it will notify
the Company when it no longer meets the
condition in (1) above
For US federal income tax purposes, and subject
to the passive foreign investment company (PFIC)
rules discussed below, US holders will include in
gross income the gross amount of any dividend
paid by the Company out of its current or
accumulated earnings and profits (as determined
for US federal income tax purposes) as ordinary
income when the dividend is actually or
constructively received by the US holder, in the
case of Ordinary Shares, or by the Depositary, in
the case of ADSs. Any Irish tax withheld from this
dividend payment must be included in this gross
amount even though the amount withheld is not in
fact received. Dividends paid to non-corporate US
holders that constitute qualified dividend income
will be taxed at the preferential rates applicable to
long-term capital gains provided certain holding
period requirements are met. Dividends the
Company pays with respect to Ordinary Shares or
ADSs generally will be qualified dividend income.
Dividends paid by CRH will not be eligible for the
dividends received deduction generally allowed to
US corporations in respect of dividends received
from other US corporations.
The amount of the dividend distribution includable
in income of a US holder will be the US Dollar
value of the euro payments made, determined at
the spot euro/US Dollar rate on the date such
dividend distribution is includable in the income of
the US holder, regardless of whether the payment
is in fact converted to US Dollars. Generally any
gain or loss resulting from currency exchange
fluctuations during the period from the date the
dividend payment is includable in income to the
date such payment is converted into US Dollars
will be treated as ordinary income or loss and will
not be eligible for the special tax rate applicable to
qualified dividend income. Such gain or loss will
generally be income or loss from sources within
the US for foreign tax credit limitation purposes.
Taxation
253
Taxation - continued
Distributions in excess of current and accumulated
earnings and profits, as determined for US federal
income tax purposes, will be treated as a
non-taxable return of capital to the extent of the
US holder’s basis in the Ordinary Shares or ADSs
and thereafter as capital gain. However, the
Company does not calculate earnings and profits
in accordance with US federal income tax
principles. Accordingly, US holders should expect
to generally treat distributions the Company makes
as dividends.
For foreign tax credit limitation purposes, dividends
the Company pays with respect to Ordinary
Shares or ADSs will generally be income from
sources outside the US, and will, depending on
your circumstances, generally be “passive” income
for purposes of computing the foreign tax credit
allowable to a US holder.
Subject to certain limitations, the Irish tax withheld
in accordance with the Income Tax Treaty and paid
over to the Republic of Ireland will be creditable or
deductible against your US federal income tax
liability. Special rules apply in determining the
foreign tax credit limitation with respect to
dividends that are subject to the preferential tax
rates. Any Irish tax withheld from distributions will
not be eligible for a foreign tax credit to the extent
an exemption from the tax withheld is available to
the US holder.
Capital Gains Tax
A US holder will not be liable for Irish tax on
gains realised on the sale or other disposition
of Ordinary Shares or ADSs unless the Ordinary
Shares or ADSs are held in connection with a
trade or business carried on by such holder in the
Republic of Ireland through a branch or agency. A
US holder will be liable for US federal income tax
on such gains in the same manner as gains from a
sale or other disposition of any other shares in a
company.
Subject to the PFIC rules below, US holders who
sell or otherwise dispose of Ordinary Shares or
ADSs will recognise a capital gain or loss for US
federal income tax purposes equal to the
difference between the US Dollar value of the
amount realised on the sale or disposition and the
tax basis, determined in US Dollars, in the Ordinary
Shares or ADSs.
Capital gains of a non-corporate US holder are
generally taxed at a preferential rate where the
holder has a holding period greater than one year,
and the capital gain or loss will generally be US
source for foreign tax credit limitation purposes.
Capital Acquisitions Tax
(Estate/Gift Tax)
Although non-residents may hold Ordinary Shares,
the shares are deemed to be situated in the
Republic of Ireland, because the Company is
required to maintain its Share Register in the
Republic of Ireland for Irish Capital Gains Tax
purposes.
Accordingly, holders of Ordinary Shares may
be subject to Irish gift or inheritance tax,
notwithstanding that the parties involved are
domiciled and resident outside the Republic of
Ireland. Certain exemptions apply to gifts and
inheritances depending on the relationship
between the donor and donee.
Under the Ireland-US Estate Tax Treaty with
respect to taxes on the estates of deceased
persons, credit against US federal estate tax is
available in respect of any Irish inheritance tax
payable in respect of transfers of Ordinary Shares.
Additional US Federal Income
Tax Considerations
The Company believes that Ordinary Shares and
ADSs should not currently be treated as stock of a
PFIC for US federal income tax purposes and
does not expect them to become stock of a PFIC
in the foreseeable future. However, this conclusion
is a factual determination that is made annually
and thus may be subject to change. If the
Company is treated as a PFIC and you are a US
holder that did not make a mark-to-market
election, you will be subject to special rules with
respect to any gain you realise on the sale or other
disposition of your Ordinary Shares or ADSs and
any excess distribution that the Company makes
to you. Generally, any such gain or excess
distribution will be allocated ratably over your
holding period for the Ordinary Shares or ADSs,
the amount allocated to the taxable year in which
you realised the gain or received the excess
distribution, or to prior years before the first year in
which we were a PFIC with respect to you, will be
taxed as ordinary income, the amount allocated to
each prior year will be generally taxed as ordinary
income at the highest tax rate in effect for each
other such year, and an interest charge will be
applied to any tax attributable to such gain or
excess distribution for the prior years. With certain
exceptions, Ordinary Shares or ADSs will be
treated as stock in a PFIC if the company was a
PFIC at any time during the investor’s holding
period in the Ordinary Shares or ADSs. In addition,
dividends that you receive from the Company will
not constitute qualified dividend income to you if
the Company is deemed to be a PFIC either in the
taxable year of the distribution or the preceding
taxable year, but instead will be taxable at rates
applicable to ordinary income.
Stamp Duty
Section 90 Stamp Duties Consolidation Act 1999
exempts from Irish stamp duty transfers of ADSs
where the ADSs are dealt in and quoted on a
recognised stock exchange in the US and the
underlying deposited securities are dealt in and
quoted on a recognised stock exchange. The Irish
tax authorities regard NASDAQ and the NYSE as
recognised stock exchanges. Irish stamp duty will
be charged at the rate of 1% of the amount or
value of the consideration on any conveyance or
transfer on sale of Ordinary Shares (exemption
generally available in the case of single transfers
with a value of less than €1,000).
254 The Company’s Memorandum of Association sets
out the objects and powers of the Company. The
Articles of Association detail the rights attaching to
each share class; the method by which the
Company’s shares can be purchased or reissued;
the provisions which apply to the holding of and
voting at general meetings; and the rules relating
to the Directors, including their appointment,
retirement, re-election, duties and powers.
A copy of the current Memorandum and Articles of
Association can be obtained from the Group’s
website, www.crh.com.
The following summarises certain provisions of
CRH’s Memorandum and Articles of Association
and applicable Irish law.
Objects and Purposes
CRH is incorporated under the name CRH public
limited company and is registered in Ireland with
registered number 12965. Clause 4 of CRH’s
Memorandum of Association provides that its
objects include the business of an investment
holding company. Clause 4 also sets out other
objects including the business of quarry masters
and proprietors and lessees and workers of
quarries, sand and gravel pits, mines and the like
generally; the business of road-makers and
contractors, building contractors, builders
merchants and providers and dealers in road
making and building materials, timber merchants;
and the carrying on of any other business
calculated to benefit CRH. The memorandum
grants CRH a range of corporate capabilities to
effect these objects.
Directors
The Directors manage the business and affairs
of CRH.
Directors who are in any way, whether directly or
indirectly, interested in contracts or other
arrangements with CRH must declare the nature
of their interest at a meeting of the Directors, and,
subject to certain exemptions, may not vote in
respect of any contract or arrangement or other
proposal whatsoever in which they have any
material interest other than by virtue of their
interest in shares or debentures in the Company.
However, in the absence of some other material
interest not indicated below, a Director is entitled
to vote and to be counted in a quorum for the
purpose of any vote relating to a resolution
concerning the following matters:
• 
the giving of security or indemnity with respect to
money lent or obligations taken by the Director
at the request or for the benefit of the Company;
• 
the giving of security or indemnity to a third
party with respect to a debt or obligation of
the Company which the Director has assumed
responsibility for under a guarantee, indemnity
or the giving of security;
Memorandum and Articles of Association
Marlux, part of CRH’s Building Products Division, contributed to a home makeover programme on Belgian television
in 2019, supplying its Mosaic Victoria tiling solution to pave a back yard. The decorative yet durable tiles can be
custom patterned for individual distributors.
255
• 
any proposal in which the Director is interested
concerning the underwriting of Company
shares, debentures or other securities;
• 
any other proposal concerning any other
company in which the Director is interested,
directly or indirectly (whether as an officer,
shareholder or otherwise) provided that the
Director is not the holder of 1% or more of the
voting interest in the shares of such company;
and
• 
proposals concerning the modification of
certain retirement benefits under which the
Director may benefit and which have been
approved or are subject to approval by the Irish
Revenue Commissioners
The Directors may exercise all the powers of the
Company to borrow money, except that such
general power is restricted to the aggregate amount
of principal borrowed less cash balances of the
Company and its subsidiaries not exceeding an
amount twice the aggregate of (i) the share capital
of the Company; and (ii) the amount standing to the
credit of retained income, foreign currency
translation reserve and other reserves, capital
grants, deferred taxation and non-controlling
interest; less any repayable government grants; less
(iii) the aggregate amount of Treasury Shares and
own shares held by the Company.
The Company in general meeting from time to time
determines the fees payable to the Directors. The
Board may grant special remuneration to any of its
number who being called upon, shall render any
special or extra services to the Company or go or
reside abroad in connection with the conduct of
any of the affairs of the Company.
The qualification of a Director is the holding alone
and not jointly with any other person of 1,000
Ordinary Shares in the capital of the Company.
Voting Rights
The Articles provide that, at shareholders’
meetings, holders of Ordinary Shares, either in
person or by proxy, are entitled on a show of
hands to one vote and on a poll to one vote per
share. No member is entitled to vote at any
general meeting unless all calls or other sums
immediately payable in respect of their shares in
the Company have been paid.
Laws, Decrees or other
Regulations
There are no restrictions under the Memorandum
and Articles of Association of the Company or
under Irish law that limit the right of non-Irish
residents or foreign owners freely to hold their
Ordinary Shares or to vote their Ordinary Shares.
Liquidation Rights/Return
of Capital
In the event of the Company being wound up, the
liquidator may, with the sanction of a shareholders’
special resolution, divide among the holders of the
Ordinary Shares the whole or any part of the net
assets of the Company (after the return of capital
and payment of accrued dividends on the
preference shares) in cash or in kind, and may set
such values as he deems fair upon any property to
be so divided and determine how such division will
be carried out. The liquidator may, with a like
sanction, vest such assets in trust as he thinks fit,
but no shareholders will be compelled to accept
any shares or other assets upon which there is any
liability.
Variation in Class Rights
Subject to the provisions of the Companies Act
2014, the rights attached to any class of shares may
be varied with the consent in writing of the holders of
not less than three fourths in nominal value of the
issued shares of that class, or with the sanction of a
special resolution passed at a separate general
meeting of the holders of those shares.
Issue of Shares
Subject to the provisions of the Companies Act
2014 and the Articles of Association, the issue of
shares is at the discretion of the Directors.
Dividends
Shareholders may by ordinary resolution declare
final dividends and the Directors may declare
interim dividends but no final dividend may be
declared in excess of the amount recommended
by the Directors and no dividend may be paid
otherwise than out of income available for that
purpose in accordance with the Companies Act
2014. There is provision to offer scrip dividends in
lieu of cash. The preference shares rank for fixed
rate dividends in priority to the Ordinary and
Income Shares for the time being of the Company.
Any dividend which has remained unclaimed for 12
years from the date of its declaration shall, if the
Directors so decide, be forfeited and cease to
remain owing by the Company.
Meetings
Shareholder meetings may be convened by
majority vote of the Directors or requisitioned by
shareholders holding not less than 5% of the
voting rights of the Company. A quorum for a
general meeting of the Company is constituted by
five or more shareholders present in person and
entitled to vote. The passing of resolutions at a
meeting of the Company, other than special
resolutions, requires a simple majority. A special
resolution, in respect of which not less than 21
clear days’ notice in writing must be given,
requires the affirmative vote of at least 75% of
the votes cast.
Disclosure of Shareholders’
Interests
A shareholder may lose the right to vote by not
complying with any statutory notice or notice
pursuant to Article 14 of the Articles of Association
given by the Company requiring an indication in
writing of: (i) the capacity in which the shares are
held or any interest therein; (ii) the persons who
have an interest in the shares and the nature of
their interest; or (iii) whether any of the voting rights
carried by such shares are the subject of any
agreement or arrangement under which another
person is entitled to control the shareholder’s
exercise of these rights.
Preference Shares
Details of the 5% and 7% ‘A’ Cumulative
Preference Shares are disclosed in note 31 to
the Consolidated Financial Statements.
Use of Electronic
Communication
Whenever the Company, a Director, the Secretary, a
member or any officer or person is required or
permitted by the Articles of Association to give
information in writing, such information may be
given by electronic means or in electronic form,
whether as electronic communication or otherwise,
provided that the electronic means or electronic
form has been approved by the Directors.
Memorandum and Articles of Association - continued
256 Announcement of final results for 2019 28 February 2020
Ex-dividend date 12 March 2020
Record date for dividend 13 March 2020
Latest date for receipt of completed bank mandates 13 March 2020
Latest date for revocation of existing bank mandates 13 March 2020
Annual General Meeting 23 April 2020
Dividend payment date 28 April 2020
Further updates to the calendar can be found on www.crh.com.
Financial Calendar
Electronic Communications
Following the introduction of the 2007
Transparency Regulations, and in order to adopt a
more environmentally friendly and cost effective
approach, the Company provides the Annual
Report and Form 20-F to shareholders
electronically via the CRH website, www.crh.com,
and only sends a printed copy to those
shareholders who specifically request a copy.
Shareholders who choose to do so can receive
other shareholder communications, for example,
notices of general meetings and shareholder
circulars, electronically. However, shareholders will
continue to receive printed proxy forms, dividend
documentation and, if the Company deems it
appropriate, other documentation by post.
Shareholders can alter the method by which they
receive communications by contacting the
Registrars.
CRH Website
Information on or accessible through our website,
www.crh.com, other than the item identified as the
Annual Report and Form 20-F, does not form part
of and is not incorporated into the Company’s
Annual Report on Form 20-F as filed with the SEC
(the ‘Form 20-F’). References in this document to
other documents on the CRH website, such as the
CRH Sustainability Report, are included only as an
aid to their location and are not incorporated by
reference into the Form 20-F. The Group’s website
provides the full text of the Form 20-F, which is
filed annually with the SEC, interim reports, trading
updates, copies of presentations to analysts and
investors and circulars to shareholders. News
releases are made available in the News & Events
section of the website, immediately after release to
the Stock Exchanges.
Electronic Proxy Voting
Shareholders may lodge a proxy form for the 2020
AGM electronically by accessing the Registrars’
website as described below.
CREST members wishing to appoint a proxy
via CREST should refer to the CREST Manual
and the notes to the Notice of the AGM.
Registrars
Enquiries concerning shareholdings should be
addressed to the Registrars:
Link Asset Services,
P.O. Box 1110
Maynooth,
Co. Kildare,
Ireland.
Telephone: +353 1 553 0050
Fax: +353 1 224 0700
Website: www.linkassetservices.com
Shareholders with access to the internet
may check their accounts by logging onto
www.signalshares.com, selecting CRH plc and
registering for the share portal. Shareholders
should note that they will need to have their
Investor Code (found on their share certificate) and
follow the instructions online to register. This facility
allows shareholders to check their shareholdings
and dividend payments, register e-mail addresses,
appoint proxies electronically and download
standard forms required to initiate changes in
details held by the Registrars. Shareholders will
need to register for a User ID before using some of
the services.
American Depositary Receipts
The ADR programme is administered by the Bank
of New York Mellon and enquiries regarding ADRs
should be addressed to:
BNY Mellon Shareowner Services,
P.O. Box 505000, Louisville,
KY 40233-5000, U.S.A.
Telephone: Toll Free Number
US residents: 1-888-269-2377
International: +1 201-680-6825
E-mail: shrrelations@cpushareownerservices.com
Website: www.mybnymdr.com
Frequently Asked Questions
(FAQs)
The Group’s website contains answers to
questions frequently asked by shareholders,
including questions regarding shareholdings,
dividend payments, electronic communications
and shareholder rights. The FAQs can be
accessed in the Investors section of the website
under “Equity Investors”.
Exchange Controls
Certain aspects of CRH’s international monetary
operations outside the European Union were, prior
to 31 December 1992, subject to regulation by the
Central Bank of Ireland. These controls have now
ceased. There are currently no Irish foreign
exchange controls, or other statute or regulations
that restrict the export or import of capital, that
affect the remittance of dividends, other than
dividend withholding tax on the Ordinary Shares,
or that affect the conduct of the Company’s
operations.
Principal Accountant Fees
and Services
Details of auditors’ fees are set out in note 5 to the
Consolidated Financial Statements. For details on
the audit and non-audit services pre-approval
policy see Corporate Governance – External
Auditors on page 64.
Documents on Display
It is possible to read and copy documents referred
to in this Form 20-F, that have been filed with the
SEC at the SEC’s public reference room located at
100 F Street, NE, Washington, DC 20549. Please
call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms and
their copy charges. The SEC filings are also
available to the public from commercial document
retrieval services and, for most recent CRH
periodic filings only, at the website maintained by
the SEC at www.sec.gov.
General Information
257
Rudus, part of CRH’s Europe Materials Division, is a leading manufacturer of stone-based building materials in Finland.
The Sammonmäki plant in Tuusula produces a range of concrete stair elements. With a dedicated product design team
at the plant, Rudus ensures an efficient and seamless design and production process, delivering high-quality, tailored
products to its customers.
Principal Subsidiary
Undertakings 260
Principal Equity Accounted
Investments 264
Exhibits 266
Cross Reference to Form 20-F
Requirements 267
Our Products and
Services Locations 268
Index 270
Signatures 272
260 - 272
Other information
The following documents are filed in the SEC’s EDGAR system, as part of this Annual Report on Form 20-F, and can be viewed on the SEC’s website.
1. 		
Memorandum and Articles of Association.*
2.1		 Amended and Restated Deposit Agreement dated 28 November 2006, between CRH plc and The Bank of New York Mellon.**
2.2		 Description of securities registered under Section 12 of The Exchange Act.
8. 		 Listing of principal subsidiary undertakings and equity accounted investments (included on pages 260 to 264 of this Annual Report and Form 20-F).
12. 	
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Public Company Accounting Reform and Investor
Protection Act of 2002.
13. 	
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Public Company Accounting Reform and Investor
Protection Act of 2002.***
15.1 Consent of Independent Registered Public Accounting Firm.
15.2 Governance Appendix.
15.3 Letter from Ernst & Young, dated 6 March 2020, regarding the Change in Certifying Accountant.
16. Disclosure of Mine Safety and Health Administration (MSHA) Safety Data.
101. eXtensible Business Reporting Language (XBRL).
* Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2018 that was filed by the Company on 8 March 2019.
** Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2006 that was filed by the Company on 3 May 2007.
*** Furnished but not filed.
The total amount of long-term debt of the Registrant and its subsidiaries authorised under any one instrument does not exceed 10% of the total assets of CRH plc and its subsidiaries
on a consolidated basis.
The Company agrees to furnish copies of any such instrument to the SEC upon request.
Exhibits
266 Page
PART I
Item 1. Identity of Directors, Senior Management and
Advisors
n/a
Item 2. Offer Statistics and Expected Timetable n/a
Item 3. Key Information
A - Selected Financial Data 224
B - Capitalisation and Indebtedness n/a
C - Reasons for the Offer and Use of Proceeds n/a
D - Risk Factors 233
Item 4. Information on the Company
A - 
History and Development
of the Company
2, 3, 35, 37, 245
B - Business Overview 32, 38, 244
C - Organisational Structure 245
D - Property, Plants and Equipment 230
Item 4A. Unresolved Staff Comments None
Item 5. Operating and Financial Review and Prospects
A - Operating Results 10, 30, 225
B - Liquidity and Capital Resources 33, 34, 37, 177, 229
C - 
Research and Development, Patents and
Licences, etc.
245
D - Trend Information 10, 33
E - Off-Balance Sheet Arrangements 229
F - Tabular Disclosure of Contractual Obligations 229
G - Safe Harbor 103
Item 6. Directors, Senior Management and Employees
A - Directors and Senior Management 56
B - Compensation 74
C - Board Practices 60
D - Employees 245
E - Share Ownership 99, 248, 249, 251
Item 7. Major Shareholders and Related Party Transactions
A - Major Shareholders 72, 248
B - Related Party Transactions 206
C - Interests of Experts and Counsel n/a
Item 8. Financial Information
A - 
Consolidated Statements and Other
Financial Information
128–215
- Legal Proceedings 245
- Dividends 250
B - Significant Changes 245
Item 9. The Offer and Listing
A - Offer and Listing Details 248
B - Plan of Distribution n/a
C - Markets 248
D - Selling Shareholders n/a
E - Dilution n/a
F - Expenses of the Issue n/a
Page
Item 10. Additional Information
A - Share Capital n/a
B - Memorandum and Articles of Association 255
C - Material Contracts None
D - Exchange Controls 257
E - Taxation 253
F - Dividends and Paying Agents n/a
G - Statements by Experts n/a
H - Documents on Display 257
I - Subsidiary Information 260
Item 11. Quantitative and Qualitative Disclosures about
Market Risk
229
Item 12. Description of Securities Other than Equity
Securities
A - Debt Securities n/a
B - Warrants and Rights n/a
C - Other Securities n/a
D - American Depositary Shares 252
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies None
Item 14. Material Modifications to the Rights of Security
Holders and Use of Proceeds
None
Item 15. Controls and Procedures 127, 242
Item 16A. Audit Committee Financial Expert 57, 58, 59
Item 16B. Code of Ethics 72
Item 16C. Principal Accountant Fees and Services 64, 73, 153, 257
Item 16D. Exemptions from the Listing Standards for Audit
Committees
n/a
Item 16E. Purchases of Equity Securities by the Issuer and
Affiliated Purchasers
249
Item 16F. Change in Registrant’s Certifying Accountant 243
Item 16G. Corporate Governance 242
Item 16H. Mine Safety Disclosures 230
PART III
Item 17. Financial Statements n/a
Item 18. Financial Statements 128–215
Item 19. Exhibits 266
This table has been provided as a cross reference from the information included in this Annual Report and Form 20-F to the requirements of this 20-F.
Cross Reference to Form 20-F Requirements
267
Our Products and Services Locations
1. Includes the Group’s equity accounted investments.
Cement Aggregates Lime Readymixed
A
Accounting Policies		 133
Acquisitions Committee		 72
American Depositary Shares 252
Americas Materials		 40
Annual General Meeting 105
Audit Committee		 64
Auditors (Directors’ Report)		 104
Auditor’s Remuneration 64, 153, 220
Auditor’s Report, Independent (Irish) 116
Auditor’s Report, Independent (US) 125
B
Balance Sheet
- Company 216
- Consolidated 130
Balanced Portfolio 12
Board Approval of Financial
Statements (note 36)
206
Board Committees 72
Board Effectiveness 70
Board of Directors 56
Board Responsibilities 71
Building Products 48
Business and Non-Current Asset
Disposals (note 6)
154
Business Combinations (note 32) 141, 201
Business Model 16
Business Overview 32
Business Performance 30
C
Capital and Financial Risk
Management (note 24)
182
Cash and Cash Equivalents
(note 25)
142, 186
Cash Flow, Operating 19
Cash Flow Statement, Consolidated 132
Chairman’s Introduction 4
Chief Executive’s Review 10
Communications with Shareholders 73
Company Secretary 73
Compliance and Ethics 72
Contractual Obligations 229
Corporate Governance Practices 242
Corporate Governance Report 60
Cost Analysis (note 4) 152
CREST 249
D
Debt, Analysis of Net (note 23) 177
Deferred Income Tax
- expense (note 12) 137, 160
- assets and liabilities (note 29) 137, 191
Depreciation
- cost analysis (note 4) 152
- 
property, plant and equipment
(note 15)
140, 164
- segment analysis (note 2) 147
Derivative Financial Instruments
(note 27)
142, 188
Directors’ Emoluments and Interests
(note 8)
155, 221
Directors’ Interests in Share Capital 99
Directors’ Remuneration Report 74
Directors’ Report 102
Directors’ Responsibilities,
Statement of
105
Directors’ Share Options 92
Discontinued Operations (note 3) 150
Dividend Payments
(Shareholder Information)
102, 250
Dividend per Share 1
Dividends (note 13) 143, 162
E
Earnings per Ordinary Share (note 14) 163
Employees, Average Number (note 7) 155
Employment Costs (note 7) 155
End-use Exposure		 12
Equity Accounted Investments’
Profit, Share of (note 11)
160
Europe Materials 44
Events After the Balance Sheet Date
(note 35)
206
Exchange Rates 144
Exhibits 266
F
Finance Committee 72
Finance Costs and Finance Income
(note 10)
159
Finance Director’s Review 33
Financial Assets (note 17) 169
Financial Calendar 257
Financial Statements, Consolidated 128
Foreign Currency Translation 113, 241
Frequently Asked Questions 257
G
Global Business 2
Going Concern 104
Governance 54
Greenhouse Gas Emissions 18
Guarantees (note 26; note 11
to Company Balance Sheet)
187, 221
H
Health and Safety 18
Index
270 I
Inclusion and Diversity 18, 61
Income Statement, Consolidated 128
Income Tax Expense (note 12) 160
Intangible Assets (note 16) 141, 166
Inventories (note 18) 142, 170
Investor Relations Activities 73
K
Key Components of 2019
Performance
33
KPIs, Financial 19
KPIs, Non-Financial 18
L
Leases (note 22) 133, 141, 175
Listing Rule 9.8.4C 103
Loans and Borrowings,
Interest-Bearing (note 26)
142, 186
M
Measuring Performance 18
Memorandum and Articles of
Association
73, 255
N
Nomination & Corporate Governance
Committee
68
Non-controlling Interests (note 33) 205
Non-GAAP Performance Measures 225
Notes on Consolidated Financial
Statements
145
Notes to the Company Balance Sheet 218
O
Operating Costs (note 4) 152
P
Pensions, Retirement Benefit
Obligations (note 30)
136, 192
Principal Equity Accounted
Investments
264
Principal Risks and Uncertainties 108
Principal Subsidiary Undertakings 260
Profit on Disposals (note 6) 154
Property, Plant and Equipment
(note 15)
140, 164
Property, Plants and Equipment 230
Provisions for Liabilities (note 28) 136, 190
Proxy Voting, Electronic 257
R
Registrars 257
Regulatory Information 103
Related Party Transactions (note 34) 206
Remuneration Committee 88
Reserves, Mineral 231
Retirement Benefit Obligations
(note 30)
136, 192
Return on Net Assets (RONA) 19, 226, 228
Revenue (note 1) 145
Risk Governance 26
Risk Management and Internal
Control
104, 242
Risk Factors 233
S
Safety, Environment & Social
Responsibility Committee
20, 60, 244
Sector Exposure and End-Use
- Americas Materials 40
- Europe Materials 44
- Building Products 48
Segment Information (note 2) 139, 147
Selected Financial Data 224
Senior Independent Director 57
Share-based Payments (note 9) 140, 156
Share Capital and Reserves
(note 31)
143, 198
Share Options
- Directors 92
- Employees (note 9) 156
Share Price Data 248
Shareholder Communication 73
Shareholdings as at 31 December 2019 72, 248
Statement of Changes in Equity,
Consolidated
131
Statement of Changes in Equity,
Company
217
Statement of Comprehensive
Income, Consolidated
129
Statement of Directors’
Responsibilities
105
Stock Exchange Listings 72, 248
Strategy 14
Substantial Holdings 72
Supplemental Guarantor Information
(note 37)
207
Sustainability 20
T
Total Shareholder Return (TSR) 8, 19
Trade and Other Payables (note 20) 173
Trade and Other Receivables (note 19) 170
V
Volumes, Annualised
- Americas Materials 41
- Europe Materials 45
W
Website 73, 257
Working Capital and Provisions for
Liabilities, Movement in (note 21)
174
271
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorised the undersigned to sign this Annual Report on its behalf.
									 /s/ S. Murphy
Senan Murphy
CRH® is a registered trade mark
of CRH plc.
Cover image: Oldcastle Infrastructure, part of CRH’s
Building Products Division, designed bespoke floating
concrete slabs for the Los Angeles Metro Rail project
in California. The slabs reduce vibration and noise from
trains passing under the Disney Concert Hall. When
complete, over 500 slabs will support a section of track
around three-quarters of a mile long.
Resilience
ANNUAL REPORT &
ACCOUNTS 2019
Strategic Report 2
Purpose and Values 2
Chair’s Statement 4
Chief Executive’s Review 8
Strategy and Business Model 10
 ’s Markets 10
 Business Model 12
 KPIs 14
 Strategic Priorities 16
Operations Review 26
Financial Review 28
Risk Management 40
Responsible Business Report 48
Corporate Governance 56
Chair’s Overview 56
Our Board of Directors 58
Executive Management Team 60
Corporate Governance Report 62
Nomination Committee Report 70
Audit and Risk Committee Report 72
Remuneration Committee Report 78
Directors’ Report 96
Financial Statements 99
Statement of Directors’ Responsibilities
in respect of the Annual Report and the
Financial Statements 100
Independent Auditor’s Report 102
Consolidated Statement of Profit or Loss
and Other Comprehensive Income 109
Consolidated Statement
of Financial Position 110
Consolidated Statement
of Changes in Equity 111
Consolidated Statement of Cash Flows 113
Notes to the Consolidated
Financial Statements 114
Company Statement of Financial Position 175
Company Statement of Changes in Equity 176
Company Statement of Cash Flows 177
Notes to the Company
Financial Statements 178
Supplementary Financial
Information 183
Alternative Performance Measures (“APM”) 183
Glossary 188
The Financial Statements reflect the operations of the owned
and leased hotels, therefore the KPI's and other statistics refer
to the 41 owned and leased hotels.
OUR HOTEL ASSETS
(Hotel assets € million)
WeAre
aPeople
Business
OUR FAIRNESS
We pride ourselves on creating
an objective, supportive and fair
working environment for our
employees, the people we deal
with and the communities we
work within.
OUR INDIVIDUALITY
Our people are as individual
as our hotels. They bring their
own personality, character
and enthusiasm, ensuring the
experience we provide is always
warm, welcoming, genuine
and friendly.
OUR PEOPLE
is the place where you
can do great things - individually
and as a team. You will have
the opportunity to develop
your talent, be recognised and
rewarded for your commitment
and pursue a fulfilling career.
OUR SERVICE
We ensure our service
standards are consistently
high at every opportunity.
We strive for success, are
enthusiastic about what we
do and take responsibility
for doing things right.
PURPOSE & VALUES
When was founded in 2007 it
acquired eleven hotels and launched
the Maldron Hotel brand with a vision
to develop a distinctive hotel operating
company with people at the heart of
the business.
We adopt a differentiated, decentralised
approach to managing our business and
delivering on customers’ expectations.
We trust our hotel general managers
and their teams to manage and develop
their business, manage customer
relationships and develop deep roots
in the local community. Our central
team supports the hotels and provides
strategic oversight, leveraging our
strength as a group. Our experienced
acquisitions and development team
sources and develops the asset pipeline
and adopts a clearly defined strategy
to create shareholder value in every
transaction. Our continual investment
in our people and fostering of long-term
relationships with trusted development
partners and suppliers on both the capital
and operational sides of the business
supports a sustainable business model.
We want to make our hotels the number
one choice for business and leisure
travellers looking for quality service in
well located and well invested hotels
throughout Ireland and the UK.
This puts our people at the centre
of .
Our culture has a relentless focus on
success but it is never about winning at all
costs. We are committed to doing business
ethically and in accordance with our values
of people, fairness, service and individuality.
Maldron Hotel Belfast
3
Purpose & Values
2 
STRATEGIC
REPORT
CORPORATE
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FINANCIAL
STATEMENTS
SUPPLEMENTARY
FINANCIAL
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As Ireland’s
leading hotel
operator, with a
growing presence
in the United
Kingdom, we
continue to
invest strongly
in our people,
our properties
and our brands.
Chair’s Statement
CHAIR’S STATEMENT
Growthand
Resilience
Introduction
Welcome to the Annual Report of the
Hotel Group for 2019. I am grateful
to you for taking the time and trouble to
read what I and others have to say about
our business.
2019 was another busy and very
successful year for the Group. The
number of people in our organisation
continued to grow, as did the number of
hotels in the Group. As Ireland’s leading
hotel operator, with a growing presence
in the United Kingdom, we continue
to invest strongly in our people, our
properties and our brands, while taking
very seriously our responsibilities to the
environment and to the communities in
which we conduct our business.
In 2019 we delivered another strong
financial performance. Total revenues
in the business increased by 9.3% to
€429.2m in 2019, and adjusted EBITDA
(excluding the impact of IFRS 16)
increased 12.8% to €134.8m in 2019
from €119.6m in the previous year. We
ended the year with a very strong balance
sheet. We continued our progressive
dividend policy with an interim dividend
of 3.5 cent per share, an increase of
17% on the prior year.
As of the date of this statement we
are operating 41 Owned and Leased
hotels, with a total of 8,952 rooms, and
our employee numbers are 4,871. We
maintain close contact with our guests,
our staff, our suppliers and our investors,
and we monitor carefully the feedback we
receive. The information we received in
2019, including the results of our extensive
surveys of staff and customers, indicates
that the way we operate, and the services
we deliver, are viewed very positively.
Culture and People
Our culture drives everything that we
do. This culture is very specific to
, and has been developed
over time under the outstanding
leadership of our CEO, Pat McCann.
Pat is supported by an executive team
with strength in depth across the
organisation, and our culture can be
detected wherever we do business.
Central to our culture are the
commitments we make to listen,
and to empower our people to deliver
outstanding service to our customers.
Our people are recruited with care,
and receive high-quality training,
development and support at all
levels of the organisation. They are
then encouraged to take personal
responsibility in their day-to-day
activities and to progress through the
organisation in accordance with their
desires and abilities. The growth of the
Group and the training we offer provide
opportunities for advancement to all
among our staff who wish to develop
their careers.
Our culture is made real by our
people, who make the difference in
our business, and make us all proud
to be part of the family. Having
travelled to many of our properties over
the course of 2019 and earlier years, I
can assure our shareholders that the
highest standards, infused with our
culture, can be experienced all across
the Group.
On behalf of the Board, I wish to thank
all our people for their tireless dedication
and commitment to excellence.
Environmental, Social
and Governance
During 2019 we decided to form a
new Board committee to exercise
leadership over environmental, social and
governance matters within the Group.
I am excited by this development as I
believe strongly that businesses, including
ours, have a duty to do everything they
reasonably can to respect and protect
those parts of the environment, society
and local communities that are affected
by their activities.
The Group has, of course, been
conscious of these issues for many
years, and several initiatives have been
taken to make real progress under these
headings. Elevating these matters to
a level where they receive the regular
attention of a Board committee
demonstrates the importance we attach
to them, and will allow us to ensure that
our efforts in these areas continue to be
real and effective.
I also believe that our duty to society
extends to an obligation to observe
the highest standards of governance,
including corporate governance.
seeks to comply with all
requirements of the UK Corporate
Governance Code, the Irish Corporate
Governance Annex and best practice
generally in respect of its corporate
governance practices. Details of our
approach are set out in the separate
Corporate Governance report.
Board
During 2019 it was my pleasure to
announce the appointment of two
new Directors to our Board. The
additions of Elizabeth McMeikan as a
Non-executive Director and Shane
Casserly (who was appointed in January
2020) as an Executive Director bring
significant new skills, experience and
expertise to the Board.
Elizabeth is our first UK-based Director,
recognising the growing significance
of that market to , and she
brings a wealth of relevant experience
as a business person and as a Non-
executive Director, to the Board. Shane
has been an important member of the
executive team for several years. His
vast experience in sourcing, overseeing
the development team and evaluating
opportunities to expand our portfolio
of hotels, negotiating with vendors and
providers of finance will continue to be
of immense value to the Group. I am
delighted to welcome Elizabeth and
Shane to the Board.
The addition of Elizabeth and Shane to
the Board has allowed us to make some
changes to Board committees and to
permit additional roles to be taken on by
Board members. Alf Smiddy was given
responsibility for workforce engagement,
and he has spent time in 2019 meeting
with our staff in various locations and
developing this new role. I am confident
that this role will enable the Board to
develop a better understanding of issues
of importance to our people and will
provide an excellent communication
path between our staff and the Board.
Our new Environmental, Social and
Governance (ESG) Committee will be
chaired by Elizabeth McMeikan, and
Robert Dix and Stephen McNally have
also been appointed as members of
that Committee. I have taken over
the chairmanship of the Nomination
Committee from Alf Smiddy. The
Remuneration Committee will continue
to be chaired by Margaret Sweeney,
with Elizabeth McMeikan and myself
as members. The Audit and Risk
Committee, under Robert Dix’s
chairmanship, remains unchanged,
and Alf Smiddy continues to exercise
the role of Senior Independent Director.
I wish to thank all
our people for their
tireless dedication
and commitment
to excellence.
4  5
Responsible Business Report
Our Culture
 page 52
Strategic Priorities
People
 page 18
STRATEGIC
REPORT
CORPORATE
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FINANCIAL
STATEMENTS
SUPPLEMENTARY
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Maldron Hotel Cork
The Board itself continues to operate
effectively, with regular Board meetings
at different Group properties, and
through the various Board committees.
Reports from each committee chair are
contained in this Annual Report.
In addition to regular meetings of the
Board and its committees, the Board
meets separately to discuss strategy
and to receive regular training. Directors
also meet informally from time to time,
and the Non-executive Directors also
meet as a group, separately from the
Executive Directors, on a number of
occasions each year.
The Group has continued to benefit
from the extensive experience,
knowledge and expertise of each
member of our Board, and I would like
to thank the Directors and the company
secretarial team for their dedication
and commitment during the year.
As Chairman of the Board and of
the Nomination Committee, it is
my responsibility to ensure that
the Company is served by strong,
competent and independent Non-
executive Directors, and I am satisfied
that the current Board continues to
meet those standards. I am also of the
view that the knowledge, experience
and expertise built up by the current
Non-executive Directors is of significant
value to the Group, and that it would
not be in the interests of the Company
or its shareholders if that knowledge,
experience and expertise were to be lost
suddenly, or over a short period.
Four of the non-executive members
of the Board have served since they
were appointed to the Board together
in February 2014 prior to our IPO. As
the tenure of both individual Directors
and the overall Board increases, it is
appropriate that we give attention to
succession planning for this group.
There will be a need to introduce
fresh resources in the coming years.
However, it is important that we do so
in a manner and over a timescale that
will allow a transfer of knowledge, and
will avoid a sudden loss of experience,
while at all times preserving the
independence of the non-executive
members of the Board.
Therefore, it is my intention to oversee
a phased and orderly refreshment of
the non-executive membership of the
Board over the next five years. Bringing
fresh thinking to the Board on a phased
basis over a period of years will allow
us to transfer the existing knowledge,
experience and understanding
of the business and its evolution,
while preserving the strength and
independence of the non-executive
group within the Board. This approach
to succession, in the particular
circumstances where four Non-
executive Directors were appointed
together, will, in my view, best serve
the interests of the Company and
its shareholders.
Of course, Board succession planning
is not confined to the Non-executive
Directors. The Nomination Committee
and the Board are cognisant of the need
to plan for succession among Executive
Directors, to promote the development
of a skilled and diverse pipeline of senior
management in the business and to
identify suitable candidates for Board
membership among executives when
the need arises.
Dividend
We made an interim dividend payment
of 3.5 cent per share in October and
the Board has recommended the
payment of a final dividend of 7.25
cent per share which, subject to
shareholder approval at the AGM,
will be paid on 6th May 2020.
Outlook
In my report last year I dealt with
what was then the imminent Brexit
deadline of 29 March 2019. Events
since then have removed much of
the uncertainty that prevailed at that
time. Whilst it is still not entirely clear
how matters will progress following the
departure of the UK from the EU, we
remain confident that the Group will
continue to perform well in our principal
markets in the coming months. Market
conditions always pose challenges,
including increased supply of hotel
rooms in major cities in which we
operate. However, we expect our strong
business model to continue to deliver
profitable growth in 2020.
John Hennessy
Non-executive Chair
6  Chair’s Statement 7
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Responsible Business Report
Our Culture
 page 52
In the behaviours
and attitude came first
before we decided this
was our culture.
Opening our new properties with
people is key to continuing
this and hence my obsession with
our development programmes.
As we start 2020, we do so with
confidence. There is no doubt that
some things will conspire against
us but other things will move in our
favour. While RevPAR is an important
measure it is not the only measure in
our business.
We have sizeable other income
that needs to be taken into account.
Income like food, beverage, car
parks, leisure and fitness clubs are all
important contributions to our overall
earnings. The outcome for 2019 shows
just how good we are at maintaining
the budgeted bottom line. We hit a
milestone in free cash flow, crossing
the €100 million mark for the first time.
Our balance sheet is in great shape,
well supported by fantastic assets and
relatively low debt.
Sitting where I am sitting and knowing
what I know, I cannot be anything but
confident about the coming year.
We have a great team of people, well
invested hotel assets, a very strong
pipeline of new hotels coming out of
the ground and both cash and external
funding to continue growing. In any
business there are challenges and
is no different. It is how you
respond to these challenges that sets
teams apart. Throughout its existence
has taken full advantage of
many of the crises we faced. Nothing
has changed in that we will continue
doing what we do well. I look forward
to 2020 with vigour and the confidence
that we will once again deliver for all
our stakeholders.
Pat McCann
Chief Executive
> In May 2019, we won
the Irish Times Company
of the Year Award.
> In September 2019, our
Maldron Hotels Ireland
won the Irish Hotel Group
of the Year.
> In November 2019,
we won the overall award
at the Published
Accounts Awards.
> In December 2019, we
won the Business and
Finance Company of
the Year Award.
These are just some of the main awards.
Many of our people won individual awards
which is fantastic.
We have a lot to live up to in 2020.
ESG has become more of a prominent
issue and rightly so. In , we have a
new Board subcommittee which will be
chaired by Elizabeth McMeikan. This will
bring further focus to this vital area. In
, we have done lots of good things
in the ESG space. We have been poor
at telling the story of all the great things
that have happened. I should say we have
a long way to go but it is important to say
we are starting from a positive place.
Our culture is front and centre of
everything we do. It reflects on the way
we do things. How we engage with our
customers, our people, our suppliers,
our investors, our banks is absolutely
consistent across all stakeholders.
Culture is a word that is tossed about and
can have little or no relevance. In 
the behaviours and attitude came first
before we decided this was our culture.
Our people now believe it is something
to be treasured and cultivated as it is
so unique. While our culture in Ireland,
one would imagine, is relatively easy to
maintain, it amazes me how well our
culture is embedded in the UK and this
applies to our new hotels as well as the
original properties.
2019, as expected, turned out to be
different from the past five years. We
had become used to RevPAR growing
strongly from year to year. At some
point that had to come to an end. We
are now in what I call normal growth
territory. Team are well capable
of continuing to thrive in this type of
market. Despite some light headwinds
we were able to protect the bottom line
and meet the earnings expectations
of the market. We protected our very
strong margins without causing any
damage to the business. Two metrics
I look at are our customer satisfaction
scores and our employee engagement
scores, both well outperforming
last year. I know some of you think I
am overly optimistic at times. That
optimism is driven by me knowing
what my management colleagues are
capable of. We all have a clear mandate
from our Board to grow the earnings in
2020 and beyond.
Another key factor for me is our
development pipeline. Here we
are in fantastic shape with close to
3,000 rooms under, or about to start,
construction and more to come. This
will add 30% more rooms into the
business. Our existing portfolio is in
great shape as we continue to spend
4% of total turnover on refurbishing
our existing properties. Given how
young our portfolio is, this is more than
adequate to ensure our hotels remain
in top condition well into the future.
On our people, we are also making great
progress here. We are preparing the
teams that will manage our new hotels
as they open over the next two years.
We currently have 360 people on our
Senior Development Programmes.
It is a delight to see all the young and
not so young growing up in . Our
reputation in this space is so strong
that we have very few recruitment or
retention issues. This is an area closest
to my heart that I nurture and protect as
it is so vital to our future growth plans.
In 2019 we won a number of very
prestigious awards which I am
absolutely thrilled about. These awards
are a recognition of the entire 
team and it gives them a great boost
when we win something.
PAT’S REVIEW
Our Culture is front and
centre of everything we do.
Our
Culture
ofSuccess
Pat’s Review
Strategic Priorities
People
 page 18
9
8 
STRATEGIC
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FINANCIAL
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SUPPLEMENTARY
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Tourism is the world’s third
largest export category
after chemicals and fuels,
and ahead of automotive
products and food (2017)7
STRATEGY AND BUSINESS MODEL
’s Markets
RepublicofIreland1
Ireland was the fastest growing economy in
Europe in 2019. After a record year in 2018
for Irish tourism and a sustained growth
period of eight years, tourism growth in
2019 slowed slightly. Overseas visitors were
up 1.8%, marginally ahead of the 10.6m
recorded in 2018. Holiday visits grew by an
estimated 1% to 5.3m, while business and
corporate trips grew by 8% over the same
period. The domestic economy was strong
with an estimated GDP growth of 5% and
consumer spending up 2.5%.
The economy is projected to enjoy another
year of growth in 2020. The multinational
sector continues to drive employment
growth in the country. There will be increased
supply of hotel rooms in Dublin putting some
pressure on RevPar, but a growing economy
and strong calendar of events is encouraging.
1 Central Statistics Office: Overseas Travel
December 2019; Irish Tourism Industry
Confederation (ITIC): End of Year Review 2019 &
Outlook 2020; Central Bank of Ireland: Quarterly
Bulletin Q4 2019.
Regional Ireland RevPAR
increased by 1.5% in 2019.
Cork (-3.0%) and Galway
(-2.1%) experienced a reduction
in RevPARs for the year due to
new supply entering the market
while Limerick saw growth of
3.7%. Average occupancy for
the region was up 0.4%.
The region as a whole felt a
pronounced effect with the
increase in VAT during 2019.
3 Trending.ie
Commentary2
Dublin RevPAR fell 3.57% to €116.73
in 2019 (82% occupancy) and
Average Daily Rates (ADR) were down
1.98% to €142.17. The Dublin market
was affected by the additional supply
into the city, the 4.5% increase in
VAT and a decrease in the number
of events in the city for 2019. 1,500
new rooms were added to the city
in 2019, bringing the total market
to approximately 22,030. 1,875 new
rooms are in the pipeline for 2020.
2 STR Global; Savills; AMPM
Market Concentration
Market conditions in the UK
were again challenging in 2019
due to the uncertainty around
Brexit. The Bank of England
estimated 2019 GDP growth
of 1% (2018: 1.3%). Household
spending increased by 1.1% to
Q3 2019 versus 2018. Visitor
numbers increased by 2.2% to
an estimated 38.7m on 2018.
4 Bank of England Monetary Policy
Report November 2019; Office of
National Statistics (ONS): Consumer
Trends Q3 2019; Office of National
Statistics (ONS): Overseas Travel
and Tourism Q3 2019.
Commentary5
Hotel performance in the UK was
mixed in 2019. Leeds, London and
Manchester all performed strongly
with RevPAR growths of 3.92%,
3.72% and 1.87% respectively.
All other regions experienced a
moderate drop in RevPARs. Belfast
was the city most affected with a
fall in RevPARs of 6.79% due to the
significant increase in supply into
that market.
5 STR Global
Clayton Hotels
Maldron Hotels
Bespoke Brand Hotels
Global
Overview6
A strong global economy is good
for the travel and tourism industry
and with it the hotel industry. The
continued rise in the number of
middle-class households and solid
growth in consumer spending has
led to the travel and tourism sector
outpacing the global economy
for the eighth-consecutive year.
Continued competition between
airlines, technological advances,
strong corporate travel demand
and consumers continuing to look
for experiences to enrich their lives,
supporting hotel sector growth.
2019 was another strong year
for global travel and tourism with
international tourist arrivals up
4%, although slightly behind the
exceptional rates of 2017 (+7%)
and 2018 (+6%). Uncertainty
surrounding Brexit and geopolitical
trade tensions weighed on growth.
Global GDP growth is estimated to
be 2.9% for 2019 (2018: 3.6%) with
USA growth of 2.3% (2018: 2.9%
and Euro area growth of 1.2% (2018:
1.9%). In Q3 2019, hotel revenue per
available room (RevPAR) grew 0.7%
year on year in USA and 1.7% year
on year in Europe.
6 World Tourism Organisation: World Tourism
Barometer; International Monetary Fund (IMF):
World Economic Outlook; STR Global.
7 World Tourism Organization (UNWTO) and
World Trade Organization (WTO), 2017.
EXPORT EARNINGS BY PRODUCT CATEGORY7
Chemicals
Fuels
International Tourism
Automotive Products

STRATEGIC
REPORT
CORPORATE
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SUPPLEMENTARY
FINANCIAL
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STRATEGY AND BUSINESS MODEL
Business Model
TheDifference
with
We generate value by providing quality offerings
at an appropriate price that our customers want.
We identify strategic investment opportunities
and develop quality hotels in prime city locations.
Employees Development
 Strategic Priorities - People, page 18
Guest Satisfaction
 Strategic Priorities - Customers, page 22
Focus on Financials
 Case study, page 37
is a hotel
owner and operator.
We operate in Ireland and the UK
 's Markets, page 10
Since the Company floated
in 2014, we have grown to be
the most successful and largest
hotel Group in Ireland.
Our key business drivers
We generate revenue through selling
accommodation, food and beverage,
meeting rooms, conferences and ancillary
services to our customers.
Growth led by people and properties
 Strategic Priorities, page 16
Room pipeline expansion
 Strategic Priorities - Properties, page 20
Shared Service Centre
 Case study, page 37
€
HOW WE DO IT
HOW WE GENERATE VALUE
Asset Management
is a vertically integrated hotel owner and operator. We
control every aspect of asset management and the operation
of our properties. Our disciplined investment strategy is designed
to create shareholder value in every transaction. We own or
have a long leasehold interest on almost all of our hotels, and
we own all of our own brands. This means we control the overall
direction of the asset, its development and its performance. This
differentiates us from the market, where an owner/franchise model
is predominately adopted.
Hotel Operation
We operate a decentralised model whereby the hotel general
manager has ultimate responsibility for their hotel. This enables
quick local decision making in relation to areas such as revenue
and pricing, meeting customer needs and product offerings. It also
encourages our managers to engage with their local communities
and build strong relationships. Hotel management is supported
by expert functional teams in Central Office, selected shared
services and an experienced senior management team.
Support Service Excellence
We are able to implement common group-wide business and
IT systems, and deliver expertise in areas such as procurement,
finance, health and safety and marketing. We have developed
and implemented group-wide training and development for
our employees. We offer a range of development options to all
employees, complementing our extensive training programmes.
We are also able to provide a career path for our employees as we
grow and add new hotels. We encourage our employees to move
throughout our hotel portfolio and actively support a policy of
filling vacancies internally.
Our business model
differentiates us
from our peers.
Our Purpose & Values, page 2
Our Strategic Priorities, page 16
Our Responsible Business Framework, page 48
Maldron Hotels and Clayton Hotels
are our principal hotel brands* and the
majority of our hotels operate under
these brands. There are 22 Clayton
hotels, which are all four-star, and 17
Maldron hotels which are comprised
of four- and three-star properties.
We own and manage a number of
ancillary brands, which complement our
hotel brands. These include Red Bean
Roastery, Club Vitae and Grain & Grill.
2
Leading
Hotel Brands
17
Maldron Hotels
22
Clayton Hotels at MALDRON HOTELS
OUR BRANDS
*We also own The Gibson Hotel and Samuel Hotel Brands
13
12
STRATEGIC
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 Business Model
STRATEGY AND BUSINESS MODEL
KPIs - Financial
STRATEGY AND BUSINESS MODEL
KPIs - Non Financial
Commentary
Key top-line Measure of the
overall growth and development
of the business.
2019 Progress
Total Revenue increased by
€36.6 million in 2019 due mainly
to strong trading performance
in our UK hotels.
Link to Strategy
Revenue
Total Revenue (Millions)
Total Group Revenue represents sales
(excluding VAT) of goods and services net of
discounts provided in the normal course of
business and is recongnised when services
have been rendered.
15
226
291
352
393
429
16 17 18* 19
+9.3%
Commentary
Developing and delivering
our pipeline is key to our
growth strategy.
2019 Progress
We have added 462 owned
and leased rooms to our hotel
stock in 2019. Clayton Hotel
City of London and Clayton
Hotel Cambridge were acquired
during the year.
Link to Strategy
Growth
New Rooms Added
Total number of new owned and leased
rooms added through acquisition or
development in the group.
15
3239
1620
477
1224
16 17 18 19
Customer
Satisfaction
Customer Satisfaction (%)
A measure of the quality of our product offering
and service collected from our customers.
Commentary
We are driven to improve customer
experience through continuous
investment to meet ever rising
expectations.
2019 Progress
Our Customer Satisfaction score has
increased by 1.2% year on year and is in
line with our values of being dedicated
to service excellence and being a
people business.
Link to Strategy
+1.2% 15
82
83
84
85
16 17 18 19
81
462
Margin
Segments EBITDAR Margin (%)
Earnings before interest and finance costs, tax,
depreciation, amortisation and rent (EBITDAR)
divided by revenue. By excluding rent costs,
leased and owned properties are comparable
with each other.
No change
Commentary
EBITDAR is our key measure of
operational profitability. Focus on
the margin allows us to monitor
conversion of incremental revenue
to profit.
2019 Progress
The Group has achieved an EBITDAR
Margin of 42.6% in 2019, which was
the same as 2018.
Link to Strategy
Earnings
Adjusted EPS-Basic (%)
Profit for the year divided by the number of
ordinary shares and adjusted for the effect of
items which are not reflective of normal trading
activities or distort comparability either ‘year on
year’ or with other similar businesses.
Commentary
Key measure of the effective
delivery of profitable growth for
our shareholders.
2019 Progress
Adjusted EPS - basic (pre IFRS 16)
has seen an increase of 3.2c on
2018, a growth of 7.5% year on year.
Adjusted EPS - basic (post IFRS 16)
totalled 42c for the year.
Link to Strategy
+7.5% 16
26.8
38.3
42.8
46.0
17 18 19 19
20.2
post
IFRS
16
pre
IFRS
16
15
42.0
Commentary
The Group is focused on turning
profit into cash for re-investment
and dividend payments.
2019 Progress
Free Cash Flow of €100.6m was
achieved in 2019. A 16% increase
from 2018, driven by effective cost
control throughout the year.
Link to Strategy
+16% 15
59.3
71.7
86.6
100.6
16 17 18 19
Cash
Free Cash Flow (Millions)
Net cash from operating activities less
amounts paid for interest, finance costs and
refurbishment capital expenditure and after
adding back cash paid in respect of adjusting
items to EBITDA.
48.5
People
Internal Promotions
Number of Internal Promotions
in the Group.*
*Measurement commenced in 2018.
+24%
Commentary
Development of our people is
critical to ensure we have a talent
pipeline for our new hotels and is a
key element of managing the risk
associated with new hotel openings.
2019 Progress
In line with our strategy of
developing our teams from within,
we have seen an increase of 24% in
Internal Promotions in 2019.
Link to Strategy
305
379
18 19
Strategic Priorities
Customers
 page 22
Strategic Priorities
Brands
 page 24
Strategic Priorities
People
 page 18
Strategic Priorities
Properties
 page 20
*Prior period revenue figures have been restated in the current period to reflect the reclassification of €1.1 million of income from managed hotels from revenue
to other income following the change in reportable segments during 2019.
15
41.4
42.4
42.6
42.6
16 17 18* 19
39.6
15
14 
STRATEGIC
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KPIs
Growthled
byPeople&
Properties
Strategy in Action
Read more about People
 page 18
Strategy in Action
Read more about Properties
 page 20
Strategy in Action
Read more about Customers
 page 22
Strategy in Action
Read more about Brands
 page 24
STRATEGY AND BUSINESS MODEL
Strategic Priorities
Our strategic objective is to drive
long-term shareholder returns
by becoming the leading four-
star hotel operator in Ireland
and the UK and, in the process,
developing a sustainable business
that respects the interests of
our wider stakeholders: our
employees, customers, suppliers
and communities.
GROWTH
PROPERTIES
BRANDS
PEOPLE
CUSTOMERS
OUR STRATEGIC VISION
STRATEGIC
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16 Strategic Priorities
The success of our 
Online training platform
was one of the highlights
of 2019. The quality of our
learning and development
programmes is central to
retaining and developing
the best people.
DawnWynne
Head of HR
Our
People
As the Company continues
to grow, we recognise that
our team members are
central to the success of the
Group and how we operate.
Developing internal talent has
continued to play an essential role in
2019 and will continue to be a priority
for our future success.
Continuous development of our
General Managers is one of our primary
focuses and our Pinnacle programme
provides further development with
masterclasses delivered by the Irish
Management Institute on the latest
business trends.
Our Altitude programme is aimed at
developing and upskilling our Deputy
General Managers to ensure we have
a pipeline of future General Managers
to support our ambitious growth plans.
Our focus is on their leadership and
people management expertise as
well as business strategy and growth.
We are incredibly proud of our Ascend
Graduate Programme, and we were
delighted to welcome a record 34
graduates into our Class of 2019.
The Ascend programme ensures the
development of talented graduates,
some of whom will become leaders
within our business. To date, we have
retained 72% of those who graduated
in 2017 & 2018. We currently have
62 Ascend graduates from different
disciplines gaining valuable experience
in the hospitality industry. More
recently we have added Sales &
Marketing, Human Resources and
Revenue Management streams to the
graduate programme. Our graduate
programme within our growing
employer brand has resulted in an
increase in the number and calibre of
applicants each year.
2019 saw the exciting launch of our
newest programme, Navigate. This
programme has been developed
with the objective of upskilling
our employees at the supervisory
level in our hotels to give them
the confidence, communication
and leadership skills required for
managing a team.
From our specialist stream, the Head
Chef Development programme has
been a phenomenal success for
the business and the people who
have attended. We have combined
with Tralee IT to develop a bespoke
blended Chef Development
Programme – Certificate in Culinary
Management & Innovation. This
programme is an excellent example
of how we continue to grow and
develop great talent for our hotels
and is in its second year. It is also an
example of how we can work with
a third-level institution to develop
the specialist skills required for
some categories of our people. We
have seen our first 15 Senior Chefs
graduate from this programme.
The return on investment of this
programme has been excellent with a
retention of 87% and an engagement
score of 97%.
In December 2018, we launched
our new online learning platform,
Online, which has been
well received and has enjoyed
excellent engagement across
the Group. We will retain our ‘face
to face’ delivery but supplement it
with a very efficient and effective
online platform.
These development programmes
ensure that we are developing the
talent necessary to continue to
manage our growing portfolio using
our decentralised management
approach. In 2018 and early 2019,
we opened six new-build hotels with
72% of the senior management
coming from within the Group.
This ensured that the culture,
model and brand was present from
the pre-opening stage. We have the
same robust plans in place for the
new openings in 2021 & 2022.
83%
of employees feel they
are growing professionally
367
employees enrolled on
structured programmes
36%
of current General
Managers developed
through our Pinnacle
programme
47,524
courses have been
completed in 2019
STRATEGY IN ACTION
LearningandDevelopment
We offer top class learning and development solutions to our
current and potential talent from all backgrounds. Employees
can continually learn and grow their career further, accessing
a range of online, face-to-face and accredited development
programmes, as well as gaining access to upskilling
hospitality training.
Development of our people is a strategic priority and over the years we
have developed a top class and engaging suite of learning and development
programmes and workshops from which we have yielded excellent results.
We offer 14 internal development programmes; our ‘Milestones’ training calendar
which offers over 40 personal development courses per quarter; Online
our learning management system which gives access to over 50 courses available
as online bite-sized courses across all our hotels, as well as hotel-specific daily
upskilling training. We are also excited to launch our new Mentoring Programme in
2020, as well as a structured approach to creating pathways to work for all through
development within the community, including work-experience placements,
internship opportunities and apprenticeships.
19
18  Strategic Priorities
Ascend graduate programme, class of 2017. Graduation: March 2019
STRATEGY AND BUSINESS MODEL
Strategic Priorities
STRATEGIC
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Strategic Priorities
FINANCIAL
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SUPPLEMENTARY
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Our
Properties
IV. Within our existing portfolio, we
have identified opportunities for
expansion, including extensions
to Clayton Hotel Birmingham –
44 bedrooms and Clayton Hotel
Cardiff Lane – 88 bedrooms.
The company now has a pipeline
of 11 new properties in the UK and
Ireland, 7 of which have already
commenced construction. With
extensions this will result in over
2,000 new bedrooms in 2021 and
another circa 1,000 bedrooms
opening in subsequent years.
We are the leading hotel operator
in Ireland and our strategy is to
become the leading four star
operator in the 20 cities that we
are targeting for expansion in the
UK. We also wish to significantly
increase our presence in London.
Our flexibility has enabled us to
take advantage of opportunities
in target locations through a
variety of investment vehicles,
ranging from agreements for lease
through to freehold acquisition of
development sites.
2020 FOCUS
Our focus for 2020 will be to secure
further opportunities in excellent
locations across our target cities
whilst also exploring other potential
markets that could further support
the development of our pipeline.
We have undertaken, and will
continue to undertake, significant
research to identify the most
attractive geographical markets
that will support our ambitious
growth strategy and drive further
shareholder value.
11
Hotels
in pipeline
2
New hotels added
in 2019, one in the
City of London and
one in Cambridge
3,000
Circa 3,000
bedrooms in the
Development
Pipeline
A new hotel
pipeline rising to
30% of rooms
operated today.
STRATEGY AND BUSINESS MODEL
Strategic Priorities
21
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Strategic Priorities
20 
We have increased
earnings at Clayton Hotel
Birmingham by 66% in two
years. We identified an
under-performing hotel on
an under-utilised site, and
exploited the opportunity
through efficient deal
execution. Our hotel
management, and asset
and project management
expertise enabled us to
transform performance
and expand the hotel
from 174 to 218 rooms.
ShaneCasserly
Corporate Development Director
STRATEGY IN ACTION
ClaytonHotelBirmingham
Improving performance and delivering on shareholder value
In July 2017, initially acquired control of Hotel La Tour, a 4-star property in central
Birmingham. The following month, completed a sale and leaseback with Deka
Immobilien (Deka) for £30 million, with an initial rent of £1.6 million per annum for the
hotel. Completed in 2012 to a high four-star standard, the property boasts 174 bedrooms,
restaurant and bar facilities, as well as extensive conference and meeting facilities, all
boasting high quality finishes.
Shortly after acquisition the hotel was rebranded as the Clayton Hotel Birmingham and
the operations team commenced the implementation of the business plan for the
hotel. The property has enjoyed considerable success over the last couple of years and
the team, now led by Caitriona Delaney, have delivered the following improvements
across key performance metrics:
 Increased EBITDAR by 66%*
 Increased RevPar by 15.4%*
 Increased overall Revenues by over 6.5%*
 Increased EBITDAR Margin from 24% to 37%*
One of the largest cities in the UK, Birmingham was always high on ’s list of target
markets. With the improved performance of the hotel and the Commonwealth Games
due to be hosted in the city during 2022, its appeal has only increased. During the initial
acquisition in 2017, the possibility of extending the existing hotel was an opportunity that
had been discussed with Deka and, in September 2018, we secured planning permission
for an additional 44 bedrooms, distributed across two new floors.
In 2019, we exchanged contracts for an extensive Development Agreement with Deka,
which will result in Deka investing £5.6 million in the property for the delivery of the
bedroom extension whilst will invest a further £1.37 million, primarily focused on
enhancing the ground floor offering for customers. Construction commenced in January
2020 and the project is on schedule to complete by the end of 2020.
Clayton Hotel Birmingham will enter 2021 reinvigorated and reinvested, perfectly placed to
continue to grow its business and enjoy further success. When finished the hotel will have
218 bedrooms and a refreshed ground floor, including a considerably improved bar and
restaurant. Furthermore, the additional 44 bedrooms will enter operation at a rent per key
that is approximately 25% less than the current rent per bedroom.
This project further demonstrates ’s commitment to this dynamic city and our ability
to apply our strengths and skills to an existing property and drive performance and growth
so that it outpaces the market.
*Based on results for 2019 versus 2017,
when it was acquired by .
Clayton Hotel
Birmingham
STRATEGIC
REPORT
We are focused on continually
improving the journey of our customers
as they experience our hotels and our
people who serve them. We always seek
to better understand our customers so
that we can better satisfy their needs
and meet their expectations.
2019 PROGRESS
Our focus for 2019 was to further
enhance our customer experience
through investments in our facilities,
advancements in our technologies and
focus on our service delivery.
Customer satisfaction is key to our
success, and so to keep our standards
high, we collect customer feedback from
an industry-leading online reputation
management tool to help us monitor and
measure satisfaction levels. In 2019 we
received and processed over 150,000
customer reviews. Our response rate
increased by 50% and the overall
satisfaction rating went up by 1.2% to
85% overall. We examine the customer
feedback results in detail and use those
results to inform our decision making
on areas such as capital investment,
employee training requirements and
service delivery standards.
Our customers book our services in
a multitude of different ways. They
use tour group operators, global
distribution systems (GDS), our own
brand websites or just walk in off the
street for a coffee. Each and every
customer is important to us.
Our
Customers
Our customer is
at the centre of
everything we do
as a hospitality
company.
STRATEGY IN ACTION
GDSPrivateLabelSwitch
Global Distribution Systems [GDS] Chain Code Switch from generic
“UI” to private label “DA”
Global Distribution System (GDS) is a worldwide computerised
reservations network that enables automated transactions
between travel service providers for airlines, hotels and car
rental companies.
GDS Customers (corporate clients, travel management companies and consortia
partnerships) make reservations through phone, dedicated travel desks, online
booking tools or platforms, all sourced through native GDS.
Our connectivity provider, Pegasus, has distributed our rooms inventory to the
global distribution systems through their chain code of “UI” since Hotel
Group was established.
In 2019, after in-depth research, we decided to change our GDS code to our
private label code of DA. This gave us a unique identity while creating brand
awareness. It allowed us to create Hotel Group as a solid independent
hotel group which stands out and now provides us with prioritisation on booking
channels and the ability to develop new and maximise existing partnerships
through preferential status.
Since making the switch to our private label, Hotel Group has seen a 113%
growth in partnership numbers from 2019 to 2020, future proofing us within the
global corporate market to generate growth within existing hotels and facilitate
intelligence as we enter new markets.
Through preferred partners and GDS systems, we have developed a new marketing
plan with the objective of creating awareness of our chain code and brand
development across global markets. Applying a communications creative concept
for the identity allows us to associate all brands of , Clayton & Maldron Hotels.
1.2%
Overall Customer
satisfaction up 1.2%
10%
Maldron Hotels
Breakfast Satisfaction
Increased by 10%
6%
Clayton Hotels
Breakfast Satisfaction
Increased by 6%
Repositioning 
Hotel Group within
the Global Distribution
System (GDS) will allow
us to increase sales in
this channel - maximising
revenue from existing
partnerships and
developing new ones.
PatriceLennon
Group Head of Sales and Marketing
We carried out an overview of the
online customer journey for those
booking through our own websites.
It was conducted through heatmap
reports to see how users behave and
interact with our websites. The data
received enabled us to see which
elements of the page were attracting
users’ attention, how they flow
through different pages of the site and
potential issues with content. After
taking account of a number of tests
that were completed, we redeveloped
and relaunched our websites. The
changes have contributed to an
increase in site performance and
content consumed by users.
2020 FOCUS
We will continue to drive bookings
through our websites, with our “Make
it Maldron” and “Click on Clayton”
campaigns. We will continue to seek
to encourage more customers to book
directly with us in 2020.
Customer data and privacy is
something we take very seriously in
. Over the past year, we have
reviewed our systems and policies to
ensure that we are GDPR compliant.
Additional focus will be placed on this
important and developing area in 2020.
STRATEGY AND BUSINESS MODEL
Strategic Priorities
23
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22 Strategic Priorities
STRATEGIC
REPORT
Our brands are central
to our business model,
and the development
of these brands is
essential to our strategy.
Our
Brands
Clayton and Maldron are the two
largest hotel brands in Ireland.
In today’s dynamic accommodation
market we believe that total
brand control, combined with our
de-centralised operations model,
allows us to maximise return on
investment at each individual
hotel according to its location
and characteristics.
2019 PROGRESS
2019 was another fantastic year for
our Clayton and Maldron hotel brands.
We invested over €7 million in 2019
refurbishing 699 rooms in our hotels,
bringing the total number of new or
refurbished rooms in our portfolio
to 5,773 since 2014. This means
that we deliver a consistently good
quality product at every location.
In 2019 we announced two future new
Maldron Hotels, one in Liverpool and
one in London, which will help grow
further the profile of the brand in the
UK. We also opened our third Clayton
hotel in London – the Clayton City of
London. We took over the Tamburlaine
Hotel in Cambridge in November 2019
which will be rebranded as Clayton
Hotel Cambridge in February 2020.
STRATEGY IN ACTION
FromtheTamburlaineHotel
toClaytonHotelCambridge
The perfect fit to our Clayton family
In November 2019 the Group acquired the operating lease for
The Tamburlaine Hotel in Cambridge. A decision was made to
rebrand the hotel as Clayton Hotel Cambridge and this will be
completed in February 2020.
To understand why this rebranding made sense to us and why it enhances the strength
of the Clayton brand we considered a number of factors.
 Cambridge as a location reflects our brand criteria. It is a centre of learning, commerce
and research and is home to one of the most prestigious universities in the world. Many
of the world’s leading multinationals are also based in the city. We locate Clayton hotels at
the centre of key business and leisure cities in Ireland and the UK and the Clayton Hotel
Cambridge will enhance our brand profile.
 The hotel’s business mix is also suited to the Clayton brand, with a strong corporate
presence supported by a healthy leisure market. This supports the hotel’s outstanding
meetings and events, and food and beverage offerings.
 The hotel opened in May 2017 and is fitted out to a high specification. Clayton hotels
are well-appointed and well-invested properties and The Tamburlaine fits our criteria
of offering a high-quality guest experience.
 Of huge importance to us is the relationship of our Clayton hotels with the local
community, and the hotel’s place in this community. The “Tamburlaine” name resonates
deeply with the local Cambridge community. Honoring 16th century playwright, and
Cambridge alumnus, Christopher Marlowe’s most famous play, “Tamburlaine the Great”,
we have renamed the bar and restaurant “The Tamberlaine” to retain the link with
the community.
Clayton Hotel Cambridge is a high quality addition to the Clayton brand. The hotel
strengthens the brand and the brand will lift revenue and earnings at the hotel.
17
Operating
Maldron Hotels
7
Maldron Hotels
in the Pipeline
22
Operating
Clayton Hotels
3
Clayton Hotels
in the Pipeline
Following the success
of Clayton Hotel
Birmingham (see page
21) we are excited to
announce Clayton
Hotel Cambridge,
launching February
2020. Another high
quality addition to
the brand portfolio.
PatriceLennon
Group Head of Sales
and Marketing
Clayton Hotel
Cambridge
STRATEGY AND BUSINESS MODEL
Strategic Priorities
We have maintained our disciplined
approach to developing or acquiring
new hotels in prime city-centre
locations.
We also had significant growth in
our other brands. Our Red Bean
Roastery, which is our stand-alone
coffee brand is now available at 36
locations across both hotel brands
in Ireland and the UK including two
standalone coffee shops located in
Cork and Dublin.
Our 13 Club Vitae Leisure Centres
brand had over half a million capital
investment in 2019.
2020 FOCUS
We have just commenced an
extensive market research project
which will assess matters such as
awareness of our brands in Ireland
and the UK, the effectiveness of our
websites and consumer perception
of our brands. Empowered with
these insights, this research will
help us refine the marketing and
communications strategies of
each brand. It will act as a guiding
compass for us over the coming
years as we continue to invest and
develop our brands.
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24 Strategic Priorities 25

STRATEGIC
REPORT
OPERATIONS REVIEW
is, at its heart, a hotel operator, and
I’m delighted to report on another hugely
successful year for hotel operations in
the company. We integrated six new
hotels into our business, identified several
future leaders within our emerging talent
pool, protected and grew our profit
margin despite softening RevPAR in our
key Dublin market, improved customer
satisfaction across both the Clayton and
Maldron brands and saw a sharp increase
in our employee engagement scores.
Our brands and accommodation
product continues to benefit from
our commitment to investment in
rooms refurbishment.
The operations team at also
plays a critical role in the new hotel
development process. There is a
continuous feedback loop between
operations and the acquisitions and
development team on due diligence,
design, planning, and during the critical
pre-opening phase as we take over the
project and begin to turn our investment
targets into reality. This relationship is an
essential part of the success of ’s
business model.
People
The strategic importance of the
development of our people is explained
in detail on pages 18 and 19. We
recognise the need to take care of our
people as one of our primary social
responsibilities (pages 50 and 51), and
we underline the importance of people
development and retention in our key
risks on pages 44 and 45.
Our in-house development programmes
support all of our key departments:
operations, human resources, sales and
marketing, revenue management, food
and beverage and finance. Everybody has
an opportunity to excel in their career,
and I am delighted with the figure of 379
internal employee promotions alone
during 2019. We are building fantastic
teams to underpin our future growth,
both in Ireland and the UK.
Hotel General Managers and their teams
have full decision making responsibility
and accountability for each of their
respective businesses. The hotels are
ably supported by a strong, very
experienced and energetic Central
Office team.
The improvement in employee
engagement is great to see and is a
result of us listening to concerns and
making sure our managers are rewarded
for taking an interest in employee
welfare. In 2019, we improved staff
facilities at several locations, introduced
an employee assistance programme,
more great training courses and
maintained excellent communication
through regular town hall meetings at
all hotels and in the central office. I am
a firm believer that a happy workforce
is an essential component of excellent
customer service, and the combination
delivers our bottom-line targets.
Customer
There are several drivers of our
thriving customer relationships. We
are transparent across the business,
sharing our satisfaction ratings across
all the hotels, and driving a daily focus to
every customer experience.
Our accommodation offering is the core
of the business, and we are committed
to providing a high standard of quality
and service. Over the past year, we
have also focused on the customer
experience on our ground floors. Food
and beverage performed very well, and
we continue to invest in our customer
offering and consistency. Red Bean
Roastery coffee is now a mainstay in all
our lobbies, and I was delighted when
Clayton Hotel Leopardstown’s cafe was
voted best coffee shop in the bustling
Sandyford Business District in 2019.
This shows that we can produce high-
quality food and beverage experiences.
Improvements in our breakfast product
and service was another essential
part of the overall growth in customer
satisfaction scoring.
Our six 2018/19 hotel openings have
settled down very well and have, without
exception, been very well received by
customers. Each one has contributed to
our earnings growth in 2019.
As well as caring for individual
customers, we invest in developing
deep relationships with group
customers in a variety of market
subsegments. One good example of
this is in the sports sector, where we
cultivate partnerships with several
leading organisations and clubs through
sponsorships and preferred partner
arrangements. These partnerships
include London GAA, the FAI emerging
talent programme, Munster Schools
rugby and several League of Ireland
football teams. These relationships also
help foster healthy relationships in our
local communities.
Sustainability
I am looking forward to working on the
ESG Committee chaired by Elizabeth
McMeikan. We view our responsibility
for our impact on society and the
environment as something we must
integrate into our day to day business.
In 2019 we took some progressive
steps; the Environmental Steering
Group led by Conal O’Neill (see page 55)
successfully established a sustainability
benchmark across all of our properties
in partnership with Green Tourism,
and we concluded a two-year supply
agreement Bord Gais for green-
certified electricity for all our Irish hotels.
We look into 2020 with optimism.
There are several key events, including
football’s Euro 2020, and the return
of the Autumn series of rugby
internationals, which will boost visitor
numbers to Ireland and the UK. In
Dublin, we welcome the 50th World Irish
Dancing Championship in April and the
College Football Classic in August, two
events that attract big visitor numbers.
I am confident that we have a terrific
committed team in place to make
the most of the opportunities in the
marketplace and to overcome any
obstacles that we might meet in 2020.
Stephen McNally
Deputy Chief Executive
OurPeople,
Powering
ourGrowth
I am confident that
we have a terrific
committed team in
place to make the most
of the opportunities in
the marketplace and
to overcome any
obstacles that we
might meet in 2020.
Strategic Priorities
People
 page 18
Strategic Priorities
Customers
 page 22
Strategic Priorities
Brands
 page 24
27
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FINANCIAL REVIEW
Financial Review
RobustPerformance
DeliveringStrong
CashFlow
The net result is that
despite RevPAR falling
at our ‘like for like’ hotels
in Dublin and Regional
Ireland, our EBITDAR
margins increased
in both those regions.
Generating over €100 million in Free
Cash Flow1
is truly a great achievement
by everyone in the team in 2019.
We significantly grew earnings again in
2019 despite RevPARs falling in the Irish
market for the first time since we floated
the company in 2014. Coupled with
that, the uncertainty surrounding the
outcome of Brexit hung over both the
UK and Irish economies for the entirety
of 2019. However, the investment in our
people, improving our processes and
systems, and understanding better the
needs of our customers served us very
well in 2019.
RevPAR1
is a key metric to assess
the health of hotel markets and the
operators within those markets.
However, it is not the only metric. Our
hotel teams work very hard every day
in driving sales through our food and
beverage outlets, attracting clients
into our excellent meeting and events
facilities, retaining existing and capturing
new members in our health and fitness
facilities as well as generating revenues
in any other way we can. Our Central
Office sales team are always looking
at expanding existing channels to
support our teams at the hotels as well
as exploring new channels to sell our
services through.
Our hotel teams are also focused on
delivering service to our customers in
the most efficient way possible. Our
decentralised model encourages them
to be innovative in finding efficiencies
that do not have a negative impact on
our customers. Meanwhile, our Central
Office team is delivering technology
that is increasing overall efficiency at
the Group. The Shared Service Centre
in Cork, as explained later, is a big part
of that effort. In addition, technology
and an ever-increasing focus on health
and safety is resulting in reduced claims
costs at a time of rising insurance costs
in Ireland.
The net result is that despite RevPAR
falling at our ‘like for like’ hotels in Dublin
and Regional Ireland, our EBITDAR
margins1
increased in both those regions.
That is a result that I am very proud of.
GWe delivered strong revenue growth of
€36.6 million (9.3%) to €429.2 million in
2019 driven by the full year contribution
from the six new hotels and four hotel
extensions which opened during 2018
and early 2019. Our existing UK hotel
portfolio performed very well, which
is particularly encouraging given our
expansion plans for this region. RevPARs
at our ‘like for like’ Republic of Ireland
hotels decreased due to the digestion
of newly added supply and the impact
of the VAT increase.
The additional revenue converted strongly
to the bottom line with Segments EBITDAR1
increasing by €15.6 million. Segments
EBITDAR margin1
for the Group is
unchanged at 42.6% despite a fall In RevPAR
in the Irish market and lower margins at
our six newly opened hotels which have yet
to reach full operating performance. This
demonstrates our excellent control of costs.
Adjusting Items to EBITDA
We disclose Adjusted EBITDA to show
the underlying operating performance of
the Group excluding items which are not
reflective of normal trading activities
or distort comparability either ‘year on
year’ or with other similar businesses.
The adjusting items of €1.6 million for
2019 relate to the net property revaluation
movements recorded in profit or loss. The
Group adopts a revaluation policy for its
hotel property assets. In 2019, the value of
our hotel assets were revalued upwards by
€122.3 million, of which €120.7 million was
recorded directly in equity.
Earnings Per Share (EPS)
Basic EPS has grown by 3.7% to 42.4 cents.
Our new and extended hotels have made
a significant contribution to earnings.
However, this is offset by the increase in
depreciation and finance costs due to the
application of IFRS 16 Leases.
Under IFRS 16, lease expenses are higher
in the early years of implementation due
to the front-loading effects of finance
costs compared to the straight-line rent
expense under IAS 17. Excluding the
impact of IFRS 16, basic EPS increased
by 13.4% to 46.4 cents.
The Group’s effective tax rate1
decreased
from 13.8% in 2018 to 12.8% in 2019
largely due to the reversal of prior year
valuation impairments which is not taxable
and the release of an over provision from
2018. Work completed by external advisors
on the level of capital allowances on the
2018 development capital expenditure
resulted in a higher qualifying amount than
originally estimated. In 2018, the non-
deductible impairments led to a higher
effective tax rate.
The current tax charge also includes a
capital gains tax charge of €0.9 million
on insurance proceeds received in 2018.
These became taxable as a result of the
Group’s decision in 2019 not to redevelop
the insured building which had been
destroyed by fire.
1, 2 See endnotes page 39 1 See endnotes page 39
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TransitioningforIFRS16Leases
GROUP SNAPSHOT OF OWNED AND LEASED PORTFOLIO
AT 31 DECEMBER 2019
At , we strive to be open, practical
and straightforward in everything we do.
I feel that this culture is very evident in
how we approached accounting for the
Group’s leasing activities under the new
standard, IFRS 16 Leases.
Under IFRS 16, almost all ’s
leases are recorded on the balance
sheet in the form of right-of-use assets,
representing our right to use the leased
assets, and corresponding lease liabilities,
representing our obligation to pay rental
costs. At an early stage we identified that
IFRS 16 was going to have a significant
impact on our financial statements and
the KPI’s we report. As a result, it was
very important to us that we started the
process early to allow sufficient time for
review and reflection. Carol Phelan and
her team took the lead on this project
and confronted the issues head on.
We were one of the first groups to
address the impact of IFRS 16. Carol
Phelan presented in detail the likely
impact of the new IFRS at our capital
markets day back in November 2017.
We wanted to share this information
with our stakeholders as soon as possible.
The key area of judgement in IFRS
16 was estimating the discount rate
on transition. We adopted a ground-
up approach to addressing the main
expected components, the risk-free
rate, country risk premium, if applicable,
finance spread, and asset specific
adjustment. We then compared where
this sits to data points such as property
yields to ensure that the rates did not
look unreasonable.
As permitted under IFRS 16, we adopted
the modified retrospective approach
and therefore have not restated prior
period comparatives. Following the
implementation of IFRS 16, we spent a
lot of time exploring how best to present
and explain our results for 2019. We
decided that the clearest way to enable
our stakeholders to fully understand how
we have performed during the year was
to disclose 2019 numbers including and
excluding the impact of IFRS 16.
The following tables detail the significant
change as a result of the application
of IFRS 16 to ’s profit or loss,
statement of financial position and cash
flow statement presentation for the year
ended 31 December 2019.
Impact on financial statements: Consolidated statement of comprehensive income
Element of IFRS 16 Leases
Leases Impact on profit or loss for the year ended 31
December 2019
Fixed rental expenses are
excluded from profit or loss
and replaced with finance
costs on the lease liabilities
and depreciation of the
right-of-use assets.
Adjusted EBITDA has increased by €27.4 million
as fixed rental expenses are removed from profit
or loss. However, under IFRS 16 total expenses
are higher in the early years of the lease due to
the front-loading effects of finance costs versus
the straight-line rent expense under IAS 17. This
resulted in a €7.5 million decrease to profit after
tax and a 4.0 cents decrease to basic EPS for 2019.
Impact on financial statements: Consolidated statement of financial position (“SOFP”)
Element of IFRS 16 Leases
Leases Impact on SOFP at 31 December 2019
Recognition of assets
reflecting the right-of-use
of leased assets.
Right-of-use assets of €386.4 million at 31
December 2019.
Recognition of financial
liabilities to pay rental costs.
’s liabilities have increased by €362.1
million at 31 December 2019 as the accounting
estimate of lease liabilities is brought on balance
sheet. This results in an increase in Net Debt to
Adjusted EBITDA1
from 2.8x pre IFRS 16 to 4.5x
post IFRS 16.
Impact on financial statements: Consolidated statement of cash flows
Element of IFRS 16 Leases
Leases Impact on cash flows for the year ended 31
December 2019
The payment of fixed rental
costs is now presented
within cash flows from
financing activities.
Net cash flow from operating activities has
increased by €27.5 million as the payment
of fixed rental costs is now presented within
financing activities in the form of interest on
lease liabilities (€18.9 million) and repayment
of lease liabilities (€8.6 million). There is a minor
impact on cash flows due to the positive cash
benefit from the treatment of IFRS 16 by UK
Tax Authorities.
• Dublin • UK • Regional Ireland
In the following section I will analyse the results from the Group’s
portfolio of hotels in Dublin, Regional Ireland and the United Kingdom.
Dublin
€million 2019 2018
Room revenue 176.3 168.7
Food and beverage revenue 53.0 50.6
Other revenue 16.1 15.6
Total revenue 245.4 234.9
EBITDAR 119.7 114.0
EBITDAR margin % 48.8% 48.5%
Performance statistics
(like for like)3
2019 2018
Occupancy 86.5% 88.2%
Average room rate (€) 124.15 125.72
RevPAR (€) 107.41 110.89
RevPAR change % -3.1%
Dublin owned
& leased portfolio
2019 2018
Hotels 16 16
Room numbers 4,482 4,460
Dublin
RevPAR in the Dublin market declined
by 3.6%. There were a number
of factors which made it a more
challenging year for the Dublin hotel
industry. The increase in the VAT rate
from 9% to 13.5% was the biggest
single factor but the increase in the
supply of rooms, increased availability
of student accommodation on OTA
platforms during the summer and
fewer large events compared to
2018 were also factors in the RevPAR
decline. On the positive side, demand
for hotel rooms continues to grow
very strongly on the back of buoyant
economic growth in the city.
I am very happy with our performance
in Dublin where we grew revenues by
4.5%. The contribution of the rooms
we opened in 2018 was very strong.
We also outperformed the market
with our RevPAR at our ‘like for like’
hotels falling by 3.1% versus market
fall of 3.6%.
Food and beverage revenues grew by
€2.4m (4.7%) due to full year effect of
the two hotels opened in 2018 and the
very strong performance of several of
our other hotels.
EBITDAR margin before adjusting
items grew from 48.5% to 48.8%.
This is an excellent result given the
fall in RevPAR.
1 See endnotes page 39
3 See endnotes page 39
• Owned Hotels • Leased Hotels
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Regional Ireland
The Regional Ireland market was
negatively impacted by the increase
in the VAT rate. Our Cork hotels
were in line with the market with
RevPAR falling 3.2% at our ‘like for
like’ hotels. Our Limerick hotels were
up by 2.4% compared to a market
growth of 3.7%. One of our hotels was
disproportionately impacted by a loss
of airline crew when they discontinued
a Shannon Airport route. Our Galway
hotels had a strong year with RevPAR
up 0.7% in a city where the market
was down 2.1%.
Overall, revenue was up 6.8% with
Maldron Hotel South Mall, Cork having
a strong first year of trading. EBITDAR
Margin improved further at 28.9% as
we get closer to our target of 30%
for this region.
Regional Ireland
€million 2019 2018
Room revenue 49.7 45.2
Food and beverage revenue 26.8 26.4
Other revenue 8.4 8.0
Total revenue 84.9 79.6
EBITDAR 24.5 22.7
EBITDAR margin % 28.9% 28.5%
Performance statistics
(like for like)4
2019 2018
Occupancy 74.9% 75.2%
Average room rate (€) 97.32 97.87
RevPAR (€) 72.87 73.57
RevPAR change % -1.0%
Regional Ireland
owned & leased portfolio
2019 2018
Hotels 13 13
Room numbers 1,867 1,797
United Kingdom (local currency)
Despite the uncertainty created by
Brexit, we had an excellent year in the UK.
All our provincial UK hotels outperformed
their city market in terms of RevPAR
change. Our London hotels were behind
the city as a whole but performed well
within their own local markets. The
recently opened Clayton Hotel City of
London, Maldron Hotel Newcastle and
Maldron Hotel Belfast City contributed
to a very strong growth in revenue of
£17.6m (25.5%).
Despite the dampening impact of
three hotels being in a ramp up phase,
EBITDAR margin remained unchanged
at 39.0%. As our portfolio grows and
matures in the UK, we fully expect
EBITDAR margin to grow strongly.
United Kingdom
£million 2019 2018
Room revenue 62.8 48.1
Food and beverage revenue 17.8 15.2
Other revenue 6.1 5.8
Total revenue 86.7 69.1
EBITDAR 33.8 27.0
EBITDAR margin % 39.0% 39.0%
Performance statistics
(like for like)5
2019 2018
Occupancy 85.2% 84.7%
Average room rate (£) 84.03 82.33
RevPAR (£) 71.57 69.70
RevPAR increase % 2.7%
United Kingdom
owned & leased portfolio
2019 2018
Hotels 12 10
Room numbers 2,600 2,233
Central Costs and Share-Based
Payments Expense
€million 2019 2018
Central costs 11.8 13.3
Share-based
payments expense
2.7 2.8
Central costs decreased by €1.5
million due to the release of insurance
provisions made in previous accounting
periods totalling €1.9 million following
the impact of better claims experience
on original estimates. Our improving
claims experience is driven by our
commitment to continually look at ways
to make our hotels safer each year for
our guests and employees – this is a
journey that never ends. Our improving
claims experience is also driven by an
investment in technology and a strong
focus on training, which has enhanced
our ability to record and track incidents,
defend claims when they do arise and
direct capital expenditure to prevent
instances occurring in the future. Wages
and salaries included within central
costs increased by €0.4 million following
the impact of new hires to support the
growing Group.
Depreciation

Total depreciation Depreciation of property, plant and
equipment increased by €6.5 million
to €26.2 million driven by growth in the
portfolio. €3.0 million of the increase
relates to the full year impact of the new
rooms added during 2018. €2.0 million
relates to Clayton Hotel City of London
which was acquired in January 2019.
The remaining increase relates to the
depreciation of refurbishment capital
expenditure which replaced items that
had already been fully depreciated in
previous accounting periods.
The application of IFRS 16 Leases, results
in a depreciation of right-of-use assets
amounting to €17.1 million in 2019.
Right-of-use assets are depreciated
on a straight-line basis from the
transition date of 1 January 2019 or
the commencement date of the lease,
whichever is later, typically to the end of
the lease term.
The application of IFRS 16 Leases,
which results in the recognition
of an interest charge on the lease
liabilities, has increased finance costs
by €18.9 million in 2019. Capitalised
interest has reduced by €1.3 million
due to a decrease in the number of
development projects.
Interest on bank loans increased
by €1.3 million due to the additional
drawdowns from the multicurrency
revolving credit facility to fund the
acquisition of Clayton Hotel City of
London and a site in London for the
new Maldron Hotel Shoreditch. This
was offset by a decrease in interest
on bank loans under the improved
terms of the new facility agreement
secured in October 2018. The
weighted average interest rate for
2019 was 2.42% (2018: 2.94%), of
which 1.57% (2018: 2.15%) related
to margin.
The interest on the lease liabilities for
existing hotels is calculated using the
estimated incremental borrowing rate
applicable to each lease at the date
of transition, 1 January 2019, or the
date the hotel becomes operational if
opened afterwards. This rate is derived
from country specific risk-free interest
rates over the relevant lease term,
adjusted for the estimated finance
margin attainable by each lessee and
asset specific adjustments designed to
reflect the underlying asset’s location
and condition. The Group’s weighted
average estimated incremental
borrowing rate for IFRS 16 accounting
purposes was 6% for the year ended
31 December 2019.
4, 5 See endnotes page 39
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Over€100 milliongenerated
inFreeCashFlow
€million 2019 2018
Net cash from operating activities 155.0 115.8
Fixed rent paid6
(27.5) -
Finance costs paid (11.2) (13.2)
Refurbishment capital expenditure paid (15.7) (15.9)
Exclude adjusting items with a cash effect - (0.1)
Free Cash Flow 100.6 86.6
As I said earlier, I am delighted that we generated over €100 million in Free Cash Flow for
the first time in the history of the Group.
Our portfolio of hotels continues to earn strong Free Cash Flow. The cash generated
allows us to fund acquisitions and developments whilst also paying dividends to our
shareholders. allocates approximately 4% of annual revenue to refurbishment
capital expenditure to ensure the portfolio remains fresh for our customers and
adheres to brand standards. Refurbishment capital expenditure is slightly lower,
compared to 4% of 2019 revenue, due to timing of projects ongoing at year end.
We exclude adjusting items to present normalised cash flows for the portfolio.
Property, Plant and Equipment
€million 2019 2018
Property, plant and equipment
at end of the year

The value of our property, plant and equipment increased by €295.1 million to just
under €1.5 billion at the end of 2019. The acquisition of Clayton Hotel City of London
amounted to €109.2 million (including acquisition related costs). There was a very
significant net revaluation gain of €122.4 million. This was driven by uplifts on newly
built hotels and extensions which were built at a cost below fair value and where trade
has outperformed assumptions underpinning initial external valuations. In addition,
hotel transactions in the wider market during 2019 have achieved improved valuation
metrics which has led to increased valuations for the properties owned by the Group.
Hotels either bought, developed or extended in the 12 months to January 2019
contributed €67.4 million of that gain, reflecting their strong financial performance.
Additions to Property, Plant and Equipment
Additions through acquisitions
and capital expenditure €million
2019 2018
Development capital expenditure:
Acquisition of freeholds or site purchases 156.2 9.2
Construction of new build hotels, hotel
extensions and renovations
12.5 76.1
Other development expenditure 5.4 4.3
Total development capital expenditure 174.1 89.6
Total refurbishment capital expenditure 15.2 15.9
Additions to property, plant and equipment 189.3 105.5
We typically allocate 4% of revenue to refurbishment capital expenditure. In 2019, we
allocated €6.2 million to refurbishing our bedrooms and a further €9.0 million on public
areas, back of house areas and completing health and safety works.
In 2019, achieved a Normalised Return on Invested Capital1
of 12.1% (2018:
12.7%). This figure excludes the capital cost and trading impact of the five new owned
hotels, which opened during 2019 or 2018 and assets under construction at year end.
In addition to this, the Group also adds value through the acquisition and development
of hotels. In 2019, the value of our property assets increased by a further €122.3
million. The total uplift in value to our property assets since 2014 is now €397 million
highlighting our excellent ability to acquire strategic assets and develop hotels in an
efficient manner.
CapitalStructure
We are committed to carefully managing our capital structure to ensure we have the
right mix of leases, debt and equity.
LEASES
DEBT
EQUITY SUPPORTING OUR
GROWTH WITH
THE APPROPRIATE
MIX OF FINANCE
Leases
The adoption of IFRS 16 Leases has brought an accounting estimate of lease liabilities
on to the balance sheet, increasing the Group’s liabilities at year end by €362.1 million.
We have always viewed leases as another form of debt. We look for a strong stabilised
rental cover of 1.85x for all new leases we commit to. Our Debt and Lease Service
Cover1
amounted to 3.2x at year end showing we are comfortably able to meet our
interest and rent commitments.
Debt
Excluding the impact of IFRS 16 Leases, the Group’s Net Debt to Adjusted EBITDA1
using traditional bank debt was 2.8x at year end (31 December 2018: 2.3x). Post IFRS
16, our Net Debt and Lease Liabilities to Adjusted EBITDA1
was 4.5x. The undrawn loan
facilities as at 31 December 2019 were €121.2 million (2018: €216.2 million).
Dividends
adopts a progressive dividend policy with the level of payment based on a
percentage of profit after tax. An interim dividend for 2019 of 3.5 cents per share was
paid on 4 October 2019 on the ordinary shares in Hotel Group plc amounting
to €6.5 million. On 24 February 2020, the Board proposed a final dividend of 7.25 cents
per share amounting to €13.4 million based on shares in issue at 31 December 2019.
Subject to shareholders’ approval at the Annual General Meeting on 29 April 2020, the
payment date will be 6 May 2020 for the final dividend to shareholders registered on
the record date 14 April 2020.
6 See endnotes page 39 1 See endnotes page 39
Strong balance sheet
backed by €1.5bn
of prime assets.
Portfolio of young,
well maintained hotels
continues to deliver
strong cash flow.
35
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CASE STUDY
SharedServiceCentre
Delivering efficiencies at our hotels.
Another strong attribute of our culture is that we are always striving to improve.
An example of this is how we enhanced our processes and procedures within the
finance function and achieved significant efficiencies and cost savings.
As a large number of our hotels were acquired in multiple separate transactions
since mid-2014, we had inherited a range of different systems that did not integrate
with one another. It was vital that we addressed this to ensure we could scale our
various functions for further growth. In 2017, Stephen Clarke and Edel Conran
led the project that set up a shared service centre (SSC) in Cork with the remit to
streamline processes across the Group, enhance controls and provide a platform
for future growth.
In its first year, the SSC introduced a single accounting platform across all hotels
and began implementing a new procurement system across the Group. This system
manages the ordering process from start to finish at the hotels and results in
significant efficiencies. For example, in 2016, there was circa 120k purchase orders
in the Group per annum. These had to be manually raised, manually approved and
the invoices were manually posted to the accounting system. Now, all purchase
ordering and invoice processing is automated and integrated with the accounting
system. Our procurement system ensures that our hotels only use nominated
suppliers and benefit from the prices negotiated by our central procurement team.
As a result, we have seen substantial savings in our food and beverage gross profit
costs. Our food gross profit margin has increased from 69.0% in 2016 to 71.5% in
2019, realising €1.6 million in savings for the Group in 2019. In the same period, our
beverage gross profit margin has increased from 68.1% to 70.3%, realising €0.6
million in savings in 2019.
In its second year, the SSC started preparing supplier reconciliations and payments.
Large suppliers now have one account as opposed to previously having one
account per hotel. This has enabled us to achieve a 90% reduction in the number of
payments. We also extended the procurement system to cover capital expenditure.
In 2019, the SSC introduced a new payroll system across the Group. We are in the
process of moving the administration and payment of payroll for the Group to
the team in SSC. In 2017, we processed and paid 4,300 employees in 26 different
locations. By the middle of 2020, we will pay all employees from just one location
in Cork.
All these examples are tasks that were previously done at a hotel level. The SSC
team now manages routine administration work in a highly efficient manner. This
in turn allows the hotels to focus on value adding activities such as serving our
customers and analysing the business. The SSC is now a centre of excellence which
provides support and training to the finance teams in the hotels. It is now much easier
and faster to bring a finance team up to date when we open or acquire a new hotel.
We will continue to realise the benefits of this investment in 2020 and beyond.
The SSC team now manages
routine administration work in
a highly efficient manner. This
in turn allows the hotels to focus
on value adding activities such
as serving our customers and
analysing the business.
ACHIEVEMENTS TO DATE
Most supplier
reconciliations
and payments
completed centrally
Implemented a
new procurement
system across
the Group
All payroll will
be administered
and paid centrally
Provide training
and support to
the hotels
Increase in
automation
Universal
accounting
platform across
the Group
PROCESSES
ARE MORE
EFFICIENT AND
CONTROLLED
€
Maldron Hotel South Mall Cork
Red Bean Roastery
36  Financial Review 37
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INFORMATION
GrowthStrategy
2019 was another exciting year in terms
of hotel openings and development.
Shane Casserly and his development
team continue to deliver new hotels for us
to operate. We completed the acquisition
of the Clayton Hotel City of London in
early January 2019 and successfully
opened it later that month. The hotel
has traded strongly in its first year of
operation. We also secured a prime site
in Shoreditch, London with planning
permission for a hotel in August and we
expect to start construction later this
year. Our success in securing these two
projects has been a catalyst to us being
considered for other projects in London.
We now see this city as being a location
within which we have the financial,
development and operational expertise
to expand further.
Our strong performance in our provincial
UK properties reaffirms our belief that
there is a significant opportunity for us
to expand in the larger provincial UK
cities. The quality of the four-star hotels
in those cities is very mixed. The market is
fragmented in terms of brands, operating
companies and owners. In addition, the
product is very tired due to its age. The
average age of our current UK portfolio
is nine years and this will fall to eight
years by the time the current pipeline of
rooms is in operation in 2022. This will
be of significant advantage to us. The
addition of The Tamburlaine Hotel (to be
rebranded as Clayton Hotel Cambridge)
in November was a very positive addition
to the portfolio. We were also very
happy to secure an agreement to lease
a new Maldron hotel in the centre of
Liverpool. We are actively chasing other
opportunities in our target cities.
Although the focus of our growth
ambitions will be in the UK, we will still
exploit any attractive opportunities in
Dublin. I look forward to the opening
of Maldron Hotel Merrion Road and
The Samuel Hotel in the city in 2021. I
was delighted that we also secured an
agreement to lease a new Maldron hotel
adjacent to the iconic Croke Park Stadium.
We continue to have a very strong
relationship with fixed income investors.
Deka Immobilien, Aberdeen Standard and
M&G Real Estate all own one or more of
our current hotels. We are delighted that
Aviva and Union Investment have also
contracted to buy three of our current
pipeline properties in the UK.
I am very confident that we will continue
to grow our pipeline in 2020.
2019 was a year that we proved we could
still deliver on the bottom line when
RevPARs were lower than expected.
Our teams rose to the challenges and
exploited any opportunities – we are all
excited about doing the same in 2020.
Dermot Crowley
Deputy Chief Executive
Business Development & Finance
Conclusion
2020 is a year in which we are
very focused on maximising the
performance of our existing portfolio.
However, we are also focused on
ensuring that we are ready to take
on the additional 1,800 rooms that
are scheduled to open next year.
To that end, we will continue to invest
in our people. Our people are key to
delivering returns from our existing
properties as well as providing the
internal expertise to open our new
hotels. We will continue to grow our
development programmes which in
turn allows us to continue our policy
of promoting from within. We are a
people centric organisation which is as
it should be for a hospitality company.
We will continue to invest in technology
and centralise more of the processing
tasks, leaving local hotel management
to focus on operating their hotels and
ensuring that our customers continue
to rate our services so highly. Happy
and motivated employees equate to
happy customers. Our decentralised
management approach is core to
our operating model.
1 See Supplementary Financial Information
which contains definitions and reconciliations
of Alternative Performance Measures (“APM”)
and other definitions.
2 Prior year comparatives and the KPI’s calculated
thereon have been restated to reflect the
reclassification of income from managed hotels
from revenue to other income in the year ended
31 December 2019. The comparatives also do not
include any adjustments for IFRS 16.
3 In Dublin, performance statistics exclude the
new hotels which opened during 2018 (Maldron
Hotel Kevin Street and Clayton Hotel Charlemont)
and the Tara Towers Hotel which closed in
September 2018. To achieve an accurate ‘like
for like’ comparison we have also excluded
hotels with a significant increase in available
rooms year on year (> 10%): (i) Maldron Hotel
Parnell Square due to the significant extension
completed during 2018 and (ii) Clayton Hotel
Liffey Valley due to the significant acquisition
of rooms during 2018 and 2019. We also
excluded Clayton Hotel Burlington Road due to
the redevelopment works ongoing in the hotel
which distorts comparability.
4 In Regional Ireland, performance statistics
exclude the new Maldron Hotel South Mall,
Cork which opened in December 2018 and
Our people are key to delivering
returns from our existing
properties as well as providing
the internal expertise to open
our new hotels.
Maldron Hotel Sandy Road, Galway which had
a significant extension added during 2018.
5 In the UK, performance statistics exclude
the new Maldron Hotel Belfast City, Maldron
Hotel Newcastle and Clayton Hotel City of
London which opened in March 2018,
December 2018 and January 2019 respectively
and Clayton Hotel Cambridge which was leased
from November 2019.
6 Fixed rent was included in net cash from
operating activities in 2018 in line with previous
applicable accounting standards. Under IFRS
16, in 2019 fixed rent paid is represented by
lease repayments and interest.
Clayton Hotel
Charlemont, Dublin
38 
STRATEGIC
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STATEMENTS
SUPPLEMENTARY
FINANCIAL
INFORMATION
RISK MANAGEMENT
Identifying and managing risks is
a key part of running our business
successfully, and planning for our future
growth and development. We recognise
that risk management is an ongoing
process and is part of how we manage
our business on a day-to-day basis.
The Board is responsible for risk
management and a risk management
policy is in place, which is reviewed
annually. The Audit & Risk Committee
reviews the Group’s risks at each of its
meetings with a particular focus on
new and emerging risks and changes
to risk profiles.
We have a risk management framework
in place, which provides us with the
basis for managing our risks within the
business. The framework is designed
to be flexible and reactive. In practical
terms this means that emerging risks,
or those where the risk profile has
changed materially, can be discussed
and reviewed promptly and mitigations
designed and planned.
Risk Management Framework
We adopt the principles of the “three
lines of defence” risk management
model, with distinct yet integrated
structures that combine to provide us
with a sound framework to managing
risk. The key elements of this are:
 Major strategic decisions concerning
the Group are made by the
Board. There is detailed analysis
and discussion on these and the
associated risks are also considered
by Board.
 Executive management are
responsible for implementing Board
decisions and managing risk within
the business areas. There are clear
lines of responsibility within the
Group’s management structure.
There are specific management
functions assigned responsibility for
managing risks, either in full or as part
of their overall responsibilities. These
are clearly defined.
 We have an Executive Risk Committee
structure in place, with meeting
agendas led by the Head of Risk &
Compliance. These meetings provide
a forum where detailed review and
discussion on risks occur, and are held
usually 5 times a year.
The Executive Directors and members
of the senior management team
attend these meetings. The output
of these meetings is then the basis
for the risk review undertaken by the
Audit & Risk Committee at each of its
meetings. This structure enables us to
keep abreast of developments in our
risk management environment and
enables ongoing focus on risks facing
the Group.
 We operate over 40 hotels and
managing risks across diverse
locations and properties is a key
focus area. Over the past years
the Group has invested in property
refurbishments and also in IT, health &
safety and operational systems to help
us better manage our risks. We have
also invested in our people, providing
them with both the knowledge and
systems to manage risks in their
businesses. This investment will
continue and is regularly reviewed.
The process by which we consider and
document our risks is set out opposite.
This is an ongoing and “live” process.
How We Manage Our Risks
For us, risk management is not a
standalone or oversight function but
is an integrated element in the way
we manage our business. We see our
teams as being risk managers, even
though this specific term may not be
included in their role titles. Everyone
has a role in managing risks.
To embed this in the organisation we
have, what we believe is, a risk-focused
culture. We focus on risks every day.
We have embedded structures in all
our hotels relating to financial controls,
business forecasting, health & safety,
training, employee development and
target setting (both financial and non-
financial). This aim of this approach is
to manage risks from the bottom up,
identifying risks, dealing effectively with
them at a local level and ensuring that
more material risks are notified and
highlighted to Executive management.
It also supports a regular information
flow from our hotels to Executive
management and vice-versa.
Risks are also approached from a top-
down level. The Board determines the
Group’s strategic goals and assesses
the “big-picture” risks that could affect
the delivery of this strategy.
In Central Office, the Company
Secretary and Head of Risk & Compliance
has oversight responsibility for risk
management in the Group, reporting to
the Chief Executive. The Chief Executive
is incentivised to continually improve the
Group’s risk management processes.
The Audit & Risk Committee reviews
the risk register as a standing meeting
agenda item. This provides a challenge to
Executive management on how risks are
being mitigated and also sets the
tone from Board to management
on risk management matters.
The Group has specific internal
resources and expertise in relation
to risk management areas. This is
supplemented by external advisors,
notably in relation to food safety, health
& safety, property facilities, insurance
risks and cyber/privacy matters. Our
internal audit function plays a key
role , providing additional oversight
and reporting on how risks are being
managed to the Audit and Risk
Committee. This process of bottom-up
and top-down analysis and oversight
provides the basis for the monitoring
and assessment of risks, including the
identification of emerging risks.
Over the past number of years we
have invested heavily in our hotels.
The result of this investment is a
modern hotel infrastructure, which has
reduced our associated risk profiles.
From an information and IT system
perspective, we have invested in up-to-
date business systems, which provide
additional controls and information
to better manage risks. Our capital
expenditure processes are designed
to enable prompt investment should
a specific risk area be identified.
Our Principal Risks
Our assessment of the key risks likely
to have the greatest impact on our
business in the foreseeable future is
set out in the following pages. Where
we believe risks are inter-dependent,
we have grouped these together to
better set out these linkages.
In particular, we note the impact of
uncertainty around factors outside
the Group’s control, mainly relating
to economic conditions, geopolitical
factors and the UK’s future relationship
with the EU.
We continue to focus on the risks that
could affect our expansion strategy,
our people as key to this strategy,
the operational risks associated with
managing hotels and other business-
wide risks.
FIRST LINE
OF DEFENCE
SECOND LINE
OF DEFENCE
THIRD LINE
OF DEFENCE
Hotel and business
management
Financial Control
Health and Safety
Management
Internal Audit
Risk
Identification
Board
Oversight
Internal monitoring
by Executive Risk
Committee
Assessment of
controls, mitigations
and action plans
Risk
Assessment
Oversight by
Audit and Risk
Committee
OUR ASSURANCE FRAMEWORK
41
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Risk Management
External
1. The economic cycle
2. Geopolitical events – including Brexit
3. International terrorism or the worldwide spread of disease
Strategic
Priorities
The hotel sector is vulnerable to a
variety of external events that may
negatively impact economic activity
as a whole or may have the effect of
reducing expenditure on travel and
leisure services.
Potential impact
A short-term or more prolonged,
mild or severe, reduction in revenues
or disruption to supplies, or both. At
present, on-going Brexit negotiations
and the international response to the
outbreak of the Coronavirus are of
near-term concern.
Mitigation
The Company relies on corporate
governance structures that require
management to monitor external
threats. This analysis supports strategy
development and investment decision
making. Management actively prepares
for adverse external events affecting
the business as a whole, maintaining
flexibility in the cost base to allow for a
timely reaction, maintenance of a critical
incident plan, and the development and
maintenance of strong relationships and
good communication with key customers
and suppliers.
Trend: Increased
2019 Commentary
2019 saw progress on the UK’s future
relationship with the EU, but much was
uncertain, and the international political
environment remains unsettled.
2020 Focus
We will closely watch the emerging
threat of the Coronavirus outbreak and
monitor developments in the trade
negotiations between the UK and the
EU and other events and maintain our
ongoing monitoring of travel demand
trends across our source markets.
Financial
4. Fluctuation in EUR/GBP exchange rate Strategic
Priorities
Fluctuation in the EUR/GBP
exchange rate may adversely
affect customer behaviour.
Potential impact
Loss of revenue and earnings;
fluctuation of asset values in euro terms;
translation of GBP earnings.
Mitigation
There are a number of natural hedges in
the business with a trade-off between
visitors travelling between the UK and the
Eurozone. GBP asset values are hedged
by the value of the company’s borrowings
weighted towards GBP. Interest paid in
GBP partially offsets GBP earnings.
Trend: Unchanged
2019 Commentary
The exchange rate was more volatile
in 2019 than the previous years,
varying from 0.93 to 0.83 in the
course of the year.
2020 Focus
Continued agile marketing in
anticipation of continuing volatility.
Strategic
5. Market Concentration
Strategic
Priorities
66% of 2019 Group Segments
EBITDAR came from Dublin, making
it vulnerable to changes in market
dynamics in the city.
Potential impact
A decline in revenue and profitability
in the event of either a significant
decline in demand in Dublin or an
increase in supply.
Mitigation
Dublin is the key market for , and the
Group’s strategy is to maintain its market
share through carefully targeted new
property development and investment
in our existing properties to maintain
superior quality. Further growth focuses
on new markets, reducing dependence on
Dublin. As new supply enters the Dublin
market, we will focus on maintaining
strong relationships with key customers
and on new business development
activities as well as closely managing the
cost base to off-set any softening of sales.
Trend: Increased
2019 Commentary
Although the growth rate of
international arrivals to Dublin slowed,
demand remained steady; new room
supply, and the increase in the rate of
value-added tax combined to dampen
RevPAR growth.
2020 Focus
While delivering on our UK growth plan
and our own new Dublin capacity to
maintain our share, we will concentrate
on effective execution in the market
where we have well located and well-
invested hotels.
Strategic
6. Growth and Expansion Strategy Strategic
Priorities
The pace of growth planned for the
next three years presents several risks,
presented collectively here: failure to
deliver returns (for either market or
operational reasons), overstretch of
management resources, erosion of
the culture and values of the Company.
Potential impact
The Company’s growth opportunity
also runs the risk of failure to achieve
financial objectives and return for
shareholders, and potentially other
management failures.
Mitigation
The Company adopts a disciplined and
broad-reaching due-diligence process
for all new projects with the development
team receiving key input from operations.
The Board scrutinises all new projects
before proceeding. Preparations for
new openings start early, the Company
maintains a consistent focus on talent
development, and management regularly
reviews the group structures and the
resources required to manage effectively
at both new and existing properties.
Trend: Increased
2019 Commentary
Two new hotels added. An increase
in the pipeline to almost 3,000
rooms, is an increase of 30% on
existing room capacity.
2020 Focus
Preparation for the 2021 openings:
identifying and appointing management
teams, backfilling the vacancies created,
continuing investment in learning and
development.
Financial
7. Level of Debt Strategic
Priorities
The risk associated with ineffective
debt management and excessive
levels of debt.
Potential impact
Excessive debt levels expose the Group
to solvency risks in the event of a severe
downturn in business.
Mitigation
practises a disciplined and
consistent approach to financial risk
management, including investment
appraisal and financing, the level of
traditional bank and lease debt, and
interest rate exposures. The Company
discloses its maximum leverage targets
and regularly stress tests its resilience
to potential financial shocks. The
Group’s corporate governance
structure enables effective oversight
of financial risk management.
Trend: Unchanged
2019 Commentary
Following a re-finance of all bank debt
in 2018, the group exercised an option
to extend existing facilities during the
year to 2024 and secured a number
of new hotel development projects
through agreements to enter long-
term lease finance.
2020 Focus
Continued monitoring of market
developments, management of
banking covenants, and rigorous
stress testing of financial projections.
RISK MANAGEMENT
Principal Risk Analysis
Strategic Priorities
Customers
 page 20
Strategic Priorities
Brands
 page 22
Strategic Priorities
People
 page 16
Strategic Priorities
Properties
 page 18
43
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Risk Management
Operational
8. Development and retention of expertise Strategic
Priorities
Inability to attract people to work in
the business and to retain and develop
future leaders.
Potential impact
Risk to successful execution of the
expansion programme. Upward
pressure on costs.
Mitigation
The Company recognises, as a
strategic priority, the importance of the
development of its people. Its objective
is to become the employer of choice in
the sector, through its people-centred
culture and its commitment to learning
and development for all employees.
The Company carries out regular
employee engagement research
surveys and uses the results to improve
the employee experience.
Trend: Unchanged
2019 Commentary
Over 1,000 applications for the 
graduate programme; 367 participants
on structured learning programmes
and the roll-out of Online, our
online training platform.
2020 Focus
Continued development of the 
employer brand.
Reputational
9. Health and safety Strategic
Priorities
Risk of material operational health and
safety related event (eg fire, food safety
or public health).
Potential impact
Injury or loss of life or major property
damage. Financial loss and damage
to reputation.
Mitigation
The development of a health and
safety culture is a Group priority, with
the promotion of health and safety
training focussed on prevention, incident
management, and reporting. We have
a critical incident management plan in
place and reserve a portion of the capital
expenditure budget to address identified
risks. We invest in safety management and
reporting systems, and the independent
audit of health and safety, and food safety
standards at all hotels. The Audit and Risk
Committee provides oversight.
Trend: Unchanged
2019 Commentary
We saw a continuation of the 2018
trend of the reduced cost of claims
in our self-insurance programme.
2020 Focus
We will continue to prioritise health and
safety risk management and complete
a detailed review of the effectiveness of
our audit processes.
Reputational
10. Cyber-attack – data loss Strategic
Priorities
Information systems are subject to an
external or internal cyber event with
the potential for data loss/theft.
Potential impact
Denial of service, data breach, loss
of revenue, business disruption,
reputational damage.
Mitigation
In recent years, the Company has
upgraded IT systems across the business
with an emphasis on establishing
common platforms. The reduced
number of software vendors improves
the management of data and facilitates
greater standardisation of processes. The
Company retains third-party cybersecurity
experts to support the IT department
and has a Privacy Committee to monitor
compliance with data privacy regulations
and the Company’s policies. Internal Audit
is supported by external expertise to carry
out independent reviews of cybersecurity
risk management. The Audit and Risk
Committee provides oversight.
Trend: Increased
2019 Commentary
The journey towards fewer and more
centralised, cloud-based software
applications continued, and the
Privacy Committee was established
with a focus on risk management.
2020 Focus
Continuing to monitor risks and
evolve risk management processes
through the IT department, Privacy
Committee, and Internal Audit.
Strategic
11. Senior Management succession
Strategic
Priorities
Failure to manage succession at
the senior level may stall corporate
development.
Potential impact
Loss of strategic direction, faltering
leadership, or both.
Mitigation
The Company emphasises the
development of people at all levels in the
organisation with a philosophy that there
should always be one or more potential
internal candidates qualified to fill any
vacancy that may arise in the Company.
Regarding senior management
positions, the succession process is
subject to the oversight of the Board
through the Nomination Committee.
Trend: Unchanged
2019 Commentary
At the end of 2019 Shane Casserly, an
internal candidate, was appointed to
the Board as Corporate Development
Director and several senior
executives participated in leadership
development programmes.
2020 Focus
Continuity of development
programmes for senior executives.
Reputational
12. Environmental and climate change Strategic
Priorities
Failure to recognise and respond to
the impact of our business activities
on the environment.
Potential impact
Damage to corporate reputation,
loss of customer, employee, and
other stakeholder’s confidence.
Mitigation
Action to reduce the Group’s impact
on the environment focusing on
three areas: carbon footprint, waste
management, and water usage.
The Group Environmental Steering
Committee, formed in early 2019, is
tasked with developing the appropriate
strategies to manage the environmental
impact of our operations, target setting,
measurement, and communication
with stakeholders.
Trend: Increased
2019 Commentary
The environment and climate change
came into sharp focus in 2019 with
an increase in stakeholder concern
and expectations. The Company is
committed to addressing stakeholder
concerns and announced the
formation of a Board subcommittee
responsible for environmental, social
and governance oversight, effective
from 1 January 2020.
2020 Focus
Performance improvement across
all of our hotels.
Operational
13. Changing distribution environment for accommodation sales Strategic
Priorities
New entrants to the accommodation
sector (e.g. short-term private lets)
and disruptive online sales channels.
Potential impact
Loss of market share, increased
intermediary commission, lower
revenue and profits.
Mitigation
Continuous education of our revenue
management and sales and marketing
professionals and our expert service
providers to meet the marketing
challenge of reaching and attracting
potential customers, and optimising
the use of competing online marketing
channels.
Trend: Increased
2019 Commentary
There was a notable increase
in the marketing of student
accommodation during the
summer months in the Irish market.
2020 Focus
Continuous focus on on-line
marketing innovation and
exploitation of the benefits of the
adoption of private label branding
in the Global Distribution System
(GDS) segment, see page 23.
Strategic Priorities
Customers
 page 22
Strategic Priorities
Brands
 page 24
Strategic Priorities
People
 page 18
Strategic Priorities
Properties
 page 20
RISK MANAGEMENT
Principal Risk Analysis (continued)
45
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SUPPLEMENTARY
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Risk Management
The Board has a reasonable expectation that
the company will be able to continue in operation
and meet its liabilities as they fall due over the
three years to December 2022. This assessment
is made based on an analysis of the Group’s current
position, trading performance, contracted capital
expenditure and future prospects, in severe
but plausible scenarios.
RISK MANAGEMENT
Viability Statement
Maldron Hotel Newcastle
46  Risk Management
The Board has a reasonable expectation
that the company will be able to continue
in operation and meet its liabilities as
they fall due over the three years to
December 2022. This assessment
is made based on an analysis of the
Group’s current position, trading
performance, contracted capital
expenditure and future prospects,
in severe but plausible scenarios.
The Directors assessed the prospects of
the Group over a three year period as in
previous years for the following reasons:
 It aligns with the Group’s risk
assessment timeline of current
risks facing the Group;
 All current committed projects
are expected to be substantially
completed during this period and the
risks associated with this phase of
development are fully considered; and
 A longer period would lead to less
certainty around market performance
and expectations.
The Directors have carried out a robust
assessment of the principal risks that
could potentially threaten the business
model, future performance, solvency or
liquidity of the Group within the viability
period. These risks are included in pages
42 to 45 and are linked to the overall
Group strategy.
The following risks are the most
significant to the assessment of
the viability of the Group:
 Risks 1, 2 and 3 (page 42): Risks
relating to the general economic
backdrop to the business involving
the specific risks to the economic
environment including geopolitical
events (eg. Brexit) or shocks to the
system (eg. Terrorist attacks or
widespread outbreak of disease).
 Risk 7 (page 43): Risks relating to
the level of bank borrowings, the
associated interest payments
and covenants.
The other risks, are also deemed
very important. However, these risks
are difficult to model for sensitivity
analysis as the financial impact would
vary depending on the extremity of
the situation. However, the potential
impact of these other risks are not
believed to be as potentially material
as those tested in the above scenarios.
All these risks are managed through
the adoption of the ‘three lines of
defence’ risk management model and
are reviewed and discussed at each
Audit and Risk Committee meeting.
Based on these risks, the Group
has chosen robust downside
financial scenarios which could
affect the viability of the Group. The
Group operates in an established
sector with strong cash flows
and mature patterns of demand
and supply. However, the Group
carefully considers events that
may have a negative impact on the
hotel market in Ireland and the UK
and consequently demand for its
services. In order to assess its future
prospects, the Group has examined
the cyclical trading patterns in the
Irish and UK hotel sector over several
decades and considered the market
dynamics in each of these two
markets. During periods of slowdown,
whatever the catalyst, hotel revenues
may decline sharply as consumers
reduce or alter their travel plans.
The Group has stress-tested its
projections based on how the hotel
market has reacted to previous
shocks and considered what
mitigating actions in terms of cost
and cash management would be
taken to protect the Group. The
Group's operations are spread across
a number of locations and therefore it
has focused on risks that would have
a Group-wide impact as these pose
a greater risk to Group viability. The
Group also manages its debt profile
to ensure it has adequate headroom
to withstand a severe shock and is in
compliance with its banking covenants.
In our scenario analysis RevPar
was reduced by up to 25% within
six months of the onset of the
downturn with a resultant impact
on all other sales.
The receipt of proceeds from
the sale of the Merrion Road, Dublin
residential development in 2021 was
delayed by three months.
In mitigation
 Non-essential and non-committed
capital expenditure was reduced.
 Strategic cost reduction was
modelled.
The above scenarios were firstly
evaluated on a standalone basis, and
then collectively. Once the mitigation
plans were applied to these
scenarios, there was no threat to the
viability of the Group. The Group has
a €525 million multicurrency facility
and on 19 August 2019, it availed
of its option to extend the facility
by an additional year to 26 October
2024. As a result, the Group has
reduced refinancing risk, and has
additional flexibility and headroom
which reduces liquidity risk. Sufficient
available funds headroom was
maintained in addition to being in
compliance with all debt covenants
at each semi-annual review date in
the modelled scenarios.
It is recognised that such future
assessments are subject to a level of
uncertainty that increases with time
and, therefore, future outcomes
cannot be guaranteed or predicted
with certainty.
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See our Responsible Business
Framework policies on:
www.hotelgroup.com
Dear Shareholder,
Our commitment to operating our
business responsibly underpins our entire
strategy and the reputation of our hotels
and brands.
This responsibility starts with the
example set by the Board and is, I hope,
reflected in the decisions and behaviours
of colleagues throughout the Group,
whether in one of our hotels or in
Central Office.
In 2019 each of the three Executive
Directors had specific incentives targets
related to environmental and social
objectives (see page 89 and 90).
Given the importance of sustainability
to the Board, a new ESG Board
subcommittee was established in
January 2020. This Committee will work
with management in areas such as
emission targets, inclusion and diversity,
employee engagement, health and
safety and sustainability reporting.
As we embark on this next stage of our
journey, we do so from a solid base which
is reflected in an AA score from ESG
rating agency MSCI.
We have an illustrated framework (see
below) to allow the business to respond
in a structured and progressive way to
our responsibilities to society and our
impact on the environment.
In 2019 we developed a Supplier
Code of Conduct, updated our group
environmental policy and rolled out
our online learning and development
platform. We launched our new corporate
website to enhance our engagement with
stakeholders outside the organisation
and in 2020 we will finalise our Group
Code of Conduct.
I would like to thank all my colleagues for
their dedication in 2019 for making 
the company it is today. We will continue
our dedication to our sustainability
initiatives in 2020 and will continue our
commitment to live the values
in everything we do.
aims to comply with the European
Union (Disclosure of Non-Financial and
Diversity Information by certain large
undertakings and groups) Regulations
2017. In the table opposite, we set out
the company’s response to managing its
non-financial priorities and advise where
further information on compliance may
be found in this report.
Pat McCann
Chief Executive
Our Response To Managing Our Non-Financial Priorities.
Reporting requirement Policies and standards Further information
and risk management
Environmental matters Environmental policy
Supplier Code of Conduct
Responsible Business
Environment
RESPONSIBLE BUSINESS REPORT
As our business has grown, so
too have our people. We have
experienced rapid growth in employee
headcount and have invested
consistently to support individual
career development within .
The growth of our people is an
essential element of the sustainable
development of our business.
TRAINING & SUCCESSION
We invest in our talent and encourage
their growth by delivering an exciting
and forward-thinking workplace
for them to develop their skills and
knowledge within. We provide them
with opportunities to grow with our
business. Talent development and
succession planning is a strategic
priority (see page 18) and is at the
centre of our HR strategy in .
In 2019, internal promotions of our
people have increased by 24% year
on year from 305 to 379.
has a vital role to play in
introducing people to first-time
employment to develop a career in
hospitality. In 2019 employed
1,152 new hires under the age of 30.
In December 2019, 83% of our people
reported that they feel they are
developing professionally in 
and a further 86% say that their
manager encourages them to grow.
With 367 employees on structured
development programmes and 1,324
people attending training courses in
the last 12 months, our learning and
development programmes help our
employees to reach their potential
while delivering an exceptional
guest experience.
DIVERSITY
We communicate our Equal
Opportunities Policy to all employees,
and our senior management team
actively promotes our commitment
to diversity and inclusion as part of the
company culture. This commitment is
practised across recruitment, terms
and conditions of employment,
promotion, training and development,
discipline and grievance processes,
and termination of employment.
We are committed to providing
a harmonious and fair working
environment with real and equal
opportunities for all in which no form
of intimidation or discrimination exists.
We enjoy and take pride in the diversity
of our workplace.
Of our total workforce, 52% are female
and 48% are male; amongst the group
of the 100 most senior managers in
the organisation, 47% are female, and
53% are male, and participants in our
structured development programmes
are evenly balanced - 50% female and
50% male.
In our December 2019 employee
engagement survey, we found that 89%
of our people believe that people from all
backgrounds are treated fairly in .
As part of our commitment to equal
opportunities, we provide dignity at
work training for all managers across
the business.
Further training on equal opportunities
and fair recruitment practices is a focus
for 2020.
We are incredibly proud of the diversity
of our people with employees from 121
different countries working in .
LABOUR STANDARDS
AND HUMAN RIGHTS
The Board has adopted a Modern
Slavery Policy and we have published
our 2019 modern slavery statement
on the company website. In 2019 the
company adopted a Supplier Code of
Conduct that applies to all suppliers
and includes provisions designed
to give assurance about labour
standards and respect for human
rights through the supply chain. In
2020 we will implement supplier
compliance procedures using
a risk-based approach to provide
further assurance.
LISTENING TO
OUR PEOPLE
We have measured employee
engagement since 2016, and it
continues to play an essential role
in the further development of the
Group by helping us understand the
employee experience.
Our participation rate remains
consistently high, with 3,929 employees
responding to our December 2019
employee engagement feedback
survey with 15,777 pieces of qualitative
feedback received from employees. We
actively encourage all of our managers
to listen to and act on this feedback to
improve the employee experience.
 The overall engagement result of
83% grew from 77% in December
2018, which places 5% above
the our peer benchmark.
 86% of people would recommend
’s products and services to
friends and family.
 85% believe strongly in the Company
values and its strategic direction.
 88% of team members feel that
they are empowered to do their job.
The overall satisfaction of our high-
potential employees, who are currently
completing structured development
programmes, is at 91%.
HEALTH AND WELLNESS
OF OUR PEOPLE
In 2020, is committed to actively
promoting and supporting wellbeing
for all employees and to have tools to
assist our staff in everyday life matters.
Developing a healthy and active mind is
part of our culture in .
Our newly launched wellness app, which
focuses on living a healthy and enjoyable
life, has been well received across the
organisation. To promote good mental
health, we have launched a helpline and
online chat function in which employees
can contact professionals for support
should they need to discuss any
personal concerns.
The Board and Senior Management
work to promote a culture of best
practice for health and safety at work,
and we work with all of our employees
to ensure that their wellbeing is to
the forefront of their employment
experience with us.
Gerard’sRoadtoSuccess
Gerard Madden was introduced to Maldron
Hotel Dublin Airport in June 2015 through the
Momentum Programme, a back to work placement
scheme, for people unemployed for twelve months
or more, run by the Irish government agency Solas.
Gerard started in the maintenance department
and, having impressed with his positive attitude
and determination, was offered a permanent full-
time position within the accommodation team.
He later moved from accommodation to food
& beverage, developing new skills at each stage
of his journey, and in 2018 was promoted to the
meeting and events department. Gerard has
received recognition as employee of the month
on numerous occasions and in 2018 was Maldron
Hotel Dublin Employee of the Year.
His career journey in hospitality continues.
CASE STUDY
Our
People
The growth of our people
is an essential element of
the sustainable development
of our business.
50  51
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DigsDeep
The #digsdeep charity fundraising programme has developed as an internal brand in its own
right as the company has grown, and this is all driven by employee participation.
Our employees have taken the lead on many initiatives, making new connections with colleagues,
community, suppliers, and customers. In 2019 alone, we had over 2,000 volunteer hours and organised
160 fundraising events.
Four years ago, the idea was simply to raise money for good causes. Since then, through the
commitment and enthusiasm of our employees and management, it has grown into something
bigger. We adopted three charity partners, CMRF Crumlin, Cancer NI, and Great Ormond Street
Hospital Children’s Charity, and in the four years have raised €1.3 million.
So much of our employees’ impact will not only be felt today but long into the future as the research
they funded will benefit the sick children and their families of generations to come.
CASE STUDY
RESPONSIBLE BUSINESS REPORT
Our Board is focused on promoting a
healthy and responsible culture across the
business. Our CEO and senior executives
are accountable for embedding our
unique culture into the business.
Our culture is reflected in the way
that we engage with our customers,
communities and suppliers and through
our values of fairness, people, service
and individuality.
CUSTOMERS
True Hospitality
We recognise that customer feedback
is the most effective way for us to
improve the experience at our hotels.
We have made customer feedback and
our actions from it key performance
indicators of the Group as a whole, and
we are committed to responding to
customer desires as best we can.
Safety & Security
The Board has approved numerous
policies aimed at promoting high
standards of safety and security in the
Group. These include the Group Health
& Safety Policy, Data Protection Policy
and Privacy Policy. We take the privacy of
our customers very seriously. In 2019 we
established a privacy committee, which
meets quarterly to ensure our systems
and policies and ongoing practices
reflect customers expectations for
respect of their privacy.
The safety and security of our guests and
employees remain a priority at all times.
We have implemented an online fire
Our
Culture
For , a healthy business
culture is - fundamentally -
about doing the right thing.
safety monitoring system across all of
our hotels, and rigorous safety measures
are in place.
Access to hotel facilities and guest
rooms is strictly controlled, and additional
night-time measures are in place.
COMMUNITIES
Employment and employability
At , we are an Equal Opportunities
employer, and we encourage people from
all backgrounds to apply for positions
at the Group, from the hotels to central
office. We discuss this further on page 50.
Community engagement
For us, it is important we work closely with
our neighbourhoods, and make positive
contributions to our local communities
and to the people who live there. We
encourage all our hotels to engage
actively in the community, by supporting
local organisations, sports clubs and
community events.
We are active in the business community
and in 2019 our CEO Pat McCann
became IBEC President. IBEC is Ireland’s
largest business representative and lobby
group which represents 70% of Ireland's
workforce. Several other managers
participate in hotel and tourism sector
representative organisations.
We have continued to support our three
chosen charities in 2019 - Great Ormond
Street Hospital in the UK, Cancer Focus
NI and CMRF Crumlin in the Republic of
Ireland. Read more about this on page 53.
SUPPLIERS
Responsible Supply Chain
We have successfully implemented
a centralised purchasing and invoice
payment system across the Group which
all of our suppliers now use.
The system simplifies the order and
delivery processes along with more
efficient invoice clearing and supplier
payments. Along with better purchasing
information, this enhances the
management of our supply chain.
The Audit & Risk Committee approved
our supplier code of conduct in late
2019, and we are currently in the process
of implementing this with our supplier
base to ensure compliance with the
code’s requirements.
The code sets out, amongst other things,
the requirements and principles 
has adopted to promote ethical conduct
in the workplace, safe working conditions
in our supply chain, the treatment of
persons with respect and dignity, and
environmentally responsible practices.
The Board has approved an Anti-Bribery
and Corruption policy, an Anti-Money
Laundering Policy, and Modern Slavery
Policy and statement. The report on
our Whistleblowing Policy is detailed on
page 76.
The Team at the Cork City Marathon 2019
52  Responsible Business Report 53
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RESPONSIBLE BUSINESS REPORT
GREENHOUSE GAS
(GHG) EMISSIONS
The management of our energy use
has always been important to the
Group and we continue to make strides
in reducing the carbon footprint in
our hotels.
This progress is reflected in the B- score
we achieved for our 2019 CDP response,
in our second year of participation. We
have scope for further improvement and
have set a target of reducing our carbon
emissions by 20% by 2022 from our
2018 baseline.
In 2019 contracted to buy
100% renewable electricity in Ireland
and the UK. Green electricity is
generated by using the power of wind
and is therefore completely renewable.
This commitment helps to achieve our
carbon emissions targets.
We are exploring ways to reduce carbon
emissions and improve energy efficiency
across the Group by continuing to
upgrade our lighting systems in our hotels
to use more energy-efficient LED bulbs,
upgrading the building management
systems in our hotels (BMS) and adding
solar panels. All hotels receive monthly
energy reports which allow us to receive
accurate updates on all our energy
consumption. This information provides
us with the ability to monitor peaks and
troughs in usage. The benefits of this
are not only commercial, but will also
allow us to explore ways to reduce our
carbon footprint.
WASTE
As part of our broader efforts to reduce
plastic waste, we are committed to
reduce the consumption of single-
use plastics in our hotels. In 2018, we
eliminated over 500,000 plastic straws
from our hotels. We have eliminated
plastic bottles from all our meeting
rooms and in our bedrooms in all hotels.
In 2020, we will continue to look at ways
in which we can further reduce single-
use plastics in our business. See
our case study on the next page for
more information.
We continue to increase the amount
diverted away from landfill every year
in Ireland and the UK. We ensure our
waste is separated and sent to recycling
facilities and food waste is treated
by anaerobic digestion. In 2019 the
food waste in Ireland that was sent for
anaerobic digestion was as follows:
2019 2018
Total Food
waste ROI
1,236
tonne
1,155
tonne
Renewable
Energy produced
494.5
MWH
461.9
MWH
CO2
emissions
savings by diverting
from landfill
618.1
tonne
577.4
tonne
Amount of fertiliser
digestate
247.2
tonne
230.9
tonne
WATER
We have a strategy in place to minimise
consumption of water in our hotels. By
the end of 2020 all our hotels will have
tap or shower aerators. These water
saving devices will control the amount
of water that flows through the tap or
shower head without affecting the water
pressure as they mix the water with air,
thus reducing flow without affecting
guest satisfaction.
2020 FOCUS
For 2020 we have established a €1 million
Green Fund from our capital expenditure
budget. Hotels will submit projects for
consideration on a competitive basis.
Everybody has to play their
part. We’re no different to
anybody else. If we all play a
part in some way it will have
a significant impact on the
environment that we all
need to live in.
PatMcCann
Chief Executive Officer
Environment
EnvironmentSteeringGroup
The Environment Steering Group was setup in 2019 with
the aim of responding in a more comprehensive manner
to the growing expectations among all our stakeholders on
the impacts our business has on the environment. The group is
led by Conal O’Neill (Group General Manager - Maldron Hotels)
and comprises of ten members from a range of functions,
locations and brands across the Group. The group acts as
an umbrella for all activities in this area, and picks up from
significant works already done by the company that included
an extensive LED lamp exchange programme, CHP unit
installations and voltage optimisation works.
Looking ahead the group are focusing on the following
key areas:
 Framework and culture
 Utilities and energy consumption
 Waste & recycling
 Water consumption
 Capital projects including new build hotels
 Communication with stakeholders
On establishment, the priority of the group was to set about
building a framework for implementation and progress that
would also grow the necessary culture across all hotels. To
this end we partnered with Green Tourism, a hospitality
specialist accreditation partner. Green Tourism conducted
CASE STUDY
Stephen McNally and Stephen Clarke from 
with Adrienne Volpe of Bord Gais Energy.
“Energy & Sustainability Audits” in all our hotels during Q4 2019
with each hotel gaining accreditation as part of the process.
The audits in turn now provide a road map for our hotel based
“Environment Impact Teams” to drive the agenda and respond
to the expectations of our stakeholders in a meaningful way.
On the procurement front, we now buy all our electricity
from 100% renewable sources. The steering group also led
the introduction of improved measurement and reporting
processes around our consumption of utilities, with reporting
that gives our hotel teams the information they need to
make informed and quick decisions. We are engaging with
all our large suppliers on initiatives to reduce the volume of
packaging waste being taken into our hotels. We have made
great strides in the past year in our war on plastics with the
removal of most single use plastic products from our hotels.
This includes a commitment to remove all single use bath and
shower products from guest bedrooms. The steering group
will co-ordinate the allocation of a €1 million Green Fund that
hotels will compete for with green capital investment projects.
In tandem with these projects, our steering group also works
with our Development team to ensure we avail of the latest
technologies and building methods that will make our new
build hotels as efficient as possible. Finally we are developing
a communications strategy to keep our team members and
customers abreast of our progress.
We are at the start of our journey but excited by the prospect
of the really positive impacts we can make.
54  Responsible Business Report 55
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Clayton Hotel
Charlemont Dublin
CHAIR’S OVERVIEW
Dear Shareholder,
I am pleased to present the Corporate
Governance Report of Hotel
Group plc for 2019. In this report, I
describe our Corporate Governance
framework and explain how the Board
works to ensure that this framework
remains appropriate and effective.
The following Corporate Governance
Report, including the Committee
Reports and the Directors’
Report, sets out how we apply our
governance standards in practice
and demonstrates our compliance
with the UK Corporate Governance
Code 2018.
Under my Chairmanship, I continue
to focus on ensuring that the Board
remains effective and leads by
example to demonstrate the desired
values and culture of the Company.
The Board recognises that strong
Corporate Governance is essential to
deliver the strategy, to drive success
and to create long term value for
its stakeholders. In 2019, the Board
was pleased to welcome Elizabeth
McMeikan, as an independent Non-
executive and in January 2020 Shane
Casserly as an Executive Director.
Both Directors bring skills and expertise
that will strengthen the Board. Further
details of the appointment process for
the new Non-executive Director are
provided in the Nomination Committee
report on pages 70 to 71
The Board operates effectively, and
each Board member demonstrates the
correct balance of skills, experience,
independence, knowledge, and
the ability to commit sufficient
time to undertake their duties and
responsibilities appropriately. This
year, in accordance with our re-election
policy, all Directors will be subject to
re-election at our AGM.
The Board is committed to the highest
standards of integrity and accountability.
It oversees a system of prudent and
effective risk management and internal
control systems and has a well-
established Audit and Risk Committee
to assist it in the undertaking of its duties.
The Board ensures ongoing
engagement with stakeholders
throughout the year and acknowledges
the clear responsibility it has to
promote the long-term success of
the Company for its stakeholders. This
long-term approach defines how the
The Company has complied in full during
2019 and to the date of this report with the
provisions of the UK Corporate Governance
Code published in 2018. The Code is publicly
available at the website of the Financial
Reporting Council at www.frc.org.uk.
I continue to focus
on ensuring that
the Board remains
effective and leads
by example to
demonstrate the
desired values
and culture of
the Company.
Corporate
Governance
BOARD OVERVIEW
Board meetings and attendance
The Board held eight formal meetings in 2019 and also met on four separate occasions
for training and strategy days.
Member No. of meetings
John Hennessy 8/8
Pat McCann 8/8
Dermot Crowley 8/8
Stephen McNally 8/8
Margaret Sweeney 8/8
Alf Smiddy 8/8
Robert Dix 8/8
Elizabeth McMeikan 2/2
Principal Responsibilities include
 Establishing the Group strategy,
business objectives and long-
term plans.
 Review and approval of
acquisitions, capital projects
and group financing.
 Overseeing the business and
affairs of the Group in light of
emerging risks and opportunities.
 Selecting and maintaining a
succession plan for the position
of the Chief Executive and key
members of management.
 Review and approval of the
annual budget.
See the UK Corporate
Governance Code on:
www.frc.org.uk
strategy is set and allows the Board
to assess risk and deliver sustainable
value for stakeholders.
We present a new three-year
Remuneration policy (set out on pages
80 to 85) this year which we will submit
voluntarily, to an advisory vote at our
AGM on the 29th April 2020. This policy
has been developed to ensure as far as
possible that the Group will continue to
attract and retain people necessary for
the delivery of long-term sustainable
growth for the group.
I am proud to serve as Chair of ,
and we will continue to focus on building
on our success and creating long term
value for all our stakeholders. If any
shareholder wishes to contact me
about the content of the annual report,
please do so through the Company
Secretary at the company’s address.
John Hennessy
Non-executive Chair
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57
Corporate Governance
*Independent on appointment
Name Age Director
Since
Independent Committee memberships 2019 Other current
listed boards
A&R RemCo NomCo ESG
John Hennessy 63 2014 N* Member Chair 1
Pat McCann 68 2014 N 1
Stephen McNally 55 2014 N Member
Dermot Crowley 52 2014 N
Robert Dix 67 2014 Y Chair Member 1
Alf Smiddy 57 2014 Y Member Member
Margaret Sweeney 59 2014 Y Member Chair Member 1
Elizabeth McMeikan 57 2019 Y Member Chair 2
Shane Casserly 52 2020 N
BOARD MATRIX
4
BOARD DIVERSITY IN FIGURES
PRINCIPAL SKILLS
International Business
Finance
Governance
Business Leadership
Industry
Customer
People Management
M&A
Risk Management
Hotel Operations
Legal
0 3 6 9 Number of Board Members
•<1 year
• 6 years
•46-55
•56-65
•>65
TENURE GENDER AGE
•Female
•Male
2
7
2
2
3
7
Number of Board Members
LEADERSHIP
Board of Directors
DermotCrowley
Deputy Chief Executive -
Business Development and Finance
Nationality: Irish
Expertise: Dermot worked with Pwc, Procter
& Gamble, Forte Hotels and Renault before
joining Jurys Doyle Hotel Group plc in 2000
as Head of Development. He spent six years
with Ion Equity before joining in
2012 as Deputy Chief Executive - Business
Development and Finance. Dermot is a Fellow
of Chartered Accountants Ireland. He is a
graduate of University College Cork.
Principal Skills: International Business,
Finance, Industry, M&A.
AlfSmiddy
Non-Executive Director and
Senior Independent Director
Nationality: Irish
Expertise: Former Chair and Managing
Director of Beamish and Crawford plc. Alf
has over 25 years’ experience in the Irish and
international hospitality and beverage sector.
He is a Fellow of Chartered Accountants
Ireland and the Irish Marketing Institute. He
has a Diploma in Corporate Direction and a
Masters in Executive Leadership.
He is a Non-executive Director and Chair of
Marketing Brand and Customer Committee
of ESB and Chair and Non-executive Director
of a number of private companies.
Principal Skills: International Business,
Business Leadership, Finance, Governance,
Customer, People Management.
SeanMcKeon
Company Secretary,
Head of Risk and Compliance
Expertise: Sean joined after several
years in senior Finance roles in retail and
FMCG including Dunnes Stores, Keelings,
Roches Stores (now Debenhams), Aer Rianta
International and Diageo.
Sean is a fellow of Chartered Accountants
Ireland and an MBA graduate of the UCD
Michael Smurfit Graduate Business School.
4
ShaneCasserly
Corporate Development Director
Nationality: Irish
Appointed: 1 January 2020
Expertise: A graduate of University College
Cork and Chartered Accountant, Shane joined
in March 2014 as Head of Strategy
and Development and has been instrumental
in driving the Company’s growth through
acquisition and development activity in Ireland
and the UK. He previously worked as Head
of Development at Jurys Doyle Hotel Group
plc and held senior positions with Ion Equity,
Microsoft Europe and Musgrave Group.
Principal Skills: International Business,
Finance, Industry, M&A.
JohnHennessy
Non-Executive Chair
Nationality: Irish
Expertise: John is a Chartered Director
and a practising barrister. He is a fellow of
Chartered Accountants Ireland and of the
Chartered Institute of Arbitrators. He is also
an accredited mediator.
He is also Non- Executive Chair of CPL
Resources plc.
Principal Skills: International Business,
Business Leadership, Governance,
Finance, Legal.
PatMcCann
Chief Executive
Nationality: Irish
Expertise: Pat began his career with The
Ryan Hotels plc. In 1989 he joined Jurys Hotel
Group plc as a general manager and in 1994
was appointed to the Board as Operations
Director. From 2000 - 2006 Pat was the Chief
Executive of Jurys Doyle Hotel Group plc and
in 2007 founded Hotel Group.
He is also a Non-executive Director of
Glenveagh Properties plc and is President
of IBEC.
Principal Skills: International Business,
Business Leadership, Governance,
Hotel Operations, Industry, Customer,
People Management.
StephenMcNally
Deputy Chief Executive
Nationality: Irish
Expertise: Stephen started his career with
Ramada Hotels in the UK and Germany.
In 1989 he joined Jurys Doyle Hotel Group plc
where he worked for 17 years. He managed
hotels in the UK and Ireland before he was
appointed as Head of Group Operations.
Stephen became Deputy Chief Executive
at Hotel Group in 2007.
Principal Skills: International Business,
Hotel Operations, Industry, Customer,
People Management.
RobertDix
Non-Executive Director
Nationality: Irish
Expertise: Robert was a partner in KPMG
Ireland where he headed up the Transaction
Services Division. Currently, Robert owns
his own company Sopal Limited, providing
advice to different organisations on capital
markets, corporate governance and strategic
planning issues. He is a graduate of Trinity
College Dublin and is a Fellow of Chartered
Accountants Ireland.
He is also Non-executive Director of
Glenveagh Properties plc and Non-executive
Director of a number of privates companies.
Principal Skills: International Business, Risk
Management, Finance, Governance, M&A.
ElizabethMcMeikan
Non-Executive Director
Nationality: British
Expertise: Elizabeth is an experienced Non-
executive Director. Previously she was Senior
Independent Director at J.D. Wetherspoon
plc and Remuneration Committee Chair at
Flybe plc.
Elizabeth is currently the Senior Independent
Director at Unite Group plc; where she chairs
the Board’s Remuneration Committee and is
also Non-executive Director of McBride plc.
Elizabeth is also a Non-executive Director at
private company Fresca Group Ltd.
Principal Skills: International Business,
Business Leadership, Governance,
Customer, People Management.
MargaretSweeney
Non-Executive Director
Nationality: Irish
Expertise: Margaret is CEO of Ires Reit plc
and previously led DAA plc and Postbank
Ireland Limited as CEO. Margaret worked
with KPMG for 15 years as Director in Audit
and Advisory Services. She is a Fellow
of Chartered Accountants Ireland and a
Chartered Director.
Principal Skills: International Business,
Business Leadership, Finance, Governance,
Risk Management, M&A.
59
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INFORMATION
58  Board of Directors
has a strong and diverse leadership team
with the skills and experience to effectively
manage our current business along with the
resources and capabilities to grow our portfolio.
Our leadership team are responsible for the long
term success of the Group, setting the strategy,
and providing appropriate challenges to ensure
management remains focused on achieving the
strategic objectives and for delivering value to
the shareholders and other stakeholders.
See full bios of our Executive
Management Team on:
www.hotelgroup.com
LEADERSHIP
Our Executive Management Team
Success
Backed
byPeople
MEET THE TEAM
Top row from left to right: Eoin Manley,
Group Facilities Manager; Tony McGuigan,
Head of Procurement & F&B Projects;
Adrian Sherry, Head of Marketing Development;
Patrice Lennon, Head of Sales and Marketing;
Aine Doyle, Group Learning & Development
Manager; Karen Halpin, Group Marketing
Communications Manager; Paul Maloney,
Projects Development Manager;
Martha Mannion, Head of Rooms Revenue
and Distribution; Stephen McNally, Deputy
CEO; Pat McCann, CEO; Dermot Crowley,
Deputy CEO- Business Development and
Finance; Josephine Norton, Group Marketing
and E-Commerce Manager; Conal O’Neill,
Group General Manager- Maldron Hotels;
Anthony Murray, Group IT Manager; Shane
Casserly, Corporate Development Director;
Keith Rynhart, Financial Planning and Analysis
Manager; Duncan Little, Group Capital and
Development Manager; Stephen Clarke,
Group Financial Controller.
Bottom row from left to right: Niall Macklin,
Acquisitions and Development Manager;
Emma Dalton, UK Group General Manager;
Caitriona Conroy, Group Insurance, Risk, Health
& Saftey Manager; Michael McCann, Head of
Ancillary Revenue; Des McCann, Group General
Manager- Clayton Hotels; Sean McKeon,
Company Secretary- Head of Risk & Compliance;
Carol Phelan, Group Head of Financial Reporting,
Treasury and Tax; Dawn Wynne, Head of Human
Resources; Macarten McGuigan, Group Internal
Auditor; Sinead O’Toole, Group HR Manager.
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Executive Management Team
Disclosure Committee
Executive Risk Committee
Privacy Committee
Environmental Steering Group
CHIEF
EXECUTIVE
OFFICER
SENIOR
MANAGEMENT
BOARD
SUBCOMMITTEES
BOARD
Audit & Risk Committee
 See Report on page 72
Remuneration Committee
 See Report on page 78
Nomination Committee
 See Report on page 70
Environmental, Social & Governance Committee
Committee established 1.1.2020
Group
Internal
Audit
CORPORATE
GOVERNANCE
REPORT
Board membership
As of the date of this report, the Board
comprises nine members, a Non-
executive Chair, four Non-executive
Directors and four Executive Directors.
The Directors believe that the
composition of the Board provides
the necessary skills, knowledge and
experience, gained from a diverse range
of industries and backgrounds, required
to manage the Group.
The experience of each Director is
set out in their biographies which are
detailed on pages 58 to 59 and the Board
considers that their biographies reflect
suitable breadth and depth of strategic
management experience.
Role of the Board
The Board is primarily responsible
for the long-term success of the
Group, for setting the strategy, for the
leadership and control of the Group
and to provide appropriate challenge to
ensure management remains focused
on achieving the strategic objectives for
delivering value to the shareholders and
other stakeholders.
The Board defines the Company’s
purpose and then sets a strategy to
deliver it, underpinned by the values
and behaviours that shape our culture.
A sound understanding of how value
is created over time has been key in
steering strategies toward the level
of sustainable value creation we have
delivered. A cornerstone of safeguarding
our long-term ambitions has been
a commitment to high standards of
corporate governance, as well as a
Board of Directors with a depth of
experience and expertise. In making
and implementing actions, the Board
aims to manage the contrast between
short-term pressures and the long-term
impacts of decisions.
Division of Responsibility
There is a clear division of responsibilities
within the Group between the Board and
executive management, with the Board
retaining control of strategic and other
major decisions. The Chair leads the
Board and is responsible for its overall
effectiveness in directing the company.
One of the key roles for the Chair in
doing so is demonstrating objective
judgement throughout their tenure and
promoting a culture of openness and
debate. In addition, the Chair facilitates
constructive board relations and
the effective contribution of all Non-
executive Directors, and ensures that
Directors receive accurate,timely and
clear information.
The Board includes an appropriate
combination of Executive and
Non-executive (and, in particular,
Independent Non-executive) Directors,
such that no one individual or small
group of individuals dominates the
Board’s decision-making. There is
a clear division of responsibilities
between the leadership of the Board
and the executive leadership of the
Company’s business.
Time commitment
Under the terms of their appointment
all Directors agreed to the ‘Time
Commitment Schedule’ which
requires them to allocate sufficient
time to discharge their responsibilities
effectively. As part of the Board
evaluation process completed in
November 2019, each Non-executive
Director confirmed that they continue
to be able to allocate sufficient time
to discharge their responsibilities
effectively.
In addition, any potential appointment
to the Board of another company must
be approved by the Board.
The Board has delegated a number
of responsibilities to standing
committees of the Board as detailed
below and also to the executive
management team of the Group.
The roles of the Chair and the Chief
Executive Officer are separately held
and the division of their responsibilities
is clearly established and has been
set out in writing and approved by the
Board. A summary of the formal roles
of the Board’s leadership is set out on
page 64.
Conflicts of interest
The Boards considers potential
conflicts of interest as a standing
agenda item at each Board meeting
and each Director is obliged to
notify the Company in advance of
any interest in any transaction to be
considered by the Board.
On 16 November 2018, the Company
announced the development of a new
hotel and adjoining residential complex
at Merrion Road in Dublin (on the
site of the former Tara Towers Hotel)
and that Irish Residential Properties
REIT plc had contracted to purchase
the entire residential development
on completion. The development
of the property has commenced
and is scheduled to be completed in
mid-2021. Non-executive Director
Margaret Sweeney is CEO and an
Executive Director of Irish Residential
Properties REIT plc.
The New UK Code
The Financial Reporting Council’s 2018
U.K. Corporate Governance Code (‘the
Code’) came into effect for from
1 January 2019. The Board welcomed
the shift in focus under the new Code,
which places emphasis on a company’s
purpose and its interaction with
stakeholders – areas where the company
has made significant strides. Throughout
2019 the Board, with support from senior
staff, took a number of steps to refine its
approach to reflect the altered focus of
the Code, which are:
 Board Leadership and
Company Purpose
 Division of Responsibilities
 Composition, Succession
and Evaluation
 Audit, Risk and Internal Control
 Remuneration
Our Governance Framework
The Board oversees the Group’s
governance framework, reviews
and approves the strategy, monitors
management’s performance
against agreed targets and ensures
appropriate controls are in place and
operating effectively.
The Board ensures leadership through
effective oversight and review.
Executive decisions, and development
and implementation of strategy are
delegated to management.
The Board fulfills a number of its
responsibilities directly and others
through its committees.
See the list of matters reserved
to the Board on:
www.hotelgroup.com
OUR GOVERNANCE FRAMEWORK
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The Board is primarily
responsible for the
long-term success of
the Group, for setting
the strategy, for the
leadership and control
of the Group and to
provide appropriate
challenge to ensure
management remains
focused on achieving
the strategic objectives
for delivering value to
the shareholders and
other stakeholders.
The Company appointed a firm of
reputable international property
agents and conducted a competitive
tender process for the sale of the
residential development. In advance
of each meeting of the Board at which
the proposed transaction was due
for consideration, Margaret Sweeney
declared her potential conflict of
interest. Accordingly, she did not
receive board papers prepared relating
to the proposed transaction and was
excused from board meetings when the
proposed transaction was discussed and
considered for approval.
This is a once-off, arm’s length
transaction and the Board has carefully
applied good governance procedures to
ensure the Director having a potential
conflict of interest played no part in the
decision-making process.
Meetings and attendance
The Board meets sufficiently regularly
to ensure that all its duties are
discharged effectively. Board meetings
are intentionally held at hotels
in different locations to broaden the
Board’s exposure to the markets in
which the Group operates and to provide
opportunities to meet frontline staff and
other colleagues.
During 2019, the Board held eight
formal Board meetings and four other
full-day meetings dealing with strategy
and Board training and management
presentations. There was full attendance
by all members.
Board Committees
The principal committees of the Board in
2019 were the Audit and Risk Committee,
the Remuneration Committee and the
Nomination Committee. In January
2020 the Board established a new
Environmental Social and Governance
Committee. They support the operation
of the Board through their focus on
specific areas of governance. Reports
on the activities of the individual
Committees are presented to the Board
by the respective Committee Chair.
Further details on the activities of
each Committee can be found in their
respective reports on:
 Nomination Committee page 70
 Audit & Risk Committee page 72
 Remuneration Committee page 78
Independence
The independence of each of the
Non-executive Directors is considered
upon appointment and on an annual
basis by the Board. The Board has
determined all of the Non-executive
Directors, save for the Chair who was
independent on appointment, to be
independent within the meaning of
the term as defined in the Code.
Robert Dix is a Director of The Quinn
Property Group and of Glenveagh
Properties plc. boards on which Pat
McCann is also currently a Non-
executive Director. The Board has
concluded that notwithstanding
this relationship, Robert can
apply objective, unfettered and
independent judgement and act in
the best interests of the Company.
The Board also considered the
impact of Margaret Sweeney’s
position as CEO of IRES Reit on her
independence in view of the Merrion
Road transaction agreed between
and IRES Reit in 2018 (see page
63 Conflicts of Interest). The Board
is satisfied that there is no ongoing
conflict of interest that impairs the
ability of Margaret Sweeney to act
as an independent Non-executive
Director of the Company.
Appointments to Board
The Nomination Committee is
responsible for a formal, rigorous
and transparent procedure for the
appointment of new Directors. There
was one appointment to the Board
during 2019, Elizabeth McMeikan. The
terms and conditions of the Non-
executive Directors are set out in
their letters of appointment, which
are available for inspection at the
Company’s registered office during
normal office hours and at the AGM
of the Company.
Re-election of Directors
The Company’s Articles of Association
provide that one third of the Directors
retire by rotation each year and that
each Director seeks re-election at the
Annual General Meeting every three
years. New Directors are subject to
election by shareholders at the next
Annual General Meeting following their
appointment. However, in accordance
with the provisions of the Code, the
Board has decided that all Directors
should retire at the 2020 Annual
General Meeting and offer themselves
for re-election.
New Director inductions
Directors joining the Board undertake
an induction programme which
covers briefings on the operation and
activities of the Group, the Group’s
principal risks and uncertainties, the
role of the Board and the matters
reserved to it, the responsibilities
of the Board Committees, and the
strategic challenges and opportunities
facing the Group. See Governance in
action on page 68.
Ongoing Director training
and development
The Board as a whole engages in
development through a series of
presentations with experts on a range
of topics including risk management,
corporate governance and strategy.
The Board received two full days
of presentations made by senior
management on various topics
through the year about their areas of
responsibility. In November 2019, a
Directors’ Training Day was facilitated
by the Company Secretary and was
attended by both Executive and Non-
executive Directors.
Each Director may obtain independent
professional advice at the Company’s
expense in the furtherance of their
duties as a Director. Each Committee
is supported by the Company
Secretary and his Deputy. In addition,
each Committee is able to seek
independent professional advice.
CHAIR > Leads the Board, sets each meeting agenda and ensures the Board
receives accurate, timely and clear information to monitor, challenge and
guide and make sound decisions;
> Promotes a culture of open debate between executive and Non-executive
Directors and holds meetings with the Non-executive Directors, without
the Executive Directors present;
> Regularly meets with the Chief Executive and other senior management
to stay informed;
> Ensures effective communication with shareholders and other
stakeholders;
> Promotes high standards of corporate governance;
> Promotes and safeguards the interests and reputation of the Company.
CHIEF
EXECUTIVE
> Provides coherent leadership of the Company, including representing the
Company to customers, suppliers, governments, shareholders, financial
institutions, employees, the media, the community and the public and
enhances the Group’s reputation;
> Leads the Executive Directors and senior management team in running
the Group’s business;
> Develops and implements Group objectives and strategy having regard to
shareholders and other stakeholders;
> Manages the Group’s risk profile and ensures appropriate internal controls
are in place;
> Ensures compliance with legal, regulatory, corporate governance, social,
ethical and environmental requirements.
SENIOR
INDEPENDENT
DIRECTOR
> Working closely with the Chair, acts as a sounding board and
providing support;
> Responsible for conducting an annual performance review of the Chair;
> Provides advice and judgement to the Chair as necessary, serving as an
intermediary to the other Directors when necessary;
> Is available for shareholders who have concerns that cannot be addressed
through the normal channels of Chair, Chief Executive Officer or Deputy
Chief Executive, Business Development and Finance.
NON-EXECUTIVE
DIRECTORS
> Review the performance of management;
> Review Group financial information and provide advice to management;
> Assist in strategy development, and ensure appropriate and effective
systems of internal control and risk management are in place.
COMPANY
SECRETARY
> Ensures compliance with Board procedures and provides support to
the Chair, to ensure Board effectiveness;
> Ensures the Board has high-quality information, adequate time and
appropriate resources in order to function effectively and efficiently;
> Assists the Chair by organising induction and training programmes
and ensuring that all Directors have full and timely access to all
relevant information;
> Provides advice and keeps the Board updated on corporate governance
developments; and
> Facilitates the Directors’ induction programmes and assists with
professional development.
KEY ROLES IN OUR GOVERNANCE FRAMEWORK
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Directors joining the
Board undertake an
induction programme
which covers briefings
on the operation
and activities of the
Group, the Group’s
principal risks and
uncertainties, the role
of the Board and the
matters reserved to it,
the responsibilities of
the Board Committees,
and the strategic
challenges and
opportunities facing
the Group.
The annual report and accounts
are also available on:
www.hotelgroup.com
Information flow at meetings
Eight formal Board meetings and four
additional full day meetings dealing
with strategy and Board training were
held during 2019. Prior to each Board
meeting the Directors receive their
papers on a fully encrypted electronic
portal system. Included in these papers
are detailed monthly accounts together
with reports from the Chief Executive,
Deputy Chief Executive, and Deputy
Chief Executive – Business Development
and Finance.
The Chief Executive and the Deputy
Chief Executive-Business Development
and Finance ensure that the Board is
kept fully aware on a timely basis
of business issues and prospects
throughout the Group.
The structure of the Executive
Management Team and the open
communication approach in the Group
enables issues to be raised easily. Many
of these key issues are brought to the
attention of the Board.
In consultation with the Chair and Chief
Executive, the Company Secretary
manages the provision of information to
the Board for their formal Board meetings
and at other appropriate times.
The Chair and Chief Executive also
maintain regular informal contact
with all Directors.
Board diversity
The Board has adopted a Board
Diversity Policy which is reviewed
annually, most recently in December
2019. The objective of the policy is
to help achieve the optimum Board
composition of skills and experience.
In accordance with the policy, all Board
appointments are made on merit, in
the context of the skills, experience,
independence and knowledge which
the Board as a whole requires to
be effective.
The policy statement also
acknowledges that an effective Board
will include and make good use of
differences in the skills, regional and
industry experience, background, race,
gender and other distinctions between
Directors. These differences will be
considered in determining the optimum
composition of the Board and when
possible will be balanced appropriately.
Further detail on the application of
the policy is set out in the Nomination
Committee Report on page 70.
ENGAGEMENT WITH STAKEHOLDERS
should they want to discuss any
concerns they may have. The
Board is kept informed of the views
of the shareholders by receiving
updates at Board meetings on any
engagement undertaken. Analyst
research on the Company is also
shared with the Board.
The Group makes every effort to
ascertain investor perceptions and
regular reports of investor and analyst
feedback are provided to the Board.
During 2019, over 280 separate
meetings and conference calls were
held with existing and prospective
shareholders: and the Board
commissioned an in-depth survey of
investor perception in September 2019.
The annual report and accounts are sent
to all shareholders who wish to receive
a copy and they are also available in the
investor section of the Group’s website
www.hotelgroup.com.
Also, as outlined in the Remuneration
Committee Chair’s introduction to
the Remuneration Committee report
on page 78, there was extensive
engagement with the Group’s
major shareholders in late 2019 on
the Remuneration Committee’s
proposals regarding the 2020 Directors
Remuneration policy.
Board evaluation
We recognise the importance of
evaluating the performance of the
Board, its main Committees and
all Directors, in line with the Code.
Following the externally facilitated
evaluation in 2017, Senior Independent
Director Alf Smiddy conducted an
internal evaluation at the end of
2019. The Chair also met with each
Director individually during the year
to discuss Board effectiveness
and composition.
The Senior Independent Director met
with the other Directors to evaluate the
performance of the Chair. For further
details see the Nomination Committee
report on page 70.
Risk management
On page 40 we explain how the Board
oversees risk management.
Internal controls
The Board has responsibility for
maintaining sound risk management
and internal control systems, and
at least annually reviewing the
effectiveness of these systems. These
internal control systems are designed
to manage rather than eliminate the risk
of failing to achieve a business objective.
The Board’s engagement with
shareholders included:
 Meeting with shareholders and
responding to any queries raised
at the 2019 AGM.
 Investor Roadshows events in USA,
Dublin, Europe and UK.
 Attendance at key institutional
investor conferences.
 Seeking feedback via an investor
perception survey.
 A programme of one to one meetings
with major institutional shareholders.
 Extensive engagement by the Chair
of Remuneration Committee with
major shareholders during the year.
The Board recognises that, for the Group
to be successful over the long term,
it is important to build and maintain
successful relationships with a wide
range of stakeholders.
This is formalised within the ongoing
comprehensive investor relations
programme conducted by the Chief
Executive and/or Deputy Chief
Executive– Business Development and
Finance. Throughout the year meetings
are held with institutional investors and
sell-side analysts. These meetings allow
us to discuss the Company’s strategy,
business model and the markets we
operate in. In addition, the Chair and
Senior Independent Director are available
to meet with shareholders on request,
Stakeholder engagement during the year
As an Irish incorporated company, is not subject to the provisions of
the UK Companies Act 2006, however, the Board is cognisant of the principle
underpinning Provision 5 of the New UK Code, which asks Boards to have regard
for engagement mechanisms with stakeholders. The Board is fully aware of its
responsibilities in this area and other areas of this report set out clearly the long-
lasting partnerships we have developed with customers, employers, suppliers
and communities.
Specifically, during the year, the Board engaged with a number of key
stakeholders, including:
 Meetings with the workforce and guests during various hotel visits.
 Joining the annual general manager conference in Cork.
 Meeting suppliers in Cork.
In addition, in April 2019 Alf Smiddy, Senior Independent Director, was appointed
as the Director with responsibility for workforce engagement. See page 68 for
further details of our governance in action.
They can therefore only provide
reasonable and not absolute assurance
against material misstatement or loss.
Assessment of the principal risks
facing the Group
The Board and Audit and Risk Committee
received and reviewed reports from
Group Internal Audit to help with their
annual assessment of the principal
risks facing the Group, and the controls
in place to mitigate these risks. The
principal risks and the mitigating factors
are outlined on pages 42 to 45.
Annual assessment of the
effectiveness of risk management,
internal control and financial
reporting systems
The Board and Audit and Risk Committee
received and reviewed reports from
Group Internal Audit and the Group’s
External Auditor, to help with their annual
assessment of the effectiveness of
the Group’s risk management, internal
control and financial reporting systems,
and are satisfied that the systems have
been operating effectively throughout
the year to the date of the report.
AGM
The Annual General Meeting will be
held on 29 April 2020 at The Gibson
Hotel, Point Square, North
Dock, Dublin.
Formal notification will be sent to
shareholders at least 20 working
days before the meeting in
accordance with the provisions of
the Code. Other general meetings
may also, be convened from time to
time upon at least 14 working days’
notice or where certain requirements
are met, including prior approval
by shareholders by way of a special
resolution, upon 14 working days’
notice in accordance with the Code.
The Annual General Meeting gives
shareholders an opportunity to hear
about general development of the
business and to ask questions of
the Chair and, through him, the Chairs
of the various Committees and its
Committee members. Shareholders
attending the meeting are informed
of the number of proxy votes lodged
for each resolution.
Details of the meeting and the
resolutions to be proposed are
sent out in the shareholders’ Notice
of Meeting.
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The Board has adopted
a Board Diversity Policy
which is reviewed
annually, most
recently in December
2019. The objective
of the policy is to help
achieve the optimum
Board composition of
skills and experience.
GOVERNANCE IN ACTION
BoardEngagement
withtheWorkforce
The Board welcomed the 2018 Code’s
emphasis on stakeholder engagement
and adopted a Board Policy for
Workforce Engagement..
The policy seeks to deepen Board engagement with
the workforce in several ways:
 holding Board and subcommittee meetings at a wide
variety of company locations to promote access by
employees to the board on an informal basis;
 the receipt of presentations from functional managers
in the business and hotel general managers to gain
deeper insights and reflect a more extensive diversity
of interested opinion in board discussions;
 Executive Director participation in employee
engagement activities and delivery of content on our
learning and development programs, and;
 by the designation of a Non-executive Director with
responsibility for workforce engagement.
The board designated responsibility for workforce
engagement to Senior Independent Director Alf Smiddy:
“Almost immediately upon the announcement
of the new role and appointment, I was being
asked to attend meetings almost every week.
There was just a huge level of interest among
management and staff, and I found it very
interesting as a board member to engage
with staff and give them comfort about our
willingness as a Board of Directors to listen
carefully to points raised and to provide
assurance that management and staff issues,
HR, training and development, succession
planning, and so on, are taken very seriously
at board level and are regularly discussed.”
AlfSmiddy
GOVERNANCE IN ACTION
NewDirectorInduction
New Non-executive Director Elizabeth McMeikan,
appointed to the Board October 2019
OVERVIEW
The Chair, supported by the Company
Secretary, is responsible for ensuring
that new Directors have a thorough
and appropriate induction.
Each newly appointed Director has participated in a structured
induction programme and has received a comprehensive suite
of resources providing detailed information on the Group.
Each induction has been based on the individual Directors
requirements and included meetings with relevant Directors,
senior management and external advisors. This ensures that
each new Director understands the Company’s strategy and
governance structure.
OBJECTIVE
To provide our new Directors with the resources they need
in order to be able to maximise their effectiveness in the
shortest time practicable.
PROCESS
Resources
 Provision of resources including papers and minutes
from previous Board meetings and key corporate
governance policies.
Meetings
 Business briefings with the Executive Directors and
the Chair.
 Meetings with members of the Executive Team and
senior management.
 Meetings with external advisers, as appropriate to the role.
 Meetings with General Managers of Maldron Hotels and
Clayton Hotels.
 Meetings with Head of HR,Head of Revenue, and
Head of Sales & Marketing.
Specific Activities to help understand the business
 Visits to our hotels and meeting our General Managers.
Future Plans
 Meet with external advisors.
 Opportunity to visit more of our hotels.
 Meet with more members of the executive
management team.
BoardActivities
WHAT THE BOARD DID IN 2019
BUSINESS
PERFORMANCE
AND STRATEGIC
DEVELOPMENTS
Business performance
> Received detailed management accounts and financial update from the management team
as each scheduled board meeting.
> Received detailed operations update from the management team at each scheduled board
meeting covering HR matters, revenue management, marketing, health and safety, employee
engagement and customer satisfaction, as well as more detailed reports on progress at recently
opened properties.
> Received detailed presentations from members of the management team including the group
general managers for Clayton Hotels Ireland, Maldron Hotels Ireland and our UK business, sales
and marketing, revenue management, HR, financial control and IT.
> Received and approved a detailed presentation on the budget for the forthcoming year.
Strategic development
> Received a detailed presentation from management on the activities of the acquisitions and
development team, at each scheduled board meeting, including the search for new pipeline
opportunities and progress updates on projects already secured.
> Approved several transactions during the year, including agreements to lease new properties in
Cambridge, Liverpool, and Croke Park, Dublin, and the acquisition of the Shoreditch, London site.
> Considered projections presented by management for the forthcoming three years and approved
the company’s long-term viability statement.
FINANCIAL
REPORTING
AND CONTROLS
> Reviewed and approved the half and full-year financial results, including the financial statements,
the results announcement, and the investor presentation.
> Reviewed and approved the group’s annual report.
> Considered the level of distributable reserves, approved the payment of the interim dividend
and recommendation to shareholders in respect of the final dividend.
> Approved the extension of the group’s bank borrowing facilities up to 2024.
GOVERNANCE > Reviewed and approved the Notice of AGM and corporate governance disclosures.
> Considered the key provisions of the new UK Corporate Governance Code and the application
of it to the Company.
> Reviewed and approved the Matters Reserved for the Board and each of the Committees’
terms of reference.
> Discussed the findings of the internally facilitated Board evaluation and agreed actions for
the following year.
> Chair and Non-executive Directors met without the Executive Directors present.
> Reviewed the composition of board subcommittees.
> Reviewed a broad range of corporate policies including risk management, modern slavery,
bribery and corruption, and environmental.
> Received a detailed presentation on shareholder perception.
> Approved the appointment of new Non-executive Director Liz McMeikan and new Executive
Director Shane Casserly.
PEOPLE
AND CULTURE
> Reviewed and approved the Board Diversity Policy.
> Discussed talent and succession planning.
> Reviewed the results of the employee engagement surveys carried out in June and December.
> Reviewed updates regarding health and safety within the Group.
> Received a detailed presentation on monitoring corporate culture as part of its board
training activity.
> Adopted a policy for board engagement with the workforce and designated responsibility for
workforce engagement to Senior Independent Director Alf Smiddy.
> Approved the offer of share options to all group employees under the Sharesave Scheme.
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NOMINATION
COMMITTEE REPORT
Dear Shareholder,
I am pleased to present the report of the
Nomination Committee for 2019. It was
another busy year for the committee with
two new Director appointments, the first
appointments since our stock market
listing in 2014.
The committee met on five occasions
during the year dealing with, in addition to
the appointments, many other matters,
including succession planning, the
appointment and designation of a Non-
executive Director with responsibility
for workforce engagement, board
evaluation, board training, and the
composition of board subcommittees.
Board Composition
We commenced 2019 with a board
composed of seven Directors; a Non-
executive Chair, three independent Non-
executive Directors and three Executive
Directors. The committee concluded,
following a review process commenced
in 2018, that the time was right, in light
of the group’s expansion into the UK and
the existing board composition, to recruit
one additional Non-executive Director.
The committee also fully reviewed the
executive representation on the board,
taking into account the structure of the
business, its growth strategy, and the
relative contribution of the individual
functional leaders within the executive
team to achieving our strategic objectives.
Non-executive Director appointment
We were delighted to recommend the
appointment of Elizabeth McMeikan to
the board as a Non-executive Director,
and she took up the position in October.
Her appointment came following a
thorough recruitment process. The
committee appointed specialist search
consultants Russell Reynolds Associates
to assist with the process (Russell
Reynolds Associates is an accredited firm
under the enhanced code for executive
search firms and has no other connection
with the company other than the provision
of recruitment services).
We completed the assignment in
several stages:
1. Engagement of the search consultancy.
2. A meeting of the committee and the
search consultants, with each member
of the board in attendance, to identify
the skills, attributes, and qualities to
be sought in prospective candidates.
3. Shortlisting of candidates by
the committee.
4. The interview of candidates by
the company Chair and Senior
Independent Director.
5. A recommendation to the Board
of the chosen candidate.
6. Appointment terms drafted and
agreed with the selected candidate.
Following her appointment, Elizabeth
received an induction programme
(see page 68 for details).
Executive Director appointment
In December, we announced the
appointment of Shane Casserly to
the board as Corporate Development
Director with effect from 1 January 2020.
Shane joined the Company in March 2014
as Head of Acquisitions and Development
at the time of the company’s stock market
listing. In the six years since then, Shane
has been instrumental in the execution
of multiple acquisition and development
projects each of which has created
significant shareholder value and which
collectively have transformed 
from being a company with no asset base
to today having almost €1.5 billion in
property assets, a substantial leased
hotel portfolio and an exciting pipeline
of hotels under development.
We welcome Shane to the board
and look forward to his continuing
contribution to the Company’s growth,
and he too is participating in the Board
induction process.
Succession planning
The committee considers succession
planning on an ongoing basis. I am
very happy to report that the company
fosters a strong ethos of continuous
learning and development, and this is
visible throughout the organisation.
Board members have regular
opportunities to engage with members
of the executive management team
(presented on pages 60 and 61).
Accordingly, the committee is in a
position to evaluate internal succession
options in the event of a contingency as
well as for the medium and long-term.
The Nominations Committee will
continue to keep under review
succession and refreshment of the
board at both executive and non-
executive level, to also include board
committee make up. In this regard,
John Hennessy, in his Chair’s statement
on page 5, outlines the Company’s
planned approach to refreshing the
board in the coming years.
Designated Non-executive
Director with responsibility
for workforce engagement
The Board asked the Committee to
consider the Company’s response
to the Code’s call for boards to
establish an engagement mechanism
with the company’s workforce.
Following deliberation on the options
proposed in the Code, the committee
recommended that one of the Non-
executive Directors be designated
responsible for workforce engagement.
I was pleased to accept this role in
April on behalf of the Board and have
enjoyed meeting many members of staff
throughout our hotels and the central
office in Ireland in the UK in the past year
(see page 68 for more details).
Board Evaluation
In keeping with the requirements of
the Code, conducts an annual
evaluation of the Board and the Board
committees. This year the process
was facilitated by the Committee and
involved the completion of a detailed
online survey by each member of the
board, the preparation of a report by the
Committee and its presentation to the
Board with findings, setting out some
topics for discussion and follow-up,
including a comparison with summary
findings of the 2018 evaluation. In
addition, the Board Chair met individually
with each Director during the year, and
I, in my role as the Senior Independent
Director, completed an evaluation of the
Board Chair, meeting and consulting with
each of the other Directors individually.
In 2020 our board evaluation will be
externally facilitated.
Board training
The Board met at the Clayton Hotel, City
of London, in November for a full day of
training. This annual session has become
an integral part of the board calendar,
and this year we received stimulating
presentations on the following topics:
 Leadership decision-making
 Assessing, monitoring and
influencing culture
 The role of the proxy adviser
 ESG from the investor perspective
 The outlook for European capital
market development post Brexit
Diversity
The company acknowledges the value
of a diverse Board and has adopted a
Board Diversity Policy. Under this policy,
candidates for Board appointments
are considered on merit against
objective criteria having due regard
to the benefits of the diversity of
gender, skills, regional and industry
experience, background, and race.
Last year we made some progress
with gender diversity following
Elizabeth’s appointment. The policy
does not set out a quota target for
female participation;however, the
Board acknowledges the benefit of
increasing the number of women
amongst its number, and this forms
part of the Committee’s mandate.
Composition of Board
subcommittees
Following Elizabeth McMeikan’s
appointment, the board took the
opportunity to make some changes
to the board committees and specific
other individual Non-executive
Director responsibilities. These
changes are set out in detail in the
Chair’s Statement on page 5 and
became effective on 1 January 2020.
As part of the changes, John Hennessy
becomes chair of the Nomination
Committee from January 2020 and
I will continue as a member of the
Committee, as designated Non-
executive Director with responsibility
for workforce engagement, and as the
Senior Independent Director.
It has been my pleasure to serve as
Chair of the Nomination Committee
for the past six years, and I look
forward to continuing my work
with the Board and the Committee
during 2020.
Alf Smiddy
Senior Independent Non-Executive
Director and Outgoing Chair,
Nomination Committee
It was another
busy year for the
committee with
two new Director
appointments, the
first appointments
since our stock
market listing
in 2014.
 Reviewing the structure, size and
composition of the Board and making
recommendations to the Board with
regard to any changes.
 Assessing the effectiveness and
performance of the Board and
each of its Committees including
consideration of the balance of
skills, experience, independence and
ROLE OF THE COMMITTEE
knowledge of the Company on the
Board, its diversity, including gender,
how the Board works together as
a unit, and other factors relevant to
its effectiveness.
 Considering succession planning
for Directors and members of the
Executive Management Team.
 Identifying and nominating new
members to the Board.
 Reviewing the results of the Board
performance evaluation process that
relate to the composition of the Board.
 Reviewing annually the time input
required from Non-executive
Directors.
Nomination Committee Report 71
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See the Committee’s
terms of reference on:
www.hotelgroup.com
COMMITTEE MEETINGS AND ATTENDANCE
All members of the Committee
are considered by the Board to be
independent (the Company Chair
being independent on appointment).
The Committee met five times
during 2019.
Member No. of meetings
Alf Smiddy 5/5
John Hennessy 5/5
Margaret Sweeney 5/5
AUDIT & RISK
COMMITTEE REPORT
Dear Shareholder,
As Chair of the Audit and Risk
Committee, I am pleased to present
this report setting out the work of the
Committee during 2019.
As the business continues to thrive
and grow, it was also a busy year
for the Committee. 2019 was the
first reporting year where IFRS 16
Leases became effective. As regards
the business itself, this accounting
standard change will not impact our
strategy or the role of leases in our
continued growth. However, it does
have a very significant impact on
how the Group’s results and financial
position are presented in our financial
statements. Given the scale of the
impact, the Committee has engaged
proactively with management and
external advisors in planning for,
communicating and applying the
provisions of the standard. As far
back as 2017, the Group set out the
expected impact of the standard on
the Group at our Capital Markets Day
having undertaken a wide-ranging
initial review.
During 2019, the Committee
received presentations on IFRS 16
from management. These included
the calculation of the transition and
ongoing impacts. They also covered
the approach to ensure that how we
implemented and communicated
the changes would provide the most
clarity and insight for users of our
financial statements. In particular, the
Committee reviewed the calculation
and approach to the setting of the
discount rate for the individual leases
under IFRS 16. This introduced a new
source of estimation uncertainty into
the financial statements due to the
relatively long length of our leases and
the lack of directly comparable rates.
From our review of both the interim
financial statements to 30 June
2019 and the 2019 full year financial
statements, along with our External
Auditor assessment of the application
of the standard , we are satisfied that
this accounting standard’s provisions
have been properly applied.
The Committee pays close attention
to the Group’s accounting policies and
areas of judgement. In advance of both
the interim and annual reporting cycles
management brief the Committee on
key accounting judgement areas. A
full review of these is then completed
by the Committee and the findings of
the External Auditors are considered
prior to the approval of the financial
statements. Details on the significant
financial judgements and sources of
estimation uncertainty in 2019 are set
out on page 74 and 75.
We oversee the company’s
relationship with our External Auditors,
KPMG, and details on our review of
their work and their independence is
set out on page 76.
During 2019, the Committee
reviewed and considered a wide
range of reports and presentations
from both management and also
external advisors. These enabled the
Committee to meet our oversight
responsibilities, while also providing
us with the ability to challenge
management and to also provide insight
on the financial, risk and compliance
matters affecting the Group.
Financial Reporting and External
Auditor-areas considered
and reviewed
 Full year and interim financial
statements and related reports
 Key accounting judgements,
estimates and disclosures
 KPMG key findings reports from
review of interim financial statements
and audit of year end financial
statements
 KPMG audit planning documentation,
information relating to audit and non-
audit fees and consideration
of independence
 Revised accounting policy for
Adjusting Items and the Use of
Underlying Performance Measures
 Update on Treasury Management
policies
 Dividend Policy update
 Review of Viability Statement
Risk and Compliance – areas
considered and reviewed
 The Group’s risk register, key risks and
material changes to risk profiles, which
are considered at each Committee
meeting
 Group risk management policy
 The health and safety frameworks
in place across the Group, our incident
management recording/reporting and
Health and Safety initiatives for 2019
 The self-insurance programme and an
update on the insurance market and
claims environment
 The extent of data protection
compliance after the implementation
of GDPR in 2018, along with a review
of the Group’s data protection policy
 Outcome of the insurance broker
tender process
 Directors’ compliance statement
for inclusion in the annual report and
supporting organisational structures
 Update on Market Abuse Regulation
Governance and Reporting
 Review and consideration of internal
controls and fraud management
structures within the Group
 Consideration of policies relating
to modern slavery, Anti-bribery
and Corruption, and Anti-Money
Laundering
 Consideration of the Group’s
supplier code of conduct
Internal Audit
We work closely with the Group’s internal
audit function and oversee the work that
it completes. The Group Internal Auditor
presents findings from his reviews to
us and we also consider management’s
responses to matters raised. EY provide
us with technical IT internal audit support
in relation to our IT infrastructure. The
Committee meets with the Group
Internal Auditor without management
present after each Committee meeting.
We have also separately met with EY
during 2019.
My thanks to the management team,
internal audit and the Group’s advisors
for their support and co-operation in
assisting the Committee in its work
during 2019. I look forward to our work
in 2020, where there will be undoubtedly
new challenges in the financial reporting,
risk and compliance areas.
Robert Dix
Chair, Audit and Risk Committee
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The Committee pays
close attention to the
Group’s accounting
policies and areas of
judgement. In advance
of both the interim
and annual reporting
cycles management
brief the Committee
on key accounting
judgement areas.
During 2019, the
Committee reviewed
and considered a wide
range of reports and
presentations from
both management
and also external
advisors. These enabled
the Committee to
meet our oversight
responsibilities, while
also providing us with
the ability to challenge
management.
See the Committee’s
terms of reference on:
www.hotelgroup.com
COMMITTEE MEETINGS AND ATTENDANCE
All members of the Committee
are considered by the Board to
be independent .
The Board considers that the Committee
Chair has sufficient recent and relevant
financial experience for the role and
that there is sufficient financial and
commercial experience within the
Committee as a whole.
The Committee met five times
during 2019.
Member No. of meetings
Robert Dix 5/5
Alf Smiddy 5/5
Margaret Sweeney 5/5
Audit & Risk Committee Report
 Monitor the integrity of the Group’s
financial statements, accounting
policies and the key judgements
made in the financial statements.
 Assess whether the Annual
Report, taken as a whole, is fair,
balanced and understandable
and provides the information
necessary for shareholders to
assess the Company’s position
ROLE OF THE COMMITTEE
and performance, business model
and strategy.
 Oversee the Group’s relationship
with our External Auditor.
 Review the effectiveness of the
Group’s internal control systems.
 Monitor the Group’s risk management
systems and the identification of our
principal risks.
 Monitor the effectiveness of
the Internal Audit function.
 Review the Group’s compliance
framework.
 Monitor health, safety and
operational risks and the Group’s
insurance programmes.
SignificantFinancialJudgementsandKeySources
ofEstimationUncertaintyin2019
Matter Significant financial judgements and key sources of estimation uncertainty
PROPERTY REVALUATIONS
In line with the Group’s revaluation
policy for land and buildings, valuations
are carried out by suitably qualified
professional valuers at each reporting
period end.
The net carrying value of land and buildings at 31 December 2019 was €1.32 billion
(note 10, pages 137 to 141). The carrying value of land and buildings is determined
using fair value. The calculation of fair value and the allocation of fair value to land
and buildings requires judgement.
The assumptions utilised by the valuation specialists are disclosed in note 10 to
the Group consolidated financial statements and include projected cash flows
for future revenue and costs, terminal value multiples and discount rates.
Management has engaged appropriately qualified professional valuation
specialists to determine the value attributable to land and buildings.
Management have reported in detail to the Committee in relation to the valuation
approach, as determined by suitably qualified professionals, of land and buildings
at 31 December 2019. The Committee has discussed the valuation approach
undertaken with management.
Through discussion with management and considering the findings of the External
Auditor, the Committee is satisfied that the property valuations at 31 December
2019 are reasonable and that the revaluation movements have been appropriately
presented in the Group consolidated financial statements.
DETERMINATION OF INCREMENTAL
BORROWING RATE
The application of IFRS 16
Leases introduces a new source
of estimation uncertainty when
setting the appropriate discount
rate for individual leases.
On transition to IFRS 16 Leases, lease liabilities were measured at the present
value of the remaining lease payments. The Group has chosen the modified
retrospective approach and the discount rates applied to each lease on transition
were the applicable estimated incremental borrowing rates at 1 January 2019. The
relative length of our leases with a weighted average lease term of 30.3 years on
transition and the absence of bank lending for this tenor means that such rates
were not readily available.
Management adopted a ground up approach to identify the transition date rates
and additional data points which would provide a robust estimate and repeatable
process for future leases. The components of this rate for each lease included
the risk-free rate, a country-risk premium, if applicable, a finance spread with due
regard to the Group’s existing arrangements and discussion with our funding
partners, and asset specific adjustments. The discount rate established from this
process was then compared to secondary data points such as property yields to
ensure that the rates are not unreasonable. In most cases, the discount rate is
determined in the first year of the lease and will not change for the remainder of
the term unless an event such as a change in lease term or a modification of the
lease occurs.
The weighted-average incremental borrowing rate applied for leases at the
transition date was 6.03%. The lease liabilities are sensitive to movements in the
rate with a 1% increase in the discount rate resulting in a €28.2 million decrease in
the lease liabilities while a 1% decrease in the rate results in a €32.9 million increase
in lease liabilities at the date of transition.
Management have reported in detail to the Committee in relation to the
determination of the incremental borrowing rate. The Committee have discussed
the approach with management and the External Auditor and are satisfied
that the assumptions used are reasonable.
Accordingly, the Committee is satisfied that the lease liabilities are correctly stated
in the Group consolidated financial statements.
Matter Significant financial judgements and key sources of estimation uncertainty
ACCOUNTING FOR ACQUISITIONS
The Group completed a number of
hotel acquisitions during the year.
During 2019, the Group acquired the Clayton Hotel City of London. In addition,
the Group entered a lease on the Tamburlaine Hotel (being rebranded as Clayton
Hotel Cambridge). Details of both transactions are set out in notes 10 and 12 to
the Group consolidated financial statements on page 137 to 141 and 146 to 149.
The Committee has evaluated the accounting treatment of the consideration
paid and costs incurred as presented by management for each of these
transactions. In addition, the Committee discussed the transactions during
the year with management and with the External Auditor. Accordingly, the
Committee is satisfied that the correct accounting method has been chosen
for each of the transactions.
CARRYING VALUE OF GOODWILL
Detailed impairment reviews are
undertaken on an annual basis to
determine whether the carrying
value of Goodwill is impaired.
Goodwill amounted to €33.9 million at 31 December 2019 (2018: €33.3 million).
The carrying values of hotel cash-generating units (CGUs) to which goodwill has
been allocated are required to be tested annually for impairment. Management
undertook detailed impairment reviews on a hotel by hotel basis, taking account
of the valuations prepared by the qualified professional valuation specialists and
other factors. The assumptions utilised by management in conducting these
analyses are disclosed in note 9 to the Group consolidated financial statements
and include projected cash flows for future revenue and costs, terminal value
multiples and discount rates.
The Committee has reviewed the approach taken by management, as outlined in
management’s report to the Committee, in conducting these impairment reviews
and in particular, the assumptions utilised by management. As part of their audit,
the External Auditor assessed the Group’s impairment calculations on a CGU by
CGU basis.
Discussions were undertaken between management and the External Auditor as
to the underlying assumptions. Following discussions with management and with
the External Auditor, the Committee is satisfied that these are reasonable. As the
recoverable amounts of certain CGUs were determined to be higher than their
carrying values at 31 December 2019, no impairment of goodwill was recognised.
Accordingly, the Committee has concluded that the carrying value of goodwill is
appropriately stated at 31 December 2019 and that the disclosures included within
note 9 of the Group consolidated financial statements are adequate.
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Whistleblowing
The Board has approved a Confidential
Disclosure Policy (Whistleblowing
Policy) which is reviewed annually. The
Committee considers the matter of
Whistleblower reports at each of its
meetings. No concerns were raised by
employees using this procedure during
the year. A copy of the Confidential
Disclosure Policy is included in the
Employee Handbook, which is provided
to all employees.
ExternalAudit
Our External Auditor is KPMG, who were
appointed in 2014 and reappointed in
2016 when the company became an
EU Public Interest Entity (PIE) following
its admission to the main markets of
Euronext Dublin (formerly Irish Stock
Exchange) and the London Stock
Exchange. An important part of the
Committee’s remit is in relation to
overseeing the Group’s relationship
with KPMG, including safeguarding
independence, consideration of
non-audit fees and the continuing
appointment of KPMG.
During 2019, we evaluated KPMG
based on their work completed,
management feedback and our review
of the documentation provided to
the Committee. Based on these,
the Committee is satisfied with
their effectiveness, objectivity and
independence. The Committee also
reviewed KPMG’s internal process
for monitoring independence and
objectivity and we are satisfied that
this process has operated effectively.
The Company has adopted a policy in
relation to the employment of former
employees of the External Auditor.
In 2019, the Committee agreed,
following a detailed analysis, a revised
fee structure with KPMG in relation to
their audit services.
The Committee has an agreed process
in place over the pre-approval of non-
audit services by KPMG to the Group.
During 2019, KPMG provided non-audit
services, principally, in relation to two
specific business transactions and tax
depreciation services. KPMG fees for
2019 are set out on page 128. The
ratio of non-audit to audit fees for
2019 was 37%.
The External Auditor is subject to
mandatory rotation after ten years,
from the date that the Company
became an EU PIE. The Company
has no immediate plan to tender for
external audit services voluntarily.
KPMG attend all of the Committee’s
meetings and are provided with all
meeting documentation. During 2019,
the Committee met with KPMG twice
without the presence of management.
InternalControl
andRisk
Management
The Board has overall responsibility
for risk management and it has
delegated this task to the Committee.
A consideration of the Group’s risk
register, with particular emphasis on
key risks and changing risk profiles, is a
standing agenda item for each meeting.
The Committee reviews documentation
prepared by management in this regard.
Additional details on risk management
are set out on pages 40 to 46.
The Committee also has responsibility
for the oversight of the internal control
and fraud management structures.
These are reviewed on an ongoing
basis throughout the year through
the consideration of internal audit
reports and other relevant papers.
In December, the Committee also
considered a detailed analysis of the
Group’s internal control and fraud
management environment.
Internal Audit
The Committee is responsible for
overseeing the scope, work and
effectiveness of the Group’s internal
audit function. Internal Audit operates
to formal terms of reference. At each
meeting, the Committee considers
the findings noted in the internal audit
reviews and management’s responses
to matters noted.
On an annual basis, the Group Internal
Auditor sets out the planned approach
and scope of work for the following
year for consideration by the
Committee. This plan is reviewed
on an ongoing basis and updated
at each Committee meeting.
The Committee meets with the Group
Internal Auditor after each Committee
meeting without management present.
Maldron Hotel
Parnell Square
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Audit & Risk Committee Report
REMUNERATION
COMMITTEE REPORT
Dear Shareholder,
I am pleased to present the report of
the Remuneration Committee of 
Hotel Group plc for the year ended 31
December 2019.
Performance in 2019
2019 was another very successful year
of growth and development for the
company. Pre-IFRS 16 adjusted EBITDA
grew by 12.8%, driven by the positive
impact of the six new hotels opened
in 2018 and early 2019, Management
successfully integrated all of the new
hotels into our business operations, our
pipeline of hotels at prime city-centre
locations in the UK and Ireland has grown
to almost 3,000 rooms, and the Company
has generated free cash flow above €100
million for the first time. Although demand
in the Irish market, particularly in Dublin,
remains strong, there were some notable
headwinds, including an increase from
9% to 13.5% in the VAT rate in Ireland, an
increased hotel bed capacity in our key
Dublin market, and Brexit uncertainty.
The strategy for growth for the Company
has now shifted more significantly to
development of new hotels with attendant
risks and need for management focus.
Review of Directors
Remuneration Policy
During the year, the Committee reviewed
the Directors’ Remuneration Policy in
advance of submitting a revised Policy to
shareholders for an advisory vote at the
forthcoming AGM on 29 April 2020. The
Committee last submitted a Directors’
Remuneration Policy to the AGM in 2017.
Since this time, the business has changed
significantly; Total Shareholder Return
(TSR) was 27.5% in the three years to
December 2019, revenue has increased
by 48%, profit before tax has increased
by 103%, and basic EPS is up 122% (2019
performance compared to 2016). We have
been continuously adding hotel capacity
over this period in line with strategy, and we
continue to invest in driving future success
and shareholder value creation.
Against this backdrop of the accelerated
growth and evolving strategy for the
business, the Committee considered that
it was appropriate to review remuneration
arrangements for our Executive Directors
to ensure that they continue to promote
long-term value creation, and are aligned
with the business’s strategic objectives
and with the interests of shareholders
within an acceptable risk framework. The
Committee conducted the review with
careful regard for the provisions of the
revised UK Corporate Governance Code
(the Code) and the Investment Association
Principles of Remuneration (the Principles)
published in November 2018.
As an Irish-incorporated company, 
is not formally required to comply with
the Directors’ Remuneration Reporting
Regulations. However, the company is
committed to maintaining a high standard
of governance in keeping with our UK
listing and voluntarily submits the Directors’
Remuneration Policy to an advisory vote.
The Committee believes that the current
remuneration structure and the incentive
framework, comprising annual bonus and
LTIP, is effective in focusing executives on
delivery of the business strategy and is
linked to and promotes sustainable long-
term value creation. It is proposed that
salary increases will continue in line with
those of the rest of the workforce. Taking
into account the increase in the size of
the Group and the complexity of the roles,
the Committee proposes to increase the
annual bonus opportunity to a maximum
of 125% of salary (currently 110% of
salary for the Chief Executive and 100% of
salary for other Executive Directors). The
Committee considers that this level of
See the Committee’s
terms of reference on:
www.hotelgroup.com
COMMITTEE MEETINGS AND ATTENDANCE
All members of the Committee
are considered by the Board to be
independent (the Company Chair
being independent on appointment).
The Board considers that the Committee
Chair has sufficient recent and relevant
experience for the role and that there
is sufficient and experience within the
Committee as a whole.
The Committee met five times
during 2019.
Member No. of meetings
Margaret Sweeney 5/5
John Hennessy 5/5
Robert Dix 5/5
annual bonus opportunity better reflects
the current size and stage of growth
of the Company, and the increasing
complexity, risk and international reach
of the organisation.
Given the increase in bonus opportunity,
the proportion of the bonus deferred
for bonuses earned in respect of 2020
onwards will be increased to 30% of
the total bonus (currently 20%). This
enhances alignment with shareholders
and brings our approach to deferral
more closely in-line with market practice.
For the Chief Executive, this increase
in deferral means that under the new
structure, the cash bonus opportunity
remains the same as it is currently, with
only a small increase in cash opportunity
for the other Executive Directors.
A post-employment shareholding policy
is proposed to be introduced such that
individuals who step down as an Executive
Director after 1 January 2020 will normally
be expected to retain a shareholding in
the Company of half of their shareholding
requirement (or actual shareholding if
lower) for two years after leaving. This
guidance will normally apply to share
incentives that vest following the adoption
of this Policy.
No changes are proposed to LTIP
opportunities or the performance
measures for the annual bonus or LTIP.
50% of the LTIP performance condition
is earnings based, measured by EPS.
Bearing in mind the significant impact
that the new accounting standard, IFRS
16, has on the early years of reported
earnings for new leased hotels, the EPS
performance targets for the 2020 LTIP
awards have been set based on the
outgoing lease accounting standard,
IAS 17, rather than IFRS 16. This
maintains consistency with previous
years and allows us some time to better
understand the implications of the
change. The Committee will further review
performance measures and targets in
advance of the grant of the 2021 LTIP
awards, having regard to the market’s
adoption of the new standard, to ensure
that they remain appropriate.
The LTIP is subject to a two-year holding
period following vesting, and malus and
clawback provisions apply to incentive
awards. We therefore already comply
with the 2018 UK Corporate Governance
Code in these areas. The Committee
has taken steps to ensure that the Policy
and supporting documentation contains
sufficient flexibility to enable the use of
discretion should this be appropriate.
Shareholder engagement
The Committee undertook a detailed
consultation with our shareholders
concerning the proposed changes to the
remuneration policy. We contacted the
20 largest shareholders, representing
62% of the share register, with almost all
engaging with and providing feedback to
us. I also spoke with analysts from proxy
agencies ISS and Glass Lewis. This was a
very valuable exercise generating useful
feedback, which has been used to shape
the final proposals and will inform our
discussions in the future. I am grateful
for the broad input and support from
shareholders for this remuneration policy
for the next three years.
Board changes
During the year, we welcomed
Elizabeth McMeikan as a new Non-
executive Director on our board, and,
in December, we announced the
executive appointment of Shane
Casserly as Corporate Development
Director with effect from 1 January
2020. His salary has been set at €325,000
per annum, and his annual bonus and
LTIP opportunities are aligned with those
of the Deputy Chief Executives - 125%
and 150% of salary respectively. The
Company’s contribution to Mr Casserly’s
pension is 5% of salary. This contribution
is aligned to the contribution rate
provided to the majority of pension
eligible staff in Ireland. Further details
of compensation arrangements for
the new Directors are contained in
this report.
 Review the ongoing appropriateness
and relevance of the remuneration
policy, having regard to the pay
and employment conditions across
the Group.
 Consider and recommend to the
Board the Group framework for
the remuneration of the Executive
Directors.
ROLE OF THE COMMITTEE
 Within the terms of the agreed
policy, determine the total individual
remuneration package of the
Chair and each Executive Director,
including salary benefits, bonuses
and incentive payments.
 Review the design of all incentive
plans for approval by the Board
and Shareholders and, for each
such plan, recommend whether
awards are made and, if so, the
overall amount of such awards,
the individual awards to Executive
Directors and the performance
targets to be used.
Salary review
The committee reviewed Executive
Director salaries for 2020 and granted a
2% increase with effect from 1 January
2020. This increase is in line with that
awarded to the majority of the workforce.
Incentive outcomes for 2019
Each of the Executive Directors received a
bonus payment for 2019 which was 62.5%
of the maximum amount; full details of the
bonus outcome are set out on pages 89
and 90.
LTIP awards granted in 2017, contingent
on performance achieved over the three
years up to the end of 2019, will vest at a
rate of 67% of the maximum; details are
set out on page 91.
In finalising the incentive outcomes,
the Committee considered whether
the outcomes were appropriate in the
context of the underlying performance
of the business and the experience of
shareholders and other stakeholders
over the performance periods as well as
considering whether there was any other
significant negative event that would
warrant an adjustment. The committee
was satisfied that the incentive outcomes
were merited.
Gender Pay Gap
During the year, the Committee examined
the gender pay gap across the Group.
We observed a mean gender pay gap of
6% at the basic pay level. The company
is committed to achieving gender pay
equality in the coming years.
Conclusion
It has been a pleasure to report on another
successful year for , and I am
grateful for the continuing support of our
shareholders generally and concerning our
remuneration arrangements.
Margaret Sweeney
Chair, Remuneration Committee
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The strategy for growth
for the Company
has now shifted
more significantly to
development of new
hotels with attendant
risks and need for
management focus.
Directors’
Remuneration
Policy2020–2022
This Policy will be submitted as an
advisory vote to shareholders at the
2020 AGM and will apply to payments
made on or after 29 April 2020, subject
to shareholder approval of the Policy.
As an Irish-incorporated company,
does not have the benefit of the
statutory protections afforded by the
UK Companies Act 2006 concerning
the remuneration reporting regime.
Accordingly, if there is any inconsistency
between the Company’s Policy (as
approved by shareholders) and any
contractual entitlement or another
right of a Director, the Company may
be obliged to honour that existing
entitlement or right. On this basis, the
report is submitted to shareholders as
an advisory rather than a binding vote.
Summary of policy making process
In determining the new Remuneration
Policy, the Committee followed a robust
process that commenced in May 2019
and concluded following an engagement
process during which shareholders
representing 62% of the share register
were consulted. The Committee
considered input from the Chief
Executive and our independent advisors,
as well as considering best practice,
shareholder guidance, and the specific
feedback received from our consultation
with major shareholders.
Element Purpose, link to strategy
and operation
Maximum opportunity Performance Metrics
Base
Salary
An appropriate level of fixed
remuneration to reflect the skills
and experience of the individual.
Salaries are normally reviewed
annually by the Committee, taking
into account all relevant factors,
which may include the size and
scope of the role, the experience
and performance of the individual,
and appropriate market data.
There is no prescribed maximum. Salary
increases are normally in line with those of
the wider workforce.
Salary increases may be above this level in
certain circumstances, such as: an increase
in the size or complexity of the Group; an
increase in the size or responsibilities of
the role; or changes in the competitive
market place.
Where a new Executive Director has been
appointed to the Board at a lower than
typical market salary to allow for growth
in the role, then larger increases may be
awarded to move salary positioning closer
to typical market level as the Executive
Director gains experience.
N/A
In reaching its decisions on the new
Remuneration Policy, the Remuneration
Committee considered the following
principles as recommended in the
revised 2018 UK Corporate Governance
Code (the Code).
Clarity – The Remuneration Policy is
designed to allow our remuneration
arrangements to be structured such
that they support, in a sustainable
way, the financial objectives and the
strategic priorities of the Company.
The Remuneration Committee
remains committed to reporting on its
remuneration practices in a transparent,
balanced, and understandable way.
Simplicity – The policy consists of
three main elements: fixed pay (salary,
benefits, and pension), an annual bonus
award, and a long-term incentive award.
The annual bonus is based on one
key financial measure and individual
strategic objectives tied to our key
strategic objectives and risk framework.
The LTIP is based on two measures:
relative TSR and EPS, which provide a
clear link to the shareholder experience.
The Committee will keep under review
the measures used and may apply
different measures for future years
to ensure they continue to be aligned
with strategy.
Risk – Remuneration policies are in line
with our risk appetite. A robust malus
and clawback policy is in place, and the
Committee has the discretion to reduce
variable pay outcomes where these are
not considered to represent overall
company performance or the
shareholder experience. The new
post-employment shareholding policy
adopted this year further ensures
Executive Directors are motivated to
deliver sustainable performance that
extends beyond their departure from
the company.
Predictability – Annual bonus and LTIP
awards levels are capped as set out in
this policy. The Committee considers
the impact of various performance
outcomes on incentive levels when
determining pay levels. These can be
seen in the scenario charts on page 83.
Proportionality – A substantial portion of
the package comprises a performance-
based reward linked to the achievement
of solid company performance and the
delivery of strategy. The Committee
uses discretion where required to
ensure that performance outcomes
are appropriate.
Alignment to culture – In determining
executive remuneration policies
and practices, the Remuneration
Committee considers remuneration
structures and opportunities at other
companies of a similar size and
complexity as well as our approach
to remuneration internally to ensure
that remuneration is appropriate
compared to these reference points.
The Committee also considers
other wider workforce themes as
part of its review, including workforce
demographics, engagement levels,
and diversity to ensure executive
remuneration is appropriate from a
cultural perspective.
Element Purpose, link to strategy
and operation
Maximum opportunity Performance Metrics
Pension Contributions into the Company’s
defined contribution pension
scheme, or an equivalent cash
supplement.
0% of base salary for the Chief Executive.
15% of base salary for the Deputy
Chief Executives.
5% of salary for the Corporate
Development Director.
For new Executive Directors appointed
to the Board pension will be set on
appointment, taking into account best
practice, the pension contributions or
allowances available to the wider pension
eligible workforce, and market practice at
similar-sized companies.
N/A
Benefits To provide a market competitive
benefits package.
The benefits available currently
comprise a company car and fuel,
and benefits under the group risk
benefit scheme, which includes
death in service cover and disability
benefit. The Committee may
determine that other benefits
will apply where appropriate.
Directors are eligible to participate
in the Company’s Sharesave
Scheme on the same basis as all
other employees.
Directors may be reimbursed for
reasonable business expenses
(and any associated tax liabilities).
Where an Executive Director is
required to relocate to perform
their role, appropriate one-off
or on-going expatriate benefits
may be provided (e.g. housing,
schooling, etc.).
The value of benefits is not capped as it is
determined by the cost to the Company,
which may vary.
Participation in Sharesave Scheme up to
statutory limits.
N/A
Annual
Bonus
To drive and reward the delivery
of business objectives over the
financial year.
The bonus is discretionary, and the
Committee determines any pay-out
based on performance. Targets are
set and assessed by the Committee
each year.
At least 30% of the bonus will be
delivered in the form of 
shares deferred for at least three
years. The remainder is payable in
cash following the year-end. This
deferral may be operated under the
terms of a restricted share trust.
Malus and clawback provisions apply.
The maximum opportunity is:
> Chief Executive: 125% of salary.
> Other Executive Directors:
125% of salary.
Payment is determined by reference to
performance assessed over one financial
year, and will normally be measured against
a combination of financial and individual
strategic performance targets.
The Committee determines the weightings
of the performance measures each year.
The overall framework will normally be
weighted towards financial measures
of performance.
The Committee will consider the Group’s
overall performance before determining
final bonus payment levels and may adjust
the bonus award if it considers that the
outcome does not reflect the underlying
financial or non-financial performance
of the participant or the Group over the
relevant period, or that such payout
level is not appropriate in the context of
circumstances that were unexpected or
unforeseen when the targets were set.
When making this judgment the Committee
may take into account such factors as the
Committee considers relevant.40% of
the maximum bonus typically pays out for
achieving threshold levels of performance
with 50% of maximum paying out for target
levels of performance. The Committee
retains the discretion to vary the level of
payout if appropriate.
Policy Table for Executive Directors
The Group’s policy on Executive Directors’ remuneration is designed to ensure that employment and remuneration conditions
support the delivery of strategy and promote long-term sustainable success for all stakeholders. The elements of the remuneration
package which may apply to Executive Directors are base salary, pension and benefits, annual bonus and the long term incentive plan.
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Element Purpose, link to strategy
and operation
Maximum opportunity Performance Metrics
Long-term
Incentive Plan
(LTIP)
To reward Executive Directors
for the delivery of long term
performance and align their
interests with shareholders.
Awards are made under, and
subject to the terms of, the 2017
LTIP approved by shareholders
at the 2017 AGM.
Awards are in the form of conditional
share awards or nil-cost options
(or in such other form that the
Committee determines has the
same economic effect) which vest as
soon as reasonably practicable after
the end of the performance period,
subject to performance conditions.
Vested shares are subject to an
additional holding period of at
least two years. Shares subject
to a holding period may be placed
in a restricted share trust.
Malus/clawback and dividend
equivalent provisions apply
(see notes).
The maximum annual award level is
> Chief Executive: 150% of salary.
> Other Executive Directors:
125% of salary.
Performance targets are normally measured
over three financial years, using performance
measures aligned with the strategy and
shareholder value. This may include
measures such as total shareholder return
(TSR), earnings per share (EPS), or other
financial or strategic measures.
25% normally vests for threshold
performance.
The Committee has the discretion to
use different or additional performance
measures to ensure that LTIP awards
remain appropriately aligned to the
business strategy and objectives.
The Committee will consider the Group’s
overall performance before determining
the final vesting level and may adjust the
vesting level if it considers that the outcome
does not reflect the underlying financial or
non-financial performance of the participant
or the Group over the relevant period, or
that such payout level is not appropriate
in the context of circumstances that were
unexpected or unforeseen when the targets
were set. When making this judgment the
Committee may take into account such
factors as the Committee considers relevant.
Shareholding
Guidelines
To increase long term alignment
between executives and
shareholders.
Executive Directors are required
to build up and maintain a
beneficial holding of at least
200% of base salary.
Unvested deferred bonus shares
and vested LTIP shares within a
holding period will count towards
the guideline (on a net of tax basis).
N/A N/A
Remuneration Policy for other
Group Employees
The Committee regularly reviews
workforce remuneration and broader
employment practices taking these
into account when determining
remuneration policy for Executive
Directors. The remuneration framework
for other employees is based on broadly
consistent principles used to determine
the policy for Executive Directors. All
executives and senior managers are
Notes:
1.“Minimum” includes the value of fixed pay components only – annual base salary effective from 1 January, pension (zero for the Chief Executive, 15% of base
salary for Deputy Chief Executives and 5% for Corporate Development Director), and benefits (assumed for FY20).
2.“Target” includes fixed pay and “target” annual bonus (50% of the maximum) and threshold vesting of the maximum LTIP awards (25% of the maximum). No
share price growth is assumed.
3.“Maximum” includes fixed pay and maximum annual bonus (125% for all Executive Directors) and full vesting of LTIP awards (Chief Executive: 150% of salary,
Deputy Chief Executives and Corporate Development Director 125% of salary). No share price growth is assumed.
4.“Maximum with 50% share price growth” shows the “Maximum” scenario as described above but assuming 50% share price growth for the
LTIP awards.
Notes to the table:
a. Dividend equivalents - LTIP awards may incorporate the right to receive an amount equal to the value of dividends which would have been paid on the shares
under an award that vest up to the time of vesting (or where the award is subject to a holding period, release).
b. Adjustment of LTIP -LTIP awards may be adjusted in the event of any variation of the Company’s share capital or any demerger, delisting, special dividend, or
other events that may affect the Company’s share price.
c. Malus and clawback - The annual bonus and the LTIP contain malus and clawback provisions. The cash and share elements of the annual bonus may be
clawed back during the three years following payment, and awards under LTIP may be cancelled (prior to vesting), reduced, or clawed back for two years post
vesting, in the event of a material misstatement of results or serious misconduct.
d. Performance measures - The choice of the performance measures applicable to the annual bonus reflects the Committee’s belief that any incentives should
be aligned to the Group’s financial and strategic objectives. In the LTIP, the current measures provide a balance between incentivising long term profit growth
from the execution of the strategy and recognising performance delivered for shareholders via share price growth and dividend performance relative to sector
peers. For both the bonus and the LTIP, the Committee sets challenging targets taking into account the Board’s objectives for the business and shareholder
expectations. Bonus targets are not disclosed in advance as they are considered to be commercially sensitive. The Committee intends to disclose bonus
targets following the financial year to which they relate unless they remain commercially sensitive at that point. Performance conditions may be amended or
substituted by the Committee if an event occurs which causes the Committee to determine an amended or substituted performance condition would be more
appropriate and not materially less difficult to satisfy.
e. Other payments - The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any
discretions available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out above where the terms of the
payment were agreed (i) before the policy set out above came into effect, provided that the terms of the payment were consistent with any applicable
shareholder-approved Directors’ remuneration policy in force at the time they were agreed or where otherwise approved by shareholders; or (ii) at a time
when the relevant individual was not a Director of the Company ( or other persons to whom the Policy set out above applies) and, in the opinion of the
Committee, the payment was not in consideration for the individual becoming a Director of the Company. For these purposes “payments” includes the
Committee satisfying awards of variable remuneration and , in relation to an award over shares, the terms of the payment are “agreed” no later than the time
the award is granted. This policy applies equally to any individual who is required to be treated as a Director under the applicable regulations.
f. Key changes to this Policy - The key changes to this Policy compared to the 2017 - 2019 Policy are the increase in the annual bonus opportunity and the
corresponding increase in the annual bonus deferral as well as the revised approach to pension contribution for new hires and the introduction of a post-
employment shareholding requirement. Other minor changes have also been made to the wording of the policy to aid operation and to increase clarity.
generally eligible to participate in an
annual bonus plan. Participation in the
LTIP is extended to executives and
senior managers, with LTIP performance
conditions consistent across all levels.
Individual salary and pension levels and
incentive award sizes vary according to
the level of seniority and responsibility, in
line with market data. The Committee also
reviews analysis of the gender pay gap
periodically; the company is committed
to achieving gender pay equality.
Illustration of application of
Remuneration Policy 2020 - 2022
The chart below illustrates the
composition of the Executive Directors’
remuneration packages at different
levels of performance, both as a
percentage of total remuneration
opportunity and as a total value.
Any dividend equivalents payable
are not included in the below.
CHIEF EXECUTIVE
100%
50%
27%
22%
31%
33%
28%
19%
40%
50%
€610,195
€1,220,390
€2,745,878
€2,288,231
Minimum
Target
Maximum
Maximum + 50%
share price growth
DEPUTY CHIEF EXECUTIVES
100%
56%
32%
27%
29%
34%
29%
15%
34%
44%
€420,831
€754,117
€1,531,784
€1,309,593
Minimum
Target
Maximum
Maximum + 50%
share price growth
CORPORATE DEVELOPMENT DIRECTOR
100%
53%
30%
25%
31%
35%
30%
16%
35%
45%
€341,250
€645,938
€1,356,875
€1,153,750
Minimum
Target
Maximum
Maximum + 50%
share price growth
3,000
2,000
1,000
0
Remuneration
(€’000)
Base Salary, Pension and Benefits Bonus LTIP
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Policy Table for Non-executive Directors
Element Purpose, link to strategy and operation Opportunity
Chair and Non-executive
Director (“NED”) Fees
To attract and retain Non-executive
Directors with the required qualities,
skills, and experience.
Fees for the Chair are determined by a
subcommittee of the Board comprising
the Chief Executive and the Non-executive
Directors but excluding the Chair.
Fees for Non-executive Directors, other
than the Chair, are determined by a
subcommittee of the Board comprising
the Chief Executive and the Chair.
The Chair receives a single fee. NED
fees include a base fee and may include
additional fees for other Board or
Committee duties.
The Chair and Non-executive Directors
do not participate in any incentive plan or
pension arrangement. Where appropriate,
benefits may be provided.
Non-executive Directors may be
reimbursed for business expenses (and
any associated tax liabilities) incurred
when travelling in the performance
of duties. Additional benefits may be
introduced if considered appropriate.
There is no prescribed maximum
annual increase or fee level.
Fee levels are normally reviewed every
two years, with reference to the time
commitment of the role and market
levels (for example, in companies of
comparable size and complexity).
Fees are next due for review in 2021.
Service contracts/letters
of appointment
Pat McCann and Stephen McNally are
employed under service contracts
commencing on 9 August 2007, Dermot
Crowley is employed under a service
contract commencing on 3 December
2012 and Shane Casserly’s service
contract commenced on 3 March 2014.
Service contracts do not have a fixed
end date but can be terminated by
serving notice. The service contracts
have a notice period of 24 weeks for
Pat McCann and Stephen McNally and
six months for Dermot Crowley and
Shane Casserly. Other than entitlement
to notice and payment of salary and
contractual benefits in lieu of notice, the
Executive Directors are not entitled to
compensation on termination of their
respective contracts. These terms would
normally apply to a service contract for a
new Executive Director.
Non-executive Directors, Alf Smiddy,
Margaret Sweeney, Robert Dix, and
the Chair, John Hennessy, have been
appointed under the terms of letters
of appointment commencing on 27
February 2014. Elizabeth McMeikan was
appointed under the terms of a letter of
appointment commencing on 8 October
2019. The appointment is renewed
annually, and, under the Company’s
Director’s re-election policy, all Directors
any fees for outplacement assistance,
and the Director’s legal, or professional
advice fees in connection with his or her
cessation of office or employment.
Post-employment interest in shares
The Committee has a policy to promote
interests in share awards following
cessation of employment to enable
former Executive Directors to remain
aligned with the interest of shareholders
for an extended period after leaving
the Company.
Individuals who cease to be an Executive
Director from 1 January 2020 onwards
will normally be expected to retain
a shareholding in the Company for
two years after stepping down as an
Executive Director at the lower of half
of the shareholding requirement in
place before departure or the actual
shareholding on departure.
This requirement applies to shares
acquired from incentive plans that vest
after the introduction of the Policy
and will normally include the net value
of outstanding deferred bonus share
awards and LTIP awards subject only
to a holding period. The Committee
will have the discretion to operate
the Policy flexibility and may waive
part or all of the requirement where
considered appropriate, for example,
in compassionate circumstances.
Treatment in the event of a change
of control
The default treatment is that any
unvested LTIP awards vest in the event
of a change of control to the extent the
Committee determines, taking into
account the satisfaction of the relevant
performance conditions and, unless
the Committee determines otherwise,
the proportion of the performance
period served. Shares subject to deferral
or holding periods would normally be
released on a change of control.
Remuneration on recruitment
The remuneration package for a
new Executive Director would be set
under the terms of the Policy Table for
Executive Directors. Salaries would be
set at an appropriately competitive level
to reflect the skills and experience of the
individual, and the scope of the role.
Where an individual forfeits
remuneration with a previous employer
as a result of an appointment to the
Company, the Committee may offer
compensatory payments or awards
to facilitate recruitment. Any such
payments or awards would be in such
form as the Committee considers
are subject to annual re-election by
shareholders. Non-executive Director’s
appointment is terminable by either party
giving one month’s written notice.
Policy on payments for loss of office
In addition to a payment in lieu of notice
referred to above, a departing Executive
Director may be eligible for incentive
awards, which will be treated under the
rules of the relevant plan, as summarised
in the table below:
appropriate and would normally
reflect the nature, time horizons, and
performance requirements attaching to
that remuneration. There is no limit on
the value of such compensatory awards,
but the Committee intends that the
value awarded would be no higher than
the value forfeited.
The maximum level of variable
remuneration which may be awarded
(excluding any “buyout” awards referred
to above) in respect of recruitment is
275% of salary, which is in line with the
maximum current limit receivable by the
Chief Executive under the annual bonus
and LTIP.
Where an Executive Director is required
to relocate from their home location to
take up their role, the Committee may
assist with relocation (either via one-off
or ongoing payments or benefits). Any
ongoing benefits would normally be
time-limited.
If an internal candidate is promoted to
the Board, legacy terms and conditions
would normally be honoured, including
any accrued pension entitlements and
any outstanding incentive awards. Future
pension provision will be aligned with our
policy set out above.
Consideration of conditions elsewhere
in the Company
When determining remuneration
arrangements for Executive Directors,
the Committee considers the pay and
conditions of employees throughout
the Group. In particular, the Committee
considers the general level of salary
increases and incentive award outcomes
within the wider population. While the
Committee does not directly consult
with employees as part of the process of
determining executive pay, the company
carries out detailed employee surveys,
and our designated employee Non-
executive Director regularly engages
with employees to understand their
views on a range of issues including pay
and employment conditions throughout
the Group. The Board takes such
feedback into account when reviewing
executive pay. To the extent that
employees are shareholders, they can
vote on remuneration resolutions at
the AGM.
Incentive plan Summary of leaver provisions
Annual bonus Annual bonuses may be payable for
performance in the financial year
of cessation (pro-rated for time,
unless the Committee determines
otherwise). The Committee retains
the discretion to deliver any such
bonus solely in cash, without any
deferred share element.
Deferred bonus Awards will normally continue to
vest on the original vesting date,
subject to the malus provisions,
unless the Committee determines
otherwise.
LTIP The default treatment is that
any unvested awards lapse on
cessation of employment.
The Committee reserves the right to
make any other payments in connection
with a Director’s cessation of office
or employment where the payments
are made in good faith in discharge
of an existing legal obligation (or by
way of damages for breach of such an
obligation) or by way of settlement of
any claim arising in connection with
the cessation of a Director’s office or
employment. Any such payments may
include but are not limited to paying
Consideration of shareholder views
The Committee undertook a
consultation exercise with major
shareholders, representing 62% of
the share register, in respect of the
development of this Remuneration
Policy, and the feedback received
was taken into account in finalising
the proposals.
During each year, the Committee
considers shareholder feedback
received at the time of the AGM, plus
any additional feedback received
through other means of dialogue.
The Committee also regularly reviews
the policy in the context of published
shareholder guidelines.
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ANNUAL
REMUNERATION
REPORT
This report will be submitted as
an advisory vote to shareholders
at the 2020 AGM on 29 April 2020.
Statement of Implementation for 2020
This section summarises the remuneration arrangements for the Directors for the 2020
financial year.
Base salaries
The following table shows the base salaries effective 1 January 2020 with comparative
figures for 2019:
€’000 2020 2019 Increase
Pat McCann 610.2 598.2 2%
Stephen McNally 355.5 348.5 2%
Dermot Crowley 355.5 348.5 2%
Shane Casserly 325.0 n/a n/a
Salaries for Executive Directors are set at a competitive market level for the scope of the
roles and the size and complexity of the business. A 2% increase was awarded for 2020,
in line with pay increases for the general workforce.
In recommending the 2020 salary increase, the Committee took account of the review
of wages and salaries across the Group, trading circumstances for the Group, and the
personal performance of each individual.
Shane Casserly was appointed to the Board on 1 January 2020 and his salary was set
at €325,000 from this date.
Pension
The Chief Executive does not receive a pension contribution. Deputy Chief Executives
will receive a contribution to the defined contribution pension scheme or an equivalent
cash salary supplement, of 15% of base salary, in line with the Policy.
The pension contribution for Shane Casserly has been set at 5% of base salary. This
contribution is aligned to the contribution rate provided to the majority of pension eligible
staff in Ireland. The Committee will keep the pension contribution for Shane Casserly
under the review in the context of any changes in pension provision across the Group.
For new Executive Directors, the Board will determine pension arrangements on
appointment to the board, taking into account best practice, the rate available to the
wider pension eligible workforce, and market practice at similar sized companies at the
time of appointment.
Annual bonus
Each of the Executive Directors will be eligible for a maximum bonus of 125% of salary
under the proposed policy. The performance measures for the Chief Executive and
Deputy Chief Executives are weighted 75/25 between profitability and individual strategic
objectives. The performance measure for the Corporate Development Director is
weighted 50/50 between profitability and individual strategic objectives. The Committee
considered carefully the weighting for the Corporate Development Director, whose
office is concerned with the sourcing and the delivery of the company’s new hotel
pipeline within a framework of defined investment criteria. The Corporate Development
Director’s individual strategic objectives include quantifiable targets for sourcing new and
completing existing pipeline projects and the committee is satisfied that the weighting
of his performance measures is better aligned with strategy and the interests of
shareholders than if it were the same as the other Executive Directors.
Maximum Annual Bonus
(as a % of salary)
CEO and
Deputy CEOs
Corporate
Development Director
Profitability1
93.75% 62.5%
Individual strategic objectives 31.25% 62.5%
Total 125% 125%
1 Financial performance for annual bonus purposes is measured using an adjusted measure of EBIT
‘Modified EBIT’ described in detail on page 187.
30% of the total bonus earned will be deferred for at least three years (increased from 20% for 2019). This deferral enhances
alignment with shareholders and brings our approach to deferral more closely in-line with market practice.
The Committee has determined that the specific targets for 2020 are commercially sensitive and cannot be disclosed at this time.
To the extent that the targets for 2020 are no longer deemed to be commercially sensitive, they will be disclosed in next year’s report.
LTIP
Awards will be granted in 2020 of 150% of salary for the Chief Executive and 125% of salary for the other Executive Directors in line
with the proposed Policy. Awards will vest after a three-year performance period based 50% on TSR and 50% on EPS targets shown
in the table below. Vested shares will be subject to a minimum additional two-year post-vesting holding period.
€’000 TSR
(50% of award)
EPS
(50% of award)
Definition TSR performance
against the Index
Basic EPS (calculated under IAS 17: Leases)
achieved in the year ending 31 December 2022
Threshold vesting (25% of maximum) TSR equal to Index €0.44
Maximum vesting TSR equal to 10% or more
per annum above Index
€0.55
a. No vesting below threshold performance.
b. Straight-line vesting between points.
c. For TSR, the “Index” referred to in the table is the STOXX Europe 600 Travel and Leisure Index. TSR will be calculated using a three-month average at the start
and end of the performance period (1 January 2020 to 31 December 2022).
d. Basic EPS may be adjusted to exclude items that are deemed one-off and thus not reflecting normal trading activities or distorting comparability either period
on period or with other similar businesses. For reference, the relevant adjustments to EPS for 2018 and 2019 are set out in note 29 to the consolidated financial
statements on pages 172 and 173. We want to encourage the vigorous pursuit of opportunities, and by excluding certain one-off items, we drive the behaviours
we seek from the executives and encourage management to invest for the long-term interests of shareholders.
e. When setting the EPS threshold and maximum targets, the Committee had regard to company forecasts and underlying assumptions, the approach to target
setting in previous years, comparison with base year performance (2019), consensus forecasts for 2022, targets set in previous years and previous LTIP and
bonus outcomes. Taking into account all of these reference points, the Committee considers that the EPS targets set for the 2020 award are as stretching
as those set in previous years and, if achieved, will deliver value for shareholders. The maximum EPS target does not represent an increase on that set for the
performance condition in 2019 (2021 EPS) with the threshold target being 1 cent lower. Readers are guided to consider that the Company has announced the
opening of ten new hotels in 2021 and 2022 which represents an increase of approximately 30% of the current owned and leased hotel portfolio. New hotels
do not normally reach their full profit potential until years three to five following opening, therefore, the EPS profile in 2021 and 2022 reflects this business-
building phase of the company’s development. The Committee is satisfied that the successful delivery of the planned new hotels will create long-term value for
shareholders and that EPS targets set for 2022 represents a stretching but achievable target at the threshold level.
f. The Committee considered, in detail, the impact on reported EPS of the adoption of the accounting standard IFRS 16 (from 1 January 2019) in place of IAS 17
for accounting for lease costs. IFRS 16 introduces additional complexity to accounting for leases and affects a pronounced weighting of costs towards the early
years of a lease contract compared with IAS 17 (which typically apportioned costs on a straight-line basis over the term of the lease). Market participants and
other interested parties continue to evaluate the impact of the new standard. Accordingly, the Committee determined that, for the 2020 awards performance
condition, it was preferable to continue to calculate EPS using IAS 17. The Committee is satisfied that this approach is fair for both shareholders and plan
participants. The Committee will further review this element of the performance condition for 2021.
g. EPS targets may be amended if an event occurs which causes the Committee to determine an amended or substituted performance condition that would be
more appropriate and not materially more or less difficult to satisfy.
Non-executive Director fees
The following table shows the fees effective 1 January 2020. There will be no underlying increase in fees for 2020. However, some
amendments are made to reflect the change in Committee composition and individual Director responsibilities. Fees were last
reviewed and increased in 2019 following the biennial review of Non-executive Director compensation for 2019/20 under the Policy. On
1 January 2020, the Board formed a subcommittee with responsibility for Environmental Social and Governance, the Board estimates
that the workload of this committee chair will be equivalent to that of the Remuneration and Audit and Risk Committee chairs and
determined that compensation be similar for this role. The board also determined that additional compensation be paid to the Non-
executive Director with designated responsibility for workforce engagement by reference to the time commitment for this role.
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OutcomesinRespectof2019
Where indicated the disclosure has been audited in accordance with the UK reporting regulations.
Directors’ remuneration in 2019 was awarded in line with the Remuneration Policy, which was approved by shareholders at the AGM
in May 2017.
Single total figure of remuneration (audited)
The following table summarises the remuneration received by the Directors for the 2019 financial year (with the 2018 prior year
comparator also shown).

Annual bonus plan outcome for 2019 (audited)
The maximum bonus for 2019 was 110% of salary for CEO Pat McCann and 100% of salary for Stephen McNally and Dermot Crowley,
in line with the previous 2017-2019 Policy. This was based 75% on the achievement of a stretching profitability target and 25% on
individual strategic objectives aligned to the delivery of key strategic and operational objectives. Overall, the bonus outcome for 2019
was 62.5% of the maximum amount, for each Executive Director, based on performance as set out below.
Profitability
Financial performance for annual bonus evaluation is measured using Modified EBIT for Bonus Calculation (Modified EBIT). EBIT is
thus modified to remove the effect of fluctuations between the annual and budgeted EUR/GBP exchange rate and other items
including, for 2019, the effect of IFRS16, and the net revaluation movements through profit and loss, which were considered, by the
Remuneration Committee, to fall outside of the framework of the budget target set for the year. Modified EBIT is described in detail
and reconciled to Profit Before Tax on page 187.
€’000 Threshold
(40% payout)
Target
(50% payout)
Maximum
(100% payout)
Actual Outcome
Modified EBIT €102.6m €108.0m €115.6m €108.0m Performance met 100%
of the target leading to
50% of maximum bonus
payout for this element
Individual strategic objectives
The Committee considered carefully each Directors’ performance against individual strategic objectives set and the outcomes.
The Committee also had regard to the progress made by the senior management team as a whole toward delivering the company’s
strategic objectives.
Objectives set Summary of performance achieved 2019 Outcomes
PAT MCCANN
Culture
Nurture, promote, and monitor the culture and
values of the business to ensure continuity of
the entrepreneurial spirit and capacity for future
growth and development within the Company.
The continued strength in the company culture
was evidenced in the upward trend in customer
satisfaction scores, employee engagement
scores, a record number of applicants to our
graduate programmes, and public accolades
received by the Company in the business
community during the year.
2019 maximum:
27.5% of base salary
2019 achieved:
27.5%
Team Growth
Continue to develop the senior executive team
and each individual within it.
The number of internal promotions and intra-
property transfers grew in 2019 despite the
absence of new hotel openings; increased
number of participants on structured
development programmes.
Risk
Development of the risk management process,
including the identification of new and emerging
risks. A review of insurable risk management.
Maintained a downward trend in public liability
claims costs per room let and employers liability
claims costs to payroll ratio.
Accelerated the move towards centralised IT
platforms, revised business continuity plans
across all locations, and increased investment in
cyber risk management processes including the
establishment of the Group Privacy Committee.
Established environmental risk management
as a high priority focus for the business through
the formation of the Group Environmental
Steering Committee.
Elizabeth McMeikan 2019 15 - - - - 15
2018 n/a - - - - n/a
Notes:
a. Base salary / fees represent all amounts received in respect of the financial year.
b. Pension represents payments into the Company’s defined contribution pension plan. For 2019 (and 2018) the Chief Executive, Pat McCann, did not
participate in the pension plan. Other Executive Directors received pension contributions of 15% of salary.
c. Benefits include a company car and fuel and benefits under the Group risk-benefit scheme, which includes death in service cover and disability benefit.
d. Bonus represents the value of the bonus receivable in respect of the Group’s annual bonus plan for the relevant financial year. 20% of the bonus shown above
will be deferred into shares for a minimum period of three years.
e. For the LTIP, the value shown for 2019 reflects the final vesting outcome of the 2017 LTIP award with performance measured over the three-year
performance period from 1 January 2017 to 31 December 2019. Vesting of the 2017 award is based 50% on TSR performance compared to the STOXX
Europe 600 Travel & Leisure Index and 50% on EPS performance achieved in FY19 (see page 91 for further details). The values shown for 2019 have been
calculated using the three-month average share price to 31 December 2019 of €5.3475. 8% of the value disclosed in respect of the 2017 LTIP relates to the
increase in share price from the date of the award.
f. Concerning both the bonus and LTIP outturn for 2019, the Committee considered whether the outcomes were appropriate in the context of the underlying
performance of the business and the experience of shareholders and other stakeholders over the performance period(s) as well as considering whether there
was any other significant negative event that would warrant an adjustment. The Committee was satisfied that the incentive outcomes were merited, and no
discretion was exercised by the Committee to adjust either award.
g. The LTIP value for 2018 is restated to reflect the final vesting outcome of 46% (compared to the estimated vesting of 53%) for the LTIP award granted on 3
March 2016. The award vested on 2 March 2019 and the share price on the date of vesting was €6.00 compared to the share price used to estimate vesting,
which was €5.23. The restated LTIP outcomes are €279,000 for Pat McCann (€280,000 estimated), and €162,000 for Stephen McNally and Dermot Crowley
(€163,000 estimated). Readers will observe that the final vesting outcome is almost identical to the estimate owing to the off setting variances between the
final vesting percentage and the share price compared with the estimates.
h. Alf Smiddy received compensation of €6 k for expenses incurred in traveling to and from board meetings (2018 €4k). Robert Dix received similar compensation
of €1k (2018 €0k).
i. Elizabeth McMeikan was appointed Non- executive Director of the Board on 8 October 2019. Her fees for 2019 reflect her time in service during the year.
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Objectives set Summary of performance achieved 2019 outcomes
STEPHEN MCNALLY
Complete integration of six newly opened
hotels to achieve investment targets and
resolve any build completion issues.
We have achieved overall financial and non-
financial targets for the new properties.
2019 maximum:
25% of base salary
2019 achieved:
25%
Identify future leaders for hotels opening
through 2021.
75% of the potential General Managers
identified; development programmes in place
for high-potential employees identified for other
management roles at the new hotels.
Strategic cost management to protect
margins in light of market headwinds.
Maintained and grew EBITDAR margins despite
the RevPAR drop in key markets.
Prepare pro-active Brexit action plan. Engaged with the strategically important
suppliers to understand the potential implications
of a disruptive Brexit under various scenarios and
developed contingency plans; engaged with hotel
and leisure industry peers to communicate risks
and input to industry-wide risk management.
Improve Customer satisfaction scores. Stretch targets for customer satisfaction were
achieved for both Clayton and Maldron brands
Improve levels of employee engagement. The group-wide employee engagement score
improved from 78% to 85%, exceeding the
targets set for the year.
DERMOT CROWLEY
Finance function team development. Achieved delegation of key management
responsibility objectives within the department,
including in investor relations, banking, and
management of the external audit process.
Achieved development objectives for the shared
services centre.
2019 maximum:
25% of base salary
2019 achieved:
25%
Maintain the reach and effectiveness of
the investor relations programme in light
of challenges encountered as a result of
regulatory changes arising from MIFID 2.
Shareholder sentiment survey conducted on
behalf of the company indicated very strong
levels of support for the investor relations
programme.
Maintain and develop strategic relationships
with funding partners including banking
syndicate and institutional property investors.
12-month extension to banking facilities agreed
and two additional institutional property
investment partners secured.
Secure additional 1,200 rooms for hotel
pipeline and effectively manage the
progress of hotels and hotel extensions
under development.
Rooms pipeline development objectives
achieved, all live projects proceeding to plan.
Group strategy development. Completed agreed projects and presented
findings to the Board to increase the range of
strategic options for business development.
Shoreditch, London site acquisition was a
product of this activity.
LTIP – vesting outcome of the 2017 award (audited)
The 2017 LTIP award granted to Executive Directors on 22 May 2017 became eligible for vesting following the completion of the
Performance Period on 31 December 2019. Vesting of the award is subject to two performance criteria: 50% of the award is based
on TSR performance compared to the STOXX Europe 600 Travel and Leisure Index, and 50% is based on EPS performance for the
year ended 31 December 2019.
Previously, we reported that TSR performance would be compared with the Dow Jones European STOXX Travel and Leisure Index.
This index has been rebranded, and therefore, we will now be comparing TSR to the STOXX Europe 600 Travel and Leisure Index,
which represents the same sector, geographic focus, size, and complexity, and which is comprised of virtually the same companies
as the original Dow Jones Index. The same performance conditions apply. This change will impact the 2017 and 2018 awards.
The updated index is reflected in the vesting outcomes for the 2017 award, as set out below.
Overall, 67 % of the award will vest based on the assessment of the TSR and EPS performance, as shown below.
Weighting Threshold
maximum
1 TSR vesting is relative to the STOXX Europe 600 Travel and Leisure Index. TSR was calculated using a 3-month average at the start and end of the
performance period (1 January 2017 to 31 December 2019).
2 The maximum EPS vesting target was achieved based on the calculation of Pre-IFRS 16 Adjusted Basic EPS (under the accounting treatment of leases per IAS
17). A detailed calculation of Pre-IFRS 16 Adjusted Basic EPS (in accordance with IAS17) is set out in note 29 to the financial statements on pages 172 and 173.
When considering the level of annual bonus payout and long-term incentive vesting, the Committee also considered the underlying
performance of the Group over the performance period, taking into account performance against key financial and non-financial
indicators as well as the share price performance and the experience of shareholders and other stakeholders. The Committee also
considered whether there had been a significant negative event (such as an ESG event), which would warrant an adjustment. The
Committee concluded the proposed pay-out outcomes detailed above to be appropriate. Overall, the Committee considers that the
Remuneration Policy has operated as it was intended during 2019.
Share incentive plan interests awarded during 2019 (audited)
The table below provides details of the LTIP awards made during the year to the Executive Directors.
Director Type of
award
a. Vesting is based on two separate performance criteria: 50% of the award is based on TSR performance compared with the STOXX Europe 600 Travel and
Leisure Index. Threshold vesting occurs for TSR equal to the index and maximum vesting where TSR is equal to or greater than 10% per annum above the
index. The remaining 50% is based on Pre-IFRS 16 Adjusted Basic EPS (calculated under the accounting treatment of Leases per IAS 17) achieved in FY21
with threshold vesting for EPS equal to €0.45 and maximum vesting if EPS is equal to or greater than €0.55.
b. The number of shares awarded was calculated using the volume-weighted average share price on 5 March 2019 (€5.9775), the day prior to the date of
the grant.
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a. Shares beneficially owned include those of connected persons and include shares held in trust which are subject to deferral or holding periods.
b. On 2 December 2019, each of the Executive Directors and the Company Secretary exercised options (granted on 2 December 2016) to acquire 6,132
shares each under the Irish Sharesave Scheme. On 2 October 2019 these four individuals were granted options to acquire 5,000 shares each under the Irish
Sharesave Scheme which may be exercised between 2 March 2023 and 2 September 2023.
c. Total conditional LTIP awards include LTIP awards to Executive Directors representing the maximum number of shares which may vest under 2017, 2018, and
2019 LTIP awards based on the performance conditions as described elsewhere in this report. As described on page 91, 67% of the 2017 award will vest as
soon as practicable after December 2019 based on the achievement against the performance conditions.
d. There was no change in the beneficial interests of the Directors between the year-end and the date of this report.
Shareholding guidelines
Executive Directors are required to build up and maintain a beneficial holding of at least 200% of base salary. Based on the closing share
price on 31 December 2019 of €5.15, the Executive Director’s beneficial holdings as a percentage of 2019 base salary were as follows:
Beneficial shareholding % base salary
Pat McCann 1211%
Stephen McNally 736%
Dermot Crowley 723%
TSR performance summary and historic remuneration outcomes
The graph below compares the TSR (re-based to 100) over the period since listing to the performance of the ISEQ Index and the
median of the STOXX Europe 600 Travel and Leisure Index.
The following table shows the total remuneration for the Chief Executive for each financial year over the same period.
Remuneration Committee and advisors
In addition to the Remuneration Committee members, Non-executive Director Alf
Smiddy attended each meeting during 2019 at the invitation of the Chair. The Chief
Executive and the Company Secretary attended at the invitation of the Committee
Chair (but were not present for discussions on their own remuneration).
The Committee’s independent advisor Deloitte LLP and the Group HR Manager also
attended some meetings.
The members of the Committee have no financial interest and no potential conflicts of
interest, other than as shareholders, in the matters to be decided, and no day-to-day
involvement in the running of the business.
In carrying out its duties, the Committee considers any relevant legal requirements,
the recommendations in the UK Corporate Governance Code and the Listing Rules of
the London Stock Exchange or Euronext Dublin and associated guidance and investor
guidelines on executive remuneration. The Committee received a detailed report from
the Group Head of HR in September detailing remuneration trends throughout the
Group, including the general workforce as a whole, benchmarked against the market.
The Board approves the remuneration of the Non-executive Directors.
During 2019, the Committee continued to receive independent advice from Deloitte
LLP, based in London, in respect of the development of the Remuneration Policy.
Deloitte LLP is a member of the Remuneration Consultants Group and adheres to its
code concerning executive remuneration consulting. Deloitte Ireland also provided
unrelated corporate finance advisory services during the year.
The Committee appointed Deloitte LLP. It is the view of the Committee that
the Deloitte LLP engagement team that provide remuneration advice to the
Committee do not have connections with the Company or its Directors that may
impair their independence.
The Committee reviewed the potential for conflicts of interest and judged that there
were appropriate safeguards against such conflicts. The Committee considers that
the advice received from the advisors is independent, straightforward, relevant, and
appropriate and that it has an appropriate level of access to them and has confidence
in their advice.
Fees charged by Deloitte LLP during the year were £46,900. These fees were charged
on a time and materials basis.
On behalf of the Board
Margaret Sweeney
Chair, Remuneration Committee
24 February 2020
Clayton Hotel
City of London
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DIRECTORS’ REPORT
The Directors present their report and
the consolidated financial statements
of Hotel Group plc (“” or
the “Company”) and its subsidiaries
(the “Group”) for the year ended 31
December 2019.
Principal activities and
business review
Hotel Group plc is the largest
hotel operator in the Republic of Ireland
and operates eleven hotels in the UK.
Shareholders are referred to the Chair’s
Statement, Chief Executive Officer’s
Review and the Financial Review which
contain a review of operations and the
financial performance of the Group for
2019, the outlook for 2020 and the key
performance indicators used to assess
the performance of the Group. These
are deemed to be incorporated in the
Directors' Report.
Results for the year
The consolidated statement of profit or
loss and other comprehensive income
for the year ended 31 December 2019
and the consolidated statement of
financial position at that date are set out
on pages 109 and 110 respectively.
Dividends
An interim dividend of 3.5 cent per
share, amounting to €6.5 million, was
paid to shareholders on 4 October
2019. The Directors recommend the
payment of a final dividend of 7.25
cent per share in respect of the year
ended 31 December 2019. Subject to
shareholders’ approval at the Annual
General Meetings on 29 April 2020,
the payment date for the final dividend
is 06 May 2020 to shareholders
registered on the record date of 14
April 2020.
Future developments
A review of future developments of the
business is included in the Financial
Review on pages 28 to 39.
Directors and Company Secretary
The names of the Directors and
Company Secretary and a biographical
note on each appear on pages 58 to 59.
In accordance with the provisions
contained in the UK Corporate
Governance Code, all Directors will
voluntarily retire and be subject to
election by shareholders at the 2020
Annual General Meeting.
Directors’ and Company
Secretary’s interests
Details of the Directors’ and Company
Secretary’s share interests and interests
in unvested share awards of the
Company and Group companies are set
out in the Remuneration Committee
report on page 92.
Audit Committee
The Group has an established Audit and
Risk Committee comprising of three
Independent Non-executive Directors.
Details of the Committee and its
activities are set out on pages 72 to 77.
Share capital
The issued share capital of Hotel
Group plc at 24 February 2020 consists
of 185,166,504 ordinary shares. Each
share has a nominal value of €0.01. All
shares have equal voting and dividend
rights. The Group has in place a number
of employee share schemes,the details
of which are set out in the Remuneration
Committee Report and in Note 7 to the
consolidated financial statements.
Substantial holdings
As at 24 February 2020, the Company has
been notified of the following interests of
3% or more in its share capital:
Holder Number of
Ordinary Shares
% of Shares
in issue
Ameriprise Financial, Inc 16,739,432 9.04%
FMR LLC 9,148,450 4.94%
Pioneer Asset Management S.A. 7,936,156 4.29%
TimesSquare Capital Management, LLC 7,601,901 4.11%
Blackrock, Inc 7,466,529 4.03%
I.G. International Limited 6,867,668 3.71%
Allianz Global Investors GmbH 5,755,071 3.11%
Principal risks and uncertainties
Under Irish company law the Company
is required to give a description of the
principal risks and uncertainties which
the Group faces. These principal risks
and uncertainties form part of the Risk
Management Report on pages 40 to
47. The Financial Risk Management
policies are set out in Note 24 to the
consolidated financial statements.
Non-financial reporting directive
aims to comply with the
requirements of the Non- Financial
Reporting Directive (S.I 360/2017) and
these requirements are addressed
throughout the Strategic Report.
Information pertaining to each of the
matters addressed by these regulations
is set out on page 49.
Additionally, non-financial concerns are
reflected in our Strategy and Business
Model on pages 10 to 25 and in our risk
management report on pages 40 to 47.
The Company uses a number of non-
financial metrics, several of which are
disclosed in this report, including in our
key performance indicators on page 15.
Accounting records
The Directors believe that they have
complied with the requirements of
Sections 281 to 285 of the Companies
Act 2014 with regard to adequate
accounting records by employing
accounting personnel with appropriate
expertise and by providing adequate
resources to the financial function.
The accounting records of the Company
are maintained at its registered office:
4th Floor, Burton Court, Burton Hall Drive,
Sandyford Industrial Estate, Dublin 18.
Takeover regulations 2006
For the purpose of Regulation 21
of Statutory Instrument 255/2006
‘European Communities (Takeover Bids
Directive (2004/25/EC)) Regulations
2006’, the information given in note 7 to
the consolidated financial statements
and in the Remuneration Committee
report on pages 78 to 95 in relation
to the Long-Term Incentive Plan,
employee share schemes, Directors'
service contracts and appointment
and compensation for loss of office of
Directors is deemed to be incorporated
in the Directors' Report.
Transparency regulations 2007
For the purposes of information required
by Statutory Instrument 277/2007
‘Transparency (Directive 2004/109/
EC) Regulations 2007’ concerning the
development and performance of the
Group, the Responsible Business Report
set out on pages 48 to 55, is deemed
to be incorporated in this part of the
Directors' Report together with details
of earnings per share in note 29 to
the consolidated financial statements,
employment details in note 6 and details
of financial instruments in note 24.
Corporate Governance regulations
As required by company law, the
Directors have prepared a Report on
Corporate Governance which is set
out on pages 56 to 95, and which, for
the purposes of Section 1373 of the
Companies Act 2014, is deemed to
be incorporated in this part of the
Directors' Report. Details of the
capital structure and employee
share schemes are included in notes
18 and 7 to the consolidated financial
statements respectively.
Relevant audit information
The Directors who held office at the
date of approval of this Directors'
Report confirm that, so far as, they are
each aware, there is no relevant audit
information of which the Company's
External Auditor is unaware; and each
Director has taken all the steps that they
ought to have taken as a Director to
make themselves aware of any relevant
audit information and to establish
that the Company's External Auditor
is aware of that information.
Compliance statement
The Directors, in accordance with
Section 225(2) of the Companies
Act 2014, acknowledge that they are
responsible for securing the Company’s
compliance with certain obligations
specified in that section arising from the
Companies Act 2014, the Market Abuse
(Directive 2003/6/ EC) Regulations 2005,
the Prospectus (Directive 2003/71/ EC)
Regulations 2005, the Transparency
(Directive 2004/109EC) Regulations
2007 and Tax laws (‘relevant obligations’).
The Directors confirm that:
 a compliance policy statement
has been drawn up setting out the
Company’s policies that in their
opinion are appropriate with regard
to such compliance;
 appropriate arrangements and
structures have been put in place
that are designed to provide
reasonable assurance of compliance
in all material respects with those
relevant obligations; and a review
has been conducted, during the
financial year, of those arrangements
and structures.
Going concern
The current activities of the Group
and those factors likely to affect its
future development, together with
a description of its financial position,
are described in the Strategic Report.
Principal risks and uncertainties
affecting the Group, and the steps
taken to mitigate these risks are
described in the Risk Management
section of the Strategic Report on
pages 40 to 47. Critical accounting
estimates affecting the carrying
values of assets and liabilities of the
Group are discussed in note 1 to the
consolidated financial statements.
After making appropriate enquiries,
the Directors have a reasonable
expectation that the Company and
the Group have adequate resources
to continue in operational existence
for three years (in line with the Viability
Statement on pages 46 to 47). In
making this assessment, the Directors
considered the going concern
status for a period of at least 12
months from the date of signing this
Annual Report and Accounts. For this
reason, they continue to adopt the
going concern basis in preparing the
financial statements.
Political contributions
There were no political contributions
which require disclosure under the
Electoral Act, 1997.
Independent auditors
KPMG, Chartered Accountants, were
appointed statutory auditor in 2014
and reappointed on 30 June 2016
and pursuant to section 383(2) of
the Companies Act 2014 will continue
in office.
Subsidiaries
Information on the Group’s subsidiaries
is set out in note 28 to the consolidated
financial statements.
Subsequent events
Details of subsequent events are set
out in note 27 to the consolidated
financial statements.
Approval of Financial Statements
The Financial Statements were
approved by the Board on 24
February 2020.
On behalf of the Board
John Hennessy
Chair
Pat McCann
Director
24 February 2020
97
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Directors’ Report
Clayton Hotel Manchester Airport
Financial
Statements
Financial Statements 99-182
Statement of Directors’ Responsibilities in respect
of the Annual Report and the Financial Statements 100
Independent Auditor’s Report 102
Consolidated statement of profit or loss
and other comprehensive income 109
Consolidated statement of financial position 110
Consolidated statement of changes in equity 111
Consolidated statement of cash flows 113
Notes to the consolidated financial statements 114
1 Significant accounting policies 114
2 Operating segments 123
3 Statutory and other information 128
4 Other income 129
5 Finance costs 129
6 Personnel expenses 130
7 Share-based payments expense 131
8 Tax charge 133
9 Intangible assets and goodwill 134
10 Property, plant and equipment 137
11 Transition impact of IFRS 16 Leases 142
12 Leases 146
13 Investment property 150
14 Contract fulfilment costs 150
15 Trade and other receivables 151
16 Inventories 152
17 Cash and cash equivalents 152
18 Capital and reserves 153
19 Trade and other payables 155
20 Provision for liabilities 155
21 Loans and borrowings 156
22 Derivatives 160
23 Deferred tax 161
24 Financial instruments and risk management 162
25 Commitments 169
26 Related party transactions 170
27 Subsequent events 170
28 Subsidiary undertakings 171
29 Earnings per share 172
30 Approval of the financial statements 173
Company statement of financial position 175
Company statement of changes in equity 176
Company statement of cash flows 177
Notes to the Company financial statements 178
Supplementary Financial Information 183
Alternative Performance Measures (“APM”) 183
Glossary 188
Advisor and Shareholder Contacts 189
99
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98
FINANCIAL
STATEMENTS
StatementvofvDirectors’Responsibilities
invrespectf to theAnnua Report and the
FinancialStatements
The Directors are responsible for
preparing the annual report and the
consolidated and Company financial
statements, in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare consolidated and Company
financial statements for each financial
year. Under that law, the Directors are
required to prepare the consolidated
financial statements in accordance
with IFRS as adopted by the European
Union and applicable law including
Article 4 of the IAS Regulation. The
Directors have elected to prepare
the Company financial statements
in accordance with IFRS as adopted
by the European Union as applied in
accordance with the provisions of
Companies Act 2014.
Under company law, the Directors
must not approve the financial
statements unless they are satisfied
that they give a true and fair view of
the assets, liabilities and financial
position of the Group and Company
and of the Group’s profit or loss for
that year. In preparing each of the
consolidated and Company financial
statements, the Directors are
required to:
> select suitable accounting policies
and then apply them consistently;
> make judgements and estimates that
are reasonable and prudent;
> state whether applicable accounting
standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements;
> assess the Group’s and Company’s
ability to continue as a going concern,
disclosing, as applicable, matters
related to going concern; and
> use the going concern basis of
accounting unless they either intend
to liquidate the Group or Company
or to cease operations, or have no
realistic alternative but to do so.
The Directors are also required
by the Transparency (Directive
2004/109/EC) Regulations 2007
and the Transparency Rules of the
Central Bank of Ireland to include
a management report containing
a fair review of the business and a
description of the principal risks and
uncertainties facing the Group.
The Directors are responsible for
keeping adequate accounting records
which disclose with reasonable
accuracy at any time the assets,
liabilities, financial position and profit or
loss of the Company and which enable
them to ensure that the financial
statements of the Company comply
with the provisions of the Companies
Act 2014. The Directors are also
responsible for taking all reasonable
steps to ensure such records are
kept by the Company’s subsidiaries
which enable them to ensure that the
financial statements of the Group
comply with the provisions of the
Companies Act 2014 and Article
4 of the IAS Regulation. They are
responsible for such internal control
as they determine is necessary to
enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud
or error, and have general responsibility
for safeguarding the assets of the
Company and the Group, and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities. The Directors
are also responsible for preparing a
Directors’ Report that complies with
the requirements of the Companies
Act 2014.
The Directors are responsible for
the maintenance and integrity
of the corporate and financial
information included on the Group’s
and Company’s website www.
hotelgroup.com. Legislation
in the Republic of Ireland concerning
the preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Responsibility statement as required
by the Transparency Directive and UK
Corporate Governance Code
Each of the Directors, whose names
and functions are listed on pages 58 to
59 of this Annual Report, confirm that,
to the best of each person’s knowledge
and belief:
> The consolidated financial
statements, prepared in accordance
with IFRS as adopted by the European
Union, and the Company financial
statements prepared in accordance
with IFRS as adopted by the European
Union as applied in accordance with
the provisions of Companies Act
2014, give a true and fair view of
the assets, liabilities, and financial
position of the Group and Company
at 31 December 2019 and of the
profit of the Group for the year
then ended;
> The Directors’ Report contained
in the Annual Report includes a fair
review of the development and
performance of the business and the
position of the Group and Company,
together with a description of the
principal risks and uncertainties that
they face; and
> The Annual Report and financial
statements, taken as a whole,
provides the information necessary
to assess the Group’s performance,
business model and strategy and is
fair, balanced and understandable
and provides the information
necessary for shareholders to
assess the Company’s position and
performance, business model and
strategy.
On behalf of the Board
John Hennessy
Chair
Patrick McCann
Director
24 February 2020
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IndependentAuditor’sReport
to the members of Hotel Group plc
IndependentAuditor’sReport
to the members of Hotel Group plc (continued)
Reportontheauditof
thefinancialstatements
Opinion
We have audited the financial
statements of Hotel Group plc
(‘the Company’) for the year ended 31
December 2019, which comprise the
consolidated statement of profit or loss
and other comprehensive income, the
consolidated and Company statements
of financial position, the consolidated
and Company statements of changes in
equity, the consolidated and Company
statements of cash flows and related
notes, including the summary of
significant accounting policies set
out in note 1. The financial reporting
framework that has been applied in their
preparation is Irish Law and International
Financial Reporting Standards (IFRS)
as adopted by the European Union
and, as regards the Company financial
statements, as applied in accordance
with the provisions of the Companies
Act 2014.
In our opinion:
» the financial statements give a true
and fair view of the assets, liabilities
and financial position of the Group
and Company as at 31 December
2019 and of the Group’s profit for the
year then ended;
» the consolidated financial statements
have been properly prepared in
accordance with IFRS as adopted by
the European Union;
» the Company financial statements
have been properly prepared in
accordance with IFRS as adopted
by the European Union, as applied in
accordance with the provisions of the
Companies Act 2014; and
» the consolidated financial statements
and Company financial statements
have been properly prepared in
accordance with the requirements
of the Companies Act 2014 and, as
regards the consolidated financial
statements, Article 4 of the
IAS Regulation.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(Ireland) (ISAs (Ireland)) and applicable
law. Our responsibilities under those
standards are further described in the
Auditor’s Responsibilities section of
our report. We believe that the audit
evidence we have obtained is a sufficient
and appropriate basis for our opinion.
Our audit opinion is consistent with our
report to the Audit and Risk Committee.
We were appointed as auditor by
the Directors on 30 June 2016.
The period of total uninterrupted
engagement is the three years ended
31 December 2019. We have fulfilled
our ethical responsibilities under, and
we remained independent of the
Group in accordance with, ethical
requirements applicable in Ireland,
including the Ethical Standard issued
by the Irish Auditing and Accounting
Supervisory Authority (IAASA) as applied
to public interest entities. No non-audit
services prohibited by that standard
were provided.
Keyauditmatters:our
assessmentofrisksof
materialmisstatement
Key audit matters are those matters
that, in our professional judgment,
were of most significance in the audit
of the financial statements and include
the most significant assessed risks
of material misstatement (whether
or not due to fraud) identified by us,
including those which had the greatest
effect on: the overall audit strategy; the
allocation of resources in the audit; and
directing the efforts of the engagement
team. These matters were addressed
in the context of our audit of the
financial statements as a whole, and in
forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Property valuations – carrying value of land and buildings €1,324.5 million (2018: €1,077.2 million)
Refer to page 74 (Audit and Risk Committee Report), note 1(xi) to the consolidated financial statements (accounting policy for
property, plant and equipment), and note 10 to the consolidated financial statements (financial disclosures – property, plant
and equipment).
The key audit matter How the matter was addressed in
our audit
Our findings
The Group has a large owned hotel
property portfolio and under its
accounting policies applies the
revaluation model to its land and
buildings included within property,
plant and equipment. This gives rise
to a risk of material misstatement
if periodic revaluations are not
performed on an appropriate basis or
are not accounted for in accordance
with relevant accounting standards.
The Group engages independent
external experts to perform periodic
hotel revaluations, which are inclusive
of fixtures, fittings and equipment,
which the Group accounts for under
the cost model. Appropriate allocations
of hotel valuations must therefore be
made between land and buildings, and
fixtures and fittings and equipment for
accounting purposes.
Our audit procedures included
among others:
» Evaluating the approach and
findings of the work performed by
the independent external experts
engaged by the Group in relation to
hotel valuations, including assessing
and challenging the key assumptions
applied in their discounted cash flow
valuation calculations;
» Considering the allocation of hotel
valuations to land and buildings and
fixtures, fittings and equipment;
» Testing the amounts of individual
property revaluation movements
and their presentation either in
other comprehensive income or in
profit or loss, as appropriate; and
» Evaluating the adequacy of the
Group’s disclosures in relation to
property valuations.
Our audit procedures did not
identify any material issues with
the assumptions adopted in the
property valuations. The allocation
of valuations between land and
buildings and fixtures, fittings
and equipment and the inclusion
of revaluation movements in
other comprehensive income or
in profit or loss are appropriate.
The disclosures in the financial
statements relating to property
valuations are adequate to provide
an understanding of the basis of
the valuations.
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IFRS 16 lease accounting – carrying value of right of use assets €386.4 million (2018: €nil) and lease liabilities of €362.1
million (2018: €nil)
Refer to page 74 (Audit and Risk Committee Report), note 1(vii) to the consolidated financial statements (accounting policy for
leases), note 11 to the consolidated financial statements (transition impact of IFRS 16 Leases), and note 12 to the consolidated
financial statements (financial disclosures – leases).
The key audit matter How the matter was addressed in our
audit
Our findings
The first-time application of IFRS 16
Leases in 2019 has a highly material
impact on the Group’s financial
statements because the Group
operates a significant number of hotels
through lease arrangements.
Potential risks of material
misstatement associated with IFRS 16
Leases implementation are as follows:
» Accounting differences and impacts
relating to IFRS 16 adoption are not
completely identified;
» The accounting treatments applied
do not reflect the key terms of the
leases;
» Key judgements applied in IFRS
16 accounting (e.g. in relation to
discount rates) are not adequately
supported;
» Transition options and practical
expedients are not appropriately
applied;
» Transition date recognition and
measurement adjustments are not
accurately recorded;
» New leases, or changes to leases,
after the transition date are not
accounted for in accordance with
IFRS 16; and
» Required disclosures under IFRS 16
are omitted, incomplete, inaccurate
or not fairly presented.
Our audit procedures included among
others:
» Considering the appropriateness of
the selection of accounting policies
based on the requirements of IFRS
16;
» Determining whether the transition
approach applied was consistent
with the requirements of IFRS 16;
» Reviewing the design and
implementation of relevant controls
over IFRS 16 accounting;
» Evaluating the reasonableness of,
and support for, management’s key
judgements and estimates made
in the application of IFRS 16, and in
particular the discount rate applied;
» Evaluating the completeness,
accuracy and relevance of data used
in IFRS 16 calculations, including in
relation to lease length, payments
and other relevant factors;
» Independently recalculating lease
liabilities and right-of-use assets and
comparing them to management’s
calculations; and
» Evaluating the completeness,
accuracy and relevance of the
relevant disclosures in the financial
statements.
Our audit procedures did not
identify any material issues with
regard to the implementation
of IFRS 16 Leases. In our view,
the financial statements contain
appropriately detailed disclosures
in relation to the impact of IFRS 16
Leases, primarily in notes 11 and
12 to the consolidated financial
statements.
Accounting for hotel acquisitions
Refer to page 75 (Audit and Risk Committee Report), note 1((iv),(vii) and (xi)) to the consolidated financial statements
(accounting policies for business combinations, leases, and property plant and equipment), note 10 to the consolidated financial
statements (financial disclosures – property, plant and equipment) and note 12 to the consolidated financial statements
(financial disclosures – leases).
The key audit matter How the matter was addressed in our
audit
Our findings
The following hotel acquisitions were
completed in the year: (i) the Clayton
Hotel City of London; and (ii) the
Tamburlaine Hotel, Cambridge.
Hotel acquisitions give rise to a risk
of material misstatement, if each
acquisition is not correctly identified
as (i) a business combination or (ii) an
asset purchase or (iii) another type of
transaction (e.g. lease), according to
the substance of the transactions, and
accounted for in accordance with the
relevant accounting standards.
In particular, for any business
combinations, the consideration paid,
the costs incurred, the fair value of the
assets and liabilities acquired and any
goodwill arising must all be identified,
measured and recorded appropriately.
Our audit procedures included among
others:
» Inspecting acquisition agreements
and related documentation;
» Examining the accounting papers
prepared by Group management
on the accounting treatment for
each transaction, and evaluating
the substance of the transactions;
» Independently considering whether
the acquisitions were business
combinations or asset purchases
or leases;
» Reviewing the accounting for the
amounts recorded in relation to
these transactions and evaluating
whether the relevant accounting
standards had been applied; and
» Considering the adequacy of the
Group’s disclosures in relation to
acquisitions in the year.
Our audit procedures did not
identify any material issues with
regard to the determination as
to whether the hotel acquisitions
in the year were business
combinations, asset purchases,
or leases, and the associated
accounting applied for same.
IndependentAuditor’sReport
to the members of Hotel Group plc (continued)
IndependentAuditor’sReport
to the members of Hotel Group plc (continued)
105
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Our application of materiality and an
overview of the scope of our audit
The materiality for the consolidated
financial statements as a whole was
set at €4.4 million (2018: €4.3 million).
This has been calculated with reference
to a benchmark of consolidated profit
before taxation. Materiality represents
approximately 5% of this benchmark,
which we consider to be one of the
principal considerations for members of
the Company in assessing the financial
performance of the Group. The Group
has a significant asset base which we
also consider in establishing materiality.
Total assets at 31 December 2019
amounts to €1,984.0 million (2018:
€1,319.1 million) and our materiality
measure represents 0.22% of total
assets (2018: 0.33%) which is below
the materiality measure of 0.5%-1.0%
typically used for this measure, where
applicable, in public company audits.
We report to the Audit and Risk
Committee all corrected and
uncorrected misstatements we
identified through our audit with a
value in excess of €0.2 million (2018:
€0.2 million), in addition to other audit
misstatements below that threshold
that we believed warranted reporting on
qualitative grounds.
We subjected all of the Group’s
reporting components to audits for
group reporting purposes. The work on
all components was performed by the
Group audit team.
Materiality for the Company financial
statements as a whole was set at €4.0
million (2018: €4.0 million), determined
with reference to a benchmark of total
assets, of which it represents 0.52%
(2018: 0.51%).
We have nothing to report
on going concern
We are required to report to you if:
» we have anything material to add or
draw attention to in relation to the
Directors’ statement in note 1 to the
financial statements on the use of the
going concern basis of accounting
with no material uncertainties that
may cast significant doubt over the
Group’s and Company’s use of that
basis for a period of at least twelve
months from the date of approval of
the financial statements; or
» if the related statement under the
Listing Rules set out on page 97
is materially inconsistent with our
audit knowledge.
We have nothing to report in these
respects.
Other information
The Directors are responsible for the
preparation of the other information
presented in the Annual Report together
with the financial statements. The other
information comprises the information
included in the Directors’ Report,
Chair’s Statement, Chief Executive’s
Review, Purpose and Values section,
Strategy and Business Model section,
Operations Review, Financial Review,
Risk Management section, Responsible
Business Report, Chair’s Overview
– Corporate Governance section,
Board of Directors section, Executive
Management Team section, Corporate
Governance Report, Nomination
Committee Report, Remuneration
Committee Report, Audit and Risk
Committee Report, and Supplementary
Financial Information section.
The financial statements and our
auditor’s report thereon do not comprise
part of the other information. Our
opinion on the financial statements
does not cover the other information
and, accordingly, we do not express
an audit opinion or, except as explicitly
stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider
whether, based on our financial
statements audit work, the information
therein is materially misstated
or inconsistent with the financial
statements or our audit knowledge.
Based solely on that work we have not
identified material misstatements in the
other information.
Based solely on our work on the other
information we report that, in those
parts of the Directors’ Report specified
for our consideration:
» we have not identified
material misstatements in the
Directors’ Report;
» in our opinion, the information given
in the Directors’ Report is consistent
with the financial statements; and
» in our opinion, the Directors’ Report
has been prepared in accordance with
the Companies Act 2014.
Disclosures of principal risks and
longer-term viability
Based on the knowledge we acquired
during our financial statements audit,
we have nothing material to add or draw
attention to in relation to:
» the Principal Risks disclosures
describing these risks and explaining
how they are being managed and
mitigated;
» the Directors’ confirmation within
the Viability Statement on page 46
that they have carried out a robust
assessment of the principal risks
facing the Group, including those that
would threaten its business model,
future performance, solvency and
liquidity; and
» the Directors’ explanation in the
Viability Statement of how they
have assessed the prospects of the
Group, over what period they have
done so and why they considered
that period to be appropriate, and
their statement as to whether they
have a reasonable expectation that
the Group will be able to continue
in operation and meet its liabilities
as they fall due over the period of
their assessment, including any
related disclosures drawing attention
to any necessary qualifications
or assumptions.
Other corporate
governance disclosures
We are required to address the following
items and report to you in the following
circumstances:
» Fair,balancedandunderstandable:
ifwehaveidentifiedmaterial
inconsistenciesbetweenthe
knowledgeweacquiredduringour
financialstatementsauditandthe
Directors’statementthatthey
considerthattheAnnualReportand
financialstatementstakenasawhole
isfair,balancedandunderstandable
andprovidestheinformation
necessaryforshareholderstoassess
theGroup’spositionandperformance,
businessmodeland strategy;
» Audit and Risk Committee Report:
if the section of the Annual Report
describing the work of the Audit
and Risk Committee does not
appropriately address matters
communicated by us to the Audit and
Risk Committee;
» Statement of compliance with UK
Corporate Governance Code: if the
Directors’ statement does not
properly disclose a departure from
provisions of the UK Corporate
Governance Code specified by the
Listing Rules of Euronext Dublin
and/or the UK Listing Authority for
our review.
We have nothing to report in these
respects.
In addition as required by the Companies
Act 2014, we report, in relation to
information given in the Corporate
Governance Statement on pages 56 to
69, and the Directors’ Report that:
» based on the work undertaken
for our audit, in our opinion, the
description of the main features of
internal control and risk management
systems in relation to the financial
reporting process and information
relating to voting rights and other
matters required by the European
Communities (Takeover Bids
(Directive 2004/EC)) Regulations
2006 and specified for our
consideration, is consistent with the
financial statements and has been
prepared in accordance with the Act;
» based on our knowledge and
understanding of the Company
and its environment obtained in the
course of our audit, we have not
identified any material misstatements
in that information; and
» the Directors’ Report contains the
information required by the European
Union (Disclosure of Non-Financial
and Diversity Information by certain
large undertakings and groups)
Regulations 2017.
We also report that, based on work
undertaken for our audit, the information
required by the Act is contained in the
Corporate Governance Statement.
Our opinions on other matters
prescribed by the Companies Act
2014 are unmodified
We have obtained all the information
and explanations which we consider
necessary for the purpose of our audit.
In our opinion, the accounting records of
the Group and Company were sufficient
to permit the financial statements to
be readily and properly audited and the
financial statements are in agreement
with the accounting records.
We have nothing to report on other
matters on which we are required
to report by exception
The Companies Act 2014 requires us
to report to you if, in our opinion, the
disclosures of Directors’ remuneration
and transactions required by Sections
305 to 312 of the Act are not made.
The Companies Act 2014 also requires
us to report to you if, in our opinion,
the Company has not provided the
information required by section 5(2) to
(7) of the European Union (Disclosure of
Non-Financial and Diversity Information
by certain large undertakings and
groups) Regulations 2017 for the year
ended 31 December 2019 as required by
the European Union (Disclosure of Non-
Financial and Diversity Information by
certain large undertakings and groups)
(amendment) Regulations 2018.
The Listing Rules of Euronext Dublin
and the UK Listing Authority require us
to review:
» the Directors’ Statements, set out on
pages 46 and 97, in relation to going
concern and longer‑term viability;
» the part of the Corporate Governance
Statement on pages 56 to 69 relating
to the Company’s compliance with
the provisions of the UK Corporate
Governance Code and the Irish
Corporate Governance Annex
specified for our review; and
» certain elements of disclosures
in the report to shareholders
by the Board of Directors’
Remuneration Committee.
Respective
responsibilitiesand
restrictionsonuse
Directors’ responsibilities
As explained more fully in their
statement set out on pages 100 and
101, the Directors are responsible
for: the preparation of the financial
statements including being satisfied
that they give a true and fair view; such
internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error; assessing the Group and
Parent Company’s ability to continue as a
going concern, disclosing, as applicable,
matters related to going concern;
and using the going concern basis of
accounting unless they either intend
to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.
IndependentAuditor’sReport
to the members of Hotel Group plc (continued)
IndependentAuditor’sReport
to the members of Hotel Group plc (continued)
107
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Auditor’s responsibilities
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether
due to fraud or error, and to issue
our opinion in an auditor’s report.
Reasonable assurance is a high level
of assurance, but does not guarantee
that an audit conducted in accordance
with ISAs (Ireland) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud,
other irregularities or error and are
considered material if, individually or in
aggregate, they could reasonably be
expected to influence the economic
decisions of users taken on the
basis of the financial statements.
The risk of not detecting a material
misstatement resulting from fraud or
other irregularities is higher than for
one resulting from error, as they may
involve collusion, forgery, intentional
omissions, misrepresentations, or the
override of internal control and may
involve any area of law and regulation
and not just those directly affecting the
financial statements.
A fuller description of our responsibilities
is provided on IAASA’s website at https://
www.iaasa.ie/getmedia/b2389013-1cf6-
458b-9b8f-a98202dc9c3a/Description_
of_auditors_responsiblities_for_audit.pdf
The purpose of our audit work and to
whom we owe our responsibilities
Our report is made solely to the
Company’s members, as a body, in
accordance with Section 391 of the
Companies Act 2014. Our audit work
has been undertaken so that we might
state to the Company’s members
those matters we are required to state
to them in an auditor’s report and for
no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other
than the Company and the Company’s
members, as a body, for our audit work,
for our report, or for the opinions we
have formed.
Patricia Carroll
for and on behalf of
KPMG
Chartered Accountants,
Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
24 February 2020
Consolidatedstatementofprofitorloss
andothercomprehensiveincome
for the year ended 31 December 2019
Restated*
2019 2018
Note 
Continuing operations
Revenue 2 429,184 392,568
Cost of sales (154,584) (142,275)
Gross profit 274,600 250,293
Administrative expenses (155,505) (157,515)
Other income 4 1,206 4,037
Operating profit 120,301 96,815
Finance costs 5 (30,613) (9,514)
Profit before tax 89,688 87,301
Tax charge 8 (11,476) (12,077)
Profit for the year attributable to owners of the Company 78,212 75,224
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of property 10 120,723 102,946
Related deferred tax 23 (17,272) (9,634)
103,451 93,312
Items that are or may be reclassified subsequently to profit or loss
Exchange difference on translating foreign operations 23,592 (2,667)
(Loss)/gain on net investment hedge (16,987) 1,625
Fair value movement on cash flow hedges 22 (4,238) (554)
Cash flow hedges – reclassified to profit or loss 22 1,177 1,026
Related deferred tax 23 382 (59)
3,926 (629)
Other comprehensive income for the year, net of tax 107,377 92,683
Total comprehensive income for the year attributable to owners of the Company 185,589 167,907
Earnings per share
Basic earnings per share 29 42.4 cents 40.9 cents
Diluted earnings per share 29 42.0 cents 40.4 cents
* Income from managed hotels has been reclassified from revenue to other income for the year ended 31 December 2019. The prioryear figures have been restated for
this reclassification (note 1).
IndependentAuditor’sReport
to the members of Hotel Group plc (continued)
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SUPPLEMENTARY
FINANCIAL
INFORMATION
Consolidatedstatementofchangesinequity
for the year ended 31 December 2019
Consolidatedstatementoffinancialposition
at 31 December 2019
Note 2019 2018

Assets
Non-current assets
Intangible assets and goodwill 9 36,133 54,417
Property, plant and equipment 10 1,471,315 1,176,260
Right-of-use assets 12 386,407 -
Investment property 13 2,149 1,560
Deferred tax assets 23 3,527 2,613
Contract fulfilment costs 14 13,346 9,066
Other receivables 15 6,760 14,759
Total non-current assets 1,919,637 1,258,675
Current assets
Trade and other receivables 15 21,802 22,566
Inventories 16 1,927 1,954
Cash and cash equivalents 17 40,586 35,907
Total current assets 64,315 60,427
Total assets 1,983,952 1,319,102
Equity
Share capital 18 1,851 1,843
Share premium 18 504,488 503,113
Capital contribution 18 25,724 25,724
Merger reserve 18 (10,337) (10,337)
Share-based payment reserve 18 4,900 4,232
Hedging reserve 18 (3,958) (1,279)
Revaluation reserve 18 351,869 248,418
Translation reserve 18 (6,593) (13,198)
Retained earnings 204,897 144,061
Total equity 1,072,841 902,577
Liabilities
Non-current liabilities
Loans and borrowings 21 411,739 301,889
Lease liabilities 12 331,544 -
Deferred tax liabilities 23 59,358 41,129
Derivatives 22 4,434 1,306
Provision for liabilities 20 4,804 4,783
Total non-current liabilities 811,879 349,107
Current liabilities
Lease liabilities 12 30,557 -
Trade and other payables 19 66,163 65,250
Derivatives 22 89 -
Current tax liabilities 664 309
Provision for liabilities 20 1,759 1,859
Total current liabilities 99,232 67,418
Total liabilities 911,111 416,525
Total equity and liabilities 1,983,952 1,319,102
On behalf of the Board:
John Hennessy Patrick McCann
Chair Director
Attributable to owners of the Company
Share
capital
Share
premium
Capital
contribution
Merger
reserve
Share-
based
payment
reserve
Hedging
reserve
Revaluation
reserve
Translation
reserve
Retained
earnings Total
    
At 1 January 2019 1,843 503,113 25,724 (10,337) 4,232 (1,279) 248,418 (13,198) 144,061 902,577
Comprehensive income:
Profit for the year - - - - - - - - 78,212 78,212
Other comprehensive income
Exchange difference on
translating foreign operations - - - - - - - 23,592 - 23,592
Loss on net investment hedge - - - - - - - (16,987) - (16,987)
Revaluation of properties
(note 10) - - - - - - 120,723 - - 120,723
Fair value movement on
cash flow hedges (note 22) - - - - - (4,238) - - - (4,238)
Cash flow hedges – reclassified
to profit or loss (note 22) - - - - - 1,177 - - - 1,177
Related deferred tax (note 23) - - - - - 382 (17,272) - - (16,890)
Total comprehensive
income for the year - - - - - (2,679) 103,451 6,605 78,212 185,589
Transactions with owners of
the Company:
Equity-settled share-based
payments (note 7) - - - - 2,679 - - - - 2,679
Vesting of share awards and
options (note 7) 8 1,375 - - (2,011) - - - 2,011 1,383
Dividends paid (note 18) - - - - - - - - (19,387) (19,387)
Total transactions with
owners of the Company 8 1,375 - - 668 - - - (17,376) (15,325)
At 31 December 2019 1,851 504,488 25,724 (10,337) 4,900 (3,958) 351,869 (6,593) 204,897 1,072,841
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Consolidatedstatementofcashflows
for the year ended 31 December 2019
Consolidatedstatementofchangesinequity
for the year ended 31 December 2018
Attributable to owners of the Company
Share
capital
Share
premium
Capital
contribution
Merger
reserve
Share-
based
payment
reserve
Hedging
reserve
Revaluation
reserve
Translation
reserve
Retained
earnings Total
    
At 1 January 2018 1,837 503,113 25,724 (10,337) 2,753 (1,692) 155,106 (12,156) 73,045 737,393
Comprehensive income:
Profit for the year - - - - - - - - 75,224 75,224
Other comprehensive income
Exchange difference on
translating foreign operations - - - - - - - (2,667) - (2,667)
Gain on net investment hedge - - - - - - - 1,625 - 1,625
Revaluation of properties
(note 10) - - - - - - 102,946 - - 102,946
Fair value movement on cash
flow hedges (note 22) - - - - - (554) - - - (554)
Cash flow hedges – reclassified
to profit or loss (note 22) - - - - - 1,026 - - - 1,026
Related deferred tax (note 23) - - - - - (59) (9,634) - - (9,693)
Total comprehensive income
for the year - - - - - 413 93,312 (1,042) 75,224 167,907
Transactions with owners of
the Company:
Equity-settled share-based
payments (note 7) - - - - 2,800 - - - - 2,800
Vesting of share awards
(note 7) 6 - - - (1,321) - - - 1,321 6
Dividends paid (note 18) - - - - - - - - (5,529) (5,529)
Total transactions with
owners of the Company 6 - - - 1,479 - - - (4,208) (2,723)
At 31 December 2018 1,843 503,113 25,724 (10,337) 4,232 (1,279) 248,418 (13,198) 144,061 902,577
2019 2018

Cash flows from operating activities
Profit for the year 78,212 75,224
Adjustments for:
Depreciation of property, plant and equipment 26,183 19,698
Depreciation of right-of-use assets 17,127 -
Amortisation of intangible assets 195 44
Net revaluation movements through profit or loss (1,601) 3,137
Share-based payment expense 2,679 2,800
Interest on lease liabilities 18,945 -
Other interest and finance costs 11,668 9,514
Tax charge 11,476 12,077
164,884 122,494
Increase in trade and other payables and provision for liabilities 1,569 7,950
Increase in current and non-current receivables (793) (2,414)
Decrease/(increase) in inventories 85 (191)
Tax paid (10,776) (12,085)
Net cash from operating activities 154,969 115,754
Cash flows from investing activities
Purchase of property, plant and equipment (176,933) (112,692)
Contract fulfilment cost payments (3,528) (304)
Costs paid on entering new leases and agreements for leases (5,790) (3,734)
Deposits and costs paid for future acquisitions - (5,613)
Purchase of intangible assets (1,076) -
Net cash used in investing activities (187,327) (122,343)
Cash flows from financing activities
Interest paid on lease liabilities (18,945) -
Other interest and finance costs paid (11,196) (13,188)
Receipt of bank loans 134,437 137,902
Repayment of bank loans (42,158) (92,563)
Repayment of lease liabilities (8,569) -
Dividends paid (19,387) (5,529)
Proceeds from vesting of share awards and options 1,383 6
Net cash from financing activities 35,565 26,628
Net increase in cash and cash equivalents 3,207 20,039
Cash and cash equivalents at the beginning of the year 35,907 15,745
Effect of movements in exchange rates 1,472 123
Cash and cash equivalents at the end of the year 40,586 35,907
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Notes to the consolidated financial statements
Notes to the consolidated financial statements














Notes to the consolidated financial statements














(continued)
Notes to the consolidated financial statements
Notes to the consolidated financial statements














Notes to the consolidated financial statements














forming part of the consolidated financial statements
1 Significantaccountingpolicies
General information and basis of preparation
Hotel Group plc (the ‘Company’) is a company domiciled
in the Republic of Ireland. The Company’s registered office is
4th Floor, Burton Court, Burton Hall Drive, Sandyford, Dublin 18.
The consolidated financial statements of the Company for the
year ended 31 December 2019 include the Company and its
subsidiaries (together referred to as the ‘Group’). The financial
statements were authorised for issue by the Directors on 24
February 2020.
The consolidated financial statements have been prepared in
accordance with IFRS, as adopted by the EU. In the preparation
of these consolidated financial statements the accounting
policies set out below have been applied consistently by all
Group companies.
The preparation of financial statements in accordance with
IFRS as adopted by the EU requires the Directors to make
estimates and assumptions that affect the reported amounts
of assets and liabilities, as well as disclosure of contingent
assets and liabilities, at the date of the financial statements, and
the reported amounts of revenues and expenses during the
reporting year. Such estimates and judgements are based on
historical experience and other factors, including expectation
of future events, that are believed to be reasonable under the
circumstances and are subject to continued re-evaluation.
Actual outcomes could differ from those estimates.
In preparing these financial statements, the critical judgements
made by Directors in applying the Group’s accounting policies
and the key sources of estimation uncertainty were the same
as those that applied to the consolidated financial statements
as at and for the year ended 31 December 2018 with the
exception of estimates surrounding the implementation
of IFRS 16 Leases, which is effective for the first time in the
financial year ended 31 December 2019. Estimates surrounding
the determination of the appropriate rate to discount
lease payments under IFRS 16 Leases is a new source of
estimation uncertainty.
The key judgements and estimates impacting these
consolidated financial statements are as follows:
Significant judgements
» Carrying value of own-use property measured at fair value
(note 10);
» Carrying value of goodwill including assumptions
underpinning the impairment tests (note 9); and
» Accounting for hotel acquisitions (notes 10,12).
Key source of estimation uncertainty
» Appropriate discount rate for lease payments with regard to
the implementation of IFRS 16 Leases (note 11).
Measurement of fair values
A number of the Group’s accounting policies and disclosures
require the measurement of assets and liabilities at fair value.
When measuring the fair value of an asset or liability, the Group
uses observable market data as far as possible, with non-
financial assets being measured on a highest and best-use
basis. Fair values are categorised into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Further information about the assumptions made in measuring
fair values is included in note 24 – Financial instruments and
risk management (in relation to financial assets and financial
liabilities) and note 10 – Property, plant and equipment.
(i) Going concern
The Directors have assessed the Group’s ability to continue in
operational existence for the foreseeable future by preparing
detailed financial forecasts and carrying out stress testing
on projections, with consideration of the macro-economic
backdrop. The Directors also evaluated the strategy of the
Group as set out on page 10 to 25 of the annual report. Note 24
to the consolidated financial statements includes: the Group’s
objectives, policies and processes for managing its capital;
details of its financial instruments and hedging activities; and its
exposures to credit, currency and liquidity risks.
Having assessed the business risks, the cash flow forecasts and
available bank facilities, the Directors believe that the Group is
well placed to manage these risks successfully, and they have a
reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
The Group therefore continues to adopt the going concern
basis in preparing its consolidated financial statements.
(ii) Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(‘IFRS’) and their interpretations issued by the International
Accounting Standards Board (‘IASB’) as adopted by the
EU and those parts of the Companies Act 2014 applicable
to companies reporting under IFRS and Article 4 of the
IAS Regulation.
1 Significantaccountingpolicies (continued)
(ii) Statement of compliance (continued)
The following standards and interpretations were effective for
the Group for the first time from 1 January 2019:
» IFRS 16 Leases;
» Annual Improvements to IFRS Standards 2015-2017 Cycle;
» Amendments to IAS 19 Plan Amendment, Curtailment
or Settlement;
» Amendments to IAS 28 Long-term Interests in Associates and
Joint Ventures;
» IFRIC 23 Uncertainty over Income Tax Treatments;
» IFRIC 22 Foreign Currency Transactions and Advance
Consideration; and
» Amendments to IFRS 9 Prepayment Features with
Negative Compensation.
With the exception of IFRS 16 Leases, the above standards,
amendments and interpretations have no material impact
on the consolidated results of the Group. The IFRS 16
Leases impact on the consolidated results of the Group is
discussed hereafter.
Changes in accounting policies
Leases
The accounting policy for lease payments as included in the
2018 consolidated financial statements has been replaced
with the accounting policy as set out in (vii) Leases effective,
from the date of initial application of IFRS 16 Leases being 1
January 2019.
IFRS 16 Leases introduces an on‑balance sheet accounting
model for lessees. As a result, the Group, as a lessee, has
recognised right-of-use assets representing its rights to use
the underlying assets and lease liabilities representing its
obligation to make lease payments in its statement of financial
position. The Group has applied IFRS 16 Leases using the
modified retrospective approach. Accordingly, the comparative
information for 2018 has not been restated.
The impact of IFRS 16 Leases is detailed in notes 11 and 12 to
the consolidated financial statements.
Change in reportable segments
During the year ended 31 December 2019, the Group changed
the composition of operating segments. This reflected the
decreasing importance of management fees as an element
of the business and reflects the way the information is now
reported and analysed internally by the chief operating
decision makers.
The change in the revenue recognition accounting policy is
isolated to a change in classification. In the year ended 31
December 2018, management fees, earned from hotels
managed by the Group were recognised within revenue. From
1 January 2019, the Group has included income earned from
managed hotels within other income as a consequence of the
change in reportable segments referred to hereafter.
The effect of the change on the prior year would have resulted
in a decrease in revenue of €1.2 million for the year ended 31
December 2018, with a corresponding increase in other income
of the same amount. These comparatives have been restated.
The impact of this change on the comparatives for the Group
for the year ended 31 December 2019 is presented hereafter.
As reported in
31 December
2018
Financial
Statements
31 December
2018
Adjustments
31 December
2018
Restated
 €’000
Revenue 393,736 (1,168) 392,568
Other income 2,869 1,168 4,037
If the Group had applied the previous composition of operating
segments in the current year, this would have resulted in an
increase in reported revenue of €0.9 million for the year ended
31 December 2019, with a corresponding decrease in other
income of the same amount.
Standards issued but not yet effective
The following amendments to standards have been endorsed
by the EU, are available for early adoption and are effective from
1 January 2020 as indicated below. The Group has not adopted
these amendments to standards early, and instead intends to
apply from their effective date as determined by the date of EU
endorsement. The potential impact of these amendments to
standards on the Group is under review:
» Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate
Benchmark Reform (issued on 26 September 2019).
» Amendments to IAS 1 and IAS 8 Definition of Material (issued
on 31 October 2018).
» Amendments to References to the Conceptual Framework
in IFRS Standards (issued on 29 March 2018).
The following standards and interpretations are not yet
endorsed by the EU. The potential impact of these standards on
the Group is under review:
» IFRS 17 Insurance Contracts (issued on 18 May 2017), IASB
effective date 1 January 2021.
» Amendment to IFRS 3 Business Combinations (issued on 22
October 2018), IASB effective date 1 January 2020.
» Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (issued on
23 January 2020). IASB effective date 1 January 2020.
(iii) Functional and presentation currency
These consolidated financial statements are presented in Euro,
being the functional currency of the Company and the majority
of its subsidiaries. All financial information presented in Euro
has been rounded to the nearest thousand or million and this is
clearly set out in the financial statements where applicable.
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Notes to the consolidated financial statements














Notes to the consolidated financial statements














(continued)
Notes to the consolidated financial statements
Notes to the consolidated financial statements














Notes to the consolidated financial statements














(continued)
1 Significantaccountingpolicies (continued)
(iv) Basis of consolidation
Theconsolidatedfinancialstatementsincludethefinancial
statementsoftheCompanyandallofitssubsidiary undertakings.
Business combinations
TheGroupaccountsforbusinesscombinationsusingthe
acquisitionmethodwhencontrolistransferredtotheGroup.
Theconsiderationtransferredintheacquisitionisgenerally
measuredatfairvalue,asaretheidentifiablenetassetsacquired.
Anygoodwillthatarisesistestedannuallyforimpairment.
Anygainonabargainpurchaseisrecognisedinprofitorloss
immediately.Transactioncostsareexpensedasincurred,except
ifrelatedtotheissueofdebtorequity securities.
Whenanacquisitiondoesnotrepresentabusiness,itisaccounted
forasapurchaseofagroupofassetsandliabilities,notasa
businesscombination.Thecostoftheacquisitionisallocatedto
theassetsandliabilitiesacquiredbasedontheirrelativefairvalues,
andnogoodwillisrecognised.WheretheGroupsolelypurchases
thefreeholdinterestinaproperty,thisisaccountedforasanasset
purchaseandnotasabusinesscombinationonthebasisthatthe
asset(s)purchaseddonotconstituteabusiness.Assetpurchases
areaccountedforasadditionstoproperty,plantand equipment.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. Intra-group
balances and transactions, and any unrealised income and
expenses arising from intra-group transactions, are eliminated.
(v) Revenue recognition
Revenue represents sales (excluding VAT) of goods and
services net of discounts provided in the normal course of
business and is recognised when services have been rendered.
Revenue is derived from hotel operations and includes the rental
of rooms, food and beverage sales, car park revenue and leisure
centre membership in leased and owned hotels operated by the
Group. Revenue is recognised when rooms are occupied and
food and beverages are sold. Car park revenue is recognised
when the service is provided. Leisure centre membership
revenue is recognised over the life of the membership.
Revenue in respect of contracts with customers for sale
of residential property is based on when the performance
obligations inherent in the contract are completed. The
contract for sale is assessed in line with IFRS 15 Revenue from
Contracts with Customers and revenue is recognised when the
performance obligations inherent in the contract are met.
Management fees are earned from hotels managed by the
Group. Management fees are normally a percentage of hotel
revenue and/or profit and are recognised when earned and
recoverable under the terms of the management agreement.
Management fee income is included within other income.
Rental income from investment property is recognised on a
straight-line basis over the term of the lease and is included
within other income.
(vi) Sales discounts and allowances
The Group recognises revenue on a gross revenue basis and
makes various deductions to arrive at net revenue as reported
in profit or loss. These adjustments are referred to as sales
discounts and allowances.
(vii) Leases
Lease payments pre application of IFRS 16 Leases
Prior to 1 January 2019 and the application of IFRS 16 Leases
the following accounting policy was effective. As permitted
upon transition to IFRS 16 Leases and under the modified
retrospective approach selected by the Group, the comparative
2018 information has not been restated.
Payments made under operating leases were recognised in
profit or loss on a straight-line basis over the term of the lease.
Certain hotel operating lease agreements included minimum
rental payments with further contingent rent payable depending
on the financial performance of the hotel. Contingent rent was
recognised in profit or loss based on performance in the year.
Initial direct costs associated with entering into a new lease
were recognised as a prepayment and were amortised to profit
or loss on a straight-line basis over the term of the lease.
Lease payments post application of IFRS 16 Leases with effect
from 1 January 2019
At inception of a lease contract, the Group assesses whether a
contract is, or contains, a lease. If the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration, it is recognised as a lease.
To assess the right to control, the Group assesses whether:
» the contract involves the use of an identified asset;
» the Group has the right to obtain substantially all of the
economic benefits from the use of the asset; and
» the Group has the right to direct the use of the asset.
A lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Group’s incremental
borrowing rate. The Group uses its incremental borrowing rate
as the discount rate, which is defined as the estimated rate of
interest that the lessee would have to pay to borrow, over a
similar term and with a similar security, the funds necessary to
obtain an asset of a similar value to the right-of-use asset in
a similar economic environment. The estimated incremental
borrowing rate for each leased asset is derived from country
specific risk-free interest rates over the relevant lease term,
adjusted for the finance margin attainable by each lessee and
asset specific adjustments designed to reflect the underlying
asset’s location and condition.
1 Significantaccountingpolicies (continued)
(vii) Leases (continued)
Lease payments post application of IFRS 16 Leases with effect
from 1 January 2019 (continued)
Lease payments included in the measurement of the lease
liability comprise the following:
» fixed payments (including in‑substance fixed payments) less
any lease incentives receivable;
» variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date;
» amounts expected to be payable under a residual
value guarantee;
» the exercise price under a purchase option that the Group is
reasonably certain to exercise; and
» penalties for early termination of a lease unless the Group is
reasonably certain not to terminate early.
Variable lease payments linked to future performance or use of
an underlying asset are excluded from the measurement of the
lease liability and the right-of-use asset. The related payments
are recognised as an expense in the period in which the event or
condition that triggers those payments occurs and are included
in administrative expenses in profit or loss.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying
amount to reflect lease payments.
The Group remeasures the lease liability where lease payments
change due to changes in an index or rate, changes in expected
lease term or where a lease contract is modified. When the
lease liability is remeasured, a corresponding adjustment is
made to the carrying amount of the right-of-use asset or is
recorded in profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate of
costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. Right-of-use assets are
reviewed on an annual basis or whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. The Group applies IAS 36 Impairment of Assets to
determine whether a cash-generating unit with a right-of-use
asset is impaired and accounts for any identified impairments
through profit or loss. The right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability. The Group applies the fair
value model in IAS 40 Investment Property to right-of-use assets
that meet the definition of investment property.
The Group has elected not to recognise right-of-use assets
and lease liabilities for short-term leases of fixtures, fittings and
equipment that have a lease term of 12 months or less and
leases of low-value assets. Assets are considered low value if
the value of the asset when new is less than €5,000. The Group
recognises the lease payments associated with these leases as
an expense on a straight-line basis over the lease term.
(viii) Share-based payments
The grant date fair value of equity-settled share-based payment
awards and options granted to employees is recognised as
an expense, with a corresponding increase in equity, over the
vesting period of the awards and options. This incorporates the
effect of market-based conditions, where applicable, and the
estimated fair value of equity‑settled share-based payment
awards issued with non-market performance conditions.
The amount recognised as an expense is adjusted to reflect
the number of awards and options for which the related service
and any non-market performance conditions are expected to
be met, such that the amount ultimately recognised is based
on the number of awards that meet the related service and
non-market performance conditions at the vesting date. The
amount recognised as an expense is not adjusted for market
conditions not being met.
On vesting of the equity-settled share-based payment awards
and options, the cumulative expense recognised in the share-
based payment reserve is transferred directly to retained
earnings. An increase in ordinary share capital and share
premium, in the case where the price paid per share is higher
than the cost per share, is recognised reflecting the issuance of
shares as a result of the vesting of the awards and options.
The dilutive effect of outstanding awards is reflected as
additional share dilution in calculating diluted earnings per share.
(ix) Tax
Tax charge comprises current and deferred tax. Tax charge is
recognised in profit or loss except to the extent that it relates
to a business combination or items recognised directly in other
comprehensive income or equity.
Current tax is the expected tax payable on the taxable income
for the year using tax rates enacted or substantively enacted at
the reporting date and any adjustment to tax payable in respect
of previous years.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and amounts used for taxation
purposes except for the initial recognition of goodwill and other
assets that do not affect accounting profit or taxable profit at
the date of recognition.
Deferred tax is measured at the tax rates that are expected
to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively
enacted by the reporting date.
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(continued)
1 Significantaccountingpolicies (continued)
(ix) Tax (continued)
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on
the same taxable entity, or on different entities, but they intend
to settle current tax liabilities and assets on a net basis or their
tax assets and liabilities will be realised simultaneously. Deferred
tax liabilities have been recognised where the carrying value of
land and buildings for financial reporting purposes is greater
than their tax cost base.
Deferred tax assets are recognised for unused tax losses,
unused tax credits and deductible temporary differences to the
extent that it is probable future taxable profits will be available
against which the temporary difference can be utilised.
Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the
related tax benefit will be realised. Such reductions are reversed
when the probability of future taxable profits improves.
(x) Earnings per share (‘EPS’)
Basic earnings per share are calculated based on the profit
for the year attributable to owners of the Company and
the basic weighted average number of shares outstanding.
Diluted earnings per share are calculated based on the profit
for the year attributable to owners of the Company and the
diluted weighted average number of shares and potential
shares outstanding.
Dilutive effects arise from share-based payments that are
settled in shares. Conditional share awards to employees have
a dilutive effect when the average share price during the period
exceeds the exercise price of the awards and the market or
non-market conditions of the awards are met, as if the current
period end were the end of the vesting period. When calculating
the dilutive effect, the exercise price is adjusted by the value
of future services that have yet to be received related to
the awards.
(xi) Property, plant and equipment
Land and buildings are initially stated at cost, including directly
attributable transaction costs, (or fair value when acquired
through business combinations) and subsequently at fair value.
Assets under construction include sites where new hotels are
currently being developed and significant development projects
at hotels which are currently operational. These sites and the
capital investment made are recorded at cost. Borrowing costs
incurred in the construction of major assets or development
projects which take a substantial period of time to complete
are capitalised in the financial period in which they are incurred.
Once construction is complete and the hotel is operating, the
assets will be transferred to land and buildings at cost, and
will subsequently be measured at fair value. Depreciation will
commence when the asset is available for use.
Fixtures, fittings and equipment are stated at cost, less
accumulated depreciation and any impairment provision.
Cost includes expenditure that is directly attributable to the
acquisition of property, plant and equipment unless it is acquired
as part of a business combination under IFRS 3, where the
deemed cost is its acquisition date fair value. In the application
of the Group’s accounting policy, judgement is exercised
by management in the determination of fair value at each
reporting date, residual values and useful lives.
Depreciation is charged through profit or loss on the cost or
valuation less residual value on a straight-line basis over the
estimated useful lives of the assets which are as follows:
Buildings 50 years
Fixtures, fittings and equipment 3 – 15 years
Land is not depreciated.
Residual values and useful lives are reviewed and adjusted if
appropriate at each reporting date.
Land and buildings are revalued by qualified valuers on a
sufficiently regular basis using open market value (which
reflects a highest and best use basis) so that the carrying value
of an asset does not materially differ from its fair value at the
reporting date. External revaluations of the Group’s land and
buildings have been carried out in accordance with the Royal
Institution of Chartered Surveyors (RICS) Valuation Standards
and IFRS 13 FairValue Measurement.
Surpluses on revaluation are recognised in other
comprehensive income and accumulated in equity in the
revaluation reserve, except to the extent that they reverse
impairment losses previously charged to profit or loss, in which
case the reversal is recorded in profit or loss. Decreases in
value are charged against other comprehensive income and
the revaluation reserve to the extent that a previous gain has
been recorded there, and thereafter are charged through profit
or loss.
Fixtures, fittings and equipment are reviewed for impairment
when events or changes in circumstances indicate that
the carrying value may not be recoverable. Assets that do
not generate independent cash flows are combined into
cash-generating units. If carrying values exceed estimated
recoverable amounts, the assets or cash-generating units are
written down to their recoverable amount. Recoverable amount
is the greater of fair value less costs to sell and value in use.
Value in use is assessed based on estimated future cash flows
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and risks specific to the asset.
1 Significantaccountingpolicies (continued)
(xii) Investment property
Investment property is held either to earn rental income, or for
capital appreciation, or for both, but not for sale in the ordinary
course of business.
Investment property is initially measured at cost, including
transaction costs, (or fair value when acquired through business
combinations) and subsequently revalued by professional
external valuers at their respective fair values. The difference
between the fair value of an investment property at the
reporting date and its carrying value prior to the external
valuation is recognised in profit or loss.
The Group’s investment properties are valued by qualified
valuers on an open market value basis in accordance with
the Royal Institution of Chartered Surveyors (RICS) Valuation
Standards and IFRS 13 FairValue Measurement.
(xiii) Goodwill
Goodwill represents the excess of the fair value of the
consideration for an acquisition over the Group’s interest in the
net fair value of the identifiable assets, liabilities and contingent
liabilities of the acquiree. Goodwill is the future economic
benefits arising from other assets in a business combination
that are not individually identified and separately recognised.
Goodwill is measured at its initial carrying amount less
accumulated impairment losses. The carrying amount of
goodwill is reviewed at each reporting date to determine if there
is an indication of impairment. For the purposes of impairment
testing, assets are grouped together into the smallest group
of assets that generate cash inflows from continuing use that
are largely independent of the cash inflows of other assets or
groups of assets (the ‘cash-generating unit’).
The goodwill acquired in a business combination, for the
purpose of impairment testing, is allocated to cash-generating
units that are expected to benefit from the synergies of
the combination.
The recoverable amount of a cash-generating unit is the
greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects a current market assessment of the time value of
money and the risks specific to the asset.
An impairment loss is recognised in profit or loss if the carrying
amount of a cash-generating unit exceeds its estimated
recoverable amount. Impairment losses recognised in respect
of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units and
then to reduce the carrying amount of the other assets in the
units on a pro-rata basis. Impairment losses of goodwill are not
reversed once recognised.
The impairment testing process requires management to make
significant judgements and estimates regarding the future
cash flows expected to be generated by the cash-generating
unit. Management evaluates and updates the judgements and
estimates which underpin this process on an ongoing basis.
The impairment methodology and key assumptions used by the
Group for testing goodwill for impairment are outlined in note 9.
The assumptions and conditions for determining impairment
of goodwill reflects management’s best estimates and
judgements, but these items involve significant inherent
uncertainties, many of which are not under the control of
management. As a result, accounting for such items could
result in different estimates or amounts if management
used different assumptions or if different conditions occur in
the future.
(xiv) Intangible assets other than goodwill
An intangible asset is only recognised where the item lacks a
physical presence, is identifiable, non-monetary, controlled by
the Group and expected to provide future economic benefits to
the Group.
Intangible assets are measured at cost (or fair value when
acquired through business combinations), less accumulated
amortisation and impairment losses.
An intangible asset is determined to have an indefinite useful
life when, based on the facts and circumstances, there is no
foreseeable limit to the period over which the asset is expected
to generate future economic benefits for the Group. Intangible
assets with indefinite lives are reviewed for impairment on
an annual basis and are not amortised. The useful life of an
intangible asset that is not subject to amortisation is reviewed
at least annually to determine whether a change in the useful
life is appropriate.
Other intangible assets are amortised over the period of their
expected useful lives by charging equal annual instalments to
profit or loss. The useful life used to amortise finite intangible
assets relates to the future performance of the asset and
management’s judgement as to the period over which
economic benefits will be derived from the asset.
(xv) Inventories
Inventories are stated at the lower of cost (using the first-in,
first-out (FIFO) basis) and net realisable value. Inventories
represent assets that are sold in the normal course of business
by the Group and consumables.
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Notes to the consolidated financial statements
(continued)
Notes to the consolidated financial statements
(continued)
1 Significant accounting policies (continued)
(xvi) Contract fulfilment costs
Contract fulfilment costs are stated at the lower of cost and
recoverable amount. Contract fulfilment costs represent
assets that are to be sold by the Group but do not form part of
normal trading. Costs capitalised as contract fulfilment costs
include costs incurred in fulfilling the specific contract. The
costs must enhance the asset, be used in order to satisfy the
obligations inherent in the contractual arrangement and should
be recoverable. Costs which are not recoverable are written off
to profit or loss as incurred.
(xvii) Trade and other receivables
Trade and other receivables are stated initially at their fair value
and subsequently at amortised cost, less any expected credit
loss provision. The Group applies the simplified approach
to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. Bad debts are
written off to profit or loss on identification.
(xviii) Trade and other payables
Trade and other payables are initially recorded at fair value,
which is usually the original invoiced amount, and subsequently
carried at amortised cost using the effective interest rate
method. Liabilities are derecognised when the obligation under
the liability is discharged, cancelled or expires.
(xix) Finance costs
Finance costs comprise interest expense on borrowings and
related financial instruments, amortisation of capitalised costs
directly related to debt raises, commitment fees and other
costs relating to financing of the Group.
Interest expense is recognised using the effective interest
method. The effective interest rate of a financial liability
is calculated on initial recognition of a financial liability. In
calculating interest expense, the effective interest rate is
applied to the amortised cost of the liability. The effective
interest rate is revised as a result of periodic re-estimation of
cash flows of floating rate instruments to reflect movements in
market rates of interest.
Finance costs incurred for qualifying assets, which take a
substantial period of time to construct, are added to the cost
of the asset during the period of time required to complete and
prepare the asset for its intended use or sale. The Group uses
two capitalisation rates being the weighted average interest
rate after the impact of hedging instruments for Sterling
borrowings which is applied to United Kingdom qualifying assets
and the weighted average interest rate for Euro borrowings
which is applied to Republic of Ireland qualifying assets.
Capitalisation commences on the date on which the Group
undertakes activities that are necessary to prepare the asset
for its intended use. Capitalisation of borrowing costs ceases
when the asset is ready for its intended use.
Finance costs also include interest on lease liabilities since the
date of initial application of IFRS 16 Leases.
(xx) Foreign currency
Transactions in currencies other than the functional currency of
a Group entity are recorded at the rate of exchange prevailing
on the date of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are
retranslated into the respective functional currency at the
relevant rates of exchange ruling at the reporting date. Foreign
exchange differences arising on translation are recognised in
profit or loss.
The assets and liabilities of foreign operations are translated
into Euro at the exchange rate ruling at the reporting date. The
income and expenses of foreign operations are translated into
Euro at rates approximating the exchange rates at the dates of
the transactions.
Foreign exchange differences arising on the translation of
foreign operations are recognised in other comprehensive
income, and are included in the translation reserve within equity.
(xxi) Provisions and contingent liabilities
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If
the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and,
where appropriate, the risks specific to the liability.
The provision in respect of self-insured risks includes
projected settlements for known claims and incurred but not
reported claims.
Where it is not probable that an outflow of economic benefits
will be required, or the amount cannot be estimated reliably,
the obligation is disclosed as a contingent liability, unless the
probability of an outflow of economic benefits is remote.
Possible obligations, whose existence will only be confirmed
by the occurrence or non-occurrence of one or more future
events, are also disclosed as contingent liabilities unless the
probability of an outflow of economic benefits is remote.
(xxii) Ordinary shares
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issuance of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
(xxiii) Loans and borrowings
Loans and borrowings are recognised initially at fair value of
consideration received, less directly attributable transaction
costs. Subsequent to initial recognition, loans and borrowings
are stated at amortised cost with any difference between cost
and redemption value being recognised in profit or loss over
the period of the borrowings on an effective interest rate basis.
Directly attributable transaction costs are amortised to profit or
loss on an effective interest rate basis over the term of the loans
and borrowings. This amortisation charge is recognised within
finance costs. Commitment fees incurred in connection with
loans and borrowings are expensed as incurred to profit or loss.
1 Significantaccountingpolicies (continued)
(xxiv) Derecognition of financial liabilities
The Group removes a financial liability from its statement of
financial position when it is extinguished (when its contractual
obligations are discharged, cancelled, or expire).
The Group also derecognises a financial liability when the
terms and the cash flows of a modified liability are substantially
different. The terms are substantially different if the discounted
present value of the cash flows under the new terms,
discounted using the original effective interest rate, including
any fees paid net of any fees received, is at least ten percent
different from the discounted present value of the remaining
cash flows of the original financial liability, the ‘10% test’.
If the financial liability is deemed substantially modified
(greater than ten percent different), a new financial liability
based on the modified terms is recognised at fair value. The
difference between the carrying amount of the financial
liability derecognised and consideration paid is recognised in
profit or loss.
If the financial liability is deemed non-substantially modified
(less than ten percent different), the amortised cost of the
liability is recalculated by discounting the modified cash flows at
the original effective interest rate and the resulting gain or loss
is recognised in profit or loss. For floating-rate financial liabilities,
the original effective interest rate is adjusted to reflect the
current market terms at the time of the modification. Any costs
and fees directly attributable to the modified financial liability
are recognised as an adjustment to the carrying amount of the
modified financial liability and amortised over its remaining term
by re-computing the effective interest rate on the instrument.
Any unamortised costs attributable to the original financial
liability, with the exception of unamortised arrangement fees,
are recognised as an adjustment to the carrying amount of the
modified financial liability and amortised over its remaining term
by re-computing the effective interest rate on the instrument.
Unamortised arrangement fees relating to the original liability
are expensed to profit or loss on modification.
(xxv) Derivative financial instruments
The Group’s borrowings expose it to the financial risks of
changes in interest rates. The Group uses derivative financial
instruments such as interest rate swap agreements and
interest rate cap agreements to hedge these exposures.
Interest rate swaps convert part of the Group’s Sterling
denominated borrowings from floating to fixed interest rates.
The interest rate cap limits a portion of the exposure of the
Group’s Euro denominated borrowings to upward movements
in floating interest rates. The Group does not use derivatives for
trading or speculative purposes.
Derivative financial instruments are recognised at fair value
on the date a derivative contract is entered into plus directly
attributable transaction costs and are subsequently re-
measured at fair value. Derivatives are carried as assets when
the fair value is positive and as liabilities when the fair value
is negative.
The full fair value of a hedging derivative is classified as a non-
current asset or non-current liability if the remaining maturity
of the hedging instrument is more than twelve months and as a
current asset or current liability if the remaining maturity of the
hedging instrument is less than twelve months.
The fair value of derivative instruments is determined by
using valuation techniques. The Group uses its judgement to
select the most appropriate valuation methods and makes
assumptions that are mainly based on observable market
conditions (Level 2 fair values) existing at the reporting date.
The method of recognising the resulting gain or loss depends
on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
(xxvi) Cash flow hedge accounting
For those derivatives designated as cash flow hedges and for
which hedge accounting is desired, the hedging relationship is
documented at its inception. This documentation identifies the
hedging instrument, the hedged item or transaction, the nature
of the risk being hedged and its risk management objectives
and strategy for undertaking the hedging transaction. The
Group also documents its assessment, both at hedge inception
and on a semi-annual basis, of whether the derivatives that are
used in hedging transactions are highly effective in offsetting
changes in cash flows of hedged items.
Where a derivative financial instrument is designated as a hedge
of the variability in cash flows of a recognised asset or liability,
the effective part of any gain or loss on the derivative financial
instrument is recognised in other comprehensive income and
accumulated in equity in the hedging reserve. Any ineffective
portion is recognised immediately in profit or loss as finance
income/costs. The amount accumulated in equity is retained in
other comprehensive income and reclassified to profit or loss
in the same period or periods during which the hedged item
affects profit or loss.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, exercised, or no
longer qualifies for hedge accounting or the designation is
revoked. At that point in time, any cumulative gain or loss on
the hedging instrument recognised in equity remains in equity
and is recognised when the forecast transaction is ultimately
recognised in profit or loss. However, if a hedged transaction is
no longer anticipated to occur, the net cumulative gain or loss
accumulated in equity is reclassified to profit or loss.
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Notes to the consolidated financial statements
(continued)
Notes to the consolidated financial statements
(continued)
1 Significant accounting policies (continued)
(xxvii) Net investment hedges
Where relevant, the Group uses a net investment hedge,
whereby the foreign currency exposure arising from a net
investment in a foreign operation is hedged using borrowings
held by a Group entity that is denominated in the functional
currency of the foreign operation.
Foreign currency differences arising on the retranslation of
a financial liability designated as a hedge of a net investment
in a foreign operation are recognised directly in other
comprehensive income in the foreign currency translation
reserve, to the extent that the hedge is effective. To the extent
that the hedge is ineffective, such differences are recognised
in profit or loss. When the hedged part of a net investment is
disposed of, the associated cumulative amount in equity is
reclassified to profit or loss.
(xxviii) Adjusting items
Consistent with how business performance is measured and
managed internally, the Group reports both statutory measures
prepared under IFRS and certain alternative performance
measures (‘APMs’) that are not required under IFRS.
These APMs are sometimes referred to as ‘non-GAAP’
measures and include, amongst others, Adjusted EBITDA,
Adjusted Profit and Adjusted EPS.
The Group believes that the presentation of these APMs
provides useful supplemental information which, when viewed in
conjunction with the financial information presented under IFRS,
provides stakeholders with a more meaningful understanding
of the underlying financial and operating performance of
the Group.
Adjusted measures of profitability represent the equivalent
IFRS measures adjusted to show the underlying operating
performance of the Group and exclude items which are not
reflective of normal trading activities or distort comparability
either period on period or with other similar businesses.
(xxix) Pre IFRS 16 alternative performance measures
As set out in note 11 and note 12, the adoption of IFRS 16
Leases has had a significant impact on the Group’s consolidated
financial statements. Additionally, in line with the transition
approach selected by the Group under the standard, the
modified retrospective approach, the 2018 comparative
information has not been restated.
Given the scale of the impact and the non-restatement of
the comparatives, the Group has elected to also disclose
2019 numbers as if IFRS 16 Leases had not applied. This is to
provide additional quality and depth to users’ understanding
of the performance and financial position of the business.
This is particularly important given key metrics, which users
have heretofore placed significant reliance on, have been
considerably impacted.
2 Operatingsegments
The segments are reported in accordance with IFRS 8 Operating Segments. The segment information is reported in the same way
as it is reviewed and analysed internally by the chief operating decision makers, primarily the CEO, Deputy CEOs and the Board
of Directors.
The Group segments its leased and owned business by geographical region within which the hotels operate being Dublin, Regional
Ireland and United Kingdom. These comprise the Group’s three reportable segments.
Dublin, Regional Ireland and United Kingdom segments
These segments are concerned with hotels that are either owned or leased by the Group. As at 31 December 2019, the Group owns
28 hotels (31 December 2018: 27 hotels) and has effective ownership of one further hotel which it operates (31 December 2018:
one hotel). It also owns the majority of one of the other hotels which it operates (31 December 2018: one hotel). The Group also
leases 11 hotel buildings from property owners (31 December 2018: ten hotels) and is entitled to the benefits and carries the risks
associated with operating these hotels.
The Group’s revenue from leased and owned hotels is primarily derived from room sales and food and beverage sales in restaurants,
bars and banqueting. The main operating costs arising are payroll, cost of goods for resale, commissions paid to online travel agents
on room sales, other operating costs, and, in the case of leased hotels, variable rent payments (where linked to turnover or profit)
made to lessors. In 2019, fixed rental costs are no longer included in operating costs in accordance with IFRS 16 Leases which instead
reflects interest on lease liabilities and depreciation of right-of-use assets.
Restated*
2019 2018

Revenue
Dublin 245,401 234,907
Regional Ireland 84,925 79,554
United Kingdom 98,858 78,107
Total revenue 429,184 392,568
* Income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019 following the change in reportable segments
during 2019, which is described in note 1. The prioryear figures have been restated for this reclassification.
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* Income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019 following the change in reportable segments
during 2019, which is described in note 1. The prioryear figures have been restated for this reclassification.
Group EBITDA to 31 December 2019 represents earnings before interest on lease liabilities, other interest and finance costs, tax,
depreciation of property, plant and equipment and right-of-use assets, and amortisation of intangible assets.
Group EBITDA to 31 December 2018 represents earnings before interest and finance costs, tax, depreciation of property, plant and
equipment and amortisation of intangible assets.
In 2018, Group EBITDA is calculated after deduction of fixed rent of €25.4 million and variable rent of €7.5 million under IAS 17 Leases.
From 1 January 2019, as a result of the application of IFRS 16, Group EBITDA has no comparative fixed rent deduction, however, Group
EBITDA continues to include a deduction for variable rent. Interest on lease liabilities and depreciation of right-of-use assets are now
recognised instead and appear below Group EBITDA. If the Group accounted for rent under IAS 17 to 31 December 2019, rental
expenses would include fixed rent of €27.4 million and EBITDA would decrease by the same amount.
Adjusted EBITDA is presented as an alternative performance measure to show the underlying operating performance of the Group
excluding items which are not reflective of normal trading activities or distort comparability either period on period or with other
similar businesses. Consequently, Adjusted EBITDA represents Group EBITDA before:
» Net property revaluation movements through profit or loss (note 10,13);
» Hotel pre-opening expenses (note 3); and
» Proceeds from insurance claim in 2018 (note 4).
2 Operating segments (continued)
The line item ‘central costs’ includes costs of the Group’s central functions including operations support, technology, sales and
marketing, human resources, finance, corporate services and business development.
Share-based payments expense is presented separately from central costs as this expense relates to employees across the Group.
‘Segmental results – EBITDA’ for Dublin, Regional Ireland and United Kingdom represents the ‘Adjusted EBITDA’ for each
geographical location before central costs, share-based payments expense and other income. It is the net operational contribution
of leased and owned hotels in each geographical location.
‘Segmental results – EBITDAR’ for Dublin, Regional Ireland and United Kingdom represents ‘Segmental results – EBITDA’ before rent
(fixed and variable).
Adjusted tax charge shows the tax charge excluding the tax effect of items which are not reflective of normal trading activities or
distort comparability either period on period or with other similar businesses.
Tax impact of proceeds from insurance claim reflects the capital gains tax which is now payable following the Group’s decision not to
reinstate the asset that was the subject of the insurance claim in 2018. The tax adjustment for adjusting items reflects the impact of
tax on other adjusting items. The adjusted tax charge excludes these two amounts.
Disaggregated revenue information
Disaggregated revenue is reported in the same way as it is reviewed and analysed internally by the chief operating decision makers,
primarily the CEO, Deputy CEOs and the Board of Directors.
The key components of revenue reviewed by the chief operating decision makers are:
» Room revenue which relates to the rental of rooms in each hotel. Revenue is recognised when the hotel room is occupied, and the
service is provided;
» Food and beverage revenue which relates to sales of food and beverages at the hotel property. Revenue is recognised at the point
of sale; and
» Other revenue includes revenue from leisure centres, car parks, meeting room hire and other revenue sources at the hotels.
Leisure centre revenue is recognised over the life of the membership while the other items are recognised when the service
is provided.
Revenue review by segment – Dublin 2019 2018
Depreciation of right-of-use assets 17,127 -
Operating lease rentals: Land and buildings (including central office lease costs) 7,321 33,171
Hotel pre-opening expenses 9 2,487
Hotel pre-opening expenses relate to costs incurred by the Group in advance of the six new hotels which opened in 2018 (five) and
early 2019 (one). These costs primarily relate to payroll expenses, sales and marketing costs and training costs of new staff.
Auditor’s remuneration 2019 2018

Audit of Group, Company and subsidiary financial statements 405 321
Other assurance services 25 20
Tax services 37 262
Other non-audit services 87 39
554 642
Auditor’s remuneration for the audit of the Company financial statements was €15,000 (2018: €10,000).
Other assurance services primarily relate to review of the interim condensed consolidated financial statements.
The majority of the fees for tax and other non-audit services in 2019 relate to review of capital allowances, financial due diligence in
acquiring the lease of the Tamburlaine Hotel in Cambridge and other miscellaneous projects.
The fees for tax and other non-audit services in 2018 relate to taxation advice on the sale, at completion, of the residential
property which the Group is developing at the site of the Tara Towers hotel (note 14), review of capital allowances and other
miscellaneous projects.
Directors’ remuneration 2019 2018

Salary and other emoluments 2,158 2,617
Gains on vesting of awards granted in 2015 under the 2014 LTIP - 1,250
Gains on vesting of awards granted in 2016 under the 2014 LTIP 603 -
Gains on vesting of options granted under the Ireland Share Save scheme 44 -
Fees 420 350
Pension costs – defined contribution 104 103
3,329 4,320
Gains associated with the shares which issued to the Directors on vesting of awards granted in 2015 and 2016 under the 2014 Long
Term Incentive Plan (“LTIP”) and granted in 2016 under the Ireland Share Save scheme represent the difference between the quoted
share price per ordinary share and the exercise price on the vesting date (note 7). The shares granted under the LTIP schemes are
held in a restricted share trust and may not be sold or dealt in any way for a period of five years and 30 days from the vesting date.
Details of the Directors’ remuneration and interests in conditional share awards are set out in the Remuneration Committee Report
on pages 78 to 95.
4 Other income
Restated*
2019 2018

Rental income from investment property (note 13) 351 271
Proceeds from insurance claim - 2,598
Income from managed hotels 855 1,168
1,206 4,037
* Income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019 following the change in reportable segments
during 2019, which is described in note 1.
Income from managed hotels represents the fees and other income earned from services provided in relation to partner hotels
which are not owned or leased by the Group.
In October 2018, the Group received a commercial settlement amounting to €2.6 million from an insurance claim as a result of a
fire in December 2016 at Clayton Hotel Silver Springs, Cork in which a vacant building located on the grounds, but separate to, and
unused by the hotel, was destroyed.
5 Finance cost 
Interest on lease liabilities (note 12) 18,945 -
Interest expense on bank loans and borrowings 9,126 7,801
Cash flow hedges – reclassified from other comprehensive income 1,177 1,026
Other finance costs 1,536 2,760
Net exchange loss/(gain) on financing activities 366 (325)
Interest capitalised to property, plant and equipment (note 10) (400) (1,748)
Interest capitalised to contract fulfilment costs (note 14) (137) -
30,613 9,514
The Group incurred interest amounting to €18.9 million on lease liabilities since the date of initial application of IFRS 16 Leases
(note 12).
The Group uses interest rate swaps to convert the interest rate on part of its debt from floating rate to fixed rate (note 22). The cash
flow hedge amount reclassified from other comprehensive income is shown separately within finance costs and primarily represents
the additional interest the Group paid as a result of the interest rate swaps.
Other finance costs include the amortisation of capitalised debt costs, commitment fees and other banking fees. As a result of
refinancing in 2018, the write-off of unamortised arrangement fees relating to the original loan facility on modification of €0.9 million
were also included in finance costs in 2018 (note 21).
Exchange gain/loss on financing activities relates principally to loans which did not form part of the net investment hedge (note 24).
Interest on loans and borrowings amounting to €0.4 million was capitalised to assets under construction on the basis that this cost
was directly attributable to the construction of qualifying assets (note 10) (2018: €1.7 million). Interest on loans and borrowings
amounting to €0.1 million was capitalised to contract fulfilment costs on the basis that this cost was directly attributable to the
construction of qualifying assets (note 14) (2018: €nil). The capitalisation rates applied by the Group, which were reflective of the
weighted average interest cost in respect of Euro denominated borrowings and Sterling denominated borrowings for the year, were
1.4% (2018: 2.03%) and 2.9% (2018: 3.43%) respectively.
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€0.6 million of payroll costs relating to the Group’s internal development employees were capitalised to land and buildings as these
costs are directly related to development and other construction work completed in the year to 31 December 2019 (note 10).
7 Share-based payments expense
The total share-based payments expense for the Group’s employee share schemes charged to profit or loss during the year was
€2.7 million (2018: €2.8 million), analysed as follows:
2019 2018

Long Term Incentive Plans 2,268 2,374
Share Save schemes 411 426
2,679 2,800
Details of the schemes operated by the Group are set out below:
Long Term Incentive Plans
During the year ended 31 December 2019, the Board approved the conditional grant of 839,373 ordinary shares (‘the Award’)
pursuant to the terms and conditions of the Group’s 2017 Long Term Incentive Plan (‘the 2017 LTIP’). The Award was made to senior
employees across the Group (96 in total). Vesting of the Award is based on two independently assessed performance targets,
each one representing 50% of the Award. The first is based on earnings per share (‘EPS’) and the second on total shareholder
return (‘TSR’). The performance period for the award is 1 January 2019 to 31 December 2021 and 25% of the award will vest at
threshold performance, provided service conditions attaching to the awards are met. Threshold performance for the TSR condition
is performance in line with the Dow Jones European STOXX Travel and Leisure Index with 100% vesting for outperformance of
the index by 10% per annum. Threshold performance for the EPS condition, which is a non-market based performance condition,
is based on the achievement of Adjusted Basic EPS pre IFRS 16, as disclosed in the Group’s 2021 audited consolidated financial
statements, of €0.45 with 100% vesting for Adjusted Basic EPS pre IFRS 16 of €0.55 or greater. Awards will vest on a straight-line
basis for performance between these points. EPS targets may be amended in restricted circumstances if an event occurs which
causes the Remuneration Committee to determine an amended or substituted performance condition would be more appropriate
and not materially more or less difficult to satisfy. Further details of the plans are set out in the Remuneration Committee Report on
pages 78 to 95.
Movements in the number of share awards are as follows:
2019 2018
Outstanding at the end of the year 2,361,766 2,159,409
During the year ended 31 December 2019, the Company issued 285,809 shares on foot of the vesting of awards granted in March
2016 under the terms of the 2014 LTIP. Over the course of the three year performance period, 18,658 share awards lapsed due to
vesting conditions which were not satisfied. 335,444 shares lapsed unvested due to TSR performance below maximum target. The
weighted average share price at the date of exercise for awards exercised during the year was €6.00.
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Measurement of fair values
The fair value, at the grant date, of the TSR-based conditional share awards was measured using a Monte Carlo simulation model.
Non-market based performance conditions attached to the awards were not taken into account in measuring fair value at the grant
date. The valuation and key assumptions used in the measurement of the fair values at the grant date were as follows:
March 2019 March 2018 May 2017 March 2016
Fair value at grant date €3.43 €3.03 €2.14 €2.45
Share price at grant date €5.98 €6.06 €5.09 €4.69
Exercise price €0.01 €0.01 €0.01 €0.01
Expected volatility 29.96% p.a. 29.77% p.a. 25.89% p.a. 30.20% p.a.
Dividend yield 1.5% 1.5% 1.5% 1.5%
Performance period 3 years 3 years 3 years 3 years
For measurement purposes, a future dividend yield of 1.5% per annum has been assumed for the purpose of informing the projected
Company dividend in the LTIP fair value calculation model. This percentage is not in any way indicative of the expected dividend yield
of the Group. This will be decided by the Board of Directors as appropriate. Expected volatility is based on the historical volatility of
the Company’s share price.
Awards granted in 2017, 2018 and 2019 under the 2017 LTIP include EPS-based conditional share awards. The EPS-related
performance condition is a non-market performance condition and does not impact the fair value of the award at the grant date,
which equals the share price less exercise price. Instead, an estimate is made by the Group as to the number of shares which are
expected to vest based on satisfaction of the EPS-related performance condition, and this, together with the fair value of the
award at grant date, determines the accounting charge to be spread over the vesting period. The estimate of the number of shares
which are expected to vest is reviewed in each reporting period over the vesting period of the award and the accounting charge is
adjusted accordingly.
Share Save schemes
The Remuneration Committee of the Board of Directors approved the granting of share options under the UK and Ireland Share
Save schemes (the ‘Schemes’) for all eligible employees across the Group in 2016, 2017, 2018 and 2019. 527 employees availed
of the Schemes granted in 2019 (379 employees availed of the Schemes granted in 2018). Each Scheme is for three years and
employees may choose to purchase shares at the end of the three year period at the fixed discounted price set at the start of the
three year period. The share price for the Schemes has been set at a 25% discount for Republic of Ireland based employees and 20%
for United Kingdom based employees in line with the maximum amount permitted under tax legislation in both jurisdictions.
During the year ended 31 December 2019, the Company issued 465,145 shares on maturity of the share options granted as part of the
Scheme granted in 2016. The weighted average share price at the date of exercise for options exercised during the year was €5.23.
Movements in the number of share options and the related weighted average exercise price (“WAEP”) are as follows:
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Goodwill
Goodwill is attributable to factors including expected profitability and revenue growth, increased market share, increased
geographical presence, the opportunity to develop the Group’s brands and the synergies expected to arise within the Group
after acquisition.
Based on our annual impairment review conducted at 31 December 2019, goodwill was not considered to be impaired and
accordingly, no impairment was recognised during 2019. During 2016, following revaluation gains increasing the carrying value of
assets an element of goodwill was impaired on eight of the Group’s cash-generating units (CGUs), primarily relating to Moran Bewley
Hotel Group acquisitions which resulted in a €10.3 million reduction in goodwill which was charged to profit or loss.
In 2007, the Group acquired a number of Irish hotel operations for consideration amounting to €41.5 million. The goodwill arising
represented the excess of costs and consideration over the fair value of the identifiable assets less liabilities acquired and amounted
to €42.1 million. That goodwill was subsequently impaired in 2009 and the carrying value of that goodwill at the beginning and end of
the year amounted to €6.9 million.
Included in the goodwill figure is €12.8 million (£10.9 million) which is attributable to goodwill arising on acquisition of foreign
operations. Consequently, such goodwill is subsequently retranslated at the closing rate. The retranslation at 31 December 2019
resulted in a foreign exchange gain of €0.6 million and a corresponding increase in goodwill. The comparative retranslation at 31
December 2018 resulted in a foreign exchange loss of €0.1 million.
9 Intangible assets and goodwill (continued)
Goodwill (continued)
Number of Cash-Generating Units 2019 2018
Carrying amount of goodwill allocated At 31 December 2019 
Moran Bewley Hotel Group (i) 7 25,023 24,491
Other acquisitions (i) 3 2,022 1,956
2007 Irish hotel operations acquired (ii) 4 6,867 6,867
33,912 33,314
The above table represents the number of CGUs to which goodwill was allocated at 31 December 2019.
Annual goodwill testing
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. Due to
the Group’s policy of revaluation of land and buildings, and the allocation of goodwill to individual CGUs, impairment of goodwill can
occur as the Group realises the profit and revenue growth and synergies which underpinned the goodwill. As these materialise, these
are recorded as revaluation gains to the carrying value of the property and consequently, elements of goodwill may be required to be
written off if the carrying value of the CGU (which includes revalued property and allocated goodwill) exceeds its recoverable amount
on a value in use basis. The impairment of goodwill is through profit or loss though the revaluation gains are taken to reserves
through other comprehensive income.
Future under-performance in any of the Group’s major CGUs may result in a material write-down of goodwill which would have
a substantial impact on the Group’s profit and equity. The Group continues to monitor the ongoing uncertainty surrounding the
potential impact of the United Kingdom’s departure from the European Union but has seen no impact on trading and there is no
indicator of impairment at 31 December 2019 as a result of this.
(i) Moran Bewley Hotel Group and other single asset acquisitions
For the purposes of impairment testing, goodwill has been allocated to each of the hotels acquired as CGUs. As these hotel
properties are valued annually by independent external valuers, the recoverable amount of each CGU is based on a fair value less
costs of disposal estimate, or where this value is less than the carrying value of the asset, the value in use of the CGU is assessed.
Costs of acquisition of a willing buyer which are factored in by external valuers when calculating the fair value price of the asset are
significant for these assets (2019: Ireland 9.96%, UK 6.8%, 2018: Ireland 8.46%, UK 6.8%). Purchasers costs are a key difference
between value in use and fair value less costs of disposal as prepared by external valuers. The increase in purchasers’ costs in the
Republic of Ireland versus 2018 was due to the increase in stamp duty relating to commercial property from 6% to 7.5%.
At 31 December 2019, the recoverable amounts of the ten CGUs were based on value in use, determined by discounting the
future cash flows generated from the continuing use of these hotels. The value in use estimates were based on the following
key assumptions:
» Cash flow projections are based on current operating results and budgeted forecasts prepared by management covering a
ten year period. This period was chosen due to the nature of the hotel assets and is consistent with the valuation basis used by
independent external property valuers when performing their hotel valuations (note 10);
» Revenue and EBITDA for the first year of the projections is based on budgeted figures for 2020 prepared by management.
Budgeted revenue and EBITDA are based on expectations of future outcomes taking into account past experience, adjusted for
anticipated revenue and cost growth;
» Cash flow projections assume a long-term compound annual growth rate of 2% in EBITDA for assets in the Republic of Ireland
and 2.5% for assets in the United Kingdom;
» Cash flows include an average annual capital outlay on maintenance for the hotels dependent on the condition of the hotel or
typically 4% of revenues but assume no enhancements to any property;
» The value in use calculations also include a terminal value based on terminal (year 10) capitalisation rates consistent with those
used by the external property valuers which incorporates a long-term growth rate of 2% for Irish and 2.5% for UK properties;
» The cash flows are discounted using a risk adjusted discount rate specific to each property which ranged from 8.25% to 11.25%
(Ireland: 8.50% to 10.75%; UK: 8.25% to 11.25%) (2018: 8.25% to 11.50% (Ireland: 9.50% to 11.25%; UK: 8.25% to 11.50%)). The
discount rates were consistent with those used by the external property valuers; and
» Following the application of IFRS 16 Leases, the right-of-use asset for a hotel with a land lease is included in the CGU. Cash flow
projections are forecast for the entire term of the lease and fixed rent is excluded from EBITDA. The discount rate is derived by
applying a comparative risk adjusted discount rate for a similar property to the equity portion of the CGU and the incremental
borrowing rate used in the calculation of the lease liability is applied to the debt portion. A weighted average discount rate is then
derived which is applied to the cash flow projections.
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Notes to the consolidated financial statements
Annual goodwill testing (continued)
(i) Moran Bewley Hotel Group and other single asset acquisitions (continued)
The values applied to each of these key assumptions are derived from a combination of internal and external factors based on
historical experience of the valuers and of management and taking into account the stability of cash flows typically associated with
these factors.
At 31 December 2019, the recoverable amount was determined to be higher than the carrying amount of the group of CGUs. There
is no reasonably foreseeable change in assumptions that would impact adversely on the carrying value of this goodwill. The Directors
concluded that the carrying value of this goodwill is not impaired at 31 December 2019.
(ii) 2007 Irish hotel operations acquired
For the purposes of impairment testing, goodwill has been allocated to each of the cash-generating units (CGUs) representing the
Irish hotel operations acquired in 2007. Eight hotels were acquired at that time but only four of these hotels have goodwill associated
with them. Three of these hotels which have since been purchased by the Group are valued annually by independent external valuers,
as the freehold interest in the property is owned by the Group. One property is leased by the Group. Where hotel properties are
valued annually by independent external valuers, the recoverable amount of each CGU is based on a fair value less costs of disposal
estimate, or where this value is less than the carrying value of the asset, the value in use of the CGU is assessed. The recoverable
amount at 31 December 2019 of each of these four CGUs which have associated goodwill was based on value in use. Value in use is
determined by discounting the future cash flows generated from the continuing use of these hotels.
Costs of acquisition of a willing buyer which are factored in by external valuers when calculating the fair value price of the asset are
significant for these assets (2019: 9.96%, 2018: 8.46%). Purchasers costs are a key difference between value in use and fair value
less costs of disposal as prepared by external valuers. The increase in purchasers’ costs in the Republic of Ireland versus 2018 was
due to the increase in stamp duty relating to commercial property from 6% to 7.5%.
The assumptions underpinning these value in use calculations were as follows:
» Cash flow projections are based on current operating results and budgeted forecasts prepared by management covering a ten
year period;
» Revenue and EBITDA for the first year of the projections is based on budgeted figures for 2020 prepared by management.
Budgeted revenue and EBITDA are based on expectations of future outcomes taking into account past experience, adjusted for
anticipated revenue and cost growth;
» Cash flow projections assume a long-term compound annual growth rate of 2% in EBITDA;
» Cash flows include an average annual capital outlay on maintenance for the hotels of 4% of revenues but assume no
enhancements to any property;
» The value in use calculations also include a terminal value based on an industry earnings multiple model which incorporates a long-
term growth rate of 2%;
» The cash flows are discounted using a risk adjusted discount rate specific to each property which ranged from 6.75% to 9.5%
(2018: 10.25% to 11.25%). In the case of owned hotels, the discount rates were consistent with rates used by the valuers.
Discount rates applied to calculate value in use in respect of leased properties are comparative rates used by external property
valuers in their valuations of similar hotels; and
» Following the application of IFRS 16, the right-of-use asset for a leased hotel is included in the CGU. Cash flow projections are
forecast for the entire term of the lease and fixed rent is excluded from EBITDA. The discount rate is derived by applying a
comparative risk adjusted discount rate for a similar property to the equity portion of the CGU and the incremental borrowing rate
used in the calculation of the lease liability is applied to the debt portion. A weighted average discount rate is then derived which is
applied to the cash flow projections.
The values applied to each of these key assumptions are derived from a combination of internal and external factors based on
historical experience of the valuers and of management and taking into account the stability of cash flows typically associated with
these factors.
At 31 December 2019, the recoverable amount was determined to be higher than the carrying amount of the group of CGUs. There
is no reasonably foreseeable change in assumptions that would impact adversely on the carrying value of this goodwill. The Directors
concluded that the carrying value of this goodwill is not impaired at 31 December 2019.
Key sources of estimation uncertainty
The key assumptions used in estimating the future cash flows in the impairment test are subjective and include projected EBITDA
(as defined in note 2), discount rates and the duration of the discounted cash flow model. Expected future cash flows are inherently
uncertain and therefore liable to change materially over time.
9 Intangible assets andgoodwill (continued)
Other indefinite-lived intangible assets
Acquired leasehold interests
The indefinite-lived intangible asset amounting to €20.5 million at 31 December 2018, related to the Group’s acquired leasehold
interest in The Gibson Hotel, was transferred to right-of-use asset on 1 January 2019 in accordance with the transition provisions of
IFRS 16 (note 11).
Other intangible assets
Other intangible assets of €0.6 million at 31 December 2018 represented the Group’s interest in a sub-lease (as sub-lessor) retained
in respect of part of the Clayton Hotel Cardiff, UK following the sale and leaseback (operating lease) of that hotel property. The asset
was transferred to investment property on 1 January 2019 upon recognition of a right-of-use asset with respect to the head lease in
accordance with IFRS 16.
Additions to other intangible assets of €2.4 million represent the Group’s cost of entering into a software licence agreement during
2019. At the commencement date, there were €1.2 million of prepayments relating to the software licence which were transferred
to intangible assets. This software licence will run to 31 January 2024 and is being amortised on a straight line basis over the life of
the asset.
The Group reviews the carrying amounts of other intangible assets annually to determine whether there is any indication of
impairment. If any such indicators exist then the asset’s recoverable amount is estimated.
At 31 December 2019, there were no indicators of impairment present and the Directors concluded that the carrying value of other
intangible assets was not impaired at 31 December 2019.
10 Property, plant andequipment
 
At 31 December 2019
Valuation 1,324,468 - - 1,324,468
Cost - 59,600 135,676 195,276
Accumulated depreciation (and impairment charges) * - - (48,429) (48,429)
Net carrying amount 1,324,468 59,600 87,247 1,471,315
At 1 January 2019, net carrying amount 1,077,208 26,404 72,648 1,176,260
Additions through freehold or site purchases 105,543 45,539 5,117 156,199
Other additions through capital expenditure 2,643 9,756 20,741 33,140
Reclassification from assets under construction to land and buildings
and fixtures, fittings and equipment for assets that have come into use 15,848 (18,336) 2,488 -
Capitalised labour costs (note 6) 550 - - 550
Capitalised borrowing costs (note 5) - 400 - 400
Reclassification from assets under construction to other receivables
for assets disposed of as part of a contractual arrangement (note 15) - (4,163) - (4,163)
Revaluation gains through OCI 124,962 - - 124,962
Revaluation losses through OCI (4,239) - - (4,239)
Reversal of revaluation losses through profit or loss 1,967 - - 1,967
Revaluation losses through profit or loss (322) - - (322)
Depreciation charge for the year (11,786) - (14,397) (26,183)
Translation adjustment 12,094 - 650 12,744
At 31 December 2019, net carrying amount 1,324,468 59,600 87,247 1,471,315
* Accumulated depreciation of buildings is stated after the elimination of depreciation, revaluation, disposals and impairments.
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At 31 December 2018
Valuation 1,077,208 - - 1,077,208
Cost - 26,404 106,680 133,084
Accumulated depreciation (and impairment charges) * - - (34,032) (34,032)
Net carrying amount 1,077,208 26,404 72,648 1,176,260
At 1 January 2018, net carrying amount 848,777 97,365 52,670 998,812
Additions through freehold or site purchases 9,187 - - 9,187
Other additions through capital expenditure 1,133 76,231 18,971 96,335
Reclassification from assets under construction to land and buildings
and fixtures, fittings and equipment for assets that have come into
use 140,194 (152,047) 11,853 -
Transfer from land and buildings to asset under construction for land
which is being developed into a new hotel (6,615) 6,615 - -
Transfer from land and buildings to contract fulfilment costs (note 14) (8,085) - - (8,085)
Capitalised borrowing costs (note 5) - 1,748 - 1,748
Transfer of capitalised borrowing costs from assets under
construction to land and buildings for assets that have come into use 3,300 (3,300) - -
Revaluation gains through OCI 111,221 - - 111,221
Revaluation losses through OCI (8,275) - - (8,275)
Reversal of revaluation losses through profit or loss 290 - - 290
Revaluation losses through profit or loss (3,402) - - (3,402)
Depreciation charge for the year (8,927) - (10,771) (19,698)
Translation adjustment (1,590) (208) (75) (1,873)
At 31 December 2018, net carrying amount 1,077,208 26,404 72,648 1,176,260
* Accumulated depreciation of buildings is stated after the elimination of depreciation, revaluation, disposals and impairments.
The carrying value of land and buildings (revalued at 31 December 2019) is €1,324.5 million (2018: €1,077.2 million). The value of
these assets under the cost model is €927.8 million (2018: €803.4 million). In 2019, unrealised revaluation gains of €125.0 million and
unrealised losses of €4.2 million have been reflected through other comprehensive income and in the revaluation reserve in equity.
A revaluation loss of €0.3 million and a reversal of prior period revaluation losses of €2.0 million have been reflected in administrative
expenses through profit or loss.
Included in land and buildings at 31 December 2019 is land at a carrying value of €499.8 million (2018: €412.7 million) which is
not depreciated.
Additions to land and buildings and fixtures, fittings and equipment during the year ended 31 December 2019 primarily include the
following asset purchase:
» On 3 January 2019, the Group completed the acquisition of the long leasehold (effective freehold) interest of a newly built hotel,
located in Aldgate, London for total consideration of £91.0 million (€107.0 million) (through acquiring the entire issued share
capital of Hintergard Limited) plus acquisition related costs of £1.9 million (€2.2 million). The hotel opened on 24 January 2019
and has been branded Clayton Hotel City of London.
10 Property,plantandequipment (continued)
Additions to assets under construction during the year ended 31 December 2019 include the following:
» On 12 August 2019, the Group acquired a site with planning approval for a new hotel on Paul Street in Shoreditch, London for
£32.1 million (€37.7 million) plus acquisition related costs of £1.7 million (€2.0 million);
» On 8 January 2019, the Group acquired a site adjacent to Clayton Hotel Cardiff Lane, Dublin for €5.5 million plus capitalised
acquisition costs of €0.4 million. The Group has plans to redevelop the area into circa 88 bedrooms and ancillary facilities and it is
classified as assets under construction and not depreciated as the asset is not in use in its current form;
» Development expenditure incurred on new hotel builds of €5.6 million;
» Development expenditure incurred on hotel extensions and renovations of €4.2 million; and
» Interest capitalised on loans and borrowings relating to qualifying assets of €0.4 million (note 5).
Property previously classified as assets under construction (€18.3 million) has been transferred to land and buildings and fixtures,
fittings and equipment as a result of the assets coming into use during the year ended 31 December 2019. This includes
the following:
» Final completion works at Maldron Hotel South Mall, Cork;
» Final completion works at Maldron Hotel Parnell Square, Dublin; and
» Final completion works at Clayton Hotel Charlemont, Dublin.
Property previously classified as assets under construction (€4.2 million) relating to a renovation project ongoing at Clayton Hotel
Burlington Road, Dublin has been transferred to other receivables as a result of a contractual arrangement entered into in 2019,
whereby assets totalling €7.5 million are to be transferred to the landlord for €7.5 million (note 15).
Capitalised labour costs (€0.6 million) include labour costs relating to the Group’s internal development team which are directly
related to asset acquisitions and other construction work completed in relation to the Group’s land and buildings.
The Group operates the Maldron Hotel Limerick and, since the acquisition of Fonteyn Property Holdings Limited in 2013, holds a
secured loan over that property. The loan is not expected to be repaid. Accordingly, the Group has the risks and rewards of ownership
and accounts for the hotel as an owned property, reflecting the substance of the arrangement.
At 31 December 2019, properties included within land and buildings with a carrying amount of €1,101.8 million (2018: €895.9 million)
were pledged as security for loans and borrowings.
The value of the Group’s property at 31 December 2019 reflects open market valuations carried out in December 2019 by
independent external valuers having appropriate recognised professional qualifications and recent experience in the location and
value of the property being valued. The external valuations performed were in accordance with the Royal Institution of Chartered
Surveyors (RICS) Valuation Standards.
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Measurement of fair value
The fair value measurement of the Group’s own-use property has been categorised as a Level 3 fair value based on the inputs to
the valuation technique used. At 31 December 2019, 30 properties were revalued by independent external valuers engaged by the
Group (31 December 2018: 29).
The principal valuation technique used by the independent external valuers engaged by the Group was discounted cash flows. This
valuation model considers the present value of net cash flows to be generated from the property over a ten year period (with an
assumed terminal value at the end of year 10). Valuers’ forecast cash flow included in these calculations represents the expectations
of the valuers for EBITDA (driven by revenue per available room (“RevPAR”) calculated as total rooms revenue divided by rooms
available) for the property and also takes account of the expectations of a prospective purchaser. It also includes their expectation
for capital expenditure which the valuers, typically, assume as approximately 4% of revenue per annum. This does not always reflect
the profile of actual capital expenditure incurred by the Group. On specific assets, refurbishments are, by nature, periodic rather than
annual. Valuers’ expectations of EBITDA are based off their trading forecasts (benchmarked against competition, market and actual
performance). The expected net cash flows are discounted using risk adjusted discount rates. Among other factors, the discount
rate estimation considers the quality of the property and its location. The final valuation also includes a deduction of full purchaser’s
costs based on the valuers’ estimates at 9.96% for Republic of Ireland domiciled assets (2018: 8.46%) and 6.8% for United Kingdom
domiciled assets (2018: 6.8%). The increase in purchasers costs in the Republic of Ireland versus 2018 was due to the increase in
stamp duty relating to commercial property from 6% to 7.5%.
The valuers use their professional judgement and experience to balance the interplay between the different assumptions and
valuation influences. For example, initial discounted cash flows based on individually reasonable inputs may result in a valuation which
challenges the price per key metrics in recent transactions. This would then result in one or more of the inputs being amended
for preparation of a revised discounted cash flow. Consequently, the individual inputs may change from the prior period or may look
individually unusual and therefore must be considered as a whole in the context of the overall valuation.
The significant unobservable inputs and drivers thereof are summarised in the following table:
Significant unobservable inputs
* Price per key represents the valuation of a hotel divided by the number of rooms in that hotel.
The valuers also applied risk adjusted discount rates of 7.25% to 10.75% for Dublin assets (31 December 2018: 9.25% to 11.25%),
6.75% to 11.00% for Regional Ireland assets (31 December 2018: 9.50% to 12.00%) and 7.25% to 11.25% for United Kingdom
assets (31 December 2018: 8.25% to 12.00%).
The most significant factors which have impacted valuations this year are the uplifts on newly built hotels and extensions which
were built at a cost below fair value and where trade has outperformed assumptions underpinning initial external valuations. Hotel
transactions in the wider market during the year have achieved improved valuation metrics which has led to increased valuations for
the properties owned by the Group.
The potential impact of the United Kingdom’s departure from the European Union may have a negative impact on both the United
Kingdom and Irish economies. The Group continues to monitor the ongoing uncertainty surrounding the potential impact of Brexit
but has seen no impact on trading and there is no indicator of impairment at 31 December 2019 as a result of this.
The estimated fair value under this valuation model would increase or decrease if:
» Valuers’ forecast cash flow was higher or lower than expected; and/or
» The risk adjusted discount rate and terminal capitalisation rate was lower or higher.
Valuations also had regard to relevant price per key metrics from hotel sales activity.
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Notes to the consolidated financial statements
Notes to the consolidated financial statements
Notes to the consolidated financial statements
Notes to the consolidated financial statements

Notes to the consolidated financial statements
(continued)
11 TransitionimpactofIFRS16Leases
IFRS 16 Leases was effective for the first time in the financial year commencing 1 January 2019. IFRS 16 replaces IAS 17 Leases, IFRIC
4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.
IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to lessee
accounting by removing the distinction between operating and finance leases and requiring the recognition of right-of-use assets
and lease liabilities at the commencement of most leases. This has a significant impact on the Group’s financial statements as the
Group is a lessee in a number of material property leases, which were formerly accounted for as operating leases. The requirements
for lessor accounting remain largely unchanged.
The Group has applied IFRS 16 using the modified retrospective method. Lease liabilities were measured at the present value of
the remaining lease payments, discounted at the Group’s incremental borrowing rates as at 1 January 2019. Right-of-use assets
have been measured at an amount equal to the lease liabilities adjusted by the amounts of any lease prepayments and accruals and
reclassifications from intangible assets, where applicable. The comparative information has not been restated and is presented as
previously reported under IAS 17 and related interpretations. Details of the impact of the change in accounting policies as well as the
new accounting policies are disclosed hereafter.
Definition of a lease
Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4. Under IFRS
16, a contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time. On
transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are
leases and applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases
under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was
applied only to contracts entered into or changed on/or after 1 January 2019.
As a lessee
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the
Group recognises right-of-use assets and lease liabilities for most leases and these are no longer excluded from the statement of
financial position.
On transition, lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group’s
incremental borrowing rates as at 1 January 2019. Determining the discount rate introduces a new source of estimation uncertainty
into the financial statements. The Group has calculated the incremental borrowing rate by adding country specific risk-free
government bonds to the Group finance spread to create a Group yield curve.
The Group finance spread was calculated by weighting the Group interest margin on loans and borrowings entered into in October
2018 (senior debt) and a hypothetical junior debt margin available to the Group using an appropriate loan-to-value ratio for the senior
debt. Each lease was matched against the Group yield curve and subsequently adjusted for lessee and asset specific factors to reflect
the underlying asset’s location and condition. In most cases, the discount rate is determined in the first year of the lease and does
not change for the remainder of the term unless an event such as a change in lease term or a modification of the lease occurs. The
weighted-average incremental borrowing rate applied on transition was 6.03% (Republic of Ireland: 5.86%, United Kingdom: 6.49%).
The sensitivity of the Group’s lease liabilities to a one percent (100bps) movement in the incremental borrowing rate is as follows:
At existing
rate
Sensitised upwards
by 100 bps
Sensitised downwards
by 100 bps
 €’000
Lease liabilities at 1 January 2019 314,430 286,246 347,350
11 Transition impact of IFRS16 Leases (continued)
As a lessee (continued)
A reconciliation from the operating lease commitments at 31 December 2018 to the opening balance for the lease liabilities at
1 January 2019 is shown below:
€’000
Operating lease commitments at 31 December 2018 672,708
Discounted using the incremental borrowing rates at 1 January 2019 (358,278)
Lease liabilities recognised at 1 January 2019 (note 12) 314,430
Right-of-use assets have been measured at an amount equal to the lease liabilities adjusted by the amounts of any lease
prepayments and accruals and reclassifications from intangible assets, where applicable. Fixed rental expenses under IAS 17 were
removed from profit or loss under IFRS 16 and replaced with finance costs on the lease liabilities and depreciation of the right-of-use
assets. Variable lease payments which are dependent on hotel performance continue to be recognised directly in profit or loss.
The Group used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under
IAS 17:
» Applied a single discount rate to a portfolio of leases with similar characteristics;
» Relied on its assessment of whether leases are onerous immediately before 1 January 2019 as an alternative to performing an
impairment review; and
» Applied the exemption not to recognise right-of-use assets and lease liabilities for leases with a remaining lease term of less than
12 months as at 1 January 2019.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low value equipment. The Group did not
recognise any finance leases under IAS 17 prior to the date of initial application of IFRS 16.
Banking covenants as currently calculated under the existing debt facility agreement have not been amended as their calculation is in
accordance with generally accepted accounting principles, policies, standards and practices applicable on the date of entry into the
agreement which was prior to the adoption of IFRS 16.
As a lessor
Under IAS 17, the Group leased out its investment properties to lessees under operating leases. IFRS 16 does not substantially
change how a lessor accounts for leases as a lessor continues to classify leases as either finance or operating leases. The Group’s
lessor contracts continue to be classified as operating leases under IFRS 16. However, when the Group is an intermediate lessor the
sub-leases are classified with reference to the right-of-use asset arising from the head lease, not with reference to the underlying
asset. The Group sub-leases part of one of its properties and on transition to IFRS 16 the right-of-use asset recognised from the
head lease is presented in investment property and measured at fair value on transition to IFRS 16.
Sale and leaseback
Under IFRS 16, the Group continues to account for Clayton Hotel Cardiff (completed in June 2017) and Clayton Hotel Birmingham
(completed in August 2017) transactions as sale and leaseback transactions. As a result of IFRS 16, the Group has recognised right-
of-use assets and lease liabilities for these leases on 1 January 2019. €1.1 million arising from the sale and leaseback of Clayton Hotel
Birmingham, representing the difference between the proceeds received and the acquisition price, has been transferred from non-
current receivables to right-of-use asset on this date.
143

Impact on financial statements
The tables below show the adjustment for each financial statement line item affected by the application of IFRS 16 for the year
ended 31 December 2019.
Excerpt from consolidated statement of profit or loss and other comprehensive income
*Only lines which are impacted are presented below
*As if IAS 17
still applied IFRS 16 impact *As presented
 €’000
Administrative expenses (165,762) 10,257 (155,505)
Operating profit 110,044 10,257 120,301
Finance costs (11,668) (18,945) (30,613)
Profit before tax 98,376 (8,688) 89,688
Tax charge (12,711) 1,235 (11,476)
Profit for the year 85,665 (7,453) 78,212
Earnings per share
Basic earnings per share 46.4 cents (4.0) cents 42.4 cents
Diluted earnings per share 46.0 cents (4.0) cents 42.0 cents
Excerpt from operating segments note (note 2)
*Only lines which are impacted are presented below
*As if IAS 17
still applied IFRS 16 impact *As presented
 €’000
Segmental results - EBITDA
Dublin 92,761 20,161 112,922
Regional Ireland 23,429 997 24,426
United Kingdom 32,126 5,983 38,109
EBITDA for reportable segments 148,316 27,141 175,457
Central costs (12,013) 243 (11,770)
Adjusted EBITDA 134,830 27,384 162,214
Net property revaluation movements through profit or loss 1,645 (44) 1,601
Group EBITDA 136,466 27,340 163,806
Depreciation of right-of-use assets - (17,127) (17,127)
Amortisation of intangible assets (239) 44 (195)
Interest on lease liabilities - (18,945) (18,945)
Profit before tax 98,376 (8,688) 89,688
Tax charge (12,711) 1,235 (11,476)
Profit for the year 85,665 (7,453) 78,212
The Group’s profit has decreased by €7.5 million and basic earnings per share by 4.0 cents for the year ended 31 December 2019
due to the implementation of IFRS 16. Under the standard, total lease expenses increase in the early years of implementation due to
the front-loading effect of finance costs versus the straight-line rent expense under IAS 17, resulting in a decrease in profit.
EBITDA for reportable segments and Adjusted EBITDA (existing alternative performance measures as defined in note 2), are
significantly impacted by the implementation of IFRS 16 and have increased by €27.1 million and €27.4 million respectively due to the
removal of fixed rent. Under IFRS 16, variable rents based on turnover or profit do not form part of the lease liability measurement
and remain in administrative expenses and EBITDA.
Depreciation and finance costs, as currently reported in the Group’s profit or loss, have increased, as under the new standard the
right-of-use assets are depreciated over the term of the lease and interest costs are applied to the lease liabilities.
11 TransitionimpactofIFRS16Leases (continued)
Impact on financial statements (continued)
Excerpt from consolidated statement of financial position
On implementation of IFRS 16 on 1 January 2019, the following line items in the consolidated statement of financial position
were affected:
As previously reported
at 31 December 2018
IFRS 16
impact
As presented at
1 January 2019
 €’000
Non-current assets
Intangible assets and goodwill 54,417 (21,103) 33,314
Right-of-use assets - 343,713 343,713
Other receivables 14,759 (5,422) 9,337
Investment property 1,560 603 2,163
Current assets
Trade and other receivables 22,566 (4,307) 18,259
Total impact on assets 313,484
Current liabilities
Trade and other payables (65,250) 946 (64,304)
Lease liabilities - (26,259) (26,259)
Non-current liabilities
Lease liabilities - (288,171) (288,171)
Total impact on liabilities (313,484)
Impact on net assets -
On transition, the Group recognised lease liabilities amounting to €314.4 million and right-of-use assets of €343.7 million. The
measurement of the right-of-use assets includes the amount of the lease liabilities and a further €29.3 million of items that were
recognised elsewhere in the statement of financial position at 31 December 2018 as follows:
» Favourable terms relating to the Gibson hotel operating lease acquired as part of a business combination amounting to €20.5
million previously recognised in intangible assets;
» Lease prepayments amounting to €8.6 million previously recognised in non-current other receivables (€4.3 million) and current
trade and other receivables (€4.3 million);
» €1.1 million arising from the sale and leaseback of Clayton Hotel Birmingham previously recognised in non-current receivables; less
» Lease accruals amounting to €0.9 million previously recognised in trade and other payables.
Consolidated statement of cash flows
The adoption of IFRS 16 does not have any impact on Group leasing cash flows but the UK tax authorities have decided to follow
the accounting changes and allow deductions for interest on lease liabilities and depreciation of right-of-use assets in lieu of lease
payments which impact the tax cash flows. There are lower UK tax cash flows in the early years of the leases in line with the front-
loading of expenses. There is no cash flow impact in Ireland as the basis for tax deduction remains unchanged.
The presentation of cash flows in the consolidated statement of cash flows is also impacted. Under IFRS 16, lessees must present
short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement
of the lease liabilities as part of operating activities.
Lease liability payments are split into payments of interest and payments of principal and are presented separately in the
consolidated statement of cash flows. The Group has opted to include the element of cash flows recorded as interest as part of
financing activities as permitted by IAS 7 Statement of Cash Flows. Cash payments for the principal portion have also been presented
as part of financing activities.
Under IAS 17, all lease payments on operating leases were presented as part of cash flows from operating activities and
consequently, as a result of the implementation of IFRS 16, the net cash flow from financing activities has decreased by €27.5 million
while the net cash generated from operating activities has increased by the same amount.
145
Group as a lessee
The Group leases assets including land and buildings, vehicles, machinery and IT equipment. Information about leases for which the
Group is a lessee is presented below:
Right-of-use assets
Land and
buildings
Fixtures,
fittings and
equipment Total
 €’000
Net book value at 1 January 2019 (note 11) 343,562 151 343,713
Additions 45,656 56 45,712
Depreciation charge for the year (note 3) (17,068) (59) (17,127)
Remeasurement of lease liabilities 9,239 - 9,239
Translation adjustment 4,869 1 4,870
Net book value at 31 December 2019 386,258 149 386,407
Right-of-use assets comprise leased assets that do not meet the definition of investment property.
Lease liabilities €’000
Current 26,259
Non-current 288,171
Lease liabilities at 1 January 2019 (note 11) 314,430
Additions 42,391
Interest on lease liabilities (note 5) 18,945
Lease payments (27,514)
Remeasurement of lease liabilities 9,239
Translation adjustment 4,610
Lease liabilities at 31 December 2019 362,101
Current 30,557
Non-current 331,544
Lease liabilities at 31 December 2019 362,101
The remeasurement of lease liabilities relates to the reassessment of the lease liabilities of two leases following completion of rent
reviews and extension of the lease term at a third hotel during the year ended 31 December 2019.
Additions principally relate to the Group entering into a 30 year lease in November 2019 of the Tamburlaine Hotel in Cambridge,
England which has resulted in a right-of-use asset and lease liability of €45.5 million (£38.9 million) and €42.4 million (£36.3 million)
respectively. The Group included €3.1 million (£2.6 million) of lease prepayments and initial direct costs in the measurement of the
right-of-use asset.
12 Leases (continued)
Group as a lessee (continued)
Non-cancellable undiscounted lease cash flows payable under lease contracts are set out below:
At 31 December 2019 At 31 December 2018
Republic
of Ireland
United
Kingdom Total
Republic
of Ireland
United
Sterling amounts have been converted using the closing foreign exchange rate of 0.8508 as at 31 December 2019 (0.89453 as at 31
December 2018).
The weighted average lease life of future minimum rentals payable under leases is 29.4 years (31 December 2018: 30.3 years). The
Group does not face a significant liquidity risk with regard to its lease liabilities which are expected to be capable of being paid from
operating cash flows over the life of the leases. Lease liabilities are monitored within the Group’s treasury function.
For the year ended 31 December 2019, the total fixed cash outflows amounted to €27.5 million for land and building leases and €0.3
million for leases of fixtures, fittings and equipment.
Proforma unwind of right-of-use assets and release of interest charge
The proforma unwinding of the right-of-use assets and the release of the interest on the lease liabilities through profit or loss over
the terms of the leases have been disclosed in the following table:
Sterling amounts have been converted using the closing foreign exchange rate of 0.8508 as at 31 December 2019.
147
Financial Statements
146 
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
SUPPLEMENTARY
FINANCIAL
INFORMATION
12 Leases (continued)
Group as a lessee (continued)
The actual depreciation and interest charge through profit or loss will depend on the composition of the Group’s lease portfolio in
future years and is subject to change, driven by:
» commencement of new leases;
» modifications of existing leases;
» reassessments of lease liabilities following periodic rent reviews; and
» impairments of right-of-use assets.
There are no events or changes in circumstances which indicate that the carrying value of the right-of-use assets may not
be recoverable.
Leases of land and buildings
The Group leases land and buildings for its hotel operations and office space. The leases of hotels typically run for a period of
between 25 and 35 years and leases of office space for ten years.
Some leases provide for additional rent payments that are based on a percentage of the revenue/EBITDAR that the Group
generates at the hotel in the period. The Group sub-leases part of one of its properties to a tenant under an operating lease.
Variable payments based on revenue/EBITDAR
These terms are common in hotel leases in the Republic of Ireland and the United Kingdom and link rental payments to hotel cash
flows and reduce fixed payments. Variable lease payments based on revenue/EBITDAR for the year ended 31 December 2019 are
as follows:
Variable rent
element
Estimated
impact on
variable rent of
5% increase
in revenue/
EBITDAR

Leases with lease payments based on revenue/EBITDAR 7,321 600
Extension options and termination options
The Group, as a hotel lessee, does not have any extension options. The Group holds a single termination option in an office space
lease. The Group assesses at lease commencement whether it is reasonably certain not to terminate the option and reassesses if
there is a significant event or change in circumstances within its control. The relative magnitude of optional lease payments to lease
payments is as follows:
Lease liabilities
recognised
(discounted)
Potential future
lease payments
not included in
lease liabilities
(discounted)

Office building 372 486
Leases not yet commenced to which the lessee is committed
The Group has multiple agreements for lease at 31 December 2019 and details of the non-cancellable lease rentals and other
contractual obligations payable under these agreements are set out hereafter. These represent the minimum future lease payments
(undiscounted) in aggregate that the Group is required to make under the agreements. An agreement for lease is a binding
agreement between external third parties and the Group to enter into a lease at a future date. The dates of commencement of
these leases may change based on the hotel operating dates. The amounts payable may also change slightly if there are any changes
in room numbers delivered through construction.
12 Leases (continued)
Group as a lessee (continued)
Leases of land and buildings (continued)
At 31
December
2019
At 31
December
2018

Agreements for lease
Less than one year 1,910 2,585
One to two years 17,314 9,947
Two to five years 66,656 55,660
Five to fifteen years 236,011 181,086
Fifteen to twenty five years 249,344 192,114
After twenty five years 307,763 240,088
Total future lease payments 878,998 681,480
The significant movement since the year ended 31 December 2018 is due principally to the following:
» The Group has signed an agreement to lease the Maldron Hotel Croke Park, to be built in Dublin. On completion of construction,
the Group will commence operations in the hotel through a 35 year lease; and
» The Group has signed an agreement to lease a Maldron Hotel, to be built in Liverpool. On completion of construction, the Group
will commence operations in the hotel through a 35 year lease.
Also, included in the above table are future lease payments for agreements for lease, with a lease term of 35 years, for Maldron
Hotel Glasgow, Clayton Hotel Glasgow, Clayton Hotel Bristol, Maldron Hotel Birmingham, Maldron Hotel Manchester, Clayton Hotel
Manchester City and The Samuel, Dublin.
Leases of fixtures, fittings and equipment
The Group leases a small number of vehicles, IT equipment and hotel equipment with lease terms of up to five years. The Group has
applied the short-term and low value exemptions available under IFRS 16 Leases where applicable and recognises lease payments
associated with short-term leases or leases for which the underlying asset is of low value as an expense on a straight-line basis over the
lease term. Where the exemptions were not available, right-of-use assets have been recognised with corresponding lease liabilities.
2019
€’000
Expenses relating to short-term leases recognised in administrative expenses 172
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets recognised in
administrative expenses 111
Group as a lessor
Lease income from lease contracts in which the Group acts as lessor is outlined below:
2019 2018

Operating lease income (note 4) 351 271
The Group leases its investment property and has classified these leases as operating leases because they do not transfer
substantially all of the risks and rewards incidental to ownership of these assets to the lessee. Operating lease income from
sub‑leasing right-of-use assets for the year ended 31 December 2019 amounted to €0.1 million.
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments receivable:
2019 2018


Cost or valuation
At 1 January 1,560 1,585
Transfer from intangible assets on transition to IFRS 16 (note 9) 603 -
Effect of movements in exchange rates 30 -
Loss on revaluation recognised in profit or loss (44) (25)
At 31 December 2,149 1,560
Investment property at 31 December 2019 reflects the following assets and movements during the year:
» Two commercial properties which are leased to third parties for lease terms of 25 and 30 years, with 11 and 7 years remaining at
31 December 2019 (€1.2 million); and
» An intangible asset amounting to €0.6 million at 31 December 2018 was transferred to investment property on 1 January 2019
upon recognition of a right-of-use asset with respect to the head lease in accordance with IFRS 16 Leases. This asset represents
the Group’s interest in a sub-lease (as sub-lessor) retained in respect of part of the Clayton Hotel Cardiff, UK following the sale
and leaseback of that hotel property in 2017.
Also included in investment property is a sub-lease of part of Clayton Whites Hotel, Wexford which has a carrying value of €0.4 million
(2018: €0.4 million).
Changes in fair values are recognised in administrative expenses in profit or loss.
An investment property with a carrying value of €0.6 million (2018: €nil) was pledged as security for loans and borrowings at 31
December 2019.
14 Contractfulfilmentcosts
2019 2018

Non-current asset
At 1 January 9,066 -
Transfer from land and buildings to contract fulfilment costs (note 10) - 8,085
Other costs incurred in fulfilling contract to date 4,143 981
Capitalised borrowing costs (note 5) 137 -
At 31 December 13,346 9,066
Contract fulfilment costs, within non-current assets, relate to the Group’s contractual agreement with Irish Residential Properties
REIT plc (“IRES”), entered into on 16 November 2018, for IRES to purchase a residential development the Group is developing
(comprising 69 residential units) on the site of the former Tara Towers hotel.
Revenue and the associated cost will be recognised on this contract in profit or loss when the performance obligation in the contract
has been met. Based on the terms of the contract this will be on legal completion of the contract which will occur on practical
completion of the development project which is expected to be in 2021. As a result, revenue will be recognised at a point in time in
the future when the performance obligation is met, rather than over time.
Arising from the change in use by the Group of previously recognised property, plant and equipment during 2018, following
the closure of the former Tara Towers Hotel, there was a transfer to contract fulfilment costs within non-current assets (€8.1
million) relating to the element of the land on the site of the former Tara Towers hotel (note 10) which will be used for the
residential development.
Other costs incurred in fulfilling the contract of €4.1 million (2018: €1.0 million), which relate directly to this contractual agreement
with IRES, are also included within non-current assets at 31 December 2019. These costs have enhanced the asset which will be
used for the residential development, have been used in order to satisfy the contract and the costs are expected to be recovered.
They primarily relate to build costs, legal costs, architectural and planning costs and other professional fees incurred up to 31
December 2019 in fulfilling the contract.
Interest capitalised on loans and borrowings relating to this development (qualifying asset) was €0.1 million in the year to 31
December 2019 (2018: €nil) (note 5).
The overall sale value of the transaction is expected to be up to €42.4 million (excluding VAT). The overall value of the transaction will
vary depending on how Part V obligations (Social and Affordable housing allocation) are settled with Dublin City Council.
Contract fulfilment costs paid have been included in investing activities in the consolidated statement of cash flows as they are not
primarily derived from the principal revenue-producing activities of the Group.
15 Tradeandotherreceivables
2019 2018

Non-current assets
Other receivables 1,400 900
Deposit paid on acquisitions - 5,086
Prepayments 5,360 8,773
6,760 14,759
Current assets
Trade receivables 7,920 9,300
Prepayments 6,135 8,943
Contract assets 2,456 2,614
Accrued income 1,886 1,709
Other receivables 3,405 -
21,802 22,566
Total 28,562 37,325
Non-current other receivables includes a non-current deposit required as part of a hotel property lease contract of €0.9 million
(2018: €0.9 million). The deposit is interest-bearing and is refundable at the end of the lease term.
At 31 December 2019, non-current other receivables and current other receivables include €0.5 million and €3.0 million (€3.4 million
including VAT) respectively relating to a renovation project at a leased hotel where the landlord will pay €7.5 million (excluding VAT) to
the Group in return for the transferring of assets worth €7.5 million to the landlord. This contractual arrangement was entered into
during 2019. Prior to signing the arrangement, €4.2 million of expenditure was incurred and capitalised as assets under construction
within property, plant and equipment in relation to this project. On signing of the contractual arrangement this €4.2 million was
transferred to other receivables from assets under construction (note 10). A further €3.3 million has been spent on the renovation
project from the date of signing of the contractual arrangement to 31 December 2019. As this expenditure is directly related to this
contractual arrangement, the Group has included these costs as receivables in line with the contractual arrangement. On 7 May
2019, the Group received a first instalment of €4 million in relation to the total agreed sum of €7.5 million. €3.0 million (€3.4 million
including VAT) of the remaining €3.5 million was requested for payment in December 2019. This has been received in January 2020.
The remaining €0.5 million will be received in January 2021 and is recognised as a non-current other receivable. No revenue or cost
will be recognised in profit or loss on this contractual arrangement as the Group is acting as an agent in this arrangement with no gain
or loss on the transfer of the assets as the Group is being reimbursed for the costs.
Included in non-current prepayments at 31 December 2019 is an amount of €5.2 million (31 December 2018: €1.4 million) of
professional fees directly related to future lease agreements for hotels currently being constructed or in planning. When these
leases are initiated, these costs will be reclassified to right-of-use assets.
At 31 December 2018, lease prepayments of €5.4 million were included in non-current prepayments and €4.3 million in current trade
and other receivables which have now been included in the measurement of right-of-use assets in accordance with IFRS 16 Leases
(note 11).
Included in non-current prepayments at 31 December 2018 was €0.9 million relating to a prepayment made for IT costs. The
Group entered into a software licence agreement in 2019 and these costs, together with other payments made in 2019 to the
commencement date totalled €1.2 million and were transferred to intangible assets (note 9).
Included in non-current assets at 31 December 2018 was a deposit paid of €5.1 million (£4.6 million) relating to the acquisition of
Hintergard Limited, which owns the hotel subsequently rebranded as Clayton Hotel City of London. This was reclassified to property,
plant and equipment after completing the transaction on 3 January 2019 (note 10). Professional fees included in non-current
prepayments at 31 December 2018 of €1.1 million (£1.0 million) associated with this transaction were also reclassified to property,
plant and equipment upon acquisition.
Trade receivables are subject to the expected credit loss model in IFRS 9 Financial Instruments. The Group applies the IFRS 9
simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the
number of days past due.
151
Financial Statements
150 
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
SUPPLEMENTARY
FINANCIAL
INFORMATION

Cash at bank and in hand 40,586 35,907
40,586 35,907
18 Capitalandreserves
Share capital and share premium
At 31 December 2019
Authorised share capital Number €’000
Ordinary shares of €0.01 each 10,000,000,000 100,000
Allotted, called-up and fully paid shares Number €’000
Ordinary shares of €0.01 each 185,100,620 1,851
Share premium 504,488
At 31 December 2018
Authorised share capital Number €’000
Ordinary shares of €0.01 each 10,000,000,000 100,000
Allotted, called-up and fully paid shares Number €’000
Ordinary shares of €0.01 each 184,349,666 1,843
Share premium 503,113
All ordinary shares rank equally with regard to the Company’s residual assets.
During the year ended 31 December 2019, the Company issued 285,809 shares of €0.01 per share following the vesting of awards
granted in March 2016 under the 2014 LTIP (note 7). 465,145 shares were also issued during 2019 under the Share Save schemes
granted in 2016 which had a weighted average exercise price of €2.96 per share (note 7).
Dividends
The dividends paid in respect of ordinary share capital were as follows:
2019 2018

Final dividend paid 7.0 cents per Ordinary Share (2018: €nil) 12,925 -
Interim dividend paid 3.5 cents per Ordinary Share (2018: 3.0 cents) 6,462 5,529
19,387 5,529
A final dividend for 2018 of 7.0 cents per share was paid on 8 May 2019 on the ordinary shares in Hotel Group plc and
amounted to €12.9 million (2018: €nil).
An interim dividend for 2019 of 3.5 cents (2018: 3.0 cents) per share was paid on 4 October 2019 on the ordinary shares in 
Hotel Group plc and amounted to €6.5 million (2018: €5.5 million).
On 24 February 2020, the Board proposed a final dividend for 2019 of 7.25 cents per share. This proposed final dividend is subject
to approval by the shareholders at the Annual General Meeting. The payment date for the final dividend will be 6 May 2020 to
shareholders registered on the record date 14 April 2020. These consolidated financial statements do not reflect this dividend.
Based on shares in issue at 31 December 2019, the amount of dividends proposed is €13.4 million.
153


(a) Capital contribution and merger reserve
As part of a Group reorganisation in 2014, the Company became the ultimate parent entity of the then existing Group, when it
acquired 100% of the issued share capital of DHGL Limited in exchange for the issue of 9,500 ordinary shares of €0.01 each. By
doing so, it also indirectly acquired the 100% shareholdings previously held by DHGL Limited in each of its subsidiaries. As part of
that reorganisation, shareholder loan note obligations (including accrued interest) of DHGL Limited were assumed by the Company
as part of the consideration paid for the equity shares in DHGL Limited.
The fair value of the Group (as then headed by DHGL Limited) at that date was estimated at €40.0 million. The fair value of the
shareholder loan note obligations assumed by the Company as part of the acquisition was €29.7 million and the fair value of the
shares issued by the Company in the share exchange was €10.3 million.
The difference between the carrying value of the shareholder loan note obligations (€55.4 million) prior to the reorganisation and
their fair value (€29.7 million) at that date represents a contribution from shareholders of €25.7 million which has been credited to
a separate capital contribution reserve. Subsequently all shareholder loan note obligations were settled in 2014, in exchange for
shares issued in the Company.
The insertion of Hotel Group plc as the new holding company of DHGL Limited did not meet the definition of a business
combination under IFRS 3 Business Combinations, and, as a consequence, the acquired assets and liabilities of DHGL Limited and its
subsidiaries continued to be carried in the consolidated financial statements at their respective carrying values as at the date of the
reorganisation. The consolidated financial statements of Hotel Group plc were prepared on the basis that the Company is a
continuation of DHGL Limited, reflecting the substance of the arrangement.
As a consequence, an additional merger reserve of €10.3 million arose in the consolidated statement of financial position. This
represents the difference between the consideration paid for DHGL Limited in the form of shares of the Company, and the issued
share capital of DHGL Limited at the date of the reorganisation which was a nominal amount of €95.
(b) Share-based payment reserve
The share-based payment reserve comprises amounts equivalent to the cumulative cost of awards by the Group under equity-
settled share-based payment arrangements being the Group’s Long Term Incentive Plans and the Share Save schemes. On vesting,
the cost of awards previously recognised in the share-based payments reserve is transferred to retained earnings. Details of the
share awards, in addition to awards which vested in the year, are disclosed in note 7 and on pages 78 to 95 of the Remuneration
Committee report.
(c) Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in
cash flow hedges, net of deferred tax.
(d) Revaluation reserve
The revaluation reserve relates to the revaluation of land and buildings in line with the Group’s policy to fair value these assets at each
reporting date (note 10), net of deferred tax.
(e) Translation reserve
The translation reserve comprises all foreign currency exchange differences arising from the translation of the financial statements
of foreign operations, as well as the effective portion of any foreign currency differences arising from hedges of a net investment in a
foreign operation (note 24).
19 Trade and other payables
2019 2018

Trade payables 15,598 18,490
Accruals 32,135 34,072
Contract liabilities 10,348 9,421
Value added tax 5,278 775
Payroll taxes 2,804 2,492
66,163 65,250
Accruals include capital expenditure accruals including work in progress at year end which has not yet been invoiced (2019: €7.5
million, 2018: €9.5 million).
Value added tax liability (‘VAT’) as at 31 December 2019 has increased since 2018 due to the reduced levels of input VAT on
construction costs relative to the prior year, as construction was completed at these newly completed hotel developments at the
end of 2018. Additionally, the VAT rate at which the Group makes the majority of its sales in Ireland has increased from 9% in 2018 to
13.5% in 2019.
20 Provision for liabilities
2019 2018

Non-current liabilities
Insurance provision 4,804 4,783
Current liabilities
Insurance provision 1,759 1,859
6,563 6,642
The reconciliation of the movement in the provision during the year is as follows:
2019 2018

At 1 January 6,642 4,716
Provisions made during the year – charged to profit or loss 2,500 2,784
Utilised during the year (723) (858)
Reversed to profit or loss during the year (1,856) -
At 31 December 6,563 6,642
This provision relates to actual and potential obligations arising from the Group’s insurance arrangements where the Group is
self-insured. The Group has third party insurance cover above specific limits for individual claims and has an overall maximum
aggregate payable for all claims in any one year. The amount provided is principally based on projected settlements as determined
by external loss adjusters. The provision also includes an estimate for claims incurred but not yet reported and incurred but not
enough reported.
The utilisation of the provision is dependent on the timing of settlement of the outstanding claims. The Group expects the majority
of the insurance provision will be utilised within five years of the period end date, however, due to the nature of the provision, there is
a level of uncertainty in the timing of settlement as the Group generally cannot precisely determine the extent and duration of the
claim process. The provision has been discounted to reflect the time value of money though the effect is not significant.
The self-insurance programme commenced in July 2015 and increasing levels of claims data is becoming available. Claim
provisions are assessed in light of claims experience and amended accordingly to ensure provisions reflect recent experience and
trends. This has resulted in a reversal of provisions made in prior periods of €1.9 million (2018: €nil) which has been credited within
administrative expenses.
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Notes to the consolidated financial statements
Notes to the consolidated financial statements

Bank borrowings 415,432 306,078
Less: unamortised debt costs (3,693) (4,189)
Total loans and borrowings 411,739 301,889
On 26 October 2018, the Group successfully completed the refinancing of its existing debt facility with a banking club of six lenders
- four original lenders who had participated in the previous facility and two new lenders to the Group. A new €525 million five year
multicurrency facility was entered into consisting of a €200 million term loan facility and a €325 million revolving credit facility, with
a maturity date of 26 October 2023. On 19 August 2019, the Group availed of its option to extend the €525 million multicurrency
facility for an additional year to 26 October 2024.
In line with IFRS 9 derecognition criteria, the Group assessed whether the terms and cash flows of the modified liability were
substantially different on refinancing.
Based on the ‘10% test’ referred to in note 1 (xxiv) (derecognition of financial liabilities accounting policy), the loans and borrowings
which were repriced to current market terms and which related to the original lenders were deemed to be non-substantially
modified. As they are floating rate liabilities, the amortised cost of the loans and borrowings relating to the original lenders was
recalculated by discounting the modified cash flows at an effective interest rate which reflected the market terms of the refinanced
liabilities on 26 October 2018, which resulted in no gain or loss. These loans and borrowings are recognised at amortised cost
with directly attributable costs being amortised to profit or loss on an effective interest rate basis over the term. Unamortised
arrangement fees of €0.9 million on the original loans, which were not reflective of market terms at the refinancing date, were
recognised immediately in finance costs in profit or loss in 2018 (note 5).
The loans and borrowings drawn with the two new lenders on 26 October 2018 were accounted for as new financial liabilities and
accounted for at fair value less directly attributable transaction costs on initial recognition and subsequently, stated at amortised
cost with directly attributable costs amortised to profit or loss on an effective interest rate basis.
As at 31 December 2019, the drawn loan facility is €415.4 million consisting of Sterling term borrowings of £176.5 million (€207.5
million) and revolving credit facility borrowings of €207.9 million - €102.1 million in Euro and £90 million (€105.8 million) in Sterling.
Unamortised debt costs at that date total €3.7 million.
During 2019, £60 million and €30.5 million were drawn to fund the acquisition of the effective freehold interest in Clayton Hotel City
of London (note 10) and £30 million was drawn to fund the purchase of a site on Paul Street in Shoreditch, London (note 10), from the
revolving credit facility. The undrawn loan facilities as at 31 December 2019 were €121.2 million (2018: €216.2 million).
The loans bear interest at variable rates based on 3 month Euribor/LIBOR plus applicable margins. The Group has entered into
certain derivative financial instruments to hedge interest rate exposure on a portion of these loans (note 22). The loans are secured
on the Group’s assets. Under the terms of the loan facility agreement, an interest rate floor is in place which prevents the Group from
receiving the benefit of sub-zero benchmark LIBOR and Euribor rates.
21 Loans and borrowings (continued)
Reconciliation of movements of liabilities to cash flows arising from financing activities for the year ended 31 December
2019
Liabilities Equity
Loans and
borrowings
Lease
liabilities
Trade
and other
payables Derivatives
Share
capital
Share
premium
Retained
earnings Total
   
(continued)
Notes to the consolidated financial statements

Notes to the consolidated financial statements

21 Loansandborrowings (continued)
Reconciliation of movements of liabilities to cash flows arising from financing activities for the year ended 31 December
2018
Liabilities Equity
Loans and
borrowings
Trade
and other
payables Derivatives
Share
capital
Retained
earnings Total
  
Balance as at 31 December 2017 260,139 64,853 1,778 1,837 73,045 401,652
Changes from financing cash flows
Proceeds from vesting of share awards - - - 6 - 6
Interest and finance costs paid (3,693) (8,469) (1,026) - - (13,188)
Receipt of bank loans 137,902 - - - - 137,902
Repayment of bank loans (92,563) - - - - (92,563)
Dividends paid - - - - (5,529) (5,529)
Total changes from financing cash flows 41,646 (8,469) (1,026) 6 (5,529) 26,628
Liability-related other changes
The effect of changes in foreign exchange rates (1,570) - - - - (1,570)
Changes in fair value - - 554 - - 554
Interest expense on bank loans and borrowings - 7,801 - - - 7,801
Otherfinancecosts-netamortisationofdebtcosts 1,674 - - - - 1,674
Other finance costs - other - 1,065 - - - 1,065
Total liability-related other changes 104 8,866 554 - - 9,524
Total equity-related other changes - - - - 76,545 76,545
Balance as at 31 December 2018 301,889 65,250 1,306 1,843 144,061 514,349
21 Loansandborrowings (continued)
Reconciliation of movement in net debt for the year ended 31 December 2019
Sterling
facility
Sterling
facility
Euro
facility Total
£’000  €’000
Loans and borrowings (excluding unamortised debt costs)
At 1 January 2019 178,352 199,381 106,697 306,078
Cash flows
Facilities drawn down 90,000 98,937 35,500 134,437
Loan repayments (1,852) (2,158) (40,000) (42,158)
Non-cash changes
Effect of foreign exchange movements - 17,075 - 17,075
At 31 December 2019 266,500 313,235 102,197 415,432
Cash and cash equivalents
At 1 January 2019 35,907
Movement during the year 4,679
At 31 December 2019 40,586
Net debt at 31 December 2019 374,846
Reconciliation of net debt and lease liabilities
Net debt at 31 December 2019 374,846
Lease liabilities as at 1 January 2019 (note 12) 314,430
Additions (note 12) 42,391
Interest on lease liabilities (note 12) 18,945
Lease payments (note 12) (27,514)
Remeasurement of lease liabilities (note 12) 9,239
Translation adjustment (note 12) 4,610
Lease liabilities at 31 December 2019 362,101
Net debt and lease liabilities at 31 December 2019 736,947
Net debt is calculated in line with banking covenants and includes external loans and borrowings before deduction of amortised
debt costs less cash and cash equivalents. The above table also includes a reconciliation to net debt and lease liabilities. Interest rate
swaps of €4.5 million are not included in the above tables (2018: €1.3 million).
Reconciliation of movement in net debt for the year ended 31 December 2018

Notes to the consolidated financial statements
Notes to the consolidated financial statements
22 Derivatives
The Group have entered into interest rate swaps and a cap agreement with a number of financial institutions in order to manage the
interest rate risks arising from the Group’s borrowings (note 21).
Interest rate swaps are employed by the Group to partially convert the Group’s Sterling denominated borrowings from floating to
fixed interest rates. An interest rate cap was employed to limit the exposure to upward movements in floating interest rates on Euro
denominated borrowings. The interest rate cap matured on 30 September 2019.
On 26 October 2018, as a result of the refinancing (note 21), the Group decided to hedge the floating interest rate on all the term
borrowings for a five year term.
The terms of the derivatives are as follows:
» On refinancing, the interest rate swaps with a maturity date of 3 February 2020 were retained which fix the LIBOR benchmark rate
to 1.5025% on a notional of £101.5 million Sterling denominated borrowings.
» On 26 October 2018, two new interest rate swaps were employed with an effective date of 3 February 2020 which hedge the
LIBOR benchmark rate on £101.5 million of the Sterling denominated borrowings for the period to the maturity of the term
borrowings on 26 October 2023. These swaps fix the LIBOR benchmark rate to 1.39%.
» On 26 October 2018, two new interest rate swaps were employed with an effective date of 26 October 2018 and a maturity
date of 26 October 2023 to hedge the LIBOR benchmark rate on a total notional of £75 million of the Group’s term Sterling
denominated borrowings. These swaps fix the LIBOR benchmark rate at 1.27% on a notional of £63 million and 1.28% on a
notional of £12 million of Sterling denominated borrowings.
During the year ended 31 December 2019, the Group entered into the following interest rate swaps which hedge the floating rate on
Sterling borrowings:
» On 9 January 2019, two interest rate swaps were entered into with an effective date of 29 March 2019 and a maturity date of 31
December 2020 to hedge the LIBOR benchmark rate on £25 million of the Sterling revolving credit facility borrowings. The swaps
hedge the LIBOR benchmark rate to 1.086%.
» As a result of the loan facility being extended for an additional year to 26 October 2024 (note 21), four new interest rate swaps
were employed with an effective date of 26 October 2023 and a maturity date of 26 October 2024 which hedge the LIBOR
benchmark rate on the Sterling term denominated borrowings. These swaps fix the LIBOR benchmark rate between 0.95% and
0.96%.
As at 31 December 2019, the interest rate swaps cover 100% of the Group’s Term Sterling denominated borrowings. As at 31
December 2019, the interest rate swaps cover 28% of the Group’s Sterling revolving credit facility borrowings.
All derivatives have been designated as hedging instruments for the purposes of IFRS 9.
22 Derivatives (continued)
Fair value 2019 2018


Movements in year
At 1 January – net liability (38,516) (28,287)
Charge for year – to profit or loss (note 8) (425) (536)
Charge for year – to other comprehensive income (16,890) (9,693)
At 31 December – net liability (55,831) (38,516)
The majority of the deferred tax liabilities result from the Group’s policy of ongoing revaluation of land and buildings. Where the
carrying value of a property in the financial statements is greater than its tax base cost, the Group recognises a deferred tax liability.
This is calculated using applicable Irish and UK corporation tax rates. The use of these rates in line with the applicable accounting
standards reflects the intention of the Group to use these assets for ongoing trading purposes. Should the Group dispose of a
property, the actual tax liability would be calculated with reference to rates for capital gains on commercial property.
The Group acquired Hotel La Tour Birmingham Limited in July 2017. At that time, the company had tax trading losses forward of £8.2
million (€9.6 million) which were not recognised as an asset in the statutory accounts of that company. Hotel La Tour Birmingham
Limited sold Hotel La Tour Birmingham (now Clayton Hotel Birmingham) in August 2017, at which time a taxable capital gain of £6.0
million (€7.0 million) arose. The Group opted to roll over this capital gain by correspondingly reducing the future tax base cost of
capital assets.
The Group immediately recognised this deferred tax liability of £1.0 million (€1.2 million) and recognised a matching deferred tax
asset relating to the trading losses to the extent of the capital gain arising. A further £2.2 million (€2.6 million) of tax trading losses
remain unrecognised. The tax effect of these losses is £0.4 million (€0.4 million).
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Notes to the consolidated financial statements
Notes to the consolidated financial statements
Deferred tax arises from temporary differences relating to:
Risk exposures
The Group is exposed to various financial risks arising in the normal course of business. Its financial risk exposures are predominantly
related to the creditworthiness of counterparties and risks relating to changes in interest rates and foreign currency.
The Group uses financial instruments throughout its business: loans and borrowings and cash and cash equivalents are used to
finance the Group’s development and operations; trade and other receivables, trade payables and accruals arise directly from
operations; and derivatives are used to manage interest rate risks and to achieve a desired profile of borrowings. The Group uses
Sterling denominated borrowings as a net investment hedge to hedge the foreign exchange risk from investments in certain UK
operations. The Group does not trade in financial instruments.
The following tables show the carrying amount of Group financial assets and liabilities including their values in the fair value hierarchy
for the year ended 31 December 2019. The tables do not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value. A fair value disclosure for lease liabilities is
not required.
Fair value hierarchy
The Group measures the fair value of financial instruments based on the degree to which inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurements. Financial instruments are categorised by the type of
valuation method used. The valuation methods are as follows:
» Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
» Level 2: Inputs other than quoted prices included within Level 1 that are observable for the financial instrument, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).
» Level 3: Inputs for the financial instrument that are not based on observable market data (unobservable inputs).
The Group’s policy is to recognise any transfers between levels of the fair value hierarchy as of the end of the reporting period during
which the transfer occurred. During the year ended 31 December 2019, there were no reclassifications of financial instruments and
no transfers between levels of the fair value hierarchy used in measuring the fair value of financial instruments.
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Notes to the consolidated financial statements
24 Financialinstrumentsandriskmanagement (continued)
Estimation of fair values
The principal methods and assumptions used in estimating the fair values of financial assets and liabilities are explained hereafter.
Cash at bank and in hand
For cash at bank and in hand, the carrying value is deemed to reflect a reasonable approximation of fair value.
Derivatives
Discounted cash flow analyses have been used to determine the fair value of the interest rate swaps and interest rate cap taking into
account current market inputs and rates (Level 2).
Receivables/payables
For the receivables and payables with a remaining term of less than one year or demand balances, the carrying value less any
expected credit loss provision, where appropriate, is a reasonable approximation of fair value. The non-current receivables carrying
value is a reasonable approximation of fair value.
Bank loans
For bank loans, the fair value was calculated based on the present value of the expected future principal and interest cash flows
discounted at interest rates effective at the reporting date. The carrying value of floating rate interest-bearing loans and borrowings
is considered to be a reasonable approximation of fair value. There is no difference between margins available in the market at year
end and the margins that the Group was paying at the year end.
(a) Credit risk
Exposure to credit risk
Credit risk is the risk of financial loss to the Group arising from granting credit to customers and from investing cash and cash
equivalents with banks and financial institutions.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. There is no concentration
of credit risk or dependence on individual customers due to the large number of customers. Management has a credit policy in
place and the exposure to credit risk is monitored on an ongoing basis. Outstanding customer balances are regularly monitored and
reviewed for indicators of impairment (evidence of financial difficulty of the customer or payment default). The maximum exposure
to credit risk is represented by the carrying amount of each financial asset.
The ageing profile of trade receivables at 31 December 2019 is provided in note 15. Management does not expect any significant
losses from receivables that have not been provided for as shown in note 15.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and give rise to credit risk on the amounts held with counterparties.
The maximum credit risk is represented by the carrying value at the reporting date. The Group’s policy for investing cash is to limit
risk of principal loss and to ensure the ultimate recovery of invested funds by limiting credit risk.
The Group review regularly the credit rating of each bank and if necessary, take appropriate action to ensure there is appropriate
cash and cash equivalents held with each bank based on their credit rating.
The carrying amount of the following financial assets represents the Group’s maximum credit exposure. The maximum exposure to
credit risk at year end was as follows:
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities. The
Group’s approach to managing liquidity risk is to ensure as far as possible that it will always have sufficient liquidity to:
» Fund its ongoing activities;
» Allow it to invest in hotels that may create value for shareholders; and
» Maintain sufficient financial resources to mitigate against risks and unforeseen events.
The Group’s treasury function ensures that sufficient resources are available to meet its liabilities as they fall due through a
combination of cash and cash equivalents, cash flows and undrawn credit facilities.
On 26 October 2018, the Group successfully completed the refinancing of its existing debt facility with a banking club of six lenders.
A new €525 million five year multicurrency facility was entered into consisting of a €200 million term loan facility and a €325 million
revolving credit facility. The maturity date of this facility on completion of the refinancing was 26 October 2023, however on 19
August 2019, the Group availed of its option to extend the €525 million multicurrency facility for an additional year, to 26 October
2024. As at 31 December 2019, the entire term facility was drawn in Sterling equating to £176.5 million (€207.5 million) and €207.9
million was drawn from the revolving credit facility - €102.1 million in Euro and £90.0 million (€105.8 million) in Sterling. The Group had
undrawn revolving credit facilities of €121.2 million as at 31 December 2019.
The Group also monitors its Debt and Lease Service Cover, which is 3.2 times for the year ended 31 December 2019 (31 December
2018: 2.7 times) and seeks to ensure that if a significant temporary drop in revenues were to occur, there would be sufficient liquid
resources to meet ongoing requirements.
The following are the contractual maturities of the Group’s financial liabilities at 31 December 2019, including estimated interest
payments. In the below table, bank loans are repaid on 26 October 2024, even though the Group has the flexibility to repay and draw
the revolving credit facility throughout the term of the facility which would improve its liquidity position.
Carrying value

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Notes to the consolidated financial statements
Notes to the consolidated financial statements
Market risk is the risk that changes in market prices and indices, such as interest rates and foreign exchange rates will affect the
Group’s profit or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
(i) Interest rate risk
The Group is exposed to floating interest rates on its debt obligations and uses hedging instruments to mitigate the risk associated
with interest rate fluctuations. This is achieved by entering into interest rate swaps (note 22) which hedge the variability in cash flows
attributable to the interest rate risk. All such transactions are carried out within the guidelines set by the Board. The Group seeks to
apply hedge accounting to manage volatility in profit or loss.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on
the reference interest rates, maturities and the notional amounts. The Group assesses whether the derivative designated in each
hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical
derivative method.
A fundamental review and reform of major interest rate benchmarks is being undertaken globally. There is uncertainty as to the
timing and the methods of transition for replacing existing benchmark interbank offered rates (IBORs) with alternative rates. LIBOR
continues to be used as a reference rate in financial markets and is used in the valuation of instruments with maturities that exceed
the expected end date for LIBOR. The Group’s derivatives continue to hedge the LIBOR variable interest rate on Sterling borrowings.
As a result, the Group continues to apply hedge accounting as at 31 December 2019.
The interest rate profile of the Group’s interest-bearing financial liabilities as reported to the management of the Group is as follows:
          Nominal amount
2019 2018

VThe weighted average interest rate for 2019 was 2.42% (2018: 2.94%), of which 1.57% (2018: 2.15%) related to margin.
The interest expense for 2019 has been sensitised in the following table for a reasonably possible change in variable interest rates.
In relation to the downward sensitivity, the Group has used a zero benchmark interest rate as the lowest variable interest rate due to
floors embedded in the loan facilities and as a result, the Group does not benefit from any reduction in benchmark rates below zero.
For the upward sensitivity, the Group have reviewed eight years historical data for the 3 month Euribor and 3 month LIBOR rates and
3 month Euribor and 3 month LIBOR forward curves for the term of the loan facility. Based on this review, the Group believe that a
reasonable change in the rates would be 1.1% for both 3 month LIBOR and for 3 month Euribor based on historical data for each
benchmark interest rate.
At 31 December 2019, all Sterling term borrowings (£176.5 million) were hedged with interest rate swaps and £25 million of the
£90 million revolving credit facility borrowings was hedged with interest rate swaps. £65 million of Sterling borrowings are unhedged
and are affected by changes in variable interest rates. The Group does not currently hedge its variable interest rates on its
Euro borrowings.
24 Financial instruments and risk management (continued)
(c) Market risk (continued)
(i) Interest rate risk (continued)
The impact on profit or loss is shown below. This analysis assumes that all other variables, in particular foreign currency exchange
rates, remain constant.
2019 actual weighted
average variable
benchmark rate
(ii) Foreign currency risk
As per the Risk Management section of the annual report on pages 40 to 47, the Group is exposed to fluctuations in the Euro/
Sterling rate.
The Group is exposed to transactional foreign currency risk on trading activities conducted by subsidiaries in currencies other than
their functional currency and to foreign currency translation risk on the retranslation of foreign operations to Euro.
The Group’s policy is to manage foreign currency exposures commercially and through netting of exposures where possible. The
Group’s principal transactional exposure to foreign exchange risk relates to interest costs on its Sterling borrowings. This risk is
mitigated by the earnings from UK subsidiaries which are denominated in Sterling.
The Group’s gain or loss on retranslation of the net assets of foreign currency subsidiaries is taken directly to the translation reserve.
The Group limits its exposure to foreign currency risk by using Sterling debt to hedge part of the Group’s investment in UK
subsidiaries. The Group financed certain acquisitions and developments in the UK by obtaining funding through external borrowings
denominated in Sterling. These borrowings amounted to £266.5 million (€313.2 million) at 31 December 2019 (2018: £176.5 million
(€197.3 million)) and are designated as net investment hedges. The net investment hedge was fully effective during the year.
This enables gains and losses arising on retranslation of those foreign currency borrowings to be recognised in Other
Comprehensive Income, providing a partial offset in reserves against the gains and losses arising on translation of the net assets of
those UK operations.
Sensitivity analysis on transactional risk
The Group have reviewed the historical average monthly Euro/Sterling foreign exchange rates for the previous thirteen years. The
lowest average foreign exchange rate of 0.66 has been used in calculating the impact of Euro weakening against Sterling as it is
reflective of a period of market volatility due to strong economic growth. On the upward sensitivity, due to current volatility in the
market and the unknown impact of Brexit, the Group have used a Euro/Sterling foreign exchange rate of 1 (parity) in the sensitivity.
The aforementioned rates are broadly in line with market forecasts which display a wide variation in foreign exchange rates. The
actual weighted average foreign exchange rate for interest expense in 2019 was 0.88 (2018: 0.88). The interest cost on Sterling loans
in 2019 was £7.3 million (€8.3 million).
 
Decrease/(increase) on interest costs of Sterling loans 1,022 (2,664) 1,022 (2,664)
Impact on tax charge (128) 333 (128) 333
Increase/(decrease) in profit/equity 894 (2,331) 894 (2,331)
(d) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. Management monitors the return on capital to ordinary shareholders.
The Board of Directors seeks to maintain a balance between the higher returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position. The Group’s target is to achieve a pre-tax
leveraged return on equity of at least 15% on investments and a rent cover of at least 1.85 times in year three for new leased assets.
The Group monitors capital using a ratio of Net Debt to Adjusted EBITDA in line with its banking covenants.
The Net Debt to Adjusted EBITDA pre IFRS 16 as at 31 December 2019 is 2.8 (2018: 2.3).
24 Financial instruments and risk management (continued)
(d) Capital management (continued)
Net Debt to Adjusted EBITDA (pre IFRS 16):
2019 2018

Adjusted EBITDA (note 2) 162,214 119,583
Deduct: fixed rent costs* (note 11) (27,384) -
Adjusted EBITDA pre IFRS 16 134,830 119,583
Net debt as at 31 December (note 21) 374,846 270,171
Net Debt to Adjusted EBITDA as at 31 December 2.8 2.3
* No adjustment required to 2018 figures as prior year figures have not been restated for IFRS 16.
Net debt and lease liabilities to Adjusted EBITDA:
2019
€’000
Adjusted EBITDA (note 2) 162,214
Net debt and lease liabilities as at 31 December (note 21) 736,947
Net debt and lease liabilities to Adjusted EBITDA 4.5
The comparative information is not shown above as it has not been restated for IFRS 16.
25 Commitments
Section 357 Companies Act 2014
Hotel Group plc, as the parent company of the Group and for the purposes of filing exemptions referred to in Section 357
of the Companies Act 2014, has entered into guarantees in relation to the liabilities of the Republic of Ireland registered subsidiary
companies which are listed below:
Financial Statements
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Notes to the consolidated financial statements
Notes to the consolidated financial statements
25 Commitments (continued)
Capital commitments
The Group has the following commitments for future capital expenditure under its contractual arrangements.
2019 2018

Contracted but not provided for 61,270 26,701
This relates primarily to the development of the following new-build hotels and extensions to currently operational hotels which are
now contractually committed:
» New build hotel development of Maldron Merrion Road;
» New build residential development (comprising 69 residential units) on the site of the former Tara Towers hotel (note 14); and
» Extensions and renovations of Clayton Hotel Cardiff Lane, Clayton Hotel Birmingham and Clayton Hotel Burlington Road.
It also includes committed capital expenditure at other hotels in the Group.
The Group has further commitments in relation to fixtures, fittings and equipment in some of its leased hotels. Under certain lease
agreements, the Group has committed to spending a percentage of turnover on capital expenditure in respect of fixtures, fittings
and equipment in the leased hotels over the life of the lease. The Group has estimated the commitment in relation to these leases to
be €58.3 million (31 December 2018: €60.6 million) spread over the life of the various leases with the majority ranging in length from
25 years to 35 years. The turnover figures used in this estimate have been based on 2019 revenues.
26 Related party transactions
Under IAS 24 Related Party Disclosures, the Group has related party relationships with shareholders and Directors of the Company.
Remuneration of key management
Key management is defined as the Directors of the Company and does not extend to any other members of the Executive
Management Team. The compensation of key management personnel is set out in the Remuneration Committee Report on pages
78 to 95. In addition, the share-based payments expense for key management in 2019 was €1.0 million (2018: €0.9 million).
27 Subsequent events
Proposed final dividend
On 24 February 2020, the Board proposed a final dividend of 7.25 cents per share. This proposed dividend is subject to approval
by the shareholders at the Annual General Meeting. The payment date for the final dividend will be 6 May 2020 to shareholders
registered on the record date 14 April 2020. These consolidated financial statements do not reflect this dividend. Based on shares in
issue at 31 December 2019, the amount of dividends proposed is €13.4 million.
Vesting of share options
On 2 January 2020, the Company issued 49,245 shares of €0.01 per share following the partial vesting of the Share Save schemes
granted in 2016.
On 3 February 2020, the Company issued 16,639 shares of €0.01 per share following the partial vesting of the Share Save schemes
granted in 2016.
28 Subsidiary undertakings
A list of all subsidiary undertakings at 31 December 2019 is set out below:
Country of Ownership
Subsidiary undertaking Incorporation Activity Direct Indirect
5
The registered address of this company is 12 Castle Street, St Helier Jersey, JE2 3RT.
29 Earnings per share
Basic earnings per share is computed by dividing the profit for the year available to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year. Diluted earnings per share is computed by dividing the profit for the year
available to ordinary shareholders by the weighted average number of ordinary shares outstanding and, when dilutive, adjusted for
the effect of all potentially dilutive shares. The following table sets out the computation for basic and diluted earnings per share for
the years ended 31 December 2019 and 31 December 2018.
2019 2018
Profit attributable to shareholders of the parent (€’000) – basic and diluted 78,212 75,224
Adjusted profit attributable to shareholders of the parent (€’000) – basic and diluted 77,535 78,821
Earnings per share – Basic 42.4 cents 40.9 cents
Earnings per share – Diluted 42.0 cents 40.4 cents
Adjusted earnings per share – Basic 42.0 cents 42.8 cents
Adjusted earnings per share – Diluted 41.6 cents 42.3 cents
Weighted average shares outstanding – Basic 184,601,191 184,125,709
Weighted average shares outstanding – Diluted 186,305,549 186,156,827
The difference between the basic and diluted weighted average shares outstanding for the year ended 31 December 2019 is due to
the dilutive impact of the conditional share awards granted in 2016 (for the period prior to exercise), 2017, 2018 and 2019 (note 7).
There have been no adjustments made to the number of weighted average shares outstanding in calculating adjusted basic earnings
per share and adjusted diluted earnings per share.
Adjusted earnings per share (basic and diluted) is presented as an alternative performance measure to show the underlying
performance of the Group excluding the tax adjusted effects of items considered by management to not reflect normal trading
activities or distort comparability either period on period or with other similar businesses (note 2).
29 Earnings pershare (continued)
2019 2018 
Reconciliation to adjusted profit for the year 
Profit before tax 89,688 87,301
Finance costs 30,613 9,514
Profit before tax and finance costs 120,301 96,815
Adjusting items (note 2)
Proceeds from insurance claim - (2,598)
Hotel pre-opening expenses 9 2,487
Net revaluation movements through profit or loss (1,601) 3,137
Adjusted profit before tax and finance costs 118,709 99,841
Finance costs (30,613) (9,514)
Adjusting items in finance costs
Write off of unamortised arrangement fees on original loans (note 5) - 946
Adjusted profit before tax 88,096 91,273
Tax charge (11,476) (12,077)
Adjusting items in tax charge (note 2)
Tax impact of proceeds from insurance claim 857 -
Tax adjustment for adjusting items 58 (375)
Adjusted profit for the year 77,535 78,821
Earnings per share as restated to remove the impact of IFRS 16 Leases in 2019 is presented in the following table. There is no
comparative information for 2018 as IFRS 16 had not been applied in that year.
2019
Pre IFRS 16 Earnings per share – Basic 46.4 cents
Pre IFRS 16 Earnings per share – Diluted 46.0 cents
Pre IFRS 16 Adjusted earnings per share – Basic 46.0 cents
Pre IFRS 16 Adjusted earnings per share – Diluted 45.6 cents
There have been no adjustments made to the number of weighted average shares outstanding in calculating the pre IFRS 16
earnings per share. A reconciliation of profit for the year as reported in accordance with prevailing IFRS to pre IFRS 16 profit for the
year is included below.
Profit for
the year
Adjusted
profit for
the year

As presented in accordance with prevailing IFRS 78,212 77,535
IFRS 16 impact on profit and adjusted profit for the year (note 11) 7,453 7,453
Loss on investment property (note 13) - (44)
Pre IFRS 16 profit and adjusted profit for the year 85,665 84,944
30 Approval of the financial statements
The financial statements were approved by the Directors on 24 February 2020.
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Maldron Hotel
South Mall Cork
Company statement of financial position
at 31 December 2019
Note 2019 2018

Assets
Non-current assets
Investments in subsidiaries 2 48,408 46,704
Total non-current assets 48,408 46,704
Current assets
Trade and other receivables 3 49 36
Amounts owed by subsidiaries 4 725,697 744,203
Cash and cash equivalents 5 167 676
Total current assets 725,913 744,915
Total assets 774,321 791,619
Equity
Share capital 7 1,851 1,843
Share premium 7 504,488 503,113
Share-based payment reserve 4,900 4,232
Retained earnings 259,682 263,113
Total equity 770,921 772,301
Current liabilities
Trade and other payables 6 3,400 19,318
Total current liabilities 3,400 19,318
Total liabilities 3,400 19,318
Total equity and liabilities 774,321 791,619
On behalf of the Board:
John Hennessy Patrick McCann
Chair Director
COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2019
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174 
Company statement of changes in equity
for the year ended 31 December 2019
Attributable to equity holders of the Company
Share
capital
Share
premium
Share-based
payment
reserve
Hedging
reserve
Retained
earnings Total

Cash flows from operating activities
Profit for the year 13,945 280,475
Adjustments for:
Dividends received from subsidiary undertakings (15,310) (88,259)
Finance costs 64 10,545
Foreign exchange loss/(gain) on borrowings 154 (56)
Share-based payment expense 975 874
Distribution income - (200,000)
(172) 3,579
Decrease in trade and other payables (784) (521)
(Increase)/decrease in trade and other receivables (13) 34
Net cash (used in)/from operating activities (969) 3,092
Cash flows from investing activities
Cash movements on amounts due from subsidiaries 3,372 72,679
Distribution received - 200,000
Dividends received 15,310 -
Net cash from investing activities 18,682 272,679
Cash flows from financing activities
Interest and finance costs paid - (8,146)
Receipt of bank loans - 74,459
Repayment of bank loans - (336,937)
Dividends paid (19,387) (5,529)
Proceeds from issue of share capital 1,383 6
Net cash used in financing activities (18,004) (276,147)
Net decrease in cash and cash equivalents (291) (376)
Cash and cash equivalents at the beginning of the year 676 849
Effect of movements in exchange rates (218) 203
Cash and cash equivalents at the end of the year 167 676
177
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I
The individual financial statements of the Company have been prepared in accordance with IFRS as adopted by the EU, and as
applied in accordance with the Companies Act 2014.
Significant accounting policies specifically applicable to these individual Company financial statements and which are not reflected
within the accounting policies for the Group consolidated financial statements are detailed below.
IFRS 16 Leases has no impact on the individual financial statements of the Company.
(i) Investments in subsidiaries
Investments in subsidiaries are accounted for in these individual Company financial statements on the basis of the direct equity
interest, rather than on the basis of the reported results and net assets of investees. Investments in subsidiaries are carried at cost
less impairment.
Share-based payments in respect of employees in subsidiaries are accounted for as an increase in the cost of investments
in subsidiaries.
(ii) Intra-group guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of companies within the Group,
the Company considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee
contract as a contingent liability until such time as it becomes probable that it will be required to make a payment under
the guarantee.
2 Investments in subsidiaries

Movements in year
At 1 January 46,704 42,519
Cost of share-based payments in respect of subsidiaries 1,704 1,926
Additions to investments - 2,259
At 31 December 48,408 46,704
On 25 October 2018, DHGL Limited declared a dividend in specie in favour of the Company of 2,000,100 ordinary £1 shares in Cenan
BV (€2.3 million). This is the entire ordinary share capital of Cenan BV, and the Company was the sole shareholder in Cenan BV at
that date.
On 11 December 2019, the shares the Company held in Cenan BV were gifted to DHG Harton Limited, a wholly owned subsidiary
of the Company. As a result of this transaction, Cenan BV has become a direct subsidiary of DHG Harton Limited rather than the
Company. The Company has derecognised its investment in Cenan BV and recognised an investment in DHG Harton Limited of the
same value. As both Cenan BV and DHG Harton Limited are subsidiaries of the Company, there has been no impact on investments
in subsidiaries in the financial statements.
On 26 October 2018, DHG Glover Limited, a wholly owned subsidiary, acquired the Company’s investment in DHGL Limited for €200
million. The Company retained control of DHGL Limited as a result of the transaction. Accordingly, the €200 million proceeds were
treated as distribution income by the Company in profit or loss in 2018. The €200 million received was used to repay a portion of the
outstanding debt facilities in 2018.
Details of subsidiary undertakings are included in note 28 of the consolidated financial statements.
3 Trade and other receivables
2019 2018

Prepayments 45 31
Value added tax 4 5
49 36
4 Amounts owed by subsidiaries
2019 2018

Amounts owed by subsidiaries 725,697 744,203
725,697 744,203
Amounts owed by subsidiaries are non-interest bearing and are repayable on demand.
The amounts owed by subsidiaries have been reviewed and no credit losses are expected based on the financial position of
subsidiaries. As a result, no expected credit loss provision has been recognised.
5 Cash and cashequivalents
2019 2018

Amounts due to group undertakings at 31 December 2019 include an interest-bearing loan of €0.7 million (2018: €nil) which is
repayable on demand. The Company incurred interest on a loan from a group undertaking at an interest rate of 1.4%. Other amounts
due to subsidiaries are non-interest bearing and are repayable on demand.
7 Share capital and premium
All ordinary shares rank equally with regard to the Company’s residual assets.
During the year ended 31 December 2019, the Company issued 285,809 shares of €0.01 per share following the vesting of awards
granted in March 2016 under the 2014 LTIP. 465,145 shares were also issued during 2019 under the Share Save schemes granted in
2016 which had a weighted average exercise price of €2.96 per share.
8 Dividends
The dividends paid and proposed in respect of ordinary share capital were as follows:
2019 2018

Final paid 7.0 cents per Ordinary Share (2018: €nil) 12,925 -
Interim paid 3.5 cents per Ordinary Share (2018: 3.0 cents) 6,462 5,529
19,387 5,529
A final dividend for 2018 of 7.0 cents per share was paid on 8 May 2019 on the ordinary shares in the Company and amounted to
€12.9 million (2018: €nil).
An interim dividend for 2019 of 3.5 cents (2018: 3.0 cents) per share was paid on 4 October 2019 on the ordinary shares in the
Company and amounted to €6.5 million (2018: €5.5 million).
On 24 February 2020, the Board proposed a final dividend for 2019 of 7.25 cents per share. This proposed final dividend is subject
to approval by the shareholders at the Annual General Meeting. The payment date for the final dividend will be 6 May 2020 to
shareholders registered on the record date 14 April 2020. These consolidated financial statements do not reflect this dividend.
Based on shares in issue at 31 December 2019, the amount of dividends proposed is €13.4 million.
During the year ended 31 December 2019, the Company received dividend income which has been included in profit or loss
amounting to €15.3 million (2018: €88.3 million) from its subsidiary undertakings.
9 Attributable profit or loss of theCompany
The profit attributable to shareholders dealt with in the financial statements of the Company for the year ended 31 December 2019
was €13.9 million (2018: profit of €280.5 million). As permitted by Section 304 of the Companies Act 2014, the statement of profit or
loss and other comprehensive income for the Company has not been separately presented in these financial statements.
Profit for the year ended 31 December 2019 primarily includes dividend income from subsidiary undertakings of €15.3 million
(note 8).
Profit for the year ended 31 December 2018 principally included distribution income of €200 million (note 2) and dividend income
from subsidiary undertakings of €88.3 million (note 8).
10 Company related party disclosures
Under IAS 24 Related Party Disclosures, the Company has related party relationships with Directors of the Company and with its
subsidiary undertakings (note 28 of the consolidated financial statements).
Remuneration of key management
Key management is defined as the Directors of the Company. The compensation of key management personnel is set out in the
Remuneration Committee Report on pages 78 to 95 and note 26 of the consolidated financial statements.
Transactions with related parties
During the year ended 31 December 2019, the Company charged fees amounting to €2.8 million (2018: €3.6 million) to its subsidiary
undertakings for services provided during the year.
In 2018, the Company repaid its external borrowings therefore the Company did not charge interest relief to its subsidiaries in 2019.
In 2018, the Company charged €3.6 million to its subsidiaries for use of interest relief.
11 Commitments
Section 357 Companies Act 2014
Hotel Group plc, as the as the parent company of the Group and for the purposes of filing exemptions referred to in Section
357 of the Companies Act 2014, has entered into guarantees in relation to the liabilities of Republic of Ireland registered subsidiary
companies which are listed below:
11 Commitments (continued)
Other guarantees
At 31 December 2019, the Company has undertaken to guarantee the obligations of its subsidiaries in relation to the following:
Property Subsidiary Term Term remaining
The Group reports certain alternative performance measures
(‘APMs’) that are not defined under International Financial
Reporting Standards (‘IFRS’), which is the framework under which
the consolidated financial statements are prepared. These are
sometimes referred to as ‘non-GAAP’ measures.
The Group believes that reporting these APMs provides useful
supplemental information which, when viewed in conjunction
with our IFRS financial information, provides investors with a more
comprehensive understanding of the underlying financial and
operating performance of the Group and its operating segments.
These APMs are primarily used for the following purposes:
» to evaluate the historical and planned underlying results of
our operations; and
» to discuss and explain the Group’s performance with the
investment analyst community.
The APMs can have limitations as analytical tools and should
not be considered in isolation or as a substitute for an analysis
of our results in the consolidated financial statements which
are prepared under IFRS. These performance measures may
not be calculated uniformly by all companies and therefore may
not be directly comparable with similarly titled measures and
disclosures of other companies.
The definitions of and reconciliations for certain APMs are
contained within the consolidated financial statements. A
summary definition of these APMs together with the reference
to the relevant note in the consolidated financial statements
where they are reconciled is included below. Also included below
is information pertaining to certain APMs which is not mentioned
within the consolidated financial statements but which are
referred to in other sections of this annual report. This information
includes a definition of theAPM in addition to a reconciliation of
the APM to the most directly reconcilable line item presented
in the consolidated financial statements. References to the
consolidated financial statements are included as applicable.
(i) Adjusted EBITDA
Adjusted EBITDA is anA PM representing earnings before interest
on lease liabilities, other interest and finance costs,depreciation
of property, plant and equipment and right-of-useassets,
amortisation of intangible assets and tax, adjusted to show the
underlying operating performance of the Group and excludes
items which are not reflective of normal trading activities or distort
comparability either year-on-year or with other similar businesses.
Reconciliation:Note2
(ii) EBITDA and Segments EBITDA
EBITDA is an APM representing earnings before interest on
lease liabilities, other interest and finance costs, depreciation
of property, plant and equipment and right-of-use assets,
amortisation of intangible assets and tax.
Reconciliation: Note 2 
Segments EBITDA represents ‘AdjustedEBITDA’ before central
costs, share-based payments expense and other income for each
of the reportable segments: Dublin, Regional Ireland and United
Kingdom. It is presented to show the net operational contribution
of leased and owned hotels in each geographical location.
Reconciliation:Note2
(iii) EBITDAR and Segments EBITDAR
EBITDAR is an APM representing earnings before rent (fixed and
variable), interest on lease liabilities, other interest and finance
costs, depreciation of property, plant and equipment and
right-of-use assets, amortisation of intangible assets and tax.
Reconciliation: Note 2
Segments EBITDAR represents Segments EBITDA before rent
(fixed and variable) for each of the reportable segments: Dublin,
Regional Ireland and United Kingdom.
Reconciliation: Note 2
(iv) Adjusted basic earnings per share (EPS)
Adjusted Basic EPS is presented as an APM to show the
underlying performance of the Group excluding the effects of
items considered by management to not reflect normal trading
activities or distort comparability either year on year or with
other similar businesses.
Reconciliation: Note 29
(v) Segments EBITDAR margin
Segments EBITDAR margin represents ‘Segments EBITDAR’
as a percentage of the total revenue for the following Group
segments: Dublin, Regional Ireland and United Kingdom. Also
referred to as Hotel EBITDAR margin.
(vi) Effective tax rate
The Group’s annual tax charge divided by the profit before tax
presented in the consolidated statement of profit or loss and
other comprehensive income.
Reconciliation: Refer below
(vii) Net Debt
Net Debt represents loans and borrowings (gross of unamortised
debt costs)less cash and cash equivalents at year end.
Reconciliation:Note21
(viii) Net Debt and Lease Liabilities
Net Debt and lease liabilities recorded at year end.
Reconciliation: Note 21
(ix) Net Debt to Adjusted EBITDA
Net Debt divided by the ‘Adjusted EBITDA’ after deducting fixed
rent for the year. This APM is presented to show the Group’s
financial leverage before the application of IFRS 16 Leases.
Reconciliation: Note 24
(x) Net Debt and Lease Liabilities to Adjusted EBITDA
Net Debt and Lease Liabilities divided by the ‘Adjusted EBITDA’
for the year. This APM is presented to show the Group’s financial
leverage after including the accounting estimate of lease
liabilities following the application of IFRS 16 Leases.
Reconciliation: Note 24
Supplementary
FinancialInformation
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Supplementary Financial Information

(xii) Debt and Lease Service Cover
Free Cash Flow before payments of rent, interest and finance
costs divided by the total amount paid for rent, interest and
finance costs. Debt and Lease Service Cover is presented to show
the Group’s ability to meet its debt and lease commitments.
Reconciliation: Refer below
(xiii) Normalised Return on Invested Capital
Adjusted EBIT for the year divided by the Group’s average
invested capital. The Group defines invested capital as total
assets less total liabilities at the year end and excludes the
accumulated revaluation gains/losses included in property,
plant and equipment, Net Debt, derivative financial instruments,
taxation related balances and is restated to remove the impact
of adopting IFRS 16 Leases, including removing the accounting
estimate for right-of-use assets and lease liabilities. The Group
also excludes the impact of the investment in the construction
of future assets or newly opened, owned assets in 2018 or 2019
which have not yet reached full operating performance.
The Group’s net assets are adjusted to reflect the average
level of acquisition investment spend and the average level
of working capital for the accounting period. The average
invested capital is the simple average of the opening and
closing invested capital figures.
Adjusted EBIT represents the Group’s Adjusted EBITDA after
deducting the depreciation of property, plant and equipment,
amortisation of intangible assets and is restated to remove the
impact of adopting IFRS 16 by deducting the rental expense
under IAS 17. The earnings from owned assets newly opened
in 2018 or 2019 are excluded as they have not yet reached full
operating performance.

(xiv) Pre IFRS 16 numbers
Due to the significant impact from the adoption of IFRS 16
Leases on the consolidated financial statements, the Group has
also disclosed numbers for the year ended 31 December 2019
as if they had been prepared under the previous accounting
standard IAS 17 Leases. As the Group is not restating prior
year comparatives under the transition method selected,
these additional disclosures will provide the reader with more
information to assist in interpreting the underlying operating
performance of the Group. See note 11 to the consolidated
financial statements for the year ended 31 December 2019 for
more information on the transition to IFRS 16.
In particular, the Group refers to the following APMs to enable
comparison between years following the adoption of IFRS 16
Leases in the year.
Adjusted EBITDA pre IFRS 16
Earnings before adjusting items, interest and finance costs,
tax, depreciation, amortisation of intangible assets and
restated to remove the impact of adopting IFRS 16, replacing
IFRS 16 right of use asset depreciation and lease liability
interest with rental expenses under IAS 17. Earnings are
adjusted to show the underlying operating performance of the
Group and excludes items which are not reflective of normal
trading activities or distort comparability either year on year or
with other similar businesses.
Reconciliation: Note 11
Profit before tax pre IFRS 16
Profit before tax restated to remove the impact of adopting IFRS
16, replacing IFRS 16 right of use asset depreciation and lease
liability interest with rental expense under IAS 17.
Reconciliation: Note 11
Profit for the year pre IFRS 16
Basic earnings per share pre IFRS 16
Basic earnings per share restated to remove the impact of
adopting IFRS 16, including replacing IFRS 16 right of use asset
depreciation and lease liability interest with rental expense under
IAS 17.
Reconciliation: Note 11
Diluted earnings per share pre IFRS 16
IAS17.
Reconciliation: Note 11
Adjusted basic earnings per share pre IFRS 16
Basic EPS before adjusting items and restated to remove the
impact of adopting IFRS 16, including replacing IFRS 16 right
of use asset depreciation and lease liability interest with rental
expense under IAS 17.
Reconciliation: Note 29
SupplementaryFinancialInformation
(continued)
Reconciliation of pre IFRS 16 statement of financial position
A reconciliation of the reported consolidated statement of financial position at 31 December 2019 to what would have been
presented had IAS 17 still applied is shown in the table below.
Calculation - €’000
31 December
2019
IFRS 16
impact
31 December 2019
As Reported
Non-current assets Pre IFRS 16 Post IFRS 16
Property, plant and equipment 1,471,315 - 1,471,315
Right-of-use assets - 386,407 386,407
Goodwill and intangible assets 57,191 (21,058) 36,133
Other non-current assets 33,044 (7,262) 25,782
Current assets
Trade and other receivables and inventories 29,260 (5,531) 23,729
Cash and cash equivalents 40,586 - 40,586
Total assets 1,631,396 352,556 1,983,952
Equity 1,080,371 (7,530) 1,072,841
Loans and borrowings 411,739 - 411,739
Lease liabilities (non-current & current) - 362,101 362,101
Trade and other payables 67,718 (1,555) 66,163
Other liabilities 71,568 (460) 71,108
Total equity and liabilities 1,631,396 352,556 1,983,952
(xv) Modified earnings before interest and tax (Modified EBIT)
For the purposes of the annual bonus evaluation, EBIT is modified to remove the effect of fluctuations between the annual and
budgeted EUR/GBP exchange rate, the effect of IFRS16 and other items which are considered, by the Remuneration Committee, to
fall outside of the framework of the budget target set for the year.
Reconciliaton: Refer below
Calculation of Effective tax rate (APM definition vi)
€’000 Reference in financial statements 2019 2018
Tax charge Statement of profit or loss and
other comprehensive income
11,476 12,077
Profit before tax 89,688 87,301
Effective tax rate 12.8% 13.8%
Calculation of Free Cash Flow (APM definition xi) and Debt and Lease Service Cover (APM definition xii)
€’000 Reference in financial statements 2019 2018
Net cash from operating activities Statement of cash flows 154,969 115,754
Other interest and finance costs paid Statement of cash flows (11,196) (13,188)
Refurbishment capital expenditure paid (15,625) (15,868)
Exclude adjusting items with a cash effect 9 (111)
Fixed rent paid1:
Interest paid on lease liabilities Statement of cash flows (18,945) -
Repayment of lease liabilities Statement of cash flows (8,569) -
Free Cash Flow 100,643 86,587
Add back total rent paid2
34,982 37,375
Add back interest and finance costs paid Statement of cash flows 11,196 13,188
Free Cash Flow before rent and finance costs (A) 146,821 137,150
Total rent paid2
34,982 37,375
Interest and finance costs paid Statement of cash flows 11,196 13,188
Total rent, interest and finance costs paid (B) 46,178 50,563
Debt and Lease Service Cover (A/B) 3.2x 2.7x
1 In the prioryear fixed rent paid was included in net cash from operating activities in accordance with the applicable accounting standards.
Following the application of IFRS 16, fixed rent is now presented under net cash from financing activities.
2 Totalrentpaidrelatestopaymentsoffixedandvariablerentduringtheyearinaccordancewiththeleaseagreementsiftheyrelatetotheyear.
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Supplementary Financial Information
SupplementaryFinancialInformation
(continued)
Calculation of Normalised Return on Invested Capital (APM definition xiii)
€’000 Reference in financial statements
2019
As Reported 2019 20182
Post IFRS 16 Pre IFRS 16
Adjusted EBITDA Note 2/11 162,214 134,830 119,583
Depreciation of property, plant and
equipment Note 2 (26,183) (26,183) (19,698)
Amortisation of intangible assets Note 2/11 (195) (239) (44)
Fixed rent Note 11 (27,384) - -
Adjusted EBIT from recently
opened owned hotels1
(11,631) (11,631) (2,298)
Adjusted EBIT pre IFRS 16 excluding results
from recently opened owned hotels (A) 96,821 96,777 97,543
€’000 Reference in financial statements
31 December
2019
As reported
31
December
2019
31
December
20182
Post IFRS 16 Pre IFRS 16
Net assets at balance sheet date Statement of financial position 1,072,841 1,080,371 902,577
Revaluation uplift in Property,
Plant and Equipment3
(396,797) (396,797) (273,774)
Remove impact of IFRS 16:
Right-of-use assets Statement of financial position (386,407) - -
Lease liabilities Statement of financial position 362,101 - -
Intangible asset reclassed to RoU assets
under IFRS 16 20,500 - -
Working capital adjustment 3,976 - -
Capitalised lease costs that existed under
IAS 17 7,993 - -
Net Debt Note 21 374,846 374,846 270,171
Net deferred tax liability Note 23 55,831 56,004 38,516
Current tax liabilities Statement of financial position 664 1,124 309
Derivative liabilities Note 22 4,523 4,523 1,306
Less assets under construction
at year end Note 10 (59,600) (59,600) (26,404)
Less contract fulfilment costs Statement of financial position (13,346) (13,346) (9,066)
Less new owned assets4
(235,141) (235,141) (110,479)
Normalised invested capital 811,984 811,984 793,156
Average normalised invested capital (B) 802,570 802,570 769,482
Normalised Return on Average Invested Capital (A/B) 12.1% 12.1% 12.7%
1 The Adjusted EBIT from the five new, owned hotels which recently opened in 2018 or 2019 are excluded as these hotels have not
benefited from a full twelve months of trading or have yet to reach normalised operating levels.
2 The calculation was redefined during the period primarily to exclude contract fulfilment costs. This change does not have a material
impact on prior period comparatives. Under the previous calculation, the Group’s Normalised Return on Average Invested Capital
amounted to 12.6% for 2018.
3 Includes the combined net revaluation uplift included in property, plant and equipment since the revaluation policy was adopted in 2014
or in the case of hotel assets acquired after this date, since the date of acquisition. The carrying value of land and buildings, revalued at
31 December 2019, is €1,324.5 million (2018: €1,077.2 million). The value of these assets under the cost model is €927.8 million (2018:
€803.4 million). Therefore, the revaluation uplift included in property plant and equipment is €396.7 million (2018: €273.8 million). Refer
to note 10 to the financial statements.
4 The cost of constructing the five new owned, hotels which opened during 2018 or 2019 are excluded as these hotels have not benefited
from a full twelve months of trading or have yet to reach normalised operating levels.
SupplementaryFinancialInformation
(continued)
Calculation of Modified earnings before interest and tax (Modified EBIT) – APM definition xv
€’000 Reference in Consolidated
Financial Statements 2019 2018
Profit before tax
Statement of profit or loss and
other comprehensive income - 87,301
Profit before tax as if IAS 17 still applied Note 11 98,376 -
Add back:
Finance costs Note 5 - 9,514
Finance costs as if IAS 17 still applied Note 11 11,668 -
Foreign exchange gains* (see note below) (457) (324)
Adjusting items:
Proceeds from insurance claim Note 2 - (2,598)
Hotel pre-opening expenses Note 2 9 2,487
Net revaluation movements through
profit or loss Note 2 - 3,137
Net revaluation movements through profit or loss
as if IAS 17 still applied Note 11 (1,645) -
Modified EBIT 107,951 99,517
* Foreign exchange losses represent the difference on converting EBITDA as calculated as if IAS 17 still applied from UK hotels at
actual foreign exchange rates during 2019 versus budgeted foreign exchange rates, after depreciation. In 2019 the budgeted EUR/
GBP exchange rate was 0.90 (2018: 0.90). A reconciliation is presented in the table below.
€‘000 Reference in Consolidated
Financial Statements 2019 2018
UK hotels’ EBITDA - GBP 28,306 23,290
UK hotels’ EBITDA at budgeted FX rate - Euro 31,451 25,878
UK hotels’ EBITDA at actual FX rates as if IAS 17
still applied – Euro Note 11 32,126 -
UK hotels’ EBITDA at actual FX rates - Euro Note 2 - 26,298
Foreign exchange gains on EBITDA - Euro (675) (420)
Depreciation and amortisation on UK assets - GBP 7,389 5,041
Depreciation and amortisation on UK assets
at budgeted FXrate-Euro 8,210 5,601
Depreciation and amortisation on UK assets
at actual FX rates as if IAS 17 still applied - Euro 8,428 -
Depreciation and amortisation on UK assets
at actual FX rates - Euro - 5,697
Foreign exchange losses on depreciation - Euro 218 96
Foreign exchange gains - Euro (457) (324)
187
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SUPPLEMENTARY
FINANCIAL
INFORMATION
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STATEMENTS
Supplementary Financial Information
Glossary
1. Revenue per available room (RevPAR)
Revenue per available room is calculated as total rooms
revenue divided by the number of available rooms, which is also
equivalent to the occupancy rate multiplied by the average daily
room rate achieved.
2. ‘Like for like’ RevPAR
‘Like for like’ RevPAR excludes the (i) hotels which were not in
operation for a full year in the current year and substantially
all of the preceding year, (ii) hotels with a significant change in
available rooms year on year, which the Group defines as greater
than 10% and (iii) hotels with significant renovations on-going in
either the current or preceding year which significantly impacts
the hotels ability to operate on a normal basis.
The Dublin portfolio excludes (i) Maldron Hotel Kevin Street
and Clayton Hotel Charlemont which opened during 2018,
(ii) Tara Towers Hotel which closed in September 2018, (iii)
Maldron Hotel Parnell Square due to the significant extension
completed during 2018, (iv) Clayton Hotel Liffey Valley due to
the acquisition of rooms over the past two years and (v) Clayton
Hotel Burlington Road due to the redevelopment works ongoing
at the hotel.
The Regional Ireland portfolio excludes the new Maldron Hotel
South Mall, Cork which opened in December 2018 and Maldron
Hotel Sandy Road, Galway which had a significant extension
added during 2018.
The UK portfolio excludes the new Maldron Hotel Belfast City,
Maldron Hotel Newcastle and Clayton Hotel City of London
which opened in March 2018, December 2018 and January 2019
respectively and also The Tamburlaine Hotel, Cambridge which
was leased from November 2019.
‘Like for like’ Group RevPAR is also stated on a constant currency
basis with the KPIs for the prior year restated at the foreign
currency rates applicable in the current year.
3. ARR
Average Room Rate (also ADR – Average Daily Rate)
4. Hotel assets
Hotel assets represents the value of property, plant and
equipment per the consolidated statement of financial position
at 31 December 2019.
5. Refurbishment capital expenditure
The Group allocates approximately 4% of annual revenue to
refurbishment capital expenditure to ensure the portfolio
remains fresh for its customers and adheres to brand standards.
6. Food and beverage gross profit margins
Food and beverage gross profit margins are calculated as total
food or beverage revenue less total food or beverage cost of
Advisors
189
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SUPPLEMENTARY
FINANCIAL
INFORMATION
FINANCIAL
STATEMENTS
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188 
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SUPPLEMENTARY
FINANCIAL
INFORMATION
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At the heart
of healthy
lifestyles

Annual Report and Financial Statements 2019
Strategic Report
Highlights of 2019 01
 at a Glance 02
Investment Case 04
Group Chairman’s Statement 06
Group Managing Director’s Review 08
Our Strategy 11
Business Model 16
Key Performance Indicators 18
Operations Review 20
Group Finance Director’s Review 36
Engaging with our Stakeholders 42
Sustainability 44
Risk Management 52
Principal Risks and Uncertainties 56
Directors’ Report
Corporate Governance Report 60
Introduction from the Chairman 60
Board of Directors and Senior Management 62
Board Activities 66
Division of Responsibilities 68
Composition, Succession and Evaluation 70
Audit, Risk, Internal Control and Remuneration 72
Compliance Statements 73
Audit Committee Report 74
Nomination and Governance Committee Report 80
Remuneration Committee Report 84
Other Statutory Information 109
Directors’ Responsibility Statement 114
Financial Statements
Independent Auditor’s Report 116
Group Financial Statements 125
Notes to the Financial Statements 130
Company Financial Statements 194
Other Information
Glossary of KPIs and non-IFRS
Performance Measures 200
Shareholder Information 209
Contacts 213
Large and
growing markets
Consumers around the globe continue
to search for healthier, cleaner and more
convenient food, snacks and beverages that
fit their active lifestyles and nutritional needs.
We operate in large and growing markets and
these powerful consumer trends offer strong
engines of growth for the future.
Read more on pages 20 and 21
SlimFast and
Innovation
Our extensive consumer knowledge in the
weight management category coupled with
our use of data-driven insights continues
to drive innovation in our SlimFast brands.
In 2019, SlimFast was the #1 brand of Keto
weight management products in the US.
Read more on pages 26 and 27
Engaging with
our stakeholders
Maintaining good communications and
developing strong relationships with all our
stakeholders is fundamental to our long-term
success. Our purpose and vision help guide
these global relationships.
Read more on pages 42 and 43
 is a
global nutrition
group dedicated
to delivering
better nutrition
for every step
of life’s journey
“While we had some challenges in 2019 our business is
strong and we have commenced a series of initiatives
that will drive growth momentum in 2020 and beyond.”
Siobhán Talbot
Group Managing Director
1 Reported currency
2 Constant currency
For definitions and more information on constant currency and other performance measures see the glossary on
pages 200 to 208.
Forward-looking statements
 (the ‘Group’) has made forward-looking statements in this Annual Report that are based on management’s beliefs and assumptions and on information currently available to
management. Forward-looking statements include, but are not limited to, information concerning the Group’s possible or assumed future results of operations, business strategies, financing plans,
competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward-looking
statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words ‘believe,’ ‘develop,’ ‘ensure,’ ‘arrive,’ ‘achieve,’
‘anticipate,’ ‘maintain,’ ‘grow,’ ‘aim,’ ‘deliver,’ ‘sustain,’ ‘should’ or the negative of these terms or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions. Actual
results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any forward-looking statements. The risk factors included at pages
56 to 59 of this Annual Report could cause the Group’s results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that the Group is
unable to predict at this time or that the Group currently does not expect to have a material adverse effect on its business. These forward-looking statements are made as of the date of this Annual
Report. The Group expressly disclaims any obligation to update these forward-looking statements other than as required by law. The forward-looking statements in this Annual Report do not
constitute reports or statements published in compliance with any of Regulations 4 to 9 and 26 of the Transparency (Directive 2004/109/EC) Regulations 2007. As an Irish incorporated group, the
Strategic report does not constitute a strategic report for the purposes of the UK Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, and the Remuneration Committee report does not constitute a remuneration report for the purposes of the UK
Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations.
+7.0%
(2018: +8.5%)
Nutritional Solutions (LFL)
02
 > Strategic Report
 at a glance
 Performance Nutrition
 Performance Nutrition (GPN) is a global leader in the
performance and lifestyle nutrition business. GPN has a portfolio
of nine brands ranging in appeal from consumers looking to
improve their athletic performance to those seeking on-the-go
snacks and beverages to support weight management and
a healthy lifestyle.
Read more on page 22
 Nutritionals
 Nutritionals (GN) comprises: Nutritional Solutions (NS)
and US Cheese. Through its extensive portfolio of ingredients and
capabilities, NS is a global provider of both dairy and non-dairy
nutritional and functional solutions and customised premixes.
In an innovative model with US dairy partners, US Cheese is the
#1 producer and marketer of American-style cheddar cheese.
Read more on page 28
Joint ventures
 Ireland is the largest Irish-based integrated dairy nutrition and
agri-food business. Southwest Cheese and MWC are US-based cheese
and whey manufacturing businesses with an existing plant in New Mexico
and a plant under construction in Michigan.  Cheese UK is the
largest mozzarella cheese manufacturer in Europe.  Cheese EU
is constructing a new mozzarella cheese plant in Ireland.
Read more on page 34
Who we are: What we do:
We are a global nutrition group delivering performance
and lifestyle nutrition brands and an extensive portfolio
of functional and nutritional ingredient solutions and
customised premixes. We are the #1 US producer
and marketer of American-style cheddar cheese
and a partner in scale joint ventures in the EU and US.
Through our distinctive capabilities we create world-
leading performance and lifestyle nutrition brands and
innovative nutritional and functional ingredients and
customised premixes. Our unique consumer-insights
enable us to anticipate and respond to rapidly
changing marketplaces.
03

Our ambition is to be one of the world’s top performing
nutrition companies trusted to enrich lives every day.
We have a direct presence in 34 countries worldwide.
Our branded performance and lifestyle nutrition
products are sold in more than 100 countries and
our ingredient and premix customers produce
some of the world’s iconic food and drink brands.
Where we do business
#1
Global performance nutrition
brand portfolio
Weight management brand in
the UK
Producer of American-style
cheddar cheese
Engagement score
72%engagement
Our recent employee
engagement survey
confirmed a culture of positive
engagement and inclusiveness.
Brands
9GPN brands
GPN has a portfolio of nine
performance nutrition and
lifestyle brands.
People
7,385people
Our people are our most
important asset. We are proud
of our ability to attract, retain
and develop the best people.
Global reach
29production facilities
We have 29 production facilities
worldwide with two more
under construction.
04
 > Strategic Report
We are focused on implementing key strategic initiatives
to return the business to growth. We are investing in maintaining
a strong business that will deliver consistent and sustained
value for all our stakeholders.
Sustainable
business model
Through our consumer-focused
innovation, long-term partnerships,
and talented team we add value to
our pool of raw ingredients and deliver
a portfolio of higher-margin nutritional
and functional ingredients, and
branded performance nutrition
and lifestyle brands.
Strong brands and
market positions
Our flagship sports nutrition brand,
Optimum Nutrition is the #1
performance nutrition brand
worldwide. SlimFast is the #1 brand
in the weight management category
in the UK and #2 in the US. We are the
#1 US producer of American-style
cheddar cheese and high-protein
whey, and the #2 producer of global
micronutrient premixes.
Investment case
Powerful
consumer trends
We operate in attractive markets which
provide significant opportunity for
growth. Global health and wellness
trends coupled with a growing desire
for convenient Ready-to-Eat and
Ready-to-Drink foods underpin an
increasing demand for our performance
nutrition and lifestyle brands,
and our nutritional and functional
ingredient solutions.
Our business
has core strength
and resilience
05

Ambition for
future growth
Our focus for 2020 is to regain
momentum in GPN. Our growth
strategy will continue to be a blend
of organic growth and strategic
acquisition opportunities, which
we will continue to evaluate
as they arise.
Strong
balance sheet
Our strong conversion of earnings
to cash enables the Group sustain
a progressive dividend policy.
We have strong financing metrics
and considerable financial firepower
and flexibility to fund strategic capital
expenditure and acquisitions.
06
 > Strategic Report
Group Chairman’s Statement
“Post the 2019 challenges,
our focus is to recover
growth momentum. While
our long-term growth
opportunities are significant,
our immediate focus
is on improved operating
performance so that
we have a sound and
credible platform for future
investment and growth.”
Dear Shareholder
Overall, 2019 was a difficult year for the
Group. Challenging sector dynamics in
certain international markets impacted the
performance of our  Performance
Nutrition (GPN) business, however 
Nutritionals (GN) and our joint ventures (JVs)
delivered a very good performance for the
year. Both recent acquisitions SlimFast and
Watson exceeded our ambitions in their first
year as part of the  family.
Performance
Group revenue was €3.9 billion, up 16.6%
constant currency. EBITA before exceptional
items decreased by 7.8% constant currency
to €276.8 million. The decline in EBITA was
driven by GPN as challenges in some key
markets throughout 2019 resulted in lower
volumes and earnings. Profit after tax was
€180.2 million (2018: €234.0 million).
Adjusted Earnings per Share (EPS) was
88.10 cent in line with our guidance of 88-92
cent. Basic EPS was 61.04 cent. The Group
retained a strong balance sheet over the
course of the year. Return on Capital
Employed (ROCE), a key metric for the
Group, was within our guidance range of
10% to 13% at 10.9%, down from 13.2%
in 2018. This reflects increased capital
employed in our strategic investments.
The strong operating cash flow conversion
continued at 86%, (2018: 92%) with net
debt at the year-end of €614.3 million.
Return to Shareholders
While GN and our JVs performed very well,
the challenges in GPN led to a significant
share price drop in the second half of
the year. As a Board we are, of course,
disappointed with the share price
performance during 2019. However, the
fundamental strength of the organisation
remains intact. Our focus is to recover
growth momentum and the Board has
devoted considerable time to reviewing,
with management, the 2019 challenges
and the necessary initiatives required to
regain momentum.
Dividends and proposed share
buyback
Testament to the strength of our balance
sheet and in line with our progressive
dividend policy, the Board is recommending
a 10% increase in the 2019 full year dividend
to 26.62 cent. This total dividend represents
a return of €78.6 million to shareholders
from 2019 earnings and a payout of 30.2%
of 2019 adjusted earnings per share.
A proposed 2019 final dividend of 15.94 cent
per share is to be to be paid on 24 April
2020 to shareholders on the register as at
the close of business on 13 March 2020.
The Group intends to maintain a dividend
payout ratio of between 25%-35%.
The Board of  will seek shareholder
authorisation for a share buyback
programme at the Annual General Meeting
(AGM). The Board believes that it is important
that the Company would have the flexibility to
return value to shareholders in this manner.
Strategy
We have a strong portfolio across branded
performance and lifestyle nutrition and dairy
and non-dairy nutritional and functional
ingredient solutions playing into key
consumer trends. Responding to the 2019
challenges in GPN the team has taken the
opportunity to reassess GPN’s strategic
priorities to regain growth momentum.
As outlined by Siobhán on pages 8-10 our
core ambition is to regain topline growth
in 2020 and drive both topline and margin
growth to 2022 through a simplification and
decomplexing of the GPN business and a
ruthless focus on our core brands. We will
also focus on organisational change across
the Group, and continue to invest to drive
future growth in GN and our JVs.
Martin Keane
Group Chairman
07

Our recent acquisitions performed very
well in 2019. SlimFast delivered an excellent
performance with pro-forma like-for-like
revenues up 32.4% versus its full year 2018
revenues. SlimFast is now the number 1
weight management product in the UK and
the number 2 weight management product
in the US. GN delivered strong revenue
growth for the year especially in its
Nutritional Solutions (NS) business. The
acquisition of Watson in February 2019 is
proving to be an excellent addition to the
NS component of GN’s business. Our JVs
performed well and delivered a very good
performance in 2019.
Board composition
Later in the annual report, I detail our
governance activities for the year. The Board
exercises its governance responsibilities with
diligence, but also with a clarity of purpose
to support the management team, to drive
growth momentum and drive value for all
our stakeholders. Board composition and
renewal continues to be an important area
of focus for the Group. Our aim is to achieve
a Board with broad-based skills that reflect
a diverse range of education, cultures, gender,
experience, expertise and perspectives.
During the year, we welcomed three new
colleagues to the Board, John Daly, Richard
Laube and Mary Minnick whose biographies
are on page 63. All three are highly
experienced board directors and business
leaders who have successfully operated at
senior management levels internationally.
Paul Haran retired as Non-Executive
Director on 1 May 2019. I would like to
express my deep gratitude to Paul for his
valued contribution and wise counsel over
his tenure. Richard Laube has recently
indicated that for family and personal
reasons, he is no longer in a position
to remain on the Board and he will retire
on 28 February 2020. In addition, Non-
Executive Directors Jer Doheny and Eamon
Power, nominated to the Board by 
Co-operative Society Limited (‘the Society’),
will retire from the Board at the forthcoming
AGM on 22 April 2020. On behalf of the
Board, I would like to thank Richard, Jer and
Eamon for their service and commitment
to . We wish them every success
for the future. A process to identify a new
Independent Non-Executive Director
has commenced.
In accordance with the Relationship
Agreement between  and the
Society, in 2020 the number of directors
nominated by the Society will reduce
from eight to seven and in 2022 to six.
Also in accordance with the Relationship
Agreement a process to identify my
successor as Chairperson has commenced.
A sub-committee of the Board, led by Dan
O’Connor, Senior Independent Director, has
been established. External advisors have
been appointed to assist the sub-committee
in the selection process.
Annual General Meeting
We remain proactive in our engagement and
look forward to answering your questions at
our AGM which will be held on 22 April 2020
in the Lyrath Estate Hotel, Lyrath, R95 F685,
Kilkenny, Ireland.
Our people
The importance of organisational culture
continues to be the focus of our governance
thinking. We believe that a positive, open
and honest culture is a trademark of our
Group and vital to our future success. The
Board is cognisant of its role in supporting
employee welfare and in seeking evidence
that the right culture is being fostered. By
its nature this tends to be informal, but the
results of our recent employee engagement
survey confirmed our views that a
progressive, dynamic and inclusive culture
exists within . The employee
engagement survey showed strong positive
responses in terms of the values the Group
espouses and our employees’ buy-in to
these values. We have a long tradition
of attracting ambitious, enthusiastic and
committed people who have come together
with a shared goal, to deliver better nutrition
for every step of life’s journey. We recognise
the dedication and hard work of our people
throughout the Group and I would like to
thank in particular our Group Managing
Director Siobhán and all her team for their
commitment and dedication in 2019.
Looking ahead
We now look forward to 2020. Our
strategy remains aligned to market growth
opportunities. We have reassessed and
refocused our GPN strategy and remain
confident in its delivery. While our long-term
growth opportunities are significant, our
immediate focus is on improved operating
performance so that we have a sound
and credible platform for future investment
and growth.
Martin Keane
Group Chairman
Our purpose
and culture
We have a strong culture
at  which remains
true to our values and the
behaviours which underpin
them. A healthy culture both
protects and generates value.
As a Board, we are mindful
that society is demanding
that companies, both public
and private, serve a social
purpose. We are proud of the
Group’s purpose to deliver
better nutrition for every step
of life’s journey. Companies
must benefit all their
stakeholders, including
shareholders, employees,
customers, suppliers and the
communities in which they
operate. Without a sense of
purpose, no company can
achieve its full potential.
We recognise that the
2018 Corporate Governance
Code will be effective for the
Group’s 2020 Report, and in
line with this we are working
to articulate more explicitly
and holistically our purpose
and values and how they
relate to all our stakeholders.
We strive to ensure we have
meaningful two-way dialogue
with all our stakeholders.
 
For more information on Board
and stakeholder engagement
see page 67.
08
 > Strategic Report
Group Managing Director’s Review
“While we did not achieve
our 2019 earnings growth
ambitions, we have
conducted a comprehensive
review of our GPN business
and are taking actions to
simplify the operating model
and brand strategy. We are
highly focused on regaining
growth momentum in 2020.”
Dear Shareholder
In 2019, we did not achieve our earnings
growth ambition. While many areas of the
organisation performed well, we had some
significant challenges in certain international
markets for our GPN business that impacted
the Group’s overall performance for the year.
However, we are highly focused on regaining
our growth momentum in 2020.
The fundamentals of  are strong. Our
performance nutrition, weight management
and functional dairy and non-dairy
ingredients are positioned in attractive
end markets forecast to grow annually at
mid-single-digit percentage growth rates.
Global macro trends around health and
wellness as well as active lifestyles continue
to drive significant consumer demand in
these categories. Our strategy is to capture
this growth via our two platforms of 
Performance Nutrition (GPN) and 
Nutritionals (GN).
2019 financial performance
We delivered strong revenue growth with
wholly-owned revenue increasing by 16.6%
constant currency, to €3.9 billion. The
drivers of revenue growth included a 6.6%
increase in pricing and 9.9% contribution
from acquisitions with overall volume broadly
in line with 2018. Price and volume growth
were driven by a good performance from
GN with the acquisitions of Watson and
SlimFast also performing well in 2019.
Wholly-owned EBITA (pre-exceptional)
was €276.8 million, a 7.8% decline, constant
currency, and EBITA margin was 7.1%,
190 bps lower than 2018. EBITA decline
was driven by GPN which, as previously
noted, encountered challenges in specific
international markets as well as lower sales
in the North American Specialty and Club
channels resulting in lower volumes and
negative operating leverage. This decline
was partially offset by a 10.5% increase,
constant currency, in pre-exceptional EBITA
in GN driven by volume growth, price
increases and the Watson acquisition.
’s share of JVs’ profit after tax
increased by €3.3 million to €48.6 million
in 2019 primarily as a result of good growth
in volume in all JVs.
Exceptional items of €34.6 million, after tax,
primarily relate to the GPN segment as well
as Brexit mitigation costs and acquisition
integration costs in 2019. There were no
exceptional items in 2018.
Total Group profit after tax and exceptional
items was €180.2 million. Total Group profit
(pre-exceptional) was €214.8 million for 2019
down from €234.0 million in 2018.
As a result of lower Group profit, adjusted
earnings per share was 88.10 cent which
was 7.7% lower, constant currency, than
2018 but within the previously issued
guidance range. Basic earnings per share
was 61.04 cent, a 26.6% decrease constant
currency on prior year, reflecting lower
Group profit and exceptional charges
in the year.
Siobhán Talbot
Group Managing Director
09

2020 key strategic focus areas
In light of the significant performance issues
in GPN in 2019 a comprehensive review
of this business’s brand strategy, route-to-
market and operating model took place in
the second half of 2019. GPN will now be
managed through the commercial lens
of North America Performance Nutrition,
North America Lifestyle, International and
Direct-to-Consumer businesses. GPN has
invested in new senior talent to enhance
capabilities and enable growth in each of
these businesses.
In North America, GPN has two distinct
brand portfolios in the performance
nutrition and lifestyle categories. Consumer
motivations, market segments and reach
differ for each portfolio with both having
the scale to benefit from focused resources
to drive growth.
In International markets, GPN is reshaping
primarily around the Optimum Nutrition
(“ON”) brand in the performance nutrition
category and the Body & Fit direct-to-
consumer online platform in Europe
which also enhances GPN’s digital
capability globally.
Our key strategic focus areas for 2020
are clear:
1. Regain growth momentum in our
core GPN branded business;
2. Continue organisational change
programmes in GPN and Group-wide
to deliver margin improvement by
2022; and
3. Execute our planned strategy in GN
and the joint ventures, prioritising
the continued evolution of GN’s
Nutritional Solutions through both
organic growth and acquisitions.
1. Regain growth momentum in GPN
Branded revenue growth in GPN will be
achieved through prioritisation of (i) the
ON brand within the performance nutrition
category globally. This brand, which had
Global sales of $655 million in 2019 is the
largest brand in the GPN portfolio and
makes up the majority of sales in the
North America Performance Nutrition and
International businesses; (ii) SlimFast with
the majority of its sales within the North
America Lifestyle portfolio, and some sales
in the UK, was acquired in November 2018.
SlimFast grew strongly in 2019 to revenue of
$325 million and anchors the North America
Lifestyle portfolio; (iii) The Body & Fit
direct-to-consumer platform is the key path
to growth in the online channel in Europe,
as well as providing digital capability
which can be leveraged on a global basis.
2. Organisational change
Complementary to the revenue growth
initiatives undertaken in GPN, we have
established a Group-wide project to
drive margin growth to 2022. This project
encompasses a series of initiatives both
in GPN and across the Group.
GPN margins will be improved via the
following initiatives:
1. Simplification and exit of low margin
business. This is being achieved
via SKU rationalisation of the lowest
performing products, which has already
commenced, and will have a minimal
impact on net sales. GPN will also
exit the majority of the US contract
manufacturing business during the
second half of 2020 and 2021;
2. Supply chain optimisation globally
encompassing a review of the mix of
owned and contract manufacturing; and
3. Refined approach to innovation to focus
on higher margin opportunities across
the branded portfolio.
It is expected that this project will both
fund investment in building GPN brands and
contribute to EBITA margin progression with
a target of over 200 basis point improvement
in GPN EBITA margin by 2022.
GPN’s key initiatives are further outlined in
the table below.
At a Group level,  has commenced
a review of the current operating model
across GPN and GN to identify opportunities
to further leverage ’s scale.
Area Key GPN initiatives
Brand • Prioritise focus and investment in Optimum Nutrition and SlimFast brands
• Streamline the product portfolio; eliminate 35% of stock keeping units (SKUs)
while limiting revenue loss
• Exit the majority of US contract business
• Refine GPN’s approach to innovation to focus on higher margin opportunities
• Optimise investment and margin across the total brand portfolio
Route-to-
Market
• Improve routes-to-market in India, Brazil and Middle East, redefining partner relationships
as needed
• Continue investment in building Direct-to-Consumer capability in the EU and eCommerce
capability globally
• Decomplex and optimise our supply chain foot print globally to a mix of owned and contract
manufacturing operations
Resources • In the US, leverage our reorganised commercial operating models around performance nutrition
and lifestyle
• In international markets, reshape the organisation to focus on the ON brand and invest
in resources across key markets to leverage growth potential.
10
 > Strategic Report
Group Managing Director’s Review continued
3. Continued strategic execution in
 Nutritionals and joint ventures
 Nutritionals (GN)
GN is a global player providing dairy and
non-dairy functional and nutritional ingredient
solutions to regional and global customers
across a wide variety of sectors. Overall, GN
delivered a very good performance in 2019.
Specifically, we had a strong performance
from Nutritional Solutions (NS) with revenues
growing 23.4% constant currency. Like-for-
like volume growth was 7.0%, with good
growth across both our dairy and non-dairy
value-add ingredients.
The Watson acquisition, which was completed
in February 2019, added revenue growth of
12.6% to NS. This business has proven to
be an excellent addition to NS. Its facilities
are highly complementary to the GN
footprint and further strengthen NS’s
capabilities, enhancing our ability to
create superior customised precision
premix solutions that address our
customers’ complex formulation
and application requirements.
The NS strategy is to leverage its core position
as a supplier of choice to customers seeking
ingredients and solutions in premix and
healthy snacking segments. NS will achieve
this via its innovation capabilities and
build-out of complementary portfolios.
NS has a diverse product portfolio and
supports a range of ingredients and solutions
in ready-to-eat, value-added beverages
and powder based formats in a number
of categories.
NS also continues to further expand its
reach in international markets where it
partners with key brand owners and delivers
a suite of products from straight ingredients
to full consumer-ready solutions. We remain
very ambitious for growth within NS and
we continue to evaluate further acquisition
opportunities to achieve this growth.
US Cheese and joint ventures
Our primary dairy activities encompass
our US Cheese and joint venture operations.
Our wholly-owned US Cheese business
within GN grew revenue by 18.5% constant
currency in 2019 and continues to be the
leading producer and marketer of American-
style cheddar cheese in the US. GN’s US
Cheese team continues to operate all of the
dairy processing plants within GN including
the Southwest Cheese joint venture, which
produces cheese and whey ingredients.
Our new joint venture project in Michigan
is at an advanced stage of construction and
is expected to be commissioned by 2021.
Our other joint ventures in Europe, 
Ireland and  Cheese UK had a good
performance in 2019 delivering strong
operational performance and volume growth.
The growth strategy for both these joint
ventures is clear and underpinned by volume
growth ambitions. Our business models
across the joint ventures are robust,
facilitating strategic investment which
is financed on a non-recourse basis
to the Group.
Our people
As an organisation,  has a unique set
of values that drive our culture and influence
how we operate on a daily basis. We enjoy
good engagement with our employees as
our recent employee engagement survey
has shown. While this has been a difficult
year for the Group, we have experienced
remarkable commitment and dedication
from all our people across the organisation.
I take this opportunity to thank each of
them for their valued contribution in 2019.
Strategic targets and
2020 outlook
A number of ’s financial metrics as
outlined at its capital markets day in 2018
remain unchanged. Adjusted earnings per
share in 2020 is expected to be broadly in
line with prior year on a constant currency
basis and  is targeting an average
growth rate of 5% to 10% constant currency
in adjusted earnings per share for the three
years to 2022.
We expect GPN to deliver branded revenue,
margin and EBITA progression in 2020
versus prior year. In GN, Nutritional Solutions
continued revenue momentum is expected
to be offset by margin headwinds.
Joint Venture performance year-on-year
is expected to decline largely due to
commissioning costs of new joint venture
capital projects.
In considering capital allocation priorities,
the Board considered a share buyback
programme and will seek shareholder
authorisation at the Annual General
Meeting on 22 April 2020.
Our business will not be immune to
international disruption and we have
factored into Quarter 1, the expected impact
of the coronavirus. However, the depth
and breadth of our portfolio, as well as
the commitment and focus of our people,
give us confidence in our resilience as we
navigate 2020. Our balance sheet is strong
and our financial discipline will continue to
drive strong cash conversion and return on
investment metrics. While we are ambitious
for further acquisition activity in our GN
Nutritional Solutions business it is not a
current priority for GPN as we focus on
regaining organic growth momentum.
We remain very ambitious for  and
focused on regaining growth momentum.
We have met the challenges in GPN in 2019
and during 2020 we will complete the reset
of the business that will underpin future
revenue growth and margin momentum.
Siobhán Talbot
Group Managing Director
11

Financial metrics for 3 year ambition
Our Strategy
Regain momentum
in our GPN
branded business
Focus on brand investment
in ON and SlimFast.
Fix routes-to-market in key
international markets.
Evolve operating model and invest
as required to fuel growth.
Accelerate Body & Fit eCommerce
platform and digital capabilities.
Continue Group and
GPN organisational
change plan
Leverage group scale
and operating model.
Focus on efficiency
and cost reduction.
Develop and retain talent.
Further progress
strategic execution in
GN and Joint Ventures
Focus on NS organic and
M&A growth opportunities.
Evolve NS portfolio capabilities.
Progress new JV dairy facilities
in the EU and US.
Address 2019
challenges &
grow our global
leadership positions
in performance and
lifestyle nutrition
Sustain current, and
drive further, market
leadership positions
in nutritional
ingredients
Grow through
organic investment
programme
and acquire
complementary
businesses
Develop talent,
culture and values
in line with
our global
growth ambition
Our 2020 key strategic focus areas
Strategic priorities to achieve 2020 – 2022 growth ambitions
Our 2022 Ambition
Delivered through organic and acquisition enabled growth
Read more on page 12 Read more on page 13 Read more on page 14 Read more on page 15
Total Group
Revenue1
€6bn
Average adjusted
EPS Growth
5%-10%
OCF
Conversion
80%+
Return On Capital
Employed
10%-13%
Dividend
Payout Ratio
25%-35%
1 Including share of revenue in joint ventures.
12
 > Strategic Report
Strategic priority #1
Address 2019 challenges
and grow our global
leadership in performance
and lifestyle nutrition
Key Performance
Indicators
2019 progress in GPN
• Recognised challenges in certain international markets and
commenced project to simplify and decomplex the business;
• Reorganised US operating model into Performance Nutrition
and Lifestyle portfolios;
• Navigated channel shift in Performance Nutrition in US driving
mid-single-digit growth of overall ON consumption;
• Delivered very strong double-digit SlimFast consumption levels
as a result of innovation;
• Continued to develop consumer engagement and digital capabilities
with execution of D2C strategy; and
• Rebranded think! business and delivered turnaround initiatives.
Looking Forward
• Continue to rollout strategic initiatives to fund brand investment and
drive future EBITA margin progression;
• Through higher consumer engagement, capture full scale potential
of ON as a global flagship brand;
• Continue growth in SlimFast through further innovation achieving full
portfolio potential;
• Recapture growth in international markets with a more focused
approach on high growth potential markets leveraging the
eCommerce channel;
• Continue to support our regional specialty brands in Lifestyle
and Performance Nutrition; and
• Hire and develop the best people.
Adjusted Earnings Per Share
88.10c (2018: 91.01c)
-7.7% constant currency
GPN Revenue
€1.4bn (2018: €1.2bn)
+11% cc
GPN EBITA (pre-exceptional)
€146.4m (2018: €173.1m)
-19.6% cc
LFL branded revenue volume growth
-8.9% (2018: +9.2%)
Key risks
• A lack of robust market data in certain
international markets;
• An accelerated deterioration in economic
growth or consumer confidence;
• An increase in international trade
volatility (tariffs);
• Competitor activity or a rapid change in
consumer behaviour; and
• The inability to manage disruption from the
spread of the coronavirus with resultant people
management, supply chain and other issues.
Link to remuneration
• Adjusted earnings per share is a performance
target in both annual incentive and LTIP for
Executive Directors;
• Business segment EBITA forms part of
the annual incentive and LTIP for the CEO
of GPN; and
• GPN LFL branded revenue growth forms part
of the annual incentive of the CEO of GPN.
Our Strategy continued
13

Strategic priority #2
Sustain current, and
drive further, market
leadership positions in
nutritional ingredients
Key Performance
Indicators
2019 progress
• Good GN performance with strong revenue and EBITA growth;
• Deepened our relationships with key customers as a partner of
choice for a comprehensive range of dairy, plant-based, healthy
snacking and premix solutions, across a broad range of categories;
• Informed by market, customer and consumer insights, continued
to innovate across all product platforms;
• Acquired Watson, a value-added non-dairy solutions business
to complement the NS component of GN’s business; and
• Progressed a new Dairy JV in Michigan, US, which is on track
for commissioning in 2021. When commissioned all output will
be commercialised by GN.
Looking forward
Nutritional Solutions
• Build on core strength in premix and healthy snacking solutions;
• Continue to build strong positions in US and progress in building
out our core capabilities in Europe and ASPAC; and
• Develop and expand into adjacent ingredient solutions to enhance
our offering and relevance to customers.
Cheese
• Deepen our strategic relationships with customers and suppliers
through innovative partnership models; and
• Continue market-leading innovation and develop export markets.
Adjusted Earnings Per Share
88.10c (2018: 91.01c)
-7.7% constant currency
GN Revenue
€2.5bn (2018: €2.0bn)
+19.9% cc
GN EBITA (pre-exceptional)
€130.4m (2018: €111.8m)
+10.5% cc
NS LFL revenue volume growth
+7.0% (2018: +8.5%)
Key risks
• A failure to match our approach to
innovation and internal capabilities
to key consumer insights;
• The loss or significant deterioration
in commercial terms with one of our
key customers;
• An increase in international trade volatility
(tariffs) and dairy market headwinds; and
• The inability to manage disruption from the
spread of the coronavirus with resultant people
management, supply chain and other issues.
Link to remuneration
• Adjusted earnings per share is a performance
target in both annual incentive and LTIP for
Executive Directors;
• Business segment EBITA forms part of
the annual incentive and LTIP for the CEO
of GN; and
• NS LFL revenue volume growth forms part
of the annual incentive of the CEO of GN.
14
 > Strategic Report
Our Strategy continued
Strategic priority #3
Grow through organic
investment programme
and acquire complementary
businesses
Key Performance
Indicators
2019 progress
• Successfully integrated the SlimFast brand into GPN’s
lifestyle portfolio;
• Acquired Watson, a value-added non-dairy solutions business
to complement the NS component of GN’s business; and
• Progressed construction of joint venture capital projects in Michigan,
US (US$470 million) and in Portlaoise, Ireland (€130 million); and
• Completed capital spend of €76.3 million.
Looking forward
• Focus on acquisition opportunities that enhance the portfolio and
capabilities of GN NS; and
• Working with our joint venture partners, continue the development
of JV projects in the US and Ireland.
Adjusted Earnings Per Share
88.10c (2018: 91.01c)
-7.7% constant currency
ROCE
10.9% (2018: 13.2%)
-230bps
OCF Conversion
86% (2018: 92%)
Total Shareholder Return (TSR)
-36.7% (2018: +11.4%)
Key risks
• The anticipated benefits of acquisitions may
not be achieved if the Group fails to conduct
effective due diligence or properly integrate
the acquired businesses;
• Adopting business strategies that fail to
adequately recognise disruptive trends; and
• Below expected performance of acquired
businesses may result in the diversion of
management attention and impact our
growth objectives.
Link to remuneration
• Adjusted earnings per share is a performance
target in both annual incentive and LTIP for
Executive Directors;
• OCF conversion is a performance target in the
annual incentive for Executive Directors and
the Operating Executive; and
• ROCE and TSR are performance targets
in the LTIP for Executive Directors and the
Operating Executive.
15

Strategic priority #4
Develop talent, culture and
values in line with our global
growth ambition
Key Performance
Indicators
2019 progress
• Continued to embed our employee-focused purpose,
vision and values across all levels of the Group;
• Commenced a multi-year HR transformation programme;
• Completed a comprehensive organisation and people review,
to inform talent bench strength and succession planning;
• Reviewed the  graduate programme and developed an early
careers framework to meet the changing needs of our organisation;
• Established Diversity & Inclusion (D&I) Strategy Working Group;
• Accelerated talent and leadership development programmes across
the organisation with continued rollout of a new suite of leadership
development programmes for all management levels; and
• Prepared for our global employee engagement survey.
Looking forward
• Enhance culture and engagement based on learnings from
our global employee engagement survey;
• Deliver phase one of the multi-year HR transformation programme
looking at operating model, service delivery and technology;
• Continue to focus on talent, succession and leadership development
across the Group;
• Rollout a new global early career talent framework aligned to the
diverse needs of our global organisation;
• Continue to invest in hiring new capabilities and skills to underpin
growth ambitions;
• Develop Diversity & Inclusion strategy, align its goals with the overall
business strategy and improve gender diversity at senior levels
in the organisation; and
• Sustain focus on values and behaviours across the Group.
Employee Engagement Score
72%
the percentage of employees who
are highly engaged through their
work in 
 Risk Management System
All locations maintained or improved
their individual site rating from the
prior year
Key risks
• A failure to embrace the diversity of our
people or invest in developing them will
impact employee retention; and
• Strong economic performance in our key
markets has increased talent retention risks.
Link to remuneration
• Development of talent is a personal
objective of Executive Directors and
the Operating Executive.
16
 > Strategic Report
Business Model
Brand power
Our brands occupy leading positions
in the performance and lifestyle
nutrition markets with an unrivalled
product offering and key channel
and category leadership. As an
ingredient supplier in the B2B
arena, the  brand stands
for quality, integrity, innovation
and sustainability.
Portfolio management
 has a strong track record
of efficient capital allocation and
portfolio management. Our use of
a variety of structures including joint
ventures supports financial discipline
and strong returns of capital, critical
to sustainable long-term growth both
organically and by acquisition.
Operational excellence
Operational excellence enables
us to manufacture products that
meet customer and consumer
food safety and high-quality
standards as a trusted partner
to key global customers.
Science-backed innovation
Innovation is critical to our success,
and that of our customers. We focus
on market-led and technology-driven
innovation, to move up the
ingredients value chain and deliver
well researched patented ingredients
and branded products.
Our core
capabilities
Our purpose
To deliver better
nutrition for every
step of life’s journey.
Key market trends
The global healthy
nutrition market
Read more on pages 20-21
Our assets & resources
Capital deployment
Financial control
Quality risk management
Supply chain
People & relationships
The views of our
stakeholders
Understanding
key issues through
effective engagement.
Read more on pages 42-43
 Culture
Hard-working
and adaptable
Passion for delivering
better nutrition
Curious and innovative
Respectful and inclusive
Collaborative
and supportive
Our values
The customers’ champion
Performance matters
Showing respect
Find a better way
Winning together
Our business model enables us to create world-leading
performance and lifestyle nutrition brands and innovative
nutritional and functional ingredients. We operate through
both wholly-owned businesses and joint ventures.
How we add value
Impacted by
Driven by
17

Address 2019 challenges and
grow leadership positions
in performance and
lifestyle nutrition
Sustain current, and
drive further, market
leadership positions in
nutritional ingredients
Grow through organic
investment programme and
acquisition/partnership with
complementary businesses
Develop talent, culture
and values in line with
our global growth ambition
Driven through four clear
strategic priorities
 Performance
Nutrition
Leading portfolios
of consumer brands
in performance and
lifestyle nutrition.
 Nutritionals
Provider of dairy
and non-dairy based
ingredients and
nutritional solutions
to the food and
beverage industry.
Primary Dairy
Robust business models
with attractive, scalable
platforms providing
dairy products in
Europe & US.
Our sustainability strategy
Committed people
7,385
We attract and retain talented
employees through management
training and development
programmes aligned with our
purpose, vision and values.
Read more on pages 44-46
Thriving communities
€1.6m
Through community giving initiatives,
sponsorships, employee fundraising
and corporate donations we
contributed over €1.6 million
to our thriving global and local
communities and charities.
Read more on pages 47
Revenue
€3.9bn
Our core strengths are our world-
leading branded products and
ingredient solutions portfolios,
admired by consumers and our
customers. In 2019 revenue grew by
16.6% constant currency to €3.9bn.
Read more on pages 22-35
Dividend payout
30.2%
We have a progressive dividend
policy with a dividend payout ratio of
between 25% and 35% of adjusted
Earnings Per Share. The dividend
payout ratio for 2019 was 30.2%.
Read more on pages 36-41
To advance our purpose
and vision through an
integrated and phased
sustainability programme,
which will strengthen our
businesses for the future.
Read more on pages 44-51
Outcomes
Outputs
18
 > Strategic Report
Key performance indicators
Revenue
€3.9bn(2018: €3.2bn1
)
+16.6% cc
2018 €3.2bn
2019 €3.9bn
Strategic relevance
Revenue growth is a key indicator of how the
Group is succeeding in developing through
investment in organic growth and the ongoing
acquisition programme.
In addition to overall revenue for the Group
there are a number of key components of
Group revenue (price, volume and acquisition)
which are actively monitored to provide greater
insight into markets, opportunities and
performance of Business Units.
Performance
In 2019, revenue was €3.9 billion (2018: €3.2
billion), up 22.2% on a reported basis and up
16.6% constant currency on 2018. Revenue
growth was driven by pricing growth of 6.6%
and acquisitions of 9.9%. Sales volumes were
broadly flat, as volume growth in GN was offset
by volume declines in GPN.
Revenue volume growth2
+0.1%(2018: +6.7%)
GPN -8.9% (2018: +9.2%)
LFL branded revenue growth
NS +7.0% (2018: + 8.5%)
Strategic relevance
Revenue volume growth is an important metric
for the Group as it represents the underlying
growth in sales to customers excluding any
impact of price. Volume is further broken
down by the Business Units to understand
the brand growth within GPN and the
components of volume growth in Nutritional
Solutions within GN.
Performance
Overall volumes were broadly flat in the year.
The key volume growth metrics were a LFL
branded volume decline in GPN of -8.9% and
volume growth within the NS division of the
GN segment of +7.0% LFL. The decline in
GPN volumes related mainly to the challenging
environment in some non-US markets.
EBITA3
(pre-exceptional)
€276.8m(2018: €284.9m)
-7.8% cc
2018 €284.9m
2019 €276.8m
Strategic relevance
Earnings Before Interest, Tax and Amortisation
(EBITA), pre-exceptional items, is the key
performance measure of the wholly-owned
segments within the Group. The exclusion
of amortisation aids comparability between
our segments.
EBITA margin is a key metric to ensure that
growth is being driven in a responsible manner
by maintaining margins within an acceptable
range. The strategy for the Group is to focus
on higher growth, higher margin products
within GPN and GN.
Performance
EBITA was €276.8 million in 2019, down
2.8%reported and down 7.8% on a constant
currency basis. GN had EBITA growth of
10.5% constant currency with EBITA margins
down 40bps versus 2018. GPN’s EBITA
declined by -19.6% constant currency versus
2018, while EBITA margins were down 410bps.
Profit after Tax
€180.2m(2018: €234.0m)
2018 €234.0m
2019 €180.2m
Strategic relevance
Profit after tax is the profit attributable to the
equity shareholders of the Company and is a
measure of the profit retained by the Group for
the year, post-tax and post-exceptional items.
Performance
Profit after tax for 2019 was €180.2 million
compared to €234.0 million in 2018,
a decrease of €53.8 million, due to lower
underlying EBITA in the year and higher
amortisation and exceptional charges.


Strategic relevance
Total Shareholder Return (TSR) reflects
the value delivered to shareholders arising
from the ownership of ’s shares plus
dividends reinvested. TSR, compared to
a specific peer group or market index, is an
important measure of how successful the
Group has been in terms of shareholder value
creation, compared with its peers over the
same time period.
Performance
’s TSR was negative 36.7% in
2019. The STOXX Europe 600 Food and
Beverage Index (F&B Index), which is a
key benchmark for remuneration purposes,
increased by 30.9% in the year. ’s
TSR over the three-year period of 2017 to 2019
was a negative 32.9% versus the F&B index of
+38.4% and over the five-year period of 2015
to 2019 was negative 16.1% versus the F&B
Index of +62.8%. ’s share price at
the end of the financial year was €10.16

Adjusted Earnings Per Share2,4
Strategic relevance
Adjusted Earnings Per Share (EPS) is an
important measure of the profitability of the
Group as it represents the underlying profit
per equity share in issue.
Performance
Adjusted EPS was 88.1 cent, down 3.2%
on a reported basis, down 7.7% constant
currency basis, primarily driven by reduced
profitability within GPN.
Return on Capital Employed4
10.9%(2018: 13.2%)
2018 13.2%
2019 10.9%
Strategic relevance
Return on Capital Employed (ROCE)
measures the efficiency of the Group’s
organic and acquisition investment
programmes as well as the utilisation
of its assets.
Performance
ROCE in 2019 decreased by 230 basis
points to 10.9% (2018:13.2%). This was
primarily due to the combination of lower
profitability in the year and higher average
capital employed as a result of recent
acquisitions and investments in joint ventures.
OCF conversion2,3
86%(2018: 92%)
2018 92%
2019 86%
Strategic relevance
Operating Cash Flow (OCF) measures the
cash generated from operations before interest
and tax payments and before strategic capital
expenditure. OCF conversion is OCF as
a percentage of EBITDA (earnings before
interest, tax, depreciation and amortisation)
and is a measure of the ability of the Group
to convert trading profits to cash, which is
then available for strategic investments and
dividend payments.
Performance
OCF conversion was 86% in 2019 compared
to a target conversion of 80% and conversion
in 2018 of 92%.
Health and safety
Objective
Maintain the highest possible global safety
standards using sites with no Lost Time
Case (LTC) as a key benchmark.
 
See page 46 for more information
on Environmental Health and Safety.
Strategic relevance
The health and safety of our employees is
inherent in our  values and is reflected
in our organisational goal of ‘Zero Harm’.
LTC frequency rate is an established global
measure of safety performance and 
aspires to zero LTC.
Performance
In 2019, 30% of reporting locations had zero
LTC (2018: 50%). In  the full year
result for Lost Time Incident Rate (LTIR) was
0.45, which is well within the 2019 target of
1.0. Site action plans are being monitored
by our Corporate Responsibility Council
(CRC) leadership.
 Risk Management System
(GRMS)
Objective
Generate heightened operational risk
awareness to help protect the safety
of our people, the wider community
and the environment.
 
See pages 52 to 59 for more information
on Risk Management.
Strategic relevance
GRMS is an auditable framework for the
identification and management of operational
risks across the Group. Assessment and
ranking levels are based on international
risk management standards. On-site
assessments are conducted by an
independent third party to help drive a culture
of continuous improvement across our sites.
Each site is awarded a level 1 to 5 score.
Performance
All locations maintained or improved their
individual site rating from the prior year.
Management action plans to address
the key improvement opportunities were
developed by the independent assessor
and agreed with local management.
Progress against these recommendations
are centrally monitored.
Employee engagement score
72%
 
See page 45 for more information
Strategic relevance
We employ 7,385 people across 34 different
countries and in a wide range of working
environments, including our joint ventures. At
 we acknowledge that people who are
positively engaged, motivated and supported
perform to the best of their ability, find a
greater sense of meaning in what they do and
contribute positively to ’s success.
Performance
’s employee engagement score as
measured by a new survey partner Glint was
72%. Glint has implemented a new continuous
listening survey framework, which helps us
understand how engaged our employees are
and enables us to take actions to make sure
that  continues to be a great place
to work.
1 2018 numbers have been restated to reflect the adoption of IFRS 15.
2 Performance condition of ’s Annual Incentive Scheme.
3 Both EBITA and OCF are presented on a pre-exceptional basis.
4 Performance condition of ’s Long-Term Incentive Plan.
20
 > Strategic Report
Operations Review
At the heart of healthy lifestyles
Large and growing markets
Growth drivers and global trends
• While consumers are becoming more aware of and
more used to consuming proteins from different sources,
elite athletes & sports teams remain convinced and
committed to the effectiveness of dairy protein powder.2
• Newer adopters are viewing sports products as an
extension of the larger nutritional purchases they make
to meet their daily lifestyle goals.3
• Sports nutrition sits in a valuable position, as the category
builds from performance and exercise goals into wellness
and lifestyle positioning.3
Growth drivers and global trends
• Obesity is a major global health concern with more than
1.4 billion overweight and obese adults in the world.4
• Healthy nutrition advocates often lean toward a slimming
or clean-label orientation or on-the-go snack-based options
like sports protein bars and ready-to-drink sports protein.3
• Consumers seek longer-lasting satiety as an aid to
weight management.5
’s market position

Revenue

Revenue
2 GPN Protein Summit 2018.
3 Euromonitor International.
4 World Health Organisation.
5 Nutrition Insight 2019.
1 Euromonitor; Note: Beginning in 2019 updated Euromonitor definition of the Sports Nutrition
category is now broader and includes mass market energy/low protein nutrition bars
previously excluded, significantly increasing the estimated size of the global Sports
Nutrition market.
21

Growth drivers and global trends
• Demand continues to grow for on-trend and purposeful
ingredient solutions, which help address specific market
challenges, while achieving the desired taste, nutrition,
clean-labelling and cost.6
• Dairy remains the protein of choice with 58% of US
consumers saying dairy is their preferred source of protein.7
• Rising health and wellness awareness levels among
consumers, growing demand for fortified food products,
will drive the global food premix market in future.8
Growth drivers and global trends
• US per-capita consumption of cheddar cheese increased
from 9.0 pounds in 1995 to 11.2 pounds in 2018. Expanded
usage of cheese within foodservice has been one of
the growth drivers but sales also continue to expand
at retail level.9
• The growth in popularity of the European food culture in the
US is a major driver of growth in the US cheese market.10
• More than 20 percent of adults are actively checking labels
for protein.11
Cheese is seen a natural source of superior
quality protein, providing a range of essential amino acids.
’s market position
#1
producer and marketer
of American-style
cheddar cheese.
90
World and US Cheese
innovation championships
awards.
’s market position
#1
GN is the #1 US producer of
whey protein isolate.
#2
GN is the #2 provider
of global micronutrient
premixes.
Market opportunity
Nutritional and
Functional Ingredients
Consumers are seeking quick and convenient ways to achieve a
healthier lifestyle. Demand continues to grow for functional snacks,
fortified nutritionals, and naturally nutrient-dense food and drinks
in convenient formats.
Market opportunity
US
Cheese
The overall cheese market continues to grow with cheese proving
to be a powerful source of protein and a unique way of delivering
essential nutrients. Consumer preferences have shifted towards
eating more natural food and ’s clean-label offerings play
to these growing trends.
Nutritional Solutions delivers
a large and diverse range of
ingredients and solutions across
multiple end market segments.
See page 28 for more details.
5.3bn Ibs
Market size*
*American-style cheddar
cheese
$834m

Revenue
1.1bn lbs

cheese* volumes
6 Databridge market research 2020.
7 Nielsen 2018.
8 Zion Market Research Food Premix Market Global Industry Perspective. Comprehensive
Analysis, and Forecast, 2018–2025.
9 USDA’s Economic Research Service.
10 Dairy Management Inc.
11 US Cheese Market- Opportunity Analysis and Industry Forecast, 2017-2025.
22
 > Strategic Report
 Performance Nutrition
Operations Review
“
Following a challenging year
for GPN, we have reorganised
the business to ruthlessly
focus our activities on brand
growth opportunities.”
Hugh McGuire
CEO
 Performance Nutrition
Performance
Overview

1 Pre-exceptional
All commentary is on a constant currency basis.
GPN delivered revenue growth of 11.0% in FY 2019
versus prior year. This was driven by the contribution
of SlimFast, which was acquired in November 2018
and increased GPN revenues by 20.6% in 2019, offset
by a volume decline of 9.0% and pricing decline of
0.6%. Branded revenue declined 9.8% in the year on a
like-for-like basis driven by an 8.9% volume decline and
0.9% pricing decline. Pricing decline related to the first
half of 2019 and in the third quarter price increases were
successfully implemented which helped deliver positive
pricing in the second half of 2019.
EBITA
GPN pre-exceptional EBITA in FY 2019 was
€146.4 million, 19.6% lower than the prior year, with
a pre-exceptional EBITA margin of 10.7%. GPN margins
improved in H2 2019, however, due to increased
marketing spend, lower like-for-like volumes and the
resulting negative operating leverage and business mix,
full year margins reduced by 410 basis points versus
the full year 2018.
Key stats
Brands
Our brands
 Performance Nutrition has a portfolio of nine brands – Optimum
Nutrition (ON) and SlimFast are our flagship brands and BSN, Isopure, Nutramino,
ABB, think!, Amazing Grass and Body & Fit are our specialty brands. Our products
are sold in over 100 countries.
About GPN
Who we are
We are a global performance
nutrition and lifestyle
brand business.
Our mission
Inspiring people everywhere
to achieve their performance
and healthy lifestyle goals.
23

International
International markets accounted for 26% of 2019 total
Global GPN sales with European markets 13% and Rest
of World 13%. These markets were the most challenging
for GPN in 2019 as foreign exchange headwinds and
higher tariffs impacted its competitive position resulting
in branded volume declining by double digits in the year.
In response to this GPN has taken actions which will
restore International markets to growth in 2020.
In Europe growth in the UK market was offset by
declines in Western European markets as a result of an
acceleration of channel shift from the Specialty channel
to Online. This market shift is being addressed through
a focus on the ON brand and the Body & Fit platform.
In Rest of World markets, growth in Asia and Oceania
was offset by the challenges in Brazil, Middle East and
India. GPN’s relative competitive position declined in
Brazil in the period largely due to foreign exchange
headwinds on products imported from GPN’s US
manufacturing base. GPN has reduced its number
of SKUs and has changed its route-to-market
arrangements in Brazil and this transition will be
completed through 2020. In the Middle East access
to a number of markets was reduced due to political
instability in the region and in response to this GPN has
scaled back its presence in these markets. In India the
relative competitive position has been impacted by
foreign exchange headwinds and importation tariffs,
introduced in late 2018. Supply chain initiatives
commenced in India in 2019 have taken longer than
planned and will be ongoing in 2020. Throughout
International markets SKU complexity has been reduced
with a refocus on the ON brand.
GPN markets
North America Performance Nutrition 39%
North America Lifestyle 29%
International 26%
Direct-to-Consumer 6%
Business reorganisation
2019 was a challenging year for GPN and in response
to this the business has been reorganised to focus
on growth opportunities. The segment will now be
managed as North America Performance Nutrition,
North America Lifestyle, International and Direct-to-
Consumer businesses.
North America Performance Nutrition portfolio
The North America Performance Nutrition portfolio
accounted for 39% of total Global GPN sales in 2019
and encompasses the Optimum Nutrition (ON), BSN and
Isopure brands. Revenue declined in this portfolio as
shipments lagged consumption during the year and the
business had a lower level of activity in the Club channel
in the fourth quarter versus the prior year. As a category
leader, particularly in the Online and Club channels,
ON recorded year-on-year consumption growth of
mid-single-digits in North America measured channels1
(which capture 72% of ON North America net sales)
as a result of marketing investment. As part of an overall
programme to simplify and decomplex the business,
GPN has significantly reduced the number of SKUs in the
North America branded portfolio to provide greater focus
on its core ON brand. GPN will continue to support the
BSN and Isopure brands in specific channels and
consumer segments. GPN will exit the majority of its
contract manufacturing business during H2 2020
and 2021, which accounted for 5% of total GPN
sales in 2019.
North America Lifestyle portfolio
The North America Lifestyle portfolio accounted for
29% of total Global GPN sales in 2019 and encompasses
SlimFast, think! and Amazing Grass brands. The platform
brand within this portfolio is SlimFast which grew
consumption in North America measured channels1
(which captures 73% of SlimFast North America net
sales) by very strong double digits in 2019, mainly
as a result of successful innovation across a range of
ready-to-eat and ready-to-drink formats in the Keto
weight management category. In 2019, revenue
progression of the North America Lifestyle portfolio on a
like-for-like basis was flat versus prior year as a weak first
quarter was balanced by a good final quarter. The final
quarter reflected good momentum of the think! brand
which was relaunched in the second half of the year, and
the ongoing strong performance from SlimFast which
entered like-for-like comparatives in November 2019.
1. North America measured channels include Online FDMC (Food, Drug,
Mass, Club) and Specialty Channels. Data compiled from published
external sources and  estimates.
At the heart of
healthy lifestyles
26%
percentage of GPN
revenue through online
sales (2018: 28%). The
percentage reduction
reflects the acquisition
of SlimFast.
––––––––
24
 > Strategic Report
Direct-to-Consumer
Body & Fit is GPN’s Direct-to-Consumer online platform
serving consumers in Europe and accounted for 6% of
total GPN sales in 2019. This business delivered revenue
growth in 2019 as a result of increased market coverage.
Body & Fit has upgraded its online platform in 2019 and
increased its digital resources. It is expanding its
presence in Western Europe with a target of serving
14 markets by the end of 2020. In addition Body & Fit
provides GPN with strong eCommerce capability which
can be deployed for other GPN brands in the portfolio
as well as in other Global markets.
Future growth momentum
Following a challenging year for GPN, we have
reorganised the business to ruthlessly focus our
activities on brand growth opportunities. The actions
we are taking to simplify our business will allow us to
concentrate on our core brands and optimise our routes
to market across channels and geographies. As a result,
we expect GPN to regain branded revenue growth
momentum in 2020.
Hugh McGuire
CEO
 Performance Nutrition
Optimum Nutrition launched a new
communications platform, ‘Proven’ in
April 2019. Proven reflects Optimum
Nutrition’s position as a global leader in
sports nutrition and uses comments
and reviews from real consumers.
Proven was brought to life through a
combination of over 1,200 advertising,
social media, digital and merchandising
assets in over 30 countries around the
world. Featuring the entire Optimum
Nutrition range and with a focus on
Gold Standard 100% Whey, Proven
ran 30 second and 15 second creative
assets on digital channels in the
US as well as tailored content and
programmes with a number of key retail
partners in the online, specialty and
independent channels.
Proven was also featured heavily
in the activation of the England Rugby
sponsorship for the UK market, with
Optimum Nutrition giving consumers
an insight into the post-match recovery
shake of the men’s England Rugby
team after the World Cup Semi Final.
Proven will continue to evolve in 2020,
with the addition of new creative assets
to be executed in digital and social
channels, a new series of education-
based video content and further
integration with team and
individual partnerships.
1,200
advertising, social media, digital and
merchandising assets in over 30 countries
across the world.
				 
by
consumers
 Performance Nutrition
Operations Review continued
25

!
Performance Lifestyle
World-class brands
GPN 2022 Ambition
Inspiring people everywhere to achieve their performance and healthy lifestyle goals
Our flagship
brands
Our specialty brands:
To create and deliver sustainable growth
2022: revenue ambition
$1.8bn
2022: margin improvement
of over 200 bps
Growth fuelled by:
Focus on
key brands
Investment in
resources
Drive for efficiencies and
optimise routes-to-market
26
 > Strategic Report
At the heart of healthy lifestyles
Today’s consumers are increasingly aware of
the importance of nutrition in improving their
overall health and weight management. We
are searching for better, healthier and smarter
weight management products that fit our
busy lifestyles.
In the competitive weight management
industry, success can be hard won, but the
emergence in 2019 of the Keto lifestyle
coupled with the SlimFast team’s strategic
approach to innovation quickly led to the
launch of SlimFast Keto.
Consumers are seeking great-tasting Keto
foods, drinks and snacks that are also
convenient. SlimFast Keto quickly captured
the Keto segment of the weight management
category with powders, ready-to-eat meal
bars and snacks, and ready-to-drink shakes.
At the end of 2019, SlimFast held a 70%
share of the Keto segment within the weight
management category with 8 of the top 10
items in this Keto segment from the SlimFast
brand.1
The Keto launch also accelerated
momentum in the overall SlimFast business
with SlimFast now the #2 brand in the US
weight loss category.2
Market position
#2
SlimFast is the #2 brand
in the US weight loss category.
1 IRI, MULO, 4 weeks through 3/11/2019.
2 IRI, 52 weeks through 3/11/2019.
Watch the video at www.slimfast.com/success-stories
Related

Products
SlimFast shakes
think!
snack bars
Healthy snacks
(including GN
ingredients)
SlimFast:
Enabling Danielle
to reach her
lifestyle goals
27

“SlimFast’s
product range
made it easy
for me to achieve
my healthy lifestyle
and weight
management
goals.
At the heart of healthy lifestyles
Danielle
Weight
management
“
As a graphic designer for SlimFast, I helped
design the packaging for the new SlimFast
Keto line. During the process, I learned a lot
about the Keto diet. When SlimFast’s Keto
products became available, I knew I had
to give them a try!”

With a goal to lose 20 pounds, Danielle
surpassed her goal and lost 45 pounds
in 39 weeks.
28
 > Strategic Report
1 Pre-exceptional
2 Restated following adoption of IFRS 15
All commentary is on a constant currency basis.
GN delivered revenue growth of 19.9% in 2019, on prior
year, driven by increases in volume and pricing of 5.5%
and 10.8% respectively, additionally supported by
revenue from the Watson acquisition. Volume growth
related to capacity expansion and underlying market
growth, with pricing increases at both Nutritional
Solutions (NS) and US Cheese reflecting higher dairy
markets. GN’s pre-exceptional EBITA in 2019 was
€130.4 million, a 10.5% improvement versus prior year,
however EBITA margin had a 40 basis point decline
to 5.2% primarily as result of reduced margins in NS.
About GN
 Nutritionals (GN) comprises: Nutritional Solutions (NS)
and US Cheese.
Market
Producer of American-style
cheddar cheese
US Cheese Revenue
Nutritional Solutions (NS)
NS is a global provider of
innovative nutritional and
functional solutions. Through
its extensive portfolio of dairy
and non-dairy ingredients and
capabilities, NS provides a wide
range of science-led solutions
to customers across the globe.
US Cheese
GN is the number one
producer of American-style
cheddar cheese, supplying
our natural cheese to brand
owners and other leading
food service organisations
globally.
“
We are pursuing market
segments which are
on-trend and growing.
Innovation is a key enabler
to accelerate this growth.”
Brian Phelan
CEO  Nutritionals
Revenue by Division
Nutritional solutions 30%
US cheese 70%
29

Nutritional Solutions
Nutritional Solutions (NS) is a global provider of nutritional
and functional premix solutions for use in healthy snacks,
bars and beverages. Through its expertise and
technological capabilities, it is a leading producer of
advanced-technology whey protein, specialist vitamin
and mineral blends and plant-based ingredients.
1 Pre-exceptional
2 Restated following adoption of IFRS 15
NS LFL revenue increased by 23.4% in full year 2019
versus prior year with a strong performance across both
dairy and non-dairy solutions. This was driven by a 7.0%
increase in volume, 3.8% increase in pricing and the
Watson acquisition contributing 12.6% to revenue
growth. Volume growth was broad based with a strong
performance in Asian markets for vitamin and mineral
blends and in the US for dairy-based healthy snacking
ingredients. Pricing increase was primarily as a result
of dairy market dynamics versus prior year.
Watson is performing well and has helped to expand the
Nutritional Solutions supply chain footprint in addition to
bringing technical capability into the business.
NS delivered an increase in EBITA of 7.1% as a result of
revenue growth offsetting a margin decline of 210 basis
points to 13.4%. Margin decline primarily related to
negative mix from certain dairy ingredients, headwinds
from tariffs on raw materials, increased investment in
resources to support growth and some dilution from
the Watson acquisition.
NS strategic priorities
Build our premix and bioactives business
The micronutrient premix business continues to perform
well and we remain ambitious for growth.
Leverage protein capability into healthy snacking
As consumer habits continue to evolve we are leveraging
our core expertise to innovate new solutions and
applications to address this market need.
Scale in adjacent solutions
As consumers expand their tastes, and brand owners seek
to offer increasingly novel and tailored nutrition solutions,
NS will seek to identify growth areas in adjacent solutions.
Innovation
While the proliferation of the brand landscape continues,
NS will leverage our core expertise, by continuing to
quarterback the sectors in which we operate.
With consumers becoming increasingly aware of healthy
eating, snack bars have become immensely popular replacing
chocolates, cakes and biscuits as the go-to snacks.
With the snack bar market expected
to grow 6.7% CAGR in the years
2019-20233
, snack bar manufacturers
are including protein and fibre in their
bars to capture the healthy option
segment of the market.
NS has extensive dairy and non-dairy
protein capability in this healthy
snacking category with a
sophisticated and comprehensive bar
and snack library that showcases our
capabilities and responds to these
current nutritional market trends.
Our state-of-the-art technologies
enable us to deliver healthy snacks
with the maximum nutritional value
without compromising on taste,
texture or format.
With production facilities in Europe,
Asia and North America, NS is a
diverse business with state-of-the-art
technologies servicing a wide range
of end markets. We offer ingredient
solutions with applications in a
number of areas including extended
shelf life, reduced sugar and
enhanced texture and taste. NS also
has the ability to tailor these snacks
for regional and ethnic palates using
our innovative flavours and high-
protein seasonings.
3 Global Snack Bar Market 2019 Industry
Research Report.
Healthy
Snacking
estimated CAGR in the
snack bar market
between the years
2019-20233
30
 > Strategic Report
US Cheese
US Cheese is a leading producer of American-style
cheddar cheese in the US supplying a broad range
of customers, predominantly US based, who
participate in the food service and retail consumer
branded and private label end markets. As well as
selling its own manufactured cheese, US Cheese is
also the commercial partner for its joint venture
Southwest Cheese (SWC).

1 Pre-exceptional
2 Restated following adoption of IFRS 15
US Cheese revenue increased by 18.5% in full year
2019 versus prior year. This was driven by pricing
increase of 13.6%, as cheese markets were
significantly stronger in the second half of 2019
versus prior year. Volume growth of 4.9% reflected
the full year benefit of capacity expansion
commissioned in 2018.
US Cheese delivered an increase in EBITA of 23.6%
as a result of revenue growth, and EBITA margin
improved by 10 bps to 1.7% versus prior year
due to a good operating performance.
US Cheese strategic priorities
Solidify #1 market position
Through close collaboration with our customers and
strategic development, our ambition is to grow and
maintain our #1 position in American-style cheddar
cheese and in selected export markets.
Deepen strategic relationships
Our long-standing and valued relationships,
both with key customers and strategic
partners such as Dairy Farmers of America
(DFA) and Select Milk Producers (Select),
deepened in 2019. Our new JV project in
St. Johns, Michigan is at an advanced
stage of construction and is expected to
be commissioned in the second half of 2021.
Brian Phelan
CEO
 Nutritionals
Processed cheese was developed in
the early 1900’s when it was discovered
that heating a combination of cheese
and emulsifying salts resulted in a
viscous product that could be shaped
into processed cheese products for
use in a variety of applications on
hamburgers, pizza, salads and other
food products.
However, emulsifying salts resulted in
labels with undesirable ingredients and
also high levels of sodium.
With the growing trend of health
conscious consumers seeking great
tasting products with fewer ingredients
and cleaner labels,  has
developed an innovative cheese
ingredient technology that reduces
emulsifying salts and sodium levels
in the barrel cheese, while potentially
increasing the calcium levels.
This unique barrel cheese provides
the functionality that results in an end
product that is healthier and cleaner
but with similar characteristics of
processed cheese – melt, stretch,
flavour and colour.
This ingredient technology is patent
pending with ongoing collaborations
to improve and commercialise.
US Cheese volumes sold in 2019
1.1bn lbs3
3 American-style cheddar cheese
Read more on page 21
Innovation
New cheese
technology offers
cleaner labels
 Nutritionals
Operations Review continued
At the heart of healthy lifestyles
New Cheese
technology
Trends addressed: Desire from consumers for
clean-label products without compromise in
taste or functionality.
Value to customers: Better nutrition with
great taste and functionality and the flexibility
to develop tailored stretch, melt, colour and
flavour depending on the desired application.
Value to GN: Supports barrel placement
by offering a differentiated product in
the barrel space.
31

Key consumer trends enabling GN growth
New brand
growth
Formulation
capability
Shortening
product
lifecycles
Proactive
innovation
On-the-go
convenience
Application
and format
expertise
Trends
Opportunity
Clean
labelling
Quality
ingredients
and supply
chain
Population
growth
and
urbanisation
Increasing
international
opportunity
Increase
in dairy
consumption
Capital
efficient
partnership
model
Centres of
excellence
One face to
the customer
Insights-led Integrated
vision and
culture
Fuelled by top
talent
Scalable Efficient and
agile
Bakery and
confectionary

Sports
nutrition

Beverages
Infant
nutrition

Dairy
products

Dietary
products

Clinical
nutrition

GN is pursuing market segments which are on-trend and growing
Our chosen markets and growth rates*
* Source: ARC Nutrition, Premixes Market Report 2018.
GN 2022 Ambition
GN’s strong and agile operating model
GN’s 2022 Ambition:
NS: €1bn revenue US Cheese: €2bn revenue
32
 > Strategic Report
At the heart of healthy lifestyles
“Premixes that
support healthy
living or healthy
ageing command
a premium.”
Source: Euromonitor premix analysis 2019
At the heart of healthy lifestyles
Premix
$1.9bn
estimated value of global premix market
by 2023.
Source: Nutritional Premixes Market – Global
Opportunity Analysis and Industry Forecast
(2018-2023)
33

Growth in the global nutritional premix market
is driven by a growing desire from consumers
for safe, quality-assured, science-based
solutions for use in clinical and early life
nutrition, sports and lifestyle nutrition,
supplements and mainstream food and
beverages. Furthermore, the convenience
to the manufacturing process of a premix
(in place of using multiple individual
ingredients) is contributing to demand.
GN’s Nutritional Solutions (NS) business has
the expertise and technical capability set to
create superior premix solutions that meet the
formulation requirements of today’s complex
application demand. As the #2 global premix
nutrient provider, NS works closely with our
customers to combine various ingredients
and deliver customised precision premixes
with optimal nutritional, functional and
operational performance.
In February 2019, we strengthened our
capability set, customer and category reach,
with our acquisition of Watson, a US-based
non-dairy ingredient solutions business.
Watson specialises in vitamin and mineral
premix solutions, edible films and material
conditioning and serves global and regional
customers in the food, nutritional, supplement
and personal care categories.
The acquisition of Watson broadens NS’s
premix production footprint which now
extends coast-to-coast across the US with
facilities in California, Missouri, Illinois and
Connecticut. NS also has facilities in Germany
and China to provide truly global scale to
our customers as they grow internationally.
For more information: www.nutritionals.com
Premix
categories
Sports and lifestyle
nutrition
Mainstream food
and beverages
Clinical nutrition
Early life nutrition
Supplements
Expanding our
global footprint
in a growing
premix market
34
 > Strategic Report
Strategic Joint Ventures
Operations Review
Delivering growth through
strong partnership models
Joint Venture Business Performance
( share)

All commentary is on a constant currency basis.
’s share of profit after tax (PAT) from JVs
increased by €3.3 million to €48.6 million in 2019
compared to the prior year and this was driven by
revenue and margin growth. ’s share of JVs’
revenues increased by 12.9%, with sales volume growth
of 9.6%, and overall pricing increases of 3.3% primarily
due to higher year-on-year dairy markets in the US.
 Ireland
The  Ireland JV (GI) is owned 60% by 
Co-operative Society Limited and 40% by .
GI is the largest milk processor in Ireland producing a
range of value-added dairy ingredients and consumer
products as well as selling farm inputs.
GI delivered a good performance in 2019 with revenue
growth, due to higher volumes, offset by modest price
declines. Milk volumes processed in 2019 increased
by 7.4% on a like-for-like basis with the previous year,
resulting in a total GI milk pool of 2.9 billion litres.
A record volume of 86.8 million litres of milk was
processed in the peak week in May 2019. This was a
10% increase over the same week in 2018. This growth
in the milk pool, combined with a clearance of high stock
levels, helped drive a strong increase in sales volume
across the ingredients business. Continued progress
was made in expanding GI’s consumer branded offerings
internationally, with substantial growth in sales of UHT
milk and cream into South East Asia. A new brand
Joint
Venture:
 Ireland  Cheese UK  Cheese EU (a) Southwest Cheese
(b) MWC
Key
activities:
Largest Irish-based
integrated agri-food and
dairy nutrition business
Large-scale manufacturer
and marketer of
mozzarella cheese
JV established in 2018
to build a mozzarella
cheese plant
US producers of
American-style cheddar
cheese and whey ingredients
Location: Ireland United Kingdom Ireland
*  share. See glossary page 201 for further details.
Robust Joint Venture models
35

‘Truly Grass Fed’, offering a range of butter and cheese
products, has been well received in the US market.
Strong emphasis is being placed on driving value-added
growth and growing new markets. A strategic review set
out ambitious targets for the next five years which will run
in tandem with the aims of GI’s suppliers to continue with
their plans to increase volumes at sustainable levels over
the coming years. Sustainable growth is key to all GI’s
planning for the future. GI continued to launch a range
of innovative schemes including a new initiative in
partnership with energy companies, to bring a renewable
solar energy solution to the market. GI has entered into a
strategic partnership with Royal A-ware, a leading global
cheese and dairy producer in the Netherlands, to build a
new continental cheese manufacturing facility in Belview,
Co. Kilkenny, Ireland. The new facility, which is scheduled
for commissioning in 2022, is currently progressing
through the planning process.
 Cheese UK
 Cheese UK is a large-scale manufacturer and
marketer of mozzarella cheese, 51% owned by 
plc and 49% owned by a global specialist mozzarella
producer, Leprino Foods Company. The business has
two state-of-the-art mozzarella cheese manufacturing
facilities in Llangefni, Wales and in Magheralin, Northern
Ireland.  Cheese UK delivered higher revenues in
2019 due to increased volumes partly offset by a modest
reduction in market pricing.
 Cheese EU
 Cheese EU was established in 2018 as a 50:50
joint venture between  and Leprino Foods
Company. The construction of the new mozzarella
cheese plant in Portlaoise, Ireland is progressing to
plan with commissioning expected to be completed
before the end of 2020. Of a total project investment
of €35 million for , €25 million has been invested
to-date with a further €10 million to be invested during
the remaining construction phase of the facility.
Southwest Cheese
Southwest Cheese (SWC) is a large-scale producer of
American-style cheddar cheese and whey ingredients
in the US with a production facility located in the State
of New Mexico, US. All of SWC cheese and whey
ingredients are sold through GN’s route-to-market
channels at market prices. SWC delivered a strong
performance in 2019, as a result of higher revenue mainly
due to increased pricing and volume growth, related to
increased production capacity and higher year-on-year
US dairy markets.
MWC
MWC is ’s new JV in Michigan, US. This $470
million facility is at an advanced stage of construction
with commissioning expected to be completed by the
third quarter of 2021. Of the total project investment of
$82.5 million for , $75 million has been invested
to-date, with a balance of $7.5 million to be invested on
completion of the construction phase.
Our
growth
drivers
Investment programme
to support  Ireland
expansion is on track.
New facility in Michigan,
US is on track to be
commissioned in 2021.
New facility in Ireland
to be commissioned
in 2020.
 Ireland
total milk pool in
2
. The Group reported adjusted EPS of 88.1 cent, down 7.7%
constant currency on prior year. This profitability decline is due to
challenges experienced by GPN, particularly in certain non-US
markets. GN and the Joint Ventures posted good results for the year.
GPN’s revenues of €1.4 billion reflected an increase of 11% constant
currency, comprising organic volume declines of 9% and pricing
decline of 0.6%, offset by the impact of the SlimFast acquisition of
+20.6%. GPN’s organic revenue declines were most severe in a
number of its non-US markets, in particular India, Middle East and
Brazil. GPN was impacted by different issues in each market which
included dollar strength and tariffs reducing competitiveness,
distributor changes leading to unplanned adjustments in inventory
holdings and increased local competition. In the EU, increased
competition from the Direct-to-Consumer channel impacted revenues
in traditional channels, albeit Body & Fit further expanded its country
reach and had good revenue growth for the year. In North America,
consumption continued to be strong in sports nutrition in the Online
and Club channels with core brands, whereas the specialty channel
continued to be challenged during the year. GPN’s US lifestyle brands
performed well in 2019, particularly SlimFast, and the relaunch of the
think! brand has gone well. As a consequence of the revenue
declines, GPN EBITA, at €146.4 million, was down 19.6% constant
currency, on prior year. In response to the aforementioned revenue
challenges we have reviewed the forecasting process in GPN’s
non-US operations and are implementing more robust forecasting
procedures in 2020.
Revenues in GN were strong in the year, up 19.9% constant currency,
with organic volumes up 5.5%, pricing up 10.8% (dairy and cheese
related) and the impact of the Watson acquisition in February 2019, of
+3.6%. NS organic volumes were up 7% with strong growth in Asian
markets for vitamin and mineral blends and in the US for dairy-based
healthy snacking ingredients. US Cheese also had a good year, with
organic volumes up 4.9% as a result of the annualised impact of the
Southwest Cheese expansion completed in 2018. GN EBITA grew
10.5% constant currency, to €130.4 million.
“
We are focused on
delivering on our key metrics
and returning the Group
to its long-term trajectory
of profitable growth.”
Mark Garvey
Group Finance Director

Operating cash flow (OCF) was strong at just under €280 million
converting 86% of EBITDA into OCF, against a target of 80%
conversion. Free cash flow for the year was €231 million. In the first
quarter the Group acquired Watson for a total consideration including
acquired debt of $87 million, and this business is performing well
since acquisition. An additional €47 million was invested in two
significant joint venture projects in MWC and  Cheese EU,
and €76 million was invested in capital expenditure projects. The
Group return on capital employed was 10.9%, within our guidance
range of 10%–13%.
Return of capital to shareholders is a key priority of the Group and, in
line with our dividend policy, we will have a dividend payout of 30.2%
of adjusted EPS in respect of 2019. This represents a final dividend
of 15.94 cent per share to bring the total 2019 dividend to 26.62 cent
per share, a 10% increase and a total of €78.6 million returned to
shareholders from 2019 earnings.
The Board will seek authorisation for a share buyback programme
at the Annual General Meeting on the 22 April 2020.
2020 Outlook
In 2020,  expects to deliver adjusted earnings per share
broadly in line with prior year on a constant currency basis.
 expects GPN to deliver branded revenue, margin and EBITA
progression in 2020 versus prior year. In GN, Nutritional Solutions
continued revenue momentum is expected to be offset by margin
headwinds. Joint Venture performance year-on-year is expected to
decline largely due to commissioning costs of new joint venture
capital projects.
2019 Income Statement review
The 2019 results are for the 53 week period ended 4 January 2020
while 2018 comparatives are for the 52 week period ended
29 December 2018.
Revenue and EBITA
Revenue and EBITA are key performance indicators (KPIs) for the
Group. In particular the Group focuses on revenue volumes and
EBITA margins to assess underlying performance. Details of these
KPIs are set out below.

Following the implementation of IFRS 15, GN prior year revenue was restated to reflect the
impact of recognising the Group as a principal in its sales relationship with its joint venture
Southwest Cheese rather than as an agent. The impact was to increase prior year sales by
€784 million; there was no change to EBITA following this restatement.
Revenue
Wholly-owned revenue increased in 2019 by 16.6% versus prior year
on a constant currency basis to €3.9 billion, an increase of 22.2% on
a reported basis. Sales volumes were broadly flat, with 5.5% volume
growth in GN offset by a decrease of 9% year-on-year in sales
volumes in GPN. Pricing had a positive impact, increasing revenue
by 6.6%, driven primarily by higher dairy market pricing within GN.
The SlimFast and Watson acquisitions had strong performances
and accounted for 9.9% of the growth in revenue. Detailed analysis
of revenue by GPN and GN segments is set out below.
 Performance Nutrition:
GPN delivered revenue growth of 11.0% constant currency in 2019
versus prior year. This was driven by the contribution of SlimFast
which increased GPN revenues by 20.6%, offset by a volume decline
of 9.0% and pricing decline of 0.6%. Branded revenue declined 9.8%
in the year on a like-for-like basis, -8.9% volume and -0.9% price.

Pricing declines were evident in the first half of 2019. In the third
quarter, price increases in North America were successfully
implemented which helped deliver positive pricing in the second
half of 2019.
 Nutritionals
GN delivered revenue growth of 19.9% constant currency in 2019,
on prior year, driven by increases in volume and pricing of 5.5%
and 10.8% respectively, supported by revenue from the Watson
acquisition in the first quarter. Volume growth and pricing increases
at both Nutritional Solutions and US Cheese, reflect higher
dairy markets.
Nutritional Solutions

 > Strategic Report
Group Finance Director’s Review continued
EBITA (pre-exceptional)
EBITA before exceptional items declined 7.8% constant currency
(down 2.8% reported) to €276.8 million (2018: €284.9 million).
GPN EBITA pre-exceptional decreased by 19.6% constant currency to
€146.4 million (2018: €173.1 million), a decrease of 15.4% on a reported
basis. GPN pre-exceptional EBITA margin at 10.7% was 400 basis points
lower than prior year reported, due to lower volumes and resulting negative
operating leverage arising from lower organic revenue and business mix.
GN pre-exceptional EBITA increased by 10.5% constant currency to
€130.4 million (2018: €111.8 million) – 16.6% increase on a reported basis.
GN pre-exceptional EBITA margin was 5.2%, down 40 basis points from
2018, due to the impact of product mix and tariff headwinds.
				
The 2019 pre-exceptional tax charge decreased by €9.4 million to
€23.4 million (2018: €32.8 million). This represents an effective tax
rate, excluding joint ventures, of 12.3% (2018: 14.8%). The reduction
in pre-exceptional tax rate is driven primarily by the geographic mix of
profits, a lower charge for uncertain tax risks and a lower tax charge
relating to corporate development activity in the year. The tax credit
related to exceptional items is €4.5m. The Group currently expects
that its effective tax rate for 2020 will be in the range of 11.5%
to 12.5%.
Exceptional items
Details of the exceptional items are as follows:
1. Organisation redesign costs relate primarily to a fundamental
reorganisation of the  Performance Nutrition segment,
including the creation of distinct North America Performance
Nutrition, North America Lifestyle, International and Direct-to-
Consumer businesses. Costs incurred to-date are professional
consultancy (€7.9 million) and redundancy and employment related
costs including recruitment costs and costs of relocating people
to new markets and geographies to support the organisation
change (€4.8 million). This restructuring programme will continue
into 2020.
2. Asset impairments comprise the write down of inventory to
net realisable value (€14.9 million), related development assets
(€2.0 million) and some fixed assets (€0.4 million) in the GPN
business. The impairment of inventory arises from (i) sales volume
declines in certain non-US markets resulting in surplus inventories
of €5.6 million, (ii) unsuccessful innovation SKUs in the US Food/
Drug/Mass/Club (FDMC) channels of €5.7 million, (iii) the cost of
discontinuing a significant number of other North American SKUs
of €2.6 million to reduce SKU complexity and simplify the supply
chain, and (iv) other inventory impairments of €1.0 million. Overall
these inventory impairments will result in a significant simplification
within the GPN business resulting in approximately 1,200 SKUs
(35% of total) being discontinued. This level of inventory
impairment is substantially in excess of past experience in
the GPN business and none of the SKUs rationalised will be
manufactured or contracted for in the future. Based on the past
12 months sales, the revenue related to the discontinued SKUs
is approximately 5% of total GPN revenues, the vast majority
of which is expected to be retained through sales of alternative
GPN SKUs.
3. Acquisition integration costs comprise costs relating to the
integration and restructuring of acquired businesses and the
transaction costs incurred in completing the current year
acquisition. The charge comprises professional fees of
€2.5 million, employee benefit costs of €1.2 million and
inventory impairments of €3.1 million following a post-acquisition
assessment of the product portfolio of the acquired businesses.
4. Brexit related costs have been incurred in preparing the
organisation for the departure of the United Kingdom from the
European Union. Costs incurred include professional fees and
increased storage and production costs as the Group sought
to mitigate the potential risks relating to Brexit.
The total net cash outflow during the year in respect of exceptional
items was €12.0 million. During 2018 there were cash outflows of
€2.6 million in respect of exceptional charges incurred prior to 2018.
39

Profit after tax
€’m 2019 2018 Change
Profit after tax 180.2 234.0 (53.8)
Profit after tax for the year was €180.2 million compared to €234.0
million in 2018, comprising pre-exceptional profit after tax of €214.8m
down €19.2 million on prior year and exceptional charges of €34.6
million (there were no exceptional items in 2018). The €19.2 million
decline in pre-exceptional profit after tax is primarily driven by the
reduced profitability of GPN which more than offset increased profits
in GN and the joint ventures. Higher net finance costs were offset
by a lower tax charge for the year.
Earnings per share
		
Basic EPS decreased by 23.0% reported versus prior year, driven by
year-on-year reduction in pre-exceptional profitability and exceptional
charges in 2019.
Adjusted EPS is a Key Performance Indicator (KPI) of the Group and
a key metric guided to the market. Adjusted EPS declined by 7.7%
constant currency (3.2% reported) in the year, driven by the reduction
in profitability of the GPN segment and increased interest costs, offset
by increased share of profits of joint ventures and lower income taxes.
Cash flow
€’m 2019 2018
EBITDA pre-exceptional 
Movement in working capital (pre-exceptional) (24.9) (9.7)
Business-sustaining capital expenditure (20.1) (16.4)
Operating cash flow 279.9 301.7
Net interest and tax paid (74.1) (42.2)
Dividends from Joint Ventures 35.3 31.6
Other inflows/(outflows) (9.6) 4.3
Free cash flow 231.5 295.4
Strategic capital expenditure (56.2) (46.2)
Equity dividends (74.3) (76.0)
Acquisitions (58.3) (313.0)
Disposals 0.2 1.3
Exceptional items paid (12.0) (2.6)
Loans to/equity in Joint Ventures (47.4) (58.9)
Cash flow pre-foreign exchange translation/
other adjustments (16.5) (200.0)
Exchange translation/other adjustments (10.5) (9.0)
Debt acquired on acquisition (10.6) –
Net debt movement (37.6) (209.0)
Net debt at beginning of the year (576.7) (367.7)
Closing net debt (614.3) (576.7)
For more information on operating cash flow and free cash flow see glossary page 205
The principal cash flow KPIs of the Group and Business Units
are Operating Cash Flow (OCF) and Free Cash Flow (FCF). OCF
represents EBITDA of the wholly-owned businesses net of business-
sustaining capital expenditure and working capital movements,
excluding exceptional cash flows. FCF is calculated as the cash flow
in the year before the following items: strategic capital expenditure,
equity dividends, acquisition spend, proceeds received on disposal,
exceptional costs paid, loans to/equity invested in joint ventures, and
foreign exchange movements. These metrics are used to monitor the
cash conversion performance of the Group and Business Units and
identify available cash for strategic investment. OCF conversion,
which is OCF as a percentage of EBITDA is a key element of
Executive Directors and senior management remuneration.
OCF was €279.9 million in the year (2018: €301.7 million) and
represents a strong cash conversion on EBITDA of 86% (2018: 92%).
The OCF conversion target for the year was 80%. The decrease in OCF
versus prior year was due primarily to higher investment in working
capital and business sustaining capital expenditure.
The Group continues to actively manage its working capital. During the
year, the Group embarked on a programme to increase payables terms
with significant vendors in response to similar increased receivables
terms that have been agreed with certain customers.
FCF was €231.5 million vs €295.4 million in 2018, with the decrease
primarily due to lower OCF and increased corporation tax (including
acquisition integration related) payments as well as higher interest
payments as a result of increased levels of debt due to acquisitions.
Acquisition spend relates to the cost of Watson which was acquired
in February 2019. Loans to/equity in Joint Ventures includes the
continuation of the investments in  Cheese EU, the mozzarella
cheese joint venture in Portlaoise, Ireland and in MWC, the joint venture
cheese and whey plant in Michigan, US.
Group net debt
Group Financing 2019 2018
Net debt (€’m) 614.3 576.7
Net debt: adjusted EBITDA 1.71 times 1.55 times
Adjusted EBIT: net finance cost 9.3 times 14.8 times
The Group’s financial position continues to be strong. Net debt at the
end of 2019 was €614.3 million. This is an increase of €37.6 million
from the prior year end net debt of €576.7 million. At year-end 2019,
 had committed debt facilities of €1.2 billion with a weighted
average maturity of 2.8 years. ’s ability to generate cash as
outlined above and its available debt facilities ensures the Group
has considerable capacity to finance future investments. Net debt
to adjusted EBITDA was 1.71 times and interest cover was 9.3 times,
both metrics remaining well within financing covenants.
Of committed bank borrowings at year end, facilities amounting to
€261.5 million currently mature on 5th November 2020. The Group
expects to have completed a re-financing of these facilities,
incorporating an extension of maturity date, prior to 31st March 2020.
40
 > Strategic Report
Group Finance Director’s Review continued
Use of capital
Capital expenditure
The cash outflow relating to capital expenditure for the year amounted
to €76.3 million (2018: €62.6 million) which includes €20.1 million of
business-sustaining capital expenditure and €56.2 million of strategic
capital expenditure. Key strategic projects completed in 2019 included
investments in innovation, expansion of manufacturing facilities and IT
systems development, particularly the further enhancement of our
D2C platforms.
Investments in joint ventures
During 2019, the Group continued its investment in the new joint
ventures commenced in 2018. A total of $35 million was invested in
MWC during 2019, the joint venture cheese and whey manufacturing
facility in Michigan US. This brings the total Group investment in
MWC to $75 million with a balance of $7.5 million still to be invested.
Construction is well advanced in this facility with commissioning
expected to be complete in 2021.
During 2019 the Group also invested €17 million in  Cheese
EU, the joint venture mozzarella cheese plant in Portlaoise, Ireland,
bringing the total invested to €25 million. The Group expects to invest
a further €10 million over the construction phase of this project which
will be commissioned in 2020. The remaining funding for both of
these projects will come from the other joint venture partners,
government grants and dedicated joint venture banking facilities,
which are non-recourse to .
Return on Capital Employed
2019 2018 Change
Return on Capital Employed 10.9% 13.2% (230bps)
Return on Capital Employed (ROCE) decreased in 2019 by 230 basis
points to 10.9%. This decrease resulted from the combination of lower
profitability in the year and increased average capital employed
as a result of recent acquisitions and investments in joint ventures.
Acquisitions remain a key part of the growth strategy for the Group
and it is the Group’s goal to maintain a ROCE range of between 10%
and 13% over the medium-term.
Annual impairment testing
The Group monitors the performance of acquisitions on an ongoing
basis and completes annual impairment reviews in respect of goodwill
and intangible assets. No impairments were identified from the 2019
review, however a significant reduction in the headroom for the BSN
cash generating unit (CGU) was noted. In addition, sensitivity analysis
on the ‘think!’ lifestyle brand, shows that a reasonably possible
change in one of the sensitivity assumptions could result in an
impairment charge. This is the former thinkThin business which
has been re-branded and relaunched with positive consumption
momentum evident since relaunch.
For the purposes of impairment testing, assets are grouped at the
lowest level for which there are separately identifiable cash flows
(CGUs) and these CGUs are kept under review to ensure that they
reflect any changes to the interdependencies of cash flows within
the Group. CGUs will be reviewed in 2020 and we expect that the
completion of recent organisation redesign within GPN and GN will
result in a change to the number of CGUs we report.
Dividends
 adopts a dividend policy that includes an annual dividend
payout ratio between 25% and 35% of adjusted EPS. In line with this
policy the recommended final 2019 dividend will be 15.94 cent per
share (2018: final dividend 14.49 cent per share) and will bring the
total dividend for the year to 26.62 cent per share (2018: 24.20 cent
per share) and a payout ratio of 30.2%. This represents a 10%
increase on prior year and a return of €78.6 million to shareholders
from 2019 earnings.
Total Shareholder returns
Total Shareholder Return (TSR) for 2019 was negative 36.7%.
The STOXX Europe 600 Food & Beverage Index (F&B Index) a key
benchmark for the Group, increased by 30.9% in 2019. The three-year
period 2017 to 2019  TSR was negative 32.9% versus the F&B
Index of +38.4%. The five-year  TSR to 2019 was negative
16.1% versus the F&B Index of +62.8%. ’s share price at the
end of the financial year was €10.16 compared to €16.35 at the 2018
year end, a 38% decrease.
Impact of new accounting standards
While new accounting standards and improvements are issued
annually there are two new accounting standards which have or are
expected to have significant impacts to the Group. Set out below are
the impacts where relevant to  from these standards.
IFRS 15 ‘Revenue from Contracts with Customers’
IFRS 15 ‘Revenue from Contracts with Customers’ is effective and
was adopted by the Group for the 2019 financial year. Following
a detailed review by the Group there were no material changes to
revenue recognition and profits across the Group with the exception
of the  Nutritionals (GN) segment as outlined below.
The Group concluded that the relationship between GN and the
Group joint venture partner Southwest Cheese (SWC), transitioned
from an agent relationship to that of a principal following a change
in the assessment criteria of a principal and agent within IFRS 15.
The impact is as follows:
• Revenue and costs within GN were grossed up for all sales of
SWC products on which previously only commission was
recognised. Comparative numbers for 2018 have also been
restated to reflect this change, in line with the transitional
arrangements for IFRS 15.
• There is no change to EBITA in GN or at  Group level.
• Although there is no change to EBITA, as a result of the increase
in revenue, there is dilution to the EBITA margin percentage of GN
and consequently of the wholly-owned Group. Restatement of the
2018 revenue has resulted in a reduction in EBITA margin for the
Group from the previously reported margin of 11.9% to a revised
margin of 9.0%.
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ comes into effect for the financial year commencing
on 5 January 2020. Under the new accounting standard the fair value
of all qualifying operating leases, representing the present value of the
lease payments over the life of the lease, will be recognised as a right
of use asset with a corresponding lease liability. The new standard
will result in the removal of a rental charge from the Income Statement
for the leases and will be replaced with a depreciation charge in
respect of the right of use asset and an interest charge relating
to the lease liability.
41

The Group will adopt the modified retrospective approach to
transition permitted by the standard in which the cumulative effect
of initially applying the standard is recognised in opening retained
reserves at the date of initial application. The Group expects to
recognise right of use assets and lease liabilities of €105.8 million
and €127.5 million respectively. We do not expect this change to
have a material impact on the financial KPIs of adjusted EPS or
Return on Capital Employed. We expect EBITA to increase by
€2.4 million, which will be offset by a corresponding increase in
interest charge of €2.7 million.
Pension
The Group’s net pension liability under IAS 19 (revised) ‘Employee
Benefits’, before deferred tax, increased in 2019 by €7.8 million to €46.3
million (2018: €38.5 million). The defined benefit pension liability is
calculated by discounting the estimated future cash outflows using
appropriate corporate bond rates. During 2019, the relevant corporate
bond rates for both the Irish and UK pension schemes reduced
significantly, and this resulted in an increase to the net pension liability,
despite the Group pension contributions made during the year.
Foreign exchange
 generates over 90% of its earnings in US dollar currency and has
significant assets and liabilities denominated in US dollars. As a result,
and as ’s reporting currency is euro, there can be a significant
impact to reported numbers arising from currency movements year-on-
year and on translation of US dollar non-monetary assets and liabilities in
the preparation of the Consolidated Financial Statements. Commentary
has been provided on a constant currency basis to provide a better
reflection of the underlying operating results in the year, as this removes
the translational currency impact. To arrive at the constant currency
change, the average foreign exchange rate for the current period is
applied to the relevant reported result from the same period in the prior
year. At the balance sheet date, due to the strengthening of the US dollar
compared to prior year, there was a translation gain arising on the
translation of US assets and liabilities into euro. The gain on translation of
non-monetary assets and liabilities from US dollar to euro is presented
within other comprehensive income and amounted to €46.7 million in the
year. The retranslation of non-euro denominated debt resulted in a loss of
€10.5 million within the cash flow statement. Average and year-end US
dollar to euro rates were as follows:

Financial strategy
’s financial strategy is very much aligned with its overall
strategy of ensuring the Group delivers on its key financial goals.
Specific financial goals to enable this strategy include:
• Assessing both external and organic investment opportunities
against a target minimum benchmark of 12% return after tax by
end of year three, with a goal of between 10% and 13% ROCE in
any one year;
• Focusing the organisation on cash conversion through improved
working capital management and disciplined business-sustaining
capital expenditure, with a goal of greater that 80% cash conversion;
• Leveraging the Group’s activities to enable improved cost
structures utilising shared services, procurement, IT and a
continuous improvement mindset;
• Maintaining the capital structure of the Group within an implicit
investment-grade credit profile; and
• Dividend policy with a payout ratio of 25%-35%.
Brexit and international trade challenges
The UK departed from EU membership (Brexit) on 31 January 2020.
The process and its impact in terms of the exit deal including tariffs
and trade agreements remain unclear and difficult to quantify at this
point in time. 2019 was a year of uncertainty in relation to Brexit and
the Group sought to mitigate potential risks as much as possible as
outlined in the principal risks and uncertainties on pages 52 to 59. An
exceptional cost of €2.3m has been incurred in respect of this activity.
As global trade uncertainty continues, the impact of tariffs on
international trade will continue to be monitored by the Group and
mitigated as much as possible.
Investor relations
 continued its active investor relations initiatives in 2019.
During the year, representatives from  presented at 12 investor
conferences globally and held over 300 meetings with institutional
investors. A shareholder survey was carried out at the end of 2019 by
an independent research company which interviewed shareholders
and other stakeholders to gain insights into how ’s strategy,
investment case and communications are perceived. A summary of
the key findings and recommendations from this research was shared
with the  Board. In addition,  engaged directly with its
top 40 shareholders representing over 70% of the issued equity of
 on remuneration policy which was led by the Chairman of the
Remuneration Committee with Remuneration advisers, and findings
were shared directly with the Board and also published via RNS.
Annual General Meeting (AGM)
’s AGM will be held on Wednesday, 22 April 2020, in the
Lyrath Estate Hotel, Lyrath, Kilkenny, Ireland.
Mark Garvey
Group Finance Director
42
 > Strategic Report
Water
Responsible nutrition
Farmer sustainability
Product safety and quality
Employee health and safety
Climate change
Animal welfare
Packaging
Responsible business
UN SDGs Energy
Waste
Sustainable value chains
Fair pricing
Sustainable products
Respecting our people
Stakeholder Engagement
Diversity and inclusion
Community engagement Sustainability reporting
Engaging with our stakeholders
’s success depends on our ability to engage effectively and work
constructively with our key stakeholder groups.  engages with five
key groups; our people, our consumers and customers, our suppliers, our
shareholders and society.
Materiality assessment
Process and findings
During 2019 the Group undertook its first
materiality assessment to clearly align
sustainability with the needs of our main
stakeholders. We consulted with
approximately 200 of the Group’s key
stakeholders – including the Board,
employees, suppliers, and customers – to
identify priority issues and inform our future
sustainability strategy.
The key topics identified in collaboration with
our stakeholders are shown in the matrix
below. Covering environmental, social,
societal, business and governance aspects,
these topics have been evaluated to
determine sustainability risks and
opportunities for . These topics will
now determine our strategic focus with the
aim of improving our overall performance in
areas of climate change and social impact,
contributing to delivering the Paris
Agreement on climate change, and to
delivering the UN Guiding Principles on
Human Rights and increasing our alignment
with the UN Sustainable Development
Goals (SDGs).
Materiality methodology
We followed these three steps:
1: Identification of key materiality issues
2: 
Mapping of stakeholder concerns
3: Assessment and validation of results
Step 1: Identification of potentially
relevant topics
Firstly, we identified a selection of
environmental, social and economic topics
that are directly or indirectly connected to
’s business and stakeholders’
interests. We considered the 
business model, consulted with internal
experts and external sustainability
advisors, and examined relevant
sustainability standards.
Step 2: Confirm topics and stakeholders
The project team confirmed the topics most
relevant to  and our stakeholders.
We also prioritised and confirmed a list
of key stakeholders.
Step 3: Assessment and validation
We engaged with our priority stakeholder
groups through existing relationship
channels and a quantitative survey. This
survey was conducted worldwide, involving
some 80  employees, more than
100 professional stakeholders and 10
key customers. The topics were ranked
according to their potential impact on
the activity and their importance for
the interviewed stakeholders.
After completion of the surveys we
conducted a workshop with the senior team
and a select group of external and internal
stakeholders to review the overall findings
of the materiality assessment and confirm
how topics will be addressed.
High Higher Highest
High
Higher
Highest
Shareholders
Suppliers
Society
People
Consumers
and customers
Key: Economic Social Environmental
Importance
to
stakeholders
Importance to 
43

Significance
We have an experienced,
diverse and dedicated
workforce, which we recognise
as a key asset of our business.
We continually create the right
environment to encourage
and create opportunities
for individuals and teams
to realise their full potential.
How we engage
• Communication through
intranet, workplace meetings
and employee surveys;
• Group MD and workforce
Director participated in
employee townhalls; and
• Focus on development
training and succession
planning.
2019 highlights
72% response rate to
employee ‘Your Voice’
engagement survey.
1,238 employees
attended leadership
and talent development
programmes.
Further links
Employees have their say
through the ‘Your Voice’ survey.
Read more on page 45
Addressing the talent
requirements of the organisation.
Read more on page 46
Significance
As a global nutrition company,
we are passionate about helping
people understand how we
deliver sustainable ingredients
and brands in an efficient
manner. ’s supply chain
spans procurement of raw
materials, packaging and
transport globally.
How we engage
• Ongoing dialogue via our
commercial teams;
• Assessments against our
Supplier Code of Conduct
including anti-bribery and
anti-corruption, human rights
and environmental policies; and
• Dedicated farm relations
teams.
2019 highlights
Updated our Group-wide
procurement policy.
100% of Irish dairy suppliers
accredited to Origin Green and
52% of Idaho suppliers
completed FARM Environmental
Scheme assessment.
Further links
Our commitment to excellence
in food safety and quality.
Read more on page 48
Encouraging and supporting
a sustainable dairy industry.
Read more on page 49
Significance
Our performance nutrition and
lifestyle brands enjoy a loyal
following across the globe. In
GN, we build relationships with
our customers by working
collaboratively and developing
products that meet their needs.
How we engage
• Consumers surveys;
• Customer visits, industry
conferences and a
commitment to deliver
on feedback; and
• Category attitude and usage
studies as well as brand
health studies.
2019 highlights
GPN partnered with Sprinklr to
gain a deeper understanding of
consumer feedback and
engagement in digital channels.
In its global innovation centres,
GN experts worked side-by-side
with customers sharing ideas
and insights.
Further links
Responding to our customers’
needs in a growing marketplace.
Read more on page 20
Showcasing our globally
recognised and trusted brands.
Read more on page 22
Significance
 is committed to maintaining
constructive dialogue with
shareholders and engages with
them regularly to understand their
concerns and ensure these are
considered in its decision-making.
How we engage
• Regular investor updates and
meetings;
• Annual Report and Annual
General Meeting; and
• Website (www..com).
2019 highlights
300+ investor meetings
throughout Europe and
North America.
Presented at 12 investor
conferences globally.
Further links
A clear and compelling
investment case.
Read more on page 04
A sustainable business model
driven by our purpose.
Read more on page 16
Significance
We have a desire and
responsibility to make a positive
contribution to civic society. We
believe in the value of working
together with our communities
and supporting charities and local
community groups. Helping
communities thrive and prosper
is important to us as a business.
How we engage
• Staff volunteering;
• Global and local event
sponsorship; and
• GPN’s Sports
Nutrition School.
2019 highlights
€625,000 raised for Breast
Cancer Ireland across Ireland
and the US.
20,400 participants in GPN’s
education programme focusing
on sports nutrition.
Further links
Raising money for global
and local causes.
Read more on page 47
GPN’s industry leading Sports
Nutrition School.
Read more on page 47
44
 > Strategic Report
Sustainability
How we add value
Impacted by
Driven by
Our strategic pillars
Our purpose
To deliver better
nutrition for every
step of life’s journey.
The views of our
stakeholders
Understanding
key issues
through effective
engagement
with employees,
customers, suppliers
and investors.
Our values
Bringing our values to life
Our People Our Society Our World Our Supply
Chain
The customers’
champion
Performance matters
Showing respect
Find a better way
Winning together
Employee numbers
7,385
Total Group employees.
Employee engagement
score
72%
Total Employee engagement
from employee survey.
Food safety
97%
Adoption of new food safety
certification requirements in
2019.
Water usage
-19%
Reduction in water use
intensity since base year
2015.
Our Sustainability Vision
We are a responsible business generating
economic, environmental and social value.
Our ambition is to embed sustainability in
our strategy, creating value for all
stakeholders.
Our Sustainability Strategy
To advance our purpose and vision through
an integrated and phased sustainability
programme, which will strengthen our
business for the future.
Outcomes
Sustainability Business Model
Showing respect
We are a responsible business seeking
always to generate economic, environmental
and social value. Our sustainability strategy is
formulated to deliver on our ambitions for the
business and advance our purpose and
vision through an integrated and phased
sustainability programme. Respect is the
core value underpinning this strategy. Central
to showing respect is an understanding that
our future growth is founded on developing
and rewarding our employees, delivering
on the highest standards in food safety and
quality, reducing our environmental impact,
optimising our safety performance and
having a positive social and economic impact
on our communities.
’s approach to sustainability focuses
on four key pillars: Our People; Our Society;
Our World; and Our Supply Chain.
The  Corporate Responsibility Council
(CRC) and its framework allows us to measure
and publicly report against our commitments.
This supports continuous improvement and
practice change where necessary. When the
framework was first established, we focused
on our 2020 goals. Our focus will now turn to
the next phase of strategy development and
target setting, to 2030 and beyond. Our
materiality review in 2019 combined with our
partnership with Carbon Trust on target
setting and value chain mapping ensure that
our new strategy will be informed by global
scientific evidence and the targets being
deployed in our sector.
Michael Patten
Group Human Resources
and Corporate Affairs Director
45

Our People Our World
Our Society Our Supply Chain
Employee engagement score
72%
Proud of ’s products
82%
Total Recordable Incident Rate
(TRIR)
1.89
12% improvement versus 2018
United Nations SDGs most
relevant to 
Our Vision
To develop the talent, culture and values of ,
within an inclusive framework that protects and
develops our people, respects the wider community
and upholds international human rights.
’s people are our most important
resource. Their energy, expertise, integrity
and passion underpin our strategy and
potential. ’s people strategy is to
unlock the full potential of our people and
our culture.
Global employee base
In 2019, total Group employees, including
Joint Ventures, increased to 7,385 people
based in 34 countries.  Performance
Nutrition (GPN) had 2,115 employees during
the year.  Nutritionals (GN) employed
2,427 people during the year including the
addition of 295 from Watson. Our Joint
Ventures had 2,843 employees in 2019.
Culture and engagement
In 2019, the ‘Our ’ roadshow
extended its global reach and saw our
Group MD Siobhán Talbot and members of
the Group Operating Executive visit 29 sites
across the US, Europe and Asia Pacific,
conducting 36 townhall meetings and
interacting directly with more than 3,000
employees across the Group. Recognition
was a key focus of the roadshow events,
with more than 120 awards presented to
employees and teams across the Group,
recognising their commitment to our values
in action.
Workforce engagement
In line with the new UK Corporate
Governance Code, in 2018 the Board agreed
that Non-Executive Director Donard Gaynor
would assume responsibility for workforce
engagement. During 2019, Donard engaged
with a broad representation of the workforce
at townhall meetings and regional and
market visits where he accompanied various
members of the  leadership team.
Furthermore, he reviewed the results of the
Your Voice engagement survey and will be
involved in providing strategic input to key
initiatives arising from the survey findings.
Listening to our people
Your Voice Engagement Survey
Our people are fundamental to delivering
success for  and we are committed
to fostering a culture where our employees
are motivated, empowered and supported
to perform to the best of their ability.
Listening to and acting on employee
feedback is a fundamental part of our
‘Showing Respect’ value and the feedback
from previous ‘Your Voice’ surveys led to a
number of significant learning and
development, and engagement initiatives
being implemented across .
The Your Voice survey conducted by Glint
in January 2020, shows that engagement
levels remain satisfactory in line with industry
benchmarks and that pride in ’s
products and services among our
employees remains strong. In addition,
most  employees feel safe in their
workplace and feel comfortable being
themselves at work. Insights from the recent
survey will continue to inform our ways
of working, engagement strategies and
leadership development programmes to
make sure that  continues to be a
great place to work. Areas for improvement
identified in the survey include developing
career pathways, improving organisational
agility and enhancing communications
delivery across the organisation.
Employee engagement scores
Contributing to the success of 
80%
know how they contribute to ’s success
Comfortable to be themselves
78%
agreed with the statement ‘I feel comfortable
being myself at work’.
Meaningful work
77%
feel the work they do is meaningful.
46
 > Strategic Report
A diverse and inclusive 
Creating and sustaining a diverse and
inclusive culture is core to our purpose. In
2019, we continued to develop our policy
framework to make  a place where
every employee has the freedom to succeed
regardless of age, status, gender, ethnicity
or any other attribute. In 2019, a Diversity
& Inclusion strategy working group was
established with representatives from each
part of the business, with a mandate to
develop ’s strategy in this area.
Our Group Finance Director is sponsoring
this work at Executive level and the Group
expects to deliver its recommendations
during 2020. We also marked initiatives
including International Women’s Day,
Pride and World Mental Health Day in 2019.
Talent and Performance
In 2019 our talent centre of excellence
continued to focus on anticipating and
responding to the talent needs of the
organisation, particularly in relation to
leadership development. Across the
organisation, more than 1,200 leadership
development training days took place,
including ‘Leading the  Way’ and
‘Reverse Mentoring’.  now operates
a suite of development programmes for
all leadership levels across the Group.
In 2019, the Group also completed a
comprehensive talent and succession
review, our organisation and people review
(OPR), which assesses succession bench
strength and emerging issues in our talent
planning. This year the OPR covered 1,275
positions across the Group.
In addition, GN undertook several talent
development initiatives including developing
over 100 leaders in First Line Supervisor
Training Programme, continuing to cultivate
early talent through graduate and intern
hiring and structured rotations and
developing career pathways and
competency models for our product
management, R&D and HR teams.
In GPN, work across functions and regions
was undertaken, centred on developing
engagement and communication skills to
create high performing teams and building
a stronger culture.
Pure Ambition Graduate Programme
In 2019 we embarked on a review of our
early career talent programme to ensure that
it meets the changing needs of our future
organisation. We engaged with internal and
external stakeholders, benchmarked against
other organisations and gathered insights
from current and former associates. The
output of this process was the development
of a new global early career talent
framework aligned to the needs of our
organisation, which will be rolled out in 2020.
More than two-thirds of graduates stay with
the organisation for five years or more after
the completion of the graduate programme,
according to our most recent review.
Gender equality
The Board and  Operating Executive
are committed to gender equality. During
2019 analysis of gender representation and
gender pay was undertaken. Insights and
recommendations were presented to the
Board and  Operating Executive.
Further work in this area will continue to
ensure proactive monitoring and
management for equitable gender
representation and pay.
Parental benefit
In 2019  enhanced parental leave
benefits for all employees in the US and also
implemented improvement to parental leave
entitlements in Ireland.
Anti-bribery and corruption
 does not tolerate bribery and
corruption in any form. Our policy is
summarised in our Anti-Bribery and
Corruption Policy which states that bribery,
corrupt payments and any other forms of
unethical business practice are strictly
prohibited. The policy is available on our
website: www..com
Total employee gender split
68%
Men
32%
Women
Number of employees by age
45%
Millennials
(born between
1980-1996)
5%
Generation Z
(born between
1997-2012)
36%
Generation X
(born between
1965-1979)
14%
Baby boomers
(born between
1946-1964)
Health and Safety (H&S)
In 2019, we continued to enhance our H&S
reporting standards, with all sites now
reporting in a single, standard global
platform. The H&S Leadership Team
delivered group-wide standards, including
the launch of a -wide ‘Root Cause
Analysis’ module, and a standardised risk
assessment tool, ‘Job Safety Analysis’. The
application of these tools will enhance our
ability to detect and eventually prevent
workplace risks that could result in injury,
and drive practical solutions.
Our Total Recordable Incident Rate (TRIR)
for the plc, excluding JVs, improved by 12%
at 1.89 incidents per 200,000 hours worked,
versus 2018 (2.15 incidents per 200,000
hours). Our Group-wide TRIR for 2019 was
2.32. All  sites which missed their
targets have been reviewed, and in 2020
will have improvement plans in place, with
bi-annual reviews by our Corporate
Responsibility Council (CRC).
Sustainability continued
Health & Safety
Vision
To safeguard the health, safety and wellness
of employees, customers and our
community, in pursuing ‘Zero Harm’.
2019 Performance
–
–  improved TRIR by 12% 2019
versus 2018
–
– Underlying Root Cause Analyses (RCA)
and priority sites action plans in place
–
– 100% of Group locations (excluding
recent acquisitions) are now reporting
on our common H&S global reporting
platform
–
– Roll-out of global policies, Risk
Assessment, and a global registry for
Health & Safety RCA
–
– Increased depth of data trending on
incident types, locations, categories
driving focused improvements
2020 targets
–
– To integrate newly opened/acquired sites
into our global reporting standards and
programmes (Michigan, Watson)
–
– To log and track all priority sites’ H&S
improvement plans in our global
reporting platform
–
– To continue to drive down injuries with a
10% reduction in TRIRs at leading sites
47

Supporting local communities
€1m+
contributed to community causes
in 2019.
Breast cancer research
€625k
raised for breast cancer research
across three locations.
GPN’s educational programme
20,400
participants engaged in GPN’s
Sports Nutrition School (SNS).
United Nations SDGs most
relevant to 
Our Vision
To have a positive social and economic impact on our
communities through the promotion of health and
wellbeing at all stages of life’s journey.
Our People Our World
Our Supply Chain
Caption:  employees who participated in the
inaugural Great Pink Run in Chicago.
Health and wellbeing
 supports the physical, nutritional
and mental health of our people through
health and wellbeing programmes, including
health checks, the provision of sports
facilities and nutritional and healthy lifestyle
education. In 2019, more than 50 sites
across ’s global operations, including
new colleagues from Watson and SlimFast,
took part in our largest ever Workplace
Wellbeing day.
Community support
 continued its long tradition of
supporting local communities through
focused partnerships. In North America,
 Nutritionals continued its work with
local communities with the 25th Annual GN
Charity Golf Tournament raising $215,000
for local charities, bringing the total amount
raised to US$2.5 million since 2003.
In Ireland, we continued our relationship with
the GAA through our sponsorship of the
Kilkenny and Wexford intercounty teams.
Our local community sponsorships included
the Kilkenny Arts Festival and food festivals
Savour Kilkenny and the Waterford Festival
of Food.
Education initiatives
GPN’s Sports Nutrition School is an industry
leading educational programme designed
to immerse participants in the science of
sports nutrition. This year 185 education
sessions were experienced by over 20,400
consumers, customers and employees
across EMEA, LAPAC and North America.
In addition, Optimum Nutrition launched a
new online nutrition education programme
designed specifically for fitness
professionals and coaches. ‘Optimum
Nutrition for Health and Performance’ is
an Association for Nutrition certified course
and is approved for continuous professional
development points from leading fitness
professional bodies such as the Register
of Exercise Professionals and Chartered
Institute for the Management of Sport and
Physical Activity. The course addresses the
most common nutrition queries and myths
circulating in the industry and is delivered
by PhD level sports nutritionists and
experienced lecturers. To date over
1,200 fitness professionals have enrolled
in the course.
 continued its partnership with
Breast Cancer Ireland (BCI) in 2019. The
Great Pink Run series was expanded to add
a third event which took place in Chicago’s
Diversey Harbor in October, followed by the
Dublin and Kilkenny races. More than 12,000
people, including almost 500 
employees, participated in the three events,
which raised a record €625,000 for Breast
Cancer Ireland and US charity partners
Research-A-Cure and the Ludwig Center
at the University of Chicago. Proceeds from
this year’s events will support research into
metastatic breast cancer.
In Ireland, circa. 100  employees
took on the Two Peaks Challenge for BCI,
climbing Carrauntoohill and Mangerton
mountains in a charity challenge. The Two
Peaks Challenge,  300 Cycle and
Pink Bales initiative raised a further €90,000
for BCI.
Breast Cancer Ireland
Our Society
48
 > Strategic Report
Responsible sourcing
’s supply chain spans procurement
of raw materials, packaging, transport and
other services globally. In 2019 we updated
our Group-wide procurement policy and
brought together a Group-wide procurement
team. The Group procurement policy sets
our expectations of our suppliers and follows
the principles of ethical business set out in
the  Code of Conduct.
 requires our suppliers to be
compliant with the laws, regulations and
social customs of the countries in which
they operate and with all human rights,
labour and environmental health and
safety regulations. As we have evolved
our non-financial policies so too have
we increased our requirements from
our suppliers.
Safe products for every step
of life’s journey
We continued our commitment to excellence
in food safety and quality in 2019, marking
four years since setting up of our centre of
excellence, the Quality Leadership Team
(QLT) in 2015. The  Quality System
(GQS) – our food safety code of practice –
has continued to develop new policies and
standards to address areas relevant to our
businesses. In 2019, we launched a ‘Merger
and Acquisition Due Diligence’ standard,
aimed at ensuring our prospective and
newly acquired businesses integrate into the
 family and apply the same principles
we have developed for our existing
manufacturing sites. We completed audits to
the 12 core policies of the GQS (completing
nearly 250 such assessments in this review
cycle) to drive improvement in topics central
to food safety. We completed 95%
of all planned audits, and have an 88%
proficiency rate for these audits in 2019. In
addition, a Group-wide policy for sustaining
a globally recognised quality and food safety
certification at all our manufacturing sites
has achieved 97% compliance. We
continued the ‘Investigative Excellence’
initiative to drive a culture of learning and
prevention. This policy requires a global
logging of all potentially significant quality
incidences, and requires a completed Root
Cause Analysis (RCA) of acceptable quality,
and a post-case review/close out. In 2019
we have achieved a 97% success rate on
this programme, and added a regular forum
to review/discuss RCA amongst the expert
community across the Group. 2019 saw a
Group-wide effort to aggregate and improve
standards to deliver infant nutrition
excellence that will carry forward into 2020.
This reinforced our commitment to
excellence in this highly important category
of the most sensitive consumers. Like our
H&S programmes, we will further embed our
global GQS reporting and action plans/
tracking into our single global platform.
Our value chain
Dairy is in our DNA but as our business
has grown in ambition so too has the scope
and complexity of our value chain including
non-dairy ingredients and products. In 2019
 worked with the Carbon Trust to
map our value chain. The value chain project
is integral to developing our future ambition
as we move beyond the current
sustainability 2020 targets while ensuring
our focus is on the most material impact
areas upstream and downstream. The
project delivered a detailed mapping,
including our own operations (Scope 1 & 2),
and 15 of the most material Scope 3
categories (outside our operations) as
recommended by the Carbon Trust based
on the Greenhouse Gas (GHG) protocol.
Unsurprisingly, given our sector, the most
material aspect in transitioning to a low
carbon economy, is our dairy sourcing, with
over 89% of total carbon emissions in our
value chain attributable to purchased milk.
This data reaffirms our long-standing
prioritisation and dedication to on-farm
improvement. Our operations account for
4% of total value chain carbon emissions.
Whilst relatively speaking a much smaller
factor, packaging (2.1% of total value chain
emissions) is a further material consideration
for the next phase in our strategy.
Sustainable dairy supply
We are committed to playing a meaningful
role in the transformation of our food system,
for the betterment of our planet, our people
and our communities. Historically we have
reported on our efforts to drive on-farm
improvement for sustainable dairy production.
The value chain project underscores the
importance of this effort whilst the scale of the
challenge in global decarbonisation means
we won’t be alone.  has been a
thought leader in the development of
sustainability programmes and driving best
practice in partnerships including with Bord
Bia (Irish Food Board) and the Innovation
Center for US Dairy. In 2019 that work
continued, with the global demands pushing
everyone in the supply chain for an
acceleration of ambition and effort.
Sustainability continued
Food safety
97%
Adoption of global food safety
certification requirements in 2019.
Milk pool
8bn
litres of milk produced annually by
5,000 milk suppliers.
Environmental stewardship
52%
of Idaho milk suppliers completed
the Environmental Stewardship
assessment in 2019.
Our Vision
To sustainably source all raw materials in line with
the principles of ethical business set out in the
 Code of Conduct.
Our People Our World
Our Supply Chain
Our Society
United Nations SDGs most
relevant to 
49

Farm programmes
Sustainable US milk production
 has supported the US Farmers
Assuring Responsible Management (FARM)
since its inception when the primary focus
was animal welfare. The FARM programme
has expanded in scope to include
Environmental Stewardship (FARM ES).
FARM ES is a model that calculates dairy’s
carbon and energy footprint. The FARM ES
module requires a web or application entry
on farm across 46 input areas and
generates the GHG and energy use intensity
and changes over time. As with Origin
Green, Ireland’s national sustainability
programme, FARM ES gives farmers the
tools to track progress, identify potential
efficiency gains and assess against best in
class local and national performance. We
continue to work with our farmer suppliers
on the roll out of FARM ES with 52% of
Idaho suppliers completing a FARM ES
assessment in 2019.
In 2019  Nutritionals, having been
engaged as a thought leader through the ES
committee of the Innovation Center for US
Dairy, adopted the US Dairy Stewardship
Commitment. The Commitment allows US
dairy to document and demonstrate
progress in material sustainability areas. By
signing the Commitment,  has
agreed to follow a rigorous set of standards
to demonstrate positive impact. FARM ES
allows US dairy aggregate data and track
against progress. In 2019  played a
leadership role in the deployment of a
US-wide processor reporting tool. The
reporting is rolling out with the majority of
US dairy processors and co-operatives
already committed to uploading their
environmental data. When viewed in its
entirety the FARM ES tool allied to the dairy
processor reporting allows US dairy to plot
and report progress against an ambitious
direction on emissions to ensure the sector
meets the demands of consumers and the
overriding imperative of carbon reduction.
Ireland Origin Green
All ’s Irish dairy suppliers are
accredited to Origin Green. The programme
involves audits as part of the Sustainable
Dairy Assurance Scheme (SDAS), ensuring
highly sustainable and responsible sourcing
in our supply chain. Our milk advisory team
works closely with suppliers on milk quality,
sustainability and farm development as well
as planning for the future in terms of
finances, expansion and succession
planning.
In 2019,  announced the third Open
Source Future Farm Programme – an Irish
Government (Teagasc) and  Ireland
knowledge transfer pilot programme. A key
objective of this Pilot – which is based
around 11 demonstration farms – is to help
farmers implement changes to ensure that
their environmental footprint is in line with
the aims of the national Climate Action Plan.
It will also provide strong insights for other
farmers on streamlining their farming
operations to deliver lean management
practices, whilst also supporting the health
and wellbeing of the farmer.
Caption: Paul Gagliano, (centre) EVP of Sales SlimFast, accepts the award from Matt Musgrave, Walmart Buyer OTC,
and Annie Walker, VP OTC Merchandising at Walmart HQ, Arkansas.
SlimFast awarded the prestigious
‘Supplier of the Year’ award
by Walmart.
Walmart serves millions of customers every
week, providing convenient access to food,
health and wellness products and general
merchandise. For more than forty years,
SlimFast has been a key brand in the
Walmart weight management portfolio
through its ‘Original’ and ‘Advanced’
product lines.
In recent years, the success of the
partnership has been enhanced by new
SlimFast brand innovations including the
launch of the Keto product range and new
formats which have captured the attention
of consumers seeking convenience in their
nutrition choices. Sustained growth across
a number of Stock Keeping Units (SKUs)
in the category have been a further feature
of the relationship.
Supply chain excellence is about moving
the right items at the right time by the most
efficient means possible and Walmart is
recognised as a global leader and
continuous innovator in this space.
Working closely with Walmart’s replenishment
teams, SlimFast focuses on providing
accurate and timely data on forecasting as
well as filling orders on time and in full (OTIF) to
continuously exceed Walmart’s requirements
for on-shelf availability.
In 2019, the success of the partnership was
recognised by Walmart naming SlimFast as
its Supplier of the Year (Consumables), at its
annual Supplier Summit in Rogers,
Arkansas.
Accepting the award on behalf of SlimFast,
Paul Gagliano, Chief Customer Officer at
SlimFast said: “Walmart is a key retail
partner for SlimFast and we are proud to
work closely with the team, helping them
to better serve their customers every day.”
Supplier of the Year
50
 > Strategic Report
A solid foundation
Over the first four years of our Group-wide
sustainability programme we have focused
on the most material aspects within our
operation. Our focus was on building a
strong culture, the systems to support
in-depth analysis, and a governance model
to oversee progress against targets. Since
we began Group-wide data collection in
2015 we have hit the targets we set on water
use and waste and recorded progress on
energy use reduction. Taking account of the
Carbon Trust recommendations we
deployed Intelex, the Environmental Health
& Safety management software. Today all
operating sites are reporting on water, waste
and energy use. Intelex gives us improved
dashboards on progress against targets and
allows in-depth analysis of the data behind
the material focus areas by site or Business
Unit. For example, combusted energy is
analysed by the type of energy, the nature of
the source, background conversion factors
relevant to the location and on-site energy
production. As a result, we were able to
build a carbon footprint with the oversight
of the Carbon Trust. This granularity in data
is a critical pillar to evolving a new strategy
in 2020.
KPIs
We have targets for water, energy and waste.
In addition to these Group-wide metrics each
business unit has its own internal targets for
its most material elements for the same time
period of 2015 to 2020.
Water
19.3%
reduction in water use intensity
over 2015 base year.
Energy
4.6%
reduction in energy use intensity
over 2015 base year.
Waste
Zero
waste to landfill for all GPN sites.
Our Vision
To protect the environment through strong,
responsible stewardship.
Our People Our Supply Chain
Our Society Our World
United Nations SDGs most
relevant to 
Waste
In 2018 we reported that GPN had achieved
its target of zero waste to landfill for all
operating sites. That ambition was set in
2016 and was delivered ahead of schedule.
 Nutritionals specialty operation sites
are embarking on a similar ambition in 2020.
Water
Our ambition was to reduce water use intensity
by 8% from our 2015 baseline. In 2019 we
achieved a water use intensity reduction
of 19% over the 2015 baseline.
Energy
Energy use intensity has been reduced by
4.6% over the 2015 baseline.
The reduction in intensity for both water
and energy is behind that reported in 2018.
However, the water reduction remains
significantly ahead of target whilst energy
continues to show a reduction over 2015.
Greenhouse gases
In 2018 we reported our carbon footprint
across all operating sites. That effort was
supported by the oversight of the Carbon
Trust and our consultants Harbor
Environmental and Safety. Our 2019 Carbon
footprint shows Scope 1 (direct emissions
from our operations) and Scope 2 (indirect
emissions generated by the electricity
consumer and purchased by )
emissions, which resulted in a 1.5%
reduction on our 2018 footprint. The value
chain project conducted in 2019 shows
the total carbon footprint beyond our
operations. Two years of GHG emissions
data, allied to continuous improvement in
Intelex functionality and analysis, provides
insights on our most material considerations
for reducing our Scope 1 and Scope 2
emissions. In the first instance, we are
pursuing certified renewable electricity,
with 54.6% of our group wide grid electricity
certified as renewably sourced in 2019.
CO2
emissions by scope (tonnes)
64%
Scope 1
275,381
36%
Scope 2
152,103
CO2
emissions by Business Unit
(tonnes)
GN
108,034
GPN
11,976
GI
170,244
GCL
36,492
SWC
100,739
Sustainability continued
51

Our 2019 Carbon Disclosure
Project (CDP) score
Carbon Disclosure Project (CDP) provides a
globally recognised, transparent and line up
independently evaluated disclosure system
that enables companies to assess, disclose
and manage their environmental metrics.
A number of our customers request that
 submit to CDP. We, in turn, benefit
from the insights on our performance. In
2019  submitted a Group-wide
response to CDP’s climate change
(including supplier engagement) and
water questionnaires. In the interest of
transparency, we made our disclosure
available to investors on the CDP portal.
Overall we continue to demonstrate a solid
performance, however, our climate change
score is below the sector average. A score
of D on climate change acknowledges that
we disclose, but to move to a higher ranking
CDP requires further evidence of
coordinated action and implementation of
best practice, which is exactly what is being
developed in our 2020 strategy refresh.
Specifically CDP feedback calls out the
need to accelerate our ambition on emission
reduction initiatives and target setting. We
are confident our central strategic projects
including science-based targets and value
chain mapping, position us to improve
relative to the sector average by directly
addressing the limiting factors of the CDP
result. With our current strategy coming
to its conclusion 2020 we will leverage
these insights to the next phase to 2030
and beyond.
Climate change Water
Supplier
engagement
rating
 2019 D B- B-
Sector average 2019 C B C
We will continue to pursue a renewable
energy procurement focus as 36% of
our footprint is attributable to purchased
electricity. As part of our 2019 science-
based target project with Carbon Trust we
have mapped our future energy reduction
projects across the Group against the
reductions we would need to implement
to meet the global ambition of keeping
temperature rises well below 2.0 degrees
Celsius by 2050.
2020
With phase one of our strategy completed,
in 2019 we built the cornerstones for the
next phase of our sustainability strategy.
The materiality study combined with target
exploration and value chain mapping
conducted with the Carbon Trust inform
the priority areas for our ambition to 2030
and beyond. In 2020 we will develop a new
strategy, taking into account the scientific
information from these projects, targets
being set in our supply chain, and, working
with the Carbon Trust, where we fit in the
global effort to meet our ambition.
Non-Financial reporting statement
 aims to comply with the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings
and groups) Regulations 2017. The table below is designed to help stakeholders navigate to the relevant sections in this Annual Report
to understand the Group’s approach to these non-financial risks. Many of our policies can be viewed on www..com.
Reporting Requirement Policies and standards which govern our approach Risk management and additional information
Environmental matters
• Environmental sustainability
• Supply chain and responsible
sourcing and on-farm sustainability
• Our world and climate action – pages 50 and 51
• Site Compliance risk and Environmental, Health
and Safety regulation risk management – page 46
• Our Supply chain – page 48
Employee matters
• Culture and engagement
• Group Code of Conduct
• Whistleblowing policy
• Diversity and inclusion
• Corporate Responsibility Council – page 44
• Group Code of Conduct – page 48
• UK Corporate Governance Code – page 73
• Diversity and inclusion – page 46
Social Matters
• Education initiatives
• Community support
• GPN Sports Nutrition School and other
education initiatives – page 47
• Community and charity support – page 47
Human Rights
• Anti-Slavery and human
trafficking statement
• Available on www..com
Anti-Bribery and Corruption
• Group Code of Conduct and
Anti-Bribery and Corruption policy
• Available on www..com
Description of principal risks and impact of business activity
• Principal risks – pages 52 to 59
• Potential impact of Coronavirus – page 10
Description of the business model • Business Model – pages 16 and 17
Non-Financial KPIs
• Key Performance Indicators – pages 18 and 19
• Our Sustainability – pages 44 to 51
DISCLOSURE INSIGHT ACTION
52
 > Strategic Report
Risk Management
The Board recognises that the effective management of risk can
only be achieved by instilling a culture of open communication in
combination with our formal risk management processes. The Board
is committed to the continued investment in and development of our
people, processes and systems to help enable us to anticipate and
address changes to the Group’s risk environment, that may impact
the delivery of the Group’s strategic objectives, as they emerge.
A robust risk management framework is critical to correctly identify,
assess, prioritise and manage risks. The Board has implemented
appropriate governance structures to ensure that there is clarity of
ownership and responsibility for risk management throughout the
Group. An overview of the Group’s risk management and internal
control framework is outlined in the diagram below.
The Group did encounter a range of challenges in 2019, particularly in
our non-US markets, where the impact of some of our principal risks
and uncertainties could not be fully mitigated. This was most evident
in relation to the geopolitical and market risks encountered where the
impact of increased tariffs, currency volatility, route-to-market
challenges and local market competition impacted our non-US growth.
Forecasting challenges in some of these markets, where the availability
of robust market data is limited, impacted our ability to respond
effectively. The Audit Committee and the Board have discussed these
impacts and the required corrective actions in detail to ensure that we
are better positioned in 2020 and onwards to protect ourselves from the
challenges encountered in 2019. These actions include a fundamental
re-assessment of GPN’s routes-to-market and innovation strategy, a
significant supply chain simplification and SKU rationalisation project,
focused cost reduction initiatives and brand and eCommerce
investments to reinvigorate our growth strategy. The Board believes
that these improvement initiatives, combined with our eCommerce and
continued brand investments, provide a solid platform for future growth.
Our risk management framework
Our risk management framework outlines the key stakeholder
responsibilities. It is designed to ensure that there is input across
all levels of the business to the management of risk. While risk
management is a regular agenda item at Board meetings, the Board
also conducts a detailed consideration of the impact of the Group’s
Our Principal Risks
and Uncertainties
Our strategic priorities
Our governance
How we are organised and managed
How we provide assurance
Risk awareness Risk ownership Risk monitoring Risk reporting
The Board
Our Purpose Our Values Our Code
Grow performance
nutrition
Sustain and drive
nutritional solutions
Organic and
acquisitional growth
Develop talent,
culture and values
Group
Operating Executive
Audit
Committee
Group
Internal Audit
Group Senior Leadership Team
Oversight, identification, assessment and mitigation of risk
at business unit level and across key Group functional areas
Oversight, identification, assessment and mitigation of risk at Group level
What we stand for
Our system of Risk Management and Internal Control
53

principal risks, including emerging risks, during the annual
Group strategy process. This is designed to ensure that the Board
understands both the key risks existing within the business and newly
emerging risks together with the methods by which these risks are
being managed. The Board and management use the same process
to assess and manage risks within our material Joint Ventures
as it does for the wholly-owned areas of the Group. We hold board
positions in all such entities. The Board’s risk assessment was
completed at the December 2019 strategy meeting and refreshed at
the February 2020 meeting to ensure that the Group’s principal risks
and uncertainties, as outlined on pages 54 to 59, effectively describe
the nature and extent of the Group’s principal risks.
Following the additional mitigation measures introduced to address
the challenges encountered in 2019 the Board is satisfied that its risk
management and internal control processes are effective, however,
as with all practices, a mindset of continuous improvement is required.
The Board also considered its obligations in relation to providing
both the annual Going Concern and Long-term Viability Statements.
Its review and conclusions in this regard are outlined on page 55.
Our risk management process
Our risk management process supports the delivery of the Group’s
strategy by managing the risk of failing to achieve business objectives.
Group Internal Audit (GIA) prepare regular Group summary risk
management reports based on information submitted by management
throughout the year. These reports include:
• An analysis of key Group risks in terms of impact (assessed over
the following 12 months within defined monetary terms), likelihood
of occurrence (using defined probabilities of occurrence) and
velocity (speed at which the impact of the risk could materialise);
• A summary of the key movements in the identified risks, with a
particular focus on highlighting new or emerging risks;
• Management action plans (MAPs) to manage risk exposures; and
• An overview of the broader organisational and business risks.
The Group Operating Executive reviews these reports regularly during
the year. The Audit Committee and the Board perform at least a
bi-annual review, with interim updates received from management
on significant issues.
Group Senior Leadership Team (SLT)
The management team of each business segment and the Group
functional leads are required to maintain and submit a risk register.
The register ensures consistency of approach in the reporting of risks
to Group defined guidelines. By focusing our risk management system
on the early identification of new or emerging risks, it enables us to
conduct a detailed consideration of the existing level of mitigation and
the management actions required to either reduce or remove the risk.
Where the reduction or removal of the risk is not possible, the Group
formulates a MAP to respond to the risk should the risk materialise. The
quality and consistency of SLT risk reporting is supported by a number
of other monitoring and reporting processes during the year including:
• Group strategy process and Board review of key financial and
operational performance, including detailed finance, capex
planning and expenditure reviews;
• Bi-annual control self-assessment and management representation
letter processes;
• Post-acquisition completion and significant Capex project reviews;
• Risk focused GIA plan; and
• The externally assessed  Risk Management System (GRMS)
reviews which assess operational risks across the Group and the
internal  Quality System (GQS) reviews.
Board and Audit Committee oversight
The Board has overall responsibility for determining the nature and extent
of the significant risks it is willing to take in achieving the Group’s strategic
objectives. This is achieved by carrying out a robust assessment of
the Group’s principal risks, including emerging risks, identified in our risk
register process. The focus of the Board during such reviews is to
ensure that the Group residual risk position is within its risk appetite.
The Group Operating Executive and the Audit Committee, supported by
GIA, are entrusted with ensuring that appropriate measures are in place
to validate the strength of internal controls and risk mitigation. In 2019
the Audit Committee continued its approach to developing a deeper
awareness and insight into the Group’s principal risks by receiving
ongoing updates from senior executives and detailed presentations
from Group functional leads including the:
• Group Head of  Business Services and IT;
• Group Head of Tax; and
• Group Head of Quality and Safety.
These presentations typically provide the opportunity to review the
Group’s risk appetite statements in relation to the principal and emerging
risks being examined. Due to the adverse market performance during
the year, the Audit Committee and Board also received market
performance updates from senior executives including a detailed
overview of the GPN operating performance, particularly the GPN
non-US business and think! brand performance. The Group forecasting
process and related management action improvement plans were
also reviewed in detail and will continue to be a focus area in 2020.
Brexit
In line with the guidance issued by the Financial Reporting Council
(FRC), the Board has considered the risks and uncertainties in the
political and economic environment arising from Brexit and the
potential impact of those risks and uncertainties on the Group.
The UK formally left the EU on 31 January 2020 and has entered a
transition period. The transition period maintains the UK’s current
relationship with the EU making the short term position to
31 December 2020 largely unchanged. From a medium to longer term
perspective, the Brexit process has now entered the trade negotiation
phase where the future relationship remains uncertain. The Board
is alert to the risk of additional costs, such as higher tariffs, following
the negotiations and has the position under review. A significant
revision to macro-economic performance in our European markets,
including the UK, could impact our operating performance.
As a consequence of the increased risks, the Board and the Brexit
cross-divisional and joint venture committee has focused on ensuring
that the potential impacts to the Group are clearly understood and
that we are equipped as well as possible to address the challenges
that may arise across a broad range of issues including operational
risks, currency risks, regulatory, raw material inflation and tariff
exposures. Key impacts to the Group include effectively planning for
and managing raw material and finished goods movements into and
out of the UK; and cross border product flows. Mitigation measures
include items such as:
• Amending our EU storage and co-manufacture arrangements;
• Understanding potential customer and supplier export certificate,
customs inspection and logistic requirements;
• Review of potential alternative manufacturing and supply
strategies; and
• Tax team monitoring of international tax legislation developments,
particularly in the UK.
Note 6(d) to the Financial Statements outlines the exceptional Brexit
related costs incurred in 2019.
54
 > Strategic Report
Risk Management continued
Identifying our principal risks and uncertainties
The Directors have carried out a robust assessment of the Group’s
principal risks, including those that may threaten our business model,
future performance, solvency or liquidity. Key risks are identified based
on the likelihood of occurrence, potential impact and velocity on the
Group using the process outlined on pages 52 and 53. The Board
fully recognises that many risks do not exist in isolation and that one
or more risks may crystallise at the same time which could increase
the impact to the Group, as experienced in 2019. The interactions and
relationship between such risks are discussed and considered by the
Board throughout the year.
Risks are reported on a residual risk basis and represent a snapshot
of the Group’s principal risk profile. This is not an exhaustive list
of all of the risks faced by the Group, there may be other risks and
uncertainties that are not yet considered material or not yet known to
us and this list will change if these risks assume greater importance
in future. Likewise, some of the current risks will drop off the key risks
schedule as management actions are implemented or changes in the
operating environment occur.
Changes to risks in the year
• Re-classifying acquisition/integration risk from being a strategic
risk to an operational risk. This re-classification recognises that
a key Group focus in 2019 and for the year ahead in 2020 is the
successful integration of the SlimFast and Watson acquisitions.
• The potential impacts of the new coronavirus strain are broad and impact
a number of our principal risks. A project team is in place to assess
these threats and ensure we have appropriate incident and
response plans in place. Above all, we will maintain our commitment
to the health and safety of our employees and customers by putting
people first.
• Other risk trend movements during the period are indicated by the
arrows in the table above.
New risks
• Digital transformation risk was added to recognise our GPN
direct-to-consumer (D2C) ambitions and the IT infrastructure
development required to support our objectives. A significant
technology failure or data leak may negatively impact
these ambitions.
Emerging risks
• Climate change risk was added as an emerging risk recognising
the scientific consensus that action is required to address the
impact of greenhouse gases on rising global temperatures and
our role in protecting the environment.
Principal risks and uncertainties
Key risk factors and uncertainties with the potential to impact
on the Group’s financial performance in 2020 include:
• Market disruption – Increasing competition, tariffs, currency
volatility and channel shifts contributed to decreased sales volumes
in 2019, particularly within our GPN international markets. While the
disruption threat remains in some of our markets we have reacted
appropriately by working to better manage our routes-to-market,
channel mix and by implementing a SKU rationalisation project to
reduce the tail of under-performing SKUs. The continued execution
of these programmes and effective implementation of our GPN
focus areas in 2020 is important to ensuring a positive overall
impact on revenue and margin;
• Economic, industry and political – As an international business we
operate in many countries and currencies where changing economic
conditions can impact us. In 2019, this was evidenced by the
negative impact from the introduction of trade tariffs. While the risk
from this element of the geopolitical climate appears to be reducing
following positive US/China trade negotiations, other uncertainties
such as the nature of the UK’s future trading relationship with the
EU post the Brexit transition phase is still to be determined;
• Customer concentration – While from a strategic perspective the
Group aims to build strong customer relationships with major
customers, the loss, or material disruption with one or more of these
customers, or a significant deterioration in commercial terms, could
materially impact profitability. It can also expose the Group to credit
exposure and other balance sheet risks. The Board is focused on
utilising available mitigation to limit such exposures where possible;
• Talent management – The investment in building our global talent
pool and D2C capability may be negatively impacted by a failure
to attract and retain top talent; and
• Supply chain – The ability of governments and medical agencies
to contain the spread of the COVID-19 virus will be important in
preventing unexpected supply chain disruptions which could result
in restrictions on the importation of key raw materials and/or
negative impacts on our international sales channels. While we
Risk Categories
Strategic/External
Mainly external risks associated with our
operating environment
Market Disruption
Economic, Industry and Political
Customer Concentration
Financial
Our financial status and internal controls
Taxation Changes
Technological
The systems we use to drive the business
and the data they hold
Digital Transformation
Cyber Security and Data Protection
Operational/Regulatory
The people and processes we use to power
our business model
Talent Management
Supply Chain

Product Safety and Compliance

Health and Safety

Acquisition/Integration
Emerging
Emerging or developing risks with the
potential to impact in the longer term
Climate Change
Risk
Categories
Strategic/
External
Operational/
Regulatory
Financial
Emerging
Technological
The Board has updated the way our risks are categorised. Our approach recognises the external risks associated with our operating environment,
which are typically considered and managed through our strategic processes, and the mainly internal risks associated with our people, processes
and systems which are managed through our internal controls. Emerging risks with the potential to impact our longer term success are also
considered to ensure we plan appropriately to respond to them over time.
55

have appropriate safety stocks in place for our core raw materials
a prolonged impact to the supply chain would have negative
consequences from both a supply and pricing perspective.
Going concern
’s business activities, together with the main factors likely
to affect its future development and performance, are described in
the Strategic Report on pages 1 to 59. After making enquiries the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for a period of at least
12 months from the date of approval of the Financial Statements.
The Group therefore continues to adopt the going concern basis
in preparing its Financial Statements. In reaching this conclusion
the Directors have had due regard to:
• Available cash resources, cash generation from operations, committed
bank facilities and their maturities which taken together provide
confidence that  will be able to meet its obligations as they fall
due. Further information on its bank facilities is provided in Note 25 to
the Financial Statements and outlined in the Group Finance Director’s
review on pages 36 to 41; and
• ’s financial risk management policies are described in Note 29
to the Financial Statements, the nature of its business activities and the
factors likely to impact our operating performance and future growth.
Long-term viability statement
Assessment of prospects
In accordance with the Code and Listing Rule 6.1.82 (3) of Euronext
Dublin, the Directors have assessed the viability of the Group and its
ability to meet its liabilities as they fall due over a period extending to
2022. This period was chosen as it is aligned to the Group’s growth
strategy and ambitions as set out at the Group’s Capital Markets Day in
Chicago in May 2018 and refreshed at the Board budget review sessions
in December 2019 and early 2020. The Board considers this the most
appropriate period to assess the Group’s prospects taking into account
its current financial position, the Group’s strategy and business model
and the potential impact arising from the principal risks and uncertainties.
Factors considered in assessing long-term prospects include:
(a) The Group’s current position
• Strong Group financial position with good cash generation.
• While we experienced significant challenges in 2019, particularly
with the GPN non-US business, the Board believe that global
market trends in human nutrition are positive and will underpin the
execution of the Group’s strategic ambition.
• Strong market positions in the wholly-owned segments GPN and GN
and robust joint venture business models.
• SlimFast and Watson acquisitions are performing well.
• Key long-term customer relationships, brands with strong equity
and leadership positions in ingredients.
• A team of talented and committed people, focused on the delivery
of Group targets in line with our Group purpose, vision and values.
See the Finance Director’s review on pages 36 to 41 for more detail.
(b) The Group’s strategy and business model
• Clearly articulated business model with well-defined and
communicated Group growth targets.
• Clear priority of returning GPN to top line growth and driving
earnings to 2022 from our core platforms of GPN and NS.
• Evaluating further opportunities to return our margin profile to
historical levels by leveraging our eCommerce capabilities and
reducing our cost base to better position ourselves for future
growth in line with our guided targets.
• Ongoing review to identify priority areas to reset and transform the
business in 2020, and further refine to 2022 in line with the strategic plan.
• Delivery of the defined strategic approaches will be focused on
growing market share where we have market leading capabilities,
underpinned by a simplification of the business across product
portfolios, routes-to-market and geographies.
• Ambition to grow through both organic investment and acquisition
activity within a framework of clear capital allocation priorities, as
demonstrated by our acquisitions and scale investments in dairy
processing conducted through robust joint venture models.
• Clear focus and prioritisation on the development of talent which
remains central to our strategy.
See the Group’s business model and strategy on pages 11 to 17 for
more detail.
(c) Principal risks related to the Group’s business
See pages 56 to 59 for a detailed description of each of the Group’s
principal risks, related mitigation measures and 2020 focus areas.
Assessment of viability
The Directors’ assessment of the Group’s viability has been made with
reference to the 2019 performance, the principal risks and uncertainties
including emerging risks facing the Group and how these are managed
within the Board’s risk appetite as detailed on pages 54 to 59. The
Directors carried out a robust assessment of the consolidated financial
forecast for the current year and financial projections for future years to
2022 during the strategy and budget review session in December 2019
and subsequent meetings in early 2020.
The Board reviewed the assessment of the Group’s prospects made
by management, including:
• The development of a rigorous planning process, the outputs of
which comprise a strategic plan, a consolidated financial forecast
for the current year and financial projections for future years
covering the period of the plan;
• A comprehensive review of the strategic plan as part of its annual
strategy review, with regular monitoring on the achievement of
strategic objectives taking place at each Board meeting;
• Assumptions are built at both Group and business unit levels and
are subject to detailed examination, challenge and sensitivity
analysis by management and the Directors; and
• A consideration of how the impact of one or more of the principal
risks and uncertainties, outlined on pages 56 to 59, could
materially impact the Group’s performance, solvency or liquidity.
These considerations include external factors such as the impacts
of lower economic growth, particularly in our key areas of operation;
unfavourable currency exchange rate movements, principally the USD/
euro rate; increased regulations; and internal factors such as the
strategic plan under-delivering; the loss of a key production site; or a
major food safety related event. These considerations also took into
account additional mitigating measures available to the Group,
including the ability to reduce capital expenditure and the potential
availability of additional debt facilities. The Board is satisfied that
sufficient financial headroom exists to address the potential negative
impacts arising from the events considered.
Conclusions
Having considered these elements and the challenges experienced in
2019, the Board assessed the prospects and viability of the Group in
accordance with the UK Corporate Governance Code requirements.
The Board has a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over the
period of the assessment. In reaching this assessment the Board has
also considered the impact of the new coronavirus strain and the
on-going Brexit uncertainties as outlined on pages 53 and 54. The
Board does not expect any reasonably anticipated coronavirus or
Brexit-related outcomes to impact the Group’s long-term viability or
ability to continue as a going concern. The Board, in considering its
dividend policy for the years to 2022, believes it will have sufficient
distributable reserves to pay dividends. The Board assesses the
Group’s key financial metrics, liquidity position and projected cash
flows before declaring interim and proposing final dividends.
56
 > Strategic Report
Principal Risks and Uncertainties
Link to Strategic Priorities (see pages 12 to 15)
Grow performance nutrition Organic and acquisitional growth
Sustain and drive nutritional solutions Develop talent, culture and values
Risk Potential Impact Mitigation
Strategic/External
Market Disruption   
Increasing competition across
certain channels through high
promotional activity, competitor
product innovation and channel shifts
provides an ongoing challenge.
Potential adverse effect on the Group’s
financial performance if we fail to adapt
successfully where and when required
to meet market challenges.
Failing to recognise or obtain accurate and
relevant competitive and environmental
intelligence may result in the adoption of
incorrect business strategies.
The Board considered the major trends, such as clean labelling,
impacting our businesses as part of our strategic review processes.
We invest in research and development expenditure focused on
value-added and customer-specific solutions, and invest in promotional
activities where required.
GN focuses on differentiating its capabilities from competitors through
innovation to enable it to be the partner of choice for nutritional and
functional solutions across both the dairy and non-dairy segments.
Economic, Industry
and Political
Our performance is influenced by
global economic conditions, consumer
confidence and the stability of the
markets in which we operate.
Deterioration in economic growth or
consumer confidence, significant currency
movements, political instability or civil
disturbance may impact performance and
the achievement of growth targets.
After a difficult 2019 our strategy has been reset around our core
performance nutrition brands and our consumers with a simplification
of the business underway across product portfolios, geographies
and processes.
These actions together with the effective implementation of our GPN focus
areas positions us well to regain revenue and profitability growth.
Customer
Concentration
The Group benefits from close
commercial relationships with
a number of key customers.
The loss or material disruption with
one or more of these customers, or a
significant deterioration in commercial
terms, could have a material impact
on Group profitability.
Pricing risks associated with the growth
of the online channel.
The Group has developed strong relationships with major customers
by focusing on superior customer service, quality assurance and
cost competitiveness.
The Board regularly reviews its exposure to individual customers and
considers the impact of acquisitions where relevant.
Credit exposure is actively reviewed and managed including the use
of credit insurance where possible.
Financial
Taxation Changes
The Group’s tax strategy may be
impacted by legislative changes
to local or international tax rules.
The Group may be exposed to additional
tax liabilities.
The Group employs a team of tax professionals to support the Group
in ensuring compliance with legislative requirements globally.
We constructively engage with tax authorities where appropriate and
we engage advisors to clarify tax legislation to ensure that we achieve
compliance with relevant tax law across the jurisdictions in which
we operate.
Technological
Digital Transformation
The Group is focused on implementing
an effective digital strategy to improve
competitiveness and enhance
customer service.
A failure to adopt new technologies may
impact our targeted growth.
Executive commitment to ensuring the full benefits of newly acquired
digital capabilities are maximised.
Significant investment by the Group in ensuring market-leading
technologies are deployed by the right talent to drive growth across the
eCommerce landscape.
Cyber Security and
Data Protection
The Group is dependent on robust IT
systems and infrastructure for most of
our principal business processes
which may be impacted by the
significant growth of cyber threats.
An adverse event could result in significant
reputational damage due to the potential
loss or unauthorised access to sensitive
financial, personal and commercial
information such as the Group’s intellectual
property (IP) and that of our customers.
There is a dedicated Group IT Security team in place to limit IT risks.
We have policies in place regarding the protection of both business and
personal information, as well as the use of IT systems and applications by
our employees.
We have systems in place (including ongoing audit activities) to monitor
compliance with relevant privacy laws and regulations.
Detailed IT Internal Audit work programme to identify operational
IT weaknesses.
Regular security scanning across all eCommerce sites with penetration
testing completed on all new sites.
57

Risk Trend
Developments in 2019 2020 Focus Areas
Increased local market competition, channel shifts, trade tariffs and route-to-market
challenges contributed to a difficult 2019, particularly in our non-US GPN markets.
This was compounded by the forecasting challenges encountered in some of our
non-US markets where the availability of robust market data was limited.
The North American market remains competitive for ready-to-eat formats and the
2019 rebranding from thinkThin to think! has reinvigorated our growth in this category.
The challenges encountered in 2019 led the Group to focus on resetting the
business in 2020. This reset will include the simplification of our product portfolio
and geographic footprint, and implementation of our GPN focus areas as we work
to reverse the 2019 revenue decline and aim to regain top line momentum.
We will focus on developing key consumer insights and trends in all areas of the
business to assist in improving our GPN forecasting processes.
Matching these insights to our refined approach to innovation and internal
capabilities will be integral to our stated growth ambitions.
In our non-US markets this will include reshaping the GPN organisation to focus
on the performance nutrition category and the ON brand.
Macroeconomic and global trade uncertainty increased in the first half of 2019,
partly as a result of the geo-political climate where the continued introduction of
trade tariffs combined with currency fluctuations and competitive markets
contributed to a very difficult year in the GPN business across many of its non-US
markets. This uncertainty stabilised in H2 2019 as US/China relations improved and
the timing of Brexit became more clear.
Management, in combination with external advisors, conducted a detailed
assessment of key market trends and the implications for Group performance and
strategic objectives with a number of corrective actions in progress.
The uncertainty surrounding the UK’s future trading relationship with the EU
post Brexit is still to be determined and the associated risks to the Group will be
maintained under review.
We will continue to invest in developing in-house capabilities to assess trends in
key market areas ensuring accurate and relevant data is available to the Board and
management teams to support decision making.
The Board has reviewed its exposures to individual customers and channels as part
of the strategic review process.
We continually assess the potential impact of channel shifts by consumers and the
financial strength of our customer base.
Tariff headwinds on raw materials contributed to a margin decline where the
increased costs were not passed on in full to customers.
Building key customer partnerships through strategic capacity expansions and
product supply opportunities, particularly with our core GN customers.
The Group is re-focusing its innovation pipeline in GPN and using enhanced market
research to drive targeted investment.
Monitoring our customer credit exposures and balance sheet risks and utilising
available mitigation to limit the risks where possible.
The Audit Committee received a detailed management presentation during the year
on the status of current tax authority reviews, our tax structures and controls and
the ongoing management of our current operations. The Committee was satisfied
with the outcome of the various tax authority reviews which concluded in 2019 with
no material issues arising.
Management will continue to monitor potential further developments in
international tax legislation while continuing to ensure compliance with
current legislative requirements.
Continued pro-active engagement with tax authorities in all material jurisdictions.
A leading eCommerce platform was selected following a detailed supplier risk
assessment process.
Project plan in place to transform our digital capabilities, increase our speed to
market, reduce costs and improve customer experience.
Completion of the phased migration to our preferred eCommerce platform.
The Group is focused on ensuring the successful execution of our D2C ambitions
which are a key enabler to the delivery of our growth objectives.
Appropriate IT controls will continue to be implemented to ensure the security
of our core platform.
Control processes further developed to limit the risk of system intrusion
and/or data loss with a particular focus on the EU General Data Protection
Regulation requirements.
Vulnerability scans implemented across all eCommerce sites.
Fraud and cyber security exercises completed.
Focus on ensuring the effective integration of our IT systems and the related
Group monitoring controls post-acquisition.
Continued focus on monitoring the evolving threats and raising awareness
of potential cyber-attack threats such as phishing and social engineering.
Protection of IP is a key focus area for the cross-functional teams involved including
Group Legal, IT and the relevant commercial, operational and R&D teams. We will
continue to ensure our IP is protected through appropriate IT security measures,
patent applications and related control procedures.
Increasing Stable Decreasing
58
 > Strategic Report
Principal Risks and Uncertainties continued
Link to Strategic Priorities (see pages 12 to 15)
Grow performance nutrition Organic and acquisitional growth
Sustain and drive nutritional solutions Develop talent, culture and values
Risk Potential Impact Mitigation
Operational/Regulatory
Talent Management
The Group is dependent upon our global
talent to deliver best in class portfolio
management, operational excellence,
science-based innovation and strong
customer relationships.
A failure to retain, attract and/or develop
key talent, particularly in emerging areas
of talent need or areas such as D2C and
robotics, will impact on our ability to deliver
sustainable value for all our stakeholders.
A remuneration policy is in place with clear links to our strategic objectives.
This policy includes a balanced approach to short and long-term
incentives and is aimed at mitigating weak performance in any one year
and utilising appropriate retention tools for key individuals.
The Group has implemented strong recruitment processes, effective
HR policies and procedures, robust succession management planning
and a range of talent management initiatives.
Strong graduate recruitment and mentor programmes are in place to
support the Group’s succession planning processes.
Supply Chain
The risks include principal ingredient
supply not achieving an appropriate
balance between sustainable milk
supply and cost and the inability to
contain the spread of the coronavirus
with resulting unexpected supply
chain disruptions.
Milk availability and pricing can vary from
quarter-to-quarter and year-to-year with
resulting impacts on production levels and
input costs.
The coronavirus could result in restrictions
on the importation of key raw materials
and/or negative impacts on our
international sales channels.
The majority of our dairy activities are in joint venture partnerships with
established, robust business models to manage this risk in our dairy
operations.
Our milk and procurement strategy teams work proactively with the US
patron supplier base to ensure the business remains competitive in its
supplier offerings to underpin long-term sustainable supply including the
provision of non-pricing value-added initiatives.
Appropriate short-term safety stocks in place for our core raw materials,
while we assess alternative sources of supply.
Product Safety and
Compliance   
A breakdown in control processes may
result in contamination of products
resulting in a breach of existing food
safety legislation and potential
consumer or employee illness.
Reputational damage, regulatory penalties
or restrictions, product recall costs,
compensation payments, lost revenues
and reduced growth potential.
The sudden introduction of more stringent
regulations such as additional labelling
requirements may also cause
operational difficulties.
Suitably qualified and experienced staff are employed within the Group.
The  Quality Leadership Team (QLT) has established governance,
benchmarking and KPI measurement processes to ensure the Group is
tracking to global standards and best practice.
The Group also ensures appropriate product liability insurance is maintained.
Health and Safety
The risk of an escalation in the spread of
the new coronavirus strain or non-
compliance with building and fire code
regulations and/or zoning restrictions
resulting in a loss of capacity or closure
at a major site.
Health and safety risks to our people and
the wider public, reputational damage,
regulatory penalties and an inability to
service customer requirements due to
capacity restrictions or plant closure.
The  Corporate Responsibility Council (CRC) monitors progress
against our key health and safety, food safety and quality and
environmental objectives. The CRC, which includes two members of our
Group Operating Executive, helps ensure an effective framework, Group
policies and clear objectives are in place and that corrective actions are
implemented in a timely manner where required.
The Group monitors overall safety and loss prevention performance
through the independently assessed  Risk Management
System (GRMS).
Acquisition/Integration
The anticipated benefits of acquisitions
may not be achieved if the Group fails to
conduct effective due diligence,
complete the transaction or properly
integrate the acquired businesses.
Below expected performance of the
acquired business and the diversion
of management attention to integration
efforts could result in significant
value destruction.
The Board approves the business case and funding requirements
for all significant investments.
The Group has acquisition integration processes in place to monitor the
performance of acquired businesses and implement corrective actions.
Acquired entity management teams are typically strengthened by the
transfer of experienced  managers, which assists in increasing
the efficiency of integration efforts.
Mandatory post-acquisition completion and significant capital expenditure
project reviews are conducted, with regular Audit Committee updates.
Emerging
Climate Change
The risk of non-compliance with
regulations and/or the Group’s vision to
protect the environment through
responsible stewardship.
Changes in policy, regulation, technologies
and weather conditions, may impact the
Group or influence consumer preferences.
Failure to comply with incident
reporting regulations may cause
reputational damage.
The Board recognises the scientific consensus that action is required to
address the impact of greenhouse gases on rising global temperatures
and has ensured that:
• Our operating sites are reporting on water, waste and energy use.
• The Group-wide sustainability programme focuses on building a
strong culture, systems and governance model to oversee progress.
59

Risk Trend
Increasing Stable Decreasing
Developments in 2019 2020 Focus Areas
Given the strong economic performance in the key markets in which we operate and
our 2019 underperformance we have a resulting increased talent retention risk.
Continued execution of our people strategy which aims to sustain a high-performing,
values driven and respectful culture.
Our HR transformation programme continued its development particularly through
the global talent centre of excellence and IT platform development work. This,
combined with focused management development programmes, helps to enhance
the mobility and capabilities of our workforce.
In early 2020 we conducted a Group-wide employee survey. In H1 2020 we will
perform a detailed analysis of the results as part of our employee engagement
programme and develop appropriate action plans.
Continued development of our approach to increasing diversity across the
organisation, including our talent pipeline, new acquisitions and new geographies.
Continue to embed our purpose, vision and values across all levels of the Group
through defined training programmes.
Structurally in many areas of our business our models for the purchase of milk are
significantly aligned with our end product pricing. However, that protection is not
absolute. In particular, the relative pricing dynamic between base and high-end
whey can have a significant impact on GN dairy margins, when our ability to pass
pricing volatility to suppliers is constrained by competitive pressures.
Monitoring the potential impacts of the coronavirus, particularly on the import of key
raw materials and/or negative impacts on our international sales channels and taking
effective action where required.
On-going engagement with our supply base in Ireland and the US to ensure
sustainability of supply at a level of pricing that is both commercial and competitive.
Embedding our global reporting tool, core  Quality Standards (GQS) and
system of third party audits/certifications across the Group.
Enhanced our Group-wide standards particularly in relation to contract
manufacturing qualification and acquisition integration.
97% adoption of global food safety certification requirements in 2019.
Maintaining standards as we optimise our supply chain globally by encompassing
a mix of owned and contract manufacture facilities.
Working to continuously improve our operations while reducing our environmental
impacts in a cost effective and sustainable manner.
Ensuring new regulatory requirements and emerging issues are captured with
appropriate team training on the revised requirements.
Worked to embed our Group policies and procedures through our global health
and safety reporting platform, improved performance dashboard reporting and
CRC oversight.
Continued the Group commitment to pursuing a vision of ‘Zero Harm’.
Close monitoring of our accident rates with a clear focus on driving effective root
cause analysis across the Group.
We recognise that the uncertainty of the new coronavirus strain may create fear
and anxiety for our employees. We took decisive action by temporarily closing
our GN China plant in Suzhou, restricting travel to China and are maintaining regular
communications with our employees, many of whom are working from home,
to help ensure the safety of our people.
Even if the coronavirus is contained and suppressed in the coming weeks, we will
assess whether any business activities have not gone as planned and make the
required improvements to limit any future exposures.
Monitor evolving health and safety regulatory requirements.
The Board considered and approved the acquisition of Watson, a US-based
non-dairy ingredient solutions business, which completed in February 2019.
Management focused on ensuring the 2018 acquisition of the SlimFast brand and
the Watson acquisition were effectively integrated into the Group’s operations.
The Group continued to participate with its strategic joint venture partners in the
progression of a number of dairy-related investments.
The Audit Committee assessed the impairment review of goodwill and intangibles as
outlined on page 78.
The Board will continue to review the Group’s overall portfolio as part of its strategic
review processes.
Acquisition integration and post-acquisition review processes will be monitored
through Board and Audit Committee reviews.
The Audit Committee will continue to review the impairment testing methodology,
inputs, assumptions, sensitivity analysis and results of any material business units
performing below expectations.
The Board will continue to evaluate acquisition opportunities to broaden the
Group’s portfolio.
The Group continues to invest in energy efficiency advancements, carbon reduction
and emission management programmes.
The value chain project conducted in 2019 has mapped out the total carbon
footprint across all our operating sites and helped us to identify the key areas of
potential improvement.
Continued on-farm sustainability and animal welfare programmes in Ireland.
In 2020 the Board will develop an enhanced internal strategy, taking into account
scientific information, targets being set in our supply chain and, by working with
Carbon Trust, identify our responsibilities in the global effort to reduce greenhouse
gases and protect our environment.
Driving continuous improvement with our US farm suppliers through the US Farmers
Assuring Responsible Management environmental stewardship programme.
60
 > Directors’ Report
Corporate Governance Report
Introduction from the Chairman
Dear Shareholder,
On behalf of the Board, I am pleased to introduce the Group’s
Corporate Governance Report for 2019.
2019 was a difficult year for the Group. Our  Nutritionals (‘GN’)
and Joint Venture (‘JV’) businesses delivered good performances
however  Performance Nutrition (‘GPN’) experienced a
number of challenges in specific international markets outside the US.
Driving our agenda forward with an eye on the long-term sustainable
success of  has been, and will continue to be, the Board’s
primary objective. It is therefore essential for the Board to be highly
engaged to support and challenge senior management. A strong and
robust corporate governance structure is integral in supporting this.
The Board is committed to ensuring that the Group has the best
strategy, structure, people and culture in place to support the delivery
of the Group’s long-term success.
Stakeholder engagement
’s success is dependent on the Board taking decisions for the
benefit of our shareholders while at the same time having regard for
all of our stakeholders. The 2018 edition of the UK Corporate
Governance Code renewed the emphasis on stakeholder
engagement and on pages 42 to 43 and page 67 you will find further
information on how we have engaged with all of our stakeholders this
year. The Board is committed to understanding the views of all of
’s stakeholders to inform the decisions that we make.
We continue to strive for transparency for shareholders and other
stakeholders and we are committed to ensuring that the Group’s
corporate governance arrangements are effective and continue to
evolve with best practice. This report explains ’s governance
structure and how the Company has applied the principles and
complied with the provisions of the 2016 edition of the UK Corporate
Governance Code, and highlights the main areas of focus for the
Board during 2019.
Areas of focus for the Board
In 2019, the Board devoted a considerable amount of time to
reviewing, with senior management, the challenges which impacted
specific areas of the business. These areas will continue to be
a priority for the Board over the next 12 months. The Board also
focused on strategy, Board renewal, succession planning and
talent management.
Strategy
We take seriously our responsibility for ensuring the Group is capable
of delivering on our strategic objectives and operating in the best
interests of our stakeholders over the long-term.
Our purpose is at the core of our strategy which aims to drive
shareholder returns through a focus on operational excellence and
organic growth by deepening customer engagement, transforming
our operating model and improving asset utilisation.
Board renewal and Committee changes
There were a number of changes to the composition of the Board
during the year which are discussed in detail in the Nomination and
Governance Committee Report on pages 80 and 82.
From a governance perspective the most significant changes were the
reorganisation of the composition of the Board and its Committees
following the appointment of three new Independent Non-Executive
Directors, John Daly, Richard Laube and Mary Minnick, on 1 May
2019. They brought a wealth of experience from prior executive and
non-executive leadership roles within various multinational consumer
health, food and beverage businesses. Unfortunately, due to family
and personal reasons, Richard Laube has indicated that he will retire
as Non-Executive Director effective 28 February 2020. I thank Richard
for his invaluable contributions to the Board during his short tenure.
A process to identify a new Independent Non-Executive Director is
currently underway.
Paul Haran retired from the Board as Non-Executive Director and
Senior Independent Director on 1 May 2019 and was succeeded by
Dan O’Connor as Senior Independent Director from that date. I thank
Paul for his commitment, integrity, probity and valuable contributions
to the Board during his tenure and wish him every success for
the future.
“Good corporate governance is
critical to promoting long-term
sustainable success for the
benefit of our shareholders,
and for building and
maintaining relationships
with stakeholders.”
Martin Keane
Group Chairman
61

Non-Executive Directors, Jer Doheny and Eamon Power, have
confirmed that they will not be seeking re-election at the 2020
Annual General Meeting (‘AGM’). I thank both Jer and Eamon
for their commitment and support during their respective tenures.
In accordance with the amended and restated Relationship
Agreement dated 2 July 2017 (the ‘Relationship Agreement’) between
the Company and  Co-operative Society Limited (the
‘Society’), the number of Directors nominated by the Society (the
‘Society Nominee Directors’) will reduce in 2020 from eight to seven
and to six in 2022.
Also, in accordance with the Relationship Agreement, a process
to identify my successor as Chairperson has commenced.
A sub-committee of the Board, led by Dan O’Connor, Senior
Independent Director, has been established. External advisors have
been appointed to assist the sub-committee in the selection process.
Priorities for the Board’s Committees in 2019
During 2019, the Audit Committee’s key priorities included reviewing
the Group’s forecasting processes, exceptional items, impairment
reviews and related financial statements disclosures, ensuring the
effective management of cyber-security risks, the development of
the Group’s direct-to-consumer strategy and compliance with the EU
General Data Protection Regulation (GDPR). Further details on these
and other matters dealt with by the Audit Committee are set out on
pages 74 to 79.
In accordance with our triennial cycle of Board evaluations, during
2019 the Nomination and Governance Committee commissioned
an externally facilitated evaluation of the Board, the purpose of which
was to review and further improve the Board’s performance and to
identify any development needs. The review was undertaken by
Independent Audit. Taking into account the significant Board changes
during 2019, it was decided to undertake two successive external
reviews to ensure a consistent approach to development. The 2019
review was questionnaire based. The 2020 review, scheduled for
mid-2020, will be interview based and include observation of Board
meetings. Independent Audit will conduct full interviews with each
Director and the key contributors to the Board and Committee
meetings and review progress against the 2019 agreed actions.
Further information on the process of Independent Audit’s
appointment and a full description of the 2019 Board evaluation
process and results can be found on page 71.
Following a 21% vote, at the 2019 AGM, against Resolution 5,
the 2018 Directors’ Remuneration Report, the Chairman of the
Remuneration Committee led an in-depth consultation with
shareholders to better understand and address their concerns.
Details of the outcome of this consultation were published on
18 October 2019 and are summarised in the Directors’ Remuneration
Report on page 85.
During 2019, the Remuneration Committee also undertook a
remuneration advisor selection process and Korn Ferry was
appointed as advisors. Further details on the shareholder consultation
and engagement process and the remuneration advisor selection
process can be found in the Directors’ Remuneration Report on
page 87.
Looking ahead
The Board is committed to maintaining the highest standards of
corporate governance across the Group to support the delivery
of our strategy.
I encourage all shareholders to vote their shares in respect of the
resolutions, as recommended in the Circular, to be considered at
our AGM which will be held in Lyrath Estate Hotel, Lyrath, R95 F685,
Kilkenny on 22 April 2020, even if you are unable to attend in person.
This will enable us gain a better understanding of your views.
I also welcome questions from shareholders either via our website
www..com, by e-mail at ir@.ie or in person at the AGM.
Finally, I again thank my colleagues on the Board and all our
employees for their continued support, commitment and passion
for our business.
Martin Keane
Group Chairman
UK Corporate Governance Code
The Group has adopted the Irish Corporate Governance Annex (2010) and the UK Corporate Governance Code collectively known as the ‘Codes’.
A fundamental part of the way the Board conducts its business is embedding the main principles of the Codes and embracing best practice across
all parts of our organisation. Details of where the Codes can be accessed are included on page 73.
The Company is reporting in accordance with the 2016 edition of the UK Corporate Governance Code (the ‘2016 Code’) and has also incorporated many of the
changes introduced by the substantially revised 2018 edition of the code (the ‘2018 Code’) although these provisions only apply to the Company in respect of
its next annual report.
The Board considers that the Company has, throughout the year ended 4 January 2020, complied fully with the provisions of the Codes with the exception of B.1
(Composition of the Board of Directors) and D.2.1 (Minimum of three members of the Remuneration Committee) of the 2016 Code. The current composition of the
Board reflects the historical shareholding and relationship of the Company with the Society which is documented in the amended and restated Relationship
Agreement dated 2 July 2017 the provisions of which were approved by shareholders at the Extraordinary General Meeting held on 22 May 2017. Between 2012
and 2017, the Society and the Board agreed on a number of changes impacting the composition and size of the Board over the period 2016 to 2022 which will
reduce the number of Directors nominated by the Society on the Board from the current level of eight (previously 14) to six (details of which are set out in the
Nomination and Governance Committee Report on page 81). The Board will continue to work closely with the representatives of the Society to further the
interests of the Group. The Board is satisfied that the current composition and size of the Board (which has received shareholder approval) is justified in
our particular circumstances. The membership of the Remuneration Committee fell to two following the retirement of Paul Haran on 1 May 2019 until the
appointment of John Daly and Mary Minnick on 20 June 2019 brought the membership up to four. The Remuneration Committee held one meeting during
this period but did not make any material decisions.
A detailed description of how we have applied the principles of the Codes is set out in the following pages including the Audit, Nomination and Governance
and Remuneration Committee Reports.
62
 > Directors’ Report
Corporate Governance Report continued
Board of Directors and Senior Management
Group Chairman, Vice-Chairmen, Non-Executive Directors nominated
by  Co-operative Society Limited (the ‘Society’)
Executive Directors and Group Secretary (Group Operating Executive)
Martin Keane
Group Chairman and Non-Executive
Director nominated by the Society
Age: 64
John Murphy
Vice-Chairman and Non-Executive
Director nominated by the Society
Age: 57
Patrick Murphy
Vice-Chairman and Non-Executive
Director nominated by the Society
Age: 61
Term of office
Date of Appointment: 24 May 2006
Tenure: 13 full years
Term of office
Date of Appointment: 29 June 2010
Tenure: Nine full years
Term of office
Date of Appointment: 26 May 2011
Tenure: Eight full years
Skills, competence and experience
Martin Keane was appointed Group Chairman on
1 June 2018 having previously served eight years
as Vice-Chairman. Martin farms at Errill, Portlaoise,
Co. Laois and has completed the ICOS Co-operative
Leadership Programme. Martin is a Director of Ornua
Co-operative Limited and former President of the
Irish Co-operative Organisation Society Limited.
Skills, competence and experience
John Murphy was appointed as a Vice-Chairman on
2 June 2017. John farms at Ballinacoola, Craanford,
Gorey, Co. Wexford. John is Vice-Chairman of the
National Dairy Council and has completed the
University College Cork Diploma in Corporate
Direction.
Skills, competence and experience
Patrick Murphy was re-appointed as a Vice-Chairman
on 1 June 2018 having previously served two years
as a Vice-Chairman from 2015 to 2017. Patrick farms
at Smithstown, Maddoxtown, Co. Kilkenny and is a
Director of Farmer Business Developments plc.
Siobhán Talbot
Group Managing Director
and Executive Director
Age: 56
Mark Garvey
Group Finance Director
and Executive Director
Age: 55
Michael Horan
Group Secretary
Age: 55
Term of office
Date of Appointment: 1 July 2009
Tenure: 10 full years
Term of office
Date of Appointment: 12 November 2013
Tenure: Six full years
Term of office
Date of Appointment: 9 June 2005
Tenure: 14 full years
Skills, competence and experience
Siobhán Talbot was appointed as Group Managing
Director on 12 November 2013, having been
appointed Group Managing Director Designate on
1 June 2013. She was previously Group Finance
Director and her role encompassed responsibility for
Group strategic planning. She has been a member
of the Group Operating Executive since 2000 and
the Board since 2009 and has held a number of
senior positions since she joined the Group in 1992.
She is also a Director of the Irish Business
Employers’ Confederation (IBEC) and was appointed
as a Non-Executive Director of CRH plc effective
1 December 2018. Prior to joining , she
worked with PricewaterhouseCoopers in Dublin and
Sydney. A fellow of Chartered Accountants Ireland,
Siobhán graduated from University College Dublin
with a Bachelor of Commerce and Diploma in
Professional Accounting.
Skills, competence and experience
Mark Garvey was appointed as Group Finance
Director on 12 November 2013. Prior to joining
 he held the position of Executive Vice
President and Chief Financial Officer until 2012 with
Sara Lee Corporation, a leading global food and
beverage company. Mark also held a number of
senior finance roles in the Sara Lee Corporation in
the US and Europe and prior to that he worked with
Arthur Andersen in Ireland and the US. A fellow of
Chartered Accountants Ireland and the American
Institute of Certified Public Accountants, Mark
graduated from University College Dublin with a
Bachelor of Commerce and Diploma in Professional
Accounting and has an Executive MBA from
Northwestern University, Illinois.
Skills, competence and experience
Michael Horan was appointed as Group Secretary
on 9 June 2005, having previously held the position
of Group Financial Controller since June 2002. He
joined the Group in 1998 as Financial Controller of
the Fresh Pork business in Ireland. Michael
previously worked with Almarai Company Limited in
Saudi Arabia and BDO Simpson Xavier. A fellow of
Chartered Accountants Ireland, Michael graduated
from the National University of Ireland, Galway
with a Bachelor of Commerce.
63

Board of Directors and Senior Management
Senior Independent Director, Non-Executive Directors
Dan O’Connor
Senior Independent Director
and Non-Executive Director
Age: 60
Patrick Coveney
Non-Executive Director
Age: 49
John Daly
Non-Executive Director
Age: 63
Term of office
Date of Appointment: 1 December 2014
Tenure: Five full years
Term of office
Date of Appointment: 30 May 2014
Tenure: Five full years
Term of office
Date of Appointment: 1 May 2019
Tenure: Less the one full year
Committee Membership
Audit Committee/Nomination and Governance
Committee (Chair of both)
Remuneration Committee (Member)
Committee Membership
Audit Committee/Nomination and
Governance Committee (Member)
Committee Membership
Remuneration Committee (Member)
Skills, competence and experience
Dan O’Connor is currently Chairman of Activate
Capital Limited and International Personal Finance plc.
He is a former Non-Executive Director of CRH plc.
Dan is a former President and Chief Executive Officer
of GE Consumer Finance Europe and a former Senior
Vice-President of GE. He was Executive Chairman of
Allied Irish Banks plc from November 2009 until
October 2010. A fellow of Chartered Accountants
Ireland, Dan graduated from University College Dublin
with a Bachelor of Commerce and Diploma in
Professional Accounting.
Skills, competence and experience
Patrick Coveney is Chief Executive Officer (CEO) of
Greencore Group plc, the leading convenience foods
manufacturer. Prior to becoming CEO of Greencore,
Patrick served as the Chief Financial Officer for
Greencore for over two years. Before he joined
Greencore, Patrick was Managing Partner of
McKinsey & Company in Ireland. Patrick is also
Non-Executive Chairman of Core Media Group. He
holds an M.Phil and D.Phil from New College Oxford
University, where he was a Rhodes Scholar. He also
holds a Bachelor of Commerce degree (First Class)
from University College Cork. Patrick served as
President of the Dublin Chamber of Commerce in
2012, having been a Council member since 2003.
Skills, competence and experience
John Daly currently serves as Chairman of Britvic plc,
a leading soft drinks company, and Vivo Energy plc,
a downstream petroleum company. He is a former
Non-Executive Director of Ferguson plc and G4S plc.
He retired as an Executive Director of British American
Tobacco (‘BAT’) in 2013. Over a 19 year career at BAT,
he held commercial leadership roles in both developed
and emerging markets, culminating in his position as
Chief Operating Officer. Prior to his time with BAT, John
held various roles with Johnson & Johnson, Bristol-
Myers Squibb, Pennwalt Corporation and Schering-
Plough. John holds an MBA from University College
Dublin and a Diploma in Marketing from the Chartered
Institute of Marketing (UK).
Donard Gaynor
Non-Executive Director
Age: 63
Richard Laube
Non-Executive Director
Age: 63
Mary Minnick
Non-Executive Director
Age: 60
Term of office
Date of Appointment: 12 March 2013
Tenure: Six full years
Term of office
Date of Appointment: 1 May 2019
Tenure: Less than one full year
Term of office
Date of Appointment: 1 May 2019
Tenure: Less than one full year
Committee Membership
Remuneration Committee (Chair)
Audit Committee/Nomination and Governance
Committee (Member)
Committee Membership
Audit Committee (Member)
Committee Membership
Remuneration Committee (Member)
Skills, competence and experience
Donard Gaynor retired in December 2012 as Senior
Vice President of Strategy and Corporate
Development of Beam, Inc., the premium spirits
company previously listed on the New York Stock
Exchange, based in Chicago, Illinois. A Fellow of
Chartered Accountants Ireland and the American
Institute of Certified Public Accountants, he joined
Beam Inc. in 2003 as Senior Vice President and
Managing Director – International. Prior to this, he
served in a variety of senior executive leadership
roles with The Seagram Spirits & Wine Group in New
York and was also Audit Client Services Partner with
the New York office of PricewaterhouseCoopers. In
November 2016, Donard was appointed Chairman
of Hazelwood Demesne Limited ‘The Lough Gill
Distillery’ Company.
Skills, competence and experience
Richard Laube was Chief Executive Officer (CEO) of
Nobel Biocare, a Swiss listed medical device business,
from 2011 to 2016. Prior to that, he served as
Executive Board Member of Nestlé SA, from 2005 to
2010 and operationally as CEO of Nestlé Nutrition.
Before Nestlé, Richard served as Executive Committee
member of Roche Holding AG and was operationally
responsible for Roche Consumer Health. Earlier in his
career, he held a range of international management
roles at Procter & Gamble. Richard currently serves as
a Director of Gnubiotics Sciences SA and of Piqur
Therapeutics. He previously served as Chairman of
Atkins Nutritionals Inc. and as an independent board
member of Logitech SA. Richard holds an MA and BA
in Psychology from Boston University.
Skills, competence and experience
Mary Minnick was previously a partner of Lion Capital
LLP, a consumer-focused private equity firm, from 2007
to 2018. Prior to that, she had a 23-year career with The
Coca-Cola Company, where she held a variety of senior
management positions, including Chief Operating Officer
of the Asian region, Division President roles in the Japan,
South Pacific and Asian regions, and ultimately as the
company’s Chief Marketing Officer and Global President
of Strategy and Innovation. She is currently a member of
the boards of Target Corporation and Leo Holdings Corp.
Previously she was a member of the boards of Heineken
NV and Whitewave Foods. Mary holds an MBA from
Duke University and a B.Sc in Business Administration
from Bowling Green State University.
64
 > Directors’ Report
Corporate Governance Report continued
Board of Directors and Senior Management
Non-Executive Directors nominated by the Society
All of the Directors nominated by the Society are full time farmers who have significant experience of the global dairy and agribusiness industry.
Patsy Ahern
Non-Executive Director
nominated by the Society
Age: 62
Jer Doheny
Non-Executive Director
nominated by the Society
Age: 64
Vincent Gorman
Non-Executive Director
nominated by the Society
Age: 63
Term of office
Date of Appointment: 21 June 2018
Tenure: Four full years (over each of his terms)
Term of office
Date of Appointment: 1 June 2018
Tenure: Six full years (over each of his terms)
Term of office
Date of Appointment: 27 June 2013
Tenure: Six full years
Skills, competence and experience
Patsy Ahern farms at Sheanmore, Ballyduff Upper,
Co. Waterford and previously served two full years
on the Board. Patsy has completed the University
College Cork Diploma in Corporate Direction.
Skills, competence and experience
Jer Doheny farms at Upper Tullaroan, Co. Kilkenny
and previously served five full years on the Board.
Jer has completed the University College Cork
Diploma in Corporate Direction.
Skills, competence and experience
Vincent Gorman farms at Ballindrum, Athy, Co.
Kildare. Vincent is also Chairman of Progressive
Genetics Co-operative Society Limited.
Brendan Hayes
Non-Executive Director
nominated by the Society
Age: 59
Eamon Power
Non-Executive Director
nominated by the Society
Age: 65
Term of office
Date of Appointment: 2 June 2017
Tenure: Seven full years (over each of his terms)
Term of office
Date of Appointment: 2 June 2017
Tenure: 16 full years (over each of his terms)
Skills, competence and experience
Brendan Hayes farms at Ballyquinn, Carrick-on-Suir,
Co. Waterford and previously served four full years
on the Board. Brendan has completed the University
College Cork Diploma in Corporate Direction.
Skills, competence and experience
Eamon Power farms at Fethard-on-Sea, New Ross,
Co. Wexford and previously served 13 full years on
the Board. Eamon has completed the University
College Cork Diploma in Corporate Direction.
Composition of the Board
Non-Executive Chairman nominated by
 Co-operative Society Limited
Non-Executive Directors nominated by
 Co-operative Society Limited
Other Non-Executive Directors
Executive Directors
Directors’ tenure on the Board
Less than 3 years
Between 3 and 6 years
Between 6 and 9 years
Over 9 years
65

Senior Management
Group Operating Executive
Jim Bergin
CEO  Ireland
Age: 57
Hugh McGuire
CEO  Performance Nutrition
Age: 49
Term of office
Date of Appointment: 2 July 2017
Tenure: Two full years
Term of office
Date of Appointment: 1 June 2013
Tenure: Six full years
Skills, competence and experience
Jim Bergin was appointed as Director and Chief
Executive Officer (CEO) of  Ireland, a Joint
Venture of the Group, in 2017 having previously been
Director and CEO of  Ingredients Ireland
since 2012. He worked for the Group between 1984
and 2012 and held a number of senior positions
during that time. Jim is also a Director of Ornua
Co-operative Limited. Jim graduated from University
College Cork with a Bachelor of Commerce and has a
M.Sc. in Management Practice from Smurfit
Business School.
Skills, competence and experience
Hugh McGuire is Chief Executive Officer of 
Performance Nutrition. Hugh was appointed to the
Board on 1 June 2013 and served as a Director of
the Company between June 2013 and April 2019.
Hugh joined the Group in 2003 and has been CEO
of Performance Nutrition since 2008. Prior to that he
held a number of senior management roles in the
Group. He previously worked for McKinsey &
Company as a consultant across a range of industry
sectors. Prior to this he worked in the consumer
products industry with Nestle and Leaf. Hugh
graduated from University College Dublin with an
M.Sc. in Food Science. He has a Diploma in Finance
from the Association of Chartered Certified
Accountants Ireland.
Michael Patten
Group Human Resources & Corporate
Affairs Director
Age: 57
Brian Phelan
CEO  Nutritionals
Age: 53
Term of office
Date of Appointment: 11 December 2014
Tenure: Five full years
Term of office
Date of Appointment: 1 January 2004
Tenure: 16 full years
Skills, competence and experience
Michael Patten is Group Human Resources &
Corporate Affairs Director and has responsibility for
Group Human Resources, strategic leadership of the
Group’s global reputation, public affairs and
sustainability agenda. Prior to joining the Group,
Michael was Global Public Affairs Director with
Diageo plc. He previously served with the Group as
Director of Communications. Michael holds a BA in
Communication Studies from Dublin City University
and is an Honorary Life Fellow of the Public Relations
Institute of Ireland.
Skills, competence and experience
Brian Phelan was appointed as Chief Executive
Officer (CEO) of  Nutritionals on 1 June 2013
and served as a Director of the Company between
January 2013 and April 2019. Brian was previously
Group Human Resources & Operations
Development Director (2004 to 2012). He is the
Chairman of  Cheese Limited. Since joining
the Group in 1993, he has held a number of senior
management positions. Prior to this, he worked with
KPMG. He graduated from University College Cork
with a Bachelor of Commerce and is a fellow of
Chartered Accountants Ireland.
66
 > Directors’ Report
What was on the Board’s
agenda in 2019?
The following pages offer some insight into how the Board uses its meetings as a mechanism for discharging its duties, including
the broad range of matters it discussed and debated during the year. It also includes a description of how we engaged with our
key stakeholders.
Each Board meeting follows a carefully tailored agenda agreed in
advance by the Group Chairman, the Group Managing Director and
the Group Secretary. A typical meeting will comprise reports on
current trading, financial and general business performance from the
Group Managing Director and the Group Finance Director, legal and
governance updates from the Group Secretary and a review of the
strategic initiatives, and one or two detailed deep dives into areas of
particular strategic importance. The CEOs of the Group’s two global
growth platforms,  Performance Nutrition (‘GPN’) and 
Nutritionals (‘GN’) generally attend all Board meetings and provide
detailed business and operational reviews of their respective
businesses. Details of the Directors’ attendance at the seven
scheduled meetings that took place during the year can be
found on page 69.
Committee Updates
Throughout the year the Chairmen of the Audit, Nomination and Governance and Remuneration Committees updated the Board on the
proceedings of their meetings, including the key discussion points and any particular areas of concern.
Strategy and Corporate Development
Trading updates
• Undertook a strategic review of retail
market pressures and challenges,
competitor performance and the
implications on trading arising from
these reviews;
• Kept under review operational issues
arising and responses, such as customer
demands, stock availability, supplier
relationships and general systems
operations; and
• Discussed funding requirements for the
next phases of the Group’s strategy.
Strategic initiatives
• Reassessed Group strategic priorities
with a renewed focus on: improved
financial performance, simplification and
de-complexing of the GPN business and
brand strategy and future growth of GN
and JVs;
• Agreed the Group’s strategic KPIs and
key enablers for the two global growth
platforms GPN and GN and our JVs with
regular updates provided throughout the
year; and
• Agreed a significant Group organisational
change programme to be implemented
in 2020.
IT strategy
• Considered the effective management
of cyber security risks;
• Received updates on the Group’s
direct-to-consumer strategy; and
• Considered compliance with
the EU General Data Protection
Regulation (GDPR).
Acquisitions
• Considered and approved the acquisition
of Watson, a non-dairy ingredient
solutions business headquartered
in Connecticut, USA.
Operational and Financial Performance
Budget process
• Considered performance versus the
2019 budget and agreed the budgets for
each of the business segments for 2020;
• Considered actual performance against
the strategic plans and budgets including
implications on long-term performance
and future investments; and
• Reviewed, supported by Internal Audit,
the Group’s forecasting processes,
exceptional items, impairment
reviews and related financial
statements disclosures.
Cash flow and dividend
• Reviewed cash flow, dividend cover and
shareholder returns, taking into
consideration financial performance,
liquidity and credit metrics, and agreed a
dividend increase of 10%, resulting in a
full year dividend of 26.62 cent per share.
Costs
• Reaffirmed the ambition to create
a more efficient cost base and generate
savings; and
• Reviewed cost savings achieved during
the year relating to management
structure, infrastructure costs,
IT costs and procurement costs.
Risk
• Reviewed the Group risk profile, covering
core internal and external risks, risks
driven by business change and areas
of emerging risk; and
• Agreed the Group-level risks to be
monitored and appropriate mitigating
activities, and delegated responsibility
to the Audit Committee to review
the processes and Group policies
underpinning these.
Corporate Governance Report continued
Board Leadership and Company Purpose
Read more on pages 1 to 59
Read more on pages 20 to 41
67

Governance and Legal
Board involvement programme
• Appointed Donard Gaynor as Workforce
Director to enhance Board engagement
with employees.
Annual General Meeting
• Convened the thirty first Annual General
Meeting (‘AGM’) of the Company; and
• Reviewed specific issues raised by
shareholders throughout the year to
be addressed in the Group Chairman’s
AGM statement.
Board succession and diversity
• Considered and reviewed the Board’s
composition, diversity and succession
plans, facilitating the appointment and
induction of three new Independent
Non-Executive Directors; and
• Established a sub-committee of the
Board to make recommendations to the
Board for the appointment of a new
Group Chairperson assisted by external
advisers who have been appointed.
Legal and regulatory
• On the recommendation of the Audit
Committee, reviewed and approved the
Annual Report and Financial Statements,
Notice of AGM and the Half and Full Year
Results announcements; and
• Monitored regulatory and legislative
developments and considered
any potential impact on the
Group’s operations.
Board action plan and
evaluation
• Reviewed progress against the 2019
Board Action Plan and set the Action
Plan for 2020, with a clear process for
monitoring progress over the course
of the year;
• Engaged external consultants,
Independent Audit, to facilitate an
external evaluation of the effectiveness
of the Board and its Committees, their
processes and ways of working, with
feedback from individual Directors
provided through online questionnaires
and the outcome was discussed by the
Board; and
• Revised the terms of reference of the
Audit, Nomination and Governance
and Remuneration Committees in
light of changes to the UK Corporate
Governance Code.
Board Stakeholder Engagement
Communities
• Received progress updates against
sustainability targets including
environment, supply chain and society
programmes; and
• Supported and received updates on
’s involvement in local community
and charitable partnerships.
People
• Received updates on a comprehensive
organisation and people review and
HR strategy;
• Reviewed the multi-year HR
transformation programme;
• Oversaw Group-wide performance
reward processes and target setting; and
• Workforce Director, Donard Gaynor
reviewed the global employee
engagement survey; reviewed the
Group’s whistleblowing system;
attended employee ‘skip-level’
meetings; and participated
in Group ‘townhall’ meetings.
Investor relations
• Completed an independent survey of
key stakeholders including investors
using a specialist third party agency;
• Attended 12 equity conferences
across North America and Europe;
• Reviewed output from over 300
one-to-one institutional investor
meetings;
• Led by the Remuneration Committee
Chair, engaged with the top 40 investors
representing over 70% of the issued
equity of  and the two major
independent proxy advisory firms on
remuneration policy; and
• Updated the market regularly on
performance via the AGM, Full and
Half-Year Results announcements and
Interim Management Statements.
Customers and consumers
• Evaluated insights from customer and
consumer research gathered as part
of the stakeholders survey;
• Assessed recommendations in respect
of our brands’ positioning; and
• Received updates on key customer
relationships.
Suppliers
• Continued engagement with Dairy
Farmers of America and Select Milk
Producers as part of the review of the
US Joint Venture operations;
• Extensively engaged with Irish farmer
suppliers; and
• Received updates on the operation of the
Group procurement function and supply
chain priorities and initiatives.
Read more on pages 60 to 113
Read more on pages 42 to 51
68
 > Directors’ Report
Audit Committee
Key activities: Review of Annual Report
and Financial Statements and statutory
Auditor’s independence and fees, internal
controls, risk management systems,
post-acquisition reviews and the
effectiveness of the Group Internal Audit
and Group Finance functions.
Nomination and Governance Committee
Key activities: Making recommendations on
appointments to the Board (including the
Group Chairperson and Vice-Chairmen),
senior management succession planning,
review of the independence and time
commitment of Non-Executive Directors
and keeping under review corporate
governance developments to ensure Group
governance practices are
in line with best practice.
Remuneration Committee
Key activities: Review of Executive
Directors’ salaries and benefits, approval
of Annual Incentive targets, Long-Term
Incentive share awards, review of
Non-Executive Directors’ fees and
compliance with the relevant codes.
Board Committees
Board
Group Management
Group Operating Executive
This group is comprised of the two Executive Directors,
the Group Secretary, the CEO of  Performance Nutrition,
the CEO of  Nutritionals, the Group Human Resources
& Corporate Affairs Director and the CEO of  Ireland.
Key activities: Monitoring performance and making strategic
recommendations to the Board. This forum is also the Group
Risk Committee and the Group Investment Committee.
Group Senior Leadership Team
This team includes the Group Operating Executive and the Group’s
senior business and functional leaders. Key activities: To create
alignment and drive delivery of the Group’s business plans.
The Disclosure Committee remains in place to oversee the timely and accurate disclosure
of all information required to be so disclosed by the Group to meet the legal and regulatory
obligations required by its stock exchange listings. It also continues to assist in the design,
implementation and periodic evaluation of disclosure controls and procedures.
Corporate Governance Report continued
Division of Responsibilities
Managing
Director
The following are the key matters reserved for the Board:
• Approval of the Group’s strategic plan, oversight of the Group’s
operations and review of performance in light of the Group’s
strategy, objectives, business plans and budgets, ensuring that
any necessary corrective/transformative action is taken;
• Ultimate oversight of risk, including determining the Group’s risk
profile and risk appetite;
• Approval of acquisitions, disposals and other transactions outside
delegated limits;
• Financial reporting and controls, including approval of the
Half-Year Results, Interim Management Statements and Full-Year
Results, approval of the Annual Report and Financial Statements,
approval of any significant changes in accounting policies or
practices and ensuring maintenance of appropriate internal control
and risk management systems;
• Ensuring the Annual Report and Financial Statements present a
fair, balanced and understandable assessment of the Group’s
position and prospects and provides the information necessary for
shareholders to assess the Group’s position, performance,
business model and strategy;
• Assessment of the Group’s viability and ability to continue as a
going concern;
• Capital expenditure, including the annual approval of the capital
expenditure budgets and any material changes to them in line with
the Group-wide policy on capital expenditure;
• Dividend policy, including the annual review of the dividend policy
and declaration of the interim dividend and recommendation of the
final dividend;
• Shareholder documentation, including approval of resolutions and
corresponding documentation to be put to the shareholders and
approval of all press releases concerning matters decided by the
Board; and
• Key business policies.
Martin Keane, Group Chairman
• Leads the Board, sets the agenda and promotes a culture of
open debate between Executive and Non-Executive Directors
and sets the highest standards of corporate governance;
• Regularly meets with the Group Managing Director and other
senior management to stay informed; and
• Ensures effective communication with our stakeholders.
Siobhán Talbot, Group Managing Director
• Develops and implements strategy and chairs the Group
Operating Executive;
• Leads the Group through the Group Operating Executive; and
• Promotes the purpose, vision and values of the organisation
internally and externally.
Dan O’Connor, Senior Independent Director
• Provides a sounding board to the Group Chairman and
appraises his performance;
• Acts as intermediary for other Directors, if needed; and
• Is available to respond to shareholder concerns when contact
through the normal channels is inappropriate.
Mark Garvey, Group Finance Director
• Manages the effectiveness and profitability of the Group
including financial and operational risk management;
• Develops appropriate capital and corporate structures to
ensure the Group’s strategy is met; and
• Oversees Group corporate development.
Non-Executive Directors
• Provide independent insight based on relevant experience;
• Contribute to developing strategy; and
• Scrutinise and constructively challenge business
performance and strategic execution.
Michael Horan, Group Secretary
• Monitors the Group’s compliance with legal, regulatory,
governance, ethics, policy and procedural matters;
• Ensures that the correct Board procedures are followed. In
conjunction with the Group Chairman ensures that the Directors
receive timely and clear information so that the Directors are
equipped for robust debate and informed decision making; and
• Supports the Group Chairman by organising induction and
training programmes for Directors.
Group Operating Executive
• With the Group Managing Director, develops and executes
the Group’s strategy in line with the policies and objectives
agreed by the Board;
• Manages operational effectiveness and profitability of the
Group; and
• Is the Group Risk Committee and Group Investment
Committee.
Read more on pages 62 to 65
69

Board meeting attendance and Directors’ tenure, key skills and competencies
The Board had seven meetings in 2019 with Board member meeting attendance as follows:
Director Appointed
Number of full
years on the
Board
2019 Meeting
attendance
Governance &
Management
Global Food
Industry
Financial & Risk
Management
Strategy &
Transformation
Merger &
Acquisitions
M Keane 24 May 2006 13 7/7 • • •
J Murphy 29 June 2010 9 7/7 • • •
P Murphy 26 May 2011 8 7/7 • • •
S Talbot 1 July 2009 10 7/7 • • • • •
P Ahern (Note 1) 21 June 2018 4 7/7 • • •
P Coveney 30 May 2014 5 7/7 • • • • •
J Daly 1 May 2019 Less than 1 5/5 • • • • •
J Doheny (Note 2) 1 June 2018 6 7/7 • • •
M Garvey 12 November 2013 6 7/7 • • • • •
D Gaynor 12 March 2013 6 7/7 • • • • •
V Gorman 27 June 2013 6 7/7 • • •
P Haran (Note 3) 9 June 2005 13 2/2 • • • • •
B Hayes (Note 4) 2 June 2017 7 7/7 • • •
R Laube 1 May 2019 Less than 1 5/5 • • • • •
H McGuire (Note 5) 1 June 2013 5 2/2 • • • • •
M Minnick 1 May 2019 Less than 1 5/5 • • • • •
D O’Connor 1 December 2014 5 7/7 • • • • •
B Phelan (Note 5,6) 1 January 2013 6 1/2 • • • • •
E Power (Note 7) 2 June 2017 16 7/7 • • •
1. P Ahern retired from the Board on 1 June 2018 and was re-appointed to the Board on 21 June 2018 having previously served two full years on the Board.
2. J Doheny was re-appointed to the Board on 1 June 2018 having previously served five full years on the Board.
3. P Haran retired from the Board on 1 May 2019.
4. B Hayes was re-appointed to the Board on 2 June 2017 having previously served four full years on the Board.
5. H McGuire and B Phelan did not put themselves forward for re-election at the 2019 AGM (24 April 2019) in order to facilitate the re-organisation and the broadening of the external perspective
of the Board.
6. B Phelan was unable to attend one Board meeting due to work commitments abroad.
7. E Power was re-appointed to the Board on 2 June 2017 having previously served 13 full years on the Board.
Board responsibilities
To ensure that the Board operates efficiently and effectively, the Directors, the Group Secretary and the Group Operating Executive have clearly defined
responsibilities which are set out below. There is a clear division of responsibility between the Group Chairman and the Group Managing Director.
70
 > Directors’ Report
Corporate Governance Report continued
Composition, Succession and Evaluation
The Board has a clear governance framework with defined responsibilities
and accountabilities which ensures that policies and procedures set at
Board level are effectively communicated across the whole Group. The
Board has established certain principal Committees to assist it in fulfilling
its oversight responsibilities, providing detailed focus on particular
areas as set out in the respective Committee reports that follow.
Information for the Board
The Group Chairman, with the assistance of the Group Managing
Director and the Group Secretary, is responsible for ensuring that
Directors are supplied with information in a timely manner and of an
appropriate quality that enables them to discharge their duties. In the
normal course of business, such information is provided by the Group
Managing Director in a regular report to the Board that includes
information on operational matters, strategic developments, financial
performance relative to the business plan, business development,
corporate responsibility and investor relations.
At each scheduled Board meeting, the Group Managing Director,
the Group Finance Director and CEOs of the Group’s two global
growth platforms,  Performance Nutrition (‘GPN’) and
 Nutritionals (‘GN’), provide operational and financial updates.
Depending on the nature of the proposal to be considered, other
Senior Executives are invited to make presentations or participate
in Board discussions to ensure that Board decisions are supported
by a full analysis of each proposal.
All Directors have access to the advice and services of the Group
Secretary, who is responsible for advising the Board on all governance
matters. The Directors also have access to independent professional
advice, if required, at the expense of the Group. This is coordinated
through the Group Secretary.
Board structure
The Board currently comprises 16 Directors: Two Executive Directors
and 14 Non-Executive Directors of whom eight are nominated by
 Co-operative Society Limited (the ‘Society’).
Avonmore Foods plc and Waterford Foods plc merged in 1997 to form
. At the same time, their respective major shareholders also
merged to form the Society. The Society retains a major shareholding
in the Company and nominates from its board of directors up to eight
(previously 14) Non-Executive Directors for appointment to the Board
of the Company. This will reduce to seven Non-Executive Directors in
2020 and six Non-Executive Directors in 2022, more details of which
are set out on page 81 of the Nomination and Governance Committee
Report. Our Directors come from diverse backgrounds, ranging from
public service, accountancy and banking to industry (dairy, fast
moving consumer goods and production).
Appointments to the Board, policy, diversity
and succession planning
During 2018, the Board approved a Board Diversity Policy which
recognises the benefits of diversity. Having regard to the right of the
Society to nominate eight of the 16 Directors, the Nomination and
Governance Committee keeps the Board’s balance of skills, knowledge,
experience and the tenure of Directors under constant review. In this
regard, the Company has not set any specific quota. In respect of
succession planning and maintaining the skill set of the Board, there is an
established procedure for the appointment of new Directors and Senior
Executives. The Nomination and Governance Committee identifies the
set of skills and experience required. Individuals are then selected on the
basis of required competencies, irrespective of gender, age, nationality
or other personal characteristics. External search agencies are engaged
to assist where appropriate. The Company also has a formal policy with
respect to the appointment of new Independent Non-Executive Directors
(other than those nominated by the Society). The policy provides that any
new Independent Non-Executive Directors will be appointed for an initial
three-year term, subject to re-appointment by shareholders at each AGM
and should expect to serve no more than three successive three-year
terms i.e. a maximum of nine years. All new Independent Non-Executive
Directors, and any re-appointments, will be subject to a rigorous review
by the Committee after each three-year term and annually after six years.
Induction and Board development
A robust induction and site visits are an integral part of performing
one’s duties as a Director. They are invaluable in enabling Board
members to develop a greater understanding of the opportunities and
challenges affecting the business, leading to more informed
discussions around the Board table.
The Company puts full, formal and tailored induction programmes in
place for all of its new Directors. While Directors’ backgrounds and
experience are taken into account, the induction programme is aimed
to be a broad introduction to the Group’s businesses and its areas of
significant risk. Key elements include meeting the Executive Directors
and senior management as well as visiting the Group’s main sites to
be briefed on Group strategy and on their individual businesses.
John Daly, Richard Laube and Mary Minnick joined the Board on
1 May 2019 and each received an extensive and thorough induction.
Prior to their first Board meeting in June 2019, they met with the Group
Managing Director, the Group Finance Director and other members of
senior management from various Group functions. A session on
strategic planning and corporate development formed part of their
first Board Meeting.
They also met individually with the Group Secretary who explained
the obligations of a Director of an Irish and UK listed company, and the
relevant rules, regulations, and supporting governance processes
at .
As part of their induction, they spent a day at the GPN facilities in
Chicago followed by a day at the GN facilities in Idaho, the Group’s
two main global growth platforms. They undertook tours of each
production facility, R&D facility and innovation centre. They also
visited the corporate offices in each location where they received
an introduction to both businesses. This consisted of meetings
with the respective Chief Executive Officers and business overview
presentations from other members of their senior leadership teams.
The Group Chairman regularly encourages the Non-Executive Directors
to update their skills, expertise and knowledge of the Group in order to
carry out their responsibilities competently. This is achieved by regular
presentations at Board meetings from senior management on matters
of significance. Examples during the year included regular presentations
from senior management of our two wholly-owned business segments
GPN and GN and from our strategic Joint Ventures. The Board and
Committees also received presentations from the Group Human
Resources & Corporate Affairs Director, General Manager of Group
Business Services, Director of Global Business Solutions and Group
Head of Quality and Safety.
In addition to the induction programme that all Directors undertake
on joining the Board, an ongoing programme of Director development
has been established. For example, as part of the annual programme
of Board meetings, Directors visit some of the Group’s principal
operations to meet employees and gain an understanding of the
business operations and strategy. Opportunities to visit our
operations globally and learn more about the business continue to
be very important and valuable for the Board, and for new members
in particular, as they provide the opportunity for our Directors to
understand operations, performance and challenges in a regional
context. Board members also get a chance to engage with local
employees in different roles at different levels of seniority and from
71

varying backgrounds. This aspect of Board visits provides real insight
into the culture of the business. These visits also afford Directors the
opportunity to interact with employees and develop deeper insights
into the quality of our current senior management and the potential for
succession. It also helps the Directors to actively embed the values of
 across key locations.
During 2019, the October Board meeting was held in GPN, Downers
Grove, Illinois. This was a three day event and the itinerary for the visit
was split between formal Board and Committee meetings, business
updates, store visits and engagement events with employees.
Directors are regularly provided with updates on corporate
governance, legislative and regulatory issues. During 2019, updates
included a presentation from the Group Secretary on the revised
provisions of the UK Corporate Governance Code (2018), the impact
of Brexit from a governance perspective and an investor relations
update presentation from the Group Finance Director.
As part of their annual performance evaluation, Directors are given
the opportunity to discuss their own training and development needs.
Board evaluation
The annual Board evaluation process is an important element in
ensuring and enhancing the effective and efficient operation of the
Board. The Group has established a formal process for the annual
evaluation of the performance of the Board and its principal
Committees, including a triennial external evaluation. The external
evaluation supplements our existing internal Board performance
evaluation processes. During 2019, in accordance with our triennial
cycle of Board performance evaluations and taking into account the
significant changes to the Board in 2019, it was decided to carry out
two successive external reviews to ensure a consistent approach to
development. External consultants, Independent Audit, were engaged
to facilitate the external evaluation of the effectiveness of the Board and
its Committees, the purpose of which was to review and further
improve the Board’s and Committees performance and identify any
development needs. Independent Audit was retained following a
detailed selection process undertaken by the Committee which
involved the evaluation of eight providers, the consideration of three
written proposals and meetings with two providers. Independent
Audit has no other connection with the Group. The evaluation carried
out in 2019 was questionnaire-based and the 2020 evaluation
scheduled for mid-2020 will be interview-based and include
observation of meetings.
The process that was followed for the 2019 review and the
conclusions of the evaluation are set out below:
1. Each Director and key contributors to the Board and Committees
completed a detailed online questionnaire produced by
Independent Audit;
2. Independent Audit conducted a review of the Board and
Committee papers and key governance policies and procedures;
3. The results of stages 1-2 were collected and analysed by
Independent Audit and a report was prepared and discussed with
the Group Chairman and the Group Secretary; and
4. The results were presented by Independent Audit to the Board
and discussed at its meeting in January 2020. An action plan for
2020, listing areas of focus from the evaluation, was agreed at the
February Board meeting. These are summarised below.
The evaluation highlighted numerous aspects where the Board is
working well, in particular, the effectiveness of the chairmanship of
both the Board and the Committees, the commitment of all Directors
to their responsibilities, the structure and depth of financial
performance reporting and the importance given to particular aspects
of risk management.
The Board agreed the following areas of focus for 2020:
• Board papers and agendas should be refined to enhance the
efficient operation of the Board and its Committees by focusing on
the medium/long term priorities for the Board and contextualising
the papers to highlight emerging issues, performance drivers
(including non-financial drivers and related indicators) and their link
to the strategic goals; and
• Talent management and executive and non-executive succession
planning.
During 2020 Independent Audit will conduct full interviews with each
Director and the key contributors to the Board and Committees and
undertake a full review of progress against agreed 2020 actions.
During 2020 Independent Audit will also attend and observe meetings
of the Board and Committees.
The evaluation of the Group Chairman’s performance formed a part of
the external evaluation. The Group Chairman’s performance was also
separately evaluated by the Board led by the Senior Independent
Director. As part of the Group Chairman’s evaluation, the Non-
Executive Directors met separately under the chairmanship of the
Senior Independent Director.
Independent Audit assessed each Committee’s performance
covering each of their terms of reference, composition, procedures,
contribution and effectiveness. As a result of that assessment, the
Board and each Committee is satisfied that each Committee is
functioning effectively and continues to meet its terms of reference.
Independence
The Board and the Nomination and Governance Committee believe
that all Non-Executive Directors demonstrate the essential
characteristics of independence and bring independent challenge
and deliberations to the Board. A detailed description of how
independence was determined is set out in the Nomination and
Governance Committee Report on page 83. While the Company
regards the Directors nominated by the Society (the ‘Society Nominee
Directors’) as being independent, the Society Nominee Directors are
not being designated as Independent Directors for the purpose of
Listing Rule 6.1.7 (2) of Euronext Dublin/Listing Rule 9.2.2 AD of the
United Kingdom Listing Authority (UKLA). This is to ensure
consistency with the agreement reached at the Extraordinary General
Meeting held on 22 May 2017 updating the previously agreed position
with regard to the composition and size of the Board and allowing for
the planned reduction of the Society’s representation on the Board as
described in the Circular which was sent by the Company to
shareholders on 28 April 2017 and is set out on page 81 of this
Annual Report and is available to view at www..com (Society
representation on the Board).
In compliance with Listing Rule 6.1.7 (2) of Euronext Dublin/Listing Rule
9.2.2 AD of the UKLA, the Company has entered into a written legally
binding agreement with the Society (the ‘Relationship Agreement’),
the only controlling shareholder, which is intended to ensure that the
Society complies with the independence provisions/undertakings set
out in Listing Rule 2.2.15 of Euronext Dublin and 6.5.4 R of the UKLA
(the ‘Independence Provisions’). This Relationship Agreement also
provides that the governance arrangements referred to above will
apply with respect to the composition and size of the Board.
During 2019, the Company has complied with the Independence
Provisions in the Relationship Agreement and, in so far as the
Company is aware, the Society has also complied with the
Independence Provisions. The Company’s constitution allows the
election and re-election of Independent Directors for the purpose of
Listing Rule 6.1.7 (2) of Euronext Dublin/Listing Rule 9.2.2 AD of the
UKLA, to be conducted in accordance with the election provisions
for such Directors in the Euronext Dublin/UKLA Listing Rules.
72
 > Directors’ Report
Corporate Governance Report continued
Audit, Risk, Internal Control and Remuneration
Re-election of Directors
In accordance with the UK Corporate Governance Code,
all of the Directors are subject to annual re-election by shareholders.
Accordingly, each of the Directors, with the exception of Richard Laube
(who retires effective 28 February 2020), Jer Doheny and Eamon Power
who are not putting themselves forward for re-election at the AGM, will
seek re-election at the 2020 AGM. Additionally the re-election of Patrick
Coveney, John Daly, Donard Gaynor, Mary Minnick and Dan O’Connor
will be subject to the approval by independent shareholders (i.e. all of
the shareholders save the Society and its subsidiary companies and
related parties). All Directors have indicated that they will abstain from
voting on these resolutions.
Audit, Risk and Internal Control
Risk management and internal control
Effective risk management underpins our operating, financial and
governance activities. The Board continues to place particular
emphasis on monitoring both principal and emerging risks and
regularly monitors the risk management framework to ensure
risks are being appropriately mitigated and new risks identified.
While the Board has ultimate responsibility for determining the Group’s
risk profile and risk appetite, the Board has delegated responsibility
for reviewing the design and implementation of the Group’s risk
management and internal control systems to the Audit Committee.
These systems are designed to manage, rather than eliminate, the
risk of failure to achieve business objectives and provide reasonable,
but not absolute, assurance against material misstatement or loss.
During the year, the Board considered the Group key risk reports
and received updates from the Audit Committee Chairman on the
programme of risk presentations from key risk managers across the
Group. This work provided a comprehensive insight into how key risk
exposures are managed and better informs the Board in its evaluation
of progress against strategic objectives of the business.
The Board and management are satisfied that appropriate risk
management and internal control systems are in place throughout the
Group. The Risk Management section is contained on pages 52 to 59.
Going concern
’s business activities, together with the main factors likely to
affect its future development and performance, are described in the
Strategic Report on pages 1 to 59.
After making enquiries, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for a period of at least 12 months from the date of approval
of the Financial Statements. The Group therefore continues to adopt
the going concern basis in preparing its Financial Statements. The full
Going Concern Statement is contained on page 55.
Long-term viability statement
In accordance with the UK Corporate Governance Code (2016) and
Listing Rule 6.1.82(3) of Euronext Dublin Listing Rules, the Directors
have assessed the viability of the Group and its ability to meet its
liabilities as they fall due over a period extending to 2022, taking into
account the Group’s current financial position, the Group’s strategy
and business model and the potential impact arising from the
principal risks and uncertainties. The factors considered in
assessing the long-term prospects are detailed on page 55.
Having considered these factors and the challenges experienced
in 2019, the Directors have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as they fall
due over the three-year period of the assessment. The full viability
statement is contained on page 55.
Fair, balanced and understandable
The Directors have concluded that the Annual Report and Financial
Statements present a fair, balanced and understandable assessment
of the Group’s position and prospects and provides the information
necessary for shareholders to assess the Group’s position,
performance, business model and strategy. This assessment
was completed by the Audit Committee as outlined in its report
on page 76.
Adequate accounting records
The Directors are responsible for keeping adequate accounting
records that are sufficient to correctly record and explain the
transactions of the Company or enable, at any time, the assets,
liabilities, financial position and profit or loss of the Company to be
determined with reasonable accuracy, enable the Directors to ensure
that the Financial Statements comply with the Companies Act 2014,
and, as regards the Group Financial Statements, Article 4 of the
IAS Regulation, and enable those Financial Statements to be audited.
The Directors, through the use of appropriate procedures and
systems, have also ensured that measures are in place to secure
compliance with the Company’s and the Group’s obligation to keep
adequate accounting records. These accounting records are kept at
 House, Kilkenny, Ireland, R95 E866, the registered office of
the Company.
Accountability and audit
Directors’ responsibilities for preparing the Financial Statements
for the Company and the Group are detailed on page 114.
The Independent Auditor’s report details the respective
responsibilities of Directors and the statutory Auditor.
Statutory Auditor
The statutory Auditor, Deloitte Ireland LLP, continues in office in
accordance with section 383(2) of the Companies Act 2014. Deloitte
(who was succeeded by Deloitte Ireland LLP) was originally appointed
on 27 April 2016.
Disclosure of information to statutory Auditor
In accordance with the provisions of section 330 of the Companies
Act 2014, each of the persons who are Directors of the Company
at the date of approval of this Report confirms that:
• So far as the Director is aware, there is no relevant audit
information (as defined in the Companies Act 2014) of which the
statutory Auditor is unaware; and
• The Director has taken all the steps that he/she ought to have
taken as a Director to make himself/herself aware of any relevant
audit information (as defined) and to ensure that the statutory
Auditor is aware of such information.
Remuneration
The Remuneration Committee’s agenda continued to apply
focus to the key matters of Group and individual Executive Director
performance and the consideration of appropriate targets for 2020
and beyond. Our aim is to ensure that our remuneration policies and
practices remain competitive within our industry to attract, retain and
motivate high quality and committed people who are critical to the
future development and growth of the Group. Further details can be
obtained on pages 84 to 108.
Irish Corporate Governance Annex
Board Composition Pages 62 to 71
Board Appointments Pages 60, 61, 80 and 82
Board Evaluation Pages 61 and 71
Board Re-election Pages 72 and 83
Audit Committee Pages 74 to 79
Remuneration Pages 84 to 108
Section 1373 Companies Act 2014
Applicable Codes Pages 61 and 73
Departures from the Codes Pages 61 and 73
Risk Management and
Internal Control Pages 52 to 59, 72 and 77
Takeover Regulations Pages 109 to 113
Shareholder Information Pages 209 to 212
Board and Committees Pages 60 to 108
UK Corporate Governance Code
Board Leadership and Company Purpose:
Leadership Pages 66 to 67
Division of Responsibilities:
Leadership Pages 68 to 69
Composition Succession and Evaluation:
Effectiveness Pages 70 to 71 and 80 to 83
Audit Risk and Internal Controls:
Accountability Pages 72 and 74 to 79
Remuneration Pages 84 to 108
Board Leadership and Company Purpose:
Relations with shareholders Pages 66 to 67
Non-Financial Reporting Statement Page 51
73

Compliance Statements
Directors’ Compliance Statement
It is the policy of the Company to comply with its relevant obligations
(as defined in the Companies Act 2014). The Directors have drawn up
a compliance policy statement as defined in section 225(3)(a) of the
Companies Act 2014. Arrangements and structures have been put in
place that are, in the Directors’ opinion, designed to secure a material
compliance with the Company’s relevant obligations. These
arrangements and structures were reviewed by the Company during
the financial year. As required by section 225(2) of the Companies Act
2014, the Directors acknowledge that they are responsible for the
Company’s compliance with the relevant obligations. In discharging
their responsibilities under section 225, the Directors relied on the
advice of third parties whom the Directors believe have the requisite
knowledge and experience to advise the Company on compliance
with its relevant obligations.
Corporate Governance Statement
During 2019 the Group was subject to the Irish Corporate Governance
Annex (2010) and the UK Corporate Governance Code (2016), the
‘Codes’. The Group has complied with the detailed provisions of the
Codes throughout 2019 with the exception of B.1 (Composition of the
Board of Directors) and D.2.1 (Minimum of three members of the
Remuneration Committee) of the UK Corporate Governance Code
(2016). The rationale for these departures are explained on pages 61
and 81. The Codes are not a rigid set of rules and they recognise that
an alternative to following a provision may be justified in particular
circumstances where good governance is still achieved.
The Irish Corporate Governance Annex published in December 2010
by the Irish Stock Exchange is publicly available on the Euronext
Dublin website: www.ise.ie/Products-Services/Sponsors-and-
Advisors/Irish-Corporate-Governance-Annex.pdf. The UK
Corporate Governance Code is publicly available the Financial
Reporting Council website: www.frc.org.uk/getattachment/
ca7e94c4-b9a9-49e2-a824-ad76a322873c/UK-Corporate-
Governance-Code-April-2016.pdf.
Our approach to corporate governance and how we apply the
principles of the Codes is set out in this Corporate Governance
Report, the Board of Directors and Senior Management section
and the Risk Management section (all of which are deemed to be
incorporated in this Corporate Governance Report). The Reports
from the Chairmen of the Audit, Nomination and Governance and
Remuneration Committees highlight the key areas of focus for,
and the background to, the principal decisions taken by those
Committees, which form an integral part of our governance structure.
A fair, balanced and understandable assessment of the Group’s
position and prospects is set out in the Strategic Report on pages
1 to 59. Other Statutory Information contains certain other information
required to be incorporated into this Corporate Governance
Statement. All of these statements are deemed to be incorporated
in this Corporate Governance Statement.
74
 > Directors’ Report
Audit Committee Report
Dear shareholder
As Chairman of ’s Audit Committee, I am pleased to present
the report of the Committee for the year ended 4 January 2020. This
report provides an overview of the Committee’s principal activities
during the year, its role in ensuring the integrity of the Group’s
published financial information and an outline of the Committee’s
priorities for the year ahead.
Committee structure
Following the reorganisation of the composition of the Board, the
membership of the Committee has also been updated. Paul Haran
retired from the Board as Non-Executive Director, Senior Independent
Director and Audit Committee member on 1 May 2019. I succeeded
Paul as Senior Independent Director from that date while Richard
Laube was appointed as a member of the Audit Committee on
20 June 2019. As recently announced, Richard has advised the
Company of his intention to step down from the Board with effect
from 28 February 2020 for family and personal reasons and a process
to identify a new independent Non-Executive Director has
commenced. On behalf of the Committee, I would like to thank Paul
and Richard for their service and commitment to the Committee and
wish them both every success for the future.
Areas of focus in 2019
From a performance perspective 2019 was a difficult year for the
Group. After a decade of strong growth a series of challenges
including the impact of increased tariffs, currency volatility and local
market competition, particularly in our non-US markets, combined to
have a significant adverse impact on operating performance and
results versus our initial expectations. During this difficult period the
Audit Committee has supported the Board on a number of matters
relating to the Group’s financial reporting, internal control and risk
management and despite the challenges encountered in 2019 we
believe that the corrective actions, both taken and planned, will
strengthen our control environment and better position the Group for
growth in the years ahead. Key areas of Committee focus in 2019 and
to-date in 2020 included:
• Review of the half-year results, interim management statement
and full year results announcements including an assessment of
the accounting, reporting and disclosure of the year-end
impairment reviews and exceptional items;
• Addressing the forecasting challenges in some of our non-US
markets where the availability of robust market data is limited;
• Conducting a robust assessment of the Group’s budget and
forecasting processes, particularly in relation to key market
assumptions, with appropriate sensitivity analysis; and
• Monitoring the development of the Group’s IT capabilities,
cyber-security risks and associated IT security and data
protection controls.
“The Committee is focused on
rebuilding confidence in the
GPN forecasting processes
and the Group’s growth
prospects through
effective oversight.”
Dan O’Connor
Audit Committee Chairman
Responsibilities
The Committee is responsible for monitoring the integrity of the
Group’s Financial Statements and for assisting the Board in
determining that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy. This included conducting
a detailed review of both the financial and non-financial information
contained in the Group’s Annual Report. The work performed in this
regard is detailed on pages 76 and 77. A summary of the 2019
significant financial judgements and disclosures and the steps taken
by the Committee to address these matters is included on page 78.
The Committee is also responsible for assisting the Board in
reviewing the effectiveness of the Group’s risk management and
internal control systems and for ensuring a robust assessment of the
emerging and principal risks facing the company. During 2019, the
Committee evaluated key areas of risk such as financial reporting and
tax, regulatory compliance, IT security, food safety and quality and
health and safety by receiving direct presentations from the Group
functional leads. The work performed in this regard is detailed on
page 77. The Audit Committee considered the requirements of the
Irish Companies Act 2014 in relation to the Directors’ Compliance
Statement and is satisfied that appropriate steps have been
undertaken to ensure that  is fully compliant with
these requirements.
Engagement
In fulfilling its key oversight responsibilities the Committee engaged
regularly with management, Group Internal Audit and the statutory
Auditor to ensure the provision of timely and accurate information.
Our engagement with the Group Internal Audit function and our
external Auditors is detailed on pages 77 and 79 together with an
explanation of how the Committee has assessed the independence
and effectiveness of the external audit process. The Committee is
satisfied, based on the evidence obtained throughout the audit
process, and the outcome of the external audit effectiveness review
conducted during the year, that a robust and efficient process is
taking place across the Group. In particular, the Committee reviewed
the key audit risk areas, and the work undertaken by the Auditors to
address those risks, in detail.
75

Terms of reference
The full terms of reference of the Audit Committee which were
updated in December 2019 can be found on the Group’s website:
www..com or can be obtained from the Group Secretary.
Key responsibilities
Monitor the integrity of the Group’s Financial Statements.
Review the appropriateness of accounting policies and significant
financial reporting issues or judgements.
Advise the Board in relation to its responsibilities in regard
to monitoring the Group’s systems of risk management and
internal controls.
Provide input on whether the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable.
Assist the Board in its responsibilities with regard to the assessment
of the Going Concern and Viability Statements.
Oversee the relationship with the statutory Auditor, including
approving the terms of engagement and assessing the effectiveness
of the process.
Ensure that the Group’s Auditor Relationship and Independence
Policy is enforced including conducting an audit tender at least every
10 years.
Review the operation and effectiveness of the Internal Audit function.
Assess the Group’s procedures for fraud prevention and detection.
Review the Group’s arrangements for its employees to raise
concerns, in confidence, about possible wrongdoing in financial
reporting and other matters.
2019 Audit Committee meeting attendance
Member Appointed
Number of full years
on the Committee
2019 meeting
attendance
D O’Connor 1-Dec-14 5 7/7
P Haran1
9-Jun-05 13 2/2
P Coveney 30-Sep-14 5 7/7
D Gaynor 24-Feb-15 5 7/7
R Laube2
20-Jun-19 <1 4/4
 
See page 63 for more information on current
Audit Committee members.
1 P Haran retired on 1 May 2019 from the Audit Committee.
2 R Laube has indicated his intention to retire on 28 February 2020.
Allocation of time
	
Financial and corporate governance activities
Statutory Auditor
Risk management and internal controls
Internal Audit
Other
Priorities for 2020
The Committee’s key priorities for 2020 include:
• Providing an independent challenge and oversight to ensure
shareholder interests are protected;
• Ensuring the Group’s Financial Statements are accurate and
reflect the balanced and consistent application of accounting
and financial reporting requirements and fairly represent the
performance of the business;
• Maintaining a continued focus on our impairment testing
methodology, inputs, assumptions, sensitivity analysis and results;
• Reviewing the bench strength of the Group’s finance talent
and resources;
• Assessing the processes in place to ensure effective oversight
of environmental, social and governance activities and other
non-financial disclosures; and
• Ensuring that robust due diligence is performed, acquisition
integration is closely monitored and post-acquisition/capital
expenditure reviews are conducted on all material investments
in line with Group policy.
The Committee will continue its programme of direct presentations
from management to ensure that effective risk management
processes are implemented to address these key risk areas
in a manner consistent with the Group’s risk appetite.
Review of Audit Committee performance
Board evaluation consultants assessed the Committee’s performance
covering its terms of reference, composition, procedures, contribution
and effectiveness. As a result of that assessment, the Board and the
Committee are satisfied that the Committee is functioning effectively
and continues to meet its terms of reference, see page 71 for more
details on the Board and Committee evaluations.
On behalf of the Audit Committee
Dan O’Connor
Audit Committee Chairman
76
 > Directors’ Report
Audit Committee Report continued
Governance
Committee Membership
The Audit Committee was in place throughout 2019. The Committee
comprises four Independent Non-Executive Directors, Dan O’Connor
(Senior Independent Director and Committee Chairman), Patrick
Coveney, Donard Gaynor and Richard Laube, of whom two members
constitute a quorum. The Group Secretary acts as secretary to the
Committee. Membership is reviewed annually by the Chairman
of the Committee and the Group Chairman who recommend new
appointments to the Nomination and Governance Committee for
consideration and onward recommendation to the Board. As recently
announced, Richard has advised the Company of his intention to
step down from the Board with effect from 28 February 2020 and
a process to identify a new independent Non-Executive Director
has commenced.
The Board is satisfied that Dan O’Connor, Patrick Coveney and
Donard Gaynor meet the requirements for recent and relevant
financial experience, as set out in the UK Corporate Governance
Code (2016). The Board is also satisfied that the Audit Committee,
as a whole, has competence relevant to the sector in which the Group
operates including a wide range of skills, expertise and experience
arising from the senior positions they hold or held in other
organisations as set out in their biographical details on page 63.
Meetings
The Audit Committee met seven times during the year ended
4 January 2020 and there was full attendance by all members of the
Committee. The increase in meetings held during the year reflected
the challenges encountered during 2019 and the additional time
required by the Committee to consider the financial reporting and risk
oversight requirements. The Group Managing Director, Group Finance
Director, Group Secretary, Group Head of Internal Audit, Group
Financial Controller and representatives of the statutory Auditor
are typically invited to attend all meetings of the Committee, with
additional members of the Group Senior Leadership Team invited
to attend as deemed necessary.
The Committee ensured that the statutory Auditor has direct access
to the Chairman of the Committee and the Group Chairman. It is
standard practice for the statutory Auditor to meet privately with the
Audit Committee on at least an annual basis without any members of
management or the Executive Directors being present. This meeting
was held in February 2020 following the completion of the 2019 audit
to review the findings from the audit of the Financial Statements.
Management’s progress on control improvement opportunities
identified by Deloitte Ireland LLP will be maintained under review
by the Committee during 2020. The Group Head of Internal Audit
also has direct access to the Chairman of the Audit Committee.
The Chairman of the Audit Committee reports to the Board as
necessary on the activities of the Committee and attends the AGM
to answer questions on the Audit Committee’s report and matters
within the scope of the Committee’s responsibilities.
Audit Committee key activities
Financial reporting and significant financial judgements
At our meetings during 2019 and to date in 2020, the Committee
reviewed the interim management statements, half-year and Annual
Consolidated Financial Statements and all formal announcements
relating to these statements by considering and challenging, where
appropriate, the Group’s accounting policies and key judgement
areas. The Committee paid particular attention to matters it deemed
to be important by virtue of their impact on the Group’s results
and particularly those items which involved a higher level of
estimation or judgement before submitting them to the Board
with a recommendation to approve the documents presented.
As outlined in our accounting policies on page 142, the Group
has adopted an income statement format that seeks to highlight
significant items within the Group results for the year. Judgement is
used by the Directors in assessing the particular items which by virtue
of their scale and nature should be disclosed in the Income Statement
and Financial Statement notes as exceptional items. While no such
items were noted in the 2018 Group results a number of significant
items have been highlighted as exceptional items in 2019 and the
Committee is satisfied that this is appropriate and consistent with the
Group’s policy in this area. The table on page 78 sets out the 2019
significant financial statement reporting judgements and disclosures
and how the Audit Committee addressed these matters. The
Committee reviewed reports from the Group Finance team on
financial reporting disclosure requirements, accounting, treasury,
and taxation issues in making these assessments.
The Committee considered the Directors’ Responsibility Statement
and the principal risks and uncertainties of the Group within the 2019
Annual Report and Financial Statements and the half-year results
and were satisfied with the adequacy of the disclosures.
Fair, balanced and understandable
At the request of the Board, the Audit Committee reviewed the
content of the Annual Report to ensure that it is a fair, balanced
and understandable assessment of the Company’s position and
prospects and that it considers the Annual Report and Accounts
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
In satisfying this responsibility the Committee considered the following:
• the established, documented process and timelines for the
planning, preparation and review of the Annual Report and
Financial Statements;
• a dedicated project manager is in place to drive adherence to
deadlines, reporting standards and consistency and this is aligned
with the external audit process undertaken by Deloitte Ireland LLP;
• the key process milestones, in particular to ensure the draft Annual
Report and Financial Statements were available to the Committee
in sufficient time in advance of the Committee meeting to facilitate
adequate review and promote effective challenge at the meeting;
• the senior finance management and executive team review and
authorisation procedures;
• a detailed management report outlining the process by which
they assessed the narrative and financial sections and disclosures
within the 2019 Annual Report to ensure that the criteria of fair,
balanced and understandable has been achieved; and
• the effectiveness of the key features of internal control, including
the reporting timetable, in preparing the Financial Statements
and the coordination and review activities involved.
Having considered the above, in conjunction with the regular updates
the Committee receives from management and the reports received
from our external Auditors, Deloitte Ireland LLP, the Committee
has confirmed to the Board, that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Group and the Company position, performance, business model
and strategy.
Going Concern and Viability Statements
The Audit Committee reviewed the draft Going Concern and Viability
Statements prior to recommending them for approval by the Board.
These statements are included in the Risk Management Report on
page 55. This review included assessing the effectiveness of the
process undertaken by the Directors to evaluate going concern,
including the analysis supporting the Going Concern statement and
77

disclosures in the Financial Statements. The Committee and the
Board consider it appropriate to adopt the going concern basis of
accounting with no material uncertainties as to the Group’s ability
to continue to do so.
The Committee also reviewed the Directors’ Viability Statement
which is supported by the work conducted in the strategy and budget
review sessions in December 2019, early 2020 and the Board’s
ongoing review of monthly and year-to-date business performance
versus budget and forecast. Further detail is provided within the
Viability Statement on page 55.
Regulators and our financial reporting
During the year the Group received correspondence from the Irish
Auditing and Accounting Supervisory Authority (IAASA) in respect of
the Group’s Annual Report and Financial Statements for the year
ended 29 December 2018 outlining a number of areas on which they
required further information and clarity. The Company provided the
necessary information and clarifications requested and IAASA
acknowledged the cooperation received from the Directors and
management in responding to the queries raised. The Committee was
satisfied that no material findings arose from the review.
Internal Audit
To fulfil its responsibilities for monitoring and reviewing the operation
and effectiveness of the Internal Audit function the Committee:
• approved the Group Internal Audit annual work programme;
• ensured that it is adequately resourced with a strong mix of skills
and expertise capable of conducting effective internal audits, IT
audits and special investigations;
• received regular reports from the Group Head of Internal Audit
covering team development, progress against the audit plan, best
practice risk management and whistleblowing procedures;
• received an overview of the Internal Audit process from the audit
planning prioritisation stage, through the planning and production
phases of the audit to the report publication and subsequent
tracking of management progress in implementing the agreed
actions. The Committee also reviewed a sample of the templates
typically used in the Internal Audit communication processes;
• noted that the Group Internal Audit team utilises a market leading
audit management system and appropriate data analytics tools
to maintain the effectiveness of the Internal Audit processes; and
• regularly reviewed progress on the status of management action
plans to address control weaknesses identified during the Internal
Audit reviews which are tracked to closure using the audit
management system.
The Group Head of Internal Audit routinely meets with the Chairman
of the Audit Committee in preparation for upcoming Committee
meetings, to review the meeting agenda and draft papers and to
ensure that the overall Committee work plan remains aligned to the
current and emerging areas of key Group risk. Where required, the
relevant Board or Committee agendas are amended to include items
that require more detailed consideration, typically by a direct
presentation to the Committee or Board by the relevant business unit
or functional lead.
On the basis of the above, the Committee concluded that for 2019
the Internal Audit function was performing well and is satisfied that
the quality, experience and expertise of the function is appropriate
for the Group. In 2020, the Group Head of Internal Audit will assess
the impacts of the recently updated Internal Audit Code of Practice
issued by the Institute of Internal Auditors. The Institute’s update to
this Code was designed to assist in reinforcing the role of the internal
audit profession as a cornerstone of good corporate governance.
The Group Head of Internal Audit will review any resulting
improvement opportunities with the Committee in 2020.
The Committee also encourages effective coordination between
the external and internal audit teams to maximise the benefits from
coordinated activities and ensures that this is in place through the
regular Committee meetings.
Risk management and internal control systems
The Audit Committee is responsible for assisting the Board by
taking delegated responsibility for the ongoing monitoring of the
effectiveness of the Group’s systems of risk management and internal
control. The Risk Management Report on pages 52 to 59 sets out
the detailed steps in this regard.
The Committee receive regular Group key risk summary reports,
prepared by the Internal Audit team, tracking residual risk exposures
which allows the Committee to assess the appropriateness of
management’s action plans to ensure the Board’s risk appetite is not
exceeded and to remain alert to emerging risks as they are identified
through the review process.
The Committee’s risk management focus during 2019 included:
• reviewing and approving the assessment of the principal risks and
uncertainties that could impact the achievement of the Group’s
strategic objectives as outlined on pages 12 to 15;
• an evaluation of the key areas of risk such as financial reporting
(particularly the Group’s forecasting processes), tax, regulatory
compliance, IT security, food safety and quality and health
and safety by receiving direct presentations from the Group
functional leads;
• developing a detailed understanding of the risks within each
of these core functions, our improvement opportunities, team
strengths and weaknesses and areas of emerging risk;
• receiving updates from the Group Finance Director, 
Performance Nutrition Finance Director and the Group Financial
Controller on the forecasting issues identified during the year. This
included a detailed analysis of how the risk failures occurred, the
difficulty in obtaining reliable market data in some of our non-US
markets and the status of the agreed corrective actions;
• a consideration of the detailed performance updates on Group
investments and the impairment review methodology and
outcomes outlined in Note 16;
• receiving regular updates from the Group Head of Internal Audit
based on reports completed during the year outlining non-
compliance with Group policies and controls, fraud investigation
reports and management actions to address them;
• assessing the Group’s risk management and internal control
systems in line with the Financial Reporting Council (FRC)
guidance on risk management and internal control; and
• reviewing reports from our external Auditors in respect of
significant financial accounting and reporting issues, together
with management’s plans in place to address any internal
control weaknesses noted.
The Committee, having assessed the above information, is satisfied
that the Group’s systems of internal control and risk management
are operating effectively and has reported that opinion to the Board.
Where improvement opportunities have been identified appropriate
management action plans are in place.
The Board also reviewed the effectiveness of the current systems
of risk management and internal control and, despite the forecasting
challenges encountered during 2019 in some of our non-US markets
where the availability of robust market data is limited, is satisfied that
these systems are operating effectively.
78
 > Directors’ Report
Audit Committee Report continued
2019 significant financial reporting judgements and disclosures
The Audit Committee assessed whether suitable accounting policies have been adopted and whether management has made appropriate
estimates and judgements in the preparation of the 2019 Financial Statements. As part of this exercise the Committee reviewed accounting
papers prepared by management which provide the supporting detail for the key areas of financial judgement and disclosure considered
by the Committee in relation to the 2019 Financial Statements. An outline of how these were addressed is included in the following table.
Key financial judgement
and disclosures How the Audit Committee addressed these matters
Impairment review of
goodwill and intangibles
• Goodwill and intangible asset impairment reviews involve a range of judgemental decisions largely related
to the assumptions used to assess the value-in-use of the assets being tested. These assumptions typically
include short and long-term business and macroeconomic projections, cash flow forecasts and associated
discount rates;
• In 2019 the Committee received a number of detailed performance updates on the Group investments
where the headroom between the carrying value of the asset and the value in use had reduced in 2018;
• Management provided the Committee with detailed reports to support the recoverable value of the balances
included in Note 16 to the Financial Statements. The Committee examined the methodology applied including
ensuring that the discount rates used were appropriate;
• The Committee considered the output from the sensitivity analysis performed at 2019 year-end, in particular
they noted that a reasonably possible change in a key assumption used in the think! impairment assessment
could result in an impairment charge and the significant reduction in the headroom for the BSN Cash
Generating Unit (CGU); and
• The Committee constructively challenged assumptions used for future cash flows, discount rates, terminal
values and growth rates, with consideration of different scenarios and key assumptions used within the
respective reviews.
Following these discussions, the Committee is satisfied that the impairment review methodology, disclosed
in Note 16, has been consistently applied and that the key assumptions made and conclusions reached
are appropriate.
Exceptional items • The Committee considered the presentation of the Group’s Financial Statements and, in particular, the
appropriateness of the presentation of exceptional items; and
• Consideration was given by the Committee to ensure our reported results represent a true and fair view
of the underlying performance during the year.
The Committee reviewed the nature of the items identified and after a robust challenge and consideration
of the disclosures is satisfied that the treatment was in line with Group policy, consistently applied across
years and appropriately presented in the Financial Statements with sufficient detail to allow users of the
Financial Statements to understand the nature and extent of the exceptional items and how they arose.
Revenue recognition • All revenue across the Group is recorded automatically at the point of dispatch as part of our sales systems.
Manual adjustments are recorded to ensure revenue is recorded in line with the underlying contractual terms
with customers and the requirements of IFRS 15 ‘Revenue from Contracts with Customers’;
• The Group Finance team outlined to the Committee the established review processes in place to ensure
the accuracy of the manual revenue reversals for which the performance obligations have not been met;
• Within the GPN segment revenue is recognised net of rebate, discount, deduction and allowance claims
across the Group where the amounts payable can vary depending on the arrangements made with
individual customers and the volume of trade; and
• The Committee received a paper from the Group Finance team outlining the basis of any significant
year-end rebate provisions to ensure they were adequate and appropriate.
Following these discussions, the Committee is satisfied that the timing of revenue recognition and the basis
of the year-end rebate provisions within the Financial Statements are appropriate.
Uncertain tax provisions • The Committee received a presentation from the Group Finance Director and Group Head of Tax on various
tax matters including legislative changes, tax structures and controls;
• The Committee considered in detail the impact of the refinancing activity conducted during the year and the
Group’s compliance with the increasing legislative requirements in this area;
• The Committee received an analysis of movements in the year-end uncertain tax provisions, reviewed the
key judgements in relation to the calculation of the uncertain tax provisions, the external professional advice
obtained to support the provisions and the Financial Statement disclosure requirements;
• The Committee obtained an update from management on the status or outcome of any tax authority reviews
conducted during the financial period; and
• The Committee challenged management on the key judgements and estimates made.
Following these enquiries, the Committee is satisfied that the key assumptions governing the calculation
of uncertain tax provisions and their disclosure within the Financial Statements are appropriate.
79

Whistleblowing and fraud
The Audit Committee assisted the Board by taking delegated
responsibility for ensuring that the Group maintains suitable
whistleblowing arrangements for employees. These arrangements are
outlined in our Code of Conduct which is available on the Company’s
website www..com and on our Group intranet. The Committee
received a presentation from the Group Secretary outlining:
• the Group’s Speak-Up policy and the evolving regulatory
responsibilities in this area, including the European Union Directive
for the protection of persons reporting on breaches of Union Law;
• the Group’s arrangements for its employees to raise concerns, in
confidence, about possible wrong doings in financial reporting and
other matters. This included a review of the Group’s independent
Safecall Speak-up service. This is a multi-lingual service and is
accessible to all employees and third parties 24 hours a day by
phone, web or email;
• an overview of how concerns raised are categorised, investigated,
monitored and reported with a review of the themes arising; and
• management’s actions designed to improve the effectiveness
of the Group’s whistleblowing arrangements, training and
communication processes.
The Committee concluded, and confirmed to the Board, that it was
satisfied that the Group’s whistleblowing and other fraud prevention
and detection procedures, including the Internal Audit team activities,
are adequate and allow for the proportionate and independent
investigation of such matters and appropriate follow up action.
Review of statutory Auditor
The Committee oversees the relationship with the statutory Auditor,
including ensuring that the statutory audit contract is put out to tender
at least every 10 years. Deloitte (who were succeeded by Deloitte
Ireland LLP) were appointed as the Group’s statutory Auditor
on 27 April 2016 following a formal tender process.
At the Committee’s October 2019 meeting it reviewed the approach
and scope of the annual audit work to be undertaken by the statutory
Auditor, which included planned levels of materiality, key risks to the
accounts, the audit of the Group’s core financial IT systems, fraud
responsibilities and representations, the Group’s processes for
disclosing information to the Auditor, the proposed audit fee and the
approval of the terms of engagement for the audit. The Committee
discussed recent corporate governance updates, including the
requirements of the revised 2018 UK Corporate Governance Code for
the 2020 Annual Report, regulator commentary and correspondence,
the increasing demands from investors for environmental, social and
governance information, climate related risks and the potential
impacts and preparation requirements for IFRS 16 together with other
planned IFRS reporting developments. The Committee also received
reports from the Auditor at its meetings in December 2019, January
2020 and February 2020.
Independence of the statutory Auditor
In order to ensure the independence and objectivity of the statutory
Auditor, the Committee:
• maintains and regularly reviews the Group’s Auditor Relationship
and Independence Policy;
• considers the performance of the statutory Auditor each year;
• reviews Audit Partner rotation requirements, and assesses their
independence on an ongoing basis. In line with regulatory
requirements for listed companies, the statutory Auditor is required
to rotate the Audit Partner responsible for the Group audit every
five years. The current audit engagement partner, Kevin Sheehan,
was appointed as lead engagement partner for the Group in 2016.
As 2020 will be Kevin’s final year as lead engagement partner the
Committee will ensure appropriate consideration and preparation
is put in place for his successor; and
• requests the statutory Auditor to formally confirm its independence
in writing to the Committee. This confirmation process also
provides examples of safeguards that may, either individually or in
combination, reduce any independence threat to an acceptable
level. These safeguards will always include ensuring:
–
– that the statutory Auditor does not play any part in the
management or decision-making of ; and
–
– the individuals involved in providing any non-audit services
are not members of the audit engagement team.
Non-audit services
Our Auditor Relationship and Independence Policy includes a clearly
defined pre-approval process for audit and other services, including
a requirement for the business to submit a formal template setting out
the details of the services requested, the likely fee level, the rationale
for requiring the work to be carried out by Deloitte Ireland LLP rather
than another service provider and confirmation that the service
requested is not a prohibited service.
The policy requires each request to be reviewed and where
appropriate challenged by the Group Financial Controller, Group
Finance Director, Group Secretary and Audit Committee Chairman
(subject to a defined monetary threshold). The provision of all
non-audit services which are not prohibited and approved in line with
our policy must be ratified by the Audit Committee at the following
meeting of the Committee, who also ensures that the total fees for
non-audit services will not exceed the defined thresholds. Fees paid
to Deloitte Ireland LLP for audit related and non-audit related services
are analysed in Note 5 to the Financial Statements.
The Committee is pleased that this policy has been effectively
implemented since the appointment of Deloitte Ireland LLP as
statutory Auditor. The focus on compliance in this area has
significantly reduced the type and level of services provided to prevent
any perceived or actual impact on the Auditor’s independence.
Effectiveness
The Committee is very satisfied with its own interactions with Deloitte
Ireland LLP, both in terms of reports received and direct interactions
during Audit Committee meetings. However, the Committee
considered it appropriate, following the completion of three full audit
cycles, to complete a review of the effectiveness of the audit process
to identify any potential areas for improvement. As part of the review
process, audit effectiveness questionnaires were developed utilising
some best practice examples provided by IAASA and ESMA and
shared with relevant finance executives at Group and Business Unit
level who have the most interaction with Deloitte Ireland LLP.
The responses were summarised by management and reported to
the Audit Committee. The summary report concluded that the
external audit process is highly effective with a robust challenge
provided in relation to judgemental and complex areas. The
Committee noted that good staff continuity across the teams has
enabled the Deloitte audit teams to build their knowledge of the
Group and to understand the business well.
The observations from the survey were shared with the statutory
Auditor to enable the learnings to be openly discussed and acted
upon and to ensure that the 2019 audit process was further
enhanced. The Committee remains satisfied with the effectiveness
of the statutory Auditor based on the improvements implemented
following the audit process review, the quality of the presentations
received, management commentary on the robustness of the
challenge provided, their technical insight and their demonstration
of a clear understanding of the Group’s business and its key risks.
80
 > Directors’ Report
Nomination and Governance Committee Report
Dear shareholder,
Having succeeded Paul Haran as Chairman of the Nomination and
Governance Committee, on behalf of the Board, I am delighted to
present my first report for the year ended 4 January 2020 which
outlines the work performed by the Committee during the year.
Board and Committee changes during 2019
2019 was another year of significant change for the Board and its
Committees. From a governance perspective the most significant
changes were the reorganisation of the composition of the Board and
its Committees following the appointment of three new Independent
Non-Executive Directors, John Daly, Richard Laube and Mary Minnick,
on 1 May 2019.
Since 1 May 2019 the Board is comprised as follows:
• Two Executive Directors; Group Managing Director and Group
Finance Director;
• Six Independent Non-Executive Directors; and
• Eight Society Nominee Directors.
The new Non-Executive Directors have brought valuable experience
and fresh perspective to the  Board, full biographical details
of each of these new Directors are contained on page 63.
To facilitate the reorganisation and the broadening of the external
perspective of the Board, Hugh McGuire and Brian Phelan did not put
themselves forward for re-election at the 2019 Annual General Meeting
(AGM). Their key executive roles are unaltered and they continue
in their executive leadership positions as CEOs of the Group’s two
global growth platforms,  Performance Nutrition and 
Nutritionals respectively.
Paul Haran retired from the Board as Non-Executive Director and
Senior Independent Director on 1 May 2019. I succeeded Paul Haran
as Senior Independent Director from that date.
On 20 June 2019 the composition of the Board Committees was
changed following the appointment of the new Directors (which
continue to comprise only of Independent Non-Executive Directors),
full detail of which is contained on page 82.
“The Committee ensures
the Board and Group
Operating Executive comprise
individuals with the requisite
skills and diversity of
experience to discharge
their responsibilities.”
Dan O’Connor
Nomination and Governance Committee Chairman
Board and Committee changes during 2020
For personal and family reasons, Richard Laube has notified the
Company that he will retire as Independent Non-Executive Director
effective 28 February 2020. A process to identify a new Independent
Non-Executive Director is currently underway.
Non-Executive Directors, Jer Doheny and Eamon Power, have
confirmed that they will not be seeking re-election at the 2020
AGM. In accordance with the amended and restated Relationship
Agreement between the Company and  Co-operative
Society Limited (the ‘Society’) dated 2 July 2017 (the ‘Relationship
Agreement’), in 2020 the number of Directors nominated by the
Society (the ‘Society Nominee Directors’) on the Board will reduce
from eight to seven. Any changes arising from Jer and Eamon’s
retirement and the reduction contemplated by the Relationship
Agreement will be considered in June 2020.
Also in accordance with the Relationship Agreement, a process
to identify a successor to Martin Keane as Chairperson has
commenced. A sub-committee of the Board, led by myself, has been
established to lead the process in identifying a new Chairperson for
recommendation for appointment to the Board. External advisors
have been appointed to assist the sub-committee.
The following pages provide further details on the roles and
responsibilities of the Committee and its highlights and achievements
during 2019.
I am available at any time to discuss any matters that any shareholder
may wish to raise.
On behalf of the Nomination and Governance Committee
Dan O’Connor
Nomination and Governance Committee Chairman
81

Key responsibilities
Assessing the composition, structure and size (including skills,
knowledge, experience and diversity) of the Board and its
Committees and making recommendations on appointments
and re-appointments to the Board;
Recommending to the Board the membership and chairmanship
of the Audit and Remuneration Committees respectively;
Planning for the orderly succession of new Directors to the Board
and of senior management;
Keeping under review the leadership needs of the Group, both
executive and non-executive, with a view to ensuring the continued
ability of the Group to compete effectively in the market place;
Keeping the extent of Directors’ other interests under review
to ensure that the effectiveness of the Board is not compromised;
Overseeing the performance evaluation of the Board, its Committees
and individual Directors;
Keeping under review corporate governance developments with the
aim of ensuring that the Group’s governance policies and practices
continue to be in line with best practice;
Ensuring that the principles and provisions set out in the Irish
Corporate Governance Annex and the UK Corporate Governance
Code (and any other governance code that applies to the Company)
are observed; and
Reviewing the disclosures and statements made in the Directors’
Report to the shareholders.
Terms of reference
The full terms of reference of the Nomination and Governance
Committee (which were reviewed and updated in December 2019)
can be found on the Group’s website: www..com or can be
obtained from the Group Secretary.
2019 Committee members and attendance
Member Appointed
Number of full years
on the Committee
2019 meeting
attendance
D O’Connor 12-Dec-14 5 6/6
P Coveney 23-Feb-16 4 6/6
D Gaynor 12-Dec-14 5 6/6
P Haran* 9-Jun-05 13 3/3
* 
P Haran retired on 1 May 2019 from the Board and the Nomination and
Governance Committee.
 
See page 63 for more information on current Nomination and
Governance Committee members.
Allocation of time
Governance
Board and Committee composition
Succession planning		
Board Effectiveness
 Co-operative Society
Limited – Right to nominate
Non-Executive Directors.
The Society currently owns 31.5% of the issued share
capital of the Company.
The current composition and size of the Board reflects the
historical shareholding and relationship of the Company
with the Society and is documented in the amended and
restated Relationship Agreement dated 2 July 2017.
Between 2012 and 2017, the Society and the Board
agreed the following changes, which will impact the
composition and size of the Board in the coming years:
• In 2020 the number of Society Nominee Directors will
reduce from eight to seven, which number of Society
Nominee Directors will also apply in 2021; and
• In 2022 the number of Society Nominee Directors
will reduce from seven to six, which number of
Society Nominee Directors will also apply each
subsequent year.
It is the intention that the Society would continue to
nominate a Society Nominee Director as Chairman
of the Board until no later than 30 June 2020.
Up to eight of the Directors on the Board will be made
up of Executives and Independent (of the Society)
Non-Executive Directors. The parties will co-operate
to ensure (as far as practicable) that the Independent
Non-Executive Directors will be appointed on the
recommendation of the Nomination and Governance
Committee. If the number of non-Society Nominee
Directors on the Board changes, the number of Society
Nominee Directors set out above will change pro rata.
Where a reduction is required to take effect in the number
of Society Nominee Directors in respect of a particular
year it shall take effect on the earlier of the conclusion
of the first board meeting of the Society immediately
following the AGM of the Society which takes place in that
year or 30 June (or such earlier date as the Society shall
agree with ) in that year. Further, if the Society’s
shareholding in the Company falls below 28% of the
issued share capital, discussions will take place regarding
a further reduction in the size of the Society’s
representation on the Board.
82
 > Directors’ Report
Nomination and Governance Committee Report continued
Governance
The Committee was in place throughout 2019 and Dan O’Connor,
Senior Independent Director is Chairman of the Committee. The
Committee comprises three Independent Non-Executive Directors,
of whom two members constitute a quorum. The Group Secretary
acts as secretary to the Committee. The Group Chairman and Group
Managing Director attend by invitation only.
Nomination and Governance Committee key
activities
The principal activities undertaken by the Committee in 2019 were
as follows:
Board and Committee changes
During 2019, there were a number changes to the composition of the
Board and Board Committees. These changes were driven primarily
by the reorganisation of the composition of the Board in accordance
with the Relationship Agreement as described on page 81.
Board changes during 2019
To facilitate the reorganisation and the broadening of the external
perspective of the Board, Hugh McGuire and Brian Phelan did
not put themselves forward for re-election at the 2019 AGM.
Three new Independent Non-Executive Directors, John Daly, Richard
Laube and Mary Minnick, were appointed to the Board on 1 May
2019. On the same day, Paul Haran retired as Senior Independent
and Non-Executive Director and Dan O’Connor was appointed as
Paul’s successor as Senior Independent Non-Executive Director.
Committee changes during 2019
On 20 June 2019 the composition of the Board Committees was
refreshed following the appointment of the new Independent
Non-Executive Directors. Richard Laube, Independent Non-Executive
Director was appointed as a member of the Audit Committee. John
Daly and Mary Minnick, Independent Non-Executive Directors, were
appointed as members of the Remuneration Committee and Dan
O’Connor was appointed as Chairman of the Nomination and
Governance Committee.
In compliance with the UK Corporate Governance Code the
membership of the Audit, Nomination and Governance and
Remuneration Committees continues to comprise only Independent
(of the Society) Non-Executive Directors.
Society changes in 2020
In accordance with the Relationship Agreement between the
Company and the Society, in 2020 the number of Society Nominee
Directors on the Board will reduce from eight to seven.
To assist the Board in the identification of a new Chairperson,
in accordance with the Relationship agreement, the Board
unanimously agreed to the Nomination and Governance Committee’s
recommendation to establish a sub-committee of the Board
(comprising of Dan O’Connor, as Chairman of the sub-committee,
John Murphy, Pat Murphy and Patrick Coveney), assisted by an
external advisor who does not have any other connection with the
Group. In accordance with good governance, it was agreed that
Martin Keane should not be involved in the process to appoint
his successor.
Diversity
A description of our Diversity Policy is contained on page 70. Details
of our diversity objectives, policy on inclusion and linkage to Company
strategy and progress on achieving the objectives are contained in
‘Our People’ on page 46.
Independent Non-Executive Director recruitment and
selection process
During 2018, the Committee commenced a process to recruit and
appoint new Independent Non-Executive Directors (which continued
into 2019). The Committee had a number of discussions to scope
out the current and likely key skills, experience, characteristics and
requirements for the role having regard to the challenges and
demands of the future operating environment, growth opportunities
for  and Board diversity. An Independent Non-Executive
Director specification was drawn up and approved by the Committee.
Key criteria included international experience, management of cultural
diversity, strategic commercial business acumen and knowledge
of global capital markets and major transactions.
The Committee retained Leaders Mores (Ireland) and Russell Reynolds
Associates (International) to lead the search for the Independent
Non-Executive Directors. Both are leading executive and non-executive
search practices and have no other connection with the Group.
A structured timetable was adopted for the process and regular
Committee discussions and updates held throughout the process.
Both Leaders Mores and Russell Reynolds Associates put together
an extensive range of potential candidates for consideration which
was narrowed down to a strong shortlist for interview. Shortlisted
candidates went through a three-stage interview process meeting
with the then Senior Independent Director and the current Senior
Independent Director and the Group Secretary, the Group Managing
Director and the Group Chairman and finally the Committee. All were
unanimous in their final selection of each of John Daly, Richard Laube
and Mary Minnick as Independent Non-Executive Directors.
Unfortunately, due to personal and family reasons, Richard Laube
has notified the Company that he will retire as Non-Executive Director
effective 28 February 2020. A process to identify a new Independent
Non-Executive Director is currently underway.
Senior Independent Non-Executive Director
The Board, on the recommendation of the Nomination and
Governance Committee, approved the appointment of Dan O’Connor
to succeed Paul Haran as Senior Independent Non-Executive
Director effective from Paul’s retirement on 1 May 2019.
Workforce Director
During 2019, the role of Donard Gaynor, an Independent Non-
Executive Director, was expanded to include oversight of workforce
engagement to further improve Board involvement in this area.
Details of Donard’s engagements and activities with employees
during 2019 are set out in the ‘Our People’ section on page 45
and on page 67.
Succession planning
The Committee is responsible for ensuring that the Board, its
Committees and senior management have the correct balance of skills,
knowledge and experience to effectively lead the Group both now
and in the longer term. This is achieved through effective succession
planning. During 2019, the Committee continued to focus on the
succession pipeline with consideration of both Board-level plans to
ensure orderly refreshment of membership, and longer term talent
strategy to understand the changing competencies required to ensure
the development of a skilled workforce which will support the Group’s
strategy, purpose, culture and values.
Through ongoing review of Non-Executive tenure, the Committee
can identify any likely short to medium term changes in the skill set,
diversity and independence of the Board and ensure that Board
refreshment is progressive and planned.
83

Internal talent development and the attraction and retention of skilled
individuals is facilitated through engagement with HR to ensure that
the broader people strategy supports the development of the internal
talent pipeline and ensures access to a diverse and inclusive external
talent pool. We have looked to identify, harness and accelerate the
development of talent at all levels, based on an assessment of
successor readiness in respect of senior positions. Annually one
Board meeting is held at one of the wholly-owned business sites
which provide an opportunity for interaction with employees and
a chance for Non-Executive Directors to develop deeper insights
into the quality of our current senior management in both these
businesses and the potential for succession.
Our culture is a major contributing factor to the delivery of long-term
success for our stakeholders. The Committee plays a key role in
embedding a positive culture by ensuring that our succession planning
and appointment process identifies candidates who are exemplars of
our values. Our induction and training programmes, and the annual
performance evaluation process promotes these values in all our
Directors and employees.
Regular matters
A number of regular matters were considered by the Committee in
accordance with its terms of reference, details of which are:
Review of Non-Executive Directors’ independence in
accordance with the guidance in the Irish Corporate
Governance Annex and the UK Corporate Governance
Code (2016) (the ‘Codes’)
The Board evaluation and review process considered the
independence of each of the Non-Executive Directors, taking into
account their integrity, objectivity and contribution to the Board and
its Committees. A rigorous internal review was carried out in respect
of those Non-Executive Directors who served longer than six years.
The Board is of the view that the following behaviours are essential for
a Non-Executive Director to be considered independent:
• Provides an objective, robust and consistent challenge to the
assumptions, beliefs and views of senior management and the
other Directors;
• Questions intelligently, debates constructively and challenges
rigorously and dispassionately;
• Acts at all times in the best interests of the Company and its
shareholders; and
• Has a detailed and extensive knowledge of the Company and the
Group’s business and of the market as a whole which provides a
solid background with which they can consider the strategy of the
Company and the Group objectively and help the Executive
Directors develop proposals on strategy.
The Board and Committee believe that all Non-Executive Directors
demonstrated the essential characteristics of independence and
brought independent challenge and deliberations to the Board.
The reviews took into consideration the fact that Martin Keane,
Eamon Power and John Murphy have each served on the Board
for more than nine years; (Martin serving ten and a half years
coterminously with the Group Managing Director, the longest
coterminous period with a current Executive Director) and that eight
of the Non-Executive Directors are Society Nominee Directors, both
of which the Codes state could be relevant to the determination of
a Non-Executive Director’s independence. The Codes also make
it clear, however, that a director may be considered independent
notwithstanding the presence of one or more of these factors. This
reflects the Board’s view that independence is determined by the
Director’s character as set out above. The Committee concluded
that the Society Nominee Directors including the Group Chairman
continue to demonstrate the essential characteristics of
independence and brought independent challenge and deliberations
to the Board through their character and objectivity. Notwithstanding
this, however, the Society Nominee Directors are not being
designated as Independent Directors for the purpose of Listing
Rule 6.1.7 (2) of Euronext Dublin/Listing Rule 9.2.2 AD of the UKLA.
This conclusion was presented to, and agreed by, the Board.
Re-election of Directors
The Committee continues to be of the view that all Directors should
be re-elected to the Board at the Company’s AGM. All Directors who
sought re-election at the 2019 AGM were re-elected. All Directors,
with the exception of Richard Laube (who retires effective 28 February
2020), Jer Doheny and Eamon Power (who are not putting themselves
forward for re-election at the AGM), are seeking re-election at the
2020 AGM.
The Committee is satisfied that the backgrounds, skills, experience
and knowledge of the Group of the continuing Directors collectively
enables the Board and its Committees to discharge their respective
duties and responsibilities effectively. Each Director is committed to
their role, provides constructive challenge and devotes sufficient time
to contribute to the performance of the Board. The Group Chairman
farms in Co. Laois and is a Director of Ornua Co-operative Society
Limited, but the Committee and the Board consider that this does not
interfere with the discharge of his duties to the Group. This conclusion
was supported by the formal external evaluation of the Board
conducted during 2019, see page 71 for more details on the Board
evaluation. The table on page 69 provides a summary of the
competencies, important to the long term success of the Group,
that each Director brings to the Board. Full biographies are set
out on pages 62 to 65.
Additionally in 2020, as in 2019, the re-election of each of the
Independent (of the Society) Non-Executive Directors, Patrick
Coveney, John Daly, Donard Gaynor, Mary Minnick and Dan
O’Connor will be subject to approval by the independent shareholders
(i.e. all of the shareholders save the Society and its subsidiary
companies and related parties). We believe that sufficient biographical
and other information on those Directors seeking re-election is
provided in this Annual Report, and the Circular accompanying the
Notice of the 2020 AGM to be published, to enable shareholders
to make an informed decision.
84
 > Directors’ Report
Remuneration Committee Report
Dear shareholder,
On behalf of the Board and Remuneration Committee, I am pleased
to present the Directors’ Remuneration Committee Report for the
year ended 4 January 2020. The Directors’ Remuneration Committee
Report sets out the operation of the Directors’ Remuneration Policy in
2019 and proposed operation in 2020. Our current 2018-2020 policy
was approved at our 2018 AGM and is included for reference in this
Remuneration Report.
As set out in the Group Chairman’s Statement, 2019 has been a
mixed year.  Performance Nutrition experienced a challenging
year as a result of a range of factors that included a consumer
channel shift in Europe and difficult global trade dynamics in key
international markets. The challenges in  Performance
Nutrition were, in part, offset by good performance in our 
Nutritionals business segment, our Joint Venture businesses and
our recent acquisitions of SlimFast and Watson.
As fully explained later in the report, the Committee’s decisions in
respect of 2019 short-term incentive plan outcomes and application of
remuneration policy in 2020 reflect an evaluation of the performance
delivery for 2019 as well as our acknowledgement of wider shareholder
expectations. In this regard, exercising the Committee’s remit to apply
appropriate discretion, the Committee has moved beyond application
of the formulaic methodologies for bonus determination set out in
policy to ensure that remuneration reflects the results achieved and
incentivises an improved performance in 2020.
The Committee’s approach has been supported by the Group
Operating Executive. Indeed the Group Managing Director Siobhán
Talbot and the CEO of  Performance Nutrition Hugh McGuire
went further by voluntarily waiving any annual short term bonus award
in respect of 2019, due to the performance challenges experienced
in  Performance Nutrition.
Consequently, the decisions by the Remuneration Committee in
respect of the 2019 short-term incentive plan are to:
1. Reduce the bonus amount payable in respect of non-financial
metrics for the Group Operating Executive, which includes the
Executive Directors, to reflect the holistic performance outcome.
An exception to this is the CEO of  Nutritionals who is to
receive his bonus as normal given the strong performance of this
business unit in 2019.
2. Any bonus payable for 2019 to the Group Finance Director who
is receiving a reduced bonus equivalent to 29.3% of maximum,
would be deferred into shares for two years in accordance with
the procedures that normally apply for bonus earned above
target as part of the Group’s Remuneration Policy.
“Aligning shareholder
interests and executive
remuneration through
robust performance
and pay linkages.”
Donard Gaynor
Remuneration Committee Chairman
In addition, in the light of the challenges encountered in 2019 the
Remuneration Committee has made the following decisions in
respect to 2020 remuneration for the Group Operating Executive,
which includes the Executive Directors:
1. No salary increases will be awarded to the Group Operating
Executive in 2020.
2. In respect of the 2020 annual bonus plan, a modifier has been
introduced whereby the bonus pool available across the Group
may be reduced if the Group’s 2020 EPS target is not met. This
applies to all employees eligible to participate in the Group bonus
plan and is in addition to the Remuneration Committee’s overriding
discretion to adjust the formulaic bonus outcome for the Group
Operating Executive including the Executive Directors if it is not
reflective of underlying performance.
3. Acknowledging the decline in the 2019 share price, a reduction
in the size of 2020 long-term incentive plan awards will be made to
the Group Operating Executive, including the Executive Directors
when they are expressed as a multiple of salary. The revised
award levels to operate in 2020 will be 200% of salary (from 250%
of salary) for the Group Managing Director and 160% of salary
(from 200% of salary) for the Group Finance Director. Furthermore,
the Committee is retaining the same range of growth targets (EPS
and ROCE) for the three year performance period 2020 to 2022
as were set for the 2019 award to end 2021. In the context of the
challenging nature of 2019, and market outlook for dairy and Joint
Ventures in 2020, this is considered an indication of Committee
focus on driving performance in 2020 and beyond.
4. Noting developments in institutional investors’ expectations in
relation to Directors’ pensions, a newly appointed Executive
Director will have their pension set in line with the wider workforce.
Looking ahead to the renewal of our current Remuneration Policy
which will take place at our 2021 AGM (being the third anniversary
of the introduction of the current Policy), the Committee intends
to undertake a comprehensive review of our current approach to
Executive Remuneration. We take into this process the benefit of
the feedback received from our investors in the recent consultation
process and the decisions made in respect of 2019 and 2020 to
continue to evolve our remuneration policy and operation. We have
considered the recommended best practice remuneration provisions
85

included in the 2018 UK Corporate Governance Code and note that
we already comply with the majority of those provisions. However,
during the review of remuneration we are to undertake in 2020 we
will consider the areas that our current policy does not comply with
a view to taking appropriate policy decisions to align with the Code
where we consider it appropriate to do so.
The Committee also notes that, from 2020, the format and structure
of our Remuneration Report will be updated to reflect the reporting
obligations under the Shareholder Rights Directive which will require
changes to our current format of reporting and the 2018 UK
Corporate Governance Code. The Committee considered early
adoption of expected requirements under the Shareholder Rights
Directive but concluded that it was better to wait for the specifics of
the legislation to be transposed into Irish law before adopting them.
The Committee has, however, improved certain aspects of its
disclosure for 2019 (e.g. reporting on non-financial performance
in the annual bonus).
As noted above, the Committee has spent considerable time
engaging with our institutional shareholders during the year. This
follows the 2019 AGM voting on our Directors’ Remuneration Report
where, whilst the majority of our shareholders were supportive of the
way we applied our remuneration policy in 2019, just over 21% of
shareholders voted against the Directors’ Remuneration Report. The
votes against related to changes to Executive Directors’ salaries, their
contractual terms and the 2019 long-term incentive plan targets. We
did consult widely prior to the 2019 AGM on these changes but a key
learning from our post AGM discussions, with those shareholders that
voted against, was that we should have better communicated the
rationale for the changes we made. Accordingly, during the year we
undertook a far reaching consultation exercise with over 70% of our
shareholder register (plus the leading shareholder advisor bodies) to
better explain our changes and gather shareholder feedback. Based
on the information we provided the feedback from this exercise was
overwhelmingly positive and at the request of some of those
consulted, we have included a further detailed explanation in the
Directors’ Remuneration Report of the rationale for the changes we
made for 2019. This included the Committee’s objective of setting pay
at a level that reflected the size and complexity of the Group (allowing
for the growth in recent years by acquisition, also through organic
growth and the substantial joint ventures we operate) and to
recognise the unique legal framework in Ireland that necessitates
taking a different approach to non-compete provisions than is
standard in the UK. Further details are set out on pages 90 to 91.
Board changes
As set out on page 80 a number of Board changes were made during
the year. Paul Haran retired from the Board and the Remuneration
Committee. John Daly and Mary Minnick were appointed Non-
Executive Directors to the Board on 1 May 2019, both also taking
a seat on the Remuneration Committee on 20 June 2019. Further
details of Remuneration Committee members and meeting
attendance is set out on page 87.
To facilitate this reorganisation and the broadening of the external
perspective of the Board, the CEO of  Nutritionals and the
CEO of  Performance Nutrition did not put themselves forward
for re-election to the Board at the AGM on 24 April 2019. Their
executive roles are unaltered. In line with best practice their pro-rata
remuneration to 24 April 2019 is set out in this Remuneration Report.
Business performance 2019
The Group had good revenue growth versus prior year, driven
by a strong performance in  Nutritionals and from the recent
acquisition of SlimFast and Watson. While  Nutritionals and
our strategic Joint Ventures performed well,  Performance
Nutrition encountered challenges primarily in some non-US markets
throughout 2019. Adjusted EPS was down 7.7% constant currency
(down 3.2% reported). Return on capital employed was 10.9%, a
decline from prior year reflecting lower profitability and higher capital
employed from recent acquisitions and investments in joint ventures.
The Balance Sheet continues to be strong. Net debt was €614.3m
with all financial metrics well within bank covenant levels at year end,
and with capacity for further investment available. Operating Cash
Flow of €279.9m equates to an EBITDA cash conversion of 86.1%.
Remuneration in respect of 2019
Executive Director base salary and benefits
The increases in salary for our Executive Directors were set out in last
year’s Remuneration Report and formed part of my consultation with
shareholders as set out above. Further context for the increases
awarded is provided on page 94 with the salaries in effect from
1 January 2019 for the current Executive Directors being €1,050,000
for the Group Managing Director and €581,000 for the Group
Finance Director.
2019 Annual Incentive
The 2019 Annual Incentive was based on a combination of business
(80% weighting) and personal strategic (20% weighting) objectives.
As a result of challenging market conditions the Group Adjusted EPS
and  Performance Nutrition EBITA targets have not been met.
The Cash Flow targets have been exceeded as have the Executive
Director personal objectives. However, as detailed above the
formulaic bonus outcomes were the subject of a review and
adjustment by the Committee resulting in reduced overall bonus
outcome of between 0% and 42.8% of maximum for the Group
Operating Executive. Full details are provided on pages 95 to 97. As
stated earlier, the Group Managing Director and the CEO of 
Performance Nutrition have both waived any bonus payment for 2019.
2017 Share Awards granted under the 2008 Long-Term Incentive
Plan (LTIP 2008)
Under the 2008 LTIP the 2017 share award is the third share award
which incorporates business segment as well as Group performance
conditions for relevant Executive Directors. Against very stretching
objectives for the three year performance period 2017 to 2019, the
vesting for Executive Directors is in the range of 11.0% and 17.7% for
the 2017 share awards. The 2017 share awards will vest no earlier
than 23 February 2020, the third anniversary of their grant. Full details
on the LTIP 2017 share awards can be found in the Directors’
Remuneration Implementation Report on pages 98 to 100.
Non-Executive Director remuneration
Following the review of and increase in the fees paid to Non-Executive
Directors as part of the Remuneration Policy review approved
at the AGM in April 2018, there were no increases for 2019. The
Non-Executive Directors fees for 2019 are outlined on page 92.
86
 > Directors’ Report
Remuneration Committee Report continued
Executive Director remuneration for 2020
The Committee has carefully considered the operation of the current
policy for 2020 and feedback from investors. The Committee has
reviewed the use of EPS in both the Annual and Long-Term incentives
and the current TSR peer group and has determined to retain both of
these for 2020 (with this in part relating to the Committee’s desire to
best recognise joint venture profit after tax performance in our
financial targets for short and long-term performance and since EPS
is the most comprehensive financial measure of performance it is to
be retained in both schemes). However, the Committee intends to
review this approach from first principles as part of the 2020 policy
review. For 2020 no substantive changes will be made to the
operation of policy in place for 2019. Further detail of the
Committee’s considerations is set out on page 102.
Executive Director base salary and benefits
The base salaries of the Group Managing Director and Group Finance
Director will remain unchanged for 2020. No increase in base salary
will be applied.
2020 Annual Incentive
The Group Managing Director and Group Finance Director will
continue to participate in the Annual Incentive plan based on a
combination of business (80% weighting) and personal (20%
weighting) objectives. The target and maximum payments will remain
at 75% and 150% of base salary respectively. However, as outlined,
the 2020 bonus structure is being amended to further focus on
performance and growth.
2020 Share Awards granted under the 2018 Long-Term Incentive
Plan (LTIP 2018)
The Group Managing Director and Group Finance Director will
continue to participate in the LTIP 2018 in 2020. However, as detailed
earlier, in light of the current share price the current Executive
Directors’ award levels, expressed as a percentage of salary,
will be reduced by 20% versus our standard application of Policy.
Performance and vesting will continue to be determined by the key
Group performance metrics of adjusted EPS, ROCE and relative
TSR against the STOXX Europe 600 Food and Beverage Index.
Directors’ Remuneration Policy Review and Transposition of the
EU Shareholder Rights Directive into Irish Law
The current 2018-2020 Remuneration Policy will be reviewed during
2020 and a new policy brought to shareholders for approval at our
2021 AGM. The Committee will also consider as part of its review how
the requirements of the 2018 UK Corporate Governance Code will be
addressed in the new policy including post-employment shareholding
guidelines and Directors’ pension contributions.
In 2019 the Group also undertook an analysis of gender representation
and pay. Insights and recommendations were presented to the Board.
We will continue to proactively monitor to ensure equitable
representation and pay.
We are awaiting the new legislation to bring the amended European
Shareholder Rights Directive into Irish law which is now overdue and
our policy review and shareholder resolution to approve the new policy
will take into account any new requirements. It is expected that this
legislation will prescribe many aspects of the content and format of
remuneration reporting which will directly influence the Directors’
Remuneration Report in future years. In doing so the Group will seek
to comply with the provisions of the UK Corporate Governance Code
in a manner consistent with the methodologies set out by Irish law.
Voting & Shareholder engagement
An advisory non-binding resolution to approve the 2019 Remuneration
Committee Annual Report on Remuneration will be put to the AGM on
22 April 2020.
During 2019 the Group continued to execute its strategic ambitions,
despite the performance headwinds detailed in the Group Chairman’s
Statement. The Committee is confident that, following its use of
discretion, the remuneration outcomes for the Executive Directors are
aligned to that performance. I and my fellow Committee members are
committed to strong and effective engagement with our shareholders
and to providing remuneration reporting disclosures that effectively
explain our remuneration decisions.
I am grateful to our shareholders for their engagement in a productive
and valuable process in relation to the issues identified at our 2019
AGM. I trust that the more detailed explanations that we have been
able to provide through this engagement and as set out in this year’s
Directors’ Remuneration Report enable you to support the
remuneration decisions that we made in 2019. I look forward to further
engagement as the Committee reviews the Directors’ Remuneration
Policy in advance of the shareholder vote on a revised policy at our
2021 AGM.
I am available through our Group Secretary if you wish to engage with
me prior to our 2020 AGM.
Donard Gaynor
Remuneration Committee Chairman
Key responsibilities
Determine and agree with the Board the framework and policy for
remuneration of the Executive Directors and other Senior Executives
as required.
Oversee remuneration design and target setting of annual and
long-term incentive arrangements to ensure comprehensive linkages
between performance and reward and to incentivise delivery of
Group strategy.
Determine, within the agreed policy, individual total compensation
packages for the Executive Directors and other Senior Executives
as required.
Determine any employee share-based incentive award and any
performance conditions to be used for such awards.
Consider and approve Executive Directors’ and other Senior
Executives’ total compensation arrangements annually.
Determine the achievement of performance conditions for vesting
of Annual and Long-Term Incentive Plans.
Review and understanding of reward policies and practices
throughout the  Group.
Terms of reference
The full terms of reference of the Remuneration Committee (which
were reviewed and updated in December 2019) can be found on the
Group’s website: www..com or can be obtained from the
Group Secretary.
87

Remuneration Committee Governance 2019
Remuneration Committee Governance
The Remuneration Committee is currently comprised of four Independent (in all respects, including of the Society) Non-Executive Directors,
of whom two members constitute a quorum. Where relevant the Group Chairman may also attend the Remuneration Committee meetings.
The Group Managing Director and the Group Human Resources & Corporate Affairs Director attend Committee meetings by invitation only.
No Director or member of Operating Executive Committee is involved in considering his/her own remuneration, they absent themselves when
their remuneration is discussed. The Group Secretary acts as secretary to the Remuneration Committee.
Remuneration Best Practices
The Remuneration Committee complies with all relevant reporting and legislative requirements applicable to an Irish incorporated company with
a primary listing on Euronext Dublin. With a secondary listing on the London Stock Exchange, the Remuneration Committee has also resolved
on a voluntary basis to align, to the extent it considers possible and appropriate having had regard to Irish law, the Directors’ Remuneration Policy
and Remuneration Reporting with UK remuneration best practices including the regulations applicable to UK incorporated and listed companies.
Additionally, the Remuneration Committee is giving increasing regard to remuneration practices in the major overseas countries in which the
Group operates which are relevant in attracting, retaining and motivating senior talent in relevant markets. The Committee also continues to
monitor the adoption of the amended European Shareholder Rights Directive in Ireland and any potential impact.
The Remuneration Committee receives independent external advice. This advice was provided by Willis Towers Watson, who were first appointed
as Remuneration Advisers in 2011, until October 2019. Following a competitive selection process Korn Ferry are now appointed as Remuneration
Advisers to the Board. The provision of external advice to the Remuneration Committee supports a robust and sound decision making process.
Willis Towers Watson fees for advising the Remuneration Committee to October 2019 were €52,678 and Korn Ferry’s fees from October to the
end of the year were €34,595.
The Remuneration Committee is committed to strong and effective engagement with our shareholders and to provide remuneration reporting
disclosures that effectively explain our remuneration decisions. As noted in the letter of the Chairman of the Remuneration Committee,
engagement with shareholders took place in 2019 following the 21% vote against our 2018 Annual Report on Remuneration. We will engage with
our shareholders again in 2020 regarding our new policy. Following feedback received this year we reviewed our remuneration reporting to ensure
it clearly explains our remuneration decisions and we will consider this again as part of our policy review.
The Committee continues to actively listen and incorporate, as far as possible, the views of the shareholders when determining the Directors’
Remuneration Policy and making remuneration decisions. Furthermore, through the advice of its independent external Remuneration Advisers,
the Committee monitors and incorporates, as appropriate, best practice developments for remuneration policies. The Directors’ Remuneration
Committee is currently operating within the Directors’ Remuneration Policy 2018-2020 which received 99.83% approval of shareholders at the
AGM on 25 April 2018.
Remuneration Report Results at 2019 AGM
Resolution to receive and consider the Remuneration Committee report for the year ended 29 December 2018
For % Against % Total excluding withheld % Withheld % Total including withheld %
160,590,836 78.69% 43,492,339 21.31% 204,083,175 100.00% 117,788 0.06% 204,200,963 100.00%
2019 Committee Members and meeting
attendance
Member Appointed
Number of full years
on the Committee
2019 meeting
attendance
D Gaynor 13-May-14 5 7/7
P Haran* 9-Jun-05 13 2/2
D O’Connor 1-Dec-14 5 7/7
J Daly^ 1-May-19 <1 4/4
M Minnick^ 1-May-19 <1 4/4
* Paul Haran retired from the Board and the Remuneration Committee on 1 May 2019.
^ John Daly and Mary Minnick were appointed to the Board on 1 May 2019 and took their
seats on the Remuneration Committee on 20 June 2019.
 
See page 63 for more information on current Remuneration
Committee members.
Allocation of time
	
Framework and Policy
Annual Incentive Plan
Long Term Incentive Plan
Total Compensation Package
Wider Group Reward
Pension
88
 > Directors’ Report
Remuneration Committee Report continued
Section A: Directors’ Remuneration Policy 2018-2020
The 2018-2020 Directors’ Remuneration Policy applies to the Group’s Executive Directors. The new legislation required to be enacted in Ireland
prior to 10 June 2019 for the purposes of implementing the amended European Shareholder Rights Directive has not yet been brought into effect.
This new legislation will provide shareholders with the right to vote on the policy for directors’ remuneration but the effective date of this provision
is not yet known. Subject to the provisions of the new legislation, it is the Remuneration Committee’s intention that the Directors’ Remuneration
Policy will continue to apply until the 2021 Annual General Meeting when a new policy which is aligned to the requirements of any new legislation
in place by that time will be brought to shareholders for approval.
Remuneration strategy, policy and purpose
The Directors’ Remuneration Policy is based on attracting, retaining and motivating executives to ensure that they perform in the best interests
of the Group and its shareholders by growing and developing the business over the long-term. Performance related elements of remuneration
are designed to form an appropriate portion of the overall remuneration package of Executive Directors and link remuneration to business
performance and individual performance, while aligning the interests of Executive Directors with those of shareholders.
The Directors’ Remuneration Policy focuses on incentivising the successful implementation of our corporate strategy, consistent with our risk
management framework. This strategy aims to deliver sustainable, superior earnings growth, solid financial stewardship and total shareholder
return performance for our shareholders over the long-term through the strong performance of high-quality and committed leadership, critical
to the future development of the Group.
The Group Key Performance Indicators (KPIs), which are detailed on pages 18 and 19, underpin the selection of performance criteria used within
the incentive arrangements. We have provided specifics in summary form on the individual elements of the remuneration packages for Executive
Directors including personal objectives on subsequent pages.
Summary Executive Directors’ Remuneration Policy
The following table summarises the key elements of the Directors’ Remuneration Policy for the Group’s Executive Directors. The operational
elements are subject to annual adjustment. The content is consistent with the policy presented to shareholders at the 2018 AGM. There are some
formatting and language refinements to give better clarity.
Element Objective Description, Performance Measures and Maximum Value
Base salary (fixed)
Annual fixed pay
Provide competitive base pay
which reflects market value of
role, job size, responsibility and
individual skills and experience.
Set by reference to the relevant market median of Europe and US based on an external
independent evaluation of the role against appropriate peer companies.
Reviewed annually by the Remuneration Committee. Any reviews, unless reflecting a change
in role, usually take effect from the commencement of the relevant financial year.
Individual performance, with targets and assessment determined annually.
Pension (fixed)
Retirement Benefit
Provide competitive,
affordable and sustainable
retirement benefits.
Determined as a percentage of base salary.
Other Benefits
(fixed)
Provide competitive benefits
which recognise market value of
role, job size and responsibility.
Determined in consideration of the level of responsibilities and local market practice.
Other benefits include company car or equivalent, benefit in lieu of personal future service
pension benefit, medical/life assurance, tax equalisation payments and relocation or other
business related allowances where appropriate.
Short-Term
Performance
Related Incentive
(variable)
Incentivise Executive Directors
to achieve specific performance
goals which are linked to the
Group’s business plans and
personal performance objectives
during a one-year period.
Ensure greater linkage of
remuneration to performance.
Ensure greater linkage to
long-term sustainability and
alignment to Group Risk
Management Policy.
Alignment with shareholders
and/or share value growth.
The Annual Incentive scheme rewards achievement of specific short-term annual
performance metrics.
Group Executive Directors can earn 75% of base salary at target performance and up to
150% for maximum performance.
Based on growth in annual Group adjusted EPS on a constant currency basis, Group
Operating Cash flow and individual performance objectives (Organisation Effectiveness,
Strategic Growth Plan, Driving Innovation Capability).
All performance metrics and calibration of targets are determined by the Remuneration
Committee annually.
The proportion of the Annual Incentive earned in excess of 75% of base salary is deferred
and once the appropriate taxation and social security deductions have been made, invested
in shares in the Company and delivered to the Executive Directors two years following this
investment.
Deferred incentives are subject to malus and clawback (for a period of two years following
this investment) to the extent determined by the Remuneration Committee as outlined in
Note 1 on page 89.
89

Element Objective Description, Performance Measures and Maximum Value
Shareholding
Requirement
Minimum share ownership
requirements to be built
up over a five-year period.
Ensure a greater alignment with
shareholders’ interests.
Executive Directors are expected to build a shareholding through the vesting of shares under
the Group’s schemes.
The Group Managing Director is required to build and maintain a shareholding of 250% of
base salary over a maximum of five years. Other Executive Directors are required to build
up and maintain a shareholding of 150% of base salary over a maximum of five years.
Existing shareholdings and shares acquired in the market are also taken into account, and
although share ownership guidelines are not contractually binding, the Remuneration
Committee retains the discretion to withhold future grants under the 2018 LTIP if Executive
Directors do not comply with the guidelines.
Long-Term
Performance
Related Incentive
(variable)
Long Term Incentive Plan
under which shares are
granted in the form of
a provisional allocation
of shares for which no
exercise price is payable
To align the interests of
Executive Directors and
shareholders through a
long-term share-based incentive
linked to share ownership and
holding requirements.
To focus on greater alignment
with shareholders, long-term
retention and reward for
sustainable performance.
Long-Term Incentive individual annual share award level ordinarily cannot exceed 250% of
base salary, dependent on the level of job responsibilities and with reference to companies
of similar size and complexity in Europe and US. This may vary where necessitated by the
recruitment or retention of key Executives as determined by the Remuneration Committee.
• Group Managing Director, maximum award level of 250%.
• Group Finance Director, maximum award level of 200%.
The Remuneration Committee annually reviews and determines the financial metrics. The
2020 share award is to be determined by reference to the following performance metrics:
• 40% Group adjusted EPS;
• 40% Group ROCE;
• 20% relative TSR against the STOXX Europe 600 Food and Beverage Index.
For all performance metrics, 25% vests at threshold performance and 100% vests at
maximum with straight line vesting in between these levels.
The extent of vesting shall be dependent on the level of achievement, measured over a
three-year period, of the relevant performance conditions. The Remuneration Committee
has the discretion to change the performance criteria (including the measures, their
weighting and calibration) where deemed appropriate for new Long-Term Incentive awards
to ensure they continue to reflect the strategic priorities of the business. Any changes to
these performance conditions will be disclosed in the Remuneration Committee Report
which will be subject to a general shareholder non-binding advisory vote. Quality
of earnings review/underpin will continue to be exercised at the discretion of the
Remuneration Committee.
A share award shall not vest unless the Remuneration Committee is satisfied that the
Group’s underlying financial performance has shown a sustained improvement in the period
since the date of grant.
Executive Directors will be required to hold shares received pursuant to the vesting of LTIP
share awards for a minimum period of two years post vesting. LTIP share awards are subject
to malus and clawback (during the two-year holding period following vesting), to the extent
determined by the Remuneration Committee as outlined in Note 1 below.
Note 1: Malus and clawback – The Committee may, at any time within two years of an LTIP share award or Annual Deferred Incentive vesting, determine that malus and clawback shall apply if the
Committee determines that there was a material misstatement of the financial statements of the Company upon which the performance targets were assessed or an erroneous calculation was made
in assessing the extent to which performance targets were met. Additionally, the Committee can determine at any time within two years of an LTIP share award or Annual Deferred Incentive vesting
that malus and clawback will apply if an award holder is found guilty, or pleads guilty, to a crime which causes reputational damage; or an award holder is guilty of serious misconduct or gross
negligence which causes loss or reputational damage.
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 > Directors’ Report
Remuneration Committee Report continued
Executive Director employment conditions
The Remuneration Committee adopts a transparent framework when making Board appointments of either external or internal candidates.
Recruitment policy
When recruiting new Executive Directors, the Group’s policy is to pay what is necessary to attract individuals with the skills and experience
appropriate to the role being filled, taking into account remuneration across the Group, including other senior executives, and that offered by
other international food and nutritional companies and other companies of similar size and complexity. New Executive Directors will generally be
appointed on remuneration packages with the same structure and pay elements as described in the table below. Each element of remuneration
to be included in the package offered to a new Executive Director would be considered.
Element Description
Base salary (fixed) Base salary levels will be set in consideration of the skills, experience and expected contribution to the new role, the current
salaries of other Executive Directors in the Group and current market levels for the role.
Pension (fixed) Will be considered in light of relevant market practice for the role, the retirement arrangements of the wider workforce and
consideration by the Remuneration Committee of the new recruit’s package as a whole.
Other Benefits
(fixed)
Will be considered in light of relevant market practice for the role and the provisions in place for other Executive Directors.
Short-Term
Performance
Related Incentive
(variable)
The maximum level of short-term variable remuneration which may be granted to a new recruit is 150% (total maximum variable
remuneration is 400%, annual and long term variable). This excludes any buyout share awards that might arise.
The Remuneration Committee will consider whether it is appropriate for the new recruit to participate in the same Annual
Incentive plan applicable to the current Executive Directors. If this is considered appropriate, the same financial measures,
weighting, payout scale and target and maximum incentive opportunity (as a percentage of base salary) which apply to the
existing Executive Directors will generally apply to the new recruit.
Long-Term
Performance
Related Incentive
(variable)
The maximum level of long-term variable remuneration which may be granted to a new recruit is 250% (total maximum variable
remuneration is 400%, annual and long-term variable). This excludes any buyout share awards that might arise.
The award of long-term incentives will depend on the timing of the appointment and where this fits into the typical annual
grant cycles.
In exceptional circumstances or where the Remuneration Committee determines that it is necessary for the recruitment or retention of key
executives, the Remuneration Committee reserves the right to offer additional cash and/or share-based payments. Such payments may take into
account remuneration relinquished when leaving the former employer and would reflect the nature, time horizons and performance requirements
attached to that remuneration. The Remuneration Committee may also grant share awards on hiring an external candidate to buy out awards
which will be forfeited on leaving the previous employer.
The Remuneration Committee’s approach to this matter is to carry out a detailed review of the awards which the individual will lose and calculate
the estimated value of them. In doing so, the Remuneration Committee will consider the vesting period; the award exercise period if applicable;
whether the awards are cash or share-based; performance related or not; the former employer’s recent performance and pay out levels and any
other factors the Remuneration Committee considers appropriate. If a buyout share award is to be made, the structure and level will be carefully
designed and will generally reflect and replicate the previous awards as accurately as possible. The award will be made subject to appropriate
clawback provisions in the event that the individual resigns or their employment is terminated within a certain time frame.
For an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms,
adjusted as relevant to take into account the appointment. In addition, any ongoing remuneration obligations existing prior to appointment
(which are inconsistent with the policy as disclosed herein) may continue, provided they are disclosed to the Remuneration Committee. The
Remuneration Committee reserves the right to offer additional cash and/or share-based payments on an internal promotion when it considers
this to be in the best interests of the Group and its shareholders.
Executive Director Service Agreements
The Group Managing Director, Siobhán Talbot, and the Group Finance Director, Mark Garvey, have three year service agreements effective from
1 January 2019. The service agreements for the Group Managing Director and the Group Finance Director, in line with market practice, include
a standard 12 month notice obligation from either side. The service agreements are capable of being terminated by either party on not more than
12 months’ notice, provided however that no notice obligation for the executives shall be for a period longer than 6 months after the end of the
initial three year contract period, if not renewed. The Group retains the sole right to terminate with pay in lieu of 12 months’ notice, or part thereof,
at any time.
Employment contracts for Executive Directors do not provide for any compensation for loss of office beyond payments in lieu of notice and therefore,
except as may otherwise be required by Irish law, the amount payable under the contract upon termination is limited to a maximum of 12 months
remuneration. If so required the Group reserves the right to make necessary payments in settlement of a Director’s statutory employment rights.
91

Background to the 2019 Service and Severance Agreements
The following additional information is presented in response to the feedback received during post AGM discussions with institutional
shareholders where some requested that additional details provided in these discussions be included in the Remuneration Report.
The review of contractual arrangements with the Group Managing Director and the Group Finance Director commenced in mid-December 2018,
following the completion of the acquisition of SlimFast. The Committee’s focus for the review was to provide enhanced continuity and stability to
the  Group in terms of leadership and protection of the business during a period of significant change and business evolution.
To ensure both these contractual arrangements and the effectiveness of the non-solicitation and non-compete provisions remained appropriate in
the context of Irish Law, the Committee introduced separate 12 month restrictive covenant Agreements in 2019. These separate provisions were
seen by the Board as essential to provide additional, critical protection for the Group when the Executive Directors leave service. Under Irish law,
it is difficult to enforce non-compete agreements and providing payment for the non-compete obligations ensures as far as possible the
enforceability of the obligations. Such agreements which are separate and in addition to the contract of service and notice period are therefore
both necessary as a matter of law and aligned to market practice in Ireland.
The post termination restrictive covenant agreement exists solely to provide a high level of protection to the Company from competitors by
compelling the executives not to compete in any way with the  Group, directly or indirectly, or engage with its customers, suppliers and
employees for an additional period of 12 months post termination of employment.
The Committee understands shareholders’ concerns around executive remuneration, including that on termination of employment, payments to
Executive Directors should not exceed 12 months remuneration, and wholly supports the principles of paying no more than is necessary for
securing the best interests of the Group for shareholders as well as not rewarding failure. The Committee will ensure that careful consideration is
given to the remuneration payable on any termination of employment including whether an Executive Director is required to work his or her notice
period to minimise the total cost of severance.
Exit pay policy
The Group’s exit pay policy for the variable pay of Executive Directors is as follows;
• STIP awards – STIP awards will vest pro-rata to reflect the performance period which was worked and the performance outcomes achieved,
in accordance with plan rules with the Remuneration Committee applying its discretion to allow all or part of STIP award to vest.
• LTIP awards – In the event an Executive Director leaves before an award vests for reasons of death, redundancy, injury, ill health or disability
retirement with the agreement of the Remuneration Committee or any other reason approved by the Remuneration Committee, the awards of
the Executive Director will lapse except that the Remuneration Committee will have the discretion to allow all or some of the Executive
Director’s awards to vest subject to pro-rate for time and to the extent to which the performance conditions of the award are met (save in the
case of death or if the circumstances are sufficiently exceptional as determined by the Remuneration Committee where the Remuneration
Committee may allow some or all awards to vest). The Remuneration Committee may at any time prior to vesting, in its absolute discretion,
revoke any determination to permit awards to vest where an Executive Director breaches a protective covenant.
	
In the event of a takeover, merger, scheme of arrangement or other similar event involving a change of control of the Company or a demerger
of a substantial part of the Group, or a special dividend, or which has the effect of materially changing the Group’s business, or an Executive
Director’s employment with the Group terminates by reason of a transfer of his/her employment to an entity outside the Group or other similar
event that affects the Group’s shares to a material extent, share awards under the 2018 LTIP will vest early, subject to normal restrictions on
sale and the pro-rating of the share awards to reflect the reduced period of time between the commencement of the performance period and
the early vesting. The Remuneration Committee can decide not to apply restrictions on sale or pro-rate a share award if it regards it as
inappropriate to do so in the particular circumstances.
• Other payments, such as legal or other professional fees, relocation or outplacement costs, may be paid if it is considered appropriate and is
at the absolute discretion of the Remuneration Committee.
Policy on external Board appointments
The long-standing policy of allowing Executive Directors to hold external Non-Executive Directorships with the prior approval of the Remuneration
Committee will continue. The Remuneration Committee considers that external directorships provide the Group’s Executive Directors with
valuable experience that is of benefit to . The Remuneration Committee believes that it is reasonable for the individual Executive Director
to retain any fees received from such appointments given the additional personal responsibility that this entails. Siobhán Talbot is a Non-Executive
Director of CRH plc effective from 1 December 2018, for which Siobhán received an annual fee in 2019 of €135,000. Siobhán Talbot also holds a
position on the IBEC board, for which she does not receive any fee. The Group Finance Director has no external directorships and no other fees
earned.
Consideration of employment conditions elsewhere in the Group
The Remuneration Committee considers all employees across the Group when establishing and implementing policy for Executive Directors.
Senior and high-performing individuals within the organisation are invited to participate in both annual and long-term incentive arrangements.
Similar to the Executive Directors, incentives are calibrated to provide appropriate rewards only on the achievement of superior performance.
In addition, senior executives below Board level may be eligible to participate in restricted stock awards as part of the annual LTIP grant,
as a retention measure.
The Remuneration Committee has not previously consulted directly with employees when formulating Executive Director pay policy. However,
it does solicit and take into account information provided by the Group Human Resources function and the independent external advice from its
Remuneration Advisers. The Remuneration Committee will consider, as part of the policy review to be carried out during 2020, the best approach
to address the requirements of the UK Corporate Governance Code in respect of engaging with employees to explain the alignment of the
Executive Directors’ Remuneration Policy to the wider workforce.
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Remuneration Below Executive Directors
The Group’s remuneration principles and policy underpin remuneration practice across the Group. Below the level of the Executive Directors,
similar principles and policy framework, as outlined in the preceding pages, cascade as far as possible, taking account of seniority and relevant
local market practice.
The table below outlines the reward elements which apply to employees across the Group depending on their level of seniority and market
location.
Element Description
Base salary (fixed) Set by reference to role responsibilities relative to the relevant local market based on external independent market data against
appropriate peer companies. Reviewed annually in consideration of personal performance with any change of pay approved by
a member of the Group Operating Executive (and by the Remuneration Committee for senior executives falling under its remit).
Pension (fixed) Employees participate in retirement benefits applicable to their local market and in line with relevant scheme rules and
Company practice.
Other Benefits
(fixed)
Employees participate in other benefits applicable to their local market and in line with relevant rules and Company practice.
Examples may include car benefit, illness benefit, medical insurance, relocation expenses/payments.
Short-Term
Performance
Related Incentive
(variable)
The Annual Incentive potential is based on appropriate and specific Group or Business Unit measures, as determined by the
Remuneration Committee. For designated senior executives, deferral of the proportion of the Annual Incentive earned in excess
of 75% of base salary which, once the appropriate taxation and social security deductions have been made, will be invested in
shares in the Company and delivered two years following investment.
Long-Term
Performance
Related Incentive
(variable)
The Long-Term Incentive plan is focused on key Group financial metrics and TSR. Additionally, where relevant, appropriate
specific Business Unit measures, as determined by the Remuneration Committee, emphasise long-term Business Unit
achievement. The Remuneration Committee may also award a portion of the LTIP award as restricted stock, focusing
on individual performance over the performance period. A one year holding period applies below Executive Directors.
Non-Executive Directors Remuneration
The Directors’ Remuneration Policy for the Group Chairman and Non-Executive Directors is summarised below.
Element Objective Description
Annual Fees Recognise market value
of role, job size, responsibility
and reflects individual skills
and experience.
Set by reference to the relevant market median based on an external independent
evaluation of comparator companies of a similar scale and complexity. Reflects a fee
for the role of Non-Executive Director and additional fees reflecting responsibilities
for chairmanship of a Committee of the Board. Reviewed from time to time by the
Remuneration Committee and the Board. Any reviews usually take effect from
1 January in the relevant year.
Benefits and
Expenses
Reimburse role-based
expenses incurred during
performance of the duties
of the role.
No additional benefits are provided other than direct expenses relating to the role.
Such expenses may include travel in the course of the role for the Group.
Non-Executive Director fees
The remuneration for each of the Non-Executive Directors is outlined below and remains unchanged since 1 January 2018.
Role
2020
€
2019
€
Group Chairman 112,500 112,500
Vice-Chairmen 60,000 60,000
Senior Independent Director/Committee Chairman 95,000 95,000
Non-Executive Director 85,000 85,000
Society-nominated Non-Executive Director 42,500 42,500
The Non-Executive Directors do not have service contracts, but have letters of appointment detailing the basis of their appointment. The terms
and conditions of appointment of Non-Executive Directors are available for inspection at the Company’s registered office during normal business
hours and at the AGM of the Company.
The Non-Executive Directors do not have periods of notice and the Group has no obligation to pay compensation when their appointment
terminates in accordance with their letters of appointment. They are subject to annual re-election at the AGM of the Company.
Remuneration Committee Report continued
93

Section B: Directors’ Remuneration Implementation Report
Executive Directors’ Remuneration Elements 2019
The Remuneration elements and 2019 delivery for the Executive Directors is summarised in the table below.
Fixed Pay Annual Incentive Long-term Incentive
Base salary
Up to 150% of base salary
for maximum performance
Group CEO, 250%
Other Executive Directors, 200%
(% of base salary)
Pension
Other benefits
Measured by Adjusted EPS,
Group OCF, Personal Objectives
and where relevant Business
Segment EBITA
Measured by Adjusted EPS,
Group ROCE, TSR and where
relevant Business Segment EBITA
and Business Segment ROCE
Base salary increase
effective 1 January 2019
Annual Incentive payments
for FY 2019
Long-term Incentive
2017 vesting
Executive Director Remuneration Payments 2019
Further details of actual 2019 payments are set out in the subsequent table and later in this report.
Fixed Pay Annual Incentives
Executive Directors Full Year
Base salary
€’000
Pension
contribution 2
€’000
Other Benefits 3
€’000
Annual Incentive
(payable in cash) 4
€’000
Annual Incentive
(deferred shares) 5
€’000
S Talbot 2019 1,050 - 344 - -
2018 860 - 283 645 553
M Garvey 2019 581 145 35 - 256
2018 506 126 33 379 325
H McGuire1
2019 166 - 56 - -
2018 513 - 212 384 269
B Phelan1
2019 145 - 51 93 -
2018 447 - 156 335 255
Details of Directors’ 2008 LTIP share awards granted in 2017 expected to vest in respect of performance to 4 January 2020 are set out on pages
98 to 100.
Further explanatory notes relating to each remuneration element follow.
1. Brian Phelan and Hugh McGuire’s remuneration for 2019 reflects their period of qualifying services to 24 April 2019 as Executive Directors.
2. Mark Garvey participates in the  defined contribution plan with a contribution of 25%.
3. Other benefits include company car or equivalent, medical/life assurance and taxable cash in lieu of pension payments of 26.5% of salary to both Siobhán Talbot and Brian Phelan and 25%
of salary to Hugh McGuire.
4. This reflects the proportion of the Annual Incentive payable in cash to Brian Phelan in respect of qualifying service to 24 April 2019. The 2019 annual incentive payment will be paid in 2020.
5. The proportion of the gross Annual Incentive 2019 payable in cash to Mark Garvey will be deferred into Company shares. Mark Garvey will be required to retain the deferred shares for two years,
following appropriate taxation and social security deductions, to recognise an ongoing link to long-term Group performance.
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Fixed Pay 2019
Base salary 2019
As detailed in last year’s Remuneration Report, the Group Managing Director and Group Finance Director respective base salaries increased
to €1,050,000 and €581,000 effective from 1 January 2019 as outlined in the 2018 Remuneration Report and explained in more detail below.
As part of the review of their employment terms in 2018, the Committee reviewed base salaries with the objective of setting pay at a level that
reflected the size and complexity of the Group (allowing for the growth in recent years by acquisition in particular the SlimFast acquisition and also
through organic growth and the substantial joint ventures operated by the Group). It also took account of the increased role of the Group Finance
Director who now has responsibility for the Group Corporate Development function, leadership of which previously had been carried out by
a dedicated full time role on the  Operating Executive Team.
The Committee understands shareholder concerns regarding increases in remuneration and particularly fixed pay and normally expects any
increases to be set in the context of the increases awarded to the wider workforce. In relation to the increases awarded for 2019, the Committee
took into account investors’ general expectations in relation to increases in fixed remuneration at the same time as considering the provision of
a fair and competitive level of remuneration for the individuals in light of the evolution of the individual’s roles, responsibilities, experience and
the increased complexities of the business as well as doing what it considered was necessary to ensure the continuing service of the Executive
Directors who operate in a competitive international sector. The Committee considered whether to make the increases in phases but decided
on balance it was preferable to provide the Executive Directors with the certainty of a one-off correctional adjustment. In determining the salary
increases the Committee noted that 80% of the Executive Directors’ package is variable pay and therefore performance based.
The Committee also notes concerns raised by some investors about benchmarking. The Committee uses market data in remuneration design as
one of a number of reference points to sense check remuneration proposals and this was the approach when determining the salary increases for
2019. When looking at market data the Committee considers the Irish, UK and US market which reflect the competitive and international market
in which the Group and Executive Directors operate as well as the breadth and scale of  international operations.
The Committee has consistently used these benchmark reference groups as set out in the shareholder approved remuneration policy and have
not had any queries raised previously by shareholders in relation to this. Going forward the Committee expects any future Executive Director
salary increases to be in line with the average workforce increase.
The base salaries of the CEO  Performance Nutrition and CEO  Nutritionals increased in line with the standard 2.5% increase in
Ireland, where they are both based, to €525,313 and €458,177 respectively, effective 1 January 2019.
The base salary increase for the broader employee population for 2019 was in a range of 2.5% to 7%.
Pension 2019
Mark Garvey participates in a defined contribution retirement plan, to which contributions are made at an agreed rate of 25%.
A newly appointed Director will have their pension set in line with the wider workforce.
Other benefits 2019
Other benefits include employment-related benefits such as the use of a company car or equivalent, benefit in lieu of personal future service
pension benefit, medical/life assurance, tax equalisation payments and relocation or other business-related allowances where appropriate.
All benefits are subject to normal deductions per the relevant regulations.
Siobhán Talbot and Brian Phelan are members of the  defined benefit schemes, however they are no longer accruing personal pension
benefits under these schemes, effective 1 January 2012 and 4 January 2015 respectively. As a result of the cap on pension benefits introduced
in the Irish Finance Act 2006, and subsequently amended in December 2010 and in December 2013, the Remuneration Committee reviewed
the pension arrangements for Executive Directors and agreed to offer Siobhán Talbot and Brian Phelan the option to receive a taxable payment
(26.5% of base salary) in lieu of the personal future service pension benefit. As agreed by the Remuneration Committee, Hugh McGuire received
a taxable non-pensionable allowance of 25% of base salary in lieu of a pension contribution to the  defined contribution retirement plan.
Remuneration Committee Report continued
95

Annual Incentive 2019
The Group’s Executive Directors participate in a performance related Annual Incentive scheme, which aims to reward achievement of specific
short-term performance metrics determined by the Remuneration Committee annually. Other senior executives below the Group’s Executive
Directors also participate in this scheme, albeit at different participation levels. The performance metrics consider collective business
performance and individual performance. The Committee believes that this method of performance measurement and assessment is objective,
transparent, rigorous and balanced, and provides an appropriate means to evaluate annual performance.
It also ensures that all senior management in the Group are aligned to the same annual goals in the best interests of the Group and the
shareholders. In light of overall Group financial performance in 2019 the Remuneration Committee agreed to implement the Operating Executive
proposal to reduce certain 2019 annual bonus awards from the amount otherwise determined on a formulaic basis. Furthermore, the Group
Managing Director and the CEO of  Performance Nutrition voluntarily waived any bonus entitlement payable in 2020. For the Group
Finance Director the amount payable based on non-financial performance was reduced to take account of the Group’s financial performance
during 2019. This resulted in the bonus being reduced from 36.5% to 29.3% of maximum. Also, the entire bonus will be payable in deferred
shares (using the Company’s approach to bonus deferral included in the Remuneration Policy for bonuses normally earned in excess of 75%
of salary). The CEO of  Nutritionals was paid a bonus in line with his performance, against the targets set at the start of the year, to reflect
the good performance delivered in the  Nutritionals business.
The table below outlines the 2019 Annual Incentive design and respective weightings for each Executive Director. It also details the 2019
performance assessment %, actual bonus to be paid following the Committee’s use of discretion and the full year 2019 actual incentive payable
as a percentage of maximum opportunity.
Annual Incentive Weighting
Executive Directors Adjusted EPS Group OCF1
Personal
objectives
Business
segment EBITA Total
Annual Incentive
opportunity as %
of salary
2019 performance
assessment as a % of
maximum opportunity
2019 Actual Incentive
payable as a % of
maximum opportunity
S Talbot 56% 24% 20% – 100% 0%-150% 33.4% 0%
M Garvey 56% 24% 20% – 100% 0%-150% 36.5% 29.3%
H McGuire 40% 20% 20% 20% 100% 0%-150% 13.1% 0%
B Phelan 40% 20% 20% 20% 100% 0%-150% 42.8% 42.8%
1. Group OCF is measured using Operating Cash Conversion defined as OCF divided by pre-exceptional earnings before interest, tax, depreciation and amortisation (EBITDA). This cash measure
aligns with the Group’s working capital management programme as introduced at Capital Markets Day in May 2018.
For the financial year to 4 January 2020, each Executive Director could earn up to 150% of base salary for maximum performance measured
against growth in adjusted EPS on a constant currency basis, Operating Cash Flow (OCF) on an Operating Cash Conversion basis, individual
performance objectives and where relevant business segment EBITA for Executive Directors with Business Unit responsibility. The mix of
weightings for all objectives at target reflected 15% of base salary for personal objectives and 60% of base salary for business objectives
(EPS, OCF and business segment EBITA where relevant), doubling at maximum performance to 30% of base salary for personal objectives and
120% of base salary for business objectives. Both personal and business objectives are specific and measurable, determined and communicated
at the start of the financial year. The mix and weighting of objectives recognises each Executive Director’s contribution to the Group.
Personal objectives are aligned with the Group strategy reflecting personal contribution to the achievement of both medium and long-term strategic
objectives all relating to: organisational leadership, organisational effectiveness (including growth & innovation), the execution of the strategic growth
plan and driving innovation capability. Progress on personal objectives for each of the Executive Directors is detailed in the 2019 Annual Incentive
outcomes.
Key Business Objectives 2019
The table below sets out actual performance relative to target for the Group measures and a summary of performance against target for the
commercially sensitive GN and GPN targets.
Performance Assessment in 2019
Performance
range Actual
% of
maximum
vesting
Below
Threshold
(zero vesting)
Threshold to
Target
(pro-rata
vesting)
Target
(100%
vesting)
Target to
Maximum
(pro-rata
vesting)
Maximum
(200%
vesting)
Adjusted EPS Growth1
3% to 9% -7.7% 0%
Group OCF (%)2
75% to 90% 86.1% 80.5%
GN EBITA (and relevant Joint Ventures) 50%
GPN EBITA 0%
1. Adjusted EPS growth is measured on a constant currency basis to reflect the underlying performance of the Group. For 2019 the Executive Directors targeted constant currency adjusted EPS
growth of 5% with a maximum incentive achievable at 9%. The 2019 performance outcome was below threshold for the year.
2. OCF is measured as Operating Cash Conversion and is defined as OCF divided by pre-exceptional earnings before interest, tax, depreciation and amortisation (EBITDA). Cash conversion is a
measure of the Group’s ability to convert trading profits into cash and is an important metric in the Group’s working capital management programme. For 2019 the Executive Directors’ target
Group Operating Cash Conversion was 80% with a maximum incentive achievable at 90%. The 2019 outcome was 86.1%.
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Group Managing Director,
Siobhán Talbot
Personal Objectives at Maximum: 30%
Overall Performance Assessment: 21%
Personal Objectives Bonus Payout*: 0%
Measure/Objective Weighting % Performance Assessment Achievement %
Focus on culture, talent pipelines and succession
readiness to ensure required capabilities, skills and
depth to execute Group growth plans.
5% Full Operating People Review and key talent
development initiatives progressed in 2019. Enhanced
workforce planning in 2019 is supporting required skill
sets for growth.
4%
Review and optimise group operating model, cost base
and portfolio to underpin strategy and performance.
7% Key portfolio assessments completed. Significant
evaluation of operating model effectiveness underway.
5%
Focus on corporate development and delivery
of accretive strategic acquisitions to optimise
market positions.
5% Solid pipeline in place. Acquisition and integration of
SlimFast and Watson progressing well.
4%
With BU CEOs focus on execution of strategic plan to
achieve targeted development in identified platforms
and segments.
10% Strong progress in  Nutritionals portfolio and
evolution of  Performance Nutrition capabilities
in sports nutrition, lifestyle and D2C progressing. Key
challenges in  Performance Nutrition sports
nutrition in international regions being addressed.
5%
Mitigate risks to strategy including Brexit. 3% Hard Brexit readiness plan delivered. 3%
Group Finance Director,
Mark Garvey
Personal Objectives at Maximum: 30%
Overall Performance Assessment: 26%
Personal Objectives Bonus Payout^: 15%
Measure/Objective Weighting % Performance Assessment Achievement %
Sustain focus on operating cash flows and working
capital management.
5% Strong cross business delivery of improved cash and
working capital management.
5%
Sustain corporate development focus, portfolio
management and EPS-accretive M&A.
15% Watson acquisition delivered and integration of both
SlimFast and Watson on track. Wider corporate
development projects completed (business confidential).
12%
Drive group-wide cost optimisation initiatives. 4% Identified opportunities are on track with emphasis on
procurement initiatives.
3%
Focus on delivery and effectiveness of finance,
corporate development and  Business
Services functions.
6% Successful roll-out of key IT projects and integration of
improved global IT infrastructure. Functional team
development is on track.
6%
Key Personal Objectives 2019
Personal objectives are aligned with the Group strategy reflecting the Executive Director’s personal contribution to organisational effectiveness,
the execution of the strategic growth plan and driving innovation capability. The Group Managing Director set the personal performance
objectives for each of the other Executive Directors, with the Group Managing Director’s personal objectives set by the Chairman in conjunction
with the Remuneration Committee. All personal objectives were then agreed with the Remuneration Committee who monitored their progress
throughout the year.
Remuneration Committee Report continued
97

CEO  Performance Nutrition,
Hugh McGuire
Personal Objectives at Maximum: 30%
Overall Performance Assessment: 19%
Personal Objectives Bonus Payout*: 0%
Measure/Objective Weighting % Performance Assessment Achievement %
Deliver brand performance targets across revenue,
innovation and channel management, particularly in
North America.
12% Like-for-like branded revenue growth targets not
achieved, good overall progress on innovation targets
and NA channel management.
7%
Continue to evolve the commercial strategy and
operating model for lifestyle brands in NA and UK.
7% Very strong SlimFast performance in 2019 and excellent
integration into  in 2019. Good progress on
relaunch of think! brand.
7%
Focus on organisation design and talent strategy,
international strategic review and build of D2C strategy
and technical platform.
7% Good progress in D2C and NA operating model
evolution. Actions to address significant challenges in
some international markets commenced in H2 2019.
International strategy work is continuing into 2020.
5%
Evolve portfolio through selective M&A. 4% Deprioritised in 2019 to focus on operational priorities. 0%
CEO  Nutritionals,
Brian Phelan
Personal Objectives at Maximum: 30%
Overall Performance Assessment: 25%
Personal Objectives Bonus Payout: 25%
Measure/Objective Weighting % Performance Assessment Achievement %
Deliver targeted volume growth in Nutritional Solutions
and JV PAT delivery.
8% Delivery to budget in 2019. 7%
Develop and execute M&A strategy in GN. 8% Watson acquisition completed and integration is
progressing well. Strategic investments in MWC and
 Cheese joint ventures on target.
6%
Execute operational, product and portfolio objectives for
2019 (business confidential).
10% Strong delivery across key dairy and non-dairy
platforms.
9%
Build GN organisational capabilities in line with strategy. 4% Good expansion and development of leadership team in
2019 including the appointment of  Nutritionals
COO and CFO.
3%
* The Group Managing Director and the CEO of  Performance Nutrition voluntarily waived any short-term bonus payment for 2019.
^ Payout of personal objectives for the Group Finance Director was reduced by the Remuneration Committee in consideration of full year financial performance in 2019.
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Long-Term Incentive Awards 2017
The 2008 LTIP share awards granted on 23 February 2017 had a three-year performance period (2017 to 2019) which ended on 4 January 2020.
Under the 2008 LTIP, the 2017 share awards incorporated business segment performance conditions as well as Group performance conditions,
with the mix and weighting of performance conditions depending on the Executive Director’s responsibilities in the Group. Both the Group and
business segment performance conditions for the 2017 share awards are measured in respect of performance in the three-year period and
independently verified by external advisers on behalf of the Remuneration Committee.
The Remuneration Committee’s Policy on corporate activity in relation to the 2015-2017 performance period was that in the event of a material
acquisition or disposal which was unforeseen at the time of setting LTIP metrics, the calibration of the performance conditions for the Group and
Business Unit may be adjusted by the Committee for the impact of the acquisition or disposal during the performance period. The principles for
such review are that the impact of any transaction on the LTIP should not influence decision making to the detriment of the long-term strategy
of the business; that the true underlying performance of the business is factored into any LTIP performance achievement; and that there is a
balanced perception of appropriate reward levels and value creation by LTIP participants and shareholders over the long-term. The outcome
of the amendments is to ensure that the targets are no easier or harder to achieve allowing for the unanticipated events that took place in the
performance period. Acquisitions which were not foreseen at the time of setting LTIP 2017 targets and therefore require adjustment on
determining vesting include SlimFast in 2018 and Watson on 28 February 2019. The Committee’s policy is also that performance conditions
should be tested on a constant currency basis to more accurately reflect underlying earnings performance and remove any distortionary effect
of currency volatility. These factors are as previously set out in last year’s Remuneration Report and similarly applied to the 2016 LTIP awards.
These factors reinforce the emphasis on achievements through actual underlying performance.
For the Group Managing Director and Group Finance Director the 2017 LTIP performance conditions were; growth in annual adjusted EPS, Group
ROCE and the Group’s relative TSR measured against a peer group of the STOXX Europe 600 Food & Beverage Index. The CEO of 
Nutritionals and CEO of  Performance Nutrition are also incentivised through these Group performance conditions as well as business
segment ROCE and business segment EBITA. The table below outlines the relative weighting of the 2017 share award performance conditions
for each of the Executive Directors.
2008 Long-Term Incentive Plan
2017 share award
Executive Directors
Adjusted EPS growth
(constant currency) Group ROCE
TSR ranking In the
comparator group
Business segment
ROCE
Business segment
EBITA
S Talbot 40% 40% 20% - -
M Garvey 40% 40% 20% - -
H McGuire 30% 25% 15% 10% 20%
B Phelan 30% 25% 15% 10% 20%
TSR Performance
The graph illustrates the TSR performance of the Group over the past five years showing the change in value of €100 invested in Group’s shares
from 2 January 2015 to 4 January 2020 (dates aligning with opening and closing financial periods).
€0
€100
€200
2019
2018
2017
2016
2015
2014
STOXX Europe 600 Food and Beverage Index

Remuneration Committee Report continued
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2008 LTIP – 2017 share award vesting
The following table outlines the relevant threshold, maximum and actual vesting outcome for the 2008 LTIP scheme 2017 share award, for the
three-year performance period 2017-2019.
Performance Condition Threshold (25% vesting) Maximum (100% vesting) Actual
Group EPS Three-year adjusted EPS
growth equal to 5% CAGR1
Three-year adjusted EPS
growth equal to or greater
than 12% CAGR1
Three-year adjusted EPS
growth equal to -0.55%
CAGR
Vesting 0%
Group ROCE Three-year simple ROCE
average equal to 11.95%2
Three-year simple ROCE
average equal to 13.95%2
Three-year simple ROCE
average 12.46%
Vesting 44.1%
Group TSR Ranked at the median of the
STOXX Europe 600 Food &
Beverage Index
Ranked in the top quartile of
the STOXX Europe 600 Food
& Beverage Index
Ranked below median
Vesting 0%
 Performance
Nutrition ROCE
Three-year simple ROCE
average equal to the
defined target %3
Three-year simple ROCE
average equal to the
defined maximum %3
Vesting 0%
 Nutritionals
ROCE
Three-year simple ROCE
average equal to the
defined target %3
Three-year simple ROCE
average equal to the
defined target %3
Vesting 52.5%
 Performance
Nutrition EBITA
Growth over Base EBITA
average equal to the
defined target %3
Growth over Base EBITA
average equal to the
defined maximum %3
Vesting 0%
 Nutritionals
EBITA
Growth over Base EBITA
equal to the defined target %3
Growth over Base EBITA
average equal to the
defined maximum %3
Vesting 0%
1. Group EPS is adjusted for acquisitions unforeseen at the time of target setting and constant currency. Resulting in a vesting outcome of 0%.
2. Group ROCE adjustment from 12% to 14% to account for acquisitions unforeseen at the time of target setting.
3. Commercially sensitive information.
2008 LTIP – 2017 share award vesting
It is expected that share awards granted to Executive Directors in 2017, under the 2008 LTIP scheme, for the three-year performance period 2017-
2019, vest no earlier than 23 February 2020 (3 years from the date of grant) as follows:
Executive Directors
Total Number of
shares awarded
Number of shares
awarded expected
to vest in 2020
Percentage
outcome %
Value at grant
of the shares
vesting (A)
Change in value
over vesting period
of share vesting (B)
Total vesting value
(A+B) 1
S Talbot 112,451 19,837 17.7% €357,661 -€156,117 €201,544
M Garvey 52,911 9,334 17.7% €168,292 -€73,459 €94,833
H McGuire 55,463 6,115 11.0% €110,253 -€48,125 €62,128
B Phelan 46,777 7,614 16.3% €137,280 -€59,922 €77,358
1. This reflects the value of long term incentive share awards expected to vest in 2020 with a three year performance period ended in 2019. The total vesting values have been estimated using the
official closing price of a  share on 3 January 2020 (being the last day of trading on Euronext Dublin to the financial year end of 4 January 2020) of €10.16. The value at grant of the
shares vesting was €18.05 being the median between the high and low of a  share on 23 February 2017 the day of grant. The value used to determine the quantum of the 2017 award
was €18.03 being the median between the high and low of a  share on the day prior to grant; this is the value at grant shown above.
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Methodology
The Remuneration Committee has agreed to the following adjustments for the purposes of determining the vesting of LTIP 2017:
• Acquisitions which were not foreseen at the time of setting LTIP 2017 targets are adjusted for on determining vesting. Relevant acquisitions
include SlimFast in 2018 and Watson in February 2019. This adjustment impacts Group EPS, Group ROCE and relevant business segment
EBITA and ROCE, by restating the threshold and maximum to maintain the performance metric range during the three year performance period.
The adjustments ensured that the targets, allowing for the corporate activity were, in the opinion of the Committee, no more or less demanding
than the targets originally set.
• The EPS and business segment EBITA performance condition is measured using constant currency to more accurately reflect underlying
earnings performance and remove any distortionary effect of currency volatility.
Group EPS
The Group’s Compound Annual Growth Rate (CAGR) of adjusted EPS over the three-year performance period was a key LTIP metric for each
Executive Director’s 2017 share award, representing 40% weighting for the Group Managing Director and Group Finance Director and a 30%
weighting for business segment Executive Directors. Adjusted EPS is calculated as the profit attributable to the equity holders of the Group before
exceptional items and intangible asset amortisation (excluding software amortisation) net of related tax, divided by the weighted average number
of ordinary shares in issue during the year.
Investors consider adjusted EPS to be a key indicator of long-term financial performance and value creation of a public limited company. Therefore
adjusted EPS is a key metric to incentivise long-term sustainable business performance.
The table below shows the Group’s reported adjusted EPS over the performance period from continuing operations.
2016 80.40c
2019 88.10c
For the purpose of LTIP 2017 these reported adjusted EPS numbers are adjusted for acquisitions unforeseen at the time of target setting and
constant currency, in line with the methodology set out above.
Group ROCE
Group ROCE over the three-year performance period represented a 40% weighting for the Group Managing Director and Group Finance Director
and a 25% weighting for business segment Executive Directors for the 2017 share award. Group ROCE is defined as the Group’s earnings before
interest, and amortisation (net of related tax) plus the Group’s share of the results of equity accounted investees after interest and tax divided by
capital employed. Capital employed comprises the sum of the Group total assets plus cumulative intangible asset amortisation less current
liabilities less deferred tax liabilities excluding all financial liabilities, retirement benefit assets and cash. It is calculated by taking the average of the
relevant opening and closing balance sheet amounts. The impact of acquisitions on the 2017 Group ROCE performance condition adjusts the
threshold and maximum by 0.05%.
Group TSR
The Group’s TSR ranking relative to an agreed peer group of STOXX Europe 600 Food & Beverage Index represents the change in the capital
value of a listed/quoted company over a period, plus dividends reinvested, expressed as a plus or minus percentage of the opening value.
Investors regard TSR as an important indication of both earnings and capital growth relative to other major companies in the same sector as well
as ensuring that share awards only vest if there has been a clear improvement in the Group’s relative performance over the relevant period.
Therefore TSR is a key metric to incentivise long-term sustainable business performance.
This metric attracts a 20% weighting for the Group Managing Director and Group Finance Director and a 15% weighting for business segment
Executive Directors.
Business segment ROCE
Business segment Executive Directors have a 10% weighting associated with business segment ROCE over the three-year performance period for
the 2017 share award. Business segment ROCE is calculated as business segment earnings before interest, tax and amortisation divided by capital
employed. Capital employed is calculated as the sum of the business segment’s total assets plus cumulative intangible asset amortisation less
current liabilities excluding all borrowings, cash and tax balances, and goodwill related to deferred tax recognised on acquisition. The impact of
acquisitions on the 2017  Performance Nutrition and  Nutritionals ROCE performance conditions adjusts the threshold and maximum.
Business segment EBITA
Business segment EBITA is calculated as business segment compounded growth over Base EBITA for the three-year performance period.
This metric attracts a 20% weighting for business segment Executive Directors.
The EBITA outturn is adjusted for the impact of acquisitions on the 2017  Performance Nutrition and  Nutritionals
performance conditions.
Remuneration Committee Report continued
101

Long-Term Incentive Awards 2016
The 2016 Long-Term Incentive Award vested in 2019 as detailed below. Performance against targets was reported in the 2018 Remuneration Report.
LTIP Award 2016
Executive Directors
Total number of
shares awarded
Number of shares
awarded vested
in 2019
Percentage
outcome %
Value at grant of the
shares vesting (A)
Change in value
over vesting period of
share vesting (B)
Total vesting
value (A+B)1
S Talbot 103,790 60,334 58.1% €1,111,654 €12,972 €1,124,626
M Garvey 44,280 25,741 58.1% €474,278 €5,534 €479,812
H McGuire 54,040 26,368 48.8% €485,830 €5,669 €491,500
B Phelan 43,180 18,551 43.0% €341,802 €3,988 €345,791
1. This reflects the value of long-term incentive share awards vested in 2019 with a three year performance period ended in 2018. These have been valued at the market value of the shares on the
date of vesting €18.64 per share (official opening price). The value at grant of the shares vesting was €18.47 being the median between the high and low of a  share on 25 February
2016 the day of grant. The value used to determine the quantum of the 2016 award was €18.425 being the median between the high and low of a  share on the day prior to grant;
this is the value at grant shown above.
Long-Term Incentive Awards 2018 and 2019
2018 LTIP awards and 2019 LTIP awards were made to the Executive Directors on 26 April 2018 and 21 March 2019 respectively. Both awards
are subject to the achievement of Group TSR, Group EPS and ROCE performance conditions (Group and Business Segment), as set out below,
measured over the relevant three year performance period. 2018 LTIP awards will vest no earlier than 26 April 2021 with 2019 LTIP awards vesting
no earlier than 21 March 2022. Any vested shares are subject to a two-year holding period from date of vesting.
The performance conditions and weightings for all outstanding share awards under LTIP 2018 are set out in the following table.
2018 Performance Metrics
Financial Period 2018 – 2020
2019 Performance Metrics
Financial Period 2019 – 2021
Performance Condition Vesting 0%
Vesting 25%
(Threshold)*
Vesting 100%
(Maximum)* Vesting 0%
Vesting 25%
(Threshold)*
Vesting 100%
(Maximum)*
Group EPS
Three-year adjusted EPS
< 4%
CAGR
= 4%
CAGR
≥ 9%
CAGR
< 4%
CAGR
= 4%
CAGR
≥ 9%
CAGR
Group ROCE < 10% = 10% ≥ 13% < 9% = 9% ≥ 12%
Group TSR
Ranking in STOXX Europe 600 Food and Beverage Index
Below the
median
At
median
In the top
quartile
Below the
median
At
median
In the top
quartile
GPN & GN ROCE** Below
target
At
target
At
Maximum
Below
target
At
target
At
Maximum
GPN & GN EBITA**
Growth over Base EBITA relative to the defined % per annum
compounded
< defined
%
= defined
%
≥ defined
%
< defined
%
= defined
%
≥ defined
%
* Straight line vesting between threshold performance and maximum performance.
** Commercially sensitive information.
Achievement against performance conditions is determined on a constant currency basis to more accurately reflect underlying earnings
performance and remove any distortionary effect of currency volatility. For 2018 LTIP awards onwards, performance targets are set with future
acquisitions in mind and are therefore reflective of the expected impact acquisitions may have on key performance conditions. This approach
acknowledges the strategic importance of acquisitions to the Group’s long-term performance and strategy as set out in the Group’s ambitions
on Capital Markets Day in 2018.
ROCE targets for 2019 LTIP awards
A number of shareholders consulted during 2019 raised some concerns about the reduction in the ROCE performance targets for the 2019 share
awards from 10%-13% to 9%-12%. The change in ROCE range was to ensure that the targets were similarly challenging to the ROCE targets set
in prior years allowing for the impact of the SlimFast acquisition. The Committee’s policy is to review the target range each year having regard to
both internal and external expectations for the Group’s performance and then set an appropriately demanding performance range around those
expectations. This review for the 2019 awards concluded that the change made was appropriate in this context. The Committee intends to
continue to keep the performance under review each year prior to making future awards.
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 > Directors’ Report
Long-Term Incentive Awards 2018 and 2019 – weightings
The weightings for all outstanding share awards (2018 and 2019) are set out in the table below.
2018 Weightings 2019 Weightings
Performance Condition
Group Managing Director
and Group Finance Director
Business segment
Executive Directors
Group Managing Director
and Group Finance Director
Business segment
Executive Directors
Group EPS 40% 30% 40% 30%
Group ROCE 40% 25% 40% 25%
Group TSR 20% 15% 20% 15%
GPN & GN ROCE - 10% - 10%
GPN & GN EBITA - 20% - 20%
Directors’ shareholdings
As at 4 January 2020 the Executive Directors’ share ownership against the guidelines was as follows:
Executive Directors
Shares held as at
4 January 2020
% of base salary based
on market value as at
4 January 20201
Shareholding
guidance
S Talbot 297,192 288% 250%
M Garvey 92,255 161% 150%
1. The market values have been estimated using the official closing price of a  share on 3 January 2020 (being the last day of trading on the Euronext Dublin to the financial year end
of 4 January 2020) of €10.16.
Dilution
Share awards granted under the 2008 LTIP, 2019 LTIP and the Annual Deferred Incentive are satisfied through the funding of employee benefit
trusts which acquire shares in the market. The Company’s employee benefit trusts held 820,302 shares at 4 January 2020.
The exercise of share options under the 2002 LTIP (which expired in 2012) is satisfied by the allotment of newly issued shares. At 4 January 2020
the total number of shares which could be allotted under this scheme was 40,000 shares which represent significantly less than one percent of
the issued share capital of the Company.
Implementation of policy in 2020
The base salaries of the Group Managing Director and Group Finance Director will not be increased in 2020. Annual Incentive opportunity for the
Group Managing Director and Group Finance Director in 2020 will remain unchanged. Annual Incentive will continue to be based on EPS, Group
Operating Cash flow and individual performance objectives. In response to shareholders feedback the Committee reviewed the use of EPS in
both the Annual and Long-term Incentive Plan and whether there is an alternative measure of profit that might be used in the Annual Incentive.
The Committee concluded that EPS be retained for 2020 for both the Annual and Long-term Incentive. EPS in the Annual Incentive measures
EPS over one year only and in the Long-term Incentive over a three year period and management is therefore being rewarded for short term profit
and separately for critically long-term sustainable profit over a three year period. In addition, EPS includes profit derived from our significant joint
ventures which is not captured by alternative measures of profit. The Committee will review the measures for the Annual Incentive as part of the
policy review in 2020.
In light of the Group’s focus on returning to growth, the approach to target setting in the 2020 annual bonus has been revised in respect of the
EPS and EBITA metric. The Committee has introduced a bonus modifier whereby if the Group EPS target is not met, the total bonus pool
available will be reduced across the Group. This applies to Executive Directors and all employees eligible to participate in the Group bonus plan.
The Committee has also reduced the proportion of bonus payable between threshold and target performance to emphasise the importance of
delivering on our growth plans. This approach recognises the 2019 outcomes as well as internal and external expectations for 2020 performance.
Acknowledging the decline in the 2019 share price, a reduction in the size of 2020 LTIP awards will be made to Executive Directors as are
expressed as a multiple of salary. The revised award levels to operate in 2020 will be 200% of salary (from 250% of salary) for the Group
Managing Director and 160% of salary (from 200% of salary) for the Group Finance Director. In determining an appropriate level of scale back,
consideration was given to the grant price for the 2019 awards and the average share price during both the 2018 and 2019 financial years. The
quantum of the 2019 awards was determined at a near historic high share price of €18.01 and so the Committee concluded that the level of scale
back should be based on a longer-term view of the Company’s share price. The average share prices in place during 2019 and 2018 were €13.93
and €14.82 respectively and, as a result, the Committee considered that a 20% reduction to headline awards appropriately took into account the
fall in the underlying share price having had regard to the other remuneration decisions taken for both 2019 and 2020.
Vesting criteria for 2020 LTIP share awards for the Group Managing Director and Group Finance Director will continue to be based on Group
adjusted EPS, Group ROCE and relative TSR. The Committee has reviewed the TSR performance metric and peer group during 2019 and it will
continue to be used for the 2020 LTIP awards. Further consideration will be given during 2020 to whether any changes should be made for the
new policy period.
Remuneration Committee Report continued
103

The range of financial targets set for the LTIP are set out below and are the same performance ranges as set for the 2019 awards. In the context
of the challenging nature of 2019, and market outlook for 2020, this is considered an effective toughening of the performance requirements
versus those set in prior years and consistent with the Committee’s focus on incentivising a return to long-term profitable growth.
2020 Performance Metrics
Performance Condition & Weighting Vesting 0% Vesting 25% (Threshold) Vesting 100% (Maximum)
Group EPS – 40%
Three-year adjusted EPS
< 4% CAGR = 4% CAGR ≥ 9% CAGR
Group ROCE – 40% < 9% = 9% ≥ 12%
Group TSR – 20%
Ranking in STOXX Europe 600 Food and Beverage
Index
Below the median At median In the top quartile
All pension and other benefits will remain unchanged for 2020 with pension provision being considered as part of the overall Directors’
Remuneration Policy review during 2020. A new Executive Director will receive pension in line with that of the wider workforce.
Directors’ remuneration and interests in shares in 
Tables A to G on the following pages give details of the Directors’ remuneration and interests in shares in  held by Directors and the
Group Secretary and their connected persons as at 4 January 2020. There have been no changes in the interests listed in Tables B to G between
4 January 2020 and 25 February 2020.
The market price of the ordinary shares as at 3 January 2020 (the last day of trading on Euronext Dublin before the financial year end of 4 January
2020) was €10.16 and the range during the year was €9.64 to €19.05. The average price for the year was €13.93.
104
 > Directors’ Report
Table A: 2019 Directors’ Remuneration
The salary, fees and other benefits pursuant to the remuneration package of each Director during the year were:
Date of Directorship appointment/retirement
Salary
€’000
Fees
€’000
Pension
contribution2
€’000
Other
benefits3
€’000
Annual
Incentive
(payable in
cash)4
€’000
Annual
Incentive
(deferred
shares)5
€’000
2019
Total
€’000
2018
Total
€’000
Executive Directors
S Talbot 1,050 – – 344 – – 1,394 2,341
M Garvey 581 – 145 35 – 256 1,017 1,369
H McGuire To 24 April 20191
166 – – 56 – – 222 1,378
B Phelan To 24 April 20191
145 – – 51 93 – 289 1,193
2019 1,942 – 145 486 93 256 2,922
2018 2,326 – 126 684 1,743 1,402 6,281
Non-Executive Directors
Mn Keane – 113 – – – – 113 90
J Murphy – 60 – – – – 60 60
P Murphy 60 – – – – 60 53
P Ahern Ret. 1 June 2018 and Reapp 21 June 2018 – 43 – – – – 43 40
H Corbally Ret. 21 June 2018 0 – – – – 0 49
P Coveney – 85 – – – – 85 85
J Daly App. 1 May 2019 57 – – – – 57 0
J Doheny Ret. 2 June 2017 and Reapp 1 June 2018 – 43 – – – – 43 25
D Gaynor – 95 – – – – 95 95
V Gorman – 43 – – – – 43 43
T Grant Ret. 9 May 2016, Reapp 2 June 2017
and Ret. 1 June 2018 – 0 – – – – 0 18
P Haran Ret. 1 May 2019 – 32 – – – – 32 95
B Hayes – 43 – – – – 43 43
MI Keane Ret. 25 April 2018 – 0 – – – – 0 13
R Laube App. 1 May 2019 – 57 – – – – 57 0
M Minnick App. 1 May 2019 57 57 0
D O’Connor – 95 – – – – 95 95
E Power – 43 – – – – 43 43
2019 – 926 – – – – 926
2018 – 847 – – – – 847
Total 2019 1,942 926 145 486 93 256 3,848
Total 2018 2,326 847 126 684 1,743 1,402 7,128
1. Brian Phelan and Hugh McGuire did not put themselves forward for re-election at the 2019 AGM (24 April 2019) in order to facilitate the re-organisation and the broadening of the external
perspective of the Board. Their remuneration for 2019 reflects their period of qualifying services to 24 April 2019 as Executive Directors.
2. Mark Garvey participates in the  defined contribution plan with a contribution of 25%.
3. Other benefits include company car or equivalent, medical/life assurance and taxable cash in lieu of pension payments of 26.5% of salary to both Siobhán Talbot and Brian Phelan and 25%
of salary to Hugh McGuire.
4. This reflects the proportion of the Annual Incentive payable in cash to Brian Phelan in respect of qualifying service to 24 April 2019. The 2019 annual incentive payment will be paid in 2020.
5. The proportion of the gross Annual Incentive 2019 payable in cash to Mark Garvey will be deferred into Company shares. Mark Garvey will be required to retain the deferred shares for two years,
following appropriate taxation and social security deductions, to recognise an ongoing link to long-term Group performance.
Details of Directors’ long-term awards expected to vest in respect of performance to 4 January 2020 are set out on pages 98 to 100.
Remuneration Committee Report continued
105

The defined benefit pension benefits of each of the Executive Directors during the year were as follows:
Transfer value of
increase in
accrued pension
€’000
Annual pension
accrued in 2019 in
excess of inflation
€’000
Total annual
accrued pension
at 4 January 2020
€’000
S Talbot – – 159
B Phelan – – 103
2019 – – 262
2018 – – 262
Table B: Directors’ and Secretary’s interests in ordinary shares in 
As at
4 January 2020
Ordinary Shares
As at
30 December 2018
Ordinary Shares*
Directors
Mn Keane 33,742 25,742
J Murphy 7,283 7,283
P Murphy 11,506 11,506
S Talbot1
297,192 275,068
P Ahern 14,091 10,091
P Coveney 3,900 3,900
J Daly2
5,000 –
J Doheny 16,159 16,159
M Garvey1
92,255 63,421
D Gaynor 10,000 10,000
V Gorman 6,033 5,033
B Hayes 34,846 32,346
R Laube2
– –
M Minnick2
– –
D O’Connor 7,680 7,680
E Power 58,693 58,693
Secretary
M Horan 39,755 39,313
* or at date of original appointment to the Board.
1. Executive Director.
2. Appointed 1 May 2019.
Note: The ordinary shares held in trust for the Directors and Secretary disclosed in Table C on page 106 are included in the total number of ordinary shares held by the Directors and Secretary above.
None of the Directors have used the above shares as security.
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 > Directors’ Report
Table C: Directors’ and Secretary’s interests in ordinary shares in  subject to restriction
2008 LTIP2
2008 LTIP3
2017
Annual Deferred
Incentive4
2018
Annual Deferred
Incentive5
Total1
Executive Directors
S Talbot 44,937 32,259 9,893 17,124 104,213
M Garvey 19,174 13,763 5,818 10,071 48,826
Secretary
M Horan 8,876 11,837 3,275 5,442 29,430
1. The above ordinary shares are held on trust for the Directors and Secretary by the  Section 128D Employee Benefit Trust and are included in the total number of ordinary shares held
by the Directors and Secretary disclosed in Table B on page 105.
2. Subject to restriction on sale until 25 May 2020.
3. Subject to restriction on sale until 11 March 2021.
4. Subject to restriction on sale until 29 March 2020.
5. Subject to restriction on sale until 28 March 2021.
Table D: Summary of Directors’ and Secretary’s interests in  2018 and 2008 LTIP
As at
4 January 2020
As at
30 December 2018
As at
4 January 2020
As at
30 December 2018
2018 LTIP Share
awards
2018 LTIP Share
awards
2008 LTIP Share
awards
2008 LTIP Share
awards
Directors
S Talbot 300,757 155,005 112,451 216,241
M Garvey 137,455 72,935 52,911 97,191
Secretary
M Horan 63,228 35,341 23,702 44,062
Table E: Directors’ and Secretary’s interests in 2018 LTIP
Date of Grant 30-Dec-18
Granted
during the
year
Vested during
the year
Lapsed
during the
year 4-Jan-20
Market price
at date of
award €
Earliest date
for vesting Expiry date Notes
Directors
S Talbot
26-Apr-18 155,005 – – – 155,005 13.86 26-Apr-21 26-Apr-23 1
21-Mar-19 – 145,752 – – 145,752 17.73 21-Mar-22 21-Mar-24 2
Total: 155,005 145,752 – – 300,757
M Garvey
26-Apr-18 72,935 – – – 72,935 13.86 26-Apr-21 26-Apr-23 1
21-Mar-19 – 64,520 – – 64,520 17.73 21-Mar-22 21-Mar-24 2
Total: 72,935 64,520 – – 137,455
Secretary
M Horan
26-Apr-18 35,341 – – – 35,341 13.86 26-Apr-21 26-Apr-23 1
21-Mar-19 – 27,887 – – 27,887 17.73 21-Mar-22 21-Mar-24 2
Total: 35,341 27,887 – – 63,228
1. The performance period in respect of the 2018 LTIP awards made in 2018 is the three financial years ending 2020.
2. The performance period in respect of the 2018 LTIP awards made in 2019 is the three financial years ending 2021.
The performance conditions attached to the awards are detailed in the section entitled ‘Long-Term Incentive Awards 2018 and 2019’ on pages 101 to 102.
Remuneration Committee Report continued
107

Table F: Directors’ and Secretary’s interests in 2008 LTIP
Date of Grant 30-Dec-18
Granted
during the
year
Vested during
the year
Lapsed
during the
year 4-Jan-20
Market price
at date of
award €
Earliest date
for vesting Expiry date Notes
Directors
S Talbot
25-Feb-16 103,790 – 60,334 43,456 – 18.47 25-Feb-19 25-Feb-20 1,2,3
23-Feb-17 112,451 – – – 112,451 18.05 23-Feb-20 23-Feb-21 4
Total: 216,241 – 60,334 43,456 112,451
M Garvey
25-Feb-16 44,280 – 25,741 18,539 – 18.47 25-Feb-19 25-Feb-20 1,2,3
23-Feb-17 52,911 – – – 52,911 18.05 23-Feb-20 23-Feb-21 4
Total: 97,191 – 25,741 18,539 52,911
Secretary
M Horan
25-Feb-16 20,360 – 11,837 8,523 – 18.47 25-Feb-19 25-Feb-20 1,2,3
23-Feb-17 23,702 – – – 23,702 18.05 23-Feb-20 23-Feb-21 4
Total: 44,062 – 11,837 8,523 23,702
1. Share awards granted on 25 February 2016 were subject to performance conditions measured over the three financial years ended 29 December 2018. The awards vested on 11 March 2019
and the percentage of the awards vested are shown on page 101.
2. Directors were permitted to sell sufficient shares to satisfy any tax or social security deductions arising on the acquisition of the shares. The balance of the shares is restricted from sale for two
years and are held on trust for them by the trustee of the  Section 128D Employee Benefit Trust.
3. The total number of shares subject to restriction are included in the total number of ordinary shares disclosed in Table B on Page 105.
4. Share awards granted on 23 February 2017 were subject to performance conditions measured over the three financial years ended 4 January 2020. The outcome of these performance
conditions and the number of share awards expected to vest to Executive Directors during 2020 are set out on pages 98 to 100. The vested share award, net of relevant taxation and social
security deductions, will be restricted from sale for two years and be held on trust for them by the trustee of the  section 128D Employee Benefit Trust.
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 > Directors’ Report
Table G: Directors’ and Secretary’s Annual Deferred Incentive
Value of Annual
Incentive
converted into
shares €1
Date of
conversion/
acquisition
of shares
Acquisition price
per share at date
of conversion
Number of shares
acquired
Directors
S Talbot
2017 Annual Deferred Incentive €263,000 29-Mar-18 €14.22 18,468
2018 Annual Deferred Incentive €553,000 28-Mar-19 €17.285 31,966
M Garvey
2017 Annual Deferred Incentive €154,000 29-Mar-18 €14.22 10,862
2018 Annual Deferred Incentive €325,000 28-Mar-19 €17.285 18,801
Secretary
M Horan
2017 Annual Deferred Incentive €87,000 29-Mar-18 €14.22 6,114
2018 Annual Deferred Incentive €176,000 28-Mar-19 €17.285 10,160
1. Numbers are rounded to the nearest thousand.
2. Directors were permitted to sell sufficient shares to satisfy any tax or social security deductions arising on the acquisition of the shares. The balance of the shares are restricted from sale for two
years and are held on trust for them by the trustee of the  Section 128D Employee Benefit Trust.
3. The total number of shares subject to restriction are included in the total number of ordinary shares disclosed in Table B on Page 105.
Table H: Value of awards expected to vest in 2020 and awards vested in 2019
Number of shares
awarded expected
to vest in 2020
Percentage
outcome %
Estimated Market
Value €1
Number of shares
vested in 2019
Percentage
outcome %
Estimated Market
Value €2
Executive Directors
S Talbot 19,837 17.7% 201,544 60,334 58.1% 1,124,626
M Garvey 9,334 17.7% 94,833 25,741 58.1% 479,812
H McGuire 6,115 11.0% 62,128 26,368 48.8% 491,500
B Phelan 7,614 16.3% 77,358 18,551 43.0% 345,791
1. This reflects the value of long term incentive share awards expected to vest in 2020 with a three year performance period ended in 2019. These have not been adjusted for Brian Phelan and
Hugh McGuire to reflect their qualifying services to 24 April 2019. The market values have been estimated using the official closing price of a  share on 3 January 2020 (being the last
day of trading on Euronext Dublin before year end 4 January 2020) of €10.16 per share.
2. This reflects the value of long term incentive share awards vested in 2019 with a three year performance period ended in 2018. These have been valued at the market value of the shares on the
date of vesting €18.64 per share (official opening price).
Remuneration Committee Report continued
109

Other Statutory Information
Principal activities, strategy and business model
 is a global nutrition group, headquartered in Ireland, with operations in 34 countries worldwide.
The Group’s business model and strategy are summarised in the Strategic Report on pages 11 to 17.
The Group Chairman’s statement on pages 6 and 7, the Group Managing Director’s review on pages 8 to 10, the Operations review on pages 20
to 35 and the Group Finance Director’s review on pages 36 to 41 contain a review of the development and performance of the Group’s business
during the year, of the state of affairs of the business at 4 January 2020, of recent events and of likely future developments. Information in respect
of events since the year end is included in these sections and in Note 36 to the Financial Statements.
As set out in the Group Income Statement on page 125, the Group reported a profit for the period of €180.2 million after exceptionals.
Comprehensive reviews of the financial and operating performance of the Group during 2019 are set out in the Group Finance Director’s review
on pages 36 to 41 and in the Operations review on pages 20 to 35. Key Performance Indicators are set out on pages 18 and 19. The treasury
policy and the financial risk management objectives of the Group are set out in detail in Note 29 to the Financial Statements. Our approach
to our people and sustainability is discussed on pages 42 to 51.
Non-Financial Reporting Statement
The Group aims to comply with the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and
groups) Regulations 2017, SI No. 360 of 2017 (as amended). The table on page 51 is designed to help stakeholders navigate to the relevant
sections in this Annual Report to understand the Group’s approach to these non-financial risks. Many of our policies can be viewed on
www..com.
Process for appointment/retirement of Directors
In addition to the Companies Acts, the constitution of the Company contains provisions regarding the appointment and retirement of Directors.
At each Annual General Meeting (AGM) the constitution provides that each Director who has been in office at the conclusion of each of the three
preceding AGMs, and who has not been appointed or re-appointed at either of the two most recently held of those three meetings, shall retire from
office; however in accordance with the UK Corporate Governance Code, all of the Directors are subject to annual re-election. Each of the Directors,
with the exception of Richard Laube (who retires effective 28 February 2020), Jer Doheny and Eamon Power (who are not putting themselves
forward for re-election at the AGM), will retire at the 2020 AGM and, being eligible, offer themselves for re-appointment. The constitution of the
Company also allows the election and re-election of Independent Directors to be conducted in accordance with the election provisions for
Independent Non-Executive Directors in the Euronext Dublin Listing Rules and the United Kingdom Listing Authority (UKLA) Listing Rules.
No person, other than a Director retiring by rotation, shall be appointed a Director at any general meeting unless he/she is recommended by the
Directors or, not less than seven nor more than 42 days before the date appointed for the meeting, notice executed by a member qualified to vote
at the meeting has been given to the Company of the intention to propose that person for appointment. If a Director is also a director of 
Co-operative Society Limited (the ‘Society’), the constitution of the Company provides that his or her appointment as a Director shall terminate
automatically in the event of his or her ceasing to be a director of the Society.
The constitution of the Company also contains provisions regarding the automatic retirement of a Director in certain other limited circumstances.
Annual General Meeting
The Company’s 2020 AGM will be held on 22 April 2020. Full details of the 2020 AGM, together with explanations of the resolutions to be
proposed, will be contained in the Notice of the 2020 AGM. The record date for the 2020 AGM is 5.00 pm on 20 April 2020.
Powers of the Directors
The Directors are responsible for the management of the business of the Company and the Group and may exercise all powers of the Company
subject to applicable legislation and regulation and the constitution of the Company. At the 2019 AGM, the Directors were given the power to
issue new shares up to a nominal amount of €3,237,258.96. This power will expire on the earlier of the close of business on the date of the 2020
AGM or 23 July 2020. Accordingly, a resolution will be proposed at the 2020 AGM to renew the Company’s authority to issue new shares.
At the 2019 AGM, the Directors were also given the power to:
(i) dis-apply the strict statutory pre-emption provisions in the event of a rights issue or other pre-emptive issue or in any other issue up to
an aggregate amount equal to 5% of the nominal value of the Company’s issued share capital. This 5% limit includes any treasury shares
re-issued by the Company while this authority remains operable; and
(ii) dis-apply the strict statutory pre-emption provisions for an additional 5% for specific transactions. The resolution gave the Directors an
additional power to allot shares on a non-pre-emptive basis and for cash up to a further 5% of the issued share capital in connection with an
acquisition or a specified capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding
six month period and is disclosed in the announcement of the issue. The 5% limit includes any treasury shares reissued by the Company while
this authority remains operable.
These powers will expire on the date of the 2020 AGM or 23 July 2020, whichever is earlier. Accordingly, resolutions will be proposed at the 2020
AGM to renew these authorities.
It is the Directors’ intention to follow the provisions of the Pre-emption Group Statement of Principles regarding cumulative usage of authorities
within a rolling three-year period. These principles provide that companies should consult shareholders prior to issuing, other than to existing
shareholders, shares for cash representing in excess of 7.5% of a company’s issued share capital in any rolling three-year period.
110
 > Directors’ Report
Other Statutory Information continued
Powers of the Directors continued
A special resolution will also be proposed at the AGM to authorise the Directors of the Company, or any of its subsidiaries, to purchase up to 10%
of the Company’s ordinary shares in issue at the date of the AGM. If approved, the minimum price which may be paid for shares purchased by the
Company shall not be less than the nominal value of the ordinary shares and the maximum price will be 105% of the average of the closing prices
of the ordinary shares taken from the Euronext Dublin Daily Official List in Dublin and the average of the closing prices of the shares taken from
the Official List of the London Stock Exchange for the five business days prior to the day the purchase is made. A special resolution will also
be proposed for the purpose of renewing the authority to set the maximum and minimum prices at which treasury shares (effectively shares
purchased and not cancelled) may be reissued off-market by the Company. If granted, both of these authorities will expire on the earlier of the
date of the AGM in 2021 or 21 July 2021.
Research and development
The Group is fully committed to ongoing technological innovation in all sectors of its business, providing integrated customer-focused product
development by leveraging our global technology capabilities and expertise. Expenditure on research and development amounted to €12.7 million
in 2019 (2018: €11.2 million) as disclosed in Note 5 to the Financial Statements.
Dividends
An interim dividend of 10.68 cent per share was paid on 4 October 2019 (an aggregate of €31.5 million) to shareholders on the share register at
the close of business on 23 August 2019. The Directors propose a final dividend of 15.94 cent per share (an aggregate of €47.1 million) bringing
the total dividend in respect of 2019 to 26.62 cent per share (an aggregate of €78.6 million). Subject to shareholder approval, the final dividend will
be paid on 24 April 2020 to shareholders on the share register on 13 March 2020. The foregoing amounts paid are net of dividends waived by the
Group’s Employee Trusts.
Total dividends paid during 2019 amounted to an aggregate of €74.3 million (being a final dividend of 14.49 cent per share paid on 26 April 2019
(an aggregate of €42.8 million) and an interim dividend of 10.68 cent per share paid on 4 October 2019 (an aggregate of €31.5 million)).
The foregoing amounts paid are net of dividends waived by the Group’s Employee Trusts.
Following approval by shareholders at the AGM in 2010, all dividend payments will be made by direct credit transfer into a nominated bank or
financial institution. If a shareholder has not provided his/her account details prior to the payment of the dividend, a shareholder will be sent the
normal tax voucher advising a shareholder of the amount of his/her dividend and that the amount is being held because his/her direct credit
transfer instructions had not been received in time.
A shareholder’s dividends will not accrue interest while they are held. Payment will be transferred to a shareholder’s account as soon as possible
on receipt of his/her direct credit transfer instructions. Additionally, if a shareholder’s registered address is in the UK and a shareholder has not
previously provided the Company with a mandate form for a euro account, a shareholder’s dividend will default to a sterling payment. All other
shareholder’s dividends will default to a euro payment.
Political donations
The Electoral Act, 1997 as amended requires companies to disclose all political donations over €200 in aggregate made during the financial year.
The Directors, on enquiry, have satisfied themselves that no payment or other donations in excess of this amount have been made by the Group.
Issued share capital
At 4 January 2020 the authorised share capital of the Company was 350,000,000 ordinary shares of €0.06 each and the issued share capital was
296,045,684 (2018: 296,045,684) ordinary shares of €0.06 each, of which 31.5% was held by the Society. All the Company’s shares are fully paid
up and quoted on Euronext Dublin and the London Stock Exchange. The Company did not allot any shares during the year.
Details of the Company’s share capital and shares under option or share award at 4 January 2020 are given in Notes 22 and 23, respectively,
to the Financial Statements.
Rights and obligations of ordinary shares
On a show of hands at a general meeting, every holder of ordinary shares present in person or by proxy and entitled to vote shall have one vote.
On a poll, every shareholder present in person or by proxy, shall have one vote for every ordinary share held. In accordance with the provisions
of the constitution of the Company, holders of ordinary shares are entitled to a dividend where declared or paid out of profits available for such
purposes. On a return of capital on a winding up, holders of ordinary shares are entitled to participate.
Restrictions on transfer of shares/votes
With the exception of restrictions on transfer of shares under the Group’s share schemes, while the shares are subject to the schemes, there are no
restrictions on the voting rights attaching to the Company’s ordinary shares (except as outlined below) or the transfer of securities in the Company.
Certain restrictions on transfers of shares may from time to time be imposed by the Group’s share dealing rules and/or the Market Abuse
Regulation (EU) No 596/2014. Directors and certain employees are required to seek the Company’s approval to deal in its shares. Additionally,
members of the Group Operating Executive are required to hold a proportion of the value of their base salary in shares. These shares may not
normally be transferred during their period of office. Where participants, in a Group share scheme operated by the Group, are the beneficial
owners of shares but not the registered owner, the voting rights are normally exercised by the registered owner at the direction of the participants.
Article 2 of the constitution of the Company provides that any ordinary shares acquired by any person who is/was an employee of the Group or
any associate or joint venture (provided he is neither a Director of the Company nor a director of the Society) shall be non-voting shares if such
acquisition would, if not for this restriction on voting rights, cause such person to be deemed to have acquired indirect control of the Company
or to have to make an offer under Rule 9 of the Irish Takeover Panel Act 1997, Takeover Rules 2013.
111

Under the constitution of the Company, the Directors have the power to impose restrictions on the exercise of rights attaching to share(s) where
the holder of the share(s) fails to disclose the identity of any person who may have an interest in those shares. No person holds securities in the
Company carrying special rights with regard to control of the Company. The Company is not aware of any agreements between holders of
securities that may result in restrictions in the transfer of securities or voting rights.
Exercise of rights of shares in employee share schemes
As detailed in Note 23 to the Financial Statements at 4 January 2020, 820,302 ordinary shares were held in employee benefit trusts for the
purpose of the Company’s employee share schemes.
The Group’s employee benefit trusts have waived dividends due to them in respect of unallocated shares save a nominal amount.
The Trustees of the Group’s employee trusts do not seek to exercise voting rights on shares held in the employee trusts other than on the
direction of the underlying beneficiaries. No voting rights are exercised in relation to shares unallocated to individual beneficiaries.
Rights under the Shareholders’ Rights (Directive 2007/36/EC) Regulations 2009
Shareholder(s) have the right to ask questions related to items on the agenda of a general meeting and to receive answers, subject to certain
qualifications. Shareholder(s) holding 3% of the issued share capital of the Company, representing at least 3% of its total voting rights, have the
right to put items on the agenda and to table draft resolutions at AGMs. The request must be received by the Company at least 42 days before
the relevant meeting. Further details of shareholders’ rights under the Shareholders’ Rights (Directive 2007/36/EC) Regulations 2009 will be
contained in the Notice of the 2020 AGM.
Restrictions on voting deadlines
The notice of any general meeting shall specify the deadline for exercising voting rights and appointing a proxy or proxies to vote in relation to
resolutions to be proposed at the general meeting. The number of proxy votes for, against or withheld in respect of each resolution is published
on the Group’s website after the meeting.
Constitution of the Company
The Company’s constitution details the rights attaching to the shares; the method by which the Company may purchase or reissue its shares, the
provisions which apply to the holding of shares and voting at general meetings and the rules relating to the Directors, including their appointment,
retirement, re-election, duties and powers. A copy of the Company’s constitution can be obtained from the Group’s website: www..com.
Unless expressly specified to the contrary in the constitution of the Company, the Company’s constitution may be amended by special resolution
of the Company’s shareholders.
Change of control provisions
The Group has certain debt facilities which may require repayment in the event that a change in control occurs with respect to the Group.
There are also a number of agreements that take effect, alter or terminate upon a change of control of the Group, which include the Group’s 
Cheese Joint Venture with Leprino Foods Company and the shareholders agreement with the Society in respect of  Ireland Designated
Activity Company. If a third party were to acquire control of the Group, Leprino Foods Company could elect to terminate its Joint Venture with the
Group and, if this were to occur, the Group could then be required to sell its shareholding in the Joint Venture to Leprino Foods Company at a price
equal to its fair value. In the same circumstances, the Society could within one year exercise the call option described on page 112.
The Board is satisfied that no change of control has occurred in respect of these agreements.
In addition, the Company’s employee share plans contain change of control provisions which can allow for the acceleration of the exercisability
of share options and the vesting of share awards in the event of a change of control.
Substantial interests
The Company has been advised of the following notifiable interests in its ordinary share capital:
Shareholder
No of ordinary
shares as at
4-Jan-2020
% of issued share
capital as at
4-Jan-2020
No of ordinary
shares as at
25-Feb-2020
% of issued share
capital as at
25-Feb-2020
 Co-operative Society Limited 93,276,241 31.5% 93,276,241 31.5%
The Capital Group Companies, Inc./Capital Research and Mgt. Company* 16,643,357 5.6% 14,500,963 4.9%
Mawer Investment Management Limited 14,852,659 5.0% 14,852,659 5.0%
Black Creek Investment Management Inc.** 11,874,803 4.0% 11,874,803 4.0%
*	
The Capital Group Companies, Inc. (‘CGC’) is the parent company of Capital Research and Management Company (‘CRMC’) and Capital Bank & Trust Company (‘CB&T’). CRMC is a US based
investment management company that serves as investment manager to the American Funds family of mutual funds, other pooled investment vehicles, as well as individual and institutional clients.
CRMC and its investment manager affiliates manage equity assets for various investment companies through three divisions, Capital Research Global Investors, Capital International Investors and
Capital World Investors. CRMC is the parent company of Capital Group International, Inc. (‘CGII’), which in turn is the parent company of four investment management companies (“CGII management
companies”): Capital International, Inc., Capital International Limited, Capital International Sàrl and Capital International K.K. CGII management companies and CB&T primarily serve as investment
managers to institutional and high net worth clients. CB&T is a US based investment management company that is a registered investment adviser and an affiliated federally chartered bank.
	
Neither CGC nor any of its affiliates own shares of  for its own account. Rather, the shares reported are owned by accounts under the discretionary investment management
of one or more of the investment management companies described above.
	
As at 4 January 2020, Growth Fund of America (‘GFA’) a mutual fund registered in the United States under the Investment Company Act of 1940, was the legal owner of 10,918,860 shares
(3.6882% of the outstanding shares), (less than 3% as at 25 February 2020). GFA has granted proxy voting authority to its investment adviser CRMC.
** Black Creek Investment Management Inc. (‘Black Creek’) is an investment management company. The shares are beneficially owned by 21 separate funds and clients which Black Creek advises
regarding their investment portfolios. Shares held directly are by funds for which Black Creek also acts as investment fund manager. None of the funds or clients by itself reaches or exceeds the
3% threshold. The funds and clients give a proxy to Black Creek who can exercise the voting rights for the shares in its own discretion.
112
 > Directors’ Report
Other Statutory Information continued
Contracts of significance for the purpose of LR 6.8.1, Euronext Dublin Listing Rules/LR 9.8.4 R, UKLA
Listing Rules
The Company has entered into an amended and restated Relationship Agreement with the Society, as also described in the Circular sent
to shareholders on 28 April 2017 and the key provisions of which are also contained on pages 71 and 81.
The Company has also entered into a shareholders’ agreement dated 2 July 2017 with the Society in respect of  Ireland Designated
Activity Company (GI). The key terms of the shareholders’ agreement are as set out below.
The board of directors of GI
The board of directors of GI will comprise of 14 directors appointed by the Society, six directors appointed by  (the ‘PLC Appointees’)
and up to three executive directors. The PLC Appointees are appointed from the Executive Directors of , the Independent (of the
Society) Non-Executive Directors of  and such other persons as may be approved by the Nomination and Governance Committee of
the Board of . Each of the PLC Appointees has 1.5 votes at any meeting of the board of directors of GI. All of the other directors of GI
have one vote each. The chairman of the board of GI shall not be entitled to a casting vote. The chairman of GI shall be appointed by the Society
so long as it holds more than 50% of the entire issued share capital of GI.
Consent of  and the Society
The prior written consent of  and the Society will be required for certain matters relating to GI, including:
• changes to the business being carried on by GI;
• agreeing the annual budget and the three-year rolling business plan;
• Value Added Projects (as defined below);
• approval and changes to the related dividend policy;
• altering the distribution policy or any material decision which is likely to result in GI failing to meet its minimum profitability level specified
in the business plan;
• incurring any capital expenditure in excess of that provided for in the budget;
• acquisitions and disposals with a consideration in excess of €4 million;
• entering into any contract or transaction except in the ordinary course of the business of GI and on an arm’s length basis with a value in
excess of €2 million; and
• incurring any new debt facilities in excess of €4 million which are not included in the business plan or which does not arise in the ordinary
course of trading.
Future capital contributions to GI
Future capital contributions will be considered by the shareholders of GI on a case by case basis (without any binding commitment).
Profit and distribution policies of GI
Profit retention
A minimum profit policy that sets an expectation for the profitability of GI by reference to a minimum profit after tax equivalent to not less than
3.2% of net revenue of the business of GI (the ‘Minimum Net Profit’). Net revenue for this purpose will be adjusted for revenue arising from Value
Added Projects (as defined below) in respect of which there is to be a separate profit retention policy (see below).
In any year where the Minimum Net Profit will be exceeded, the first €5 million of incremental net profit in excess of the Minimum Net Profit will be
set aside as a Volatility Fund in the business to support milk suppliers, grain suppliers, suppliers of other farm outputs and customers purchasing
agricultural inputs, to be paid out at the discretion of the GI board (the terms of distribution of each Volatility Fund and the time limit on payout will
be determined by the board of GI before the close of the audit of the financial statements for GI for the year in which the Volatility Fund was created).
Value Added Projects – target profit policy
A separate target profit policy will apply to Value Added Projects. Projects undertaken as Value Added Projects shall be subject to a target profit
after tax which shall be agreed by the board of GI on a project-by-project basis for each financial year based upon the investment business case
of each such Value Added Project. For such projects, 30% of the profit after tax for each Value Added Project shall be retained by GI and 70%
shall be distributed to GI’s shareholders pro rata.
Dividend policy of GI
Subject to compliance with its applicable banking covenants and the availability of sufficient distributable reserves, GI will operate an annual
dividend payout comprised of the aggregate of 70% of the profit after tax attributable to Value Added Projects as described above, and 50%
of profit after tax attributable to the remaining business activities.
Call option
Under the shareholders’ agreement dated 2 July 2017, the Society will continue to have a call option (the ‘Call Option’) to acquire ’s
40% interest in GI. The Call Option will be exercisable for a one year period commencing on completion of a change of control event in relation to
. A reduction of the Society’s representation on the  Board or its shareholding in  below 30% shall not constitute
a change of control for the purposes of the Call Option (unless there is an associated acquisition by an unaffiliated third party of a controlling
interest in ). The price payable by the Society on completion of the Call Option shall be an amount equal to 40% of the fair value of GI
as between a willing buyer and willing seller (and no discount in respect of  being a minority shareholder in GI will apply). The fair value
of GI shall be agreed by  and the Society or, in the absence of agreement, the fair value shall be the midpoint between the valuations
as determined for the fair value by two suitably qualified independent valuers.
113

If following the exercise of the Call Option by the Society, GI and/or  Foods Ireland Limited continues to be a participating employer in the
 defined benefit pension schemes and  continues to be the principal employer, the Society will guarantee to  the due
performance of the obligations of these companies under the schemes for so long as each individual company remains as a participating employer.
For a period of three years from completion (i.e. 1 July 2020),  shall not, directly or indirectly, without the Society’s prior written
consent, transfer or dispose of any interest in GI, or enter into any agreement, arrangement or understanding (whether legally binding or not)
or do or omit to do any act as a result of which any third party may acquire such interest. This restriction shall not apply to transfers by 
to subsidiaries of  provided that the transferee does not cease to be a subsidiary of .
Effect of termination of the Gl Joint Venture
If  ceases to have any shareholding in GI:
• GI and, if applicable, each of its subsidiaries will change its name to a new name which does not include the name ‘’ and  will pay
to GI 50% of the vouched reasonable costs of such rebranding up to a maximum liability for  of €1,500,000 (i.e. 50% of €3 million); and
• the Society will propose (and recommend to its members for approval) a resolution at the next AGM of the Society following the date on which
 ceases to have any shareholding in GI to change its corporate name to a name which does not include the name ‘’. The
Society will not be required to convene a general meeting of members solely to consider a proposed change of name. The Society will not
use the ‘’ name for any trading or business purpose.
Information required to be disclosed by LR 6.1.77, Euronext Dublin Listing Rules/LR 9.8.4 R, UKLA Listing
Rules
For the purposes of LR 6.1.77/LR 9.8.4 R, the information required to be disclosed by LR 6.1.77/LR 9.8.4 R can be found in the following locations:
Section Topic Location
(1) Interest capitalised and related tax relief Financial Statements, Note 11
(2) Publication of unaudited financial information Not applicable
(3) Small related party transactions Not applicable
(4) Details of long-term incentive schemes Remuneration Committee Report
(5) Waiver of emoluments by a director Remuneration Committee Report
(6) Waiver of future emoluments by a director Not applicable
(7) Non-pre-emptive issues of equity for cash Not applicable
(8) Item (7) in relation to major subsidiary undertakings Not applicable
(9) Parent participation in a placing by a listed subsidiary Not applicable
(10) Contracts of significance Other Statutory Information
(11) Provision of services by a controlling shareholder Not applicable
(12) Shareholder waivers of dividends Other Statutory Information
(13) Shareholder waivers of future dividends Other Statutory Information
(14) Agreement with controlling shareholders and independence
provisions/undertakings
Page 71
All the information cross-referenced above is hereby incorporated by reference into this Directors’ Report.
Subsidiary and associated undertakings/branches outside the State
A list of the principal subsidiary and associated undertakings and their activities including details of any branches of the Group outside the State
is included in Note 37 to the Financial Statements.
114
 > Directors’ Report
The Directors are responsible for preparing the Annual Report and the Group and Company Financial Statements in accordance with applicable
law and regulations. Irish company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors
are required to prepare the Group Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by
the European Union and Article 4 of the IAS Regulation and elected to prepare the Company Financial Statements in accordance with IFRS as
adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014. Under Irish law the Directors shall
not approve the Group and Company Financial Statements unless they are satisfied that they give a true and fair view of the assets, liabilities and
financial position, of the Group and Company respectively, as at the end of the financial year and of the profit or loss of the Group for the financial
year and otherwise comply with the Companies Act 2014.
In preparing these Group and Company Financial Statements the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state that the Financial Statements comply with IFRS as adopted by the European Union and ensure the Financial Statements contain the
information required by the Companies Act 2014 and as regards the Company Financial Statements as applied in accordance with the
provision of the Companies Act 2014; and
• prepare the Financial Statements on a going concern basis, unless it is inappropriate to presume that the Group and the Company will
continue in business.
The Directors are also required by the Transparency Directive (Directive 2004/109/EC) Regulations 2007, the Central Bank (Investment Market
Conduct) Rules 2019, the Companies Act 2014 and the Listing Rules issued by Euronext Dublin to prepare a Directors’ Report and reports
relating to Directors’ remuneration and corporate governance and the Directors are required to include a management report containing, amongst
other things, a fair review of the development and performance of the Group’s business and of its position and a description of the principal risks
and uncertainties facing the Group.
The Directors are responsible for keeping adequate accounting records that are sufficient to:
• correctly record and explain the transactions of the Company;
• enable, at any time, the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy;
• enable the Directors to ensure that the Group and Company Financial Statements and the Directors’ Report comply with the Companies Act
2014, and as regards the Group Financial Statements Article 4 of the IAS Regulation; and
• enable the Group and Company Financial Statements to be audited.
The Directors are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of certain corporate and
financial information included on the Group’s website (www..com). Legislation in Ireland concerning the preparation and dissemination of
Financial Statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on pages 62 to 64 (‘Current Directors’) confirms that he/she considers that the
Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for
shareholders to assess the position, performance, business model and strategy of the Company and the undertakings included in the
consolidation taken as whole. Each of the Current Directors also confirms that to the best of each person’s knowledge and belief:
• the Group Financial Statements prepared in accordance with IFRS as adopted by the European Union and the Company Financial Statements
prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provision of the Companies Act
2014 give a true and fair view of the assets, liabilities and financial position and profit or loss of the Company and the undertakings included
in the consolidation taken as a whole; and
• the Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the
position of the Company and the undertakings included in the consolidation taken as whole, together with a description of the principal
risks and uncertainties that they face.
The Directors’ Report for the purpose of the Transparency Directive (Directive 2004/109/EC) Regulations 2007, the Central Bank (Investment
Market Conduct) Rules 2019, the Companies Act 2014 and the Listing Rules issued by Euronext Dublin consists of pages 1 to 114.
Directors’ Report
On behalf of the Board
Martin Keane
Directors
25 February 2020
Siobhán Talbot Mark Garvey
Directors’ Responsibility Statement
115

Financial
Statements
116
 > Financial Statements
Independent auditor’s report to the members of 
Report on the audit of the financial statements
Opinion on the financial statements of  (the ‘Company’)
In our opinion the Group and Company financial statements:
• give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 4 January 2020 and of the profit
of the Group for the financial period then ended; and
• have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements
of the Companies Act 2014, and as regards the Group financial statements, Article 4 of the IAS Regulation.
The financial statements we have audited comprise:
The Group financial statements:
• the Group income statement;
• the Group statement of comprehensive income;
• the Group balance sheet;
• the Group statement of changes in equity;
• the Group statement of cash flows;
• and the related notes 1 to 37, including a summary of significant accounting policies as set out in Note 2.
The Company financial statements:
• the Company balance sheet;
• the Company statement of changes in equity;
• and the related notes 1 to 10, including a summary of significant accounting policies as set out in Note 1 of the Company financial statements.
The relevant financial reporting framework that has been applied in the preparation of the Group financial statements is the Companies Act 2014,
International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union and interpretations as approved
by the International Accounting Standards Board (IASB) (“the relevant financial reporting framework”).
The relevant financial reporting framework that has been applied in the preparation of the Company financial statements is the Companies Act
2014 and FRS 101 “Reduced Disclosure Framework” issued by the Financial Reporting Council (“the relevant financial reporting framework”)
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities
under those standards are described below in the “Auditor’s responsibilities for the audit of the financial statements” section of our report.
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied
to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
117

Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year were:
Event driven:
• Exceptional items
Recurring:
• Provisions for uncertain tax positions;
• Impairment of goodwill and other intangible assets; and
• Revenue recognition.
Materiality The materiality for the Group that we used in the current year was €12.9m which was determined on the basis of adjusted
profit before tax and exceptional items. The materiality for the Company that we used in the current year was set at
€5.2m which was determined based on net assets.
Scoping We determined the scope of our Group audit by obtaining an understanding of the Group and its environment, including
Group-wide internal financial controls, and assessing the risks of material misstatement at the Group level.
Based on that assessment, we focused our Group audit scope primarily on the audit work in 40 components. 10 of these
were subject to a full audit, whilst the remaining 30 were subject to audits of specified balances where the extent of our
testing was based on our assessment of the associated risks of material misstatement and of the materiality of the
component’s operations to the Group. Analytical review procedures were performed by the Group engagement team on
all other components within the Group.
Significant changes
in our approach
Key audit matters:
We have removed “Acquisition accounting and the valuation of intangibles on acquisition” as a key audit matter in
the current financial period. The key audit matter was included in the prior year due to the acquisition of SlimFast by
the  Performance Nutrition division. In the current year the Group made one acquisition, Watson, which is not
as significant.
In the current year we have included a key audit matter in relation to “Exceptional Items” due to the level of judgement
involved in the classification of a number of expense items as exceptional.
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the Annual Report, in relation to which ISAs (Ireland) require us to report to you
whether we have anything material to report, add or draw attention to:
• the Directors’ confirmation in the Annual Report on page 54 that they have carried out a robust assessment of the principal risks facing the
Group and the Company, including those that would threaten its business model, future performance, solvency or liquidity;
• the disclosures on pages 56 to 59 to the Annual Report that describe those principal risks and explain how they are being managed
or mitigated;
• the Directors’ statement on page 55 in the Annual Report and on page 196 in the financial statements about whether the Directors consider it
appropriate to adopt the going concern basis of accounting in preparing the financial statements and the Directors’ identification of any
material uncertainties to the Group’s and Company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• whether the Directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 6.1.82(3) is
materially inconsistent with our knowledge obtained in the audit; or
• the Directors’ explanation on page 55 in the Annual Report as to how they have assessed the prospects of the Group and Company, over
what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group and Company will be able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current financial period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
118
 > Financial Statements
Provisions for uncertain tax positions
Key audit matter
description
The Group operates across numerous multinational jurisdictions, the most significant of which are Ireland and the
USA, and are subject to periodic challenge by local tax authorities on a range of tax matters during the normal course
of business including transfer pricing, group financing arrangements and transaction related tax matters.
The Directors apply significant judgement in assessing current and deferred tax risks and exposures in relation to
the interpretation of local and international tax laws, rates and treaties relating to worldwide provisions for uncertain
tax positions.
As a result there is a risk that tax authorities could have different interpretations to those of the Directors resulting in
potential misstatement of tax provisions.
Refer also to page 78 (Audit Committee Report), Page 137 (Income taxes accounting policy), Note 3 (Critical accounting
judgements and estimates) and notes 12 and 26 to the financial statements.
How the scope
of our audit
responded to the
key audit matter
To obtain evidence over the appropriateness of the Directors’ assumptions in determining provisions for uncertain tax
positions, we obtained an understanding of the Group’s tax strategy, tax operating models and any changes to the
Group’s tax structures arising from global changes in tax legislation. We evaluated the design and determined the
implementation of the relevant controls in respect of the tax computation process and tax risk management process.
We also reviewed the Directors’ assessment of related tax risks and exposures across the Group.
We engaged our Irish and International tax specialists as part of our audit team, including US tax specialists to analyse
and challenge the appropriateness of the assumptions made by the Directors in determining adjustments to current and
deferred tax provisions.
We challenged and evaluated Directors’ assumptions and estimates, including external advice obtained, in respect of tax
risks and related provisions.
We focused particularly on the Directors’ judgements made in relation to transfer pricing models, interpretations of
relevant tax laws, group financing arrangements and the Directors’ assessment of likely outcomes for uncertain tax
positions in key jurisdictions where the Group has significant trading operations.
We inspected relevant correspondence between the Group and relevant tax authorities.
We evaluated the completeness and accuracy of current and deferred tax disclosures for compliance with the relevant
financial reporting framework.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to the uncertain
taxation provisions.
Independent auditor’s report to the members of  continued
119

Impairment of goodwill and other intangible assets
Key audit matter
description
The Group’s goodwill and intangible assets of €1,258m, which is held across fifteen individual Cash Generating Units
(CGUs), represents approximately 37% of the Group’s total assets at year end. The Performance Nutrition business
accounts for 85% of total goodwill and intangible assets as it has been the most acquisitive segment of the Group over
recent years.
Judgement is required in identifying indicators of impairment and estimation is required in determining the recoverable
amount of the Group’s CGUs. There is a risk that incorrect inputs or inappropriate assumptions could be included in the
Group’s impairment assessment model leading to an impairment charge that has not been included in the Group’s
financial statements. This risk was pinpointed to 10 CGUs with a particular focus on the think! CGU, where the Directors
noted in their sensitivity analysis that a reasonably possible change in a key assumption used in their impairment
assessment could result in an impairment charge, and in the BSN CGU, where we noted a significant reduction in the
headroom between the carrying amount and the recoverable amount for this CGU since the prior year.
The recoverable amount used in the impairment assessment is determined based on value in use calculations which
rely on Directors’ assumptions and estimates of future trading performance.
The key assumptions utilised by the Directors in the impairment reviews are discount rates and growth rates.
Refer also to page 78 (Audit Committee Report), page 132 (Intangible assets accounting policy), Note 3 (Critical
accounting judgements and estimates) and Note 16 to the financial statements.
How the scope
of our audit
responded to the
key audit matter
We, in conjunction with our valuation specialists, evaluated the methodology applied by the Directors in preparing the
value in use calculations and the judgements applied in determining the CGUs. In addition, we evaluated the design
and determined the implementation of relevant controls in respect of the impairment review process and the budgeting
process upon which the Group’s discounted cash flow model is based.
We performed a retrospective review of assumptions used in prior year value in use calculations and compared these
to actual outturn.
We challenged the underlying key assumptions within the Group’s impairment model by developing an independent
view of the Group discount rate where we benchmarked the rates used by the Directors against market data and
comparable organisations.
We challenged cash flow projections by comparing them to historic growth rates and Group strategic plans. We
challenged the Group’s forecasts with reference to recent performance and trend analysis including comparing recent
historic performance to budgets for CGUs where revenue growth has significantly fallen behind plans or where sensitivity
analysis in respect of key assumptions in the Group’s impairment model indicates a potential impairment. Where we
noted any significant reduction in headroom for a CGU since the prior year, we gained an understanding of the reasons
giving rise to the reduction and performed additional procedures to substantiate these reasons. We held discussions with
the business unit controllers to understand the changes being implemented at the site level to ensure the targets set in
the strategic plans are met.
We assessed and challenged the reasonableness of related assumptions used in determining terminal values.
We evaluated the completeness and accuracy of the disclosures in relation to goodwill and intangible assets for
compliance with the relevant financial reporting framework.
Key observations While we note that actions are required by the Group to achieve the forecasts outlined in the Group’s strategic plans over
the short and medium term, we concluded that the assumptions in the impairment models, specifically in the value in use
calculations, are within an acceptable range.
120
 > Financial Statements
Revenue recognition
Key audit matter
description
The Group sells products to customers under a variety of contractual terms.
When assessing the potential risk of fraud in relation to revenue recognition, we considered the nature of the automated
and manual transactions recorded across the Group. All revenue across the Group is recorded automatically at point
of dispatch. Management record manual adjustments to revenue to ensure revenue is accounted for in line with the
underlying contractual terms with customers. We have therefore pinpointed the significant risk across the Group to
manual adjustments to revenue.
Furthermore, within the  Performance Nutrition division, revenue is recognised net of discounts, rebates and other
promotional arrangements where they apply to sales contracts. Significant judgement is required to determine the level
of accruals required to settle these arrangements with customers post year end, which impacts the amount of revenue
recognised in the period. There is a risk that year end accruals relating to selling arrangements, and therefore revenue
could be misstated either intentionally to achieve performance targets, or as a result of error.
As described in Note 2 (Summary of significant accounting policies) the Group adopted IFRS 15 ‘Revenue from Contracts
with Customers’ effective from 30 December 2018. In transitioning to IFRS 15, the Group assessed how revenue from the
sale of goods manufactured by its joint venture Southwest Cheese Company, LLC is accounted for and whether it was
more appropriate to account for revenue on an agency or net basis, versus principal or gross basis. As a result of this
assessment the Directors concluded that the revenue should be recorded on a gross basis as the Group controls the
promised goods before transferring them to the customers. The application of the standard is reliant upon a number of
key estimates primarily on the interpretation of control of goods.
Refer also to page 78 (Audit Committee Report), and page 137 (Revenue recognition accounting policy).
How the scope
of our audit
responded to the
key audit matter
We obtained an understanding of the various selling contracts and arrangements in place with customers across all
divisions of the Group, and of the internal controls and IT systems in place over the revenue processes to determine if
revenue was appropriately recognised to reflect the terms of contracts with customers and to ensure that the appropriate
cut-off procedures are applied and revenue at year end is not misstated.
We evaluated the design and determined the implementation of relevant controls in respect of revenue recognition.
Where possible, operating effectiveness testing was performed and controls were relied upon.
We recalculated year end accruals based on underlying contracts with customers and assessed whether there was any
evidence of management bias in key judgements made by management. We also performed year end cut-off procedures
and reviewed goods in transit at the year end date to ensure transactions were recorded in the correct period.
As revenue is recognised automatically on despatch within SAP, we selected a sample of manual journal entries posted
to revenue to ensure amounts were recorded in line with underlying contracts for a selection of invoices and customers.
We also tested higher risk transactions including agency arrangements by assessing if these transactions were
appropriately accounted for in accordance with the relevant accounting standards.
In addition, we selected a sample of post year end credit notes and rebate payments to identify any invalid sales
transactions recorded in the period. In relation to the transition to IFRS 15, we obtained and documented our
understanding of the process the Directors undertook to identify the impacts of the new standard and to develop the
accounting policy papers including the consideration of the key judgment outlined above.
We challenged the key judgements in assessing when control passed to customers to determine whether the company
was the agent or principal to ensure revenue was recorded in line with the requirements of IFRS 15. Where appropriate,
we reviewed the detailed assessment against the contracted arrangements and the underlying requirements of the
accounting standard.
We evaluated the completeness and accuracy of the disclosures in relation to the transition to IFRS 15 and whether they
were appropriate.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to revenue recognised.
Independent auditor’s report to the members of  continued
121

Exceptional items
Key audit matter
description
As described in Note 2 (Summary of significant accounting polices) and Note 6 (Exceptional items) the Group,
in accordance with its stated accounting policy, classified a number of significant items of expense totalling €39.1m
as exceptional items. These exceptional items relate to organisational redesign costs, asset impairments, acquisition
integration costs and Brexit related costs.
Earnings before interest, tax and amortisation (EBITA) is disclosed throughout the annual report on a pre-exceptional
basis and is one of the Group’s key performance indicators. The classification of items as exceptional is inherently
judgemental. As a result there is a risk that items are not consistently classified as exceptional items in line with the
Group’s accounting policy, or are not adequately disclosed.
Refer also to page 78 (Audit Committee Report), and page 139 (Exceptional Items accounting policy).
How the scope
of our audit
responded to the
key audit matter
We documented our understanding of the process the Directors undertook to identify and present exceptional items
within the Annual Report.
We challenged the nature and classification of transactions as exceptional items in accordance with the Group’s
accounting policy, whilst also challenging whether the accounting policy for exceptional items is appropriate and
is consistent with previous periods.
We reviewed the presentation of and disclosures in the Group’s financial statements against requirements under
the relevant financial reporting framework.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to exceptional items.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to
express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the
risks described above, and we do not express an opinion on these individual matters.
122
 > Financial Statements
Our application of materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable
person, relying on the financial statements, would be changed or influenced. We use materiality both in planning the scope of our audit work
and in evaluating the results of our work.
We determined materiality for the Group to be €12.9m, which is approximately 5.4% of adjusted profit before tax and exceptional items. We have
considered the adjusted profit before tax and exceptional items to be the appropriate benchmark for determining materiality because it is the
most important measure for users of the Group’s financial statements. The materiality for the Company was set at €5.2m which was determined
on the basis of net assets. We have considered quantitative and qualitative factors such as understanding the entity and its environment, history
of misstatements, complexity of the Group and reliability of the control environment.
We agreed with the Audit Committee that we would report to them all audit differences in excess of €0.65m as well as differences below this
threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
We determined the scope of our Group audit by obtaining an understanding of the Group and its environment, including Group-wide internal
financial controls, and assessing the risks of material misstatement at the Group level. Based on that assessment, we focused our Group audit
scope primarily on the audit work in 40 components. 10 of these were subject to a full audit, whilst the remaining 30 were subject to audits of
specified balances where the extent of our testing was based on our assessment of the associated risks of material misstatement and of the
materiality of the component’s operations to the Group. Analytical review procedures were performed by the Group engagement team on all
other components within the Group.
These components were selected based on the level of coverage achieved and to provide an appropriate basis for undertaking audit work to
address the risks of material misstatement identified above. Our audit work for all components was executed at levels of materiality applicable
to each individual unit which were lower than Group materiality and ranged from €2.5m to €9m.
At the Group level, we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were
no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to a full audit.
External Revenue % Tested Net Assets % Tested
The Group audit team attended planning meetings at a number of significant component locations, including Ireland and the USA,
during the year and participated in audit meetings with other significant components and a number of non significant components.
In addition to our planning meetings, we sent detailed instructions to our component audit teams, included them in our team briefings,
discussed their risk assessment, attended client planning and closing meetings, and reviewed their audit working papers.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other
than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
Independent auditor’s report to the members of  continued
PBT
Materiality
Full Audit
Specified Audit Balances
Analytic Procedures
PBT €238.2m Materiality €12.9m
Audit Committee reporting
threshold €0.65m
51%
35%
42%
51%
7% 14%
123

We have nothing to report in this regard.
In this context, we also have nothing to report with regard to our responsibility to specifically address the following items in the other information
and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:
• Fair, balanced and understandable – the statement given by the Directors that they consider the Annual Report and financial statements
taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and
Company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting – the section describing the work of the audit committee does not appropriately address matters
communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code and the Irish Corporate Governance Annex – the
parts of the Directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance
Code and the Irish Corporate Governance Annex containing provisions specified for review by the auditor in accordance with Listing Rule
6.1.85 and Listing Rule 6.1.86 do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code or the
Irish Corporate Governance Annex in accordance with Listing Rule 6.1.87.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional scepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the entity (or where relevant,
the Group) to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group to express an
opinion on the consolidated financial statements. The Group auditor is responsible for the direction, supervision and performance of the
Group audit. The Group auditor remains solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that the auditor has
complied with relevant ethical requirements regarding independence, including the Ethical Standard for Auditors (Ireland) 2016, and
communicates with them all relationships and other matters that may reasonably be thought to bear on the auditor’s independence, and where
applicable, related safeguards.
Where the auditor is required to report on key audit matters, from the matters communicated with those charged with governance, the auditor
determines those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter
or when, in extremely rare circumstances, the auditor determines that a matter should not be communicated in the auditor’s report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
124
 > Financial Statements
This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work
has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited.
• The Company balance sheet is in agreement with the accounting records.
• In our opinion the information given in those parts of the Directors’ report as specified for our review is consistent with the financial statements
and has been prepared in accordance with the Companies Act 2014.
Corporate Governance Statement
We report, in relation to information given in the Corporate Governance Statement on pages 60 to 73 that:
• In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate Governance Statement
pursuant to subsections 2(c) and (d) of section 1373 of the Companies Act 2014 is consistent with the Company’s statutory financial
statements in respect of the financial period concerned and such information has been prepared in accordance with the Companies Act 2014.
Based on our knowledge and understanding of the Group and Company and its environment obtained in the course of the audit, we have not
identified any material misstatements in this information;
• In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement contains the information
required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and
groups) Regulations 2017 (as amended); and
• In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373(2)(a), (b),
(e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not
identified material misstatements in those parts of the Directors’ report that have been specified for our review.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by Regulation
5(2) to 5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations
2017 (as amended) for the financial period ended 4 January 2020. We have nothing to report in this regard.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion, the disclosures
of Directors’ remuneration and transactions specified by law are not made.
The Listing Rules of the Euronext Dublin require us to review six specified elements of disclosures in the report to shareholders by the Board of
Directors’ remuneration committee. We have nothing to report in this regard.
Other matters, which we are required to address
 appointed us on 27 April 2016 to audit the financial statements for the financial period ended 31 December 2016 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is four years, covering
the periods ending 31 December 2016, 30 December 2017, 29 December 2018 and 4 January 2020.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Company in conducting
the audit.
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISA (Ireland) 260.
Kevin Sheehan
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2, Ireland
25 February 2020
Independent auditor’s report to the members of  continued
126
 > Financial Statements Notes

Profit for the year 180.2 234.0
Other comprehensive income/(expense)
Items that will not be reclassified subsequently to the Group income statement:
Remeasurements on defined benefit plans, net of deferred tax (14.1) (0.3)
Share of other comprehensive income of equity accounted investees, net of deferred tax 17 (8.3) (2.0)
Revaluation of equity investments at FVOCI*, net of deferred tax 23 (0.1) –
Items that may be reclassified subsequently to the Group income statement:
Currency translation differences 23 46.7 58.6
Currency translation difference arising on net investment hedge 23 (2.4) (3.9)
Disposal of AFS** financial assets, net of deferred tax 23 – (3.5)
Loss on cash flow hedges, net of deferred tax 23(d) (2.0) –
Share of other comprehensive income of equity accounted investees, net of deferred tax 17 (10.0) (4.2)
Other comprehensive income for the year, net of tax 9.8 44.7
Total comprehensive income for the year attributable to equity holders of the Company 190.0 278.7
* Fair value through other comprehensive income (‘FVOCI’)
** Available for sale (‘AFS’)
Group Statement of Comprehensive Income
for the financial year ended 4 January 2020
Non-current assets
Property, plant and equipment 15 474.1 453.0 442.2
Intangible assets 16 1,344.6 1,304.0 959.8
Equity accounted investees 17 373.2 334.5 266.9
Other financial assets 18 3.4 – –
Available for sale financial assets 18 – 3.7 11.1
Loans to equity accounted investees 35 28.8 29.8 –
Deferred tax assets 26 1.9 2.1 1.6
Retirement benefit assets 9 2.1 1.1 1.7
2,228.1 2,128.2 1,683.3
Current assets
Current tax assets 23.7 9.6 11.3
Inventories 20 447.5 384.6 321.6
Trade and other receivables 19 432.3 411.6 351.1
Derivative financial instruments 29 0.3 1.5 2.2
Cash and cash equivalents (excluding bank overdrafts) 21 269.0 224.6 162.2
1,172.8 1,031.9 848.4
Total assets 3,400.9 3,160.1 2,531.7
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium 22 105.4 105.4 105.4
Other reserves 23 269.1 240.9 190.0
Retained earnings 24 1,327.4 1,242.8 1,086.3
Total equity 1,701.9 1,589.1 1,381.7
LIABILITIES
Non-current liabilities
Financial liabilities 25 514.2 752.4 499.6
Deferred tax liabilities 26 168.6 160.3 125.6
Retirement benefit obligations 9 48.4 39.6 43.6
Provisions 27 – 24.9 24.0
Capital grants – – 0.1
Other payables 28 12.5 13.0 10.1
743.7 990.2 703.0
Current liabilities
Trade and other payables 28 512.5 468.4 356.6
Current tax liabilities 67.7 59.7 52.0
Financial liabilities 25 369.1 48.9 30.3
Derivative financial instruments 29 2.4 0.5 0.3
Provisions 27 3.6 3.3 7.8
955.3 580.8 447.0
Total liabilities 1,699.0 1,571.0 1,150.0
Total equity and liabilities 3,400.9 3,160.1 2,531.7
On behalf of the Board
Martin Keane
Directors
Siobhán Talbot Mark Garvey
Balance at 30 December 2018 105.4 240.9 1,242.8 1,589.1
Profit for the year – – 180.2 180.2
Other comprehensive income/(expense) – 32.2 (22.4) 9.8
Total comprehensive income for the year – 32.2 157.8 190.0
Transactions with equity holders of the Company
Contributions and distributions
Dividends – – (74.3) (74.3)
Purchase of own shares – (7.6) – (7.6)
Cost of share-based payments – 4.6 – 4.6
Transfer on exercise, vesting or expiry of share-based payments – (1.0) 1.0 –
Deferred tax on share-based payments – – 0.1 0.1
Balance at 4 January 2020 105.4 269.1 1,327.4 1,701.9
Balance at 31 December 2017 105.4 190.0 1,086.3 1,381.7
Profit for the year – – 234.0 234.0
Other comprehensive income/(expense) – 47.0 (2.3) 44.7
Total comprehensive income for the year – 47.0 231.7 278.7
Transactions with equity holders of the Company
Contributions and distributions
Dividends – – (76.0) (76.0)
Purchase of own shares – (4.3) – (4.3)
Cost of share-based payments – 8.8 – 8.8
Transfer on exercise, vesting or expiry of share-based payments – (0.6) 0.6 –
Deferred tax on share-based payments – – 0.2 0.2
Balance at 29 December 2018 105.4 240.9 1,242.8 1,589.1
Group Statement of Changes in Equity
for the financial year ended 4 January 2020
Cash flows from operating activities
Cash generated from operating activities 32 285.9 316.5
Interest received 3.7 4.8
Interest paid (32.5) (21.0)
Tax paid (44.6) (25.2)
Net cash inflow from operating activities 212.5 275.1
Cash flows from investing activities
Payment for acquisition of subsidiaries, net of cash and cash equivalents acquired (58.3) (313.0)
Purchase of property, plant and equipment (42.7) (32.0)
Purchase of intangible assets 16 (33.6) (30.6)
Interest paid in relation to property, plant and equipment 11 (0.7) (0.8)
Dividends received from equity accounted investees 17/35 35.3 31.6
Loans advanced to equity accounted investees 35 – (17.0)
Repayment of loans advanced to equity accounted investees 35 1.0 –
Investment in equity accounted investees (48.4) (41.9)
Proceeds from disposal/redemption of FVOCI financial assets (2018: AFS financial assets) 18 0.5 7.9
Payments for FVOCI financial assets (2018: AFS financial assets) 18 (0.4) (0.3)
Proceeds from sale of property, plant and equipment 0.2 1.3
Net cash outflow from investing activities (147.1) (394.8)
Cash flows from financing activities
Purchase of own shares 23 (7.6) (4.3)
Drawdown of borrowings 606.2 370.7
Repayment of borrowings (599.9) (130.5)
Finance lease payments – (0.3)
Dividends paid to Company shareholders 14 (74.3) (76.0)
Net cash (outflow)/inflow from financing activities (75.6) 159.6
Net (decrease)/increase in cash and cash equivalents (10.2) 39.9
Cash and cash equivalents at the beginning of the year 175.7 132.1
Cash acquired on acquisition (4.2) –
Effects of exchange rate changes on cash and cash equivalents 3.4 3.7
Cash and cash equivalents at the end of the year 21 164.7 175.7
Group Statement of Cash Flows
for the financial year ended 4 January 2020
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 > Financial Statements
1. General information
 (the ‘Company’) and its subsidiaries (together the ‘Group’) is a leading global nutrition group with its main operations in Europe,
US and Asia Pacific. See note 4.
The Company is a public limited company incorporated and domiciled in Ireland, the number under which it is registered is 129933. The address
of its registered office is  House, Kilkenny, Ireland, R95 E866.  Co-operative Society Limited, (the ‘Society’), together with its
subsidiaries, holds 31.5% of the issued share capital of the Company. The Board of Directors for the year ended 4 January 2020 is comprised
of 16 members, of which up to 8, including the Chairman who has the casting vote, are nominated by the Society. In accordance with IFRS 10
‘Consolidated Financial Statements’, the Society controls the Group and is the ultimate parent of the Group. In 2020 in accordance with the
Relationship Agreement, the number of directors nominated by the Society will reduce to seven in a board comprising of 15 members. Thereafter
the Society will no longer control the Group.
The Company’s shares are quoted on Euronext Dublin and London Stock Exchange. The consolidated financial statements were approved and
authorised for issue by the Board of Directors on 25 February 2020.
2. Summary of significant accounting policies
The Group adopted new accounting standards and International Financial Reporting Interpretations Committee (IFRIC) interpretations during the
year ended 4 January 2020. As a result of adopting IFRS 15 ‘Revenue from Contracts with Customers’, the prior year Group income statement,
balance sheet and certain notes were restated. Refer to the section ‘Adoption of new and amended standards and interpretations’ herein for
details of the restatement and adoption of other new and amended accounting standards and interpretations.
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently
applied to all years presented by the Group and equity accounted investees unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with EU adopted International Financial Reporting Standards (IFRS),
IFRIC interpretations and those parts of the Companies Act 2014, applicable to companies reporting under IFRS. IFRS as adopted by the
European Union (EU) comprise standards and interpretations approved by the International Accounting Standards Board (IASB). The consolidated
financial statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by the EU differs in certain respects from IFRS issued by the
IASB. References to IFRS hereafter refer to IFRS adopted by the EU.
The consolidated financial statements have been prepared under the historical cost convention as modified by use of fair values for certain other
financial assets and derivative financial instruments.
The preparation of the consolidated financial statements in conformity with IFRS requires the use of estimates, judgements and assumptions that
affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or
actions, actual results ultimately may differ from these estimates. See note 3.
Amounts are stated in euro millions (€’m) unless otherwise stated. These financial statements are prepared for the 53-week period ended
4 January 2020. Comparatives are for the 52-week period ended 29 December 2018. The balance sheets for 2019 and 2018 have been drawn
up as at 4 January 2020 and 29 December 2018 respectively.
Going concern
After making enquiries, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the consolidated
financial statements.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by it (its subsidiaries).
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control
ceases. Inter-company assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated on consolidation.
Equity accounted investees – joint ventures
The Group applies IFRS 11 ‘Joint Arrangements’ to all joint arrangements. Under IFRS 11 investments in joint arrangements are classified as
either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature
of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting. Under the equity method of accounting, interests in
joint ventures are initially recognised at cost. The Group’s share of joint ventures post acquisition profits or losses after tax are recognised in the
‘Share of results of equity accounted investees’ in the Group income statement. The Group’s share of joint ventures post acquisition movement
in reserves is recognised in the Group statement of other comprehensive income.
Notes to the Financial Statements
for the financial year ended 4 January 2020
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The cumulative post acquisition movements are adjusted against the carrying amount of the investment less any impairment in value. Where indicators
of impairment arise, the carrying amount of the joint venture is tested for impairment by comparing its recoverable amount against its carrying value.
Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group’s interest in the entity. Unrealised losses
are similarly eliminated to the extent that they do not provide evidence of impairment of a transferred asset.
When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, the Group does not recognise further losses
unless the Group has incurred obligations or made payments on behalf of the joint venture.
When the Group ceases to have joint control, any retained interest in the entity is re-measured to its fair value at the date when joint control or
significant influence is lost with the change in carrying amount recognised in the income statement. The Group also reclassifies any movements
previously recognised in other comprehensive income to the income statement.
Business combinations
The Group uses the acquisition method of accounting to account for business combinations. The acquisition date is defined as the date the
Group gained control of the entity. The cost of the acquisition is measured at the aggregate of the fair value of the consideration given.
Upon acquisition, the Group assesses the assets acquired and liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Identifiable assets acquired, liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date except for deferred
tax assets or liabilities and assets or liabilities related to employee benefit arrangements which are recognised and measured in accordance
with IAS 12 ‘Income Taxes’ and IAS 19 ‘Employee Benefits’ respectively. The fair value of the assets and liabilities are based on valuations using
assumptions deemed by management to be appropriate. Professional valuers are engaged when it is deemed appropriate to do so.
Goodwill represents the excess of the aggregate of the consideration transferred and the amount of any non-controlling interest in the acquired
entity over the net identifiable assets acquired. If this is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain
purchase, the difference is recognised directly in the income statement.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the valuation of the fair value of assets acquired and liabilities assumed is still
in progress. Those provisional amounts are adjusted during the measurement period of one year from the date control is achieved when
additional information is obtained about facts and circumstances which would have affected the amounts recognised as of that date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration will be recognised in the income statement.
Acquisition related costs are expensed as incurred in the income statement.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s net assets.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s subsidiaries and joint ventures are measured using the currency
of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented
in euro.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the income statement, except when
deferred in equity as qualifying cash flow hedges or net investment hedges.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Currency
translation differences on monetary assets and liabilities are taken to the income statement, except when deferred in equity in the currency
translation reserve as (i) qualifying cash flow hedges or (ii) exchange gains or losses on long-term intra-group loans and on net investment hedges.
Subsidiaries and joint ventures
The income statement and balance sheet of subsidiaries and joint ventures that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
• assets and liabilities at each reporting date are translated at the closing rate at the reporting date of the balance sheet;
• income and expenses in the income statement and statement of comprehensive income are translated at average exchange rates for the year
when they are a reasonable approximation of the cumulative effect of the rates on transaction dates; and
• all resulting exchange differences are recognised in other comprehensive income.
Resulting exchange differences are taken to a separate currency reserve within equity. When a foreign entity is disposed of outside the Group,
such exchange differences are recognised in the income statement as part of the gain or loss on disposal.
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2. Summary of significant accounting policies continued
The principal exchange rates used for the translation of results and balance sheets into euro are as follows:
Average Year end
Euro 1= 2019 2018 2019 2018
US dollar 1.1196 1.1812 1.1147 1.1454
Pound sterling 0.8772 0.8847 0.8512 0.9027
Business combinations
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are denominated in the functional currency of the foreign entity,
recorded at the exchange rate at the date of the transaction and subsequently retranslated at the applicable closing rates.
Property, plant and equipment
Cost
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly
attributable to the acquisition of the assets. Subsequent costs, for example the costs of major renovation, are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is de-recognised when replaced. All other repairs and maintenance
are charged to the income statement during the reporting period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the income statement.
Borrowing costs directly attributable to the construction of property, plant and equipment which take a substantial period of time to get ready
for its intended use are capitalised as part of the cost of the assets.
Depreciation
Depreciation is calculated on the straight-line method to write off the cost (less residual value) of each asset over its estimated useful life at the
following rates:
%
Land Nil
Buildings 2.5 – 5
Plant and equipment 4 – 33
Motor vehicles 20 – 25
Land is not depreciated. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or,
where shorter, the term of the relevant lease.
Residual values and useful lives are reviewed and adjusted if appropriate at each reporting date.
Impairment
Carrying amounts of items of property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication
of impairment. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
Impairment losses are recognised in the income statement. Following the recognition of an impairment loss, the depreciation charge applicable
to the asset is adjusted prospectively in order to systematically allocate the revised carrying amount, net of any residual value over the remaining
useful life.
Intangible assets
Goodwill
Goodwill is initially recognised at cost being the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets, liabilities and contingent liabilities of the acquired subsidiary or joint venture at the date of acquisition. Goodwill on acquisition of
subsidiaries is included within intangible assets. Goodwill associated with the acquisition of joint ventures is not recognised separately and
included within the interest in joint ventures under the equity method of accounting.
Following initial recognition goodwill is carried at cost less accumulated impairment losses, if applicable. Goodwill impairments are not reversed.
Goodwill is not amortised but is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment
is considered to exist. The annual goodwill impairment tests are undertaken at a consistent time in each annual period.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
In accordance with IFRS 1 ‘First time Adoption of International Financial Reporting Standards’, goodwill written off to reserves prior to date of
transition to IFRS remains written off. In respect of goodwill capitalised and amortised at transition date, its carrying value at date of transition
to IFRS remains unchanged.
Notes to the Financial Statements continued
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Research and development costs
Research expenditure is recognised as an expense in the income statement as incurred.
Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets
when it is probable that the project will be a success, considering its commercial and technological feasibility and costs can be measured reliably.
Development costs are amortised using the straight-line method over their estimated useful lives. The useful life is typically 3 years.
Brands, customer relationships, recipes, know-how and other intangibles
Brands, customer relationships, recipes, know-how and other intangibles acquired as part of a business combination are stated at their fair value
at the date control is achieved.
Indefinite life brands are carried at cost less accumulated impairment losses, if applicable. Indefinite life brands are not amortised on an annual
basis but are tested annually for impairment. Indefinite life intangible assets are those for which there is no foreseeable limit to their expected
useful life. The classification of the brands as indefinite is assessed annually.
Definite life brands, customer relationships, recipes, know-how and other intangibles are amortised using the straight-line method over their useful
life as follows:
Years
Brands 3 – 40
Customer relationships 5 – 15
Recipes, know-how and other intangibles 2 – 15
The useful life used to amortise definite life brands, customer relationships, recipes, know-how and other intangibles relates to the future
performance of the assets acquired and management’s judgement of the period over which the economic benefit will be derived from the assets.
The carrying values of definite life brands, customer relationships, recipes, know-how and other intangibles are reviewed for indicators of
impairment at each reporting date and are subject to impairment testing when events or circumstances indicate that the carrying values may
not be recoverable.
Computer software
Computer software is stated at cost less accumulated amortisation and impairment losses.
Costs incurred on the acquisition of computer software are capitalised, as are costs directly associated with developing computer software
programmes for internal use, if they meet the recognition criteria of IAS 38 ‘Intangible Assets’.
Computer software costs recognised as assets are amortised using the straight-line method over their estimated useful lives, which is normally
between five and 10 years.
Impairment of intangible assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.
For the purposes of impairment testing, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-
generating units (CGUs)). An impairment is recognised in the income statement for the amount by which the carrying value of the CGU exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Value in use is
determined as the discounted future cash flows of the CGU.
Equity instruments
The Group classifies and measures its equity instruments at fair value. Changes in their fair value are recognised in the income statement
unless management has elected to present fair value gains and losses in OCI on an investment by investment basis. When an election is made
for an investment, there is no subsequent reclassification of fair value gains and losses related to the investment to profit or loss following the
derecognition of the investment. Dividends from such investments are recognised in profit or loss when the Group’s right to receive payments
is established.
Trade and other receivables, loans to equity accounted investees and financial assets at amortised cost
Trade and other receivables, loans to equity accounted investees and financial assets at amortised cost are classified and measured at amortised
cost as they are held to collect contractual cash flows which comprise solely payments of principal and interest, where applicable. They are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less loss allowance.
They are classified as non-current assets except for those maturing within 12 months of the reporting date.
The Group recognises an allowance for expected credit losses (ECLs) for financial assets not held at fair value through profit or loss. For credit
exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next 12 months. For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a lifetime expected loss allowance is recognised, irrespective of the timing of the default.
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2. Summary of significant accounting policies continued
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. A loss allowance for receivables is estimated based on expected credit losses. To measure expected credit losses, historical loss
rates are calculated based on historical credit loss experience. The loss allowance based on historical loss rates is adjusted where appropriate
to reflect current information and forward-looking information on macroeconomic factors, including the trading environment of countries in which
the Group sells its goods, which affect the ability of the debtors to settle the receivables.
Receivables are written off when there is no reasonable expectation of recovery such as a debtor failing to engage in a repayment plan with
the Group.
Trade and other payables
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost which approximates to fair value
given the short-term nature of these liabilities. These amounts represent liabilities for goods and services provided to the Group prior to, or at the
end of the financial year which are unpaid.
The amounts are unsecured and are usually paid within 30–90 days of recognition depending on the terms negotiated with suppliers. Trade and
other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and deposits held on call with banks. For the purposes of the Group statement of cash flows,
cash and cash equivalents consists of cash and cash equivalents net of bank overdrafts as bank overdrafts are repayable on demand and they
form an integral part of cash management.
Financial liabilities
Financial liabilities are recognised initially at fair value and are subsequently stated at amortised cost. They are classified as current liabilities
unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the Group or the counterpart.
Derivative financial instruments
Derivatives are initially recorded at fair value and subsequently remeasured at their fair value at the reporting date. Derivative contracts are
recognised on the trade date, other than ‘regular way’ contracts for which settlement date accounting is applied.
The fair value of any foreign currency contracts or any commodities contract is estimated by discounting the difference between the contractual
forward price and the current forward price, using the market interest rate at the measurement date, for a time period equal to the residual
maturity of the contract. The fair value of any interest rate swap is estimated by discounting future cash flows under the swap, using the market
interest rates, at the measurement date, for time periods equal to the residual maturity of the contracted cash flows.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the
nature of the item being hedged. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised
in the income statement. The Group adopts the hedge accounting model in IFRS 9.
The Group designates certain derivatives as either: (i) hedges of the fair value of recognised assets or liabilities or an unrecognised firm
commitment (fair value hedge); or (ii) hedges of a particular risk associated with the cash flows of recognised asset or liability or a highly probable
forecast transaction (cash flow hedge).
The Group documents at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge
inception and half yearly, of whether the derivatives that are used in hedging transactions are effective in offsetting changes in fair values or cash
flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note 29. The full fair value of a hedging derivative is
classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability
if the remaining maturity of the hedged item is less than 12 months.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with
any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.
Notes to the Financial Statements continued
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Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for instance
when the forecast sale that is hedged takes place). The recycled gain or loss relating to the effective portion of interest rate swaps hedging
variable interest rates on borrowings is recognised in the income statement within ‘finance costs’. The recycled gain or loss relating to the
effective portion of foreign exchange contracts is recognised in the income statement.
When a hedging instrument expires or is sold or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
Net investment hedge
Net investment hedges are foreign currency borrowings used to finance or provide a hedge against Group equity investments in non-euro
denominated operations to the extent that they are neither planned nor expected to be repaid in the foreseeable future or are expected to provide
an effective hedge of the net investment. When long-term intra-group loans are repaid the related cumulative currency translation recognised in
the currency reserve is not reclassified to the income statement unless the entity is disposed of.
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value
and subsequently at the higher of:
• the amount determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments; and
• the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of
IFRS 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments
required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be
payable to a third party for assuming the obligations.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost includes all expenditure incurred in the normal course of business in bringing the products to their present location and condition. Cost is
determined by the first-in, first-out (FIFO) method or by weighted average cost. The cost of finished goods and work in progress comprises raw
materials, direct labour, other direct costs and related production overheads (based on normal capacity). Costs of inventories include the transfer
from equity of any gains/losses on qualifying cash flow hedges which relate to purchases of raw materials.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Allowance is made, where necessary, for aged, slow moving, obsolete and defective inventories.
Provisions, contingent liabilities and contingent assets
Provisions are recognised on the balance sheet when the Group has a constructive or legal obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for
future operating losses. Provisions are measured using management’s best estimate of the present value of the expenditure required to settle
the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The increase in provision due to passage of time
is recognised as an interest expense.
Provisions arising on business combinations are only recognised to the extent that they have qualified for recognition in the financial statements
of the acquiree prior to acquisition.
A contingent liability is not recognised but is disclosed where the existence of the obligation will only be confirmed by future events or where it is
not probable that an outflow of resources will be required to settle the obligation or where the amount of the obligation cannot be measured with
reasonable reliability.
Contingent assets are not recognised but are disclosed where an inflow of economic benefits is probable.
Employee benefits
Pension obligations
The Group operates various pension plans. The plans are funded through payments to trustee-administered funds. The Group has both defined
contribution and defined benefit plans.
Defined contribution pension
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal
or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating
to employee service in the current and prior periods. The contributions are recognised as an employee benefit expense in the income statement
when they are due.
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2. Summary of significant accounting policies continued
Defined benefit pension obligation
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors
such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation
at the reporting date less the fair value of the plan assets. The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to
maturity approximating to the terms of the related pension obligation. The fair value of plan assets is based on market price information and in the
case of quoted securities in active markets it is the published bid price.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period
in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in
the balance sheet. Remeasurements are not reclassified to the income statement in subsequent periods.
A curtailment arises when the Group significantly reduces the number of employees or employee entitlements covered by a plan. A past service
cost may be either positive (when benefits are introduced or changed so that the present value of the defined benefit obligation increases) or
negative (when benefits are withdrawn or changed so that the present value of the defined benefit obligation decreases).
A settlement occurs when an entity enters into a transaction that eliminates all further legal or constructive obligation for part or all of the benefits
provided under a defined benefit plan (other than a payment of benefits to, or on behalf of, employees in accordance with the terms
of the plan and included in the actuarial assumptions). The gain or loss on a settlement is the difference between:
(a) the present value of the defined benefit obligation being settled, as determined on the date of settlement; and
(b) the settlement price, including any plan assets transferred and any payments made directly by the entity in connection with the settlement.
The deferred tax impact of pension plan obligations is disclosed separately within deferred tax assets.
Share-based payments
The Group operates a number of equity settled share-based compensation plans which include share option and share award schemes which
are open to Executive Directors and certain senior managers.
The charge to the income statement in respect of share-based payments is based on the fair value of the equity instruments granted and
is spread over the performance period.
Options under the 2002 Long-term incentive plan
The fair value of the instruments awarded were calculated using the binomial model. The proceeds received are credited to share capital (nominal
value) and share premium when the options are exercised. The market vesting condition is Total Shareholder Return (TSR) and the awards
contain both market and non-market vesting conditions.
Awards under the Annual incentive deferred into shares scheme (AIDIS)
The fair value of shares awarded is determined in line with the Group’s Annual Incentive Scheme rules and equates with the cash value of
the portion of the annual incentive that will be settled by way of shares. The expense is recognised immediately in the income statement with
a corresponding entry to equity.
Awards under the 2008 and 2018 Long-term incentive plan (2008 LTIP and 2018 LTIP)
The fair value of the awards is calculated using a Monte Carlo simulation technique. The awards contain both market and non-market vesting
conditions. The market vesting condition is TSR and, accordingly, the fair value assigned to the related equity instruments is adjusted so as
to reflect the anticipated likelihood at the grant date of achieving the market-based vesting condition. There are no revisions to the fair value
at subsequent reporting dates for changes in TSR estimates.
Awards under the 2019 Restricted share plan (2019 RSP)
The fair value of the awards is calculated using the discounted cash flow method. The awards typically contain only non-market vesting and
service conditions.
In respect of 2008 LTIP, 2018 LTIP and 2019 RSP, non-market vesting and service conditions are included in assumptions about the number
of awards that are expected to vest. At each reporting date, the Group revises its estimates of the number of awards that are expected to vest
based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the income
statement with a corresponding adjustment to equity. The non-market based charge to the income statement is reversed where awards do
not vest because non-market performance conditions have not been met or where, subject to the rules of the scheme, an employee in receipt
of share awards leaves service before the end of the vesting period.
When the awards are exercised, the Company reissues shares from own shares and the fair value of the awards exercised is reclassified from the
share-based payment reserve to retained earnings.
Notes to the Financial Statements continued
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Income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates
to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income
or directly in equity, respectively.
Current tax
Current tax is calculated on the basis of tax laws enacted or substantively enacted at the Group balance sheet date in countries where the Group
operates and generates taxable income, taking into account adjustments relating to prior years.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax legislation is subject to
interpretation and establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Management
uses in-house tax experts, professional firms and previous experience when assessing tax risks and the tax uncertainties have been measured
using a probability weighted expected value approach. Further detail on estimates and judgements are set out in note 3.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Deferred tax
Deferred tax is determined using tax rates and laws enacted or substantively enacted by the reporting date. Deferred tax is provided on a non-
discounted basis, using the balance sheet liability method, providing for temporary differences on the reporting date between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred tax liabilities are not recognised to the extent they arise from the initial recognition of goodwill not having full tax basis.
The carrying amount of a deferred tax asset or liability may change for reasons other than a change in the temporary difference itself. Such
changes might arise as a result of a change in tax rates or laws, a reassessment of the recoverability of a deferred tax asset or a change in the
expected manner of recovery of an asset or the expected manner of a settlement of a liability. The impact of these changes is recognised in the
income statement or in other comprehensive income depending on where the original deferred tax balance was recognised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and joint ventures except where the timing of the reversal of
the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and
when they relate to income taxes levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Share capital
Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction from the proceeds.
Own shares
Where the Employee Share Trust and/or the Employee Share Scheme Trust (on behalf of the Company) purchases the Company’s equity share capital,
under the 2008 and 2018 Long-term incentive plan, the 2019 Restricted share plan and the Annual incentive deferred into shares scheme, the
consideration paid is deducted from distributable reserves and classified as own shares until they are re-issued. Where such shares are re-issued,
they are re-issued on a first-in, first-out basis and the proceeds on re-issue of own shares are transferred from own shares to retained earnings.
Revenue recognition
The Group manufactures and sells performance nutrition and lifestyle nutrition products, cheese and dairy, and non-dairy nutritional and functional
ingredients. In general, there is one performance obligation relating to the sale of products in a contract with a customer. Performance obligations
are met at the point in time when control of the products has transferred to the customer, which is dependent on the contractual terms with each
customer. In most cases, control transfers to the customer when the products are dispatched or delivered to the customer. Delivery occurs when
the products have been delivered to the specific location. The Group is deemed to be a principal in an arrangement when it controls the promised
goods before transferring them to a customer, and accordingly recognises revenue on a gross basis.
Rebates and discounts are provided for based on agreements or contracts with customers, agreed promotional arrangements and accumulated
experience using the most likely method. Judgement is exercised by management in the determination of quantum and likelihood of rebates and
discounts based on experience and historical trading patterns. Rebates and discounts are recorded in the same period as the original revenue.
Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing.
Thus, the Group does not adjust any of the transaction prices for the time value of money as a practical expedient as the Group does not expect
to have any contracts where the period between the transfer of the promised products to the customer and payment by the customer exceeds
one year.
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 > Financial Statements
2. Summary of significant accounting policies continued
Segment reporting
As outlined in note 4, the Group reports across the following three reporting segments:  Performance Nutrition,  Nutritionals
and  Ireland. The segments reflect the Group’s organisation structure and the nature of the information reported to the Chief Operating
Decision Maker (CODM) who is identified as the Group Operating Executive.
In identifying the Group’s operating segments, management considered the following principal factors:
• the Group’s organisational structure, namely  Performance Nutrition,  Nutritionals and joint ventures
• how financial information is reported to the CODM
• existence of managers responsible for the components
• the nature of the component business activities; refer to note 4 for details
• the degree of similarity of products and services, and production processes
Finance income, finance costs and income taxes are not allocated to segments, as this type of activity is driven by central treasury and taxation
functions which manage the cash and tax position of the Group. Unallocated assets and liabilities primarily include tax, cash and cash equivalents,
other financial assets, financial liabilities and derivatives. Inter-segment revenue is determined on an arm’s-length basis. Where a material dependency
or concentration on an individual customer would warrant disclosure, this is disclosed in note 4.
Dividends
Dividends on ordinary shares to the Company’s shareholders are recognised as a liability of the Company when approved by the Company’s
shareholders. Interim dividends are recognised when paid.
Proposed dividends that are approved after the balance sheet date are not recognised as a liability but are disclosed in the dividends note.
Finance costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, net losses on hedging instruments
that are recognised in the income statement, facility fees and the unwinding of discounts on provisions. The interest expense component of
finance lease payments is recognised in the income statement using the effective interest rate method.
General and specific finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised
during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that
necessarily take a substantial period of time to get ready for their intended use or sale.
Other finance costs are expensed in the income statement in the period in which they are incurred.
Finance income
Finance income is recognised in the income statement as it accrues using the effective interest rate method and includes net gains on hedging
instruments that are recognised in the income statement.
Earnings Per Share
Earnings Per Share (EPS) represents the profit attributable to owners of the Company divided by the weighted average number of ordinary shares
in issue during the period excluding own shares.
Adjusted EPS is calculated on the net profit attributable to the owners of the Company before exceptional items and intangible asset amortisation
(excluding software amortisation), net of related tax, divided by the weighted average number of ordinary shares in issue during the period
excluding own shares. Full details on the calculation and reconciliation to IFRS reported numbers are included in the Glossary section.
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares.
Leases
Finance leases
Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. All other leases are
operating leases. A determination is also made as to whether the substance of an arrangement could equate to a finance lease.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset or the present value of the minimum
lease payments.
Each lease payment is allocated between the liability and finance cost. The property, plant and equipment acquired under finance leases
is depreciated over the shorter of the useful life of the asset or the lease term. The corresponding rental obligation, net of finance charges is
included in financial liabilities and split between current and non-current, as appropriate.
Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line
basis over the period of the lease.
Notes to the Financial Statements continued
139

Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date or whenever an employee
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates:
(i) when the Group can no longer withdraw the offer of those benefits; and (ii) when the entity recognises costs for a restructuring that is within
the scope of IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and involves the payment of termination benefits.
Income statement format
Exceptional items
The Group has adopted an income statement format that seeks to highlight significant items within the Group results for the year. Such items
may include impairment of assets, including material adjustments arising from the re-assessment of asset lives, adjustments to contingent
consideration, material acquisition integration costs, restructuring costs, profit or loss on disposal or termination of operations, material
acquisition costs, litigation settlements, legislative changes, gains or losses on defined benefit pension plan restructuring and profit
or loss on disposal of investments. Judgement is used by the Group in assessing the particular items which by virtue of their scale
and nature should be disclosed in the income statement and notes as exceptional items.
Earnings before interest, tax and amortisation
The Group believes that Earnings before interest, tax and amortisation (EBITA) is a relevant performance measure and has therefore disclosed
this amount in the Group income statement. EBITA is stated before considering the share of results of equity accounted investees.
Adoption of new and amended standards and interpretations
The Group has adopted the following standards, interpretations and amendments to existing standards during the financial year:
IFRS 9 ‘Financial Instruments’
IFRS 9 is the standard which replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’. The standard addresses the classification,
measurement and derecognition of financial assets and liabilities, introduces new rules for hedge accounting and a new impairment model for
financial assets. The Group has adopted IFRS 9 from 30 December 2018. Comparatives for 2018 have not been restated. The impact of adopting
IFRS 9 was not material for the Group financial statements and there was no adjustment to retained earnings at 30 December 2018 on application
of the standard.
Classification and measurement
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities. However, it removes
the previous IAS 39 categories for financial assets of held-to-maturity, loans and receivables and available for sale. Under IFRS 9, on initial
recognition, a financial asset is classified as measured at amortised cost or fair value through other comprehensive income, or fair value through
profit or loss. The classification is based on the business model for managing the financial assets and the contractual terms of the cash flows.
Results of the assessment of the classification of financial assets are as follows:
Financial asset category Classification and measurement under IAS 39 Results of IFRS 9 classification assessment Classification and measurement under IFRS 9
Cash and cash equivalents
Trade and other receivables
Loans to equity accounted
investees
Loans and receivables at fair value
(initial recognition) followed by
amortised cost (subsequent
measurement)
Business model test: hold to
collect contractual cash flows
Cash flow characteristics: solely
payments of principal and interest
Financial assets at fair value (initial
recognition) followed by amortised
cost (subsequent measurement)
Other financial assets Available for sale assets at fair
value (initial recognition and
subsequent measurement) with
subsequent changes in fair
value recognised in other
comprehensive income (‘OCI’).
When an asset is derecognised
or impaired, cumulative gain or
loss in OCI is reclassified from
equity to the income statement
Business model test: hold to
collect contractual cash flows
Cash flow characteristics: solely
payments of principal and interest
Financial assets at fair value (initial
recognition) followed by amortised
cost (subsequent measurement)
Pertains to the financial asset –
Ornua Co-operative Limited
(note 18)
Election is made to present fair
value changes in OCI and not
recycle any gains or losses
arising on its de-recognition
to the income statement
Financial assets at fair value (initial
recognition and subsequent
measurement) followed by
subsequent changes in fair value
recognised in equity permanently
Pertains to equity instruments
Other than what is disclosed in the preceding table there are no changes to the measurement and classification of remaining financial assets
and liabilities determined in accordance with IAS 39 and IFRS 9. There is no impact on the Group’s accounting for financial liabilities, as the new
requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have
any such liabilities.
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 > Financial Statements
2. Summary of significant accounting policies continued
Impairment
IFRS 9 has introduced a new impairment model which requires the recognition of impairment allowance based on expected credit losses rather
than only incurred credit losses as is the case under IAS 39. It is applied to the Group’s financial assets within the scope of IFRS 9, contract
assets under IFRS 15, lease receivables and certain financial guarantees held for its subsidiaries. For trade receivables, the Group applies the
IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance. Trade receivables are written off
when there is no reasonable expectation of recovery. The change in impairment methodology from implementing IFRS 9 did not have a material
impact on the Group’s financial statements.
Hedge accounting
The Group has elected to adopt the new general hedge accounting model in IFRS 9. The Group determined that all existing hedge relationships
that are currently designated in effective hedging relationships will continue to qualify for hedge accounting under IFRS 9. As IFRS 9 does not
change the general principles of how an entity accounts for effective hedges, there is no impact to the Group’s results.
IFRS 15 ‘Revenue from Contracts with Customers’
The Group adopted the full retrospective approach, and has restated the prior year Group income statement and balance sheet and disclosed
the opening balance sheet at 31 December 2017. The Group has assessed the impact of implementing IFRS 15 and, with the exception of the
matter set out below, has not identified any material impact resulting from transition to the new standard.
Following a review of all material contracts with customers, the Group has concluded that the change from the risk and reward model under
IAS 18 to the control model under IFRS 15 led to the Group’s relationship within the  Nutritionals segment with its joint venture, Southwest
Cheese Company, LLC to transition from an agent relationship to that of a principal as the Group controls the promised goods before transferring
them to the customers. The legal position of the relationship with the joint venture remains the same. The transition to IFRS 15 results in a gross
up of revenue and costs as follows:
For the financial year ended 29 December 2018 Notes
Although there is no change to EBITA, as a result of the increase in revenue, there is a dilution to the EBITA margin of the  Nutritionals
segment and the Group. For the 2019 financial year, revenue and costs relating to this arrangement are shown gross in the Group income
statement. There is no change to basic or diluted EPS.
The transition to IFRS 15 described above also results in a gross up of outstanding trade receivables and amounts due to equity accounted
investees which are recorded in the line items on the balance sheet “Trade and other receivables – current” and “Trade and other payables –
current” respectively:
Balance sheet as at 29 December 2018 Notes
Previously
reported
Trade and other receivables – current 19 350.2 61.4 411.6
Trade and other payables – current 28 (407.0) (61.4) (468.4)
Balance sheet as at 31 December 2017
Trade and other receivables – current 302.4 48.7 351.1
Trade and other payables – current (307.9) (48.7) (356.6)
Early adoption of Amendments to IFRS 9, IAS 39 and IFRS 7 ‘Interest Rate Benchmark Reform’
The Group has chosen to early apply the amendments to IFRS 9/IAS 39 for the financial year ended 4 January 2020, which are mandatory for
annual reporting periods beginning on or after 1 January 2020. These amendments modify specific hedge accounting requirements to allow
hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments affected
by the current interest rate benchmarks are amended as a result of the ongoing interest rate benchmark reforms. The amendments are relevant
to the Group given that it has EURIBOR floating rate debt which it cash flow hedges using EURIBOR interest rate swaps. Early adoption of the
amendments allows the Group to continue hedge accounting and retain the cumulative gain or loss in the cash flow hedge reserve relating to the
interest rate swaps designated as cash flow hedges even though there is uncertainty about the timing and amount of the hedged cash flows due
to the interest rate benchmark reforms.
Notes to the Financial Statements continued
141

Other IFRS changes
The following changes to IFRS became effective for the Group during the financial year but did not result in material changes to the Group’s
consolidated financial statements:
• Amendments to IFRS 2 ‘Classification and Measurement of Share-based payment Transactions’
• Annual Improvements to IFRSs 2014–2016 Cycle
• Amendments to IAS 40 ‘Transfers of Investment Property’
• IFRIC Interpretation 22 ‘Foreign Currency Translation and Advance Consideration’
• Amendments to IFRS 4 ‘Insurance Contracts’
New and amended standards and interpretations that are not yet effective
The Group has not applied certain new standards, amendments to existing standards and interpretations that have been issued but are not yet
effective. The most significant of which are as follows:
IFRS 16 ‘Leases’
This standard will be effective for and will be adopted by the Group for the 2020 financial year beginning 5 January 2020 as the 2019 financial
year is for the 53-week period ended 4 January 2020. The Group’s evaluation of the effect of adoption of IFRS 16 is in its final stages and the
findings are detailed as follows.
The Group expects that the adoption of IFRS 16 will have a material impact on the financial statements, significantly increasing the Group’s
recognised assets and liabilities. The Group commenced a comprehensive project to assess the impact of IFRS 16 during 2018 which is still
ongoing. This project includes an accounting assessment of the impact of the implementation of new processes and procedures, including new
lease accounting software, to ensure leases are accounted for in line with the new standard from the commencement of our 2020 financial year.
The Group expects to adopt the modified retrospective approach to transition permitted by the standard in which the cumulative effect of initially
applying the standard is recognised in opening retained earnings at 5 January 2020. In applying IFRS 16 for the first time, the Group intends to
avail of practical expedients/exemptions including:
• applying a single discount rate to a portfolio of leases with reasonably similar characteristics
• relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review
• accounting for operating leases with a remaining lease term of within 12 months of 5 January 2020 as short-term leases
• using hindsight in determining the lease term where the contract contains options to extend or terminate the lease
• not reassessing whether a contract is, or contains a lease at the date of initial application
• not making any adjustments on transition for leases for which the underlying asset is of low value
The Group’s assessment of the impact of adopting IFRS 16 is in the process of being finalised. The actual adjustment can differ to the estimated
impact provided below due to changes in underlying assumptions. Based on the work performed to date, the expected impact of IFRS 16 on the
2020 financial year is as follows:
• lease liabilities and right-of-use assets on 5 January 2020: increase of approximately €127.5 million and €105.8 million respectively
• return on capital employed on 5 January 2020: decrease of approximately 0.4%
• finance costs: increase of approximately €2.7 million
• operating profit: increase of approximately €2.4 million
• adjusted earnings used to calculate Adjusted EPS: increase of approximately €0.3 million
IFRS 16 will have no impact on the Group’s net cash flows but the lease repayment outflows will be disclosed as financing cash outflow, instead
of operating cash outflow. Net debt is a non-IFRS measure and does not comprise of lease liabilities determined in accordance with IFRS 16
which is consistent with net debt as defined within financing covenants. Covenants are accordingly not affected on transition to IFRS 16.
There were no significant judgements or estimates made in applying IFRS 16 that would have a material impact on the Group. However, it is noted
that estimation is involved in determining incremental borrowing rate (IBR) which is used to measure lease liabilities. The Group estimates the IBR
based on the currency and country/region in which a lease is based, the lease duration, and the credit quality of the lessee.
IFRIC 23 ‘Uncertainty over Income Tax Treatments’ (EU effective date: on or after 1 January 2019)
The interpretation will be effective for and will be adopted by the Group for the 2020 financial year beginning 5 January 2020. The interpretation
sets out how to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over
income tax treatments under IAS 12 ‘Income taxes’. The Group is finalising its evaluation of the impact of this interpretation on the financial
statements. The Group does not expect the adoption of this interpretation to have a material impact on the financial statements, as the Group
already applies the principles of IFRIC 23 in determining its uncertain tax provisions.
Amendments to IFRS 3 ‘Business Combinations’ (IASB effective date: on or after 1 January 2020 – not yet endorsed)
The amendments clarify the definition of a business to help entities determine whether an acquired set of activities and assets is a business
or not. The Group is currently evaluating the impact of the amendments on future periods.
Other changes to IFRS have been issued but are not yet effective for the Group. However, they are either not expected to have a material impact
on the Group or they are not currently relevant for the Group.
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 > Financial Statements
3. Critical accounting judgements and estimates
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Significant judgements and estimates made in the preparation of these
financial statements are set out below.
Judgements
Exceptional items
The Group considers that items of income or expense which are significant by virtue of their scale and nature should be disclosed separately if the
Group financial statements are to fairly present the financial performance and financial position of the Group. Determining which transactions are to be
considered exceptional in nature is often a subjective matter. However, circumstances that the Group believes would give rise to exceptional items for
separate disclosure are outlined in the accounting policy on exceptional items in note 2. Exceptional items are included on the income statement line
item to which they relate. In addition, for clarity, separate disclosure is made of all items in one column on the face of the Group income statement.
Interests in joint ventures
The Group holds 51% of the share capital of  Cheese Limited but this entity is considered to be a joint venture as the Group does not have
control of the company as it has equal representation on the Board of Directors, along with its joint venture partner Leprino Foods Company who
directs the relevant activities of the business. The Group controls 50% of the voting rights and is entitled to appoint 50% of the total number of Directors
to the Board.
The Group holds 40% of the ordinary share capital of  Ireland DAC. However this entity is considered to be a joint venture of the Group
as the business plan, which directs the relevant activities of the business, requires the unanimous approval of both the Group and 
Co-operative Society Limited which holds the remaining 60% shareholding.
Estimates
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the
related actual results. Revisions to estimates are recognised prospectively.
Retirement benefit obligations
The Group operates a number of defined benefit pension plans both in Ireland and the UK. The rates of contributions payable, the pension cost
and the Group’s total obligation in respect of defined benefit plans is calculated and determined by independent qualified actuaries and updated
at least annually. Refer to note 9 for the amounts associated with the Irish and UK plans.
The size of the obligation and cost of the benefits are sensitive to actuarial assumptions. These include demographic assumptions covering
mortality and longevity, and economic assumptions including price inflation, benefit and salary increases together with the discount rate
used. As a result of the UK referendum on EU membership, and the ongoing Brexit negotiations, the Group’s UK defined benefit pension
plan assumptions are subject to increased volatility and risk. The Group disclose the UK defined benefit pension plan details separately from
the Irish plans to identify the impact of a change in UK assumptions on the Group’s defined benefit pension plans.
The discount rate is a highly sensitive input to the calculation of scheme liabilities. Sensitivity analysis has been completed to assess the impact
of a change in the discount rate used. Refer to note 9 for the sensitivity analysis.
Impairment reviews of goodwill and indefinite life intangibles
The Group tests annually whether goodwill and indefinite life intangibles have suffered any impairment, in accordance with the accounting policy
stated in note 2. The recoverable amounts of cash-generating units (CGUs) have been determined based on value in use calculations. These
calculations require the use of estimates.
Goodwill and intangible assets in respect of  Performance Nutrition and  Nutritionals are tested for impairment using projected cash flows
over a three year period. In cases where management have strategic plans beyond three years these numbers are also used in the projections. Discount
rates are based on the Group weighted average cost of capital adjusted for company risk factors and specific country risk. A terminal value assuming
2% growth into perpetuity is also applied. Sensitivity on the cashflows is also prepared based on a reduction in projected EBITDA growth of 10%,
a terminal value assuming zero growth or an increase in the discount factor used by 1%. Indefinite life intangible assets are those for which there
is no foreseeable limit to their expected useful life. The classification of intangible assets as indefinite is reviewed annually.
Additional information in relation to impairment reviews is disclosed in note 16.
Notes to the Financial Statements continued
143

Income taxes
The Group is subject to income tax in numerous jurisdictions. Significant estimation is required in determining the worldwide provision for income
taxes. There are many transactions during the ordinary course of business for which the ultimate tax determination is uncertain and the applicable
tax legislation is open to differing interpretations. The Group takes external professional advice to help minimise this risk. It recognises liabilities
for anticipated tax authority reviews based on estimates of whether additional taxes will be due, having regard to all information available on the
tax matter. The Group engages with local tax experts to support the judgements made where there is significant uncertainty about the position
taken. In determining any liability for amounts expected to be paid to tax authorities, the Group has regard to the tax status of the entities
involved, the external professional advice received, the status of negotiations and correspondence with the relevant tax authorities, assessments
of a probability weighted expected value, past practices of the tax authorities and any precedents in the relevant jurisdiction. Where the final
outcome of these tax matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is made.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses
and unused tax credits may be utilised. The Group estimates the most probable amount of future taxable profits using assumptions consistent
with those employed in impairment calculations and taking into consideration applicable tax legislation in the relevant jurisdiction.
Provisions
The amounts recognised as a provision are management’s best estimate of the expenditure required to settle present obligations at the balance
sheet date. The outcome depends on future events which are by their nature uncertain. In assessing the likely outcome, management bases
its assessment on historical experience and other factors that are believed to be reasonable in the circumstances. Provisions are disclosed
in note 27.
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 > Financial Statements
4. Segment information
In accordance with IFRS 8 ‘Operating Segments’, the Group, including its joint ventures, has identified three reportable segments as follows:
 Performance Nutrition
 Performance Nutrition manufactures and sells sports nutrition and lifestyle nutrition products through a variety of channels including
specialty retail, e-Commerce, Food/Drug/Mass/Club (FDMC), and gyms in a variety of formats, including powders, Ready-to-Eat (bars and
snacking foods) and Ready-to-Drink beverages.
 Nutritionals
 Nutritionals manufactures and sells cheese, dairy and non-dairy nutritional and functional ingredients, and vitamin and mineral premixes
targeting the increased market focus on health and nutrition (refer to note 2 on IFRS 15 transition).
 Ireland
 Ireland is the largest milk processor in Ireland producing a range of value added dairy ingredients and consumer products. 
Ireland is also a large scale seller of animal nutrition and fertilizer as well as having a chain of agricultural retail outlets in Ireland.  Ireland
is an equity accounted investee and the amounts stated represent the Group’s share (note 17).
Other segments and unallocated
All other segments and unallocated include both the results of other equity accounted investees who manufacture and sell cheese and dairy
ingredients and unallocated corporate costs. These investees did not meet the quantitative thresholds for reportable segments in 2019 or 2018.
These segments align with the Group’s internal financial reporting system and the way in which the Chief Operating Decision Maker (‘CODM’)
assesses performance and allocates the Group’s resources. Each segment is reviewed in its totality by the CODM. The CODM assesses the
trading performance of operating segments based on a measure of earnings before interest, tax, amortisation and exceptional items (EBITA).
Given that net finance costs and income tax are managed on a centralised basis, these items are not allocated between operating segments
for the purposes of the information presented to the CODM and are accordingly omitted from the detailed segmental analysis below.
Amounts stated for equity accounted investees represents the Group’s share.
Pre-exceptional segment results are as follows:
2019

Total gross segment revenue 1,363.8 2,547.8 – 3,911.6 – 3,911.6
Inter-segment revenue – (35.9) – (35.9) – (35.9)
Revenue 1,363.8 2,511.9 – 3,875.7 – 3,875.7
Total Group earnings before interest, tax,
amortisation and exceptional items 146.4 130.4 – 276.8 – 276.8
Share of results of equity accounted investees – – 22.2 22.2 26.4 48.6
2018 (restated)
Total gross segment revenue 1,179.6 2,026.9 – 3,206.5 – 3,206.5
Inter-segment revenue – (36.0) – (36.0) – (36.0)
Revenue 1,179.6 1,990.9 – 3,170.5 – 3,170.5
Total Group earnings before interest, tax,
amortisation and exceptional items 173.1 111.8 – 284.9 – 284.9
Share of results of equity accounted investees – – 22.0 22.0 23.3 45.3
Notes to the Financial Statements continued
145

Included in external revenue are related party sales between  Nutritionals and  Ireland of €0.4 million (2018 restated: €0.6 million)
and between  Performance Nutrition and  Ireland of nil (2018: €0.9 million). Inter-segment transfers or transactions are entered
into under the normal commercial terms and conditions that would also be available to unrelated third parties.
Revenue of approximately €405.6 million (2018 restated: €273.3 million) and €705.4 million (2018 restated: €567.3 million) is derived from two
external customers respectively within the  Nutritionals segment.
Segment earnings before interest, tax, amortisation and exceptional items are reconciled to reported profit before tax and profit after tax in the
Group income statement.
Other pre-exceptional segment information is as follows:
2019 Notes

Performance
Nutrition
€’m

Nutritionals


Ireland

Total
reportable
segments

All other
segments and
unallocated

Total
Group

Segment assets 1,709.1 977.6 227.0 2,913.7 487.2 3,400.9
Segment liabilities 350.8 331.8 – 682.6 1,016.4 1,699.0
2018 (restated)
Segment assets 1,728.6 798.9 225.4 2,752.9 407.2 3,160.1
Segment liabilities 367.8 255.3 – 623.1 947.9 1,571.0
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 > Financial Statements
4. Segment information continued
Geographical information
Revenue
Revenue from external customers is allocated to geographical areas based on the place of delivery or collection of the products sold as agreed
with customers as opposed to the end use market where the product may be consumed.
2019 2018 (restated)

Performance
Nutrition
€’m

Nutritionals
€’m
Total
€’m

Performance
Nutrition
€’m

Nutritionals
€’m
Total
€’m
There are numerous countries in “Rest of World” including UAE, India and Brazil.
Non-current assets
The total of non-current assets, other than financial instruments, deferred tax assets, and retirement benefit assets attributable to the country
of domicile and all foreign countries of operation for which non-current assets exceed 10% of total Group non-current assets are set out below.
2019
€’m
2018
€’m
Ireland (country of domicile) 892.3 816.0
US 1,127.4 1,080.4
Others 172.2 224.8
2,191.9 2,121.2
Disaggregation of revenue
Revenue is disaggregated based on the primary geographical markets in which the Group operates (see table above within Geographical
Information). Revenue has also been disaggregated based on the Group’s internal reporting structures and by the timing of revenue recognition
as set out in the tables below.
2019 2018 (restated)
North America Performance Nutrition 538.3 – 538.3 553.2 – 553.2
North America Lifestyle 392.0 – 392.0 162.2 – 162.2
International 358.7 – 358.7 395.1 – 395.1
Direct-to-Consumer 74.8 – 74.8 69.1 – 69.1
Nutritional Solutions – 744.9 744.9 – 577.0 577.0
US Cheese – 1,767.0 1,767.0 – 1,413.9 1,413.9
Total 1,363.8 2,511.9 3,875.7 1,179.6 1,990.9 3,170.5
Products transferred at point in time 1,363.8 2,511.9 3,875.7 1,179.6 1,990.9 3,170.5
Products transferred over time – – – – – –
Total 1,363.8 2,511.9 3,875.7 1,179.6 1,990.9 3,170.5
Notes to the Financial Statements continued

Revenue 3,875.7 – 3,875.7 3,170.5 – 3,170.5
Cost of goods sold (3,095.8) (19.1) (3,114.9) (2,473.3) – (2,473.3)
Gross profit 779.9 (19.1) 760.8 697.2 – 697.2
Selling and distribution expenses (340.4) – (340.4) (252.0) – (252.0)
Administration expenses (162.7) (18.0) (180.7) (160.3) – (160.3)
Earnings before interest, tax and
amortisation (EBITA) 276.8 (37.1) 239.7 284.9 – 284.9
Intangible asset amortisation and impairment 16 (60.9) (2.0) (62.9) (45.9) – (45.9)
Operating profit 215.9 (39.1) 176.8 239.0 – 239.0
Operating profit is stated after (charging)/crediting:
2019 2018 (restated)

Cost of inventories recognised as an expense in
Cost of Goods Sold 20 (2,748.2) (19.1) (2,767.3) (2,184.6) – (2,184.6)
Depreciation of property, plant and equipment 15 (48.1) – (48.1) (43.0) – (43.0)
Impairment of property, plant and equipment 15 – (0.4) (0.4) – – –
Operating lease rentals (24.0) – (24.0) (21.0) – (21.0)
Amortisation of intangible assets 16 (60.9) – (60.9) (45.9) – (45.9)
Impairment of intangible assets 16 – (2.0) (2.0) – – –
Amortisation of capital grants received – – – 0.1 – 0.1
Employee benefit expense 7 (343.9) (4.3) (348.2) (300.4) – (300.4)
Auditor’s remuneration (1.5) – (1.5) (1.3) – (1.3)
Research and development costs (12.7) – (12.7) (11.2) – (11.2)
Net foreign exchange loss (1.5) – (1.5) (2.5) – (2.5)
(Loss)/gain on disposal of property, plant
and equipment 32 (0.2) – (0.2) 0.3 – 0.3
Net impairment losses on financial assets (1.9) – (1.9) (0.7) – (0.7)
The following table discloses the fees paid or payable to Deloitte Ireland LLP, the Group auditor, and to other statutory audit firms in the Deloitte
network:
Statutory auditor Other statutory auditor network firms

Statutory audit of Group companies 0.7 0.6 0.8 0.7
Other assurance services – – – –
Tax advisory services – – – –
Other non-audit services – – – –
0.7 0.6 0.8 0.7
In addition to the above, Deloitte Ireland LLP and Deloitte network member firms received fees of €0.3 million (2018: €0.2 million) in respect of the
audit of the Group’s equity accounted investees.
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6. Exceptional items
The nature of the total exceptional operating loss is as follows:
Notes
2019
€’m
Organisational redesign costs (a) 12.7
Asset impairments (b) 17.3
Acquisition integration costs (c) 6.8
Brexit related costs (d) 2.3
Total exceptional charge before taxation 39.1
Exceptional tax credit 12 (4.5)
Total exceptional charge after taxation 34.6
During 2019 there were cash outflows of €12.0 million in respect of exceptional charges recognised in FY 2019. During 2018 there were cash
outflows of €2.6 million in respect of exceptional charges incurred prior to FY 2018. There were no exceptional items in 2018.
(a) Organisational redesign costs relate primarily to a fundamental reorganisation of the  Performance Nutrition segment, including the
creation of distinct North America Performance Nutrition, North America Lifestyle, International and Direct-to-Consumer businesses. Costs
incurred to-date are professional consultancy of €7.9 million and redundancy and employment related costs including recruitment costs and
costs of relocating people to new markets and geographies to support the organisation change of €4.8 million. This restructuring programme
will continue into 2020.
(b) Asset impairments comprise the write down of inventory to net realisable value of €14.9 million, related development assets of €2.0 million
and some fixed assets of €0.4 million in the GPN business. The impairment of inventory arises from i) sales volume declines in certain non-US
markets resulting in surplus inventories of €5.6 million, ii) unsuccessful innovation SKUs in the US Food/Drug/Mass/Club (FDMC) channels of
€5.7 million, iii) the cost of discontinuing a significant number of other North American SKUs of €2.6 million in order to reduce SKU complexity
and simplify the supply chain; and iv) other inventory impairments of €1.0 million. Overall these inventory impairments will result in a significant
simplification within the GPN business resulting in approximately 1,200 SKUs (35% of total) being discontinued. This level of inventory
impairment is substantially in excess of past experience in the GPN business and none of the SKUs rationalised will be manufactured or
contracted for going forward. Based on the past 12 months sales, the revenue related to the discontinued SKUs is approximately 5% of total
GPN revenues, the vast majority of which is expected to be retained through sales of alternative GPN SKUs.
(c) Acquisition integration costs comprise costs relating to the integration and restructuring of acquired businesses and the transaction costs incurred
in completing the current year acquisition. The charge comprised professional fees of €2.5 million, employee benefit costs of €1.2 million and
inventory impairments of €3.1 million following a post acquisition assessment of the product portfolio of the acquired businesses.
(d) Brexit related costs have been incurred in preparing the organisation for the departure of the United Kingdom from the European Union. Costs
incurred include professional fees and increased storage and production costs as the Group sought to mitigate the potential risks related to
Brexit during 2019.
Notes to the Financial Statements continued
149

7. Employment
The aggregate payroll costs of employees (including Executive Directors) in the Group were:

Wages and salaries 298.2 256.5
Social security costs 25.2 23.5
Pension costs – defined contribution plans 9 11.5 9.4
Pension costs – defined benefit plans 9 1.2 4.7
Other compensation costs
– Cost of share-based payments 10 4.6 8.8
– Company car allowance 1.5 1.3
– Private health insurance 20.9 16.4
363.1 320.6
Included within the aggregate payroll costs is exceptional items of €4.3 million (2018: nil) which include redundancy costs of €2.4 million (2018: nil).
Capitalised labour costs of €14.9 million (2018: €20.2 million) are included within the aggregate payroll costs while the remaining post-exceptional
cost of €348.2 million (2018: €300.4 million) are recognised as an expense (note 5).
The average number of employees, excluding the Group’s equity accounted investees, is analysed into the following reportable segments:
2019 2018
 Performance Nutrition 2,115 2,118
 Nutritionals 2,427 2,039
4,542 4,157
8. Directors’ remuneration
The Directors’ remuneration information is shown on tables A to H on pages 104 to 108 in the Remuneration Committee Report.
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9. Retirement benefit obligations
Defined contribution plans
The Group has a number of defined contribution pension plans in operation.
The following amounts have been recognised in the Group income statement in relation to the defined contribution pension plan expense:
		

Defined contribution pension plan expense 7 11.5 9.4
Defined benefit pension plans
The Group operates two defined benefit pension plans in the Republic of Ireland and two defined benefit pension plans in the United Kingdom (UK).
The defined benefit pension plans in Ireland and the UK are administered by Boards of Trustees through separate trustee controlled funds. These
Boards are responsible for the management and governance of the plans including compliance with all relevant laws and regulations. Each of the
Group’s plans operate under their respective regulatory frameworks and minimum funding requirements. The UK plans comprise solely of pensioners
and deferred pensioners.
The defined benefit pension plans provide retirement and death benefits for the Group’s employees. The majority of the defined benefit pension
plans are career average pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life. The level
of benefits provided depends on members’ length of service and their average salary over their period of employment.
The contributions paid to the defined benefit pension plans are in accordance with the schedule of contributions agreed between the Group and
the Trustees of the relevant plans as recommended in the actuarial valuation reports or in subsequent actuarial advice. The contributions are partly
funded by the employees, where they are required to contribute a fixed percentage of pensionable salary, and partly by the Group. The latest
actuarial valuation reports for these plans, which are not available for public inspection, are dated between 5 April 2017 and 1 January 2019.
During the year changes to certain assumptions underlying the past service cost were agreed with the Trustees resulting in a credit to past service
cost of €1.2 million. In relation to the year ended 29 December 2018, the High Court of Justice of England and Wales issued a judgement in the
case of Lloyds Banking Group Pension Group Pension Trustees Limited v Lloyds Bank plc (and others) regarding the rights of members to equality
in defined benefit pension schemes on 26 October 2018. The judgement concluded that schemes are under a duty to equalise benefits for all
members, regardless of gender, in relation to guaranteed minimum pension benefits. The Group engaged its actuaries to determine an appropriate
estimate for the year ended 29 December 2018 and 4 January 2020 which resulted in an increase to the defined benefit obligations on the balance
sheet and a past service cost was recognised amounting to €2.1 million in the Group income statement for the year ended 29 December 2018. The
computations are complex and it is expected it will take a number of years to finalise the full impact. The directors do not believe the result will be
materially different to the 2018 estimate. Any subsequent changes will result in an increase or decrease to the obligation and will be recorded
through other comprehensive income.
Recognition in the Group balance sheet:
2019
€’m
2018
€’m
Non-current assets
Surplus on defined benefit pension plan 2.1 1.1
Non-current liabilities
Deficit on defined benefit pension plan (48.4) (39.6)
Net defined benefit pension plan liability (46.3) (38.5)
Notes to the Financial Statements continued
151

The amounts recognised in the balance sheet and the movements in the net defined benefit obligations over the year are as follows:
Present value of obligation Fair value of plan assets Total net
defined
liability
At the beginning of the year (127.3) (97.5) (224.8) 105.9 80.4 186.3 (38.5)
Current service cost (1.7) – (1.7) – – – (1.7)
Past service cost – 1.2 1.2 – – – 1.2
Interest (expense)/income (2.3) (2.5) (4.8) 1.9 2.2 4.1 (0.7)
Total amount recognised in profit or loss (4.0) (1.3) (5.3) 1.9 2.2 4.1 (1.2)
Remeasurements
– Return of plan assets in excess of interest income – – – 10.2 1.1 11.3 11.3
– Actuarial loss arising from experience adjustments (0.7) – (0.7) – – – (0.7)
– Actuarial loss arising from changes in demographic
assumptions – (0.6) (0.6) – – – (0.6)
– Actuarial loss arising from changes in financial
assumptions (14.2) (10.4) (24.6) – – – (24.6)
Total amount recognised in other comprehensive income (14.9) (11.0) (25.9) 10.2 1.1 11.3 (14.6)
Exchange differences – (5.8) (5.8) – 5.0 5.0 (0.8)
Contributions paid by the employer – – – 2.0 6.8 8.8 8.8
Contributions paid by the employee (0.3) – (0.3) 0.3 – 0.3 –
Benefits paid 4.0 4.6 8.6 (4.0) (4.6) (8.6) –
At the end of the year (142.5) (111.0) (253.5) 116.3 90.9 207.2 (46.3)
Present value of obligation Fair value of plan assets Total net
defined
liability
At the beginning of the year (122.7) (104.9) (227.6) 103.3 82.4 185.7 (41.9)
Current service cost (1.8) – (1.8) – – – (1.8)
Past service cost – (2.1) (2.1) – – – (2.1)
Interest (expense)/income (2.3) (2.4) (4.7) 1.9 2.0 3.9 (0.8)
Total amount recognised in profit or loss (4.1) (4.5) (8.6) 1.9 2.0 3.9 (4.7)
Remeasurements
– Return of plan assets in excess of interest income – – – 2.1 (4.6) (2.5) (2.5)
– Actuarial (loss)/gain arising from experience adjustments (1.0) 2.0 1.0 – – – 1.0
– Actuarial gain arising from changes in demographic
assumptions – 1.9 1.9 – – – 1.9
– Actuarial (loss)/gain arising from changes in financial
assumptions (3.1) 2.2 (0.9) – – – (0.9)
Total amount recognised in other comprehensive income (4.1) 6.1 2.0 2.1 (4.6) (2.5) (0.5)
Exchange differences – 1.8 1.8 – (1.5) (1.5) 0.3
Contributions paid by the employer – – – 2.2 6.1 8.3 8.3
Contributions paid by the employee (0.4) – (0.4) 0.4 – 0.4 –
Benefits paid 4.0 4.0 8.0 (4.0) (4.0) (8.0) –
At the end of the year (127.3) (97.5) (224.8) 105.9 80.4 186.3 (38.5)
The net liability disclosed above relates to funded plans.
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9. Retirement benefit obligations continued
The fair value of plan assets at the end of the reporting period are as follows:
Equities
– Consumer 2.6 - 2.6 1 2.7 – 2.7 1
– Financials 4.5 - 4.5 2 3.9 – 3.9 2
– Information technology 4.1 - 4.1 2 2.9 – 2.9 2
– Other 12.4 - 12.4 6 10.2 – 10.2 5
Corporate bonds
– Investment grade 8.8 - 8.8 4 12.4 – 12.4 7
– Non-investment grade 1.0 - 1.0 1 1.3 – 1.3 1
Government bonds and gilts 48.1 - 48.1 23 29.6 – 29.6 16
Property - 2.4 2.4 1 0.1 1.2 1.3 –
Cash 1.3 9.7 11.0 6 0.4 14.0 14.4 8
Investment funds - 101.6 101.6 49 – 91.4 91.4 49
Other - 10.7 10.7 5 0.3 15.9 16.2 9
82.8 124.4 207.2 100% 63.8 122.5 186.3 100
The plan assets at the end of the reporting period do not include any equities held in the Group, nor does the Group use or occupy any of the
plan assets.
Principal risks in the defined benefit pension plans
Through its defined benefit pension plans the Group is exposed to a number of risks, the most significant of which are detailed below:
(a) Investment risk
The pension plans hold investments in asset classes such as equities, which have volatile market values. While these assets are expected to
provide higher returns than other asset classes over the long-term, the short-term volatility could cause an increase in the deficit at any particular
point in time. When assets return less than the discount rate, this will lead to an increase in the net defined benefit obligation. The Trustees
conduct investment reviews to take advice on asset allocation, taking into account asset valuations, liability durations, funding measurements
and an achievement of an appropriate return on assets.
(b) Interest rate risk
The pension liabilities are assessed using market yields on high-quality corporate bonds to discount the liabilities. As the pension plans hold other
assets such as equities, the value of the assets and liabilities may not move in the same way. A change in the defined benefit obligation as a result
of changes in the discount rate leads to volatility in the Group balance sheet, Group income statement and Group statement of comprehensive
income. It also impacts the funding requirements for the plans.
(c) Inflation risk
A significant proportion of the benefits under the plans are linked to inflation, be it consumer price inflation or retail price inflation, which in most
cases are subject to a cap on annual increases. Although there are caps in force on inflation increases and the plans’ assets are expected to
provide a good hedge against inflation over the long-term, higher inflation will lead to higher liabilities.
(d) Longevity risk
The present value of the defined benefit obligation is calculated by reference to the best estimate of the life expectancy of plan participants both
during and after their employment. An increase in the life expectancy of the plan participants will increase the defined benefit obligation.
Notes to the Financial Statements continued
153

Principal assumptions used in the defined benefit pension plans
The principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate 1.00% 1.85% 1.80% 2.65%
Inflation rate 1.10%-1.20% 2.05%-2.95% 1.30%-1.40% 2.20%-3.20%
Future salary increases* 2.20% 0.00% 2.40% 0.00%
Future pension increases 0.00% 2.15%-2.80% 0.00% 2.25%-2.95%
Mortality rates (years)
– Male – reaching 65 years of age in 20 years’ time 23.8 22.0 23.8 21.8
– Female – reaching 65 years of age in 20 years’ time 25.9 24.2 25.9 24.1
– Male – currently aged 65 years old 21.4 20.9 21.4 20.7
– Female – currently aged 65 years old 23.9 22.9 23.9 22.9
*
The ROI defined benefit pension plans are on a career average structure therefore this assumption does not have a material impact. The UK defined benefit pension plans comprise solely
pensioners and deferred pensioners.
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience
in each territory.
Sensitivity analysis for principal assumptions used to measure plan liabilities
There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial valuation of the Group’s defined
benefit pension plans. The following table analyses, for the Group’s pension plans, the estimated impact on the plan liabilities resulting from
changes to key actuarial assumptions, with all other assumptions remaining constant.
The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in the
assumptions would occur in isolation of one another as some of the assumptions may be correlated. The impact on the plan liabilities has been
calculated using the projected unit credit method, which is the same as that applied in calculating the defined benefit obligation recognised on
the Group balance sheet.
There have been no changes from the previous year in the methods and assumptions used in preparing the sensitivity analysis.
ROI plans UK plans
Assumption Change in assumption

Discount rate 0.25% movement (6.0) 6.4 (4.2) 4.5
Inflation rate 0.25% movement 1.8 (1.8) 3.7 (3.6)
Mortality rate 1 year movement 4.7 (4.6) 5.1 (5.1)
Future salary increases*
Future pension increases**
2018
Discount rate 0.25% movement (5.2) 5.5 (3.6) 3.8
Inflation rate 0.25% movement 1.5 (1.5) 2.8 (2.9)
Mortality rate 1 year movement 3.8 (3.8) 4.0 (4.0)
Future salary increases*
Future pension increases**
* The majority of the defined benefit plans are career average plans. As a result, future salary increases will not have a material impact on the plan liabilities.
** There are no future pension increases agreed in the material defined benefit pension plans.
2019
ROI plans
2019
UK plans
2018
ROI plans
2018
UK plans
Expected contributions to the defined benefit plans for the coming year (€’m) 2.2 7.0 2.3 6.0
Weighted average duration of the defined benefit plans 17 years 15 years 17 years 15 years
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 > Financial Statements
10. Share-based payment expense
The Group operates various equity settled share-based payment arrangements which are described in this note. Further details of the plans are
available in the Remuneration Committee Report on pages 84 to 108.
The total cost recognised in the Group income statement is analysed as follows:
Notes
2019
€’m
2018
€’m
The 2008 Long-term incentive plan (2008 LTIP) 0.3 4.9
The 2018 Long-term incentive plan (2018 LTIP) 2.4 1.9
The 2019 Restricted Share Plan (2019 RSP) 1.6 –
The annual incentive deferred into shares scheme (AIDIS) 0.3 2.0
7/32 4.6 8.8
Refer to note 23 for the movement in the share-based payment reserve recognised in the Group balance sheet.
2008 LTIP and 2018 LTIP
The 2008 LTIP was introduced in 2008 following approval by the shareholders, under which share awards are granted to Executive Directors and
certain senior managers in the form of a provisional allocation of shares for which no exercise price is payable. The 2008 LTIP expired on 4 March
2018 and was replaced by the 2018 LTIP. No further awards were made under the 2008 LTIP after 4 March 2018.
Awards granted under the 2008 LTIP and 2018 LTIP are scheduled to vest to the extent that there is sustained improvement in the underlying
financial performance over a three-year period and that the service condition is fulfilled as determined by the Remuneration Committee. Awards
lapse/expire by the fourth anniversary of the date of a grant. The maximum annual award level is 250% of base salary. Vesting is determined on
a straight line basis between threshold and maximum. There is a requirement to hold shares received pursuant to the vesting of LTIP awards for
a minimum period of one year post-vesting (two years for members of the Group Operating Executive).
The extent of vesting for awards outstanding is determined based on a combination of performance metrics comprised of Group adjusted
Earnings Per Share (EPS), relative Total Shareholder Return performance (TSR) against the STOXX Europe 600 Food & Beverage index, Group
Return on Capital Employed (ROCE), business segment EBITA and ROCE where applicable, a service condition and in certain circumstances
a personal objective.
2019 RSP
This scheme was introduced in 2019 to provide share awards to certain employees. The maximum award level is 250% of base salary. The extent
of vesting for awards outstanding is generally determined based on a service condition and personal objectives.
AIDIS
This scheme is an annual performance related incentive scheme for Executive Directors and other senior management. The fair value of the
annual incentive deferred into shares scheme was calculated as €0.3 million in 2019 (2018: €2.0 million) and equates to the cash value of the
portion of the annual incentive that will be settled by way of shares. The number of shares received is determined by the share price on the date
of allocation. The incentive will be invested in shares in the Company and delivered to the Executive Directors and senior management two years
following this investment.
2002 LTIP
This plan closed to further grants in 2012, the last share options were granted in 2011. Under the 2002 LTIP, options could not be exercised
before the expiration of three years from the date of grant and could only be exercised if a pre-determined performance criterion for the Group
had been achieved. The performance criterion required an increase in the adjusted Earnings per Share (EPS) of the Group of at least the
Consumer Price Index plus 5% over a three-year period. When the options are exercised, the Company issues new shares and the fair value
of the awards exercised is reclassified from the share-based payment reserve to retained earnings. The fair value of the share options was
calculated using the Binomial Model.
In accordance with the terms of the 2002 LTIP, certain executives to whom options were granted in 2004 were eligible to receive share awards
related to the number of ordinary shares which they held on the second anniversary of the exercise of the option up to a maximum of 1,450
ordinary shares. There are no share awards outstanding as at the end of the year (2018: nil).
There is no movement in the number of options outstanding under 2002 LTIP for the year ended 4 January 2020 and 29 December 2018.
The number of share options outstanding and exercisable as at 4 January 2020 and 29 December 2018 is 40,000. They have a weighted
average exercise price of €4.38 per share and expire in 2021.
Notes to the Financial Statements continued
155

Movement in the number of awards of the 2018 LTIP, 2008 LTIP and 2019 RSP, and the weighted average fair value of grants during the years
ended 4 January 2020 and 29 December 2018 are as follows:
At the beginning of the year 1,002,386 – 1,349,801 2,203,668 – –
Granted 925,522 1,063,248 – – 222,116 –
Vested – – (304,444) (480,995) (56,457) –
Lapsed (95,280) (60,862) (352,754) (372,872) (6,000) –
At the end of the year 1,832,628 1,002,386 692,603 1,349,801 159,659 –
Weighted average fair value of awards
granted €15.94 €12.45 – – €14.41 –
The assumptions used in the valuation of the awards granted under 2018 LTIP and 2019 RSP during the years ended 4 January 2020 and
Model used Monte Carlo Monte Carlo Discounted
cash flow
Year of earliest vesting date 2022 2021 2019-2022
Share price at date of award €17.73 €13.86 €9.91-€17.01
Risk-free interest rate (0.63%) (0.35%) –
Expected volatility* 25.7% 24.40% –
Expected dividend yield 1.56% 1.38% 1.55%-1.69%
Fair value – TSR component €8.68 €6.49 –
Fair value – non-market performance component €16.92 €13.29 –
* Expected volatility was determined by calculating the historical volatility of the Company’s share price over a period equivalent to the expected life of the award.
11. Finance income and costs

Finance income
Interest income on loans at amortised cost to related parties 35 1.3 0.4
Interest income on deposits 4.7 3.1
Net interest income on cross currency swaps 0.2 0.4
Total finance income 32 6.2 3.9
Finance costs
Bank borrowing costs (24.0) (12.2)
Facility fees including cost amortisation (1.1) (2.0)
Finance cost of private placement debt (7.4) (7.2)
Total finance costs 32 (32.5) (21.4)
Net finance costs (26.3) (17.5)
Net finance costs do not include bank borrowing costs of €0.7 million (2018: €0.8 million) attributable to the acquisition, construction or production
of a qualifying asset, which have been capitalised, as disclosed in note 15. Interest is capitalised at the Group’s average interest rate for the period
of 3.4% (2018: 4.3%). Where relevant, tax deduction for capitalised interest was taken in accordance with Sec 81(3), TCA 1997. Tax relief in relation
to capitalised interest is nil (2018: nil).
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 > Financial Statements
12. Income taxes

Current tax
Irish current tax charge 3.2 15.7
Adjustments in respect of prior years 0.9 (0.9)
Irish current tax for the year 4.1 14.8
Foreign current tax 16.0 17.9
Adjustments in respect of prior years (0.9) 1.0
Foreign current tax for the year 15.1 18.9
Total current tax 19.2 33.7
Deferred tax
Deferred tax – current year (1.2) (0.7)
Adjustments in respect of prior years 0.9 (0.2)
Total deferred tax 26 (0.3) (0.9)
Tax charge 32 18.9 32.8
The tax credit on exceptional items included in the above amounts is as follows:

Current tax credit on exceptional items (4.4) –
Deferred tax credit on exceptional items (0.1) –
Total tax credit on exceptional items for the year 6 (4.5) –
The net tax credit on exceptional items in 2019 has been disclosed separately above as it relates to costs and income which have been presented
as exceptional.
The tax on the Group’s profit before tax differs from the theoretical amount that would arise applying the corporation tax rate in Ireland, as follows:
2019
€’m
2018
€’m
Profit before tax 199.1 266.8
Income tax calculated at Irish rate of 12.5% (2018: 12.5%) 24.9 33.3
Earnings at higher Irish rates 0.2 0.4
Difference due to overseas tax rates (capital and trading) 4.0 3.3
Adjustment to tax charge in respect of previous periods 0.9 (0.1)
Tax on share of results of equity accounted investees included in profit before tax (6.2) (5.7)
Other reconciling differences (4.9) 1.6
Total tax charge 18.9 32.8
Details of deferred tax charged or credited directly to other comprehensive income during the year are outlined in note 26.
Factors that may affect future tax charges and other disclosure requirements
The total tax charge in future periods will be affected by any changes to the applicable tax rates in force in jurisdictions in which the Group
operates and other relevant changes in tax legislation, including amendments impacting on the excess of tax depreciation over accounting
depreciation and further clarification on certain application matters in relation to the Tax Cuts and Jobs Act enacted in December 2017 in
the US. The total tax charge of the Group may also be influenced by the effects of corporate development activity and the resolution of uncertain
tax positions where the final outcome of those matters is different than the amounts recorded using the probability weighted expected value
approach which is considered to be the best predictor of the final outcome.
Notes to the Financial Statements continued
157

13. Earnings Per Share
Basic
Basic Earnings Per Share is calculated by dividing the net profit attributable to the equity holders of the Company by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Group and held as own shares (note 23). The
weighted average number of ordinary shares in issue used in the calculation of Basic Earnings Per Share is 295,215,046 (2018: 295,159,530).
2019 2018
Profit after tax attributable to equity holders of the Company (€’m) 180.2 234.0
Basic Earnings Per Share (cent) 61.04 79.28
Diluted
Diluted Earnings Per Share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all potential
dilutive ordinary shares. Share options and share awards are the Company’s only potential dilutive ordinary shares.
The share awards, which are performance based, are treated as contingently issuable shares, because their issue is contingent upon satisfaction
of specified performance conditions, as well as the passage of time. Contingently issuable shares are included in the calculation of Diluted Earnings
Per Share to the extent that conditions governing exercisability have been satisfied, as if the end of the reporting period were the end of the vesting
period. The number of share options represents the number expected to be exercised.
2019 2018
Weighted average number of ordinary shares in issue 295,215,046 295,159,530
Shares deemed to be issued for no consideration in respect of:
– Share awards 543,676 858,826
– Share options 27,441 28,182
Weighted average number of shares used in the calculation of Diluted Earnings Per Share 295,786,163 296,046,538
Diluted Earnings Per Share (cent) 60.92 79.04
14. Dividends
The dividends paid and recommended on ordinary share capital are as follows:
Notes

Equity dividends to shareholders
Final – paid 14.49c per ordinary share (2018: 16.09c) 42.9 47.6
Interim – paid 10.68c per ordinary share (2018: 9.71c) 31.6 28.7
Total 74.5 76.3
Reconciliation to Group statement of cash flows and statement of changes in equity
Dividends to shareholders 74.5 76.3
Waived dividends in relation to own shares (0.2) (0.3)
Total dividends paid to equity holders of the Company 24 74.3 76.0
Equity dividends recommended
Final 2019 – proposed 15.94c per ordinary share (2018: 14.49c) 36 47.2 42.9
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 > Financial Statements
15. Property, plant and equipment
Notes
Year ended 4 January 2020
Opening carrying amount 186.9 265.2 0.9 453.0
Exchange differences 4.3 7.4 – 11.7
Acquisitions 34 11.5 5.1 – 16.6
Additions 9.3 32.3 0.1 41.7
Impairment 5/6 – (0.4) – (0.4)
Disposal of assets – (0.4) – (0.4)
Depreciation charge 5/32 (10.8) (37.0) (0.3) (48.1)
Closing carrying amount 201.2 272.2 0.7 474.1
At 4 January 2020
Cost 290.5 594.7 3.1 888.3
Accumulated depreciation and impairment (89.3) (322.5) (2.4) (414.2)
Carrying amount 201.2 272.2 0.7 474.1
Year ended 29 December 2018
Opening carrying amount 182.1 259.3 0.8 442.2
Exchange differences 6.9 10.5 – 17.4
Acquisitions 0.3 0.1 – 0.4
Additions 7.5 29.3 0.4 37.2
Disposal of assets (0.6) (0.6) – (1.2)
Depreciation charge 4/5/32 (9.3) (33.4) (0.3) (43.0)
Closing carrying amount 186.9 265.2 0.9 453.0
At 29 December 2018
Cost 257.6 542.6 3.1 803.3
Accumulated depreciation and impairment (70.7) (277.4) (2.2) (350.3)
Carrying amount 186.9 265.2 0.9 453.0
Included in the closing cost at 4 January 2020 is an amount of €14.7 million (2018: €15.5 million) incurred in respect of assets under construction.
Included in the cost of additions for 2019 is €0.3 million (2018: €1.2 million) incurred in respect of staff costs capitalised into assets. Included
in the cost of additions for 2019 is €0.7 million (2018: €0.8 million) incurred in respect of borrowing cost capitalised into assets.
Assets held under finance leases
At 4 January 2020, tangible fixed assets held under finance leases amounted to nil (2018: €0.1 million). Depreciation on assets held under finance
leases was nil (2018: €0.3 million).
Notes to the Financial Statements continued

Year ended 4 January 2020
Opening carrying amount 549.8 680.1 53.9 20.2 1,304.0
Exchange differences 14.2 18.1 0.9 0.6 33.8
Acquisitions 10.3* 25.5* 0.3 – 36.1
Additions – 0.5 18.8 14.3 33.6
Impairment 5/6 – – – (2.0) (2.0)
Amortisation 5/32 – (40.1) (9.5) (11.3) (60.9)
Closing carrying amount 574.3 684.1 64.4 21.8 1,344.6
At 4 January 2020
Cost 574.3 915.6 112.9 101.9 1,704.7
Accumulated amortisation and impairment – (231.5) (48.5) (80.1) (360.1)
Carrying amount 574.3 684.1 64.4 21.8 1,344.6
Year ended 29 December 2018
Opening carrying amount 396.2 503.9 43.4 16.3 959.8
Exchange differences 16.1 21.2 0.9 0.7 38.9
Acquisitions 137.5** 183.0 0.1 – 320.6
Additions – 1.0 16.3 13.3 30.6
Amortisation 4/5/32 – (29.0) (6.8) (10.1) (45.9)
Closing carrying amount 549.8 680.1 53.9 20.2 1,304.0
At 29 December 2018
Cost 549.8 871.6 96.1 87.8 1,605.3
Accumulated amortisation and impairment – (191.5) (42.2) (67.6) (301.3)
Carrying amount 549.8 680.1 53.9 20.2 1,304.0
* Goodwill acquired in 2019 comprised €11.8 million of goodwill arising on the Watson acquisition less a €1.5 million revision to goodwill on the acquisition of SlimFast. Brands and other intangibles
acquired comprised of €22.8 million of brands and other intangibles arising on the Watson acquisition plus a €2.7 million revision to customer relationships on the acquisition of SlimFast.
** Goodwill acquired in 2018 comprised €137.0 million of goodwill arising on the SlimFast acquisition plus a €0.5 million revision to goodwill on the acquisition of Body & Fit.
The average remaining amortisation period for software costs is 5.6 years (2018: 5.8 years) and development costs is 2.1 years (2018: 2.2 years).
Approximately €8.8 million (2018: €12.6 million) of software additions during the year were internally generated which included €7.5 million
(2018: €12.1 million) of staff costs capitalised. Approximately €14.2 million of development cost additions during the year (2018: €12.6 million)
were internally generated which included €7.1 million (2018: €6.9 million) of staff costs capitalised.
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 > Financial Statements
16. Intangible assets continued
Brands and other intangibles
Brands
Year ended 4 January 2020
Opening carrying amount 463.4 214.7 2.0 680.1
Exchange differences 12.3 5.9 (0.1) 18.1
Acquisitions 1.1 15.6* 8.8 25.5
Additions 0.5 – – 0.5
Amortisation (12.7) (26.3) (1.1) (40.1)
Closing carrying amount 464.6 209.9 9.6 684.1
At 4 January 2020
Cost 519.2 386.1 10.3 915.6
Accumulated amortisation and impairment (54.6) (176.2) (0.7) (231.5)
Carrying amount 464.6 209.9 9.6 684.1
Year ended 29 December 2018
Opening carrying amount 335.2 166.4 2.3 503.9
Exchange differences 14.3 6.8 0.1 21.2
Acquisitions 120.7 62.3 – 183.0
Additions 1.0 – – 1.0
Amortisation (7.8) (20.8) (0.4) (29.0)
Closing carrying amount 463.4 214.7 2.0 680.1
At 29 December 2018
Cost 507.8 360.3 3.5 871.6
Accumulated amortisation and impairment (44.4) (145.6) (1.5) (191.5)
Carrying amount 463.4 214.7 2.0 680.1
* Customer relationships acquired comprised of €12.9 million of customer relationships arising on the Watson acquisition plus a €2.7 million revision relating to the SlimFast acquisition.
Individually material intangible assets with definite useful lives

Management reviewed the amortisation period and amortisation method for the intangible assets with definite useful lives at the reporting date.
Management noted no difference in the expected useful life of the brands and customer relationship assets from the original estimates and noted
no change in the expected pattern of consumption of the future economic benefits of the assets.
Individually material indefinite life intangible assets
Brands
 Performance Nutrition – Optimum Nutrition 110.1 Indefinite 107.1 Indefinite
During 2018 the Group acquired a patent in respect of the Optimum Nutrition brand for a cost of €1.0 million. As this is directly related to the
Optimum Nutrition Brand which has an indefinite useful life, it was capitalised as part of the Optimum Nutrition indefinite life intangible asset.
The remaining movement in the carrying amount of the asset is in relation to exchange differences arising on translation at year end.
As at the reporting date management reviewed the events and circumstances supporting the indefinite useful life assessment. The brand is long
established, continues to have a strong market presence with high customer recognition and there are no material legal, contractual or other
factors that limit its useful life. In addition, the likelihood that market based factors could truncate the brand’s life is relatively remote because
of the size, diversification and market share of the brand. It was determined that this asset will continue to contribute indefinitely to the cash flows
of the Group.
Impairment tests for goodwill and indefinite life intangibles
Goodwill and indefinite life intangibles acquired in business combinations are allocated to the Group’s cash generating units (CGUs) that are
expected to benefit from the business acquisition, rather than where the assets are owned. The CGUs represent the lowest level within the
Group at which the associated goodwill and indefinite life intangibles are monitored for internal management purposes and are not larger than
the operating segments determined in accordance with IFRS 8 ‘Operating Segments’. CGUs are kept under review to ensure that they reflect
changing interdependencies of cash inflows within the Group and how management monitors operations.
A summary of the carrying value of goodwill and indefinite life intangibles together with the number of CGUs is analysed between the operating
segments in the Group as follows:
2 > Financial Statements
16. Intangible assets continued
Key assumptions
The recoverable amount of goodwill and indefinite life intangibles allocated to a CGU is determined based on a value in use computation.
The key assumptions for calculating value in use of the CGUs are discount rates, growth rates and cash flows. They are described as follows:
Discount rates
Refer to the preceding table for the pre-tax discount rates that are applied to the cash flow projections in the value in use computations. The
pre-tax discount rates are based on the Group’s weighted average cost of capital, calculated using the Capital Asset Pricing Model adjusted for the
Group’s specific beta coefficient together with a country risk premium to take account of the countries from where the CGU derives its cash flows.
Growth rates
A terminal value of 2% growth into perpetuity was used to extrapolate cash flows beyond the budget and strategic plan period. This growth rate
does not exceed the long-term average growth rate for the industries in which each CGU operates. The application of the terminal value has
taken account of the Group’s position, playing in large and growing markets which centre around nutrition and healthy lifestyles.
Cash flows
The cash flow projections are based on three years of cash flows being, the 2020 budget formally approved by, and the strategic plan for 2021 and
2022 as presented to, the Board of Directors. In cases where management have strategic plans beyond 2022 these numbers are also used in the
projections. Due to management’s plan as part of the Direct-to-Consumer business model to reinvest the profits of the business for a number of
years to drive revenue growth and build the brand for potential expansion into other markets, the cash flows of the CGU relating to Body & Fit are
forecast over a period of seven years. In respect of think! lifestyle business the strategy presented to the Board covered a five year period from
2020 to 2024 and these cash flows have been used in the impairment calculations.
In preparing the 2020 budget and strategic plan, management considered the Group’s history of earnings, past experience and cash flow
generation. Management also considered external sources of information pertaining to estimated growth of the relevant market, customer and
consumer behaviours, competitor activity and developing trends in the industry in which the CGU operates in. Business sustaining capital
expenditure and working capital requirements are estimated by assigning values to the investment required to support the estimated future
profitability taking into account historic investment patterns and past experience. The cash flow projections exclude the impact of future development
and acquisition activity.
No impairments relating to goodwill, brands and other intangibles, and software costs arose in either 2019 or 2018.
Sensitivity analysis
The key assumptions underlying the impairment reviews are set out above. Sensitivity analysis has been conducted in respect of each of the CGUs
using the following sensitivity assumptions: 1% increase in the discount rate; 10% decrease in EBITDA growth; and nil terminal value growth.
From our sensitivity analysis, we have identified one CGU, the think! lifestyle business, where a reasonably possible change in the pre-tax
discount rate or the terminal value growth rate could result in an impairment charge. The recoverable amount of this CGU exceeds its carrying
amount by €55.5 million. The change required to the relevant assumptions that would result in the carrying amount to equal its recoverable
amount is as follows: 2019 pre-tax discount rate of 7.12% increase by 123bps or terminal value growth of 2% decrease by 173bps.
Notes to the Financial Statements continued
163

17. Equity accounted investees
The Group’s interests in equity accounted investees at the end of the reporting period is as follows:
Notes
MWC-Southwest Holdings LLC (a) 110.7 83.4
 Cheese Limited (b) 40.1 34.8
 Cheese EU Limited (c) 24.2 19.7
 Ireland DAC (d) 198.2 196.6
Interests in joint ventures 373.2 334.5
The joint ventures have share capital, consisting solely of ordinary shares, membership interests or membership units and preference shares.
(a) In 2018, MWC-Southwest Holdings LLC (formerly known as Spartan-Southwest Holdings LLC) was established to hold 100% of the ownership
interest in Southwest Cheese Company, LLC (Southwest Cheese) and MWC (Michigan) LLC (formerly known as Spartan-Michigan LLC)
(MWC). Consequently, the Group owns 50% of MWC-Southwest Holdings LLC and its two subsidiaries (Southwest/Midwest Group).
Southwest Cheese is a large scale manufacturer of premium quality block cheese and whey protein ingredients for consumer foods markets
internationally. MWC will also be a large scale manufacturer of premium quality block cheese and whey protein ingredients for consumer
foods markets internationally. The plant is currently under construction in Michigan, US and is expected to be commissioned in 2021.
(b)  Cheese Limited is a leading European mozzarella producer. Its customers include most of the leading pizza and pasta chains, food
service operators, industrial food manufacturers, wholesalers and retailers across Europe and internationally. The two plants (Magheralin and
Llangefni) are strategically located in productive agricultural heartland which helps to ensure a secure and consistent supply of high-quality
milk. The Group holds 51% of the share capital of  Cheese Limited but this entity is considered to be a joint venture as the Group does
not have control of the company as it has equal representation on the Board of Directors, along with its joint venture partner Leprino Foods
Company who directs the relevant activities of the business. The Group controls 50% of the voting rights and is entitled to appoint 50% of the
total number of Directors to the Board.
(c)  Cheese EU Limited was established in 2018 and is a joint venture with Leprino Foods Company with each party owning 50% of the
share capital of the company. The Group controls 50% of the voting rights and is entitled to appoint 50% of the total number of Directors to
the Board. When operating, the company will be a producer of mozzarella cheese with a plant situated in Portlaoise, Ireland. It is expected
to be commissioned in 2020.
(d)  Ireland DAC is the largest dairy and agribusiness in Ireland. It owns leading consumer and agri brands such as Avonmore, GAIN
Animal Nutrition, Kilmeaden Cheese, Premier Milk, mymilkman.ie and Wexford Cheese. The Group holds 40% of the ordinary share capital
of  Ireland DAC. However this entity is considered to be a joint venture of the Group as the business plan, which directs the relevant
activities of the business, requires the unanimous approval of both the Group and  Co-operative Society Limited (the Society)
(60% shareholding).
Refer to note 37 for further details of the joint ventures.
The movement in the equity accounted investees recognised in the Group balance sheet is as follows:
At the beginning of the year 334.5 266.9
Investment in joint ventures 36.6 53.9
Share of profit after tax (post exceptional) 32 48.6 45.3
Share of other comprehensive income
– Remeasurements on defined benefit plan, net of deferred tax 24 (8.3) (2.0)
– Fair value movement on cash flow hedges, net of deferred tax 23(d) (10.0) (4.2)
Dividends received 35 (35.3) (31.6)
Income tax movement 2.7 3.6
Exchange differences 4.4 2.6
At the end of the year 373.2 334.5
164
 > Financial Statements
17. Equity accounted investees continued
Summarised financial information for equity accounted investees
Set out below is the summarised financial information for the Group’s equity accounted investees, which are accounted for using the
equity method. The information below reflects the amounts presented in the financial statements of the equity accounted investees reconciled
to the carrying value of the Group’s interest in equity accounted investees.
2019 Notes

Summarised balance sheet (100%):
Non-current assets 711.8 41.3 72.6 563.8
Current assets
Cash and cash equivalents 47.9 46.5 8.3 11.4
Other current assets 421.3 44.5 2.0 140.3
469.2 91.0 10.3 151.7
Non-current liabilities
Financial liabilities (274.0) – – (312.2)
Other non-current liabilities (176.7) (6.0) (24.3) (17.2)
(450.7) (6.0) (24.3) (329.4)
Current liabilities
Bank overdrafts and loans (61.5) – – –
Other current liabilities (247.0) (52.4) (10.3) (164.7)
(308.5) (52.4) (10.3) (164.7)
Net assets (100%) 421.8 73.9 48.3 221.4
Net assets attributable to equity holders of the Company 410.0 73.9 48.3 221.4
Reconciliation to carrying amount:
Group’s equity interest 40% 51% 50% 50%
Group’s share of net assets 164.0 37.7 24.2 110.7
Adjustment in respect of unrealised profit on sales to the Group (2.5) – – –
Fair value adjustments on investment in  Ireland DAC 36.7 – – –
Dividend income receivable – 2.4 – –
Carrying amount 198.2 40.1 24.2 110.7
Summarised income statement (100%):
Revenue 1,961.8 341.7 – 1,034.2
Depreciation (30.4) (5.0) – (19.0)
Amortisation (2.7) (0.2) – (0.1)
Interest (expense)/income (11.9) 0.2 – (11.2)
Tax (9.4) (7.1) 0.1 (8.2)
Profit after tax 62.8 26.6 (1.1) 21.7
Other comprehensive income (22.5) (1.0) – (17.6)
Total comprehensive income 40.3 25.6 (1.1) 4.1
Profit after tax attributable to equity holders of the Company 61.7 26.6 (1.1) 21.7
Total comprehensive income attributable to equity holders of the Company 39.3 25.6 (1.1) 4.1
Reconciliation to the Group’s share of total comprehensive income:
Group’s share of total comprehensive income 15.7 13.1 (0.6) 2.1
Adjustment in respect of unrealised profit on sales to the Group (1.3) – – –
Amortisation of intangible assets recognised on the fair value adjustments (1.1) – – –
Dividends receivable by the Group – 2.4 – –
Group’s share of total comprehensive income 13.3 15.5 (0.6) 2.1
Dividends received by Group 35 11.6 12.5 – 11.2
* The difference between the net assets and the net assets attributable to equity holders of the Company is the portion of net assets attributable to non-controlling interests.
Notes to the Financial Statements continued

Summarised balance sheet (100%):
Non-current assets 669.4 40.7 29.5 376.6
Current assets
Cash and cash equivalents 57.4 24.2 2.1 18.5
Other current assets 494.4 47.7 12.1 108.3
551.8 71.9 14.2 126.8
Non-current liabilities
Financial liabilities (368.5) – – (256.7)
Other non-current liabilities (136.1) (9.9) (1.9) –
(504.6) (9.9) (1.9) (256.7)
Current liabilities
Bank overdrafts and loans – – – (1.6)
Other current liabilities (305.1) (38.7) (2.4) (78.4)
(305.1) (38.7) (2.4) (80.0)
Net assets (100%) 411.5 64.0 39.4 166.7
Net assets attributable to equity holders of the Company 400.1 64.0 39.4 166.7
Reconciliation to carrying amount:
Group’s equity interest 40% 51% 50% 50%
Group’s share of net assets 160.0 32.6 19.7 83.4
Adjustment in respect of unrealised profit on sales to the Group (1.2) – – –
Fair value adjustments on investment in  Ireland DAC 37.8 – – –
Dividend income receivable – 2.2 – –
Carrying amount 196.6 34.8 19.7 83.4
Summarised income statement (100%):
Revenue 1,809.9 311.0 – 802.4
Depreciation (27.6) (4.7) – (14.7)
Interest expense (10.8) 0.1 – (9.5)
Tax (9.2) (5.9) 0.1 (7.1)
Profit after tax 57.5 22.0 (0.6) 20.2
Other comprehensive income (10.2) (0.9) – (3.5)
Total comprehensive income 47.3 21.1 (0.6) 16.7
Profit after tax attributable to equity holders of the Company 56.3 22.0 (0.6) 20.2
Total comprehensive income attributable to equity holders of the Company 46.2 21.1 (0.6) 16.7
Reconciliation to the Group’s share of total comprehensive income:
Group’s share of total comprehensive income 18.5 10.8 (0.3) 8.4
Adjustment in respect of unrealised profit on sales to the Group 0.5 – – –
Amortisation of intangible assets recognised on the fair value adjustments (1.0) – – –
Dividends receivable by the Group – 2.2 – –
Group’s share of total comprehensive income 18.0 13.0 (0.3) 8.4
Dividends received by Group 35 8.6 12.4 – 10.6
* The difference between the net assets and the net assets attributable to equity holders of the Company is the portion of net assets attributable to non-controlling interests.
** The information relating to the income statement and statement of comprehensive income relates primarily to Southwest Cheese Company, LLC for the period before it became a subsidiary of
MWC-Southwest Holdings LLC (formerly known as Spartan-Southwest Holdings LLC) on 19 December 2018. The information relating to the balance sheet is that of Southwest/Midwest Group
as at 29 December 2018.
Commitments and contingent liabilities in respect of equity accounted investees
The Group has committed to invest a further €10.0 million cash contributions in  Cheese EU Limited (2018: €15.0 million comprising
of €5.0 million in share capital and €10.0 million in cash contributions). The Group has also committed to invest $7.5 million in MWC-Southwest
Holdings LLC in 2020 (2018: $42.5 million).
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 > Financial Statements
18. Other financial assets
Other financial assets comprise the following:
Notes
2019
€’m
2018*
€’m
Financial assets at amortised cost
Ornua Co-operative Limited** 29(b)/29(f) 0.7 1.1
Equity instruments designated at FVOCI
The BDO Development Capital Fund 2.1 2.0
Others 0.6 0.6
3.4 3.7
* These unlisted investments were classified as available for sale (AFS) in 2018. Refer to note 2 for details of the transition to IFRS 9.
** This is a loan note receivable from Ornua Co-operative Limited.
Other financial assets are classified as non-current assets, unless they are expected to be realised within 12 months of the reporting date or
unless they will need to be sold to raise operating capital.
The movement in other financial assets is as follows:
2019
€’m
2018
€’m
At the beginning of the year 3.7 11.1
Disposals/redemption (0.5) (7.9)
Fair value adjustment (0.2) 0.2
Additions 0.4 0.3
At the end of the year 3.4 3.7
During 2018, there were disposals of AFS financial assets amounting to €7.9 million with proceeds of €7.9 million. The accumulated fair value
adjustments in relation to these investments amounting to €5.3 million and deferred tax of €1.8 million were transferred from the AFS financial
asset reserve to the income statement (note 23). The disposals included shares in IPL Plastics plc (formerly One 51 plc) as part of a share
buyback programme in advance of their IPO.
19. Trade and other receivables
Current assets Notes

Trade receivables 389.6 372.3
Less loss allowance (6.6) (4.7)
Trade receivables – net 383.0 367.6
Receivables from equity accounted investees 35(c) 8.0 13.2
Receivables from other related parties 35(c) 0.2 0.2
Loans to equity accounted investees 35 0.1 0.1
Value added tax 3.7 2.2
Prepayments 16.6 18.4
Other receivables 20.7 9.9
432.3 411.6
See note 33 for analysis of the movement in trade and other receivables. Information in relation to the Group’s credit risk and fair value estimation
process is included in note 29.
The currency profile of trade and other receivables is as follows:
Euro
At 4 January 2020 43.8 334.9 30.6 3.1 19.9 432.3
At 29 December 2018 (restated) 43.7 320.4 29.6 4.2 13.7 411.6
Notes to the Financial Statements continued
167

20. Inventories
2019
€’m
2018
€’m
Raw materials 136.6 127.5
Work in progress 8.0 6.8
Finished goods 266.5 212.3
Consumables 36.4 38.0
447.5 384.6
Recognition in the Group income statement:
Cost of inventories recognised as an expense in Cost of Goods Sold 5 2,767.3 2,184.6
Write down of inventory to net realisable value during the year 26.1 4.7
Previous write downs of inventories reversed during the year* (2.8) (5.0)
23.3 (0.3)
* Previous write downs have been reversed as a result of increased sales prices in certain markets.
Included in write downs of inventory is an exceptional charge of €18.0 million (see note 6 for further details).
21. Cash and cash equivalents
Cash at bank and in hand 260.1 216.4
Short term bank deposits 8.9 8.2
Cash and cash equivalents in the Group balance sheet 29(c) 269.0 224.6
Bank overdrafts used for cash management purposes 25 (104.3) (48.9)
Cash and cash equivalents in the Group statement of cash flows 25 164.7 175.7
22. Share capital and share premium

At 29 December 2018 and 4 January 2020 296,046 17.8 87.6 105.4
The total authorised number of ordinary shares is 350 million shares (2018: 350 million shares) with a par value of €0.06 per share (2018: €0.06
per share). All issued shares are fully paid, carry one vote per share and a right to dividends. The rights and obligations of the ordinary shares
and the restrictions on the transfer of shares and voting rights are provided in Other Statutory Information.
During the year ended 4 January 2020 there were no 2002 LTIP share options exercised (2018: nil). Details of share options and awards granted
under the Long-term and Annual Incentive Schemes are provided in note 10 and in the Remuneration Committee Report on pages 84 to 108.
Balance at 30 December 2018 2.8 113.1 126.4 (1.0) (0.1) (14.4) 14.1 240.9
Currency translation differences – – 46.7 – – – – 46.7
Net investment hedge – – (2.4) – – – – (2.4)
Revaluation – gross – – – (16.9) (0.2) – – (17.1)
Reclassification to profit or loss – gross – – – 1.3 – – – 1.3
Deferred tax – – – 3.6 0.1 – – 3.7
Net change in OCI – – 44.3 (12.0) (0.1) – – 32.2
Purchase of own shares – – – – – (7.6) – (7.6)
Cost of share-based payments – – – – – – 4.6 4.6
Transfer on exercise, vesting or expiry
of share-based payments – – – – – 8.0 (9.0) (1.0)
Balance at 4 January 2020 2.8 113.1 170.7 (13.0) (0.2) (14.0) 9.7 269.1
Balance at 31 December 2017 2.8 113.1 71.7 3.2 3.4 (19.1) 14.9 190.0
Currency translation differences – – 58.6 – – – – 58.6
Net investment hedge – – (3.9) – – – – (3.9)
Revaluation – gross – – – (5.5) – – – (5.5)
Reclassification to profit or loss – gross – – – 0.3 (5.3) – – (5.0)
Deferred tax – – – 1.0 1.8 – – 2.8
Net change in OCI – – 54.7 (4.2) (3.5) – – 47.0
Purchase of own shares – – – – – (4.3) – (4.3)
Cost of share-based payments – – – – – – 8.8 8.8
Transfer on exercise, vesting or expiry
of share-based payments – – – – – 9.0 (9.6) (0.6)
Balance at 29 December 2018 2.8 113.1 126.4 (1.0) (0.1) (14.4) 14.1 240.9
*AFS financial asset reserve at and before 29 December 2018.
(a) Capital reserve
The capital reserve comprises of a capital redemption reserve and a capital reserve which arose on the re-nominalisation of the Company’s share
capital on conversion to the euro.
(b) Merger reserve
The merger reserve arose on the merger of Waterford Foods plc now named Waterford Foods DAC and Avonmore Foods plc now named 
plc in 1997. The merger reserve adjustment represents the difference between the nominal value of the issued share capital of Waterford Foods
DAC and the fair value of the shares issued by .
€’m
Share premium representing excess of fair value over nominal value of ordinary shares issued in connection with the merger of
Avonmore Foods plc and Waterford Foods plc 355.3
Merger reserve adjustment (327.2)
Share premium and other reserves relating to nominal value of shares in Waterford Foods plc 85.0
At the beginning and end of the current and prior year 113.1
(c) Currency reserve
The currency reserve reflects the foreign exchange gains and losses arising from the translation of the net investment in foreign operations
and on borrowings designated as hedges of the net investment which are taken to equity. The movement in US dollar foreign exchange rates
from 1.1454 as at 29 December 2018 to 1.1147 as at 4 January 2020 is the primary driver of the movement in the currency reserve in the year.
When an entity is sold the accumulated foreign currency gains and losses are recycled to the income statement.
Notes to the Financial Statements continued
169

(d) Hedging reserve
The hedging reserve reflects the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges.
Amounts accumulated in the hedging reserve are recycled to the income statement in the periods when the hedged item affects income or
expense. The hedging reserve also reflects the Group’s share of the effective portion of changes in the fair value of derivatives that are entered
into by the Group’s equity accounted investees (note 29(a)).
The movements on the hedging reserve for the years ended 4 January 2020 and 29 December 2018 are as follows:
Equity
accounted
investees
Balance at 30 December 2018 (0.9) (0.1) (1.0)
Revaluation – gross
– Foreign exchange contracts – loss in year (currency risk) (0.7) – (0.7)
– Commodity futures – loss in year (commodity price risk) (0.1) – (0.1)
– Interest rate swaps – loss in year (interest rate risk) (14.1) (2.0) (16.1)
Recognised in OCI (14.9) (2.0) (16.9)
Reclassification to profit or loss – gross
– Foreign exchange contracts – loss/(gain) in year (currency risk) 1.3 (0.3) 1.0
– Commodity futures – loss in year (commodity price risk) 0.3 – 0.3
Reclassified from OCI to profit or loss 1.6 (0.3) 1.3
Deferred tax 3.3 0.3 3.6
Net change in OCI (10.0) (2.0) (12.0)
Balance at 4 January 2020 (10.9) (2.1) (13.0)
Balance at 31 December 2017 3.3 (0.1) 3.2
Revaluation – gross
– Foreign exchange contracts – loss in year (currency risk) (0.6) (0.4) (1.0)
– Commodity futures – loss in year (commodity price risk) (1.1) (0.1) (1.2)
– Interest rate swaps – loss in year (interest rate risk) (3.3) – (3.3)
Recognised in OCI (5.0) (0.5) (5.5)
Reclassification to profit or loss – gross
– Foreign exchange contracts – loss in year (currency risk) 0.2 0.4 0.6
– Commodity futures – gain in year (commodity price risk) (0.4) – (0.4)
– Interest rate swaps – loss in year (interest rate risk) 0.1 – 0.1
Reclassified from OCI to profit or loss (0.1) 0.4 0.3
Deferred tax 0.9 0.1 1.0
Net change in OCI (4.2) – (4.2)
Balance at 29 December 2018 (0.9) (0.1) (1.0)
(e) FVOCI reserve
Unrealised gains and losses arising from changes in the fair value of equity instruments measured at fair value through other comprehensive
income are recognised in the FVOCI reserve. On derecognition of such an equity instrument, the accumulated balances of an instrument
associated with it will be reclassified to retained earnings.
At and before 29 December 2018, this account is available for sale (AFS) financial asset reserve. Unrealised gains and losses arising from
changes in the fair value of AFS financial assets are recognised in the AFS financial asset reserve. When such AFS financial assets are sold
or impaired, the accumulated fair value adjustments are recycled to profit or loss.
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 > Financial Statements
23. Other reserves continued
(f) Own shares
The own shares reserve reflects the ordinary shares of  which are held in trust.
An Employee Share Trust was established in May 2002 to operate initially in connection with the Company’s Saving Related Share Option Scheme
and subsequently for the vesting of shares under the 2008 LTIP, 2018 LTIP and 2019 RSP (note 10). The Trustee of the Employee Share Trust is
Computershare Trustees (Jersey) Limited, a Jersey based trustee services company. The dividend rights in respect of these shares have been
waived, save 0.001 cent per share. An Employee Share Scheme Trust was established in April 2013 to operate in connection with the Company’s
AIDIS. The Trustee of the Employee Share Scheme Trust is  Management Services Limited. The dividend rights in respect of shares which
have not vested have been waived.
The movement in own shares for the years ended 4 January 2020 and 29 December 2018 is as follows:
Number
of Shares
At the beginning of the year 14.4 0.1 871,335 19.1 0.2 1,127,066
Purchased 7.6 – 425,082 4.3 – 291,362
Allocated (8.0) – (476,115) (9.0) (0.1) (547,093)
At the end of the year 14.0 0.1 820,302 14.4 0.1 871,335
The shares acquired during the year and those held in trust are allocated to employees under the various share-based payment schemes.
This represented an insignificant amount of the total share capital at the beginning and end of the year. Shares purchased are deemed to be
own shares in accordance with IAS 32 ‘Financial Instruments’. The own shares at 4 January 2020 restrict distributable profits by €14.0 million
(2018: €14.4 million) and had a market value of €8.5 million (2018: €14.3 million).
(g) Share-based payment reserve
The share-based payment reserve reflects the equity settled share-based payment plans in operation by the Group (note 10).
24. Retained earnings
At the beginning of the year 1,242.8 1,086.3
Profit for the period 180.2 234.0
Other comprehensive income/(expense)
– Remeasurement on defined benefit plans 9 (14.6) (0.5)
– Deferred tax on remeasurements on defined benefit plans 26 0.5 0.2
– Share of remeasurements on defined benefit plans from equity accounted investees, net of
deferred tax 17 (8.3) (2.0)
Net change in OCI (22.4) (2.3)
Dividends 14 (74.3) (76.0)
Transfer on exercise, vesting or expiry of share-based payments 1.0 0.6
Deferred tax on share-based payments 26 0.1 0.2
At the end of the year 1,327.4 1,242.8
25. Financial liabilities

Non-current
Bank borrowings 374.3 616.2
Private placement debt 139.9 136.2
29(b) 514.2 752.4
Current
Bank borrowings 264.8 –
Bank overdrafts 21 104.3 48.9
369.1 48.9
Total financial liabilities 29(c) 883.3 801.3
Notes to the Financial Statements continued
171

At the year-end, the Group had multi-currency committed term facilities of €1.2 billion (2018: €1.1 billion) of which €353.4 million
(2018: €358.0 million) were undrawn.
The maturity profile of financial liabilities and undrawn committed facilities is as follows:
2019 2018
Loans and
borrowings
At 4 January 2020 265.4 602.0 6.8 3.6 5.5 883.3
At 29 December 2018 158.7 617.3 17.4 3.5 4.4 801.3
Principal currencies in “other” include New Zealand dollar and Indian Rupee.
Bank borrowings
The Group has committed unsecured bank facilities maturing in 2020 and 2024. They are borrowed at fixed and floating interest rates. At
4 January 2020, €151.6 million of bank borrowings denominated in USD are at fixed nominal interest rate of 3.30% (2018: €147.5 million at 3.30%).
The remaining bank borrowings are subject to interest rate changes, taking into account of contractual repricing dates. Nominal interest rates
of these borrowings range primarily from 0.39% – 8.80% (2018: 0.33% – 3.67%). The floating interest rates are set at commercial rates based
on a margin over EURIBOR, US dollar LIBOR and Australian dollar interest rates for periods of up to six months.
Private placement debt
The private placement debt committed facility matures in 2021, bears interest at a fixed 5.40% nominal interest rate and is denominated in USD.
At 4 January 2020, the Group had undrawn uncommitted private placement facilities of nil (2018: €87.3 million).
Bank overdrafts
Bank overdraft interest rates are variable and mostly range from 0.55% – 12.5% (2018: 0.67% – 2.75%). At 4 January 2020, the Group had
undrawn uncommitted bank overdraft facilities of €10.9 million (2018: €10.5 million).
Debt issue costs
Included within the carrying value of borrowings are deferred debt issue costs of €0.1 million (2018: €0.4 million), all of which were recognised
in finance costs in the Group income statement using the effective interest rate method over the remaining life of the borrowings.
Guarantees
Financial liabilities are secured by cross-guarantees from  and certain principal subsidiaries. The Group has complied with the financial
covenants of its borrowing facilities during 2019 and 2018 (note 29(c)).
Net debt is a non-IFRS measure which we provide to investors as we believe they find it useful. Net debt comprises the following:
Private placement debt 139.9 136.2
Bank borrowings 151.6 147.5
Not subject to interest rate changes* 291.5 283.7
Bank borrowings 487.5 468.7
Cash and cash equivalents net of bank overdrafts 21 (164.7) (175.7)
Subject to interest rate changes* 322.8 293.0
614.3 576.7
* Taking into account of contractual repricing dates at the reporting date.
At the beginning of the year (158.2) (124.0)
Income statement credit 12 0.3 0.9
Deferred tax credit to other comprehensive income
– on remeasurement of defined benefit plans 24 0.5 0.2
– on disposal of AFS financial assets – 1.8
– on fair value movements 0.4 0.1
Deferred tax credit/(charge) to equity
– on share-based payments 24 0.1 0.2
– on acquisition of subsidiaries 34 (0.5) (32.4)
Reclassification (note 27) (5.6) –
Exchange differences (3.7) (5.0)
At the end of the year (166.7) (158.2)
Notes to the Financial Statements continued
173

The movement in deferred tax assets during the year is as follows:
At 30 December 2018 5.0 9.3 2.8 12.2 29.3
Credit/(charge) to income statement 0.4 (1.5) (0.4) (1.5) (3.0)
Credit to other comprehensive income 0.5 – – – 0.5
Credit to equity – 0.1 – – 0.1
Exchange differences 0.1 0.2 0.1 0.3 0.7
At 4 January 2020 6.0 8.1 2.5 11.0 27.6
At 31 December 2017 4.9 8.0 1.0 10.7 24.6
(Charge)/credit to income statement (0.2) 0.5 (1.2) (0.3) (1.2)
Credit to other comprehensive income 0.2 – – – 0.2
Credit to equity – 0.2 – – 0.2
Acquisition of subsidiaries and intellectual properties – 0.4 3.0 1.1 4.5
Exchange differences 0.1 0.2 – 0.7 1.0
At 29 December 2018 5.0 9.3 2.8 12.2 29.3
The movement in deferred tax liabilities during the year is as follows:
Accelerated tax
depreciation

At 30 December 2018 (62.6) – (99.2) (25.7) (187.5)
(Charge)/credit to income statement (1.8) – 10.9 (5.8) 3.3
Credit to other comprehensive income – 0.4 – – 0.4
Acquisition of subsidiaries and intellectual properties – – (1.4) 0.9 (0.5)
Reclassification – – – (5.6) (5.6)
Exchange differences (1.6) – (2.6) (0.2) (4.4)
At 4 January 2020 (66.0) 0.4 (92.3) (36.4) (194.3)
At 31 December 2017 (57.9) (1.8) (69.1) (19.8) (148.6)
(Charge)/credit to income statement (2.0) – 9.6 (5.5) 2.1
Credit to other comprehensive income – 1.9 – – 1.9
Acquisition of subsidiaries and intellectual properties (0.1) – (36.5) (0.3) (36.9)
Exchange differences (2.6) (0.1) (3.2) (0.1) (6.0)
At 29 December 2018 (62.6) – (99.2) (25.7) (187.5)
A deferred tax asset has been recognised on the basis that the realisation of the related tax benefit through future taxable profits is probable.
This includes deferred tax assets which are recognised for tax losses carried forward to the extent that realisation of the related tax benefit
through future taxable profits is probable.
At the balance sheet date, the Group has unused tax losses of €77.1 million (2018: €83.0 million) available for offset against future profits. A deferred
tax asset has been recognised in respect of €2.5 million (2018: €3.8 million) of such losses. No deferred tax asset has been recognised in respect
of the remaining €74.6 million (2018: €79.2 million) as it is not considered probable that there will be future taxable profits available. All tax losses
may be carried forward indefinitely (€0.3 million in 2018 was due to expire within the next two years). Also included in unrecognised tax losses
are €46.6 million (2018: €45.9 million) of capital losses.
No deferred tax liability has been recognised on temporary differences of €41.8 million (2018: €34.4 million) relating to the unremitted earnings
of overseas subsidiaries as the Group is able to control the timing of the reversal of these temporary differences and it is probable that they will
not reverse in the foreseeable future. Temporary differences arising in connection with interests in equity accounted investees are insignificant.
At 30 December 2018 – non-current – – 2.8 – 22.1 24.9
At 30 December 2018 – current 0.1 1.7 – 0.8 0.7 3.3
Reclassification – – – – (22.8) (22.8)
Amount provided for in the year 0.8 – – – – 0.8
Utilised in the year – (1.7) (0.1) – – (1.8)
Unused amounts reversed in the year – – (0.6) (0.3) – (0.9)
Exchange differences – – – 0.1 – 0.1
At 4 January 2020 – current 0.9 – 2.1 0.6 – 3.6
(a) The restructuring provision relates mainly to a redundancy provision arising from the ongoing strategic review within the  Performance
Nutrition segment. The provision at 4 January 2020 is expected to be settled within the next 12 months.
(b) The legal claims provision represented legal claims brought against the Group. All legal claims were settled during the year.
(c) The property and lease commitments provision relates to property remediation works and is based on the estimated cost of re-instating
a property to its original condition. Due to the nature of the remediation works there is some uncertainty around the amount and timing
of payments.
(d) The operational provision represents provisions relating to certain insurance claims and other items. Due to the nature of these items,
there is some uncertainty around the amount and timing of payments.
(e) The regulatory and related provision at 30 December 2018 represented provisions relating to the interest and penalties element of uncertain
tax positions and the UK pension provision. Reclassifications have taken place in the year moving regulatory and related provisions to tax
balances and accrued expenses to better reflect the nature of the items.
28. Trade and other payables
Trade payables 257.9 223.5
Amounts due to equity accounted investees 35(c) 91.6 84.0
Amounts due to other related parties 35(c) 0.1 0.1
Social security costs 4.5 4.3
Accrued expenses 158.4 156.5
512.5 468.4
Non-current
Other payables 12.5 13.0
Total 525.0 481.4
See note 33 for analysis of the movement in trade and other payables. See note 29 for information on the Group’s fair value estimation process.
Other payables relate primarily to lease incentives on non-cancellable operating leases and are amortised on a straight line basis over the
lease term.
Notes to the Financial Statements continued
175

29. Derivative financial instruments and financial risk management
(a) Derivative financial instruments
Cross currency swaps – fair value through income statement 0.3 – – (0.2)
Foreign exchange contracts – cash flow hedges (currency risk) – (0.4) 0.1 –
Interest rate swaps – cash flow hedges (interest rate risk) – (2.0) – –
Commodity futures – cash flow hedges (commodity price risk) – – 0.2 (0.3)
Commodity futures – fair value hedges (commodity price risk) – – 1.2 –
Total 0.3 (2.4) 1.5 (0.5)
Non-current – (2.0) – –
Current 0.3 (0.4) 1.5 (0.5)
29(e)/29(f) 0.3 (2.4) 1.5 (0.5)
Derivatives recognised at fair value through income statement
Included in cross currency swaps is a pound sterling euro cross currency swap with a notional amount of £60.0 million (2018: £36.0 million)
and €70.2 million (2018: €40.1 million). The translation gain included in the Group income statement in respect of this swap is €0.3 million
(2018: €0.2 million loss).
Hedge accounting
The Group enters into hedge relationships when there is an economic relationship between the hedged item and the hedging instrument. When
the critical terms of the hedged item and hedging instrument are closely aligned for the prospective assessment of effectiveness, a qualitative
assessment is performed. In instances where changes occur to the hedged item which result in the critical terms being no longer closely aligned,
the Group uses the hypothetical derivative method to assess the ineffectiveness. A hedge ratio of one to one is established as the quantities
of the hedged item and the hedging instrument used to hedge that hedged item are the same. Potential sources of ineffectiveness may include
the timing and amounts of cash flows, and changes in credit risk of the hedging instruments or hedged items.
Derivative assets and liabilities designated as cash flow hedges
Foreign exchange contracts
The Group may use foreign exchange contracts to hedge its future cash flow risk from movements in foreign exchange rates on foreign
denominated sales or purchases. Such contracts are generally designated as cash flow hedges. Weighted average hedged rate of foreign
exchange contracts (including forward points) as at 4 January 2020 is EUR 1:US dollar 1.0925 (2018: EUR 1:US dollar 1.1454).
The notional principal amounts of the outstanding foreign exchange contracts as at 4 January 2020 were €18.2 million (2018: €5.3 million).
All outstanding foreign exchange contracts will mature and be released to the Group income statement within 12 months of the reporting
date (2018: within 12 months of the reporting date).
Commodity futures
The Group may use commodity futures to hedge its future cash flow risk from movement in gas prices. The notional principal amount of the
outstanding futures designated as cash flow hedges is nil (2018: €1.5 million and 542,900 million BTU). Weighted average hedged rate of
commodity futures is nil (2018: €2.94 per million BTU). All outstanding commodity futures at 29 December 2018 matured and were released
to the Group income statement in 2019.
Interest rate swaps
The Group may use floating to fixed interest rate swaps to hedge against its future cash flow risk from its exposure to variable rates on its
long-term borrowings with floating rates. The notional principal amounts of the outstanding EURIBOR linked interest rate swaps designated
as cash flow hedges affected by interest rate benchmark reform as at 4 January 2020 were €120.0 million (2018: nil). Weighted average hedged
rate of interest rate swaps as at 4 January 2020 is 0.20%. All outstanding interest rate swaps mature in 2023.
176
 > Financial Statements
29. Derivative financial instruments and financial risk management continued
Amounts recognised in the Group income statement and the Group statement of comprehensive income:
Losses recognised in other comprehensive income Notes

Foreign exchange contracts 23(d) – (0.4)
Commodity futures 23(d) – (0.1)
Interest rate swaps 23(d) (2.0) –
(2.0) (0.5)
(Gain)/loss transferred from cash flow hedge reserve to the Group income statement
Foreign exchange contracts 23(d) (0.3) 0.4
The transferred amounts relating to foreign exchange contracts are recorded in the line item “Administration expenses” in the income statement.
No material ineffectiveness has been recognised in respect of the cash flow hedges in 2019 (2018: nil). If ineffectiveness had been recognised,
it would have been recorded in “Administration expenses” in the income statement.
Refer to note 23(d) for the balances in the cash flow hedge reserve. The maturity profile of the cash flows of the derivative financial instruments
is included in note 29(d).
Derivative financial instruments entered into by equity accounted investees
The Group’s equity accounted investees enter into interest rate swaps, commodity futures (gas, oil, butter, whey and skim milk powder) and
foreign exchange contracts. The Group’s share of the movement in the derivative financial instruments designated as cash flow hedges is
recognised in other comprehensive income and against the carrying value of the interest in equity accounted investees.
The movement recognised in other comprehensive income on interest rate swaps (note 23(d)) represents the Group’s share of the movement
in the interest rate swaps entered into by equity accounted investees. All movements are recognised against the carrying value of the interest
in equity accounted investees until repayment of the related bank borrowings.
Net investment hedge
A portion of the Group’s US dollar denominated borrowings (see note 25) with a nominal amount of US$98.5 million (2018: US$98.5 million) is
designated as a hedge of a portion of the net investment in the Group’s US dollar net assets amounting to US$98.5 million (2018: US$98.5 million).
Therefore, hedge ratio is 1:1.

Carrying value of net investment hedge 88.4 86.0
Loss recognised in other comprehensive income 23 (2.4) (3.9)
The borrowings of US$98.5 million is translated at year end exchange rate of EUR 1:US dollar 1.1147 (2018: EUR 1:US dollar 1.1454) to arrive at
carrying amount of €88.4 million (2018: €86.0 million). €12.0 million (2018: €9.6 million) of the currency reserve relates to the net investment hedge
(see note 23). There was no ineffectiveness recognised in the Group income statement during the year (2018: nil). If ineffectiveness had been
recognised, it would have been recorded in “Administration expenses” in the income statement.
Derivative assets and liabilities designated as fair value hedges
Commodity futures
The Group entered into fixed price purchase and sale contracts for milk and cheese respectively and uses commodity futures to hedge this exposure
The notional principal amounts of the outstanding commodity (milk and cheese) futures, designated as fair value hedges as at 4 January 2020
was nil (2018: €42.2 million and 29.1 million lbs of cheese). Weighted average hedged rate is nil (2018: €1.45 per lb of cheese).
Notes to the Financial Statements continued
177

(b) Fair value and fair value estimation
Fair value of financial instruments measured at amortised cost
Except as detailed in the following table the Group deemed that the carrying amounts of financial instruments measured at amortised cost in the
€’m
Non-current financial liabilities 25 (514.2) (523.6) (752.4) (751.1)
Non-current loans due from equity accounted investees 35 (28.8) (28.8) (29.8) (29.8)
Non-current financial asset measured at amortised cost – Ornua Co-Operative Ltd* 18 0.7 0.7 1.1 1.1
Fair value is estimated by discounting future contractual cash flows using current market interest rates from observable interest rates at the end
of the reporting period that are available to the Group for similar financial instruments (classified as level 2 in the fair value hierarchy).
Group’s fair valuation process
The Group’s finance department includes a team that performs the valuations of financial assets and liabilities required for financial reporting
purposes, including Level 3 fair values. The valuation team reports directly to the Group Finance Director who in turn reports to the Audit
Committee. Discussions of valuation processes and results are held between the Group Finance Director and the Audit Committee. Changes
in Level 2 and Level 3 fair values are analysed at each reporting date. As part of this discussion, the valuation team presents a report that
explains the reasons for fair value movements.
In accordance with IFRS 13 ‘Fair Value Measurements’, the Group has disclosed the fair value of instruments by the following fair value
measurement hierarchy:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (Level 2); and
• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Fair value of financial instruments carried at fair value
The following table shows the fair values of financial instruments measured at fair value:
Notes
Cross currency swaps – fair value through income statement (a) Level 2 0.3 (0.2)
Foreign exchange contracts – cash flow hedges (b) Level 2 (0.4) 0.1
Interest rate swaps – cash flow hedges (c) Level 2 (2.0) –
Commodity futures assets – cash flow hedges (d) Level 2 – 0.2
Commodity futures liabilities – cash flow hedges (d) Level 2 – (0.3)
Commodity futures assets – fair value hedges (d) Level 2 – 1.2
Equity instrument designated at FVOCI – The BDO Development Capital Fund* (e) Level 2 2.1 2.0
(a) Fair value is determined by reference to the current foreign exchange rates at the end of the reporting period.
(b) Fair value is estimated by discounting the difference between the contractual forward exchange rates and the current forward exchange rates
(from observable forward exchange rates at the end of the reporting period). The effect of discounting was insignificant in 2019 and 2018.
(c) Fair value is estimated by discounting the difference between the contractual interest rate swap rates and the current interest rate swap rates
(from observable interest rate swap rates at the end of the reporting period). The effects of discounting was insignificant in 2019 and 2018.
(d) Fair value is estimated by discounting the difference between the contractual forward commodity prices and the current forward commodity
prices (from observable commodity forward prices at the end of the reporting period). The effect of discounting was insignificant in 2019
and 2018.
(e) The investment in the BDO Development Capital Fund (note 18) is fair valued by reference to the latest quarterly report available to the
limited partners.
There were no transfers in either direction between Level 1 and Level 2 in 2019 and 2018. The Group did not hold any Level 3 financial assets
or liabilities at 4 January 2020 or 29 December 2018.
*Classified as available for sale in 2018
178
 > Financial Statements
29. Derivative financial instruments and financial risk management continued
(c) Capital risk management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern while maximising the returns to
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the overall cost of capital. Total capital is
calculated based on equity as shown in the balance sheet and net debt as follows:

Total equity per the Group balance sheet 1,701.9 1,589.1
Total financial liabilities 25 883.3 801.3
Cash and cash equivalents 21 (269.0) (224.6)
Total capital 2,316.2 2,165.8
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to increase or reduce debt or buy back shares. Any material adjustments to the capital structure are
approved by the Board of Directors. From time to time, the Group purchases its own shares on the market. These shares are primarily intended
to be used for issuing shares under the Group’s long-term and short-term incentive plans. Buy decisions are made on a specific transaction basis
by the Employee Benefit Trusts. The Board will seek approval for a share buyback programme at the annual General Meeting on the 22 April 2020.
The Group’s key financing arrangements are: adjusted EBIT: net finance cost and net debt: adjusted EBITDA ratios, as defined within covenants.
At 4 January 2020 the Group’s adjusted EBIT: net finance cost was 9.3 times (2018: 14.8 times) which is within the Group’s financing covenants.
Adjusted EBIT: net finance cost is calculated as pre-exceptional earnings before interest and tax plus dividends received from equity accounted
investees divided by net finance cost. Net finance cost comprises finance costs less finance income per the Group income statement plus
capitalised borrowing costs.
At 4 January 2020, the Group’s net debt: adjusted EBITDA ratio was 1.71 times (2018: 1.55 times), which is deemed by management to be
prudent and within the Group’s financing covenants. Net debt: adjusted EBITDA is calculated as net debt at the end of the year divided by
adjusted EBITDA. Net debt is calculated as total financial liabilities excluding debt issue costs less cash and cash equivalents. Adjusted EBITDA
is calculated as pre-exceptional EBITDA for the wholly owned businesses plus dividends received from equity accounted investees, and,
in the event of an acquisition in the year, includes pro-forma EBITDA as though the acquisition date had been at the beginning of the year.
The Group’s capital position and information on the capital monitoring ratios are included in the monthly report issued to the Board of Directors.
The Group has no externally imposed capital requirements. No changes were made in the objectives, policies or processes for capital
management during 2019 and 2018.
(d) Financial risk management
The conduct of its ordinary business operations necessitates the Group holding financial instruments. The Group has exposure to the following risks
arising from financial instruments: market risk comprising of currency risk, interest rate risk, price risk, liquidity risk and cash flow risk, and credit risk.
The Group does not enter into any financial instruments that give rise to a speculative position. The Group finances its operations by a mixture
of retained profits, medium-term committed borrowings and undrawn uncommitted borrowings. The Group borrows in the major global debt
markets in a range of currencies at both fixed and floating rates of interest, using derivatives where appropriate to generate the desired effective
currency profile and interest rate basis. Risk management, other than credit risk management, is carried out by a central treasury department
(Group Treasury) under policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in close
co-operation with the Group’s business units. The Board of Directors provides written principles for overall risk management, as well as,
written policies covering specific areas such as foreign exchange risk, interest rate risk, liquidity risk, and credit risk, use of derivative financial
instruments and non-derivative financial instruments and investment of excess liquidity.
There has been no significant change during the financial year or since the end of the year to the types of financial risks faced by the Group
or the Group’s approach to the management of those risks.
Currency risk
Although the Group is based in Ireland with the euro as the functional currency of , it has significant geographic investment and
operating exposures outside the eurozone, primarily in the US. As a result, currency movements, particularly movements in the euro/US dollar
exchange rate, can significantly affect the Group’s euro balance sheet and income statement. Group Treasury monitors and manages these
currency exposures on a continuous basis, using approved hedging strategies and appropriate currency derivative instruments.
Notes to the Financial Statements continued
179

Sensitivity analysis
The following table demonstrates the sensitivity of profit before tax and total equity to movements in the euro/US dollar exchange rate with all
other variables held constant.
+/-5% change in euro/US dollar exchange rate
2019
€’m
2018
€’m
Impact on profit before tax* -/+9.0 -/+6.2
Impact on total equity** -/+63.1 -/+55.2
* The impact on profit before tax is based on changing the euro/US dollar exchange rate used in calculating profit before tax for the period.
** The impact on total equity is calculated by changing the euro/US dollar exchange rate used in measuring the closing balance sheet.
The Group is exposed to transactional foreign currency risk that arises from sales or purchases by an operating unit in currencies other than the
operating unit’s functional currency. Group companies are required to manage their foreign exchange risk against their functional currency and
spot and forward exchange contracts are primarily used to hedge foreign exchange risk exposure on foreign currency denominated sales and
purchases.
The notional principal amounts of the outstanding foreign exchange contracts as at 4 January 2020 were €18.2 million (2018: €5.3 million),
which substantially covers the operating units currency exposure.
Refer to note 29(a) for further details of the foreign exchange contracts.
Interest rate risk
The Group’s objective is to minimise the impact of interest rate volatility on interest costs. This is achieved by determining a long-term strategy
against a number of policy guidelines, which focus on (i) the amount of floating rate indebtedness anticipated over such a period and (ii) the
consequent sensitivity of interest costs to interest rate movements on this indebtedness and the resultant impact on reported profitability. The
Group borrows at both fixed and floating rates of interest and can use interest rate swaps to manage the Group’s resulting exposure to interest
rate fluctuations.
The Group’s main interest rate risk arises from long-term borrowings with floating rates, due to the borrowings being periodically contractually
repriced within 12 months from the reporting date. These borrowings expose the Group to cash flow interest rate risk.
Group policy is to maintain no more than one third of its projected debt exposure on a floating rate basis over any succeeding 12 month period
with further minimum guidelines over succeeding 24 and 36 month periods. The Group, on a continuous basis, monitors the level of fixed rate
cover dependent on prevailing fixed market rates, projected debt and market informed interest rate outlook. Occasionally, the Group manages
its cash flow interest rate risk by using floating to fixed interest rate swaps. Such interest rate swaps have the effect of converting borrowings from
floating rates to fixed rates. Under these interest rate swaps, the Group agrees with other parties to exchange at specified intervals, the difference
between fixed interest rate amounts and floating interest rate amounts calculated by reference to the agreed notional amounts.
The exposure of the Group’s borrowings subject to interest rate changes taking into account of contractual repricing dates at the end of the
reporting period is €487.5 million (2018: €468.7 million) (note 25). The Group fix a portion of the floating rate bank borrowings for 6 month periods
in line with Group policies. See note 29(a) for the floating to fixed interest rate swaps entered into by the Group to hedge against this exposure.
The Group does not hedge 100% of its floating rate loans, therefore the amount hedged is a proportion of the outstanding loans up to the
notional amount of the swaps.
The Group enters into interest rate swaps that have similar critical terms as the hedged item. As all critical terms matched during the year,
there is an economic relationship between the interest rate swaps (hedging instruments) and floating rate borrowings (hedged items).
Sensitivity analysis
The Group does not account for any fixed rate financial liabilities at fair value through profit or loss. Therefore a change in interest rates at the
reporting date would not affect profit or loss.
The following table demonstrates the sensitivity of profit before tax and total equity if market interest rates had been 1% higher or lower with all
other variables held constant:
180
 > Financial Statements
29. Derivative financial instruments and financial risk management continued
Price risk
Equity price risk
The Group’s objective is to minimise the price risk the Group is exposed to because of equity instruments held by the Group (note 18). These
equity instruments are classified on the Group balance sheet as FVOCI (2018: available for sale financial assets). To manage its price risk arising
from these equity securities, the Group does not maintain a significant balance with any one equity. Diversification of the portfolio must be done
in accordance with the limits set by the Group. The impact of a 5% increase or decrease in equity indices across the eurozone countries would
not have any material impact on Group profit before tax or total equity.
Commodity price risk
Commodity price risk in the Group arises primarily from price fluctuations of commodities. The Group’s objective is to minimise commodity price
risk through entering into commodity future contracts and the use of appropriate hedging strategies. The Group enters into forward purchase and
forward sale agreements in the normal course of business. Certain of these contracts are deemed to be ‘own use’ as they were entered into in
accordance with the Group’s expected purchase, sale or usage requirements. The impact of a 5% increase or decrease in commodity prices
(milk, cheese and gas) would not have any material impact on Group profit before tax or total equity.
Liquidity and cash flow risk
The Group’s objective is to ensure that the Group does not encounter difficulties in meeting obligations associated with financial liabilities that are
settled by delivering cash or another financial asset.
In order to preserve the continuity of funding, the Group’s policy is that, at a minimum, committed facilities should be available at all times to meet
the full extent of its anticipated finance requirements, arising in the ordinary course of business, during the succeeding 12 month period. Refer to
note 25 for details of the Group’s committed facilities.
When appropriate, surplus funds in the Group are transferred to Group Treasury through different methods including the repayment of borrowings,
deposits and dividends. These are then lent to Group companies, contributed as equity to fund Group operations, used to repay external debt
or invested externally. The Group does not use off-balance sheet special purpose entities as a source of liquidity or for other financing purposes.
The Group uses cash flow forecasts to constantly monitor the funding requirements of the Group. Compliance with the Group’s financial
covenants is monitored continually based on statutory and management accounts and financial projections. All covenants have been complied
with in 2019 and 2018.
There is no significant concentration of liquidity risk.
Further analysis of the Group’s debt covenants is included in the Group Finance Director’s Review. For further details regarding the Group’s
borrowing facilities see note 25.
The table below analyses the Group’s non-derivative financial liabilities and derivative financial liabilities for which the contractual maturities are
essential for an understanding of the timing of the cash flows, into relevant maturity groupings based on the remaining period from the reporting
date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than
Non-derivative financial liabilities
Financial liabilities 397.1 157.9 403.6 – 958.6
Trade payables and amounts due to equity accounted investees 349.5 – – – 349.5
746.6 157.9 403.6 – 1,308.1
Less future finance costs (28.0) (18.0) (29.3) – (75.3)
718.6 139.9 374.3 – 1,232.8
Derivative financial liabilities 0.4 – 2.0 – 2.4
At 29 December 2018
Non-derivative financial liabilities
Financial liabilities 75.8 331.4 164.2 309.9 881.3
Trade payables and amounts due to equity accounted investees (restated) 307.5 – – – 307.5
383.3 331.4 164.2 309.9 1,188.8
Less future finance costs (26.9) (25.0) (28.0) (0.1) (80.0)
356.4 306.4 136.2 309.8 1,108.8
Derivative financial liabilities 0.2 – – – 0.2
Notes to the Financial Statements continued
181

Credit risk
The Group’s objective is to minimise credit risk which is managed on a Group basis. Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial transaction fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents,
credit exposures to customers, including outstanding receivables and committed transactions, and loans to equity accounted investees.
Other financial assets (note 18) are not material. Loss allowance of ECL is accordingly not material.
Receivables are written off when there is no reasonable expectation of recovery such as debtor failing to engage in a repayment plan with
a company. Subsequent recoveries of amounts written off are recognised in the Group income statement. The Group does not expect any
significant counterparty to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying amount of each asset.
Cash and cash equivalents
In the international movement and placement of funds and execution of financial transactions, the risk of counterparty default is managed by the
Group’s policies requiring exposure to independently rated parties with long-term credit ratings of at least A3 (Moody’s) or A– (Standard & Poor’s).
In the movement and placement of funds and execution of financial transactions in Ireland, the Group’s policies accept exposure to independently
rated parties with long-term credit ratings of at least Baa3 (Moody’s) or BBB– (Standard & Poor’s). The Group’s cash and cash equivalents (note
21) at 4 January 2020 and 29 December 2018 were held within financial institutions which complied with Group policy. Accordingly, the Group
considers its cash and cash equivalents to be of low credit risk and does not expect any expected credit loss in relation to them.
Trade receivables
The Group’s credit risk management policy requires that, where possible, all debt is insured with an external credit insurance underwriter. No goods
may be dispatched to a customer on credit until the application for credit has been authorised. The Group’s authorisation review includes external
credit agency reports, the trading and financial history and position of the customer, the business case, the country in which the customer
operates and any other available information. The utilisation of credit limits is actively managed and reviewed formally on an annual basis. Where
the extension of credit is not appropriate, payment in advance is required. No goods are dispatched on credit until the credit controller has
authorised the application confirming all necessary procedures have been complied with. Outstanding customer balances are regularly monitored
and a review for indicators of impairment (evidence of financial difficulty of the customer, payment default, breach of contract etc.) is carried out
at each reporting date.
Goods are sold primarily subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. Where
required, the Group holds appropriate security or liens in respect of trade and other receivables. The Group does not hold any significant security
or liens at the end of the year.
See note 19 for the carrying amount of the Group’s trade and other receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, historical loss rates of operating units are calculated based on their recent historical credit
loss experience and applied to the operating units trade receivables at the reporting date. The loss allowance is estimated based on historical
loss rules and adjusted where appropriate to reflect current information and forward-looking information on macroeconomic factors, including
the trading environment in countries in which the Group sells its goods, which affect the ability of the debtors to settle the receivables.
The movement in the expected credit loss allowance for trade receivables is as follows:

At the beginning of the year 4.7 4.0
Exchange differences 0.1 0.1
Increase in loss allowance recognised during the year 5.1 3.6
Receivables written off during the year as uncollectible (2.3) (0.9)
Unused amounts reversed (1.0) (2.1)
At the end of the year 6.6 4.7
The net movement in the loss allowance has been included within the Group income statement.
182
 > Financial Statements
29. Derivative financial instruments and financial risk management continued
Trade receivables amounted to €389.6 million at 4 January 2020 (note 19) (2018: €372.3 million). Receivable balances that are neither past due
nor impaired amounted to €342.0 million (2018: €337.8 million). Past due information is reported to key management personnel for credit risk
management purposes. At 4 January 2020, trade receivables of €47.6 million (2018: €34.5 million) were past due and analysed as follows:
Loans to equity accounted investees
The Group advanced interest bearing loans to its joint ventures for the purposes of funding capital expenditure. See note 35 for details of the
loans. The loans receivable are considered to have low credit risk as there is a low risk of default and the joint ventures are expected to meet their
contractual cash flow obligations in the near term. The Group considers information such as cash flow forecasts of the joint ventures to determine
whether they have the ability to repay the intercompany loans. Management does not expect significant adverse changes in economic and
business conditions which would reduce the ability of the joint ventures to repay the intercompany loans. Consequently, the Group has
determined that the loans are of low credit risk.
Where a loan is considered not to have low credit risk at the reporting date and to assess whether there is a significant increase in credit risk
of the loan since initial recognition, the Group considers information such as actual or expected significant adverse changes in economic or
business conditions that are expected to cause a significant change in a joint venture’s ability to meet its obligations, and significant increases in
credit risk on other financial instruments of the joint venture. A loan would be considered to be in default if a joint venture did not make contractual
repayments within 90 days after they fell due unless evidenced otherwise. Evidence that an intercompany loan is credit-impaired would include
information such as significant financial difficulty of the joint venture, or the probability that the joint venture will enter bankruptcy.
In calculating the expected credit loss rates, the Group considers historical loss rate on its loans advanced to the joint ventures, internal credit
rating of the joint ventures based on experience of Group Treasury and recent pricing provided by external credit providers and adjusts for
forward-looking macroeconomic data. There were no historical losses for loans advanced to the joint ventures and internal credit rating of
the joint ventures is considered to be about investment grade. Expected credit loss allowance is accordingly not material.
Notes to the Financial Statements continued
183

(e) Offsetting financial assets and financial liabilities
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting arrangements. In relation
to certain deposits the Group is required to maintain cash on deposit in respect of certain borrowings. The Group and the lender intend to net
settle or realise the asset and settle the liability simultaneously. The Group has a current legally enforceable right to offset recognised amounts
which is not conditional on the occurrence of a future event. As a result, the Group’s borrowings have been presented net of these deposits
as the requirements for offsetting have been met.
The following tables set out the carrying amounts of recognised financial instruments that are subject to the above agreements:
Financial assets
Financial assets measured at amortised cost
Trade receivables and receivables from related parties 391.3 381.0
Loans to equity accounted investees 35 28.8 29.8
Ornua Co-operative Limited 18 0.7 1.1
420.8 411.9
Financial liabilities measured at amortised cost
Financial liabilities 25 (883.3) (801.3)
Trade payables and amounts due to related parties (349.6) (307.6)
(1,232.9) (1,108.9)
Equity instruments designated at FVOCI 2.7 2.6
Financial assets measured at FVTPL – derivatives 29(a) 0.3 1.5
Financial liabilities measured at FVTPL – derivatives 29(a) (2.4) (0.5)
184
 > Financial Statements
30. Contingent liabilities
Bank guarantees amounting to €4.7 million (2018: €3.5 million) are outstanding at 4 January 2020. The Group does not expect any material loss
to arise from these guarantees.
The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business and a case on the settlement of value
added tax. It is not anticipated that any material liability will arise from these contingent liabilities other than those provided for.
Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the
year ended 4 January 2020 as permitted by section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of the
Company elects to avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments
entered into by such wholly-owned subsidiary, including amounts shown as liabilities (within the meaning of section 357 (1) (b) of the Companies
Act 2014) in such wholly-owned subsidiary’s statutory financial statements for the year ended 4 January 2020.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended
31 December 2019 of  Foods B.V. (see note 37), the Company has guaranteed the liabilities ensuing from legal acts performed by this
subsidiary from 1 January 2019 in accordance with and to the extent as set out in section 2:403.1(f) of the Dutch Civil Code. Therefore 
Foods B.V. is exempt from the obligation to publish its statutory financial statements and its obligations to file statutory financial statements has
been fulfilled by means of the publication of the declaration of consent and the declaration of liability.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended
31 December 2019 of the three Luxembourg subsidiaries (see note 37), the Company has guaranteed the liabilities of these subsidiaries in
respect of any losses or liabilities (as provided by Article 70 (c) of the Luxembourg Law of 19 December 2002 on the register of commerce and
companies and the accounting and annual accounts of undertakings) for the financial year ended on 31 December 2019. These subsidiaries avail
of the exemption from filing of their statutory financial statements, as permitted by Article 70 of the Luxembourg Law of 19 December 2002
on the register of commerce and companies and the accounting and annual accounts of undertakings.
The Group recognises a defined benefit liability and incurs administration and certain other costs in relation to its UK pension schemes for
businesses disposed of in prior years, as outlined in note 9. The Company has guaranteed the payment of a proportion of employer contributions
in respect of these UK pension plans. The amount of the potential liability under the UK pension guarantee is reducing annually by the contributions
paid into these plans.
31. Commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised in the Group financial statements is as follows:

Property, plant and equipment 8.3 4.8
Operating lease commitments – where the Group is the lessee
The Group leases various assets. Generally, operating leases contain no purchase option.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows at the reporting date:

Not later than 1 year 22.7 19.5
Later than 1 year and not later than 5 years 59.5 50.4
Later than 5 years 46.6 41.8
128.8 111.7
Commitments in relation to joint ventures are disclosed in note 17.
Notes to the Financial Statements continued
185

32. Cash generated from operating activities

Profit after taxation 180.2 234.0
Income taxes 12 18.9 32.8
Net write down/(write back) of inventories (pre-exceptional) 5.3 (0.3)
Non-cash movement in allowance for impairment of receivables 1.8 1.5
Non-cash element of exceptional charge before taxation 27.1 –
Non-cash movement in provisions (0.9) (1.1)
Non-cash movement on cross currency swaps and fair value hedges 0.8 1.0
Share of results of equity accounted investees 17 (48.6) (45.3)
Depreciation of tangible assets 15 48.1 43.0
Amortisation of intangible assets 16 60.9 45.9
Cost of share-based payments 10 4.6 8.8
Difference between pension charge and cash contributions (7.6) (3.7)
Loss/(gain) on disposal of property, plant and equipment 5 0.2 (0.3)
Finance income 11 (6.2) (3.9)
Finance expense 11 32.5 21.4
Amortisation of government grants received – (0.1)
Net loss on disposal of investments – 0.2
Recycle of AFS reserve to the Group income statement on disposal of investment 23 – (5.3)
Operating cash flows before movement in working capital 317.1 328.6
Increase in inventories 33 (61.4) (18.4)
Decrease/(increase) in short-term receivables 33 1.4 (27.7)
Increase in short-term liabilities 33 31.3 39.0
Decrease in provisions 33 (2.5) (5.0)
Cash generated from operating activities 285.9 316.5
33. Movement in working capital

At 30 December 2018 384.6 411.6 (481.4) (28.2) 286.6
Exchange differences 9.5 10.8 (10.7) (0.1) 9.5
Arising on acquisition 15.3 10.5 (9.1) – 16.7
Reclassification – – (0.7) 22.8 22.1
Loans/amounts payable to equity accounted
investees, interest accruals, capital creditors
and other non-operating items (23.3) 0.8 8.2 (0.6) (14.9)
Increase/(decrease) in working capital 32 61.4 (1.4) (31.3) 2.5 31.2
At 4 January 2020 447.5 432.3 (525.0) (3.6) 351.2
2018 (restated)
At 31 December 2017 321.6 302.4 (318.0) (31.8) 274.2
Exchange differences 12.3 10.6 (14.5) (0.1) 8.3
Arising on acquisition 32.0 24.8 (31.9) – 24.9
Loans/amounts payable to equity accounted
investees, interest accruals, capital creditors
and other non-operating items 0.3 46.1 (78.0) (1.3) (32.9)
Increase/(decrease) in working capital 32 18.4 27.7 (39.0) 5.0 12.1
At 29 December 2018 384.6 411.6 (481.4) (28.2) 286.6
186
 > Financial Statements
Notes to the Financial Statements continued
34. Business Combinations
Acquisitions in 2019
On 28 February 2019, the Group acquired 100% of the equity of Watson LLC and Polymer Films LLC (collectively known as ‘Watson’). Watson is a
US based non-dairy ingredient solutions business, which will be a complementary acquisition for the Group and has been included in the 
Nutritionals segment. The goodwill relates to the acquired workforce, the expectation that the business will give rise to synergies across the
 Nutritionals segment, will generate future sales beyond the existing customer base, as well as the opportunity to expand the business
into new markets, where there are no existing customers, and leverage the recipes and know-how across the  Nutritionals segment.
Goodwill of €6.5 million is not deductible for tax purposes.
Details of the net assets acquired and goodwill arising from the acquisition are as follows:
Total
€’m
Purchase consideration – cash paid 61.3
Less: Fair value of assets acquired (49.5)
Goodwill 11.8
The fair value of assets and liabilities arising from the acquisition are as follows:
Notes
Total
€’m
Property, plant and equipment 15 16.6
Software 0.3
Intangible assets – recipes and know-how 8.8
Intangible assets – customer relationships 12.9
Intangible assets – brands 1.1
Inventories 15.3
Trade and other receivables 13.7
Trade and other payables (8.1)
Cash and cash equivalents (excluding bank overdraft) 25 4.6
Bank overdraft 25 (8.8)
Bank loans 25 (6.4)
Deferred tax liability 26 (0.5)
Fair value of net assets acquired 49.5
The fair value of Watson’s trade and other receivables at the acquisition date amounted to €13.7 million. The gross contractual amount for trade
receivables due is €13.5 million, of which €0.3 million is expected to be uncollectable.
Combined impact of acquisitions
The revenue and profit before taxation and exceptional items of the Group, including the impact of acquisitions completed during the financial
year ended 4 January 2020, were as follows:
The Group acquired KSF Holdings LLP and HNS Intermediate Corporation who collectively own SlimFast and their brands (‘SlimFast’) in 2018 for
which the fair value of assets and liabilities were determined provisionally. Following the finalisation of the fair value of assets and liabilities during
the measurement period, goodwill decreased by €1.5 million. This was as a result of an increase in the fair value of customer relationships
intangible assets of €2.7 million and a decrease in the fair value of working capital of €1.2 million.
187

35. Related party transactions
Related parties of the Group include  Co-operative Society Limited (the Group’s ultimate parent), subsidiary undertakings, equity accounted
investees, key management personnel and connected parties. A listing of the principal subsidiaries and equity accounted investees is provided
in note 37.
Transactions with  Co-operative Society Limited
 Co-operative Society Limited (the Society), together with its subsidiaries, holds 31.5% of the issued share capital of the Company.
The Board of Directors for the year ended 4 January 2020 is comprised of 16 members, of which up to 8, including the Chairman who has the
casting vote, are nominated by the Society. In accordance with IFRS 10 ‘Consolidated Financial Statements’, the Society controls the Group and
is the ultimate parent of the Group. In 2020 in accordance with the Relationship Agreement, the number of directors nominated by the Society
will reduce to seven in a board comprising of 15 members. Thereafter the Society will no longer control the Group. During 2019, dividends
of €23.5 million (2018: €24.1 million) were paid to the Society and its wholly owned subsidiaries based on their shareholding in .
Dividends of €0.1 million (2018: €0.1 million) were received during the period from the Society by a subsidiary society of the Group. The Group
provides a range of management and administrative services to the Society and is headquartered in a premises owned by the Society.
Transactions with equity accounted investees
The Group trades in the normal course of business with its equity accounted investees. Refer to note 35(a) to (c) for the transactions carried out
with them and the balances relating to them at year end. The Group provides management and administrative services to its equity accounted
investees, which are settled in cash. Dividends received by the Group from its equity accounted investees are as follows:
Entity Nature of investment Notes
Southwest Cheese Company, LLC Joint venture 17 11.2 10.6
 Cheese Limited Joint venture 17 12.5 12.4
 Ireland DAC Joint venture 17 11.6 8.6
17 35.3 31.6
Dividends receivable from  Cheese Limited (joint venture) of €2.4 million (2018: €2.2 million) were recognised by the Group.
Loans to equity accounted investees

Loans to equity accounted investees
At the beginning of the year 29.8 12.8
Loan repayments received (1.0) –
Loans advanced during the year – 17.0
At the end of the year 29(b)/29(f) 28.8 29.8
Interest on loans to equity accounted investees
At the beginning of the year 0.1 0.3
Interest charged 11 1.3 0.4
Interest received (1.3) (0.6)
At the end of the year 19 0.1 0.1
Total loans and interest at the end of the year 28.9 29.9
During 2018 the Group advanced a loan of €16.0 million at arm’s length to  Ireland DAC, a joint venture of the Group, which is repayable
on 4 August 2021 and a loan of €1.0 million at arm’s length to  Cheese EU Limited, a joint venture of the Group, which was repaid during
2019. On 21 January 2016 a subordinated loan of €12.8 million was advanced to  Ireland DAC, a joint venture of the Group, which is
repayable on 4 August 2021.
Receivables from related parties:
–  Co-operative Society Limited 19 0.2 0.2
– joint ventures 19 8.0 13.2
Payables to related parties:
–  Co-operative Society Limited 28 0.1 0.1
– joint ventures 28 91.6 84.0
The outstanding balances included in receivables and payables at the balance sheet date in respect of transactions with related parties are
unsecured, interest free and settlement arises in cash. No guarantees have been given or received. All outstanding balances are deemed to
be fully recoverable by the Group.
(d) Contributions to retirement benefit plans
Information in relation to the Group’s contributions to retirement benefit plans is disclosed in note 9.
Notes to the Financial Statements continued
189

(e) Key management compensation
IAS 24 ‘Related Party Disclosures’ requires the disclosure of compensation paid to the Group’s key management.
The Board of Directors and  Operating Executive are deemed to be key management personnel as they are responsible for planning,
directing and controlling the activities of the Group.
Key management compensation includes the compensation of the Board of Directors (Executive and Non-Executive) and members of the 
Operating Executive, including the Group Secretary. Dividends totalling €0.3 million (2018: €0.3 million) were received by key management personnel
during the year, based on their personal shareholdings in .
In addition to their salaries and short term benefits, the Group contributes to post retirement benefit plans on behalf of key management personnel
and these personnel also participate in the Group’s various share-based payment arrangements (notes 9 and 10). No loans were made to key
management during the year (2018: nil).
2019
€’m
2018
€’m
Salaries and other short-term employee benefits 5.3 6.5
Post-employment benefits 1.0 0.9
Share-based payments 0.6 6.2
Non-Executive Directors fees 0.9 0.8
7.8 14.4
Retirement benefits of €0.4 million (2018: €0.4 million) were accrued in the year to four members of key management (2018: four) under
a post retirement defined benefit plan. Total retirement benefits accrued to key management under the post retirement defined benefit plan
are €7.6 million (2018: €6.5 million).
The Group through Employee Benefit Trusts reacquired Company shares from key management personnel; the total number reacquired was
81,172 ordinary shares at an average price of €17.59 per share.
Details of the Directors’ compensation including salary, fees, various share-based payment arrangements and other benefits, together with their
interest in  is disclosed in the Remuneration Committee Report on pages 84 to 108.
36. Events after the reporting period
See note 14 for the final dividend, recommended by the Directors. Subject to shareholder approval, this dividend will be paid on 24 April 2020
to shareholders on the register of members on 13 March 2020, the record date.
190
 > Financial Statements
37. Principal subsidiaries and equity accounted investees
The information outlined below relates only to the principal undertakings in the Group as at 4 January 2020 and as at 29 December 2018. The
Group has availed of the exemption under section 316 of the Companies Act 2014. The information required under section 314 of the Companies
Act 2014 including a full listing of subsidiaries and joint venture undertakings will be annexed to the Company’s Annual Return to be filed in the
Companies Registration Office in Ireland.
All beneficial interests are in ordinary shares, membership interests or membership units.
(a) Subsidiaries
Incorporated and operating in
Registered
office Principal activity
Beneficial
 > Financial Statements
Company Balance Sheet
as at 4 January 2020
Notes
4 January
2020
€’m
29 December
2018
€’m
ASSETS
Non-current assets
Investment in joint venture 2 95.4 95.4
Investment in subsidiaries 3 660.5 489.4
Other financial assets (2018: Available for sale financial assets) 4 2.8 3.1
Deferred tax assets 0.4 0.4
759.1 588.3
Current assets
Trade and other receivables 5 6.9 347.2
Cash at bank and in hand 8.2 7.9
15.1 355.1
Total assets 774.2 943.4
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium 6 460.7 460.7
Other reserves (0.3) 3.8
Retained earnings 102.8 170.8
Total equity 563.2 635.3
LIABILITIES
Non-current liabilities
Bank borrowings 105.0 41.0
Current liabilities
Bank overdraft 22.7 –
Provisions 0.6 0.6
Trade and other payables 7 82.7 266.5
106.0 267.1
Total liabilities 211.0 308.1
Total equity and liabilities 774.2 943.4
As permitted by section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its separate profit and
loss account in these financial statements and from filing it with the Registrar of Companies. The profit for the year dealt with in the financial
statements of the Company amounts to €5.3 million (2018: €34.1 million).
On behalf of the Board
Martin Keane
Directors
Siobhán Talbot Mark Garvey
195

Company Statement of Changes in Equity
for the financial year ended 4 January 2020

Balance at 30 December 2018 460.7 4.2 (14.4) 14.1 (0.1) 170.8 635.3
Profit for the year – – – – – 5.3 5.3
Other comprehensive income – – – – – – –
Total comprehensive income for the year – – – – – 5.3 5.3
Transactions with owners, recorded directly
in equity
Fair value movement – – – – (0.2) – (0.2)
Deferred tax on fair value movement – – – – 0.1 – 0.1
Dividends – – – – – (74.3) (74.3)
Cost of share–based payments – – – 4.6 – – 4.6
Transfer on exercise, vesting or expiry
of share–based payments – – 8.0 (9.0) – 1.0 –
Purchase of own shares – – (7.6) – – – (7.6)
Total contributions by and distributions to
owners – – 0.4 (4.4) (0.1) (73.3) (77.4)
Balance at 4 January 2020 460.7 4.2 (14.0) 9.7 (0.2) 102.8 563.2
Balance at 31 December 2017 460.7 4.2 (19.1) 14.9 3.4 212.1 676.2
Profit for the year – – – – – 34.1 34.1
Other comprehensive income – – – – – – –
Total comprehensive income for the year – – – – – 34.1 34.1
Transactions with owners, recorded directly
in equity
Transfer to income statement:
Available for sale disposals – – – – (5.3) – (5.3)
Deferred tax on disposals of available for sale – – – – 1.8 – 1.8
Dividends – – – – – (76.0) (76.0)
Cost of share–based payments – – – 8.8 – – 8.8
Transfer on exercise, vesting or expiry
of share–based payments – – 9.0 (9.6) – 0.6 –
Purchase of own shares – – (4.3) – – – (4.3)
Total contributions by and distributions
to owners – – 4.7 (0.8) (3.5) (75.4) (75.0)
Balance at 29 December 2018 460.7 4.2 (14.4) 14.1 (0.1) 170.8 635.3
*Fair value through other comprehensive income (‘FVOCI’) (2018: Available for sale financial asset reserve)
See note 23 of the Group financial statements for a description of the accounts in other reserves.
196
 > Financial Statements
Notes to the Company Financial Statements
for the financial year ended 4 January 2020
1. Accounting policies
Basis of preparation
 (the ‘Company’) is a public limited company incorporated and domiciled in Ireland, the number under which it is registered is 129933.
The address of its registered office is  House, Kilkenny, Ireland, R95 E866.
These financial statements are prepared for the 53-week period ended 4 January 2020. Comparatives are for the 52-week period ended
29 December 2018. The balance sheets for 2019 and 2018 have been drawn up as at 4 January 2020 and 29 December 2018 respectively.
The Company financial statements were approved and authorised for issue by the Board of Directors on 25 February 2020.
The Company meets the definition of a qualifying entity under Financial Reporting Standard (‘FRS’) 100 issued by the Financial Reporting
Council (‘FRC’). Accordingly, in the year ended 4 January 2020 the Company transitioned from reporting under International Financial Reporting
Standards adopted by the European Union (‘IFRS’) to FRS 101 ‘Reduced Disclosure Framework’ as issued by the FRC. This transition is not
considered to have had a material effect on the financial statements.
The financial statements are prepared on a going concern basis under the historical cost basis in accordance with the Companies Act 2014
and FRS 101. The Company has taken advantage of the following disclosure exemptions under FRS 101:
• a Cash Flow Statement and related notes;
• disclosures in respect of transactions with wholly owned subsidiaries;
• disclosures in respect of capital management;
• the effects of new but not yet effective IFRS; and
• disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements of the Company and its subsidiaries include the equivalent disclosures, the Company has also availed
of the following disclosure exemptions under FRS 101:
• IFRS 2 Share Based Payments in respect of group settled share based payments; and
• paragraphs 91 to 99 of IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.
The financial statements have been prepared in euro and presented in millions.
The Company adopted IFRS 9 ‘Financial instruments’ and IFRS 15 ‘Revenue from Contracts with Customers’ during the year ended 4 January
2020 with no material impact to the financial statements. The accounting policies set out below have, unless otherwise stated, been applied
consistently to all periods presented in these financial statements.
Going concern
The Company is in a net current liabilities position at 4 January 2020. The Company and its subsidiaries (the Group) is profit-making and cash
generative, having made a profit after tax of €180.2 million and generated cash from operating activities of €212.5 million in 2019. The Company
made a profit of €5.3 million in 2019. The Group expect to continue to be profitable and cash generative for at least 12 months from the date of
approval of these financial statements based on approved budgets and strategic plans. The Company has control over its subsidiaries, it can
therefore direct its subsidiary entities to distribute or make available funds to the parent company to ensure that the Company can repay its
creditors as they fall due. The Directors have a reasonable expectation that these funds will be available within the Group based on current
budgets and strategic plans. Accordingly, the financial statements of the Company for the financial year ended 4 January 2020 have been
prepared on a going concern basis.
Investment in joint venture and subsidiaries
Investments in joint venture and subsidiaries are held at cost. The Company assesses investments for impairment whenever events or changes in
circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of impairment exists, the Company
makes an estimate of its recoverable amount. When the carrying amount of an investment exceeds its recoverable amount, the investment is
considered impaired and is written down to its recoverable amount. In the opinion of the Directors the shares in the joint venture and subsidiaries
are worth at least the amounts at which they are stated in the balance sheet.
Other financial assets
The Company classifies and initially measures its equity instruments at fair value and are subsequently adjusted to fair value at each reporting
date. If the market for a financial asset is not active or unquoted, the Group establishes fair value using valuation techniques. The investment
in BDO Development Capital Fund is fair valued by reference to the latest quarterly report available to the limited partners. Changes in their fair
value are recognised in the profit and loss account unless management has elected to present changes in fair value through other comprehensive
income (‘FVOCI’) on an investment by investment basis. When an election is made for an investment, there is no subsequent reclassification
of fair value gains and losses related to the investment to profit or loss following the derecognition of the investment. Dividends from such
investments are recognised in profit or loss when the Group’s right to receive payments is established.
Financial assets are derecognised when the rights to receive cash flows from financial assets have expired or have been transferred and the
Company has transferred substantially all the risks and rewards of ownership.
Trade and other receivables and payables
Receivables and payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method
less any allowance for expected credit loss for receivables. These are classified as non-current except for those maturing within 12 months of the
reporting date or repayable on demand.
197

Impairment
An allowance for expected credit loss is made when the Company will be unable to recover receivable balances in full. Balances are written
off when the probability of recovery is assessed as being remote. The loss allowance of expected credit loss for amounts owed by subsidiary
undertakings is not material at year end.
Cash at bank and in hand
Cash includes cash, in any currency, in hand or deposited with financial institutions repayable without penalty on notice of not more than 24 hours.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as
a deduction from the proceeds.
Own shares
Where the Employee Share Trust and/or the Employee Share Scheme Trust (on behalf of the Company) purchases the Company’s equity
share capital, under the 2008 and 2018 Long-term incentive plan, the 2019 Restricted share plan, and the Annual Incentive Deferred into Shares
Scheme, the consideration paid is deducted from distributable reserves and classified as own shares until they are re-issued. Where such shares
are re-issued, they are re-issued on a first-in, first-out basis and the proceeds from re-issue of own shares are transferred from own shares to
retained earnings.
Dividends
Dividends on ordinary shares to the Company’s shareholders are recognised as a liability of the Company when approved by the Company’s
shareholders. Interim dividends are recognised when paid. Proposed dividends that are approved after the balance sheet date are not recognised
as a liability but are disclosed in note 14 of the Group financial statements.
Foreign currency translation
The functional and presentation currency of the Company is euro. Transactions in foreign currencies are translated at the rates of exchange ruling
at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into euro at the rates of exchange ruling
at the balance sheet date, with a corresponding charge or credit to the profit and loss account.
Dividend income
Dividend income is recognised in the income statement on the date the entity’s right to receive payment is established.
Share-based payments
The Company operates equity settled share-based payment arrangements. The arrangements include both share option and share award
schemes open to both Executive Directors and certain senior management. The Company also operates an annual incentive scheme whereby
a portion of the annual incentive will be settled by way of shares, and a long term incentive plan and a restricted share plan whereby share awards
in the Company are granted to Executive Directors and senior management. The Company recharges the costs of these plans to its subsidiaries
and the balances are settled in cash.
Taxation
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates
to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income
or directly in equity, respectively.
Current tax is calculated on the basis of tax laws enacted or substantively enacted at the Company balance sheet date in countries where the
Company operates and generates taxable income, taking into account adjustments relating to prior years. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax legislation is subject to interpretation and establishes provisions,
where appropriate, on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is determined using tax rates and laws enacted or substantively enacted by the reporting date. Deferred tax is provided on a non-
discounted basis, using the balance sheet liability method, providing for temporary differences on the reporting date between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred tax liabilities are not recognised to the extent they arise from the initial recognition of goodwill not having full tax basis.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilised.
Critical accounting judgements and estimates
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Significant judgement made in the preparation of these financial statements
is set out below.
Interests in joint venture
The Company holds 40% of the ordinary share capital of  Ireland DAC. However this entity is considered to be a joint venture of the
Company as the business plan, which directs the relevant activities of the business, requires the unanimous approval of both the Company
and  Co-operative Society Limited (60% shareholding).
198
 > Financial Statements
2. Investment in joint venture
		

€’Disposals/redemption (0.4) (7.9)
Fair value adjustment (0.2) 0.2
At the end of the year 2.8 3.1
Other financial assets comprised equity instrument at FVOCI (The BDO Development Capital Fund) of €2.1 million (2018: €2.0 million) and financial
asset at amortised cost (comprised a loan note receivable from Ornua Co-operative Limited) of €0.7 million (2018: €1.1 million). See note 29(b)
of the Group financial statements for related fair value disclosures. They were classified as available for sale financial assets in the prior year.
5. Trade and other receivables
2019
€’m
2018
€’m
Amounts owed by subsidiaries* 6.8 346.8
Prepayments 0.1 0.4
6.9 347.2
6. Share capital and share premium
At 4 January 2020 and 29 December 2018, share capital and share premium were €17.8 million and €442.9 million respectively. The difference
between the Company and Group share premium is due to the merger of Waterford Foods plc now named Waterford Foods DAC and Avonmore
Foods plc now named  in 1997. See note 23(b) of the Group financial statements for further details.

Amounts owed to subsidiaries* 68.7 253.7
Amounts owed to  Co-operative Society Limited 0.1 0.1
Accruals 13.9 12.7
82.7 266.5
*The decrease in amounts owed by/to subsidiaries was primarily due to settlement of balances in the year.
Notes to the Company Financial Statements continued
199

8. Contingent liabilities
The Group recognises a defined benefit liability and incurs administration and certain other costs in relation to its UK pension schemes for
businesses disposed of in prior years, as outlined in note 9 of the Group financial statements. The Company has guaranteed the payment
of a proportion of employer contributions in respect of these UK pension plans. The amount of the potential liability under the UK pension
guarantee is reducing annually by the contributions paid into these plans.
Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the
year ended 4 January 2020 as permitted by section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of
the Company elects to avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments
entered into by such wholly-owned subsidiary, including amounts shown as liabilities (within the meaning of section 357 (1) (b) of the Companies
Act 2014) in such wholly-owned subsidiary’s statutory financial statements for the year ended 4 January 2020.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended
31 December 2019 of  Foods B.V. (see note 37 of the Group financial statements), the Company has guaranteed the liabilities ensuing
from legal acts performed by this subsidiary from 1 January 2019 in accordance with and to the extent as set out in section 2:403.1(f) of the
Dutch Civil Code. Therefore  Foods B.V. is exempt from the obligation to publish its statutory financial statements and its obligations
to file statutory financial statements has been fulfilled by means of the publication of the declaration of consent and the declaration of liability.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended
31 December 2019 of the three Luxembourg subsidiaries (see note 37 of the Group financial statements), the Company has guaranteed the
liabilities of these subsidiaries in respect of any losses or liabilities (as provided by Article 70 (c) of the Luxembourg Law of 19 December 2002 on
the register of commerce and companies and the accounting and annual accounts of undertakings) for the financial year ended on 31 December
2019. These subsidiaries avail of the exemption from filing of their statutory financial statements, as permitted by Article 70 of the Luxembourg
Law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings.
The Group’s financial liabilities are secured by cross-guarantees by the Company and certain principal subsidiaries. Expected credit loss
allowance in relation to these guarantees is not material.
9. Related party transactions
During 2019, dividends of €23.5 million (2018: €24.1 million) were paid to  Co-operative Society Limited (the Society) and its wholly owned
subsidiaries based on their shareholding in the Company. Non-Executive Directors fees of €0.5 million (2018: €0.5 million) were recharged from
the Company to the Society during 2019. See note 7 for outstanding balances due to the Society at the reporting date. During 2018, there was
a sale of property and other assets from the Company to  Ireland DAC for €0.3 million.
10. Statutory information
The following table discloses the fees paid or payable to Deloitte Ireland LLP:
Statutory audit* – –
Other assurance services 0.7 0.6
Tax advisory services – –
Other non-audit services – –
0.7 0.6
* The audit fee for the Company is €37,500 (2018: €35,700) and is payable to Deloitte Ireland LLP, the statutory auditor.
Directors’ remuneration is disclosed in the Remuneration Committee Report on pages 84 to 108 and in note 35(e) of the Group financial statements.
200
 > Other Information
NOT COVERED BY INDEPENDENT AUDITOR’S REPORT
Non–IFRS performance measures
The Group reports certain performance measures that are not defined under IFRS but which represent additional measures used by the Board of
Directors and the  Operating Executive in assessing performance and for reporting both internally and to shareholders and other external
users. The Group believes that the presentation of these non–IFRS performance measures provides useful supplemental information which, when
viewed in conjunction with our IFRS financial information, provides readers with a more meaningful understanding of the underlying financial and
operating performance of the Group.
None of these non–IFRS performance measures should be considered as an alternative to financial measures drawn up in accordance with IFRS.
The principal non–IFRS performance measures used by the Group are:
1. Constant currency
2. Total Group
3. Revenue
G 4. EBITA
G 5. EBITA margin %
G 6. EBITDA
G 7. Constant Currency Basic and Adjusted Earnings Per Share (EPS)
G 8. Financing Key Performance Indicators
G 9. Volume and pricing increase/(decrease)
G 10. Like-for-like revenue increase/(decrease)
G 11. Innovation rate
G 12. Effective tax rate
G 13. Average interest rate
G 14. Operating cash conversion
G 15. Operating cash flow and free cash flow
G 16. Return on capital employed (ROCE)
G 17. Total shareholder return (TSR)
G 18. Dividend payout ratio
G 19. Compound annual growth rate (CAGR)
 20. Exceptional Items
These principal non-IFRS performance measures are defined below with a reconciliation of these measures to IFRS measures where applicable.
In the prior year the Group disclosed two non-IFRS performance measures which are not included in the current year. These were G6 (IFRS 15)
and G8 (Pro-forma Adjusted Earnings Per Share). G6 (IFRS 15) is no longer disclosed as IFRS 15 has now been adopted by the group (see note 2).
G8 (Pro-forma Adjusted Earnings Per Share) is no longer disclosed as the disposal of Dairy Ireland and related assets occurred in 2017 and is not
disclosed in the comparative numbers.
G 1. Constant currency
While the Group reports its results in euro, it generates a significant proportion of its earnings in currencies other than euro, in particular US dollar.
Constant currency reporting is used by the Group to eliminate the translational effect of foreign exchange on the Group’s results. To arrive at the
constant currency year–on–year change, the results for the prior year are retranslated using the average exchange rates for the current year and
compared to the current year reported numbers.
The principal average exchange rates used to translate results for 2019 and 2018 are set out below:
Euro 1 = 2019 2018
US dollar 1.1196 1.1812
Pound sterling 0.8772 0.8847
All non–IFRS performance measures have been presented on a constant currency basis, where relevant, within this glossary.
G 2. Total Group
The Group has a number of strategically important equity accounted investees (Joint Ventures) which when combined with the Group’s wholly-
owned businesses give an important indication of the scale and reach of the Group’s operations. Total Group is used to describe certain financial
metrics such as Revenue and EBITA when they include both the wholly-owned businesses and the Group’s share of equity accounted investees.
G 3. Revenue
Revenue comprises sales of goods and services of the wholly-owned businesses to external customers net of value added tax, rebates and
discounts. Revenue is one of the Group’s Key Performance Indicators and is an IFRS performance measure.
Glossary
Key Performance Indicators and non-IFRS performance measures
Reference to the
Financial Statements/
Glossary
€’m
Equity accounted investees revenue (100%) Note 17 1,961.8 1,034.2 341.7 (1,089.8) 2,247.9
% of ownership interest 40% 50% 51% 40-50%
Group’s share of revenue of equity
accounted investees 784.7 517.1 174.3 (539.3) 936.8
2018
Equity accounted investees revenue (100%) Note 17 1,809.9 802.4 311.0 (837.0) 2,086.3
% of ownership interest 40% 50% 51% 40%-50%
Group’s share of revenue of equity
accounted investees 724.0 401.2 158.6 (415.1) 868.7
* The IFRS 15 Consolidation Adjustment primarily relates to the gross up of Southwest Cheese revenue due to the transition to IFRS 15. The prior
year comparative has been restated to reflect this on a like-for-like basis.
G 4. EBITA
EBITA is defined as earnings before interest, tax and amortisation. EBITA references throughout the annual report are on a pre-exceptional basis
unless otherwise indicated. EBITA is one of the Group’s Key Performance Indicators. Business Segment EBITA growth on a constant currency
basis is one of the performance conditions in ’s Annual Incentive Plan for Executive Directors with Business Unit responsibility. Refer to
note 5 to the financial statements for the reconciliation of continuing operations EBITA.
G 4.1 Total Group EBITA:
Reference to the Financial
Statements/Glossary
 > Other Information
G 4. EBITA continued
G 4.2 Reconciliation of the Group’s share of equity accounted investees EBITA to the share of results of equity accounted investees on
a constant currency basis is as follows:

EBITA of equity accounted investees 73.6 65.8
Adjustment in respect of unrealised profit on sales to the Group (1.3) 0.6
Amortisation (2.4) (2.5)
Finance costs (10.3) (9.0)
Income tax (11.2) (10.1)
Share of results of equity accounted investees 0.6 1.0
Non-controlling interest (0.4) (0.5)
Share of results of equity accounted investees per the Group income statement – pre-exceptional 48.6 45.3
Impact of retranslating 2018 - 0.6
Share of results of equity accounted investees on a constant currency basis – pre-exceptional 48.6 45.9
Constant currency change 5.9%
G 5. EBITA margin %
EBITA margin % is defined as EBITA as a percentage of revenue. Wholly-owned EBITA Margin % is defined as Wholly-owned EBITA as a
percentage of Wholly-owned Revenue. Refer to G3.1 and G4.1 for reconciliations of Total Group revenue and Total Group EBITA respectively.
EBITA references throughout the annual report are on a pre-exceptional basis unless otherwise indicated.
G 6. EBITDA
EBITDA is defined as earnings before interest, tax, depreciation (net of grant amortisation) and amortisation. EBITDA references throughout
the annual report are on a pre-exceptional basis unless otherwise indicated.
Reference to the Financial Statements/
Glossary

Earnings before interest, tax and amortisation
(pre-exceptional EBITA) G 4.1 276.8 284.9
Depreciation Note 5 48.1 43.0
Grant amortisation Note 5 - (0.1)
Earnings before interest, tax, depreciation and amortisation
(pre-exceptional EBITDA) 324.9 327.8
G 7. Constant Currency Basic and Adjusted Earnings Per Share (EPS)
G 7.1 Constant Currency Basic Earnings Per Share (EPS)
Basic Earnings Per Share is calculated by dividing the net profit attributable to the equity holders of the Company by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Group and held as own shares (note 23.)
Reference to the Financial
Statements/Glossary
Profit attributable to equity holders of the Company
Group income
statement 180.2 234.0 245.5
Weighted average number of ordinary shares
in issue (thousands) Note 13 295,215 295,159 295,159
Basic Earnings Per Share (cent) Note 13 61.04 79.28 83.18
Constant Currency Change -26.6%
G 7.2 Adjusted Earnings Per Share (EPS)
Adjusted EPS is defined as the net profit attributable to the equity holders of , before exceptional items and intangible asset amortisation
and impairment (excluding software amortisation), net of related tax, divided by the weighted average number of ordinary shares in issue during
the year. The Group believes that adjusted EPS is a better measure of underlying performance than Basic EPS as it excludes exceptional items
(net of related tax) that are not related to on–going operational performance and intangible asset amortisation, which allows better comparability
of companies that grow by acquisition to those that grow organically.
Adjusted EPS is one of the Group’s Key Performance Indicators. Adjusted EPS growth on a constant currency basis is one of the performance
conditions in ’s Annual Incentive Plan and in ’s Long–term Incentive Plan.
Glossary continued
Key Performance Indicators and non-IFRS performance measures continued
203

G 7. Constant Currency Basic and Adjusted Earnings Per Share (EPS) continued
G 7.2 Adjusted Earnings Per Share (EPS) continued
Reference to the Financial
Statements/Glossary
2019
€’m
2018
Reported
€’m
2018
Retranslated
€’m
Profit attributable to equity holders of the Company –
pre-exceptional
Group income
statement 214.8 234.0 245.5
Amortisation and impairment of intangible assets
(excluding software amortisation) net of related tax
of €8.1 million (2018: €6.1 million) 45.3 34.6 36.3
Adjusted net income 260.1 268.6 281.8
Weighted average number of ordinary shares in issue
(thousands) Note 13 295,215 295,159 295,159
Adjusted Earnings Per Share (cent) 88.10 91.01 95.49
Constant currency change -7.7%
G 8. Financing Key Performance Indicators
The following are the financing key performance indicators defined as per the Group’s financing agreements.
G 8.1 Net debt: adjusted EBITDA
Net debt: adjusted EBITDA is calculated as net debt at the end of the period divided by adjusted EBITDA. Net debt is calculated as total financial
liabilities less cash and cash equivalents. Adjusted EBITDA is calculated in accordance with lenders’ facility agreements definition which adjust
pre-exceptional EBITDA for items such as dividends received from equity accounted investees and acquisitions or disposals. Adjusted EBITDA
is a rolling 12 month measure.
Reference to the Financial
Statements/Glossary
2019
€’m
2018
€’m
Net debt Note 25 614.3 576.7
EBITDA G 6 324.9 327.8
Adjustments in line with lenders’ facility agreements 35.0 45.2
Adjusted EBITDA 359.9 373.0
Net debt: adjusted EBITDA 1.71 1.55
G 8.2 Adjusted EBIT: Adjusted net finance cost
Adjusted EBIT: net finance cost is calculated as pre-exceptional earnings before interest and tax plus dividends received from equity accounted
investees divided by net finance cost. Adjusted net finance cost comprises finance costs less finance income per the Group income statement
plus capitalised borrowing costs. Adjusted EBIT and net finance cost are rolling 12 month measures.
Reference to the Financial
Statements/Glossary
2019
€’m
2018
€’m
Operating profit – (pre-exceptional) Group income statement 215.9 239.0
Dividends received from equity accounted investees Group statement of cash flows 35.3 31.6
Adjusted EBIT 251.2 270.6
Adjusted net finance costs Note 11 27.0 18.3
Adjusted EBIT: Adjusted net finance cost 9.3 14.8
204
 > Other Information
G 9. Volume and pricing increase/(decrease)
Volume increase/(decrease) represents the impact of sales volumes within the revenue movement year-on-year, excluding volume from
acquisitions, on a constant currency basis.
Pricing increase/(decrease) represents the impact of sales pricing (including trade spend) within revenue movement year-on-year, excluding
acquisitions, on a constant currency basis.
US Cheese G 3.1 4.9% 13.6% -% 18.5%
Nutritional Solutions G 3.1 7.0% 3.8% 12.6% 23.4%
 Nutritionals G 3.1 5.5% 10.8% 3.6% 19.9%
 Performance Nutrition G 3.1 -9.0% -0.6% 20.6% 11.0%
2019 increase % – wholly-owned revenue G 3.1 0.1% 6.6% 9.9% 16.6%
2019 increase/(decrease) % – equity accounted
investees revenue (Pre IFRS15 Consolidation Adjustment) G 3.1 9.6% 3.3% -% 12.9%
G 10. Like-for-like revenue increase/(decrease)
G 10.1  Performance Nutrition like-for-like branded revenue
This represents the sales increase/(decrease) year-on-year on branded sales, excluding acquisitions, on a constant currency basis. Like-for-like
branded revenue increase/(decrease) is one of the  Performance Nutrition segment’s Key Performance Indicators. Like-for-like branded
revenue increase/(decrease) is one of the performance conditions in ’s Annual Incentive Plan for  Performance Nutrition
Senior Management.
G 10.2  Nutritionals like-for-like revenue
This represents the sales increase/(decrease) year-on-year, excluding acquisitions, on a constant currency basis.
G 11. Innovation rate
This represents net revenue from products launched in the previous three years. Innovation rate is one of the  Performance Nutrition
segment’s Key Performance Indicators. Innovation rate is one of the performance conditions in ’s Annual Incentive Plan for 
Performance Nutrition Senior Management.
G 12. Effective tax rate
The effective tax rate is defined as the pre-exceptional income tax charge divided by the profit before tax less share of results of equity
accounted investees.
Reference to the Financial
Statements/Glossary
2019
€’m
2018
€’m
Profit before tax Group income statement 238.2 266.8
Less share of results of equity accounted investees Group income statement (48.6) (45.3)
189.6 221.5
Income tax (pre-exceptional) Group income statement 23.4 32.8
Effective tax rate 12.3% 14.8%
G 13. Average interest rate
The average interest rate is defined as the annualised net finance costs (pre-capitalised borrowing costs) divided by the average net debt during
the reporting period.
G 14. Operating cash conversion
Operating cash conversion is defined as Operating Cash Flow (OCF) divided by pre-exceptional EBITDA. Cash conversion is a measure of the
Group’s ability to convert trading profits into cash and is an important metric in the Group’s working capital management programme.
Glossary continued
Key Performance Indicators and non-IFRS performance measures continued
205

G 15. Operating cash flow and free cash flow
Operating cash flow is defined as pre-exceptional EBITDA of the wholly-owned businesses net of business sustaining capital expenditure and
working capital movements, excluding exceptional cash flows.
Operating cash flow is one of the Group’s Key Performance Indicators. Operating cash flow is one of the performance conditions in ’s
Annual Incentive Plan.
Free cash flow is calculated as the net cash flow in the year before the following items: strategic capital expenditure, acquisition spend,
proceeds received on disposals, loans/investments to equity accounted investees, equity dividends paid, exceptional costs paid and
currency translation movements.
Reference to the Financial
Statements/Glossary
2019
€’m
2018
€’m
Earnings before interest, tax, depreciation and amortisation
(pre-exceptional EBITDA) G 6 324.9 327.8
Movement in working capital (pre-exceptional) G 15.3 (24.9) (9.7)
Business sustaining capital expenditure G 15.5 (20.1) (16.4)
Operating cash flow G 15.1 279.9 301.7
Net interest and tax paid G 15.4 (74.1) (42.2)
Dividends from equity accounted investees Group statement of cash flows 35.3 31.6
Other (outflows)/inflows G 15.6 (9.6) 4.3
Free cash flow 231.5 295.4
Strategic capital expenditure G 15.5 (56.2) (46.2)
Dividends paid to Company Shareholders Group statement of cash flows (74.3) (76.0)
Loans/Investment in Equity accounted investees Group statement of cash flows (47.4) (58.9)
Exceptional costs paid G 15.2 (12.0) (2.6)
Acquisitions Group statement of cash flows (58.3) (313.0)
Proceeds from the sale of PPE Group statement of cash flows 0.2 1.3
Net cash flow (16.5) (200.0)
Exchange translation Note 25 (10.5) (9.0)
Debt Acquired on Acquisition Note 25/Note 34 (10.6) –
Net debt movement (37.6) (209.0)
Opening net debt Note 25 (576.7) (367.7)
Closing net debt Note 25 (614.3) (576.7)
G 15.1 Reconciliation of operating cash flow to the Group statement of cash flows in the Financial Statements:
Reference to the Financial
Statements/Glossary

Cash generated from operating activities Note 32 285.9 316.5
Add back exceptional cash flow in the year G 15.2 12.0 2.6
Less business sustaining capital expenditure G 15.5 (20.1) (16.4)
Non-cash items not adjusted in computing operating cash flow:
Cost of share based payments Note 32 (4.6) (8.8)
Difference between pension charge and cash contributions Note 32 7.6 3.7
(Loss)/Gain on disposal of property, plant and equipment Note 32 (0.2) 0.3
Recycle of AFS reserve to the Group income statement on disposal of investment Note 32 - 5.3
Net loss on disposal of investments Note 32 - (0.2)
Amounts payable to the Southwest/MWC Group joint venture partners (0.7) (1.3)
Operating cash flow G 15 279.9 301.7
G 15.2 Exceptional cash flow in the year:
Reference to the Financial
Statements/Glossary

Pre–tax exceptional charge for year Note 6 (39.1) –
Non–cash element of exceptional charge Note 32 27.1 –
Current year exceptional items paid in the year (12.0) –
Prior year exceptional items paid in the year Note 6 - (2.6)
Total exceptional cash outflow in the year Note 6 (12.0) (2.6)
206
 > Other Information
G 15. Operating cash flow and free cash flow continued
G 15.3 Movement in working capital:
Reference to the Financial
Statements/Glossary

Movement in working capital (pre-exceptional) G 15 (24.9) (9.7)
Net write back of inventories Note 32 (5.3) 0.3
Non-cash movement in allowance for impairment of receivables Note 32 (1.8) (1.5)
Prior year exceptional items paid in the year G 15.2 - (2.6)
Non-cash movement in provisions Note 32 0.9 1.1
Non-cash movement on cross currency swaps and fair value hedges Note 32 (0.8) (1.0)
Amounts payable to the Southwest/MWC Group
joint venture partners 0.7 1.3
Movement in net working capital Note 33 (31.2) (12.1)
G 15.4 Net interest and tax paid:
Reference to the Financial
Statements/Glossary
Interest received Group statement of cash flows 3.7 4.8
Interest paid Group statement of cash flows (32.5) (21.0)
Tax paid Group statement of cash flows (44.6) (25.2)
Interest paid in relation to property, plant and equipment Group statement of cash flows (0.7) (0.8)
Net interest and tax paid (74.1) (42.2)
G 15.5 Capital expenditure:
Reference to the Financial
Statements/Glossary

Business sustaining capital expenditure G 15 20.1 16.4
Strategic capital expenditure G 15 56.2 46.2
Total capital expenditure 76.3 62.6
Purchase of property, plant and equipment Group statement of cash flows 42.7 32.0
Purchase of intangible assets Group statement of cash flows 33.6 30.6
Total capital expenditure per the Group statement of cash flows 76.3 62.6
Business sustaining capital expenditure
The Group defines business sustaining capital expenditure as the expenditure required to maintain/replace existing assets with a high proportion
of expired useful life. This expenditure does not attract new customers or create the capacity for a bigger business. It enables the Group to keep
running at current throughput rates but also keep pace with regulatory and environmental changes as well as complying with new requirements
from existing customers.
Strategic capital expenditure
The Group defines strategic capital expenditure as the expenditure required to facilitate growth and generate additional returns for the Group.
This is generally expansionary expenditure beyond what is necessary to maintain the Group’s current competitive position.
Glossary continued
Key Performance Indicators and non-IFRS performance measures continued
Cost of share based payments Note 32 4.6 8.8
Difference between pension charge and cash contributions Note 32 (7.6) (3.7)
Loss/(gain) on disposal of property, plant and equipment Note 32 0.2 (0.3)
Disposals/redemption of available for sale financial assets Group statement of cash flows 0.5 7.9
Additions to available for sale financial assets Group statement of cash flows (0.4) (0.3)
Purchase of own shares Group statement of cash flows (7.6) (4.3)
Recycle of AFS reserve to the Group income statement on
disposal of investment Note 32 - (5.3)
Amounts payable to joint venture partners 0.7 1.3
Net loss on disposal of investments Note 32 - 0.2
Total other (outflows)/inflows G 15 (9.6) 4.3
G 16. Return on capital employed (ROCE)
ROCE is defined as the Group’s earnings before interest, and amortisation (net of related tax) plus the Group’s share of the results of Equity
accounted investees after interest and tax divided by capital employed. Capital employed comprises the sum of the Group’s total assets
plus cumulative intangible asset amortisation and impairment less current liabilities less deferred tax liabilities excluding all financial liabilities,
retirement benefit assets and cash. It is calculated by taking the average of the relevant opening and closing balance sheet amounts.
In years where the Group makes significant acquisitions or disposals, the ROCE calculation is adjusted appropriately, to ensure the acquisition
or disposal are equally time apportioned in the numerator and the denominator.
ROCE is one of the Group’s Key Performance Indicators (see pages 18 to 19). ROCE is one of the performance conditions in ’s Long Term
Incentive Plan. See Remuneration Committee Report on pages 84 to 108 for more information.
Reference to the Financial
Statements/Glossary
2019
€’m
2018
€’m
Operating profit – pre-exceptional Group income statement 215.9 239.0
Tax on operating profit (26.6) (35.4)
Amortisation and impairment of intangible assets net of related tax
of €9.6m (2018: €7.2m) 51.3 38.7
Share of results of equity accounted investees Group income statement 48.6 45.3
Return 289.2 287.6
Total assets Group balance sheet 3,400.9 3,160.1
Current liabilities Group balance sheet (955.3) (580.8)
Deferred tax liabilities Group balance sheet (168.6) (160.3)
Less cash and cash equivalents Group balance sheet (269.0) (224.6)
Less current financial liabilities Group balance sheet 369.1 48.9
Less retirement benefit assets Group balance sheet (2.1) (1.1)
Plus accumulated amortisation Note 16 360.1 301.3
Capital employed before acquisition adjustment 2,735.1 2,543.5
Adjustment for acquisitions G 16.1 49.4 (242.8)
Capital employed 2,784.5 2,300.7
Average capital employed 2,664.0 2,184.6
Return on capital employed 10.9% 13.2%
G 16.1. Adjustment for acquisitions
This adjustment is required to ensure the capital employed of the acquisitions (Watson (2019) & (SlimFast (2018)) are appropriately time
apportioned in the denominator.
G 17. Total Shareholder Return (TSR)
TSR represents the change in the capital value of a listed quoted company over a period, plus dividends reinvested, expressed as a plus or minus
percentage of the opening value.
TSR is one of the Group’s Key Performance Indicators (see pages 18 to 19). TSR is one of the performance conditions in ’s Long Term
Incentive Plan. See Remuneration Committee Report on pages 84 to 108 for more information.
19. Compound Annual Growth Rate (CAGR)
The compound annual growth rate is the annual growth rate over a period of years. It is calculated on the basis that each year’s growth is compounded.
G 20. Exceptional Items
The Group considers that items of income or expense which are material by virtue of their scale and nature should be disclosed separately if the
Group financial statements are to fairly present the financial performance and financial position of the Group. Determining which transactions are
to be considered exceptional in nature is often a subjective matter. However, circumstances that the Group believes would give rise to exceptional
items for separate disclosure are outlined in the accounting policy on exceptional items in note 2. Exceptional items are included on the income
statement line item to which they relate. In addition, for clarity, separate disclosure is made of all items in one column on the face of the Group
income statement. Refer to note 6 for an analysis of exceptional items recognised in 2019.
Glossary continued
Key Performance Indicators and non-IFRS performance measures continued
209

Shareholder Information
Stock exchange listings
The Company’s shares are listed on the main market of the Euronext Dublin Stock Exchange as well as having a premium listing on the main
market of the London Stock Exchange.
Managing your shareholding
Computershare Investor Services (Ireland) Limited (‘Computershare’) maintains the Company’s register of members. Should a shareholder
have any queries in respect of their shareholding, they should contact Computershare directly using the contact details provided below:
Computershare Investor Services (Ireland) Limited, 3100 Lake Drive, Citywest Business Campus, Dublin 24, D24 AK82, Ireland.
Contact details:
Telephone number 01 247 5349 (within Ireland), +353 1 247 5349 (outside Ireland), or by logging on to: www.investorcentre.com/ie/contactus.
2019 2018
Share price data € €
Share price as at financial year end 10.16 16.35
Market capitalisation 3,008m 4,840m
Share price movements during the year:
– high 19.05 17.19
– low 9.64 13.39
The current share price of  ordinary shares can be accessed at: www..com/prices-delayed.
Shareholder analysis
Geographic Location*
Number of
shares held
% of
total
North America 69,761,228 23.6
UK 29,193,954 9.9
Rest of world 29,145,550 9.8
Retail 74,668,711 25.2
 Co-operative Society Ltd 93,276,241 31.5
*This represents a best estimate of the number of shares held by geographic locations at 4 January 2020.
North America – 23.6%
UK – 9.9%
Rest of the World – 9.8%
Retail – 25.2%
 Co-operative Society Ltd – 31.5%
Share capital
The authorised share capital of the Company at 4 January 2020 was 350,000,000 ordinary shares at €0.06 each. The issued share capital
at 4 January 2020 was 296,045,684 ordinary shares of €0.06 each.
210
 > Other Information
Shareholder Information continued
Substantial shareholdings
The table below details the significant holding (3% or more) in the Company’s ordinary share capital that have been notified to the Company at
4 January 2020 and 25 February 2020.
Shareholder
No. of ordinary
shares as at
04 January 2020
% of issued share
capital as at
04 January 2020
 Co-operative Society Limited 93,276,241 31.5
The Capital Group Companies, Inc/Capital Research and Mgt. Company* 16,643,357 5.6
Mawer Investment Management Limited 14,852,659 5.0
Black Creek Investment Management Inc.** 11,874,803 4.0
Shareholder
No. of ordinary
shares as at
25 February 2020
% of issued share
capital as at
25 February 2020
 Co-operative Society Limited 93,276,241 31.5
The Capital Group Companies, Inc/Capital Research and Mgt. Company* 14,500,963 4.9
Mawer Investment Management Limited 14,852,659 5.0
Black Creek Investment Management Inc. ** 11,874,803 4.0
*	
The Capital Group Companies, Inc. (‘CGC’) is the parent company of Capital Research and Management Company (‘CRMC’) and Capital Bank & Trust Company (‘CB&T’). CRMC is a US based
investment management company that serves as investment manager to the American Funds family of mutual funds, other pooled investment vehicles, as well as individual and institutional
clients. CRMC and its investment manager affiliates manage equity assets for various investment companies through three divisions, Capital Research Global Investors, Capital International
Investors and Capital World Investors. CRMC is the parent company of Capital Group International, Inc. (‘CGII’), which in turn is the parent company of four investment management companies
(“CGII management companies”): Capital International, Inc., Capital International Limited, Capital International Sàrl and Capital International K.K. CGII management companies and CB&T
primarily serve as investment managers to institutional and high net worth clients. CB&T is a US based investment management company that is a registered investment adviser and an affiliated
federally chartered bank.
	
Neither CGC nor any of its affiliates own shares of  for its own account. Rather, the shares reported are owned by accounts under the discretionary investment management of one
or more of the investment management companies described above.
	
As at 4 January 2020, Growth Fund of America (‘GFA’) a mutual fund registered in the United States under the Investment Company Act of 1940, was the legal owner of 10,918,860 shares
(3.6882% of the outstanding shares), (less than 3% as at 25 February 2020). GFA has granted proxy voting authority to its investment adviser CRMC.
** Black Creek Investment Management Inc. (‘Black Creek’) is an investment management company. The shares are beneficially owned by 21 separate funds and clients which Black Creek advises
regarding their investment portfolios. Shares held directly are by funds for which Black Creek also acts as investment fund manager. None of the funds or clients by itself reaches or exceeds the
3% threshold. The funds and clients give a proxy to Black Creek who can exercise the voting rights for the shares in its own discretion.
Employee share schemes
The Company operates a number of employee share schemes. At 4 January 2020 820,302 ordinary shares were held in employee benefit trusts
for the purpose of the Group’s employee share schemes. While any shares in the Company are held by the Trustees, the Trustees shall refrain
from exercising any voting rights which may attach to the shares save that if the beneficial interest in any share has been vested in any beneficiary
the Trustees shall seek and comply with any direction from such beneficiary as to the exercise of voting rights attaching to such shares.
Dividend payments direct to your bank account
An interim dividend of 10.68 cent per share was paid in respect of ordinary shares on 4 October 2019.
Subject to shareholders’ approval, a final dividend of 15.94 cent per share will be paid in respect of ordinary shares on 24 April 2020 to
shareholders on the register of members on 13 March 2020. If a shareholder’s registered address is in the UK and a shareholder has not
previously provided the Company with a mandate form for an Irish euro account, the payment will be in GBP. All other payments will be in euro.
Dividend Withholding Tax (DWT) is deductible from dividends paid by an Irish resident company unless the shareholder is entitled to an exemption
and has submitted a properly completed exemption form to the Company’s Registrar, Computershare. DWT applies to dividends paid by way of
cash and is deducted at 25%. Non-resident shareholders and certain Irish companies, trusts, pension schemes, investment undertakings and
charities may be entitled to claim exemption from DWT and are thereby required to send the relevant form to Computershare. Copies of this form
may be obtained from Computershare.
In order to continue to improve the security of dividend payments to shareholders and reduce costs, the Company proposes to pay future
dividend payments on its ordinary shares only by credit transfer into a nominated bank or building society account.
Shareholders will continue to receive tax vouchers in respect of dividend payments. The Company takes data security issues very seriously.
Bank account details supplied to the Company and its Registrar will be used only for dividend distribution and the information will not be used
for any other purpose or supplied to any third party.
Shareholders may visit: www..com/shareholder-centre for up-to-date investor information. Electronic copies of current and past annual
and half-yearly reports can be downloaded from the website. Current and historic share prices, news, updates and presentations may also be
obtained. Shareholders may also register to receive future shareholder communications electronically.
211

Electronic communications
The Transparency (Directive 2004/109/EC) Regulations 2007 recognises the growing importance of electronic communications. The Group,
therefore, provides documentation and communications to all shareholders via our website unless a shareholder has specifically elected to
receive a hard copy.
Using electronic communications enables fast receipt of documents, helps the environment by significantly reducing the amount of paper used
to communicate with shareholders and reduces associated printing, mailing and distribution costs.
Shareholders can also vote online for the next Annual General Meeting (“AGM”). This is a quick and easy option, using the proxy voting service
provided by Computershare. Shareholders may use this facility by visiting: www.eproxyappointment.com.
Financial calendar
Announcement of 2019 Full Year Results 26 February 2020
Ex-dividend date 12 March 2020
Record date for dividend 13 March 2020
Date for receipt of proxy forms 20 April 2020
Record date for AGM 20 April 2020
AGM 22 April 2020
Dividend payment date 24 April 2020
AGM
The AGM will be held on 22 April 2020. The notice of meeting, together with details of the business to be conducted at the meeting will be
available 20 business days before the meeting on: www..com/agm.
The voting results for the 2020 AGM, including proxy votes and votes withheld will be available on our website shortly after the meeting at the
following address: www..com/agm.
Conditions for participating in a meeting
Every shareholder, irrespective of how many  shares they hold, has the right to attend, speak, ask questions and vote at the AGM.
Completion of a proxy form will not affect a shareholder’s right to attend, speak, ask questions and vote at the meeting in person.
The quorum for a general meeting of the Company is constituted by three persons entitled to vote upon the business of the meeting, each being
a shareholder or a proxy or corporate representative for a shareholder.
The right to participate in the AGM is subject to the registration of the shares prior to the date of the meeting (the record date). For the 2020 AGM
the record date is 5:00 pm on 20 April 2020 (or in the case of an adjournment 5:00 pm, on the day prior to the day before the time fixed for the
adjourned meeting).
Appointment of proxy
Where a shareholder is unable to attend the AGM in person, a proxy (or proxies) may be appointed to attend, speak, ask questions and vote
on their behalf. For this purpose a form of proxy is posted to all shareholders. Copies of these documents may be requested by telephoning the
Company’s Registrar on 01 247 5349 (within Ireland), +353 1 247 5349 (outside Ireland), or by logging on to www.investorcentre.com/ie/contactus
or by writing to the Group Secretary at ,  House, Kilkenny, Ireland, R95 E866.
Alternatively, a shareholder may appoint a proxy electronically, by visiting: www.eproxyappointment.com and submitting their proxy details.
They will be asked to enter the Control Number, the Shareholder Reference Number (“SRN”) and PIN and agree to certain terms and conditions.
The Control Number, the SRN and the PIN can be found on the top of the form of proxy.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting
and any adjournment(s) thereof by using the procedures described in the CREST manual.
How to exercise shareholders rights
Shareholders have several ways to exercise their right to vote:
• by attending the AGM in person;
• by appointing the Chairman or another person as a proxy to vote on their behalf;
• by visiting www.eproxyappointment.com and submitting their proxy details; or
• by appointing a proxy via the CREST system.
The passing of resolutions at a meeting of the Company, other than special resolutions, requires a simple majority. To be passed, a special
resolution requires at least 75% of the votes cast to be in favour of the resolution.
212
 > Other Information
Tabling agenda items
A shareholder, or a group of shareholders acting together, who hold at least 3% of the issued share capital of the Company, has the right to put
an item on the agenda of the AGM. In order to exercise this right, written details of the item to be included on the 2020 AGM agenda together with
a written explanation why the item is to be included on the agenda and evidence of the shareholding must be received by the Group Secretary
at ,  House, Kilkenny, Ireland, R95 E866 or by email to ir@.ie/info@.ie no later than 12 March 2020 (i.e. 42 days before
the AGM).
An item cannot be included on the AGM agenda unless it is accompanied by the written explanation and received at either of these addresses
by this deadline.
Tabling draft resolutions
A shareholder, or a group of shareholders acting together, who hold at least 3% of the issued share capital of the Company, has the right to table
a draft resolution for inclusion on the agenda of the 2020 AGM subject to any contrary provision in company law.
In order to exercise this right, the text of the draft resolution and evidence of shareholding must be received no later than 12 March 2020
(i.e. 42 days before the AGM) by post to the Group Secretary at ,  House, Kilkenny, Ireland, R95 E866 or by email to
ir@.ie/info@.ie. A resolution cannot be included on the 2020 AGM agenda unless it is received at either of these addresses
by this deadline. Furthermore, shareholders are reminded that there are provisions in company law which impose other conditions on the
right of shareholders to propose resolutions at the general meeting of a company.
How to ask a question before or at the meeting
The AGM is an opportunity for shareholders to put a question to the Chairman during the question and answer session. Before the 2020 AGM,
a shareholder may also submit a question in writing by sending a letter and evidence of shareholding at least four business days before the 2020
AGM (i.e. 17 April 2020) to the Group Secretary, ,  House, Kilkenny, Ireland, R95 E866 or by email to ir@.ie/info@.ie.
Dividend rights
The Company may, by ordinary resolution, declare dividends in accordance with the respective rights of shareholders, but no dividend shall
exceed the amount recommended by the Directors. The Directors may also declare and pay interim dividends if it appears to them that the
interim dividends are justified by the profits of the Company available for distribution.
Distribution on winding up
If the Company shall be wound up and the assets available for distribution among shareholders shall be insufficient to repay the whole of the paid
up or credited as paid up share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by shareholders in
proportion to the capital paid up or credited as paid up at the commencement of the winding up on the shares held by them respectively. Further
if, in a winding up, the assets available for distribution among shareholders shall be more than sufficient to repay the whole of the share capital
paid up or credited as paid up at the commencement of the winding up, the excess shall be distributed among shareholders in proportion to
the capital at the commencement of the winding up paid up or credited as paid up on the said shares held by them respectively.
Shareholder Information continued
Group Secretary and Registered Office
Michael Horan,
Transforming
Dublin
Annual Report 2019
Hibernia is an Irish real estate investment
trust (“REIT”), listed on Euronext Dublin
and the London Stock Exchange.
We own and develop property and have
a portfolio worth €1.4bn, all in Dublin
and predominantly in city centre offices.
Reception at 2WML
What we do
We use our knowledge and
experience of the Dublin property
market, together with modest levels
of leverage, to target above average
long-term returns for our shareholders.
How we do it
We focus on improving buildings
at appropriate times in the property
cycle and on growing our income through
active asset management. Our portfolio
is mainly a mix of redeveloped properties
and assets held for future repositioning.
Strategic report
2 Highlights
4 Our business at a glance
6 Creating value
16 Chairman’s letter
18 Chief Executive
Officer’s review
22 Our market
24 Market review
26 Our stakeholders
30 Our business model
32 Our strategy
34 Key performance
indicators
36 Risk management
39 Going concern and
viability statement
40 Principal risks
and uncertainties
50 Operational review
56 Financial review
59 Sustainability
Governance
64 Chairman’s corporate
governance statement
68 Board of Directors
70 The Senior
Management Team
72 Corporate governance
84 Audit Committee report
91 Nominations
Committee report
93 Remuneration
Committee report
115 Directors’ report
119 Directors’
responsibility
statement
Financial statements
120 Independent
auditor’s report
126 Consolidated
income statement
127 Consolidated
statement of
comprehensive income
128 Consolidated statement
of financial position
129 Consolidated statement
of changes in equity
130 Consolidated statement
of cash flows
131 Notes to the
consolidated
financial statements
177 Company statement
of financial position
178 Company statement
of changes in equity
179 Company statement of
cash flows
180 Notes to the Company
financial statements
Supplementary information
(unaudited)
192 Five-year record
193 Alternative
performance measures
194 EPRA performance
measures
200 Other disclosures
202 	
Directors and
other information
203 Glossary
Strategic
report
Governance
Financial
statements
Additional
information
1
Highlights of the year
Strong performance
Strategic achievements
• Complete developments: Two schemes delivered totalling
172,000 sq. ft. of Grade A offices (>65% let), completing
the Windmill Quarter
• Increase rental income and duration: Annual contracted
rent roll now €57.6m, up 2.9% since March 2018, and in-
place office portfolio WAULT to earlier of break/expiry of
7.5 years, up 2.7% in the year
• Make selective investments: €40.0m reinvested in seven
acquisitions, including the purchase of 98.3 acres of land
at Newlands in late 2018
• Recycle capital to monetise gains and enhance future
returns: Sale of two properties for €100.3m (both modestly
ahead of book value, with one completing after year end)
• Maintain an efficient balance sheet and seek to diversify
funding sources and maturity dates: Debt refinanced in
December 2018 and announced intention to return €35m
to shareholders in April 2019
• Continue to improve environmental efficiency of the
portfolio: Achieved a 5% reduction in energy consumption
on a like-for-like basis in our multi-let portfolio and a
recycling rate of >50% for the first time
Net rental income
€53.3m
2018: €45.7m
+16.6%
EPRA EPS
4.0c
2018: 2.8c
+40.4%
Alternative Performance Measures (“APMs”)
The Group uses a number of financial measures to
describe its performance which are not defined under
International Financial Reporting Standards (“IFRS”)
and which are therefore considered APMs. In particular,
measures developed by the European Public Real Estate
Association (“EPRA”) are reported in line with other
public real estate companies. These are defined in more
detail, and reconciled with IFRS where applicable, in the
Supplementary Information section on pages 193 to 199 of
this Annual Report.
2  Read more on page 13
Read more on page 12
Read more on page 10
Read more on page 14
Read more on page 11
Read more on page 8
Contributing
to the community
Refinancing
the business
for the long term
Advancing and
enhancing the
development
pipeline
Improving
our sustainability
Crystallising
value
Working with
our tenants
Strategic
report
Governance
Financial
statements
Additional
information
3

Strategic report
Our business at a glance
Our whole portfolio is located in Dublin, with 85% in city
centre offices or office developments across the three
main sub-markets, the Traditional Core, the South Docks
and the International Financial Services Centre (“IFSC”).
We also have 11% in multi-family residential assets in
South Dublin and the balance is in industrial/land assets.
Portfolio segments by value In-place office rent by sector
A well-positioned portfolio
Industrial/land 4%
Dublin CBD office development 1%
Dublin residential 11%
IFSC 15%
Traditional Core 32%
South Docks 37%
€1,395m
Banking & capital markets 8%
Serviced offices 1%
Professional services 9%
Other 2%
Insurance & reinsurance 4%
Government 20%
Technology, media & telecoms 55%
€50.4m
In-place offices
1.1m
sq. ft.
Properties
32
Average office rent
€47psf
In-place office vacancy
12%
Offices including fully
developed pipeline
1.4m
sq. ft.
Portfolio contracted annual rent
€57.6m
Reversionary potential
€3.7m
In-place office WAULT
7.5 yrs
1 1DC
2 2DC
3 The Forum
4 50 City Quay
5 1SJRQ
6 The Observatory
7 1WML
8 2WML
9 South Dock House
10 Central Quay
11 1 Cumberland Place
12 2 Cumberland Place
13 Marine House
14 Blocks 1, 2 & 5
Clanwilliam Court
15 Earlsfort Terrace
16 Hardwicke House
17 Montague House
18 Harcourt Square
19 39 Harcourt Street
20 35 – 37 Camden Street
21 129 Slaney Road
22 Newlands/Gateway
23 Cannon Place
24 Dundrum View
25 Wyckham Point
Portfolio statistics Key
Our properties
4  GStrategic report
Creating value
Completing our first cluster
The
Windmill
Quarter
With the completion of our 1 Sir John Rogerson’s Quay (“1SJRQ”)
and 2 Windmill Lane (“2WML”) developments in early 2019 the
Windmill Quarter is now complete. It provides office space for
over 3,000 people, together with further residential, food &
beverage and gym facilities.
Clustering is a core part of our strategy: it allows us to spread the
cost of communal areas and shared facilities between buildings,
meaning tenants and their staff get a better working environment
and experience. In the Windmill Quarter we have held various
classes and two music events in the Townhall so far in 2019 and
there will be more to follow. We intend to create similar clusters
when we redevelop Clanwilliam Court and Harcourt Square and
will apply our learnings from the Windmill Quarter to these.
Number of buildings:
6
Office area:
400ksq. ft.
Estimated rental value at March 19:
€24m
Strategic priorities:
1 2 3 5 6
6  Opposite page: restored tram yard
gate at 1SJRQ
Top right: Erica Cody performing at
the first Windmill Live event at the
Townhall, 1WML
Top left: the original Tedcastle Line
sign salvaged from the derelict
Dockers pub and re-used in 1SJRQ
Middle left: interior Perpetua gym,
2WML
Bottom left: Reception, 2WML
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Strategic report
Creating value
Advancing and enhancing
the development pipeline
Marine House, D2
In December 2018 we received planning
permission for a refurbishment and extension
of the building.
Timing: mid-2020 onwards
Blocks 1, 2 & 5
Clanwilliam Court, D2
A planning application has been
lodged for a redevelopment to
form a cluster with Marine House
similar to the Windmill Quarter.
Timing: 2021 onwards
Strategic priority:
1
Current area:
93,000
sq. ft.
Applied for planning for:
152,000
sq. ft.
Current area:
41,000
sq. ft.
Planning granted for:
49,000
sq. ft.
Strategic priority:
1
8  Harcourt
Square, D2
In November 2018 we received
revised planning permission for the
redevelopment of the existing buildings,
including 39 Harcourt Street, with a new
scheme c. 12% larger than the previous
planning permission of 277,000 sq. ft.
Timing: early 2023 onwards
Current area:
122,000
sq. ft.
Planning granted for:
309,000
sq. ft.
Strategic priority:
1
Newlands, D22
We acquired an additional 98.3
acres of land in the year for initial
consideration of €28.7m, excluding
acquisition costs, taking Hibernia’s
total interest in the area to 143.7 acres.
Other than the Gateway industrial site,
the remaining land is not currently
zoned for development but in future
we believe it is an ideal candidate for
a mixed-use scheme, including a large
element of infill residential, given its
location and proximity to excellent
transport infrastructure.
Timing: unclear. The current local
authority development plan – under
which zoning is determined – runs
until 2022.
Strategic priority:
1
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Creating value
Improving
our sustainability
5%
reduction in energy consumption
across our managed portfolio on
a like-for-like basis
>50%
recycling rate achieved for the first
time at our managed properties
Strategic priority:
6

Read our Sustainability Report at
10  Crystallising
value
We have continued to sell buildings which we do not expect to meet our
target returns. In the year we realised net proceeds of €100.3m from the
sale of New Century House and 77 Sir John Rogerson’s Quay, up from
net sales proceeds of €35.8m generated in the prior year. Both sales were
made modestly ahead of last reported book value. €40.0m of the sales
proceeds have been recycled into acquisitions during the year. In addition
we have announced our intention to return the net sales proceeds of
€35m from the sale of 77 Sir John Rogerson’s Quay to shareholders
starting with a €25m share buyback, which commenced in April 2019.
Strategic priority:
4
This page: interior of 77 Sir John Rogerson’s Quay
Opposite page, right: the green wall at 1SJRQ
Opposite page, left: PV panels on the roof of 1WML
Net sales proceeds:
€100.3m
Average premium to book value:
2.7%
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Strategic report
Creating value
In December 2018 we refinanced Hibernia’s debt,
a €400m secured revolving credit facility (margin:
2.05%), with a €320m unsecured revolving credit
facility (margin: 2.0%) and €75m of unsecured US
private placement notes (average coupon: 2.53%).
The refinancing significantly increased the average
maturity of our debt and the move to an unsecured
debt structure, the first for an Irish REIT, ensures we
have access to the widest range of funding options
in future. The overall cost of our debt remains similar
thanks to a reduction in undrawn commitment fees
on the revolving credit facility.
Strategic priority:
5
Refinancing
the business
for the
long term
Weighted average
debt maturity
before refinancing:
1.9
years
Weighted average
debt maturity
after refinancing:
5.7
years
12  Dragons at the Docks
Hibernia was a co-founder of this event and has been an anchor sponsor
since its inception in 2017.
Dragons at the Docks has raised over €530,000 for Dublin homeless charity
Simon and other charities to date. In 2018 there were over 70 teams from six
property related sectors and over 840 participants.
Opposite page: A tenant in 1WML
This page: Dragons at the Docks event
Contributing to
the community
Proceeds raised in 2018:
>€300k
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Strategic report
Creating value
Working
with our
tenants
Working closely with our tenants to understand and meet
their needs is key for us and it is one of the reasons why we
brought our building management in-house in 2016. We have
been working with HubSpot since they first leased 27,500
sq. ft. in One Dockland Central in 2015. Since then they have
grown rapidly, taking a further 46,000 sq. ft. in Two Dockland
Central in three lettings in 2017 and early 2018. In November
2018 they agreed to lease the entire 112,000 sq. ft. of office
space in our 1SJRQ development from June 2019 as their EMEA
headquarters building.
Total space let to HubSpot:
185,000
sq. ft.
Capacity for:
>1,500
employees
“
We’ve seen tremendous growth
in Dublin since opening our initial
office in 2015 and our latest move
to 1 Sir John Rogerson’s Quay
positions us well to continue our
expansion in the region. Hibernia
has been a great partner as we’ve
grown, and we look forward to
continuing to work with them
in the future.”
JD Sherman, President and COO of HubSpot
Opposite page: Tenants in their break-out area in 1WML
14  Strategic
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Strategic report
Chairman’s letter
“
The year to  has been another
successful one for Hibernia, with our portfolio
significantly outperforming the MSCI/SCSI
Ireland Quarterly Property All Assets Index.”
An experienced team,
a clear strategy
16  Ireland, and Dublin in particular, has
continued to record growing economic
activity and foreign direct investment.
Dublin continues to attract companies
for many reasons, including access to EU
markets, and existing businesses are also
expanding their operations and taking more
office space. This demand, together with the
financial strength and professionalism of the
Irish and international property firms now
operating in Dublin, has led to a strong and
vibrant real estate market.
The year to  has been another
successful one for Hibernia, with our
portfolio delivering a total property return
of 11.6%, a significant outperformance of
the MSCI/SCSI Ireland Quarterly Property
All Assets Index (“MSCI Ireland Index”)
(excluding Hibernia), which returned 7.5%
over the same period. Hibernia’s EPRA
net asset value per share grew by 8.9% to
173.3 cent and net rental income increased
by 16.6% to €53.3m enabling the Board to
propose a final dividend of 2.0 cent per
share, taking the total dividend for the year
to 3.5 cent, up 16.7% on the prior year.
Our developments at 1 Sir John
Rogerson’s Quay and 2 Windmill Lane
were successfully completed on budget
meaning that the Windmill Quarter, our
first office cluster, now comprises six
adjacent buildings with c. 400,000 sq. ft.
of office space and further ancillary space
and communal facilities. Our tenants are
delighted with the space we have created,
and we will aim to deliver similar high
quality space in our future developments.
During the year we disposed of two
buildings for €100.3m and invested €40.0m
in the purchase of a further 98.3 acres of
land at Newlands and several other small
acquisitions: we now own almost 144 acres
of land at Newlands with potential for a
very significant mixed-use scheme and
are pursuing a strategy to achieve the
re-zoning of these lands. We also invested
€44.8m in capital expenditure on our active
development schemes, principally the two
buildings completed in the financial year.
Immediately after the year end we
announced a €25m share buyback to
continue our progress towards our leverage
targets and we are seeking shareholder
approval at our AGM to undertake a capital
reorganisation to give us more flexibility in
managing our capital structure in future.
The successful refinancing of our debt and
move to an unsecured structure, adding
non-bank funding for the first time, has
significantly extended our average debt
maturity to 5.4 years at  and
broadens the range of funding options
available to us in future.
Corporate governance and sustainability
are becoming increasingly important to
our stakeholders and we have invested
significant resources in ensuring that we
continue to meet high standards in these
areas. During the year we appointed our
first female Non-Executive Director, Roisin
Brennan. She has significant experience of
capital markets and as a board member
of other public companies and this
expertise will assist with the strategic
development of Hibernia. I also undertook
a roadshow earlier in 2019 and talked to
a number of our larger shareholders who
were appreciative of the opportunity to
discuss corporate governance matters.
Further details of the key points discussed
are set out on page 81 in the corporate
governance report. We have published
our first standalone sustainability report
this year, which is available on our
website, illustrating our commitment to
sustainability which is an important part of
our strategic goals.
Our wider stakeholder group, which
includes tenants, suppliers, employees and
the communities in which we operate, is
very important to us and we work hard
to satisfy their needs and create long-
term relationships. We actively seek the
views of tenants and employees through
regular surveys and other interactions and
respond to the feedback. Our wellness
campaign, which has been rolled out
across our managed office portfolio, has
been a great success and tenants have
engaged. We place great emphasis on
health and safety, particularly at all of our
developments, and we are proud to say
that we have had no serious accidents
in our five years of operations. All our
developments have been built to high
standards of sustainability and have
achieved very good ratings and we are
committed to improving energy usage and
waste management across our portfolio
by actively working with our tenants.
In the local communities in which we
operate we engage with representative
groups and seek to provide employment
opportunities for people living in adjacent
areas. A major charity fund-raising initiative
has been the annual Dragons at the Dock
event. In the year we helped to raise over
€300,000 which has been used to support
the homeless in Dublin as well as several
other local charities. Another successful
initiative was our recycling of the graffiti
wall from the former Windmill Lane Studios.
The charity focusing on men’s mental
health, Movember, has raised €120,000 to
date selling parts of the restored wall to
local businesses.
On behalf of the Board I want to thank
our staff for their efforts and commitment
during the year. They are an integral part
of our success and their dedication to
achieving high standards across all our
activities is crucial to the delivery of our
strategic priorities.
My colleagues on the Board continue
to provide their full support to me and
the Group and are always available for
meetings. All the Directors make valuable
contributions at meetings and their
external experience is helpful in framing
the discussions of the Board. We strive
to operate as a team where everyone is
encouraged to contribute fully, and I am
very satisfied that everyone is prepared
to give their opinion on issues being
considered by the Board.
The anticipated continuing growth of Dublin,
both economically and demographically,
provides further opportunities for Hibernia
over the medium term, though we must
remain conscious that the open nature of
Ireland’s economy means it is highly exposed
to global events. With our pipeline of future
development projects and increasing rental
income I am confident we can continue to
create value for our shareholders.
Daniel Kitchen
Chairman
17 June 2019
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Strategic report
Chief Executive Officer’s review
“
We are reporting another set of strong
financial results, including increasing our
net asset value per share by almost 9%
and growing net rental income and our
full year dividend by over 16%.”
Good progress made
across the business
18  “
Despite the uncertainty caused by Brexit,
Ireland continues to have one of the best
performing economies in the euro area
and foreign direct investment remains high.”
We are pleased to report strong results, with
our office developments and residential
assets again performing particularly well.
The total property return of our portfolio
was 11.6% for the year, outperforming
our benchmark, the MSCI Ireland Index
(excluding Hibernia), which returned 7.5%.
EPRA NAV per share grew by 8.9% to 173.3
cent and we have proposed a final dividend
of 2.0 cent per share, taking the total
dividend for the year to 3.5 cent, an
increase of 16.7% over the prior year.
Growing economy and favourable
market conditions persist
Despite the uncertainty caused by Brexit,
Ireland continues to have one of the best
performing economies in the euro area
and foreign direct investment remains high.
Numbers in employment are at record
levels and there is strong occupier demand,
especially from the TMT sector and also
for larger lettings. Dublin office take-up set
a new record in 2018 and remained above
trend in Q1 2019. The overall vacancy rate
in Dublin at March 2019 was 5.4% and
the Grade A vacancy rate in Dublin’s city
centre, where c. 85% of Hibernia’s portfolio
is located, was 4.5% at the same date.
The supply of new offices in the city centre
continues to be relatively constrained, which
is helping support rents and in the residential
sector rent levels continue to rise. On a like-
for-like basis our office portfolio grew 3.7%
in value (excluding developments) and our
residential portfolio grew 9.8%.
Disciplined allocation of capital
with sales proceeds reinvested
or returned to shareholders
Consistent with our strategy of selling
assets where we expect forward returns
to be below our targets and reinvesting in
opportunities that we expect to enhance
our returns, we disposed of New Century
House and 77 Sir John Rogerson’s Quay
(“77SJRQ”) for €100.3m in the year and
reinvested €40.0m in seven acquisitions,
most notably the purchase of 98.3 acres
of land at Newlands. We also invested
€44.8m in capital expenditure on our
development schemes.
In order to maintain progress towards
our leverage targets, we have announced
our intention to return the €35m sales
proceeds from 77SJRQ to shareholders
and we commenced a €25m on-market
share buyback in April 2019. We also intend
to undertake a capital reorganisation to
enhance our flexibility for future capital
management through converting a
substantial amount of our share premium
into distributable reserves and we are
seeking approval from shareholders for
this at the AGM on 31 July 2019.
De-risking developments and
advancing pipeline of future schemes
We significantly de-risked our current
development programme with the
completion of 1 Sir John Rogerson’s Quay
(“1SJRQ”) and 2 Windmill Lane (“2WML”)
in March and February 2019, respectively,
delivering 172,000 sq. ft. of Grade A offices
and 19,000 sq. ft. of retail/leisure space and
generating a profit on cost of over 75%.
As at  over 65% of this office
space had been taken, following the letting
of 1SJRQ to HubSpot. The completion of
1SJRQ and 2WML finishes the Windmill
Quarter, our first cluster, which now
comprises six adjacent buildings in the
South Docks and c. 400,000 sq. ft. of offices
plus further ancillary space and communal
facilities. Our development at 2 Cumberland
Place, which will deliver 50,000 sq. ft. of
new Grade A office space, remains on
track to complete in the first half of 2020.
We have also made good progress on our
pipeline of future schemes, obtaining new
grants of planning permission for office
developments at Harcourt Square and
Marine House and growing our mixed-
use schemes through the acquisition of
a further 98.3 acres of land at Newlands
(Gateway) and 3.8 acres at 129 Slaney
Road. In total our four office schemes can
deliver 538,000 sq. ft. of office space post
completion and we now own 147.5 acres of
land with potential for mixed-use schemes,
143.7 acres of which is at Newlands.
Income and WAULT increasing
despite asset sales and growing
EPRA earnings and dividend
We agreed new leases and rent reviews
totalling €7.8m in the year or €5.8m net
of lease expiries and surrenders. The net
sales made in the year reduced contracted
rent by €4.2m meaning overall contracted
rent at  grew 2.9% to €57.6m
and our office weighted average unexpired
lease term (“WAULT”) to the earlier of
break or expiry grew 2.7% to 7.5 years.
Contracted rent from our completed office
developments of €27.5m now exceeds
the €22.9m of contracted rent from office
assets we acquired with income.
EPRA earnings grew 41.6% to €27.5m (4.0
cent per share) for the financial year and
the Board has proposed a final dividend of
2.0 cent per share, bringing the dividend
for the year to 3.5 cent, up 16.7% on the
prior year and representing a pay-out ratio
of 89% of EPRA earnings. We see potential
for further growth as we let our committed
developments and vacant space (ERV:
€10.8m), capture the €3.7m of reversionary
potential in the portfolio (most of which
will come in the next 2.1 years), and from
our lower cost structure following the end
of the IMA in November 2018.
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Strategic report
Chief Executive Officer’s review continued
Debt refinanced, progress
towards leverage target expected
We successfully refinanced our debt
in December 2018, moving to a fully
unsecured structure and agreeing our first
non-bank funding in the form of €75m of
seven and 10-year US private placement
notes. While the quantum of our facilities
has remained broadly unchanged, the
refinancing significantly extended the
average maturity of our debt from 1.9 years
to 5.7 years as at December 2018 (March
2019: 5.4 years, March 2018: 2.7 years)
and the unsecured structure ensures
we have access to the widest possible
range of funding options in future.
As at  net debt was €217.1m
(March 2018: €202.7m) and the loan to
value ratio was 15.6% (March 2018: 15.5%).
While development and acquisition
expenditure in the year was €84.8m, this
was largely countered by the net sales
proceeds received of €65.0m. A further
€35.3m was received after the year end
from the sale of 77SJRQ (contracted in
March 2019) which we have committed
to return to shareholders. We expect
further progress towards the lower end of
our target 20-30% loan to value range as
we have a further €34.5m of committed
development expenditure, most of which
will occur in the year to March 2020. Net of
this committed development spend and
capital returns we have cash and undrawn
facilities of €143m available.
Positive outlook
Market conditions remain favourable, with
robust economic growth and continued
foreign direct investment leading to strong
demand for office space, while supply
of new offices in central Dublin remains
limited. These same dynamics are also
in evidence within the residential sector.
We are positive about our prospects: we
have a talented team, a portfolio with near-
and longer-term potential, and flexible, low
cost funding available to support our plans.
Kevin Nowlan
Chief Executive Officer
17 June 2019
“
We have continued
to recycle capital,
selling assets worth
over €100m and
reinvesting €85m in
new acquisitions and
our developments,
where we expect
better future returns.”
20  Q+A with
the CEO
How is Brexit affecting your thinking?
Given the strong occupational market
in Dublin our key strategic priority has
been increasing our portfolio income
and WAULT through completing and
leasing our developments, concluding rent
reviews and letting the vacant space in our
portfolio. We think Brexit thus far has been
a net positive for the Dublin office market
(both overtly, from relocations from the
UK, and less visibly, through redirection
of foreign direct investment flows away
from the UK) but even without it, the
occupational market would have been
strong so it’s unlikely our strategy would
have been much different. Looking ahead,
it’s impossible to know how Brexit will
play out but it is reassuring that the UK
Parliament remains against exiting the EU
without a deal, an outcome which we think
could have a negative impact on the Dublin
property market in the near term. That said,
with our high quality portfolio and low
leverage we believe we are well-positioned
whatever the outcome of Brexit.
You’ve sold more assets than
you’ve bought this year and
announced a share buyback – why?
Our focus is on maximising shareholder
returns: where we have assets that we
don’t expect to meet our forward returns
targets or where we receive offers ahead
of our assessment of value we look to sell.
For these reasons we sold New Century
House and 77 Sir John Rogerson’s Quay
in the year, both at prices modestly
ahead of the last reported book value,
generating proceeds of €100.3m. If we
find opportunities which we think will
enhance our returns we look to invest but
equally if we can’t we won’t: this year we
invested €40.0m in seven acquisitions,
most notably at Newlands Cross. We are
also conscious of maintaining an efficient
balance sheet and that is behind our
decision to return €35m from the sale
of 77 Sir John Rogerson’s Quay to
shareholders, starting with an initial €25m
share buyback.
Do you expect to continue
this trend in the coming year?
We will continue to focus on shareholder
returns and recycling capital: if the
investment market remains as competitive
as it is currently we are probably more
likely to be net sellers than net buyers
but one never knows what opportunities
will arise.
“
With our high quality portfolio and low
leverage we believe we are well-positioned
whatever the outcome of Brexit.”
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Strategic report
Our market
Why is Dublin an attractive place to invest?
Dublin is a capital city and by far the largest
and wealthiest city in Ireland. Greater Dublin
is home to more than 40% of Ireland’s
4.8m population and generates over half
its GDP (source: CSO). Dublin has four
universities and a number of other higher
education institutions and it has a young,
highly-skilled and growing workforce. This,
together with Ireland’s language, legal
system, time-zone, tax advantages and
membership of the European Union, has
attracted many international companies
to Dublin, particularly from the technology
and financial sectors. Greater Dublin is
expected to continue to grow rapidly, with
its population forecast to increase by over
17% in the next decade (source: National
Planning Framework), and office-based
employment forecast to grow by a similar
amount (source: Oxford Economics).
Would you ever invest outside Dublin?
Our mandate is to invest in the Republic
of Ireland. For the reasons mentioned
already we believe Dublin is likely to remain
the most attractive investment market for
us and it is also the one where our local
knowledge, built up over many years, gives
us a competitive advantage.
Why has Hibernia concentrated on the
office and residential sectors in Dublin?
Our primary focus is the Dublin office
sector, which accounts for c. 85% of our
portfolio: it is a large, relatively liquid market
totalling over 40m sq. ft. (c. 22m sq. ft.
in city centre) which attracts international
investors and it is a sector where we expect
growth over the next decade. Within the
Dublin office sector we have invested
solely in city centre offices as this is where
most tenants and employees want to be –
leading to higher rents. It is also where the
barriers to entry are highest, on account of
planning restrictions and scarcity of sites.
The same trend of secular growth and
constrained supply is expected in the
Dublin residential sector, which currently
comprises c. 11% of our portfolio. And it
is why we have made a number of
acquisitions in the past year – most
notably at Newlands, D22 – which we
hope will enable us to deliver new
residential rental stock in future.
Why Dublin?
22  Is Brexit good or bad for Dublin?
At the moment none of us knows exactly
what the outcome of Brexit will be, so
it’s a difficult question to answer! While
companies are often reticent about giving
reasons for locating or increasing their
presence in Dublin, we believe that since
the UK’s referendum on EU membership
in June 2016 Dublin has benefited from
a number of companies deciding to
increase their headcount here, primarily on
account of Brexit. Some of these have been
financial services companies moving staff
but we think the larger source of demand
for office space has come from the TMT
sector directing their expansion to Dublin
(“latent Brexit”). We think this trend will
continue and that the positives of Brexit
for the Dublin property market are likely to
outweigh the negatives.
Are you seeing a change in the
requirements of office tenants?
Human capital is increasingly important to
employers and, as a result, good working
environments and wellness are also rising
in their priorities as they seek to attract and
retain the best staff. As mentioned already
this is a key reason why all Hibernia’s office
properties are located in the city centre: it
is where the majority of employees prefer
to work. It is also why we, along with
delivering high quality new buildings, have
sought to develop clusters of adjacent
buildings, with the first completed being
the Windmill Quarter: by doing so we are
able to provide excellent communal areas,
facilities and events without prohibitive
costs for tenants.
Tenants are also becoming more focused
on sustainability and are seeking greater
flexibility in their leases, with some larger
corporates now using serviced offices
for part of their accommodation needs.
Sustainability is an important strategic
priority for us and with a series of targets
for the delivery of new buildings and the
management of the existing portfolio,
we are well-positioned to meet evolving
tenant needs in this regard (for further
details please see pages 59 to 63). We have
looked closely at the serviced office sector,
helped by our joint arrangement with
Iconic Offices in Clanwilliam Court which
runs until January 2022. We will consider
leasing space selectively to serviced office
operators where we believe it will enhance
the portfolio: they comprised 1% of our
office contracted rent roll at .
We will also consider offering shorter lease
terms with corporate tenants ourselves,
where appropriate.
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Strategic report
Market review
Market dynamics remain favourable
“
The Dublin office market set a new record
of 3.9m sq. ft. of take-up in 2018, up 8%
on 2017 which was the previous record.”
General economy
Ireland had another year as one of the
top performing economies in Europe in
2018, with headline GDP growth of 6.7%
versus 1.8% for the euro area (source: CBI,
European Commission). Core domestic
demand, which is regarded as a better
measure of the strength of the economy,
grew by 4.5% in 2018. There have been
some modest downgrades to growth
expectations recently, largely on account
of the uncertainty around Brexit, but
nonetheless economic momentum is
expected to remain strong with growth
in core domestic demand forecast to be
4.5% in 2019 and 3.7% in 2020 (source:
Goodbody). The number of people in work
reached a new high of 2.3m in December
2018, albeit with some moderation in future
growth expected as the pool of available
labour diminishes (source: CSO, CBI) and
the same trends are being seen in Dublin,
where the unemployment rate has fallen
below 5% (to 4.9% in Q4 2018) for the
first time since late 2007 (source: Dublin
Economic Monitor). As the labour market
has tightened wage growth has started
to pick up, with salary inflation of 3.0%
expected in 2019 and overall inflation of
0.9% expected (source: Department of
Finance). In the construction sector tender
prices are expected to increase by 3.4% in
the first half of 2019 (source: SCSI).
With tax revenues ahead of expectations,
the Government achieved a balanced
budget in 2018 for the first time in over a
decade and a budget surplus of 0.2% is
forecast in 2019 (source: CSO, Department
of Finance). National debt to GDP was
64.8% at the end of 2018 and is forecast to
reduce to 61% by the end of 2019, marking
near achievement of the target of 60% as
set down by the EU (source: Department
of Finance). The investment programme
announced by the Government as part of
Project Ireland 2040 has seen projected
capital spending for 2019 rise to €7.9bn,
well ahead of the initial €5bn expected in
the 2016 Capital Investment Plan (source:
Goodbody), and the National Broadband
Plan, to deliver high-speed fibre capacity to
the whole country, has just been announced
at an expected cost to the State of €3bn.
Despite its current momentum, the open
nature of Ireland’s economy means it is
particularly exposed to events beyond its
borders and key risks include a disorderly
Brexit, trade wars and an economic
slowdown in the US. At present, foreign
direct investment (“FDI”) in Ireland remains
high: 4,700 IDA-sponsored jobs have been
created thus far in 2019, equivalent to 63%
of the 2018 total which was itself a strong
year, and Dublin has accounted for 80% of
these new jobs (source: Davy, IDA).
Irish property investment market
In the 12 months to  the
MSCI/SCSI Ireland Quarterly Property
All Assets Index (the “Index”) excluding
Hibernia delivered a total return of
7.5% (March 2018: 7.7%, including the
4% increase in commercial stamp duty
introduced in October 2017). The industrial
sector was the top performer with a total
return of 12.9% followed by the office
sector at 8.5% and “other” – which includes
multi-family residential – at 7.3% (March
2018: 7.8%, 9.7% and 7.7%, respectively).
Yields have remained broadly constant in
the office sector since late 2017, with the
agent consensus between 4% and 4.25%,
though some suggest these are trending
tighter. PRS yields are between 3.85%
and 4%, down from 4.25% at March 2018,
and are trending tighter as well (source:
Cushman & Wakefield, CBRE).
2018 was another strong year for the
investment market as total spend
reached a record €3.6bn and a number
of large transactions completed. The rate
moderated slightly in Q1 2019, amounting
to €0.6bn, and total investment volumes
for 2019 are expected to reach €2.5bn but
could be considerably higher depending
on the outcome of the Green REIT sales
process (source: JLL). The office and
residential sectors comprised the majority
of investment volumes in 2018 at 40% and
30%, respectively, and Dublin continues
to be the principal location within Ireland,
accounting for 85% of volumes (source:
Knight Frank).
Office occupational market
The Dublin office market set a new record
of 3.9m sq. ft. of take-up in 2018, up 8%
on 2017 which was the previous record.
The city centre continues to account for the
majority of the take-up, representing 72%
of lettings by area in 2018 (source: Knight
Frank). Net take-up was 71% of the headline
figure in 2018 (2017: 55%), suggesting
robust underlying occupier demand.
This demand has continued into 2019 with
1.4m sq. ft. taken up in the first quarter,
equivalent to 35% of 2018’s full-year total
(source: Knight Frank). The trend towards
large leasing deals has also persisted,
with lettings greater than 50,000 sq. ft.
accounting for 48% of take-up in 2018 and
79% of take-up in the quarter ended March
2019 (source: Knight Frank).
Top 10 office investment transactions (12 months to March 2019)
Building Price Price (psf) Buyer Buyer nationality
Dublin office swap, D1&D2 €160m n/a IPUT/State Street Ireland/USA
Charlemont Exchange, D2 €144m €1,171psf Vestas South Korea
No. 2 Dublin Landings, D1 €107m €1,118psf JR AMC South Korea
The Beckett Building, D3 €101m €532psf Kookmin Bank South Korea
Belfield Office Park, D4 €90m €308psf Spear Street Capital USA
New Century House, D1 €65m €818psf Credit Suisse Switzerland
The Infinity Building, D7 €57m €452psf Credit Suisse Switzerland
The Sharp Building, D2 €56m €1,260psf Credit Suisse Switzerland
The One Building, D2 €50m €1,100psf BNP REIM France
77SJRQ, D2 €36m €1,040psf Patrizia Germany
Source: Knight Frank
24  The amount of space accounted for by lettings under 50,000 sq. ft. has remained relatively
consistent with 1.9m, 1.6m and 2.0m sq. ft. take-up in 2016, 2017 and 2018, respectively
(source: CRBE, Knight Frank).
The technology, media and
telecommunications (“TMT”) sector remains
the biggest source of demand, accounting
for 52% of 2018 take-up and 56% in Q1 2019
(2017: 51%), followed by co-working at 13%
(Q1 2019: 1%). State bodies comprised 7% of
take-up in 2018 and 31% in Q1 2019 (source:
Knight Frank). As noted in previous results
statements, we believe US technology
companies redirecting investment that may
otherwise have gone to the UK (“latent
Brexit”) are having a bigger impact on
the Dublin office market than relocations
from the UK. The serviced office sector is
also growing strongly and as of Q1 2019
represents 2.9% of Dublin’s CBD office
stock, excluding period offices, up from
1.8% during the same quarter last year.
By comparison, the sector’s share of office
stock in London and Paris is 5.6% and 2.1%,
respectively (source: Knight Frank).
The overall Dublin office vacancy rate at
March 2019 was 5.4% (March 2018: 6.2%)
and the Grade A vacancy rate in the
city centre where all of Hibernia’s office
portfolio is located was 4.5% at March 2019
(March 2018: 3.7%) (source: Knight Frank).
CBRE notes that while prime city centre
rents have remained stable at €65psf
to end-April 2019, rental values in the
suburbs have increased in recent months.
Looking ahead, active demand remains
strong at 4.2m sq. ft. at the end of March
2019 though it has reduced from 5.8m sq.
ft. at the same time last year following the
satisfaction of several large requirements
during 2018 (source: Cushman &
Wakefield).
Office development pipeline
The table below sets out delivery since 2017
and our expectations for upcoming supply
across Dublin’s city centre and for the
whole of Dublin by year. Overall, we expect
a total of 11.2m sq. ft. of gross new space
between 2017 and 2022, of which 70% will
be in the CBD.
The pre- and mid-letting market remains
active, with 47% of office stock under
construction in the city having been
let or reserved as at April 2019 (source:
CBRE): recent lettings include the pre-let
of the 160,000 sq. ft. Distillers Building
in Smithfield to the OPW and Amazon’s
agreement to let 176,000 sq. ft. of space in
the 2 Charlemont Square development.
Residential sector
Housing delivery continues to increase,
with 18,000 new homes delivered in 2018
(versus 14,000 in 2017) and 60% of these
delivered in the Dublin area. The same
trend was exhibited in Q1 2019, as 4,275
units were completed nationally, up 23%
Top 10 office lettings (12 months to March 2019)
Tenant Industry Building
Area
(sq. ft.)
%
of total
take-up
Facebook TMT Bankcentre, D4 870k 19%
Salesforce TMT Spencer Place, D1 430k 10%
Google TMT Bolands Quay, D2 221k 5%
Central Bank State 4 & 5 Dublin Landings, D1 201k 4%
OPW State The Distillers Building, D8 182k 4%
Facebook TMT Nova Atria South, D18 174k 4%
WeWork Serviced offices Charlemont Exchange, D2 121k 3%
HubSpot TMT 1SJRQ, D2 112k 3%
IDA State Three Park Place, D2 112k 2%
WeWork Serviced offices 2 Dublin Landings, D1 100k 2%
Source: Knight Frank
year-on-year (source: CSO, Goodbody).
However, this increased output accounts
for only half of the estimated annual
demand in the market (source: Goodbody).
Completions are expected to grow further
in 2019 and 2020, to 24,000 and 28,000
units, respectively, following increased
planning permissions granted over the past
year (source: Goodbody, CBI). House price
inflation has moderated somewhat,
standing at 4.3% annually on a national
basis and at just 1.4% annually in Dublin at
February 2019 (source: CSO).
While the realised and forecast increases
in housing supply are welcome, delivery
of affordable units remains a key concern.
2018 delivery suggests an excess of
new homes at higher price ranges when
compared to the number of people who
can afford to buy them and, conversely, a
deficit at more affordable prices (source:
Goodbody). Apartment delivery continues
to lag behind other housing types: planning
for over 10,000 apartment units was
approved in the 12 months to Q3 2018, a
multiple of almost four times the actual
delivery in 2018 (source: Goodbody).
However, the removal of uncertainty around
planning restrictions and heights in late
2018 is likely to spur greater delivery in 2019
and the build to rent sector is expected
to be a significant contributor to supply:
planning for a further 10,000 units has
been applied for since the beginning of Q4
2018 (source: Goodbody). Strong growth
in apartment delivery of 29% year-on-
year in Q1 2019, albeit from a low base,
suggests that apartment delivery can be
a key contributor to housing supply in the
coming years (source: CSO, Goodbody).
Despite increases in supply and a
moderation in growth in capital values,
there remains a large amount of
international and domestic institutional
capital looking to invest in the residential
sector, particularly in the private rented
sector (“PRS”). CBRE’s latest research
suggests that as much as €6.3bn is now
targeting the sector in Ireland, up from
€5.3bn this time last year.
Expected Dublin office development supply
Year City centre supply All Dublin supply
2017 0.9m sq. ft. 1.4m sq. ft.
2018 1.7m sq. ft. 2.1m sq. ft.
2019f 0.8m sq. ft. (66% pre-let) 1.6m sq. ft. (44% pre-let)
2020f 1.9m sq. ft. (45% pre-let) 2.4m sq. ft. (38% pre-let)
2021f 1.1m sq. ft. (36% pre-let) 1.9m sq. ft. (50% pre-let)
2022f 1.3m sq. ft. (0% pre-let) 1.8m sq. ft. (0% pre-let)
Total 2017-22 7.8m sq. ft. 11.2m sq. ft.
Source: Knight Frank/Hibernia
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Strategic report
Our stakeholders
Listening to
our stakeholders
Hibernia recognises the importance of stakeholder engagement
in achieving its strategic priorities and ensuring the long-term
success of the Group.
Listening to our stakeholders
Understanding views, perspectives,
concerns and ideas from inside and
outside the Group is vital to ensure our
operations meet the changing needs of
our stakeholders. Tenants are at the heart
of everything we do and we use daily
engagement and regular surveys to ensure
we react proactively to their concerns.
Hibernia’s approach to
stakeholder engagement
The purpose of the business is to create
value not only for shareholders but also for
the wider stakeholder universe. To do this
the Group considers not only its investors,
but also its tenants, employees, investors,
suppliers and the communities it operates
in when planning its strategy and operating
its business. Stakeholder engagement and
management are key ingredients for the
Group’s continued success.
Central to our property business is
sustainability, not only as this is increasingly
a focus of regulation around property
development and management, but
also because our business can make a
positive impact on a sustainable future
and our stakeholders care about our
green credentials.
Tenant event at the Townhall, 1WML
26  Why is it important to engage?
Our tenants are our customers: they expect high quality
working environments and good service. Engaging with our
tenants is crucial to ensuring that we fully meet their needs and
requirements. Unlike many of our peers, who outsource this
function, we have our own team of asset and building managers
because we believe this is the best way to fully understand our
tenants’ experience.
Our shareholders are the owners of Hibernia. Other investors
may become shareholders in future. Engagement allows
investors to gain a greater understanding of Hibernia, its
strategy and the dynamics of the market in which the Company
operates. It also gives Hibernia’s Board and Senior Management
Team an insight into investors’ views and any concerns they
may have.
How we engage
Our building managers are located in our multi-let office
buildings so they interact with our tenants every day. Our asset
managers and our Sustainability Manager engage with tenants
periodically (e.g. at review meetings) or as required. We run
an annual tenant survey and use the information gathered,
and feedback on initiatives undertaken, to further enhance our
offering and service.
With the exception of restricted periods (e.g. in the run-up
to releasing financial results), Hibernia’s Board and Senior
Management are always available to speak to or meet investors
on any matter, including sustainability. Our Senior Management
Team undertakes an extensive scheduled investor relations
programme over the course of each year, encompassing both
roadshows and attendance at key conferences.
With respect to sustainability performance, Hibernia has started
reporting to GRESB and from 2019 onwards its results will be
available to investors who subscribe to GRESB. Hibernia also
reports sustainability performance figures under the EPRA
Sustainability Best Practices Recommendations (“sBPR”).
Stakeholder expectation
Our tenants have a diverse range of businesses and needs.
They expect us to deliver spaces that work for them. Many now
also value sustainable spaces, quality of services and amenities
for their employees and flexibility in lease arrangements and
other terms.
Our investors expect a positive return. Many now expect that we
align ourselves with sustainability benchmarks such as GRESB.
Relevance to the business model and strategy
Listening to tenants helps shape our future developments and
refurbishments, plan delivery of workable spaces and informs us
of our tenants’ expectations and appreciation for amenities we
provide such as shared social spaces and green initiatives.
Investors are the reason the business exists. Their expectations
for income and capital growth inform our decisions on
many levels, the mix of income generating properties versus
development activities, the investment in sustainability
improvements, dividend targets and leverage amongst others.
Read more on pages 81 to 83
Read more on page 14
Tenants Investors
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Strategic report
Our stakeholders continued
Why is it important to engage?
Our suppliers provide goods and services to Hibernia,
without which we may not be able to achieve our strategic
objectives. The successful delivery of our projects requires
good relationships with the main contractors. It is important
that Hibernia treats suppliers fairly so that they are willing to
continue to provide goods and services. It is also important
that suppliers fulfil their obligations from a commercial,
environmental and social (e.g. health & safety) perspective.
For Hibernia to be successful in the long term it is important
that it is a responsible owner and landlord and that its work
brings benefit to the wider community. This is particularly
the case where Hibernia is doing development work which
potentially brings significant upheaval to surrounding
communities. Engaging and supporting these communities is
therefore an important part of our approach.
How we engage
We maintain a team of qualified individuals supporting our
business who have good contacts and relationships with
suppliers. Whilst we use a tender process to ensure best value,
we place a large emphasis on quality and established track
record. We ensure that we support all suppliers through fair
and prompt payment. This helps us to keep a good working
relationship with quality suppliers to continue to support our
future pipeline. We have a Supplier Code of Conduct that sets
out the standards we expect our suppliers to comply with.
Where new developments are taking place we engage with
local communities during the planning process. During the
year, we engaged with a number of local initiatives designed to
support local communities. Part of the historic graffitied wall
of Windmill Lane Studios was donated to Movember, a men’s
mental health group that has raised €120k to date through
selling restored pieces. We are one of the lead sponsors and
organisers of the Dragons at the Docks event each summer
which has so far raised over €300k for homeless and other local
charities. We organised children’s activities locally including a
Christmas party in 1WML in the year. In the wider community
we sponsored industry related events. We also co-sponsored
the Haughton and Young Limited (HYL) ‘Excellence in training’
scheme for young apprentices.
Stakeholder expectation
Our suppliers expect to be paid promptly and treated fairly.
Assuming they perform well they can reasonably expect to be
used in future.
Local communities where our properties are located can have
a wide range of expectations. Within the working population
in our buildings, retail and social space and other amenities
can be important. In the wider community, apprenticeship
programmes, community support and engagement schemes
are expected.
Relevance to the business model and strategy
Investing in our supplier relationships enables us to work with
established and quality providers, particularly on our building
contracts. Using supplier interactions and requiring adherence
to a code of contact helps us to maintain our standards where
activities and goods are sub-contracted externally.
Community engagement demonstrates our commitment
to responsible and sustainable business and reduces the
risk of reputational damage. It also helps us to understand
the interactions of the various stakeholders and respond to
their needs.
Read more on pages 59 to 63
Read more on pages 59 to 63
Suppliers Communities
28  Hibernia’s employees work to execute the Group’s strategy.
Proper engagement is necessary to communicate the Group’s
goals, to encourage personal development and to make sure
employees are happy and motivated.
Government, central and local, sets the rules that govern
Hibernia and its properties. Delivering on our development and
refurbishment strategy requires interaction with local planning
authorities and government.
The Board and Management encourage a culture of openness
and transparency, which is helped by the Group’s single,
open-plan office. There are weekly Executive Committee
meetings together with regular inter-departmental meetings
and quarterly “all staff” town halls. There is a formal annual
review process for every employee and an anonymous annual
employee survey. In addition there are periodic training events
and social events for those who wish to participate.
We engage proactively in planning pre-application consultations
with key stakeholders and adjust our approach accordingly.
We ensure we are informed of and compliant with all regulations
impacting our activities and we use advisers and consultants
to aid us in this task. We engage at a community level with
local councillors to help target community support priorities.
We work closely with the council in order to complete our
streetscaping around new buildings. We are a founding member
of Irish Institutional Property, a representative group which
represents the interests of institutional property companies.
Employees expect not only a fair payment for their services but
also a good working environment. Employees place value on
good communication, a social network and the opportunity to
participate in personal and community development as well as
contribute to charitable endeavours.
We are expected to comply with regulations and planning
guidelines. In some cases we are expected to contribute to
the local area development in terms of the public realm and
other amenities which are not necessarily part of our property.
Local government’s expectation also incorporates an element
of community welfare and informs our interaction with
the communities they serve.
Happy and motivated employees feel more connected and loyal
to the Group and these efforts tend to promote retention and
enhance recruitment efforts. All of this combines to support the
business in the achievement of its KPIs. Alignment of employee
remuneration to KPIs also ensures the greater likelihood of
achieving corporate goals.
At a basic level, non-compliance with regulation can cost us
money and reputational damage. Proper management and
interaction with this stakeholder can advance our goals in
developing and creating value.
Government
Read more on pages 59 to 63 Read more on pages 59 to 63
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Strategic report
Our business model
Creating long-term value
We focus on the Dublin office and residential markets.
Our approach is based on active ownership of our properties
(through repositioning buildings and asset management) and
recycling of capital into new opportunities to generate above
average long-term returns while using only modest leverage.
Read more on page 34
People and relationships
Experienced leadership with
specialist investment, asset
and building management,
development and finance teams
and a deep knowledge of the
Dublin property market.
Innovations and tenant service
We seek to be at the forefront
of changes in occupier needs.
Our clustering strategy (see
page 6) enables us to provide
better experiences and services to
our tenants. Unlike many property
companies in Ireland we manage
most of our buildings ourselves as
we feel this is better for both tenant
and landlord.
Financial resources
We run with low leverage: our
through-cycle target is 20-30% loan
to value.
Our inputs How we create value
30  Investors
We aim to create value and grow
income for our shareholders.
Tenants
Our well-located, attractive buildings
offer tenants excellent space to work
or live in.
Suppliers
We are responsible customers and
seek to pay suppliers promptly.
Communities
Investing in our buildings and
clusters improves locations and
benefits local communities.
Employees
We give our employees the chance
to gain experience and develop.
Our review process gives concise
feedback and we run training
schemes for our employees.
The value we share
Clustering
Where possible we form
clusters of buildings with
shared facilities to benefit
our tenants and their
employees.
Asset
improvement
We unlock value
through refurbishment,
redevelopment and
change of use, increasing
the rents tenants are
prepared to pay.
Buy
Typically, we buy off-market
and we are experienced in
acquiring property through
secured loans.
Sell
Where assets no longer meet
our expected forward returns
or we can achieve future
gains today, we look to sell
and recycle the proceeds into
new investments.
Active
management
We seek close relationships
with tenants and take a
cycle-based approach
to maturities.
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Strategic report
Our strategy
Clear strategic thinking
is key to our long-term success
Strategic priorities
2018-19 Key targets 2018-19 progress
KPI impact and
operational metrics
1 Complete committed near-
term developments and
prepare pipeline of future
projects. Where possible
use development to form
clusters of buildings with
shared facilities
See pages 53 to 54
• Deliver 1SJRQ and
2WML completing the
Windmill cluster
• Progress four pipeline
projects and add to pipeline
where possible
• Assess existing in-place
portfolio for future value-
add opportunities
• 1SJRQ and 2WML delivered,
completing the Windmill Quarter
• Construction commenced on 2
Cumberland Place: expected to
complete in H1 2020 calendar year
• Planning permission granted for
revised scheme at Harcourt Square
and new scheme at Marine House
• Working up plans for other
pipeline projects including
Clanwilliam Court and Newlands
• Development profits
enhance EPRA
NAVPS and TPR
• Lettings/pre-lets
increase rent,
WAULTs and reduce
voids/void costs
2 Increase rental income
and duration
See page 55
• Let 1SJRQ and 2WML
• Deliver rental uplifts
through rent reviews and
lease renewals
• Keep vacancy rates
below 5%
• Contracted rent +2.9% to €57.6m
and WAULT +2.7% to 7.5 years
• 1SJRQ offices let to HubSpot at
annual rent of €6.8m
• New office leases added €7.1m
(€6.9m excluding gym letting),
with weighted average term
certain of c.12 years
• Vacancy rate now 12% following
recent completion of 2WML and
lease break in the Forum
• Lettings increase,
contracted rents
and WAULTs and
may enhance EPRA
NAVPS and TPR
3 Make selective investments
See page 50
• Make acquisitions or
investments where we see
opportunities to enhance
Group returns
• €40m (incl. costs) invested in
seven acquisitions
• €45m invested in capital
expenditure on our
development schemes
• Investments should
enhance EPRA
NAVPS and TPR in
longer term
4 Recycle capital to monetise
gains and enhance
future returns
See page 50
• Sell assets which do not
meet our expectations for
forward returns
• Sale of New Century House and
77 Sir John Rogerson’s Quay for
€100m (modestly above book
value) with c. €85m invested in new
acquisitions and development capex
• Announced intention to return
€35m from the sale of 77SJRQ to
shareholders starting with an initial
€25m share buyback
• Disposals above
book value
enhance TPR and
EPRA NAVPS
5 Maintain an efficient balance
sheet and seek to diversify
funding sources and
maturity dates
See pages 56 to 58
• Continue to progress
towards target leverage level
of 20-30%
• Look to diversify debt
funding away from purely
bank debt and seek to
extend debt maturity dates
• LTV of 15.6% at March 2019
compared to 15.5% at March 2018
• Refinanced entire €400m secured
RCF with €320m unsecured RCF
and €75m of PP notes
• Weighted average debt maturity
5.4 years, up from 2.7 years at
March 2018
• Efficient balance
sheet should
enhance EPRA
NAVPS growth
and DPS
6 Continue to improve
environmental efficiency of
the portfolio
See pages 59 to 63
• Reduce energy consumption
and greenhouse gas
emissions (“GHG”) per
square metre on ‘like-for-like’
(“LfL”) and absolute basis
• New office buildings
delivered achieve at least
LEED Gold
• LFL reductions in energy
consumption and fuel
consumption per square metre of
4.5% and 7.1%, respectively
• 1SJRQ and 2WML on target to
receive LEED Platinum and LEED
Gold certifications, respectively
• See Sustainability
Report 2019
available at
32  Strategic priorities
2019–20 Key targets Risks
1 Increase rental income to drive
dividends per share and, where possible,
increase WAULTs
See pages 53 to 55
• Get office vacancy rate back below 5%
• Agree outstanding and upcoming rent
reviews to capture reversion
• Occupational market weakness
• Existing tenants leave or
become insolvent
2 Progress with our committed
development scheme and prepare
pipeline of future projects, especially
where there is potential for more clusters
similar to the Windmill Quarter
See pages 8 to 9
• Continue construction of 2 Cumberland
Place and aim to complete as early as
possible in 2020 calendar year
• Obtain planning permission for
redevelopment of Clanwilliam Court
• Assess existing in-place portfolio for
future value-add opportunities
• Market decline reduces
development surpluses
• Construction cost inflation or (sub)
contractor failure does likewise
• Buildings delivered do not meet
tenant needs
• Adverse planning decisions
3 Recycle capital to monetise gains and
make selective investments
See page 11
• Continue to seek to dispose of assets
which do not meet our expectations for
forward returns
• Make acquisitions or investments
where we see opportunities to enhance
Group returns
• Market decline means cannot achieve
book value on disposals
• No attractive acquisition or
investment opportunities
• Returns expectations wrong
4 Maintain an efficient balance sheet
See page 58
• Continue to progress towards target
range of 20-30% LTV
• Where net sales reduce leverage
consider returning excess capital
to shareholders
• Disposals exceed capital deployment,
reducing LTV
5 Continue to improve environmental
efficiency of the portfolio
See our Sustainability Report 2019
at • Reduce energy consumption and GHG
emissions per square metre on LfL and
absolute basis
• New office buildings delivered to
achieve at least LEED Gold
• Failure to achieve reductions could
impact the Group’s ability to attract
tenants and/or the value of the
Group’s properties
With a favourable occupational market and a competitive
investment market our main focus at present is on
maximising the value we deliver from our portfolio
through reducing vacancy, capturing reversion,
progressing developments and recycling capital.
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Strategic report
Key performance indicators
Creating long-term value
Our key performance indicators (“KPIs”) are the main metrics we use in running
the business and assessing its performance. They are focused on returns to
shareholders and are the principal determinants of variable remuneration. The
previous remuneration scheme, which existed since IPO, expired in November
2018 and the Group’s new policy took effect from that date.
Total accounting return (“TAR”) %
Reason
Measures the absolute growth in the Group’s EPRA NAV per share
plus ordinary dividends paid.
Commentary
Positive TAR shows that Hibernia continues to add value year on
year for shareholders. While the share price on the market may
be volatile, this shows the underlying capital and income growth
Hibernia has delivered for the shareholders.
Link to remuneration
Old scheme
• Absolute performance fees
New scheme
• All staff annual bonuses
• Executive Directors and Senior Management LTIP (starting
1 Apr 2019)

Total property return
(“TPR”) vs MSCI Ireland Index
Reason
MSCI/SCSI Ireland Quarterly Property All Assets Index (“MSCI Ireland
Index”) measures the return of the property market in Ireland for all
asset classes both including and excluding Hibernia assets.
Commentary
Demand in the core Dublin CBD market continues to be strong and
the completion of two major developments during the financial year,
together with gains from the rest of the portfolio, have combined to
ensure that Hibernia delivered a strong performance for the financial
year. Note: 2018 and 2017 data is restated using the methodology
used for the new Remuneration Policy.
Link to remuneration
Old scheme
• Relative performance fees
New scheme
• All staff annual bonuses
• Executive Directors and Senior Management LTIP (starting
1 Apr 2019)

EPRA earnings per share (cent)
Total shareholder return (“TSR”) %
Reason
Measures the profit after tax excluding revaluations and gains
and losses on disposals and associated taxation (if any).
For property companies it is a key measure of operational
performance and capacity to pay dividends
Commentary
Steady growth in EPRA EPS shows the increase in our underlying
rental income and in our ability to pay dividends.
Link to remuneration
Old scheme
• None
New scheme
• All staff annual bonuses
Reason
TSR measures the return to shareholders through growth in share
price and dividends and enables comparison to peers.
Commentary
TSR is used as a KPI in the performance assessment for LTIPs
under the new Remuneration Policy only and will only be relevant
for the financial year ended 31 March 2020 onwards. It encourages
long term performance for those responsible for strategic direction.
Link to remuneration
Old scheme
• None
New scheme
• Executive Directors and Senior Management LTIP (starting
1 Apr 2019)
  Operational metrics
In addition to our KPIs, we use the following main operational metrics in managing the business
Investment 2019 2018
Purchases €40m €39m
(Disposals) €(100)m €(36)m
Net investment €(60)m €3m
Sales – premium to book value 3% 21%
See more on page 50
Asset management 2019 2018
Portfolio value €1,395m €1,309m
In-place office vacancy 12% 3%
Passing rent €51m €50m
Contracted rent €58m €56m
Office rent w/cap and collar or
upwards only at next review 26% 36%
In-place office WAULT to break/expiry 7.5yrs 7.3yrs
Reversionary potential 7% 12%
See more on page 55
Alternative performance measures
The group uses a number of financial measures to describe
performance which are not defined under IFRS and are
therefore considered alternative performance measures
(“APMS”). These are described on page 193.
Development management 2019 2018
Capital expenditure €45m €45m
Committed capital expenditure €35m €77m
Profit on cost (completed in FY) >75% >65%
Yield on cost (completed in FY) 8.9% 8.7%
See more on pages 53 to 54
Financial management 2019 2018
EPRA earnings €27.5m €19.4m
Profit before tax €124m €107m
Net debt €217m €203m
LTV 15.6% 15.5%
Finance
costs €8.2m €6.2m
Cash and undrawn facilities €178m €197m
Committed return of capital €35m –
See more on pages 56 to 58
Number of staff 2019 2018
Employee retention 97% 97%
Training per employee (average) 20 hours 11 hours
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Strategic report
Risk management
Risk management
Effective management of risk is essential for the Group to
achieve its strategic priorities and deliver strong performance
over the long term. Overall the Group has a relatively low
tolerance of risk.
The Board has ultimate responsibility for
risk management and this is implemented
through a risk management system which
extends to all levels of the Group. The Group
promotes a proactive risk management
culture, encouraging all employees and
Directors to identify, measure and manage
risk on an on-going basis.
Our key focus areas in 2018-19
• Cycle position and appropriate
risk appetite
• Brexit and its potential impact on
our strategy
• Implementation of recommendations
made in reports from internal auditors
• Compliance with GDPR post May 2018
• Cyber threats and other security risks
• External review of health and safety
across the Group
Our key focus areas in 2019-20
• Cycle position and appropriate
risk appetite
• Adapting to changes in tenant needs
• Monitoring the potential outcomes and
impact of Brexit
• Continuing with the internal audit
programme and implementation of any
agreed recommendations
• Seeking ISO 45001 accreditation to
provide additional assurance around
health & safety and environmental, social
and governance (“ESG”) practices
• Expanding the CPD training programme
within the Group to include further risk
management training
• Reviewing GDPR implementation and
ongoing compliance
Risk profile
As a Group with the majority of its assets in
central Dublin offices, Hibernia is especially
sensitive to any factors which impact on
demand for office space in Dublin’s city
centre. Any decline in demand or material
increase in supply could negatively impact
the value of the Group’s portfolio, its rental
income and its ability to recycle capital or
source new capital. In addition the Dublin
property market is impacted by a range
of factors, some local to Dublin or Ireland
(e.g. planning regulations, cost of labour)
and some international in nature (e.g.
global trade, foreign direct investment
in Ireland).
Risk appetite
Risk appetite is set and reviewed by Senior
Management in consultation with the
Board of Directors. Conflicting interests, for
example where a business decision may
exceed stated risk appetite levels, are dealt
with by the Board. Overall the Group’s risk
appetite is relatively low and includes the
following factors:
• Moderate leverage: Leverage should
not exceed 40% of portfolio value at
incurrence and the Group’s through-
cycle leverage target is 20-30% LTV:
at  LTV was 15.6%
• Income producing assets: The Group will
meet its financing commitments and the
REIT requirements in terms of dividend
payments to its shareholders: in the year
ended  the Group had
interest cover of 4.1 times and declared
dividends of 3.5c per share, which is
greater than 85% of our property rental
profits in the year
• Dublin property market focus: Senior
Management’s expertise and value-
adding capabilities are most suited to
the Dublin property market. This focused
strategy allows the Group to limit its
foreign currency and geographical risks,
though there are concentration risks: as
at  100% of the Group’s
assets were in Dublin, the majority
comprising city centre offices
• Limited development exposure: The
Group limits its exposure to higher risk
development or speculative projects
while allowing it to grow income through
delivery of some new buildings: as
at  only one building
(1% of the portfolio by value) was
in development
• Mid-range property values: The Group
primarily targets office properties in the
€20m to €100m range. This reduces
the administration costs associated with
dealing with multiple smaller properties
and decreases the concentration
risk associated with high value single
property assets, where exit options may
be limited to a few major purchasers:
as at  66% of the Group’s
portfolio by value fitted into this category
These parameters are reviewed on a
periodic basis by the Board.
Risk management culture
Effective day-to-day management of risk
is embedded in our operational processes
at all levels of the organisation. Some key
points to note:
• The Board and Senior Management
encourage a culture of openness and
transparency throughout the Group
• The Group operates out of a single, open-
plan office in central Dublin and most of
its properties are within walking distance
• The Directors are closely involved in the
business, helping to quickly identify new
risks and weaknesses
• Senior Management is experienced and
staff turnover remains low
• The Senior Management Team holds
weekly management meetings and
regular inter-departmental meetings
to review progress in each area of
the business
• PwC has been retained as internal auditor
to provide an independent assessment of
controls and risk management processes
36  Risk management system
The Board has put in place procedures
designed to ensure that all applicable risks
pertaining to the Group can be identified,
monitored and managed at all times.
The Group’s risk management objectives
are to:
• Ensure risk management continues to
be an integral part of business processes;
• Maintain an effective system of risk
identification, analysis, evaluation
and treatment;
• Avoid exposure to significant operational,
reputational or financial losses;
• Assess and challenge the benefits and
costs of risk management processes and
controls; and
• Contribute to the achievement of the
Group’s strategic objectives
The Group’s risk management system
and any updates to it are communicated
to all relevant staff periodically and at
least annually.
Internal audit: PwC continues to provide
internal audit services to the Group.
An agreed internal audit risk assessment
and plan for the financial years 2018-2020
is in place. The plan proposes to undertake
a comprehensive review of processes and
controls in key risk areas. Further detail is
set out in the Audit Committee Report on
pages 84 to 90.
Risk register: The Group’s risk register
details risks across, inter alia, economic,
political, investment, operational, IT,
governance, regulatory and strategic
areas of the business.
The register was comprehensively reviewed
during the year with new risks added
to include risk factors around planning,
re-zoning and environmental issues,
obtaining vacant possession, the increasing
uncertainty around the Brexit process,
political risk, the failure to anticipate
or react to market trends in office and
tenant behaviour and the increasing focus
on sustainability reporting. Several risks
were added including risk factors around
the housing crisis, supply of commercial
property, availability of sites, market
concentration and market confidence.
Risk ratings were comprehensively
reviewed and adjusted during the period
reflecting the increasing threat of cyber
security, increasing uncertainty over Brexit
and its impact on the Group’s strategy, the
impact of the loss of key personnel, the
use of gearing, management of tax and/or
changes in the tax environment, access to
funding/refinancing debt, reputational risk
and fraud. Risk ratings were reduced for
remuneration policies to reflect the expiry
of the interim remuneration arrangements
in November 2018, for insurance to reflect
the strong mitigating measures in place
and for regulatory, legislative and tax
changes and professional negligence risks.
The risk register is reviewed and reported
to the Board on an annual basis.
A register of errors and breaches is
maintained and no material breaches
were noted during this and the preceding
financial year.
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Strategic report
Risk management system responsibilities
Monitoring
and
reporting
Board
• Ensure effective risk management is in place across the Group
• Approve the risk appetite for the Group
• Review and assess the Group’s principal risks and uncertainties
• Review the Group’s risk register and risk metrics
Implementation
and
compliance
Audit Committee
• Monitor and review the effectiveness of risk management processes across
the Group
• Monitor and review the Group’s management of risk
• Assess findings and recommendations of internal audit and management in
respect of risk
Risk and
compliance and
internal audit
• Lead the approach to risk management in the Group
• Implement risk management policy
• Present results of internal audit and other reviews to the Audit Committee,
identify deficiencies and recommend remedial measures where necessary
• Identify and assess emerging risks
• Identify and records all risks for inclusion in the register
• Monitor key risk indicators and risk metrics
Management
Committees
• Input into the Board process for setting risk appetites
• Implement strategy in line with the approved risk appetite
• Lead operational management approach to implementation
of risk management processes
• Identify and assess principal risks for the Board
• Consideration of mitigating factors recorded in the risk register
Operational
management
• Create an environment of acceptance and support for risk management
by employees
• Implement and maintain the risk management process
• Produce the risk registers including identification of risks, mitigations in place
and actions required
• Preparation of risk metrics
Employees • Active day to day consideration and management of risk
38  Going concern and viability statement
Going concern
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position
are set out in the strategic report on pages
2 to 63 of this Annual Report. This also
covers the financial position of the Group,
its liquidity position and debt facilities.
Further detail on the financial performance
and financial position of the Group and
Company is provided in the consolidated
financial statements and Company financial
statements on pages 126 to 191 and in note
2.e to the consolidated financial statements.
In addition, note 31 to the Annual Report
includes details on the Group’s financial risk
management and exposures. The Directors
have assessed the Group’s liquidity position
and have no reason to expect that the
Group will not be able to meet its liabilities
as they fall due for the foreseeable future.
Therefore, the Directors have concluded
that the going concern assumption
remains appropriate.
Viability statement
The Directors have assessed the prospects
of the business and its ability to meet its
liabilities as they fall due over the medium
term. The Directors’ assessment has been
made with reference to the resilience of
the Group, its strong financial position,
the Group’s strategy and the Group’s
principal risks and risk appetite. The review
is made drawing on expertise from across
our team and includes an assessment
of the macro-economic environment,
forecasts of key property market metrics
(including yields and rental growth) and
rolling valuation progressions for each
asset based on internal and market
expectations. These elements are drawn
into full financial projections for the current
financial year and the following three
years. These forecasts are updated for
each quarterly Board meeting and key
performance and sensitivity metrics are
highlighted for the review period.
The Group has five strategic priorities
(as set out on page 33). The Board has
concluded that a three-year (six for the
financial year ended )
period for a viability assessment remains
appropriate when balancing the long-term
nature of property investment with some
of the more immediate strategic priorities.
Assumptions have been built into the
business and financial planning process
which are based on a conservative view
of the Group’s expected income and
investment profile over this three-year
period. The financial planning process
considers the Group’s rental income,
profitability, capital values, gearing,
cashflows and other key operational and
financial metrics over the plan period
and the key vulnerabilities inherent
in the business. The timing of the
completion of development projects, lease
commencement of new space, expected
lease renewals, expected rental values and
capital values are the main elements of
planning reviewed at each quarterly Board
meeting. Sensitivity analyses are performed
to test the potential impact of some of the
principal risks and uncertainties affecting
the Group’s activities as described on
pages 40 to 49.
For the purposes of this viability statement,
the Directors have considered the decline
in underlying operating profits and asset
values that would be required before the
Group would breach its debt covenants or
the requirements of the Irish REIT regime.
Having reviewed the results of this exercise,
the Directors consider that all of these
scenarios are extremely unlikely to occur
within the three-year period examined.
The Group refinanced its €400m secured
revolving credit facility in December 2018
with a €320m unsecured revolving credit
facility (the “Unsecured Facility”) and
€75m of unsecured US private placement
notes (the “Notes”). The Unsecured
Facility has a five-year term and the Notes
have an average maturity of 8.5 years.
This refinancing resulted in the increase
of the weighted average maturity of the
Group’s debt from 1.9 years to 5.7 years
as at 31 December 2018 (5.4 years as at
).
While the Directors have no reason to
believe that the Group will not be viable
over the longer term, based on their
assessment of viability as described, the
Directors have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities as they
fall due over the three-year period of their
assessment ending 31 March 2022.
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Principal risks and uncertainties
A description of the Group’s principal risks and uncertainties and the steps which the Group has taken to manage them is
set out below.
These represent the Board’s view of the principal risks at this point in time and there may be other matters that are not
currently known to the Board or that are currently considered of low likelihood which could emerge and give rise to
material consequences. The mitigation measures that are maintained in relation to these risks are designed to provide a
reasonable and not an absolute level of protection against the impact of the events in question. The Board has reviewed
the principal risks and considers that while there has not been a significant change in these risks in the past year, they do
continue to evolve.
Change since last year
Risk Exposure Impact Probability
Market
Weakening economy • A drop in economic activity leading to declining
property values and/or rental income
• Ireland is a relatively small and “open” economy and
is therefore particularly sensitive to deterioration in
macro-economic conditions elsewhere
Under-performance of Dublin
property market
• Our portfolio is solely focused on the Dublin market
Adverse Brexit outcome • Ireland is particularly exposed to the impact of Brexit
due to its extensive trade with the UK
• An orderly Brexit is likely to be beneficial to certain
elements of the Irish economy, including the Dublin
property market, even if others may suffer
• In a disorderly Brexit scenario, the negative economic
impact may outweigh positives, at least in the near term
40  Key controls
and mitigants Comments
Residual
risk impact
Link to
strategic priority
• Active monitoring of economic lead
indicators and market developments
• Regular financial forecasting, stress
testing and scenario planning
• Risk appetite limits are in place for key
operating indicators
• Group policy is to use modest leverage
levels throughout the property cycle
Underlying economic activity in Ireland is expected to
continue to grow at a good rate in the coming years.
Core domestic demand growth was 5.7% in 2018 and is
expected to be 4.5% in 2019 and 3.7% in 2020 (source:
Goodbody). Brexit aside, global economic sentiment is
weakening and risks related to international trade and taxation
changes persist. These conditions may have an important
bearing on the future performance of the Irish economy.
The Group continues to increase WAULTs through lease
renewals and letting of new space completed, the WAULT
now standing at 7.5 years for the whole office portfolio as at
, up from 7.3 years at , helping
to reduce vacancy risks in a market downturn. While the
Group’s office vacancy rate at  was 12% due
to recent completions at 2WML and a lease break in Forum,
this is expected to reduce in the near term. Vacancy rates
in Dublin remain low (5.4% at ) and take-up
remains strong.

• Strategy and asset allocation
are regularly reviewed in light of
economic and market trends
• Risk appetites are set and monitored
for concentration levels
• Key risk indicators are reported to
the Board on a quarterly basis
Dublin office take-up set a new record in 2018 (for the
second year running) with 3.9m sq. ft. let and 2019 has started
strongly. Investment demand for office and residential assets
remains strong with record investment volumes in 2018.
1 2
3 4
• Low leverage (15.6% LTV) and financing
in place for the medium to long term
• High quality tenant base
• Seeking to lease vacant space and
extend WAULTs
The outcome of Brexit remains uncertain though it is
reassuring that the British Parliament appears opposed to a
“no-deal” Brexit. The Group’s key strategic priority continues
to be to grow our income and WAULTs through letting our
developments, concluding rent reviews and reducing vacancy
in the portfolio: these actions will also help protect the Group
in the event of an adverse Brexit outcome.

Risk trend
Unchanged
Increasing
Decreasing
Risk impact
High
Medium
Low
	
Read more on our strategic
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Strategic report
Principal risks and uncertainties continued
Change since last year
Risk Exposure Impact Probability
Investment
Mistimed investment or sale
through incorrect reading of
property cycle
• Lower returns and/or losses
• Missed investment opportunities
Inappropriate concentration
on single assets, locations,
tenants or tenant sectors
• Excessive exposure leading to poor performance
and/or reduced liquidity
Development
Poor or mistimed execution
of development projects
• Poor returns and/or losses
• Development projects not managed properly
leading to delays and cost overruns
• Failure to achieve expected rental levels
Contractor or sub-
contractor default
• Poor returns and/or losses
• Significant delays in completing development projects
Adverse outcome regarding
re-zoning at Newlands
(Gateway)
• Poor returns and/or losses
• Delays
42  Key controls
and mitigants Comments
Residual
risk impact
Link to
strategic priority
• Experienced investment team in place
• Close monitoring of market and
economic lead indicators
• Rigorous assessment of all acquisition
and disposal opportunities and of
projected portfolio returns
• Board and Investment
Committee overview
The Group’s portfolio was valued at €1.4 billion at 
and comprised 32 properties. The Group has been a net seller
of assets since , disposing of two properties for
€100m and recycling €40m into the acquisition of additional
properties and land.
The Chief Investment Officer, Richard Ball, resigned and left
the Group on  to pursue another opportunity.
Edwina Governey, previously Senior Investment Manager and
an experienced member of the team, has been appointed as
Interim Chief Investment Officer.
3 4
• Risk exposure targets and limits
are set and monitored for risk
concentration levels
• Periodic assessment of covenant
strength of key tenants
• Regular review of portfolio mix and
asset allocation and tenant exposure
• Board and Investment
Committee overview
All the Group’s investments are within Dublin and the majority
are in the office sector. The Group has assembled a balanced
portfolio comprising 32 properties. As at  the
largest single asset represented 11% of the portfolio by value
(11% as at March 2018). The in-place office portfolio’s top 10
tenants account for 69% of the contracted rent roll as at March
2019 (61% as at March 2018). The Technology, Media and
Communications sector (“TMT”) accounts for 48% of Group
contracted rent and reflects Ireland’s success in attracting
TMT companies.
Following the letting of 1SJRQ, HubSpot has become Hibernia’s
largest tenant contributing 18% of Group contracted rent.
1 3
4
• Experienced development team
• Close monitoring of market and
economic lead indicators together
with the supply pipeline
• Rigorous monitoring of development
expenditure against approved budgets
• Board and Development
Committee overview
As at  the Group had one committed
development scheme, totalling 50k sq. ft. of offices which
is scheduled for completion in the first half of 2020
(calendar year).
Two schemes, comprising 172k sq. ft. of Grade A office
space successfully completed in February and March 2019
respectively, and both were completed on budget. More
than 65% of this space is let following the HubSpot lease in
1SJRQ and discussions continue regarding the remaining
vacant space.
1 2
5
• Due diligence is completed on
key contractors
• Use of reputable and larger contractors
• Use of expert advisers to assist in
management of contractors and
sub-contractors
• Close oversight by development
team and project managers
The Group has an experienced development team, overseen
by the Development Committee. It also uses expert advisers
to help assess and manage contractors. The Group seeks to
use contractors with proven track records which also helps
to mitigate construction risks, including the risk of failing to
comply with applicable building regulations.
1 2
5
• Experienced development team
• Use of expert advisers
• Board and Development
Committee overview
The majority of the Group’s 144 acres of land at Newlands is
zoned for agricultural use under the current local authority
development plan which applies until 2022. There is also a small
element of the site that is zoned for industrial use. The Group
is working to get the land re-zoned to enable mixed-use
development but there is no certainty that this will happen or
over the timing of this occurring. At present the land represents
less than 4% of Hibernia’s portfolio value so any negative
impact is likely to be relatively modest.
1 2
Risk trend
Unchanged
Increasing
Decreasing
Risk impact
High
Medium
Low
	
Read more on our strategic
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Strategic report
Principal risks and uncertainties continued
Change since last year
Risk Exposure Impact Probability
Asset management
Poor asset management • Income not maximised through poor asset management
• Failure to proactively maintain assets leading to
increased costs
• Loss of tenants due to lack of satisfaction with
space and service
Failure to react to evolving
tenant needs
• Space fails to attract new tenants
• Assets become less attractive to investors
• Reduction in income and capital returns generated
44  Key controls
and mitigants Comments
Residual
risk impact
Link to
strategic priority
• All building and asset management
for multi-let office portfolio is done
in-house
• Annual survey of tenants to assess
satisfaction/areas for improvement
• Analysis of covenant strength of
prospective and existing tenants
• Creation of Head of Occupier Services
role to deliver an innovative tenant
focused strategy
• Focus on improving
sustainability credentials
All building and asset management of the multi-let office
portfolio is carried out by Group staff. This ensures best service
for tenants and best management by the Group. As well
as daily interactions with tenants by the Group’s building
managers, the Group carries out an annual tenant survey
to assess satisfaction and areas for improvement.
All prospective tenants are analysed by the finance team for
covenant strength before leases are agreed. The covenant
strength of the Group’s key existing tenants is also assessed
periodically. As outlined further below and elsewhere, the
Group is also highly focused on sustainability.
1 3
5
• Creation of Head of Occupier
Services role to deliver an innovative
tenant focused strategy and assess
changing trends
• Creation of clusters of offices to
provide better communal areas,
services and events for tenants and
their staff
• Regular, proactive maintenance and
upgrading of older stock
• Introduction of added value, e.g.
wellness programmes, and ancillary
and shared services
• Annual tenant satisfaction surveys
and one on one meetings with
tenants to identify priorities
• Focus on improving
sustainability credentials
The Group instigates regular assessments of its buildings and
upgrades as appropriate. Standard lease terms have been
revised in line with tenant and investor interest in sustainability.
Shared gym, meeting rooms and other services have been
introduced where “clusters” of buildings facilitate this, leading
to smaller tenants benefiting from high specification space for
meetings and provision of other services for staff.
Compliance with sustainability and environmental standards
has been an increasing focus for the Group and its tenants.
Sustainability targets include resource management and
delivery of new, high quality buildings. The Group reports on
EPRA sBPR standards annually and completed its first GRESB
assessment during 2018 which includes benchmarking energy,
waste and water usages for its buildings, on a private basis.
It has identified areas to improve performance in future. Its 2019
GRESB results will be available for all GRESB subscribers to see
once published.
1 2
3 4
5
Risk trend
Unchanged
Increasing
Decreasing
Risk impact
High
Medium
Low
	
Read more on our strategic
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Strategic report
Principal risks and uncertainties continued
Change since last year
Risk Exposure Impact Probability
Finance
Lack of available funds
for investment
• Failure to meet target returns due to funding limitations
Inappropriate capital structure
for market conditions
• Excessive gearing resulting in higher funding costs and
risk of covenant breaches
• Insufficient gearing leading to limited investment returns
People
Loss or shortage of staff to
execute our business plan
or failure to motivate staff
• Failure to achieve strategic goals
• Replacement of departing staff in a competitive
labour market may be challenging and/or costly
46  Key controls
and mitigants Comments
Residual
risk impact
Link to
strategic priority
• Active monitoring and assessment
of current and future financial and
cashflow requirements and availability
of funding
• Quarterly budget and scenario analyses
• Assessments of portfolio performance
and whether any assets should be sold
• Board and Finance & IR
Committee oversight
At  the Group had cash and undrawn facilities
totalling €178m, or €143m net of committed capital
expenditure (: €197m or €120m respectively).
The refinancing of the Group’s debt was completed in
December 2018 resulting in the extension of weighted average
maturity to 5.7 years from 1.9 years (5.4 years at )
and a move to a fully unsecured debt structure, maximising
future funding options.
During the financial year the Group has been a net seller,
generating net proceeds of €100m of which it has reinvested
€85m in acquisitions and capital expenditure on developments
and has committed to return €35m to shareholders.
1 2
3 4
5
• Policy of maintaining modest leverage
throughout the cycle: target loan to
value ratio of 20-30% and majority of
interest rate exposure fixed or hedged
• Active monitoring and assessment of
current and future covenant compliance
• Quarterly budget and scenario
analyses performed
• Assessments of portfolio performance
and whether any assets should be sold
• Board and Finance & IR Committee
oversight: all new loan facilities must
be approved by the Board.
At  the Group had a LTV ratio of 15.6% (31 March
2018: 15.5%), with committed capital expenditure in the
next 18 months expected to increase the LTV ratio to c. 18%.
No covenant breaches occurred in the period. As a result of
the refinancing of the Group’s facilities, the weighted average
maturity of the Group’s debt increased from 2.7 years at
 to 5.4 at . Further details on this
refinancing can be found in note 26a of the financial statements.
Given the net sales proceeds of €100m generated in the year,
the Group has committed to return €35m to shareholders
to maintain its progress towards the lower end of its
leverage target.
1 2
3 4
5
• Employee remuneration is strongly
linked to Group and individual
performance and annual staff appraisal
system and variable pay includes
deferred element
• Periodic assessment of remuneration
packages for all staff to ensure in line
with market
• Positive team spirit is fostered through
social and training events.
• Personal development and training
requirements are reviewed annually
Staff turnover remains low, with only 3% in the 2019
financial year.
A new Remuneration Policy was approved by shareholders at
the AGM in July 2018 which replaced the existing arrangements
which expired on 26 November 2018, as part of this a
remuneration assessment was completed for all staff.
The Group has an annual appraisal system for staff, with interim
reviews every six months. As well as reviewing performance
this system also sets targets for personal development.
The Group also hosts regular training sessions at lunchtime
to improve staff knowledge in all areas of the business and
the industry.
1 2
3 4
5
Risk trend
Unchanged
Increasing
Decreasing
Risk impact
High
Medium
Low
	
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priorities on pages 32 to 33
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Financial
statements
Additional
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47

Strategic report
Principal risks and uncertainties continued
Change since last year
Risk Exposure Impact Probability
Regulatory,
tax and political
Change in the political
landscape in Ireland or globally
may result in new laws or
regulations which may have an
adverse impact on the Group
• Changes in laws and/or regulations (including tax laws)
may reduce returns
Increased cost of compliance
and/or risk of non-compliance
with regulatory obligations
including laws, planning,
environmental, health and safety,
tax and other legislation
• Cost of compliance impacts profits
• Failure to comply may be costly and negatively
affect reputation
Business risk
Cyber attack/threat • Significant damage to the Group’s business
• Reputational damage
An external event occurs (e.g.
natural disaster, war, terrorism,
civil unrest) which significantly
and negatively affects the
Group’s operations
• Significant disruption and damage to the Group’s
portfolio and/or operations.
Reputational damage • Damage or losses due to fraud or error
• Inability to attract and retain staff and thus higher costs
• Regulatory sanctions in the event of a non-
compliance issue
48  Key controls
and mitigants Comments
Residual
risk impact
Link to
strategic priority
• The Group monitors news-flow and
uses expert advisers to keep abreast of
any proposed legislation
There is a shortage of housing, particularly in Dublin, and this
could, for example, lead to further Government intervention
through new laws and/or regulations.
Global tax reforms could also impact on the attractiveness of
Ireland and Dublin as a location for multi-national firms.
1 2
3 5
• The Group spends substantial time, and
retains external experts as necessary,
to ensure compliance with current and
possible future regulatory requirements
• Frequent meetings take place with the
Group’s retained tax advisers
• The Sustainability Committee monitors
compliance with ESG standards
• The Health and Safety Committee
addresses regulation including
building fire regulation compliance
and construction sites
A consultant review of health and safety requirements
was completed during the financial year. To promote ESG
compliance, the Group participates in GRESB which assesses
and benchmarks the ESG performance of real estate
companies and provides standardised and validated data to
investors. In this way the Group can measure its performance
versus its peers. The implementation of GDPR was completed
in this period. The Group is working towards achieving
additional certification to ISO 45001 and ISO 14001 which will
provide a framework to manage and improve sustainability
performance and results.
1 2
3 4
5
• External consultants complete regular
testing of IT security and systems
• Regular back-up schedules are in place
for all Group information and data
• Staff IT information security and cyber
security training plan is in place
Cyber security continues to be a focus as the incidence and
sophistication of cyber security attacks increases. The Group
has continued to improve its IT security measures during the
financial year 2019 by reviewing controls and working closely
with our IT consultants.
1 2
3 5
• Business continuity and crisis
management plans are reviewed at
least annually
• Insurance policies include cover for
catastrophic events
• Security measures and emergency
plans are in place for all our buildings
Business continuity plans are reviewed periodically and at a
minimum on an annual basis. Other business interruption risks
remain stable.
1 2
3 4
5
• Effective internal controls and fraud
prevention measures in place
• Board scrutiny of compliance and
related matters
• Audit Committee’s active role in the
oversight of all risk within the Group
• Internal audit monitors and provides
assurance around internal processes
and controls
The Group adheres to the highest standards of corporate
governance. An internal audit function was added in 2018
and the first two internal audits have since been completed.
The Group uses PwC to provide internal audit services.
Building management has been brought in-house so the
Group can manage its multi-let properties to its own rigorous
standards and is not dependent on third parties for this.
With an increasing focus on sustainability by investors and
tenants alike, the Group has committed to industry standard
benchmarking with its membership of GRESB.
1 2
3 4
5
Risk trend
Unchanged
Increasing
Decreasing
Risk impact
High
Medium
Low
	
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Strategic report
Operational review
Disposals and acquisitions
While we have continued to successfully
recycle capital into new opportunities we
have been net sellers in the financial year,
generating net sales proceeds of €60.3m
(€60.8m excluding transaction costs)
(March 2018: €-3.6m) from the disposal
of New Century House and 77SJRQ and
several acquisitions, most notably at
Newlands. Since the end of the financial
year we have invested a further €6.9m in
four acquisitions of assets, three of which
are adjacent to our existing properties.
Disposals
• New Century House, IFSC: the sale of
the 80,000 sq. ft. office building was
agreed in July 2018 and completed in
September 2018. The price of €65.3m
was modestly ahead of the March 2018
valuation and equated to a net initial
yield of 4.0%. The ungeared IRR for
Hibernia since acquisition in 2014 was in
excess of 12%
• 77SJRQ, South Docks: contracts were
exchanged for the sale of the 34,400 sq.
ft. office building for €35.5m in March
2019 and the sale completed in May 2019.
The sales price was modestly ahead of
the property’s December 2018 valuation
and reflected a net initial yield of 4.6%.
Hibernia’s ungeared IRR on the property
exceeded 15%
Portfolio overview
As at  the property portfolio consisted of 32 investment properties valued at €1,395m (March 2018: 32 investment properties
valued at €1,309m), which can be categorised as follows:
Value as at
March 2019
% of
portfolio
Equivalent
yield1
Passing rent

Contracted rent

ERV

1. Yields on unsmoothed values and excluding adjustment for South Dock House owner-occupied space.
2. Harcourt Square, Clanwilliam Court and Marine House yields are calculated as the passing rent over the total value (after costs) which includes residual land value.
Excludes Iconic Offices in Clanwilliam Court.
3. Excludes the value of space occupied by Hibernia in South Dock House.
4. 2 Cumberland Place.
5. Includes 1WML residential element (Hanover Mills).
6. Net yields assuming 80% net-to-gross and purchaser costs as per Cushman & Wakefield at March 2019.
7. Current rental value assumed as ERV as these assets are valued on a price per acre basis except for Slaney Road which is valued on an income basis.
8. Excludes all CBD office developments.
9. Residential rent on a net basis.
10. Net ERV assuming 80% net to gross (as per valuer assumptions).
Acquisitions
• 129 Slaney Road, D11: the 62,000 sq. ft.
industrial building on a 3.8 acre site in the
Dublin Industrial Estate was bought for
€4.8m in July 2018. The property is fully
let, producing rent of €0.5m per annum,
with a WAULT of 8.5 years to expiry and
a WAULT to break of 1.5 years at 31 March
2019. It has potential for a future mixed-
use development (see further details in
the developments and refurbishments
section below)
• 50 City Quay, South Docks: the 4,500
sq. ft. office building, which neighbours
1SJRQ and faces onto the River Liffey,
was acquired for €2.7m in July 2018.
The property expanded the Windmill
Quarter to six buildings with c. 400,000
sq. ft. of office accommodation as well as
retail and leisure facilities
• Newlands, D22: an additional 98.3
acres of agricultural land at Newlands
was acquired in two acquisitions in
August and November 2018. The initial
consideration was €28.7m, with possible
deferred consideration equating to a
44% share of the market value of all
lands upon re-zoning, less the initial
consideration paid to one vendor of
€27.0m. Following these acquisitions
Hibernia’s property interest in the
Newlands area totals 143.7 acres (see
further details in the developments and
refurbishments section below)
• Other: during the financial year €1.0m
was spent on three small ‘bolt-on’
acquisitions which provide potential
synergies with properties already owned
by Hibernia. Since the financial year end,
a further €6.9m has been invested in four
further acquisitions, three of which are
adjacent to our existing properties.
Operational review
Disposals
€100.3m
(2018: €35.8m)
Acquisitions
€40.0m
(2018: €39.1m)
50  The key statistics for the office element of our portfolio, which comprised 85% by value and 88% by contracted income at 
(March 2018: 88% and 89%, respectively), are set out below: contracted income from completed developments now exceeds that from
our acquired in-place offices.
Contracted rent ERV
WAULT to
review1
1. To earlier of review or expiry.
2. Mark-to-market.
3. 1 Cumberland Place, SOBO Works, 1&2DC, 1WML, 1SJRQ.
4. 2 Cumberland Place.
Increasing portfolio income and extending unexpired lease terms continue to be key priorities. In spite of net asset sales and the exercise
of a break option in the Forum, we have added €1.6m to contracted rent since  through:
• New office leases adding €7.1m (€6.9m excluding gym letting), with weighted average term certain of c. 12 years
• Rent reviews adding €0.7m (€0.4m from office rent reviews)
• Net asset sales reducing office income by €4.2m and lease expiries and breaks reducing income by €2.0m
The in-place office portfolio vacancy rate was 12% by lettable area at  (: 3%): for further details on the reasons
for this move and the increase in rental income, please see asset management section below.
Top 10 in-place office occupiers by contracted rent
and % of contracted in-place office rent roll
In-place office contracted rent
by tenant business sector
Electricity Supply Board
Informatica Ireland EMEA
Autodesk Ireland Operations
Twitter International Company 10.1%
Core Media 2.8%
ComReg
B
Strategic report
Operational review
Portfolio performance
In the financial year ended  the portfolio value increased €99m or 7.9% on a like-for-like basis (i.e. excluding acquisitions,
disposals and capital expenditure). In the year ended  the portfolio value increased by €82m or 6.6% on a like-for-like basis.
Value at
March 2018 Capex Acquisitions1
Disposals2
Revaluation
Value at
March 2019 LfL change
1. Dublin CBD
offices
Traditional Core €436m €1m – – €7m €444m €7m 1.6%
IFSC €261m €2m – (€62m) €6m €207m €6m 2.6%
South Docks €322m3
€2m €3m (€34m) €21m €522m3
€22m 7.6%
Total Dublin
CBD offices €1,019m €5m €3m (€96m) €34m €1,173m €35m 3.7%
2. Dublin
CBD office
development €134m €42m – – €48m €16m €48m 27.3%
3. Dublin
residential €138m – €1m – €14m €153m €14m 9.8%
4. Industrial/
land €18m – €36m – (€1m) €53m €2m 17.2%
Total €1,309m €47m €40m (€96m) €95m €1,395m €99m⁴ 7.9%4
1. Including acquisition costs.
2. As at relevant valuation (smoothed) date (Mar-18 for New Century House and Sep-18 for 77 SJRQ). Total sales prices were €100.8m and net proceeds after sales costs were
€100.3m.
3. Excludes the value of space occupied by Hibernia in South Dock House but Mar-19 includes reclassification of 1SJRQ and 2WML as CBD offices from office development.
4. €99m is “like-for-like” change on Mar-18 values and excludes gains/losses from acquisitions/disposals in the year to March 2019, e.g. acquisition of additional land at Newlands.
The key individual valuation movements in the period were:
• 1SJRQ, South Docks: €33.3m/29% uplift driven by compression of the equivalent yield from 4.75% to 4% and an increase in the
headline market rent from €56.19psf to €60psf following the completion of the development and the leasing of the entire office area
• 1WML, South Docks: €14.1m/10% uplift driven by the equivalent yield on the office building moving from 4.56% to 4.22% as the
Windmill Quarter has been completed
• 2WML, South Docks: €13.9m/29% uplift as a result of the completion of the development during the year: the headline market rent
increased from €53psf to €55.19psf and the equivalent yield compressed by 15bps from 5% to 4.85%
• Block 3, Wyckham Point, D14: €9.7m/11% uplift driven by yield compression from 4.03% NIY to 3.79% NIY. The valuer’s assessment of
open market rent also increased by 7%
• 1 Cumberland Place, D2: €7.5m/6% uplift due to the movement of the equivalent yield on the building from 4.75% to 4.5%
Like-for-like increase in portfolio value
€99m (+7.9%)
(2018: €82m (+6.6%))
In-place office WAULT
7.5years
(2018: 7.3 years)
In-place office vacancy
12%
(2018: 3%)
52  Developments and refurbishments
Three development schemes were active
in the year, of which two completed
before year end. Capital expenditure
on developments amounted to €44.8m
(March 2018: €45.8m).
Schemes completed
The two schemes completed delivered
172,000 sq. ft. of new and refurbished
Grade A office space. Both are in the
Windmill Quarter in Dublin’s South Docks,
Hibernia’s first cluster of buildings, and
their delivery marked the completion of
Yield on cost made on schemes
completed in the year
8.9%
(2018: 8.7%)
1SJRQ courtyard
A lift lobby in 2WML
development work in the Windmill Quarter.
At , over 65% of the office
space in the two schemes was let (see
asset management section for further
details). The schemes were:
• 1SJRQ: the development of 112,000 sq.
ft. of new office space and 7,000 sq. ft.
of retail space (food & beverage) was
completed on budget in March 2019
delivering a profit on cost of >90%.
The office accommodation is fully let
and the building will be yielding 8.9%
on cost upon lease commencement
on 1 June 2019 (expected yield on cost
of 9.2% when the food & beverage
accommodation is let)
• 2WML: the refurbishment and extension
of the building, which comprises 60,000
sq. ft. of office space and a 12,000 sq.
ft. gym, was completed on budget in
February 2019 and the gym has been
let. The profit on cost at completion
was >40% and the building is expected
to deliver a yield on cost of 8.4% when
fully let
Committed development schemes
2 Cumberland Place, D2, is our only
scheme currently under construction:
the basement works are now largely
complete. The building remains scheduled
to complete in the first six months of 2020.
It will deliver 50,000 sq. ft. of new Grade A
office space adjacent to
1 Cumberland Place, taking the total on
the site to c. 180,000 sq. ft., and will have
the potential either to link into the existing
reception or to be separately accessed with
the possibility to interlink certain floors with
the existing building.
Please see further details on the committed
development scheme below:
Sector
Total area
post completion
(sq. ft.)
Full purchase
price Est. capex
Est. total cost
(incl. land) ERV1
Office ERV1
Expected
practical
completion
(“PC”) date
2 Cumberland
Place
Office 50k office
1k retail/café
€0m €30m €600psf2
€2.8m €54.61psf H1 2020
Total committed 50k office
1k retail/café
€0m €30m €600psf2
€2.8m €54.61psf
1. Per C&W valuation at .
2. Office demise only.
At  Cushman & Wakefield, the Group’s independent valuer, had an average estimated rental value for the unlet office space
(110,000 sq. ft.) in 2WML and 2 Cumberland Place of €54.93psf and was assuming an average yield of 4.80% upon completion: based on
these assumptions Cushman & Wakefield, expects a further €11m of development profit (excluding finance costs) to be realised through
the completion and letting of these schemes. A 25-basis point movement in yields across the properties would make c. €8m difference
to the development profits, and a €2.50psf change in estimated rental value (“ERV”) would result in a c. €6m difference. If current market
conditions prevail, we would expect these yields to tighten once the buildings are completed and let.
Strategic
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Financial
statements
Additional
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53

Strategic report
Operational review continued
Development pipeline
We have split the Marine House scheme
from Clanwilliam Court in the pipeline,
given its likely earlier commencement date,
and now have four office schemes in the
pipeline which, if undertaken, would deliver
up to an estimated 538,000 sq. ft. of high
quality office space upon completion (a
net increase over current areas of 260,000
sq. ft.): this figure has increased by 6.5%
since  due to the addition of
33,000 sq. ft. of extra space from grants
of planning. In May 2019 we applied for
planning permission for a 152,000 sq. ft.
redevelopment scheme at Clanwilliam
Court. Clanwilliam/Marine House and
Harcourt Square both provide us with
opportunities to create clusters of office
buildings with shared facilities similar to the
Windmill Quarter. In the longer term there
is potential for mixed-use development
schemes at Newlands (Gateway), where we
now own 143.7 acres, and 129 Slaney Road,
where we own 3.8 acres. In both cases, re-
zoning will be necessary and so the timing
of any future developments is uncertain
at present.
At  Cushman & Wakefield, the
Group’s valuer, had an average estimated
rental value for three main schemes in the
office development pipeline (497,000 sq.
ft. of offices excluding Earlsfort Terrace) of
€56.82psf and was assuming an average
yield of 4.43% upon completion. Based on
these assumptions and forecast capex of
€260m (using current build costs including
contingency but excluding effect of future
tender price inflation) and assuming
current market conditions, a further €167m
of development profit (excluding finance
costs) is expected to be realised through
the completion and letting of these
schemes. A 50-basis point movement
in the average yield for the properties
would make c. €55m of difference to the
development profits, and a €5psf change
in average estimated rental value (“ERV”)
would result in a c. €45m difference.
Office Sector
Current area
(sq. ft.)
Area
post completion
(sq. ft.)
Full
purchase
price1
Comments
Marine House Office 41k 49k €29m • Planning granted December 2018 for 49k sq. ft.
• Lower ground floor application may add approx.
1.5k sq. ft.
• Vacant possession expected during 2020
Blocks 1, 2 & 5
Clanwilliam Court
Office 93k 141k office
11k ancillary
€54m • Redevelopment opportunity post-2021
• Potential to add significantly to existing net
internal areas (“NIA”) across all three blocks
and create an office cluster similar to Windmill
Quarter (with Marine)
• Planning application lodged for 152k sq. ft.
redevelopment
Harcourt Square Office 122k 307k office
2k retail
€75m • Leased to the Office of Public Works until
December 2022
• Site offers potential to create cluster of office
buildings with shared facilities or a major HQ
• Full 10-year planning grant for 309k sq. ft
• Detailed building assessment underway by
development team
One Earlsfort Terrace Office 22k 28k €20m • Current planning permission for two extra floors
(6k sq. ft.), expiring July 2021
• Potential for redevelopment as part of wider
Earlsfort Centre scheme
Total office 278k 538k €178m
Mixed-use
Newlands (Gateway) 143.7 acres n/a €48m2
• Strategic transport location
• Potential for future mixed-use redevelopment
subject to re-zoning
129 Slaney Road 62k on
3.8 acres
n/a €5m • Strategic transport location
• Potential for future mixed-use redevelopment
subject to re-zoning
Total mixed-use 147.5 acres n/a €53m
1. Including transaction costs and capex spent to date
2. Initial consideration
Office pipeline when completed
538,000
sq. ft.
(2018: 505,000 sq. ft.)
54  Asset management
Capital expenditure on maintenance items
amounted to €1.8m in the year (March
2018: €2.4m). Contracted rent grew 2.9% to
€57.6m (March 2018: €56.0m) as a result of:
• Lettings and rent reviews adding €7.8m
(see further details below)
• Lease expiries and surrenders reducing
contracted rent by €2.0m
• Net property sales reducing contracted
rent by €4.2m
At  nine office rent reviews
were active representing €2.5m of
contracted rent with an ERV of €4.6m
and the vacancy rate in the office portfolio
was 12%, based on lettable area (March
2018: 3%). The principal reasons for
the increase in vacancy rate were the
completion of 2WML (60,000 sq. ft.) and
the office tenant in the Forum vacating
the building (47,000 sq. ft.), both of
which occurred just before .
Together, these two events added nine
percentage points to the vacancy rate.
Summary of letting activity in the year
Offices:
• Two new lettings totalling 113,000 sq.
ft. and generating €6.9m per annum
of incremental new rent. The weighted
average periods to break and expiry for
the new leases were 11.9 years and 19.9
years, respectively
• One rent review was concluded over
12,000 sq. ft., adding a further €0.4m of
rent per annum: this rent review was over
140% ahead of previous contracted rents
and ahead of ERV
Retail:
• The 12,000 sq. ft. gym in 2WML was let
to Perpetua generating rent of €0.1m per
annum, rising to €0.2m per annum by
year three
Residential:
• 293 of the Company’s 328 apartments
are located in Dundrum and average
rents achieved in new lettings in the year
by the Company for two-bed apartments
in Dundrum were €1,850 per month vs
average two-bed passing rents of €1,831
per month
• Letting activity and lease renewals at
Dundrum generated incremental gross
annual rent of €0.3m in the period (new
leases signed on 73 apartments and
leases renewed on 237 apartments)
• All let units are subject to the rental
cap regulations
Contracted rent roll
€57.6m
(2018: €56.0m)
Key asset management highlights
1SJRQ, South Docks
In November 2018 HubSpot agreed terms
to occupy all 112,000 sq. ft. of office
accommodation in the building on a
20-year lease, with 12 years term certain,
commencing in June 2019. HubSpot will
pay an initial rent of €6.8m (€59.75psf) per
annum, commencing after a four-month
rent free period. As part of the letting,
HubSpot, which also occupies 73,000
sq. ft. in One and Two Dockland Central,
has agreed to extend the date of its break
options in these buildings by three and a
half years to coincide with those at 1SJRQ.
Hibernia remains in discussions with various
food and beverage operators regarding the
7,000 sq. ft. of retail space in the building.
2WML, South Docks
In late 2018 Perpetua, a leading gym
operator, agreed to let the ground floor, a
12,000 sq. ft. gym, at an initial rent of €0.1m
per annum, rising to €0.2m per annum
by year three, on a 10-year lease, with six
years term certain. Discussions continue
with potential occupiers for the 60,000
sq. ft. of office accommodation in the
building which completed at the end of
February 2019.
50 City Quay, South Docks
The 4,500 sq. ft. riverside office building,
which occupies a prominent corner
adjacent to the Windmill Quarter, was
acquired vacant (see further details
above). We are finalising plans for the
refurbishment of the building.
Cannon Place, D4
The 16 residential units are vacant following
the completion of remedial work which had
to be carried out. We intend to retain the
property and let the units.
Central Quay, South Docks
In late 2018, Daqri, which occupies the
first floor (11,000 sq. ft.) and is paying rent
of €0.6m per annum, served notice to
exercise its break option and will vacate
the property in June 2019. The remaining
vacant space on part of the ground floor
(5,000 sq. ft.) and the third floor (12,000
sq. ft.) continues to be marketed and talks
are ongoing with potential occupiers.
Hardwicke House & Montague House, D2
At  there were seven rent
reviews outstanding in the buildings,
relating to 82,000 sq. ft. of office
accommodation, with passing rents of
€2.4m and ERVs of €4.3m. We expect
the majority of these to conclude shortly.
Marine House, D2
There are two rent reviews active, regarding
a total of 4,300 sq. ft. of ground floor
office space, which is let to WK Nowlan
Real Estate Advisors.
South Dock House, South Docks
We are in discussions regarding the leasing
of all 9,000 sq. ft. of the property to a party.
The Forum, IFSC
Depfa Bank, which previously occupied
all 47,000 sq. ft. of office accommodation
along with 50 car parking spaces at an
annual rent of €2.0m, vacated the building
in March 2019 having previously exercised a
break clause in its lease. Hibernia continues
to consider options for the building
and is in preliminary discussions with
interested parties.
The Observatory, South Docks
Riot Games, which occupies 44,000 sq.
ft. across three floors in the building, has
exercised a break option on part of its
demise and will be vacating 8,000 sq. ft.
in early July 2019 leading to a reduction
in annual rent of €0.2m. We will seek to
re-let the space when it becomes vacant.
The remainder of the Riot Games demise,
which is under-rented at present, will be
subject to a rent review at 1 July 2019.
Windmill Quarter, South Docks
With the completion of 1SJRQ and 2WML
the Windmill Quarter has been finished and
now comprises six adjacent buildings with
c. 400,000 sq. ft. of offices and further
ancillary space and communal facilities.
As well as the individual building managers
we have a dedicated manager for the
Quarter and are introducing features for
tenants such as a smartphone app, with
updates and information, and music events.
Flexible workspace arrangement
The flexible workspace arrangement
with Iconic Offices (“Iconic”) in 21,000
sq. ft. of Block 1 Clanwilliam Court is
performing well, with all workstations
(c. 90% of revenue from the arrangement)
occupied and 77% of the available
co-working memberships contracted
as at .
Other completed assets
The remaining completed properties in the
portfolio remain close to full occupancy.
The average period to rent review or
lease expiry for the acquired in-place
office portfolio (not including recently
completed developments) is 2.1 years.
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Strategic report
Financial review
As at   Movement

1. An alternative performance measure (“APM”). The Group uses a number of such financial measures to describe its performance, which are not defined under IFRS and which
are therefore considered APMs. In particular, measures defined by EPRA are an important way for investors to compare similar real estate companies. For further information
see page 193 of this Annual Report.
The key drivers of EPRA NAV per share, which increased by 14.2 cent from , were:
• 13.6 cent per share from the revaluation of the property portfolio, including 6.8 cent per share in relation to development properties
• 4.0 cent per share from EPRA earnings in the period
• 0.4 cent per share from profits on the sale of two investment properties
• Payment of the FY18 final dividend and FY19 interim dividend, which reduced NAV by 3.4 cent per share and other items, which
reduced it by a further 0.4 cent
EPRA earnings were €27.5m, up 41.6% compared to the same period in the prior year. The uplift was principally due to increased
rental income as a result of new lettings at our developments made in the prior financial year. Administrative expenses (excluding IMA
performance-related payments) were €13.9m (March 2018: €13.5m) and included four months of cost from the Group’s new remuneration
scheme which commenced on 27 November 2018. IMA performance-related payments were €5.4m (Mar 2018: €6.6m) and related
primarily to the Group’s outperformance of the MSCI Ireland Index in the period to November 2018.
Profit before tax was €124.0m, an increase of 15.8% over the prior year, mainly due to higher revaluation gains in the financial period
compared to the same period last year. For reference, the 12 months ended  saw significant yield compression in the office
sector but was also impacted by an increase in stamp duty on Irish commercial property transactions: the impact was to reduce the
Group’s revaluation gains by an estimated €53.7m.
Financial review
Funding position
Group leverage target: our through-cycle leverage target remains 20-30%
In December 2018 we refinanced the Group’s sole debt facility, a €400m secured revolving credit facility (“RCF”) maturing in November
2020, with a margin of 2.05% over EURIBOR, with the following unsecured debt:
Instrument Quantum Maturity date Interest cost Security
Revolving credit facility (five year) €320m December 2023 2.0% over
EURIBOR
Unsecured
Private placement notes (seven year) €37.5m January 2026 2.36% coupon
(fixed)
Unsecured
Private placement notes (ten year) €37.5m January 2029 2.69% coupon
(fixed)
Unsecured
Total €395m n/a n/a n/a
The refinancing extended the weighted average maturity of the Group’s debt from 1.9 years to 5.7 years as at December 2018 (March
2019: 5.4 years, March 2018: 2.7 years) and moved the Group away from being wholly reliant on bank facilities for its debt funding.
The move to an unsecured structure also ensures the Group has access to the widest range of possible funding options in future. Due to
a reduction in the undrawn commitment fees payable on the new RCF, overall interest costs under the new funding arrangements remain
broadly unchanged. The banks participating in the new RCF are Bank of Ireland, Wells Fargo, Barclays Bank Ireland and Allied Irish Banks.
The private placement notes were placed with a single institutional investor and drawn in January 2019.
As at , net debt was €217.1m (March 2018: €202.7m), equating to a loan to value ratio (“LTV”) of 15.6% (March 2018: 15.5%).
The key line items impacting net debt in the year were total capital expenditure of €47.2m and acquisition expenditure of €40.0m which
were largely offset by the receipt of €65.0m from the sale of New Century House. The disposal proceeds from the sale of 77SJRQ of
€35.3m were not received until May 2019 and are being returned to shareholders, a process which has commenced with the €25m share
buyback programme launched in April 2019.
Cash and undrawn facilities as at  totalled €178m or €143m net of committed capital expenditure (March 2018: €197m and
€120m, respectively). Assuming full investment of the available facilities in property and taking into account the €25m share buyback, the
LTV, based on property values at , would be c. 25%.
Interest rate hedging
Group hedging policy: to ensure the majority of the interest rate risk on its drawn debt balances is fixed or hedged
As at  the Group had €75m of fixed coupon private placement notes and the interest rate risk on the RCF drawings of
€159.4m was protected by €225m of hedging instruments comprising:
Instrument Notional Strike rate Exercise date Effective date Termination date
Cap €100m 1% n/a November 2017 November 2019
Swaption €100m 1% November 2019 November 2019 November 2021
Cap €125m 0.75% n/a February 2019 December 2021
Swaption €125m 0.75% December 2021 December 2021 December 2023
While the Group is “over-hedged” on its interest rate exposure at present, this causes no additional financial risk to the Group and is
expected to cease by November 2019 when caps and swaptions over €100m of notional debt are due to expire. The reason for the
over-hedging is that when seeking to put in place additional hedging for the period from November 2019 to the expiry of the new
RCF in December 2023, it was found to be no more expensive to start the hedging from February 2019 than from November 2019.
Dividend
Group dividend policy: to distribute 85-90% of recurring rental profits via dividends each financial year, with the interim dividend in a
financial year usually representing 30-50% of the total ordinary dividends paid in respect of the prior financial year
The Board has proposed a final dividend of 2.0 cent per share (2018: 1.9 cent), taking the total dividend for the financial year to 3.5 cent
per share, an uplift of 16.7% on the prior year (2018: 3.0 cent). This represents 89% of the EPRA earnings per share for the financial year,
in line with our policy and reduced compared to the last financial year when dividends amounted to 108% of EPRA earnings per share on
account of the greater than expected performance fees.
Subject to approval at the Group’s AGM on 31 July 2019, the final dividend will be paid on 2 August 2019 to shareholders on the register at
5 July 2019. All of the dividend will be a Property Income Distribution (“PID”) in respect of the Group’s property rental business as defined
under the Irish REIT legislation.
Hibernia’s Dividend Reinvestment Plan (“DRiP”) is available to shareholders and allows them to instruct Link, the Company’s registrar, to
reinvest the dividends paid by Hibernia into the purchase of shares in the Company. The terms and conditions of the DRiP and information
on how to apply are available on the Group’s website.
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Strategic report
Financial review continued
Capital management
On 1 April 2019 we announced the sale of
77SJRQ and our intention to return the
net proceeds of €35m to shareholders,
starting with an on-market share buyback
programme of up to €25m which
commenced on 2 April. The purpose
of the buyback is to maintain our
progress towards the lower end of the
Group’s stated 20-30% leverage target.
The buyback is expected to be accretive to
EPRA NAV per share. At close of business
on 14 June 2019, 6.3m shares had been
repurchased and cancelled for aggregate
consideration of €8.7m.
To enhance our flexibility for future capital
management we intend to propose
a capital reorganisation resolution at
the AGM on 31 July 2019. This will seek
permission to convert a substantial part
of our share premium account, which had
a balance of €624.5m at ,
into distributable reserves in a process
which will also require High Court approval.
Subject to receiving the necessary
approvals the capital reorganisation is likely
to complete in late 2019.
Expiry of Investment
Management Agreement
The Investment Management Agreement
(“IMA”) entered between Hibernia and WK
Nowlan REIT Management Ltd (its former
Investment Manager) prior to Hibernia’s
IPO expired on 26 November 2018. As part
of the arrangements for the Internalisation
of the Investment Manager in 2015 (the
“Internalisation”) it was agreed that any
payments due under the IMA each financial
year would be paid, mainly in shares, in lieu
of a separate incentive scheme until the
expiry of the IMA.
The final performance fee for the period
1 April 2018 to 26 November 2018 was
€5.4m (15% of this is being used to
fund the Group’s Performance Related
Remuneration Scheme for staff) and
the final base fee top-up was €1.5m.
The amounts due to the Vendors will be
paid in new shares once the FY19 audit
is completed using a share price of 135.1
cent (the average closing share price for
the 20 trading days up to and including
26 November 2018) and will be subject to
the same lock-up provisions as all other
shares they have received.
From 27 November 2018 the Company’s
new Remuneration Policy, which was
approved by shareholders at the
Company’s AGM in July 2018, took effect.
European Public Real Estate Association (“EPRA”) Performance Measures
The Group uses a number of financial measures to describe its performance which are not defined under International Financial Reporting
Standards (“IFRS”) and which are therefore considered Alternative Performance Measures (“APMs”). In particular, measures defined
by EPRA were developed to enhance transparency and comparability with other public real estate investment companies in Europe.
EPRA has consulted investors and preparers of information in order to compile its recommendations. Using these measures ensures
that the Group’s investors can compare the Group’s performance on a like-for-like basis with similar companies. Further detail on these
measures are set out in Supplementary information, part III. European Public Real Estate Association (“EPRA”) Performance Measures,
on pages 194 to 199 of this Annual Report. This includes their calculation and reconciliation to the consolidated financial statements as
prepared under IFRS where applicable.
Summary EPRA measures
EPRA performance measure Unit
Financial
year ended

Financial
year ended

Sustainability
I am pleased to present the sustainability
section of this year’s Annual Report.
Sustainability remains a key priority for us:
It is an integral part of our strategy and we
believe it is crucial to delivering long-term
value to our stakeholders. It is an area that
occupational and investment markets are
increasingly paying attention to, meaning
good or bad performance in this area
may have commercial consequences.
We are making good progress against
the targets set in the five key areas of our
Sustainability Strategy and have set out
our targets for the future – you can read
about our key impact areas in summary
in this section and the full details of our
sustainability performance and targets in
our Sustainability Report 2019 which is
separately published on our website.
Introduction to sustainability
“
We have created our
inaugural standalone
Sustainability Report
which provides a
detailed overview
of our approach to
this important issue.”
We recently introduced a new
Remuneration Policy and the achievement
of sustainability performance targets will
have a bearing on annual bonus awards for
senior management colleagues and certain
other staff.
Please do take the opportunity to read our
inaugural standalone Sustainability Report
at /sustainability and
we will be pleased to receive any feedback
on the content in this section, as well our
Sustainability Report.
Kevin Nowlan
Chief Executive Officer
17 June 2019
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Sustainability
Manager
CFO oversight
Sustainability
& Marketing Committee
Incl. CEO & CFO
Board
Strategic report
Sustainability continued
Our Sustainability
Policy (available on
our website) has been
developed to ensure
that Hibernia operates
in a responsible and
sustainable manner,
having regard to its
tenants, staff, suppliers,
local communities and
the environment.
Sustainability at Hibernia
The policy consists of five key principles
which run right through the business:
1) Responsible asset management
2) Deliver sustainable buildings
3) Positively impact communities
4) Support our suppliers
5) Develop our employees
For each of the principles, we have a series
of targets. These form our Sustainability
Strategy which you can read more about
in the coming pages.
How we manage sustainability
Hibernia’s Board has ultimate oversight
for all aspects of the business including
sustainability. The Board reviews and
approves the Group’s Sustainability
Strategy, Sustainability Policy and Supplier
Code of Conduct, and receives updates
from the Sustainability & Marketing
Committee, which, along with other
Executive Committees, meets at least
once every two months. Day-to-day,
Hibernia’s sustainability programme
is run by the Sustainability Manager,
with input and support as required
from the CFO and other team members.
60  1.
Responsible
asset management
We actively manage our buildings to
minimise environmental impact while
maximising asset performance and
efficiency for our tenants and customers.
Where possible, we adopt a “polluter
pays” approach: we have set specific
targets in this area to improve the
performance of our buildings.
4.
Support
our suppliers
We support our suppliers through
the prompt payment of invoices.
In return, via our contractual
relationship, we expect suppliers to
adhere to our Supplier Code of Conduct.
3.
Positively impact
communities
We support the communities in
which we operate. We are responsible
neighbours and strive to develop
and maintain good relationships.
5.
Develop
our employees
We have an inclusive and open working
environment. We encourage individuals
and teams to realise their full potential
for personal and collective growth
and to enable the business to meet
its strategic objectives.
2.
Deliver
sustainable buildings
We improve the local built
environment by providing efficient
new space, through developments or
refurbishments, which offers lower
running costs, fewer emissions and
an enhanced occupier experience.
We have set specific targets for new
buildings, both in terms of certifications
and more general impacts.
How we apply our
five key principles
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Strategic report
Water consumption
increased by
+4%
Building energy
intensity reduced by
-2%
Waste generated by
our office portfolio
reduced by
-7%
of this, more than half
was either recycled or
composted. No waste
was sent to landfill
Electricity consumption
down by
-5%
Fuels consumption
down by
-7%
100%
of assets are BER accredited
and one asset has achieved
LEED platinum
Introduction
We report on our environmental, social and
governance impacts in accordance with
the third edition of the EPRA Sustainability
Best Practice Recommendations
(sBPR). An overview is provided here
for convenience.
Summary of our approach
We use the operational control approach
for our data boundary for our office and
residential assets. In 2018 this included 12
office assets, and 293 apartments located
over two buildings. This excludes three
buildings which were under development
during the year, 1 Sir John Rogerson’s Quay,
Two Windmill Lane (formerly the Hanover
Building) and 2 Cumberland Place.
Our utilities consumption at our own
occupied offices is reported separately to
our portfolio. Our offices cover one floor
of a mixed-use building that we occupy
as a tenant. The rest of the portfolio,
consisting of industrial units and land held
for development, is excluded as it is not
directly managed and is not considered
material in relation to our other asset types.
The consumption reported includes utilities
(energy and water) that we purchase
as landlords.
Certifications of assets
All office developments and major office
refurbishments are registered for LEED
Gold certification as a minimum in line with
our sustainability targets for developing
sustainable buildings. This means that over
time we expect an increasing proportion of
our portfolio to have sustainability-focused
building certifications.
Location of EPRA sustainability
performance measures
EPRA sustainability performance measures
for our portfolio and own offices as well
as our social and governance measures
can be found in the Sustainability Report
on pages 26 to 31 which is accessible via
/sustainability.
We have also published a separate
download of our EPRA performance
summary on our website
/sustainability.
Third party verification
JLL Upstream Sustainability Services
has assured our data in line with the
AA1000 standard. JLL’s assurance
statement can be found on pages
32 to 34 of the Sustainability Report
and is also available on our website
/sustainability.
Our sustainability performance at a glance
Sustainability continued
62  Governance
Governance
We set certain ethical standards for our
employees and suppliers.
The key policies which set out our
requirements include:
• Code of Conduct
• Anti-Bribery and Corruption Policy
• Modern slavery
• Diversity and Inclusion Policy
• Whistleblowing and
grievance procedures
• Employment and labour practices
• Gifts and Inducements Policy
Health and safety
Our Health and Safety Committee
monitors employee and contractor health
and safety as well as other aspects.
We report EPRA metrics In our separate
Sustainability Report 2019 which is available
on our website at /
sustainability and on pages 59 to 62.
All personnel visiting building sites
must have completed the “Safe Pass”
course, must wear appropriate safety
equipment Hibernia provides at all times
and be supervised by site professionals.
We completed working space ergonomic
reviews for all our staff in the reporting
period and added improvements in working
conditions where necessary. We provide
standing desks and similar facilities where
employees request them. In our new
offices, we plan to provide adjustable
height desks as a standard feature.
Diversity and equal opportunities
We are committed to developing the skills
and diverse talents of our employees and
Board members. We foster a culture that
promotes fairness and where advancement
reflects ability, potential, performance
and teamwork.
Modern slavery
We have zero-tolerance of violations of
anti-slavery and human trafficking laws.
The risk of slavery and human trafficking
in the recruitment and engagement of our
employees is negligible as our investment
property portfolio is located entirely in
Dublin and our employees are all office-
based professionals. All our suppliers are
required to comply with our supplier code
of conduct which includes a commitment
to abide by anti-slavery and human
trafficking laws and regulations.
Bribery and corruption
Bribery is not acceptable and is
not tolerated, whatever its form.
Staff are required to adhere to our gifts
and inducements policy. The key principle
of this is that gifts, benefits or inducements
should neither be offered nor accepted
if they create or appear to create an
obligation, affect either party’s impartiality
or constitute an undue influence on a
business decision.
Whistleblowing
The Group has detailed whistleblowing
procedures to facilitate a confidential and
accessible means for employees to raise
any concerns in relation to how we conduct
our business or interact with employees or
other stakeholders.
We aspire to the highest standards of behaviour based
on honesty and transparency in everything we do.
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Governance
Chairman’s corporate governance statement
Introduction from the Chairman
I seek to ensure that we always have the
appropriate mixture of skills and experience
on the Board.
Consistent with our goal of improving
diversity, both in experience and gender,
we have appointed Roisin Brennan as
an Independent Non-Executive Director.
Roisin joined the Board on 16 January
2019 and brings much experience in
advising public companies and acting as
a non-executive director of other listed
companies. Roisin has joined our three
Board Committees, Audit, Remuneration
and Nominations.
We will continue to seek to improve
diversity while focusing on succession
planning as current Board members
approach the end of their tenures.
Dear fellow shareholder
The Board of Hibernia is committed to
ensuring the highest standards of corporate
governance at all levels in the Group.
On behalf of the Board, I am pleased to
confirm that Hibernia has, throughout
the financial year, complied fully with all
relevant provisions of the UK Corporate
Governance Code 2016 (“the UK Code”)
and the Irish Corporate Governance Annex
(“the Irish Annex”). We continue to keep
developments under review and confirm
that the Group intends to be fully compliant
with the 2018 Revised Code during the
financial year ending 31 March 2020.
Our corporate governance framework
underpins effective decision-making and
accountability and is the basis on which
we conduct our business and engage
with all stakeholders.
The Group has continued with the strategic
priorities established in previous years,
focusing on the delivery of development
projects and increasing the rental income
of the portfolio while remaining alert to
any acquisition and disposal opportunities
that arise.
Board activity
The Board met eight times: five of
these were regular, scheduled meetings.
These meetings were attended by the
relevant key management and other
personnel where appropriate, ensuring
the Board has a good interaction with the
Group’s staff and appropriate experts.
“
Roisin Brennan’s appointment is the first
step in our Board succession planning.”
64  Director time commitments
All Non-Executive Directors have been
available to attend Board meetings as
required and I have no concerns over the
time commitments of individual Directors.
Some investors have raised concerns in
relation to overboarding, both in respect
of me and of Colm Barrington.
I am Chairman of four public companies.
None is operating in a complex or highly
regulated sector such as financial services
or pharmaceuticals. The time commitments
required are well within my ability to
manage, and this is evidenced by my
availability to spend time meeting major
shareholders of Hibernia on a corporate
governance roadshow this year as well as
in carrying out my duties on the Board
Committees. Two of the companies I
chair, Workspace and Sirius, are property
businesses and are local, and non-complex.
The companies’ businesses are confined
to limited and adjacent markets and the
similarity in business leads to advantages in
terms of market knowledge and strategy.
The third, Applegreen, is a convenience
food and beverage retailer and operator of
petrol forecourts in Ireland, the UK and the
US. I have resigned my position as Non-
Executive Director of LXB Retail Properties.
I have attended all meetings of Hibernia,
both scheduled and other, over the past
three years and in addition committed
extra time in managing the recruitment
and succession work of the Nominations
Committee and undertaking the corporate
governance roadshow during 2018-19.
Colm Barrington is CEO of Fly Leasing plc
and a Non-Executive Director of Finnair plc.
He resigned from his position as a Non-
Executive Director of IFG Group plc during
the year. Fly Leasing is a US company
based on the west coast of America and, as
Mr Barrington resides in Ireland, he is able
to undertake other activities without any
difficulty. His attendance and input at Board
meetings is excellent. During 2018-19 we
implemented a new Remuneration Policy
and Mr Barrington made himself available
to consult major shareholders in advance of
finalising the policy.
Culture and values
We aspire to the highest standards
of behaviour based on honesty and
transparency in everything we do.
The Group works from a single office and
has an open workspace which encourages
communication and interaction between
all employees. In addition, the Senior
Management Team arranges regular
training sessions and social events which
are particularly important for the building
managers who spend most of their time
on site at our properties. Our performance
evaluations include annual surveys of
our staff’s assessment of management
and their understanding and perception
of the key pillars of our overall strategic
goals. We have completed these surveys
for each of the past three years and they
help us ensure that everyone is engaged
and understands the Group’s goals and
ethics. Regular communication in this way
ensures we identify issues and tackle them
proactively. Our Executive Committee
structure ensures a high level of oversight
over the Group’s day-to-day activities.
The Executive Committees met regularly
throughout the year.
Data protection
The General Data Protection Regulation
(“GDPR”) came into force in May 2018.
It has changed the way personal data
is managed by the Group. Our policies
and procedures were updated, and we
verified that not only ourselves but also
key suppliers were prepared for the
changes. This work continues together
with improvements in cyber security and
making sure we have robust IT systems in
place to ensure data integrity in all areas.
Stakeholder engagement
We are committed to building strong
relationships with our stakeholders as
we believe that is essential to ensure
the long-term success of the Group for
all interested parties.
	
Read more on stakeholder
engagement on pages 26-29
We recognise that there is a wide universe
of stakeholders in our business and have
set goals and targets in managing their
interests. Stakeholders include our tenants,
employees, suppliers, agents, government
and communities in addition to our
investors. We also recognise our impact
on the local environment and this year
have published a separate Sustainability
Report to not only report on environmental
performance metrics but also on our
targets and ambitions relating to social and
governance activities.
	
Read our Sustainability Report 2019 >>
/sustainability
Delivering long
term value to our
stakeholders
Sustainability Report 2019
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Governance
Chairman’s corporate governance statement continued
We include our employees in all aspects
of governance and encourage frank and
open exchanges. The Group’s structure of
Executive Committees enables employees
to stay informed and be involved in
strategic decisions and performance
assessment. Our new Remuneration
Policy recognises not only short-term
performance but encourages long-term
loyalty and interest in the Group’s longer-
term returns.
Board effectiveness
This year we undertook an internal
Board performance review. The process,
recommendations and actions to
implement are summarised on pages
80 to 81.
In 2019-20 our challenge is to continue
to focus on our strategic priorities while
ensuring that we continue to uphold high
standards of corporate governance.
Board Committees
Our Board Committees continued to
perform effectively.
The Audit Committee considered the
first outputs of internal audit from PwC
as the provider of internal audit services,
considered the implementation of the
General Data Protection Regulation
(“GDPR”), and continues to ensure an
effective system of internal control and
risk management is in place.
The Nominations Committee focused
on succession planning, including the
selection and appointment of a new Non-
Executive Director, with a particular focus
on broadening diversity, not only in gender,
but also in experience. Roisin Brennan
brings added public company expertise
as well as additional capital markets/
corporate finance skills to support the
Board. The focus for the coming year is
on succession planning and continuing
to maintain the breadth of experience
and qualifications on the Board.
The Remuneration Committee carried
over its work from last year with the
submission of the new Remuneration
Policy to shareholders at the 2018 AGM
and its subsequent implementation.
The Committee reports on progress on
this and performance against key metrics
in its remuneration report for the financial
year ended .
Conclusion
I would like to take this opportunity to
thank my colleagues on the Board for
their continued work and dedication.
	
Read more on our Audit Committee
on pages 84 to 90
	
Read more on our Nominations
Committee on pages 91 to 92
	
Read more on our Remuneration
Committee on pages 93 to 114
On behalf of the Board, I would also
like to extend my thanks to the Senior
Management Team and staff, without
whose commitment and hard work these
results would not be possible.
I believe the Group is well-placed to make
continued progress on our goals and I am
confident that we can continue to deliver
value for our shareholders.
Daniel Kitchen
Chairman
17 June 2019
“
I feel the Management Team provide
space for the wider team to give opinions
and share ideas… I think it’s important to
foster this ‘open’ culture – I hope as we grow
this will not be lost.”
Response from staff member
in annual survey
66  UK Corporate Governance Code 2018 (“the Code”)
A new Code comes into effect for our next financial year. The Group currently complies with the majority of the provisions of this Code
and intends to comply during the financial year.
What’s coming next year:
• Workforce engagement policy
• Post employment shareholding requirements
UK Corporate Governance Code Principles and how the Company addresses them
1 Board leadership
and Company
purpose
The role of the Board and its Committees
What the Board did in 2018-19
Business model
Strategic priorities
Stakeholder engagement
KPIs and operational metrics
Remuneration Policy
Risk and internal control framework
Principal risks
Staff policies including whistle blowing, grievance process et. al.
pages 72 to 73
pages 77 to 79
pages 30 to 31
pages 32 to 33
pages 26 to 29, 81 to 83
pages 34 to 35
pages 102 to 103
pages 36 to 38
pages 40 to 49
page 63
2 Division of
responsibilities
The role of the Board and its Committees
Board of Directors
Key management personnel
Governance structure
pages 72 to 73
pages 68 to 69
pages 70 to 71
pages 72 to 73
3 Composition,
succession and
evaluation
Board of Directors
Succession planning
Evaluation
Nominations Committee
pages 68 to 69
page 92
pages 80 to 81
pages 91 to 92
4 Audit, risk and
internal control
Audit Committee
Strategic report
Risk report
Principal risks
pages 84 to 90
pages 2 to 63
pages 36 to 39
pages 40 to 49
5 Remuneration Remuneration Committee
Remuneration Policy
Shareholder consultation
pages 93 to 114
pages 102 to 103
page 94
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Governance
The right skills and experience to deliver our strategy
4. Daniel Kitchen (67)
Independent Non-Executive
Chairman; Irish
Committee memberships:
Remuneration and Nominations
(Chair) Committees
Appointed: 23 August 2013
Skills and expertise: Danny
brings the benefit of his expertise
and experience gained across
a variety of property, finance
and public company roles to his
chairmanship of the Board and
Nominations Committee.
Current external appointments:
Chairman of Workspace Group
plc, Applegreen plc, Sirius Real
Estate Limited and a Non-Executive
Director of the Irish Takeover
Panel Limited.
3. Frank Kenny (66)
Non-Executive Director; Irish
Committee memberships:
Development Committee
(Executive Committee)
Appointed: 8 November 2017
Skills and expertise: Frank is a
Chartered Surveyor and has more
than 35 years’ experience in the Irish
and US property markets and was
one of the founders of Hibernia.
Current external appointments:
Founder and Chief Executive Officer
of Willett Companies LLC, a property
investment company specialising
in multi-tenanted office and retail
properties on the East Coast of
the United States. Founder and
Director of Urbeo Residential Fund
ICAV, an Irish social and affordable
housing fund.
2. Colm Barrington (73)
Independent Non-Executive
Director and Senior Independent
Director; Irish
Committee memberships:
Audit, Remuneration (Chair) and
Nominations Committees
Appointed: 23 August 2013
Skills and expertise: Colm’s senior
executive management experience
and the range of public company
board roles held by him add
significant value to the Board from
outside the property sector.
Current external appointments:
Chief Executive Officer and Director
of Fly Leasing and a Non-Executive
Director of Finnair.
1. Terence O’Rourke (64)
Independent Non-Executive
Director; Irish
Committee memberships:
Audit (Chair), Remuneration
and Nominations Committees
Appointed: 23 August 2013
Skills and expertise: As ex-
Managing Partner of KPMG
Ireland from 2006 to 2013 and a
former President of the Institute of
Chartered accountants in Ireland
and a board member of the
Chartered accountants Regulatory
Board, Terence brings substantial
management, regulatory, risk and
financial experience.
Current external appointments:
Chairman of Enterprise Ireland
and Kinsale Capital Management,
Non-Executive Director of the Irish
Times. He is also Chairman of the
Irish Management Institute as well
as a member of their Council.
Board of Directors
68  8. Thomas Edwards-Moss (39)
Chief Financial Officer;
British
Committee memberships:
All Executive Committees
Appointed: 5 November 2015
Skills and expertise: Tom joined
the Board as Chief Financial Officer
following the Internalisation of the
Investment Manager where he
held the same role since joining in
June 2014. Prior to this, he spent
nine years at Credit Suisse where
he focused on corporate finance,
latterly in the property sector, and
advised on the initial public offering
of the Company. He is a Chartered
Accounted and qualified at PwC.
Current external appointments:
None.
7. Roisin Brennan (54)
Independent Non-Executive
Director; Irish
Committee memberships:
Audit, Nominations and
Remuneration Committees
Appointed: 16 January 2019
Skills and expertise: Roisin has
extensive experience in advising
Irish public companies and acting
as a non-executive director of listed,
private and State organisations.
Current external appointments:
Non-Executive Director of Ryanair
Holdings plc, Musgrave Group plc
and Dell Bank International d.a.c.
6. Stewart Harrington (76)
Independent Non-Executive
Director; Irish
Committee memberships: Audit,
Nominations and Remuneration,
Chair of Investment and
Development Committees
(Executive Committees)
Appointed: 23 August 2013
Skills and expertise: Stewart
has extensive knowledge and
experience of the Irish property
market gained over many years
in a variety of roles including as a
partner in JLL and BNP Paribas
Real Estate Ireland and Managing
Director at Dunloe Ewart Limited.
Current external appointments:
Non-Executive Director of the
parent company of BWG Group,
Stafford Holdings, Killeen Properties
and Activate Capital.
5. Kevin Nowlan (48)
Chief Executive Officer; Irish
Committee memberships:
All Executive Committees
Appointed: 5 November 2015
Skills and expertise: Kevin joined
the Board as Chief Executive Officer
following the Internalisation of the
Investment Manager, where he held
the same position from its inception
in 2013. He is a Chartered Surveyor
and has more than 20 years’
experience in the Irish property
market, including commercial
agency, property management,
investment, development and
development financing, commercial
loan portfolio management and
debt restructuring. He is one of the
founders of Hibernia.
Current external appointments:
None.
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Governance
The Senior Management Team
“
Our people are key to our achievements.
During this financial year, after the expiry
of the IMA arrangements, our new
Remuneration Policy, which aligns rewards
for all staff with delivery of our strategic goals
and personal performance, commenced.”
Our Senior Management Team
Standing, left to right:
Frank O’Neill
Director of Operations
Justin Dowling
Director of Property
Edwina Governey
Interim Chief Investment Officer
Sean O’Dwyer
Company Secretary
and Risk & Compliance Officer
Seated, left to right:
Thomas Edwards-Moss
Chief Financial Officer
Kevin Nowlan
Chief Executive Officer
Mark Pollard
Director of Development
An experienced team with deep knowledge
of the Dublin property market
70  Kevin Nowlan (48)
Chief Executive Officer
Appointed: 5 November 2015
Skills and expertise: Kevin joined the
Board of the Company as Chief Executive
Officer in November 2015 following the
Internalisation of the Investment Manager,
where he held the same position from
its inception in 2013. He has more than
20 years’ experience in the Irish property
market, including commercial agency,
property management, investment,
development and development financing,
commercial loan portfolio management
and debt restructuring. He is one of the
founders of Hibernia.
Current external appointments: None.
Edwina Governey (34)
Interim Chief Investment Officer
Appointed: Joined the Group in 2015 from
the Investment Manager. Appointed Interim
Chief Investment Officer in March 2019,
prior to which she held the role of Senior
Investment Manager.
Responsibilities and experience:
Edwina is responsible for the
identification, analysis and execution
of investment opportunities, portfolio
analysis and reporting, and the Group’s
research function. Previously she
worked for Resolution Property and
Mountgrange Investment Managers in
London. She is a Chartered Surveyor.
Thomas Edwards-Moss (39)
Chief Financial Officer
Appointed: 5 November 2015
Skills and expertise: Tom joined the
Board of the Company as Chief Financial
Officer in November 2015, following the
Internalisation of the Investment Manager
where he held the same role since joining in
June 2014. Prior to this, he spent nine years
at Credit Suisse in where he focused on
corporate finance, latterly in the property
sector, and advised on the initial public
offering of the Company. He is a Chartered
Accountant and qualified at PwC.
Current external appointments: None.
Justin Dowling (43)
Director of Property
Appointed: Joined the Group as Head
of Asset Management in 2015, having
previously held the same role in the
Investment Manager. Appointed Director of
Property in January 2019
Responsibilities and experience: Justin
is responsible for managing our standing
portfolio. He has 20 years’ experience
in the Irish and UK property markets.
Justin previously held senior roles in Rohan
Holdings and WK Nowlan Property Limited.
He is a Chartered Surveyor.
Mark Pollard (63)
Director of Development
Appointed: Joined the Group in 2016 as
Director of Development
Responsibilities and experience: Mark
is responsible for all aspects of our
development and major refurbishment
projects. He worked for the National Asset
Management Agency (“NAMA”) and was
responsible for managing a number of key
development assets in Dublin and London.
Previously he held senior development roles
at Treasury Holdings and Asda Property
Holdings. Mark is a Chartered Surveyor.
Sean O’Dwyer (60)
Company Secretary and
Risk & Compliance Officer
Appointed: Sean joined the Group as
Risk & Compliance Officer in 2015 having
previously held the same role in the
Investment Manager. He was appointed
Company Secretary in February 2017.
Responsibilities and experience: Sean
is responsible for risk management and
compliance as well as company secretarial
duties. He worked for over 20 years in Bank
of Ireland Asset Management (now State
Street Global Advisers Ireland) where he
had responsibility for finance, compliance
and risk on a global basis. Between 2009
and 2013, he worked in a number of
consulting roles with a variety of financial
services firms. He has extensive experience
of governance, regulation and risk in Ireland
and overseas. He is a Chartered Accountant
and qualified with EY.
Frank O’Neill (60)
Director of Operations
Appointed: One of the founders of
Hibernia. Joined the Group as Chief
Operations Officer in 2015 following the
Internalisation of the Investment Manager
where he had held the same role. Moved to
Director of Operations role in January 2019.
Responsibilities and experience:
Frank, in addition to providing input on
strategic property matters and projects, is
responsible for managing the Company’s
workspace and its HR and IT functions.
He has worked for more than 30 years
in the Irish property market and has
considerable experience in property
transactions and advising financial
institutions in relation to distressed
borrowing. Previously, he was a Director
at Rohan Holdings, one of Ireland’s
leading private property investment
and development companies. Frank is a
Chartered Accountant, Chartered Surveyor
and holds an MSc in Planning.
The Senior Management Team
The Senior Management Team
comprises each of our department
heads and is responsible for running
the business under the supervision of
the Board. Two members of the Senior
Management Team are also Executive
Directors. The Senior Management
Team has discretionary authority to
enter into transactions for and on behalf
of the Group save for certain matters
of sufficient materiality or risk which
require the consent of the Board.
The Senior Management Team ensures
that all Directors receive, in a timely
manner, all relevant management,
regulatory and financial information.
Representatives of management are
invited to attend Board meetings where
applicable, thus enabling the Directors
to probe further on matters of interest.
Employees
We have a team of 34 full and part-time
permanent employees (including the
Senior Management Team).
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Governance
Corporate governance
The Board has Executive
and Non-Executive
Directors with a wide
range of business
experience including
property (investment
and development),
finance, public company
and other commercial
experience.
The Chairman leads the Board. He is Chair
of the Nominations Committee and a
member of the Remuneration Committee.
All the Non-Executive Directors, other
than Frank Kenny, are independent
according to the provisions of the UK
Corporate Governance Code. The Board
meets regularly, with up to six scheduled
meetings per year and a number of
additional meetings depending on the
needs of the Company business. The Chief
Executive Officer is responsible for the
day-to-day management of the business
and is an Executive Director. The Chief
Financial Officer is also an Executive
Director and responsible for all finance,
reporting and investor relations matters.
Senior employees below Board level
present to the Board on operational topics.
Non-Executive Directors have access to all
employees. The governance structure is set
out in more detail below.
Leadership
The role of the Board and its Committees
The Board is committed to developing and
maintaining a high standard of corporate
governance and complying with all
applicable regulations. The main governance
and regulatory requirements are the Listing
Rules of Euronext Dublin and the Financial
Conduct Authority, the UK Code, the Irish
Annex and the Transparency and Market
Abuse Regulations. To this end, the Board
has established Audit, Remuneration and
Nominations Committees, as described
below, comprised entirely of independent
Non-Executive Directors. The Company
has been approved as an internally-
managed Alternative Investment Fund
(“AIF”) under the Alternative Investment
Fund Management Directive (Directive
2011/61/EU) as amended (“AIFMD”) and
complies with the relevant requirements and
procedures as set out by the Central Bank of
Ireland in the AIF Rulebook March 2018.
Board and Committee structure
Strategic priorities (see page 32 to 33)
Board of Directors
Strategy and oversight | Regulatory and compliance | Risk management
Corporate governance and overall financial performance | Culture, values and ethics
Executive Committees
Remuneration Committee
• Executive remuneration, policy and packages
• Oversight of Remuneration Policy and issues
for all staff
Advised by PwC London

Read more on pages 93-114
Nominations Committee
• Review and recommendations on the size,
composition and structure of the Board
• Succession planning
• New appointments planning

Read more on pages 91-92
CEO/CFO
• Development and implementation of strategy
• Effective leadership
• Manage business performance
• Financial planning, cash management, operating and financial
performance of the Group
• Investor and other stakeholder relations
Risk & Compliance Officer/
Company Secretary
• Risk and compliance
• Company secretarial
responsibilities
• Corporate governance

Internal Audit
• External monitoring of internal
controls and recommendation
for improvement
Outsourced to PwC Ireland
Audit Committee
• Oversight of financial and other reporting,
ensuring integrity
• External audit and valuers oversight
• Risk management framework and oversight
• Internal controls and oversight of the
internal auditor

Read more on pages 84-90
Development
• Propose
development
projects
• Budget, plan
and monitor
ongoing projects
Finance and
Investor Relations
• Financial
performance
and reporting
• Cash management
• Balance sheet
management
including debt and
other funding
arrangements
• Strategic
and corporate
development
• Investor and other
stakeholders
relations
Investment
• Consider and
recommend
significant
investment/
divestment
transactions
Building
Management
• Management
of multi-tenanted
properties
Asset Management
• All items relating to
the management
of the property
portfolio including
tenants
Sustainability
and Marketing
• Development and
implementation
of the Group’s
sustainability policy
• Consideration
of environmental,
social and energy
issues
• Corporate branding
and marketing issues
Governance structure
The Board is responsible for establishing goals for management and monitoring the achievement of these goals.
The Board oversees the performance of the Group’s activities. The Senior Management Team has discretionary authority to enter into
transactions for and on behalf of the Group save for certain matters of sufficient materiality or risk which require the consent of the Board.
The Board challenges, supervises and instructs the Senior Management Team at a high level. The Board reviews Group and Company
performance and management accounts on a quarterly basis.
Board composition and roles
Role Incumbent Functions
Chairman Daniel Kitchen • Responsible for leading the Board, its effectiveness and governance and for
monitoring and measuring progress against strategy, and the performance of
the CEO
• Maintains a culture of openness and debate and sets the tone from the top in terms
of the values and objectives of the whole Group
• Makes sure that the Board is aware of and understands the views and objectives of
the major stakeholders of the Group and Company
CEO Kevin Nowlan • Responsible for developing the Group’s strategy and objectives, the implementation
of the same and running the Group’s day-to-day business, ensuring effective internal
controls are in place
• Leads the executive team and maintains a close working relationship with
the Chairman
CFO Thomas Edwards-Moss • Responsible for the financial management and reporting of the Group, managing
funding requirements, investor and other stakeholder relations and corporate
development, and ensuring effective internal controls are in place
• Works closely with the CEO and other members of the Senior Management Team
Independent
Non-Executive
Directors
Colm Barrington
Roisin Brennan
Stewart Harrington
Terence O’Rourke
• Bring independent and expert views to the Board’s deliberations and decision-
making
• Support and constructively challenge the Executive Directors and monitor the
delivery of the agreed strategy within the risk framework developed by the Board
Senior
Independent
Director
Colm Barrington • Provides a sounding board for the Chairman and serves as an intermediary for the
other Directors when necessary
• Facilitates shareholders if they have concerns which contact through the normal
channels of Chairman and the executives has failed to resolve or for which such
contact is inappropriate
• To discuss the Chairman’s performance with Non-Executive Directors, taking into
account the view of Executive Directors
• To listen to the views of major shareholders in order to help develop a balanced
understanding of the issues and concerns of shareholders
Non-
Executive Director
Frank Kenny • Brings considerable property experience, particularly in the area of development
Chair of
Audit Committee
Terence O’Rourke • Monitors the Group’s financial reporting process
• Monitors the effectiveness of the Group’s systems of internal control, internal audit
and risk management
• Monitors the statutory audit of the financial statements
• Reviews and monitors the independence of the internal and statutory auditors
• Monitors the adequacy, effectiveness and security of the Group’s IT systems
Chair of
Remuneration
Committee
Colm Barrington • Determines the strategy and policy in relation to remuneration including the
roles, terms and conditions and specific total remuneration of the Chairman,
the Non-Executive and Executive Directors and the Senior Management Team
• Determines and recommends the remuneration strategy of the Group to the Board
and the policy as it applies to all employees
• Specific fees payable to Non-Executive Directors are determined by the Board on
the recommendation of the Remuneration Committee
Chair of
Nominations
Committee
Daniel Kitchen • Develops and maintains formal procedures for making recommendations on
appointments to the Board
• Succession planning for the Board
Company Secretary
and Risk &
Compliance Officer
Sean O’Dwyer • Provides advice and assistance to the Chairman and the Board on corporate
governance practice, risk management, compliance and induction training
and development
• Ensures that all applicable regulations and rules are identified and processes
implemented to ensure compliance
• Ensures timely provision of information for Board meetings
• Submits returns and other information
• Is supported by Sanne, the Assistant Company Secretary, in Company
secretarial matters
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Governance
Corporate governance continued
At the core of our culture are the
following values:
Communication
As an organisation with a relatively low head
count we have a flat management structure
and we prioritise a culture of open-ness
and co-operation between individuals and
teams. This is encouraged through an open-
door policy and a communal working space
specifically designed for informal meetings
and discussions.
Weekly meetings are held across and
within departments to ensure regular and
effective communication. The Board and
Committees encourage participation by
those directly responsible for the topics
being discussed. Informal team events
foster good relationships within the team.
Personal development
We encourage our staff to develop broad
skill sets and to be as flexible as possible.
We encourage them to undertake training
to develop their skills and enhance their
careers. We arrange for experts to present
to the team on a regular basis.
Performance
Our people are aligned with the Group’s
strategy through objective setting and
periodic performance reviews.
When we have a success such as winning
an award we seek to include everyone’s
contribution in the celebrations.
Remuneration
We seek to remunerate in line with market
salaries and have bonus arrangements
to incentivise achievement of personal
and Group objectives. Our Remuneration
Policy is designed to reward current
performance and promote retention over
the longer term.
Culture
and people
Diversity and equal
opportunities
The Group is committed to developing the
skills and diverse talents of its employees
and Board members and to having a
business and culture in place which
supports this objective. Our aim is to
foster a culture that promotes fairness and
where success reflects ability, potential,
performance and working as part of a team.
Equal opportunities
The Group is committed to providing equal
opportunities to all its employees including
recruitment, remuneration, training,
promotion of staff and any other aspect
of employment. All employees are trained,
appraised and promoted on the basis of
their relevant merits, qualifications, abilities
and experience.
The Group has established and maintains
appropriate procedures so that employees
who feel that they are being unfairly treated
can have their complaints investigated.
Full details of the Group’s Equal
Opportunities Policy are set out in the
Employee Handbook.
Diversity
The Group’s policy is to employ the
best candidates regardless of sex, race,
ethnic origin, nationality, socio-economic
background, colour, age, religion or
philosophical belief, sexual orientation,
marriage or civil partnership, pregnancy,
maternity, gender reassignment or disability.
Our employee profile includes a range of
nationalities, a reasonable male to female
ratio and a wide range of age profiles
within the business. Our size, in terms of
staff numbers, is likely always to limit our
diversity somewhat; however, the Group is
committed to building a strong, talented,
experienced and diverse team and an
inclusive working environment.
The Board believes diversity is important
for ensuring long-term success and
to ensure different perspectives are
considered by the Board. The long-term
success of the Group requires appointing
the best people and all appointments to the
Board are examined in light of the current
mix of skills and knowledge on the Board.
The Directors believe that when making
appointments to the Board it is important
to ensure the proper mix of knowledge
and experience. In that context, priority
will be given to making appointments that
improve diversity.
As part of our EPRA sustainability
measures, we disclose gender diversity
information. Full details are available
in our Sustainability Report available at
/sustainability.
Summary
The Group has a wide range of policies and
procedures and continuing professional
development training is in place to
support a diverse and inclusive working
environment. All staff are responsible for
ensuring that they are familiar with and
comply with the Group’s Diversity & Equal
Opportunities Policy and that all equal
opportunities principles are respected.
74  Board snapshot
Key skills and experience Gender (female)
Total Board
Average age
Total Board
61 years
(: 62 years)
Average tenure
Total
3.9 years
(: 3.4 years)
Average age
Non-Executive
67 years
(: 69 years)
Average tenure
Non-Executive
4.3 years
(: 3.8 years)
Gender (female)
Non-Executives
Public company experience
Financial and corporate finance
Property investment,
development and management
13%
(: 0%)
17%
(: 0%)
Skills
Name Finance
Public

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Governance
Directors’ attendance at Board and Committee meetings
Financial year ended

Financial year ended

Directors’ attendance at Board meetings
Number of
meetings held
while a Board
member
Number of
meetings
attended
while a Board
member
Number of
meetings held
while a Board
member
Number of
meetings
attended
while a Board
member
Directors’ attendance at Board Committee meetings
Number of
meetings held
while a Board
member
Number of
meetings
attended
while a Board
member
Number of
meetings held
while a Board
member
Number of
meetings
attended
while a Board
member
Audit Committee
All Directors attended the 2018 AGM.
Where appropriate the Board also establishes Board Committees on an ad hoc basis to deal with specific matters that arise throughout
the year. The membership of such a Committee will depend on the purpose for which it is established and will take into account the skills
and experience required.
On 16 January 2019 Ms Roisin Brennan was appointed to the Board.
The Directors’ responsibilities statement is set out on page 119.
Corporate governance continued
76  The 2019 financial year saw the Group
make good progress with its developments
and in enhancing the portfolio.
The secured revolving credit facility was
refinanced with an unsecured facility
and private placement notes, resulting in
an extension of the Group’s borrowings
maturity to 5.4 years at financial year
end (2018: 2.7 years) and diversifying the
Group’s funding away from being solely
bank-sourced. Significant progress was
made in sustainability, with the Group’s first
submission to Sustainability Benchmark
(“GRESB”) made in 2018 and the first
GRESB rating to be published in 2019 and
What the Board did
in the financial year ended 
“
I enjoy being part of Hibernia’s Board.
It’s a young company with some really
interesting ideas and my fellow Board
members bring a broad range of experiences
which really adds to the debate.”
Independent Non-Executive Director
Matters addressed at each
scheduled meeting:
• Review operational reports and issues
from all areas of the business
• Consideration of new business
structures and investment/
divestment opportunities
• Review and consideration of
capital expenditure proposals
• Progress in leasing existing and
upcoming vacant space
• Progress in rolling out own
management of properties and
Hibernia branding
• Profitability and other KPIs and
operational metrics
• Liquidity status and
financing considerations
• Budget, viability and stress tests
• Compliance and risk levels
• Conflicts of interest and related-
party transactions
• Updates from Committees
• Trading updates, announcements,
Annual and Interim Reports
• Investor relations
Board skills Board diversity Board culture
The Board has a strong base in Irish
property knowledge as well as a good
mix of financial and capital markets
knowledge. The skills of the Board
reflect those of executives, allowing a
robust challenge on operational matters.
The addition of Roisin Brennan has
increased listed public company and
corporate finance experience.
The Board believes diversity is important for
ensuring long-term success and to ensure
different perspectives are considered by the
Board. The long-term success of the Group
requires appointing the best people to the
Board and all appointments to the Board are
examined in light of the current mix of skills
and knowledge on the Board. The Board was
established in 2013 and succession planning is
now well underway. Gender and age diversity
are priorities in succession planning and 2019
saw the appointment of the first female Non-
Executive Director. Board nationality is mainly
Irish with just one director from the UK, as the
Group’s business is entirely focused on Ireland
the lack of diverse nationalities on the Board
is not of concern. The international experience
and activities of the Directors provides a good
knowledge of matters outside Ireland.
The Board culture is one of open dialogue
between Board and Senior Management
and employees. The Chairman and CEO set
a tone of openness and integrity which is
carried through to the general workforce.
Employees attend Board meetings as
necessary. Executive Committees are chaired
by Executive Directors, and in the case of the
Development and Investment Committees
the Chair is Stewart Harrington while Frank
Kenny is a member of the Development
Committee. All Directors are highly motivated
and attendance and individual contribution at
meetings was excellent during the year.
this increased importance is also reflected
by the publication of our first standalone
Sustainability Report. In 2020 the focus will
continue on developments, in particular
looking to advance the longer-term
opportunities in the pipeline as well as
seeking to make strides towards our ESG
goals and enhanced reporting. The Group
strengthened the Board with the addition
of Roisin Brennan as a new independent
Non-Executive Director and is working
on further Board appointments and on
succession. The Board also continues
to make improvements on governance
and controls.
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Governance
Corporate governance continued
“This financial year saw a number of significant matters, in
particular the expiry of the Investment Management Agreement
arrangements and the refinancing of the Group’s balance sheet.
I look forward with interest to seeing our progress in 2019-20.”
Independent Non-Executive Director
Q1 FY19
Risk and governance
• Preliminary Results 2018, Annual Report 2018 and Auditor’s
Report considered
• Performance fee and remuneration finalised and approved
• Recommended final dividend and agreed to propose at AGM
• Annual performance evaluation of Board and Committees
• Shareholder consultation on Remuneration Policy proposed
• GDPR and data protection policy and training
• Approval of the issue of shares for the settlement of
IMA performance related payments for the year ended

Business and strategy
• Newlands project considered and decided to pursue
re-zoning
• Decision to progress further land acquisitions at Newlands
and industrial unit on Slaney Road
• Consideration of potential acquisitions
• Consideration and approval of refinancing proposals
• Review of sustainability objectives 2017-18 and
approval of objectives for 2018-19 as proposed by the
Sustainability Committee
Q2 FY19
Risk and governance
• AGM arrangements
• Membership of Irish Institutional Property approved
• Consideration of results of the AGM in particular where there
were material votes against a resolution
• Level of authority delegated to management for acquisitions
Business and strategy
• Approval of commercial terms of letting of 1SJRQ to HubSpot
• Trading Update
• Consideration and approval of refinancing proposals
• Disposal of New Century House
• Approval of acquisition of IRFU lands
Timeline of activity
Newlands land 1 SJRQ
78  Q3 FY19
Risk and governance
• Interim Results considered
• Application of new IFRS and first time reporting of same
• Approval of interim dividend
• Consideration of process for finalisation of performance fee
due to 26 November 2018
• Amendment of consulting arrangements post termination of
IMA agreement
• Employee benchmarking process review
and recommendations
• Human resource changes and potential head office relocation
Business and strategy
• Final approval of private placement and pricing
• Final approval of new revolving credit facility
Q4 FY19
Risk and governance
• Approval of nine-month financial statements and final
performance and top-up fee amounts following expiry of
interim arrangements
• Appointment of new independent Non-Executive Director
• Compliance policy statement 2019
• Audit planning
• Results of internal audit reporting
• Matters reserved to the Board reviewed
• Review of Terms of Reference of Board Committees
• Board delegations and authorised signatories
• Resignation of Richard Ball
• Committee evaluations
• Corporate governance roadshow
• Review of Board time commitments and attendance
Business and strategy
• Clanwilliam Court development proposals
• Consideration and approval of hedging proposals
• Share buyback
• Trading Update
• Disposal of 77 Sir John Rogerson’s Quay
2WML Proposed Clanwilliam Court redevelopment (CGI)
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Governance
Corporate governance continued
Any Director appointed to the Board by
the Directors is subject to re-election by
the shareholders at the first AGM after his/
her appointment. Furthermore, under the
Articles, one-third of all Directors must
retire by rotation each year and may seek
re-election. However, in keeping with best
corporate governance practice, all Directors
intend to seek re-election each year at
the AGM.
Details of the remuneration of Directors are
set out in the Report of the Remuneration
Committee on pages 93 to 114.
The composition of the Board is reviewed
regularly to ensure that the Board has
an appropriate mix of expertise and
experience. The Articles of the Company
provide that the number of Directors that
may be appointed cannot be fewer than
two or greater than ten and that two
Directors present at a Directors’ meeting
shall be a quorum.
Board strategy
Strategy is reviewed frequently by the
Board by regular updates on progress
to date, forecasts and stress testing on
forecasts, funding, capital expenditure
and other topics relevant to the success
of the Group’s strategy. At its November
meeting the Board specifically considered
strategic priorities (see pages 32 and 33 of
this Report) and addressed possibilities for
advancement of the Group’s targets in the
coming year. The Senior Management Team
held a strategy day in October 2018 to
review and consider the proposed strategy
ahead of its consideration by the Board.
Induction and development
New Directors receive a full and
appropriate induction on joining the Board.
This includes meeting the other Board
members, Senior Management Team
and the Company’s advisers and visits to
properties owned by the Group. This gives
them the opportunity to learn about the
Group and Company and its processes
and culture. They also have access to a
comprehensive package of information.
Roisin Brennan completed this process on
her appointment.
Board effectiveness
Information provided on induction:
Board Papers and minutes of previous meetings, all documentation, including reserved matters,
policies and procedures.
Committees Terms of reference, minutes and papers from prior meetings.
Risk The Group’s risk framework, risk register and metrics, records of breaches and any other
relevant documents.
Organisation Organisational charts and latest Annual and Interim Reports, strategic priorities and
latest KPIs.
Key policies Key policies and procedures applicable within the organisation.
Governance Copies of the relevant codes, compliance policy statement and other relevant
documentation at the time of appointment.
Legal/regulatory/insurance Full information of the Group’s regulatory and tax status. Details of Directors’ and Officers’
insurance and any other relevant matters.
Professional development, support and training for Directors
Board members regularly attend presentations and seminars on topics relevant to the property sector and their area of professional
expertise. These seminars are run by a variety of entities, including Euronext Dublin, professional bodies and advisers. Additionally,
when new regulatory or legal requirements are implemented, specific advice is sought from the Company’s own advisers; for example,
in the design and implementation of the Remuneration Policy PwC LLC were engaged. If requested, individual training needs can also
be facilitated.
Board evaluation 2018-19
In line with the UK Code recommendations
that an external review be carried out
every three years, the first external review
was conducted in March 2017. The overall
outcome was satisfactory and concluded
that the Board was operating effectively
in most areas. The following matters were
addressed arising out of this review:
• The business continuity plan was expanded
to include crisis management procedures;
• A new Remuneration Policy was
prepared and submitted for shareholder
approval at the 2018 AGM. This has since
been implemented;
• The Nominations Committee has
been working on succession planning.
The Board has been expanded adding
diversity in experience and gender with
the appointment of Roisin Brennan as
an Independent Non-Executive Director.
All other Non-Executive Directors save
Frank Kenny have served more than
five years and therefore succession
planning is currently a priority for the
Nominations Committee;
• The induction process has been reviewed
and updated;
80  Conflicts of interest
The Group has comprehensive conflict
of interest procedures, including a gifts
and inducements policy, designed to
address not only any possible conflicts
within the Board, but also of all employees.
This includes situations where employees
have personal direct or indirect connections
with parties that may be involved in
activities with the Group that give rise
to financial rewards. The key principle is
that gifts, benefits or inducements should
neither be offered nor received if they could
create or appear to create an obligation,
could affect either party’s impartiality or
could constitute an undue influence on a
business decision.
All Directors are required to declare
external directorships to the Board and
the Company Secretary at the time of
appointment so any potential conflicts
can be addressed at that time. All changes
in such directorships are also notified to
the Company Secretary and all potential
conflicts declared at Board meetings.
Directors must abstain from discussion
of or voting on items in which they may
have a conflict of interest. The Board
considers that these procedures are
working effectively.
Committees of the Board
The Board has established three
Committees: the Audit Committee,
the Remuneration Committee and the
Nominations Committee. The duties
and responsibilities of each of these
Committees are set out clearly in written
terms of reference, which are reviewed
annually and approved by the Board.
These are available on the Group’s website.
Each of these Committees reports
separately within this section of the
Annual Report.
Other information
Share Dealing Code
The Company has a Share Dealing Code
which imposes restrictions on share
dealings for the purpose of preventing
the abuse, or suspicion of abuse, of inside
information by Directors and other persons
discharging managerial responsibilities
within the Company. The Board is
responsible for taking all proper and
reasonable steps to ensure compliance with
the Code by the Directors and others to
whom the Code is applicable.
The Company’s Share Dealing Code
gives guidance to the Directors, the
Senior Management Team, any persons
discharging managerial responsibilities as
defined in Article 3.1 (25) of the Market
Abuse Regulations and persons identified
by the Board to fulfil this role, and anyone
listed on the Company’s Insider Lists on
the pre-clearance notification procedures
to be followed when dealing in the shares
of any class of the Company or any other
type of securities issued by or related to
the Company.
Market Abuse Regulations 2016 (“MAR”)
The Company continues to maintain
a list of persons exercising managerial
responsibilities (“PDMRs”) and has
complied with the MAR requirements
during the year.
Communications with shareholders
	
See stakeholder engagement pages
26 to 29 for more on investor relations
The Board is conscious of the need for the
Company to engage and communicate
clearly with investors, and for its
shareholders to have the opportunity to
discuss performance and offer their views
on governance, strategy and performance
through active dialogue with management.
During this financial year, the Chairman
and Company Secretary undertook
the Company’s first specific corporate
governance roadshow. The Company’s
top institutional investors representing
holdings of 1% or more (c. 79% of total
shares and 27 institutional investors)
were contacted and offered meetings
or calls. Fourteen investors (46% of the
shares in issue) accepted the invitation.
Those met were appreciative of the
opportunity to have dialogue with the
Chairman. Feedback was positive on the
new Remuneration Policy and in particular
the shareholding requirement of 350% of
salary for Executive Directors. Investors also
expressed an increasing interest in the
Group’s sustainability policy and initiatives.
Concerns expressed, aside from business
issues, were around succession planning,
potential time conflicts due to potential
overboarding for both the Chairman
and Colm Barrington, and issues around
diversity in age, nationality and gender.
• The Chairman and the Non-Executive
Directors met without any executives
present; and
• The roles of the Chairman and CEO have
been set out in writing.
For 2018-19 the Directors undertook
a self-evaluation of the Board and the
Committees. Individual evaluation of
Directors aimed to show whether each
Director continues to contribute effectively
and to demonstrate commitment to the role
(including commitment of time for Board
and Committee meetings and any other
duties). The results of these evaluations
were satisfactory as to the Board’s
effectiveness and also as to the Chairman’s
effectiveness. No follow-up action was
identified from this self-evaluation.
Board environment and access
to appropriate information
All Directors are expected to allocate
sufficient time to the Group and Company
to discharge their responsibilities
effectively. Directors are expected to attend
all scheduled Board meetings as well as
the AGM. All Directors are furnished with
the information necessary to assist them in
the performance of their duties. The Board
meets at least five times each calendar year
and, prior to such meetings taking place, an
agenda and Board papers are circulated to
the Directors with sufficient time allowed
so that they are adequately prepared for
the meetings. The Company Secretary is
responsible for the procedural aspects of
the Board meetings.
Directors are, where appropriate, entitled
to have access to independent professional
advice at the expense of the Company.
Standing quarterly items at Board meetings
include management accounts for the
period, risk reporting, operational reports
covering asset management, investment
updates and progress on development
projects, as well as cash and liability
management and other activities.
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Governance
Corporate governance continued
General meetings
The Company holds an Annual General
Meeting (“AGM”) each year in addition to
any other meetings in that year. Not more
than 15 months shall elapse between
the date of one Annual General Meeting
and that of the next. The Directors are
responsible for the convening of general
meetings. Information is distributed to
shareholders at least 20 business days prior
to such meetings to ensure compliance
with the Articles and the UK Code.

181
contacts
Shareholders by geography Investor contact by location Investor contact by method
Key investor relations activities in FY19
April 2018 September 2018
May 2018 June 2018 July 2018
Conferences: Davy
(Dublin)
Investor roadshow:
Dublin, London,
Montreal, New York
Equity sales meetings:
Dublin x3
Investor roadshow:
Boston, London, Zurich,
Amsterdam, Edinburgh
Annual
General Meeting
Equity sales meetings:
Dublin x1
Conferences: EPRA
(Berlin)
AGM details (2018 and 2019) Overview
The 2018 AGM was held on 31 July 2018 • All directors attended
• Votes in favour of the re-election
of Directors > 90% other than for
Colm Barrington where votes in favour
were 69% (see page 65 for discussion
on time commitments)
• All other resolutions approved –
10 ordinary and five special with votes in
favour >80% except the Directors’ report
on remuneration which passed with 62%
of the vote (see page 94) for voting
outcomes on remuneration
2019 AGM to be held on 31 July 2019 in
The Townhall, 1WML, Windmill Lane, Dublin 2
• Full Director attendance expected
• Resolution for a Capital Reorganisation
to be proposed
• Seven ordinary resolutions and six special
resolutions are being proposed
to shareholders
82  Quorum
No business other than the appointment
of a Chairman shall be transacted at any
general meeting unless a quorum is present
at the time when the meeting proceeds to
business. Two members present in person
or by proxy shall be a quorum.
Voting rights
a. 
Votes of members: votes may be given
either personally or by proxy. Subject to
any rights or restrictions for the time
being attached to any class or classes
of shares, on a show of hands every
member present in person and every
proxy shall have one vote, so, however,
that no individual shall have more than
one vote, and on a poll every member
shall have one vote for every share
carrying voting rights of which he/she
is the Holder. The Chairman shall be
entitled to a casting vote where there is
an equality of votes.
b. 
Resolutions: resolutions are categorised
as either ordinary or special resolutions.
The essential difference between
an ordinary resolution and a special
resolution is that a simple majority
of more than 50% of the votes cast
by members voting on the relevant
resolution is required for the passing
of an ordinary resolution, whereas a
qualified majority of more than 75%
of the votes cast by members voting
on the relevant resolution is required
in order to pass a special resolution.
Matters requiring a special resolution
include for example:
• Altering the objects of the Company;
• Pre-emption rights;
• Market purchase of own shares
and reissuing;
• Altering the articles of association
of the Company; and
• Approving a change of the
Company’s name.
Market announcements
The Group discloses information to the
market as required by the Central Bank of
Ireland, Euronext Dublin and the Financial
Conduct Authority including, inter alia:
• Periodic financial information such as
annual and half-yearly results;
October 2018 November 2018 January 2019 March 2019
• Any other information assessed to
be price sensitive, which might be
a significant change in the Group’s
financial position or outlook, unless
a reason is present not to (e.g.
prejudicing commercial negotiations);
• Information regarding major
developments in the Group’s activities;
• Information regarding dividend decisions;
• Any changes at Board level; and
• Information in relation to any notifications
to the Company of the acquisition or
disposal of major shareholdings.
The Company will make an announcement
if it has reason to believe that a leak may
have occurred about any matter of a
price-sensitive nature. Any Board decisions
which might influence the share price
must be announced before the start of
trading the next day. Information relayed
at a shareholders’ meeting which could be
price-sensitive must be announced no later
than the time the information is delivered at
the meeting.
In relation to any uncertainty regarding
the communication of a particular matter,
advice will be sought from the Company’s
corporate brokers and/or legal adviser(s).
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Governance
Audit Committee Chairman’s report
Post the expiry of these interim
arrangements, the new Remuneration
Policy became effective. In addition, from
1 April 2018 the new accounting standards,
IFRS 9: Financial Instruments and IFRS 15:
Revenue from Contracts with Customers
became effective. As a result, we have
revised the Group’s accounting policies for
these changes during this financial year.
As reported previously and expected, none
of these changes in policy had a material
effect on either the results or the financial
position of the Company and Group.
We also carried out our fifth self-evaluation,
examining both our own work and our
interactions with external assurance providers
such as the external auditor and valuer.
We are satisfied that the Audit Committee
has the right balance of skills and resources,
has been able to work effectively and has
received all the support and response it
has required from both management and
the external service providers. We are also
satisfied that the level of scrutiny of the
Group’s public announcements is sufficient
and effective. There were no issues arising
from this evaluation.
Terence O’Rourke
17June 2019
Dear fellow shareholder
On behalf of the Audit Committee, I am
pleased to present the Committee’s report
for the financial year ended .
I would like to welcome Roisin Brennan to
the Audit Committee and I look forward
to working closely with her. Roisin brings
experience in corporate finance and
accounting to the Audit Committee as
well as considerable public company
board experience.
The following pages provide insight into
our work and activities during the financial
year as we discharge our responsibilities
in relation to the integrity of financial
reporting, the relationship with and
independence of the external auditor, the
effectiveness of internal controls and the
risk management system and the role and
effectiveness of internal audit.
As part of our activities, we regularly met
the Senior Management Team and the
internal and external auditors. We also met
the independent valuer and assessed their
work in valuing our investment properties.
During this financial year the Company
saw the first rotation of its external audit
partner, with Christian McManus replacing
Brian Jackson. Mr McManus shadowed Mr
Jackson for the 2018 audit and commenced
his role in full for the interim review of the
half year to 30 September 2018.
We met the internal auditors, PwC, as
they presented the results of their first
internal audit and plans for subsequent
audits. These are addressed in the body
of this report.
The remuneration arrangements which
resulted from the Internalisation of the
Investment Manager in 2015 under the
Share Purchase Agreement, expired
on 26 November 2018. We therefore
agreed the process to determine the
final performance fee calculations and
amounts due to the Vendors of the
Investment Manager during this financial
year. We appointed Deloitte, the external
auditor, to provide a limited assurance
review of the calculation of the amount
due. As this is an important related party
transaction, we wanted assurance that
the final amounts were correctly and
fairly calculated in advance of disclosure.
The amounts have been subject to a full
audit as part of the annual audit.
Audit Committee year in focus:
• Expiry of IMA arrangements and
final performance fee calculations;
• Capital reorganisation and
share buyback;
• Consideration of results of first
internal audits;
• External audit partner changeover;
• Consideration of financial
statements and key areas
of judgement;
• External audit and interim review
planning and results.
Members of the Audit Committee:
Chair: Terence O’Rourke, Members:
Colm Barrington, Roisin Brennan and
Stewart Harrington
Roisin Brennan was appointed on
16 January 2019. Terence O’Rourke,
Colm Barrington and Stewart
Harrington have served since the
establishment of the Company, a
period of five years and four months
to .
Audit Committee Chairman’s report
84  • Reviewing and monitoring the
independence of the statutory auditor,
and the provision of additional services
by the auditor; and
• Supervising the provision of internal audit
services by PwC.
A full copy of the terms of reference is
available on the Company’s website at
/about-us/corporate-
governance
The Audit Committee meets regularly,
in alignment with the financial reporting
calendar. The Audit Committee requests
the attendance of relevant parties as
required. The parties met were as follows:
Audit Committee report
The Audit Committee is chaired by Terence
O’Rourke, who is an independent Non-
Executive Director and is considered by the
Board to have recent and relevant financial
experience and sufficient understanding
of financial reporting and accounting
principles. The Committee also has relevant
industry and commercial experience.
All members of the Audit Committee are
independent Non-Executive Directors,
appointed by the Board for a period of up
to three years, extendable by up to two
additional three-year periods. All members
except Roisin Brennan, who was appointed
on 16 January 2019 and is in her first term,
are in their second three-year terms.
Invitee Reason for attendance
Deloitte Ireland LLP The independent auditor attended to present its plans and results in respect of the
annual audit, interim and limited assurance reviews, its analysis of the risks it identified
within the Group and its recommendations for improvements in systems and controls.
PwC Dublin The internal auditor attended to report on the findings from its initial review of the
Company which focused on the budgeting practices and the related monitoring measures
in place for development and operational expenditure and to agree the next review.
Cushman & Wakefield The independent valuer met the Audit Committee to discuss its work and its significant
assumptions in relation to the investment property valuations. The Audit Committee
reviewed in particular the bases of valuation (e.g. investment vs residual methodologies),
estimated rental values and variations on yields experienced in the market. Other areas
of focus were on the treatment of incentives, the length of void period assumed after
a tenant vacates and similar issues around some more tailored lease arrangements.
These discussions enabled the Audit Committee to review the valuations used in the
financial statements and make recommendations to the Directors in relation to their
assessment of the investment property valuations.
Representatives of the Group Representatives of the Group, including the CEO, CFO, CIO, the Finance Team and the
Company Secretary/Risk & Compliance Officer (“RCO”) met the Audit Committee in
order to present the financial statements and investment property valuations, to discuss
significant judgements and areas of uncertainty, the risks and measures in place to
mitigate risks, and any other matters as requested by the Audit Committee. This gave
the Audit Committee an opportunity for better insight into the financial reporting and
internal controls process and assisted them in making more informed decisions.
The Audit Committee is constituted
in compliance with the UK Code, the
Irish Annex and the Company’s Articles
regarding the composition of the
Audit Committee.
The Audit Committee is responsible for:
• Monitoring the financial reporting process;
• Identifying and considering key areas of
judgement in the financial statements;
• Monitoring the effectiveness of internal
controls and risk management systems;
• Monitoring the statutory audit of
the annual consolidated financial
statements and the review work on the
interim report;
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Governance
Principal responsibilities of the Audit Committee
The principal responsibilities of the Audit Committee and the key areas of discussion in 2018–19 were as follows:
Principal responsibilities of the Audit Committee Key areas discussed and reviewed in 2018–19
Reporting and external audit • Monitoring the integrity of the Group and
Company financial statements and any
other formal announcements relating to
the Group’s financial performance, business
model and strategy and reviewing significant
financial reporting issues including material
disclosure obligations
• Reviewing and discussing the external auditor’s
audit plan and ensuring that it is consistent with
the Group’s overall risk management system
• Assessing the external auditor’s performance,
qualifications, expertise, resources, independence
and its terms of reference, approving its fees and
reviewing the external audit reports to ensure that
where deficiencies in internal controls have been
identified that appropriate and prompt remedial
action is taken
• Monitoring the policy on the engagement of the
external auditor in providing non-audit services in
line with relevant guidelines
• Reviewing the content of the Annual Report and
financial statements to ensure it is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group’s
position and performance, business model
and strategy
• Considering and approving the Group’s viability
and going concern statements
• Reviewing the work of the independent valuers
• Annual and interim results along with trading
updates and announcements including
the proposed capital reorganisation and
share buyback
• Consideration of changes to accounting
policies arising from the new Remuneration
Policy, the transition to IFRS 9 and IFRS 15 and
other minor changes during the financial year
• External audit planning and reporting including
meeting the external auditor both with and
without the presence of management
• Termination of interim arrangements resulting
from the Internalisation of the Investment
Manager in 2015
–
– Appointed the external auditor to provide
limited assurance on the arrangements in place
on the expiry of the interim arrangements,
including a review of calculation of the final
performance fees as these are a related
party transaction
–
– Appointed the valuer to perform an additional
valuation of the portfolio as at 31 December
2018 as the basis for the calculation of final
performance fees to 26 November 2018
–
– Review and approval of the Management
Accounts for 31 December 2018 and the
calculation of the final performance fees
• Met the valuer independently during the year
to discuss the valuation process and key risks
• Sustainability Report review as well as
consideration of the AA1000 Assurance report
• Going concern and viability assessments
• Significant judgements and key estimates
• Liquidity reports and Depositary Board reports
Internal audit and
internal controls
• The independence, appropriateness and
effectiveness of internal audit
• Reviewing the recommendations and actions
taken by management to address matters raised
in the initial internal audit review
• Agreeing the terms of reference for the second
internal audit within the agreed three-year plan
• Responsibility for reviewing the effectiveness
of the Group’s system of internal control on
behalf of the Board. This covers all material
controls including financial, operational and
compliance controls
• Reviewed the effectiveness of the Group’s system
of internal control, including risk management
• Review of the register of errors and breaches which
is a mechanism to detect and deal with failings or
weaknesses which may or may not be significant,
but which could result in a loss to the Group
• Reviewed the recommendations arising out
of the first completed internal audit within the
three-year plan
• Terms of reference agreed for the second audit
with the focus being on cyber security
• Review of all breaches in limits and internal
controls and responses required. There were three
breaches during the year none of which resulted
from a failure in internal controls or resulted in
any losses
• Revisions to some internal controls procedures
following the recommendations put forward by
the internal auditors following the completion of
their first report
• Monitoring data security actions and policies
Audit Committee Chairman’s report continued
86  Principal responsibilities of the Audit Committee Key areas discussed and reviewed in 2018–19
Risk management • Reviewing the adequacy and effectiveness of the
Group’s internal financial controls and internal
control and risk management systems
• Monitoring the Group’s risk exposure and
recommending the risk appetite to the Board
for approval
• Assessing the principal risks of the Group
• Reviewing the disclosures made on risk in the
Annual Report
• Risk management is dealt with in the Risks and
Risk Management section on pages 36 to 49 of
the Annual Report. This section also covers the
principal risks of the Group
• Monitoring of risk register, including identification
of principal risks and movements in exposures
• Consideration of risk metrics and risk reporting
Other • Reviewing the procedures in place to comply
with applicable legislation, the Listing Rules
and the Irish REIT regime guidelines
• Reviewing the operation of the Group’s
procedures for the detection of fraud, bribery
and compliance
• Market Abuse Regulations compliance
• Reviewing dividend policy and distributions
planned versus legislative requirements
• Reviewing the Audit Committee’s terms of
reference and performance
• Review of the arrangements for staff to raise
concerns about possible improprieties
• Oversight of capital restructuring plans and share
buyback programme
• Review of the Audit Committee’s terms of
reference and effectiveness, including self-
assessment which was agreed to be undertaken
externally every three years
• Review of JLL Upstream Sustainability AA1000
Assurance Report
• Review of all correspondence with regulators
• Reviewed the Company’s compliance with the
REIT legislation
• Compliance with loan covenants
• Ensured that the Company adhered to its
Company Law requirements and had sufficient
levels of distributable reserves in place when
approving both the interim, final dividends paid
and the share buyback during the financial year
The key issues considered by the Audit Committee during the financial year ended  and the actions taken by the Audit
Committee are set out below:
Significant issues considered Action taken by Audit Committee
Valuation of the investment
property portfolio
The Audit Committee considered whether the information provided to the independent valuer, Cushman
& Wakefield, was complete and accurate and that the results of its valuation judgements were in line with
expectations based on the Audit Committee’s assessment of the market and knowledge of the properties.
It confirmed the valuation methods, estimated rental value and market-based yields were relevant and
appropriate to the individual property circumstances. It also considered the appropriateness of moving
from a residual method appraisal to an investment method for development properties that had not
yet reached practical completion. The Audit Committee challenged the assumptions made, considered
the independence of the valuer and reviewed the results of these valuations. It considered whether any
amendments needed to be made to the valuation amounts, e.g. in recognition of effects arising from the
accounting policy on the recognition of rental incentives and prepaid letting fees.
As at , all investment properties are valued in accordance with their current use, which is also
the highest and best use except for:
• Harcourt Square, which is valued on a residual basis as this reflects its highest and best use as a
development property. The present value of the residual income to December 2022 when the current
lease expires is added to the residual value of the site.
• Gateway industrial site, which is currently rented on short-term leases, and has been valued on a price
per acre basis as early stage plans are in place to redevelop this property in the future and this approach
reflects the highest and best use of this property.
• Marine House and Clanwilliam Court Blocks 1, 2 and 5 are valued on an investment basis until
the end of the leases (2020 and 2021 respectively) and on a residual basis thereafter, as it is the
Directors’ intention to undertake a refurbishment/redevelopment of both sites after the leases expire.
Planning permission has been granted for Marine House and the Group is currently seeking planning
permission for the redevelopment Clanwilliam Court Blocks 1, 2 and 5.
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Significant issues considered Action taken by Audit Committee
IMA performance-
related payments
As part of the expiry of the agreements covering the Internalisation of the Investment Manager in 2015, the
Group was obliged to make payments contingent on Group performance for the period to 26 November
2018. It was agreed that the final amount of fees for the period 1 April 2018 to 26 November 2018 would
be based on the pro-rated performance to 26 November 2018, using management accounts prepared
to 31 December 2018. The external valuer was engaged to perform a valuation of the Group’s property
portfolio as at this date for use in preparing these management accounts. While the quantum of fees
payable was not material, it was considered significant because of its status as a related party transaction,
The Audit Committee therefore requested that the external auditor perform a limited assurance exercise
on the management accounts which were prepared for the nine months ending 31 December 2018.
The external auditor performed limited procedures to review the management accounts including
reconciling them to the accounting records and to the valuer’s report as at 31 December 2018. It also
reviewed the calculation of performance fees due to 26 November 2018 and recalculated these to compare
with Management’s calculation. The Audit Committee reviewed both Management’s calculations and the
externally prepared auditor’s report and were satisfied that the calculations were properly made.
Changes to
accounting policies
The Audit Committee considered the implication on the Group’s accounting policies arising out of the
application of new and revised IFRS. The following standards and interpretations were effective from
1 April 2018 but did not materially impact on the results or financial position of the Group or Company
either at that date or at :
• IFRS 2 (amendment) Classification and Measurement of Share-based Payments Transactions
• IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Measurement and Recognition
• IFRS 15 Revenue from Contracts with Customers and the related Clarifications to IFRS 15 Revenue from
Contracts with Customers replace IAS 18 Revenue, IAS 11 Construction Contracts, and several revenue-
related Interpretations
The Audit Committee reviewed the amended Accounting Policies and Management’s interpretation of
the impact and agreed with their approach. Notes 3 and 37 to the consolidated financial statements give
further information on the adoption of these standards.
In addition to the changes in accounting policies arising from new standards or interpretations, the
implementation of the new Remuneration Policy for the period starting from 26 November 2018 has
had only a minimal impact on the financial statements. However, the issues are complex and PwC, who
provides advice to the Remuneration Committee, is also providing advice on appropriate measurement
and accounting, in particular for the Long-Term Incentive Plan (“LTIP”). This did not commence until
1 April 2019 and the Audit Committee is overseeing the amendments to the Group’s accounting policies.
Internal audit review The Audit Committee reviewed the recommendations outlined within the report issued by the internal
auditors and agreed to implement the control recommendations proposed around the Company’s online
banking system and on setting detailed administrative expenditure budgets annually
Audit Committee Chairman’s report continued
88  External auditor independence
Deloitte Ireland LLP is a tenant of
Hardwicke House, which is an investment
property of the Group. Deloitte Ireland
LLP was in situ when the Group acquired
its interest in the building and all lease
arrangements are at arm’s length.
Deloitte Ireland LLP occupies some space
in this property which is currently under
rent review, and therefore pays rent to
the Group.
Based on their consideration of the
above facts, the Audit Committee
concluded that the independence and
objectivity of the external auditor have not
been compromised.
Depositary
The Group had €22m (31 March
2018: €23m) in cash at the financial year
end. The depositary is responsible for
monitoring the safe keeping of these assets
in accordance with the Group’s policy on
cash management. In addition to ongoing
reviews of processes and procedures the
depositary undertook onsite due diligence
reviews during the year. No material or
significant issues were identified and the
depositary issued satisfactory reports
which were reviewed and approved by
the Audit Committee.
Approval of reports
The Annual Report and financial statements
were considered in draft on 15 May 2019.
The Preliminary Statement, which included
consolidated financial statements, was
approved by the Board on 22 May 2019.
The Annual Report was approved by the
Board on 17 June 2019.
Reappointment of the external auditor
The Audit Committee has recommended
to the Board that the statutory audit firm,
Deloitte Ireland LLP, should be reappointed
for the coming financial year. As required
under the Articles of the Company, the
reappointment will be tabled at the Annual
General Meeting for shareholder approval.
The Audit Committee has reached this
recommendation after due consideration
of the auditor’s qualification, expertise and
resources, effectiveness and independence.
In the course of arriving at this
recommendation the Audit Committee
completed a detailed assessment of these
factors including the key points below:
• Confirmation from the auditor that there
are no issues concerning its status as
a statutory auditor or the designation
of the audit engagement partner as a
responsible individual
• The independence and objectivity
of the audit partner and senior audit
staff especially in its interaction
with management
• The quality of the audit partner and
audit staff from a technical accounting
and auditing perspective, including their
industry knowledge and their specialist
technical expertise
• Whether issues were raised at the right
time by the appropriate level of audit
staff with the appropriate Group staff
member and in particular, the level
and quality of communication with the
Audit Committee
The outcome of this assessment confirmed
that the auditor was performing well,
adding value to the control process, had
a good relationship with both the Audit
Committee and Management and was
sufficiently independent and technically
qualified to justify the recommendation to
reappoint. The audit partner, Mr Christian
MacManus, who took over as lead audit
partner for the current financial year, had
met the Audit Committee throughout
the course of the year and shadowed the
previous partner for the prior year’s audit
and the Audit Committee was therefore
satisfied that he had sufficient knowledge
and experience to take on the assignment.
Deloitte Ireland LLP was appointed as the
first statutory auditor to the Company on
5 December 2013. The Audit Committee
will keep its tenure under review in light of
best practice and recent legislation.
In accordance with Section 383(2) of
the Companies Act 2014 the auditor has
expressed its willingness to continue in
office. Therefore, the Board intends to
recommend the reappointment of the
auditor at the 2019 AGM in accordance
with article 53 of the Articles of Association
of the Company.
Non-audit work carried out by
the external auditor during the
financial year ended 
The Audit Committee in general avoids
any non-audit services being sought from
the external auditors. Such services can
only be provided by the external auditor
when they are best suited to undertake the
work, do not have any conflict of interest
and do not in any way compromise their
independence by undertaking this work.
All such engagements must be formally
documented and approved by the
Audit Committee.
All of the work carried out by the external
auditor during the year related to the
audit of Group Companies or the review
of interim reports or accounts where
the Audit Committee considered that
the external auditor was best suited to
the assignment. This work included a
review of the management accounts as at
31 December 2018 and the calculation of
the balance of the final IMA performance-
related payments due as at 26 November
2018, which were pro-rated from these
management accounts. The quantum
of non-audit fees earned is immaterial
in relation to the quantum of the fees
for the audit of the Company, subsidiary
companies and the Group.
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Governance
Risk management
Risks and risk management are dealt with
in the Risk Management section on pages
36 to 49 of this Annual Report. This section
also covers the principal risks of the Group.
Audit Committee evaluation
A self-evaluation of the Audit Committee’s
work was carried out in early 2019.
This evaluation found that the Audit
Committee was operating effectively but
that an external evaluation of the operation
of the Audit Committee should take place
every three years.
Internal controls
The Board acknowledges that it is
responsible for maintaining the Group’s
system of internal control and risk
management to safeguard the Group’s
assets. Such a system is designed to
identify, manage and mitigate financial,
operational and compliance risks inherent
to the Group. The system is designed to
manage rather than eliminate the risk
of failure to achieve business objectives
and can only provide reasonable, but
not absolute, assurance against material
misstatement or loss.
The Group’s internal control system is
built on certain fundamental principles
and is subject to review by the Board.
The following are the principles under
which the internal control system operates:
• A defined schedule of matters reserved
to the Board;
• Documented procedures and policies;
• A clear and detailed
authorisation process;
• Risk metrics and risks reporting
at meetings;
• Formal documentation and approval
of all significant transactions;
• Maintenance of a breaches register
to record any failings and follow up
corrective measures;
• Business and financial planning to
include cashflows and viability modelling
covering a period of three financial years
forward on a rolling basis;
• Robust assessment of property
investment decisions;
• Performance assessment versus budget
on total and individual project basis; and
• Benchmarking of performance
against external sources, i.e. the MSCI/
SCSI Ireland Quarterly Property All
Assets Index.
The Policies and Procedures Manual
sets out financial reporting and other
procedures and policies of the Group
and addresses the respective authority
levels and responsibilities of the Group,
the authorisations required to effect those
transactions and the necessary controls to
ensure that only appropriately authorised
individuals in the Group can approve
particular transactions. In particular, the
Policies and Procedures Manual establishes
the necessary controls and authority levels
to manage the Group’s investment property
portfolio. Other controls and authorities in
the Policies and Procedures Manual include
those in relation to the management of risk,
property portfolio management, property
valuations and the maintenance of registers
and other administrative matters.
The Group maintains a register of errors
and breaches which is a mechanism to
detect and deal with failings or weaknesses
which may or may not be significant, but
which could result in a loss to the Group.
This register records incidents of error
or potential error arising from various
sources such as attempted fraud, external
service providers and failure of internal
controls. During the financial year ended
 three minor breaches were
recorded, none of which resulted from a
failure in internal controls or resulted in any
losses. The breaches were all identified
through internal reviews and corrective
controls were amended as required
where appropriate.
Audit Committee Chairman’s report continued
90  Nominations Committee report
“
The Nominations Committee is focused
on ensuring that the Board and Senior
Management Team have the skills, knowledge
and experience to meet the needs of the
business and ensure compliance with best
practice in governance.”
Nominations Committee
Terms of reference
Board composition and succession
• Reviews the structure, size and
composition of the Board and
makes recommendations to the
Board regarding any changes
• Succession planning for Directors
and other senior executives of
the Company
• Responsible for recruitment of new
Board members, taking account
of existing mix of skills, knowledge,
independence and experience
• Makes recommendations on
reappointment of and re-election
of Non-Executive Directors
• Implements and keeps under
review the Diversity policy and
steps to implement same
Leadership needs
• Succession planning for Directors
and, in particular, the Chairman
and Chief Executive
• Reviews the leadership needs
of the Company with a view to
ensuring the continued ability
of the Company to compete
effectively in the marketplace
Other
• Advises the Board in respect
of compliance with and
developments in best practice
and rules generally with respect
to matters within its remit
• Oversees the conduct of the
annual evaluation
• Reports on its actions to the
Board and to the shareholders
in the Annual Report
A full copy of the terms of reference
available on the Company’s
website at:
/about-us/
corporate-governance
Nominations Committee report
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Governance
Report of the Nominations Committee
The Nominations Committee met four times
during the financial year ended 31 March
2019. All members of the Nominations
Committee are independent Non-Executive
Directors, appointed by the Board for a
period of up to three years, which may
be renewed for further periods of up to
three years. The Nominations Committee
is constituted in compliance with the UK
Code, the Irish Annex, and the Company’s
Articles regarding the composition of the
Nominations Committee.
The Nominations Committee is responsible
for appointments to the Board and meets
at least once in a financial year and as
otherwise required.
Composition of the Board and
Senior Management Team
The Committee continued to discharge
its responsibility for ensuring that the
balance of skills, knowledge and experience
on both the Board and its Committees
remains appropriate, such that they can
carry out their roles effectively.
The Committee is working closely on
ensuring succession given that four of
the Non-Executive Directors have now
served more than five years. In addition,
lack of Board diversity was highlighted as
a concern in the 2018 evaluation and in
feedback from investors. The Committee
had also identified a need to strengthen
the Board’s skill set and transition its age
profile. The Committee identified a number
of female candidates and after a selection
process and approval by the Central Bank,
Ms Roisin Brennan was appointed to the
Board on 16 January 2019 and to all three
Board Committees, Audit, Remuneration
and Nominations. In accordance with
Company policy, Roisin will offer herself
for re-election at the 2019 AGM.
Following the expiry of the IMA the
Committee approved the following
organisational changes:- (i) Mr Frank O’Neill
would begin working on a part time basis
as Director of Operations; (ii) Mr Justin
Dowling would be promoted to Director
of Property; (iii) Mr Frank Kenny would
remain as a Non-Executive Director and his
consultancy agreement would be extended
to  and (iv) Mr Bill Nowlan
would cease to provide consultancy
services to the Company.
Mr Richard Ball, the Chief Investment
Officer, resigned and left the Group on
 and Ms Edwina Governey,
who has worked with the Group since
shortly after its inception as Richard’s
deputy, has been appointed as Interim
Chief Investment Officer.
Succession planning
Succession planning is one of the
responsibilities of this Committee.
The Group has a relatively small Senior
Management Team and a flat structure
and therefore the focus is on developing
employees to become competent
across disciplines to provide personal
development and resource flexibility.
The Committee also recognises the
contribution of more experienced
individuals who are closer to retirement
and wish to work on a more flexible basis.
These individuals provide expertise and
support that would otherwise be difficult to
source. A review of the Company’s resource
requirements and succession planning
is completed on an annual basis by the
Committee with Management.
The Nominations Committee may not
be chaired by the Chairman when it is
dealing with the matter of succession
to the Chairmanship of the Company.
Time commitments
The Committee noted that some investors
had expressed concerns on the time
commitments of certain members of
the Board. Mr Barrington advised the
Nominations Committee during the
financial year of his resignation from
his directorship of IFG Group plc. I have
resigned my position as Non-Executive
Director of LXB Retail Properties PLC.
I have three other Chair positions, two
of which are also property companies.
None of the companies of which I am
Chair operates in heavily regulated
businesses, such as financial services,
and only Applegreen has geographically
diverse operations. I am able to manage
my commitments to the benefit of all
of the companies and there have been
no occasions where I have not been
available to the Group when required.
Specifically in 2018-19, in addition to
completing all my normal duties with the
Group, I also spent a week meeting and
speaking to Hibernia shareholders on
corporate governance matters.
Key activities 2018-19
• Appointment of additional Non-
Executive Director; Roisin Brennan
• Succession planning
• Board time commitments review
Focus for 2019-20
• Non-Executive Director succession
• External evaluation
• Further diversity action
Members of the Committee:
Chair: Daniel Kitchen,
Members: Colm Barrington,
Roisin Brennan, Stewart Harrington,
Terence O’Rourke
All members except Roisin Brennan
have served since the establishment
of the Company, a period of five
years and four months to 31 March
2019. Roisin has served since her
appointment on 16 January 2019.
The Committee considered the time
commitment and attendance of all Non-
Executive Directors at meetings during
the year and was satisfied that all Non-
Executives were readily available for
meetings and were able to devote sufficient
time to properly deal with Group business.
The Company Secretary also reported that
there were no difficulties in arranging Board
meetings, even at relatively short notice.
Committee evaluation
In 2019, the evaluation found that the
Committee was operating effectively and
the main item to progress in 2019-20 was
planning for the orderly transition of the
Non-Executive Directors over the medium
term. This is likely to lead to an increase
in the number of Directors on the Board
in the short to medium term to allow
for transition.
Daniel Kitchen
Chairman of the Nominations Committee
17June 2019
Nominations Committee report continued
92  Remuneration Committee report
Member Independent
Number of
meetings
attended
CAll members except for Roisin Brennan have served since the establishment of the Committee in February 2016,
a period of three years and two months to . Roisin joined the Committee on 16 January 2019.
Matters covered during the year:
• New Remuneration Policy approved at 2018 AGM by 94% of our shareholders;
• Consideration of shareholder concerns regarding the levels of Board
remuneration increases;
• Conclusion of the Investment Management Agreement in November 2018;
• Corporate governance roadshow to engage with our major investors on topics including
remuneration, and understand their views;
• Consideration of conclusion of review of remuneration for all employees.
• Setting incentive scheme targets for 2019 using stretching financial and non-financial
measures designed to align with strategic objectives and shareholder interests,
which was implemented for entire workforce as well as Executive Directors and
Senior Management;
• Consideration of revisions to the UK Corporate Governance Code and market practice;
• Determination of bonus outcomes under the Performance Related Remuneration
(“PRR”) Scheme and new annual bonus scheme;
• Appointment of new member Roisin Brennan in January 2019.
Remuneration Committee report
The Committee complies with
the UK Corporate Governance
Code. The Committee makes
recommendations to the Board,
within agreed terms of reference,
on remuneration for the Executive
Directors and Chair of the Board
and has oversight of remuneration
arrangements for Senior
Management. No Director plays a
part in any decision about his/her
own remuneration.
Role of the Remuneration Committee
The Committee’s
responsibilities include:
• Determine Remuneration Policy
for the Company’s Chairman,
Executive Directors, the Company
Secretary and other members
of the Senior Management Team
as delegated;
• Determine remuneration
packages for Chairman and
Executive Directors;
• Review the appropriateness
of the Remuneration Policy on
an ongoing basis and make
recommendations to the Board on
appropriate changes if required;
• Obtain up-to-date comparative
market information and appoint
remuneration consultants as
required to advise or obtain
information required;
• Approve design of and set targets
for performance related incentives
across the Company;
• Oversee any major changes to
remuneration for employees;
• Ensure failure is not rewarded
exercising discretion on outcomes
of Remuneration Policies; and
• Agree policy for authorising
director expense claims.
The Committee’s terms of reference
are available on the Group’s website
at /about-us/
corporate-governance.
Our terms of reference were reviewed
by the Remuneration Committee in
light of the recent changes to the
UK Corporate Governance Code
and were subsequently amended
and approved by the Board on
6 February 2019.
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Governance
None of the Committee members
has any:
• Personal financial interest (other
than as shareholders) in the
decisions made by the Committee;
• Conflicts of interest arising from
cross-directorships; or
• Day-to-day involvement in running
the business.
As an Irish company, Hibernia is
not subject to the UK Directors’
Remuneration Reporting Regulations.
However, in line with best practice,
the Group is committed to applying
the requirements on a voluntary basis
insofar as is practicable under Irish
legislation. As with previous years
we are putting our Annual Report
on Remuneration to a shareholder
advisory vote.
“Continued
engagement with
our shareholders has
been a key focus for
this year especially
as we have
implemented our
new Remuneration
Policy.”
Colm Barrington
Chairman of the Remuneration Committee
Looking ahead:
• Continue to set stretching short- and long-term incentive targets that are closely
aligned with Group strategy and reward success in a measured and sustainable way;
• Continue to consider changes proposed to the UK Corporate Governance Code and
put an action plan in place for compliance;
• Focus on ensuring disclosure of remuneration meets best practice standards;
• Ensure the application of Remuneration Policy and resulting packages supports
the Group’s long-term strategy and our culture; and
• Grant the first LTIP awards under the new Remuneration Policy.
Who advises the Committee?
During the year, the Committee received advice on the new Remuneration Policy, the
shareholder consultation on the Policy and preparation of the Directors’ Remuneration
Report from PwC LLP. PwC’s fees for this advice were €90k (March 2018: €43k), which
were charged on a time/cost basis. PwC is a member of the Remuneration Consultants’
Group, and as such chooses to operate pursuant to a code of conduct that requires
remuneration advice to be given objectively and independently. The Committee is satisfied
that the advice provided by PwC in relation to remuneration matters is objective and
independent. The Company Secretary acts as secretary to the Committee and attends
Committee meetings.

Directors’ Annual Report
on Remuneration (2018)
Directors’ Remuneration Policy
Company’s Annual and
Deferred Bonus Plan
Company’s Long Term
Incentive Plan

Voting outcomes 2018
VRemuneration Committee report continued
94  Dear fellow shareholder
On behalf of the Remuneration Committee
I am pleased to present the Directors’
Remuneration Report for the financial
year ended  which sets
out how the Committee has carried out
its objectives and responsibilities during
the year. This year we have taken the
opportunity to refresh certain aspects
of our report; we have included some
more detail on Hibernia’s remuneration
philosophy, included a new “at a
glance” summary and provided some
additional context on Hibernia’s
remuneration arrangements. This year
we have also provided more detailed
information on our approach to wider
workforce considerations. Our annual
report on remuneration sets out how
our Remuneration Policy was applied
during the year and outcomes for our
Executive Directors.
The Committee was also delighted to
welcome Roisin Brennan, who joined us
on 16 January 2019. Roisin has significant
experience in corporate finance and
serving on the boards of large companies
and brings a wealth of insight to the
Committee’s deliberations.
Shareholder engagement on remuneration
Last year, we introduced a new
Remuneration Policy which followed an
extensive consultation with our major
shareholders and the main proxy adviser
firms. While our Policy was approved by
94% of shareholders at the 2018 AGM,
the advisory vote on our Remuneration
Report received 62% of votes for, which
was lower than we hoped to achieve.
We recognise that the primary concern
for our shareholders was around the one-
off increases to the Executive Directors’
salaries. Whilst many shareholders
understood and accepted the rationale for
the increases and were appreciative of the
level of market data the Committee set out
in the Directors’ Remuneration Report, a
number of our shareholders and the proxy
advisers felt they could not support the
increases. The Committee felt strongly that
the increases were in the best interests of
the business and helped ensure that our
overall remuneration package was fair and
competitive against companies of a similar
size and complexity. Nonetheless, we
valued the time taken by shareholders to
engage with us on this issue.
We are committed to continued
engagement with our shareholders and
the proxy advisers (ISS and Glass Lewis)
on remuneration matters. This year we
undertook a corporate governance
roadshow where our Chairman, Danny
Kitchen, and Company Secretary, Sean
O’Dwyer, met in person or spoke to those
of our major shareholders who indicated
they would welcome such engagement.
One of the key themes from the meetings
was that many of our shareholders believe
that the remuneration framework that we
have in place for our Executive Directors
strongly aligns the new Remuneration
Policy with their long-term interests.
We also discussed the increases which
were implemented to Executive Directors’
base salaries and confirmed that it is the
Committee’s intention not to increase the
salaries of the Executive Directors over
the Policy period other than potentially to
reflect average employee or inflationary
rises. On behalf of the Board, the
Committee is once again grateful for the
time invested by our shareholders and
proxy advisers to meet with us and share
their views. We will continue to maintain
an open and transparent dialogue with
our shareholders.
2019 business performance
2019 was another very strong year for
Hibernia. We are pleased that the Company
has continued to perform well and has
made good strategic progress over the
past year. Key performance highlights are
as follows:
• EPRA EPS: 4.0 cent, +40.4%
• EPRA NAV per share: 173.3 cent, +8.9%
• Total accounting return (“TAR”): 11.1%
• Total property return (“TPR”): 11.6%
It is with this performance in mind, and
in line with Hibernia’s remuneration
philosophy of paying only for performance,
that the Committee has taken its
decisions in respect of Executive Director
remuneration arrangements for the year.
2019 incentive outcomes
2019 was a transitional year for the Group
as the interim variable remuneration
arrangements which were implemented as
part of the Internalisation of the Investment
Manager and relate back to the Investment
Management Agreement (“IMA”) were
replaced by the new Remuneration Policy
which took effect on 27 November 2018.
Under the new Remuneration Policy, the
Group’s remuneration framework consists
of fixed remuneration and separate
incentive arrangements (annual bonus and
a long-term incentive plan) and is aligned
with Irish and UK Corporate Governance
best practice.
Annual bonus
For the period from 1 April 2018 to
26 November 2018 (i.e. the final period
of the IMA), Performance Related
Remuneration (“PRR”) for most non-Vendor
employees, including Thomas Edwards-
Moss, was met out of arrangements
under the Internalisation agreement.
Kevin Nowlan was one of the Vendors of
the Investment Manager and therefore
received no variable compensation for this
period as he was compensated under the
Internalisation arrangements as disclosed
in notes 11.b and 36.b to the consolidated
financial statements. Further details on his
compensation are set out on pages 110
to 112.
For the period from 27 November 2018
to  (i.e. the period subject
to the new Remuneration Policy), both
Kevin Nowlan and Thomas Edwards-Moss
participated in the annual bonus plan.
The Remuneration Committee set annual
bonus performance targets which applied
for the full 2019 financial year as the
Committee felt this approach was the most
simple, transparent and robust.
Kevin Nowlan and Thomas Edwards-Moss’
maximum annual bonus opportunity
for the financial year was 150% of salary.
In Kevin Nowlan’s case, as he was one
of the Vendors, bonus outcomes have
been pro-rated for 27 November 2018 to
.
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Governance
Annual bonus plan
The performance metrics and weightings
used in 2019 were:
• Relative Total Property Return (40%);
• Total Accounting Return per share
(17.5%);
• Growth in EPRA earnings per share
(17.5%); and
• Individual-specific strategic/operational
objectives (25%).
In assessing pay for performance against
our stretching targets, the Committee
approved annual bonus outcomes of 42%
(as a % of salary and equivalent to 124%
on a proforma annual basis) for the CEO
and 120% (as a % of salary) for the CFO.
As Kevin Nowlan did not participate in the
annual bonus for the full financial year, his
bonus outcome has been pro-rated for the
period 27 November 2018 to .
The Committee has set out on page 101 and
pages 111 to 112 full details of performance
against the targets. The maximum bonus
opportunity for the CEO and the CFO was
150% of salary.
In the CEO’s case, two-thirds of the bonus
payable under the Remuneration Policy, i.e.
from 27 November 2018 to ,
will be paid in the form of cash and the
remaining third has been deferred for three
years and will be payable in shares, subject
to continued employment.
In the CFO’s case, one half of the bonus
payable from 1 April 2018 to 26 November
2018, i.e. falling under the IMA PRR, will
be paid in cash and the balance has been
deferred subject to continued employment
and will be payable in shares, net of tax, at
the end of two years from the end of the
financial year to which it relates. For the
other portion of the CFO’s bonus, which is
subject to the Remuneration Policy, two-
thirds will be paid in the form of cash and
the remaining third has been deferred for
three years and will be payable in shares,
subject to continued employment.
Discretions
The Committee felt that the above
incentive outcomes were in line with the
overall performance of the business during
the relevant financial year and therefore
did not exercise any discretion to alter
the outcomes from the application of the
performance conditions.
Long-Term Incentive Plan (LTIP)
There were no LTIP grants in the financial
year 2019.
Approach to Directors’ remuneration
for the year ending 31 March 2020
As we noted last year, it is the Committee’s
intention not to increase the salaries of
the Executive Directors over the Policy
period other than potentially to reflect
average employee or inflationary rises
and this principle has been followed this
year. For FY 2020, the Committee has
determined that Executive Directors’
salaries as well as Chairman and Non-
Executive Directors’ fees will be frozen.
This is in line with the approach taken for
the wider workforce.
The Group’s philosophy is to pay for
performance in a simple and transparent
way and we remain committed to
ensuring that the remuneration framework
that is in place is consistent with this
philosophy. The overall framework
for the CEO and CFO’s annual bonus
arrangements will remain the same with
a maximum bonus opportunity of 150%
of salary. The performance metrics and
their weightings will remain unchanged.
We consider the targets to be commercially
sensitive but we will continue to provide
robust retrospective disclosure in next
year’s Directors’ Remuneration Report.
The first grants under the LTIP scheme
will be made in July 2019. The Committee
disclosed the performance measures
and targets for the first grant in last
year’s Director’s Remuneration Report.
We reviewed the performance targets
again this year to ensure they remain fit
for purpose and we are satisfied that the
targets are sufficiently challenging taking
into account the Group’s business plan and
the economic environment. The Committee
has set out details of the performance
targets on page 104.
Compliance with the UK Corporate
Governance Code
One of the activities of the Committee
this year was considering the current
compliance of our approved Remuneration
Policy and its operation with the new
UK Corporate Governance Code, which
applies to financial years beginning on
or after 1 January 2019. While we were
not required to comply with the new UK
Corporate Governance Code for the current
year being reported, the Committee has
reviewed the Directors’ Remuneration
Policy in light of these changes. We are
satisfied that the Remuneration Policy
is well aligned with the provisions of
the Code.
Remuneration Committee report continued
96  We recognise there are areas of the Code
that we need to keep under review in the
lead-up to our next Policy review in 2021
and we will continue to consider how best
to approach these areas.
We are also mindful that legislation was
introduced in the UK which requires
certain companies to disclose CEO pay
ratios. As an Irish incorporated company,
we are not required to comply with this
legislation. However, the Committee
seeks to follow best practice and we will
consider this closely over the next year to
determine what meaningful information
we can provide to shareholders. FY 2020
will be the first full year where the CEO
is remunerated fully through payroll and
not through his association with the
Investment Manager as was the case until
26 November 2018.
Wider workforce considerations
Hibernia is committed to creating an
inclusive working environment and to
rewarding our employees throughout the
organisation in a fair manner. The new
Remuneration Policy was extended across
the workforce and accompanied by an
assessment exercise to ensure that salaries
and other conditions were commensurate
with market norms. As a result, we are
satisfied that our total remuneration levels
for employees are appropriate and little
amendment was required for the most part.
We also reviewed our benefits offerings for
most employees other than the Executive
Directors and Senior Management
Team and, as a result of this exercise, we
increased pension contribution for those
employees to 7.5% of salary and introduced
payment for private health insurance which
brings us more in line with our peers.
The Committee has also taken steps to
implement changes to the UK Code which
came into effect at the beginning of 2019
and the expansion of our remit. We have
set out on page 98 specific details of how
we are responding to aspects of the Code.
In conclusion
As a Committee, we remain focused on
ensuring that Hibernia’s Remuneration
Policy is fit for purpose in the context of
the Group’s long-term strategy. We trust
that the information set out in this report
provides you with what you need to be able
to support the advisory resolution to be put
to shareholders on this remuneration report
at the Company’s AGM on 31 July 2019.
Once again, I would like to thank those
shareholders who have engaged with
us this past year and a half. We very
much value our ongoing dialogue with
shareholders and as always, welcome
your feedback. If you would like to
discuss any aspect of this remuneration
report, I would be happy to hear from
you. You can contact me through the
Company Secretary, Sean O’Dwyer.
I will also be available at the Company’s
Annual General Meeting on 31 July 2019
to answer any questions in relation to this
Remuneration Report.
On behalf of the Committee and the Board,
Colm Barrington
17 June 2019
Key remuneration element of the
2018 UK Corporate Governance Code
Alignment with our
approved Remuneration Policy
Five-year period between the date of
grant and realisation for equity incentives.
• The LTIP has a five-year period including
the performance and holding period.
Phased release of equity awards • The LTIP ensures the phased release
of equity awards through annual
rolling grants.
Discretion to override formulaic
outcomes for bonus and LTIP awards
• The Remuneration Policy contains the
ability to override formulaic outcomes and
apply discretion where deemed necessary.
Post-cessation shareholding requirement • The Remuneration Policy does not
currently include a post-cessation
shareholding requirement but this is
an area which the Committee will be
keeping under review in the lead-up to
our next Policy review.
Pension alignment • The pension provision for the current
Executive Directors is within the range
provided to the wider workforce of the
Group and this will continue to be the
case for future Executive Directors.
Extended malus and clawback • The current malus and clawback provision
already exceeds the best practice
suggested in relation to the new Code.
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97

Governance
Remuneration philosophy
Remuneration principles
Hibernia’s Remuneration Policy aims to encourage, reward and retain the Executive Directors and other employees and ensure their
actions support the implementation of the Group’s strategy. The core principles which underpin remuneration across the Group are:
Our remuneration principles
Simplicity and
transparency:
Remuneration should be
simple and transparent
in terms of design
and communication
to internal and
external shareholders
Long-term shareholder
alignment:
Remuneration outcomes
should mirror the
shareholder and wider
stakeholder experience
over the long term
Pay-for-performance:
Remuneration outcomes
should be clearly linked
to the delivery of superior
corporate results
Market competitiveness:
The remuneration
opportunity provided
should be fair and
competitive against
companies of a
similar size, scope
and complexity with
a strong emphasis on
variable elements
Flexibility:
Remuneration should be
able to support potential
changes in business
priorities over time
How does the Committee address the requirements under provision 40 of the Corporate Governance Code?
Factor How our Remuneration Policy aligns
Clarity • Hibernia’s performance remuneration is based on supporting the implementation of the
Company’s strategy measured through KPIs which are used for the annual bonus and
LTIP. This provides clarity to all stakeholders on the relationship between the successful
implementation of the Group’s strategy and the remuneration paid.
Simplicity • Hibernia operates a market standard approach to remuneration which is familiar to all
stakeholders and aligned with best practice in Ireland and the UK.
Risk The Remuneration Policy includes:
• Setting defined limits on the maximum awards which can be earned;
• Requiring the deferral of a substantial proportion of the incentives in shares for a material
period of time;
• Aligning the performance conditions with the strategy of the Company;
• Ensuring a focus on long-term sustainable performance through the LTIP; and
• Ensuring there is sufficient flexibility to adjust payments through malus and clawback and
an overriding discretion to depart from formulaic outcomes.
These elements mitigate against the risk of target-based incentives by:
• Limiting the maximum value that can be earned;
• Deferring the value in shares for the long term which helps ensure that the performance
earning the award was sustainable and thereby discouraging short-term behaviours;
• Aligning any reward to the agreed strategy of the Company;
• Ensuring that the use of an LTIP supports a focus on the sustainability of the performance
over the longer term;
• Reducing the awards or cancelling them if the behaviours giving rise to the awards are
inappropriate; and
• Reducing the awards or cancelling them, if it appears that the criteria on which the award
was based do not reflect the underlying performance of the Company.
Predictability • Shareholders were given full information on the potential values which could be earned
under the incentive plans prior to approval. In addition, all the checks and balances set out
above under Risk were disclosed at the time of shareholder approval.
Proportionality • The Company’s incentive plans clearly reward the successful implementation of the
strategy and, through deferral and measurement of performance over a number of years,
ensure that the Executive Directors and employees have a strong drive to ensure that the
performance is sustainable over the long-term. Poor performance cannot be rewarded due
to the Committee’s overriding discretion to depart from the formulaic outcomes under the
incentive plans if they do not reflect underlying business performance.
Alignment to culture • A key tenet of Hibernia’s culture is a focus on ensuring long-term sustainable performance.
This is reflected directly in the type of performance conditions used in Hibernia’s
incentive plans which assess sustainable performance using a variety of non-financial and
financial measures.
• The focus on share ownership and long term sustainable performance is also a key part
of the Company’s culture. In addition, the measures used in the Incentive Plans support
directly the implementation of the strategy.
98  How do our incentive performance measures align to our strategy?
The Committee carefully considers the performance measures for the annual bonus and the LTIP in the context of the long-term
strategy and believes that the measures that were selected support the business focus on income growth, asset improvement, portfolio
management, delivery of developments and capital discipline. In addition, the combination of absolute and relative measures focuses
Executive Directors and the Senior Management Team on both outperformance of the strategic plan as well as industry benchmarks.
The following table sets out a number of the Group’s KPIs and how their satisfaction is supported by the Group’s incentive framework:
FY18–19 strategic priorities
1
Complete
committed near-
term developments
and prepare pipeline
of future projects
2
Increase rental income
and duration
3
Make selective
investments
4
Recycle capital to
monetise gains and
enhance future returns
5
Maintain an efficient
balance sheet and
seek to diversify
funding sources and
maturity dates
6
Continue to improve
environmental
efficiency of the
portfolio
Our key performance indicators
EPRA earnings Total Accounting Return (TAR) Total Property Return (TPR) Total Shareholder Return (TSR)
Annual bonus
Measures Link to strategy Link to KPIs
EPRA earnings • Linked to shareholder value
• Key measure of organic growth
• Focus on sustainable investment

Relative TPR • Measures how we are driving value
in our portfolio
• Focus on maximising rental income
• Focus on outperformance

Growth in TAR • Link to shareholder value
• Focus on sustainable investment
• Execution of our dividend strategy

Strategic/
operational
• Focus on operational efficiencies
• Focus on specific internal projects

Long-Term Incentive Plan
Measures Link to strategy Link to KPIs
Relative TPR • Measures how we are driving value
in our portfolio
• Focus on maximising rental income
• Focus on outperformance

Relative TSR • Linked to shareholder
value/divided strategy
• Focus on outperformance

Growth in TAR • Link to shareholder value
• Focus on sustainable investment
• Execution of our dividend strategy

Shareholding
guidelines
• Linked to shareholder value

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99

Governance
Remuneration at a glance
Remuneration in respect of 2019
Business performance against our core KPIs
Hibernia portfolio returns significantly outperformed the Dublin market helped by successful completion of development schemes and
capital recycling into new opportunities.
Relative Total Property Return
(TPR) vs MSCI Ireland All Assets index
* The CEO, Kevin Nowlan did not participate in the annual bonus for the full financial year as he was a Vendor of the Investment Manager and so his bonus outcome has been
pro-rated for the period 27 November 2018 to . On a proforma basis, the CEO’s bonus is equal to 124% of salary.
2019 LTIP outcomes
Not applicable as the first LTIP grants are expected to be made in July 2019.
Total single figure of remuneration
CEO CFO
 
2019 €731 €828
2018 €367 €625
1. The CEO, Kevin Nowlan did not participate in the annual bonus for the full financial year as he was a Vendor of the Investment Manager and so his bonus outcome has been
pro-rated for the period 27 November 2018 to . On a proforma basis, the CEO’s bonus is equal to 124% of salary.
2. The figures for the CEO, Kevin Nowlan, do not include payments under the IMA which are disclosed in note 36.b to the consolidated financial statements. These payments are
in respect of deferred consideration on the Internalisation rather than remuneration.
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Governance
Remuneration at a glance continued
Remuneration under the new Policy – how the Policy was implemented in 2019 and how it is proposed to implement the Policy in 2020
The Policy for Executive Directors supports Hibernia’s KPIs, which are set out on page 34. The Policy and its use of performance metrics
appropriately support shareholder value creation by delivering sustainable performance consistent with the strategic drivers and appropriate
risk management. The table below summarises key aspects of the Policy. The Policy itself is published on our website at .
Element
Year
Operation

Base Salary
Provides the basis for the overall market
remuneration package and takes into account
the role and skills of the individual.
Salaries are set at a level to ensure the recruitment
and retention of high calibre executives to
implement the Group’s strategy.
Salaries are set on appointment and reviewed annually.
When determining salary the Committee considers:
• General employee salary rises;
• Remuneration practices in the Group;
• Scope, role and experience;
• Performance of the Group and economic environment; and
• Salaries paid in relevant comparator group.
Pension
To provide a basis for post–retirement
remuneration in line with comparable
remuneration packages.
Directors may participate in a defined contribution scheme.
The pension plan is an optional defined contribution scheme with
an independent pension provider and an employer contribution of
between 7.5% and 15% for staff and Senior Management respectively.
Benefits
To provide a market competitive benefits package.
Benefits may include: car allowance, death in service and long-term
disability schemes, travel insurance, and other benefits as needed to
attract and retain Directors (e.g. relocation allowances).
Annual bonus
To incentivise the achievement of annual
performance targets that support the Group’s
short-term key performance as well as providing
long-term alignment with shareholders through
the operation of bonus deferral in shares for
three years.
Awards are granted annually with performance measured over
one financial year. At least 50% of awards will be linked to financial
measures although specific measures, targets and weightings may
vary from year to year.
A third of any bonus earned is deferred into shares subject to a further
three-year vesting period.
Participants may be entitled to dividends or dividend equivalents
on the deferred shares representing the dividends paid during the
deferral period.
Malus and clawback arrangements apply.
LTIP
To incentivise the achievement of long-term
sustainable shareholder return through the
delivery of key financial performance indicators.
The Committee may award annual grants of performance share
awards which vest three years from the date of grant subject to the
achievement of the performance measures.
A further two-year holding period applies to vested shares.
Participants may be entitled to dividends or dividend equivalents
representing the dividends paid during the performance period on
vested LTIP Awards.
Malus and clawback arrangements apply.
Shareholding requirement
To ensure Executive Directors’ interests are
aligned with shareholders over the long term.
Formal shareholding requirements which will encourage the Executive
Directors to build up shareholdings over a five-year period and then
subsequently hold a shareholding equivalent to a percentage of salary.
Non-Executive Directors’ fees
To attract and retain NEDs of the highest calibre
with experience relevant to the Company.
Non-Executive Directors are paid an annual fee and additional fees
for chairmanship of committees and the role of Senior Independent
Director (“SID”).
The Company retains the flexibility to pay fees for the membership
of committees.
102  Opportunity
Implementation for financial year
ended 
Implementation for financial year
ended 31 March 2020
The Committee ensures that maximum salary
levels are positioned in line with companies
of a similar size to Hibernia and validated
against other companies in the industry.
Average annual percentage increase in salaries
for Executive Directors will be in line with the
average for other employees in the Group.
Exceptions to this rule are:
• If an individual is below market level; and
• Material increase in scope or responsibility.
Kevin Nowlan (CEO):
€450,000 p.a.
Thomas Edwards-Moss (CFO):
€340,000 p.a.
Salaries for FY 2020 have been frozen for
Executive Directors in line with the wider
workforce. Salaries are as follows:
Kevin Nowlan (CEO):
€450,000 p.a.
Thomas Edwards-Moss (CFO):
€340,000 p.a.
The maximum pension contribution allowance
for existing Executive Directors is 15% of salary.
15% of base salary for Executive Directors. No change.
The maximum is the cost of providing the
relevant benefits.
Car allowance, death in service, long-term
disability schemes, travel insurance and other
benefits where necessary.
No change.
Maximum: 150% of salary.
20% of maximum is paid out for threshold
performance; 50% of maximum for on target
performance; and 100% of maximum for
maximum performance.
Maximum opportunity of 150% of base salary
for Executive Directors.
Performance conditions and weightings:
• 40% Relative Total Property Return (TPR)
• 17.5% growth in EPRA Earnings Per Share (EPS)
• 17.5% Total Accounting Return (TAR) per share
• 
25% Strategic and operational objectives
Executive Directors awarded bonuses in FY 2019 of:
• CEO 42% (as a % of salary and equivalent to
124% on a proforma annual basis)
• CFO 120% (as a % of salary)
Information on bonus outcomes can be found
on page 101 and pages 111 to 112.
Note: the CEO, Kevin Nowlan did not participate
in the annual bonus for the full financial year as
he was a Vendor of the Investment Manager and
so his bonus outcome has been pro-rated for
the period 27 November 2018 to .
No change to maximum bonus opportunity or
performance conditions.
Actual performance targets are not disclosed
prospectively as they are considered to be
commercially sensitive.
Full disclosure will be published at the end of
the financial year.
Maximum: 200% of salary.
20% vesting for threshold and 100% vesting
for maximum performance.
FY 2020 will be the first year of operation of
the LTIP – no grants were made in 2019.
Maximum opportunity of 200% of base salary
for Executive Directors.
Performance conditions and weightings:
• 33.3% Relative TPR compared to the MSCI/
SCSI Ireland Quarterly Property index
• 33.3% Relative Total Shareholder Return (TSR)
compared to constituents of the EPRA/
NAREIT Developed Europe Index (33.3%);
• 33.3% growth in TAR per share
The minimum shareholding requirement
for Executive Directors is 350% of salary.
Current shareholdings of the Executive
Directors are:
• CEO: 2,051% of salary;
• CFO: 58% of salary.
No change.
In general, the level of fee increase for the
Non-Executive Directors and the Chairman
will be set taking account of any change in
responsibility and the general rise in salaries
across employees.
The Company will pay reasonable expenses
incurred by the Non-Executive Directors and
may settle any tax incurred in relation to these.
Non-Executive Director fees were set
as follows:
• Chairman: €150,000;
• NED Base fee: €60,000;
• SID fee: €15,000; and
• Committee Chair fee: €10,000 (excludes
Nominations Committee Chair).
In formulating the 2018 Remuneration Policy
the Board reviewed fees of the Chairman and
Non-Executive Directors. The revised fee levels
were disclosed as part of the Policy approval
and are as a result of the repositioning exercise
described in full detail in last year’s Directors’
Remuneration Report.
Chairman and NED fees for FY 2020 have
been frozen in line with the wider workforce.
Fees from 1 April 2019 will be as follows:
• Chairman: €150,000;
• NED Base fee: €60,000;
• SID fee: €15,000; and
• Committee Chair fee: €10,000 (excludes
Nominations Committee Chair).
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Governance
Remuneration at a glance continued
First grant of LTIP awards
The maximum LTIP opportunity is 200% of salary for the CEO and the CFO. It is expected that the first grant will be made in July 2019.
The performance measures and targets which will apply to the final grant are set out below.
Performance measures
Weighting (as a
% of maximum
opportunity)
Threshold
vesting* (20%)
Maximum
vesting* (100%)
Relative Total Shareholder Return (TSR)
Assessment of TSR will be against companies in the EPRA/NAREIT Developed Europe Index
33.3% Median Upper quartile
Relative Total Property Return (TPR)
TPR will be compared to the MSCI/SCSI Ireland Quarterly Property All Assets Index (excluding Hibernia)
33.3% Equal to index Equal to index
plus 1.5% p.a.
Total Accounting Return per share (TAR)
Growth in TAR will be assessed against three-year targets
(Compound Annual Growth Rate “CAGR”)
33.3% 4% CAGR p.a. 10% CAGR p.a.
*Straight-line interpolation between threshold and maximums.
104  Additional context to our Executive Directors’ remuneration
How do our remuneration levels compare to our peers?
The following chart shows the relative position of base salaries and target total remuneration for our Executive Directors compared to our
peers (see below for positioning):
Additional information on Hibernia’s remuneration positioning policy
The Committee’s determination of the appropriate Policy position for remuneration is as follows:
• REIT comparators for both Executive Directors:
–
– Lower quartile fixed pay;
–
– Upper quartile incentive opportunities; and
–
– Total target remuneration at around the median.
• Irish comparators (Hibernia is median to upper quartile in terms of market capitalisation) for the CEO:
–
– Below median fixed pay;
–
– Upper quartile incentive opportunities; and
–
– Total target remuneration at around the median to upper quartile.
For the CFO the positioning is significantly higher against the Irish comparators. However, the Committee’s view is that the REIT
comparators are the primary group against which the Company should be compared for this role.
ISE
REIT
Governance
Additional context to our Executive Directors’ remuneration continued
External relativities
Policy external positioning
In line with the UK Corporate Governance Code the Committee considered relevant external relativities when setting the remuneration
levels within the proposed Policy. The Committee looked at two comparator groups:
Comparator group 1: REIT comparators
This is the primary comparator group used which consists of those companies which the Committee believes are the most relevant to the
Group and where individuals are likely to be recruited from or lost to.
Comparator group 2: Irish comparators
The secondary comparator group recognises that the Group is listed in Ireland and therefore the domestic market for executive talent is a
relevant consideration when setting the Company’s remuneration levels.
REIT comparators Irish comparators
Company name Company name
Intu Properties Smurfit Kappa Group
Derwent London Kingspan Group
Shaftesbury Glanbia
Great Portland Estates Aryzta
Workspace Group Cairn Homes
Big Yellow Group C&C Group
LondonMetric Property Irish Continental Group
Assura Dalata Hotel Group
Hansteen Holdings Origin Enterprises
Safestore Holdings First Derivatives
Empiric Student Property Glenveagh Properties
Capital & Regional Total Produce
Helical REIT Irish Residential Properties REIT
Mucklow (A & J) Group Malin Corporation
McKay Securities Applegreen
Kenmare Resources
Hostelworld Group
Datalex
Mincon Group
REIT comparators3
Market cap
€m1
Net asset
value €m2
Irish comparators
Market cap
€m1
Upper quartile 2,121 2,414 Upper quartile 1,115
Median 1,465 1,149 Median 774
Lower quartile 467 552 Lower quartile 451
Hibernia 980 1,219 Hibernia 980
1. 1 year average Market Capitalisation to 31/03/2019. Source: Thomson Reuters Refinitiv.
2. Latest available NAV available from Thomson Reuters Refinitiv as at June 2019.
3. In the case of REIT comparators, it should be noted that Market Capitalisation is the average for the year to  and the NAV is the last reported. This table is simply
intended to provide a snapshot of the size of REIT comparator companies for remuneration benchmarking purposes.
106  What is our 2019 single figure compared to our current policy?
The charts set out below are updated versions of charts which appeared in the Directors’ Remuneration Policy approved in July 2018.
These set out an illustration of the Directors’ Remuneration Policy compared to the actual Executive Director remuneration paid in 2019.
Notes
The minimum scenario reflects fixed remuneration of salary, pension and benefits only as the other elements are linked to future performance.
Base salary is current base salary effective 1 April 2019.
Benefits are as shown in the single figure remuneration table for the year to  on page 110.
The on-target scenario reflects fixed remuneration as above plus 50% of the maximum annual bonus opportunity and 60% vesting for the LTIP awards.
The maximum scenario reflects the fixed remuneration plus the maximum pay-out of all other incentive arrangements.
The maximum scenarios include an additional bar which shows the impact of 50% share price growth on the LTIP over the relevant performance period in line with the
remuneration reporting regulations.
What is our minimum shareholding requirement and has it been met?
The Company has a shareholding requirement for Executive Directors. The level of shareholding reflects the total annual performance-
related remuneration an Executive Director is eligible to receive and is equal to 350% of salary. The Executive Directors have five years
from the date of approval of the Remuneration Policy to achieve this guideline.
Using the Company’s closing share price of €1.336 on , compliance with these requirements was as follows:
Governance
Additional context to our Executive Directors’ remuneration continued
Additional information on shareholding requirements
Shares counting towards the achievement of the guideline include beneficially owned shares (including shares held by connected
persons) and the net of tax value of deferred shares which are subject to continued employment only.
As there were no LTIP grants in FY 2019, shares which are subject to performance are not shown but this will be indicated in future years.
Overall link to remuneration, equity and wealth of the Executive Directors
It is the Committee’s view that it is important when considering the remuneration paid in the year under the single figure to take a holistic
view of the Director’s total wealth linked to the performance of the Company. In the Committee’s opinion, the impact on the total wealth
of the Director is more important than the single figure in any one year; this approach encourages Directors to take a long-term view of
the sustainable performance of the Company; this is critical in a cyclical business. The ability for the Directors to gain and lose dependent
on the share price performance of the Company at a level which is material to their total remuneration is a key facet of the Company’s
Remuneration Policy.
The following table sets out the single figure for 2019, the number of shares held by the Executive Directors at the beginning and end of
the financial year and the impact on the value of these shares taking the opening price and closing price for the year. Shares held includes
those owned outright as well as any conditional shares held under incentive plans which have not yet vested.
2018-19 single
figure
Shares held at
start of year
Shares held at
end of year
Value of shares
at start of year
Value of shares
at end of year Difference
In the CEO’s case, the difference of shows that the CEO’s shareholding is meaningful in comparison to his single figure.
Therefore, a material proportion of the CEO’s wealth is tied to the share price of the Company, aligning him with the ownership experience
of other shareholders during the period. It should be noted that the increase in value for both the CEO and the CFO is as a result of an
increase in the number of shares owned by the CEO and CFO during the year with the actual share price having fallen during the period
(€1.44 at the start of the year and €1.34 at the end of the year).
Other pay comparisons used by the Committee
Total Shareholder Return
The chart below shows the Company’s Total Shareholder Return (TSR) since Internalisation of the management team on
5 November 2015. The Committee believes European industry benchmarks represent the most relevant benchmark for comparison.
Hibernia FTSE EPRA/NAREIT Developed Europe
108  CEO remuneration and percentage change in CEO remuneration
The table below details the total remuneration of Kevin Nowlan, our CEO, for the financial year. The percentage change in remuneration
is equivalent to an increase of 99% as compared to the prior year. 2018-2019 is a transitional year with partial implementation of the new
Remuneration Policy and therefore a year on year comparison is not particularly meaningful. Kevin Nowlan was one of the Vendors of
the Investment Manager and therefore, received no variable remuneration until after 26 November 2018 when the IMA expired as he was
compensated under the Share Purchase Agreement. The variable remuneration shown is therefore for the period from 27 November 2018
to . The table below excludes Kevin’s compensation under the Share Purchase Agreement as this is not remuneration but
details of this can be found in note 36.b to the consolidated financial statements.
In next year’s Directors’ Remuneration Report we will expand this disclosure to include the CEO’s percentage change in remuneration
relative to the average of the wider workforce and other senior employees as this provides more meaningful information.
Financial
year ended
31 March
Base salary

Taxable benefits

Pension

Annual bonus

Total

Kevin Nowlan (CEO) 
Relative importance of spend on pay
The table below sets out the overall spend on pay for all employees compared with the returns distributed to shareholders.
Significant distributions 2019 2018 % Change
Staff costs for all non-vendor employees ()1
5.3m 4.4m +21%
Distributions paid to shareholders () 23.7m 17.7m +34%
1. €0.9m (: €0.8m) in staff costs is excluded from this as it is recovered through service charge arrangements on Hibernia-managed buildings.
Fairness, diversity and wider workforce considerations
The Remuneration Committee’s remit
The Remuneration Committee is responsible for ensuring that the Company’s overall Remuneration Policy is consistent with the
strategic objectives of the Company and takes account of risk management implications. The Committee is responsible for oversight of
remuneration across the Company with specific regard for Directors and Senior Management.
The Committee also has oversight of wider workforce pay and policies and incentives, which enables it to ensure that the approach to
executive remuneration is consistent with that applied to the wider workforce. The Committee is provided with additional information
from the Company in order to carry out these responsibilities.
In order for the Committee to carry out the current oversight review of wider workforce pay, policies and incentives in line with the UK
Corporate Governance Code, the current process is being refined. The Committee currently receive an annual summary setting out the
key details of remuneration changes for the wider work force and approve the details of changes for the Senior Management Team.
The Committee is aware that clearly the level and type of remuneration offered will vary across employees depending on the employee’s
level of seniority and the nature of his or her role. The Committee is not looking for a homogeneous approach to remuneration; however,
when conducting its review, it pays particular attention to: whether the element of remuneration is consistent with the Company’s
remuneration philosophy; if there are differences, they are objectively justifiable; and whether the approach seems fair and equitable in the
context of Hibernia’s Senior Management and Hibernia’s wider workforce. Details of the findings on the alignment of pay across the Group
will be communicated to employees and reported on in next year’s Directors’ Remuneration Report.
Competitive pay and cascade of incentives
As outlined in the Chairman’s statement, the Remuneration Policy was extended to set structures for the wider workforce and in the
context of the cascade of incentives throughout the Company.
We undertook an assessment exercise to ensure pay and other incentives were competitive and fair with respect to the market at large,
underscoring the Company’s commitment to fair pay, and internally in relation to gender balance and other relevant factors. As a result
of this exercise, as well as salary adjustments applied from 1 January 2019, the Company increased the employer pension contribution for
staff from 5% to 7.5% and introduced a health insurance payment scheme for employees other than the Executive Directors and Senior
Management Team.
We believe that employees should also share in the success of the Company, and therefore all employees are set performance targets
that encompass not only personal objectives but also Company performance targets. The balance between personal and Company
performance targets is set depending on the employee’s ability to influence outcomes, but all employees have an element of Company
performance comprised within their targets. All employees therefore participate in the Annual Bonus element of the Remuneration Policy
and selected Senior Management participate in the LTIP portion of the remuneration scheme.
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Governance
Additional context to our Executive Directors’ remuneration continued
Competitive pay & cascade of incentives
Organisational level Employee #1
Maximum bonus
percentage of
salary
Proportion of
bonus payable
in cash
Proportion
of bonus
deferrable in
shares
Maximum
LTIP award
percentage
of salary
Group Chief Executive Officer
Note:
1. Employees of the Group as at .
2. Minimum deferral has been set at 33%.
We have 27 other employees, all of whom are eligible to participate in our bonus plan. Maximum bonus opportunities vary within this
group depending on the individual’s seniority and role.
Diversity and equal opportunities
The Group is committed to developing the skills and diverse talents of its employees and Board members and has a business and
culture in place which supports this objective. Our aim is to foster a culture that promotes fairness and where success reflects ability,
potential, performance and working as part of a team. The Group’s policy is to employ the best candidates regardless of sex, race, ethnic
origin, nationality, socio-economic background, colour, age, religion or philosophical belief, sexual orientation, marital status, pregnancy,
maternity, gender reassignment or disability. However, where possible, recruitment at all levels seeks to add diversity. Along with our
commitment to EPRA Sustainability Basic Principles, we publish gender diversity and pay ratios in our Sustainability Report which can be
found on our website at /sustainability.
Fairness through our supply chain
Having established our Supplier Code of Conduct in 2017, we aim to continue to support our suppliers to adhere to legislation and to
embed sustainable practices within their own businesses. Our Supplier Code of Conduct, which can be found on our website at
/sustainability, sets out our expectations that our suppliers support fair pay and working time practices and operate
an ethical business policy.
Annual report on remuneration for the financial year ended 
The 2019 annual report on remuneration contains details of how the Company’s Remuneration Policy for Directors was implemented
during the financial year ended . As an Irish company, Hibernia is not subject to the UK Directors’ Remuneration Reporting
Regulations. However, in line with best practice, the Group is committed to applying the requirements on a voluntary basis insofar
as practicable under Irish legislation. An advisory ordinary resolution to approve this report and the Annual Statement will be put to
shareholders at the AGM.
Single total figure of remuneration for Executive Directors (Audited)
Financial year
ended 31 March
Base salary

Incentive outcomes for 2019 (audited)
The annual bonus outcomes for the financial year ended  are made up of two elements:
• For the period from 1 April 2018 to 26 November 2018 (i.e., the final period of the IMA), Performance Related Remuneration (“PRR”)
for all non-Vendor employees, including Thomas Edwards-Moss, was met out of arrangements under the Internalisation agreement.
Kevin Nowlan was one of the Vendors of the Investment Manager and therefore receives no variable compensation as he is
compensated under the Internalisation as disclosed in notes 11.b and 36.b to the consolidated financial statements. Further details on his
compensation are set out on pages 110 to 112.
• For the period from 27 November 2018 to  (i.e., period subject to the new Remuneration Policy), both Kevin Nowlan and
Thomas Edwards-Moss participated in the annual bonus plan.
The Remuneration Committee set annual bonus performance targets which applied for the full 2019 financial year as the Committee
felt this approach was the most simple, transparent and robust. Kevin Nowlan and Thomas Edwards-Moss’ maximum annual bonus
opportunity for the financial year was 150% of salary. In Kevin Nowlan’s case, as he was one of the Vendors, bonus outcomes have been
pro-rated to 27 November 2018 to . In Thomas Edwards-Moss’ case, the bonus is split between the PRR under the IMA and
the annual bonus plan under the Remuneration Policy.
The performance metrics, targets and outcomes for each metric are shown below:
Annual bonus Threshold Target Maximum Hibernia actual
Performance
* The CEO, Kevin Nowlan did not participate in the annual bonus for the full financial year as he was a Vendor of the Investment Manager and so his bonus outcome has been
pro-rated for the period 27 November 2018 to . On a proforma annual basis, the CEO’s bonus is equal to 124% of salary.
In the CEO’s case, two-thirds of the bonus payable under the Remuneration Policy, i.e. from 27 November 2018 to ,
will be paid in the form of cash and the remaining third has been deferred for three years and will be payable in shares, subject to
continued employment.
In the CFO’s case, one half of the bonus payable to the CFO from 1 April 2018 to 26 November 2018, i.e. falling under the IMA PRR, will be
paid in cash and the balance has been deferred subject to continued employment and will be payable in shares, net of tax, at the end of
three years from the start of the financial year to which they relate. For the other half of the CFO’s bonus, two-thirds will be paid in the
form of cash and the remaining third has been deferred for three years and will be payable in shares, subject to continued employment.
As a result, the following cash bonus and deferred bonus shares will be awarded:
Cash bonus Deferred bonus
CEO €127,141 €63,570
CFO €227,288 €180,712
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Governance
Additional context to our Executive Directors’ remuneration continued
CEO – bonus assessment for 2018-2019
Financial objectives Assessment Committee Determination
Total Property Return: outperform IPD
Ireland Index (ex- Hibernia) (40%)
Hibernia TPR of 11.6% vs MSCI Ireland Index annual return of 7.5%.
Maximum pay-out at Index + 2%
The objective was fully met
Growth in EPRA earnings per share
(17.5%)
EPRA earnings per share growth of 4.0 cent. Threshold was
4.1 cent.
The objective was not met
Growth in Total Accounting Return
per share (17.5%)
Growth in Total Accounting Return of 11%. Maximum
pay-out at 10% growth
The objective was fully met
Strategic and Operational Measures (25%)
Deliver current development projects
and prepare pipeline of future projects
1 Sir John Rogerson’s Quay and 2 Windmill Lane projects
completed. Work commenced on 2 Cumberland Place.
Additional 90 acres acquired in Newlands.
The objective was fully met
Deploy capital into acquisitions and
development projects and recycle
capital to monetise gains and enhance
future returns
€40m of new acquisitions and €45m invested in development
projects. Disposals of €100m and commencement of share
buyback programme.
The objective was fully met
No material breaches of corporate
governance, regulatory, tax and
banking requirements
Full compliance with all requirements and no material breaches. The objective was fully met
Management of
Senior Management Team
Structures put in place to allow team to perform and internal
appointment as Interim Chief Investment Officer demonstrates
depth of talent
The objective was fully met
Environmental and
Sustainability Objectives
Separate Sustainability Report produced this year highlighting
progress made against targets. First GRESB submission made
in 2018 and 2019 results available to all GRESB subscribers when
published. EPRA gold Award received. Continued involvement in
charity fund raising events.
The Committee felt significant progress has
been made in achieving this objective and
work is continuing to make improvements
in this area.
Overall the Committee determined that the objectives had been satisfied at 82.5% giving rise to a proforma annual bonus of 123.75% of
salary which is prorated to 42% for the period from 27 November 2018 to  (maximum available 150% of salary).
CFO – bonus assessment for 2018-2019
Financial objectives Assessment Committee Determination
Total Property Return: outperform IPD
Ireland Index (ex- Hibernia) (40%)
Hibernia TPR of 11.6% vs MSCI Ireland Index annual return of 7.5%.
Maximum pay-out at Index + 2%
The objective was fully met
Growth in EPRA Earnings per Share (17.5%) EPRA Earnings per Share growth of 4.0 cent. Threshold was 4.1 cent. The objective was not met
Growth in Total Accounting Return
per share (17.5%)
Growth in Total Accounting Return of 11%. Maximum pay-out at 10%
growth
The objective was fully met
Strategic and Operational Measures (25%)
Ensure Hibernia has access to
competitive, low cost funding with longer
term duration and increased flexibility
Debt refinanced in December 2018 with duration extended from
1.9 years to 5.7 years. Move to unsecured structure giving increased
funding options. €75m of private placement notes issued
The objective was fully met
No material breaches of corporate
governance, regulatory, tax and
banking requirements
Full compliance with all requirements and no material breaches The objective was fully met
Further improvement in quality of
financial and sustainability reporting
to stakeholders
Achieved Gold awards from EPRA for financial reporting and
sustainability reporting. Separate Sustainability Report produced
for 2018/19 and full participation in GRESB
The Committee felt that this objective was
substantially met but that this is an area
where there is always an opportunity for
further improvement
Management of finance team Structures put in place to enable team members to develop and
grow and take more responsibility for finance activities
The Committee felt good progress had
been made in this area with scope for
continuing improvement
Environmental and
Sustainability Objectives
Separate Sustainability Report produced this year highlighting
progress made against targets. First GRESB submission made in
2018 and 2019 results available to all GRESB subscribers when
published. EPRA Gold Award received. Continued involvement in
charity fund raising events.
The Committee felt significant progress has
been made in achieving this objective and
work is continuing to make improvements
in this area.
Overall the Committee determined that the objectives had been satisfied at 80% giving rise to a bonus of 120% of salary (maximum
available 150% of salary).
112  LTIP (audited)
No LTIP awards were made or vested during the financial year.
Payments to past Directors (audited)
There were no payments to past Directors during the financial year, other than consultancy related payments to Mr William Nowlan,
who retired from the Board on 25 July, which are outlined further in Note 36.b to the consolidated financial statements.
Payments for loss of office (audited)
There were no payments for loss of office during the financial year.
Single figure remuneration table for Non-Executive Directors (audited)
The remuneration of Non-Executive Directors showing the breakdown between components with comparative figures for the prior year is
shown below.
2018 50 – 50
1. In formulating the 2018 Remuneration Policy the Board reviewed the fees of the Chairman and Non-Executive Directors. The revised fee levels were disclosed as part of the
Policy approval and are as a result of the repositioning exercise described in full detail in last year’s Director’s Remuneration Report.
Statement of Directors’ shareholdings
Directors’ share interests are set out below.
Director

beneficially
owned1
Total interests
subject to
performance
conditions2
Total interests
not subject to
performance
conditions3
% of share
capital (2019)
% of share
capital (2018) 1 April 20184
On 4 April 2019 45,472 shares were issued to Thomas Edwards-Moss pursuant to the settlement of performance-related remuneration in
respect of the financial year ended 31 March 2017. Other than this, there were no movements in Directors’ shareholdings between 31 March
2019 and the date of this report.
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. There are currently no unvested LTIP shares subject to performance conditions. The first grant under the new Long Term Incentive Plan will be made in the financial year
starting 1 April 2019.
3. Total interests not subject to performance conditions include deferred shares (net of tax) granted under the interim incentive scheme, subject to continued employment
conditions, and shares due to vendors under Internalisation.
4. Or date of appointment if later.
Statement of implementation of Remuneration Policy for the year ending 31 March 2020
See pages 102 to 103.
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Governance
Additional context to our Executive Directors’ remuneration continued
Service contracts for Executive Directors
When setting notice periods, the Committee has regard to market practice and corporate governance best practice. The table below
summarises the service contracts for Executive Directors. The Executive Directors’ contracts are available for shareholders to view at
the AGM.
Director Date of contract Notice period
Kevin Nowlan (CEO) 27 November 2018 6 months
Thomas Edwards-Moss (CFO) 5 November 2015 6 months
Letters of appointment for Non-Executive Directors
The Non-Executive Directors do not have service contracts but do have letters of appointment which reflect their responsibilities
and commitments.
Non-Executive Director Date of letter Notice period
Daniel Kitchen August 2013 1 month
Colm Barrington August 2013 1 month
Roisin Brennan January 2019 1 month
Frank Kenny November 2017 1 month
Stewart Harrington August 2013 1 month
Terence O’Rourke August 2013 1 month
In accordance with the requirements of the UK Code each of the Directors submits themselves for re-election each year.
External appointments
Executive Directors are permitted to accept external, non-executive appointments with the prior approval of the Board where such
appointments are not considered to have an adverse impact on their role within the Group. Neither Kevin Nowlan nor Thomas Edwards-
Moss has any external appointments currently.
On behalf of the Committee and the Board,
Colm Barrington
17 June 2019
114  Directors’ report
Directors’ report
The Directors submit their report for
the financial year ended .
The strategic report, on pages 2 to 63 is
incorporated into the Directors’ report
by reference.
Financial highlights and a discussion
thereon can be found on pages 56 to 58
of the Strategic Report.
Directors’ responsibilities
These are set out in the Directors’
responsibility statement on page 119
of this Report.
Principal activity and business review
The principal activity of the Group is
property investment. Further details on the
Group’s development and performance
for the financial year under review are set
out in the ‘Financial results and position’
on pages 56 to 58 The principal subsidiary
and associate undertakings are listed in
note 36.a to the consolidated financial
statements and form part of this Report.
Results for the financial year
Group results for the financial year are
set out in the Group consolidated income
statement on page 126. The profit for the
financial year ended  was
€123.5m (March 2018: €107.1m), including
unrealised gains on investment property of
€95.5m (: €81.4m).
The key performance indicators used
in evaluating the achievement of
strategic objectives, and as performance
measurements for remuneration, are
as follows:
• Total property return (“TPR”) %:
Measures the relative performance of the
Company’s investment property portfolio
versus the MSCI Ireland All Property
Index (excluding Hibernia).
• Total accounting return (“TAR”) %:
Measures the absolute growth in the
Group’s EPRA NAV per share plus
any ordinary dividends paid during
the period.
• EPRA earnings per share (cent):
Measures the profit after tax excluding
revaluations and gains and losses on
disposals and associated taxation
(if any). For property companies
it is a key measure of a company’s
operational performance and capacity to
pay dividends.
• Total shareholder return (“TSR”) %:
Measures growth in share value over
a period assuming dividends are re-
invested in the purchase of shares.
Allows comparison to other companies in
the Group’s listed peer group.
Other important operational metrics for
the Group are measures relating to the
management of the portfolio, investment
activity and financial indebtedness.
In addition, the Group has commenced
measurement of sustainability parameters
such as energy and waste consumption
using EPRA metrics.
Strategy and key performance measures
are reported in the Strategic report on
pages 32 to 35 of this Annual Report.
Dividends
The Directors maintain a dividend which
adheres to the Irish REIT regime and for
sustainable levels of dividend payments.
Under the Irish REIT regime, subject to
having sufficient distributable reserves,
the Company is required to distribute to
shareholders at least 85% of the property
income of its property rental business
for each accounting period. Subject to
the foregoing, the Directors intend to
reinvest proceeds from disposals of assets
in accordance with the Group’s strategic
priorities or return funds to shareholders
(see below “Share buyback programme”).
The Company seeks to pay dividends
biannually and has a general policy of
paying interim dividends equating to
30–50% of the total regular dividends paid
in respect of the prior year.
The Board has proposed a final dividend
of 2.0 cent per share (c. €14m based on
the number of ordinary shares in issue as
at close of business on 14 June 2019 as
adjusted for expected share issues prior
to the payment date) (: 1.9
cent per share or c. €13.3m) which will be
paid, subject to shareholder approval, on
2 August 2019. Together with the interim
dividend of 1.5 cent, the total dividend for
the financial year is 3.5 cent per share or
c. €24.4m (: 3.0 cent or c.
€20.9m).
Share buyback programme
On 1 April 2019 the Company announced
the sale of 77 Sir John Rogerson’s Quay
and its intention to return the net sales
proceeds from the sale (€35m) to
shareholders, commencing with an initial
share buyback of up to €25m. The share
buyback programme started on 2 April
2019, in accordance with the Company’s
general authority to repurchase ordinary
shares as approved by shareholders at the
Company’s AGM on 31 July 2018, and may
continue until 31 December 2019 subject
to renewed general repurchase authority
at the 2019 AGM, market conditions,
the ongoing capital requirements of
the business and termination provisions
customary for arrangements of this
nature. The maximum number of ordinary
shares to be repurchased under the Share
Buyback Programme is 69,758,891.
Principal risks and uncertainties
The Directors confirm that they have
carried out a robust assessment of the
principal risks facing the Group, including
those that would threaten its business
model, future performance, solvency
or liquidity. The principal risks and
uncertainties are discussed in the ‘Risks
management’ section on pages 40 to 49
and form part of this report.
Directors’ compliance statement
The Directors have, with the assistance of
advisers and Hibernia employees, identified
the Relevant Obligations, as required by the
Companies Act 2014, that they consider
apply to the Company. The Directors
acknowledge they are responsible for
securing the Company’s compliance with
its Relevant Obligations and confirm that
they have:
• Drawn up a compliance policy statement
setting out the Company’s policies
in respect of compliance with its
relevant obligations;
• Ensured that appropriate arrangements
and structures have been put in place
that are designed to ensure material
compliance with the Company’s relevant
obligations; and
• Conducted a review, during this financial
year, of the arrangements and structures
that were put in place to secure material
compliance with the Company’s
Relevant Obligations.
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Additional
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115

Governance
REIT status and taxation
Hibernia REIT plc has elected for Real
Estate Investment Trust (“REIT”) status
under Section 705E, Taxes Consolidation
Act 1997. As a result, the Group does not
pay Irish corporation tax or capital gains tax
on the profits or gains from its qualifying
rental business in Ireland provided it meets
certain conditions. With certain exceptions,
corporation tax is still payable in the
normal way on profits from any activities
that are not part of the Group’s qualifying
rental business.
The Group must satisfy the conditions
summarised below for each
accounting period:
a. 
At least 75% of the aggregate income of
the Group must be derived from carrying
on a property rental business;
b. 
It should conduct a property rental
business consisting of at least three
properties, the market value of no one
of which is more than 40% of the total
market value of the properties in the
property rental business;
c. 
It should maintain a property financing
ratio being, broadly, the ratio of property
income plus financing costs to financing
costs, of at least 1.25:1;
d. 
At least 75% of the market value of the
assets of the Group must relate to assets
of the property rental business;
e. 
The aggregate debt shall not exceed an
amount of 50% of the market value of
the assets of the Group; and
f. 
Subject to having sufficient distributable
reserves, the Group must distribute
at least 85% of its Property Income
to its shareholders by way of a
Property Income Distribution for each
accounting period.
In relation to properties under
development, where the development
costs exceed 30% of the market value
of the property at the commencement
of development, then the property must
not be disposed of within three years of
completion. If such a disposal takes place
then the Group would be liable to tax on
any profits realised on disposal.
The Directors confirm that the Group
complied with the REIT legislation for the
financial years ended  and
2018, respectively.
Share capital
At  the Company had
697,588,911 units of ordinary stock in issue
(: 692,347,106).
On 4 April 2019, 121,519 shares were issued
pursuant to the settlement of performance-
related remuneration awards to staff for the
year ended 31 March 2017. In addition, as of
14 June 2019, 6,285,487 shares had been
repurchased and cancelled as part of the
initial share buyback programme.
Approximately 5.6m shares will be issued in
relation to performance-related payments
for the financial year ended 
(: 6.2m).
Future developments
The Group continues to look for
opportunities to invest in its portfolio,
whether through further capital
expenditure or new acquisitions, and to
enhance its shareholders’ returns through
leveraging its capital base. The outlook for
the property market is discussed in the
Strategic report on pages 24 to 25 of this
report. We are confident that the Group is
well-placed to deliver further progress in
the coming financial year and beyond.
Going concern and viability statement
The financial statements have been
prepared on a going concern basis.
Going concern and viability are addressed
on page 39 of the Risk report. The principal
risks of the Group are set out on pages 40
to 49.
For the purposes of this viability statement,
worst case budget projections are used to
conduct this assessment. When considering
stress scenarios, the Directors have
calculated the decline in underlying
operating profits and asset values required
before the Group breaks its debt covenants
or the requirements of the Irish REIT
regime. Having reviewed the results of this
exercise, the Directors consider that these
scenarios are considered extremely unlikely
to occur within the three-year horizon
examined. The Company refinanced
its €400m secured revolving credit
arrangement that was due to expire in
November 2020 with a €320m unsecured
revolving credit facility and €75m of
unsecured US private placement notes:
overall the Group has an average debt
maturity of 5.4 years.
As a result of these assessments, the
Directors expect that the Group will be
able to continue in operation and meet its
liabilities as they fall due over the three-year
period of their assessment.
Directors
The Directors of the Company are
as follows:
Daniel Kitchen (Chairman)
Colm Barrington (Senior
Independent Director)
Roisin Brennan
Thomas Edwards-Moss (CFO)
Stewart Harrington
Frank Kenny
Kevin Nowlan (CEO)
Terence O’Rourke
The business of the Company is managed
by the Directors, each of whose business
address is Hibernia REIT plc, South Dock
House, Hanover Quay, Dublin D02 XW94,
Ireland. Roisin Brennan was appointed
on 16 January 2019. Apart from this there
were no changes to the Board or Company
Secretary during the financial year.
Unless otherwise determined by the
Company in a general meeting, the
number of Directors shall not be more
than ten nor less than two. Two Directors
present at a Directors’ meeting shall
be a quorum, subject to appropriate
notification requirements.
Each Director has the same general legal
responsibilities to the Company as any
other Director and the Board is collectively
responsible for the overall success of the
Company. In addition to their general
legal responsibilities, the Directors have
responsibility for the Company’s strategy,
performance, financial and risk control
and personnel.
Details on Directors’ remuneration are
contained in the Remuneration Committee
report on pages 93 to 114 of this
Annual Report.
Directors’ report continued
116  In accordance with provision B.7.1 of the
UK Code and the Irish Annex, the Directors
individually retire at each AGM of the
Company and submit themselves for
re-election if appropriate. All the current
Directors will offer themselves for re-
election at the AGM. No reappointment
is automatic and all Directors are subject
to a full and rigorous evaluation. One of
the main purposes of this evaluation is
to assess each Director’s suitability for
re-election. The Board will not recommend
a Director for re-election if the individual
concerned is not considered effective
in carrying out their required duties.
Substantial shareholdings
As at  the Company has been notified of the following substantial interests (3% or more of the issued share capital) in the
Company’s shares:
Holding
Holder ’000 Shares %
BNP Paribas Asset Management Holding SA 41,991 6.02
TIAA-CREF Investment Management LLC 35,107 5.03
Oppenheimer Funds Inc. 34,839 5.03
BlackRock Inc. 34,634 5.00
Standard Life Aberdeen plc 28,895 4.14
FMR LLC 28,133 4.03
Baillie Gifford & Co 21,622 3.10
Heitman Real Estate Securities LLC 20,938 3.00
As at 14 June 2019 the Company has been notified of the following changes:
Holding
Holder ’000 Shares %
Invesco Ltd* 46,409 6.69
BNP Paribas Asset Management Holding SA 41,676 6.00
FMR LLC 21,164 3.04
Kempen Capital Management N.V. 20,950 3.01
Heitman Real Estate Securities LLC 20,583 2.97
Oppenheimer Funds Inc* - -
* Following the completion of Invesco’s acquisition of Oppenheimer Funds.
Further discussion on the evaluation
process for Board, Committee and Director
performance is provided on pages 80 to 81
of the Annual Report.
In the financial year under review, each
Director has been subject to the evaluation
process recommended by the UK Code.
On this basis, the Chairman and the Board
are pleased to recommend those Directors
who are seeking reappointment at the
forthcoming AGM as they continue to be
effective and remain committed to their
role on the Board.
Directors’ interests in share capital
as at 
The interests of the Directors and
Company Secretary in the shares of the
Company are set out in the Report on
the Directors’ Remuneration on pages 110
to 114. The Directors and the Company
Secretary have no beneficial interests
in any of the Group’s subsidiary or
associated undertakings.
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Governance
Corporate governance
The Group is committed to high standards
of corporate governance, details of which
are given in the corporate governance
report on pages 64 to 114 which forms part
of the Directors’ report.
Health, safety and security
The Group has a Health and Safety
Committee to monitor compliance with
all regulations. The Group complies with
all relevant Health and Safety legislation
and works to industry-best standards.
Contractors working on Group properties
are fully insured and all work is carried
out in line with relevant legislation.
Potential insurance incidents are reported
as soon as possible to the Group’s
insurance broker. There have been no
major incidents at any of the Group’s
properties in this or the previous financial
year. All employees receive health and
safety training. All must achieve relevant
certification before attending construction
sites. The Group works closely with
its partners to ensure that customers,
employees, contractors and visitors are
safe and secure in all the Group’s sites.
No reportable incidents occurred during
this or the prior financial year.
Sustainability
The Group is committed to ensuring ethical
and sustainable practices for the benefit
of all its stakeholders. More details on the
Group’s policies and progress can be found
in the Sustainability Report for the year
ended  which is published
separately and available on our website at
 and summarised in
this Annual Report on pages 60 to 63.
Accounting records
The Directors believe that they have
complied with the provisions of sections
281 to 285 of the Companies Act 2014
with regard to accounting records by
employing accounting personnel with
appropriate expertise and by providing
adequate resources to the finance function.
The accounting records of the Group and
Company are maintained at the registered
office located at South Dock House,
Hanover Quay, Dublin D02 XW94, Ireland.
Political contributions
The Group made no political contributions
during the financial year.
Financial risk management
The financial risk management objectives
and policies of the Group and Company
are set out in note 31 to the consolidated
financial statements and note s of the
Company financial statements.
Independent auditor
The auditor, Deloitte Ireland LLP,
Chartered Accountants, continues in
office in accordance with section 383 (2)
of the Companies Act 2014. Under Irish
legislation, the Company’s external auditor
is automatically reappointed each year at
the AGM unless the meeting determines
otherwise or the auditor expresses its
unwillingness to continue in office. However,
a resolution confirming that they will be
reappointed will be included as ordinary
business at the Annual General Meeting.
Events after the reporting date
These are described in note 38 to the
consolidated financial statements.
Annual Report
The Board, having reviewed the Annual
Report in its entirety, is satisfied it is fair,
balanced and understandable and gives
the reader all the information required to
understand the business model, strategy,
position and performance of the Group.
The Board is assisted in this review by the
work carried out by the Audit Committee
as set out in the Audit Committee report
on pages 84 to 90 of this Annual Report.
A key responsibility of the Audit Committee
is to assist the Board in monitoring the
integrity of the financial statements and
to advise the Board whether it believes
that the Annual Report, taken as a whole
is fair, balanced and understandable
and provides the information necessary
for shareholders to assess the Group’s
performance, business model and strategy.
In recommending the report to the Board
for the current reporting period, the
Audit Committee reviewed the Annual
Report and considered whether the
consolidated financial statements were
consistent with the operating and financial
reviews elsewhere in the Annual Report.
The Audit Committee also considered the
treatment of items representing significant
judgements and key estimates as presented
in the consolidated financial statements
and where appropriate discussed these
items with the external auditor.
General meetings
The fifth Annual General Meeting (“AGM”)
of the Company was held on 31 July 2018.
The sixth AGM will be held on 31 July 2019.
Notice of the 2019 AGM, together with
details of the resolutions to be considered
at the meeting, will be circulated to the
shareholders in June 2019.
Directors’ statement
of relevant audit information
Each of the Directors at the date of
approval of this Directors’ report confirms
that all relevant information has been
disclosed to the auditor. This statement
confirms that:
• So far as the Directors are aware, there is
no relevant audit information of which the
Group’s statutory auditor is unaware; and
• Each Director has taken all the steps that
ought to be taken as a Director to make
himself or herself aware of any relevant
audit information and to establish
that the statutory auditor is aware of
that information.
The Directors Report was approved by the
Board of Directors on 17 June 2019 and is
signed on their behalf by:
Kevin Nowlan
Chief Executive
Officer
Thomas
Edwards-Moss
Chief Financial Officer
Directors’ report continued
118  The Directors, whose names and details are
listed on pages 68 to 69 are responsible
for preparing the Annual Report and
Group and Company financial statements
in accordance with applicable laws
and regulations.
Irish Company law requires the Directors
to prepare financial statements for each
financial period. Under that law the
Directors are required to prepare the Group
financial statements in accordance with
International Financial Reporting Standards
as adopted by the EU (“IFRSs”) and have
elected to prepare the Company financial
statements in accordance with IFRSs and
Article 4 of IAS Regulations.
Under company law, the Directors must
not approve the financial statements
unless they are satisfied that they give a
true and fair view of the assets, liabilities
and financial position of the Group and
Company as at the financial year end date
and of the profit or loss of the Company
for the financial year and otherwise comply
with the Companies Act 2014.
In preparing the Annual Report, the
Directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• Make judgements and accounting
estimates that are reasonable
and prudent;
• State that Group and Company financial
statements comply with applicable
International Financial Reporting
Standards as adopted by the European
Union, subject to any material departures
disclosed and explained in the financial
statements, and ensure the financial
statements contain the information
required by the Companies Act 2014; and
• Prepare the financial statements on
a going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are also required by
the Transparency Directive (Directive
2004/109/EC) Regulations 2007, the
Transparency Rules of the Central Bank of
Ireland, the Companies Act 2014, and the
Listing Rules issued by Euronext Dublin
(formerly the Irish Stock Exchange), to
prepare a Directors’ report and reports
relating to Directors’ remuneration and
corporate governance and the Directors
are required to include a management
report containing, amongst other things,
a fair review of the development and
performance of the Group’s business and
of its position and a description of the
principal risks and uncertainties facing
the Group.
The Directors are responsible for ensuring
that the Group and Company keeps or
causes to be kept adequate accounting
records which:
• Correctly explain and record the
transactions of the Group and Company;
• Enable at any time the assets, liabilities,
financial position and profit or loss of the
Group and Company to be determined
with reasonable accuracy;
• Enable them to ensure that the financial
statements and Directors’ report comply
with the Companies Act 2014; and
• Enable the financial statements to
be audited.
Directors are also responsible for
safeguarding the assets of the Group and
the Company and for taking reasonable
steps for the prevention and detection of
fraud and other irregularities. The Directors
are responsible for the maintenance and
integrity of certain corporate and financial
information included on the Group’s
website ().
The Directors confirm that they have
complied with the above requirements in
preparing the Annual Report.
Each of the Directors, whose names and
functions are listed on pages 68 to 69,
confirms that, to the best of each person’s
knowledge and belief:
• The Annual Report and consolidated
financial statements, prepared in
accordance with IFRSs as adopted by
the European Union, give a true and fair
view of the assets, liabilities, financial
position for the Group and Company as
at  and of the result for the
financial year then ended for the Group
and Company;
• The Directors’ report includes a
fair review of the development and
performance of the Group’s business
and the state of affairs of the Group and
Company at , together with
a description of the principal risks and
uncertainties facing the Group; and
• The Annual Report and consolidated
financial statements, taken as a whole,
are fair, balanced and understandable
and provide the information necessary
for shareholders to assess the position
and performance, strategy and business
model of the Group and Company.
This responsibility statement was approved
by the Board of Directors on 17 June 2019
and is signed on their behalf by:

Chief Executive
Officer
Thomas
Edwards-Moss
Chief Financial Officer
Directors’ responsibility statement
Directors’ responsibility statement
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Opinion on the financial statements of Hibernia REIT plc (the ‘Company’)
In our opinion the Group and Company financial statements:
• give a true and fair view of the assets, liabilities and financial position of the Group and Company as at  and of the profit
of the Group for the financial year then ended; and
• have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements of
the Companies Act 2014 and as regards the Group financial statements, Article 4 of the IAS Regulation.
The financial statements we have audited comprise:
The Group financial statements:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated statement of financial position;
• the consolidated statement of changes in equity;
• the consolidated statement of cash flows; and
• the related notes 1 to 38, including a summary of significant accounting policies as set out in the notes.
The Company financial statements:
• the statement of financial position;
• the statement of changes in equity;
• the statement of cash flows; and
• the related notes a to aa, including a summary of significant accounting policies as set out in the notes.
The relevant financial reporting framework that has been applied in the preparation of the Group and Company financial statements
is the Companies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union (“the relevant
financial reporting framework”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland) and applicable law.
Our responsibilities under those standards are described below in the “Auditor’s responsibilities for the audit of the financial statements”
section of our report.
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA),
as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year were:
• Valuation of investment properties; and
• Accuracy of IMA performance-related payments.
Materiality We determined materiality for the Group and Company to be €12.2 million which is 1% of
Group and Company net assets.
Significant changes in our approach There were no significant changes in our approach which we feel require disclosure to
the members.
Report on the audit of the financial statements
Independent auditor’s report to the members of Hibernia REIT plc
120  Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the Annual Report, in relation to which ISAs (Ireland) require us to
report to you whether we have anything material to report, add or draw attention to:
• the Directors’ confirmation in the Annual Report on page 115 that they have carried out a robust assessment of the principal risks
facing the Group and the Company, including those that would threaten its business model, future performance, solvency or liquidity;
• the disclosures on pages 40 to 49 of the Annual Report that describe those principal risks and explain how they are being managed
or mitigated;
• the Directors’ statement on page 132 in the financial statements about whether the Directors considered it appropriate to adopt the
going concern basis of accounting in preparing the financial statements and the directors’ identification of any material uncertainties
to the Group’s and the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the
financial statements;
• whether the Directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 6.8.3(3) is
materially inconsistent with our knowledge obtained in the audit; or
• the Directors’ explanation on page 39 in the Annual Report as to how they have assessed the prospects of the Group and the
Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group and the Company will be able to continue in operation and meet their liabilities as
they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current financial year and include the most significant assessed risks of material misstatement (whether or not due to fraud)
we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of investment property
Key audit matter
description
The valuation of the Group’s investment properties of €1,395m (2018: €1,309m) requires significant judgement and
estimation to be made by the Directors taking into consideration advice from the external valuer and Management.
Any input inaccuracies or inappropriate assumptions used in valuation models (such as in respect of estimated
rental value and market based yields applied) could result in a material misstatement of the financial statements.
Please refer to pages 84 to 90 (Audit Committee Report), pages 132 to 133 (Notes 2f and 2g – Significant
judgements and analysis of sources of estimation uncertainty and pages 152 to 155 (Note 17 – Investment property).
How the scope of our
audit responded to
the key audit matter
We evaluated the design and determined the implementation of the key controls the Company has implemented
over the valuation of investment properties.
We challenged the basis used by the Group for the valuation of investment properties in light of the Group’s
valuation policy and the requirements of IFRS.
We evaluated the competence, independence and integrity of the external valuer including reading their terms
of engagement with the Group to determine whether there were any matters that might have affected their
objectivity or that may have imposed scope limitations upon their work. We also considered fee arrangements
between the external valuer and the Group.
We met the external valuer to discuss and challenge the significant assumptions used in the valuation process,
including estimated rental value and market based yields, and considered these assumptions in accordance with
available market data.
We compared the recorded value of each investment property held to the valuation report prepared by the
external valuer and considered any adjustments made in light of the Group’s accounting policies and the
requirements of IFRS.
We set an expected range for yield and capital value movements, determined by reference to published
benchmarks and our experience and knowledge of the market. Where assumptions were outside the expected
range or otherwise appeared unusual, and/or valuations showed unexpected movements, we undertook further
investigation and when necessary, held further discussions with the external valuer and obtained evidence to
support explanations received.
We performed audit procedures to assess the accuracy and completeness of information provided to the external
valuer including agreeing on a sample basis back to underlying lease agreements.
In conjunction with our internal property specialists we met Management to discuss properties under
development. On a sample basis we assessed project costs, progress of development and leasing status.
We considered the reasonableness of forecast costs to complete included in the valuations as well as identified
contingencies, exposures and remaining risks.
We evaluated the disclosures made in the financial statements. In particular, we challenged Management to
ensure the disclosures were sufficiently clear in highlighting the significant estimates that exist in respect of
valuation of investment properties and the sensitivity of their fair value to changes in the underlying assumptions.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to the
valuation of investment properties.
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Independent auditor’s report to the members of Hibernia REIT plc continued
Accuracy of IMA performance-related payments
Key audit matter
description
The calculation of IMA performance-related payments of €6.9m (2018: €8.3m) as disclosed on page 145
(Note 11.b IMA performance-related payments to Vendors and staff) is manual, the basis of the calculation is
complex in nature and the recipients of payments are related parties of the Group. These factors increase the
risk of error and as a result we have assessed this as qualitatively material to the financial statements as a whole.
A portion of the IMA performance-related payments is settled through the issue of shares in the Company and
therefore must be recorded in accordance with the requirements of share-based payments.
Please refer to page 88 (Audit Committee Report) and page 145 (Note 11.b IMA performance-related payments).
How the scope
of our audit
responded to
the key audit matter
We evaluated the design and determined implementation of the key controls the Company has implemented
over the calculation and approval of the IMA performance-related payments.
We obtained the details of the performance-related payment calculation as detailed in the investment
management agreement and tested that the calculation prepared by management was consistent with
this agreement.
We considered the inputs to the IMA performance-related payments calculation and where appropriate we
have compared the inputs to entity or market data to evaluate the accuracy of the inputs.
We assessed the accounting treatment and disclosures of the IMA performance-related payments and considered
that the accounting charge recorded has been accounted for in accordance with the requirements of IFRS.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to the IMA
performance-related payments.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not
to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any
of the risks described above, and we do not express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group and Company to be €12.2m which is 1% of Group and Company net assets. We have determined
that net assets is one of the principal benchmarks within the financial statements relevant to members of the Company in assessing
financial performance. We have considered quantitative and qualitative factors such as understanding the entity and its environment,
history of misstatements, complexity of the Company and the reliability of the control environment.
We agreed with the Audit Committee that we would report to them any audit differences in excess of €0.61m, as well as differences
below that threshold which, in our view, warranted reporting on qualitative grounds. We also reported to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the financial statements.
Group Net Assets
Group materiality
€12.2m
Audit Committee
reporting threshold
€0.61m
Group Materiality
122  An overview of the scope of our audit
We determined the scope of our Group audit by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at Group level. Based on that assessment, a full scope audit was performed
by the Group audit team for all major subsidiaries of the Group (please see note 36.a to the consolidated financial statements for further
information). This gives coverage over substantially all of the Group.
Our 2019 audit was planned and executed having regard to the fact that the Group’s operations were largely unchanged in nature
from the previous year. Additionally, there have been no significant changes to the valuation methodology and accounting standards
relevant to the Group. In light of this, our approach to the audit in terms of scoping and areas of focus was largely unchanged.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Financial
Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other
information and to report as uncorrected material misstatements of the other information where we conclude that those items meet
the following conditions:
• Fair, balanced and understandable – the statement given by the directors that they consider the Annual Report and financial
statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess
the Group’s and the Company’s position and performance, business model and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
• Audit Committee reporting – the section describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code and the Irish Corporate Governance Annex – the parts
of the Directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance
Code and the Irish Corporate Governance Annex containing provisions specified for review by the auditor in accordance with Listing
Rule 6.8.3(7) and Listing Rule 6.8.3(9) do not properly disclose a departure from a relevant provision of the UK Corporate Governance
Code or the Irish Corporate Governance Annex.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
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Independent auditor’s report to the members of Hibernia REIT plc continued
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group and Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions
may cause the entity (or where relevant, the Group) to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group to express
an opinion on the consolidated financial statements. The Group auditor is responsible for the direction, supervision and performance of
the Group audit. The Group auditor remains solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that the auditor
has complied with relevant ethical requirements regarding independence, including the Ethical Standard for Auditors (Ireland) 2016, and
communicates with them all relationships and other matters that may be reasonably thought to bear on the auditor’s independence, and
where applicable, related safeguards.
Where the auditor is required to report on key audit matters, from the matters communicated with those charged with governance, the
auditor determines those matters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, the auditor determines that a matter should not be communicated
in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
124  Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and
properly audited.
• The Company Statement of Financial Position is in agreement with the accounting records.
• In our opinion the information given in the Directors’ report is consistent with the financial statements and has been prepared in
accordance with the Companies Act 2014.
Corporate Governance Statement
We report, in relation to information given in the Corporate Governance Statement on pages 64 to 114 that:
• In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate Governance
Statement pursuant to subsections 2(c) and (d) of section 1373 Companies Act 2014 is consistent with the Company’s statutory
financial statements in respect of the financial year concerned and such information has been prepared in accordance with the
Companies Act 2014.
• Based on our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not
identified any material misstatements in this information.
• In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement contains the
information required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017 (as amended); and
• In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373(2)(a),
(b), (e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit,
we have not identified material misstatements in the Directors’ report.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion,
the disclosures of Directors’ remuneration and transactions specified by law are not made.
The Listing Rules of Euronext Dublin require us to review six specified elements of disclosures in the report to shareholders by the Board
of Directors’ Remuneration Committee. We have nothing to report in this regard.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were appointed on 5 December 2013 to audit the financial statements for the
financial year ended 31 March 2014. The period of total uninterrupted engagement including previous renewals and reappointments of the
firm is six years, covering the years ending 2014 to 2019.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Company in
conducting the audit.
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISA
(Ireland) 260.
Christian MacManus
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2
17 June 2019
Notes: An audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes
may have occurred to the financial statements since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance
in this area.
Legislation in Ireland governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.
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Financial statements
Consolidated income statement
Notes
Financial
year ended
Revenue 5 61,387 54,094
Rental income 5 56,027 49,075
Property operating expenses 5 (2,718) (3,352)
Net rental and related income 5 53,309 45,723
Gains and losses on investment property 7 98,105 87,802
Other gains and (losses) 8 140 (41)
151,554 133,484
Operating expenses
Administration expenses 9 (13,890) (13,517)
IMA performance-related payments 11 (5,401) (6,599)
Total operating expenses (19,291) (20,116)
Operating profit 132,263 113,368
Finance income 5 7
Finance expense (8,226) (6,243)
Net finance expense 12 (8,221) (6,236)
Profit before income tax 124,042 107,132
Income tax expense 13 (583) (31)
Profit for the financial year 123,459 107,101
EPRA earnings for the financial year 15 27,472 19,403
Earnings per share
Basic earnings per share (cent) 15 17.8 15.5
Diluted earnings per share (cent) 15 17.6 15.4
EPRA earnings per share (cent) 15 4.0 2.8
Diluted EPRA earnings per share (cent) 15 3.9 2.8
The notes on pages 131 to 176 form an integral part of these consolidated financial statements.
Consolidated income statement
For the financial year ended 
126  Consolidated statement of comprehensive income
Notes
Financial
year ended


Financial
year ended


Profit for the financial year 123,459 107,101
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Gain on revaluation of land and buildings 24.a 723 657
Items that may be reclassified subsequently to profit or loss:
Net fair value gain/(loss) on hedging instruments entered into for cashflow hedges 24.b 41 (112)
Total other comprehensive income 764 545
Total comprehensive income for the financial year attributable to owners of the Company 124,223 107,646
The notes on pages 131 to 176 form an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income
For the financial year ended 
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Financial statements
Consolidated statement of financial position
Notes




Assets
Non-current assets
Investment property 17 1,395,418 1,308,717
Property, plant and equipment 18 5,902 5,411
Other financial assets 21 194 240
Trade and other receivables 22 7,928 7,787
Total non-current assets 1,409,442 1,322,155
Current assets
Trade and other receivables 22 40,164 7,239
Cash and cash equivalents 20 22,372 22,521
62,536 29,760
Non-current assets classified as held for sale 19 534 534
Total current assets 63,070 30,294
Total assets 1,472,512 1,352,449
Equity and liabilities
Capital and reserves
Issued capital and share premium 23 694,242 686,696
Other reserves 24 9,157 9,620
Retained earnings 25 515,140 415,414
Total equity 1,218,539 1,111,730
Non-current liabilities
Financial liabilities 26.a 231,048 218,409
Deferred tax liabilities 27 547 –
Total non-current liabilities 231,595 218,409
Current liabilities
Financial liabilities 26.a 507 809
Trade and other payables 28 19,863 19,756
Contract liabilities 29 2,008 1,745
Total current liabilities 22,378 22,310
Total equity and liabilities 1,472,512 1,352,449
IFRS NAV per share (cent) 16 174.7 160.6
Diluted IFRS NAV per share (cent) 16 173.2 159.1
EPRA NAV per share (cent) 16 173.3 159.1
The notes on pages 131 to 176 form an integral part of these consolidated financial statements. The consolidated financial statements on
pages 126 to 176 were approved and authorised for issue by the Board of Directors on 17 June 2019 and signed on its behalf by:
Kevin Nowlan
Chief Executive Officer
Thomas Edwards-Moss
Chief Financial Officer
Consolidated statement of financial position
As at 
128  Consolidated statement of changes in equity
Financial year ended 
Balance at start of financial year 69,235 617,461 415,414 9,620 1,111,730
Total comprehensive income for the financial year
Profit for the financial year – – 123,459 – 123,459
Total other comprehensive income – – – 764 764
69,235 617,461 538,873 10,384 1,235,953
Transactions with owners of the Company,
recognised directly in equity
Dividends paid 25 – – (23,719) – (23,719)
Issue of ordinary shares in settlement
of share-based payments 23 524 7,022 – (7,546) –
Share issue costs – – (14) – (14)
Share-based payments expense/cash settlement 11 – – – 6,319 6,319
Balance at end of financial year 69,759 624,483 515,140 9,157 1,218,539
Financial year ended 
Notes
Share
capital

Balance at start of financial year 68,545 609,565 325,983 9,759 1,013,852
Total comprehensive income for the financial year
Profit for the financial year – – 107,101 – 107,101
Total other comprehensive income – – – 545 545
68,545 609,565 433,084 10,304 1,121,498
Transactions with owners of the Company,
recognised directly in equity
Dividends paid 25 – – (17,656) – (17,656)
Issue of ordinary shares in settlement
of share-based payments 23 690 7,896 – (8,586) –
Share issue costs – – (14) – (14)
Share-based payments expense/cash settlement 11 – – – 7,902 7,902
Balance at end of financial year 69,235 617,461 415,414 9,620 1,111,730
The notes on pages 131 to 176 form an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
For the financial year ended 
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Consolidated statement of cash flows
Notes
Financial
year ended


Financial
year ended


Cash flows from operating activities
Profit for the financial year 123,459 107,101
Adjustments from:
Gain on sales of investment property 7 (2,578) (6,425)
Other gains and losses (140) 41
Cash-settled share-based payments 11.b (339) –
Finance expense 8,221 6,236
Non-cash movements 30.a (85,359) (68,746)
Operating cash flow before movements in working capital 43,264 38,207
(Increase) in trade and other receivables (961) (962)
(Decrease)/increase in trade and other payables (447) 945
Increase in contract liabilities 263 884
Net cash inflow from operating activities 42,119 39,074
Cash flows from investing activities
Cash expended on investment property 30.b (86,847) (93,787)
Cash received from sales of investment property 30.c 64,016 35,815
Purchase of fixed assets 18 (52) (238)
Cash received from loans repaid 170 –
Income on other assets 122 (41)
Finance income 5 7
Finance expense (9,546) (5,378)
Net cash flow absorbed by investing activities (32,132) (63,622)
Cash flow from financing activities
Dividends paid 25 (23,719) (17,656)
Borrowings drawn 26.a 340,412 86,454
Borrowings repaid 26.a (326,372) (39,674)
Derivatives premium paid (443) (189)
Share issue costs (14) (14)
Net cash (outflow)/inflow from financing activities (10,136) 28,921
Net (decrease)/increase in cash and cash equivalents (149) 4,373
Cash and cash equivalents start of financial period 22,521 18,148
(Decrease)/increase in cash and cash equivalents (149) 4,373
Net cash and cash equivalents at end of financial period 22,372 22,521
The notes on pages 131 to 176 form an integral part of these consolidated financial statements.
Consolidated statement of cash flows
For the financial year ended 
130  Notes to the consolidated financial statements
Section I – General
This section contains the significant accounting policies and other information that apply to the Group’s financial statements as a whole.
Those policies applying to individual areas such as investment property are described within the relevant note to the consolidated
financial statements. This section also includes a summary of the new European Union (“EU”) endorsed accounting standards,
amendments and interpretations that have not yet been adopted and their expected impact on the reported results of the Group.
The Group has applied IFRS 9 and IFRS 15 for the first time in these financial statements (notes 3 and 37). There was no material impact
on the financial results or on the financial position as at 1 April 2018 as a result of adopting these standards.
1. General information
Hibernia REIT plc, the “Company”, registered number 531267, together with its subsidiaries and associated undertakings (the “Group”), is
engaged in property investment and development (primarily office) in the Dublin market with a view to maximising its shareholders’ returns.
The Company is a public limited company and is incorporated and domiciled in Ireland. The address of the Company’s registered office
is South Dock House, Hanover Quay, Dublin, D02 XW94, Ireland.
The ordinary shares of the Company are listed on the primary listing segment of the Official List of Euronext Dublin (formerly the Irish
Stock Exchange) (the “Irish Official List”) and the premium listing segment of the Official List of the UK Listing Authority (the “UK Official
List” and, together with the Irish Official List, the “Official Lists”) and are traded on the regulated markets for listed securities of Euronext
Dublin and the London Stock Exchange plc (the “London Stock Exchange”).
2. Basis of preparation
a. Statement of compliance and basis of preparation
The consolidated financial statements of Hibernia REIT plc have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the EU and the Companies Act 2014. IFRS as adopted by the EU differ in certain respects from IFRS
as issued by the International Accounting Standards Board (“IASB”). The Group financial statements therefore comply with Article 4 of
the EU IAS Regulation. The consolidated financial statements have been prepared on the historical cost basis, except for the revaluation
of investment properties, owner occupied buildings and derivative financial instruments that are measured at fair value at the end of
each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The Group has not early adopted any forthcoming IASB standards (note 3).
b. Alternative performance measures
The Group uses alternative performance measures to present certain aspects of its performance. These are explained and, where
appropriate, reconciled to equivalent IFRS measures in the Supplementary Information section at the back of this report. The main
alternative performance measures used are those issued by the European Public Real Estate Association (“EPRA”) which is the
representative body of the listed European real estate industry. EPRA issues guidelines and benchmarks for reporting both financial and
sustainability measures. These are important in allowing investors to compare and measure the performance of real estate companies
across Europe on a consistent basis. EPRA earnings and EPRA NAV are presented within the consolidated financial statements and fully
reconciled to IFRS as these two measures are among the key performance indicators for the Group’s business.
c. Functional and presentation currency
These consolidated financial statements are presented in euro, which is the Company’s functional currency and the Group’s
presentation currency.
d. Basis of consolidation
The consolidated financial statements incorporate the consolidated financial statements of the Company and entities controlled by
the Company (its subsidiaries). The accounting policies of all consolidated entities are consistent with the Group’s accounting policies.
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences
until the date on which control ceases. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. All intragroup assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Notes to the consolidated financial statements
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Notes to the consolidated financial statements continued
2. Basis of preparation continued
e. Assessment of going concern
The consolidated financial statements have been prepared on a going concern basis. The Directors have performed an assessment
of going concern for a minimum period of 12 months from the date of signing this statement and are satisfied that the Group is
appropriately capitalised. The Group has a cash balance as at  of €22m (March 2018: €23m), is generating positive operating
cash flows and, as discussed in note 26, has in place debt facilities with average maturity of 5.4 years and an undrawn balance of €160.6m
at  (March 2018: €179m). The Group has assessed its liquidity position and there are no reasons to expect that the Group will
not be able to meet its liabilities as they fall due for the foreseeable future.
f. Significant judgements
The preparation of the consolidated financial statements may require management to exercise judgement in applying the
Group’s accounting policies. The following are the significant judgements and key estimates used in preparing these consolidated
financial statements:
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or liability, the Group takes into account the characteristics of the asset or liability
if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair
value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except
for share-based transactions that are within the scope of IFRS 2 (see note 11 for more details), leasing transactions that are within the
scope of IAS 17, and measurements that have some similarities to fair value but are not fair value such as value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which
are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability either directly
or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
Valuation basis of investment property
All investment properties are valued in accordance with their current use, which is also the highest and best use except for:
• Harcourt Square, which is valued on a residual basis as this reflects its highest and best use as a development property. The present
value of the residual income to December 2022 when the current lease expires is added to the residual value.
• Gateway industrial site, which is currently rented on short-term leases, and has been valued on a price per acre basis as early stage
plans are in place to redevelop this property in the future and this approach reflects the highest and best use of this property.
• Marine House and Clanwilliam Court Blocks 1, 2 and 5 are valued on an investment basis until the end of the leases (2020 and 2021
respectively) and on a residual basis thereafter, as it is the Directors’ intention to undertake a refurbishment/development of both sites
after the leases expire. Planning permission has been granted for Marine House and the Group is currently seeking planning permission
for Clanwilliam Court Blocks 1, 2 and 5.
Residential assets: Block 3 Wyckham Point and Hanover Mills: both properties are held for long-term property rental and were
developed on this basis. VAT was payable on the acquisition (in the case of Block 3 Wyckham Point only) and on the construction costs
for both schemes which has been treated as irrecoverable and recognised as part of the capital costs of both projects. If either property is
sold within five years of completion, the Group would be obliged to charge VAT on the sale but would be entitled to a recovery of the VAT
incurred on the construction and acquisition costs on an apportioned basis according to the VAT life of each building. As neither property
is intended to be sold within the five-year period, in the opinion of the Directors, no amendment to the valuer’s valuation of either asset is
deemed necessary.
Share-based payments
The Group has a number of share-based payment arrangements in place. The determination of the grant date in particular can be complex
in nature and significant judgement is required in the interpretation and application of IFRS 2 to these arrangements. The calculation of the
absolute element of the performance fee required some judgement around adjustments to EPRA NAV and while not material in nature, due
to the related party nature of the IMA performance-related payments, these were reviewed by the Audit Committee.
132  2. Basis of preparation continued
g. Analysis of sources of estimation uncertainty
Valuation of investment property
The Group’s investment properties are held at fair value and were valued at  by the external valuer, Cushman and Wakefield
(“C&W”), a firm employing qualified valuers in accordance with the appropriate sections of the Professional Standards (“PS”), the
Valuation Technical and Performance Standards (“VPS”) and the Valuation Applications (“VPGA”) contained within the RICS Valuation
– Global Standards 2017 (“the Red Book”). It follows that the valuations are compliant with the International Valuation Standards (“IVS”).
Further information on the valuations and the sensitivities is given in note 17.
The Board conducts a thorough review of the property valuations to ensure that appropriate assumptions have been applied.
Property valuations are complex and involve data which is not publicly available, and a degree of judgement. The valuations are based
upon the key assumptions of estimated rental values and market-based yields.
The approach to developments and material refurbishments is on a residual basis and factors such as the assumed timescale, the
assumed future development cost and an appropriate finance and/or discount rate are used to determine the property value together
with market evidence and recent comparable properties where appropriate. In determining fair value, the valuer refers to market evidence
and recent transaction prices for similar properties.
The Directors are satisfied that the valuation of the Group’s investment property is appropriate for inclusion in the consolidated financial
statements. The fair value of these properties is based on the valuation provided by C&W.
In accordance with the Group’s policy on income recognition from leases, the valuation provided by C&W is adjusted by the fair value of
the income accruals ensuing from the recognition of lease incentives and the deferral of lease costs. The total reduction in the external
valuer’s investment property valuation in respect of these adjustments was €6.7m (March 2018: €6.8m).
There were no other significant judgements or key estimates that might have a material impact on the consolidated financial statements
at .
3. Application of new and revised International Financial Reporting Standards (“IFRS”)
Changes in accounting standards
The following Standards and Interpretations are effective for the Group from 1 April 2018 but did not have a material impact on the results
or financial position of the Group:
IFRS 2 (amendment) Classification and Measurement of Share-based Payment Transactions changes the classification and measurement
of certain cash-based and mixed share-based payments. This applies to minor amounts of equity settled share-based payments which
may have a cash element in settling employee tax obligations (note 11).
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Measurement and Recognition and includes revised requirements
on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment
of financial assets, and new general hedge accounting requirements. It also carries forward the requirements on recognition and
derecognition of financial instruments from IAS 39. IFRS 9 largely retains the existing requirements in IAS 39 for the classification and
measurement of financial liabilities. However, it eliminates the previous IAS 39 categories for financial assets of “held-to-maturity”, “loans
and receivables” and “available for sale”. Under IFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost or
fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVPL). The classification is dependent on the
business model for managing the financial assets and on whether the cash flows represent solely the payment of principal and interest.
The Group has elected to adopt the new general hedge accounting model in IFRS 9. Under IFRS 9, the Group’s hedges on interest rates
on its debt continue to be recognised as cash flow hedges. Accounting for the cost of hedging, which is not material, has been applied
prospectively, without restating comparatives.
The Group has quantified the impact on its consolidated financial statements resulting from the application of IFRS 9. A small amount
of the Group’s receivables is classified as financial assets, the majority of which are of a very short-term nature, are within agreed terms
and have no historic losses. The move from an incurred loss model to an expected loss model has therefore had an immaterial effect on
balances. The implementation of IFRS 9 resulted in the reclassification of the Group’s loans held (notes 3 and 37) from amortised cost to
fair value through profit or loss (FVPL) which has also had an immaterial effect. This loan was realised during the financial year (note 21).
On this basis, the classification and measurement changes do not have a material impact on the Group’s consolidated financial statements
and IFRS 9 was therefore adopted with no restatement of comparative information and no adjustment to retained earnings on application
at 1 April 2018. In line with the transition guidance in IFRS 9, the Group has not restated the  prior year. Please refer to note
37 for further information on transition.
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Notes to the consolidated financial statements continued
3. Application of new and revised International Financial Reporting Standards (“IFRS”) continued
Changes in accounting standards continued
IFRS 15 Revenue from Contracts with Customers and the related Clarifications to IFRS 15 Revenue from Contracts with Customers
(hereinafter referred to as ‘IFRS 15’) replace IAS 18 Revenue, IAS 11 Construction Contracts, and several revenue-related interpretations.
In preparation for the transition to IFRS 15, the Group reviewed all material contracts to identify contracts with customers that fall within
the scope of IFRS 15. The Group has reviewed its policies and disclosures to ensure that users of the accounts can understand the nature,
amount, timing and uncertainty of revenue. The adoption of this standard applied to the accounting for service charge income and
expense but excluded rent receivable, the Group’s main source of income, which is still within the scope of IAS 17 (and from 1 April 2019
IFRS 16). The Group has completed its implementation of this standard with no material impact on the financial statements. The service
charge income stream is accounted for as a single performance obligation satisfied over time by measuring its progress towards
complete satisfaction of that performance obligation. Management fees relating to the provision of services to tenants are recognised as
these services are provided. This is in line with the prior recognition approach that has been used to recognise these elements of revenue
and related expenditure under the previous accounting policy.
Implementation of this standard has not resulted in any restatement of comparatives presented nor equity balances carried forward.
New policies are disclosed where relevant in the notes to the financial statements and disclosures have been reviewed and amended as
appropriate in the relevant notes to these consolidated financial statements. Please refer to note 37 for further information on transition.
IAS 40 (amendment) Investment Property – an entity shall transfer a property to, or from, investment property when, and only when,
there is evidence of a change in use. This has had no impact as no transfers have taken place into or out of investment property since
April 2018.
Impacts expected from new or amended standards
The following standards and amendments are not expected to have a significant impact on reported results or disclosures of the Group,
and, were not effective at the financial year end  and have not been applied in preparing these consolidated financial
statements. The Group’s current view of the impact of these accounting changes is outlined below:
IFRS 16 Leases is applicable for annual reporting periods beginning on or after 1 January 2019. IFRS 16 will result in almost all leases being
recognised on the balance sheet as it removes the distinction between operating and finance leases for lessees. As the Group is mainly a
lessor, the introduction of IFRS 16 on 1 April 2019 will have minimal impact on the Group financial statements. As at the reporting date the
Group has no operating leases.
IFRS 17 Insurance Contracts requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform
measurement and presentation approach for all insurance contracts. The Group does not currently envisage any impact from the
introduction of this standard. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021.
IFRIC 23 Uncertainty over Income Tax Treatments addresses the determination of taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. It is currently not expected to be
applicable to the Group’s financial statements. It is applicable to annual reporting periods beginning on or after 1 January 2019.
Amendments to IAS 19 Employee Benefits are effective for annual reporting periods beginning on or after 1 January 2019: this applies to
defined benefit pension schemes and will therefore have no impact on the Group’s consolidated financial statements.
Amendments to IFRS 3 Business Combinations clarify the definition of a business and have no impact on the Group’s consolidated
financial statements. They apply to business combinations that take place in annual reporting periods that commence on or after
1 January 2020.
Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors clarify the definition of “material” and are effective for annual reporting periods that commence on or after 1 January 2020.
These amendments are not expected to have a significant impact on the Group.
Annual Improvements to IFRS Standards 2015-2016 Cycle – effective for annual reporting periods beginning on or after 1 January 2019.
Makes amendments to the following standards:
IFRS 12 Disclosure of Interests in Other Entities clarifies the scope of the standard by specifying the disclosure requirements in the
standard that apply to an entity’s interests that are classified as held for sale, as held for distribution or as discontinued operations in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
IAS 28 Long-term Interests in Associates and Joint Ventures clarifies that the election to measure at fair value through profit or loss
an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, or other qualifying entity,
is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition.
These amendments are not expected to have a significant impact on the Group.
134  Section II – Performance
This section includes notes relating to the performance of the Group for the year, including segmental reporting, earnings per share and
net asset value per share as well as specific elements of the consolidated statement of income.
4. Operating segments
a. Basis for segmentation
The Group is organised into six business segments, against which the Group reports its segmental information. These segments mainly
represent the different investment property classes. The Group has divided its business in this manner as the various asset segments
differ in their character and returns profiles depending on market conditions and reflect the strategic objectives that the Group has
targeted. The following table describes each segment:
Reportable segment Description
Office assets Office assets comprise central Dublin completed office buildings, all of which are either generating
rental income or are available to let. Those assets which are multi-tenanted or multi-let are mainly
managed by the Group. Income is therefore rental income and service charge income, including
management fees, while expenses are service charge expenses and other property expenses.
Where only certain floors of a building are undergoing refurbishment the asset remains in
this category.
Office development assets Office development assets are not currently revenue generating and are the properties that the
Group has currently under development in line with its strategic objectives. Development profits,
recognised in line with completion of the projects, enhance Net Asset Value (“NAV”), Total
Accounting Return (“TAR”), and Total Portfolio Return (“TPR”). Once completed these assets are
transferred to the office assets segment at fair value.
Residential assets This segment contains the Group’s completed multi-tenanted residential assets.
Industrial/land assets This segment contains industrial units and agricultural land which generate some rental income.
Other assets This segment contains other assets that are not part of the previous four strategic segments.
It originally represented the “non-core” assets, i.e. those assets identified for resale from loan
portfolio purchases. Currently this segment contains assets held for sale.
Central assets and costs Central assets and costs include the Group head office assets and expenses.
The Board reviews the internal management reports, including budgets, at least quarterly at its scheduled meetings. There is some
interaction between reportable segments for example, completed development property is transferred to income-generating segments.
These transfers are made at fair value on an arm’s length basis using values determined by the Group’s independent valuer.
b. Information about reportable segments
The Group’s key measure of underlying performance of a segment is total income after revaluation gains and losses, which comprises
revenue (rental and service charge income), property outgoings, revaluation of investment properties and other gains and losses.
Total income after revaluation gains and losses includes rental income which is used as the basis to report key measures such as EPRA
Net Initial Yield (“NIY”) and EPRA “topped-up” NIY. These alternative performance measures (“APMs”) (detailed in the supplementary
section on pages 194 to 199) measure the cash passing rent returns on market value of investment properties before and after an
adjustment for the expiry of a rent-free period or other lease incentives, respectively.
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Notes to the consolidated financial statements continued
4. Operating segments continued
b. Information about reportable segments continued
An overview of the reportable segments is set out below:
Group consolidated segment analysis
For the financial year ended 
Office assets
Total revenue 53,497 – 6,862 1,028 – – 61,387
Rental income 48,137 – 6,862 1,028 – – 56,027
Property operating expenses (1,373) – (1,314) (31) – – (2,718)
Net rental and related income 46,764 – 5,548 997 – – 53,309
Gains and (losses)
on investment property 37,837 48,020 13,559 (1,311) – – 98,105
Other gains and (losses) – – – – – 140 140
84,601 48,020 19,107 (314) – 140 151,554
Administration expenses – – – – – (13,606) (13,606)
Depreciation – – – – – (284) (284)
IMA performance-related
payments – – – – – (5,401) (5,401)
Total operating expenses – – – – – (19,291) (19,291)
Operating profit/(loss) 84,601 48,020 19,107 (314) – (19,151) 132,263
Finance income – – – – – 5 5
Finance expense (2,861) – – – – (5,365) (8,226)
Profit before income tax 81,740 48,020 19,107 (314) – (24,511) 124,042
Income tax – – – (547) – (36) (583)
Profit for the financial year 81,740 48,020 19,107 (861) – (24,547) 123,459
Total segment assets 1,224,888 16,199 153,606 53,144 534 24,141 1,472,512
Investment property 1,173,140 16,199 153,079 53,000 – – 1,395,418
For the financial year ended 
Office assets
Total revenue 46,954 – 6,475 665 – – 54,094
Rental income 41,935 – 6,475 665 – – 49,075
Property operating expenses (2,019) – (1,257) (16) (60) – (3,352)
Net rental and related income 39,916 – 5,218 649 (60) – 45,723
Gains and losses
on investment property 34,311 38,405 16,781 (1,695) – – 87,802
Other gains and (losses) – – – – – (41) (41)
74,227 38,405 21,999 (1,046) (60) (41) 133,484
Administration expenses – – – – – (13,232) (13,232)
Depreciation – – – – – (285) (285)
IMA performance-related
payments – – – – – (6,599) (6,599)
Total operating expenses – – – – – (20,116) (20,116)
Operating profit/(loss) 74,227 38,405 21,999 (1,046) (60) (20,157) 113,368
Finance income – – – – – 7 7
Finance expense (2,838) – – – (103) (3,302) (6,243)
Profit before income tax 71,389 38,405 21,999 (1,046) (163) (23,452) 107,132
Income tax – – – – – (31) (31)
Profit for the financial year 71,389 38,405 21,999 (1,046) (163) (23,483) 107,101
Total segment assets 1,034,046 134,500 139,025 17,800 686 26,392 1,352,449
Investment property 1,017,937 134,500 138,480 17,800 – – 1,308,717
136  4. Operating segments continued
c. Geographic information
All of the Group’s assets, revenue and costs are based in Ireland, mainly in central Dublin.
d. Major customers
The Group uses information on its top 10 tenants to monitor its major customers. This is presented below based on contracted rents as
at the financial year end. This is concentrated on office tenants as the next major segment, residential, consists mainly of small household
tenants and therefore contains no major concentration of credit risk.
The Group’s top 10 tenants are as follows, expressed as a percentage of contracted office rent:
As at 
Tenant Business sector
Contracted
rent (€m) %
Top 10 tenants 34.8 69.2%
Remaining tenants 15.6 30.8%
Whole office portfolio 50.4 100.0%
As at 
Tenant Business sector
Contracted
rent (€m) %

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Notes to the consolidated financial statements continued
5. Revenue and net rental and related income
Accounting policy
The Group recognises revenue from the following major sources:
• Rental income
• Service charge income
• Other ad-hoc income such as surrender premia and fees from other activities associated with the Group’s property business.
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes
amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.
Rental income
Rental income is the Group’s major source of income and arises from properties under operating leases. Rental income, including fixed
rental uplifts, is recognised in the consolidated income statement on a straight-line basis over the term of the lease. All incentives given to
tenants under lease arrangements are recognised as an integral part of the net consideration agreed for the use of the leased asset and
therefore recognised on the same straight-line basis over the lease term. Contingent rents, being lease payments that are not fixed at the
inception of a lease, such as turnover rents, are recorded as income in the period in which they are earned.
Service charge income
The Group manages the majority of its multi-let buildings under service contracts. These contracts operate for a one-year period over
which the Group provides communal services such as security, cleaning, waste and other occupation services to the tenants in its
buildings. The tenants pay a service charge, based on the area they occupy, which is collected in advance based on budgeted costs.
This income stream is recognised as revenue in accordance with the policy described under property-related income and expense below.
Other income
All other income is recognised in accordance with the following model:
1. Identify the contract with a customer
2. Identify all the individual performance obligations within the contract
3. Determine the transaction price
4. Allocate the price to the performance obligations
5. Recognise revenue as the performance obligations are fulfilled
Property-related income and expenses
Property-related income and expenses comprise service charge income (revenue from contracts with customers) and service charge
expenses (costs of goods and services) as well as other property expenses. The Group enters into property management arrangements
with tenants as part of its activities. These arrangements constitute a separate performance obligation to the obligations under the rental
leases. Buildings with multiple tenants share the costs of common areas and pooled services under these arrangements. The Group
manages these costs for tenants and earns a management fee for the provision of shared services on a cost-plus basis. As a landlord,
costs of vacant areas are absorbed by the Group and included in other property expenses.
The service charge income stream is accounted for as a single performance obligation which is satisfied over time because the tenant
simultaneously receives and consumes the benefits of the Group’s activities in providing services under the agreement. Service charge
income and expenditure is therefore recognised on an input basis. Tenants reimburse expenses in advance based on budgets with over
and under spends reconciled and settled annually. Service charge accounts are maintained for each managed building and the application
and management of funds are independently reviewed on the tenants’ behalf.
Property operating expenses comprise expenses relating to properties that are not recharged to tenants, i.e. void costs, residential
management costs and other related property expenses.
138  5. Revenue and net rental and related income continued
Revenue can be analysed as follows:
Financial
year ended


Financial
year ended


Gross rental income 56,242 46,306
Rental incentives (215) 2,769
Rental income 56,027 49,075
Revenue from contracts with customers1
5,360 5,019
Total 61,387 54,094
1. Revenue from contracts with customers is service charge income.
Net rental and related income
Financial
year ended


Financial
year ended


Total revenue 61,387 54,094
Cost of goods and services1
(5,482) (5,224)
Property expenses (2,596) (3,147)
Net rental and related income 53,309 45,723
1. Cost of goods and services are service charge expenses.
Further information on the sources and characteristics of revenue and rental income is provided in note 6.
Included in other property expenses is an amount of €0.5m (March 2018: €1.2m) relating to void costs on office properties, i.e. costs
relating to office properties which were available to let but were not income-generating during the financial period.
Property operating expenses
Financial
year ended


Financial
year ended


Service charge income 5,360 5,019
Service charge expenses (5,482) (5,224)
Property expenses (2,596) (3,147)
Property operating expenses (2,718) ( 3,352)
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Financial statements
Notes to the consolidated financial statements continued
6. Disaggregation of revenue and rental income
The Group’s business is the rental of its investment properties, the development of properties for its investment portfolio and the
provision of managed multi-let buildings to its tenants. The Group’s revenue consists of rental income, service charge income and other
ad hoc receipts from its property business such as surrender premiums. The majority of its contracts are longer term, with some being
10 years or more excluding residential tenancy arrangements which are generally one year in duration. Service charge arrangements are
generally provided for under the lease contract but constitute a different performance obligation, the conditions attaching to which are
negotiated annually.
Note 4: Operating segments discloses the analysis of revenue and income and expense in line with the Group’s business model, i.e. by
investment property category. In order to complete the disaggregation of revenue by categories that depict how the nature, amount,
timing and uncertainty of revenue and cash flows are affected by economic factors, analyses of the revenue for the period by duration of
lease contracts (to next break date) and by tenant industry sector are provided below. Additional information on portfolio characteristics
that impact on income is set out in the business review.
Total revenue by duration of lease contract (based on next break date or expiry)
Service charge income is included within the current leases segment as these arrangements, while provided for under the lease contracts,
are negotiated on an annual basis. Other income is once-off in nature and is recognised in the one year or less segment, for example
rental income on other assets.
Financial year ended 
One year or less
Lease contracts:
Assets sold
Office assets 995 8,822 15,376 21,761 46,954
Office development assets – – – – –
Residential assets – 6,475 – – 6,475
Industrial/land assets – 570 95 – 665
995 15,867
Total segmented revenue 16,862 15,471 21,761 54,094
Rental income by tenant industry sector
Financial year ended

Financial year ended

 %  %
Technology, media and telecommunications 19,977 35.7% 14,557 29.7%
Government agency 10,362 18.5% 10,434 21.3%
Banking and capital markets 8,501 15.2% 8,285 16.9%
Residential 6,862 12.2% 6,441 13.1%
Professional services 5,276 9.4% 5,497 11.2%
Co-working 2,230 4.0% 690 1.4%
Insurance and reinsurance 1,246 2.2% 1,593 3.2%
Logistics 1,028 1.8% 665 1.4%
Other 545 1.0% 913 1.8%
Rental income 56,027 49,075
140  7. Gains and losses on investment property
The Group sold New Century House during the period for €65m, net of costs, realising a profit of €2.4m on book value at the sales
date. 77 Sir John Rogerson’s Quay (“77SJRQ”) was contracted to be sold in March 2019 for a €0.2m gain over book value. Sales of three
properties in the financial year ended  realised proceeds of €35.8m and a profit over book value of €6.4m after costs.
Note
Financial
year ended


Financial
year ended


Revaluation of investment property 17 95,527 81,377
Gains on sale of investment property 2,578 6,425
Gains and losses on investment property 98,105 87,802
8. Other gains and losses
Other gains and losses arose from amounts received or paid in relation to assets other than investment property and realised gains or
losses on the resolution of loans measured at fair value. €0.1m of this amount related to a reduction in monies accrued in relation to
development bonds. The balance of the amount for the financial year ended  related to a profit on the realisation of an
outstanding loan measured at fair value and small amounts of rental income and costs relating to assets other than investment property.
Amounts for the financial year ended  related to surpluses and deficits on assets other than investment property.
9. Administration expenses
Accounting policy
Administration expenses are recognised on an accruals basis in the consolidated income statement.
Operating profit for the financial year has been stated after charging:
Note
Non-Executive Directors’ fees 447 286
Professional valuer’s fees 394 281
Prepaid remuneration expense 2,679 4,444
Depository fees 299 278
Depreciation 18 284 285
“Top-up” Internalisation expenses 11.b 1,482 1,743
Staff costs 10 4,516 3,405
Other administration expenses 3,789 2,795
Administration expenses 13,890 13,517
All fees paid to Non-Executive Directors are for services as Directors to the Company. Non-Executive Directors receive no other benefits
other than Frank Kenny who also received €140k in consulting fees as well as payments in relation to his interest as a Vendor of the
Investment Manager during the financial year (note 36.b). Annual Non-Executive Directors’ fees increased from €300k to €495k as at
 due to increases effective from 1 April 2018 and the addition of Roisin Brennan to the Board.
Prepaid remuneration expense related to the recognition of payments to the Vendors of the Investment Manager that were contingent on
the continued provision of services to the Group over the period during which the Group benefits from the service. These payments were
made in November 2015 as part of the Internalisation of the Investment Manager and were made subject to clawback arrangements for
those Vendors who remain tied to the Company by employment or service contracts. The clawback arrangements over one-third of these
payments were removed on each anniversary of the acquisition date until 26 November 2018. Given the expiry of the arrangements on
26 November 2018, the balance included in trade and other receivables for this at  was €nil (March 2018: €2.7m) (note 22).
“Top-up” Internalisation expenses relate to additional management fees that would have been due under the IMA due to increases in NAV
in the period since Internalisation. These are payable in shares of the Company (note 11.b). There are no further top-up fees due after the
expiry of these arrangements on 26 November 2018.
Professional valuer’s fees are paid to Cushman & Wakefield (“C&W”), in return for its services in providing independent valuations of
the Group’s investment properties on an at least twice-yearly basis. The fees are charged on a fixed rate per property valuation. In the
financial year ended  additional valuation work was carried out at 31 December 2018 for the calculation of the final IMA
performance-related amounts at 26 November 2018 (note 11) and for the refinancing of the secured revolving credit facility.
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Financial statements
Notes to the consolidated financial statements continued
9. Administration expenses continued
Auditor’s remuneration (excluding VAT)
Financial
year ended

1. Other assurance services include the review of the Interim Report, audit of Group subsidiary financial statements and a review of the final IMA performance calculation in
early 2019.
10. Employment
The average monthly number of persons (including Executive Directors) directly employed during the financial year in the Group was 33
(March 2018: 28).
Total employees at financial year end:
Group
Financial
year ended


Financial
year ended


At financial year end:
Building management services
Head office staff 6 6
On-site staff 5 5
11 11
Administration 23 21
Total employees 34 32
No amount of salaries and other benefits were capitalised into investment properties. Staff costs are allocated to the following
expense headings:
Group
The staff costs for the above employees were:
Financial
year ended


Financial
year ended


Wages and salaries 
Social insurance costs
Employee share-based payment expense 
Pension costs – defined contribution plan
Total 6,280 5,243
Staff costs are allocated to the following expense headings:
Financial
year ended


Financial
year ended


Administration expenses 4,516 3,405
Net property expenses1
954 848
IMA performance-related payments 810 990
Total 6,280 5,243
1. Most of the €954k is recovered directly from tenants via the service charge arrangements within Hibernia managed office buildings.
142  11. Share-based payments
Accounting policy
The Group has a number of share-based payment arrangements in place. These share-based payments are transactions in which the
Group receives services in exchange for its equity instruments or by incurring liabilities for cash amounts based on the price of the Group’s
shares. Share-based payments settled in the Group’s shares are measured at the grant date except where they are subject to non-market
performance conditions which include a service condition in which case they are measured over the relevant service period.
The equity-settled share-based awards granted under these plans are measured at the fair value of the equity instrument at the date
of grant. The cost of the award is charged to the consolidated income statement over the vesting period of the awards based on the
probable number of awards that will eventually vest, with a corresponding credit to shareholders’ equity.
Share-based payments that are cash-settled are re-measured at fair value at each accounting date. At the end of each reporting period,
the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment
to the share-based payment reserve. When these shares vest they are assessed for tax purposes at the current market share price and
employee taxes are settled through payroll in cash. Employees therefore receive the number of shares net of taxes at the vesting date.
Movements in share-based payments during the financial year by share-based payment scheme:
Summary of share-based payments financial year ended 
Opening balance Paid Provided1
Closing balance
Shares
a. New remuneration policy –
Annual Bonus provided – – – – 23 17 23 17
b. IMA performance-related
payments payable to Vendors 7,332 5,079 (7,334) (5,079) 6,071 4,495 6,069 4,495
b. IMA performance-related
payments payable to
employees 1,373 1,044 (551) (428) 386 282 1,208 898
c. Employee long-term
incentive plan – interim
arrangements 78 60 – – 178 129 256 189
Balance at period end 8,783 6,183 (7,885) (5,507) 6,658 4,923 7,556 5,599
1. The average closing share price for the 20 days prior to 26 November 2018 was €1.3513.
Summary of share-based payments financial year ended 
Opening balance Paid Provided1
Closing balance

Shares
b. IMA performance-related
payments payable to Vendors 8,586 6,895 (8,586) (6,895) 7,332 5,079 7,332 5,079
b. IMA performance-related
payments payable to
employees 881 708 – – 492 336 1,373 1,044
c. Employee long-term
incentive plan – interim
arrangements – – – – 78 60 78 60
Balance at period end 9,467 7,603 (8,586) (6,895) 7,902 5,475 8,783 6,183
1. The average closing share price for the 20 days prior to the financial year end was €1.448.
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Financial statements
Notes to the consolidated financial statements continued
11. Share-based payments continued
Movements in share-based payments during the financial year – total amounts
As at  As at 
Balance at beginning of financial year 8,783 6,183 9,467 7,603
Issue of ordinary shares in settlement of share-based payments (7,546) (5,242) (8,586) (6,895)
Share-based payments expense/cash settlement:
Cash-settled amounts (339) (265) – –
Provided during the financial year 6,677 4,944 7,902 5,475
Forfeited and other minor movements (19) (21) – –
Share-based payments expense/cash settlement – total 6,319 4,658 7,902 5,475
Balance at end of financial year 7,556 5,599 8,783 6,183
a. New remuneration policy effective from 27 November 2018
Since the expiry of the IMA arrangements on 26 November 2018, share-based payments arise only in relation to remuneration.
The Group introduced a new Remuneration Policy during the year which was ratified by shareholders at the AGM on 31 July 2018.
These arrangements are summarised below.
The new Remuneration Policy is designed to align with Irish and UK corporate governance best practice and comprises fixed
remuneration with separate variable incentives (i.e. an annual bonus plan and a long-term incentive plan (“LTIP”)). It also encompasses
required minimum shareholding levels for Executive Directors.
Remuneration consists of the following:
1. Basic pay
2. Annual Bonus
3. Long-term incentive plan (“LTIP”)
The split between personal and Group performance targets is set depending on an employee’s ability to influence Group outcomes,
but all employees have an element of Group performance within their targets. All Group employees are eligible to participate in the
Annual Bonus while the LTIP applies to Executive Directors and to members of the Senior Management Team and potentially others
on a discretionary basis.
Only the Annual Bonus, further described below, commenced in the financial year ended , the LTIP commences from
1 April 2019. Therefore only the Annual Bonus element of the new Remuneration Policy gives rise to share-based payment provisions
in this financial year.
Full details on the new Remuneration Policy were presented in the Annual Report 2018. For further information, please also refer to the
Remuneration Committee Report on pages 93 to 114.
Annual Bonus
The Annual Bonus is measured on personal and Group performance targets that are set by the Remuneration Committee every year.
Each employee is assigned a target at the start of the financial year and the actual amounts are determined post year end and only after
Group performance results have been audited. One third of the amount awarded consists of the grant of the option to acquire shares in
the Company at nil cost subject to a three-year service condition. If the service condition is met, then the employees can exercise their
option at any date after the third anniversary of the financial year to which they relate.
This qualifies as an equity settled share-based payment under IFRS 2 Share-based Payments although it is settled net of taxes. IFRS 2
allows that this transaction is classified as equity-settled in its entirety if the entire share-based payment would otherwise be classified as
equity-settled without the net settlement feature for taxes.
The variable incentive elements of the awards are subject to the absolute discretion of the Remuneration Committee and therefore the
grant date will be the date when the award letter is presented to the participants setting out the number of deferred shares they have
been granted as approved by the Remuneration Committee, i.e. when all the conditions are understood and agreed by the parties to the
arrangement and any required approval process has been completed.
The deferred shares awarded under the Annual Bonus are subject only to continued employment. The fair value of the share award is
therefore the number of Plan shares granted at the closing share price on the date of grant.
Employees have an expectation of this award from the start of the financial year to which they relate and therefore the award is amortised
from the start of the financial year to which it relates to the vesting date after appropriate consideration of the impact of potential
employee departures. Therefore, the value of the deferred shares for the period 27 November 2018 to , €293k, is estimated
as at January 2019, as this was the first date that participants received details of their potential Annual Bonus awards and what element
would be deferred. The amount provided for in the period ended  is €23k.
144  11. Share-based payments continued
b. IMA performance-related payments to Vendors and staff
IMA performance-related payments refer to those payments that were made under the IMA for each financial year and settled mainly
in shares of the Company until the expiry of the agreement on 26 November 2018. The Board considered how best to calculate any
performance fees and other related payments for the final period of the IMA from 1 April 2018 to 26 November 2018. Since the IPD
Ireland Index, which was used in the calculation of any relative performance fees, reports on a quarterly basis, the Board determined that
it was most appropriate to measure the Group’s performance to 31 December 2018, being the nearest quarter end, and to pro-rate any
performance fees due for the fact that the final IMA period expired on 26 November 2018. Accordingly, the property portfolio was valued
by Cushman & Wakefield as at 31 December 2018 and the Group produced management accounts to the same date. The increase in NAV
to 31 December 2018 was pro-rated to 26 November 2018 and this resulted in a final performance fee of €5.4m and a final base fee top-up
of €1.5m, both payable mainly in shares once the audit of the accounts for year ended  is completed using a share price of
€1.351, being the average closing price for the 20 trading days ending 26 November 2018.
A portion of the IMA performance-related payments, up to 15%, is set aside to fund employee bonus amounts that would have originally
been paid by the Investment Manager. Approximately half of this, 7.5%, may be payable in cash. The balance payable in shares is deferred,
subject only to continued employment, for two years after the end of the financial year to which they apply.
Shares are forfeited should the employee leave the Group prior to the vesting date unless subject to “good leaver” provisions. Any shares
forfeited are transferable to the Vendors on the basis that these shares have been deducted from performance fees that would otherwise
have been due to the Vendors. Therefore, there is no impact on fair value measurement from any possible departures relating to
these shares.
The final arrangements are summarised below.
Summary of IMA performance-related payments
Financial
year ended

Total IMA performance-related payments for the financial year 5,401 6,599
“Top-up” Internalisation expenses (note 9) 1,482 1,743
Total 6,883 8,342
Of which are:
Payable to Vendors 6,073 7,352
Payable to employees 810 990
Total 6,883 8,342
Approximately €0.4m of the above total performance payment of €6.9m accrued will be paid in cash bonuses to staff, the balance of
€6.5m will be payable in shares to staff and Vendors.
Shares issued relating to IMA performance-related payments to Vendors are subject to lock-up provisions meaning they are restricted
from being sold upon receipt, with one-third of the shares being “unlocked” on each anniversary of the issue date. All shares issued to
Vendor recipients are beneficially owned by the recipients and all voting rights and rights to dividends accrue to them. Employees who
receive deferred share awards under these arrangements are paid the dividends accruing during the period prior to vesting
through payroll.
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Financial statements
Notes to the consolidated financial statements continued
11. Share-based payments continued
b. IMA performance-related payments to Vendors and staff continued
IMA performance-related payments payable to Vendors
Grant date: 27 October 2015
Measurement date: The interim arrangements expired on 26 November 2018 as described above. The final amount of any IMA
performance-related payments under this arrangement for the period from 1 April 2018 was measured at 31 December 2018 and calculated
on a pro-rated basis to 26 November 2018.
Financial year ended

Financial year ended

Grant date: 27 October 2015
Measurement date: 26 November 2018
Share price
Opening balance at start of financial year 1.444 7,332 5,079 8,586 6,895
Payment made during the financial year (7,334) (5,079) (8,586) (6,895)
Amounts provided during the financial year:
IMA performance-related payments 6,883 5,094 8,322 5,763
Less: payable to employees (810) (599) (990) (684)
Other amendments (2) – – –
Net amount provided during the financial year 6,071 4,495 7,332 5,079
Closing balance at end of financial year 1.336 6,071 4,495 7,332 5,079
The settlement of IMA performance-related fees to the Vendors for the financial year ended  was made on 20 July 2018,
resulting in the listing of 5,078,809 new ordinary shares when the prior day’s closing price of the Company’s shares was €1.490.
The settlement of IMA performance-related fees for the financial year ended 31 March 2017 was made on 3 July 2017 resulting in the listing
of 6,895,231 new ordinary shares when the prior day’s closing price of the Company’s shares was €1.375.
IMA performance-related payments payable to employees
Grant date: 27 October 2015
Measurement date: The interim arrangements expired on 26 November 2018 as described above. The final amount of any IMA
performance-related payments under this arrangement was measured at 31 December 2018 and calculated on a pro-rated basis to
26 November 2018.
Financial year ended

Financial year ended

Grant date: 27 October 2015
Measurement date: 26 November 2018
Share price

Opening balance at start of financial year 1.444 1,373 1,044 881 708
Payment made during the financial year:
Shares issued (212) (163) – –
Cash-settled share-based payments (taxes) (223) (177) – –
Cash-settled share-based payments (116) (88) – –
Total payments made in financial year (551) (428) – –
Amounts provided during the financial year:
IMA performance-related payments 810 606 990 680
Cash bonus element (405) (303) (498) (344)
Other amendments (19) (21) – –
Net amount provided during the financial year 386 282 492 336
Closing balance at end of financial year 1.336 1,208 898 1,373 1,044
During this period, 346k shares vested under this arrangement. 163k shares were issued valued at €0.2m. The balance, 177k shares
equivalent, was paid to Revenue in cash on the employees’ behalf through normal payroll. €0.2m was released from the share-based
payment reserve relating to these shares. The difference between the IFRS 2 value based on measurement date and the fair value
at vesting date has been charged to staff costs in this period. No shares vested under this arrangement in the financial year ended
.
146  11. Share-based payments continued
c. Employee long-term incentive plan – interim arrangements
Employees who fell outside the arrangements at b. above, i.e. those who provide services that were not part of the IMA arrangements,
e.g. new staff including building management and development staff, were also paid bonuses on a similar basis to those paid to the
employees qualifying at b. above, except that the share-based payment is cash-settled. These shares are also subject to a two-year
vesting period and this scheme also expired on 26 November 2018 when all employees moved to the new Remuneration Policy.
Financial year ended

Financial year ended

Share price

Opening balance at start of financial year 78 60 – –
Share-based bonus awards recognised 178 129 78 60
Closing balance at end of financial year 1.336 256 189 78 60
A further 0.3m shares (March 2018: 0.4m) are due to be recognised over the remainder of the vesting period.
12. Finance income and expense
Accounting policy
Finance expenses directly attributable to the construction of investment properties, which take a considerable length of time to prepare
for rental to tenants, are added to the costs of those properties until such time as the properties are substantially ready for use. All other
finance expenses and income are recognised in the income statement as they occur using the effective interest method. The effective
interest method is a method of calculating the amortised cost of a financial asset or financial liability (or group of financial assets or
financial liabilities) and of allocating the interest income, interest expense and fees paid and received over the relevant period.
The effective interest expense on borrowings arises as a result of the recognition of interest expense, commitment fees and
arrangement fees.
Financial
year ended


Financial
year ended


Interest income on cash and cash equivalents 5 7
Effective interest expense on borrowings (6,803) (6,243)
Early amortisation of arrangement fees on refinancing of unsecured bank borrowings (1,423) –
Net finance expense (8,221) (6,236)
In December 2018 the Company refinanced the Group’s borrowings (note 26.a). As a result €1.4m relating to arrangement fees on the
refinanced borrowings were expensed in accordance with the relevant accounting policy.
Interest costs capitalised in the financial year were €0.6m (March 2018: €2.0m) in relation to the Group’s development and refurbishment
projects. The capitalisation rate used is the effective interest rate on the cost of borrowing applied to the portion of investment that is
financed from borrowings.
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Financial statements
Notes to the consolidated financial statements continued
13. Income tax expense
Accounting policy
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except insofar as it applies to business
combinations or to items recognised in other comprehensive income.
Current tax: current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Hibernia REIT plc has elected
for Real Estate Investment Trust (“REIT”) status under section 705E Tax Consolidation Act 1997. As a result, the Group does not pay Irish
corporation tax on the profits and gains from its qualifying rental business in Ireland provided it meets certain conditions. With certain
exceptions, corporation tax is still payable in the normal way in respect of income and gains from a Group’s Residual Business that is, its
non-property rental business. Deferred tax is recognised on unrealised gains on assets where future taxes may be payable on these gains.
Reconciliation of the income tax expense for the financial year
Financial
year ended
Profit before tax 124,042 107,132
Tax charge on profit at standard rate of 12.5% 15,506 13,392
Non-taxable revaluation surplus (11,729) (10,172)
REIT tax-exempt profits (3,580) (3,220)
Other (additional tax rate on residual income) 381 21
Under-provision in respect of prior periods 5 10
Income tax expense for the financial year 583 31
The Directors confirm that the Group has remained in full compliance with the Irish REIT rules and regulations up to and including the
date of this report.
14. Dividends
Accounting policy
Interim dividends are recognised as a liability of the Company when the Board of Directors resolves to pay the dividend and the
shareholders have been notified in accordance with the Company’s Articles of Association. Final dividends of the Company are
recognised as a liability when they have been approved by the Company’s shareholders at the AGM.
Financial
year ended

Interim dividend for the financial year ended  of 1.5 cent per share
(March 2018: 1.1 cent per share) 10,465 7,616
Proposed final dividend for the financial year ended  of 2.0 cent per share1
(March 2018: 1.9 cent per share) 13,969 13,254
Total 24,434 20,870
1. Based on shares in issue at close of business at 21 May 2019 of 693.9m along with the 4.5m of share to be issued in settlement of the IMA performance-related payments for
the period ended 26 November 2018.
The Board has proposed a final dividend of 2.0 cent per share (March 2018: 1.9 cent) which is subject to approval by shareholders at the
Annual General Meeting and has therefore not been included as a liability in these consolidated financial statements. This dividend is
expected to be paid to shareholders on 2 August 2019. All of this proposed final dividend of 2.0 cent per share will be a Property Income
Distribution (“PID”) in respect of the Group’s property rental business (March 2018: 1.9 cent). The total dividend, interim paid and final
proposed for the financial year ended  is 3.5 cent per share (March 2018: 3.0 cent per share) or €24.4m (March 2018: €20.9m).
Under the Irish REIT regime, the Company is required to distribute a minimum of 85% of the Group’s property rental business profits and
the Group’s dividend policy is to pay out 85-90% of its property rental business profits. The Company has complied with this requirement,
the total dividends for the year ended March 2019 equate to 89% of EPRA earnings (March 2018: 108%).
148  15. Earnings per share
There are no convertible instruments, options or warrants on ordinary shares in issue as at . However, the Company has
established a reserve of €7.6m (March 2018: €8.8m) which is mainly for the issue of ordinary shares relating to the payment of IMA
performance-related payments. It is estimated that approximately 6.0m ordinary shares (March 2018: 6.6m shares) will be issued in
total, 5.6m of which are provided for at  and a further 0.4m of which will be recognised over the next two years. Details
on share-based payments are set out in note 11. The dilutive effect of these shares is disclosed below.
The calculations are as follows:
Weighted average number of shares
Financial
year ended
Issued share capital at beginning of financial year 692,347 685,452
Shares issued during the financial year 5,242 6,895
Shares in issue at financial year end 697,589 692,347
Weighted average number of shares 694,968 688,900
Number of shares to be issued under share-based schemes 6,028 6,599
Diluted number of shares 700,996 695,499
Financial
Number of shares due to be issued under share-based schemes recognised at financial year end (note 11) 5,599 6,183
Number of shares due under share-based schemes not recognised at financial year end1
429 416
Number of shares to be issued under share-based schemes 6,028 6,599
1. Included here are all amounts from share-based payments described in notes 11.a and 11.c which are either granted at the year-end or shortly after and which have not been
recognised at year-end but will be recognised over the next two to three years.
Basic and diluted earnings per share (IFRS)
Financial
year ended
3Weighted average number of ordinary shares (basic) 694,968 688,900
Weighted average number of ordinary shares (diluted) 700,996 695,499
Basic earnings per share (cent) 17.8 15.5
Diluted earnings per share (cent) 17.6 15.4
EPRA earnings per share and diluted EPRA earnings per share1
Financial
year ended

Profit for the financial year attributable to the owners of the Company 123,459 107,101
Less:
Gains and losses on investment property (98,105) (87,802)
Profit or (loss) on disposals of other assets (140) –
Deferred tax in respect of EPRA adjustments 547 –
Changes in fair value of financial instruments and associated close-out costs 1,711 104
EPRA earnings 27,472 19,403
’000 ’000
Weighted average number of ordinary shares (basic) 694,968 688,900
Weighted average number of ordinary shares (diluted) 700,996 695,499
EPRA earnings per share (cent) 4.0 2.8
Diluted EPRA earnings per share (cent) 3.9 2.8
1. EPRA earnings per share is an alternative performance measure and is calculated in accordance with the EPRA Best Practice Recommendations Guidelines November 2016.
Further information is available in the Supplementary Information section on page 194.
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Financial statements
Notes to the consolidated financial statements continued
16. IFRS NAV, EPRA NAV per share and total accounting return
The IFRS NAV is calculated as the value of the Group’s assets less the value of its liabilities based on IFRS measures. EPRA NAV is
calculated in accordance with the European Public Real Estate Association (“EPRA”) Best Practice Recommendations: November 2016.
The EPRA NAV per share includes investment property, other non-current assets and trading properties at fair value. For this purpose,
non-current assets classified as held for sale are included at fair value. It excludes the fair value movement of financial instruments and
deferred tax. It is calculated on a diluted basis.
Total accounting return, a key performance indicator and alternative performance measure, is calculated as the increase in EPRA NAV
per share over the previous financial year-end EPRA NAV and adding back dividends per share paid, expressed as a percentage of
opening EPRA NAV.
As at

The Company has established a reserve of €7.6m (March 2018: €8.8m) against the issue of approximately 5.6m ordinary shares relating to
shares due to issue for payments due to the Vendors of the Investment Manager and employees as detailed in note 11.
150  Section III – Tangible assets
This section contains information on the Group’s investment properties and other tangible assets. All investment properties are fully
owned by the Group. The Group’s investment properties are carried at fair value and its other tangible assets at depreciated cost except
for land and buildings which are adjusted to fair value.
17. Investment property
Accounting policy
Investment properties are properties held to earn rental income and/or for capital appreciation (including property under construction
for such purposes). Properties are treated as acquired at the point at which the Group assumes the significant risks and rewards of
ownership. This occurs when:
1. It is probable that the future economic benefits that are associated with the investment property will flow to the Group;
2. There are no material conditions which could affect completion of the acquisition; and
3. The cost of the investment property can be measured reliably.
Investment properties are measured initially at cost, including transaction costs. After initial recognition, investment properties are
measured at fair value. Gains and losses arising from changes in the fair value of investment properties are included in the consolidated
income statement in the period in which they arise.
Investment properties and properties under development are professionally valued on a twice-yearly basis, or as required, by qualified
external valuers using inputs that are observable either directly or indirectly for the asset in addition to unobservable inputs and are
therefore classified at Level 3. The valuation of investment properties is further discussed above under notes 2f and 2g.
The valuations of investment properties and investment properties under development are prepared in accordance with the appropriate
sections of the Professional Standards (“PS”), the Valuation Technical and Performance Standards (“VPS”) and the Valuation Applications
(“VPGA”) contained within the RICS Valuation – Global Standards 2017 (“the Red Book”). It follows that the valuations are compliant with
the International Valuation Standards (“IVS”). When the Group begins to redevelop an existing investment property, or property acquired
as an investment property, for future use as an investment property, the property remains an investment property and is accounted
for as such. Expenditure on investment properties is capitalised only when it increases the future economic benefits associated with
the property. All other expenditure is charged to the consolidated income statement. Interest and other outgoings, less any income, on
properties under development are capitalised. Borrowing costs, that is interest and other costs incurred in connection with borrowing
funds, are recognised as part of the costs of an investment property where directly attributable to the purchase or construction of that
property. Borrowing costs are capitalised in accordance with the policy described in note 12.
In accordance with the Group’s policy on revenue recognition (note 5), the value of accrued income in relation to the recognition of lease
incentives under operating leases over the term of the lease is adjusted in the fair value assessment of the investment property to which
the accrual relates.
Where amounts are received from departing tenants in respect of dilapidations, i.e. compensation for works that the tenant was expected
to carry out at the termination of a lease but the tenant, in agreement with the Group, pays a compensatory sum in lieu of carrying out
this work, the Group applies these amounts to the cost of the property. The value of the work to be done is therefore reflected in the fair
value assessment of the property when it is assessed at the end of the period.
An investment property is de-recognised on disposal, i.e. when the significant risks and rewards of ownership are transferred outside the
Group’s control, or when the investment property is permanently removed from use and no future economic benefits are anticipated
from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the consolidated income statement in the period in which the property is
de-recognised.
Amendments to IAS 40 clarified the recognition of transfers into or out of investment property. In accordance with these amendments,
the Group recognises or de-recognises investment property when the property meets or ceases to meet the definition of an investment
property and there is evidence of the change in use. This amendment has no impact on the recognition of investment properties in the
Group’s consolidated statement of financial position.
The valuations used to determine fair value for the investment properties in the consolidated financial statements are determined by C&W,
the Group’s independent valuer and are in accordance with the provisions of IFRS 13. C&W has agreed to the use of its valuations for this
purpose. Some of the inputs to the valuations are defined as “unobservable” by IFRS 13. As discussed in note 2(f) to the consolidated
financial statements, property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer.
For these reasons, and consistent with EPRA’s guidance, the Group has classified the valuations of its property portfolio as Level 3 as
defined by IFRS 13. Valuations are completed on the Group’s investment property on at least a half-yearly basis and in accordance with the
appropriate sections of the Professional Standards (“PS”), the Valuation Technical and Performance Standards (“VPS”) and the Valuation
Applications (“VPGA”) contained within the RICS Valuation – Global Standards 2017 (“the Red Book”). It follows that the valuations are
compliant with the International Valuation Standards (“IVS”). This takes account of the properties’ highest and best use. Where the highest
and best use is not the current use, the valuation will account for the costs and likelihood of achieving this use in arriving at a valuation
estimate for that property. In the financial year ended , for most properties the highest and best use is the current use except
as discussed in note 2(f). In these instances, the Group may need to achieve vacant possession before re-development or refurbishment
may take place and the valuation of the property takes account of any remaining occupancy period on existing leases. The table below
summarises the approach for each investment property segment and highlights properties where the approach has been varied.
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Notes to the consolidated financial statements continued
17. Investment property continued
Accounting policy continued
The method that is applied for fair value measurements categorised within Level 3 of the fair value hierarchy is the yield methodology
using market rental values capitalised with a market capitalisation rate or yield or other applicable valuation techniques. Using this
approach for the Group’s investment properties, values of investment properties are arrived at by discounting forecasted net cash flows
at market derived capitalisation rates. This approach includes future estimated costs associated with refurbishment or development,
together with the impact of rental incentives allowed to tenants. Thus development properties are assessed using a residual method in
which the completed development property is valued using income and yield assumptions and deductions are made for the estimated
costs to complete, including finance costs and developers’ profit, to arrive at the current valuation estimate. In effect, this values the
development as a proportion of the completed property.
In valuing the Group’s investment properties, the Directors have applied a reduction of €6.7m (March 2018: €6.8m) to the valuer’s
valuations to factor in the impact of the accounting policy on the recognition of rental incentives allowed to tenants and the costs of
setting up leases. This deduction is a measure of the impact on the property valuation of the difference between cash and accounting
approaches to the recognition of net rental income.
At 
Fair value category
Office assets
Carrying value at  1,173,140 16,199 153,079 53,000 1,395,418
1. This includes capital expenditure on 1WML and 2DC after their transfer to the office segment in the prior year.
2. New Century House and 77 Sir John Rogerson’s Quay were sold or contracted to be sold during the year, generating €2.6m in gains in excess of their carrying values.
3. 2WML (formerly the Hanover Building) and 1SJRQ were transferred from ‘Office development assets’ to ‘Office assets’ as they were completed before .
At 
Fair value category
Office assets
L
Carrying value at 31 March 2017 869,748 168,042 116,429 13,168 1,167,387
Additions:
Property purchases 32,075 – 923 6,160 39,158
Development and refurbishment expenditure 12,250 36,953 815 167 50,185
Revaluations included in income statement 29,875 38,405 14,792 (1,695) 81,377
Disposals:
Sales1
(26,990) – (2,400) – (29,390)
Transferred between segments2
100,979 (108,900) 7,921 – –
Carrying value at  1,017,937 134,500 138,480 17,800 1,308,717
1. The Chancery Building, Hanover Street East and 11 Lime Street were sold during the year, generating €6.4m in gains in excess of their carrying values.
2. 2WML (formerly the Hanover Building) was transferred from ‘Office assets’ to ‘Office development assets’ as re-development commenced in the period. 1WML and Hanover
Mills Apartments were completed during the period and moved from ‘Office development assets’ to ‘Office assets’ and ‘Residential assets’, respectively.
There were no transfers between fair value levels during the financial year. Approximately €0.6m of financing costs were capitalised
at an effective interest rate of 2.05% in relation to the Group’s developments and major refurbishments (March 2018: €2.0m). No other
operating expenses were capitalised during the financial year.
152  17. Investment property continued
The following table illustrates the methods applied to each segment:
Description of
investment property
asset class
Fair value of the
investment property 
at the financial year end Narrative description of the techniques used
Changes in the fair value technique
during the financial year
Office assets 1,173 Yield methodology using market rental values
capitalised with a market capitalisation rate.
Exceptions to this:
• Harcourt Square is valued on an investment basis
until the end of the lease (2022) and on a residual
basis thereafter.
• Marine House and Clanwilliam Court Blocks 1, 2 and 5
are valued on an investment basis until the end of the
leases (2020 and 2021 respectively) and on a residual
basis thereafter.
No change in valuation
technique except:
• Marine House and Clanwilliam
Court Blocks 1, 2 and 5 at
 were valued on
an investment basis but are
now valued on a hybrid of an
investment basis until the end
of the leases (2020 and 2021
respectively) and on a residual
basis thereafter.
Office
development
assets
16 Residual method, i.e. “Gross Development Value”
less “Total Development Cost” less “Profit” equals
“Fair Value”:
• Gross Development Value (“GDV”): the fair value of
the completed proposed development (arrived at
by capitalising the ERV with an appropriate yield,
allowances for purchasers’ costs, assumptions for
voids and/or rental free periods).
• Total Development Cost (“TDC”): this includes, but
is not limited to, construction costs, land acquisition
costs, professional fees, levies, marketing costs and
finance costs.
• Profit or “Profit on Cost” which is measured as a
percentage of the total development costs (including
the site value).
For developments close to completion the yield
methodology is applied.
No change in valuation technique
except that 2WML changed from
a residual to an investment basis
during the financial year.
Residential assets 153 Yield methodology using rental values capitalised with
a market capitalisation rate.
No change in valuation technique.
Industrial/
land assets
53 Yield methodology using market rental values
capitalised with a market capitalisation rate.
The Newlands site, including adjacent lands, is valued
as an early stage development site on a price per
acre basis.
No change in valuation technique.
Reconciliation of the independent valuer’s valuation report amount to the carrying value of investment property in the consolidated
statement of financial position:

Valuation per valuer’s certificate 1,407,740 1,320,581
Owner occupied (note 18) (5,643) (5,029)
Income recognition adjustment1
(6,679) (6,835)
Investment property balance at financial year end 1,395,418 1,308,717
1. Income recognition adjustment: this relates to the difference in valuation that arises as a result of property valuations using a cash flow based approach while income
recognition for accounting purposes spreads the costs of tenant incentives and lease set up over the lease term.
Financial statements
Notes to the consolidated financial statements continued
17. Investment property continued
Information about fair value measurements using unobservable inputs (Level 3)
The valuation technique used in determining the fair value for each of the categories of assets is market value as defined by VPS4 of the
Red Book 2017, being the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer
and a willing seller in an arm’s length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and
without compulsion, and is in accordance with IFRS 13. Included in the inputs for the valuations above are future development costs where
applicable. These development costs are generally determined by tender at the outset of the project and capped by agreement with the
contractors and are therefore observable and not subject to material change.
As outlined above, the main inputs in using a market-based capitalisation approach are the ERV and equivalent yields. ERVs, apart from in
multi-family residential properties, are not generally directly observable and therefore classified as Level 3. Yields depend on the valuer’s
assessment of market capitalisation rates and are therefore Level 3 inputs.
The tables below summarise the key unobservable inputs used in the valuation of the Group’s investment properties at .
There are interrelationships between these inputs as they are both determined by market conditions and the valuation result in any one
period depends on the balance between them. The Group’s residential properties are mainly multi-family units and therefore ERVs are
based on current market rents observed for units rented within the property. ERV is included in the below table for completeness.
Key unobservable inputs used in the valuation of the Group’s investment property

Estimated rental value Equivalent yield
Market value
€‘000 Low High Low High
Office 1,173,140 €15.00 psf €60.00 psf 4.04% 7.30%
Office development 16,199 €30.00 psf €57.50 psf 4.75% 4.75%
Residential1
153,079 €23,400 pa €31,800 pa 5.16% 6.00%
Industrial/land 53,000 €5.25 psf €5.25 psf 8.02% 8.02%
1. Average ERV based on a two-bedroom apartment; yields are gross.

Estimated rental value Equivalent yield
Market value
€‘000 Low High Low High
Office 1,017,937 €20.00 psf €60.00 psf 4.56% 7.17%
Office development 134,500 €30.00 psf €58.00 psf 4.75% 5.25%
Residential1
138,480 €19,800 pa € 31,800 pa 5.20% 6.43%
Industrial/land 17,800 €5.50 psf €5.50 psf 7.45% 7.45%
1. Average ERV based on a two-bedroom apartment, yields are gross.
The sensitivities below illustrate the impact of movements in key unobservable inputs on the fair value of investment properties.
To calculate these impacts only the movement in one unobservable input is changed as if there is no impact on the other. In reality there
may be some impact on yields from an ERV shift and vice versa. However, this gives an assessment of the maximum impact of shifts in
each variable. If rents in the market are assumed to move 5% from those estimated at , the Group’s investment property
portfolio would increase or decrease in value by approximately €62m (March 2018: €60m). A 25bp increase in equivalent yields would
decrease the value of the portfolio by €83m (March 2018: €69m) and a 25bp decrease would result in an increase in value of €95m
(March 2018: €78m).

18. Property, plant and equipment
Accounting policy
Owned property which is occupied by the Group for its own purposes is de-recognised as investment property at the date occupation
commenced and recognised as owner occupied property within property, plant and equipment at its fair value at that date. Property used
for administration purposes is stated in the consolidated statement of financial position at its revalued amount, being the fair value at the
date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are
performed with sufficient regularity such that the carrying amounts do not differ materially from those that would be determined using
fair values at the end of each accounting period.
Any revaluation increase from this property is recognised in other comprehensive income and accumulated in equity, except to the extent
that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to
profit or loss to the extent of the decrease previously expensed. A decrease in the carrying amount of this property arising on revaluation
is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the property’s revaluation reserve relating to a
previous revaluation of that asset.
Depreciation on revalued property is recognised in profit or loss. On the subsequent sale or retirement of a revalued property, the
attributable revaluation reserve is transferred directly to retained earnings.
Fixtures and fittings are stated at cost less accumulated depreciation and impairment losses.
Depreciation is recognised to write off the cost or value of assets less their residual value over their useful lives. The estimated useful lives,
residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
The estimated useful lives for the main asset categories are:

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Notes to the consolidated financial statements continued
18. Property, plant and equipment continued
At 
Group
Land and
buildings
Office and
computer
equipment

Leasehold
improvements
and fixtures
and fittings

Total

Cost or valuation
Additions – 65 173 238
Revaluation recognised in other comprehensive income 

Land and buildings, 54% of South Dock House, was revalued at  and at  by the Group’s independent valuer
and in accordance with the valuation approach described under note 17. It was measured at fair value at the period end using a yield
methodology using market rental values capitalised with a market capitalisation rate. These fair value measurements use significant
unobservable inputs. The inputs used are disclosed in the table below.
Valuation inputs  
ERV per sq. ft. €57.50 €52.50
Equivalent yield 5.0% 5.0%
19. Non-current assets classified as held for sale
Financial
year ended


Financial
year ended


Balance at start of financial year 534 385
Recognised during the year – 149
Balance at end of financial year 534 534
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. The Directors
have assessed the fair value of these assets by reviewing the sales prices achieved on similar assets and the expected sales price as
determined by the selling agent in preparing their disposal plans. Assets sold to date (since being acquired in 2014) have achieved at least
their acquisition price on an individual basis and in total a profit of approximately €5.0m (March 2018: €5.0m) before tax and after costs.
The Directors have therefore concluded that the fair value of these assets is at least their carrying value.
The balance carried forward from  contains some assets which remain from a portfolio of assets deemed not to be part of
the Group’s core property rental business. There have been unforeseen delays beyond the Group’s control in the sales of these assets but
the Directors expect that the assets will be sold in the near future and they are therefore retained as held for sale.
156  Section IV – Financing including equity and working capital
This part focuses on the financing of the Group’s activities, including the equity capital, bank borrowings and working capital. It also
covers financial risk management.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability of another entity. The Group
has identified financial assets and liabilities in its financial position and the accounting policy for these is summarised in this note.
Financial instruments may be further analysed between current and non-current depending on whether these will fall due within
12 months after the balance sheet date or beyond.
Financial assets: This classification depends on the business model and the contractual terms of the cash flows. Financial assets that
are held to collect contractual cash flows where those cash flows represent solely payments of principal or interest are measured at
amortised cost. Financial assets measured at amortised cost are principally trade receivables. At initial recognition the Group measures
the financial assets at fair value plus (except for those at fair value through profit or loss) transaction costs.
On initial recognition the Group classifies its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through other comprehensive income (“OCI”) or through profit or loss); and
• Those to be measured subsequently at amortised cost.
The Group’s financial assets comprise trade and other receivables, loans receivable and derivative instruments.
The Group de-recognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does
not retain control of the financial asset. On de-recognition of a financial asset, the difference between the carrying amount of the asset
and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative
gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Relevant costs incurred with the
disposal of a financial asset are deducted in computing the gain or loss on disposal.
Financial liabilities: These are initially recognised at the fair value of the considerations received less directly attributable transaction
costs. Subsequent to initial recognition, financial liabilities are recognised at amortised costs. The difference between the recognition
value and the redemption value is recognised in the income statement over the contractual terms using the effective interest rate
method. This category includes trade and other payables and borrowings. Financial liabilities are de-recognised in full when the Group
is discharged from its obligation, they expire, or they are replaced by a new liability with substantially modified terms.
The Group’s non-equity financing is all unsecured and comprises a revolving credit facility and private placement notes. The majority of
this debt is fixed rate or hedged through derivatives to protect against major rises in interest rates.
Effective interest method: The Group uses the effective interest method of calculating the amortised cost of a debt instrument and of
allocating interest income and expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts or payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial asset or liability, or, where appropriate, a
shorter period, to the gross carrying amount of a financial asset or the amortised cost of a financial liability.
Impairment of financial assets: The Group recognises a loss allowance for expected credit losses on debt instruments, trade receivables
and other financial assets. The amount of expected credit losses (“ECL”) is updated at each reporting date to reflect changes in credit risk
since initial recognition of the respective financial instrument. The Group always recognises lifetime ECL for trade receivables (see note
22). For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since
initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group
measures the loss allowance for that financial instrument at an amount equal to 12‑month ECL. Lifetime ECL represents the expected
credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12‑month ECL
represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within
12 months after the reporting date.
In order to perform this assessment, the Group classifies its assessment into three stages:
• Stage 1 includes financial assets that are expected to perform in line with their contractual terms and which have no signs of increased
credit risk since initial recognition. 12-month expected credit losses are recognised.
• Stage 2 includes financial assets where the credit risk has significantly increased since initial recognition but which are not yet credit
impaired. Lifetime credit losses are recognised.
• Stage 3 applies to credit-impaired financial instruments.
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Notes to the consolidated financial statements continued
20. Cash and cash equivalents

Cash and cash equivalents 22,372 22,521
Cash and cash equivalents includes cash at banks in current accounts and deposits held on call with banks. The management of cash and
cash equivalents is discussed in note 31.d. Please also refer to note 26.b on the net debt calculations. In addition, the Company holds funds
in excess of its regulatory minimum capital requirement at all times.
21. Other financial assets
Accounting policy
Loans and receivables: Loans and receivables (including loans to subsidiaries) are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Loans are initially recorded at fair value plus transaction costs. Those
that are held within a business model to collect contractual cash flows and these cash flows consist solely of payments of principal and
interest on the principal amount outstanding are measured at amortised cost. Loans that are not held within this model are measured at
fair value through profit or loss.
Derivatives: The Group utilises derivative financial instruments to hedge interest rate exposures on its borrowings. Derivatives designated as
hedges against interest risks are accounted for as cash flow hedges. Hedge relationships are documented at inception. This documentation
identifies the hedge, the item being hedged, the nature of the risks being hedged and how the effectiveness is measured during its
duration. Hedges are measured for effectiveness at each accounting date and the accounting treatment of changes in fair value revised
accordingly. The Group’s cash flow hedges are against significant increases in interest costs and the effective portion is recognised in
equity in the hedging reserve, with the ineffective portion being recognised in profit or loss within finance expenses.
Derivatives at fair value 194 88
Loans carried at fair value through profit or loss – 152
Balance at end of financial year end – current 194 240
Cash flow hedges are the Group’s hedging instruments on its borrowings. The Group has a policy of having the majority of its interest rate
exposure on its debt hedged or fixed. As at , as well as having €75m of fixed coupon private placement notes, it has hedged
the interest rate exposure on €225m of its revolving credit facility (March 2018: €245m) using a combination of caps and swaptions to
limit the EURIBOR element of interest payable to 1% on €100m of drawn debt and 0.75% on €125m of drawn debt.
Loans carried at fair value through profit or loss consisted of one loan which was repaid by the sale of the underlying property during
the financial year. This loan was acquired by the Group as part of a portfolio of loans which were settled by the sale of collateral. It was
reclassified from “carried at amortised costs” to “carried at fair value through profit or loss” on 1 April 2018 as part of the implementation
of IFRS 9. There was no impact on retained earnings as a result of this reclassification.
158  22. Trade and other receivables
Accounting policy
Trade and other receivables are initially recognised when they are originated. Trade and other receivables that do not contain significant
financing components, which is assessed at initial recognition, are measured at the transaction price. Trade receivables that are held
within a business model where the objective is to hold the financial asset in order to collect cash flows and the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest are recognised at fair value at
the recognition date and subsequently measured at amortised cost using the effective interest rate method.
As trade receivables do not contain a significant financing element the Group has adopted a simplified approach to calculating
impairment losses. Expected credit losses on trade receivables are estimated using a provision matrix which uses a fixed provision rate
based on the number of days a trade receivable is outstanding.
Non-current
Property income receivables 7,163 5,681
Other receivables 765 2,106
Balance at end of financial year – non-current 7,928 7,787
Current
Receivable from investment property sales 34,639 –
Deposits paid on investment property 145 –
Prepaid remuneration1
– 2,679
Property income receivables 4,105 2,885
Prepayments 548 1,077
Recoverable capital expenditure 314 416
Income tax refund due 54 102
VAT refundable 359 80
Balance at end of financial year – current 40,164 7,239
Balance at end of financial year – total 48,092 15,026
Of which are classified as financial assets 37,630 2,092
1. This consisted of the balance of the payment to service providers relating to the Internalisation transaction.
The non-current balance is mainly non-financial in nature; €0.8m (March 2018: €0.5m) relates to amounts receivable from two tenants
in relation to capital expenditure funded initially by the Group, with the balance consisting of deferred income and expenditure amounts
relating to the lease incentives and deferred lease costs. €34.6m was receivable in respect of a property sale; the balance of trade and
other receivables has no concentration of credit risk as it comprises mainly prepayments (note 31.d).
Trade receivables are managed under a “held to collect” business model. The cash collected represents principal and interest where
applicable. The trade receivables have been assessed under the simplified credit loss approach using a provision matrix which refers to
the number of days that they have been outstanding. Balances at  were assessed during the implementation of IFRS 9
(notes 3 and 37). There is no material provision for lifetime expected credit losses required either at  or 1 April 2018.
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Notes to the consolidated financial statements continued
23. Issued capital and share premium
Accounting policy
The equity of the Company consists of ordinary shares issued. Shares issued are recorded at the date of issuance. The par value of the issued
shares is recorded in the share capital account. The excess proceeds received over the par value is recorded in the share premium account.
Direct issue costs in respect of the issue of shares are accounted for in the retained earnings reserve, net of any related tax deduction.
Financial year ended  Financial year ended 
No. of shares
i
Balance at beginning
of financial year 
Shares issued during the
financial year (see below) 5,242 524 7,022 7,546 6,895 690 7,896 8,586
Balance at end
of financial year 697,589 69,759 624,483 694,242 692,347 69,235 617,461 686,696
Shares issued during the period are as follows:
5,241,805 ordinary shares with a nominal value of €0.10 were issued during the period in settlement of share-based payments totaling
€7.5m (note 11): 162,996 shares were issued on 9 April 2018 and 5,078,809 shares were issued on 20 July 2018 and the associated costs
were €14k.
Share capital
Ordinary shares of €0.10 each:

’000 of shares

’000 of shares
Authorised 1,000,000 1,000,000
Allotted, called up and fully paid 697,589 692,347
In issue at end of financial year 697,589 692,347
There are no shares issued which are not fully paid.
Share premium: On 23 May 2019 the Group announced its intention to undertake a share capital reorganisation to convert a substantial
part of its share premium into distributable reserves to give it greater flexibility for capital management in future. A resolution will be
proposed at the Group’s AGM on 31 July 2019 and, if approved, the Group will proceed through the Court process necessary to enact
the capital reorganisation.
Under the terms of the agreement under which the Group internalised the Investment Manager, the Vendors were entitled, until
26 November 2018, to certain deferred contingent payments which are, for the most part, equivalent to the performance fees which
would have been due under the Investment Management Agreement. These and other share-based payments due at 
amounted to €7.6m at the financial year end (March 2018: €8.8m) and are all payable in shares (note 11). A further 5.6m shares are
expected to be issued in relation to these payments.
160  Property revaluation 1,889 1,166
Cash flow hedging (288) (329)
Share-based payment reserve 7,556 8,783
Balance at end of financial year 9,157 9,620
a. Property revaluation reserve
As at 31 March
2019

As at 31 March
2018

Balance at beginning of financial year 1,166 509
Increase arising on revaluation of properties 723 657
Balance at end of financial year 1,889 1,166
The Group’s headquarters are carried at fair value and the remeasurement of this property is made through other comprehensive income
or loss (note 18). If the property is sold the property revaluation reserve will be transferred directly to retained earnings.
b. Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging
instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments
that are recognised and accumulated under the heading of cash flow hedging reserve is reclassified to profit or loss when the hedged
transaction affects the profit or loss consistent with the Group’s accounting policy.
No income tax arises on this item.
Cumulative gains or losses arising on changes in fair value of hedging instruments that have been tested as ineffective and reclassified
from equity into profit or loss during the period are included in the following line items:
Balance at beginning of financial year (329) (217)
Released to profit and loss – 58
Gain/(loss) arising on fair value of hedging instruments entered into for cash flow hedges 41 (170)
Balance at end of financial year (288) (329)
c. Share-based payment reserve

Balance at beginning of financial year 8,783 9,467
IMA performance-related payments provided 6,658 7,902
Settlement of 2018 IMA performance-related payments (7,885) (8,586)
Balance at end of financial year 7,556 8,783
The share-based payment reserve comprises amounts reserved for the issue of shares in respect of IMA performance-related and other
payments. These are discussed further in note 11.
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Financial statements
Notes to the consolidated financial statements continued
25. Retained earnings, distributable reserves and dividends on equity instruments
Retained earnings
Financial
year ended
Balance at beginning of financial year 415,414 325,983
Profit for the financial year 123,459 107,101
Share issuance costs (14) (14)
Dividends paid (23,719) (17,656)
Balance at end of financial year 515,140 415,414
Distributable reserves – Company only
Financial
year ended

Retained earnings at end of financial period (Company only) 436,014 344,758
Unrealised gains on investment property1
(388,791) (320,501)
Dividends payable post period end (estimated) (note 14) (13,969) (13,254)
Distributable earnings after post period end dividends 33,254 11,003
1. Unrealised inter-company profits arising on the transfer of investment properties to subsidiaries of the Company have been eliminated for the purpose of the
above calculation.
In August 2018 a dividend of 1.9 cent per share (€13.3m) and in January 2019 an interim dividend of 1.5 cent per share (€10.5m) were paid
to the holders of fully paid ordinary shares.
The Directors confirm that the Company continues to comply with the dividend payment obligations contained within the Irish
REIT legislation.
26. Financial liabilities
Accounting policy
A financial instrument is classified as a financial liability where it contains an obligation to repay. These are accounted for at amortised
cost. Financial liabilities that are classified as amortised cost are initially measured at fair value minus any transaction costs. Accounting
at amortised cost means that any difference between the proceeds (net of transaction costs) and the redemption value is recognised in
profit or loss or capitalised into investment property over the period of the borrowings using the effective interest method (see Section
IV introduction).
a. Borrowings
As at

Non-current
Unsecured bank borrowings 156,524 218,409
Unsecured private placement notes 74,524 –
Total non-current borrowings 231,048 218,409
Current
Unsecured bank borrowings 149 809
Unsecured private placement notes 358 –
Total current borrowings 507 809
Total borrowings 231,555 219,218

The maturity of non-current borrowings is as follows:
Less than one year 507 809
Between one and two years – –
Between two and five years 156,524 218,409
Over five years 74,524 –
Total 231,555 219,218
162  26. Financial liabilities continued
a. Borrowings continued
Movements in borrowings during the financial year:
Financial
year ended

Balance at beginning of financial year 219,218 171,138
Bank finance drawn during the financial year 340,412 86,454
Bank finance repaid during the financial year (326,372) (39,674)
Interest payable1
(1,703) 1,300
Balance at end of financial year 231,555 219,218
1. Balance in the current year is negative due to the capitalisation of arrangement fees on the refinancing of the RCF and the issue of private placement notes.
The Group seeks to leverage its equity capital to achieve higher returns within agreed limits. The Group has a stated policy of not
incurring debt above 40% of the market value of its property assets and has a through cycle leverage target of 20-30% loan-to-value
(“LTV”). Under the Irish REIT rules the LTV ratio must remain under 50%. The Group has no finance leases. In December 2018, the
Group refinanced its €400m secured revolving credit facility (“RCF”), which was due to expire in November 2020, with €395m of
debt comprising:
• A €320m unsecured revolving credit facility expiring 19 December 2023; and
• €75m of unsecured US private placement notes, €37.5m dated 23 January 2026 and €37.5m dated 23 January 2029, with fixed rate
coupons of 2.36% and 2.69%, respectively.
The unsecured revolving credit facility has a five-year term and is provided by Bank of Ireland, Wells Fargo, Barclays Bank Ireland and
Allied Irish Banks. This facility is denominated in euro and is subject to a margin of 2.0% over three-month EURIBOR. The Group has
entered into derivative instruments so that the majority of its EURIBOR exposure is capped at 1% or 0.75% in accordance with the Group’s
hedging policy (note 31.d.ii)
The private placement notes have an average maturity of 8.3 years at  and were placed with a single institutional investor.
Coupons are fixed so long as the Group’s credit rating remains at investment grade.
Where debt is drawn to finance material refurbishments and developments that take a substantial period of time to take into use, the
interest cost of this debt is capitalised.
All costs related to financing arrangements are amortised using the effective interest rate. The Directors confirm that all covenants have
been complied with and are kept under review.
b. Net debt reconciliation and LTV
Net debt and LTV are key metrics in the Group. Net debt is redemption value of borrowings as adjusted by cash available for use. LTV or
“loan to value” is the ratio of net debt to investment property value at the measurement date.
As at
Gross debt – fixed interest rates (75,000) –
Gross debt – variable interest rate (159,413) (220,373)
Net debt at period end (217,091) (202,682)
Investment property at period end 1,395,418 1,308,717
Loan to value ratio 15.6% 15.5%
1. Cash is reduced by the amounts held in relation to rent deposits, sinking funds and similar arrangements as these balances are not viewed as available funds for the purposes
of the above calculation.
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Financial statements
Notes to the consolidated financial statements continued
26. Financial liabilities continued
b. Net debt reconciliation and LTV continued
Reconciliation of opening to closing net debt:
Assets Liabilities
Cash and cash
equivalents
Net debt due as at 1 April 2017 18,148 (173,593) – – (155,445)
Cash inflow – (86,454) – – (86,454)
Cash outflow – 39,674 – – 39,674
Movement in cash and cash equivalents 4,373 – – – 4,373
Movement in cash reserved1
(4,830) – – – (4,830)
Net debt as at  17,691 (220,373) – – (202,682)
Restatement on adoption of IFRS 9 – – – – –
Net debt at as at 1 April 2018 17,691 (220,373) – – (202,682)
Cash inflow – (31,000) (234,413) (75,000) (340,413)
Cash outflow – 251,373 75,000 – 326,373
Movement in cash and cash equivalents (149) – – – (149)
Movement in cash reserved1
(220) – – – (220)
Net debt as at  17,322 – (159,413) (75,000) (217,091)
1. Cash is reduced by the amounts held in relation to rent deposits, sinking funds and similar arrangements as these balances are not viewed as available funds for the purposes
of the above calculation.
27. Deferred tax liabilities
Accounting policy
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax assets are only recognised where it is probable that the
amounts will be recoverable.
The Group is not generally liable for corporate taxes as it has REIT status (see note 13). Where it is anticipated that certain assets may
not qualify as assets of the property rental business (defined in legislation), deferred tax liabilities may be recognised on unrealised gains
recognised on these assets as future taxes may be payable on these gains. There were no unrecognised deferred tax assets in the period
that might be available to offset against these liabilities.
The balance comprises temporary differences attributable to:
Unrealised gains on residual business 547 –
164  28. Trade and other payables
Accounting policy
Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.
Current
Investment property payable 5,667 5,118
Rent prepaid 7,013 7,313
Rent deposits and other amounts due to tenants 1,222 1,569
Sinking funds 1,926 2,053
Trade and other payables 3,742 3,540
PAYE/PRSI payable 293 163
Balance at end of financial year 19,863 19,756
Of which classified as financial instruments 3,231 1,369
Cash is held against balances due for service charges prepaid and sinking fund contributions, €3.9m (March 2018: €3.6m), and rental
deposits from tenants, €1.2m (March 2018: €1.2m). Sinking funds are monies put aside from annual service charges collected from tenants
as contributions towards expenditure on larger maintenance items that occur at irregular intervals in buildings managed by Hibernia.
Trade and other payables are interest free and have settlement dates within one year. The Directors consider that the carrying value of the
trade and other payables approximates to their fair value.
29. Contract liabilities
Accounting policy
Contract liabilities arise as a result of service charge contracts, the accounting for which is discussed in note 5.
Contract liabilities arise from service charge payables. Service charge arrangements form a single performance obligation under which
the Group purchases services for multi-let buildings and recharges them to tenants. The movements for the purchase of services and
income relating to these activities are presented below. The comparative numbers for  were previously included in trade
and other payables (note 28) but have been separately presented here for clarity.
Contract
liabilities

At 1 April 2017 861
(Revenue)/expense recognised during the period 205
Amounts received from customers under contracts 4,853
Amounts paid to suppliers (4,174)
At  1,745
(Revenue)/expense recognised during the period 243
Amounts received from customers under contracts 6,311
Amounts paid to suppliers (6,291)
At  2,008
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Financial statements
Notes to the consolidated financial statements continued
30. Cash flow information
a. Non-cash movements in operating profit
Notes
Financial
year ended

Revaluation of investment property 17 (95,527) (81,377)
Share-based payments 11 6,658 7,902
Prepaid remuneration expense 9 2,679 4,444
Depreciation 18 284 285
Deferred tax 27 547 –
Non-cash movements in operating profit (85,359) (68,746)
b. Cash expended on investment property
Notes
Financial
year ended

Property purchases 17 40,030 39,158
Development and refurbishment expenditure 17 47,221 50,185
Financing arrangement fee write-off – (522)
Deposit paid on investment property 145 –
(Increase)/decrease in investment property costs payable (549) 4,966
Cash expended on investment property 86,847 93,787
c. Cash received from sales of investment property
Notes
Financial
year ended

Property sales 17 96,077 29,390
Profit on sales 7 2,578 6,425
(Increase) in receivable from investment property sales (34,639) –
Cash received from sales of investment property 64,016 35,815
d. Non-cash investing and financing activities
The Group has no non-cash investing and financing activities.
31. Financial instruments and risk management
a. Financial risk management objectives and policy
The Group takes calculated risks to realise its strategic goals and this exposes the Group to a variety of financial risks. These include,
but are not limited to, market risk (including interest and price risk), liquidity risks and credit risk. These financial risks are managed
in an overall risk framework by the Board, in particular by the Chief Financial Officer, and monitored and reported on by the Risk and
Compliance Officer. The Group monitors market conditions with a view to minimising the volatility of the funding costs of the Group.
The Group uses derivative financial instruments such as interest rate caps and swaptions to manage some of the financial risks associated
with the underlying business activities of the Group.
166  31. Financial instruments and risk management continued
b. Financial assets and financial liabilities
The following table shows the Group’s financial assets and liabilities and the methods used to calculate fair value.
Asset/Liability Carrying value Level
Fair value calculation
technique Assumptions
Trade and
other receivables
Amortised cost 2 Discounted
cash flow
Most trade receivables are very short term, the
majority less than one month, and therefore face
value approximated fair value on a discounted basis.
Financial liabilities Amortised cost 2 Discounted
cash flow
The fair value of financial liabilities held at amortised
cost has been calculated by discounting the expected
cash flows at prevailing interest rates.
Derivative
financial instruments
Fair value 2 Calculated fair
value price
The fair value of derivative financial instruments is
calculated using pricing based on observable inputs
from financial markets.
Trade and
other payables
Amortised cost 2 Discounted
cash flow
All trade and other payables that could be classified
as financial instruments are very short term, the
majority less than one month, and therefore face
value approximated fair value on a discounted basis.
Contract liabilities Amortised cost 2 Discounted
cash flow
All contract liabilities classified as financial instruments
are very short term, the majority less than one month,
and therefore face value approximated fair value on a
discounted basis.
The carrying value of non-interest-bearing financial assets and financial liabilities approximates to their fair values, largely due to their
short-term maturities.
c. Fair value hierarchy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to
the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are
described as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based on
observable market data.
The following tables present the classification of financial assets and liabilities within the fair value hierarchy and the changes in fair values
measurements at Level 3 estimated for the purposes of making the above disclosure.
As at 
Level
Total

Financial statements
Notes to the consolidated financial statements continued
31. Financial instruments and risk management continued
c. Fair value hierarchy continued
As at 
Trade and other receivables 2 15,026 2,092 522 1,570 2,092 2,092
Loans1
3 152 152 – 152 152 152
Derivatives at fair value 2 88 88 88 – 88 88
Borrowings 2 (219,218) (219,218) – (219,218) (219,218) (219,218)
Trade and other payables 2 (19,756) (1,369) – (1,369) (1,369) (1,369)
Contract liabilities2
2 (1,745) (1,745) – (1,745) (1,745) (1,745)
(225,453) (220,000) 610 (220,610) (220,000) (220,000)
1. The balance of loans as at  was reclassified from amortised cost to fair value through the profit or loss on the adoption of IFRS 9 and has since been repaid
(note 21).
2. Contract liabilities were reclassified as part of the implementation of IFRS 15 (notes 3 and 37).
Movements of Level 3 fair values
This reconciliation includes investment property, loans and other financial assets which are included in trade payables, trade receivables
and contract liabilities. Measurement of these assets is described in note 17 (investment property) and in the table at the start of this note.
Balance at beginning of financial year 1,308,869 1,167,539
Transfers out of Level 3 – –
Purchases, sales, issues and settlement
Purchases1
87,251 89,343
Sales (96,077) (29,390)
Loan redemption (152) –
Fair value movement 95,527 81,377
Balance at end of financial year 1,395,418 1,308,869
1. Includes development, refurbishment and remedial expenditure.
d. Financial risk management
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance.
Risk Exposure arising from Measurement Management
Market risk –
interest rate risk
Long-term borrowings at variable rates Sensitivity analysis Derivative products – cap/
swaption arrangements
Credit risk Cash and cash equivalents, trade
receivables, derivative financial instruments
Aging analysis, credit
ratings where applicable
Cash investment policy with
minimum ratings
Diversification of deposits
where merited
Liquidity risk Borrowings and other liabilities Cash flow forecasts are
completed as part of
budgeting process
Availability of borrowing facilities
The policies for managing each of these and the principal effects of these policies on the results for the financial year are summarised in
the following section:
168  31. Financial instruments and risk management continued
d. Financial risk management continued
i. Risk management framework
The Group’s Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Audit
Committee is responsible for developing and monitoring the Group’s risk management policies. Risk management policies are established
to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to
limits. All of these policies are regularly reviewed in order to reflect changes in the market conditions and the Group’s activities. The Audit
Committee is assisted in its work by internal audit, conducted by PwC Ireland, which undertakes periodic reviews of different elements of
risk management controls and procedures.
ii. Market risk
Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market
risk reflects interest rate risk, currency risk and other price risks. The Group has no financial assets or liabilities denominated in foreign
currencies. The Group’s financial assets mainly comprise trade receivables. Financial liabilities comprise short-term payables, private
placement notes and bank borrowings. Therefore the primary market risk is interest rate risk.
The Group has both fixed and variable rate borrowings. Variable rate borrowings consist of an unsecured revolving credit facility and
the Group has partly hedged against increasing rates by entering into interest rate caps and swaptions to restrict EURIBOR costs to a
maximum of 1%.
The following therefore illustrates the potential impact on profit and loss for the financial year of a 1% or 2% increase in EURIBOR:
As at 
Exposure to interest rates is limited to the exposure of the Group’s earnings from borrowings. Variable rate borrowings were €159.4m (March
2018: €220.4m) and net debt (note 26.b) was €217.1m in total, of which €75.0m was fixed rate private placement notes (March 2018: €202.7m
of which €nil was fixed). The Group’s drawings under its facilities were based on a EURIBOR rate of 0% throughout the period.
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Notes to the consolidated financial statements continued
31. Financial instruments and risk management continued
d. Financial risk management continued
iii. Credit risk
Credit risk is the risk of loss of principal or loss of a financial reward stemming from a counterparty’s failure to repay a loan or otherwise
meet a contractual obligation. Credit risk is therefore, for the Group and Company, the risk that the counterparties underlying its
assets default.
The Group has the following types of financial assets and cash that are subject to credit risk:
Cash and cash equivalents: These are held with major Irish and European financial institutions. The Board has established a cash
management policy for these funds which it monitors regularly. This policy includes ratings restrictions, BB or better, and related
investment thresholds, maximum balances of €25–50m with individual institutions dependent on rating, to avoid concentration risks
with any one counterparty. The Group also retains the services of a Depository to ensure the security of the cash assets.
Trade and other receivables: Rents are generally received one quarter in advance from tenants and therefore there tends to be a low level
of credit risk associated with this asset class. An amount of €34.6m was due in relation to the sale of an investment property at 31 March
2019 which was received shortly after the financial year end (March 2018: nil). Otherwise, the Group has small balances in trade receivables
which are immaterial in the context of credit risk.
Trade receivables are managed under a “held to collect” business model as described in note 22. On that basis, the loss allowance
at 1 April 2018 on adoption of IFRS 9 and at  was immaterial. There are no contract assets at either 1 April 2018 or
.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there are no
reasonable expectations of recovery are, inter alia, the failure of a debtor to engage with the Group and make a payment plan, a failure to
make contractual payments for more than 120 days, and the expectation that amounts may be irrecoverable as the tenant has vacated
and refuses to engage further.
In the prior year under the previous accounting policy (before the introduction of IFRS9), the impairment of trade receivables was
assessed on an incurred loss model, i.e. balances known to be irrecoverable were written down by reducing the carrying amount directly.
The Group had no such write-offs as at  or .
The maximum amount of credit exposure is therefore:

Other financial assets 194 240
Trade and other receivables 37,630 2,092
Cash and cash equivalents 22,372 22,521
Balance at end of period 60,196 24,853
iv. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that it has
sufficient available funds to meet obligations as they fall due. Net current assets, a measure of the Group’s ability to meet its current
liabilities, at the financial year end were:

Net current assets at the period end 40,692 7,984
The nature of the Group’s activities means that the management of cash is particularly important and is managed over a four-year period.
The budget and forecasting process includes cash forecasting, capital and operational expenditure projections, cash inflows and dividend
payments on a quarterly basis over the four-year horizon. This allows the Group to monitor the adequacy of its financial arrangements.
The Group had access at  to €161m (March 2018: €187m) in undrawn amounts under its revolving credit facility (note 26.a),
which matures in December 2023. Cash and undrawn facilities as at  totalled €178m or €143m net of committed capital
expenditure (March 2018: €197m and €120m, respectively).
170  31. Financial instruments and risk management continued
d. Financial risk management continued
iv. Liquidity risk continued
Exposure to liquidity risk
Listed below are the contractual maturities of the Group’s financial liabilities. Only trade and other payables relating to cash expenditure
are included, the balance relates either to non-cash items or deferred income. These include interest margins payable and contracted
repayments. EURIBOR is assumed at 0% throughout the period.
At 
Carrying
amount
Contractual
cash flows
6 months
v. Capital management
The Group’s objectives when managing capital are to:
• Safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other
stakeholders; and
• Maintain an optimal capital structure to minimise the cost of capital.
In order to maintain or adjust capital, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt. On 1 April 2019, the Company announced a share buyback programme to return an initial
€25m, the majority of the net sales proceeds (€35m) from the sale of 77SJRQ, to shareholders (note 38). The Group is also obliged to
distribute at least 85% of its property rental income under the REIT regime regulations.
Capital comprises share capital, reserves and retained earnings as disclosed in the consolidated and Company statement of changes in
equity. At  the total capital of the Group was €1,219m (March 2018: €1,112m).
The key performance indicators used in evaluating the achievement of strategic objectives, and as performance measurements for
remuneration, are as follows:
• Total property return (“TPR”) %: Measures the relative performance of the Company’s investment property portfolio versus the Irish
property market, as calculated. by the MSCI/SCSI Ireland Quarterly Property All Assets Index (“MSCI Ireland Index”).
• Total accounting return (“TAR”) %: Measures the absolute growth in the Group’s EPRA NAV per share plus any ordinary dividends
paid during the period.
• EPRA earnings per share (cent): Measures the profit after tax excluding revaluations and gains and losses on disposals and associated
taxation (if any). For property companies it is a key measure of a company’s operational performance and capacity to pay dividends.
• Total shareholder return (“TSR”) %: Measures growth in share value over a period assuming dividends are re-invested in the purchase
of shares. Allows comparison to other companies in the Group’s listed peer group.
The Group seeks to leverage its equity capital in order to enhance returns (note 26.a). The loan to value ratio (“LTV”) is expressed as net
debt (note 26.b) divided by total investment property value (as shown in the balance sheet). The Group’s policy is to maintain an LTV
ratio of 20-30% on a through cycle basis and not to incur debt above an LTV ratio of 40% (see note 26.b).
Loan covenants
Under the terms of the major borrowing facilities, the Group is required to comply with the following key financial covenants:
• The LTV ratio must not exceed 50%; and
• Interest cover must be greater than 1.5 times on both an historic and forward basis for a 12-month period.
The Group has complied with these key covenants throughout the reporting period.
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Notes to the consolidated financial statements continued
31. Financial instruments and risk management continued
d. Financial risk management continued
v. Capital management continued
Other
In addition, the LTV ratio must remain under 50% under the rules of the Irish REIT regime.
The Company’s share capital is publicly traded on Euronext Dublin and the London Stock Exchange.
As the Company is authorised under the Alternative Investment Fund regulations it is required to maintain 25% of its annual fixed
overheads as capital. This is managed through the Company’s risk management process. The limit was monitored throughout the
financial year and no breaches occurred.
Section V–Other
This section contains notes that do not belong in any of the previous categories.
32. Operating lease receivables
Future aggregate minimum rentals receivable (to the next break date) under non-cancellable operating leases are:

Operating lease receivables due in:
Less than one year 55,395 54,680
Between two and five years 162,407 166,096
Greater than five years 195,291 150,565
Total 413,093 371,341
The Group leases its investment properties under operating leases. The weighted average unexpired lease term (“WAULT”) at 31 March
2019, excluding residential properties and weighted on contracted rents, based on the earlier of lease break or expiry date, was 7.5 years
(March 2018: 7.3 years).
These calculations are based on all leases in place at , i.e. including leases that have not yet commenced.
33. Investment in subsidiary undertakings
Accounting policy
Business combinations
Acquisitions of subsidiaries and businesses are accounted for under the acquisition method. The consideration transferred in a business
combination is measured at fair value. Acquisition-related costs are expensed as incurred.
A joint arrangement is an arrangement over which two or more parties have joint control. Joint control is established when no one entity
has control of the arrangement on its own; all the entities involved in the arrangement control it collectively. Where the joint arrangement
is recognised as a joint operation, the Group recognises its share of assets and liabilities held jointly as well as its share of revenues and
expenses according to IFRS applicable to the items being recognised.
There were no business combinations during this or the previous financial year.
172  34. Capital commitments
The Group has entered into a number of development contracts to develop buildings in its portfolio. The total capital expenditure
commitment in relation to these over the next one to two years is approximately €35m (March 2018: €77m).
35. Contingent liabilities
Accounting policy
Contingent liabilities are possible obligations depending on whether some uncertain future event occurs, or present obligations where
payment is not probable, or the amount cannot be measured reliably. Contingent liabilities are not recognised but are disclosed unless
the possibility of an outflow of economic resources is remote.
The Group has not identified any contingent liabilities which are required to be disclosed in the financial statements.
36. Related parties
a. Subsidiaries
All transactions between the Company and its subsidiaries are eliminated on consolidation.
The following are the major subsidiaries of the Group:
Financial statements
Notes to the consolidated financial statements continued
36. Related parties continued
b. Other related party transactions
The Group earned rent of €115k from WK Nowlan Real Estate Advisors in Marine House in the financial year ended  (March
2018: €115k). The lease is currently under review and the Group calculates that it is owed approximately €73k at  (March
2018: nil).
William Nowlan is Chairman of WK Nowlan Real Estate Advisors. William Nowlan is a shareholder in WK Nowlan Real Estate Advisors
along with Kevin Nowlan and Frank O’Neill. As part of his consultancy agreement with the Company, William Nowlan received €92k
in consulting fees for the financial year ended  (March 2018: €84k). Nothing was due to him at  (March
2018: €25k). This consultancy arrangement has now ceased.
As part of the IMA performance-related payments for the financial year (note 11), the following payments are due:
Kevin Nowlan: €2.3m, Frank Kenny: €1.5m, William Nowlan: €1.1m and Frank O’Neill: €0.5m. (March 2018: Kevin Nowlan: €2.8m, Frank
Kenny: €1.8m, William Nowlan: €1.4m and Frank O’Neill: €0.6m.)
As part of his consultancy agreement with the Company, Frank Kenny earned €140k in fees for the financial year ended 
(March 2018: €181k). He also received a fee of €60k during the period in relation to his role as a Non-Executive Director. An amount of
€35k in respect of consultancy fees was owed to him at the period end (March 2018: €nil). This consultancy arrangement has now ceased.
Thomas Edwards-Moss (CFO) rents an apartment from the Group at market rent and paid €12k in rent during the period (March 2018: €14k).
For further information on Directors’ emoluments please refer to the Directors’ Remuneration report on pages 93 to 114 of this
Annual Report.
c. Key management personnel
In addition to the Executive and Non-Executive Directors, the following are the key management personnel of the Group:
Justin Dowling		 Director of Property (from 1 January 2019 (formerly Head of Asset Management))
Richard Ball 		 Chief Investment Officer (to )
Edwina Governey		 Interim Chief Investment Officer (from )
Sean O’Dwyer		 Company Secretary and Risk & Compliance Officer
Frank O’Neill		 Director of Operations (from 1 January 2019 (formerly Chief Operations Officer))
Mark Pollard		 Director of Development
The remuneration of the above key management personnel during the financial year was as follows:

Short-term benefits 3,035 2,381
Post-employment benefits 226 200
Other long-term benefits – –
Share-based payments 353 379
Total for the financial year 3,614 2,960
The remuneration of Executive Directors and key management is determined by the Remuneration Committee, having regard to the
performance of individuals and the Group, and market trends.
174  37. Impact of transition to new accounting policies
This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers on the
Group’s financial statements.
Impact on the financial statements
As a result of the changes in the Group’s accounting policies there were no restatements of the prior year financial statements, and
therefore no impact on balances as at 1 April 2018. There were amendments to presentations to reflect changes in classifications arising
from the new policies. There was no impact on profit or loss or reserves from the adoption of either IFRS so this is not shown.

As originally
presented
Assets
Non-current assets
Investment property 1,308,717 – – 1,308,717
Property, plant and equipment 5,411 – – 5,411
Other financial assets 240 – – 240
Trade and other receivables 7,787 – – 7,787
Total non-current assets 1,322,155 – – 1,322,155
Current assets
Trade and other receivables 7,239 – – 7,239
Cash and cash equivalents 22,521 – – 22,521
Non-current assets classified as held for sale 534 – – 534
Total current assets 30,294 – – 30,294
Total assets 1,352,449 – – 1,352,449
Equity and liabilities – –
Capital and reserves 686,696 – – 686,696
Issued capital and share premium 9,620 – – 9,620
Other reserves 415,414 – – 415,414
Retained earnings 1,111,730 – – 1,111,730
Total equity
Non-current liabilities
Financial liabilities 218,409 – – 218,409
Total non-current liabilities 218,409 – – 218,409
Current liabilities
Financial liabilities 809 – – 809
Trade and other payables 21,501 – (1,745) 19,756
Contract liabilities – – 1,745 1,745
Total current liabilities 22,310 – – 22,310
Total equity and liabilities 1,352,449 – – 1,352,449
IFRS 9 Financial Instruments
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial
liabilities, de-recognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of IFRS 9 has had minimal impact on the financial statements as the Group does not have a large number of financial
instruments and has only cash flow hedging on its revolving credit facility.
Adoption resulted in the reclassification of one loan from “carried at amortised cost” to “at fair value”, as it did not meet the solely
payments of principal and interest test (“SPPI test”). This loan was non-performing and was recovered by the sale of collateral during the
financial year ended .
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Financial statements
Notes to the consolidated financial statements continued
37. Impact of transition to new accounting policies continued
IFRS 9 Financial Instruments continued
As at 1 April 2018
Trade and other receivables 2 15,026 2,092 522 1,570 2,092 2,092
Loans 3 152 152 – 152 152 152
Derivatives at fair value 2 88 88 88 – 88 88
Financial assets 15,266 2,332 610 1,722 2,332 2,332
Reclassification of loans
to at fair value 152 (152)
Financial assets as restated 15,266 2,332 762 1,570 2,332 2,332
Impairment of financial assets
The Group has two types of financial assets that are subject to IFRS 9’s new expected credit loss model:
• Trade receivables for rental income and other property income; and
• Loans receivable.
The Group’s trade receivables that are classified as financial assets are mainly of a very short-term nature. Trade receivables that are
financial assets are managed under a “held to collect” business model and the cash collected represents principal and interest where
applicable. The Group has adopted the simplified credit loss approach in assessing impairment on these as they do not contain a
significant financing component. The move from an incurred loss model to an expected loss model has therefore had an immaterial
effect on balances and there is no restatement of prior year financial statements required.
The Group had one loan receivable at  which was settled during the financial year  by the sale of the
underlying property and the payment of the proceeds to clear the full balance of the loan outstanding plus a small surplus after costs.
Therefore the fair value of this loan was determined to be carrying value and there was therefore no need for impairment nor any
restatement of prior year financial statements.
Hedge positions
The interest rate swaps and caps in place at  qualified as cash flow hedges under IFRS 9 and there was therefore no change
in classification or measurement of these positions in transitioning from IAS 39 either at  or 1 April 2018. The Group’s risk
management strategies and hedge documentation are aligned with the requirements of IFRS 9 and these relationships are therefore
treated as continuing hedges.
Financial liabilities
There was no impact on financial liabilities of the Group due to the adoption of IFRS 9.
IFRS 15 Revenue from Contracts with Customers
In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers (as amended in April 2016) which is effective
for an annual period that begins on or after 1 January 2018. IFRS 15 introduced a five‑step approach to revenue recognition. However, the
Group’s revenue is mainly from rental income under lease contracts which falls under IAS 17 (IFRS 16 from 1 April 2019).
IFRS 15 applies to the Group’s property management revenues and service charge income. The accounting policy in respect of this
activity is described in note 5. The adoption of IFRS 15 resulted in no re-measurements of balances included in the financial statements.
It resulted in one change in presentation of amounts in the consolidated statement of financial position as at  (and 1 April
2018) as illustrated in the table above. An amount of €1.7m was reclassified from trade payables to contract liabilities. This represents
amounts due in relation to performance obligations under service charge arrangements. See note 5 “Net property expenses” and note 29
“Contract liabilities” for further details and note 3 for transition notes.
38. Events after the reporting period
1.	
On 1 April 2019 the Company announced its intention to return the net sales proceeds from the sale of 77SJRQ (€35m) to shareholders,
commencing with an initial share buyback of up to €25m. The share buyback programme commenced on 2 April 2019, in accordance
with the Company’s general authority to repurchase ordinary shares as approved by shareholders at the Company’s AGM on 31 July
2018 and may continue until 31 December 2019 subject to renewed general repurchase authority at the 2019 AGM. The maximum
number of ordinary shares to be repurchased under the share buyback programme is 69,758,891. As at close of business on 14 June
2019 the Company had repurchased and cancelled 6,284,457 ordinary shares for aggregate consideration of €8.7m.
2.	
The Directors have proposed a final dividend of 2.0 cent per share that is subject to approval at the AGM to be held on 31 July 2019.
3.	
To enhance our flexibility for future capital management, the Company is proposing a capital reorganisation resolution at the AGM on
31 July 2019. This seeks permission to convert a substantial part of its share premium account into distributable reserves in a process
which will also require High Court approval. Subject to receiving the necessary approvals, the capital reorganisation will likely complete
in late 2019.
4.	
Between  and 17 June 2019 the Group invested €6.9m in the acquisition of four investment properties, three of which are
adjacent to existing properties.
5.	
69,080 shares, which were due to vest and be issued to an employee post , became forfeit upon the departure of the
employee and, under the Internalisation arrangements, will be returned to the Vendors and will be included in the shares being issued
in respect of the final payment under the Performance Fee arrangement in July 2019.
176  Notes

Assets
Non-current assets
Investment property d 1,207,742 1,128,292
Property, plant and equipment e 5,905 5,409
Investment in subsidiaries f 26,339 26,235
Loans to subsidiaries g 148,946 113,139
Other financial assets h – 2
Trade and other receivables i 5,389 5,631
Total non-current assets 1,394,321 1,278,708
Current assets
Trade and other receivables i 4,202 5,977
Cash and cash equivalents 20,733 21,795
24,935 27,772
Non-current assets classified as held for sale j 534 534
Total current assets 25,469 28,306
Total assets 1,419,790 1,307,014
Equity and liabilities
Capital and reserves
Issued capital and share premium k 694,242 686,696
Other reserves l 9,445 9,718
Retained earnings m 436,014 344,758
Total equity 1,139,701 1,041,172
Non-current liabilities
Financial liabilities n 259,294 246,050
Deferred tax liabilities o 547 –
Total non-current liabilities 259,841 246,050
Current liabilities
Financial liabilities n 507 809
Trade and other payables p 18,123 17,563
Contract liabilities q 1,618 1,420
Total current liabilities 20,248 19,792
Total equity and liabilities 1,419,790 1,307,014
The Parent Company’s profit after tax for the financial year ended  determined in accordance with IFRS is €115.0m (31 March
2018: €82.9m).
The notes on pages 180 to 191 form an integral part of these Company financial statements. The Company financial statements on pages
177 to 191 were approved and authorised for issue by the Board of Directors on 17 June 2019 and signed on its behalf by:
Kevin Nowlan
Chief Executive Officer
Thomas Edwards-Moss
Chief Financial Officer
Company statement of financial position
Company statement of financial position
As at 
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Balance at start of financial year 69,235 617,461 344,758 9,718 1,041,172
Total comprehensive income for the financial year
Profit for the financial year – – 114,989 – 114,989
Total other comprehensive income – – – 954 954
69,235 617,461 459,747 10,672 1,157,115
Transactions with owners of the Company,
recognised directly in equity
Dividends – – (23,719) – (23,719)
Issue of ordinary shares in settlement of share-based payments 524 7,022 – (7,546) –
Share issue costs – – (14) – (14)
Share-based payments expense/cash settlement – – – 6,319 6,319
Balance at end of financial year 69,759 624,483 436,014 9,445 1,139,701
Financial year ended 
Share
capital

Balance at start of financial year 68,545 609,565 279,528 9,759 967,397
Total comprehensive income for the financial year
Profit for the financial year – – 82,900 – 82,900
Total other comprehensive income – – – 643 643
68,545 609,565 362,428 10,402 1,050,940
Transactions with owners of the Company,
recognised directly in equity
Dividends – – (17,656) – (17,656)
Issue of ordinary shares in settlement of share-based payments 690 7,896 – (8,586) –
Share issue costs – – (14) – (14)
Share-based payments expense/cash settlement – – – 7,902 7,902
Balance at end of financial year 69,235 617,461 344,758 9,718 1,041,172
The notes on pages 180 to 191 form an integral part of these Company financial statements.
Company statement of changes in equity
Company statement of changes in equity
For the financial year ended 
178  Cash flows from operating activities
Profit for the financial year 114,989 82,900
Adjustments from:
Gain on sales of investment property (2,397) (6,425)
Other gains and losses (123) –
Dividends received (9,469) (610)
Cash-settled share-based payments (339) –
Finance expense 8,581 6,935
Non-cash movements: r (74,848) (46,027)
Operating cash flow before movements in working capital 36,394 36,773
(Increase)/decrease in trade and other receivables (517) 1,454
(Decrease)/increase in trade and other payables (676) 527
Increase in contract liabilities 198 –
Net cash flow from operating activities 35,399 38,754
Cash flows from investing activities
Cash expended on investment property r (55,109) (43,206)
Cash received from sales of investment property r 64,156 35,815
(Increase) in loan to subsidiaries g (35,807) (66,072)
Purchase of fixed assets e (54) (226)
Income on other assets 123 –
Finance income 5 7
Finance expense (9,551) (5,470)
Net cash flow absorbed by investing activities (36,237) (79,152)
Cash flow from financing activities
Dividends paid (23,719) (17,656)
Dividends received 9,469 610
Borrowings drawn n 340,412 83,500
Borrowings repaid n (326,372) (22,128)
Share issue costs (14) (14)
Net cash outflow/inflow from financing activities (224) 44,312
Net (decrease)/increase in cash and cash equivalents (1,062) 3,914
Cash and cash equivalents start of financial period 21,795 17,881
(Decrease)/increase in cash and cash equivalents (1,062) 3,914
Net cash and cash equivalents at end of financial period 20,733 21,795
The notes on pages 180 to 191 form an integral part of these Company financial statements.
Company statement of cashflows
Company statement of cash flows
For the financial year ended 
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Financial statements
a. Accounting policies and critical accounting estimates and judgements
The Company’s financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as
applied in accordance with the provisions of the Companies Act 2014. The financial statements reflect the financial position of the
Company only and do not consolidate the results of any subsidiaries. The financial statements have been prepared under the historical
cost convention, as modified to include the fair valuation of investment properties, certain financial instruments and land and buildings.
The significant accounting policies of the Parent Company are the same as those of the Group which are set out in the notes to the
consolidated financial statements on pages 131 to 176 of the Group’s Annual Report.
The Company’s investments in its subsidiaries that are not classified as held for sale are stated at cost less any impairment. If the
investment is classified as held for sale, the Company accounts for it at the lower of its carrying value and fair value less estimated costs
to sell.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
financial year. Although these estimates are based on Management’s best knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates. A description of the significant judgements and analysis of sources of estimation uncertainty
is set out in notes 2(f) and 2(g) to the consolidated financial statements on pages 126 to 176 of the Group’s Annual Report.
Changes in accounting policies
For further information on changes in accounting policies please also refer to note 3 of the consolidated financial statements.
IFRS 9: Financial Instruments
The Company implemented IFRS 9 during the period. There was no material impact on the Company financial statements either from
reclassification or re-measurement of prior period amounts. The following Company financial assets fall to be accounted for under IFRS 9:
• Loans to subsidiaries – see note g for further information
• Trade and other receivables – see note i for further information
• Other financial assets – see note h for further information
Impairment review of shares in Group undertakings
The Company reviews its shares in Group undertakings for impairment at each reporting date. Impairment testing involves the
comparison of the carrying value of the investment with its recoverable amount. The recoverable amount is the higher of the investment’s
fair value or its value in use. Value in use is the present value of expected future cash flows from the investment. Fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. Impairment testing inherently involves a number of judgemental areas: the preparation of cash flow forecasts for years that are
beyond the normal requirements of management reporting, the assessment of the discount rate appropriate to the business, estimation
of the fair value of the investment, and the valuation of the separable assets comprising the overall investment in the Group undertaking.
The use of reasonably possible alternative assumptions would not materially impact the carrying value of the Company’s shares in
Group undertakings.
b. Operating profit
Operating profit for the financial year is stated after charging:
Financial
year ended


Non-Executive Directors’ fees 447 286
Professional valuers’ fees 394 281
Prepaid remuneration expense 2,679 4,444
Depository fees 299 278
Depreciation (see note e) 281 269
“Top-up” Internalisation expenses for financial year 1,482 1,743
Staff costs 4,516 3,405
Other administration expenses 3,706 2,567
Total administration expenses 13,804 13,273
For further information on expenses please refer to note 9 of the consolidated financial statements.
Notes to the Company financial statements
180  b. Operating profit continued
Auditor’s remuneration
Financial
year ended
Company
Audit of the financial statements 72 70
Other assurance services1
26 16
Tax advisory services – –
Other non-audit services – –
Total 98 86
1. Other assurance services include a review of the final IMA performance-related payment calculation in early 2019.
For further information on the Auditor’s remuneration, please refer to note 9 of the consolidated financial statements.
c. Employment
The average monthly number of persons (including Executive Directors) directly employed during the financial year in the Company was
22 (: 21).
Total employees at financial year end:
Financial year ended
Carrying value at  846,283 134,500 129,709 17,800 1,128,292
Additions:
Property purchases 2,956 – 980 6,882 10,818
Development and refurbishment expenditure 3,4001
41,500 60 417 45,377
Revaluations included in income statement 21,271 48,020 13,159 2,564 85,014
Disposals:
Sales2

Carrying Value at 31 March 2017 869,748 58,082 116,429 13,168 1,057,427
Additions:
Property purchases 1,377 – 923 6,160 8,460
Development and refurbishment expenditure 9,997 22,174 815 167 33,153
Revaluations included in income statement 24,321 22,074 13,942 (1,695) 58,642
Disposals:
Sales1
(26,990) – (2,400) – (29,390)
Transferred between segments2
Carrying value at  846,283 134,500 129,709 17,800 1,128,292
1. The Chancery Building, Hanover Street East and 11 Lime Street were sold during the year, generating €6.4m in gains in excess of their carrying values.
2. 2 Windmill Lane (formerly the Hanover Building) was transferred from ‘Office assets’ to ‘Office development assets’ as redevelopment commenced in the period.
Note 17 to the Group consolidated financial statements contains further information in relation to the Company’s investment properties.
All Group investment properties are held directly by the Company except for 1 Windmill Lane, Hanover Mills and part of the lands at
Newlands which are held through wholly owned subsidiaries of the Company (March 2018: 1 Windmill Lane, Hanover Mills and
77 Sir John Rogerson’s Quay). The tables below provide information on inputs and sensitivities for the calculations of fair value for the
properties held by the Company.
Key unobservable inputs used in the valuation of the Company’s investment property
 Estimated rental value Equivalent yield
Cost or valuation
At 1 April 2017 4,560 90 416 5,066
Additions – 54 172 226
Revaluation recognised in other comprehensive income 657 – – 657
At  5,217 144 588 5,949
Depreciation

1. The Group occupies 54% (: 54%) of the office space in its South Dock House property. This property was revalued as at  and  by the
Group’s valuer in accordance with the valuation approach described under note 2. (g). of the consolidated financial statements.
For further information on the Company’s property, plant and equipment refer to note 18 of the consolidated financial statements.
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Notes to the Company financial statements continued
f. Investment in subsidiaries
As at
Balance at end of financial year 26,339 26,235
For further information on the Company’s subsidiaries refer to note 36.a of the consolidated financial statements.
g. Loans to subsidiaries
Accounting policy
Classification and measurement
On 1 April 2018 the Company’s Management assessed which business model applies to the above loans and has determined that loans to
subsidiaries are financial assets that are managed under a “held to collect” business model. The cash collected represents “solely principal
and interest” (the “SPPI” test) where applicable.
Loans to subsidiaries are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition
loans to subsidiaries are measured at amortised cost using the effective interest method, less any impairment losses. As these are
repayable on demand the loan amount approximates to fair value at recognition.
Loans to subsidiaries are assessed under a three-stage model:
• Stage 1: Credit risk has not increased significantly since initial recognition – recognise 12 months expected credit loss (“ECL”), and
recognise interest (if any) on a gross basis
• Stage 2: Credit risk has increased significantly since initial recognition – recognise lifetime ECL, and recognise interest (if any) on a
gross basis
• Stage 3: Financial asset is credit impaired and lifetime ECL recognised
Once it is determined which stage a loan to a subsidiary is at, the ECL is calculated and applied where relevant. Loans to subsidiaries
are usually repayable on demand and are without a significant financing component. Therefore ECLs are based on the assumption that
the repayment of the loan is demanded at the reporting date or earliest possible call date where another date has been agreed. If the
recovery strategies indicate that the Company would fully recover the balance outstanding on the loans, the ECL is limited to the effect
of discounting, at the loans’ effective discount rate, the amount due over the period to collection.
IFRS 9 transition
Management has assessed the loans held at  on this basis and determined that they expect to recover the balances
outstanding in full and that therefore no impairment loss needs to be recognised at that date nor at 1 April 2018 nor is there any impact on
retained reserves.
Financial
year ended
Balance at beginning of financial year 113,139 47,067
Loan advances 36,629 66,474
Loan repayments (822) (402)
Interest income at effective interest rate – –
Balance at end of financial year 148,946 113,139
The maturity of inter-company loans are as follows:
Less than one year 148,946 113,139
The majority of the above balance, €148m, is due from three subsidiaries, Hibernia REIT Holding Company Limited (1 Windmill Lane office
building and Hanover Mills residential apartments), Hibernia REIT Hold Co One Limited (77 Sir John Rogerson’s Quay (“77SJRQ”)) and
NL7 Limited Partnership (Newlands development project). €35.5m related to 77SJRQ which was contracted for sale at 
and the funds were received shortly after this date. These funds have been provided from the Group’s borrowings, as loans repayable on
demand, to finance the assets held. There is no interest payable and they are held at amortised cost. Management assessed the loans for
recovery and determined that there has been no significant increase in credit risk since initial recognition, all loans to subsidiaries remain at
stage 1 and they expect to recover the balances outstanding in full and that no material impairment loss has been recognised.
h. Other financial assets
As at

Derivatives at fair value – 2
For further information on other financial assets refer to note 21 of the consolidated financial statements
184  i. Trade and other receivables
As at

Non-current
Property income receivables 4,624 4,231
Other receivables 765 1,400
Balance at end of financial year – non-current 5,389 5,631
Current
Prepaid remuneration – 2,679
Deposits paid on investment property 145 –
Property income receivables 2,746 2,042
Prepayments 518 606
Recoverable capital expenditure 333 416
Income tax refund due 42 88
VAT refundable 418 146
Balance at end of financial year – current 4,202 5,977
Balance at end of financial year – total 9,591 11,608
Of which classified as financial assets 1,987 2,191
There are no amounts past due. The Directors consider that the carrying value of trade and other receivables approximates to their fair value.
For further information on trade and other receivables refer to note 22 of the consolidated financial statements.
j. Non-current assets classified as held for sale
For further information on non-current assets classified as held for sale refer to note 19 of the consolidated financial statements.
k. Issued share capital and share premium
For information on issued share capital and share premium refer to note 23 of the consolidated financial statements
l. Other reserves
As at
Balance at beginning of financial year (231) (217)
Released to profit and loss 231 54
Gain/(loss) arising on fair value of hedging instruments entered into for cash flow hedges – (68)
Balance at end of financial year – (231)
iii. Share-based payment reserve
For further information on the share-based payment reserve refer to note 24.c of the consolidated financial statements.
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Financial statements
Notes to the Company financial statements continued
m. Retained earnings, distributable reserves and dividends on equity instruments
Financial
year ended


Financial
year ended


Balance at beginning of financial year 344,758 279,528
Profit for the financial year 114,989 82,900
Share issuance costs (14) (14)
Dividends paid (23,719) (17,656)
Balance at end of financial year 436,014 344,758
For further information on retained earnings, distributable reserves and dividends on equity instruments refer to note 25 of the
consolidated financial statements.
n. Financial liabilities
Non-current
Unsecured bank borrowings 156,524 218,409
Debenture issued to subsidiary 28,246 27,641
Unsecured Notes 74,524 –
Total non-current 259,294 246,050
Current
Unsecured bank borrowings 149 809
Unsecured Notes 358 –
Total current 507 809
Total financial liabilities 259,801 246,859
The maturity of non-current financial liabilities is as follows:
Between one and two years 507 809
Between two and five years 184,770 246,050
Over five years 74,524 –
Total 259,801 246,859
Movements in financial liabilities during the financial year:
Financial
year ended

Balance at beginning of financial year 246,859 184,102
Finance drawn during the financial year 340,412 83,500
Finance repaid during the financial year (326,372) (22,128)
Interest payable (1,098) 1,385
Balance at end of financial year 259,801 246,859
For further information on financial liabilities refer to note 26.a of the consolidated financial statements.
186  o. Deferred tax liabilities
For further information on deferred tax liabilities refer to note 27 of the consolidated financial statements.
p. Trade and other payables
Current
Investment property payable 5,500 4,269
Rent prepaid 6,188 7,288
Rent deposits and other amounts due to tenants 883 1,568
Sinking funds 1,862 2,037
Trade and other payables 3,430 2,257
PAYE/PRSI payable 260 144
Balance at end of financial year 18,123 17,563
Of which classified as financial instruments 3,195 1,831
For further information on trade and other payables refer to note 28 of the consolidated financial statements.
q. Contract liabilities
Total

Contract liabilities at 1 April 2017 862
(Revenue)/expense recognised during the period –
Amounts received from customers under contracts 4,190
Amounts paid to suppliers (3,632)
Contract liabilities at  1,420
(Revenue)/expense recognised during the period –
Amounts received from customers under contracts 5,006
Amounts paid to suppliers (4,808)
Contract liabilities at  1,618
For further information on contract liabilities refer to note 29 of the consolidated financial statements.
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Financial statements
Notes to the Company financial statements continued
r. Cash flow statement
Non-cash movements in operating profit
Notes
Financial
year ended


Revaluation of investment property d (85,014) (58,642)
Share-based payments 11 6,659 7,902
Prepaid remuneration expense 2,679 4,444
Depreciation e 281 269
Deferred tax o 547 –
Non-cash movements in operating profit (74,848) (46,027)
Cash expended on investment property
Notes
Financial
year ended

Property purchases d 10,818 8,460
Development and refurbishment expenditure d 45,377 33,153
Deposit paid on investment property i 145 –
Decrease/(increase) in investment property costs payable p (1,231) 1,593
Cash expended on investment property 55,109 43,206
Cash received from sales of investment property
Notes

Property sales d 61,759 29,390
Profit on sales 2,397 6,425
(Increase)/decrease in receivable from investment property sales – –
Cash received from sales of investment property 64,156 35,815
s. Financial instruments and risk management
The Company has identified exposure to the following risks:
• Market risk
• Credit risk
• Liquidity risk
The substantial majority of these risks for the Group are held by the Company and managed at the Group level. Therefore, the policies
for managing each of these and the principal effects of these policies on the results for the financial year are summarised in note 31 to
the consolidated financial statements. The following tables measure the risks discussed on a Company only basis for the purpose of
these discussions.
In addition to the assets and liabilities of the Group, the Company has loans to subsidiaries that are repayable on demand. These loans
are therefore carried at their amortised costs which approximates their fair value. These loans are made by the Parent Company in order
to fund the purchase of, and capital expenditure on, investment properties which are secured to the parent. The fair value of the collateral
properties is €187.0m while the receivable from the sale of 77SJRQ was €35.5m (: €180.4m collateral value).
The following tables present the classification of financial assets and liabilities within the fair value hierarchy and the changes in fair value
measurements at Level 3 estimated for the Company only for the purposes of making the disclosures in note 31 of the consolidated
financial statements. Assets held at Level 3 include investment properties in addition to the loans to subsidiaries.
188  s. Financial instruments and risk management continued
Classification of financial assets and liabilities
At 
Trade and other receivables 2 11,608 2,191 523 1,668 2,191 2,191
Loans to subsidiaries 3 113,139 113,139 – 113,139 113,139 113,139
Derivatives at fair value 2 2 2 2 – 2 2
Borrowings 2 (246,859) (246,859) – (246,859) (246,859) (246,859)
Trade and other payables 2 (17,563) (1,831) – (1,831) (1,831) (1,831)
Contract liabilities 2 (1,420) (1,420) – (1,420) (1,420) (1,420)
(141,093) (134,778) 525 (135,303) (134,778) (134,778)
Changes in fair value measurement at level 3
Financial
year ended


Financial
year ended


Balance at beginning of financial year 1,241,431 1,104,495
Transfers out of Level 3 – –
Purchases, sales, issues and settlement:
Purchases 56,195 41,613
Sales (61,759) (29,390)
Advances 36,629 66,473
Repayments (822) (402)
Fair value movement 85,014 58,642
Balance at end of financial year 1,356,688 1,241,431
Maximum credit exposure
As at 31 March
2019

As at 31 March
2018

Financial assets – 2
Trade and other receivables 1,987 2,191
Cash and cash equivalents 20,733 21,795
Balance at end of financial year 22,720 23,988
Liquidity risk
As at 31 March
Net current assets at end of financial year 5,221 8,514
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Financial statements
Notes to the Company financial statements continued
t. Operating lease receivables
Future aggregate minimum rentals receivable (to the next break date) under non-cancellable operating leases are:
As at 31 March
Operating lease receivables due in:
Less than one year 47,856 46,977
Between two and five years 134,007 130,494
Greater than five years 148,689 84,383
Total 330,552 261,854
u. Dividends
For information on the dividends paid and proposed during the financial year please refer to note 14 of the consolidated
financial statements.
v. Investment in subsidiary undertakings
The major subsidiaries of the Company are disclosed in note 36.a of the consolidated financial statements. The Group has other subsidiary
companies which are generally property management companies and are not considered material in the Group’s operations.
The Group has no interests in unconsolidated subsidiaries.
w. Capital commitments
The Company has entered into a number of development contracts to develop buildings in its portfolio. The total capital expenditure
commitment in relation to these over the next one to two years is approximately €32m (: €74m).
x. Related parties
i. Subsidiaries
Please refer to note 36.a of the consolidated financial statements.
ii. Other transactions
Transactions with related parties are the same as those disclosed in note 36.b of the consolidated financial statements.
iii. Key management personnel
For information on key management personnel refer to note 36.c of the consolidated financial statements.
y. Income statement of the Parent Company
The Parent Company of the Group is Hibernia REIT plc. In accordance with Section 304 (2) of the Companies Act, 2014, the Parent
Company is availing of the exemption from presenting its individual Income Statement to the Annual General Meeting and from filing
it with the Registrar of Companies. The Parent Company’s profit after tax for the financial year ended  determined in
accordance with IFRS is €115.0m (: €82.9m).
190  z. Changes in accounting policies
This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers on the
Company’s financial statements.
Impact on the financial statements
As a result of the changes in the entity’s accounting policies, there was no restatement of the prior year financial statements and therefore
no impact on balances as at 1 April 2018. There were minor amendments to presentations to reflect changes in classifications arising from
the new policies. There was no impact on profit or loss or reserves from the adoption of either IFRS so this is not shown.
IFRS 9 Financial Instruments
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial
liabilities, de-recognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of IFRS 9 has had minimal impact on the financial statements as the Company does not have a large number of
financial instruments.
There were no reclassifications of financial assets or liabilities as a result of the adoption of IFRS 9 in the Company financial statements.
Impairment of financial assets
The Company has two types of financial assets that are subject to IFRS 9’s new expected credit loss model.
• Trade receivables for rental income and other property income
• Loans receivable
The Company has a small balance of trade receivables that are classified as financial assets and that are mainly of a very short-term
nature. Trade receivables that are financial assets are managed under a “held to collect” business model and the cash collected represents
principal and interest where applicable. The Company has adopted the simplified credit loss approach in assessing impairment on these
as they do not contain a significant financing component. The move from an incurred loss model to an expected loss model has therefore
had an immaterial effect on balances and there is no restatement of prior year financial statements required.
The Company has a number of loans outstanding to subsidiaries that have no interest payable and are repayable on demand. In order to
repay these loans, the subsidiaries would have to sell the underlying buildings these loans have funded. The Company has assessed these
balances as at 1 April 2018 and the future strategies associated with the properties and determined that as at this date, recovery strategies
indicate that the Company would have fully recovered the balances on these loans as at that date and as a result of this assessment the
expected credit losses on transition to IFRS 9 were immaterial.
Financial liabilities
There was no impact on financial liabilities of the Company due to the adoption of IFRS 9.
IFRS 15 Revenue from Contracts with Customers
The Company’s revenue is mainly from rental income under lease contracts and therefore falls under IFRS 17 (IFRS 16 from 1 April
2019). The adoption of IFRS 15 therefore resulted in no re-measurements of balances included in the financial statements. It resulted in
one change in presentation of amounts in the statement of financial position as at  (and 1 April 2018) as illustrated in the
table above. An amount of €1.4m was reclassified from trade payables to contract liabilities. This represents amounts due in relation to
performance obligations under service charge arrangements.
See note q (Contract liabilities) for further details and notes 3 and 37 of the consolidated financial statements for transition notes.
aa. Events after the reporting date
For information on events after the reporting date refer to note 38 of the consolidated financial statements.
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Investment property 1,395 1,309 1,167 928 641
Other assets 77 44 43 61 167
Financial liabilities (231) (219) (171) (73) –
Other liabilities (23) (22) (25) (19) (55)
Net assets 1,218 1,112 1,014 897 753
Financed by:
Share capital 694 687 678 673 658
Reserves 524 425 336 224 95
Total equity 1,218 1,112 1,014 897 753
IFRS NAV per share (cent) 174.7 160.6 147.9 131.6 112.4
EPRA NAV per share (cent) 173.3 159.1 146.3 130.8 111.8
Consolidated income statement

Net rental income 53 46 40 30 18
Gains and losses on investment property 98 88 104 125 86
Other gains and losses – – 2 – 3
Total operating expenses (19) (21) (21) (15) (12)
Operating profit 132 113 125 140 95
Net finance expense (8) (6) (6) (4) (2)
Profit before income tax 124 107 119 136 93
Income tax expense (1) – – – –
Profit for the financial year 123 107 119 136 93
Basic earnings per share (cent) 17.8 15.5 17.3 20.2 18.4
Diluted earnings per share (cent) 17.6 15.4 17.2 20.1 18.3
EPRA earnings per share (cent) 4.0 2.8 2.2 1.5 0.8
Diluted EPRA earnings per share (cent) 3.9 2.8 2.2 1.5 0.8
Dividend per share (cent) 3.5 3.0 2.2 1.5 0.8
Supplementary information (unaudited)
Supplementary information (unaudited)
192  II. Alternative performance measures
The Group has applied the European Securities and Markets Authority (ESMA) “Guidelines on Alternative Performance Measures” in this
report. An alternative performance measure (“APM”) is a measure of financial or future performance, position or cash flows of the Group
which is not a measure defined by International Financial Reporting Standards (“IFRS”).
The following are the APMs used in this report together with information on their calculation and relevance.
APM
Reconciled to
IFRS measure Reference Definition
Contracted
rent roll
n/a n/a Contracted rent under the lease agreements, and excluding all incentives or rent abatements, for the
portfolio as at the reporting date.
EPRA
cost ratios
IFRS operating
expenses
III.b Calculated using all administrative and operating expenses under IFRS net of service fees. It is calculated
including and excluding vacancy costs.
EPRA earnings
and adjusted
EPRA earnings
IFRS profit
after tax
III.a As EPRA earnings is used to measure the operational performance of the Group, it excludes all
components not relevant to the underlying net income performance of the portfolio, such as the change
in value of the underlying investments and any gains or losses from the sales of investment properties.
Adjusted EPRA earnings include some further adjustments made to assist investors in understanding the
underlying earnings of the Group.
EPRA earnings
per share
(“EPRA EPS”)
reporting
n/a III.d Like-for-like (“LfL”) rental growth compares the growth of the net rental income of the portfolio that has
been consistently in operation, and not under development, during the two full preceding periods that
are described.
EPRA NAV IFRS NAV Note 16
III.f
The objective of the EPRA NAV measure is to highlight the fair value of net assets on an ongoing, long-
term basis. Assets and liabilities that are not expected to crystallise in normal circumstances, such as
the fair value of financial derivatives and deferred taxes on property valuation surpluses are therefore
excluded.

III.f
EPRA NAV calculated on a diluted basis taking into account the impact of any options, convertibles, etc.
that are “dilutive”.
EPRA NNNAV IFRS NAV via
EPRA NAV
III.f Reports EPRA NAV including fair value adjustments for any material balance sheet items which are not
included in EPRA NAV at fair value.
EPRA NNNAV
per share
IFRS NAV via
EPRA NAV
III.f EPRA NNNAV on a per share basis.
EPRA Net
Initial Yield
(“EPRA NIY”)
n/a III.e Inherent yield of the completed portfolio using passing rent at the reporting date.
EPRA topped-
up Net Initial
Yield (“EPRA
topped-up
NIY”)
n/a III.e Inherent yield of the completed portfolio using contracted rent at the reporting date.
EPRA
vacancy rate
n/a III.c Estimated rental value (“ERV”) of the vacant space over the total ERV of the completed portfolio.
Loan to value
(“LTV”)
n/a Note 26.b Net debt as a proportion of the value of investment properties.
Final and
interim
dividend
per share
Dividend per
share
Note 14 Number of cent per share to be distributed to shareholders in dividends.
Net debt Financial
liabilities
Note 26.b Financial liabilities net of cash balances (as reduced by the amounts collected from tenants for deposits,
sinking funds and similar) available.
Passing rent n/a n/a Annualised gross property rent receivable on a cash basis as at the reporting date.
Property-
related capital
expenditure
n/a Note 17
III.g.ii
Property-related capital expenditure analysed so as to illustrate the element of such expenditure that is
maintenance rather than investment.
Reversionary
potential
n/a III.g.i Potential rent uplift available from leases with break dates, expiring or review events in future periods.
Total
accounting
return (“TAR”)
Indirectly
through EPRA
NAV
Note 16 Measures the absolute growth in the Group’s EPRA NAV per share plus any ordinary dividends paid in
the accounting period.
Total property
return (“TPR”)
n/a n/a Total property return is the return for the period of the property portfolio (capital and income) as
measured by the MSCI/SCSI Ireland Quarterly Property All Assets Index.
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Financial statements
Supplementary information (unaudited) continued
III. European Public Real Estate Association (“EPRA”) performance measures
EPRA performance measures are calculated according to the EPRA Best Practices Recommendations November 2016. EPRA
performance measures are used in order to enhance transparency and comparability with other public real estate companies
in Europe. EPRA has consulted investors and preparers of information in order to compile its recommendations. Using these
measures ensures that the Group’s investors can compare the Group’s performance on a like-for-like basis with similar companies.
Further details on these measures are set out below, including their calculation and reconciliation to the financial statements
where applicable.
III.a EPRA earnings
EPRA earnings are presented as they are important for investors in assessing the extent to which dividends are supported by
recurring income.
EPRA earnings per share and diluted EPRA earnings per share
Financial
year ended


Financial
year ended


Profit for the financial year attributable to the owners of the Company 123,459 107,101
Less:
Gains and losses on investment property (98,105) (87,802)
Profit or loss on disposals of other assets (140) –
Deferred tax in respect of EPRA adjustments 547 –
Changes in fair value of financial instruments and associated close-out costs 1,711 104
EPRA earnings 27,472 19,403
‘000 ‘000
Weighted average number of ordinary shares (basic) 694,968 688,900
Weighted average number of ordinary shares (diluted) (note 15) 700,996 695,499
EPRA earnings per share (cent) 4.0 2.8
Diluted EPRA earnings per share (cent) 3.9 2.8
Impact of Internalisation: In order to show the impact of items relating to the original external management structure and the
subsequent Internalisation, which ceased to be an expense to the Group on 26 November 2018, EPRA earnings are shown below
adjusted to remove Internalisation-related costs. All IMA related amounts are removed and the estimated annual cost of the new
remuneration scheme when fully in effect added in.
Financial
year ended


Financial
year ended


EPRA earnings as calculated above 27,472 19,403
Prepaid remuneration expense 2,679 4,444
“Top-up” Internalisation expenses 1,482 1,743
New remuneration scheme expense 608 –
IMA performance-related payments 5,401 6,599
Underlying earnings excluding effects of management charges 37,642 32,189
Estimated annual costs of new remuneration scheme (4,000) (4,000)
Adjusted EPRA earnings 33,642 28,189
Weighted average number of shares 694,968 688,900
Adjusted earnings per share (cent) 4.8 4.1
194  III. European Public Real Estate Association (“EPRA”) performance measures continued
III.b EPRA cost ratios
EPRA costs are calculated below. These costs ceased on 26 November 2018 with the expiry of the IMA. Adjusted costs ratios are provided
to show indicative impacts on ratios for future financial years.
Financial
year ended


Financial
year ended


Total operating expenses under IFRS 19,291 20,116
Property expenses 2,596 3,147
Net service charge costs/fees 122 205
EPRA costs including direct vacancy costs 22,009 23,468
Direct vacancy costs (545) (1,073)
EPRA costs excluding direct vacancy costs 21,464 22,395
Gross rental income 56,027 49,075
EPRA cost ratio including direct vacancy costs 39.3% 47.8%
EPRA cost ratio excluding direct vacancy costs 38.3% 45.6%
The Group has not capitalised any overheads in the current or the prior financial year.
Financial
year ended


Financial
year ended


Costs adjusted for Internalisation
EPRA costs including direct vacancy costs 22,009 23,468
Prepaid remuneration expense (2,679) (4,444)
“Top-up” Internalisation expenses (1,482) (1,743)
IMA performance-related payments (5,401) (6,599)
Estimated annual costs of new remuneration scheme 4,000 4,000
Costs excluding Internalisation effects 16,447 14,682
Direct vacancy costs (545) (1,073)
Costs excluding direct vacancy costs 15,902 13,609
Gross rental income 56,027 49,075
Adjusted EPRA cost ratio including direct vacancy costs 29.4% 29.9%
Adjusted EPRA cost ratio excluding direct vacancy costs 28.4% 27.7%
III.c EPRA vacancy rate
This provides comparable and consistent vacancy data for investors based on the independent valuer’s assessment of ERV. The EPRA
vacancy rate measures the ERV of vacant space expressed as a percentage of the total ERV.
Financial
year ended


Financial
year ended


Annualised ERV vacant units 7,265 1,283
Annualised ERV completed portfolio 67,760 65,571
EPRA vacancy rate 10.7% 2.0%
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Financial statements
Supplementary information (unaudited) continued
III. European Public Real Estate Association (“EPRA”) performance measures continued
III.d EPRA like-for-like rental growth
Like-for-like (“LfL”) net rental growth compares the growth in the net rental income of the portfolio that has been consistently in
operation, and not under development, during the two full preceding periods that are described. Information on the growth in rental
income other than from acquisitions and disposals, allows stakeholders to arrive at an estimate of organic growth. This can be used to
measure whether the reversions feed through as anticipated and the impact of changes in vacancy rates. This measure excludes rental
income on disposals and acquisitions and properties under development or refurbishment during the period. All rental income is from
properties based in Dublin, Ireland and the greater Dublin area.
Financial year ended 
Whole portfolio Like for like portfolio – year ended 
Value – all
assets
Net rental
income
Value LfL
assets
Net rental
income LfL
assets current
year
Net rental
income LfL
assets prior
year Growth in net rental income
Segment       %
Office assets 1,173.1 43.9 725.8 35.3 32.5 2.8 8.5%
Residential assets 153.1 5.5 134.1 5.2 5.1 0.1 2.1%
Industrial/land assets 53.0 1.0 12.8 0.7 0.7 0.0 5.8%
Total in-place portfolio 1,379.2 50.4 872.7 41.2 38.3 2.9 7.6%
Development assets 16.2 –
Assets sold 2.9
Total portfolio 1,395.4 53.3
Buildings excluded from LfL as at 
Developments/refurbishments concluded: 1WML, 1SJRQ, 2WML, Two Dockland Central, Hanover Mills, Cannon Place apartments.
Developments in progress/sites: 2 Cumberland Place, Newlands land.
Properties acquired: 50 City Quay, 129 Slaney Road Industrial Park, Clanwilliam Apartments.
Properties sold: New Century House, 77 SJRQ (The Chancery, Hanover Street East and Lime Street sold in the year ended ).
Financial year ended 
Whole portfolio Like for like portfolio – year ended 
Value – all
assets
Net rental
income
Value LfL
assets
Net rental
income LfL
assets current
year
Net rental
income LfL
assets
prior year Growth in net rental income
      %
Office assets 1,017.9 39.1 484.6 21.1 19.5 1.6 8.2%
Residential assets 138.5 5.2 121.0 5.1 4.9 0.2 4.1%
Industrial/land assets 17.8 0.6 12.8 0.7 0.6 0.1 16.6%
Total in-place portfolio 1,174.2 44.9 618.4 26.9 25.0 1.9 7.6%
Development assets 134.5 –
Assets sold 0.8
Total portfolio 1,308.7 45.7
Buildings excluded from LfL as at 
Developments/refurbishments concluded: 1WML, One & Two Dockland Central, Hanover Mills, Cannon Place apartments.
Developments in progress/sites: 1SJRQ, 2WML, 2 Cumberland Place, Newlands land.
Properties acquired: 77SJRQ, Clanwilliam Apartments (Clanwilliam Court acquired in year end March 2017).
Properties sold: The Chancery, Hanover Street East and Lime Street (no assets sold in the year ended 31 March 2017).
196  III. European Public Real Estate Association (“EPRA”) performance measures continued
III.e EPRA Net Initial Yield (“EPRA NIY”) and EPRA “topped-up” Net initial yield
EPRA NIY: This measures the inherent yield of the portfolio according to set guidelines to allow investors to compare real estate
investment companies across Europe on a consistent basis, using current cash passing rent.
EPRA “topped-up” NIY: This measures the yield based on rents adjusted for the expiration of lease incentives, i.e. on a contracted
rent basis.
At 
Office

Residential

Industrial/land

Total

Development

Total

Investment property at fair value 1,173,140 153,079 53,000 1,379,219 16,199 1,395,418
Less: Development/refurbishment – – (35,500)1
(35,500) (16,199) (51,699)
Completed property portfolio 1,173,140 153,079 17,500 1,343,719 – 1,343,719
Allowance for purchasers’ costs2
99,248 6,827 1,481 107,556
Gross up completed property portfolio 1,272,388 159,906 18,981 1,451,275
Annualised cash passing rental income3
46,401 7,099 1,135 54,635
Property outgoings (755) (1,232) (31) (2,018)
Annualised net rents 45,646 5,867 1,104 52,617
Expiry of lease incentives and fixed uplifts4
6,929 – 130 7,059
“
1. Lands at Newlands are excluded as held for future development.
2. Purchasers’ costs are 8.46% for commercial and 4.46% for residential.
3. Cash passing rent includes residential rents gross as property outgoings are included separately.
4. Expiry of lease incentives and fixed uplifts are mainly within one year.
At 
Office

Residential

Industrial/land

Total

Development

Total

Investment property at fair value 1,017,937 138,480 17,800 1,174,217 134,500 1,308,717
Less: Development/refurbishment – – (5,000)1
(5,000) (134,500) (139,500)
Completed property portfolio 1,017,937 138,480 12,800 1,169,217 – 1,169,217
Allowance for purchasers’ costs2
86,117 6,176 1,083 93,376
Gross up completed property portfolio 1,104,054 144,656 13,883 1,262,593
Annualised cash passing rental income3
43,836 6,816 695 51,347
Property outgoings (1,662) (1,229) – (2,891)
Annualised net rents 42,174 5,587 695 48,456
Expiry of lease incentives and fixed uplifts4
5,798 47 10 5,855
“Topped-up” annualised net rent 47,972 5,634 705 54,311
EPRA NIY 3.8% 3.9% 5.0% 3.8%
EPRA “Topped-up” NIY 4.3% 3.9% 5.1% 4.3%
1. Lands at Newlands are excluded as held for future development.
2. Purchasers’ costs are 8.46% for commercial and 4.46% for residential.
3. Cash passing rent includes residential rents gross as property outgoings are included separately.
4. Expiry of lease incentives and fixed uplifts are all within one year.
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Financial statements
Supplementary information (unaudited) continued
III. European Public Real Estate Association (“EPRA”) performance measures continued
III.f EPRA NAV and EPRA NNNAV
The objective of these measures is to highlight the fair value of net assets on an ongoing, long-term basis. Therefore assets which are not
expected to crystallise in normal circumstances are excluded while trading properties are adjusted to their fair value. The Group presents
its investment properties in its financial statements at fair value as allowed under IAS 40 and has no items not expected to crystallise in
a long-term investment property business model. The fair value of derivative instruments is excluded from EPRA NAV on the basis that
these are hedging instruments and intended to be held to maturity. EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of
debt and derivatives and to include deferred taxation on revaluations (if any).
Financial year ended

Financial year ended

 Cent per share  Cent per share
IFRS NAV 1,218,539 1,111,730
Deferred tax 547 –
Fair value of financial instruments 288 345
EPRA NAV 1,219,374 173.3 1,112,075 159.1
Deferred tax (547) –
Fair value of financial instruments (288) (345)
EPRA NNNAV 1,218,539 173.2 1,111,730 159.1
Ordinary shares in issue including shares to be issued – “diluted” (note 16) 703,617 698,946
III.g Portfolio information
Portfolio information can be generally found in the strategic report. Below is further information based on the guidelines issued by EPRA.
i. Reversionary potential
The following data is calculated for the in-place office and industrial portfolio (inclusive of the Iconic arrangement) and based on the
earliest of review, break or expiry dates. Residential data is excluded as reversion to ERV is limited to 4% in rent-controlled areas where all
the residential assets are based, and residential leases generally roll annually. Contracted rent is used to avoid overstating uplifts to ERV
as fixed uplifts are generally in the first year of lease and are accounted for on a smoothed period over the lease term in the financial data.
Further details on portfolio rent statistics can be found in the strategic report.
As at 
Rent subject to
rent reviews
Financial year ended 31 March 2020 2021 2022-2024 >2024 Total
Contracted rent 3.9 1.6 19.9 8.9 34.3
Uplift to ERV1
1. ERV uplift includes all “in-place” office potential uplifts. The Group may develop some of these properties in the longer term and therefore these reversions may not
be obtained.
198  III. European Public Real Estate Association (“EPRA”) performance measures continued
III.g Portfolio information continued
i. Reversionary potential continued
As at 
Rent subject to
rent reviews
Financial year ended  2020 2021-2023 >2023 Total
Contracted rent 7.7 1.5 24.1 – 33.3
Uplift to ERV1
4.5 0.2 0.1 – 4.8
Total 12.2 1.7 24.2 – 38.1
% increase/(decrease) possible 59% 13% 0% – 15%
From vacant space 1.2 – – – 1.2
Total 13.4 1.7 24.2 – 39.3
Rent subject to
break or expiry
Financial year ended  2020 2021–2023 >2023 Total
Contracted rent 4.2 1.8 11.4 – 17.4
Uplift to ERV 0.3 0.2 0.5 – 1.0
Total 4.5 2.0 11.9 – 18.4
% increase possible 8% 11% 4% – 6%
Total reversion from review and break/expiry (excluding vacancy)
Total contracted rent 11.9 3.3 35.5 – 50.7
Total uplift to ERV 4.8 0.4 0.6 – 5.8
% increase possible 40% 12% 2% – 11%
% increase possible including vacancy 14%
1. ERV uplift includes all “in-place” office potential uplifts. The Group may develop some of these properties in the longer term and therefore these reversions may not
be obtained.
ii. Property-related capital expenditure
Capital expenditure on the investment portfolio is analysed to allow an understanding of the investment in the portfolio during the period.
Further information on capital expenditure is available in note 17 to the consolidated financial statements as well as in the operational
review section of this report.
Financial
year ended


Financial
year ended
Financial statements
Supplementary information (unaudited) continued
IV. Other disclosures
Disclosures required under the Alternative Investment Fund Managers Directive (“AIFMD”) for Annual Reports of Alternative
Investment Funds (“AIF”)
Material changes and periodic risk management disclosures
All disclosure requirements to be made to shareholders and investors are made on the Company’s website: .
Financial information disclosures
There were €2.6m gains arising on the sale of investment properties (: €6.4m). Included within the unrealised gains disclosed
under IFRS there is a total of €8.1m (: €15.3m) in unrealised losses and €103.6m (: €96.7m) in unrealised gains.
Remuneration disclosures
Hibernia REIT plc has adopted a Remuneration Policy with the objective of aligning the interests of employees of the Group with the
creation of long-term value for the shareholders of Hibernia REIT plc. The remuneration paid takes account of the remuneration in similar
organisations, the regulatory and governance framework and the current economic climate. Further details on the Remuneration Policy
are in the Remuneration report on pages 93 to 114 of the Annual Report. Performance-related remuneration takes account of personal
performance and the financial performance of Hibernia REIT plc.
The total remuneration paid to staff in the financial year (via cash and deferred shares and inclusive of amounts recouped via service
charges from tenants), all of whom are engaged in managing the Group activities, was €6,279,755 of which €4,485,063 comprised
fixed remuneration and €1,794,692 comprised variable remuneration (: €5,243,190 of which €3,794,219 comprised fixed
remuneration and €1,448,971 comprised variable remuneration). The average number of identified staff during the financial year was 33
(: 28).
Non-financial information statement
We are not obliged to comply with the new non-financial reporting requirements contained in the European Union (Disclosure
of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (the “2017 Regulations”).
However, the table below, and the information it refers to, is intended to help readers of the Group’s Annual Report find key
non-financial information relevant to the Group.
Reporting requirement
Policies and standards
that govern our approach1
Read more here Page
Business model Our business model 30 to 31
Key performance indicators
relevant to our business
Key performance indicators
Operational metrics
34
35
Environmental matters Sustainability Policy2
Sustainability
Sustainability Report 20192
59 to 63
4 to 5
Social and employee matters Diversity policy
Anti-bullying and harassment policy1
Disability policy1
Equal opportunities policy1
Health and safety policy1
Corporate governance report 74
Human rights Supplier Code of Conduct2
Data protection policy2
Modern slavery statement
Supplier Code of Conduct2
Sustainability Report 20192
21
Bribery and corruption Anti-bribery policy1
Whistle-blowing policy1
Money laundering policy1
Gifts and inducement policy1
Diversity Diversity policy Corporate governance report 74
1. Certain Group policies and guidelines are not published externally.
2. Further information is available on our website, including our Supplier Code of Conduct, our Sustainability Policy and our Sustainability Report 2019.
200  Occupiers representing over 0.5% of contracted rent at 
Tenant  %

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Governance
Financial
statements
Additional
information
201

Additional Information
Directors and Other Information
Directors
Daniel Kitchen (Chairman)
Colm Barrington (Senior Independent Director)
Roisin Brennan (from 16 January 2019)
Thomas Edwards-Moss (CFO)
Stewart Harrington
Frank Kenny
Kevin Nowlan (CEO)
Terence O’Rourke
Company Secretary
Sean O’Dwyer
Assistant Secretary
Sanne Corporate Administration Services Ireland
Limited t/a Sanne
4th Floor
76 Lower Baggot Street
Dublin D02 EK81
Ireland
Registered office
South Dock House
Hanover Quay
Dublin D02 XW94
Ireland
Company number
531267
Independent auditor
Deloitte Ireland LLP
Chartered Accountants
and Statutory Audit Firm
29 Earlsfort Terrace
Dublin D02 AY28
Ireland
Tax adviser
KPMG
1 Stokes Place
St. Stephen’s Green
Dublin D02 DE03
Ireland
Independent valuer
Cushman & Wakefield
164 Shelbourne Road
Ballsbridge
Dublin 4
Ireland
Principal banker
Bank of Ireland
2 Burlington Plaza
Burlington Road
Dublin 4
Ireland
Depositary
BNP Paribas Securities Services, Dublin Branch
Trinity Point
10-11 Leinster Street South
Dublin D02 EF85
Ireland
Registrar
Link Registrars Limited t/a Link Asset Services
2 Grand Canal Square
Dublin D02 A342
Ireland
Principal legal adviser
A&L Goodbody
25/28 North Wall Quay
IFSC
Dublin D01 H104
Ireland
Corporate brokers
Goodbody Stockbrokers
Ballsbridge Park
Ballsbridge
D04 YW83
Ireland
Credit Suisse International
One Cabot Square
London E14 40J
United Kingdom
Directors and other information
202  Glossary
AIF is an Alternative Investment Fund.
AIFM is an Alternative Investment
Fund Manager.
Brexit is the UK exit from the
European Union.
Cash passing rent is the gross property
rent receivable on a cash basis as at the
reporting date. It includes sundry items
such as car parks rent and estimates of
rents in respect of unsettled rent reviews.
CBD is Central Business District.
Contracted rent is the annualised rent
adjusted for the inclusion of rent that is
subject to a rental incentive such as a
rent-free period or reduced rent year.
Developer’s profit is the profit on cost
estimated by valuers which is typically a
percentage of developer’s costs, usually
between 10% and 25%.
Development construction cost is the
total costs of construction to completion,
excluding site and financing costs.
Finance costs are usually assumed at
a notional percentage per annum by
the valuers.
DPS is dividend per share.
DRIP or dividend reinvestment plan is
a plan offered by the Group that allows
investors to reinvest their cash dividends
by purchasing additional shares on the
dividend payment date.
EPRA is the European Public Real Estate
Association, which is the industry body for
European property companies. It produces
guidelines for number of standardised
performance measures (e.g. EPRA earnings,
EPRA NAV).
EPRA cost ratio (including direct vacancy
costs) is the ratio of net overheads and
operating expenses against gross rental
income. Net overheads and operating
expenses relate to all administrative and
operating expenses net of any service
fees, recharges or other income which is
specifically intended to cover overhead and
property expenses.
EPRA cost ratio (excluding direct vacancy
costs) is the same as above except it
excludes direct vacancy costs.
EPRA earnings is the profit after tax
excluding revaluations and gains and
losses on disposals and associated taxation
(if any).
EPRA NAV per share is the EPRA NAV
divided by the diluted number of shares
at the period end.
EPRA net asset value (“EPRA NAV”)
is defined as the IFRS assets excluding
the mark to market on effective cash flow
hedges and related debt instruments
and deferred taxation on revaluations.
EPRA net initial yield (“NIY”) is the
passing rent generated by the investment
portfolio at the balance sheet date,
less estimated recurring irrecoverable
property costs, expressed as a percentage
of the portfolio valuation as adjusted.
The portfolio valuation is adjusted by the
exclusion of development properties and
those under refurbishment.
EPRA NNNAV is the EPRA NAV adjusted
to reflect the fair value of debt and
derivatives and to include deferred taxation
on revaluations.
EPRA topped-up net initial yield is
calculated as the EPRA NIY but adjusting
the passing rent for contractually agreed
uplifts, where these are not in lieu of
rental growth.
EPRA vacancy rate is the Estimated Rental
Value (“ERV”) of vacant space divided by
the ERV of the whole portfolio, excluding
developments and residential property.
This is the inverse of the occupancy rate.
EPS or earnings per share is the profit after
taxation divided by the weighted average
number of shares in issue during the period.
Equivalent yield is the weighted average of
the initial yield and reversionary yield and
represents the return that a property will
produce based on the occupancy data of
the tenant leases.
ERV or estimated rental value is the
external valuer’s opinion as to what the
open market rental value of the property
is on the valuation date, and which could
reasonably be expected to be the rent
obtainable on a new letting on that
property on the valuation date.
Fair value movement is the accounting
adjustment to change the book value of
the asset or liability to its market value.
FRI lease is a full repairing and
insuring lease.
GRESB is the Global ESG benchmark for
real estate assets.
Gross rental income is the accounting
based rental income under IFRS. When the
Group provides incentives to its tenants the
incentives are recognised over the lease
term on a straight-line basis in accordance
with IFRS. Gross rental income is therefore
the passing rent as adjusted for the
spreading of these incentives.
Hibernia is Hibernia REIT plc, the Group or
the Company.
In-place portfolio is the portfolio of
completed properties, i.e. excluding active
development and refurbishment projects
and land.
Internalisation refers to the acquisition of
the Investment Manager and the ultimate
elimination of reliance on the external
investment management function through
bringing these activities inside the Group.
IPO is the initial public offering, i.e. the first
equity raising of the Company.
IPMS are the international property
measurement standards as issued by the
Royal Institute of Chartered Surveyors.
IRR is internal rate of return.
Lease incentive is any consideration or
expense, borne by the Group, in order to
secure a lease.
Glossary
Strategic
report
Governance
Financial
statements
Additional
information
203

Additional Information
Glossary
LEED (“Leadership in Energy and
Environmental Design”) is a green building
certification System developed by the
US Green Building Council (USGBC).
Its aim is to be an objective measure of
building sustainability.
Like-for-like (“LfL”) rental income growth
is the growth in net rental income on
properties owned through the current and
previous periods under review. This growth
rate includes revenue recognition and
lease accounting adjustments but excludes
properties held for development in either
financial year or properties with guaranteed
rental reviews.
Loan to value (“LTV”) is the ratio of
the Group’s net debt to the value of its
investment properties.
Long-term incentive plan (“LTIP”) aims
to encourage key employee retention and
align their interests with those of the Group
through the payment of rewards based on
the Company and individual’s performance
through shares in the Company that vest
after a future period of service.
Market abuse regulations are issued by
the Central Bank of Ireland and can be
accessed on https:/
/www.centralbank.ie/
regulation/securities-markets/market-
abuse/Pages/default.aspx.
MSCI/SCSI Ireland Quarterly Property All
Assets Index (“MSCI Ireland Index”) is the
index produced by MSCI which measures
the return of the property market in Ireland
for all asset classes and which is calculated
by MSCI both including and excluding
Hibernia assets and is used to calculate
our KPI ‘Total property return’ or TPR.
NAVPS is the net asset value in cent
per share.
Net development value is the external
valuer’s view on the end value of a
development property when the
building is fully completed and let.
Net equivalent yield is the weighted
average income return (after allowing for
notional purchaser’s costs) a property
will produce based on the timing of the
income received. As is normal practice, the
equivalent yields (as determined by the
external valuers) assumes rent is received
annually in arrears.
Net lettable or net internal area (“NIA”) is
the usable area within a building measured
to the internal face of the perimeter walls at
each floor level.
Net reversionary yield is the expected
yield after the rent reverts to the ERV.
Occupancy rate is the estimated rental
value of let units as a percentage of the
total estimated rental value of the portfolio,
excluding development properties.
Over rented is used to describe when the
contracted rent is higher than the ERV.
Passing rent is the annualised gross
property rent receivable on a cash basis
as at the reporting date. It includes sundry
items such as car parks rent and estimates
of rents in respect of unsettled rent reviews.
Property income distributions (“PIDs”)
are dividends distributed by a REIT that
are subject to taxation in the hands of the
shareholders. Normal withholding tax still
applies in most cases.
PRS is the private rented sector which
refers to residential properties held for rent.
Psf is per square foot.
REIT is a Real Estate Investment Trust.
Irish REITs follow section 705E of the
Taxes Consolidation Act 1997.
Remuneration Policy is the Remuneration
Policy approved by shareholders at the
2018 AGM and which took effect from
27 November 2018.
Reversion is the rent uplift where the
ERV is higher than the contracted rent.
Royal Institute of Chartered Surveyors
(“RICS”) Professional Standards, RICS
Global Valuation Practice Statements
and the RICS Global Valuation Practice
Guidance – Applications contained within
the RICS Valuation – Global Standards
2017 (the “Red Book”) issued by the Royal
Institute of Chartered Surveyors provide
the standards for preparing valuations
on property.
Sq. ft. is square feet.
Tenant or lease incentives are incentives
offered to occupiers on entering into a
new lease and may include a rent free or
reduced rent period, or a cash contribution
to fit-out. Under accounting rules, the value
of these incentives is amortised through the
rental income on a straight-line basis over
the term of the lease or the period to the
next break point.
Term certain is the lease period to the next
break or expiry.
TMT sector is the technology, media and
telecommunications sector.
Total Accounting Return (“TAR”)
measures the absolute growth in the
Group’s EPRA NAV per share plus any
ordinary dividends paid.
Total Property Return (“TPR”) is the return
for the period of the property portfolio
(capital and income) as measured by the
MSCI/SCSI Ireland Quarterly Property All
Assets Index (“MSCI Ireland Index”).
Total Shareholder Return (“TSR”) is
the growth in share value over a period
assuming dividends are reinvested to
purchase additional units of stock.
Transparency regulations enhance the
information made available about issuers
whose securities are admitted to trading on
a regulated market and further information
is available on https:/
/www.centralbank.ie/
regulation/securities-markets/
transparency/Pages/default.aspx.
Under rented is the term used to describe
where contracted rents are lower than
ERV. This implies a positive reversion after
expiry of the current lease contract terms.
Ungeared IRR is the internal rate of return
excluding gearing.
Valuer is the independent valuer appointed
by the Group to value the Group’s
investment properties at the date of
the consolidated financial statements.
From September 2017 the Group has
used Cushman & Wakefield. Previously
the Group used CBRE.
WAULT is weighted average unexpired
lease term and is variously calculated to
break, expiry or next review date.